diff --git a/raw/proxies/0000008146/0000950170-24-051612/proxy.txt b/raw/proxies/0000008146/0000950170-24-051612/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..25a0adff810b04a89b160664f35c6aac3067156f --- /dev/null +++ b/raw/proxies/0000008146/0000950170-24-051612/proxy.txt @@ -0,0 +1,1302 @@ +DEF 14A +1 +alot_def_14a_2024-finalp.htm +DEF 14A +DEF 14A +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Proxy Statement Pursuant to Section 14(a) of the +Securities Exchange Act of 1934 +(Amendment No. ) +Filed by the Registrant ☒ +Filed by a Party other than the Registrant ☐ +Check the appropriate box: +☐ +Preliminary Proxy Statement +☐ +Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +☒ +Definitive Proxy Statement +☐ +Definitive Additional Materials +☐ +Soliciting Material Pursuant to §240.14a-12 +ASTRONOVA, INC. +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +☒ +No fee required. +☐ +Fee paid previously with preliminary materials. +☐ +Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11. +AstroNova, Inc. +600 East Greenwich Avenue +West Warwick, Rhode Island 02893 +NOTICE OF ANNUAL MEETING OF SHAREHOLDERS +June 11, 2024 +To the Shareholders of AstroNova, Inc.: +Notice is hereby given that the 2024 Annual Meeting of Shareholders of AstroNova, Inc. (the “Company,” “we” or “our”) will be held by means of remote communication on Tuesday, June 11, 2024, beginning at 9:00 a.m., Eastern Daylight Time for the following purposes: +(1) +To consider and vote upon the election of five directors to serve until the next annual meeting of shareholders or until their successors are elected and have qualified; +(2) +To conduct a non-binding, advisory vote to approve the Company’s executive compensation; +(3) +To ratify the appointment of Wolf & Company, P.C. as the Company’s independent registered public accounting firm for the fiscal year ending January 31, 2025; and +(4) +To transact such other business as may properly come before the meeting. +The close of business on April 12, 2024 has been fixed as the record date for determining shareholders entitled to attend or vote at the annual meeting or any adjournment thereof. +You may vote on these matters at the annual meeting or by proxy. Whether or not you plan to attend the meeting, please promptly complete and return the enclosed proxy card in the enclosed addressed, postage-paid envelope or vote via the Internet or telephone, so that your shares will be represented and voted at the meeting in accordance with your wishes. If you attend the meeting, you may withdraw your proxy or Internet or telephone vote and vote your shares by means of the remote platform. +The Annual Meeting of Shareholders will only be conducted exclusively via remote communication. In order to attend the meeting, you should register in advance at www.proxydocs.com/ALOT prior to the start of the meeting. Upon completing your registration, you will receive further instructions via email, including your unique link that will allow you access to the meeting and give you the ability to submit questions. Please be sure to follow instructions found on your proxy card and/or voting authorization form and subsequent instructions that will be delivered to you via email. As always, we encourage you to vote your shares prior to the annual meeting. +By Order of the Board of Directors +/s/Daniel S. Clevenger +Daniel S. Clevenger +Secretary +May 2, 2024 +IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON JUNE 11, 2024. +The Company’s Proxy Statement and Annual Report are available for viewing, +printing and downloading at: +http://www.proxydocs.com/ALOT +This website does not use “cookies” to track or identify visitors +AstroNova, Inc. +PROXY STATEMENT +ANNUAL MEETING OF SHAREHOLDERS +June 11, 2024 +The Meeting +The 2024 annual meeting of shareholders of AstroNova, Inc. (the “Company”) will be held at 9:00 a.m., Eastern Daylight Time, on Tuesday, June 11, 2024, by means of remote communication. At the meeting, shareholders of record on the record date for the meeting who are present or represented by proxy will have the opportunity to vote on the following matters: +• +the election of five directors to serve until the next annual meeting of shareholders or until their successors are elected and have qualified; +• +the approval, on an advisory, non-binding basis, of the compensation paid to the Company’s Named Executive Officers, as disclosed in this proxy statement pursuant to Item 402 of Regulation S-K (including in the compensation discussion and analysis, compensation tables, and accompanying narrative disclosures); +• +the ratification of the appointment of Wolf & Company, P.C. as the Company’s independent registered public accounting firm for the fiscal year ending January 31, 2025; and +• +such other business as may properly come before the meeting. +Solicitation of Proxies +This proxy statement and the accompanying proxy card are expected to be first sent to shareholders on or about May 2, 2024. +The Board of Directors (the “Board”) of the Company is soliciting proxies in connection with its 2024 annual meeting of shareholders. The Company will bear the cost of such solicitation. It is expected that the solicitation of proxies will be primarily by mail. Proxies may also be solicited personally by directors, officers, and employees of the Company at nominal cost. The Company may reimburse brokerage houses and other custodians, nominees and fiduciaries holding stock for others in their names, or in those of their nominees, for their reasonable out-of-pocket expenses in sending proxy material to their principals or beneficial owners and obtaining their proxies. +The Company has engaged Alliance Advisors, LLC to assist in the solicitation of proxies and provide related advice and informational support. The Company expects to pay Alliance Advisors, LLC fees and disbursements which are not expected to exceed $12,500 in the aggregate. +Who May Vote +The Board has established April 12, 2024 as the record date for the annual meeting. Only shareholders of record at the close of business as of that date will be entitled to virtually attend or vote at the annual meeting. On the record date, there were 7,485,976 shares of common stock of the Company outstanding. There was no other outstanding class of voting securities. +A list of shareholders entitled to vote will be available via the website for the annual meeting. In addition, you may contact David S. Smith, at the Company’s offices located at 600 East Greenwich Avenue, West Warwick, Rhode Island, to make arrangements to review a copy of the shareholder list at those offices, between the hours of 9:00 a.m. and 5:00 p.m., Eastern Daylight Time, on any business day from May 31, 2024. +Attending the Annual Meeting +The annual meeting will be held through means of remote communications only. In order to attend, you must register in advance at www.proxydocs.com/ALOT prior to the start of the meeting. Upon completing your registration, you will receive further instructions via email, including your unique link that will allow you to access the meeting and give you the ability to vote and submit questions. Please be sure to follow instructions found on your proxy card and/or voting authorization form and subsequent instructions that will be delivered to you via email. If you are planning to attend our virtual meeting, please register at the website by June 10, 2024, 11:59 p.m. Eastern Daylight Time. +1 +How to Vote +You are entitled to one vote at the meeting for each share of common stock registered in your name at the close of business on the record date for the meeting. +Shares Held of Record with Our Transfer Agent +If you are a shareholder of record, that is you have a stock certificate or hold your shares in an account with our transfer agent, Computershare, you may vote your shares at the virtual meeting or by proxy via mail, the Internet, or the toll-free number (for residents of the United States and Canada) listed on your proxy card. +To vote at the annual meeting, you must attend the virtual meeting following the procedures set forth in the instructions found on your proxy card and/or voting authorization form and subsequent instructions that will be delivered to you. You will be able to vote during the meeting. +To vote by proxy by mail , if you received proxy materials by mail and choose to authorize your proxy by mail, simply mark your proxy card, and then date, sign and return it in the postage-paid envelope provided. If you complete all of the proxy card except the voting instructions, then the designated persons will vote your shares +• +FOR the re-election of each of Alexis P. Michas, Mitchell I. Quain, Yvonne E. Schlaeppi, Richard S. Warzala and Gregory A. Woods as a director of the Company; +• +FOR the approval, on an advisory, non-binding basis, of the Company’s executive compensation as described in this proxy statement; +• +FOR the ratification of the appointment of Wolf & Company, P.C. as the Company’s independent registered public accounting firm for the fiscal year ending January 31, 2025. +To vote by proxy using the Internet , you must access the website for Internet voting at www.proxypush .com/ALOT. Please have the enclosed proxy card handy when you access the website and follow the on-screen instructions. Internet voting facilities for shareholders of record will be available 24 hours a day through the closing of the polls at the annual meeting. If you vote via the Internet, you do not have to return your proxy card via mail. +To vote by proxy using the telephone , use any touch-tone telephone and call 866-509-1041 to transmit your voting instructions through the closing of the polls at the annual meeting. Please have the enclosed proxy card handy when you call and then follow the instructions. If you vote via telephone, you do not have to return your proxy card via mail. +If any other business properly comes before the meeting, then the designated persons will have the discretion, to the extent authorized by applicable rules and regulations, to vote all shares they own or represent by proxy in any manner they deem appropriate. +If you vote by proxy, whether by mail, the Internet or telephone, you may revoke your proxy at any time before it is exercised by taking one of the following actions: +• +sending written notice to the Company’s Secretary at the address set forth on the notice of meeting appearing on the cover of this proxy statement; +• +voting again via the Internet or telephone on a later date or properly executing and delivering a later-dated proxy card; or +• +attending the virtual meeting and then voting at the virtual meeting. +Shares Held by Brokers or Nominees +If the shares you own are held in “street name” by a brokerage firm, your brokerage firm, as the record holder of your shares, is required to vote your shares according to your instructions. In order to vote your shares, you will need to follow the directions your brokerage firm provides you. Many brokers also offer the option of providing voting instructions to them over the Internet or by telephone, directions for which would be provided by your brokerage firm on your vote instruction form. +2 +Under stock exchange rules applicable to most brokerage firms, if you do not give instructions to your broker, your broker will be permitted to vote any shares it holds for your account in its discretion with respect to “routine” proposals but will not be allowed to vote your shares with respect to “non-routine” proposals. Proposal 1, regarding the election of Directors, and Proposal 2, regarding the approval, on an advisory, non-binding basis, of the Company’s executive compensation, are “non-routine” proposals. If you do not instruct your broker how to vote with respect to these proposals, your broker will not vote your shares on them and your shares will be recorded as “broker non-votes” and will not affect the outcome of the vote on those proposals . “Broker non-votes” are shares that are held in “street name” by a bank or brokerage firm that indicates on its proxy that, while voting in its discretion on one matter, it does not have or did not exercise discretionary authority to vote on another matter. +Proposal 3, regarding the ratification of the appointment of Wolf & Company, P.C. as the Company’s independent registered public accounting firm for the fiscal year ending January 31, 2025, is considered to be a routine item under the applicable rules and your broker will be able to vote on this item even if it does not receive instructions from you, so long as your broker holds your shares in its name. +If a broker or nominee holds shares of common stock in “street name” for your account, then this proxy statement may have been forwarded to you with a voting instruction card, which allows you to instruct the broker or nominee how to vote your shares on the proposals described herein. To vote by proxy or instruct your broker how to vote, you should follow the directions provided with the voting instruction card. In order to have your vote counted on Proposal 1 and Proposal 2, you must either provide timely voting instructions to your broker or obtain a properly executed proxy from the broker or other record holder of the shares that authorizes you to act on behalf of the record holder with respect to the shares held for your account . +Votes Required to Transact Business at the Meeting +The holders of a majority of the shares entitled to vote, present in person or represented by proxy, will constitute a quorum for the transaction of business at the meeting. Abstentions and broker non-votes are counted as present and entitled to vote for purposes of determining a quorum. +If You Receive More Than One Proxy Card or Voting Instruction Form +If you hold your shares in multiple accounts or registrations, or in both registered and street name, you will receive a proxy card or voting instruction form for each account. Please sign, date and return all proxy cards you receive from the Company. If you choose to vote by proxy via the telephone or the Internet, please vote once for each proxy card you receive. Only your latest dated proxy for each account will be voted. +Multiple Shareholders Sharing the Same Address +If you and other residents at your mailing address own shares of the Company’s common stock through a broker or other nominee, you may have received only one copy of this proxy statement and the Company’s Annual Report for its fiscal year ended January 31, 2024 (“fiscal year 2024”). If you and other residents at your mailing address own shares of common stock in your own names, you may have received only one copy of this proxy statement and the fiscal year 2024 Annual Report, unless you provided the Company’s transfer agent with contrary instructions. This practice, known as “householding,” is designed to reduce the Company’s printing and postage costs. You may promptly obtain an additional copy of this proxy statement and our fiscal year 2024 Annual Report by sending a written request to AstroNova, Inc., attention Investor Relations Department, 600 East Greenwich Avenue, West Warwick, Rhode Island 02893, or by calling the Company’s investor relations department at 617-542-5300. If you hold your shares through a broker or other nominee and wish to discontinue householding or to change your householding election, you may do so by contacting your broker or by calling 800-542-1061 or writing to Broadridge Financial Solutions, 51 Mercedes Way, Edgewood, NY 11717. If you hold shares in your own name and wish to discontinue householding or change your householding election, you may do so by calling 877-373-6374 or writing to Computershare Investor Services at P.O. Box.43006, Providence, RI 02940-3006. +3 +PROPOSAL NO. 1 +ELECTION OF DIRECTORS +At the annual meeting, five directors are to be elected to hold office until the next annual meeting and until their respective successors are elected and qualified. The persons named in the accompanying proxy, who have been designated by the Board, intend to vote, unless otherwise instructed, for the election to the Board of the persons named below. The biographies below contain information regarding the person’s service as a director, business experience, director positions held currently or at any time during the last five years, and the experiences, qualifications, attributes or skills that caused the Nominating and Governance Committee and the Board to determine that the person should serve as a director. +THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR EACH OF THE BOARD’S FIVE NOMINEES FOR DIRECTOR. +Alexis P. Michas , 66, has been a director since June 2022. Mr. Michas is the founder and has been Managing Partner of Juniper Investment Company, LLC since 2008. Juniper is also a Principal of Aetolian Investors, LLC, a registered commodity pool operator. Mr. Michas received a Bachelor of Arts degree from Harvard College and a Master of Business Administration degree from Harvard Business School. Mr. Michas is the Non-Executive Chairman of the board of BorgWarner Inc., the Non-Executive Chairman of the board of Revvity, Inc., a director of funds managed by Atlantic Investment Management, Inc., and is also on the board of privately held Theragenics Corporation. Mr. Michas also served as the Non-Executive Chairman of the board of Lincoln Educational Services Corporation until 2015, and as a director of Allied Motion Technologies, Inc. (now Allient Inc.) until July 2017. Mr. Michas served as the Chairman of the U.S. Board of Trustees of Athens College, a non-profit organization until April 2023. We believe that Mr. Michas’ many years of private equity experience across a wide range of industries, his successful record of managing investments in public companies his record of board-level oversight and leadership with public companies, and his extensive transactional experience qualify him to serve on our Board. +Mitchell I. Quain , 72, has been a director since August 2011. Mr. Quain has served on the Executive Council of American Securities, Inc., a private equity firm, since January 2020. From December 2011 to December 2019, Mr. Quain was a Senior Advisor at the private equity firm Carlyle Group. From January 2010 through December 2011, Mr. Quain was a Partner at One Equity Partners, a private investment firm. From 2006 through 2009, he was a Senior Director of ACI Capital Corp. From 2002 through 2005, Mr. Quain served as Chairman of Register.com, Inc., an internet services provider, and from 1997 to 2001 he was employed with ABN AMRO and its predecessors in several capacities, including Vice Chairman of Investment Banking. Mr. Quain also serves as a director of Kensington Capital Acquisition Corp. V, a blank check company, Star Equity Holdings, a provider of mobile healthcare solutions and diagnostic imaging equipment and services, and Williams Industrial Services. Mr. Quain previously served as a director of DeCrane Aircraft Holdings, Inc., Handy & Harman Ltd., Hardinge Inc., HEICO Corporation, Kensington Capital Acquisition Corp. I, Kensington Capital Acquisition Corp. II, MagneTek, Inc., Mechanical Dynamics, Inc., Jason Industries, RBC Bearings, Inc., Register.com, Inc., Tecumseh Products Company, Titan International, Inc., and Xerium Technologies, Inc. We believe that Mr. Quain’s extensive experience in the private equity sector and public company board experience qualify him to serve on our Board. +Yvonne E. Schlaeppi , 64, has been a director since April 2018. Since 2011, Ms. Schlaeppi has served as a Managing Partner of Stratevise LLC, an international strategic advisory firm that she co-founded. From 2022 through its sale in 2024, Ms. Schlaeppi served on the board of OpGen, Inc., a NASDAQ-listed molecular diagnostics company. From 2016 through its going private in 2019, Ms. Schlaeppi served on the board of directors of Stallergenes Greer plc, a pharmaceutical company traded on the Euronext Paris exchange. From 2014 to 2015, Ms. Schlaeppi served on the boards of directors of allergy immunotherapy companies, Ares Allergy Holdings Inc. and Greer Laboratories, Inc. Since 2015, Ms. Schlaeppi has been a member of the External Advisory Council to the Channing Division of Network Medicine of Brigham and Women’s Hospital in Boston. Since 2022, Ms. Schlaeppi has been recognized as Directorship Certified® by the National Association of Corporate Directors (“NACD”) and has been recognized as a Board Leadership Fellow by the NACD annually from 2017-2022. Prior to founding Stratevise, Ms. Schlaeppi served as General Counsel at Global Enterprise Technologies, Passport & ID, a high-security document printing solutions provider and systems integrator, from 2007 to 2011 and as Executive Vice President, General Counsel and Corporate IP Officer at Organon BioSciences, a global pharmaceutical, animal health and biotech group based in the Netherlands, from 2006 until its sale in 2007. From 1999 to 2006, Ms. Schlaeppi was a partner at the Boston-based law firm of Palmer & Dodge LLP, where she served as Chairperson of that firm’s International Practice Group. From 1995 to 1998, Ms. Schlaeppi served in senior positions at Johnson Controls, Inc., a NYSE-listed diversified industrial company, including as General Counsel Europe. We believe that Ms. Schlaeppi’s extensive experience in international business and corporate governance, as well as relevant industry experience, qualify her to serve on our Board. +4 +Richard S. Warzala , 70, has been a director since December 2017. He is the President, Chief Executive and Chairman of the Board of Directors of Allient Inc. (formerly, Allied Motion Technologies, Inc.) (“Allient”), a developer of advanced motion control products and systems, and has more than 40 years of leadership experience and a strong technical background in the industrial, aerospace and commercial industries. He joined Allient as President and Chief Operating Officer in 2002. Mr. Warzala was elected a director of Allient in 2006, appointed President and Chief Executive Officer in 2009, and elected as the Chairman of Allient’s board of directors in 2014. Allient designs, manufactures and sells precision and specialty motion control components and systems in markets including Vehicle, Medical, Aerospace & Defense, and Industrial/Electronics. Before joining Allient, Mr. Warzala was President of Danaher Corporation’s Motion Components Group and served in various senior positions at American Precision Industries Inc., including Corporate Vice President and President of its API Motion Division. We believe that Mr. Warzala’s technology background and international industry experience, together with his corporate governance, management and oversight expertise, business insights and deep understanding of lean manufacturing principles, qualify him to serve on our Board. +Gregory A. Woods , 65, has served as Chief Executive Officer of the Company since February 1, 2014, and as a director since January 2014. Mr. Woods joined the Company in September 2012 as Executive Vice President and Chief Operating Officer and was appointed President and Chief Operating Officer on August 29, 2013. Prior to joining the Company, Mr. Woods served from January 2010 to August 2012 as Managing Director of Medfield Advisors, LLC, an advisory firm located in Medfield, Massachusetts focused on providing corporate development and strategy guidance to technology driven manufacturing firms. From 2008 to 2010, Mr. Woods served as President of Performance Motion Devices, a specialty semiconductor and electronics manufacturer located in Lincoln, Massachusetts. Prior to Performance Motion Devices, Mr. Woods served as chief executive officer of Control Technology Corp., a manufacturer of industrial computer and software products; and President of API Controls, a division of Danaher. Mr. Woods holds a Bachelor of Arts in physics from Colgate University, a Bachelor of Engineering in computer and mechanical engineering from Dartmouth College, and a Master of Business Administration from the University of Rochester. Based on this experience and his position as Chief Executive Officer of the Company, we believe that Mr. Woods is qualified to serve on our Board. +The Board has determined that all of the directors of the Company, each of whom is standing for election at the 2024 annual shareholders meeting, other than Gregory A. Woods, are independent of the Company in that such nominees have no material relationship with the Company either directly or as a partner, shareholder or affiliate of an organization that has a relationship with the Company. The Board has made this determination in accordance with applicable Securities and Exchange Commission (“SEC”) rules and NASDAQ listing standards. +The directors will be elected by a plurality of the votes of the shares entitled to vote on the election of directors and present in person or represented by proxy at the annual meeting. This means that the five nominees receiving the highest number of FOR votes will be elected as directors. Votes may be cast FOR or WITHHELD FROM each nominee. Broker non-votes and votes that are WITHHELD FROM the nominees will be excluded entirely from the vote and will have no effect. +THE BOARD RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THE NOMINEES LISTED ABOVE. +5 +CORPORATE GOVERNANCE +The Board of Directors — Meetings and Committees +The Board currently consists of five members, all of whose terms will expire at the annual meeting. Each of our current directors has been nominated by the Board for re-election. During the fiscal year ended January 31, 2024, the Board held eight meetings. During fiscal year 2024, each director currently in office attended not less than 75% of the total number of meetings of the Board and the committees on which such director served. +The Board has adopted a policy that requires members of the Board to make every effort to attend each annual shareholders meeting. All of the current members of the Board attended the 2023 annual shareholders meeting. +The Board currently has three standing committees: an Audit Committee, a Human Capital and Compensation Committee and a Nominating and Governance Committee. The members and chairs of each of those committees are appointed each year. The Audit Committee is currently comprised of Mr. Michas, Mr. Quain and Ms. Schlaeppi. The Nominating and Governance Committee is currently comprised of Mr. Quain, Ms. Schlaeppi and Mr. Warzala. The Human Capital and Compensation Committee is currently comprised of Messrs. Michas, Quain and Warzala. Each of the members of our committees is independent as defined under the applicable NASDAQ listing standards and SEC rules. Each of the Audit, Compensation, and Nominating and Governance Committees has a written charter approved by the Board. A copy of each charter is available on the Company’s website at www.astronovainc.com under “Investors — Corporate Governance — Governance Documents.” +Audit Committee. The Audit Committee’s primary duties and responsibilities include: overseeing the integrity of the Company’s financial reports and the adequacy of internal controls, appointing, setting the compensation of and overseeing the Company’s independent accountants, and assessing the qualifications, independence and performance of the Company’s independent accountants, and overseeing the administration of the Company’s Code of Conduct. The Audit Committee meets with the Company’s independent accountants to review quarterly financial results, the results of the audit, and other relevant matters. The Audit Committee held seven meetings during the fiscal year ended January 31, 2024. The Board has determined that all members of the Audit Committee during fiscal year 2024 satisfy the financial literacy requirements of the NASDAQ listing standards and are independent as defined under the NASDAQ listing requirements and applicable SEC rules. Additionally, the Board has determined that each of Messrs. Michas and Quain qualifies as an “audit committee financial expert” as defined by the SEC rules and possesses “financial sophistication” as described in the NASDAQ listing standards. +Human Capital and Compensation Committee. The Human Capital and Compensation Committee assists the Board in discharging the Board’s responsibilities relating to director and executive compensation. The Human Capital and Compensation Committee’s responsibilities include: establishing and reviewing the Company’s executive and director compensation philosophy, strategies, plans and policies; making recommendations with respect to the design of the Company’s incentive compensation plans and equity based plans; granting awards under such plans and overseeing generally the administration of such plans; evaluating the performance and determining the compensation of the Chief Executive Officer; reviewing and approving recommendations on compensation of other executives; and reviewing and monitoring the Company’s executive officer succession plans. In addition, the Human Capital and Compensation Committee oversees the Company’s diversity, equity and inclusion initiatives, which focused in fiscal year 2024 on (i) participation by women in technical, engineering, sales and leadership positions, (ii) participation by veterans in our workforce, (iii) continuing to develop a technical apprenticeship program and (iv) developing and refining measures of employee engagement. The Human Capital and Compensation Committee may form and delegate authority to one or more subcommittees, except that it may not delegate its authority with respect to compensation matters involving any executive officer. The Human Capital and Compensation Committee held six meetings during the fiscal year ended January 31, 2024. +Nominating and Governance Committee . The Nominating and Governance Committee assists the Board in fulfilling its nomination and corporate governance responsibilities. The Nominating and Governance Committee’s responsibilities include: (i) advising the Board concerning appropriate composition of the Board and its committees, including identifying individuals qualified to serve on the Board and its committees, (ii) recommending to the Board individuals to be nominated by the Board for election to the Board by the shareholders or, in appropriate circumstances, elected by the Board to fill vacancies on the Board, (iii) advising the Board regarding appropriate governance practices and assisting the Board in achieving them, and (iv) overseeing and reporting to the Board concerning the periodic evaluation of the Board, each committee of the Board and members of the Board. The Board conducts annual self-evaluations that are overseen by the Nominating and Governance Committee. The Nominating and Governance Committee is also charged with advising the board regarding applicable standards to be used in determining the independence of the directors serving on the Board, reviewing and making recommendations to the Board regarding the Company’s corporate governance policies, and overseeing the Company’s director of education and onboarding programs. The Nominating and Governance Committee held four meetings in the fiscal year ended January 31, 2024. +6 +Director Share Ownership Requirements . The Company has a stock ownership policy that requires each director to hold shares of Company common stock with a value equal to at least $200,000. Any director who does not meet this requirement will have five years from the date of his or her initial election to the Board to achieve this ownership level. Directors are expected to retain at least 50% of the shares acquired upon exercise of any stock option (net of any shares withheld for payment of taxes) or vesting of a restricted stock or restricted unit award until they achieve the specified ownership level and thereafter maintain such ownership level. All of our directors other than Mr. Michas, who joined the Board in 2022, meet the ownership requirement. +Compensation Committee Interlocks and Insider Participation +During the fiscal year ended January 31, 2024, Messrs. Michas, Quain and Warzala, served on the Company’s Compensation Committee. No member of the Company’s Compensation Committee who currently serves or who served during fiscal year 2024 has ever been an officer or employee of the Company or any of its subsidiaries. None of the Company’s executive officers serves as a director or member of the compensation committee of another entity in a case where an executive officer of such other entity serves as a director of the Company or a member of the Company’s Compensation Committee. +Nomination of Directors +The Nominating and Governance Committee considers suggestions from many sources, including shareholders, regarding possible candidates for director. As part of its ongoing succession planning, the Nominating and Governance Committee makes periodic recommendations to the Board regarding the desired characteristics for potential directors, including with respect to competencies, special knowledge or expertise, experience of members, diversity and age. In all cases, the Nominating and Governance Committee seeks individuals who possess the highest ethical standards and integrity, have a history of achievement that reflects superior standards for themselves and others, have the ability to provide wise, informed and thoughtful counsel to management on a range of issues, exercise independence of thought, and possess skills and expertise appropriate to meet the Company’s needs and advance the long-term interests of the shareholders. The Nominating and Governance Committee considers diversity with respect to viewpoints, accomplishments, skills and experiences, among other factors such as gender, race, national origin and age, in its evaluation of candidates for Board membership. In considering candidates for the Board, the Nominating and Governance Committee considers the entirety of each candidate’s credentials in determining whether the candidate would bring a valuable perspective to the Board. +The Nominating and Governance Committee also monitors the Board’s compliance with the requisite qualifications under the NASDAQ listing standards for populating the Audit, Compensation, and Nominating and Governance Committees. The Nominating and Governance Committee will consider shareholder nominees for director in the same manner as nominees for director from other sources. +Shareholders may send recommendations for director nominees to the Nominating and Governance Committee at the Company’s offices at 600 East Greenwich Avenue, West Warwick, Rhode Island 02893. Submissions should include information regarding a candidate’s background, qualifications, experience, and willingness to serve as a director. In addition, Section 10 of Article III of the Company’s By-Laws sets forth specific procedures that, if followed, enable any shareholder entitled to vote in the election of directors to make nominations directly at an annual meeting of shareholders. These procedures include a requirement for written notice to the Company not more than 150 days nor less than 60 days prior to the scheduled annual meeting, which must contain the name and certain information concerning the nominee and the shareholders who support the nominee’s election. For the annual meeting to be held in 2025, the notice must be received no earlier than December 21, 2024 and no later than March 21, 2025. A copy of the Company’s By-Laws may be obtained by writing to AstroNova, Inc., Attn: Investor Relations Department, 600 East Greenwich Avenue, West Warwick, Rhode Island 02893. +7 +Board of Directors Diversity Matrix +NASDAQ’s Board Diversity Rule, approved by the SEC on August 6, 2021, requires that companies listed on NASDAQ’s U.S. exchange publicly disclose board-level diversity statistics. The matrix below reflects the diversity of our Board as of May 2, 2024 based on the self-identified characteristics of our directors. The characteristics are based on the NASDAQ rule. +Board Diversity Matrix (As of May 2, 2024) +Total Number of Directors: +5 +Female +Male +Non-Binary +Did Not +Disclose +Gender +Directors +1 +4 +0 +0 +Number of Directors who identify in Any of the Categories Below: +African American or Black +0 +0 +0 +0 +Alaskan Native or Native American +0 +0 +0 +0 +Asian +0 +0 +0 +0 +Hispanic or Latinx +0 +0 +0 +0 +Native Hawaiian or Pacific Islander +0 +0 +0 +0 +White +1 +3 +0 +0 +Two or More Races or Ethnicities +0 +0 +0 +0 +LGBTQ+ +0 +Did Not Disclose Demographic Background +1 +Communications with the Board of Directors +The Company’s Board provides a process for shareholders to communicate directly with the members of the Board or the individual chairman of each standing committee. Any shareholder with a concern, question or complaint regarding our compliance with any policy or law, or who would otherwise like to contact the Board, may communicate directly with the directors by writing directly to those individuals c/o AstroNova, Inc., 600 East Greenwich Avenue, West Warwick, Rhode Island 02893. The Company’s general policy is to forward, and not to intentionally screen, any mail received at the Company’s corporate offices that is sent directly to an individual unless the Company believes the communication may pose a security risk. +Board Leadership Structure +All members of the Board, other than Mr. Woods, are independent and all our key committees — Audit, Human Capital and Compensation, and Nominating and Governance — are, and during the fiscal year ended January 31, 2024 were, comprised solely of independent directors. The non-management directors meet in executive session at each scheduled Board meeting, which occur at least quarterly, in order to promote discussion among the independent directors and assure independent oversight of management. +A key component of our leadership structure is the active role played by our independent directors in overseeing the Company’s business, both at the Board and Committee level. All of our directors are free to suggest the inclusion of items on the agenda for meetings of the Board or to raise subjects that are not on the agenda for that meeting. In addition, our Board and each committee have complete and open access to any member of management and the authority to retain independent legal, financial, and other advisors as they deem appropriate without consulting or obtaining the approval of any member of management. Moreover, our Audit Committee, Human Capital and Compensation Committee and the Nominating and Governance Committee, all of which are comprised entirely of independent directors, also perform oversight functions independent of management. +Lead Independent Director. Our Board has not elected a Chairman at the present time. However, in August 2019, the Board elected Mr. Warzala as its lead independent director. In that capacity, among other things, Mr. Warzala serves as a liaison between the independent directors and the Company’s management and as the chair of executive sessions of the independent directors. The Board believes that in light of the relatively small size of the Board and the active involvement by all of our independent directors in both the oversight of the Company and the conduct of the Board’s meetings and deliberations, including the establishment of the Board’s agenda for its meetings, the Board’s current leadership structure is appropriate for the Company at this time. The Board intends to continue to review its leadership structure, including the role of the lead independent director. +8 +Risk Oversight +The Board has an active role, as a whole and also at the committee level, in overseeing management of the Company’s risks through a program of sound policies, systems, processes, and reports. The Board as a whole is primarily responsible for overseeing the Company’s risk management practices relating to supply chain matters, cybersecurity and information technology, and commercial risks. +The Audit Committee of the Board has oversight responsibility over financial reporting and disclosure processes, compliance and legal matters, and fraud risk. The Audit Committee also monitors controls to prevent material weaknesses in the financial reporting function and oversees the administration of the Company’s Code of Conduct. The Audit Committee meets regularly with our Chief Financial Officer in carrying out these responsibilities, and with the Company’s independent auditors in executive session. +The Human Capital and Compensation Committee of the Board oversees risks as they relate to the Company’s compensation policies and practices as described under “Compensation Discussion and Analysis” as well as reviewing and monitoring executive officer succession plans. +The Board’s Nominating and Governance Committee assists the Board in fulfilling the Board’s oversight responsibilities with respect to confirming the independence of board members, developing desired characteristics of the Board and identifying individuals qualified to be members of the Board, and assessing the effectiveness of the Board and its committees. +While each committee is responsible for evaluating the risks within their areas of responsibility and primarily overseeing the management of such risks, all committees report regularly to the full Board, which also considers the Company’s entire risk profile. +Anti-Hedging +The Company prohibits its director’s officers and employees from engaging in hedging transactions relating to the Company’s securities, including by means of prepaid variable forwards, equity swaps, collars and exchange funds. +Compensation of Directors +The Human Capital and Compensation Committee is responsible for reviewing and establishing the compensation of the directors of the Company. On June 5, 2023, the Human Capital and Compensation Committee adopted amendments to the Company's Amended and Restated Non-Employee Director Annual Compensation Program (as so amended, the “Director Compensation Program”). +Pursuant to the Director Compensation Program, beginning with the second fiscal quarter of fiscal year 2024, each non-employee director automatically receives a grant of restricted stock on the date of the Board's regularly scheduled quarterly meeting. The number of whole shares granted is equal to the number calculated by dividing 25% of the stock component of the director compensation amount determined by the Human Capital and Compensation Committee for that year by the fair market value of our stock on that day. The aggregate value of the restricted stock award for fiscal year 2024 was $70,000. Shares of restricted stock granted under the Director Compensation Program are fully vested upon the date of issuance. Other than as part of a Change in Control of the Company and except in the case of economic hardship of a particular non-employee director, as determined by the Compensation Committee, while a non-employee director is serving on our Board they may not sell or otherwise dispose of any of our stock received in connection with their service on our Board (whether that stock was granted under the Director Compensation Program, any predecessor program or otherwise) if that non-employee director has not satisfied the requirements of any stock ownership guidelines established for directors by the Board or if the transfer would cause them to be out of compliance with any such guidelines. +9 +Pursuant to the Director Compensation Program, each non-employee director receives cash payments for their service on the Board and its committees. The amounts of those payments for the fiscal year ended January 31, 2024 were: +Position Covered +Fiscal +Year 2024 +Annual +Payment +Service on the Board +$ +45,000 +Lead Independent Director +$ +11,000 +Audit Committee Chairman +$ +11,000 +Human Capital and Compensation Committee Chairman +$ +9,000 +Nominating and Governance Committee Chairman +$ +9,000 +Committee Member (other than Chairman) +$ +4,000 +Cash payments are made to non-employee directors in four equal tranches on the dates of the Board’s regular quarterly meetings. If a person becomes a non-employee director on a date other than the date of our annual meeting of shareholders in any fiscal year, that person will receive an award of restricted stock as described above, but appropriately prorated to reflect the number of days remaining from the date he or she commences his or her service in that capacity until the scheduled date for our next annual meeting of shareholders. In addition, if a person becomes a non-employee director, Chairman of the Board, lead independent director, chairman of a committee or a member of a committee other than on the first business day of a fiscal quarter of the Company, he or she will receive cash fees on (i) the date of the regular full meeting of the Board held in that quarter or (ii) if later, the date he or she commences his or her service in that capacity, as described above, but appropriately prorated to reflect the number of days remaining in that fiscal quarter. +The following Director Compensation table provides information regarding the compensation paid or accrued by each person other than Mr. Woods who served as a director during the fiscal year ended January 31, 2024. See “Executive Compensation” for information regarding compensation of and outstanding equity awards held by Mr. Woods. +Name +Fees +Earned +or +Paid in +Cash ($) +Stock +Awards ($) +(a)(b) +Total ($) +Alexis Michas +53,000 +69,982 +122,982 +Mitchell I. Quain +64,000 +69,982 +133,982 +Yvonne E. Schlaeppi +58,000 +69,982 +127,982 +Richard S. Warzala +69,000 +69,982 +138,982 +(a) +The amounts reflect the aggregate fair value of the awards on the grant date under the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 718 (“ASC 718”) for shares of restricted stock granted to directors. For additional information, refer to Note 14, “Share Based Compensation,” in the Company’s audited financial statements for the fiscal year ended January 31, 2024, included in the Company’s Annual Report on Form 10-K filed with the SEC on April 12, 2024. All stock awards were fully vested on the date of issuance. +(b) +As of January 31, 2024, the Company’s non-employee directors held the following number of outstanding stock options, all of which were fully vested: Mitchell I. Quain — 25,000; Yvonne E. Schlaeppi — 10,000; and Richard S. Warzala — 10,000. Mr. Michas did not hold any stock options as of January 31, 2024. +10 +(c) +Security Ownership of 5% Beneficial Owners +The following table sets forth certain information regarding the beneficial ownership of the Company’s outstanding shares of common stock, as of April 12, 2024 (except as noted), by each person who is known to the Company to own of record or beneficially more than 5% of such stock: +Name of Beneficial Owner +Number of +Shares Beneficially +Owned (a) +Percent +of Class +Dimensional Fund Advisors LP +516,983 +(b) +6.9 +% +6300 Bee Cave Road, Building One +Austin, TX 78746 +Royce & Associates, LP +477,097 +(c) +6.4 +% +745 Fifth Avenue +New York, NY 10151 +Askeladden Capital Management, LLC +409,260 +(d) +5.5 +% +14 Sunrise Ct +Trophy Club, TX 76262 +Punch & Associates Investment Management, Inc. +495,951 +(e) +6.6 +% +7701 France Ave. So., Suite 300 +Edina, MN 55435 +Juniper Targeted Opportunity Fund, L.P. +535,203 +(f) +7.1 +% +555 Madison Avenue, 24th Floor +New York, NY 10022 +Peter Kamin +433,065 +(g) +5.8 +% +2720 Donald Ross Road, Unit 311 +Palm Beach Gardens, FL 33410 +(a) +All information is based upon ownership of record as reflected on the stock transfer books of the Company or as reported on Schedule 13G or Schedule 13D filed under Rule 13d-1 under the Securities Exchange Act of 1934. +(b) +According to a Schedule 13G/A filed with the SEC on February 9, 2024, Dimensional Fund Advisors LP, an investment adviser registered under the Investment Advisers Act of 1940, as amended (the “Advisers Act”), and its subsidiaries (collectively, “Dimensional”) had sole voting power with respect to 512,713 shares and sole dispositive power with respect to 516,983 shares held by registered investment companies, trusts and separate accounts for which Dimensional serves as investment manager, adviser or sub-adviser as of December 29, 2023. +(c) +According to a Schedule 13G/A filed with the SEC on January 23, 2024, Royce & Associates, LP, an investment adviser registered under the Advisers Act, had sole voting power and sole dispositive power with respect to 477,097 shares as of December 31, 2023. +(d) +According to a Schedule 13G/A filed with the SEC on February 14, 2024, Askeladden Capital Management, LLC and Samir Patel had shared voting power and shared dispositive power with respect to 409,260 shares as of December 31, 2023. +(e) +According to a Schedule 13G/A filed with the SEC on February 14, 2024, Punch & Associates Investment Management, Inc., an investment adviser registered under the Advisers Act, had sole voting power and sole dispositive power with respect to 495,951 shares as of December 31, 2023. +(f) +Juniper Targeted Opportunity Fund, L.P. (“Jupiter Fund”) has sole voting and dispositive power with respect to 535,203 shares. Juniper HF Investors II, LLC (“Juniper HF”), Juniper Investment Company, LLC (“Juniper Investment Company”), an investment adviser registered under the Advisers Act, Alexis P. Michas and John A. Bartholdson, have shared voting and dispositive power with respect to 535,203 shares based on their relationship with Jupiter Fund. +(g) +According to a Schedule 13D filed with the SEC on December 13, 2022, Peter H. Kamin had sole voting power and sole dispositive power with respect to 433,065 shares as of December 5, 2022, which includes 143,420 shares held by the Peter H. Kamin Revocable Trust dated February 2003, of which Mr. Kamin is the sole trustee, 82,084 shares held by the Peter H. Kamin Childrens Trust dated March 1997 of which Mr. Kamin is the trustee, and 58,823 shares held by 3K Limited Partnership, of which Mr. Kamin is the General Partner. +11 +Security Ownership of Directors and Officers +The following table sets forth certain information regarding the beneficial ownership of the Company’s common stock as of April 12, 2024 by each director, by each executive officer named in the Summary Compensation Table and by all directors and executive officers as a group. Unless otherwise noted, all shares of common stock are subject to the sole voting and dispositive power of the respective directors and executive officers. +Beneficial Ownership +Name of Beneficial Owner +Shares and +Restricted +Shares (a) +Options +Exercisable +Within 60 +Days of +April 12, +2024 (b) +Total +Beneficial +Ownership +(a) +Percent +of +Class +Non-employee directors +Alexis P. Michas +545,184 +(c) +— +545,184 +7.3 +% +Mitchell I. Quain +90,329 +25,000 +115,329 +1.5 +% +Yvonne E. Schlaeppi +32,313 +10,000 +42,313 +* +Richard S. Warzala +35,159 +10,000 +45,159 +* +Executive Officers +Gregory A. Woods +178,915 +245,500 +424,415 +5.7 +% +David S. Smith +29,034 +64,000 +93,034 +1.2 +% +Michael J. Natalizia +41,130 +17,500 +58,630 +* +All directors and executive officers of the Company +as a group (9) +1,010,751 +400,000 +1,410,751 +18.8 +% +*Indicates less than 1.0%. +(a) +If applicable, beneficially owned shares include shares owned by the spouse, minor children, and certain other relatives of the director or executive officer, as well as shares held by trusts of which the person is a trustee or in which he or she has a beneficial interest. +(b) +All options held by non-employee directors and executive officers are fully vested and currently exercisable. +(c) +Mr. Michas, as a managing member of Juniper HF and Juniper Investment Company, may be deemed to own beneficially the 535,203 shares held by Juniper Fund and Juniper Investment Company. Mr. Michas disclaims beneficial ownership of such shares for all other purposes. +Delinquent Section 16(a) Reports +Section 16(a) of the Exchange Act, requires the directors and executive officers of the Company and any persons who beneficially own more than ten percent of the Company’s common stock to file with the SEC various reports of beneficial ownership and changes in beneficial ownership. Based solely on a review of the copies of such reports received by the Company and certain written representations that no other reports were required, the Company believes that for the fiscal year ended January 31, 2024, all of its officers, directors and 10% beneficial owners complied with the requirements of Section 16(a). +12 +COMPENSATION DISCUSSION AND ANALYSIS +The Human Capital and Compensation Committee of the Company’s Board of Directors (the “Committee”) is charged with the responsibility for establishing, implementing and monitoring adherence to the Company’s compensation philosophy and setting the compensation for our executives and key management personnel in a manner which is internally equitable. The Committee also is responsible for reviewing and establishing the compensation of directors. +Compensation Philosophy and Objectives. The Committee’s overall philosophy in terms of executive compensation is to link management incentives with the actual financial performance of the Company. Similarly, the compensation should attract, retain, and motivate highly qualified individuals to achieve the Company’s business goals and link their interests with shareholder interests. In setting compensation for the Company’s executive officers, the Committee considers the executive’s performance, awards, if any, made during prior years and other relevant factors, including the results of the annual advisory vote of the Company’s shareholders on executive compensation. The Committee seeks to have the long-term performance of the Company’s common stock reflected in executive compensation through our equity incentive programs. +Elements of Compensation. The total compensation program for the Company’s executive officers consists of the following: +• +salary; +• +cash incentive and bonus awards tied to the Company’s annual performance; +• +equity-based incentive compensation, in the form of time-based restricted stock units and performance-based restricted stock units; and +• +retirement and other benefits. +The Committee seeks to structure each element of compensation to attract and retain the necessary executive talent, reward annual performance and provide incentives for achieving both long-term strategic goals and short-term performance goals. To this end, the Committee seeks to establish salaries at levels that are competitive within the Company’s industry and geographical markets. As described further below, the Committee utilizes annual cash-based incentive awards tied to the achievement by the Company of EBITDA-based targets to encourage the Company’s executives to focus on improving the Company’s short-term profitability. The Committee utilizes a mix of time-based restricted stock units and performance-based restricted stock units tied to the Company’s achievement of multi-year revenue goals in order to encourage the Company’s executives to focus on driving the Company’s long-term growth. The Committee believes that the combination of these elements is effective in aligning the interests of the Company’s executives with those of its shareholders. +Say on Pay Consideration. In accordance with SEC rules, the Company conducted a non-binding, advisory vote on the Company’s executive compensation at its 2023 annual meeting. The Company’s shareholders voted to approve the Company’s executive compensation practices at the 2023 annual meeting by a favorable vote of approximately 96.2% of the votes cast. +Setting Executive Compensation. The Committee is responsible for establishing and periodically reviewing the compensation of the Company’s executive officers and approving all equity awards. The Committee annually reviews the performance of the executive officers and based on these reviews, the Committee determines salary adjustments and annual awards. Mr. Woods does not participate during the deliberations regarding his compensation. +Fiscal Year 2024 Compensation Overview. The total compensation paid to Mr. Woods and the Company’s two other most highly compensated executive officers, Mr. Smith and Mr. Natalizia (collectively with Mr. Woods, the “Named Executive Officers”), in the fiscal year ended January 31, 2024 was not adjusted from the base salaries in effect for fiscal year 2023. +Salary. Base salaries for executive officers are evaluated each year. Historically, base salaries have been increased at annual rates which approximate the general rates of increase of compensation for all employees of the Company. Annual salary adjustments are made effective April 1 of each year. In March 2023, the Committee determined not to adjust the base salaries for executive officers for fiscal year 2024 from those in effect for fiscal year 2023. The fiscal year 2024 annual salaries of the Named Executive Officers were as follows: +Name +Salary ($) +Gregory A. Woods +459,251 +David S. Smith +316,069 +Michael J. Natalizia +250,510 +13 +Cash Incentive and Bonus Awards. Annual cash incentive awards are an important component of total executive cash compensation because they reward the Company’s executives for achieving targeted, annual results and emphasize variable or “at risk” compensation. From time-to-time the Committee awards discretionary cash bonuses to the Company’s executives to reward their efforts in extraordinary circumstances. +Senior Executive Short-Term Incentive Plan. Participants in the STIP (which may include any executive officer, vice president or director-level manager) are determined annually by the Committee. Awards under the STIP are earned based on achieving or exceeding annual financial objectives, which the Committee has full discretion to establish for each plan year. Annually, the Committee establishes a Target Award for each STIP participant, which may vary as to each participant and from year to year. In April 2023, the Committee established the following Target Awards for our Named Executive Officers for fiscal year 2024: +Name +Target +Award +($) +Target +Award as +Percentage +of Base +Salary +Gregory A. Woods +367,401 +80% +David S. Smith +142,231 +45% +Michael J. Natalizia +87,679 +35% +Concurrently with the establishment of the Target Awards for fiscal year 2024, the Committee established fiscal year 2024 consolidated adjusted EBITDA as the sole performance goal under the STIP (the “2024 Performance Goal”) and established a threshold and a target for the 2024 Performance Goal. The total STIP award earned by a Named Executive Officer for fiscal year 2024 is calculated as follows: +• +No bonus was to be paid with respect to the 2024 Performance Goal unless the Company’s fiscal year 2024 adjusted EBITDA exceeded the threshold established by the Committee. If the Company’s fiscal year 2024 adjusted EBITDA equaled the target established by the Committee, 100% of the target bonus would have been paid. Since fiscal year 2024 adjusted EBITDA fell between the threshold and the target, the bonus amount was determined through linear interpolation. An incremental bonus of up to 100% of each participant’s total STIP target bonus would have been paid if our fiscal year 2024 adjusted EBITDA fell between the target and an amount equal to 200% of the target. If our fiscal year 2024 adjusted EBITDA had fallen between the target and 200% of the target, the bonus amount would have been determined through linear interpolation. No further bonus would have been paid on account of fiscal year 2024 adjusted EBITDA exceeding 200% of the target. +Each of our Named Executive Officers’ STIP award is subject to the following limitations: +• +Aggregate awards under the STIP in any year may not exceed 15% of the Company’s consolidated operating income for that year determined without deduction for the STIP awards. +• +Adequate reserves for awards must be accrued when determining whether a Performance Goal based upon operating income has been achieved. +The threshold and target for the 2024 Performance Goal and the corresponding amount of the STIP paid based on the Company’s results for fiscal year 2024 were as follows: +Performance Goal +Threshold($) +Target ($) +Actual +Adjusted EBITDA +Performance ($) +Percentage +of Target +Bonus +Earned (%) +Adjusted EBITDA Goal +16,000,000 +22,000,000 +17,603,000 +26.7 +As a result, our Named Executive Officers received the following STIP awards for fiscal year 2024. +Name +STIP Award for +Fiscal Year 2024 +Gregory A. Woods +$98,096 +David S. Smith +$37,976 +Michael J. Natalizia +$23,410 +14 +Equity-based Incentive Compensation . Total compensation at the executive level also includes equity incentive awards granted under the Company’s 2018 Equity Incentive Plan. The objectives of the equity incentive awards are to align executive and shareholder long-term interests by creating a strong and direct link between executive pay and the Company’s performance in key financial metrics, and to enable executives to develop and maintain a long-term stock ownership position in the Company’s common stock. +In fiscal year 2024, the Committee granted to the Named Executive Officers the following number of time-based restricted stock units. +Name +Time-based +Restricted +Stock Units +Gregory A. Woods +18,399 +David S. Smith +6,332 +Michael J. Natalizia +2,342 +The time-based restricted stock units vest in three equal annual installments commencing on the first anniversary of the date of grant, based on the executive’s continued employment with us. +The Company also utilizes performance-based restricted stock units with multi-year performance periods to further align the interests of our executives with the long-term interests of the Company and its shareholders. In fiscal years 2022, 2023 and 2024, the Committee granted to the Named Executive Officers the following numbers of performance-based restricted stock units: +Name +Performance- +based +Restricted +Stock Units +Granted in +Fiscal Year +2022 +Performance- +based +Restricted +Stock Units +Granted in +Fiscal Year +2023 +Performance- +based +Restricted +Stock Units +Granted in +Fiscal Year +2024 +Gregory A. Woods +31,734 +30,905 +36,799 +David S. Smith +10,815 +10,635 +12,663 +Michael J. Natalizia +2,169 +3,934 +4,684 +The performance-based restricted stock units may be earned based upon the achievement by the Company of a performance goal based on a revenue threshold and target (the “Revenue Goal”) over a three fiscal-year period (the “Performance Period”) as follows: +Fiscal Year Granted +Performance Period +(fiscal years) +Revenue +Threshold +Revenue +Target +2022 +2022, 2023 and 2024 +$120,000,000 +$150,000,000 +2023 +2023, 2024 and 2025 +$150,000,000 +$180,000,000 +2024 +2024, 2025 and 2026 +$180,000,000 +$210,000,000 +The number of performance-based restricted stock units that become earned (“Earned RSUs”) with respect to any fiscal year within a Performance Period (a “Performance Year”) will be equal to the product of the total number of performance-based restricted stock units, less any performance-based restricted stock units that became Earned RSUs with respect to a prior Performance Year within that Performance Period, multiplied by the Earned Revenue Percentage (as defined below) for such Performance Year, rounded down to the nearest whole number. In no event will the aggregate number of Earned RSUs with respect to an award of performance-based restricted stock units exceed the total number of performance-based restricted stock units constituting the applicable award. One-third of the number of performance-based restricted stock units that become Earned RSUs will vest on the date that the Committee determines that they have been earned, with the remaining two-thirds vesting in equal installments on the first and second anniversaries of that date. +For purposes of the performance-based restricted stock units, “Earned Revenue Percentage” for a Performance Year means the percentage obtained by dividing (i) the Company’s revenue for that Performance Year, as determined by the Committee in accordance with United States generally accepted accounting principles (the “Revenue”), minus the Adjusted Performance Threshold (defined below) for that Performance Year by (ii) the performance target minus the Adjusted Performance Threshold for that Performance Year. If the revenue for any Performance Year is less than or equal to the Adjusted Performance Threshold for that Performance Year, the Earned Revenue Percentage for that Performance Year shall be zero, and if the Revenue for any Performance Year is equal to or exceeds the Annual Performance Target, the Earned Revenue Percentage for that Performance Year shall be 100%. The “Adjusted +15 +Performance Threshold” for a Performance Year means the greater of (i) the performance threshold and (ii) the highest revenue for any previously completed Performance Year. +The Adjusted Performance Threshold for fiscal year 2024 and the number of performance-based restricted stock units held by our Named Executive Officers that became Earned RSUs based on the Company’s fiscal year 2024 revenue of $148.1 million are as follows: +Name +Fiscal +Year +Granted +Adjusted +Performance +Threshold ($) (1) +Earned +RSUs +(#) +Remaining +Performance- +based +Restricted +Stock Units +(#) +Gregory A. Woods +2024 +180,000,000 +— +36,799 +2023 +150,000,000 +— +30,905 +2022 +142,527,000 +5,907 +— +(2) +David S. Smith +2024 +180,000,000 +— +12,663 +2023 +150,000,000 +— +10,635 +2022 +142,527,000 +2,013 +— +(2) +Michael J. Natalizia +2024 +180,000,000 +— +4,684 +2023 +150,000,000 +— +3,934 +2022 +142,527,000 +743 +— +(2) +(1) +None of the performance-based restricted stock units granted in fiscal year 2023 or 2024 became Earned RSUs based on the Company’s revenue for either of those years, and accordingly, the Adjusted Performance Threshold equaled the original threshold for those grants. A portion of the performance-based restricted stock units granted in fiscal year 2022 became Earned RSUs based on the Company’s revenue for its fiscal year 2023, and accordingly, the Adjusted Performance Threshold for those grants equaled the Company’s revenue for its fiscal year 2023, which was $142.5 million. +(2) +Performance-based restricted stock units granted in fiscal year 2022 that did not become Earned RSUs based on the Company’s fiscal year 2024 revenue were forfeited. As a result, performance-based restricted stock units of 2,025, 690, and 256 that were granted to Messrs. Woods, Smith and Natalizia, respectively, in fiscal year 2022 were forfeited. +Share Ownership and Retention Guidelines . The Committee believes that, as a rule, senior management should have a meaningful equity interest in the Company. In order to promote equity ownership and further align the interests of management with our shareholders, the Committee has adopted share ownership and retention guidelines for our executives. These guidelines are based upon the market value of our common stock as a multiple of such officer’s base pay. The multiple is three times base salary for the CEO, two times base salary for the Chief Financial Officer and 1.25 times base salary for the other executive officers. Under these guidelines, an executive was expected to achieve the ownership level by April 1, 2020 or, if later, within five years of his or her initial appointment as an executive officer. Executives are expected to retain at least 50% of all shares acquired on vesting of restricted stock or restricted stock units and 50% of all shares acquired on exercise of any stock option (net of any shares tendered or withheld for payment of taxes) until they achieve the specified ownership level and thereafter maintain such ownership level. +Retirement and Other Benefits . In order to attract and retain key executives, the Company offers retirement benefits through a Profit-Sharing Plan for employees, including its executive officers. +Profit Sharing Plan. The Company maintains a Profit Sharing Plan that is a qualified plan under Section 401(k) of the Internal Revenue Code, which provides retirement benefits to substantially all the Company’s employees. +Each eligible employee shares in contributions on the basis of relative compensation. In addition, participants are permitted to defer up to 50% of their cash compensation and make contributions of such deferral to this plan through payroll deductions (limited to $20,500 in calendar year 2022 and $22,500 in calendar year 2023). The Company makes matching contributions equal to 50% of the first seven percent of compensation contributed. The deferrals are made within the limits prescribed by Section 401(k). The Profit Sharing Plan provides for the vesting of 100% of matching contributions made by the Company to the account of the employee after three years of service. Contributions by an employee are 100% vested immediately. +Perquisites . In addition to the benefits described above, the Company provides automobile allowances to certain of its executive officers and a housing allowance to one of its Named Executive Officers. The amount of any automobile or housing allowance granted to our Named Executive Officers is reflected in the “All Other Compensation” column of the Summary Compensation Table below. +16 +Change in Control Agreements with Mr. Woods and Mr. Smith . In November 2014 and November 2020, the Company entered into change in control agreements (the “CIC Agreements”) with Mr. Woods and Mr. Smith, respectively. The CIC Agreements provides for the payment of severance benefits upon a change in control of the Company if Mr. Woods’ or Mr. Smith’s employment is terminated by the Company without cause or by Mr. Woods or Mr. Smith, as applicable, for good reason within the period (the “CIC Period”) beginning on the earlier of (i) 180 days prior to the occurrence of the change in control and (ii) the announcement of a transaction expected to result in a change in control, and ending on the second anniversary of the occurrence of a change in control. +Severance payments to Mr. Woods include (i) payment of one and one-half times the sum of (A) his annual salary and (B) the greater of the amount of his target bonus for the fiscal year in progress or the highest annual bonus paid to him in the prior three years (collectively, “Mr. Woods’ base compensation”), (ii) a portion of Mr. Woods’ bonus for the fiscal year in progress, prorated based upon the number of days elapsed since the commencement of the fiscal year and calculated assuming that 100% of the target under the bonus plan is achieved, (iii) immediate vesting of all unvested stock options and restricted stock awards, (iv) continued health coverage for 18 months or until he receives benefits from another employer, if earlier, and (v) reimbursement for outplacement services in an amount not to exceed 17% of Mr. Woods’ base compensation. Severance payments to Mr. Smith include (i) payment of the sum of (A) his annual salary and (B) 75% of the amount of his target bonus for the fiscal year in progress (collectively, “Mr. Smith’s base compensation”), (ii) a portion of Mr. Smith’s bonus for the fiscal year in progress, prorated based upon the number of days elapsed since the commencement of the fiscal year and calculated assuming that 100% of the target under the bonus plan is achieved, (iii) immediate vesting of all unvested stock options, restricted stock, time-based restricted stock units and earned performance-based restricted stock units (provided that performance-based restricted stock units shall be deemed to have been earned only to the extent that they are earned in accordance with their terms as of the Change in Control Date and only the time-based vesting of such earned units shall be accelerated under Mr. Smith’s CIC Agreement, (iv) continued health coverage for 12 months or until he receives benefits from another employer, if earlier, and (v) reimbursement for outplacement services in an amount not to exceed 17% of Mr. Smith’s base compensation. +If any payment or benefit under the CIC Agreement or under any other plan or agreement would constitute an “excess parachute payment” within the meaning of Section 280G of the Internal Revenue Code, and if Mr. Woods or Mr. Smith would be in a better after-tax position by reducing such payments or benefits, the amounts payable under the applicable CIC Agreement will be reduced to the extent necessary to avoid the excise tax payable under Section 280G. +Employment Agreements and Severance Benefits . Except for the CIC Agreements with Mr. Woods and Mr. Smith, we generally do not provide any severance benefits to our Named Executive Officers other than those provided to all employees. Severance benefits vary based upon salary levels and length of service. +17 +HUMAN CAPITAL AND COMPENSATION COMMITTEE REPORT +The Human Capital and Compensation Committee has reviewed and discussed with management the Compensation Discussion & Analysis included above and based on these reviews and discussions, has recommended to the Board that the Compensation Discussion & Analysis be included in this Proxy Statement. +Human Capital and Compensation Committee: +Richard S. Warzala (Chairman) +Alexis P. Michas +Mitchell I. Quain +18 +EXECUTIVE COMPENSATION +The following table provides information regarding the total compensation paid or accrued by the Company to each of its Named Executive Officers. +2024 Summary Compensation Table +Name and Principal Position +Fiscal +Year +Salary +($) +Stock +Awards +($) (a) +Non-Equity +Incentive Plan +Compensation +($) +All Other +Compensation ($) +Total +($) +Gregory A. Woods +2024 +459,251 +688,871 +98,096 +39,888 +(b) +1,286,106 +President and CEO +2023 +457,193 +583,647 +— +39,068 +1,079,908 +David S. Smith +2024 +316,069 +237,058 +37,976 +57,798 +(c) +648,901 +Vice President, CFO and Treasurer +2023 +314,199 +200,835 +— +56,871 +571,905 +Michael J. Natalizia +2024 +250,510 +87,684 +23,410 +5,991 +(d) +367,595 +Chief Technology Officer and Vice President of Strategic Technical Alliances +2023 +249,028 +74,294 +— +6,041 +329,363 +(a) +The amounts reflect the aggregate grant date fair value of the restricted stock units and performance-based restricted stock units issued to the Named Executive Officers, as calculated under ASC 718, excluding estimated forfeitures. Under ASC 718, the grant date fair value of each time-based restricted stock unit is equal to the closing price of the Company’s common stock on the grant date. The grant date fair value of performance-based restricted stock units is based on the closing price of the Company’s common stock on the grant date and the Company’s estimate, as of the date of grant, of the probable outcome of the performance conditions. The closing price of the Company’s common stock on the grant date for all restricted stock units issued to the Named Executive Offices during fiscal year 2024 was $12.48. +(b) +Represents vehicle allowance of $25,158, premiums on Company-paid life insurance policies for which Mr. Woods or his estate is the beneficiary of $3,160, and an employer match under the Company’s Profit Sharing Plan of $11,570. +(c) +Represents housing allowance of $28,800, vehicle allowance of $18,374, and an employer match under the Company’s Profit Sharing Plan of $10,624. +(d) +Represents an employer match under the Company’s Profit Sharing Plan of $5,991. +19 +2024 Grants of Plan-Based Awards +The following table provides information on all plan-based awards by the Company for the fiscal year ended January 31, 2024 to each Named Executive Officer. +Estimated Future Payouts +Under Non-Equity +Incentive Plan Awards +Estimated Future Payouts +Under Equity +Incentive Plan Awards +All Other +Stock +Awards: +Number +of Shares +of Stock +Grant Date +Fair Value +of Stock +Name +Grant +Date +Threshold +($) (a)(b) +Target +($) (a) +Maximum +($) (a) +Threshold +(#) +Target +(#) (c) +Maximum +(#) (c) +or Units +(#) (d) +Awards +($) (e) +Gregory A. Woods +3/21/2023 +— +367,401 +734,802 +3/21/2023 +— +36,799 +36,799 +459,252 +3/21/2023 +18,399 +229,620 +David S. Smith +3/21/2023 +— +142,231 +284,462 +3/21/2023 +— +12,663 +12,663 +158,034 +3/21/2023 +6,332 +79,023 +Michael J. Natalizia +3/21/2023 +— +87,679 +175,358 +3/21/2023 +— +4,684 +4,684 +58,456 +3/21/2023 +2,342 +29,228 +(a) +Represents awards under the Company’s Senior Executive Short-Term Incentive Plan. See “Compensation Discussion & Analysis – Senior Executive Short-Term Incentive Plan” for additional information regarding the Senior Executive Short-Term Incentive Plan. +(b) +The Company’s Senior Executive Short-Term Incentive Plan does not provide for any threshold payment amount for amounts that may be earned thereunder. +(c) +Consists of a performance-based restricted stock unit award issued pursuant to the Company’s 2018 Equity Incentive Plan. Any portion of the award that is earned will vest in three equal annual installments commencing on the date the Company’s Human Capital and Compensation Committee makes the determination that such portion of the award was earned. See “Compensation Discussion & Analysis – Equity-based Incentive Compensation” for more information about the performance-based restricted stock units. +(d) +Consists of a restricted stock unit award issued pursuant to the Company’s 2018 Equity Incentive Plan, which vests in three equal annual installments commencing on the first anniversary of the grant date. +(e) +The grant date fair value of each time-based restricted stock unit is equal to the closing price of the Company’s common stock on the grant date. The grant date fair value of performance-based restricted stock units is based on the closing price of the Company’s common stock on the grant date and the Company’s estimate, as of the date of grant, of the probable outcome of the performance conditions. +20 +Outstanding Equity Awards at 2024 Fiscal Year-End +The following table provides information on all outstanding equity awards held by each of the Named Executive Officers as of January 31, 2024. +Option Awards +Stock Awards +Name +Number of +Securities +Underlying +Unexercised +Options (#) +Exercisable +Number of +Securities +Underlying +Unexercised +Options (#) +Unexercisable +Option +Exercise +Price +($) +Option +Expiration +Date +Number +of Shares +or Units +of Stock +That Have +Not +Vested (#) +Market +Value of +Shares or +Units of +Stock +That +Have Not +Vested ($) +Equity +Incentive +Plan +Awards: +Number +of +Unearned +Shares, +Units or +Other +Rights +That +Have Not +Vested (#) +Equity +Incentive +Plan +Awards: +Market or +Payout +Value of +Unearned +Shares, +Units or +Other +Rights +That +Have Not +Vested ($) +Gregory A. Woods +50,000 +— +13.80 +5/22/2024 +(a) +50,000 +— +13.95 +3/16/2025 +(a) +50,000 +— +15.01 +3/14/2026 +(a) +50,000 +— +12.85 +3/13/2027 +(a) +45,500 +— +18.25 +6/4/2028 +(b) +34,435 +(c) +607,089 +15,868 +(d) +279,753 +7,932 +(e) +139,841 +30,905 +(f) +544,855 +36,799 +(g) +648,766 +David S. Smith +50,000 +— +13.80 +1/22/2028 +(a) +14,000 +— +18.25 +6/4/2028 +(b) +11,831 +(h) +208,581 +5,408 +(d) +95,343 +2,703 +(e) +47,654 +10,635 +(f) +187,495 +12,663 +(g) +223,249 +Michael J. Natalizia +5,000 +— +14.20 +3/7/2024 +(a) +17,500 +— +18.25 +6/4/2028 +(b) +4,377 +(i) +77,167 +2,001 +(d) +35,278 +999 +(e) +17,612 +3,934 +(f) +69,356 +4,684 +(g) +82,579 +(a) +Options vest in four equal annual installments commencing on the first anniversary of the option grant date (which is ten years prior to the expiration date). +(b) +Options vest in three equal annual installments commencing on the first anniversary of the option grant date (which is ten years prior to the expiration date). +(c) +Consists of (i) 6,133 restricted stock units that vested on March 21, 2024; (ii) 5,734 restricted stock units that vested on April 7, 2024; (iii) 5,151 restricted stock units that vested on April 18, 2024; (iv) 5,151 restricted stock units that vest on April 18, 2025; and (v) 12,266 restricted stock units that vest in equal installments on March 21, 2025 and 2026. +(d) +Consists of performance-based restricted stock units granted in fiscal year 2022 and held by the Named Executive Officers, which may be earned based upon the achievement by the Company of a performance goal relating to the Company’s fiscal year 2022, 2023 and 2024 revenue. Restricted stock units of 15,868, 5,408, and 2,001 were earned by Messrs. Woods, Smith and Natalizia, respectively, based upon the Company's fiscal year 2023 revenue. These restricted stock units vest in equal installments on April 7, 2024 and April 7, 2025. +(e) +Consists of performance-based restricted stock units granted in fiscal year 2022 and held by the Named Executive Officers, which may be earned based upon the achievement by the Company of a performance goal relating to the Company’s fiscal year 2022, 2023 and 2024 revenue. Restricted stock units of 5,907, 2,013 and 743 were earned on April 17, 2024 by Messrs. Woods, Smith and Natalizia, respectively, based upon the Company's fiscal year 2024 revenue. These restricted stock units vest in equal installments on April 17, 2024, April 17, 2025 and April 17, 2026. +(f) +Consists of performance-based restricted stock units granted in fiscal year 2023 and held by the Named Executive Officers, which may be earned based upon the achievement by the Company of a performance goal relating to the Company’s fiscal year 2023, 2024 and 2025 revenue. No restricted stock units were earned by the Named Executive Officers based upon the Company’s fiscal year 2024 revenue. +21 +(g) +Consists of performance-based restricted stock units granted in fiscal year 2024 and held by the Named Executive Officers, which may be earned based upon the achievement by the Company of a performance goal relating to the Company’s fiscal year 2024, 2025 and 2026 revenue. No restricted stock units were earned by the Named Executive Officers based upon the Company’s fiscal year 2024 revenue. +(h) +Consists of (i) 2,111 restricted stock units that vested on March 21, 2024; (ii) 1,954 restricted stock units that vested on April 7, 2024; (iii) 1,772 restricted stock units that vested on April 18, 2024; (iv) 1,773 restricted stock units that vest on April 18, 2025; and (v) 4,221 restricted stock units that vest in equal installments on March 21, 2025 and 2026. +(i) +Consists of (i) 781 restricted stock units that vested on March 21, 2024; (ii) 723 restricted stock units that vested on April 7, 2024; (iii) 656 restricted stock units that vested on April 18, 2024; (iv) 656 restricted stock units that vest on April 18, 2025; and (v) 1,561 restricted stock units that vest in equal installments on March 21, 2025 and 2026. +Risk Related to Compensation Policies +The Company’s compensation policies and practices for its employees, including its executive compensation program described in Compensation Discussion and Analysis, aim to provide a risk-balanced compensation package which is competitive in our market sectors and relevant to the individual executive. The Company expects to continue to award certain executives and employees, upon satisfaction of applicable performance conditions and subject to future approval and grant by the Human Capital and Compensation Committee, equity and cash-based awards. Because the Company’s equity incentive programs include substantial vesting features, the Company believes that the structure of its compensation plans discourages short-term risk taking and aligns the interest of its executives and managers with those of its shareholders. The Company does not believe that risks arising from these practices, or its compensation policies and practices considered as a whole, are reasonably likely to have a material adverse effect on the Company. +Pay Versus Performance +The following table provides a comparison between two measures of compensation for our Named Executive Officers and certain measures of performance. The two compensation measures are the Named Executive Officers’ “total compensation,” as presented in the Summary Compensation Table, and their “compensation actually paid,” a measure of compensation required by SEC rules. These measures are presented for the relevant years on an individual basis for our Chief Executive Officer, and as an average for the group of our other Named Executive Officers. +While both “total compensation” and “compensation actually paid” measure compensation for the same fiscal year, the two measures are calculated differently. Compensation actually paid is based on total compensation but substitutes different amounts for equity compensation. Compensation actually paid removes from total compensation the grant-date fair value of equity awards granted during the relevant year and replaces it with the net aggregate change in the fair value of equity awards during the relevant year. This net aggregate change in fair value represents the sum of: +• +the year-end fair value of new awards granted during the year that are outstanding and unvested as of the end of the year; +• +the change in the fair value (positive or negative) of unvested awards outstanding during the entire year, measured from the beginning of the year to the end of the year; +• +the vesting-date fair value of new awards that are granted and also vest in the year; +• +the change in the fair value (positive or negative) of unvested awards that are held at the beginning of the year and that also vest during the year, measured from the beginning of the year to the vesting date; +• +the loss in fair value of unvested awards outstanding at the beginning of the year that fail to meet applicable vesting conditions during the year, measured as the loss of the fair value of those awards at the beginning of the year; and +• +the dollar value of any dividends or other earnings paid on awards during the year prior to any vesting date that are not otherwise reflected in total compensation for the year. +22 +The net change in aggregate fair value must also reflect any increase in the fair value of any equity awards that were repriced or otherwise materially modified during the year. No equity awards were repriced or otherwise materially modified during any of the years presented. +Fiscal Year +Summary +Compensation +Table Total for +Mr. Woods +Compensation +Actually Paid +to Mr. Woods +Average +Summary +Compensation +Table Total for +Messrs. Smith +and Natalizia +Average +Compensation +Actually Paid to +Messrs. Smith +and Natalizia +Value of +Initial +Fixed $100 +Investment +Based On +Total +Shareholder +Return (a) +Net Income +(in thousands) +2024 +$1,286,106 +$1,849,025 +(b) +$508,248 +$640,408 +(b) +$164 +$4,694 +2023 +$1,079,908 +$1,105,510 +(c) +$450,634 +$456,934 +(c) +$123 +$2,661 +2022 +$1,421,482 +$958,145 +(d) +$542,906 +$415,322 +(d) +$128 +$6,429 +(a) +Represents the cumulative total shareholder return (on a dividends-reinvested basis) on our common stock from January 29, 2021, the last trading day before the earliest year presented in the table, to the last trading day of the relevant year, calculated on the basis of an investment of $100 in our common stock on January 29, 2021. +(b) +Represents compensation actually paid for fiscal year 2024 to Mr. Woods and the average compensation actually paid for fiscal year 2024 to Messrs. Smith and Natalizia, our other named executive officers for fiscal year 2024. The following table provides the adjustments to total compensation that were made in order to calculate compensation actually paid (excluding the grant-date fair value of equity awards granted in 2024, which is presented separately in the Summary Compensation Table): +Change in Fair Value +Mr. Woods +Average for +Messrs. Smith +and Natalizia +New Grants Unvested at Year-End +973,141 +229,375 +Prior Years Awards Unvested at Year-End +300,976 +70,667 +New Grants that Vested in Fiscal Year 2024 +— +— +Prior Years Awards that Vested in Fiscal Year 2024 +4,504 +756 +Prior Years Awards that Failed to Vest in Fiscal Year 2024 +(26,831 +) +(6,267 +) +Dividends or Earnings on Awards Before Vesting +— +— +The fair value of time-based restricted stock units is equal to the closing price of the Company’s common stock on the measurement date. The fair value of performance-based restricted stock units is based on the closing price of the Company’s common stock on the measurement date and the Company’s estimate, as of the measurement date, of the probable outcome of the performance conditions. +(c) +Represents compensation actually paid for fiscal year 2023 to Mr. Woods, and the average compensation actually paid for fiscal year 2023 to Messrs. Smith and Natalizia, our other named executive officers for fiscal year 2023. The fair value of time-based restricted stock units is equal to the closing price of the Company’s common stock on the measurement date. The fair value of performance-based restricted stock units is based on the closing price of the Company’s common stock on the measurement date and the Company’s estimate, as of the measurement date, of the probable outcome of the performance conditions. +(d) Represents compensation actually paid for fiscal year 2022 to Mr. Woods, and the average compensation actually paid for fiscal year 2022 to Messrs. Smith and Natalizia, our other named executive officers for fiscal year 2022. The fair value of time-based restricted stock units is equal to the closing price of the Company’s common stock on the measurement date. The fair value of performance-based restricted stock units is based on the closing price of the Company’s common stock on the measurement date and the Company’s estimate, as of the measurement date, of the probable outcome of the performance conditions. +23 +Relationship Between Pay and Performance +The following table shows, for the periods presented, the relationship between, on the one hand, the compensation actually paid to Mr. Woods and the average compensation actually paid to our other named executive officers and, on the other hand, each of: +• +Our cumulative total shareholder return since January 29, 2021, the last trading day before fiscal year 2022; and +• +Our net income over the last three years. +Metric +Fiscal Year +2022 +Fiscal Year +2023 +Fiscal +Year 2024 +Change from +Fiscal +Year 2022 to +Fiscal Year +2023 (%) +Change from +Fiscal +Year 2023 to +Fiscal Year +2024 (%) +Compensation actually paid to Mr. Woods +$ +958,145 +$ +1,105,510 +$ +1,849,025 +15.4 +% +67.3 +% +Average Compensation Actually Paid to Messrs. +Smith and Natalizia +$ +415,322 +$ +456,934 +$ +640,408 +10.0 +% +40.2 +% +Total Shareholder Return since January 28, 2021 +28 +% +23 +% +64 +% +(17.9 +)% +178.3 +% +Net income (in thousands) +$ +6,429 +$ +2,661 +$ +4,694 +(58.6 +)% +76.4 +% +24 +EQUITY COMPENSATION PLAN INFORMATION +The following table sets forth information about the Company’s equity compensation plans as of January 31, 2024: +Plan Category +Number of +Securities to be +Issued Upon +Exercise of +Outstanding +Options, +Warrants +and Rights +Weighted- +Average +Exercise Price +of Outstanding +Options, +Warrants +and Rights +Number of +Securities +Remaining +Available +for Future +Issuance Under +Equity +Compensation +Plans +Equity Compensation Plans Approved by Shareholders +824,054 +(1) +$ +15.26 +(2) +721,694 +(3) +Equity Compensation Plans Not Approved by Shareholders +— +— +— +Total +824,054 +(1) +$ +15.26 +(2) +721,694 +(3) +(1) +Includes 260,249 shares issuable upon exercise of outstanding options granted under the Company’s 2007 Equity Incentive Plan; 127,600 shares issuable upon exercise of outstanding options granted under the Company’s 2015 Equity Incentive Plan; and 135,500 shares issuable upon exercise of outstanding options granted and 300,705 restricted stock units outstanding under the Company’s 2018 Equity Incentive Plan. Refer to Note 14, “Share Based Compensation,” to the Company’s audited financial statements for the fiscal year ended January 31, 2024 included in the Company’s Annual Report on Form 10-K filed with the SEC on April 12, 2024 for further discussion. +(2) +Does not include restricted stock units. +(3) +Represents 696,636 shares available for grant under the Company’s 2018 Equity Incentive Plan and 25,058 shares available for issuance under the Company’s Employee Stock Purchase Plan. +25 +PROPOSAL NO. 2 +ADVISORY VOTE ON EXECUTIVE COMPENSATION +As required by the Section 14A(a)(1) of the Exchange Act, the Board is providing shareholders with the opportunity to cast an advisory vote on the Company’s executive compensation at the annual meeting through the following resolution: +“RESOLVED, that the shareholders approve the Company’s executive compensation, as described in the Compensation Discussion and Analysis and the tabular disclosure regarding Named Executive Officer compensation (together with the accompanying narrative disclosure) in the Company’s Proxy Statement.” +The Board believes that the Company’s compensation policies and procedures, which are described more fully in the “Compensation Discussion and Analysis” section of this Proxy Statement and in the tables and narrative in the “Executive Compensation” section, are strongly aligned with the long-term interests of shareholders. These policies and procedures balance short-term and longer-term compensation opportunities to assure that the Company meets short-term objectives while continuing to produce value for our shareholders over the long term. +Approval of this proposal requires the affirmative vote of a majority of the shares of common stock entitled to vote and present in person or represented by proxy at the annual meeting. Abstentions will have the same effect as a vote against the proposal, and broker non-votes will have no effect on the outcome of the vote. This vote will not be binding on or overrule any decisions by the Board or any committee thereof, will not create or imply any additional fiduciary duty on the part of the Board, and will not restrict or limit the ability of the Company’s shareholders to make proposals for inclusion in proxy materials related to executive compensation. However, the Human Capital and Compensation Committee and the Board will take into account the outcome of the vote when considering future executive compensation arrangements. +The Board recommends a vote “FOR” approval of the Company’s executive compensation, as described in the Compensation Discussion and Analysis, and the tabular disclosure regarding Named Executive Officer compensation (together with accompanying narrative disclosure) in this Proxy Statement. +26 +PROPOSAL NO. 3 +RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +The Audit Committee has sole authority to select, evaluate and when appropriate, to replace the Company’s independent auditors. The Audit Committee has appointed Wolf & Company, P.C. as the Company’s independent registered public accounting firm for the fiscal year ending January 31, 2025. Although action by the Company’s shareholders on this matter is not required, the Audit Committee believes it is appropriate to seek shareholder ratification in light of the critical role played by the independent auditors in evaluating the integrity of Company financial controls and reporting and requests that shareholders ratify such appointment. +Approval of this proposal requires the affirmative vote of a majority of the shares of common stock entitled to vote and present in person or represented by proxy at the annual meeting. Abstentions will have the same effect as a vote against the proposal, and broker non-votes will have no effect on the outcome of the vote. +The Board recommends a vote “FOR” the ratification of the appointment of Wolf & Company, P.C. as the Company’s independent registered public accounting firm for the fiscal year ending January 31, 2025. +Independent Accountants’ Fees, Services and Other Matters +The Company expects a representative of Wolf & Company, P.C. will participate in the annual meeting via remote communication with the opportunity to make a statement, if he or she so desires, and that such representative will be available to respond to appropriate questions. +Aggregate fees for professional services rendered for the Company by Wolf & Company, P.C. for the fiscal years ended January 31, 2024 and 2023 are set forth below. +2024 +2023 +Audit Fees +$ +392,000 +$ +520,420 +Audit-Related Fees +$ +— +$ +— +Tax Fees +$ +— +$ +— +All Other Fees +$ +— +$ +— +Audit Fees for the fiscal years ended January 31, 2024 and 2023 were for professional services rendered for the audit of the Company’s annual financial statements and internal control over financial reporting, quarterly review of the financial statements included in the Company’s Quarterly Reports on Form 10-Q, consents and other assistance required to complete the year end audit of the consolidated financial statements. Audit fees for the fiscal years ended January 31, 2024 and 2023 also includes fees for professional services related to the review of the Company’s registration statement on Form S-8. +Policy on Audit Committee Pre-Approval . The Audit Committee pre-approves all audit and non-audit services provided by the independent accountants prior to the engagement of the independent accountants with respect to such services. None of the services described above were approved by the Audit Committee under the de minimis exception provided by Rule 2-01(C)(7)(i)(c) under Regulation S-X. +27 +AUDIT COMMITTEE REPORT +The Audit Committee of the Board is responsible for providing independent, objective oversight of the Company’s accounting functions and internal controls. The Audit Committee is composed of three directors, each of whom is independent as defined by the NASDAQ listing standards and SEC rules. The Audit Committee operates under a written charter approved by the Board. +Management is responsible for the Company’s internal controls and financial reporting process. The independent accountants are responsible for performing an independent audit of the Company’s consolidated financial statements in accordance with generally accepted auditing standards and issuing a report thereon. The Audit Committee’s responsibility is to monitor and oversee these processes. +The Audit Committee’s responsibilities focus on two primary areas: (1) the adequacy of the Company’s internal controls and financial reporting process and the reliability of the Company’s financial statements; and (2) the independence and performance of the Company’s independent accountants. The Audit Committee has sole authority to select, evaluate and when appropriate, replace the Company’s independent auditors. +The Audit Committee has met with management and the Company’s independent accountants, Wolf & Company, P.C., to review and discuss the January 31, 2024 financial statements. Management represented to the Committee that the Company’s consolidated financial statements were prepared in accordance with generally accepted accounting principles, and the Audit Committee has reviewed and discussed the consolidated financial statements with management and the independent accountants. The Audit Committee also discussed with Wolf & Company, P.C. the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board. The Audit Committee also received from Wolf & Company, P.C. the written disclosures and the letter from Wolf & Company, P.C. pursuant to applicable requirements of the Public Company Accounting Oversight Board regarding Wolf & Company, P.C.’s communications with the Audit Committee concerning independence, and has discussed with Wolf & Company, P.C. its independence from the Company. +The Audit Committee received the information concerning the fees of Wolf & Company, P.C. for the year ended January 31, 2024 set forth above under “Independent Accountant Fees and Services.” When applicable, the Audit Committee considers whether the provision of non-audit services is compatible with maintaining the independence of the independent accountants. Wolf & Company, P.C. did not provide any non-audit services during the fiscal year ended January 31, 2024. +Based upon the review and discussions referred to above, the Audit Committee recommended that the Board include the audited consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended January 31, 2024, to be filed with the SEC. +Audit Committee: +Mitchell I. Quain (Chairman) +Alexis P. Michas +Yvonne Schlaeppi +28 +RELATED PARTY TRANSACTIONS +Potential conflicts of interest and related party transactions are referred by the Board to the Audit Committee for review and approval. In reviewing and evaluating potential conflicts of interest and related party transactions, the Audit Committee uses applicable NASDAQ listing standards and SEC rules as a guide. +No officer, director or nominee for director of the Company or any associate of any of the foregoing had during the period beginning on February 1, 2023 through the date of this proxy statement any material interest, direct or indirect, in any material transaction or any material proposed transaction in which the amount exceeds $120,000 and to which the Company was or is to be a party. +None of our non-employee directors have any substantial interest in any matter to be acted upon except with respect to the directors so nominated. None of our executive officers have any substantial interest in any matter to be acted upon other than Proposals 1 and 2. +FINANCIAL REPORTS +A copy of the annual report of the Company for the fiscal year ended January 31, 2024, including the Company’s annual report to the SEC on Form 10-K, accompanies this proxy statement. Such report is not part of this proxy statement. +PROPOSALS FOR 2025 ANNUAL MEETING +The 2025 annual meeting of the shareholders of the Company is scheduled to be held on May 20, 2025, the third Tuesday in May. If a shareholder intending to present a proposal at that meeting wishes to have such proposal included in the Company’s proxy statement and form of proxy relating to the meeting pursuant to Rule 14a-8, the shareholder must submit the proposal to the Company no later than January 2, 2025. Shareholder proposals not requested to be included in the proxy statement pursuant to Rule 14a-8 and director nominations that are to be considered at the 2025 annual meeting must be submitted no earlier than December 21, 2024 and no later than March 21, 2025. To comply with the universal proxy rules, stockholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act no later than April 12, 2025. If the date of the 2025 annual meeting is more than 30 days before or after June 11, 2025, stockholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must provide such notice by the later of 60 days prior to the meeting or the 10th day after the Company first publicly announces the date of the meeting. +OTHER MATTERS +No business other than that set forth in the attached Notice of Meeting is expected to come before the annual meeting, but should any other matters requiring a vote of shareholders arise, including a question of adjourning the meeting, the persons named in the accompanying proxy will vote thereon according to their best judgment in the interests of the Company. In the event any of the nominees for the office of director should withdraw or otherwise become unavailable for reasons not presently known, the persons named as proxies will vote for other persons in their place in what they consider the best interests of the Company. +You are urged to sign and return your proxy promptly to make certain your shares will be voted at the meeting. You may revoke your proxy at any time before it is voted. +29 +Astro Nova P.O. BOX 8016, CARY, NC 27512-9903 Your vote matters! Have your ballot ready and please use one of the methods below for easy voting: Your control number Have the 12 digit control number located in the box above available when you access the website and follow the instructions. Scan QR for digital voting AstroNova, Inc. Annual Meeting of Stockholders For Stockholders of record as of April 12, 2024 Tuesday, June 11, 2024 9:00 AM, Eastern Daylight Time Annual Meeting to be held live via the Internet - please visit www.proxydocs.com/ALOT for more details. YOUR VOTE IS IMPORTANT! PLEASE VOTE BY: 9:00 AM, Eastern Daylight Time, June 11, 2024. Internet: www.proxypush.com/ALOT • Cast your vote online • Have your Proxy Card ready • Follow the simple instructions to record your vote Phone: 1-866-509-1041 • Use any touch-tone telephone • Have your Proxy Card ready • Follow the simple recorded instructions Mail: • Mark, sign and date your Proxy Card • Fold and return your Proxy Card in the postage-paid envelope provided Virtual: You must register to attend the meeting online and/or participate at www.proxydocs.com/ALOT This proxy is being solicited on behalf of the Board of Directors The undersigned hereby appoints Alexis P. Michas, Mitchell I. Quain, Yvonne E. Schlaeppi, Richard S. Warzala and Gregory A. Woods (the "Named Proxies"), and each or any of them, as the true and lawful attorneys of the undersigned, with full power of substitution and revocation, and authorizes them, and each of them, to vote all the shares of capital stock of AstroNova, Inc. which the undersigned is entitled to vote at said meeting and any adjournment thereof upon the matters specified and upon such other matters as may be properly brought before the meeting or any adjournment thereof, conferring authority upon such true and lawful attorneys to vote in their discretion on such other matters as may properly come before the meeting and revoking any proxy heretofore given. THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, SHARES WILL BE VOTED IDENTICAL TO THE BOARD OF DIRECTORS RECOMMENDATION. This proxy, when properly executed, will be voted in the manner directed herein. In their discretion, the Named Proxies are authorized to vote upon such other matters that may properly come before the meeting or any adjournment or postponement thereof. You are encouraged to specify your choice by marking the appropriate box (SEE REVERSE SIDE) but you need not mark any box if you wish to vote in accordance with the Board of Directors’ recommendation. The Named Proxies cannot vote your shares unless you sign (on the reverse side) and return this card. PLEASE BE SURE TO SIGN AND DATE THIS PROXY CARD AND MARK ON THE REVERSE SIDE +AstroNova, Inc. Annual Meeting of Stockholders Please make your marks like this: THE BOARD OF DIRECTORS RECOMMENDS A VOTE: FOR ON PROPOSALS 1, 2 AND 3 PROPOSAL YOUR VOTE 1. To elect five directors to serve until the next annual meeting of shareholders or until their successors are elected and have qualified. 1.01 Alexis P. Michas 1.02 Mitchell I. Quain1.03 Yvonne E. Schlaeppi 1.04 Richard S. Warzala 1.05 Gregory A. Woods FOR WITHHOLD BOARD OF DIRECTORS RECOMMENDS FOR FOR FOR FOR FOR FOR FOR 2. To approve, on an advisory, non-binding basis, the compensation paid to the Company's Named Executive Officers, as disclosed in the Company's proxy statement for the 2024 annual meeting of shareholders 3. To ratify the appointment of Wolf & Company, P.C. as the Company's independent registered public accounting firm for the fiscal year ending January 31, 2025. FOR AGAINST ABSTAIN You must register to attend the meeting online and/or participate at www.proxydocs.com/ALOT Authorized Signatures - Must be completed for your instructions to be executed. Please sign exactly as your name(s) appears on your account. If held in joint tenancy, all persons should sign. Trustees, administrators, etc., should include title and authority. Corporations should provide full name of corporation and title of authorized officer signing the Proxy/Vote Form. Signature (and Title if applicable) Date Signature (if held jointly) Date \ No newline at end of file diff --git a/raw/proxies/0000008146/0000950170-24-051612/proxy_rpt.txt b/raw/proxies/0000008146/0000950170-24-051612/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..b2cf0302ec8fb5062d914980e52ff7f3aba7fec7 --- /dev/null +++ b/raw/proxies/0000008146/0000950170-24-051612/proxy_rpt.txt @@ -0,0 +1,4 @@ +RELATED PARTY TRANSACTIONS +Potential conflicts of interest and related party transactions are referred by the Board to the Audit Committee for review and approval. In reviewing and evaluating potential conflicts of interest and related party transactions, the Audit Committee uses applicable NASDAQ listing standards and SEC rules as a guide. +No officer, director or nominee for director of the Company or any associate of any of the foregoing had during the period beginning on February 1, 2023 through the date of this proxy statement any material interest, direct or indirect, in any material transaction or any material proposed transaction in which the amount exceeds $120,000 and to which the Company was or is to be a party. +None of our non-employee directors have any substantial interest in any matter to be acted upon except with respect to the directors so nominated. None of our executive officers have any substantial interest in any matter to be acted upon other than Proposals 1 and 2. \ No newline at end of file diff --git a/raw/proxies/0000008146/0001193125-15-138485/proxy.txt b/raw/proxies/0000008146/0001193125-15-138485/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..83d2e03c9d48970ae6cc7de9d70575437c4d8468 --- /dev/null +++ b/raw/proxies/0000008146/0001193125-15-138485/proxy.txt @@ -0,0 +1,2323 @@ +DEF 14A +1 +d874878ddef14a.htm +DEF 14A +DEF 14A +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Proxy Statement Pursuant to Section 14(a) of the +Securities Exchange Act of 1934 +(Amendment No. ) +Filed by the +Registrant x Filed by +a Party other than the Registrant ¨ +Check the appropriate box: +¨ +Preliminary Proxy Statement +¨ +Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +x +Definitive Proxy Statement +¨ +Definitive Additional Materials +¨ +Soliciting Material Pursuant to §240.14a-12 +Astro-Med, +Inc. +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +x +No fee required. +¨ +Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. +(1) +Title of each class of securities to which transaction applies: +(2) +Aggregate number of securities to which transaction applies: +(3) +Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing +fee is calculated and state how it was determined): +(4) +Proposed maximum aggregate value of transaction: +(5) +Total fee paid: +¨ +Fee paid previously with preliminary materials. +¨ +Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement +number, or the Form or Schedule and the date of its filing. +(1) +Amount Previously Paid: +(2) +Form, Schedule or Registration Statement No.: +(3) +Filing Party: +(4) +Date Filed: +Astro-Med, Inc. +600 East Greenwich Avenue +West Warwick, Rhode Island 02893 +NOTICE OF ANNUAL MEETING OF SHAREHOLDERS +May 20, 2015 +To the Shareholders of Astro-Med, Inc.: +Notice is hereby given that the 2015 Annual Meeting of Shareholders of Astro-Med, Inc. (the “Company”) will be held at the offices of the Company, 600 East Greenwich Avenue, West Warwick, Rhode +Island on Wednesday, May 20, 2015, beginning at 10:00 a.m., for the purpose of considering and acting upon the following: +(1) +Electing six directors to serve until the next annual meeting of shareholders or until their successors are elected and have qualified. +(2) +To consider and approve an advisory (non-binding) proposal on the Company’s executive compensation. +(3) +To consider and approve the Company’s 2015 Equity Incentive Plan. +(4) +To consider and act upon a proposal to ratify the appointment of Wolf & Company, P.C. as independent registered public accounting firm for the Company. +(5) +Transacting such other business as may properly come before the meeting. +The close of business on March 27, 2015 has been fixed +as the record date for determining shareholders entitled to vote at the annual meeting or any adjournment thereof. +By Order of the Board of Directors +Margaret D. Farrell +Secretary +April 20, 2015 +Kindly fill in, date and sign the enclosed proxy and promptly return it in the enclosed addressed envelope, which requires no postage if mailed in the United States. If you are personally present at the +meeting, your proxy will be returned to you if you desire to vote in person. +IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 20, 2015. +The Company’s Proxy Statement, sample proxy card and Annual Report are available at: +http://www.proxyvote.com. +Astro-Med, Inc. +PROXY STATEMENT +ANNUAL MEETING OF SHAREHOLDERS +May 20, 2015 +Solicitation and Revocation of Proxies +The accompanying proxy is solicited by the Board of +Directors (the “Board”) of Astro-Med, Inc. (herein called the “Company”) in connection with the annual meeting of the shareholders to be held on Wednesday, May 20, 2015. The Company will bear the cost of such solicitation. +It is expected that the solicitation of proxies will be primarily by mail. Proxies may also be solicited personally by regular employees of the Company at nominal cost. The Company may reimburse brokerage houses and other custodians, nominees and +fiduciaries holding stock for others in their names, or in those of their nominees, for their reasonable out-of-pocket expenses in sending proxy material to their principals or beneficial owners and obtaining their proxies. Any shareholder giving a +proxy has the power to revoke it at any time prior to its exercise, but the revocation of a proxy will not be effective until notice thereof has been given to the Secretary of the Company. Every properly signed proxy will be voted in accordance with +the specification made thereon. This proxy statement and the accompanying proxy are expected to be first sent to shareholders on or about April 20, 2015. +Voting at Meeting +Only shareholders of record at the close of business on March 27, 2015 will be entitled to vote at the meeting. On the record date, +there were 7,266,134 shares of common stock of the Company outstanding. There was no other outstanding class of voting securities. Each shareholder has one vote for every share owned. +Votes Required to Transact Business At the Meeting +The holders of a majority of the shares entitled to +vote, present in person or represented by proxy, will constitute a quorum for the transaction of business at the meeting. Abstentions and broker “non-votes” are counted as present and entitled to vote for purposes of determining a quorum. +Please note that brokers may not vote your shares on the election of directors or on proposals 2 and 3 in the absence of your specific instructions as to how to vote. +PROPOSAL NO. 1 +ELECTION OF DIRECTORS +At the annual meeting, six directors are to be elected to hold office until the next annual meeting or until their respective successors +are elected and qualified. The persons named in the accompanying proxy, who have been designated by the Board, intend to vote, unless otherwise instructed, for the election to the Board of the persons named below. The biographies below contain +information regarding the person’s service as director, business experience, director positions held currently or at any time during the last five years, and the experiences, qualifications, attributes or skills that caused the Nominating +Committee and the Board to determine that the person should serve as a director. +Graeme MacLetchie , 77, is a private investor and was a director of Deutsche Bank Alex +Brown (Private Client Division), an investment banking and brokerage services company for private wealth and asset management, from November 1995 to March 2010. Prior to this, Mr. MacLetchie was Senior Vice President of C. J. Lawrence Deutsche +Bank Securities Corporation from 1970 to 1995. He has been a director of the Company since 2002 and also served as a director of E-Sync Networks Inc., a provider of managed enterprise services and solutions to medium and large businesses, from 1994 +to 1999. We believe that Mr. MacLetchie’s substantial experience in the financial sector and knowledge of the financial, regulatory, corporate governance and other matters affecting public companies qualify him to serve on our Board. +Everett V. Pizzuti , 78, served as Chief +Executive Officer of the Company from 2011 to January 31, 2014. Prior to serving as Chief Executive Officer of the Company, Mr. Pizzuti was President and Chief Operating Officer from 1971 to 2011. Mr. Pizzuti has also been a director +of the Company since 1985. Prior to 1971, he served as General Sales Manager of the Recorder Division of Gulton Industries. Through his long service with the Company, Mr. Pizzuti has an intimate knowledge of the Company’s products and +markets and is able to provide our Board with insight and advice related to the Board’s decisions. Based on this experience, we believe that Mr. Pizzuti is qualified to serve on our Board. +Mitchell I. Quain , 63, has been a director since 2011. +Mr. Quain is a Senior Advisor at Carlyle Group, a private equity firm. From 2010 through 2011, Mr. Quain was a Partner at One Equity Partners, a private investment firm. From 2006 through 2009, he was a Senior Director of ACI Capital Corp. +From 2002 through 2005, Mr. Quain served as Chairman of Register.Com, Inc., an internet services provider, and from 1997 to 2001 he was employed with ABN AMRO and its predecessors in several capacities, including Vice Chairman. Mr. Quain +also serves as Chairman of the Board of MagneTek, Inc., a manufacturer of digital power and motion control systems, and a director of Hardinge Inc., a global designer, manufacturer and distributor of machine tools, and RBC Bearings, Inc., an +international manufacturer and marketer of highly engineered precision plain, roller and ball bearings. Mr. Quain previously served as a director of DeCrane Aircraft Holdings, Inc., Handy & Harman Ltd., HEICO Corporation, Mechanical +Dynamics, Inc., Register.com and Titan International, Inc. We believe that Mr. Quain’s extensive experience in the private equity sector and public company experience qualify him to serve on our Board. +Harold Schofield , 73, is the owner and manager of +Schofield Imaging Associates, LLC, in Narragansett, Rhode Island since 2004. Prior to this, Mr. Schofield was Founder, President and CEO of Atlantek Incorporated (“Atlantek”), a manufacturer of thermal printers and retired as Vice +President and General Manager of Zebra-Atlantek following the acquisition of Atlantek by Zebra Technologies in 2003. Prior to founding Atlantek, Mr. Schofield was Design Engineering Manager at Gulton Industries where he was responsible for +design and development of thermal printers, plotters and chart recorders. Mr. Schofield is an internationally recognized authority in the electronic printing field. We believe that Mr. Schofield’s long history and expertise in the +printing and imaging field qualify him to serve on our Board. +Hermann Viets , Ph.D., 72, has been President and Chief Executive Officer of the Milwaukee School of Engineering, a university located in Milwaukee, Wisconsin focused primarily on engineering +education, since 1991. Dr. Viets served as a director of Gehl Co. from 1999 to 2008. He serves as a Director of Public Policy Forum for southeastern Wisconsin, an independent reviewer of public policy issues. Dr. Viets also serves as a +director of Competitive Wisconsin Inc., an association of business, education and labor leaders promoting the State of Wisconsin and serves as a member of the Greater Milwaukee Committee, an organization of civic leaders promoting the economic +development and social improvement of the City of Milwaukee. Dr. Viets was +2 +also a trustee of Polytechnic University (a private engineering school located in Brooklyn, NY) until 2009. Dr. Viets has been a director of the Company since 1988. We believe that +Dr. Viets’ executive experience as president of a university, his service on other public company boards and his understanding of the Company’s products as well as corporate governance matters qualify him to serve on our Board. +Gregory A. Woods , 55, has served as Chief +Executive Officer of the Company since February 1, 2014. Mr. Woods joined the Company in September 2012 as Executive Vice President and Chief Operating Officer and was appointed President and Chief Operating Officer on August 29, +2013. Prior to joining the Company, Mr. Woods served as Managing Director of Medfield Advisors, LLC, an advisory firm located in Medfield, Massachusetts focused on providing corporate development and strategy guidance to technology driven +manufacturing firms. From 2008 to 2010, Mr. Woods served as President of Performance Motion Devices, a specialty semiconductor and electronics manufacturer located in Lincoln, Massachusetts. Through his work experience, Mr. Woods has +extensive knowledge of the technology and electronics industries, as well as lean manufacturing processes. Based on this experience and his position as Chief Executive Officer of the Company, we believe that Mr. Woods is qualified to serve on +our Board. +The Board has determined that all of +the directors of the Company, including each of the nominees standing for election at the 2015 annual shareholders meeting, other than Gregory A. Woods and Everett V. Pizzuti, are independent of the Company in that such nominees have no material +relationship with the Company either directly, or as a partner, shareholder or affiliate of an organization that has a relationship with the Company. The Board has made this determination in accordance with applicable Securities and Exchange +Commission (“SEC”) rules and NASDAQ listing standards. +Meetings and Committees +During the fiscal year ended January 31, 2015, the Board held 8 meetings. During fiscal year 2015, all directors attended at least +75% of the meetings of the Board and meetings of committees on which such director serves. The Board has adopted a policy that requires members of the Board to make every effort to attend each annual shareholders meeting. All members of the Board +attended the 2014 annual shareholders meeting. +The Board currently has three standing committees: an Audit Committee, a Compensation Committee and a Nominating Committee. The members +and chairs of each of those committees are appointed each year. The Audit Committee is comprised of Messrs. MacLetchie, Quain and Schofield. The Nominating Committee is comprised of Messrs. MacLetchie, Quain and Viets. The Compensation Committee is +comprised of all of our outside directors, Messrs. MacLetchie, Quain, Schofield and Viets. Each of the members of our committees is independent as defined under the applicable NASDAQ listing standards and SEC rules. Each of the Audit, Compensation +and Nominating Committees has a written charter approved by the Board. A copy of each charter is available on the Company’s website at www.astro-medinc.com under “Our Company – Charters.” +Audit Committee. The Audit Committee’s primary +duties and responsibilities include overseeing the integrity of the Company’s financial reports; appointing, setting the compensation and overseeing the Company’s independent accountants; and assessing the qualifications and independence +and performance of the Company’s independent accountants and the adequacy of internal controls. The Audit Committee meets with the Company’s independent accountants to review quarterly financial results, the results of the audit and other +relevant matters. Mr. MacLetchie serves as Chairman of the Audit Committee, which held 5 meetings during the fiscal year ended January 31, 2015. The Board has determined that all three members of the Audit Committee satisfy the financial +literacy requirements of the NASDAQ listing standards and are independent as defined under the NASDAQ +3 +listing requirements and applicable SEC rules. Additionally, the Board has determined that Graeme MacLetchie satisfies the “financial sophistication” requirement of the NASDAQ listing +requirements, and that Mitchell Quain qualifies as an “audit committee financial expert” as defined by the SEC rules. +Compensation Committee. The Compensation Committee assists the Board in discharging the Board’s responsibilities relating to +director and executive compensation. The Compensation Committee’s responsibilities include: establishing and reviewing the Company’s executive and director compensation philosophy, strategies, plans and policies; making recommendations +with respect to the design of the Company’s incentive compensation plans and equity based plans; granting awards under such plans and overseeing generally the administration of such plans; evaluating the performance and determining the +compensation of the Chief Executive Officer; and reviewing and approving recommendations on compensation of other executives. Mr. Quain serves as chairman of the Compensation Committee, which held 7 meetings during the fiscal year ended +January 31, 2015. +Nominating +Committee . The Nominating Committee is responsible for identifying individuals qualified to be members of the Board and recommending such individuals to be nominated by the Board for election to the Board by the shareholders. The Nominating +Committee held one meeting in the fiscal year ended January 31, 2015. Dr. Viets serves as chairman of the Nominating Committee. +Director Share Ownership Requirements . In March 2015, the Board approved a stock ownership policy to require each director to hold +shares of Company common stock with a value equal to at least $200,000. Any director who does not currently meet this requirement will have five years from the later of April 1, 2015 or initial election to the Board to achieve this ownership +level. Directors are expected to retain at least 50% of the shares acquired upon exercise of any stock option (net of shares withheld or tendered in payment of the exercise price) or vesting of a restricted stock or restricted unit award until they +achieve the specified ownership level and thereafter maintain such ownership level. Currently, all but one director meets the new ownership requirement. +Nomination of Directors +The Nominating Committee considers suggestions from many sources, including shareholders, regarding possible candidates for director. The +Nominating Committee does not set specific criteria for directors but seeks individuals who possess the highest ethical standards and integrity, have a history of achievement that reflects superior standards for themselves and others, have the +ability to provide wise, informed and thoughtful counsel to management on a range of issues, exercise independence of thought and possess skills and expertise appropriate to meet the Company’s needs and advance the long-term interests of the +shareholders. The Nominating Committee does not have a policy with respect to diversity and does not specifically consider issues of diversity, such as gender, race, origin or sex when determining whether to nominate any person to be a director of +the Company. +The Nominating Committee must also +ensure that members of the Board as a group maintain the requisite qualifications under the NASDAQ listing standards for populating the Audit, Compensation and Nominating Committees. The Nominating Committee will consider shareholder nominees for +director in the same manner as nominees for director from other sources. +Shareholders may send recommendations for director nominees to the Nominating Committee at the Company’s offices at 600 East Greenwich Avenue, West Warwick, Rhode Island 02893. Submissions should +include information regarding a candidate’s background, qualifications, experience and willingness to serve as a +4 +director. In addition, Section 10 of Article II of the Company’s By-Laws sets forth specific procedures that, if followed, enable any shareholder entitled to vote in the election of +directors to make nominations directly at an annual meeting of shareholders. These procedures include a requirement for written notice to the Company at least 60 days prior to the scheduled annual meeting and must contain the name and certain +information concerning the nominee and the shareholders who support the nominee’s election. For the annual meeting to be held in 2016, the notice deadline under the By-Laws is March 19, 2016. A copy of this By-Law provision may be obtained +by writing to Astro-Med, Inc., Attn: Investor Relations Department, 600 East Greenwich Avenue, West Warwick, Rhode Island 02893. +Communications with the Board of Directors +The Company’s Board provides a process for shareholders to communicate directly with the members of the Board or the individual +chairman of each standing committee. Any shareholder with a concern, question or complaint regarding our compliance with any policy or law, or would otherwise like to contact the Board may communicate directly with the directors by writing directly +to those individuals c/o Astro-Med, Inc., 600 East Greenwich Avenue, West Warwick, Rhode Island 02893. The Company’s general policy is to forward, and not to intentionally screen, any mail received at the Company’s corporate offices that +is sent directly to an individual unless the Company believes the communication may pose a security risk. +Board Leadership Structure +All members of the Board, other than Gregory A. Woods and Everett V. Pizzuti, are independent and all our key committees – Audit, Compensation and Nominating – are comprised solely of +independent directors. The non-management directors meet in executive session without Messrs. Woods and Pizzuti at least quarterly. +The Board believes that separating the positions of Chief Executive Officer and Chairman of the Board is preferable and in the best +interests of shareholders because it gives our independent directors a significant role in Board direction and agenda setting and enhances the Board’s ability to fulfill its oversight responsibilities, including of senior management. Separating +the positions also provides an independent viewpoint and focus at Board meetings, and ensures that our Chief Executive Officer will be able to focus his energy on running the Company. We believe this structure provides strong leadership for the +Board, while also positioning the chief executive officer as the leader of the Company in the eyes of our customers, employees and shareholders. +Risk Oversight +The Board has an active role, as a whole and also at the committee level, in overseeing management of the Company’s risks through a +program of sound policies, systems, processes, and reports. The Audit Committee of the Board has oversight responsibility over financial reporting and disclosure process, compliance and legal matters, and information security and fraud risk. The +Audit Committee also monitors controls for material weaknesses in the audit function. The Audit Committee meets regularly with our Chief Financial Officer and Controller in carrying out these responsibilities, and with the Company’s independent +auditors in executive session. +The Compensation +Committee of the Board oversees risks as they relate to the Company’s compensation policies and practices as described under “Compensation Discussion and Analysis.” The Board’s Nominating Committee assists the Board in fulfilling +its oversight responsibilities with respect to independence of Board members and identification of individuals qualified to be members of the Board. +5 +While each committee is responsible for evaluating the risks within their areas of +responsibility and overseeing the management of such risks, all our committees report regularly to the full Board, which also considers the Company’s entire risk profile. +Compensation of Directors +The Compensation Committee is responsible for reviewing and +establishing the compensation of the directors of the Company. The Company adopted a Non-Employee Director Annual Compensation Program (the “Program”) on January 30, 2012 effective as of February 1, 2012, which was amended and +restated as of February 1, 2014. Under the Program, each non-employee director is entitled to an annual cash retainer of $7,000 (the “Cash Retainer”), plus $500 for each Board and committee meeting attended. In addition, the Chairman +of the Board, if a non-employee director, will receive an annual retainer of $6,000, and the Chair of the Audit Committee and Chair of the Compensation Committee will each receive an annual retainer of $4,000 (each a “Chair Retainer”). Any +non-employee director who is first elected or appointed to such position after February 1 of any fiscal year will receive a pro rata portion of any Cash Retainer and Chair Retainer payable. The non-employee director may elect for any fiscal +year to receive all or a portion of the Cash Retainer or Chair Retainer in the form of common stock of the Company. +In addition, under the Program, each non-employee director will receive a restricted stock award with a value equal to $20,000 (the +“Equity Retainer”) upon adjournment of each annual meeting (or special meeting in lieu of annual meeting) of shareholders. If a non-employee director is first appointed or elected to the Board effective on a date other than at the annual +shareholders meeting, on the date of such appointment or election the director will receive a pro rata award of restricted common stock having a value based on the number of days remaining until the next annual meeting. The Equity Retainer will vest +on the earlier of 12 months after the grant date or the date immediately prior to the next annual meeting (or special meeting in lieu of annual meeting) of the shareholders following the meeting at which such restricted stock award was granted. +However, a non-employee director may not sell, transfer, assign, pledge or otherwise encumber the vested common stock prior to the second anniversary of the vesting date. In the event of the death or disability of a non-employee director, or a +Change in Control (as such term is defined in the Company’s 2007 Equity Incentive Plan) of the Company, the restricted stock award shall immediately vest and shall no longer be subject to such restrictions on transfer. +Unless a non-employee director elects to receive all or a +portion of the Cash Retainer or Chair Retainer in common stock (as described below), each non-employee director will receive the Cash Retainer and Chair Retainer in four equal quarterly installments on the first day of each fiscal quarter. +If a non-employee director elects to receive all +or a portion of the Cash Retainer or Chair Retainer (each, a “Retainer”) in the form of common stock, such shares will be issued in four quarterly installments on the first day of each fiscal quarter, and the number of shares of common +stock issued will be based on the fair market value of the common stock on the date such installment is payable. The common stock received in lieu of a Retainer will be fully vested. However, a non-employee director who receives common stock in lieu +of all or a portion of a Retainer may not sell, transfer, assign, pledge or otherwise encumber the common stock prior to the first anniversary of the date on which such shares were issued. In the event of the death or disability of a non-employee +director, or a Change in Control (as such term is defined in the Company’s 2007 Equity Incentive Plan) of the Company, any shares of common stock issued in lieu of a Retainer, will no longer be subject to such restrictions on transfer. +6 +In addition to the Program, under the Company’s 2007 Equity Incentive Plan, each +non-employee director receives non-qualified options to purchase 5,000 shares of the Company’s common stock upon initial election to the Board (if not at the annual meeting) and upon the adjournment of each annual meeting or special meeting in +lieu of an annual meeting of the shareholders of the Company. These options have a term of ten years and become exercisable immediately prior to the occurrence of the next annual meeting following the date the option is granted. +The following Director Compensation table provides +information regarding the compensation paid or accrued by each individual who was a director during the 2015 fiscal year. +Name +Total ($) +Fees Earned +or Paid in +Cash ($)(a) +Stock +Awards($)(b) +Option +Awards +($)(c)(d) +All Other +Compensation ($) +Graeme MacLetchie +54,786 +20,573 +20,000 +14,213 +Everett V. Pizzuti +273,929 +10,550 +20,000 +14,213 +229,167 +(e) +Mitchell I. Quain +54,286 +20,073 +20,000 +14,213 +Harold Schofield +51,551 +17,338 +20,000 +14,213 +Hermann Viets +52,547 +18,334 +20,000 +14,213 +Gregory A. Woods (f) +— +— +— +— +— +(a) +Includes cash retainers which were paid in stock at the election of the director as follows: +Name +Shares +Value($) +Graeme MacLetchie +681 +8,972 +Mitchell I. Quain +681 +8,972 +Harold Schofield +531 +6,975 +Hermann Viets +756 +9,971 +(b) +Represents restricted stock award of 1,449 shares, which vests immediately prior to 2015 annual meeting of shareholders. +(c) +The amounts reflect the aggregate fair value of the awards on the grant date under FASB ASC Topic 718 for stock options granted to directors. Assumptions used in the +calculation of these amounts are included in footnote 10 in the Company’s audited financial statements for the fiscal year ended January 31, 2015, included in the Company’s Annual Report on Form 10-K filed with the SEC on +April 8, 2015. +(d) +As of January 31, 2015, each non-employee director had the following number of options outstanding: Graeme MacLetchie (41,375), Everett V. Pizzuti (5,000), +Mitchell I. Quain (20,000), Harold Schofield (15,000) and Hermann Viets (41,375). +(e) +Represents amounts paid pursuant to a Release and Non-Competition Agreement with Everett V. Pizzuti entered into in connection with his retirement as Chief Executive +Officer on January 31, 2014. +(f) +See Summary Compensation Table and Outstanding Equity Awards at Fiscal Year End Table for disclosure relating to compensation and outstanding option awards of +Mr. Woods. +7 +COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT +Security Ownership of 5% Beneficial Owners +The following table sets forth certain information regarding +the beneficial ownership of the Company’s outstanding shares of common stock, as of March 27, 2015 (except as noted), by each person who is known to the Company to own of record or beneficially more than 5% of such stock: +Name of Beneficial Owner +Number of Shares +Beneficially +Owned(a) +Percent +of +Class +Albert W. Ondis III, Alexis Ondis and April Ondis, as Co-Executors of the Estate of Albert W. Ondis +1,274,132 +(b) +17.5 +% +50 Kennedy Plaza, Suite 1500 +Providence, Rhode Island 02903 +Ariel Investments, LLC +1,167,646 +(c) +16.1 +% +200 E. Randolph Drive, Suite 2900 +Chicago, IL 60601 +Dimensional Fund Advisors LP +506,806 +(d) +7.0 +% +6300 Bee Cave Road, Building One +Austin, TX 78746 +Rutabaga Capital Management, LLC +609,621 +(e) +8.4 +% +64 Broad Street, 3 rd Floor +Boston, MA 02109 +(a) +All information is based upon ownership of record as reflected on the stock transfer books of the Company or as reported on Schedule 13G or Schedule 13D filed under +Rule 13d-1 under the Securities Exchange Act of 1934. +(b) +This information is based on the Company’s records and the Schedule 13D/A filed with the SEC on December 9, 2014 by the Estate of Albert W. Ondis (the +“Ondis Estate”) and Albert W. Ondis III, Alexis Ondis and April Ondis and consists of the shares held by the Ondis Estate (886,163 shares, including 3,858 shares allocated to the Ondis Estate under the Company’s Employee Stock +Ownership Plan, or “ESOP”), Albert W. Ondis III (128,081 shares, including 1,658 shares held in trust for his child, 4,000 shares issuable upon exercise of options exercisable within 60 days of March 27, 2015 and 326 shares allocated +to his account under the Company’s ESOP), Alexis Ondis (127,710 shares, including 5,614 shares held in trust for her child) and April Ondis (132,178 shares, including 6,238 shares issuable upon exercise of options exercisable within 60 days of +March 27, 2015 and 670 shares allocated to her account under the Company’s ESOP). Albert W. Ondis III, Alexis Ondis and April Ondis, the children of the Company’s founder, Albert W. Ondis, are the Co-Executors of the Ondis Estate and +have indicated shared voting and dispositive power with respect to the 886,163 shares held by the Ondis Estate. They have also indicated that each has the sole power to vote or dispose of the shares held by them individually. The Ondis Estate +beneficially owns 12.20% of the Company’s outstanding common stock. Excluding the shares held as Co-Executors of the Ondis Estate, each Co-Executor’s percentage ownership of the Company’s outstanding common stock is as follows: Albert +W. Ondis III (1.8%); Alexis Ondis (1.8%); and April Ondis (1.8%). +(c) +According to a Schedule 13G filed with the SEC on February 13, 2015, Ariel Investments, LLC, an investment adviser registered under the Investment Advisers Act of +1940 (the “Advisers Act”), had sole voting power with respect to 734,371 shares and sole investment power with respect to 1,167,646 shares as of December 31, 2014. +8 +(d) +According to a Schedule 13G filed with the SEC on February 5, 2015, as of December 31, 2014, Dimensional Fund Advisors, LP, an investment adviser registered +under the Advisers Act, and its subsidiaries (collectively, “Dimensional”) had sole voting power with respect to 498,775 shares and sole investment power with respect to 506,806 shares held by registered investment companies, trusts and +separate accounts for which Dimensional serves as investment manager, adviser or sub-adviser. +(e) +According to a Schedule 13G filed with the SEC on February 13, 2015, Rutabaga Capital Management, LLC, an investment adviser registered under the Advisers Act, had +sole voting power with respect to 516,521 shares, shared investment power with respect to 93,100 shares and sole investment power with respect to 609,621 shares as of December 31, 2014. +Security Ownership of Directors and Officers +The following table sets forth certain information regarding +the beneficial ownership of the Company’s outstanding shares of common stock as of March 27, 2015 by each director, by each executive officer named in the Summary Compensation Table and by all directors and executive officers as a group. +Unless otherwise noted, all shares of our common stock are subject to the sole voting and investment power of the directors and executive officers. +Beneficial Ownership +Name of Beneficial Owner +Shares and +Restricted +Shares (a) +Options +Exercisable +within 60 days +of 3/27/15 +Total +Beneficial +Ownership +(a) +Percent +of +Class +Graeme MacLetchie +92,799 +(b) +41,375 +134,174 +1.8 +% +Everett V. Pizzuti +112,536 +(c) +5,000 +117,536 +1.6 +% +Harold Schofield +9,369 +(b) +15,000 +24,369 +* +Mitchell I. Quain +32,225 +(b) +20,000 +52,225 +* +Hermann Viets +193,071 +(b) +41,375 +234,446 +3.2 +% +Gregory A. Woods +69,287 +(d) +37,500 +106,787 +1.5 +% +Joseph P. O’Connell +108,422 +(e) +39,994 +148,416 +2.0 +% +Michael Morawetz +6,349 +17,601 +23,950 +* +All directors and executive officers of the Company as a group (12) +664,665 +(f) +270,988 +935,653 +12.4 +% +* +Indicates less than 1.0%. +(a) +If applicable, beneficially owned shares include shares owned by the spouse, minor children and certain other relatives of the director or executive officer, as well as +shares held by trusts of which the person is a trustee or in which he or she has a beneficial interest. +(b) +Includes 1,449 shares restricted stock. +(c) +Includes 1,449 shares of restricted stock and 4,868 shares allocated to his ESOP account. +(d) +Includes 25,000 shares of restricted stock. +(e) +Includes 2,068 shares allocated to his ESOP account. +(f) +Includes 32,245 shares of restricted stock and 12,780 shares allocated to executive officers’ ESOP accounts. +Section 16(a) Beneficial Ownership Reporting Compliance +Section 16(a) of the Securities +Exchange Act of 1934 (the “Exchange Act”), as amended, requires the directors and executive officers of the Company and any persons who own more than ten percent of the Company’s common stock to file with the SEC various reports of +beneficial ownership and changes in beneficial ownership. The Company believes all of its directors and executive officers complied with all filing requirements applicable to them with respect to transactions during the fiscal year ended +January 31, 2015. +9 +COMPENSATION DISCUSSION & ANALYSIS +The Compensation Committee of the Board of the Company (the +“Committee”) is charged with the responsibility for establishing, implementing and monitoring adherence to the Company’s compensation philosophy and assuring that executives and key management personnel are effectively compensated in +a manner which is internally equitable. The Committee also is responsible for reviewing and establishing the compensation of directors. +Compensation Philosophy and Objectives. Our overall philosophy in terms of executive compensation is to link +management incentives with the actual financial performance of the Company. Similarly, the compensation should attract, retain and motivate highly qualified individuals to achieve the Company’s business goals and link their interests with +shareholder interests. In setting compensation for our executive officers, the Committee considers the executive’s performance, awards, if any, made during prior years and other relevant factors. We seek to have the long-term performance of our +common stock reflected in executive compensation through our equity incentive programs. +Elements of Compensation. Our total compensation program for executive officers consists of the following: +• +salary; +• +cash incentive and bonus awards tied to the Company’s and employee’s annual performance; +• +long-term incentive compensation, in the form of stock options, restricted stock and performance units; and +• +retirement and other benefits. +We choose to pay each element of compensation in order to attract and retain the necessary executive talent, reward annual performance and +provide incentive for both long-term strategic goals as well as short-term performance. Our policy for allocating between currently paid and long-term compensation is to ensure adequate base compensation to attract and retain personnel, while +providing incentives to maximize long-term value for our shareholders. +Say on Pay Consideration. In accordance with SEC rules, we solicited shareholder “say on pay” advisory vote in our proxy statement to shareholders in 2014. Our +shareholders showed support (approximately 76%) of our compensation practices during last year’s vote. +Setting Executive Compensation. The Committee is responsible for establishing and periodically reviewing the +compensation of our executive officers and approving all equity awards. The Committee annually reviews the performance of the executive officers and, based on these reviews, the Committee determines salary adjustments and annual award amounts of our +executive officers. Mr. Woods does not participate during deliberations regarding his compensation. +Salary. Base salaries for executive officers, other than recent hires, were established a number of years +ago. Historically, base salaries have been increased at annual rates which approximate the general rates of increase of compensation for all employees of the Company. Annual salary adjustments are made effective April 1 of each year. For fiscal +year 2015, we increased the compensation of the Company’s employees and executive officers, by approximately 3%. Salaries are also reviewed at the time of a promotion or other change in +10 +responsibilities. During fiscal 2014, Mr. Woods’ salary was increased to $260,000 effective February 1, 2014 upon his appoint as Chief Executive Officer. In May 2014, the Committee +approved salary increases for Mr. Woods and Joseph P. O’Connell, the Company’s Chief Financial Officer, to $315,000 and $250,000, respectively, to bring their salaries more in line with base salaries paid for comparable positions at +similarly sized public companies. Effective April 6, 2015, Mr. Woods received an additional $45,000 salary increase. +Cash Incentive and Bonus Awards. Annual cash incentive awards are an important component of total executive +cash compensation because they reward our executives for achieving targeted, annual results and emphasize variable or “at risk” compensation. From time-to-time we award discretionary cash bonuses to our executives to reward their efforts +in extraordinary circumstances. +Fiscal 2015 +Annual Bonus Program +The Company has had +two separate management bonus plans applicable to its executive officers. One plan is applicable to domestic employees of the Company (the “Domestic Plan”) and the other is applicable to the Vice President-International Branches, currently +Michael Morawetz (the “International Branch Plan”). The Domestic Plan provides for cash incentive awards based upon achieving annual financial objectives established by the Committee and also allows the Committee to award bonuses based +upon achieving specified strategic and tactical objectives. Under the Domestic Plan, the total award may not exceed 60% of the executive’s base salary, except that with respect to our Chief Executive Officer, effective May 22, 2014, the +maximum total award was increased to 75% of base salary. +Awards under the International Branch Plan are based on the annual earned bonus pool available under the Company’s bonus plans applicable to the Company’s international branches located in +Canada, the United Kingdom, France and Germany. These bonus pools are determined by comparing the annual sales achieved in the last fiscal year ended by each international branch to the respective volume of sales achieved during the prior fiscal +year for each branch. Actual sales that surpass the prior year’s sales earn an incremental bonus on the sales volume up to the specified target established by the Committee for that year. The bonus pool earned is then adjusted (increased or +decreased) by the branch’s achievement of specified profit margin thresholds as determined by the Committee. The amounts available under the branch bonus pools are then allocated amongst a pool of individuals at such offices at the discretion +of the Chief Executive Officer. Under the International Branch Plan, the Vice President of International Branches was eligible to receive a bonus of up to 20%; provided that, no bonus will be paid to the Vice President of International Branches +under the International Branch Plan unless the consolidated sales of all the Company’s international branches meets the minimum threshold of sales for each of the Company’s international branches as established annually by the Committee. +The specified threshold and target financial +objectives and business objectives and the related bonus payouts under the Company’s bonus plans are established annually by the Committee. Accordingly, individual awards may vary, up or down, from year to year. In March 2014, the Committee +approved threshold and target goals for net sales, operating income and operating income return on net assets (“ORONA”) for fiscal 2015. Bonuses paid or accrued for fiscal year 2015 under our management bonus plans to all executive +officers totaled $488,472, which represented approximately 33.6% of their combined salaries. Bonuses paid under the Domestic Plan and the International Branch Plan for fiscal 2015 are reflected in the “Non-Equity Incentive Plan +Compensation” column of the Summary Compensation Table below. +11 +New Short-Term Incentive Plan +During late 2014, the Committee engaged Radford, an Aon +Hewitt Company, to conduct an assessment of the Company’s executive compensation program, including a review of executive base salaries, short-term incentive opportunities and long-term incentives and pay mix as compared to the competitive +market. Following receipt of Radford’s report in March 2015, the Committee approved a new Senior Executive Short-Term Incentive Plan (the “STIP”), which replaces the Domestic Plan and International Branch Plan for the fiscal year +beginning February 1, 2015. Participants in the STIP (which may include any executive officer, vice president or director level manager) are determined annually by the Committee. Awards under the STIP will be earned based on achieving or +exceeding annual financial objectives (“Performance Goals”). The Committee has full discretion to establish the Performance Goals for any plan year. For fiscal 2016, the Performance Goals are Net Sales, Operating Income and Economic Value +Added (i.e., Net Operating Profit after Taxes – [Capital × Cost of Capital]) (“EVA”). The Committee will also determine annually the weighting of each Performance Goal. +Annually, the Committee will establish a Target Award for each STIP participant, expressed as a percentage of +base salary, which may vary as to each participant and from year to year. For example, the Target Award for a participant with a $150,000 base salary and a 30% target award percentage would be $45,000. +Performance with respect to each specific Performance Goal +will be calculated independently to determine the amount of the award for each Performance Goal (each, an “Award Component”). The total STIP award earned by a participant for a plan year will be equal to the sum of the separate Award +Components determined for each Performance Goal. Each Award Component will be independently adjusted by an “Adjustment Factor” as follows: +• +If the actual performance exceeds the Performance Goal, the Adjustment Factor for that Performance Goal would be 1 plus the percentage by which actual +performance exceeds the Performance Goal. For example, if actual performance exceeds the Performance Goal by 4%, the Adjustment Factor for that Award Component would be increased by 4% to 1.04. +• +If actual performance is less than the Performance Goal for the plan year, the Adjustment Factor is 1 minus 10 percentage points for each percentage +point by which actual performance is less than the Performance Goal. For example, if actual performance is 97% of the Performance Goal, then the Adjustment Factor for that Award Component would be reduced by 30% to 0.70. +If actual performance does not exceed 90% of +the Performance Goal, then the Award Component for that Performance Goal will be zero. A participant’s STIP award is uncapped, except as follows: +• +Aggregate awards under the STIP in any year may not exceed 15% of the Company’s Consolidated Operating Income for that year determined without +deduction for the STIP awards. +• +If the EVA Performance Goal is less than $1 million for any plan year, the maximum award to a participant that year may not exceed two (2) times +the participant’s Target Award. +• +Adequate reserves for awards must be accrued when determining whether a Performance Goal based upon operating income has been achieved. +The amount of a +participant’s award under the STIP will be credited to a book account maintained by the Company (the “Award Bank”). The resultant balance in the participant’s account after crediting the amount of award (the “Bank +Balance”) will then be used to determine the participant’s Payout Amount for the plan year. +12 +The “Payout Amount” is equal to the sum of (i) the lesser of (A) the +participant’s actual award for the plan year or (B) the participant’s Target Award for the plan year (“Base Award”) plus (ii) 30% of the participant’s Bank Balance (after deduction of the amount of +the Base Award). Thus, only 30% of the amount in excess of the Target Award will be paid out currently and 70% of such excess will be “banked” and paid out in subsequent years in accordance with the foregoing formula, provided the +participant remains employed with the Company. +For example, if a participant’s Target Award for Year 1 is $45,000 but the actual award is $55,000, then the Payout Amount for such +year would be $48,000 ($45,000 + [30% × $10,000]) and the Bank Balance remaining after the payout would be $7,000. If the participant’s Target Award for Year 2 is $47,000 and the actual award is $45,000, then the Payout Amount for such +year would be $47,100 ($45,000 + [30% × $7,000]) and the Bank Balance remaining after the payout would be $4,900. +If a participant’s employment with the Company is terminated for any reason other than death, disability or retirement, then the +participant will forfeit any interest in his Bank Balance. A participant’s Bank Balance will vest in full and become immediately payable in the event of termination of a participant’s employment with the Company due to the +participant’s death, disability or retirement. A participant’s Bank Balance will also vest in full and become payable upon a change in control of the Company. +Long-Term Incentive +Compensation. Total compensation at the executive level also includes long-term incentive awards granted under the Company’s 2007 Equity Incentive Plan. The objectives of the equity incentive program are to align +executive and shareholder long-term interests by creating a strong and direct link between executive pay and total shareholder return, and to enable executives to develop and maintain a long-term stock ownership position in our common stock. Prior +to fiscal year 2013, all equity awards were in the form of stock options which have generally been granted in March of each year at an exercise price equal to the market price on the date of grant. Since 2004, all options granted vest in four equal +annual installments commencing on the first anniversary of the date of grant. Under the Company’s 2007 Equity Incentive Plan, the Committee may also make equity awards in the form of restricted stock, restricted units and performance units in +addition to stock options. In fiscal year 2014, the Committee awarded restricted stock units to the Company’s executive officers. These restricted stock unit awards vest 25% in March 2016; 50% upon the achievement of cumulative budgeted sales +targets for the fiscal years 2014 through 2016; and 25% upon the achievement of ORONA goals for the fiscal years 2014 through 2016. In fiscal year 2015, the Committee granted only stock options to executive officers, which awards are reflected in +the Grants of Plan Based Awards table under “Executive Compensation.” +Gregory A. Woods joined the Company as Chief Operating Officer in September 2012 and became Chief Executive Officer on February 1, 2014, upon Everett V. Pizzuti’s retirement. In November 2014, +the Company entered into an Equity Incentive Award Agreement with Mr. Woods (the “Equity Agreement”), which provides for equity awards that are intended to enhance his equity ownership, create stronger alignment with the shareholder +interests and reward him for driving the long-term growth and profitability of the Company. The Equity Agreement provides that in each of 2015, 2016 and 2017, the Company will grant Mr. Woods the following equity awards: +• +an option for 50,000 shares (subject to adjustment in the event of any stock splits, stock dividends or similar changes in capital structure), each +with an exercise price equal to the fair market value of the Company’s common stock as of the grant date of such option; and +13 +• +a restricted stock award with a value equal to the amount (if any) by which the exercise price of such year’s option exceeds $13.80, multiplied by +the number of shares covered by the option granted in such year (initially 50,000, subject to adjustment in the event of any stock splits, stock dividends or similar changes in capital structure). +Each option and restricted stock award under the Equity +Agreement will vest in four equal annual installments commencing on the first anniversary of the grant date for each such award and all options and restricted stock will vest upon a change in control of the Company. The Equity Agreement provides +that, in the event there is a change in control of the Company prior to June 1, 2018, the Company will pay Mr. Woods an amount equal to (i) the positive difference (if any) between the fair market value of the Company’s common +stock as of the date of the change in control and $13.80 (ii) multiplied by the number of options which the Company remains obligated to grant under the Equity Agreement. +Share Ownership and Retention +Guidelines . The Committee believes that senior management should have a meaningful equity interest in the Company. In order to promote equity ownership and further align the interests of management with our shareholders, +the Board has adopted share ownership and retention guidelines for our executives. These guidelines are based upon the market value of our common stock as a multiple of such officer’s base pay. The multiple is 3 times base salary for the CEO, 2 +times base salary for the Chief Financial Officer and 1.25 times base salary for the other executive officers. Under these guidelines, an executive must achieve the ownership level within five years from the later of April 1, 2015 or initial +appointment as an executive officer. Executives are expected to retain at least 50% of the shares acquired upon exercise of any stock option (net of any shares tendered upon exercise or sold to pay the option exercise price) or vesting of restricted +stock until they achieve the specified ownership level and thereafter maintain such ownership level. +Retirement and Other Benefits. In order to attract and retain key executives, we offer retirement benefits +through a Profit-Sharing Plan and Employee Stock Ownership Plan for employees, including our executive officers. +Profit-Sharing Plan. We maintain a qualified Profit-Sharing Plan which provides retirement benefits to substantially all our +employees and provides for contributions into a trust fund in such amounts as the Board may annually determine. Each eligible employee shares in contributions on the basis of relative (limited to $260,000 in 2014) compensation. In addition, +participants are permitted to defer up to 50% of their cash compensation and make contributions of such deferral to this plan through payroll deductions. The Company makes matching contributions equal to 50% of the first percent of compensation +contributed, 25% of the second through the seventh percent and 50% of the eighth and ninth percent. The deferrals are made within the limits prescribed by Section 401(k) of the Internal Revenue Code. The Profit-Sharing Plan provides for the +vesting of 100% of matching contributions made by the Company to the account of the employee after three years of service. Contributions by an employee are 100% vested immediately. +Employee Stock Ownership Plan. We also have an +Employee Stock Ownership Plan (“ESOP”) which provides retirement benefits to substantially all employees of the Company. Contributions in such amounts as the Board may annually determine are allocated among eligible employees on the basis +of relative (limited to $100,000) compensation. Participants are 100% vested in any and all allocations to their accounts. Contributions, which may be in cash or stock, are invested by the Plan’s trustee in shares of common stock of the +Company. +14 +Perquisites . In addition to the benefits described above, we provide +automobile allowances to certain of our executive officers. The amounts of any aforesaid automobile allowances to our Named Executive Officers are reflected in the “All Other Compensation” column of the Summary Compensation Table below. +Change in Control Agreement. In +November, 2014, we entered into a Change in Control Agreement (the “CIC Agreement”) with Mr. Woods. The CIC Agreement provides for the payment of severance benefits upon a change in control of the Company, if Mr. Woods is +terminated within a two-year period following such change in control. Severance payments made to Mr. Woods when terminated without cause include (i) payment of one and one-half times the sum of (A) his annual salary and (B) the +greater of the amount of his target bonus for the fiscal year in progress or the highest annual bonus paid to him in the prior three years (collectively, “base compensation”), (ii) immediate vesting of all unvested stock options and +restricted stock awards, (iii) continued health coverage for 18 months or until he receives benefits from another employer, and (v) outplacement services not in excess of 17% of his base compensation. If any payment or benefit under the +CIC Agreement or under any other plan or agreement would constitute an “excess parachute payment” within the meaning of Section 280G of the Internal Revenue Code, and if Mr. Woods would be in a better after-tax position by +reducing the such payments or benefits, the amounts payable under the CIC Agreement will be reduced to the extent necessary to avoid the excise tax payable under Section 280G. +Employment Agreements and Severance Benefis . In +November 2014, in order to comply with certain legal requirements, the Company entered into an Employment Agreement with Michael Morawetz, Vice President-International Branches, as the general manager of its German subsidiary. The employment +agreement can be terminated on six months’ notice and provides that in the event of his termination without cause, Mr. Morawetz will receive severance equal to one month’s salary for each year of his employment. Other than the +contract with Mr. Morawetz, we have no employment agreements with any of our executive officers. Except for the Morawetz Employment Agreement and the CIC Agreement with Mr. Woods, we generally do not provide any severance benefits to our +executives other than those provided to all employees. Severance benefits will vary based upon salary levels and length of service. +COMPENSATION COMMITTEE REPORT +The Compensation Committee has reviewed and discussed with management the Compensation Discussion & Analysis included above. +Based on these reviews and discussions, the Compensation Committee has recommended to the Board that the Compensation Discussion & Analysis be included in the Company’s Annual Report on Form 10-K for the fiscal year ended +January 31, 2015 for filing with the SEC through incorporation by reference of this Proxy Statement. +Compensation Committee: +Mitchell I. Quain (Chairman) +Graeme MacLetchie +Harold Schofield +Hermann Viets, Ph.D. +15 +EXECUTIVE COMPENSATION +The following table provides information regarding the total compensation paid or accrued by the Company to +each of its Chief Executive Officer (“CEO”) and its two other highest paid executive officers other than the CEO for the fiscal year ended January 31, 2015 (collectively, the “Named Executive Officers”). +Because the Company’s Domestic Plan and International +Branch Plan are based on achieving specified performance goals, awards under these plans are not considered “Bonuses” for purposes of SEC rules and are listed below as “Non-Equity Incentive Plan Compensation.” +Summary Compensation Table +Name and Principal Position +Year +Salary +($) +Bonus +($)(a) +Stock +Awards($) +Option +Awards +($)(b) +Non-Equity +Incentive Plan +Compensation +($)(c) +All Other +Compensation +($) +Total +($) +Gregory A. Woods(d) +2015 +287,796 +— +— +142,130 +182,120 +54,010 +(e) +666,056 +President and CEO +2014 +235,366 +— +75,525 +— +73,500 +16,143 +400,534 +2013 +105,192 +10,000 +395,500 +96,468 +— +5,806 +612,966 +Joseph P. O’Connell +2015 +235,275 +— +— +21,956 +80,984 +38,979 +(f) +377,194 +Senior Vice President, +2014 +215,818 +— +75,525 +— +60,612 +36,693 +388,648 +Treasurer and CFO +2013 +215,765 +— +43,211 +10,914 +105,354 +23,142 +398,386 +Michael Morawetz +2015 +206,690 +— +— +13,759 +7,574 +13,991 +(g) +242,014 +(h) +Vice President – +2014 +191,411 +— +39,273 +— +17,867 +16,059 +264,610 +International Branches +2013 +183,455 +— +27,973 +7,065 +11,541 +15,773 +245,807 +(a) +Reflects discretionary cash bonuses. +(b) +The amounts reflect the aggregate fair value of the awards on the grant date under FASB ASC Topic 718 for stock options granted to the Named Executive Officers. +Assumptions used in the calculation of these amounts are included in footnote 10 to the Company’s audited financial statements for the fiscal year ended January 31, 2015, included in the Company’s Annual Report on Form 10-K filed with the SEC on April 8, 2015. +(c) +Reflects cash awards to the named individuals under the Company’s management bonus plan which is discussed in further detail under the heading “Compensation +Discussion and Analysis” above. +(d) +Mr. Woods joined the Company as COO in September 2012, was appointed President in August 2013 and became CEO of the Company on February 1, 2014. +(e) +Includes pay-out of unused vacation of $35,712, automobile allowance of $12,000, employer match under the Profit Sharing Plan of $5,620, and employer contribution to +the Company’s ESOP of $678. +(f) +Includes pay-out of unused vacation of $9,253, automobile allowance of $23,707, employer match under the Profit Sharing Plan of $5,341, and employer contribution to the +Company’s ESOP of $678. +(g) +Represents automobile allowance. +(h) +Mr. Morawetz’s salary is based on euro currency and is converted to U.S. dollars at the average monthly exchange rate. The exchange rate for the fiscal year +ended January 31, 2015 was 1.132. +16 +Outstanding Equity Awards at Fiscal Year-End +The following table provides information on all outstanding +equity awards held by each of the Named Executive Officers as of January 31, 2015. +OPTION AWARDS +STOCK AWARDS +Name +Number of +Securities +Underlying +Unexercised +Options (#) +Exercisable +Number of +Securities +Underlying +Unexercised +Options (#) +Unexercisable +Option +Exercise +Price +($) +Option +Expiration +Date (a) +Number of +Shares or +Units of +Stock That +Have Not +Vested (#)(b) +Market +Value +of +Shares or +Units +of +Stock That +Have Not +Vested +($) +Equity +Incentive +Plan +Awards: +Number +of +Unearned +Shares, +Units or +Other +Rights That +Have Not +Vested (#) +Equity +Incentive +Plan +Awards: +Market or +Payout +Value of +Unearned +Shares, +Units or +Other +Rights That +Have +Not +Vested ($)(c) +Gregory A. Woods +25,000 +25,000 +7.9100 +9/4/22 +50,000 +13.80 +5/22/24 +25,000 +373,750 +7,500 +112,125 +Joseph P. O’Connell +14,063 +— +7.9316 +3/20/16 +10,000 +— +11.4450 +4/12/17 +5,375 +— +8.9500 +4/1/18 +4,800 +— +7.3600 +3/15/20 +2,588 +2,587 +8.3500 +3/29/22 +— +7,500 +14.2000 +3/17/24 +7,500 +112,125 +Michael Morawetz +938 +— +6.7680 +3/21/15 +938 +— +7.9316 +3/20/16 +3,500 +— +11.4450 +4/12/17 +3,475 +— +8.9500 +4/1/18 +3,000 +— +6.2200 +3/18/19 +3,000 +— +7.3600 +3/15/20 +1,675 +1,675 +8.3500 +3/29/22 +— +4,700 +14.2000 +3/17/24 +3,900 +58,305 +(a) +Options vest in four equal annual installments commencing on the first anniversary of the option grant date (which is ten years prior to the expiration date). +(b) +Represents restricted stock which vests 50% on September 4, 2015 and 50% on September 4, 2016. +(c) +Represents restricted stock units which vest as follows: 25% on April 3, 2016, 50% upon the achievement of certain specified goals relating to cumulative budgeted +sales targets for the fiscal years 2014 through 2016, and 25% upon the achievement of certain specified goals relating to operating income return on net assets for the fiscal years 2014 through 2016. +17 +Grants of Plan Based Awards +The following table provides information on all plan-based awards by the Company for the fiscal year ended +January 31, 2015 to each Named Executive Officer. +Name +Grant +Date +All +Other +Option +Awards: +Number of +Securities +Underlying +Options(#) +Exercise +or +Base +Price of +Option +Awards +($/Sh) +Grant +Date Fair +Value of +Stock +and +Option +Awards +($)(a) +Gregory A. Woods +5/22/14 +50,000 +13.80 +142,130 +Joseph P. O’Connell +3/17/14 +7,500 +14.20 +21,956 +Michael Morawetz +3/17/14 +4,700 +14.20 +13,759 +(a) +Assumptions used in the calculation of these amounts are included in footnote 10 to the Company’s audited financial statements for the fiscal year ended +January 31, 2015, included in the Company’s Annual Report on Form 10-K filed with the SEC on or around April 8, 2015. +Option Exercises and Stock Vested +The following table provides information on all exercises of options by the Named Executive Officers and vesting of restricted stock +awards during the fiscal year ended January 31, 2015. +Option Awards +Stock Awards +Name +Number of +Shares Acquired +on Exercise (#)(a) +Value Realized +on Exercise +($)(b) +Number of +Shares Acquired +on Vesting (#) +Value Realized +On Vesting +($)(c) +Gregory A. Woods +— +— +12,500 +171,375 +Joseph P. O’Connell +9,375 +74,363 +2,588 +30,150 +Michael Morawetz +2,062 +7,161 +1,675 +19,514 +(a) +Number of shares acquired on exercise have been adjusted to reflect the Company’s May 2004 stock dividend and June 2006 stock split. +(b) +Based on difference between the closing market price of the Company’s common stock on the date of exercise and option exercise price. +(c) +The amounts shown are calculated based on the closing market price of the Company’s common stock on the date of vesting multiplied by the number of shares or +restricted stock units that vested. +RELATED PARTY TRANSACTIONS +Potential conflicts of interest and related party transactions are referred by the Board to the Audit Committee for review and approval. +In reviewing and evaluating potential conflicts of interest and related party transactions, the Audit Committee uses applicable NASDAQ listing standards and SEC rules as a guide. +18 +Other than as described below, no officer, director or nominee for director of the Company +or any associate of any of the foregoing had during the fiscal year ended January 31, 2015 any material interest, direct or indirect, in any material transaction or any material proposed transaction in which the amount exceeds $120,000 and to +which the Company was or is to be a party. +The +Company employs three sons of director Everett V. Pizzuti, to whom the Company paid or accrued over $120,000 in compensation during the fiscal year ended January 31, 2015: Eric Pizzuti, as Vice President and General Manager of QuickLabel +Systems, Christopher Pizzuti, as a QuickLabel Field Sales Engineer, and Kevin Pizzuti, as a District Manager, QuickLabel Systems. The Company paid Eric Pizzuti $184,998 in salary and bonus and paid Christopher Pizzuti and Kevin Pizzuti $161,741 and +$127,312, respectively, in salary and sales commissions. Eric Pizzuti also received options for 5,500 shares, a vacation payout of $8,922 and a matching contribution to his Profit Sharing Plan account of $5,261. Christopher Pizzuti also received +options for 500 shares, an automobile allowance of $7,500 and a vacation payout of $2,094. Kevin Pizzuti also received an automobile allowance of $7,500, a vacation payout of $2,308 and a matching contribution to his Profit Sharing Plan account of +$1,253. In addition, the Company made a $678 contribution to each of their ESOP accounts. +The Company also employs April Ondis, a Co-Executor of the Ondis Estate, as Senior Manager, Applied Marketing of QuickLabel Systems product group. As Co-Executor of the Ondis Estate, Ms. Ondis is +deemed to be the beneficial owner of more than 5% of the Company’s outstanding common stock, and, therefore a “related person” of the Company. The Company paid Ms. Ondis $125,455 in salary and commission and a vacation payout of +$4,258. Ms. Ondis also received options for 600 shares. The Company also made contributions of $2,054 and $678 to her Profit Sharing Plan and ESOP accounts, respectively. +EQUITY COMPENSATION PLAN INFORMATION +The following table provides information as of +January 31, 2015, regarding shares outstanding and available for issuance under all equity compensation plans of the Company: +Plan Category +Number of Securities to +be Issued Upon +Exercise +of Outstanding Options, +Warrants and +Rights +Weighted- +Average Exercise +Price of +Outstanding +Options, +Warrants and +Rights +Number of Securities +Remaining Available for +Future Issuances Under +Equity +Compensation +Plans +Equity Compensation Plans Approved by Security Holders +696,011 +(a) +$ +10.01 +(b) +206,339 +(c) +Equity Compensation Plans Not Approved by Security Holders +— +— +57,005 +(d) +Total +696,011 +(a) +$ +10.01 +(b) +263,334 +(a) +Includes 73,348 shares issuable upon exercise of outstanding options granted under the Company’s incentive stock option plans, 59,313 shares +issuable upon exercise of outstanding options granted under the Company’s non-qualified stock option plans under which options were granted to officers and key employees, 2,750 shares issuable upon exercise of outstanding stock options granted +under the Astro-Med, Inc. Non-Employee Director Stock Option Plan, 520,600 shares issuable upon exercise of outstanding options granted and 40,000 restricted stock units outstanding under the Astro-Med, Inc. 2007 Equity +19 +Incentive Plan (refer to Note 10 “Share-Based Compensation” in the audited financial statements for the fiscal year ended January 31, 2015 included in the Company’s Annual +Report on Form 10-K filed with the SEC on April 8, 2015 for a further discussion). +(b) +Does not include restricted stock units. +(c) +Represents shares available for grant under the Astro-Med, Inc. 2007 Equity Incentive Plan. No shares may be granted under any other prior plan. Excludes 32,245 shares +issued pursuant to outstanding unvested restricted stock awards which are subject to forfeiture. +(d) +Represents shares available for purchase under the Employee Stock Purchase Plan. +PROPOSAL NO. 2 +ADVISORY (NON-BINDING) VOTE ON EXECUTIVE COMPENSATION +As required by the Section 14A(a)(2) of the Exchange +Act, the Board is providing shareholders with the opportunity to cast an advisory vote on the Company’s executive compensation at the annual meeting through the following resolution: +“RESOLVED, that the shareholders approve the Company’s executive compensation, as described in the +Compensation Discussion and Analysis and the tabular disclosure regarding named executive officer compensation (together with the accompanying narrative disclosure) in this Proxy Statement.” +We believe that our compensation policies and procedures, +which are described more fully in the “Compensation Discussion and Analysis” section of this Proxy Statement and in the tables and narrative in the “Executive Compensation” section, are strongly aligned with the long-term +interests of shareholders. These policies and procedures balance short-term and longer-term compensation opportunities to ensure that the Company meets short-term objectives while continuing to produce value for our shareholders over the long term. +Approval of this proposal will require the +affirmative vote of a majority of our common stock represented in person or by proxy at the annual meeting. This vote will not be binding on or overrule any decisions by the Board, will not create or imply any additional fiduciary duty on the part +of the Board, and will not restrict or limit the ability of our shareholders to make proposals for inclusion in proxy materials related to executive compensation. The Compensation Committee and the Board will, however, take into account the outcome +of the vote when considering future executive compensation arrangements. +The Board of Directors recommends a vote “FOR” approval of the Company’s executive compensation, as described in the Compensation Discussion and Analysis, and the tabular disclosure +regarding named executive officer compensation (together with accompanying narrative disclosure) in this Proxy Statement. +PROPOSAL NO. 3 +APPROVAL OF 2015 EQUITY INCENTIVE PLAN +This section summarizes the proposal to approve the Astro-Med, Inc. 2015 Equity Incentive Plan (the “2015 Plan”) in the form included with this Proxy Statement as Appendix A. The 2015 Plan was +recommended to the Board by its Compensation Committee (the “Committee”) and the Board approved the 2015 Plan on April 16, 2015, subject to approval by the shareholders. +20 +The Company currently has in place its 2007 Equity Incentive Plan, which was approved by +shareholders on May 15, 2007 (the “2007 Plan”). The 2007 Plan reserved 1,000,000 shares of common stock for issuance. As of March 27, 2015, there were 979,896 shares that had been issued, are issuable pursuant to outstanding +equity grants under the 2007 Plan, or the options the Company is committed to issue under the Equity Agreement with Mr. Woods, leaving only 20,104 shares available for new awards. The 2007 Plan provides for automatic option grants for 5,000 +shares each for each non-employee director following his election at the annual meeting. Accordingly, there are insufficient shares available for issuance under the 2007 Plan to cover both the 2015 automatic option grant to directors provided in the +2007 Plan and the 2016 and 2017 option awards to Mr. Woods required under the Equity Agreement. +The 2007 Plan will expire on May 15, 2017. Notwithstanding approval of the 2015 Plan, the 2007 Plan will remain in effect and +available for grants of plan-based awards as authorized thereunder until its expiration. The Company currently intends to satisfy its obligations to grant options and restricted stock awards to Gregory A. Woods under the Equity Agreement out of the +2007 Plan. The closing market price for Company’s common stock on January 30, 2015 was $14.95. +We are asking our shareholders to approve the 2015 Plan. If our shareholders fail to approve the 2015 Plan, the 2015 Plan will not be +given effect. Shareholder approval of the 2015 Plan will also constitute approval of the material terms of the performance goals contained in the 2015 Plan for purposes of enabling the Company to meet the requirements under Section 162(m) of +the Internal Revenue Code (the “Code”) for tax deductibility of amounts paid under the 2015 Plan to certain of the Company’s executive officers as described below under “Summary of U.S. Federal Tax Consequences – +Section 162(m).” +Generally, the 2015 +Plan contains the same features as the 2007 Plan in terms of the types of awards that can be granted; however, the 2015 Plan is updated to incorporate current best practices as well as other developments since the 2007 Plan was approved. The +principal changes from the 2007 Plan are the following: +• +Share Recycling. Unlike the 2007 Plan, the 2015 Plan provides that shares withheld in satisfaction of tax withholding obligations will be +treated as issued for purposes of determining the number of shares available for future grants under the 2015 Plan. The 2015 Plan also contains provisions dealing with awards issued in connection with acquisitions, which are described in the summary +below. +• +No Repricing. The 2015 Plan expressly provides that no amendment or modification may be made to an outstanding option or stock appreciation +right that would be treated as a repricing under the rules of the securities exchange or market system constituting the primary market for the shares, without the approval of the shareholders. +• +Addition of a Clawback : Award agreements issued under the 2015 Plan may provide for the cancellation or clawback of certain awards or a portion +of the realized gain if, prior to a change in control, there is an accounting restatement due to material noncompliance by the Company with any financial reporting requirement under the securities laws which reduces the amount of the awards that +would have been paid or vested had the financial results been properly reported, or if the Company is otherwise required by applicable law or Company policy to recoup any such amounts. +• +Minimum Vesting Period of Certain Awards : Awards granted under the 2015 Plan that vest based solely on continued service must have a vesting +term of at least three years (although vesting may be pro rata over the three year period) and awards that vest based on achievement of performance goals must have a performance period of at least one year from date of grant, subject in either case +to accelerated vesting in the Committee’s discretion in the event of a participant’s death, disability or retirement, +21 +special circumstances determined by the Committee or on a change in control of the Company. The 2015 Plan also provides that the minimum vesting provisions will not apply to awards to +non-employee directors or consultants. +• +Limit on Awards to Directors : The 2015 Plan will limit the aggregate grant date fair value of awards issued to a non-employee director in any +fiscal year to $100,000, excluding awards made at a director’s election in lieu of annual and committee cash retainers. +• +Change in Control Triggers : The 2015 Plan changes the triggering events that constitute a change in control event by raising the ownership +threshold required to trigger a “change in control” from the acquisition of beneficial ownership of 30% of our common stock to more than 50%, and requiring the actual consummation of a merger or sale transaction (rather than approval of a +transaction by the shareholders). We have also modified the change in board composition trigger so that a change in a majority of the directors in connection with an actual or threatened election contest will constitute a change in control, even if +the incumbent board elects or nominates such new directors. +Consequence of Change in Control. The 2015 Plan provides that, subject to the provisions in a specific award agreement, vesting of awards will not accelerate automatically if +the acquiring company assumes the award. If the acquiring company assumes the award but the employee is terminated within 18 months of the change in control, vesting of the award would accelerate and the terminated employee would have 12 months to +exercise the award (but not beyond its expiration date). +In addition to the items described above, the 2015 Plan would change the maximum individual limits that will apply to performance awards denominated in common stock that are granted to a participant under +the 2015 Plan from 25,000 shares during any fiscal year to 75,000 shares in any 36-month period, as described in the summary below. This change is intended to allow the Committee to make awards tied to multi-year, long-term performance measures. +The affirmative vote of a majority of the shares +present in person or by proxy and entitled to vote at the meeting is required to approve the 2015 Plan. A copy of the 2015 Plan is attached as Appendix A to this Proxy Statement. The description that follows is qualified in its entirety by reference +to the full text of the 2015 Plan as set forth in Appendix A. +Principal Features of the 2015 Plan +Purpose. The 2015 Plan is intended to promote the best interests of the Company and its shareholders and is +designed to attract, retain and motivate executives, other key employees, directors and certain other individuals providing services to the Company by providing them with the opportunity to enhance their own financial interest through acquisition of +stock in the Company and participation in the long-term growth and financial success of the Company, thereby strengthening the financial relationship between these individuals and shareholders. +Authorized Shares. The maximum +number of shares of common stock of the Company authorized for issuance under the 2015 Plan is 500,000, subject to adjustment for changes to our capital structure as provided in the 2015 Plan. Shares of stock will not be deemed issued pursuant to +the 2015 Plan to the extent an award is settled in cash in lieu of stock. Shares subject to awards that are forfeited, expire, or are settled for cash will be “added back” and become available for future awards. Shares tendered or withheld +in satisfaction of the exercise +22 +price of an option or withheld in satisfaction of tax withholding obligations will not be “added back” or otherwise increase the number of shares available for grant under the 2015 +Plan. Shares issued under the 2015 Plan may be of original issuance, treasury shares or other shares, or a combination of the foregoing. +Shares of Company common stock issued as substitution awards in connection with the Company’s merger with or acquisition of another +company will not decrease the number of shares available for grant under the 2015 Plan, but shares of common stock subject to substitution awards will not be available for further awards under the 2015 Plan if the substitution awards are forfeited, +expire or are settled in cash. The Company may use shares under a pre-existing, shareholder approved plan of a company acquired by the Company for awards under the 2015 Plan, which shares will not decrease the number of shares available for grant +under the 2015 Plan, but such shares may only be used for grants of awards made prior to the expiration of the pre-existing plan and to persons who were not employees or directors of the Company or any subsidiary prior to such acquisition. +Administration. The +2015 Plan will be administered by the Committee. The Committee may delegate to the CEO the right to grant awards to employees who are not directors or executive officers of the Company. The Committee is authorized to interpret the 2015 Plan and +related agreements and documents and to take various other actions with respect thereto. +Eligibility. Awards under the 2015 Plan may be granted to executive officers and other key employees of the Company and its subsidiaries and the Company’s non-employee +directors. In addition, the Committee may select certain consultants and advisers providing services to the Company or its subsidiaries to receive awards under the 2015 Plan. Incentive stock options may be granted only to individuals who, as of the +time of grant, are employees of the Company or its subsidiaries. The 2015 Plan’s eligibility criteria are intended to encompass a group which is currently estimated at approximately 75 individuals, which includes 5 non-employee directors and 7 +executive officers. The actual number of individuals who will receive an award cannot be determined in advance because the Committee has discretion to select the participants. +Available Awards. The 2015 Plan +allows for a range of equity-based compensation, including stock options, stock appreciation rights (“SARs”), restricted stock and restricted stock units (“RSUs”), performance awards and other stock-based awards. Each type of +award is described below under “Types of Awards Authorized Under the 2015 Plan.” Each award granted under the 2015 Plan will be evidenced by an award agreement containing such terms and provisions, consistent with the 2015 Plan, as the +Committee may approve. +General Award +Limitations . Subject to certain adjustments as provided for in the 2015 Plan: +• +No participant may be granted stock options or SARs for more than 50,000 shares of common stock for each type of award in any one fiscal year. +• +No participant may be granted performance awards denominated in shares of common stock for more than 75,000 shares of common stock for each type of +award during any 36-month period. +• +The maximum dollar value that may be earned by any participant for any fiscal year with respect to performance awards which are denominated in cash and +intended to be “performance-based compensation” under Section 162(m) of the Code is $1,000,000. +Limit on Director Awards. In addition to the general plan limitations described above, we have added a limit +on awards to our non-employee directors. The 2015 Plan provides that the aggregate grant date fair value +23 +(computed as of the date of grant in accordance with applicable financial accounting rules) of all awards granted to any non-employee director during any single fiscal year, excluding awards made +at the election of the director in lieu of all or a portion of annual and committee cash retainers) will not exceed $100,000. +Minimum Vesting Requirements . Awards granted under the 2015 Plan (other than substitute awards in connection +with an acquisition) (i) must have a restriction period of not less than three years from date of grant (but permitting pro rata vesting over such time) if subject only to continued employment or service with the Company or its subsidiaries or +(ii) a performance period of not less than one year from date of grant if subject to the achievement of performance goals, subject in either case to accelerated vesting in the Committee’s discretion upon certain events. The foregoing +vesting restrictions do not apply to grants of up to 5% of the number of shares of the Company’s common stock available for awards on the effective date of the 2015 Plan or to awards to non-employee directors or consultants. +Repricing Prohibited. The +Committee may not authorize the amendment of an outstanding option or SAR that would be treated as a repricing under the rules of the securities exchange or market system constituting the primary market for the shares, without the approval of the +Company’s shareholders. However, appropriate adjustments may be made in connection with corporate transactions and capital restructurings and as necessary to comply with applicable law. +Clawback . The 2015 Plan provides that award agreements issued under it may +provide for the cancellation or clawback of certain awards or a portion of the realized gain if, prior to a change in control of the Company, there is an accounting restatement due to material noncompliance by the Company with any financial +reporting requirement under the securities laws which reduces the amount of the awards that would have been paid or vested had the financial results been properly reported or if the Company is otherwise required by applicable law or Company policy +to recoup any such amounts. +Types of Awards +Authorized Under the 2015 Plan. The following types of awards may be granted under the 2015 Plan: +Stock Options . Stock options may be granted that entitle the optionee to purchase shares of Company common stock at a +price not less than fair market value per share as of the date of grant (except for substitution awards). The maximum term for stock options is 10 years. Incentive stock options (“ISOs”) granted to any person who owns, as of the date of +grant, stock possessing more than 10% of the total combined voting power of all classes of our stock, however, must have an exercise price that is not less than 110% of the fair market value of Company common stock on the date of grant and may not +have a term extending beyond the fifth anniversary of the date of grant. Stock options may be granted as ISOs, nonqualified stock options, or combinations of the foregoing. If on the date incentive stock options are granted, the fair market value of +the shares underlying the awards is greater than the maximum allowed under the Code, the portion of such options which exceeds such amount will be treated as nonstatutory stock options. +The 2015 Plan provides that the option exercise price may be paid (i) in cash, by check, or in cash +equivalent, (ii) by tender of Company’s common stock owned by the participant having a fair market value not less than the exercise price , (iii) with the consent of the Committee, by the assignment of the proceeds of a sale with +respect to some or all of the shares being acquired upon the exercise of the option, or (iv) pursuant to a “net exercise” arrangement as permitted by the Committee whereby the participant directs the Company to deduct from the shares +of stock issuable upon exercise of an option a number of shares having an aggregate fair market +24 +value equal to the sum of the total exercise price of such option and/or the amount of the participant’s minimum tax withholding. Payment of an option exercise price may also be made by such +other lawful consideration as approved by the Committee or by any combination of the foregoing. +The 2015 Plan provides for the extension of the term of outstanding options (other than ISOs) for up to 30 days if, on the last business day of the term, the exercise of the award is prohibited by +applicable law, Company policy or due to the application of a contractual lock-up restriction in order to comply with the requirements of Section 409A of the Code and prevent the inadvertent expiration of the term under those circumstances. No +option may be exercised unless the participant has made adequate provision for applicable taxes relating to the exercise of the option, including, if permitted or required by the Company, through the participant’s surrender of a portion of the +option shares to the Company. +Stock options are +nontransferable by the participant, other than by will or by the laws of descent and distribution, and are exercisable during the participant’s lifetime only by the participant. However, the Committee may provide in the option award agreement +or may agree in writing that participant may transfer a nonstatutory stock option, without consideration, to members of the participant’s immediate family, to trusts for the benefit of such family members, or to partnerships in which such +family members are the only partners, provided that the transferee agrees in writing to be bound by all of the terms and conditions of the 2015 Plan and the applicable option award agreement. +Annual Directors’ Options . The 2015 Plan continues the annual 5,000 option grant to +non-employee directors. Accordingly, upon the adjournment of each annual meeting, non-employee directors of the Company will receive non-qualified options to purchase 5,000 shares of stock. If a person is first elected to serve as director of the +Company at any meeting of the shareholders other than an annual meeting, such person is granted an option to purchase 5,000 shares of stock upon election. Each of these options has an exercise price equal to the fair market value per share of the +stock as of the date of the grant. The options granted to directors have a term of ten years and become exercisable on the earlier of 12 months after the grant date or immediately prior to the occurrence of the annual meeting following the date the +option is granted; provided, however, that all such options become immediately exercisable upon a change in control of the Company. If a director ceases to be a director of the Company for any reason other than death or disability, all such options +that are not exercisable terminate and any remaining options may be exercised within two years following the director’s termination. If a director ceases to be a director due to death or disability, all such options become immediately +exercisable, and may be exercised within two years following the date of death or disability. The 2015 Plan provides that, upon approval of the 2015 Plan, the automatic 5,000 share option grant to non-employee directors under the 2007 Plan will +cease. +Stock Appreciation +Rights . A SAR gives a participant the right to receive the appreciation in the fair market value of the Company’s common stock between the date of grant of the award and the date of its exercise. The Company may pay the +appreciation either in cash or in the Company’s common stock. The maximum term of any SAR granted under the 2015 Plan is ten years. The 2015 Plan provides for the extension of the term of outstanding SARs for up to 30 days if, on the last +business day of the term, the exercise of the award is prohibited by applicable law, company policy or due to the application of a contractual lock-up restriction in order to comply with the requirements of Section 409A of the Code and prevent +the inadvertent expiration of the term under those circumstances. SARs are nontransferable by the participant, other than by will or by the laws of descent and distribution, and are exercisable during the participant’s lifetime only by the +participant. +25 +Restricted Stock Awards . A grant of restricted stock involves the immediate +transfer by the Company to a participant of ownership of a specified number of restricted shares of its common stock in consideration of the performance of service. The participant is entitled immediately to voting, dividend and other ownership +rights in such shares; provided, however, that at least a portion of the restricted stock covered by such issuance or transfer must be subject to a “substantial risk of forfeiture” within the meaning of Section 83 of the Code for a +period to be determined by the Committee at the date of grant or to the achievement of specified performance measures. Any dividends or other distributions paid in shares will be subject to the same restrictions as the original award. +Restricted Stock Units . An RSU represents a +right to receive common stock of the Company at a future date determined in accordance with the participant’s award agreement. No monetary payment is required for receipt of RSUs or the shares issued in settlement of the award, the +consideration for which is furnished in the form of the participant’s services to the Company. The Committee may grant restricted stock unit awards subject to the attainment of performance goals similar to those described below in connection +with performance awards, or may make the awards subject to vesting conditions similar to those applicable to restricted stock awards. Participants have no voting rights or rights to receive cash dividends with respect to RSUs until shares of common +stock are issued in settlement of such awards. However, the Committee may grant RSUs that entitle their holders to receive dividend equivalents, which are rights to receive additional RSUs for a number of shares whose value is equal to any cash +dividends paid by the Company. +Other +Stock-Based Awards . The Committee may, in its discretion, grant to eligible employees other stock-based awards, as deemed by the Committee to be consistent with the purposes of the 2015 Plan. Any such awards will be subject to the +minimum vesting period requirements (three years for time-based awards and one year for performance-based awards) described above. +Performance Awards . The Committee may grant performance awards in the form of performance shares or performance +units, subject to such conditions and the attainment of such performance goals over such periods as the Committee determines in writing. Performance shares and performance units are unfunded bookkeeping entries generally having initial values, +respectively, equal to the fair market value determined on the grant date of the common stock. Performance awards will specify a predetermined amount of performance shares or performance units that may be earned by the participant to the extent that +one or more predetermined performance goals are attained within a predetermined performance period. To the extent earned, performance awards may be settled in cash, common stock of the Company or any combination thereof. In its discretion, the +Committee may provide for the payment to a participant who is awarded performance shares of dividend equivalents with respect to cash dividends paid on the Company’s common stock. Any dividends or dividend equivalents provided with respect to +performance awards, as well as with respect to restricted stock, RSUs and other stock-based awards that are subject to the attainment of performance goals, will be subject to the same restrictions and risk of forfeiture as the underlying awards. +Performance awards are nontransferable by the participant, other than by will or by the laws of descent and distribution, and are exercisable during the participant’s lifetime only by the participant. +26 +Performance Goals. Performance goals are measurable +performance objectives established by the Committee for participants who have received awards under the 2005 Plan. Performance goals will be based on the attainment of specified target levels with respect to one or more measures of business or +financial performance of the Company and its subsidiaries, or such division or business unit of the Company as may be selected by the Committee. The Committee, in its discretion, may base performance goals on one or more of the following such +measures or any combination of the following: +• +revenue +• +gross profit margin +• +operating income +• +operating margin +• +income before income taxes +• +net income +• +earnings before interest, taxes, depreciation and/or amortization (EBITDA) +• +earnings per share (diluted) +• +cash flow from operations +• +free cash flow +• +return on equity +• +return on assets +• +return on sales +• +Operating income return on net assets (ORONA) +• +market share +• +one or more operating ratios +• +stock price +• +Economic value added (EVA) +• +accomplishment of mergers, acquisitions, dispositions or similar extraordinary business transactions +• +any individual performance objective that is measured solely in terms of quantitative targets related to the Company or the Company’s business +The performance goals selected +in any case need not be applicable across the Company, but may be particular to an individual’s function or business unit. The Committee may provide, consistent with Section 162(m) of the Code, that any evaluation of performance may +include or exclude any of the following events: litigation or claim judgments or settlements; the effect of changes in tax laws, accounting principles, or other laws or provisions affecting reported results; any reorganization and restructuring +programs; extraordinary nonrecurring items as described under generally accepted accounting principles and/or in management’s discussion and analysis of financial condition and results of operations appearing in the Company’s annual report +to shareholders for the applicable year; and acquisitions or divestitures. +27 +In the event that applicable tax and/or securities laws change to permit Committee +discretion to alter the governing performance goals without obtaining shareholder approval of such changes, the Committee shall have sole discretion to make such changes without obtaining shareholder approval, provided the exercise of such +discretion does not violate Section 409A of the Code. In addition, in the event that the Committee determines that it is advisable to grant performance awards that shall not qualify as “Performance-Based Compensation”, the Committee +may make such grants without satisfying the requirements of Section 162(m) of the Code and base vesting on performance goals other than those set forth above. +The Committee retains the discretion to eliminate or reduce, +but not increase, the amount that would otherwise be payable to the participant on the basis of the performance goals attained. However, no such reduction may increase the amount paid to any other participant. Performance award payments may be made +in lump sum or in installments. If any payment is to be made on a deferred basis, the Committee may provide for the payment of dividend equivalents or interest during the deferral period. +The effect of the participant’s termination of employment on any performance award shall be determined by +the Committee, in its discretion, and set forth in the applicable award agreement. No performance award may be sold or transferred other than by will or the laws of descent and distribution prior to the end of the applicable performance period. +Change in +Control. For purposes of the 2015 Plan, “Change in Control” means: +• +The acquisition of more than 50% of beneficial ownership of the combined voting stock of the Company by any person or group other than the Company or +its subsidiaries or any employee benefit 2015 Plan of the Company or any person who was an officer or director of the Company on the effective date of the 2015 Plan; +• +Consummation by the Company of a reorganization, merger or consolidation in which all or substantially all of the individuals and entities who were the +beneficial owners of the voting securities of such entity immediately prior to such reorganization, merger or consolidation do not, following such reorganization, merger or consolidation, beneficially own, directly or indirectly, securities +representing more than 50% of the voting power of then outstanding voting securities of the corporation resulting from such a reorganization, merger or consolidation, unless the transaction is structured as “merger of equals” and the Board +determines that a change in control has not occurred; +• +The sale of all or substantially all of the Company’s assets to a party which is not controlled by or under common control with the Company; or +• +During any 24 month period, individuals who, as of the beginning of such period, constitute the Board (the “Incumbent Directors”) cease for +any reason to constitute at least a majority of the Board, except that individuals whose election or nomination was approved by a vote of at least a majority of the Incumbent Directors then on the Board (other than in connection with an actual or +threatened election contest) are treated as Incumbent Directors. +Impact of Change in Control on Awards. The 2015 Plan generally provides the Committee with flexibility to determine the effects of a change in control on outstanding awards. +Under the 2015 Plan, in the event of a Change in Control, the acquiring company may, without the consent of any participant, either assume the Company’s rights and obligations under outstanding awards or substitute for outstanding awards +substantially equivalent awards for the acquiring company’s stock. The determination of such substantial equality of value of consideration shall be made by the Committee in its sole discretion. +28 +In the event the acquiring company elects not to assume or substitute for outstanding awards +of the Company in connection with a Change in Control, then the exercisability and vesting conditions applicable to the shares held by a participant whose employment or other service has not terminated prior to the Change in Control shall be +accelerated effective as of the date ten days prior to the Change in Control and the shares subject shall become fully vested and transferable to the full extent of the original grant, provided that any award agreement with respect to a performance +award may provide for vesting, settlement or conversion to a restricted stock award upon the consummation of a Change in Control on a basis that is specific to that performance award. +Assumption or Substitution of Certain Awards. Unless otherwise provided in an +award agreement or other agreement between the Company and a participant, in the event of a Change in Control in which the acquiring corporation assumes or substitutes for an award (or in which the Company is the ultimate parent corporation and +continues the award), if a participant’s employment terminates within 18 months following such Change in Control (or such other period set forth in the award agreement) and under the circumstances specified in the award agreement: +• +options and SARs outstanding as of the date of such termination of employment will immediately vest, become fully exercisable, and may thereafter be +exercised for 12 months (or the period of time set forth in the award agreement, but in no event beyond the end of the regularly scheduled term of such options or SARs); +• +the vesting conditions applicable to restricted stock and restricted stock units outstanding as of the date of such termination of employment shall +lapse and the restricted stock and restricted stock units shall become free of all restrictions, limitations and conditions and become fully vested; and +• +the restrictions, limitations and other conditions applicable to any other stock-based awards or any other awards shall lapse, and such other +stock-based awards or such other awards shall become free of all restrictions, limitations and conditions and become fully vested and transferable to the full extent of the original grant. +Termination of Awards. Award +agreements may provide that in the event of a Change in Control, options and SARs outstanding as of the date of the Change in Control may be cancelled and terminated without payment therefor if the fair market value of one share of stock of the +Company as of the date of the Change in Control is equal to or less than the option exercise price per share or the SAR grant price. The Committee, in its discretion, may determine that, if a Change in Control, each option and SAR outstanding shall +terminate within a specified number of days after notice to the participant, and/or that each participant shall receive, with respect to each share of stock subject to such option or SAR, an amount equal to the excess of the fair market value of +such share of stock immediately prior to the occurrence of such Change in Control over the exercise price per share. +Cancellation of Award; Forfeiture of Gain. The 2015 Plan provides that the Company may retain the right to +cause a forfeiture of the gain realized by a participant on account of actions taken by the participant in violation or breach of or in conflict with any employment agreement, non-competition agreement, any agreement prohibiting solicitation of +employees or customers or any confidentiality obligation with respect to the Company and its affiliates, or otherwise in competition with the Company or its affiliates. In addition, the Company may annul an award if the participant is an employee of +the Company or its affiliates and is terminated for Cause as defined in the applicable award agreement or the 2015 Plan. +Adjustments for Changes in Capital Structure. If the number of outstanding shares of stock of the Company is +increased or decreased or the shares of stock are changed into or exchanged for a different number or +29 +kind of shares or other securities of the Company on account of any recapitalization, reclassification, stock split, reverse split, combination of shares, exchange of shares, stock +dividend or other distribution payable in capital stock, or other increase or decrease in such shares effected without receipt of consideration by the Company, then the number and kinds of shares for which grants of awards may be made under the 2015 +Plan will be adjusted proportionately by the Company. Any such adjustment in outstanding options or SARs will not change the aggregate exercise price payable with respect to shares that are subject to the unexercised portion of an outstanding option +or SAR, but will include a corresponding proportionate adjustment in the exercise price per share for such option or SAR. +Summary of U.S. Federal Income Tax Consequences. The following summary is intended only as a general guide +to the U.S. federal income tax consequences of participation in the 2015 Plan and does not attempt to describe all possible federal or other tax consequences of such participation or tax consequences based on particular circumstances. +Incentive Stock Options . A participant +recognizes no taxable income for regular income tax purposes as a result of the grant or exercise of an incentive stock option (ISO) qualifying under Section 422 of the Code. Participants who neither dispose of their shares within two years +following the date the option was granted, nor within one year following the exercise of the option, will normally recognize a capital gain or loss equal to the difference, if any, between the sale price and the purchase price of the shares. If a +participant satisfies such holding periods upon the sale of the shares, the Company will not be entitled to any deduction for federal income tax purposes. If a participant disposes of shares within two years after the date of grant, or within one +year after the date of exercise (a “disqualifying disposition”), the difference between the fair market value of the shares on the determination date (see discussion under “Nonstatutory Stock Options” below) and the option +exercise price (not to exceed the gain realized on the sale if the disposition is a transaction in which a loss, if sustained, would be recognized) will be taxed as ordinary income at the time of disposition. Any gain in excess of that amount will +be a capital gain. If a loss is recognized, there will be no ordinary income, and such loss will be a capital loss. Any ordinary income recognized by the participant upon the disqualifying disposition of the shares generally will be deductible by +the Company for federal income tax purposes, except to the extent such deduction is limited by applicable provisions of the Code. +The difference between the option exercise price and the fair market value of the shares on the determination date of an ISO (see +discussion under “Nonstatutory Stock Options” below) is treated as an adjustment in computing the participant’s alternative minimum taxable income and may be subject to an alternative minimum tax which is paid if such tax exceeds the +regular tax for the year. Special rules may apply with respect to certain subsequent sales of the shares in a disqualifying disposition, certain basis adjustments for purposes of computing the alternative minimum taxable income on a subsequent sale +of the shares and certain tax credits which may arise with respect to participants subject to the alternative minimum tax. +Nonstatutory Stock Options . Options not designated or qualifying as ISOs will be nonstatutory stock options having no +special tax status. A participant generally recognizes no taxable income as the result of the grant of such an option, provided the exercise price of the option is no less than the fair market value of the common stock at the time of grant. Upon +exercise of a nonstatutory stock option, the participant normally recognizes ordinary income in the amount of the difference between the option exercise price and the fair market value of the shares on the determination date (as defined below). If +the participant is an employee, such ordinary income generally is subject to withholding of income and employment taxes. The “determination date” is the date on which the option is exercised, unless the shares are subject to a substantial +risk of forfeiture (as in the case where +30 +a participant is permitted to exercise an unvested option and receive unvested shares which, until they vest, are subject to the Company’s right to repurchase them at the original exercise +price upon the participant’s termination of service) and are not transferable, in which case the determination date is the earlier of (i) the date on which the shares become transferable, or (ii) the date on which the shares are no +longer subject to a substantial risk of forfeiture. If the determination date is after the exercise date, the participant may elect, pursuant to Section 83(b) of the Code, to have the exercise date be the determination date by filing an +election with the Internal Revenue Service no later than 30 days after the date the option is exercised, provided that no Section 83(b) election may be made unless permitted by the terms of the award agreement or approved in writing by the +Committee. Upon the sale of stock acquired by the exercise of a nonstatutory stock option, any gain or loss, based on the difference between the sale price and the fair market value on the determination date, will be taxed as capital gain or loss. +No tax deduction is available to the Company with respect to the grant of a nonstatutory stock option or the sale of the stock acquired pursuant to such grant. The Company generally will be entitled to a deduction equal to the amount of ordinary +income recognized by the participant as a result of the exercise of a nonstatutory stock option, except to the extent such deduction is limited by applicable provisions of the Code. +Restricted Stock Awards . A participant acquiring restricted stock generally will recognize +ordinary income equal to the fair market value of the shares on the “determination date” (as defined above under “Nonstatutory Stock Options”). If the participant is an employee, such ordinary income generally is subject to +withholding of income and employment taxes. If the determination date is after the date on which the participant acquires the shares, the participant may elect, pursuant to Section 83(b) of the Code, to have the date of acquisition be the +determination date by filing an election with the Internal Revenue Service no later than 30 days after the date the shares are acquired, provided that no Section 83(b) election may be made unless permitted by the terms of the award agreement or +approved in writing by the Committee. Upon the sale of shares acquired pursuant to a restricted stock award, any gain or loss, based on the difference between the sale price and the fair market value on the determination date, will be taxed as +capital gain or loss. The Company generally will be entitled to a deduction equal to the amount of ordinary income recognized by the participant on the determination date, except to the extent such deduction is limited by applicable provisions of +the Code. +Performance and RSU +Awards . A participant generally will recognize no income upon the grant of a performance share, performance unit or RSU award. Upon the settlement of such awards, participants normally will recognize ordinary income in the year of receipt in +an amount equal to the cash received and the fair market value of any unrestricted shares received. If the participant is an employee, such ordinary income generally is subject to withholding of income and employment taxes. If the participant +received shares of restricted stock, the participant generally will be taxed in the same manner as described above (see discussion under “Restricted Stock”). Upon the sale of any shares received, any gain or loss, based on the difference +between the sale price and the fair market value on the “determination date” (as defined above under “Nonstatutory Stock Options”), will be taxed as capital gain or loss. The Company generally will be entitled to a deduction +equal to the amount of ordinary income recognized by the participant on the determination date, except to the extent such deduction is limited by applicable provisions of the Code. +Section 162(m) . Section 162(m) of the +Code generally denies a corporate tax deduction for annual compensation exceeding $1 million paid to the chief executive officer, or to any of the four other most highly compensated officers of a publicly held company. However, certain types of +compensation, including performance-based compensation, are generally excluded from this deductibility limit. To enable compensation in connection with stock options, certain restricted stock grants, performance shares and performance units +31 +awarded under the 2015 Plan to qualify as “performance-based” within the meaning of Section 162(m) of the Code, the 2015 Plan limits the sizes of such awards as described above. +While the Company believes that compensation in connection with such awards under the 2015 Plan will be deductible by the Company for federal income tax purposes, under certain circumstances, such as a Change in Control, compensation paid in +settlement of performance awards may not qualify as “performance-based.” By approving the 2015 Plan, the shareholders will be approving, among other things, eligibility requirements for participation in the 2015 Plan, financial performance +measures upon which specific performance goals applicable to certain awards would be based, limits on the numbers of shares or level of compensation that could be made subject to certain awards, and the other material terms of the awards described +above. +Section 409A . +Section 409A of the Code has implications that affect traditional deferred compensation plans, as well as certain equity-based awards, such as stock options, restricted stock units, and stock appreciation rights. Section 409A requires +compliance with specific rules regarding the timing of exercise or settlement of equity- based awards and, unless explicitly set forth in a plan document or award agreement, no acceleration of payment is permitted. Under the final regulations, +issued on April 10, 2007, with respect to Section 409A provided by the U.S. Department of Treasury, individuals who hold equity awards are subject to the following penalties if the terms of such awards do not comply with the requirements +of Section 409A: (i) appreciation is includible in the participant’s gross income for tax purposes once the awards are no longer subject to a “substantial risk of forfeiture” (e.g., upon vesting), (ii) the participant +is required to pay interest at the tax underpayment rate plus one percentage point commencing on the date an award subject to Section 409A is no longer subject to a substantial risk of forfeiture, and (iii) the participant incurs a 20% +penalty tax plus interest on the amount required to be included in income. +Awards to Participants Outside the United States. The Committee may modify the terms of any award under the 2015 Plan made to a participant who is a resident or primarily +employed outside the United States in order that such award will conform to applicable laws and regulations or so that the value and other benefits of the award to the participant, as affected by foreign tax laws and other restrictions, shall be +comparable to the value of such an award to a participant who is resident or primarily employed in the United States. +Termination or Amendment. The term of the 2015 Plan will expire on May 20, 2025. No award grant will be +made after such date. If approved by shareholders, the 2015 Plan will continue in effect until the first to occur of (i) its termination by the Board, (ii) the date on which all shares available for issuance under the 2015 Plan have been +issued and all restrictions on such shares under the terms of the 2015 Plan and the agreements evidencing awards granted under the 2015 Plan have lapsed, or (iii) May 20, 2025. The Board may terminate or amend the 2015 Plan at any time, +provided that no amendment may be made without shareholder approval if the Board deems such approval necessary for compliance with any applicable tax requirement or any market system on which the shares of the Company’s common stock are then +listed. No termination or amendment may affect any outstanding award unless expressly provided by the Committee, and in any event, may not adversely affect an outstanding award, without the consent of the participant, unless necessary to comply with +any applicable law, regulation or rule. +Nonexclusivity of the Plan. Neither the adoption of the 2015 Plan by the Board nor the submission of the +2015 Plan to the shareholders of the Company for approval shall be construed as creating any limitations on the power of the Board to adopt such other incentive arrangements as it may deem desirable, including, without limitation, the granting of +stock options otherwise than under the 2015 Plan. +32 +New Plan Benefits +Equity Awards Made in Fiscal Year 2015 . We cannot +currently determine the benefits or number of shares subject to awards that may be granted in the future to participants under the 2015 Plan; therefore, the following table sets forth information with respect to equity awards made in fiscal year +ended January 31, 2015 under the 2007 Plan as if the 2015 Plan had been in effect to each of (i) the Named Executive Officers identified in the “Executive Compensation—Summary Compensation Table” contained in this proxy +statement, (ii) all current executive officers as a group, (iii) our current non-executive officer directors as a group (excluding stock issued in lieu of cash retainers at the directors’ election), and (iv) all employees other +than executive officers as a group. +Name and Position +Stock +Options(#) +Restricted +Stock(#) +Gregory A. Woods, President and Chief Executive Officer +50,000 +Joseph P. O’Connell, Senior Vice President, Chief Financial Officer +7,500 +Michael Morawetz, Vice President, International Branches +4,700 +Executive Group (7 persons) +81,800 +Non-Executive Director Group (5 persons) +25,000 +7,245 +Non-Executive Officer Employee Group (67 persons as of fiscal year end) +49,800 +Equity Awards Made in +Fiscal Year 2016 and Future Equity Awards. Although we cannot currently determine the benefits or number of shares subject to awards that may be granted during the remainder of the 2016 fiscal year to participants under the 2015 Plan, we did +award an option to purchase up to 50,000 shares of our common stock and 537 shares of restricted stock to Gregory A. Woods on March 16, 2015 under the 2007 Plan pursuant to the Equity Agreement with Mr. Woods. The Committee anticipates +granting options for an additional 100,000 shares and an unspecified number of shares of restricted stock to Mr. Woods in March 2016 and 2017 under the 2007 Plan pursuant to the Equity Agreement. +Pursuant to the terms of the Non-Employee Director Annual +Compensation Program, each non-employee director will receive, immediately following the adjournment of the 2015 annual meeting of shareholders, the following annual equity grants: (i) an option to acquire 5,000 shares, which will vest +immediately prior to the 2016 annual meeting of shareholders and (ii) restricted stock with a market value (on the date of grant) of $20,000, which will vest on the earlier of May 20, 2016 or the day immediately preceding our next annual +meeting of shareholders. +The following table sets +forth information with respect the option awards and the dollar value of the anticipated restricted stock awards to be made to our non-executive officer directors immediately following the adjournment of the 2015 annual meeting of shareholders. +Name and Position +Dollar +Value +($)(a) +Restricted +Stock +(#)(b) +Option +Awards +(#) +Non-Executive Director Group (5 persons) +100,000 +6,685 +25,000 +(b) +(a) +Reflects the value of the annual restricted stock awards to non-employee directors. The value does not include the value of any options or stock a director will receive +pursuant to a director’s election to receive stock in lieu of any cash retainer. +(b) +Estimated number of shares to be issued to non-employee directors following 2015 annual meeting of shareholders based on a value of $14.95 (the market value of the +Company’s common stock as of January 30, 2015). +33 +No awards have been granted subject to shareholder approval of the 2015 Plan, and the amount +of future awards to our Named Executive Officers and other employees under the 2015 Plan are not determinable. For additional information regarding grants made during the Company’s 2015 fiscal year to our Named Executive Officers, please see +the Grants of Plan-Based Awards table earlier in this proxy statement. +The Board of Directors recommends a vote “FOR” the approval of Proposal No. 3, which approves the 2015 Equity Incentive Plan. +AUDIT COMMITTEE REPORT +The Audit Committee of the Board is responsible for +providing independent, objective oversight of the Company’s accounting functions and internal controls. The Audit Committee is composed of three directors, each of whom is independent as defined by the NASDAQ listing standards and SEC rules. +The Audit Committee operates under a written charter approved by the Board. +Management is responsible for the Company’s internal controls and financial reporting process. The independent accountants are responsible for performing an independent audit of the Company’s +consolidated financial statements in accordance with generally accepted auditing standards and to issue a report thereon. The Audit Committee’s responsibility is to monitor and oversee these processes. +The Audit Committee’s responsibilities focus on two +primary areas: (1) the adequacy of the Company’s internal controls and financial reporting process and the reliability of the Company’s financial statements; and (2) the independence and performance of the Company’s +independent accountants. The Audit Committee has sole authority to select, evaluate and when appropriate, to replace the Company’s independent auditors. +The Audit Committee has met with management and the Company’s independent accountants, Wolf & Company, P.C., to review and +discuss the January 31, 2015 financial statements. Management represented to the Committee that the Company’s consolidated financial statements were prepared in accordance with generally accepted accounting principles, and the Audit +Committee has reviewed and discussed the consolidated financial statements with management and the independent accountants. The Audit Committee also discussed with Wolf & Company, P.C. the matters required by Auditing Standard No. 16 +( Communication with Audit Committees ), as amended and as adopted by the Public Company Accounting Oversight Board (“PCAOB”) in Rule 3200T. The Audit Committee also received from Wolf & Company, P.C. the written disclosures +and the letter from Wolf & Company, P.C. pursuant to applicable requirements of the PCAOB regarding Wolf & Company, P.C.’s communications with the Audit Committee concerning independence, and has discussed with Wolf & +Company, P.C. its independence from the Company. +The Audit Committee received the information concerning the fees of Wolf & Company, P.C. for the year ended January 31, 2015 +set forth below under “Independent Accountant Fees and Services.” When applicable, the Audit Committee considers whether the provision of non-audit services is compatible with maintaining the independence of the independent accountants. +Wolf & Company, P.C. did not provide any non-audit services during the fiscal year ended January 31, 2015. +34 +Based upon the review and discussions referred to above, the Audit Committee recommended +that the Board include the audited consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended January 31, 2015, to be filed with the SEC. +Audit Committee: +Graeme MacLetchie (Chairman) +Harold Schofield +Mitchell I. Quain +PROPOSAL NO. 4 +RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +The Audit Committee has sole authority to select, evaluate +and when appropriate, to replace the Company’s independent auditors. The Audit Committee has appointed Wolf & Company, P.C. as the Company’s independent registered public accounting firm for the fiscal year ending January 31, +2016. Although action by our shareholders on this matter is not required, the Audit Committee believes it is appropriate to seek shareholder ratification in light of the critical role played by the independent auditors in maintaining the integrity +of Company financial controls and reporting and hereby requests the shareholders to ratify such appointment. +The Board of Directors recommends a vote “FOR” the ratification of the appointment of Wolf & Company, P.C. as the +Company’s independent registered public accounting firm. +Independent Accountants’ Fees, Services and Other Matters +The Company expects a representative of Wolf & +Company, P.C. will be present at the annual meeting with the opportunity to make a statement, if he or she so desires, and that such representative will be available to respond to appropriate questions. +Aggregate fees for professional services rendered for the +Company by Wolf & Company, P.C. for the fiscal years ended January 31, 2015 and 2014 are set forth below. The aggregate fees included in the Audit category are billed for the fiscal years for the audit of the Company’s annual +financial statements and review of financial statements and statutory and regulatory filings or engagements. +2015 +2014 +Audit Fees +$ +175,000 +$ +153,378 +Audit-Related Fees +0 +0 +Tax Fees +0 +0 +All Other Fees +0 +0 +Audit Fees for the +fiscal years ended January 31, 2015 and 2014 were for professional services rendered for the audits of the financial statements of the Company, quarterly review of the financial statements included in the Company’s Quarterly Reports on +Form 10-Q, consents and other assistance required to complete the year end audit of the consolidated financial statements. +35 +Policy on Audit Committee Pre-Approval . The Audit Committee pre-approves all audit +and non-audit services provided by the independent accountants prior to the engagement of the independent accountants with respect to such services. None of the services described above were approved by the Audit Committee under the de +minimus exception provided by Rule 2-01(C)(7)(i)(c) under Regulation S-X. +FINANCIAL REPORTS +A copy of the annual report of the Company for the fiscal year ended January 31, 2015 including the Company’s annual report to the SEC on Form 10-K, accompanies this proxy statement. Such report +is not part of this proxy statement. +PROPOSALS +FOR 2016 ANNUAL MEETING +The 2016 annual +meeting of the shareholders of the Company is scheduled to be held on May 18, 2016. If a shareholder intending to present a proposal at that meeting wishes to have such proposal included in the Company’s proxy statement and form of proxy +relating to the meeting, the shareholder must submit the proposal to the Company no later than December 20, 2015. Shareholder proposals that are to be considered at the 2016 annual meeting but not requested to be included in the proxy statement +must be submitted no later than March 19, 2016 and no earlier than December 20, 2015. +OTHER MATTERS +No business other than that set forth in the attached Notice of Meeting is expected to come before the annual meeting, but should any other matters requiring a vote of shareholders arise, including a +question of adjourning the meeting, the persons named in the accompanying proxy will vote thereon according to their best judgment in the interests of the Company. In the event any of the nominees for the office of director should withdraw or +otherwise become unavailable for reasons not presently known, the persons named as proxies will vote for other persons in their place in what they consider the best interests of the Company. +You are urged to sign and return your proxy promptly to make certain your shares will be voted at the meeting. +You may revoke your proxy at any time before it is voted. +By Order of the Board of Directors +Margaret D. Farrell +Secretary +36 +APPENDIX A +ASTRO-MED, INC. +2015 EQUITY INCENTIVE PLAN +SECTION 1. PURPOSE +This 2015 Equity Incentive Plan (the +“ Plan ”) is intended to promote the best interests of the Company and its shareholders and is designed to attract and retain the best available talent and encourage the highest level of performance by, and provide additional +incentive to (a) executives and other key employees of the Company and any other Participating Company (as defined below), (b) Directors, and (c) certain other individuals providing services to the Company and any other Participating +Company. The Company intends that this purpose will be effected by providing for Awards in the form of stock and/or stock-based cash awards as provided in the Plan, which afford Participants the opportunity to enhance their own financial interests +through the acquisition of shares of Company Stock and participation in the long-term growth and financial success of the Company, thereby strengthening the financial relationship between Participants and Company shareholders. The terms of the Plan +shall be interpreted in accordance with this intention. +SECTION 2. DEFINITIONS AND CONSTRUCTION +2.1 Definitions . Whenever used herein, the following terms shall have their respective +meanings set forth below: +“ Acquiring +Corporation ” shall have the meaning set forth in Section 12.1 hereof. +“ Award ” means any Option, SAR, Restricted Stock Award, Performance Award or Other Stock-Based Award granted under the Plan. +“ Award Agreement ” means a written agreement between the Company and a Participant setting +forth the terms, conditions and restrictions of the Award granted to the Participant. +“ Board ” means the Board of Directors of the Company. +“ Cashless Exercise ” shall have the meaning set forth in Section 6.3 hereof. +“ Cause ” shall have the meaning given such +term in the applicable Award Agreement and, in the absence of any such definition, means (x) any material breach by the Participant of any agreement to which the Participant and a Participating Company are both parties, (y) any act or +omission to act by the Participant which may have a material and adverse effect on a Participating Company’s business or on the Participant’s ability to perform services for a Participating Company, including, without limitation, the +commission of any crime (other than ordinary traffic violations), or (z) any material misconduct or material neglect of duties by the Participant in connection with the business or affairs of a Participating Company. +A-1 +“ Change in Control ” means: +(a) the acquisition of more than 50% +of the beneficial ownership of the combined voting securities of the Company by any person or group (as such terms are used in Section 13(d) and 14(d) of the Exchange Act), other than the Company or its subsidiaries or any employee benefit plan +of the Company or any person who was an officer or Director of the Company on the Effective Date of the Plan; +(b) consummation by the Company of a reorganization, merger or consolidation, in each case, with respect to which +all or substantially all of the individuals and entities who were the beneficial owners of the voting securities of such entity immediately prior to such reorganization, merger or consolidation do not, following such reorganization, merger or +consolidation, beneficially own, directly or indirectly, securities representing more than 50% of the voting power of then outstanding voting securities of the corporation resulting from such a reorganization, merger or consolidation, provided that +the forgoing shall not apply if the transaction is structured as “merger of equals” and the Board determines that a Change in Control has not occurred; +(c) the sale, exchange or other +disposition (in one transaction or a series of related transactions) of all or substantially all of the assets of the Company (on a consolidated basis) to a party which is not controlled by or under common control with the Company; or +(d) a change in the composition of the +Board during any period of twenty-four months (not including any period prior to the Effective Date of this Plan), such that the individuals who at the beginning of such period, constitute the Board (such Board shall be hereinafter referred to as +the “ Incumbent Board ”) cease for any reason to constitute at least a majority of the Board; provided , however , for purposes of this paragraph, that any individual who becomes a member of the Board +subsequent to the Effective Date, whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a two-thirds (2/3) of those individuals who are members of the Board and who were also members +of the Incumbent Board (or deemed to be such pursuant to this proviso) shall be considered as though such individual were a member of the Incumbent Board; but, provided further , that any such individual whose initial assumption of office +occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of +“Persons” (as such term is used for purposes of Section 13(d) or 14(d) of the Exchange Act) other than the Board shall not be so considered as a member of the Incumbent Board; +provided , however , that notwithstanding the foregoing, with respect to any Award that is determined to be +“non-qualified deferred compensation” within the meaning of Section 409A of the Code, an event shall not be considered to be a Change in Control under the Plan for purposes of any payment in respect of such Award unless such event is +also a “change in ownership,” a “change in effective control” or a “change in the ownership of a substantial portion of the assets” of the Company within the meaning of Section 409A of the Code. +“ Code ” means the Internal Revenue Code of +1986, as amended, and any applicable regulations promulgated thereunder. +“ Committee ” means the Compensation Committee or other committee of the Board duly appointed to administer the Plan and having such powers as shall be specified by the Board. It is +intended that each member of the Committee shall be an Independent Director and a “Non-Employee Director” within the meaning of Rule 16b-3 under the Exchange Act (or any successor provision), but the authority and validity of any act taken +or not taken by the Committee shall not be affected if any person administering the Plan is not a Non-Employee Director. +A-2 +“ Company ” means Astro-Med, Inc., a Rhode Island corporation, or any +successor company thereto. +“ Consultant ” means a person engaged to provide consulting or advisory services (other than as an Employee or a Director) +to a Participating Company, provided that the identity of such person, the nature of such services or the entity to which such services are provided would not preclude the Company from offering or selling securities to such person pursuant to the +Plan in reliance on registration on a Form S-8 Registration Statement under the Securities Act. +“ Covered Employee ” means an Employee who is a covered employee within the meaning of Section 162(m)(3) of the Code, as the same may be amended from time to time. +“ Director ” means a member of the Board or of +the board of directors of a Participating Company. +“ Disability ” shall have the meaning given such term in the applicable Award Agreement and, in the absence of any such +definition, shall have the meaning set forth in Section 409A of the Code, as the same may be amended from time to time. Section 409A of the Code currently defines “Disability” as (a) the inability to engage in any +substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months or (b) by reason or any +medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months and the service recipient is receiving income replacement payments for at +least three months under a plan covering employees. Notwithstanding the foregoing, with respect to rules regarding expiration of an Incentive Stock Option following termination of the Participant’s Service, Disability shall have the meaning +specified in Section 22(e)(3) of the Code. +“ Dividend Equivalent ” means a credit, made at the discretion of the Committee or as otherwise provided by the Plan, to +the account of a Participant in an amount equal to the cash dividends paid on one share of Stock for each share of Stock represented by an Award (other than an Option or SAR) held by such Participant. +“ Effective Date ” shall have the meaning set +forth in Section 18 hereof. +“ Employee ” means any person treated as an employee (including an officer or a Director who is also treated as an +employee) in the records of a Participating Company; provided , however , that neither service as a Director nor payment of a director’s fee shall be sufficient to constitute employment for purposes of the Plan; and +provided further that for purposes of Section 5.1 hereof, the definition of Participating Company as used above shall be limited to the Company, and any present or future “parent or subsidiary corporation” of the Company as defined in +Sections 424(e) and 424(f) of the Code. +“ Exchange Act ” means the Securities Exchange Act of 1934, as amended. +“ Fair Market Value ” means, as of any date, +the value of a share of Stock or other property as determined by the Committee, in its discretion, or by the Company, in its discretion, if such determination is expressly allocated to the Company herein, subject to the following: +(a) If, on such date, the Stock is +listed on a national or regional securities exchange or market system, the Fair Market Value of a share of Stock shall be the closing price of a share of Stock on such national or regional securities exchange or market system constituting the +primary market for the Stock, as reported on the +A-3 +NASDAQ Global Select Market or such other source as the Committee deems reliable. If the relevant date does not fall on a day on which the Stock has traded on such securities exchange or market +system, the date on which the Fair Market Value shall be established shall be the last day on which the Stock was so traded prior to the relevant date, or such other appropriate day as shall be determined by the Committee, in its discretion. +(b) If, on such date, the +Stock is not listed on a national or regional securities exchange or market system, the Fair Market Value of a share of Stock shall be as determined by the Committee in good faith without regard to any restriction other than a restriction which, by +its terms, will never lapse. +“ Incentive +Stock Option ” means an Option intended to be (as set forth in the Award Agreement) and which qualifies as an “incentive stock option” within the meaning of Section 422(b) of the Code or any successor provision thereto as in +effect from time to time. +“ Independent +Director ” means any Director of the Company who shall meet the listing standards relating to independence of The NASDAQ Stock Market or other relevant listing standards. Without limiting the generality of the foregoing, an Independent +Director shall not be a current employee of the Company or a member of an “affiliated group,” as such term is defined in Section 1504(a) of the Code, which includes the Company and shall be an “outside director” within the +meaning of Section 162(m) of the Code. +“ NASDAQ ” means The NASDAQ Stock Market or any successor thereto. +“ Net Exercise ” means a Participant’s ability to exercise an Option by directing the +Company to deduct from the shares of Stock issuable upon exercise of his or her Option a number of shares having an aggregate Fair Market Value equal to the aggregate exercise price, and at the Company’s discretion the amount of the +Participant’s minimum tax withholding (if any), whereupon the Company shall issue to the Participant the net remaining number of shares of Stock after such deductions. +“ Nonstatutory Stock Option ” means an Option +not intended to be (as set forth in the Award Agreement) or which does not qualify as an Incentive Stock Option. +“ Option ” means any option to purchase Stock granted pursuant to Section 6 hereof. +“ Other Stock-Based Award ” means any right +granted under Section 10 hereof. +“ Participant ” means any eligible person selected by the Committee to receive an Award under the Plan. +“ Participating Company” shall mean the +Company, any parent entity that controls the Company or any Subsidiary. +“ Performance Award ” means an Award of Performance Shares, Performance Units or Performance-Based Restricted Stock. +“ Performance-Based Compensation ” means +compensation under an Award that is intended to satisfy the requirements of Section 162(m) for certain performance-based compensation paid to Covered Employees. Notwithstanding the foregoing, nothing in this Plan shall be construed to mean that +an Award which does not satisfy the requirements for performance-based compensation under Section 162(m) does not constitute performance-based compensation for other purposes, including Code Section 409A. +A-4 +“ Performance-Based Restricted Stock ” means Stock granted to a Participant +pursuant to the terms and conditions of Section 8 and Section 9 hereof, including Vesting Conditions contingent upon the attainment of one or more Performance Goals. +“ Performance Goal ” means a performance goal +established by the Committee pursuant to Section 9.3 hereof. +“ Performance Period ” means a period established by the Committee pursuant to Section 9.3 hereof, at the end of which one or more Performance Goals are to be measured. +“ Performance Share ” means a bookkeeping +entry representing a right granted to a Participant pursuant to the terms and conditions of Section 9 hereof to receive a payment determined by reference to a designated number of shares of Stock upon achievement of specified Performance Goals +during the Performance Period as the Committee shall establish, in its discretion. +“ Performance Unit ” means a bookkeeping entry representing a right granted to a Participant pursuant to the terms and conditions of Section 9 hereof to receive a payment determined by +reference to a designated amount of cash or property (other than Stock) upon achievement of specified Performance Goals during the Performance Period as the Committee shall establish, in its discretion. +“ Plan ” means this 2015 Equity Incentive +Plan, as amended from time to time. +“ Prior Plan ” shall mean the Company’s 2007 Equity Incentive Plan. +“ Restricted Stock ” means Stock granted to a +Participant pursuant to the terms and conditions of Section 8 hereof. +“ Restricted Stock Award ” means an Award of Restricted Stock or a Restricted Stock Unit. +“ Restricted Stock Unit ” means a bookkeeping entry representing a right granted to a Participant to receive in cash or +Stock the Fair Market Value of a share of Stock granted pursuant to the terms and conditions of Section 8 hereof. +“ Restriction Period ” means the period established in accordance with Section 8.2 hereof during which shares subject +to a Restricted Stock Award are subject to Vesting Conditions. +“ Rule 16b-3 ” means Rule 16b-3 under the Exchange Act, as amended from time to time, or any successor rule or regulation thereto. +“ Section 162(m) ” means Section 162(m) of the Code. +“ Securities Act ” means the Securities Act of +1933, as amended. +“ Service ” +means a Participant’s employment or service with a Participating Company, whether in the capacity of an Employee, a Director or a Consultant. A Participant’s Service shall not be deemed to have terminated merely because of a change in the +capacity in which the Participant renders Service to the +A-5 +Participating Company or as a result of a transfer from one Participating Company to another, provided that there is no interruption or termination of the Participant’s Service. Furthermore, +a Participant’s Service may be deemed, as provided in the applicable Award Agreement, not to have terminated if the Participant takes any military leave, sick leave, or other bona fide leave of absence approved by the Participating Company; +provided , however , that if any such leave exceeds ninety (90) days, on the one hundred eighty-first (181st) day of such leave any Incentive Stock Option held by such Participant shall cease to be treated as an +Incentive Stock Option and instead shall be treated thereafter as a Nonstatutory Stock Option unless the Participant’s right to return to Service is guaranteed by statute or contract. Notwithstanding the foregoing, unless otherwise designated +by the Participating Company or required by law, a leave of absence shall not be treated as Service for purposes of determining vesting under the Participant’s Award Agreement. A Participant’s Service shall be deemed to have terminated +either upon an actual termination of Service or upon the date that a Subsidiary for which the Participant performs Service ceases to be a Subsidiary. Subject to the foregoing, the Company, in its discretion, shall determine whether the +Participant’s Service has terminated and the effective date of such termination. +“ Stock ” means the common stock of the Company, as adjusted from time to time in accordance with Section 11 hereof. +“ Stock Appreciation Right ” or “ SAR ” means a bookkeeping entry representing, +for each share of Stock subject to such SAR, a right granted to a Participant pursuant to Section 7 hereof to receive payment of an amount equal to the excess, if any, of the Fair Market Value of a share of Stock on the date of exercise of the +SAR over the exercise price. +“ Subsidiary ” means any present or future “subsidiary corporation” of the Company, as defined in +Section 424(f) of the Code or any other entity controlled by or under common control with the Company. +“ Substitute Awards ” means Awards granted upon assumption of, or in substitution for, outstanding awards previously +granted by a company or other entity acquired by a Participating Company or with which a Participating Company combines. +“ Ten Percent Owner ” means a Participant who, at the time an Option is granted to the Participant, owns stock possessing +more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or a Subsidiary within the meaning of Section 422(b)(6) of the Code. +“ Vesting Conditions ” means those conditions +established in accordance with Section 8.2 prior to the satisfaction of which shares subject to a Restricted Stock Award remain subject to forfeiture or a repurchase option in favor of the Company. +2.2 Construction . Captions and titles contained herein are for convenience only and shall not +affect the meaning or interpretation of any provision of the Plan. Except when otherwise indicated by the context, the singular shall include the plural, the plural shall include the singular and the masculine shall include the feminine and neuter, +as the context requires. Use of the term “or” is not intended to be exclusive, unless the context clearly requires otherwise. +A-6 +SECTION 3. ADMINISTRATION +3.1 Administration by the Committee. +The Plan shall be administered by the +Committee. If no committee of the Board has been appointed to administer the Plan, the Independent Directors shall exercise all of the powers of the Committee granted herein, and, in any event, the Independent Directors of the Board may, in their +discretion, exercise any or all of such powers. All questions of interpretation of the Plan or of any Award shall be determined by the Committee, and such determinations shall be final and binding upon all persons having an interest in the Plan or +such Award. +3.2 Authority of +Officers . Any officer of a Participating Company shall have the authority to act on behalf of the Company with respect to any matter, right, obligation, determination or election which is the responsibility of or which +is allocated to the Company herein, provided the officer has apparent authority with respect to such matter, right, obligation, determination or election. Without limiting the generality of the foregoing, except as limited by law (including, without +limitation, the Rhode Island Business Corporation Act), regulation or the NASDAQ listing rules, the Committee may delegate its authority to the Chief Executive Officer of the Company hereunder, except that the Committee will not delegate its +authority with respect to compensation matters involving any executive officer, as defined under the Exchange Act and in the listing rules of NASDAQ. +3.3 Powers of the Committee . In addition to any other powers set forth in the Plan and subject +to the provisions of the Plan, the Committee shall have the full and final power and authority, in its discretion: +(a) to determine the persons to whom, and the time or times at which, Awards shall be granted and the number of +shares of Stock or units to be subject to each Award; +(b) to determine the type of Award granted and to designate Options as Incentive Stock Options or Nonstatutory Stock Options; +(c) to determine the Fair Market Value +of shares of Stock or other property; +(d) to determine the terms, conditions and restrictions applicable to each Award (which need not be identical) and +any shares acquired pursuant thereto, including, without limitation, (i) the purchase price of any Stock, (ii) the method of payment for shares purchased pursuant to any Award, (iii) the method for satisfaction of any tax withholding +obligation arising in connection with any Award, including by the withholding or delivery of shares of Stock, (iv) the timing, terms and conditions of the exercisability or vesting of any Award or any shares acquired pursuant thereto, +(v) the Performance Goals applicable to any Award and the extent to which such Performance Goals have been attained, (vi) the time of the expiration of any Award, (vii) the effect of the Participant’s termination of Service on +any of the foregoing, and (viii) all other terms, conditions and restrictions applicable to any Award or shares acquired pursuant thereto not inconsistent with the terms of the Plan; +(e) to determine whether an Award of Restricted Stock Units, Performance Shares, +Performance Units or Stock Appreciation Rights will be settled in shares of Stock, cash, or in any combination thereof; +(f) to approve one or more forms of Award Agreement; +(g) to amend, modify, extend, cancel or renew any Award or to waive any restrictions or +conditions applicable to any Award or any shares acquired pursuant thereto; +A-7 +(h) to accelerate, continue, extend or defer the exercisability or +vesting of any Award or any shares acquired pursuant thereto, including, without limitation, with respect to the period following a Participant’s termination of Service; +(i) to prescribe, amend or rescind +rules, guidelines and policies relating to the Plan, or to adopt supplements to, or alternative versions of, the Plan, including, without limitation, as the Committee deems necessary or desirable to comply with the laws of, or to accommodate the tax +policy or custom of, foreign jurisdictions whose citizens may be granted Awards; +(j) to authorize, in conjunction with any applicable Company deferred compensation plan, that the receipt of cash or Stock subject to any Award under this Plan, may be deferred +under the terms and conditions of such Company deferred compensation plan; +(k) to correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Award Agreement and to make all other determinations and take such other actions +with respect to the Plan or any Award as the Committee may deem advisable to the extent not inconsistent with the provisions of the Plan or applicable law; and/or +(l) to provide for a +“clawback” of an Award pursuant to the provisions of Section 15.5 below. +3.4 Minimum Restriction or Performance Periods . Notwithstanding Section 3.3(d) above, Awards to Employees (other than Substitute Awards) (i) shall have a +Restriction Period of not less than three (3) years from date of grant (but permitting pro rata vesting over such time) if subject only to continued Service with a Participating Company or (ii) shall have a Performance Period of not less +than one (1) year from date of grant if subject to the achievement of Performance Goals, subject in either case to accelerated vesting in the Committee’s discretion in the event of the death, Disability or Retirement of the Participant, +special circumstances determined by the Committee, or a Change in Control. Notwithstanding the foregoing, the restrictions in the preceding sentence shall not be applicable to the grant of up to 5% of the number of shares of Stock available for +Awards under Section 4.1 on the Effective Date. The minimum Restriction Period requirements of this Section shall not apply to Restricted Stock Awards or Restricted Stock Unit Awards granted to Non-Employee Directors or Consultants. +3.5 No +Repricing . Notwithstanding anything in this Plan to the contrary, no amendment or modification may be made to an outstanding Option or SAR, including, without limitation, by replacement of Options or SARs with cash or +other award type, that would be treated as a repricing under the rules of the securities exchange or market system constituting the primary market for the Stock, in each case, without the approval of the shareholders of the Company, provided, that, +appropriate adjustments may be made to outstanding Options and SARs pursuant to Section 11 and may be made to make changes to achieve compliance with applicable law, including Code Section 409A. +3.6 Deferral +Arrangements . The Committee may permit or require the deferral of any award payment into a deferred compensation arrangement, subject to such rules and procedures as it may establish, which may include provisions for +the payment or crediting of interest or dividend equivalents, including converting such credits into deferred Stock equivalents. Any such deferrals shall be made in a manner that complies with Code Section 409A. +A-8 +3.7 Indemnification . Neither the Board nor the +Committee, nor any member of either or officer or employee of a Participating Company to whom authority to act for the Board, the Committee or the Company is delegated, shall be liable for any act, omission, interpretation, construction or +determination made in good faith in connection with the Plan. In addition to such other rights of indemnification as they may have as members of the Board, the Committee or as officers or employees of a Participating Company, members of the Board or +of the Committee and any officers or employees of the Participating Company to whom authority to act for the Board, the Committee or the Company is delegated, shall be entitled in all cases to indemnification and reimbursement by the Company in +respect of any claim, loss, damage or expense (including, without limitation, reasonable attorneys’ fees) arising or resulting therefrom to the fullest extent permitted by law and/or under any directors’ and officers’ liability +insurance coverage which may be in effect from time to time. +3.8 Share Issuance/Book-Entry . Notwithstanding any provision of this Plan to the contrary, the +issuance of the Stock under the Plan may be evidenced in such a manner as the Committee, in its discretion, deems appropriate, including, without limitation, book-entry registration or issuance of one or more Stock certificates +SECTION 4. SHARES SUBJECT TO PLAN +4.1 Number of Shares Available for +Awards . The total number of shares of Stock that may be issued pursuant to Awards granted under the Plan shall not exceed an aggregate of five hundred thousand (500,000) shares; provided , +however , that the class and aggregate number of shares which may be subject to Awards granted under the Plan shall be subject to adjustment as provided in Section 11 hereof. +4.2 Determination of Shares Issued and Issuable . Shares covered by +an Award shall be counted as used as of the effective date of the grant. Any shares of Stock that are subject to Awards shall be counted against the limit set forth in Section 4.1 as one (1) share for every one (1) share subject to an +Award. Shares of Stock shall not be deemed to have been issued pursuant to the Plan with respect to any portion of an Award that is settled in cash in lieu of shares. If any shares covered by an Award granted under the Plan are not earned or +purchased or are forfeited or expire, or if an Award otherwise terminates without delivery of any Stock subject thereto, then the number of shares of Stock counted against the aggregate number of shares available under the Plan with respect to such +Award shall, to the extent of any such forfeiture, termination or expiration, be available for making Awards under the Plan in the same amount as such shares were counted against the limit set forth in Section 4.1. Notwithstanding the +foregoing, upon the exercise of any Award, to the extent that such Award is exercised through tendering (or attesting to) previously owned shares or through withholding shares that would otherwise be awarded and to the extent shares are withheld for +tax withholding purposes, the shares available under the Plan shall be reduced by the gross number of shares of Stock being exercised without giving effect to the number of shares tendered or withheld. +4.3 Substitute +Awards . The Committee shall have the right to substitute or assume Awards in connection with mergers, reorganizations, separations, or other transactions to which Section 424(a) of the Code applies. Substitute +Awards shall not reduce the shares of Stock authorized for issuance under the Plan, nor shall shares of Stock subject to a Substitute Award be added to the shares available for Awards under the Plan as provided in Sections 4.2 above. Additionally, +in the event that a company acquired by a Participating Company, or with which a Participating Company combines, has shares available under a pre-existing plan approved by stockholders and not adopted in contemplation of such acquisition or +combination, the shares available for grant pursuant to the terms of such pre-existing plan (as adjusted, to the extent appropriate, using the exchange ratio or other adjustment or valuation ratio or formula used in such acquisition or combination +to determine the +A-9 +consideration payable to the holders of common stock of the entities party to such acquisition or combination) may be used for Awards under the Plan and shall not reduce the shares of Stock +authorized for grant under the Plan (and shares subject to such Awards shall not be added to the shares available for Awards under the Plan as provided in Sections 4.2 and 4.3 above); provided that Awards using such available shares shall not be +made after the date awards or grants could have been made under the terms of the pre-existing plan, absent the acquisition or combination, and shall only be made to individuals who were not Employees or Directors prior to such acquisition or +combination . +4.4 Source of +Shares . The Stock subject to the Awards granted under the Plan shall be shares of the Company’s authorized but unissued Stock or shares of the Stock held in treasury. +SECTION 5. ELIGIBILITY +5.1 Persons Eligible for Incentive Stock +Options . Incentive Stock Options may be granted only to Employees. For purposes of the foregoing sentence, the term “Employees” shall include prospective Employees to whom Incentive Stock Options are granted +in connection with written offers of employment with the Participating Companies; provided , however , that any such Incentive Stock Option shall be deemed granted effective on the date such person commences Service as an +Employee, with an exercise price determined as of such date in accordance with Section 6.1 hereof. +5.2 Persons Eligible for Other Awards . Awards other than Incentive Stock Options may be granted only to Employees, Consultants and Directors. +For purposes of the foregoing sentence, the terms “Employees,” “Consultants” and “Directors” shall include prospective Employees, prospective Consultants and prospective Directors to whom Awards are granted in +connection with written offers of an employment or other service relationship with the Participating Companies; provided , however , that any such Award that is an Option shall be deemed granted effective on the date such +person commences Service, with an exercise price determined as of such date in accordance with Section 6.1 hereof; and provided further that no such Award shall vest or become exercisable, and no Stock shall be issued pursuant to such +Award, prior to the date on which such person commences Service as an Employee, Consultant or Directors. +5.3 Award Limits . +(a) Award Limits . The following limits shall apply to the grant of any Award: +(i) Options and SARs . No +Employee shall be granted within any fiscal year of the Company one or more Options or SARs which in the aggregate are for more than fifty thousand (50,000) shares of Stock (subject to adjustment as provided in Section 11). An Option which +is canceled in the same fiscal year of the Company in which it was granted shall continue to be counted against such limit for such fiscal year. +(ii) Performance Awards Denominated in Stock . No Employee shall be granted within any 36-month period +one or more Performance Awards denominated in shares of Stock, which in the aggregate are for more than seventy-five thousand (75,000) shares of Stock (subject to adjustment as provided in Section 11). +(iii) Performance Awards +Denominated in Cash . The maximum amount payable pursuant to all Performance Awards denominated in cash to any Participant in the aggregate in any calendar year shall be $1,000,000 in value. The limitation contained in this +Section 5.5(b)(iii) does not apply to any Award or Awards +A-10 +subject to the limitation contained in Section 5.5(b)(i) or 5.5(b)(ii). The limitation contained in this Section 5.5(b)(iii) shall apply only with respect to any Award or Awards granted +under this Plan, and limitations on awards granted under any other shareholder-approved incentive plan maintained by the Company will be governed solely by the terms of such other plan. +(b) Limitation on Awards Granted to Non-Employee Directors . No Director +who is not also an employee of a Participating Company may be granted any Award or Awards denominated in shares of Stock that exceed in the aggregate $100,000 in value (such value computed as of the date of grant in accordance with applicable +financial accounting rules) in any single fiscal year. The foregoing limit shall not apply to any Award made pursuant to any election by the Director to receive an Award in lieu of all or a portion of annual and committee cash retainers and meeting +fees. +SECTION 6. TERMS AND CONDITIONS +OF STOCK OPTIONS +Options shall be evidenced +by Option Agreements specifying the number of shares of Stock covered thereby, in such form as the Committee shall from time to time establish. No Option or purported Option shall be a valid and binding obligation of the Company unless evidenced by +a fully executed Option Agreement. Option Agreements shall comply with and be subject to the following terms and conditions: +6.1 Exercise Price . The exercise price for each Option shall be established in the discretion +of the Committee; provided , however , that (a) the exercise price per share for an Option shall be not less than the Fair Market Value of a share of Stock on the effective date of grant of the Option, (b) no +Incentive Stock Option granted to a Ten Percent Owner shall have an exercise price per share less than one hundred ten percent (110%) of the Fair Market Value of a share of Stock on the effective date of grant of the Option. Notwithstanding the +foregoing, an Option may be granted with an exercise price lower than the minimum exercise price set forth above if such Option is granted as a Substitute Award in a manner qualifying under the provisions of Section 424(a) of the Code. +6.2 Exercisability and Term of +Options . Options shall be exercisable at such time or times, or upon such event or events, and subject to such terms, conditions, performance criteria and restrictions as shall be determined by the Committee and set +forth in the Option Agreement evidencing such Option; provided , however , that (a) no Option shall be exercisable after the expiration of ten (10) years after the effective date of grant of such Option, and +(b) no Incentive Stock Option granted to a Ten Percent Owner shall be exercisable after the expiration of five (5) years after the effective date of grant of such Option. Subject to the foregoing, unless otherwise specified by the +Committee in the grant of an Option, any Option granted hereunder shall terminate ten (10) years after the effective date of grant of the Option, unless earlier terminated in accordance with its provisions. Notwithstanding the foregoing, in the +event that on the last business day of the term of a Nonstatutory Option (i) the exercise of the Option is prohibited by applicable law or (ii) shares may not be purchased or sold by certain employees or Directors of the Company due to the +“black-out period” of a Company policy or a “lock-up” agreement undertaken in connection with an issuance of securities by the Company, the term of such Nonstatutory Option shall be extended for a period of thirty (30) days +following the end of the legal prohibition, black-out period or lock-up agreement in each case to the extent any such extension would not constitute the extension of a stock right under Section 409A of the Code +A-11 +6.3 Payment of Exercise Price . Except as +otherwise provided in the Option Agreement, payment of the exercise price for the number of shares of Stock being purchased pursuant to any Option shall be made: +(i) in cash, by check or cash +equivalent, +(ii) by tender +to the Company, or attestation to the ownership, of shares of Stock owned by the Participant having a Fair Market Value not less than the exercise price, +(iii) pursuant to a Net Exercise arrangement, provided, however , that in such event the Committee may +exercise its discretion to limit the use of a Net Exercise; +(iv) with the consent of the Committee and subject to such procedures as the Committee shall prescribe as a condition of such payment procedure, by delivery of a properly executed +notice together with irrevocable instructions to a broker providing for the assignment to the Company of the proceeds of a sale with respect to some or all of the shares being acquired upon the exercise of the Option (a “ Cashless +Exercise ”), +(v) by such other consideration as may be approved by the Committee from time to time to the extent permitted by +applicable law, or +(vi) by +any combination thereof. +6.4 Effect +of Termination of Service . An Option granted to a Participant shall be exercisable after the Participant’s termination of Service only during the applicable time period determined in accordance with the +Option’s term as set forth in the Option Agreement. Such provisions shall be determined in the sole discretion of the Committee, need not be uniform among all Options issued pursuant to the Plan, and may reflect distinctions based on the +reasons for termination of Service. +6.5 Transferability of Options . During the lifetime of the Participant, an Option shall be +exercisable only by the Participant or the Participant’s guardian or legal representative. No Option shall be assignable or transferable by the Participant, except by will or by the laws of descent and distribution. Notwithstanding the +foregoing, the Committee, in its sole discretion, may provide in the Award Agreement regarding a given Option, or may agree in writing with respect to an outstanding Option, that the optionee may transfer his Nonstatutory Stock Options, without +consideration, to members of his immediate family (as such term is defined in the General Instructions to Form S-8 Registration Statement under the Securities Act), to trusts for the benefit of such family members, or to partnerships in which such +family members are the only partners, provided that the transferee agrees in writing with the Company to be bound by all of the terms and conditions of this Plan and the applicable Option. +6.6 Fair Market Value Limitation on Incentive Stock Options . To the +extent that options designated as Incentive Stock Options (granted under all stock option plans of the Company or any Subsidiary) become exercisable by a Participant for the first time during any calendar year for stock having a Fair Market Value +greater than One Hundred Thousand Dollars ($100,000), the portions of such options which exceed such amount shall be treated as Nonstatutory Stock Options. For purposes of this Section 6.6, Options designated as Incentive Stock Options shall be +taken into account in the order in which they were granted, and the Fair Market Value of stock shall be determined as of the time the option with respect to such stock is granted. If the Code is amended to provide for a different limitation from +that set forth in this Section 6.6, such different limitation shall be deemed incorporated herein effective as of the date and with respect to such Options as required or permitted by +A-12 +such amendment to the Code. If an Option is treated as an Incentive Stock Option in part and as a Nonstatutory Stock Option in part by reason of the limitation set forth in this Section 6.6, +the Participant may designate which portion of such Option the Participant is exercising. In the absence of such designation, the Participant shall be deemed to have exercised the Incentive Stock Option portion of the Option first. Separate +certificates representing each such portion shall be issued upon the exercise of the Option. +6.7 Annual Directors’ Options . Upon the adjournment of each annual meeting or special meeting in lieu of an annual meeting of the +shareholders of the Company (either, the “ Annual Meeting ”), each person who is not an employee of a Participating Company who is serving as a Director of the Company upon the adjournment of such Annual Meeting shall be granted a +Nonstatutory Stock Option to purchase 5,000 shares of Stock, provided, however , a person who is not an employee of a Participating Company who is first elected to serve as a Director of the Company at any meeting of shareholders other +than the Annual Meeting or at any meeting of the Board of Directors (or by the unanimous written consent of the Directors of the Company) pursuant to the Company’s Articles of Incorporation and its By-Laws shall be granted a Nonstatutory Stock +Option to purchase 5,000 shares of Stock upon such election. Each such Option shall have an exercise price equal to the Fair Market Value per share of the Stock on the date of grant of the Option. After the Effective Date of the Plan, no awards may +be granted to Directors of the Company under Section 6.6 of the Prior Plan. +(a) Option Exercisability . Each Option granted pursuant to this Section 6.7, shall (i) have a term of ten (10) years and (ii) become exercisable +immediately prior to the occurrence of the Annual Meeting following the date the Option is granted. Notwithstanding the foregoing, all such Options shall become immediately exercisable upon a Change of Control. +(b) Termination of +Directorship . If a Director of the Company fails to be re-elected to the Board, resigns or otherwise ceases to be a Director of the Company for reasons other than death or Disability, all Options granted under this Section 6.7 to such +Director which are not exercisable on such date shall immediately terminate, and any such Options remaining shall terminate if not exercised before twenty-four (24) months following such termination, or at such earlier time as may be applicable +under Section 6.7(a) above. +(c) Death or Disability . If a Participant ceases to be a Director of the Company by reason of death +or Disability, all Options granted under this Section 6.7 to such Director which are not exercisable on such date shall become immediately exercisable, and may be exercised at any time before the expiration of twenty-four (24) months +following the date of death or commencement of Disability, or such earlier time as may be applicable under Section 6.7(a) above. +SECTION 7. TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS +SARs shall be evidenced by Award Agreements specifying the number of shares of Stock subject to the Award, in +such form as the Committee shall from time to time establish. No SAR or purported SAR shall be a valid and binding obligation of the Company unless evidenced by a fully executed Award Agreement. Award Agreements evidencing SARs shall comply with and +be subject to the following terms and conditions: +7.1 Exercise Price . The exercise price for each SAR shall be established in the discretion of +the Committee; provided , however , that the exercise price per share of a SAR shall be not less than the Fair Market Value of a share of Stock on the effective date of grant of the SAR. +A-13 +7.2 Exercisability and Term of SARs . SARs shall +be exercisable at such time or times, or upon such event or events, and subject to such terms, conditions, performance criteria and restrictions as shall be determined by the Committee and set forth in the Award Agreement evidencing such SAR; +provided , however , that no SAR shall be exercisable after the expiration of ten (10) years after the effective date of grant of such SAR. +7.3 Exercise of +SARs . Upon the exercise of a SAR, the Participant (or the Participant’s legal representative or other person who acquired the right to exercise the SAR by reason of the Participant’s death) shall be entitled +to receive payment of an amount for each share with respect to which the SAR is exercised equal to the excess, if any, of the Fair Market Value of a share of Stock on the date of exercise of the SAR over the exercise price. Payment of such amount +shall be made in cash, shares of Stock, or any combination thereof as determined by the Committee. Unless otherwise provided in the Award Agreement evidencing such SAR, payment shall be made in a lump sum as soon as practicable following the date of +exercise of the SAR. The Award Agreement evidencing any SAR may provide for deferred payment in a lump sum or in installments, so long as such payment is made in a manner that complies with Code Section 409A. When payment is to be made in +shares of Stock, the number of shares to be issued shall be determined on the basis of the Fair Market Value of a share of Stock on the date of exercise of the SAR. For purposes of this Section 7, a SAR shall be considered exercised on the date +on which the Company receives actual notice of exercise from the Participant. +7.4 Effect of Termination of Service . A SAR shall be exercisable after a Participant’s termination of Service to such extent and during +such period as determined by the Committee, in its discretion, and set forth in the Award Agreement evidencing such SAR. +7.5 Nontransferability of SARs . SARs may not be assigned or transferred in any manner except +by will or the laws of descent and distribution, and, during the lifetime of the Participant, shall be exercisable only by the Participant or the Participant’s guardian or legal representative. +SECTION 8. TERMS AND CONDITIONS OF RESTRICTED STOCK +AWARDS +Restricted Stock Awards may be in the +form of (a) Restricted Stock, which shall be evidenced by a Restricted Stock Agreement, (b) a Restricted Stock Unit, which shall be evidenced by a Restricted Stock Unit Agreement, or (c) a Performance-Based Restricted Stock Award, +which shall be evidenced by a Performance-Based Restricted Stock Agreement and shall be subject to the provisions of Section 9 hereof. Each such Award Agreement shall specify the number of shares of Stock subject to and the other terms, +conditions and restrictions of the Award, and shall be in such form as the Committee shall establish from time to time. No Restricted Stock Award or purported Restricted Stock Award shall be a valid and binding obligation of the Company unless +evidenced by a fully executed Award Agreement. Restricted Stock Award Agreements shall comply, as applicable, with and be subject to the following terms and conditions: +8.1 Purchase +Price . No monetary payment (other than applicable tax withholding) shall be required as a condition of receiving Restricted Stock or Restricted Stock Units, or Performance-Based Restricted Stock, the consideration for +which shall be services rendered to a Participating Company. +8.2 Vesting and Restrictions on Transfer . Shares issued pursuant to any Restricted Stock Award +may be made subject to vesting conditioned upon the satisfaction of such Service requirements, conditions, restrictions or performance criteria, including, without limitation, Performance Goals as described in Section 9.3 (the “ Vesting +Conditions ”), as shall be established by the Committee and set forth in the Award Agreement evidencing such Award. During any period (the “ Restriction Period ”) in which shares acquired pursuant to a Restricted Stock +A-14 +Award remain subject to Vesting Conditions, such shares may not be sold, exchanged, transferred, pledged, hypothecated, assigned or otherwise disposed of other than pursuant to a Change in +Control, or as provided in Section 8.5. Upon request by the Company, each Participant shall execute any agreement evidencing such transfer restrictions prior to the receipt of shares of Stock hereunder and shall promptly present to the Company +any and all certificates representing shares of Stock acquired hereunder for the placement on such certificates of appropriate legends evidencing any such transfer restrictions. +8.3 Voting Rights; +Dividends . Except as provided in this Section 8.3 and Section 8.2, during the Restriction Period applicable to shares subject to a time-based Restricted Stock Award held by a Participant, the Participant +shall have all of the rights of a shareholder of the Company holding shares of Stock, including the right to vote such shares and to receive all dividends and other distributions paid with respect to such shares; provided , +however , that if any such dividends or distributions are paid in shares of Stock, such shares shall be subject to the same Vesting Conditions as the shares subject to the Restricted Stock Award with respect to which the dividends or +distributions were paid. A Participant who is awarded a Restricted Stock Unit shall possess no incidents of ownership with respect to such a Restricted Stock Award; provided that the Award Agreement may provide for payments in lieu of dividends to +such Participant. A holder of Restricted Stock Units shall have no rights other than those of a general creditor of the Company. Restricted Stock Units represent an unfunded and unsecured obligation of the Company, subject to the terms and +conditions of the applicable Award Agreement. +8.4 Effect of Termination of Service . The effect of the Participant’s termination of +Service on any Restricted Stock Award shall be determined by the Committee, in its discretion, and set forth in the Award Agreement evidencing such Restricted Stock Award. +8.5 Nontransferability of Restricted Stock Award +Rights . Rights to acquire shares of Stock pursuant to a Restricted Stock Award may not be assigned or transferred in any manner except by will or the laws of descent and distribution, and, during the lifetime of the +Participant, shall be exercisable only by the Participant. +SECTION 9. TERMS AND CONDITIONS OF PERFORMANCE AWARDS +Performance Awards may be in the form of +(a) Performance Shares, which shall be evidenced by a Performance Share Agreement, (b) Performance Units, which shall be evidenced by a Performance Unit Agreement, or (c) Performance-Based Restricted Stock, which shall be evidenced by +a Performance-Based Restricted Stock Agreement. Each such Award Agreement shall specify the number of Performance Shares, Performance Units or Performance-Based Restricted Stock subject thereto, the method of computing the value of each Performance +Share or Performance Unit, the Performance Goals and Performance Period applicable to the Award, and the other terms, conditions and restrictions of the Award, and shall be in such form as the Committee shall establish from time to time. No +Performance Award or purported Performance Award shall be a valid and binding obligation of the Company unless evidenced by a fully executed Award Agreement which shall comply with and be subject to the following terms and conditions: +9.1 Initial Value of Performance Shares and +Performance Units . Unless otherwise provided by the Committee in granting a Performance Award, each Performance Share shall have an initial value equal to the Fair Market Value of a share of Stock on the effective date +of grant of the Performance Share, and each Performance Unit shall have an initial value of One Hundred Dollars ($100). The final value payable to the Participant in settlement of a Performance Award will depend on the extent to which Performance +Goals established by the Committee are attained within the applicable Performance Period established by the Committee. +A-15 +9.2 Granting Performance-Based Restricted Stock +Awards . Performance-Based Restricted Stock Awards granted under the Plan shall be subject to the provisions of Section 8 above, and to the provisions of this Section 9. +9.3 Establishment of Performance Goals and +Performance Period . The Committee shall establish in writing the Performance Period applicable to each Performance Award and one or more performance goals (“ Performance Goals ”) which, when measured at +the end of the Performance Period, shall determine the final value of the Performance Award to be paid to the Participant. Unless otherwise permitted in compliance with the requirements under Section 162(m) with respect to +“performance-based compensation,” the Committee shall establish the Performance Goals applicable to each Performance Award no later than the earlier of (a) the date ninety (90) days after the commencement of the applicable +Performance Period or (b) the date on which twenty-five percent (25%) of the Performance Period has elapsed, and, in any event, at a time when the outcome of the Performance Goals remains substantially uncertain. Once established, the +Performance Goals shall not be changed during the Performance Period except in a manner consistent with Section 162(m). +9.4 Measurement of Performance Goals . For purposes of the Plan, the Performance Goals shall be +determined by the Committee, according to criteria established by the Committee. If and to the extent that the Committee determines that an Award to be granted to a Participant who is designated by the Committee as likely to be a Covered Employee +should qualify as “performance-based compensation” for purposes of Code Section 162(m), the grant, exercise and/or settlement of such award shall be contingent upon achievement of pre-established Performance Goals based on any one or +more of the following criteria: (i) revenue, (ii) gross profit margin, (iii) operating income, (iv) operating margin, (v) income before income taxes, (vi) net income, (vii) earnings before interest, taxes +depreciation and/or amortization (EBITDA), (viii) earnings per share (diluted), (ix) cash flow from operations, (x) free cash flow, (xi) return on equity, (xii) return on assets, (xiii) return on sales, +(xiv) operating income return on net assets (ORONA), (xv) market share, (xvi) one or more operating ratios, (xvii) stock price, (xviii) economic value added (EVA); (xix) the accomplishment of mergers, acquisitions, +dispositions or similar extraordinary business transactions, (xx) any individual performance objective that is measured solely in terms of quantitative targets related to the Company or the Company’s business or (xxi) any combination +of the foregoing. The Performance Goals selected in any case need not be applicable across the Company, but may be particular to one or more Subsidiaries or an individual’s function or business unit. The Committee shall determine whether such +Performance Goals are attained and such determination shall be final and conclusive. In the event that the Performance Goals are not met, the Performance Award shall be forfeited and transferred to, and reacquired by, the Company at no cost to the +Company. +The Committee may impose such other +restrictions and conditions (in addition to the performance-based restrictions described above) on any Performance Award as the Committee deems appropriate and may waive any such additional restrictions and conditions, so long as such waiver does +not waive any restriction described in the previous paragraph. Nothing herein shall limit the Committee’s ability to reduce the amount payable under an Award upon the attainment of the Performance Goal(s), provided , +however , that the Committee shall have no right under any circumstance to increase the amount payable under, or waive compliance with, any applicable Performance Goal(s). +The Committee may provide in any such Award that any evaluation of performance may include or exclude any of +the following events that occur during a Performance Period: (a) litigation or claim judgments or settlements; (b) the effect of changes in tax laws, accounting principles, or other laws or provisions affecting reported results; +(c) any reorganization and restructuring programs; (d) extraordinary nonrecurring items as +A-16 +described under generally accepted accounting principles and/or in management’s discussion and analysis of financial condition and results of operations appearing in the Company’s +annual report to shareholders for the applicable year; and (e) acquisitions or divestitures. To the extent such inclusions or exclusions affect Awards to Covered Employees, they shall be prescribed in a form that meets the requirements of +Section 162(m) for deductibility. +In the +event that applicable tax and/or securities laws change to permit Committee discretion to alter the governing Performance Goals without obtaining shareholder approval of such changes, the Committee shall have sole discretion to make such changes +without obtaining shareholder approval provided the exercise of such discretion does not violate Code Section 409A. +9.5 Determination of Final Value and Certification of Attainment of Performance Goals . As soon +as practicable following the completion of the Performance Period applicable to a Performance Award, the Committee shall certify in writing the extent to which the applicable Performance Goals have been attained and the resulting final value(s) of +the Award earned by the Participant and to be paid or delivered upon its settlement in accordance with the terms of the Award Agreement. The Committee may rely on others as the basis for its certification, so long as such reliance is reasonable +under the circumstances. The Committee shall have no discretion to increase the value of an Award payable upon its settlement in excess of the amount called for by the terms of the Award Agreement on the basis of the degree of attainment of the +Performance Goals as certified by the Committee. However, notwithstanding the attainment of any Performance Goal, if permitted under a Participant’s Award Agreement, the Committee shall have the discretion, on the basis of such criteria as may +be established by the Committee, to reduce some or all of the value of a Performance Award that would otherwise be delivered upon its settlement. No such reduction may result in an increase in the amount payable upon settlement of another +Participant’s Performance Award. As soon as practicable following the Committee’s certification, the Company shall notify the Participant of the determination of the Committee. +9.6 Dividend Equivalents . In its discretion, the Committee may +provide in the Award Agreement evidencing any Performance-Based Restricted Stock or Performance Share Award that the Participant shall be entitled to receive Dividend Equivalents with respect to the payment of cash dividends on Stock having a record +date prior to the date on which the Performance-Based Restricted Stock or Performance Shares are settled or forfeited. Dividend Equivalents, if granted, must be accumulated and paid to the extent that Performance-Based Restricted Stock or +Performance Shares become nonforfeitable. Settlement of Dividend Equivalents may be made in cash, shares of Stock, or a combination thereof as determined by the Committee, and may be paid on the same basis as settlement of the related Performance +Shares as provided in Section 9.7. Dividend Equivalents shall not be paid with respect to Performance Units. +9.7 Payment in Settlement of Performance Awards . Payment of the final value of a Performance Award earned by a Participant as determined +following the completion of the applicable Performance Period pursuant to Sections 9.5 and 9.6 may be made in cash, shares of Stock, or a combination thereof as determined by the Committee. If payment is made in shares of Stock, the number of such +shares shall be determined by dividing the final value of the Performance Award by the Fair Market Value of a share of Stock on the settlement date. Payment may be made in a lump sum or installments as prescribed by the Committee. If any payment is +to be made on a deferred basis, the Committee may, but shall not be obligated to, provide for the payment during the deferral period of Dividend Equivalents or a reasonable rate of interest within the meaning of Section 162(m). +A-17 +9.8 Effect of Termination of Service . The effect +of the Participant’s termination of Service on any Performance Award shall be determined by the Committee, in its discretion, and set forth in the Award Agreement evidencing such Performance Award. +9.9 Nontransferability of Performance +Awards . Performance Awards may not be sold, exchanged, transferred, pledged, hypothecated, assigned, or otherwise disposed of other than by will or by the laws of descent and distribution. All rights with respect to +Performance Shares and Performance Units granted to a Participant hereunder shall be exercisable during his or her lifetime only by such Participant. +9.10 Status of Performance Awards under Section 162(m ) . It is the intent of the +Company that Awards under this Section 9 granted to persons who are designated by the Committee as likely to be Covered Employees shall, if so designated by the Committee, constitute “qualified performance-based compensation” within +the meaning of Section 162(m) and regulations thereunder. Accordingly, the terms of Section 9, including the definitions of Covered Employee and other terms used therein, shall be interpreted in a manner consistent with Section 162(m) +and regulations thereunder. The foregoing notwithstanding, because the Committee cannot determine with certainty whether a given Participant will be a Covered Employee with respect to a fiscal year that has not yet been completed, the term Covered +Employee as used herein shall mean only a person designated by the Committee, at the time of grant of an Award, as likely to be a Covered Employee with respect to that fiscal year. If any provision of the Plan or any agreement relating to such +Awards does not comply or is inconsistent with the requirements of Section 162(m) or regulations thereunder, such provision shall be construed or deemed amended to the extent necessary to conform to such requirements. Notwithstanding anything +in the foregoing to the contrary, in the event that the Committee determines it is advisable to grant Performance Awards that shall not qualify as Performance Based Compensation, the Committee may make such grants without satisfying the requirements +of Section 9.3, may base vesting on Performance Goals other than those set forth in Section 9.4, and may make and provide for settlement of such Awards without satisfying the requirements of Section 162(m). +SECTION 10. OTHER STOCK-BASED AWARDS +The Committee shall have authority to grant +to eligible Employees an “Other Stock-Based Award,” which shall consist of any right that is an Award of Stock or an Award denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to, Stock +(including, without limitation, securities convertible into Stock), as deemed by the Committee to be consistent with the purposes of the Plan, other than an Award described in Sections 6 through 9 above. +SECTION 11. CHANGES IN THE COMPANY’S CAPITAL +STRUCTURE +11.1 No Limitations +on the Company . The existence of outstanding Awards shall not affect in any way the right or power of the Company or its shareholders to make or authorize, without limitation, any or all adjustments, recapitalizations, +reorganizations or other changes in the Company’s capital structure or its business, or any merger or consolidation of the Company, or any issue of Stock, or any issue of bonds, debentures, preferred or prior preference stock or other capital +stock ahead of or affecting the Stock or the rights thereof, or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar +character or otherwise. +11.2 Adjustments for Changes in Capital Structure . If the number of outstanding shares of +Stock is increased or decreased or the shares of Stock are changed into or exchanged for a different number or kind of +A-18 +shares or other securities of the Company on account of any recapitalization, reclassification, stock split, reverse split, combination of shares, exchange of shares, stock dividend or other +distribution payable in capital stock, or other increase or decrease in such shares effected without receipt of consideration by the Company occurring after the Effective Date, the number and kinds of shares for which grants of Options and other +Awards may be made under the Plan, including, without limitation, the limits set forth in Section 5.3, shall be adjusted proportionately and accordingly by the Company. In addition, the number and kind of shares for which Awards are outstanding +shall be adjusted proportionately and accordingly so that the proportionate interest of the Participant immediately following such event shall, to the extent practicable, be the same as immediately before such event. Any such adjustment in +outstanding Options or SARs shall not change the aggregate exercise price payable with respect to shares that are subject to the unexercised portion of an outstanding Option or SAR as applicable, but shall include a corresponding proportionate +adjustment in the exercise price per share for such Option or SAR. The Committee may unilaterally amend the outstanding Awards to reflect the adjustments contemplated by this Section 11.2. The conversion of any convertible securities of the +Company shall not be treated as an increase in shares effected without receipt of consideration. Notwithstanding the foregoing, in the event of any distribution to the Company’s shareholders of securities of any other entity or other assets +(including an extraordinary dividend but excluding a non-extraordinary dividend of the Company) without receipt of consideration by the Company, the Company shall, in such manner as the Company deems appropriate, adjust (a) the number and kind +of shares subject to outstanding Awards and/or (b) the exercise price of outstanding Options or SARs to reflect such distribution. Notwithstanding the foregoing, in no event may the exercise price of any Option be decreased to an amount less +than the par value, if any, of the stock subject to such Award. +11.3 Adjustments . Adjustments under this Section 11 related to shares of Stock or +securities of the Company shall be made by the Committee, whose determination in that respect shall be final, binding and conclusive. No fractional shares or other securities shall be issued pursuant to any such adjustment, and any fractions +resulting from any such adjustment shall be eliminated in each case by rounding downward to the nearest whole share. The Committee shall determine the effect of a Change in Control upon Awards other than Options, SARs, Restricted Stock Units and +Restricted Stock, and such effect shall be set forth in the appropriate Award Agreement. The Committee may provide in the Award Agreements at the time of grant, or any time thereafter with the consent of the Participant, for different provisions to +apply to an Award in place of those described in Sections 11.2. This Section 11 does not limit the Company’s ability to provide for alternative treatment of Awards outstanding under the Plan in the event of a Change in Control. +SECTION 12. CHANGE IN CONTROL +12.1 Effect of Change in Control on Awards: +Assumption or Termination of Awards. +(a) In the event of a Change in Control, the surviving, continuing, successor, or purchasing corporation or other +business entity or parent corporation thereof, as the case may be (the “ Acquiring Corporation ”), may, without the consent of the Participant, either assume the Company’s rights and obligations under any outstanding Awards or +substitute for any of the outstanding Awards substantially equivalent awards. The Acquiring Corporation need not make uniform determinations with respect to any Awards or class of Awards, and it can select the Awards (if any) that it will assume or +substitute for, in its sole discretion. For the purposes of this Section 12, an Award shall be considered assumed or substituted for, if following the Change in Control, the Award confers the right to purchase or receive, for each share subject +to the Award prior to the Change in Control, the consideration (whether stock, cash or other securities or property) received in the transaction constituting a Change in Control by holders of Stock for each share of Stock held on the effective date +of such +A-19 +transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares of Stock); provided, however, that if +such consideration received in the transaction constituting a Change in Control is not solely common stock of the Acquiring Corporation, the Committee may, with the consent of the Acquiring Corporation, provide that the consideration to be received +upon the exercise or vesting of an Award, for each share subject thereto, will be solely common stock of the Acquiring Corporation substantially equal in fair market value to the consideration per share of Stock received by holders of Stock in the +transaction constituting a Change in Control. The determination of such substantial equality of value of consideration shall be made by the Committee in its sole discretion and its determination shall be conclusive and binding. +(b) In the event that the Acquiring +Corporation elects not to assume or substitute for any of the outstanding Awards in connection with a Change in Control, the exercisability and vesting of each such outstanding Award and any shares acquired upon the exercise thereof held by a +Participant whose Service has not terminated prior to such date shall be accelerated, effective as of the date ten (10) days prior to the date of the Change in Control. The foregoing notwithstanding, any Award Agreement with respect to a +Performance Award may provide for vesting, settlement or conversion to a Restricted Stock Award upon the consummation of a Change in Control on a basis that is specific to that Performance Award. The exercise or vesting of any Award and any shares +acquired upon the exercise thereof that was permissible solely by reason of this Section 12.1 and the provisions of the relevant Award Agreement shall be conditioned upon the consummation of the Change in Control. Any Awards which are neither +assumed nor substituted for by the Acquiring Corporation in connection with the Change in Control nor exercised (in the case of Options and SARs) nor paid or converted to a Restricted Stock Award (in the case of a Performance Award) as of the date +of the Change in Control shall terminate and cease to be outstanding effective as of the date of the Change in Control. Notwithstanding the foregoing, shares acquired upon exercise of an Option or SAR prior to the Change in Control and any +consideration received pursuant to the Change in Control with respect to such shares shall continue to be subject to all applicable provisions of the Award Agreement evidencing such Option or SAR except as otherwise provided in such Award Agreement. +12.2 Assumption or +Substitution of Certain Awards . Unless otherwise provided in an Award Agreement or a Participant’s effective negotiated employment, change in control, severance or other similar agreement, in the event of a Change +in Control in which the Acquiring Corporation assumes or substitutes for an Award (or in which the Company is the ultimate parent corporation and continues the Award), if a Participant’s employment with the Acquiring Corporation (or the +Company) or a subsidiary thereof terminates within 18 months following such Change in Control (or such other period set forth in the Award Agreement, including prior thereto if applicable) and under the circumstances specified in the Award +Agreement: (i) Options and SARs outstanding as of the date of such termination of employment will immediately vest, become fully exercisable, and may thereafter be exercised for 12 months (or the period of time set forth in the Award Agreement, +but in no event beyond the end of the regularly scheduled term of such Options or SARs), (ii) the Vesting Conditions applicable to Restricted Stock and Restricted Stock Units outstanding as of the date of such termination of employment shall +lapse and the Restricted Stock and Restricted Stock Units shall become free of all restrictions, limitations and conditions and become fully vested, and (iii) the restrictions, limitations and other conditions applicable to any Other +Stock-Based Awards or any other Awards shall lapse, and such Other Stock-Based Awards or such other Awards shall become free of all restrictions, limitations and conditions and become fully vested and transferable to the full extent of the original +grant. +A-20 +12.3 Termination of Awards . Notwithstanding +anything to the contrary in the foregoing of this Section 12, Options and SARs outstanding as of the date of a Change in Control may be cancelled and terminated without payment therefor if the Fair Market Value of one share of Stock as of the +date of the Change in Control is equal to or less than the Option exercise price per share of Stock or the SAR grant price. In addition, the Committee, in its discretion, may determine that, if a Change in Control occurs, each Option and SAR +outstanding shall terminate within a specified number of days after notice to the Participant, and/or that each Participant shall receive, with respect to each share of Stock subject to such Option or SAR, an amount equal to the excess of the Fair +Market Value of such share of Stock immediately prior to the occurrence of such Change in Control over the exercise price per share of Stock of such Option and/or SAR; such amount to be payable in cash, in one or more kinds of stock or property +(including the stock or property, if any, payable in the transaction) or in a combination thereof, as the Committee, in its discretion, shall determine. +SECTION 13. COMPLIANCE WITH SECURITIES LAW +13.1 General . The grant of Awards and the issuance of shares of Stock pursuant to any Award +shall be subject to compliance with all applicable requirements of federal, state and foreign law with respect to such securities and the requirements of any stock exchange or market system upon which the Stock may then be listed. In addition, no +Award may be exercised or shares issued pursuant to an Award unless (a) a registration statement under the Securities Act shall at the time of such exercise or issuance be in effect with respect to the shares issuable pursuant to the Award or +(b) in the opinion of legal counsel to the Company, the shares issuable pursuant to the Award may be issued in accordance with the terms of an applicable exemption from the registration requirements of the Securities Act. The inability of the +Company to obtain from any regulatory body having jurisdiction the authority, if any, deemed by the Company’s legal counsel to be necessary to the lawful issuance and sale of any shares hereunder shall relieve the Company of any liability in +respect of the failure to issue or sell such shares as to which such requisite authority shall not have been obtained. As a condition to issuance of any Stock, the Company may require the Participant to satisfy any qualifications that may be +necessary or appropriate, to evidence compliance with any applicable law or regulation and to make any representation or warranty with respect thereto as may be requested by the Company. +13.2 Rule 16b-3 . During any time when the Company has a class of equity security +registered under Section 12 of the Exchange Act, it is the intent of the Company that Awards pursuant to the Plan and the exercise of Options and SARs granted hereunder will qualify for the exemption provided by Rule 16b-3 under the Exchange +Act. To the extent that any provision of the Plan or action by the Committee does not comply with applicable requirements of Rule 16b-3, it shall be deemed inoperative to the extent permitted by law and deemed advisable by the Committee, and shall +not affect the validity of the Plan. In the event that Rule 16b-3 is revised or replaced, the Committee may exercise its discretion to modify this Plan in any respect necessary to satisfy the requirements of, or to take advantage of any features of, +the revised exemption or its replacement. +SECTION 14. +TAX WITHHOLDING +14.1 Tax Withholding in General . The Company shall have the right to require the Participant, through payroll +withholding, cash payment or otherwise, including by means of a Cashless Exercise of an Option, to make adequate provision for the federal, state, local and foreign taxes, if any, required by law to be withheld by a Participating Company with +respect to an Award or the shares acquired pursuant thereto. The Company shall have no obligation to deliver shares of Stock, to release shares of Stock from an escrow established pursuant to an Award Agreement, or to make any payment in cash under +the Plan until such tax withholding obligations have been satisfied by the Participant. +A-21 +14.2 Withholding in Shares . The Company shall +have the right, but not the obligation, to deduct from the shares of Stock issuable to a Participant upon the exercise or settlement of an Award, or to accept from the Participant the tender of, a number of whole shares of Stock having a Fair Market +Value, as determined by the Company, equal to all or any part of the tax withholding obligations of a Participating Company. The Fair Market Value of any shares of Stock withheld or tendered to satisfy any such tax withholding obligations shall not +exceed the amount determined by the applicable minimum statutory withholding rates (unless a higher withholding rate is permissible without adverse accounting consequences). +SECTION 15. RIGHTS AND OBLIGATIONS OF THE PARTIES +15.1 Rights as Employee, +Consultant or Director . No person, even though eligible pursuant to Section 5, shall have a right to be selected as a Participant, or, having been so selected, to be selected again as a Participant. Nothing in the +Plan or any Award granted under the Plan shall confer on any Participant a right to remain an Employee, Consultant or Director, or interfere with or limit in any way the right of a Participating Company to terminate the Participant’s Service at +any time. +15.2 Rights as a +Shareholder . A Participant shall have no rights as a shareholder with respect to any shares covered by an Award until the date of the issuance of a certificate for such shares (as evidenced by the appropriate entry on +the books of the Company or of a duly authorized transfer agent of the Company). No adjustment shall be made for dividends, distributions or other rights for which the record date is prior to the date such certificate is issued, except as provided +in Section 11 or another provision of the Plan. +15.3 Right of Setoff . A Participating Company may, to the extent permitted by applicable law, +deduct from and set off against any amounts such Participating Company may owe to the Participant from time to time, including amounts payable in connection with any Award, owed as wages, fringe benefits, or other compensation owed to the +Participant, such amounts as may be owed by the Participant to the Participating Company, although the Participant shall remain liable for any part of the Participant’s payment obligation not satisfied through such deduction and setoff. By +accepting any Award granted hereunder, the Participant agrees to any deduction or setoff under this Section 15.3. +15.4 Section 83(b) Election . No election under Section 83(b) of the Code (to include +in gross income in the year of transfer the amounts specified in Code Section 83(b)) or under a similar provision of the laws of a jurisdiction outside the United States may be made, unless expressly permitted by the terms of the Award +Agreement or by action of the Committee in writing before the making of such election. In any case in which a Participant is permitted to make such an election in connection with an Award, the Participant shall notify the Company of such election +within ten days after filing notice of the election with the Internal Revenue Service or other governmental authority, in addition to any filing and notification required pursuant to regulations issued under Code Section 83(b) or other +applicable provision. +15.5 Compliance with Section 409A of the Code . Awards under the Plan are intended to +satisfy the requirements of Section 409A of the Code and the Treasury Department guidance and regulations issued thereunder (collectively, “ Section 409A ”) so as to avoid the imposition of any additional taxes or penalties under +Section 409A. If the Committee determines that an Award, Award Agreement, payment, distribution, deferral election, transaction or any other action or arrangement contemplated by the provisions of the Plan would, if undertaken, cause a +Participant to become subject to any additional taxes or other penalties under Section 409A, then unless the Committee specifically provides otherwise, such Award, Award Agreement, payment, +A-22 +distribution, deferral election, transaction or other action or arrangement shall not be given effect to the extent it causes such result and the related provisions of the Plan and/or Award +Agreement will be deemed modified, or, if necessary, suspended in order to comply with the requirements of Section 409A to the extent determined appropriate by the Committee, in each case without the consent of or notice to the Participant. +To the extent that any Award is determined to constitute +“nonqualified deferred compensation” within the meaning of Section 409A (a “ 409A Award ”), the Award shall be subject to such additional rules and requirements as specified by the Committee in order to comply with +Section 409A. If any amount under a 409A Award is payable upon a “separation from service” (within the meaning of Section 409A), to a grantee who is then considered a “specified employee” (within the meaning of +Section 409A), then no such payment shall be made prior to the date that is the earlier of (i) six months and one day after the grantee’s separation from service, or (ii) the grantee’s death, but only to the extent such +delay is necessary to prevent such payment from being subject to additional tax pursuant to Section 409A. +15.6 Disqualifying Disposition Notification . If any Participant shall make any disposition of Stock delivered pursuant to the exercise of an +Incentive Stock Option under the circumstances described in Code Section 421(b) (relating to certain disqualifying dispositions), such Participant shall notify the Company of such disposition within ten days thereof. +15.7 Beneficiary +Designation . The Committee, in its sole discretion, may establish procedures pursuant to which a Participant may file with the Company a written designation of a beneficiary who is to receive any benefit under the +Plan to which the Participant is entitled in the event of such Participant’s death before he or she receives any or all of such benefit. Any such designation will revoke all prior designations by the same Participant, shall be in a form +prescribed by the Company, and will be effective only when filed by the Participant in writing with the Company during the Participant’s lifetime. If a married Participant designates a beneficiary other than the Participant’s spouse, the +effectiveness of such designation shall be subject to the consent of the Participant’s spouse. If a Participant dies without an effective designation of a beneficiary who is living at the time of the Participant’s death, the Company will +pay any remaining unpaid benefits to the Participant’s legal representative. +15.8 Cancellation of Award; Forfeiture of Gain . Notwithstanding anything to the contrary contained herein, an Award Agreement may provide that +if, prior to the occurrence of a Change in Control, there is (i) an accounting restatement due to material noncompliance by the Company with any financial reporting requirement under the securities laws or (ii) the Company is otherwise +required by applicable law or Company policy to recoup any portion of an Award otherwise paid or payable hereunder, the Committee shall have the right to review any Award, the amount, payment or vesting of which was based on an entry in the +financial statements that are the subject of the restatement. If the Committee determines that (i) based on the results of the restatement or (ii) due to inaccurate financial data used to determine the payment or vesting of an Award, a +lesser amount or portion of an Award should have been paid or vested, it may (i) cancel all or any portion of any outstanding Awards and (ii) require the Participant or other person to whom any payment has been made or shares or other +property have been transferred in connection with the Award to forfeit and pay over to the Company, on demand, all or any portion of the gain (whether or not taxable) realized upon the exercise of any Option or Stock Appreciation Right and the value +realized (whether or not taxable) on the vesting or payment of any other Award during the period beginning twelve months preceding the date of the restatement and ending with the date of cancellation of any outstanding Awards. +A-23 +The Company may also retain the right in an Award Agreement to cause a forfeiture of the +gain realized by a Participant on account of actions taken by the Participant in violation or breach of or in conflict with any employment agreement, non-competition agreement, any agreement prohibiting solicitation of employees or customers of a +Participating Company or any confidentiality obligation with respect to a Participating Company or otherwise in competition with a Participating Company, to the extent set forth in or specified in such Award Agreement applicable to the Participant. +In addition, the Company may annul an Award if the Participant is an employee of a Participating Company and is terminated for Cause as defined in the applicable Award Agreement or the Plan, as applicable. +SECTION 16. MISCELLANEOUS +16.1 Delivery and Execution of Electronic +Documents . To the extent permitted by applicable law, the Company may (i) deliver by email or other electronic means (including posting on a web site maintained by the Company or by a third party under contract +with the Company) all documents relating to the Plan and any Award thereunder (including without limitation, prospectuses required by the SEC) and all other documents that the Company is required to deliver to its security holders (including without +limitation, annual reports and proxy statements) and (ii) permit participants in the Plan to electronically execute applicable Plan documents (including but not limited to, Award Agreements) in a manner prescribed by +the Committee. +16.2 Awards to Participants Outside the United States . The Committee may modify the terms of +any Award under the Plan made to or held by a Participant who is then resident or primarily employed outside of the United States in any manner deemed by the Committee to be necessary or appropriate in order that such Award shall conform to laws, +regulations, and customs of the country in which the Participant is then resident or primarily employed, or so that the value and other benefits of the Award to the Participant, as affected by foreign tax laws and other restrictions, applicable as a +result of the Participant’s residence or employment abroad shall be comparable to the value of such an Award to a Participant who is resident or primarily employed in the United States. An Award may be modified under this Section 16.2 in a +manner that is inconsistent with the express terms of the Plan, so long as such modifications will not contravene any applicable law or regulation or result in actual liability under Section 16(b) of the Exchange Act for the Participant whose +Award is modified. +16.3 Nonexclusivity of the Plan . Neither the adoption of the Plan by the Board nor the +submission of the Plan to the shareholders of the Company for approval shall be construed as creating any limitations on the power of the Board to adopt such other incentive arrangements as it may deem desirable, including, without limitation, the +granting of stock options otherwise than under the Plan, and such arrangements may be either applicable generally or only in specific cases. +16.4 Severability . If any provision of the Plan or any Award Agreement shall be determined to +be illegal or unenforceable by any court of law in any jurisdiction, the remaining provisions hereof and thereof shall be severable and enforceable in accordance with their terms, and all provisions shall remain enforceable in any other +jurisdiction. +16.5 Requirements of +Law . The granting of Awards and the issuance of Stock under the Plan shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges +as may be required. +A-24 +16.6 Governing Law . The validity and +construction of this Plan and the instruments evidencing the Awards hereunder shall be governed by the laws of the State of Rhode Island, other than any conflicts or choice of law rule or principle that might otherwise refer construction or +interpretation of this Plan and the instruments evidencing the Awards granted hereunder to the substantive laws of any other jurisdiction. +SECTION 17. TERMINATION OR AMENDMENT OF PLAN +The Board may terminate or amend the Plan at any time. +However, subject to changes in applicable law, regulations or rules that would permit otherwise, without the approval of the Company’s shareholders, there shall be (a) no increase in the maximum aggregate number of shares of Stock that may +be issued under the Plan (except by operation of the provisions of Section 11), (b) no change in the class of persons eligible to receive Incentive Stock Options, and (c) no other amendment of the Plan that would require approval of +the Company’s shareholders under any applicable law, regulation or rule. No termination or amendment of the Plan shall affect any then outstanding Award unless expressly provided by the Committee. In any event, no termination or amendment of +the Plan may materially adversely affect any then outstanding Award without the consent of the Participant, unless such termination or amendment is necessary to comply with any applicable law, regulation or rule. +SECTION 18. EFFECTIVE DATE AND DURATION OF PLAN +The Plan shall become +effective (the “ Effective Date ”) upon the later of the approval of the Plan by the Board and the approval of the Plan by the shareholders of the Company in accordance with applicable laws and regulations. No Award may be granted +under the Plan after the tenth (10 th ) anniversary of +the Effective Date. The Plan shall terminate when the total amount of the Stock available for issuance under the Plan have been issued and all restrictions on such shares under the terms of the Plan and the agreements evidencing Awards granted under +the Plan have lapsed. +IN WITNESS WHEREOF, the +Company has caused this 2015 Equity Incentive Plan to be executed by its duly authorized officer as of the day of May, 2015. +ASTRO-MED, INC. +By: +Name: +Gregory A. Woods +Title: +Chief Executive Officer +Attest: +Margaret D. Farrell +Secretary +A-25 +Astro-Med, Inc. +Astro-Med Industrial Park +600 East Greenwich Ave. +West Warwick, RI 02893 +VOTE BY INTERNET - www.proxyvote.com +Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off +date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. +Electronic Delivery of Future PROXY MATERIALS +If you would like to reduce the costs incurred by our company in mailing proxy materials, +you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when +prompted, indicate that you agree to receive or access proxy materials electronically in future years. +VOTE BY PHONE - 1-800-690-6903 +Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your +proxy card in hand when you call and then follow the instructions. +VOTE BY +MAIL +Mark, sign and date your proxy card and return it in the postage-paid +envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. +TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: +KEEP THIS PORTION FOR YOUR RECORDS +DETACH AND RETURN THIS PORTION ONLY +THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. +1. +FOR +WITHHOLD +FOR all +except +(01) Graeme MacLetchie +¨ +¨ +¨ +(02) Everett V. Pizzuti +¨ +¨ +(03) Mitchell I. Quain +¨ +¨ +(04) Harold Schofield +¨ +¨ +(05) Hermann Viets, Ph.D. +¨ +¨ +(06) Gregory A. Woods +¨ +¨ +INSTRUCTION: To withhold authority to vote for any individual nominee(s), mark “For All Except” and write that nominee(s’) name(s) or number(s) in the space provided below. +FOR +AGAINST +ABSTAIN +2. To consider and approve an advisory (non-binding) proposal on the Company’s executive compensation. +¨ +¨ +¨ +FOR +AGAINST +ABSTAIN +3. To consider and approve the Company’s 2015 Equity Incentive Plan. +¨ +¨ +¨ +FOR +AGAINST +ABSTAIN +4. Ratify the appointment of Wolf & Company, P.C. as the Company’s independent registered public accounting firm. +¨ +¨ +¨ +5. In their discretion, upon such other matters as may properly come before the meeting +Signature [PLEASE SIGN WITHIN BOX] +Date +Signature (Joint Owners) +Date +Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The +Form 10-K, +Notice & Proxy Statement is/are available at www.proxyvote.com . +ASTRO-MED, INC. +Annual +Meeting of Shareholders-May 20, 2015 +The undersigned, whose signature appears on the reverse side of this proxy, hereby appoints +Graeme MacLetchie, Everett V. Pizzuti, Mitchell I. Quain, Harold Schofield, Hermann Viets and Gregory A. Woods, and each of them acting singly, as proxies and attorneys with power of substitution and with all the powers the undersigned would possess +if personally present, to vote the stock of the undersigned in ASTRO-MED, INC. at the annual meeting of shareholders to be held May 20, 2015, at 600 East Greenwich Avenue, West Warwick, Rhode Island, and at any adjournments or postponements thereof, +as directed with respect to the matters set forth herein and with discretionary authority on all other matters that may properly come before said meeting, as more fully described in the proxy statement received by the undersigned shareholder. +THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS +PROXY WILL BE VOTED FOR THE NOMINEES SPECIFIED IN PROPOSAL 1, AND FOR PROPOSALS 2, 3 AND 4 AND IN ACCORDANCE WITH THE JUDGMENT OF THE PROXIES UPON OTHER MATTERS THAT MAY PROPERLY COME BEFORE SAID MEETING OR ANY ADJOURNMENTS OR POSTPONEMENTS THEREOF. +THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY +Address change/comments: +(If you noted any Address Changes and/or Comments above, please mark corresponding box on the reverse side.) \ No newline at end of file diff --git a/raw/proxies/0000008146/0001193125-15-138485/proxy_rpt.txt b/raw/proxies/0000008146/0001193125-15-138485/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..0ea96280c4efc05114fd205c2a698abc91f0ce1b --- /dev/null +++ b/raw/proxies/0000008146/0001193125-15-138485/proxy_rpt.txt @@ -0,0 +1,16 @@ +RELATED PARTY TRANSACTIONS +Potential conflicts of interest and related party transactions are referred by the Board to the Audit Committee for review and approval. +In reviewing and evaluating potential conflicts of interest and related party transactions, the Audit Committee uses applicable NASDAQ listing standards and SEC rules as a guide. +18 +Other than as described below, no officer, director or nominee for director of the Company +or any associate of any of the foregoing had during the fiscal year ended January 31, 2015 any material interest, direct or indirect, in any material transaction or any material proposed transaction in which the amount exceeds $120,000 and to +which the Company was or is to be a party. +The +Company employs three sons of director Everett V. Pizzuti, to whom the Company paid or accrued over $120,000 in compensation during the fiscal year ended January 31, 2015: Eric Pizzuti, as Vice President and General Manager of QuickLabel +Systems, Christopher Pizzuti, as a QuickLabel Field Sales Engineer, and Kevin Pizzuti, as a District Manager, QuickLabel Systems. The Company paid Eric Pizzuti $184,998 in salary and bonus and paid Christopher Pizzuti and Kevin Pizzuti $161,741 and +$127,312, respectively, in salary and sales commissions. Eric Pizzuti also received options for 5,500 shares, a vacation payout of $8,922 and a matching contribution to his Profit Sharing Plan account of $5,261. Christopher Pizzuti also received +options for 500 shares, an automobile allowance of $7,500 and a vacation payout of $2,094. Kevin Pizzuti also received an automobile allowance of $7,500, a vacation payout of $2,308 and a matching contribution to his Profit Sharing Plan account of +$1,253. In addition, the Company made a $678 contribution to each of their ESOP accounts. +The Company also employs April Ondis, a Co-Executor of the Ondis Estate, as Senior Manager, Applied Marketing of QuickLabel Systems product group. As Co-Executor of the Ondis Estate, Ms. Ondis is +deemed to be the beneficial owner of more than 5% of the Company’s outstanding common stock, and, therefore a “related person” of the Company. The Company paid Ms. Ondis $125,455 in salary and commission and a vacation payout of +$4,258. Ms. Ondis also received options for 600 shares. The Company also made contributions of $2,054 and $678 to her Profit Sharing Plan and ESOP accounts, respectively. \ No newline at end of file diff --git a/raw/proxies/0000008146/0001193125-16-540158/proxy.txt b/raw/proxies/0000008146/0001193125-16-540158/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..6cb4f83f944fdc254f13cc9e419dceadad072728 --- /dev/null +++ b/raw/proxies/0000008146/0001193125-16-540158/proxy.txt @@ -0,0 +1,1660 @@ +DEF 14A +1 +d105557ddef14a.htm +DEF 14A +DEF 14A +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Proxy Statement Pursuant to Section 14(a) of the +Securities Exchange Act of 1934 +(Amendment No. ) +Filed by the +Registrant x +Filed by a Party other than the Registrant ¨ +Check the appropriate box: +¨ +Preliminary Proxy Statement +¨ +Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +x +Definitive Proxy Statement +¨ +Definitive Additional Materials +¨ +Soliciting Material Pursuant to §240.14a-12 +Astro-Med, Inc. +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +x +No fee required. +¨ +Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. +(1) +Title of each class of securities to which transaction applies: +(2) +Aggregate number of securities to which transaction applies: +(3) +Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on +which the filing fee is calculated and state how it was determined): +(4) +Proposed maximum aggregate value of transaction: +(5) +Total fee paid: +¨ +Fee paid previously with preliminary materials. +¨ +Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement +number, or the Form or Schedule and the date of its filing. +(1) +Amount Previously Paid: +(2) +Form, Schedule or Registration Statement No.: +(3) +Filing Party: +(4) +Date Filed: +Astro-Med, Inc. +600 East Greenwich Avenue +West Warwick, Rhode Island 02893 +NOTICE OF ANNUAL MEETING OF SHAREHOLDERS +May 18, 2016 +To the Shareholders of Astro-Med, Inc.: +Notice is hereby given that the 2016 Annual Meeting of Shareholders of Astro-Med, Inc. (the “Company”) will be held at the offices of the Company, 600 East Greenwich Avenue, West Warwick, Rhode +Island on Wednesday, May 18, 2016, beginning at 10:00 a.m., for the following purposes: +(1) +To consider and vote upon the election of seven directors to serve until the next annual meeting of shareholders or until their successors are elected and have +qualified; +(2) +To conduct an advisory vote to approve the Company’s executive compensation; +(3) +To approve an amendment to the Company’s Restated Articles of Incorporation to change the Company’s name to AstroNova, Inc.; +(4) +To ratify the appointment of Wolf & Company, P.C. as the Company’s independent registered public accounting firm for the fiscal year ending +January 31, 2017; and +(5) +To transact such other business as may properly come before the meeting. +The close of business on March 24, 2016 has been fixed +as the record date for determining shareholders entitled to attend or vote at the annual meeting or any adjournment thereof. +You may vote on these matters in person, by proxy or via the Internet or telephone. Whether or not you plan to attend the meeting, please +promptly complete and return the enclosed proxy card in the enclosed addressed, postage-paid envelope or vote via the Internet or telephone, so that your shares will be represented and voted at the meeting in accordance with your wishes. If you +attend the meeting, you may withdraw your proxy or Internet or telephone vote and vote your shares in person. +By Order of the Board of Directors +Peter M. Rosenblum +Secretary +April 13, 2016 +IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY +MATERIALS FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 18, 2016. +The Company’s Proxy Statement, form of proxy card and Annual Report are available for viewing, printing and downloading at: +http://www.proxyvote.com +This website does not use “cookies” to track or identify visitors. +Astro-Med, Inc. +PROXY STATEMENT +ANNUAL MEETING OF SHAREHOLDERS +May 18, 2016 +The Meeting +The 2016 annual meeting of shareholders of Astro-Med, Inc. (the “Company”) will be held at 10:00 +a.m., local time, on Wednesday, May 18, 2016 at the offices of the Company, 600 East Greenwich Avenue, West Warwick, Rhode Island. At the meeting, shareholders of record on the record date for the meeting who are present or represented by proxy +will have the opportunity to vote on the following matters: +• +the election of seven directors to serve until the next annual meeting of shareholders or until their successors are elected and have qualified; +• +the approval, on an advisory, non-binding basis, of the compensation paid to the Company’s named executive officers, as disclosed in this proxy +statement pursuant to Item 402 of Regulation S-K (including in the compensation discussion and analysis, compensation tables and accompanying narrative disclosures); +• +the approval of an amendment to the Company’s Restated Articles of Incorporation, as amended (the “Articles of Incorporation”) to change +the Company’s name to AstroNova, Inc.; +• +the ratification of the appointment of Wolf & Company, P.C. as the Company’s independent registered public accounting firm for the fiscal +year ending January 31, 2017; and +• +such other business as may properly come before the meeting. +Solicitation and Revocation of Proxies +The accompanying proxy is solicited by the Board of +Directors (the “Board”) of the Company in connection with its 2016 annual meeting of shareholders. The Company will bear the cost of such solicitation. It is expected that the solicitation of proxies will be primarily by mail. Proxies may +also be solicited personally by directors, officers and employees of the Company at nominal cost. The Company may reimburse brokerage houses and other custodians, nominees and fiduciaries holding stock for others in their names, or in those of their +nominees, for their reasonable out-of-pocket expenses in sending proxy material to their principals or beneficial owners and obtaining their proxies. Any shareholder giving a proxy has the power to revoke it at any time prior to its exercise, but +the revocation of a proxy will not be effective until notice thereof has been given to the Secretary of the Company. Every properly submitted proxy will be voted in accordance with the specification made thereon. This proxy statement and the +accompanying proxy are expected to be first sent to shareholders on or about April 18, 2016. +Who May Vote +The Board has established March 24, 2016 as the record date for the annual meeting. Only shareholders of record at the close of business as of that date will be entitled to attend or vote at the +annual meeting. On the record date, there were 7,388,048 shares of common stock of the Company outstanding. There was no other outstanding class of voting securities. +A list of shareholders entitled to vote will be available at the annual meeting. In +addition, you may contact Joseph P. O’Connell, at the Company’s offices located at 600 East Greenwich Avenue, West Warwick, Rhode Island, to make arrangements to review a copy of the shareholder list at those offices, between the hours of +9:00 a.m. and 5:00 p.m., local time, on any business day from May 6, 2016 to the time of the annual meeting. +How to Vote +You are entitled to one vote at the meeting for each share of common stock registered in your name at the close of business on the record date for the meeting. You may vote your shares at the meeting in +person, by proxy or via the Internet or the toll-free number (for residents of the United States and Canada) listed on your proxy card. +• +To vote in person , you must attend the meeting, and then complete and submit the ballot provided at the meeting. +• +To vote by proxy , you must complete and return the enclosed proxy card. Your proxy card will be valid only if you sign, date and return it +before the meeting. By completing and returning the proxy card, you will direct the persons named on the proxy card to vote your shares at the meeting in the manner you specify. If you complete all of the proxy card except the voting instructions, +then the designated persons will vote your shares +• +FOR the re-election of each of Graeme MacLetchie, April L. Ondis, Everett V. Pizzuti, Mitchell I. Quain, Harold Schofield, Hermann Viets and Gregory A. +Woods as a director of the Company; +• +FOR the approval, on an advisory, non-binding basis, of the Company’s executive compensation as described in this proxy statement; +• +FOR the approval of an amendment to the Company’s Articles of Incorporation to change the name of the Company to AstroNova, Inc.; and +• +FOR the ratification of the appointment of Wolf & Company, P.C. as the Company’s independent registered public accounting firm for the +fiscal year ending January 31, 2017. +If any other business properly comes before the meeting, then the designated persons will have the discretion to vote in any manner they deem appropriate. +• +To vote via the Internet , you must access the website for Internet voting at www.proxyvote.com. Please have the enclosed proxy card handy when +you access the website and follow the on-screen instructions. Internet voting facilities for shareholders of record will be available 24 hours a day until 11:59 p.m. (Eastern time) on May 17, 2016. If you vote via the Internet, you do not have +to return your proxy card via mail. +• +To vote via telephone , use any touch-tone telephone and call 1-800-690-6903 to transmit your voting instructions up until 11:59 p.m. (Eastern +time) on May 17, 2016. Please have the enclosed proxy card handy when you call and then follow the instructions. If you vote via telephone, you do not have to return your proxy card via mail. +If you vote by proxy or via the Internet or telephone, you +may revoke your vote at any time before it is exercised by taking one of the following actions: +• +sending written notice to the Company’s Secretary at the address set forth on the notice of meeting appearing on the cover of this proxy +statement; +2 +• +voting again by proxy or via the Internet or telephone on a later date; or +• +attending the meeting, notifying the Company’s Secretary that you are present, and then voting in person. +Shares Held by Brokers or Nominees +If the shares you own are held in “street name” by +a brokerage firm, your brokerage firm, as the record holder of your shares, is required to vote your shares according to your instructions. In order to vote your shares, you will need to follow the directions your brokerage firm provides you. Many +brokers also offer the option of providing voting instructions to them over the Internet or by telephone, directions for which would be provided by your brokerage firm on your vote instruction form. +Under stock exchange rules applicable to most brokerage +firms, if you do not give instructions to your broker, your broker will be permitted to vote any shares it holds for your account in its discretion with respect to “routine” proposals, but will not be allowed to vote your shares with +respect to “non-routine” proposals. Proposal 1, regarding the election of Directors, and Proposal 2, regarding the approval, on an advisory, non-binding basis, of the Company’s executive compensation, are “non-routine” +proposals. If you do not instruct your broker how to vote with respect to these proposals, your broker will not vote your shares on them and your shares will be recorded as “broker non-votes” and will not affect the outcome of the vote on +those proposals . “Broker non-votes” are shares that are held in “street name” by a bank or brokerage firm that indicates on its proxy that, while voting in its discretion on one matter, it does not have or did not exercise +discretionary authority to vote on another matter. +Proposal 3, regarding the amendment of the Company’s Articles of Incorporation to change the name of the Company to AstroNova, Inc., +and Proposal 4, the ratification of Wolf & Company, P.C. as the Company’s independent registered public accounting firm for the fiscal year ending January 31, 2017, are considered to be routine items under the applicable rules and +your broker will be able to vote on those items even if it does not receive instructions from you, so long as your broker holds your shares in its name. +If a broker or nominee holds shares of common stock in “street name” for your account, then this proxy statement may have been +forwarded to you with a voting instruction card, which allows you to instruct the broker or nominee how to vote your shares on the proposals described herein. To vote by proxy or instruct your broker how to vote, you should follow the directions +provided with the voting instruction card. In order to have your vote counted on Proposal 1 and Proposal 2, you must either provide timely voting instructions to your broker or obtain a properly executed proxy from the broker or other record +holder of the shares that authorizes you to act on behalf of the record holder with respect to the shares held for your account . +Votes Required to Transact Business At the Meeting +The holders of a majority of the shares entitled to vote, present in person or represented by proxy, will constitute a quorum for the +transaction of business at the meeting. Abstentions and broker non-votes are counted as present and entitled to vote for purposes of determining a quorum. +Multiple Shareholders Sharing the Same Address +If you and other residents at your mailing address own shares of the Company’s common stock through a broker or other nominee, you +may have elected to receive only one copy of this proxy statement and the +3 +Company’s fiscal year 2016 Annual Report. If you and other residents at your mailing address own shares of common stock in your own names, you may have received only one copy of this proxy +statement and the fiscal year 2016 Annual Report, unless you provided the Company’s transfer agent with contrary instructions. +This practice, known as “householding,” is designed to reduce the Company’s printing and postage costs. You may promptly +obtain an additional copy of this proxy statement, enclosed proxy card and our fiscal year 2016 Annual Report by sending a written request to Astro-Med, Inc., attention Investor Relations Department, 600 East Greenwich Avenue, West Warwick, Rhode +Island 02893, or by calling the Company’s investor relations department at 617-542-5300. If you hold your shares through a broker or other nominee and wish to discontinue householding or to change your householding election, you may do so by +contacting your broker or by calling (800) 542-1061 or writing to Broadridge Financial Solutions, 51 Mercedes Way, Edgewood, NY 11717. If you hold shares in your own name and wish to discontinue householding or change your householding +election, you may do so by calling (877) 373-6374 or writing to Computershare Investor Services at P.O. Box. 43078, Providence, RI 02940-3078. +Directions to the Company’s offices +The annual meeting will be held at the Company’s offices 600 East Greenwich Avenue, West Warwick, Rhode Island. For those planning to +attend the special meeting, directions to our offices can be found under the heading “Contact Us” on our website. +PROPOSAL NO. 1 +ELECTION OF DIRECTORS +At the annual meeting, seven directors are to be elected to hold office until the next annual meeting or until their respective successors are elected and qualified. The persons named in the accompanying +proxy, who have been designated by the Board, intend to vote, unless otherwise instructed, for the election to the Board of the persons named below. The biographies below contain information regarding the person’s service as director, business +experience, director positions held currently or at any time during the last five years, and the experiences, qualifications, attributes or skills that caused the Nominating Committee and the Board to determine that the person should serve as a +director. +Graeme MacLetchie , 78, is a +private investor and was a director of Deutsche Bank Alex Brown (Private Client Division), an investment banking and brokerage services company for private wealth and asset management, from November 1995 until his retirement in March 2010. Prior to +this, Mr. MacLetchie was Senior Vice President of C. J. Lawrence Deutsche Bank Securities Corporation from 1970 to 1995. He has been a director of the Company since 2002 and also served as a director of E-Sync Networks Inc., a provider of +managed enterprise services and solutions to medium and large businesses, from 1994 to 1999. We believe that Mr. MacLetchie’s substantial experience in the financial sector and knowledge of the financial, regulatory, corporate governance +and other matters affecting public companies qualify him to serve on our Board. +April L. Ondis , 42, has been a director since November 2015. Since September 2015, Ms. Ondis has served as a Marketing Manager for Crossref, a collaborative reference linking service operated +by Publishers International Linking Associations, Inc. Prior to joining Crossref, Ms. Ondis held a variety of marketing-related positions with the Company, including Applied Marketing Manager from January 2015 to August 2015, +4 +Worldwide Marketing Director from 2005 through December 2014 and Marketing Assistant from 1998 to 2005. We believe that Ms. Ondis’ substantial knowledge of the markets in which the +Company operates and extensive knowledge of the Company’s customer relationships qualify her to serve on our Board. +Everett V. Pizzuti , 79, served as Chief Executive Officer of the Company from June 2011 to January 31, 2014. Prior to serving +as Chief Executive Officer of the Company, Mr. Pizzuti was its President and Chief Operating Officer from 1971 to June 2011. Mr. Pizzuti has also been a director of the Company since 1985. Prior to 1971, he served as General Sales Manager +of the Recorder Division of Gulton Industries. Through his long service with the Company, Mr. Pizzuti has an intimate knowledge of the Company’s products and markets and is able to provide our Board with insight and advice related to the +Board’s decisions. Based on this experience, we believe that Mr. Pizzuti is qualified to serve on our Board. +Mitchell I. Quain , 64, has been a director since August 2011. Mr. Quain has served as a Senior Advisor at Carlyle Group, a +private equity firm since December 2011. From January 2010 through December 2011, Mr. Quain was a Partner at One Equity Partners, a private investment firm. From 2006 through 2009, he was a Senior Director of ACI Capital Corp. From 2002 through +2005, Mr. Quain served as Chairman of Register.Com, Inc., an internet services provider, and from 1997 to 2001 he was employed with ABN AMRO and its predecessors in several capacities, including Vice Chairman of Investment Banking. +Mr. Quain also serves as a director of Hardinge Inc., a global designer, manufacturer and distributor of machine tools, RBC Bearings, Inc., an international manufacturer and marketer of highly engineered precision plain, roller and ball +bearings, Jason Industries, Inc. a manufacturing company operating in the seating, finishing, acoustics and components businesses. Mr. Quain previously served as a director of DeCrane Aircraft Holdings, Inc., Handy & Harman Ltd., HEICO +Corporation, MagneTek, Inc., Mechanical Dynamics, Inc., Register.com, Inc., Titan International, Inc. and Tecumseh Products Company. We believe that Mr. Quain’s extensive experience in the private equity sector and public company +experience qualify him to serve on our Board. +Harold Schofield , 74, has been the owner and manager of Schofield Imaging Associates, LLC, in Narragansett, Rhode Island since +2004. Prior to founding Schofield Imaging Associates, LLC, Mr. Schofield was Founder, President and CEO of Atlantek Incorporated (“Atlantek”), a manufacturer of thermal printers and retired as Vice President and General Manager of +Zebra Atlantek, Inc. following the acquisition of Atlantek by Zebra Technologies Corp. in November 2003. Prior to founding Atlantek, Mr. Schofield was Design Engineering Manager at Gulton Industries where he was responsible for design and +development of thermal printers, plotters and chart recorders. Mr. Schofield is an internationally recognized authority in the electronic printing field. We believe that Mr. Schofield’s long history and expertise in the printing and +imaging field qualify him to serve on our Board. +Hermann Viets , Ph.D., 73, served as the President and Chief Executive Officer of the Milwaukee School of Engineering, a university +located in Milwaukee, Wisconsin focused primarily on engineering education, from 1991 until his retirement in June 2015 and continues to serve on the Board of Regents of that institution. Dr. Viets served as a director of Gehl Co., a publicly +traded manufacturing company, from 1999 until its acquisition by Manitou BF S.A. in 2008. Dr. Viets was also a trustee of Polytechnic University (a private engineering school located in Brooklyn, NY) until 2009. Dr. Viets has been a +director of the Company since 1988. We believe that Dr. Viets’ executive experience as president of a university and as a director of another public company and his understanding of the Company’s products as well as corporate +governance matters qualify him to serve on our Board. +5 +Gregory A. Woods , 57, has served as Chief Executive Officer of the Company since +February 1, 2014. Mr. Woods joined the Company in September 2012 as Executive Vice President and Chief Operating Officer and was appointed President and Chief Operating Officer on August 29, 2013. Prior to joining the Company, +Mr. Woods served from January 2010 to August 2012 as Managing Director of Medfield Advisors, LLC, an advisory firm located in Medfield, Massachusetts focused on providing corporate development and strategy guidance to technology driven +manufacturing firms. From 2008 to 2010, Mr. Woods served as President of Performance Motion Devices, a specialty semiconductor and electronics manufacturer located in Lincoln, Massachusetts. Through his work experience, Mr. Woods has +extensive knowledge of the technology and electronics industries, as well as lean manufacturing processes. Based on this experience and his position as Chief Executive Officer of the Company, we believe that Mr. Woods is qualified to serve on +our Board. +The Board has determined that all of +the directors of the Company, including each of the nominees standing for election at the 2016 annual shareholders meeting, other than Gregory A. Woods, Everett V. Pizzuti and April L. Ondis, are independent of the Company in that such nominees have +no material relationship with the Company either directly, or as a partner, shareholder or affiliate of an organization that has a relationship with the Company. The Board has made this determination in accordance with applicable Securities and +Exchange Commission (“SEC”) rules and NASDAQ listing standards. +Each of the directors must be elected by a plurality of the votes properly cast at the annual meeting. This means that the seven nominees receiving the highest number of FOR votes will be elected as +directors. Votes may be cast FOR or WITHHELD FROM each nominee. Broker non-votes and votes that are WITHHELD FROM the nominees will be excluded entirely from the vote and will have no effect. +The Board recommends a vote FOR the election of each the nominees listed above. +CORPORATE GOVERNANCE +The Board of Directors – Meetings and Committees +The Board currently consists of seven members, all of whose +terms will expire at the annual meeting and each of whom has been nominated for re-election. During the fiscal year ended January 31, 2016, the Board held eight meetings. During fiscal year 2016, all directors attended at least 75% of the +meetings of the Board and meetings of committees on which such director serves. The Board has adopted a policy that requires members of the Board to make every effort to attend each annual shareholders meeting. All members of the Board attended the +2015 annual shareholders meeting. +The Board +currently has three standing committees: an Audit Committee, a Compensation Committee and a Nominating Committee. The members and chairs of each of those committees are appointed each year. The Audit Committee is comprised of Messrs. MacLetchie, +Quain and Schofield. The Nominating Committee is comprised of Messrs. MacLetchie, Quain and Viets. The Compensation Committee is comprised of all of our independent directors, Messrs. MacLetchie, Quain, Schofield and Viets. Each of the members of +our committees is independent as defined under the applicable NASDAQ listing standards and SEC rules. Each of the Audit, Compensation and Nominating Committees has a written charter approved by the Board. A copy of each charter is available on the +Company’s website at www.astronovainc.com under “Investors – Governance Documents.” +6 +Audit Committee. The Audit Committee’s primary duties and responsibilities +include: overseeing the integrity of the Company’s financial reports; appointing, setting the compensation of and overseeing the Company’s independent accountants; and assessing the qualifications and independence and performance of the +Company’s independent accountants and the adequacy of internal controls. The Audit Committee meets with the Company’s independent accountants to review quarterly financial results, the results of the audit and other relevant matters. +Mr. MacLetchie serves as Chairman of the Audit Committee, which held five meetings during the fiscal year ended January 31, 2016. The Board has determined that all three members of the Audit Committee satisfy the financial literacy +requirements of the NASDAQ listing standards and are independent as defined under the NASDAQ listing requirements and applicable SEC rules. Additionally, the Board has determined that Graeme MacLetchie satisfies the “financial +sophistication” requirement of the NASDAQ listing requirements, and that Mitchell Quain qualifies as an “audit committee financial expert” as defined by the SEC rules. +Compensation Committee. The Compensation Committee assists the Board in discharging the Board’s +responsibilities relating to director and executive compensation. The Compensation Committee’s responsibilities include: establishing and reviewing the Company’s executive and director compensation philosophy, strategies, plans and +policies; making recommendations with respect to the design of the Company’s incentive compensation plans and equity based plans; granting awards under such plans and overseeing generally the administration of such plans; evaluating the +performance and determining the compensation of the Chief Executive Officer; and reviewing and approving recommendations on compensation of other executives. Mr. Quain serves as chairman of the Compensation Committee, which held four meetings +during the fiscal year ended January 31, 2016. +Nominating Committee . The Nominating Committee is responsible for identifying individuals qualified to be members of the Board and +recommending such individuals to be nominated by the Board for election to the Board by the shareholders. The Nominating Committee held three meetings in the fiscal year ended January 31, 2016. Dr. Viets serves as chairman of the +Nominating Committee. +Director +Share Ownership Requirements . In March 2015, the Board approved a stock ownership policy to require each director to hold shares of Company common stock with a value equal to at least $200,000. Any director who does not currently +meet this requirement will have five years from the later of April 1, 2015 or his or her initial election to the Board to achieve this ownership level. Directors are expected to retain at least 50% of the shares acquired upon exercise of any +stock option (net of shares withheld or tendered in payment of the exercise price) or vesting of a restricted stock or restricted unit award until they achieve the specified ownership level and thereafter maintain such ownership level. Currently, +all but one director meets the ownership requirement. +Nomination of Directors +The Nominating Committee considers suggestions from many sources, including shareholders, regarding possible candidates for director. The +Nominating Committee does not set specific criteria for directors but seeks individuals who possess the highest ethical standards and integrity, have a history of achievement that reflects superior standards for themselves and others, have the +ability to provide wise, informed and thoughtful counsel to management on a range of issues, exercise independence of thought and possess skills and expertise appropriate to meet the Company’s needs and advance the long-term interests of the +shareholders. The Nominating Committee does not have a policy with respect to diversity and does not specifically consider issues of diversity, such as gender, race, origin or sex, when determining whether to nominate any person to be a director of +the Company. +7 +The Nominating Committee must also ensure that members of the Board as a group maintain the +requisite qualifications under the NASDAQ listing standards for populating the Audit, Compensation and Nominating Committees. The Nominating Committee will consider shareholder nominees for director in the same manner as nominees for director from +other sources. +Shareholders may send +recommendations for director nominees to the Nominating Committee at the Company’s offices at 600 East Greenwich Avenue, West Warwick, Rhode Island 02893. Submissions should include information regarding a candidate’s background, +qualifications, experience and willingness to serve as a director. In addition, Section 10 of Article III of the Company’s By-Laws sets forth specific procedures that, if followed, enable any shareholder entitled to vote in the election of +directors to make nominations directly at an annual meeting of shareholders. These procedures include a requirement for written notice to the Company not more than 150 days nor less than 60 days prior to the scheduled annual meeting and must contain +the name and certain information concerning the nominee and the shareholders who support the nominee’s election. For the annual meeting to be held in 2017, the notice must be received no earlier than December 19, 2016 and no later than +March 17, 2017. A copy of the Company’s By-Laws may be obtained by writing to Astro-Med, Inc., Attn: Investor Relations Department, 600 East Greenwich Avenue, West Warwick, Rhode Island 02893. +Communications with the Board of Directors +The Company’s Board provides a process for shareholders +to communicate directly with the members of the Board or the individual chairman of each standing committee. Any shareholder with a concern, question or complaint regarding our compliance with any policy or law, or who would otherwise like to +contact the Board may communicate directly with the directors by writing directly to those individuals c/o Astro-Med, Inc., 600 East Greenwich Avenue, West Warwick, Rhode Island 02893. The Company’s general policy is to forward, and not to +intentionally screen, any mail received at the Company’s corporate offices that is sent directly to an individual unless the Company believes the communication may pose a security risk. +Board Leadership Structure +All members of the Board, other than Gregory A. Woods, April L. Ondis and Everett V. Pizzuti, are independent and all our key committees +– Audit, Compensation and Nominating – are comprised solely of independent directors. The non-management directors meet in executive session without Mr. Woods, Ms. Ondis and Mr. Pizzuti at least quarterly. +The Board believes that separating the positions of Chief +Executive Officer and Chairman of the Board is preferable and in the best interests of shareholders because it gives our independent directors a significant role in Board direction and agenda setting and enhances the Board’s ability to fulfill +its oversight responsibilities, including of senior management. Separating the positions also provides an independent viewpoint and focus at Board meetings, and ensures that our Chief Executive Officer will be able to focus his energy on running the +Company. The Board believes this structure provides strong leadership for the Board, while also positioning the Chief Executive Officer as the leader of the Company in the eyes of our customers, employees and shareholders. +Risk Oversight +The Board has an active role, as a whole and also at the +committee level, in overseeing management of the Company’s risks through a program of sound policies, systems, processes, and reports. The Audit Committee of +8 +the Board has oversight responsibility over financial reporting and disclosure processes, compliance and legal matters, and information security and fraud risk. The Audit Committee also monitors +controls for material weaknesses in the financial reporting function. The Audit Committee meets regularly with our Chief Financial Officer and Controller in carrying out these responsibilities, and with the Company’s independent auditors in +executive session. +The Compensation Committee of +the Board oversees risks as they relate to the Company’s compensation policies and practices as described under “Compensation Discussion and Analysis.” The Board’s Nominating Committee assists the Board in fulfilling its +oversight responsibilities with respect to independence of Board members and identification of individuals qualified to be members of the Board. +While each committee is responsible for evaluating the risks within their areas of responsibility and overseeing the management of such +risks, all committees report regularly to the full Board, which also considers the Company’s entire risk profile. +Compensation of Directors +The Compensation Committee is responsible for reviewing and establishing the compensation of the directors of the Company. The Company +adopted a Non-Employee Director Annual Compensation Program (the “Program”) on January 30, 2012 effective as of February 1, 2012, which was amended and restated as of February 1, 2014. Under the Program, each non-employee +director is entitled to an annual cash retainer of $7,000 (the “Cash Retainer”), plus $500 for each Board and committee meeting attended. In addition, the Chairman of the Board, if a non-employee director, will receive an annual retainer +of $6,000, and the Chair of the Audit Committee and Chair of the Compensation Committee will each receive an annual retainer of $4,000 (each a “Chair Retainer”). Any non-employee director who is first elected or appointed to such position +after February 1 of any fiscal year will receive a pro rata portion of any Cash Retainer and Chair Retainer payable. Each non-employee director may elect for any fiscal year to receive all or a portion of the Cash Retainer or Chair Retainer in +the form of common stock of the Company. +In +addition, under the Program, each non-employee director will receive a restricted stock award with a value equal to $20,000 (the “Equity Retainer”) upon adjournment of each annual meeting (or special meeting in lieu of annual meeting) of +shareholders. If a non-employee director is first appointed or elected to the Board effective on a date other than at the annual shareholders meeting, on the date of such appointment or election the director will receive a pro rata award of +restricted common stock having a value based on the number of days remaining until the next annual meeting. The Equity Retainer will vest on the earlier of 12 months after the grant date or the date immediately prior to the next annual meeting (or +special meeting in lieu of annual meeting) of the shareholders following the meeting at which such restricted stock award was granted. However, a non-employee director may not sell, transfer, assign, pledge or otherwise encumber the vested common +stock prior to the second anniversary of the vesting date. In the event of the death or disability of a non-employee director, or a Change in Control (as such term is defined in the Company’s 2015 Equity Incentive Plan) of the Company, the +restricted stock award shall immediately vest and shall no longer be subject to such restrictions on transfer. +Unless a non-employee director elects to receive all or a portion of the Cash Retainer or Chair Retainer in common stock (as described +below), each non-employee director will receive the Cash Retainer and Chair Retainer in four equal quarterly installments on the first day of each fiscal quarter. +9 +If a non-employee director elects to receive all or a portion of the Cash Retainer or Chair +Retainer (each, a “Retainer”) in the form of common stock, such shares will be issued in four quarterly installments on the first day of each fiscal quarter, and the number of shares of common stock issued will be based on the fair market +value of the common stock on the date such installment is payable. The common stock received in lieu of a Retainer will be fully vested. However, a non-employee director who receives common stock in lieu of all or a portion of a Retainer may not +sell, transfer, assign, pledge or otherwise encumber the common stock prior to the first anniversary of the date on which such shares were issued. In the event of the death or disability of a non-employee director, or a Change in Control (as such +term is defined in the Company’s 2007 Equity Incentive Plan) of the Company, any shares of common stock issued in lieu of a Retainer, will no longer be subject to such restrictions on transfer. +In addition to the Program, under the Company’s 2015 +Equity Incentive Plan, each non-employee director receives non-qualified options to purchase 5,000 shares of the Company’s common stock upon initial election to the Board (if not at the annual meeting) and upon the adjournment of each annual +meeting or special meeting in lieu of an annual meeting of the shareholders of the Company. These options have a term of ten years and become exercisable immediately prior to the occurrence of the next annual meeting following the date the option is +granted. +The following Director Compensation +table provides information regarding the compensation paid or accrued by each individual who was a director during the 2016 fiscal year. +Name +Total ($) +Fees Earned +or Paid in +Cash +($)(a) +Stock +Awards($)(b) +Option +Awards +($)(c)(d) +All Other +Compensation ($)(e) +Graeme MacLetchie +40,493 +20,500 +19,993 +12,215 +— +April L. Ondis +14,296 +4,500 +9,796 +11,965 +— +Everett V. Pizzuti +281,493 +11,500 +19,993 +12,215 +250,000 +Mitchell I. Quain +40,993 +21,000 +19,993 +12,215 +— +Harold Schofield +35,493 +15,500 +19,993 +12,215 +— +Hermann Viets +39,993 +20,000 +19,993 +12,215 +— +Gregory A. Woods(f) +— +— +— +— +— +(a) +Includes cash retainers which were paid in stock at the election of the director as follows: +Name +Shares +Value($) +Graeme MacLetchie +772 +10,966 +Mitchell I. Quain +772 +10,966 +Harold Schofield +490 +6,960 +Hermann Viets +913 +12,969 +(b) +Represents annual restricted stock award, which vests immediately prior to the 2016 annual meeting of shareholders. Each director, other than Ms. Ondis, received +1,423 shares of restricted stock. In connection with her election to the Board on November 22, 2015, Ms. Ondis was granted 736 shares of restricted common stock as a pro-rated portion of the annual restricted stock award. +(c) +The amounts reflect the aggregate fair value of the awards on the grant date under FASB ASC Topic 718 for stock options granted to directors. Assumptions used in the +calculation of these amounts are included in footnote 11 in the Company’s audited financial statements for the fiscal year ended January 31, 2016, included in the Company’s Annual Report on Form 10-K filed with the SEC on April 8, +2016. +10 +(d) +As of January 31, 2016, each non-employee director had the following number of options outstanding: Graeme MacLetchie (45,000, of which 40,000 were vested), April +L. Ondis (5,000, of which none were vested), Everett V. Pizzuti (10,000, of which 5,000 were vested), Mitchell I. Quain (25,000, of which 20,000 were vested), Harold Schofield (20,000, of which 15,000 were vested) and Hermann Viets (45,000, of which +40,000 were vested). +(e) +Represents amounts paid during fiscal year 2016 pursuant to a Release and Non-Competition Agreement with Everett V. Pizzuti entered into in connection with his +retirement as Chief Executive Officer on January 31, 2014. +(f) +See Summary Compensation Table and Outstanding Equity Awards at Fiscal Year End Table for disclosure relating to compensation and outstanding option awards held by +Mr. Woods. +Our Management +The following sets forth information with respect to our +executive officers, other than Mr. Woods, as of March 24, 2016. Biographical information regarding Gregory A. Woods, our President and Chief Executive Officer is included above in Proposal No. 1 – Election of Directors. +Name +Age +Position +Gregory A. Woods +57 +President, Chief Executive Officer and Directors +Joseph P. O’Connell +72 +Senior Vice President, Treasurer and Chief Financial Officer +Michael M. Morawetz +56 +Vice President – International Branches +Stephen M. Petrarca +53 +Vice President – Operations +Erik J. Mancyak +40 +Vice President and Corporate Controller +Eric E. Pizzuti +49 +Vice President and General Manager – QuickLabel +Michael J. Natalizia +52 +Vice President and Chief Technology Officer +Mr. O’Connell +joined the Company in 1996. He previously held senior financial management positions with Cherry Tree Products Inc., IBI Corporation and Avery Dennison Corporation. Mr. O’Connell is also Assistant Secretary of the Company. He was appointed +to the position of Senior Vice President in 2007. +Mr. Morawetz was appointed Vice President—International Branches in 2006. He was previously the General Manager of Branch +Operations for the Company’s German subsidiary, having joined the Company in 1989. +Mr. Petrarca was appointed Vice President—Operations in 1998. He has previously held positions as General Manager of Manufacturing, Manager of Grass Operations and Manager of Grass Sales. He has +been with the Company since 1980. +Mr. Mancyak was appointed a Vice President of the Company in 2011. He also holds the position of Corporate Controller and Principal +Accounting Officer to which he was appointed in 2009. He served as Assistant Corporate Controller of the Company from 2008 to 2009 and prior to that was an Accounting Manager of the Company beginning in 2005. Prior to 2005, Mr. Mancyak was +Senior Treasury Analyst at American Power Conversion and an auditor at the international accounting firm KPMG LLP. +Mr. Eric E. Pizzuti was appointed Vice President and General Manager of the Company’s QuickLabel business segment on +March 9, 2012. Prior to this appointment, Mr. Pizzuti held the position of Vice President +11 +and Worldwide Director of Sales for QuickLabel Systems from March 2010 and Worldwide Director of Sales from March 2006 through March 2010. Mr. Pizzuti has held various other positions since +joining the Company in 1996. +Mr. Natalizia +was appointed Vice President and Chief Technology Officer of Astro-Med, Inc. on March 9, 2012. Prior to this appointment, Mr. Natalizia held the position of Director of Product Development of the Company since 2005. +Security Ownership of 5% Beneficial Owners +The following table sets forth certain information regarding +the beneficial ownership of the Company’s outstanding shares of common stock, as of April 8, 2016 (except as noted), by each person who is known to the Company to own of record or beneficially more than 5% of such stock: +Name of Beneficial Owner +Number of Shares +Beneficially +Owned(a) +Percent +of Class +Albert W. Ondis III, Alexis Ondis and April Ondis, as Co-Executors of the Estate of Albert W. Ondis +1,269,263(b) +17.2 +% +50 Kennedy Plaza, Suite 1500 +Providence, Rhode Island 02903 +Ariel Investments, LLC +1,060,361(c) +14.3 +% +200 E. Randolph Drive, Suite 2900 +Chicago, IL 60601 +Dimensional Fund Advisors LP +506,028(d) +6.8 +% +6300 Bee Cave Road, Building One +Austin, TX 78746 +Rutabaga Capital Management, LLC +537,778(e) +7.3 +% +64 Broad Street, 3 rd Floor +Boston, MA 02109 +(a) +All information is based upon ownership of record as reflected on the stock transfer books of the Company or as reported on Schedule 13G or Schedule 13D filed under +Rule 13d-1 under the Securities Exchange Act of 1934. +(b) +This information is based on the Company’s records and the Schedule 13D/A filed with the SEC on December 9, 2014 by the Estate of Albert W. +Ondis (the “Ondis Estate”) and Albert W. Ondis III, Alexis Ondis and April Ondis and consists of the shares held by the Ondis Estate (886,320 shares, including 4,015 shares allocated to the Ondis Estate under the Company’s Employee +Stock Ownership Plan, or “ESOP”), Albert W. Ondis III (124,180 shares, including 1,658 shares held in trust for his child and 425 shares allocated to his account under the Company’s ESOP), Alexis Ondis (127,710 shares, including 5,614 +shares held in trust for her child) and April Ondis (131,053 shares, including 5,000 shares issuable upon exercise of options exercisable within 60 days of April 8, 2016 and 783 shares allocated to her account under the Company’s ESOP). Albert +W. Ondis III, Alexis Ondis and April Ondis, the children of the Company’s founder, Albert W. Ondis, are the Co-Executors of the Ondis Estate and have indicated shared voting and dispositive power with respect to the 886,320 shares held by the +Ondis Estate. They have also indicated that each has the sole power to vote or dispose of the shares held by them individually. The Ondis Estate +12 +beneficially owns 12.0% of the Company’s outstanding common stock. Excluding the shares held as Co-Executors of the Ondis Estate, each Co-Executor’s percentage ownership of the +Company’s outstanding common stock is as follows: Albert W. Ondis III (1.7%); Alexis Ondis (1.7%); and April Ondis (1.8%). +(c) +According to a Schedule 13G filed with the SEC on February 12, 2016, Ariel Investments, LLC, an investment adviser registered under the Investment Advisers Act of +1940 (the “Advisers Act”), had sole voting power with respect to 700,786 shares and sole investment power with respect to 1,060,361 shares as of December 31, 2015. +(d) +According to a Schedule 13G filed with the SEC on February 9, 2016, as of December 31, 2015, Dimensional Fund Advisors, LP, an investment adviser registered +under the Advisers Act, and its subsidiaries (collectively, “Dimensional”) had sole voting power with respect to 499,990 shares and sole investment power with respect to 506,028 shares held by registered investment companies, trusts and +separate accounts for which Dimensional serves as investment manager, adviser or sub-adviser. +(e) +According to a Schedule 13G filed with the SEC on February 11, 2016, Rutabaga Capital Management, LLC, an investment adviser registered under the Advisers Act, had +sole voting power with respect to 437,611 shares, shared voting power with respect to 100,167 shares, and sole investment power with respect to 537,778 shares as of December 31, 2015. +Security Ownership of Directors and Officers +The following table sets forth certain information regarding +the beneficial ownership of the Company’s common stock as of April 8, 2016 by each director, by each executive officer named in the Summary Compensation Table and by all directors and executive officers as a group. Unless otherwise noted, all +shares of common stock are subject to the sole voting and investment power of the respective directors and executive officers. +Beneficial Ownership +Name of Beneficial Owner +Shares and +Restricted +Shares(a) +Options +Exercisable +within 60 days +of 3/27/16 +Total +Beneficial +Ownership +(a) +Percent +of Class +Graeme MacLetchie +95,098 +(b) +45,000 +140,098 +1.9 +% +April L. Ondis +126,053 +(c) +5,000 +131,053 +1.8 +% +Everett V. Pizzuti +106,508 +(b) +10,000 +116,508 +1.6 +% +Harold Schofield +9,717 +(b) +20,000 +29,717 +* +Mitchell I. Quain +27,366 +(b) +25,000 +52,366 +* +Hermann Viets +195,328 +(b) +45,000 +240,328 +3.2 +% +Gregory A. Woods +63,537 +(d) +75,000 +(g) +140,593 +1.9 +% +Joseph P. O’Connell +111,874 +(e) +29,100 +(h) +142,226 +1.9 +% +Michael Morawetz +4,011 +6,687 +(i) +10,698 +* +All directors and executive officers of the Company as a group (13) +795,321 +(f) +309,687 +(j) +1,111,887 +14.3 +% +* +Indicates less than 1.0%. +(a) +If applicable, beneficially owned shares include shares owned by the spouse, minor children and certain other relatives of the director or executive officer, as well as +shares held by trusts of which the person is a trustee or in which he or she has a beneficial interest. +(b) +Includes 1,423 shares of restricted stock. +(c) +Includes 736 shares of restricted stock, and 783 shares allocated to her ESOP account. Does not include 886,320 shares held by the Ondis Estate, for which Ms. Ondis +serves as Co-Executor, as described above. +(d) +Includes 16,932 shares of restricted stock, 7,603 restricted stock units vesting within 60 days of April 8, 2016, and 110 shares allocated to his ESOP account. +(e) +Includes 3,095 restricted stock units vesting within 60 days of April 8, 2016, and 2,262 shares allocated to his ESOP account. +13 +(f) +Includes 24,783 shares of restricted stock, 16,450 restricted stock units vesting within 60 days of April 8, 2016, and 9,677 shares allocated to executive +officers’ ESOP accounts. +(g) +Excludes 125,000 shares underlying options not exercisable within 60 days of April 8, 2016. +(h) +Excludes 3,750 shares underlying options not exercisable within 60 days of April 8, 2016. +(i) +Excludes 4,863 shares underlying options not exercisable within 60 days of April 8, 2016. +(j) +Excludes 144,913 shares underlying options not exercisable within 60 days of April 8, 2016. +Section 16(a) Beneficial Ownership Reporting Compliance +Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), requires +the directors and executive officers of the Company and any persons who own more than ten percent of the Company’s common stock to file with the SEC various reports of beneficial ownership and changes in beneficial ownership. Based solely on a +review of the copies of such reports received by the Company and certain written representations that no other reports were required, the Company believes that for the fiscal year ended January 31, 2016, all of its officers, directors and 10% +beneficial owners complied with the requirements of Section 16(a), except that the following forms were filed late: +• +Two Forms 4 by Mr. Quain relating to two transactions in shares of the Company’s common stock; +• +Two Forms 4 by Dr. Viets relating to two transactions in shares of the Company’s common stock; +• +Two Forms 4 by Mr. MacLetchie relating to two transactions in shares of the Company’s common stock; +• +Two Forms 4 by Mr. Schofield relating to two transactions in shares of the Company’s common stock; +• +One Form 4 by Mr. Pizzuti relating to two transactions in shares of the Company’s common stock; and +• +One Form 4 by Mr. Morawetz relating to 10 transactions in shares of the Company’s common stock. +14 +COMPENSATION DISCUSSION & ANALYSIS +The Compensation Committee (the “Committee”) is +charged with the responsibility for establishing, implementing and monitoring adherence to the Company’s compensation philosophy and ensuring that executives and key management personnel are effectively compensated in a manner which is +internally equitable. The Committee also is responsible for reviewing and establishing the compensation of directors. +Compensation Philosophy and Objectives. The Committee’s overall philosophy in terms of executive +compensation is to link management incentives with the actual financial performance of the Company. Similarly, the compensation should attract, retain and motivate highly qualified individuals to achieve the Company’s business goals and link +their interests with shareholder interests. In setting compensation for the Company’s executive officers, the Committee considers the executive’s performance, awards, if any, made during prior years and other relevant factors. The +Committee seeks to have the long-term performance of the Company’s common stock reflected in executive compensation through our equity incentive programs. +Elements of Compensation. The total compensation program for the Company’s executive officers consists +of the following: +• +salary; +• +cash incentive and bonus awards tied to the Company’s and executive’s annual performance; +• +long-term incentive compensation, in the form of stock options, restricted stock units and performance units; and +• +retirement and other benefits. +The Committee seeks to structure each element of compensation to attract and retain the necessary executive talent, reward annual +performance and provide incentive for both long-term strategic goals as well as short-term performance. The Committee’s policy for allocating between currently paid and long-term compensation is to ensure adequate base compensation to attract +and retain personnel, while providing incentives to maximize long-term value for our shareholders. +Say on Pay Consideration. In accordance with SEC rules, the Company conducted a non-binding, advisory vote on the Company’s executive compensation at its 2015 annual +meeting. Approximately 76% of shareholders voted to approve the Company’s executive compensation practices at the 2015 annual meeting. +Setting Executive Compensation. The Committee is responsible for establishing and periodically reviewing the +compensation of the Company’s executive officers and approving all equity awards. The Committee annually reviews the performance of the executive officers and, based on these reviews, the Committee determines salary adjustments and annual +awards. Mr. Woods does not participate during deliberations regarding his compensation. +Salary. Base salaries for executive officers, other than recent hires, were established a number of years ago. Historically, base salaries have been increased at annual rates +which approximate the general rates of increase of compensation for all employees of the Company. Annual salary adjustments are made effective April 1 of each year. For fiscal year 2016, the Committee increased the compensation of the +Company’s employees and executive officers, other than Mr. Woods, Mr. O’Connell and Mr. Morawetz, by approximately +15 +3%. Salaries are also reviewed at the time of a promotion or other change in responsibilities. During fiscal year 2015, the Committee approved salary increases for Mr. Woods and +Mr. O’Connell, to $315,000 and $250,000, respectively, to bring their salaries more in line with base salaries paid for comparable positions at similarly sized public companies. Effective April 6, 2015, Mr. Woods received an +additional $45,000 salary increase. Effective April 1, 2016, Mr. Woods’ and Mr. Morawetz’s salaries were increased to $370,800 and $190,921, respectively. Cash compensation paid to Mr. Morawetz is paid in Euros; the +amount reported was converted to U.S. dollars at an assumed exchange rate of €1:$1.089. +Cash Incentive and Bonus Awards. Annual cash incentive awards are an important component of total executive cash compensation because they reward the Company’s +executives for achieving targeted, annual results and emphasize variable or “at risk” compensation. From time-to-time the Committee awards discretionary cash bonuses to the Company’s executives to reward their efforts in extraordinary +circumstances. +Short-Term Incentive Plan +During late 2014, the Committee engaged +Radford, an Aon Hewitt Company, to conduct an assessment of the Company’s executive compensation program, including a review of executive base salaries, short-term incentive opportunities and long-term incentives and pay mix as compared to the +competitive market. Following receipt of Radford’s report in March 2015, the Committee approved the Senior Executive Short-Term Incentive Plan (the “STIP”), which replaced the Company’s prior Domestic and International Branch +Plans for the fiscal year beginning February 1, 2015. Participants in the STIP (which may include any executive officer, vice president or director level manager) are determined annually by the Committee. Awards under the STIP are earned based +on achieving or exceeding annual financial objectives (“Performance Goals”). The Committee has full discretion to establish the Performance Goals for any plan year. In March 2015, the Committee established Performance Goals for fiscal year +2016 of Consolidated Net Sales of $98,279,000, Consolidated Operating Income of $9,238,000 and Economic Value Added, which is defined as Net Operating Profit after Taxes – [Capital × Cost of Capital]) (“EVA”), of $500,000. +Annually, the Committee establishes a Target +Award for each STIP participant, which may vary as to each participant and from year to year. For fiscal year 2016, the Committee established the following Target Awards for our Named Executive Officers: +Name +Target Award ($) +Gregory A. Woods +270,000 +Joseph P. O’Connell +103,000 +Michael Morawetz +65,000 +The Committee allocated the +Target Awards to the fiscal year 2016 Performance Goals as follows: +• +25% of the Target Awards are tied to achievement of the Consolidated Net Sales Performance Goal; +• +55% of the Target Awards are tied to the achievement of the Consolidated Operating Income Performance Goal; and +• +20% of the Target Awards are tied to the achievement of the EVA Performance Goal. +Performance with respect to each specific Performance Goal is +calculated independently to determine the amount of the award for each Performance Goal (each, an “Award Component”). The total STIP award earned by +16 +a participant for a plan year is equal to the sum of the separate Award Components determined for each Performance Goal. Each Award Component is independently adjusted by an “Adjustment +Factor” as follows: +• +If the actual performance exceeds the Performance Goal, the Adjustment Factor for that Performance Goal would be 1 plus the percentage by which actual +performance exceeds the Performance Goal. For example, if actual performance exceeds the Performance Goal by 4%, the Adjustment Factor for that Award Component would be increased by 4% to 1.04. +• +If actual performance is less than the Performance Goal for the plan year, the Adjustment Factor is 1 minus 10 percentage points for each percentage +point by which actual performance is less than the Performance Goal. For example, if actual performance is 97% of the Performance Goal, then the Adjustment Factor for that Award Component would be reduced by 30% to 0.70. +If actual performance does not exceed 90% of +the Performance Goal, then the Award Component for that Performance Goal will be zero. A participant’s STIP award is uncapped, except as follows: +• +Aggregate awards under the STIP in any year may not exceed 15% of the Company’s Consolidated Operating Income for that year determined without +deduction for the STIP awards. +• +If the EVA Performance Goal is less than $1 million for any plan year, the maximum award to a participant that year may not exceed two (2) times +the participant’s Target Award. +• +Adequate reserves for awards must be accrued when determining whether a Performance Goal based upon operating income has been achieved. +Based on the Company’s +results, the Award Components were as follows: +Performance Goal +Target ($) +Actual +Performance +($) +Adjustment +Factor +Consolidated Net Sales +98,279,000 +94,658,000 +0.6 +Consolidated Operating Income +9,238,000 +6,910,000 +— +EVA +500,000 +2,770,000 +2.0 +The amount of a +participant’s award under the STIP will be credited to a book account maintained by the Company (the “Award Bank”). The resultant balance in the participant’s account after crediting the amount of award (the “Bank +Balance”) will then be used to determine the participant’s Payout Amount for the plan year. +The “Payout Amount” is equal to the sum of (i) the lesser of (A) the participant’s actual award for the plan year +or (B) the participant’s Target Award for the plan year (“Base Award”) plus (ii) 30% of the participant’s Bank Balance (after deduction of the amount of the Base Award). Thus, only 30% of the amount in +excess of the Target Award will be paid out currently and 70% of such excess will be “banked” and paid out in subsequent years in accordance with the foregoing formula, provided the participant remains employed with the Company. +For example, if a participant’s Target Award +for Year 1 is $45,000 but the actual award is $55,000, then the Payout Amount for such year would be $48,000 ($45,000 + [30% × $10,000]) and the Bank Balance remaining after the payout would be $7,000. If the participant’s Target Award +for Year 2 is $47,000 and the actual award is $45,000, then the Payout Amount for such year would be $47,100 ($45,000 + [30% × $7,000]) and the Bank Balance remaining after the payout would be $4,900. +17 +The following table sets forth for each of our Named Executive Officers the amount of the +award under the STIP for fiscal year 2016. Because the awards under the STIP for fiscal year 2016 were lower for each of our Named Executive Officers than their respective Target Awards, the full amount of the fiscal 2016 awards were paid to the +Named Executive Officers, and no amounts were credited to their Bank Balances. +Name +Award Under +the +2016 STIP ($) +Gregory A. Woods +150,626 +Joseph P. O’Connell +57,461 +Michael Morawetz +34,318 +If a participant’s +employment with the Company is terminated for any reason other than death, disability or retirement, then the participant will forfeit any interest in his Bank Balance. A participant’s Bank Balance will vest in full and become immediately +payable in the event of termination of a participant’s employment with the Company due to the participant’s death, disability or retirement. A participant’s Bank Balance will also vest in full and become payable upon a change in +control of the Company. +Long-Term Incentive +Compensation . Total compensation at the executive level also includes long-term incentive awards granted under the Company’s 2007 Equity Incentive Plan and 2015 Equity Incentive Plan. The objectives of the equity +incentive program are to align executive and shareholder long-term interests by creating a strong and direct link between executive pay and total shareholder return, and to enable executives to develop and maintain a long-term stock ownership +position in the Company’s common stock. Prior to fiscal year 2013, all equity awards were in the form of stock options, which were generally granted in March of each year at an exercise price equal to the market price on the date of grant. +Since 2004, all options granted to employees vest in four equal annual installments commencing on the first anniversary of the date of grant. Under the Company’s 2007 Equity Incentive Plan and 2015 Equity Incentive Plan, the Committee may also +make equity awards in the form of restricted stock, restricted units and performance units in addition to stock options. In fiscal year 2014, the Committee awarded restricted stock units to the Company’s executive officers. Twenty-five percent +of each award was subject to time-based vesting and became vested in April 2016. Vesting of the remaining 75% of each award was contingent upon the Company meeting specified performance goals, with 50% of each award to vest upon the achievement of +cumulative budgeted sales targets for fiscal years 2014 through 2016; and 25% to vest upon the achievement of an average operating income return on net assets (“ORONA”) goal for fiscal years 2014 through 2016. In March 2016, the Committee +determined that the average ORONA goal for fiscal years 2014 through 2016 had been achieved and the corresponding portion of the awards would become vested upon the filing of the Company’s Annual Report on Form 10-K. +In fiscal year 2016, the Committee adopted its 2015 Long Term +Equity Incentive Program, or the 2015 LTIP. Under the terms of the 2015 LTIP, the Committee granted restricted stock units to the Company’s executive officers. A portion of the awards issued to each officer were time-based awards, which vest in +four equal annual installments commencing on the first anniversary of the date of grant. The remaining awards may be earned based upon the increase in net sales, if any, achieved in each of the fiscal years 2016, 2017 and 2018 in relation to the +Company’s three-year net sales increase goal. To the extent that the Committee determines that net sales growth in a fiscal year was achieved due to organic growth, any restricted stock units earned as a result will immediately vest, while +restricted stock units earned as a result of net sales growth resulting from acquisitions will vest in three equal annual installments commencing on the first anniversary of the date the Committee determines that the performance goal was achieved. +Any performance based restricted stock units that are not +18 +earned at the end of the three-year performance period will be forfeited. In March 2016, the Committee determined that approximately 9.6% of the performance based restricted stock units had been +earned based on fiscal 2016 organic net sales growth and approximately 0.6% of the performance based awards had been earned based on fiscal 2016 net sales growth resulting from acquisitions. +Gregory A. Woods joined the Company as Chief Operating Officer in September 2012 and became Chief Executive +Officer on February 1, 2014, upon Everett V. Pizzuti’s retirement. In November 2014, the Company entered into an Equity Incentive Award Agreement with Mr. Woods (the “Equity Agreement”), which provides for grants of equity +awards to Mr. Woods that are intended to enhance his equity ownership, create stronger alignment with shareholder interests and reward him for driving the long-term growth and profitability of the Company. The Equity Agreement provides that in +each of 2015, 2016 and 2017, the Company will grant Mr. Woods the following equity awards: +• +an option for 50,000 shares (subject to adjustment in the event of any stock splits, stock dividends or similar changes in capital structure), each +with an exercise price equal to the fair market value of the Company’s common stock as of the grant date of such option; and +• +a restricted stock award with a value equal to the amount (if any) by which the exercise price of such year’s option exceeds $13.80, multiplied by +the number of shares covered by the option granted in such year (initially 50,000, subject to adjustment in the event of any stock splits, stock dividends or similar changes in capital structure). +Each option and restricted stock award under the Equity +Agreement will vest in four equal annual installments commencing on the first anniversary of the grant date for each such award, and all options and restricted stock will vest upon a change in control of the Company. The Equity Agreement provides +that, in the event there is a change in control of the Company prior to June 1, 2018, the Company will pay Mr. Woods an amount equal to (i) the positive difference (if any) between the fair market value of the Company’s common +stock as of the date of the change in control and $13.80 (ii) multiplied by the number of options which the Company remains obligated to grant under the Equity Agreement. +Share Ownership and Retention +Guidelines . The Committee believes that senior management should have a meaningful equity interest in the Company. In order to promote equity ownership and further align the interests of management with our shareholders, +the Board has adopted share ownership and retention guidelines for our executives. These guidelines are based upon the market value of our common stock as a multiple of such officer’s base pay. The multiple is 3 times base salary for the CEO, 2 +times base salary for the Chief Financial Officer and 1.25 times base salary for the other executive officers. Under these guidelines, an executive is expected to achieve the ownership level within five years from the later of April 1, 2015 or +initial appointment as an executive officer. Executives are expected to retain at least 50% of the shares acquired upon exercise of any stock option (net of any shares tendered upon exercise or sold to pay the option exercise price) or vesting of +restricted stock until they achieve the specified ownership level and thereafter maintain such ownership level. +Retirement and Other Benefits . In order to attract and retain key executives, the Company offers retirement +benefits through a Profit-Sharing Plan and Employee Stock Ownership Plan for employees, including its executive officers. +Profit Sharing Plan. The Company maintains a qualified Profit Sharing Plan which provides retirement benefits to +substantially all the Company’s employees. Each eligible employee shares in contributions on the basis of relative (limited to $265,000 in 2015) compensation. In addition, participants are permitted to defer up to +19 +50% of their cash compensation and make contributions of such deferral to this plan through payroll deductions. The Company makes matching contributions equal to 50% of the first seven percent of +compensation contributed. The deferrals are made within the limits prescribed by Section 401(k) of the Internal Revenue Code. The Profit Sharing Plan provides for the vesting of 100% of matching contributions made by the Company to the account +of the employee after three years of service. Contributions by an employee are 100% vested immediately. +Employee Stock Ownership Plan. The Company also has an Employee Stock Ownership Plan (“ESOP”) which provides +retirement benefits to substantially all of its employees. Contributions in such amounts as the Board may annually determine are allocated among eligible employees on the basis of relative (limited to $100,000) compensation. Participants are 100% +vested in any and all allocations. Contributions, which may be in cash or stock, are invested by the Plan’s trustee in shares of common stock of the Company. +Perquisites . In addition to the benefits +described above, the Company provides automobile allowances to certain of its executive officers. The amount of any automobile allowance granted to our Named Executive Officers is reflected in the “All Other Compensation” column of the +Summary Compensation Table below. +Change in +Control Agreement. In November, 2014, the Company entered into a Change in Control Agreement (the “CIC Agreement”) with Mr. Woods. The CIC Agreement provides for the payment of severance benefits upon a change in control of +the Company if Mr. Woods’ employment is terminated by the Company without cause or by Mr. Woods for good reason within the period (the “CIC Period”) beginning on the earlier of (i) 180 days prior to the occurrence of +the change in control and (ii) the announcement of a transaction expected to result in a change in control, and ending on the second anniversary of the occurrence of a change in control. Severance payments to Mr. Woods include +(i) payment of one and one-half times the sum of (A) his annual salary and (B) the greater of the amount of his target bonus for the fiscal year in progress or the highest annual bonus paid to him in the prior three years +(collectively, “base compensation”), (ii) immediate vesting of all unvested stock options and restricted stock awards, (iii) continued health coverage for 18 months or until he receives benefits from another employer, and +(v) reimbursement for outplacement services in an amount not to exceed 17% of his base compensation. If any payment or benefit under the CIC Agreement or under any other plan or agreement would constitute an “excess parachute payment” +within the meaning of Section 280G of the Internal Revenue Code, and if Mr. Woods would be in a better after-tax position by reducing the such payments or benefits, the amounts payable under the CIC Agreement will be reduced to the extent +necessary to avoid the excise tax payable under Section 280G. +Employment Agreements and Severance Benefits . In November 2014, in order to comply with certain legal requirements, the Company entered into an Employment Agreement with Michael Morawetz, +Vice President-International Branches, as the general manager of its German subsidiary. The employment agreement can be terminated on six months’ notice and provides that in the event of the termination of his employment by the Company without +cause, Mr. Morawetz will receive severance equal to one month’s salary for each year of his employment. Other than the contract with Mr. Morawetz, we have no employment agreements with any of our executive officers. Except for the +Morawetz Employment Agreement and the CIC Agreement with Mr. Woods, we generally do not provide any severance benefits to our executives other than those provided to all employees. Severance benefits will vary based upon salary levels and +length of service. +20 +COMPENSATION COMMITTEE REPORT +The Compensation Committee has reviewed and discussed with management the Compensation Discussion & +Analysis included above. Based on these reviews and discussions, the Compensation Committee has recommended to the Board that the Compensation Discussion & Analysis be included in the Company’s Annual Report on Form 10-K for the fiscal +year ended January 31, 2016 for filing with the SEC through incorporation by reference of this Proxy Statement. +Compensation Committee: +Mitchell I. Quain (Chairman) +Graeme MacLetchie +Harold Schofield +Hermann Viets, Ph.D. +21 +EXECUTIVE COMPENSATION +The following table provides information regarding the total compensation paid or accrued by the Company to +each of its Chief Executive Officer (“CEO”) and its two other highest paid executive officers other than the CEO for the fiscal year ended January 31, 2016 (collectively, the “Named Executive Officers”). +Summary Compensation Table +Name and Principal Position +Year +Salary +($) +Bonus +($)(a) +Stock +Awards($)(b) +Option +Awards +($)(c) +Non-Equity +Incentive Plan +Compensation +($)(d) +All Other +Compensation +($) +Total +($) +Gregory A. Woods +2016 +342,346 +— +1,488,544 +(e) +121,324 +150,626 +55,631 +(f) +2,158,471 +President and CEO +2015 +287,796 +— +— +142,130 +182,120 +54,010 +666,056 +2014 +235,366 +— +75,525 +— +73,500 +16,143 +400,534 +Joseph P. O’Connell +2016 +247,668 +— +398,725 +(g) +— +57,461 +39,913 +(h) +743,767 +Senior Vice President, +2015 +235,275 +— +— +21,956 +80,984 +38,979 +377,194 +Treasurer and CFO +2014 +215,818 +— +75,525 +— +60,612 +36,693 +388,648 +Michael Morawetz +2016 +179,084 +185,067 +(i) +— +34,318 +14,952 +(j) +413,421 +(k) +Vice President – +2015 +206,690 +— +— +13,759 +7,574 +13,991 +242,014 +International Branches +2014 +191,411 +— +39,273 +— +17,867 +16,059 +264,610 +(a) +Reflects discretionary cash bonuses. +(b) +The amounts reflect the aggregate fair value of the awards on the grant date under FASB ASC Topic 718 for restricted stock units and restricted stock awards granted to +the Named Executive Officers. Under FASB ASC Topic 718, the grant date fair value of each restricted stock unit and restricted stock award is equal to the closing price of our common stock on the grant date. +(c) +The amounts reflect the aggregate fair value of the awards on the grant date under FASB ASC Topic 718 for stock options granted to the Named Executive Officers. +Assumptions used in the calculation of these amounts are included in footnote 11 to the Company’s audited financial statements for the fiscal year ended January 31, 2016, included in the Company’s Annual Report on Form 10-K filed with +the SEC on April 8, 2016. +(d) +Reflects cash awards under the Company’s Senior Executive Short-Term Incentive Plan which is discussed in further detail under the heading “Compensation +Discussion and Analysis” above. +(e) +Value represents grant date fair value of (i) 537 shares of restricted stock, which will vest in four equal annual installments, (ii) 75,000 restricted stock units, +which may be earned based upon the increase in net sales, if any, achieved in each of fiscal years 2016, 2017 and 2018 relative to a three-year net sales increase goal, and (iii) 30,413 restricted stock units, which will vest in four equal annual +installments. For additional information, see “—Grants of Plan Based Awards,” below. +(f) +Includes pay-out of unused vacation of $26,308, automobile allowance of $23,010, and an employer match under the Profit Sharing Plan of $6,313. +22 +(g) +Value represents grant date fair value of (i) 16,000 restricted stock units, which may be earned based upon the increase in net sales, if any, achieved in each of +fiscal years 2016, 2017 and 2018 relative to a three-year net sales increase goal, and (ii) 12,379 restricted stock units, which will vest in four equal annual installments. For additional information, see “—Grants of Plan Based +Awards,” below. +(h) +Includes pay-out of unused vacation of $495, automobile allowance of $34,061, and an employer match under the Profit Sharing Plan of $5,357. +(i) +Value represents grant date fair value of (i) 8,000 restricted stock units, which may be earned based upon the increase in net sales, if any, achieved in each of fiscal +years 2016, 2017 and 2018 relative to a three-year net sales increase goal, and (ii) 5,172 restricted stock units, which will vest in four equal annual installments. For additional information, see “—Grants of Plan Based Awards,” +below. +(j) +Represents automobile allowance. +(k) +Mr. Morawetz’s salary is based on euro currency and was converted to U.S. dollars at the exchange rate as of January 31, 2016, which was €1:$1.0828. +23 +Outstanding Equity Awards at Fiscal Year-End +The following table provides information on all outstanding +equity awards held by each of the Named Executive Officers as of January 31, 2016. +OPTION AWARDS +STOCK AWARDS +Name +Number of +Securities +Underlying +Unexercised +Options (#) +Exercisable +Number of +Securities +Underlying +Unexercised +Options (#) +Unexercisable +Option +Exercise +Price +($) +Option +Expiration +Date(a) +Number of +Shares or +Units of +Stock That +Have Not +Vested +(#) +Market +Value of +Shares or +Units of +Stock That +Have Not +Vested +($) +Equity +Incentive +Plan +Awards: +Number of +Unearned +Shares, +Units or +Other +Rights That +Have Not +Vested +(#) +Equity +Incentive +Plan +Awards: +Market or +Payout +Value of +Unearned +Shares, +Units +or +Other +Rights That +Have Not +Vested ($) +Gregory A. Woods +37,500 +12,500 +7.9100 +9/4/22 +12,500 +37,500 +13.8000 +5/22/24 +45,325 +(b) +$ +711,149 +80,625 +(c)(d) +$ +1,265,006 +Joseph P. O’Connell +10,000 +— +11.4450 +4/12/17 +5,375 +— +8.9500 +4/1/18 +4,800 +— +7.3600 +3/15/20 +3,881 +1,294 +8.3500 +3/29/22 +1,875 +5,625 +14.2000 +3/17/24 +14,254 +(e) +$ +223,645 +21,625 +(c)(d) +$ +339,296 +Michael Morawetz +3,500 +— +11.4450 +4/12/17 +— +837 +8.3500 +3/29/22 +1,175 +3,525 +14.2000 +3/17/24 +6,147 +(f) +$ +96,446 +10,925 +(c)(d) +$ +171,413 +(a) +Options vest in four equal annual installments commencing on the first anniversary of the option grant date (which is ten years prior to the expiration date). +(b) +Consists of (i) 135 shares of restricted stock that vested on March 16, 2016, (ii) 1,875 restricted stock units that vested on April 3, 2016, +(iii) 12,500 shares of restricted stock that will vest on September 4, 2016, (iv) 402 shares of restricted stock that will vest in three equal tranches on March 16, 2017, 2018 and 2019, and (v) 30,413 restricted stock units +that will vest in four equal annual installments beginning on May 20, 2016. +(c) +Includes 5,625; 5,625; and 2,925 restricted stock units held by Messrs. Woods, O’Connell and Morawetz, respectively, which become earned and vested as follows: +two-thirds upon the achievement of certain specified goals relating to cumulative budgeted sales targets for the fiscal years 2014 through 2016 and one-third upon the achievement of certain specified goals relating to average ORONA for the fiscal +years 2014 through 2016. On March 14, 2016, the Compensation Committee determined that the ORONA performance goal was achieved and the related restricted stock units became earned upon the filing of the Company’s Annual Report on Form 10-K +for fiscal year 2016. +(d) +Includes 75,000; 16,000; and 8,000 restricted stock units held by Messrs. Woods, O’Connell, and Morawetz, respectively, which may be earned based upon the increase +in net sales, if any, achieved in each of fiscal years 2016, 2017 and 2018 relative to a three-year net sales increase goal. Shares earned based on organic revenue growth are fully vested when earned, while those earned based on revenue growth via +acquisitions will vest annually over a three-year period following the fiscal year in which the revenue growth occurs. On March 14, 2016, the Compensation Committee determined that 7,199; 1,536; and 768 shares were earned by Messrs. Woods, +O’Connell, and Morawetz, respectively, based upon organic revenue growth, and 451; 96; and 48 shares, respectively, were earned based on growth due to acquisitions. +(e) +Consists of (i) 1,875 restricted stock units that vested on April 3, 2016 and (ii) 12,379 restricted stock units that will vest in four equal annual +installments beginning on May 20, 2016. +(f) +Consists of (i) 975 restricted stock units that vested on April 3, 2016 and (ii) 5,172 restricted stock units that will vest in four equal annual +installments beginning on May 20, 2016. +24 +Grants of Plan Based Awards +The following table provides information on all plan-based awards by the Company for the fiscal year ended +January 31, 2016 to each Named Executive Officer. +Name +Grant +Date +Estimated Possible Payouts +Under Non-Equity Incentive Plan +Awards +All Other +Stock +Awards: +Number of +Shares of +Stock or +Units +(#) +All Other +Option +Awards: +Number of +Securities +Underlying +Options +(#) +Exercise +or Base +Price +of +Option +Awards +($/Sh) +Grant +Date Fair +Value of +Stock +and +Option +Awards (c) +Threshold +($)(a)(b) +Target +($)(a) +Maximum +($)(a) +Gregory A. Woods +3/16/2015 +537 +(d) +7,491 +3/16/2015 +50,000 +(e) +13.95 +121,324 +5/20/2015 +105,413 +(f) +1,481,053 +270,000 +540,000 +Joseph P. O’Connell +5/20/2015 +28,379 +(f) +398,725 +103,000 +206,000 +Michael Morawetz +5/20/2015 +13,172 +(f) +185,067 +64,567 +129,134 +(a) +Represents awards under the Company’s Short-Term Incentive Plan. See “Compensation Discussion & Analysis – Short-Term Incentive Plan” for +additional information regarding the Short-Term Incentive Plan. +(b) +The Company’s Short-Term Incentive Plan does not provide for any threshold payment amount. No payment is made under the Short-Term Incentive Plan with respect to +any performance goal achieved at or below the 90% level. +(c) +The grant date fair value of each restricted stock unit and restricted stock award is equal to the closing price of our common stock on the grant date. The assumptions +used in the calculation of the grant date fair value of option awards are included in footnote 11 to the Company’s audited financial statements for the fiscal year ended January 31, 2016, included in the Company’s Annual Report on +Form 10-K filed with the SEC on April 8, 2016. +(d) +Consists of shares of restricted stock issued pursuant to the Company’s 2007 Equity Incentive Plan, which will vest in four equal annual installments commencing on +the first anniversary of the grant date. +(e) +Consists of an option award issued pursuant to the Company’s 2007 Equity Incentive Plan, which will vest in four equal annual installments commencing on the first +anniversary of the grant date. +(f) +Consists of restricted stock units issued pursuant to the Company’s 2015 Equity Incentive Plan, which will vest as follows: 75,000; 16,000; and 8,000 restricted +stock units held by Messrs. Woods, O’Connell, and Morawetz, respectively, may be earned based upon the increase in net sales, if any, achieved in each of fiscal years 2016, 2017 and 2018 relative to a three-year net sales increase goal, and +30,413; 12,379; and 5,172 restricted stock units, respectively, which will vest in four equal annual installments commencing on the first anniversary of the grant date. +Option Exercises and Stock Vested +The following table provides information on all exercises of +options by the Named Executive Officers and vesting of restricted stock awards during the fiscal year ended January 31, 2016. +Option Awards +Stock Awards +Name +Number of +Shares Acquired +on Exercise (#) +Value Realized +on Exercise ($)(a) +Number of +Shares Acquired +on Vesting (#) +Value Realized +On Vesting ($)(b) +Gregory A. Woods +— +— +12,500 +174,375 +Joseph P. O’Connell +14,603 +83,652 +— +— +Michael Morawetz +13,863 +81,781 +— +— +25 +(a) +Based on difference between the closing market price of the Company’s common stock on the date of exercise and option exercise price. +(b) +The amounts shown are calculated based on the closing market price of the Company’s common stock on the date of vesting multiplied by the number of shares or +restricted stock units that vested. +Potential Payments upon Termination or Change-in-Control +The following table provides information regarding the +estimated amounts payable to Mr. Woods pursuant to the CIC Agreement and Mr. Morawetz pursuant to his employment agreement with the Company, in each case assuming that the trigger event occurred on January 31, 2016, the last day of +the Company’s most recently completed fiscal year. The amounts shown as payable upon the triggering events described do not include amounts earned by the individual and accrued before the occurrence of the triggering event but payable after the +triggering event, such as accrued and unpaid salary or the value of accrued but unused paid-time-off. +Name and Trigger Event +Cash ($) +Equity ($) +Perquisites/ +Benefits ($) +Total ($) +Gregory A. Woods +1,002,180 +1,815,028 +(a) +134,846 +(b) +2,952,054 +Termination of Mr. Woods employment during the CIC Period by the Company without cause or by Mr. Woods for good +reason +Michael Morawetz +471,360 +— +— +471,360 +Termination of Mr. Morawetz’s employment by the Company without cause. +(a) +Represents the value attributable to the acceleration of vesting of (i) in-the-money options to purchase 87,500 shares of common stock, which is equal to the +difference between the applicable option exercise price and the closing price of the Company’s common stock as reported by the NASDAQ Global Market on January 31, 2016, multiplied by the number of shares underlying the options, and +(ii) 100,816 restricted stock awards and units, which is equal to the closing sale price of the Company’s common stock on January 31, 2016, multiplied by the number of restricted stock awards and units for which vesting would be +accelerated. +(b) +Value represents $42,686 attributable to the cost of continuing health benefits and $92,160 in costs for outplacement services. +RELATED PARTY TRANSACTIONS +Potential conflicts of interest and related party +transactions are referred by the Board to the Audit Committee for review and approval. In reviewing and evaluating potential conflicts of interest and related party transactions, the Audit Committee uses applicable NASDAQ listing standards and SEC +rules as a guide. +Other than as described below, +no officer, director or nominee for director of the Company or any associate of any of the foregoing had during the fiscal year ended January 31, 2016 any material interest, direct or indirect, in any material transaction or any material +proposed transaction in which the amount exceeds $120,000 and to which the Company was or is to be a party. +The Company employs three sons of Everett V. Pizzuti, to two of whom the Company paid or accrued over $120,000 in compensation during the +fiscal year ended January 31, 2016: Eric Pizzuti, as Vice President and +26 +General Manager of QuickLabel Systems, and Christopher Pizzuti, as a QuickLabel Field Sales Engineer. The Company paid Eric Pizzuti $170,209 in salary and bonus and paid Christopher Pizzuti +$166,567 in salary and sales commissions. Eric Pizzuti also received restricted stock units with a grant date fair value of $179,671, a vacation payout of $2,873 and a matching contribution to his Profit Sharing Plan account of $5,326. Christopher +Pizzuti also received an automobile allowance of $7,500, a vacation payout of $762, and a matching contribution to his Profit Sharing Plan account of $894. +EQUITY COMPENSATION PLAN INFORMATION +The following table sets forth information about the Company’s equity compensation plans as of January 31, 2016: +Plan Category +Number of Securities to +be Issued Upon Exercise +of Outstanding Options, +Warrants and +Rights +Weighted- +Average Exercise +Price of +Outstanding +Options, +Warrants +and +Rights +Number of Securities +Remaining Available for +Future Issuance Under +Equity Compensation +Plans +Equity Compensation Plans Approved by Shareholders +930,136 +(1) +$ +11.00 +(2) +406,211 +(3) +Equity Compensation Plans Not Approved by Shareholders +— +— +— +Total +930,136 +(1) +$ +11.00 +(2) +392,211 +(1) +Includes 47,974 shares issuable upon exercise of outstanding options granted under the Company’s 1997 incentive stock option plan; 26,500 shares issuable upon +exercise of outstanding options granted under the Company’s 1998 non-qualified stock option plan; 553,462 shares issuable upon exercise of outstanding options granted and 37,200 restricted stock units outstanding under the Company’s 2007 +Equity Incentive Plan; and 30,000 shares issuable upon exercise of outstanding options granted and 235,000 restricted stock units outstanding under the Company’s 2015 Equity Incentive Plan. Refer to footnote 11 to the Company’s audited +financial statements for the fiscal year ended January 31, 2016 included in the Company’s Annual Report on Form 10-K filed with the SEC on April 8, 2016 for further discussion. +(2) +Does not include restricted stock units. +(3) +Represents 354,611 shares available for grant under the Astro-Med, Inc. 2007 and 2015 Equity Incentive Plans and 51,600 shares available for issuance under the +Company’s Employee Stock Purchase Plan. This balance does not include 20,888 shares issued pursuant to outstanding unvested restricted stock awards which are subject to forfeiture. +PROPOSAL NO. 2 +ADVISORY VOTE ON EXECUTIVE COMPENSATION +As required by the Section 14A(a)(2) of the Exchange Act, the Board is providing shareholders with the opportunity to cast an +advisory vote on the Company’s executive compensation at the annual meeting through the following resolution: +“RESOLVED, that the shareholders approve the Company’s executive compensation, as described in the Compensation Discussion and +Analysis and the tabular disclosure regarding named executive officer compensation (together with the accompanying narrative disclosure) in this Proxy Statement.” +27 +The Board believes that the Company’s compensation policies and procedures, which are +described more fully in the “Compensation Discussion and Analysis” section of this Proxy Statement and in the tables and narrative in the “Executive Compensation” section, are strongly aligned with the long-term interests of +shareholders. These policies and procedures balance short-term and longer-term compensation opportunities to ensure that the Company meets short-term objectives while continuing to produce value for our shareholders over the long term. +Approval of this proposal requires the affirmative vote of a +majority of the shares of common stock represented in person or by proxy at the annual meeting. This vote will not be binding on or overrule any decisions by the Board or any committee thereof, will not create or imply any additional fiduciary duty +on the part of the Board, and will not restrict or limit the ability of the Company’s shareholders to make proposals for inclusion in proxy materials related to executive compensation. However, the Compensation Committee and the Board will take +into account the outcome of the vote when considering future executive compensation arrangements. +The Board recommends a vote “FOR” approval of the Company’s executive compensation, as described in the Compensation Discussion and Analysis, and the tabular disclosure regarding named +executive officer compensation (together with accompanying narrative disclosure) in this Proxy Statement. +PROPOSAL NO. 3 +APPROVAL OF AMENDMENT TO THE COMPANY’S ARTICLES OF INCORPORATION TO CHANGE THE NAME OF THE COMPANY +The Board has adopted and is seeking shareholder approval of an amendment (the “Name Change Amendment”) to the Company’s +Articles of Incorporation to change the Company’s name from “Astro-Med, Inc.” to “AstroNova, Inc.” The Board recommends this action in order to publicly reflect the Company’s transformational strategy. +Rationale for Proposed Name Change +On September 25, 2015, the Company announced that it +would begin doing business as AstroNova on worldwide basis. +The Astro-Med name was originally based on the two markets where the Company applied its data visualization technology – aerospace and medical. Since divesting the medical business in 2013, the +“Med” part of the name no longer describes our business and confuses customers and investors. +AstroNova was selected because it fits the Company’s transformation strategy. “Astro” refers to the company’s strong +roots in the aerospace business. “Nova” comes from the Latin word “novus,” meaning “new.” AstroNova exemplifies our traditional strengths in aerospace, plus our expanding presence in test and measurement, product +identification, and other new areas where data visualization technology can be applied. +28 +How the Name Change will be Implemented +If the Name Change Amendment is approved by shareholders, it will be implemented through, and become effective +upon, the filing of an amendment to the Articles of Incorporation with the Secretary of State of the State of Rhode Island. The Name Change Amendment will change Article First of the Articles of Incorporation to read in its entirety as follows: +FIRST: The +name of the corporation is AstroNova, Inc. +No changes will be made to the other provisions of the Articles of Incorporation pursuant to this Proposal 3. A copy of the proposed +amendment to the Company’s Articles of Incorporation is set forth in Appendix A . +If the Name Change Amendment is approved, the rights of shareholders holding certificated shares under currently outstanding stock certificates and the number of shares represented by those certificates +will remain unchanged. The Name Change Amendment will not affect the validity or transferability of any currently outstanding stock certificates nor will it be necessary for shareholders with certificated shares to surrender or exchange any stock +certificates they currently hold as a result of the name change. Regardless of whether the Name Change Amendment is approved, the Company will continue its product and services rebranding efforts under the AstroNova brand as described above. +Approval of this proposal requires the +affirmative vote of a majority of our common stock entitled to vote. Votes may be cast for or against the proposal or may abstain; votes that abstain and broker non-votes will have the same effect as a vote against the proposal. +The Board recommends a vote “FOR” the approval +of Proposal No. 3, which approves the amendment to the Company’s Articles of Incorporation to change the name of the Company to AstroNova, Inc. +AUDIT COMMITTEE REPORT +The Audit Committee of the Board is responsible for providing independent, objective oversight of the Company’s accounting functions +and internal controls. The Audit Committee is composed of three directors, each of whom is independent as defined by the NASDAQ listing standards and SEC rules. The Audit Committee operates under a written charter approved by the Board. +Management is responsible for the Company’s internal +controls and financial reporting process. The independent accountants are responsible for performing an independent audit of the Company’s consolidated financial statements in accordance with generally accepted auditing standards and issuing a +report thereon. The Audit Committee’s responsibility is to monitor and oversee these processes. +The Audit Committee’s responsibilities focus on two primary areas: (1) the adequacy of the Company’s internal controls and +financial reporting process and the reliability of the Company’s financial statements; and (2) the independence and performance of the Company’s independent accountants. The Audit Committee has sole authority to select, evaluate and +when appropriate, to replace the Company’s independent auditors. +The Audit Committee has met with management and the Company’s independent accountants, Wolf & Company, P.C., to review and discuss the January 31, 2016 financial statements. Management +represented to the +29 +Committee that the Company’s consolidated financial statements were prepared in accordance with generally accepted accounting principles, and the Audit Committee has reviewed and discussed +the consolidated financial statements with management and the independent accountants. The Audit Committee also discussed with Wolf & Company, P.C. the matters required by Auditing Standard No. 16 ( Communication with Audit +Committees ) issued by the Public Company Accounting Board. The Audit Committee also received from Wolf & Company, P.C. the written disclosures and the letter from Wolf & Company, P.C. pursuant to applicable requirements of the +Public Company Accounting Oversight Board regarding Wolf & Company, P.C.’s communications with the Audit Committee concerning independence, and has discussed with Wolf & Company, P.C. its independence from the Company. +The Audit Committee received the information +concerning the fees of Wolf & Company, P.C. for the year ended January 31, 2016 set forth below under “Independent Accountant Fees and Services.” When applicable, the Audit Committee considers whether the provision of +non-audit services is compatible with maintaining the independence of the independent accountants. Wolf & Company, P.C. did not provide any non-audit services during the fiscal year ended January 31, 2016. +Based upon the review and discussions referred to above, the +Audit Committee recommended that the Board include the audited consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended January 31, 2016, to be filed with the SEC. +Audit Committee: +Graeme MacLetchie (Chairman) +Harold Schofield +Mitchell I. Quain +PROPOSAL NO. 4 +RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +The Audit Committee has sole authority to select, evaluate +and when appropriate, to replace the Company’s independent auditors. The Audit Committee has appointed Wolf & Company, P.C. as the Company’s independent registered public accounting firm for the fiscal year ending January 31, +2017. Although action by the Company’s shareholders on this matter is not required, the Audit Committee believes it is appropriate to seek shareholder ratification in light of the critical role played by the independent auditors in maintaining +the integrity of Company financial controls and reporting and hereby requests the shareholders to ratify such appointment. +Approval of this proposal requires the affirmative vote of a majority of the shares of common stock represented in person or by proxy at +the annual meeting. +The Board of Directors +recommends a vote “FOR” the ratification of the appointment of Wolf & Company, P.C. as the Company’s independent registered public accounting firm for the fiscal year ending January 31, 2017. +30 +Independent Accountants’ Fees, Services and Other Matters +The Company expects a representative of Wolf & +Company, P.C. will be present at the annual meeting with the opportunity to make a statement, if he or she so desires, and that such representative will be available to respond to appropriate questions. +Aggregate fees for professional services rendered for the +Company by Wolf & Company, P.C. for the fiscal years ended January 31, 2016 and 2015 are set forth below. The aggregate fees included in the “Audit Fees” category are billed for the fiscal years for the audit of the +Company’s annual financial statements and review of financial statements and statutory and regulatory filings or engagements. +2016 +2015 +Audit Fees +$ +180,000 +$ +175,000 +Audit-Related Fees +— +— +Tax Fees +— +— +All Other Fees +— +— +Audit Fees for the +fiscal years ended January 31, 2016 and 2015 were for professional services rendered for the audits of the financial statements of the Company, quarterly review of the financial statements included in the Company’s Quarterly Reports on +Form 10-Q, consents and other assistance required to complete the year end audit of the consolidated financial statements. +Policy on Audit Committee Pre-Approval . The Audit Committee pre-approves all audit and non-audit services provided by the +independent accountants prior to the engagement of the independent accountants with respect to such services. None of the services described above were approved by the Audit Committee under the de minimis exception provided by Rule +2-01(C)(7)(i)(c) under Regulation S-X. +FINANCIAL REPORTS +A copy of the annual report of the Company for the fiscal year ended January 31, 2016 including the Company’s annual report to +the SEC on Form 10-K, accompanies this proxy statement. Such report is not part of this proxy statement. +PROPOSALS FOR 2017 ANNUAL MEETING +The 2017 annual meeting of the shareholders of the Company is scheduled to be held on May 16, 2017. If a shareholder intending to +present a proposal at that meeting wishes to have such proposal included in the Company’s proxy statement and form of proxy relating to the meeting, the shareholder must submit the proposal to the Company no later than December 19, 2016. +Shareholder proposals that are to be considered at the 2017 annual meeting but not requested to be included in the proxy statement must be submitted no later than March 17, 2017 and no earlier than December 17, 2016. +OTHER MATTERS +No business other than that set forth in the attached Notice +of Meeting is expected to come before the annual meeting, but should any other matters requiring a vote of shareholders arise, including a question of adjourning +31 +the meeting, the persons named in the accompanying proxy will vote thereon according to their best judgment in the interests of the Company. In the event any of the nominees for the office of +director should withdraw or otherwise become unavailable for reasons not presently known, the persons named as proxies will vote for other persons in their place in what they consider the best interests of the Company. +You are urged to sign and return your proxy promptly to make +certain your shares will be voted at the meeting. You may revoke your proxy at any time before it is voted. +By Order of the Board of Directors +Peter M. Rosenblum +Secretary +32 +Filing Fee $50.00 +ID Number: +STATE OF RHODE ISLAND AND PROVIDENCE PLANTATIONS +Office of the Secretary of State +Corporations Division +148 W. River Street +Providence, Rhode Island 02904-2615 +BUSINESS CORPORATION +ARTICLES OF AMENDMENT TO THE +ARTICLES OF INCORPORATION +Pursuant to the provisions of Section 7-1.2-905 of the General Laws of Rhode Island, 1956, as amended, the undersigned corporation adopts the following Articles of Amendment to its Articles of +Incorporation: +1. The name of the corporation is +ASTRO-MED, INC. +2. +The shareholders of the corporation (or, where no shares have been issued, the board of directors of the corporation) on May 18, 2016 +, in the manner prescribed by Chapter 7-1.2 of the +General Laws, 1956, as amended, adopted the following amendment(s) to the Articles of Incorporation: +(If additional space is required, please list on separate attachment) +The Restated Articles of Incorporation of Astro-Med, Inc., are hereby +further amended by deleting Article First +thereof in its entirety and substituting therefor the following new Article +First: +“FIRST: The name of the corporation is AstroNova, +Inc.” +3. +As required by Section 7-1.2-105 of the General Laws, the corporation has paid all fees and taxes. +4. +These Articles of Amendment shall be effective upon filing unless a specified date is provided which shall be no later than the 90 th day after the date of this filing +Under penalty of perjury, I declare and affirm that I have examined these Articles of Amendment, including any accompanying attachments, and that all statements contained herein +are true and correct. +Date: +Signature of Authorized Officer of the Corporation +Type or Print Name of Authorized Officer +Form No. 101 +Revised: 12/05 +A-1 +VOTE BY INTERNET - www.proxyvote.com +Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before +the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. +ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS +If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy +statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or +access proxy materials electronically in future years. +VOTE BY PHONE - 1-800-690-6903 +Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting +date. Have your proxy card in hand when you call and then follow the instructions. +VOTE BY MAIL +Mark, sign and +date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. +TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS +FOLLOWS: x +KEEP THIS PORTION FOR YOUR RECORDS +DETACH AND RETURN THIS PORTION ONLY +THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. +The Board of Directors recommends you vote FOR the following: +For +All +Withhold +All +For All +Except +To withhold authority to +vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below. +1. +Election of Directors +¨ +¨ +¨ +Nominees +01) +Graeme MacLetchie +02) April L. Ondis 03) Everett V. +Pizzuti 04) Mitchell I. Quain 05) Harold Schofield +06) +Hermann Viets, Ph.D. 07) Gregory A. Woods +The Board of Directors recommends you vote FOR proposals 2, 3 +and 4. +For +Against +Abstain +2. +To approve on an advisory, non-binding basis, the compensation paid to the Company’s named executive officers, as disclosed in +the proxy statement for the 2016 annual meeting of its shareholders. +¨ +¨ +¨ +3. +To approve an amendment to the Company’s restated articles of incorporation to change the Company’s name to AstroNova, +Inc. +¨ +¨ +¨ +4. +Ratify the appointment of Wolf & Company, P.C. as the Company’s independent registered public accounting firm for the fiscal year ending January 31, 2017. +¨ +¨ +¨ +NOTE: In their discretion, upon such other +matters as may properly come before the meeting +For address change/comments, mark here. +(see reverse for instructions) +¨ +Please sign exactly as your name(s) appear(s) hereon. When +signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by +authorized officer. +Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Form 10-K and Notice & Proxy Statement are available +at www.proxyvote.com . +ASTRO-MED, +INC. +Annual Meeting of Shareholders-May 18, +2016 +THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE +COMPANY +The undersigned shareholder of Astro-Med, Inc. (the “Company”), whose signature appears on the reverse side of +this proxy, hereby appoints Graeme MacLetchie, April L. Ondis, Everett V. Pizzuti, Mitchell I. Quain, Harold Schofield, Hermann Viets and Gregory A. Woods, and each of them acting singly, as proxies and attorneys with power of substitution and with +all the powers the undersigned would possess if personally present, to vote all shares of the capital stock of the Company that the undersigned is entitled to vote at the Company’s annual meeting of shareholders to be held May 18, 2016, at 600 +East Greenwich Avenue, West Warwick, Rhode Island, and at any adjournments or postponements thereof, as directed with respect to the matters set forth herein and with discretionary authority on all other matters that may properly come before said +meeting, as more fully described in the notice of annual meeting and the related proxy statement proxy statement, copies of which have been received by the undersigned shareholder. Attendance by the undersigned at the annual meeting or any +adjournment or postponement thereof will not be deemed to revoke this proxy unless the undersigned shall affirmatively indicate the intention of the undersigned to vote the shares represented hereby in person prior to the exercise of this proxy. +THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED +HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE NOMINEES SPECIFIED IN PROPOSAL 1, AND FOR PROPOSALS 2, 3 AND 4 AND IN ACCORDANCE WITH THE JUDGMENT OF THE PROXIES UPON OTHER MATTERS THAT MAY PROPERLY +COME BEFORE SAID MEETING OR ANY ADJOURNMENTS OR POSTPONEMENTS THEREOF. +Address change / comments: +(If you noted any Address Changes and/or Comments above, please mark corresponding box on the reverse side.) +Continued and to be signed on reverse side \ No newline at end of file diff --git a/raw/proxies/0000008146/0001193125-16-540158/proxy_rpt.txt b/raw/proxies/0000008146/0001193125-16-540158/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..f78c6db5d5e7c5f8cecb254b583b742dd1d4b563 --- /dev/null +++ b/raw/proxies/0000008146/0001193125-16-540158/proxy_rpt.txt @@ -0,0 +1,13 @@ +RELATED PARTY TRANSACTIONS +Potential conflicts of interest and related party +transactions are referred by the Board to the Audit Committee for review and approval. In reviewing and evaluating potential conflicts of interest and related party transactions, the Audit Committee uses applicable NASDAQ listing standards and SEC +rules as a guide. +Other than as described below, +no officer, director or nominee for director of the Company or any associate of any of the foregoing had during the fiscal year ended January 31, 2016 any material interest, direct or indirect, in any material transaction or any material +proposed transaction in which the amount exceeds $120,000 and to which the Company was or is to be a party. +The Company employs three sons of Everett V. Pizzuti, to two of whom the Company paid or accrued over $120,000 in compensation during the +fiscal year ended January 31, 2016: Eric Pizzuti, as Vice President and +26 +General Manager of QuickLabel Systems, and Christopher Pizzuti, as a QuickLabel Field Sales Engineer. The Company paid Eric Pizzuti $170,209 in salary and bonus and paid Christopher Pizzuti +$166,567 in salary and sales commissions. Eric Pizzuti also received restricted stock units with a grant date fair value of $179,671, a vacation payout of $2,873 and a matching contribution to his Profit Sharing Plan account of $5,326. Christopher +Pizzuti also received an automobile allowance of $7,500, a vacation payout of $762, and a matching contribution to his Profit Sharing Plan account of $894. \ No newline at end of file diff --git a/raw/proxies/0000008146/0001193125-17-122949/proxy.txt b/raw/proxies/0000008146/0001193125-17-122949/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..b37f5c5916d138ce93297f057dad34e5f9aa2562 --- /dev/null +++ b/raw/proxies/0000008146/0001193125-17-122949/proxy.txt @@ -0,0 +1,1781 @@ +DEF 14A +1 +d313007ddef14a.htm +DEF 14A +DEF 14A +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Proxy Statement Pursuant to Section 14(a) of the +Securities Exchange Act of 1934 +(Amendment No. ) +Filed by the +Registrant ☒ Filed by a Party other than +the Registrant ☐ +Check the appropriate box: +☐ +Preliminary Proxy Statement +☐ +Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +☒ +Definitive Proxy Statement +☐ +Definitive Additional Materials +☐ +Soliciting Material Pursuant to §240.14a-12 +ASTRONOVA, INC. +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +☒ +No fee required. +☐ +Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. +(1) +Title of each class of securities to which transaction applies: +(2) +Aggregate number of securities to which transaction applies: +(3) +Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on +which the filing fee is calculated and state how it was determined): +(4) +Proposed maximum aggregate value of transaction: +(5) +Total fee paid: +☐ +Fee paid previously with preliminary materials. +☐ +Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement +number, or the Form or Schedule and the date of its filing. +(1) +Amount Previously Paid: +(2) +Form, Schedule or Registration Statement No.: +(3) +Filing Party: +(4) +Date Filed: +AstroNova, Inc. +600 East Greenwich Avenue +West Warwick, Rhode Island 02893 +NOTICE OF ANNUAL MEETING OF SHAREHOLDERS +May 17, 2017 +To the Shareholders of AstroNova, Inc.: +Notice is hereby given that the 2017 Annual Meeting of Shareholders of AstroNova, Inc. (the “Company”) will be held at the offices of the Company, 600 East Greenwich Avenue, West Warwick, Rhode +Island on Wednesday, May 17, 2017, beginning at 10:00 a.m., for the following purposes: +(1) +To consider and vote upon the election of seven directors to serve until the next annual meeting of shareholders or until their successors are elected and have +qualified; +(2) +To conduct an advisory vote to approve the Company’s executive compensation; +(3) +To ratify the appointment of Wolf & Company, P.C. as the Company’s independent registered public accounting firm for the fiscal year ending +January 31, 2018; and +(4) +To transact such other business as may properly come before the meeting. +The close of business on March 24, 2017 has been fixed +as the record date for determining shareholders entitled to attend or vote at the annual meeting or any adjournment thereof. +You may vote on these matters in person, by proxy or via the Internet or telephone. Whether or not you plan to attend the meeting, please +promptly complete and return the enclosed proxy card in the enclosed addressed, postage-paid envelope or vote via the Internet or telephone, so that your shares will be represented and voted at the meeting in accordance with your wishes. If you +attend the meeting, you may withdraw your proxy or Internet or telephone vote and vote your shares in person. +By Order of the Board of Directors +Peter M. Rosenblum +Secretary +April 13, 2017 +IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY +MATERIALS FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 17, 2017. +The Company’s Proxy Statement, form of proxy card, and Annual Report are available for viewing, printing and downloading at: +http://www.proxyvote.com +This website does not use “cookies” to track or identify visitors. +AstroNova, Inc. +PROXY STATEMENT +ANNUAL MEETING OF SHAREHOLDERS +May 17, 2017 +The Meeting +The 2017 annual meeting of shareholders of AstroNova, Inc. (the “Company”) will be held at 10:00 +a.m., local time, on Wednesday, May 17, 2017 at the offices of the Company, 600 East Greenwich Avenue, West Warwick, Rhode Island. At the meeting, shareholders of record on the record date for the meeting who are present or represented by proxy +will have the opportunity to vote on the following matters: +• +the election of seven directors to serve until the next annual meeting of shareholders or until their successors are elected and have qualified; +• +the approval, on an advisory, non-binding basis, of the compensation paid to the Company’s Named Executive Officers, as disclosed in this proxy +statement pursuant to Item 402 of Regulation S-K (including in the compensation discussion and analysis, compensation tables, and accompanying narrative disclosures); +• +the ratification of the appointment of Wolf & Company, P.C. as the Company’s independent registered public accounting firm for the fiscal +year ending January 31, 2018; and +• +such other business as may properly come before the meeting. +Solicitation and Revocation of Proxies +The accompanying proxy is solicited by the Board of +Directors (the “Board”) of the Company in connection with its 2017 annual meeting of shareholders. The Company will bear the cost of such solicitation. It is expected that the solicitation of proxies will be primarily by mail. Proxies may +also be solicited personally by directors, officers, and employees of the Company at nominal cost. The Company may reimburse brokerage houses and other custodians, nominees and fiduciaries holding stock for others in their names, or in those of +their nominees, for their reasonable out-of-pocket expenses in sending proxy material to their principals or beneficial owners and obtaining their proxies. Any shareholder giving a proxy has the power to revoke it at any time prior to its exercise, +but the revocation of a proxy will not be effective until notice thereof has been given to the Secretary of the Company. Every properly submitted proxy will be voted in accordance with the specification made thereon. This proxy statement and the +accompanying proxy are expected to be first sent to shareholders on or about April 18, 2017. +Who May Vote +The Board has established March 24, 2017 as the record date for the annual meeting. Only shareholders of record at the close of business as of that date will be entitled to attend or vote at the +annual meeting. On the record date, there were 7,525,046 shares of common stock of the Company outstanding. There was no other outstanding class of voting securities. +A list of shareholders entitled to vote will be available at +the annual meeting. In addition, you may contact John Jordan, at the Company’s offices located at 600 East Greenwich Avenue, West Warwick, Rhode Island, to +make arrangements to review a copy of the shareholder list at those offices, between the hours of 9:00 a.m. and 5:00 p.m., local time, on any business day from May 5, 2017 to the time of the +annual meeting. +How to Vote +You are entitled to one vote at the meeting for each share +of common stock registered in your name at the close of business on the record date for the meeting. You may vote your shares at the meeting in person, by proxy or via the Internet or the toll-free number (for residents of the United States and +Canada) listed on your proxy card. +• +To vote in person , you must attend the meeting, and then complete and submit the ballot provided at the meeting. +• +To vote by proxy , you must complete and return the enclosed proxy card. Your proxy card will be valid only if you sign, date and return it +before the meeting. By completing and returning the proxy card, you will direct the persons named on the proxy card to vote your shares at the meeting in the manner you specify. If you complete all of the proxy card except the voting instructions, +then the designated persons will vote your shares +• +FOR the re-election of each of Graeme MacLetchie, April L. Ondis, Everett V. Pizzuti, Mitchell I. Quain, Harold Schofield, Hermann Viets and Gregory A. +Woods as a director of the Company; +• +FOR the approval, on an advisory, non-binding basis, of the Company’s executive compensation as described in this proxy statement; and +• +FOR the ratification of the appointment of Wolf & Company, P.C. as the Company’s independent registered public accounting firm for the +fiscal year ending January 31, 2018. +If any other business properly comes before the meeting, then the designated persons will have the discretion, to the extent authorized by applicable rules and regulations, to vote all shares they own or +represent by proxy in any manner they deem appropriate. +• +To vote via the Internet , you must access the website for Internet voting at www.proxyvote.com. Please have the enclosed proxy card handy when +you access the website and follow the on-screen instructions. Internet voting facilities for shareholders of record will be available 24 hours a day until 11:59 p.m. (Eastern time) on May 16, 2017. If you vote via the Internet, you do not have +to return your proxy card via mail. +• +To vote via telephone , use any touch-tone telephone and call 1-800-690-6903 to transmit your voting instructions up until 11:59 p.m. (Eastern +time) on May 16, 2017. Please have the enclosed proxy card handy when you call and then follow the instructions. If you vote via telephone, you do not have to return your proxy card via mail. +If you vote by proxy or via the Internet or telephone, you +may revoke your vote at any time before it is exercised by taking one of the following actions: +• +sending written notice to the Company’s Secretary at the address set forth on the notice of meeting appearing on the cover of this proxy +statement; +• +voting again by proxy or via the Internet or telephone on a later date; or +• +attending the meeting, notifying the Company’s Secretary that you are present, and then voting in person. +2 +Shares Held by Brokers or Nominees +If the shares you own are held in “street name” by a brokerage firm, your brokerage firm, as the +record holder of your shares, is required to vote your shares according to your instructions. In order to vote your shares, you will need to follow the directions your brokerage firm provides you. Many brokers also offer the option of providing +voting instructions to them over the Internet or by telephone, directions for which would be provided by your brokerage firm on your vote instruction form. +Under stock exchange rules applicable to most brokerage firms, if you do not give instructions to your broker, your broker will be +permitted to vote any shares it holds for your account in its discretion with respect to “routine” proposals, but will not be allowed to vote your shares with respect to “non-routine” proposals. Proposal 1, regarding the +election of Directors, and Proposal 2, regarding the approval, on an advisory, non-binding basis, of the Company’s executive compensation, are “non-routine” proposals. If you do not instruct your broker how to vote with respect to +these proposals, your broker will not vote your shares on them and your shares will be recorded as “broker non-votes” and will not affect the outcome of the vote on those proposals . “Broker non-votes” are shares that are held +in “street name” by a bank or brokerage firm that indicates on its proxy that, while voting in its discretion on one matter, it does not have or did not exercise discretionary authority to vote on another matter. +Proposal 3, regarding the ratification of Wolf & +Company, P.C. as the Company’s independent registered public accounting firm for the fiscal year ending January 31, 2018, is considered to be a routine item under the applicable rules and your broker will be able to vote on this item even +if it does not receive instructions from you, so long as your broker holds your shares in its name. +If a broker or nominee holds shares of common stock in “street name” for your account, then this proxy statement may have been forwarded to you with a voting instruction card, which allows you +to instruct the broker or nominee how to vote your shares on the proposals described herein. To vote by proxy or instruct your broker how to vote, you should follow the directions provided with the voting instruction card. In order to have your +vote counted on Proposal 1 and Proposal 2, you must either provide timely voting instructions to your broker or obtain a properly executed proxy from the broker or other record holder of the shares that authorizes you to act on behalf of the record +holder with respect to the shares held for your account . +Votes Required to Transact Business at the Meeting +The holders of a majority of the shares entitled to vote, present in person or represented by proxy, will constitute a quorum for the +transaction of business at the meeting. Abstentions and broker non-votes are counted as present and entitled to vote for purposes of determining a quorum. +Multiple Shareholders Sharing the Same Address +If you and other residents at your mailing address own shares of the Company’s common stock through a broker or other nominee, you +may have elected to receive only one copy of this proxy statement and the Company’s fiscal year 2017 Annual Report. If you and other residents at your mailing address own shares of common stock in your own names, you may have received only one +copy of this proxy statement and the fiscal year 2017 Annual Report, unless you provided the Company’s transfer agent with contrary instructions. +3 +This practice, known as “householding,” is designed to reduce the Company’s +printing and postage costs. You may promptly obtain an additional copy of this proxy statement, enclosed proxy card and our fiscal year 2017 Annual Report by sending a written request to AstroNova, Inc., attention Investor Relations Department, 600 +East Greenwich Avenue, West Warwick, Rhode Island 02893, or by calling the Company’s investor relations department at 617-542-5300. If you hold your shares through a broker or other nominee and wish to discontinue householding or to change your +householding election, you may do so by contacting your broker or by calling (800) 542-1061 or writing to Broadridge Financial Solutions, 51 Mercedes Way, Edgewood, NY 11717. If you hold shares in your own name and wish to discontinue +householding or change your householding election, you may do so by calling (877) 373-6374 or writing to Computershare Investor Services at P.O. Box. 43078, Providence, RI 02940-3078. +Directions to the Company’s offices +The annual meeting will be held at the Company’s +offices 600 East Greenwich Avenue, West Warwick, Rhode Island. For those planning to attend the special meeting, directions to our offices can be found under the heading “Contact Us” on our website. +PROPOSAL NO. 1 +ELECTION OF DIRECTORS +At the annual meeting, seven directors are to be elected to hold office until the next annual meeting or until their respective successors +are elected and qualified. The persons named in the accompanying proxy, who have been designated by the Board, intend to vote, unless otherwise instructed, for the election to the Board of the persons named below. The biographies below contain +information regarding the person’s service as director, business experience, director positions held currently or at any time during the last five years, and the experiences, qualifications, attributes or skills that caused the Nominating +Committee and the Board to determine that the person should serve as a director. +Graeme MacLetchie , 79, is a private investor and was a director of Deutsche Bank Alex Brown (Private Client Division), an investment banking and brokerage services company for private wealth and +asset management, from November 1995 until his retirement in March 2010. Prior to this, Mr. MacLetchie was Senior Vice President of C. J. Lawrence Deutsche Bank Securities Corporation from 1970 to 1995. He has been a director of the Company +since 2002 and also served as a director of E-Sync Networks Inc., a provider of managed enterprise services and solutions to medium and large businesses, from 1994 to 1999. We believe that Mr. MacLetchie’s substantial experience in the +financial sector and knowledge of the financial, regulatory, corporate governance and other matters affecting public companies qualify him to serve on our Board. +April L. Ondis , 43, has been a director since November +2015. Since January 2017, Ms. Ondis has served as Director of Marketing for Mt. Wachusett Community College. From September 2015 to January 2017, Ms. Ondis served as a Marketing Manager for Crossref, a collaborative reference linking +service operated by Publishers International Linking Associations, Inc. Prior to joining Crossref, Ms. Ondis held a variety of marketing-related positions with the Company, including Applied Marketing Manager from January 2015 to August 2015, +Worldwide Marketing Director from 2005 through December 2014 and Marketing Assistant from 1998 to 2005. We believe that Ms. Ondis’ substantial knowledge of the markets in which the Company operates and extensive knowledge of the +Company’s customer relationships qualify her to serve on our Board. +4 +Everett V. Pizzuti , 80, served as Chief Executive Officer of the Company from June +2011 to January 31, 2014. Prior to serving as Chief Executive Officer of the Company, Mr. Pizzuti was its President and Chief Operating Officer from 1971 to June 2011. Mr. Pizzuti has also been a director of the Company since 1985. +Prior to 1971, he served as General Sales Manager of the Recorder Division of Gulton Industries. Through his long service with the Company, Mr. Pizzuti has an intimate knowledge of the Company’s products and markets and is able to provide +our Board with insight and advice related to the Board’s decisions. Based on this experience, we believe that Mr. Pizzuti is qualified to serve on our Board. +Mitchell I. Quain , 65, has been a director since +August 2011. Mr. Quain has served as a Senior Advisor at the Carlyle Group, a private equity firm since December 2011. From January 2010 through December 2011, Mr. Quain was a Partner at One Equity Partners, a private investment firm. From +2006 through 2009, he was a Senior Director of ACI Capital Corp. From 2002 through 2005, Mr. Quain served as Chairman of Register.Com, Inc., an internet services provider, and from 1997 to 2001 he was employed with ABN AMRO and its predecessors +in several capacities, including Vice Chairman of Investment Banking. Mr. Quain also serves as a director of Hardinge Inc., a global designer, manufacturer and distributor of machine tools, RBC Bearings, Inc., an international manufacturer and +marketer of highly engineered precision plain, roller and ball bearings, and Jason Industries, Inc. a manufacturing company operating in the seating, finishing, acoustics and components businesses. Mr. Quain previously served as a director of +DeCrane Aircraft Holdings, Inc., Handy & Harman Ltd., HEICO Corporation, MagneTek, Inc., Mechanical Dynamics, Inc., Register.com, Inc., Titan International, Inc. and Tecumseh Products Company. We believe that Mr. Quain’s extensive +experience in the private equity sector and public company experience qualify him to serve on our Board. +Harold Schofield, 75, has been the owner and manager of Schofield Imaging Associates, LLC, in Narragansett, Rhode Island since +2004, and, since January 2017, has served as interim chief executive officer of NuLabel Technologies, Inc., a developer and provider of adhesive solutions for labeling and decorating applications. Prior to founding Schofield Imaging Associates, LLC, +Mr. Schofield was Founder, President and CEO of Atlantek Incorporated (“Atlantek”), a manufacturer of thermal printers and retired as Vice President and General Manager of Zebra Atlantek, Inc. following the acquisition of Atlantek by +Zebra Technologies Corp. in November 2003. Prior to founding Atlantek, Mr. Schofield was Design Engineering Manager at Gulton Industries where he was responsible for design and development of thermal printers, plotters, and chart recorders. +Mr. Schofield is an internationally recognized authority in the electronic printing field. We believe that Mr. Schofield’s long history and expertise in the printing and imaging field qualify him to serve on our Board. +Hermann Viets , Ph.D., 74, served as the President and +Chief Executive Officer of the Milwaukee School of Engineering, a university located in Milwaukee, Wisconsin focused primarily on engineering education, from 1991 until his retirement in June 2015 and continues to serve on the Board of Regents of +that institution. Dr. Viets served as a director of Gehl Co., a publicly traded manufacturing company, from 1999 until its acquisition by Manitou BF S.A. in 2008. Dr. Viets was also a trustee of Polytechnic University (a private +engineering school located in Brooklyn, NY) until 2009. Dr. Viets has been a director of the Company since 1988. We believe that Dr. Viets’ executive experience as president of a university and as a director of another public company +and his understanding of the Company’s products as well as corporate governance matters qualify him to serve on our Board. +Gregory A. Woods , 58, has served as Chief Executive Officer of the Company since February 1, 2014. Mr. Woods joined the +Company in September 2012 as Executive Vice President and Chief Operating Officer and was appointed President and Chief Operating Officer on August 29, 2013. Prior to joining the Company, +5 +Mr. Woods served from January 2010 to August 2012 as Managing Director of Medfield Advisors, LLC, an advisory firm located in Medfield, Massachusetts focused on providing corporate +development and strategy guidance to technology driven manufacturing firms. From 2008 to 2010, Mr. Woods served as President of Performance Motion Devices, a specialty semiconductor and electronics manufacturer located in Lincoln, +Massachusetts. Through his work experience, Mr. Woods has extensive knowledge of the technology and electronics industries, as well as lean manufacturing processes. Based on this experience and his position as Chief Executive Officer of the +Company, we believe that Mr. Woods is qualified to serve on our Board. +The Board has determined that all of the directors of the Company, including each of the nominees standing for election at the 2016 annual shareholders meeting, other than Gregory A. Woods, Everett V. +Pizzuti and April L. Ondis, are independent of the Company in that such nominees have no material relationship with the Company either directly, or as a partner, shareholder or affiliate of an organization that has a relationship with the Company. +The Board has made this determination in accordance with applicable Securities and Exchange Commission (“SEC”) rules and NASDAQ listing standards. +Each of the directors must be elected by a plurality of the votes properly cast at the annual meeting. This means that the seven nominees +receiving the highest number of FOR votes will be elected as directors. Votes may be cast FOR or WITHHELD FROM each nominee. Broker non-votes and votes that are WITHHELD FROM the nominees will be excluded entirely from the vote and will have no +effect. +The Board recommends a vote FOR the +election of each of the nominees listed above. +CORPORATE GOVERNANCE +The Board of Directors – Meetings and Committees +The Board currently consists of seven members, all of whose terms will expire at the annual meeting and each of whom has been nominated +for re-election. During the fiscal year ended January 31, 2017, the Board held [five] meetings. During fiscal year 2017, all directors attended at least 75% of the meetings of the Board and meetings of committees on which such director serves. +The Board has adopted a policy that requires members of the Board to make every effort to attend each annual shareholders meeting. All members of the Board attended the 2016 annual shareholders meeting. +The Board currently has three standing committees: an Audit +Committee, a Compensation Committee, and a Nominating Committee. The members and chairs of each of those committees are appointed each year. The Audit Committee is comprised of Messrs. MacLetchie, Quain, and Schofield. The Nominating Committee is +comprised of Dr. Viets and Messrs. MacLetchie and Quain. The Compensation Committee is comprised of all of our independent directors, Dr. Viets and Messrs. MacLetchie, Quain, and Schofield. Each of the members of our committees is +independent as defined under the applicable NASDAQ listing standards and SEC rules. Each of the Audit, Compensation, and Nominating Committees has a written charter approved by the Board. A copy of each charter is available on the Company’s +website at www.astronovainc.com under “Investors – Governance Documents.” +Audit Committee. The Audit Committee’s primary duties and responsibilities include: overseeing the integrity of the Company’s financial reports; appointing, setting the compensation of +and overseeing the Company’s independent accountants; and assessing the qualifications, independence and performance of the +6 +Company’s independent accountants and the adequacy of internal controls. The Audit Committee meets with the Company’s independent accountants to review quarterly financial results, the +results of the audit, and other relevant matters. Mr. MacLetchie serves as Chairman of the Audit Committee, which held five meetings during the fiscal year ended January 31, 2017. The Board has determined that all three members of the +Audit Committee satisfy the financial literacy requirements of the NASDAQ listing standards and are independent as defined under the NASDAQ listing requirements and applicable SEC rules. Additionally, the Board has determined that Mitchell Quain +qualifies as an “audit committee financial expert” as defined by the SEC rules and that each of Mr. Quain and Graeme MacLetchie possesses “financial sophistication” as described in the NASDAQ listing standards. +Compensation Committee. The Compensation Committee +assists the Board in discharging the Board’s responsibilities relating to director and executive compensation. The Compensation Committee’s responsibilities include: establishing and reviewing the Company’s executive and director +compensation philosophy, strategies, plans and policies; making recommendations with respect to the design of the Company’s incentive compensation plans and equity based plans; granting awards under such plans and overseeing generally the +administration of such plans; evaluating the performance and determining the compensation of the Chief Executive Officer; and reviewing and approving recommendations on compensation of other executives. Mr. Quain serves as chairman of the +Compensation Committee, which held four meetings during the fiscal year ended January 31, 2017. +Nominating Committee . The Nominating Committee is responsible for identifying individuals qualified to be members of the Board and +recommending such individuals to be nominated by the Board for election to the Board by the shareholders. The Nominating Committee held three meetings in the fiscal year ended January 31, 2017. Dr. Viets serves as chairman of the +Nominating Committee. +Director Share Ownership +Requirements. In March 2015, the Board approved a stock ownership policy to require each director to hold shares of Company common stock with a value equal to at least $200,000. Any director who does not currently meet this requirement will have +five years from the later of April 1, 2015 or his or her initial election to the Board to achieve this ownership level. Directors are expected to retain at least 50% of the shares acquired upon exercise of any stock option (net of shares +withheld or tendered in payment of the exercise price) or vesting of a restricted stock or restricted unit award until they achieve the specified ownership level and thereafter maintain such ownership level. Currently, all of our directors meet the +ownership requirement. +Compensation +Committee Interlocks and Insider Participation +During fiscal 2017, the members of the Company’s Compensation Committee were Messrs. MacLetchie, Quain, Schofield, and Viets. No +member of the Company’s Compensation Committee has ever been an officer or employee of the Company or any of its subsidiaries. None of the Company’s executive officers serves as a director or member of the compensation committee of another +entity in a case where an executive officer of such other entity serves as a director of the Company or a member of the Company’s Compensation Committee. +Nomination of Directors +The Nominating Committee considers suggestions from many sources, including shareholders, regarding possible candidates for director. The +Nominating Committee does not set specific criteria for directors but seeks individuals who possess the highest ethical standards and integrity, have a history of achievement that reflects +7 +superior standards for themselves and others, have the ability to provide wise, informed and thoughtful counsel to management on a range of issues, exercise independence of thought, and possess +skills and expertise appropriate to meet the Company’s needs and advance the long-term interests of the shareholders. The Nominating Committee does not have a policy with respect to diversity and does not specifically consider issues of +diversity, such as gender, race, origin or sex, when determining whether to nominate any person to be a director of the Company. +The Nominating Committee must also ensure that members of the Board as a group maintain the requisite qualifications under the NASDAQ +listing standards for populating the Audit, Compensation, and Nominating Committees. The Nominating Committee will consider shareholder nominees for director in the same manner as nominees for director from other sources. +Shareholders may send recommendations for director nominees +to the Nominating Committee at the Company’s offices at 600 East Greenwich Avenue, West Warwick, Rhode Island 02893. Submissions should include information regarding a candidate’s background, qualifications, experience, and willingness to +serve as a director. In addition, Section 10 of Article III of the Company’s By-Laws sets forth specific procedures that, if followed, enable any shareholder entitled to vote in the election of directors to make nominations directly at an +annual meeting of shareholders. These procedures include a requirement for written notice to the Company not more than 150 days nor less than 60 days prior to the scheduled annual meeting and must contain the name and certain information concerning +the nominee and the shareholders who support the nominee’s election. For the annual meeting to be held in 2018, the notice must be received no earlier than December 16, 2017 and no later than March 16, 2018. A copy of the +Company’s By-Laws may be obtained by writing to AstroNova, Inc., Attn: Investor Relations Department, 600 East Greenwich Avenue, West Warwick, Rhode Island 02893. +Communications with the Board of Directors +The Company’s Board provides a process for shareholders +to communicate directly with the members of the Board or the individual chairman of each standing committee. Any shareholder with a concern, question or complaint regarding our compliance with any policy or law, or who would otherwise like to +contact the Board may communicate directly with the directors by writing directly to those individuals c/o AstroNova, Inc., 600 East Greenwich Avenue, West Warwick, Rhode Island 02893. The Company’s general policy is to forward, and not to +intentionally screen, any mail received at the Company’s corporate offices that is sent directly to an individual unless the Company believes the communication may pose a security risk. +Board Leadership Structure +All members of the Board, other than Gregory A. Woods, April L. Ondis, and Everett V. Pizzuti, are independent and all our key committees +– Audit, Compensation, and Nominating – are comprised solely of independent directors. The non-management directors meet in executive session without Mr. Woods, Ms. Ondis, and Mr. Pizzuti at least quarterly. +The Board believes that separating the positions of Chief +Executive Officer and Chairman of the Board is preferable and in the best interests of shareholders because it gives our independent directors a significant role in Board direction and agenda setting and enhances the Board’s ability to fulfill +its oversight responsibilities, including of senior management. Separating the positions also provides an independent viewpoint and focus at Board meetings, and ensures that our Chief Executive Officer will be able to focus his energy on running the +8 +Company. The Board believes this structure provides strong leadership for the Board, while also positioning the Chief Executive Officer as the leader of the Company in the eyes of our customers, +employees, and shareholders. +Risk Oversight +The Board has an active role, as a whole and also at the +committee level, in overseeing management of the Company’s risks through a program of sound policies, systems, processes, and reports. The Audit Committee of the Board has oversight responsibility over financial reporting and disclosure +processes, compliance and legal matters, and information security and fraud risk. The Audit Committee also monitors controls for material weaknesses in the financial reporting function. The Audit Committee meets regularly with our Chief Financial +Officer and Controller in carrying out these responsibilities, and with the Company’s independent auditors in executive session. +The Compensation Committee of the Board oversees risks as they relate to the Company’s compensation policies and practices as +described under “Compensation Discussion and Analysis.” The Board’s Nominating Committee assists the Board in fulfilling its oversight responsibilities with respect to independence of Board members and identification of individuals +qualified to be members of the Board. +While each +committee is responsible for evaluating the risks within their areas of responsibility and overseeing the management of such risks, all committees report regularly to the full Board, which also considers the Company’s entire risk profile. +Compensation of Directors +The Compensation Committee is responsible for reviewing and +establishing the compensation of the directors of the Company. The Company adopted a Non-Employee Director Annual Compensation Program (the “Program”) on January 30, 2012 effective as of February 1, 2012, which was amended and +restated as of February 1, 2014 and further amended on August 1, 2016. Prior to the August 1, 2016 amendment, under the Program, each non-employee director was entitled to an annual cash retainer of $7,000 (the “Cash +Retainer”), plus $500 for each Board and committee meeting attended. In addition, the Chairman of the Board, if a non-employee director, received an annual retainer of $6,000, and the Chair of the Audit Committee and Chair of the Compensation +Committee each received an annual retainer of $4,000 (each a “Chair Retainer”). Any non-employee director who was first elected or appointed to such position after February 1 of any fiscal year received a pro rata portion of any Cash +Retainer and Chair Retainer payable. Each non-employee director was able to elect for any fiscal year to receive all or a portion of the Cash Retainer or Chair Retainer in the form of common stock of the Company. In addition, prior to the +August 1, 2016 amendment, each non-employee director received a restricted stock award with a value equal to $20,000 (the “Equity Retainer”) upon adjournment of each annual meeting (or special meeting in lieu of annual meeting) of +shareholders. If a non-employee director was first appointed or elected to the Board effective on a date other than at the annual shareholders meeting, on the date of such appointment or election the director would have received a pro rata award of +restricted common stock having a value based on the number of days remaining until the next annual meeting. The Equity Retainer vests on the earlier of 12 months after the grant date or the date immediately prior to the next annual meeting (or +special meeting in lieu of annual meeting) of the shareholders following the meeting at which such restricted stock award was granted. However, a non-employee director may not sell, transfer, assign, pledge or otherwise encumber the vested common +stock prior to the second anniversary of the vesting date. +9 +Effective August 1, 2016, the Program was amended to provide that, in lieu of any Cash +Retainer, Chair Retainer or Equity Retainer, commencing on the first business day of the third fiscal quarter of fiscal 2017, each non-employee director receives an automatic grant of restricted stock awards (“RSAs”) on the first business +day of each fiscal quarter. The number of whole shares to be granted each quarter is equal to 25% of the number calculated by dividing the director compensation amount by the fair market value of the Company’s stock on such day. The director +annual compensation amount was $55,000 for fiscal year 2017 and will be $65,000 for fiscal 2018, and $75,000 for fiscal 2019. In addition, the Chairman of the Board receives RSAs with an aggregate value of $6,000, and the Chairs of the Audit and +Compensation Committees each receive RSAs with an aggregate value of $4,000, also issued in quarterly installments and calculated in the same manner as the directors’ RSA grants. RSAs granted prior to March 30, 2017 pursuant to the amended +Program become fully vested on the first anniversary of the date of grant. On March 30, 2017, the Program was further amended to provide that RSA’s granted pursuant to the amended Program after that date will become vested on the date +that is three months following the date of grant. +In the event of the death or disability of a non-employee director, or a Change in Control (as such term is defined in the Company’s +2015 Equity Incentive Plan) of the Company, the restricted stock award shall immediately vest and shall no longer be subject to such restrictions on transfer. +Prior to the August 1, 2016 amendment to the Program, a non-employee director could elect to receive all or a portion of the Cash +Retainer or Chair Retainer (each, a “Retainer”) in the form of shares of common stock issued in four quarterly installments on the first day of each fiscal quarter, with the number of shares of common stock issued based on the fair market +value of the common stock on the date such installment is payable. The common stock received in lieu of a Retainer is fully vested. However, a non-employee director who received common stock in lieu of all or a portion of a Retainer may not sell, +transfer, assign, pledge or otherwise encumber the common stock prior to the first anniversary of the date on which such shares were issued. In the event of the death or disability of a non-employee director, or a Change in Control (as such term is +defined in the Company’s 2007 Equity Incentive Plan) of the Company, any shares of common stock issued in lieu of a Retainer, will no longer be subject to such restrictions on transfer. +In addition to the Program, under the Company’s 2015 Equity Incentive Plan, each non-employee director +receives non-qualified options to purchase 5,000 shares of the Company’s common stock upon initial election to the Board (if not at the annual meeting) and upon the adjournment of each annual meeting or special meeting in lieu of an annual +meeting of the shareholders of the Company. These options have a term of ten years and become exercisable immediately prior to the occurrence of the next annual meeting following the date the option is granted. +10 +The following Director Compensation table provides information regarding the compensation +paid or accrued by each individual who was a director during the 2017 fiscal year. +Name +Total ($) +Fees Earned +or Paid in +Cash ($)(a) +Stock +Awards($)(b)(c) +Option +Awards +($)(d)(e) +Graeme MacLetchie +76,718 +10,000 +49,447 +17,271 +April L. Ondis +68,740 +4,000 +47,469 +17,271 +Everett V. Pizzuti +69,240 +4,500 +47,469 +17,271 +Mitchell I. Quain +76,718 +10,000 +49,447 +17,271 +Harold Schofield +71,740 +7,000 +47,469 +17,271 +Hermann Viets +77,214 +9,500 +50,443 +17,271 +Gregory A. Woods(f) +— +— +— +— +(a) +Includes cash retainers which were paid in stock at the election of the director as follows: +Name +Shares +Value($) +Graeme MacLetchie +367 +5,487 +Mitchell I. Quain +367 +5,487 +Hermann Viets +434 +6,490 +(b) +The amounts reflect the aggregate fair value of the awards on the grant date under FASB ASC Topic 718 for shares of restricted stock granted to directors. For +additional information, see footnote 11 in the Company’s audited financial statements for the fiscal year ended January 31, 2017, included in the Company’s Annual Report on Form 10-K filed with the SEC on April 7, 2017. +(c) +As of January 31, 2017, each non-employee director had the following number of shares of unvested restricted stock outstanding: Graeme MacLetchie (3,328), April L. +Ondis (3,197), Everett V. Pizzuti (3,197), Mitchell I. Quain (3,328), Harold Schofield (3,197), and Hermann Viets (3,394). +(d) +The amounts reflect the aggregate fair value of the awards on the grant date under FASB ASC Topic 718 for stock options granted to directors. Assumptions used in the +calculation of these amounts are included in footnote 11 in the Company’s audited financial statements for the fiscal year ended January 31, 2017, included in the Company’s Annual Report on Form 10-K filed with the SEC on April 7, +2017. +(e) +As of January 31, 2017, each non-employee director had the following number of options outstanding: Graeme MacLetchie (50,000, of which 45,000 were vested), April +L. Ondis (10,000, of which 5,000 were vested), Everett V. Pizzuti (15,000, of which 10,000 were vested), Mitchell I. Quain (30,000, of which 25,000 were vested), Harold Schofield (25,000, of which 20,000 were vested), and Hermann Viets (50,000, of +which 45,000 were vested). +(f) +See Summary Compensation Table and Outstanding Equity Awards at Fiscal Year End Table for disclosure relating to compensation and outstanding option awards held by +Mr. Woods. +11 +Our Management +The following sets forth information with respect to our +executive officers, other than Mr. Woods, as of April 7, 2017. Biographical information regarding Gregory A. Woods, our President and Chief Executive Officer is included above in Proposal No. 1 – Election of Directors. +Name +Age +Position +Gregory A. Woods +58 +President, Chief Executive Officer and Director +John P. Jordan +71 +Vice President, Chief Financial Officer and Treasurer +Michael M. Morawetz +57 +Vice President – International Branches +Stephen M. Petrarca +54 +Vice President – Operations +Eric E. Pizzuti +50 +Vice President and General Manager – Product Identification +Michael J. Natalizia +51 +Vice President and Chief Technology Officer +Mr. Jordan joined the +Company on August 1, 2016 as our Vice President, Chief Financial Officer, and Treasurer. Since February 2015, Mr. Jordan has served as the president of FreshFoodsVI.com, an on-line grocery delivery service. From February 2011 to October +2014, Mr. Jordan served as Chief Financial Officer, Vice President and Treasurer of Zygo Corporation, a company that manufactures and designs advanced optical metrology systems and optical components and assemblies. From March 2007 to February +2011, Mr. Jordan served as Chief Financial Officer, Vice President, and Treasurer of Baldwin Technology Company, Inc., a supplier of process automation equipment and related consumables for the print media industry. +Mr. Morawetz was appointed Vice +President—International Branches in 2006. He was previously the General Manager of Branch Operations for the Company’s German subsidiary, having joined the Company in 1989. +Mr. Petrarca was appointed Vice President—Operations in 1998. He has previously held positions as +General Manager of Manufacturing, Manager of Grass Operations and Manager of Grass Sales. He has been with the Company since 1980. +Mr. Eric E. Pizzuti was appointed Vice President and General Manager of the Company’s Product Identification business +segment on March 9, 2012. Prior to this appointment, Mr. Pizzuti held the position of Vice President and Worldwide Director of Sales for QuickLabel Systems from March 2010 and Worldwide Director of Sales from March 2006 through March 2010. +Mr. Pizzuti has held various other positions since joining the Company in 1996. +Mr. Natalizia was appointed Vice President and Chief Technology Officer on March 9, 2012. Prior to this appointment, Mr. Natalizia held the position of Director of Product Development of +the Company since 2005. +In addition, Joseph P. +O’Connell served as the Company’s Senior Vice President, Treasurer and Chief Financial Officer until August 1, 2016, when he stepped down from those positions in connection with the appointment of Mr. Jordan as the Company’s +Vice President, Chief Financial Officer and Treasurer. Mr. O’Connell continues to serve the Company as its Vice President – Business Development. +12 +Security Ownership of 5% Beneficial Owners +The following table sets forth certain information regarding the beneficial ownership of the Company’s +outstanding shares of common stock, as of April 7, 2017 (except as noted), by each person who is known to the Company to own of record or beneficially more than 5% of such stock: +Name of Beneficial Owner +Number of Shares +Beneficially +Owned(a) +Percent +of Class +Albert W. Ondis, III +957,177 +(b) +12.7 +% +515 Beach Road +Fairfield, CT 06824 +Ariel Investments, LLC +881,974 +(c) +11.7 +% +200 E. Randolph Drive, Suite 2900 +Chicago, IL 60601 +Rutabaga Capital Management, LLC +551,836 +(d) +7.3 +% +64 Broad Street, 3 rd Floor +Boston, MA 02109 +Dimensional Fund Advisors LP +507,289 +(e) +6.7 +% +6300 Bee Cave Road, Building One +Austin, TX 78746 +Wellington Management Group, LLP +439,697 +(f) +5.8 +% +280 Congress Street +Boston, MA 02210 +(a) +All information is based upon ownership of record as reflected on the stock transfer books of the Company or as reported on Schedule 13G or Schedule 13D filed under +Rule 13d-1 under the Securities Exchange Act of 1934. +(b) +According to a Schedule 13D filed with the SEC on April 18, 2016 by the Albert W. Ondis Declaration of Trust (the “Trust”) and Albert W. Ondis III, who +serves as trustee of the Trust, the Trust had sole voting and dispositive power with respect to 826,305 shares, held by the Trust, and Mr. Ondis had sole voting and dispositive power with respect to 957,177 shares, which includes all of the +shares held by the Trust, and an additional 130,872 shares, including 1,658 shares held in trust for a child of Mr. Ondis, for which Mr. Ondis serves as trustee, and 3,400 shares issuable upon exercise of stock options. +(c) +According to a Schedule 13G/A filed with the SEC on February 14, 2017, Ariel Investments, LLC, an investment adviser registered under the Investment Advisers Act +of 1940 (the “Advisers Act”), had sole voting power with respect to 521,189 shares and sole dispositive power with respect to 881,974 shares as of December 31, 2016. +(d) +According to a Schedule 13G/A filed with the SEC on February 15, 2016, Rutabaga Capital Management, LLC, an investment adviser registered under the Advisers Act, +had sole voting power with respect to 382,869 shares, shared voting power with respect to 168,967 shares, and sole dispositive power with respect to 551,836 shares as of December 31, 2016. +(e) +According to a Schedule 13G/A filed with the SEC on February 9, 2017, as of December 31, 2016, Dimensional Fund Advisors, LP, an investment adviser registered +under the Advisers Act, and its subsidiaries (collectively, “Dimensional”) had sole voting power with respect to 501,251 shares and sole dispositive power with respect to 507,289 shares held by registered investment companies, trusts and +separate accounts for which Dimensional serves as investment manager, adviser or sub-adviser. +13 +(f) +This information is based on information contained in (i) a Schedule 13G filed with the SEC on February 9, 2017 by Wellington Management Group LLP, a parent +holding company or control person (“Wellington Group”), Wellington Group Holdings LLP, a parent holding company (“Wellington Holdings”), Wellington Investment Advisors Holdings LLP, a parent holding company (“Wellington +Advisors”), and Wellington Management Company LLP, an investment adviser registered under the Advisers Act (“Wellington Management”); (ii) a Schedule 13G filed with the SEC on February 9, 2017 by Wellington Trust Company, +NA, a bank (“Wellington Trust”); and (iii) a Schedule 13G/A filed with the SEC on February 9, 2017 by Wellington Trust Company, National Association Multiple Common Trust Funds Trust, Microcap Equity Portfolio (the +“Fund”). Wellington Group, Wellington Holdings, Wellington Advisors, and Wellington Management each reported, as of December 31, 2016, having shared voting and dispositive power with respect to 439,697 shares held of record by clients +of Wellington Management; Wellington Trust reported, as of December 31, 2016, having shared voting and dispositive power with respect to 439,697 shares held of record by clients for which it serves as investment advisor; and the Fund reported, +as of December 31, 2016, having shared voting and dispositive power with respect to 390,062 shares. +Security Ownership of Directors and Officers +The following table sets forth certain information regarding the beneficial ownership of the Company’s common stock as of +April 7, 2017 by each director, by each executive officer named in the Summary Compensation Table and by all directors and executive officers as a group. Unless otherwise noted, all shares of common stock are subject to the sole voting and +dispositive power of the respective directors and executive officers. +Beneficial Ownership +Name of Beneficial Owner +Shares and +Restricted +Shares(a) +Options +Exercisable +within 60 days +of 4/7/17 +Total +Beneficial +Ownership +(a) +Percent +of Class +Graeme MacLetchie +99,850 +(b) +50,000 +149,850 +2 +% +April L. Ondis +131,157 +(c) +10,000 +141,157 +1.9 +% +Everett V. Pizzuti +110,869 +(d) +15,000 +125,869 +1.7 +% +Harold Schofield +14,078 +(d) +25,000 +39,078 +* +Mitchell I. Quain +32,118 +(b) +30,000 +62,118 +* +Hermann Viets +201,591 +(e) +50,000 +251,591 +3.3 +% +Gregory A. Woods +77,234 +(f) +100,000 +(g) +177,234 +2.3 +% +John Jordan +— +— +(h) +— +* +Michael Morawetz +5,811 +(i) +7,862 +(j) +13,673 +* +Michael Natalizia +18,585 +(k) +11,325 +(l) +29,910 +* +Stephen Petrarca +24,676 +(m) +4,294 +(n) +28,970 +* +All directors and executive officers of the Company as a group (12) +730,136 +(o) +314,681 +(p) +1,044,817 +13.3 +% +* +Indicates less than 1.0%. +(a) +If applicable, beneficially owned shares include shares owned by the spouse, minor children, and certain other relatives of the director or executive officer, as well +as shares held by trusts of which the person is a trustee or in which he or she has a beneficial interest. +(b) +Includes 3,328 shares of restricted stock. +(c) +Includes 3,197 shares of restricted stock, and excludes 826,305 shares of common stock held by the Albert W. Ondis Declaration of Trust, of which Ms. Ondis is a +beneficiary. +(d) +Includes 3,197 shares of restricted stock. +14 +(e) +Includes 3,394 shares of restricted stock. +(f) +Includes 402 shares of restricted stock, 7,603 restricted stock units vesting within 60 days of April 7, 2017, and 112 shares allocated to Mr. Woods’ +ESOP account. +(g) +Excludes 75,000 shares underlying options not exercisable within 60 days of April 7, 2017. +(h) +Excludes 5,000 shares underlying options not exercisable within 60 days of April 7, 2017. +(i) +Includes 3,095 restricted stock units vesting within 60 days of April 6, 2017. +(j) +Excludes 1,175 shares underlying options not exercisable within 60 days of April 7, 2017. +(k) +Includes 1,079 restricted stock units vesting within 60 days of April 7, 2017, and 638 shares allocated to Mr. Natalizia’s ESOP account. +(l) +Excludes 1,250 shares underlying options not exercisable within 60 days of April 7, 2017. +(m) +Includes 1,079 restricted stock units vesting within 60 days of April 7, 2017, and 3,600 shares allocated to Mr. Petrarca’s ESOP account. +(n) +Excludes 1,150 shares underlying options not exercisable within 60 days of April 7, 2017. +(o) +Includes 20,043 shares of restricted stock, 12,324 restricted stock units vesting within 60 days of April 7, 2017, and 6,883 shares allocated to executive +officers’ ESOP accounts. +(p) +Excludes 84,950 shares underlying options not exercisable within 60 days of April 7, 2017. +Section 16(a) Beneficial Ownership Reporting Compliance +Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), requires +the directors and executive officers of the Company and any persons who own more than ten percent of the Company’s common stock to file with the SEC various reports of beneficial ownership and changes in beneficial ownership. Based solely on a +review of the copies of such reports received by the Company and certain written representations that no other reports were required, the Company believes that for the fiscal year ended January 31, 2017, all of its officers, directors and 10% +beneficial owners complied with the requirements of Section 16(a), except that the following forms were filed late: +• +One Form 4 by Mr. Jordan relating to a grant of options to purchase shares of the Company’s common stock. +15 +COMPENSATION DISCUSSION & ANALYSIS +The Compensation Committee (the “Committee”) is +charged with the responsibility for establishing, implementing and monitoring adherence to the Company’s compensation philosophy and ensuring that executives and key management personnel are effectively compensated in a manner which is +internally equitable. The Committee also is responsible for reviewing and establishing the compensation of directors. +Compensation Philosophy and Objectives. The Committee’s overall philosophy in terms of executive +compensation is to link management incentives with the actual financial performance of the Company. Similarly, the compensation should attract, retain, and motivate highly qualified individuals to achieve the Company’s business goals and link +their interests with shareholder interests. In setting compensation for the Company’s executive officers, the Committee considers the executive’s performance, awards, if any, made during prior years and other relevant factors. The +Committee seeks to have the long-term performance of the Company’s common stock reflected in executive compensation through our equity incentive programs. +Elements of Compensation. The total compensation program for the Company’s executive officers consists +of the following: +• +salary; +• +cash incentive and bonus awards tied to the Company’s and executive’s annual performance; +• +long-term incentive compensation, in the form of stock options, restricted stock units, and performance units; and +• +retirement and other benefits. +The Committee seeks to structure each element of compensation to attract and retain the necessary executive talent, reward annual +performance and provide incentive for both long-term strategic goals as well as short-term performance. The Committee’s policy for allocating between currently paid and long-term compensation is to ensure adequate base compensation to attract +and retain personnel, while providing incentives to maximize long-term value for our shareholders. +Say on Pay Consideration. In accordance with SEC rules, the Company conducted a non-binding, advisory vote on the Company’s executive compensation at its 2016 annual +meeting. The Company’s shareholders voted to approve the Company’s executive compensation practices at the 2016 annual meeting by a favorable vote of approximately 88% of the votes cast. +Setting Executive +Compensation. The Committee is responsible for establishing and periodically reviewing the compensation of the Company’s executive officers and approving all equity awards. The Committee annually reviews the +performance of the executive officers and, based on these reviews, the Committee determines salary adjustments and annual awards. Mr. Woods does not participate during deliberations regarding his compensation. +Salary. Base salaries for +executive officers, other than recent hires, were established a number of years ago. Historically, base salaries have been increased at annual rates which approximate the general rates of increase of compensation for all employees of the Company. +Annual salary adjustments are made effective +16 +April 1 of each year. Effective as of April 1, 2016, the Committee set the fiscal 2017 annual salaries for each of the Named Executive Officers other than Mr. Jordan as follows: +Name +Salary +Gregory A. Woods +$ +370,800 +Joseph P. O’Connell +$ +257,500 +Michael Morawetz +$ +188,134 +(1) +Stephen M. Petrarca +$ +169,229 +Michael J. Natalizia +$ +158,516 +(1) +Cash compensation paid to Mr. Morawetz is paid in Euros; all amounts reported with respect to payments to Mr. Morawetz were converted to U.S. dollars at the +exchange rate as of January 31, 2017, which was €1:$1.0731. +In connection with his appointment as the Company’s Vice President, Chief Financial Officer, and Treasurer on August 1, 2016, Mr. Jordan’s annual salary was set at $225,000. +Cash Incentive and Bonus +Awards. Annual cash incentive awards are an important component of total executive cash compensation because they reward the Company’s executives for achieving targeted, annual results and emphasize variable or +“at risk” compensation. From time-to-time the Committee awards discretionary cash bonuses to the Company’s executives to reward their efforts in extraordinary circumstances. In connection with his appointment as the Company’s +Vice President, Chief Financial Officer, and Treasurer and Vice President on August 1, 2016, Mr. Jordan became eligible to receive a $5,000 cash bonus on September 1, 2016, which was earned and paid during fiscal year 2017. +Short-Term Incentive Plan +During late 2014, the Committee engaged +Radford, an Aon Hewitt Company, to conduct an assessment of the Company’s executive compensation program, including a review of executive base salaries, short-term incentive opportunities, and long-term incentives and pay mix as compared to the +competitive market. Following receipt of Radford’s report in March 2015, the Committee approved the Senior Executive Short-Term Incentive Plan (the “STIP”), which replaced the Company’s prior Domestic and International Branch +Plans for the fiscal year beginning February 1, 2015. Participants in the STIP (which may include any executive officer, vice president or director level manager) are determined annually by the Committee. Awards under the STIP are earned based +on achieving or exceeding annual financial objectives (“Performance Goals”). The Committee has full discretion to establish the Performance Goals for any plan year. In March 2016, the Committee established Performance Goals for fiscal year +2017 of Consolidated Net Sales of $110,000,000, Consolidated Operating Income of $9,000,000 and Economic Value Added, which is defined as Net Operating Profit after Taxes – [Capital × Cost of Capital]) (“EVA”), of $1,635,000. +17 +Annually, the Committee establishes a Target Award for each STIP participant, which may vary +as to each participant and from year to year. For fiscal year 2017, the Committee established the following Target Awards for our Named Executive Officers: +Name +Target Award ($) +Gregory A. Woods +278,100 +Joseph P. O’Connell +103,000 +Michael Morawetz +65,847 +Stephen M. Petrarca +42,307 +Michael J. Natalizia +39,629 +The Committee allocated the +Target Awards to the fiscal year 2017 Performance Goals as follows: +• +40% of the Target Awards are tied to achievement of the Consolidated Net Sales Performance Goal; +• +55% of the Target Awards are tied to the achievement of the Consolidated Operating Income Performance Goal; and +• +5% of the Target Awards are tied to the achievement of the EVA Performance Goal. +Performance with respect to each specific Performance Goal is +calculated independently to determine the amount of the award for each Performance Goal (each, an “Award Component”). The total STIP award earned by a participant for a plan year is equal to the sum of the separate Award Components +determined for each Performance Goal. Each Award Component is independently adjusted by an “Adjustment Factor” as follows: +• +For the Consolidated Net Sales Performance Goal: +• +If the Company’s fiscal year 2017 Consolidated Net Sales exceed the Consolidated Net Sales Performance Goal, the Adjustment Factor for the +Consolidated Net Sales Performance Goal would be 1 plus 16.66 2 / 3 % for each $1 million by which Consolidated Net Sales exceeds the Consolidated Net Sales Performance Goal, up to a maximum +bonus of 250% of the Target Award tied to achievement of the Consolidated Net Sales Performance Goal. For example, if actual fiscal year 2017 Consolidated Net Sales exceeds the Consolidated Net Sales Performance Goal by $2 million, the Adjustment +Factor for that Award Component would be increased by 33.33 1 / 3 % to 1.33 1 / 3 . +• +If the Company’s fiscal year 2017 Consolidated Net Sales are less than the Consolidated Net Sales Performance Goal, the Adjustment Factor is 1 +minus 16.66 2 / 3 % for each $1 million by which Consolidated Net Sales is less than the Consolidated Net Sales Performance Goal. For example, if actual fiscal year 2017 Consolidated Net Sales is $2 million less than the +Consolidated Net Sales Performance Goal, the Adjustment Factor for that Award Component would be reduced by 33.33 1 / 3 % to +66.66 2 / 3 . +• +For the Consolidated Operating Income Performance Goal: +• +If the Company’s fiscal year 2017 Consolidated Operating Income exceeds the Consolidated Operating Income Performance Goal, the Adjustment Factor +for the Consolidated Operating Income Performance Goal would be 1 plus 10% for each one percent by which Consolidated Operating Income exceeds the Consolidated Operating Income Performance Goal, up to a maximum bonus of 250% of the Target Award tied +to achievement of the Consolidated Operating Income Performance Goal. For example, if actual fiscal year 2017 Consolidated Operating Income exceeds the +18 +Consolidated Operating Income Performance Goal by 4%, the Adjustment Factor for that Award Component would be increased by 40% to 1.4. +• +If the Company’s fiscal year 2017 Consolidated Operating Income is less than the Consolidated Operating Income Performance Goal, the Adjustment +Factor for the Consolidated Operating Income Performance Goal would be 1 minus 10% for each one percent by which Consolidated Operating Income is less than the Consolidated Operating Income Performance Goal. For example, if actual fiscal year 2017 +Consolidated Operating Income is 4% less than the Consolidated Operating Income Performance Goal, the Adjustment Factor for that Award Component would be decreased by 40% to 0.6. +• +The Award Component related to the EVA Performance Goal is not subject to an Adjustment Factor and is only paid if the Company’s 2017 EVA equals +or exceeds the EVA Performance Goal. +Any Adjustment Factor relating to the Consolidated Net Sales Performance Goal or the Consolidated Operating Income Performance Goal will be subject to linear interpolation to reflect achievements between +$1 million or 1%, respectively. +A participant’s STIP award is subject to the following limitations: +• +Aggregate awards under the STIP in any year may not exceed 15% of the Company’s Consolidated Operating Income for that year determined without +deduction for the STIP awards. +• +If the EVA Performance Goal is less than $1 million for any plan year, the maximum award to a participant that year may not exceed two (2) times +the participant’s Target Award. +• +Adequate reserves for awards must be accrued when determining whether a Performance Goal based upon operating income has been achieved. +Based on the Company’s +results for fiscal year 2017, the Award Components were as follows: +Performance Goal +Target ($) +Actual +Performance +($) +Adjustment +Factor +Consolidated Net Sales +110,000,000 +98,448,000 +— +Consolidated Operating Income +9,000,000 +6,281,000 +— +EVA +1,635,000 +1,657,000 +n/a +The amount of a +participant’s award under the STIP, if any, will be credited to a book account maintained by the Company (the “Award Bank”). The resultant balance in the participant’s account after crediting the amount of award (the “Bank +Balance”) would then be used to determine the participant’s Payout Amount for the plan year. +The “Payout Amount” is equal to the sum of (i) the lesser of (A) the participant’s actual award for the plan year +or (B) the participant’s Target Award for the plan year (“Base Award”) plus (ii) 30% of the participant’s Bank Balance (after deduction of the amount of the Base Award). Thus, only 30% of the amount in +excess of the Target Award would be paid out currently and 70% of such excess would be “banked” and paid out in subsequent years in accordance with the foregoing formula, provided the participant remains employed with the Company. +19 +For example, if a participant’s Target Award for Year 1 is $45,000 but the actual award +is $55,000, then the Payout Amount for such year would be $48,000 ($45,000 + [30% × $10,000]) and the Bank Balance remaining after the payout would be $7,000. If the participant’s Target Award for Year 2 is $47,000 and the actual award is +$45,000, then the Payout Amount for such year would be $47,100 ($45,000 + [30% × $7,000]) and the Bank Balance remaining after the payout would be $4,900. +The following table sets forth for each of our Named Executive Officers other than Mr. Jordan the amount of the award under the STIP +for fiscal year 2017. Because the awards under the STIP for fiscal year 2017 were lower for each of our Named Executive Officers than their respective Target Awards, the full amount of the fiscal 2017 awards were paid to the Named Executive +Officers, and no amounts were credited to their Bank Balances. +Name +Award Under +the +2017 STIP ($) +Gregory A. Woods +13,905 +Joseph P. O’Connell +3,825 +Michael Morawetz +3,292 +Stephen M. Petrarca +2,115 +Michael J. Natalizia +1,982 +If a participant’s +employment with the Company is terminated for any reason other than death, disability or retirement, then the participant will forfeit any interest in his Bank Balance. A participant’s Bank Balance will vest in full and become immediately +payable in the event of termination of a participant’s employment with the Company due to the participant’s death, disability or retirement. A participant’s Bank Balance will also vest in full and become payable upon a change in +control of the Company. +Long-Term Incentive +Compensation . Total compensation at the executive level also includes long-term incentive awards granted under the Company’s 2007 Equity Incentive Plan and 2015 Equity Incentive Plan. The objectives of the equity +incentive program are to align executive and shareholder long-term interests by creating a strong and direct link between executive pay and total shareholder return, and to enable executives to develop and maintain a long-term stock ownership +position in the Company’s common stock. Prior to fiscal year 2013, all equity awards were in the form of stock options, which were generally granted in March of each year at an exercise price equal to the market price on the date of grant. +Since 2004, all options granted to employees vest in four equal annual installments commencing on the first anniversary of the date of grant. Under the Company’s 2007 Equity Incentive Plan and 2015 Equity Incentive Plan, the Committee may also +make equity awards in the form of restricted stock, restricted units, and performance units in addition to stock options. In fiscal year 2014, the Committee awarded restricted stock units to the Company’s executive officers. Twenty-five percent +of each award was subject to time-based vesting and became vested in April 2016. Vesting of the remaining 75% of each award was contingent upon the Company meeting specified performance goals, with 50% of each award to vest upon the achievement of +cumulative budgeted sales targets for fiscal years 2014 through 2016; and 25% to vest upon the achievement of an average operating income return on net assets (“ORONA”) goal for fiscal years 2014 through 2016. In March 2016, the Committee +determined that the average ORONA goal for fiscal years 2014 through 2016 had been achieved and the corresponding portion of the awards vested upon the filing of the Company’s Annual Report on Form 10-K for fiscal year 2016. +In fiscal year 2016, the Committee adopted its 2015 Long Term +Equity Incentive Program, or the 2015 LTIP. Under the terms of the 2015 LTIP, the Committee granted restricted stock units to the Company’s +20 +executive officers. A portion of the awards issued to each officer were time-based awards, which vest in four equal annual installments commencing on the first anniversary of the date of grant. +The remaining awards may be earned based upon the increase in net sales, if any, achieved in each of the fiscal years 2016, 2017, and 2018 in relation to the Company’s three-year net sales increase goal. To the extent that the Committee +determines that net sales growth in a fiscal year was achieved due to organic growth, any restricted stock units earned as a result will immediately vest, while restricted stock units earned as a result of net sales growth resulting from +acquisitions will vest in three equal annual installments commencing on the first anniversary of the date the Committee determines that the performance goal was achieved. Any performance based restricted stock units that are not earned at the end of +the three-year performance period will be forfeited. In March 2017, the Committee determined that approximately 6.1% of the performance based restricted stock units had been earned based on fiscal 2017 organic net sales growth. No performance based +awards under the 2015 LTIP were earned based on fiscal 2017 net sales growth resulting from acquisitions. +Gregory A. Woods joined the Company as Chief Operating Officer in September 2012 and became Chief Executive Officer on February 1, +2014, upon Everett V. Pizzuti’s retirement. In November 2014, the Company entered into an Equity Incentive Award Agreement with Mr. Woods (the “Equity Agreement”), which provides for grants of equity awards to Mr. Woods that +are intended to enhance his equity ownership, create stronger alignment with shareholder interests, and reward him for driving the long-term growth and profitability of the Company. The Equity Agreement provided that in each of 2015, 2016, and 2017, +the Company would grant to Mr. Woods the following equity awards: +• +an option for 50,000 shares (subject to adjustment in the event of any stock splits, stock dividends or similar changes in capital structure), each +with an exercise price equal to the fair market value of the Company’s common stock as of the grant date of such option; and +• +a restricted stock award with a value equal to the amount (if any) by which the exercise price of such year’s option exceeds $13.80, multiplied by +the number of shares covered by the option granted in such year (initially 50,000, subject to adjustment in the event of any stock splits, stock dividends or similar changes in capital structure). +Each option and restricted stock award under the Equity +Agreement will vest in four equal annual installments commencing on the first anniversary of the grant date for each such award, and all options and restricted stock will vest upon a change in control of the Company. The Equity Agreement provides +that, in the event there is a change in control of the Company prior to June 1, 2018, the Company will pay Mr. Woods an amount equal to (i) the positive difference (if any) between the fair market value of the Company’s common +stock as of the date of the change in control and $13.80 multiplied by (ii) the number of options which the Company remains obligated to grant under the Equity Agreement. +In connection with his appointment as the Company’s Vice +President, Chief Financial Officer, and Treasurer on August 1, 2016, Mr. Jordan was granted an option to purchase 5,000 shares of the Company’s common stock, subject to vesting in four equal annual installments commencing on +August 1, 2017. +Share Ownership and +Retention Guidelines . The Committee believes that senior management should have a meaningful equity interest in the Company. In order to promote equity ownership and further align the interests of management with our +shareholders, the Board has adopted share ownership and retention guidelines for our executives. These guidelines are based upon the market value of our common stock as a multiple of such officer’s base pay. The multiple is 3 times base salary +for the CEO, 2 times base salary for the Chief Financial +21 +Officer and 1.25 times base salary for the other executive officers. Under these guidelines, an executive is expected to achieve the ownership level within five years from the later of +April 1, 2015 or initial appointment as an executive officer. Executives are expected to retain at least 50% of the shares acquired upon exercise of any stock option (net of any shares tendered upon exercise or sold to pay the option exercise +price) or vesting of restricted stock until they achieve the specified ownership level and thereafter maintain such ownership level. +Retirement and Other Benefits . In order to attract and retain key executives, the Company offers retirement +benefits through a Profit-Sharing Plan for employees, including its executive officers. +Profit Sharing Plan. The Company maintains a Profit Sharing Plan that is qualified plan under Section 401(k) of the Internal Revenue Code, which provides retirement benefits to +substantially all the Company’s employees. Each eligible employee shares in contributions on the basis of relative (limited to $18,000 in 2016) compensation. In addition, participants are permitted to defer up to 50% of their cash compensation +and make contributions of such deferral to this plan through payroll deductions. The Company makes matching contributions equal to 50% of the first seven percent of compensation contributed. The deferrals are made within the limits prescribed by +Section 401(k). The Profit Sharing Plan provides for the vesting of 100% of matching contributions made by the Company to the account of the employee after three years of service. Contributions by an employee are 100% vested immediately. +Employee Stock Ownership Plan. The +Company also has an Employee Stock Ownership Plan (“ESOP”) which provides retirement benefits to substantially all of its employees. Contributions in such amounts as the Board may annually determine are allocated among eligible employees +on the basis of relative (limited to $100,000) compensation. Participants are 100% vested in any and all allocations. Contributions, which may be in cash or stock, are invested by the Plan’s trustee in shares of common stock of the Company. +During fiscal year 2017, the Board of Directors authorized the termination of the ESOP. +Perquisites . In addition to the benefits described above, the Company provides automobile allowances to certain of its executive officers. The amount of any automobile allowance granted to +our Named Executive Officers is reflected in the “All Other Compensation” column of the Summary Compensation Table below. +Change in Control Agreement. In November, 2014, the Company entered into a Change in Control Agreement (the “CIC +Agreement”) with Mr. Woods. The CIC Agreement provides for the payment of severance benefits upon a change in control of the Company if Mr. Woods’ employment is terminated by the Company without cause or by Mr. Woods for +good reason within the period (the “CIC Period”) beginning on the earlier of (i) 180 days prior to the occurrence of the change in control and (ii) the announcement of a transaction expected to result in a change in control, and +ending on the second anniversary of the occurrence of a change in control. Severance payments to Mr. Woods include (i) payment of one and one-half times the sum of (A) his annual salary and (B) the greater of the amount of his +target bonus for the fiscal year in progress or the highest annual bonus paid to him in the prior three years (collectively, “base compensation”), (ii) immediate vesting of all unvested stock options and restricted stock awards, +(iii) continued health coverage for 18 months or until he receives benefits from another employer, if earlier, and (v) reimbursement for outplacement services in an amount not to exceed 17% of his base compensation. If any payment or +benefit under the CIC Agreement or under any other plan or agreement would constitute an “excess parachute payment” within the meaning of Section 280G of the Internal Revenue Code, and if Mr. Woods would be in a better after-tax +position by reducing such payments or benefits, the amounts payable under the CIC Agreement will be reduced to the extent necessary to avoid the excise tax payable under Section 280G. +22 +Employment Agreements and Severance Benefits . In November 2014, in order to +comply with certain legal requirements, the Company entered into an Employment Agreement with Michael Morawetz, Vice President-International Branches, as the general manager of its German subsidiary. The employment agreement can be terminated on six +months’ notice and provides that in the event of the termination of his employment by the Company without cause, Mr. Morawetz will receive severance equal to one month’s salary for each year of his employment. Other than the contract +with Mr. Morawetz, we have no employment agreements with any of our executive officers. Except for the Morawetz Employment Agreement and the CIC Agreement with Mr. Woods, we generally do not provide any severance benefits to our executives +other than those provided to all employees. Severance benefits will vary based upon salary levels and length of service. +COMPENSATION COMMITTEE REPORT +The Compensation Committee has reviewed and discussed with management the Compensation Discussion & Analysis included above. +Based on these reviews and discussions, the Compensation Committee has recommended to the Board that the Compensation Discussion & Analysis be included in the Company’s Annual Report on Form 10-K for the fiscal year ended +January 31, 2017 for filing with the SEC through incorporation by reference of this Proxy Statement. +Compensation Committee: +Mitchell I. Quain (Chairman) +Graeme MacLetchie +Harold Schofield +Hermann Viets, Ph.D. +23 +EXECUTIVE COMPENSATION +The following table provides information regarding the total compensation paid or accrued by the Company to +each of its Chief Executive Officer (“CEO”), its Chief Financial Officer (“CFO”), its former CFO, and its three most highly compensated executive officers other than the CEO, CFO, and former CFO for the fiscal year ended +January 31, 2017 (collectively, the “Named Executive Officers”). +Summary Compensation Table +Name and Principal Position +Year +Salary +($) +Stock +Awards($)(a) +Option +Awards +($)(b) +Non-Equity +Incentive Plan +Compensation +($)(c) +All Other +Compensation +($) +Total +($) +Gregory A. Woods +2017 +368,930 +60,490 +(d) +143,175 +13,905 +69,952 +(e) +656,452 +President and CEO +2016 +342,346 +1,488,544 +121,324 +150,626 +55,631 +2,158,471 +2015 +287,796 +— +142,130 +182,120 +54,010 +666,056 +John P. Jordan +Vice President, CFO, +and Treasurer +2017 +112,500 +— +18,345 +5,000 +6,722 +(f) +142,567 +Joseph P. O’Connell +2017 +191,254 +— +— +3,825 +60,792 +(g) +255,871 +Former CFO +2016 +247,668 +398,725 +— +57,461 +39,913 +743,767 +2015 +235,275 +— +21,956 +80,984 +38,979 +377,194 +Michael Morawetz +2017 +183,837 +— +— +3,292 +14,566 +(h) +201,695 +(i) +Vice President – +2016 +179,084 +185,067 +— +34,318 +14,952 +413,421 +International Branches +2015 +206,690 +— +13,759 +7,574 +13,991 +242,014 +Stephen M. Petrarca +2017 +168,377 +— +— +2,115 +24,192 +(j) +194,684 +Vice President – Operations +Michael J. Natalizia +2017 +157,717 +— +— +1,982 +21,409 +(k) +181,108 +Vice President and +Chief Technology Officer +(a) +The amounts reflect the aggregate fair value of the awards on the grant date under FASB ASC Topic 718 for restricted stock units and restricted stock awards granted to +the Named Executive Officers. Under FASB ASC Topic 718, the grant date fair value of each restricted stock unit and restricted stock award is equal to the closing price of our common stock on the grant date. +(b) +The amounts reflect the aggregate fair value of the awards on the grant date under FASB ASC Topic 718 for stock options granted to the Named Executive Officers. +Assumptions used in the calculation of these amounts are included in footnote 11 to the Company’s audited financial statements for the fiscal year ended January 31, 2017, included in the Company’s Annual Report on Form 10-K filed with +the SEC on April 7, 2017. +(c) +Except with respect to Mr. Jordan, reflects cash awards under the Company’s Senior Executive Short-Term Incentive Plan which is discussed in +further detail under the heading “Compensation Discussion and +24 +Analysis” above. With respect to Mr. Jordan, reflects amount paid to Mr. Jordan as an incentive bonus on the one-month anniversary of this appointment as the Company’s Vice +President, CFO and Treasurer. +(d) +Value represents grant date fair value of 4,030 shares of restricted stock, which will vest in four equal annual installments. +(e) +Includes pay-out of unused vacation of $31,613, automobile allowance of $32,117, and an employer match under the Profit Sharing Plan of $6,222. +(f) +Includes automobile allowance of $6,000 and an employer match under the Profit Sharing Plan of $722. +(g) +Includes pay-out of unused vacation of $17,387, automobile allowance of $39,058, and an employer match under the Profit Sharing Plan of $4,347. +(h) +Represents automobile allowance. +(i) +Payments are made to Mr. Morawetz’s in the euro currency and was converted to U.S. dollars at the exchange rate as of January 31, 2017, which was +€1:$1.0731. +(j) +Includes pay-out of unused vacation of $18,658 and an employer match under the Profit Sharing Plan of $5,534. +(k) +Includes pay-out of unused vacation of $15,038 and an employer match under the Profit Sharing Plan of $6,371. +25 +Outstanding Equity Awards at Fiscal Year-End +The following table provides information on all outstanding +equity awards held by each of the Named Executive Officers as of January 31, 2017. +OPTION AWARDS +STOCK AWARDS +Name +Number of +Securities +Underlying +Unexercised +Options (#) +Exercisable +Number of +Securities +Underlying +Unexercised +Options (#) +Unexercisable +Option +Exercise +Price +($) +Option +Expiration +Date(a) +Number of +Shares or +Units of +Stock That +Have Not +Vested (#) +Market +Value of +Shares or +Units of +Stock That +Have Not +Vested +($) +Equity +Incentive +Plan +Awards: +Number of +Unearned +Shares, +Units or +Other +Rights That +Have +Not +Vested (#)(c) +Equity +Incentive +Plan +Awards: +Market or +Payout +Value of +Unearned +Shares, +Units +or +Other +Rights That +Have Not +Vested ($) +Gregory A. Woods +25,000 +— +7.9100 +9/4/22 +25,000 +25,000 +13.8000 +5/22/24 +12,500 +37,500 +13.9540 +3/16/25 +— +50,000 +15.0100 +3/14/26 +27,693 +(b) +383,825 +67,350 +933,471 +John P. Jordan +5,000 +5,000 +15.6300 +8/1/26 +Joseph P. O’Connell +10,000 +— +11.4450 +4/12/17 +4,800 +— +7.3600 +3/15/20 +5,175 +— +8.3500 +3/29/22 +3,750 +3,750 +14.2000 +3/17/24 +9,380 +(d) +130,007 +14,368 +199,140 +Michael Morawetz +3,500 +— +11.4450 +4/12/17 +837 +— +8.3500 +3/29/22 +2,350 +2,350 +14.2000 +3/17/24 +3,927 +(e) +54,428 +7,184 +99,570 +Stephen M. Petrarca +6,500 +— +11.4450 +4/12/17 +844 +— +8.3500 +3/29/22 +2,300 +2,300 +14.2000 +3/17/24 +3,505 +(f) +48,579 +7,184 +99,570 +Michael J. Natalizia +1,600 +— +11.8950 +3/26/17 +1,000 +— +8.9500 +4/1/18 +1,000 +— +6.2200 +3/18/19 +1,000 +— +7.3600 +3/15/20 +1,000 +— +7.9500 +3/14/21 +3,575 +— +8.3500 +3/29/22 +2,500 +2,500 +14.2000 +3/17/24 +3,285 +(g) +45,530 +7,184 +99,570 +(a) +Options vest in four equal annual installments commencing on the first anniversary of the option grant date (which is ten years prior to the expiration date). +(b) +Consists of (i) 134 shares of restricted stock that vested on March 16, 2017; (ii) 268 shares of restricted stock that will vest in equal tranches on +March 16, 2018 and 2019; (iii) 22,810 restricted stock units that will vest in equal tranches on May 20, 2017, 2018, and 2019; (iv) 1,008 shares of restricted stock that vested on March 14, 2017; (v) 3,022 shares of +restricted stock that will vest in tranches of 1,008 shares, 1,007 shares and 1,007 shares on March 14, 2018, 2019 and 2020, respectively; (vi) 151 restricted stock units that vested on March 14, 2017; and (viii) 300 restricted +stock units that will vest in two equal tranches on March 14, 2018 and 2019. +(c) +Includes performance-based restricted stock units held by the Named Executive Officers other than Mr. Jordan, which may be earned based upon the +increase in net sales, if any, achieved in each of fiscal years 2016, 2017, and 2018 relative to a three-year net sales increase goal. Shares earned based on organic revenue growth are fully vested when earned, while those earned based on revenue +growth via acquisitions will vest annually over a three-year period following the fiscal year in which the revenue growth occurs. On March 13, +26 +2017, the Compensation Committee determined that a portion of the shares were earned by the Named Executive Officers based upon organic revenue growth. The total number of these performance-based +restricted stock units held by each Named Executive Officer as of January 31, 2017 and the number of shares earned based on fiscal year 2017 net sales are as follows: +Name +Performance-based Restricted Stock Units +held as of January 31, +2017 +Shares Earned based on Organic Revenue +Growth during Fiscal +2017 +Mr. Woods +67,350 +4,606 +Mr. Jordan +— +— +Mr. O’Connell +14,368 +982 +Mr. Morawetz +7,184 +491 +Mr. Petrarca +7,184 +491 +Mr. Natalizia +7,184 +491 +(d) +Consists of (i) 9,284 restricted stock units that will vest in three equal tranches on May 20, 2017, 2018, and 2019; (ii) 32 restricted stock units that +vested on March 14, 2017; and (iii) 64 restricted stock units that will vest in equal tranches on March 14, 2018, and 2019. +(e) +Consists of (i) 3,879 restricted stock units that will vest in three equal tranches on May 20, 2017, 2018, and 2019; (ii) 16 restricted stock units that +vested on March 14, 2017; and (iii) 32 restricted stock units that will vest in equal tranches on March 14, 2018 and 2019. +(f) +Consists of (i) 3,457 restricted stock units that will vest in three equal tranches on May 20, 2017, 2018, and 2019; (ii) 16 restricted stock units that +vested on March 14, 2017; and (iii) 32 restricted stock units that will vest in equal tranches on March 14, 2018 and 2019. +(g) +Consists of (i) 3,237 restricted stock units that will vest in three equal tranches on May 20, 2017, 2018, and 2019; (ii) 16 restricted stock units that +vested on March 14, 2017; and (iii) 32 restricted stock units that will vest in equal tranches on March 14, 2018 and 2019. +27 +Grants of Plan Based Awards +The following table provides information on all plan-based awards by the Company for the fiscal year ended +January 31, 2017 to each Named Executive Officer. +Name +Grant +Date +Estimated Possible +Payouts +Under Non-Equity Incentive Plan +Awards +All Other +Stock +Awards: +Number of +Shares of +Stock or +Units +(#) +All Other +Option +Awards: +Number +of +Securities +Underlying +Options (#) +Exercise +or Base +Price of +Option +Awards +($/Sh) +Grant +Date Fair +Value +of +Stock and +Option +Awards ($)(c) +Threshold +($)(a)(b) +Target +($)(a) +Maximum +($)(a) +Gregory A. Woods +3/14/2016 +4,030 +(d) +60,490 +3/14/2016 +50,000 +(e) +15.01 +143,175 +278,100 +674,393 +John P. Jordan +5,000 +5,000 +5,000 +8/1/2016 +5,000 +(f) +15.63 +18,345 +Joseph P. O’Connell +103,000 +249,775 +Michael Morawetz +65,847 +159,679 +Stephen M. Petrarca +42,307 +102,595 +Michael J. Natalizia +39,629 +96,100 +(a) +Other than with respect to Mr. Jordan, represents awards under the Company’s Short-Term Incentive Plan. See “Compensation Discussion & Analysis +– Short-Term Incentive Plan” for additional information regarding the Short-Term Incentive Plan. With respect to Mr. Jordan, represents a cash bonus payable upon the one-month anniversary of Mr. Jordan’s appointment as the +Company’s’ Vice President, CFO, and Treasurer. +(b) +The Company’s Short-Term Incentive Plan does not provide for any threshold payment amount for amounts that may be earned with respect to the Consolidated Net Sales +Goal or 2017 Consolidated Operating Income Goal. Amounts that may be earned with respect to the EVA Performance Goal are not subject to an Adjustment Factor and are paid only if the EVA Performance Goal is achieved. The amounts allocated under the +Short-Term Incentive Plan to achievement of the EVA Performance Goal for each of our NEOs other than Mr. Jordan, who did not participate in the Short-Term Incentive Plan for fiscal year 2017, are as follows: Mr. Woods – $13,905; +Mr. O’Connell – $5,150; Mr. Morawetz – $3,292; Mr. Petrarca – $2,115; and Mr. Natalizia – $1,982. +(c) +The grant date fair value of each restricted stock unit and restricted stock award is equal to the closing price of our common stock on the grant date. The assumptions +used in the calculation of the grant date fair value of option awards are included in footnote 11 to the Company’s audited financial statements for the fiscal year ended January 31, 2017, included in the Company’s Annual Report on +Form 10-K filed with the SEC on April 7, 2017. +(d) +Consists of shares of restricted stock issued pursuant to the Company’s 2007 Equity Incentive Plan, which will vest in four equal annual installments commencing on +the first anniversary of the grant date. +(e) +Consists of an option award issued pursuant to the Company’s 2007 Equity Incentive Plan, which will vest in four equal annual installments commencing on the first +anniversary of the grant date. +(f) +Consists of an option award issued pursuant to the Company’s 2015 Equity Incentive Plan, which will vest in four equal annual installments commencing on the first +anniversary of the grant date. +28 +Option Exercises and Stock Vested +The following table provides information on all exercises of +options by the Named Executive Officers and vesting of restricted stock awards during the fiscal year ended January 31, 2017. +Option Awards +Stock Awards +Name +Number of +Shares Acquired +on Exercise (#) +Value Realized +on Exercise ($)(a) +Number of +Shares Acquired +on Vesting (#) +Value Realized +On Vesting ($)(b) +Gregory A. Woods +25,000 +170,125 +31,187 +459,652 +John P. Jordan +— +— +— +— +Joseph P. O’Connell +5,375 +34,669 +8,381 +119,645 +Michael Morawetz +— +— +4,011 +57,094 +Stephen M. Petrarca +12,406 +95,982 +3,720 +52,977 +Michael J. Natalizia +— +— +3,847 +54,621 +(a) +Based on the difference between the closing market price of the Company’s common stock on the date of exercise and option exercise price. +(b) +The amounts shown are calculated based on the closing market price of the Company’s common stock on the date of vesting multiplied by the number of shares or +restricted stock units that vested. +Potential Payments upon Termination or Change-in-Control +The following table provides information regarding the +estimated amounts payable to Mr. Woods pursuant to the CIC Agreement and Mr. Morawetz pursuant to his employment agreement with the Company, in each case assuming that the trigger event occurred on January 31, 2017, the last day of +the Company’s most recently completed fiscal year. The amounts shown as payable upon the triggering events described do not include amounts earned by the individual and accrued before the occurrence of the triggering event but payable after the +triggering event, such as accrued and unpaid salary or the value of accrued but unused paid-time-off. +Name and Trigger Event +Cash ($) +Equity ($) +Perquisites/ +Benefits ($) +Total ($) +Gregory A. Woods +976,350 +1,261,208 +(a) +157,911 +(b) +2,395,469 +Termination of Mr. Woods’ employment during the CIC Period by the Company without cause or by Mr. Woods for +good reason +Michael Morawetz +517,374 +— +— +517,374 +Termination of Mr. Morawetz’s employment by the Company without cause +(a) +Represents the value attributable to the acceleration of vesting of (i) in-the-money options to purchase 25,000 shares of common stock, which is equal to the +difference between the applicable option exercise price and the closing price of the Company’s common stock as reported by the NASDAQ Global Market on January 31, 2017, multiplied by the number of shares underlying the options, and +(ii) 90,888 restricted stock awards and units, which is equal to the closing price of the Company’s common stock on January 31, 2017, multiplied by the number of restricted stock awards and units for which vesting would be +accelerated. +(b) +Value represents $47,598 attributable to the cost of continuing health benefits and $110,313 in costs for outplacement services. +29 +Risk Related to Compensation Policies +The Company’s compensation policies and practices for +its employees, including its executive compensation program described in Compensation Discussion and Analysis, aim to provide a risk-balanced compensation package which is competitive in our market sectors and relevant to the individual executive. +Pursuant to STIP and LTIP, the Company expects to continue to award to certain executives and employees, upon satisfaction of applicable performance conditions and subject to future approval and grant by the Compensation Committee, equity and +cash-based awards. Because the STIP and LTIP provide for a blend of short-term and long-term goals, and include substantial vesting features, the Company believes that the structure of its compensation plans discourages short-term risk taking and +aligns the interest of its executives and managers with those of its shareholders. The Company does not believe that risks arising from these practices, or its compensation policies and practices considered as a whole, are reasonably likely to have +a material adverse effect on the Company. +RELATED PARTY TRANSACTIONS +Potential conflicts of interest and related party transactions are referred by the Board to the Audit Committee for review and approval. +In reviewing and evaluating potential conflicts of interest and related party transactions, the Audit Committee uses applicable NASDAQ listing standards and SEC rules as a guide. +Other than as described below, no officer, director or +nominee for director of the Company or any associate of any of the foregoing had during the fiscal year ended January 31, 2017 any material interest, direct or indirect, in any material transaction or any material proposed transaction in which +the amount exceeds $120,000 and to which the Company was or is to be a party. +The Company employs two sons of Everett V. Pizzuti, to both of whom the Company paid or accrued over $120,000 in compensation during the fiscal year ended January 31, 2017: Eric Pizzuti, as Vice +President and General Manager, Product Identification, and Christopher Pizzuti, as a Product Identification Field Sales Engineer. The Company paid Eric Pizzuti $146,301 in salary and bonus and paid Christopher Pizzuti $136,100 in salary and sales +commissions. Eric Pizzuti also received a matching contribution to his Profit Sharing Plan account of $6,130. Christopher Pizzuti also received an automobile allowance of $7,500, a vacation payout of $3,358, and a matching contribution to his Profit +Sharing Plan account of $732. +30 +EQUITY COMPENSATION PLAN INFORMATION +The following table sets forth information about the +Company’s equity compensation plans as of January 31, 2017: +Plan Category +Number of Securities to +be Issued Upon Exercise +of Outstanding Options, +Warrants and +Rights +Weighted- +Average Exercise +Price of +Outstanding +Options, +Warrants +and +Rights +Number of Securities +Remaining Available for +Future Issuance Under +Equity +Compensation +Plans +Equity Compensation Plans Approved by Shareholders +841,250 +(1) +$ +11.96 +(2) +285,200 +(3) +Equity Compensation Plans Not Approved by Shareholders +— +— +— +Total +841,250 +(1) +$ +11.96 +(2) +285,200 +(1) +Includes 30,700 shares issuable upon exercise of outstanding options granted under the Company’s 1997 incentive stock option plan; 26,500 shares issuable upon +exercise of outstanding options granted under the Company’s 1998 non-qualified stock option plan; 526,456 shares issuable upon exercise of outstanding options granted under the Company’s 2007 Equity Incentive Plan; and 101,800 shares +issuable upon exercise of outstanding options granted and 189,794 restricted stock units outstanding under the Company’s 2015 Equity Incentive Plan. Refer to footnote 11 to the Company’s audited financial statements for the fiscal year +ended January 31, 2017 included in the Company’s Annual Report on Form 10-K filed with the SEC on April 7, 2017 for further discussion. +(2) +Does not include restricted stock units. +(3) +Represents 239,976 shares available for grant under the AstroNova, Inc. 2007 and 2015 Equity Incentive Plans and 45,224 shares available for issuance under the +Company’s Employee Stock Purchase Plan. This balance does not include 24,073 shares issued pursuant to outstanding unvested restricted stock awards which are subject to forfeiture. +PROPOSAL NO. 2 +ADVISORY VOTE ON EXECUTIVE COMPENSATION +As required by the Section 14A(a)(2) of the Exchange Act, the Board is providing shareholders with the opportunity to cast an +advisory vote on the Company’s executive compensation at the annual meeting through the following resolution: +“RESOLVED, that the shareholders approve the Company’s executive compensation, as described in the Compensation Discussion and +Analysis and the tabular disclosure regarding Named Executive Officer compensation (together with the accompanying narrative disclosure) in this Proxy Statement.” +The Board believes that the Company’s compensation +policies and procedures, which are described more fully in the “Compensation Discussion and Analysis” section of this Proxy Statement and in the tables and narrative in the “Executive Compensation” section, are strongly aligned +with the long-term interests of shareholders. These policies and procedures balance short-term and longer-term compensation opportunities to ensure that the Company meets short-term objectives while continuing to produce value for our shareholders +over the long term. +31 +Approval of this proposal requires the affirmative vote of a majority of the shares of +common stock represented in person or by proxy at the annual meeting. This vote will not be binding on or overrule any decisions by the Board or any committee thereof, will not create or imply any additional fiduciary duty on the part of the Board, +and will not restrict or limit the ability of the Company’s shareholders to make proposals for inclusion in proxy materials related to executive compensation. However, the Compensation Committee and the Board will take into account the outcome +of the vote when considering future executive compensation arrangements. +The Board recommends a vote “FOR” approval of the Company’s executive compensation, as described in the Compensation Discussion and Analysis, and the tabular disclosure regarding Named +Executive Officer compensation (together with accompanying narrative disclosure) in this Proxy Statement. +AUDIT COMMITTEE REPORT +The Audit Committee of the Board is responsible for providing independent, objective oversight of the Company’s accounting functions +and internal controls. The Audit Committee is composed of three directors, each of whom is independent as defined by the NASDAQ listing standards and SEC rules. The Audit Committee operates under a written charter approved by the Board. +Management is responsible for the Company’s internal +controls and financial reporting process. The independent accountants are responsible for performing an independent audit of the Company’s consolidated financial statements in accordance with generally accepted auditing standards and issuing a +report thereon. The Audit Committee’s responsibility is to monitor and oversee these processes. +The Audit Committee’s responsibilities focus on two primary areas: (1) the adequacy of the Company’s internal controls and +financial reporting process and the reliability of the Company’s financial statements; and (2) the independence and performance of the Company’s independent accountants. The Audit Committee has sole authority to select, evaluate and +when appropriate, to replace the Company’s independent auditors. +The Audit Committee has met with management and the Company’s independent accountants, Wolf & Company, P.C., to review and discuss the January 31, 2017 financial statements. Management +represented to the Committee that the Company’s consolidated financial statements were prepared in accordance with generally accepted accounting principles, and the Audit Committee has reviewed and discussed the consolidated financial +statements with management and the independent accountants. The Audit Committee also discussed with Wolf & Company, P.C. the matters required by Auditing Standard No. 16 ( Communication with Audit Committees ) issued by the Public +Company Accounting Board. The Audit Committee also received from Wolf & Company, P.C. the written disclosures and the letter from Wolf & Company, P.C. pursuant to applicable requirements of the Public Company Accounting Oversight +Board regarding Wolf & Company, P.C.’s communications with the Audit Committee concerning independence, and has discussed with Wolf & Company, P.C. its independence from the Company. +The Audit Committee received the information concerning the +fees of Wolf & Company, P.C. for the year ended January 31, 2017 set forth below under “Independent Accountant Fees and Services.” When applicable, the Audit Committee considers whether the provision of non-audit services is +compatible with maintaining the independence of the independent accountants. Wolf & Company, P.C. did not provide any non-audit services during the fiscal year ended January 31, 2017. +32 +Based upon the review and discussions referred to above, the Audit Committee recommended +that the Board include the audited consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended January 31, 2017, to be filed with the SEC. +Audit Committee: +Graeme MacLetchie (Chairman) +Harold Schofield +Mitchell I. Quain +PROPOSAL NO. 3 +RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC +ACCOUNTING FIRM +The Audit Committee has sole authority to select, evaluate and when appropriate, to replace the Company’s independent auditors. The Audit Committee has appointed Wolf & Company, P.C. as the +Company’s independent registered public accounting firm for the fiscal year ending January 31, 2018. Although action by the Company’s shareholders on this matter is not required, the Audit Committee believes it is appropriate to seek +shareholder ratification in light of the critical role played by the independent auditors in maintaining the integrity of Company financial controls and reporting and hereby requests the shareholders to ratify such appointment. +Approval of this proposal requires the affirmative vote of a +majority of the shares of common stock represented in person or by proxy at the annual meeting. +The Board of Directors recommends a vote “FOR” the ratification of the appointment of Wolf & Company, P.C. as the Company’s independent registered public accounting firm for the +fiscal year ending January 31, 2018. +Independent +Accountants’ Fees, Services and Other Matters +The Company expects a representative of Wolf & Company, P.C. will be present at the annual meeting with the opportunity to make a statement, if he or she so desires, and that such representative +will be available to respond to appropriate questions. +Aggregate fees for professional services rendered for the Company by Wolf & Company, P.C. for the fiscal years ended January 31, 2017 and 2016 are set forth below. The aggregate fees +included in the “Audit Fees” category are billed for the fiscal years for the audit of the Company’s annual financial statements and review of financial statements and statutory and regulatory filings or engagements. +2017 +2016 +Audit Fees +$ +205,000 +$ +180,000 +Audit-Related Fees +— +— +Tax Fees +— +— +All Other Fees +— +— +Audit Fees for the +fiscal years ended January 31, 2017 and 2016 were for professional services rendered for the audits of the financial statements of the Company, quarterly review of the financial statements included in the +33 +Company’s Quarterly Reports on Form 10-Q, consents and other assistance required to complete the year end audit of the consolidated financial statements. +Policy on Audit Committee Pre-Approval . The Audit +Committee pre-approves all audit and non-audit services provided by the independent accountants prior to the engagement of the independent accountants with respect to such services. None of the services described above were approved by the Audit +Committee under the de minimis exception provided by Rule 2-01(C)(7)(i)(c) under Regulation S-X. +FINANCIAL REPORTS +A copy of the annual report of the Company for the fiscal year ended January 31, 2017, including the Company’s annual report to +the SEC on Form 10-K, accompanies this proxy statement. Such report is not part of this proxy statement. +PROPOSALS FOR 2018 ANNUAL MEETING +The 2018 annual meeting of the shareholders of the Company is scheduled to be held on May 15, 2018. If a shareholder intending to +present a proposal at that meeting wishes to have such proposal included in the Company’s proxy statement and form of proxy relating to the meeting, the shareholder must submit the proposal to the Company no later than December 19, 2017. +Shareholder proposals that are to be considered at the 2018 annual meeting but not requested to be included in the proxy statement must be submitted no later than March 16, 2018 and no earlier than December 16, 2017. +OTHER MATTERS +No business other than that set forth in the attached Notice +of Meeting is expected to come before the annual meeting, but should any other matters requiring a vote of shareholders arise, including a question of adjourning the meeting, the persons named in the accompanying proxy will vote thereon according to +their best judgment in the interests of the Company. In the event any of the nominees for the office of director should withdraw or otherwise become unavailable for reasons not presently known, the persons named as proxies will vote for other +persons in their place in what they consider the best interests of the Company. +You are urged to sign and return your proxy promptly to make certain your shares will be voted at the meeting. You may revoke your proxy at any time before it is voted. +By Order of the Board of Directors +Peter M. Rosenblum +Secretary +34 +VOTE BY INTERNET - www.proxyvote.com +Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before +the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. +ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS +If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy +statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or +access proxy materials electronically in future years. +VOTE BY PHONE - 1-800-690-6903 +Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting +date. Have your proxy card in hand when you call and then follow the instructions. +VOTE BY MAIL +Mark, sign and +date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. +TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS +FOLLOWS: ☒ +KEEP THIS PORTION FOR YOUR RECORDS +DETACH AND RETURN THIS PORTION ONLY +THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. +The Board of Directors recommends you vote FOR the following: +For +All +Withhold +All +For All +Except +To withhold authority to +vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below. +1. +Election of Directors +☐ +☐ +☐ +Nominees +01) +Graeme MacLetchie +02) April L. Ondis 03) Everett V. +Pizzuti 04) Mitchell I. Quain 05) Harold Schofield +06) +Hermann Viets, Ph.D. 07) Gregory A. Woods +The Board of Directors recommends you vote FOR proposals 2 +and 3. +For +Against +Abstain +2. +To approve on an advisory, non-binding basis, the compensation paid to the Company’s named executive officers, as disclosed in +the proxy statement for the 2017 annual meeting of its shareholders. +☐ +☐ +☐ +3. +Ratify the appointment of Wolf & Company, P.C. as the Company’s independent registered public accounting firm for the fiscal year ending January 31, 2018. +☐ +☐ +☐ +NOTE: In their discretion, upon such other +matters as may properly come before the meeting +For address change/comments, mark here. +(see reverse for instructions) +☐ +Please sign exactly as your name(s) appear(s) hereon. When +signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by +authorized officer. +Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Annual Report, Notice & Proxy Statement is/are +available at www.proxyvote.com +ASTRONOVA, +INC. +Annual Meeting of Shareholders-May 17, +2017 +THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE +COMPANY +The undersigned shareholder of AstroNova, Inc. (the “Company”), whose signature appears on the reverse side of +this proxy, hereby appoints Graeme MacLetchie, April L. Ondis, Everett V. Pizzuti, Mitchell I. Quain, Harold Schofield, Hermann Viets and Gregory A. Woods, and each of them acting singly, as proxies and attorneys with power of substitution and with +all the powers the undersigned would possess if personally present, to vote all shares of the capital stock of the Company that the undersigned is entitled to vote at the Company’s annual meeting of shareholders to be held May 17, 2017, at 600 +East Greenwich Avenue, West Warwick, Rhode Island, and at any adjournments or postponements thereof, as directed with respect to the matters set forth herein and with discretionary authority on all other matters that may properly come before said +meeting, as more fully described in the notice of annual meeting and the related proxy statement, copies of which have been received by the undersigned shareholder. Attendance by the undersigned at the annual meeting or any adjournment or +postponement thereof will not be deemed to revoke this proxy unless the undersigned shall affirmatively indicate the intention of the undersigned to vote the shares represented hereby in person prior to the exercise of this proxy. +THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER +DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE NOMINEES SPECIFIED IN PROPOSAL 1, AND FOR PROPOSALS 2, AND 3 AND IN ACCORDANCE WITH THE JUDGMENT OF THE PROXIES UPON OTHER MATTERS THAT MAY +PROPERLY COME BEFORE SAID MEETING OR ANY ADJOURNMENTS OR POSTPONEMENTS THEREOF. +Address change / comments: +(If you noted any Address Changes and/or Comments above, please mark corresponding box on the reverse side.) +Continued and to be signed on reverse side \ No newline at end of file diff --git a/raw/proxies/0000008146/0001193125-17-122949/proxy_rpt.txt b/raw/proxies/0000008146/0001193125-17-122949/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..f3caf3f68951063a5f0c6a18a26ec1c713a49b7d --- /dev/null +++ b/raw/proxies/0000008146/0001193125-17-122949/proxy_rpt.txt @@ -0,0 +1,11 @@ +RELATED PARTY TRANSACTIONS +Potential conflicts of interest and related party transactions are referred by the Board to the Audit Committee for review and approval. +In reviewing and evaluating potential conflicts of interest and related party transactions, the Audit Committee uses applicable NASDAQ listing standards and SEC rules as a guide. +Other than as described below, no officer, director or +nominee for director of the Company or any associate of any of the foregoing had during the fiscal year ended January 31, 2017 any material interest, direct or indirect, in any material transaction or any material proposed transaction in which +the amount exceeds $120,000 and to which the Company was or is to be a party. +The Company employs two sons of Everett V. Pizzuti, to both of whom the Company paid or accrued over $120,000 in compensation during the fiscal year ended January 31, 2017: Eric Pizzuti, as Vice +President and General Manager, Product Identification, and Christopher Pizzuti, as a Product Identification Field Sales Engineer. The Company paid Eric Pizzuti $146,301 in salary and bonus and paid Christopher Pizzuti $136,100 in salary and sales +commissions. Eric Pizzuti also received a matching contribution to his Profit Sharing Plan account of $6,130. Christopher Pizzuti also received an automobile allowance of $7,500, a vacation payout of $3,358, and a matching contribution to his Profit +Sharing Plan account of $732. +30 \ No newline at end of file diff --git a/raw/proxies/0000008146/0001193125-18-152518/proxy.txt b/raw/proxies/0000008146/0001193125-18-152518/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..4e976e61701119329142852c910986c18d0f4bbe --- /dev/null +++ b/raw/proxies/0000008146/0001193125-18-152518/proxy.txt @@ -0,0 +1,2593 @@ +DEF 14A +1 +d523765ddef14a.htm +DEF 14A +DEF 14A +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Proxy Statement Pursuant to Section 14(a) of the +Securities Exchange Act of 1934 +(Amendment No. ) +Filed by the +Registrant ☒ Filed by a Party other than +the Registrant ☐ +Check the appropriate box: +☐ +Preliminary Proxy Statement +☐ +Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +☒ +Definitive Proxy Statement +☐ +Definitive Additional Materials +☐ +Soliciting Material Pursuant to §240.14a-12 +ASTRONOVA, INC. +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +☒ +No fee required. +☐ +Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. +(1) +Title of each class of securities to which transaction applies: +(2) +Aggregate number of securities to which transaction applies: +(3) +Per unit price or other underlying value of transaction computed pursuant to Exchange Act +Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): +(4) +Proposed maximum aggregate value of transaction: +(5) +Total fee paid: +☐ +Fee paid previously with preliminary materials. +☐ +Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the +offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. +(1) +Amount Previously Paid: +(2) +Form, Schedule or Registration Statement No.: +(3) +Filing Party: +(4) +Date Filed: +AstroNova, Inc. +600 East Greenwich Avenue +West Warwick, Rhode Island 02893 +NOTICE OF ANNUAL MEETING OF SHAREHOLDERS +June 4, 2018 +To the Shareholders of AstroNova, Inc.: +Notice is hereby given that the 2018 Annual Meeting of Shareholders of AstroNova, Inc. (the “Company”) will be held at the offices of the Company, 600 East Greenwich Avenue, West Warwick, Rhode +Island on Monday, June 4, 2018, beginning at 10:00 a.m., for the following purposes: +(1) +To consider and vote upon the election of six directors to serve until the next annual meeting of shareholders or until their successors are elected and have qualified; +(2) +To conduct an advisory vote to approve the Company’s executive compensation; +(3) +To consider and approve the Company’s 2018 Equity Incentive Plan; +(4) +To ratify the appointment of Wolf & Company, P.C. as the Company’s independent registered public accounting firm for the fiscal year ending +January 31, 2019; and +(5) +To transact such other business as may properly come before the meeting. +The close of business on April 9, 2018 has been fixed as +the record date for determining shareholders entitled to attend or vote at the annual meeting or any adjournment thereof. +You may vote on these matters in person or by proxy. Whether or not you plan to attend the meeting, please promptly complete and return +the enclosed proxy card in the enclosed addressed, postage-paid envelope or vote via the Internet or telephone, so that your shares will be represented and voted at the meeting in accordance with your wishes. If you attend the meeting, you may +withdraw your proxy or Internet or telephone vote and vote your shares in person. +By Order of the Board of Directors +Peter M. Rosenblum +Secretary +May 4, 2018 +IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY +MATERIALS FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON JUNE 4, 2018. +The Company’s Proxy Statement, form of proxy card, and Annual Report are available for viewing, printing and downloading at: +http://www.proxydocs.com/ALOT +This website does not use “cookies” to track or identify visitors +AstroNova, Inc. +PROXY STATEMENT +ANNUAL MEETING OF SHAREHOLDERS +June 4, 2018 +The Meeting +The 2018 annual meeting of shareholders of AstroNova, Inc. (the “Company”) will be held at 10:00 a.m., local time, on Monday, +June 4, 2018 at the offices of the Company, 600 East Greenwich Avenue, West Warwick, Rhode Island. At the meeting, shareholders of record on the record date for the meeting who are present or represented by proxy will have the opportunity to +vote on the following matters: +• +the election of six directors to serve until the next annual meeting of shareholders or until their successors are elected and have qualified; +• +the approval, on an advisory, non-binding basis, of the compensation paid to the Company’s Named Executive +Officers, as disclosed in this proxy statement pursuant to Item 402 of Regulation S-K (including in the compensation discussion and analysis, compensation tables, and accompanying narrative disclosures); +• +the approval of the Company’s 2018 Equity Incentive Plan; +• +the ratification of the appointment of Wolf & Company, P.C. as the Company’s independent registered public accounting firm for the fiscal +year ending January 31, 2019; and +• +such other business as may properly come before the meeting. +Solicitation of Proxies +This proxy statement and the accompanying proxy card are +expected to be first sent to shareholders on or about May 4, 2018. +The Board of Directors (the “Board”) of the Company is soliciting proxies in connection with its 2018 annual meeting of shareholders. The Company will bear the cost of such solicitation. It is +expected that the solicitation of proxies will be primarily by mail. Proxies may also be solicited personally by directors, officers, and employees of the Company at nominal cost. The Company may reimburse brokerage houses and other custodians, +nominees and fiduciaries holding stock for others in their names, or in those of their nominees, for their reasonable out-of-pocket expenses in sending proxy material to +their principals or beneficial owners and obtaining their proxies. +The Company has also engaged The Proxy Advisory Group, LLC to assist it with the solicitation of proxies, and provide related advice and informational support, for a services fee, plus customary +disbursements, which, in the aggregate, are not anticipated to exceed $15,000 in total. +Who May Vote +The Board has established April 9, 2018 as the record date for the annual meeting. Only shareholders of record at the close of business as of that date will be entitled to attend or vote at the +annual meeting. On the +record date, there were 6,807,842 shares of common stock of the Company outstanding. There was no other outstanding class of voting securities. +A list of shareholders entitled to vote will be available at +the annual meeting. In addition, you may contact David S. Smith, at the Company’s offices located at 600 East Greenwich Avenue, West Warwick, Rhode Island, to make arrangements to review a copy of the shareholder list at those offices, between +the hours of 9:00 a.m. and 5:00 p.m., local time, on any business day from May 25, 2018 to the time of the annual meeting. +How to Vote +You are entitled to one vote at the meeting for each share of common stock registered in your name at the close of business on the record +date for the meeting. You may vote your shares at the meeting in person or by proxy via mail, the Internet, or the toll-free number (for residents of the United States and Canada) listed on your proxy card. +• +To vote in person , you must attend the meeting, and then complete and submit the ballot provided at the meeting. +• +To vote by proxy by mail , if you received proxy materials by mail and choose to authorize your proxy by mail, simply mark your proxy card, and +then date, sign and return it in the postage-paid envelope provided. If you complete all of the proxy card except the voting instructions, then the designated persons will vote your shares +• +FOR the re-election of each of April L. Ondis, Mitchell I. Quain, Yvonne E. Schlaeppi, Harold +S. Schofield, Richard Warzala and Gregory A. Woods as a director of the Company; +• +FOR the approval, on an advisory, non-binding basis, of the Company’s executive compensation as described +in this proxy statement; +• +FOR the approval of the Company’s 2018 Equity Incentive Plan; and +• +FOR the ratification of the appointment of Wolf & Company, P.C. as the Company’s independent registered public accounting firm for the +fiscal year ending January 31, 2019. +• +To vote by proxy using the Internet , you must access the website for Internet voting at www.proxypush.com/ALOT. Please have the enclosed proxy +card handy when you access the website and follow the on-screen instructions. Internet voting facilities for shareholders of record will be available 24 hours a day until 11:59 p.m. (Eastern time) on +June 3, 2018. If you vote via the Internet, you do not have to return your proxy card via mail. +• +To vote by proxy using the telephone , use any touch-tone telephone and call 866-509-1041 to transmit your voting instructions up until 11:59 +p.m. (Eastern time) on June 3, 2018. Please have the enclosed proxy card handy when you call and then follow the instructions. If you vote via telephone, you do not have to return your proxy card via mail. +If any other business properly comes before the meeting, then +the designated persons will have the discretion, to the extent authorized by applicable rules and regulations, to vote all shares they own or represent by proxy in any manner they deem appropriate. +2 +If you vote by proxy, whether by mail, the Internet or telephone, you may revoke your +proxy at any time before it is exercised by taking one of the following actions: +• +sending written notice to the Company’s Secretary at the address set forth on the notice of meeting appearing on the cover of this proxy +statement; +• +voting again via the Internet or telephone on a later date or properly executing and delivering a later-dated proxy card; or +• +attending the meeting, notifying the Company’s Secretary that you are present, and then voting in person. +Shares Held by Brokers or Nominees +If the shares you own are held in “street name” by +a brokerage firm, your brokerage firm, as the record holder of your shares, is required to vote your shares according to your instructions. In order to vote your shares, you will need to follow the directions your brokerage firm provides you. Many +brokers also offer the option of providing voting instructions to them over the Internet or by telephone, directions for which would be provided by your brokerage firm on your vote instruction form. +Under stock exchange rules applicable to most brokerage +firms, if you do not give instructions to your broker, your broker will be permitted to vote any shares it holds for your account in its discretion with respect to “routine” proposals, but will not be allowed to vote your shares with +respect to “non-routine” proposals. Proposal 1, regarding the election of Directors, Proposal 2, regarding the approval, on an advisory, non-binding basis, +of the Company’s executive compensation, and Proposal 3, regarding the Company’s 2018 Equity Incentive Plan, are “non-routine” proposals. If you do not instruct your broker how to vote with +respect to these proposals, your broker will not vote your shares on them and your shares will be recorded as “broker non-votes” and will not affect the outcome of the vote on those proposals . +“Broker non-votes” are shares that are held in “street name” by a bank or brokerage firm that indicates on its proxy that, while voting in its discretion on one matter, it does not have or +did not exercise discretionary authority to vote on another matter. +Proposal 4, regarding the ratification of Wolf & Company, P.C. as the Company’s independent registered public accounting firm for the fiscal year ending January 31, 2019, is considered +to be a routine item under the applicable rules and your broker will be able to vote on this item even if it does not receive instructions from you, so long as your broker holds your shares in its name. +If a broker or nominee holds shares of common stock in +“street name” for your account, then this proxy statement may have been forwarded to you with a voting instruction card, which allows you to instruct the broker or nominee how to vote your shares on the proposals described herein. To vote +by proxy or instruct your broker how to vote, you should follow the directions provided with the voting instruction card. In order to have your vote counted on Proposal 1, Proposal 2 and Proposal 3, you must either provide timely voting +instructions to your broker or obtain a properly executed proxy from the broker or other record holder of the shares that authorizes you to act on behalf of the record holder with respect to the shares held for your account . +3 +Votes Required to Transact Business at the Meeting +The holders of a majority of the shares entitled to vote, +present in person or represented by proxy, will constitute a quorum for the transaction of business at the meeting. Abstentions and broker non-votes are counted as present and entitled to vote for purposes of +determining a quorum. +If You Receive More Than One Proxy Card +or Voting Instruction Form +If you hold your +shares in multiple accounts or registrations, or in both registered and street name, you will receive a proxy card or voting instruction form for each account. Please sign, date and return all proxy cards you receive from the Company. If you choose +to vote by proxy via the telephone or the Internet, please vote once for each proxy card you receive. Only your latest dated proxy for each account will be voted. +Multiple Shareholders Sharing the Same Address +If you and other residents at your mailing address own +shares of the Company’s common stock through a broker or other nominee, you may have elected to receive only one copy of this proxy statement and the Company’s fiscal year 2018 Annual Report. If you and other residents at your mailing +address own shares of common stock in your own names, you may have received only one copy of this proxy statement and the fiscal year 2018 Annual Report, unless you provided the Company’s transfer agent with contrary instructions. This +practice, known as “householding,” is designed to reduce the Company’s printing and postage costs. You may promptly obtain an additional copy of this proxy statement, enclosed proxy card and our fiscal year 2018 Annual Report by +sending a written request to AstroNova, Inc., attention Investor Relations Department, 600 East Greenwich Avenue, West Warwick, Rhode Island 02893, or by calling the Company’s investor relations department at 617-542-5300. If you hold your shares through a broker or other nominee and wish to discontinue householding or to change your householding election, you may do so by contacting your broker or by calling +(800) 542-1061 or writing to Broadridge Financial Solutions, 51 Mercedes Way, Edgewood, NY 11717. If you hold shares in your own name and wish to discontinue householding or change your householding election, +you may do so by calling (877) 373-6374 or writing to Computershare Investor Services at P.O. Box. 43078, Providence, RI 02940-3078. +Directions to the Company’s Offices +The annual meeting will be held at the Company’s +offices 600 East Greenwich Avenue, West Warwick, Rhode Island. For those planning to attend the annual meeting, directions to our offices can be found under the heading “Contact Us” on our website. +4 +PROPOSAL NO. 1 +ELECTION OF DIRECTORS +At the annual meeting, six directors are to be elected to hold office until the next annual meeting or until their respective successors +are elected and qualified. The persons named in the accompanying proxy, who have been designated by the Board, intend to vote, unless otherwise instructed, for the election to the Board of the persons named below. The biographies below contain +information regarding the person’s service as a director, business experience, director positions held currently or at any time during the last five years, and the experiences, qualifications, attributes or skills that caused the Nominating +Committee and the Board to determine that the person should serve as a director. +THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR EACH OF THE BOARD’S SIX NOMINEES FOR DIRECTOR. +April L. Ondis , 44, has been a director since November +2015. Since January 2017, Ms. Ondis has served as Director of Marketing for Mt. Wachusett Community College. From September 2015 to January 2017, Ms. Ondis served as a Marketing Manager for Crossref, a collaborative reference linking +service operated by Publishers International Linking Associations, Inc. Prior to joining Crossref, Ms. Ondis held a variety of marketing-related positions with the Company, including Applied Marketing Manager from January 2015 to August 2015, +Worldwide Marketing Director from 2005 through December 2014 and Marketing Assistant from 1998 to 2005. We believe that Ms. Ondis’ substantial knowledge of the markets in which the Company operates and extensive knowledge of the +Company’s customer relationships qualify her to serve on our Board. +Mitchell I. Quain , 66, has been a director since August 2011. Mr. Quain has served as a Senior Advisor at Carlyle Group, a private equity firm since December 2011. From January 2010 through +December 2011, Mr. Quain was a Partner at One Equity Partners, a private investment firm. From 2006 through 2009, he was a Senior Director of ACI Capital Corp. From 2002 through 2005, Mr. Quain served as Chairman of Register.Com, Inc., an +internet services provider, and from 1997 to 2001 he was employed with ABN AMRO and its predecessors in several capacities, including Vice Chairman of Investment Banking. Mr. Quain also serves as a director of Hardinge Inc., a global designer, +manufacturer and distributor of machine tools, RBC Bearings, Inc., an international manufacturer and marketer of highly engineered precision plain, roller and ball bearings, Jason Industries, Inc. a manufacturing company operating in the seating, +finishing, acoustics and components businesses, and Xerium Technologies, Inc., a developer of highly engineered products and services. Mr. Quain previously served as a director of DeCrane Aircraft Holdings, Inc., Handy & Harman Ltd., +HEICO Corporation, MagneTek, Inc., Mechanical Dynamics, Inc., Register.com, Inc., Titan International, Inc. and Tecumseh Products Company. We believe that Mr. Quain’s extensive experience in the private equity sector and public company +experience qualify him to serve on our Board. +Yvonne E. Schlaeppi , 58, has been a director since April 2018. Since 2011, Ms. Schlaeppi has served as a Managing Partner of +Stratevise LLC, an international strategic advisory firm that she cofounded. Since 2014, Ms. Schlaeppi has served on the board of directors of Stallergenes Greer plc, a healthcare company traded on the Euronext Paris exchange. From 2014 to +2015, Ms. Schlaeppi served on the boards of directors of allergy immunotherapy companies, Ares Allergy Holdings Inc. and Greer Laboratories, Inc. Since 2015 Ms. Schlaeppi has been a member of the external advisory committee to Channing +Division of Network Medicine of Brigham and Women’s Hospital in Boston. Ms. Schlaeppi was recognized as a Board Leadership Fellow by the National Association of Corporate Directors in 2017. Prior to founding Stratevise, Ms. Schlaeppi +served as General Counsel at +5 +Global Enterprise Technologies, Passport & ID, a high-security document printing solutions provider and systems integrator, from 2007 to 2011 and as Executive Vice President, General +Counsel and Corporate IP Officer at Organon BioSciences, a global pharmaceutical, animal health and biotech group based in the Netherlands, from 2006 to 2007. From 1999 to 2006 Ms. Schlaeppi was a partner at the Boston-based law firm of +Palmer & Dodge LLP, where she served as Chairperson of that firm’s International Practice Group. From 1995 to 1998 Ms. Schlaeppi served in senior positions at Johnson Controls, Inc., a NYSE-listed diversified industrial company, +including as General Counsel Europe. We believe that Ms. Schlaeppi’s extensive experience in international business and corporate governance, as well as relevant industry experience, qualify her to serve on our Board. +Harold Schofield , 76, has been the owner and manager +of Schofield Imaging Associates, LLC, in Narragansett, Rhode Island since 2004, and, since January 2017, has served as interim chief executive officer of NuLabel Technologies, Inc., a developer and provider of adhesive solutions for labeling and +decorating applications. Prior to founding Schofield Imaging Associates, LLC, Mr. Schofield was Founder, President and CEO of Atlantek Incorporated (“Atlantek”), a manufacturer of thermal printers and retired as Vice President and +General Manager of Zebra Atlantek, Inc. following the acquisition of Atlantek by Zebra Technologies Corp. in November 2003. Prior to founding Atlantek, Mr. Schofield was Design Engineering Manager at Gulton Industries where he was responsible +for design and development of thermal printers, plotters, and chart recorders. Mr. Schofield is an internationally recognized authority in the electronic printing field. We believe that Mr. Schofield’s long history and expertise in +the printing and imaging field qualify him to serve on our Board. +Richard S. Warzala , 64, is the President, Chief Executive and Chairman of the board of directors of Allied Motion Technologies, Inc. (“Allied Motion”), and has more than 40 years of +leadership experience and a strong technical background in the industrial, aerospace and commercial industries. He joined Allied Motion as President and Chief Operating Officer in 2002. Mr. Warzala was elected a director of Allied Motion in +2006, appointed President and Chief Executive Officer in 2009, and elected as the Chairman of Allied Motion’s board of directors in 2014. Allied Motion designs, manufactures and sells precision and specialty motion control components and +systems in markets including Vehicle, Medical, Aerospace & Defense, and Industrial/Electronics. Before joining Allied Motion, Mr. Warzala was President of Danaher Corporation’s Motion Components Group and served in various senior +positions at American Precision Industries Inc., including Corporate Vice President and President of its API Motion Division. We believe that Mr. Warzala’s technology background and international industry experience, together with his +corporate governance expertise, business insights and deep understanding of lean manufacturing principles, qualify him to serve on our Board. +Gregory A. Woods , 59, has served as Chief Executive Officer of the Company since February 1, 2014. Mr. Woods joined the +Company in September 2012 as Executive Vice President and Chief Operating Officer and was appointed President and Chief Operating Officer on August 29, 2013. Prior to joining the Company, Mr. Woods served from January 2010 to August 2012 +as Managing Director of Medfield Advisors, LLC, an advisory firm located in Medfield, Massachusetts focused on providing corporate development and strategy guidance to technology driven manufacturing firms. From 2008 to 2010, Mr. Woods served +as President of Performance Motion Devices, a specialty semiconductor and electronics manufacturer located in Lincoln, Massachusetts. Through his work experience, Mr. Woods has extensive knowledge of the technology and electronics industries, +as well as lean manufacturing processes. Based on this experience and his position as Chief Executive Officer of the Company, we believe that Mr. Woods is qualified to serve on our Board. +The Board has determined that all of the directors of the Company, including each of the nominees standing for +election at the 2018 annual shareholders meeting, other than Gregory A. Woods and April L. Ondis, are +6 +independent of the Company in that such nominees have no material relationship with the Company either directly or as a partner, shareholder or affiliate of an organization that has a +relationship with the Company. The Board has made this determination in accordance with applicable Securities and Exchange Commission (“SEC”) rules and NASDAQ listing standards. +Each of the directors must be elected by a plurality of the votes properly cast at the annual meeting. This +means that the six nominees receiving the highest number of FOR votes will be elected as directors. Votes may be cast FOR or WITHHELD FROM each nominee. Broker non-votes and votes that are WITHHELD FROM the +nominees will be excluded entirely from the vote and will have no effect. +The Board recommends a vote FOR the election of each of the nominees listed above. +7 +CORPORATE GOVERNANCE +The Board of Directors – Meetings and Committees +The Board currently consists of six members, all of whose terms will expire at the annual meeting and each of +whom has been nominated for re-election. During the fiscal year ended January 31, 2018, the Board held fourteen meetings. During fiscal year 2018, all directors attended at least 75% of the meetings of +the Board and meetings of committees on which such director serves. The Board has adopted a policy that requires members of the Board to make every effort to attend each annual shareholders meeting. All members of the Board then serving attended the +2017 annual shareholders meeting. +The Board +currently has three standing committees: an Audit Committee, a Compensation Committee, and a Nominating Committee. The members and chairs of each of those committees are appointed each year. The Audit Committee is comprised of Ms. Schlaeppi and +Messrs. Quain, and Schofield. The Nominating Committee is comprised of Ms. Schlaeppi and Messrs. Quain, Schofield and Warzala. The Compensation Committee is comprised of Messrs. Quain, Schofield and Warzala. Each of the members of our +committees is independent as defined under the applicable NASDAQ listing standards and SEC rules. Each of the Audit, Compensation, and Nominating Committees has a written charter approved by the Board. A copy of each charter is available on the +Company’s website at www.astronovainc.com under “Investors – Governance Documents.” +Audit Committee. The Audit Committee’s primary duties and responsibilities include: overseeing the integrity of the +Company’s financial reports; appointing, setting the compensation of and overseeing the Company’s independent accountants; and assessing the qualifications, independence and performance of the Company’s independent accountants and the +adequacy of internal controls. The Audit Committee meets with the Company’s independent accountants to review quarterly financial results, the results of the audit, and other relevant matters. The Audit Committee held six meetings during the +fiscal year ended January 31, 2018. The Board has determined that all three members of the Audit Committee during fiscal year 2018 and all three current members of the Audit Committee satisfy the financial literacy requirements of the NASDAQ +listing standards and are independent as defined under the NASDAQ listing requirements and applicable SEC rules. Additionally, the Board has determined that Mitchell Quain qualifies as an “audit committee financial expert” as defined by +the SEC rules and that Mr. Quain possesses “financial sophistication” as described in the NASDAQ listing standards. During fiscal year 2018 and until his retirement from the Board on April 3, 2018, Graeme MacLetchie served on the +Audit Committee. +Compensation Committee. +The Compensation Committee assists the Board in discharging the Board’s responsibilities relating to director and executive compensation. The Compensation Committee’s responsibilities include: establishing and reviewing the Company’s +executive and director compensation philosophy, strategies, plans and policies; making recommendations with respect to the design of the Company’s incentive compensation plans and equity based plans; granting awards under such plans and +overseeing generally the administration of such plans; evaluating the performance and determining the compensation of the Chief Executive Officer; and reviewing and approving recommendations on compensation of other executives. The Compensation +Committee held four meetings during the fiscal year ended January 31, 2018. Our former Chairman, Dr. Hermann Viets served on the Compensation Committee during fiscal year 2018 until his passing in September 2017. Mr. MacLetchie served +on the Compensation Committee during fiscal year 2018 and until his retirement from the Board on April 3, 2018. +8 +Nominating Committee . The Nominating Committee is responsible for identifying +individuals qualified to be members of the Board and recommending such individuals to be nominated by the Board for election to the Board by the shareholders. The Nominating Committee held three meetings in the fiscal year ended January 31, +2018. Dr. Hermann Viets served on the Nominating Committee during fiscal year 2018 until his passing in September 2017. Mr. MacLetchie served on the Nominating Committee during fiscal year 2018 and until his retirement from the Board on +April 3, 2018. +Director Share Ownership +Requirements . The Company has a stock ownership policy that requires each director to hold shares of Company common stock with a value equal to at least $200,000. Any director who does not currently meet this requirement will have five years +from the later of April 1, 2015 or his or her initial election to the Board to achieve this ownership level. Directors are expected to retain at least 50% of the shares acquired upon exercise of any stock option (net of any shares withheld for +payment of taxes) or vesting of a restricted stock or restricted unit award until they achieve the specified ownership level and thereafter maintain such ownership level. Currently, all of our directors meet the ownership requirement, with the +exception of Ms. Schlaeppi, who was appointed to the Board in April 2018, and Richard Warzala, who was appointed to the Board in December 2017. +Compensation Committee Interlocks and Insider Participation +During fiscal year 2018, Messrs. MacLetchie, Quain, +Schofield, Warzala and Dr. Viets served on the Company’s Compensation Committee. No member of the Company’s Compensation Committee who currently serves or who served during fiscal year 2018 has ever been an officer or employee of the +Company or any of its subsidiaries. None of the Company’s executive officers serves as a director or member of the compensation committee of another entity in a case where an executive officer of such other entity serves as a director of the +Company or a member of the Company’s Compensation Committee. +Nomination of Directors +The Nominating Committee considers suggestions from many sources, including shareholders, regarding possible candidates for director. The +Nominating Committee does not set specific criteria for directors but seeks individuals who possess the highest ethical standards and integrity, have a history of achievement that reflects superior standards for themselves and others, have the +ability to provide wise, informed and thoughtful counsel to management on a range of issues, exercise independence of thought, and possess skills and expertise appropriate to meet the Company’s needs and advance the long-term interests of the +shareholders. The Nominating Committee does not have a policy with respect to diversity and does not specifically consider issues of diversity, such as gender, race, origin or sex, when determining whether to nominate any person to be a director of +the Company. +The Nominating Committee must also +ensure that members of the Board as a group maintain the requisite qualifications under the NASDAQ listing standards for populating the Audit, Compensation, and Nominating Committees. The Nominating Committee will consider shareholder nominees for +director in the same manner as nominees for director from other sources. +Shareholders may send recommendations for director nominees to the Nominating Committee at the Company’s offices at 600 East Greenwich Avenue, West Warwick, Rhode Island 02893. Submissions should +include information regarding a candidate’s background, qualifications, experience, and willingness to serve as a +9 +director. In addition, Section 10 of Article III of the Company’s By-Laws sets forth specific procedures that, if followed, enable any +shareholder entitled to vote in the election of directors to make nominations directly at an annual meeting of shareholders. These procedures include a requirement for written notice to the Company not more than 150 days nor less than 60 days prior +to the scheduled annual meeting and must contain the name and certain information concerning the nominee and the shareholders who support the nominee’s election. For the annual meeting to be held in 2019, the notice must be received no earlier +than December 22, 2018 and no later than March 22, 2019. A copy of the Company’s By-Laws may be obtained by writing to AstroNova, Inc., Attn: Investor Relations Department, 600 East Greenwich +Avenue, West Warwick, Rhode Island 02893. +Communications with +the Board of Directors +The Company’s +Board provides a process for shareholders to communicate directly with the members of the Board or the individual chairman of each standing committee. Any shareholder with a concern, question or complaint regarding our compliance with any policy or +law, or who would otherwise like to contact the Board may communicate directly with the directors by writing directly to those individuals c/o AstroNova, Inc., 600 East Greenwich Avenue, West Warwick, Rhode Island 02893. The Company’s general +policy is to forward, and not to intentionally screen, any mail received at the Company’s corporate offices that is sent directly to an individual unless the Company believes the communication may pose a security risk. +Board Leadership Structure +All members of the Board, other than Mr. Woods and +Ms. Ondis are independent and all of our key committees – Audit, Compensation, and Nominating – are, and during fiscal year 2018 were, comprised solely of independent directors. The +non-management directors meet in executive session at least quarterly in order to promote discussion among the independent directors and assure independent oversight of management. +A key component of our leadership structure is the active +role played by our independent directors in overseeing the Company’s business, both at the Board and Committee level. All of our directors are free to suggest the inclusion of items on the agenda for meetings of the Board or to raise subjects +that are not on the agenda for that meeting. In addition, our Board and each committee have complete and open access to any member of management and the authority to retain independent legal, financial, and other advisors as they deem appropriate +without consulting or obtaining the approval of any member of management. Moreover, our Audit Committee, Compensation Committee and Nominating Committee, all of which are comprised entirely of independent directors, also perform oversight functions +independent of management. +Since the passing of +Dr. Viets, our former Chairman of the Board, on September 30, 2017, the Board has not elected a new Chairman of the Board. In light of the recent retirement of two long-standing directors and the recent addition of two new directors, +following the Annual Meeting of Shareholders, the Board intends to review its leadership structure. +Risk Oversight +The Board has an active role, as a whole and also at the committee level, in overseeing management of the Company’s risks through a program of sound policies, systems, processes, and reports. The +Audit Committee of the Board has oversight responsibility over financial reporting and disclosure processes, compliance and legal matters, and information security and fraud risk. The Audit Committee also monitors controls for material +10 +weaknesses in the financial reporting function. The Audit Committee meets regularly with our Chief Financial Officer in carrying out these responsibilities, and with the Company’s +independent auditors in executive session. +The +Compensation Committee of the Board oversees risks as they relate to the Company’s compensation policies and practices as described under “Compensation Discussion and Analysis.” The Board’s Nominating Committee assists the Board +in fulfilling its oversight responsibilities with respect to independence of Board members and identification of individuals qualified to be members of the Board. +While each committee is responsible for evaluating the risks +within their areas of responsibility and overseeing the management of such risks, all committees report regularly to the full Board, which also considers the Company’s entire risk profile. +Compensation of Directors +The Compensation Committee is responsible for reviewing and +establishing the compensation of the directors of the Company. The Company adopted a Non-Employee Director Annual Compensation Program on January 30, 2012 effective as of February 1, 2012, which was +amended and restated as of February 1, 2014 and August 1, 2016 and further amended on March 30, 2017 (as so amended, the “Program”). Pursuant to the Program, each non-employee director +receives an automatic grant of restricted stock awards (“RSAs”) on the first business day of each fiscal quarter. The number of whole shares to be granted each quarter is equal to 25% of the number calculated by dividing the director +compensation amount by the fair market value of the Company’s stock on such day. The director annual compensation amount was $55,000 for fiscal year 2017 and $65,000 for fiscal 2018 and will be $75,000 for fiscal 2019. In addition, the Chairman +of the Board receives RSAs with an aggregate value of $6,000, and the Chairs of the Audit and Compensation Committees each receive RSAs with an aggregate value of $4,000, also issued in quarterly installments and calculated in the same manner as the +directors’ RSA grants. RSAs granted prior to March 30, 2017 pursuant to the amended Program became fully vested on the first anniversary of the date of grant. RSA’s granted after that date become vested on the date that is three +months following the date of grant. +In the event +of the death or disability of a non-employee director, or a Change in Control (as such term is defined in the Company’s applicable equity compensation plan) of the Company, the restricted stock award +shall immediately vest and shall no longer be subject to such restrictions on transfer. +In addition, each non-employee director receives non-qualified options to purchase 5,000 shares of the Company’s common +stock upon initial election to the Board (if not at the annual meeting) and upon the adjournment of each annual meeting or special meeting in lieu of an annual meeting of the shareholders of the Company. These options have a term of ten years and +become exercisable immediately prior to the occurrence of the next annual meeting following the date the option is granted. +11 +The following Director Compensation table provides information regarding the +compensation paid or accrued by each individual who was a director during fiscal year 2018. +Name +Total ($) +Fees Earned +or Paid in +Cash ($) +Stock +Awards($)(a)(b) +Option +Awards +($)(c)(d) +April L. Ondis +93,064 +— +64,964 +28,100 +Mitchell I. Quain +97,031 +— +68,931 +28,100 +Harold Schofield +93,064 +— +64,964 +28,100 +Richard S. Warzala +39,154 +— +9,754 +29,400 +Gregory A. Woods(e) +— +— +— +— +Hermann Viets(f) +81,294 +— +53,194 +28,100 +Graeme MacLetchie(g) +97,031 +— +68,931 +28,100 +Everett V. Pizzuti(g) +93,064 +— +64,964 +28,100 +(a) +The amounts reflect the aggregate fair value of the awards on the grant date under FASB ASC Topic 718 for shares of restricted stock granted to directors. For +additional information, see footnote 13 in the Company’s audited financial statements for the fiscal year ended January 31, 2018, included in the Company’s Annual Report on Form 10-K filed with +the SEC on April 10, 2018. +(b) +As of January 31, 2018, each non-employee director had the following number of shares of unvested restricted stock +outstanding: Graeme MacLetchie (1,235), April L. Ondis (1,164), Everett V. Pizzuti (1,164), Mitchell I. Quain (1,235), Harold Schofield (1,164), Hermann Viets (0) and Richard Warzala (675). +(c) +The amounts reflect the aggregate fair value of the awards on the grant date under FASB ASC Topic 718 for stock options granted to directors. Assumptions used in the +calculation of these amounts are included in footnote 13 in the Company’s audited financial statements for the fiscal year ended January 31, 2018, included in the Company’s Annual Report on Form +10-K filed with the SEC on April 10, 2018. +(d) +As of January 31, 2018, each non-employee director had the following number of options outstanding: Graeme MacLetchie +(50,000, of which 45,000 were vested), April L. Ondis (15,000, of which 10,000 were vested), Everett V. Pizzuti (20,000, of which 15,000 were vested), Mitchell I. Quain (25,000, of which 20,000 were vested), Harold Schofield (30,000, of which 25,000 +were vested), Hermann Viets (45,000, of which 45,000 were vested) and Richard S. Warzala (5,000, of which 0 were vested). +(e) +See Summary Compensation Table and Outstanding Equity Awards at Fiscal Year End Table for disclosure relating to compensation and outstanding option awards held by Mr. +Woods. +(f) +Dr. Viets passed away on September 30, 2017. +(g) +Each of Messrs. MacLetchie and Pizzuti retired from the Board effective as of April 3, 2018. +Our Management +The following sets forth information with respect to our executive officers, other than Mr. Woods, as of April 20, 2018. +Biographical information regarding Gregory A. Woods, our President and Chief Executive Officer is included above in Proposal No. 1 – Election of Directors. +Name +Age +Position +Gregory A. Woods +59 +President, Chief Executive Officer and Directors +David S. Smith +61 +Vice President, Chief Financial Officer and Treasurer +Michael M. Morawetz +59 +Vice President – EMEA +Stephen M. Petrarca +55 +Vice President – Operations +Michael J. Natalizia +52 +Vice President and Chief Technology Officer +12 +Mr. Smith was appointed Vice President, Chief Financial Officer and Treasurer in +January 2018. Mr. Smith has served as CFO for multinational companies, including Dover Corporation from 2000 to 2002 and Crane Co. from 1994 to 2000. From 2005 to 2008 he was Senior Vice President and CFO of the semiconductor +company, Standard Microsystems Corporation. From 2008 until his appointment as our Vice President, Chief Financial Officer and Treasurer, Mr. Smith was Managing Partner for S.C. Advisors LLC, a management consultancy based in Darien, CT. +He received his Master’s Degree in Business Administration from Wharton School, University of Pennsylvania and his Bachelor of Arts degree from Columbia College, Columbia University. +Mr. Morawetz was appointed Vice President—EMEA in June 2017. He was previously Vice +President—International Branches from 2006 to June 2017 and General Manager of Branch Operations for the Company’s German subsidiary, having joined the Company in 1989. +Mr. Petrarca was appointed Vice +President—Operations in 1998. He has previously held positions as General Manager of Manufacturing, Manager of Grass Operations and Manager of Grass Sales. He has been with the Company since 1980. +Mr. Natalizia was appointed Vice President and Chief +Technology Officer of AstroNova, Inc. on March 9, 2012. Prior to this appointment, Mr. Natalizia held the position of Director of Product Development of the Company since 2005. +Security Ownership of 5% Beneficial Owners +The following table sets forth certain information regarding +the beneficial ownership of the Company’s outstanding shares of common stock, as of April 26, 2018 (except as noted), by each person who is known to the Company to own of record or beneficially more than 5% of such stock: +Name of Beneficial Owner +Number of Shares +Beneficially +Owned(a) +Percent +of Class +Ariel Investments, LLC +745,767 +(b) +10.9 +% +200 E. Randolph Drive, Suite 2900 +Chicago, IL 60601 +Rutabaga Capital Management, LLC +551,836 +(c) +8.1 +% +64 Broad Street, 3 rd Floor +Boston, MA 02109 +Dimensional Fund Advisors LP +518,662 +(d) +7.6 +% +6300 Bee Cave Road, Building One +Austin, TX 78746 +Punch & Associates Investment Management, Inc. +349,220 +(e) +5.1 +% +7701 France Ave. So., Suite 300 +Edina, MN 55435 +(a) +All information is based upon ownership of record as reflected on the stock transfer books of the Company or as reported on Schedule 13G or Schedule 13D filed under +Rule 13d-1 under the Securities Exchange Act of 1934. +(b) +According to a Schedule 13G/A filed with the SEC on February 13, 2018, Ariel Investments, LLC, an investment adviser registered under the +Investment Advisers Act of 1940 (the “Advisers Act”), had sole +13 +voting power with respect to 539,795 shares and sole dispositive power with respect to 745,767 shares as of December 31, 2017. +(c) +According to a Schedule 13G/A filed with the SEC on February 15, 2017, Rutabaga Capital Management, LLC, an investment adviser registered under the Advisers Act, +had sole voting power with respect to 382,869 shares, shared voting power with respect to 168,967 shares, and sole dispositive power with respect to 551,836 shares as of December 31, 2016. +(d) +According to a Schedule 13G/A filed with the SEC on February 9, 2018, as of December 31, 2017, Dimensional Fund Advisors, LP, an investment adviser registered +under the Advisers Act, and its subsidiaries (collectively, “Dimensional”) had sole voting power with respect to 510,930 shares and sole dispositive power with respect to 518,662 shares held by registered investment companies, trusts and +separate accounts for which Dimensional serves as investment manager, adviser or sub-adviser. +(e) +According to a Schedule 13G filed with the SEC on February 14, 2018, Punch & Associates Investment Management, Inc., an investment adviser registered +under the Advisers Act, had sole voting power and sole dispositive power with respect to 349,220 shares as of January 31, 2018. +Security Ownership of Directors and Officers +The following table sets forth certain information regarding the beneficial ownership of the Company’s common stock as of +April 26, 2018 by each director, by each executive officer named in the Summary Compensation Table and by all directors and executive officers as a group. Unless otherwise noted, all shares of common stock are subject to the sole voting and +dispositive power of the respective directors and executive officers. +Beneficial Ownership +Name of Beneficial Owner +Shares and +Restricted +Shares(a) +Options +Exercisable +within 60 days +of 4/20/18 +Total +Beneficial +Ownership +(a) +Percent +of Class +April L. Ondis +136,144 +(b) +15,000 +151,144 +2.2 +% +Mitchell I. Quain +47,394 +(c) +25,000 +72,394 +1.1 +Yvonne Schlaeppi +341 +(d) +5,000 +5,341 +* +Harold Schofield +19,061 +(e) +30,000 +49,061 +* +Richard Warzala +2,074 +(e) +5,000 +7,074 +* +Gregory A. Woods +84,848 +(f) +150,000 +(g) +234,848 +3.4 +% +David S. Smith +— +— +(h) +— +* +Michael Morawetz +10,968 +(i) +5,537 +16,505 +* +Michael Natalizia +20,436 +(j) +11,575 +32,011 +* +Stephen Petrarca +22,000 +(k) +5,444 +27,444 +* +Joseph P. O’Connell +125,165 +(l) +17,475 +142,640 +2.1 +% +John Jordan +— +— +— +* +All directors and executive officers of the Company as a group (15) +468,431 +(m) +270,031 +(n) +738,462 +10.4 +% +* +Indicates less than 1.0%. +(a) +If applicable, beneficially owned shares include shares owned by the spouse, minor children, and certain other relatives of the director or executive officer, as well +as shares held by trusts of which the person is a trustee or in which he or she has a beneficial interest. +(b) +Includes 1,399 shares of restricted stock and 794 shares allocated to Ms. Ondis’ ESOP account and excludes 36,000 shares of common stock held by the Albert W. +Ondis Declaration of Trust, of which Ms. Ondis is a beneficiary. +14 +(c) +Includes 1,473 shares of restricted stock. +(d) +Includes 341 shares of restricted stock. +(e) +Includes 1,399 shares of restricted stock. +(f) +Includes 2,148 shares of restricted stock, 7,603 restricted stock units vesting within 60 days of April 26, 2018, and 112 shares allocated to Mr. Woods’ +ESOP account. +(g) +Excludes 75,000 shares underlying options not exercisable within 60 days of April 26, 2018. +(h) +Excludes 50,000 shares underlying options not exercisable within 60 days of April 26, 2018. +(i) +Includes 1,293 restricted stock units vesting within 60 days of April 26, 2018. +(j) +Includes 1,079 restricted stock units vesting within 60 days of April 26, 2018. +(k) +Includes 1,152 restricted stock units vesting within 60 days of April 26, 2018. +(l) +Includes 3,095 restricted stock units vesting within 60 days of April 26, 2018, and 1,718 shares allocated to Mr. O’Connell’s ESOP account. +(m) +Includes 8,159 shares of restricted stock, 14,222 restricted stock units vesting within 60 days of April 26, 2018, and 2,624 shares allocated to executive +officers’ and Ms. Ondis’ ESOP accounts. +(n) +Excludes 125,000 shares underlying options not exercisable within 60 days of April 26, 2018. +Section 16(a) Beneficial Ownership Reporting Compliance +Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), requires +the directors and executive officers of the Company and any persons who own more than ten percent of the Company’s common stock to file with the SEC various reports of beneficial ownership and changes in beneficial ownership. Based solely on a +review of the copies of such reports received by the Company and certain written representations that no other reports were required, the Company believes that for the fiscal year ended January 31, 2018, all of its officers, directors and 10% +beneficial owners complied with the requirements of Section 16(a), except that the following forms were filed late: +• +One Form 4 by Mr. Natalizia relating to the exercise of a stock option and sale of shares of common stock; +• +One Form 4 by Mr. Woods relating to the surrender of shares of common stock to satisfy tax withholding obligations in connection with the vesting +of restricted stock; and +• +One Form 4 by each of Dr. Viets, Ms. Ondis and Messrs. Schofield, Quain, Pizzuti and MacLetchie relating to the grant of a stock option. +15 +COMPENSATION DISCUSSION & ANALYSIS +The Compensation Committee (the “Committee”) is +charged with the responsibility for establishing, implementing and monitoring adherence to the Company’s compensation philosophy and ensuring that executives and key management personnel are effectively compensated in a manner which is +internally equitable. The Committee also is responsible for reviewing and establishing the compensation of directors. +Compensation Philosophy and Objectives. The Committee’s overall philosophy in terms of executive +compensation is to link management incentives with the actual financial performance of the Company. Similarly, the compensation should attract, retain, and motivate highly qualified individuals to achieve the Company’s business goals and link +their interests with shareholder interests. In setting compensation for the Company’s executive officers, the Committee considers the executive’s performance, awards, if any, made during prior years and other relevant factors. The +Committee seeks to have the long-term performance of the Company’s common stock reflected in executive compensation through our equity incentive programs. +Elements of Compensation. The total compensation program for the Company’s executive officers consists +of the following: +• +salary; +• +cash incentive and bonus awards tied to the Company’s and executive’s annual performance; +• +long-term incentive compensation, in the form of stock options, restricted stock units, and performance units; and +• +retirement and other benefits. +The Committee seeks to structure each element of compensation to attract and retain the necessary executive talent, reward annual +performance and provide incentive for both long-term strategic goals as well as short-term performance. The Committee’s policy for allocating between currently paid and long-term compensation is to ensure adequate base compensation to attract +and retain personnel, while providing incentives to maximize long-term value for our shareholders. +Say on Pay Consideration. In accordance with SEC rules, the Company conducted a non-binding, advisory vote on the Company’s +executive compensation at its 2017 annual meeting. The Company’s shareholders voted to approve the Company’s executive compensation practices at the 2017 annual meeting by a favorable vote of approximately 97.5% of the votes cast. +Setting Executive +Compensation. The Committee is responsible for establishing and periodically reviewing the compensation of the Company’s executive officers and approving all equity awards. The Committee annually reviews the +performance of the executive officers and, based on these reviews, the Committee determines salary adjustments and annual awards. Mr. Woods does not participate during deliberations regarding his compensation. +Salary. Base salaries for +executive officers, other than recent hires, were established a number of years ago. Historically, base salaries have been increased at annual rates which approximate the general rates of increase of compensation for all employees of the Company. +Annual salary adjustments are made effective +16 +April 1 of each year. Effective as of April 1, 2017, the Committee set the fiscal 2018 annual salaries for each of the Named Executive Officers other than Mr. Smith as follows: +Name +Salary +Gregory A. Woods +$ +381,924 +Joseph P. O’Connell +$ +150,000 +(1) +Michael Morawetz +$ +236,584 +(2) +Stephen M. Petrarca +$ +174,306 +Michael J. Natalizia +$ +175,000 +(3) +John P. Jordan +$ +231,750 +(1) +In connection with Mr. O’Connell’s appointment as interim Chief Financial Officer and Treasurer of the Company and effective as of September 1, +2017, his annual salary was increased to $257,500. +(2) +Cash compensation paid to Mr. Morawetz is paid in Euros; all amounts reported with respect to payments to Mr. Morawetz were converted to U.S. dollars at the +exchange rate as of January 31, 2018, which was €1:$1.243. +(3) +Effective February 6, 2017. +In connection with his appointment as the Company’s Vice President, Chief Financial Officer, and Treasurer on January 22, 2018, +Mr. Smith’s annual salary was set at $265,000. +Cash Incentive and Bonus Awards. Annual cash incentive awards are an important component of total executive cash compensation because they reward the Company’s +executives for achieving targeted, annual results and emphasize variable or “at risk” compensation. From time-to-time the Committee awards discretionary cash +bonuses to the Company’s executives to reward their efforts in extraordinary circumstances. +Short-Term Incentive Plan +During late 2014, the Committee engaged Radford, an Aon Hewitt Company, to conduct an assessment of the Company’s executive compensation program, including a review of executive base salaries, +short-term incentive opportunities, and long-term incentives and pay mix as compared to the competitive market. Following receipt of Radford’s report in March 2015, the Committee approved the Senior Executive Short-Term Incentive Plan (the +“STIP”), which replaced the Company’s prior Domestic and International Branch Plans for the fiscal year beginning February 1, 2015. Participants in the STIP (which may include any executive officer, vice president or director +level manager) are determined annually by the Committee. Awards under the STIP are earned based on achieving or exceeding annual financial objectives (“Performance Goals”). The Committee has full discretion to establish the Performance +Goals for any plan year. In March 2017, the Committee established Performance Goals for fiscal year 2018 of Consolidated Revenue of $120,000,000 and Consolidated Operating Income of $9,220,000. +17 +Annually, the Committee establishes a Target Award for each STIP participant, which may +vary as to each participant and from year to year. For fiscal year 2018, the Committee established the following Target Awards for our Named Executive Officers other than Mr. Smith: +Name +Target Award ($) +Gregory A. Woods +286,443 +Michael Morawetz +82,804 +Stephen M. Petrarca +43,577 +Michael J. Natalizia +43,750 +Joseph P. O’Connell +37,500 +John P. Jordan +81,113 +The Committee allocated the +Target Awards to the fiscal year 2018 Performance Goals as follows: +• +60% of the Target Awards were tied to achievement of the Consolidated Revenue Performance Goal; and +• +40% of the Target Awards were tied to the achievement of the Consolidated Operating Income Performance Goal. +Performance with respect to each specific Performance Goal is +calculated independently to determine the amount of the award for each Performance Goal (each, an “Award Component”). The total STIP award earned by a participant for a plan year is equal to the sum of the separate Award Components +determined for each Performance Goal. Each Award Component is independently adjusted by an “Adjustment Factor” as follows: +• +For the Consolidated Revenue Performance Goal: +• +If the Company’s fiscal year 2018 Consolidated Revenue exceed the Consolidated Net Sales Performance Goal, the Adjustment Factor for the +Consolidated Revenue Performance Goal would be 1 plus 20% for each $1 million by which Consolidated Revenue exceeds the Consolidated Revenue Performance Goal, up to a maximum bonus of 250% of the Target Award tied achievement of the +Consolidated Revenue Performance Goal. For example, if actual fiscal year 2018 Consolidated Revenue exceeds the Consolidated Revenue Performance Goal by $2 million, the Adjustment Factor for that Award Component would be increased by 40% to +1.4. +• +If the Company’s fiscal year 2018 Consolidated Revenue are less than the Consolidated Revenue Performance Goal, the Adjustment Factor is 1 minus +20% for each $1 million by which Consolidated Revenue is less than the Consolidated Revenue Performance Goal. For example, if actual fiscal year 2018 Consolidated Revenue is $2 million less than the Consolidated Revenue Performance Goal, +the Adjustment Factor for that Award Component would be reduced by 40% to 60. +• +For the Consolidated Operating Income Performance Goal: +• +If the Company’s fiscal year 2018 Consolidated Operating Income exceeds the Consolidated Operating Income Performance Goal, the Adjustment Factor +for the Consolidated Operating Income Performance Goal would be 1 plus 10% for each 1.757% by which Consolidated Operating Income exceeds the Consolidated Operating Income Performance Goal, up to a maximum bonus of 250% of the Target Award tied +achievement of the Consolidated Operating Income Performance Goal. For +18 +example, if actual fiscal year 2018 Consolidated Operating Income exceeds the Consolidated Operating Income Performance Goal by 1.757%, the Adjustment Factor for that Award Component would be +increased by 10% to 1.10. +• +If the Company’s fiscal year 2018 Consolidated Operating Income is less than the Consolidated Operating Income Performance Goal, the Adjustment +Factor for the Consolidated Operating Income Performance Goal would be 1 minus 10% for each 1.757% by which Consolidated Operating Income is less than the Consolidated Operating Income Performance Goal. For example, if actual fiscal year 2018 +Consolidated Operating Income is 1.757% less than the Consolidated Operating Income Performance Goal, the Adjustment Factor for that Award Component would be decreased by 10% to 0.9. +Any Adjustment Factor relating to the Consolidated Revenue +Performance Goal or the Consolidated Operating Income Performance Goal will be subject to linear interpolation to reflect achievements between $1 million or 1.757%, respectively. +A participant’s STIP award is subject to the following limitations: +• +Aggregate awards under the STIP in any year may not exceed 15% of the Company’s Consolidated Operating Income for that year determined without +deduction for the STIP awards. +• +Adequate reserves for awards must be accrued when determining whether a Performance Goal based upon operating income has been achieved. +Based on the Company’s +results for fiscal year 2018, the Award Components were as follows: +Performance Goal +Target ($) +Actual +Performance +($) +Adjustment +Factor +Consolidated Net Sales +120,000,000 +113,401,000 +— +Consolidated Operating Income +9,220,000 +5,412,000 +— +The amount of a +participant’s award under the STIP, if any, will be credited to a book account maintained by the Company (the “Award Bank”). The resultant balance in the participant’s account after crediting the amount of award (the “Bank +Balance”) would then be used to determine the participant’s Payout Amount for the plan year. +The “Payout Amount” is equal to the sum of (i) the lesser of (A) the participant’s actual award for the plan year +or (B) the participant’s Target Award for the plan year (“Base Award”) plus (ii) 30% of the participant’s Bank Balance (after deduction of the amount of the Base Award). Thus, only 30% of the amount in excess +of the Target Award would be paid out currently and 70% of such excess would be “banked” and paid out in subsequent years in accordance with the foregoing formula, provided the participant remains employed with the Company. +For example, if a participant’s Target Award for Year 1 +is $45,000 but the actual award is $55,000, then the Payout Amount for such year would be $48,000 ($45,000 + [30% × $10,000]) and the Bank Balance remaining after the payout would be $7,000. If the participant’s Target Award for Year 2 is +$47,000 and the actual award is $45,000, then the Payout Amount for such year would be $47,100 ($45,000 + [30% × $7,000]) and the Bank Balance remaining after the payout would be $4,900. +19 +If a participant’s employment with the Company is terminated for any reason other +than death, disability or retirement, then the participant will forfeit any interest in his Bank Balance. A participant’s Bank Balance will vest in full and become immediately payable in the event of termination of a participant’s +employment with the Company due to the participant’s death, disability or retirement. A participant’s Bank Balance will also vest in full and become payable upon a change in control of the Company. +Our Named Executive Officers did not receive awards under the +STIP for fiscal year 2018. +Long-Term Incentive +Compensation . Total compensation at the executive level also includes long-term incentive awards granted under the Company’s 2007 Equity Incentive Plan and 2015 Equity Incentive Plan. The objectives of the equity +incentive program are to align executive and shareholder long-term interests by creating a strong and direct link between executive pay and total shareholder return, and to enable executives to develop and maintain a long-term stock ownership +position in the Company’s common stock. Prior to fiscal year 2013, all equity awards were in the form of stock options, which were generally granted in March of each year at an exercise price equal to the market price on the date of grant. +Since 2004, all options granted to employees vest in four equal annual installments commencing on the first anniversary of the date of grant. Under the Company’s 2007 Equity Incentive Plan and 2015 Equity Incentive Plan, the Committee may also +make equity awards in the form of restricted stock, restricted units, and performance units in addition to stock options. +In fiscal year 2016, the Committee adopted its 2015 Long Term Equity Incentive Program, or the 2015 LTIP. Under the terms of the 2015 +LTIP, the Committee granted restricted stock units to the Company’s executive officers, which included each of the Named Executive Officers other than Messrs. Smith and Jordan. A portion of the awards issued to each officer were time-based +awards, which vest in four equal annual installments commencing on the first anniversary of the date of grant. The remaining awards may be earned based upon the increase in revenue, if any, achieved in each of the fiscal years 2016, 2017, and 2018 +in relation to the Company’s three-year revenue increase goal. To the extent that the Committee determines that revenue growth in a fiscal year was achieved due to organic growth, any restricted stock units earned as a result will immediately +vest, while restricted stock units earned as a result of revenue growth resulting from acquisitions will vest in three equal annual installments commencing on the first anniversary of the date the Committee determines that the performance goal was +achieved. Any performance based restricted stock units that are not earned at the end of the three-year performance period will be forfeited. In March 2017, the Committee determined that approximately 6.1% of the performance based restricted stock +units had been earned based on fiscal year 2017 revenue growth, all of which was attributable to organic growth. No performance based awards under the 2015 LTIP were earned based on fiscal year 2017 net sales growth resulting from acquisitions. In +March 2018, the Committee determined that approximately 24.2% of the performance based restricted stock units had been earned based on fiscal year 2018 revenue growth, approximately 82% of which was attributable to growth resulting from +acquisitions. +Gregory A. Woods joined the Company +as Chief Operating Officer in September 2012 and became Chief Executive Officer on February 1, 2014, upon Everett V. Pizzuti’s retirement. In November 2014, the Company entered into an Equity Incentive Award Agreement with Mr. Woods +(the “Equity Agreement”), which provides for grants of equity awards to Mr. Woods that are intended to enhance his equity ownership, create stronger alignment with shareholder interests, and reward him for driving the long-term growth +and profitability of the +20 +Company. The Equity Agreement provided that in each of 2015, 2016, and 2017, the Company would grant to Mr. Woods the following equity awards: +• +an option for 50,000 shares (subject to adjustment in the event of any stock splits, stock dividends or similar changes in capital structure), each +with an exercise price equal to the fair market value of the Company’s common stock as of the grant date of such option; and +• +a restricted stock award with a value equal to the amount (if any) by which the exercise price of such year’s option exceeds $13.80, multiplied by +the number of shares covered by the option granted in such year (initially 50,000, subject to adjustment in the event of any stock splits, stock dividends or similar changes in capital structure). +Each option and restricted stock award under the Equity +Agreement will vest in four equal annual installments commencing on the first anniversary of the grant date for each such award, and all options and restricted stock will vest upon a change in control of the Company. The Equity Agreement provides +that, in the event there is a change in control of the Company prior to June 1, 2018, the Company will pay Mr. Woods an amount equal to (i) the positive difference (if any) between the fair market value of the Company’s common +stock as of the date of the change in control and $13.80 multiplied by (ii) the number of options which the Company remains obligated to grant under the Equity Agreement. +In connection with his appointment as the Company’s Vice +President, Chief Financial Officer, and Treasurer effective January 22, 2018, Mr. Smith was granted an option to purchase 50,000 shares of the Company’s common stock and 15,000 restricted stock units, each subject to vesting in four +equal annual installments commencing on January 22, 2019. +Share Ownership and Retention Guidelines . The Committee believes that senior management should have a meaningful equity interest in the Company. In order to promote equity +ownership and further align the interests of management with our shareholders, the Committee has adopted share ownership and retention guidelines for our executives. These guidelines are based upon the market value of our common stock as a multiple +of such officer’s base pay. The multiple is 3 times base salary for the CEO, 2 times base salary for the Chief Financial Officer and 1.25 times base salary for the other executive officers. Under these guidelines, an executive is expected to +achieve the ownership level within five years from the later of April 1, 2015 or initial appointment as an executive officer. Executives are expected to retain at least 50% of all shares acquired on vesting of restricted stock and 50% of all +shares acquired on exercise of any stock option or vesting (net of any shares tendered or withheld for payment of taxes) until they achieve the specified ownership level and thereafter maintain such ownership level. +Retirement and Other +Benefits . In order to attract and retain key executives, the Company offers retirement benefits through a Profit-Sharing Plan for employees, including its executive officers. +Profit Sharing Plan. The Company maintains a +Profit Sharing Plan that is a qualified plan under Section 401(k) of the Internal Revenue Code, which provides retirement benefits to substantially all the Company’s employees. Each eligible employee shares in contributions on the basis of +relative (limited to $18,000 in 2017) compensation. In addition, participants are permitted to defer up to 50% of their cash compensation and make contributions of such deferral to this plan through payroll deductions. The Company makes matching +contributions equal to 50% of the first seven percent of compensation contributed. The deferrals +21 +are made within the limits prescribed by Section 401(k). The Profit Sharing Plan provides for the vesting of 100% of matching contributions made by the Company to the account of the employee +after three years of service. Contributions by an employee are 100% vested immediately. +Employee Stock Ownership Plan. The Company also has an Employee Stock Ownership Plan (“ESOP”) which provides retirement benefits to substantially all of its employees. +Contributions in such amounts as the Board may annually determine are allocated among eligible employees on the basis of relative (limited to $100,000) compensation. Participants are 100% vested in any and all allocations. Contributions, which may +be in cash or stock, are invested by the Plan’s trustee in shares of common stock of the Company. During fiscal year 2017, the Board of Directors authorized the termination of the ESOP. +Perquisites . In addition to the benefits described above, the Company provides automobile +allowances to certain of its executive officers and a housing allowance to one of its Named Executive Officers. The amount of any automobile or housing allowance granted to our Named Executive Officers is reflected in the “All Other +Compensation” column of the Summary Compensation Table below. +Change in Control Agreement. In November, 2014, the Company entered into a Change in Control Agreement (the “CIC Agreement”) with Mr. Woods. The CIC Agreement provides for the +payment of severance benefits upon a change in control of the Company if Mr. Woods’ employment is terminated by the Company without cause or by Mr. Woods for good reason within the period (the “CIC Period”) beginning on the +earlier of (i) 180 days prior to the occurrence of the change in control and (ii) the announcement of a transaction expected to result in a change in control, and ending on the second anniversary of the occurrence of a change in control. +Severance payments to Mr. Woods include (i) payment of one and one-half times the sum of (A) his annual salary and (B) the greater of the amount of his target bonus for the fiscal year in +progress or the highest annual bonus paid to him in the prior three years (collectively, “base compensation”), (ii) immediate vesting of all unvested stock options and restricted stock awards, (iii) continued health coverage for 18 +months or until he receives benefits from another employer, if earlier, and (iv) reimbursement for outplacement services in an amount not to exceed 17% of his base compensation. If any payment or benefit under the CIC Agreement or under any +other plan or agreement would constitute an “excess parachute payment” within the meaning of Section 280G of the Internal Revenue Code, and if Mr. Woods would be in a better after-tax +position by reducing the such payments or benefits, the amounts payable under the CIC Agreement will be reduced to the extent necessary to avoid the excise tax payable under Section 280G. +Employment Agreements and Severance Benefits . In November 2014, in order to comply with certain +legal requirements, the Company entered into an Employment Agreement with Michael Morawetz, Vice President-International Branches, as the general manager of its German subsidiary. The employment agreement can be terminated on six months’ notice +and provides that in the event of the termination of his employment by the Company without cause, Mr. Morawetz will receive severance equal to one month’s salary for each year of his employment. Other than the contract with +Mr. Morawetz, we have no employment agreements with any of our executive officers. Except for the Morawetz Employment Agreement and the CIC Agreement with Mr. Woods, we generally do not provide any severance benefits to our executives +other than those provided to all employees. Severance benefits will vary based upon salary levels and length of service. +22 +COMPENSATION COMMITTEE REPORT +The Compensation Committee has reviewed and discussed with +management the Compensation Discussion & Analysis included above. Based on these reviews and discussions, the Compensation Committee has recommended to the Board that the Compensation Discussion & Analysis be included in the +Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2018 for filing with the SEC through incorporation by reference of this Proxy Statement. +Compensation Committee: +Mitchell I. Quain (Chairman) +Harold Schofield +Richard Warzala +23 +EXECUTIVE COMPENSATION +The following table provides information regarding the total compensation paid or accrued by the Company to +each of its Chief Executive Officer (“CEO”), its Chief Financial Officer (“CFO”), its former CFOs, and its three most highly compensated executive officers other than the CEO, CFO, and former CFOs for the fiscal year ended +January 31, 2018 (collectively, the “Named Executive Officers”). +Summary Compensation Table +Name and Principal Position +Year +Salary +($) +Stock +Awards($)(a) +Option +Awards +($)(b) +Non-Equity +Incentive +Plan +Compensation +($)(c) +All Other +Compensation +($) +Total +($) +Gregory A. Woods +2018 +387,344 +— +252,742 +— +63,138 +(d) +703,224 +President and CEO +2017 +368,930 +60,490 +143,175 +13,905 +69,952 +656,452 +2016 +342,346 +1,488,544 +121,324 +150,626 +55,631 +2,158,471 +David S. Smith +2018 +10,092 +207,000 +277,501 +— +1,108 +(e) +495,701 +Vice President, CFO, and Treasurer +John P. Jordan +2018 +136,990 +— +— +— +36,642 +(f) +171,632 +Former Vice President, CFO, and Treasurer +2017 +112,500 +— +18,345 +5,000 +6,722 +142,567 +Joseph P. O’Connell +2018 +194,453 +— +— +— +31,586 +(g) +226,039 +Former Interim CFO +2017 +191,254 +— +— +3,825 +60,792 +255,871 +2016 +247,668 +398,725 +— +57,461 +39,913 +743,767 +Michael Morawetz +2018 +233,477 +— +— +— +15,414 +(h) +248,891 +(i) +Vice President – +2017 +183,837 +— +— +3,292 +14,566 +201,695 +EMEA +2016 +179,084 +185,067 +— +34,318 +14,952 +413,421 +Stephen M. Petrarca +2018 +176,125 +— +— +— +12,014 +(j) +188,139 +Vice President – Operations +2017 +168,377 +— +— +2,115 +24,192 +194,684 +Michael J. Natalizia +2018 +178,049 +— +— +— +9,784 +(k) +187,833 +Vice President and Chief Technology Officer +2017 +157,717 +— +— +1,982 +21,409 +181,108 +(a) +The amounts reflect the aggregate fair value of the awards on the grant date under FASB ASC Topic 718 for restricted stock units and restricted stock awards granted to +the Named Executive Officers. Under FASB ASC Topic 718, the grant date fair value of each restricted stock unit and restricted stock award is equal to the closing price of our common stock on the grant date. +(b) +The amounts reflect the aggregate fair value of the awards on the grant date under FASB ASC Topic 718 for stock options granted to the Named Executive Officers. +Assumptions used in the calculation of these amounts are included in footnote 13 to the Company’s audited financial statements for the fiscal year ended January 31, 2018, included in the Company’s Annual Report on Form 10-K filed with the SEC on April 10, 2018. +24 +(c) +Except with respect to Mr. Jordan, reflects cash awards under the Company’s Senior Executive Short-Term Incentive Plan which is discussed in further detail +under the heading “Compensation Discussion and Analysis” above. With respect to Mr. Jordan, reflects amount paid to Mr. Jordan as an incentive bonus on the one-month anniversary of this +appointment as the Company’s Vice President, CFO and Treasurer. +(d) +Includes pay-out of unused vacation of $27,543, automobile allowance of $25,850, and an employer match under the Profit Sharing +Plan of $9,745. +(e) +Represents housing allowance. +(f) +Includes pay-out of unused vacation of $3,192, automobile allowance of $7,154, an employer match under the Profit Sharing Plan +of $5,696, and a housing allowance of $18,600. +(g) +Includes pay-out of unused vacation of $5,769, automobile allowance of $18,675, and an employer match under the Profit Sharing +Plan of $7,142. +(h) +Represents automobile allowance. +(i) +Payments are made to Mr. Morawetz’s in the euro currency and was converted to U.S. dollars at the exchange rate as of January 31, 2018, which was +€1:$1.243. +(j) +Includes pay-out of unused vacation of $6,251 and an employer match under the Profit Sharing Plan of $5,763. +(k) +Includes pay-out of unused vacation of $3,365 and an employer match under the Profit Sharing Plan of $6,419. +25 +Outstanding Equity Awards at Fiscal Year-End +The following table provides information on +all outstanding equity awards held by each of the Named Executive Officers as of January 31, 2018. +OPTION AWARDS +STOCK AWARDS +Name +Number of +Securities +Underlying +Unexercised +Options (#) +Exercisable +Number of +Securities +Underlying +Unexercised +Options (#) +Unexercisable +Option +Exercise +Price +($) +Option +Expiration +Date(a) +Number of +Shares or +Units of +Stock That +Have Not +Vested (#) +Market +Value of +Shares or +Units of +Stock That +Have Not +Vested +($) +Equity +Incentive +Plan +Awards: +Number of +Unearned +Shares, +Units or +Other +Rights That +Have +Not +Vested (#)(c) +Equity +Incentive +Plan +Awards: +Market or +Payout +Value of +Unearned +Shares, +Units +or +Other +Rights That +Have Not +Vested ($) +Gregory A. Woods +25,000 +— +7.9100 +9/4/22 +37,500 +12,500 +13.8000 +5/22/24 +25,000 +25,000 +13.9500 +3/16/25 +12,500 +37,500 +15.0100 +3/14/26 +— +50,000 +12.8500 +3/13/27 +18,798 +(b) +253,773 +62,744 +847,044 +David S. Smith +— +50,000 +13.8000 +1/22/28 +15,000 +202,500 +John P. Jordan +— +— +— +— +Joseph P. O’Connell +4,800 +— +7.3600 +3/15/20 +5,175 +— +8.3500 +3/29/22 +5,625 +1,875 +14.2000 +3/17/24 +6,253 +(d) +84,416 +13,386 +180,711 +Michael Morawetz +837 +— +8.3500 +3/29/22 +3,525 +1,175 +14.2000 +3/17/24 +2,618 +(e) +35,357 +6,693 +90,356 +Stephen M. Petrarca +844 +— +8.3500 +3/29/22 +3,450 +1,150 +14.2000 +3/17/24 +2,337 +(f) +31,550 +6,693 +90,356 +Michael J. Natalizia +1,000 +— +8.9500 +4/1/18 +1,000 +— +6.2200 +3/18/19 +1,000 +— +7.3600 +3/15/20 +1,000 +— +7.9500 +3/14/21 +3,575 +— +8.3500 +3/29/22 +3,750 +1,250 +14.2000 +3/17/24 +2,190 +(g) +29,565 +6,693 +90,356 +(a) +Options vest in four equal annual installments commencing on the first anniversary of the option grant date (which is ten years prior to the expiration date). +(b) +Consists of (i) 134 shares of restricted stock that vested on March 16, 2018; (ii) 134 shares of restricted stock that will vest on March 16, 2019; (iii) +15,207 restricted stock units that will vest in equal tranches on May 20, 2018 and 2019; (iv) 1,008 shares of restricted stock that vested on March 14, 2018; (v) 2,014 shares of restricted stock that will vest in equal tranches on +March 14, 2019 and 2020; (vi) 150 restricted stock units that vested on March 14, 2018; and (vii) 151 restricted stock units that will vest on March 14, 2019. +(c) +Includes performance-based restricted stock units held by the Named Executive Officers, which may be earned based upon the increase in net sales, if +any, achieved in each of fiscal years 2016, 2017, and 2018 relative to a three-year net sales increase goal. Shares earned based on organic revenue growth are fully vested when earned, while those earned based on revenue growth via acquisitions will +vest annually over a three-year period following the fiscal year in which the revenue growth occurs. On March 12, 2018, the Compensation Committee determined that a portion of the shares were earned by the Named Executive Officers based upon organic +revenue growth. +26 +The total number of these performance-based restricted stock units held by each Named Executive Officer as of January 31, 2018 and the number of shares earned based on fiscal year 2018 net +sales are as follows: +Name +Performance-based Restricted Stock Units +held as of January 31, +2018 +Shares Earned based on Organic Revenue +Growth during Fiscal +2018 +Mr. Woods +62,744 +3,267 +Mr. Smith +— +— +Mr. Jordan +— +— +Mr. O’Connell +13,386 +697 +Mr. Morawetz +6,693 +348 +Mr. Petrarca +6,693 +348 +Mr. Natalizia +6,693 +348 +(d) +Consists of (i) 6,189 restricted stock units that will vest in two equal tranches on May 20, 2018 and 2019; (ii) 32 restricted stock units that vested on +March 14, 2018; and (iii) 32 restricted stock units that will vest on March 14, 2019. +(e) +Consists of (i) 2,586 restricted stock units that will vest in two equal tranches on May 20, 2018 and 2019; (ii) 16 restricted stock units that vested on +March 14, 2018; and (iii) 16 restricted stock units that will vest on March 14, 2019. +(f) +Consists of (i) 2,305 restricted stock units that will vest in two equal tranches on May 20, 2018 and 2019; (ii) 16 restricted stock units that vested on +March 14, 2018; and (iii) 16 restricted stock units that will vest on March 14, 2019. +(g) +Consists of (i) 2,158 restricted stock units that will vest in two equal tranches on May 20, 2018 and 2019; (ii) 16 restricted stock units that vested on +March 14, 2018; and (iii) 16 restricted stock units that will vest on March 14, 2019. +Grants of Plan-Based Awards +The following table provides information on all plan-based awards by the Company for the fiscal year ended January 31, 2018 to each +Named Executive Officer. +Name +Grant +Date +Estimated Possible +Payouts +Under Non-Equity Incentive Plan +Awards +All Other +Stock +Awards: +Number of +Shares of +Stock or +Units +(#) +All Other +Option +Awards: +Number +of +Securities +Underlying +Options (#) +Exercise +or Base +Price of +Option +Awards +($/Sh) +Grant +Date Fair +Value of +Stock +and +Option +Awards ($)(c) +Threshold +($)(a)(b) +Target +($)(a) +Maximum +($)(a) +Gregory A. Woods +3/13/2017 +286,443 +716,108 +50,000 +(d) +12.85 +252,742 +David S. Smith +— +— +15,000 +(e) +207,000 +50,000 +(f) +13.80 +277,501 +John P. Jordan +81,113 +202,781 +Joseph P. O’Connell +37,500 +93,750 +Michael Morawetz +82,805 +207,011 +Stephen M. Petrarca +43,577 +108,941 +Michael J. Natalizia +43,750 +109,375 +(a) +Other than with respect to Messrs. Jordan and Smith, represents awards under the Company’s Short-Term Incentive Plan. See “Compensation Discussion & +Analysis – Short-Term Incentive Plan” for additional information regarding the Short-Term Incentive Plan. +(b) +The Company’s Short-Term Incentive Plan does not provide for any threshold payment amount for amounts that may be earned with respect to the Consolidated Revenue +Goal or 2018 Consolidated Operating Income Goal. +(c) +The grant date fair value of each restricted stock unit and restricted stock award is equal to the closing price of our common stock on the grant date. The assumptions +used in the calculation of the grant date fair value of option awards are included in footnote 13 to the Company’s audited financial statements for the fiscal year ended January 31, 2018, included in the Company’s Annual Report on Form 10-K filed with the SEC on April 10, 2018. +(d) +Consists of an option award issued pursuant to the Company’s 2007 Equity Incentive Plan, which will vest in four equal annual installments commencing on the first +anniversary of the grant date. +(e) +Consists of a restricted stock unit award issued pursuant to the Company’s 2015 Equity Incentive Plan, which will vest in four equal annual installments commencing +on the first anniversary of the grant date. +(f) +Consists of an option award issued pursuant to the Company’s 2015 Equity Incentive Plan, which will vest in four equal annual installments commencing on the first +anniversary of the grant date. +27 +Option Exercises and Stock Vested +The following table provides information on all exercises of +options by the Named Executive Officers and vesting of restricted stock awards during the fiscal year ended January 31, 2018. +Option Awards +Stock Awards +Name +Number of +Shares Acquired +on Exercise (#) +Value Realized +on Exercise ($) +Number of +Shares Acquired +on Vesting (#) +Value Realized +On Vesting ($)(a) +Gregory A. Woods +— +— +13,501 +183,897 +David S. Smith +— +— +— +— +John P. Jordan +— +— +— +— +Joseph P. O’Connell +10,000 +34,050 +4,109 +56,693 +Michael Morawetz +3,500 +11,393 +1,800 +24,758 +Stephen M. Petrarca +6,500 +19,902 +1,659 +22,770 +Michael J. Natalizia +1,600 +4,574 +1,586 +21,741 +(a) +The amounts shown are calculated based on the closing market price of the Company’s common stock on the date of vesting multiplied by the number of shares or +restricted stock units that vested. +Potential Payments upon Termination or Change-in-Control +The following table provides information +regarding the estimated amounts payable to Mr. Woods pursuant to the CIC Agreement and Mr. Morawetz pursuant to his employment agreement with the Company, in each case assuming that the trigger event occurred on January 31, 2018, the +last day of the Company’s most recently completed fiscal year. The amounts shown as payable upon the triggering events described do not include amounts earned by the individual and accrued before the occurrence of the triggering event but +payable after the triggering event, such as accrued and unpaid salary or the value of accrued but unused paid-time-off. +Name and Trigger Event +Cash ($) +Equity ($) +Perquisites/ +Benefits ($) +Total ($) +Gregory A. Woods +1,002,551 +1,133,317 +(a) +160,784 +(b) +2,296,652 +Termination of Mr. Woods’ employment during the CIC Period by the Company without cause or by Mr. Woods for +good reason +Michael Morawetz +666,026 +— +— +666,026 +Termination of Mr. Morawetz’s employment by the Company without cause +(a) +Represents the value attributable to the acceleration of vesting of +(i) in-the-money options to purchase 50,000 shares of common stock, which is equal to the difference between the applicable option exercise price and the closing +price of the Company’s common stock as reported by the NASDAQ Global Market on January 31, 2018, multiplied by the number of shares underlying the options, and (ii) 81,542 restricted stock awards and units, which is equal to the closing +sale price of the Company’s common stock on January 31, 2018, multiplied by the number of restricted stock awards and units for which vesting would be accelerated. +(b) +Value represents $47,162 attributable to the cost of continuing health benefits and $113,622 in costs for outplacement services. +28 +Risk Related to Compensation Policies +The Company’s compensation policies and practices for +its employees, including its executive compensation program described in Compensation Discussion and Analysis, aim to provide a risk-balanced compensation package which is competitive in our market sectors and relevant to the individual executive. +Pursuant to STIP and LTIP, the Company expects to continue to award to certain executives and employees, upon satisfaction of applicable performance conditions and subject to future approval and grant by the Compensation Committee, equity and +cash-based awards. Because the STIP and LTIP provide for a blend of short-term and long-term goals, and include substantial vesting features, the Company believes that the structure of its compensation plans discourages short-term risk taking and +aligns the interest of its executives and managers with those of its shareholders. The Company does not believe that risks arising from these practices, or its compensation policies and practices considered as a whole, are reasonably likely to have +a material adverse effect on the Company. +CEO +PAY RATIO DISCLOSURE +In accordance with SEC +guidelines, the Compensation Committee reviewed a comparison of our CEO’s annual total compensation in fiscal year 2018 to that of the median employee for the same period. We selected December 31, 2017 as the date on which to determine our +median employee. As of that date, we had approximately 356 employees worldwide, of which approximately 280 employees were located in the United States and U.S. territories. +In determining the annual total compensation of the median +employee, we calculated such employee’s compensation in accordance with Item 402(c)(2)(x) of Regulation S-K as required by SEC rules. This calculation is the same calculation used to determine total +compensation for purposes of the 2018 Summary Compensation Table with respect to each of the named executive officers. +Based on the foregoing, for our 2018 fiscal year: +• +The median of the annual total compensation of all of our employees, other than our CEO, was $51,991. +• +Our CEO’s annual total compensation, as reported in the Total column of the 2018 Summary Compensation Table, was $703,224. +• +Based on this information, the ratio of the annual total compensation of our CEO to the median of the annual total compensation of all employees is +approximately 13.5 to 1. +RELATED PARTY TRANSACTIONS +Potential conflicts of interest and related party transactions are referred by the Board to the Audit Committee for review and approval. +In reviewing and evaluating potential conflicts of interest and related party transactions, the Audit Committee uses applicable NASDAQ listing standards and SEC rules as a guide. +Other than as described below, no officer, director or +nominee for director of the Company or any associate of any of the foregoing had during the fiscal year ended January 31, 2018 any material interest, direct or indirect, in any material transaction or any material proposed transaction in which +the amount exceeds $120,000 and to which the Company was or is to be a party. +29 +During the fiscal year ended January 31, 2018, the Company employed Christopher +Pizzuti, a son of Everett V. Pizzuti, as a Product Identification Field Sales Engineer. The aggregate amount of compensation paid by the Company to Christopher Pizzuti during fiscal year 2018 was $122,050, consisting of $113,013 in salary and sales +commissions, an automobile allowance of $7,644, a vacation payout of $800, and a matching contribution to his Profit Sharing Plan account of $593. +On May 1, 2017, the Company entered into a stock repurchase agreement (the “Stock Repurchase Agreement”) with the trust +established by Albert W. Ondis by Declaration of Trust dated December 4, 2003, as amended (the “Trust”) to repurchase 826,305 shares of the Company’s common stock held by the Trust at a per share price of $13.60, for an aggregate +repurchase price of $11,237,748.00 (the “Stock Repurchase”). The Stock Repurchase was consummated on May 2, 2017 and was funded using existing cash on hand. The Company has been informed that, following the Stock Repurchase, the +Trust owns 36,000 shares of the Company’s common stock. +April L. Ondis, a director of the Company, is a beneficiary of the Trust. The Stock Repurchase was authorized and approved by the Company’s Audit Committee as a related party transaction. Prior to +entering into the Stock Repurchase Agreement, the Company obtained an opinion from an independent investment banking firm that the consideration to be paid by the Company to the Trust pursuant to the Stock Repurchase Agreement would be fair to the +public stockholders of the Company, other than the Trust, from a financial point of view. +EQUITY COMPENSATION PLAN INFORMATION +The following table sets forth information about the Company’s equity compensation plans as of January 31, 2018: +Plan Category +Number of Securities to +be Issued Upon Exercise +of Outstanding Options, +Warrants and +Rights +Weighted- +Average Exercise +Price of +Outstanding +Options, +Warrants +and +Rights +Number of Securities +Remaining Available for +Future Issuance Under +Equity +Compensation +Plans +Equity Compensation Plans Approved by Shareholders +912,690 +(1) +$ +12.52 +(2) +54,916 +(3) +Equity Compensation Plans Not Approved by Shareholders +— +— +— +Total +912,690 +(1) +$ +12.52 +(2) +54,916 +(1) +Includes 554,870 shares issuable upon exercise of outstanding options granted under the Company’s 2007 Equity Incentive Plan; and 190,400 shares issuable upon +exercise of outstanding options granted and 167,420 restricted stock units outstanding under the Company’s 2015 Equity Incentive Plan. Refer to footnote 13 to the Company’s audited financial statements for the fiscal year ended +January 31, 2018 included in the Company’s Annual Report on Form 10-K filed with the SEC on April 10, 2018 for further discussion. +(2) +Does not include restricted stock units. +(3) +Represents 15,709 shares available for grant under the 2015 Equity Incentive Plan and 39,207 shares available for issuance under the Company’s Employee Stock +Purchase Plan. This balance does not include 9,927 shares issued pursuant to outstanding unvested restricted stock awards which are subject to forfeiture. +30 +PROPOSAL NO. 2 +ADVISORY VOTE ON EXECUTIVE COMPENSATION +As required by the Section 14A(a)(2) of the Exchange Act, the Board is providing shareholders with the opportunity to cast an +advisory vote on the Company’s executive compensation at the annual meeting through the following resolution: +“RESOLVED, that the shareholders approve the Company’s executive compensation, as described in the Compensation Discussion and +Analysis and the tabular disclosure regarding Named Executive Officer compensation (together with the accompanying narrative disclosure) in this Proxy Statement.” +The Board believes that the Company’s compensation +policies and procedures, which are described more fully in the “Compensation Discussion and Analysis” section of this Proxy Statement and in the tables and narrative in the “Executive Compensation” section, are strongly aligned +with the long-term interests of shareholders. These policies and procedures balance short-term and longer-term compensation opportunities to assure that the Company meets short-term objectives while continuing to produce value for our shareholders +over the long term. +Approval of this proposal +requires the affirmative vote of a majority of the shares of common stock represented in person or by proxy at the annual meeting. This vote will not be binding on or overrule any decisions by the Board or any committee thereof, will not create or +imply any additional fiduciary duty on the part of the Board, and will not restrict or limit the ability of the Company’s shareholders to make proposals for inclusion in proxy materials related to executive compensation. However, the +Compensation Committee and the Board will take into account the outcome of the vote when considering future executive compensation arrangements. +The Board recommends a vote “FOR” approval of the Company’s executive compensation, as described in the Compensation +Discussion and Analysis, and the tabular disclosure regarding Named Executive Officer compensation (together with accompanying narrative disclosure) in this Proxy Statement. +AUDIT COMMITTEE REPORT +The Audit Committee of the Board is responsible for providing +independent, objective oversight of the Company’s accounting functions and internal controls. The Audit Committee is composed of three directors, each of whom is independent as defined by the NASDAQ listing standards and SEC rules. The Audit +Committee operates under a written charter approved by the Board. +Management is responsible for the Company’s internal controls and financial reporting process. The independent accountants are responsible for performing an independent audit of the Company’s +consolidated financial statements in accordance with generally accepted auditing standards and issuing a report thereon. The Audit Committee’s responsibility is to monitor and oversee these processes. +The Audit Committee’s responsibilities focus on two +primary areas: (1) the adequacy of the Company’s internal controls and financial reporting process and the reliability of the Company’s financial statements; and (2) the independence and performance of the Company’s +independent accountants. The Audit Committee has sole authority to select, evaluate and when appropriate, to replace the Company’s independent auditors. +31 +The Audit Committee has met with management and the Company’s independent +accountants, Wolf & Company, P.C., to review and discuss the January 31, 2018 financial statements. Management represented to the Committee that the Company’s consolidated financial statements were prepared in accordance with +generally accepted accounting principles, and the Audit Committee has reviewed and discussed the consolidated financial statements with management and the independent accountants. The Audit Committee also discussed with Wolf & Company, P.C. +the matters required by Auditing Standard No. 16 ( Communication with Audit Committees ) issued by the Public Company Accounting Board. The Audit Committee also received from Wolf & Company, P.C. the written disclosures and the +letter from Wolf & Company, P.C. pursuant to applicable requirements of the Public Company Accounting Oversight Board regarding Wolf & Company, P.C.’s communications with the Audit Committee concerning independence, and has +discussed with Wolf & Company, P.C. its independence from the Company. +The Audit Committee received the information concerning the fees of Wolf & Company, P.C. for the year ended January 31, 2018 set forth below under “Independent Accountant Fees and +Services.” When applicable, the Audit Committee considers whether the provision of non-audit services is compatible with maintaining the independence of the independent accountants. Wolf & +Company, P.C. did not provide any non-audit services during the fiscal year ended January 31, 2018. +Based upon the review and discussions referred to above, the Audit Committee recommended that the Board include the audited consolidated +financial statements in the Company’s Annual Report on Form 10-K for the year ended January 31, 2018, to be filed with the SEC. +Audit Committee: +Harold Schofield +Mitchell I. Quain +32 +PROPOSAL NO. 3 +APPROVAL OF THE COMPANY’S 2018 EQUITY INCENTIVE PLAN +The Company is requesting shareholder approval of the +AstroNova, Inc. 2018 Equity Incentive Plan, or the 2018 Plan, which was approved by the Board, subject to shareholder approval, on April 30, 2018. +The Board believes that the use of long-term, equity-based compensation as a component of our senior corporate leaders’, practice +leaders’ and other key revenue generators’ total compensation aligns the interests of our management team with the interests of our shareholders and creates substantial incentives for our management team to achieve our long-term goals. The +Board has reviewed a range of projections for future equity awards, which indicates that the current number of shares of common stock issuable under the Company’s 2015 Equity Incentive Plan (the “2015 Plan”), the only plan pursuant to +which the Company currently grants equity-based compensation awards, will be insufficient for maintaining equity awards as a core component of our long-term incentive program. As of May 3, 2018, the number of shares still available for issuance +under the 2015 Plan was 59,284. For fiscal years 2018, 2017, and 2016, the Company’s burn rate, which measures the usage of shares under the Company’s equity incentive plans, was 2.6%, 1.5%, and 4.7%, respectively, resulting in an average +burn rate over that period of 2.9%. We calculate burn rate by dividing the number of shares subject to awards granted during each fiscal year, net of forfeitures and cancellations, by the weighted average number of shares outstanding during that +fiscal year. We believe that our three-year average annual burn rate of 2.9% is well within the range considered reasonable under the proxy policies of most institutional shareholders. +We believe that if our shareholders do not adopt the 2018 Plan, our ability to attract, retain, and motivate +our senior corporate leaders, practice leaders and other key revenue generators could be impaired because we will not have a sufficient number of shares to make appropriate grants to them under our long-term incentive program. +If the 2018 Plan is approved by the Company’s +shareholders, the Company will not grant new equity awards pursuant to the 2015 Plan. The total number of shares of our common stock issuable under the 2018 Plan will be 650,000, plus an additional number of shares (not to exceed 821,637) subject to +outstanding awards under the 2015 Plan that are forfeited, cancelled, reacquired by us or terminated in the future and that, had they been issued under the 2018 Plan, would have been available for future grants. +The Board recommends that our shareholders approve the 2018 +Equity Incentive Plan, so that we can continue to provide equity awards pursuant to our long-term incentive program and thereby continue to attract and retain talented personnel. Approval of the 2018 Equity Incentive Plan requires the affirmative +vote of a majority of the shares of common stock represented in person or by proxy at the annual meeting. +Description of the 2018 Equity Incentive Plan +The following is a brief summary of the material features of the 2018 Plan. This summary does not purport to be complete and is qualified in its entirety by reference to the 2018 Plan, a copy of which is +attached to this proxy statement as Appendix A. +Purpose. The 2018 Plan is intended to promote the best interests of the Company and its shareholders and is +designed to attract, retain and motivate executives, other key employees, directors and certain other individuals providing services to the Company by providing them with the opportunity to enhance their own financial interest through acquisition of +stock in the Company and participation in the long-term growth and financial success of the Company, thereby strengthening the financial relationship between these individuals and shareholders. +33 +Authorized Shares. The maximum number of shares of +common stock of the Company authorized for issuance under the 2018 Plan is 650,000, subject to adjustment for changes to our capital structure as provided in the 2018 Plan. Shares of stock will not be deemed issued pursuant to the 2018 Plan to the +extent an award is settled in cash in lieu of stock. Shares subject to awards issued under the 2018 Plan or awards outstanding under the 2015 Plan as of the date the 2018 Plan is approved by shareholders that are forfeited, canceled, satisfied +without the issuance of stock, otherwise terminated, or, for shares of stock issued pursuant to any unvested award, reacquired by the Company at not more than the grantee’s purchase price (other than by exercise) will be “added back” +and become available for future awards. Shares tendered or withheld in satisfaction of the exercise price of an option or withheld in satisfaction of tax withholding obligations will not be “added back” or otherwise increase the number of +shares available for grant under the 2018 Plan. Shares issued under the 2018 Plan may be of original issuance, treasury shares or other shares, or a combination of the foregoing. +Shares of common stock issued as substitution awards in +connection with the Company’s merger with or acquisition of another company will not decrease the number of shares available for grant under the 2018 Plan, but shares of common stock subject to substitution awards will not be available for +further awards under the 2018 Plan if the substitution awards are forfeited, expire or are settled in cash. The Company may use shares under a pre-existing, shareholder approved plan of a company acquired by +the Company for awards under the 2018 Plan, which shares will not decrease the number of shares available for grant under the 2018 Plan, but such shares may only be used for grants of awards made prior to the expiration of the pre-existing plan and to persons who were not employees or directors of the Company or any subsidiary prior to such acquisition. +Administration. The 2018 Plan +is administered by the Committee. The Committee may delegate to the CEO the right to grant awards to employees who are not directors or executive officers of the Company. The Committee is authorized to interpret the 2018 Plan and related agreements +and documents and to take various other actions with respect thereto. +Eligibility. Awards under the 2018 Plan may be granted to executive officers and other employees of the Company and its subsidiaries and the Company’s non-employee directors. In addition, the Committee may select certain consultants and advisers to the Company or its subsidiaries to receive awards under the 2018 Plan. Incentive stock options may be granted only to +individuals who, as of the time of grant, are employees of the Company or its subsidiaries. The 2018 Plan’s eligibility criteria are intended to encompass a group which is currently estimated at approximately 360 individuals, which includes 5 non-employee directors and 5 executive officers. The actual number of individuals who will receive an award cannot be determined in advance because the Committee has discretion to select the participants. +Available +Awards. The 2018 Plan allows for a range of equity-based compensation, including stock options, stock appreciation rights (“SARs”), restricted stock, restricted stock units (“RSUs”) and other +stock-based awards. Each type of award is described below under “Types of Awards Authorized Under the 2018 Plan.” Each award granted under the 2018 Plan will be evidenced by an award agreement containing such terms and provisions, +consistent with the 2018 Plan, as the Committee may approve. +Limit on Director Awards. The 2018 Plan provides that the aggregate grant date fair value (computed as of the date of grant in accordance with applicable financial accounting +rules) of all awards granted to any non-employee director during any single fiscal year, excluding awards to a director as all or a portion of Board or committee retainers or meeting fees or pursuant to any +election by a Director to receive an Award in lieu of all or a portion of any cash retainers or meeting fees, shall not exceed $100,000. +34 +Minimum Vesting Requirements . Awards granted to employees +under the 2018 Plan (other than substitute awards in connection with an acquisition) may not vest or otherwise become exercisable earlier than one year following the date of grant, subject to accelerated vesting in the Committee’s discretion in +the event of the death or Disability (as defined in the 2018 Plan) of the participant, special circumstances determined by the Committee, or a Change in Control (as defined in the 2018 Plan). The foregoing vesting restrictions do not apply to grants +of up to 5% of the number of shares of the Company’s common stock available for awards on the effective date of the 2018 Plan or to awards granted to non-employee directors or consultants. +Repricing Prohibited. The +Committee may not authorize the amendment of an outstanding option or SAR that would be treated as a repricing under the rules of the securities exchange or market system constituting the primary market for the shares, without the approval of the +Company’s shareholders. However, appropriate adjustments may be made in connection with corporate transactions and capital restructurings and as necessary to comply with applicable law. +Clawback . The 2018 Plan provides that award agreements issued under it may +provide for the cancellation or clawback of certain awards or a portion of the realized gain if, prior to a change in control of the Company, there is an accounting restatement due to material noncompliance by the Company with any financial +reporting requirement under the securities laws which reduces the amount of the awards that would have been paid or vested had the financial results been properly reported or if the Company is otherwise required by applicable law or Company policy +to recoup any such amounts. +Types of Awards +Authorized Under the 2018 Plan. The following types of awards may be granted under the 2018 Plan: +Stock Options . Stock options may be granted that entitle the optionee to purchase shares of Company +common stock at a price not less than fair market value per share as of the date of grant (except for substitution awards) at such time or times, or upon such event or events, and subject to such terms, conditions, performance criteria and +restrictions as the Committee may determine. The maximum term for stock options is 10 years. However, incentive stock options (“ISOs”) granted to any person who owns, as of the date of grant, stock possessing more than 10% of the total +combined voting power of all classes of our stock must have an exercise price that is not less than 110% of the fair market value of Company common stock on the date of grant and may not have a term extending beyond the fifth anniversary of the date +of grant. Stock options may be granted as ISOs, nonstatutory stock options, or combinations of the foregoing. If the fair market value of the shares underlying the awards (measured on the date incentive stock options are granted) that first becomes +exercisable in a calendar year is greater than the maximum allowed under the Code, the portion of such options which exceeds such amount will be treated as nonstatutory stock options. +The 2018 Plan provides that the option exercise price may be paid (i) in cash, by check, or in cash +equivalent, (ii) by tender of Company’s common stock owned by the participant having a fair market value not less than the exercise price , (iii) with the consent of the Committee, by the assignment of the proceeds of a sale with +respect to some or all of the shares being acquired upon the exercise of the option, or (iv) pursuant to a “net exercise” arrangement as permitted by the Committee whereby the participant directs the Company to deduct from the shares +of stock issuable upon exercise of an option a number of shares having an aggregate fair market value equal to the sum of the total exercise price of such option and/or the amount of the participant’s minimum tax withholding. Payment of an +option exercise price may also be made by such other lawful consideration as approved by the Committee or by any combination of the foregoing. +35 +In the event that on the last business day of the term of a nonstatutory option +(i) the exercise of the option is prohibited by applicable law or (ii) shares may not be purchased or sold by certain employees or directors of the Company due to the “black-out period” of +a Company policy or a “lock-up” agreement undertaken in connection with an issuance of securities by the Company, the term of that nonstatutory option will be extended for a period of thirty +(30) days following the end of the legal prohibition, black-out period or lock-up agreement in each case to the extent any such extension does not constitute the +extension of a stock right under Section 409A of the Code. +Stock options are nontransferable by the participant, other than by will or by the laws of descent and distribution, and are exercisable during the participant’s lifetime only by the participant. +However, the Committee may provide in the option award agreement or may agree in writing that a participant may transfer a nonstatutory stock option, without consideration, to members of the participant’s immediate family, to trusts for the +benefit of such family members, or to partnerships in which such family members are the only partners, provided that the transferee agrees in writing to be bound by all of the terms and conditions of the 2018 Plan and the applicable option award +agreement. +Stock Appreciation +Rights . A SAR gives a participant the right to receive the appreciation in the fair market value of the Company’s common stock between the date of grant of the award and the date of its exercise. SARs may become +exercisable at such time or times, or upon such event or events, and subject to such terms, conditions performance criteria and restrictions as the Committee may determine. The Company may pay the appreciation either in cash or in the Company’s +common stock. The maximum term of any SAR granted under the 2018 Plan is ten years. +Restricted Stock Awards . A grant of restricted stock involves the immediate transfer by the Company to a participant of ownership of a specified number of restricted shares of its common +stock at a purchase price, if any, established by the Committee. Shares subject to a Restricted Stock Award may be made subject to vesting conditioned upon the satisfaction such service requirements, conditions, restrictions or performance criteria +as the Committee may determine. The participant is entitled immediately to voting and other ownership rights in such shares, subject to the rules with respect to dividends set forth below. +Restricted Stock Units . An RSU represents a right to receive common stock of the Company +at a future date determined in accordance with the participant’s award agreement. No monetary payment is required for receipt of RSUs or the shares issued in settlement of the award, the consideration for which is furnished in the form of the +participant’s services to the Company. The Committee may grant restricted stock unit awards subject to vesting conditions similar to those applicable to restricted stock awards. Participants have no voting rights or rights to receive cash +dividends with respect to RSUs until shares of common stock are issued in settlement of such awards. However, subject to the restrictions discussed below under the heading “Dividends,” the Committee may grant RSUs that entitle their +holders to receive dividend equivalents, which are rights to receive additional RSUs for a number of shares whose value is equal to any cash dividends paid by the Company. +Other Stock-Based Awards . The +Committee may, in its discretion, grant to eligible employees other stock-based awards, as deemed by the Committee to be consistent with the purposes of the 2018 Plan. Any such awards will be subject to the minimum vesting requirements described +above. +Dividends. No recipient of an award of options or stock appreciation rights will have the right to receive +dividends or dividend equivalents with respect to such an award. Dividends or dividend equivalents credited, +36 +paid to or payable in connection with an award that is not yet vested will be subject to the same restrictions and risk of forfeiture as the underlying award and may not be paid to the recipient +until the underlying award vests. +Change in +Control. For purposes of the 2018 Plan, “Change in Control” means: +• +The acquisition of more than 50% of beneficial ownership of the combined voting stock of the Company by any person or group other than the Company or +its subsidiaries or any employee benefit plan of the Company or any person who was an officer or director of the Company on the effective date of the 2018 Plan; +• +Consummation by the Company of a reorganization, merger or consolidation in which all or substantially all of the individuals and entities who were the +beneficial owners of the voting securities of such entity immediately prior to such reorganization, merger or consolidation do not, following such reorganization, merger or consolidation, beneficially own, directly or indirectly, securities +representing more than 50% of the voting power of then outstanding voting securities of the corporation resulting from such a reorganization, merger or consolidation, unless the transaction is structured as “merger of equals” and the Board +determines that a change in control has not occurred; +• +The sale of all or substantially all of the Company’s assets to a party which is not controlled by or under common control with the Company; or +• +During any 24 month period, individuals who, as of the beginning of such period, constitute the Board (the “Incumbent Directors”) cease for +any reason to constitute at least a majority of the Board, except that individuals whose election or nomination was approved by a vote of at least a majority of the Incumbent Directors then on the Board (other than in connection with an actual or +threatened election contest) are treated as Incumbent Directors. +Impact of Change in Control on Awards. The 2018 Plan generally provides the Committee with flexibility to determine the effects of a change in control on outstanding awards. +Under the 2018 Plan, in the event of a Change in Control, the acquiring company may, without the consent of any participant, either assume the Company’s rights and obligations under outstanding awards or substitute for outstanding awards +substantially equivalent awards for the acquiring company’s stock. The determination of such substantial equality of value of consideration shall be made by the Committee in its sole discretion. +In the event the acquiring company elects not to assume or +substitute for outstanding awards of the Company in connection with a Change in Control, then the exercisability and vesting conditions applicable to such awards and any shares acquired upon exercise of such awards held by a participant whose +employment or other service has not terminated prior to the Change in Control shall be accelerated effective as of the date ten days prior to the Change in Control +Assumption or Substitution of Certain +Awards. Unless otherwise provided in an award agreement or other agreement between the Company and a participant, in the event of a Change in Control in which the acquiring corporation assumes or substitutes for an award +(or in which the Company is the ultimate parent corporation and continues the award), if a participant’s employment terminates within 18 months following such Change in Control (or such other period set forth in the award agreement) and under +the circumstances specified in the award agreement: +• +options and SARs outstanding as of the date of such termination of employment will immediately vest, become fully exercisable, and may thereafter be +exercised for 12 months (or if longer the period of time +37 +set forth in the award agreement, but in no event beyond the end of the regularly scheduled term of such options or SARs); and +• +the vesting conditions applicable to restricted stock, restricted stock units, and any other stock-based awards outstanding as of the date of such +termination of employment shall lapse and the restricted stock, restricted stock units or other stock-based awards shall become free of all restrictions, limitations and conditions and become fully vested. +Termination of Awards. Award +agreements may provide that in the event of a Change in Control, options and SARs outstanding as of the date of the Change in Control may be cancelled and terminated without payment therefor if the fair market value of one share of stock of the +Company as of the date of the Change in Control is equal to or less than the option exercise price per share or the SAR grant price. In addition, the Committee, in its discretion, may determine that, if a Change in Control, each option and SAR +outstanding shall terminate within a specified number of days after notice to the participant, and/or that each participant shall receive, with respect to each share of stock subject to such option or SAR, an amount equal to the excess of the fair +market value of such share of stock immediately prior to the occurrence of such Change in Control over the exercise price per share. +Cancellation of Award; Forfeiture of Gain. The 2018 Plan provides that the Company may retain the right to +cause a forfeiture of the gain realized by a participant on account of actions taken by the participant in violation or breach of or in conflict with any employment agreement, non-competition agreement, any +agreement prohibiting solicitation of employees or customers or any confidentiality obligation with respect to the Company and its affiliates, or otherwise in competition with the Company or its affiliates. In addition, the Company may annul an +award if the participant is an employee of the Company or its affiliates and is terminated for Cause as defined in the applicable award agreement or the 2018 Plan. +Adjustments for Changes in Capital +Structure. If the number of outstanding shares of stock of the Company is increased or decreased or the shares of stock are changed into or exchanged for a different number or kind of shares or other securities of the +Company on account of any recapitalization, reclassification, stock split, reverse split, combination of shares, exchange of shares, stock dividend or other distribution payable in capital stock, or other increase or decrease in such +shares effected without receipt of consideration by the Company, then the number and kinds of shares for which grants of awards may be made under the 2018 Plan will be adjusted proportionately by the Company. Any such adjustment in outstanding +options or SARs will not change the aggregate exercise price payable with respect to shares that are subject to the unexercised portion of an outstanding option or SAR, but will include a corresponding proportionate adjustment in the exercise price +per share for such option or SAR. +Summary of +U.S. Federal Income Tax Consequences. The following summary is intended only as a general guide to the U.S. federal income tax consequences of participation in the 2018 Plan and does not attempt to describe all possible +federal or other tax consequences of such participation or tax consequences based on particular circumstances. +Incentive Stock Options . A participant recognizes no taxable income for regular income tax purposes as a result of +the grant or exercise of an incentive stock option (ISO) qualifying under Section 422 of the Code. Participants who neither dispose of their shares within two years following the date the option was granted, nor within one year following the +exercise of the option, will normally recognize a long-term capital gain or loss +38 +equal to the difference, if any, between the sale price and the purchase price of the shares. If a participant satisfies such holding periods upon the sale of the shares, the Company will not be +entitled to any deduction for federal income tax purposes. If a participant disposes of shares within two years after the date of grant, or within one year after the date of exercise (a “disqualifying disposition”), the difference between +the fair market value of the shares on the date of exercise and the option exercise price (not to exceed the gain realized on the sale if the disposition is a transaction in which a loss, if sustained, would be recognized) will be taxed as ordinary +income at the time of disposition. Any gain in excess of that amount will be a capital gain, which will be long-term gain only if the shares were held for more than a year following option exercise. Any ordinary income recognized by the participant +upon the disqualifying disposition of the shares generally will be deductible by the Company for federal income tax purposes, except to the extent such deduction is limited by applicable provisions of the Code. +The difference between the option exercise price and the fair +market value of the shares on the date of exercise of an ISO is treated as an adjustment in computing the participant’s alternative minimum taxable income and may be subject to an alternative minimum tax which is paid if such tax exceeds the +regular tax for the year. +Nonstatutory +Stock Options . Options not qualifying as ISOs will be nonstatutory stock options having no special tax status. A participant generally recognizes no taxable income as the result of the grant of such an option, provided the exercise +price of the option is no less than the fair market value of the common stock at the time of grant. Upon exercise of a nonstatutory stock option, the participant normally recognizes ordinary income in the amount of the difference between the option +exercise price and the fair market value of the shares on the date of exercise. If the participant is an employee, such ordinary income generally is subject to withholding of income and employment taxes. Upon the sale of stock acquired by the +exercise of a nonstatutory stock option, any gain or loss, based on the difference between the sale price and the fair market value on the date of exercise, will be taxed as capital gain or loss. No tax deduction is available to the Company with +respect to the grant of a nonstatutory stock option or the sale of the stock acquired pursuant to such grant. The Company generally will be entitled to a deduction equal to the amount of ordinary income recognized by the participant as a result of +the exercise of a nonstatutory stock option, except to the extent such deduction is limited by applicable provisions of the Code. +Restricted Stock Awards . A participant acquiring restricted stock generally recognizes income only as such shares of +restricted stock vest. Upon vesting, the participant will recognize ordinary income equal to the fair market value of the vested shares at the time of vesting (less the amount, if any, paid by the participant for the vested shares). +However, a participant may elect to recognize ordinary income +upon the receipt, not the vesting, of shares of restricted stock in connection with such award, by making an election in accordance with Section 83(b) of the Internal Revenue Code. In this case, the participant recognizes ordinary income in an +amount equal to the fair market value of the shares at the time the participant received the shares (less the amount, if any, that the participant paid for the shares). +If the participant is an employee, the ordinary income +recognized at the time of vesting, or upon receipt if an “83(b) election” was made, generally is subject to withholding of income and employment taxes. Upon the sale of shares acquired pursuant to a restricted stock award, any gain or +loss, based on the difference between the sale price and the fair market value on the vesting date, or upon receipt if an “83(b) election” was made, will be taxed as capital gain or loss. The Company generally will be entitled to a +deduction equal to the amount of ordinary income recognized by the participant at the time such income was recognized, except to the extent such deduction is limited by applicable provisions of the Code. +39 +RSU Awards . A participant generally will recognize no income +upon the grant of an RSU award. Upon the settlement of such awards, participants normally will recognize ordinary income in the year of receipt in an amount equal to the cash received and the fair market value of any shares received. If the +participant is an employee, such ordinary income generally is subject to withholding of income and employment taxes. Upon the sale of any shares received, any gain or loss, based on the difference between the sale price and the fair market value on +the date such shares were received will be taxed as capital gain or loss. The Company generally will be entitled to a deduction equal to the amount of ordinary income recognized by the participant, except to the extent such deduction is limited by +applicable provisions of the Code. If the participant received shares of restricted stock upon the settlement of an RSU award, the participant generally will be taxed in the same manner as described above (see discussion under “Restricted +Stock”). +Awards to Participants Outside +the United States. The Committee may modify the terms of any award under the 2018 Plan made to a participant who is a resident or primarily employed outside the United States in order that such award will conform to +applicable laws and regulations, or so that the value and other benefits of the award to the participant, as affected by foreign tax laws and other restrictions, shall be comparable to the value of such an award to a participant who is resident or +primarily employed in the United States. +French Sub-Plan . The 2018 Plan includes special provisions, which are +referred to as the French sub-plan, for awards granted to participants who are French resident taxpayers or otherwise subject to the French social security scheme. The purpose of the French sub-plan is to provide favorable income tax and social security tax treatment under French law. In the event of any conflicts between the French sub-plan and another provision +of the 2018 Plan, the provisions of the French Sub-plan will control with respect to any awards subject to the French sub-plan. The French +Sub-plan will become effective upon the approval of the 2018 Plan by our shareholders. +Termination or Amendment. If approved by shareholders at the annual meeting, the 2018 Plan will continue in +effect until the date on which all shares available for issuance under the 2018 Plan have been issued and all restrictions on such shares under the terms of the 2018 Plan and the agreements evidencing awards granted under the 2018 Plan have lapsed. +In addition, the Board may terminate or amend the 2018 Plan at any time, provided that no amendment may be made without shareholder approval if the Board deems such approval necessary for compliance with any applicable tax requirement or any market +system on which the shares of the Company’s common stock are then listed. No termination or amendment may affect any outstanding award unless expressly provided by the Committee, and in any event, may not adversely affect an outstanding award, +without the consent of the participant, unless necessary to comply with any applicable law, regulation or rule. No awards may granted under the 2018 Plan after the tenth anniversary of the date that it is approved by the Company’s shareholders. +Nonexclusivity of the +Plan. Neither the adoption of the 2018 Plan by the Board nor the submission of the 2018 Plan to the shareholders of the Company for approval shall be construed as creating any limitations on the power of the Board to adopt +such other incentive arrangements as it may deem desirable, including, without limitation, the granting of stock options otherwise than under the 2018 Plan. +New Plan Benefits. No grants have been made with respect to the additional shares of common stock to be reserved for issuance under +the 2018 Plan. The number of shares of common stock that may be granted to executive officers and all employees, including non-executive officers and directors who are employees, and to independent directors +is indeterminable at this time, as such grants are subject to the discretion of the +40 +Compensation Committee and the Board. The Compensation Committee determines and approves the stock option compensation for the chief executive officer and all other officers. +The Board of Directors recommends a vote “FOR” +the approval of the 2018 Equity Incentive Plan. +PROPOSAL NO. 4 +RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC +ACCOUNTING +FIRM +The Audit Committee has sole authority +to select, evaluate and when appropriate, to replace the Company’s independent auditors. The Audit Committee has appointed Wolf & Company, P.C. as the Company’s independent registered public accounting firm for the fiscal year +ending January 31, 2019. Although action by the Company’s shareholders on this matter is not required, the Audit Committee believes it is appropriate to seek shareholder ratification in light of the critical role played by the independent +auditors in maintaining the integrity of Company financial controls and reporting and hereby requests the shareholders to ratify such appointment. +Approval of this proposal requires the affirmative vote of a majority of the shares of common stock represented in person or by proxy at +the annual meeting. +The Board of Directors +recommends a vote “FOR” the ratification of the appointment of Wolf & Company, P.C. as the Company’s independent registered public accounting firm for the fiscal year ending January 31, 2019. +Independent Accountants’ Fees, Services and Other Matters +The Company expects a representative of +Wolf & Company, P.C. will be present at the annual meeting with the opportunity to make a statement, if he or she so desires, and that such representative will be available to respond to appropriate questions. +Aggregate fees for professional services rendered for the +Company by Wolf & Company, P.C. for the fiscal years ended January 31, 2018 and 2017 are set forth below. The aggregate fees included in the “Audit Fees” category are billed for the fiscal years for the audit of the +Company’s annual financial statements and review of financial statements and statutory and regulatory filings or engagements. +2018 +2017 +Audit Fees +$ +222,000 +$ +205,000 +Audit-Related Fees +— +— +Tax Fees +— +— +All Other Fees +— +— +Audit Fees for the +fiscal years ended January 31, 2018 and 2017 were for professional services rendered for the audits of the financial statements of the Company, quarterly review of the financial statements included in the Company’s Quarterly Reports on +Form 10-Q, consents and other assistance required to complete the year end audit of the consolidated financial statements. +41 +Policy on Audit Committee Pre-Approval . +The Audit Committee pre-approves all audit and non-audit services provided by the independent accountants prior to the engagement of the independent accountants with +respect to such services. None of the services described above were approved by the Audit Committee under the de minimis exception provided by Rule 2-01(C)(7)(i)(c) under Regulation S-X. +FINANCIAL REPORTS +A copy of the annual report of the Company for the fiscal year ended January 31, 2018, including the Company’s annual report to +the SEC on Form 10-K, accompanies this proxy statement. Such report is not part of this proxy statement. +PROPOSALS FOR 2019 ANNUAL MEETING +The 2019 annual meeting of the shareholders of the Company is scheduled to be held on May 21, 2019, the third Tuesday in May. If a +shareholder intending to present a proposal at that meeting wishes to have such proposal included in the Company’s proxy statement and form of proxy relating to the meeting pursuant to Rule 14a-8, the +shareholder must submit the proposal to the Company no later than December 26, 2018. Shareholder proposals that are to be considered at the 2019 annual meeting but not requested to be included in the proxy statement pursuant to Rule 14a-8 must be submitted no later than March 22, 2019 and no earlier than December 22, 2018. +OTHER MATTERS +No business other than that set forth in the attached Notice of Meeting is expected to come before the annual meeting, but should any +other matters requiring a vote of shareholders arise, including a question of adjourning the meeting, the persons named in the accompanying proxy will vote thereon according to their best judgment in the interests of the Company. In the event any of +the nominees for the office of director should withdraw or otherwise become unavailable for reasons not presently known, the persons named as proxies will vote for other persons in their place in what they consider the best interests of the Company. +You are urged to sign and return your proxy +promptly to make certain your shares will be voted at the meeting. You may revoke your proxy at any time before it is voted. +By Order of the Board of Directors +Peter M. Rosenblum +Secretary +42 +Appendix A +ASTRONOVA, INC. +2018 EQUITY INCENTIVE PLAN +SECTION 1. PURPOSE +This 2018 Equity Incentive Plan (the +“ Plan ”) is intended to promote the best interests of the Company and its shareholders and is designed to attract and retain the best available talent and encourage the highest level of performance by, and provide additional +incentive to (a) executives and other key employees of the Company and any other Participating Company (as defined below), (b) Directors, and (c) certain other individuals providing services to the Company and any other Participating +Company. The Company intends that this purpose will be effected by providing for Awards in the form of stock and/or stock-based cash awards as provided in the Plan, which afford Participants the opportunity to enhance their own financial interests +through the acquisition of shares of Company Stock and participation in the long-term growth and financial success of the Company, thereby strengthening the financial relationship between Participants and Company shareholders. The terms of the Plan +shall be interpreted in accordance with this intention. +SECTION 2. DEFINITIONS AND CONSTRUCTION +2.1 Definitions . Whenever used herein, the following terms shall have their respective meanings set forth below: +“ Acquiring Corporation ” shall +have the meaning set forth in Section 11.1 hereof. +“ Award ” means any Option, SAR, Restricted Stock Award or Other Stock-Based Award granted under the Plan. +“ Award Agreement ” means a written agreement +between the Company and a Participant setting forth the terms, conditions and restrictions of the Award granted to the Participant. +“ Board ” means the Board of Directors of the Company. +“ Cashless Exercise ” shall have the meaning +set forth in Section 6.3 hereof. +“ Cause ” shall have the meaning given such term in the applicable Award Agreement and, in the absence of any such +definition, means (x) any material breach by the Participant of any agreement to which the Participant and a Participating Company are both parties, (y) any act or omission to act by the Participant which may have a material and adverse +effect on a Participating Company’s business or on the Participant’s ability to perform services for a Participating Company, including, without limitation, the commission of any crime (other than ordinary traffic violations), or +(z) any material misconduct or material neglect of duties by the Participant in connection with the business or affairs of a Participating Company. +“ Change in Control ” means: +(a) the acquisition of more than 50% of the beneficial ownership of the combined voting securities of the Company by any +person or group (as such terms are used in Section 13(d) and 14(d) of the Exchange Act), other than the Company or its subsidiaries or any employee benefit plan of the Company or any person who was an officer or Director of the Company on the +Effective Date of the Plan; +A-1 +(b) consummation by the Company of a reorganization, merger or +consolidation, in each case, with respect to which all or substantially all of the individuals and entities who were the beneficial owners of the voting securities of such entity immediately prior to such reorganization, merger or consolidation do +not, following such reorganization, merger or consolidation, beneficially own, directly or indirectly, securities representing more than 50% of the voting power of then outstanding voting securities of the corporation resulting from such a +reorganization, merger or consolidation, provided that the forgoing shall not apply if the transaction is structured as “merger of equals” and the Board determines that a Change in Control has not occurred; +(c) the sale, exchange or other disposition +(in one transaction or a series of related transactions) of all or substantially all of the assets of the Company (on a consolidated basis) to a party which is not controlled by or under common control with the Company; or +(d) a change in the composition of the Board +during any period of twenty-four months (not including any period prior to the Effective Date of this Plan), such that the individuals who at the beginning of such period, constitute the Board (such Board shall be hereinafter referred to as the +“ Incumbent Board ”) cease for any reason to constitute at least a majority of the Board; provided , however , for purposes of this paragraph, that any individual who becomes a member of the Board +subsequent to the Effective Date, whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a two-thirds (2/3) of those individuals who are members +of the Board and who were also members of the Incumbent Board (or deemed to be such pursuant to this proviso) shall be considered as though such individual were a member of the Incumbent Board; but, provided further , that any such +individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) +or other actual or threatened solicitation of proxies or consents by or on behalf of “Persons” (as such term is used for purposes of Section 13(d) or 14(d) of the Exchange Act) other than the Board shall not be so considered as a +member of the Incumbent Board; +provided , however , that notwithstanding the foregoing, with respect to any Award that is determined to be “non-qualified deferred compensation” within the meaning of Section 409A of the Code, an event shall not be considered to be a Change in Control under the Plan for purposes of any payment in respect +of such Award unless such event is also a “change in ownership,” a “change in effective control” or a “change in the ownership of a substantial portion of the assets” of the Company within the meaning of +Section 409A of the Code. +“ Code ” means the Internal Revenue Code of 1986, as amended, and any applicable regulations promulgated thereunder. +“ Committee ” means the +Compensation Committee or other committee of the Board duly appointed to administer the Plan and having such powers as shall be specified by the Board. It is intended that each member of the Committee shall be an Independent Director and a “Non-Employee Director” within the meaning of Rule 16b-3 under the Exchange Act (or any successor provision), but the authority and validity of any act taken or not +taken by the Committee shall not be affected if any person administering the Plan is not a Non-Employee Director. +“ Company ” means AstroNova, Inc., a Rhode Island corporation, or any successor company thereto. +“ Consultant ” means a person engaged to +provide consulting or advisory services (other than as an Employee or a Director) to a Participating Company. +A-2 +“ Director ” means a member of the Board or of the board of directors of +a Participating Company. +“ Disability ” shall have the meaning given such term in the applicable Award Agreement and, in the absence of any such +definition, shall have the meaning set forth in Section 409A of the Code, as the same may be amended from time to time. Section 409A of the Code currently defines “Disability” as (a) the inability to engage in any +substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months or (b) by reason or any +medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months and the service recipient is receiving income replacement payments for at +least three months under a plan covering employees. Notwithstanding the foregoing, with respect to rules regarding expiration of an Incentive Stock Option following termination of the Participant’s Service, Disability shall have the meaning +specified in Section 22(e)(3) of the Code. +“ Dividend Equivalent ” means a credit, made at the discretion of the Committee or as otherwise provided by the Plan, to +the account of a Participant in an amount equal to the cash dividends paid on one share of Stock for each share of Stock represented by an Award (other than an Option or SAR) held by such Participant. +“ Effective Date ” shall have the meaning set +forth in Section 17 hereof. +“ Employee ” means any person treated as an employee (including an officer or a Director who is also treated as an +employee) in the records of a Participating Company; provided , however , that neither service as a Director nor payment of a director’s fee shall be sufficient to constitute employment for purposes of the +Plan; and provided further that for purposes of Section 5.1 hereof, the definition of Participating Company as used above shall be limited to the Company, and any present or future “parent or subsidiary corporation” of the Company as +defined in Sections 424(e) and 424(f) of the Code. +“ Exchange Act ” means the Securities Exchange Act of 1934, as amended. +“ Fair Market Value ” means, as of any date, +the value of a share of Stock or other property as determined by the Committee, in its discretion, or by the Company, in its discretion, if such determination is expressly allocated to the Company herein, subject to the following: +(a) If, on such date, the Stock is listed on +a national or regional securities exchange or market system, the Fair Market Value of a share of Stock shall be the closing price of a share of Stock on such national or regional securities exchange or market system constituting the primary market +for the Stock. If the relevant date does not fall on a day on which the Stock has traded on such securities exchange or market system, the date on which the Fair Market Value shall be established shall be the last day on which the Stock was so +traded prior to the relevant date, or such other appropriate day as shall be determined by the Committee, in its discretion. +(b) If, on such date, the Stock is not listed on a national or regional securities exchange or market system, the Fair +Market Value of a share of Stock shall be as determined by the Committee in good faith without regard to any restriction other than a restriction which, by its terms, will never lapse. +“ Incentive Stock Option ” means an Option intended to be (as set forth in the Award Agreement) +and which qualifies as an “incentive stock option” within the meaning of Section 422(b) of the Code or any successor provision thereto as in effect from time to time. +A-3 +“ Independent Director ” means any Director of the Company who shall +meet the listing standards relating to independence of NASDAQ or other relevant listing standards. Without limiting the generality of the foregoing, an Independent Director shall not be a current employee of the Company or a member of an +“affiliated group,” as such term is defined in Section 1504(a) of the Code, which includes the Company. +“ NASDAQ ” means The NASDAQ Stock Market or any successor thereto. +“ Net Exercise ” means a Participant’s ability to exercise an Option by directing the +Company to deduct from the shares of Stock issuable upon exercise of his or her Option a number of shares having an aggregate Fair Market Value equal to the aggregate exercise price, and at the Company’s discretion the amount of the +Participant’s minimum tax withholding (if any), whereupon the Company shall issue to the Participant the net remaining number of shares of Stock after such deductions. +“ Nonstatutory Stock Option ” means an Option +not intended to be (as set forth in the Award Agreement) or which does not qualify as an Incentive Stock Option. +“ Option ” means any option to purchase Stock granted pursuant to Section 6 hereof. +“ Other Stock-Based Award ” means any right +granted under Section 9 hereof. +“ Participant ” means any eligible person selected by the Committee to receive an Award under the Plan. +“ Participating Company” shall +mean the Company, any parent entity that controls the Company or any Subsidiary. +“ Plan ” means this 2018 Equity Incentive Plan, as amended from time to time. +“Pool ” has the meaning set forth in Section 4.1 hereof. +“ Prior Plan ” shall mean the Company’s 2015 Equity Incentive Plan. +“ Restricted Stock ” means Stock granted to a +Participant pursuant to the terms and conditions of Section 8 hereof. +“ Restricted Stock Award ” means an Award of Restricted Stock or a Restricted Stock Unit. +“ Restricted Stock Unit ” means a bookkeeping entry representing a right granted to a Participant to receive in cash or +Stock the Fair Market Value of a share of Stock granted pursuant to the terms and conditions of Section 8 hereof. +“ Restriction Period ” has the meaning set forth in Section 8.1 hereof. +“ Rule +16b-3 ” means Rule 16b-3 under the Exchange Act, as amended from time to time, or any successor rule or regulation thereto. +“ Securities Act ” means the Securities Act of +1933, as amended. +A-4 +“ Service ” means a Participant’s employment or service with a +Participating Company, whether in the capacity of an Employee, a Director or a Consultant. A Participant’s Service shall not be deemed to have terminated merely because of a change in the capacity in which the Participant renders Service to the +Participating Company or as a result of a transfer from one Participating Company to another, provided that there is no interruption or termination of the Participant’s Service. Furthermore, a Participant’s Service may be deemed, as +provided in the applicable Award Agreement, not to have terminated if the Participant takes any military leave, sick leave, or other bona fide leave of absence approved by the Participating +Company; provided , however , that if any such leave exceeds ninety (90) days, on the one hundred eighty-first (181st) day of such leave any Incentive Stock Option held by such Participant shall cease to +be treated as an Incentive Stock Option and instead shall be treated thereafter as a Nonstatutory Stock Option unless the Participant’s right to return to Service is guaranteed by statute or contract. Notwithstanding the foregoing, unless +otherwise designated by the Participating Company or required by law, a leave of absence shall not be treated as Service for purposes of determining vesting under the Participant’s Award Agreement. A Participant’s Service shall be deemed +to have terminated either upon an actual termination of Service or upon the date that a Subsidiary for which the Participant performs Service ceases to be a Subsidiary. Subject to the foregoing, the Company, in its discretion, shall determine +whether the Participant’s Service has terminated and the effective date of such termination. +“ Stock ” means the common stock of the Company, as adjusted from time to time in accordance with Section 10 hereof. +“ Stock Appreciation Right ” or “ SAR ” means a bookkeeping entry representing, +for each share of Stock subject to such SAR, a right granted to a Participant pursuant to Section 7 hereof to receive payment of an amount equal to the excess, if any, of the Fair Market Value of a share of Stock on the date of exercise of the +SAR over the exercise price. +“ Subsidiary ” means any present or future “subsidiary corporation” of the Company, as defined in +Section 424(f) of the Code or any other entity controlled by or under common control with the Company. +“ Substitute Awards ” means Awards granted upon assumption of, or in substitution for, outstanding awards previously +granted by a company or other entity acquired by a Participating Company or with which a Participating Company combines. +“ Ten Percent Owner ” means a Participant who, at the time an Option is granted to the Participant, owns stock possessing +more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or a Subsidiary within the meaning of Section 422(b)(6) of the Code. +“Vesting Conditions ” has the meaning set +forth in Section 8.1 hereof. +2.2 +Construction . Captions and titles contained herein are for convenience only and shall not affect the meaning or interpretation of any provision of the Plan. Except when otherwise indicated by the context, the singular shall include +the plural, the plural shall include the singular and the masculine shall include the feminine and neuter, as the context requires. Use of the term “or” is not intended to be exclusive, unless the context clearly requires otherwise. +A-5 +SECTION 3. ADMINISTRATION +3.1 Administration by the Committee. +The Plan shall be administered by the Committee. If no +committee of the Board has been appointed to administer the Plan, the Independent Directors shall exercise all of the powers of the Committee granted herein, and, in any event, the Independent Directors of the Board may, in their discretion, +exercise any or all of such powers. All questions of interpretation of the Plan or of any Award shall be determined by the Committee, and such determinations shall be final and binding upon all persons having an interest in the Plan or such Award. +3.2 Authority of Officers . +Any officer of a Participating Company shall have the authority to act on behalf of the Company with respect to any matter, right, obligation, determination or election which is the responsibility of or which is allocated to the Company herein, +provided the officer has apparent authority with respect to such matter, right, obligation, determination or election. Without limiting the generality of the foregoing, except as limited by law (including, without limitation, the Rhode Island +Business Corporation Act), regulation, the NASDAQ listing rules, or the listing rules of such other national or regional securities exchange or market system constituting the primary market for the Stock, the Committee may delegate its authority to +the Chief Executive Officer of the Company hereunder, except that the Committee will not delegate its authority with respect to compensation matters involving any executive officer, as defined under the Exchange Act and in the listing rules of +NASDAQ or such other national or regional securities exchange or market system constituting the primary market for the Stock. +3.3 Powers of the Committee . In addition to any other powers set forth in the Plan and subject to the provisions of the Plan, +the Committee shall have the full and final power and authority, in its discretion: +(a) to determine the persons to whom, and the time or times at which, Awards shall be granted and the number of shares of +Stock or units to be subject to each Award; +(b) to determine the type of Award granted and to designate Options as Incentive Stock Options or Nonstatutory Stock Options; +(c) to determine the Fair Market Value of +shares of Stock or other property; +(d) to determine the terms, conditions and restrictions applicable to each Award (which need not be identical) and any +shares acquired pursuant thereto, including, without limitation, (i) the purchase price of any Stock, (ii) the method of payment for shares purchased pursuant to any Award, (iii) the method for satisfaction of any tax withholding +obligation arising in connection with any Award, including by the withholding or delivery of shares of Stock, (iv) the timing, terms and conditions of exercisability or vesting of any Award or any shares acquired pursuant thereto, (v) the +time of the expiration of any Award, (vi) the effect of the Participant’s termination of Service on any of the foregoing, and (vii) all other terms, conditions and restrictions applicable to any Award or shares acquired pursuant +thereto not inconsistent with the terms of the Plan; +(e) to determine whether an Award of Restricted Stock Units or Performance Shares, or Stock Appreciation Rights will be settled in shares of Stock, cash, or in any combination thereof; +(f) to approve one or more forms of Award +Agreement; +(g) to amend, modify, +extend, cancel or renew any Award or to waive any restrictions or conditions applicable to any Award or any shares acquired pursuant thereto; +A-6 +(h) to accelerate, continue, extend or defer the exercisability or +vesting of any Award or any shares acquired pursuant thereto, including, without limitation, with respect to the period following a Participant’s termination of Service; +(i) to prescribe, amend or rescind rules, +guidelines and policies relating to the Plan, or to adopt supplements to, or alternative versions of, the Plan, including, without limitation, as the Committee deems necessary or desirable to comply with the laws of, or to accommodate the tax policy +or custom of, foreign jurisdictions whose citizens may be granted Awards; +(j) to authorize, in conjunction with any applicable Company deferred compensation plan, that the receipt of cash or Stock subject to any Award under this Plan, may be deferred under the terms and +conditions of such Company deferred compensation plan; +(k) to correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Award Agreement and to make all other determinations and take such other actions with respect to the Plan +or any Award as the Committee may deem advisable to the extent not inconsistent with the provisions of the Plan or applicable law; and/or +(l) to provide for a “clawback” of an Award pursuant to the provisions of Section 14.5 below. +3.4 Minimum Vesting Periods . Notwithstanding +Section 3.3(d) above, Awards to Employees (other than Substitute Awards) shall not vest or otherwise become exercisable earlier than one year following the date of grant, subject to accelerated vesting in the Committee’s discretion in the +event of the death or Disability of the Participant, special circumstances determined by the Committee, or a Change in Control. Notwithstanding the foregoing, the restrictions in the preceding sentence shall not be applicable to the grant of up to +5% of the number of shares of Stock available for Awards under Section 4.1 on the Effective Date. +3.5 No Repricing . Notwithstanding anything in this Plan to the contrary, no amendment or modification may be made to an outstanding Option or SAR, including, +without limitation, by replacement of Options or SARs with cash or other award type, that would be treated as a repricing under the rules of the securities exchange or market system constituting the primary market for the Stock, in each case, +without the approval of the shareholders of the Company, provided, that, appropriate adjustments may be made to outstanding Options and SARs pursuant to Section 10 and may be made to make changes to achieve compliance with applicable law, +including Code Section 409A. +3.6 +Deferral Arrangements . The Committee may permit or require the deferral of any award payment into a deferred compensation arrangement, subject to such rules and procedures as it may establish, which may include provisions for the +payment or crediting of interest or dividend equivalents, including converting such credits into deferred Stock equivalents. Any such deferrals shall be made in a manner that complies with Code Section 409A. +3.7 Indemnification . Neither the Board nor the +Committee, nor any member of either or officer or employee of a Participating Company to whom authority to act for the Board, the Committee or the Company is delegated, shall be liable for any act, omission, interpretation, construction or +determination made in good faith in connection with the Plan. In addition to such other rights of indemnification as they may have as members of the Board, the Committee or as officers or employees of a Participating Company, members of the Board or +of the Committee and any officers or employees of the Participating Company to whom authority to act for the Board, the Committee or the Company is delegated, shall be entitled in all cases to indemnification and reimbursement by the Company in +respect of any claim, loss, damage or expense (including, without limitation, reasonable +A-7 +attorneys’ fees) arising or resulting therefrom to the fullest extent permitted by law and/or under any directors’ and officers’ liability insurance coverage which may be in effect +from time to time. +3.8 Share +Issuance/Book-Entry . Notwithstanding any provision of this Plan to the contrary, the issuance of the Stock under the Plan may be evidenced in such a manner as the Committee, in its discretion, deems appropriate, including, without +limitation, book-entry registration or issuance of one or more Stock certificates +SECTION 4. SHARES SUBJECT TO PLAN +4.1 Number of Shares Available for Awards . The total number of shares of Stock that may be issued pursuant to Awards granted under the Plan shall not exceed an aggregate +of six hundred fifty thousand (650,000) shares (with the other shares of Stock added pursuant to this Section, the “Pool”). For purposes of this limitation, in respect of any shares of Stock under any Award under the Plan or under any +award under the Prior Plan, which shares are forfeited, canceled, satisfied without the issuance of Stock, otherwise terminated, or, for shares of Stock issued pursuant to any unvested Award, reacquired by the Company at not more than the +grantee’s purchase price (other than by exercise) (“Unissued Shares”), such Unissued Shares shall be added to the Pool, provided however that the number of Unissued Shares added to the Pool with respect to awards under the Prior Plan +shall not exceed 821,637 shares. Subject to such overall limitation, shares of Stock may be issued up to such maximum number pursuant to any type or types of Award, including Incentive Stock Options. The shares available for issuance from the Pool +may be authorized but unissued shares of Stock or shares of Stock reacquired by the Company and held in its treasury, or shares purchased on the open market. The class and aggregate number of shares which may be subject to Awards granted under the +Plan shall be subject to adjustment as provided in Section 10 hereof. +4.2 Determination of Shares Issued and Issuable . Shares covered by an Award shall be counted as used as of the effective date of the grant. Any shares of Stock +that are subject to Awards shall be counted against the limit set forth in Section 4.1 as one (1) share for every one (1) share subject to an Award. Shares of Stock shall not be deemed to have been issued pursuant to the Plan with +respect to any portion of an Award that is settled in cash in lieu of shares. If any shares covered by an Award granted under the Plan are not earned or purchased or are forfeited or expire, or if an Award otherwise terminates without delivery of +any Stock subject thereto, then the number of shares of Stock counted against the aggregate number of shares available under the Plan with respect to such Award shall, to the extent of any such forfeiture, termination or expiration, be available for +making Awards under the Plan in the same amount as such shares were counted against the limit set forth in Section 4.1. Notwithstanding the foregoing, upon the exercise of any Award, to the extent that such Award is exercised through tendering +(or attesting to) previously owned shares or through withholding shares that would otherwise be awarded and to the extent shares are withheld for tax withholding purposes, the shares available under the Plan shall be reduced by the gross number of +shares of Stock being exercised without giving effect to the number of shares tendered or withheld. Notwithstanding anything to the contrary in the Plan, in the event that the Company were to repurchase Stock in the open market using Option exercise +proceeds, such repurchased Stock will not again become available for issuance under the Plan. +4.3 Substitute Awards . The Committee shall have the right to substitute or assume Awards in connection with mergers, reorganizations, separations, or other +transactions to which Section 424(a) of the Code applies. Substitute Awards shall not reduce the shares of Stock authorized for issuance under the Plan, nor shall shares of Stock subject to a Substitute Award be added to the shares available +for Awards under the Plan as provided in Sections 4.2 above. Additionally, in the event that a company acquired by a Participating Company, or with +A-8 +which a Participating Company combines, has shares available under a pre-existing plan approved by stockholders and not adopted in contemplation of such +acquisition or combination, the shares available for grant pursuant to the terms of such pre-existing plan (as adjusted, to the extent appropriate, using the exchange ratio or other adjustment or valuation +ratio or formula used in such acquisition or combination to determine the consideration payable to the holders of common stock of the entities party to such acquisition or combination) may be used for Awards under the Plan and shall not reduce the +shares of Stock authorized for grant under the Plan (and shares subject to such Awards shall not be added to the shares available for Awards under the Plan as provided in Sections 4.2 and 4.3 above); provided that Awards using such available shares +shall not be made after the date awards or grants could have been made under the terms of the pre-existing plan, absent the acquisition or combination, and shall only be made to individuals who were not +Employees or Directors prior to such acquisition or combination . +4.4 Source of Shares . The Stock subject to the Awards granted under the Plan shall be shares of the Company’s authorized but unissued Stock or shares of the Stock held in +treasury. +SECTION 5. ELIGIBILITY +5.1 Persons Eligible for Incentive Stock +Options . Incentive Stock Options may be granted only to Employees. For purposes of the foregoing sentence, the term “Employees” shall include prospective Employees to whom Incentive Stock Options are granted in connection with +written offers of employment with the Participating Companies; provided , however , that any such Incentive Stock Option shall be deemed granted effective on the date such person commences Service as an Employee, +with an exercise price determined as of such date in accordance with Section 6.1 hereof. +5.2 Persons Eligible for Other Awards . Awards other than Incentive Stock Options may be granted only to Employees, Consultants and Directors. For purposes of the foregoing +sentence, the terms “Employees,” “Consultants” and “Directors” shall include prospective Employees, prospective Consultants and prospective Directors to whom Awards are granted in connection with written offers of an +employment or other service relationship with the Participating Companies; provided , however , that no such Award shall vest or become exercisable, and no Stock shall be issued pursuant to such Award, prior to +the date on which such person commences Service as an Employee, Consultant or Directors. +5.3 Non-Employee Director Award Limits . No Director who is not also an employee of a Participating Company may be granted any +Award or Awards denominated in shares of Stock that exceed in the aggregate $100,000 in value (such value computed as of the date of grant in accordance with applicable financial accounting rules) in any single fiscal year. The foregoing limit shall +not apply to any Award to a Director as all or a portion of Board or committee retainers or meeting fees or pursuant to any election by a Director to receive an Award in lieu of all or a portion of any cash retainers or meeting fees. +A-9 +SECTION 6. TERMS AND CONDITIONS OF STOCK OPTIONS +Options shall be evidenced by Option Agreements specifying +the number of shares of Stock covered thereby, in such form as the Committee shall from time to time establish. No Option or purported Option shall be a valid and binding obligation of the Company unless evidenced by a fully executed Option +Agreement. Option Agreements shall comply with and be subject to the following terms and conditions: +6.1 Exercise Price . The exercise price for each Option shall be established in the discretion of the Committee; provided , however , +that (a) the exercise price per share for an Option shall be not less than the Fair Market Value of a share of Stock on the effective date of grant of the Option, (b) no Incentive Stock Option granted to a Ten Percent Owner shall have an +exercise price per share less than one hundred ten percent (110%) of the Fair Market Value of a share of Stock on the effective date of grant of the Option. Notwithstanding the foregoing, an Option may be granted with an exercise price lower +than the minimum exercise price set forth above if such Option is granted as a Substitute Award in a manner qualifying under the provisions of Section 424(a) of the Code. +6.2 Exercisability and Term of Options . Options +shall vest and be exercisable at such time or times, or upon such event or events, and subject to such terms, conditions, performance criteria and restrictions as shall be determined by the Committee and set forth in the Option Agreement evidencing +such Option; provided , however , that (a) no Option shall be exercisable after the expiration of ten (10) years after the effective date of grant of such Option, and (b) no Incentive Stock Option +granted to a Ten Percent Owner shall be exercisable after the expiration of five (5) years after the effective date of grant of such Option. Subject to the foregoing, unless otherwise specified by the Committee in the grant of an Option, any +Option granted hereunder shall terminate ten (10) years after the effective date of grant of the Option, unless earlier terminated in accordance with its provisions. Notwithstanding the foregoing, in the event that on the last business day of +the term of a Nonstatutory Option (i) the exercise of the Option is prohibited by applicable law or (ii) shares may not be purchased or sold by certain employees or Directors of the Company due to the +“black-out period” of a Company policy or a “lock-up” agreement undertaken in connection with an issuance of securities by the Company, the term of +such Nonstatutory Option shall be extended for a period of thirty (30) days following the end of the legal prohibition, black-out period or lock-up agreement in +each case to the extent any such extension would not constitute the extension of a stock right under Section 409A of the Code. +6.3 Payment of Exercise Price . Except as otherwise provided in the Option Agreement, payment of the exercise +price for the number of shares of Stock being purchased pursuant to any Option shall be made: +(a) in cash, by check or cash equivalent, +(b) by tender to the Company, or attestation +to the ownership, of shares of Stock owned by the Participant having a Fair Market Value not less than the exercise price, +(c) pursuant to a Net Exercise arrangement, provided, however , that in such event the Committee may +exercise its discretion to limit the use of a Net Exercise; +(d) with the consent of the Committee and subject to such procedures as the Committee shall prescribe as a condition of such payment procedure, by delivery of a properly executed notice together with +irrevocable instructions to a broker providing for the assignment to the Company of the proceeds of a sale with respect to some or all of the shares being acquired upon the exercise of the Option (a “ Cashless Exercise ”), +A-10 +(e) by such other consideration as may be approved by the Committee +from time to time to the extent permitted by applicable law, or +(f) by any combination thereof. +6.4 Effect of Termination of Service . An Option granted to a Participant shall be exercisable after the Participant’s termination of Service only during the applicable +time period determined in accordance with the Option’s term as set forth in the Option Agreement. Such provisions shall be determined in the sole discretion of the Committee, need not be uniform among all Options issued pursuant to the Plan, +and may reflect distinctions based on the reasons for termination of Service. +6.5 Transferability of Options . During the lifetime of the Participant, an Option shall be exercisable only by the Participant or the Participant’s guardian or legal +representative. No Option shall be assignable or transferable by the Participant, except by will or by the laws of descent and distribution. Notwithstanding the foregoing, the Committee, in its sole discretion, may provide in the Award Agreement +regarding a given Option, or may agree in writing with respect to an outstanding Option, that the optionee may transfer his Nonstatutory Stock Options, without consideration, to members of his immediate family (as such term is defined in the General +Instructions to Form S-8 Registration Statement under the Securities Act), to trusts for the benefit of such family members, or to partnerships in which such family members are the only partners, provided that +the transferee agrees in writing with the Company to be bound by all of the terms and conditions of this Plan and the applicable Option. +6.6 Fair Market Value Limitation on Incentive Stock Options . To the extent that options designated as Incentive Stock +Options (granted under all stock option plans of the Company or any Subsidiary) become exercisable by a Participant for the first time during any calendar year for stock having a Fair Market Value greater than One Hundred Thousand Dollars +($100,000), the portions of such options which exceed such amount shall be treated as Nonstatutory Stock Options. +6.7 Annual Directors’ Options . After the Effective Date of the Plan, no awards may be granted to Directors of the Company under Section 6.7 of the Prior Plan. +SECTION 7. TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS +SARs shall be evidenced by Award Agreements +specifying the number of shares of Stock subject to the Award, in such form as the Committee shall from time to time establish. No SAR or purported SAR shall be a valid and binding obligation of the Company unless evidenced by a fully executed Award +Agreement. Award Agreements evidencing SARs shall comply with and be subject to the following terms and conditions: +7.1 Exercise Price . The exercise price for each SAR shall be established in the discretion of the Committee; provided , however , that the +exercise price per share of a SAR shall be not less than the Fair Market Value of a share of Stock on the effective date of grant of the SAR. +7.2 Exercisability and Term of SARs . SARs shall vest and be exercisable at such time or times, or upon such +event or events, and subject to such terms, conditions, performance criteria and restrictions as shall be determined by the Committee and set forth in the Award Agreement evidencing such SAR; provided , however , +that no SAR shall be exercisable after the expiration of ten (10) years after the effective date of grant of such SAR. +A-11 +7.3 Exercise of SARs . Upon the exercise of a SAR, the Participant (or the +Participant’s legal representative or other person who acquired the right to exercise the SAR by reason of the Participant’s death) shall be entitled to receive payment of an amount for each share with respect to which the SAR is exercised +equal to the excess, if any, of the Fair Market Value of a share of Stock on the date of exercise of the SAR over the exercise price. Payment of such amount shall be made in cash, shares of Stock, or any combination thereof as determined by the +Committee. Unless otherwise provided in the Award Agreement evidencing such SAR, payment shall be made in a lump sum as soon as practicable following the date of exercise of the SAR. The Award Agreement evidencing any SAR may provide for deferred +payment in a lump sum or in installments, so long as such payment is made in a manner that complies with Code Section 409A. When payment is to be made in shares of Stock, the number of shares to be issued shall be determined on the basis of the +Fair Market Value of a share of Stock on the date of exercise of the SAR. For purposes of this Section 7, a SAR shall be considered exercised on the date on which the Company receives actual notice of exercise from the Participant. +7.4 Effect of Termination of Service . A SAR shall +be exercisable after a Participant’s termination of Service to such extent and during such period as determined by the Committee, in its discretion, and set forth in the Award Agreement evidencing such SAR. +7.5 Nontransferability of SARs . SARs may not be assigned +or transferred in any manner except by will or the laws of descent and distribution, and, during the lifetime of the Participant, shall be exercisable only by the Participant or the Participant’s guardian or legal representative. +SECTION 8. TERMS AND CONDITIONS OF RESTRICTED STOCK AWARDS +Restricted Stock Awards may be in the form of +(a) Restricted Stock, which shall be evidenced by a Restricted Stock Agreement, or (b) a Restricted Stock Unit, which shall be evidenced by a Restricted Stock Unit Agreement. Each such Award Agreement shall specify the number of shares and +purchase price per share, if any, of Stock subject to and the other terms, conditions and restrictions of the shares of Stock underlying the Award, of the Award, and shall be in such form as the Committee shall establish from time to time. No +Restricted Stock Award or purported Restricted Stock Award shall be a valid and binding obligation of the Company unless evidenced by a fully executed Award Agreement. Restricted Stock Award Agreements shall comply, as applicable, with and be +subject to the following terms and conditions: +8.1 +Vesting and Restrictions on Transfer . Shares issued pursuant to any Restricted Stock Award may be made subject to vesting conditioned upon the satisfaction of such Service requirements, conditions, restrictions or performance +criteria (the “ Vesting Conditions ”), as shall be established by the Committee and set forth in the Award Agreement evidencing such Award. During any period (the “ Restriction Period ”) in which shares acquired +pursuant to a Restricted Stock Award remain subject to Vesting Conditions, such shares may not be sold, exchanged, transferred, pledged, hypothecated, assigned or otherwise disposed of other than pursuant to a Change in Control, or as provided in +Section 8.4. Upon request by the Company, each Participant shall execute any agreement evidencing such transfer restrictions prior to the receipt of shares of Stock hereunder and shall promptly present to the Company any and all certificates +representing shares of Stock acquired hereunder for the placement on such certificates of appropriate legends evidencing any such transfer restrictions. +8.2 Voting Rights; Dividends . Except as provided in this Section 8.2 and Section 8.1, during the Restriction Period +applicable to shares subject to a Restricted Stock Award held by a Participant, the Participant shall have all of the rights of a shareholder of the Company holding shares of Stock, including the right to vote such shares +A-12 +and to receive all dividends and other distributions paid with respect to such shares; provided , however , that the right to receive or retain any dividends +or other distributions shall be subject to Section 14.6. A Participant who is awarded a Restricted Stock Unit shall possess no holder of Stock with respect to such Restricted Stock Award; provided that the Award Agreement may provide for +payments in lieu of dividends to such Participant, subject to Section 14.6. A holder of Restricted Stock Units shall have no rights other than those of a general creditor of the Company. Restricted Stock Units represent an unfunded and +unsecured obligation of the Company, subject to the terms and conditions of the applicable Award Agreement. +8.3 Effect of Termination of Service . The effect of the Participant’s termination of Service on any Restricted Stock Award shall be determined by the Committee, in its +discretion, and set forth in the Award Agreement evidencing such Restricted Stock Award. +8.4 Nontransferability of Restricted Stock Award Rights . Rights to acquire shares of Stock pursuant to a Restricted Stock Award may not be assigned or transferred in any manner +except by will or the laws of descent and distribution, and, during the lifetime of the Participant, shall be exercisable only by the Participant. +SECTION 9. OTHER STOCK-BASED AWARDS +The Committee shall have authority to grant to eligible Employees an “Other Stock-Based Award,” which shall consist of any right +that is an Award of Stock or an Award denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to, Stock (including, without limitation, securities convertible into Stock), as deemed by the Committee to +be consistent with the purposes of the Plan, other than an Award described in Sections 6 through 8 above. +SECTION 10. CHANGES IN THE COMPANY’S CAPITAL STRUCTURE +10.1 No Limitations on the Company . The existence of outstanding Awards shall not affect in any way the right or power of the Company or its shareholders to make or authorize, +without limitation, any or all adjustments, recapitalizations, reorganizations or other changes in the Company’s capital structure or its business, or any merger or consolidation of the Company, or any issue of Stock, or any issue of bonds, +debentures, preferred or prior preference stock or other capital stock ahead of or affecting the Stock or the rights thereof, or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or +any other corporate act or proceeding, whether of a similar character or otherwise. +10.2 Adjustments for Changes in Capital Structure . If the number of outstanding shares of Stock is increased or decreased or the shares of Stock are changed into +or exchanged for a different number or kind of shares or other securities of the Company on account of any recapitalization, reclassification, stock split, reverse split, combination of shares, exchange of shares, stock dividend or other +distribution payable in capital stock, or other increase or decrease in such shares effected without receipt of consideration by the Company occurring after the Effective Date, the number and kinds of shares for which grants of Options and other +Awards may be made under the Plan, including, without limitation, the limits set forth in Section 5.3, shall be adjusted proportionately and accordingly by the Company. In addition, the number and kind of shares for which Awards are outstanding +shall be adjusted proportionately and accordingly so that the proportionate interest of the Participant immediately following such event shall, to the extent practicable, be the same as immediately before such event. Any such adjustment in +outstanding Options or SARs shall not change the aggregate exercise price payable with respect to shares that are subject to the unexercised portion of an outstanding Option or SAR as applicable, but shall include a corresponding proportionate +adjustment in the exercise price per share for such Option or SAR. The Committee +A-13 +may unilaterally amend the outstanding Awards to reflect the adjustments contemplated by this Section 10.2. The conversion of any convertible securities of the Company shall not be treated +as an increase in shares effected without receipt of consideration. Notwithstanding the foregoing, in the event of any distribution to the Company’s shareholders of securities of any other entity or other assets (including an extraordinary +dividend but excluding a non-extraordinary dividend of the Company) without receipt of consideration by the Company, the Company shall, in such manner as the Company deems appropriate, adjust (a) the +number and kind of shares subject to outstanding Awards and/or (b) the exercise price of outstanding Options or SARs to reflect such distribution. Notwithstanding the foregoing, in no event may the exercise price of any Option be decreased to +an amount less than the par value, if any, of the stock subject to such Award. +10.3 Adjustments . Adjustments under this Section 10 related to shares of Stock or securities of the Company shall be made by the Committee, whose +determination in that respect shall be final, binding and conclusive. No fractional shares or other securities shall be issued pursuant to any such adjustment, and any fractions resulting from any such adjustment shall be eliminated in each case by +rounding downward to the nearest whole share. The Committee shall determine the effect of a Change in Control upon Awards other than Options, SARs, Restricted Stock Units and Restricted Stock, and such effect shall be set forth in the appropriate +Award Agreement. The Committee may provide in the Award Agreements at the time of grant, or any time thereafter with the consent of the Participant, for different provisions to apply to an Award in place of those described in Sections 10.2. This +Section 10 does not limit the Company’s ability to provide for alternative treatment of Awards outstanding under the Plan in the event of a Change in Control. +SECTION 11. CHANGE IN CONTROL +11.1 Effect of Change in Control on Awards: Assumption or Termination +of Awards. +(a) In the +event of a Change in Control, the surviving, continuing, successor, or purchasing corporation or other business entity or parent corporation thereof, as the case may be (the “ Acquiring Corporation ”), may, without the consent of the +Participant, either assume the Company’s rights and obligations under any outstanding Awards or substitute for any of the outstanding Awards substantially equivalent awards. The Acquiring Corporation need not make uniform determinations with +respect to any Awards or class of Awards, and it can select the Awards (if any) that it will assume or substitute for, in its sole discretion. For the purposes of this Section 11, an Award shall be considered assumed or substituted for, if +following the Change in Control, the Award confers the right to purchase or receive, for each share subject to the Award prior to the Change in Control, the consideration (whether stock, cash or other securities or property) received in the +transaction constituting a Change in Control by holders of Stock for each share of Stock held on the effective date of such transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a +majority of the outstanding shares of Stock); provided, however, that if such consideration received in the transaction constituting a Change in Control is not solely common stock of the Acquiring Corporation, the Committee may, with the consent of +the Acquiring Corporation, provide that the consideration to be received upon the exercise or vesting of an Award, for each share subject thereto, will be solely common stock of the Acquiring Corporation substantially equal in fair market value to +the consideration per share of Stock received by holders of Stock in the transaction constituting a Change in Control. The determination of such substantial equality of value of consideration shall be made by the Committee in its sole discretion and +its determination shall be conclusive and binding. +(b) In the event that the Acquiring Corporation elects not to assume or substitute for any of the outstanding Awards in connection with a Change in Control, the exercisability and vesting of each such +A-14 +outstanding Award and any shares acquired upon the exercise thereof held by a Participant whose Service has not terminated prior to such date shall be accelerated, effective as of the date ten +(10) days prior to the date of the Change in Control. The foregoing notwithstanding, any Award Agreement may provide for vesting, settlement or conversion to a Restricted Stock Award upon the consummation of a Change in Control on a basis that +is specific to that Award. The exercise or vesting of any Award and any shares acquired upon the exercise thereof that was permissible solely by reason of this Section 11.1 and the provisions of the relevant Award Agreement shall be conditioned +upon the consummation of the Change in Control. Any Awards which are neither assumed nor substituted for by the Acquiring Corporation in connection with the Change in Control nor exercised (in the case of Options and SARs) nor paid or converted to a +Restricted Stock Award as of the date of the Change in Control shall terminate and cease to be outstanding effective as of the date of the Change in Control. Notwithstanding the foregoing, shares acquired upon exercise of an Option or SAR prior to +the Change in Control and any consideration received pursuant to the Change in Control with respect to such shares shall continue to be subject to all applicable provisions of the Award Agreement evidencing such Option or SAR except as otherwise +provided in such Award Agreement. +11.2 Assumption or +Substitution of Certain Awards . Unless otherwise provided in an Award Agreement or a Participant’s effective negotiated employment, change in control, severance or other similar agreement, in the event of a Change in Control in which +the Acquiring Corporation assumes or substitutes for an Award (or in which the Company is the ultimate parent corporation and continues the Award), if a Participant’s employment with the Acquiring Corporation (or the Company) or a subsidiary +thereof terminates within 18 months following such Change in Control (or such other period set forth in the Award Agreement, including prior thereto if applicable) and under the circumstances specified in the Award Agreement: (i) Options and +SARs outstanding as of the date of such termination of employment will immediately vest, become fully exercisable, and may thereafter be exercised for 12 months (or if longer, the period of time set forth in the Award Agreement, but in no event +beyond the end of the regularly scheduled term of such Options or SARs), (ii) the Vesting Conditions applicable to Restricted Stock and Restricted Stock Units outstanding as of the date of such termination of employment shall lapse and the +Restricted Stock and Restricted Stock Units shall become free of all restrictions, limitations and conditions and become fully vested, and (iii) the restrictions, limitations and other conditions applicable to any Other Stock-Based Awards or +any other Awards shall lapse, and such Other Stock-Based Awards or such other Awards shall become free of all restrictions, limitations and conditions and become fully vested and transferable to the full extent of the original grant. +11.3 Termination of Awards . Notwithstanding +anything to the contrary in the foregoing of this Section 11, Options and SARs outstanding as of the date of a Change in Control may be cancelled and terminated without payment therefor if the Fair Market Value of one share of Stock as of the +date of the Change in Control is equal to or less than the Option exercise price per share of Stock or the SAR grant price. In addition, the Committee, in its discretion, may determine that, if a Change in Control occurs, each Option and SAR +outstanding shall terminate within a specified number of days after notice to the Participant, and/or that each Participant shall receive, with respect to each share of Stock subject to such Option or SAR, an amount equal to the excess of the Fair +Market Value of such share of Stock immediately prior to the occurrence of such Change in Control over the exercise price per share of Stock of such Option and/or SAR; such amount to be payable in cash, in one or more kinds of stock or property +(including the stock or property, if any, payable in the transaction) or in a combination thereof, as the Committee, in its discretion, shall determine. +A-15 +SECTION 12. COMPLIANCE WITH SECURITIES LAW +12.1 General . The grant of Awards and the +issuance of shares of Stock pursuant to any Award shall be subject to compliance with all applicable requirements of federal, state and foreign law with respect to such securities and the requirements of any stock exchange or market system upon +which the Stock may then be listed. In addition, no Award may be exercised or shares issued pursuant to an Award unless (a) a registration statement under the Securities Act shall at the time of such exercise or issuance be in effect with +respect to the shares issuable pursuant to the Award or (b) in the opinion of legal counsel to the Company, the shares issuable pursuant to the Award may be issued in accordance with the terms of an applicable exemption from the registration +requirements of the Securities Act. The inability of the Company to obtain from any regulatory body having jurisdiction the authority, if any, deemed by the Company’s legal counsel to be necessary to the lawful issuance and sale of any shares +hereunder shall relieve the Company of any liability in respect of the failure to issue or sell such shares as to which such requisite authority shall not have been obtained. As a condition to issuance of any Stock, the Company may require the +Participant to satisfy any qualifications that may be necessary or appropriate, to evidence compliance with any applicable law or regulation and to make any representation or warranty with respect thereto as may be requested by the Company. +SECTION 13. TAX WITHHOLDING +13.1 Tax Withholding in General . The Company +shall have the right to require the Participant, through payroll withholding, cash payment or otherwise, including by means of a Cashless Exercise of an Option, to make adequate provision for the federal, state, local and foreign taxes, if any, +required by law to be withheld by a Participating Company with respect to an Award or the shares acquired pursuant thereto. The Company shall have no obligation to deliver shares of Stock, to release shares of Stock from an escrow established +pursuant to an Award Agreement, or to make any payment in cash under the Plan until such tax withholding obligations have been satisfied by the Participant. +13.2 Withholding in Shares . The Company shall have the right, but not the obligation, to deduct from the shares of Stock +issuable to a Participant upon the exercise or settlement of an Award, or to accept from the Participant the tender of, a number of whole shares of Stock having a Fair Market Value, as determined by the Company, equal to all or any part of the tax +withholding obligations of a Participating Company. The Fair Market Value of any shares of Stock withheld or tendered to satisfy any such tax withholding obligations shall not exceed the amount determined by the applicable minimum statutory +withholding rates (unless a higher withholding rate is permissible without adverse accounting consequences). +SECTION 14. RIGHTS AND OBLIGATIONS OF THE PARTIES +14.1 Rights as Employee, Consultant or Director . No person, even though eligible pursuant to Section 5, shall have a right to be selected as a Participant, or, having been +so selected, to be selected again as a Participant. Nothing in the Plan or any Award granted under the Plan shall confer on any Participant a right to remain an Employee, Consultant or Director, or interfere with or limit in any way the right of a +Participating Company to terminate the Participant’s Service at any time. +14.2 Rights as a Shareholder . A Participant shall have no rights as a shareholder with respect to any shares covered by an Award until the date of the issuance of a certificate +for such shares (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company). No adjustment shall be made for dividends, distributions or other rights for which the record date is prior to +the date such certificate is issued, except as provided in Section 10 or another provision of the Plan. +A-16 +14.3 Right of Setoff . A Participating Company may, to the +extent permitted by applicable law, deduct from and set off against any amounts such Participating Company may owe to the Participant from time to time, including amounts payable in connection with any Award, owed as wages, fringe benefits, or other +compensation owed to the Participant, such amounts as may be owed by the Participant to the Participating Company, although the Participant shall remain liable for any part of the Participant’s payment obligation not satisfied through such +deduction and setoff. By accepting any Award granted hereunder, the Participant agrees to any deduction or setoff under this Section 14.3. +14.4 Compliance with Section 409A of the Code . Awards under the Plan are intended to satisfy +the requirements of Section 409A of the Code and the Treasury Department guidance and regulations issued thereunder (collectively, “ Section 409A ”) so as to avoid the imposition of any additional taxes or +penalties under Section 409A. If the Committee determines that an Award, Award Agreement, payment, distribution, deferral election, transaction or any other action or arrangement contemplated by the provisions of the Plan would, if undertaken, +cause a Participant to become subject to any additional taxes or other penalties under Section 409A, then unless the Committee specifically provides otherwise, such Award, Award Agreement, payment, distribution, deferral election, transaction +or other action or arrangement shall not be given effect to the extent it causes such result and the related provisions of the Plan and/or Award Agreement will be deemed modified, or, if necessary, suspended in order to comply with the requirements +of Section 409A to the extent determined appropriate by the Committee, in each case without the consent of or notice to the Participant. +To the extent that any Award is determined to constitute “nonqualified deferred compensation” within the meaning of Section 409A (a +“ 409A Award ”), the Award shall be subject to such additional rules and requirements as specified by the Committee in order to comply with Section 409A. If any amount under a 409A Award is payable upon a “separation from +service” (within the meaning of Section 409A), to a grantee who is then considered a “specified employee” (within the meaning of Section 409A), then no such payment shall be made prior to the date that is the earlier of +(i) six months and one day after the grantee’s separation from service, or (ii) the grantee’s death, but only to the extent such delay is necessary to prevent such payment from being subject to additional tax pursuant to +Section 409A. +14.5 Cancellation of +Award; Forfeiture of Gain . Notwithstanding anything to the contrary contained herein, an Award Agreement may provide that if, prior to the occurrence of a Change in Control, there is (i) an accounting restatement due to material +noncompliance by the Company with any financial reporting requirement under the securities laws or (ii) the Company is otherwise required by applicable law or Company policy to recoup any portion of an Award otherwise paid or payable hereunder, +the Committee shall have the right to review any Award, the amount, payment or vesting of which was based on an entry in the financial statements that are the subject of the restatement. If the Committee determines that (i) based on the results +of the restatement or (ii) due to inaccurate financial data used to determine the payment or vesting of an Award, a lesser amount or portion of an Award should have been paid or vested, it may (i) cancel all or any portion of any +outstanding Awards and (ii) require the Participant or other person to whom any payment has been made or shares or other property have been transferred in connection with the Award to forfeit and pay over to the Company, on demand, all or any +portion of the gain (whether or not taxable) realized upon the exercise of any Option or Stock Appreciation Right and the value realized (whether or not taxable) on the vesting or payment of any other Award during the period beginning twelve months +preceding the date of the restatement and ending with the date of cancellation of any outstanding Awards. +A-17 +The Company may also retain the right in an Award Agreement to cause a forfeiture of +the gain realized by a Participant on account of actions taken by the Participant in violation or breach of or in conflict with any employment agreement, non-competition agreement, any agreement prohibiting +solicitation of employees or customers of a Participating Company or any confidentiality obligation with respect to a Participating Company or otherwise in competition with a Participating Company, to the extent set forth in or specified in such +Award Agreement applicable to the Participant. In addition, the Company may annul an Award if the Participant is an employee of a Participating Company and is terminated for Cause. +14.6 Dividends . No recipient of an Award of +Options or Stock Appreciation Rights shall have the right to receive dividends or Dividend Equivalents with respect to such Award. Dividends or Dividend Equivalents credited, paid to or payable in connection with an Award that is not yet Vested +shall be subject to the same restrictions and risk of forfeiture as the underlying Award and shall not be paid until the underlying Award Vests. +SECTION 15. MISCELLANEOUS +15.1 Delivery and Execution of Electronic Documents . To the extent permitted by applicable law, the Company may +(i) deliver by email or other electronic means (including posting on a web site maintained by the Company or by a third party under contract with the Company) all documents relating to the Plan and any Award thereunder (including without +limitation, prospectuses required by the SEC) and all other documents that the Company is required to deliver to its security holders (including without limitation, annual reports and proxy statements) and (ii) permit participants in the Plan +to electronically execute applicable Plan documents (including but not limited to, Award Agreements) in a manner prescribed by the Committee. +15.2 Awards to Participants Outside the United States . The Committee may modify the terms of any Award under the Plan made to +or held by a Participant who is then resident or primarily employed outside of the United States in any manner deemed by the Committee to be necessary or appropriate in order that such Award shall conform to laws, regulations, and customs of the +country in which the Participant is then resident or primarily employed, or so that the value and other benefits of the Award to the Participant, as affected by foreign tax laws and other restrictions, applicable as a result of the +Participant’s residence or employment abroad shall be comparable to the value of such an Award to a Participant who is resident or primarily employed in the United States. An Award may be modified under this Section 15.2 in a manner that +is inconsistent with the express terms of the Plan, so long as such modifications will not contravene any applicable law or regulation or result in actual liability under Section 16(b) of the Exchange Act for the Participant whose Award is +modified. +15.3 Nonexclusivity of the +Plan . Neither the adoption of the Plan by the Board nor the submission of the Plan to the shareholders of the Company for approval shall be construed as creating any limitations on the power of the Board to adopt such other +incentive arrangements as it may deem desirable, including, without limitation, the granting of stock options otherwise than under the Plan, and such arrangements may be either applicable generally or only in specific cases. +15.4 Severability . If any provision of the Plan +or any Award Agreement shall be determined to be illegal or unenforceable by any court of law in any jurisdiction, the remaining provisions hereof and thereof shall be severable and enforceable in accordance with their terms, and all provisions +shall remain enforceable in any other jurisdiction. +A-18 +15.5 Requirements of Law . The granting of Awards and the issuance of Stock +under the Plan shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required. +15.6 Governing Law . The validity and construction of this Plan and the instruments evidencing the +Awards hereunder shall be governed by the laws of the State of Rhode Island, other than any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Plan and the instruments evidencing the Awards +granted hereunder to the substantive laws of any other jurisdiction. +SECTION 16. TERMINATION OR AMENDMENT OF PLAN +The Board may terminate or amend the Plan at any time. However, subject to changes in applicable law, regulations or rules that would permit otherwise, without the approval of the Company’s +shareholders, there shall be (a) no increase in the maximum aggregate number of shares of Stock that may be issued under the Plan (except by operation of the provisions of Section 10), (b) no change in the class of persons eligible to +receive Incentive Stock Options, and (c) no other amendment of the Plan that would require approval of the Company’s shareholders under any applicable law, regulation or rule. No termination or amendment of the Plan shall affect any then +outstanding Award unless expressly provided by the Committee. In any event, no termination or amendment of the Plan may materially adversely affect any then outstanding Award without the consent of the Participant, unless such termination or +amendment is necessary to comply with any applicable law, regulation or rule. +SECTION 17. EFFECTIVE DATE AND DURATION OF PLAN +The Plan shall become effective (the “ Effective Date ”) upon the later of the approval of the Plan by +the Board and the approval of the Plan by the shareholders of the Company in accordance with applicable laws and regulations. No Award may be granted under the Plan after the tenth (10 th ) anniversary of the Effective Date. The Plan shall terminate when the total amount of the Stock available for +issuance under the Plan have been issued and all restrictions on such shares under the terms of the Plan and the agreements evidencing Awards granted under the Plan have lapsed. +SECTION 18. FRENCH SUB-PLAN; FOR +INDIVIDUALS WHO ARE FRENCH RESIDENT TAXPAYERS AND/OR SUBJECT TO THE FRENCH SOCIAL SECURITY SCHEME IN FRANCE. +All Awards granted under this Section 18 (also referred to as the “French +Sub-plan”) to an Employee who is a French resident taxpayer and/or subject to the French social security scheme in France shall comply with the terms of this French +Sub-plan. The purpose of the French Sub-plan is to grant Awards that qualify for favorable income tax and social security tax treatment under French law. In the event +any other provision of the Plan conflicts with a provision of this Section 18, the provision in Section 18 shall control with respect to any Award granted under Section 18. No other Award granted under the Plan shall be subject to the +provisions of this Section 18. +As a matter of principle, any +provision included in the Plan or any other document evidencing the terms and conditions of the Plan that would contravene any substantive principle set out in Articles +L.225-197-1 to L.225-197-6 of the French Code de Commerce shall not be applicable to +recipients of Awards hereunder who are residents of France and employed or providing services in France. +A-19 +Provided that he or she complies with the provisions of the French +Sub-plan, recipients of Awards hereunder will benefit from the favorable tax and social contribution regimes provided by articles 80 quaterdecies and 200 A of the French Tax Code (Code Général +des Impôts) and article L.242-1 of the French Social Security Code (Code de la Sécurité Sociale) in connection with the grant and settlement of Restricted Stock Units and the disposition of +the shares received upon the vesting of the Restricted Stock Units pursuant to the Plan. +18.1 Definitions . The following terms shall have the following meanings for purposes of this French Sub-plan: +(a) “French Award” means, individually or +collectively, any Award granted under this Section 18 to Employees who are French resident taxpayers and/or subject to the French social security scheme in France. +(b) “French Option Award” means, individually or +collectively, any French Award in the form of an option to purchase shares of Common Stock. +(c) “French Restricted Stock Award” means, individually or collectively, any French Award in the form of Restricted Stock. +(d) “French RSU Award” means, individually or +collectively, any French Award in the form of Restricted Stock Units. +(e) “Disability” means a physical or mental condition corresponding to the classification in the second or third categories laid down in Article L. 341-4 +of the French Social Security Code (Code de la Sécurité Sociale). +(f) “Holding Period” means, with respect to any French Award, the holding period described in Section 18.5. +18.2 Eligibility . A French Award under the French Sub-plan may be granted only to an Employee who is a French resident taxpayer and/or subject to the French social security scheme in France. +18.3 Limitation on Grants under the French Sub-Plan . French Awards may not be granted to an Employee who holds more than 10% of the outstanding Stock at the date of grant or an Employee who would hold more than 10% of the outstanding Stock following +the French Award grant. Any Stock granted in violation of this rule shall not be deemed to have been granted. Settlement of French RSU Awards shall only be in Stock; there shall be no settlement of French RSUs in cash. +18.4 Vesting Periods . Except in the case of the death or +Disability of the Employee, no portion of any French Restricted Stock Award or French RSU Award may vest (whether such vesting results from the achievement of one or more goals relating to the completion of service by the French Award holder and/or +the achievement of performance or other objectives) until at least the first anniversary of the date of grant of such French Award. The holder of a French Award shall be 100% vested in such French Award in the event his or her employment is +terminated by reason of death or Disability, provided, however, that if the vesting of such French Award is based, at least in part, on performance goals, the acceleration, if any, of such performance-based vesting upon such death of Disability +shall be determined as set forth in the applicable Award Agreement. In the event of death or Disability, the remaining Stock subject to the Award that have not been issued as of the date the Award holder’s service relationship with the Company +(and its subsidiaries) so terminates will be issued to the holder or, in the case of death, his or her heirs upon their request as provided under applicable law. In such event (either death or Disability), the Company shall issue the Stock within +six months of such termination, and the Holding Period described in Section 18.5 will not apply to such shares, but the blackout restrictions on sale described in Section 18.6 will continue to apply. +A-20 +18.5 Holding Period . With respect to each French Award, there shall be a one-year period following each vesting date applicable to such French Award, during which the Employee issued such French Award may not sell or loan (i) in the case of a French Restricted Stock Award or French +RSU Award, any Stock issued upon the vesting on such vesting date of such French Restricted Stock Award or a French RSU Award, or (ii) in the case of a French Option Award, any Stock acquired upon the exercise of the portion of such French +Option Award that vested on such vesting date. This Holding Period will not be applicable for any issued Stock delivered on or following the second anniversary of the date of grant of the French Award, provided, however, that all French Awards shall +in any event be subject to any additional holding requirements to the extent set forth in the Plan. +18.6 Restrictions on Sale – Black out Periods . Following the expiration of the Holding Period described in Section 18.5, shares of Stock issued upon the applicable vesting +of French Restricted Stock Awards or French RSU Awards or the exercise of the portion of French Option Awards vested upon the applicable vesting may not be sold: +(a) during the then-existing blackout periods established by +the Company, which are hereby made applicable to all French Awards; +(b) during the ten stock exchange trading days preceding and following the date on which the Company’s consolidated accounts are made public, or failing that, the annual accounts are published; +(c) between (i) the date on which the +Company’s management bodies have knowledge of information which, if made public, could have a significant impact on the price of the Stock; and (ii) ten stock exchange trading days following the date on which this information is published; +and +(d) if the participant has nonpublic +material information about the Company and such sale would violate any applicable securities laws of the United States of America or France. +18.7 Restriction on Sale for Officers and Directors . At the time of the grant of French Awards, the Committee shall, if any of +the participants is an officer or director of the Company, either decide that such officer or director cannot sell the Stock received upon vesting or exercise of the French Award before the end of his or her functions, or determine the number of +shares of Common Stock received upon vesting of such French Award that such officer or director shall keep up to the end of his or her functions. +18.8 Restrictions on Transfer . Shares of Stock subject to French Awards may not be transferred, assigned, pledged or +hypothecated in any manner until they have vested in accordance with this French Sub-plan. +18.9 Other Compliance with French Tax and Social Security Law . French Awards granted under the French +Sub-plan must also comply with any other requirements set forth by the French tax and social security law as interpreted and supplemented by the French tax and social security guidelines in effect at the date +of grant of such Awards. Except as the Company and recipient agree in writing, the Company shall not modify the terms of a French Award agreement (or this French Sub-plan) in such a manner as to cause the +recipient to no longer benefit from the favorable tax and social contribution regimes provided by articles 80 quaterdecies and 200 A of the French Tax Code (Code Général des Impôts) and article +L.242-1 of the French Social Security Code (Code de la Sécurité Sociale) in connection with the grant and settlement of Restricted Stock Units and the disposition of the shares received upon the +vesting of the Restricted Stock Units pursuant to the Award agreement, this French Sub-plan, and the Plan. +A-21 +18.10 No Rights as a Shareholder . The holder of a French RSU Award or a French +Option Award shall not have any rights as a shareholder of the Company unless and until shares are issued to the holder with respect to the Award. +18.11 Restrictions on Transfer . Rights granted under the French Sub-plan shall not be +transferable by the recipient of such grants other than by will or by the laws of descent and distribution. +18.12 Data Protection . The Company will satisfy any notification, application or prior authorization required under applicable laws in order to comply with application French or +European Union data protection legislation or regulations, including but not limited to the Generation Data Protection Regulation (EU) 2016/679. +18.13 Understanding of Terms . Each French Award agreement shall include the following provision: +By signing and returning this document providing for the +terms and conditions of the French Award, I confirm having read and understood the documents referenced in this Agreement, including the Award agreement itself and the AstroNova, Inc. 2018 Equity Incentive Plan (including the French sub-plan), which were made available to me in the English language. I accept the terms of those documents accordingly. +En signant et renvoyant le présent document décrivant les termes et conditions de mon attribution, je confirme avoir lu +et compris les documents relatifs à cette attribution, à savoir le présent contrat d’attribution et le plan général d’actionnariat salarié de AstroNova, Inc. de 2018, en ce compris son sous plan +français, qui m’ont été communiqués en langue anglaise. J’en accepte les termes de ces documents en connaissance de cause. +A-22 +ANNUAL MEETING OF ASTRONOVA, INC. +Date: +Monday, June 4, 2018 +Time: +10 A.M. (Eastern Time) +Place: +600 East Greenwich Avenue West Warwick, RI 02893 +Please make your marks like +this: ☒ Use dark black pencil or pen only +The Board of Directors Recommends a Vote FOR each of the director nominees listed in proposal 1 and FOR proposals 2, 3 and 4. +1: +The election of six directors to serve until the next annual meeting of shareholders or until their successors are +elected and have qualified; +Nominees: +(01) April L. Ondis +(02) Mitchell I. Quain +(03) Yvonne E. Schlaeppi +(04) Harold Schofield +(05) Richard S. Warzala +(06) Gregory A. Woods +Vote For +All Nominees +Withhold Vote From +All Nominees +Vote For +All Except +☐ +☐ +☐ +INSTRUCTIONS: To withhold authority to vote for any nominee, mark the “Vote For All Except” box and write the number(s) in the space provided to the +right. +For +Against +Abstain +2: +To approve, on an advisory, non-binding basis, the compensation paid to the Company’s Named Executive Officers, as disclosed in the proxy statement pursuant to the 2018 +annual meeting of its shareholders. +☐ +☐ +☐ +For +Against +Abstain +3: +To approve the AstroNova, Inc. 2018 Equity Incentive Plan. +☐ +☐ +☐ +For +Against +Abstain +4: +To ratify the appointment of Wolf & Company, P.C. as the Company’s independent registered public accounting firm for the fiscal year ending January 31, 2019. +☐ +☐ +☐ +To attend the meeting and vote your shares in person, please mark this box. +☐ +Authorized Signatures - This section must be completed for your Instructions to be executed. +Please Sign Here +Please Date Above +Please Sign Here +Please Date Above +Please sign exactly as your name(s) appears on +your stock certificate. If held in joint tenancy, all persons should sign. Trustees, administrators, etc., should include title and authority. Corporations should provide full name of corporation and title of authorized officer signing the +proxy. +Please separate carefully at the perforation and return just this portion in the envelope provided. +Annual Meeting of AstroNova, Inc. +to be held on Monday, June 4, 2018 +for Holders as of April 9, 2018 +This proxy is being solicited on behalf of the Board of Directors +VOTE BY: +INTERNET +TELEPHONE +Go To +Call +www.proxypush.com/alot +866-509-1041 +• +Cast your vote online 24 hours a day / 7 days a week. +OR +• +Use any touch-tone telephone toll-free 24 hours a day / 7 days a week. +• +Have your Proxy Card/Voting Instructions Form ready. +MAIL +• +• +Have your Proxy Card/Voting Instruction Form ready. +Follow the simple recorded instructions. +• +View Meeting Documents. +OR +• +Mark, sign and date your Proxy Card/Voting Instruction Form. +• +Detach your Proxy Card/Voting Instruction Form. +• +Return your Proxy Card/Voting Instruction Form in the +postage-paid envelope provided. +The undersigned hereby appoints April L. Ondis, Mitchell I. Quain, Yvonne E. Schlaeppi, Harold +Schofield, Richard S. Warzala and Gregory A. Woods, and each or either of them, as the true and lawful attorneys of the undersigned, with full power of substitution and revocation, and authorizes them, and each of them, to vote all the shares of +common stock of AstroNova, Inc. which the undersigned is entitled to vote at said meeting and any adjournment thereof upon the matters specified and upon such other matters as may be properly brought before the meeting or any adjournment thereof, +conferring authority upon such true and lawful attorneys to vote in their discretion on such other matters as may properly come before the meeting and revoking any proxy heretofore given. +THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, SHARES WILL BE VOTED FOR THE ELECTION OF THE +DIRECTORS IN ITEM 1 AND FOR THE PROPOSALS IN ITEMS 2, 3, and 4. THE PROXIES WILL VOTE IN THEIR DISCRETION ON ANY OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING AND ANY ADJOURNMENT THEREOF. +All votes must be received by 11:59 P.M., Eastern Time, June 3, 2018. +PROXY TABULATOR FOR +ASTRONOVA, INC. +c/o MEDIANT COMMUNICATIONS +P.O. BOX 8016 +CARY, NC 27512-9903 +EVENT # +CLIENT # \ No newline at end of file diff --git a/raw/proxies/0000008146/0001193125-18-152518/proxy_rpt.txt b/raw/proxies/0000008146/0001193125-18-152518/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..4bd157f4f1837c00911e09fbeea8f972fa0462d1 --- /dev/null +++ b/raw/proxies/0000008146/0001193125-18-152518/proxy_rpt.txt @@ -0,0 +1,17 @@ +RELATED PARTY TRANSACTIONS +Potential conflicts of interest and related party transactions are referred by the Board to the Audit Committee for review and approval. +In reviewing and evaluating potential conflicts of interest and related party transactions, the Audit Committee uses applicable NASDAQ listing standards and SEC rules as a guide. +Other than as described below, no officer, director or +nominee for director of the Company or any associate of any of the foregoing had during the fiscal year ended January 31, 2018 any material interest, direct or indirect, in any material transaction or any material proposed transaction in which +the amount exceeds $120,000 and to which the Company was or is to be a party. +29 +During the fiscal year ended January 31, 2018, the Company employed Christopher +Pizzuti, a son of Everett V. Pizzuti, as a Product Identification Field Sales Engineer. The aggregate amount of compensation paid by the Company to Christopher Pizzuti during fiscal year 2018 was $122,050, consisting of $113,013 in salary and sales +commissions, an automobile allowance of $7,644, a vacation payout of $800, and a matching contribution to his Profit Sharing Plan account of $593. +On May 1, 2017, the Company entered into a stock repurchase agreement (the “Stock Repurchase Agreement”) with the trust +established by Albert W. Ondis by Declaration of Trust dated December 4, 2003, as amended (the “Trust”) to repurchase 826,305 shares of the Company’s common stock held by the Trust at a per share price of $13.60, for an aggregate +repurchase price of $11,237,748.00 (the “Stock Repurchase”). The Stock Repurchase was consummated on May 2, 2017 and was funded using existing cash on hand. The Company has been informed that, following the Stock Repurchase, the +Trust owns 36,000 shares of the Company’s common stock. +April L. Ondis, a director of the Company, is a beneficiary of the Trust. The Stock Repurchase was authorized and approved by the Company’s Audit Committee as a related party transaction. Prior to +entering into the Stock Repurchase Agreement, the Company obtained an opinion from an independent investment banking firm that the consideration to be paid by the Company to the Trust pursuant to the Stock Repurchase Agreement would be fair to the +public stockholders of the Company, other than the Trust, from a financial point of view. \ No newline at end of file diff --git a/raw/proxies/0000008146/0001193125-19-118219/proxy.txt b/raw/proxies/0000008146/0001193125-19-118219/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..e86a4fb06bc8e421d4f292ee162a1995957b3f1d --- /dev/null +++ b/raw/proxies/0000008146/0001193125-19-118219/proxy.txt @@ -0,0 +1,2520 @@ +DEF 14A +1 +d664700ddef14a.htm +DEF 14A +DEF 14A +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Proxy Statement Pursuant to Section 14(a) of the +Securities Exchange Act of 1934 +(Amendment No. ) +Filed by the +Registrant +☒ Filed by a Party other +than the Registrant ☐ +Check the appropriate box: +☐ +Preliminary Proxy Statement +☐ +Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +☒ +Definitive Proxy Statement +☐ +Definitive Additional Materials +☐ +Soliciting Material Pursuant to §240.14a-12 +ASTRONOVA, INC. +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +☒ +No fee required. +☐ +Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. +(1) +Title of each class of securities to which transaction applies: +(2) +Aggregate number of securities to which transaction applies: +(3) +Per unit price or other underlying value of transaction computed pursuant to Exchange Act +Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): +(4) +Proposed maximum aggregate value of transaction: +(5) +Total fee paid: +☐ +Fee paid previously with preliminary materials. +☐ +Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the +previous filing by registration statement number, or the Form or Schedule and the date of its filing. +(1) +Amount Previously Paid: +(2) +Form, Schedule or Registration Statement No.: +(3) +Filing Party: +(4) +Date Filed: +AstroNova, Inc. +600 East Greenwich Avenue +West +Warwick, Rhode Island 02893 +NOTICE OF ANNUAL MEETING OF SHAREHOLDERS +June 4, 2019 +To the Shareholders of AstroNova, Inc.: +Notice is hereby given that the 2019 Annual Meeting of Shareholders of AstroNova, Inc. (the “Company”) will be held at the offices +of Foley Hoag LLP, Seaport West, 155 Seaport Boulevard, Boston, Massachusetts on Tuesday, June 4, 2019, beginning at 10:00 a.m., for the following purposes: +(1) +To consider and vote upon the election of six directors to serve until the next annual meeting of shareholders +or until their successors are elected and have qualified; +(2) +To conduct a non-binding, advisory vote to approve the Company’s +executive compensation; +(3) +To consider and vote upon a non-binding, advisory “say on +frequency” proposal on the frequency of future shareholder advisory votes on executive compensation; +(4) +To consider and vote upon an amendment to the Company’s 2018 Equity Incentive Plan to increase the number +of shares of common stock available for issuance thereunder by 300,000 shares; +(5) +To ratify the appointment of Wolf & Company, P.C. as the Company’s independent registered public +accounting firm for the fiscal year ending January 31, 2020; and +(6) +To transact such other business as may properly come before the meeting. +The close of business on April 12, 2019 has been fixed as the record date for determining shareholders entitled to attend or vote at the +annual meeting or any adjournment thereof. +You may vote on these matters in person or by proxy. Whether or not you plan to attend the +meeting, please promptly complete and return the enclosed proxy card in the enclosed addressed, postage-paid envelope or vote via the Internet or telephone, so that your shares will be represented and voted at the meeting in accordance with your +wishes. If you attend the meeting, you may withdraw your proxy or Internet or telephone vote and vote your shares in person. +By Order of the Board of Directors +Peter M. Rosenblum +Secretary +April 25, 2019 +IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON JUNE 4, 2019. +The Company’s Proxy Statement, form of proxy card, and Annual Report are available for viewing, printing and downloading at: +http://www.proxydocs.com/ALOT +This website does not use “cookies” to track or identify visitors +AstroNova, Inc. +PROXY STATEMENT +ANNUAL +MEETING OF SHAREHOLDERS +June 4, 2019 +The Meeting +The 2019 annual meeting of +shareholders of AstroNova, Inc. (the “Company”) will be held at 10:00 a.m., local time, on Tuesday, June 4, 2019 at the offices of Foley Hoag LLP , Seaport West, 155 Seaport Boulevard, Boston, Massachusetts. At the +meeting, shareholders of record on the record date for the meeting who are present or represented by proxy will have the opportunity to vote on the following matters: +• +the election of six directors to serve until the next annual meeting of shareholders or until their successors +are elected and have qualified; +• +the approval, on an advisory, non-binding basis, of the compensation paid +to the Company’s Named Executive Officers, as disclosed in this proxy statement pursuant to Item 402 of Regulation S-K (including in the compensation discussion and analysis, compensation tables, and +accompanying narrative disclosures); +• +whether shareholders would prefer that the Company conduct future advisory votes on the compensation of its named +executive officers every one, two or three years; +• +the approval of an amendment to the Company’s 2018 Equity Incentive Plan to increase the number of shares of +common stock available for issuance thereunder by 300,000 shares; +• +the ratification of the appointment of Wolf & Company, P.C. as the Company’s independent registered +public accounting firm for the fiscal year ending January 31, 2020; and +• +such other business as may properly come before the meeting. +Solicitation of Proxies +This proxy +statement and the accompanying proxy card are expected to be first sent to shareholders on or about April 25, 2019. +The Board of +Directors (the “Board”) of the Company is soliciting proxies in connection with its 2019 annual meeting of shareholders. The Company will bear the cost of such solicitation. It is expected that the solicitation of proxies will be primarily +by mail. Proxies may also be solicited personally by directors, officers, and employees of the Company at nominal cost. The Company may reimburse brokerage houses and other custodians, nominees and fiduciaries holding stock for others in their +names, or in those of their nominees, for their reasonable out-of-pocket expenses in sending proxy material to their principals or beneficial owners and obtaining their +proxies. +The Company has engaged The Proxy Advisory Group, LLC to assist in the solicitation of proxies and provide related advice and +informational support. The Company expects to pay The Proxy Advisory Group, LLC fees and disbursements which are not expected to exceed $15,000 in the aggregate. +Who May Vote +The Board has established April 12, 2019 as the record date for the annual meeting. Only shareholders of record at the close of business +as of that date will be entitled to attend or vote at the annual meeting. On the record date, there were 6,991,923 shares of common stock of the Company outstanding. There was no other outstanding class of voting securities. +A list of shareholders entitled to vote will be available at the annual meeting. In addition, you may contact David S. Smith, at the +Company’s offices located at 600 East Greenwich Avenue, West Warwick, Rhode Island, to make arrangements to review a copy of the shareholder list at those offices, between the hours of 9:00 a.m. and 5:00 p.m., local time, on any business day +from May 24, 2019 to the time of the annual meeting. +How to Vote +You are entitled to one vote at the meeting for each share of common stock registered in your name at the close of business on the record date +for the meeting. You may vote your shares at the meeting in person or by proxy via mail, the Internet, or the toll-free number (for residents of the United States and Canada) listed on your proxy card. +• +To vote in person , you must attend the meeting, and then complete and submit the ballot provided at the +meeting. +• +To vote by proxy by mail , if you received proxy materials by mail and choose to authorize your proxy by +mail, simply mark your proxy card, and then date, sign and return it in the postage-paid envelope provided. If you complete all of the proxy card except the voting instructions, then the designated persons will vote your shares +• +FOR the re-election of each of Jean Bua, Mitchell I. Quain, Yvonne +Schlaeppi, Harold Schofield, Richard Warzala and Gregory A. Woods as a director of the Company; +• +FOR the approval, on an advisory, non-binding basis, of the +Company’s executive compensation as described in this proxy statement; +• +FOR the option of every year as the preferred frequency for advisory votes on the compensation of the +Company’s named executive officers; +• +FOR the approval of the amendment to the Company’s 2018 Equity Incentive Plan to increase the number of +shares of common stock available for issuance thereunder by 300,000 shares; +• +FOR the ratification of the appointment of Wolf & Company, P.C. as the Company’s independent +registered public accounting firm for the fiscal year ending January 31, 2020. +• +To vote by proxy using the Internet , you must access the website for Internet voting at +www.proxypush.com/ALOT. Please have the enclosed proxy card handy when you access the website and follow the on-screen instructions. Internet voting facilities for shareholders of record will be available 24 +hours a day until 11:59 p.m. (Eastern time) on June 3, 2019. If you vote via the Internet, you do not have to return your proxy card via mail. +• +To vote by proxy using the telephone , use any touch-tone telephone and call +866-509-1041 to transmit your voting instructions up until 11:59 p.m. (Eastern time) on June 3, 2019. Please have the enclosed proxy card handy when you call and +then follow the instructions. If you vote via telephone, you do not have to return your proxy card via mail. +2 +If any other business properly comes before the meeting, then the designated persons will +have the discretion, to the extent authorized by applicable rules and regulations, to vote all shares they own or represent by proxy in any manner they deem appropriate. +If you vote by proxy, whether by mail, the Internet or telephone, you may revoke your proxy at any time before it is exercised by taking one +of the following actions: +• +sending written notice to the Company’s Secretary at the address set forth on the notice of meeting +appearing on the cover of this proxy statement; +• +voting again via the Internet or telephone on a later date or properly executing and delivering a later-dated +proxy card; or +• +attending the meeting, notifying the Company’s Secretary that you are present, and then voting in person. +Shares Held by Brokers or Nominees +If the shares you own are held in “street name” by a brokerage firm, your brokerage firm, as the record holder of your shares, is +required to vote your shares according to your instructions. In order to vote your shares, you will need to follow the directions your brokerage firm provides you. Many brokers also offer the option of providing voting instructions to them over the +Internet or by telephone, directions for which would be provided by your brokerage firm on your vote instruction form. +Under stock +exchange rules applicable to most brokerage firms, if you do not give instructions to your broker, your broker will be permitted to vote any shares it holds for your account in its discretion with respect to “routine” proposals, but will +not be allowed to vote your shares with respect to “non-routine” proposals. Proposal 1, regarding the election of Directors, Proposal 2, regarding the approval, on an advisory, non-binding basis, of the Company’s executive compensation, Proposal 3, regarding the frequency with which advisory, non-binding votes to approve the Company’s +executive compensation are held, and Proposal 4, regarding an amendment to the Company’s 2018 Equity Incentive Plan, are “non-routine” proposals. If you do not instruct your broker how to vote +with respect to these proposals, your broker will not vote your shares on them and your shares will be recorded as “broker non-votes” and will not affect the outcome of the vote on those +proposals . “Broker non-votes” are shares that are held in “street name” by a bank or brokerage firm that indicates on its proxy that, while voting in its discretion on one matter, it +does not have or did not exercise discretionary authority to vote on another matter. +Proposal 5, regarding the ratification of the +appointment of Wolf & Company, P.C. as the Company’s independent registered public accounting firm for the fiscal year ending January 31, 2020, is considered to be a routine item under the applicable rules and your broker will be +able to vote on this item even if it does not receive instructions from you, so long as your broker holds your shares in its name. +If a +broker or nominee holds shares of common stock in “street name” for your account, then this proxy statement may have been forwarded to you with a voting instruction card, which allows you to instruct the broker or nominee how to vote your +shares on the proposals described herein. To vote by proxy or instruct your broker how to vote, you should follow the directions provided with the voting instruction card. In order to have your vote counted on Proposal 1, Proposal 2, Proposal 3 +and Proposal 4, you must either provide timely voting +3 +instructions to your broker or obtain a properly executed proxy from the broker or other record holder of the shares that authorizes you to act on behalf of the record holder with respect to +the shares held for your account . +Votes Required to Transact Business at the Meeting +The holders of a majority of the shares entitled to vote, present in person or represented by proxy, will constitute a quorum for the +transaction of business at the meeting. Abstentions and broker non-votes are counted as present and entitled to vote for purposes of determining a quorum. +If You Receive More Than One Proxy Card or Voting Instruction Form +If you hold your shares in multiple accounts or registrations, or in both registered and street name, you will receive a proxy card or voting +instruction form for each account. Please sign, date and return all proxy cards you receive from the Company. If you choose to vote by proxy via the telephone or the Internet, please vote once for each proxy card you receive. Only your latest dated +proxy for each account will be voted. +Multiple Shareholders Sharing the Same Address +If you and other residents at your mailing address own shares of the Company’s common stock through a broker or other nominee, you may +have elected to receive only one copy of this proxy statement and the Company’s fiscal year 2019 Annual Report. If you and other residents at your mailing address own shares of common stock in your own names, you may have received only one copy +of this proxy statement and the fiscal year 2019 Annual Report, unless you provided the Company’s transfer agent with contrary instructions. This practice, known as “householding,” is designed to reduce the Company’s printing and +postage costs. You may promptly obtain an additional copy of this proxy statement, enclosed proxy card and our fiscal year 2019 Annual Report by sending a written request to AstroNova, Inc., attention Investor Relations Department, 600 East +Greenwich Avenue, West Warwick, Rhode Island 02893, or by calling the Company’s investor relations department at 617-542-5300. If you hold your shares through a +broker or other nominee and wish to discontinue householding or to change your householding election, you may do so by contacting your broker or by calling (800) 542-1061 or writing to Broadridge Financial +Solutions, 51 Mercedes Way, Edgewood, NY 11717. If you hold shares in your own name and wish to discontinue householding or change your householding election, you may do so by calling (877) 373-6374 or writing +to Computershare Investor Services at P.O. Box. 43078, Providence, RI 02940-3078. +Directions to the Annual Meeting +The annual meeting will be held at the offices of Foley Hoag LLP, Seaport West, 155 Seaport Boulevard, Boston, Massachusetts. For those +planning to attend the annual meeting, directions to Foley Hoag’s offices can be found at www.proxydocs.com/ALOT. +4 +PROPOSAL NO. 1 +ELECTION OF DIRECTORS +At +the annual meeting, six directors are to be elected to hold office until the next annual meeting and until their respective successors are elected and qualified. The persons named in the accompanying proxy, who have been designated by the Board, +intend to vote, unless otherwise instructed, for the election to the Board of the persons named below. The biographies below contain information regarding the person’s service as a director, business experience, director positions held +currently or at any time during the last five years, and the experiences, qualifications, attributes or skills that caused the Nominating and Governance Committee and the Board to determine that the person should serve as a director. +THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR EACH OF THE BOARD’S SIX NOMINEES FOR DIRECTOR. +Jean A. Bua , 60, has been a director since November 2018. Ms. Bua has served as Executive Vice President, Chief Financial Officer, +Chief Accounting Officer and Treasurer of NetScout Systems, Inc., a provider of real-time operational intelligence and performance analytics for service assurance and cyber security solutions, since September 2015. Prior to assuming her current role +at NetScout Systems, Inc., Ms. Bua served as that company’s Senior Vice President, Chief Financial Officer, Chief Accounting Officer and Treasurer from November 2011 until September 2015 and Vice President, Finance from September 2010 +until November 2011. Prior to her tenure at NetScout Systems, Inc., Ms. Bua served as Executive Vice President, Finance & Treasurer of American Tower Corporation from 2005 to 2010 and served in various roles at Iron Mountain, Inc. from +1996 to 2005, most recently as Senior Vice President, Chief Accounting Officer and Worldwide Controller. Previously, she held senior positions at Duracraft Corp. and Keithley Instruments. Ms. Bua has also served as a management consultant at +Ernst & Young and an auditor at KPMG. Since May 2017, she has served on the board of directors of CoreSite Realty Corporation, a provider of data center and interconnection solutions across the United States. We believe that +Ms. Bua’s expertise and experience in public company accounting and financial management qualify her to serve on our board. +Mitchell I. Quain , 67, has been a director since August 2011. Mr. Quain has served as a Senior Advisor at Carlyle Group, a private +equity firm since December 2011. From January 2010 through December 2011, Mr. Quain was a Partner at One Equity Partners, a private investment firm. From 2006 through 2009, he was a Senior Director of ACI Capital Corp. From 2002 through 2005, +Mr. Quain served as Chairman of Register.Com, Inc., an internet services provider, and from 1997 to 2001 he was employed with ABN AMRO and its predecessors in several capacities, including Vice Chairman of Investment Banking. Mr. Quain +also serves as a director of Digirad Corporation, a provider of mobile healthcare solutions and diagnostic imaging equipment and services, and Jason Industries, Inc., a manufacturing company operating in the seating, finishing, acoustics and +components businesses. Mr. Quain previously served as a director of DeCrane Aircraft Holdings, Inc., Handy & Harman Ltd., Hardinge Inc., HEICO Corporation, MagneTek, Inc., Mechanical Dynamics, Inc., RBC Bearings, Inc., Register.com, +Inc., Tecumseh Products Company, Titan International, Inc., and Xerium Technologies, Inc. We believe that Mr. Quain’s extensive experience in the private equity sector and public company experience qualify him to serve on our Board. +Yvonne E. Schlaeppi , 59, has been a director since April 2018. Since 2011, Ms. Schlaeppi has served as a Managing Partner of +Stratevise LLC, an international strategic advisory firm that she cofounded. Since 2016, Ms. Schlaeppi has served on the board of directors of Stallergenes Greer plc, a pharmaceutical company traded +5 +on the Euronext Paris exchange. From 2014 to 2015, Ms. Schlaeppi served on the boards of directors of allergy immunotherapy companies, Ares Allergy Holdings Inc. and Greer Laboratories, Inc. +Since 2015 Ms. Schlaeppi has been a member of the external advisory committee to the Channing Division of Network Medicine of Brigham and Women’s Hospital in Boston. Ms. Schlaeppi was recognized as a Board Leadership Fellow by the +National Association of Corporate Directors in 2017 and 2018. Prior to founding Stratevise, Ms. Schlaeppi served as General Counsel at Global Enterprise Technologies, Passport & ID, a high-security document printing solutions provider +and systems integrator, from 2007 to 2011 and as Executive Vice President, General Counsel and Corporate IP Officer at Organon BioSciences, a global pharmaceutical, animal health and biotech group based in the Netherlands, from 2006 to 2007. From +1999 to 2006 Ms. Schlaeppi was a partner at the Boston-based law firm of Palmer & Dodge LLP, where she served as Chairperson of that firm’s International Practice Group. From 1995 to 1998 Ms. Schlaeppi served in senior +positions at Johnson Controls, Inc., a NYSE-listed diversified industrial company, including as General Counsel Europe. We believe that Ms. Schlaeppi’s extensive experience in international business and corporate governance, as well as +relevant industry experience, qualify her to serve on our Board. +Harold Schofield , 77, has been a director since May 2012. Since +Mr. 2004, Mr. Schofield has been the owner and manager of Schofield Imaging Associates, LLC, in Narragansett, Rhode Island, and, since January 2017, has served as interim chief executive officer of NuLabel Technologies, Inc., a developer +and provider of adhesive solutions for labeling and decorating applications. Prior to founding Schofield Imaging Associates, LLC, Mr. Schofield was Founder, President and CEO of Atlantek Incorporated (“Atlantek”), a manufacturer of +thermal printers and retired as Vice President and General Manager of Zebra Atlantek, Inc. following the acquisition of Atlantek by Zebra Technologies Corp. in November 2003. Prior to founding Atlantek, Mr. Schofield was Design Engineering +Manager at Gulton Industries where he was responsible for design and development of thermal printers, plotters, and chart recorders. Mr. Schofield is an internationally recognized authority in the electronic printing field. We believe that +Mr. Schofield’s long history and expertise in the printing and imaging field qualify him to serve on our Board. +Richard S. +Warzala , 65, has been a director since December 2017. He is the President, Chief Executive and Chairman of the board of directors of Allied Motion Technologies, Inc. (“Allied Motion”), and has more than 40 years of leadership +experience and a strong technical background in the industrial, aerospace and commercial industries. He joined Allied Motion as President and Chief Operating Officer in 2002. Mr. Warzala was elected a director of Allied Motion in 2006, +appointed President and Chief Executive Officer in 2009, and elected as the Chairman of Allied Motion’s board of directors in 2014. Allied Motion designs, manufactures and sells precision and specialty motion control components and systems in +markets including Vehicle, Medical, Aerospace & Defense, and Industrial/Electronics. Before joining Allied Motion, Mr. Warzala was President of Danaher Corporation’s Motion Components Group and served in various senior positions +at American Precision Industries Inc., including Corporate Vice President and President of its API Motion Division. We believe that Mr. Warzala’s technology background and international industry experience, together with his corporate +governance expertise, business insights and deep understanding of lean manufacturing principles, qualify him to serve on our Board. +Gregory A. Woods , 60, has served as Chief Executive Officer of the Company since February 1, 2014 and as a director since January +2014. Mr. Woods joined the Company in September 2012 as Executive Vice President and Chief Operating Officer and was appointed President and Chief Operating Officer on August 29, 2013. Prior to joining the Company, Mr. Woods served +from January 2010 to August 2012 as Managing Director of Medfield Advisors, LLC, an advisory firm located in Medfield, Massachusetts focused on providing corporate +6 +development and strategy guidance to technology driven manufacturing firms. From 2008 to 2010, Mr. Woods served as President of Performance Motion Devices, a specialty semiconductor and +electronics manufacturer located in Lincoln, Massachusetts. Based on this experience and his position as Chief Executive Officer of the Company, we believe that Mr. Woods is qualified to serve on our Board. +The Board has determined that all of the directors of the Company, including each of the nominees standing for election at the 2019 annual +shareholders meeting, other than Gregory A. Woods, are independent of the Company in that such nominees have no material relationship with the Company either directly or as a partner, shareholder or affiliate of an organization that has a +relationship with the Company. The Board has made this determination in accordance with applicable Securities and Exchange Commission (“SEC”) rules and NASDAQ listing standards. +The directors will be elected by a plurality of the votes of the shares entitled to vote on the election of directors and present in person or +represented by proxy at the annual meeting. This means that the six nominees receiving the highest number of FOR votes will be elected as directors. Votes may be cast FOR or WITHHELD FROM each nominee. Broker +non-votes and votes that are WITHHELD FROM the nominees will be excluded entirely from the vote and will have no effect. +The Board recommends a vote FOR the election of each the nominees listed above. +7 +CORPORATE GOVERNANCE +The Board of Directors – Meetings and Committees +The Board currently consists of six members, all of whose terms will expire at the annual meeting and each of whom has been nominated for re-election. During the fiscal year ended January 31, 2019, the Board held eleven meetings. During fiscal year 2019, each director other than Ms. Bua attended at least 75% of the meetings of the Board and +meetings of committees on which such director served. Following Ms. Bua’s election to the Board in November 2018, during fiscal year 2019 the Board and the committees on which Ms. Bua then served held a combined two additional +meetings, both of which were scheduled prior to Ms. Bua’s appointment. At the time of her appointment, Ms. Bua had a prior commitment that conflicted with one of these previously scheduled board meetings, which prevented her from +attending that meeting. During fiscal year 2020, the Board and committees on which Ms. Bua serves have met six times, and Ms. Bua has attended all of those meetings. +The Board has adopted a policy that requires members of the Board to make every effort to attend each annual shareholders meeting. All members +of the Board then serving attended the 2018 annual shareholders meeting. +The Board currently has three standing committees: an Audit +Committee, a Compensation Committee, and a Nominating and Governance Committee. The members and chairs of each of those committees are appointed each year. The Audit Committee is comprised of Ms. Bua, Mr. Quain, Ms. Schlaeppi and +Mr. Schofield. The Nominating and Governance Committee is comprised of Ms. Bua, Mr. Quain, Ms. Schlaeppi, Mr. Schofield and Mr. Warzala. The Compensation Committee is comprised of Messrs. Quain, Schofield and Warzala. +Each of the members of our committees is independent as defined under the applicable NASDAQ listing standards and SEC rules. Each of the Audit, Compensation, and Nominating and Governance Committees has a written charter approved by the Board. A +copy of each charter is available on the Company’s website at www.astronovainc.com under “Investors – Corporate Governance – Governance Documents.” +Audit Committee. The Audit Committee’s primary duties and responsibilities include: overseeing the integrity of the Company’s +financial reports; appointing, setting the compensation of and overseeing the Company’s independent accountants; and assessing the qualifications, independence and performance of the Company’s independent accountants and the adequacy of +internal controls. The Audit Committee meets with the Company’s independent accountants to review quarterly financial results, the results of the audit, and other relevant matters. The Audit Committee held seven meetings during the fiscal year +ended January 31, 2019. The Board has determined that all members of the Audit Committee during fiscal year 2019 and all four current members of the Audit Committee satisfy the financial literacy requirements of the NASDAQ listing standards and +are independent as defined under the NASDAQ listing requirements and applicable SEC rules. Additionally, the Board has determined that that each of Ms. Bua and Mr. Quain qualifies as an “audit committee financial expert” as +defined by the SEC rules and possesses “financial sophistication” as described in the NASDAQ listing standards. During fiscal year 2019, until his retirement from the Board on April 3, 2018, Graeme MacLetchie served on the Audit +Committee. +Compensation Committee. The Compensation Committee assists the Board in discharging the Board’s responsibilities +relating to director and executive compensation. The Compensation Committee’s responsibilities include: establishing and reviewing the Company’s executive and director compensation philosophy, strategies, plans and policies; making +recommendations with respect to the design of the Company’s incentive compensation plans and equity based plans; granting awards under such plans and overseeing generally the +8 +administration of such plans; evaluating the performance and determining the compensation of the Chief Executive Officer; and reviewing and approving recommendations on compensation of other +executives. The Compensation Committee held nine meetings during the fiscal year ended January 31, 2019. During fiscal year 2019, until his retirement from the Board on April 3, 2018, Graeme MacLetchie served on the Compensation Committee. +Nominating and Governance Committee . The Nominating and Governance Committee is responsible for identifying individuals qualified +to be members of the Board and recommending such individuals to be nominated by the Board for election to the Board by the shareholders. The Nominating and Governance Committee is also responsible for reviewing director candidates nominated by +shareholders. During fiscal year 2019, the Board expanded the Nominating and Governance Committee’s role to include advising the Board regarding appropriate governance practices, including reviewing and monitoring executive officer succession +planning, and overseeing periodic evaluations of the Board, its committees, and the directors. The Nominating and Governance Committee held seven meetings in the fiscal year ended January 31, 2019. During fiscal year 2019, until his retirement +from the Board on April 3, 2018, Graeme MacLetchie served on the Nominating and Governance Committee. +Director Share Ownership +Requirements . The Company has a stock ownership policy that requires each director to hold shares of Company common stock with a value equal to at least $200,000. Any director who does not currently meet this requirement will have five years +from the later of April 1, 2015 or his or her initial election to the Board to achieve this ownership level. Directors are expected to retain at least 50% of the shares acquired upon exercise of any stock option (net of any shares withheld for +payment of taxes) or vesting of a restricted stock or restricted unit award until they achieve the specified ownership level and thereafter maintain such ownership level. Currently, all of our directors meet the ownership requirement, with the +exception of Ms. Bua, who was appointed to the Board in November 2018, Ms. Schlaeppi, who was appointed to the Board in April 2018, and Mr. Warzala, who was appointed to the Board in December 2017. +Compensation Committee Interlocks and Insider Participation +During fiscal year 2019, Messrs. MacLetchie, Quain, Schofield, and Warzala served on the Company’s Compensation Committee. No member of +the Company’s Compensation Committee who currently serves or who served during fiscal year 2019 has ever been an officer or employee of the Company or any of its subsidiaries. None of the Company’s executive officers serves as a director +or member of the compensation committee of another entity in a case where an executive officer of such other entity serves as a director of the Company or a member of the Company’s Compensation Committee. +Nomination of Directors +The Nominating +and Governance Committee considers suggestions from many sources, including shareholders, regarding possible candidates for director. As part of its ongoing succession planning, the Nominating and Governance Committee makes periodic recommendations +to the Board regarding the desired characteristics for potential directors, including with respect to competencies, special knowledge or expertise, experience of members, diversity and age. In all cases, the Nominating and Governance Committee seeks +individuals who possess the highest ethical standards and integrity, have a history of achievement that reflects superior standards for themselves and others, have the ability to provide wise, informed and thoughtful counsel to management on a range +of issues, exercise independence of thought, and possess skills and expertise appropriate +9 +to meet the Company’s needs and advance the long-term interests of the shareholders. While the Nominating and Governance Committee does not have a specific policy with respect to diversity, +it considers diversity with respect to viewpoints, accomplishments, skills and experiences, among other factors such as gender, race, national origin and age, in its evaluation of candidates for Board membership. In considering candidates for the +Board, the Nominating and Governance Committee considers the entirety of each candidate’s credentials in determining whether the candidate would bring a valuable perspective to the Board. +The Nominating and Governance Committee must also ensure that members of the Board as a group maintain the requisite qualifications under the +NASDAQ listing standards for populating the Audit, Compensation, and Nominating and Governance Committees. The Nominating and Governance Committee will consider shareholder nominees for director in the same manner as nominees for director from other +sources. +Shareholders may send recommendations for director nominees to the Nominating and Governance Committee at the Company’s +offices at 600 East Greenwich Avenue, West Warwick, Rhode Island 02893. Submissions should include information regarding a candidate’s background, qualifications, experience, and willingness to serve as a director. In addition, Section 10 +of Article III of the Company’s By-Laws sets forth specific procedures that, if followed, enable any shareholder entitled to vote in the election of directors to make nominations directly at an annual +meeting of shareholders. These procedures include a requirement for written notice to the Company not more than 150 days nor less than 60 days prior to the scheduled annual meeting and must contain the name and certain information concerning the +nominee and the shareholders who support the nominee’s election. For the annual meeting to be held in 2020, the notice must be received no earlier than December 21, 2019 and no later than March 20, 2020. A copy of the Company’s By-Laws may be obtained by writing to AstroNova, Inc., Attn: Investor Relations Department, 600 East Greenwich Avenue, West Warwick, Rhode Island 02893. +Communications with the Board of Directors +The Company’s Board provides a process for shareholders to communicate directly with the members of the Board or the individual chairman +of each standing committee. Any shareholder with a concern, question or complaint regarding our compliance with any policy or law, or who would otherwise like to contact the Board, may communicate directly with the directors by writing directly to +those individuals c/o AstroNova, Inc., 600 East Greenwich Avenue, West Warwick, Rhode Island 02893. The Company’s general policy is to forward, and not to intentionally screen, any mail received at the Company’s corporate offices that is +sent directly to an individual unless the Company believes the communication may pose a security risk. +Board Leadership Structure +All members of the Board, other than Mr. Woods, are independent and all our key committees – Audit, Compensation, and Nominating and +Governance – are, and during fiscal year 2019 were, comprised solely of independent directors. The non-management directors meet in executive session at least quarterly in order to promote discussion +among the independent directors and assure independent oversight of management. +A key component of our leadership structure is the active +role played by our independent directors in overseeing the Company’s business, both at the Board and Committee level. All of our directors are free to suggest the inclusion of items on the agenda for meetings of the Board or to raise subjects +that are not on the agenda for that meeting. In addition, our Board and each committee have complete and open access to any +10 +member of management and the authority to retain independent legal, financial, and other advisors as they deem appropriate without consulting or obtaining the approval of any member of +management. Moreover, our Audit Committee, Compensation Committee and the Nominating and Governance Committee, all of which are comprised entirely of independent directors, also perform oversight functions independent of management. +Since the passing of Dr. Viets, our former Chairman of the Board, on September 30, 2017, the Board has not elected a new Chairman of +the Board or lead independent director. The Board believes that in light of the relatively small size of the Board and the active involvement by all of our independent directors in both the oversight of the Company and the conduct of the +Board’s meetings and deliberations, including the establishment of the Board’s agenda for its meetings, the Board’s current leadership structure is appropriate for the Company at this time. +Risk Oversight +The Board has an active +role, as a whole and also at the committee level, in overseeing management of the Company’s risks through a program of sound policies, systems, processes, and reports. The Audit Committee of the Board has oversight responsibility over financial +reporting and disclosure processes, compliance and legal matters, and information security and fraud risk. The Audit Committee also monitors controls to prevent material weaknesses in the financial reporting function. The Audit Committee meets +regularly with our Chief Financial Officer in carrying out these responsibilities, and with the Company’s independent auditors in executive session. +The Compensation Committee of the Board oversees risks as they relate to the Company’s compensation policies and practices as described +under “Compensation Discussion and Analysis.” The Board’s Nominating and Governance Committee assists the Board in fulfilling the Board’s oversight responsibilities with respect to confirming the independence of board members, +developing desired characteristics of the Board and identifying individuals qualified to be members of the Board, reviewing and monitoring executive officer succession plans, and assessing the effectiveness of the Board and its committees. +While each committee is responsible for evaluating the risks within their areas of responsibility and overseeing the management of such risks, +all committees report regularly to the full Board, which also considers the Company’s entire risk profile. +Compensation of Directors +The Compensation Committee is responsible for reviewing and establishing the compensation of the directors of the Company. The Company adopted +a Non-Employee Director Annual Compensation Program on January 30, 2012 effective as of February 1, 2012, which was amended and restated as of February 1, 2014 and August 1, 2016 and +further amended on March 30, 2017 and June 4, 2018 (as so amended, the “Prior Program”). Pursuant to the Prior Program, each non-employee director received an automatic grant of restricted +stock awards (“RSAs”) on the first business day of each fiscal quarter. The number of whole shares granted each quarter was equal to 25% of the number calculated by dividing the director compensation amount by the fair market value of the +Company’s stock on such day. The director annual compensation amount was $55,000 for fiscal year 2017, $65,000 for fiscal year 2018 and $75,000 for fiscal year 2019. In addition, the Chairman of the Board would receive RSAs with an aggregate +value of $6,000, and the Chairs of the Audit and Compensation Committees each receive RSAs with an aggregate value of $4,000, also issued in quarterly installments and calculated in the same manner as the directors’ RSA grants. RSAs granted +prior to March 30, 2017 pursuant to the amended +11 +Program became fully vested on the first anniversary of the date of grant. RSAs granted after that date become vested on the date that is three months following the date of grant. +In addition, each non-employee director would receive +non-qualified options to purchase 5,000 shares of the Company’s common stock upon initial election to the Board (if not at the annual meeting) and upon the adjournment of each annual meeting or special +meeting in lieu of an annual meeting of the shareholders of the Company. These options would have a term of ten years and become exercisable immediately prior to the occurrence of the next annual meeting following the date the option is granted. In +connection with Ms. Bua’s election to the Board and in lieu of a grant of non-qualified options, she was granted a restricted stock award of 1,000 shares of our common stock, which will vest on the +first anniversary of the date of grant. +On January 31, 2019, the Compensation Committee adopted an Amended and Restated Non-Employee Director Annual Compensation Program (the “New Program”), which became effective as of February 1, 2019 and supersedes the Prior Program. Pursuant to the New Program, beginning with +fiscal year 2020, each non-employee director will automatically receive a grant of restricted stock on the date of his or her re-election to the Board. The number of +whole shares to be granted will be equal to the number calculated by dividing the stock component of the director compensation amount determined by the Compensation Committee for that year by the fair market value of our stock on that day. The value +of the restricted stock award for fiscal year 2020 is $60,000. To account for the partial year beginning on February 1, 2019 and continuing through the 2019 annual meeting and thereby provide for the alignment of the timing of annual grants of +restricted stock under the New Program with the election of directors at the annual meeting, on February 1, 2019, each non-employee director was granted shares of restricted stock with a fair market value +of $18,000. Other than the shares granted on February 1, 2019, which will vest on June 1, 2019, shares of restricted stock granted under the New Program will become vested on the first anniversary of the date of grant, conditioned upon the +recipient’s continued service on the Board through that date. In the event of the death or disability of a non-employee director, or a Change in Control (as that term is defined in our 2018 Equity +Incentive Plan) of the Company, the shares of restricted stock will immediately vest and no longer be subject to restrictions on transfer. Other than as part of a Change in Control of the Company and except in the case of economic hardship of a +particular non-employee director, as determined by the Compensation Committee, while a non-employee director is serving on our Board he or she may not sell or otherwise +dispose of any of our stock received in connection with his or her service on our Board (whether that stock was granted under the New Program, any predecessor program or otherwise) if that non-employee +director has not satisfied the requirements of any stock ownership guidelines established for directors by the Board or if the transfer would cause him or her to be out of compliance with any such guidelines. +Pursuant to the New Program, each non-employee director will also receive cash payments for +their service on the Board and its committees. The amounts of those payments for fiscal year 2020 will be: +Position Covered +Fiscal Year 2020 Annual Payment +Service on the Board +$ +45,000 +Audit Committee Chairman +$ +10,000 +Compensation Committee Chairman +$ +8,000 +Nominating and Governance Committee Chairman +$ +6,000 +Committee Member (other than Chairman) +$ +3,000 +Cash payments will be made to non-employee directors in four +equal tranches on the dates of the Board’s regular quarterly meetings. +12 +If a person becomes a non-employee director, +Chairman of the Board, lead independent director, chairman of a committee or a member of a committee on a date other than the date of our annual meeting of shareholders in any fiscal year, that person will receive an award of restricted stock as +described above, but appropriately prorated to reflect the number of days remaining from the date he or she commences his or her service in that capacity until the date for the scheduled date for our next annual meeting of shareholders. In addition, +if a person becomes a non-employee director, Chairman of the Board, lead independent director, chairman of a committee or a member of a committee other than on the first business day of a fiscal quarter of the +Company, he or she will receive cash fees on (i) the date of the regular full meeting of the Board held in that quarter or (ii) if later, the date he or she commences his or her service in that capacity, as described above, but +appropriately prorated to reflect the number of days remaining in that fiscal quarter. +The following Director Compensation table provides +information regarding the compensation paid or accrued by each person other than Mr. Woods who served as a director during fiscal year 2019. See “Executive Compensation” for information regarding compensation of and outstanding equity +awards held by Mr. Woods. +Name +Stock +Awards($)(a)(b) +Option +Awards +($)(c)(d) +Total ($) +Jean Bua +32,560 +— +32,560 +Mitchell I. Quain +79,520 +40,282 +119,802 +Yvonne Schlaeppi +61,658 +74,285 +135,943 +Harold Schofield +74,966 +40,282 +115,248 +Richard S. Warzala +77,528 +40,282 +117,810 +April L. Ondis(e) +74,966 +40,282 +115,248 +Graeme MacLetchie(f) +19,738 +— +19,738 +Everett V. Pizzuti(f) +18,747 +— +18,747 +(a) +The amounts reflect the aggregate fair value of the awards on the grant date under FASB ASC Topic 718 for +shares of restricted stock granted to directors. For additional information, see footnote 14 in the Company’s audited financial statements for the fiscal year ended January 31, 2019, included in the Company’s Annual Report on Form 10-K filed with the SEC on April 10, 2019. +(b) +As of January 31, 2019, Ms. Bua held 1,000 shares of unvested restricted stock. No other non-employee director held shares of unvested restricted stock as of that date. +(c) +The amounts reflect the aggregate fair value of the awards on the grant date under FASB ASC Topic 718 for stock +options granted to directors. Assumptions used in the calculation of these amounts are included in footnote 14 in the Company’s audited financial statements for the fiscal year ended January 31, 2019, included in the Company’s Annual +Report on Form 10-K filed with the SEC on April 10, 2019. +(d) +As of January 31, 2019, the Company’s non-employee directors +other than Ms. Bua held the following number of outstanding stock options: Mitchell I. Quain – 30,000, of which 25,000 were vested; Yvonne Schlaeppi – 10,000, of which 5,000 were vested; Harold Schofield – 35,000, of which 30,000 +were vested; and Richard Warzala – 10,000, of which 5,000 were vested. Ms. Bua did not hold any stock options as of January 30, 2019. +(e) +Ms. Ondis resigned from the Board effective as of November 19, 2018. +(f) +Each of Messrs. MacLetchie and Pizzuti retired from the Board effective as of April 3, 2018. +13 +Our Management +The following sets forth information with respect to our executive officers, other than Mr. Woods, as of April 12, 2019. Biographical +information regarding Gregory A. Woods, our President and Chief Executive Officer is included above in Proposal No. 1 – Election of Directors. +Name +Age +Position +Gregory A. Woods +60 +President, Chief Executive Officer and Director +David S. Smith +62 +Vice President, Chief Financial Officer and Treasurer +Michael M. Morawetz +60 +Vice President – EMEA +Stephen M. Petrarca +56 +Vice President – Operations +Michael J. Natalizia +53 +Vice President and Chief Technology Officer +Mr. Smith was appointed Vice President, Chief Financial Officer and Treasurer in January 2018. +Mr. Smith has served as CFO for multinational companies, including Dover Corporation from 2000 to 2002 and Crane Co. from 1994 to 2000. From 2005 to 2008 he was Senior Vice President and CFO of the semiconductor company, Standard Microsystems +Corporation. From 2008 until his appointment as our Vice President, Chief Financial Officer and Treasurer, Mr. Smith was Managing Partner for S.C. Advisors LLC, a management consultancy based in Darien, CT. +Mr. Morawetz was appointed Vice President—EMEA in June 2017. He was previously Vice President—International Branches from 2006 +to June 2017 and General Manager of Branch Operations for the Company’s German subsidiary, having joined the Company in 1989. +Mr. Petrarca was appointed Vice President—Operations in 1998. He has previously held positions as General Manager of Manufacturing, +Manager of Grass Operations and Manager of Grass Sales. He has been with the Company since 1980. +Mr. Natalizia was appointed Vice +President and Chief Technology Officer of AstroNova, Inc. on March 9, 2012. Prior to this appointment, Mr. Natalizia held the position of Director of Product Development of the Company since 2005. +14 +Security Ownership of 5% Beneficial Owners +The following table sets forth certain information regarding the beneficial ownership of the Company’s outstanding shares of common stock, +as of April 12, 2019 (except as noted), by each person who is known to the Company to own of record or beneficially more than 5% of such stock: +Name of Beneficial Owner +Number of Shares +Beneficially +Owned(a) +Percent +of Class +Dimensional Fund Advisors LP +566,023 +(b) +8.1 +% +6300 Bee Cave Road, Building One +Austin, TX 78746 +Rutabaga Capital Management, LLC +551,836 +(c) +7.9 +% +64 Broad Street, 3 rd Floor +Boston, MA 02109 +Kennedy Capital Management, Inc. +478,888 +(d) +6.8 +% +10829 Olive Blvd. +St. Louis, MO 63141 +Ariel Investments, LLC +429,959 +(e) +6.1 +% +200 E. Randolph Drive, Suite 2900 +Chicago, IL 60601 +Punch & Associates Investment Management, Inc. +385,960 +(f) +5.5 +% +7701 France Ave. So., Suite 300 +Edina, MN 55435 +(a) +All information is based upon ownership of record as reflected on the stock transfer books of the Company or as +reported on Schedule 13G or Schedule 13D filed under Rule 13d-1 under the Securities Exchange Act of 1934. +(b) +According to a Schedule 13G/A filed with the SEC on February 8, 2019, as of December 31, 2018, +Dimensional Fund Advisors, LP, an investment adviser registered under the Advisers Act, and its subsidiaries (collectively, “Dimensional”) had sole voting power with respect to 551,728 shares and sole dispositive power with respect to +566,023 shares held by registered investment companies, trusts and separate accounts for which Dimensional serves as investment manager, adviser or sub-adviser. +(c) +According to a Schedule 13G/A filed with the SEC on February 15, 2017, Rutabaga Capital Management, LLC, +an investment adviser registered under the Advisers Act, had sole voting power with respect to 382,869 shares, shared voting power with respect to 168,967 shares, and sole dispositive power with respect to 551,836 shares as of December 31, +2016. +(d) +According to a Schedule 13G filed with the SEC on February 12, 2019, Kennedy Capital Management, Inc., an +investment adviser registered under the Advisers Act, had sole voting power and sole dispositive power with respect to 478,888 shares as of December 31, 2018. +(e) +According to a Schedule 13G/A filed with the SEC on February 14, 2019, Ariel Investments, LLC, an +investment adviser registered under the Investment Advisers Act of 1940 (the “Advisers Act”), had sole voting power with respect to 417,359 shares and sole dispositive power with respect to 429,959 shares as of December 31, 2018. +(f) +According to a Schedule 13G/A filed with the SEC on February 11, 2019, Punch & Associates +Investment Management, Inc., an investment adviser registered under the Advisers Act, had sole voting power and sole dispositive power with respect to 385,960 shares as of December 31, 2018. +15 +Security Ownership of Directors and Officers +The following table sets forth certain information regarding the beneficial ownership of the Company’s common stock as of April 12, +2019 by each director, by each executive officer named in the Summary Compensation Table and by all directors and executive officers as a group. Unless otherwise noted, all shares of common stock are subject to the sole voting and dispositive power +of the respective directors and executive officers. +Beneficial Ownership +Name of Beneficial Owner +Shares and +Restricted +Shares(a) +Options +Exercisable +within 60 days +of 4/12/19 +Total +Beneficial +Ownership +(a) +Percent +of Class +Non-employee directors +Jean Bua +2,657 +(b) +— +2,657 +* +% +Mitchell I. Quain +51,560 +(c) +30,000 +81,560 +1.2 +Yvonne Schlaeppi +4,310 +(c) +10,000 +14,310 +* +Harold Schofield +19,030 +(c) +35,000 +54,030 +* +Richard Warzala +6,184 +(c) +10,000 +16,184 +* +Executive officers +Gregory A. Woods +102,828 +(d) +202,666 +(e) +305,494 +4.2 +David S. Smith +5,340 +(f) +17,166 +(g) +22,506 +* +Michael Natalizia +24,936 +(h) +10,833 +(i) +35,769 +* +All directors and executive officers of the Company as a group (10) +244,018 +(j) +330,146 +(k) +574,164 +7.8 +% +* +Indicates less than 1.0%. +(a) +If applicable, beneficially owned shares include shares owned by the spouse, minor children, and certain other +relatives of the director or executive officer, as well as shares held by trusts of which the person is a trustee or in which he or she has a beneficial interest. +(b) +Includes 1,868 shares of restricted stock. +(c) +Includes 868 shares of restricted stock. +(d) +Includes 1,007 shares of restricted stock and 16,564 restricted stock units vesting within 60 days of +April 12, 2019. +(e) +Excludes 67,834 shares underlying options not exercisable within 60 days of April 12, 2019. +(f) +Includes 3,489 restricted stock units vesting within 60 days of April 12, 2019. +(g) +Excludes 46,834 shares underlying options not exercisable within 60 days of April 12, 2019. +(h) +Includes 4,626 restricted stock units vesting within 60 days of April 12, 2019. +(i) +Excludes 11,667 shares underlying options not exercisable within 60 days of April 12, 2019. +(j) +Includes 29,228 restricted stock units vesting within 60 days of April 12, 2019. +(k) +Excludes 133,335 shares underlying options not exercisable within 60 days of April 12, 2019. +Section 16(a) Beneficial Ownership Reporting Compliance +Section 16(a) of the Exchange Act, requires the directors and executive officers of the Company and any persons who beneficially own more +than ten percent of the Company’s common stock to file with the SEC various reports of beneficial ownership and changes in beneficial ownership. Based solely on a review of the copies of such reports received by the Company and certain written +representations that no other reports were required, the Company believes that for the fiscal year ended January 31, 2019, all of its officers, directors and +16 +10% beneficial owners complied with the requirements of Section 16(a), except that the following forms were filed late: +• +One Form 4 by each of Ms. Ondis, Ms. Schlaeppi and Mr. Schofield relating to the grant of a +restricted stock award; +• +Two Form 4s by each of Mr. Quain and Mr. Warzala relating to the grant of a restricted stock award; +• +One Form 4 by Mr. Smith relating to the issuance of shares of common stock upon the vesting of a restricted +stock unit; and +• +One Form 4 by Mr. Morawetz relating to the sale of shares of common stock. +17 +COMPENSATION DISCUSSION & ANALYSIS +The Compensation Committee (the “Committee”) is charged with the responsibility for establishing, implementing and monitoring +adherence to the Company’s compensation philosophy and ensuring that executives and key management personnel are effectively compensated in a manner which is internally equitable. The Committee also is responsible for reviewing and establishing +the compensation of directors. +Compensation Philosophy and Objectives. The Committee’s overall +philosophy in terms of executive compensation is to link management incentives with the actual financial performance of the Company. Similarly, the compensation should attract, retain, and motivate highly qualified individuals to achieve the +Company’s business goals and link their interests with shareholder interests. In setting compensation for the Company’s executive officers, the Committee considers the executive’s performance, awards, if any, made during prior years +and other relevant factors. The Committee seeks to have the long-term performance of the Company’s common stock reflected in executive compensation through our equity incentive programs. +Elements of Compensation. The total compensation program for the Company’s executive officers consists of +the following: +• +salary; +• +cash incentive and bonus awards tied to the Company’s and executive’s annual performance; +• +equity-based incentive compensation, in the form of stock options, time-based restricted stock units and +performance-based restricted stock units; and +• +retirement and other benefits. +The Committee seeks to structure each element of compensation to attract and retain the necessary executive talent, reward annual performance +and provide incentives for achieving both long-term strategic goals as well as short-term performance goals. The Committee’s policy for allocating between currently paid and long-term compensation is to ensure adequate base compensation to +attract and retain personnel, while providing incentives to maximize long-term value for our shareholders. +Say on Pay +Consideration. In accordance with SEC rules, the Company conducted a non-binding, advisory vote on the Company’s executive compensation at its 2018 annual meeting. The +Company’s shareholders voted to approve the Company’s executive compensation practices at the 2018 annual meeting by a favorable vote of approximately 98.4% of the votes cast. +Setting Executive Compensation. The Committee is responsible for establishing and periodically reviewing the +compensation of the Company’s executive officers and approving all equity awards. The Committee annually reviews the performance of the executive officers and, based on these reviews, the Committee determines salary adjustments and annual +awards. Mr. Woods does not participate during deliberations regarding his compensation. +In fiscal year 2019, the Committee engaged a +compensation consultant, Radford, an Aon Hewitt company, to assist the Committee in assessing the amount and structure of the compensation paid to the Company’s executive officers. As part of its engagement, Radford assisted the Committee in +assessing the competitiveness of the Company’s executive compensation practices compared to a peer group of companies, which was identified +18 +with the assistance of Radford, and other survey data. The peer group selected by the Committee for purposes of evaluating the Company’s executive compensation practices consisted of the +following 19 publicly traded hardware manufacturing companies with similar revenues, employee headcounts and market capitalizations to the Company: +• +Allied Motion Technologies Inc. +• +Amtech Systems, Inc. +• +AXT, Inc. +• +Brightcove Inc. +• +CCUR Holdings, Inc. +• +Clearfield, Inc. +• +Communications Systems, Inc. +• +CVD Equipment Corporation +• +CyberOptics Corporation +• +Digi International Inc. +• +EMCORE Corporation +• +Frequency Electronics, Inc. +• +Intevac, Inc. +• +KVH Industries, Inc. +• +Nanometrics Incorporated +• +Perceptron, Inc. +• +Revolution Lighting Technologies, Inc. +• +Rudolph Technologies, Inc. +• +Transact Technologies Incorporated +While benchmarking may not always be appropriate as a stand-alone tool for setting compensation due to the aspects of the Company’s +business and objectives that are unique to it and the specific experiences and attributes of the Company’s executive officers, the Committee has generally considered approximately the median level of total compensation, as well as the +components of total compensation, in the survey and peer group data as the basis for comparison. +Fiscal Year 2019 Compensation +Overview . The total compensation paid to Mr. Woods and the Company’s two other most highly compensated executive officers, Mr. Smith and Mr. Natalizia (collectively with Mr. Woods, the “Named +Executive Officers”), in fiscal year 2019 increased significantly over the total compensation paid in fiscal year 2018. As is described in more detail below, the reasons for this increase were primarily attributable to the following: +• +in fiscal year 2019, the Company’s financial performance resulted in payments to the Named Executive +Officers under the Company’s Senior Executive Short-Term Incentive Plan (the “STIP”) equal to +19 +approximately 115% percent of their target awards, while no compensation was paid to the Named Executive Officers under the STIP in fiscal year 2018; +• +new performance and time-based restricted stock units were issued to the Named Executive Officers in fiscal year +2019, while no such awards were issued in fiscal year 2018, primarily due to the fact that fiscal year 2018 was a performance year under previously issued long-term equity incentive awards; and +• +Mr. Smith was employed with the Company for all of fiscal year 2019 versus less than one month in fiscal +year 2018. +The impact of regular salary increases for fiscal year 2019 also contributed to the overall increase in +total compensation for our Named Executive Officers in fiscal year 2019. +Salary. Base salaries for +executive officers are evaluated each year. Historically, base salaries have been increased at annual rates which approximate the general rates of increase of compensation for all employees of the Company. Annual salary adjustments are made +effective April 1 of each year. Effective as of April 2, 2018, the Committee set the fiscal year 2019 annual salaries the Named Executive Officers as follows: +Name +Salary +Gregory A. Woods +$ +415,000 +David Smith +$ +273,000 +Michael J. Natalizia +$ +205,000 +Cash Incentive and Bonus Awards. Annual cash incentive awards are an important +component of total executive cash compensation because they reward the Company’s executives for achieving targeted, annual results and emphasize variable or “at risk” compensation. From time-to-time the Committee awards discretionary cash bonuses to the Company’s executives to reward their efforts in extraordinary circumstances. +Senior Executive Short-Term Incentive Plan +During late 2014, the Committee engaged Radford to conduct an assessment of the Company’s executive compensation program, including a +review of executive base salaries, short-term incentive opportunities, and long-term incentives and pay mix as compared to the competitive market. Following receipt of Radford’s report in March 2015, the Committee approved the STIP for the +fiscal year beginning February 1, 2015. The STIP has been amended from time to time by the determinations of the Committee in connection with the establishment of annual awards and performance goals. Participants in the STIP (which may include +any executive officer, vice president or director-level manager) are determined annually by the Committee. Awards under the STIP are earned based on achieving or exceeding annual financial objectives, which the Committee has full discretion to +establish for each plan year. In April 2018, the Committee established objectives for fiscal year 2019 (the “2019 Performance Goals”) of consolidated revenue of $139,000,000 (the “Consolidated Revenue Performance Goal”) and +operating income of $7,949,000 (the “Consolidated Operating Income Performance Goal”). +20 +Annually, the Committee establishes a Target Award for each STIP participant, which may vary +as to each participant and from year to year. For fiscal year 2019, the Committee established the following Target Awards for our Named Executive Officers: +Name +Target +Award +($) +Target Award as +Percentage of Base Salary +Gregory A. Woods +311,250 +75 +% +David Smith +109,200 +40 +% +Michael J. Natalizia +61,500 +30 +% +The Committee allocated the Target Awards to the 2019 Performance Goals as follows: +• +50% of the Target Awards were tied to achievement of the Consolidated Revenue Performance Goal; and +• +50% of the Target Awards were tied to the achievement of the Consolidated Operating Income Performance Goal. +Performance with respect to each specific 2019 Performance Goal is calculated independently to determine the amount of +the award for each 2019 Performance Goal (each, an “Award Component”). The total STIP award earned by a participant for fiscal year 2019 is equal to the sum of the separate Award Components determined for each 2019 Performance Goal. Each +Award Component is independently adjusted by an “Adjustment Factor” as follows: +• +For the Consolidated Revenue Performance Goal: +• +If the Company’s fiscal year 2019 revenue exceeds the Consolidated Revenue Performance Goal, the Adjustment +Factor for that Award Component is 1 plus 20% for each $1.9 million by which actual performance exceeds the Consolidated Revenue Performance Goal, up to a maximum bonus of up to 250% of the target bonus allocated to that Award Component. +• +If the Company’s fiscal year 2019 revenue is less than the revenue performance goal, the Adjustment Factor +for that Award Component is 1 minus 10% for each $1.9 million by which actual performance is less than the Consolidated Revenue Performance Goal, such that no bonus would be paid under the STIP with respect to the Consolidated Revenue Award +Component if our fiscal year 2019 revenue was $120.0 million or less. +• +For the Consolidated Operating Income Performance Goal: +• +If the Company’s fiscal year 2019 operating income exceeds the Consolidated Operating Income Performance +Goal, the Adjustment Factor for that Award Component is 1 plus 10% for each $184,900 by which actual performance exceeds the performance goal, up to a maximum bonus of 250% of the target bonus amount allocated to that Award Component. +• +If the Company’s fiscal year 2019 operating income is less than the Consolidated Operating Income +Performance Goal, the Adjustment Factor for that Award Component will be 1 minus 10% for each $184,900 by which actual performance is less than the operating income performance goal, such that no bonus would be paid under the STIP with respect to +the Consolidated Operating Income Award Component if our fiscal year 2019 operating income is $6.1 million or less. +21 +Any Adjustment Factor relating to the Consolidated Revenue Performance Goal or the +Consolidated Operating Income Performance Goal is subject to linear interpolation to reflect achievements between the $1.9 million and $184,900, respectively, amounts mentioned for adjustments. +A participant’s STIP award is subject to the following limitations: +• +Aggregate awards under the STIP in any year may not exceed 15% of the Company’s Consolidated Operating +Income for that year determined without deduction for the STIP awards. +• +Adequate reserves for awards must be accrued when determining whether a Performance Goal based upon operating +income has been achieved. +Based on the Company’s results for fiscal year 2019, the Award Components were as +follows: +Performance Goal +Target ($) +Actual +Performance +($) +Adjustment +Factor +Consolidated Net Sales +139,000,000 +136,657,419 +0.8767 +Consolidated Operating Income +7,949,000 +8,720,868 +1.4175 +As a result, our Named Executive Officers received the STIP awards for fiscal year 2019 listed in the table +below. +Name +STIP Award for Fiscal Year 2019 ($) +Gregory A. Woods +357,028 +David Smith +125,261 +Michael J. Natalizia +70,545 +Previously, the amount of a participant’s award under the STIP, if any, would be credited to a book +account maintained by the Company (the “Award Bank”). The resultant balance in the participant’s account after crediting the amount of award (the “Bank Balance”) would then be used to determine the participant’s Payout +Amount for the plan year. In March 2019, in connection with its determination of the performance goals and STIP awards for fiscal year 2020, the Committee determined that the payment of those awards would not be subject to the Award Bank, and that +the Company would instead pay directly to each of Messrs. Woods, Smith and Natalizia the amounts of the fiscal year 2019 STIP awards that would previously have been subject to the Award Bank. +Equity-based Incentive Compensation . Total compensation at the executive level also includes equity incentive +awards granted under the Company’s 2018 Equity Incentive Plan. The objectives of the equity incentive awards are to align executive and shareholder long-term interests by creating a strong and direct link between executive pay and the +Company’s performance in key financial metrics, and to enable executives to develop and maintain a long-term stock ownership position in the Company’s common stock. +22 +In fiscal year 2019, the Committee granted to the Named Executive Officers the following +number of time-based and performance-based restricted stock units. +Name +Time-based Restricted +Stock Units +Performance-based +Restricted Stock Units +Gregory A. Woods +14,875 +12,800 +David Smith +5,775 +5,000 +Michael J. Natalizia +5,950 +5,000 +The time-based restricted stock units vest in three equal annual installments commencing on the first +anniversary of the date of grant, based on the executive’s continued employment with us. The performance-based restricted stock units may be earned based upon the achievement by the Company of performance goals based on a fiscal year 2019 +revenue threshold and target (the “Revenue Goal”) and operating income threshold and target (the “Operating Income Goal”) as follows: +Performance Goal +Threshold ($) +Target ($) +Revenue Goal +120,000,000 +139,000,000 +Operating Income Goal +6,100,000 +7,949,000 +One half of the performance-based restricted stock units issued to the Named Executive Officers were subject +to the Revenue Goal (“Revenue RSUs”) and the other half were subject to the Operating Income Goal (“Operating Income RSUs”). The number of Revenue RSUs and Operating Income RSUs that were earned was calculated as follows: +• +The number of Revenue RSUs earned by a Named Executive Officer was equal to the total number of Revenue RSUs held +by that Named Executive Officer multiplied by the quotient of +• +the Company’s fiscal year 2019 revenue minus the Revenue Goal Threshold, divided by +• +the Revenue Goal Target minus the Revenue Goal Threshold; and +• +The number of Operating Income RSUs earned by a Named Executive Officer was equal to the total number of +Operating Income RSUs held by that Named Executive Officer multiplied by the quotient of +• +the Company’s fiscal year 2019 operating income minus the Operating Income Goal Threshold, divided by +• +the Operating Income Goal Target minus the Operating Income Goal Threshold, +in each case rounded down to the nearest whole number. In no event could more than 100% of the Revenue RSUs or 100% of the Operating Income RSUs have become +earned. If the Company’s fiscal year 2019 revenue had been less than the Revenue Goal Threshold, then none of the Revenue RSUs would have been earned, and if the Company’s fiscal year 2019 operating income had been less than the Operating +Income Goal Threshold, then none of the Operating Income RSUs would have been earned. +23 +Based on the Company’s fiscal year 2019 revenue and operating income, in March 2019, +the Committee determined that approximately 87.67% of the Revenue RSUs and 100% of the Operating Income RSUs issued to the Named Executive Officers were earned, as follows: +Name +Earned Performance- +based Restricted Stock +Units +Gregory A. Woods +12,011 +David Smith +4,692 +Michael J. Natalizia +4,692 +Earned performance-based restricted stock units will vest in three equal tranches on June 4, 2019, 2020 +and 2021, conditioned upon the executives’ continued employment with us. +The Committee historically included stock options as a +component of executive compensation. In June 2018, the Committee granted the below stock options to the Named Executive Officers. Each of the stock options was issued pursuant to our 2018 Equity Incentive Plan, has an exercise price per share equal +to the closing price of our common stock on the date of grant, as reported on the Nasdaq Global Market, vests in three equal annual installments beginning on the first anniversary of the date of grant and has a term of ten years. +Name +Stock Options +Gregory A. Woods +45,500 +David Smith +14,000 +Michael J. Natalizia +17,500 +In fiscal year 2020, the Committee determined that it would cease using stock options as a component of +executive compensation. The Committee currently intends to exclusively utilize time-based and performance-based restricted stock units and restricted stock awards as the equity component of executive equity compensation. +Share Ownership and Retention Guidelines . The Committee believes that, as a rule, senior management should have +a meaningful equity interest in the Company. In order to promote equity ownership and further align the interests of management with our shareholders, the Committee has adopted share ownership and retention guidelines for our executives. These +guidelines are based upon the market value of our common stock as a multiple of such officer’s base pay. The multiple is three times base salary for the CEO, two times base salary for the Chief Financial Officer and 1.25 times base salary for +the other executive officers. Under these guidelines, an executive is expected to achieve the ownership level within five years from the later of April 1, 2015 or initial appointment as an executive officer. Executives are expected to retain at +least 50% of all shares acquired on vesting of restricted stock and 50% of all shares acquired on exercise of any stock option or vesting (net of any shares tendered or withheld for payment of taxes) until they achieve the specified ownership level +and thereafter maintain such ownership level. +Retirement and Other Benefits . In order to attract and retain +key executives, the Company offers retirement benefits through a Profit-Sharing Plan for employees, including its executive officers. +Profit Sharing Plan. The Company maintains a Profit Sharing Plan that is a qualified plan under Section 401(k) of the +Internal Revenue Code, which provides retirement benefits to substantially all the +24 +Company’s employees. Each eligible employee shares in contributions on the basis of relative (limited to $18,500 in 2018) compensation. In addition, participants are permitted to defer up to +50% of their cash compensation and make contributions of such deferral to this plan through payroll deductions. The Company makes matching contributions equal to 50% of the first seven percent of compensation contributed. The deferrals are made +within the limits prescribed by Section 401(k). The Profit Sharing Plan provides for the vesting of 100% of matching contributions made by the Company to the account of the employee after three years of service. Contributions by an employee are +100% vested immediately. +Perquisites . In addition to the benefits described above, the Company provides automobile +allowances to certain of its executive officers and a housing allowance to one of its Named Executive Officers. The amount of any automobile or housing allowance granted to our Named Executive Officers is reflected in the “All Other +Compensation” column of the Summary Compensation Table below. +Change in Control Agreement with +Mr. Woods. In November 2014, the Company entered into a Change in Control Agreement (the “CIC Agreement”) with Mr. Woods. The CIC Agreement provides for the payment of severance benefits upon a +change in control of the Company if Mr. Woods’ employment is terminated by the Company without cause or by Mr. Woods for good reason within the period (the “CIC Period”) beginning on the earlier of (i) 180 days prior to the +occurrence of the change in control and (ii) the announcement of a transaction expected to result in a change in control, and ending on the second anniversary of the occurrence of a change in control. Severance payments to Mr. Woods +include (i) payment of one and one-half times the sum of (A) his annual salary and (B) the greater of the amount of his target bonus for the fiscal year in progress or the highest annual bonus +paid to him in the prior three years (collectively, “base compensation”), (ii) immediate vesting of all unvested stock options and restricted stock awards, (iii) continued health coverage for 18 months or until he receives benefits +from another employer, if earlier, and (iv) reimbursement for outplacement services in an amount not to exceed 17% of his base compensation. If any payment or benefit under the CIC Agreement or under any other plan or agreement would constitute +an “excess parachute payment” within the meaning of Section 280G of the Internal Revenue Code, and if Mr. Woods would be in a better after-tax position by reducing the such payments or +benefits, the amounts payable under the CIC Agreement will be reduced to the extent necessary to avoid the excise tax payable under Section 280G. +Employment Agreements and Severance Benefits . Except for the CIC Agreement with Mr. Woods, we generally do not provide any +severance benefits to our Named Executive Officers other than those provided to all employees. Severance benefits vary based upon salary levels and length of service. +COMPENSATION COMMITTEE REPORT +The Compensation Committee has reviewed and discussed with management the Compensation Discussion & Analysis included above. Based on +these reviews and discussions, the Compensation Committee has recommended to the Board that the Compensation Discussion & Analysis be included in the Company’s Annual Report on Form 10-K for the +fiscal year ended January 31, 2019 for filing with the SEC through incorporation by reference of this Proxy Statement. +Compensation Committee: +Richard Warzala (Chairman) +Mitchell I. Quain +Harold Schofield +25 +EXECUTIVE COMPENSATION +The following table provides information regarding the total compensation paid or accrued by the Company to each of its Named Executive +Officers. +Summary Compensation Table +Name and Principal Position +Year +Salary +($) +Stock +Awards($)(a) +Option +Awards +($)(b) +Non-Equity +Incentive Plan +Compensation +($)(c) +All Other +Compensation +($) +Total +($) +Gregory A. Woods +2019 +409,911 +505,069 +366,563 +357,028 +79,631 +(d) +1,718,202 +President and CEO +2018 +387,344 +— +252,742 +— +63,138 +703,224 +David S. Smith +2019 +265,469 +196,644 +112,789 +125,261 +62,456 +(e) +762,619 +Vice President, CFO and Treasurer +2018 +10,092 +207,000 +277,501 +— +1,108 +495,701 +Michael J. Natalizia +2019 +198,019 +199,838 +104,986 +70,545 +27,646 +(f) +637,033 +Vice President and Chief Technology Officer +2018 +178,049 +— +— +— +9,784 +187,833 +(a) +The amounts reflect the aggregate fair value of the awards on the grant date under FASB ASC Topic 718 for +restricted stock units granted to the Named Executive Officers. Under FASB ASC Topic 718, the grant date fair value of each restricted stock unit is equal to the closing price of our common stock on the grant date. +(b) +The amounts reflect the aggregate fair value of the awards on the grant date under FASB ASC Topic 718 for stock +options granted to the Named Executive Officers. Assumptions used in the calculation of these amounts are included in footnote 14 to the Company’s audited financial statements for the fiscal year ended January 31, 2019, included in the +Company’s Annual Report on Form 10-K filed with the SEC on April 10, 2019. +(c) +Reflects cash awards under the Company’s Senior Executive Short-Term Incentive Plan, which is discussed in +further detail under the heading “Compensation Discussion and Analysis” above. +(d) +Represents pay-out of unused vacation of $32,721, vehicle allowance of +$24,173, premiums on Company-paid disability and life insurance policies for which Mr. Woods or his estate is the beneficiary of $10,532 and $3,160, respectively, and employer match under the Company’s Profit Sharing Plan of $9,045. +(e) +Represents housing allowance of $27,693, vehicle allowance of $18,000, +pay-out of unused vacation of $11,550, and employer match under the Company’s Profit Sharing Plan of $5,213. +(f) +Represents pay-out of unused vacation of $20,923 and employer match +under the Company’s Profit Sharing Plan of $6,723. +26 +Grants of Plan-Based Awards +The following table provides information on all plan-based awards by the Company for the fiscal year ended January 31, 2019 to each Named +Executive Officer. +Name +Grant +Date +Estimated Possible Payouts +Under Non-Equity Incentive +Plan Awards +Estimated Possible Payouts +Under Equity Incentive Plan +Awards +All Other +Stock +Awards: +Number +of +Shares of +Stock or +Units (#) +All Other +Option +Awards: +Number of +Securities +Underlying +Options (#) +Exercise +or Base +Price of +Option +Awards +($/Sh) +Grant +Date +Fair +Value +of +Stock +and +Option +Awards +($)(c) +Threshold +($)(a)(b) +Target +($)(a) +Maximum +($)(a) +Threshold +(#) +Target +(#) +Maximum +(#) +Gregory A. Woods +4/2/2018 +— +311,250 +778,125 +6/4/2018 +14,875 +(d) +271,469 +6/4/2018 +— +12,800 +(e) +12,800 +(e) +233,600 +6/4/2018 +45,500 +(f) +18.25 +366,563 +David S. Smith +4/2/2018 +— +109,200 +273,000 +6/4/2018 +5,775 +(d) +105,394 +6/4/2018 +— +5,000 +(e) +5,000 +(e) +91,250 +6/4/2018 +14,000 +(f) +18.25 +112,789 +Michael J. Natalizia +4/2/2018 +— +61,500 +153,750 +6/4/2018 +5950 +(d) +108,588 +6/4/2018 +— +5,000 +(e) +5,000 +(e) +91,250 +6/4/2018 +17,500 +(f) +18.25 +140,986 +(a) +Represents awards under the Company’s Senior Executive Short-Term Incentive Plan. See “Compensation +Discussion & Analysis – Senior Executive Short-Term Incentive Plan” for additional information regarding the Senior Executive Short-Term Incentive Plan. +(b) +The Company’s Senior Executive Short-Term Incentive Plan does not provide for any threshold payment amount +for amounts that may be earned with respect to the Consolidated Revenue Goal or Consolidated Operating Income Goal. +(c) +The grant date fair value of each restricted stock unit is equal to the closing price of our common stock on the +grant date and, in the case of performance-based restricted stock units, assumes achievement of 100% of target performance. The assumptions used in the calculation of the grant date fair value of option awards are included in footnote 14 to the +Company’s audited financial statements for the fiscal year ended January 31, 2019, included in the Company’s Annual Report on Form 10-K filed with the SEC on April 10, 2019. +(d) +Consists of a restricted stock unit award issued pursuant to the Company’s 2018 Equity Incentive Plan, +which will vest in three equal annual installments commencing on the first anniversary of the grant date. +(e) +Consists of a performance-based restricted stock unit award issued pursuant to the Company’s 2018 Equity +Incentive Plan, which, if earned, will vest in three equal annual installments commencing on the first anniversary of the grant date. See “Compensation Discussion & Analysis – Equity-based Incentive Compensation” for more +information about the performance-based restricted stock units. +(f) +Consists of an option award issued pursuant to the Company’s 2018 Equity Incentive Plan, which will vest in +three equal annual installments commencing on the first anniversary of the grant date. +27 +Outstanding Equity Awards at Fiscal Year-End +The following table provides information on all outstanding equity awards held by each of the Named Executive Officers as of +January 31, 2019. +OPTION AWARDS +STOCK AWARDS +Name +Number of +Securities +Underlying +Unexercised +Options (#) +Exercisable +Number of +Securities +Underlying +Unexercised +Options (#) +Unexercisable +Option +Exercise +Price +($) +Option +Expiration +Date +Number of +Shares or +Units of +Stock That +Have Not +Vested (#) +Market +Value of +Shares or +Units of +Stock That +Have Not +Vested ($) +Equity +Incentive +Plan +Awards: +Number of +Unearned +Shares, +Units or +Other +Rights That +Have Not +Vested +(#) +(a) +Equity +Incentive +Plan +Awards: +Market or +Payout +Value of +Unearned +Shares, +Units or +Other +Rights That +Have +Not +Vested ($) +Gregory A. Woods +25,000 +— +7.91 +9/4/2022 +(b) +50,000 +— +13.80 +5/22/2024 +(b) +37,500 +12,500 +13.95 +3/16/2025 +(b) +25,000 +25,000 +15.01 +3/14/2026 +(b) +12,500 +37,500 +12.85 +3/13/2027 +(b) +— +45,000 +18.25 +6/4/2028 +(c) +39,660 +(d) +792,407 +12,800 +239,980 +David S. Smith +12,500 +37,500 +13.80 +1/22/2028 +(b) +— +14,000 +18.25 +6/4/2028 +(c) +17,025 +(e) +340,160 +5,000 +93,746 +Michael J. Natalizia +5,000 +— +14.20 +3/17/2024 +(b) +— +17,500 +18.25 +6/4/2028 +(c) +8,633 +(f) +172,487 +5,000 +93,746 +(a) +Consists of performance-based restricted stock units held by the Named Executive Officers, which may be earned +based upon the achievement by the Company of performance goals relating to the Company’s fiscal year 2019 revenue and operating income. Restricted stock units that are earned vest in three equal installments on June 4, 2019, 2020 and 2021. +On March 11, 2019, the Committee determined that a portion of the restricted stock units were earned by the Named Executive Officers based upon the Company’s fiscal year 2019 revenue and operating income. The total number of these +performance-based restricted stock units held by each Named Executive Officer as of January 31, 2019 and the number earned based on the Company’s fiscal year 2019 financial performance are as follows: +Name +Performance-based Restricted Stock Units +held as of January 31, 2019 +Shares Earned based on Fiscal 2019 +Revenue and Operating Income +Mr. Woods +12,800 +12,011 +Mr. Smith +5,000 +4,692 +Mr. Natalizia +5,000 +4,692 +(b) +Options vest in four equal annual installments commencing on the first anniversary of the option grant date +(which is ten years prior to the expiration date). +(c) +Options vest in three equal annual installments commencing on the first anniversary of the option grant date +(which is ten years prior to the expiration date). +(d) +Consists of (i) 1,007 shares of restricted stock and 151 restricted stock units that vested on March 14, +2019; (ii) 134 shares of restricted stock that vested on March 16, 2019; (iii) 4,960 shares of restricted stock that vested on March 20, 2019; (iv) 7,603 restricted stock units that will vest on May 20, 2019; (v) 14,875 restricted +stock units that will vest in three equal tranches on June 4, 2019, 2020, and 2021; (vi) 1,007 shares of restricted stock that will vest on March 14, 2020; and (vii) 9,923 restricted stock units that will vest in two equal tranches on +March 20, 2020 and 2021. +28 +(e) +Consists of (i) 5,775 restricted stock units that will vest in three equal tranches on June 4, 2019, 2020, +and 2021; and (ii) 11,250 restricted stock units that will vest in three equal tranches on January 22, 2020, 2021, and 2022. +(f) +Consists of (i) 16 restricted stock units that vested on March 14, 2019; (ii) 529 restricted stock units +that vested on March 20, 2019; (iii) 1,079 restricted stock units that will vest on May 20, 2019; (iv) 5,950 restricted stock units that will vest in three equal tranches on June 4, 2019, 2020, and 2021; and (v) 1,059 restricted stock +units that will vest in two equal tranches on March 20, 2020 and 2021. +Risk Related to Compensation Policies +The Company’s compensation policies and practices for its employees, including its executive compensation program described in +Compensation Discussion and Analysis, aim to provide a risk-balanced compensation package which is competitive in our market sectors and relevant to the individual executive. The Company expects to continue to award to certain executives and +employees, upon satisfaction of applicable performance conditions and subject to future approval and grant by the Compensation Committee, equity and cash-based awards. Because the Company’s incentive programs provide for a blend of short-term +and long-term goals, and include substantial vesting features, the Company believes that the structure of its compensation plans discourages short-term risk taking and aligns the interest of its executives and managers with those of its +shareholders. The Company does not believe that risks arising from these practices, or its compensation policies and practices considered as a whole, are reasonably likely to have a material adverse effect on the Company. +AUDIT COMMITTEE REPORT +The Audit Committee of the Board is responsible for providing independent, objective oversight of the Company’s accounting functions and +internal controls. The Audit Committee is composed of four directors, each of whom is independent as defined by the NASDAQ listing standards and SEC rules. The Audit Committee operates under a written charter approved by the Board. +Management is responsible for the Company’s internal controls and financial reporting process. The independent accountants are +responsible for performing an independent audit of the Company’s consolidated financial statements in accordance with generally accepted auditing standards and issuing a report thereon. The Audit Committee’s responsibility is to monitor +and oversee these processes. +The Audit Committee’s responsibilities focus on two primary areas: (1) the adequacy of the +Company’s internal controls and financial reporting process and the reliability of the Company’s financial statements; and (2) the independence and performance of the Company’s independent accountants. The Audit Committee has +sole authority to select, evaluate and when appropriate, to replace the Company’s independent auditors. +The Audit Committee has met +with management and the Company’s independent accountants, Wolf & Company, P.C., to review and discuss the January 31, 2019 financial statements. Management represented to the Committee that the Company’s consolidated +financial statements were prepared in accordance with generally accepted accounting principles, and the Audit Committee has reviewed and discussed the consolidated financial statements with management and the independent accountants. The Audit +Committee also discussed with Wolf & Company, P.C. the matters required by Auditing Standard No. 16 ( Communication with Audit Committees ) issued by the Public Company Accounting Board. The Audit Committee also received from +Wolf & Company, P.C. the written disclosures and the letter from Wolf & Company, P.C. pursuant to applicable requirements of the Public Company Accounting Oversight Board regarding Wolf & Company, P.C.’s +communications with the Audit Committee concerning independence, and has discussed with Wolf & Company, P.C. its independence from the Company. +29 +The Audit Committee received the information concerning the fees of Wolf & Company, +P.C. for the year ended January 31, 2019 set forth below under “Independent Accountant Fees and Services.” When applicable, the Audit Committee considers whether the provision of non-audit +services is compatible with maintaining the independence of the independent accountants. Wolf & Company, P.C. did not provide any non-audit services during the fiscal year ended January 31, 2019. +Based upon the review and discussions referred to above, the Audit Committee recommended that the Board include the audited consolidated +financial statements in the Company’s Annual Report on Form 10-K for the year ended January 31, 2019, to be filed with the SEC. +Audit Committee: +Mitchell I. Quain (Chairman) +Jean Bua +Yvonne Schlaeppi +Harold Schofield +30 +RELATED PARTY TRANSACTIONS +Potential conflicts of interest and related party transactions are referred by the Board to the Audit Committee for review and approval. In +reviewing and evaluating potential conflicts of interest and related party transactions, the Audit Committee uses applicable NASDAQ listing standards and SEC rules as a guide. +No officer, director or nominee for director of the Company or any associate of any of the foregoing had during the period beginning on +February 1, 2018 through the date of this proxy statement any material interest, direct or indirect, in any material transaction or any material proposed transaction in which the amount exceeds $120,000 and to which the Company was or is to be +a party. +EQUITY COMPENSATION PLAN INFORMATION +The following table sets forth information about the Company’s equity compensation plans as of January 31, 2019: +Plan Category +Number of Securities to +be Issued Upon Exercise +of Outstanding Options, +Warrants and Rights +Weighted- +Average Exercise +Price of +Outstanding +Options, +Warrants and +Rights +Number of Securities +Remaining Available for +Future Issuance Under +Equity Compensation +Plans +Equity Compensation Plans Approved by Shareholders +901,664 +(1) +$ +14.30 +(2) +290,593 +(3) +Equity Compensation Plans Not Approved by Shareholders +— +— +— +Total +901,664 +(1) +$ +14.30 +(2) +290,593 +(3) +(1) +Includes 417,695 shares issuable upon exercise of outstanding options granted under the Company’s 2007 +Equity Incentive Plan; 202,450 shares issuable upon exercise of outstanding options granted and 50,585 restricted stock units outstanding under the Company’s 2015 Equity Incentive Plan; and 151,000 shares issuable upon exercise of outstanding +options granted and 79,934 restricted stock units outstanding under the Company’s 2018 Equity Incentive Plan. Refer to footnote 14 to the Company’s audited financial statements for the fiscal year ended January 31, 2019 included in +the Company’s Annual Report on Form 10-K filed with the SEC on April 10, 2019 for further discussion. +(2) +Does not include restricted stock units. +(3) +Represents 256,740 shares available for grant under the Company’s 2018 Equity Incentive Plan and 33,853 +shares available for issuance under the Company’s Employee Stock Purchase Plan. This balance does not include (i) 3,148 shares issued pursuant to outstanding unvested restricted stock awards that are subject to forfeiture or (ii) shares +subject to outstanding awards under the Company’s 2015 Equity Incentive Plan, that may become available under the Company’s 2018 Equity Incentive Plan if those awards are forfeited, cancelled, reacquired by the Company or terminated in the +future under circumstances that, had they been issued under the Company’s 2018 Equity Incentive Plan, would have been available for future grants. +31 +PROPOSAL NO. 2 +ADVISORY VOTE ON EXECUTIVE COMPENSATION +As required by the Section 14A(a)(1) of the Exchange Act, the Board is providing shareholders with the opportunity to cast an advisory +vote on the Company’s executive compensation at the annual meeting through the following resolution: +“RESOLVED, that the +shareholders approve the Company’s executive compensation, as described in the Compensation Discussion and Analysis and the tabular disclosure regarding Named Executive Officer compensation (together with the accompanying narrative disclosure) +in the Company’s Proxy Statement.” +The Board believes that the Company’s compensation policies and procedures, which are +described more fully in the “Compensation Discussion and Analysis” section of this Proxy Statement and in the tables and narrative in the “Executive Compensation” section, are strongly aligned with the long-term interests of +shareholders. These policies and procedures balance short-term and longer-term compensation opportunities to assure that the Company meets short-term objectives while continuing to produce value for our shareholders over the long term. +Approval of this proposal requires the affirmative vote of a majority of the shares of common stock entitled to vote and present in person or +represented by proxy at the annual meeting. Abstentions will have the same effect as a vote against the proposal, and broker non-votes will have no effect on the outcome of the vote. This vote will not be +binding on or overrule any decisions by the Board or any committee thereof, will not create or imply any additional fiduciary duty on the part of the Board, and will not restrict or limit the ability of the Company’s shareholders to make +proposals for inclusion in proxy materials related to executive compensation. However, the Compensation Committee and the Board will take into account the outcome of the vote when considering future executive compensation arrangements. +The Board recommends a vote “FOR” approval of the Company’s executive compensation, as described in the Compensation +Discussion and Analysis, and the tabular disclosure regarding Named Executive Officer compensation (together with accompanying narrative disclosure) in this Proxy Statement. +32 +PROPOSAL NO. 3 +ADVISORY VOTE ON THE FREQUENCY OF EXECUTIVE COMPENSATION VOTES +As required by the Section 14A(a)(2) of the Exchange Act, we are providing shareholders the opportunity to advise on how frequently we +should include in our Proxy Statement a vote on our executive compensation similar to Proposal No. 2 of this Proxy Statement. We are required to hold this advisory vote on the frequency of the advisory vote on executive compensation at least +once every six years. The Board will consider carefully the results of shareholder voting upon the frequency of inclusion of our proposal regarding approval of our executive compensation, but the final vote is advisory in nature and not binding upon +the Board. By voting on this proposal, shareholders may indicate whether they prefer an advisory vote on named executive compensation once every one, two, or three years. We ask that you support a frequency period of every year for future non-binding shareholder votes on executive compensation. +The Board believes that an annual advisory +vote on executive compensation will allow our shareholders to provide timely, direct input on our executive compensation philosophy, policies and practices as disclosed in the proxy statement each year. +The voting frequency option that receives the greatest number of votes cast by the shares of our common stock entitled to vote and present in +person or represented by proxy at the annual meeting will be the frequency for the advisory vote on executive compensation that has been selected by shareholders. Abstentions and broker non-votes will have no +effect on the outcome of the vote on this proposal. However, because this vote is advisory and not binding on the Board of Directors or the Company in any way, the Board of Directors may decide that it is in the best interests of our shareholders +and the Company to hold an advisory vote on executive compensation more or less frequently than the option selected by our shareholders. +The Board recommends a vote for “EVERY YEAR” on the frequency of our submission of a vote of shareholders for approval of the +Company’s executive compensation. +33 +PROPOSAL NO. 4 +APPROVAL OF AN AMENDMENT TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK AVAILABLE FOR ISSUANCE UNDER THE COMPANY’S 2018 EQUITY +INCENTIVE PLAN +The Board has adopted and is seeking shareholder approval of an amendment to the Company’s 2018 Equity Incentive +Plan, or the 2018 Plan, to increase the number of shares of common stock that are available to be issued under the 2018 Plan by 300,000 shares. As of April 12, 2019, 188,631 shares remained available for future grants or awards under the 2018 +Plan. The Company may also issue under the 2018 Plan an additional number of shares equal to the number of shares subject to outstanding awards under the Company’s 2015 Equity Incentive Plan, or the 2015 Plan, that are forfeited, cancelled, +reacquired by us or terminated in the future and that, had they been issued under the 2018 Plan, would have been available for future grants under the 2018 Plan. +The Board recommends this action in order to enable us to continue to attract, retain, and motivate our executives, other key employees, +directors and individuals providing services to the Company. The Board believes that stock options, restricted stock units and other forms of equity compensation promote growth and provide a meaningful incentive to employees of successful companies. +The Board has reviewed a range of projections for future equity awards, which indicates that the current number of shares of common stock +issuable under the 2018 Plan, may be insufficient for maintaining equity awards as a core component of our long-term incentive program beyond fiscal year 2021. For fiscal year 2019, 2018, and 2017, the Company’s burn rate, which measures the +usage of shares under the Company’s equity incentive plans, was 4.6%, 2.7% and 1.7%, respectively, resulting in an average burn rate over that period of 2.4%. We calculate burn rate by dividing the number of shares subject to awards granted +during each fiscal year, net of forfeitures and cancellations, by the weighted average number of shares outstanding during that fiscal year. We believe that our three-year average annual burn rate is well within the range considered reasonable by +most institutional shareholders. +As a result of the Company’s shift in fiscal year 2020 from using stock options as a component of +equity compensation to exclusively utilizing time-based and performance-based restricted stock units and restricted stock awards for that purpose, the Board expects the number of shares of stock underlying awards issued pursuant to the 2018 Equity +Plan on an annual basis to decrease in fiscal years 2020 and 2021. +The Board recommends that our shareholders approve the amendment to +the 2018 Plan so that we can continue to provide equity awards pursuant to our long-term incentive program and thereby continue to attract and retain talented personnel. Approval of 2018 Plan requires the affirmative vote of a majority of the shares +of common stock entitled to vote and present in person or represented by proxy at the annual meeting. Abstentions will have the same effect as a vote against the proposal, and broker non-votes will have no +effect on the outcome of the vote. +Description of the 2018 Equity Incentive Plan, as proposed to be amended +The following is a brief summary of the material features of the 2018 Plan, as proposed to be amended. This summary does not purport to be +complete and is qualified in its entirety by reference to the 2018 Plan, as proposed to be amended, a copy of which is attached to this proxy statement as Appendix A. +Purpose. The 2018 Plan is intended to promote the best interests of the Company and its shareholders and is +designed to attract, retain and motivate executives, other key employees, directors and certain other individuals +34 +providing services to the Company by providing them with the opportunity to enhance their own financial interest through acquisition of stock in the Company and participation in the long-term +growth and financial success of the Company, thereby strengthening the financial relationship between these individuals and shareholders. +Authorized Shares. If shareholders approve the proposed amendment to the 2018 Plan, 488,631 shares would +be available for future grants or awards under the 2018 Plan, based on the number of awards outstanding on April 12, 2019. Shares of stock will not be deemed issued pursuant to the 2018 Plan to the extent an award is settled in cash in lieu of +stock. Shares subject to awards issued under the 2018 Plan or awards outstanding under the 2015 Plan that are forfeited, canceled, satisfied without the issuance of stock, otherwise terminated, or, for shares of stock issued pursuant to any unvested +award, reacquired by the Company at not more than the grantee’s purchase price (other than by exercise) will be “added back” and become available for future awards. Shares tendered or withheld in satisfaction of the exercise price of +an option or withheld in satisfaction of tax withholding obligations will not be “added back” or otherwise increase the number of shares available for grant under the 2018 Plan. Shares issued under the 2018 Plan may be of original +issuance, treasury shares or other shares, or a combination of the foregoing. +Shares of common stock issued as substitution awards in +connection with the Company’s merger with or acquisition of another company will not decrease the number of shares available for grant under the 2018 Plan, but shares of common stock subject to substitution awards will not be available for +further awards under the 2018 Plan if the substitution awards are forfeited, expire or are settled in cash. The Company may use shares under a pre-existing, shareholder approved plan of a company acquired by +the Company for awards under the 2018 Plan, which shares will not decrease the number of shares available for grant under the 2018 Plan, but such shares may only be used for grants of awards made prior to the expiration of the pre-existing plan and to persons who were not employees or directors of the Company or any subsidiary prior to such acquisition. +Administration. The 2018 Plan is administered by the Committee. The Committee may delegate to the CEO the right +to grant awards to employees who are not directors or executive officers of the Company. The Committee is authorized to interpret the 2018 Plan and related agreements and documents and to take various other actions with respect thereto. +Eligibility. Awards under the 2018 Plan may be granted to executive officers and other employees of the Company +and its subsidiaries and the Company’s non-employee directors. In addition, the Committee may select certain consultants and advisers to the Company or its subsidiaries to receive awards under the 2018 +Plan. Incentive stock options may be granted only to individuals who, as of the time of grant, are employees of the Company or its subsidiaries. The 2018 Plan’s eligibility criteria are intended to encompass a group which is currently estimated +at approximately 380 individuals, which includes 5 non-employee directors and 5 executive officers. The actual number of individuals who will receive an award cannot be determined in advance because the +Committee has discretion to select the participants. +Available Awards. The 2018 Plan allows for a range of +equity-based compensation, including stock options, stock appreciation rights (“SARs”), restricted stock, restricted stock units (“RSUs”) and other stock-based awards. Each type of award is described below under “Types of +Awards Authorized Under the 2018 Plan.” Each award granted under the 2018 Plan will be evidenced by an award agreement containing such terms and provisions, consistent with the 2018 Plan, as the Committee may approve. +35 +Limit on Director Awards. The 2018 Plan provides that the +aggregate grant date fair value (computed as of the date of grant in accordance with applicable financial accounting rules) of all awards granted to any non-employee director during any single fiscal year, +excluding awards to a director as all or a portion of Board or committee retainers or meeting fees or pursuant to any election by a Director to receive an Award in lieu of all or a portion of any cash retainers or meeting fees, shall not exceed +$100,000. +Minimum Vesting Requirements . Awards granted to employees under the 2018 Plan (other than +substitute awards in connection with an acquisition) may not vest or otherwise become exercisable earlier than one year following the date of grant, subject to accelerated vesting in the Committee’s discretion in the event of the death or +Disability (as defined in the 2018 Plan) of the participant, special circumstances determined by the Committee, or a Change in Control (as defined in the 2018 Plan). The foregoing vesting restrictions do not apply to grants of up to 5% of the number +of shares of the Company’s common stock available for awards on the effective date of the 2018 Plan or to awards granted to non-employee directors or consultants. +Repricing Prohibited. The Committee may not authorize the amendment of an outstanding option or SAR that would +be treated as a repricing under the rules of the securities exchange or market system constituting the primary market for the shares, without the approval of the Company’s shareholders. However, appropriate adjustments may be made in connection +with corporate transactions and capital restructurings and as necessary to comply with applicable law. +Clawback . The 2018 Plan provides that award agreements issued under it may provide for the cancellation or +clawback of certain awards or a portion of the realized gain if, prior to a change in control of the Company, there is an accounting restatement due to material noncompliance by the Company with any financial reporting requirement under the +securities laws which reduces the amount of the awards that would have been paid or vested had the financial results been properly reported or if the Company is otherwise required by applicable law or Company policy to recoup any such amounts. +Types of Awards Authorized Under the 2018 Plan. The following types of awards may be granted under the +2018 Plan: +Stock Options . Stock options may be granted that entitle the optionee to purchase shares of Company common +stock at a price not less than fair market value per share as of the date of grant (except for substitution awards) at such time or times, or upon such event or events, and subject to such terms, conditions, performance criteria and restrictions as +the Committee may determine. The maximum term for stock options is 10 years. However, incentive stock options (“ISOs”) granted to any person who owns, as of the date of grant, stock possessing more than 10% of the total combined voting +power of all classes of our stock must have an exercise price that is not less than 110% of the fair market value of Company common stock on the date of grant and may not have a term extending beyond the fifth anniversary of the date of grant. Stock +options may be granted as ISOs, nonstatutory stock options, or combinations of the foregoing. If the fair market value of the shares underlying the awards (measured on the date incentive stock options are granted) that first becomes exercisable in a +calendar year is greater than the maximum allowed under the Code, the portion of such options which exceeds such amount will be treated as nonstatutory stock options. +The 2018 Plan provides that the option exercise price may be paid (i) in cash, by check, or in cash equivalent, (ii) by tender of +Company’s common stock owned by the participant having a fair market value not less than the exercise price, (iii) with the consent of the Committee, by the assignment of the proceeds of a sale +36 +with respect to some or all of the shares being acquired upon the exercise of the option, or (iv) pursuant to a “net exercise” arrangement as permitted by the Committee whereby the +participant directs the Company to deduct from the shares of stock issuable upon exercise of an option a number of shares having an aggregate fair market value equal to the sum of the total exercise price of such option and/or the amount of the +participant’s minimum tax withholding. Payment of an option exercise price may also be made by such other lawful consideration as approved by the Committee or by any combination of the foregoing. +In the event that on the last business day of the term of a nonstatutory option (i) the exercise of the option is prohibited by +applicable law or (ii) shares may not be purchased or sold by certain employees or directors of the Company due to the “black-out period” of a Company policy or a +“lock-up” agreement undertaken in connection with an issuance of securities by the Company, the term of that nonstatutory option will be extended for a period of thirty (30) days following the +end of the legal prohibition, black-out period or lock-up agreement in each case to the extent any such extension does not constitute the extension of a stock right +under Section 409A of the Code. +Stock options are nontransferable by the participant, other than by will or by the laws of descent +and distribution, and are exercisable during the participant’s lifetime only by the participant. However, the Committee may provide in the option award agreement or may agree in writing that the participant may transfer a nonstatutory stock +option, without consideration, to members of the participant’s immediate family, to trusts for the benefit of such family members, or to partnerships in which such family members are the only partners, provided that the transferee agrees in +writing to be bound by all of the terms and conditions of the 2018 Plan and the applicable option award agreement. +Stock +Appreciation Rights . A SAR gives a participant the right to receive the appreciation in the fair market value of the Company’s common stock between the date of grant of the award and the date of its exercise. SARs may become +exercisable at such time or times, or upon such event or events, and subject to such terms, conditions, performance criteria and restrictions as the Committee may determine. The Company may pay the appreciation either in cash or in the +Company’s common stock. The maximum term of any SAR granted under the 2018 Plan is ten years. +Restricted Stock Awards . +A grant of restricted stock involves the immediate transfer by the Company to a participant of ownership of a specified number of restricted shares of its common stock at a purchase price, if any, established by the Committee. Shares subject to a +Restricted Stock Award may be made subject to vesting conditioned upon the satisfaction such service requirements, conditions, restrictions or performance criteria as the Committee may determine. The participant is entitled immediately to voting and +other ownership rights in such shares, subject to the rules with respect to dividends set forth below. +Restricted Stock +Units . An RSU represents a right to receive common stock of the Company at a future date determined in accordance with the participant’s award agreement. No monetary payment is required for receipt of RSUs or the shares +issued in settlement of the award, the consideration for which is furnished in the form of the participant’s services to the Company. The Committee may grant restricted stock unit awards subject to vesting conditions similar to those applicable +to restricted stock awards. Participants have no voting rights or rights to receive cash dividends with respect to RSUs until shares of common stock are issued in settlement of such awards. However, subject to the restrictions discussed below under +the heading “Dividends,” the Committee may grant RSUs that entitle their holders to receive dividend equivalents, which are rights to receive additional RSUs for a number of shares whose value is equal to any cash dividends paid by the +Company. +37 +Other Stock-Based Awards . The Committee may, in its discretion, grant to +eligible employees other stock-based awards, as deemed by the Committee to be consistent with the purposes of the 2018 Plan. Any such awards will be subject to the minimum vesting requirements described above. +Dividends. No recipient of an award of options or stock appreciation rights will have the right to receive +dividends or dividend equivalents with respect to such an award. Dividends or dividend equivalents credited, paid to or payable in connection with an award that is not yet vested will be subject to the same restrictions and risk of forfeiture as the +underlying award and may not be paid to the recipient until the underlying award vests. +Change in +Control. For purposes of the 2018 Plan, “Change in Control” means: +• +The acquisition of more than 50% of the beneficial ownership of the combined voting stock of the Company by any +person or group other than the Company or its subsidiaries or any employee benefit plan of the Company or any person who was an officer or director of the Company on the effective date of the 2018 Plan; +• +Consummation by the Company of a reorganization, merger or consolidation in which all or substantially all of the +individuals and entities who were the beneficial owners of the voting securities of such entity immediately prior to such reorganization, merger or consolidation do not, following such reorganization, merger or consolidation, beneficially own, +directly or indirectly, securities representing more than 50% of the voting power of then outstanding voting securities of the corporation resulting from such a reorganization, merger or consolidation, unless the transaction is structured as +“merger of equals” and the Board determines that a change in control has not occurred; +• +The sale of all or substantially all of the Company’s assets to a party which is not controlled by or under +common control with the Company; or +• +During any 24-month period, individuals who, as of the beginning of such +period, constitute the Board (the “Incumbent Directors”) cease for any reason to constitute at least a majority of the Board, except that individuals whose election or nomination was approved by a vote of at least a majority of the +Incumbent Directors then on the Board (other than in connection with an actual or threatened election contest) are treated as Incumbent Directors. +Impact of Change in Control on Awards. The 2018 Plan generally provides the Committee with flexibility to +determine the effects of a change in control on outstanding awards. Under the 2018 Plan, in the event of a Change in Control, the acquiring company may, without the consent of any participant, either assume the Company’s rights and obligations +under outstanding awards or substitute for outstanding awards substantially equivalent awards for the acquiring company’s stock. The determination of such substantial equality of value of consideration shall be made by the Committee in its sole +discretion. +In the event the acquiring company elects not to assume or substitute for outstanding awards of the Company in connection +with a Change in Control, then the exercisability and vesting conditions applicable to such awards and any shares acquired upon exercise of such awards held by a participant whose employment or other service has not terminated prior to the Change in +Control shall be accelerated effective as of the date ten days prior to the Change in Control. +Assumption or Substitution of Certain +Awards. Unless otherwise provided in an award agreement or other agreement between the Company and a participant, in the event of a Change in Control in which the +38 +acquiring corporation assumes or substitutes for an award (or in which the Company is the ultimate parent corporation and continues the award), if a participant’s employment terminates +within 18 months following such Change in Control (or such other period set forth in the award agreement) and under the circumstances specified in the award agreement: +• +options and SARs outstanding as of the date of such termination of employment will immediately vest, become fully +exercisable, and may thereafter be exercised for 12 months (or if longer the period of time set forth in the award agreement, but in no event beyond the end of the regularly scheduled term of such options or SARs); and +• +the vesting conditions applicable to restricted stock, restricted stock units, and any other stock-based awards +outstanding as of the date of such termination of employment shall lapse and the restricted stock, restricted stock units or other stock-based awards shall become free of all restrictions, limitations and conditions and become fully vested. +Termination of Awards. Award agreements may provide that in the event of a Change in +Control, options and SARs outstanding as of the date of the Change in Control may be cancelled and terminated without payment therefor if the fair market value of one share of stock of the Company as of the date of the Change in Control is equal to +or less than the option exercise price per share or the SAR grant price. In addition, the Committee, in its discretion, may determine that, in the event of a Change in Control, each option and SAR outstanding shall terminate within a specified +number of days after notice to the participant, and/or that each participant shall receive, with respect to each share of stock subject to such option or SAR, an amount equal to the excess of the fair market value of such share of stock immediately +prior to the occurrence of such Change in Control over the exercise price per share. +Cancellation of Award; Forfeiture of +Gain. The 2018 Plan provides that the Company may retain the right to cause a forfeiture of the gain realized by a participant on account of actions taken by the participant in violation or breach of or in conflict with +any employment agreement, non-competition agreement, any agreement prohibiting solicitation of employees or customers or any confidentiality obligation with respect to the Company and its affiliates, or +otherwise in competition with the Company or its affiliates. In addition, the Company may annul an award if the participant is an employee of the Company or its affiliates and is terminated for Cause as defined in the applicable award agreement or +the 2018 Plan. +Adjustments for Changes in Capital Structure. If the number of outstanding shares of stock +of the Company is increased or decreased or the shares of stock are changed into or exchanged for a different number or kind of shares or other securities of the Company on account of any recapitalization, reclassification, stock +split, reverse split, combination of shares, exchange of shares, stock dividend or other distribution payable in capital stock, or other increase or decrease in such shares effected without receipt of consideration by the Company, then +the number and kind of shares for which grants of awards may be made under the 2018 Plan will be adjusted proportionately by the Company. Any such adjustment in outstanding options or SARs will not change the aggregate exercise price payable with +respect to shares that are subject to the unexercised portion of an outstanding option or SAR, but will include a corresponding proportionate adjustment in the exercise price per share for such option or SAR. +Summary of U.S. Federal Income Tax Consequences. The following summary is intended only as a general guide to +the U.S. federal income tax consequences of participation in the 2018 Plan and does not attempt to describe all possible federal or other tax consequences of such participation or tax consequences based on particular circumstances. +39 +Incentive Stock Options . A participant recognizes no taxable +income for regular income tax purposes as a result of the grant or exercise of an incentive stock option (ISO) qualifying under Section 422 of the Code. Participants who neither dispose of their shares within two years following the date the +option was granted, nor within one year following the exercise of the option, will normally recognize a long-term capital gain or loss equal to the difference, if any, between the sale price and the purchase price of the shares. If a participant +satisfies such holding periods upon the sale of the shares, the Company will not be entitled to any deduction for federal income tax purposes. If a participant disposes of shares within two years after the date of grant, or within one year after the +date of exercise (a “disqualifying disposition”), the difference between the fair market value of the shares on the date of exercise and the option exercise price (not to exceed the gain realized on the sale if the disposition is a +transaction in which a loss, if sustained, would be recognized) will be taxed as ordinary income at the time of disposition. Any gain in excess of that amount will be a capital gain, which will be long-term gain only if the shares were held for more +than a year following option exercise. Any ordinary income recognized by the participant upon the disqualifying disposition of the shares generally will be deductible by the Company for federal income tax purposes, except to the extent such +deduction is limited by applicable provisions of the Code. +The difference between the option exercise price and the fair market value of +the shares on the date of exercise of an ISO is treated as an adjustment in computing the participant’s alternative minimum taxable income and may be subject to an alternative minimum tax which is paid if such tax exceeds the regular tax for +the year. +Nonstatutory Stock Options . Options not qualifying as ISOs will be nonstatutory stock options having +no special tax status. A participant generally recognizes no taxable income as the result of the grant of such an option, provided the exercise price of the option is no less than the fair market value of the common stock at the time of grant. Upon +exercise of a nonstatutory stock option, the participant normally recognizes ordinary income in the amount of the difference between the option exercise price and the fair market value of the shares on the date of exercise. If the participant is an +employee, such ordinary income generally is subject to withholding of income and employment taxes. Upon the sale of stock acquired by the exercise of a nonstatutory stock option, any gain or loss, based on the difference between the sale price and +the fair market value on the date of exercise, will be taxed as capital gain or loss. No tax deduction is available to the Company with respect to the grant of a nonstatutory stock option or the sale of the stock acquired pursuant to such grant. The +Company generally will be entitled to a deduction equal to the amount of ordinary income recognized by the participant as a result of the exercise of a nonstatutory stock option, except to the extent such deduction is limited by applicable +provisions of the Code. +Restricted Stock Awards . A participant acquiring restricted stock generally recognizes +income only as such shares of restricted stock vest. Upon vesting, the participant will recognize ordinary income equal to the fair market value of the vested shares at the time of vesting (less the amount, if any, paid by the participant for the +vested shares). +However, a participant may elect to recognize ordinary income upon the receipt, not the vesting, of shares of restricted +stock in connection with such award, by making an election in accordance with Section 83(b) of the Internal Revenue Code. In this case, the participant recognizes ordinary income in an amount equal to the fair market value of the shares at the +time the participant received the shares (less the amount, if any, that the participant paid for the shares). +If the participant is an +employee, the ordinary income recognized at the time of vesting, or upon receipt if an “83(b) election” was made, generally is subject to withholding of income and employment taxes. Upon the sale +40 +of shares acquired pursuant to a restricted stock award, any gain or loss, based on the difference between the sale price and the fair market value on the vesting date, or upon receipt if an +“83(b) election” was made, will be taxed as capital gain or loss. The Company generally will be entitled to a deduction equal to the amount of ordinary income recognized by the participant at the time such income was recognized, except to +the extent such deduction is limited by applicable provisions of the Code. +RSU Awards . A participant generally +will recognize no income upon the grant of a RSU award. Upon the settlement of such an award, a participant normally will recognize ordinary income in the year of receipt in an amount equal to the cash received and the fair market value of any +shares received. If the participant is an employee, such ordinary income generally is subject to withholding of income and employment taxes. Upon the sale of any shares received, any gain or loss, based on the difference between the sale price and +the fair market value on the date such shares were received will be taxed as capital gain or loss. The Company generally will be entitled to a deduction equal to the amount of ordinary income recognized by the participant, except to the extent such +deduction is limited by applicable provisions of the Code. If the participant received shares of restricted stock upon the settlement of an RSU award, the participant generally will be taxed in the same manner as described above (see discussion +under “Restricted Stock”). +Awards to Participants Outside the United States. The Committee may +modify the terms of any award under the 2018 Plan made to a participant who is a resident or primarily employed outside the United States in order that such award will conform to applicable laws and regulations or so that the value and other +benefits of the award to the participant, as affected by foreign tax laws and other restrictions, shall be comparable to the value of such an award to a participant who is resident or primarily employed in the United States. +French Sub-Plan . The 2018 Plan includes special provisions, which are referred to +as the French sub-plan, for awards granted to participants who are French resident taxpayers or otherwise subject to the French social security scheme. The purpose of the French +sub-plan is to provide favorable income tax and social security tax treatment under French law. In the event of any conflicts between the French sub-plan and another +provision of the 2018 Plan, the provisions of the French Sub-plan will control with respect to any awards subject to the French sub-plan. The French Sub-plan became effective upon the approval of the 2018 Plan by our shareholders. +Termination or +Amendment. The 2018 Plan will continue in effect until the date on which all shares available for issuance under the 2018 Plan have been issued and all restrictions on such shares under the terms of the 2018 Plan and the +agreements evidencing awards granted under the 2018 Plan have lapsed. In addition, the Board may terminate or amend the 2018 Plan at any time, provided that no amendment may be made without shareholder approval if the Board deems such approval +necessary for compliance with any applicable law, regulation or rule. No termination or amendment may affect any outstanding award unless expressly provided by the Committee, and in any event, may not adversely affect an outstanding award, without +the consent of the participant, unless necessary to comply with any applicable law, regulation or rule. No awards may be granted under the 2018 Plan after June 4, 2028, the tenth anniversary of the date that it was initially approved by the +Company’s shareholders. +Nonexclusivity of the Plan. Neither the approval of the amendment to the 2018 +Plan by the Board nor the submission of the amendment to the 2018 Plan to the shareholders of the Company for approval shall be construed as creating any limitations on the power of the Board to adopt such other incentive arrangements as it may deem +desirable, including, without limitation, the granting of awards otherwise than under the 2018 Plan. +41 +New Plan Benefits. No grants have been made with respect to the additional shares of +common stock to be reserved for issuance under the 2018 Plan. At this time, the Company cannot determine the number of shares of common stock that may be granted to executive officers and all employees, including +non-executive officers and directors who are employees, as such grants are subject to the discretion of the Committee. Pursuant to the Company’s Amended and Restated +Non-Employee Director Compensation Program as currently in effect, each non-employee director who is re-elected to the +Company’s board of directors at the 2019 annual meeting of shareholders will receive a grant of shares of restricted stock with a fair value of $60,000 as of that date. The Committee determines and approves the equity compensation for the chief +executive officer and all other officers. +The Board of Directors recommends a vote “FOR” the approval of the amendment to +the 2018 Equity Incentive Plan. +PROPOSAL NO. 5 +RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC +ACCOUNTING FIRM +The Audit +Committee has sole authority to select, evaluate and when appropriate, to replace the Company’s independent auditors. The Audit Committee has appointed Wolf & Company, P.C. as the Company’s independent registered public accounting +firm for the fiscal year ending January 31, 2020. Although action by the Company’s shareholders on this matter is not required, the Audit Committee believes it is appropriate to seek shareholder ratification in light of the critical role +played by the independent auditors in evaluating the integrity of Company financial controls and reporting and hereby requests the shareholders to ratify such appointment. +Approval of this proposal requires the affirmative vote of a majority of the shares of common stock entitled to vote and present in person or +represented by proxy at the annual meeting. Abstentions will have the same effect as a vote against the proposal, and broker non-votes will have no effect on the outcome of the vote. +The Board of Directors recommends a vote “FOR” the ratification of the appointment of Wolf & Company, P.C. as the +Company’s independent registered public accounting firm for the fiscal year ending January 31, 2020. +Independent Accountants’ +Fees, Services and Other Matters +The Company expects a representative of Wolf & Company, P.C. will be present at the annual +meeting with the opportunity to make a statement, if he or she so desires, and that such representative will be available to respond to appropriate questions. +42 +Aggregate fees for professional services rendered for the Company by Wolf & +Company, P.C. for the fiscal years ended January 31, 2019 and 2018 are set forth below. The aggregate fees included in the “Audit Fees” category are billed for the fiscal years for the audit of the Company’s annual financial +statements and review of financial statements and statutory and regulatory filings or engagements. +2019 +2018 +Audit Fees +$ +224,500 +$ +222,000 +Audit-Related Fees +— +— +Tax Fees +— +— +All Other Fees +$ +— +— +Audit Fees for the fiscal years ended January 31, 2019 and 2018 were for professional services +rendered for the audits of the financial statements of the Company, quarterly review of the financial statements included in the Company’s Quarterly Reports on Form 10-Q, consents and other assistance +required to complete the year end audit of the consolidated financial statements. Audit fees for the fiscal year ended January 31, 2019 included fees for professional services relating to the review of the Company’s registration statement +on Form S-8. +Policy on Audit Committee +Pre-Approval . The Audit Committee pre-approves all audit and non-audit services provided by the independent accountants prior +to the engagement of the independent accountants with respect to such services. None of the services described above were approved by the Audit Committee under the de minimis exception provided by Rule +2-01(C)(7)(i)(c) under Regulation S-X. +FINANCIAL +REPORTS +A copy of the annual report of the Company for the fiscal year ended January 31, 2019, including the Company’s +annual report to the SEC on Form 10-K, accompanies this proxy statement. Such report is not part of this proxy statement. +PROPOSALS FOR 2020 ANNUAL MEETING +The 2020 annual meeting of the shareholders of the Company is scheduled to be held on May 19, 2020, the third Tuesday in May. If a +shareholder intending to present a proposal at that meeting wishes to have such proposal included in the Company’s proxy statement and form of proxy relating to the meeting pursuant to Rule 14a-8, the +shareholder must submit the proposal to the Company no later than December 27, 2019. Shareholder proposals not requested to be included in the proxy statement pursuant to Rule 14a-8 and director +nominations that are to be considered at the 2020 annual meeting must be submitted no earlier than December 21, 2019 and no later than March 20, 2020. +43 +OTHER MATTERS +No business other than that set forth in the attached Notice of Meeting is expected to come before the annual meeting, but should any other +matters requiring a vote of shareholders arise, including a question of adjourning the meeting, the persons named in the accompanying proxy will vote thereon according to their best judgment in the interests of the Company. In the event any of the +nominees for the office of director should withdraw or otherwise become unavailable for reasons not presently known, the persons named as proxies will vote for other persons in their place in what they consider the best interests of the Company. +You are urged to sign and return your proxy promptly to make certain your shares will be voted at the meeting. You may revoke your proxy +at any time before it is voted. +By Order of the Board of Directors +Peter M. Rosenblum +Secretary +44 +Appendix A +EXPLANATORY NOTE: This Appendix A contains a copy of the AstroNova, Inc. 2018 Equity Incentive Plan, as proposed to be amended, as described in the proxy +statement to which this Appendix A is attached. +AstroNova, Inc. +2018 Equity Incentive Plan +SECTION 1. +PURPOSE +This 2018 Equity Incentive Plan (the “ Plan ”) is intended to promote the best interests of the Company and its +shareholders and is designed to attract and retain the best available talent and encourage the highest level of performance by, and provide additional incentive to (a) executives and other key employees of the Company and any other +Participating Company (as defined below), (b) Directors, and (c) certain other individuals providing services to the Company and any other Participating Company. The Company intends that this purpose will be effected by providing for +Awards in the form of stock and/or stock-based cash awards as provided in the Plan, which afford Participants the opportunity to enhance their own financial interests through the acquisition of shares of Company Stock and participation in the +long-term growth and financial success of the Company, thereby strengthening the financial relationship between Participants and Company shareholders. The terms of the Plan shall be interpreted in accordance with this intention. +SECTION 2. DEFINITIONS AND CONSTRUCTION +2.1 Definitions . Whenever used herein, the following terms shall have their respective meanings set forth below: +“ Acquiring Corporation ” shall have the meaning set forth in Section 11.1 hereof. +“ Award ” means any Option, SAR, Restricted Stock Award or Other Stock-Based Award granted under the Plan. +“ Award Agreement ” means a written agreement between the Company and a Participant setting forth the terms, conditions and +restrictions of the Award granted to the Participant. +“ Board ” means the Board of Directors of the Company. +“ Cashless Exercise ” shall have the meaning set forth in Section 6.3 hereof. +“ Cause ” shall have the meaning given such term in the applicable Award Agreement and, in the absence of any such definition, +means (x) any material breach by the Participant of any agreement to which the Participant and a Participating Company are both parties, (y) any act or omission to act by the Participant which may have a material and adverse effect on a +Participating Company’s business or on the Participant’s ability to perform services for a Participating Company, including, without limitation, the commission of any crime (other than ordinary traffic violations), or (z) any material +misconduct or material neglect of duties by the Participant in connection with the business or affairs of a Participating Company. +A-1 +“ Change in Control ” means: +(a) the acquisition of more than 50% of the beneficial ownership of the combined voting securities of the Company by any person +or group (as such terms are used in Section 13(d) and 14(d) of the Exchange Act), other than the Company or its subsidiaries or any employee benefit plan of the Company or any person who was an officer or Director of the Company on the +Effective Date of the Plan; +(b) consummation by the Company of a reorganization, merger or consolidation, in each case, +with respect to which all or substantially all of the individuals and entities who were the beneficial owners of the voting securities of such entity immediately prior to such reorganization, merger or consolidation do not, following such +reorganization, merger or consolidation, beneficially own, directly or indirectly, securities representing more than 50% of the voting power of then outstanding voting securities of the corporation resulting from such a reorganization, merger or +consolidation, provided that the forgoing shall not apply if the transaction is structured as “merger of equals” and the Board determines that a Change in Control has not occurred; +(c) the sale, exchange or other disposition (in one transaction or a series of related transactions) of all or substantially +all of the assets of the Company (on a consolidated basis) to a party which is not controlled by or under common control with the Company; or +(d) a change in the composition of the Board during any period of twenty-four months (not including any period prior to the +Effective Date of this Plan), such that the individuals who at the beginning of such period, constitute the Board (such Board shall be hereinafter referred to as the “ Incumbent Board ”) cease for any reason to constitute at least a +majority of the Board; provided , however , for purposes of this paragraph, that any individual who becomes a member of the Board subsequent to the Effective Date, whose election, or +nomination for election by the Company’s shareholders, was approved by a vote of at least a two-thirds (2/3) of those individuals who are members of the Board and who were also members of +the Incumbent Board (or deemed to be such pursuant to this proviso) shall be considered as though such individual were a member of the Incumbent Board; but, provided further , that any such individual whose initial assumption of +office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual or threatened +solicitation of proxies or consents by or on behalf of “Persons” (as such term is used for purposes of Section 13(d) or 14(d) of the Exchange Act) other than the Board shall not be so considered as a member of the Incumbent Board; +provided , however , that notwithstanding the foregoing, with respect to any Award that is determined +to be “non-qualified deferred compensation” within the meaning of Section 409A of the Code, an event shall not be considered to be a Change in Control under the Plan for purposes of +any payment in respect of such Award unless such event is also a “change in ownership,” a “change in effective control” or a “change in the ownership of a substantial portion of the assets” of the Company within the +meaning of Section 409A of the Code. +“ Code ” means the Internal Revenue Code of 1986, as amended, and any applicable +regulations promulgated thereunder. +“ Committee ” means the Compensation Committee or other committee of the Board duly +appointed to administer the Plan and having such powers as shall be specified by the Board. It is intended that each member of the Committee shall be an Independent Director and +a “Non-Employee Director” within the meaning of Rule 16b-3 under the Exchange Act (or any successor provision), but the authority and +validity of any act taken +A-2 +or not taken by the Committee shall not be affected if any person administering the Plan is not a Non-Employee Director. +“ Company ” means AstroNova, Inc., a Rhode Island corporation, or any successor company thereto. +“ Consultant ” means a person engaged to provide consulting or advisory services (other than as an Employee or a Director) to a +Participating Company. +“ Director ” means a member of the Board or of the board of directors of a Participating Company. +“ Disability ” shall have the meaning given such term in the applicable Award Agreement and, in the absence of any such +definition, shall have the meaning set forth in Section 409A of the Code, as the same may be amended from time to time. Section 409A of the Code currently defines “Disability” as (a) the inability to engage in any +substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months or (b) by reason or any +medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months and the service recipient is receiving income replacement payments for at +least three months under a plan covering employees. Notwithstanding the foregoing, with respect to rules regarding expiration of an Incentive Stock Option following termination of the Participant’s Service, Disability shall have the meaning +specified in Section 22(e)(3) of the Code. +“ Dividend Equivalent ” means a credit, made at the discretion of the +Committee or as otherwise provided by the Plan, to the account of a Participant in an amount equal to the cash dividends paid on one share of Stock for each share of Stock represented by an Award (other than an Option or SAR) held by such +Participant. +“ Effective Date ” shall have the meaning set forth in Section 17 hereof. +“ Employee ” means any person treated as an employee (including an officer or a Director who is also treated as an employee) in +the records of a Participating Company; provided , however , that neither service as a Director nor payment of a director’s fee shall be sufficient to constitute employment for +purposes of the Plan; and provided further that for purposes of Section 5.1 hereof, the definition of Participating Company as used above shall be limited to the Company, and any present or future “parent or subsidiary corporation” of +the Company as defined in Sections 424(e) and 424(f) of the Code. +“ Exchange Act ” means the Securities Exchange Act of +1934, as amended. +“ Fair Market Value ” means, as of any date, the value of a share of Stock or other property as +determined by the Committee, in its discretion, or by the Company, in its discretion, if such determination is expressly allocated to the Company herein, subject to the following: +(a) If, on such date, the Stock is listed on a national or regional securities exchange or market system, the Fair Market Value +of a share of Stock shall be the closing price of a share of Stock on such national or regional securities exchange or market system constituting the primary market for the Stock. If the relevant date does not fall on a day on which the Stock has +traded on such securities exchange or market system, the date on which the Fair Market Value shall be established shall be the last day on which the Stock was so traded prior to the relevant date, or such other appropriate day as shall be determined +by the Committee, in its discretion. +A-3 +(b) If, on such date, the Stock is not listed on a national or regional +securities exchange or market system, the Fair Market Value of a share of Stock shall be as determined by the Committee in good faith without regard to any restriction other than a restriction which, by its terms, will never lapse. +“ Incentive Stock Option ” means an Option intended to be (as set forth in the Award Agreement) and which qualifies as an +“incentive stock option” within the meaning of Section 422(b) of the Code or any successor provision thereto as in effect from time to time. +“ Independent Director ” means any Director of the Company who shall meet the listing standards relating to independence of +NASDAQ or other relevant listing standards. Without limiting the generality of the foregoing, an Independent Director shall not be a current employee of the Company or a member of an “affiliated group,” as such term is defined in +Section 1504(a) of the Code, which includes the Company. +“ NASDAQ ” means The NASDAQ Stock Market or any successor +thereto. +“ Net Exercise ” means a Participant’s ability to exercise an Option by directing the Company to deduct from +the shares of Stock issuable upon exercise of his or her Option a number of shares having an aggregate Fair Market Value equal to the aggregate exercise price, and at the Company’s discretion the amount of the Participant’s minimum tax +withholding (if any), whereupon the Company shall issue to the Participant the net remaining number of shares of Stock after such deductions. +“ Nonstatutory Stock Option ” means an Option not intended to be (as set forth in the Award Agreement) or which does not +qualify as an Incentive Stock Option. +“ Option ” means any option to purchase Stock granted pursuant to Section 6 +hereof. +“ Other Stock-Based Award ” means any right granted under Section 9 hereof. +“ Participant ” means any eligible person selected by the Committee to receive an Award under the Plan. +“ Participating Company” shall mean the Company, any parent entity that controls the Company or any Subsidiary. +“ Plan ” means this 2018 Equity Incentive Plan, as amended from time to time. +“Pool ” has the meaning set forth in Section 4.1 hereof. +“ Prior Plan ” shall mean the Company’s 2015 Equity Incentive Plan. +“ Restricted Stock ” means Stock granted to a Participant pursuant to the terms and conditions of Section 8 hereof. +“ Restricted Stock Award ” means an Award of Restricted Stock or a Restricted Stock Unit. +“ Restricted Stock Unit ” means a bookkeeping entry representing a right granted to a Participant to receive in cash or Stock +the Fair Market Value of a share of Stock granted pursuant to the terms and conditions of Section 8 hereof. +A-4 +“ Restriction Period ” has the meaning set forth in Section 8.1 hereof. +“ Rule 16b-3 ” means +Rule 16b-3 under the Exchange Act, as amended from time to time, or any successor rule or regulation thereto. +“ Securities Act ” means the Securities Act of 1933, as amended. +“ Service ” means a Participant’s employment or service with a Participating Company, whether in the capacity of an +Employee, a Director or a Consultant. A Participant’s Service shall not be deemed to have terminated merely because of a change in the capacity in which the Participant renders Service to the Participating Company or as a result of a transfer +from one Participating Company to another, provided that there is no interruption or termination of the Participant’s Service. Furthermore, a Participant’s Service may be deemed, as provided in the applicable Award Agreement, not to have +terminated if the Participant takes any military leave, sick leave, or other bona fide leave of absence approved by the Participating Company; provided , however , that if any such leave exceeds +ninety (90) days, on the one hundred eighty-first (181st) day of such leave any Incentive Stock Option held by such Participant shall cease to be treated as an Incentive Stock Option and instead shall be treated thereafter as a +Nonstatutory Stock Option unless the Participant’s right to return to Service is guaranteed by statute or contract. Notwithstanding the foregoing, unless otherwise designated by the Participating Company or required by law, a leave of absence +shall not be treated as Service for purposes of determining vesting under the Participant’s Award Agreement. A Participant’s Service shall be deemed to have terminated either upon an actual termination of Service or upon the date that a +Subsidiary for which the Participant performs Service ceases to be a Subsidiary. Subject to the foregoing, the Company, in its discretion, shall determine whether the Participant’s Service has terminated and the effective date of such +termination. +“ Stock ” means the common stock of the Company, as adjusted from time to time in accordance with +Section 10 hereof. +“ Stock Appreciation Right ” or “ SAR ” means a bookkeeping entry representing, for +each share of Stock subject to such SAR, a right granted to a Participant pursuant to Section 7 hereof to receive payment of an amount equal to the excess, if any, of the Fair Market Value of a share of Stock on the date of exercise of the SAR +over the exercise price. +“ Subsidiary ” means any present or future “subsidiary corporation” of the Company, as +defined in Section 424(f) of the Code or any other entity controlled by or under common control with the Company. +“ Substitute Awards ” means Awards granted upon assumption of, or in substitution for, outstanding awards previously granted by +a company or other entity acquired by a Participating Company or with which a Participating Company combines. +“ Ten Percent +Owner ” means a Participant who, at the time an Option is granted to the Participant, owns stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or a Subsidiary within the +meaning of Section 422(b)(6) of the Code. +“Vesting Conditions ” has the meaning set forth in Section 8.1 +hereof. +A-5 +2.2 Construction . Captions and titles contained herein are for convenience +only and shall not affect the meaning or interpretation of any provision of the Plan. Except when otherwise indicated by the context, the singular shall include the plural, the plural shall include the singular and the masculine shall include the +feminine and neuter, as the context requires. Use of the term “or” is not intended to be exclusive, unless the context clearly requires otherwise. +SECTION 3. ADMINISTRATION +3.1 Administration +by the Committee. +The Plan shall be administered by the Committee. If no committee of the Board has been appointed to administer +the Plan, the Independent Directors shall exercise all of the powers of the Committee granted herein, and, in any event, the Independent Directors of the Board may, in their discretion, exercise any or all of such powers. All questions of +interpretation of the Plan or of any Award shall be determined by the Committee, and such determinations shall be final and binding upon all persons having an interest in the Plan or such Award. +3.2 Authority of Officers . Any officer of a Participating Company shall have the authority to act on +behalf of the Company with respect to any matter, right, obligation, determination or election which is the responsibility of or which is allocated to the Company herein, provided the officer has apparent authority with respect to such matter, +right, obligation, determination or election. Without limiting the generality of the foregoing, except as limited by law (including, without limitation, the Rhode Island Business Corporation Act), regulation, the NASDAQ listing rules, or the listing +rules of such other national or regional securities exchange or market system constituting the primary market for the Stock, the Committee may delegate its authority to the Chief Executive Officer of the Company hereunder, except that the Committee +will not delegate its authority with respect to compensation matters involving any executive officer, as defined under the Exchange Act and in the listing rules of NASDAQ or such other national or regional securities exchange or market system +constituting the primary market for the Stock. +3.3 Powers of the Committee . In addition to any other powers set forth in the +Plan and subject to the provisions of the Plan, the Committee shall have the full and final power and authority, in its discretion: +(a) to determine the persons to whom, and the time or times at which, Awards shall be granted and the number of shares of Stock +or units to be subject to each Award; +(b) to determine the type of Award granted and to designate Options as Incentive +Stock Options or Nonstatutory Stock Options; +(c) to determine the Fair Market Value of shares of Stock or other property; +(d) to determine the terms, conditions and restrictions applicable to each Award (which need not be identical) and any +shares acquired pursuant thereto, including, without limitation, (i) the purchase price of any Stock, (ii) the method of payment for shares purchased pursuant to any Award, (iii) the method for satisfaction of any tax withholding +obligation arising in connection with any Award, including by the withholding or delivery of shares of Stock, (iv) the timing, terms and conditions of exercisability or vesting of any Award or any shares acquired pursuant thereto, (v) the +time of the expiration of any Award, (vi) the effect of the Participant’s termination of Service on any of the foregoing, and (vii) all other terms, conditions and restrictions applicable to any Award or shares acquired pursuant +thereto not inconsistent with the terms of the Plan; +A-6 +(e) to determine whether an Award of Restricted Stock Units or Performance +Shares, or Stock Appreciation Rights will be settled in shares of Stock, cash, or in any combination thereof; +(f) to +approve one or more forms of Award Agreement; +(g) to amend, modify, extend, cancel or renew any Award or to waive any +restrictions or conditions applicable to any Award or any shares acquired pursuant thereto; +(h) to accelerate, continue, +extend or defer the exercisability or vesting of any Award or any shares acquired pursuant thereto, including, without limitation, with respect to the period following a Participant’s termination of Service; +(i) to prescribe, amend or rescind rules, guidelines and policies relating to the Plan, or to adopt supplements to, or +alternative versions of, the Plan, including, without limitation, as the Committee deems necessary or desirable to comply with the laws of, or to accommodate the tax policy or custom of, foreign jurisdictions whose citizens may be granted Awards; +(j) to authorize, in conjunction with any applicable Company deferred compensation plan, that the receipt of cash or Stock +subject to any Award under this Plan, may be deferred under the terms and conditions of such Company deferred compensation plan; +(k) to correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Award Agreement and to make +all other determinations and take such other actions with respect to the Plan or any Award as the Committee may deem advisable to the extent not inconsistent with the provisions of the Plan or applicable law; and/or +(l) to provide for a “clawback” of an Award pursuant to the provisions of Section 14.5 below. +3.4 Minimum Vesting Periods . Notwithstanding Section 3.3(d) above, Awards to Employees (other than Substitute Awards) +shall not vest or otherwise become exercisable earlier than one year following the date of grant, subject to accelerated vesting in the Committee’s discretion in the event of the death or Disability of the Participant, special circumstances +determined by the Committee, or a Change in Control. Notwithstanding the foregoing, the restrictions in the preceding sentence shall not be applicable to the grant of up to 5% of the number of shares of Stock available for Awards under +Section 4.1 on the Effective Date. +3.5 No Repricing . Notwithstanding anything in this Plan to +the contrary, no amendment or modification may be made to an outstanding Option or SAR, including, without limitation, by replacement of Options or SARs with cash or other award type, that would be treated as a repricing under the rules of the +securities exchange or market system constituting the primary market for the Stock, in each case, without the approval of the shareholders of the Company, provided, that, appropriate adjustments may be made to outstanding Options and SARs pursuant +to Section 10 and may be made to make changes to achieve compliance with applicable law, including Code Section 409A. +3.6 Deferral Arrangements . The Committee may permit or require the deferral of any award payment into a deferred compensation +arrangement, subject to such rules and procedures as it may establish, which may include provisions for the payment or crediting of interest or dividend equivalents, including converting such credits into deferred Stock equivalents. Any such +deferrals shall be made in a manner that complies with Code Section 409A. +3.7 Indemnification . Neither the Board +nor the Committee, nor any member of either or officer or employee of a Participating Company to whom authority to act for the Board, the Committee or the Company is delegated, shall +A-7 +be liable for any act, omission, interpretation, construction or determination made in good faith in connection with the Plan. In addition to such other rights of indemnification as they may have +as members of the Board, the Committee or as officers or employees of a Participating Company, members of the Board or of the Committee and any officers or employees of the Participating Company to whom authority to act for the Board, the Committee +or the Company is delegated, shall be entitled in all cases to indemnification and reimbursement by the Company in respect of any claim, loss, damage or expense (including, without limitation, reasonable attorneys’ fees) arising or resulting +therefrom to the fullest extent permitted by law and/or under any directors’ and officers’ liability insurance coverage which may be in effect from time to time. +3.8 Share Issuance/Book-Entry . Notwithstanding any provision of this Plan to the contrary, the issuance of the Stock under the +Plan may be evidenced in such a manner as the Committee, in its discretion, deems appropriate, including, without limitation, book-entry registration or issuance of one or more Stock certificates +SECTION 4. SHARES SUBJECT TO PLAN +4.1 Number of Shares Available for Awards . The total number of shares of Stock that may be issued pursuant to Awards +granted under the Plan shall not exceed an aggregate of nine hundred fifty thousand (950,000) shares (with the other shares of Stock added pursuant to this Section, the “Pool”). For purposes of this limitation, in respect of any shares of +Stock under any Award under the Plan or under any award under the Prior Plan, which shares are forfeited, canceled, satisfied without the issuance of Stock, otherwise terminated, or, for shares of Stock issued pursuant to any unvested Award, +reacquired by the Company at not more than the grantee’s purchase price (other than by exercise) (“Unissued Shares”), such Unissued Shares shall be added to the Pool, provided however that the number of Unissued Shares added to the +Pool with respect to awards under the Prior Plan shall not exceed 821,637 shares. Subject to such overall limitation, shares of Stock may be issued up to such maximum number pursuant to any type or types of Award, including Incentive Stock Options. +The shares available for issuance from the Pool may be authorized but unissued shares of Stock or shares of Stock reacquired by the Company and held in its treasury, or shares purchased on the open market. The class and aggregate number of shares +which may be subject to Awards granted under the Plan shall be subject to adjustment as provided in Section 10 hereof. +4.2 Determination of Shares Issued and Issuable . Shares covered by an Award shall be counted as used as of +the effective date of the grant. Any shares of Stock that are subject to Awards shall be counted against the limit set forth in Section 4.1 as one (1) share for every one (1) share subject to an Award. Shares of Stock shall not be +deemed to have been issued pursuant to the Plan with respect to any portion of an Award that is settled in cash in lieu of shares. If any shares covered by an Award granted under the Plan are not earned or purchased or are forfeited or expire, or if +an Award otherwise terminates without delivery of any Stock subject thereto, then the number of shares of Stock counted against the aggregate number of shares available under the Plan with respect to such Award shall, to the extent of any such +forfeiture, termination or expiration, be available for making Awards under the Plan in the same amount as such shares were counted against the limit set forth in Section 4.1. Notwithstanding the foregoing, upon the exercise of any Award, to +the extent that such Award is exercised through tendering (or attesting to) previously owned shares or through withholding shares that would otherwise be awarded and to the extent shares are withheld for tax withholding purposes, the shares +available under the Plan shall be reduced by the gross number of shares of Stock being exercised without giving effect to the number of shares tendered or withheld. Notwithstanding anything to the contrary in the Plan, in the event that the Company +were to repurchase Stock in the open market using Option exercise proceeds, such repurchased Stock will not again become available for issuance under the Plan. +A-8 +4.3 Substitute Awards . The Committee shall have the +right to substitute or assume Awards in connection with mergers, reorganizations, separations, or other transactions to which Section 424(a) of the Code applies. Substitute Awards shall not reduce the shares of Stock authorized for issuance +under the Plan, nor shall shares of Stock subject to a Substitute Award be added to the shares available for Awards under the Plan as provided in Sections 4.2 above. Additionally, in the event that a company acquired by a Participating Company, or +with which a Participating Company combines, has shares available under a pre-existing plan approved by stockholders and not adopted in contemplation of such acquisition or combination, the shares +available for grant pursuant to the terms of such pre-existing plan (as adjusted, to the extent appropriate, using the exchange ratio or other adjustment or valuation ratio or formula used in such +acquisition or combination to determine the consideration payable to the holders of common stock of the entities party to such acquisition or combination) may be used for Awards under the Plan and shall not reduce the shares of Stock authorized for +grant under the Plan (and shares subject to such Awards shall not be added to the shares available for Awards under the Plan as provided in Sections 4.2 and 4.3 above); provided that Awards using such available shares shall not be made after the +date awards or grants could have been made under the terms of the pre-existing plan, absent the acquisition or combination, and shall only be made to individuals who were not Employees or Directors +prior to such acquisition or combination . +4.4 Source of Shares . The Stock subject to the Awards granted under the +Plan shall be shares of the Company’s authorized but unissued Stock or shares of the Stock held in treasury. +SECTION 5. ELIGIBILITY +5.1 Persons Eligible for Incentive Stock Options . Incentive Stock Options may be granted only to Employees. For purposes of +the foregoing sentence, the term “Employees” shall include prospective Employees to whom Incentive Stock Options are granted in connection with written offers of employment with the Participating +Companies; provided , however , that any such Incentive Stock Option shall be deemed granted effective on the date such person commences Service as an Employee, with an exercise price +determined as of such date in accordance with Section 6.1 hereof. +5.2 Persons Eligible for Other Awards . Awards +other than Incentive Stock Options may be granted only to Employees, Consultants and Directors. For purposes of the foregoing sentence, the terms “Employees,” “Consultants” and “Directors” shall include prospective +Employees, prospective Consultants and prospective Directors to whom Awards are granted in connection with written offers of an employment or other service relationship with the Participating +Companies; provided , however , that no such Award shall vest or become exercisable, and no Stock shall be issued pursuant to such Award, prior to the date on which such person +commences Service as an Employee, Consultant or Directors. +5.3 Non-Employee Director Award Limits . No Director who is not also +an employee of a Participating Company may be granted any Award or Awards denominated in shares of Stock that exceed in the aggregate $100,000 in value (such value computed as of the date of grant in accordance with applicable financial accounting +rules) in any single fiscal year. The foregoing limit shall not apply to any Award to a Director as all or a portion of Board or committee retainers or meeting fees or pursuant to any election by a Director to receive an Award in lieu of all or a +portion of any cash retainers or meeting fees. +A-9 +SECTION 6. TERMS AND CONDITIONS OF STOCK OPTIONS +Options shall be evidenced by Option Agreements specifying the number of shares of Stock covered thereby, in such form as the Committee shall +from time to time establish. No Option or purported Option shall be a valid and binding obligation of the Company unless evidenced by a fully executed Option Agreement. Option Agreements shall comply with and be subject to the following terms and +conditions: +6.1 Exercise Price . The exercise price for each Option shall be established in the discretion of +the Committee; provided , however , that (a) the exercise price per share for an Option shall be not less than the Fair Market Value of a share of Stock on the effective date of grant of the +Option, (b) no Incentive Stock Option granted to a Ten Percent Owner shall have an exercise price per share less than one hundred ten percent (110%) of the Fair Market Value of a share of Stock on the effective date of grant of the Option. +Notwithstanding the foregoing, an Option may be granted with an exercise price lower than the minimum exercise price set forth above if such Option is granted as a Substitute Award in a manner qualifying under the provisions of Section 424(a) +of the Code. +6.2 Exercisability and Term of Options . Options shall vest and be exercisable at such time or times, or +upon such event or events, and subject to such terms, conditions, performance criteria and restrictions as shall be determined by the Committee and set forth in the Option Agreement evidencing such +Option; provided , however , that (a) no Option shall be exercisable after the expiration of ten (10) years after the effective date of grant of such Option, and (b) no +Incentive Stock Option granted to a Ten Percent Owner shall be exercisable after the expiration of five (5) years after the effective date of grant of such Option. Subject to the foregoing, unless otherwise specified by the Committee in the +grant of an Option, any Option granted hereunder shall terminate ten (10) years after the effective date of grant of the Option, unless earlier terminated in accordance with its provisions. Notwithstanding the foregoing, in the event that on +the last business day of the term of a Nonstatutory Option (i) the exercise of the Option is prohibited by applicable law or (ii) shares may not be purchased or sold by certain employees or Directors of the Company due to the “black-out period” of a Company policy or a “lock-up” agreement undertaken in connection with an issuance of securities by the +Company, the term of such Nonstatutory Option shall be extended for a period of thirty (30) days following the end of the legal prohibition, black-out period +or lock-up agreement in each case to the extent any such extension would not constitute the extension of a stock right under Section 409A of the Code. +6.3 Payment of Exercise Price . Except as otherwise provided in the Option Agreement, payment of the +exercise price for the number of shares of Stock being purchased pursuant to any Option shall be made: +(a) in cash, by +check or cash equivalent, +(b) by tender to the Company, or attestation to the ownership, of shares of Stock owned by the +Participant having a Fair Market Value not less than the exercise price, +(c) pursuant to a Net Exercise +arrangement, provided, however , that in such event the Committee may exercise its discretion to limit the use of a Net Exercise; +(d) with the consent of the Committee and subject to such procedures as the Committee shall prescribe as a condition of such +payment procedure, by delivery of a properly executed notice together with irrevocable instructions to a broker providing for the assignment to the Company of the proceeds of a sale with respect to some or all of the shares being acquired upon the +exercise of the Option (a “ Cashless Exercise ”), +A-10 +(e) by such other consideration as may be approved by the Committee from +time to time to the extent permitted by applicable law, or +(f) by any combination thereof. +6.4 Effect of Termination of Service . An Option granted to a Participant shall be exercisable after the Participant’s +termination of Service only during the applicable time period determined in accordance with the Option’s term as set forth in the Option Agreement. Such provisions shall be determined in the sole discretion of the Committee, need not be uniform +among all Options issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination of Service. +6.5 Transferability of Options . During the lifetime of the Participant, an Option shall be exercisable only by the +Participant or the Participant’s guardian or legal representative. No Option shall be assignable or transferable by the Participant, except by will or by the laws of descent and distribution. Notwithstanding the foregoing, the Committee, in its +sole discretion, may provide in the Award Agreement regarding a given Option, or may agree in writing with respect to an outstanding Option, that the optionee may transfer his Nonstatutory Stock Options, without consideration, to members of his +immediate family (as such term is defined in the General Instructions to Form S-8 Registration Statement under the Securities Act), to trusts for the benefit of such family members, or to +partnerships in which such family members are the only partners, provided that the transferee agrees in writing with the Company to be bound by all of the terms and conditions of this Plan and the applicable Option. +6.6 Fair Market Value Limitation on Incentive Stock Options . To the extent that options designated as Incentive +Stock Options (granted under all stock option plans of the Company or any Subsidiary) become exercisable by a Participant for the first time during any calendar year for stock having a Fair Market Value greater than One Hundred Thousand Dollars +($100,000), the portions of such options which exceed such amount shall be treated as Nonstatutory Stock Options. +6.7 Annual +Directors’ Options . After the Effective Date of the Plan, no awards may be granted to Directors of the Company under Section 6.7 of the Prior Plan. +SECTION 7. TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS +SARs shall be evidenced by Award Agreements specifying the number of shares of Stock subject to the Award, in such form as the Committee shall +from time to time establish. No SAR or purported SAR shall be a valid and binding obligation of the Company unless evidenced by a fully executed Award Agreement. Award Agreements evidencing SARs shall comply with and be subject to the following +terms and conditions: +7.1 Exercise Price . The exercise price for each SAR shall be established in the discretion of the +Committee; provided , however , that the exercise price per share of a SAR shall be not less than the Fair Market Value of a share of Stock on the effective date of grant of the SAR. +7.2 Exercisability and Term of SARs . SARs shall vest and be exercisable at such time or times, or upon +such event or events, and subject to such terms, conditions, performance criteria and restrictions as shall be determined by the Committee and set forth in the Award Agreement evidencing such +SAR; provided , however , that no SAR shall be exercisable after the expiration of ten (10) years after the effective date of grant of such SAR. +A-11 +7.3 Exercise of SARs . Upon the exercise of a SAR, the Participant (or the +Participant’s legal representative or other person who acquired the right to exercise the SAR by reason of the Participant’s death) shall be entitled to receive payment of an amount for each share with respect to which the SAR is exercised +equal to the excess, if any, of the Fair Market Value of a share of Stock on the date of exercise of the SAR over the exercise price. Payment of such amount shall be made in cash, shares of Stock, or any combination thereof as determined by the +Committee. Unless otherwise provided in the Award Agreement evidencing such SAR, payment shall be made in a lump sum as soon as practicable following the date of exercise of the SAR. The Award Agreement evidencing any SAR may provide for deferred +payment in a lump sum or in installments, so long as such payment is made in a manner that complies with Code Section 409A. When payment is to be made in shares of Stock, the number of shares to be issued shall be determined on the basis of the +Fair Market Value of a share of Stock on the date of exercise of the SAR. For purposes of this Section 7, a SAR shall be considered exercised on the date on which the Company receives actual notice of exercise from the Participant. +7.4 Effect of Termination of Service . A SAR shall be exercisable after a Participant’s termination of Service to such +extent and during such period as determined by the Committee, in its discretion, and set forth in the Award Agreement evidencing such SAR. +7.5 Nontransferability of SARs . SARs may not be assigned or transferred in any manner except by will or the laws of descent and +distribution, and, during the lifetime of the Participant, shall be exercisable only by the Participant or the Participant’s guardian or legal representative. +SECTION 8. TERMS AND CONDITIONS OF RESTRICTED STOCK AWARDS +Restricted Stock Awards may be in the form of (a) Restricted Stock, which shall be evidenced by a Restricted Stock Agreement, or +(b) a Restricted Stock Unit, which shall be evidenced by a Restricted Stock Unit Agreement. Each such Award Agreement shall specify the number of shares and purchase price per share, if any, of Stock subject to and the other terms, conditions +and restrictions of the shares of Stock underlying the Award, of the Award, and shall be in such form as the Committee shall establish from time to time. No Restricted Stock Award or purported Restricted Stock Award shall be a valid and binding +obligation of the Company unless evidenced by a fully executed Award Agreement. Restricted Stock Award Agreements shall comply, as applicable, with and be subject to the following terms and conditions: +8.1 Vesting and Restrictions on Transfer . Shares issued pursuant to any Restricted Stock Award may be made subject to vesting +conditioned upon the satisfaction of such Service requirements, conditions, restrictions or performance criteria (the “ Vesting Conditions ”), as shall be established by the Committee and set forth in the Award Agreement evidencing +such Award. During any period (the “ Restriction Period ”) in which shares acquired pursuant to a Restricted Stock Award remain subject to Vesting Conditions, such shares may not be sold, exchanged, transferred, pledged, hypothecated, +assigned or otherwise disposed of other than pursuant to a Change in Control, or as provided in Section 8.4. Upon request by the Company, each Participant shall execute any agreement evidencing such transfer restrictions prior to the receipt of +shares of Stock hereunder and shall promptly present to the Company any and all certificates representing shares of Stock acquired hereunder for the placement on such certificates of appropriate legends evidencing any such transfer restrictions. +8.2 Voting Rights; Dividends . Except as provided in this Section 8.2 and Section 8.1, during the Restriction +Period applicable to shares subject to a Restricted Stock Award held by a Participant, the Participant shall have all of the rights of a shareholder of the Company holding shares of Stock, including the right to vote such shares +A-12 +and to receive all dividends and other distributions paid with respect to such shares; provided , however , that the right to +receive or retain any dividends or other distributions shall be subject to Section 14.6. A Participant who is awarded a Restricted Stock Unit shall possess no holder of Stock with respect to such Restricted Stock Award; provided that the Award +Agreement may provide for payments in lieu of dividends to such Participant, subject to Section 14.6. A holder of Restricted Stock Units shall have no rights other than those of a general creditor of the Company. Restricted Stock Units +represent an unfunded and unsecured obligation of the Company, subject to the terms and conditions of the applicable Award Agreement. +8.3 Effect of Termination of Service . The effect of the Participant’s termination of Service on any Restricted Stock +Award shall be determined by the Committee, in its discretion, and set forth in the Award Agreement evidencing such Restricted Stock Award. +8.4 Nontransferability of Restricted Stock Award Rights . Rights to acquire shares of Stock pursuant to a Restricted Stock +Award may not be assigned or transferred in any manner except by will or the laws of descent and distribution, and, during the lifetime of the Participant, shall be exercisable only by the Participant. +SECTION 9. OTHER STOCK-BASED AWARDS +The +Committee shall have authority to grant to eligible Employees an “Other Stock-Based Award,” which shall consist of any right that is an Award of Stock or an Award denominated or payable in, valued in whole or in part by reference to, or +otherwise based on or related to, Stock (including, without limitation, securities convertible into Stock), as deemed by the Committee to be consistent with the purposes of the Plan, other than an Award described in Sections 6 through 8 above. +SECTION 10. CHANGES IN THE COMPANY’S CAPITAL STRUCTURE +10.1 No Limitations on the Company . The existence of outstanding Awards shall not affect in any way the right or power of the +Company or its shareholders to make or authorize, without limitation, any or all adjustments, recapitalizations, reorganizations or other changes in the Company’s capital structure or its business, or any merger or consolidation of the Company, +or any issue of Stock, or any issue of bonds, debentures, preferred or prior preference stock or other capital stock ahead of or affecting the Stock or the rights thereof, or the dissolution or liquidation of the Company, or any sale or transfer of +all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise. +10.2 Adjustments for Changes in Capital Structure . If the number of outstanding shares of Stock is +increased or decreased or the shares of Stock are changed into or exchanged for a different number or kind of shares or other securities of the Company on account of any recapitalization, reclassification, stock split, reverse split, combination of +shares, exchange of shares, stock dividend or other distribution payable in capital stock, or other increase or decrease in such shares effected without receipt of consideration by the Company occurring after the Effective Date, the number and kinds +of shares for which grants of Options and other Awards may be made under the Plan, including, without limitation, the limits set forth in Section 5.3, shall be adjusted proportionately and accordingly by the Company. In addition, the number and +kind of shares for which Awards are outstanding shall be adjusted proportionately and accordingly so that the proportionate interest of the Participant immediately following such event shall, to the extent practicable, be the same as immediately +before such event. Any such adjustment in outstanding Options or SARs shall not change the aggregate exercise price payable with respect to shares that are subject to the unexercised portion of an outstanding Option or SAR as applicable, but shall +include +A-13 +a corresponding proportionate adjustment in the exercise price per share for such Option or SAR. The Committee may unilaterally amend the outstanding Awards to reflect the adjustments +contemplated by this Section 10.2. The conversion of any convertible securities of the Company shall not be treated as an increase in shares effected without receipt of consideration. Notwithstanding the foregoing, in the event of any +distribution to the Company’s shareholders of securities of any other entity or other assets (including an extraordinary dividend but excluding a non-extraordinary dividend of the Company) +without receipt of consideration by the Company, the Company shall, in such manner as the Company deems appropriate, adjust (a) the number and kind of shares subject to outstanding Awards and/or (b) the exercise price of outstanding +Options or SARs to reflect such distribution. Notwithstanding the foregoing, in no event may the exercise price of any Option be decreased to an amount less than the par value, if any, of the stock subject to such Award. +10.3 Adjustments . Adjustments under this Section 10 related to shares of Stock or securities of the +Company shall be made by the Committee, whose determination in that respect shall be final, binding and conclusive. No fractional shares or other securities shall be issued pursuant to any such adjustment, and any fractions resulting from any such +adjustment shall be eliminated in each case by rounding downward to the nearest whole share. The Committee shall determine the effect of a Change in Control upon Awards other than Options, SARs, Restricted Stock Units and Restricted Stock, and such +effect shall be set forth in the appropriate Award Agreement. The Committee may provide in the Award Agreements at the time of grant, or any time thereafter with the consent of the Participant, for different provisions to apply to an Award in place +of those described in Sections 10.2. This Section 10 does not limit the Company’s ability to provide for alternative treatment of Awards outstanding under the Plan in the event of a Change in Control. +SECTION 11. CHANGE IN CONTROL +11.1 Effect of +Change in Control on Awards: Assumption or Termination of Awards. +(a) In the event of a Change in Control, the +surviving, continuing, successor, or purchasing corporation or other business entity or parent corporation thereof, as the case may be (the “ Acquiring Corporation ”), may, without the consent of the Participant, either assume the +Company’s rights and obligations under any outstanding Awards or substitute for any of the outstanding Awards substantially equivalent awards. The Acquiring Corporation need not make uniform determinations with respect to any Awards or class of +Awards, and it can select the Awards (if any) that it will assume or substitute for, in its sole discretion. For the purposes of this Section 11, an Award shall be considered assumed or substituted for, if following the Change in Control, the +Award confers the right to purchase or receive, for each share subject to the Award prior to the Change in Control, the consideration (whether stock, cash or other securities or property) received in the transaction constituting a Change in Control +by holders of Stock for each share of Stock held on the effective date of such transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares of Stock); +provided, however, that if such consideration received in the transaction constituting a Change in Control is not solely common stock of the Acquiring Corporation, the Committee may, with the consent of the Acquiring Corporation, provide that the +consideration to be received upon the exercise or vesting of an Award, for each share subject thereto, will be solely common stock of the Acquiring Corporation substantially equal in fair market value to the consideration per share of Stock received +by holders of Stock in the transaction constituting a Change in Control. The determination of such substantial equality of value of consideration shall be made by the Committee in its sole discretion and its determination shall be conclusive and +binding. +(b) In the event that the Acquiring Corporation elects not to assume or substitute for any of the outstanding +Awards in connection with a Change in Control, the exercisability and vesting of each such +A-14 +outstanding Award and any shares acquired upon the exercise thereof held by a Participant whose Service has not terminated prior to such date shall be accelerated, effective as of the date ten +(10) days prior to the date of the Change in Control. The foregoing notwithstanding, any Award Agreement may provide for vesting, settlement or conversion to a Restricted Stock Award upon the consummation of a Change in Control on a basis that +is specific to that Award. The exercise or vesting of any Award and any shares acquired upon the exercise thereof that was permissible solely by reason of this Section 11.1 and the provisions of the relevant Award Agreement shall be conditioned +upon the consummation of the Change in Control. Any Awards which are neither assumed nor substituted for by the Acquiring Corporation in connection with the Change in Control nor exercised (in the case of Options and SARs) nor paid or converted to a +Restricted Stock Award as of the date of the Change in Control shall terminate and cease to be outstanding effective as of the date of the Change in Control. Notwithstanding the foregoing, shares acquired upon exercise of an Option or SAR prior to +the Change in Control and any consideration received pursuant to the Change in Control with respect to such shares shall continue to be subject to all applicable provisions of the Award Agreement evidencing such Option or SAR except as otherwise +provided in such Award Agreement. +11.2 Assumption or Substitution of Certain Awards . Unless otherwise provided in an Award +Agreement or a Participant’s effective negotiated employment, change in control, severance or other similar agreement, in the event of a Change in Control in which the Acquiring Corporation assumes or substitutes for an Award (or in which the +Company is the ultimate parent corporation and continues the Award), if a Participant’s employment with the Acquiring Corporation (or the Company) or a subsidiary thereof terminates within 18 months following such Change in Control (or such +other period set forth in the Award Agreement, including prior thereto if applicable) and under the circumstances specified in the Award Agreement: (i) Options and SARs outstanding as of the date of such termination of employment will +immediately vest, become fully exercisable, and may thereafter be exercised for 12 months (or if longer, the period of time set forth in the Award Agreement, but in no event beyond the end of the regularly scheduled term of such Options or SARs), +(ii) the Vesting Conditions applicable to Restricted Stock and Restricted Stock Units outstanding as of the date of such termination of employment shall lapse and the Restricted Stock and Restricted Stock Units shall become free of all +restrictions, limitations and conditions and become fully vested, and (iii) the restrictions, limitations and other conditions applicable to any Other Stock-Based Awards or any other Awards shall lapse, and such Other Stock-Based Awards or such +other Awards shall become free of all restrictions, limitations and conditions and become fully vested and transferable to the full extent of the original grant. +11.3 Termination of Awards . Notwithstanding anything to the contrary in the foregoing of this Section 11, Options and +SARs outstanding as of the date of a Change in Control may be cancelled and terminated without payment therefor if the Fair Market Value of one share of Stock as of the date of the Change in Control is equal to or less than the Option exercise price +per share of Stock or the SAR grant price. In addition, the Committee, in its discretion, may determine that, if a Change in Control occurs, each Option and SAR outstanding shall terminate within a specified number of days after notice to the +Participant, and/or that each Participant shall receive, with respect to each share of Stock subject to such Option or SAR, an amount equal to the excess of the Fair Market Value of such share of Stock immediately prior to the occurrence of such +Change in Control over the exercise price per share of Stock of such Option and/or SAR; such amount to be payable in cash, in one or more kinds of stock or property (including the stock or property, if any, payable in the transaction) or in a +combination thereof, as the Committee, in its discretion, shall determine. +A-15 +SECTION 12. COMPLIANCE WITH SECURITIES LAW +12.1 General . The grant of Awards and the issuance of shares of Stock pursuant to any Award shall be subject to compliance +with all applicable requirements of federal, state and foreign law with respect to such securities and the requirements of any stock exchange or market system upon which the Stock may then be listed. In addition, no Award may be exercised or shares +issued pursuant to an Award unless (a) a registration statement under the Securities Act shall at the time of such exercise or issuance be in effect with respect to the shares issuable pursuant to the Award or (b) in the opinion of legal +counsel to the Company, the shares issuable pursuant to the Award may be issued in accordance with the terms of an applicable exemption from the registration requirements of the Securities Act. The inability of the Company to obtain from any +regulatory body having jurisdiction the authority, if any, deemed by the Company’s legal counsel to be necessary to the lawful issuance and sale of any shares hereunder shall relieve the Company of any liability in respect of the failure to +issue or sell such shares as to which such requisite authority shall not have been obtained. As a condition to issuance of any Stock, the Company may require the Participant to satisfy any qualifications that may be necessary or appropriate, to +evidence compliance with any applicable law or regulation and to make any representation or warranty with respect thereto as may be requested by the Company. +SECTION 13. TAX WITHHOLDING +13.1 Tax Withholding in General . The Company shall have the right to require the Participant, through payroll withholding, +cash payment or otherwise, including by means of a Cashless Exercise of an Option, to make adequate provision for the federal, state, local and foreign taxes, if any, required by law to be withheld by a Participating Company with respect to an Award +or the shares acquired pursuant thereto. The Company shall have no obligation to deliver shares of Stock, to release shares of Stock from an escrow established pursuant to an Award Agreement, or to make any payment in cash under the Plan until such +tax withholding obligations have been satisfied by the Participant. +13.2 Withholding in Shares . The Company shall have +the right, but not the obligation, to deduct from the shares of Stock issuable to a Participant upon the exercise or settlement of an Award, or to accept from the Participant the tender of, a number of whole shares of Stock having a Fair Market +Value, as determined by the Company, equal to all or any part of the tax withholding obligations of a Participating Company. The Fair Market Value of any shares of Stock withheld or tendered to satisfy any such tax withholding obligations shall not +exceed the amount determined by the applicable minimum statutory withholding rates (unless a higher withholding rate is permissible without adverse accounting consequences). +SECTION 14. RIGHTS AND OBLIGATIONS OF THE PARTIES +14.1 Rights as Employee, Consultant or Director . No person, even though eligible pursuant to Section 5, shall have a +right to be selected as a Participant, or, having been so selected, to be selected again as a Participant. Nothing in the Plan or any Award granted under the Plan shall confer on any Participant a right to remain an Employee, Consultant or Director, +or interfere with or limit in any way the right of a Participating Company to terminate the Participant’s Service at any time. +14.2 Rights as a Shareholder . A Participant shall have no rights as a shareholder with respect to any shares covered by an +Award until the date of the issuance of a certificate for such shares (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company). No adjustment shall be made for dividends, distributions +or other rights for which the record date is prior to the date such certificate is issued, except as provided in Section 10 or another provision of the Plan. +A-16 +14.3 Right of Setoff . A Participating Company may, to +the extent permitted by applicable law, deduct from and set off against any amounts such Participating Company may owe to the Participant from time to time, including amounts payable in connection with any Award, owed as wages, fringe benefits, or +other compensation owed to the Participant, such amounts as may be owed by the Participant to the Participating Company, although the Participant shall remain liable for any part of the Participant’s payment obligation not satisfied through +such deduction and setoff. By accepting any Award granted hereunder, the Participant agrees to any deduction or setoff under this Section 14.3. +14.4 Compliance with Section 409A of the Code . Awards under the Plan are intended to satisfy the requirements of +Section 409A of the Code and the Treasury Department guidance and regulations issued thereunder (collectively, “ Section 409A ”) so as to avoid the imposition of any additional taxes or penalties under +Section 409A. If the Committee determines that an Award, Award Agreement, payment, distribution, deferral election, transaction or any other action or arrangement contemplated by the provisions of the Plan would, if undertaken, cause a +Participant to become subject to any additional taxes or other penalties under Section 409A, then unless the Committee specifically provides otherwise, such Award, Award Agreement, payment, distribution, deferral election, transaction or other +action or arrangement shall not be given effect to the extent it causes such result and the related provisions of the Plan and/or Award Agreement will be deemed modified, or, if necessary, suspended in order to comply with the requirements of +Section 409A to the extent determined appropriate by the Committee, in each case without the consent of or notice to the Participant. +To the extent +that any Award is determined to constitute “nonqualified deferred compensation” within the meaning of Section 409A (a “ 409A Award ”), the Award shall be subject to such additional rules and requirements as specified by +the Committee in order to comply with Section 409A. If any amount under a 409A Award is payable upon a “separation from service” (within the meaning of Section 409A), to a grantee who is then considered a “specified +employee” (within the meaning of Section 409A), then no such payment shall be made prior to the date that is the earlier of (i) six months and one day after the grantee’s separation from service, or (ii) the grantee’s +death, but only to the extent such delay is necessary to prevent such payment from being subject to additional tax pursuant to Section 409A. +14.5 Cancellation of Award; Forfeiture of Gain . Notwithstanding anything to the contrary contained herein, an Award Agreement +may provide that if, prior to the occurrence of a Change in Control, there is (i) an accounting restatement due to material noncompliance by the Company with any financial reporting requirement under the securities laws or (ii) the Company +is otherwise required by applicable law or Company policy to recoup any portion of an Award otherwise paid or payable hereunder, the Committee shall have the right to review any Award, the amount, payment or vesting of which was based on an entry in +the financial statements that are the subject of the restatement. If the Committee determines that (i) based on the results of the restatement or (ii) due to inaccurate financial data used to determine the payment or vesting of an Award, a +lesser amount or portion of an Award should have been paid or vested, it may (i) cancel all or any portion of any outstanding Awards and (ii) require the Participant or other person to whom any payment has been made or shares or other +property have been transferred in connection with the Award to forfeit and pay over to the Company, on demand, all or any portion of the gain (whether or not taxable) realized upon the exercise of any Option or Stock Appreciation Right and the value +realized (whether or not taxable) on the vesting or payment of any other Award during the period beginning twelve months preceding the date of the restatement and ending with the date of cancellation of any outstanding Awards. +The Company may also retain the right in an Award Agreement to cause a forfeiture of the gain realized by a Participant on account of actions +taken by the Participant in violation or breach of or in conflict with any +A-17 +employment agreement, non-competition agreement, any agreement prohibiting solicitation of employees or customers of a Participating Company or +any confidentiality obligation with respect to a Participating Company or otherwise in competition with a Participating Company, to the extent set forth in or specified in such Award Agreement applicable to the Participant. In addition, the Company +may annul an Award if the Participant is an employee of a Participating Company and is terminated for Cause. +14.6 Dividends . No recipient of an Award of Options or Stock Appreciation Rights shall have the right to receive dividends or +Dividend Equivalents with respect to such Award. Dividends or Dividend Equivalents credited, paid to or payable in connection with an Award that is not yet Vested shall be subject to the same restrictions and risk of forfeiture as the underlying +Award and shall not be paid until the underlying Award Vests. +SECTION 15. MISCELLANEOUS +15.1 Delivery and Execution of Electronic Documents . To the extent permitted by applicable law, the Company may +(i) deliver by email or other electronic means (including posting on a web site maintained by the Company or by a third party under contract with the Company) all documents relating to the Plan and any Award thereunder (including without +limitation, prospectuses required by the SEC) and all other documents that the Company is required to deliver to its security holders (including without limitation, annual reports and proxy statements) and (ii) permit participants in the Plan +to electronically execute applicable Plan documents (including but not limited to, Award Agreements) in a manner prescribed by the Committee. +15.2 Awards to Participants Outside the United States . The Committee may modify the terms of any Award under the Plan made to +or held by a Participant who is then resident or primarily employed outside of the United States in any manner deemed by the Committee to be necessary or appropriate in order that such Award shall conform to laws, regulations, and customs of the +country in which the Participant is then resident or primarily employed, or so that the value and other benefits of the Award to the Participant, as affected by foreign tax laws and other restrictions, applicable as a result of the +Participant’s residence or employment abroad shall be comparable to the value of such an Award to a Participant who is resident or primarily employed in the United States. An Award may be modified under this Section 15.2 in a manner that +is inconsistent with the express terms of the Plan, so long as such modifications will not contravene any applicable law or regulation or result in actual liability under Section 16(b) of the Exchange Act for the Participant whose Award is +modified. +15.3 Nonexclusivity of the Plan . Neither the adoption of the Plan by the Board nor the +submission of the Plan to the shareholders of the Company for approval shall be construed as creating any limitations on the power of the Board to adopt such other incentive arrangements as it may deem desirable, including, without limitation, the +granting of stock options otherwise than under the Plan, and such arrangements may be either applicable generally or only in specific cases. +15.4 Severability . If any provision of the Plan or any Award Agreement shall be determined to be illegal or unenforceable by +any court of law in any jurisdiction, the remaining provisions hereof and thereof shall be severable and enforceable in accordance with their terms, and all provisions shall remain enforceable in any other jurisdiction. +15.5 Requirements of Law . The granting of Awards and the issuance of Stock under the Plan shall be subject to all applicable +laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required. +A-18 +15.6 Governing Law . The validity and construction of this Plan and the +instruments evidencing the Awards hereunder shall be governed by the laws of the State of Rhode Island, other than any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Plan and the +instruments evidencing the Awards granted hereunder to the substantive laws of any other jurisdiction. +SECTION 16. TERMINATION OR AMENDMENT OF PLAN +The Board may terminate or amend the Plan at any time. However, subject to changes in applicable law, regulations or rules that would +permit otherwise, without the approval of the Company’s shareholders, there shall be (a) no increase in the maximum aggregate number of shares of Stock that may be issued under the Plan (except by operation of the provisions of +Section 10), (b) no change in the class of persons eligible to receive Incentive Stock Options, and (c) no other amendment of the Plan that would require approval of the Company’s shareholders under any applicable law, regulation +or rule. No termination or amendment of the Plan shall affect any then outstanding Award unless expressly provided by the Committee. In any event, no termination or amendment of the Plan may materially adversely affect any then outstanding Award +without the consent of the Participant, unless such termination or amendment is necessary to comply with any applicable law, regulation or rule. +SECTION 17. EFFECTIVE DATE AND DURATION OF PLAN +The Plan shall become effective (the “ Effective Date ”) upon the later of the approval of the Plan by the Board and the +approval of the Plan by the shareholders of the Company in accordance with applicable laws and regulations. No Award may be granted under the Plan after the tenth (10 th ) anniversary of the +Effective Date. The Plan shall terminate when the total amount of the Stock available for issuance under the Plan have been issued and all restrictions on such shares under the terms of the Plan and the agreements evidencing Awards granted under the +Plan have lapsed. +SECTION 18. FRENCH SUB-PLAN; FOR INDIVIDUALS WHO ARE FRENCH RESIDENT TAXPAYERS +AND/OR SUBJECT TO THE FRENCH SOCIAL SECURITY SCHEME IN FRANCE. +All Awards granted under this Section 18 (also referred to as the “French Sub-plan”) to an Employee who is a French resident taxpayer and/or subject to the French social security scheme in France shall comply with the terms of this French Sub-plan. The purpose of the French Sub-plan is to grant Awards that qualify for favorable income tax and social security tax treatment under French +law. In the event any other provision of the Plan conflicts with a provision of this Section 18, the provision in Section 18 shall control with respect to any Award granted under Section 18. No other Award granted under the Plan shall +be subject to the provisions of this Section 18. +As a matter of principle, any provision included in the Plan or any other document evidencing the +terms and conditions of the Plan that would contravene any substantive principle set out in Articles L.225-197-1 to L.225-197-6 of the French Code de Commerce shall not be applicable to recipients of Awards hereunder who are residents of France and employed or providing services in France. +Provided that he or she complies with the provisions of the French Sub-plan, recipients of Awards hereunder +will benefit from the favorable tax and social contribution regimes provided by articles 80 quaterdecies and 200 A of the French Tax Code (Code Général des Impôts) and +article L.242-1 of the French Social Security Code (Code de +A-19 +la Sécurité Sociale) in connection with the grant and settlement of Restricted Stock Units and the disposition of the shares received upon the vesting of the Restricted Stock Units +pursuant to the Plan. +18.1 Definitions . The following terms shall have the following meanings for purposes of this French Sub-plan: +(a) “French Award” means, individually or collectively, any Award +granted under this Section 18 to Employees who are French resident taxpayers and/or subject to the French social security scheme in France. +(b) “French Option Award” means, individually or collectively, any French Award in the form of an option to purchase shares of Common +Stock. +(c) “French Restricted Stock Award” means, individually or collectively, any French Award in the form of Restricted +Stock. +(d) “French RSU Award” means, individually or collectively, any French Award in the form of Restricted Stock Units. +(e) “Disability” means a physical or mental condition corresponding to the classification in the second or third categories laid down +in Article L. 341-4 of the French Social Security Code (Code de la Sécurité Sociale). +(f) “Holding Period” means, with respect to any French Award, the holding period described in Section 18.5. +18.2 Eligibility . A French Award under the French Sub-plan may be granted only to +an Employee who is a French resident taxpayer and/or subject to the French social security scheme in France. +18.3 Limitation on Grants +under the French Sub-Plan . French Awards may not be granted to an Employee who holds more than 10% of the outstanding Stock at the date of grant or an Employee who would hold more than 10% of the +outstanding Stock following the French Award grant. Any Stock granted in violation of this rule shall not be deemed to have been granted. Settlement of French RSU Awards shall only be in Stock; there shall be no settlement of French RSUs in cash. +18.4 Vesting Periods . Except in the case of the death or Disability of the Employee, no portion of any French Restricted Stock +Award or French RSU Award may vest (whether such vesting results from the achievement of one or more goals relating to the completion of service by the French Award holder and/or the achievement of performance or other objectives) until at least the +first anniversary of the date of grant of such French Award. The holder of a French Award shall be 100% vested in such French Award in the event his or her employment is terminated by reason of death or Disability, provided, however, that if the +vesting of such French Award is based, at least in part, on performance goals, the acceleration, if any, of such performance-based vesting upon such death of Disability shall be determined as set forth in the applicable Award Agreement. In the event +of death or Disability, the remaining Stock subject to the Award that have not been issued as of the date the Award holder’s service relationship with the Company (and its subsidiaries) so terminates will be issued to the holder or, in the case +of death, his or her heirs upon their request as provided under applicable law. In such event (either death or Disability), the Company shall issue the Stock within six months of such termination, and the Holding Period described in +Section 18.5 will not apply to such shares, but the blackout restrictions on sale described in Section 18.6 will continue to apply. +18.5 Holding Period . With respect to each French Award, there shall be +a one-year period following each vesting date applicable to such French Award, during which the Employee issued such French Award may not +A-20 +sell or loan (i) in the case of a French Restricted Stock Award or French RSU Award, any Stock issued upon the vesting on such vesting date of such French Restricted Stock Award or a French +RSU Award, or (ii) in the case of a French Option Award, any Stock acquired upon the exercise of the portion of such French Option Award that vested on such vesting date. This Holding Period will not be applicable for any issued Stock delivered +on or following the second anniversary of the date of grant of the French Award, provided, however, that all French Awards shall in any event be subject to any additional holding requirements to the extent set forth in the Plan. +18.6 Restrictions on Sale – Black out Periods . Following the expiration of the Holding Period described in Section 18.5, +shares of Stock issued upon the applicable vesting of French Restricted Stock Awards or French RSU Awards or the exercise of the portion of French Option Awards vested upon the applicable vesting may not be sold: +(a) during the then-existing blackout periods established by the Company, which are hereby made applicable to all French Awards; +(b) during the ten stock exchange trading days preceding and following the date on which the Company’s consolidated accounts are made +public, or failing that, the annual accounts are published; +(c) between (i) the date on which the Company’s management bodies +have knowledge of information which, if made public, could have a significant impact on the price of the Stock; and (ii) ten stock exchange trading days following the date on which this information is published; and +(d) if the participant has nonpublic material information about the Company and such sale would violate any applicable securities laws of the +United States of America or France. +18.7 Restriction on Sale for Officers and Directors . At the time of the grant +of French Awards, the Committee shall, if any of the participants is an officer or director of the Company, either decide that such officer or director cannot sell the Stock received upon vesting or exercise of the French Award before the end of his +or her functions, or determine the number of shares of Common Stock received upon vesting of such French Award that such officer or director shall keep up to the end of his or her functions. +18.8 Restrictions on Transfer . Shares of Stock subject to French Awards may not be transferred, assigned, pledged +or hypothecated in any manner until they have vested in accordance with this French Sub-plan. +18.9 Other Compliance with French Tax and Social Security Law . French Awards granted under the +French Sub-plan must also comply with any other requirements set forth by the French tax and social security law as interpreted and supplemented by the French tax and social security guidelines in +effect at the date of grant of such Awards. Except as the Company and recipient agree in writing, the Company shall not modify the terms of a French Award agreement (or this French Sub-plan) in such +a manner as to cause the recipient to no longer benefit from the favorable tax and social contribution regimes provided by articles 80 quaterdecies and 200 A of the French Tax Code (Code Général des Impôts) and article L.242-1 of the French Social Security Code (Code de la Sécurité Sociale) in connection with the grant and settlement of Restricted Stock Units and the disposition of the shares +received upon the vesting of the Restricted Stock Units pursuant to the Award agreement, this French Sub-plan, and the Plan. +18.10 No Rights as a Shareholder . The holder of a French RSU Award or a French Option Award shall not have any rights as a +shareholder of the Company unless and until shares are issued to the holder with respect to the Award. +A-21 +18.11 Restrictions on Transfer . Rights granted under the French Sub-plan shall not be transferable by the recipient of such grants other than by will or by the laws of descent and distribution. +18.12 Data Protection . The Company will satisfy any notification, application or prior authorization required under applicable laws +in order to comply with application French or European Union data protection legislation or regulations, including but not limited to the Generation Data Protection Regulation (EU) 2016/679. +18.13 Understanding of Terms . Each French Award agreement shall include the following provision: +By signing and returning this document providing for the terms and conditions of the French Award, I confirm having read and understood the +documents referenced in this Agreement, including the Award agreement itself and the AstroNova, Inc. 2018 Equity Incentive Plan (including the French sub-plan), which were made available to me in the +English language. I accept the terms of those documents accordingly. +En signant et renvoyant le présent document +décrivant les termes et conditions de mon attribution, je confirme avoir lu et compris les documents relatifs à cette attribution, à savoir le présent contrat d’attribution et le plan général +d’actionnariat salarié de AstroNova, Inc. de 2018, en ce compris son sous plan français, qui m’ont été communiqués en langue anglaise. J’en accepte les termes de ces documents en connaissance de +cause. +A-22 +ANNUAL MEETING OF ASTRONOVA, INC. +Date: +Tuesday, June 4, 2019 +Time: +10 A.M. (Eastern Time) +Place: +Offices of Foley Hoag LLP, Seaport West, 155 Seaport Blvd., Boston, MA +Please make your marks like +this: ☒ Use dark black pencil or pen only +The Board of Directors Recommends a Vote FOR each of the director nominees listed in proposal 1, for “EVERY YEAR” in proposal 3 and FOR +proposals 2, 4 and 5. +1: +To elect six directors to serve until the next annual meeting of shareholders and until their successors are elected and have +qualified; +Nominees: +(01) Jean A. Bua +(02) Mitchell I. Quain +(03) Yvonne E. Schlaeppi +(04) Harold Schofield +(05) Richard S. Warzala +(06) Gregory A. Woods +Vote For +All Nominees +Withhold Vote From +All Nominees +Vote For +All Except +☐ +☐ +☐ +INSTRUCTIONS: To withhold authority to vote for any nominee, mark the “Vote For All Except” box and write the number(s) in the space provided to the +right. +For +Against +Abstain +2: +To approve, on an advisory, non-binding basis, the compensation paid to the Company’s Named Executive Officers, as disclosed in the Company’s proxy statement for its +2019 annual meeting of shareholders. +☐ +☐ +☐ +Every +Year +Every +2 Years +Every +3 Years +Abstain +3: +To vote on, on an advisory, non-binding basis, the frequency of future advisory shareholder votes on executive compensation. +☐ +☐ +☐ +☐ +For +Against +Abstain +4: +To approve an amendment to the Company’s 2018 Equity Incentive Plan to increase the number of shares of common stock available for issuance thereunder by 300,000 +shares. +☐ +☐ +☐ +For +Against +Abstain +5: +To ratify the appointment of Wolf & Company, P.C. as the Company’s independent registered public accounting firm for the fiscal year ending +January 31, 2020. +☐ +☐ +☐ +To attend the meeting and vote your shares in person, please mark this box. +☐ +Authorized Signatures - This section must be completed for your Instructions to be executed. +Please Sign Here +Please Date Above +Please Sign Here +Please Date Above +Please sign exactly as your name(s) appears on your stock +certificate. If held in joint tenancy, all persons should sign. Trustees, administrators, etc., should include title and authority. Corporations should provide full name of corporation and title of authorized officer signing the proxy. +Please separate carefully at the perforation and return just this portion in the envelope provided. +Annual Meeting of AstroNova, Inc. +to be held on Tuesday, June 4, 2019 +for Holders as of April 12, 2019 +This proxy is being solicited on behalf of the Board of Directors +VOTE BY: +INTERNET +TELEPHONE +Go To +Call +www.proxypush.com/ALOT +866-509-1041 +• +Cast your vote online 24 hours a day / 7 days a week. +OR +• +Use any touch-tone telephone toll-free 24 hours a day / 7 days a week. +• +Have your Proxy Card/Voting Instructions Form ready. +MAIL +• +• +Have your Proxy Card/Voting Instruction Form ready. +Follow the simple recorded instructions. +• +View Meeting Documents. +OR +• +Mark, sign and date your Proxy Card/Voting Instruction Form. +• +Detach your Proxy Card/Voting Instruction Form. +• +Return your Proxy Card/Voting Instruction Form in the +postage-paid envelope provided. +The undersigned hereby appoints Jean A. Bua, Mitchell I. Quain, Yvonne E. Schlaeppi, Harold Schofield, Richard S. +Warzala and Gregory A. Woods, and each or any of them, as the true and lawful attorneys of the undersigned, with full power of substitution and revocation, and authorizes them, and each or any of them, to vote all the shares of common stock of +AstroNova, Inc. which the undersigned is entitled to vote at said meeting and any adjournment or postponement thereof upon the matters specified and upon such other matters as may be properly brought before the meeting or any adjournment or +postponement thereof, conferring authority upon such true and lawful attorneys to vote in their discretion on such other matters as may properly come before the meeting and revoking any proxy heretofore given. +THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, SHARES WILL BE VOTED FOR THE ELECTION OF THE DIRECTORS IN +ITEM 1, FOR “EVERY YEAR” IN ITEM 3 AND FOR THE PROPOSALS IN ITEMS 2, 4 and 5. THE PROXIES WILL VOTE IN THEIR DISCRETION ON ANY OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING AND ANY ADJOURNMENT OR POSTPONEMENT THEREOF. +PROXY TABULATOR FOR +ASTRONOVA, INC. +c/o MEDIANT COMMUNICATIONS +P.O. BOX 8016 +CARY, NC 27512-9903 \ No newline at end of file diff --git a/raw/proxies/0000008146/0001193125-19-118219/proxy_rpt.txt b/raw/proxies/0000008146/0001193125-19-118219/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..8432c0fc6a8bda446e6bb21347289c49c8c908b3 --- /dev/null +++ b/raw/proxies/0000008146/0001193125-19-118219/proxy_rpt.txt @@ -0,0 +1,6 @@ +RELATED PARTY TRANSACTIONS +Potential conflicts of interest and related party transactions are referred by the Board to the Audit Committee for review and approval. In +reviewing and evaluating potential conflicts of interest and related party transactions, the Audit Committee uses applicable NASDAQ listing standards and SEC rules as a guide. +No officer, director or nominee for director of the Company or any associate of any of the foregoing had during the period beginning on +February 1, 2018 through the date of this proxy statement any material interest, direct or indirect, in any material transaction or any material proposed transaction in which the amount exceeds $120,000 and to which the Company was or is to be +a party. \ No newline at end of file diff --git a/raw/proxies/0000008146/0001193125-20-123314/proxy.txt b/raw/proxies/0000008146/0001193125-20-123314/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..4a0d362e3e89ef20b9555e4384ec6e7689608f65 --- /dev/null +++ b/raw/proxies/0000008146/0001193125-20-123314/proxy.txt @@ -0,0 +1,1591 @@ +DEF 14A +1 +d834845ddef14a.htm +DEF 14A +DEF 14A +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Proxy Statement Pursuant to Section 14(a) of the +Securities Exchange Act of 1934 +(Amendment No. ) +Filed by the +Registrant ☒ Filed by a Party other than the +Registrant ☐ +Check the appropriate box: +☐ +Preliminary Proxy Statement +☐ +Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +☒ +Definitive Proxy Statement +☐ +Definitive Additional Materials +☐ +Soliciting Material Pursuant to §240.14a-12 +ASTRONOVA, INC. +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +☒ +No fee required. +☐ +Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. +(1) +Title of each class of securities to which transaction applies: +(2) +Aggregate number of securities to which transaction applies: +(3) +Per unit price or other underlying value of transaction computed pursuant to Exchange Act +Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): +(4) +Proposed maximum aggregate value of transaction: +(5) +Total fee paid: +☐ +Fee paid previously with preliminary materials. +☐ +Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the +previous filing by registration statement number, or the Form or Schedule and the date of its filing. +(1) +Amount Previously Paid: +(2) +Form, Schedule or Registration Statement No.: +(3) +Filing Party: +(4) +Date Filed: +AstroNova, Inc. +600 East Greenwich Avenue +West +Warwick, Rhode Island 02893 +NOTICE OF ANNUAL MEETING OF SHAREHOLDERS +June 2, 2020 +To the Shareholders of +AstroNova, Inc.: +Notice is hereby given that the 2020 Annual Meeting of Shareholders of AstroNova, Inc. (the “Company”) will be held at the +offices of Foley Hoag LLP , Seaport West, 155 Seaport Boulevard, Boston, Massachusetts on Tuesday, June 2, 2020, beginning at 10:00 a.m., for the following purposes: +(1) +To consider and vote upon the election of six directors to serve until the next annual meeting of shareholders +or until their successors are elected and have qualified; +(2) +To conduct a non-binding, advisory vote to approve the Company’s +executive compensation; +(3) +To ratify the appointment of Wolf & Company, P.C. as the Company’s independent registered public +accounting firm for the fiscal year ending January 31, 2021; and +(4) +To transact such other business as may properly come before the meeting. +The close of business on April 3, 2020 has been fixed as the record date for determining shareholders entitled to attend or vote at the annual meeting or +any adjournment thereof. +You may vote on these matters in person or by proxy. Whether or not you plan to attend the meeting, please promptly complete and +return the enclosed proxy card in the enclosed addressed, postage-paid envelope or vote via the Internet or telephone, so that your shares will be represented and voted at the meeting in accordance with your wishes. If you attend the meeting, you +may withdraw your proxy or Internet or telephone vote and vote your shares in person. +The Company is mindful of the impact of the current COVID-19 pandemic, and the well-being of the Company’s shareholders, employees, officers, directors and other stakeholders is its primary concern during this time. While the Company currently intends to hold an +in-person Annual Meeting of Shareholders, if it is unable or determines that it is not in the best interests of all affected stakeholders to do so, it will make arrangements for shareholders to be able to +attend and vote at the meeting via the Internet and promptly announce that decision. Any such announcement will include detailed information as to how shareholders may remotely participate in the meeting. +By Order of the Board of Directors +Peter M. Rosenblum +Secretary +May 1, 2020 +IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON JUNE 2, 2020. +The Company’s Proxy Statement, form of proxy card, and Annual Report are available for viewing, +printing and downloading at: +http://www.proxydocs.com/ALOT +This website does not use “cookies” to track or identify visitors +AstroNova, Inc. +PROXY STATEMENT +ANNUAL +MEETING OF SHAREHOLDERS +June 2, 2020 +The Meeting +The 2020 annual meeting of shareholders of +AstroNova, Inc. (the “Company”) will be held at 10:00 a.m., local time, on Tuesday, June 2, 2020 at the offices of Foley Hoag LLP , Seaport West, 155 Seaport Boulevard, Boston, Massachusetts. At the meeting, shareholders +of record on the record date for the meeting who are present or represented by proxy will have the opportunity to vote on the following matters: +• +the election of six directors to serve until the next annual meeting of shareholders or until their successors +are elected and have qualified; +• +the approval, on an advisory, non-binding basis, of the compensation paid +to the Company’s Named Executive Officers, as disclosed in this proxy statement pursuant to Item 402 of Regulation S-K (including in the compensation discussion and analysis, compensation tables, and +accompanying narrative disclosures); +• +the ratification of the appointment of Wolf & Company, P.C. as the Company’s independent registered +public accounting firm for the fiscal year ending January 31, 2021; and +• +such other business as may properly come before the meeting. +Solicitation of Proxies +This proxy statement and the +accompanying proxy card are expected to be first sent to shareholders on or about May 1, 2020. +The Board of Directors (the “Board”) of the +Company is soliciting proxies in connection with its 2020 annual meeting of shareholders. The Company will bear the cost of such solicitation. It is expected that the solicitation of proxies will be primarily by mail. Proxies may also be solicited +personally by directors, officers, and employees of the Company at nominal cost. The Company may reimburse brokerage houses and other custodians, nominees and fiduciaries holding stock for others in their names, or in those of their nominees, for +their reasonable out-of-pocket expenses in sending proxy material to their principals or beneficial owners and obtaining their proxies. +The Company has engaged The Proxy Advisory Group, LLC to assist in the solicitation of proxies and provide related advice and informational support. The +Company expects to pay The Proxy Advisory Group, LLC fees and disbursements which are not expected to exceed $12,500 in the aggregate. +Who May Vote +The Board has established April 3, 2020 as the record date for the annual meeting. Only shareholders of record at the close of business as of +that date will be entitled to attend or vote at the annual meeting. On the record date, there were 7,096,596 shares of common stock of the Company outstanding. There was no other outstanding class of voting securities. +A list of shareholders entitled to vote will be available at the annual meeting. In addition, you may contact David S. Smith, at the Company’s offices +located at 600 East Greenwich Avenue, West Warwick, Rhode Island, to make arrangements to review a copy of the shareholder list at those offices, between the hours of 9:00 a.m. and 5:00 p.m., local time, on any business day from May 22, 2020 to +the time of the annual meeting. +1 +How to Vote +You are entitled to one vote at the meeting for each share of common stock registered in your name at the close of business on the record date for the meeting. +If you are a shareholder of record, that is you have a stock certificate or hold your shares in an account with our transfer agent, Computershare, you may vote your shares at the meeting in person or by proxy via mail, the Internet, or the toll-free +number (for residents of the United States and Canada) listed on your proxy card. +• +To vote in person , you must attend the meeting, and then complete and submit the ballot provided at the +meeting. +• +To vote by proxy by mail , if you received proxy materials by mail and choose to authorize your proxy by +mail, simply mark your proxy card, and then date, sign and return it in the postage-paid envelope provided. If you complete all of the proxy card except the voting instructions, then the designated persons will vote your shares +• +FOR the re-election of each of Jean A. Bua, Mitchell I. Quain, Yvonne E. +Schlaeppi, Harold Schofield, Richard S. Warzala and Gregory A. Woods as a director of the Company; +• +FOR the approval, on an advisory, non-binding basis, of the +Company’s executive compensation as described in this proxy statement; +• +FOR the ratification of the appointment of Wolf & Company, P.C. as the Company’s independent +registered public accounting firm for the fiscal year ending January 31, 2021. +• +To vote by proxy using the Internet , you must access the website for Internet voting at +www.proxypush.com/ALOT. Please have the enclosed proxy card handy when you access the website and follow the on-screen instructions. Internet voting facilities for shareholders of record will be available 24 +hours a day until 11:59 p.m. (Eastern time) on June 1, 2020. If you vote via the Internet, you do not have to return your proxy card via mail. +• +To vote by proxy using the telephone , use any touch-tone telephone and call +866-509-1041 to transmit your voting instructions up until 11:59 p.m. (Eastern time) on June 1, 2020. Please have the enclosed proxy card handy when you call and +then follow the instructions. If you vote via telephone, you do not have to return your proxy card via mail. +If any other business +properly comes before the meeting, then the designated persons will have the discretion, to the extent authorized by applicable rules and regulations, to vote all shares they own or represent by proxy in any manner they deem appropriate. +If you vote by proxy, whether by mail, the Internet or telephone, you may revoke your proxy at any time before it is exercised by taking one of the following +actions: +• +sending written notice to the Company’s Secretary at the address set forth on the notice of meeting +appearing on the cover of this proxy statement; +• +voting again via the Internet or telephone on a later date or properly executing and delivering a later-dated +proxy card; or +• +attending the meeting, notifying the Company’s Secretary that you are present, and then voting in person. +Shares Held by Brokers or Nominees +If the shares you own are held in “street name” by a brokerage firm, your brokerage firm, as the record holder of your shares, is required to vote +your shares according to your instructions. In order to vote your shares, you will need to follow the directions your brokerage firm provides you. Many brokers also offer the option of providing voting instructions to them over the Internet or by +telephone, directions for which would be provided by your brokerage firm on your vote instruction form. +2 +Under stock exchange rules applicable to most brokerage firms, if you do not give instructions to your +broker, your broker will be permitted to vote any shares it holds for your account in its discretion with respect to “routine” proposals, but will not be allowed to vote your shares with respect to +“non-routine” proposals. Proposal 1, regarding the election of Directors, and Proposal 2, regarding the approval, on an advisory, non-binding basis, of the +Company’s executive compensation, are “non-routine” proposals. If you do not instruct your broker how to vote with respect to these proposals, your broker will not vote your shares on them and +your shares will be recorded as “broker non-votes” and will not affect the outcome of the vote on those proposals . “Broker non-votes” are shares +that are held in “street name” by a bank or brokerage firm that indicates on its proxy that, while voting in its discretion on one matter, it does not have or did not exercise discretionary authority to vote on another matter. +Proposal 3, regarding the ratification of the appointment of Wolf & Company, P.C. as the Company’s independent registered public accounting firm +for the fiscal year ending January 31, 2021, is considered to be a routine item under the applicable rules and your broker will be able to vote on this item even if it does not receive instructions from you, so long as your broker holds your +shares in its name. +If a broker or nominee holds shares of common stock in “street name” for your account, then this proxy statement may have +been forwarded to you with a voting instruction card, which allows you to instruct the broker or nominee how to vote your shares on the proposals described herein. To vote by proxy or instruct your broker how to vote, you should follow the +directions provided with the voting instruction card. In order to have your vote counted on Proposal 1 and Proposal 2, you must either provide timely voting instructions to your broker or obtain a properly executed proxy from the broker or other +record holder of the shares that authorizes you to act on behalf of the record holder with respect to the shares held for your account . +Votes +Required to Transact Business at the Meeting +The holders of a majority of the shares entitled to vote, present in person or represented by proxy, will +constitute a quorum for the transaction of business at the meeting. Abstentions and broker non-votes are counted as present and entitled to vote for purposes of determining a quorum. +If You Receive More Than One Proxy Card or Voting Instruction Form +If you hold your shares in multiple accounts or registrations, or in both registered and street name, you will receive a proxy card or voting instruction form +for each account. Please sign, date and return all proxy cards you receive from the Company. If you choose to vote by proxy via the telephone or the Internet, please vote once for each proxy card you receive. Only your latest dated proxy for each +account will be voted. +Multiple Shareholders Sharing the Same Address +If you and other residents at your mailing address own shares of the Company’s common stock through a broker or other nominee, you may have elected to +receive only one copy of this proxy statement and the Company’s Annual Report for its fiscal year ended January 31, 2020 (“fiscal year 2020”). If you and other residents at your mailing address own shares of common stock in your +own names, you may have received only one copy of this proxy statement and the fiscal year 2020 Annual Report, unless you provided the Company’s transfer agent with contrary instructions. This practice, known as “householding,” is +designed to reduce the Company’s printing and postage costs. You may promptly obtain an additional copy of this proxy statement, enclosed proxy card and our fiscal year 2020 Annual Report by sending a written request to AstroNova, Inc., +attention Investor Relations Department, 600 East Greenwich Avenue, West Warwick, Rhode Island 02893, or by calling the Company’s investor relations department at +617-542-5300. If you hold your shares through a broker or other nominee and wish to discontinue householding or to change your householding election, you may do so by +contacting your broker or by calling 800-542-1061 or writing to Broadridge Financial Solutions, 51 Mercedes Way, Edgewood, NY 11717. If you hold shares in your own name and wish to discontinue householding or +change your householding election, you may do so by calling 877-373-6374 or writing to Computershare Investor Services at P.O. Box. 43078, Providence, RI 02940-3078. +3 +Directions to the Annual Meeting +The annual meeting will be held at the offices of Foley Hoag LLP , Seaport West, 155 Seaport Boulevard, Boston, Massachusetts. For those planning +to attend the annual meeting, directions to Foley Hoag’s offices can be found at www.proxydocs.com/ALOT. While the Company plans to have an in-person Annual Meeting of Shareholders, if it is unable or +determines that it is not in the best interests of all affected stakeholders to do so, it will make arrangements for shareholders to be able to attend and vote at the meeting via the Internet and promptly announce that decision. Any such +announcement will include detailed information as to how shareholders may remotely participate in the meeting. +4 +PROPOSAL NO. 1 +ELECTION OF DIRECTORS +At the annual +meeting, six directors are to be elected to hold office until the next annual meeting and until their respective successors are elected and qualified. The persons named in the accompanying proxy, who have been designated by the Board, intend to +vote, unless otherwise instructed, for the election to the Board of the persons named below. The biographies below contain information regarding the person’s service as a director, business experience, director positions held currently or at +any time during the last five years, and the experiences, qualifications, attributes or skills that caused the Nominating and Governance Committee and the Board to determine that the person should serve as a director. +THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR EACH OF THE BOARD’S SIX NOMINEES FOR DIRECTOR. +Jean A. Bua , 61, has been a director since November 2018. Ms. Bua has served as Executive Vice President, Chief Financial Officer, Chief +Accounting Officer and Treasurer of NetScout Systems, Inc., a provider of real-time operational intelligence and performance analytics for service assurance and cyber security solutions, since September 2015. Prior to assuming her current role at +NetScout Systems, Inc., Ms. Bua served as that company’s Senior Vice President, Chief Financial Officer, Chief Accounting Officer and Treasurer from November 2011 until September 2015 and Vice President, Finance from September 2010 until +November 2011. Prior to her tenure at NetScout Systems, Inc., Ms. Bua served as Executive Vice President, Finance & Treasurer of American Tower Corporation from 2005 to 2010 and served in various roles at Iron Mountain, Inc. from 1996 +to 2005, most recently as Senior Vice President, Chief Accounting Officer and Worldwide Controller. Previously, she held senior positions at Duracraft Corp. and Keithley Instruments. Ms. Bua has also served as a management consultant at +Ernst & Young and an auditor at KPMG. Since May 2017, she has served on the board of directors of CoreSite Realty Corporation, a provider of data center and interconnection solutions across the United States. We believe that +Ms. Bua’s expertise and experience in public company accounting and financial management qualify her to serve on our board. +Mitchell I. +Quain , 68, has been a director since August 2011. Mr. Quain has served on the Executive Council of American Securities, Inc., a private equity firm, since January 2020. From December 2011 to December 2019, Mr. Quain was a Senior +Advisor at the private equity firm Carlyle Group. From January 2010 through December 2011, Mr. Quain was a Partner at One Equity Partners, a private investment firm. From 2006 through 2009, he was a Senior Director of ACI Capital Corp. From +2002 through 2005, Mr. Quain served as Chairman of Register.Com, Inc., an internet services provider, and from 1997 to 2001 he was employed with ABN AMRO and its predecessors in several capacities, including Vice Chairman of Investment Banking. +Mr. Quain also serves as a director of Digirad Corporation, a provider of mobile healthcare solutions and diagnostic imaging equipment and services, and Jason Industries, Inc., a manufacturing company operating in the seating, finishing, +acoustics and components businesses. Mr. Quain previously served as a director of DeCrane Aircraft Holdings, Inc., Handy & Harman Ltd., Hardinge Inc., HEICO Corporation, MagneTek, Inc., Mechanical Dynamics, Inc., RBC Bearings, Inc., +Register.com, Inc., Tecumseh Products Company, Titan International, Inc., and Xerium Technologies, Inc. We believe that Mr. Quain’s extensive experience in the private equity sector and public company experience qualify him to serve on our +Board. +Yvonne E. Schlaeppi , 60, has been a director since April 2018. Since 2011, Ms. Schlaeppi has served as a Managing Partner of +Stratevise LLC, an international strategic advisory firm that she cofounded. From 2016 through 2019, Ms. Schlaeppi served on the board of directors of Stallergenes Greer plc, a pharmaceutical company traded on the Euronext Paris exchange. +Ms. Schlaeppi served on the Special Committee of Independent Directors of Stallergenes Greer in connection with its going-private transaction in 2019. From 2014 to 2015, Ms. Schlaeppi served on the boards of directors of allergy +immunotherapy companies, Ares Allergy Holdings Inc. and Greer Laboratories, Inc. Since 2015 Ms. Schlaeppi has been a member of the external advisory committee to the Channing Division of Network Medicine of Brigham and Women’s Hospital in +Boston. +5 +Ms. Schlaeppi has been recognized as a Board Leadership Fellow by the National Association of Corporate Directors beginning in 2017. Prior to founding Stratevise, Ms. Schlaeppi served +as General Counsel at Global Enterprise Technologies, Passport & ID, a high-security document printing solutions provider and systems integrator, from 2007 to 2011 and as Executive Vice President, General Counsel and Corporate IP Officer at +Organon BioSciences, a global pharmaceutical, animal health and biotech group based in the Netherlands, from 2006 to 2007. From 1999 to 2006 Ms. Schlaeppi was a partner at the Boston-based law firm of Palmer & Dodge LLP, where she +served as Chairperson of that firm’s International Practice Group. From 1995 to 1998 Ms. Schlaeppi served in senior positions at Johnson Controls, Inc., a NYSE-listed diversified industrial company, including as General Counsel Europe. We +believe that Ms. Schlaeppi’s extensive experience in international business and corporate governance, as well as relevant industry experience, qualify her to serve on our Board. +Harold Schofield , 78, has been a director since May 2012. Since 2004, Mr. Schofield has been the owner and manager of Schofield Imaging +Associates, LLC, in Narragansett, Rhode Island, and between 2017 and 2019, served as interim Chief Executive Officer of NuLabel Technologies, Inc., a developer and provider of adhesive solutions for labeling and decorating applications. Prior to +founding Schofield Imaging Associates, LLC, Mr. Schofield was Founder, President and CEO of Atlantek Incorporated (“Atlantek”), a manufacturer of thermal printers, and retired as Vice President and General Manager of Zebra Atlantek, +Inc. following the acquisition of Atlantek by Zebra Technologies Corp. in November 2003. Prior to founding Atlantek, Mr. Schofield was Design Engineering Manager at Gulton Industries where he was responsible for design and development of +thermal printers, plotters, and chart recorders. Mr. Schofield is an internationally recognized authority in the electronic printing field. We believe that Mr. Schofield’s long history and expertise in the printing and imaging field +qualify him to serve on our Board. +Richard S. Warzala , 66, has been a director since December 2017. He is the President, Chief Executive and +Chairman of the Board of Directors of Allied Motion Technologies, Inc. (“Allied Motion”), a developer of advanced motion control products and systems, and has more than 40 years of leadership experience and a strong technical background in +the industrial, aerospace and commercial industries. He joined Allied Motion as President and Chief Operating Officer in 2002. Mr. Warzala was elected a director of Allied Motion in 2006, appointed President and Chief Executive Officer in 2009, +and elected as the Chairman of Allied Motion’s board of directors in 2014. Allied Motion designs, manufactures and sells precision and specialty motion control components and systems in markets including Vehicle, Medical, Aerospace & +Defense, and Industrial/Electronics. Before joining Allied Motion, Mr. Warzala was President of Danaher Corporation’s Motion Components Group and served in various senior positions at American Precision Industries Inc., including Corporate +Vice President and President of its API Motion Division. We believe that Mr. Warzala’s technology background and international industry experience, together with his corporate governance expertise, business insights and deep understanding +of lean manufacturing principles, qualify him to serve on our Board. +Gregory A. Woods , 61, has served as Chief Executive Officer of the Company +since February 1, 2014 and as a director since January 2014. Mr. Woods joined the Company in September 2012 as Executive Vice President and Chief Operating Officer and was appointed President and Chief Operating Officer on August 29, +2013. Prior to joining the Company, Mr. Woods served from January 2010 to August 2012 as Managing Director of Medfield Advisors, LLC, an advisory firm located in Medfield, Massachusetts focused on providing corporate development and strategy +guidance to technology driven manufacturing firms. From 2008 to 2010, Mr. Woods served as President of Performance Motion Devices, a specialty semiconductor and electronics manufacturer located in Lincoln, Massachusetts. Based on this +experience and his position as Chief Executive Officer of the Company, we believe that Mr. Woods is qualified to serve on our Board. +The Board has +determined that all of the directors of the Company, including each of the nominees standing for election at the 2020 annual shareholders meeting, other than Gregory A. Woods, are independent of the Company in that such nominees have no material +relationship with the Company either directly or as a partner, shareholder or affiliate of an organization that has a relationship with the Company. The Board has made this determination in accordance with applicable Securities and Exchange +Commission (“SEC”) rules and NASDAQ listing standards. +6 +The directors will be elected by a plurality of the votes of the shares entitled to vote on the election of +directors and present in person or represented by proxy at the annual meeting. This means that the six nominees receiving the highest number of FOR votes will be elected as directors. Votes may be cast FOR or WITHHELD FROM each nominee. Broker non-votes and votes that are WITHHELD FROM the nominees will be excluded entirely from the vote and will have no effect. +The Board recommends a vote FOR the election of each the nominees listed above. +CORPORATE GOVERNANCE +The Board of +Directors – Meetings and Committees +The Board currently consists of six members, all of whose terms will expire at the annual meeting and each of +whom has been nominated by the Board for re-election. During the fiscal year ended January 31, 2020, the Board held six meetings. During fiscal year 2020, each director attended all of the meetings of the +Board and meetings of committees on which such director served. +The Board has adopted a policy that requires members of the Board to make every effort to +attend each annual shareholders meeting. All members of the Board then serving attended the 2019 annual shareholders meeting. +The Board currently has +three standing committees: an Audit Committee, a Compensation Committee and a Nominating and Governance Committee. The members and chairs of each of those committees are appointed each year. The Audit Committee is comprised of Ms. Bua, +Mr. Quain, Ms. Schlaeppi and Mr. Schofield. The Nominating and Governance Committee is comprised of Ms. Bua, Mr. Quain, Ms. Schlaeppi, Mr. Schofield and Mr. Warzala. The Compensation Committee is comprised of +Messrs. Quain, Schofield and Warzala. Each of the members of our committees is independent as defined under the applicable NASDAQ listing standards and SEC rules. Each of the Audit, Compensation, and Nominating and Governance Committees has a +written charter approved by the Board. A copy of each charter is available on the Company’s website at www.astronovainc.com under “Investors – Corporate Governance – Governance Documents.” +Audit Committee. The Audit Committee’s primary duties and responsibilities include: overseeing the integrity of the Company’s financial +reports, appointing, setting the compensation of and overseeing the Company’s independent accountants, and assessing the qualifications, independence and performance of the Company’s independent accountants and the adequacy of internal +controls. The Audit Committee meets with the Company’s independent accountants to review quarterly financial results, the results of the audit, and other relevant matters. The Audit Committee held seven meetings during the fiscal year ended +January 31, 2020. The Board has determined that all members of the Audit Committee during fiscal year 2020 satisfy the financial literacy requirements of the NASDAQ listing standards and are independent as defined under the NASDAQ listing +requirements and applicable SEC rules. Additionally, the Board has determined that that each of Ms. Bua and Mr. Quain qualifies as an “audit committee financial expert” as defined by the SEC rules and possesses “financial +sophistication” as described in the NASDAQ listing standards. +Compensation Committee. The Compensation Committee assists the Board in +discharging the Board’s responsibilities relating to director and executive compensation. The Compensation Committee’s responsibilities include: establishing and reviewing the Company’s executive and director compensation philosophy, +strategies, plans and policies; making recommendations with respect to the design of the Company’s incentive compensation plans and equity based plans; granting awards under such plans and overseeing generally the administration of such plans; +evaluating the performance and determining the compensation of the Chief Executive Officer; and reviewing and approving recommendations on compensation of other executives. The Compensation Committee held seven meetings during the fiscal year ended +January 31, 2020. +Nominating and Governance Committee . The Nominating and Governance Committee assists the Board in fulfilling its nomination +and corporate governance responsibilities. The Nominating and Governance +7 +Committee’s responsibilities include: (i) advising the Board concerning appropriate composition of the Board and its committees, including identifying individuals qualified to serve on +the Board and its committees, recommending to the Board individuals to be nominated by the Board for election to the Board by the shareholders or, in appropriate circumstances, elected by the Board to fill vacancies on the Board, (ii) advising +the Board regarding appropriate governance practices and assisting the Board in achieving them, and (iii) overseeing and reporting to the Board concerning the periodic evaluation of the Board, each committee of the Board and members of the +Board. The Nominating and Governance Committee is also charged with advising the board regarding applicable standards to be used in determining the independence of the directors serving on the Board, reviewing and making recommendations to the Board +regarding the Company’s corporate governance policies, overseeing the Company’s director education and onboarding programs, and reviewing and monitoring the Company’s executive officer succession plans. The Nominating and Governance +Committee held three meetings in the fiscal year ended January 31, 2020. +Director Share Ownership Requirements . The Company has a stock +ownership policy that requires each director to hold shares of Company common stock with a value equal to at least $200,000. Any director who does not meet this requirement will have five years from the date of his or her initial election to the +Board to achieve this ownership level. Directors are expected to retain at least 50% of the shares acquired upon exercise of any stock option (net of any shares withheld for payment of taxes) or vesting of a restricted stock or restricted unit award +until they achieve the specified ownership level and thereafter maintain such ownership level. Currently, all of our directors meet the ownership requirement, with the exception of Ms. Bua, who was appointed to the Board in November 2018, +Ms. Schlaeppi, who was appointed to the Board in April 2018, and Mr. Warzala, who was appointed to the Board in December 2017. +Compensation +Committee Interlocks and Insider Participation +During the fiscal year ended January 31, 2020, Messrs. Quain, Schofield, and Warzala served on the +Company’s Compensation Committee. No member of the Company’s Compensation Committee who currently serves or who served during fiscal year 2020 has ever been an officer or employee of the Company or any of its subsidiaries. None of the +Company’s executive officers serves as a director or member of the compensation committee of another entity in a case where an executive officer of such other entity serves as a director of the Company or a member of the Company’s +Compensation Committee. +Nomination of Directors +The +Nominating and Governance Committee considers suggestions from many sources, including shareholders, regarding possible candidates for director. As part of its ongoing succession planning, the Nominating and Governance Committee makes periodic +recommendations to the Board regarding the desired characteristics for potential directors, including with respect to competencies, special knowledge or expertise, experience of members, diversity and age. In all cases, the Nominating and Governance +Committee seeks individuals who possess the highest ethical standards and integrity, have a history of achievement that reflects superior standards for themselves and others, have the ability to provide wise, informed and thoughtful counsel to +management on a range of issues, exercise independence of thought, and possess skills and expertise appropriate to meet the Company’s needs and advance the long-term interests of the shareholders. While the Nominating and Governance Committee +does not have a specific policy with respect to diversity, it considers diversity with respect to viewpoints, accomplishments, skills and experiences, among other factors such as gender, race, national origin and age, in its evaluation of candidates +for Board membership. In considering candidates for the Board, the Nominating and Governance Committee considers the entirety of each candidate’s credentials in determining whether the candidate would bring a valuable perspective to the Board. +The Nominating and Governance Committee also monitors the Board’s compliance with the requisite qualifications under the NASDAQ listing standards +for populating the Audit, Compensation, and Nominating and +8 +Governance Committees. The Nominating and Governance Committee will consider shareholder nominees for director in the same manner as nominees for director from other sources. +Shareholders may send recommendations for director nominees to the Nominating and Governance Committee at the Company’s offices at 600 East Greenwich +Avenue, West Warwick, Rhode Island 02893. Submissions should include information regarding a candidate’s background, qualifications, experience, and willingness to serve as a director. In addition, Section 10 of Article III of the +Company’s By-Laws sets forth specific procedures that, if followed, enable any shareholder entitled to vote in the election of directors to make nominations directly at an annual meeting of shareholders. +These procedures include a requirement for written notice to the Company not more than 150 days nor less than 60 days prior to the scheduled annual meeting, which must contain the name and certain information concerning the nominee and the +shareholders who support the nominee’s election. For the annual meeting to be held in 2021, the notice must be received no earlier than December 19, 2020 and no later than March 19, 2021. A copy of the Company’s By-Laws may be obtained by writing to AstroNova, Inc., Attn: Investor Relations Department, 600 East Greenwich Avenue, West Warwick, Rhode Island 02893. +Communications with the Board of Directors +The +Company’s Board provides a process for shareholders to communicate directly with the members of the Board or the individual chairman of each standing committee. Any shareholder with a concern, question or complaint regarding our compliance with +any policy or law, or who would otherwise like to contact the Board, may communicate directly with the directors by writing directly to those individuals c/o AstroNova, Inc., 600 East Greenwich Avenue, West Warwick, Rhode Island 02893. The +Company’s general policy is to forward, and not to intentionally screen, any mail received at the Company’s corporate offices that is sent directly to an individual unless the Company believes the communication may pose a security risk. +Board Leadership Structure +All members of the +Board, other than Mr. Woods, are independent and all our key committees – Audit, Compensation, and Nominating and Governance – are, and during the fiscal year ended January 31, 2020 were, comprised solely of independent +directors. The non-management directors meet in executive session at least quarterly in order to promote discussion among the independent directors and assure independent oversight of management. +A key component of our leadership structure is the active role played by our independent directors in overseeing the Company’s business, both at the +Board and Committee level. All of our directors are free to suggest the inclusion of items on the agenda for meetings of the Board or to raise subjects that are not on the agenda for that meeting. In addition, our Board and each committee have +complete and open access to any member of management and the authority to retain independent legal, financial, and other advisors as they deem appropriate without consulting or obtaining the approval of any member of management. Moreover, our Audit +Committee, Compensation Committee and the Nominating and Governance Committee, all of which are comprised entirely of independent directors, also perform oversight functions independent of management. +Lead Independent Director. Since the passing of the Company’s former Chairman of the Board in 2017, our Board has not elected a new Chairman. +However, in August 2019, the Board elected Mr. Warzala as its lead independent director. In that capacity, among other things, Mr. Warzala serves as a liaison between the independent directors and the Company’s management and as the +chair of executive sessions of the independent directors. The Board believes that in light of the relatively small size of the Board and the active involvement by all of our independent directors in both the oversight of the Company and the conduct +of the Board’s meetings and deliberations, including the establishment of the Board’s agenda for its meetings, the Board’s current leadership structure is appropriate for the Company at this time. The Board intends to continue to +review its leadership structure, including the role of the lead independent director. +9 +Risk Oversight +The Board has an active role, as a whole and also at the committee level, in overseeing management of the Company’s risks through a program of sound +policies, systems, processes, and reports. The Audit Committee of the Board has oversight responsibility over financial reporting and disclosure processes, compliance and legal matters, and information security and fraud risk. The Audit Committee +also monitors controls to prevent material weaknesses in the financial reporting function. The Audit Committee meets regularly with our Chief Financial Officer in carrying out these responsibilities, and with the Company’s independent auditors +in executive session. +The Compensation Committee of the Board oversees risks as they relate to the Company’s compensation policies and practices as +described under “Compensation Discussion and Analysis.” The Board’s Nominating and Governance Committee assists the Board in fulfilling the Board’s oversight responsibilities with respect to confirming the independence of board +members, developing desired characteristics of the Board and identifying individuals qualified to be members of the Board, reviewing and monitoring executive officer succession plans, and assessing the effectiveness of the Board and its committees. +While each committee is responsible for evaluating the risks within their areas of responsibility and overseeing the management of such risks, all +committees report regularly to the full Board, which also considers the Company’s entire risk profile. +Compensation of Directors +The Compensation Committee is responsible for reviewing and establishing the compensation of the directors of the Company. On January 31, 2019, the +Compensation Committee adopted an Amended and Restated Non-Employee Director Annual Compensation Program (the “Director Compensation Program”), which became effective as of February 1, 2019 and +supersedes the Company’s prior Non-Employee Director Annual Compensation Program. +Pursuant to the Director +Compensation Program, beginning with fiscal year 2020, each non-employee director automatically receives a grant of restricted stock on the date of his or her +re-election to the Board. The number of whole shares granted is equal to the number calculated by dividing the stock component of the director compensation amount determined by the Compensation Committee for +that year by the fair market value of our stock on that day. The value of the restricted stock award for fiscal year 2020 was and for fiscal year 2021 is $60,000. To account for the partial year beginning on February 1, 2019 and continuing +through the 2019 annual meeting and thereby provide for the alignment of the timing of annual grants of restricted stock under the Director Compensation Program with the election of directors at the annual meeting, on February 1, 2019, each non-employee director was granted shares of restricted stock with a fair market value of $18,000. Other than the shares granted on February 1, 2019, which vested on June 1, 2019, shares of restricted stock +granted under the Director Compensation Program become vested on the first anniversary of the date of grant, conditioned upon the recipient’s continued service on the Board through that date. In the event of the death or disability of a non-employee director, or a Change in Control (as that term is defined in our 2018 Equity Incentive Plan) of the Company, the shares of restricted stock will immediately vest and no longer be subject to restrictions +on transfer. Other than as part of a Change in Control of the Company and except in the case of economic hardship of a particular non-employee director, as determined by the Compensation Committee, while a non-employee director is serving on our Board he or she may not sell or otherwise dispose of any of our stock received in connection with his or her service on our Board (whether that stock was granted under the +Director Compensation Program, any predecessor program or otherwise) if that non-employee director has not satisfied the requirements of any stock ownership guidelines established for directors by the Board or +if the transfer would cause him or her to be out of compliance with any such guidelines. +Pursuant to the Director Compensation Program, each non-employee director receives cash payments for their service on the Board and its committees. In March 2020, the Board approved a cash payment of $10,000 per year +10 +for service as our lead independent director, which was made retroactive to Mr. Warzala’s appointment as our lead independent director in August 2019. The amounts of those payments for +the fiscal year ended January 31, 2020 were: +Position Covered +Fiscal Year 2020 Annual Payment +Service on the Board +$ +45,000 +Lead Independent Director +$ +10,000 +Audit Committee Chairman +$ +10,000 +Compensation Committee Chairman +$ +8,000 +Nominating and Governance Committee Chairman +$ +6,000 +Committee Member (other than Chairman) +$ +3,000 +Cash payments are made to non-employee directors in four equal tranches on +the dates of the Board’s regular quarterly meetings. No changes were made to the cash component of the Director Compensation Program for the fiscal year ended January 31, 2021. +If a person becomes a non-employee director on a date other than the date of our annual meeting of shareholders in any +fiscal year, that person will receive an award of restricted stock as described above, but appropriately prorated to reflect the number of days remaining from the date he or she commences his or her service in that capacity until the date for the +scheduled date for our next annual meeting of shareholders. In addition, if a person becomes a non-employee director, Chairman of the Board, lead independent director, chairman of a committee or a member of a +committee other than on the first business day of a fiscal quarter of the Company, he or she will receive cash fees on (i) the date of the regular full meeting of the Board held in that quarter or (ii) if later, the date he or she +commences his or her service in that capacity, as described above, but appropriately prorated to reflect the number of days remaining in that fiscal quarter. +The following Director Compensation table provides information regarding the compensation paid or accrued by each person other than Mr. Woods who served +as a director during the fiscal year ended January 31, 2020. See “Executive Compensation” for information regarding compensation of and outstanding equity awards held by Mr. Woods. +Name +Fees Earned or +Paid in Cash ($) +Stock +Awards($)(a)(b)(c) +Total ($) +Jean A. Bua +51,000 +77,981 +121,981 +Mitchell I. Quain +61,000 +77,981 +138,981 +Yvonne E. Schlaeppi +54,000 +77,981 +131,981 +Harold Schofield +54,000 +77,981 +131,981 +Richard S. Warzala +56,000 +77,981 +133,981 +(a) +The amounts reflect the aggregate fair value of the awards on the grant date under FASB ASC Topic 718 for +shares of restricted stock granted to directors. For additional information, see footnote 13 in the Company’s audited financial statements for the fiscal year ended January 31, 2020, included in the Company’s Annual Report on Form 10-K filed with the SEC on April 10, 2020. +(b) +As of January 31, 2020, each non-employee director held 2,312 +shares of unvested restricted stock, which will vest on June 4, 2020, conditioned, for each non-employee director, on that director’s continued service on the Board through that date. +(c) +As of January 31, 2020, the Company’s non-employee directors +held the following number of outstanding stock options, all of which were vested: Mitchell I. Quain – 30,000; Yvonne E. Schlaeppi – 10,000; Harold Schofield – 35,000; and Richard S. Warzala – 10,000. Ms. Bua did not hold any +stock options as of January 31, 2020. +11 +Security Ownership of 5% Beneficial Owners +The following table sets forth certain information regarding the beneficial ownership of the Company’s outstanding shares of common stock, as of +April 17, 2020 (except as noted), by each person who is known to the Company to own of record or beneficially more than 5% of such stock: +Name of Beneficial Owner +Number of +Shares +Beneficially +Owned (a) +Percent of +Class +Dimensional Fund Advisors LP +577,936 +(b) +8.1 +% +6300 Bee Cave Road, Building One +Austin, TX 78746 +Rutabaga Capital Management, LLC +551,836 +(c) +7.8 +% +64 Broad Street, 3 rd Floor +Boston, MA 02109 +BlackRock, Inc. +412,782 +(d) +5.8 +% +55 East 52 nd Street +New York, NY 10055 +The Vanguard Group, Inc. +398,408 +(e) +5.6 +% +100 Vanguard Blvd. +Malvern, PA 19355 +Punch & Associates Investment Management, Inc. +374,637 +(f) +5.3 +% +7701 France Ave. So., Suite 300 +Edina, MN 55435 +(a) +All information is based upon ownership of record as reflected on the stock transfer books of the Company or as +reported on Schedule 13G or Schedule 13D filed under Rule 13d-1 under the Securities Exchange Act of 1934. +(b) +According to a Schedule 13G/A filed with the SEC on February 12, 2020, as of December 31, 2019, +Dimensional Fund Advisors, LP, an investment adviser registered under the Advisers Act, and its subsidiaries (collectively, “Dimensional”) had sole voting power with respect to 564,365 shares and sole dispositive power with respect to +577,936 shares held by registered investment companies, trusts and separate accounts for which Dimensional serves as investment manager, adviser or sub-adviser. +(c) +According to a Schedule 13G/A filed with the SEC on February 15, 2017, Rutabaga Capital Management, LLC, +an investment adviser registered under the Advisers Act, had sole voting power with respect to 382,869 shares, shared voting power with respect to 168,967 shares, and sole dispositive power with respect to 551,836 shares as of December 31, +2016. +(d) +According to a Schedule 13G filed with the SEC on February 11, 2020 by BlackRock, Inc. +(“BlackRock”) on its own behalf and on behalf of its subsidiaries BlackRock Advisors, LLC, BlackRock Fund Advisors, BlackRock Institutional Trust Company, National Association, BlackRock Financial Management, Inc., and BlackRock Investment +Management, LLC (collectively, the “BlackRock Subsidiaries”), BlackRock, Inc. had sole voting power with respect to 408,110 shares and sole dispositive power with respect to 412,782 shares as of December 31, 2019. None of the +BlackRock Subsidiaries claim beneficial ownership of 5% or greater of the outstanding shares. +(e) +According to a Schedule 13G filed with the SEC on February 11, 2020, The Vanguard Group, an investment +adviser registered under the Advisers Act, had sole voting power and shared dispositive power with respect to 12,964 shares and sole dispositive power with respect to 385,444 shares as of December 31, 2019. +(f) +According to a Schedule 13G/A filed with the SEC on February 14, 2020, Punch & Associates +Investment Management, Inc., an investment adviser registered under the Advisers Act, had sole voting power and sole dispositive power with respect to 374,637 shares as of December 31, 2019. +12 +Security Ownership of Directors and Officers +The following table sets forth certain information regarding the beneficial ownership of the Company’s common stock as of April 17, 2020 by each +director, by each executive officer named in the Summary Compensation Table and by all directors and executive officers as a group. Unless otherwise noted, all shares of common stock are subject to the sole voting and dispositive power of the +respective directors and executive officers. +Beneficial Ownership +Name of Beneficial Owner +Shares +and +Restricted +Shares (a) +Options +Exercisable +within 60 +days +of 4/17/20 +Total +Beneficial +Ownership +(a) +Percent of +Class +Non-employee directors +Jean A. Bua +4,969 +(b) +— +4,969 +* +Mitchell I. Quain +37,171 +(b) +30,000 +67,171 +* +Yvonne E. Schlaeppi +8,622 +(b) +10,000 +18,622 +* +Harold Schofield +21,342 +(b) +35,000 +56,342 +* +Richard S. Warzala +11,496 +(b) +10,000 +21,496 +* +Executive officers +Gregory A. Woods +112,088 +(c) +242,832 +(d) +354,922 +4.8 +% +David S. Smith +9,844 +(e) +34,332 +(f) +44,176 +* +Michael J. Natalizia +28,344 +(g) +16,666 +(h) +45,010 +* +All directors and executive officers of the Company as a group (11) +286,071 +(i) +408,477 +(j) +694,548 +9.3 +% +* +Indicates less than 1.0%. +(a) +If applicable, beneficially owned shares include shares owned by the spouse, minor children, and certain other +relatives of the director or executive officer, as well as shares held by trusts of which the person is a trustee or in which he or she has a beneficial interest. +(b) +Includes 2,312 shares of restricted stock. +(c) +Includes 8,962 restricted stock units vesting within 60 days of April 17, 2020. +(d) +Excludes 27,668 shares underlying options not exercisable within 60 days of April 17, 2020. +(e) +Includes 3,488 restricted stock units vesting within 60 days of April 17, 2020. +(f) +Excludes 29,668 shares underlying options not exercisable within 60 days of April 17, 2020. +(g) +Includes 3,547 restricted stock units vesting within 60 days of April 17, 2020. +(h) +Excludes 5,834 shares underlying options not exercisable within 60 days of April 17, 2020. +(i) +Includes 11,560 shares of restricted stock and 21,680 restricted stock units vesting within 60 days of +April 17, 2020. +(j) +Excludes 72,506 shares underlying options not exercisable within 60 days of April 17, 2020. +Delinquent Section 16(a) Reports +Section 16(a) of the Exchange Act, requires the directors and executive officers of the Company and any persons who beneficially own more than ten percent +of the Company’s common stock to file with the SEC various reports of beneficial ownership and changes in beneficial ownership. Based solely on a review of the copies of such reports received by the Company and certain written representations +that no other reports were required, the Company believes that for the fiscal year ended January 31, 2020, all of its officers, directors and 10% beneficial owners complied with the requirements of Section 16(a), except that the following +forms were filed late: +• +One Form 4 by Mr. Morawetz relating to the issuance of shares of common stock upon the vesting of a +restricted stock unit award; +13 +• +One Form 4 by each of Ms. Bua, Mr. Quain, Ms. Schlaeppi, Mr. Schofield and Mr. Warzala +relating to the grant of a restricted stock award; and +• +One Form 4 by each of Mr. Natalizia, Mr. Petrarca, Mr. Smith and Mr. Woods relating to the +issuance of shares of common stock upon the vesting of two restricted stock unit awards and the related surrender of shares of common stock to satisfy tax withholding obligations. +14 +COMPENSATION DISCUSSION AND ANALYSIS +The Compensation Committee of the Company’s Board of Directors (the “Committee”) is charged with the responsibility for establishing, +implementing and monitoring adherence to the Company’s compensation philosophy and setting the compensation for our executives and key management personnel in a manner which is internally equitable. The Committee also is responsible for +reviewing and establishing the compensation of directors. +Compensation Philosophy and Objectives. The Committee’s overall philosophy in terms +of executive compensation is to link management incentives with the actual financial performance of the Company. Similarly, the compensation should attract, retain, and motivate highly qualified individuals to achieve the Company’s business +goals and link their interests with shareholder interests. In setting compensation for the Company’s executive officers, the Committee considers the executive’s performance, awards, if any, made during prior years and other relevant +factors. The Committee seeks to have the long-term performance of the Company’s common stock reflected in executive compensation through our equity incentive programs. +Elements of Compensation. The total compensation program for the Company’s executive officers consists of the following: +• +salary; +• +cash incentive and bonus awards tied to the Company’s and executive’s annual performance; +• +equity-based incentive compensation, in the form of time-based restricted stock units and performance-based +restricted stock units; and +• +retirement and other benefits. +The Committee seeks to structure each element of compensation to attract and retain the necessary executive talent, reward annual performance and provide +incentives for achieving both long-term strategic goals and short-term performance goals. The Committee’s policy for allocating between currently paid and long-term compensation is to ensure adequate base compensation to attract and retain +personnel, while providing incentives to maximize long-term value for our shareholders. +Say on Pay Consideration. In accordance with SEC rules, +the Company conducted a non-binding, advisory vote on the Company’s executive compensation at its 2019 annual meeting. The Company’s shareholders voted to approve the Company’s executive +compensation practices at the 2019 annual meeting by a favorable vote of approximately 99.2% of the votes cast. +Setting Executive Compensation. +The Committee is responsible for establishing and periodically reviewing the compensation of the Company’s executive officers and approving all equity awards. The Committee annually reviews the performance of the executive officers and, based +on these reviews, the Committee determines salary adjustments and annual awards. Mr. Woods does not participate during deliberations regarding his compensation. +During the fiscal year ended January 31, 2020, the Committee engaged a compensation consultant, Radford, an Aon Hewitt company, to assist the Committee +in assessing the amount and structure of the compensation paid to the Company’s executive officers. As part of its engagement, Radford assisted the Committee in assessing the competitiveness of the Company’s executive compensation +practices compared to a peer group of companies, which was identified with the assistance of Radford, and other survey data. The peer group selected by the Committee for purposes of evaluating the Company’s executive compensation practices +consisted of the following 19 publicly traded hardware manufacturing companies with similar revenues, employee headcounts and market capitalizations to the Company: +• +Allied Motion Technologies Inc. +• +Amtech Systems, Inc. +15 +• +AXT, Inc. +• +Brightcove Inc. +• +CCUR Holdings, Inc. +• +Clearfield, Inc. +• +Communications Systems, Inc. +• +CVD Equipment Corporation +• +CyberOptics Corporation +• +Digi International Inc. +• +EMCORE Corporation +• +Frequency Electronics, Inc. +• +Intevac, Inc. +• +KVH Industries, Inc. +• +Nanometrics Incorporated +• +Perceptron, Inc. +• +Revolution Lighting Technologies, Inc. +• +Rudolph Technologies, Inc. +• +Transact Technologies Incorporated +While benchmarking may not always be appropriate as a stand-alone tool for setting compensation due to the aspects of the Company’s business and +objectives that are unique to it and the specific experiences and attributes of the Company’s executive officers, the Committee has generally considered approximately the median level of total compensation, as well as the components of total +compensation, in the survey and peer group data as the basis for comparison. +Fiscal Year 2020 Compensation Overview. The total compensation paid +to Mr. Woods and the Company’s two other most highly compensated executive officers, Mr. Smith and Mr. Natalizia (collectively with Mr. Woods, the “Named Executive Officers”), in the fiscal year ended +January 31, 2020 decreased over the total compensation paid in the prior fiscal year. As is described in more detail below, this decrease was primarily attributable to the fact that in in the fiscal year ended January 31, 2019, the +Company’s financial performance resulted in payments to the Named Executive Officers under the Company’s Senior Executive Short-Term Incentive Plan (the “STIP”) equal to approximately 115% percent of their target awards, while +the Company’s financial performance in fiscal year 2020 resulted in much lower payments to the Named Executive Officers under the STIP. +Salary. Base salaries for executive officers are evaluated each year. Historically, base salaries have been increased at annual rates which approximate +the general rates of increase of compensation for all employees of the Company. Annual salary adjustments are made effective April 1 of each year. Effective as of April 2, 2019, the Committee set the fiscal year 2020 annual salaries of the +Named Executive Officers as follows: +Name +Salary +Gregory A. Woods +$ +435,000 +David S. Smith +$ +296,500 +Michael J. Natalizia +$ +235,000 +16 +In March 2020, the Committee determined not to change the annual salaries of the Named Executive Officers +for the fiscal year ending January 31, 2021. +Cash Incentive and Bonus Awards. Annual cash incentive awards are an important component of +total executive cash compensation because they reward the Company’s executives for achieving targeted, annual results and emphasize variable or “at risk” compensation. From time-to-time the Committee awards discretionary cash bonuses to the Company’s executives to reward their efforts in extraordinary circumstances. +Senior Executive Short-Term Incentive Plan +Participants in the STIP (which may include any executive officer, vice president or director-level manager) are determined annually by the Committee. Awards +under the STIP are earned based on achieving or exceeding annual financial objectives, which the Committee has full discretion to establish for each plan year. Annually, the Committee establishes a Target Award for each STIP participant, which may +vary as to each participant and from year to year. In March 2019, the Committee established the following Target Awards for our Named Executive Officers for fiscal year 2020: +Name +Target Award +Target Award as +Percentage of Base Salary +Gregory A. Woods +$ +348,000 +80 +% +David S. Smith +$ +133,425 +45 +% +Michael J. Natalizia +$ +82,250 +35 +% +Concurrently with the establishment of the Target Awards for fiscal year 2020, the Committee established fiscal year 2020 +performance criteria under the STIP (the “2020 Performance Goals”) of consolidated revenue (the “Revenue Performance Goal”) and consolidated operating income (the “Operating Income Performance Goal”). For each of the +2020 Performance Goals, the Committee established a threshold and a target. +The Committee allocated the Target Awards to the 2020 Performance Goals as +follows: +• +50% of the Target Awards were tied to achievement of the Revenue Performance Goal; and +• +50% of the Target Awards were tied to the achievement of the Operating Income Performance Goal. +Performance with respect to each specific 2020 Performance Goal was calculated independently to determine the amount of the award for +each 2020 Performance Goal (each, an “Award Component”). The total STIP award earned by a Named Executive Officer for fiscal year 2020 is equal to the sum of the separate Award Components determined for each 2020 Performance Goal, +calculated as follows: +• +No bonus was to be paid with respect to the fiscal year Revenue Performance Goal unless our fiscal year 2020 +revenue exceeded the fiscal year 2020 revenue threshold. If our fiscal year 2020 revenue had equaled or exceeded the fiscal year 2020 revenue target, 100% of the target bonus allocated to that Award Component would be paid. For fiscal year 2020 +revenue falling between the fiscal year 2020 revenue threshold and the target, the bonus amount was determined through linear interpolation. +• +No bonus was to be paid with respect to the fiscal year Operating Income Performance Goal unless our fiscal year +2020 operating income exceeded the fiscal year 2020 operating income threshold. If our fiscal year 2020 operating income had equaled the operating income target established by the Compensation Committee, 100% of the target bonus allocated to that +Award Component would have been paid. If our fiscal year 2020 operating income had fallen between the threshold and the target, the bonus amount would have been determined through linear interpolation. An incremental bonus of up to 150% of each +Named Executive Officer’s total STIP target bonus, would have been paid if our fiscal year 2020 operating income had fallen between the fiscal year 2020 operating income target and an amount equal to 175% of the fiscal year 2020 operating +income target. If our fiscal year 2020 operating +17 +income had fallen between the fiscal year 2020 operating income target and 175% of the fiscal year 2020 target, the bonus amount would have been determined through linear interpolation. No +further bonus would have been earned on account of fiscal year 2020 operating income that exceeded 175% of the operating income target. +Each of our Named Executive Officers’ STIP award is subject to the following limitations: +• +Aggregate awards under the STIP in any year may not exceed 15% of the Company’s consolidated operating +income for that year determined without deduction for the STIP awards. +• +Adequate reserves for awards must be accrued when determining whether a Performance Goal based upon operating +income has been achieved. +The threshold and target for each of the Performance Goals and the corresponding Award Components based on +the Company’s results for fiscal year 2020 were as follows: +Performance Goal +Threshold ($) +Target ($) +Actual +Performance ($) +Percentage of Target +Bonus Earned (%) +Revenue +133,000,000 +147,000,000 +133,445,558 +3.2 +Operating Income +7,848,000 +9,592,000 +2,432,487 +— +As a result, our Named Executive Officers received the STIP awards for fiscal year 2020 listed in the table below. +Name +STIP Award for Fiscal Year 2020 +Gregory A. Woods +$ +5,538 +David S. Smith +$ +2,123 +Michael J. Natalizia +$ +1,309 +The Company paid directly to each of Messrs. Woods, Smith and Natalizia the amounts of the fiscal year 2020 STIP awards. +Equity-based Incentive Compensation . Total compensation at the executive level also includes equity incentive awards granted under the Company’s +2018 Equity Incentive Plan. The objectives of the equity incentive awards are to align executive and shareholder long-term interests by creating a strong and direct link between executive pay and the Company’s performance in key financial +metrics, and to enable executives to develop and maintain a long-term stock ownership position in the Company’s common stock. +In fiscal year 2020, +the Committee granted to the Named Executive Officers the following number of time-based and performance-based restricted stock units. +Name +Time-based Restricted +Stock Units +Performance-based +Restricted Stock Units +Gregory A. Woods +11,154 +22,308 +David S. Smith +3,789 +7,578 +Michael J. Natalizia +2,010 +4,020 +The time-based restricted stock units vest in three equal annual installments commencing on the first anniversary of the date +of grant, based on the executive’s continued employment with us. The performance-based restricted stock units may be earned based upon the achievement by the Company of performance goals based on a fiscal year 2020 revenue threshold and target +(the “Revenue Goal”) and operating income threshold and target (the “Operating Income Goal”) as follows: +Performance Goal +Threshold +Target +Revenue Goal +$ +133,000,000 +$ +147,000,000 +Operating Income Goal +$ +7,848,000 +$ +9,592,000 +18 +One half of the performance-based restricted stock units issued to the Named Executive Officers were subject +to the Revenue Goal (“Revenue RSUs”) and the other half were subject to the Operating Income Goal (“Operating Income RSUs”). The number of Revenue RSUs and Operating Income RSUs that were earned was calculated as follows: +• +The number of Revenue RSUs earned by a Named Executive Officer was equal to the total number of Revenue RSUs held +by that Named Executive Officer multiplied by the quotient of +• +the Company’s fiscal year 2020 revenue minus the Revenue Goal Threshold, divided by +• +the Revenue Goal Target minus the Revenue Goal Threshold; and +• +The number of Operating Income RSUs earned by a Named Executive Officer was equal to the total number of +Operating Income RSUs held by that Named Executive Officer multiplied by the quotient of +• +the Company’s fiscal year 2020 operating income minus the Operating Income Goal Threshold, divided by +• +the Operating Income Goal Target minus the Operating Income Goal Threshold, +in each case rounded down to the nearest whole number. In no event could more than 100% of the Revenue RSUs or 100% of the Operating Income RSUs have become +earned. If the Company’s fiscal year 2020 revenue had been less than the Revenue Goal Threshold, then none of the Revenue RSUs would have been earned, and because the Company’s fiscal year 2020 operating income was less than the Operating +Income Goal Threshold, none of the Operating Income RSUs were earned. +Based on the Company’s fiscal year 2020 revenue and operating income, in March +2020, the Committee determined that approximately 3.2% of the Revenue RSUs were earned, as follows: +Name +Earned Performance- +based Restricted Stock +Units +Gregory A. Woods +355 +David S. Smith +121 +Michael J. Natalizia +64 +The earned performance-based restricted stock units vest in three equal tranches on March 20, 2020, 2021 and 2022, +conditioned upon the executives’ continued employment with the Company. +Share Ownership and Retention Guidelines . The Committee believes +that, as a rule, senior management should have a meaningful equity interest in the Company. In order to promote equity ownership and further align the interests of management with our shareholders, the Committee has adopted share ownership and +retention guidelines for our executives. These guidelines are based upon the market value of our common stock as a multiple of such officer’s base pay. The multiple is three times base salary for the CEO, two times base salary for the Chief +Financial Officer and 1.25 times base salary for the other executive officers. Under these guidelines, an executive was expected to achieve the ownership level by April 1, 2020 or, if later, within five years of his or her initial appointment +as an executive officer. Executives are expected to retain at least 50% of all shares acquired on vesting of restricted stock or restricted stock units and 50% of all shares acquired on exercise of any stock option (net of any shares tendered or +withheld for payment of taxes) until they achieve the specified ownership level and thereafter maintain such ownership level. +Retirement and Other +Benefits . In order to attract and retain key executives, the Company offers retirement benefits through a Profit-Sharing Plan for employees, including its executive officers. +Profit Sharing Plan. The Company maintains a Profit Sharing Plan that is a qualified plan under Section 401(k) of the Internal Revenue +Code, which provides retirement benefits to substantially all the Company’s employees. +19 +Each eligible employee shares in contributions on the basis of relative compensation. In addition, participants are permitted to defer up to 50% of their cash compensation and make contributions +of such deferral to this plan through payroll deductions (limited to $19,000 and $19,500 in calendar years 2019 and 2020, respectively). The Company makes matching contributions equal to 50% of the first seven percent of compensation contributed. +The deferrals are made within the limits prescribed by Section 401(k). The Profit Sharing Plan provides for the vesting of 100% of matching contributions made by the Company to the account of the employee after three years of service. +Contributions by an employee are 100% vested immediately. +Perquisites . In addition to the benefits described above, the Company +provides automobile allowances to certain of its executive officers and a housing allowance to one of its Named Executive Officers. The amount of any automobile or housing allowance granted to our Named Executive Officers is reflected in the +“All Other Compensation” column of the Summary Compensation Table below. +Change in Control Agreement with +Mr. Woods. In November 2014, the Company entered into a Change in Control Agreement (the “CIC Agreement”) with Mr. Woods. The CIC Agreement provides for the payment of severance benefits upon a change in +control of the Company if Mr. Woods’ employment is terminated by the Company without cause or by Mr. Woods for good reason within the period (the “CIC Period”) beginning on the earlier of (i) 180 days prior to the occurrence +of the change in control and (ii) the announcement of a transaction expected to result in a change in control, and ending on the second anniversary of the occurrence of a change in control. Severance payments to Mr. Woods include +(i) payment of one and one-half times the sum of (A) his annual salary and (B) the greater of the amount of his target bonus for the fiscal year in progress or the highest annual bonus paid to +him in the prior three years (collectively, “base compensation”), (ii) immediate vesting of all unvested stock options and restricted stock awards, (iii) continued health coverage for 18 months or until he receives benefits from +another employer, if earlier, and (iv) reimbursement for outplacement services in an amount not to exceed 17% of his base compensation. If any payment or benefit under the CIC Agreement or under any other plan or agreement would constitute an +“excess parachute payment” within the meaning of Section 280G of the Internal Revenue Code, and if Mr. Woods would be in a better after-tax position by reducing the such payments or +benefits, the amounts payable under the CIC Agreement will be reduced to the extent necessary to avoid the excise tax payable under Section 280G. +Employment Agreements and Severance Benefits . Except for the CIC Agreement with Mr. Woods, we generally do not provide any severance +benefits to our Named Executive Officers other than those provided to all employees. Severance benefits vary based upon salary levels and length of service. +COMPENSATION COMMITTEE REPORT +The +Compensation Committee has reviewed and discussed with management the Compensation Discussion & Analysis included above. Based on these reviews and discussions, the Compensation Committee has recommended to the Board that the Compensation +Discussion & Analysis be included in the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2020 for filing with the SEC through incorporation by reference of this +Proxy Statement. +Compensation Committee: +Richard S. +Warzala (Chairman) +Mitchell I. Quain +Harold Schofield +20 +EXECUTIVE COMPENSATION +The following table provides information regarding the total compensation paid or accrued by the Company to each of its Named Executive Officers. +Summary Compensation Table +Name and Principal Position +Year +Salary +($) +Stock +Awards +($) (a) +Option +Awards +($) (b) +Non-Equity +Incentive Plan +Compensation +($) (c) +All Other +Compensation +($) +Total +($) +Gregory A. Woods +2020 +445,692 +650,836 +— +5,538 +85,080 +(d) +1,187,146 +President and CEO +2019 +409,911 +505,069 +366,563 +357,028 +79,631 +1,718,202 +David S. Smith +2020 +284,214 +221,088 +— +2,123 +78,843 +(e) +586,268 +Vice President, CFO and Treasurer +2019 +265,469 +196,644 +112,789 +125,261 +62,456 +762,619 +Michael J. Natalizia +2020 +234,627 +117,284 +— +1,309 +29,207 +(f) +382,427 +Chief Technology Officer and Vice President of Strategic Technical Alliances +2019 +198,019 +199,838 +104,986 +70,545 +27,646 +637,033 +(a) +The amounts reflect the aggregate grant date fair value of the restricted stock units and performance-based +restricted stock units issued to the Named Executive Officers, as calculated under FASB ASC Topic 718, excluding estimated forfeitures. Under FASB ASC Topic 718, the grant date fair value of each time-based restricted stock unit is equal to the +closing price of the Company’s common stock on the grant date. The grant date fair value of performance-based restricted stock units is based on the closing price of the Company’s common stock on the grant date and the Company’s +estimate, as of the date of grant, of the probable outcome of the performance conditions. The closing price of the Company’s common stock on the grant date for all restricted stock units issued to the Named Executive Offices during fiscal year +2020 was $19.45. +(b) +The amounts reflect the aggregate fair value of the awards on the grant date under FASB ASC Topic 718, +excluding estimated forfeitures, for stock options granted to the Named Executive Officers. +(c) +Reflects cash awards under the Company’s Senior Executive Short-Term Incentive Plan, which is discussed in +further detail under the heading “Compensation Discussion and Analysis” above. +(d) +Represents pay-out of unused vacation of $33,671, vehicle allowance of +$25,242, premiums on Company-paid disability and life insurance policies for which Mr. Woods or his estate is the beneficiary of $10,814 and $3,160, respectively, and an employer match under the Company’s Profit Sharing Plan of $10,819, +and non-deductible travel expenses of $1,374. +(e) +Represents housing allowance of $29,908, vehicle allowance of $18,000, +pay-out of unused vacation of $20,527, and an employer match under the Company’s Profit Sharing Plan of $10,408. +(f) +Represents pay-out of unused vacation of $21,240, an employer match +under the Company’s Profit Sharing Plan of $7,467 and tuition reimbursement of $500. +21 +Grants of Plan-Based Awards +The following table provides information on all plan-based awards by the Company for the fiscal year ended January 31, 2020 to each Named Executive +Officer. +Name +Grant +Date +Estimated Possible Payouts +Under Non-Equity Incentive +Plan Awards +Estimated Possible Payouts Under +Equity Incentive Plan Awards +All Other +Stock +Awards: +Number of +Shares of +Stock or +Units (#) +Grant +Date Fair +Value of +Stock +Awards +($) (c) +Threshold +($) (a) (b) +Target +($) (a) +Maximum +($) (a) +Threshold +(#) +Target +(#) +Maximum +(#) +Gregory A. Woods +3/20/2019 +— +348,000 +870,000 +3/20/2019 +11,154 +(d) +216,945 +3/20/2019 +— +22,308 +(e) +22,308 +(e) +433,891 +David S. Smith +3/20/2019 +— +133,425 +333,563 +3/20/2019 +3,789 +(d) +73,696 +3/20/2019 +— +7,578 +(e) +7,578 +(e) +147,392 +Michael J. Natalizia +3/20/2019 +— +82,250 +205,625 +3/20/2019 +2,010 +(d) +39,095 +3/20/2019 +— +4,020 +(e) +4,020 +(e) +78,189 +(a) +Represents awards under the Company’s Senior Executive Short-Term Incentive Plan. See “Compensation +Discussion & Analysis – Senior Executive Short-Term Incentive Plan” for additional information regarding the Senior Executive Short-Term Incentive Plan. +(b) +The Company’s Senior Executive Short-Term Incentive Plan does not provide for any threshold payment amount +for amounts that may be earned with respect to the Consolidated Revenue Goal or Consolidated Operating Income Goal. +(c) +The grant date fair value of each time-based restricted stock unit is equal to the closing price of the +Company’s common stock on the grant date. The grant date fair value of performance-based restricted stock units is based on the closing price of the Company’s common stock on the grant date and the Company’s estimate, as of the date +of grant, of the probable outcome of the performance conditions. +(d) +Consists of a restricted stock unit award issued pursuant to the Company’s 2018 Equity Incentive Plan, +which vests in three equal annual installments commencing on the first anniversary of the grant date. +(e) +Consists of a performance-based restricted stock unit award issued pursuant to the Company’s 2018 Equity +Incentive Plan, which, if earned, vests in three equal annual installments commencing on the first anniversary of the grant date. See “Compensation Discussion & Analysis – Equity-based Incentive Compensation” for more +information about the performance-based restricted stock units. +22 +Outstanding Equity Awards at Fiscal Year-End +The following table provides information on all outstanding equity awards held by each of the Named Executive Officers as of January 31, 2020. +OPTION AWARDS +STOCK AWARDS +Name +Number of +Securities +Underlying +Unexercised +Options (#) +Exercisable +Number of +Securities +Underlying +Unexercised +Options (#) +Unexercisable +Option +Exercise +Price +($) +Option +Expiration +Date +Number of +Shares or +Units of +Stock +That +Have Not +Vested (#) +Market +Value of +Shares or +Units of +Stock +That +Have Not +Vested +($) +Equity +Incentive +Plan +Awards: +Number of +Unearned +Shares, +Units or +Other +Rights +That +Have Not +Vested +(#) +(a) +Equity +Incentive +Plan +Awards: +Market or +Payout +Value of +Unearned +Shares, +Units or +Other +Rights +That +Have +Not +Vested ($) +Gregory A. Woods +25,000 +— +7.91 +9/4/2022 +50,000 +— +13.80 +5/22/2024 +(b) +50,000 +— +13.95 +3/16/2025 +(b) +37,500 +12,500 +15.01 +3/14/2026 +(b) +25,000 +25,000 +12.85 +3/13/2027 +(b) +15,167 +30,333 +18.25 +6/4/2028 +(c) +40,008 +(d) +497,700 +22,308 +277,512 +David S. Smith +25,000 +25,000 +13.80 +1/22/2028 +(b) +4,666 +9,334 +18.25 +6/4/2028 +(c) +18,268 +(e) +227,254 +7,578 +94,270 +Michael J. Natalizia +5,000 +— +14.20 +3/17/2024 +(b) +5,833 +11,667 +18.25 +6/4/2028 +(c) +10,164 +(f) +126,440 +4,020 +50,009 +(a) +Consists of performance-based restricted stock units held by the Named Executive Officers, which may be earned +based upon the achievement by the Company of performance goals relating to the Company’s fiscal year 2020 revenue and operating income. Restricted stock units that are earned vest in three equal installments on March 20, 2020, 2021 and +2022. On March 9, 2020, the Committee determined that a portion of the restricted stock units were earned by the Named Executive Officers based upon the Company’s fiscal year 2020 revenue and operating income. The total number of these +performance-based restricted stock units held by each Named Executive Officer as of January 31, 2020 and the number earned based on the Company’s fiscal year 2020 financial performance are as follows: +Name +Performance-based Restricted +Stock Units held as of +January 31, 2020 +Shares Earned based on Fiscal 2020 +Revenue and Operating Income +Mr. Woods +22,308 +355 +Mr. Smith +7,578 +121 +Mr. Natalizia +4,020 +64 +23 +(b) +Options vest in four equal annual installments commencing on the first anniversary of the option grant date +(which is ten years prior to the expiration date). +(c) +Options vest in three equal annual installments commencing on the first anniversary of the option grant date +(which is ten years prior to the expiration date). +(d) +Consists of (i) 1,007 shares of restricted stock that vested on March 14, 2020; (ii) 8,677 restricted +stock units that vested on March 20, 2020; (iii) 17,924 restricted stock units that will vest in equal tranches on June 4, 2020 and 2021; (iv) 4,963 restricted stock units that will vest on March 20, 2021, and (v) 7,437 restricted +stock units that will vest in equal tranches on March 20, 2021 and 2022. +(e) +Consists of (i) 1,262 restricted stock units that vested on March 20, 2020, (ii) 6,979 restricted stock +units that will vest in equal tranches on June 4, 2020 and 2021; (iii) 7,500 restricted stock units that will vest in equal tranches on January 22, 2021 and 2022, and (iv) 2,527 restricted stock units that will vest in equal tranches on +March 20, 2021 and 2022. +(f) +Consists of (i) 1,198 restricted stock units that vested on March 20, 2020; (ii) 7,095 restricted stock +units that will vest in equal tranches on June 4, 2020 and 2021; (iii) 530 restricted stock units that will vest on March 20, 2021; and (iv) 1,341 restricted stock units that will vest in equal tranches on March 20, 2021 and 2022. +24 +Risk Related to Compensation Policies +The Company’s compensation policies and practices for its employees, including its executive compensation program described in +Compensation Discussion and Analysis, aim to provide a risk-balanced compensation package which is competitive in our market sectors and relevant to the individual executive. The Company expects to continue to award to certain executives and +employees, upon satisfaction of applicable performance conditions and subject to future approval and grant by the Compensation Committee, equity and cash-based awards. Because the Company’s equity incentive programs include substantial vesting +features, the Company believes that the structure of its compensation plans discourages short-term risk taking and aligns the interest of its executives and managers with those of its shareholders. The Company does not believe that risks arising +from these practices, or its compensation policies and practices considered as a whole, are reasonably likely to have a material adverse effect on the Company. +25 +AUDIT COMMITTEE REPORT +The Audit Committee of the Board is responsible for providing independent, objective oversight of the Company’s accounting functions and internal +controls. The Audit Committee is composed of four directors, each of whom is independent as defined by the NASDAQ listing standards and SEC rules. The Audit Committee operates under a written charter approved by the Board. +Management is responsible for the Company’s internal controls and financial reporting process. The independent accountants are responsible for performing +an independent audit of the Company’s consolidated financial statements in accordance with generally accepted auditing standards and issuing a report thereon. The Audit Committee’s responsibility is to monitor and oversee these processes. +The Audit Committee’s responsibilities focus on two primary areas: (1) the adequacy of the Company’s internal controls and financial +reporting process and the reliability of the Company’s financial statements; and (2) the independence and performance of the Company’s independent accountants. The Audit Committee has sole authority to select, evaluate and when +appropriate, to replace the Company’s independent auditors. +The Audit Committee has met with management and the Company’s independent +accountants, Wolf & Company, P.C., to review and discuss the January 31, 2020 financial statements. Management represented to the Committee that the Company’s consolidated financial statements were prepared in accordance with +generally accepted accounting principles, and the Audit Committee has reviewed and discussed the consolidated financial statements with management and the independent accountants. The Audit Committee also discussed with Wolf & Company, P.C. +the matters required to be discussed by the applicable requirements of the Public Company Accounting Board. The Audit Committee also received from Wolf & Company, P.C. the written disclosures and the letter from Wolf & Company, +P.C. pursuant to applicable requirements of the Public Company Accounting Oversight Board regarding Wolf & Company, P.C.’s communications with the Audit Committee concerning independence, and has discussed with Wolf & Company, +P.C. its independence from the Company. +The Audit Committee received the information concerning the fees of Wolf & Company, P.C. for the year +ended January 31, 2020 set forth below under “Independent Accountant Fees and Services.” When applicable, the Audit Committee considers whether the provision of non-audit services is compatible +with maintaining the independence of the independent accountants. Wolf & Company, P.C. did not provide any non-audit services during the fiscal year ended January 31, 2020. +Based upon the review and discussions referred to above, the Audit Committee recommended that the Board include the audited consolidated financial statements +in the Company’s Annual Report on Form 10-K for the year ended January 31, 2020, to be filed with the SEC. +Audit Committee: +Mitchell I. Quain (Chairman) +Jean Bua +Yvonne Schlaeppi +Harold Schofield +26 +RELATED PARTY TRANSACTIONS +Potential conflicts of interest and related party transactions are referred by the Board to the Audit Committee for review and approval. In reviewing and +evaluating potential conflicts of interest and related party transactions, the Audit Committee uses applicable NASDAQ listing standards and SEC rules as a guide. +No officer, director or nominee for director of the Company or any associate of any of the foregoing had during the period beginning on February 1, 2019 +through the date of this proxy statement any material interest, direct or indirect, in any material transaction or any material proposed transaction in which the amount exceeds $120,000 and to which the Company was or is to be a party. +27 +EQUITY COMPENSATION PLAN INFORMATION +The following table sets forth information about the Company’s equity compensation plans as of January 31, 2020: +Plan Category +Number of +Securities to +be Issued +Upon Exercise of +Outstanding +Options, +Warrants and +Rights +Weighted-Average +Exercise Price of +Outstanding +Options, +Warrants and +Rights +Number of +Securities +Remaining +Available for +Future Issuance +Under Equity +Compensation +Plans +Equity Compensation Plans Approved by Shareholders +801,111 +(1) +$ +14.46 +(2) +681,759 +(3) +Equity Compensation Plans Not Approved by Shareholders +— +— +— +Total +801,111 +(1) +$ +14.46 +(2) +681,759 +(3) +(1) +Includes 373,345 shares issuable upon exercise of outstanding options granted under the Company’s 2007 +Equity Incentive Plan; 166,700 shares issuable upon exercise of outstanding options granted and 22,718 restricted stock units outstanding under the Company’s 2015 Equity Incentive Plan; and 138,999 shares issuable upon exercise of +outstanding options granted and 99,349 restricted stock units outstanding under the Company’s 2018 Equity Incentive Plan. Refer to footnote 13 to the Company’s audited financial statements for the fiscal year ended January 31, 2020 +included in the Company’s Annual Report on Form 10-K filed with the SEC on April 10, 2020 for further discussion. +(2) +Does not include restricted stock units. +(3) +Represents 656,785 shares available for grant under the Company’s 2018 Equity Incentive Plan and +24,974 shares available for issuance under the Company’s Employee Stock Purchase Plan. This balance does not include (i) 12,567 shares issued pursuant to outstanding unvested restricted stock awards that are subject to forfeiture or +(ii) shares subject to outstanding awards under the Company’s 2015 Equity Incentive Plan, that may become available under the Company’s 2018 Equity Incentive Plan if those awards are forfeited, cancelled, reacquired by the Company or +terminated in the future under circumstances that, had they been issued under the Company’s 2018 Equity Incentive Plan, would have been available for future grants. +28 +PROPOSAL NO. 2 +ADVISORY VOTE ON EXECUTIVE COMPENSATION +As required by the Section 14A(a)(1) of the Exchange Act, the Board is providing shareholders with the opportunity to cast an advisory vote on the +Company’s executive compensation at the annual meeting through the following resolution: +“RESOLVED, that the shareholders approve the +Company’s executive compensation, as described in the Compensation Discussion and Analysis and the tabular disclosure regarding Named Executive Officer compensation (together with the accompanying narrative disclosure) in the Company’s +Proxy Statement.” +The Board believes that the Company’s compensation policies and procedures, which are described more fully in the +“Compensation Discussion and Analysis” section of this Proxy Statement and in the tables and narrative in the “Executive Compensation” section, are strongly aligned with the long-term interests of shareholders. These policies and +procedures balance short-term and longer-term compensation opportunities to assure that the Company meets short-term objectives while continuing to produce value for our shareholders over the long term. +Approval of this proposal requires the affirmative vote of a majority of the shares of common stock entitled to vote and present in person or represented by +proxy at the annual meeting. Abstentions will have the same effect as a vote against the proposal, and broker non-votes will have no effect on the outcome of the vote. This vote will not be binding on or +overrule any decisions by the Board or any committee thereof, will not create or imply any additional fiduciary duty on the part of the Board, and will not restrict or limit the ability of the Company’s shareholders to make proposals for +inclusion in proxy materials related to executive compensation. However, the Compensation Committee and the Board will take into account the outcome of the vote when considering future executive compensation arrangements. +The Board recommends a vote “FOR” approval of the Company’s executive compensation, as described in the Compensation +Discussion and Analysis, and the tabular disclosure regarding Named Executive Officer compensation (together with accompanying narrative disclosure) in this Proxy Statement. +29 +PROPOSAL NO. 3 +RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +The Audit Committee has sole authority to select, evaluate and when appropriate, to replace the Company’s independent auditors. The Audit Committee has +appointed Wolf & Company, P.C. as the Company’s independent registered public accounting firm for the fiscal year ending January 31, 2021. Although action by the Company’s shareholders on this matter is not required, the +Audit Committee believes it is appropriate to seek shareholder ratification in light of the critical role played by the independent auditors in evaluating the integrity of Company financial controls and reporting and requests that shareholders +ratify such appointment. +Approval of this proposal requires the affirmative vote of a majority of the shares of common stock entitled to vote and present +in person or represented by proxy at the annual meeting. Abstentions will have the same effect as a vote against the proposal, and broker non-votes will have no effect on the outcome of the vote. +The Board of Directors recommends a vote “FOR” the ratification of the appointment of Wolf & Company, P.C. as the +Company’s independent registered public accounting firm for the fiscal year ending January 31, 2021. +Independent Accountants’ +Fees, Services and Other Matters +The Company expects a representative of Wolf & Company, P.C. will be present at the annual meeting with the +opportunity to make a statement, if he or she so desires, and that such representative will be available to respond to appropriate questions. +Aggregate +fees for professional services rendered for the Company by Wolf & Company, P.C. for the fiscal years ended January 31, 2020 and 2019 are set forth below. +2020 +2019 +Audit Fees +$ +233,500 +$ +224,500 +Audit-Related Fees +— +— +Tax Fees +— +— +All Other Fees +— +— +Audit Fees for the fiscal years ended January 31, 2020 and 2019 were for professional services rendered for the +audits of the financial statements of the Company, quarterly review of the financial statements included in the Company’s Quarterly Reports on Form 10-Q, consents and other assistance required to complete +the year end audit of the consolidated financial statements. Audit fees for the fiscal years ended January 31, 2020 and 2019 included fees for professional services relating to the review of the Company’s registration statements on Form S-8. +Policy on Audit Committee Pre-Approval . The Audit +Committee pre-approves all audit and non-audit services provided by the independent accountants prior to the engagement of the independent accountants with respect to +such services. None of the services described above were approved by the Audit Committee under the de minimis exception provided by Rule 2-01(C)(7)(i)(c) under Regulation +S-X. +FINANCIAL REPORTS +A copy of the annual report of the Company for the fiscal year ended January 31, 2020, including the Company’s annual report to the SEC on Form 10-K, accompanies this proxy statement. Such report is not part of this proxy statement. +30 +PROPOSALS FOR 2021 ANNUAL MEETING +The 2021 annual meeting of the shareholders of the Company is scheduled to be held on May 18, 2021, the third Tuesday in May. If a shareholder intending +to present a proposal at that meeting wishes to have such proposal included in the Company’s proxy statement and form of proxy relating to the meeting pursuant to Rule 14a-8, the shareholder must submit +the proposal to the Company no later than January 1, 2021. Shareholder proposals not requested to be included in the proxy statement pursuant to Rule 14a-8 and director nominations that are to be +considered at the 2021 annual meeting must be submitted no earlier than December 19, 2020 and no later than March 19, 2021. +OTHER MATTERS +No business other than +that set forth in the attached Notice of Meeting is expected to come before the annual meeting, but should any other matters requiring a vote of shareholders arise, including a question of adjourning the meeting, the persons named in the +accompanying proxy will vote thereon according to their best judgment in the interests of the Company. In the event any of the nominees for the office of director should withdraw or otherwise become unavailable for reasons not presently known, the +persons named as proxies will vote for other persons in their place in what they consider the best interests of the Company. +You are urged to sign and +return your proxy promptly to make certain your shares will be voted at the meeting. You may revoke your proxy at any time before it is voted. +By Order of the Board of Directors +Peter M. Rosenblum +Secretary +31 +ANNUAL MEETING OF ASTRONOVA, INC. +Date: +Tuesday, June 2, 2020 +Time: +10 A.M. (Eastern Time) +Place: +Offices of Foley Hoag LLP, Seaport West, 155 Seaport Blvd., Boston, MA +Please make your marks like +this: ☒ Use dark black pencil or pen only +The Board of Directors Recommends a Vote FOR each of the director nominees listed in proposal 1, and FOR proposals 2 and 3. +1: +To elect six directors to serve until the next annual meeting of shareholders and until their successors are elected and have +qualified; +Nominees: +(01) Jean A. Bua +(02) Mitchell I. Quain +(03) Yvonne E. Schlaeppi +(04) Harold Schofield +(05) Richard S. Warzala +(06) Gregory A. Woods +Vote For +All Nominees +Withhold Vote From +All Nominees +Vote For +All Except +☐ +☐ +☐ +INSTRUCTIONS: To withhold authority to vote for any nominee, mark the “Vote For All Except” box and write the number(s) in the space provided to the +right. +For +Against +Abstain +2: +To approve, on an advisory, non-binding basis, the compensation paid to the Company’s Named Executive Officers, as disclosed in the Company’s proxy statement for its +2020 annual meeting of shareholders. +☐ +☐ +☐ +For +Against +Abstain +3: +To ratify the appointment of Wolf & Company, P.C. as the Company’s independent registered public accounting firm for the fiscal year ending +January 31, 2021. +☐ +☐ +☐ +To attend the meeting and vote your shares in person, please mark this box. +☐ +Authorized Signatures - This section must be completed for your Instructions to be executed. +Please Sign Here +Please Date Above +Please Sign Here +Please Date Above +Please sign exactly as your name(s) appears on your stock +certificate. If held in joint tenancy, all persons should sign. Trustees, administrators, etc., should include title and authority. Corporations should provide full name of corporation and title of authorized officer signing the proxy. +Please separate carefully at the perforation and return just this portion in the envelope provided. +Annual Meeting of AstroNova, Inc. +to be held on Tuesday, June 2, 2020 +for Holders as of April 3, 2020 +This proxy is being solicited on behalf of the Board of Directors +VOTE BY: +INTERNET +TELEPHONE +Go To +Call +www.proxypush.com/ALOT +866-509-1041 +• +Cast your vote online 24 hours a day / 7 days a week. +OR +• +Use any touch-tone telephone toll-free 24 hours a day / 7 days a week. +• +Have your Proxy Card/Voting Instructions Form ready. +MAIL +• +• +Have your Proxy Card/Voting Instruction Form ready. +Follow the simple recorded instructions. +• +View Meeting Documents. +OR +• +Mark, sign and date your Proxy Card/Voting Instruction Form. +• +Detach your Proxy Card/Voting Instruction Form. +• +Return your Proxy Card/Voting Instruction Form in the +postage-paid envelope provided. +The undersigned hereby appoints Jean A. Bua, Mitchell I. Quain, Yvonne E. Schlaeppi, Harold Schofield, +Richard S. Warzala and Gregory A. Woods and each or any of them, as the true and lawful attorneys of the undersigned, with full power of substitution and revocation, and authorizes them, and each or any of them, to vote all the shares of +common stock of AstroNova, Inc. which the undersigned is entitled to vote at said meeting and any adjournment or postponement thereof upon the matters specified and upon such other matters as may be properly brought before the meeting or any +adjournment or postponement thereof, conferring authority upon such true and lawful attorneys to vote in their discretion on such other matters as may properly come before the meeting and revoking any proxy heretofore given. +THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, SHARES WILL BE VOTED FOR THE ELECTION OF THE DIRECTORS IN +ITEM 1 AND FOR THE PROPOSALS IN ITEMS 2 AND 3. THE PROXIES WILL VOTE IN THEIR DISCRETION ON ANY OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING AND ANY ADJOURNMENT OR POSTPONEMENT THEREOF. +PROXY TABULATOR FOR +ASTRONOVA, INC. +c/o MEDIANT COMMUNICATIONS +P.O. BOX 8016 +CARY, NC 27512-9903 +Please separate carefully at the perforation and return just this portion in the envelope provided. +Proxy for Annual Meeting of Stockholders to be held +on Tuesday, June 2, 2020 +This proxy is being solicited on behalf of the Board of Directors +Please vote, date and sign this Proxy on the other side and return it in the enclosed envelope. +The Stockholder signing on the reverse side (the “undersigned”), having received the Annual Report and Proxy Statement, hereby appoint(s) Jean A. +Bua, Mitchell I. Quain, Yvonne E. Schlaeppi, Harold Schofield, Richard S. Warzala and Gregory A. Woods and each of them, Proxies of the undersigned (with full power of substitution) to attend the Annual Meeting of AstoNova (the +“Company”) to be held on Tuesday, June 2, 2020, and all adjournments and postponements thereof (the “Meeting”), and to vote all shares of Common Stock of the Company that the undersigned would be entitled to vote, if personally +present, in regard to all matters that may properly come before the Meeting. +The undersigned hereby confer(s) upon the Proxies, and each of them, +discretionary authority to consider and act upon such business, matters or proposals as may properly come before the Meeting. The Proxy, when properly executed, will be voted in the manner specified herein. If no specification is made, the +Proxies intend to vote FOR all nominees for director in Proposal 1 and FOR proposals 2 and 3. \ No newline at end of file diff --git a/raw/proxies/0000008146/0001193125-20-123314/proxy_rpt.txt b/raw/proxies/0000008146/0001193125-20-123314/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..8b8e083daab2f6e4ac7d6a532d7ef48f547bb4ea --- /dev/null +++ b/raw/proxies/0000008146/0001193125-20-123314/proxy_rpt.txt @@ -0,0 +1,6 @@ +RELATED PARTY TRANSACTIONS +Potential conflicts of interest and related party transactions are referred by the Board to the Audit Committee for review and approval. In reviewing and +evaluating potential conflicts of interest and related party transactions, the Audit Committee uses applicable NASDAQ listing standards and SEC rules as a guide. +No officer, director or nominee for director of the Company or any associate of any of the foregoing had during the period beginning on February 1, 2019 +through the date of this proxy statement any material interest, direct or indirect, in any material transaction or any material proposed transaction in which the amount exceeds $120,000 and to which the Company was or is to be a party. +27 \ No newline at end of file diff --git a/raw/proxies/0000008146/0001193125-21-139851/proxy.txt b/raw/proxies/0000008146/0001193125-21-139851/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..e463ff4ff00ab9cb81772b8b64af4b992735ed9a --- /dev/null +++ b/raw/proxies/0000008146/0001193125-21-139851/proxy.txt @@ -0,0 +1,1439 @@ +DEF 14A +1 +d100330ddef14a.htm +DEF 14A +DEF 14A +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Proxy +Statement Pursuant to Section 14(a) of the +Securities Exchange Act of 1934 +(Amendment No. ) +Filed by the +Registrant ☒ Filed by a Party other than the +Registrant ☐ +Check the appropriate box: +☐ +Preliminary Proxy Statement +☐ +Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +☒ +Definitive Proxy Statement +☐ +Definitive Additional Materials +☐ +Soliciting Material Pursuant to §240.14a-12 +ASTRONOVA, INC. +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +☒ +No fee required. +☐ +Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. +(1) +Title of each class of securities to which transaction applies: +(2) +Aggregate number of securities to which transaction applies: +(3) +Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing +fee is calculated and state how it was determined): +(4) +Proposed maximum aggregate value of transaction: +(5) +Total fee paid: +☐ +Fee paid previously with preliminary materials. +☐ +Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement +number, or the Form or Schedule and the date of its filing. +(1) +Amount Previously Paid: +(2) +Form, Schedule or Registration Statement No.: +(3) +Filing Party: +(4) +Date Filed: +AstroNova, Inc. +600 East Greenwich Avenue +West Warwick, Rhode Island 02893 +NOTICE OF ANNUAL MEETING OF SHAREHOLDERS +June 8, 2021 +To the +Shareholders of AstroNova, Inc.: +Notice is hereby given that the 2021 Annual Meeting of Shareholders of AstroNova, Inc. (the +“Company”) will be held by means of remote communication on Tuesday, June 8, 2021, beginning at 10:00 a.m., Eastern Daylight Time for the following purposes: +(1) To consider and vote upon the election of six directors to serve until the next annual meeting of shareholders or until their successors +are elected and have qualified; +(2) To conduct a non-binding, advisory vote to approve the +Company’s executive compensation; +(3) To ratify the appointment of Wolf & Company, P.C. as the Company’s independent +registered public accounting firm for the fiscal year ending January 31, 2022; and +(4) To transact such other business as may +properly come before the meeting. +The close of business on April 9, 2021 has been fixed as the record date for determining +shareholders entitled to attend or vote at the annual meeting or any adjournment thereof. +You may vote on these matters in person or by +proxy. Whether or not you plan to attend the meeting, please promptly complete and return the enclosed proxy card in the enclosed addressed, postage-paid envelope or vote via the Internet or telephone, so that your shares will be represented and +voted at the meeting in accordance with your wishes. If you attend the meeting, you may withdraw your proxy or Internet or telephone vote and vote your shares by means of the remote platform. +The Company is mindful of the continuing impact of the COVID-19 pandemic, and the well-being of the +Company’s shareholders, employees, officers, directors and other stakeholders is its primary concern. Accordingly, there will be no physical meeting, and the Annual Meeting of Shareholders will only be conducted via remote communication. In +order to attend the meeting, you should register in advance at www.proxydocs.com/ALOT prior to the start of the meeting. Upon completing your registration, you will receive further instructions via email, including your unique link that will allow +you access to the meeting and the ability to submit questions. Please be sure to follow instructions found on your proxy card and/or voting authorization form and subsequent instructions that will be delivered to you via email. As always, we +encourage you to vote your shares prior to the annual meeting. +By Order of the Board of Directors +Peter M. Rosenblum +Secretary +April 29, 2021 +IMPORTANT NOTICE +REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON JUNE 8, 2021. +The +Company’s Proxy Statement and Annual Report are available for viewing, +printing and downloading at: +http://www.proxydocs.com/ALOT +This website does not use “cookies” to track or identify visitors +AstroNova, Inc. +PROXY STATEMENT +ANNUAL +MEETING OF SHAREHOLDERS +June 8, 2021 +The Meeting +The 2021 annual meeting of +shareholders of AstroNova, Inc. (the “Company”) will be held at 10:00 a.m., Eastern Daylight Time, on Tuesday, June 8, 2021, by means of remote communications. At the meeting, shareholders of record on the record date for the +meeting who are present or represented by proxy will have the opportunity to vote on the following matters: +• +the election of six directors to serve until the next annual meeting of shareholders or until their successors +are elected and have qualified; +• +the approval, on an advisory, non-binding basis, of the compensation paid +to the Company’s Named Executive Officers, as disclosed in this proxy statement pursuant to Item 402 of Regulation S-K (including in the compensation discussion and analysis, compensation tables, and +accompanying narrative disclosures); +• +the ratification of the appointment of Wolf & Company, P.C. as the Company’s independent registered +public accounting firm for the fiscal year ending January 31, 2022; and +• +such other business as may properly come before the meeting. +Solicitation of Proxies +This proxy +statement and the accompanying proxy card are expected to be first sent to shareholders on or about April 29, 2021. +The Board of +Directors (the “Board”) of the Company is soliciting proxies in connection with its 2021 annual meeting of shareholders. The Company will bear the cost of such solicitation. It is expected that the solicitation of proxies will be primarily +by mail. Proxies may also be solicited personally by directors, officers, and employees of the Company at nominal cost. The Company may reimburse brokerage houses and other custodians, nominees and fiduciaries holding stock for others in their +names, or in those of their nominees, for their reasonable out-of-pocket expenses in sending proxy material to their principals or beneficial owners and obtaining their +proxies. +The Company has engaged The Proxy Advisory Group, LLC to assist in the solicitation of proxies and provide related advice and +informational support. The Company expects to pay The Proxy Advisory Group, LLC fees and disbursements which are not expected to exceed $15,000 in the aggregate. +Who May Vote +The Board has established +April 9, 2021 as the record date for the annual meeting. Only shareholders of record at the close of business as of that date will be entitled to virtually attend or vote at the annual meeting. On the record date, there were 7,212,979 shares of +common stock of the Company outstanding. There was no other outstanding class of voting securities. +A list of shareholders entitled to +vote will be available via the website for the annual meeting. In addition, you may contact David S. Smith, at the Company’s offices located at 600 East Greenwich Avenue, West Warwick, Rhode Island, to make arrangements to review a copy of the +shareholder list at those offices, between the hours of 9:00 a.m. and 5:00 p.m., Eastern Daylight Time, on any business day from May 29, 2021 to the time of the annual meeting. +1 +Attending the Annual Meeting +The annual meeting will be held through means of remote communications, only. In order to attend, you must register in advance at +www.proxydocs.com/ALOT prior to the start of the meeting. Upon completing your registration, you will receive further instructions via email, including your unique link that grant you access to the meeting and the ability to vote and submit +questions. Please be sure to follow instructions found on your proxy card and/or voting authorization form and subsequent instructions that will be delivered to you via email. If you are planning to attend our virtual meeting, please register at the +website by June 7, 2021, 11:59 p.m. Eastern Daylight Time. +How to Vote +You are entitled to one vote at the meeting for each share of common stock registered in your name at the close of business on the record date +for the meeting. +Shares Held of Record with Our Transfer Agent +If you are a shareholder of record, that is you have a stock certificate or hold your shares in an account with our transfer agent, +Computershare, you may vote your shares at the virtual meeting or by proxy via mail, the Internet, or the toll-free number (for residents of the United States and Canada) listed on your proxy card. +• +To vote at the annual meeting, you must attend the virtual meeting following the procedures set forth in the +instructions found on your proxy card and/or voting authorization form and subsequent instructions that will be delivered to you. You will be able to vote during the meeting. +• +To vote by proxy by mail , if you received proxy materials by mail and choose to authorize your proxy by +mail, simply mark your proxy card, and then date, sign and return it in the postage-paid envelope provided. If you complete all of the proxy card except the voting instructions, then the designated persons will vote your shares +• +FOR the re-election of each of Jean A. Bua, Mitchell I. Quain, Yvonne E. +Schlaeppi, Harold Schofield, Richard S. Warzala and Gregory A. Woods as a director of the Company; +• +FOR the approval, on an advisory, non-binding basis, of the +Company’s executive compensation as described in this proxy statement; +• +FOR the ratification of the appointment of Wolf & Company, P.C. as the Company’s independent +registered public accounting firm for the fiscal year ending January 31, 2022. +• +To vote by proxy using the Internet , you must access the website for Internet voting at +www.proxypush.com/ALOT. Please have the enclosed proxy card handy when you access the website and follow the on-screen instructions. Internet voting facilities for shareholders of record will be available 24 +hours a day through the closing of the polls at the annual meeting. If you vote via the Internet, you do not have to return your proxy card via mail. +• +To vote by proxy using the telephone , use any touch-tone telephone and call +866-509-1041 to transmit your voting instructions through the closing of the polls at the annual meeting. Please have the enclosed proxy card handy when you call and +then follow the instructions. If you vote via telephone, you do not have to return your proxy card via mail. +If any +other business properly comes before the meeting, then the designated persons will have the discretion, to the extent authorized by applicable rules and regulations, to vote all shares they own or represent by proxy in any manner they deem +appropriate. +If you vote by proxy, whether by mail, the Internet or telephone, you may revoke your proxy at any time before it is +exercised by taking one of the following actions: +• +sending written notice to the Company’s Secretary at the address set forth on the notice of meeting +appearing on the cover of this proxy statement; +2 +• +voting again via the Internet or telephone on a later date or properly executing and delivering a later-dated +proxy card; or +• +attending the virtual meeting and then voting at the virtual meeting. +Shares Held by Brokers or Nominees +If the +shares you own are held in “street name” by a brokerage firm, your brokerage firm, as the record holder of your shares, is required to vote your shares according to your instructions. In order to vote your shares, you will need to follow +the directions your brokerage firm provides you. Many brokers also offer the option of providing voting instructions to them over the Internet or by telephone, directions for which would be provided by your brokerage firm on your vote instruction +form. +Under stock exchange rules applicable to most brokerage firms, if you do not give instructions to your broker, your broker will be +permitted to vote any shares it holds for your account in its discretion with respect to “routine” proposals, but will not be allowed to vote your shares with respect to “non-routine” +proposals. Proposal 1, regarding the election of Directors, and Proposal 2, regarding the approval, on an advisory, non-binding basis, of the Company’s executive compensation, are “non-routine” proposals. If you do not instruct your broker how to vote with respect to these proposals, your broker will not vote your shares on them and your shares will be recorded as “broker non-votes” and will not affect the outcome of the vote on those proposals . “Broker non-votes” are shares that are held in “street name” by a bank +or brokerage firm that indicates on its proxy that, while voting in its discretion on one matter, it does not have or did not exercise discretionary authority to vote on another matter. +Proposal 3, regarding the ratification of the appointment of Wolf & Company, P.C. as the Company’s independent registered public +accounting firm for the fiscal year ending January 31, 2022, is considered to be a routine item under the applicable rules and your broker will be able to vote on this item even if it does not receive instructions from you, so long as your +broker holds your shares in its name. +If a broker or nominee holds shares of common stock in “street name” for your account, +then this proxy statement may have been forwarded to you with a voting instruction card, which allows you to instruct the broker or nominee how to vote your shares on the proposals described herein. To vote by proxy or instruct your broker how to +vote, you should follow the directions provided with the voting instruction card. In order to have your vote counted on Proposal 1 and Proposal 2, you must either provide timely voting instructions to your broker or obtain a properly executed +proxy from the broker or other record holder of the shares that authorizes you to act on behalf of the record holder with respect to the shares held for your account . +Votes Required to Transact Business at the Meeting +The holders of a majority of the shares entitled to vote, present in person or represented by proxy, will constitute a quorum for the +transaction of business at the meeting. Abstentions and broker non-votes are counted as present and entitled to vote for purposes of determining a quorum. +If You Receive More Than One Proxy Card or Voting Instruction Form +If you hold your shares in multiple accounts or registrations, or in both registered and street name, you will receive a proxy card or voting +instruction form for each account. Please sign, date and return all proxy cards you receive from the Company. If you choose to vote by proxy via the telephone or the Internet, please vote once for each proxy card you receive. Only your latest dated +proxy for each account will be voted. +Multiple Shareholders Sharing the Same Address +If you and other residents at your mailing address own shares of the Company’s common stock through a broker or other nominee, you may +have elected to receive only one copy of this proxy statement and the +3 +Company’s Annual Report for its fiscal year ended January 31, 2021 (“fiscal year 2021”). If you and other residents at your mailing address own shares of common stock in your +own names, you may have received only one copy of this proxy statement and the fiscal year 2021 Annual Report, unless you provided the Company’s transfer agent with contrary instructions. This practice, known as “householding,” is +designed to reduce the Company’s printing and postage costs. You may promptly obtain an additional copy of this proxy statement and our fiscal year 2021 Annual Report by sending a written request to AstroNova, Inc., attention Investor Relations +Department, 600 East Greenwich Avenue, West Warwick, Rhode Island 02893, or by calling the Company’s investor relations department at 617-542-5300. If you hold your +shares through a broker or other nominee and wish to discontinue householding or to change your householding election, you may do so by contacting your broker or by calling +800-542-1061 or writing to Broadridge Financial Solutions, 51 Mercedes Way, Edgewood, NY 11717. If you hold shares in your own name and wish to discontinue householding +or change your householding election, you may do so by calling 877-373-6374 or writing to Computershare Investor Services at P.O. Box. 43078, Providence, RI 02940-3078. +4 +PROPOSAL NO. 1 +ELECTION OF DIRECTORS +At +the annual meeting, six directors are to be elected to hold office until the next annual meeting and until their respective successors are elected and qualified. The persons named in the accompanying proxy, who have been designated by the Board, +intend to vote, unless otherwise instructed, for the election to the Board of the persons named below. The biographies below contain information regarding the person’s service as a director, business experience, director positions held +currently or at any time during the last five years, and the experiences, qualifications, attributes or skills that caused the Nominating and Governance Committee and the Board to determine that the person should serve as a director. +THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR EACH OF THE BOARD’S SIX NOMINEES FOR DIRECTOR. +Jean A. Bua , 62, has been a director since November 2018. Ms. Bua has served as Executive Vice President, Chief Financial Officer, +Chief Accounting Officer and Treasurer of NetScout Systems, Inc., a provider of real-time operational intelligence and performance analytics for service assurance and cyber security solutions, since September 2015. Prior to assuming her current role +at NetScout Systems, Inc., Ms. Bua served as that company’s Senior Vice President, Chief Financial Officer, Chief Accounting Officer and Treasurer from November 2011 until September 2015 and Vice President, Finance from September 2010 +until November 2011. Prior to her tenure at NetScout Systems, Inc., Ms. Bua served as Executive Vice President, Finance & Treasurer of American Tower Corporation from 2005 to 2010 and served in various roles at Iron Mountain, Inc. from +1996 to 2005, most recently as Senior Vice President, Chief Accounting Officer and Worldwide Controller. Previously, she held senior positions at Duracraft Corp. and Keithley Instruments. Ms. Bua has also served as a management consultant at +Ernst & Young and an auditor at KPMG. Since May 2017, she has served on the board of directors of CoreSite Realty Corporation, a provider of data center and interconnection solutions across the United States. We believe that +Ms. Bua’s expertise and experience in public company accounting and financial management qualify her to serve on our board. +Mitchell I. Quain , 69, has been a director since August 2011. Mr. Quain has served on the Executive Council of American +Securities, Inc., a private equity firm, since January 2020. From December 2011 to December 2019, Mr. Quain was a Senior Advisor at the private equity firm Carlyle Group. From January 2010 through December 2011, Mr. Quain was a Partner at +One Equity Partners, a private investment firm. From 2006 through 2009, he was a Senior Director of ACI Capital Corp. From 2002 through 2005, Mr. Quain served as Chairman of Register.Com, Inc., an internet services provider, and from 1997 to +2001 he was employed with ABN AMRO and its predecessors in several capacities, including Vice Chairman of Investment Banking. Mr. Quain also serves as a director of Kensington Capital Acquisition Corp. II, a blank check company, Star Equity +Holdings, a provider of mobile healthcare solutions and diagnostic imaging equipment and services, and Williams Industrial Services. Mr. Quain previously served as a director of DeCrane Aircraft Holdings, Inc., Handy & Harman Ltd., +Hardinge Inc., HEICO Corporation, MagneTek, Inc., Mechanical Dynamics, Inc., Jason Industries, RBC Bearings, Inc., Register.com, Inc., Tecumseh Products Company, Titan International, Inc., and Xerium Technologies, Inc. We believe that +Mr. Quain’s extensive experience in the private equity sector and public company experience qualify him to serve on our Board. +Yvonne E. Schlaeppi , 61, has been a director since April 2018. Since 2011, Ms. Schlaeppi has served as a Managing Partner of +Stratevise LLC, an international strategic advisory firm that she cofounded. From 2016 through 2019, Ms. Schlaeppi served on the board of directors of Stallergenes Greer plc, a pharmaceutical company traded on the Euronext Paris exchange. +Ms. Schlaeppi served on the Special Committee of Independent Directors of Stallergenes Greer in connection with its going private transaction in 2019. From 2014 to 2015, Ms. Schlaeppi served on the boards of directors of allergy +immunotherapy companies, Ares Allergy Holdings Inc. and Greer Laboratories, Inc. Since 2015 Ms. Schlaeppi has been a member of the External Advisory Council +5 +to the Channing Division of Network Medicine of Brigham and Women’s Hospital in Boston. Ms. Schlaeppi has been recognized annually as a Board Leadership Fellow by the National +Association of Corporate Directors beginning in 2017. Prior to founding Stratevise, Ms. Schlaeppi served as General Counsel at Global Enterprise Technologies, Passport & ID, a high-security document printing solutions provider and +systems integrator, from 2007 to 2011 and as Executive Vice President, General Counsel and Corporate IP Officer at Organon BioSciences, a global pharmaceutical, animal health and biotech group based in the Netherlands, from 2006 until its sale in +2007. From 1999 to 2006 Ms. Schlaeppi was a partner at the Boston-based law firm of Palmer & Dodge LLP, where she served as Chairperson of that firm’s International Practice Group. From 1995 to 1998 Ms. Schlaeppi served in +senior positions at Johnson Controls, Inc., a NYSE-listed diversified industrial company, including as General Counsel Europe. We believe that Ms. Schlaeppi’s extensive experience in international business and corporate governance, as well +as relevant industry experience, qualify her to serve on our Board. +Harold Schofield , 79, has been a director since May 2012. +Since 2004, Mr. Schofield has been the owner and manager of Schofield Imaging Associates, LLC, in Narragansett, Rhode Island, and between 2017 and 2019, served as interim Chief Executive Officer of NuLabel Technologies, Inc., a developer and +provider of adhesive solutions for labeling and decorating applications. Prior to founding Schofield Imaging Associates, LLC, Mr. Schofield was Founder, President and CEO of Atlantek Incorporated (“Atlantek”), a manufacturer of +thermal printers, and retired as Vice President and General Manager of Zebra Atlantek, Inc. following the acquisition of Atlantek by Zebra Technologies Corp. in November 2003. Prior to founding Atlantek, Mr. Schofield was Design Engineering +Manager at Gulton Industries where he was responsible for design and development of thermal printers, plotters, and chart recorders. Mr. Schofield is an internationally recognized authority in the electronic printing field. We believe that +Mr. Schofield’s long history and expertise in the printing and imaging field qualify him to serve on our Board. +Richard S. +Warzala , 67, has been a director since December 2017. He is the President, Chief Executive and Chairman of the Board of Directors of Allied Motion Technologies, Inc. (“Allied Motion”), a developer of advanced motion control products +and systems, and has more than 40 years of leadership experience and a strong technical background in the industrial, aerospace and commercial industries. He joined Allied Motion as President and Chief Operating Officer in 2002. Mr. Warzala was +elected a director of Allied Motion in 2006, appointed President and Chief Executive Officer in 2009, and elected as the Chairman of Allied Motion’s board of directors in 2014. Allied Motion designs, manufactures and sells precision and +specialty motion control components and systems in markets including Vehicle, Medical, Aerospace & Defense, and Industrial/Electronics. Before joining Allied Motion, Mr. Warzala was President of Danaher Corporation’s Motion +Components Group and served in various senior positions at American Precision Industries Inc., including Corporate Vice President and President of its API Motion Division. We believe that Mr. Warzala’s technology background and +international industry experience, together with his corporate governance expertise, business insights and deep understanding of lean manufacturing principles, qualify him to serve on our Board. +Gregory A. Woods , 62, has served as Chief Executive Officer of the Company since February 1, 2014 and as a director since January +2014. Mr. Woods joined the Company in September 2012 as Executive Vice President and Chief Operating Officer and was appointed President and Chief Operating Officer on August 29, 2013. Prior to joining the Company, Mr. Woods served +from January 2010 to August 2012 as Managing Director of Medfield Advisors, LLC, an advisory firm located in Medfield, Massachusetts focused on providing corporate development and strategy guidance to technology driven manufacturing firms. From 2008 +to 2010, Mr. Woods served as President of Performance Motion Devices, a specialty semiconductor and electronics manufacturer located in Lincoln, Massachusetts. Prior to Performance Motion Devices, Mr. Woods served as chief executive +officer of Control Technology Corp., a manufacturer of industrial computer and software products; and President of API Controls, a division of Danaher. Mr. Woods holds a Bachelor of Arts in physics from Colgate University, a Bachelor of +Engineering in computer and mechanical engineering from Dartmouth College, and a Master of Business Administration from the University of Rochester. Based on this experience and his position as Chief Executive Officer of the Company, we believe that +Mr. Woods is qualified to serve on our Board. +6 +The Board has determined that all of the directors of the Company, including each of the +nominees standing for election at the 2021 annual shareholders meeting, other than Gregory A. Woods, are independent of the Company in that such nominees have no material relationship with the Company either directly or as a partner, shareholder or +affiliate of an organization that has a relationship with the Company. The Board has made this determination in accordance with applicable Securities and Exchange Commission (“SEC”) rules and NASDAQ listing standards. +The directors will be elected by a plurality of the votes of the shares entitled to vote on the election of directors and present in person or +represented by proxy at the annual meeting. This means that the six nominees receiving the highest number of FOR votes will be elected as directors. Votes may be cast FOR or WITHHELD FROM each nominee. Broker +non-votes and votes that are WITHHELD FROM the nominees will be excluded entirely from the vote and will have no effect. +The Board recommends a vote FOR the election of each the nominees listed above. +7 +CORPORATE GOVERNANCE +The Board of Directors — Meetings and Committees +The Board currently consists of six members, all of whose terms will expire at the annual meeting and each of whom has been nominated by the +Board for re-election. During the fiscal year ended January 31, 2021, the Board held nine meetings. During fiscal year 2021, each director attended all of the meetings of the Board and meetings of +committees on which such director served. +The Board has adopted a policy that requires members of the Board to make every effort to +attend each annual shareholders meeting. All members of the Board then serving attended the 2020 annual shareholders meeting. +The Board +currently has three standing committees: an Audit Committee, a Compensation Committee and a Nominating and Governance Committee. The members and chairs of each of those committees are appointed each year. The Audit Committee is comprised of +Ms. Bua, Mr. Quain, Ms. Schlaeppi and Mr. Schofield. The Nominating and Governance Committee is comprised of Ms. Bua, Mr. Quain, Ms. Schlaeppi, Mr. Schofield and Mr. Warzala. The Compensation Committee is +comprised of Messrs. Quain, Schofield and Warzala. Each of the members of our committees is independent as defined under the applicable NASDAQ listing standards and SEC rules. Each of the Audit, Compensation, and Nominating and Governance Committees +has a written charter approved by the Board. A copy of each charter is available on the Company’s website at www.astronovainc.com under “Investors — Corporate Governance — Governance Documents.” +Audit Committee. The Audit Committee’s primary duties and responsibilities include: overseeing the integrity of the Company’s +financial reports, appointing, setting the compensation of and overseeing the Company’s independent accountants, and assessing the qualifications, independence and performance of the Company’s independent accountants and the adequacy of +internal controls. The Audit Committee meets with the Company’s independent accountants to review quarterly financial results, the results of the audit, and other relevant matters. The Audit Committee held eight meetings during the fiscal year +ended January 31, 2021. The Board has determined that all members of the Audit Committee during fiscal year 2021 satisfy the financial literacy requirements of the NASDAQ listing standards and are independent as defined under the NASDAQ listing +requirements and applicable SEC rules. Additionally, the Board has determined that that each of Ms. Bua and Mr. Quain qualifies as an “audit committee financial expert” as defined by the SEC rules and possesses “financial +sophistication” as described in the NASDAQ listing standards. +Compensation Committee. The Compensation Committee assists the +Board in discharging the Board’s responsibilities relating to director and executive compensation. The Compensation Committee’s responsibilities include: establishing and reviewing the Company’s executive and director compensation +philosophy, strategies, plans and policies; making recommendations with respect to the design of the Company’s incentive compensation plans and equity based plans; granting awards under such plans and overseeing generally the administration of +such plans; evaluating the performance and determining the compensation of the Chief Executive Officer; and reviewing and approving recommendations on compensation of other executives. The Compensation Committee held ten meetings during the fiscal +year ended January 31, 2021. +Nominating and Governance Committee . The Nominating and Governance Committee assists the Board +in fulfilling its nomination and corporate governance responsibilities. The Nominating and Governance Committee’s responsibilities include: (i) advising the Board concerning appropriate composition of the Board and its committees, +including identifying individuals qualified to serve on the Board and its committees, recommending to the Board individuals to be nominated by the Board for election to the Board by the shareholders or, in appropriate circumstances, elected by the +Board to fill vacancies on the Board, (ii) advising the Board regarding appropriate governance practices and assisting the Board in achieving them, and (iii) overseeing and reporting to the Board concerning the periodic evaluation of the +Board, each committee of +8 +the Board and members of the Board. The Nominating and Governance Committee is also charged with advising the board regarding applicable standards to be used in determining the independence of +the directors serving on the Board, reviewing and making recommendations to the Board regarding the Company’s corporate governance policies, overseeing the Company’s director education and onboarding programs, and reviewing and monitoring +the Company’s executive officer succession plans. The Nominating and Governance Committee held four meetings in the fiscal year ended January 31, 2021. +Director Share Ownership Requirements . The Company has a stock ownership policy that requires each director to hold shares of Company +common stock with a value equal to at least $200,000. Any director who does not meet this requirement will have five years from the date of his or her initial election to the Board to achieve this ownership level. Directors are expected to retain at +least 50% of the shares acquired upon exercise of any stock option (net of any shares withheld for payment of taxes) or vesting of a restricted stock or restricted unit award until they achieve the specified ownership level and thereafter maintain +such ownership level. Currently, all of our directors meet the ownership requirement. +Compensation Committee Interlocks and Insider Participation +During the fiscal year ended January 31, 2021, Messrs. Quain, Schofield, and Warzala served on the Company’s Compensation +Committee. No member of the Company’s Compensation Committee who currently serves or who served during fiscal year 2021 has ever been an officer or employee of the Company or any of its subsidiaries. None of the Company’s executive +officers serves as a director or member of the compensation committee of another entity in a case where an executive officer of such other entity serves as a director of the Company or a member of the Company’s Compensation Committee. +Nomination of Directors +The Nominating +and Governance Committee considers suggestions from many sources, including shareholders, regarding possible candidates for director. As part of its ongoing succession planning, the Nominating and Governance Committee makes periodic recommendations +to the Board regarding the desired characteristics for potential directors, including with respect to competencies, special knowledge or expertise, experience of members, diversity and age. In all cases, the Nominating and Governance Committee seeks +individuals who possess the highest ethical standards and integrity, have a history of achievement that reflects superior standards for themselves and others, have the ability to provide wise, informed and thoughtful counsel to management on a range +of issues, exercise independence of thought, and possess skills and expertise appropriate to meet the Company’s needs and advance the long-term interests of the shareholders. The Nominating and Governance Committee considers diversity with +respect to viewpoints, accomplishments, skills and experiences, among other factors such as gender, race, national origin and age, in its evaluation of candidates for Board membership. In considering candidates for the Board, the Nominating and +Governance Committee considers the entirety of each candidate’s credentials in determining whether the candidate would bring a valuable perspective to the Board. +The Nominating and Governance Committee also monitors the Board’s compliance with the requisite qualifications under the NASDAQ listing +standards for populating the Audit, Compensation, and Nominating and Governance Committees. The Nominating and Governance Committee will consider shareholder nominees for director in the same manner as nominees for director from other sources. +Shareholders may send recommendations for director nominees to the Nominating and Governance Committee at the Company’s offices at 600 +East Greenwich Avenue, West Warwick, Rhode Island 02893. Submissions should include information regarding a candidate’s background, qualifications, experience, and willingness to serve as a director. In addition, Section 10 of Article III +of the Company’s By-Laws sets forth specific procedures that, if followed, enable any shareholder entitled to vote in the election of directors to make nominations directly at an annual meeting of +shareholders. These procedures include a requirement for written +9 +notice to the Company not more than 150 days nor less than 60 days prior to the scheduled annual meeting, which must contain the name and certain information concerning the nominee and the +shareholders who support the nominee’s election. For the annual meeting to be held in 2022, the notice must be received no earlier than December 18, 2021 and no later than March 18, 2022. A copy of the Company’s By-Laws may be obtained by writing to AstroNova, Inc., Attn: Investor Relations Department, 600 East Greenwich Avenue, West Warwick, Rhode Island 02893. +Communications with the Board of Directors +The Company’s Board provides a process for shareholders to communicate directly with the members of the Board or the individual chairman +of each standing committee. Any shareholder with a concern, question or complaint regarding our compliance with any policy or law, or who would otherwise like to contact the Board, may communicate directly with the directors by writing directly to +those individuals c/o AstroNova, Inc., 600 East Greenwich Avenue, West Warwick, Rhode Island 02893. The Company’s general policy is to forward, and not to intentionally screen, any mail received at the Company’s corporate offices that is +sent directly to an individual unless the Company believes the communication may pose a security risk. +Board Leadership Structure +All members of the Board, other than Mr. Woods, are independent and all our key committees – Audit, Compensation, and Nominating and +Governance – are, and during the fiscal year ended January 31, 2021 were, comprised solely of independent directors. The non-management directors meet in executive session at least quarterly in order +to promote discussion among the independent directors and assure independent oversight of management. +A key component of our leadership +structure is the active role played by our independent directors in overseeing the Company’s business, both at the Board and Committee level. All of our directors are free to suggest the inclusion of items on the agenda for meetings of the +Board or to raise subjects that are not on the agenda for that meeting. In addition, our Board and each committee have complete and open access to any member of management and the authority to retain independent legal, financial, and other advisors +as they deem appropriate without consulting or obtaining the approval of any member of management. Moreover, our Audit Committee, Compensation Committee and the Nominating and Governance Committee, all of which are comprised entirely of independent +directors, also perform oversight functions independent of management. +Lead Independent Director. Our Board has not elected a +Chairman at the present time. However, in August 2019, the Board elected Mr. Warzala as its lead independent director. In that capacity, among other things, Mr. Warzala serves as a liaison between the independent directors and the +Company’s management and as the chair of executive sessions of the independent directors. The Board believes that in light of the relatively small size of the Board and the active involvement by all of our independent directors in both the +oversight of the Company and the conduct of the Board’s meetings and deliberations, including the establishment of the Board’s agenda for its meetings, the Board’s current leadership structure is appropriate for the Company at this +time. The Board intends to continue to review its leadership structure, including the role of the lead independent director. +Risk Oversight +The Board has an active role, as a whole and also at the committee level, in overseeing management of the Company’s risks through a +program of sound policies, systems, processes, and reports. The Audit Committee of the Board has oversight responsibility over financial reporting and disclosure processes, compliance and legal matters, and information security and fraud risk. The +Audit Committee also monitors controls to prevent material weaknesses in the financial reporting function. The Audit Committee meets regularly with our Chief Financial Officer in carrying out these responsibilities, and with the Company’s +independent auditors in executive session. +10 +The Compensation Committee of the Board oversees risks as they relate to the Company’s +compensation policies and practices as described under “Compensation Discussion and Analysis.” The Board’s Nominating and Governance Committee assists the Board in fulfilling the Board’s oversight responsibilities with respect to +confirming the independence of board members, developing desired characteristics of the Board and identifying individuals qualified to be members of the Board, reviewing and monitoring executive officer succession plans, and assessing the +effectiveness of the Board and its committees. +While each committee is responsible for evaluating the risks within their areas of +responsibility and overseeing the management of such risks, all committees report regularly to the full Board, which also considers the Company’s entire risk profile. +Compensation of Directors +The +Compensation Committee is responsible for reviewing and establishing the compensation of the directors of the Company. On January 31, 2019, the Compensation Committee adopted an Amended and Restated +Non-Employee Director Annual Compensation Program (the “Director Compensation Program”). +Pursuant to the Director Compensation Program, each non-employee director automatically receives a +grant of restricted stock on the date of his or her re-election to the Board. The number of whole shares granted is equal to the number calculated by dividing the stock component of the director compensation +amount determined by the Compensation Committee for that year by the fair market value of our stock on that day. The value of the restricted stock award for fiscal year 2021 was, and for fiscal year 2022 is, $60,000. Shares of restricted stock +granted under the Director Compensation Program become vested on the first anniversary of the date of grant, conditioned upon the recipient’s continued service on the Board through that date. In the event of the death or disability of a non-employee director, or a Change in Control (as that term is defined in our 2018 Equity Incentive Plan) of the Company, the shares of restricted stock will immediately vest and no longer be subject to restrictions +on transfer. Other than as part of a Change in Control of the Company and except in the case of economic hardship of a particular non-employee director, as determined by the Compensation Committee, while a non-employee director is serving on our Board he or she may not sell or otherwise dispose of any of our stock received in connection with his or her service on our Board (whether that stock was granted under the +Director Compensation Program, any predecessor program or otherwise) if that non-employee director has not satisfied the requirements of any stock ownership guidelines established for directors by the Board or +if the transfer would cause him or her to be out of compliance with any such guidelines. +Pursuant to the Director Compensation Program, +each non-employee director receives cash payments for their service on the Board and its committees. The amounts of those payments for the fiscal year ended January 31, 2021 were: +Position Covered +Fiscal +Year +2021 +Annual +Payment +Service on the Board +$ +45,000 +Lead Independent Director +$ +10,000 +Audit Committee Chairman +$ +10,000 +Compensation Committee Chairman +$ +8,000 +Nominating and Governance Committee Chairman +$ +6,000 +Committee Member (other than Chairman) +$ +3,000 +Cash payments are made to non-employee directors in four equal +tranches on the dates of the Board’s regular quarterly meetings. No changes were made to the cash component of the Director Compensation Program for the fiscal year ended January 31, 2022. +11 +If a person becomes a non-employee director on a +date other than the date of our annual meeting of shareholders in any fiscal year, that person will receive an award of restricted stock as described above, but appropriately prorated to reflect the number of days remaining from the date he or she +commences his or her service in that capacity until the scheduled date for our next annual meeting of shareholders. In addition, if a person becomes a non-employee director, Chairman of the Board, lead +independent director, chairman of a committee or a member of a committee other than on the first business day of a fiscal quarter of the Company, he or she will receive cash fees on (i) the date of the regular full meeting of the Board held in +that quarter or (ii) if later, the date he or she commences his or her service in that capacity, as described above, but appropriately prorated to reflect the number of days remaining in that fiscal quarter. +The following Director Compensation table provides information regarding the compensation paid or accrued by each person other than +Mr. Woods who served as a director during the fiscal year ended January 31, 2021. See “Executive Compensation” for information regarding compensation of and outstanding equity awards held by Mr. Woods. +Name +Fees +Earned +or +Paid in +Cash ($) +Stock +Awards($)(a)(b)(c) +Total ($) +Jean A. Bua +51,000 +60,000 +111,000 +Mitchell I. Quain +61,000 +60,000 +121,000 +Yvonne E. Schlaeppi +54,000 +60,000 +114,000 +Harold Schofield +54,000 +60,000 +114,000 +Richard S. Warzala +68,000 +60,000 +128,000 +(a) +The amounts reflect the aggregate fair value of the awards on the grant date under FASB ASC Topic 718 for +shares of restricted stock granted to directors. For additional information, see footnote 15 in the Company’s audited financial statements for the fiscal year ended January 31, 2021, included in the Company’s Annual Report on Form 10-K filed with the SEC on April 13, 2021. +(b) +As of January 31, 2021, each non-employee director held 9,600 +shares of unvested restricted stock, which will vest on June 2, 2021, conditioned, for each non-employee director, on that director’s continued service on the Board through that date. +(c) +As of January 31, 2021, the Company’s non-employee directors +held the following number of outstanding stock options, all of which were vested: Mitchell I. Quain — 30,000; Yvonne E. Schlaeppi — 10,000; Harold Schofield — 35,000; and Richard S. Warzala — 10,000. Ms. Bua did not hold any +stock options as of January 31, 2021. +12 +Security Ownership of 5% Beneficial Owners +The following table sets forth certain information regarding the beneficial ownership of the Company’s outstanding shares of common stock, +as of April 16, 2021 (except as noted), by each person who is known to the Company to own of record or beneficially more than 5% of such stock: +Name of Beneficial Owner +Number of +Shares +Beneficially +Owned (a) +Percent +of +Class +Dimensional Fund Advisors LP +545,807 +(b) +7.6 +% +6300 Bee Cave Road, Building One +Austin, TX 78746 +Askeladden Capital Management, LLC +440,178 +(c) +6.14 +% +129 Timberline Dr. N. +Colleyville, TX 76034 +Punch & Associates Investment Management, Inc. +397,141 +(d) +5.54 +% +7701 France Ave. So., Suite 300 +Edina, MN 55435 +The Vanguard Group, Inc. +363,749 +(e) +5.07 +% +100 Vanguard Blvd. +Malvern, PA 19355 +Royce & Associates, LP +362,200 +(f) +5.05 +% +745 Fifth Avenue +New York, New York 10151 +(a) +All information is based upon ownership of record as reflected on the stock transfer books of the Company or as +reported on Schedule 13G or Schedule 13D filed under Rule 13d-1 under the Securities Exchange Act of 1934. +(b) +According to a Schedule 13G/A filed with the SEC on February 12, 2021, as of December 31, 2020, +Dimensional Fund Advisors, LP, an investment adviser registered under the Advisers Act, and its subsidiaries (collectively, “Dimensional”) had sole voting power with respect to 532,506 shares and sole dispositive power with respect to +545,807 shares held by registered investment companies, trusts and separate accounts for which Dimensional serves as investment manager, adviser or sub-adviser. +(c) +According to a Schedule 13G/A filed with the SEC on February 16, 2021, by and on behalf of Askeladden +Capital Management, LLC (“Askeladden”), an investment adviser registered under the Advisers Act, Askeladden Capital GP, LLC (the “General Partner”), Askeladden Capital Partners, LP (the “Fund”), and Samir Patel, +Askeladden and Samir Patel had shared voting power and shared dispositive power with respect to 440,178 shares as of June 11, 2020. +(d) +According to a Schedule 13G/A filed with the SEC on February 16, 2021, Punch & Associates +Investment Management, Inc., an investment adviser registered under the Advisers Act, had sole voting power and sole dispositive power with respect to 397,141 shares as of December 31, 2020. +(e) +According to a Schedule 13G filed with the SEC on February 10, 2021, The Vanguard Group, an investment +adviser registered under the Advisers Act, had shared voting power with respect to 100 shares, sole dispositive power with respect to 362,474 shares and shared dispositive power with respect to 1,275 shares as of December 31, 2020. +(f) +According to a Schedule 13G/A filed with the SEC on January 14, 2021, Royce & Associates, LP, an +investment adviser registered under the Advisers Act, had sole voting power and sole dispositive power with respect to 362,200 shares as of December 31, 2020. +13 +Security Ownership of Directors and Officers +The following table sets forth certain information regarding the beneficial ownership of the Company’s common stock as of April 17, +2021 by each director, by each executive officer named in the Summary Compensation Table and by all directors and executive officers as a group. Unless otherwise noted, all shares of common stock are subject to the sole voting and dispositive power +of the respective directors and executive officers. +Beneficial Ownership +Name of Beneficial Owner +Shares +and +Restricted +Shares (a) +Options +Exercisable +within 60 +days +of 4/17/21 +Total +Beneficial +Ownership +(a) +Percent +of +Class +Non-employee directors +Jean A. Bua +14,569 +(b) +— +14,569 +* +Mitchell I. Quain +63,472 +(b) +30,000 +93,472 +1.3 +% +Yvonne E. Schlaeppi +18,250 +(b) +10,000 +28,250 +* +Harold Schofield +31,546 +(b) +35,000 +66,546 +* +Richard S. Warzala +21,096 +(b) +10,000 +31,096 +* +Executive officers +Gregory A. Woods +132,119 +(c) +270,500 +(d) +402,619 +5.3 +% +David S. Smith +15,662 +(e) +51,500 +(f) +67,162 +* +Michael J. Natalizia +33,750 +(g) +22,500 +(h) +56,250 +* +All directors and executive officers of the Company as a group (10) +386,405 +(i) +462,944 +(j) +849,349 +11.1 +% +* +Indicates less than 1.0%. +(a) +If applicable, beneficially owned shares include shares owned by the spouse, minor children, and certain other +relatives of the director or executive officer, as well as shares held by trusts of which the person is a trustee or in which he or she has a beneficial interest. +(b) +Includes 9,600 shares of restricted stock. +(c) +Includes 8,962 restricted stock units vesting within 60 days of April 17, 2021. +(d) +All options are included. +(e) +Includes 3,491 restricted stock units vesting within 60 days of April 17, 2021. +(f) +Excludes 12,500 shares underlying options not exercisable within 60 days of April 17, 2021. +(g) +Includes 3,548 restricted stock units vesting within 60 days of April 17, 2021. +(h) +All options are included. +(i) +Includes 48,000 shares of restricted stock and 21,687 restricted stock units vesting within 60 days of +April 17, 2021. +(j) +Excludes 12,500 shares underlying options not exercisable within 60 days of April 17, 2021. +14 +Delinquent Section 16(a) Reports +Section 16(a) of the Exchange Act, requires the directors and executive officers of the Company and any persons who beneficially own more +than ten percent of the Company’s common stock to file with the SEC various reports of beneficial ownership and changes in beneficial ownership. Based solely on a review of the copies of such reports received by the Company and certain written +representations that no other reports were required, the Company believes that for the fiscal year ended January 31, 2021, all of its officers, directors and 10% beneficial owners complied with the requirements of Section 16(a), except +that the following forms were filed late: +• +One Form 4 by each of Mr. Natalizia, Mr. Petrarca, Mr. Smith, Mr. Woods relating to the grant +of a restricted stock unit award; +• +One Form 4 by Mr. Carll relating to the issuance of shares of common stock upon the vesting of a restricted +stock unit award and the related surrender of shares of common stock to satisfy tax withholding obligations and the grant of restricted stock unit award; and +• +One Form 4 by Ms. Schlaeppi relating to shares of common stock acquired under an automatic dividend +reinvestment program through her broker. +15 +COMPENSATION DISCUSSION AND ANALYSIS +The Compensation Committee of the Company’s Board of Directors (the “Committee”) is charged with the responsibility for +establishing, implementing and monitoring adherence to the Company’s compensation philosophy and setting the compensation for our executives and key management personnel in a manner which is internally equitable. The Committee also is +responsible for reviewing and establishing the compensation of directors. +Compensation Philosophy and Objectives. The Committee’s +overall philosophy in terms of executive compensation is to link management incentives with the actual financial performance of the Company. Similarly, the compensation should attract, retain, and motivate highly qualified individuals to achieve the +Company’s business goals and link their interests with shareholder interests. In setting compensation for the Company’s executive officers, the Committee considers the executive’s performance, awards, if any, made during prior years +and other relevant factors. The Committee seeks to have the long-term performance of the Company’s common stock reflected in executive compensation through our equity incentive programs. +Elements of Compensation. The total compensation program for the Company’s executive officers consists of the following: +• +salary; +• +cash incentive and bonus awards tied to the Company’s and executive’s annual performance; +• +equity-based incentive compensation, in the form of time-based restricted stock units and performance-based +restricted stock units; and +• +retirement and other benefits. +The Committee seeks to structure each element of compensation to attract and retain the necessary executive talent, reward annual performance +and provide incentives for achieving both long-term strategic goals and short-term performance goals. The Committee’s policy for allocating between currently paid and long-term compensation is to ensure adequate base compensation to attract and +retain personnel, while providing incentives to maximize long-term value for our shareholders. +Say on Pay Consideration. In +accordance with SEC rules, the Company conducted a non-binding, advisory vote on the Company’s executive compensation at its 2020 annual meeting. The Company’s shareholders voted to approve the +Company’s executive compensation practices at the 2020 annual meeting by a favorable vote of approximately 76% of the votes cast. +Setting Executive Compensation. The Committee is responsible for establishing and periodically reviewing the compensation of the +Company’s executive officers and approving all equity awards. The Committee annually reviews the performance of the executive officers and, based on these reviews, the Committee determines salary adjustments and annual awards. Mr. Woods +does not participate during deliberations regarding his compensation. +Fiscal Year 2021 Compensation Overview. The total +compensation paid to Mr. Woods and the Company’s two other most highly compensated executive officers, Mr. Smith and Mr. Natalizia (collectively with Mr. Woods, the “Named Executive Officers”), in the fiscal year +ended January 31, 2021 decreased from the total compensation paid in the prior fiscal year. As is described in the Executive Compensation table below, this decrease was primarily due to the fact the Named Executive Officers took a voluntary +salary reduction due to the impact of the COVID-19 pandemic on the Company’s financial performance, and lower valued stock awards. +Salary. Base salaries for executive officers are evaluated each year. Historically, base salaries have been increased at annual rates +which approximate the general rates of increase of compensation for all employees of +16 +the Company. Annual salary adjustments are made effective April 1 of each year. Effective as of April 1, 2020, the Committee set the fiscal year 2021 annual salaries of the Named +Executive Officers as follows: +Name +Salary +Gregory A. Woods +$ +435,000 +David S. Smith +$ +296,500 +Michael J. Natalizia +$ +235,000 +Cash Incentive and Bonus Awards. Annual cash incentive awards are an important component of total +executive cash compensation because they reward the Company’s executives for achieving targeted, annual results and emphasize variable or “at risk” compensation. From +time-to-time the Committee awards discretionary cash bonuses to the Company’s executives to reward their efforts in extraordinary circumstances. +Senior Executive Short-Term Incentive Plan +Participants in the STIP (which may include any executive officer, vice president or director-level manager) are determined annually by the +Committee. Awards under the STIP are earned based on achieving or exceeding annual financial objectives, which the Committee has full discretion to establish for each plan year. Annually, the Committee establishes a Target Award for each STIP +participant, which may vary as to each participant and from year to year. In March 2020, the Committee established the following Target Awards for our Named Executive Officers for fiscal year 2021: +Name +Target +Award +Target +Award as +Percentage +of Base +Salary +Gregory A. Woods +$ +348,000 +80 +% +David S. Smith +$ +133,425 +45 +% +Michael J. Natalizia +$ +82,250 +35 +% +Concurrently with the establishment of the Target Awards for fiscal year 2021, the Committee established +fiscal year 2021 performance criteria under the STIP (the “2021 Performance Goals”) of consolidated revenue (the “Revenue Performance Goal”) and consolidated operating income (the “Operating Income Performance Goal”). +For each of the 2021 Performance Goals, the Committee established a threshold and a target. +The Committee allocated the Target Awards to +the 2021 Performance Goals as follows: +• +50% of the Target Awards were tied to achievement of the Revenue Performance Goal; and +• +50% of the Target Awards were tied to the achievement of the Operating Income Performance Goal. +Performance with respect to each specific 2021 Performance Goal was calculated independently to determine the amount of +the award for each 2021 Performance Goal (each, an “Award Component”). The total STIP award earned by a Named Executive Officer for fiscal year 2021 is equal to the sum of the separate Award Components determined for each 2021 Performance +Goal, calculated as follows: +• +No bonus was to be paid with respect to the fiscal year Revenue Performance Goal unless our fiscal year 2021 +revenue exceeded the fiscal year 2021 revenue threshold. If our fiscal year 2021 revenue had equaled or exceeded the fiscal year 2021 revenue target, 100% of the target bonus allocated to that Award Component would be paid. For fiscal year 2021 +revenue falling between the fiscal year 2021 revenue threshold and the target, the bonus amount was determined through linear interpolation. +• +No bonus was to be paid with respect to the fiscal year Operating Income Performance Goal unless our fiscal year +2021 operating income exceeded the fiscal year 2021 operating income threshold. If our +17 +fiscal year 2021 operating income had equaled the operating income target established by the Compensation Committee, 100% of the target bonus allocated to that Award Component would have been +paid. If our fiscal year 2021 operating income had fallen between the threshold and the target, the bonus amount would have been determined through linear interpolation. An incremental bonus of up to 100% of each Named Executive Officer’s total +STIP target bonus, would have been paid if our fiscal year 2021 operating income had fallen between the fiscal year 2021 operating income target and an amount equal to 132.5% of the fiscal year 2021 operating income target. If our fiscal year 2021 +operating income had fallen between the fiscal year 2021 operating income target and 132.5% of the fiscal year 2021 target, the bonus amount would have been determined through linear interpolation. No further bonus would have been earned on account +of fiscal year 2021 operating income that exceeded 132.5% of the operating income target. +Each of our Named Executive +Officers’ STIP award is subject to the following limitations: +• +Aggregate awards under the STIP in any year may not exceed 15% of the Company’s consolidated operating +income for that year determined without deduction for the STIP awards. +• +Adequate reserves for awards must be accrued when determining whether a Performance Goal based upon operating +income has been achieved. +The threshold and target for each of the Performance Goals and the corresponding Award +Components based on the Company’s results for fiscal year 2021 were as follows: +Performance Goal +Threshold ($) +Target ($) +Actual +Performance +($) +Percentage +of Target +Bonus +Earned +(%) +Revenue +133,000,000 +147,000,000 +116,033,000 +0 +Operating Income +4,000,000 +8,000,000 +2,433,000 +0 +As a result, none of our Named Executive Officers received a STIP award for fiscal year 2021. +Equity-based Incentive Compensation . Total compensation at the executive level also includes equity incentive awards granted under the +Company’s 2018 Equity Incentive Plan. The objectives of the equity incentive awards are to align executive and shareholder long-term interests by creating a strong and direct link between executive pay and the Company’s performance in key +financial metrics, and to enable executives to develop and maintain a long-term stock ownership position in the Company’s common stock. +In fiscal year 2021, the Committee granted to the Named Executive Officers the following number of time-based and performance-based restricted +stock units. +Name +Time- +based +Restricted +Stock +Units +Performance- +based +Restricted +Stock Units +Gregory A. Woods +26,019 +52,038 +David S. Smith +8,868 +17,736 +Michael J. Natalizia +4,686 +9,372 +The time-based restricted stock units vest in three equal annual installments commencing on the first +anniversary of the date of grant, based on the executive’s continued employment with us. The performance-based restricted stock units may be earned based upon the achievement by the Company of performance goals based on +18 +a fiscal year 2021 revenue threshold and target (the “Revenue Goal”) and operating income threshold and target (the “Operating Income Goal”) as follows: +Performance Goal +Threshold +Target +Revenue Goal +$ +133,000,000 +$ +147,000,000 +Operating Income Goal +$ +4,000,000 +$ +8,000,000 +One half of the performance-based restricted stock units issued to the Named Executive Officers were subject +to the Revenue Goal (“Revenue RSUs”) and the other half were subject to the Operating Income Goal (“Operating Income RSUs”). The number of Revenue RSUs and Operating Income RSUs that were earned was calculated as follows: +• +The number of Revenue RSUs earned by a Named Executive Officer was equal to the total number of Revenue RSUs held +by that Named Executive Officer multiplied by the quotient of +• +the Company’s fiscal year 2021 revenue minus the Revenue Goal Threshold, divided by +• +the Revenue Goal Target minus the Revenue Goal Threshold; and +• +The number of Operating Income RSUs earned by a Named Executive Officer was equal to the total number of +Operating Income RSUs held by that Named Executive Officer multiplied by the quotient of +• +the Company’s fiscal year 2021 operating income minus the Operating Income Goal Threshold, divided by +• +the Operating Income Goal Target minus the Operating Income Goal Threshold, +in each case rounded down to the nearest whole number. In no event could more than 100% of the Revenue RSUs or 100% of the Operating Income RSUs have become +earned. Because the Company’s fiscal year 2021 revenue was less than the Revenue Goal Threshold and the Company’s fiscal year 2021 operating income was less than the Operating Income Goal Threshold, none of the Revenue RSUs or Operating +Income RSUs were earned. +Share Ownership and Retention Guidelines . The Committee believes that, as a rule, senior management +should have a meaningful equity interest in the Company. In order to promote equity ownership and further align the interests of management with our shareholders, the Committee has adopted share ownership and retention guidelines for our executives. +These guidelines are based upon the market value of our common stock as a multiple of such officer’s base pay. The multiple is three times base salary for the CEO, two times base salary for the Chief Financial Officer and 1.25 times base salary +for the other executive officers. Under these guidelines, an executive was expected to achieve the ownership level by April 1, 2020 or, if later, within five years of his or her initial appointment as an executive officer. Executives are +expected to retain at least 50% of all shares acquired on vesting of restricted stock or restricted stock units and 50% of all shares acquired on exercise of any stock option (net of any shares tendered or withheld for payment of taxes) until they +achieve the specified ownership level and thereafter maintain such ownership level. +Retirement and Other Benefits . In order to +attract and retain key executives, the Company offers retirement benefits through a Profit-Sharing Plan for employees, including its executive officers. +Profit Sharing Plan. The Company maintains a Profit Sharing Plan that is a qualified plan under Section 401(k) of the +Internal Revenue Code, which provides retirement benefits to substantially all the Company’s employees. +Each eligible employee +shares in contributions on the basis of relative compensation. In addition, participants are permitted to defer up to 50% of their cash compensation and make contributions of such deferral +19 +to this plan through payroll deductions (limited to $19,500 in calendar years 2020 and 2021). The Company makes matching contributions equal to 50% of the first seven percent of compensation +contributed. The deferrals are made within the limits prescribed by Section 401(k). The Profit Sharing Plan provides for the vesting of 100% of matching contributions made by the Company to the account of the employee after three years of +service. Contributions by an employee are 100% vested immediately. +Perquisites . In addition to the benefits +described above, the Company provides automobile allowances to certain of its executive officers and a housing allowance to one of its Named Executive Officers. The amount of any automobile or housing allowance granted to our Named Executive +Officers is reflected in the “All Other Compensation” column of the Summary Compensation Table below. +Change in Control +Agreements with Mr. Woods and Mr. Smith . In November 2014 and November 2020, the Company entered into change in control agreements (the “CIC Agreements”) with Mr. Woods and Mr. Smith, respectively. The CIC Agreements provides for +the payment of severance benefits upon a change in control of the Company if Mr. Woods’ or Mr. Smith’s employment is terminated by the Company without cause or by Mr. Woods or Mr. Smith, as applicable, for good reason within the +period (the “CIC Period”) beginning on the earlier of (i) 180 days prior to the occurrence of the change in control and (ii) the announcement of a transaction expected to result in a change in control, and ending on the second anniversary +of the occurrence of a change in control. +Severance payments to Mr. Woods include (i) payment of one and one-half times the sum of (A) +his annual salary and (B) the greater of the amount of his target bonus for the fiscal year in progress or the highest annual bonus paid to him in the prior three years (collectively, “Mr. Woods’ base compensation”), (ii) a portion of +Mr. Woods’ bonus for the fiscal year in progress, prorated based upon the number of days elapsed since the commencement of the fiscal year and calculated assuming that 100% of the target under the bonus plan is achieved, (iii) immediate +vesting of all unvested stock options and restricted stock awards, (iv) continued health coverage for 18 months or until he receives benefits from another employer, if earlier, and (v) reimbursement for outplacement services in an amount not to +exceed 17% of Mr. Woods’ base compensation. Severance payments to Mr. Smith include (i) payment of the sum of (A) his annual salary and (B) 75% of the amount of his target bonus for the fiscal year in progress (collectively, “Mr. +Smith’s base compensation”), (ii) a portion of Mr. Smith’s bonus for the fiscal year in progress, prorated based upon the number of days elapsed since the commencement of the fiscal year and calculated assuming that 100% of the target +under the bonus plan is achieved, (iii) immediate vesting of all unvested stock options, restricted stock, time-based restricted stock units and earned performance-based restricted stock units (provided that performance-based restricted stock units +shall be deemed to have been earned only to the extent that they are earned in accordance with their terms as of the Change in Control Date and only the time-based vesting of such earned units shall be accelerated under Mr. Smith’s CIC +Agreement, (iv) continued health coverage for 12 months or until he receives benefits from another employer, if earlier, and (v) reimbursement for outplacement services in an amount not to exceed 17% of Mr. Smith’s base compensation. +If any payment or benefit under the CIC Agreement or under any other plan or agreement would constitute an “excess parachute +payment” within the meaning of Section 280G of the Internal Revenue Code, and if Mr. Woods or Mr. Smith would be in a better after-tax position by reducing the such payments or benefits, the amounts payable under the applicable CIC +Agreement will be reduced to the extent necessary to avoid the excise tax payable under Section 280G. +Employment Agreements and +Severance Benefits . Except for the CIC Agreements with Mr. Woods and Mr. Smith, we generally do not provide any severance benefits to our Named Executive Officers other than those provided to all employees. Severance benefits vary based +upon salary levels and length of service. +20 +COMPENSATION COMMITTEE REPORT +The Compensation Committee has reviewed and discussed with management the Compensation Discussion & Analysis included above. Based on +these reviews and discussions, the Compensation Committee has recommended to the Board that the Compensation Discussion & Analysis be included in the Company’s Annual Report on Form 10-K for the +fiscal year ended January 31, 2021 for filing with the SEC through incorporation by reference of this Proxy Statement. +Compensation +Committee: +Richard S. Warzala (Chairman) +Mitchell I. Quain +Harold +Schofield +21 +EXECUTIVE COMPENSATION +The following table provides information regarding the total compensation paid or accrued by the Company to each of its Named Executive +Officers. +Summary Compensation Table +Name and Principal Position +Year +Salary +($) +Stock +Awards +($)(a) +Non-Equity +Incentive Plan +Compensation +($) +All Other +Compensation +($) +Total +($) +Gregory A. Woods +2021 +409,904 +620,553 +— +126,134 +(b) +1,156,591 +President and CEO +2020 +445,692 +650,836 +5,538 +85,080 +1,187,146 +David S. Smith +2021 +268,903 +211,502 +— +77,575 +(c) +557,980 +Vice President, CFO and Treasurer +2020 +284,214 +221,088 +2,123 +78,843 +586,268 +Michael J. Natalizia +2021 +219,725 +111,761 +— +37,243 +(d) +368,729 +Chief Technology Officer and Vice President of +Strategic Technical Alliances +2020 +234,627 +117,284 +1,309 +29,207 +382,427 +(a) +The amounts reflect the aggregate grant date fair value of the restricted stock units and performance-based +restricted stock units issued to the Named Executive Officers, as calculated under FASB ASC Topic 718, excluding estimated forfeitures. Under FASB ASC Topic 718, the grant date fair value of each time-based restricted stock unit is equal to the +closing price of the Company’s common stock on the grant date. The grant date fair value of performance-based restricted stock units is based on the closing price of the Company’s common stock on the grant date and the Company’s +estimate, as of the date of grant, of the probable outcome of the performance conditions. The closing price of the Company’s common stock on the grant date for all restricted stock units issued to the Named Executive Offices during fiscal year +2021 was $7.95. +(b) +Represents pay-out of unused vacation of $77,480, vehicle allowance of +$25,205, premiums on Company-paid disability and life insurance policies for which Mr. Woods or his estate is the beneficiary of $10,814 and $3,160, respectively, and an employer match under the Company’s Profit Sharing Plan of $9,475. +(c) +Represents housing allowance of $30,300, vehicle allowance of $16,500, +pay-out of unused vacation of $20,755, and an employer match under the Company’s Profit Sharing Plan of $10,020. +(d) +Represents pay-out of unused vacation of $30,189, and an employer match +under the Company’s Profit Sharing Plan of $7,054. +22 +Grants of Plan-Based Awards +The following table provides information on all plan-based awards by the Company for the fiscal year ended January 31, 2021 to each Named +Executive Officer. +Name +Grant +Date +Estimated Possible Payouts +Under Non-Equity +Incentive Plan Awards +Estimated Possible Payouts +Under Equity +Incentive Plan Awards +All Other +Stock +Awards: +Number +of Shares +of Stock +or Units +(#) +Grant Date +Fair Value +of Stock +Awards +($)(c) +Threshold +($)(a)(b) +Target +($)(a) +Maximum +($)(a) +Threshold +(#) +Target +(#) +Maximum +(#) +Gregory A. Woods +3/27/2020 +— +348,000 +696,000 +3/27/2020 +26,01 +9(d) +206,851 +3/27/2020 +— +52,038 +(e) +52,03 +8(e) +413,702 +David S. Smith +3/27/2020 +— +133,425 +266,850 +3/27/2020 +8,86 +8(d) +70,501 +3/27/2020 +— +17,736 +(e) +17,73 +6(e) +141,001 +Michael J. Natalizia +3/27/2020 +— +82,250 +164,500 +3/27/2020 +4,68 +6(d) +37,254 +3/27/2020 +— +9,372 +(e) +9,37 +2(e) +74,507 +(a) +Represents awards under the Company’s Senior Executive Short-Term Incentive Plan. See “Compensation +Discussion & Analysis – Senior Executive Short-Term Incentive Plan” for additional information regarding the Senior Executive Short-Term Incentive Plan. +(b) +The Company’s Senior Executive Short-Term Incentive Plan does not provide for any threshold payment amount +for amounts that may be earned with respect to the Consolidated Revenue Goal or Consolidated Operating Income Goal. +(c) +The grant date fair value of each time-based restricted stock unit is equal to the closing price of the +Company’s common stock on the grant date. The grant date fair value of performance-based restricted stock units is based on the closing price of the Company’s common stock on the grant date and the Company’s estimate, as of the date +of grant, of the probable outcome of the performance conditions. +(d) +Consists of a restricted stock unit award issued pursuant to the Company’s 2018 Equity Incentive Plan, +which vests in three equal annual installments commencing on the first anniversary of the grant date. +(e) +Consists of a performance-based restricted stock unit award issued pursuant to the Company’s 2018 Equity +Incentive Plan, which, if earned, vests in three equal annual installments commencing on the first anniversary of the grant date. See “Compensation Discussion & Analysis – Equity-based Incentive Compensation” for more +information about the performance-based restricted stock units. +23 +Outstanding Equity Awards at Fiscal Year-End +The following table provides information on all outstanding equity awards held by each of the Named Executive Officers as of January 31, +2021. +OPTION AWARDS +STOCK AWARDS +Name +Number of +Securities +Underlying +Unexercised +Options (#) +Exercisable +Number of +Securities +Underlying +Unexercised +Options (#) +Unexercisable +Option +Exercise +Price +($) +Option +Expiration +Date +Number +of +Shares +or +Units of +Stock +That +Have +Not +Vested +(#) +Market +Value of +Shares or +Units of +Stock +That +Have Not +Vested +($) +Equity +Incentive +Plan +Awards: +Number +of +Unearned +Shares, +Units or +Other +Rights +That +Have Not +Vested +(#) +(a) +Equity +Incentive +Plan +Awards: +Market or +Payout +Value of +Unearned +Shares, +Units or +Other +Rights +That +Have +Not +Vested +($) +Gregory A. Woods +25,000 +— +7.91 +9/4/2022 +50,000 +— +13.80 +5/22/2024 +(b) +50,000 +— +13.95 +3/16/2025 +(b) +50,000 +— +15.01 +3/14/2026 +(b) +37,500 +12,500 +12.85 +3/13/2027 +(b) +30,332 +15,168 +18.25 +6/4/2028 +(c) +47,617 +(d) +511,883 +52,038 +559,409 +David S. Smith +37,500 +12,500 +13.80 +1/22/2028 +(b) +9,332 +4,668 +18.25 +6/4/2028 +(c) +18,716 +(e) +201,197 +17,736 +190,662 +Michael J. Natalizia +5,000 +— +14.20 +3/17/2024 +(b) +11,666 +5,834 +18.25 +6/4/2028 +(c) +10,147 +(f) +109,080 +9,372 +100,749 +(a) +Consists of performance-based restricted stock units held by the Named Executive Officers, which may be earned +based upon the achievement by the Company of performance goals relating to the Company’s fiscal year 2021 revenue and operating income. No restricted stock units were earned by the Named Executive Officers based upon the Company’s fiscal +year 2021 revenue and operating income. +(b) +Options vest in four equal annual installments commencing on the first anniversary of the option grant date +(which is ten years prior to the expiration date). +(c) +Options vest in three equal annual installments commencing on the first anniversary of the option grant date +(which is ten years prior to the expiration date). +(d) +Consists of (i) 4,963 shares of restricted stock that vested on March 20, 2021; (ii) 8,962 restricted +stock units that vest on June 4, 2021; (iii) 236 restricted stock units that vest in equal tranches on March 20, 2021 and 2022; (iv) 7,437 restricted stock units that vest on March 20, 2021 and 2022; (v) 26,019 restricted stock units +that vest in three equal installments on March 27, 2021, 2022, and 2023. +(e) +Consists of (i) 3,750 shares of restricted stock that will vest on January 22, 2022; (ii) 3,491 restricted +stock units that will vest on June 4, 2021; (iii) 80 restricted stock units that vest in equal tranches on March 20, 2021 and 2022; (iv) 2,527 restricted stock units that will vest on March 20, 2021 and 2022; (v) 8,868 restricted +stock units that vest in three equal installments on March 27, 2021, 2022, and 2023. +(f) +Consists of (i) 530 shares of restricted stock that vested on March 20, 2021; (ii) 3,548 restricted stock +units that vest on June 4, 2021; (iii) 42 restricted stock units that vest in equal tranches on March 20, 2021 and 2022; (iv) 1,341 restricted stock units that vest on March 20, 2021 and 2022; (v) 4,686 restricted stock units that +vest in three equal installments on March 27, 2021, 2022, and 2023. +24 +Risk Related to Compensation Policies +The Company’s compensation policies and practices for its employees, including its executive compensation program described in +Compensation Discussion and Analysis, aim to provide a risk-balanced compensation package which is competitive in our market sectors and relevant to the individual executive. The Company expects to continue to award to certain executives and +employees, upon satisfaction of applicable performance conditions and subject to future approval and grant by the Compensation Committee, equity and cash-based awards. Because the Company’s equity incentive programs include substantial vesting +features, the Company believes that the structure of its compensation plans discourages short-term risk taking and aligns the interest of its executives and managers with those of its shareholders. The Company does not believe that risks arising +from these practices, or its compensation policies and practices considered as a whole, are reasonably likely to have a material adverse effect on the Company. +25 +AUDIT COMMITTEE REPORT +The Audit Committee of the Board is responsible for providing independent, objective oversight of the Company’s accounting functions and +internal controls. The Audit Committee is composed of four directors, each of whom is independent as defined by the NASDAQ listing standards and SEC rules. The Audit Committee operates under a written charter approved by the Board. +Management is responsible for the Company’s internal controls and financial reporting process. The independent accountants are +responsible for performing an independent audit of the Company’s consolidated financial statements in accordance with generally accepted auditing standards and issuing a report thereon. The Audit Committee’s responsibility is to monitor +and oversee these processes. +The Audit Committee’s responsibilities focus on two primary areas: (1) the adequacy of the +Company’s internal controls and financial reporting process and the reliability of the Company’s financial statements; and (2) the independence and performance of the Company’s independent accountants. The Audit Committee has +sole authority to select, evaluate and when appropriate, to replace the Company’s independent auditors. +The Audit Committee has met +with management and the Company’s independent accountants, Wolf & Company, P.C., to review and discuss the January 31, 2021 financial statements. Management represented to the Committee that the Company’s consolidated +financial statements were prepared in accordance with generally accepted accounting principles, and the Audit Committee has reviewed and discussed the consolidated financial statements with management and the independent accountants. The Audit +Committee also discussed with Wolf & Company, P.C. the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board. The Audit Committee also received from Wolf & Company, P.C. +the written disclosures and the letter from Wolf & Company, P.C. pursuant to applicable requirements of the Public Company Accounting Oversight Board regarding Wolf & Company, P.C.’s communications with the Audit Committee +concerning independence, and has discussed with Wolf & Company, P.C. its independence from the Company. +The Audit Committee +received the information concerning the fees of Wolf & Company, P.C. for the year ended January 31, 2021 set forth below under “Independent Accountant Fees and Services.” When applicable, the Audit Committee considers whether +the provision of non-audit services is compatible with maintaining the independence of the independent accountants. Wolf & Company, P.C. did not provide any +non-audit services during the fiscal year ended January 31, 2021. +Based upon the review and +discussions referred to above, the Audit Committee recommended that the Board include the audited consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended +January 31, 2021, to be filed with the SEC. +Audit Committee: +Mitchell I. Quain (Chairman) +Jean Bua +Yvonne Schlaeppi +Harold Schofield +26 +RELATED PARTY TRANSACTIONS +Potential conflicts of interest and related party transactions are referred by the Board to the Audit Committee for review and approval. In +reviewing and evaluating potential conflicts of interest and related party transactions, the Audit Committee uses applicable NASDAQ listing standards and SEC rules as a guide. +No officer, director or nominee for director of the Company or any associate of any of the foregoing had during the period beginning on +February 1, 2020 through the date of this proxy statement any material interest, direct or indirect, in any material transaction or any material proposed transaction in which the amount exceeds $120,000 and to which the Company was or is to be +a party. +27 +EQUITY COMPENSATION PLAN INFORMATION +The following table sets forth information about the Company’s equity compensation plans as of January 31, 2021: +Plan Category +Number of +Securities to be +Issued Upon +Exercise of +Outstanding +Options, +Warrants and +Rights +Weighted- +Average +Exercise Price +of Outstanding +Options, +Warrants and +Rights +Number of Securities +Remaining Available +for Future Issuance +Under Equity +Compensation Plans +Equity Compensation Plans Approved by Shareholders +771,496 +(1) +$ +14.63 +(2) +538,853 +(3) +Equity Compensation Plans Not Approved by Shareholders +— +— +— +Total +771,496 +(1) +$ +14.63 +(2) +538,853 +(3) +(1) +Includes 337,958 shares issuable upon exercise of outstanding options granted under the Company’s 2007 +Equity Incentive Plan; 148,625 shares issuable upon exercise of outstanding options granted and 10,833 restricted stock units outstanding under the Company’s 2015 Equity Incentive Plan; and 135,500 shares issuable upon exercise of outstanding +options granted and 138,580 restricted stock units outstanding under the Company’s 2018 Equity Incentive Plan. This balance does not include 48,000 shares of unvested restricted stock which are subject to forfeiture. Refer to footnote 15 to the +Company’s audited financial statements for the fiscal year ended January 31, 2021 included in the Company’s Annual Report on Form 10-K filed with the SEC on April 13, 2021 for further +discussion. +(2) +Does not include restricted stock units. +(3) +Represents 528,479 shares available for grant under the Company’s 2018 Equity Incentive Plan and 10,374 +shares available for issuance under the Company’s Employee Stock Purchase Plan. +28 +PROPOSAL NO. 2 +ADVISORY VOTE ON EXECUTIVE COMPENSATION +As required by the Section 14A(a)(1) of the Exchange Act, the Board is providing shareholders with the opportunity to cast an advisory +vote on the Company’s executive compensation at the annual meeting through the following resolution: +“RESOLVED, that the +shareholders approve the Company’s executive compensation, as described in the Compensation Discussion and Analysis and the tabular disclosure regarding Named Executive Officer compensation (together with the accompanying narrative disclosure) +in the Company’s Proxy Statement.” +The Board believes that the Company’s compensation policies and procedures, which are +described more fully in the “Compensation Discussion and Analysis” section of this Proxy Statement and in the tables and narrative in the “Executive Compensation” section, are strongly aligned with the long-term interests of +shareholders. These policies and procedures balance short-term and longer-term compensation opportunities to assure that the Company meets short-term objectives while continuing to produce value for our shareholders over the long term. +Approval of this proposal requires the affirmative vote of a majority of the shares of common stock entitled to vote and present in person or +represented by proxy at the annual meeting. Abstentions will have the same effect as a vote against the proposal, and broker non-votes will have no effect on the outcome of the vote. This vote will not be +binding on or overrule any decisions by the Board or any committee thereof, will not create or imply any additional fiduciary duty on the part of the Board, and will not restrict or limit the ability of the Company’s shareholders to make +proposals for inclusion in proxy materials related to executive compensation. However, the Compensation Committee and the Board will take into account the outcome of the vote when considering future executive compensation arrangements. +The Board recommends a vote “FOR” approval of the Company’s executive compensation, as described in the Compensation Discussion and +Analysis, and the tabular disclosure regarding Named Executive Officer compensation (together with accompanying narrative disclosure) in this Proxy Statement. +PROPOSAL NO. 3 +RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +The Audit Committee has sole authority to select, evaluate and when appropriate, to replace the Company’s independent auditors. The Audit +Committee has appointed Wolf & Company, P.C. as the Company’s independent registered public accounting firm for the fiscal year ending January 31, 2022. Although action by the Company’s shareholders on this matter is not +required, the Audit Committee believes it is appropriate to seek shareholder ratification in light of the critical role played by the independent auditors in evaluating the integrity of Company financial controls and reporting and requests that +shareholders ratify such appointment. +Approval of this proposal requires the affirmative vote of a majority of the shares of common stock +entitled to vote and present in person or represented by proxy at the annual meeting. Abstentions will have the same effect as a vote against the proposal, and broker non-votes will have no effect on the +outcome of the vote. +The Board of Directors recommends a vote “FOR” the ratification of the appointment of Wolf & Company, P.C. as +the Company’s independent registered public accounting firm for the fiscal year ending January 31, 2022. +29 +Independent Accountants’ Fees, Services and Other Matters +The Company expects a representative of Wolf & Company, P.C. will participate in the annual meeting via remote communication with the +opportunity to make a statement, if he or she so desires, and that such representative will be available to respond to appropriate questions. +Aggregate fees for professional services rendered for the Company by Wolf & Company, P.C. for the fiscal years ended January 31, +2021 and 2020 are set forth below. +2021 +2020 +Audit Fees +$ +226,000 +$ +245,500 +Audit-Related Fees +— +— +Tax Fees +— +— +All Other Fees +— +— +Audit Fees for the fiscal years ended January 31, 2021 and 2020 were for professional services +rendered for the audits of the financial statements of the Company, quarterly review of the financial statements included in the Company’s Quarterly Reports on Form 10-Q, consents and other assistance +required to complete the year end audit of the consolidated financial statements. Audit fees for the fiscal year ended January 31, 2020 included fees for professional services relating to the review of the Company’s registration statements +on Form S-8. +Policy on Audit Committee +Pre-Approval . The Audit Committee pre-approves all audit and non-audit services provided by the independent accountants prior +to the engagement of the independent accountants with respect to such services. None of the services described above were approved by the Audit Committee under the de minimis exception provided by Rule +2-01(C)(7)(i)(c) under Regulation S-X. +FINANCIAL +REPORTS +A copy of the annual report of the Company for the fiscal year ended January 31, 2021, including the Company’s +annual report to the SEC on Form 10-K, accompanies this proxy statement. Such report is not part of this proxy statement. +30 +PROPOSALS FOR 2022 ANNUAL MEETING +The 2022 annual meeting of the shareholders of the Company is scheduled to be held on May 17, 2022, the third Tuesday in May. If a +shareholder intending to present a proposal at that meeting wishes to have such proposal included in the Company’s proxy statement and form of proxy relating to the meeting pursuant to Rule 14a-8, the +shareholder must submit the proposal to the Company no later than December 30, 2021. Shareholder proposals not requested to be included in the proxy statement pursuant to Rule 14a-8 and director +nominations that are to be considered at the 2022 annual meeting must be submitted no earlier than December 18, 2021 and no later than March 18, 2022. +OTHER MATTERS +No business +other than that set forth in the attached Notice of Meeting is expected to come before the annual meeting, but should any other matters requiring a vote of shareholders arise, including a question of adjourning the meeting, the persons named in the +accompanying proxy will vote thereon according to their best judgment in the interests of the Company. In the event any of the nominees for the office of director should withdraw or otherwise become unavailable for reasons not presently known, the +persons named as proxies will vote for other persons in their place in what they consider the best interests of the Company. +You are +urged to sign and return your proxy promptly to make certain your shares will be voted at the meeting. You may revoke your proxy at any time before it is voted. +By Order of the Board of Directors +Peter M. Rosenblum +Secretary +31 +YOUR VOTE IS IMPORTANT! PLEASE VOTE BY:INTERNETGo To: www.proxypush.com/ALOT• • Cast your vote online• Have your Proxy +Card readyFollow the simple instructions to record your votePHONE Call 1-866-509-1041• • Use any touch-tone telephone• Have your Proxy Card readyFollow the simple recorded instructionsMAIL• • Mark, sign and date your Proxy +CardFold and return your Proxy Card in the postage-paid envelope providedYou must register to attend the meeting online and/or participate at www.proxydocs.com/ALOT AstroNova, Inc.Annual Meeting of StockholdersFor Stockholders as of record on April +09, 2021TIME: Tuesday, June 08, 2021 10:00 A.M., Eastern Daylight Time PLACE: Annual Meeting to be held live via the Internet - please visit www.proxydocs.com/ALOT for more details.This proxy is being solicited on behalf of the Board of DirectorsThe +undersigned hereby appoints Jean A. Bua, Mitchell I. Quain, Yvonne E. Schlaeppi, Harold Schofield, Richard S. Warzala and Gregory A. Woods, and each or either of them, as the true and lawful attorneys of the undersigned, with full power of +substitution and revocation, and authorizes them, and each of them, to vote all the shares of capital stock of AstroNova, Inc. which the undersigned is entitled to vote at said meeting and any adjournment thereof upon the matters specified and upon +such other matters as may be properly brought before the meeting or any adjournment thereof, conferring authority upon such true and lawful attorneys to vote in their discretion on such other matters as may properly come before the meeting and +revoking any proxy heretofore given.THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, SHARES WILL BE VOTED IDENTICAL TO THE BOARD OF DIRECTORS RECOMMENDATION. This proxy, when properly executed, will be +voted in the manner directed herein. In their discretion, the Named Proxies are authorized to vote upon such other matters that may properly come before the meeting or any adjournment or postponement thereof.You are encouraged to specify your choice +by marking the appropriate box (SEE REVERSE SIDE) but you need not mark any box if you wish to vote in accordance this card. with the Board of Directors’ recommendation. The Named Proxies cannot vote your shares unless you sign (on the reverse +side) and return PLEASE BE SURE TO SIGN AND DATE THIS PROXY CARD AND MARK ON THE REVERSE SIDE +AstroNova, Inc.Annual Meeting of StockholdersPlease make your marks like this: X Use dark black pencil or pen only THE BOARD OF +DIRECTORS RECOMMENDS A VOTE: FOR ON PROPOSALS 1, 2 AND 3PROPOSAL YOUR VOTE BOARD OF DIRECTORS1. To elect six directors to serve until the next annual meeting of shareholders and until their RECOMMENDS successor are elected and have qualifiedFOR +WITHHOLDTo vote forall directors or withhold from voting all directors mark here:P2 P2 To vote individually for each nominee:1.01 Jean A. Bua FOR 1.02 Mitchell I. Quain P3 P3 FOR 1.03 Yvonne E. Schlaeppi P4 P4 FOR 1.04 Harold Schofield P5 P5 FOR +1.05 Richard S. Warzala P6 P6 FOR 1.06 Gregory A. Woods P7 P7 FORFOR AGAINST ABSTAIN2. To approve, on an advisory, non-binding basis, the compensation paid to the Company’s Named Executive Officers, as disclosed in the Company’s proxy +statement for its 2021 annual meeting of FOR P8 shareholders. P8 P8 3. To ratify the appointment of Wolf & Company, P.C. as the Company’s independent registered P9 public accounting firm for the fiscal year ending January 31, 2022. P9 P9 +FORYou must register to attend the meeting online and/or participate at www.proxydocs.com/ALOTAuthorized Signatures - Must be completed for your instructions to be executed.Please sign exactly as your name(s) appears on your account. If held in +joint tenancy, all persons should sign. Trustees, administrators, etc., should include title and authority. Corporations should provide full name of corporation and title of authorized officer signing the Proxy/Vote Form.Signature (and Title if +applicable) Date Signature (if held jointly) Date \ No newline at end of file diff --git a/raw/proxies/0000008146/0001193125-21-139851/proxy_rpt.txt b/raw/proxies/0000008146/0001193125-21-139851/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..fdf10e41d47d26245cd79bc5cb87cf9740c349cb --- /dev/null +++ b/raw/proxies/0000008146/0001193125-21-139851/proxy_rpt.txt @@ -0,0 +1,7 @@ +RELATED PARTY TRANSACTIONS +Potential conflicts of interest and related party transactions are referred by the Board to the Audit Committee for review and approval. In +reviewing and evaluating potential conflicts of interest and related party transactions, the Audit Committee uses applicable NASDAQ listing standards and SEC rules as a guide. +No officer, director or nominee for director of the Company or any associate of any of the foregoing had during the period beginning on +February 1, 2020 through the date of this proxy statement any material interest, direct or indirect, in any material transaction or any material proposed transaction in which the amount exceeds $120,000 and to which the Company was or is to be +a party. +27 \ No newline at end of file diff --git a/raw/proxies/0000008146/0001193125-22-131320/proxy.txt b/raw/proxies/0000008146/0001193125-22-131320/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..cc27ac16c920262a5828928769400a6dc2af5255 --- /dev/null +++ b/raw/proxies/0000008146/0001193125-22-131320/proxy.txt @@ -0,0 +1,1785 @@ +DEF 14A +1 +d226783ddef14a.htm +DEF 14A +DEF 14A +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Proxy +Statement Pursuant to Section 14(a) of the +Securities Exchange Act of 1934 +(Amendment No. ) +Filed by the +Registrant ☒ Filed by a Party other than the +Registrant ☐ +Check the appropriate box: +☐ +Preliminary Proxy Statement +☐ +Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +☒ +Definitive Proxy Statement +☐ +Definitive Additional Materials +☐ +Soliciting Material Pursuant to §240.14a-12 +ASTRONOVA, INC. +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +☒ +No fee required. +☐ +Fee paid previously with preliminary materials. +☐ +Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11. +AstroNova, Inc. +600 East Greenwich Avenue +West Warwick, Rhode Island 02893 +NOTICE OF ANNUAL MEETING OF SHAREHOLDERS +June 14, 2022 +To the +Shareholders of AstroNova, Inc.: +Notice is hereby given that the 2022 Annual Meeting of Shareholders of AstroNova, Inc. (the +“Company”) will be held by means of remote communication on Tuesday, June 14, 2022, beginning at 9:00 a.m., Eastern Daylight Time for the following purposes: +(1) To consider and vote upon the election of five directors to serve until the next annual meeting of shareholders or until their successors +are elected and have qualified; +(2) To conduct a non-binding, advisory vote to approve the +Company’s executive compensation; +(3) To consider and vote upon a proposal to approve and adopt the AstroNova, Inc. 2022 Employee +Stock Purchase Plan; +(3) To ratify the appointment of Wolf & Company, P.C. as the Company’s independent registered public +accounting firm for the fiscal year ending January 31, 2023; and +(4) To transact such other business as may properly come before the +meeting. +The close of business on April 18, 2022 has been fixed as the record date for determining shareholders entitled to attend +or vote at the annual meeting or any adjournment thereof. +You may vote on these matters at the annual meeting or by proxy. Whether or not +you plan to attend the meeting, please promptly complete and return the enclosed proxy card in the enclosed addressed, postage-paid envelope or vote via the Internet or telephone, so that your shares will be represented and voted at the meeting in +accordance with your wishes. If you attend the meeting, you may withdraw your proxy or Internet or telephone vote and vote your shares by means of the remote platform. +The Company is mindful of the continuing impact of the COVID-19 pandemic, and the well-being of the +Company’s shareholders, employees, officers, directors and other stakeholders is its primary concern. Accordingly, there will be no physical meeting, and the Annual Meeting of Shareholders will only be conducted via remote communication. In +order to attend the meeting, you should register in advance at www.proxydocs.com/ALOT prior to the start of the meeting. Upon completing your registration, you will receive further instructions via email, including your unique link that will allow +you access to the meeting and give you the ability to submit questions. Please be sure to follow instructions found on your proxy card and/or voting authorization form and subsequent instructions that will be delivered to you via email. As always, +we encourage you to vote your shares prior to the annual meeting. +By Order of the Board of Directors +Peter M. Rosenblum +Secretary +April 28, 2022 +IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE +HELD ON JUNE 14, 2022. +The Company’s Proxy Statement and Annual Report are available for viewing, +printing and downloading at: +http://www.proxydocs.com/ALOT +This website does not use “cookies” to track or identify visitors +AstroNova, Inc. +PROXY STATEMENT +ANNUAL +MEETING OF SHAREHOLDERS +June 14, 2022 +The Meeting +The 2022 annual meeting of +shareholders of AstroNova, Inc. (the “Company”) will be held at 9:00 a.m., Eastern Daylight Time, on Tuesday, June 14, 2022, by means of remote communications. At the meeting, shareholders of record on the record date for the meeting +who are present or represented by proxy will have the opportunity to vote on the following matters: +• +the election of five directors to serve until the next annual meeting of shareholders or until their successors +are elected and have qualified; +• +the approval, on an advisory, non-binding basis, of the compensation paid +to the Company’s Named Executive Officers, as disclosed in this proxy statement pursuant to Item 402 of Regulation S-K (including in the compensation discussion and analysis, compensation tables, and +accompanying narrative disclosures); +• +the approval and adoption of the AstroNova, Inc. 2022 Employee Stock Purchase Plan (the “2022 ESPP”); +• +the ratification of the appointment of Wolf & Company, P.C. as the Company’s independent registered +public accounting firm for the fiscal year ending January 31, 2023; and +• +such other business as may properly come before the meeting. +Solicitation of Proxies +This proxy +statement and the accompanying proxy card are expected to be first sent to shareholders on or about April 28, 2022. +The Board of +Directors (the “Board”) of the Company is soliciting proxies in connection with its 2022 annual meeting of shareholders. The Company will bear the cost of such solicitation. It is expected that the solicitation of proxies will be +primarily by mail. Proxies may also be solicited personally by directors, officers, and employees of the Company at nominal cost. The Company may reimburse brokerage houses and other custodians, nominees and fiduciaries holding stock for others in +their names, or in those of their nominees, for their reasonable out-of-pocket expenses in sending proxy material to their principals or beneficial owners and obtaining +their proxies. +The Company has engaged Alliance Advisors, LLC to assist in the solicitation of proxies and provide related advice and +informational support. The Company expects to pay Alliance Advisors, LLC fees and disbursements which are not expected to exceed $15,000 in the aggregate. +Who May Vote +The Board has established +April 18, 2022 as the record date for the annual meeting. Only shareholders of record at the close of business as of that date will be entitled to virtually attend or vote at the annual meeting. On the record date, there were 7,317,463 shares +of common stock of the Company outstanding. There was no other outstanding class of voting securities. +1 +A list of shareholders entitled to vote will be available via the website for the annual +meeting. In addition, you may contact David S. Smith, at the Company’s offices located at 600 East Greenwich Avenue, West Warwick, Rhode Island, to make arrangements to review a copy of the shareholder list at those offices, between the hours +of 9:00 a.m. and 5:00 p.m., Eastern Daylight Time, on any business day from June 4, 2022 to the time of the annual meeting. +Attending the Annual +Meeting +The annual meeting will be held through means of remote communications, only. In order to attend, you must register in advance +at www.proxydocs.com/ALOT prior to the start of the meeting. Upon completing your registration, you will receive further instructions via email, including your unique link that will allow you to access the meeting and give you the ability to vote +and submit questions. Please be sure to follow instructions found on your proxy card and/or voting authorization form and subsequent instructions that will be delivered to you via email. If you are planning to attend our virtual meeting, please +register at the website by June 13, 2022, 11:59 p.m. Eastern Daylight Time. +How to Vote +You are entitled to one vote at the meeting for each share of common stock registered in your name at the close of business on the record date +for the meeting. +Shares Held of Record with Our Transfer Agent +If you are a shareholder of record, that is you have a stock certificate or hold your shares in an account with our transfer agent, +Computershare, you may vote your shares at the virtual meeting or by proxy via mail, the Internet, or the toll-free number (for residents of the United States and Canada) listed on your proxy card. +• +To vote at the annual meeting, you must attend the virtual meeting following the procedures set forth in +the instructions found on your proxy card and/or voting authorization form and subsequent instructions that will be delivered to you. You will be able to vote during the meeting. +• +To vote by proxy by mail , if you received proxy materials by mail and choose to authorize your proxy by +mail, simply mark your proxy card, and then date, sign and return it in the postage-paid envelope provided. If you complete all of the proxy card except the voting instructions, then the designated persons will vote your shares +• +FOR the election of Alexis P. Michas and the re-election of each of +Mitchell I. Quain, Yvonne E. Schlaeppi, Richard S. Warzala and Gregory A. Woods as a director of the Company; +• +FOR the approval, on an advisory, non-binding basis, of the +Company’s executive compensation as described in this proxy statement; +• +FOR the approval and adoption of the 2022 ESPP; +• +FOR the ratification of the appointment of Wolf & Company, P.C. as the Company’s independent +registered public accounting firm for the fiscal year ending January 31, 2023. +• +To vote by proxy using the Internet , you must access the website for Internet voting at +www.proxypush.com/ALOT. Please have the enclosed proxy card handy when you access the website and follow the on-screen instructions. Internet voting facilities for shareholders of record will be available 24 +hours a day through the closing of the polls at the annual meeting. If you vote via the Internet, you do not have to return your proxy card via mail. +• +To vote by proxy using the telephone , use any touch-tone telephone and call +866-509-1041 to transmit your voting instructions through the closing of the polls at the annual meeting. Please have the enclosed proxy card handy when you call and +then follow the instructions. If you vote via telephone, you do not have to return your proxy card via mail. +2 +If any other business properly comes before the meeting, then the designated persons will +have the discretion, to the extent authorized by applicable rules and regulations, to vote all shares they own or represent by proxy in any manner they deem appropriate. +If you vote by proxy, whether by mail, the Internet or telephone, you may revoke your proxy at any time before it is exercised by taking one +of the following actions: +• +sending written notice to the Company’s Secretary at the address set forth on the notice of meeting +appearing on the cover of this proxy statement; +• +voting again via the Internet or telephone on a later date or properly executing and delivering a later-dated proxy card; or +• +attending the virtual meeting and then voting at the virtual meeting. +Shares Held by Brokers or Nominees +If +the shares you own are held in “street name” by a brokerage firm, your brokerage firm, as the record holder of your shares, is required to vote your shares according to your instructions. In order to vote your shares, you will need to +follow the directions your brokerage firm provides you. Many brokers also offer the option of providing voting instructions to them over the Internet or by telephone, directions for which would be provided by your brokerage firm on your vote +instruction form. +Under stock exchange rules applicable to most brokerage firms, if you do not give instructions to your broker, your +broker will be permitted to vote any shares it holds for your account in its discretion with respect to “routine” proposals, but will not be allowed to vote your shares with respect to +“non-routine” proposals. Proposal 1, regarding the election of Directors, Proposal 2, regarding the approval, on an advisory, non-binding basis, of the +Company’s executive compensation, and Proposal 3, regarding the approval and adoption of the 2022 ESPP, are “non-routine” proposals. If you do not instruct your broker how to vote with respect +to these proposals, your broker will not vote your shares on them and your shares will be recorded as “broker non-votes” and will not affect the outcome of the vote on those proposals . +“Broker non-votes” are shares that are held in “street name” by a bank or brokerage firm that indicates on its proxy that, while voting in its discretion on one matter, it does not have or +did not exercise discretionary authority to vote on another matter. +Proposal 4, regarding the ratification of the appointment of +Wolf & Company, P.C. as the Company’s independent registered public accounting firm for the fiscal year ending January 31, 2023, is considered to be a routine item under the applicable rules and your broker will be able to vote on +this item even if it does not receive instructions from you, so long as your broker holds your shares in its name. +If a broker or nominee +holds shares of common stock in “street name” for your account, then this proxy statement may have been forwarded to you with a voting instruction card, which allows you to instruct the broker or nominee how to vote your shares on the +proposals described herein. To vote by proxy or instruct your broker how to vote, you should follow the directions provided with the voting instruction card. In order to have your vote counted on Proposal 1, Proposal 2 and Proposal 3, you must +either provide timely voting instructions to your broker or obtain a properly executed proxy from the broker or other record holder of the shares that authorizes you to act on behalf of the record holder with respect to the shares held for your +account . +Votes Required to Transact Business at the Meeting +The holders of a majority of the shares entitled to vote, present in person or represented by proxy, will constitute a quorum for the +transaction of business at the meeting. Abstentions and broker non-votes are counted as present and entitled to vote for purposes of determining a quorum. +3 +If You Receive More Than One Proxy Card or Voting Instruction Form +If you hold your shares in multiple accounts or registrations, or in both registered and street name, you will receive a proxy card or voting +instruction form for each account. Please sign, date and return all proxy cards you receive from the Company. If you choose to vote by proxy via the telephone or the Internet, please vote once for each proxy card you receive. Only your latest dated +proxy for each account will be voted. +Multiple Shareholders Sharing the Same Address +If you and other residents at your mailing address own shares of the Company’s common stock through a broker or other nominee, you may +have received only one copy of this proxy statement and the Company’s Annual Report for its fiscal year ended January 31, 2022 (“fiscal year 2022”). If you and other residents at your mailing address own shares of common stock in +your own names, you may have received only one copy of this proxy statement and the fiscal year 2022 Annual Report, unless you provided the Company’s transfer agent with contrary instructions. This practice, known as “householding,” +is designed to reduce the Company’s printing and postage costs. You may promptly obtain an additional copy of this proxy statement and our fiscal year 2022 Annual Report by sending a written request to AstroNova, Inc., attention Investor +Relations Department, 600 East Greenwich Avenue, West Warwick, Rhode Island 02893, or by calling the Company’s investor relations department at 617-542-5300. +If you hold your shares through a broker or other nominee and wish to discontinue householding or to change your householding election, you may do so by contacting your broker or by calling 800-542-1061 or writing to Broadridge Financial Solutions, 51 Mercedes Way, Edgewood, NY 11717. If you hold shares in your own name and wish to discontinue householding or change your householding election, +you may do so by calling 877-373-6374 or writing to Computershare Investor Services at P.O. Box. 43078, Providence, RI 02940-3078. +4 +PROPOSAL NO. 1 +ELECTION OF DIRECTORS +At +the annual meeting, five directors are to be elected to hold office until the next annual meeting and until their respective successors are elected and qualified. The persons named in the accompanying proxy, who have been designated by the Board, +intend to vote, unless otherwise instructed, for the election to the Board of the persons named below. The biographies below contain information regarding the person’s service as a director, business experience, director positions held +currently or at any time during the last five years, and the experiences, qualifications, attributes or skills that caused the Nominating and Governance Committee and the Board to determine that the person should serve as a director. +THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR EACH OF THE BOARD’S FIVE NOMINEES FOR DIRECTOR. +Alexis P. Michas , 64, is the founder and has been Managing Partner of Juniper Investment Company, LLC since 2008. Juniper is also a +Principal of Aetolian Investors, LLC, a registered commodity pool operator. Mr. Michas received a Bachelor of Arts degree from Harvard College and a Master of Business Administration degree from Harvard Business School. Mr. Michas is the Non-Executive Chairman of the board of BorgWarner Inc., a director of funds managed by Atlantic Investment Management, Inc., and is also on the board of privately held Theragenics Corporation. Mr. Michas also +served as the Non-Executive Chairman of the board of Lincoln Educational Services Corporation until 2015, and as a director of Allied Motion Technologies, Inc. until July 2017. Mr. Michas is the Chairman +of the U.S. Board of Trustees of Athens College, a non-profit organization. We believe that Mr. Michas’ many years of private equity experience across a wide range of industries, his successful +record of managing investments in public companies and his extensive transactional experience qualify him to serve on our Board. +Mitchell I. Quain , 70, has been a director since August 2011. Mr. Quain has served on the Executive Council of American +Securities, Inc., a private equity firm, since January 2020. From December 2011 to December 2019, Mr. Quain was a Senior Advisor at the private equity firm Carlyle Group. From January 2010 through December 2011, Mr. Quain was a Partner at +One Equity Partners, a private investment firm. From 2006 through 2009, he was a Senior Director of ACI Capital Corp. From 2002 through 2005, Mr. Quain served as Chairman of Register.com, Inc., an internet services provider, and from 1997 to +2001 he was employed with ABN AMRO and its predecessors in several capacities, including Vice Chairman of Investment Banking. Mr. Quain also serves as a director of Kensington Capital Acquisition Corp. V, a blank check company, Star Equity +Holdings, a provider of mobile healthcare solutions and diagnostic imaging equipment and services, and Williams Industrial Services. Mr. Quain previously served as a director of DeCrane Aircraft Holdings, Inc., Handy & Harman Ltd., +Hardinge Inc., HEICO Corporation, Kensington Capital Acquisition Corp. I, Kensington Capital Acquisition Corp. II, MagneTek, Inc., Mechanical Dynamics, Inc., Jason Industries, RBC Bearings, Inc., Register.com, Inc., Tecumseh Products Company, Titan +International, Inc., and Xerium Technologies, Inc. We believe that Mr. Quain’s extensive experience in the private equity sector and public company experience qualify him to serve on our Board. +Yvonne E. Schlaeppi , 62, has been a director since April 2018. Since 2011, Ms. Schlaeppi has served as a Managing Partner of +Stratevise LLC, an international strategic advisory firm that she cofounded. From 2016 through its going private in 2019, Ms. Schlaeppi served on the board of directors of Stallergenes Greer plc, a pharmaceutical company traded on the Euronext +Paris exchange. From 2014 to 2015, Ms. Schlaeppi served on the boards of directors of allergy immunotherapy companies, Ares Allergy Holdings Inc. and Greer Laboratories, Inc. Since 2015 Ms. Schlaeppi has been a member of the External +Advisory Council to the Channing Division of Network Medicine of Brigham and Women’s Hospital in Boston. Ms. Schlaeppi has been recognized annually as a Board Leadership Fellow by the National Association of Corporate Directors beginning +in 2017. Prior to founding Stratevise, Ms. Schlaeppi served as General Counsel at Global Enterprise Technologies, Passport & ID, +5 +a high-security document printing solutions provider and systems integrator, from 2007 to 2011 and as Executive Vice President, General Counsel and Corporate IP Officer at Organon BioSciences, a +global pharmaceutical, animal health and biotech group based in the Netherlands, from 2006 until its sale in 2007. From 1999 to 2006 Ms. Schlaeppi was a partner at the Boston-based law firm of Palmer & Dodge LLP, where she served as +Chairperson of that firm’s International Practice Group. From 1995 to 1998 Ms. Schlaeppi served in senior positions at Johnson Controls, Inc., a NYSE-listed diversified industrial company, including as General Counsel Europe. We believe +that Ms. Schlaeppi’s extensive experience in international business and corporate governance, as well as relevant industry experience, qualify her to serve on our Board. +Richard S. Warzala , 68, has been a director since December 2017. He is the President, Chief Executive and Chairman of the Board of +Directors of Allied Motion Technologies, Inc. (“Allied Motion”), a developer of advanced motion control products and systems, and has more than 40 years of leadership experience and a strong technical background in the industrial, +aerospace and commercial industries. He joined Allied Motion as President and Chief Operating Officer in 2002. Mr. Warzala was elected a director of Allied Motion in 2006, appointed President and Chief Executive Officer in 2009, and elected as +the Chairman of Allied Motion’s board of directors in 2014. Allied Motion designs, manufactures and sells precision and specialty motion control components and systems in markets including Vehicle, Medical, Aerospace & Defense, and +Industrial/Electronics. Before joining Allied Motion, Mr. Warzala was President of Danaher Corporation’s Motion Components Group and served in various senior positions at American Precision Industries Inc., including Corporate Vice +President and President of its API Motion Division. We believe that Mr. Warzala’s technology background and international industry experience, together with his corporate governance expertise, business insights and deep understanding of +lean manufacturing principles, qualify him to serve on our Board. +Gregory A. Woods , 63, has served as Chief Executive Officer of +the Company since February 1, 2014 and as a director since January 2014. Mr. Woods joined the Company in September 2012 as Executive Vice President and Chief Operating Officer and was appointed President and Chief Operating Officer on +August 29, 2013. Prior to joining the Company, Mr. Woods served from January 2010 to August 2012 as Managing Director of Medfield Advisors, LLC, an advisory firm located in Medfield, Massachusetts focused on providing corporate development +and strategy guidance to technology driven manufacturing firms. From 2008 to 2010, Mr. Woods served as President of Performance Motion Devices, a specialty semiconductor and electronics manufacturer located in Lincoln, Massachusetts. Prior to +Performance Motion Devices, Mr. Woods served as chief executive officer of Control Technology Corp., a manufacturer of industrial computer and software products; and President of API Controls, a division of Danaher. Mr. Woods holds a +Bachelor of Arts in physics from Colgate University, a Bachelor of Engineering in computer and mechanical engineering from Dartmouth College, and a Master of Business Administration from the University of Rochester. Based on this experience and his +position as Chief Executive Officer of the Company, we believe that Mr. Woods is qualified to serve on our Board. +The Board has +determined that all of the directors of the Company, including each of the nominees standing for election at the 2022 annual shareholders meeting, other than Gregory A. Woods, are independent of the Company in that such nominees have no material +relationship with the Company either directly or as a partner, shareholder or affiliate of an organization that has a relationship with the Company. The Board has made this determination in accordance with applicable Securities and Exchange +Commission (“SEC”) rules and NASDAQ listing standards. +The directors will be elected by a plurality of the votes of the shares +entitled to vote on the election of directors and present in person or represented by proxy at the annual meeting. This means that the five nominees receiving the highest number of FOR votes will be elected as directors. Votes may be cast FOR or +WITHHELD FROM each nominee. Broker non-votes and votes that are WITHHELD FROM the nominees will be excluded entirely from the vote and will have no effect. +The Board recommends a vote FOR the election of each of the nominees listed above. +6 +CORPORATE GOVERNANCE +The Board of Directors — Meetings and Committees +The Board currently consists of six members, all of whose terms will expire at the annual meeting. Effective as of the annual meeting, the size +of the Board will be reduced to five members. Each of our current directors other than Ms. Bua and Mr. Schofield has been nominated by the Board for re-election, and Mr. Michas has been +nominated for election. During the fiscal year ended January 31, 2022, the Board held five meetings. During fiscal year 2022, each director attended all of the meetings of the Board and meetings of committees on which such director served. +The Board has adopted a policy that requires members of the Board to make every effort to attend each annual shareholders meeting. All members +of the Board then serving attended the 2021 annual shareholders meeting. +The Board currently has three standing committees: an Audit +Committee, a Compensation Committee and a Nominating and Governance Committee. The members and chairs of each of those committees are appointed each year. The Audit Committee is currently comprised of Ms. Bua, Mr. Quain, Ms. Schlaeppi +and Mr. Schofield. Following the annual meeting, the Audit Committee is expected to be comprised of Mr. Michas, Mr. Quain and Ms. Schlaeppi. The Nominating and Governance Committee is currently comprised of Ms. Bua, +Mr. Quain, Ms. Schlaeppi, Mr. Schofield and Mr. Warzala. Following the annual meeting, the Nominating and Governance Committee is expected to be comprised of Mr. Quain, Ms. Schlaeppi and Mr. Warzala. The +Compensation Committee is currently comprised of Messrs. Quain, Schofield and Warzala. Following the annual meeting, the Compensation Committee is expected to be comprised of Messrs. Michas, Quain and Warzala. Each of the members of our committees +is independent as defined under the applicable NASDAQ listing standards and SEC rules. Each of the Audit, Compensation, and Nominating and Governance Committees has a written charter approved by the Board. A copy of each charter is available on the +Company’s website at www.astronovainc.com under “Investors — Corporate Governance — Governance Documents.” +Audit Committee. The Audit Committee’s primary duties and responsibilities include: overseeing the integrity of the Company’s +financial reports, appointing, setting the compensation of and overseeing the Company’s independent accountants, and assessing the qualifications, independence and performance of the Company’s independent accountants and the adequacy of +internal controls. The Audit Committee meets with the Company’s independent accountants to review quarterly financial results, the results of the audit, and other relevant matters. The Audit Committee held six meetings during the fiscal year +ended January 31, 2022. The Board has determined that all members of the Audit Committee during fiscal year 2022 satisfy the financial literacy requirements of the NASDAQ listing standards and are independent as defined under the NASDAQ listing +requirements and applicable SEC rules. Additionally, the Board has determined that that each of Ms. Bua, Mr. Michas and Mr. Quain qualifies as an “audit committee financial expert” as defined by the SEC rules and possesses +“financial sophistication” as described in the NASDAQ listing standards. +Compensation Committee. The Compensation +Committee assists the Board in discharging the Board’s responsibilities relating to director and executive compensation. The Compensation Committee’s responsibilities include: establishing and reviewing the Company’s executive and +director compensation philosophy, strategies, plans and policies; making recommendations with respect to the design of the Company’s incentive compensation plans and equity based plans; granting awards under such plans and overseeing generally +the administration of such plans; evaluating the performance and determining the compensation of the Chief Executive Officer; and reviewing and approving recommendations on compensation of other executives. In addition, the Compensation Committee +oversees the Company’s diversity, equity and inclusion initiatives, which focused in fiscal year 2022 primarily on participation by women in technical, engineering, sales and leadership positions. The Compensation Committee held four meetings +during the fiscal year ended January 31, 2022. +Nominating and Governance Committee . The Nominating and Governance Committee +assists the Board in fulfilling its nomination and corporate governance responsibilities. The Nominating and Governance Committee’s +7 +responsibilities include: (i) advising the Board concerning appropriate composition of the Board and its committees, including identifying individuals qualified to serve on the Board and its +committees, (ii) recommending to the Board individuals to be nominated by the Board for election to the Board by the shareholders or, in appropriate circumstances, elected by the Board to fill vacancies on the Board, (iii) advising the +Board regarding appropriate governance practices and assisting the Board in achieving them, and (iv) overseeing and reporting to the Board concerning the periodic evaluation of the Board, each committee of the Board and members of the Board. +The Board is currently in the process of conducting a self-evaluation that is being overseen by the Nominating and Governance Committee. The Nominating and Governance Committee is also charged with advising the board regarding applicable standards +to be used in determining the independence of the directors serving on the Board, reviewing and making recommendations to the Board regarding the Company’s corporate governance policies, overseeing the Company’s director education and +onboarding programs, and reviewing and monitoring the Company’s executive officer succession plans. The Nominating and Governance Committee held three meetings in the fiscal year ended January 31, 2022. +Director Share Ownership Requirements . The Company has a stock ownership policy that requires each director to hold shares of Company +common stock with a value equal to at least $200,000. Any director who does not meet this requirement will have five years from the date of his or her initial election to the Board to achieve this ownership level. Directors are expected to retain at +least 50% of the shares acquired upon exercise of any stock option (net of any shares withheld for payment of taxes) or vesting of a restricted stock or restricted unit award until they achieve the specified ownership level and thereafter maintain +such ownership level. All of our current directors meet the ownership requirement. Mr. Michas does not directly own any shares of Company common stock. +Compensation Committee Interlocks and Insider Participation +During the fiscal year ended January 31, 2022, Messrs. Quain, Schofield, and Warzala served on the Company’s Compensation Committee. +No member of the Company’s Compensation Committee who currently serves or who served during fiscal year 2022 has ever been an officer or employee of the Company or any of its subsidiaries. None of the Company’s executive officers serves as +a director or member of the compensation committee of another entity in a case where an executive officer of such other entity serves as a director of the Company or a member of the Company’s Compensation Committee. +Nomination of Directors +The Nominating +and Governance Committee considers suggestions from many sources, including shareholders, regarding possible candidates for director. As part of its ongoing succession planning, the Nominating and Governance Committee makes periodic recommendations +to the Board regarding the desired characteristics for potential directors, including with respect to competencies, special knowledge or expertise, experience of members, diversity and age. In all cases, the Nominating and Governance Committee seeks +individuals who possess the highest ethical standards and integrity, have a history of achievement that reflects superior standards for themselves and others, have the ability to provide wise, informed and thoughtful counsel to management on a range +of issues, exercise independence of thought, and possess skills and expertise appropriate to meet the Company’s needs and advance the long-term interests of the shareholders. The Nominating and Governance Committee considers diversity with +respect to viewpoints, accomplishments, skills and experiences, among other factors such as gender, race, national origin and age, in its evaluation of candidates for Board membership. In considering candidates for the Board, the Nominating and +Governance Committee considers the entirety of each candidate’s credentials in determining whether the candidate would bring a valuable perspective to the Board. +The Nominating and Governance Committee also monitors the Board’s compliance with the requisite qualifications under the NASDAQ listing +standards for populating the Audit, Compensation, and Nominating and Governance Committees. The Nominating and Governance Committee will consider shareholder nominees for director in the same manner as nominees for director from other sources. +8 +Shareholders may send recommendations for director nominees to the Nominating and Governance +Committee at the Company’s offices at 600 East Greenwich Avenue, West Warwick, Rhode Island 02893. Submissions should include information regarding a candidate’s background, qualifications, experience, and willingness to serve as a +director. In addition, Section 10 of Article III of the Company’s By-Laws sets forth specific procedures that, if followed, enable any shareholder entitled to vote in the election of directors to +make nominations directly at an annual meeting of shareholders. These procedures include a requirement for written notice to the Company not more than 150 days nor less than 60 days prior to the scheduled annual meeting, which must contain the name +and certain information concerning the nominee and the shareholders who support the nominee’s election. For the annual meeting to be held in 2023, the notice must be received no earlier than December 17, 2022 and no later than +March 17, 2023. A copy of the Company’s By-Laws may be obtained by writing to AstroNova, Inc., Attn: Investor Relations Department, 600 East Greenwich Avenue, West Warwick, Rhode Island 02893. +Board of Directors Diversity Matrix +NASDAQ’s Board Diversity Rule, approved by the SEC on August 6, 2021, requires that companies listed on NASDAQ’s U.S. exchange +publicly disclose board-level diversity statistics. The matrix below reflects the diversity of our Board as of April 25, 2022 based on the self-identified characteristics of our directors. The characteristics are based on the NASDAQ rule. +Board Diversity Matrix (As of April 25, 2022) +Total +Number of Directors +6 +Female +Male +Non-Binary +Did Not +Disclose +Gender +Directors +2 +4 +0 +0 +Number of Directors who identify in Any of the Categories Below: +African +American or Black +0 +0 +0 +0 +Alaskan +Native or Native American +0 +0 +0 +0 +Asian +0 +0 +0 +0 +Hispanic +or Latinx +0 +0 +0 +0 +Native +Hawaiian or Pacific Islander +0 +0 +0 +0 +White +2 +4 +0 +0 +Two or +More Races or Ethnicities +0 +0 +0 +0 +LGBTQ+ +0 +Did Not +Disclose Demographic Background +0 +Communications with the Board of Directors +The Company’s Board provides a process for shareholders to communicate directly with the members of the Board or the individual chairman +of each standing committee. Any shareholder with a concern, question or complaint regarding our compliance with any policy or law, or who would otherwise like to contact the Board, may communicate directly with the directors by writing directly to +those individuals c/o AstroNova, Inc., 600 East Greenwich Avenue, West Warwick, Rhode Island 02893. The Company’s general policy is to forward, and not to intentionally screen, any mail received at the Company’s corporate offices that is +sent directly to an individual unless the Company believes the communication may pose a security risk. +Board Leadership Structure +All members of the Board, other than Mr. Woods, are independent and all our key committees — Audit, Compensation, and Nominating and +Governance — are, and during the fiscal year ended January 31, 2022 were, comprised solely of independent directors. The non-management directors meet in executive session at least quarterly in order +to promote discussion among the independent directors and assure independent oversight of management. +9 +A key component of our leadership structure is the active role played by our independent +directors in overseeing the Company’s business, both at the Board and Committee level. All of our directors are free to suggest the inclusion of items on the agenda for meetings of the Board or to raise subjects that are not on the agenda for +that meeting. In addition, our Board and each committee have complete and open access to any member of management and the authority to retain independent legal, financial, and other advisors as they deem appropriate without consulting or obtaining +the approval of any member of management. Moreover, our Audit Committee, Compensation Committee and the Nominating and Governance Committee, all of which are comprised entirely of independent directors, also perform oversight functions independent +of management. +Lead Independent Director. Our Board has not elected a Chairman at the present time. However, in August 2019, +the Board elected Mr. Warzala as its lead independent director. In that capacity, among other things, Mr. Warzala serves as a liaison between the independent directors and the Company’s management and as the chair of executive +sessions of the independent directors. The Board believes that in light of the relatively small size of the Board and the active involvement by all of our independent directors in both the oversight of the Company and the conduct of the Board’s +meetings and deliberations, including the establishment of the Board’s agenda for its meetings, the Board’s current leadership structure is appropriate for the Company at this time. The Board intends to continue to review its leadership +structure, including the role of the lead independent director. +Risk Oversight +The Board has an active role, as a whole and also at the committee level, in overseeing management of the Company’s risks through a +program of sound policies, systems, processes, and reports. The Audit Committee of the Board has oversight responsibility over financial reporting and disclosure processes, compliance and legal matters, and information security and fraud risk. The +Audit Committee also monitors controls to prevent material weaknesses in the financial reporting function. The Audit Committee meets regularly with our Chief Financial Officer in carrying out these responsibilities, and with the Company’s +independent auditors in executive session. +The Compensation Committee of the Board oversees risks as they relate to the Company’s +compensation policies and practices as described under “Compensation Discussion and Analysis.” The Board’s Nominating and Governance Committee assists the Board in fulfilling the Board’s oversight responsibilities with respect to +confirming the independence of board members, developing desired characteristics of the Board and identifying individuals qualified to be members of the Board, reviewing and monitoring executive officer succession plans, and assessing the +effectiveness of the Board and its committees. +While each committee is responsible for evaluating the risks within their areas of +responsibility and overseeing the management of such risks, all committees report regularly to the full Board, which also considers the Company’s entire risk profile. +Compensation of Directors +The +Compensation Committee is responsible for reviewing and establishing the compensation of the directors of the Company. On January 31, 2019, the Compensation Committee adopted an Amended and Restated +Non-Employee Director Annual Compensation Program (the “Director Compensation Program”). +Pursuant to +the Director Compensation Program, each non-employee director automatically receives a grant of restricted stock on the date of his or her re-election to the Board. The +number of whole shares granted is equal to the number calculated by dividing the stock component of the director compensation amount determined by the Compensation Committee for that year by the fair market value of our stock on that day. The value +of the restricted stock award for fiscal year 2022 was, and for fiscal year 2023 is, $62,625. Shares of restricted stock granted under the Director Compensation Program become vested on the first anniversary of the date of grant, conditioned upon +the recipient’s continued service on the Board through that date. In the event of the death or disability of a non-employee director, or a Change in Control (as that term is defined in our 2018 Equity +Incentive Plan) of the Company, the shares of restricted stock will immediately vest and no longer be subject to restrictions on transfer. Other than as part of a Change in Control of the Company and except in the case of economic hardship of a +particular non-employee director, as determined by the Compensation Committee, while +10 +a non-employee director is serving on our Board he or she may not sell or otherwise dispose of any of our stock received in connection with his or her +service on our Board (whether that stock was granted under the Director Compensation Program, any predecessor program or otherwise) if that non-employee director has not satisfied the requirements of any stock +ownership guidelines established for directors by the Board or if the transfer would cause him or her to be out of compliance with any such guidelines. +Pursuant to the Director Compensation Program, each non-employee director receives cash payments for +their service on the Board and its committees. The amounts of those payments for the fiscal year ended January 31, 2022 were: +Position Covered +Fiscal +Year +2022 +Annual +Payment +Service on the Board +$ +45,000 +Lead Independent Director +$ +10,000 +Audit Committee Chairman +$ +10,000 +Compensation Committee Chairman +$ +8,000 +Nominating and Governance Committee Chairman +$ +6,000 +Committee Member (other than Chairman) +$ +3,000 +Cash payments are made to non-employee directors in four equal +tranches on the dates of the Board’s regular quarterly meetings. No changes were made to the cash component of the Director Compensation Program for the fiscal year ended January 31, 2023. +If a person becomes a non-employee director on a date other than the date of our annual meeting of +shareholders in any fiscal year, that person will receive an award of restricted stock as described above, but appropriately prorated to reflect the number of days remaining from the date he or she commences his or her service in that capacity until +the scheduled date for our next annual meeting of shareholders. In addition, if a person becomes a non-employee director, Chairman of the Board, lead independent director, chairman of a committee or a member +of a committee other than on the first business day of a fiscal quarter of the Company, he or she will receive cash fees on (i) the date of the regular full meeting of the Board held in that quarter or (ii) if later, the date he or she +commences his or her service in that capacity, as described above, but appropriately prorated to reflect the number of days remaining in that fiscal quarter. +The following Director Compensation table provides information regarding the compensation paid or accrued by each person other than Mr. Woods +who served as a director during the fiscal year ended January 31, 2022. See “Executive Compensation” for information regarding compensation of and outstanding equity awards held by Mr. Woods. +Name +Fees +Earned +or +Paid in +Cash ($) +Stock +Awards($)(a)(b)(c) +Total ($) +Jean A. Bua +51,000 +62,625 +113,625 +Mitchell I. Quain +61,000 +62,625 +123,625 +Yvonne E. Schlaeppi +54,000 +62,625 +116,625 +Harold Schofield +54,000 +62,625 +116,625 +Richard S. Warzala +66,000 +62,625 +128,625 +(a) +The amounts reflect the aggregate fair value of the awards on the grant date under FASB ASC Topic 718 for +shares of restricted stock granted to directors. For additional information, see footnote 15 in the Company’s audited financial statements for the fiscal year ended January 31, 2022, included in the Company’s Annual Report on Form 10-K filed with the SEC on April 18, 2022. +11 +(b) +As of January 31, 2022, each non-employee director held 4,082 +shares of unvested restricted stock, which will vest on June 8, 2022, conditioned, for each non-employee director, on that director’s continued service on the Board through that date. +(c) +As of January 31, 2022, the Company’s non-employee directors +held the following number of outstanding stock options, all of which were vested: Mitchell I. Quain — 30,000; Yvonne E. Schlaeppi — 10,000; Harold Schofield — 35,000; and Richard S. Warzala — 10,000. Ms. Bua did not hold any +stock options as of January 31, 2022. +Security Ownership of 5% Beneficial Owners +The following table sets forth certain information regarding the beneficial ownership of the Company’s outstanding shares of common stock, +as of April 18, 2022 (except as noted), by each person who is known to the Company to own of record or beneficially more than 5% of such stock: +Name of Beneficial Owner +Number of +Shares +Beneficially +Owned (a) +Percent +of +Class +Royce & Associates, LP +539,230 +(b) +7.43 +% +745 Fifth Avenue +New York, New York 10151 +Dimensional Fund Advisors LP +540,539 +(c) +7.4 +% +6300 Bee Cave Road, Building One +Austin, TX 78746 +Punch & Associates Investment Management, Inc. +476,334 +(d) +6.56 +% +7701 France Ave. So., Suite 300 +Edina, MN 55435 +Askeladden Capital Management, LLC +437,467 +(e) +6.03 +% +14 Sunrise Ct +Trophy Club, TX 76262 +Juniper Targeted Opportunity Fund, L.P. +420,877 +(f) +5.8 +% +555 Madison Avenue, 24 th Floor +New York, NY 10022 +(a) +All information is based upon ownership of record as reflected on the stock transfer books of the Company or as +reported on Schedule 13G or Schedule 13D filed under Rule 13d-1 under the Securities Exchange Act of 1934. +(b) +According to a Schedule 13G/A filed with the SEC on January 14, 2022, Royce & Associates, LP, an +investment adviser registered under the Advisers Act, had sole voting power and sole dispositive power with respect to 539,230 shares as of December 31, 2021. +(c) +According to a Schedule 13G/A filed with the SEC on February 8, 2022, Dimensional Fund Advisors, LP, an +investment adviser registered under the Advisers Act, and its subsidiaries (collectively, “Dimensional”) had sole voting power with respect to 529,464 shares and sole dispositive power with respect to 540,539 shares held by registered +investment companies, trusts and separate accounts for which Dimensional serves as investment manager, adviser or sub-adviser as of December 31, 2021. +(d) +According to a Schedule 13G/A filed with the SEC on February 14, 2022, Punch & Associates +Investment Management, Inc., an investment adviser registered under the Advisers Act, had sole voting power and sole dispositive power with respect to 476,334 shares as of December 31, 2021. +(e) +According to a Schedule 13G/A filed with the SEC on February 14, 2022, Askeladden Capital Management, LLC, +an investment adviser registered under the Advisers Act, and Samir Patel had shared voting power and shared dispositive power with respect to 437,467 shares. +12 +(f) +Juniper Targeted Opportunity Fund, L.P. (“Jupiter Fund”) has sole voting and dispositive power with +respect to 420,877. Juniper HF Investors II, LLC (“Juniper HF”), Juniper Investment Company, LLC (“Juniper Investment Company”), an investment adviser registered under the Advisers Act, Alexis P. Michas and John A. Bartholdson, +have shared voting and dispositive power with respect to 420,877 shares based on their relationship with Jupiter Fund. +Security +Ownership of Directors and Officers +The following table sets forth certain information regarding the beneficial ownership of the +Company’s common stock as of April 18, 2022 by each director or nominee for director, by each executive officer named in the Summary Compensation Table and by all directors and executive officers as a group. Unless otherwise noted, all +shares of common stock are subject to the sole voting and dispositive power of the respective directors and executive officers. +Beneficial Ownership +Name of Beneficial Owner +Shares +and +Restricted +Shares (a) +Options +Exercisable +within 60 +days +of 4/18/22 +Total +Beneficial +Ownership +(a) +Percent +of +Class +Non-employee directors +Jean A. Bua +18,651 +(b) +— +18,651 +* +Mitchell I. Quain +75,348 +(b) +30,000 +105,348 +1.4 +% +Yvonne E. Schlaeppi +22,332 +(b) +10,000 +32,332 +* +Harold Schofield +37,923 +(b) +30,000 +67,923 +* +Richard S. Warzala +25,178 +(b) +10,000 +35,178 +* +Director nominee +Alexis P. Michas +420,877 +(c) +— +420,877 +5.8 +% +Executive officers +Gregory A. Woods +142,616 +270,500 +(d) +413,116 +5.4 +% +David S. Smith +19,856 +64,000 +(d) +83,856 +1.1 +% +Michael J. Natalizia +35,349 +22,500 +(d) +57,849 +* +All directors and executive officers of the Company as a group (10) +853,253 +469,600 +1,322,853 +17.0 +% +* +Indicates less than 1.0%. +(a) +If applicable, beneficially owned shares include shares owned by the spouse, minor children, and certain other +relatives of the director or executive officer, as well as shares held by trusts of which the person is a trustee or in which he or she has a beneficial interest. +(b) +Includes 4,082 shares of restricted stock. +(c) +Mr. Michas, as a managing member of Juniper HF and Juniper Investment Company, may be deemed to own +beneficially the 420,877 shares held by Juniper Fund and Juniper Investment Company. Mr. Michas disclaims beneficial ownership of such shares for all other purposes. +(d) +All options are included. +13 +Delinquent Section 16(a) Reports +Section 16(a) of the Exchange Act, requires the directors and executive officers of the Company and any persons who beneficially own more +than ten percent of the Company’s common stock to file with the SEC various reports of beneficial ownership and changes in beneficial ownership. Based solely on a review of the copies of such reports received by the Company and certain written +representations that no other reports were required, the Company believes that for the fiscal year ended January 31, 2022, all of its officers, directors and 10% beneficial owners complied with the requirements of Section 16(a), except +that the following forms were filed late: +• +One Form 4 by each of Mr. Natalizia, Mr. Petrarca, Mr. Smith, Mr. Woods relating to the +issuance of shares of common stock upon the vesting of a restricted stock unit award and the related surrender of shares of common stock to satisfy tax withholding obligations; +• +One Form 4 by Mr. Schofield relating to shares of common stock acquired under an automatic dividend +reinvestment program through his broker; and +• +One Form 4 by Mr. Quain relating to the purchase of shares of common stock. +14 +COMPENSATION DISCUSSION AND ANALYSIS +The Compensation Committee of the Company’s Board of Directors (the “Committee”) is charged with the responsibility for +establishing, implementing and monitoring adherence to the Company’s compensation philosophy and setting the compensation for our executives and key management personnel in a manner which is internally equitable. The Committee also is +responsible for reviewing and establishing the compensation of directors. +Compensation Philosophy and Objectives. The +Committee’s overall philosophy in terms of executive compensation is to link management incentives with the actual financial performance of the Company. Similarly, the compensation should attract, retain, and motivate highly qualified +individuals to achieve the Company’s business goals and link their interests with shareholder interests. In setting compensation for the Company’s executive officers, the Committee considers the executive’s performance, awards, if +any, made during prior years and other relevant factors. The Committee seeks to have the long-term performance of the Company’s common stock reflected in executive compensation through our equity incentive programs. +Elements of Compensation. The total compensation program for the Company’s executive officers consists of the following: +• +salary; +• +cash incentive and bonus awards tied to the Company’s and executive’s annual performance; +• +equity-based incentive compensation, in the form of time-based restricted stock units and performance-based +restricted stock units; and +• +retirement and other benefits. +The Committee seeks to structure each element of compensation to attract and retain the necessary executive talent, reward annual performance +and provide incentives for achieving both long-term strategic goals and short-term performance goals. The Committee’s policy for allocating between currently paid and long-term compensation is to ensure adequate base compensation to attract and +retain personnel, while providing incentives to maximize long-term value for our shareholders. +Say on Pay Consideration. In +accordance with SEC rules, the Company conducted a non-binding, advisory vote on the Company’s executive compensation at its 2021 annual meeting. The Company’s shareholders voted to approve the +Company’s executive compensation practices at the 2021 annual meeting by a favorable vote of approximately 89.1% of the votes cast. +Setting Executive Compensation. The Committee is responsible for establishing and periodically reviewing the compensation of the +Company’s executive officers and approving all equity awards. The Committee annually reviews the performance of the executive officers and, based on these reviews, the Committee determines salary adjustments and annual awards. Mr. Woods +does not participate during deliberations regarding his compensation. +Fiscal Year 2022 Compensation Overview. The total +compensation paid to Mr. Woods and the Company’s two other most highly compensated executive officers, Mr. Smith and Mr. Natalizia (collectively with Mr. Woods, the “Named Executive Officers”), in the fiscal year +ended January 31, 2022 increased from the total compensation paid in the prior fiscal year. As is described in the Summary Compensation Table below, this increase was primarily a result of salary increases, increased cash incentive payments and +higher valued stock awards. +Salary. Base salaries for executive officers are evaluated each year. Historically, base salaries have +been increased at annual rates which approximate the general rates of increase of compensation for all employees of +15 +the Company. Annual salary adjustments are made effective April 1 of each year. Effective as of April 1, 2021, the Committee set the fiscal year 2022 annual salaries of the Named +Executive Officers as follows: +Name +Salary +Gregory A. Woods +$ +445,875 +David S. Smith +$ +303,913 +Michael J. Natalizia +$ +240,875 +Cash Incentive and Bonus Awards. Annual cash incentive awards are an important component of total +executive cash compensation because they reward the Company’s executives for achieving targeted, annual results and emphasize variable or “at risk” compensation. From +time-to-time the Committee awards discretionary cash bonuses to the Company’s executives to reward their efforts in extraordinary circumstances. +Senior Executive Short-Term Incentive Plan +Participants in the Company’s Senior Executive Short-Term Incentive Plan (“STIP”) (which may include any executive officer, vice +president or director-level manager) are determined annually by the Committee. Awards under the STIP are earned based on achieving or exceeding annual financial objectives, which the Committee has full discretion to establish for each plan year. +Annually, the Committee establishes a Target Award for each STIP participant, which may vary as to each participant and from year to year. In April 2021, the Committee established the following Target Awards for our Named Executive Officers for +fiscal year 2022: +Name +Target +Award +Target +Award as +Percentage +of Base +Salary +Gregory A. Woods +$ +356,700 +80 +% +David S. Smith +$ +136,761 +45 +% +Michael J. Natalizia +$ +84,306 +35 +% +Concurrently with the establishment of the Target Awards for fiscal year 2022, the Committee established +fiscal year 2022 consolidated operating income as the sole performance goal under the STIP (the “2022 Performance Goal”), and established a threshold and a target for the 2022 Performance Goal. The total STIP award earned by a Named +Executive Officer for fiscal year 2022 is calculated as follows: +• +No bonus was to be paid with respect to the 2022 Performance Goal unless our fiscal year 2022 operating income +exceeded the threshold established by the Compensation Committee. If our fiscal year 2022 operating income equaled the target established by the Compensation Committee, 100% of the target bonus would have been paid. For fiscal year 2022 +operating income falling between the threshold and the target, the bonus amount was determined through linear interpolation. An incremental bonus of up to 100% of each participant’s total STIP target bonus would have been paid if +our fiscal year 2022 operating income fell between the target and an amount equal to 200% of the target. If our fiscal year 2022 operating income had fallen between the target and 200% of the target, the bonus amount would have been determined +through linear interpolation. No further bonus would have been paid on account of fiscal year 2022 operating income exceeding 200% of the target. +Each of our Named Executive Officers’ STIP award is subject to the following limitations: +• +Aggregate awards under the STIP in any year may not exceed 15% of the Company’s consolidated operating +income for that year determined without deduction for the STIP awards. +• +Adequate reserves for awards must be accrued when determining whether a Performance Goal based upon operating +income has been achieved. +16 +The threshold and target for the 2022 Performance Goal and the corresponding amount of the +STIP paid based on the Company’s results for fiscal year 2022 were as follows: +Performance Goal +Threshold ($) +Target ($) +Actual +Operating +Income +Performance +($) +Percentage +of Target +Bonus +Earned +(%) +Operating Income Goal +3,000,000 +5,000,000 +4,255,869 +62.8 +As a result, our Named Executive Officers received the STIP awards for fiscal year 2022 listed in the table +below. +Name +STIP Award for Fiscal Year 2022 +Gregory A. Woods +$ +223,984 +David S. Smith +$ +85,877 +Michael J. Natalizia +$ +52,939 +Equity-based Incentive Compensation . Total compensation at the executive level also includes equity +incentive awards granted under the Company’s 2018 Equity Incentive Plan. The objectives of the equity incentive awards are to align executive and shareholder long-term interests by creating a strong and direct link between executive pay and the +Company’s performance in key financial metrics, and to enable executives to develop and maintain a long-term stock ownership position in the Company’s common stock. +In fiscal year 2022, the Committee granted to the Named Executive Officers the following number of time-based and performance-based restricted +stock units. +Name +Time- +based +Restricted +Stock +Units +Performance- +based +Restricted +Stock Units +Gregory A. Woods +17,202 +31,734 +David S. Smith +5,863 +10,815 +Michael J. Natalizia +2,169 +4,000 +The time-based restricted stock units vest in three equal annual installments commencing on the first +anniversary of the date of grant, based on the executive’s continued employment with us. The performance-based restricted stock units may be earned based upon the achievement by the Company of a performance goal based on fiscal year 2022, 2023 +and 2024 (the “Performance Years”) revenue threshold and target (the “Revenue Goal”) as follows: +Performance Goal +Threshold +Target +Revenue Goal +$ +120,000,000 +$ +150,000,000 +The number of performance-based restricted stock units that become earned (“Earned RSUs”) with +respect to any Performance Year will be equal to the product of the total number of performance-based restricted stock units, less any performance-based restricted stock units that became Earned RSUs with respect to a prior Performance Year, +multiplied by the Earned Revenue Percentage (as defined below) for such Performance Year, rounded down to the nearest whole number. In no event will the aggregate number of Earned RSUs exceed the total performance-based restricted stock units for +any recipient of an award of performance-based restricted stock units. One-third of the number of performance-based restricted stock units that become Earned RSUs will vest on the date that the Compensation +Committee determines that they have been earned, with the remaining two-thirds vesting in equal installments on the first and second anniversaries of that date. +17 +For purposes of the performance-based restricted stock units, “Earned Revenue +Percentage” for a Performance Year means the percentage obtained by dividing (i) the Company’s revenue for that Performance Year, as determined by the Compensation Committee in accordance with United States generally accepted +accounting principles (the “Revenue”), minus the Adjusted Performance Threshold for that Performance Year by (ii) the performance target minus the Adjusted Performance Threshold for that Performance Year. If the revenue +for any Performance Year is less than or equal to the Adjusted Performance Threshold for that Performance Year, the Earned Revenue Percentage for that Performance Year shall be zero, and if the Revenue for any Performance Year is equal to or exceeds +the Annual Performance Target, the Earned Revenue Percentage for that Performance Year shall be 100%. The “Adjusted Performance Threshold” for a Performance Year means the greater of (i) the performance threshold and (ii) the +highest revenue for any previously completed Performance Year. +Because the Company’s fiscal year 2022 revenue was less than the +threshold, none of the performance-based restricted stock units were earned in 2022. +Share Ownership and Retention Guidelines . The +Committee believes that, as a rule, senior management should have a meaningful equity interest in the Company. In order to promote equity ownership and further align the interests of management with our shareholders, the Committee has adopted share +ownership and retention guidelines for our executives. These guidelines are based upon the market value of our common stock as a multiple of such officer’s base pay. The multiple is three times base salary for the CEO, two times base salary for +the Chief Financial Officer and 1.25 times base salary for the other executive officers. Under these guidelines, an executive was expected to achieve the ownership level by April 1, 2020 or, if later, within five years of his or her initial +appointment as an executive officer. Executives are expected to retain at least 50% of all shares acquired on vesting of restricted stock or restricted stock units and 50% of all shares acquired on exercise of any stock option (net of any shares +tendered or withheld for payment of taxes) until they achieve the specified ownership level and thereafter maintain such ownership level. +Retirement and Other Benefits . In order to attract and retain key executives, the Company offers retirement benefits through a +Profit-Sharing Plan for employees, including its executive officers. +Profit Sharing Plan. The Company maintains a Profit +Sharing Plan that is a qualified plan under Section 401(k) of the Internal Revenue Code, which provides retirement benefits to substantially all the Company’s employees. +Each eligible employee shares in contributions on the basis of relative compensation. In addition, participants are permitted to defer up to 50% of their cash +compensation and make contributions of such deferral to this plan through payroll deductions (limited to $19,500 in calendar years 2021 and 2022). The Company makes matching contributions equal to 50% of the first seven percent of compensation +contributed. The deferrals are made within the limits prescribed by Section 401(k). The Profit Sharing Plan provides for the vesting of 100% of matching contributions made by the Company to the account of the employee after three years of +service. Contributions by an employee are 100% vested immediately. +Perquisites . In addition to the benefits +described above, the Company provides automobile allowances to certain of its executive officers and a housing allowance to one of its Named Executive Officers. The amount of any automobile or housing allowance granted to our Named Executive +Officers is reflected in the “All Other Compensation” column of the Summary Compensation Table below. +Change in Control +Agreements with Mr. Woods and Mr. Smith . In November 2014 and November 2020, the Company entered into change in control agreements (the “CIC Agreements”) with +Mr. Woods and Mr. Smith, respectively. The CIC Agreements provides for the payment of severance benefits upon a change in control of the Company if Mr. Woods’ or Mr. Smith’s employment is terminated by the Company +without cause or by Mr. Woods or Mr. Smith, as applicable, for good reason within the period (the “CIC Period”) beginning on the +18 +earlier of (i) 180 days prior to the occurrence of the change in control and (ii) the announcement of a transaction expected to result in a change in control, and ending on the second +anniversary of the occurrence of a change in control. +Severance payments to Mr. Woods include (i) payment of one and one-half times the sum of (A) his annual salary and (B) the greater of the amount of his target bonus for the fiscal year in progress or the highest annual bonus paid to him in the prior three years +(collectively, “Mr. Woods’ base compensation”), (ii) a portion of Mr. Woods’ bonus for the fiscal year in progress, prorated based upon the number of days elapsed since the commencement of the fiscal year and calculated +assuming that 100% of the target under the bonus plan is achieved, (iii) immediate vesting of all unvested stock options and restricted stock awards, (iv) continued health coverage for 18 months or until he receives benefits from another +employer, if earlier, and (v) reimbursement for outplacement services in an amount not to exceed 17% of Mr. Woods’ base compensation. Severance payments to Mr. Smith include (i) payment of the sum of (A) his annual +salary and (B) 75% of the amount of his target bonus for the fiscal year in progress (collectively, “Mr. Smith’s base compensation”), (ii) a portion of Mr. Smith’s bonus for the fiscal year in progress, prorated based +upon the number of days elapsed since the commencement of the fiscal year and calculated assuming that 100% of the target under the bonus plan is achieved, (iii) immediate vesting of all unvested stock options, restricted stock, time-based +restricted stock units and earned performance-based restricted stock units (provided that performance-based restricted stock units shall be deemed to have been earned only to the extent that they are earned in accordance with their terms as of the +Change in Control Date and only the time-based vesting of such earned units shall be accelerated under Mr. Smith’s CIC Agreement, (iv) continued health coverage for 12 months or until he receives benefits from another employer, if +earlier, and (v) reimbursement for outplacement services in an amount not to exceed 17% of Mr. Smith’s base compensation. +If any payment or benefit under the CIC Agreement or under any other plan or agreement would constitute an “excess parachute +payment” within the meaning of Section 280G of the Internal Revenue Code, and if Mr. Woods or Mr. Smith would be in a better after-tax position by reducing the such payments or benefits, +the amounts payable under the applicable CIC Agreement will be reduced to the extent necessary to avoid the excise tax payable under Section 280G. +Employment Agreements and Severance Benefits . Except for the CIC Agreements with Mr. Woods and Mr. Smith, we generally +do not provide any severance benefits to our Named Executive Officers other than those provided to all employees. Severance benefits vary based upon salary levels and length of service. +19 +COMPENSATION COMMITTEE REPORT +The Compensation Committee has reviewed and discussed with management the Compensation Discussion & Analysis included above. Based on +these reviews and discussions, the Compensation Committee has recommended to the Board that the Compensation Discussion & Analysis be included in the Company’s Annual Report on Form 10-K for the +fiscal year ended January 31, 2022 for filing with the SEC through incorporation by reference of this Proxy Statement. +Compensation +Committee: +Richard S. Warzala (Chairman) +Mitchell I. Quain +Harold +Schofield +20 +EXECUTIVE COMPENSATION +The following table provides information regarding the total compensation paid or accrued by the Company to each of its Named Executive +Officers. +Summary Compensation Table +Name and Principal Position +Year +Salary +($) +Stock +Awards +($)(a) +Non-Equity +Incentive Plan +Compensation +($) +All Other +Compensation +($) +Total +($) +Gregory A. Woods +2022 +444,202 +697,827 +223,984 +55,470 +(b) +1,421,483 +President and CEO +2021 +408,231 +620,553 +— +107,134 +1,135,918 +David S. Smith +2022 +302,772 +237,828 +85,877 +56,404 +(c) +682,881 +Vice President, CFO and Treasurer +2021 +278,254 +211,502 +— +55,162 +544,918 +Michael J. Natalizia +2022 +239,971 +87,970 +52,939 +22,051 +(d) +402,931 +Chief Technology Officer and Vice President of +Strategic Technical Alliances +2021 +220,568 +111,761 +— +19,538 +351,867 +(a) +The amounts reflect the aggregate grant date fair value of the restricted stock units and performance-based +restricted stock units issued to the Named Executive Officers, as calculated under FASB ASC Topic 718, excluding estimated forfeitures. Under FASB ASC Topic 718, the grant date fair value of each time-based restricted stock unit is equal to the +closing price of the Company’s common stock on the grant date. The grant date fair value of performance-based restricted stock units is based on the closing price of the Company’s common stock on the grant date and the Company’s +estimate, as of the date of grant, of the probable outcome of the performance conditions. The closing price of the Company’s common stock on the grant date for all restricted stock units issued to the Named Executive Offices during fiscal year +2022 was $14.26. +(b) +Represents vehicle allowance of $25,376, premiums on Company-paid life insurance policies for which +Mr. Woods or his estate is the beneficiary of $3,160, unused vacation payout of $16,234, and an employer match under the Company’s Profit Sharing Plan of $10,700. +(c) +Represents housing allowance of $27,692, vehicle allowance of $19,108, and an employer match under the +Company’s Profit Sharing Plan of $9,604. +(d) +Represents an unused vacation payout of $16,246 and employer match under the Company’s Profit Sharing Plan +of $5,805. +21 +Grants of Plan-Based Awards +The following table provides information on all plan-based awards by the Company for the fiscal year ended January 31, 2022 to each Named +Executive Officer. +Name +Grant +Date +Estimated Possible Payouts +Under Non-Equity +Incentive Plan Awards +Estimated Possible Payouts +Under Equity +Incentive Plan Awards +All Other +Stock +Awards: +Number +of Shares +of Stock +or Units +(#) +Grant Date +Fair Value +of Stock +Awards +($)(c) +Threshold +($)(a)(b) +Target +($)(a) +Maximum +($)(a) +Threshold +(#) +Target +(#) +Maximum +(#) +Gregory A. Woods +4/7/2021 +— +356,700 +713,400 +4/7/2021 +17,202 +(d) +245,301 +4/7/2021 +— +31,734 +(e) +31,734 +(e) +452,527 +David S. Smith +4/7/2021 +— +136,761 +273,522 +4/7/2021 +5,863 +(d) +83,606 +4/7/2021 +— +10,815 +(e) +10,815 +(e) +154,222 +Michael J. Natalizia +4/7/2021 +— +84,306 +168,613 +4/7/2021 +2,169 +(d) +30,930 +4/7/2021 +— +4,000 +(e) +4,000 +(e) +57,040 +(a) +Represents awards under the Company’s Senior Executive Short-Term Incentive Plan. See “Compensation +Discussion & Analysis – Senior Executive Short-Term Incentive Plan” for additional information regarding the Senior Executive Short-Term Incentive Plan. +(b) +The Company’s Senior Executive Short-Term Incentive Plan does not provide for any threshold payment amount +for amounts that may be earned thereunder. +(c) +The grant date fair value of each time-based restricted stock unit is equal to the closing price of the +Company’s common stock on the grant date. The grant date fair value of performance-based restricted stock units is based on the closing price of the Company’s common stock on the grant date and the Company’s estimate, as of the date +of grant, of the probable outcome of the performance conditions. +(d) +Consists of a restricted stock unit award issued pursuant to the Company’s 2018 Equity Incentive Plan, +which vests in three equal annual installments commencing on the first anniversary of the grant date. +(e) +Consists of a performance-based restricted stock unit award issued pursuant to the Company’s 2018 Equity +Incentive Plan. Any portion of the award that is earned will vest in three equal annual installments commencing on the date the Company’s Compensation Committee makes the determination that such portion of the award was earned. See +“Compensation Discussion & Analysis – Equity-based Incentive Compensation” for more information about the performance-based restricted stock units. +22 +Outstanding Equity Awards at Fiscal Year-End +The following table provides information on all outstanding equity awards held by each of the Named Executive Officers as of January 31, +2022. +OPTION AWARDS +STOCK AWARDS +Name +Number of +Securities +Underlying +Unexercised +Options (#) +Exercisable +Number of +Securities +Underlying +Unexercised +Options (#) +Unexercisable +Option +Exercise +Price +($) +Option +Expiration +Date +Number +of +Shares +or +Units of +Stock +That +Have +Not +Vested +(#) +Market +Value of +Shares or +Units of +Stock +That +Have Not +Vested +($) +Equity +Incentive +Plan +Awards: +Number +of +Unearned +Shares, +Units or +Other +Rights +That +Have Not +Vested +(#) +(a) +Equity +Incentive +Plan +Awards: +Market or +Payout +Value of +Unearned +Shares, +Units or +Other +Rights +That +Have +Not +Vested +($) +Gregory A. Woods +25,000 +— +7.91 +9/4/2022 +50,000 +— +13.80 +5/22/2024 +(b) +50,000 +— +13.95 +3/16/2025 +(b) +50,000 +— +15.01 +3/14/2026 +(b) +50,000 +— +12.85 +3/13/2027 +(b) +45,500 +— +18.25 +6/4/2028 +(c) +38,386 +(d) +527,424 +31,734 +436,025 +David S. Smith +50,000 +— +13.80 +1/22/2028 +(b) +14,000 +— +18.25 +6/4/2028 +(c) +13,080 +(e) +179,719 +10,815 +148,598 +Michael J. Natalizia +5,000 +— +14.20 +3/17/2024 +(b) +17,500 +— +18.25 +6/4/2028 +(c) +5,986 +(f) +82,248 +4,000 +54,960 +(a) +Consists of performance-based restricted stock units held by the Named Executive Officers, which may be earned +based upon the achievement by the Company of a performance goal relating to the Company’s fiscal year 2022, 2023 and 2024 revenue. No restricted stock units were earned by the Named Executive Officers based upon the Company’s fiscal year +2022 revenue. +(b) +Options vest in four equal annual installments commencing on the first anniversary of the option grant date +(which is ten years prior to the expiration date). +(c) +Options vest in three equal annual installments commencing on the first anniversary of the option grant date +(which is ten years prior to the expiration date). +(d) +Consists of (i) 3,838 shares of restricted stock that vested on March 20, 2022; (ii) 17,346 restricted +stock units that vest in equal tranches on March 27, 2022 and 2023; (iii) 17,202 restricted stock units that vest in three equal installments on April 7, 2022, 2023 and 2024. +(e) +Consists of (i) 1,305 restricted stock units that vested on March 20, 2022; (ii) 5,912 restricted stock +units that will vest on March 27, 2022 and 2023; (iii) 5,863 restricted stock units that vest in three equal installments on April 7, 2022, 2023 and 2024. +(f) +Consists of (i) 693 shares of restricted stock that vested on March 20, 2022; (ii) 3,124 restricted stock +units that vest on March 27, 2022 and 2023; (iii) 2,169 restricted stock units that vest in three equal installments on April 7, 2022, 2023 and 2024. +23 +Risk Related to Compensation Policies +The Company’s compensation policies and practices for its employees, including its executive compensation program described in +Compensation Discussion and Analysis, aim to provide a risk-balanced compensation package which is competitive in our market sectors and relevant to the individual executive. The Company expects to continue to award to certain executives and +employees, upon satisfaction of applicable performance conditions and subject to future approval and grant by the Compensation Committee, equity and cash-based awards. Because the Company’s equity incentive programs include substantial vesting +features, the Company believes that the structure of its compensation plans discourages short-term risk taking and aligns the interest of its executives and managers with those of its shareholders. The Company does not believe that risks arising +from these practices, or its compensation policies and practices considered as a whole, are reasonably likely to have a material adverse effect on the Company. +24 +AUDIT COMMITTEE REPORT +The Audit Committee of the Board is responsible for providing independent, objective oversight of the Company’s accounting functions and +internal controls. The Audit Committee is composed of four directors, each of whom is independent as defined by the NASDAQ listing standards and SEC rules. The Audit Committee operates under a written charter approved by the Board. +Management is responsible for the Company’s internal controls and financial reporting process. The independent accountants are +responsible for performing an independent audit of the Company’s consolidated financial statements in accordance with generally accepted auditing standards and issuing a report thereon. The Audit Committee’s responsibility is to monitor +and oversee these processes. +The Audit Committee’s responsibilities focus on two primary areas: (1) the adequacy of the +Company’s internal controls and financial reporting process and the reliability of the Company’s financial statements; and (2) the independence and performance of the Company’s independent accountants. The Audit Committee has +sole authority to select, evaluate and when appropriate, replace the Company’s independent auditors. +The Audit Committee has met +with management and the Company’s independent accountants, Wolf & Company, P.C., to review and discuss the January 31, 2022 financial statements. Management represented to the Committee that the Company’s consolidated +financial statements were prepared in accordance with generally accepted accounting principles, and the Audit Committee has reviewed and discussed the consolidated financial statements with management and the independent accountants. The Audit +Committee also discussed with Wolf & Company, P.C. the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board. The Audit Committee also received from Wolf & Company, P.C. +the written disclosures and the letter from Wolf & Company, P.C. pursuant to applicable requirements of the Public Company Accounting Oversight Board regarding Wolf & Company, P.C.’s communications with the Audit Committee +concerning independence, and has discussed with Wolf & Company, P.C. its independence from the Company. +The Audit Committee +received the information concerning the fees of Wolf & Company, P.C. for the year ended January 31, 2022 set forth below under “Independent Accountant Fees and Services.” When applicable, the Audit Committee considers whether +the provision of non-audit services is compatible with maintaining the independence of the independent accountants. Wolf & Company, P.C. did not provide any +non-audit services during the fiscal year ended January 31, 2022. +Based upon the review and +discussions referred to above, the Audit Committee recommended that the Board include the audited consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended +January 31, 2022, to be filed with the SEC. +Audit Committee: +Mitchell I. Quain (Chairman) +Jean Bua +Yvonne Schlaeppi +Harold Schofield +25 +RELATED PARTY TRANSACTIONS +Potential conflicts of interest and related party transactions are referred by the Board to the Audit Committee for review and approval. In +reviewing and evaluating potential conflicts of interest and related party transactions, the Audit Committee uses applicable NASDAQ listing standards and SEC rules as a guide. +No officer, director or nominee for director of the Company or any associate of any of the foregoing had during the period beginning on +February 1, 2020 through the date of this proxy statement any material interest, direct or indirect, in any material transaction or any material proposed transaction in which the amount exceeds $120,000 and to which the Company was or is to be +a party. +26 +EQUITY COMPENSATION PLAN INFORMATION +The following table sets forth information about the Company’s equity compensation plans as of January 31, 2022: +Plan Category +Number of +Securities to be +Issued Upon +Exercise of +Outstanding +Options, +Warrants and +Rights +Weighted- +Average +Exercise Price +of Outstanding +Options, +Warrants and +Rights +Number of Securities +Remaining Available +for Future Issuance +Under Equity +Compensation Plans +Equity Compensation Plans Approved by Shareholders +776,975 +(1) +$ +14.67 +(2) +401,893 +(3) +Equity Compensation Plans Not Approved by Shareholders +— +— +— +Total +776,975 +(1) +$ +14.67 +(2) +401,893 +(3) +(1) +Includes 323,468 shares issuable upon exercise of outstanding options granted under the Company’s 2007 +Equity Incentive Plan; 139,075 shares issuable upon exercise of outstanding options granted under the Company’s 2015 Equity Incentive Plan; and 135,500 shares issuable upon exercise of outstanding options granted and 178,932 restricted stock +units outstanding under the Company’s 2018 Equity Incentive Plan. This balance does not include 20,410 shares of unvested restricted stock which are subject to forfeiture. Refer to footnote 15 to the Company’s audited financial statements +for the fiscal year ended January 31, 2022 included in the Company’s Annual Report on Form 10-K filed with the SEC on April 18, 2022 for further discussion. +(2) +Does not include restricted stock units. +(3) +Represents 399,611 shares available for grant under the Company’s 2018 Equity Incentive Plan and 2,282 +shares available for issuance under the Company’s Employee Stock Purchase Plan. +27 +PROPOSAL NO. 2 +ADVISORY VOTE ON EXECUTIVE COMPENSATION +As required by the Section 14A(a)(1) of the Exchange Act, the Board is providing shareholders with the opportunity to cast an advisory +vote on the Company’s executive compensation at the annual meeting through the following resolution: +“RESOLVED, that the +shareholders approve the Company’s executive compensation, as described in the Compensation Discussion and Analysis and the tabular disclosure regarding Named Executive Officer compensation (together with the accompanying narrative disclosure) +in the Company’s Proxy Statement.” +The Board believes that the Company’s compensation policies and procedures, which are +described more fully in the “Compensation Discussion and Analysis” section of this Proxy Statement and in the tables and narrative in the “Executive Compensation” section, are strongly aligned with the long-term interests of +shareholders. These policies and procedures balance short-term and longer-term compensation opportunities to assure that the Company meets short-term objectives while continuing to produce value for our shareholders over the long term. +Approval of this proposal requires the affirmative vote of a majority of the shares of common stock entitled to vote and present in person or +represented by proxy at the annual meeting. Abstentions will have the same effect as a vote against the proposal, and broker non-votes will have no effect on the outcome of the vote. This vote will not be +binding on or overrule any decisions by the Board or any committee thereof, will not create or imply any additional fiduciary duty on the part of the Board, and will not restrict or limit the ability of the Company’s shareholders to make +proposals for inclusion in proxy materials related to executive compensation. However, the Compensation Committee and the Board will take into account the outcome of the vote when considering future executive compensation arrangements. +The Board recommends a vote “FOR” approval of the Company’s executive compensation, as described in the Compensation Discussion and +Analysis, and the tabular disclosure regarding Named Executive Officer compensation (together with accompanying narrative disclosure) in this Proxy Statement. +28 +PROPOSAL NO. 3 +Overview +As of April 18, 2022, +there were 2,282 shares available for issuance under the Company’s Amended and Restated Employee Stock Purchase Plan (the “Prior ESPP”). The Board and the Compensation Committee believe that offering an employee stock purchase plan is +important to the ability of the Company to compete for talent, and on April 28, 2022, the Board adopted, subject to stockholder approval, the AstroNova, Inc. 2022 Employee Stock Purchase Plan (the “2022 ESPP”) to replace the Prior Plan. +The 2022 ESPP will provide eligible employees an opportunity to purchase shares of the Company’s common stock at a discount through accumulated contributions of their earned compensation. Effective upon the approval of the 2022 ESPP the Prior +ESPP will be terminated. +The 2022 ESPP’s initial share reserve which the Company is asking its stockholders to approve is 40,000 +shares of the Company’s common stock. Following the 2022 ESPP’s effectiveness, offering periods will not commence under the 2022 ESPP until determined by the Board or the Compensation Committee. The closing price on NASDAQ per share of the +Company’s common stock was $12.55 on April 25, 2022, the most recent practicable date prior to the date of this proxy statement. Based upon such price, the maximum aggregate market value of the shares of the Company’s common stock +that could potentially be issued under the 2022 ESPP is $502,000. +Both the Board and the Compensation Committee believe that an employee +stock purchase plan will be an important factor in attracting, motivating, and retaining qualified personnel who are essential to our success. The 2022 ESPP provides a significant incentive by allowing employees to purchase shares of the +Company’s common stock at a discount. The Board has approved the 2022 ESPP, subject to stockholder approval. +Summary of the 2022 Employee Stock +Purchase Plan +The following is a summary of the principal features of the 2022 ESPP and its operation. This summary does not contain +all of the terms and conditions of the 2022 ESPP and is qualified in its entirety by reference to the 2022 ESPP as set forth in Annex A attached to this proxy statement. +The 2022 ESPP has been adopted by the Board, subject to stockholder approval, and will become effective upon the date of stockholder approval. +It is the Company’s intention that the 2022 ESPP qualify as an “employee stock purchase plan” under Section 423 of the Code. The Board believes that the adoption of the 2022 ESPP will benefit the Company by providing employees +with an opportunity to acquire shares of the Company’s common stock and will help the Company to attract, retain and motivate valued employees. +Purpose +The purpose of the 2022 +ESPP is to provide eligible employees with an opportunity to purchase shares of the Company’s common stock through accumulated contributions, which generally will be made through payroll deductions. The 2022 ESPP will permit the administrator +of the 2022 ESPP to grant purchase rights that qualify for preferential tax treatment under Section 423 of the Code. In addition, the 2022 ESPP will authorize the grant of purchase rights that do not qualify under Code Section 423 pursuant +to rules, procedures or sub-plans adopted by the administrator that are designed to achieve desired tax or other objectives. +Shares Available for Issuance +The +Company has initially reserved 40,000 shares of the Company’s common stock for issuance under the 2022 ESPP. This limit is subject to adjustment in the event of a reorganization, recapitalization, reclassification, stock split, stock dividend, +reverse stock split or other similar change in the Company’s capitalization. +29 +Administration +The 2022 ESPP will be administered by the Compensation Committee, the Board or another board committee pursuant to the terms of the 2022 ESPP. +The plan administrator, which initially will be the Compensation Committee, will have full authority to make, administer and interpret such rules and regulations regarding the 2022 ESPP as it deems advisable. +Eligibility +Any employee of the +Company or one of its affiliates or subsidiaries that has been designated to participate in the 2022 ESPP is eligible to participate in the 2022 ESPP so long as the employee is customarily employed for at least 20 hours a week and more than five +months in a calendar year. No person who owns or holds, or as a result of participation in the 2022 ESPP would own or hold, shares of the Company’s common stock or options to purchase the Company’s common stock that together equal 5% or +more of the total combined voting power or value of all classes of capital stock of the Company or any parent or subsidiary thereof is entitled to participate in the 2022 ESPP. No employee may be granted an option under the 2022 ESPP that permits +the employee’s rights to purchase the Company’s common stock to accrue at a rate of more than $25,000 (determined using the fair market value of the stock at the time such option is granted) in any calendar year. +Participation in the 2022 ESPP is limited to eligible employees who authorize payroll deductions equal to a whole percentage of base pay for +allocation to the 2022 ESPP. Employees may authorize payroll deductions with a minimum of 1% of base pay and a maximum of 15% of base pay. As of April 18, 2022, there are currently approximately 334 employees who will be eligible to participate +in the 2022 ESPP. Once an employee becomes a participant in the 2022 ESPP, that employee will automatically participate in successive offering periods, as described below, until such time as that employee withdraws from the 2022 ESPP, becomes +ineligible to participate in the 2022 ESPP, or his, her or their employment ceases. +Offering Periods and Purchase Periods +Unless otherwise determined by the plan administrator, each offering of the Company’s common stock under the 2022 ESPP will be for a +period of three months, which is referred to as an “offering period.” The first offering period under the 2022 ESPP will begin and end on such date or dates as determined by the plan administrator. Subsequent offerings under the 2022 ESPP +will generally begin on the first business day occurring on or after each January 1, April 1, July 1 and October 1, and will end on the last business day occurring before the January 1, April 1, July 1 and +October 1 thereafter, respectively. Shares are purchased on the last business day of each offering period, with that day being referred to as an “exercise date.” The plan administrator may establish different offering periods or +exercise dates under the 2022 ESPP. The 2022 ESPP will include a component, or the “423 Component,” that is intended to qualify as an “employee stock purchase plan” under Code Section 423, and a component that does not +comply with Code Section 423, or the “Non-423 Component.” For purposes of this summary, a reference to the 2022 ESPP generally will mean the terms and operations of the 423 Component. +Except as may be permitted by the plan administrator in advance of an offering, a participant may not increase or decrease the amount of +his, her or their payroll deductions during any offering period but may increase or decrease his, her or their payroll deduction with respect to the next offering period by filing a new enrollment form within the period beginning 15 business days +before the first day of such offering period and ending on the day prior to the first day of such offering period. A participant may withdraw from an offering period at any time without affecting his, her or their eligibility to participate in +future offering periods. If a participant withdraws from an offering period, that participant may not again participate in the same offering period, but may enroll in subsequent offering periods. An employee’s withdrawal will be effective as of +the next business day following the date that the plan administrator receives the employee’s written notice of withdrawal under the 2022 ESPP. +30 +Exercise of Purchase Right +On the exercise date of each offering period, the employee is deemed to have exercised the option, at the exercise price, for the lowest of +(i) a number of shares of the Company’s common stock determined by dividing such employee’s accumulated payroll deductions or contributions on such exercise date by the exercise price; (ii) the number of shares of the +Company’s common stock determined by dividing $25,000 by the fair market value of the Company’s common stock on the first day of such offering period; or (iii) such lesser number as established by the plan administrator in advance of +the offering. The exercise price is equal to the lesser of (i) 85% the fair market value per share of the Company’s common stock on the first day of the offering period or (ii) 85% of the fair market value per share of the +Company’s common stock on the exercise date. The maximum number of shares of the Company’s common stock that may be issued to any employee under the 2022 ESPP in a calendar year is a number of shares of the Company’s common stock +determined by dividing $25,000 by the fair market value of the Company’s common stock, valued at the start of the offering period, or such other lesser number of shares as determined by the plan administrator from time to time. +Termination of Participation +In +general, if an employee is no longer a participant on an exercise date, the employee’s option will be automatically terminated, and the amount of the employee’s accumulated payroll deductions will be refunded. +Non-Transferability +A participant will not be permitted to transfer rights granted under the 2022 ESPP other than by will or the laws of descent and distribution, +and such rights are generally exercisable during the lifetime of the participant only by the participant. +Merger or Change in Control +In the case of and subject to the consummation of a “change in control,” the plan administrator, in its discretion, and on such terms +and conditions as it deems appropriate, may take any one or more of the following actions under the 2022 ESPP or with respect to any right under the 2022 ESPP or to facilitate such transactions or events: (a) provide for either +(i) termination of any outstanding option in exchange for an amount of cash, if any, equal to the amount that would have been obtained upon the exercise of such option had such option been currently exercisable or (ii) the replacement of +such outstanding option with other options or property selected by the plan administrator in its sole discretion; (b) provide that the outstanding options under the 2022 ESPP shall be assumed by the successor or survivor corporation, or a +parent or subsidiary thereof, or shall be substituted for similar options covering the stock of the successor or survivor corporation, or a parent or subsidiary thereof, with appropriate adjustments as to the number and kind of securities and +prices; (c) make adjustments in the number and type of shares of the Company’s common stock (or other securities or property) subject to outstanding options under the 2022 ESPP and/or in the terms and conditions of outstanding options and +options that may be granted in the future; (d) provide that the offering with respect to which an option relates will be shortened by setting a new exercise date on which such offering will end; and (e) provide that all outstanding options +shall terminate without being exercised and all amounts in the accounts of participants shall be promptly refunded. +Amendment; Termination +The 2022 ESPP will automatically terminate on the tenth anniversary of the effective date of the 2022 ESPP. The Board may, in its +discretion, at any time, terminate or amend the 2022 ESPP. However, without the approval within 12 months of such Board action by the stockholders, no amendment shall be made to the 2022 ESPP increasing the number of shares specifically approved to +comply with the requirements of Section 423(b) of the Code or any other changes to the components of the 2022 ESPP intended to comply with the requirements of Section 423(b) of the Code that would require stockholder approval in order for +the 2022 ESPP, as amended, to qualify as an “employee stock purchase plan” under Section 423(b) of the Code. +31 +Summary of Material U.S. Federal Income Tax Considerations +The following is only a summary of the principal U.S. federal income tax consequences of an employee’s participation in the 2022 ESPP. The +summary does not discuss all U.S. federal tax consequences of participation in the 2022 ESPP, nor does it discuss the tax laws of any municipality, state or foreign country in which a participant may reside or otherwise be subject to tax. +The 2022 ESPP is intended to comply with Section 423 of the Code. A participant in the 2022 ESPP generally recognizes no taxable income +either as a result of participation in the 2022 ESPP or upon exercise of an option to purchase shares of the Company’s common stock under the terms of the 2022 ESPP. +If a participant disposes of shares purchased upon exercise of an option granted under the 2022 ESPP within two years from the first day of +the applicable offering period or within one year from the exercise date, which is referred to as a “disqualifying disposition,” the participant will generally realize ordinary income in the year of that disposition equal to the excess of +the fair market value of the shares on the date the shares were purchased exceeds the exercise price. The amount of ordinary income will be added to the participant’s basis in the shares, and any additional gain or resulting loss recognized on +the disposition of the shares will be a capital gain or loss. A capital gain or loss will generally be long-term if the participant held the shares for more than 12 months after the option exercise date, or short-term if the participant held the +shares for 12 months or less. +If the participant disposes of shares purchased upon exercise of an option granted under the 2022 ESPP at +least two years after the first day of the applicable offering period and at least one year after the exercise date, the participant will realize ordinary income in the year of disposition equal to the lesser of (1) the excess of the fair +market value of the shares at the time the option was granted over the amount paid upon exercise and (2) the excess of the amount actually received for the Company’s common stock over the amount paid upon exercise. The amount of any +ordinary income will be added to the participant’s basis in the shares, and any additional gain recognized upon the disposition after that basis adjustment will be a long-term capital gain. If the fair market value of the shares on the date of +disposition is less than the exercise price, any loss recognized will be a long-term capital loss. +In the event that a participant has a +disqualifying disposition, the Company or its subsidiaries will generally be entitled to a tax deduction in the year of the disqualifying disposition equal to the amount of ordinary income recognized by the participant as a result of that +disposition. In all other cases, neither the Company nor its subsidiaries will be allowed a deduction. +New Plan Benefits +No awards have been previously granted under the 2022 ESPP, and no awards have been granted that are contingent on stockholder approval of the +2022 ESPP. Since participation in the 2022 ESPP is voluntary, the benefits or amounts that will be received by or allocated to any individual or group of individuals under the 2022 ESPP in the future are not determinable. Consequently, no new plan +benefits table is included in this proxy statement. +The Board recommends a vote “FOR” approval of the 2022 Employee Stock +Purchase Plan. +32 +PROPOSAL NO. 4 +RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +The Audit Committee has sole authority to select, evaluate and when appropriate, to replace the Company’s independent auditors. The Audit +Committee has appointed Wolf & Company, P.C. as the Company’s independent registered public accounting firm for the fiscal year ending January 31, 2023. Although action by the Company’s shareholders on this matter is not +required, the Audit Committee believes it is appropriate to seek shareholder ratification in light of the critical role played by the independent auditors in evaluating the integrity of Company financial controls and reporting and requests that +shareholders ratify such appointment. +Approval of this proposal requires the affirmative vote of a majority of the shares of common stock +entitled to vote and present in person or represented by proxy at the annual meeting. Abstentions will have the same effect as a vote against the proposal, and broker non-votes will have no effect on the +outcome of the vote. +The Board of Directors recommends a vote “FOR” the ratification of the appointment of Wolf & Company, P.C. as +the Company’s independent registered public accounting firm for the fiscal year ending January 31, 2023. +Independent Accountants’ +Fees, Services and Other Matters +The Company expects a representative of Wolf & Company, P.C. will participate in the annual +meeting via remote communication with the opportunity to make a statement, if he or she so desires, and that such representative will be available to respond to appropriate questions. +Aggregate fees for professional services rendered for the Company by Wolf & Company, P.C. for the fiscal years ended January 31, +2022 and 2021 are set forth below. +2022 +2021 +Audit Fees +$ +235,500 +$ +226,000 +Audit-Related Fees +— +— +Tax Fees +— +— +All Other Fees +— +— +Audit Fees for the fiscal years ended January 31, 2022 and 2021 were for professional services +rendered for the audit of the Company’s annual financial statements and internal control over financial reporting, quarterly review of the financial statements included in the Company’s Quarterly Reports on Form 10-Q, consents and other assistance required to complete the year end audit of the consolidated financial statements. +Policy on Audit Committee Pre-Approval . The Audit Committee +pre-approves all audit and non-audit services provided by the independent accountants prior to the engagement of the independent accountants with respect to such +services. None of the services described above were approved by the Audit Committee under the de minimis exception provided by Rule 2-01(C)(7)(i)(c) under Regulation +S-X. +FINANCIAL REPORTS +A copy of the annual report of the Company for the fiscal year ended January 31, 2022, including the Company’s annual report to the +SEC on Form 10-K, accompanies this proxy statement. Such report is not part of this proxy statement. +33 +PROPOSALS FOR 2023 ANNUAL MEETING +The 2023 annual meeting of the shareholders of the Company is scheduled to be held on May 16, 2023, the third Tuesday in May. If a +shareholder intending to present a proposal at that meeting wishes to have such proposal included in the Company’s proxy statement and form of proxy relating to the meeting pursuant to Rule 14a-8, the +shareholder must submit the proposal to the Company no later than December 29, 2022. Shareholder proposals not requested to be included in the proxy statement pursuant to Rule 14a-8 and director +nominations that are to be considered at the 2023 annual meeting must be submitted no earlier than December 17, 2022 and no later than March 17, 2023. +OTHER MATTERS +No +business other than that set forth in the attached Notice of Meeting is expected to come before the annual meeting, but should any other matters requiring a vote of shareholders arise, including a question of adjourning the meeting, the persons +named in the accompanying proxy will vote thereon according to their best judgment in the interests of the Company. In the event any of the nominees for the office of director should withdraw or otherwise become unavailable for reasons not presently +known, the persons named as proxies will vote for other persons in their place in what they consider the best interests of the Company. +You are urged to sign and return your proxy promptly to make certain your shares will be voted at the meeting. You may revoke your proxy at +any time before it is voted. +By Order of the Board of Directors +Peter M. Rosenblum +Secretary +34 +Annex A +AstroNova, Inc. +2022 +EMPLOYEE STOCK PURCHASE PLAN +1. +Purpose of the Plan +The purpose of the AstroNova, Inc. 2022 Employee Stock Purchase Plan (the “ Plan ”) is to provide eligible employees of +AstroNova, Inc. (the “ Company ”) and each Designated Company (as defined below) with the opportunity to purchase shares of the Company’s common stock, par value $0.05 per share (the “ Stock ”). +The Plan is comprised of two components: (a) the “ 423 Component ,” pursuant to which rights to purchase Stock that +satisfy the requirements for an “employee stock purchase plan” within the meaning of Section 423(b) of the Code (a “ Qualified ESPP ”) may be granted to eligible Employees, and (b) the “ Non-423 Component ,” pursuant to which rights to purchase Stock under the Plan that are not intended to satisfy such requirements may be granted to eligible employees. The Company intends (but makes no +undertaking or representation to maintain) the 423 Component to qualify as a Qualified ESPP. The provisions of the 423 Component, accordingly, will be construed in a manner that is consistent with the requirements of Section 423 of the Code. +Except as otherwise provided in the Plan or determined by the Administrator, the Non-423 Component will operate and be administered in the same manner as the 423 Component. In addition, the Company may make +separate Offerings under the 423 Component which vary in terms (provided that such terms are not inconsistent with the provisions of the Plan, the Offering Document or the requirements of a Qualified ESPP), and the Company will designate which +Designated Company is participating in each separate Offering. +2. +Definitions +The following terms shall be defined as set forth below: +“Administrator” is defined at Section 3 . +“ Affiliate ” means any entity that, directly or indirectly through one or more intermediaries, controls, is controlled by or +is under the common control with the Company. +“Board” means the Board of Directors of the Company. +“Change in Control” means (i) the sale of all or substantially all of the assets of the Company on a consolidated basis +to an unrelated person or entity, (ii) a merger, reorganization or consolidation pursuant to which the holders of the Company’s outstanding voting power and outstanding stock immediately prior to such transaction do not own a majority of +the outstanding voting power and outstanding stock or other equity interests of the resulting or successor entity (or its ultimate parent, if applicable) immediately upon completion of such transaction, (iii) the sale of all of the Stock of the +Company to an unrelated person, entity or group thereof acting in concert, or (iv) any other transaction in which the owners of the Company’s outstanding voting power immediately prior to such transaction do not own at least a majority of +the outstanding voting power of the Company or any successor entity immediately upon completion of the transaction other than as a result of the acquisition of securities directly from the Company. +“Code” means the Internal Revenue Code of 1986, as amended, and any successor Code, and related rules, regulations and +interpretations. +“ Compensation ” means the amount of base pay, prior to salary reduction such as pursuant to +Sections 125, 132(f) or 401(k) of the Code, but excluding overtime, commissions, incentive or bonus awards, allowances and reimbursements for expenses such as relocation allowances or travel expenses, income or gains related to Company stock +options or other share-based awards, and similar items. The Administrator shall have the discretion to determine the application of this definition to Participants outside the United States. +A-1 +“ Designated Company ” means any present or future Affiliate or Subsidiary +that has been designated by the Administrator to participate in the Plan. The current list of Designated Companies is attached hereto as Appendix A . +“Effective Date” means the date on which the Plan becomes effective as set forth in Section 21 . +“ Employee ” means any person who is customarily employed at least 20 hours per week and more than five months in a +calendar year by the Company or any Designated Company. +“ Exercise Date ” means the last day of each Offering. +“Fair Market Value” means the closing price for the Stock on any given date during regular trading, or as reported on the +principal exchange on which the Stock is then traded, or if not trading on that date, such price on the last preceding date on which the Stock was traded, unless determined otherwise by the Administrator using such methods or procedures as it may +establish. +“Option” means any option to purchase shares of Stock granted pursuant to +Section 10 . +“ Offering ” is defined at Section 6 . +“ Offering Commencement Date ” means the first day of each Offering. +“ Option Price ” means the purchase price of a share of Stock hereunder as provided in Section 10 . +“ Participant ” means an eligible Employee that participates in the Plan. +“ Parent ” means a “parent corporation” with respect to the Company, as defined in Section 424(e) of the Code. +“ Subsidiary ” means a “subsidiary corporation” with respect to the Company, as defined in Section 424(f) +of the Code. +“ Trading Date ” means a date on which the national stock exchange on which the Stock is listed is open for +trading. +3. +Administration +The Plan will be administered by the Board or the Compensation Committee of the Board or such other person or persons (the +“ Administrator ”) appointed by the Board. The Administrator has authority at any time to: (i) designate any Subsidiary or Affiliate as a Designated Company, or revoke any such designation, and further designate such companies or +Participants as participating in the 423 Component or the Non-423 Component; (ii) determine which affiliates or eligible Employees may be excluded from participation in the Plan, to the extent consistent +with Section 423 of the Code or as implemented under the Non-423 Component; (iii) determine which Designated Company or Companies will participate in separate Offerings (to the extent that the +Company makes separate Offerings); (iv) adopt, alter and repeal such rules, guidelines and practices for the administration of the Plan and for its own acts and proceedings as it shall deem advisable; (v) interpret the terms and provisions of +the Plan; (vi) make all determinations it deems advisable for the administration of the Plan, including to accommodate the specific requirements of applicable laws, regulations and procedures in jurisdictions outside the United States; +(vii) decide all disputes arising in connection with the Plan; and (viii) otherwise supervise the administration of the Plan. All interpretations and decisions of the Administrator shall be binding on all persons, including the Company and +the Participants. +4. +Shares Authorized +Subject to the adjustment provisions of Section 15 , the maximum number of shares of Stock that may be issued under +the Plan will be 40,000 shares. If any Option granted under the Plan terminates without having +A-2 +been exercised in full, the shares of Stock not purchased under such Option will again become available for issuance under the Plan. Shares issued upon exercise of an Option may be from +authorized but unissued Stock, from shares held in the treasury of the Company, or from any other proper source. +5. +Eligibility +Except as otherwise determined by the Administrator in advance of an Offering, all Employees of the Company and each Designated Company are +eligible to participate in any one or more of the Offerings under the Plan. Notwithstanding any other provision herein, individuals who are not contemporaneously classified as employees of the Company or a Designated Company for purposes of the +Company’s or applicable Designated Company’s payroll system are not considered to be Employees of the Company or any Designated Company and shall not be eligible to participate in the Plan. +6. +Offerings +The Company may make one or more offerings to eligible Employees to purchase Stock under the Plan (“ Offerings ”). Unless +otherwise determined by the Administrator, an Offering will begin on the first Trading Day occurring on or after each January 1, April 1, July 1 and October 1, and will end on the last Trading Date occurring before the +January 1, April 1, July 1 and October 1 thereafter, respectively. The Administrator may, in its discretion, designate a different period for any Offering, provided that no Offering shall exceed 27 months in duration. +7. +Participation +An eligible Employee may participate in an Offering by submitting an enrollment form to the Company or an agent designated by the Company at +least 15 business days before the Offering Commencement Date (or by such other deadline as shall be established by the Administrator for the Offering). The enrollment form (which may be in an electronic format or such other method as determined by +the Company in accordance with the Company’s practices) will (a) state a whole percentage or amount to be deducted from the Employee’s Compensation per pay period, (b) authorize the purchase of Stock in each Offering in +accordance with the terms of the Plan and (c) specify the exact name or names in which shares of Stock purchased for such individual are to be issued. An Employee who does not enroll in accordance with these procedures will be deemed to have +waived the right to participate. Unless a Participant files a new enrollment form or withdraws from the Plan, such Participant’s deductions or contributions and purchases will continue at the same percentage or amount of Compensation for future +Offerings, provided he or she remains eligible. +8. +Employee Contributions . +An eligible Employee may authorize payroll deductions or contributions at a minimum of one percent (1%) up to a maximum of 15 percent +(15%) of such Employee’s Compensation for each pay period or such other maximum as may be specified by the Administrator in advance of an Offering. The Company will maintain book accounts showing the amount of payroll deductions or +contributions made by each Participant for each Offering. No interest will accrue or be paid on payroll deductions or contributions, except as may be required by applicable law. If payroll deductions or contributions for purposes of the Plan are +prohibited or otherwise problematic under applicable law (as determined by the Administrator in its discretion), the Administrator may require Participants to contribute to the Plan by such other means as determined by the Administrator. Any +reference to “payroll deductions or contributions” in this Section 8 (or in any other section of the Plan) will similarly cover contributions by other means made pursuant to this +Section 8 . +9. +Contribution Changes; Withdrawal +(a) Except as may be determined by the Administrator in advance of an Offering, a Participant may not increase or +decrease his or her payroll deduction or contributions during any Offering, but may increase or decrease his or her payroll deduction or contributions with respect to the next Offering by filing a new enrollment +A-3 +form at least fifteen (15) business days before the next Offering Commencement Date (or by such other deadline as shall be established by the Administrator for the Offering). The +Administrator may, in advance of any Offering, establish rules permitting a Participant to increase, decrease or terminate his or her payroll deduction or contributions during an Offering. +(b) A Participant may withdraw from participation in the Plan by delivering a written notice of withdrawal to the +Company or an agent designated by the Company (in accordance with such procedures as may be established by the Administrator). The Participant’s withdrawal will be effective as of the next business day. Following a Participant’s +withdrawal, the Company will promptly refund such individual’s entire account balance under the Plan to him or her (after payment for any Stock purchased before the effective date of withdrawal). Partial withdrawals are not permitted. Such an +Employee may not begin participation again during the remainder of the Offering, but may enroll in a subsequent Offering in accordance with Section 7 . +10. +Grant of Options +On each Offering Commencement Date, the Company will grant to each eligible Employee who is then a Participant in the Plan an option +(“ Option ”) to purchase, on the last day of such Offering (the “ Exercise Date ”) and at the Option Price (as defined herein) hereinafter provided for, the lowest of (a) a number of shares of Stock determined by +dividing such Participant’s accumulated payroll deductions or contributions on such Exercise Date by the Option Price, (b) the number of shares of Stock determined by dividing $25,000 by the Fair Market Value of the Stock on the Offering +Commencement Date for such Offering; or (c) such other lesser maximum number of shares as shall have been established by the Administrator in advance of the Offering; provided, however, that such Option shall be subject to the limitations set +forth below. Each Participant’s Option shall be exercisable only to the extent of such Participant’s accumulated payroll deductions or contributions on the Exercise Date. The purchase price for each share purchased under each Option (the +“ Option Price ”) will be eighty-five percent (85%) of the Fair Market Value of the Stock on the Offering Commencement Date or the Exercise Date, whichever is less. +Notwithstanding the foregoing, no Employee shall be eligible for the grant of an Option under the 423 Component if such Employee, immediately +after the Option was granted, would be treated as owning stock possessing five percent (5%) or more of the total combined voting power or value of all classes of stock of the Company or any Parent or Subsidiary. For purposes of the preceding +sentence, the attribution rules of Section 424(d) of the Code shall apply in determining the stock ownership of a Participant. In addition, no Employee may be granted an Option under the 423 Component which permits his or her rights to purchase +stock under the Plan, and any other employee stock purchase plan of the Company and its Parents and Subsidiaries, to accrue at a rate which exceeds $25,000 of the Fair Market Value of the Stock (determined on the option grant date or dates) for each +calendar year in which the Option is outstanding at any time. +11. +Exercise of Option and Purchase of Shares +Each Employee who continues to be a Participant in the Plan on an Exercise Date shall be deemed to have exercised his or her Option on such +date and shall acquire from the Company such number of shares of Stock (which may include fractional shares of Stock) reserved for the purpose of the Plan as his or her accumulated payroll deductions or contributions on such date will purchase at +the Option Price, subject to any other limitations contained in the Plan. +Notwithstanding the foregoing, if the total number of shares of +Stock that would otherwise be purchased on any Exercise Date plus the number of shares purchased under previous Offerings under the Plan exceeds the maximum number of shares issuable under the Plan, the shares then available shall be apportioned +among Participants in proportion to the amount of payroll deductions or contributions accumulated on behalf of each Participant that would otherwise be used to purchase Stock on such Exercise Date. +A-4 +12. +Issuance of Certificates +Certificates or book-entries at the Company’s transfer agent representing shares of Stock purchased under the Plan may be issued only in +the name of the Employee, in the name of the Employee and another person of legal age as joint tenants with rights of survivorship, or in the name of a broker authorized by the Employee to be his, her or their, nominee for such purpose. +13. +Rights on Termination or Transfer of Employment +If a Participant’s employment terminates for any reason before the Exercise Date for any Offering, no payroll deduction or contributions +will be taken from any pay due and owing to the Participant and the balance in the Participant’s account will be paid to such Participant or, in the case of such Participant’s death, if permitted by the Administrator and valid under +applicable law, to his or her designated beneficiary or to the legal representative of his or her estate. An Employee will be deemed to have terminated employment, for this purpose, if the corporation that employs him or her, having been a +Designated Company, ceases to be a Subsidiary or Affiliate, or if the Employee is transferred to any corporation other than the Company or a Designated Company. Unless otherwise determined by the Administrator, a Participant whose employment +transfers between, or whose employment terminates with an immediate rehire (with no break in service) by, Designated Companies or a Designated Company and the Company will not be treated as having terminated employment for purposes of participating +in the Plan or an Offering; provided, however, that if a Participant transfers from an Offering under the 423 Component to an Offering under the Non-423 Component, the exercise of the Participant’s Option +will be qualified under the 423 Component only to the extent that such exercise complies with Section 423 of the Code. If a Participant transfers from an Offering under the Non-423 Component to an +Offering under the 423 Component, the exercise of the Participant’s Option will remain non-qualified under the Non-423 Component. Further, an Employee will not be +deemed to have terminated employment for purposes of this Section 13 , if the Employee is on an approved leave of absence where the Employee’s right to reemployment is guaranteed either by a statute or by contract or +under the policy pursuant to which the leave of absence was granted or if the Administrator otherwise provides in writing. +14. +Special Rules and Sub-Plans +Notwithstanding anything herein to the contrary, the Administrator may adopt special rules or sub-plans +applicable to the Employees of a particular Designated Company, whenever the Administrator determines that such rules are necessary or appropriate for the implementation of the Plan in a jurisdiction where such Designated Company has Employees, +regarding, without limitation, eligibility to participate in the Plan, handling and making of payroll deductions or contributions by other means, establishment of bank or trust accounts to hold payroll deductions or contributions, payment of +interest, conversion of local currency, obligation to pay payroll tax, withholding procedures and handling of share issuances, any of which may vary according to applicable requirements; provided that if such special rules or sub-plans are inconsistent with the requirements of Section 423(b) of the Code the Employees subject to such special rules or sub-plans will participate in the Non-423 Component. Any special rules or sub-plans established pursuant to this Section 14 shall, to the extent possible, result in the Employees +subject to such rules having substantially the same rights as other Participants in the Plan. +15. +Adjustment in Case of Changes Affecting Stock; Change in Control +In the event of a subdivision of outstanding shares of Stock, the payment of a dividend in Stock or any other change affecting the Stock, the +number of shares approved for the Plan and the share limitation set forth in Section 10 shall be equitably or proportionately adjusted to give proper effect to such event. In the case of and subject to the consummation of a +Change in Control, the Administrator, in its discretion, and on such terms and conditions as it deems appropriate, is hereby authorized to take any one or more of the following actions whenever the Administrator determines that such action is +appropriate in order to prevent the dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan or with respect to any right under the Plan or to facilitate such transactions or events: +(a) to provide for either (i) termination of any outstanding Option in exchange for an amount of cash, if any, +equal to the amount that would have been obtained upon the exercise of such Option had such Option been currently exercisable or (ii) the replacement of such outstanding Option with other options or property selected by the Administrator in its +sole discretion; +A-5 +(b) to provide that the outstanding Options under the Plan shall be +assumed by the successor or survivor corporation, or a parent or subsidiary thereof, or shall be substituted for similar options covering the stock of the successor or survivor corporation, or a parent or subsidiary thereof, with appropriate +adjustments as to the number and kind of shares and prices; +(c) to make adjustments in the number and type of +shares of Stock (or other securities or property) subject to outstanding Options under the Plan and/or in the terms and conditions of outstanding Options and Options that may be granted in the future; +(d) to provide that the Offering with respect to which an Option relates will be shortened, and that the Exercise Date +with respect to such Offering shall be the last Trading Date of such shortened period (the “ New Exercise Date ”). The New Exercise Date will occur before the date of the Change in Control. The Administrator will notify each +Participant in writing or electronically prior to the New Exercise Date, that the Exercise Date for the Participant’s Option has been changed to the New Exercise Date and that the Participant’s Option will be exercised automatically on the +New Exercise Date, unless prior to such date the Participant has withdrawn from the Offering; and +(e) to provide +that all outstanding Options shall terminate without being exercised and all amounts in the accounts of Participants shall be promptly refunded. +16. +Amendment of the Plan +The Board may at any time and from time to time amend the Plan in any respect, except that (i) without the approval within 12 months of +such Board action by the stockholders, no amendment shall be made increasing the number of shares approved for the 423 Component of the Plan or making any other change to the 423 Component of the Plan that would require stockholder approval in order +for the Plan, as amended, to qualify as an “employee stock purchase plan” under Section 423(b) of the Code; and (ii) no amendment to the Plan that would require stockholder approval under the rules of any securities exchange or +market system will be made without such approval. +17. +Termination of the Plan; Term of Plan +The Plan may be terminated at any time by the Board. Upon termination of the Plan, all amounts in the accounts of Participants shall be +promptly refunded. Unless terminated earlier, the Plan shall automatically terminate on the ten-year anniversary of the Effective Date. +18. +Compliance with Law +The Company’s obligation to sell and deliver Stock under the Plan is subject to applicable laws and the completion of any registration or +qualification of the Stock under any U.S. or non-U.S. local, state or federal securities or exchange control law, or under rulings or regulations of the SEC or of any other governmental regulatory body, and to +obtaining any approval or other clearance from any U.S. and non-U.S. local, state or federal governmental agency, which registration, qualification or approval the Company shall, in its absolute discretion, +deem necessary or advisable. The Company is under no obligation to register or qualify the Stock with the SEC or any other U.S. or non-U.S. securities commission or to seek approval or clearance from any +governmental authority for the issuance or sale of such stock. +19. +Miscellaneous +(a) No Rights as a Shareholder . Neither the granting of an Option to a Participant nor the deductions or +contributions from his or her pay shall result in such Participant becoming a holder of the shares of Stock covered by an Option under the Plan until such shares have been purchased by and issued to him or her. +(b) Required Notification upon Sale of Shared under the 423 Component . Each Participant agrees, by entering the +423 Component of the Plan, to give the Company prompt notice of any disposition of shares purchased under the Plan where such disposition occurs within two years after the date of grant of the Option pursuant to which such shares were purchased or +within one year after the date such shares were purchased. +A-6 +(c) No Transferability . Rights under the Plan are not +transferable by a Participant other than by will or the laws of descent and distribution, and are exercisable during the Participant’s lifetime only by the Participant. +(d) No Right to Employment . Neither eligibility to participate in nor participation in the Plan shall be deemed +to create any right of continued employment or in any way affect to the right of the Company or a Designated Company to terminate employment of any Employee. +(e) Unfunded Plan . All funds received or held by the Company under the Plan may be combined with other corporate +funds and may be used for any corporate purpose, unless otherwise required under applicable law. +(f) Governing +Law . The Plan and all Options and actions taken thereunder shall be governed by, and construed in accordance with, the laws of the State of Delaware, applied without regard to conflict of law principles +20. +Tax Withholding +Participation in the Plan is subject to any applicable U.S. and non-U.S. federal, state or local tax +withholding requirements on income the Participant realizes in connection with the Plan. Each Participant agrees, by entering the Plan, that the Company or any Subsidiary or Affiliate may withhold from a Participant’s wages, salary or other +compensation at any time the amount necessary for the Company or any Subsidiary or Affiliate to meet applicable withholding obligations, including any withholding required to make available to the Company or any Subsidiary or Affiliate any tax +deductions or benefits attributable to the sale or disposition of Stock by such Participant. In addition, the Company or any Subsidiary or Affiliate may withhold from the proceeds of the sale of Stock or use any other method of withholding that the +Company or any Subsidiary or Affiliate deems appropriate to the extent permitted by U.S. Treasury Regulation Section 1.423-2(f) with respect to the 423 Component. The Company will not be required to issue +any Stock under the Plan until such obligations are satisfied. +21. +Effective Date and Approval of Shareholders +The Plan shall take effect when approved by the holders of a majority of the votes cast at a meeting of stockholders at which a quorum is +present or by written consent of the stockholders within 12 months before or after the date the Plan is adopted by the Board. +DATE APPROVED BY BOARD OF +DIRECTORS: April 28, 2022 +DATE APPROVED BY STOCKHOLDERS: , , 2022 +A-7 +APPENDIX A +Designated Companies +A-8 +P.O. BOX 8016, CARY, NC 27512-9903 YOUR VOTE IS IMPORTANT! PLEASE VOTE BY: INTERNET Go To: www.proxypush.com/ALOT Cast your vote online +Have your Proxy Card ready Follow the simple instructions to record your vote PHONE Call 1-866-509-1041 Use any touch-tone telephone Have your Proxy Card ready Follow the simple recorded instructions MAIL Mark, sign and date your Proxy Card Fold and +return your Proxy Card in the postage-paid envelope provided You must register to attend the meeting online and/or participate at www.proxydocs.com/ALOT AstroNova, Inc. Annual Meeting of Stockholders For Stockholders of record as of April 18, 2022 +TIME: Tuesday, June 14, 2022 9:00 AM, Eastern Daylight Time PLACE: Annual Meeting to be held live via the Internet - please visit www.proxydocs.com/ALOT for more details. This proxy is being solicited on behalf of the Management The undersigned +hereby appoints Mitchell I. Quain, Yvonne E. Schlaeppi, Richard S. Warzala and Gregory A. Woods (the “Named Proxies”), and each or either of them, as the true and lawful attorneys of the undersigned, with full power of substitution and +revocation, and authorizes them, and each of them, to vote all the shares of capital stock of AstroNova, Inc. which the undersigned is entitled to vote at said meeting and any adjournment thereof upon the matters specified and upon such other +matters as may be properly brought before the meeting or any adjournment thereof, conferring authority upon such true and lawful attorneys to vote in their discretion on such other matters as may properly come before the meeting and revoking any +proxy heretofore given. THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, SHARES WILL BE VOTED IDENTICAL TO THE BOARD OF DIRECTORS RECOMMENDATION. This proxy, when properly executed, will be voted in the +manner directed herein. In their discretion, the Named Proxies are authorized to vote upon such other matters that may properly come before the meeting or any adjournment or postponement thereof. You are encouraged to specify your choice by marking +the appropriate box (SEE REVERSE SIDE) but you need not mark any box if you wish to vote in accordance with the Board of Directors’ recommendation. The Named Proxies cannot vote your shares unless you sign (on the reverse side) and return this +card. PLEASE BE SURE TO SIGN AND DATE THIS PROXY CARD AND MARK ON THE REVERSE SIDE +AstroNova, Inc. Annual Meeting of Stockholders Please make your marks like this: X BOARD OF DIRECTOS RECOMMENDS A VOTE: FOR ON PROPOSALS +1, 2, 3 AND 4 PROPOSAL YOUR VOTE MANAGEMENT RECOMMENDS 1. To elect five directors to serve until the next annual meeting of shareholders and until their successor are elected and have qualified FOR WITHHOLD 1.01 Alexis P. Michas FOR 1.02 Mitchell I. +Quain FOR 1.03 Yvonne E. Schlaeppi FOR 1.04 Richard S. Warzala FOR 1.05 Gregory A. Woods FOR FOR AGAINST ABSTAIN 2. To approve, on an advisory, non-binding basis, the compensation paid to the Company’s Named Executive Officers, as disclosed in +the Company’s proxy statement for the 2022 annual meeting of shareholders. FOR 3. To approve and adopt the AstroNova, Inc. 2022 Employee Stock Purchase Plan FOR 4. To ratify the appointment of Wolf & Company, P.C. as the Company’s +independent registered public accounting firm for the fiscal year ending January 31, 2023. You must register to attend the meeting online and/or participate at www.proxydocs.com/ALOT Authorized Signatures - Must be completed for your instructions to +be executed. Please sign exactly as your name(s) appears on your account. If held in joint tenancy, all persons should sign. Trustees, administrators, etc., should include title and authority. Corporations should provide full name of corporation and +title of authorized officer signing the Proxy/Vote Form. Signature (and Title if applicable) Date Signature (if held jointly) Date \ No newline at end of file diff --git a/raw/proxies/0000008146/0001193125-22-131320/proxy_rpt.txt b/raw/proxies/0000008146/0001193125-22-131320/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..2b030bfe7df5714321f3ae5115ae628d3ecf0334 --- /dev/null +++ b/raw/proxies/0000008146/0001193125-22-131320/proxy_rpt.txt @@ -0,0 +1,7 @@ +RELATED PARTY TRANSACTIONS +Potential conflicts of interest and related party transactions are referred by the Board to the Audit Committee for review and approval. In +reviewing and evaluating potential conflicts of interest and related party transactions, the Audit Committee uses applicable NASDAQ listing standards and SEC rules as a guide. +No officer, director or nominee for director of the Company or any associate of any of the foregoing had during the period beginning on +February 1, 2020 through the date of this proxy statement any material interest, direct or indirect, in any material transaction or any material proposed transaction in which the amount exceeds $120,000 and to which the Company was or is to be +a party. +26 \ No newline at end of file diff --git a/raw/proxies/0000008146/0001193125-23-122091/proxy.txt b/raw/proxies/0000008146/0001193125-23-122091/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..99d70aaed98fa7512d6d39a46efba0b7ce681fc6 --- /dev/null +++ b/raw/proxies/0000008146/0001193125-23-122091/proxy.txt @@ -0,0 +1,2490 @@ +DEF 14A +1 +d345299ddef14a.htm +DEF 14A +DEF 14A +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Proxy Statement Pursuant to Section 14(a) of the +Securities Exchange Act of 1934 +(Amendment No. ) +Filed by the +Registrant ☒ +Filed by a Party other than the Registrant ☐ +Check the appropriate box: +☐ +Preliminary Proxy Statement +☐ +Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +☒ +Definitive Proxy Statement +☐ +Definitive Additional Materials +☐ +Soliciting Material Pursuant to §240.14a-12 +ASTRONOVA, INC. +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +☒ +No fee required. +☐ +Fee paid previously with preliminary materials. +☐ +Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11. +AstroNova, Inc. +600 East Greenwich Avenue +West Warwick, Rhode Island 02893 +NOTICE OF ANNUAL MEETING OF SHAREHOLDERS +June 6, 2023 +To the +Shareholders of AstroNova, Inc.: +Notice is hereby given that the 2023 Annual Meeting of Shareholders of AstroNova, Inc. (the +“Company,” “we” or “our”) will be held by means of remote communication on Tuesday, June 6, 2023, beginning at 9:00 a.m., Eastern Daylight Time for the following purposes: +(1) To consider and vote upon the election of five directors to serve until the next annual meeting of shareholders or until their successors +are elected and have qualified; +(2) To conduct a non-binding, advisory vote to approve the +Company’s executive compensation; +(3) To consider and vote upon an amendment to the Company’s 2018 Equity Incentive Plan to +increase the number of shares of common stock available for issuance thereunder by 600,000 shares; +(4) To ratify the appointment of +Wolf & Company, P.C. as the Company’s independent registered public accounting firm for the fiscal year ending January 31, 2024; and +(5) To transact such other business as may properly come before the meeting. +The close of business on April 10, 2023 has been fixed as the record date for determining shareholders entitled to attend or vote at the +annual meeting or any adjournment thereof. +You may vote on these matters at the annual meeting or by proxy. Whether or not you plan to +attend the meeting, please promptly complete and return the enclosed proxy card in the enclosed addressed, postage-paid envelope or vote via the Internet or telephone, so that your shares will be represented and voted at the meeting in accordance +with your wishes. If you attend the meeting, you may withdraw your proxy or Internet or telephone vote and vote your shares by means of the remote platform. +The Annual Meeting of Shareholders will only be conducted exclusively via remote communication. In order to attend the meeting, you should +register in advance at www.proxydocs.com/ALOT prior to the start of the meeting. Upon completing your registration, you will receive further instructions via email, including your unique link that will allow you access to the meeting and give you +the ability to submit questions. Please be sure to follow instructions found on your proxy card and/or voting authorization form and subsequent instructions that will be delivered to you via email. As always, we encourage you to vote your shares +prior to the annual meeting. +By Order of the Board of Directors +Peter M. Rosenblum +Secretary +April 27, 2023 +IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE +HELD ON JUNE 6, 2023. +The Company’s Proxy Statement and Annual Report are available for viewing, +printing and downloading at: +http://www.proxydocs.com/ALOT +This website does not use “cookies” to track or identify visitors +AstroNova, Inc. +PROXY STATEMENT +ANNUAL +MEETING OF SHAREHOLDERS +June 6, 2023 +The Meeting +The 2023 annual meeting of +shareholders of AstroNova, Inc. (the “Company”) will be held at 9:00 a.m., Eastern Daylight Time, on Tuesday, June 6, 2023, by means of remote communications. At the meeting, shareholders of record on the record date for the meeting +who are present or represented by proxy will have the opportunity to vote on the following matters: +• +the election of five directors to serve until the next annual meeting of shareholders or until their successors +are elected and have qualified; +• +the approval, on an advisory, non-binding basis, of the compensation paid +to the Company’s Named Executive Officers, as disclosed in this proxy statement pursuant to Item 402 of Regulation S-K (including in the compensation discussion and analysis, compensation tables, and +accompanying narrative disclosures); +• +the approval of an amendment to the Company’s 2018 Equity Incentive Plan to increase the number of shares of +common stock available for issuance thereunder by 600,000 shares; +• +the ratification of the appointment of Wolf & Company, P.C. as the Company’s independent registered +public accounting firm for the fiscal year ending January 31, 2024; and +• +such other business as may properly come before the meeting. +Solicitation of Proxies +This proxy +statement and the accompanying proxy card are expected to be first sent to shareholders on or about April 2 7 , 2023. +The Board +of Directors (the “Board”) of the Company is soliciting proxies in connection with its 2023 annual meeting of shareholders. The Company will bear the cost of such solicitation. It is expected that the solicitation of proxies will be +primarily by mail. Proxies may also be solicited personally by directors, officers, and employees of the Company at nominal cost. The Company may reimburse brokerage houses and other custodians, nominees and fiduciaries holding stock for others in +their names, or in those of their nominees, for their reasonable out-of-pocket expenses in sending proxy material to their principals or beneficial owners and obtaining +their proxies. +The Company has engaged Alliance Advisors, LLC to assist in the solicitation of proxies and provide related advice and +informational support. The Company expects to pay Alliance Advisors, LLC fees and disbursements which are not expected to exceed $20,800 in the aggregate. +Who May Vote +The Board has established +April 10, 2023 as the record date for the annual meeting. Only shareholders of record at the close of business as of that date will be entitled to virtually attend or vote at the annual meeting. On the record date, there were 7,400,560 shares +of common stock of the Company outstanding. There was no other outstanding class of voting securities. +1 +A list of shareholders entitled to vote will be available via the website for the annual +meeting. In addition, you may contact David S. Smith, at the Company’s offices located at 600 East Greenwich Avenue, West Warwick, Rhode Island, to make arrangements to review a copy of the shareholder list at those offices, between the hours +of 9:00 a.m. and 5:00 p.m., Eastern Daylight Time, on any business day from May 26, 2023 to the time of the annual meeting. +Attending the Annual +Meeting +The annual meeting will be held through means of remote communications only. In order to attend, you must register in advance +at www.proxydocs.com/ALOT prior to the start of the meeting. Upon completing your registration, you will receive further instructions via email, including your unique link that will allow you to access the meeting and give you the ability to vote +and submit questions. Please be sure to follow instructions found on your proxy card and/or voting authorization form and subsequent instructions that will be delivered to you via email. If you are planning to attend our virtual meeting, please +register at the website by June 5, 2023, 11:59 p.m. Eastern Daylight Time. +How to Vote +You are entitled to one vote at the meeting for each share of common stock registered in your name at the close of business on the record date +for the meeting. +Shares Held of Record with Our Transfer Agent +If you are a shareholder of record, that is you have a stock certificate or hold your shares in an account with our transfer agent, +Computershare, you may vote your shares at the virtual meeting or by proxy via mail, the Internet, or the toll-free number (for residents of the United States and Canada) listed on your proxy card. +To vote at the annual meeting, you must attend the virtual meeting following the procedures set forth in the instructions found on your +proxy card and/or voting authorization form and subsequent instructions that will be delivered to you. You will be able to vote during the meeting. +To vote by proxy by mail , if you received proxy materials by mail and choose to authorize your proxy by mail, simply mark your proxy +card, and then date, sign and return it in the postage-paid envelope provided. If you complete all of the proxy card except the voting instructions, then the designated persons will vote your shares +• +FOR the re-election of each of Alexis P. Michas, Mitchell I. Quain, +Yvonne E. Schlaeppi, Richard S. Warzala and Gregory A. Woods as a director of the Company; +• +FOR the approval, on an advisory, non-binding basis, of the +Company’s executive compensation as described in this proxy statement; +• +FOR the approval of the amendment to the Company’s 2018 Equity Incentive Plan to increase the number of +shares of common stock available for issuance thereunder by 600,000 shares; and +• +FOR the ratification of the appointment of Wolf & Company, P.C. as the Company’s independent +registered public accounting firm for the fiscal year ending January 31, 2024. +To vote by proxy using the +Internet , you must access the website for Internet voting at www.proxypush.com/ALOT. Please have the enclosed proxy card handy when you access the website and follow the on-screen instructions. Internet +voting facilities for shareholders of record will be available 24 hours a day through the closing of the polls at the annual meeting. If you vote via the Internet, you do not have to return your proxy card via mail. +To vote by proxy using the telephone , use any touch-tone telephone and call 866-509-1041 to transmit your voting instructions through the closing of the polls at the annual meeting. Please have the enclosed proxy card handy when you call and then follow the instructions. If you vote +via telephone, you do not have to return your proxy card via mail. +2 +If any other business properly comes before the meeting, then the designated persons will +have the discretion, to the extent authorized by applicable rules and regulations, to vote all shares they own or represent by proxy in any manner they deem appropriate. +If you vote by proxy, whether by mail, the Internet or telephone, you may revoke your proxy at any time before it is exercised by taking one +of the following actions: +• +sending written notice to the Company’s Secretary at the address set forth on the notice of meeting +appearing on the cover of this proxy statement; +• +voting again via the Internet or telephone on a later date or properly executing and delivering a later-dated +proxy card; or +• +attending the virtual meeting and then voting at the virtual meeting. +Shares Held by Brokers or Nominees +If +the shares you own are held in “street name” by a brokerage firm, your brokerage firm, as the record holder of your shares, is required to vote your shares according to your instructions. In order to vote your shares, you will need to +follow the directions your brokerage firm provides you. Many brokers also offer the option of providing voting instructions to them over the Internet or by telephone, directions for which would be provided by your brokerage firm on your vote +instruction form. +Under stock exchange rules applicable to most brokerage firms, if you do not give instructions to your broker, your +broker will be permitted to vote any shares it holds for your account in its discretion with respect to “routine” proposals, but will not be allowed to vote your shares with respect to +“non-routine” proposals. Proposal 1, regarding the election of Directors, Proposal 2, regarding the approval, on an advisory, non-binding basis, of the +Company’s executive compensation, and Proposal 3, regarding an amendment to the Company’s 2018 Equity Incentive Plan, are “non-routine” proposals. If you do not instruct your broker how to +vote with respect to these proposals, your broker will not vote your shares on them and your shares will be recorded as “broker non-votes” and will not affect the outcome of the vote on those +proposals . “Broker non-votes” are shares that are held in “street name” by a bank or brokerage firm that indicates on its proxy that, while voting in its discretion on one matter, it +does not have or did not exercise discretionary authority to vote on another matter. +Proposal 4, regarding the ratification of the +appointment of Wolf & Company, P.C. as the Company’s independent registered public accounting firm for the fiscal year ending January 31, 2024, is considered to be a routine item under the applicable rules and your broker will be +able to vote on this item even if it does not receive instructions from you, so long as your broker holds your shares in its name. +If a +broker or nominee holds shares of common stock in “street name” for your account, then this proxy statement may have been forwarded to you with a voting instruction card, which allows you to instruct the broker or nominee how to vote your +shares on the proposals described herein. To vote by proxy or instruct your broker how to vote, you should follow the directions provided with the voting instruction card. In order to have your vote counted on Proposal 1, Proposal 2 and Proposal +3, you must either provide timely voting instructions to your broker or obtain a properly executed proxy from the broker or other record holder of the shares that authorizes you to act on behalf of the record holder with respect to the shares held +for your account . +Votes Required to Transact Business at the Meeting +The holders of a majority of the shares entitled to vote, present in person or represented by proxy, will constitute a quorum for the +transaction of business at the meeting. Abstentions and broker non-votes are counted as present and entitled to vote for purposes of determining a quorum. +3 +If You Receive More Than One Proxy Card or Voting Instruction Form +If you hold your shares in multiple accounts or registrations, or in both registered and street name, you will receive a proxy card or voting +instruction form for each account. Please sign, date and return all proxy cards you receive from the Company. If you choose to vote by proxy via the telephone or the Internet, please vote once for each proxy card you receive. Only your latest dated +proxy for each account will be voted. +Multiple Shareholders Sharing the Same Address +If you and other residents at your mailing address own shares of the Company’s common stock through a broker or other nominee, you may +have received only one copy of this proxy statement and the Company’s Annual Report for its fiscal year ended January 31, 2023 (“fiscal year 2023”). If you and other residents at your mailing address own shares of common stock in +your own names, you may have received only one copy of this proxy statement and the fiscal year 2023 Annual Report, unless you provided the Company’s transfer agent with contrary instructions. This practice, known as “householding,” +is designed to reduce the Company’s printing and postage costs. You may promptly obtain an additional copy of this proxy statement and our fiscal year 2023 Annual Report by sending a written request to AstroNova, Inc., attention Investor +Relations Department, 600 East Greenwich Avenue, West Warwick, Rhode Island 02893, or by calling the Company’s investor relations department at 617-542-5300. +If you hold your shares through a broker or other nominee and wish to discontinue householding or to change your householding election, you may do so by contacting your broker or by calling 800-542-1061 or writing to Broadridge Financial Solutions, 51 Mercedes Way, Edgewood, NY 11717. If you hold shares in your own name and wish to discontinue householding or change your householding election, +you may do so by calling 877-373-6374 or writing to Computershare Investor Services at P.O. Box. 43078, Providence, RI 02940-3078. +4 +PROPOSAL NO. 1 +ELECTION OF DIRECTORS +At +the annual meeting, five directors are to be elected to hold office until the next annual meeting and until their respective successors are elected and qualified. The persons named in the accompanying proxy, who have been designated by the Board, +intend to vote, unless otherwise instructed, for the election to the Board of the persons named below. The biographies below contain information regarding the person’s service as a director, business experience, director positions held +currently or at any time during the last five years, and the experiences, qualifications, attributes or skills that caused the Nominating and Governance Committee and the Board to determine that the person should serve as a director. +THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR EACH OF THE BOARD’S FIVE NOMINEES FOR DIRECTOR. +Alexis P. Michas , 65, has been a director since June 2022. Mr. Michas is the founder and has been Managing Partner of Juniper +Investment Company, LLC since 2008. Juniper is also a Principal of Aetolian Investors, LLC, a registered commodity pool operator. Mr. Michas received a Bachelor of Arts degree from Harvard College and a Master of Business Administration degree +from Harvard Business School. Mr. Michas is the Non-Executive Chairman of the board of BorgWarner Inc., a director of funds managed by Atlantic Investment Management, Inc., and is also on the board of +privately held Theragenics Corporation. Mr. Michas also served as the Non-Executive Chairman of the board of Lincoln Educational Services Corporation until 2015, and as a director of Allied Motion +Technologies, Inc. until July 2017. Mr. Michas is the Chairman of the U.S. Board of Trustees of Athens College, a non-profit organization. We believe that Mr. Michas’ many years of private +equity experience across a wide range of industries, his successful record of managing investments in public companies and his extensive transactional experience qualify him to serve on our Board. +Mitchell I. Quain , 71, has been a director since August 2011. Mr. Quain has served on the Executive Council of American +Securities, Inc., a private equity firm, since January 2020. From December 2011 to December 2019, Mr. Quain was a Senior Advisor at the private equity firm Carlyle Group. From January 2010 through December 2011, Mr. Quain was a Partner at +One Equity Partners, a private investment firm. From 2006 through 2009, he was a Senior Director of ACI Capital Corp. From 2002 through 2005, Mr. Quain served as Chairman of Register.com, Inc., an internet services provider, and from 1997 to +2001 he was employed with ABN AMRO and its predecessors in several capacities, including Vice Chairman of Investment Banking. Mr. Quain also serves as a director of Kensington Capital Acquisition Corp. V, a blank check company, Star Equity +Holdings, a provider of mobile healthcare solutions and diagnostic imaging equipment and services, and Williams Industrial Services. Mr. Quain previously served as a director of DeCrane Aircraft Holdings, Inc., Handy & Harman Ltd., +Hardinge Inc., HEICO Corporation, Kensington Capital Acquisition Corp. I, Kensington Capital Acquisition Corp. II, MagneTek, Inc., Mechanical Dynamics, Inc., Jason Industries, RBC Bearings, Inc., Register.com, Inc., Tecumseh Products Company, Titan +International, Inc., and Xerium Technologies, Inc. We believe that Mr. Quain’s extensive experience in the private equity sector and public company experience qualify him to serve on our Board. +Yvonne E. Schlaeppi , 63, has been a director since April, 2018. Since 2011, Ms. Schlaeppi has served as a Managing Partner of +Stratevise LLC, an international strategic advisory firm that she cofounded. Since November 2022, Ms. Schlaeppi has served on the board of directors of OpGen, Inc., a precision medicine company. From 2016 through its going private in 2019, +Ms. Schlaeppi served on the board of directors of Stallergenes Greer plc, a pharmaceutical company traded on the Euronext Paris exchange. From 2014 to 2015, Ms. Schlaeppi served on the boards of directors of allergy immunotherapy +companies, Ares Allergy Holdings Inc. and Greer Laboratories, Inc. Since 2015 Ms. Schlaeppi has been a member of the External Advisory Council to the Channing Division of Network Medicine of Brigham and Women’s Hospital in Boston. +Ms. Schlaeppi has been recognized annually as a Board Leadership Fellow by the National Association of Corporate Directors +5 +beginning in 2017. Prior to founding Stratevise, Ms. Schlaeppi served as General Counsel at Global Enterprise Technologies, Passport & ID, a high-security document printing +solutions provider and systems integrator, from 2007 to 2011 and as Executive Vice President, General Counsel and Corporate IP Officer at Organon BioSciences, a global pharmaceutical, animal health and biotech group based in the Netherlands, from +2006 until its sale in 2007. From 1999 to 2006 Ms. Schlaeppi was a partner at the Boston-based law firm of Palmer & Dodge LLP, where she served as Chairperson of that firm’s International Practice Group. From 1995 to 1998 +Ms. Schlaeppi served in senior positions at Johnson Controls, Inc., a NYSE-listed diversified industrial company, including as General Counsel Europe. We believe that Ms. Schlaeppi’s extensive experience in international business and +corporate governance, as well as relevant industry experience, qualify her to serve on our Board. +Richard S. Warzala , 69, has been +a director since December 2017. He is the President, Chief Executive and Chairman of the Board of Directors of Allied Motion Technologies, Inc. (“Allied Motion”), a developer of advanced motion control products and systems, and has more +than 40 years of leadership experience and a strong technical background in the industrial, aerospace and commercial industries. He joined Allied Motion as President and Chief Operating Officer in 2002. Mr. Warzala was elected a director of +Allied Motion in 2006, appointed President and Chief Executive Officer in 2009, and elected as the Chairman of Allied Motion’s board of directors in 2014. Allied Motion designs, manufactures and sells precision and specialty motion control +components and systems in markets including Vehicle, Medical, Aerospace & Defense, and Industrial/Electronics. Before joining Allied Motion, Mr. Warzala was President of Danaher Corporation’s Motion Components Group and served in +various senior positions at American Precision Industries Inc., including Corporate Vice President and President of its API Motion Division. We believe that Mr. Warzala’s technology background and international industry experience, +together with his corporate governance expertise, business insights and deep understanding of lean manufacturing principles, qualify him to serve on our Board. +Gregory A. Woods , 64, has served as Chief Executive Officer of the Company since February 1, 2014 and as a director since January +2014. Mr. Woods joined the Company in September 2012 as Executive Vice President and Chief Operating Officer and was appointed President and Chief Operating Officer on August 29, 2013. Prior to joining the Company, Mr. Woods served +from January 2010 to August 2012 as Managing Director of Medfield Advisors, LLC, an advisory firm located in Medfield, Massachusetts focused on providing corporate development and strategy guidance to technology driven manufacturing firms. From 2008 +to 2010, Mr. Woods served as President of Performance Motion Devices, a specialty semiconductor and electronics manufacturer located in Lincoln, Massachusetts. Prior to Performance Motion Devices, Mr. Woods served as chief executive +officer of Control Technology Corp., a manufacturer of industrial computer and software products; and President of API Controls, a division of Danaher. Mr. Woods holds a Bachelor of Arts in physics from Colgate University, a Bachelor of +Engineering in computer and mechanical engineering from Dartmouth College, and a Master of Business Administration from the University of Rochester. Based on this experience and his position as Chief Executive Officer of the Company, we believe that +Mr. Woods is qualified to serve on our Board. +The Board has determined that all of the directors of the Company, each of whom is +standing for election at the 2023 annual shareholders meeting, other than Gregory A. Woods, are independent of the Company in that such nominees have no material relationship with the Company either directly or as a partner, shareholder or affiliate +of an organization that has a relationship with the Company. The Board has made this determination in accordance with applicable Securities and Exchange Commission (“SEC”) rules and NASDAQ listing standards. +The directors will be elected by a plurality of the votes of the shares entitled to vote on the election of directors and present in person or +represented by proxy at the annual meeting. This means that the five nominees receiving the highest number of FOR votes will be elected as directors. Votes may be cast FOR or WITHHELD FROM each nominee. Broker +non-votes and votes that are WITHHELD FROM the nominees will be excluded entirely from the vote and will have no effect. +THE BOARD RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THE NOMINEES LISTED ABOVE. +6 +CORPORATE GOVERNANCE +The Board of Directors — Meetings and Committees +The Board currently consists of five members, all of whose terms will expire at the annual meeting. Each of our current directors has been +nominated by the Board for re-election. During the fiscal year ended January 31, 2023, the Board held six meetings. During fiscal year 2023, each director currently in office attended all of the meetings +of the Board and meetings of committees on which such director served. +The Board has adopted a policy that requires members of the Board +to make every effort to attend each annual shareholders meeting. All of the current members of the Board attended the 2022 annual shareholders meeting. +The Board currently has three standing committees: an Audit Committee, a Compensation Committee and a Nominating and Governance Committee. The +members and chairs of each of those committees are appointed each year. The Audit Committee is currently comprised of Mr. Michas, Mr. Quain and Ms. Schlaeppi. The Nominating and Governance Committee is currently comprised of +Mr. Quain, Ms. Schlaeppi and Mr. Warzala. The Compensation Committee is currently comprised of Messrs. Michas, Quain and Warzala. Each of the members of our committees is independent as defined under the applicable NASDAQ listing +standards and SEC rules. Each of the Audit, Compensation, and Nominating and Governance Committees has a written charter approved by the Board. A copy of each charter is available on the Company’s website at www.astronovainc.com under +“Investors — Corporate Governance — Governance Documents.” +Audit Committee. The Audit Committee’s primary +duties and responsibilities include: overseeing the integrity of the Company’s financial reports and the adequacy of internal controls, appointing, setting the compensation of and overseeing the Company’s independent accountants, and +assessing the qualifications, independence and performance of the Company’s independent accountants. The Audit Committee meets with the Company’s independent accountants to review quarterly financial results, the results of the audit, and +other relevant matters. The Audit Committee held six meetings during the fiscal year ended January 31, 2023. The Board has determined that all members of the Audit Committee during fiscal year 2023 satisfy the financial literacy requirements of +the NASDAQ listing standards and are independent as defined under the NASDAQ listing requirements and applicable SEC rules. Additionally, the Board has determined that that each of Messrs. Michas and Quain qualifies as an “audit committee +financial expert” as defined by the SEC rules and possesses “financial sophistication” as described in the NASDAQ listing standards. During fiscal year 2023, until their terms as directors ended on June 14, 2022, Jean Bua and +Harold Schofield served on the Audit Committee. +Compensation Committee. The Compensation Committee assists the Board in +discharging the Board’s responsibilities relating to director and executive compensation. The Compensation Committee’s responsibilities include: establishing and reviewing the Company’s executive and director compensation philosophy, +strategies, plans and policies; making recommendations with respect to the design of the Company’s incentive compensation plans and equity based plans; granting awards under such plans and overseeing generally the administration of such plans; +evaluating the performance and determining the compensation of the Chief Executive Officer; and reviewing and approving recommendations on compensation of other executives. In addition, the Compensation Committee oversees the Company’s +diversity, equity and inclusion initiatives, which focused in fiscal year 2023 on (i) participation by women in technical, engineering, sales and leadership positions, (ii) participation by veterans in our workforce, (iii) continuing +to develop a technical apprenticeship program and (iv) developing and refining measures of employee engagement. The Compensation Committee held six meetings during the fiscal year ended January 31, 2023. During fiscal year 2023, until his +term as a director ended on June 14, 2022, Mr. Schofield served on the Compensation Committee. +Nominating and Governance +Committee . The Nominating and Governance Committee assists the Board in fulfilling its nomination and corporate governance responsibilities. The Nominating and Governance Committee’s +7 +responsibilities include: (i) advising the Board concerning appropriate composition of the Board and its committees, including identifying individuals qualified to serve on the Board and its +committees, (ii) recommending to the Board individuals to be nominated by the Board for election to the Board by the shareholders or, in appropriate circumstances, elected by the Board to fill vacancies on the Board, (iii) advising the +Board regarding appropriate governance practices and assisting the Board in achieving them, and (iv) overseeing and reporting to the Board concerning the periodic evaluation of the Board, each committee of the Board and members of the Board. +The Board conducts annual self-evaluations that are overseen by the Nominating and Governance Committee. The Nominating and Governance Committee is also charged with advising the board regarding applicable standards to be used in determining the +independence of the directors serving on the Board, reviewing and making recommendations to the Board regarding the Company’s corporate governance policies, overseeing the Company’s director education and onboarding programs, and reviewing +and monitoring the Company’s executive officer succession plans. The Nominating and Governance Committee held five meetings in the fiscal year ended January 31, 2023. During fiscal year 2023, until their terms as directors ended on +June 14, 2022, Ms. Bua and Mr. Schofield served on the Nominating and Governance Committee. +Director Share Ownership +Requirements . The Company has a stock ownership policy that requires each director to hold shares of Company common stock with a value equal to at least $200,000. Any director who does not meet this requirement will have five years from the date +of his or her initial election to the Board to achieve this ownership level. Directors are expected to retain at least 50% of the shares acquired upon exercise of any stock option (net of any shares withheld for payment of taxes) or vesting of a +restricted stock or restricted unit award until they achieve the specified ownership level and thereafter maintain such ownership level. All of our directors other than Mr. Michas, who joined the Board in 2022, meet the ownership requirement. +Compensation Committee Interlocks and Insider Participation +During the fiscal year ended January 31, 2023, Messrs. Michas, Quain and Warzala, as well as Mr. Schofield, whose term as a director +ended at our 2022 annual meeting of shareholders, served on the Company’s Compensation Committee. No member of the Company’s Compensation Committee who currently serves or who served during fiscal year 2023 has ever been an officer or +employee of the Company or any of its subsidiaries. None of the Company’s executive officers serves as a director or member of the compensation committee of another entity in a case where an executive officer of such other entity serves as a +director of the Company or a member of the Company’s Compensation Committee. +Nomination of Directors +The Nominating and Governance Committee considers suggestions from many sources, including shareholders, regarding possible candidates for +director. As part of its ongoing succession planning, the Nominating and Governance Committee makes periodic recommendations to the Board regarding the desired characteristics for potential directors, including with respect to competencies, special +knowledge or expertise, experience of members, diversity and age. In all cases, the Nominating and Governance Committee seeks individuals who possess the highest ethical standards and integrity, have a history of achievement that reflects superior +standards for themselves and others, have the ability to provide wise, informed and thoughtful counsel to management on a range of issues, exercise independence of thought, and possess skills and expertise appropriate to meet the Company’s +needs and advance the long-term interests of the shareholders. The Nominating and Governance Committee considers diversity with respect to viewpoints, accomplishments, skills and experiences, among other factors such as gender, race, national origin +and age, in its evaluation of candidates for Board membership. In considering candidates for the Board, the Nominating and Governance Committee considers the entirety of each candidate’s credentials in determining whether the candidate would +bring a valuable perspective to the Board. +The Nominating and Governance Committee also monitors the Board’s compliance with the +requisite qualifications under the NASDAQ listing standards for populating the Audit, Compensation, and Nominating and +8 +Governance Committees. The Nominating and Governance Committee will consider shareholder nominees for director in the same manner as nominees for director from other sources. +Shareholders may send recommendations for director nominees to the Nominating and Governance Committee at the Company’s offices at 600 +East Greenwich Avenue, West Warwick, Rhode Island 02893. Submissions should include information regarding a candidate’s background, qualifications, experience, and willingness to serve as a director. In addition, Section 10 of Article III +of the Company’s By-Laws sets forth specific procedures that, if followed, enable any shareholder entitled to vote in the election of directors to make nominations directly at an annual meeting of +shareholders. These procedures include a requirement for written notice to the Company not more than 150 days nor less than 60 days prior to the scheduled annual meeting, which must contain the name and certain information concerning the nominee and +the shareholders who support the nominee’s election. For the annual meeting to be held in 2024, the notice must be received no earlier than December 23, 2023 and no later than March 22, 2024. A copy of the Company’s By-Laws may be obtained by writing to AstroNova, Inc., Attn: Investor Relations Department, 600 East Greenwich Avenue, West Warwick, Rhode Island 02893. +Board of Directors Diversity Matrix +NASDAQ’s Board Diversity Rule, approved by the SEC on August 6, 2021, requires that companies listed on NASDAQ’s U.S. exchange +publicly disclose board-level diversity statistics. The matrix below reflects the diversity of our Board as of April 27, 2023 based on the self-identified characteristics of our directors. The characteristics are based on the NASDAQ rule. +Board Diversity Matrix (As of April 27, 2023) +Total Number of Directors: +5 +Female +Male +Non-Binary +Did Not +Disclose +Gender +Directors +1 +4 +0 +0 +Number of Directors who identify in Any of the Categories Below: +African American or Black +0 +0 +0 +0 +Alaskan Native or Native American +0 +0 +0 +0 +Asian +0 +0 +0 +0 +Hispanic or Latinx +0 +0 +0 +0 +Native Hawaiian or Pacific Islander +0 +0 +0 +0 +White +1 +3 +0 +0 +Two or More Races or Ethnicities +0 +0 +0 +0 +LGBTQ+ +0 +Did Not Disclose Demographic Background +1 +Communications with the Board of Directors +The Company’s Board provides a process for shareholders to communicate directly with the members of the Board or the individual chairman +of each standing committee. Any shareholder with a concern, question or complaint regarding our compliance with any policy or law, or who would otherwise like to contact the Board, may communicate directly with the directors by writing directly to +those individuals c/o AstroNova, Inc., 600 East Greenwich Avenue, West Warwick, Rhode Island 02893. The Company’s general policy is to forward, and not to intentionally screen, any mail received at the Company’s corporate offices that is +sent directly to an individual unless the Company believes the communication may pose a security risk. +9 +Board Leadership Structure +All members of the Board, other than Mr. Woods, are independent and all our key committees — Audit, Compensation, and Nominating and +Governance — are, and during the fiscal year ended January 31, 2023 were, comprised solely of independent directors. The non-management directors meet in executive session at each scheduled Board +meeting, which occur at least quarterly, in order to promote discussion among the independent directors and assure independent oversight of management. +A key component of our leadership structure is the active role played by our independent directors in overseeing the Company’s business, +both at the Board and Committee level. All of our directors are free to suggest the inclusion of items on the agenda for meetings of the Board or to raise subjects that are not on the agenda for that meeting. In addition, our Board and each +committee have complete and open access to any member of management and the authority to retain independent legal, financial, and other advisors as they deem appropriate without consulting or obtaining the approval of any member of management. +Moreover, our Audit Committee, Compensation Committee and the Nominating and Governance Committee, all of which are comprised entirely of independent directors, also perform oversight functions independent of management. +Lead Independent Director. Our Board has not elected a Chairman at the present time. However, in August 2019, the Board elected +Mr. Warzala as its lead independent director. In that capacity, among other things, Mr. Warzala serves as a liaison between the independent directors and the Company’s management and as the chair of executive sessions of the +independent directors. The Board believes that in light of the relatively small size of the Board and the active involvement by all of our independent directors in both the oversight of the Company and the conduct of the Board’s meetings and +deliberations, including the establishment of the Board’s agenda for its meetings, the Board’s current leadership structure is appropriate for the Company at this time. The Board intends to continue to review its leadership structure, +including the role of the lead independent director. +Risk Oversight +The Board has an active role, as a whole and also at the committee level, in overseeing management of the Company’s risks through a +program of sound policies, systems, processes, and reports. The Audit Committee of the Board has oversight responsibility over financial reporting and disclosure processes, compliance and legal matters, and information security and fraud risk. The +Audit Committee also monitors controls to prevent material weaknesses in the financial reporting function. The Audit Committee meets regularly with our Chief Financial Officer in carrying out these responsibilities, and with the Company’s +independent auditors in executive session. +The Compensation Committee of the Board oversees risks as they relate to the Company’s +compensation policies and practices as described under “Compensation Discussion and Analysis.” The Board’s Nominating and Governance Committee assists the Board in fulfilling the Board’s oversight responsibilities with respect to +confirming the independence of board members, developing desired characteristics of the Board and identifying individuals qualified to be members of the Board, reviewing and monitoring executive officer succession plans, and assessing the +effectiveness of the Board and its committees. +While each committee is responsible for evaluating the risks within their areas of +responsibility and overseeing the management of such risks, all committees report regularly to the full Board, which also considers the Company’s entire risk profile. +Compensation of Directors +The +Compensation Committee is responsible for reviewing and establishing the compensation of the directors of the Company. On January 31, 2019, the Compensation Committee adopted an Amended and Restated +Non-Employee Director Annual Compensation Program (the “Director Compensation Program”). +10 +Pursuant to the Director Compensation Program, each non-employee +director automatically receives a grant of restricted stock on the date of his or her re-election to the Board. The number of whole shares granted is equal to the number calculated by dividing the stock +component of the director compensation amount determined by the Compensation Committee for that year by the fair market value of our stock on that day. The value of the restricted stock award for fiscal year 2023 was $65,000. Shares of restricted +stock granted under the Director Compensation Program become vested on the first anniversary of the date of grant, conditioned upon the recipient’s continued service on the Board through that date. In the event of the death or disability of a non-employee director, or a Change in Control (as that term is defined in our 2018 Equity Incentive Plan) of the Company, the shares of restricted stock will immediately vest and no longer be subject to restrictions +on transfer. Other than as part of a Change in Control of the Company and except in the case of economic hardship of a particular non-employee director, as determined by the Compensation Committee, while a non-employee director is serving on our Board he or she may not sell or otherwise dispose of any of our stock received in connection with his or her service on our Board (whether that stock was granted under the +Director Compensation Program, any predecessor program or otherwise) if that non-employee director has not satisfied the requirements of any stock ownership guidelines established for directors by the Board or +if the transfer would cause him or her to be out of compliance with any such guidelines. +Pursuant to the Director Compensation Program, +each non-employee director receives cash payments for their service on the Board and its committees. The amounts of those payments for the fiscal year ended January 31, 2023 were: +Position Covered +Fiscal +Year +2023 +Annual +Payment +Service on the Board +$ +45,000 +Lead Independent Director +$ +11,000 +Audit Committee Chairman +$ +11,000 +Compensation Committee Chairman +$ +9,000 +Nominating and Governance Committee Chairman +$ +9,000 +Committee Member (other than Chairman) +$ +4,000 +Cash payments are made to non-employee directors in four equal +tranches on the dates of the Board’s regular quarterly meetings. +If a person becomes a +non-employee director on a date other than the date of our annual meeting of shareholders in any fiscal year, that person will receive an award of restricted stock as described above, but appropriately +prorated to reflect the number of days remaining from the date he or she commences his or her service in that capacity until the scheduled date for our next annual meeting of shareholders. In addition, if a person becomes a non-employee director, Chairman of the Board, lead independent director, chairman of a committee or a member of a committee other than on the first business day of a fiscal quarter of the Company, he or she will +receive cash fees on (i) the date of the regular full meeting of the Board held in that quarter or (ii) if later, the date he or she commences his or her service in that capacity, as described above, but appropriately prorated to reflect +the number of days remaining in that fiscal quarter. +11 +The following Director Compensation table provides information regarding the compensation +paid or accrued by each person other than Mr. Woods who served as a director during the fiscal year ended January 31, 2023. See “Executive Compensation” for information regarding compensation of and outstanding equity awards held by +Mr. Woods. +Name +Fees +Earned +or +Paid in +Cash ($) +Stock +Awards ($)(a)(b)(c) +Total ($) +Alexis Michas +39,750 +64,998 +104,748 +Mitchell I. Quain +63,250 +64,998 +128,248 +Yvonne E. Schlaeppi +57,000 +64,998 +121,998 +Richard S. Warzala +68,250 +64,998 +133,248 +Jean Bua(d) +25,500 +— +25,500 +Harold Schofield(d) +27,000 +— +27,000 +(a) +The amounts reflect the aggregate fair value of the awards on the grant date under the Financial Accounting +Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 718 (“ASC 718”) for shares of restricted stock granted to directors. For additional information, refer to Note 16, “Share Based Compensation,” +in the Company’s audited financial statements for the fiscal year ended January 31, 2023, included in the Company’s Annual Report on Form 10-K filed with the SEC on April 17, 2023. +(b) +As of January 31, 2023, each non-employee director held 5,293 +shares of unvested restricted stock, which will vest on June 14, 2023, conditioned, for each non-employee director, on that director’s continued service on the Board through that date. +(c) +As of January 31, 2023, the Company’s non-employee directors +held the following number of outstanding stock options, all of which were vested: Mitchell I. Quain — 30,000; Yvonne E. Schlaeppi — 10,000; and Richard S. Warzala — 10,000. Mr. Michas did not hold any stock options as of +January 31, 2023. +(d) +Each of Ms. Bua and Mr. Schofield ceased serving as a director effective as of June 14, 2022. +12 +Security Ownership of 5% Beneficial Owners +The following table sets forth certain information regarding the beneficial ownership of the Company’s outstanding shares of common stock, +as of April 10, 2023 (except as noted), by each person who is known to the Company to own of record or beneficially more than 5% of such stock: +Name of Beneficial Owner +Number of +Shares +Beneficially +Owned (a) +Percent +of +Class +Dimensional Fund Advisors LP +547,916 +(b) +7.4 +% +6300 Bee Cave Road, Building One +Austin, TX 78746 +Royce & Associates, LP +518,570 +(c) +7.0 +% +745 Fifth Avenue +New York, NY 10151 +Askeladden Capital Management, LLC +522,610 +(d) +7.1 +% +14 Sunrise Ct +Trophy Club, TX 76262 +Punch & Associates Investment Management, Inc. +494,625 +(e) +6.7 +% +7701 France Ave. So., Suite 300 +Edina, MN 55435 +Juniper Targeted Opportunity Fund, L.P. +535,203 +(f) +7.2 +% +555 Madison Avenue, 24th Floor +New York, NY 10022 +Peter Kamin +433,026 +(g) +5.9 +% +2720 Donald Ross Road, Unit 311 +Palm Beach Gardens, FL 33410 +(a) +All information is based upon ownership of record as reflected on the stock transfer books of the Company or as +reported on Schedule 13G or Schedule 13D filed under Rule 13d-1 under the Securities Exchange Act of 1934. +(b) +According to a Schedule 13G/A filed with the SEC on February 10, 2023, Dimensional Fund Advisors LP, an +investment adviser registered under the Advisers Act, and its subsidiaries (collectively, “Dimensional”) had sole voting power with respect to 539,043 shares and sole dispositive power with respect to 547,916 shares held by registered +investment companies, trusts and separate accounts for which Dimensional serves as investment manager, adviser or sub-adviser as of December 30, 2022. +(c) +According to a Schedule 13G/A filed with the SEC on January 23, 2023, Royce & Associates, LP, an +investment adviser registered under the Investment Advisers Act of 1940, as amended (the “Advisers Act”), had sole voting power and sole dispositive power with respect to 518,570 shares as of December 31, 2022. +(d) +According to a Schedule 13G/A filed with the SEC on February 10, 2023, Askeladden Capital Management, LLC, +an investment adviser registered under the Advisers Act, and Samir Patel had shared voting power and shared dispositive power with respect to 522,610 shares as of December 31, 2022. +(e) +According to a Schedule 13G/A filed with the SEC on February 13, 2023, Punch & Associates +Investment Management, Inc., an investment adviser registered under the Advisers Act, had sole voting power and sole dispositive power with respect to 494,625 shares as of December 31, 2022. +(f) +Juniper Targeted Opportunity Fund, L.P. (“Jupiter Fund”) has sole voting and dispositive power with +respect to 535,203 shares. Juniper HF Investors II, LLC (“Juniper HF”), Juniper Investment Company, LLC (“Juniper Investment Company”), an investment adviser registered under the Advisers Act, Alexis P. Michas and John A. +Bartholdson, have shared voting and dispositive power with respect to 535,203 shares based on their relationship with Jupiter Fund. +13 +(g) +According to a Schedule 13D filed with the SEC on December 13, 2022, Peter H. Kamin had sole voting power +and sole dispositive power with respect to 433,026 shares as of December 5, 2022, which includes 143,420 shares held by the Peter H. Kamin Revocable Trust dated February 2003, of which Mr. Kamin is the sole trustee, 82,084 shares held by +the Peter H. Kamin Childrens Trust dated March 1997 of which Mr. Kamin is the trustee, and 58,823 shares held by 3K Limited Partnership, of which Mr. Kamin is the General Partner. +Security Ownership of Directors and Officers +The following table sets forth certain information regarding the beneficial ownership of the Company’s common stock as of April 10, +2023 by each director, by each executive officer named in the Summary Compensation Table and by all directors and executive officers as a group. Unless otherwise noted, all shares of common stock are subject to the sole voting and dispositive power +of the respective directors and executive officers. +Beneficial Ownership +Name of Beneficial Owner +Shares +and +Restricted +Shares (a) +Options +Exercisable +Within 60 +Days of +April 10, +2023 +Total +Beneficial +Ownership +(a) +Percent +of +Class +Non-employee directors +Alexis P. Michas +540,496 +(b)(c) +— +540,496 +7.3 +% +Mitchell I. Quain +80,641 +(b) +30,000 +110,641 +1.5 +% +Yvonne E. Schlaeppi +27,625 +(b) +10,000 +37,625 +* +Richard S. Warzala +30,471 +(b) +10,000 +40,471 +* +Executive Officers +Gregory A. Woods +166,561 +245,500 +(d) +412,061 +5.4 +% +David S. Smith +25,221 +64,000 +(d) +89,221 +1.2 +% +Michael J. Natalizia +38,243 +22,500 +(d) +60,743 +* +All directors and executive officers of the Company as a group (9) +970,051 +414,600 +(d) +1,384,651 +17.7 +% +* +Indicates less than 1.0%. +(a) +If applicable, beneficially owned shares include shares owned by the spouse, minor children, and certain other +relatives of the director or executive officer, as well as shares held by trusts of which the person is a trustee or in which he or she has a beneficial interest. +(b) +Includes 5,293 shares of restricted stock. +(c) +Mr. Michas, as a managing member of Juniper HF and Juniper Investment Company, may be deemed to own +beneficially the 535,203 shares held by Juniper Fund and Juniper Investment Company. Mr. Michas disclaims beneficial ownership of such shares for all other purposes. +(d) +All options are included. +Delinquent Section 16(a) Reports +Section 16(a) of the Exchange Act, requires the directors and executive officers of the Company and any persons who beneficially own more +than ten percent of the Company’s common stock to file with the SEC various reports of beneficial ownership and changes in beneficial ownership. Based solely on a review of the copies of such reports received by the Company and certain written +representations that no other reports were required, the Company believes that for the fiscal year ended January 31, 2023, all of its officers, directors and 10% beneficial owners complied with the requirements of Section 16(a), except +that the following forms were filed late: +• +One Form 4 by Mr. Petrarca relating to the issuance of shares of common stock upon the exercise of a stock +option. +14 +COMPENSATION DISCUSSION AND ANALYSIS +The Compensation Committee of the Company’s Board of Directors (the “Committee”) is charged with the responsibility for +establishing, implementing and monitoring adherence to the Company’s compensation philosophy and setting the compensation for our executives and key management personnel in a manner which is internally equitable. The Committee also is +responsible for reviewing and establishing the compensation of directors. +Compensation Philosophy and Objectives. The +Committee’s overall philosophy in terms of executive compensation is to link management incentives with the actual financial performance of the Company. Similarly, the compensation should attract, retain, and motivate highly qualified +individuals to achieve the Company’s business goals and link their interests with shareholder interests. In setting compensation for the Company’s executive officers, the Committee considers the executive’s performance, awards, if +any, made during prior years and other relevant factors. The Committee seeks to have the long-term performance of the Company’s common stock reflected in executive compensation through our equity incentive programs. +Elements of Compensation. The total compensation program for the Company’s executive officers consists of the following: +• +salary; +• +cash incentive and bonus awards tied to the Company’s and executive’s annual performance; +• +equity-based incentive compensation, in the form of time-based restricted stock units and performance-based +restricted stock units; and +• +retirement and other benefits. +The Committee seeks to structure each element of compensation to attract and retain the necessary executive talent, reward annual performance +and provide incentives for achieving both long-term strategic goals and short-term performance goals. The Committee’s policy for allocating between currently paid and long-term compensation is to ensure adequate base compensation to attract and +retain personnel, while providing incentives to maximize long-term value for our shareholders. +Say on Pay Consideration. In +accordance with SEC rules, the Company conducted a non-binding, advisory vote on the Company’s executive compensation at its 2022 annual meeting. The Company’s shareholders voted to approve the +Company’s executive compensation practices at the 2022 annual meeting by a favorable vote of approximately 88.1% of the votes cast. +Setting Executive Compensation. The Committee is responsible for establishing and periodically reviewing the compensation of the +Company’s executive officers and approving all equity awards. The Committee annually reviews the performance of the executive officers and, based on these reviews, the Committee determines salary adjustments and annual awards. Mr. Woods +does not participate during deliberations regarding his compensation. +Fiscal Year 2023 Compensation Overview. The total +compensation paid to Mr. Woods and the Company’s two other most highly compensated executive officers, Mr. Smith and Mr. Natalizia (collectively with Mr. Woods, the “Named Executive Officers”), in the fiscal year +ended January 31, 2023 decreased from the total compensation paid in the prior fiscal year. As is described in the Summary Compensation Table below, this decrease was primarily a result of the fact that no bonuses were paid to the Named +Executive Officers under the Company’s Senior Executive Short-Term Incentive Plan (“STIP”) with respect to fiscal year 2023, which was partially offset by salary increases. +15 +Salary. Base salaries for executive officers are evaluated each year. Historically, +base salaries have been increased at annual rates which approximate the general rates of increase of compensation for all employees of the Company. Annual salary adjustments are made effective April 1 of each year. Effective as of April 1, +2022, the Committee set the fiscal year 2023 annual salaries of the Named Executive Officers as follows: +Name +Salary ($) +Gregory A. Woods +459,251 +David S. Smith +316,069 +Michael J. Natalizia +250,510 +In March 2023, the Committee determined not to adjust the base salaries for executive officers for fiscal year +2024 from those in effect for fiscal year 2023. +Cash Incentive and Bonus Awards. Annual cash incentive awards are an important +component of total executive cash compensation because they reward the Company’s executives for achieving targeted, annual results and emphasize variable or “at risk” compensation. From time-to-time the Committee awards discretionary cash bonuses to the Company’s executives to reward their efforts in extraordinary circumstances. +Senior Executive Short-Term Incentive Plan. Participants in the STIP (which may include any executive officer, vice president or +director-level manager) are determined annually by the Committee. Awards under the STIP are earned based on achieving or exceeding annual financial objectives, which the Committee has full discretion to establish for each plan year. Annually, the +Committee establishes a Target Award for each STIP participant, which may vary as to each participant and from year to year. In April, 2022, the Committee established the following Target Awards for our Named Executive Officers for fiscal year 2023: +Name +Target +Award +($) +Target +Award as +Percentage +of Base +Salary +Gregory A. Woods +367,401 +80 +% +David S. Smith +142,231 +45 +% +Michael J. Natalizia +87,679 +35 +% +Concurrently with the establishment of the Target Awards for fiscal year 2023, the Committee established +fiscal year 2023 consolidated operating income as the sole performance goal under the STIP (the “2023 Performance Goal”), and established a threshold and a target for the 2023 Performance Goal. The total STIP award earned by a Named +Executive Officer for fiscal year 2023 is calculated as follows: +• +No bonus was to be paid with respect to the 2023 Performance Goal unless our fiscal year 2023 operating income +exceeded the threshold established by the Compensation Committee. If our fiscal year 2023 operating income equaled the target established by the Compensation Committee, 100% of the target bonus would have been paid. For fiscal year 2023 +operating income falling between the threshold and the target, the bonus amount was determined through linear interpolation. An incremental bonus of up to 100% of each participant’s total STIP target bonus would have been paid if +our fiscal year 2023 operating income fell between the target and an amount equal to 200% of the target. If our fiscal year 2023 operating income had fallen between the target and 200% of the target, the bonus amount would have been determined +through linear interpolation. No further bonus would have been paid on account of fiscal year 2023 operating income exceeding 200% of the target. +Each of our Named Executive Officers’ STIP award is subject to the following limitations: +• +Aggregate awards under the STIP in any year may not exceed 15% of the Company’s consolidated operating +income for that year determined without deduction for the STIP awards. +16 +• +Adequate reserves for awards must be accrued when determining whether a Performance Goal based upon operating +income has been achieved. +The threshold and target for the 2023 Performance Goal and the corresponding amount of the +STIP paid based on the Company’s results for fiscal year 2023 were as follows: +Performance Goal +Threshold($) +Target ($) +Actual +Operating +Income +Performance +($) +Percentage +of Target +Bonus +Earned +(%) +Operating Income Goal +5,800,000 +7,200,000 +5,443,000 +0 +As a result, none of our Named Executive Officers received a STIP award for fiscal year 2023. +Equity-based Incentive Compensation . Total compensation at the executive level also includes equity incentive awards granted under the +Company’s 2018 Equity Incentive Plan. The objectives of the equity incentive awards are to align executive and shareholder long-term interests by creating a strong and direct link between executive pay and the Company’s performance in key +financial metrics, and to enable executives to develop and maintain a long-term stock ownership position in the Company’s common stock. +In fiscal year 2023, the Committee granted to the Named Executive Officers the following number of time-based restricted stock units. +Name +Time- +based +Restricted +Stock +Units +Gregory A. Woods +15,543 +David S. Smith +5,317 +Michael J. Natalizia +1,967 +The time-based restricted stock units vest in three equal annual installments commencing on the first +anniversary of the date of grant, based on the executive’s continued employment with us. +The Company also utilizes performance-based +restricted stock units with multi-year performance periods to further align the interests of our executives with the long-term interests of the Company and its shareholders. In fiscal years 2022 and 2023, the Committee granted to the Named Executive +Officers the following numbers of performance-based restricted stock units: +Name +Performance- +based +Restricted +Stock Units +Granted in +Fiscal Year +2022 +Performance- +based +Restricted +Stock Units +Granted in +Fiscal Year +2023 +Gregory A. Woods +31,734 +30,905 +David S. Smith +10,815 +10,635 +Michael J. Natalizia +4,000 +3,934 +17 +The performance-based restricted stock units may be earned based upon the achievement by the +Company of a performance goal based on a revenue threshold and target (the “Revenue Goal”) over a three fiscal-year period (the “Performance Period”) as follows: +Fiscal Year Granted +Performance Period +(fiscal years) +Revenue +Threshold +Revenue Target +2022 +2022, 2023 and 2024 +$ +120,000,000 +$ +150,000,000 +2023 +2023, 2024 and 2025 +$ +150,000,000 +$ +180,000,000 +The number of performance-based restricted stock units that become earned (“Earned RSUs”) with +respect to any fiscal year within a Performance Period (a “Performance Year”) will be equal to the product of the total number of performance-based restricted stock units, less any performance-based restricted stock units that became +Earned RSUs with respect to a prior Performance Year within that Performance Period, multiplied by the Earned Revenue Percentage (as defined below) for such Performance Year, rounded down to the nearest whole number. In no event will the aggregate +number of Earned RSUs with respect to an award of performance-based restricted stock units exceed the total number of performance-based restricted stock units constituting the applicable award. One-third of +the number of performance-based restricted stock units that become Earned RSUs will vest on the date that the Compensation Committee determines that they have been earned, with the remaining two-thirds vesting +in equal installments on the first and second anniversaries of that date. +For purposes of the performance-based restricted stock units, +“Earned Revenue Percentage” for a Performance Year means the percentage obtained by dividing (i) the Company’s revenue for that Performance Year, as determined by the Compensation Committee in accordance with United States +generally accepted accounting principles (the “Revenue”), minus the Adjusted Performance Threshold for that Performance Year by (ii) the performance target minus the Adjusted Performance Threshold for that Performance +Year. If the revenue for any Performance Year is less than or equal to the Adjusted Performance Threshold for that Performance Year, the Earned Revenue Percentage for that Performance Year shall be zero, and if the Revenue for any Performance Year +is equal to or exceeds the Annual Performance Target, the Earned Revenue Percentage for that Performance Year shall be 100%. The “Adjusted Performance Threshold” for a Performance Year means the greater of (i) the performance +threshold and (ii) the highest revenue for any previously completed Performance Year. +The Adjusted Performance Threshold for fiscal +year 2023 and the number of performance-based restricted stock units held by our Named Executive Officers that became Earned RSUs based on the Company’s fiscal year 2023 revenue of $142.5 million are as follows: +Name +Fiscal +Year +Granted +Adjusted +Performance +Threshold ($) +Earned +RSUs +(#) +Remaining +Performance- +based +Restricted +Stock Units +(#) +Gregory A. Woods +2023 +150,000,000 +— +30,905 +2022 +120,000,000 +(1) +23,801 +7,933 +David S. Smith +2023 +150,000,000 +— +10,635 +2022 +120,000,000 +(1) +8,111 +2,704 +Michael J. Natalizia +2023 +150,000,000 +— +3,934 +2022 +120,000,000 +(1) +3,000 +1,000 +(1) +No performance-based restricted stock units became Earned RSUs with respect to the Company’s fiscal year +2022 revenue, and accordingly, the Adjusted Performance Threshold equaled the original threshold. +Share Ownership +and Retention Guidelines . The Committee believes that, as a rule, senior management should have a meaningful equity interest in the Company. In order to promote equity ownership and further align +18 +the interests of management with our shareholders, the Committee has adopted share ownership and retention guidelines for our executives. These guidelines are based upon the market value of our +common stock as a multiple of such officer’s base pay. The multiple is three times base salary for the CEO, two times base salary for the Chief Financial Officer and 1.25 times base salary for the other executive officers. Under these +guidelines, an executive was expected to achieve the ownership level by April 1, 2020 or, if later, within five years of his or her initial appointment as an executive officer. Executives are expected to retain at least 50% of all shares +acquired on vesting of restricted stock or restricted stock units and 50% of all shares acquired on exercise of any stock option (net of any shares tendered or withheld for payment of taxes) until they achieve the specified ownership level and +thereafter maintain such ownership level. +Retirement and Other Benefits . In order to attract and retain key executives, the +Company offers retirement benefits through a Profit-Sharing Plan for employees, including its executive officers. +Profit Sharing +Plan. The Company maintains a Profit Sharing Plan that is a qualified plan under Section 401(k) of the Internal Revenue Code, which provides retirement benefits to substantially all the Company’s employees. +Each eligible employee shares in contributions on the basis of relative compensation. In addition, participants are permitted to defer up to +50% of their cash compensation and make contributions of such deferral to this plan through payroll deductions (limited to $19,500 in calendar year 2021 and $20,500 in calendar year 2022). The Company makes matching contributions equal to 50% of the +first seven percent of compensation contributed. The deferrals are made within the limits prescribed by Section 401(k). The Profit Sharing Plan provides for the vesting of 100% of matching contributions made by the Company to the account of the +employee after three years of service. Contributions by an employee are 100% vested immediately. +Perquisites . In +addition to the benefits described above, the Company provides automobile allowances to certain of its executive officers and a housing allowance to one of its Named Executive Officers. The amount of any automobile or housing allowance granted to +our Named Executive Officers is reflected in the “All Other Compensation” column of the Summary Compensation Table below. +Change in Control Agreements with Mr. Woods and +Mr. Smith . In November 2014 and November 2020, the Company entered into change in control agreements (the “CIC Agreements”) with Mr. Woods and Mr. Smith, respectively. The CIC +Agreements provides for the payment of severance benefits upon a change in control of the Company if Mr. Woods’ or Mr. Smith’s employment is terminated by the Company without cause or by Mr. Woods or Mr. Smith, as +applicable, for good reason within the period (the “CIC Period”) beginning on the earlier of (i) 180 days prior to the occurrence of the change in control and (ii) the announcement of a transaction expected to result in a change in +control, and ending on the second anniversary of the occurrence of a change in control. +Severance payments to Mr. Woods include +(i) payment of one and one-half times the sum of (A) his annual salary and (B) the greater of the amount of his target bonus for the fiscal year in progress or the highest annual bonus paid to +him in the prior three years (collectively, “Mr. Woods’ base compensation”), (ii) a portion of Mr. Woods’ bonus for the fiscal year in progress, prorated based upon the number of days elapsed since the commencement of +the fiscal year and calculated assuming that 100% of the target under the bonus plan is achieved, (iii) immediate vesting of all unvested stock options and restricted stock awards, (iv) continued health coverage for 18 months or until he +receives benefits from another employer, if earlier, and (v) reimbursement for outplacement services in an amount not to exceed 17% of Mr. Woods’ base compensation. Severance payments to Mr. Smith include (i) payment of the +sum of (A) his annual salary and (B) 75% of the amount of his target bonus for the fiscal year in progress (collectively, “Mr. Smith’s base compensation”), (ii) a portion of Mr. Smith’s bonus for the fiscal year in +progress, prorated based upon the number of days elapsed since the commencement of the fiscal year and calculated assuming that 100% of the target under the bonus plan is achieved, (iii) immediate vesting of all unvested stock options, +restricted stock, time-based restricted stock units +19 +and earned performance-based restricted stock units (provided that performance-based restricted stock units shall be deemed to have been earned only to the extent that they are earned in +accordance with their terms as of the Change in Control Date and only the time-based vesting of such earned units shall be accelerated under Mr. Smith’s CIC Agreement, (iv) continued health coverage for 12 months or until he receives +benefits from another employer, if earlier, and (v) reimbursement for outplacement services in an amount not to exceed 17% of Mr. Smith’s base compensation. +If any payment or benefit under the CIC Agreement or under any other plan or agreement would constitute an “excess parachute +payment” within the meaning of Section 280G of the Internal Revenue Code, and if Mr. Woods or Mr. Smith would be in a better after-tax position by reducing such payments or benefits, the +amounts payable under the applicable CIC Agreement will be reduced to the extent necessary to avoid the excise tax payable under Section 280G. +Employment Agreements and Severance Benefits . Except for the CIC Agreements with Mr. Woods and Mr. Smith, we generally +do not provide any severance benefits to our Named Executive Officers other than those provided to all employees. Severance benefits vary based upon salary levels and length of service. +20 +COMPENSATION COMMITTEE REPORT +The Compensation Committee has reviewed and discussed with management the Compensation Discussion & Analysis included above. Based on +these reviews and discussions, the Compensation Committee has recommended to the Board that the Compensation Discussion & Analysis be included in the Company’s Annual Report on Form 10-K for the +fiscal year ended January 31, 2023 for filing with the SEC through incorporation by reference of this Proxy Statement. +Compensation +Committee: +Richard S. Warzala (Chairman) +Alexis P. Michas +Mitchell I. +Quain +21 +EXECUTIVE COMPENSATION +The following table provides information regarding the total compensation paid or accrued by the Company to each of its Named Executive +Officers. +Summary Compensation Table +Name and Principal Position +Fiscal +Year +Salary +($) +Stock +Awards +($)(a) +Non-Equity +Incentive Plan +Compensation +($) +All Other +Compensation +($) +Total +($) +Gregory A. Woods +2023 +457,193 +583,647 +— +39,068 +(b) +1,079,908 +President and CEO +2022 +444,202 +697,827 +223,984 +55,470 +1,421,483 +David S. Smith +2023 +314,199 +200,835 +— +56,871 +(c) +571,905 +Vice President, CFO and Treasurer +2022 +302,772 +237,828 +85,877 +56,404 +682,881 +Michael J. Natalizia +2023 +249,028 +74,294 +— +6,041 +(d) +329,363 +Chief Technology Officer and Vice President of Strategic Technical Alliances +2022 +239,971 +87,970 +52,939 +22,051 +402,931 +(a) +The amounts reflect the aggregate grant date fair value of the restricted stock units and performance-based +restricted stock units issued to the Named Executive Officers, as calculated under ASC 718, excluding estimated forfeitures. Under ASC 718, the grant date fair value of each time-based restricted stock unit is equal to the closing price of the +Company’s common stock on the grant date. The grant date fair value of performance-based restricted stock units is based on the closing price of the Company’s common stock on the grant date and the Company’s estimate, as of the date +of grant, of the probable outcome of the performance conditions. The closing price of the Company’s common stock on the grant date for all restricted stock units issued to the Named Executive Offices during fiscal year 2023 was $12.59. +(b) +Represents vehicle allowance of $25,130, premiums on Company-paid life insurance policies for which +Mr. Woods or his estate is the beneficiary of $3,160, and an employer match under the Company’s Profit Sharing Plan of $10,778. +(c) +Represents housing allowance of $27,692, vehicle allowance of $19,108, and an employer match under the +Company’s Profit Sharing Plan of $10,071. +(d) +Represents an employer match under the Company’s Profit Sharing Plan of $6,041. +22 +Grants of Plan-Based Awards +The following table provides information on all plan-based awards by the Company for the fiscal year ended January 31, 2023 to each Named +Executive Officer. +Name +Estimated Possible Payouts +Under Non-Equity +Incentive Plan Awards +Estimated Possible Payouts +Under Equity +Incentive Plan Awards +All Other +Stock +Awards: +Number +of Shares +of Stock +or Units +(#)(d) +Grant Date +Fair Value +of Stock +Awards +($)(e) +Grant +Date +Threshold +($)(a)(b) +Target +($)(a) +Maximum +($)(a) +Threshold +(#) +Target +(#)(c) +Maximum +(#)(c) +Gregory A. Woods +4/18/2022 +— +367,401 +734,802 +4/18/2022 +— +30,905 +30,905 +389,904 +4/18/2022 +15,453 +194,553 +David S. Smith +4/18/2022 +— +142,231 +284,462 +4/18/2022 +— +10,635 +10,635 +133,895 +4/18/2022 +5,317 +66,941 +Michael J. Natalizia +4/18/2022 +— +87,679 +175,358 +4/18/2022 +— +3,934 +3,934 +49,529 +4/18/2022 +1,967 +24,765 +(a) +Represents awards under the Company’s Senior Executive Short-Term Incentive Plan. See “Compensation +Discussion & Analysis – Senior Executive Short-Term Incentive Plan” for additional information regarding the Senior Executive Short-Term Incentive Plan. +(b) +The Company’s Senior Executive Short-Term Incentive Plan does not provide for any threshold payment amount +for amounts that may be earned thereunder. +(c) +Consists of a performance-based restricted stock unit award issued pursuant to the Company’s 2018 Equity +Incentive Plan. Any portion of the award that is earned will vest in three equal annual installments commencing on the date the Company’s Compensation Committee makes the determination that such portion of the award was earned. See +“Compensation Discussion & Analysis – Equity-based Incentive Compensation” for more information about the performance-based restricted stock units. +(d) +Consists of a restricted stock unit award issued pursuant to the Company’s 2018 Equity Incentive Plan, +which vests in three equal annual installments commencing on the first anniversary of the grant date. +(e) +The grant date fair value of each time-based restricted stock unit is equal to the closing price of the +Company’s common stock on the grant date. The grant date fair value of performance-based restricted stock units is based on the closing price of the Company’s common stock on the grant date and the Company’s estimate, as of the date +of grant, of the probable outcome of the performance conditions. +23 +Outstanding Equity Awards at Fiscal Year-End +The following table provides information on all outstanding equity awards held by each of the Named Executive Officers as of January 31, +2023. +Option Awards +Stock Awards +Name +Number of +Securities +Underlying +Unexercised +Options (#) +Exercisable +Number of +Securities +Underlying +Unexercised +Options (#) +Unexercisable +Option +Exercise +Price +($) +Option +Expiration +Date +Number +of +Shares +or +Units of +Stock +That +Have +Not +Vested +(#) +Market +Value of +Shares or +Units of +Stock +That +Have Not +Vested +($) +Equity +Incentive +Plan +Awards: +Number +of +Unearned +Shares, +Units or +Other +Rights +That +Have Not +Vested +(#) +Equity +Incentive +Plan +Awards: +Market or +Payout +Value of +Unearned +Shares, +Units or +Other +Rights +That +Have +Not +Vested +($) +Gregory A. Woods +50,000 +— +13.80 +5/22/2024 +(a) +50,000 +— +13.95 +3/16/2025 +(a) +50,000 +— +15.01 +3/14/2026 +(a) +50,000 +— +12.85 +3/13/2027 +(a) +45,500 +— +18.25 +6/4/2028 +(b) +35,594 +(c) +471,621 +31,734 +(d) +420,476 +30,905 +(e) +409,491 +David S. Smith +50,000 +— +14.20 +1/22/2028 +(a) +14,000 +— +18.25 +6/4/2028 +(b) +12,181 +(f) +161,398 +10,815 +(d) +143,299 +10,635 +(e) +140,914 +Michael J. Natalizia +5,000 +— +14.20 +3/7/2024 +(a) +17,500 +— +18.25 +6/4/2028 +(b) +4,975 +(g) +65,919 +4,000 +(d) +53,000 +3,934 +(e) +52,126 +(a) +Options vest in four equal annual installments commencing on the first anniversary of the option grant date +(which is ten years prior to the expiration date). +(b) +Options vest in three equal annual installments commencing on the first anniversary of the option grant date +(which is ten years prior to the expiration date). +(c) +Consists of (i) 8,673 restricted stock units that vested on March 27, 2023; (ii) 5,734 restricted stock +units that vested on April 7, 2023; (iii) 5,151 restricted stock units that vested on April 18, 2023; (iv) 5,734 restricted stock units that vest on April 7, 2024; and (v) 10,302 restricted stock units that vest in equal installments +on April 18, 2024 and 2025. +(d) +Consists of performance-based restricted stock units held by the Named Executive Officers, which may be earned +based upon the achievement by the Company of a performance goal relating to the Company’s fiscal year 2022, 2023 and 2024 revenue. 23,801, 8,111, and 3,000 restricted stock units were earned by Messrs. Woods, Smith and Natalizia, respectively, +based upon the Company’s fiscal year 2023 revenue. +(e) +Consists of performance-based restricted stock units held by the Named Executive Officers, which may be earned +based upon the achievement by the Company of a performance goal relating to the Company’s fiscal year 2023, 2024 and 2025 revenue. No restricted stock units were earned by the Named Executive Officers based upon the Company’s fiscal year +2023 revenue. +24 +(f) +Consists of (i) 2,956 restricted stock units that vested on March 27, 2023; (ii) 1,954 restricted stock +units that vested on April 7, 2023; (iii) 1,772 restricted stock units that vested on April 18, 2023; (iv) 1,954 restricted stock units that vest on April 7, 2024; and (v) 3,545 restricted stock units that vest in equal installments +on April 18, 2024 and 2025. +(g) +Consists of (i) 1,562 restricted stock units that vested on March 27, 2023; (ii) 723 restricted stock +units that vested on April 7, 2023; (iii) 655 restricted stock units that vested on April 18, 2023; (iv) 723 restricted stock units that vest on April 7, 2024; and (v) 1,312 restricted stock units that vest in equal installments on +April 18, 2024 and 2025. +Risk Related to Compensation Policies +The Company’s compensation policies and practices for its employees, including its executive compensation program described in +Compensation Discussion and Analysis, aim to provide a risk-balanced compensation package which is competitive in our market sectors and relevant to the individual executive. The Company expects to continue to award certain executives and employees, +upon satisfaction of applicable performance conditions and subject to future approval and grant by the Compensation Committee, equity and cash-based awards. Because the Company’s equity incentive programs include substantial vesting features, +the Company believes that the structure of its compensation plans discourages short-term risk taking and aligns the interest of its executives and managers with those of its shareholders. The Company does not believe that risks arising from these +practices, or its compensation policies and practices considered as a whole, are reasonably likely to have a material adverse effect on the Company. +Pay for Performance Table +The following +table provides a comparison between two measures of compensation for our Named Executive Officers and certain measures of performance. The two compensation measures are the Named Executive Officers’ “total compensation,” as presented +in the Summary Compensation Table, and their “compensation actually paid,” a new measure of compensation required by SEC rules. These measures are presented for our Chief Executive Officer during the relevant year, individually, and for +our other Named Executive Officers, as an average for the group. +While both “total compensation” and “compensation +actually paid” measure compensation for the same fiscal year, the two measures are calculated differently. Compensation actually paid is based on total compensation but substitutes different amounts for equity compensation. Compensation +actually paid removes from total compensation the grant-date fair value of equity awards granted during the relevant year and replaces it with the net aggregate change in the fair value of equity awards during the relevant year. This net aggregate +change in fair value represents the sum of: +• +the year-end fair value of new awards granted during the year that are +outstanding and unvested as of the end of the year; +• +the change in the fair value (positive or negative) of unvested awards outstanding during the entire year, +measured from the beginning of the year to the end of the year; +• +the vesting-date fair value of new awards that are granted and also vest in the year; +• +the change in the fair value (positive or negative) of unvested awards that are held at the beginning of the year +and that also vest during the year, measured from the beginning of the year to the vesting date; +• +the loss in fair value of unvested awards outstanding at the beginning of the year that fail to meet applicable +vesting conditions during the year, measured as the loss of the fair value of those awards at the beginning of the year; and +25 +• +the dollar value of any dividends or other earnings paid on awards during the year prior to any vesting date that +are not otherwise reflected in total compensation for the year. +The net change in aggregate fair value must also +reflect any increase in the fair value of any equity awards that were repriced or otherwise materially modified during the year. No equity awards were repriced or otherwise materially modified during any of the years presented. +Fiscal Year +Summary +Compensation +Table Total for +Mr. Woods +Compensation +Actually Paid +to Mr. Woods +Average +Summary +Compensation +Table Total for +Messrs. Smith +and Natalizia +Average +Compensation +Actually Paid to +Messrs. Smith +and Natalizia +Value of +Initial +Fixed $100 +Investment +Based On +Total +Shareholder +Return (a) +Net Income +(in thousands) +2023 +$ +1,079,908 +$ +1,105,510 +(b) +$ +450,634 +$ +456,934 +(b) +$ +123 +$ +2,661 +2022 +$ +1,421,482 +$ +958,145 +(c) +$ +542,906 +$ +415,322 +(c) +$ +128 +$ +6,429 +(a) +Represents the cumulative total shareholder return (on a dividends-reinvested basis) on our common stock from +January 29, 2021, the last trading day before the earliest year presented in the table, to the last trading day of the relevant year, calculated on the basis of an investment of $100 in our common stock on January 29, 2021. +(b) +Represents compensation actually paid for fiscal year 2023 to Gregory A. Woods and the average compensation +actually paid for fiscal year 2023 to Messrs. Smith and Natalizia, our other named executive officers for fiscal year 2023. The following table provides the adjustments to total compensation that were made in order to calculate compensation actually +paid (excluding the grant-date fair value of equity awards granted in 2023, which is presented separately in the Summary Compensation Table): +Change in Fair Value +Mr. Woods +Average for +Messrs. Smith +and Natalizia +New Grants Unvested at Year-End +614,244 +144,776 +Prior Years Awards Unvested at Year-End +(25,419 +) +(6,048 +) +New Grants that Vested in Fiscal Year 2023 +— +— +Prior Years Awards that Vested in Fiscal Year 2023 +20,425 +5,137 +Prior Years Awards that Failed to Vest in Fiscal Year 2023 +— +— +Dividends or Earnings on Awards Before Vesting +— +— +The fair value of time-based restricted stock units is equal to the closing price of the Company’s common +stock on the measurement date. The fair value of performance-based restricted stock units is based on the closing price of the Company’s common stock on the measurement date and the Company’s estimate, as of the measurement date, of the +probable outcome of the performance conditions. +26 +(c) +Represents compensation actually paid for fiscal year 2022 to Mr. Woods, and the average compensation +actually paid for fiscal year 2022 to Messrs. Smith and Natalizia, our other named executive officers for fiscal year 2022. The following table provides the adjustments to total compensation that were made in order to calculate compensation actually +paid (excluding the grant-date fair value of equity awards granted in fiscal year 2022, which is presented separately in the Summary Compensation Table): +Change in Fair Value +Mr. Woods +Average for +Messrs. Smith +and Natalizia +New Grants Unvested at Year-End +672,381 +145,101 +Prior Years Awards Unvested at Year-End +63,340 +16,496 +New Grants that Vested in Fiscal Year 2022 +— +— +Prior Years Awards that Vested in Fiscal Year 2022 +58,176 +19,424 +Prior Years Awards that Failed to Vest in Fiscal Year 2022 +(559,409 +) +(145,706 +) +Dividends or Earnings on Awards Before Vesting +— +— +The fair value of time-based restricted stock units is equal to the closing price of the Company’s common +stock on the measurement date. The fair value of performance-based restricted stock units is based on the closing price of the Company’s common stock on the measurement date and the Company’s estimate, as of the measurement date, of the +probable outcome of the performance conditions. +Pay for Performance Table +The following table shows, for the periods presented in the foregoing table, the relationship between, on the one hand, the compensation +actually paid to Mr. Woods and the average compensation actually paid to our other named executive officers and, on the other hand, each of: +• +Our cumulative total shareholder return since January 29, 2021, the last trading day before fiscal year +2022; and +• +Our net income over the last two years. +Metric +Fiscal Year +2022 +Fiscal +Year 2023 +Change from Fiscal +Year 2022 to Fiscal Year +2023 (%) +Compensation actually paid to Mr. Woods +$ +958,145 +$ +1,105,510 +15.4 +% +Average Compensation Actually Paid to Messrs. Smith and Natalizia +$ +415,322 +$ +456,934 +10.0 +% +Total Shareholder Return since January 29, 2021 +28 +% +23 +% +(17.9 +)% +Net income (in thousands) +$ +6,429 +$ +2,661 +(58.6 +)% +27 +EQUITY COMPENSATION PLAN INFORMATION +The following table sets forth information about the Company’s equity compensation plans as of January 31, 2023: +Plan Category +Number of +Securities to be +Issued Upon +Exercise of +Outstanding +Options, Warrants +and Rights +Weighted-Average +Exercise Price of +Outstanding +Options, Warrants +and Rights +Number of +Securities +Remaining +Available for Future +Issuance Under +Equity +Compensation Plans +Equity Compensation Plans Approved by Shareholders +800,954 +(1) +$ +15.16 +(2) +273,657 +(3) +Equity Compensation Plans Not Approved by Shareholders +— +— +— +Total +800,954 +(1) +$ +15.16 +(2) +273,657 +(3) +(1) +Includes 276,574 shares issuable upon exercise of outstanding options granted under the Company’s 2007 +Equity Incentive Plan; 135,125 shares issuable upon exercise of outstanding options granted under the Company’s 2015 Equity Incentive Plan; and 135,500 shares issuable upon exercise of outstanding options granted and 253,755 restricted stock +units outstanding under the Company’s 2018 Equity Incentive Plan. This balance does not include 21,172 shares of unvested restricted stock which are subject to forfeiture. Refer to Note 16, “Share Based Compensation,” to the +Company’s audited financial statements for the fiscal year ended January 31, 2023 included in the Company’s Annual Report on Form 10-K filed with the SEC on April 17, 2023 for further +discussion. +(2) +Does not include restricted stock units. +(3) +Represents 238,702 shares available for grant under the Company’s 2018 Equity Incentive Plan and 34,955 +shares available for issuance under the Company’s Employee Stock Purchase Plan. +28 +PROPOSAL NO. 2 +ADVISORY VOTE ON EXECUTIVE COMPENSATION +As required by the Section 14A(a)(1) of the Exchange Act, the Board is providing shareholders with the opportunity to cast an advisory +vote on the Company’s executive compensation at the annual meeting through the following resolution: +“RESOLVED, that the +shareholders approve the Company’s executive compensation, as described in the Compensation Discussion and Analysis and the tabular disclosure regarding Named Executive Officer compensation (together with the accompanying narrative disclosure) +in the Company’s Proxy Statement.” +The Board believes that the Company’s compensation policies and procedures, which are +described more fully in the “Compensation Discussion and Analysis” section of this Proxy Statement and in the tables and narrative in the “Executive Compensation” section, are strongly aligned with the long-term interests of +shareholders. These policies and procedures balance short-term and longer-term compensation opportunities to assure that the Company meets short-term objectives while continuing to produce value for our shareholders over the long term. +Approval of this proposal requires the affirmative vote of a majority of the shares of common stock entitled to vote and present in person or +represented by proxy at the annual meeting. Abstentions will have the same effect as a vote against the proposal, and broker non-votes will have no effect on the outcome of the vote. This vote will not be +binding on or overrule any decisions by the Board or any committee thereof, will not create or imply any additional fiduciary duty on the part of the Board, and will not restrict or limit the ability of the Company’s shareholders to make +proposals for inclusion in proxy materials related to executive compensation. However, the Compensation Committee and the Board will take into account the outcome of the vote when considering future executive compensation arrangements. +THE BOARD RECOMMENDS A VOTE “FOR” APPROVAL OF THE COMPANY’S EXECUTIVE COMPENSATION, AS DESCRIBED IN THE COMPENSATION +DISCUSSION AND ANALYSIS, AND THE TABULAR DISCLOSURE REGARDING NAMED EXECUTIVE OFFICER COMPENSATION (TOGETHER WITH ACCOMPANYING NARRATIVE DISCLOSURE) IN THIS PROXY STATEMENT. +29 +PROPOSAL NO. 3 +APPROVAL OF AN AMENDMENT TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK AVAILABLE FOR ISSUANCE UNDER THE COMPANY’S 2018 EQUITY +INCENTIVE PLAN +The Board has adopted and is seeking shareholder approval of an amendment to the Company’s 2018 Equity Incentive +Plan, as previously amended, or the 2018 Plan, to increase the number of shares of common stock that are available to be issued under the 2018 Plan by 600,000 shares. As of April 10, 2023, 94,938 shares remained available for future grants or +awards under the 2018 Plan. The Company may also issue under the 2018 Plan an additional number of shares equal to the number of shares subject to outstanding awards under the Company’s 2015 Equity Incentive Plan, or the 2015 Plan, that are +forfeited, cancelled, reacquired by us or terminated in the future and that, had they been issued under the 2018 Plan, would have been available for future grants under the 2018 Plan. +The Board recommends this action in order to enable us to continue to attract, retain, and motivate our executives, other key employees, +directors and individuals providing services to the Company. The Board believes that stock options, restricted stock units and other forms of equity compensation promote growth and provide a meaningful incentive to employees of successful companies. +The Board has reviewed a range of projections for future equity awards, which indicates that the current number of shares of common stock +issuable under the 2018 Plan, may be insufficient for maintaining equity awards as a core component of our long-term incentive program beyond fiscal year 2024. For fiscal years 2023, 2022 and 2021, the Company’s burn rate, which measures the +usage of shares under the Company’s equity incentive plans, was 1.8%, 1.8% and 1.0%, respectively, resulting in an average burn rate over that period of 1.6%. We calculate burn rate by dividing the number of shares subject to awards granted +during each fiscal year, net of forfeitures and cancellations, by the weighted average number of shares outstanding during that fiscal year. We believe that our three-year average annual burn rate is well within the range considered reasonable by +most institutional shareholders. +The Board recommends that our shareholders approve the amendment to the 2018 Plan so that we can +continue to provide equity awards pursuant to our long-term incentive program and thereby continue to attract and retain talented personnel. Approval of 2018 Plan requires the affirmative vote of a majority of the shares of common stock entitled to +vote and present in person or represented by proxy at the annual meeting. Abstentions will have the same effect as a vote against the proposal, and broker non-votes will have no effect on the outcome +of the vote. +Description of the 2018 Equity Incentive Plan, as proposed to be amended +The following is a brief summary of the material features of the 2018 Plan, as proposed to be amended. This summary does not purport to be +complete and is qualified in its entirety by reference to the 2018 Plan, as proposed to be amended, a copy of which is attached to this proxy statement as Appendix A. +Purpose. The 2018 Plan is intended to promote the best interests of the Company and its shareholders and is designed to attract, retain +and motivate executives, other key employees, directors and certain other individuals providing services to the Company by providing them with the opportunity to enhance their own financial interest through acquisition of stock in the Company and +participation in the long-term growth and financial success of the Company, thereby strengthening the financial relationship between these individuals and shareholders. +Authorized Shares. If shareholders approve the proposed amendment to the 2018 Plan, 694,938 shares would be available for future +grants or awards under the 2018 Plan, based on the number of awards outstanding on April 10, 2023. Shares of stock will not be deemed issued pursuant to the 2018 Plan to the extent an award is +30 +settled in cash in lieu of stock. Shares subject to awards issued under the 2018 Plan or awards outstanding under the 2015 Plan that are forfeited, canceled, satisfied without the issuance of +stock, otherwise terminated, or, for shares of stock issued pursuant to any unvested award, reacquired by the Company at not more than the grantee’s purchase price (other than by exercise) will be “added back” and become available for +future awards. Shares tendered or withheld in satisfaction of the exercise price of an option or withheld in satisfaction of tax withholding obligations will not be “added back” or otherwise increase the number of shares available for +grant under the 2018 Plan. Shares issued under the 2018 Plan may be of original issuance, treasury shares or other shares, or a combination of the foregoing. +Shares of common stock issued as substitution awards in connection with the Company’s merger with or acquisition of another company will +not decrease the number of shares available for grant under the 2018 Plan, but shares of common stock subject to substitution awards will not be available for further awards under the 2018 Plan if the substitution awards are forfeited, expire or are +settled in cash. The Company may use shares under a pre-existing, shareholder approved plan of a company acquired by the Company for awards under the 2018 Plan, which shares will not decrease the +number of shares available for grant under the 2018 Plan, but such shares may only be used for grants of awards made prior to the expiration of the pre-existing plan and to persons who were not +employees or directors of the Company or any subsidiary prior to such acquisition. +Administration. The 2018 Plan is administered +by the Compensation Committee. The Compensation Committee may delegate to the CEO the right to grant awards to employees who are not directors or executive officers of the Company. The Compensation Committee is authorized to interpret the 2018 Plan +and related agreements and documents and to take various other actions with respect thereto. +Eligibility. Awards under the 2018 +Plan may be granted to executive officers and other employees of the Company and its subsidiaries and the Company’s non-employee directors. In addition, the Compensation Committee may select +certain consultants and advisers to the Company or its subsidiaries to receive awards under the 2018 Plan. Incentive stock options may be granted only to individuals who, as of the time of grant, are employees of the Company or its subsidiaries. The +2018 Plan’s eligibility criteria are intended to encompass a group which is currently estimated at approximately 400 individuals, which includes four non-employee directors and 5 executive +officers. The actual number of individuals who will receive an award cannot be determined in advance because the Compensation Committee has discretion to select the participants. +Available Awards. The 2018 Plan allows for a range of equity-based compensation, including stock options, stock appreciation rights +(“SARs”), restricted stock, restricted stock units (“RSUs”) and other stock-based awards. Each type of award is described below under “Types of Awards Authorized Under the 2018 Plan.” Each award granted under the 2018 +Plan will be evidenced by an award agreement containing such terms and provisions, consistent with the 2018 Plan, as the Compensation Committee may approve. +Limit on Director Awards. The 2018 Plan provides that the aggregate grant date fair value (computed as of the date of grant in +accordance with applicable financial accounting rules) of all awards granted to any non-employee director during any single fiscal year, excluding awards to a director as all or a portion of Board or +committee retainers or meeting fees or pursuant to any election by a Director to receive an Award in lieu of all or a portion of any cash retainers or meeting fees, shall not exceed $100,000. +Minimum Vesting Requirements . Awards granted to employees under the 2018 Plan (other than substitute awards in connection with an +acquisition) may not vest or otherwise become exercisable earlier than one year following the date of grant, subject to accelerated vesting in the Compensation Committee’s discretion in the event of the death or Disability (as defined in the +2018 Plan) of the participant, special circumstances determined by the Compensation Committee, or a Change in Control (as defined in the 2018 Plan). The foregoing vesting restrictions do not apply to grants of up to 5% of the number of shares of the +Company’s common stock available for awards on the effective date of the 2018 Plan or to awards granted to non-employee directors or consultants. +31 +Repricing Prohibited. The Compensation Committee may not authorize the amendment of +an outstanding option or SAR that would be treated as a repricing under the rules of the securities exchange or market system constituting the primary market for the shares, without the approval of the Company’s shareholders. However, +appropriate adjustments may be made in connection with corporate transactions and capital restructurings and as necessary to comply with applicable law. +Clawback . The 2018 Plan provides that award agreements issued under it may provide for the cancellation or clawback of certain awards +or a portion of the realized gain if, prior to a change in control of the Company, there is an accounting restatement due to material noncompliance by the Company with any financial reporting requirement under the securities laws which reduces the +amount of the awards that would have been paid or vested had the financial results been properly reported or if the Company is otherwise required by applicable law or Company policy to recoup any such amounts. +Types of Awards Authorized Under the 2018 Plan. The following types of awards may be granted under the 2018 Plan: +Stock Options . Stock options may be granted that entitle the optionee to purchase shares of Company common stock at a price +not less than fair market value per share as of the date of grant (except for substitution awards) at such time or times, or upon such event or events, and subject to such terms, conditions, performance criteria and restrictions as the Compensation +Committee may determine. The maximum term for stock options is 10 years. However, incentive stock options (“ISOs”) granted to any person who owns, as of the date of grant, stock possessing more than 10% of the total combined voting power +of all classes of our stock must have an exercise price that is not less than 110% of the fair market value of Company common stock on the date of grant and may not have a term extending beyond the fifth anniversary of the date of grant. Stock +options may be granted as ISOs, nonstatutory stock options, or combinations of the foregoing. If the fair market value of the shares underlying the awards (measured on the date incentive stock options are granted) that first becomes exercisable in a +calendar year is greater than the maximum allowed under the Code, the portion of such options which exceeds such amount will be treated as nonstatutory stock options. +The 2018 Plan provides that the option exercise price may be paid (i) in cash, by check, or in cash equivalent, (ii) by tender of +Company’s common stock owned by the participant having a fair market value not less than the exercise price, (iii) with the consent of the Compensation Committee, by the assignment of the proceeds of a sale with respect to some or all of +the shares being acquired upon the exercise of the option, or (iv) pursuant to a “net exercise” arrangement as permitted by the Compensation Committee whereby the participant directs the Company to deduct from the shares of stock +issuable upon exercise of an option a number of shares having an aggregate fair market value equal to the sum of the total exercise price of such option and/or the amount of the participant’s minimum tax withholding. Payment of an option +exercise price may also be made by such other lawful consideration as approved by the Compensation Committee or by any combination of the foregoing. +In the event that on the last business day of the term of a nonstatutory option (i) the exercise of the option is prohibited by +applicable law or (ii) shares may not be purchased or sold by certain employees or directors of the Company due to the “black-out period” of a Company policy or a “lock-up” agreement undertaken in connection with an issuance of securities by the Company, the term of that nonstatutory option will be extended for a period of thirty (30) days following +the end of the legal prohibition, black-out period or lock-up agreement in each case to the extent any such extension does not constitute the +extension of a stock right under Section 409A of the Code. +Stock options are nontransferable by the participant, other than by will +or by the laws of descent and distribution, and are exercisable during the participant’s lifetime only by the participant. However, the Compensation Committee may provide in the option award agreement or may agree in writing that the +participant may transfer a nonstatutory stock option, without consideration, to members of the participant’s +32 +immediate family, to trusts for the benefit of such family members, or to partnerships in which such family members are the only partners, provided that the transferee agrees in writing to be +bound by all of the terms and conditions of the 2018 Plan and the applicable option award agreement. +Stock Appreciation +Rights . A SAR gives a participant the right to receive the appreciation in the fair market value of the Company’s common stock between the date of grant of the award and the date of its exercise. SARs may become exercisable at such +time or times, or upon such event or events, and subject to such terms, conditions, performance criteria and restrictions as the Compensation Committee may determine. The Company may pay the appreciation either in cash or in the Company’s +common stock. The maximum term of any SAR granted under the 2018 Plan is ten years. +Restricted Stock Awards . A grant of +restricted stock involves the immediate transfer by the Company to a participant of ownership of a specified number of restricted shares of its common stock at a purchase price, if any, established by the Compensation Committee. Shares subject to a +Restricted Stock Award may be made subject to vesting conditioned upon the satisfaction such service requirements, conditions, restrictions or performance criteria as the Compensation Committee may determine. The participant is entitled immediately +to voting and other ownership rights in such shares, subject to the rules with respect to dividends set forth below. +Restricted +Stock Units . An RSU represents a right to receive common stock of the Company at a future date determined in accordance with the participant’s award agreement. No monetary payment is required for receipt of RSUs or the +shares issued in settlement of the award, the consideration for which is furnished in the form of the participant’s services to the Company. The Compensation Committee may grant restricted stock unit awards subject to vesting conditions similar +to those applicable to restricted stock awards. Participants have no voting rights or rights to receive cash dividends with respect to RSUs until shares of common stock are issued in settlement of such awards. However, subject to the restrictions +discussed below under the heading “Dividends,” the Compensation Committee may grant RSUs that entitle their holders to receive dividend equivalents, which are rights to receive additional RSUs for a number of shares whose value is equal to +any cash dividends paid by the Company. +Other Stock-Based Awards . The Compensation Committee may, in its discretion, +grant to eligible employees other stock-based awards, as deemed by the Compensation Committee to be consistent with the purposes of the 2018 Plan. Any such awards will be subject to the minimum vesting requirements described above. +Dividends. No recipient of an award of options or stock appreciation rights will have the right to receive dividends or dividend +equivalents with respect to such an award. Dividends or dividend equivalents credited, paid to or payable in connection with an award that is not yet vested will be subject to the same restrictions and risk of forfeiture as the underlying award and +may not be paid to the recipient until the underlying award vests. +Change in Control. For purposes of the 2018 Plan, +“Change in Control” means: +• +The acquisition of more than 50% of the beneficial ownership of the combined voting stock of the Company by any +person or group other than the Company or its subsidiaries or any employee benefit plan of the Company or any person who was an officer or director of the Company on the effective date of the 2018 Plan; +• +Consummation by the Company of a reorganization, merger or consolidation in which all or substantially all of the +individuals and entities who were the beneficial owners of the voting securities of such entity immediately prior to such reorganization, merger or consolidation do not, following such reorganization, merger or consolidation, beneficially own, +directly or indirectly, securities representing more than 50% of the voting power of then outstanding voting securities of the corporation resulting from such a reorganization, merger or consolidation, unless the transaction is structured as +“merger of equals” and the Board determines that a change in control has not occurred; +33 +• +The sale of all or substantially all of the Company’s assets to a party which is not controlled by or under +common control with the Company; or +• +During any 24-month period, individuals who, as of the +beginning of such period, constitute the Board (the “Incumbent Directors”) cease for any reason to constitute at least a majority of the Board, except that individuals whose election or nomination was approved by a vote of at least a +majority of the Incumbent Directors then on the Board (other than in connection with an actual or threatened election contest) are treated as Incumbent Directors. +Impact of Change in Control on Awards. The 2018 Plan generally provides the Compensation Committee with flexibility to determine the +effects of a change in control on outstanding awards. Under the 2018 Plan, in the event of a Change in Control, the acquiring company may, without the consent of any participant, either assume the Company’s rights and obligations under +outstanding awards or substitute for outstanding awards substantially equivalent awards for the acquiring company’s stock. The determination of such substantial equality of value of consideration shall be made by the Compensation Committee in +its sole discretion. +In the event the acquiring company elects not to assume or substitute for outstanding awards of the Company in +connection with a Change in Control, then the exercisability and vesting conditions applicable to such awards and any shares acquired upon exercise of such awards held by a participant whose employment or other service has not terminated prior to +the Change in Control shall be accelerated effective as of the date ten days prior to the Change in Control. +Assumption or +Substitution of Certain Awards. Unless otherwise provided in an award agreement or other agreement between the Company and a participant, in the event of a Change in Control in which the acquiring corporation assumes or substitutes for an award +(or in which the Company is the ultimate parent corporation and continues the award), if a participant’s employment terminates within 18 months following such Change in Control (or such other period set forth in the award agreement) and under +the circumstances specified in the award agreement: +• +options and SARs outstanding as of the date of such termination of employment will immediately vest, become fully +exercisable, and may thereafter be exercised for 12 months (or if longer the period of time set forth in the award agreement, but in no event beyond the end of the regularly scheduled term of such options or SARs); and +• +the vesting conditions applicable to restricted stock, restricted stock units, and any other stock-based awards +outstanding as of the date of such termination of employment shall lapse and the restricted stock, restricted stock units or other stock-based awards shall become free of all restrictions, limitations and conditions and become fully vested. +Termination of Awards. Award agreements may provide that in the event of a Change in Control, options and SARs +outstanding as of the date of the Change in Control may be cancelled and terminated without payment therefor if the fair market value of one share of stock of the Company as of the date of the Change in Control is equal to or less than the option +exercise price per share or the SAR grant price. In addition, the Compensation Committee, in its discretion, may determine that, in the event of a Change in Control, each option and SAR outstanding shall terminate within a specified number of days +after notice to the participant, and/or that each participant shall receive, with respect to each share of stock subject to such option or SAR, an amount equal to the excess of the fair market value of such share of stock immediately prior to the +occurrence of such Change in Control over the exercise price per share. +Cancellation of Award; Forfeiture of Gain. The 2018 Plan +provides that the Company may retain the right to cause a forfeiture of the gain realized by a participant on account of actions taken by the participant in violation or breach of or in conflict with any employment +agreement, non-competition agreement, any agreement prohibiting solicitation of employees or customers or any confidentiality obligation with respect to the Company +34 +and its affiliates, or otherwise in competition with the Company or its affiliates. In addition, the Company may annul an award if the participant is an employee of the Company or its affiliates +and is terminated for Cause as defined in the applicable award agreement or the 2018 Plan. +Adjustments for Changes in Capital +Structure. If the number of outstanding shares of stock of the Company is increased or decreased or the shares of stock are changed into or exchanged for a different number or kind of shares or other securities of the Company on account of any +recapitalization, reclassification, stock split, reverse split, combination of shares, exchange of shares, stock dividend or other distribution payable in capital stock, or other increase or decrease in such shares effected without receipt of +consideration by the Company, then the number and kind of shares for which grants of awards may be made under the 2018 Plan will be adjusted proportionately by the Company. Any such adjustment in outstanding options or SARs will not change the +aggregate exercise price payable with respect to shares that are subject to the unexercised portion of an outstanding option or SAR, but will include a corresponding proportionate adjustment in the exercise price per share for such option or SAR. +Summary of U.S. Federal Income Tax Consequences. The following summary is intended only as a general guide to the U.S. federal +income tax consequences of participation in the 2018 Plan and does not attempt to describe all possible federal or other tax consequences of such participation or tax consequences based on particular circumstances. +Incentive Stock Options . A participant recognizes no taxable income for regular income tax purposes as a result of +the grant or exercise of an incentive stock option (ISO) qualifying under Section 422 of the Code. Participants who neither dispose of their shares within two years following the date the option was granted, nor within one year following the +exercise of the option, will normally recognize a long-term capital gain or loss equal to the difference, if any, between the sale price and the purchase price of the shares. If a participant satisfies such holding periods upon the sale of the +shares, the Company will not be entitled to any deduction for federal income tax purposes. If a participant disposes of shares within two years after the date of grant, or within one year after the date of exercise (a “disqualifying +disposition”), the difference between the fair market value of the shares on the date of exercise and the option exercise price (not to exceed the gain realized on the sale if the disposition is a transaction in which a loss, if sustained, +would be recognized) will be taxed as ordinary income at the time of disposition. Any gain in excess of that amount will be a capital gain, which will be long-term gain only if the shares were held for more than a year following option exercise. Any +ordinary income recognized by the participant upon the disqualifying disposition of the shares generally will be deductible by the Company for federal income tax purposes, except to the extent such deduction is limited by applicable provisions of +the Code. +The difference between the option exercise price and the fair market value of the shares on the date of exercise of an ISO is +treated as an adjustment in computing the participant’s alternative minimum taxable income and may be subject to an alternative minimum tax which is paid if such tax exceeds the regular tax for the year. +Nonstatutory Stock Options . Options not qualifying as ISOs will be nonstatutory stock options having no special tax +status. A participant generally recognizes no taxable income as the result of the grant of such an option, provided the exercise price of the option is no less than the fair market value of the common stock at the time of grant. Upon exercise of a +nonstatutory stock option, the participant normally recognizes ordinary income in the amount of the difference between the option exercise price and the fair market value of the shares on the date of exercise. If the participant is an employee, such +ordinary income generally is subject to withholding of income and employment taxes. Upon the sale of stock acquired by the exercise of a nonstatutory stock option, any gain or loss, based on the difference between the sale price and the fair market +value on the date of exercise, will be taxed as capital gain or loss. No tax deduction is available to the Company with respect to the grant of a nonstatutory stock option or the sale of the stock acquired pursuant to such grant. The Company +generally will be entitled to a deduction equal to the amount of ordinary income recognized by the participant as a result of the exercise of a nonstatutory stock option, except to the extent such deduction is limited by applicable provisions of the +Code. +35 +Restricted Stock Awards . A participant acquiring restricted stock +generally recognizes income only as such shares of restricted stock vest. Upon vesting, the participant will recognize ordinary income equal to the fair market value of the vested shares at the time of vesting (less the amount, if any, paid by the +participant for the vested shares). +However, a participant may elect to recognize ordinary income upon the receipt, not the vesting, of +shares of restricted stock in connection with such award, by making an election in accordance with Section 83(b) of the Internal Revenue Code. In this case, the participant recognizes ordinary income in an amount equal to the fair market value +of the shares at the time the participant received the shares (less the amount, if any, that the participant paid for the shares). +If the +participant is an employee, the ordinary income recognized at the time of vesting, or upon receipt if an “83(b) election” was made, generally is subject to withholding of income and employment taxes. Upon the sale of shares acquired +pursuant to a restricted stock award, any gain or loss, based on the difference between the sale price and the fair market value on the vesting date, or upon receipt if an “83(b) election” was made, will be taxed as capital gain or loss. +The Company generally will be entitled to a deduction equal to the amount of ordinary income recognized by the participant at the time such income was recognized, except to the extent such deduction is limited by applicable provisions of the Code. +RSU Awards . A participant generally will recognize no income upon the grant of a RSU award. Upon the settlement +of such an award, a participant normally will recognize ordinary income in the year of receipt in an amount equal to the cash received and the fair market value of any shares received. If the participant is an employee, such ordinary income +generally is subject to withholding of income and employment taxes. Upon the sale of any shares received, any gain or loss, based on the difference between the sale price and the fair market value on the date such shares were received will be taxed +as capital gain or loss. The Company generally will be entitled to a deduction equal to the amount of ordinary income recognized by the participant, except to the extent such deduction is limited by applicable provisions of the Code. If the +participant received shares of restricted stock upon the settlement of an RSU award, the participant generally will be taxed in the same manner as described above (see discussion under “Restricted Stock”). +Awards to Participants Outside the United States. The Compensation Committee may modify the terms of any award under the 2018 Plan made +to a participant who is a resident or primarily employed outside the United States in order that such award will conform to applicable laws and regulations or so that the value and other benefits of the award to the participant, as affected by +foreign tax laws and other restrictions, shall be comparable to the value of such an award to a participant who is resident or primarily employed in the United States. +French Sub-Plan . The 2018 Plan +includes special provisions, which are referred to as the French sub-plan, for awards granted to participants who are French resident taxpayers or otherwise subject to the French social security +scheme. The purpose of the French sub-plan is to provide favorable income tax and social security tax treatment under French law. In the event of any conflicts between the French sub-plan and another provision of the 2018 Plan, the provisions of the French Sub-plan will control with respect to any awards subject to the French sub-plan. The French Sub-plan became effective upon the approval of the 2018 Plan by our shareholders. +Termination or Amendment. The 2018 Plan will continue in effect until the date on which all shares available for issuance under the +2018 Plan have been issued and all restrictions on such shares under the terms of the 2018 Plan and the agreements evidencing awards granted under the 2018 Plan have lapsed. In addition, the Board may terminate or amend the 2018 Plan at any time, +provided that no amendment may be made without shareholder approval if the Board deems such approval necessary for compliance with any applicable law, regulation or rule. No termination or amendment may affect any outstanding award unless expressly +provided by the Compensation Committee, and in any event, may not adversely affect an outstanding award, without the +36 +consent of the participant, unless necessary to comply with any applicable law, regulation or rule. No awards may be granted under the 2018 Plan after June 4, 2028, the tenth anniversary of +the date that it was initially approved by the Company’s shareholders. +Nonexclusivity of the Plan. Neither the approval of +the amendment to the 2018 Plan by the Board nor the submission of the amendment to the 2018 Plan to the shareholders of the Company for approval shall be construed as creating any limitations on the power of the Board to adopt such other incentive +arrangements as it may deem desirable, including, without limitation, the granting of awards otherwise than under the 2018 Plan. +New +Plan Benefits. No grants have been made with respect to the additional shares of common stock to be reserved for issuance under the 2018 Plan. At this time, the Company cannot determine the number of shares of common stock that may +be granted to executive officers and all employees, including non-executive officers and directors who are employees, as such grants are subject to the discretion of the Compensation Committee. +Pursuant to the Company’s Amended and Restated Non-Employee Director Compensation Program as currently in effect, each non-employee director who +is re-elected to the Company’s board of directors at the 2023 annual meeting of shareholders will receive a grant of shares of restricted stock with a fair value of $65,000 as of that date. The +Compensation Committee determines and approves the equity compensation for the chief executive officer and all other officers. +THE +BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE APPROVAL OF THE AMENDMENT TO THE 2018 EQUITY INCENTIVE PLAN. +37 +PROPOSAL NO. 4 +RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +The Audit Committee has sole authority to select, evaluate and when appropriate, to replace the Company’s independent auditors. The Audit +Committee has appointed Wolf & Company, P.C. as the Company’s independent registered public accounting firm for the fiscal year ending January 31, 2024. Although action by the Company’s shareholders on this matter is not +required, the Audit Committee believes it is appropriate to seek shareholder ratification in light of the critical role played by the independent auditors in evaluating the integrity of Company financial controls and reporting and requests that +shareholders ratify such appointment. +Approval of this proposal requires the affirmative vote of a majority of the shares of common stock +entitled to vote and present in person or represented by proxy at the annual meeting. Abstentions will have the same effect as a vote against the proposal, and broker non-votes will have no effect on the +outcome of the vote. +THE BOARD RECOMMENDS A VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF WOLF & COMPANY, P.C. +AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING JANUARY 31, 2024. +Independent +Accountants’ Fees, Services and Other Matters +The Company expects a representative of Wolf & Company, P.C. will +participate in the annual meeting via remote communication with the opportunity to make a statement, if he or she so desires, and that such representative will be available to respond to appropriate questions. +Aggregate fees for professional services rendered for the Company by Wolf & Company, P.C. for the fiscal years ended January 31, +2023 and 2022 are set forth below. +2023 +2022 +Audit Fees +$ +520,420 +$ +410,500 +Audit-Related Fees +$ +— +$ +— +Tax Fees +$ +— +$ +— +All Other Fees +$ +— +$ +— +Audit Fees for the fiscal years ended January 31, 2023 and 2022 were for professional services +rendered for the audit of the Company’s annual financial statements and internal control over financial reporting, quarterly review of the financial statements included in the Company’s Quarterly Reports on Form 10-Q, consents and other assistance required to complete the year end audit of the consolidated financial statements. Audit fees for the fiscal year ended January 31, 2023 include fees for professional services +related to the review of the Company’s registration statement on Form S-8. +Policy on Audit Committee Pre-Approval . The Audit Committee pre-approves all audit and non-audit services provided by the independent accountants prior to +the engagement of the independent accountants with respect to such services. None of the services described above were approved by the Audit Committee under the de minimis exception provided by Rule +2-01(C)(7)(i)(c) under Regulation S-X. +38 +AUDIT COMMITTEE REPORT +The Audit Committee of the Board is responsible for providing independent, objective oversight of the Company’s accounting functions and +internal controls. The Audit Committee is composed of three directors, each of whom is independent as defined by the NASDAQ listing standards and SEC rules. The Audit Committee operates under a written charter approved by the Board. +Management is responsible for the Company’s internal controls and financial reporting process. The independent accountants are +responsible for performing an independent audit of the Company’s consolidated financial statements in accordance with generally accepted auditing standards and issuing a report thereon. The Audit Committee’s responsibility is to monitor +and oversee these processes. +The Audit Committee’s responsibilities focus on two primary areas: (1) the adequacy of the +Company’s internal controls and financial reporting process and the reliability of the Company’s financial statements; and (2) the independence and performance of the Company’s independent accountants. The Audit Committee has +sole authority to select, evaluate and when appropriate, replace the Company’s independent auditors. +The Audit Committee has met +with management and the Company’s independent accountants, Wolf & Company, P.C., to review and discuss the January 31, 2023 financial statements. Management represented to the Committee that the Company’s consolidated +financial statements were prepared in accordance with generally accepted accounting principles, and the Audit Committee has reviewed and discussed the consolidated financial statements with management and the independent accountants. The Audit +Committee also discussed with Wolf & Company, P.C. the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board. The Audit Committee also received from Wolf & Company, P.C. +the written disclosures and the letter from Wolf & Company, P.C. pursuant to applicable requirements of the Public Company Accounting Oversight Board regarding Wolf & Company, P.C.’s communications with the Audit Committee +concerning independence, and has discussed with Wolf & Company, P.C. its independence from the Company. +The Audit Committee +received the information concerning the fees of Wolf & Company, P.C. for the year ended January 31, 2023 set forth above under “Independent Accountant Fees and Services.” When applicable, the Audit Committee considers whether +the provision of non-audit services is compatible with maintaining the independence of the independent accountants. Wolf & Company, P.C. did not provide any non-audit services during the fiscal year +ended January 31, 2023. +Based upon the review and discussions referred to above, the Audit Committee recommended that the Board +include the audited consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended January 31, 2023, to be filed with the SEC. +Audit Committee: +Mitchell I. +Quain (Chairman) +Alexis P. Michas +Yvonne Schlaeppi +39 +RELATED PARTY TRANSACTIONS +Potential conflicts of interest and related party transactions are referred by the Board to the Audit Committee for review and approval. In +reviewing and evaluating potential conflicts of interest and related party transactions, the Audit Committee uses applicable NASDAQ listing standards and SEC rules as a guide. +No officer, director or nominee for director of the Company or any associate of any of the foregoing had during the period beginning on +February 1, 2022 through the date of this proxy statement any material interest, direct or indirect, in any material transaction or any material proposed transaction in which the amount exceeds $120,000 and to which the Company was or is to be +a party. +FINANCIAL REPORTS +A copy of the annual report of the Company for the fiscal year ended January 31, 2023, including the Company’s annual report to the +SEC on Form 10-K, accompanies this proxy statement. Such report is not part of this proxy statement. +PROPOSALS FOR 2024 ANNUAL MEETING +The 2024 annual meeting of the shareholders of the Company is scheduled to be held on May 21, 2024, the third Tuesday in May. If a +shareholder intending to present a proposal at that meeting wishes to have such proposal included in the Company’s proxy statement and form of proxy relating to the meeting pursuant to Rule 14a-8, +the shareholder must submit the proposal to the Company no later than December 29, 2023. Shareholder proposals not requested to be included in the proxy statement pursuant to Rule 14a-8 and director +nominations that are to be considered at the 2024 annual meeting must be submitted no earlier than December 23, 2023 and no later than March 22, 2024. +OTHER MATTERS +No +business other than that set forth in the attached Notice of Meeting is expected to come before the annual meeting, but should any other matters requiring a vote of shareholders arise, including a question of adjourning the meeting, the persons +named in the accompanying proxy will vote thereon according to their best judgment in the interests of the Company. In the event any of the nominees for the office of director should withdraw or otherwise become unavailable for reasons not presently +known, the persons named as proxies will vote for other persons in their place in what they consider the best interests of the Company. +You are urged to sign and return your proxy promptly to make certain your shares will be voted at the meeting. You may revoke your proxy at +any time before it is voted. +By Order of the Board of Directors +Peter M. Rosenblum +Secretary +40 +EXPLANATORY NOTE: This Appendix A contains a copy of the AstroNova, Inc. 2018 Equity Incentive Plan, as +proposed to be amended, as described in the proxy statement to which this Appendix A is attached. +AstroNova, Inc. +2018 Equity Incentive Plan +SECTION 1. +PURPOSE +This 2018 Equity Incentive Plan (the “ Plan ”) is intended to promote the best interests of the Company and its +shareholders and is designed to attract and retain the best available talent and encourage the highest level of performance by, and provide additional incentive to (a) executives and other key employees of the Company and any other +Participating Company (as defined below), (b) Directors, and (c) certain other individuals providing services to the Company and any other Participating Company. The Company intends that this purpose will be effected by providing for +Awards in the form of stock and/or stock-based cash awards as provided in the Plan, which afford Participants the opportunity to enhance their own financial interests through the acquisition of shares of Company Stock and participation in the +long-term growth and financial success of the Company, thereby strengthening the financial relationship between Participants and Company shareholders. The terms of the Plan shall be interpreted in accordance with this intention. +SECTION 2. DEFINITIONS AND CONSTRUCTION +2.1 Definitions . Whenever used herein, the following terms shall have their respective meanings set forth below: +“ Acquiring Corporation ” shall have the meaning set forth in Section 11.1 hereof. +“ Award ” means any Option, SAR, Restricted Stock Award or Other Stock-Based Award granted under the Plan. +“ Award Agreement ” means a written agreement between the Company and a Participant setting forth the terms, conditions and +restrictions of the Award granted to the Participant. +“ Board ” means the Board of Directors of the Company. +“ Cashless Exercise ” shall have the meaning set forth in Section 6.3 hereof. +“ Cause ” shall have the meaning given such term in the applicable Award Agreement and, in the absence of any such definition, +means (x) any material breach by the Participant of any agreement to which the Participant and a Participating Company are both parties, (y) any act or omission to act by the Participant which may have a material and adverse effect on a +Participating Company’s business or on the Participant’s ability to perform services for a Participating Company, including, without limitation, the commission of any crime (other than ordinary traffic violations), or (z) any material +misconduct or material neglect of duties by the Participant in connection with the business or affairs of a Participating Company. +“ Change in Control ” means: +(a) the acquisition of more than 50% of the beneficial ownership of the combined voting securities of the Company by any person +or group (as such terms are used in Section 13(d) and 14(d) of the Exchange Act), other than the Company or its subsidiaries or any employee benefit plan of the Company or any person who was an officer or Director of the Company on the +Effective Date of the Plan; +(b) consummation by the Company of a reorganization, merger or consolidation, in each case, +with respect to which all or substantially all of the individuals and entities who were the beneficial owners of the voting securities of such entity immediately prior to such reorganization, merger or consolidation do not, +A-1 +following such reorganization, merger or consolidation, beneficially own, directly or indirectly, securities representing more than 50% of the voting power of then outstanding voting securities +of the corporation resulting from such a reorganization, merger or consolidation, provided that the forgoing shall not apply if the transaction is structured as “merger of equals” and the Board determines that a Change in Control has not +occurred; +(c) the sale, exchange or other disposition (in one transaction or a series of related transactions) of all or +substantially all of the assets of the Company (on a consolidated basis) to a party which is not controlled by or under common control with the Company; or +(d) a change in the composition of the Board during any period of twenty-four months (not including any period prior to the +Effective Date of this Plan), such that the individuals who at the beginning of such period, constitute the Board (such Board shall be hereinafter referred to as the “ Incumbent Board ”) cease for any reason to constitute at least a +majority of the Board; provided , however , for purposes of this paragraph, that any individual who becomes a member of the Board subsequent to the Effective Date, whose election, or nomination for +election by the Company’s shareholders, was approved by a vote of at least a two-thirds (2/3) of those individuals who are members of the Board and who were also members of the +Incumbent Board (or deemed to be such pursuant to this proviso) shall be considered as though such individual were a member of the Incumbent Board; but, provided further , that any such individual whose initial assumption of office +occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual or +threatened solicitation of proxies or consents by or on behalf of “Persons” (as such term is used for purposes of Section 13(d) or 14(d) of the Exchange Act) other than the Board shall not be so considered as a member of the Incumbent +Board; +provided , however , that notwithstanding the foregoing, with respect to any Award that is +determined to be “non-qualified deferred compensation” within the meaning of Section 409A of the Code, an event shall not be considered to be a Change in Control under the +Plan for purposes of any payment in respect of such Award unless such event is also a “change in ownership,” a “change in effective control” or a “change in the ownership of a substantial portion of the assets” of the +Company within the meaning of Section 409A of the Code. +“ Code ” means the Internal Revenue Code of 1986, as amended, +and any applicable regulations promulgated thereunder. +“ Committee ” means the Compensation Committee or other committee +of the Board duly appointed to administer the Plan and having such powers as shall be specified by the Board. It is intended that each member of the Committee shall be an Independent Director +and a “Non-Employee Director” within the meaning of Rule 16b-3 under the Exchange Act (or any successor provision), but +the authority and validity of any act taken or not taken by the Committee shall not be affected if any person administering the Plan is not a Non-Employee Director. +“ Company ” means AstroNova, Inc., a Rhode Island corporation, or any successor company thereto. +“ Consultant ” means a person engaged to provide consulting or advisory services (other than as an Employee or a Director) to a +Participating Company. +“ Director ” means a member of the Board or of the board of directors of a Participating Company. +“ Disability ” shall have the meaning given such term in the applicable Award Agreement and, in the absence of any such +definition, shall have the meaning set forth in Section 409A of the Code, as the same may be amended from time to time. Section 409A of the Code currently defines “Disability” as (a) the inability to engage in any +substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months or +A-2 +(b) by reason or any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 +months and the service recipient is receiving income replacement payments for at least three months under a plan covering employees. Notwithstanding the foregoing, with respect to rules regarding expiration of an Incentive Stock Option following +termination of the Participant’s Service, Disability shall have the meaning specified in Section 22(e)(3) of the Code. +“ Dividend Equivalent ” means a credit, made at the discretion of the Committee or as otherwise provided by the Plan, to the +account of a Participant in an amount equal to the cash dividends paid on one share of Stock for each share of Stock represented by an Award (other than an Option or SAR) held by such Participant. +“ Effective Date ” shall have the meaning set forth in Section 17 hereof. +“ Employee ” means any person treated as an employee (including an officer or a Director who is also treated as an employee) in +the records of a Participating Company; provided , however , that neither service as a Director nor payment of a director’s fee shall be sufficient to constitute employment for +purposes of the Plan; and provided further that for purposes of Section 5.1 hereof, the definition of Participating Company as used above shall be limited to the Company, and any present or future “parent or subsidiary corporation” of +the Company as defined in Sections 424(e) and 424(f) of the Code. +“ Exchange Act ” means the Securities Exchange Act of +1934, as amended. +“ Fair Market Value ” means, as of any date, the value of a share of Stock or other property as +determined by the Committee, in its discretion, or by the Company, in its discretion, if such determination is expressly allocated to the Company herein, subject to the following: +(a) If, on such date, the Stock is listed on a national or regional securities exchange or market system, the Fair Market Value +of a share of Stock shall be the closing price of a share of Stock on such national or regional securities exchange or market system constituting the primary market for the Stock. If the relevant date does not fall on a day on which the Stock has +traded on such securities exchange or market system, the date on which the Fair Market Value shall be established shall be the last day on which the Stock was so traded prior to the relevant date, or such other appropriate day as shall be determined +by the Committee, in its discretion. +(b) If, on such date, the Stock is not listed on a national or regional securities +exchange or market system, the Fair Market Value of a share of Stock shall be as determined by the Committee in good faith without regard to any restriction other than a restriction which, by its terms, will never lapse. +“ Incentive Stock Option ” means an Option intended to be (as set forth in the Award Agreement) and which qualifies as an +“incentive stock option” within the meaning of Section 422(b) of the Code or any successor provision thereto as in effect from time to time. +“ Independent Director ” means any Director of the Company who shall meet the listing standards relating to independence of +NASDAQ or other relevant listing standards. Without limiting the generality of the foregoing, an Independent Director shall not be a current employee of the Company or a member of an “affiliated group,” as such term is defined in +Section 1504(a) of the Code, which includes the Company. +“ NASDAQ ” means The NASDAQ Stock Market or any successor +thereto. +“ Net Exercise ” means a Participant’s ability to exercise an Option by directing the Company to deduct from +the shares of Stock issuable upon exercise of his or her Option a number of shares having an aggregate Fair Market Value equal to the aggregate exercise price, and at the Company’s discretion the amount of the Participant’s minimum tax +withholding (if any), whereupon the Company shall issue to the Participant the net remaining number of shares of Stock after such deductions. +A-3 +“ Nonstatutory Stock Option ” means an Option not intended to be (as set +forth in the Award Agreement) or which does not qualify as an Incentive Stock Option. +“ Option ” means any option to +purchase Stock granted pursuant to Section 6 hereof. +“ Other Stock-Based Award ” means any right granted under +Section 9 hereof. +“ Participant ” means any eligible person selected by the Committee to receive an Award under the +Plan. +“ Participating Company” shall mean the Company, any parent entity that controls the Company or any +Subsidiary. +“ Plan ” means this 2018 Equity Incentive Plan, as amended from time to time. +“Pool ” has the meaning set forth in Section 4.1 hereof. +“ Prior Plan ” shall mean the Company’s 2015 Equity Incentive Plan. +“ Restricted Stock ” means Stock granted to a Participant pursuant to the terms and conditions of Section 8 hereof. +“ Restricted Stock Award ” means an Award of Restricted Stock or a Restricted Stock Unit. +“ Restricted Stock Unit ” means a bookkeeping entry representing a right granted to a Participant to receive in cash or Stock +the Fair Market Value of a share of Stock granted pursuant to the terms and conditions of Section 8 hereof. +“ Restriction +Period ” has the meaning set forth in Section 8.1 hereof. +“ Rule 16b-3 ” +means Rule 16b-3 under the Exchange Act, as amended from time to time, or any successor rule or regulation thereto. +“ Securities Act ” means the Securities Act of 1933, as amended. +“ Service ” means a Participant’s employment or service with a Participating Company, whether in the capacity of an +Employee, a Director or a Consultant. A Participant’s Service shall not be deemed to have terminated merely because of a change in the capacity in which the Participant renders Service to the Participating Company or as a result of a transfer +from one Participating Company to another, provided that there is no interruption or termination of the Participant’s Service. Furthermore, a Participant’s Service may be deemed, as provided in the applicable Award Agreement, not to have +terminated if the Participant takes any military leave, sick leave, or other bona fide leave of absence approved by the Participating Company; provided , however , that if any such +leave exceeds ninety (90) days, on the one hundred eighty-first (181st) day of such leave any Incentive Stock Option held by such Participant shall cease to be treated as an Incentive Stock Option and instead shall be treated thereafter as +a Nonstatutory Stock Option unless the Participant’s right to return to Service is guaranteed by statute or contract. Notwithstanding the foregoing, unless otherwise designated by the Participating Company or required by law, a leave of absence +shall not be treated as Service for purposes of determining vesting under the Participant’s Award Agreement. A Participant’s Service shall be deemed to have terminated either upon an actual termination of Service or upon the date that a +Subsidiary for which the Participant performs Service ceases to be a Subsidiary. Subject to the foregoing, the Company, in its discretion, shall determine whether the Participant’s Service has terminated and the effective date of such +termination. +A-4 +“ Stock ” means the common stock of the Company, as adjusted from time to +time in accordance with Section 10 hereof. +“ Stock Appreciation Right ” or “ SAR ” means a bookkeeping +entry representing, for each share of Stock subject to such SAR, a right granted to a Participant pursuant to Section 7 hereof to receive payment of an amount equal to the excess, if any, of the Fair Market Value of a share of Stock on the date +of exercise of the SAR over the exercise price. +“ Subsidiary ” means any present or future “subsidiary +corporation” of the Company, as defined in Section 424(f) of the Code or any other entity controlled by or under common control with the Company. +“ Substitute Awards ” means Awards granted upon assumption of, or in substitution for, outstanding awards previously granted by +a company or other entity acquired by a Participating Company or with which a Participating Company combines. +“ Ten Percent +Owner ” means a Participant who, at the time an Option is granted to the Participant, owns stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or a Subsidiary within the +meaning of Section 422(b)(6) of the Code. +“Vesting Conditions ” has the meaning set forth in Section 8.1 +hereof. +2.2 Construction . Captions and titles contained herein are for convenience only and shall not affect the meaning +or interpretation of any provision of the Plan. Except when otherwise indicated by the context, the singular shall include the plural, the plural shall include the singular and the masculine shall include the feminine and neuter, as the context +requires. Use of the term “or” is not intended to be exclusive, unless the context clearly requires otherwise. +SECTION 3. ADMINISTRATION +3.1 Administration by the Committee. +The Plan shall be administered by the Committee. If no committee of the Board has been appointed to administer the Plan, the Independent +Directors shall exercise all of the powers of the Committee granted herein, and, in any event, the Independent Directors of the Board may, in their discretion, exercise any or all of such powers. All questions of interpretation of the Plan or of any +Award shall be determined by the Committee, and such determinations shall be final and binding upon all persons having an interest in the Plan or such Award. +3.2 Authority of Officers . Any officer of a Participating Company shall have the authority to act on behalf of +the Company with respect to any matter, right, obligation, determination or election which is the responsibility of or which is allocated to the Company herein, provided the officer has apparent authority with respect to such matter, right, +obligation, determination or election. Without limiting the generality of the foregoing, except as limited by law (including, without limitation, the Rhode Island Business Corporation Act), regulation, the NASDAQ listing rules, or the listing rules +of such other national or regional securities exchange or market system constituting the primary market for the Stock, the Committee may delegate its authority to the Chief Executive Officer of the Company hereunder, except that the Committee will +not delegate its authority with respect to compensation matters involving any executive officer, as defined under the Exchange Act and in the listing rules of NASDAQ or such other national or regional securities exchange or market system +constituting the primary market for the Stock. +3.3 Powers of the Committee . In addition to any other powers set forth in +the Plan and subject to the provisions of the Plan, the Committee shall have the full and final power and authority, in its discretion: +(a) to determine the persons to whom, and the time or times at which, Awards shall be granted and the number of shares of Stock +or units to be subject to each Award; +A-5 +(b) to determine the type of Award granted and to designate Options as +Incentive Stock Options or Nonstatutory Stock Options; +(c) to determine the Fair Market Value of shares of Stock or other +property; +(d) to determine the terms, conditions and restrictions applicable to each Award (which need not be identical) +and any shares acquired pursuant thereto, including, without limitation, (i) the purchase price of any Stock, (ii) the method of payment for shares purchased pursuant to any Award, (iii) the method for satisfaction of any tax +withholding obligation arising in connection with any Award, including by the withholding or delivery of shares of Stock, (iv) the timing, terms and conditions of exercisability or vesting of any Award or any shares acquired pursuant thereto, +(v) the time of the expiration of any Award, (vi) the effect of the Participant’s termination of Service on any of the foregoing, and (vii) all other terms, conditions and restrictions applicable to any Award or shares acquired +pursuant thereto not inconsistent with the terms of the Plan; +(e) to determine whether an Award of Restricted Stock Units +or Performance Shares, or Stock Appreciation Rights will be settled in shares of Stock, cash, or in any combination thereof; +(f) to approve one or more forms of Award Agreement; +(g) to amend, modify, extend, cancel or renew any Award or to waive any restrictions or conditions applicable to any Award or +any shares acquired pursuant thereto; +(h) to accelerate, continue, extend or defer the exercisability or vesting of any +Award or any shares acquired pursuant thereto, including, without limitation, with respect to the period following a Participant’s termination of Service; +(i) to prescribe, amend or rescind rules, guidelines and policies relating to the Plan, or to adopt supplements to, or +alternative versions of, the Plan, including, without limitation, as the Committee deems necessary or desirable to comply with the laws of, or to accommodate the tax policy or custom of, foreign jurisdictions whose citizens may be granted Awards; +(j) to authorize, in conjunction with any applicable Company deferred compensation plan, that the receipt of cash or Stock +subject to any Award under this Plan, may be deferred under the terms and conditions of such Company deferred compensation plan; +(k) to correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Award Agreement and to make +all other determinations and take such other actions with respect to the Plan or any Award as the Committee may deem advisable to the extent not inconsistent with the provisions of the Plan or applicable law; and/or +(l) to provide for a “clawback” of an Award pursuant to the provisions of Section 14.5 below. +3.4 Minimum Vesting Periods . Notwithstanding Section 3.3(d) above, Awards to Employees (other than Substitute Awards) +shall not vest or otherwise become exercisable earlier than one year following the date of grant, subject to accelerated vesting in the Committee’s discretion in the event of the death or Disability of the Participant, special circumstances +determined by the Committee, or a Change in Control. Notwithstanding the foregoing, the restrictions in the preceding sentence shall not be applicable to the grant of up to 5% of the number of shares of Stock available for Awards under +Section 4.1 on the Effective Date. +3.5 No Repricing . Notwithstanding anything in this Plan to the +contrary, no amendment or modification may be made to an outstanding Option or SAR, including, without limitation, by replacement of Options or SARs with cash or other award type, that would be treated as a repricing under the rules of the +securities exchange or market system constituting the primary market for the Stock, in each case, without the approval of the shareholders of the Company, provided, that, appropriate adjustments may be made to outstanding Options and SARs pursuant +to Section 10 and may be made to make changes to achieve compliance with applicable law, including Code Section 409A. +A-6 +3.6 Deferral Arrangements . The Committee may permit or require the deferral +of any award payment into a deferred compensation arrangement, subject to such rules and procedures as it may establish, which may include provisions for the payment or crediting of interest or dividend equivalents, including converting such credits +into deferred Stock equivalents. Any such deferrals shall be made in a manner that complies with Code Section 409A. +3.7 Indemnification . Neither the Board nor the Committee, nor any member of either or officer or employee of a Participating +Company to whom authority to act for the Board, the Committee or the Company is delegated, shall be liable for any act, omission, interpretation, construction or determination made in good faith in connection with the Plan. In addition to such other +rights of indemnification as they may have as members of the Board, the Committee or as officers or employees of a Participating Company, members of the Board or of the Committee and any officers or employees of the Participating Company to whom +authority to act for the Board, the Committee or the Company is delegated, shall be entitled in all cases to indemnification and reimbursement by the Company in respect of any claim, loss, damage or expense (including, without limitation, reasonable +attorneys’ fees) arising or resulting therefrom to the fullest extent permitted by law and/or under any directors’ and officers’ liability insurance coverage which may be in effect from time to time. +3.8 Share Issuance/Book-Entry . Notwithstanding any provision of this Plan to the contrary, the issuance of the Stock under +the Plan may be evidenced in such a manner as the Committee, in its discretion, deems appropriate, including, without limitation, book-entry registration or issuance of one or more Stock certificates +SECTION 4. SHARES SUBJECT TO PLAN +4.1 Number of Shares Available for Awards . The total number of shares of Stock that may be issued pursuant to +Awards granted under the Plan shall not exceed an aggregate of one million five hundred fifty thousand (1,550,000) shares (with the other shares of Stock added pursuant to this Section, the “Pool”). For purposes of this limitation, in +respect of any shares of Stock under any Award under the Plan or under any award under the Prior Plan, which shares are forfeited, canceled, satisfied without the issuance of Stock, otherwise terminated, or, for shares of Stock issued pursuant to +any unvested Award, reacquired by the Company at not more than the grantee’s purchase price (other than by exercise) (“Unissued Shares”), such Unissued Shares shall be added to the Pool, provided however that the number of Unissued +Shares added to the Pool with respect to awards under the Prior Plan shall not exceed 821,637 shares. Subject to such overall limitation, shares of Stock may be issued up to such maximum number pursuant to any type or types of Award, including +Incentive Stock Options. The shares available for issuance from the Pool may be authorized but unissued shares of Stock or shares of Stock reacquired by the Company and held in its treasury, or shares purchased on the open market. The class and +aggregate number of shares which may be subject to Awards granted under the Plan shall be subject to adjustment as provided in Section 10 hereof. +4.2 Determination of Shares Issued and Issuable . Shares covered by an Award shall be counted as used as of the +effective date of the grant. Any shares of Stock that are subject to Awards shall be counted against the limit set forth in Section 4.1 as one (1) share for every one (1) share subject to an Award. Shares of Stock shall not be deemed +to have been issued pursuant to the Plan with respect to any portion of an Award that is settled in cash in lieu of shares. If any shares covered by an Award granted under the Plan are not earned or purchased or are forfeited or expire, or if an +Award otherwise terminates without delivery of any Stock subject thereto, then the number of shares of Stock counted against the aggregate number of shares available under the Plan with respect to such Award shall, to the extent of any such +forfeiture, termination or expiration, be available for making Awards under the Plan in the same amount as such shares were counted against the limit set forth in Section 4.1. Notwithstanding the foregoing, upon the exercise of any Award, to +the extent that such Award is exercised through tendering (or attesting to) previously owned shares or through withholding shares that would otherwise be awarded and to the extent shares are withheld for tax withholding purposes, the shares +available under the Plan shall be reduced by the gross number of shares of Stock being exercised without giving effect to the number of shares tendered or withheld. Notwithstanding anything to the contrary in the Plan, in the event that the +A-7 +Company were to repurchase Stock in the open market using Option exercise proceeds, such repurchased Stock will not again become available for issuance under the Plan. +4.3 Substitute Awards . The Committee shall have the right to substitute or assume Awards in connection with +mergers, reorganizations, separations, or other transactions to which Section 424(a) of the Code applies. Substitute Awards shall not reduce the shares of Stock authorized for issuance under the Plan, nor shall shares of Stock subject to a +Substitute Award be added to the shares available for Awards under the Plan as provided in Sections 4.2 above. Additionally, in the event that a company acquired by a Participating Company, or with which a Participating Company combines, has shares +available under a pre-existing plan approved by stockholders and not adopted in contemplation of such acquisition or combination, the shares available for grant pursuant to the terms of such pre-existing plan (as adjusted, to the extent appropriate, using the exchange ratio or other adjustment or valuation ratio or formula used in such acquisition or combination to determine +the consideration payable to the holders of common stock of the entities party to such acquisition or combination) may be used for Awards under the Plan and shall not reduce the shares of Stock authorized for grant under the Plan (and shares subject +to such Awards shall not be added to the shares available for Awards under the Plan as provided in Sections 4.2 and 4.3 above); provided that Awards using such available shares shall not be made after the date awards or grants could have been made +under the terms of the pre-existing plan, absent the acquisition or combination, and shall only be made to individuals who were not Employees or Directors prior to such acquisition or +combination . +4.4 Source of Shares . The Stock subject to the Awards granted under the Plan shall be shares of the +Company’s authorized but unissued Stock or shares of the Stock held in treasury. +SECTION 5. ELIGIBILITY +5.1 Persons Eligible for Incentive Stock Options . Incentive Stock Options may be granted only to Employees. For purposes of +the foregoing sentence, the term “Employees” shall include prospective Employees to whom Incentive Stock Options are granted in connection with written offers of employment with the Participating +Companies; provided , however , that any such Incentive Stock Option shall be deemed granted effective on the date such person commences Service as an Employee, with an exercise price +determined as of such date in accordance with Section 6.1 hereof. +5.2 Persons Eligible for Other Awards . Awards +other than Incentive Stock Options may be granted only to Employees, Consultants and Directors. For purposes of the foregoing sentence, the terms “Employees,” “Consultants” and “Directors” shall include prospective +Employees, prospective Consultants and prospective Directors to whom Awards are granted in connection with written offers of an employment or other service relationship with the Participating +Companies; provided , however , that no such Award shall vest or become exercisable, and no Stock shall be issued pursuant to such Award, prior to the date on which such person +commences Service as an Employee, Consultant or Directors. +5.3 Non-Employee Director +Award Limits . No Director who is not also an employee of a Participating Company may be granted any Award or Awards denominated in shares of Stock that exceed in the aggregate $100,000 in value (such value computed as of the date +of grant in accordance with applicable financial accounting rules) in any single fiscal year. The foregoing limit shall not apply to any Award to a Director as all or a portion of Board or committee retainers or meeting fees or pursuant to any +election by a Director to receive an Award in lieu of all or a portion of any cash retainers or meeting fees. +SECTION 6. TERMS AND CONDITIONS OF STOCK +OPTIONS +Options shall be evidenced by Option Agreements specifying the number of shares of Stock covered thereby, in such form as the +Committee shall from time to time establish. No Option or purported Option shall be +A-8 +a valid and binding obligation of the Company unless evidenced by a fully executed Option Agreement. Option Agreements shall comply with and be subject to the following terms and conditions: +6.1 Exercise Price . The exercise price for each Option shall be established in the discretion of the +Committee; provided , however , that (a) the exercise price per share for an Option shall be not less than the Fair Market Value of a share of Stock on the effective date of grant +of the Option, (b) no Incentive Stock Option granted to a Ten Percent Owner shall have an exercise price per share less than one hundred ten percent (110%) of the Fair Market Value of a share of Stock on the effective date of grant of the +Option. Notwithstanding the foregoing, an Option may be granted with an exercise price lower than the minimum exercise price set forth above if such Option is granted as a Substitute Award in a manner qualifying under the provisions of +Section 424(a) of the Code. +6.2 Exercisability and Term of Options . Options shall vest and be exercisable at such +time or times, or upon such event or events, and subject to such terms, conditions, performance criteria and restrictions as shall be determined by the Committee and set forth in the Option Agreement evidencing such +Option; provided , however , that (a) no Option shall be exercisable after the expiration of ten (10) years after the effective date of grant of such Option, and (b) no +Incentive Stock Option granted to a Ten Percent Owner shall be exercisable after the expiration of five (5) years after the effective date of grant of such Option. Subject to the foregoing, unless otherwise specified by the Committee in the +grant of an Option, any Option granted hereunder shall terminate ten (10) years after the effective date of grant of the Option, unless earlier terminated in accordance with its provisions. Notwithstanding the foregoing, in the event that on +the last business day of the term of a Nonstatutory Option (i) the exercise of the Option is prohibited by applicable law or (ii) shares may not be purchased or sold by certain employees or Directors of the Company due to the “black-out period” of a Company policy or a “lock-up” agreement undertaken in connection with an issuance of +securities by the Company, the term of such Nonstatutory Option shall be extended for a period of thirty (30) days following the end of the +legal prohibition, black-out period or lock-up agreement in each case to the extent any such extension would not constitute the +extension of a stock right under Section 409A of the Code. +6.3 Payment of Exercise Price . Except as +otherwise provided in the Option Agreement, payment of the exercise price for the number of shares of Stock being purchased pursuant to any Option shall be made: +(a) in cash, by check or cash equivalent, +(b) by tender to the Company, or attestation to the ownership, of shares of Stock owned by the Participant having a Fair Market +Value not less than the exercise price, +(c) pursuant to a Net Exercise arrangement, provided, +however , that in such event the Committee may exercise its discretion to limit the use of a Net Exercise; +(d) with +the consent of the Committee and subject to such procedures as the Committee shall prescribe as a condition of such payment procedure, by delivery of a properly executed notice together with irrevocable instructions to a broker providing for the +assignment to the Company of the proceeds of a sale with respect to some or all of the shares being acquired upon the exercise of the Option (a “ Cashless Exercise ”), +(e) by such other consideration as may be approved by the Committee from time to time to the extent permitted by applicable +law, or +(f) by any combination thereof. +6.4 Effect of Termination of Service . An Option granted to a Participant shall be exercisable after the Participant’s +termination of Service only during the applicable time period determined in accordance with the Option’s term as set forth in the Option Agreement. Such provisions shall be determined in the sole discretion of the Committee, need not be uniform +among all Options issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination of Service. +A-9 +6.5 Transferability of Options . During the lifetime of the Participant, an +Option shall be exercisable only by the Participant or the Participant’s guardian or legal representative. No Option shall be assignable or transferable by the Participant, except by will or by the laws of descent and distribution. +Notwithstanding the foregoing, the Committee, in its sole discretion, may provide in the Award Agreement regarding a given Option, or may agree in writing with respect to an outstanding Option, that the optionee may transfer his Nonstatutory Stock +Options, without consideration, to members of his immediate family (as such term is defined in the General Instructions to Form S-8 Registration Statement under the Securities Act), to +trusts for the benefit of such family members, or to partnerships in which such family members are the only partners, provided that the transferee agrees in writing with the Company to be bound by all of the terms and conditions of this Plan and the +applicable Option. +6.6 Fair Market Value Limitation on Incentive Stock Options . To the extent that options +designated as Incentive Stock Options (granted under all stock option plans of the Company or any Subsidiary) become exercisable by a Participant for the first time during any calendar year for stock having a Fair Market Value greater than One +Hundred Thousand Dollars ($100,000), the portions of such options which exceed such amount shall be treated as Nonstatutory Stock Options. +6.7 Annual Directors’ Options . After the Effective Date of the Plan, no awards may be granted to Directors of the +Company under Section 6.7 of the Prior Plan. +SECTION 7. TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS +SARs shall be evidenced by Award Agreements specifying the number of shares of Stock subject to the Award, in such form as the Committee shall +from time to time establish. No SAR or purported SAR shall be a valid and binding obligation of the Company unless evidenced by a fully executed Award Agreement. Award Agreements evidencing SARs shall comply with and be subject to the following +terms and conditions: +7.1 Exercise Price . The exercise price for each SAR shall be established in the discretion of the +Committee; provided , however , that the exercise price per share of a SAR shall be not less than the Fair Market Value of a share of Stock on the effective date of grant of the SAR. +7.2 Exercisability and Term of SARs . SARs shall vest and be exercisable at such time or times, or upon such +event or events, and subject to such terms, conditions, performance criteria and restrictions as shall be determined by the Committee and set forth in the Award Agreement evidencing such +SAR; provided , however , that no SAR shall be exercisable after the expiration of ten (10) years after the effective date of grant of such SAR. +7.3 Exercise of SARs . Upon the exercise of a SAR, the Participant (or the Participant’s legal representative or other +person who acquired the right to exercise the SAR by reason of the Participant’s death) shall be entitled to receive payment of an amount for each share with respect to which the SAR is exercised equal to the excess, if any, of the Fair Market +Value of a share of Stock on the date of exercise of the SAR over the exercise price. Payment of such amount shall be made in cash, shares of Stock, or any combination thereof as determined by the Committee. Unless otherwise provided in the Award +Agreement evidencing such SAR, payment shall be made in a lump sum as soon as practicable following the date of exercise of the SAR. The Award Agreement evidencing any SAR may provide for deferred payment in a lump sum or in installments, so long as +such payment is made in a manner that complies with Code Section 409A. When payment is to be made in shares of Stock, the number of shares to be issued shall be determined on the basis of the Fair Market Value of a share of Stock on the date of +exercise of the SAR. For purposes of this Section 7, a SAR shall be considered exercised on the date on which the Company receives actual notice of exercise from the Participant. +7.4 Effect of Termination of Service . A SAR shall be exercisable after a Participant’s termination of Service to such +extent and during such period as determined by the Committee, in its discretion, and set forth in the Award Agreement evidencing such SAR. +A-10 +7.5 Nontransferability of SARs . SARs may not be assigned or transferred in +any manner except by will or the laws of descent and distribution, and, during the lifetime of the Participant, shall be exercisable only by the Participant or the Participant’s guardian or legal representative. +SECTION 8. TERMS AND CONDITIONS OF RESTRICTED STOCK AWARDS +Restricted Stock Awards may be in the form of (a) Restricted Stock, which shall be evidenced by a Restricted Stock Agreement, or +(b) a Restricted Stock Unit, which shall be evidenced by a Restricted Stock Unit Agreement. Each such Award Agreement shall specify the number of shares and purchase price per share, if any, of Stock subject to and the other terms, conditions +and restrictions of the shares of Stock underlying the Award, of the Award, and shall be in such form as the Committee shall establish from time to time. No Restricted Stock Award or purported Restricted Stock Award shall be a valid and binding +obligation of the Company unless evidenced by a fully executed Award Agreement. Restricted Stock Award Agreements shall comply, as applicable, with and be subject to the following terms and conditions: +8.1 Vesting and Restrictions on Transfer . Shares issued pursuant to any Restricted Stock Award may be made subject to vesting +conditioned upon the satisfaction of such Service requirements, conditions, restrictions or performance criteria (the “ Vesting Conditions ”), as shall be established by the Committee and set forth in the Award Agreement evidencing +such Award. During any period (the “ Restriction Period ”) in which shares acquired pursuant to a Restricted Stock Award remain subject to Vesting Conditions, such shares may not be sold, exchanged, transferred, pledged, hypothecated, +assigned or otherwise disposed of other than pursuant to a Change in Control, or as provided in Section 8.4. Upon request by the Company, each Participant shall execute any agreement evidencing such transfer restrictions prior to the receipt of +shares of Stock hereunder and shall promptly present to the Company any and all certificates representing shares of Stock acquired hereunder for the placement on such certificates of appropriate legends evidencing any such transfer restrictions. +8.2 Voting Rights; Dividends . Except as provided in this Section 8.2 and Section 8.1, during the Restriction +Period applicable to shares subject to a Restricted Stock Award held by a Participant, the Participant shall have all of the rights of a shareholder of the Company holding shares of Stock, including the right to vote such shares and to receive all +dividends and other distributions paid with respect to such shares; provided , however , that the right to receive or retain any dividends or other distributions shall be subject to +Section 14.6. A Participant who is awarded a Restricted Stock Unit shall possess no holder of Stock with respect to such Restricted Stock Award; provided that the Award Agreement may provide for payments in lieu of dividends to such +Participant, subject to Section 14.6. A holder of Restricted Stock Units shall have no rights other than those of a general creditor of the Company. Restricted Stock Units represent an unfunded and unsecured obligation of the Company, subject +to the terms and conditions of the applicable Award Agreement. +8.3 Effect of Termination of Service . The effect of the +Participant’s termination of Service on any Restricted Stock Award shall be determined by the Committee, in its discretion, and set forth in the Award Agreement evidencing such Restricted Stock Award. +8.4 Nontransferability of Restricted Stock Award Rights . Rights to acquire shares of Stock pursuant to a Restricted Stock +Award may not be assigned or transferred in any manner except by will or the laws of descent and distribution, and, during the lifetime of the Participant, shall be exercisable only by the Participant. +SECTION 9. OTHER STOCK-BASED AWARDS +The +Committee shall have authority to grant to eligible Employees an “Other Stock-Based Award,” which shall consist of any right that is an Award of Stock or an Award denominated or payable in, valued in whole or in part by reference to, or +otherwise based on or related to, Stock (including, without limitation, securities convertible into Stock), as deemed by the Committee to be consistent with the purposes of the Plan, other than an Award described in Sections 6 through 8 above. +A-11 +SECTION 10. CHANGES IN THE COMPANY’S CAPITAL STRUCTURE +10.1 No Limitations on the Company . The existence of outstanding Awards shall not affect in any way the right or power of the +Company or its shareholders to make or authorize, without limitation, any or all adjustments, recapitalizations, reorganizations or other changes in the Company’s capital structure or its business, or any merger or consolidation of the Company, +or any issue of Stock, or any issue of bonds, debentures, preferred or prior preference stock or other capital stock ahead of or affecting the Stock or the rights thereof, or the dissolution or liquidation of the Company, or any sale or transfer of +all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise. +10.2 Adjustments for Changes in Capital Structure . If the number of outstanding shares of Stock is increased or +decreased or the shares of Stock are changed into or exchanged for a different number or kind of shares or other securities of the Company on account of any recapitalization, reclassification, stock split, reverse split, combination of shares, +exchange of shares, stock dividend or other distribution payable in capital stock, or other increase or decrease in such shares effected without receipt of consideration by the Company occurring after the Effective Date, the number and kinds of +shares for which grants of Options and other Awards may be made under the Plan, including, without limitation, the limits set forth in Section 5.3, shall be adjusted proportionately and accordingly by the Company. In addition, the number and +kind of shares for which Awards are outstanding shall be adjusted proportionately and accordingly so that the proportionate interest of the Participant immediately following such event shall, to the extent practicable, be the same as immediately +before such event. Any such adjustment in outstanding Options or SARs shall not change the aggregate exercise price payable with respect to shares that are subject to the unexercised portion of an outstanding Option or SAR as applicable, but shall +include a corresponding proportionate adjustment in the exercise price per share for such Option or SAR. The Committee may unilaterally amend the outstanding Awards to reflect the adjustments contemplated by this Section 10.2. The conversion of +any convertible securities of the Company shall not be treated as an increase in shares effected without receipt of consideration. Notwithstanding the foregoing, in the event of any distribution to the Company’s shareholders of securities of +any other entity or other assets (including an extraordinary dividend but excluding a non-extraordinary dividend of the Company) without receipt of consideration by the Company, the Company +shall, in such manner as the Company deems appropriate, adjust (a) the number and kind of shares subject to outstanding Awards and/or (b) the exercise price of outstanding Options or SARs to reflect such distribution. Notwithstanding the +foregoing, in no event may the exercise price of any Option be decreased to an amount less than the par value, if any, of the stock subject to such Award. +10.3 Adjustments . Adjustments under this Section 10 related to shares of Stock or securities of the Company +shall be made by the Committee, whose determination in that respect shall be final, binding and conclusive. No fractional shares or other securities shall be issued pursuant to any such adjustment, and any fractions resulting from any such +adjustment shall be eliminated in each case by rounding downward to the nearest whole share. The Committee shall determine the effect of a Change in Control upon Awards other than Options, SARs, Restricted Stock Units and Restricted Stock, and such +effect shall be set forth in the appropriate Award Agreement. The Committee may provide in the Award Agreements at the time of grant, or any time thereafter with the consent of the Participant, for different provisions to apply to an Award in place +of those described in Sections 10.2. This Section 10 does not limit the Company’s ability to provide for alternative treatment of Awards outstanding under the Plan in the event of a Change in Control. +SECTION 11. CHANGE IN CONTROL +11.1 Effect of +Change in Control on Awards: Assumption or Termination of Awards. +(a) In the event of a Change in Control, the +surviving, continuing, successor, or purchasing corporation or other business entity or parent corporation thereof, as the case may be (the “ Acquiring Corporation ”), may, without the consent of the Participant, either assume the +Company’s rights and obligations under any outstanding Awards or substitute for any of the outstanding Awards substantially equivalent awards. The Acquiring Corporation need not make uniform determinations with respect to any Awards or class of +A-12 +Awards, and it can select the Awards (if any) that it will assume or substitute for, in its sole discretion. For the purposes of this Section 11, an Award shall be considered assumed or +substituted for, if following the Change in Control, the Award confers the right to purchase or receive, for each share subject to the Award prior to the Change in Control, the consideration (whether stock, cash or other securities or property) +received in the transaction constituting a Change in Control by holders of Stock for each share of Stock held on the effective date of such transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the +holders of a majority of the outstanding shares of Stock); provided, however, that if such consideration received in the transaction constituting a Change in Control is not solely common stock of the Acquiring Corporation, the Committee may, with +the consent of the Acquiring Corporation, provide that the consideration to be received upon the exercise or vesting of an Award, for each share subject thereto, will be solely common stock of the Acquiring Corporation substantially equal in fair +market value to the consideration per share of Stock received by holders of Stock in the transaction constituting a Change in Control. The determination of such substantial equality of value of consideration shall be made by the Committee in its +sole discretion and its determination shall be conclusive and binding. +(b) In the event that the Acquiring Corporation +elects not to assume or substitute for any of the outstanding Awards in connection with a Change in Control, the exercisability and vesting of each such outstanding Award and any shares acquired upon the exercise thereof held by a Participant whose +Service has not terminated prior to such date shall be accelerated, effective as of the date ten (10) days prior to the date of the Change in Control. The foregoing notwithstanding, any Award Agreement may provide for vesting, settlement or +conversion to a Restricted Stock Award upon the consummation of a Change in Control on a basis that is specific to that Award. The exercise or vesting of any Award and any shares acquired upon the exercise thereof that was permissible solely by +reason of this Section 11.1 and the provisions of the relevant Award Agreement shall be conditioned upon the consummation of the Change in Control. Any Awards which are neither assumed nor substituted for by the Acquiring Corporation in +connection with the Change in Control nor exercised (in the case of Options and SARs) nor paid or converted to a Restricted Stock Award as of the date of the Change in Control shall terminate and cease to be outstanding effective as of the date of +the Change in Control. Notwithstanding the foregoing, shares acquired upon exercise of an Option or SAR prior to the Change in Control and any consideration received pursuant to the Change in Control with respect to such shares shall continue to be +subject to all applicable provisions of the Award Agreement evidencing such Option or SAR except as otherwise provided in such Award Agreement. +11.2 Assumption or Substitution of Certain Awards . Unless otherwise provided in an Award Agreement or a Participant’s +effective negotiated employment, change in control, severance or other similar agreement, in the event of a Change in Control in which the Acquiring Corporation assumes or substitutes for an Award (or in which the Company is the ultimate parent +corporation and continues the Award), if a Participant’s employment with the Acquiring Corporation (or the Company) or a subsidiary thereof terminates within 18 months following such Change in Control (or such other period set forth in the +Award Agreement, including prior thereto if applicable) and under the circumstances specified in the Award Agreement: (i) Options and SARs outstanding as of the date of such termination of employment will immediately vest, become fully +exercisable, and may thereafter be exercised for 12 months (or if longer, the period of time set forth in the Award Agreement, but in no event beyond the end of the regularly scheduled term of such Options or SARs), (ii) the Vesting Conditions +applicable to Restricted Stock and Restricted Stock Units outstanding as of the date of such termination of employment shall lapse and the Restricted Stock and Restricted Stock Units shall become free of all restrictions, limitations and conditions +and become fully vested, and (iii) the restrictions, limitations and other conditions applicable to any Other Stock-Based Awards or any other Awards shall lapse, and such Other Stock-Based Awards or such other Awards shall become free of all +restrictions, limitations and conditions and become fully vested and transferable to the full extent of the original grant. +11.3 Termination of Awards . Notwithstanding anything to the contrary in the foregoing of this Section 11, Options and +SARs outstanding as of the date of a Change in Control may be cancelled and terminated without +A-13 +payment therefor if the Fair Market Value of one share of Stock as of the date of the Change in Control is equal to or less than the Option exercise price per share of Stock or the SAR grant +price. In addition, the Committee, in its discretion, may determine that, if a Change in Control occurs, each Option and SAR outstanding shall terminate within a specified number of days after notice to the Participant, and/or that each Participant +shall receive, with respect to each share of Stock subject to such Option or SAR, an amount equal to the excess of the Fair Market Value of such share of Stock immediately prior to the occurrence of such Change in Control over the exercise price per +share of Stock of such Option and/or SAR; such amount to be payable in cash, in one or more kinds of stock or property (including the stock or property, if any, payable in the transaction) or in a combination thereof, as the Committee, in its +discretion, shall determine. +SECTION 12. COMPLIANCE WITH SECURITIES LAW +12.1 General . The grant of Awards and the issuance of shares of Stock pursuant to any Award shall be subject to compliance +with all applicable requirements of federal, state and foreign law with respect to such securities and the requirements of any stock exchange or market system upon which the Stock may then be listed. In addition, no Award may be exercised or shares +issued pursuant to an Award unless (a) a registration statement under the Securities Act shall at the time of such exercise or issuance be in effect with respect to the shares issuable pursuant to the Award or (b) in the opinion of legal +counsel to the Company, the shares issuable pursuant to the Award may be issued in accordance with the terms of an applicable exemption from the registration requirements of the Securities Act. The inability of the Company to obtain from any +regulatory body having jurisdiction the authority, if any, deemed by the Company’s legal counsel to be necessary to the lawful issuance and sale of any shares hereunder shall relieve the Company of any liability in respect of the failure to +issue or sell such shares as to which such requisite authority shall not have been obtained. As a condition to issuance of any Stock, the Company may require the Participant to satisfy any qualifications that may be necessary or appropriate, to +evidence compliance with any applicable law or regulation and to make any representation or warranty with respect thereto as may be requested by the Company. +SECTION 13. TAX WITHHOLDING +13.1 Tax Withholding in General . The Company shall have the right to require the Participant, through payroll withholding, +cash payment or otherwise, including by means of a Cashless Exercise of an Option, to make adequate provision for the federal, state, local and foreign taxes, if any, required by law to be withheld by a Participating Company with respect to an Award +or the shares acquired pursuant thereto. The Company shall have no obligation to deliver shares of Stock, to release shares of Stock from an escrow established pursuant to an Award Agreement, or to make any payment in cash under the Plan until such +tax withholding obligations have been satisfied by the Participant. +13.2 Withholding in Shares . The Company shall have +the right, but not the obligation, to deduct from the shares of Stock issuable to a Participant upon the exercise or settlement of an Award, or to accept from the Participant the tender of, a number of whole shares of Stock having a Fair Market +Value, as determined by the Company, equal to all or any part of the tax withholding obligations of a Participating Company. The Fair Market Value of any shares of Stock withheld or tendered to satisfy any such tax withholding obligations shall not +exceed the amount determined by the applicable minimum statutory withholding rates (unless a higher withholding rate is permissible without adverse accounting consequences). +SECTION 14. RIGHTS AND OBLIGATIONS OF THE PARTIES +14.1 Rights as Employee, Consultant or Director . No person, even though eligible pursuant to Section 5, shall have a +right to be selected as a Participant, or, having been so selected, to be selected again as a Participant. Nothing in the Plan or any Award granted under the Plan shall confer on any Participant a right to remain an Employee, Consultant or Director, +or interfere with or limit in any way the right of a Participating Company to terminate the Participant’s Service at any time. +A-14 +14.2 Rights as a Shareholder . A Participant shall have no rights as a +shareholder with respect to any shares covered by an Award until the date of the issuance of a certificate for such shares (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company). No +adjustment shall be made for dividends, distributions or other rights for which the record date is prior to the date such certificate is issued, except as provided in Section 10 or another provision of the Plan. +14.3 Right of Setoff . A Participating Company may, to the extent permitted by applicable law, deduct from and set +off against any amounts such Participating Company may owe to the Participant from time to time, including amounts payable in connection with any Award, owed as wages, fringe benefits, or other compensation owed to the Participant, such amounts as +may be owed by the Participant to the Participating Company, although the Participant shall remain liable for any part of the Participant’s payment obligation not satisfied through such deduction and setoff. By accepting any Award granted +hereunder, the Participant agrees to any deduction or setoff under this Section 14.3. +14.4 Compliance with +Section 409A of the Code . Awards under the Plan are intended to satisfy the requirements of Section 409A of the Code and the Treasury Department guidance and regulations issued thereunder (collectively, +“ Section 409A ”) so as to avoid the imposition of any additional taxes or penalties under Section 409A. If the Committee determines that an Award, Award Agreement, payment, distribution, deferral election, +transaction or any other action or arrangement contemplated by the provisions of the Plan would, if undertaken, cause a Participant to become subject to any additional taxes or other penalties under Section 409A, then unless the Committee +specifically provides otherwise, such Award, Award Agreement, payment, distribution, deferral election, transaction or other action or arrangement shall not be given effect to the extent it causes such result and the related provisions of the Plan +and/or Award Agreement will be deemed modified, or, if necessary, suspended in order to comply with the requirements of Section 409A to the extent determined appropriate by the Committee, in each case without the consent of or notice to the +Participant. +To the extent that any Award is determined to constitute “nonqualified deferred compensation” within the meaning of +Section 409A (a “ 409A Award ”), the Award shall be subject to such additional rules and requirements as specified by the Committee in order to comply with Section 409A. If any amount under a 409A Award is payable upon a +“separation from service” (within the meaning of Section 409A), to a grantee who is then considered a “specified employee” (within the meaning of Section 409A), then no such payment shall be made prior to the date that +is the earlier of (i) six months and one day after the grantee’s separation from service, or (ii) the grantee’s death, but only to the extent such delay is necessary to prevent such payment from being subject to additional tax +pursuant to Section 409A. +14.5 Cancellation of Award; Forfeiture of Gain . Notwithstanding anything to the contrary +contained herein, an Award Agreement may provide that if, prior to the occurrence of a Change in Control, there is (i) an accounting restatement due to material noncompliance by the Company with any financial reporting requirement under the +securities laws or (ii) the Company is otherwise required by applicable law or Company policy to recoup any portion of an Award otherwise paid or payable hereunder, the Committee shall have the right to review any Award, the amount, payment or +vesting of which was based on an entry in the financial statements that are the subject of the restatement. If the Committee determines that (i) based on the results of the restatement or (ii) due to inaccurate financial data used to +determine the payment or vesting of an Award, a lesser amount or portion of an Award should have been paid or vested, it may (i) cancel all or any portion of any outstanding Awards and (ii) require the Participant or other person to whom +any payment has been made or shares or other property have been transferred in connection with the Award to forfeit and pay over to the Company, on demand, all or any portion of the gain (whether or not taxable) realized upon the exercise of any +Option or Stock Appreciation Right and the value realized (whether or not taxable) on the vesting or payment of any other Award during the period beginning twelve months preceding the date of the restatement and ending with the date of cancellation +of any outstanding Awards. +The Company may also retain the right in an Award Agreement to cause a forfeiture of the gain realized by a +Participant on account of actions taken by the Participant in violation or breach of or in conflict with any +A-15 +employment agreement, non-competition agreement, any agreement prohibiting solicitation of employees or customers of a Participating +Company or any confidentiality obligation with respect to a Participating Company or otherwise in competition with a Participating Company, to the extent set forth in or specified in such Award Agreement applicable to the Participant. In addition, +the Company may annul an Award if the Participant is an employee of a Participating Company and is terminated for Cause. +14.6 Dividends . No recipient of an Award of Options or Stock Appreciation Rights shall have the right to receive dividends or +Dividend Equivalents with respect to such Award. Dividends or Dividend Equivalents credited, paid to or payable in connection with an Award that is not yet Vested shall be subject to the same restrictions and risk of forfeiture as the underlying +Award and shall not be paid until the underlying Award Vests. +SECTION 15. MISCELLANEOUS +15.1 Delivery and Execution of Electronic Documents . To the extent permitted by applicable law, the Company may +(i) deliver by email or other electronic means (including posting on a web site maintained by the Company or by a third party under contract with the Company) all documents relating to the Plan and any Award thereunder (including without +limitation, prospectuses required by the SEC) and all other documents that the Company is required to deliver to its security holders (including without limitation, annual reports and proxy statements) and (ii) permit participants in the Plan +to electronically execute applicable Plan documents (including but not limited to, Award Agreements) in a manner prescribed by the Committee. +15.2 Awards to Participants Outside the United States . The Committee may modify the terms of any Award under the Plan made to +or held by a Participant who is then resident or primarily employed outside of the United States in any manner deemed by the Committee to be necessary or appropriate in order that such Award shall conform to laws, regulations, and customs of the +country in which the Participant is then resident or primarily employed, or so that the value and other benefits of the Award to the Participant, as affected by foreign tax laws and other restrictions, applicable as a result of the +Participant’s residence or employment abroad shall be comparable to the value of such an Award to a Participant who is resident or primarily employed in the United States. An Award may be modified under this Section 15.2 in a manner that +is inconsistent with the express terms of the Plan, so long as such modifications will not contravene any applicable law or regulation or result in actual liability under Section 16(b) of the Exchange Act for the Participant whose Award is +modified. +15.3 Nonexclusivity of the Plan . Neither the adoption of the Plan by the Board nor the submission +of the Plan to the shareholders of the Company for approval shall be construed as creating any limitations on the power of the Board to adopt such other incentive arrangements as it may deem desirable, including, without limitation, the granting of +stock options otherwise than under the Plan, and such arrangements may be either applicable generally or only in specific cases. +15.4 Severability . If any provision of the Plan or any Award Agreement shall be determined to be illegal or unenforceable by +any court of law in any jurisdiction, the remaining provisions hereof and thereof shall be severable and enforceable in accordance with their terms, and all provisions shall remain enforceable in any other jurisdiction. +15.5 Requirements of Law . The granting of Awards and the issuance of Stock under the Plan shall be subject to all applicable +laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required. +15.6 Governing Law . The validity and construction of this Plan and the instruments evidencing the Awards hereunder shall be +governed by the laws of the State of Rhode Island, other than any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Plan and the instruments evidencing the Awards granted hereunder to the +substantive laws of any other jurisdiction. +A-16 +SECTION 16. TERMINATION OR AMENDMENT OF PLAN +The Board may terminate or amend the Plan at any time. However, subject to changes in applicable law, regulations or rules that would permit +otherwise, without the approval of the Company’s shareholders, there shall be (a) no increase in the maximum aggregate number of shares of Stock that may be issued under the Plan (except by operation of the provisions of Section 10), +(b) no change in the class of persons eligible to receive Incentive Stock Options, and (c) no other amendment of the Plan that would require approval of the Company’s shareholders under any applicable law, regulation or rule. No +termination or amendment of the Plan shall affect any then outstanding Award unless expressly provided by the Committee. In any event, no termination or amendment of the Plan may materially adversely affect any then outstanding Award without the +consent of the Participant, unless such termination or amendment is necessary to comply with any applicable law, regulation or rule. +SECTION 17. +EFFECTIVE DATE AND DURATION OF PLAN +The Plan shall become effective (the “ Effective Date ”) upon the later of the +approval of the Plan by the Board and the approval of the Plan by the shareholders of the Company in accordance with applicable laws and regulations. No Award may be granted under the Plan after the tenth (10 th ) anniversary of the Effective Date. The Plan shall terminate when the total amount of the Stock available for issuance under the Plan have been issued and all restrictions on such shares under +the terms of the Plan and the agreements evidencing Awards granted under the Plan have lapsed. +SECTION +18. FRENCH SUB-PLAN; FOR INDIVIDUALS WHO ARE FRENCH RESIDENT TAXPAYERS AND/OR SUBJECT TO THE FRENCH SOCIAL SECURITY SCHEME IN FRANCE. +All Awards granted under this Section 18 (also referred to as +the “French Sub-plan”) to an Employee who is a French resident taxpayer and/or subject to the French social security scheme in France shall comply with the terms of this French Sub-plan. The purpose of the French Sub-plan is to grant Awards that qualify for favorable income tax and social security +tax treatment under French law. In the event any other provision of the Plan conflicts with a provision of this Section 18, the provision in Section 18 shall control with respect to any Award granted under Section 18. No other Award +granted under the Plan shall be subject to the provisions of this Section 18. +As a matter of principle, any provision included in the Plan or any +other document evidencing the terms and conditions of the Plan that would contravene any substantive principle set out in Articles L.225-197-1 to L.225-197-6 of the French Code de Commerce shall not be applicable to recipients of Awards hereunder who are residents of France and employed or providing services in +France. +Provided that he or she complies with the provisions of +the French Sub-plan, recipients of Awards hereunder will benefit from the favorable tax and social contribution regimes provided by articles 80 quaterdecies and 200 A of the French Tax Code +(Code Général des Impôts) and article L.242-1 of the French Social Security Code (Code de la Sécurité Sociale) in connection with the grant and settlement +of Restricted Stock Units and the disposition of the shares received upon the vesting of the Restricted Stock Units pursuant to the Plan. +18.1 Definitions . The following terms shall have the following meanings for purposes of +this French Sub-plan: +(a) “French Award” means, individually or collectively, +any Award granted under this Section 18 to Employees who are French resident taxpayers and/or subject to the French social security scheme in France. +(b) “French Option Award” means, individually or collectively, any French Award in the form of an option to purchase shares of Common +Stock. +(c) “French Restricted Stock Award” means, individually or collectively, any French Award in the form of Restricted +Stock. +A-17 +(d) “French RSU Award” means, individually or collectively, any French Award in +the form of Restricted Stock Units. +(e) “Disability” means a physical or mental condition corresponding to the classification in +the second or third categories laid down in Article L. 341-4 of the French Social Security Code (Code de la Sécurité Sociale). +(f) “Holding Period” means, with respect to any French Award, the holding period described in Section 18.5. +18.2 Eligibility . A French Award under the French Sub-plan may be +granted only to an Employee who is a French resident taxpayer and/or subject to the French social security scheme in France. +18.3 Limitation on Grants under +the French Sub-Plan . French Awards may not be granted to an Employee who holds more than 10% of the outstanding Stock at the date of +grant or an Employee who would hold more than 10% of the outstanding Stock following the French Award grant. Any Stock granted in violation of this rule shall not be deemed to have been granted. Settlement of French RSU Awards shall only be in +Stock; there shall be no settlement of French RSUs in cash. +18.4 Vesting Periods . Except in the case of the death or +Disability of the Employee, no portion of any French Restricted Stock Award or French RSU Award may vest (whether such vesting results from the achievement of one or more goals relating to the completion of service by the French Award holder and/or +the achievement of performance or other objectives) until at least the first anniversary of the date of grant of such French Award. The holder of a French Award shall be 100% vested in such French Award in the event his or her employment is +terminated by reason of death or Disability, provided, however, that if the vesting of such French Award is based, at least in part, on performance goals, the acceleration, if any, of such performance-based vesting upon such death of Disability +shall be determined as set forth in the applicable Award Agreement. In the event of death or Disability, the remaining Stock subject to the Award that have not been issued as of the date the Award holder’s service relationship with the Company +(and its subsidiaries) so terminates will be issued to the holder or, in the case of death, his or her heirs upon their request as provided under applicable law. In such event (either death or Disability), the Company shall issue the Stock within +six months of such termination, and the Holding Period described in Section 18.5 will not apply to such shares, but the blackout restrictions on sale described in Section 18.6 will continue to apply. +18.5 Holding Period . With respect to each French Award, there shall +be a one-year period following each vesting date applicable to such French Award, during which the Employee issued such French Award may not sell or loan (i) in the case of a French +Restricted Stock Award or French RSU Award, any Stock issued upon the vesting on such vesting date of such French Restricted Stock Award or a French RSU Award, or (ii) in the case of a French Option Award, any Stock acquired upon the exercise +of the portion of such French Option Award that vested on such vesting date. This Holding Period will not be applicable for any issued Stock delivered on or following the second anniversary of the date of grant of the French Award, provided, +however, that all French Awards shall in any event be subject to any additional holding requirements to the extent set forth in the Plan. +18.6 Restrictions on Sale – Black out Periods . Following the expiration of the Holding Period described in +Section 18.5, shares of Stock issued upon the applicable vesting of French Restricted Stock Awards or French RSU Awards or the exercise of the portion of French Option Awards vested upon the applicable vesting may not be sold: +(a) during the then-existing blackout periods established by the Company, which are hereby made applicable to all French Awards; +(b) during the ten stock exchange trading days preceding and following the date on which the Company’s consolidated accounts are made +public, or failing that, the annual accounts are published; +A-18 +(c) between (i) the date on which the Company’s management bodies have knowledge +of information which, if made public, could have a significant impact on the price of the Stock; and (ii) ten stock exchange trading days following the date on which this information is published; and +(d) if the participant has nonpublic material information about the Company and such sale would violate any applicable securities laws of the +United States of America or France. +18.7 Restriction on Sale for Officers and Directors . At the time of the +grant of French Awards, the Committee shall, if any of the participants is an officer or director of the Company, either decide that such officer or director cannot sell the Stock received upon vesting or exercise of the French Award before the end +of his or her functions, or determine the number of shares of Common Stock received upon vesting of such French Award that such officer or director shall keep up to the end of his or her functions. +18.8 Restrictions on Transfer . Shares of Stock subject to French Awards may not be transferred, assigned, pledged +or hypothecated in any manner until they have vested in accordance with this French Sub-plan. +18.9 Other Compliance with French Tax and Social Security Law . French Awards granted under +the French Sub-plan must also comply with any other requirements set forth by the French tax and social security law as interpreted and supplemented by the French tax and social security +guidelines in effect at the date of grant of such Awards. Except as the Company and recipient agree in writing, the Company shall not modify the terms of a French Award agreement (or +this French Sub-plan) in such a manner as to cause the recipient to no longer benefit from the favorable tax and social contribution regimes provided by articles 80 quaterdecies and 200 A +of the French Tax Code (Code Général des Impôts) and article L.242-1 of the French Social Security Code (Code de la Sécurité Sociale) in connection with +the grant and settlement of Restricted Stock Units and the disposition of the shares received upon the vesting of the Restricted Stock Units pursuant to the Award agreement, +this French Sub-plan, and the Plan. +18.10 No Rights as a +Shareholder . The holder of a French RSU Award or a French Option Award shall not have any rights as a shareholder of the Company unless and until shares are issued to the holder with respect to the Award. +18.11 Restrictions on Transfer . Rights granted under +the French Sub-plan shall not be transferable by the recipient of such grants other than by will or by the laws of descent and distribution. +18.12 Data Protection . The Company will satisfy any notification, application or prior authorization required under +applicable laws in order to comply with application French or European Union data protection legislation or regulations, including but not limited to the Generation Data Protection Regulation (EU) 2016/679. +18.13 Understanding of Terms . Each French Award agreement shall include the following provision: +By signing and returning this document providing for the terms and conditions of the French Award, I confirm having read and understood the +documents referenced in this Agreement, including the Award agreement itself and the AstroNova, Inc. 2018 Equity Incentive Plan (including the French sub-plan), which were made available to me in the English +language. I accept the terms of those documents accordingly. +En signant et renvoyant le présent document décrivant +les termes et conditions de mon attribution, je confirme avoir lu et compris les documents relatifs à cette attribution, à savoir le présent contrat d’attribution et le plan général d’actionnariat +salarié de AstroNova, Inc. de 2018, en ce compris son sous plan français, qui m’ont été communiqués en langue anglaise. J’en accepte les termes de ces documents en connaissance de cause. +A-19 +YOUR VOTE IS IMPORTANT! PLEASE VOTE BY: INTERNET Go To: www.proxypush.com/ALOT • Cast your vote online P.O. BOX 8016, CARY, NC +27512-9903 Have your Proxy Card ready Follow the simple instructions to record your vote PHONE Call 1-866-509-1041 Use any +touch-tone telephone Have your Proxy Card ready Follow the simple recorded instructions MAIL Mark, sign and date your Proxy Card Fold and return your Proxy Card in the postage-paid envelope provided You must register to attend the meeting online +and/or participate at www.proxydocs.com/ALOT AstroNova, Inc. Annual Meeting of Stockholders For Stockholders of record as of April 10, 2023 TIME: Tuesday, June 6, 2023 9:00 AM, Eastern Daylight Time PLACE: Annual Meeting to be held live +via the Internet- please visit www.proxydocs.com/ALOT for more details. This proxy is being solicited on behalf of the Board of Directors The undersigned hereby appoints Alexis P. Michas, Mitchell I. Quain, Yvonne E. Schlaeppi, Richard S. Warzala +and Gregory A. Woods (the “Named Proxies”), and each or any of them, as the true and lawful attorneys of the undersigned, with full power of substitution and revocation, and authorizes them, and each of them, to vote all the shares of +capital stock of AstroNova, Inc. which the undersigned is entitled to vote at said meeting and any adjournment thereof upon the matters specified and upon such other matters as may be properly brought before the meeting or any adjournment thereof, +conferring authority upon such true and lawful attorneys to vote in their discretion on such other matters as may properly come before the meeting and revoking any proxy heretofore given. THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS +DIRECTED OR, IF NO DIRECTION IS GIVEN, SHARES WILL BE VOTED IDENTICAL TO THE BOARD OF DIRECTORS RECOMMENDATION. This proxy, when properly executed, will be voted in the manner directed herein. In their discretion, the Named Proxies are authorized to +vote upon such other matters that may properly come before the meeting or any adjournment or postponement thereof. You are encouraged to specify your choice by marking the appropriate box (SEE REVERSE SIDE) but you need not mark any box if you wish +to vote in accordance with the Board of Directors’ recommendation. The Named Proxies cannot vote your shares unless you sign (on the reverse side) and return this card. PLEASE BE SURE TO SIGN AND DATE THIS PROXY CARD AND MARK ON THE REVERSE +SIDE +AstroNova, Inc. Annual Meeting of Stockholders Please make your marks like this: X THE BOARD OF DIRECTORS RECOMMENDS A VOTE: FOR ON +PROPOSALS 1, 2, 3 AND 4 BOARD OF DIRECTORS PROPOSAL YOUR VOTE RECOMMENDS 1. To elect five directors to serve until the next annual meeting of shareholders or until their successors are elected and have qualified. FOR WITHHOLD 1.01 Alexis P. Michas +FOR #P2# #P2# 1.02 Mitchell I. Quain FOR #P3# #P3# 1.03 Yvonne E. Schlaeppi FOR #P4# #P4# 1.04 Richard S. Warzala FOR #P5# #P5# 1.05 Gregory A. Woods FOR #P6# #P6# FOR AGAINST ABSTAIN 2. To approve, on an advisory, +non-binding basis, the compensation paid to the Company’s Named FOR Executive Officers, as disclosed in the Company’s proxy statement for the 2023 annual meeting #P7# #P7# #P7# of shareholders. 3. To +approve an amendment to the Company’s 2018 Equity Incentive Plan to increase the number FOR of shares of common stock available for issuance thereunder by 600,000 shares. #P8# #P8# #P8# 4. To ratify the appointment of Wolf & Company, +P.C. as the Company’s independent registered FOR public accounting firm for the fiscal year ending January 31, 2024. #P9# #P9# #P9# You must register to attend the meeting online and/or participate at www.proxydocs.com/ALOT Authorized +Signatures—Must be completed for your instructions to be executed. Please sign exactly as your name(s) appears on your account. If held in joint tenancy, all persons should sign. Trustees, administrators, etc., should include title and +authority. Corporations should provide full name of corporation and title of authorized officer signing the Proxy/Vote Form. Signature (and Title if applicable) Date Signature (if held jointly) Date \ No newline at end of file diff --git a/raw/proxies/0000008146/0001193125-23-122091/proxy_rpt.txt b/raw/proxies/0000008146/0001193125-23-122091/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..e6940a63cc221f0a83e11db98df87248f1d1064c --- /dev/null +++ b/raw/proxies/0000008146/0001193125-23-122091/proxy_rpt.txt @@ -0,0 +1,6 @@ +RELATED PARTY TRANSACTIONS +Potential conflicts of interest and related party transactions are referred by the Board to the Audit Committee for review and approval. In +reviewing and evaluating potential conflicts of interest and related party transactions, the Audit Committee uses applicable NASDAQ listing standards and SEC rules as a guide. +No officer, director or nominee for director of the Company or any associate of any of the foregoing had during the period beginning on +February 1, 2022 through the date of this proxy statement any material interest, direct or indirect, in any material transaction or any material proposed transaction in which the amount exceeds $120,000 and to which the Company was or is to be +a party. \ No newline at end of file diff --git a/raw/proxies/0000008146/0001193125-25-246797/proxy.txt b/raw/proxies/0000008146/0001193125-25-246797/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..6fa3bb6043b0cf7e343d01903cec607c135e9ef2 --- /dev/null +++ b/raw/proxies/0000008146/0001193125-25-246797/proxy.txt @@ -0,0 +1,1922 @@ +DEF 14A +Table of Contents +DEF 14A false 0000008146 0000008146 2024-02-01 2025-01-31 0000008146 2023-02-01 2024-01-31 0000008146 2022-02-01 2023-01-31 0000008146 ecd:YrEndFrValOfEqtyAwrdsGrntdInCvrdYrOutsdngAndUnvstdMember ecd:PeoMember 2024-02-01 2025-01-31 0000008146 ecd:YrEndFrValOfEqtyAwrdsGrntdInCvrdYrOutsdngAndUnvstdMember ecd:NonPeoNeoMember 2024-02-01 2025-01-31 0000008146 ecd:ChngInFrValOfOutsdngAndUnvstdEqtyAwrdsGrntdInPrrYrsMember ecd:PeoMember 2024-02-01 2025-01-31 0000008146 ecd:ChngInFrValOfOutsdngAndUnvstdEqtyAwrdsGrntdInPrrYrsMember ecd:NonPeoNeoMember 2024-02-01 2025-01-31 0000008146 ecd:VstngDtFrValOfEqtyAwrdsGrntdAndVstdInCvrdYrMember ecd:PeoMember 2024-02-01 2025-01-31 0000008146 ecd:FrValAsOfPrrYrEndOfEqtyAwrdsGrntdInPrrYrsFldVstngCondsDrngCvrdYrMember ecd:NonPeoNeoMember 2024-02-01 2025-01-31 0000008146 ecd:DvddsOrOthrErngsPdOnEqtyAwrdsNtOthrwsRflctdInTtlCompForCvrdYrMember ecd:PeoMember 2024-02-01 2025-01-31 0000008146 ecd:DvddsOrOthrErngsPdOnEqtyAwrdsNtOthrwsRflctdInTtlCompForCvrdYrMember ecd:NonPeoNeoMember 2024-02-01 2025-01-31 0000008146 ecd:VstngDtFrValOfEqtyAwrdsGrntdAndVstdInCvrdYrMember ecd:NonPeoNeoMember 2024-02-01 2025-01-31 0000008146 ecd:ChngInFrValAsOfVstngDtOfPrrYrEqtyAwrdsVstdInCvrdYrMember ecd:PeoMember 2024-02-01 2025-01-31 0000008146 ecd:ChngInFrValAsOfVstngDtOfPrrYrEqtyAwrdsVstdInCvrdYrMember ecd:NonPeoNeoMember 2024-02-01 2025-01-31 0000008146 ecd:FrValAsOfPrrYrEndOfEqtyAwrdsGrntdInPrrYrsFldVstngCondsDrngCvrdYrMember ecd:PeoMember 2024-02-01 2025-01-31 iso4217:USD +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 +(Amendment No.  ) +Filed by the Registrant +☒ +Filed by a Party other than the Registrant     +☐ +Check the appropriate box: +☐ +Preliminary Proxy Statement +☐ +Confidential, for Use of the Commission Only (as permitted by Rule +14a-6(e)(2)) +☒ +Definitive Proxy Statement +☐ +Definitive Additional Materials +☐ +Soliciting Material Pursuant to +§240.14a-12 +ASTRONOVA, INC. +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check all boxes that apply): +☒ +No fee required. +☐ +Fee paid previously with preliminary materials. +☐ +Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules +14a-6(i)(1) +and +0-11. +Table of Contents +Table of Contents +LETTER FROM OUR EXECUTIVE CHAIRMAN OF THE BOARD +Dear Fellow Shareholders, +It is a pleasure to invite you to AstroNova’s 2025 Annual Meeting of Shareholders which will be held virtually on Tuesday, December 2, 2025, at 9:00 a.m. Eastern Standard Time. +At the end of June this year, your Board of Directors exercised its most important responsibility and made changes to the Company’s leadership. Jorik Ittmann was subsequently appointed President and CEO on August 15, 2025, and in a short time, has brought energy, excitement and an intense focus on our customers, our employees and our shareholders. As he has noted, we have a good amount of work in front of us to restore our Product Identification segment to a market position comparable to that earned and held by our Aerospace segment under the leadership of Tom Carll. Yet, despite our many operating and financial challenges, I am confident Jorik and Padraig Finn, Senior Vice President and leader of our Product Identification segment, complemented by the steady hand of Tom DeByle, our Chief Financial Officer, will do just that. +The Board of Directors has been refreshed as well. I have the privilege of serving as Executive Chairman effective as of August 15, 2025, and, in addition to Jorik having joined the Board, we have added Shawn Kravetz as an independent Director. +Your vote is important to us. I encourage you to read our Proxy Statement, Annual Report and the voting instructions on the pages that follow so your shares are represented at the meeting. These materials are available at https://web.viewproxy.com/ALOT/2025 where you can also register to attend the Annual Meeting. +Thank you for your ongoing support of and continued interest in AstroNova, Inc. +Warmest regards, +Darius G. Nevin +Executive Chairman of the Board +Table of Contents +NOTICE OF ANNUAL MEETING OF SHAREHOLDERS +December 2, 2025 +AstroNova, Inc. +600 East Greenwich Avenue +West Warwick, Rhode Island 02893 +To the Shareholders of AstroNova, Inc.: +Notice is hereby given that the 2025 Annual Meeting of Shareholders (the “Annual Meeting”) of AstroNova, Inc. (the “Company,” “we” or “our”) will be held by means of remote communication on Tuesday, December 2, 2025, beginning at 9:00 a.m., Eastern Standard Time for the following purposes: +(1) +To consider and vote upon the election of seven directors to serve until the next annual meeting of shareholders or until their successors are elected and have qualified; +(2) +To conduct a non-binding, advisory vote to approve the Company’s executive compensation; +(3) +To consider and vote upon a non-binding, advisory “say on frequency” proposal on the frequency of future shareholder advisory votes on executive compensation; +(4) +To ratify the appointment of Wolf & Company, P.C. as the Company’s independent registered public accounting firm for the fiscal year ending January 31, 2026; and +(5) +To transact such other business as may properly come before the meeting. +The close of business on October 13, 2025 has been fixed as the record date for determining shareholders entitled to attend or vote at the Annual Meeting or any adjournment thereof. +You may vote on these matters at the Annual Meeting or by proxy. For instructions on how to vote your shares, please refer to the instructions on the Notice of Internet Availability of Proxy Materials you received in the mail, in the section titled “How to Vote” in this Proxy Statement or, if you requested to receive printed proxy materials, your enclosed proxy card. If you attend the meeting virtually, you may withdraw your proxy, or Internet or telephone vote, and vote online during the meeting. +The Company originally furnished a Notice of Meeting and Proxy Statement (the “Original Proxy Statement”) relating to the annual meeting to shareholders on May 19, 2025. Since the date on which the Original Proxy Statement was mailed, there have been a number of significant developments with respect to the Company’s business. As a result of those developments, the Board has determined to revise the Original Proxy Statement, including Proposal 1. The purpose of this revised Proxy Statement is to provide shareholders with information concerning the revised Proposal 1 and other changes to the Company’s governance. Proposals 2, 3 and 4, as set forth herein, are substantially unchanged from the Original Proxy Statement. +By Order of the Board of Directors +Daniel S. Clevenger +Secretary +October 22, 2025 +Table of Contents +IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON DECEMBER 2, 2025. +The Company’s Proxy Statement, Annual Report and other soliciting materials are available for viewing, printing and downloading at: +https://web.viewproxy.com/ALOT/2025 +This website does not use “cookies” to track or identify visitors +Important Notice Regarding Forward-Looking Information Contained in this Proxy Statement +Any forward-looking statements contained in this Proxy Statement are included pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not statements of historical fact but rather reflect our current expectations concerning future events and results. These statements may include the use of the words “believes,” “expects,” “intends,” “plans,” “anticipates,” “likely,” “continues,” “may,” “will,” and similar expressions to identify forward-looking statements. Such forward-looking statements, including those concerning the Company’s anticipated performance, involve risks, uncertainties and other factors, some of which are beyond our control, which may cause our actual results, performance or achievements to be materially different from those expressed or implied by such forward-looking statements. These risks, uncertainties and factors include, but are not limited to, (i) the risk that our organizational improvements at MTEX may not result in the benefits that we expect; (ii) the risk that our cost-reduction and product line rationalization initiative may not provide the expected benefits; (iii) the risk that our Aerospace customers may not convert to our ToughWriter line in the volumes or on the schedule that we expect; (iv) the risk that we may not realize the anticipated benefits of our next-generation print engine technology; and (v) those factors set forth in the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2025 and subsequent filings AstroNova makes with the Securities and Exchange Commission. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The reader is cautioned not to unduly rely on such forward-looking statements when evaluating the information presented in this Proxy Statement . +Table of Contents +Table of Contents +Page +Proxy Statement Summary +1 +Voting Matters and Board Recommendations +2 +Highlight of AstroNova’s Director Nominees +2 +Corporate Governance Highlights +3 +Proposal No. 1 Election of Directors +8 +Information Regarding Company Nominees +8 +Corporate Governance +12 +The Board of Directors — Meetings and Committees +12 +Compensation Committee Interlocks and Insider Participation +14 +Nomination of Directors +14 +Communications with the Board of Directors +15 +Board Leadership Structure +15 +Risk Oversight +15 +Anti-Hedging +16 +Compensation of Directors +16 +Security Ownership of 5% Beneficial Owners +17 +Security Ownership of Directors and Officers +20 +Delinquent Section 16(a) Reports +20 +Compensation Discussion and Analysis +21 +Human Capital and Compensation Committee Report +32 +Executive Compensation +33 +2025 Summary Compensation Table +33 +2025 Grants of Plan-Based Awards +34 +Outstanding Equity Awards at 2025 Fiscal Year-End +35 +Risk Related to Compensation Policies +36 +Pay Versus Performance +37 +Relationship Between Pay and Performance +38 +Equity Incentive Awards-Mechanics and Timing of Stock Option and Other Equity Award Grants +39 +Equity Compensation Plan Information +40 +Proposal No. 2 Advisory Vote on Executive Compensation +41 +Proposal No. 3 Advisory Vote on the Frequency of Executive Compensation Votes +42 +Proposal No. 4 Ratification of Appointment of Independent Registered Public Accounting Firm +43 +Independent Accountants’ Fees, Services and Other Matters +43 +Audit Committee Report +44 +Related Party Transactions +45 +Financial Reports +45 +Proposals for 2026 Annual Meeting +45 +Other Matters +45 +Table of Contents +AstroNova, Inc. +PROXY STATEMENT +ANNUAL MEETING OF SHAREHOLDERS +December 2, 2025 +PROXY STATEMENT SUMMARY +This Proxy Statement Summary highlights information contained elsewhere in the Proxy Statement. This summary does not contain all of the information you should consider, so please read the entire Proxy Statement carefully before voting. For additional information regarding our fiscal 2025 performance, see the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2025 (“2025 Form 10-K”). The proxy materials are being distributed via mail or made available via the Internet to our shareholders on or about October 22, 2025. +Our shareholders may have already received proxy cards soliciting voting instructions for the Company’s previously announced annual meeting of shareholders (the “Original Annual Meeting”); however, because the meeting was rescheduled and certain material information relating to Proposal 1 has changed, the proxy cards distributed in connection with the Original Annual Meeting have been rendered obsolete and will not be tabulated for the rescheduled meeting. Accordingly, irrespective of whether you previously completed, signed, and returned an earlier proxy card, or otherwise transmitted voting instructions, we urgently request that you vote your shares by using one of the methods referred to in the instructions on the Notice of Internet Availability of Proxy Materials you received in the mail, in the section titled “How do I Vote” in the Proxy Statement or, if you requested to receive printed proxy materials, your enclosed proxy card, at your earliest possible convenience so that your shares are duly represented at the rescheduled annual meeting. PROXY CARDS OR OTHER VOTING INSTRUCTIONS SUBMITTED WITH RESPECT TO THE ORIGINAL ANNUAL MEETING WILL NOT COUNT AS VOTES CAST OR AS PRESENT FOR PURPOSES OF DETERMINING A QUORUM AT THE 2025 ANNUAL MEETING OF SHAREHOLDERS. +Your vote is important! How to Vote Your Shares +You may vote if you were a shareholder as of the close of business on October 13, 2025. +Online before the meeting +www.AALvote.com/ALOT or at the website indicated on the materials provided by your broker +By Phone +Use any touch-tone telephone and call 866-804-9616 +By mail +Complete, sign, date and return your proxy card in the postage-paid envelope provided +Online during the meeting +Attend our annual meeting virtually by logging into the virtual annual meeting website and follow the voting instructions provided there +AstroNova, Inc. | 2025 Proxy Statement  – 1 +Table of Contents +Proxy Statement Summary +Voting Matters and Board Recommendations +Proposal +Board Recommendation +Election of Seven (7) Directors +FOR each Director +Advisory Vote to Approve Executive Compensation +FOR +Advisory Vote on the Frequency of Future Shareholder Advisory Votes on Executive Compensation +1-YEAR +Ratification of the Appointment of Independent Registered Accountants +FOR +Highlight of AstroNova’s Director Nominees +Name +Age   +Director +Since +Principal +Occupation +Independent  +Committee +Membership +Other  +Public  +Company +Boards +Darius G. Nevin +Executive Chairman +67 +2025 +Chairman of the Board, Psychemedics Corporation +2 +Jorik Ittmann +47 +2025 +President and CEO, AstroNova +— +Shawn Kravetz +55 +2025 +President and CIO of Esplanade Capital LLC +X +Nominating & Governance +1 +Alexis P. Michas +67 +2022 +Managing Partner, Juniper Investment Company, LLC +X +Audit; Human Capital & Compensation +2 +Mitchell I. Quain +73 +2011 +Executive Council, American Securities, Inc. +X +Chair, Audit; Human Capital & Compensation; Nominating & Governance +— +Yvonne E. Schlaeppi +65 +2018 +Managing Partner, Stratevise LLC +General Counsel, Organon BioSciences NV, retired +X +Chair, Nominating & Governance; Audit +— +Richard S. Warzala +Lead Independent Director +72 +2017 +Chairman, President & CEO, Allient Inc. +X +Chair, Human Capital & Compensation; Nominating & Governance +1 +2 –  AstroNova, Inc. | 2025 Proxy Statement +Table of Contents +Proxy Statement Summary +Corporate Governance Highlights +We recognize the importance of a robust corporate governance framework to promote the interests of our shareholders. Our corporate governance highlights include: +✓   Annual election of directors +✓   Stock ownership and retention guidelines +✓   Open door policy for investors +✓   5 out of 7 independent directors +✓   Annual Board and committee evaluations +✓   Range of Company director nominee tenures +✓   One-share, one-vote standard +✓   Separate CEO, Independent Lead Director, and Executive Chairman +✓   Regular Board executive sessions +✓   Board diversity +✓   No “poison pill” +✓   Clawback Policy +AstroNova, Inc. | 2025 Proxy Statement  – 3 +Table of Contents +AstroNova, Inc. +PROXY STATEMENT +ANNUAL MEETING OF SHAREHOLDERS +December 2, 2025 +THE MEETING +The 2025 Annual Meeting of Shareholders (the “Annual Meeting”) of AstroNova, Inc. (the “Company”) will be held at 9:00 a.m., Eastern Standard Time, on Tuesday, December 2, 2025, by means of remote communication. At the meeting, shareholders of record on the record date for the meeting who are present or represented by proxy will have the opportunity to vote on the following matters: +● +the election of seven directors to serve until the next annual meeting of shareholders or until their successors are elected and have qualified; +● +the approval, on an advisory, non-binding basis, of the compensation paid to the Company’s Named Executive Officers, as disclosed in this proxy statement pursuant to Item 402 of Regulation S-K (including in the compensation discussion and analysis, compensation tables, and accompanying narrative disclosures); +● +whether shareholders would prefer that the Company conduct future advisory votes on the compensation of its Named Executive Officers every one, two or three years; +● +the ratification of the appointment of Wolf & Company, P.C. as the Company’s independent registered public accounting firm for the fiscal year ending January 31, 2026; and +● +such other business as may properly come before the meeting. +SOLICITATION OF PROXIES +The proxy materials, including this proxy statement and our annual report to shareholders, are being distributed and made available on the internet at https://web.viewproxy.com/ALOT/2025 on or about October 22, 2025. +The Board of Directors (the “Board”) of the Company is soliciting proxies in connection with the Annual Meeting. The Company will bear the cost of such solicitation. It is expected that the solicitation of proxies will be primarily by telephone, mail and electronic means. Proxies may also be solicited personally by directors, officers, and employees of the Company at nominal cost. The Company may reimburse brokerage houses and other custodians, nominees and fiduciaries holding stock for others in their names, or in those of their nominees, for their reasonable out-of-pocket expenses in sending proxy material to their principals or beneficial owners and obtaining their proxies. +WHO MAY VOTE +The Board has established October 13, 2025 as the record date for the Annual Meeting. Only shareholders of record at the close of business as of that date will be entitled to virtually attend or vote at the Annual Meeting. On the record date, there were 7,638,423 shares of common stock of the Company outstanding. There was no other outstanding class of voting securities. +A list of shareholders entitled to vote will be available via the website for the Annual Meeting. In addition, you may contact Thomas DeByle, at the Company’s offices located at 600 East Greenwich Avenue, West Warwick, Rhode Island, to make arrangements to review a copy of the shareholder list at those offices, between the hours of 9:00 a.m. and 5:00 p.m., Eastern Standard Time, on any business day from and after November 21, 2025. +4 –  AstroNova, Inc. | 2025 Proxy Statement +Table of Contents +Annual Meeting of Shareholders (continued) +ATTENDING THE ANNUAL MEETING +The Annual Meeting will be held through means of remote communications only. In order to attend, you must register in advance at https://web.viewproxy.com/ALOT/2025 prior to the start of the meeting. Upon completing your registration, you will receive further instructions via email, including your unique link that will allow you to access the meeting and give you the ability to vote and submit questions. Please be sure to follow instructions found on your Notice of Internet Availability of Proxy Materials, proxy card and/or voting authorization form and subsequent instructions that will be delivered to you via email. If you are planning to attend our virtual meeting, please register at the website by December 1, 2025, 11:59 p.m. Eastern Standard Time. +HOW TO VOTE +You are entitled to one vote at the meeting for each share of common stock registered in your name at the close of business on the record date for the meeting. +SHARES HELD OF RECORD WITH OUR TRANSFER AGENT +If you are a shareholder of record, that is you have a stock certificate or hold your shares in an account with our transfer agent, Computershare, you may vote your shares at the meeting in person or by proxy via mail, the Internet, or the toll-free number (for residents of the United States and Canada) listed on the notice of internet availability you received. +To vote at the Annual Meeting, you must attend the virtual meeting following the procedures set forth in the instructions on your notice of internet availability and/or voting authorization form and subsequent instructions that will be delivered to you. You will be able to vote during the meeting. +To vote by proxy by mail , if you received proxy materials by mail and choose to authorize your proxy by mail, simply mark your proxy card, and then date, sign and return it in the postage-paid envelope provided. If you complete all of the proxy card except the voting instructions, then the designated persons will vote your shares as follows: +● +FOR the election of each of Jorik Ittmann, Shawn Kravetz, Alexis P. Michas, Darius G. Nevin, Mitchell I. Quain, Yvonne E. Schlaeppi, Richard S. Warzala as a director of the Company; +● +FOR the approval, on an advisory, non-binding basis, of the Company’s executive compensation as described in this proxy statement; +● +FOR the option of “1-YEAR” as the preferred frequency for advisory votes on the compensation of the Company’s Named Executive Officers; +● +FOR the ratification of the appointment of Wolf & Company, P.C. as the Company’s independent registered public accounting firm for the fiscal year ending January 31, 2026. +To vote by proxy using the Internet , you must access the website for Internet voting at www.AALvote.com/ALOT. Please have the voter control number printed on the notice of internet availability handy when you access the website and follow the on-screen instructions. Internet voting facilities for shareholders of record will be available 24 hours a day through the closing of the polls at the Annual Meeting. If you vote via the Internet, you do not have to return a proxy card via mail. +To vote by proxy using the telephone , use any touch-tone telephone and call 866-804-9616 to transmit your voting instructions through the closing of the polls at the Annual Meeting. Please have the voter control number printed on the notice of internet availability handy when you call and then follow the instructions. If you vote via telephone, you do not have to return a proxy card via mail. +If any other business properly comes before the meeting, then the designated persons will have the discretion, to the extent authorized by applicable rules and regulations, to vote all shares they own or represent by proxy in any manner they deem appropriate. +AstroNova, Inc. | 2025 Proxy Statement  – 5 +Table of Contents +Annual Meeting of Shareholders (continued) +If you vote by proxy, whether by mail, the Internet or telephone, you may revoke your proxy at any time before it is exercised by taking one of the following actions: +● +sending written notice to the Company’s Secretary at the address set forth on the notice of meeting appearing on the third page of this proxy statement; +● +voting again via the Internet or telephone on a later date or properly executing and delivering a later-dated proxy card; or +● +attending the meeting, notifying the Company’s Secretary that you are present, and then voting in person. +SHARES HELD BY BROKERS OR NOMINEES +If the shares you own are held in “street name” by a brokerage firm, your brokerage firm, as the record holder of your shares, is required to vote your shares according to your instructions. In order to vote your shares, you will need to follow the directions your brokerage firm provides you. Many brokers also offer the option of providing voting instructions to them over the Internet or by telephone, directions for which would be provided by your brokerage firm on your vote instruction form. +Under stock exchange rules applicable to most brokerage firms, if you do not give instructions to your broker, your broker will be permitted to vote any shares it holds for your account in its discretion with respect to “routine” proposals but will not be allowed to vote your shares with respect to “non-routine” proposals. Proposal 1 (election of Directors), Proposal 2 (approval, on an advisory, non-binding basis, of the Company’s executive compensation), and Proposal 3 (frequency of advisory vote on executive compensation), are “non-routine” proposals. If you do not instruct your broker how to vote with respect to these proposals, your broker will not vote your shares on them and your shares will be recorded as “broker non-votes” and will not affect the outcome of the vote on those proposals . “Broker non-votes” are shares that are held in “street name” by a bank or brokerage firm that indicates on its proxy that, while voting in its discretion on one matter, it does not have or did not exercise discretionary authority to vote on another matter. +Proposal 4 (ratification of the Company’s independent registered public accounting firm for the fiscal year ending January 31, 2026), is considered to be a routine item under the applicable rules and your broker will be able to vote on this item even if it does not receive instructions from you, so long as your broker holds your shares in its name. +If a broker or nominee holds shares of common stock in “street name” for your account, then this proxy statement may have been forwarded to you with a voting instruction card, which allows you to instruct the broker or nominee how to vote your shares on the proposals described herein. To vote by proxy or instruct your broker how to vote, you should follow the directions provided with the voting instruction card. In order to have your vote counted on Proposal 1, Proposal 2 and Proposal 3, you must either provide timely voting instructions to your broker or obtain a properly executed proxy from the broker or other record holder of the shares that authorizes you to act on behalf of the record holder with respect to the shares held for your account . +VOTES REQUIRED TO TRANSACT BUSINESS AT THE MEETING +The holders of a majority of the shares entitled to vote, present in person or represented by proxy, will constitute a quorum for the transaction of business at the meeting. Abstentions and broker non-votes are counted as present and entitled to vote for purposes of determining a quorum. +IF YOU RECEIVE MORE THAN ONE PROXY CARD OR VOTING INSTRUCTION FORM +If you hold your shares in multiple accounts or registrations, or in both registered and street name, you will receive a notice of internet availability with voting instructions from that organization or voting instruction form for each account. If you received proxy materials by mail and choose to authorize your proxy by mail, please sign, date and return all proxy cards you receive from the Company. If you choose to vote by proxy via the telephone or the Internet, please vote once for each proxy card you receive. Only your latest dated proxy for each account will be voted. +6 –  AstroNova, Inc. | 2025 Proxy Statement +Table of Contents +Annual Meeting of Shareholders (continued) +Although you may have already received, and potentially executed, a proxy card for the Company’s initially scheduled annual meeting, the postponement of that meeting and the subsequent modification of certain material information pertaining to Proposal 1 have rendered those earlier proxy cards invalid for purposes of the rescheduled meeting. Consequently, regardless of any prior proxy you may have completed or any voting instructions you may have transmitted, we ask that you promptly vote your shares by using one of the methods referred to in the instructions on the Notice of Internet Availability of Proxy Materials you received in the mail, the section titled “How do I Vote” in the Proxy Statement or, if you requested to receive printed proxy materials, your enclosed proxy card, to ensure that your shares are properly represented at the adjourned Annual Meeting. PROXY CARDS OR OTHER VOTING INSTRUCTIONS SUBMITTED WITH RESPECT TO THE ORIGINAL ANNUAL MEETING WILL NOT COUNT AS VOTES CAST OR AS PRESENT FOR PURPOSES OF DETERMINING A QUORUM AT THE 2025 ANNUAL MEETING OF SHAREHOLDERS. +MULTIPLE SHAREHOLDERS SHARING THE SAME ADDRESS +If you and other residents at your mailing address own shares of the Company’s common stock through a broker or other nominee, you may have received only one copy of this proxy statement and the Company’s Annual Report for its fiscal year ended January 31, 2025 (“fiscal year 2025”). If you and other residents at your mailing address own shares of common stock in your own names, you may have received only one copy of this proxy statement and the fiscal year 2025 Annual Report, unless you provided the Company’s transfer agent with contrary instructions. This practice, known as “householding,” is designed to reduce the Company’s printing and postage costs. You may promptly obtain an additional copy of this proxy statement and our fiscal year 2025 Annual Report by sending a written request to AstroNova, Inc., attention Investor Relations Department, 600 East Greenwich Avenue, West Warwick, Rhode Island 02893, or by calling the Company’s investor relations department at 716-843-3908. If you hold your shares through a broker or other nominee and wish to discontinue householding or to change your householding election, you may do so by contacting your broker or by calling 800-542-1061 or writing to Broadridge Financial Solutions, 51 Mercedes Way, Edgewood, NY 11717. If you hold shares in your own name and wish to discontinue householding or change your householding election, you may do so by calling 800-522-6645 or writing to Computershare Investor Services at P.O. Box.43006, Providence, RI 02940-3006. +AstroNova, Inc. | 2025 Proxy Statement  – 7 +Table of Contents +PROPOSAL NO. 1 ELECTION OF DIRECTORS +At the Annual Meeting, seven directors are to be elected to hold office until the next annual meeting and until their respective successors are elected and qualified. As part of its ongoing succession planning, the Nominating and Governance Committee makes periodic recommendations to the Board regarding the desired characteristics for potential directors, including with respect to competencies, special knowledge or expertise, experience of members, diversity and age. In all cases, the Nominating and Governance Committee seeks individuals who possess the highest ethical standards and integrity, have a history of achievement that reflects superior standards for themselves and others, have the ability to provide wise, informed and thoughtful counsel to management on a range of issues, exercise independence of thought, and possess skills and expertise appropriate to meet the Company’s needs and advance the long-term interests of the shareholders. Based on the standards set by the Nominating and Governance Committee and the qualifications set forth in this proxy statement, the Board has unanimously nominated for the election to the Board the following individuals: Jorik Ittmann, Shawn Kravetz, Alexis P. Michas, Darius G. Nevin, Mitchell I. Quain, Yvonne E. Schlaeppi and Richard S. Warzala. +The directors will be elected by a plurality of the votes of the shares entitled to vote on the election of directors and present in person or represented by proxy at the Annual Meeting. This means that the seven nominees receiving the highest number of FOR votes will be elected as directors. Votes may be cast FOR or WITHHELD from each nominee. Broker non-votes and votes that are WITHHELD from the nominees will be excluded entirely from the vote and will have no effect. +As noted elsewhere in this proxy statement, although you may have already received, and potentially executed, a proxy card for the Company’s initially scheduled annual meeting, the postponement of that meeting and the subsequent modification of certain material information pertaining to this Proposal 1 have rendered those earlier proxy cards invalid for purposes of the rescheduled meeting. Consequently, regardless of any prior proxy you may have completed or any voting instructions you may have transmitted, we ask that you promptly vote your shares by using one of the methods referred to in the instructions on the Notice of Internet Availability of Proxy Materials you received in the mail, in the section titled “How do I Vote” in the Proxy Statement or, if you requested to receive printed proxy materials, your enclosed proxy card, to ensure that your shares are properly represented at the adjourned Annual Meeting. +Information Regarding Company Nominees +The matrix and biographies below contain information regarding each of the Company’s nominees’ service as a director, business experience, director positions held currently or at any time during the last five years, and the experiences, qualifications, attributes or skills that caused the Nominating and Governance Committee and the Board to determine that the person should serve as a director. +Mr. Kravetz was appointed to the Board on August 21, 2025 pursuant to a Cooperation Agreement (the “Cooperation Agreement”) entered into on that date by and among the Company, Askeladden Capital Management LLC and Samir Patel (Askeladden Capital Management and Mr. Patel, are collectively referred to as the “Askeladden parties”). Under the terms of the Cooperation Agreement, the Company agreed to increase the size of the Board to seven directors, to appoint Mr. Kravetz to the Board, and to include Mr. Kravetz as part of the Company’s slate of nominees for election to the Board at the Annual Meeting. The Company also agreed to nominate Mr. Kravetz for re-election as a director at the Company’s 2026 annual meeting of shareholders. +As part of the Cooperation Agreement, the Askeladden parties agreed, among other things, (i) to customary standstill provisions and (ii) to vote all shares over which they exercise voting control in favor of the Board’s slate of directors at the Annual Meeting and the 2026 annual meeting of shareholders. In addition, the Company reimbursed the Askeladden parties for documented out-of-pocket fees and expenses incurred in connection with the nomination of directors of the Company by the Askeladden parties. The Cooperation Agreement also contains customary mutual non-disparagement provisions. +The cooperation period, including the standstill restrictions on the Askeladden parties, will generally terminate the day after the 2026 annual meeting of shareholders. The standstill provisions may also terminate upon a breach of the Cooperation Agreement by the Company. +The foregoing description of the Cooperation Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Cooperation Agreement which was filed with the SEC on August 21, 2025 as an exhibit to the Company’s Current Report on Form 8-K. +THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR EACH OF THE BOARD’S SEVEN NOMINEES FOR DIRECTOR. +8 –  AstroNova, Inc. | 2025 Proxy Statement +Table of Contents +Proposal No. 1 Election of Directors (continued) +The below contains biographical information as of October 13, 2025, about the nominees for director. The biographies include information provided by the directors individually as to their age, current position, principal occupation and experience for the past five years, and the names of other public companies for which they currently serve as a director or have served as a director during the past five years. +Darius G. Nevin , 67, has been a director since March 2025, and our Executive Chairman of the Board of Directors since July 31, 2025. Mr. Nevin is a highly respected finance executive with more than 30 years of experience, including as a former Chief Financial Officer of a publicly traded company and public company director on multiple boards. Mr. Nevin served for nine years as Chief Financial Officer at then publicly traded Protection One, Inc., one of the largest security monitoring companies in the United States during his tenure. In this role, he was instrumental in orchestrating a comprehensive financial turnaround that significantly enhanced operational efficiency, culminating in the successful sale of the company. Since 2016, he has served on the board of Alarm.com, a global leader in internet-of-things security and automation solutions. In 2022, Mr. Nevin joined the board of drug testing company Psychemedics Corporation, where he serves as Chairman. In addition, he served on the board of WCI Communities, Inc., a luxury homebuilder, from shortly after its initial public offering on the NYSE in 2013 until its sale in 2017. Mr. Nevin received a bachelor’s degree from Harvard University and an M.B.A. from the University of Chicago Booth School of Business. +Mr. Nevin’s history of overseeing successful IPOs and acquisitions, as well as his experience in turning around struggling businesses, executive leadership, finance and internal controls, along with substantial public company board experience, enable him to contribute significantly to our Board in the areas of finance, accounting, business operations and governance. +Jorik Ittmann , 47, has been the Company’s President and Chief Executive Officer, and a member of the Board since August 2025. Mr. Ittmann joined the Company in September 2024 as Vice President of Sales and Marketing for the Product Identification segment and was promoted to Senior Vice President of Product Identification in June 2025. Mr. Ittmann brings more than 20 years of global sales and business development experience across the healthcare and printing technology industries. Prior to joining AstroNova, Mr. Ittmann served as the Chief Revenue Officer at Health Link Solutions LLC, a provider of patient safety products based in St, Louis, MO, from January 2015 through September 2024. Mr. Ittmann was Vice President of Healthcare North America at Zebra Technologies International, LLC, a subsidiary of Zebra Technologies Corporation, a provider of products and services to digitize and automate frontline workflows, from July 2012 to January 2014. Prior to that, Mr. Ittmann served as Vice President, Worldwide Sales from November 2007 to July 2012 and International Director of Sales Development from November 2004 to November 2007 at LaserBand LLC, a provider of patient identification products, before that company’s acquisition by Zebra Technologies in July 2012. +Based on this experience and his position as Chief Executive Officer of the Company, we believe that Mr. Ittmann is qualified to serve on our Board. +Shawn W. Kravetz , 55, has been a director since August 2025. Mr. Kravetz is the President and Chief Investment Officer of Esplanade Capital LLC, an investment management company that he founded in 1999. Prior to founding Esplanade Capital, Mr. Kravetz served as a principal at the Parthenon Group, a strategic consulting firm, and as the Director of Strategic Planning and Corporate Development at CML Group, Inc., a specialty marketing company. Since June 2025, Mr. Kravetz has served on the board of directors of Spruce Power Holding Corp., an owner and operator of distributed solar energy assets. Mr. Kravetz previously served on the board of directors of Nevada Gold & Casinos Inc., from October 2016 until its acquisition by Maverick Gaming LLC in 2019. Mr. Kravetz holds a Bachelor of Arts degree in economics from Harvard College and a Masters in Business Administration from Harvard Business School. +Mr. Kravetz’s extensive experience in investment management and corporate leadership, supplemented by prior roles in strategic consulting and corporate development, equip him with strong financial acumen, risk oversight skills, and a deep understanding of value creation necessary for effective board stewardship. In addition, his service on the boards of other companies, combined with his academic background in economics and business, provides governance experience and an independent perspective that will enhance the Board’s ability to guide corporate strategy and protect shareholder interests. +AstroNova, Inc. | 2025 Proxy Statement  – 9 +Table of Contents +Proposal No. 1 Election of Directors (continued) +Alexis P. Michas , 67, has been a director since June 2022. Mr. Michas contributes decades of seasoned board leadership grounded in hands-on experience with multiple, major operating companies. Mr. Michas is the founder and Managing Partner of Juniper Investment Company, and he has gained extensive corporate governance experience through his service on other public company boards together with his proven track record of successful private equity and public equity investments across a range of sectors. +In addition to being the founder and Managing Partner of Juniper Investment Company, LLC since 2008, Mr. Michas is also a Principal of Aetolian Investors, LLC, a registered commodity pool operator, the non-executive Chairman of the board of BorgWarner Inc., the non-executive Chairman of the board of Revvity, Inc., a director of funds managed by Atlantic Investment Management, Inc., and is also on the board of privately held Theragenics Corporation. Mr. Michas also served as the non-executive Chairman of the board of Lincoln Educational Services Corporation until 2015, and as a director of Allied Motion Technologies, Inc. (now Allient Inc.) until July 2017. Mr. Michas served as the Chairman of the U.S. Board of Trustees of Athens College, a non-profit organization until April 2023. Mr. Michas received a Bachelor of Arts degree from Harvard College and a Master of Business Administration degree from Harvard Business School. +Mr. Michas’ many years of private equity experience across a wide range of industries, his successful record of managing investments in public companies, his record of board-level oversight and leadership with public companies, and his extensive transactional experience qualify him to contribute substantially on our Board. +Mitchell I. Quain , 73, has been a director since August 2011. Mr. Quain has served on the Executive Council of American Securities, Inc., a private equity firm, since January 2020. From December 2011 to December 2019, Mr. Quain was a Senior Advisor at the private equity firm Carlyle Group. From January 2010 through December 2011, Mr. Quain was a Partner at One Equity Partners, a private investment firm. From 2006 through 2009, he was a Senior Director of ACI Capital Corp. From 2002 through 2005, Mr. Quain served as Chairman of Register.com, Inc., an internet services provider, and from 1997 to 2001 he was employed with ABN AMRO and its predecessors in several capacities, including Vice Chairman of Investment Banking. Mr. Quain previously served as a director of DeCrane Aircraft Holdings, Inc., Handy & Harman Ltd., Hardinge Inc., HEICO Corporation, Kensington Capital Acquisition Corp. I, Kensington Capital Acquisition Corp. II, MagneTek, Inc., Mechanical Dynamics, Inc., Jason Industries, RBC Bearings, Inc., Register.com, Inc., Tecumseh Products Company, Titan International, Inc., and Xerium Technologies, Inc. Mr. Quain received a bachelor’s degree from the University of Pennsylvania and an M.B.A. from Harvard University. +Mr. Quain’s extensive experience in the private equity sector, as an analyst, investor and public company director of small and micro-cap companies in particular, enable him to provide the Board and management with valuable perspectives on our operations, capital allocation and other strategies to maximize shareholder value. +Yvonne E. Schlaeppi , 65, has been a director since April 2018. Since 2011, Ms. Schlaeppi has served as a Managing Partner of Stratevise LLC, an international strategic advisory firm that she co-founded. From 2022 through its sale in 2024, Ms. Schlaeppi served on the board of OpGen, Inc., a NASDAQ-listed molecular diagnostics company. From 2016 through its going private in 2019, Ms. Schlaeppi served on the board of directors of Stallergenes Greer plc, a pharmaceutical company traded on the Euronext Paris exchange. From 2014 to 2015, Ms. Schlaeppi served on the boards of directors of allergy immunotherapy companies, Ares Allergy Holdings Inc. and Greer Laboratories, Inc. Since 2015, Ms. Schlaeppi has been a member of the External Advisory Council to the Channing Division of Network Medicine of Brigham and Women’s Hospital in Boston. Since 2022, Ms. Schlaeppi has been recognized as Directorship Certified ® by the National Association of Corporate Directors (“NACD”) and has been recognized as a Board Leadership Fellow by the NACD annually from 2017-2022. Prior to founding Stratevise, Ms. Schlaeppi served as General Counsel at Global Enterprise Technologies, Passport & ID, a high-security document printing solutions provider and systems integrator, from 2007 to 2011 and as Executive Vice President, General Counsel and Corporate IP Officer at Organon BioSciences, a global pharmaceutical, animal health and biotech group based in the Netherlands, from 2006 until its sale in 2007. From 1999 to 2006, Ms. Schlaeppi was a partner at the Boston-based law firm of Palmer & Dodge LLP, where she served as Chairperson of that firm’s International Practice Group. From 1995 to 1998, Ms. Schlaeppi served in senior positions at Johnson Controls, Inc., a NYSE-listed diversified industrial company, including as General Counsel Europe. Ms. Schlaeppi has a Bachelor of Arts from Princeton University and a JD from the Columbia University School of Law. +Ms. Schlaeppi’s extensive experience across industries, including in the printing industry, in international business and transactions, in managing legal functions, as well as corporate governance, qualify her to serve on our Board. +10 –  AstroNova, Inc. | 2025 Proxy Statement +Table of Contents +Proposal No. 1 Election of Directors (continued) +Richard S. Warzala , 72, has been a director since December 2017 and serves as Lead Independent Director. He brings over 40 years of operational and leadership experience having successfully led the significant growth of industrial technologies businesses that served a broad variety of industries. Currently, he is the Chairman, President and Chief Executive Officer of Allient Inc. (Nasdaq: ALNT), a developer of advanced electromagnetic products and systems, with an Enterprise Value of approximately $600 million, as it has grown its revenues both organically and through acquisitions from $15 million in 2002 to $530+ million currently. Mr. Warzala was elected a director of Allient in 2006, appointed President and Chief Executive Officer in 2009, and elected as the Chairman and Allient’s board of directors in 2014. He formerly was a Business Unit President at Danaher Corp. and President, API Motion, a division of then publicly traded American Precision Industries until it was acquired. Mr. Warzala received a bachelor’s degree and M.B.A. from SUNY at Buffalo, New York. +As a proven leader, Mr. Warzala’s highly relevant and deep expertise in international business growth and development, strategic thinking and planning, mergers and acquisitions, technical product sales and marketing, operational excellence utilizing lean manufacturing principles and together with his corporate governance, management and oversight expertise with publicly traded companies similarly situated to the Company, qualify him to serve on our Board. +The Board has determined that all of the directors of the Company, each of whom is standing for election at the Annual Meeting, other than Jorik Ittmann and Darius G. Nevin, are independent of the Company in that such nominees have no material relationship with the Company either directly or as a partner, shareholder or affiliate of an organization that has a relationship with the Company. The Board has made this determination in accordance with applicable SEC rules and NASDAQ listing standards. +THE BOARD RECOMMENDS A VOTE FOR THE ELECTION OF THE ABOVE SEVEN INDIVIDUALS NOMINATED BY THE BOARD. +AstroNova, Inc. | 2025 Proxy Statement  – 11 +Table of Contents +CORPORATE GOVERNANCE +The Board of Directors — Meetings and Committees +The Board currently consists of seven members, all of whose terms will expire at the Annual Meeting. Each of our current directors has been nominated by the Board for re-election. During the fiscal year ended January 31, 2025, the Board held eight meetings. During fiscal year 2025, each director then in office attended not less than 75% of the total number of meetings of the Board and the committees on which such director served. +The Board has adopted a policy that encourages members of the Board to make every effort to attend each annual shareholders meeting. All of the members of the Board who served as a director at such time attended the 2024 annual shareholders meeting. +The Board currently has three standing committees: an Audit Committee, a Human Capital and Compensation Committee and a Nominating and Governance Committee. The members and chairs of each of those committees are appointed each year. The Audit Committee is currently comprised of Mr. Michas, Mr. Quain, its chair, and Ms. Schlaeppi. The Nominating and Governance Committee is currently comprised of Mr. Kravetz, Mr. Quain, Ms. Schlaeppi, its chair, and Mr. Warzala. The Human Capital and Compensation Committee is currently comprised of Messrs. Michas, Quain and Warzala, its chair. Each of the members of our committees is independent as defined under the applicable NASDAQ listing standards and SEC rules. Each of the Audit, Human Capital and Compensation, and Nominating and Governance Committees has a written charter approved by the Board. A copy of each charter is available on the Company’s website at www.astronovainc.com under “Investors-Corporate Governance-Governance Documents.” +Audit Committee. The Audit Committee’s primary duties and responsibilities include: overseeing the integrity of the Company’s financial reports and the adequacy of internal controls, appointing, setting the compensation of and overseeing the Company’s independent accountants, and assessing the qualifications, independence and performance of the Company’s independent accountants, and overseeing the administration of the Company’s Code of Conduct. The Audit Committee meets with the Company’s independent accountants to review quarterly financial results, the results of the audit, and other relevant matters. The Audit Committee held five meetings during the fiscal year ended January 31, 2025. The Board has determined that all members of the Audit Committee during fiscal year 2025 satisfy the financial literacy requirements of the NASDAQ listing standards and are independent as defined under the NASDAQ listing requirements and applicable SEC rules. Additionally, the Board has determined that each of Messrs. Michas and Quain qualifies as an “audit committee financial expert” as defined by the SEC rules and possesses “financial sophistication” as described in the NASDAQ listing standards. +Human Capital and Compensation Committee. The Human Capital and Compensation Committee assists the Board in discharging the Board’s responsibilities relating to director and executive compensation. The Human Capital and Compensation Committee’s responsibilities include: establishing and reviewing the Company’s executive and director compensation philosophy, strategies, plans and policies; making recommendations with respect to the design of the Company’s incentive compensation plans and equity based plans; granting awards under such plans and overseeing generally the administration of such plans; evaluating the performance and determining the compensation of the Chief Executive Officer; reviewing and approving recommendations on compensation of other executives; and reviewing and monitoring the Company’s executive officer succession plans. In addition, the Human Capital and Compensation Committee oversees the Company’s diversity, equity and inclusion initiatives, which focused in fiscal year 2025 on (i) participation by women in technical, engineering, sales and leadership positions, (ii) participation by veterans in our workforce, (iii) continuing to develop a technical apprenticeship program and (iv) developing and refining measures of employee engagement. The Human Capital and Compensation Committee may form and delegate authority to one or more subcommittees, except that it may not delegate its authority with respect to compensation matters involving any executive officer. The Human Capital and Compensation Committee held five meetings during the fiscal year ended January 31, 2025. +Nominating and Governance Committee . The Nominating and Governance Committee assists the Board in fulfilling its nomination and corporate governance responsibilities. The Nominating and Governance Committee’s responsibilities include: (i) advising the Board concerning appropriate composition of the Board and its committees, including identifying individuals qualified to serve on the Board and its committees, (ii) recommending to the Board individuals to be nominated by the Board for election to the Board by the shareholders or, in appropriate circumstances, elected by the Board to fill vacancies on the Board, (iii) advising the Board regarding appropriate governance practices and assisting the Board in achieving them, and (iv) overseeing and reporting to the Board concerning the periodic evaluation of the Board, each committee of the Board and members of the Board. The Board conducts annual self-evaluations that are +12 –  AstroNova, Inc. | 2025 Proxy Statement +Table of Contents +Corporate Governance (continued) +overseen by the Nominating and Governance Committee. The Nominating and Governance Committee is also charged with advising the board regarding applicable standards to be used in determining the independence of the directors serving on the Board, reviewing and making recommendations to the Board regarding the Company’s corporate governance policies, and overseeing the Company’s director of education and onboarding programs. The Nominating and Governance Committee held three meetings in the fiscal year ended January 31, 2025. +Director Share Ownership Requirements . The Company has a stock ownership policy that requires each director to hold shares of Company common stock with a value equal to at least $200,000. Any director who does not meet this requirement will have five years from the date of his or her initial election to the Board to achieve this ownership level. Directors are expected to retain at least 50% of the shares acquired upon exercise of any stock option (net of any shares withheld for payment of taxes) or vesting of a restricted stock or restricted unit award until they achieve the specified ownership level and thereafter maintain such ownership level. All directors are in compliance with the policy. +AstroNova, Inc. | 2025 Proxy Statement  – 13 +Table of Contents +Corporate Governance +(continued) +Policy Regarding Transactions in AstroNova, Inc. Securities. +The Company has adopted an insider trading policy governing the purchase, sale and other transactions in our securities by our directors, officers, employees and certain other covered persons. We believe our insider trading policy is reasonably designed to promote compliance with insider trading laws, rules and regulations, and any listing standards. +Compensation Committee Interlocks and Insider Participation +During the fiscal year ended January 31, 2025, Messrs. Michas, Quain and Warzala, served on the Company’s Human Capital and Compensation Committee. No member of the Company’s Human Capital and Compensation Committee who currently serves or who served during fiscal year 2025 has ever been an officer or employee of the Company or any of its subsidiaries. None of the Company’s executive officers serves as a director or member of the compensation committee of another entity in a case where an executive officer of such other entity serves as a director of the Company or a member of the Company’s Human Capital and Compensation Committee. +Nomination of Directors +The Nominating and Governance Committee considers suggestions from many sources, including shareholders, regarding possible candidates for director. As part of its ongoing succession planning, the Nominating and Governance Committee makes periodic recommendations to the Board regarding the desired characteristics for potential directors, including with respect to competencies, special knowledge or expertise, experience of members, diversity and age. In all cases, the Nominating and Governance Committee seeks individuals who possess the highest ethical standards and integrity, have a history of achievement that reflects superior standards for themselves and others, have the ability to provide wise, informed and thoughtful counsel to management on a range of issues, exercise independence of thought, and possess skills and expertise appropriate to meet the Company’s needs and advance the long-term interests of the shareholders. The Nominating and Governance Committee considers diversity with respect to viewpoints, accomplishments, skills and experiences, among other factors, in its evaluation of candidates for Board membership. In considering candidates for the Board, the Nominating and Governance Committee considers the entirety of each candidate’s credentials in determining whether the candidate would bring a valuable perspective to the Board. +The Nominating and Governance Committee also monitors the Board’s compliance with the requisite qualifications under the NASDAQ listing standards for populating the Audit, Human Capital and Compensation, and Nominating and Governance Committees. The Nominating and Governance Committee will consider shareholder nominees for director in the same manner as nominees for director from other sources. +Shareholders may send recommendations for director nominees to the Nominating and Governance Committee at the Company’s offices at 600 East Greenwich Avenue, West Warwick, Rhode Island 02893. Submissions should include information regarding a candidate’s background, qualifications, experience, and willingness to serve as a director. In addition, Section 10 of Article III of the Company’s +By-Laws +sets forth specific procedures that, if followed, enable any shareholder entitled to vote in the election of directors to make nominations directly at an annual meeting of shareholders. These procedures include a requirement for written notice to the Company not more than 150 days nor less than 60 days prior to the scheduled annual meeting, which must contain the name and certain information concerning the nominee and the shareholders who support the nominee’s election. For the annual meeting to be held in 2026, the notice must be received no earlier than December 20, 2025 and no later than March 20, 2026. A copy of the Company’s +By-Laws +may be obtained by writing to AstroNova, Inc., Attn: Investor Relations D +epart +ment, 600 East Greenwich Avenue, West Warwick, Rhode Island 02893. +14 –  +AstroNova, Inc. +| +2025 Proxy Statement +Table of Contents +Corporate Governance (continued) +Communications with the Board of Directors +The Company’s Board provides a process for shareholders to communicate directly with the members of the Board or the individual chairman of each standing committee. Any shareholder with a concern, question or complaint regarding our compliance with any policy or law, or who would otherwise like to contact the Board, may communicate directly with the directors by writing directly to those individuals c/o AstroNova, Inc., 600 East Greenwich Avenue, West Warwick, Rhode Island 02893. The Company’s general policy is to forward, and not to intentionally screen, any mail received at the Company’s corporate offices that is sent directly to an individual unless the Company believes the communication may pose a security risk. +Board Leadership Structure +All current members of the Board, other than Mr. Nevin and Mr. Ittmann, are independent and all our key committees—Audit, Human Capital and Compensation, and Nominating and Governance—are, and during the fiscal year ended January 31, 2025 were, comprised solely of independent directors. The non-management directors meet in executive session at each scheduled Board meeting, which occur at least quarterly, in order to promote discussion among the independent directors and assure independent oversight of management. +A key component of our leadership structure is the active role played by our independent directors in overseeing the Company’s business, both at the Board and Committee level. All of our directors are free to suggest the inclusion of items on the agenda for meetings of the Board or to raise subjects that are not on the agenda for that meeting. In addition, our Board and each committee have complete and open access to any member of management and the authority to retain independent legal, financial, and other advisors as they deem appropriate without consulting or obtaining the approval of any member of management. Moreover, our Audit Committee, Human Capital and Compensation Committee and the Nominating and Governance Committee, all of which are comprised entirely of independent directors, also perform oversight functions independent of management. +Executive Chairman . On July 31, 2025, the Board appointed Mr. Nevin as the Executive Chairman of the Board. In that role, among other things, Mr. Nevin collaborates with Mr. Ittmann, Mr. DeByle and other members of the Company’s senior management to devise and implement the Company’s strategy. Together with Mr. Ittmann and Mr. DeByle, Mr. Nevin represents the Company in communications with shareholders. Acting as the presiding officer at all meetings of the Board and of the shareholders, Mr. Nevin establishes the agenda for each meeting and facilitates deliberations among the directors. +Lead Independent Director. In August 2019, the Board elected Mr. Warzala as its lead independent director. In that capacity, among other things, Mr. Warzala presides over executive sessions of the independent directors. +The Board believes that in light of the relatively small size of the Board and the active involvement by all of our independent directors in both the oversight of the Company and the conduct of the Board’s meetings and deliberations, including the establishment of the Board’s agenda for its meetings, the Board’s current leadership structure is appropriate for the Company at this time. +Risk Oversight +The Board has an active role, as a whole and also at the committee level, in overseeing management of the Company’s risks through a program of sound policies, systems, processes, and reports. The Board as a whole is primarily responsible for overseeing the Company’s risk management practices relating to supply chain matters, cybersecurity and information technology, and commercial risks. +The Audit Committee of the Board has oversight responsibility over financial reporting and disclosure processes, compliance and legal matters, and fraud risk. The Audit Committee also monitors controls to prevent material weaknesses in the financial reporting function and oversees the administration of the Company’s Code of Conduct. The Audit Committee meets regularly with our Chief Financial Officer in carrying out these responsibilities, and with the Company’s independent auditors in executive session. +AstroNova, Inc. | 2025 Proxy Statement  – 15 +Table of Contents +Corporate Governance (continued) +The Human Capital and Compensation Committee of the Board oversees risks as they relate to the Company’s compensation policies and practices as described under “Compensation Discussion and Analysis” as well as reviewing and monitoring executive officer succession plans. +The Board’s Nominating and Governance Committee assists the Board in fulfilling the Board’s oversight responsibilities with respect to confirming the independence of board members, developing desired characteristics of the Board and identifying individuals qualified to be members of the Board, and assessing the effectiveness of the Board and its committees. +While each committee is responsible for evaluating the risks within their areas of responsibility and primarily overseeing the management of such risks, all committees report regularly to the full Board, which also considers the Company’s entire risk profile. +Anti-Hedging +The Company prohibits its directors, officers and employees from engaging in hedging transactions relating to the Company’s securities, including by means of prepaid variable forwards, equity swaps, collars and exchange funds. +Compensation of Directors +The Human Capital and Compensation Committee is responsible for reviewing and establishing the compensation of the directors of the Company. On June 5, 2023, the Human Capital and Compensation Committee adopted amendments to the Company’s Amended and Restated Non-Employee Director Annual Compensation Program (as so amended, the “Director Compensation Program”). +Pursuant to the Director Compensation Program, each non-employee director automatically receives a grant of restricted stock on the date of the Board’s regularly scheduled quarterly meeting. The number of whole shares granted is equal to the number calculated by dividing 25% of the stock component of the director compensation amount determined by the Human Capital and Compensation Committee for that year by the fair market value of our stock on that day. The aggregate value of the restricted stock award for fiscal year 2025 was $72,800. Shares of restricted stock granted under the Director Compensation Program are fully vested upon the date of issuance. Other than as part of a Change in Control of the Company and except in the case of economic hardship of a particular non-employee director, as determined by the Human Capital and Compensation Committee, while a non-employee director is serving on our Board they may not sell or otherwise dispose of any of our stock received in connection with their service on our Board (whether that stock was granted under the Director Compensation Program, any predecessor program or otherwise) if that non-employee director has not satisfied the requirements of any stock ownership guidelines established for directors by the Board or if the transfer would cause them to be out of compliance with any such guidelines. +Pursuant to the Director Compensation Program, each non-employee director receives cash payments for their service on the Board and its committees. The amounts of those payments for the fiscal year ended January 31, 2025 were: +Position Covered +Fiscal +Year +2025 +Annual +Payment +Service on the Board +$46,800 +Lead Independent Director +$11,440 +Audit Committee Chairman +$11,440 +Human Capital and Compensation Committee Chairman +$ 9,360 +Nominating and Governance Committee Chairman +$ 9,360 +Committee Member (other than Chairman) +$ 4,160 +Cash payments are made to non-employee directors in four equal tranches on the dates of the Board’s regular quarterly meetings. If a person becomes a non-employee director on a date other than the date of our annual meeting of +16 –  AstroNova, Inc. | 2025 Proxy Statement +Table of Contents +Corporate Governance (continued) +shareholders in any fiscal year, that person will receive an award of restricted stock as described above, but appropriately prorated to reflect the number of days remaining from the date he or she commences his or her service in that capacity until the scheduled date for our next annual meeting of shareholders. In addition, if a person becomes a non-employee director, Chairman of the Board, lead independent director, chairman of a committee or a member of a committee other than on the first business day of a fiscal quarter of the Company, he or she will receive cash fees on (i) the date of the regular full meeting of the Board held in that quarter or (ii) if later, the date he or she commences his or her service in that capacity, as described above, but appropriately prorated to reflect the number of days remaining in that fiscal quarter. Beginning in the second quarter of fiscal year 2026, the directors agreed to receive their cash fees in the form of shares of the Company’s common stock. +The following Director Compensation table provides information regarding the compensation paid or accrued by each person other than Mr. Woods who served as a director during the fiscal year ended January 31, 2025. See “Executive Compensation” for information regarding compensation of and outstanding equity awards held by Mr. Woods. +Name +Fees +Earned +or +Paid in +Cash ($)  +Stock +Awards ($)   +(a)(b) +Total ($)   +Alexis Michas +54,590 +72,775 +127,365 +Mitchell I. Quain +65,920 +72,775 +138,695 +Yvonne E. Schlaeppi +59,740 +72,775 +132,515 +Richard S. Warzala +71,070 +72,775 +143,845 +(a) +The amounts reflect the aggregate fair value of the awards on the grant date under the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 718 (“ASC 718”) for shares of restricted stock granted to directors. For additional information, refer to Note 15, “Share-Based Compensation,” in the Company’s audited financial statements for the fiscal year ended January 31, 2025, included in the Company’s Annual Report on Form 10-K filed with the SEC on April 15, 2025. All stock awards were fully vested on the date of issuance. +(b) +As of January 31, 2025, the Company’s non-employee directors held the following number of outstanding stock options, all of which were fully vested: Mitchell I. Quain—20,000; Yvonne E. Schlaeppi—10,000; and Richard S. Warzala—10,000. Messrs. Michas and Nevin did not hold any stock options as of January 31, 2025. +Security Ownership of 5% Beneficial Owners +The following table sets forth certain information regarding the beneficial ownership of the Company’s outstanding shares of common stock, as of October 13, 2025 (except as noted), by each person who is known to the Company to own of record or beneficially more than 5% of such stock: +Name of Beneficial Owner +Number of +Shares Beneficially   +Owned(a) +Percent +of Class   +Askeladden Capital Management LLC +14 Sunrise Ct +Trophy Club, TX 76262 +716,233 (b) +9.4% +Juniper Targeted Opportunity Fund, L.P. +555 Madison Avenue, 24th Floor +New York, NY 10022 +535,203 (c) +7.1% +Dimensional Fund Advisors LP +6300 Bee Cave Road, Building One +Austin, TX 78746 +516,983 (d) +6.9% +Peter Kamin +2720 Donald Ross Road, Unit 311 +Palm Beach Gardens, FL 33410 +433,065 (e) +5.8% +(a) +All information is based upon ownership of record as reflected on the stock transfer books of the Company or as reported on Schedule 13G or Schedule 13D filed under Rule 13d-1 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). +AstroNova, Inc. | 2025 Proxy Statement  – 17 +Table of Contents +Corporate Governance (continued) +(b) +According to a Schedule 13D/A filed with the SEC on August 29, 2025, Askeladden Capital Management LLC (“Askeladden”) and Samir Patel reported shared voting power and shared dispositive power with respect to 716,233 shares. These 716,233 shares are held by client accounts of Askeladden, the investment adviser. Askeladden client accounts are the record and direct beneficial owner of the 716,233 shares. Samir Patel is the Principal of Askeladden. As the Principal of Askeladden, Mr. Patel may be deemed to beneficially own these securities. +(c) +Juniper Targeted Opportunity Fund, L.P. (“Jupiter Fund”) has sole voting and dispositive power with respect to 535,203 shares. Juniper HF Investors II, LLC (“Juniper HF”), Juniper Investment Company, LLC (“Juniper Investment Company”), an investment adviser registered under the Advisers Act, Alexis P. Michas and John A. Bartholdson, have shared voting and dispositive power with respect to 535,203 shares based on their relationship with Jupiter Fund. +(d) +According to a Schedule 13G/A filed with the SEC on February 9, 2024, Dimensional Fund Advisors LP, an investment adviser registered under the Investment Advisers Act of 1940, as amended (the “Advisers Act”), and its subsidiaries (collectively, “Dimensional”) had sole voting power with respect to 512,713 shares and sole dispositive power with respect to 516,983 shares held by registered investment companies, trusts and separate accounts for which Dimensional serves as investment manager, adviser or sub-adviser as of December 29, 2023. +(e) +According to a Schedule 13D filed with the SEC on December 13, 2022, Peter H. Kamin had sole voting power and sole dispositive power with respect to 433,065 shares as of December 5, 2022, which includes 143,420 shares held by the Peter H. Kamin Revocable Trust dated February 2003, of which Mr. Kamin is the sole trustee, 82,084 shares held by the Peter H. Kamin Childrens Trust dated March 1997 of which Mr. Kamin is the trustee, and 58,823 shares held by 3K Limited Partnership, of which Mr. Kamin is the General Partner. +18 –  AstroNova, Inc. | 2025 Proxy Statement +Table of Contents +Corporate Governance (continued) +Our Management +The following sets forth certain information with respect to all executive officers of the Company as of October 13, 2025. All officers serve at the pleasure of the Board. +Name +Age +Position +Darius G. Nevin +67   +Executive Chairman of the Board +Jorik Ittmann +47   +President, Chief Executive Officer and Director +Tom W. Carll +59   +Senior Vice President, Aerospace +Thomas D. DeByle +65   +Vice President, Chief Financial Officer and Treasurer +Padraig Finn +43   +Senior Vice President, Product Identification +Michael J. Natalizia +62   +Vice President, Technology & Strategic Alliances and Chief Technology Officer +Mr. Nevin was appointed Chairman of the Board of the Company on July 31, 2025. Please refer to Proposal 1 for Mr. Nevin’s full biography. +Mr. Ittmann was appointed President and Chief Executive Officer of the Company effective August 15, 2025. Please refer to Proposal 1 for Mr. Ittmann’s full biography. +Mr. Carll joined the Company in 1989 and has held the position of Vice President and General Manager—Aerospace since 2011. Previously, Mr. Carll was Product Manager and National Sales Manager of the AstroNova Test & Measurement product group and, from its formation in 2004, the AstroNova Aerospace business group. +Mr. DeByle was appointed Vice President, Chief Financial Officer, and Treasurer of the Company effective June 17, 2024. Prior to joining the Company, Mr. DeByle served as Chief Financial Officer for Plastic Industries, a manufacturer of blow molded, high-density polyethylene bottles for food, specialty beverage, dairy, health, wellness, household and industrial product markets, from October 2021 through the sale of the business to Altium Packaging in August 2022. Mr. DeByle also held the position of Sr. Vice President and Chief Financial Officer of NN, Inc., a global precision component manufacturer with extensive experience in machining, stamping, and precious metal plating from September 2019 to June 2021, and Vice President, Chief Financial Officer and Treasurer of Standex International Corporation, a global multi-industry manufacturer in five broad business segments: Electronics, Engraving, Scientific, Engineering Technologies, and Specialty Solutions from March 2008 through September 2019. Additionally, Mr. DeByle currently serves on the Board of Directors of Chase Corporation and Good Foods Group, LLC. +Mr. Finn was appointed Senior Vice President of Product Identification effective August 15, 2025. He previously held the position of Director of Sales EMEA since September 2024. Prior to joining the Company, Mr. Finn served as UK and Europe Sales Director of AutoCoding Systems from July 2022 to September 2024. Prior to that, Mr. Finn spent over 16 years at Linx Printing Technologies holding the position of Global Distribution Sales Manager from December 2019 to June 2022. +Mr. Natalizia was appointed Vice President—Technology & Strategic Alliances and Chief Technology Officer of the Company on March 9, 2012. Prior to this appointment, Mr. Natalizia had held the position of Director of Product Development of the Company since 2005. +AstroNova, Inc. | 2025 Proxy Statement  – 19 +Table of Contents +Corporate Governance (continued) +Security Ownership of Directors and Officers +The following table sets forth certain information regarding the beneficial ownership of the Company’s common stock as of October 13, 2025, based on 7,638,423 shares of common stock outstanding as of such date, by each director, by each named executive officer listed in the Summary Compensation Table and by all directors and current executive officers as a group. Unless otherwise noted, all shares of common stock are subject to the sole voting and dispositive power of the respective directors and executive officers. +Beneficial Ownership +Name of Beneficial Owner +Shares and +Restricted +Shares(a) +Right to +Acquire +Within 60 +Days of +October 13, +2025(b) +Total +Beneficial +Ownership +(a) +Percent  +of Class  +Non-employee directors +Shawn Kravetz +2,318 +— +2,318  +* +Alexis P. Michas +557,029 +(c) +— +557,029  +7.3 +% +Mitchell I. Quain +117,776 +15,000 +132,766  +1.7 +% +Yvonne E. Schlaeppi +44,427 +10,000 +54,427  +Richard S. Warzala +67,866 +10,000 +77,866  +1.0 +% +Named Executive Officers +Michael J. Natalizia +45,725 +17,500 +63,225  +* +Thomas W. Carll +32,155 +17,500 +49,655  +* +Gregory A. Woods(d) +209,239 +145,500 +354,739  +4.6 +% +David S. Smith(d) +37,161 +— +37,161  +* +All directors and current executive officers of the Company as a group(11)(e) +875,636 +100,000 +975,636  +12.6 +% +* +Indicates less than 1.0%. +(a) +If applicable, beneficially owned shares include shares owned by the spouse, minor children, and certain other relatives of the director or executive officer, as well as shares held by trusts of which the person is a trustee or in which he or she has a beneficial interest. +(b) +All options held by non-employee directors and executive officers are fully vested and currently exercisable. +(c) +Mr. Michas, as a managing member of Juniper HF and Juniper Investment Company, may be deemed to own beneficially the 535,203 shares held by Juniper Fund and Juniper Investment Company. Mr. Michas disclaims beneficial ownership of such shares for all other purposes. +(d) +Mr. Woods’ employment terminated on July 16, 2025. Mr. Smith’s employment terminated on July 12, 2024. +(e) +The total group of eleven includes four additional directors and executive officers of the Company not listed above. The total group does not include former executive officers Gregory A. Woods and David S. Smith. +Delinquent Section 16(a) Reports +Section 16(a) of the Exchange Act requires the directors and executive officers of the Company and any persons who beneficially own more than ten percent of the Company’s common stock to file with the SEC various reports of beneficial ownership and changes in beneficial ownership. Based solely on a review of the copies of such reports received by the Company and certain written representations that no other reports were required, the Company believes that for the fiscal year ended January 31, 2025, all of its officers, directors and 10% beneficial owners complied with the requirements of Section 16(a), except for one late-filed Form 4 by each of Mr. Carll, Mr. Natalizia, Mr. Petrarca, Mr. Smith and Mr. Woods, filed on April 3, 2024, relating to the issuance of shares of common stock and withholding of shares to cover taxes upon the vesting and settlement of restricted stock units. +20 –  AstroNova, Inc. | 2025 Proxy Statement +Table of Contents +COMPENSATION DISCUSSION AND ANALYSIS +The Human Capital and Compensation Committee of the Company’s Board of Directors (the “Committee”) is charged with the responsibility for establishing, implementing and monitoring adherence to the Company’s compensation philosophy and setting the compensation for our executives and key management personnel in a manner which is internally equitable. The Committee also is responsible for reviewing and establishing the compensation of directors. +Compensation Philosophy and Objectives. The Committee’s overall philosophy in terms of executive compensation is to link management incentives with the actual financial performance of the Company. Similarly, the compensation should attract, retain, and motivate highly qualified individuals to achieve the Company’s business goals and link their interests with shareholder interests. In setting compensation for the Company’s executive officers, the Committee considers the executive’s performance, awards, if any, made during prior years and other relevant factors, including the results of the annual advisory vote of the Company’s shareholders on executive compensation. The Committee seeks to have the long-term performance of the Company’s common stock reflected in executive compensation through our equity incentive programs. +Elements of Compensation. The total compensation program for the Company’s executive officers consists of the following: +● +salary; +● +cash incentive and bonus awards tied to the Company’s annual performance; +● +equity-based incentive compensation, in the form of time-based restricted stock units and, historically, performance-based restricted stock units; and +● +retirement and other benefits. +The Committee seeks to structure each element of compensation to attract and retain the necessary executive talent, reward annual performance and provide incentives for achieving both long-term strategic goals and short-term performance goals. To this end, the Committee seeks to establish salaries at levels that are competitive within the Company’s industry and geographical markets. As described further below, the Committee has historically utilized annual cash-based incentive awards tied to the achievement by the Company of EBITDA-based targets to encourage the Company’s executives to focus on improving the Company’s short-term profitability. The Committee utilizes a mix of time-based restricted stock units and, historically, performance-based restricted stock units tied to the Company’s achievement of multi-year performance goals in order to encourage the Company’s executives to focus on driving the Company’s long-term growth. The Committee believes that the combination of these elements is effective in aligning the interests of the Company’s executives with those of its shareholders. +Say on Pay Consideration. In accordance with SEC rules, the Company conducted a non-binding, advisory vote on the Company’s executive compensation at its 2024 annual meeting of shareholders. The Company’s shareholders voted to approve the Company’s executive compensation practices at the 2024 annual meeting by a favorable vote of approximately 98.3% of the votes cast. +Setting Executive Compensation. The Committee is responsible for establishing and periodically reviewing the compensation of the Company’s executive officers and approving all equity awards. The Committee annually reviews the performance of the executive officers and based on these reviews, the Committee determines salary adjustments and annual awards. The Chief Executive Officer does not take part in any deliberations concerning his own compensation, and the Executive Chairman similarly recuses himself from all deliberations concerning his own compensation. +Fiscal Year 2025 Compensation Overview. We are required to make disclosures regarding compensation for certain of our executive officers. This includes compensation disclosure for all principal executive officers during the last completed fiscal year, the two most highly compensated executive officers (other than the principal executive officer) who were serving as executive officers at the end of the last completed fiscal year, and up to two additional individuals for whom disclosure would have been provided (as two of the most highly compensated executive officers) but for the fact that the individual was not serving as an executive officer at the end of the last completed fiscal year. Our “Named Executive Officers” as of the fiscal year ended January 31, 2025, were Mr. Woods, Mr. Natalizia, Mr. Carll and our former Vice President, Chief Financial Officer and Treasurer, David Smith. The total compensation paid to our Named Executive Officers in the fiscal year ended January 31, 2025 decreased from the total compensation paid in the prior fiscal year. As is shown in the Summary Compensation Table below, this decrease was primarily a result of the fact that +AstroNova, Inc. | 2025 Proxy Statement  – 21 +Table of Contents +Compensation Discussion and Analysis (continued) +(i) no bonuses were paid to the Named Executive Officers under the Company’s Senior Executive Short-Term Incentive Plan (“STIP”) with respect to fiscal year 2025 and (ii) none of the performance-based restricted stock units granted in fiscal year 2023 or 2024 became “Earned RSUs” (as defined below) in fiscal year 2025 based on the Company’s revenue for either of those years, the impact of which was partially offset by salary increases. +Salary. Base salaries for executive officers are evaluated each year. Historically, base salaries have been increased at annual rates which approximate the general rates of increase of compensation for all employees of the Company. Annual salary adjustments are made effective April 1 of each year. Effective April 1, 2024, the Committee set the fiscal year 2025 annual salaries of the Named Executive Officers as follows: +Name +Salary ($)    +Gregory A. Woods +477,000 +Michael J. Natalizia +260,000 +Thomas W. Carll +230,000 +David S. Smith +328,000 +Cash Incentive and Bonus Awards. Annual cash incentive awards are an important component of total executive cash compensation because they reward the Company’s executives for achieving targeted, annual results and emphasize variable or “at risk” compensation. From time-to-time the Committee awards discretionary cash bonuses to the Company’s executives to reward their efforts in extraordinary circumstances. +Senior Executive Short-Term Incentive Plan. Participants in the STIP (which may include any executive officer, vice president or director-level manager) are determined annually by the Committee. Awards under the STIP are earned based on achieving or exceeding annual financial objectives, which the Committee has full discretion to establish for each plan year. Annually, the Committee establishes a Target Award for each STIP participant, which may vary as to each participant and from year to year. In June 2024, the Committee established the following Target Awards for our Named Executive Officers for fiscal year 2025: +Name +Target +Award    +($) +Target +Award as +Percentage   +of Base +Salary +Gregory A. Woods +381,600 +80% +Michael J. Natalizia +91,000 +35% +Thomas W. Carll +80,500 +35% +David S. Smith +147,600 +45% +Concurrently with the establishment of the Target Awards for fiscal year 2025, the Committee established fiscal year 2025 consolidated adjusted EBITDA as the sole performance goal under the STIP (the “2025 Performance Goal”) and established a threshold and a target for the 2025 Performance Goal. The total STIP award earned by a Named Executive Officer for fiscal year 2025 is calculated as follows: +● +No bonus was to be paid with respect to the 2025 Performance Goal unless the Company’s fiscal year 2025 adjusted EBITDA exceeded the threshold established by the Committee. If the Company’s fiscal year 2025 adjusted EBITDA equaled the target established by the Committee, 100% of the target bonus would have been paid. If our fiscal year 2025 adjusted EBITDA had fallen between the threshold and the target, the bonus amount would have been determined through linear interpolation. Since fiscal year 2025 adjusted EBITDA fell below the threshold and the target, no bonus amount was paid. An incremental bonus of up to 100% of each participant’s total STIP target bonus would have been paid if our fiscal year 2025 adjusted EBITDA fell between the target and an enhanced target established by the Committee. If our fiscal year 2025 adjusted EBITDA had fallen between the target and the enhanced target, the bonus amount would have been determined through linear interpolation. No further bonus would have been paid on account of fiscal year 2025 adjusted EBITDA exceeding $26,000,000. +22 –  AstroNova, Inc. | 2025 Proxy Statement +Table of Contents +Compensation Discussion and Analysis (continued) +Each of our Named Executive Officers’ STIP award is subject to the following limitations: +● +Aggregate awards under the STIP in any year may not exceed 15% of the Company’s consolidated operating income for that year determined without deduction for the STIP awards. +● +Aggregate awards earned must be fully accounted for when determining whether a performance goal based upon adjusted EBITDA has been achieved. +The threshold and target for the 2025 Performance Goal and the corresponding amount of the STIP paid based on the Company’s results for fiscal year 2025 were as follows: +Performance Goal +Threshold($) +Target ($) +Enhanced +Target ($) +Actual +Adjusted +EBITDA +Performance ($) +Percentage +of Target +Bonus +Earned (%) +Adjusted EBITDA Goal +19,000,000 +23,000,000 +26,000,000 +12,335,000 +— +As a result, per the above table, none of our Named Executive Officers received a STIP award for fiscal year 2025. +Equity-based Incentive Compensation . Total compensation at the executive level also includes equity incentive awards granted under the Company’s 2018 Equity Incentive Plan. The objectives of the equity incentive awards are to align executive and shareholder long-term interests by creating a strong and direct link between executive pay and the Company’s performance in key financial metrics, and to enable executives to develop and maintain a long-term stock ownership position in the Company’s common stock. +In fiscal year 2025, the Committee granted to the Named Executive Officers the following number of time-based restricted stock units. +Name +Time-based   +Restricted   +Stock Units   +Gregory A. Woods +13,964   +Michael J. Natalizia +1,776   +Thomas W. Carll +1,571   +David S. Smith +4,801   +The time-based restricted stock units vest in three equal annual installments commencing on the first anniversary of the date of grant, based on the executive’s continued employment with us. +The Company also utilizes performance-based restricted stock units with multi-year performance periods to further align the interests of our executives with the long-term interests of the Company and its shareholders. In fiscal year 2025, the Committee did not grant any performance-based restricted stock units to our executives. In fiscal years 2023 and 2024, the Committee granted to the Named Executive Officers the following numbers of performance-based restricted stock units: +Name +Performance- +based +Restricted +Stock Units +Granted in +Fiscal Year +2023 +Performance-   +based   +Restricted   +Stock Units   +Granted in   +Fiscal Year   +2024   +Gregory A. Woods +30,905 +36,799   +Michael J. Natalizia +3,934 +4,684   +Thomas W. Carll +3,348 +3,986   +David S. Smith +10,635 +12,663   +AstroNova, Inc. | 2025 Proxy Statement  – 23 +Table of Contents +Compensation Discussion and Analysis (continued) +The performance-based restricted stock units may be earned based upon the achievement by the Company of a performance goal based on a revenue threshold and target (the “Revenue Goal”) over a three fiscal-year period (the “Performance Period”) as follows: +Fiscal Year Granted +Performance Period +(fiscal years) +Revenue +Threshold +Revenue +Target +2023 +2023, 2024 and 2025 +$150,000,000 +$180,000,000  +2024 +2024, 2025 and 2026 +$180,000,000 +$210,000,000  +The number of performance-based restricted stock units that become earned (“Earned RSUs”) with respect to any fiscal year within a Performance Period (a “Performance Year”) will be equal to the product of the total number of performance-based restricted stock units, less any performance-based restricted stock units that became Earned RSUs with respect to a prior Performance Year within that Performance Period, multiplied by the Earned Revenue Percentage (as defined below) for such Performance Year, rounded down to the nearest whole number. In no event will the aggregate number of Earned RSUs with respect to an award of performance-based restricted stock units exceed the total number of performance-based restricted stock units constituting the applicable award. One-third of the number of performance-based restricted stock units that become Earned RSUs will vest on the date that the Committee determines that they have been earned, with the remaining two-thirds vesting in equal installments on the first and second anniversaries of that date. +For purposes of the performance-based restricted stock units, “Earned Revenue Percentage” for a Performance Year means the percentage obtained by dividing (i) the Company’s revenue for that Performance Year, as determined by the Committee in accordance with United States generally accepted accounting principles (the “Revenue”), minus the Adjusted Performance Threshold (defined below) for that Performance Year by (ii) the performance target minus the Adjusted Performance Threshold for that Performance Year. If the revenue for any Performance Year is less than or equal to the Adjusted Performance Threshold for that Performance Year, the Earned Revenue Percentage for that Performance Year shall be zero, and if the Revenue for any Performance Year is equal to or exceeds the Annual Performance Target, the Earned Revenue Percentage for that Performance Year shall be 100%. The “Adjusted Performance Threshold” for a Performance Year means the greater of (i) the performance threshold and (ii) the highest revenue for any previously completed Performance Year. +As previously noted, in fiscal year 2025, the Committee determined not to issue any performance-based restricted stock units to our executives. The number of performance-based restricted stock units held by our Named Executive Officers that became Earned RSUs based on the Company’s fiscal year 2025 revenue of $151.3 million are as follows: +Name +Fiscal +Year +Granted +Adjusted +Performance +Threshold ($)(1) +Earned +RSUs +(#) +Remaining  +Performance-  +based  +Restricted  +Stock Units  +(#)  +Gregory A. Woods +2024 +180,000,000 +— +36,799 +2023 +150,000,000 +1,328 +— +(2) +Michael J. Natalizia +2024 +180,000,000 +— +4,684 +2023 +150,000,000 +169 +— +(2) +Thomas W. Carll +2024 +180,000,000 +— +3,986 +2023 +150,000,000 +143 +— +(2) +David S. Smith +2024 +180,000,000 +— +— +(3) +2023 +150,000,000 +— +— +(3) +(1) +None of the performance-based restricted stock units granted in fiscal years 2023 or 2024 became Earned RSUs based on the Company’s revenue for either of those years, and accordingly, the Adjusted Performance Threshold equaled the original threshold for those grants. +24 –  AstroNova, Inc. | 2025 Proxy Statement +Table of Contents +Compensation Discussion and Analysis (continued) +(2) +Performance-based restricted stock units granted in fiscal year 2023 that did not become Earned RSUs based on the Company’s fiscal year 2025 revenue were forfeited. As a result, performance-based restricted stock units of 29,577, 3,765, and 3,205 that were granted to Messrs. Woods, Natalizia and Carll, respectively, in fiscal year 2023 were forfeited. +(3) +Performance-based restricted stock units granted to Mr. Smith that had not become Earned RSUs as of July 12, 2024, the date Mr. Smith’s employment with the Company ended, were forfeited as of such date. +Recent Amendments to Senior Executive Short-Term Incentive Plan for Fiscal Year 2026. In June 2025, the Company announced that in light of certain restructuring actions, the Committee determined that it was in the Company’s best interests and the best interests of its shareholders to review the STIP and the previously established performance criterion and goals. Following that review, in June 2025, the Committee amended the STIP to add corporate performance goals related to revenue and adjusted operating cash flow, and segment-level performance goals related to adjusted operating cash flow. +The amendment to the STIP did not change the aggregate target award for fiscal year 2026 for any grantee of an award under the STIP. The following table sets forth, for each of Jorik Ittmann, our President and Chief Executive Officer, Thomas DeByle, our Vice President, Chief Financial Officer and Treasurer, Michael Natalizia, our Chief Technology Officer and Vice President of Strategic Alliances, and Thomas Carll, our Senior Vice President, General Manager—Aerospace (who we refer to collectively as the participants), the percentage of base salary (the “Target Award Percentage”) that constitutes each participant’s aggregate target award under the STIP for fiscal year 2026. +Name +Target Award Percentage for  +Fiscal Year 2026  +Jorik Ittmann +70 +%  +Thomas DeByle +70 +%  +Michael Natalizia +45 +%  +Thomas Carll +45 +%  +The amounts ultimately payable under the amended STIP to each of the participants will be based on the achievement of corporate performance goals and segment-level performance goals as follows, expressed as percentages of each participant’s target award: +Name +AstroNova +Revenue +AstroNova +Adjusted +Operating +Cash Flow +AstroNova +Adjusted +EBITDA +Aerospace +Segment +Revenue +Aerospace +Segment +Adjusted +Operating +Income +Aerospace  +Segment  +Adjusted  +Operating  +Cash Flow  +Mr. Ittmann +25 +% +25 +% +50 +% +— +— +—  +Mr. DeByle +25 +% +25 +% +50 +% +— +— +—  +Mr. Natalizia +25 +% +25 +% +50 +% +— +— +—  +Mr. Carll +— +— +20 +% +35 +% +20 +% +25 +%  +The bonus earned by each participant under the amended STIP for fiscal year 2026 with respect to each performance goal will be calculated separately as follows: +● +No bonus with respect to a performance goal will be paid unless our or the applicable segment’s performance for fiscal year 2026 with respect to that performance goal equals a threshold established by the Committee, in which case the bonus with respect to that performance goal shall be 50% of that performance goal target award. +● +If the Company’s or the applicable segment’s fiscal year 2026 performance with respect to a performance goal equals a target established by the Committee, the bonus with respect to that performance goal shall be 100% of that performance goal target. +● +If the Company’s or the applicable segment’s fiscal year 2026 performance with respect to a performance goal falls between the applicable threshold and target, the bonus payable with respect to that performance goal will be determined through linear interpolation. +AstroNova, Inc. | 2025 Proxy Statement  – 25 +Table of Contents +Compensation Discussion and Analysis (continued) +● +An incremental bonus of up to 100% of each participant’s performance goal target award with respect to each performance goal will be paid if our or the applicable segment’s fiscal year 2026 performance with respect to that performance goal falls between the target and a superior level of performance established by the Committee. If the Company’s or the applicable segment’s fiscal year 2026 performance falls between the target and superior levels of performance, the bonus paid with respect to that performance goal will be determined through linear interpolation. No further bonus will be paid under the STIP with respect to any performance goal for performance in excess of the superior level. +For purposes of the 2026 STIP, as amended, +● +Adjusted EBITDA means our net income (loss) determined in accordance with United States generally accepted accounting principles (“GAAP”), adjusted to exclude interest income (expense), depreciation and amortization, income tax expense (provision), share-based compensation and such other items as may be approved by the Committee, and shall be calculated consistent with the calculations utilized in the Corporation’s earnings release for the first quarter of fiscal year 2026 (the “Q1 Release”); +● +Aerospace Segment Operating Income means the Aerospace segment’s operating income (loss) determined in accordance with GAAP, adjusted to exclude MTEX-related acquisition expenses, inventory step-up costs and restructuring charges, each net of taxes, and such other items as may be approved by the Committee; +● +AstroNova Adjusted Operating Cash Flow means our operating income (loss) determined in accordance with GAAP, adjusted to exclude MTEX-related acquisition expenses, inventory step-up costs and restructuring charges, each net of taxes, and such other items as may be approved by the Committee, calculated consistent with the calculations utilized in the Q1 Release, and further adjusted to add back depreciation and amortization expense, to subtract capital expenditures, and to include the impact of changes in inventory, accounts receivable, and accounts payable; +● +Aerospace Segment Operating Cash Flow means the Aerospace Segment’s Adjusted Operating Income, further adjusted to add back Aerospace Segment depreciation and amortization expense, to subtract Aerospace Segment capital expenditures, and to include the impact of changes in Aerospace Segment inventory, Aerospace Segment accounts receivable, and Aerospace Segment accounts payable; and +● +AstroNova Revenue and Aerospace Segment Revenue are determined in accordance with GAAP. +All payments and awards will be subject to the other provisions and limitations of the STIP, including: +● +Aggregate annual awards under the STIP may not exceed 15% of the Corporation’s consolidated operating income for the applicable fiscal year, determined without deduction for the payment of awards under the STIP. +● +Aggregate awards earned must be fully accounted for when determining whether a performance goal based upon Adjusted EBITDA has been achieved. +Long-term Incentive Program for Fiscal Years 2026 through 2028. In June 2025, the Company granted Stock-Settled Performance Awards to each of Messrs. Ittmann, DeByle, Natalizia and Carll with the following reference values: +Name +Reference Value for Stock-Settled  +Performance Award  +Jorik Ittmann +$ +110,000  +Thomas DeByle +$ +247,500  +Michael Natalizia +$ +98,000  +Thomas Carll +$ +102,000  +The earned value for each of these awards will be determined by the Company’s performance in the fiscal year ended January 31, 2028 (the “Performance Year”) with respect to Cumulative Organic Sales Growth and Adjusted EPS (each as defined below; each a “Performance Goal” and together, the “Performance Goals”). The Performance Goals are equally weighted for each of the participants. +26 –  AstroNova, Inc. | 2025 Proxy Statement +Table of Contents +Compensation Discussion and Analysis (continued) +The Target, Threshold and Superior levels of performance for each of the Performance Goals are: +Performance Goal +Threshold +Target +Superior +Cumulative Organic Revenue Growth +20 +% +25 +% +30 +% +Adjusted EPS +$1.35 +$1.60 +$1.85 +The earned value amount with respect to each Performance Goal shall be determined as follows: +● +If the Company’s performance for the Performance Year with respect to a Performance Goal is less than the applicable Threshold level of performance, the earned value amount with respect to that Performance Goal will be zero. +● +If the Company’s performance for the Performance Year with respect to a Performance Goal is equal to the applicable Threshold level of performance, the earned value amount with respect to that Performance Goal will be equal to 25% of the Reference Value. +● +If the Company’s performance for the Performance Year with respect to a Performance Goal is equal to the applicable Target level of performance, the earned value amount with respect to that Performance Goal will be equal to 50% of the Reference Value. +● +If the Company’s performance for the Performance Year with respect to a Performance Goal is equal to the applicable Superior level of performance, the earned value amount with respect to that Performance Goal will be equal to 75% of the Reference Value; no additional Earned Value amount will be awarded with respect to performance for either Performance Goal that exceeds the Superior level of performance. +● +If the Company’s performance for the Performance Year with respect to a Performance Goal falls between the applicable Threshold and Target levels of performance or between the applicable Target and Superior levels of performance, the earned value amount with respect to that Performance Goal will be determined through linear interpolation. +If the Company’s performance for the Performance Year with respect to one Performance Goal equals or exceeds the applicable Threshold level of performance but the Company’s performance with respect to the other Performance Goal is less than the applicable Threshold level of performance, the earned value amount with respect to the Performance Goal for which the Threshold level of performance is met or exceeded will be reduced by 20%. +The earned value to be used for determining how many shares of the Company’s common stock will be issued to each grantee upon settlement of the Stock-Settled Performance Award will be equal to the sum of the earned value amounts for both of the Performance Goals. The total number of shares issued to a participant in respect of the Awards will be equal to the earned value divided the greater of (i) the fair market value of one share of the Company’s common stock on the grant date and (ii) the fair market value of one share of the Company’s common stock on the date the Committee certifies the level of achievement with respect to the Performance Goals. Any shares of common stock issued upon settlement of the Stock-Settled Performance Awards will be fully vested at the time of issuance. +For purposes of the Stock-Settled Performance Awards granted to Messrs. Ittmann, DeByle, Natalizia and Carll: +● +“Adjusted EPS” means the Company’s earnings per share, as calculated in accordance with GAAP, adjusted to exclude the impact of non-recurring items, as approved by the Committee, such as restructuring charges, impairment charges, and unbudgeted gains or losses outside the control of management; and +● +“Cumulative Organic Revenue Growth” means the amount, expressed as a percentage, by which the Company’s revenue in the Performance Year, excluding any revenues attributable to any subsidiary, product line or other line of business the Company may acquire subsequent to January 31, 2025, exceeds the Company’s revenues for the Company’s fiscal year ended January 31, 2025. +AstroNova, Inc. | 2025 Proxy Statement  – 27 +Table of Contents +Compensation Discussion and Analysis (continued) +In connection with the Board appointing Mr. Ittmann as the Company’s new President and Chief Executive Officer and a member of its Board, and the changes to the Company’s executive leadership team, on August 15, 2025, the Company issued to the executives set forth below Stock-Settled Performance Awards with the following reference values, which otherwise have the same terms, including the performance period and performance goals thereunder, as set forth above: +Name +Reference Value  +Jorik Ittmann +$ +115,753  +Thomas DeByle +$ +82,185  +Tom Carll +$ +11,112  +Michael Natalizia +$ +12,964  +Based on the closing price of $9.29 for the Company’s common stock on June 12, 2025 and the closing price of $11.47 for the Company’s common stock on August 15, 2025, the grant dates for the Stock-Settled Performance Awards, the earned value and maximum number of shares that can be earned by each of the participants with respect to each Performance Goal at each of the levels of performance is as follows: +Earned Value and Maximum Number of Shares Issuable for Each Performance  +Goal at Specified Levels of Performance +Threshold +Target +Superior +Earned +Value +Shares +Earned +Value +Shares +Earned +Value +Shares +Jorik Ittmann +$ +56,438 +5,482 +$ +112,877 +10,965 +$ +169,315 +16,448 +Thomas DeByle +$ +82,421 +8,451 +$ +164,843 +16,902 +$ +247,264 +25,354 +Michael Natalizia +$ +27,741 +2,919 +$ +55,482 +5,839 +$ +83,223 +8,758 +Thomas Carll +$ +28,278 +2,986 +$ +56,556 +5,973 +$ +84,834 +8,960 +On August 15, 2025, the Company also issued to the executives set forth below time-based restricted stock units for a number of shares of the Company’s common stock with values set forth below, based on the closing price of the Company’s common stock on August 15, 2025, which will vest and be settled on August 15, 2028: +Name +Value of Shares  +of Common  +Stock Subject to  +Restricted Stock  +Units  +Jorik Ittmann +$1,500,000 +Thomas DeByle +$1,000,000 +Tom Carll +$  500,000 +Michael Natalizia +$  250,000 +Share Ownership and Retention Guidelines . The Committee believes that, as a rule, senior management should have a meaningful equity interest in the Company. In order to promote equity ownership and further align the interests of management with our shareholders, the Committee has adopted share ownership and retention guidelines for our executives. These guidelines are based upon the market value of our common stock as a multiple of such officer’s base pay. The multiple is three times base salary for the CEO, two times base salary for the Chief Financial Officer and 1.25 times base salary for the other executive officers. Under these guidelines, an executive was expected to achieve the ownership level by April 1, 2020 or, if later, within five years of his or her initial appointment as an executive officer. Executives are expected to retain at least 50% of all shares acquired on vesting of restricted stock or restricted stock units and 50% of all shares acquired on exercise of any stock option (net of any shares tendered or withheld for payment of taxes) until they achieve the specified ownership level and thereafter maintain such ownership level. +28 –  AstroNova, Inc. | 2025 Proxy Statement +Table of Contents +Compensation Discussion and Analysis (continued) +Retirement and Other Benefits . In order to attract and retain key executives, the Company offers retirement benefits through a Profit-Sharing Plan for employees, including its executive officers. +Profit Sharing Plan. The Company maintains a Profit Sharing Plan that is a qualified plan under Section 401(k) of the Internal Revenue Code, which provides retirement benefits to substantially all the Company’s employees. +Each eligible employee shares in contributions on the basis of relative compensation. In addition, participants are permitted to defer up to 50% of their cash compensation and make contributions of such deferral to this plan through payroll deductions (limited to $22,500 in calendar year 2023 and $23,000 in calendar year 2024). The Company makes matching contributions equal to 50% of the first seven percent of compensation contributed. The deferrals are made within the limits prescribed by Section 401(k). The Profit Sharing Plan provides for the vesting of 100% of matching contributions made by the Company to the account of the employee after three years of service. Contributions by an employee are 100% vested immediately. +Perquisites . In addition to the benefits described above, the Company provides automobile allowances to certain of its executive officers and a housing allowance to one of its Named Executive Officers. The amount of any automobile or housing allowance granted to our Named Executive Officers is reflected in the “All Other Compensation” column of the Summary Compensation Table below. +Employment Agreements, Severance Benefits and Change in Control – Jorik Ittmann +On August 2, 2025, in connection with Mr. Ittmann’s appointment as the Company’s new President and Chief Executive Officer, the Company entered into a letter agreement (the “Ittmann Letter Agreement”) with Mr. Ittmann, which provides for the terms of Mr. Ittmann’s employment by the Company as its President and Chief Executive Officer. +Mr. Ittmann’s annual base salary is $360,000. Mr. Ittmann’s target bonus under the Company’s STIP for fiscal year 2026 (the “2026 STIP”) was increased to 70% of his base salary, which for purposes of the 2026 STIP will be the amount of salary actually paid to Mr. Ittmann by the Company in fiscal year 2026. Mr. Ittmann’s performance goals and the definition of the performance goals, the methods for calculating bonuses earned under the 2026 STIP and the other terms of the 2026 STIP are as set forth above under the heading “Recent Amendments to Senior Executive Short-Term Incentive Plan for Fiscal Year 2026”. In addition, the Company issued to Mr. Ittmann a Stock-Settled Performance Award with a reference value of $115,753. The terms of the award, including the performance period and performance goals thereunder, are as set forth above under the heading “Long-term Incentive Program for Fiscal Years 2026 through 2028”. +The Company also agreed to issue to Mr. Ittmann a time-based restricted stock unit for a number of shares of the Company’s common stock with a value of $1,500,000, based on the closing price of the Company’s common stock on August 15, 2025. These restricted stock units will vest and be settled on August 15, 2028. However, if the Company terminates Mr. Ittmann’s employment as the Company’s President and Chief Executive Officer without Cause (as defined in the Ittmann Letter Agreement) prior to the earlier of (a) the third anniversary of the Ittmann Letter Agreement and (b) the consummation of a Change-In-Control (as defined in the Ittmann Letter Agreement), a pro rata portion of the restricted stock units, based on the number of days Mr. Ittmann actually serves as the Company’s President and Chief Executive Officer, will immediately vest. The restricted stock units will be governed by and subject to the Company’s 2018 Equity Incentive Plan and the form of time-based restricted stock unit previously approved by the Human Capital and Compensation Committee of the Company’s Board of Directors. +Under the terms of the Ittmann Letter Agreement, if, prior to August 15, 2028, the Company sells a material portion of its business (as determined by the Board or a designated committee thereof) or a Change-In-Control occurs, in either case in connection with which a dividend or distribution is declared and paid to the shareholders of the Company or consideration is otherwise paid to the shareholders of the Company (a “Triggering Transaction”), Mr. Ittmann will be entitled to receive a payment, in the same form as is paid or distributed to the shareholders of the Company in connection with the Triggering Transaction, in the amount that would have been distributable with respect to the number of shares of the Company’s common stock underlying the restricted stock units described above that remain unvested immediately following the consummation of the Triggering Transaction. Mr. Ittmann’s eligibility to receive this payment is conditioned upon his continuing employment by the Company through the date the Triggering Transaction is consummated. Restricted stock units for which vesting is accelerated or for which payment is otherwise made in connection with a Triggering Transaction will be excluded from the calculation of any amount payable to Mr. Ittmann. +AstroNova, Inc. | 2025 Proxy Statement  – 29 +Table of Contents +Compensation Discussion and Analysis (continued) +The Ittmann Letter Agreement provides that if the Company terminates Mr. Ittmann’s employment without Cause, except in connection with a Change-In-Control in connection with which a dividend or distribution is declared and paid to the shareholders of the Company or consideration is otherwise paid to the shareholders of the Company, he will be entitled to partial salary continuation for a period of 52 weeks. The amount potentially payable will be equal to his base salary in effect at the time of his termination if the termination occurs on August 15, 2025, decreasing ratably over time such that no salary continuation will be owed in connection with a termination occurring on or after August 15, 2028. In the event that Mr. Ittmann’s employment by the Company is terminated in connection with a Change-In-Control in connection with which a dividend or distribution is declared and paid to the shareholders of the Company or consideration is otherwise paid to the shareholders of the Company, whether with or without Cause, no severance will be payable. +The Company will reimburse Mr. Ittmann for all reasonable travel-related expenses incurred in connection with his duties, including airfare between St. Louis, Missouri and the Company’s headquarters West Warwick, Rhode Island and car rental and reasonable lodging expenses. If any reimbursed amounts are treated as taxable income, the Company will provide a tax gross-up to Mr. Ittmann in an amount necessary to place Mr. Ittmann in the same after-tax position as if no such tax liability had arisen. +Letter Agreements and Change in Control – Other Executives. In connection with the changes to the Company’s executive leadership team, on August 2, 2025, the Company also entered into letter agreements (the “Executive Letter Agreements”) with Thomas DeByle, the Company’s Vice President, Chief Financial Officer and Treasurer, Tom Carll, the Company’s Senior Vice President, Aerospace, and Michael Natalizia, the Company’s Vice President, Technology & Strategic Alliances and Chief Technology Officer (collectively, the “Executives”). +Under the terms of the Executive Letter Agreements: +● +the Executives’ annual base salaries will be adjusted as follows, effective as of August 15, 2025: +Name +Salary   +Thomas DeByle +$ +425,000 +Tom Carll +$ +280,000 +Michael Natalizia +$ +280,000 +● +the Executives’ target bonuses under the 2026 STIP are as set forth above under the header, “Recent Amendments to Senior Executive Short-Term Incentive Plan for Fiscal Year 2026”; +● +Stock-Settled Performance Awards with the reference values and terms as set forth above under the heading “Long-term Incentive Program for Fiscal Years 2026 through 2028”; +● +time-based restricted stock units for the number of shares of the Company’s common stock with values set forth above under the heading “Long-term Incentive Program for Fiscal Years 2026 through 2028”, which has the closing price and terms as set forth above; +● +if the Company completes a Triggering Transaction before August 15, 2028, the Executives will be entitled to receive payments on substantially the same terms as provided in the Ittmann Letter Agreement, except that the amounts of such payments shall be calculated for each Executive based on the respective time-based restricted stock units issued to them; +● +if Company terminates an Executive’s employment without Cause, except in connection with a Change-In-Control in connection with which a dividend or distribution is declared and paid to the shareholders of the Company or consideration is otherwise paid to the shareholders of the Company, that Executive will be entitled to the partial salary continuation for a period of 52 weeks; the amount potentially payable will be equal to his base salary in effect at the time of his termination if the termination occurs on August 15, 2025, decreasing ratably over time such that no salary continuation will be owed in connection with a termination occurring on or after August 15, 2028; no severance will be payable as a result of a termination of employment in connection with a Change-In-Control in connection with which a dividend or distribution is declared and paid to the shareholders of the Company or consideration is otherwise paid to the shareholders of the Company, whether with or without Cause. +In addition, the Executive Letter Agreement with Mr. DeByle provides that if Mr. DeByle’s employment with the Company terminates after June 17, 2027 as a result of his bona fide retirement, all of his then-outstanding time-based restricted stock units, including the time-based restricted stock units to be issued pursuant to the Executive Letter Agreement with Mr. DeByle, will continue to vest over time as if he were still employed. +30 –  AstroNova, Inc. | 2025 Proxy Statement +Table of Contents +Compensation Discussion and Analysis (continued) +Employment Agreements and Severance Benefits – Gregory A. Woods . +On June 29, 2025, Gregory A. Woods resigned from his positions as President and Chief Executive Officer of the Company and as a member of the Company’s Board. Pursuant to the terms of a Separation Agreement and General Release entered into by the Company and Mr. Woods effective as of July 16, 2025 (the “Woods Separation Agreement”), Mr. Woods’ employment terminated on July 16, 2025 (the “Woods Separation Date”). +During the one-year period following the Woods Separation Agreement, at the request of the Company’s Chief Executive Officer or the Chief Financial Officer, Mr. Woods is obligated to provide up to 20 hours of assistance to the Company and its management per week with respect to the transition of the chief executive officer role. Mr. Woods is also obligated under the Woods Separation Agreement to continue to cooperate with the Company in its arbitral and other proceedings relating to the Company’s acquisition of MTEX. +Pursuant to the Woods Separation Agreement, (i) Mr. Woods is receiving payment of one-half of his base salary as of the Woods Separation Date (not including bonuses or other incentives) and one-half of his vehicle allowance as of the Woods Separation Date (minus federal state, and local withholdings and any liens), for 52 weeks, in biweekly payments in accordance with the Company’s usual payroll practices, (ii) all outstanding and unvested time-based restricted stock units (including performance-based restricted stock units that had become Earned RSUs within the meaning of those awards) set forth on Schedule A to the Woods Separation Agreement are continuing to vest for a period of 12 months following the Woods Separation Date in accordance with their original vesting schedules, notwithstanding the occurrence of the termination of his employment, (iii) all outstanding stock purchase options set forth on Schedule A to the Woods Separation Agreement remain exercisable through the earlier of (a) the tenth anniversary of the date of grant of such option and (b) July 16, 2026, (iv) if Mr. Woods elects COBRA continuation coverage on a timely basis, the Company will subsidize 100% of the cost of COBRA coverage on all plans selected for Mr. Woods and his wife, as well as any administrative fee, until the earlier to occur of (a) 12 months following the Woods Separation Date or (b) the date Mr. Woods obtains alternate comparable coverage through another employer or provider, (v) if Mr. Woods or his spouse is, or becomes, eligible for Medicare at any time during the COBRA subsidy period, the Company will reimburse him for the portion of his Medicare premiums that he pays during the same COBRA subsidy period, provided that (a) the maximum aggregate Medicare reimbursement, combined with the COBRA subsidy, shall not exceed $2,021.89 per month and (b) such reimbursement shall cease immediately upon Mr. Woods’ receipt of alternate, comparable coverage or upon the expiration of the twelve-month period, whichever occurs first, (vi) payment for accrued and unused paid time off was paid on the next regularly scheduled pay date after the Woods Separation Date, and (vii) reimbursement for business expenses incurred by Mr. Woods prior to June 29, 2025 was paid on the next regularly scheduled pay date after the Woods Separation Date. +Employment Agreements and Severance Benefits – David S. Smith . On June 17, 2024, Mr. Smith announced his decision to retire from his positions as our Vice President, Chief Financial Officer and Treasurer. Pursuant to the terms of a Separation Agreement and General Release we entered into with Mr. Smith on June 25, 2024, and which was amended on August 5, 2024 (as amended, the “Smith Separation Agreement”), Mr. Smith’s employment terminated on July 12, 2024 (the “Smith Separation Date”). +Pursuant to the Smith Separation Agreement, (i) Mr. Smith received payment of his base salary (minus federal state, and local withholdings and any liens), at his weekly rate in effect as of the Smith Separation Date times fifty-two (52) weeks (not including bonuses or other incentives), in weekly payments in accordance with our usual payroll practices, (ii) Mr. Smith received payment of his housing allowance through July 2024, and in addition, he was reimbursed $2,000 by the Company for early termination of his lease, (iii) all of Mr. Smith’s outstanding and unvested time-based restricted stock units have continued to vest in accordance with their original vesting schedules, notwithstanding the occurrence of the termination of his employment, (iv) any options issued under our 2018 Equity Incentive Plan terminated in accordance with the terms of such plan, (v) Mr. Smith elected COBRA continuation coverage, and the Company is subsidizing 100% of the cost of COBRA coverage until the earlier to occur of 18 months following the Separation Date and the date he obtains alternate coverage through another employer or provider, (vi) the Company is paying to Mr. Smith, in respect of his costs of Medicare coverage, $633.20 per month from August 1, 2024 through January 31, 2026, (vii) all outstanding performance-based restricted stock units that had become Earned RSUs (within the meaning of those awards) prior to the Smith Separation Date became fully vested and settled on January 13, 2025, and (viii) payment for any accrued and unused paid time off was paid on the next regularly scheduled pay date after the Smith Separation Date. +Except for the Ittmann Letter Agreement, Executive Letter Agreements, Woods Separation and Smith Separation Agreement, we generally do not provide any severance benefits to our Named Executive Officers other than those provided to all employees. Severance benefits vary based upon salary levels and length of service. +AstroNova, Inc. | 2025 Proxy Statement  – 31 +Table of Contents +HUMAN CAPITAL AND COMPENSATION COMMITTEE REPORT +The Human Capital and Compensation Committee has reviewed and discussed with management the Compensation Discussion & Analysis included above and based on these reviews and discussions, has recommended to the Board that the Compensation Discussion & Analysis be included in this Proxy Statement. +Human Capital and Compensation Committee: +Richard S. Warzala (Chairman) +Alexis P. Michas +Mitchell I. Quain +32 –  AstroNova, Inc. | 2025 Proxy Statement +Table of Contents +EXECUTIVE COMPENSATION +The following table provides information regarding the total compensation paid or accrued by the Company to each of its Named Executive Officers. +2025 Summary Compensation Table +Name and +Principal Position +Fiscal +Year +Salary +($) +Stock +Awards +($)(a) +Non-Equity +Incentive Plan +Compensation +($) +All Other +Compensation +($) +Total +($) +Gregory A. Woods +2025 +472,563 +238,505 +— +50,682 +(c) +761,750  +President and CEO(b) +2024 +459,251 +688,871 +98,096 +39,888 +1,286,106  +Michael J. Natalizia +2025 +259,938 +30,334 +— +5,986 +(d) +296,258  +Chief Technology Officer and Vice President – Technical & Strategic Alliances +2024 +250,510 +87,684 +23,410 +5,991 +367,595  +Thomas W. Carll +2025 +225,800 +26,833 +— +7,672 +(e) +260,305  +Senior Vice President, General Manager – Aerospace +2024 +213,200 +74,618 +19,924 +7,462 +(f) +315,204  +David S. Smith +2025 +187,296 +238,886 +— +251,424 +(g) +677,606  +Former Vice President, CFO and Treasurer +2024 +316,069 +237,058 +37,976 +57,798 +648,901  +(a) +The amounts reflect the aggregate grant date fair value of the restricted stock units and performance-based restricted stock units issued to the Named Executive Officers, as calculated under ASC 718, excluding estimated forfeitures. Under ASC 718, the grant date fair value of each time-based restricted stock unit is equal to the closing price of the Company’s common stock on the grant date. The grant date fair value of performance-based restricted stock units is based on the closing price of the Company’s common stock on the grant date and the Company’s estimate, as of the date of grant, of the probable outcome of the performance conditions. The closing price of the Company’s common stock on the grant date for all restricted stock units issued to the Named Executive Offices during fiscal year 2025 was $17.08. For Mr. Smith, this amount also includes $156,885, representing the incremental fair value, calculated in accordance with ASC 718, of certain equity awards, the vesting of which was accelerated in connection with the termination of Mr. Smith’s employment. +(b) +Mr. Woods’ employment terminated on July 16, 2025. +(c) +Represents vehicle allowance of $24,915, premiums on Company-paid life insurance policies for which Mr. Woods or his estate is the beneficiary of $13,692, and an employer match under the Company’s Profit Sharing Plan of $12,075. +(d) +Represents an employer match under the Company’s Profit Sharing Plan of $5,986. +(e) +Represents an employer match under the Company’s Profit Sharing Plan of $7,672. +(f) +Represents an employer match under the Company’s Profit Sharing Plan of $7,462. +(g) +Represents severance payments actually paid during fiscal year 2025 of $176,613, health insurance and Medicare benefits of $12,596 paid in fiscal year 2025, unused vacation payout of $34,475, housing allowance of $12,185, vehicle allowance of $9,000, and an employer match under the Company’s Profit Sharing Plan of $6,555. The amount does not include $126,152 of continuing salary payments or $4,432 in health insurance and Medicare benefits payable in fiscal year 2026, as the obligation to pay those amounts is conditioned upon Mr. Smith’s continuing compliance with the Separation Agreement. +AstroNova, Inc. | 2025 Proxy Statement  – 33 +Table of Contents +Executive Compensation (continued) +2025 Grants of Plan-Based Awards +The following table provides information on all plan-based awards by the Company for the fiscal year ended January 31, 2025 to each Named Executive Officer. +Estimated Future Payouts +Under Non-Equity +Incentive Plan Awards +All Other +Stock +Awards: +Number +of Shares +of Stock +or Units +(#)(c) +Grant Date +Fair Value +of Stock +Awards +($)(d) +Name +Grant +Date +Threshold +($)(a)(b) +Target +($)(a) +Maximum +($)(a) +Gregory A. Woods +6/10/2024 +— +381,600 +763,200 +6/10/2024 +13,964  +238,505  +Michael J. Natalizia +6/10/2024 +— +91,000 +182,000 +6/10/2024 +1,776  +30,334  +Thomas W. Carll +6/10/2024 +— +80,500 +161,000 +6/10/2024 +1,571  +26,833  +David S. Smith +6/10/2024 +— +147,600 +295,200 +6/10/2024 +4,801  +82,001  +(a) +Represents awards under the Company’s Senior Executive Short-Term Incentive Plan. See “Compensation Discussion & Analysis – Senior Executive Short-Term Incentive Plan” for additional information regarding the Senior Executive Short-Term Incentive Plan. +(b) +The Company’s Senior Executive Short-Term Incentive Plan does not provide for any threshold payment amount for amounts that may be earned thereunder. +(c) +Consists of a restricted stock unit award issued pursuant to the Company’s 2018 Equity Incentive Plan, which vests in three equal annual installments commencing on the first anniversary of the grant date. +(d) +The grant date fair value of each time-based restricted stock unit is equal to the closing price of the Company’s common stock on the grant date. The grant date fair value of performance-based restricted stock units is based on the closing price of the Company’s common stock on the grant date and the Company’s estimate, as of the date of grant, of the probable outcome of the performance conditions. +34 –  AstroNova, Inc. | 2025 Proxy Statement +Table of Contents +Executive Compensation (continued) +Outstanding Equity Awards at 2025 Fiscal Year-End +The following table provides information on all outstanding equity awards held by each of the Named Executive Officers as of January 31, 2025. +Option Awards +Stock Awards +Name +Number of +Securities +Underlying +Unexercised +Options (#) +Exercisable +Number of +Securities +Underlying +Unexercised +Options (#) +Unexercisable +Option +Exercise +Price +($) +Option +Expiration +Date +Number +of Shares +or Units +of Stock +That Have +Not +Vested (#) +Market +Value of +Shares or +Units of +Stock +That +Have Not +Vested ($) +Equity +Incentive +Plan +Awards: +Number +of +Unearned +Shares, +Units or +Other +Rights +That +Have Not +Vested (#) +Equity   +Incentive   +Plan   +Awards:   +Market or   +Payout   +Value of   +Unearned   +Shares,   +Units or   +Other   +Rights   +That   +Have Not   +Vested ($)   +Gregory A. Woods +50,000 +— +13.95 +3/16/2025 +(a) +50,000 +— +15.01 +3/14/2026 +(a) +50,000 +— +12.85 +3/13/2027 +(a) +45,500 +— +18.25 +6/4/2028 +(b) +31,381 +(d) +364,020 +11,872 +(e) +137,715 +30,905 +(f) +358,498  +36,799 +(g) +426,868  +Michael J. Natalizia +17,500 +— +18.25 +6/4/2028 +(b) +3,993 +(h) +46,319 +1,496 +(e) +17,354 +3,934 +(f) +45,634  +4,684 +(g) +54,334  +Thomas W. Carll +17,500 +— +18.25 +6/4/2028 +(b) +3,457 +(i) +40,101 +1,272 +(e) +14,755 +3,348 +(f) +38,837  +3,986 +(g) +46,238  +David S. Smith +50,000 +— +13.80 +7/12/2025 +(c) +14,000 +— +18.25 +7/12/2025 +(c) +10,795 +(j) +125,222 +— +—  +(a) +Options vest in four equal annual installments commencing on the first anniversary of the option grant date (which is ten years prior to the expiration date). +(b) +Options vest in three equal annual installments commencing on the first anniversary of the option grant date (which is ten years prior to the expiration date). +(c) +Options terminate one (1) year after the date of termination of service resulting from retirement from active employment at or after age 65. +(d) +Consists of (i) 6,133 restricted stock units that vested on March 21, 2025; (ii) 5,151 restricted stock units that vested on April 18, 2025; (iii) 6,133 restricted stock units that vest on March 21, 2026; and (iv) 13,964 restricted stock units that vest in equal installments on June 10, 2025, 2026 and 2027. +AstroNova, Inc. | 2025 Proxy Statement  – 35 +Table of Contents +Executive Compensation (continued) +(e) +Consists of performance-based restricted stock units granted in fiscal year 2022 and held by the Named Executive Officers, which may be earned based upon the achievement by the Company of a performance goal relating to the Company’s fiscal year 2022, 2023 and 2024 revenue. Restricted stock units of 7,934, 1,001, and 852 were earned by Messrs. Woods, Natalizia and Carll, respectively, based upon the Company’s fiscal year 2023 revenue. These restricted stock units vest on April 7, 2025. Additional restricted stock units of 3,938, 495, and 420 were earned by Messrs. Woods, Natalizia and Carll, respectively, based upon the Company’s fiscal year 2024 revenue. These restricted stock units vest in equal installments on April 17, 2025 and April 17, 2026. +(f) +Consists of performance-based restricted stock units granted in fiscal year 2023 and held by the Named Executive Officers, which may be earned based upon the achievement by the Company of a performance goal relating to the Company’s fiscal year 2023, 2024 and 2025 revenue. Restricted stock units of 1,328, 169 and 143 were earned on April 7, 2025 by Messrs. Woods, Natalizia and Carll, respectively, based upon the Company’s fiscal year 2025 revenue. These restricted stock units vest in equal installments on April 7, 2025, April 7, 2026 and April 7, 2027. +(g) +Consists of performance-based restricted stock units granted in fiscal year 2024 and held by the Named Executive Officers, which may be earned based upon the achievement by the Company of a performance goal relating to the Company’s fiscal year 2024, 2025 and 2026 revenue. No restricted stock units were earned by the Named Executive Officers based upon the Company’s fiscal year 2025 revenue. +(h) +Consists of (i) 781 restricted stock units that vested on March 21, 2025; (ii) 656 restricted stock units that vested on April 18, 2025; (iii) 780 restricted stock units that vest on March 21, 2026; and (iv) 1,776 restricted stock units that vest in equal installments on June 10, 2025, June 10, 2026 and June 10, 2027. +(i) +Consists of (i) 664 restricted stock units that vested on March 21, 2025; (ii) 558 restricted stock units that vested on April 18, 2025; (iii) 664 restricted stock units that vest on March 21, 2026; and (iv) 1,571 restricted stock units that vest in equal installments on June 10, 2025, June 10, 2026 and June 10, 2027. +(j) +Consists of (i) 2,111 restricted stock units that vested on March 21, 2025; (ii) 1,773 restricted stock units that vested on April 18, 2025; (iii) 2,110 restricted stock units that vest on March 21, 2026; and (iv) 4,801 restricted stock units that vest in equal installments on June 10, 2025, June 10, 2026 and June 10, 2027. +Risk Related to Compensation Policies +The Company’s compensation policies and practices for its employees, including its executive compensation program described in Compensation Discussion and Analysis, aim to provide a risk-balanced compensation package which is competitive in our market sectors and relevant to the individual executive. The Company expects to continue to award certain executives and employees, upon satisfaction of applicable performance conditions and subject to future approval and grant by the Human Capital and Compensation Committee, equity and cash-based awards. Because the Company’s equity incentive programs include substantial vesting features, the Company believes that the structure of its compensation plans discourages short-term risk taking and aligns the interest of its executives and managers with those of its shareholders. The Company does not believe that risks arising from these practices, or its compensation policies and practices considered as a whole, are reasonably likely to have a material adverse effect on the Company. +36 –  AstroNova, Inc. | 2025 Proxy Statement +Table of Contents +PAY VERSUS PERFORMANCE +The following table provides a comparison between two measures of compensation for our Named Executive Officers and certain me +as +ures of performance. The two compensation measures are the Named Executive Officers’ “total compensation,” as presented in the Summary Compensation Table, and their “compensation actually paid,” a measure of compensation required by SEC rules. These measures are presented for the relevant years on an individual basis for our Chief Executive Officer, and as an average for the group of our other Named Executive Officers. +While both “total compensation” and “compensation actually paid” measure compensation for the same fiscal year, the two measures are calculated differently. Compensation actually paid is based on total compensation but substitutes different amounts for equity compensation. Compensation actually paid removes from total compensation the grant-date fair value of equity awards granted during the relevant year and replaces it with the net aggregate change in the fair value of equity awards during the relevant year. This net aggregate change in fair value represents the sum of: +● +the +year-end +fair value of new awards granted during the year that are outstanding and unvested as of the end of the year; +● +the change in the fair value (positive or negative) of unvested awards outstanding during the entire year, measured from the beginning of the year to the end of the year; +● +the vesting-date fair value of new awards that are granted and also vest in the year; +● +the change in the fair value (positive or negative) of unvested awards that are held at the beginning of the year and that also vest during the year, measured from the beginning of the year to the vesting date; +● +the loss in fair value of unvested awards outstanding at the beginning of the year that fail to meet applicable vesting conditions +during +the year, measured as the loss of the fair value of those awards at the beginning of the year; and +● +the dollar value of any dividends or other earnings paid on awards during the year prior to any vesting date that are not otherwise reflected in total compensation for the year. +The net change in aggregate fair value must also reflect any increase in the fair value of any equity awards that were repriced or otherwise materially modified during the year. No equity awards were repriced or otherwise materially modified during any of the years presented. +Fiscal +Year +Summary +Compensation +Table Total for +Mr. Woods +Compensation +Actually Paid +to Mr. Woods +Average +Summary +Compensation +Table Total for +non-PEO +NEOs(a) +Average +Compensation +Actually Paid +to +non-PEO +NEOs(a) +Value of +Initial +Fixed $100 +Investment +Based On +Total +Shareholder +Return(b) +Net Income  +(in thousands)   +2025 +$ +761,750 +$ +( 245,256 +) +(c) +$ +411,390 +$ +113,481 +(c) +$ +84 +$ +( 14,489 +) +2024 +$ +1,286,106 +$ +1,849,025 +(d) +$ +508,248 +$ +640,408 +(d) +$ +128 +$ +4,694 +2023 +$ +1,079,908 +$ +1,105,510 +(e) +$ +450,634 +$ +456,934 +(e) +$ +96 +$ +2,661 +(a) +The +Non-Principal +Executive Officer Named Executive Officers +(“Non-PEO +NEOs”) for whom the Summary Compensation Table total average compensation is presented are: for 2025, Messrs. Smith, Natalizia and Carll, and for 2024 and 2023, Messrs. Smith and Natalizia. +(b) +Represents the cumulative total shareholder return (on a dividends-reinvested basis) on our common stock from January 31, 2022, the last trading day before the earliest year presented in the table, to the last trading day of the relevant year, calculated on the basis of an investment of $100 in our common stock on +January +31, 2022. +AstroNova, Inc. +| +2025 Proxy Statement +– 37 +Table of Contents +Pay Versus Performance +(continued) +(c) +Represents compensation actually paid for fiscal year 2025 to Mr. Woods and the average compensation actually paid for fiscal year 2025 to Messrs. Natalizia, Carll and Smith, our other Named Executive Officers for fiscal year 2025. The following table provides the adjustments to total compensation that were made in order to calculate compensation actually paid (excluding the grant-date fair value of equity awards granted in 2025, which is presented separately in the Summary Compensation Table): +Change in Fair Value +Mr. Woods +Average for  +non-PEO +NEOs +New Grants Unvested at +Year-End +161,982 +31,506 +Prior Years Awards Unvested at +Year-End +( 406,518 +) +( 43,912 +) +New Grants that Vested in Fiscal Year 2025 +— +— +Prior Years Awards that Vested in Fiscal Year 2025 +( 2,523 +) +( 8,943 +) +Prior Years Awards that Failed to Vest in Fiscal Year 2025 +( 521,443 +) +( 177,875 +) +Dividends or Earnings on Awards Before Vesting +— +— +The fair value of time-based restricted stock units is equal to the closing price of the Company’s common stock on the measurement date. The fair value of performance-based restricted stock units is based on the closing price of the Company’s common stock on the measurement date and the Company’s estimate, as of the measurement date, of the probable outcome of the performance conditions. +(d) +Represents compensation actually paid for fiscal year 2024 to Mr. Woods, and the average compensation actually paid for fiscal year 2024 to Messrs. Smith and Natalizia, our other Named Executive Officers for fiscal year 2024. The fair value of time-based restricted stock units is equal to the closing price of the Company’s common stock on the measurement date. The fair value of performance-based restricted stock units is based on the closing price of the Company’s common stock on the measurement date and the Company’s estimate, as of the measurement date, of the probable outcome of the performance conditions. +(e) +Represents compensation actually paid for fiscal year 2023 to Mr. Woods, and the average compensation actually paid for fiscal year 2023 to Messrs. Smith and Natalizia, our other Named Executive Officers for fiscal year 2023. The fair value of time-based restricted stock units is equal to the closing price of the Company’s common stock on the measurement date. The fair value of performance-based restricted stock units is based on the closing price of the Company’s common stock on the measurement date and the Company’s estimate, as of the measurement date, of the probable outcome of the performance conditions. +RELATIONSHIP BETWEEN PAY AND PERFORMANCE +The following table shows, for the periods presented, the relationship between, on the one hand, the compensation actually paid to Mr. Woods and the average compensation actually paid to our other Named Executive Officers and, on the other hand, each of: +● +Our cumulative total shareholder return since January 31, 2022, the last trading day before fiscal year 2023; and +● +Our net income over the last three years. +Metric +Fiscal Year +2023 +Fiscal Year +2024 +Fiscal Year +2025 +Change from +Fiscal +Year 2023 to +Fiscal Year +2024 (%) +Change from  +Fiscal +Year 2024 to +Fiscal Year +2025 (%) +Compensation actually paid to Mr. Woods +$ +1,105,510 +$ +1,849,025 +$ +(245,256 +) +67.3 +% +(113.3 +)% +Average Compensation Actually Paid to +Non-PEO +NEOs +$ +456,934 +$ +640,408 +$ +113,481 +40.2 +% +(82.3 +)% +Total Shareholder Return since January 31, 2022 +(4 +)% +28 +% +(16 +)% +800.0 +% +(157.1 +)% +Net income ($ in thousands) +$ +2,661 +$ +4,694 +$ +(14,489 +) +76.4 +% +(408.7 +)% +38 –  +AstroNova, Inc. +| +2025 Proxy Statement +Table of Contents +Pay Versus Performance +(continued) +EQUITY INCENTIVE AWARDS-MECHANICS AND TIMING OF STOCK OPTION AND OTHER EQUITY AWARD GRANTS +We do not currently grant stock options to our NEOs, and although we do not have a formal policy regarding the timing of awards of stock options, stock appreciation rights and/or similar option-like instruments grants to our Named Executive Officers , we do not grant equity awards in anticipation of the release of material nonpublic information. Similarly, we do not time the release of material nonpublic information about the company based on equity award grant dates. +AstroNova, Inc. +| +2025 Proxy Statement +– 39 +Table of Contents +EQUITY COMPENSATION PLAN INFORMATION +The following table sets forth information about the Company’s equity compensation plans as of January 31, 2025: +Plan Category +Number of +Securities to be +Issued Upon +Exercise of +Outstanding +Options, +Warrants +and Rights +Weighted- +Average +Exercise Price +of Outstanding +Options, +Warrants +and Rights +Number of   +Securities   +Remaining   +Available   +for Future   +Issuance Under   +Equity   +Compensation   +Plans   +Equity Compensation Plans Approved by Shareholders +675,476 +(1) +$ +15.52 +(2) +667,584 +(3) +Equity Compensation Plans Not Approved by Shareholders +— +— +— +Total +675,476 +(1) +$ +15.52 +(2) +667,584 +(3) +(1) +Includes 178,599 shares issuable upon exercise of outstanding options granted under the Company’s 2007 Equity Incentive Plan; 112,600 shares issuable upon exercise of outstanding options granted under the Company’s 2015 Equity Incentive Plan; and 130,500 shares issuable upon exercise of outstanding options granted and 253,777 restricted stock units outstanding under the Company’s 2018 Equity Incentive Plan. Refer to Note 15, “Share-Based Compensation,” to the Company’s audited financial statements for the fiscal year ended January 31, 2025 included in the Company’s Annual Report on Form 10-K filed with the SEC on April 15, 2025 for further discussion. +(2) +Does not include restricted stock units. +(3) +Represents 655,076 shares available for grant under the Company’s 2018 Equity Incentive Plan and 12,508 shares available for issuance under the Company’s Employee Stock Purchase Plan. During the first quarter of fiscal year 2026, the Board terminated the Company’s Employee Stock Purchase Plan. +40 –  AstroNova, Inc. | 2025 Proxy Statement +Table of Contents +PROPOSAL NO. 2 ADVISORY VOTE ON EXECUTIVE COMPENSATION +As required by the Section 14A(a)(1) of the Exchange Act, the Board is providing shareholders with the opportunity to cast an advisory vote on the Company’s executive compensation at the Annual Meeting through the following resolution: +“RESOLVED, that the shareholders approve the Company’s executive compensation, as described in the Compensation Discussion and Analysis and the tabular disclosure regarding Named Executive Officer compensation (together with the accompanying narrative disclosure) in the Company’s Proxy Statement.” +The Board believes that the Company’s compensation policies and procedures, which are described more fully in the “Compensation Discussion and Analysis” section of this Proxy Statement and in the tables and narrative in the “Executive Compensation” section, are strongly aligned with the long-term interests of shareholders. These policies and procedures balance short-term and longer-term compensation opportunities to assure that the Company meets short-term objectives while continuing to produce value for our shareholders over the long term. +Approval of this proposal requires the affirmative vote of a majority of the shares of common stock entitled to vote and present in person or represented by proxy at the Annual Meeting. Abstentions will have the same effect as a vote against the proposal, and broker non-votes will have no effect on the outcome of the vote. This vote will not be binding on or overrule any decisions by the Board or any committee thereof, will not create or imply any additional fiduciary duty on the part of the Board, and will not restrict or limit the ability of the Company’s shareholders to make proposals for inclusion in proxy materials related to executive compensation. However, the Human Capital and Compensation Committee and the Board will take into account the outcome of the vote when considering future executive compensation arrangements. +THE BOARD RECOMMENDS A VOTE “FOR” APPROVAL OF THE COMPANY’S EXECUTIVE COMPENSATION, AS DESCRIBED IN THE COMPENSATION DISCUSSION AND ANALYSIS, AND THE TABULAR DISCLOSURE REGARDING NAMED EXECUTIVE OFFICER COMPENSATION (TOGETHER WITH ACCOMPANYING NARRATIVE DISCLOSURE) IN THIS PROXY STATEMENT. +AstroNova, Inc. | 2025 Proxy Statement  – 41 +Table of Contents +PROPOSAL NO. 3 ADVISORY VOTE ON THE FREQUENCY OF EXECUTIVE COMPENSATION VOTES +As required by the Section 14A(a)(2) of the Exchange Act, we are providing shareholders the opportunity to advise on how frequently we should include in our Proxy Statement a vote on our executive compensation similar to Proposal No. 2 of this Proxy Statement. We are required to hold this advisory vote on the frequency of the advisory vote on executive compensation at least once every six years. The Board will consider carefully the results of shareholder voting upon the frequency of inclusion of our proposal regarding approval of our executive compensation, but the final vote is advisory in nature and not binding upon the Board. By voting on this proposal, shareholders may indicate whether they prefer an advisory vote on named executive compensation once every one, two, or three years. We ask that you support a frequency period of every year for future non-binding shareholder votes on executive compensation. +The Board believes that an annual advisory vote on executive compensation will allow our shareholders to provide timely, direct input on our executive compensation philosophy, policies and practices as disclosed in the proxy statement each year. +The voting frequency option that receives the greatest number of votes cast by the shares of our common stock entitled to vote and present in person or represented by proxy at the Annual Meeting will be the frequency for the advisory vote on executive compensation that has been selected by shareholders. Abstentions and broker non-votes will have no effect on the outcome of the vote on this proposal. However, because this vote is advisory and not binding on the Board or the Company in any way, the Board may decide that it is in the best interests of our shareholders and the Company to hold an advisory vote on executive compensation more or less frequently than the option selected by our shareholders. +THE BOARD RECOMMENDS A VOTE FOR “1-YEAR” ON THE FREQUENCY OF OUR SUBMISSION OF A VOTE OF SHAREHOLDERS FOR APPROVAL OF THE COMPANY’S EXECUTIVE COMPENSATION. +42 –  AstroNova, Inc. | 2025 Proxy Statement +Table of Contents +PROPOSAL NO. 4 RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +The Audit Committee has sole authority to select, evaluate and when appropriate, to replace the Company’s independent auditors. The Audit Committee has appointed Wolf & Company, P.C. as the Company’s independent registered public accounting firm for the fiscal year ending January 31, 2026. Although action by the Company’s shareholders on this matter is not required, the Audit Committee believes it is appropriate to seek shareholder ratification in light of the critical role played by the independent auditors in evaluating the integrity of Company financial controls and reporting and requests that shareholders ratify such appointment. +Approval of this proposal requires the affirmative vote of a majority of the shares of common stock entitled to vote and present in person or represented by proxy at the Annual Meeting. Abstentions will have the same effect as a vote against the proposal, and broker non-votes will have no effect on the outcome of the vote. +THE BOARD RECOMMENDS A VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF WOLF & COMPANY, P.C. AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING JANUARY 31, 2026. +Independent Accountants’ Fees, Services and Other Matters +The Company expects a representative of Wolf & Company, P.C. will participate in the Annual Meeting via remote communication with the opportunity to make a statement, if he or she so desires, and that such representative will be available to respond to appropriate questions. +Aggregate fees for professional services rendered for the Company by Wolf & Company, P.C. for the fiscal years ended January 31, 2025 and 2024 are set forth below. +2025 +2024 +Audit Fees +$ +458,000 +$ +392,000 +Audit-Related Fees +$ +— +$ +— +Tax Fees +$ +— +$ +— +All Other Fees +$ +— +$ +— +Audit Fees for the fiscal years ended January 31, 2025 and 2024 were for professional services rendered for the audit of the Company’s annual financial statements and internal control over financial reporting, quarterly review of the financial statements included in the Company’s Quarterly Reports on Form 10-Q, consents and other assistance required to complete the year end audit of the consolidated financial statements. Audit fees for the fiscal year ended January 31, 2024 also includes fees for professional services related to the review of the Company’s registration statement on Form S-8. +Policy on Audit Committee Pre-Approval . The Audit Committee pre-approves all audit and non-audit services provided by the independent accountants prior to the engagement of the independent accountants with respect to such services. None of the services described above were approved by the Audit Committee under the de minimis exception provided by Rule 2-01(C)(7)(i)(c) under Regulation S-X. +AstroNova, Inc. | 2025 Proxy Statement  – 43 +Table of Contents +AUDIT COMMITTEE REPORT +The Audit Committee of the Board is responsible for providing independent, objective oversight of the Company’s accounting functions and internal controls. The Audit Committee is composed of three directors, each of whom is independent as defined by the NASDAQ listing standards and SEC rules. The Audit Committee operates under a written charter approved by the Board. +Management is responsible for the Company’s internal controls and financial reporting process. The independent accountants are responsible for performing an independent audit of the Company’s consolidated financial statements in accordance with generally accepted auditing standards and issuing a report thereon. The Audit Committee’s responsibility is to monitor and oversee these processes. +The Audit Committee’s responsibilities focus on two primary areas: (1) the adequacy of the Company’s internal controls and financial reporting process and the reliability of the Company’s financial statements; and (2) the independence and performance of the Company’s independent accountants. The Audit Committee has sole authority to select, evaluate and when appropriate, replace the Company’s independent auditors. +The Audit Committee has met with management and the Company’s independent accountants, Wolf & Company, P.C., to review and discuss the January 31, 2025 financial statements. Management represented to the Committee that the Company’s consolidated financial statements were prepared in accordance with generally accepted accounting principles, and the Audit Committee has reviewed and discussed the consolidated financial statements with management and the independent accountants. The Audit Committee also discussed with Wolf & Company, P.C. the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board. The Audit Committee also received from Wolf & Company, P.C. the written disclosures and the letter from Wolf & Company, P.C. pursuant to applicable requirements of the Public Company Accounting Oversight Board regarding Wolf & Company, P.C.’s communications with the Audit Committee concerning independence, and has discussed with Wolf & Company, P.C. its independence from the Company. +The Audit Committee received the information concerning the fees of Wolf & Company, P.C. for the year ended January 31, 2025 set forth above under “Independent Accountant Fees and Services.” When applicable, the Audit Committee considers whether the provision of non-audit services is compatible with maintaining the independence of the independent accountants. Wolf & Company, P.C. did not provide any non-audit services during the fiscal year ended January 31, 2025. +Based upon the review and discussions referred to above, the Audit Committee recommended that the Board include the audited consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended January 31, 2025, to be filed with the SEC. +Audit Committee: +Mitchell I. Quain (Chairman) +Alexis P. Michas +Yvonne E. Schlaeppi +44 –  AstroNova, Inc. | 2025 Proxy Statement +Table of Contents +RELATED PARTY TRANSACTIONS +Potential conflicts of interest and related party transactions are referred by the Board to the Audit Committee for review and approval. In reviewing and evaluating potential conflicts of interest and related party transactions, the Audit Committee uses applicable NASDAQ listing standards and SEC rules as a guide. +No officer, director or nominee for director of the Company or any associate of any of the foregoing had during the period beginning on February 1, 2024 through the date of this proxy statement any material interest, direct or indirect, in any material transaction or any material proposed transaction in which the amount exceeds $120,000 and to which the Company was or is to be a party. +None of our non-employee directors have any substantial interest in any matter to be acted upon except with respect to the directors so nominated (Proposal 1). None of our executive officers, other than Mr. Ittmann, have any substantial interest in any matter to be acted upon other than with respect to approval of the compensation paid to our Named Executive Officers (Proposal 2). Mr. Ittmann does not have a substantial interest in any matter to be acted upon except with respect to Proposals 1 and 2. +FINANCIAL REPORTS +A copy of the annual report of the Company for the fiscal year ended January 31, 2025, including the Company’s annual report to the SEC on Form 10-K, accompanies this proxy statement. Such report is not part of this proxy statement. +PROPOSALS FOR 2026 ANNUAL MEETING +The 2026 annual meeting of the shareholders of the Company is scheduled to be held on May 19, 2026, the third Tuesday in May. If a shareholder intending to present a proposal at that meeting wishes to have such proposal included in the Company’s proxy statement and form of proxy relating to the meeting pursuant to Rule 14a-8, the shareholder must submit the proposal to the Company no later than January 19, 2026. Shareholder proposals not requested to be included in the proxy statement pursuant to Rule 14a-8 and director nominations that are to be considered at the 2026 annual meeting must be submitted no earlier than December 20, 2025 and no later than March 20, 2026. To comply with the universal proxy rules, shareholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must ordinarily provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act no later than 60 calendar days prior to the anniversary of the previous year’s annual meeting date. Because the date of the 2026 annual meeting will be more than 30 days before December 2, 2026, shareholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must provide such notice by the later of 60 days prior to the meeting or the 10th day after the Company first publicly announces the date of the meeting. The deadline under Rule 14a-19(b) is a minimum notice requirement that does not override or supersede the earlier deadline in our By-laws. A shareholder intending to solicit proxies in support of director nominees other than our nominees must satisfy the requirements of both our By-laws and Rule 14a-19, which imposes conditions beyond those in our By-laws. Rule 14a-19(b) requires that the shareholder’s notice to us must include the names of all nominees for whom the shareholder intends to solicit proxies and must include a statement that the shareholder intends to solicit the holders of shares representing at least 67% of the voting power of shares entitled to vote on the election of directors in support of director nominees other than our nominees. +OTHER MATTERS +No business other than that set forth in the attached Notice of Meeting is expected to come before the Annual Meeting, but should any other matters requiring a vote of shareholders arise, including a question of adjourning the meeting, the persons named in the accompanying proxy will vote thereon according to their best judgment in the interests of the Company. In the event any of the nominees for the office of director should withdraw or otherwise become unavailable for reasons not presently known, the persons named as proxies will vote for other persons in their place in what they consider the best interests of the Company. +You are urged to sign and return your proxy promptly to make certain your shares will be voted at the meeting. You may revoke your proxy at any time before it is voted. +AstroNova, Inc. | 2025 Proxy Statement  – 45 +Table of Contents +AstroNova, Inc. PROXY VOTING INSTRUCTIONS Please have your 11-digit control number ready when voting by Internet or Telephone. Vote Your Proxy on the Internet: Go to www.AALvote.com/ALOT Have your proxy card available when you access the above website. Follow the prompts to vote your shares. Vote Your Proxy by Phone: Call 1-866-804-9616 Use any touch-tone telephone to vote your proxy. Have your proxy card available when you call. Follow the voting instructions to vote your shares. Vote Your Proxy by Mail: Mark, sign, and date your proxy card, then detach it, and return it in the postage-paid envelope provided. As a stockholder of AstroNova, Inc., you have the option of voting your shares electronically through the Internet or by telephone, eliminating the need to return the proxy card. Your electronic or telephonic vote authorizes the named proxies to vote your shares in the same manner as if you marked, signed, dated, and returned the proxy card. Votes submitted electronically over the Internet or by telephone must be received by 11:59 PM, Eastern Time, on December 1, 2025. CONTROL NUMBER PLEASE DETACH ALONG PERFORATED LINE AND MAIL IN THE ENVELOPE PROVIDED. ASTRONOVA, INC. ANNUAL MEETING OF STOCKHOLDERS DECEMBER 2, 2025 at 9:00 AM EASTERN TIME THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF ASTRONOVA, INC. The undersigned, having received notice of the meeting and the proxy statement, hereby appoints Jorik Ittmann, Shawn Kravetz, Alexis P. Michas, Darius G. Nevin, Mitchell I. Quain, Yvonne E. Schlaeppi, and Richard S. Warzala, and each of them, as proxies for the undersigned, with full power of substitution to act and to vote all the shares of Common Stock of AstroNova, Inc. held of record by the undersigned on October 13, 2025, the record date, at the annual meeting of shareholders to be held virtually on December 2, 2025. In order to attend the meeting, you must register at https://web.viewproxy.com/ALOT/2025 by 11:59 p.m. EDT on December 1, 2025. On the day of the Annual Meeting of Stockholders, if you have properly registered, you may enter the meeting by clicking on the link provided and entering the password you received via email in your registration confirmations. Further instructions on how to attend and vote at the Annual Meeting of Stockholders are contained in the Proxy Statement in the sections titled “Attending the Annual Meeting” and “How to Vote.” This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted in accordance with the Board of Directors’ recommendations. Signature Date Title Signature (Joint Owners) NOTE: Please sign exactly as name(s) appear(s) hereon. When signing as attorney, executor, administrator or other fiduciary, please give full title as such. Joint owners should each sign personally. If a corporation, limited liability company or partnership, please sign in full corporate, limited liability company, or partnership name by authorized officer or person. CONTROL NUMBER Address change: (If you noted any Address Changes above, please mark box.) +Table of Contents +Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be held on December 2, 2025: The Proxy Statement and Annual report are available at: https://web.viewproxy.com/ALOT/2025 PLEASE DETACH ALONG PERFORATED LINE AND MAIL IN THE ENVELOPE PROVIDED. THE BOARD OF DIRECTORS RECOMMENDS A VOTE: “FOR” EACH OF THE NOMINEES SET FORTH BELOW IN PROPOSAL 1, AND “FOR” PROPOSALS 2 AND 4. THE BOARD RECOMMENDS THAT AN ADVISORY VOTE ON THE COMPENSATION FOR NAMED EXECUTIVE OFFICERS BE HELD EVERY 1 YEAR. Please mark your votes like this Proposal 1. The election of seven directors to serve until the next annual meeting of shareholders until their successors are elected and have qualified. NOMINEES FOR WITHHOLD 01 Jorik Ittmann 02 Shawn Kravetz 03 Alexis P. Michas 04 Darius G. Nevin 05 Mitchell I. Quain 06 Yvonne E. Schlaeppi 07 Richard S. Warzala Proposal 2. The approval, on an advisory, non-binding basis, of the compensation paid to the Company’s Named Executive Officers, as disclosed in this proxy statement pursuant to Item 402 of Regulation S-K (including in the compensation discussion and analysis, compensation tables, and accompanying narrative disclosures); FOR AGAINST ABSTAIN Proposal 3. Whether shareholders would prefer that the Company conduct future advisory votes on the compensation of its Named Executive Officers every one, two or three years; 1-YEAR 2-YEARS 3-YEARS ABSTAIN Proposal 4. The ratification of the appointment of Wolf & Company, P.C. as the Company’s independent registered public accounting firm for the fiscal year ending January 31, 2026; FOR AGAINST ABSTAIN Such other business as may properly come before the meeting. \ No newline at end of file diff --git a/raw/proxies/0000008146/0001193125-25-246797/proxy_rpt.txt b/raw/proxies/0000008146/0001193125-25-246797/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..4e1b6b136cc8522fc767c993afc49b6b3e070bcb --- /dev/null +++ b/raw/proxies/0000008146/0001193125-25-246797/proxy_rpt.txt @@ -0,0 +1,4 @@ +RELATED PARTY TRANSACTIONS +Potential conflicts of interest and related party transactions are referred by the Board to the Audit Committee for review and approval. In reviewing and evaluating potential conflicts of interest and related party transactions, the Audit Committee uses applicable NASDAQ listing standards and SEC rules as a guide. +No officer, director or nominee for director of the Company or any associate of any of the foregoing had during the period beginning on February 1, 2024 through the date of this proxy statement any material interest, direct or indirect, in any material transaction or any material proposed transaction in which the amount exceeds $120,000 and to which the Company was or is to be a party. +None of our non-employee directors have any substantial interest in any matter to be acted upon except with respect to the directors so nominated (Proposal 1). None of our executive officers, other than Mr. Ittmann, have any substantial interest in any matter to be acted upon other than with respect to approval of the compensation paid to our Named Executive Officers (Proposal 2). Mr. Ittmann does not have a substantial interest in any matter to be acted upon except with respect to Proposals 1 and 2. \ No newline at end of file diff --git a/raw/proxies/0000742278/0001104659-20-034576/proxy.txt b/raw/proxies/0000742278/0001104659-20-034576/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..ee4f4723db328a1dfad3652dca5fe60e5aa65070 --- /dev/null +++ b/raw/proxies/0000742278/0001104659-20-034576/proxy.txt @@ -0,0 +1,1121 @@ +DEF 14A +1 +tm1926364-4_def14a.htm +DEFINITIVE PROXY STATEMENT +tm1926364-4_def14a - none - 3.2901654s +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A INFORMATION +Proxy Statement Pursuant to Section 14(a) of the Securities +Exchange Act of 1934 (Amendment No. ___) +Filed by the Registrant ☒ +Filed by a Party other than the Registrant ☐ +Check the appropriate box: +☐ +Preliminary Proxy Statement +☐ +Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +☒ +Definitive Proxy Statement +☐ +Definitive Additional Materials +☐ +Soliciting Material Pursuant to §240.14a-12 +RPC, Inc. +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +☒ +No fee required. +☐ +Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. +(1) +Title of each class of securities to which transaction applies: N/A +(2) +Aggregate number of securities to which transaction applies: N/A +(3) +Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): N/A +(4) +Proposed maximum aggregate value of transaction: N/A +(5) +Total fee paid: N/A +☐ +Fee paid previously with preliminary materials. +☐ +Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing: +(1) +Amount previously paid: N/A +(2) +Form, Schedule or Registration Statement No.: N/A +(3) +Filing party: N/A +(4) +Date Filed: N/A +RPC, INC. +NOTICE OF ANNUAL MEETING OF STOCKHOLDERS +2801 Buford Highway NE, Suite 300, Atlanta, Georgia 30329 +TO THE HOLDERS OF THE COMMON STOCK: +PLEASE TAKE NOTICE that the 2020 Annual Meeting of Stockholders of RPC, Inc., a Delaware corporation (“RPC” or the “Company”), will be held at 2170 Piedmont Road, NE, Atlanta, Georgia, on Tuesday, April 28, 2020, at 12:15 P.M., for the following purposes, as more fully described in the Proxy Statement accompanying this notice: +1. +To elect the three Class I nominees identified in the attached Proxy Statement to the Board of Directors; +2. +To ratify the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2020; +3. +To hold a nonbinding vote on executive compensation as disclosed in these materials; and +4. +To consider and act upon such other business as may properly come before the Annual Meeting or any adjournment of the meeting. +The Proxy Statement dated March 17, 2020 is attached. +The Board of Directors has fixed the close of business on February 28, 2020 as the record date for the determination of stockholders entitled to notice of, and to vote at, the Annual Meeting or any adjournment thereof. +This Proxy Statement and accompanying proxy card are being mailed to our stockholders along with the Company’s 2019 Annual Report for the fiscal year ended December 31, 2019. Voting can be completed by returning the proxy card, through the telephone at 1-800-652-8683 or online at www.envisionreports.com/RES +Important notice regarding the availability of proxy materials for the Annual Meeting of Stockholders to be held on April 28, 2020: The Proxy Statement and 2019 Annual Report to security holders are available at www.envisionreports.com/RES +BY ORDER OF THE BOARD OF DIRECTORS +Ben M. Palmer +Corporate Secretary +Atlanta, Georgia +March 17, 2020 +Whether or not you expect to attend the annual meeting, please sign, date and return the enclosed proxy card promptly. Alternatively, you may vote your proxy by telephone or over the Internet by following the instructions on your proxy card. If you decide to attend the meeting, you may, if you wish, revoke the proxy and vote your shares in person. +PROXY STATEMENT +This Proxy Statement and a form of proxy were first mailed to stockholders on or about March 17, 2020. The following information concerning the enclosed proxy and the matters to be acted upon at the Annual Meeting of Stockholders to be held on April 28, 2020, is submitted by the Company to the stockholders in connection with the solicitation of proxies on behalf of the Company’s Board of Directors. +SOLICITATION OF AND POWER TO REVOKE PROXY +A form of proxy is enclosed. Each proxy submitted will be voted as directed, but if not otherwise specified, proxies solicited by the Board of Directors of the Company will be voted in favor of the candidates for election to the Board of Directors, in favor of ratification of the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2020, and in favor of the nonbinding proposal to approve executive compensation. +A stockholder executing and delivering a proxy has power to revoke the same and the authority thereby given at any time prior to the exercise of such authority, if he so elects, by contacting either proxy holder, by timely submitting a later dated proxy changing his vote, or by attending the meeting and voting in person. However, a beneficial stockholder who holds his shares in street name must secure a proxy from his broker before he can attend the meeting and vote. All costs of solicitation have been, and will be, borne by the Company. +CAPITAL STOCK +The outstanding capital stock of the Company on February 28, 2020 consisted of 214,432,084 shares of Common Stock, par value $0.10 per share. Holders of Common Stock are entitled to one vote (non-cumulative) for each share of such stock registered in their respective names at the close of business on February 28, 2020, the record date for determining stockholders entitled to notice of, and to vote at, the meeting or any adjournment thereof. +A majority of the outstanding shares will constitute a quorum at the Annual Meeting. Abstentions will be counted for purposes of determining the presence or absence of a quorum for the transaction of business. In accordance with the General Corporation Law of the state of Delaware, the election of the nominees named herein as Directors will require the affirmative vote of a plurality of the votes cast by the shares of Company Common Stock entitled to vote in the election provided that a quorum is present at the Annual Meeting. In the case of a plurality vote requirement (as in the election of directors), where no particular percentage vote is required, the outcome is solely a matter of comparing the number of votes cast for each nominee, with those nominees receiving the most votes being elected, and hence only votes for director nominees (and not abstentions or broker non-votes) are relevant to the outcome. In this case, the three nominees receiving the most votes will be elected. The affirmative vote of a majority of shares of common stock present in person or represented by proxy and entitled to vote at the meeting is required to approve the ratification of the appointment of the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2020, and to approve the nonbinding stockholder resolution on executive compensation. Abstentions will have the effect of a vote against the advisory proposal on executive compensation and proposal for the ratification of the appointment of the Company’s independent registered public accounting firm, while broker non-votes will have no effect on either proposal and will be disregarded. +There are no rights of appraisal or similar dissenter’s rights with respect to any matter to be acted upon pursuant to this Proxy Statement. It is expected that shares held of record by officers and directors of the Company, which in the aggregate represent approximately 74 percent of the outstanding shares of Common Stock, will be voted for the nominees for directors, for the ratification of the appointment of the Company’s independent registered public accounting firm and for the approval, on an advisory basis, of the compensation of the Company’s named executive officers. +1 +STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT +The executives named in the Summary Compensation Table, and the name and address of each stockholder (or “group” as that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) who owned beneficially five percent (5%) or more of the shares of Common Stock of the Company on February 28, 2020, together with the number of shares owned by each such person and the percentage of outstanding shares that ownership represents, and information as to Common Stock ownership of the directors and executive officers of the Company as a group (according to information received by the Company), are set out below: +Name and Address of Beneficial Owner +Amount +Beneficially +Owned (1) +Percent of +Outstanding +Shares +R. Randall Rollins +Chairman of the Board +2170 Piedmont Road, NE +Atlanta, Georgia +147,239,502 (2) +68.7 +Gary W. Rollins +Vice Chairman and Chief Executive Officer, Rollins, Inc. +2170 Piedmont Road, NE +Atlanta, Georgia +150,172,069 (3) +70.0 +Richard A. Hubbell +President and Chief Executive Officer +2801 Buford Highway NE, Suite 300 +Atlanta, Georgia +2,915,344 (4) +1.4 +Ben M. Palmer +Vice President, Chief Financial Officer and Corporate Secretary +2801 Buford Highway NE, Suite 300 +Atlanta, Georgia +726,305 (5) +** +All Directors and Executive Officers as a group +(9 persons) +157,729,036 (6) +73.6 +** Less than one percent +(1) +Except as otherwise noted, the nature of the beneficial ownership for all shares is sole voting and investment power. +(2) +Includes 3,505,614 shares of Company Common Stock held in two charitable trusts of which he is a co-trustee and as to which he shares voting and investment power. Also includes 129,876,265 shares of Company Common Stock held by RFPS Management Company II, L.P., a Georgia limited partnership. The general partner of RFPS Management Company II, L.P., is RFA Management Company, LLC, a Georgia limited liability company, the manager of which is LOR, Inc., a Georgia corporation. Mr. R. Randall Rollins is an officer and director of LOR, Inc. Mr. R. Randall Rollins and Mr. Gary W. Rollins have voting control of LOR, Inc. Also includes 11,292,525 shares of Company Common Stock held by RFT Investment Company, LLC. LOR, Inc., is the manager of RFT Investment Company, LLC. Also includes 1,228,400 shares of Company Common Stock held by RFPS Investments II, L.P., a Georgia limited partnership. LOR Investment Company, LLC, a Georgia limited liability company, is the general partner of RFPS Investments II, L.P. LOR, Inc., holds fifty percent of all voting interests in LOR Investment Company, LLC. Also includes 283,000 shares of restricted stock awards for Company Common Stock. This also includes 268,092 shares of Company Common Stock held by his wife, as to which Mr. R. Randall Rollins disclaims any beneficial interest. Mr. R. Randall Rollins is part of a control group holding Company securities that includes Mr. Gary W. Rollins, as disclosed on a Schedule 13D on file with the U.S. Securities and Exchange Commission. +(3) +Includes 3,505,614 shares of Company Common Stock held in two charitable trusts of which he is co-trustee and as to which he shares voting and investment power. Also includes 129,876,265 shares of Company Common Stock held by RFPS Management Company II, L.P., a Georgia limited partnership. The general partner of RFPS Management Company II, L.P., is RFA Management +2 +Company, LLC, a Georgia limited liability company, the manager of which is LOR, Inc., a Georgia corporation. Mr. Gary W. Rollins is an officer and director of LOR, Inc. Mr. R. Randall Rollins and Mr. Gary W. Rollins have voting control of LOR, Inc. Also includes 11,292,525 shares of Company Common Stock held by RFT Investment Company, LLC, a Georgia limited liability company. LOR, Inc., is the manager of RFT Investment Company, LLC. Also includes 1,228,400 shares of the Company Common Stock held by RFPS Investments II, L.P., a Georgia limited partnership. LOR Investment Company, LLC, a Georgia limited liability company, is the general partner of RFPS Investments II, L.P. LOR, Inc., holds fifty percent of all voting interests in LOR Investment Company, LLC. This also includes 2,970 shares of Company Common Stock held by his wife, as to which Mr. Rollins disclaims any beneficial interest. Mr. Gary W. Rollins is part of a control group holding Company securities that includes Mr. R. Randall Rollins, as disclosed on a Schedule 13D on file with the U.S. Securities and Exchange Commission. +(4) +Includes 283,000 shares of restricted stock awards for Company Common Stock. +(5) +Includes 184,200 shares of restricted stock awards for Company Common Stock. +(6) +Shares held in trusts as to which more than one officer and/or director are co-trustees or entities in which there is common ownership have been included only once. Includes 750,200 shares of restricted stock awards for Company Common Stock awarded and issued to all of the executive officers pursuant to the Company’s Stock Incentive Plans (SIP). +PROPOSAL 1: ELECTION OF DIRECTORS +At the Annual Meeting, Messrs. R. Randall Rollins, Henry B. Tippie and James B. Williams will be nominated to serve as Class I directors. The nominees for election at the 2020 Annual Meeting are now directors of the Company. The directors in each class serve for a term of three years. The director nominees will serve in their respective class until their successors are elected and qualified. Five other individuals serve as directors but are not standing for re-election because their terms as directors extend past this Annual Meeting pursuant to provisions of the Company’s Amended and Restated By-laws (the “By-laws”) that provide for the election of directors for staggered terms, with each director serving a three-year term. Unless authority is withheld, the proxy holders will vote for the election of each nominee named below. Although management does not contemplate the possibility, in the event any nominee is not a candidate or is unable to serve as a director at the time of the election, unless authority is withheld, the proxies will be voted for any nominee who shall be designated by the present Board of Directors and recommended by the Nominating and Governance Committee to fill such vacancy. +Director Qualifications +As described in more detail below, we believe that each of our directors is well suited to serve on our Board of Directors for a variety of individual reasons and because collectively they bring a wealth of experience from diverse backgrounds that have combined to provide us with an excellent mix of experiences and viewpoints. The name and age of each of our directors and each of the nominees his or her principal occupation, together with the number of shares of Common Stock beneficially owned, directly or indirectly, by each and the percentage of outstanding shares that ownership represents, all as of the close of business on February 28, 2020 (according to information received by the Company), other board memberships and the period during which he or she has served us as a director are set forth as follows: +3 +Names of Directors +Principal Occupation (1) +Service as +Director +Age +Shares of +Common +Stock (2) +Percent of +Outstanding +Shares +Names of Director Nominees +Class I (Current Term Expires 2020; New Term Will Expire 2023) +R. Randall Rollins (3)(4) +Chairman of the Board of the +Company; Chairman of the Board of +Marine Products Corporation (boat +manufacturing); Chairman of the +Board of Rollins, Inc. (consumer +services). +1984 to date +88 +147,239,502 (5) +68.7 +Henry B. Tippie +Lead Director of the Company; +Chairman of the Board and Chief +Executive Officer of Tippie Services, +Inc. (management services); +Chairman of the Board of Dover +Motorsports, Inc. (operator of motor +racing tracks); Lead Director of +Rollins, Inc. (consumer services) and +Marine Products Corporation (boat +manufacturing). +1984 to date +93 +2,252,277 (6) +1.0 +James B. Williams +Retired Chairman of the Executive Committee, SunTrust Banks, Inc. (bank holding company). +1984 to date +86 +303,750 +** +Names of Directors Whose Terms Have Not Expired +Class II (Current Term Expires 2021) +Gary W. Rollins (3)(4) +Vice Chairman and Chief Executive +Officer of Rollins, Inc. (consumer +services). +1984 to date +75 +150,172,069 (7) +70.0 +Richard A. Hubbell +President and Chief Executive Officer of the Company; President and Chief Executive Officer of Marine Products Corporation (boat manufacturing). +1987 to date +75 +2,915,344 (8) +1.4 +Class III (Current Term Expires 2022) +Bill J. Dismuke +Retired President of Edwards Baking +Company (manufacturer of baked +pies and pie pieces). +2005 to date +83 +7,593 +** +Amy R. Kreisler (4) +Executive Director - The O. Wayne +Rollins Foundation and The Ma-Ran +Foundation (private charitable +entities). +2016 to date +50 +4,739,014 (9) +2.2 +Pamela R. Rollins (4) +Board Member for Young Harris College, National Monuments Foundation and The O. Wayne Rollins Foundation. Former Board Member of The Lovett School and an Emeritus Board Member of the Schenck School. +2019 to date +63 +2,101,013 (10) +1.0 +** Less than one percent +(1) +Except as noted, each of the directors has held the positions of responsibility set out in this column (but not necessarily his or her present title) for more than five years. In addition to the directorships listed in this column, the following individuals also serve on the Boards of Directors of the following companies: R. Randall Rollins: Dover Motorsports, Inc.; Gary W. Rollins: Director Emeritus of Genuine Parts Company and Emory University. All of the directors shown in the above table, with the exception of Amy R. Kreisler, are also directors of Marine Products Corporation (“Marine Products” or “MPC”) and, with the exception of Richard A. Hubbell and Amy R. Kreisler, are also directors of +4 +Rollins, Inc. (“Rollins”). Amy R. Kreisler is a Trustee on The Lovett School Board of Trustees and also serves on their Executive Committee. She is Trustee on the Skyland Trail Board of Trustees where she is also the Chairman of the Governance Committee. +(2) +Except as otherwise noted, the nature of the beneficial ownership for all shares is sole voting and investment power. +(3) +R. Randall Rollins and Gary W. Rollins are brothers. +(4) +Amy R. Kreisler and Pamela R. Rollins are children of R. Randall Rollins and nieces of Gary W. Rollins. +(5) +See information contained in footnote (2) to the table appearing in the Capital Stock section. +(6) +Includes shares held by a wholly owned corporation that owns 2,277 shares. +(7) +See information contained in footnote (3) to the table appearing in the Capital Stock section. +(8) +See information contained in footnote (4) to the table appearing in the Capital Stock section. +(9) +Includes 1,228,400 shares of Company Common Stock held by RFPS Investments II, L.P. Ms. Kreisler holds a voting interest in LOR Investment Company, LLC, the general partner of RFPS Investments II, L.P. Also includes 3,505,614 shares of Company Common Stock held in two charitable trusts of which she is a co-trustee or Executive Director. Excludes 734,966 shares of Company Common Stock held indirectly through a family limited partnership, of which Ms. Kreisler is a general partner. +(10) +Includes 1,228,400 shares of Company Common Stock held by RFPS Investments II, L.P. Ms. Rollins holds a voting interest in LOR Investment Company, LLC, the general partner of RFPS Investments II, L.P. Also includes 862,613 shares of Company Common Stock held in a charitable trust of which she is a co-trustee. Excludes 734,966 shares of Company Common Stock held indirectly through a family limited partnership, of which Ms. Rollins is a general partner. +Key Attributes, Experience and Skills of Directors and Director Nominees +R. Randall Rollins was elected a Director of RPC in 1984. Mr. Rollins has extensive knowledge of the Company’s business and industry serving over 35 years at the Company. Mr. Rollins serves as Chairman of the Board of the Company. He is also Chairman of the Board for Marine Products Corporation, as well as Rollins, Inc. Mr. Rollins has been a Director of Dover Motorsports, Inc. since 1996. Mr. Rollins served as a Director of SunTrust Banks, Inc. from 1995 to 2004. +Richard A. Hubbell was elected a Director of RPC in 1987. Mr. Hubbell has extensive knowledge of the Company’s business and industry serving over 35 years at the Company. He has served as the Chief Executive Officer of the Company since 2003. In addition, Mr. Hubbell serves as the President of the Company. Mr. Hubbell is also the President, Chief Executive Officer and a Director of Marine Products Corporation. +Gary W. Rollins was elected a Director of RPC in 1984. Mr. Rollins has extensive knowledge of the Company’s business and industry. In addition, Mr. Rollins serves as the Vice Chairman and Chief Executive Officer of Rollins, Inc. Mr. Rollins has been a Director of Marine Products Corporation since 2001 and a Director of Rollins, Inc. since 1981. Mr. Rollins served as a Director of Genuine Parts Company from 2005 to 2017. +Henry B. Tippie was elected a Director of RPC in 1984. Mr. Tippie brings extensive financial and management experience to our Board of Directors serving as Controller and Chief Financial Officer of Rollins, Inc. from 1953 to 1970. Mr. Tippie has over 69 years of experience including being involved with publicly owned companies during the past 59 years in various positions including founder, CFO, CEO, President, Vice-Chairman and Chairman of the Board. He is currently Chairman of the Board of Dover Motorsports, Inc., and the Lead Director of Marine Products Corporation and Rollins, Inc. +James B. Williams was elected a Director of RPC in 1984. Mr. Williams brings extensive financial and management experience to our Board of Directors serving over 35 years as a Director. He retired in March 1998 as Chairman of the Board and Chief Executive Officer of SunTrust Banks, Inc., a bank +5 +holding company. He is a Director of Marine Products Corporation and Rollins, Inc. Mr. Williams currently serves as Chair Emeritus of the Woodruff Foundation, the Ichauway Foundation and the Woodruff Fund, Inc. Mr. Williams previously served as a Director of Genuine Parts Company, Georgia Pacific Corporation and The Coca-Cola Company. +Bill J. Dismuke was elected a Director of RPC in 2005. Mr. Dismuke brings extensive financial, management and manufacturing experience to our Board of Directors. He served as a Senior Vice President of Rollins, Inc. for five years from 1979 until 1984. He retired as President of Edwards Baking Company in 1995. Mr. Dismuke has also been a Director of Rollins, Inc. since 1984 and Marine Products Corporation since 2005. +Amy R. Kreisler was appointed as a Director of RPC in 2017. She is a former attorney of the law firm Arnall Golden Gregory LLP. Ms. Kreisler is a Trustee on The Lovett School Board of Trustees and also serves on their Executive Committee. She is Trustee on the Skyland Trail Board of Trustees where she is also the Chairman of the Governance Committee. Additionally, she is Executive Director of The O. Wayne Rollins Foundation and The Ma-Ran Foundation. Ms. Kreisler brings extensive financial and investment experience to our Board of Directors. +Pamela R. Rollins was appointed as a Director of RPC in January 2019. Ms. Rollins has also been a Director of Rollins, Inc. since 2015 and Marine Products Corporation since 2017. Ms. Rollins is a Trustee of Young Harris College and The O. Wayne Rollins Foundation, a Trustee Emeritus of The Schenck School, a Board Member of The National Monuments Foundation and a former Board Member of The Lovett School. Ms. Rollins brings a distinct interest in a wide range of matters regarding social responsibility. +Our Board of Directors recommends a vote “FOR” the Class I nominees listed above. +PROPOSAL 2: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +The Audit Committee of the Board of Directors has appointed Grant Thornton LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2020. During fiscal year 2019, Grant Thornton LLP served as the Company’s independent registered public accounting firm. Representatives of Grant Thornton LLP are expected to attend the annual meeting, where they will be available to respond to appropriate questions and, if they desire, to make a statement. +Although the Company is not required to seek ratification of this appointment, the Audit Committee and the Board of Directors believe that it is appropriate to do so. If stockholders do not ratify the appointment of Grant Thornton LLP, the current appointment will stand, but the Audit Committee will consider the stockholder action in determining whether to retain Grant Thornton LLP as the Company’s independent registered public accounting firm for future fiscal years. +Our Board of Directors recommends a vote “FOR” the ratification of the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm for the 2020 fiscal year. +PROPOSAL 3: NONBINDING VOTE ON EXECUTIVE COMPENSATION +As required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“the “Dodd-Frank Act”), our Board of Directors is submitting a “Say on Pay” proposal for stockholder consideration. While the vote on executive compensation is nonbinding and solely advisory in nature, our Board of Directors and the Compensation Committee value the opinion of our stockholders and will review the voting results and seek to determine the causes of any significant negative voting result to better understand issues and concerns not previously presented. Stockholders who want to communicate with the Board of Directors or management should refer to “Director Communications” on page 12 of this proxy statement for additional information. +Executive compensation is an important matter for our stockholders. The core of our executive compensation philosophy and practice continues to be pay for performance. Our executive officers are compensated in a manner consistent with our strategy, competitive practice, sound corporate governance +6 +principles, and stockholder interests and concerns. We believe our compensation program is strongly aligned with the long-term interests of our stockholders. Compensation of our executive officers is designed to enable us to attract and retain talented and experienced senior executives to lead us successfully in a competitive environment. +Our named executive officers are identified on page 2 , and the compensation of the named executive officers is described on pages 15 to 28 , including the Compensation Discussion and Analysis (“CD&A”) on pages 15 to 19 . The CD&A section of this proxy statement provides additional details on our executive compensation, including our compensation philosophy and objectives and the fiscal 2019 compensation of the named executive officers. +We are asking stockholders to vote on the following resolution: +“Resolved, that the stockholders approve, on an advisory basis, the compensation of the Company’s named executive officers as disclosed in the Proxy Statement for the 2020 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission (which disclosure includes the Compensation Discussion and Analysis, the Summary Compensation Table and other related tables and narrative disclosures).” +As indicated above, the stockholder vote on this resolution will not be binding on us or the Board of Directors, and will not be construed as overruling any decision by us or the Board. The vote will not be construed to create or imply any change to our fiduciary duties or those of the Board, or to create or imply any additional fiduciary duties for us or the Board. +The affirmative vote of a majority of the shares of our common stock present or represented by proxy and voting at the annual meeting is required for approval of this proposal. If you own shares through a bank, broker or other holder of record, you must instruct your bank, broker or other holder of record how to vote in order for them to vote your shares so that your vote can be counted on this proposal. +Currently, we hold stockholder advisory votes on executive compensation every three years, and the next such vote after this year’s vote is scheduled to occur in 2023. +Our Board of Directors unanimously recommends that you vote “FOR” the approval, on an advisory basis, of the compensation of our named executive officers as disclosed in the Compensation Discussion and Analysis, the accompanying compensation tables, and the related narrative disclosure. +CORPORATE GOVERNANCE AND BOARD OF DIRECTORS COMMITTEES AND MEETINGS +Board Meetings +The Board of Directors met five times during the fiscal year ended December 31, 2019. No director attended fewer than 75 percent of the aggregate of all Board meetings and meetings of committees on which he or she served during 2019. Mr. Larry L. Prince, a long-time independent director of the Company, served as a member of the Board of Directors until he passed away on March 5, 2019. Board members are encouraged to attend the Company’s Annual Stockholders Meetings and a majority of the Board members were in attendance at last year’s meeting. +The Board of Directors has an Audit Committee, a Compensation Committee, a Diversity Committee and a Nominating and Governance Committee. +7 +Below is a summary of our committee structure and membership information. +Committee Member +Audit +Committee +Compensation +Committee +Diversity +Committee +Nominating & +Governance +Committee +Executive +Committee +R. Randall Rollins (1) +Member +Henry B. Tippie (2) +Chair +Chair +Chair +Chair +James B. Williams (2) +Member +Member +Member +Member +Bill J. Dismuke (2) +Member +Gary W. Rollins +Member +(1) +Chairman of the Board of Directors +(2) +Financial Expert +Audit Committee +The Audit Committee of the Board of Directors of the Company consists of Messrs. Henry B. Tippie (Chairman), Bill J. Dismuke and James B. Williams, all of whom are independent as discussed below. The Audit Committee held five meetings during the fiscal year ended December 31, 2019, including a meeting to review the Company’s Form 10-K for the year ended December 31, 2018. The Board of Directors has determined that all of the Audit Committee members are independent as that term is defined by the rules of the U.S. Securities and Exchange Commission (“SEC”) and the New York Stock Exchange (“NYSE”). The Board of Directors has also determined that all of the Audit Committee members are “Audit Committee Financial Experts” as defined in the SEC rules. The Audit Committee meets with the Company’s independent registered public accounting firm, internal auditor, Chief Executive Officer and Chief Financial Officer to review the scope and results of audits and recommendations made with respect to controls over financial reporting and specific accounting and financial reporting issues. The Audit Committee has the authority to obtain advice and assistance from, and receive appropriate funding from the Company for, outside legal, accounting or other advisors as it deems necessary to carry out its duties. The Audit Committee Charter is available on the Company’s website at rpc.net under the Governance section. +Compensation Committee +The Compensation Committee of the Board of Directors of the Company consists of Messrs. Henry B. Tippie (Chairman) and James B. Williams, both of whom are independent as discussed below. It held two meetings during the fiscal year ended December 31, 2019. The function of the Compensation Committee is to set the base salary and performance-based incentive cash compensation of all of the executive officers. The Compensation Committee also administers the Company’s Stock Incentive Plans. The Compensation Committee does not have a formal charter, and is not required to have one under the “controlled company” exemption under the NYSE rules, as described in the section titled “Director Independence and NYSE Requirements”. +Diversity Committee +The Diversity Committee of the Board of Directors of the Company consists of Messrs. Henry B. Tippie (Chairman) and James B. Williams, both of whom are independent as discussed below. It held one meeting during the fiscal year ended December 31, 2019. The function of the Diversity Committee is to monitor compliance with applicable non-discrimination laws. +8 +Nominating and Governance Committee +The Nominating and Governance Committee of the Board of Directors of the Company consists of Messrs. Henry B. Tippie (Chairman) and James B. Williams, both of whom are independent, as discussed below. The Committee was formed in 2002 pursuant to a resolution passed by the Board of Directors for the following purposes: +• +to recommend to the Board of Directors nominees for director and to consider any nominations properly made by a stockholder; +• +upon request of the Board of Directors, to review and report to the Board with regard to matters of corporate governance, including reviewing any related party transactions; and +• +to make recommendations to the Board of Directors regarding the agenda for the annual stockholders’ meetings and with respect to appropriate action to be taken in response to any stockholder proposals. +The Nominating and Governance Committee held one meeting during the fiscal year ended December 31, 2019. We are not required by law or by NYSE rules to have a nominating committee since we are a controlled corporation as described below under the heading “Director Independence and NYSE Requirements.” We established the Nominating and Governance Committee to promote responsible corporate governance practices, and we currently intend to maintain the Committee going forward. +Director Nominations +Under Delaware law, there are no statutory criteria or qualifications for directors. No criteria or qualifications have been prescribed by the Board at this time. The Nominating and Governance Committee does not have a charter or a formal policy with regard to the consideration of director candidates. As such, there is no formal policy relative to diversity, although as noted below, it is one of many factors that the Nominating and Governance Committee has the discretion to factor into its decision making. This discretion would extend to how the Committee might define diversity in a particular instance – whether in terms of background, viewpoint, experience, education, race, gender, national origin or other considerations. The Committee acts under the guidance of the Corporate Governance Guidelines approved by the Board of Directors and posted on the Company’s website at rpc.net under the Governance section. The Board believes that it should preserve maximum flexibility in order to select directors with sound judgment and other desirable qualities. According to the Company’s Corporate Governance Guidelines, the Board of Directors will be responsible for selecting nominees for election to the Board of Directors. The Board delegates the screening process to the Nominating and Governance Committee. This Committee is responsible for determining the appropriate skills and characteristics required of Board members in the context of the then current make-up of the Board. This determination takes into account all factors which the Committee considers appropriate, such as independence, experience, strength of character, mature judgment, technical skills, diversity, age and the extent to which the individual would fill a present need on the Board. The Company’s By-laws provide that nominations for the election of directors may be made by any stockholder entitled to vote for the election of directors. Nominations must comply with an advance notice procedure which generally requires, with respect to nominations for directors for election at an annual meeting, that written notice be addressed to: The Corporate Secretary, RPC, Inc., 2801 Buford Highway NE, Suite 300, Atlanta, Georgia 30329, and received not less than 90 nor more than 130 days prior to the anniversary of the prior year’s annual meeting and set forth, among other requirements specified in the By-laws, the name, age, business address and, if known, residence address of the nominee proposed in the notice, the principal occupation or employment of the nominee for the past five years, the class or series and number of shares of capital stock of the Company which are owned beneficially or of record by the person and any other information relating to the person that would be required to be disclosed in a proxy statement or other filings. Other requirements related to the notice are contained in the By-laws, and stockholders are advised to carefully review these requirements to ensure that nominations comply with the By-laws. The Committee will consider nominations from stockholders who satisfy these requirements. +9 +The Committee is responsible for screening the nominees that are selected by the Board of Directors for nomination to the Board and for service on committees of the Board. To date, the Company has not received a recommendation for a director nominee from a stockholder. All of the nominees for directors being voted upon at the Annual Meeting to be held on April 28, 2020 are currently standing for re-election. +Board Leadership +The Company has had separate persons serving as its Chairman of the Board and Chief Executive Officer since 2003. Mr. R. Randall Rollins is our Chairman and chairs our Board meetings. Mr. Richard A. Hubbell is our President and Chief Executive Officer. We believe that it represents the appropriate structure for us at this time; the Chairman of the Board provides general oversight and strategic planning for the Company, while the President and Chief Executive Officer focuses on optimizing operational efficiencies. +Risk Oversight by Board of Directors +Our Board of Directors’ oversight of risk has not been delegated to any Board committee. “Risk” is an extremely broad concept that extends to multiple functional areas and crosses multiple disciplines. As such, risk may be addressed from time to time by the full Board or by one or more of our Committees. Senior management is responsible for identifying and managing material risks that we face while insurable risks and litigation risks are handled primarily by the risk management department. Senior management provides the Board with a summary of insurance coverage annually and updates as deemed necessary. Liquidity risk, credit risk and risks associated with our credit facilities and cash management are handled primarily by our finance department which regularly provides a financial report to both the Audit Committee and to the full Board. Operational, business, regulatory and political risks are handled primarily by senior executive management which regularly provides various operational reports to, among others, the full Board, the Executive Committee and the Audit Committee. +Director Independence and NYSE Requirements +Controlled Company Exemption +The Company has elected to be treated as a “controlled company” as defined by NYSE Section 303A.00. This Section provides that a controlled company need not comply with the requirements of Sections 303A.01, 303A.04 and 303A.05 of the NYSE Listed Company Manual. Section 303A.01 requires that listed companies have a majority of independent directors. As a controlled company, this Section does not apply to the Company. Sections 303A.04 and 303A.05 require that listed companies have a nominating and corporate governance committee and a compensation committee, in each case composed entirely of independent directors, and that each of these committees must have a charter that addresses both the committee’s purpose and responsibilities and the need for an annual performance evaluation by the committee. While the Company has a nominating and corporate governance committee and a compensation committee, it is not required to and does not comply with all of the provisions of Sections 303A.04 and 303A.05. The Company is a “controlled company” because a group that includes the Company’s Chairman, R. Randall Rollins and his brother, Gary W. Rollins, who is a Director of the Company, and certain companies under their control, possesses in excess of fifty percent of the Company’s voting power. This means that they have the ability to determine the outcome of the election of directors at the Company’s annual meetings and to determine the outcome of many significant corporate transactions, many of which only require the approval of a majority of the Company’s voting power. Such a concentration of voting power could also have the effect of delaying or preventing a third party from acquiring the Company at a premium. +The Company’s Audit Committee is composed of three “independent” directors as defined by the Company’s Corporate Governance Guidelines, the NYSE rules, the Exchange Act, SEC regulations thereunder, and the Company’s Audit Committee Charter. All of the members of the Compensation, Diversity and Nominating and Governance Committees are also “independent” directors. The independent directors of the Company are Messrs. Henry B. Tippie, James B. Williams and Bill J. Dismuke. +10 +Independence Guidelines +Under NYSE listing standards, to be considered independent, a director must be determined to have no material relationship with the Company other than as a director. The NYSE standards set forth a nonexclusive list of relationships which are conclusively deemed material. The Company’s Independence Guidelines are posted on the Company’s website at rpc.net under the Governance section and include categorical standards for determining independence in specific situations. +Audit Committee Charter +Under the Company’s Audit Committee Charter, in accordance with NYSE listing requirements and the Securities Exchange Act of 1934, all members of the Audit Committee must be independent of management and the Company. A member of the Audit Committee is considered independent as long as he or she (i) does not accept any consulting, advisory, or compensatory fee from the Company, other than as a director or committee member; (ii) is not an affiliated person of the Company or its subsidiaries; and (iii) otherwise meets the independence requirements of the NYSE and the Company’s Corporate Governance Guidelines. +Nonmaterial Relationships +After reviewing all of the relationships between the members of the Audit Committee and the Company, the Board of Directors determined that none of the members of the Audit Committee had any relationships not included within the categorical standards set forth in the Independence Guidelines and discussed above except as follows: +1. +Mr. Tippie was employed by Rollins, Inc. from 1953 to 1970, and held several offices with that company during that time, including as Executive Vice President – Finance, Secretary, Treasurer and Chief Financial Officer. Mr. Dismuke was employed by Rollins from 1979 to 1984 and held various offices within that company including Senior Vice President. Messrs. Randall and Gary Rollins are directors and executive officers of Rollins, Inc. and are part of a group that has voting control of Rollins, Inc. +2. +Mr. Tippie is Chairman of the Board of Directors of Dover Motorsports, Inc. where Mr. Randall Rollins is a director. +3. +Mr. Tippie is a co-trustee of The O. Wayne Rollins Foundation and of the Rollins Children’s Trust. Ms. Kreisler is Executive Director and Ms. Rollins is a trustee of The O. Wayne Rollins Foundation. Mr. O. Wayne Rollins was the father of Messrs. Randall and Gary Rollins. The beneficiaries of the Rollins Children’s Trust include the immediate family members of Messrs. Randall and Gary Rollins. +4. +Messrs. Dismuke, Tippie, Williams and Ms. Rollins also serve on the Boards of Rollins, Inc. and Marine Products, of which Messrs. Randall and Gary Rollins are directors, and voting control over these companies is held by a control group of which Messrs. Randall and Gary Rollins are a part. Mr. Randall Rollins is an executive officer of Marine Products and Rollins. +5. +Mr. Williams is the Chair Emeritus of the Board of the Woodruff Foundation, the Ichauway Foundation and the Woodruff Fund, Inc. Mr. Randall Rollins serves on the Woodruff Fund, Inc. Board. +As required by the Independence Guidelines, the Board of Directors unanimously concluded that the above-listed relationships would not affect the independent judgment of the independent directors, based on their experience, character and independent means, and therefore do not preclude an independence determination. All of the members of the Audit Committee are also independent under the heightened standards required for Audit Committee members. +The Company’s non-management directors meet at regularly scheduled executive sessions without management. In accordance with the NYSE corporate governance listing standards, Mr. Henry B. Tippie was elected by the Board of Directors as the Lead Director and presides during these executive sessions. +11 +Corporate Governance Guidelines +We have adopted Corporate Governance Guidelines to formalize and promote better understanding of our policies and procedures. At least annually, the Board reviews these guidelines. As required by the rules of the NYSE, our Corporate Governance Guidelines require that our non-management directors meet in regularly scheduled executive sessions each year without management, and such meetings are currently required to occur at least twice annually. +At the Company’s website at rpc.net, under the Governance section, you may access a copy of its Corporate Governance Guidelines, Audit Committee Charter, Code of Business Conduct and Code of Business Conduct and Ethics for Directors and Executive Officers and Related Party Transactions Policy and Independence Guidelines. +Code of Business Conduct +The Company has adopted a Code of Business Conduct applicable to all directors, officers and employees generally, as well as a Code of Business Conduct and Ethics for Directors and Executive Officers and Related Party Transactions Policy applicable to the principal executive officer, principal financial officer, and directors. Both codes are available on the Company’s website at rpc.net under the Governance section. +Director Communications +The Company also has a process for interested parties, including stockholders, to send communications to the Board of Directors, Lead Director, any of the Board committees or the non-management directors as a group. Such communications should be addressed as follows: +Mr. Henry B. Tippie +c/o Internal Audit Department +RPC, Inc. +2801 Buford Highway NE, Suite 300 +Atlanta, Georgia 30329 +The above instructions for communications with the directors are also posted on our website at rpc.net under the Governance section. All communications received from interested parties are forwarded to the Board of Directors. Any communication addressed solely to the Lead Director or the non-management directors will be forwarded directly to the appropriate addressee(s). +COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION +None of the directors named above who serve on the Company’s Compensation Committee are or have ever been an employee of the Company. There are no Compensation Committee interlocks requiring disclosure. +12 +DIRECTOR COMPENSATION +The following table sets forth compensation to the Company’s directors for services rendered as a director for the year ended December 31, 2019. Two of the directors, Messrs. R. Randall Rollins and Richard A. Hubbell are employees of the Company. Their compensation is set forth in the Summary Compensation Table under Executive Compensation. The directors listed below have never been employed by the Company or paid a salary or bonus by the Company, have never been granted any options or other stock-based awards, and do not participate in any Company sponsored retirement plans. +Name +Fees Earned or +Paid in Cash +($) +Stock +Awards (1) +($) +Option +Awards (1) +($) +Total +($) +Henry B. Tippie +144,000 +— +— +144,000 +James B. Williams +92,000 +— +— +92,000 +Bill J. Dismuke +85,000 +— +— +85,000 +Gary W. Rollins +72,500 +— +— +72,500 +Pamela R. Rollins +70,000 +— +— +70,000 +Amy R. Kreisler +72,500 +— +— +72,500 +Larry L. Prince (2) +7,000 +— +— +7,000 +(1) +Directors are eligible for grants of stock awards under the Company’s SIP. No stock awards have been granted to the non-management directors under the SIP. +(2) +Mr. Larry L. Prince, a long-time director of the Company, served as a member of our Board of Directors until he passed away on March 5, 2019. +Directors that are our employees do not receive additional compensation for services rendered as a director. +Under compensation arrangements effective since January 1, 2019, non-management directors each received an annual retainer fee of  $60,000. In addition, the Chairman of the Audit Committee receives an annual retainer of  $20,000, the Chairman of the Compensation Committee receives an annual retainer of $10,000, and the Chairman of each of the Nominating and Governance Committee and Diversity Committee receives an annual retainer of  $6,000. A director that chairs more than one committee receives a retainer with respect to each committee he chairs. All of the retainers are paid on a quarterly basis. Per meeting fees for non-management directors are as follows: +• +For meetings of the Board of Directors, $2,500. +• +For meetings of the Compensation Committee, $2,000. +• +For meetings of the Diversity Committee, $1,500. +• +For meetings of the Nominating and Governance Committee, $1,500. +• +For meetings of the Audit Committee either in person or over the telephone, $2,500. +• +In addition, the Chairman of the Audit Committee receives an additional $2,500 for preparing to conduct each quarterly Board and Board Committee meeting. +All non-management directors are also entitled to reimbursement of expenses for all services as a director, including committee participation or special assignments. +Notwithstanding anything to the contrary set forth in any of the Company’s previous filings under the Securities Act of 1933, as amended (the “Securities Act”) or the Exchange Act that might incorporate future filings, including the Proxy Statement, in whole or in part, the Report of the Audit Committee shall not be incorporated by reference into any such filings. +13 +REPORT OF THE AUDIT COMMITTEE +Management is responsible for the Company’s internal controls, assessing the effectiveness of these controls and the financial reporting process. The Company’s independent registered public accounting firm is responsible for performing independent audits of the Company’s consolidated financial statements and the effectiveness of the Company’s internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States) and for issuing reports thereon. The Audit Committee’s responsibility is generally to monitor and oversee these processes, as described in the Audit Committee Charter. It is not the duty of the Audit Committee to plan or conduct audits or to determine that the Company’s financial statements are complete and accurate and in accordance with generally accepted accounting principles; that is the responsibility of management. +In fulfilling its oversight responsibilities with respect to the year ended December 31, 2019, the Audit Committee: +• +Approved the terms of engagement of Grant Thornton LLP as the Company’s independent registered public accounting firm for the year ended December 31, 2019; +• +Reviewed with management the interim financial information included in the Forms 10-Q prior to their being filed with the SEC. In addition, the Committee reviewed all earnings releases with management and the Company’s independent registered public accounting firm prior to their release; +• +Reviewed and discussed with the Company’s management and the independent registered public accounting firm the audited consolidated financial statements of the Company as of December 31, 2019 and 2018 and for the three years ended December 31, 2019; +• +Reviewed and discussed with the Company’s management and the independent registered public accounting firm, management’s assessment that the Company maintained effective control over financial reporting as of December 31, 2019; +• +Discussed with the independent registered public accounting firm matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board and the SEC; and +• +Received from the independent registered public accounting firm the written disclosures and the letter in accordance with the requirements of the Public Company Accounting Oversight Board regarding the firm’s communications with the Committee concerning independence, and discussed with such firm its independence from the Company. +Based upon the review and discussions referred to above, the Committee recommended to the Board of Directors that the audited consolidated financial statements of the Company and subsidiaries as of December 31, 2019 and 2018 and for the three years ended December 31, 2019 be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 and for filing with the SEC. +In giving its recommendation to the Board of Directors, the Audit Committee has relied on (i) management’s representation that such financial statements have been prepared with integrity and objectivity and in conformity with accounting principles generally accepted in the United States of America and (ii) the report of the Company’s independent registered public accounting firm with respect to such financial statements. +Submitted by the Audit Committee of the Board of Directors. +Henry B. Tippie, Chairman +James B. Williams +Bill J. Dismuke +14 +COMPENSATION DISCUSSION AND ANALYSIS +Compensation Committee +During the fiscal year ended December 31, 2019, the members of our Compensation Committee held primary responsibility for determining executive compensation levels. The Committee is currently composed of two of our non-management directors who do not participate in the Company’s compensation plans. The Committee determines the compensation and administers the performance-based incentive cash compensation plan for our executive officers. In addition, the Committee also administers our SIPs for all the employees. +The members of our Compensation Committee have extensive and varied experience with various public and private corporations - as investors and stockholders, as senior executives, and as directors charged with the oversight of management and the setting of executive compensation levels. Henry B. Tippie, the Chairman of the Compensation Committee, has served on the board of directors of twelve different publicly traded companies and has been involved in setting executive compensation levels at all of these companies. Mr. James B. Williams has served on the board of directors of several different publicly traded companies and has similarly been involved in setting executive compensation levels at many of these companies. +The Compensation Committee has authority to engage attorneys, accountants and consultants, including executive compensation consultants, to solicit input from management concerning compensation matters, and to delegate any of its responsibilities to one or more directors or members of management where it deems such delegation appropriate and permitted under applicable law. The Committee has not used the services of any compensation consultants in determining or recommending the amount or form of executive compensation. +The Compensation Committee believes that determinations relative to executive compensation levels are best left to the discretion of the Committee. In addition to the extensive experience and expertise of the Committee’s members and their familiarity with the Company’s performance and the performance of our executive officers, the Committee is able to draw on the experience of other Directors and on various legal and accounting executives employed by the Company, and the Committee has access to readily available public information relative to structuring executive compensation programs and setting appropriate compensation levels. The Committee also believes that the structure of our executive compensation programs should not become overly complicated or difficult to understand. The Committee solicits input from our Chairman with respect to the performance of our executive officers and their compensation levels. +The Role of Stockholder Say-on-Pay Votes +The Company provides its stockholders with the opportunity to cast an advisory vote on executive compensation (a “say-on-pay proposal”) once every three years. At the Company’s Annual Meeting of Stockholders held in April 2017, a substantial majority of the votes cast on the say-on-pay proposal at that meeting were voted in favor of the proposal. The Compensation Committee believes this affirms shareholders’ support of the Company’s approach to executive compensation. The stockholders voted to hold a say-on-pay advisory vote on executive compensation every three years, and the Board resolved to accept the stockholders’ recommendation. As a result, the advisory vote on executive compensation will be held again this year at the 2020 Annual Meeting of Stockholders and the next advisory vote on executive compensation will be held at the 2023 Annual Meeting. The Compensation Committee will continue to consider the outcome of the Company’s say-on-pay votes when making future compensation decisions for its executive officers. +General Compensation Objectives and Guidelines +The Company is engaged in a highly competitive industry. The success of the Company depends on its ability to attract and retain highly qualified and motivated executives. In order to accomplish this objective, the Company structures the executive compensation in a fashion that takes into account the Company’s overall performance and the individual performance of the executive. +15 +The Compensation Committee endorses the philosophy that executive compensation should reflect Company performance and the contribution of executive officers to that performance. The Company’s compensation policy is designed to achieve three fundamental objectives: (i) attract and retain qualified executives, (ii) motivate performance to achieve Company objectives, and (iii) align the interests of our executives with the long-term interests of the Company’s stockholders. +The Committee recognizes that there are many intangibles involved in evaluating performance and in motivating performance, and that determining an appropriate compensation level is a highly subjective endeavor. The analysis of the Committee is not based upon a structured formula and the objectives referred to above are not weighted in any formal manner. During the year, none of the executive officers made recommendations or otherwise contributed input on their own compensation. However, the Compensation Committee may from time to time solicit input from the Chairman when reviewing executive compensation. +The Company’s executive officers are also executive officers of Marine Products and receive compensation directly from Marine Products. The members of the Company’s Compensation Committee also constitute the Compensation Committee of Marine Products. In determining the compensation for the executive officers at the Company, the Committee considers these dual responsibilities and sources of compensation. The Company sets compensation of its executives at such levels so that the aggregate compensation received from both Marine Products and the Company is reasonable in light of their respective responsibilities and the performance of both companies, and so that the compensation from the Company for services solely to the Company is reasonable. A discussion of the Company’s executive officers’ compensation at Marine Products is contained in its annual Proxy Statement filed with the SEC. +Pursuant to the Company’s compensation philosophy, the total annual compensation of its executive officers is primarily comprised of base salary, performance-based incentive cash compensation and stock-based incentive compensation. In addition, the Company provides retirement compensation plans, group welfare benefits and certain perquisites. +We believe a competitive base salary is important to attract, retain and motivate top executives. We believe a performance-based incentive cash compensation plan is valuable in recognizing and rewarding individual achievement. Finally, we believe stock-based incentives make executives “think like owners” and, therefore, align their interests with those of our stockholders. +The Company does not have any formal stock ownership requirements for its executive officers, but notes that its current directors and executive officers are stockholders of the Company, as is disclosed elsewhere in this Proxy Statement. The Company is mindful of the stock ownership of our directors and executive officers but does not believe that it is appropriate to provide a mechanism or formula to take stock ownership (or gains from prior option or stock awards) into account when setting compensation levels. The Company provides in its insider trading policies that directors and executive officers may not sell Company securities short and may not sell puts, calls or other derivative securities tied to our Common Stock. The Company does not have any such policy applicable to its employees generally, other than the executive officers. +As a result of the Tax Cuts and Jobs Act, starting with compensation payable in 2018, Section 162(m) of the Internal Revenue Code will limit the Company from deducting compensation, including performance-based compensation, in excess of  $1,000,000 paid to our executive officers. The only exception to this rule is for compensation (including performance-based compensation) that is paid pursuant to a binding contract in effect on November 2, 2017, that would otherwise have been deductible under the prior Section 162(m) rules. Going forward, the Compensation Committee will, as before, retain full discretion to award compensation packages that best attract, retain and reward successful executive officers. Therefore, the Compensation Committee anticipates that it will award compensation that is not fully deductible under Section 162(m). +Our executive bonus agreements contain a provision that provides that, among other things, if any bonus amount is paid as a result of misrepresented or inaccurate performance, the Company may require repayment of some or all of the excess bonus paid, subject to applicable laws. This recoupment policy reflects the Company’s high ethical standards and strict compliance with accounting and other regulations applicable to public companies. As all incentives and awards remain within the discretion of the +16 +Compensation Committee, the Committee also retains the ability to take any restatements or adjustments into account in subsequent years. In addition, the Sarbanes-Oxley Act requires in the case of accounting restatements that result from material non-compliance with SEC financial reporting requirements, that the Chief Executive Officer and Chief Financial Officer must disgorge bonuses and other incentive-based compensation and profits on stock sales received during the 12 months following publication of the misstated financials, if the non-compliance results from misconduct. +Base Salary +The salary of each executive officer is determined by the Compensation Committee. In making its determinations, the Committee gives consideration to the recent financial performance of the Company, the magnitude of responsibilities, the scope of the position, individual performance and compensation paid by Marine Products. The Committee solicits input from our Chairman with respect to the performance of our executive officers and their compensation levels. There were no changes to the base salaries of the Company’s executive officers in 2019 or 2020 through the date of this proxy statement. +Performance-Based Incentive Cash Compensation +The Company implemented the Performance-Based Incentive Cash Compensation Plan (the “Management Incentive Plan”) for the executive officers in 2006. Under the Management Incentive Plan, the Compensation Committee establishes performance goals annually within ninety days after the commencement of the performance period to which such goals relate. Performance goals for each participant may be based on corporate, business unit/function or individual performance, or a combination of one or more such measures. +In connection with the annual establishment of performance goals, the Compensation Committee sets a target award for each participant in the Management Incentive Plan for the applicable year, which is expressed as a percentage of the participant’s base compensation (the “Target Award”) in effect on the last day of the final pay period of that year. If the participant’s performance goals are based upon a combination of performance measures, the Compensation Committee will weigh the importance of each performance measure by assigning a percentage (the “Weighted Percentage”) to those performance measures. The participant’s cash award amount will also depend in part upon the level of achievement that the participant attained with respect to each such performance measure utilizing the formula set out in the Management Incentive Plan. This formula provides for a performance value (“Performance Value”) which ranges from: +• +threshold performance level (with a Performance Value of 25 percent of the Target Award), +• +target performance level (with a Performance Value up to 100 percent of the Target Award), to +• +superior performance level (with a Performance Value up to 200 percent of the Target Award). +Subject to the limitations set forth below, a participant’s cash award amount for each year under the Management Incentive Plan equals the product of the Target Award multiplied by the Weighted Percentage assigned to each performance measure used for a participant, multiplied by the Performance Value attained for each performance measure, multiplied by base compensation. The Committee will determine the maximum cash award as a percentage of participants’ base compensation for each applicable year. +17 +For 2019, the Compensation Committee established the target incentive award under the Management Incentive Plan for the Chief Executive Officer and for the other members of executive management at the amounts shown in the table below. The target awards that could be earned under the Management Incentive Plan for 2019 were the same as for the prior year. +Executive Officer +Target Award as a percentage +of base salary +Richard A. Hubbell +President and Chief Executive Officer +100 % +Ben M. Palmer +Vice President, Chief Financial Officer and Corporate Secretary +100 % +R. Randall Rollins +Chairman of the Board +100 % +The maximum bonus award for each participant under the Plan for 2019 and prior years was established at 150 percent of such participant’s base salary. The performance criteria applicable to the participants under the Management Incentive Plan for 2019 were determined based solely on corporate performance. The Compensation Committee established corporate performance goals for 2019 under the Management Incentive Plan based on cash flow return on invested capital. Return on invested capital (“ROIC”) is a widely used financial performance measure that typically correlates with long-term change in stockholder value. The Company has used ROIC as the sole performance goal under the Management Incentive Plan for several years. ROIC is computed as the ratio of earnings before interest, taxes, depreciation and amortization to invested capital. Invested capital is generally equal to the aggregate of stockholders’ equity, accumulated depreciation and long-term liabilities. For 2019, the target performance goal established by the Company is in excess of the comparable historical average ROIC of our peers, is in excess of the Company’s weighted average cost of capital, and is an amount which the Company believes represents outstanding financial performance. Under the Management Incentive Plan for 2019, the Company was required to achieve at least 70 percent of the target performance goal for executive officers to be eligible for any bonus award. Bonus awards under the Management Incentive Plan are determined on a sliding scale between the threshold performance level and superior performance level, which corresponds to 175 percent of the target performance goal. To be eligible for the bonus award under the Management Incentive Plan for 2019, the ROIC was required to be in excess of 12.6 percent up to a maximum of 31.5 percent. The Company has consistently followed the same method to compute ROIC, and the Compensation Committee has not exercised discretion to waive the performance goals based on difficult industry conditions or other factors. +The Company operates in a cyclical business where financial performance is influenced by, among other things, changes in oil and natural gas prices. ROIC generated by the Company in 2019 was less than the threshold amount therefore no bonuses were earned by executive officers. The Company generated ROIC that resulted in 48 percent of the target award in 2018 and 36 percent of the target award in 2017. The ROIC performance declined in 2019 compared to 2018 and 2017 due to an intensely competitive industry environment in 2019 as oil and gas production levels remain high and customers continue to curtail their completion activities. +Stock-Based Incentive Plans +Our SIP allows for a wide variety of stock-based awards such as stock options and restricted stock. In recent years, we have awarded time-based restricted stock in lieu of granting stock options. The terms and conditions of these awards are described in more detail below. +18 +Awards under the Company’s SIP are purely discretionary, are not based upon any specific formula and may or may not be granted in any given fiscal year. For the past three years, we have granted time-based restricted stock to various employees, including our executive officers, in early January during our regularly scheduled meeting of the Compensation Committee during which the Committee reviews executive compensation. Consistent with this practice, we granted restricted stock awards to our executive officers in January 2020, 2019 and 2018 as follows: +Name +2020 +2019 +2018 +Richard A. Hubbell +100,000 +75,000 +45,000 +Ben M. Palmer +67,000 +50,000 +30,000 +R. Randall Rollins +100,000 +75,000 +45,000 +The amount of the aggregate stock-based awards to our executive officers in any given year is influenced by the Company’s overall performance. The amount of each grant to our executive officers is influenced in part by the Committee’s subjective assessment of each individual’s respective contributions to achievement of the Company’s long-term goals and objectives, in addition to the stock price around grant date. In evaluating individual performance for these purposes, the Committee considers the overall contributions of executive management as a group and the Committee’s subjective assessment of each individual’s relative contribution to that performance rather than specific aspects of each individual’s performance over a short-term period. We expect to continue annual grants of restricted stock awards although we reserve the right to modify or discontinue this or any of our other compensation practices at any time. +All of our restricted stock awards granted since 2004 have had the same features. The shares vest one-fifth per year beginning on the second anniversary of the grant date. Restricted shares have full voting and dividend rights. However, until the shares vest, they cannot be sold, transferred or pledged. Should the executive leave our employment for any reason prior to the vesting dates (other than due to disability or retirement on or after age 65), the unvested shares will be forfeited. In the event of death, or “change in control” as determined by the Board of Directors, all unvested restricted shares shall vest immediately. +Grants are made under our SIP which is administered pursuant to Rule 16b-3 of the Exchange Act. +Employment Agreements +There are no agreements or understandings between the Company and any executive officer which guarantee continued employment or guarantee any level of severance or compensation, including incentive or bonus payments. +Retirement Plans +The Company maintains a defined benefit pension plan (“Retirement Income Plan”) for all our eligible employees, a non-qualified supplemental retirement plan for our executives and certain other highly compensated employees and a 401(k) Plan for the benefit of all of our eligible employees. In 2002, the Company’s Board of Directors approved a resolution to cease all future benefit accruals under the Retirement Income Plan effective March 31, 2002. During 2002, the Company began permitting selected highly compensated employees to defer a portion of their compensation into the Company’s nonqualified Supplemental Retirement Plan (“SRP”). The SRP is described in more detail under the caption “Nonqualified Deferred Compensation” on page 26 . +Other Compensation +Other compensation to our executives includes typical employee benefits such as group medical, dental and vision coverage and group life insurance. The Company provides an automobile (or an automobile allowance) to Messrs. Richard A. Hubbell and Ben M. Palmer. +The following Compensation Committee Report shall not be incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act, except to the extent that the Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under the Securities Act or the Exchange Act. +19 +COMPENSATION COMMITTEE REPORT +We have reviewed and discussed the above “Compensation Discussion and Analysis” with management. +Based upon this review and discussion, we have recommended to the Board of Directors that the “Compensation Discussion and Analysis” be included in this Proxy Statement. +Submitted by the Compensation Committee of the Board of Directors. +Henry B. Tippie, Chairman +James B. Williams +SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE +Section 16(a) of the Exchange Act requires our officers and directors and persons who own more than ten percent of a registered class of the Company’s equity securities to file reports of ownership and changes in ownership with the SEC. Officers, directors and greater than ten percent stockholders are required to furnish the Company with copies of all Section 16(a) forms they file. +Based on our review of the copies of such forms, we believe that during fiscal year ended December 31, 2019, all filing requirements applicable to our officers, directors and greater than ten percent beneficial owners were timely satisfied. Each of these transactions were exempt from Section 16(b) of the Exchange Act by reason of Rule 16(b)(3). +20 +EXECUTIVE COMPENSATION +Shown below is information concerning the annual and long-term compensation for services in all capacities to the Company for the calendar years ended December 31, 2019, 2018 and 2017 of those persons who were, at December 31, 2019: +• +our Principal Executive Officer and Principal Financial Officer; and +• +our one other executive officer: +SUMMARY COMPENSATION TABLE +Name and Principal Position +Year +Salary +($) +Stock +Awards +($) (1) +Non-Equity +Incentive +Plan +Compensation +($) (2) +Change in +Pension +Value and +Nonqualified +Deferred +Compensation +Earnings +($) (3) +All Other +Compensation +($) (4) +Total +($) +Richard A. Hubbell +President and +Chief Executive Officer +2019 +950,000 +854,250 +— +7,607 +18,900 +1,830,757 +2018 +950,000 +1,130,850 +456,000 +— +30,670 +2,567,520 +2017 +900,000 +974,700 +324,000 +— +13,260 +2,211,960 +Ben M. Palmer +Vice President, Chief Financial Officer and Corporate Secretary +2019 +450,000 +569,500 +— +19,567 +23,550 +1,062,617 +2018 +450,000 +753,900 +216,000 +— +20,990 +1,440,890 +2017 +385,420 +584,820 +144,000 +10,078 +19,600 +1,143,918 +R. Randall Rollins +Chairman of the Board +2019 +850,000 +854,250 +— +— +— +1,704,250 +2018 +850,000 +1,130,850 +408,000 +— +— +2,388,850 +2017 +800,000 +974,700 +288,000 +— +— +2,062,700 +(1) +Represents the fair value of the award at the date of grant computed in accordance with ASC Topic 718. See Note 11 to our Financial Statements contained in our Form 10-K for the period ended December 31, 2019 for a discussion of assumptions used in this computation. For this computation, we do not include an assumption for estimated forfeitures. +(2) +Bonuses under the Management Incentive Plan are accrued in the fiscal year earned and paid in the following fiscal year. +(3) +The actuarial present value of the executive officers’ accumulated benefit under the defined benefit plan decreased as follows: In 2019, Mr. R. Randall Rollins $(53,635); in 2018, Messrs. Richard A. Hubbell $(35,453), Ben M. Palmer $(7,712) and R. Randall Rollins: $(165,595); in 2017, Messrs. Richard A. Hubbell $(4,056) and R. Randall Rollins $(83,521). Change represents impact of the change in discount rate only as no additional benefits are being accrued. +(4) +All other compensation for 2019 includes the following items for: +Mr. Richard A. Hubbell: +Insurance on automobile provided by the Company, cost of dining club dues, cost of gasoline for personal automobile and 401(k) Plan Company match of  $12,600 in the aggregate. +Mr. Ben M. Palmer: +Automobile allowance, cost of gasoline for personal automobile and 401(k) Plan Company match of  $12,600 in the aggregate. +21 +Pay Ratio Disclosure +Pursuant to a mandate of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), the SEC adopted a rule requiring annual disclosure of the ratio of the median employee’s annual total compensation to the total annual compensation of the principal executive officer (“PEO”). The Company’s PEO is Mr. Richard A. Hubbell. The purpose of the required disclosure is to provide a measure of the equitability of pay within the organization. The Company believes its compensation philosophy and process yield an equitable result. +Median Employee total annual compensation +$ +89,330 +Mr. Richard A. Hubbell (PEO) total annual compensation +$ +1,818,157 +Ratio of PEO to Median Employee Compensation +20.4:1 +The Company has re-identified the median employee as of December 31, 2019 due to the significant reduction in workforce that resulted from the restructuring initiatives undertaken by the Company during the year. The compensation disclosed above represents the total annual compensation of the median employee for the year ended December 31, 2019. Employees from our foreign subsidiaries in North America and Asia, both of which combined were less than five percent of our total employees, were excluded, as permitted by SEC rules, under “de minimus” exception. Employees on leave of absence were also excluded from the list and wages and salaries were annualized for those employees that were not employed for the full year of 2019 (other than seasonal or temporary employees). The median employee’s compensation was selected from the annualized list. For simplicity, the value of the Company’s 401(k) Plan and medical benefits provided was excluded as all employees including the PEO are offered the exact same benefits. As of December 31, 2019, the Company employed approximately 2,660 persons of which 62 were employed in Canada, China and Mexico. +The pay ratio disclosure presented above is a reasonable estimate. Because the SEC rules for identifying the median employee and calculating the pay ratio allow companies to use different methodologies, exemptions, estimates and assumptions, our pay ratio disclosure may not be comparable to the pay ratios reported by other companies. +GRANTS OF PLAN-BASED AWARDS +Name +Grant Date +Estimated Future Payouts +Under Non-Equity +Incentive Plan Awards (1) +All Other +Stock Awards: +Number of +Shares of +Stock or Units +(#) +Grant Date +Fair Value +of Stock +and Option +Awards +($) (2) +Threshold +($) +Target +($) +Maximum +($) +Richard A. Hubbell +1/22/2019 +237,500 +950,000 +1,425,000 +75,000 +854,250 +Ben M. Palmer +1/22/2019 +112,500 +450,000 +675,000 +50,000 +569,500 +R. Randall Rollins +1/22/2019 +212,500 +850,000 +1,275,000 +75,000 +854,250 +(1) +These amounts illustrate the potential bonus awards under the Management Incentive Plan for 2019. See Summary Compensation Table on page 21 for actual amounts awarded in 2019. +(2) +These amounts represent aggregate grant date fair value for grants of restricted shares of Common Stock awarded in fiscal year 2019 under the Stock Incentive Plan computed in accordance with ASC Topic 718. Please refer to Note 11 to our Financial Statements contained in our Form 10-K for the period ended December 31, 2019 for a discussion of assumptions used in this computation. For this computation, we do not include an assumption for estimated forfeitures. Our Form 10-K has been included in our Annual Report and provided to our stockholders. +The table above reflects grants of restricted shares of Company Common Stock under the Stock Incentive Plan awarded in fiscal year 2019. All grants of restricted shares of Common Stock vest one-fifth per year beginning on the second anniversary of the grant date. Restricted shares have full voting and dividend rights. However, until the shares vest, they cannot be sold, transferred or pledged. Should the +22 +executive leave our employment for any reason prior to the vesting dates (other than due to death, disability, change in control or retirement on or after age 65), the unvested shares will be forfeited. We have not issued any stock options since 2003 and have no immediate plans to issue additional stock options. +There are no agreements or understandings between the Company and any executive officer which guarantee continued employment or guarantee any level of severance or compensation, including incentive or bonus payments, to the executive officer. The existing compensation and benefits received by the Company’s Chief Executive Officer and the other executive officers are based on oral, at will arrangements. All of the executive officers are eligible for annual cash bonuses which are awarded under the Management Incentive Plan. The Compensation Committee’s decisions are based upon broad performance objectives under that plan. +The executive officers are eligible to receive shares of Company Common Stock subject to options and restricted shares of Company Common Stock under the Company’s SIPs, in such amounts and with such terms and conditions as determined by the Compensation Committee at the time of grant. All of the executive officers are eligible to participate in the Company’s SRP. The executive officers are eligible to participate in the Company’s regular employee benefit programs, including the 401(k) Plan with Company match, group life insurance, group medical and dental coverage, vision and other group benefit plans. All of the executive officers are eligible for the Retirement Income Plan although benefit accruals were frozen in 2002. For more information on these plans, see “Compensation Discussion and Analysis” on page 15 , and “Benefit Plans” on page 25 . +23 +OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END +The Company does not have any outstanding option awards made in prior years to the executives named in our Summary Compensation Table. The table below sets forth the total number of restricted shares of Common Stock outstanding at December 31, 2019 that were granted in prior years to the executives, but have not yet vested, together with the market value of these unvested shares based on the $5.24 closing price of our Common Stock on December 31, 2019. +Option Awards +Stock Awards +Name +Number of +Securities +Underlying +Unexercised +Options +(#) +Exercisable +Number of +Securities +Underlying +Unexercised +Options +(#) +Un-exercisable +Option +Exercise +Price +($) +Option +Expiration +Date +Number of +Shares or +Units of Stock +That Have +Not Vested +(#) +Market Value +of Shares or +Units of Stock +That Have +Not Vested +($) +Richard A. Hubbell +— +— +— +— +242,250 (1 ) +1,269,390 +Ben M. Palmer +— +— +— +— +153,350 (1 ) +803,550 +R. Randall Rollins +— +— +— +— +242,250 (1 ) +1,269,390 +(1) +The Company has granted employees time lapse restricted shares that vest one-fifth per year beginning on the second anniversary of the grant date. Shares of restricted stock granted to the executive officers that have not vested as of December 31, 2019 are summarized in the table that follows: +Name +Number of shares +Grant date +Date fully vested +Richard A. Hubbell +11,250 +1/28/2014 +1/28/2020 +30,000 +1/27/2015 +1/27/2021 +45,000 +1/26/2016 +1/26/2022 +36,000 +1/24/2017 +1/24/2023 +45,000 +1/23/2018 +1/23/2024 +75,000 +1/22/2019 +1/22/2025 +Ben M. Palmer +6,750 +1/28/2014 +1/28/2020 +18,000 +1/27/2015 +1/27/2021 +27,000 +1/26/2016 +1/26/2022 +21,600 +1/24/2017 +1/24/2023 +30,000 +1/23/2018 +1/23/2024 +50,000 +1/22/2019 +1/22/2025 +R. Randall Rollins +11,250 +1/28/2014 +1/28/2020 +30,000 +1/27/2015 +1/27/2021 +45,000 +1/26/2016 +1/26/2022 +36,000 +1/24/2017 +1/24/2023 +45,000 +1/23/2018 +1/23/2024 +75,000 +1/22/2019 +1/22/2025 +24 +OPTION EXERCISES AND STOCK VESTED +The following table sets forth: +• +the number of shares of Common Stock acquired by the executives named in the Summary Compensation Table upon the exercise of stock options during the fiscal year ended December 31, 2019; +• +the aggregate dollar amount realized on the exercise date for such options computed by multiplying the number of shares acquired by the difference between the market value of the shares on the exercise date and the exercise price of the options; +• +the number of restricted shares of Common Stock acquired by the executives named in the Summary Compensation Table upon the vesting of shares during the fiscal year ended December 31, 2019; and +• +the aggregate dollar amount realized on the vesting date for such restricted stock computed by multiplying the number of shares which vested by the market value of the shares on the vesting date. +Option Awards +Stock Awards +Name +Number of Shares +Acquired on Exercise +(#) +Value Realized on +Exercise +($) +Number of Shares +Acquired on Vesting +(#) +Value Realized on +Vesting +($) +Richard A. Hubbell +— +— +65,250 +739,220 +Ben M. Palmer +— +— +39,150 +443,520 +R. Randall Rollins +— +— +65,250 +739,220 +BENEFIT PLANS +The table below shows the present value of accumulated benefits payable to each of the named executive officers, including the number of years of service credited to each such named executive officer, under the Retirement Income Plan determined using interest rate and mortality rate assumptions consistent with those used in the Company’s financial statements. +Pension Benefits +Name +Plan Name +Number of +Years Credited +Service +(#) +Present +Value of +Accumulated +Benefit +($) +Payments During +Last Fiscal Year +($) +Richard A. Hubbell +Retirement Income Plan +15 +411,573 +42,314 +Ben M. Palmer +Retirement Income Plan +4 +105,382 +— +R. Randall Rollins +Retirement Income Plan +30 +1,827,688 +261,571 +The Company’s Retirement Income Plan, a trusteed defined benefit pension plan, provides monthly benefits upon retirement at age 65 to eligible employees. In 2002, the Company’s Board of Directors approved a resolution to cease all future benefit accruals under the Retirement Income Plan effective March 31, 2002. Retirement Income Plan benefits are based on the average of the employee’s compensation from the Company for the five consecutive complete calendar years of highest compensation during the last ten consecutive complete calendar years (“final average compensation”) immediately preceding March 31, 2002. The benefits are computed as the product of 1.5 percent of final average compensation multiplied by years of credited service (up to 30 years) reduced by an adjustment for benefits drawn from social security. Adjustments have been made for age and the IRS mandated compensation limitations. The final average compensation for Mr. Palmer is $179,900. +25 +The annual benefit payable at the later of retirement or age 65 for the named executive officers is approximately $9,400 for Mr. Palmer. The Plan also provides reduced early retirement benefits at age 55 or older with 15 or more years of service. Mr. Hubbell is voluntarily receiving distributions from the plan even though he has not retired from the Company. In addition, as an owner with stock ownership in excess of five percent of the Company’s voting securities, Mr. Rollins is required to receive mandatory distributions currently, even though he has not retired from the Company. The amount of distributions received during 2019 has been disclosed in the table above and is not subject to change after retirement. +401(k) Plan +Effective July 1, 1984, the Company adopted a qualified retirement plan designed to meet the requirements of Section 401(k) of the Code. The Company makes matching contributions of 100 percent for each dollar ($1.00) of a participant’s contribution to the 401(k) Plan for the first three percent of his or her annual compensation and fifty cents ($0.50) for each dollar ($1.00) for the next three percent of his or her annual compensation. The only form of benefit payment under the 401(k) Plan is a single lump-sum payment equal to the vested balance in the participant’s account on the date the distribution is processed. Under the 401(k) Plan, the full amount of a participant’s vested accrued benefit is payable upon his termination of employment, retirement, total and permanent disability, or death. During the course of employment, a participant may withdraw his or her pre-tax contributions to the extent of certain specified instances of financial hardship and may withdraw any amount from his or her pre-tax contribution account for any reason after attaining age 59 1 ∕ 2 . Amounts contributed by the Company to the accounts of the named executive officers under this plan are reported in the “All Other Compensation” column of the Summary Compensation Table on page 21 . +NONQUALIFIED DEFERRED COMPENSATION +The SRP has been established as a nonqualified plan that is designed to comply with the provisions of the American Jobs Creation Act of 2004 (including Section 409A of the Internal Revenue Code) for the cash contributions made to certain longer serviced employees in lieu of freezing the Retirement Income Plan benefit accruals effective in 2002; the SRP also has a compensation deferral option for eligible employees. The contributions and deferrals to the SRP are invested in funds held in a rabbi trust. +Name +Executive +Contributions +in Last FY +($) (1) +Registrant +Contributions +in Last FY +($) +Aggregate +Earnings in +Last FY +($) +Aggregate +Withdrawals/ +Distributions +($) +Aggregate +balance at +Last FYE +($) +Richard A. Hubbell +— +— +79,778 +— +452,434 +Ben M. Palmer +53,280 +— +112,896 +— +924,339 +R. Randall Rollins +— +— +— +— +— +(1) +Includes $36,000 of the base salary for 2019 disclosed in the Summary Compensation Table, which have been deferred by the executive officer pursuant to the SRP. The remaining deferral amounts, if any, represent deferrals of bonus compensation that was paid in 2019. +The deferral option provides that participants may defer up to 50 percent of their base salary and up to 100 percent of their annual bonus with respect to any given plan year, subject to a $2,000 per plan year minimum. All of the salary and bonus deferrals are fully vested. Accounts are credited with hypothetical earnings, and/or debited with hypothetical losses, based on the performance of certain “Measurement Funds.” Account values are calculated as if the funds from deferrals and contributions had been converted into shares or other ownership units of selected Measurement Funds by purchasing (or selling, where relevant) such shares or units at the current purchase price of the relevant Measurement Fund at the time of the participant’s selection. The benefits are unsecured general obligations of the Company to the participants, and these obligations rank in parity with the Company’s other unsecured and unsubordinated indebtedness. To the extent that the Company’s obligations under the SRP exceed assets available under the trust, the Company may be required to seek additional funding sources to fund its liability under the SRP. +26 +Generally, the SRP provides for distributions of any deferred amounts upon the earliest to occur of a participant’s death, disability, retirement or other termination of employment (a “Termination Event”). However, for any deferrals of base salary and bonus compensation (but not Company contributions), participants are entitled to designate a distribution date which is prior to a Termination Event. The SRP allows a participant to elect to receive distributions in installments or lump-sum payments. +POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL +The following table describes the potential payments and benefits under the Company’s compensation and benefit plans and arrangements to which the named executive officers would be entitled upon termination of employment. There are no other agreements, arrangements or plans that entitle executive officers to severance, perquisites, or other enhanced benefits upon termination of their employment except as described below. Additional payments or benefits to a terminating executive officer would be at the discretion of the Compensation Committee. +In accordance with the terms of the defined benefit plan, the executive officers are not entitled to additional benefits at death or disability. The amounts payable at retirement are disclosed in the “Benefit Plans” section on page 25 . The executive officers can choose to receive the amounts accumulated in the SRP either as a lump-sum or in installments at retirement, death or disability. These amounts have been disclosed under the “Nonqualified Deferred Compensation” section on page 26 . The table below reflects the incremental restricted shares and their values that would become vested as of December 31, 2019 using the closing market price of  $5.24 per share for our Common Stock, as of that date, in the case of retirement, disability, death or change in control. +Stock Awards +Name +Number of shares +underlying unvested +stock +(#) +Unrealized value of +unvested stock +($) +Richard A. Hubbell +• +Retirement +54,313 +284,600 +• +Disability +84,593 +443,270 +• +Death +242,250 +1,269,390 +• +Change in control +242,250 +1,269,390 +Ben M. Palmer +• +Retirement +— +— +• +Disability +52,478 +279,980 +• +Death +153,350 +803,550 +• +Change in control +153,350 +803,550 +R. Randall Rollins +• +Retirement +54,313 +284,600 +• +Disability +84,593 +443,270 +• +Death +242,250 +1,269,390 +• +Change in control +242,250 +1,269,390 +27 +Accrued Pay and Regular Retirement Benefits +The amounts shown in the preceding table do not include the following since they are provided on a non-discriminatory basis to salaried employees generally upon termination of employment. These include: +• +Accrued salary and vacation pay. +• +Distributions of plan balances under the 401(k) Plan. +Pension Benefit and Deferred Compensation +The Retirement Income Plan does not provide for lump sum payments for a participant including executive officers for instances other than retirement. The Retirement Income Plan is described above. Upon termination, the executive officers will receive a distribution of the balance in their SRP account. These amounts are disclosed under the “Nonqualified Deferred Compensation” section on page 26 . +Change in Control or Severance . The Company does not have any severance for its executive officers. However, upon the occurrence of a “Change in Control,” as determined by the Board of Directors, all unvested time-lapse restricted stock shall immediately vest. +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +Effective with the spin-off in 2001, the Company began providing certain administrative services to Marine Products. The service agreements between Marine Products and the Company provide for the provision of services on a cost reimbursement basis and may be terminated upon six months’ notice. The services covered by these agreements include administration of certain employee benefit programs and other administrative services. Charges from the Company (or from corporations which are subsidiaries of the Company) for such services aggregated approximately $865,000 in 2019. +RPC and Marine Products own 50 percent each of a limited liability company called 255 RC, LLC that was created for the joint purchase and ownership of a corporate aircraft. Each of RPC and Marine Products is currently a party to an operating lease agreement with 255 RC, LLC for a period of five years. During 2019, RPC recorded certain net operating costs comprised of rent and an allocable share of fixed costs of approximately $199,000 for the corporate aircraft. +During 2019, a subsidiary of RPC conducted business with companies owned by LOR, Inc. Mr. R. Randall Rollins, Chairman and Mr. Gary W. Rollins, Director, are officers, directors and controlling stockholders of LOR, Inc. In 2019, payments totaling approximately $1,625,000 were made to these LOR, Inc. companies primarily for the purchase of parts and repair services related to certain of RPC’s oilfield operating equipment. RPC believes the charges incurred are at least as favorable as the charges that would have been incurred for similar purchases from unaffiliated third parties. +RPC receives certain administrative services including an allocation for office space from Rollins. The service agreements between Rollins and the Company provide for the provision of services on a cost reimbursement basis and are terminable on six months’ notice. The services covered by these agreements include office space, administration of certain employee benefit programs, and other administrative services. Charges to the Company (or to corporations which are subsidiaries of the Company) for such services and rent aggregated approximately $104,000 in 2019. +A group that includes the Company’s Chairman of the Board, R. Randall Rollins, his brother Gary W. Rollins, who is also a director, and certain companies under their control, possesses in excess of fifty percent of the Company’s voting power. Please refer to the discussion above under the heading, “Corporate Governance and Board of Directors Committees and Meetings, Director Independence and NYSE Requirements, Controlled Company Exemption.” The group discussed above also controls in excess of fifty percent of Marine Products’ voting power. +Our Code of Business Conduct and Ethics for Directors and Executive Officers and Related Party Transactions Policy provides that related party transactions, as defined in Regulation S-K, Item 404(a) must be reviewed, approved and/or ratified by our Nominating and Corporate Governance Committee. As set forth in our Code, our Nominating and Corporate Governance Committee has the responsibility to ensure that it only approves or ratifies related party transactions that are in compliance with applicable law, +28 +consistent with the Company’s corporate governance policies (including those relative to conflicts of interest and usurpation of corporate opportunities) and on terms that are deemed to be fair to the Company. The Committee has the authority to hire legal, accounting, financial or other advisors as it may deem necessary or desirable and/or to delegate responsibilities to executive officers of the Company in connection with discharging its duties. A copy of the Code is available on our website at.rpc.net under the Governance section. All related party transactions for the fiscal year ended December 31, 2019 were reviewed, approved and/or ratified by the Nominating and Governance Committee in accordance with the Code. +INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +Principal Auditor +Grant Thornton LLP (“Grant Thornton”) served as the Company’s independent registered public accounting firm for the fiscal years ended December 31, 2019 and 2018. +The Audit Committee has appointed Grant Thornton as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2020. Grant Thornton has served as the Company’s independent registered public accounting firm for many years and is considered by management to be well qualified. Representatives of Grant Thornton are expected to be present at the Annual Meeting and will have an opportunity to make a statement if they so desire and will be available to respond to appropriate questions. +Aggregate fees billed by the Company’s independent registered public accounting firm are set forth below: +2019 +2018 +Audit fees and quarterly reviews (1) +$ +1,073,580 +$ +1,031,620 +Audit related fees +— +— +Tax fees +— +— +All other fees +— +— +(1) +Audit fees include fees for audit or review services in accordance with generally accepted auditing standards, such as statutory audits and services rendered for compliance with Section 404 of the Sarbanes-Oxley Act. +Pre-approval of Services +All of the services described above were pre-approved by the Company’s Audit Committee. The Audit Committee has determined that the payments made to its independent registered public accounting firm for these services are compatible with maintaining such auditors’ independence. A majority of the hours expended on the principal accountant’s engagement to audit the financial statements of the Company for the fiscal year ended December 31, 2019 was attributable to work performed by full-time, permanent employees of the principal accountant. +The Audit Committee is directly responsible for the appointment and termination, compensation, and oversight of the work of the independent registered public accounting firm, including resolution of disagreements between management and the independent registered public accounting firm regarding financial reporting. The Audit Committee is responsible for pre-approving all audit and non-audit services provided by the independent registered public accounting firm and ensuring that they are not engaged to perform the specific non-audit services proscribed by law or regulation. The Audit Committee has delegated pre-approval authority to its Chairman with the stipulation that his decision is to be presented to the full Committee at its next scheduled meeting. The Audit Committee has no other pre-approval policies. +29 +STOCKHOLDER PROPOSALS +Appropriate proposals of stockholders intended to be presented at the Company’s 2021 Annual Meeting of Stockholders must be received by the Company by November 22, 2020 in order to be included, pursuant to Rule 14a-8 promulgated under the Exchange Act, in the proxy statement and form of proxy relating to that meeting. With regard to such stockholder proposals, if the date of the next annual meeting of stockholders is advanced or delayed more than 30 calendar days from April 28, 2021, the Company will, in a timely manner, inform its stockholders of the change and of the date by which such proposals must be received. Stockholders desiring to present business at the 2021 Annual Meeting of Stockholders outside of the stockholder proposal rules of Rule 14a-8 of the Exchange Act and instead pursuant to Article Twenty-Seventh of the By-laws must prepare a written notice regarding such proposal addressed to The Corporate Secretary, RPC, Inc., 2801 Buford Highway NE, Suite 300, Atlanta, Georgia 30329, and deliver to or mailed and received by no later than January 24, 2021 and no earlier than December 15, 2020. Stockholders should consult the By-laws for other specific requirements related to such notice and proposed business. +With respect to stockholder nomination of directors, the By-laws provide that nominations for the election of directors may be made by any stockholder entitled to vote for the election of directors. Nominations must comply with an advance notice procedure which generally requires with respect to nominations for directors for election at an annual meeting, that written notice be addressed to: The Corporate Secretary, RPC, Inc., 2801 Buford Highway NE, Suite 300, Atlanta, Georgia 30329, and be received not less than 90 nor more than 130 days prior to the anniversary of the prior year’s annual meeting and set forth, among other requirements specified in the By-laws, the name, age, business address and, if known, residence address of the nominee proposed in the notice, the principal occupation or employment of the nominee for the past five years, the nominee’s qualifications, the class or series and number of shares of capital stock of the Company which are owned beneficially or of record by the person and any other information relating to the person that would be required to be disclosed in a proxy statement or other filings. Other specific requirements related to such notice, including required disclosures concerning the stockholder intending to present the nomination, are set forth in the By-laws. Notices of nominations must be received by the Corporate Secretary of the Company no later than January 24, 2021 and no earlier than December 15, 2020, with respect to directors to be elected at the 2021 Annual Meeting of Stockholders. +EXPENSES OF SOLICITATION +The Company will bear the cost of soliciting proxies. Upon request, we will reimburse brokers, dealers and banks, or their nominees, for reasonable expenses incurred in forwarding copies of the proxy material to their beneficial stockholders of record. Solicitation of proxies will be made principally by mail. Proxies also may be solicited in person or by telephone, facsimile or other means by our directors, officers and regular employees. These individuals will receive no additional compensation for these services. The Company has retained Georgeson Shareholder Communications, Inc. to conduct a broker search and to send proxies by mail for an estimated fee of approximately $55,000 including shipping expenses. +ANNUAL REPORT +The Company’s Annual Report to Stockholders, including its Annual Report on Form 10-K for the fiscal year ended December 31, 2019, without exhibits, is being mailed to stockholders with this Proxy Statement. The Annual Report is not considered proxy-soliciting material. +FORM 10-K +Upon the written request of any record or beneficial owner of the Company’s Common Stock whose proxy was solicited in connection with the 2020 Annual Meeting of Stockholders, the Company will furnish such owner, without charge, a copy of its Annual Report on Form 10-K, including the financial statements and the financial statement schedules (but without exhibits), for its fiscal year ended December 31, 2019. Requests for a copy of such Annual Report on Form 10-K should be addressed to Mr. Ben M. Palmer, Corporate Secretary, at RPC, Inc., 2801 Buford Highway NE, Suite 300, Atlanta, Georgia 30329. +30 +OTHER MATTERS +Our Board of Directors knows of no business other than the matters set forth herein which will be presented at the Annual Meeting. In as much as matters not known at this time may come before the Annual Meeting, the enclosed proxy confers discretionary authority with respect to such matters as may properly come before the Annual Meeting; and it is the intention of the persons named in the proxy to vote in accordance with their best judgment on such matters. +BY ORDER OF THE BOARD OF DIRECTORS +Ben M. Palmer +Corporate Secretary +Atlanta, Georgia +March 17, 2020 +31 +Your vote matters – here’s how to vote!You may vote online or by phone instead of mailing this card.Votes submitted electronically must be received by April 27, 2020 at 5 p.m. Eastern Time.OnlineGo to www.envisionreports.com/RESor scan the QR code — login details are located in the shaded bar below.PhoneCall toll free 1-800-652-VOTE (8683) within the USA, US territories and CanadaUsing a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas.Annual Meeting Proxy Cardq IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. qA Proposals — The Board of Directors recommends a vote FOR Proposals 1, 2 and 3.1. To elect the three Class I nominees, identified in the attached proxy statement, to the Board of Directors:01 - R. Randall Rollins 02 - Henry B. Tippie 03 - James B. WilliamsMark here to vote FOR all nominees Mark here to WITHHOLD vote from all nominees01For All EXCEPT - To withhold a vote for one or more nominees, mark the box to the left and the corresponding numbered box(es) to the right. 0203 2. To ratify the appointment of Grant Thornton LLP as independent registered public accounting firm of the Company for the fiscal year ending December 31, 2020. For Against Abstain 3. To hold a nonbinding vote on executive compensation, as discussed in the proxy statement. For Against Abstain To consider and act upon such other business as may properly come before the Annual Meeting or any adjournment of the meeting.B Authorized Signatures — This section must be completed for your vote to be counted. Please date and sign below.Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title. Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box. 1 U P X+ +IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q+Proxy — RPC, INC.Notice of 2020 Annual Meeting of Stockholders2170 Piedmont Road, NE, Atlanta, Georgia 30324Proxy Solicited by Board of Directors for Annual Meeting — April 28, 2020The undersigned hereby constitutes and appoints GARY W. ROLLINS and R. RANDALL ROLLINS, and each of them, jointly and severally, proxies, with full power of substitution, to vote all shares of Common Stock which the undersigned is entitled to vote at the Annual Meeting of Stockholders to be held on April 28, 2020, at 12:15 P.M. at 2170 Piedmont Road, NE, Atlanta, Georgia 30324, or any adjournment of the meeting.The undersigned acknowledges receipt of Notice of Annual Meeting of Stockholders and Proxy Statement, each dated March 17, 2020, grants authority to said proxies, or either of them, or their substitutes, to act in the absence of others, with all the powers which the undersigned would possess if personally present at such meeting and hereby ratifies and confirms all that said proxies or their substitutes may lawfully do in the undersigned’s name, place and stead. The undersigned instructs said proxies, or either of them, to vote as stated on the reverse side.(Continued and to be signed on the reverse side.)C Non-Voting ItemsChange of Address — Please print new address below.+ \ No newline at end of file diff --git a/raw/proxies/0000742278/0001104659-20-034576/proxy_rpt.txt b/raw/proxies/0000742278/0001104659-20-034576/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..6edf01b1f562b5de7917ab416b516f58eba989ac --- /dev/null +++ b/raw/proxies/0000742278/0001104659-20-034576/proxy_rpt.txt @@ -0,0 +1,9 @@ +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +Effective with the spin-off in 2001, the Company began providing certain administrative services to Marine Products. The service agreements between Marine Products and the Company provide for the provision of services on a cost reimbursement basis and may be terminated upon six months’ notice. The services covered by these agreements include administration of certain employee benefit programs and other administrative services. Charges from the Company (or from corporations which are subsidiaries of the Company) for such services aggregated approximately $865,000 in 2019. +RPC and Marine Products own 50 percent each of a limited liability company called 255 RC, LLC that was created for the joint purchase and ownership of a corporate aircraft. Each of RPC and Marine Products is currently a party to an operating lease agreement with 255 RC, LLC for a period of five years. During 2019, RPC recorded certain net operating costs comprised of rent and an allocable share of fixed costs of approximately $199,000 for the corporate aircraft. +During 2019, a subsidiary of RPC conducted business with companies owned by LOR, Inc. Mr. R. Randall Rollins, Chairman and Mr. Gary W. Rollins, Director, are officers, directors and controlling stockholders of LOR, Inc. In 2019, payments totaling approximately $1,625,000 were made to these LOR, Inc. companies primarily for the purchase of parts and repair services related to certain of RPC’s oilfield operating equipment. RPC believes the charges incurred are at least as favorable as the charges that would have been incurred for similar purchases from unaffiliated third parties. +RPC receives certain administrative services including an allocation for office space from Rollins. The service agreements between Rollins and the Company provide for the provision of services on a cost reimbursement basis and are terminable on six months’ notice. The services covered by these agreements include office space, administration of certain employee benefit programs, and other administrative services. Charges to the Company (or to corporations which are subsidiaries of the Company) for such services and rent aggregated approximately $104,000 in 2019. +A group that includes the Company’s Chairman of the Board, R. Randall Rollins, his brother Gary W. Rollins, who is also a director, and certain companies under their control, possesses in excess of fifty percent of the Company’s voting power. Please refer to the discussion above under the heading, “Corporate Governance and Board of Directors Committees and Meetings, Director Independence and NYSE Requirements, Controlled Company Exemption.” The group discussed above also controls in excess of fifty percent of Marine Products’ voting power. +Our Code of Business Conduct and Ethics for Directors and Executive Officers and Related Party Transactions Policy provides that related party transactions, as defined in Regulation S-K, Item 404(a) must be reviewed, approved and/or ratified by our Nominating and Corporate Governance Committee. As set forth in our Code, our Nominating and Corporate Governance Committee has the responsibility to ensure that it only approves or ratifies related party transactions that are in compliance with applicable law, +28 +consistent with the Company’s corporate governance policies (including those relative to conflicts of interest and usurpation of corporate opportunities) and on terms that are deemed to be fair to the Company. The Committee has the authority to hire legal, accounting, financial or other advisors as it may deem necessary or desirable and/or to delegate responsibilities to executive officers of the Company in connection with discharging its duties. A copy of the Code is available on our website at.rpc.net under the Governance section. All related party transactions for the fiscal year ended December 31, 2019 were reviewed, approved and/or ratified by the Nominating and Governance Committee in accordance with the Code. \ No newline at end of file diff --git a/raw/proxies/0000742278/0001104659-21-036030/proxy.txt b/raw/proxies/0000742278/0001104659-21-036030/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..6cac0561df490fb1a86b247746de496483d06de2 --- /dev/null +++ b/raw/proxies/0000742278/0001104659-21-036030/proxy.txt @@ -0,0 +1,1097 @@ +DEF 14A +1 +tm217458-1_def14a.htm +DEF 14A +tm217458-1_def14a - none - 3.4218713s +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A INFORMATION +Proxy Statement Pursuant to Section 14(a) of the Securities +Exchange Act of 1934 (Amendment No. ___) +Filed by the Registrant ☒ +Filed by a Party other than the Registrant ☐ +Check the appropriate box: +☐ +Preliminary Proxy Statement +☐ +Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +☒ +Definitive Proxy Statement +☐ +Definitive Additional Materials +☐ +Soliciting Material Pursuant to §240.14a-12 +RPC, Inc. +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +☒ +No fee required. +☐ +Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. +(1) +Title of each class of securities to which transaction applies: N/A +(2) +Aggregate number of securities to which transaction applies: N/A +(3) +Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): N/A +(4) +Proposed maximum aggregate value of transaction: N/A +(5) +Total fee paid: N/A +☐ +Fee paid previously with preliminary materials. +☐ +Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing: +(1) +Amount previously paid: N/A +(2) +Form, Schedule or Registration Statement No.: N/A +(3) +Filing party: N/A +(4) +Date Filed: N/A +RPC, INC. +NOTICE OF ANNUAL MEETING OF STOCKHOLDERS +2801 Buford Highway NE, Suite 300, Atlanta, Georgia 30329 +TO THE HOLDERS OF THE COMMON STOCK: +PLEASE TAKE NOTICE that the 2021 Annual Meeting of Stockholders of RPC, Inc., a Delaware corporation (“RPC” or the “Company”), will be held at 2170 Piedmont Road, NE, Atlanta, Georgia, on Tuesday, April 27, 2021, at 12:15 P.M., for the following purposes, as more fully described in the Proxy Statement accompanying this notice: +1. +To elect the three Class II nominees identified in the attached Proxy Statement to the Board of Directors; +2. +To ratify the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2021; and +3. +To consider and act upon such other business as may properly come before the Annual Meeting or any adjournment of the meeting. +The Proxy Statement dated March 15, 2021 is attached. +The Board of Directors has fixed the close of business on March 1, 2021 as the record date for the determination of stockholders entitled to notice of, and to vote at, the Annual Meeting or any adjournment thereof. +As permitted by the U.S. Securities and Exchange Commission rules, the Company is making the proxy materials relating to the Annual Meeting, including this Proxy Statement and the Company’s 2020 Annual Report on Form 10-K for the fiscal year ended December 31, 2020 (the “Annual Report”), available to our stockholders electronically via the Internet. On or about March 15, 2021, we mailed to our stockholders an Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be held on April 27, 2021 (the “Notice”) containing instructions on how to access this Proxy Statement and our Annual Report and vote online. If you received a Notice by mail, you will not receive a printed copy of the proxy materials in the mail unless you request a copy. The Notice instructs you on how to access and review all important information contained in the Proxy Statement and Annual Report. The Notice also instructs you on how you may submit your proxy over the Internet. If you received a Notice by mail and would like to receive a printed copy of our proxy materials, you should follow the instructions for requesting such materials contained on the Notice. +Important notice regarding the availability of proxy materials for the Annual Meeting of Stockholders to be held on April 27, 2021: The 2021 Proxy Statement and 2020 Annual Report to security holders are available at https://www.proxy-direct.com/geo-31978 +Voting can be completed in one of four ways: +• +Returning the Proxy Card by Mail +• Via Telephone at 1-800-337-3503 +• +Online at https://www.proxy-direct.com/geo-31978 +• Attending the meeting to vote In Person +BY ORDER OF THE BOARD OF DIRECTORS +Ben M. Palmer +Corporate Secretary +Atlanta, Georgia +March 15, 2021 +Whether or not you expect to attend the annual meeting, please sign, date and return the enclosed proxy card promptly. Alternatively, you may vote your proxy by telephone or over the Internet by following the instructions on your proxy card or Notice. If you decide to attend the meeting, you may, if you wish, revoke the proxy and vote your shares in person. +PROXY STATEMENT +We are furnishing the proxy materials to stockholders on or about March 15, 2021. The Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be held on April 27, 2021, Proxy Statement and the Annual Report are available at https://www.proxy-direct.com/geo-31978 +The following information concerning the proxy and the matters to be acted upon at the Annual Meeting of Stockholders to be held on April 27, 2021 is submitted by the Company to the stockholders in connection with the solicitation of proxies on behalf of the Company’s Board of Directors. +SOLICITATION OF AND POWER TO REVOKE PROXY +A form of proxy is enclosed. Each proxy submitted will be voted as directed, but if not otherwise specified, proxies solicited by the Board of Directors of the Company will be voted in favor of the candidates for election to the Board of Directors and in favor of ratification of the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2021. +A stockholder executing and delivering a proxy has power to revoke the same and the authority thereby given at any time prior to the exercise of such authority, if they so elect, by contacting either proxy holder, by timely submitting a later dated proxy changing their vote, or by attending the meeting and voting in person. However, a beneficial stockholder who holds his shares in street name must secure a proxy from their broker before they can attend the meeting and vote. All costs of solicitation have been, and will be, borne by the Company. +HOUSEHOLDING AND DELIVERY OF NOTICE OR PROXY MATERIALS +The Company has adopted the process called “householding” for any notice or proxy materials in order to reduce printing costs and postage fees. Householding means that stockholders who share the same last name and address will receive only one copy of the notice or proxy materials, unless we receive contrary instructions from any stockholder at that address. +If you prefer to receive multiple copies of the proxy material at the same address, additional copies will be provided to you promptly upon written or oral request. If you are a stockholder of record, you may contact us by writing to the Company at 2801 Buford Highway NE, Suite 300, Atlanta, GA 30329 or by calling 404-321-2140. Eligible stockholders of record receiving multiple copies of the proxy material can request householding by contacting the Company in the same manner. +CAPITAL STOCK +The outstanding capital stock of the Company on March 1, 2021 consisted of 215,810,964 shares of Common Stock, par value $0.10 per share. Holders of Common Stock are entitled to one vote (non-cumulative) for each share of such stock registered in their respective names at the close of business on March 1, 2021, the record date for determining stockholders entitled to notice of, and to vote at, the meeting or any adjournment thereof. +A majority of the outstanding shares will constitute a quorum at the Annual Meeting. Abstentions will be counted for purposes of determining the presence or absence of a quorum for the transaction of business. In accordance with the General Corporation Law of the state of Delaware, the election of the nominees named herein as Directors will require the affirmative vote of a plurality of the votes cast by the shares of Company Common Stock entitled to vote in the election provided that a quorum is present at the Annual Meeting. In the case of a plurality vote requirement (as in the election of directors), where no particular percentage vote is required, the outcome is solely a matter of comparing the number of votes cast for each nominee, with those nominees receiving the most votes being elected, and hence only votes for director nominees (and not abstentions or broker non-votes) are relevant to the outcome. In this case, the three nominees receiving the most votes will be elected. The affirmative vote of a majority of shares of common stock present in person or represented by proxy and entitled to vote at the meeting is required to approve the ratification of the appointment of the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2021. Abstentions will have the effect of a vote against the proposal, while broker non-votes will have no effect on the proposal and will be disregarded. +1 +There are no rights of appraisal or similar dissenter’s rights with respect to any matter to be acted upon pursuant to this Proxy Statement. It is expected that shares held of record by officers and directors of the Company, which in the aggregate represent approximately 69 percent of the outstanding shares of Common Stock, will be voted for the nominees for directors and for the ratification of the appointment of the Company’s independent registered public accounting firm. +STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT +The current executives named in the Summary Compensation Table, and the name and address of each stockholder (or “group” as that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) who owned beneficially five percent (5%) or more of the shares of Common Stock of the Company on March 1, 2021, together with the number of shares owned by each such person and the percentage of outstanding shares that ownership represents, and information as to Common Stock ownership of the directors and executive officers of the Company as a group (according to information received by the Company), are set out below: +Name and Address of Beneficial Owner +Amount +Beneficially +Owned (1) +Percent of +Outstanding +Shares +Gary W. Rollins +Non-Executive Chairman of the Board; +Chairman and Chief Executive Officer, Rollins, Inc. +2170 Piedmont Road, NE +Atlanta, Georgia +140,088,102 (2 ) +64.9 +Richard A. Hubbell +President and Chief Executive Officer +2801 Buford Highway NE, Suite 300 +Atlanta, Georgia +2,994,967 (3 ) +1.4 +Ben M. Palmer +Vice President, Chief Financial Officer and Corporate Secretary +2801 Buford Highway NE, Suite 300 +Atlanta, Georgia +779,915 (4 ) +** +All Directors and Executive Officers as a group +(9 persons) +148,841,175 (5 ) +69.0 +** +Less than one percent +(1) +Except as otherwise noted, the nature of the beneficial ownership for all shares is sole voting and investment power. +(2) +Includes the following shares of Company Common Stock: (a) 515,542 shares of the Company Common Stock held in a charitable trust of which he is a co-trustee and as to which he shares voting and investment power; (b) 84,675,924 shares held by LOR, Inc., a Georgia corporation (Mr. Gary W. Rollins is an officer and director of LOR, Inc. and has a 50 percent voting interest in it); (c) 11,292,525 shares held by RFT Investment Company, LLC, a Georgia limited liability company (LOR, Inc. is the manager of RFT Investment Company, LLC); (d) 101,510 shares held by LOR Investment Company, LLC, a Georgia limited liability company (LOR Investment Company, LLC is member managed, and LOR, Inc. holds a majority of all voting interests in LOR Investment Company, LLC); (e) 2,544,785 shares held by Rollins Holding Company, Inc. a Georgia corporation (Mr. Gary W. Rollins is an officer and director of Rollins Holding Company, Inc. and has a 50 percent voting interest in it); (f) 15,677,032 shares held by RCTLOR, LLC, a Georgia limited liability company (LOR, Inc. is the managing member of RCTLOR, LLC); (g) 889,242 shares held by RFA Management Company, LLC, a Georgia limited liability company, the manager of which is LOR, Inc.; (h) 582,471 shares held by 1997 RRR Grandchildren’s Partnership, a Georgia general partnership, the partners of which are multiple trusts benefiting the grandchildren and more remote descendants of his deceased brother, Mr. R. Randall Rollins (Mr. Gary W. Rollins is a trustee of each such trust); (i) 4,815,173 shares held by WNEG Investments, L.P., a Georgia limited partnership (Mr. Gary W. Rollins is the sole member of the sole general partner of WNEG Investments, +2 +L.P.); (j) 3,224,505 shares held by two revocable trusts established by Mr. Gary W. Rollins, as to each of which he is the sole trustee; (k) 10,231,540 shares held by seven trusts (the “Rollins Family Trusts”) for the benefit of the children and/or more remote descendants of his deceased brother, Mr. R. Randall Rollins; and (l) 335,422 shares held by the R. Randall Rollins 2012 Trust. Also includes 2,970 shares of Company Common Stock held by his wife, as to which Mr. Rollins disclaims any beneficial interest. Excludes 1,068,606 shares currently held by the Estate of R. Randall Rollins, which shares are expected to be transferred to the R. Randall Rollins 2012 Trust (the trustee of each of the Rollins Family Trusts and the R. Randall Rollins 2012 Trust is a corporation over which Mr. Rollins has the ability to assert control). Mr. Rollins is part of a control group holding Company securities, as disclosed on a Schedule 13D on file with the U.S. Securities and Exchange Commission. +(3) +Includes 320,000 shares of restricted stock awards for Company Common Stock. +(4) +Includes 211,800 shares of restricted stock awards for Company Common Stock. +(5) +Shares held in trusts as to which more than one officer and/or director are co-trustees or entities in which there is common ownership have been included only once. Includes 531,800 shares of restricted stock awards for Company Common Stock awarded and issued to the executive officers pursuant to the Company’s Stock Incentive Plans (SIP). +PROPOSAL 1: ELECTION OF DIRECTORS +At the Annual Meeting, Messrs. Gary W. Rollins, Richard A. Hubbell and Harry J. Cynkus will be nominated to serve as Class II directors. The nominees for election at the 2021 Annual Meeting are now directors of the Company. The directors in each class serve for a term of three years. The director nominees will serve in their respective class until their successors are elected and qualified. Five other individuals serve as directors but are not standing for re-election because their terms as directors extend past this Annual Meeting pursuant to provisions of the Company’s Amended and Restated Bylaws (the “Bylaws”) that provide for the election of directors for staggered terms, with each director serving a three-year term. Mr. R. Randall Rollins, served as Chairman of the Board since inception of the Company in 1984 until his passing on August 17, 2020, in addition to serving as a Class I director. In addition, our former Lead Director, Mr. Henry B. Tippie, and former directors Messrs. Bill J. Dismuke and James B. Williams retired from the Board at or before the end of 2020. On August 25, 2020, Mr. Gary W. Rollins was appointed Non-Executive Chairman of the Board to succeed Mr. R. Randall Rollins. Also on August 25, 2020, the following directors were appointed to the Board: Mr. Jerry W. Nix as a Class I director and Mr. Harry J. Cynkus as a Class II director. Mr. Nix, appointed to fill the seat vacated upon the death of Mr. R. Randall Rollins, serves as the Lead Director and will stand for election in 2023 when the Class I directors are up for re-election. Additionally, on December 11, 2020, the Board of Directors appointed Ms. Susan R. Bell and Mr. Patrick J. Gunning as Directors effective January 1, 2021. Ms. Bell will stand for election by the stockholders in 2022 as a Class III Director, and Mr. Gunning will stand for election by the stockholders in 2023 as a Class I Director. Ms. Bell fills the board vacancy arising from the retirement of Bill J. Dismuke, and Mr. Gunning fills the board vacancy arising from the retirement of James B. Williams. Unless authority is withheld, the proxy holders will vote for the election of each nominee named below. Although management does not contemplate the possibility, in the event any nominee is not a candidate or is unable to serve as a director at the time of the election, unless authority is withheld, the proxies will be voted for any nominee who shall be designated by the present Board of Directors and recommended by the Nominating and Governance Committee to fill such vacancy. +Director Qualifications +As described in more detail below, we believe that each of our directors is well suited to serve on our Board of Directors for a variety of individual reasons and because collectively they bring a wealth of experience from diverse backgrounds that have combined to provide us with an excellent mix of experiences and viewpoints. The name and age of each of our directors and each of the nominees, his or her principal occupation, together with the number of shares of Common Stock beneficially owned, directly or indirectly, by each and the percentage of outstanding shares that ownership represents, all as of the close of business on March 1, 2021 (according to information received by the Company), other board memberships and the period during which he or she has served us as a director are set forth as follows: +3 +Names of Directors +Principal Occupation (1) +Service as +Director +Age +Shares of +Common +Stock (2) +Percent of +Outstanding +Shares +Names of Director Nominees +Class II (Current Term Expires 2021; New Term Will Expire 2024) +Gary W. Rollins (3) +Non-Executive Chairman of +the Board of the Company; +Chairman and Chief Executive +Officer of Rollins, Inc. +1984 to date +76 +140,088,102 (4) +64.9 +Richard A. Hubbell +President and Chief Executive +Officer of the Company; +President and Chief Executive +Officer of Marine Products +Corporation. +1987 to date +76 +2,994,967 (5) +1.4 +Harry J. Cynkus +Vice Chairman, Trustee and +Chair of the Resources and +Finance Committee, Utica +College Board of Trustees; +Retired Chief Financial Officer +of Rollins, Inc. +August 25, 2020 +to date +71 +10,010 +** +Names of Directors Whose Terms Have Not Expired +Class III (Current Term Expires 2022) +Susan R. Bell +Retired Partner, Ernst & +Young LLP; Board Member, +National Center for Civil & +Human Rights and +International Women’s Forum, +Georgia. +January 1. 2021 +to date +58 +5,500 +** +Amy R. Kreisler (3) +Executive Director, The O. Wayne Rollins Foundation; Trustee, The Ma-Ran Foundation. +2016 to date +51 +5,397,860 (6) +2.5 +Pamela R. Rollins (3) +Vice President, LOR +Investment Company, LLC; +Vice President, Rollins Holding +Company, Inc. +2019 to date +64 +4,563,607 (7) +2.1 +Class I (Current Term Expires 2023) +Jerry W. Nix +Lead Director of the +Company; Retired Vice +Chairman, Executive Vice +President and Chief Financial +Officer of Genuine Parts +Company. +August 25, 2020 +to date +75 +— +** +Patrick J. Gunning +Chief Financial Officer, The Robert W. Woodruff Arts Center, Inc.; Retired Partner, Ernst & Young LLP. +January 1, 2021 +to date +61 +7,000 +** +** +Less than one percent +(1) +Except as noted, each of the directors has held the positions of responsibility set out in this column (but not necessarily his or her present title) and in their respective biographies below for more than five years. All of the directors shown in the above table, with the exception of Amy R. Kreisler, are also directors of Marine Products Corporation (“Marine Products” or “MPC”) and, with the exception of Richard A. Hubbell and Amy R. Kreisler, are also directors of Rollins, Inc. (“Rollins”). +4 +(2) +Except as otherwise noted, the nature of the beneficial ownership for all shares is sole voting and investment power. +(3) +Amy R. Kreisler and Pamela R. Rollins are sisters and are nieces of Gary W. Rollins. +(4) +See information contained in footnote (2) to the table appearing in the Capital Stock section. +(5) +See information contained in footnote (3) to the table appearing in the Capital Stock section. +(6) +Includes the following shares of Company common stock: (a) 2,643,001 shares of Company Common Stock held in a charitable trust of which she is a co-trustee and the Executive Director; and (b) 387,631 shares held by the 2002 Amy R. Kreisler Trust, as to which she currently has the power to designate the members of the Investment Committee of the trustee. Excludes 1,587,523 shares of Company Common Stock held indirectly through two family limited partnerships of which Ms. Kreisler is a general partner. Excludes 1,171 shares held by the R. Randall Rollins Voting Trust U/A dated August 25, 1994, as to which Ms. Kreisler is a co-trustee. Also excludes 1,068,606 shares held by the Estate of R. Randall Rollins, as to which Ms. Kreisler is a co-executor. +(7) +Includes the following shares of Company common stock: (a) 2,643,001 shares of Company Common Stock held in a charitable trust of which she is a co-trustee; and (b) 387,631 shares held by the 2002 Pamela R. Rollins Trust, as to which she currently has the power to designate the members of the Investment Committee of the trustee. Excludes 1,587,523 shares of Company Common Stock held indirectly through two family limited partnerships of which Ms. Rollins is a general partner. Excludes 1,171 shares held by the R. Randall Rollins Voting Trust U/A dated August 25, 1994, as to which Ms. Rollins is a co-trustee. Also excludes 1,068,606 shares held by the Estate of R. Randall Rollins, as to which Ms. Rollins is a co-executor. +Key Attributes, Experience and Skills of Directors and Director Nominees +Gary W. Rollins was elected a Director of RPC in 1984. Mr. Rollins has extensive knowledge of the Company’s business and industry. In August 2020, he was appointed as the Non-Executive Chairman of the Company and of Marine Products, and Chairman and CEO of Rollins. Mr. Rollins has been a Director of Marine Products since 2001 and a Director of Rollins since 1981. +Richard A. Hubbell was elected a Director of RPC in 1987. Mr. Hubbell has extensive knowledge of the Company’s business and industry serving over 36 years at the Company. He has served as the Chief Executive Officer of the Company since 2003. In addition, Mr. Hubbell serves as the President of the Company. Mr. Hubbell is also the President, Chief Executive Officer and a Director of Marine Products. +Amy R. Kreisler was appointed as a Director of RPC in 2016. She is a former attorney of the law firm Arnall Golden Gregory LLP. Ms. Kreisler is a Trustee on The Lovett School Board of Trustees and also serves on their Executive Committee. She is Trustee on the Skyland Trail Board of Trustees where she is also the Chairman of the Governance Committee. Additionally, she is Executive Director of The O. Wayne Rollins Foundation and The Ma-Ran Foundation. Ms. Kreisler brings extensive financial and investment experience to our Board of Directors. +Pamela R. Rollins was appointed as a Director of RPC in 2019. Ms. Rollins has also been a Director of Rollins since 2015 and Marine Products Corporation since 2017 and is Vice President of LOR Investment Company, LLC. Ms. Rollins is a Trustee of Young Harris College and The O. Wayne Rollins Foundation, a Trustee Emeritus of The Schenck School, a Board Member of The National Monuments Foundation and a former Board Member of The Lovett School. Ms. Rollins brings a distinct interest in a wide range of matters regarding social responsibility. +Harry J. Cynkus was appointed as a Director of RPC in August 2020. Mr. Cynkus is the former Senior Vice President, Chief Financial Officer and Treasurer of Rollins, holding various positions from 1998 to 2016. After beginning his career with Arthur Andersen & Co., he held financial positions with several companies including Tyco International, ARAMARK Services, Brach & Brock Confections and Mayer Electric Supply Co., Inc. Mr. Cynkus brings extensive financial and strategic experience to our Board of Directors. +Jerry W. Nix was appointed as a Director of RPC in August 2020. Mr. Nix is the former Vice Chairman, Executive Vice President and Chief Financial Officer of Genuine Parts Company. Prior to retiring in +5 +March 2013, he served as Chief Financial Officer for over 13 years and served in various other capacities with Genuine Parts before that time, including Senior Vice President, Finance. Mr. Nix served as a director of Synovus Financial Corp until 2019. He currently serves on the following civic and non-profit boards: Young Harris College, Cobb County Chamber of Commerce, Cobb-Marietta Coliseum and Exhibit Hall Authority, John and Mary Franklin Foundation, and on the Executive Committee for the Atlanta Area Council, Boy Scouts of America. Mr. Nix brings extensive financial and operational experience to our Board of Directors. +Susan R. Bell was appointed as a Director of RPC in December 2020, effective January 1, 2021. Ms. Bell retired as a partner from Ernst & Young LLP (EY) in 2020 after a 36-year career in public accounting. At EY, she served as both an audit and advisory partner, led the Southeast Risk Advisory practice and served as Atlanta Office Managing Partner. Prior to EY, she was an audit partner at Arthur Andersen LLP. Ms. Bell serves on the boards of the non-profit National Center for Civil & Human Rights and IWF Georgia, an international women’s forum. Ms. Bell brings extensive risk management, financial and strategic experience to our Board of Directors. +Patrick J. Gunning was appointed as a Director of RPC in December 2020, effective January 1, 2021. He recently retired as a partner from EY after a 39-year career in public accounting. Mr. Gunning held multiple leadership roles at EY including Southeast Region Leader of the Financial Accounting Advisory Services practice, Southeast Area Industry Leader of the Retail and Consumer Products practice, and Lead Audit Partner. He previously served as Partner and Assurance Division Leader with Arthur Andersen LLP through 2002, including serving as Lead Audit Partner. Mr. Gunning brings extensive financial and strategic experience to our Board of Directors. +Our Board of Directors recommends a vote “FOR” the Class II nominees listed above. +PROPOSAL 2: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +The Audit Committee of the Board of Directors has appointed Grant Thornton LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2021. During fiscal year 2020, Grant Thornton LLP served as the Company’s independent registered public accounting firm. Representatives of Grant Thornton LLP are expected to attend the annual meeting, where they will be available to respond to appropriate questions and, if they desire, to make a statement. +Although the Company is not required to seek ratification of this appointment, the Audit Committee and the Board of Directors believe that it is appropriate to do so. If stockholders do not ratify the appointment of Grant Thornton LLP, the current appointment will stand, but the Audit Committee will consider the stockholder action in determining whether to retain Grant Thornton LLP as the Company’s independent registered public accounting firm for future fiscal years. +Our Board of Directors recommends a vote “FOR” the ratification of the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm for the 2021 fiscal year. +CORPORATE GOVERNANCE AND BOARD OF DIRECTORS COMMITTEES AND MEETINGS +Board Meetings +The Board of Directors met seven times during the fiscal year ended December 31, 2020. No director attended fewer than 75 percent of the aggregate of all Board meetings and meetings of committees on which he or she served during 2020. R. Randall Rollins, the long-time Chairman of our Board of Directors, passed away on August 17, 2020. Board members are encouraged to attend the Company’s Annual Stockholders Meetings and all of the Board members were in attendance, either in person or telephonically, at last year’s meeting. +The Board of Directors has an Audit Committee, a Compensation Committee, a Diversity Committee and a Nominating and Governance Committee. +6 +Below is a summary of our committee structure and membership information. +Committee Member +Audit +Committee +Compensation +Committee +Diversity +Committee +Nominating & +Governance +Committee +Executive +Committee +Gary W. Rollins (1) +Member +Jerry W. Nix (2) +Chair +Chair +Chair +Harry J. Cynkus (3) +Chair +Patrick J. Gunning (3) +Member +Member +Member +Member +Susan R. Bell (3) +Member +Richard A. Hubbell (4) +Member +(1) +Non-Executive Chairman of the Board +(2) +Lead Director, effective January 1, 2021 +(3) +Financial Expert +(4) +President and Chief Executive Officer +Audit Committee +The Audit Committee of the Board of Directors of the Company currently consists of Messrs. Harry J. Cynkus (Chairman), Patrick J. Gunning and Ms. Susan R. Bell, all of whom are independent as discussed below. For the year ended December 31, 2020, the Audit Committee was comprised of Messrs. Henry B. Tippie (Chairman), James B. Williams and Bill J. Dismuke, all of whom retired at or before the end of 2020. The Audit Committee held five meetings during the fiscal year ended December 31, 2020, including a meeting to review the Company’s Form 10-K for the year ended December 31, 2019. The Board of Directors has determined that all of the Audit Committee members are independent as that term is defined by the rules of the U.S. Securities and Exchange Commission (“SEC”) and the New York Stock Exchange (“NYSE”). The Board of Directors has also determined that all of the Audit Committee members are “Audit Committee Financial Experts” as defined in the SEC rules. The Audit Committee meets with the Company’s independent registered public accounting firm, internal auditor, Chief Executive Officer and Chief Financial Officer to review the scope and results of audits and recommendations made with respect to controls over financial reporting and specific accounting and financial reporting issues. The Audit Committee has the authority to obtain advice and assistance from, and receive appropriate funding from the Company for, outside legal, accounting or other advisors as it deems necessary to carry out its duties. The Audit Committee Charter is available on the Company’s website at rpc.net under the Governance section. +Compensation Committee +The Compensation Committee of the Board of Directors of the Company currently consists of Messrs. Jerry W. Nix (Chairman) and Patrick J. Gunning, both of whom are independent as discussed below. For the year ended December 31, 2020 the Compensation Committee was comprised of Messrs. Henry B. Tippie (Chairman) and James B. Williams, both of whom retired before or at the end of 2020. It held three meetings during the fiscal year ended December 31, 2020. The function of the Compensation Committee is to set the base salary and performance-based incentive cash compensation of the executive officers. The Compensation Committee also administers the Company’s SIPs. The Compensation Committee does not have a formal charter, and is not required to have one under the “controlled company” exemption under the NYSE rules, as described in the section titled “Director Independence and NYSE Requirements”. +Diversity Committee +The Diversity Committee of the Board of Directors of the Company consists of Messrs. Jerry W. Nix (Chairman) and Patrick J. Gunning, both of whom are independent as discussed below. For the year ended December 31, 2020 the Diversity Committee was comprised of Messrs. Henry B. Tippie (Chairman) and +7 +James B. Williams, both of whom retired at the end of 2020. It held one meeting during the fiscal year ended December 31, 2020. The function of the Diversity Committee is to monitor compliance with applicable non-discrimination laws. +Nominating and Governance Committee +The Nominating and Governance Committee of the Board of Directors of the Company consists of Messrs. Jerry W. Nix (Chairman) and Patrick J. Gunning, both of whom are independent, as discussed below. For the year ended December 31, 2020 the Nominating and Governance Committee was comprised of Messrs. Henry B. Tippie (Chairman) and James B. Williams, both of whom retired at the end of 2020. The Committee was formed in 2002 pursuant to a resolution passed by the Board of Directors for the following purposes: +• +to recommend to the Board of Directors nominees for director and to consider any nominations properly made by a stockholder; +• +upon request of the Board of Directors, to review and report to the Board with regard to matters of corporate governance, including reviewing any related party transactions; and +• +to make recommendations to the Board of Directors regarding the agenda for the annual stockholders’ meetings and with respect to appropriate action to be taken in response to any stockholder proposals. +The Nominating and Governance Committee held three meetings during the fiscal year ended December 31, 2020. We are not required by law or by NYSE rules to have a nominating committee since we are a controlled corporation as described below under the heading “Director Independence and NYSE Requirements.” We established the Nominating and Governance Committee to promote responsible corporate governance practices, and we currently intend to maintain the Committee going forward. +Director Nominations +Under Delaware law, there are no statutory criteria or qualifications for directors. No criteria or qualifications have been prescribed by the Board at this time. The Nominating and Governance Committee does not have a charter or a formal policy with regard to the consideration of director candidates. As such, there is no formal policy relative to diversity, although as noted below, it is one of many factors that the Nominating and Governance Committee has the discretion to factor into its decision making. This discretion would extend to how the Committee might define diversity in a particular instance — whether in terms of background, viewpoint, experience, education, race, gender, national origin or other considerations. The Committee acts under the guidance of the Corporate Governance Guidelines approved by the Board of Directors and posted on the Company’s website at rpc.net under the Governance section. The Board believes that it should preserve maximum flexibility in order to select directors with sound judgment and other desirable qualities. According to the Company’s Corporate Governance Guidelines, the Board of Directors will be responsible for selecting nominees for election to the Board of Directors. The Board delegates the screening process to the Nominating and Governance Committee. This Committee is responsible for determining the appropriate skills and characteristics required of Board members in the context of the then current make-up of the Board. This determination takes into account all factors which the Committee considers appropriate, such as independence, experience, strength of character, mature judgment, technical skills, diversity, age and the extent to which the individual would fill a present need on the Board. The Company’s Bylaws provide that nominations for the election of directors may be made by any stockholder entitled to vote for the election of directors. Nominations must comply with an advance notice procedure which generally requires, with respect to nominations for directors for election at an annual meeting, that written notice be addressed to: The Corporate Secretary, RPC, Inc., 2801 Buford Highway NE, Suite 300, Atlanta, Georgia 30329, and received not less than 90 nor more than 130 days prior to the anniversary of the prior year’s annual meeting and set forth, among other requirements specified in the Bylaws, the name, age, business address and, if known, residence address of the nominee proposed in the notice, the principal occupation or employment of the nominee for the past five years, the class or series and number of shares of capital stock of the Company which are owned beneficially or of record by the person and any other information relating to the person that would be required to be disclosed in a proxy statement or other filings. Other requirements related to the notice are contained in the Bylaws, and stockholders are advised to carefully review these requirements to ensure that nominations comply with the Bylaws. The Committee will consider nominations from stockholders who satisfy these requirements. +8 +The Committee is responsible for screening the nominees that are selected by the Board of Directors for nomination to the Board and for service on committees of the Board. All of the nominees for directors being voted upon at the Annual Meeting to be held on April 27, 2021 are currently serving on the Board of Directors. +Board Leadership +The Company has had separate persons serving as its Chairman of the Board and Chief Executive Officer since 2003. Mr. R. Randall Rollins, the long-time Chairman of our Board passed away on August 17, 2020. Mr. Gary W. Rollins was appointed as the Non-Executive Chairman and chairs our Board meetings. Mr. Richard A. Hubbell is our President and Chief Executive Officer. We believe that it represents the appropriate structure for us at this time; the Chairman of the Board provides general oversight and strategic planning for the Company, while the President and Chief Executive Officer focuses on optimizing operational efficiencies. +Risk Oversight by Board of Directors +Our Board of Directors’ oversight of risk has not been delegated to any Board Committee. “Risk” is an extremely broad concept that extends to multiple functional areas and crosses multiple disciplines. As such, risk may be addressed from time to time by the full Board or by one or more of our Committees. Senior management is responsible for identifying and managing material risks that we face while insurable risks and litigation risks are handled primarily by the risk management department. Senior management provides the Board with a summary of insurance coverage annually and updates as deemed necessary. Liquidity risk, credit risk and risks associated with our credit facilities and cash management are handled primarily by our finance department which regularly provides a financial report to both the Audit Committee and to the full Board. Operational, business, regulatory and political risks are handled primarily by senior executive management which regularly provides various operational reports to, among others, the full Board, the Executive Committee and the Audit Committee. +Director Independence and NYSE Requirements +Controlled Company Exemption +The Company has elected to be treated as a “controlled company” as defined by NYSE Section 303A.00. This Section provides that a controlled company need not comply with the requirements of Sections 303A.01, 303A.04 and 303A.05 of the NYSE Listed Company Manual. Section 303A.01 requires that listed companies have a majority of independent directors. As a controlled company, this Section does not apply to the Company. Sections 303A.04 and 303A.05 require that listed companies have a nominating and corporate governance committee and a compensation committee, in each case composed entirely of independent directors, and that each of these committees must have a charter that addresses both the committee’s purpose and responsibilities and the need for an annual performance evaluation by the committee. While the Company has a nominating and corporate governance committee and a compensation committee, it is not required to and does not comply with all of the provisions of Sections 303A.04 and 303A.05. The Company is a “controlled company” because a group that includes the Company’s Non-Executive Chairman, Mr. Gary W. Rollins, and certain companies under his control, possesses in excess of fifty percent of the Company’s voting power. This means that they have the ability to determine the outcome of the election of directors at the Company’s annual meetings and to determine the outcome of many significant corporate transactions, many of which only require the approval of a majority of the Company’s voting power. Such a concentration of voting power could also have the effect of delaying or preventing a third party from acquiring the Company at a premium. +The Company’s Audit Committee is composed of three “independent” directors as defined by the Company’s Corporate Governance Guidelines, the NYSE rules, the Exchange Act, SEC regulations thereunder, and the Company’s Audit Committee Charter. All of the members of the Compensation, Diversity and Nominating and Governance Committees are also “independent” directors. The independent directors of the Company are Messrs. Harry J. Cynkus, Jerry W. Nix, Patrick J. Gunning and Ms. Susan R. Bell. +9 +Independence Guidelines +Under NYSE listing standards, to be considered independent, a director must be determined to have no material relationship with the Company other than as a director. The NYSE standards set forth a nonexclusive list of relationships which are conclusively deemed material. The Company’s Independence Guidelines are posted on the Company’s website at rpc.net under the Governance section and include categorical standards for determining independence in specific situations. +Audit Committee Charter +Under the Company’s Audit Committee Charter, in accordance with NYSE listing requirements and the Securities Exchange Act of 1934, all members of the Audit Committee must be independent of management and the Company. A member of the Audit Committee is considered independent as long as he or she (i) does not accept any consulting, advisory, or compensatory fee from the Company, other than as a director or committee member; (ii) is not an affiliated person of the Company or its subsidiaries; and (iii) otherwise meets the independence requirements of the NYSE and the Company’s Corporate Governance Guidelines. +Nonmaterial Relationships +After reviewing all of the relationships between the independent directors and the Company, the Board of Directors determined that none of independent directors had any relationships not included within the categorical standards set forth in the Independence Guidelines and discussed above except as follows: +1. +Mr. Cynkus was employed by Rollins, from 1998 to 2016 and held several positions during that time including as Senior Vice President, Chief Financial Officer and Treasurer. +2. +Mr. Nix’s son was an employee of the Company through July 2020, but was not an executive officer of the Company. +3. +Ms. Bell and Mr. Gunning retired from Ernst & Young LLP (EY) as partners; EY provided various consultation services to the Company during 2020 related to income tax accounting and preparation, sales tax audit assistance and other technical accounting matters. +4. +Messrs. Cynkus, Nix, Gunning, and Ms. Bell also serve on the Boards of Rollins and Marine Products, of which Mr. Gary W. Rollins is a director and voting control over which is held by a control group of which Mr. Gary Rollins, Ms. Pamela Rollins and Ms. Amy Rollins Kreisler are a part. +As required by the Independence Guidelines, the Board of Directors unanimously concluded that the above-listed relationships would not affect the independent judgment of the independent directors, based on their experience character and independent means, and therefore do not preclude an independence determination. All of the members of the Audit Committee are also independent under the heightened standards required for Audit Committee members. +The Company’s non-management directors meet at regularly scheduled executive sessions without management. In accordance with the NYSE corporate governance listing standards, Mr. Henry B. Tippie was elected to be the Lead Director in 2020 and presided over the executive session held during 2020. In addition, Mr. Jerry W. Nix was elected by the Board of Directors as the Lead Director, effective January 1, 2021and presides during these executive sessions. +Corporate Governance Guidelines +We have adopted Corporate Governance Guidelines to formalize and promote better understanding of our policies and procedures. At least annually, the Board reviews these guidelines. As required by the rules of the NYSE, our Corporate Governance Guidelines require that our non-management directors meet in regularly scheduled executive sessions each year without management, and such meetings are currently required to occur at least twice annually. +At the Company’s website at rpc.net, under the Governance section you may access a copy of its Corporate Governance Guidelines, Audit Committee Charter, Code of Business Conduct, Code of Business +10 +Conduct and Ethics for Directors and Executive Officers and Related Party Transactions Policy, and Independence Guidelines. +Code of Business Conduct +The Company has adopted a Code of Business Conduct applicable to all directors, officers and employees generally, as well as a Code of Business Conduct and Ethics for Directors and Executive Officers and Related Party Transactions Policy applicable to the principal executive officer, principal financial officer, and directors. Both codes are available on the Company’s website at rpc.net under the Governance section. +Director Communications +The Company also has a process for interested parties, including stockholders, to send communications to the Board of Directors, Lead Director, any of the Board committees or the non-management directors as a group. Such communications should be addressed as follows: +Mr. Jerry W. Nix +c/o Internal Audit Department +RPC, Inc. +2801 Buford Highway NE, Suite 300 +Atlanta, Georgia 30329 +The above instructions for communications with the directors are also posted on our website at rpc.net under the Governance section. All communications received from interested parties are forwarded to the Board of Directors. Any communication addressed solely to the Lead Director or the non-management directors will be forwarded directly to the appropriate addressee(s). +COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION +None of the directors named above who serve on the Company’s Compensation Committee are or have ever been an employee of the Company. There are no Compensation Committee interlocks requiring disclosure. +11 +DIRECTOR COMPENSATION +The following table sets forth compensation to the Company’s directors for services rendered as a director for the year ended December 31, 2020. Mr. Richard A. Hubbell, a director, is an employee of the Company. His compensation is set forth in the Summary Compensation Table under Executive Compensation. The directors listed below have never been employed by the Company or paid a salary or bonus by the Company, have never been granted any options or other stock-based awards, and do not participate in any Company sponsored retirement plans. +Name +Fees Earned or +Paid in Cash +($) +Stock +Awards (1) +($) +Option +Awards (1) +($) +Total +($) +Henry B. Tippie +146,500 +— +— +146,500 +James B. Williams +97,000 +— +— +97,000 +Bill J. Dismuke +72,500 +— +— +72,500 +Gary W. Rollins +92,500 +— +— +92,500 +Pamela R. Rollins +77,500 +— +— +77,500 +Amy R. Kreisler +77,500 +— +— +77,500 +Harry J. Cynkus (2) +37,500 +— +— +37,500 +Jerry W. Nix (2) +35,000 +— +— +35,000 +(1) +Directors are eligible for grants of stock awards under the Company’s SIP. No stock awards have been granted to the non-management directors under the SIP. +(2) +Messrs. Cynkus and Nix were appointed to the Board on August 25, 2020. +Directors that are our employees do not receive additional compensation for services rendered as a director. +Under compensation arrangements effective since January 1, 2019, non-management directors each received an annual retainer fee of $60,000. In addition, the Chairman of the Audit Committee receives an annual retainer of $20,000, the Chairman of the Compensation Committee receives an annual retainer of $10,000, and the Chairman of each of the Nominating and Governance Committee and Diversity Committee receives an annual retainer of $6,000. A director that chairs more than one committee receives a retainer with respect to each committee he chairs. Effective October 2020, the Non-Executive Chairman receives an annual retainer of $60,000 in addition to the director fees. All of the retainers are paid on a quarterly basis. Per meeting fees for non-management directors are as follows: +• +For meetings of the Board of Directors, $2,500. +• +For meetings of the Compensation Committee, $2,000. +• +For meetings of the Diversity Committee, $1,500. +• +For meetings of the Nominating and Governance Committee, $1,500. +• +For meetings of the Audit Committee either in person or over the telephone, $2,500. +• +In addition, the Lead Director receives an additional $2,500 for preparing to conduct each quarterly Board Committee meeting. +All non-management directors are also entitled to reimbursement of expenses for all services as a director, including committee participation or special assignments. +Notwithstanding anything to the contrary set forth in any of the Company’s previous filings under the Securities Act of 1933, as amended (the “Securities Act”) or the Exchange Act that might incorporate future filings, including the Proxy Statement, in whole or in part, the Report of the Audit Committee shall not be incorporated by reference into any such filings. +12 +REPORT OF THE AUDIT COMMITTEE +Management is responsible for the Company’s internal controls, assessing the effectiveness of these controls and the financial reporting process. The Company’s independent registered public accounting firm is responsible for performing independent audits of the Company’s consolidated financial statements and the effectiveness of the Company’s internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States) and for issuing reports thereon. The Audit Committee’s responsibility is generally to monitor and oversee these processes, as described in the Audit Committee Charter. It is not the duty of the Audit Committee to plan or conduct audits or to determine that the Company’s financial statements are complete and accurate and in accordance with generally accepted accounting principles; that is the responsibility of management. +In fulfilling its oversight responsibilities with respect to the year ended December 31, 2020, the Audit Committee: +• +Approved the terms of engagement of Grant Thornton LLP as the Company’s independent registered public accounting firm for the year ended December 31, 2020; +• +Reviewed with management the interim financial information included in the Forms 10-Q prior to their being filed with the SEC. In addition, the Committee reviewed all earnings releases with management and the Company’s independent registered public accounting firm prior to their release; +• +Reviewed and discussed with the Company’s management and the independent registered public accounting firm the audited consolidated financial statements of the Company as of December 31, 2020 and 2019 and for the three years ended December 31, 2020; +• +Reviewed and discussed with the Company’s management and the independent registered public accounting firm, management’s assessment that the Company maintained effective control over financial reporting as of December 31, 2020; +• +Discussed with the independent registered public accounting firm matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board and the SEC; and +• +Received from the independent registered public accounting firm the written disclosures and the letter in accordance with the requirements of the Public Company Accounting Oversight Board regarding the firm’s communications with the Committee concerning independence, and discussed with such firm its independence from the Company. +Based upon the review and discussions referred to above, the Committee recommended to the Board of Directors that the audited consolidated financial statements of the Company and subsidiaries as of December 31, 2020 and 2019 and for the three years ended December 31, 2020 be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 and for filing with the SEC. +In giving its recommendation to the Board of Directors, the Audit Committee has relied on (i) management’s representation that such financial statements have been prepared with integrity and objectivity and in conformity with accounting principles generally accepted in the United States of America and (ii) the report of the Company’s independent registered public accounting firm with respect to such financial statements. +Submitted by the Audit Committee of the Board of Directors. +Harry J. Cynkus, Chairman +Susan R. Bell +Patrick J. Gunning +13 +COMPENSATION DISCUSSION AND ANALYSIS +During the fiscal year ended December 31, 2020, the members of our Compensation Committee held primary responsibility for determining executive compensation levels. The Committee is currently composed of two of our non-management directors who do not participate in the Company’s compensation plans. The Committee determines the compensation and administers the performance-based incentive cash compensation plan for our executive officers. In addition, the Committee also administers SIPs for all employees. +The members of our Compensation Committee have extensive and varied experience with various public and private corporations — as investors and stockholders, as senior executives, and as directors charged with the oversight of management and the setting of executive compensation levels. Jerry W. Nix, the Chairman of the Compensation Committee has served on the board of directors of five different publicly traded companies. Mr. Patrick J. Gunning has extensive leadership roles in regional offices and has been involved in setting executive compensation at various levels. Mr. Henry B. Tippie, who served as the Chairman of the Compensation Committee in 2020, served on the board of directors of twelve different publicly traded companies and was involved in setting executive compensation levels at all of these companies. Mr. James B. Williams, a member of the Compensation Committee in 2020, served on the board of directors of several different publicly traded companies and has similarly been involved in setting executive compensation levels at many of these companies. +The Compensation Committee has authority to engage attorneys, accountants and consultants, including executive compensation consultants, to solicit input from management concerning compensation matters, and to delegate any of its responsibilities to one or more directors or members of management where it deems such delegation appropriate and permitted under applicable law. The Committee has not used the services of any compensation consultants in determining or recommending the amount or form of executive compensation. +The Compensation Committee believes that determinations relative to executive compensation levels are best left to the discretion of the Committee. In addition to the extensive experience and expertise of the Committee’s members and their familiarity with the Company’s performance and the performance of our executive officers, the Committee is able to draw on the experience of other Directors and on various legal and accounting executives employed by the Company, and the Committee has access to readily available public information relative to structuring executive compensation programs and setting appropriate compensation levels. The Committee also believes that the structure of our executive compensation programs should not become overly complicated or difficult to understand. The Committee solicits input from our Chairman with respect to the performance of our executive officers and their compensation levels. +The Role of Stockholder Say-on-Pay Votes +The Company provides its stockholders with the opportunity to cast an advisory vote on executive compensation (a “say-on-pay proposal”) once every three years. At the Company’s Annual Meeting of Stockholders held in April 2020, a substantial majority of the votes cast on the say-on-pay proposal at that meeting were voted in favor of the proposal. The Compensation Committee believes this affirms stockholders’ support of the Company’s approach to executive compensation. The stockholders voted to hold a say-on-pay advisory vote on executive compensation every three years, and the Board resolved to accept the stockholders’ recommendation. As a result, the next advisory vote on executive compensation will be held at the 2023 Annual Meeting of Stockholders. The Compensation Committee will continue to consider the outcome of the Company’s say-on-pay votes when making future compensation decisions for its executive officers. +General Compensation Objectives and Guidelines +The Company is engaged in a highly competitive industry. The success of the Company depends on its ability to attract and retain highly qualified and motivated executives. In order to accomplish this objective, the Company structures the executive compensation in a fashion that takes into account the Company’s overall performance and the individual performance of the executive. +The Compensation Committee endorses the philosophy that executive compensation should reflect Company performance and the contribution of executive officers to that performance. The Company’s +14 +compensation policy is designed to achieve three fundamental objectives: (i) attract and retain qualified executives, (ii) motivate performance to achieve Company objectives, and (iii) align the interests of our executives with the long-term interests of the Company’s stockholders. +The Committee recognizes that there are many intangibles involved in evaluating performance and in motivating performance, and that determining an appropriate compensation level is a highly subjective endeavor. The analysis of the Committee is not based upon a structured formula and the objectives referred to above are not weighted in any formal manner. During the year, none of the executive officers made recommendations or otherwise contributed input on their own compensation. However, the Compensation Committee may from time to time solicit input from the Chairman when reviewing executive compensation. +The Company’s executive officers are also executive officers of Marine Products and receive compensation directly from Marine Products. The members of the Company’s Compensation Committee also constitute the Compensation Committee of Marine Products. In determining the compensation for the executive officers at the Company, the Committee considers these dual responsibilities and sources of compensation. The Company sets compensation of its executives at such levels so that the aggregate compensation received from both Marine Products and the Company is reasonable in light of their respective responsibilities and the performance of both companies, and so that the compensation from the Company for services solely to the Company is reasonable. A discussion of the Company’s executive officers’ compensation at Marine Products is contained in its annual Proxy Statement filed with the SEC. +Pursuant to the Company’s compensation philosophy, the total annual compensation of its executive officers is primarily comprised of base salary, performance-based incentive cash compensation and stock-based incentive compensation. In addition, the Company provides retirement compensation plans, group welfare benefits and certain perquisites. +We believe a competitive base salary is important to attract, retain and motivate top executives. We believe a performance-based incentive cash compensation plan is valuable in recognizing and rewarding individual achievement. Finally, we believe stock-based incentives make executives “think like owners” and, therefore, align their interests with those of our stockholders. +The Company does not have any formal stock ownership requirements for its executive officers, but notes that a majority of its current directors and executive officers are stockholders of the Company, as is disclosed elsewhere in this Proxy Statement. The Company is mindful of the stock ownership of our directors and executive officers but does not believe that it is appropriate to provide a mechanism or formula to take stock ownership (or gains from prior option or stock awards) into account when setting compensation levels. The Company provides in its insider trading policies that directors and executive officers may not sell Company securities short and may not sell puts, calls or other derivative securities tied to our Common Stock. The Company does not have any such policy applicable to its employees generally, other than the executive officers. +As a result of the Tax Cuts and Jobs Act, starting with compensation payable in 2018, Section 162(m) of the Internal Revenue Code limits the Company from deducting compensation, including performance-based compensation, in excess of $1,000,000 paid to our executive officers. The only exception to this rule is for compensation (including performance-based compensation) that is paid pursuant to a binding contract in effect on November 2, 2017, that would otherwise have been deductible under the prior Section 162(m) rules. Going forward, the Compensation Committee will, as before, retain full discretion to award compensation packages that best attract, retain and reward successful executive officers. Therefore, the Compensation Committee anticipates that it will award compensation that is not fully deductible under Section 162(m). +Our executive bonus agreements contain a provision that provides that, among other things, if any bonus amount is paid as a result of misrepresented or inaccurate performance, the Company may require repayment of some or all of the excess bonus paid, subject to applicable laws. This recoupment policy reflects the Company’s high ethical standards and strict compliance with accounting and other regulations applicable to public companies. As all incentives and awards remain within the discretion of the Compensation Committee, the Committee also retains the ability to take any restatements or adjustments into account in subsequent years. In addition, the Sarbanes-Oxley Act requires in the case of accounting restatements that result from material non-compliance with SEC financial reporting requirements, that the Chief Executive Officer and Chief Financial Officer must disgorge bonuses and other incentive-based compensation and profits +15 +on stock sales received during the 12 months following publication of the misstated financials, if the non-compliance results from misconduct. +Base Salary +The salary of each executive officer is determined by the Compensation Committee. In making its determinations, the Committee gives consideration to the recent financial performance of the Company, the magnitude of responsibilities, the scope of the position, individual performance and compensation paid by Marine Products. The Committee solicits input from our Chairman with respect to the performance of our executive officers and their compensation levels. During 2020, in light of the difficult operating environment faced by the Company, the executive officers voluntarily reduced their annual base salaries by 25 percent to the following amounts, effective May 1, 2020: Mr. Richard A. Hubbell: $712,500 ($237,500 decrease); Mr. Ben M. Palmer: $337,500 ($112,500 decrease); and Mr. R. Randall Rollins: $637,500 ($212,500 decrease). Effective January 1, 2021, in light of the improved performance of the Company, the annual base salaries of the executive officers, with the exception of Mr. R. Randall Rollins, were restored. Mr. R. Randall Rollins, our long-time Chairman of the Board, passed away on August 17, 2020. +Performance-Based Incentive Cash Compensation +The Company implemented the Performance-Based Incentive Cash Compensation Plan (the “Management Incentive Plan”) for the executive officers in 2006. Under the Management Incentive Plan, the Compensation Committee establishes performance goals annually within ninety days after the commencement of the performance period to which such goals relate. Performance goals for each participant may be based on corporate, business unit/function or individual performance, or a combination of one or more such measures. +In connection with the annual establishment of performance goals, the Compensation Committee sets a target award for each participant in the Management Incentive Plan for the applicable year, which is expressed as a percentage of the participant’s base compensation (the “Target Award”) in effect on the last day of the final pay period of that year. If the participant’s performance goals are based upon a combination of performance measures, the Compensation Committee will weigh the importance of each performance measure by assigning a percentage (the “Weighted Percentage”) to those performance measures. The participant’s cash award amount will also depend in part upon the level of achievement that the participant attained with respect to each such performance measure utilizing the formula set out in the Management Incentive Plan. This formula provides for a performance value (“Performance Value”) which ranges from: +• +threshold performance level (with a Performance Value of 25 percent of the Target Award), +• +target performance level (with a Performance Value up to 100 percent of the Target Award), to +• +superior performance level (with a Performance Value up to 200 percent of the Target Award). +Subject to the limitations set forth below, a participant’s cash award amount for each year under the Management Incentive Plan equals the product of the Target Award multiplied by the Weighted Percentage assigned to each performance measure used for a participant, multiplied by the Performance Value attained for each performance measure, multiplied by base compensation. The Committee will determine the maximum cash award as a percentage of participants’ base compensation for each applicable year. +For 2020, the Compensation Committee established the target incentive award under the Management Incentive Plan for the Chief Executive Officer and for the other members of executive management at the amounts shown in the table below. The target awards that could be earned under the Management Incentive Plan for 2020 were the same as for the prior year. +Executive Officer +Target Award as a percentage +of base salary +Richard A. Hubbell +President and Chief Executive Officer +100 % +Ben M. Palmer +Vice President, Chief Financial Officer and Corporate Secretary +100 % +R. Randall Rollins +Former Chairman of the Board +100 % +16 +The maximum bonus award for each participant under the Plan for 2020 and prior years was established at 150 percent of such participant’s base salary. The performance criteria applicable to the participants under the Management Incentive Plan for 2020 were determined based solely on corporate performance. The Compensation Committee established corporate performance goals for 2020 under the Management Incentive Plan based on cash flow return on invested capital. Return on invested capital (“ROIC”) is a widely used financial performance measure that typically correlates with long-term change in stockholder value. The Company has used ROIC as the sole performance goal under the Management Incentive Plan for several years. ROIC is computed as the ratio of earnings before interest, taxes, depreciation and amortization to invested capital. Invested capital is generally equal to the aggregate of stockholders’ equity, accumulated depreciation and long-term liabilities. For 2020, the target performance goal established by the Company is in excess of the comparable historical average ROIC of our peers, is in excess of the Company’s weighted average cost of capital, and is an amount which the Company believes represents outstanding financial performance. Under the Management Incentive Plan for 2020, the Company was required to achieve at least 70 percent of the target performance goal for executive officers to be eligible for any bonus award. Bonus awards under the Management Incentive Plan are determined on a sliding scale between the threshold performance level and superior performance level, which correspond to 175 percent of the target performance goal. To be eligible for the bonus award under the Management Incentive Plan for 2020, the ROIC was required to be in excess of 12.6 percent up to a maximum of 31.5 percent. The Company has consistently followed the same method to compute ROIC, and the Compensation Committee has not exercised discretion to waive the performance goals based on difficult industry conditions or other factors. In light of the unique operational challenges faced by the oil and gas industry, the Compensation Committee approved supplemental financial performance measurement criteria for 2020 that used Free Cash Flow (FCF) defined as earnings before interest, taxes, depreciation and amortization minus maintenance capital expenditures. Under the FCF plan and related performance criteria, the target awards would range from 20 to 60 percent of the maximum bonus award under the ROIC plan. The bonus for 2020 was established to be the greater of the ROIC plan or the FCF plan performance award. +The Company operates in a cyclical business where financial performance is influenced by, among other things, changes in oil and natural gas prices. The Company did not achieve either the FCF or ROIC performance goals for 2020. In addition, ROIC generated by the Company in 2019 was less than the threshold amount therefore no bonuses were earned by executive officers in 2020 or 2019. The Company generated ROIC that resulted in 48 percent of the target award in 2018. The ROIC performance declined in 2020 and 2019 compared to 2018 due to an intensely competitive industry environment in 2020 caused by drastic declines in oilfield drilling and completions. This unprecedented disruption was caused by the substantial decline in global demand for oil caused by the COVID-19 pandemic as well as macroeconomic events such as the geopolitical tensions between the Organization of Petroleum Exporting Countries and Russia regarding limits on oil production. +Stock-Based Incentive Plans +Our SIP allows for a wide variety of stock-based awards such as stock options and restricted stock. In recent years, we have awarded time-based restricted stock in lieu of granting stock options. The terms and conditions of these awards are described in more detail below. +Awards under the Company’s SIP are purely discretionary, are not based upon any specific formula and may or may not be granted in any given fiscal year. For the past three years, we have granted time-based restricted stock to various employees, including our executive officers, in early January during our regularly scheduled meeting of the Compensation Committee during which the Committee reviews executive compensation. Consistent with this practice, we granted restricted stock awards to our executive officers in January 2021, 2020 and 2019 as follows: +Name +2021 +2020 +2019 +Richard A. Hubbell +100,000 +100,000 +75,000 +Ben M. Palmer +67,000 +67,000 +50,000 +R. Randall Rollins (1) +— +100,000 +75,000 +(1) +Pursuant to the terms of the restricted stock grants, all of the outstanding unvested restricted stock awarded to Mr. R. Randall Rollins vested immediately upon his death on August 17, 2020. +17 +The amount of the aggregate stock-based awards to our executive officers in any given year is influenced by the Company’s overall performance. The amount of each grant to our executive officers is influenced in part by the Committee’s subjective assessment of each individual’s respective contributions to achievement of the Company’s long-term goals and objectives, in addition to the stock price around grant date. In evaluating individual performance for these purposes, the Committee considers the overall contributions of executive management as a group and the Committee’s subjective assessment of each individual’s relative contribution to that performance rather than specific aspects of each individual’s performance over a short-term period. We expect to continue annual grants of restricted stock awards although we reserve the right to modify or discontinue this or any of our other compensation practices at any time. +All of our restricted stock awards granted since 2004 have had the same features. The shares vest one-fifth per year beginning on the second anniversary of the grant date. Restricted shares have full voting and dividend rights. However, until the shares vest, they cannot be sold, transferred or pledged. Should the executive leave our employment for any reason prior to the vesting dates (other than due to disability or retirement on or after age 65), the unvested shares will be forfeited. In the event of death, or “change in control” as determined by the Board of Directors, all unvested restricted shares shall vest immediately. +Grants are made under our SIP which is administered pursuant to Rule 16b-3 of the Exchange Act. +Employment Agreements +There are no agreements or understandings between the Company and any executive officer which guarantee continued employment or guarantee any level of severance or compensation, including incentive or bonus payments. +Retirement Plans +The Company maintains a defined benefit pension plan (“Retirement Income Plan”) for all our eligible employees, a non-qualified supplemental retirement plan for our executives and certain other highly compensated employees, and a 401(k) Plan for the benefit of all of our eligible employees. In 2002, the Company’s Board of Directors approved a resolution to cease all future benefit accruals under the Retirement Income Plan effective March 31, 2002. During 2002, the Company began permitting selected highly compensated employees to defer a portion of their compensation into the Company’s nonqualified Supplemental Retirement Plan (“SRP”). The SRP is described in more detail under the caption “Nonqualified Deferred Compensation” on page 25. +Other Compensation +Other compensation to our executives includes typical employee benefits such as group medical, dental and vision coverage, and group life insurance. The Company provides an automobile (or an automobile allowance) to Messrs. Richard A. Hubbell and Ben M. Palmer. +The following Compensation Committee Report shall not be incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act, except to the extent that the Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under the Securities Act or the Exchange Act. +18 +COMPENSATION COMMITTEE REPORT +We have reviewed and discussed the above “Compensation Discussion and Analysis” with management. +Based upon this review and discussion, we have recommended to the Board of Directors that the “Compensation Discussion and Analysis” be included in this Proxy Statement. +Submitted by the Compensation Committee of the Board of Directors. +Jerry W. Nix, Chairman +Patrick J. Gunning +SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE +Section 16(a) of the Exchange Act requires our officers and directors and persons who own more than ten percent of a registered class of the Company’s equity securities to file reports of ownership and changes in ownership with the SEC. Officers, directors and greater than ten percent stockholders are required to furnish the Company with copies of all Section 16(a) forms they file. +Based on our review of the copies of such forms, we believe that during fiscal year ended December 31, 2020, all filing requirements applicable to our officers, directors and greater than ten percent beneficial owners were timely satisfied except the following: On September 24, 2020, Mr. Jerry W. Nix filed a Form 3 after its due date with respect to any beneficial ownership of RPC shares. +19 +EXECUTIVE COMPENSATION +Shown below is information concerning the annual and long-term compensation for services in all capacities to the Company for the calendar years ended December 31, 2020, 2019 and 2018 of the following: +• +our Principal Executive Officer and Principal Financial Officer; and +• +pursuant to SEC rules, Mr. Rollins who was not serving as an executive officer at December 31, 2020: +SUMMARY COMPENSATION TABLE +Name and Principal Position +Year +Salary +($) +Stock +Awards +($) (1) +Non-Equity +Incentive +Plan +Compensation +($) (2) +Change in +Pension +Value and +Nonqualified +Deferred +Compensation +Earnings +($) (3) +All Other +Compensation +($) (4) +Total ($) +Richard A. Hubbell +President and Chief +Executive Officer +2020 +791,667 +459,000 +— +7,322 +17,570 +1,275,559 +2019 +950,000 +854,250 +— +7,607 +18,900 +1,830,757 +2018 +950,000 +1,130,850 +456,000 +— +30,670 +2,567,520 +Ben M. Palmer +Vice President, Chief Financial Officer and Corporate Secretary +2020 +375,000 +307,530 +— +— +23,050 +705,580 +2019 +450,000 +569,500 +— +19,567 +23,550 +1,062,617 +2018 +450,000 +753,900 +216,000 +— +20,990 +1,440,890 +R. Randall Rollins +Former Chairman of the +Board +2020 +471,686 +459,000 +— +— +— +930,686 +2019 +850,000 +854,250 +— +— +— +1,704,250 +2018 +850,000 +1,130,850 +408,000 +— +— +2,388,850 +(1) +Represents the fair value of the award at the date of grant computed in accordance with ASC Topic 718. See Note 13 to our Financial Statements contained in our Form 10-K for the period ended December 31, 2020 for a discussion of assumptions used in this computation. For this computation, we do not include an assumption for estimated forfeitures. +(2) +Bonuses under the Management Incentive Plan are accrued in the fiscal year earned and paid in the following fiscal year. +(3) +The actuarial present value of the executive officers’ accumulated benefit under the defined benefit plan decreased as follows: In 2020, Messrs. Ben M. Palmer — $(105,382), and R. Randall Rollins — $(403,983); in 2019, Mr. R, Randall Rollins — $(53,635); in 2018, Messrs. Richard A. Hubbell $(35,453), Ben M. Palmer $(7,712) and R. Randall Rollins: $(165,595). Decreases represent impact of the change in discount rate or lump-sum payments as no additional benefits are being accrued. +(4) +All other compensation for 2020 includes the following items for: +Mr. Richard A. Hubbell: +Insurance on automobile provided by the Company, cost of dining club dues, cost of gasoline for personal automobile and 401(k) Plan Company match of $12,825 in the aggregate. +Mr. Ben M. Palmer: +Automobile allowance, cost of gasoline for personal automobile and 401(k) Plan Company match of $12,825 in the aggregate. +Pay Ratio Disclosure +Pursuant to a mandate of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd — Frank Act”), the SEC adopted a rule requiring annual disclosure of the ratio of the median employee’s annual total compensation to the total annual compensation of the principal executive officer (“PEO”). The Company’s PEO is Mr. Richard A. Hubbell. The purpose of the required disclosure is to provide +20 +a measure of the equitability of pay within the organization. The Company believes its compensation philosophy and process yield an equitable result. +Median Employee total annual compensation +$ +77,508 +Mr. Richard A. Hubbell (PEO) total annual compensation +$ +1,262,734 +Ratio of PEO to Median Employee Compensation +16.3:1 +The Company has re-identified the median employee as of December 31, 2020 due to the significant reduction in workforce that was caused by the substantial decline in global demand for oil caused by the COVID-19 pandemic as well as other macroeconomic events. The compensation disclosed above represents the total annual compensation of the median employee for the year ended December 31, 2020. Employees from our foreign subsidiaries in North America and Asia, both of which combined were less than 5 percent of our total employees, were excluded, as permitted by SEC rules, under “de minimis” exception. Employees on leave of absence were also excluded from the list and wages and salaries were annualized for those employees that were not employed for the full year of 2020 (other than seasonal or temporary employees). The median employee’s compensation was selected from the annualized list. For simplicity, the value of the Company’s 401(k) Plan and medical benefits provided was excluded as all employees including the PEO are offered the exact same benefits. As of December 31, 2020, the Company employed 2,005 persons of which 52 were employed in Canada, China and Mexico. +The pay ratio disclosure presented above is a reasonable estimate. Because the SEC rules for identifying the median employee and calculating the pay ratio allow companies to use different methodologies, exemptions, estimates and assumptions, our pay ratio disclosure may not be comparable to the pay ratios reported by other companies. +GRANTS OF PLAN-BASED AWARDS +Estimated Future Payouts +Under Non-Equity +Incentive Plan Awards (1) +All Other +Stock Awards: +Number of +Shares of +Stock or Units +(#) +Grant Date +Fair Value +of Stock +and Option +Awards +($) (2) +Name +Grant Date +Threshold +($) +Target +($) +Maximum +($) +Richard A. Hubbell +1/28/2020 +237,500 +950,000 +1,425,000 +100,000 +459,000 +Ben M. Palmer +1/28/2020 +112,500 +450,000 +675,000 +67,0000 +307,530 +R. Randall Rollins (3) +1/28/2020 +212,500 +850,000 +1,275,000 +100,000 +459,000 +(1) +These amounts illustrate the potential bonus awards under the Management Incentive Plan for 2020. See Summary Compensation Table on page 20 for actual amounts awarded in 2020. +(2) +These amounts represent aggregate grant date fair value for grants of restricted shares of Common Stock awarded in fiscal year 2020 under the SIP computed in accordance with ASC Topic 718. Please refer to Note 13 to our Financial Statements contained in our Form 10-K for the period ended December 31, 2020 for a discussion of assumptions used in this computation. For this computation, we do not include an assumption for estimated forfeitures. Our Form 10-K has been included in our Annual Report and provided to our stockholders. +(3) +Pursuant to the terms of the restricted stock grants, all of the outstanding unvested restricted stock awarded to Mr. R. Randall Rollins vested immediately upon his death on August 17, 2020. +The table above reflects grants of restricted shares of Company Common Stock under the SIP awarded in fiscal year 2020. All grants of restricted shares of Common Stock vest one-fifth per year beginning on the second anniversary of the grant date. Restricted shares have full voting and dividend rights. However, until the shares vest, they cannot be sold, transferred or pledged. Should the executive leave our employment for any reason prior to the vesting dates (other than due to death, disability, change in control or retirement on or after age 65), the unvested shares will be forfeited. We have not issued any stock options since 2003 and have no immediate plans to issue additional stock options. +21 +There are no agreements or understandings between the Company and any executive officer which guarantee continued employment or guarantee any level of severance or compensation, including incentive or bonus payments, to the executive officer. The existing compensation and benefits received by the Company’s Chief Executive Officer and the other executive officers are based on oral, at will arrangements. The executive officers are eligible for annual cash bonuses which are awarded under the Management Incentive Plan. The Compensation Committee’s decisions are based upon broad performance objectives under that plan. +The executive officers are eligible to receive shares of Company Common Stock subject to options and restricted shares of Company Common Stock under the Company’s SIPs in such amounts and with such terms and conditions as determined by the Compensation Committee at the time of grant. All of the executive officers are eligible to participate in the Company’s SRP. The executive officers are eligible to participate in the Company’s regular employee benefit programs, including the 401(k) Plan with Company match, group life insurance, group medical and dental coverage, vision and other group benefit plans. All of the executive officers are eligible for the Retirement Income Plan although benefit accruals were frozen in 2002. For more information on these plans, see “Compensation Discussion and Analysis” on page 14, and “Benefit Plans” on page 24. +22 +OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END +The Company does not have any outstanding option awards made in prior years to the executives named in our Summary Compensation Table. The table below sets forth the total number of restricted shares of Common Stock outstanding at December 31, 2020 that were granted in prior years to the executives, but have not yet vested, together with the market value of these unvested shares based on the $3.15 closing price of our Common Stock on December 31, 2020. +Option Awards +Stock Awards +Name +Number of +Securities +Underlying +Unexercised +Options +(#) +Exercisable +Number of +Securities +Underlying +Unexercised +Options +(#) +Un-exercisable +Option +Exercise +Price +($) +Option +Expiration +Date +Number of +Shares or +Units of Stock +That Have +Not Vested +(#) +Market Value +of Shares or +Units of Stock +That Have +Not Vested +($) +Richard A. Hubbell +— +— +— +— +283,000 (1 ) +891,450 +Ben M. Palmer +— +— +— +— +184,200 (1 ) +580,230 +R. Randall Rollins (2) +— +— +— +— +— +— +(1) +The Company has granted employees time lapse restricted shares that vest one-fifth per year beginning on the second anniversary of the grant date. Shares of restricted stock granted to the executive officers that have not vested as of December 31, 2020 are summarized in the table that follows: +Name +Number of shares +Grant date +Date fully vested +Richard A. Hubbell +15,000 +1/27/2015 +1/27/2021 +30,000 +1/26/2016 +1/26/2022 +27,000 +1/24/2017 +1/24/2023 +36,000 +1/23/2018 +1/23/2024 +75,000 +1/22/2019 +1/22/2025 +100,000 +1/28/2020 +1/28/2026 +Ben M. Palmer +9,000 +1/27/2015 +1/27/2021 +18,000 +1/26/2016 +1/26/2022 +16.200 +1/24/2017 +1/24/2023 +24,000 +1/23/2018 +1/23/2024 +50,000 +1/22/2019 +1/22/2025 +67,000 +1/28/2020 +1/28/2026 +(2) +Pursuant to the terms of the restricted stock grants, all of the outstanding unvested restricted stock awarded to Mr. R. Randall Rollins vested immediately upon his death on August 17, 2020. +23 +OPTION EXERCISES AND STOCK VESTED +The following table sets forth: +• +the number of shares of Common Stock acquired by the executives named in the Summary Compensation Table upon the exercise of stock options during the fiscal year ended December 31, 2020; +• +the aggregate dollar amount realized on the exercise date for such options computed by multiplying the number of shares acquired by the difference between the market value of the shares on the exercise date and the exercise price of the options; +• +the number of restricted shares of Common Stock acquired by the executives named in the Summary Compensation Table upon the vesting of shares during the fiscal year ended December 31, 2020; and +• +the aggregate dollar amount realized on the vesting date for such restricted stock computed by multiplying the number of shares which vested by the market value of the shares on the vesting date. +Option Awards +Stock Awards +Name +Number of Shares +Acquired on Exercise +(#) +Value Realized on +Exercise +($) +Number of Shares +Acquired on Vesting +(#) +Value Realized +on Vesting +($) +Richard A. Hubbell +— +— +59,250 +265,400 +Ben M. Palmer +— +— +36,150 +162,290 +R. Randall Rollins (1) +— +— +342,250 +1,245,080 +(1) +Pursuant to the terms of the restricted stock grants, all of the outstanding unvested restricted stock awarded to Mr. R. Randall Rollins vested immediately upon his death in August 2020. +BENEFIT PLANS +The table below shows the present value of accumulated benefits payable to each of the named executive officers, including the number of years of service credited to each such named executive officer, under the Retirement Income Plan determined using interest rate and mortality rate assumptions consistent with those used in the Company’s financial statements. +Pension Benefits +Name +Plan Name +Number of +Years Credited +Service +(#) +Present +Value of +Accumulated +Benefit +($) +Payments During +Last Fiscal Year +($) +Richard A. Hubbell +Retirement Income Plan +15 +418,895 +42,314 +Ben M. Palmer +Retirement Income Plan +4 +— +113,637 +R. Randall Rollins +Retirement Income Plan +30 +1,423,705 +261,571 +The Company’s Retirement Income Plan, a trusteed defined benefit pension plan, provides monthly benefits upon normal retirement at age 65, to eligible employees. The Plan provides reduced early retirement benefits at age 59 1 ∕ 2 , or 55 or older with 15 or more years of service. In 2002, the Company’s Board of Directors approved a resolution to cease all future benefit accruals under the Retirement Income Plan effective March 31, 2002. Retirement Income Plan benefits are based on the average of the employee’s compensation from the Company for the five consecutive complete calendar years of highest compensation during the last ten consecutive complete calendar years (“final average compensation”) immediately preceding March 31, 2002. The benefits are computed as the product of 1.5 percent of final average compensation multiplied by years of credited service (up to 30 years) reduced by an adjustment for benefits drawn from social security. Adjustments have been made for age and the IRS mandated compensation limitations. +Mr. Hubbell is voluntarily receiving distributions from the plan even though he has not retired from the Company. The amount of distributions received during 2020 has been disclosed in the table above and is not +24 +subject to change after retirement. In October 2020, the Company amended the Retirement Income Plan to add a limited lump-sum payment window for vested terminated participants who had terminated employment before July 1, 2020 and for active employees who reached age 59 1 ∕ 2 by December 1, 2020, with a vested balance. Mr. Palmer elected to receive his vested balance immediately as a lump-sum. +Mr. Rollins’ spouse is receiving distributions from the plan after his death pursuant to his election of survivor annuity benefit. +401(k) Plan +Effective July 1, 1984, the Company adopted a qualified retirement plan designed to meet the requirements of Section 401(k) of the Code. The Company makes matching contributions of 100 percent for each dollar ($1.00) of a participant’s contribution to the 401(k) Plan for the first three percent of his or her annual compensation and fifty cents ($0.50) for each dollar ($1.00) for the next three percent of his or her annual compensation. The only form of benefit payment under the 401(k) Plan is a single lump-sum payment equal to the vested balance in the participant’s account on the date the distribution is processed. Under the 401(k) Plan, the full amount of a participant’s vested accrued benefit is payable upon his termination of employment, retirement, total and permanent disability, or death. During the course of employment, a participant may withdraw his or her pre-tax contributions to the extent of certain specified instances of financial hardship and may withdraw any amount from his or her pre-tax contribution account for any reason after attaining age 59 1 ∕ 2 . Amounts contributed by the Company to the accounts of the named executive officers under this plan are reported in the “All Other Compensation” column of the Summary Compensation Table on page 20. +NONQUALIFIED DEFERRED COMPENSATION +The SRP has been established as a nonqualified plan that is designed to comply with the provisions of the American Jobs Creation Act of 2004 (including Section 409A of the Internal Revenue Code) for the cash contributions made to certain longer serviced employees in lieu of freezing the Retirement Income Plan benefit accruals effective in 2002; the SRP also has a compensation deferral option for eligible employees. The contributions and deferrals to the SRP are invested in funds held in a rabbi trust. +Name +Executive +Contributions +in Last FY +($) (1) +Registrant +Contributions +in Last FY +($) +Aggregate +Earnings in +Last FY +($) +Aggregate +Withdrawals/ +Distributions +($) +Aggregate +balance at +Last FYE +($) +Richard A. Hubbell +— +— +64,196 +— +516,680 +Ben M. Palmer +30,000 +— +114,145 +— +1,087,489 +R. Randall Rollins +— +— +— +— +— +(1) +Includes $30,000 of the base salary for 2020 disclosed in the Summary Compensation Table, which have been deferred by the executive officer pursuant to the SRP. The remaining deferral amounts, if any, represent deferrals of bonus compensation that was paid in 2020. +The deferral option provides that participants may defer up to 50 percent of their base salary and up to 100 percent of their annual bonus with respect to any given plan year, subject to a $2,000 per plan year minimum. All of the salary and bonus deferrals are fully vested. Accounts are credited with hypothetical earnings, and/or debited with hypothetical losses, based on the performance of certain “Measurement Funds.” Account values are calculated as if the funds from deferrals and contributions had been converted into shares or other ownership units of selected Measurement Funds by purchasing (or selling, where relevant) such shares or units at the current purchase price of the relevant Measurement Fund at the time of the participant’s selection. The benefits are unsecured general obligations of the Company to the participants, and these obligations rank in parity with the Company’s other unsecured and unsubordinated indebtedness. To the extent that the Company’s obligations under the SRP exceed assets available under the trust, the Company may be required to seek additional funding sources to fund its liability under the SRP. +Generally, the SRP provides for distributions of any deferred amounts upon the earliest to occur of a participant’s death, disability, retirement or other termination of employment (a “Termination Event”). +25 +However, for any deferrals of base salary and bonus compensation (but not Company contributions), participants are entitled to designate a distribution date which is prior to a Termination Event. The SRP allows a participant to elect to receive distributions in installments or lump-sum payments. +POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL +The following table describes the potential payments and benefits under the Company’s compensation and benefit plans and arrangements to which the named executive officers would be entitled upon termination of employment. There are no other agreements, arrangements or plans that entitle executive officers to severance, perquisites, or other enhanced benefits upon termination of their employment except as described below. Additional payments or benefits to a terminating executive officer would be at the discretion of the Compensation Committee. +In accordance with the terms of the defined benefit plan, the executive officers are not entitled to additional benefits at death or disability. The amounts payable at retirement are disclosed in the “Benefit Plans” section on page 24. The executive officers can choose to receive the amounts accumulated in the SRP either as a lump-sum or in installments at retirement, death or disability. These amounts have been disclosed under the “Nonqualified Deferred Compensation” section on page 25. The table below reflects the incremental restricted shares and their values that would become vested as of December 31, 2020 using the closing market price of $3.15 per share for our Common Stock, as of that date, in the case of retirement, disability, death or change in control. +Stock Awards +Name +Number of shares +underlying unvested +stock +(#) +Unrealized value of +unvested stock +($) +Richard A. Hubbell +• +Retirement +42,125 +132,690 +• +Disability +78,624 +247,670 +• +Death +283,000 +891.450 +• +Change in control +283,000 +891,450 +Ben M. Palmer +• +Retirement +— +— +• +Disability +49,630 +156,330 +• +Death +184,200 +580,230 +• +Change in control +184,200 +580,230 +Accrued Pay and Regular Retirement Benefits +The amounts shown in the preceding table do not include the following since they are provided on a non-discriminatory basis to salaried employees generally upon termination of employment. These include: +• +Accrued salary and vacation pay. +• +Distributions of plan balances under the 401(k) Plan. +Pension Benefit and Deferred Compensation +Retirement Income Plan benefits currently payable to the executive officers are disclosed under the “Benefit Plans” section on page 24. Upon termination, the executive officers will receive a distribution of the balance in their SRP account. These amounts are disclosed under the “Nonqualified Deferred Compensation” section on page 25. +Change in Control or Severance . The Company does not have any severance for its executive officers. However, upon the occurrence of a “Change in Control,” as determined by the Board of Directors, all unvested time-lapse restricted stock shall immediately vest. +26 +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +Effective with the spin-off in 2001, the Company began providing certain administrative services to Marine Products. The service agreements between Marine Products and the Company provide for the provision of services on a cost reimbursement basis and may be terminated upon six months’ notice. The services covered by these agreements include administration of certain employee benefit programs and other administrative services. Charges from the Company (or from corporations which are subsidiaries of the Company) for such services aggregated approximately $846,000 in 2020. +RPC and Marine Products own 50 percent each of a limited liability company called 255 RC, LLC that was created for the joint purchase and ownership of a corporate aircraft. Each of RPC and Marine Products is currently a party to an operating lease agreement with 255 RC, LLC for a period of five years. During 2020, RPC recorded certain net operating costs comprised of rent and an allocable share of fixed costs of approximately $200,000 for the corporate aircraft. +During 2020, a subsidiary of RPC conducted business with companies owned by LOR, Inc. Mr. Gary W. Rollins, Non-Executive Chairman, is an officer, director and controlling stockholder of LOR, Inc. In 2020, payments totaling approximately $1,030,000 were made to these LOR, Inc. companies primarily for the purchase of parts and repair services related to certain of RPC’s oilfield operating equipment. RPC believes the charges incurred are at least as favorable as the charges that would have been incurred for similar purchases from unaffiliated third parties. +RPC receives certain administrative services including an allocation for office space from Rollins. The service agreements between Rollins and the Company provide for the provision of services on a cost reimbursement basis and are terminable on six months’ notice. The services covered by these agreements include office space, administration of certain employee benefit programs, and other administrative services. Charges to the Company (or to corporations which are subsidiaries of the Company) for such services and rent aggregated approximately $104,000 in 2020. +A group that includes the Company’s Non-Executive Chairman of the Board, Mr. Gary W. Rollins and certain companies under his control, possesses in excess of fifty percent of the Company’s voting power. Please refer to the discussion above under the heading, “Corporate Governance and Board of Directors Committees and Meetings, Director Independence and NYSE Requirements, Controlled Company Exemption.” The group discussed above also controls in excess of fifty percent of Marine Products’ voting power. +Our Code of Business Conduct and Ethics for Directors and Executive Officers and Related Party Transactions Policy provides that related party transactions, as defined in Regulation S-K, Item 404(a) must be reviewed, approved and/or ratified by our Nominating and Governance Committee. As set forth in our Code, our Nominating and Governance Committee has the responsibility to ensure that it only approves or ratifies related party transactions that are in compliance with applicable law, consistent with the Company’s corporate governance policies (including those relative to conflicts of interest and usurpation of corporate opportunities) and on terms that are deemed to be fair to the Company. The Committee has the authority to hire legal, accounting, financial or other advisors as it may deem necessary or desirable and/or to delegate responsibilities to executive officers of the Company in connection with discharging its duties. A copy of the Code is available on our website at.rpc.net under the Governance section. All related party transactions for the fiscal year ended December 31, 2020 were reviewed, approved and/or ratified by the Nominating and Governance Committee in accordance with the Code. +INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +Principal Auditor +Grant Thornton LLP (“Grant Thornton”) served as the Company’s independent registered public accounting firm for the fiscal years ended December 31, 2020 and 2019. +The Audit Committee has appointed Grant Thornton as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2021. Grant Thornton has served as the Company’s independent registered public accounting firm for many years and is considered by management to be well +27 +qualified. Representatives of Grant Thornton are expected to be present at the Annual Meeting, will have an opportunity to make a statement if they so desire, and will be available to respond to appropriate questions. +Aggregate fees billed by the Company’s independent registered public accounting firm are set forth below: +2020 +2019 +Audit fees and quarterly reviews (1) +$ +1,124,840 +$ +1,073,580 +Audit related fees +— +— +Tax fees +— +— +All other fees +— +— +(1) +Audit fees include fees for audit or review services in accordance with generally accepted auditing standards, such as statutory audits and services rendered for compliance with Section 404 of the Sarbanes-Oxley Act. +Pre-approval of Services +All of the services described above were pre-approved by the Company’s Audit Committee. The Audit Committee has determined that the payments made to its independent registered public accounting firm for these services are compatible with maintaining such auditors’ independence. A majority of the hours expended on the principal accountant’s engagement to audit the financial statements of the Company for the fiscal year ended December 31, 2020 was attributable to work performed by full-time, permanent employees of the principal accountant. +The Audit Committee is directly responsible for the appointment and termination (subject, if applicable, to stockholder ratification), compensation, and oversight of the work of the independent registered public accounting firm, including resolution of disagreements between management and the independent registered public accounting firm regarding financial reporting. The Audit Committee is responsible for pre-approving all audit and non-audit services provided by the independent registered public accounting firm and ensuring that they are not engaged to perform the specific non-audit services proscribed by law or regulation. The Audit Committee has delegated pre-approval authority to its Chairman with the stipulation that his decision is to be presented to the full Committee at its next scheduled meeting. The Audit Committee has no other pre-approval policies. +STOCKHOLDER PROPOSALS +Appropriate proposals of stockholders intended to be presented at the Company’s 2022 Annual Meeting of Stockholders must be received by the Company by November 15, 2021 in order to be included, pursuant to Rule 14a-8 promulgated under the Exchange Act, in the proxy statement and form of proxy relating to that meeting. With regard to such stockholder proposals, if the date of the next annual meeting of stockholders is advanced or delayed more than 30 calendar days from April 27, 2022, the Company will, in a timely manner, inform its stockholders of the change and of the date by which such proposals must be received. Stockholders desiring to present business at the 2022 Annual Meeting of Stockholders outside of the stockholder proposal rules of Rule 14a-8 of the Exchange Act and instead pursuant to Article Twenty-Seventh of the Bylaws must prepare a written notice regarding such proposal addressed to The Corporate Secretary, RPC, Inc., 2801 Buford Highway NE, Suite 300, Atlanta, Georgia 30329, and deliver to or mailed and received by no later than January 27, 2022 and no earlier than December 18, 2021. Stockholders should consult the Bylaws for other specific requirements related to such notice and proposed business. +With respect to stockholder nomination of directors, the Bylaws provide that nominations for the election of directors may be made by any stockholder entitled to vote for the election of directors. Nominations must comply with an advance notice procedure which generally requires with respect to nominations for directors for election at an annual meeting, that written notice be addressed to: The Corporate Secretary, RPC, Inc., 2801 Buford Highway NE, Suite 300, Atlanta, Georgia 30329, and be received not less than 90 nor more than 130 days prior to the anniversary of the prior year’s annual meeting and set forth, among other requirements specified in the Bylaws, the name, age, business address and, if known, residence address of the nominee +28 +proposed in the notice, the principal occupation or employment of the nominee for the past five years, the nominee’s qualifications, the class or series and number of shares of capital stock of the Company which are owned beneficially or of record by the person and any other information relating to the person that would be required to be disclosed in a proxy statement or other filings. Other specific requirements related to such notice, including required disclosures concerning the stockholder intending to present the nomination, are set forth in the Bylaws. Notices of nominations must be received by the Corporate Secretary of the Company no later than January 27, 2022 and no earlier than December 18, 2021, with respect to directors to be elected at the 2022 Annual Meeting of Stockholders. +EXPENSES OF SOLICITATION +The Company will bear the cost of soliciting proxies. Upon request, we will reimburse brokers, dealers and banks, or their nominees, for reasonable expenses incurred in forwarding copies of the proxy material to their beneficial stockholders of record. Solicitation of proxies will be made principally by mail. Proxies also may be solicited in person or by telephone, facsimile or other means by our directors, officers and regular employees. These individuals will receive no additional compensation for these services. The Company has retained Georgeson Shareholder Communications, Inc. to conduct a broker search and to send proxies by mail for an estimated fee of approximately $36,000 including shipping expenses. +ANNUAL REPORT +The Company’s Annual Report to Stockholders, including its Annual Report on Form 10-K for the fiscal year ended December 31, 2020, without exhibits, is being provided to stockholders with this Proxy Statement. The Annual Report is not considered proxy-soliciting material. +FORM 10-K +Upon the written request of any record or beneficial owner of the Company’s Common Stock whose proxy was solicited in connection with the 2021 Annual Meeting of Stockholders, the Company will furnish such owner, without charge, a copy of its Annual Report on Form 10-K, including the financial statements and the financial statement schedules (but without exhibits), for its fiscal year ended December 31, 2020. Requests for a copy of such Annual Report on Form 10-K should be addressed to Mr. Ben M. Palmer, Corporate Secretary, at RPC, Inc., 2801 Buford Highway NE, Suite 300, Atlanta, Georgia 30329. +OTHER MATTERS +Our Board of Directors knows of no business other than the matters set forth herein which will be presented at the Annual Meeting. In as much as matters not known at this time may come before the Annual Meeting, the enclosed proxy confers discretionary authority with respect to such matters as may properly come before the Annual Meeting; and it is the intention of the persons named in the proxy to vote in accordance with their best judgment on such matters. +BY ORDER OF THE BOARD OF DIRECTORS +Ben M. Palmer +Corporate Secretary +Atlanta, Georgia +March 15, 2021 +29 \ No newline at end of file diff --git a/raw/proxies/0000742278/0001104659-21-036030/proxy_rpt.txt b/raw/proxies/0000742278/0001104659-21-036030/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..310db89682ef4703160ce8bf1b3d34b84ac9c108 --- /dev/null +++ b/raw/proxies/0000742278/0001104659-21-036030/proxy_rpt.txt @@ -0,0 +1,7 @@ +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +Effective with the spin-off in 2001, the Company began providing certain administrative services to Marine Products. The service agreements between Marine Products and the Company provide for the provision of services on a cost reimbursement basis and may be terminated upon six months’ notice. The services covered by these agreements include administration of certain employee benefit programs and other administrative services. Charges from the Company (or from corporations which are subsidiaries of the Company) for such services aggregated approximately $846,000 in 2020. +RPC and Marine Products own 50 percent each of a limited liability company called 255 RC, LLC that was created for the joint purchase and ownership of a corporate aircraft. Each of RPC and Marine Products is currently a party to an operating lease agreement with 255 RC, LLC for a period of five years. During 2020, RPC recorded certain net operating costs comprised of rent and an allocable share of fixed costs of approximately $200,000 for the corporate aircraft. +During 2020, a subsidiary of RPC conducted business with companies owned by LOR, Inc. Mr. Gary W. Rollins, Non-Executive Chairman, is an officer, director and controlling stockholder of LOR, Inc. In 2020, payments totaling approximately $1,030,000 were made to these LOR, Inc. companies primarily for the purchase of parts and repair services related to certain of RPC’s oilfield operating equipment. RPC believes the charges incurred are at least as favorable as the charges that would have been incurred for similar purchases from unaffiliated third parties. +RPC receives certain administrative services including an allocation for office space from Rollins. The service agreements between Rollins and the Company provide for the provision of services on a cost reimbursement basis and are terminable on six months’ notice. The services covered by these agreements include office space, administration of certain employee benefit programs, and other administrative services. Charges to the Company (or to corporations which are subsidiaries of the Company) for such services and rent aggregated approximately $104,000 in 2020. +A group that includes the Company’s Non-Executive Chairman of the Board, Mr. Gary W. Rollins and certain companies under his control, possesses in excess of fifty percent of the Company’s voting power. Please refer to the discussion above under the heading, “Corporate Governance and Board of Directors Committees and Meetings, Director Independence and NYSE Requirements, Controlled Company Exemption.” The group discussed above also controls in excess of fifty percent of Marine Products’ voting power. +Our Code of Business Conduct and Ethics for Directors and Executive Officers and Related Party Transactions Policy provides that related party transactions, as defined in Regulation S-K, Item 404(a) must be reviewed, approved and/or ratified by our Nominating and Governance Committee. As set forth in our Code, our Nominating and Governance Committee has the responsibility to ensure that it only approves or ratifies related party transactions that are in compliance with applicable law, consistent with the Company’s corporate governance policies (including those relative to conflicts of interest and usurpation of corporate opportunities) and on terms that are deemed to be fair to the Company. The Committee has the authority to hire legal, accounting, financial or other advisors as it may deem necessary or desirable and/or to delegate responsibilities to executive officers of the Company in connection with discharging its duties. A copy of the Code is available on our website at.rpc.net under the Governance section. 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+UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A INFORMATION +Proxy Statement Pursuant to Section 14(a) of the Securities +Exchange Act of 1934 (Amendment No. ) +Filed by the Registrant ☒ +Filed by a Party other than the Registrant ☐ +Check the appropriate box: +☐ Preliminary Proxy Statement +☐ Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +☒ Definitive Proxy Statement +☐ Definitive Additional Materials +☐ Soliciting Material Pursuant to §240.14a-12 +RPC, Inc. +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +☒ No fee required. +☐ Fee paid previously with preliminary materials. +☐ Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a6(i)(1) and 0-11 +Table of Contents +2801 Buford Highway NE, Suite 300, Atlanta, Georgia 30329 +TO THE HOLDERS OF THE COMMON STOCK: +P LEASE TAKE NOTICE that the 2026 Annual Meeting of Stockholders of RPC, Inc., a Delaware corporation (RPC or the Company), will be held at 2170 Piedmont Road NE, Atlanta, Georgia, on Tuesday, April 28, 2026, at 12:15 P.M., for the following purposes, as more fully described in the Proxy Statement accompanying this notice: +1. To elect ten Nominees for a one-year term (expiring in 2027) to the Board of Directors; +2. To ratify the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2026; +3. To hold a nonbinding vote on executive compensation as disclosed in these materials; and +4. To consider and act upon such other business as may properly come before the Annual Meeting or any adjournment of the meeting. +RPC, INC . +NOTICE OF ANNUAL MEETING OF STOCKHOLDERS +The Proxy Statement dated March 18, 2026, is attached. +The Board of Directors has fixed the close of business on March 2, 2026, as the record date for the determination of stockholders entitled to notice of, and to vote at, the Annual Meeting or any adjournment thereof. +As permitted by the U.S. Securities and Exchange Commission rules, the Company is making the proxy materials relating to the Annual Meeting, including this Proxy Statement and the Company’s 2025 Annual Report on Form 10-K for the fiscal year ended December 31, 2025 (the Annual Report), available to our stockholders electronically via the Internet. On or about March 18, 2026, we mailed to our stockholders an Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be held on April 28, 2026 (the Notice) containing instructions on how to access this Proxy Statement and our Annual Report and vote online. If you received a Notice by mail, you will not receive a printed copy of the proxy materials in the mail unless you request a copy. The Notice instructs you on how to access and review all important information contained in the Proxy Statement and Annual Report. The Notice also instructs you on how you may submit your proxy over the Internet. If you received a Notice by mail and would like to receive a printed copy of our proxy materials, you should follow the instructions for requesting such materials contained on the Notice. +I mportant Notice regarding the availability of proxy materials for the Annual Meeting of Stockholders to be held on April 28, 2026: The 2026 Proxy Statement and 2025 Annual Report on Form 10-K to security holders are available at https://web.viewproxy.com/RPC/2026 . +Voting can be completed in one of four ways: +Returning the Proxy Card by Mail +Via Telephone at 1-866-804-9616 +Online at https://AALvote.com/RES +Attending the meeting to vote In Person +By Order Of The Board Of Directors +Michael L. Schmit +Corporate Secretary +Atlanta, Georgia +March 18, 2026 +Whether or not you expect to attend the annual meeting, please sign, date and return the enclosed proxy card promptly. Alternatively, you may vote your proxy by telephone or over the Internet by following the instructions on your proxy card or Notice. If you decide to attend the meeting, you may, if you wish, revoke the proxy and vote your shares in person. +Table of Contents +TABLE OF CONTENTS +NOTICE OF ANNUAL MEETING OF STOCKHOLDERS +MESSAGE FROM OUR CHIEF EXECUTIVE OFFICER +SUSTAINABILITY AT RPC +PROXY STATEMENT +1 +CAPITAL STOCK +2 +BOARD OF DIRECTORS AND CORPORATE GOVERNANCE +4 +DIRECTOR COMPENSATION +12 +INFORMATION REGARDING DIRECTOR NOMINEES +14 +PROPOSAL 1: ELECTION OF DIRECTORS +19 +AUDIT MATTERS +20 +PROPOSAL 2: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +22 +PROPOSAL 3: NONBINDING VOTE ON EXECUTIVE COMPENSATION +23 +EXECUTIVE OFFICERS +24 +COMPENSATION DISCUSSION AND ANALYSIS +25 +HUMAN CAPITAL MANAGEMENT AND COMPENSATION COMMITTEE REPORT +37 +EXECUTIVE COMPENSATION +38 +BENEFIT PLANS +42 +PAY RATIO DISCLOSURE +44 +PAY VERSUS PERFORMANCE +45 +SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE +48 +STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT +49 +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +51 +STOCKHOLDER PROPOSALS AND BOARD NOMINATIONS +52 +EXPENSES OF SOLICITATION +53 +ANNUAL REPORT +53 +FORM 10-K +53 +OTHER MATTERS +53 +CAUTION CONCERNING FORWARD-LOOKING STATEMENTS +54 +Table of Contents +a +MESSAGE FROM OUR CHIEF EXECUTIVE OFFICER +To our Stockholders, +On behalf of the Board of Directors, we are pleased to announce that we will hold our 2026 Annual Meeting of Stockholders on Tuesday, April 28, 2026, at 12:15 P.M. +In 2025, we generated solid cash flow while continuing to invest in technologies, products, and services. We deployed capital strategically to enhance our market position despite industry challenges. We remained focused on the controllable factors while positioning ourselves for long-term value creation. +Our corporate objective is to create long-term shareholder value by delivering best-in-class oilfield services while maintaining conservative financial discipline. We believe our execution has consistently aligned with that strategy. +Despite a challenging environment in 2025, RPC remained profitable and maintained a strong balance sheet with substantial liquidity. Revenues increased to $1.6 billion while diluted earnings per share (EPS) declined to $0.15 with intensifying competition across the businesses putting pressure on margins. That said, we still generated cash flow from operating activities of approximately $201 million, which we used to invest in our assets and pay consistent dividends to our stockholders. We ended 2025 with approximately $210 million in cash. We are actively exploring strategic growth opportunities to deploy capital and increase our scale, but we are doing so with the same rigor and economic discipline that has helped us achieve our strong financial position. +We launched several differentiated products and services in 2025 and are encouraged by initial feedback. These new products position RPC as an industry leader in innovation and service quality and strengthen our market positions. We encourage shareholders to learn more about these new offerings in our Annual Report. +We are proud of our consistent profitability and cash generation, despite market dynamics and industry headwinds. Our financial discipline has positioned us to continue pursuing strategic growth initiatives and capitalize on the investments made over the past year in our asset base and operational capabilities. We have launched several internal initiatives aimed at enhancing execution and expanding margins and we continue to allocate capital toward differentiated innovative products and service enhancements. Based on initial customer feedback, we expect increased adoption of many of these differentiated products and services in 2026. We are continuously evaluating acquisition opportunities to broaden and diversify our service offerings and scale. We remain focused on evaluating acquisitions to expand and enhance our platform and continue to assess opportunities through a return-based framework. +In closing, we want to recognize the hard-working people across our organization for demonstrating the resilience required to succeed in today’s competitive marketplace. We also thank our customers, for whom we work tirelessly to live up to our long reputation for delivering reliability, exceptional value, and overall outstanding service. Additionally, Jerry Nix, our Lead Director, has chosen not to stand for re-election at our April 2026 Stockholders Meeting, and we want to thank him for his many years of leadership, service, and support on our Board of Directors and various committees. Lastly, I want to express to all our stakeholders that we remain committed to the financial discipline and conservative approach that has been our hallmark for decades and the backbone of our longevity and success. +Sincerely, +Ben M. Palmer +President and Chief Executive Officer +Table of Contents +SUSTAINABILITY AT RPC +We are an oil and gas services company that provides a broad range of specialized oilfield services and equipment. RPC serves independent, as well as major oilfield companies, and oil and gas properties throughout the United States and in select international markets. We are highly regarded for our business ethics, fiscal management and our consistent focus on safety and the wellness of our employees. We consistently deliver high quality services to our customers, provide safe and rewarding work for our employees, and returns to shareholders throughout the many cycles and challenges of our sector. +We have published the following formal policies: +> Climate Change; +> Water Stewardship; +> Human Capital Management; +> Environmental; +> Workplace Health and Safety; and +> Human Rights. +The following Board committees provide periodic relevant guidance and oversight that support RPC’s ESG efforts in their respective areas as outlined below: +> The Nominating and Corporate Governance Committee is responsible for monitoring our general ESG practices, policies, programs, and public disclosures. +> The Human Capital Management and Compensation Committee provides oversight of the development and management of our human capital management strategies and policies. +> The Audit Committee is responsible for oversight of our cybersecurity risk management program and ESG reporting disclosures and related internal controls. +Table of Contents +a +PROXY STATEMENT +We are furnishing the proxy materials to stockholders on or about March 18, 2026. The Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be held on April 28, 2026, Proxy Statement and the Annual Report on Form 10-K are available at https://web.viewproxy.com/RPC/2026 . +The following information concerning the proxy and the matters to be acted upon at the Annual Meeting of Stockholders to be held on April 28, 2026 is submitted by the Company to the stockholders in connection with the solicitation of proxies on behalf of the Company’s Board of Directors. +SOLICITATION OF AND POWER TO REVOKE PROXY +A form of proxy is enclosed. Each proxy submitted will be voted as directed, but if not otherwise specified, proxies solicited by the Board of Directors of the Company will be voted in favor of the candidates for election to the Board of Directors, in favor of ratification of the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2026, and in favor of the nonbinding proposal to approve executive compensation. +A stockholder executing and delivering a proxy has power to revoke the same and the authority thereby given at any time prior to the exercise of such authority, if they so elect, by contacting either proxy holder, by timely submitting a later dated proxy changing their vote, or by attending the meeting and voting in person. However, a beneficial stockholder who holds shares in street name must secure a proxy from their broker before they can attend the meeting and vote. All costs of solicitation have been, and will be, borne by the Company. +HOUSEHOLDING AND DELIVERY OF NOTICE OR PROXY MATERIALS +The Company has adopted the process called “householding” for any notice or proxy materials in order to reduce printing costs and postage fees. Householding means that stockholders who share the same last name and address will receive only one copy of the notice or proxy materials, unless we receive contrary instructions from any stockholder at that address. Stockholders of record who have the same address and last name and have not previously requested electronic delivery of proxy materials will receive a single envelope containing the Notices of Internet Availability for all stockholders having that address. The Notice for each stockholder will include that stockholder’s unique control number needed to vote their shares. Each such stockholder which has requested paper copies of the proxy materials will continue to receive a separate proxy card. +If you prefer to receive multiple copies of the proxy materials at the same address, additional copies will be provided to you promptly upon written or oral request. If you are a stockholder of record, you may contact us by writing to the Company at 2801 Buford Highway NE, Suite 300, Atlanta, GA 30329 or by calling 404-321-2140. Eligible stockholders of record receiving multiple copies of the proxy materials can request householding by contacting the Company in the same manner. +1 +Table of Contents +2026 ANNUAL +PROXY STATEMENT +CAPITAL STOCK +The outstanding capital stock of the Company on March 2, 2026 consisted of 221,639,269 shares of Common Stock, par value $0.10 per share. Holders of Common Stock are entitled to one vote (non-cumulative) for each director nominee, and one vote (non-cumulative) with respect to each other proposal to be voted on, with respect to each share of such stock registered in their respective names at the close of business on March 2, 2026, the record date for determining stockholders entitled to notice of, and to vote at, the meeting or any adjournment thereof. +A majority of the outstanding shares will constitute a quorum at the Annual Meeting . Abstentions will be counted for purposes of determining the presence or absence of a quorum for the transaction of business. With respect to routine matters, if your shares are held through a broker and you do not instruct the broker on how to vote your shares, your broker may choose to leave your shares unvoted or to vote your shares on the routine matters. Proposal 2, with respect to the ratification of the auditor, is the only routine matter on the agenda at this year’s Annual Meeting. With respect to Proposals 1 and 3, without instructions, your broker cannot vote your shares, resulting in what are known as “broker non-votes.” Broker non-votes will be counted for purposes of determining the presence or absence of a quorum for the transaction of business. +In accordance with the General Corporation Law of the state of Delaware, the following votes are needed for approval of each proposal: +PROPOSAL +VOTE NEEDED FOR APPROVAL AND EFFECT OF ABSTENTION AND BROKER NON-VOTES +Proposal No. 1: The election of ten director nominees to serve as directors of the Company until our 2027 annual meeting of stockholders or until their successors are duly elected and qualified. +The election of each of the director nominees named herein will require the affirmative vote of a plurality of the votes cast by the shares of Company Common Stock entitled to vote in the election provided that a quorum is present at the Annual Meeting. +In the case of a plurality vote requirement (as in the election of directors), where no particular percentage vote is required, the outcome is solely a matter of comparing the number of votes cast for each nominee, with those nominees receiving the most votes being elected, and hence only votes for director nominees (and not abstentions or broker non-votes) are relevant to the outcome. In this case, the ten nominees receiving the most votes will be elected. Abstentions and broker non-votes will have no effect on the election of directors and will be disregarded. +Proposal No. 2: To ratify the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2026. +The affirmative vote of a majority of shares present in person or represented by proxy and entitled to vote with respect to this proposal at the meeting is required to approve the ratification of the appointment of the Company’s independent registered public accounting firm for fiscal year 2026 provided that a quorum is present at the Annual Meeting. +Abstentions will have the effect of a vote against this proposal. +Broker non-votes will have no effect on this proposal and will be disregarded. +2 +Table of Contents +2026 ANNUAL +PROXY STATEMENT +PROPOSAL +VOTE NEEDED FOR APPROVAL AND EFFECT OF ABSTENTION AND BROKER NON-VOTES +Proposal No. 3 : To hold a nonbinding vote on executive compensation. +The affirmative vote of a majority of shares present in person or represented by proxy and entitled to vote at the meeting is required to approve the nonbinding shareholder resolution on executive compensation. +Abstentions will have the effect of a vote against this proposal. +Broker non-votes will have no effect on this proposal and will be disregarded. +There are no rights of appraisal or similar dissenter’s rights with respect to any matter to be acted upon pursuant to this Proxy Statement. It is expected that shares held of record and beneficially by officers and directors of the Company and their affiliates, which in the aggregate represent approximately 59% of the outstanding shares of Common Stock, will be voted for the nominees, for the ratification of the appointment of the Company’s independent registered public accounting firm and for the approval of the nonbinding shareholder resolution on executive compensation. +3 +Table of Contents +2026 ANNUAL +PROXY STATEMENT +BOARD OF DIRECTORS AND CORPORATE GOVERNANCE +MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS +The Company’s Board of Directors (Board) has an Audit Committee, Human Capital Management and Compensation Committee, Nominating and Corporate Governance Committee, and an Executive Committee (Committees). The Board has adopted written charters for certain of these Committees which are all available on our website at www.rpc .net under the section titled Governance . +Under our Corporate Governance Guidelines, directors are expected to attend all regular and special meetings of the Board and Board Committees upon which they serve. Directors are also expected to attend the Annual Stockholders Meeting. Each incumbent director attended at least 75% of the aggregate of all Board meetings and meetings of the Board Committees on which they served during 2025, and all members of the Board at the time attended last year’s Annual Stockholders Meeting. +The following table shows the current membership (M) and chairman (C) of the Board and each of the Board committees, the number of Board and Board committee meetings held in 2025, and actions taken by unanimous written consent in lieu of meetings: +Human Capital +Nominating and +Management and +Corporate +Board of +Audit +Executive +Compensation +Governance +Name +Directors +Committee +Committee +Committee +Committee +Richard A. Hubbell +C +C +Susan R. Bell +M +M +Patrick J. Gunning +M +C +M +M +Gary Kolstad +M +Amy R. Kreisler +M +M +Stephen E. Lewis +M +Jerry W. Nix (1) +M +M +C +C +Ben M. Palmer +M +M +Timothy C. Rollins +M +M +John F. Wilson +M +M +M +M +Meetings Held +6 +6 +— +4 +4 +Actions Taken by Written Consent +2 +— +— +1 +1 +(1) Lead Independent Director +4 +Table of Contents +2026 ANNUAL +PROXY STATEMENT +Audit Committee +The Audit Committee of the Board of Directors currently consists of Patrick J. Gunning (Chairman), Susan R. Bell, Jerry W. Nix and John F. Wilson. For the year ended December 31, 2025, and through the Company's 2026 Annual Meeting of Stockholders to be held on April 28, 2026, Mr. Nix served, and will continue to serve, as a member of the Audit Committee. Mr. Nix has decided not to stand for re-election as a director in 2026, and Messrs. Kolstad and Lewis have been appointed to serve on the Audit Committee effectively following their re-election to the Board. The Audit Committee is responsible for, among other things: +> appointing the Company’s independent registered public accounting firm to audit the Company’s financial statements; +> assessing the independence and overseeing the performance of the Company’s independent registered public accounting firm; +> pre-approving all audit and all permissible non-audit services to be performed by the Company’s independent registered public accounting firm; +> discussing with the Company’s independent registered public accounting firm all matters required to be discussed under the standards of the Public Company Accounting Oversight Board (PCAOB), Securities and Exchange Commission (SEC) or other regulations; +> reviewing the Company’s financial statements and critical accounting policies and estimates; +> reviewing the adequacy and effectiveness of our internal controls and disclosure controls and procedures; +> assessing the performance of the Company’s internal audit department; +> reviewing the Company’s insider trading and anti-corruption policies; +> overseeing procedures for the receipt, retention, and treatment of complaints received by the Company regarding accounting, internal accounting controls, or auditing matters, and the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters; and +> overseeing compliance with the Company’s Code of Business Conduct and Ethics. +The Board has determined that all of the members of the Audit Committee are independent as defined by the rules of the SEC and the New York Stock Exchange (NYSE). The Board has also determined that Patrick J. Gunning and Susan R. Bell of the Audit Committee are qualified as "Audit Committee Financial Experts” within the meaning of the rules of the SEC and that they have accounting or related financial management expertise within the meaning of the NYSE listing standards. In addition, the Board has determined that Messrs. Wilson, Lewis and Kolstad are "financially literate” within the meaning of and as required by the rules and regulations of the NYSE. The Board has also determined that Ms. Bell’s simultaneous service on the audit committees of four public companies will not impair her ability to effectively serve on the Company’s Audit Committee . +Human Capital Management and Compensation Committee +The Human Capital Management and Compensation Committee of the Board of Directors of the Company consists of Jerry W. Nix (Chairman), Patrick J. Gunning and John F. Wilson. For the year ended December 31, 2025, and through the Company's 2026 Annual Meeting of Stockholders to be held on April 28, 2026, Mr. Nix served, and will continue to serve, as Chairman of the Human Capital Management and Compensation Committee and has chosen not to stand for re-election in 2026. The Human Capital Management and Compensation Committee is responsible for, among other things: +> reviewing the Company’s executive compensation philosophy and strategy; +> reviewing and approving the corporate goals and objectives relevant to the compensation of the Company’s CEO and executive officers; +> evaluating the performance of the Company’s CEO and executive officers; +> reviewing the compensation of the Company’s Non-Employee Directors for service on the Board and its committees and recommending to the Board changes to their compensation program as appropriate; +> determining the stock ownership guidelines for the Company’s Non-Employee Directors, Executive Chairman, CEO, CFO, executive officers, and other key executives and monitoring compliance with such guidelines; +5 +Table of Contents +2026 ANNUAL +PROXY STATEMENT +> overseeing the development and management of the Company’s human capital management strategy and policies, including, but not limited to, those policies and strategies regarding diversity, equity and inclusion; and +> reviewing, approving and administering incentive compensation and equity compensation plans for executive officers and directors. +The Board has determined that all members of the Human Capital Management and Compensation Committee are independent as defined by the rules of the SEC and NYSE, without regard to NYSE independence rules applicable specifically to compensation committee members but which do not apply to the Company since it is a “controlled company” under NYSE rules. In addition, each member of our Human Capital Management and Compensation Committee is also a Non-Employee Director, as defined pursuant to Rule 16b-3 of the Exchange Act. +The Company is not required by law or by the NYSE rules to have a formal compensation committee charter since we are a controlled company as described below under the heading Director Independence and NYSE Requirements . However, we have established a written charter of the Human Capital Management and Compensation Committee to promote responsible corporate governance practices, and we currently intend to maintain the committee charter going forward. See section titled Compensation Discussion & Analysis—Compensation Setting Process for information regarding the Human Capital Management and Compensation Committee’s processes. +Human Capital Management and Compensation Committee Interlocks and Insider Participation +As noted above, the Board has determined that each member of the Human Capital Management and Compensation Committee is independent in accordance with the NYSE rules generally applicable to directors. The Human Capital Management and Compensation Committee consists of Messrs. Nix, Gunning and Wilson. None of these individuals is a current or former officer or employee of the Company or any of its subsidiaries. Related party transactions and the independence of the non-employee members of the Company’s Board are discussed in more detail under the following sections, Director Independence and NYSE Requirements, and Certain Relationships and Related Party Transactions, of this Proxy Statement. No executive officer of the Company has served as a director or member of the compensation committee or other board committee of another entity that had an executive officer who served on the Company’s Board or Human Capital Management and Compensation Committee. +Nominating and Corporate Governance Committee +The Nominating and Corporate Governance Committee of the Board of Directors of the Company consists of Jerry W. Nix (Chairman), Patrick J. Gunning, John F. Wilson, Timothy C. Rollins and Amy R. Kreisler. For the year ended December 31, 2025, and through the Company's 2026 Annual Meeting of Stockholders to be held on April 28, 2026, Mr. Nix served, and will continue to serve, as Chairman of the Nominating and Corporate Governance Committee and has chosen not to stand for re-election in 2026. The Nominating and Corporate Governance Committee is responsible for, among other things: +> determining the appropriate qualifications required for the members of the Board; +> recommending Board committee chairs and assignments; +> recommending to our Board nominees for director and to consider any nominations properly made by a stockholder, to make recommendations to our Board of Directors regarding the agenda for our Annual Meetings of Stockholders, and appropriate action to be taken in response to any stockholder proposals; +> conducting periodic reviews of the composition and size of the Board and its committees, as well as the frequency and procedures of Board meetings; +> overseeing compliance with key corporate governance policies, including the Company’s Corporate Governance Guidelines and Independence Guidelines; +> reviewing and approving related party transactions by a sub-committee of independent members; +> reviewing and monitoring the Company’s ESG practices, policies, programs and public disclosures; and +> reviewing and assessing the adequacy of the Company’s Code of Business Conduct and Ethics. +6 +Table of Contents +2026 ANNUAL +PROXY STATEMENT +The Company is not required by law or by the NYSE rules to have a nominating committee since we are a controlled company as described below under the heading Director Independence and NYSE Requirements . However, we have established a Nominating and Corporate Governance Committee and a written charter to promote responsible corporate governance practices. We currently intend to maintain the committee going forward, but as a controlled company, we rely upon the exemption from the requirement that we have a nominating committee comprised entirely of independent directors. +Director Nominations +Under Delaware law, there are no statutory criteria or qualifications for directors. No criteria or qualifications have been prescribed by the Board at this time. The Nominating and Corporate Governance Committee does not have a formal policy with regard to the consideration of director candidates. As such, there is no formal policy relative to diversity, although as noted below, it is one of many factors that the Nominating and Corporate Governance Committee has the discretion to factor into its decision making. This discretion would extend to how the Committee might define diversity in a particular instance – whether in terms of background, viewpoint, experience, education, race, gender, national origin or other considerations. The Committee acts under the guidance of the Corporate Governance Guidelines approved by the Board of Directors and posted on the Company’s website at www.rpc.net under the Governance section. The Board believes that it should preserve maximum flexibility in order to select directors with sound judgment and other desirable qualities. According to the Company’s Corporate Governance Guidelines, the Board of Directors is responsible for selecting nominees for election to the Board of Directors. The Board has delegated the screening process of director nominees for nomination to the Board and service on the committees of the Board to the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee is responsible for determining the appropriate skills and characteristics required of Board members in the context of the then current makeup of the Board. This determination takes into account all factors which the Committee considers appropriate, such as independence, experience, strength of character, mature judgment, technical skills, diversity, age and the extent to which the individual would fill a present need on the Board. The Bylaws provide that nominations for the election of directors may be made by any stockholder entitled to vote for the election of directors. Nominations must comply with an advance notice procedure which generally requires, with respect to nominations for directors for election at an annual meeting, that written notice be addressed to: The Corporate Secretary, RPC, Inc., 2801 Buford Highway NE, Suite 300, Atlanta, Georgia 30329, and received not less than 90 nor more than 130 days prior to the anniversary of the prior year’s annual meeting and set forth among other requirements specified in the Bylaws, the name, age, business address and, if known, residence address of the nominee proposed in the notice, the principal occupation or employment of the nominee for the past five years, the nominee’s qualifications, the class or series and number of shares of capital stock of the Company which are owned beneficially or of record by the person and any other information relating to the person that would be required to be disclosed in a proxy statement or other filings. Other requirements related to the notice are contained in the Bylaws and stockholders are advised to carefully review those requirements to ensure that nominations comply with the Bylaws; stockholders who intend to solicit proxies in support of director nominees other than the Board’s nominees must also comply with SEC Rule 14a-19(b). The Committee will consider nominations from stockholders that satisfy these requirements. +All of the nominees for directors being voted upon at the Annual Meeting to be held on April 28, 2026, other than Wesley N. Slagle, are currently serving on the Board of Directors. Mr. Slagle was recommended to the Nominating and Corporate Governance Committee by the control group shareholders as a director candidate and has been nominated for election as a director by the Board of Directors. Mr. Slagle was nominated to fill the seat vacated by Mr. Nix choosing to not stand for re-election at the 2026 Annual Meeting of Stockholders. The Nominating and Governance Committee has concluded that Mr. Slagle is considered to be a non-independent director based on the RPC Independence Guidelines, NYSE and SEC guidelines. As a result, the size of our Board will remain comprised of ten members after the Annual Meeting of Stockholders. +7 +Table of Contents +2026 ANNUAL +PROXY STATEMENT +Board Leadership STRUCTURE +The Board believes the current leadership structure consisting of a separate Executive Chairman of the Board, Chief Executive Officer (CEO) and Lead Independent Director represents the appropriate structure for the Company at this time. Richard A. Hubbell is the Executive Chairman of the Board and sets the agendas for Board meetings in consultation with the CEO, Corporate Secretary, and other members of the Board, and presides over all Board meetings and the Annual Meeting of Stockholders. Ben M. Palmer is the President and Chief Executive Officer and sets the operational leadership and strategic direction of the Company. The Lead Independent Director serves as the liaison between the Executive Chairman, CEO and the independent directors, sets the agenda for and presides over the executive sessions of the non-employee and independent directors, consults with the Executive Chairman and CEO regarding information sent to the Board in connection with Board meetings and is available, if requested by the stockholders, when appropriate, for consultation and direct communication. For the year ended December 31, 2025 and through the Company's 2026 Annual Meeting of Stockholders to be held on April 28, 2026, Mr. Nix served and will continue to serve as the Lead Independent Director and has chosen not to stand for re-election in 2026. Effectively following re-election at the Annual Meeting, Mr. Gunning will serve as the Lead Independent Director. +Risk Oversight +Our Board of Directors provides oversight of the Company’s overall risk management practices. “Risk” is an extremely broad concept that extends to multiple functional areas and crosses multiple disciplines. As such, risk may be addressed from time to time by the full Board or by one or more of our Committees. Senior management is responsible for identifying and managing material risks that we face while insurable risks and litigation risks are handled primarily by the risk management department. Senior management provides the Board with a summary of insurance coverage annually and updates as deemed necessary. Liquidity risk, credit risk and risks associated with our credit facilities and cash management are handled primarily by our finance department which regularly provides a financial report to both the Audit Committee and to the full Board. Operational, business, regulatory and political risks are handled primarily by senior executive management which regularly provides various operational reports to, among others, the full Board, the Executive Committee and the Audit Committee. +Cybersecurity Risk Oversight +The Board has delegated its responsibility for oversight of the Company’s cybersecurity and information security framework and risk management to the Audit Committee. The Audit Committee receives information and updates at least quarterly and actively engages with senior leaders with respect to the effectiveness of the Company’s cybersecurity and information security framework, data privacy, and risk management. In addition, the Audit Committee receives reports summarizing threat detection and mitigation plans, audits of internal controls, training and certification, and other cyber priorities and initiatives, as well as timely updates from senior leaders on material incidents relating to information systems security, including cybersecurity incidents. The Audit Committee includes members with experience in risk management including cybersecurity. +RPC’s cybersecurity program is overseen by the Chief Information Officer (CIO) as well as several key members of RPC’s Enterprise Technology team. These key leaders collectively have over 50 years of experience in network security, cybersecurity and enterprise risk management. The Chief Executive Officer and CIO receive regular updates on cybersecurity matters, results of mitigation efforts related to existing risks and cybersecurity incident response and remediation. These leaders communicate closely with members of RPC’s Information Security Committee (ISC) which oversees the adopted CIS Control Framework, governs the Company’s information security programs and monitors the effectiveness of the Company’s cybersecurity and technology risk management practices. In addition, ISC provides oversight to align security strategies with business objectives. The Company also maintains business continuity and disaster recovery plans. +8 +Table of Contents +2026 ANNUAL +PROXY STATEMENT +Director Independence and NYSE Requirements +Controlled Company Exemption +The Company has elected to be treated as a “controlled company” as defined by NYSE Section 303A.00. This Section provides that a controlled company need not comply with the requirements of Sections 303A.01, 303A.04 and 303A.05 of the NYSE Listed Company Manual. Section 303A.01 requires that listed companies have a majority of independent directors. As a controlled company, this Section does not apply to the Company. Sections 303A.04 and 303A.05 require that listed companies have a nominating and corporate governance committee and a compensation committee, in each case composed entirely of independent directors, and that each of these committees must have a charter that addresses both the committee’s purpose and responsibilities and the need for an annual performance evaluation by the committee. While the Company has a Nominating and Corporate Governance committee and a Human Capital Management and Compensation committee, and each of these committees has a written charter that is available on the Company’s website, it is not required to and does not comply with all of the provisions of Sections 303A.04 and 303A.05. The Company is a “controlled company” because a group that includes Timothy C. Rollins and Amy R. Kreisler, each of whom is a director of the Company, and certain companies under their control, controls in excess of 50% of the Company’s voting power. This means that they have the ability to determine the outcome of the election of directors at the Company’s annual meetings and to determine the outcome of many significant corporate transactions, many of which only require the approval of a majority of the Company’s voting power. Such a concentration of voting power could also have the effect of delaying or preventing a third party from acquiring the Company at a premium. +The Company’s Audit Committee is composed of four “independent” directors as defined by the Company’s Corporate Governance Guidelines, the NYSE rules, the Exchange Act, SEC regulations thereunder, and the Company’s Audit Committee Charter. All of the members of the Human Capital Management and Compensation Committee, and a majority of the members of Nominating and Corporate Governance Committee are also “independent” directors, in accordance with the NYSE’s independence standards that apply to directors generally. The current independent directors of the Company are Jerry W. Nix, Susan R. Bell, Patrick J. Gunning, John F. Wilson, Stephen E. Lewis and Gary Kolstad. If elected, Wesley N. Slagle will be a non-independent director. +Independence Guidelines +Under NYSE listing standards, to be considered independent, a director must be determined to have no material relationship with the Company other than as a director. The NYSE standards set forth a nonexclusive list of relationships which are conclusively deemed material. The Company’s Independence Guidelines are posted on the Company’s website at www.rpc.net under the Governance section and include categorical standards for determining independence in specific situations. +Audit Committee Charter +Under the Company’s Audit Committee Charter, in accordance with NYSE listing requirements and the Securities Exchange Act of 1934, all members of the Audit Committee must be independent of management and the Company. A member of the Audit Committee is considered independent as long as he or she (i) does not accept any consulting, advisory, or compensatory fee from the Company, other than as a director or committee member; (ii) is not an affiliated person of the Company or its subsidiaries; and (iii) otherwise meets the independence requirements of the NYSE and the Company’s Corporate Governance Guidelines. +9 +Table of Contents +2026 ANNUAL +PROXY STATEMENT +Nonmaterial Relationships +After reviewing all of the relationships between the independent directors and the Company, the Board of Directors determined that none of the independent directors had any relationships that impaired their independence and discussed the following: +> Jerry W. Nix, Susan R. Bell, Patrick J. Gunning, John F. Wilson, Stephen E. Lewis and Gary Kolstad currently serve on the Board of Marine Products Corporation. Timothy C. Rollins and Amy R. Kreisler are directors of Marine Products Corporation and are part of a control group that has voting control over that company. Patrick J. Gunning and Susan R. Bell are directors of Rollins, Inc. John F. Wilson is the Executive Chairman of Rollins, Inc. Timothy C. Rollins and Amy R. Kreisler are part of a group that owns in excess of 35% of the outstanding common stock of Rollins, Inc. and are siblings. +As required by the Independence Guidelines and NYSE rules, the Board of Directors unanimously concluded that the above-listed relationships would not affect the independent judgment of the independent directors, based on their experience, character and independent means, and therefore do not preclude an independence determination. All the members of the Audit Committee are also independent under the heightened standards required for Audit Committee members. The Company’s non-management directors meet at regularly scheduled executive sessions, and the independent directors separately meet at least once annually, without management, in accordance with the NYSE Corporate Governance Listing Standards Mr. Jerry W. Nix, as Lead Independent Director, presided over the executive sessions held during 2025. +Corporate Governance Guidelines +We have adopted Corporate Governance Guidelines to formalize and promote better understanding of our policies and procedures. At least annually, the Board reviews these guidelines. As required by the rules of the NYSE, our Corporate Governance Guidelines require that our non-management directors meet in regularly scheduled executive sessions each year without management, and such meetings are currently required to occur at least twice annually. +At the Company’s website at www.rpc.net , under the Governance section, you may access a copy of the Company’s Corporate Governance Guidelines, Audit Committee Charter, Human Capital Management and Compensation Committee Charter, Nominating and Corporate Governance Committee Charter, Code of Business Conduct, Code of Business Conduct and Ethics for Directors and Executive Officers and Related Party Transactions Policy, and Independence Guidelines. +Code of Business Conduct +The Company has adopted a Code of Business Conduct applicable to all directors, officers and employees generally, as well as a Code of Business Conduct and Ethics for Directors and Executive Officers and Related Party Transactions Policy applicable to the principal executive officer, principal financial officer, and directors. Both Codes are available on the Company’s website at www.rpc.net under the Governance section. +10 +Table of Contents +2026 ANNUAL +PROXY STATEMENT +Director Communications +The Company also has a process for interested parties, including stockholders, to send communications to the Board of Directors, Lead Independent Director, any of the Board committees or the non-management or independent directors as a group. Such communications should be addressed as follows: +Mr. Patrick J. Gunning +c/o Internal Audit Department +RPC, Inc. +2801 Buford Highway NE, Suite 300 +Atlanta, Georgia 30329 +The above instructions for communications with the directors are also posted on our website at www.rpc.net under the Governance section. All communications received from interested parties are forwarded to the Board of Directors. Any communication addressed solely to the Lead Independent Director or the non-management or independent directors will be forwarded directly to the appropriate addressee(s). +Insider Trading Policy +We have adopted an Insider Trading Policy and procedures governing the purchase, sale and/or other dispositions of our securities by directors, officers and employees that is reasonably designed to promote compliance with insider trading laws, rules and regulations, and the New York Stock Exchange listing standards applicable to us. A copy of our Insider Trading Policy is filed as Exhibit 19 to our Annual Report on Form 10-K for the year ended December 31, 2025. In addition, with regard to the Company’s trading in its own securities, it is the Company’s policy to comply with the federal securities laws and the applicable exchange listing requirements. +11 +Table of Contents +2026 ANNUAL +PROXY STATEMENT +DIRECTOR COMPENSATION +Overview of the Non-Employee Director Compensation Program +Members of the Board who are not employees (Non-Employee Directors) receive compensation for their service. As RPC employees, Messrs. Hubbell and Palmer do not receive compensation for their service as Board members. The compensation program for our Non-Employee Directors is intended to provide a total compensation package that enables us to attract and retain qualified and experienced individuals to serve as directors and to align our directors’ interests with those of our stockholders. All Non-Employee Directors are also entitled to reimbursement of expenses for all services as a director, including reasonable travel expenses incurred in connection with required in-person attendance at board and committee meetings, committee participation or special assignments. +The Human Capital Management and Compensation Committee annually reviews each element and the total of our Non-Employee Director Compensation Program and periodically makes recommendations for any changes to the Board. T here were no changes made to the Non-Employee Director Compensation Program for 2026. +2025 Annual Non-Employee Director Compensation Program +Cash and Equity Compensation +Under the Director Compensation Program in effect in 2025, our Non-Employee Directors received an annual cash retainer and an annual equity grant in the form of fully vested Company common shares under the Company’s 2024 Equity Stock Incentive Plan (SIP); Committee Chairs and members received additional annual cash retainers. All cash retainers are payable in equal quarterly installments in arrears. For each Non-Employee Director who is elected or appointed for the first time, the first quarterly installment of the annual cash retainers will be paid for the first quarter that ends on or after the date of his or her initial election or appointment, prorated based on service during the quarter. In addition, equity retainers are prorated to the Non-Employee Director who is elected to the Board after the grant date. The following table sets forth the 2025 Non-Employee Director Compensation Program : +Annual +Annual +Annual +Committee +Chair +Board Member +Equity +Member Annual +Retainer +Cash Retainer +Retainer +Cash Retainer +Board/Committee +($) +($) +($) +($) +Board of Directors +— +75,000 +50,000 +— +Lead Independent Director +10,000 +— +— +— +Audit Committee +20,000 +— +— +6,000 +Human Capital Management and Compensation Committee +10,000 +— +— +3,000 +Nominating and Corporate Governance Committee +6,000 +— +— +2,000 +12 +Table of Contents +2026 ANNUAL +PROXY STATEMENT +2025 Director Compensation Table +The following table sets forth the compensation paid to our directors for services rendered as a director for the year ended December 31, 2025. Two of our directors, Richard A. Hubbell and Ben M. Palmer, are employees of the Company, and each of their employee compensation information is set forth in the Summary Compensation Table under the Executive Compensation section of this Proxy Statement. Directors that are Company employees do not receive any additional compensation for services rendered as a director. +All of the directors shown below have never been employed by the Company or paid a salary or bonus by the Company and do not participate in any Company-sponsored retirement plans. +Fees Earned or +Stock +Option +Paid in Cash +Awards (1) +Awards +Total +Name +($) +($) +($) +($) +Susan R. Bell +81,000 +50,000 +— +131,000 +Patrick J. Gunning +100,000 +50,000 +— +150,000 +Gary Kolstad (2) +34,851 +39,400 +— +74,251 +Amy R. Kreisler +77,000 +50,000 +— +127,000 +Stephen E. Lewis +51,923 +50,000 +— +101,923 +Jerry W. Nix +107,000 +50,000 +— +157,000 +Gary W. Rollins (3) +23,283 +— +— +23,283 +Pamela R. Rollins (3) +23,283 +— +— +23,283 +Timothy C. Rollins +77,000 +50,000 +— +127,000 +John F. Wilson +86,000 +50,000 +— +136,000 +(1) All stock awards are fully vested at grant. +(2) Prorated based on date of appointment. +(3) Partial year of service. Did not stand for re-election at the April 22, 2025 Annual Stockholders’ meeting. +Non-Employee Director Stock Ownership Guidelines +Under Stock Ownership Guidelines, Non-Employee Directors are required to beneficially own, within five years of their appointment to the Board, common stock of the Company equal to at least three times the annual equity retainer. Non-Employee Directors are prohibited from selling Company stock granted to such director by the Company for a period of one year from the date of such grant and until such director is in compliance with their ownership requirement under these Stock Ownership Guideline s. +13 +Table of Contents +2026 ANNUAL +PROXY STATEMENT +INFORMATION REGARDING DIRECTOR NOMINEES +The following table sets forth the names, ages as of March 2, 2026, and certain other information for each of the nominees for election as a director at the 2026 Annual Meeting to serve a one-year term. All of our current directors have terms expiring at the 2026 Annual Meeting of Stockholders, and all directors elected at the Annual Meeting are standing for re-election for a term of one year or until his or her successor has been elected and qualified, or until his or her earlier death, resignation or removal. +Name +Age +Director Since +Independent +DIRECTOR NOMINEES: +Richard A. Hubbell +81 +1987 +û +Amy R. Kreisler +56 +2016 +û +Patrick J. Gunning +66 +2021 +ü +Susan R. Bell +63 +2021 +ü +Ben M. Palmer +65 +2022 +û +John F. Wilson +68 +2022 +ü +Timothy C. Rollins +63 +2022 +û +Stephen E. Lewis +59 +2025 +ü +Gary A. Kolstad +67 +2025 +ü +Wesley N. Slagle +46 +Nominated on February 27, 2026 +û +14 +Table of Contents +2026 ANNUAL +PROXY STATEMENT +Key Attributes, Experience and Skills of Director Nominees +Director Nominees +Richard A. Hubbell +Executive Chairman of the Board +Non-Independent Member of the Board of Directors +Chairman of the Executive Committee +Richard A. Hubbell has been Executive Chairman of the Board since 2022. Prior to that, he served as a Director, the Company’s President since 1987 and its Chief Executive Officer since 2003. This experience has given Mr. Hubbell extensive knowledge of the Company’s business and industry. He is also the Executive Chairman of the Board of Directors at Marine Products Corporation and previously served as its President and Chief Executive Officer since 2001. Previously, he was Executive Vice President of Rollins Communications, Inc., a media company. He joined Rollins, Inc. in 1970. Mr. Hubbell received a Bachelor of Arts in Economics from Westminster College. +Amy R. Kreisler +Executive Director, The O. Wayne Rollins Foundation +Non-Independent Member of the Board of Directors +Member of the Nominating and Corporate Governance Committee +Amy R. Kreisler has served as a Director of RPC, Inc. since 2016. Ms. Kreisler is a Vice President at LOR, Inc., a private family investment company. She is the Executive Director of The O. Wayne Rollins Foundation and a Trustee of The Ma-Ran Foundation. In each of these roles, she oversees grant-making activities and directs the administration of foundation assets. She is also a member of The Lovett School Board of Trustees, serving on their Executive Committee and Endowment Committee. She is a board member of The Shepherd Center Foundation. Ms. Kreisler brings both legal and business experience to the Board. She is a long-standing member of the Rollins School of Public Health’s Dean’s Council and a former Board member of the Emory University Board of Visitors. Ms. Kreisler is currently a member of the Board of Directors at Marine Products Corporation. Ms. Kreisler is a former attorney of the law firm Arnall Golden Gregory LLP. She holds an English Degree from Hollins University and a Law Degree from The College of William and Mary Law School. Ms. Kreisler is the sister of Timothy C. Rollins. +15 +Table of Contents +2026 ANNUAL +PROXY STATEMENT +Patrick J. Gunning +Former Chief Financial Officer at The Woodruff Arts Center +Retired Partner, Ernst & Young LLP +Lead Independent Member of the Board of Directors , Effective Immediately Following the 2026 Annual Meeting +Chairman of the Audit Committee +Member of the Nominating and Corporate Governance Committee +Member of the Human Capital Management and Compensation Committee +Patrick J. Gunning has served as a Director of RPC, Inc. since 2021. Mr. Gunning brings extensive risk oversight, financial and strategic experience to our Board of Directors. Mr. Gunning retired as a Partner from Ernst & Young LLP in June 2020, a role he had held since May 2002, after a 39-year career in public accounting. Mr. Gunning held multiple leadership roles at Ernst & Young LLP including Southeast Region Leader of the Financial Accounting Advisory Services practice, Southeast Area Industry Leader of the Retail and Consumer Products practice, and lead audit partner for numerous publicly traded and privately owned companies. Prior to joining Ernst & Young LLP, Mr. Gunning worked at Arthur Andersen LLP from 1981 to 2002, where he served as a partner, lead audit partner and Assurance Division Leader. Mr. Gunning also served as the Chief Financial Officer of the Woodruff Arts Center, a non-profit organization, from 2020 to 2022. Mr. Gunning currently serves on the Boards of Directors at Marine Products Corporation and Rollins, Inc., roles he has held since 2021. Mr. Gunning received a Bachelor of Business Administration in Accountancy from the University of Notre Dame and is a Certified Public Accountant in the state of Georgia. +Susan R. Bell +Retired Partner, Ernst & Young LLP +Independent Member of the Board of Directors +Member of the Audit Committee +Susan R. Bell has served as a Director of RPC, Inc. since 2021. Ms. Bell brings extensive risk oversight, financial and strategic experience to our Board of Directors. Ms. Bell retired as Partner from Ernst & Young LLP in 2020 after a 36-year career in public accounting. At Ernst & Young LLP, Ms. Bell served as both an audit and advisory partner, led the Southeast Risk Advisory practice and served as the Atlanta Office Managing Partner. Prior to working at Ernst & Young LLP, Ms. Bell started her career at Arthur Andersen LLP in 1984 where she served as an audit partner from 1996 to 2002. Ms. Bell currently serves as a member of the Board of Directors at Marine Products Corporation, Rollins, Inc. and First Advantage Corporation. She also serves on the Board compensation committee of First Advantage Corporation and the Board audit committee of Marine Products Corporation, and chairs the audit committees of Rollins, Inc. and First Advantage Corporation. Ms. Bell graduated summa cum laude from Mississippi State University with a Bachelor of Professional Accountancy and is a Certified Public Accountant in the states of Georgia and Tennessee. +16 +Table of Contents +2026 ANNUAL +PROXY STATEMENT +Ben M. Palmer +President and Chief Executive Officer +Non-Independent Member of the Board of Directors +Member of the Executive Committee +Ben M. Palmer has served as a Director of RPC, Inc. since 2022. Mr. Palmer has been serving as President and Chief Executive Officer of the Company since 2022. Previously, he served as Vice President, Chief Financial Officer, and Treasurer of the Company beginning in 1996 and also Corporate Secretary from 2018 to 2022. This experience has given Mr. Palmer extensive knowledge of the Company’s business and industry. He is also the President and Chief Executive Officer of Marine Products Corporation and previously served as its Vice President, Chief Financial Officer, Treasurer and Corporate Secretary. Mr. Palmer is currently a member of the Board of Directors at Marine Products Corporation. Prior to joining RPC, Inc., he served for three years as the CFO of EQ Services, a commercial mortgage and asset management subsidiary of The Equitable Companies. Prior to that, he spent ten years with Arthur Andersen LLP in its audit and business advisory services division. Mr. Palmer has a Bachelor of Science in Business Administration from Auburn University. +John F. Wilson +Executive Chairman of the Board, Rollins, Inc. +Independent Member of the Board of Directors +Member of the Audit Committee +Member of the Nominating and Corporate Governance Committee +Member of the Human Capital Management and Compensation Committee +John F. Wilson has served as a Director of RPC, Inc. since 2022. Mr. Wilson currently serves as the Executive Chairman of the Board of Rollins, Inc., a position he has held beginning January 1, 2025. He has served in the following roles on that company Board: as Vice-Chairman from 2020 to 2024, and as a Director since 2013. He previously served as President and Chief Operating Officer of Rollins, Inc. from 2013 to 2020, Vice President of Rollins, Inc. from 2011 to 2013, and as President of Orkin, LLC, from 2009 to 2013. Mr. Wilson’s experience at Rollins has provided him with significant business management and public company expertise. He also serves as Vice Chairman of the Professional Pest Management Association and as a member of The Carter Center Board of Councilors, positions he has held since 2011 and 2015, respectively. Mr. Wilson is currently a member of the Board of Directors at Marine Products Corporation. +Timothy C. Rollins +Vice President, LOR, Inc. +Non-Independent Member of the Board of Directors +Member of the Nominating and Corporate Governance Committee +Timothy C. Rollins has served as a Director of RPC, Inc. since 2022. Mr. Rollins is a Vice President of LOR, Inc., a private family investment company, where he manages the firm’s investment portfolio and cattle operations. In this role, Mr. Rollins also leads the Executive Team of Operations and is responsible for approving major capital expenditures. He brings extensive management and financial expertise to the Board. Mr. Rollins is a Trustee of Emory University, the Woodruff Health Sciences Center, the O. Wayne Rollins Foundation, and the Ma-Ran Foundation. He also serves on the Board of Directors of Marine Products Corporation and has been nominated for election to the Board of Directors of Rollins, Inc. Mr. Rollins holds a Bachelor of Science in Business Administration from Boston University. Mr. Rollins is the brother of Amy R. Kreisler. +17 +Table of Contents +2026 ANNUAL +PROXY STATEMENT +Stephen E. Lewis +Former Chair & CEO and Retired Partner, Troutman Pepper +Independent Member of the Board of Directors +Member of the Audit Committee, effective immediately following the 2026 Annual Meeting +Stephen E. Lewis served as the Chair and Chief Executive Officer of Troutman Pepper from 2020 through 2023, having previously served as the Managing Partner and CEO of predecessor firm Troutman Sanders from 2016 to 2020. Mr. Lewis retired from Troutman Pepper at the end of 2024. Mr. Lewis has expertise in the professional and business services, real estate, manufacturing, transportation and logistics, and retail industries and has international business experience. Mr. Lewis was recently appointed to the board of directors at Piedmont Office Realty Trust, Inc., a real estate investment trust. He currently serves on the Board of Directors and Nominating Committee of the UNC School of Law Alumni Association. He previously served on the Executive Committee and the Finance Committee of the Metro Atlanta Chamber of Commerce, as the Chair of the Board of Trustees of Leadership Atlanta; on the Executive Committee of Junior Achievement of Georgia; on the Board of Visitors of the University of North Carolina at Chapel Hill; and on the Board of Directors of the Metro Atlanta YMCA. Mr. Lewis received a BS in Business Administration (Accounting Concentration) and a JD from the University of North Carolina at Chapel Hill. He has been a member of the Georgia Bar since 1991. +Gary Kolstad +Private Investor +Independent Member of the Board +Member of the Audit Committee, effective immediately following the 2026 Annual Meeting +Gary Kolstad serves as the Chairman and Co-Founder of Morpheus LLC from 2020 to the present. Additionally, Mr. Kolstad serves as the Chairman and CEO of Accuscribe from 2021 to the present. Prior to that, he was the CEO of CARBO Ceramics for 14 years. Mr. Kolstad spent 21 years at Schlumberger in senior manager roles and has vast experience in the Oil & Gas industry globally. He has expertise in entrepreneurs and start-ups with business incubation and market expansions in relation to technology. He previously volunteered as the CEO of the Montana Technological University foundation during 2022. Mr. Kolstad earned a BS in petroleum engineering from Montana Tech complemented by studies in Psychology and Engineering at Montana State University-Bozeman. +Wesley N. Slagle +President, RFA Management Company, LLC +Non-Independent Member of the Board +Wesley N. Slagle has served as the President of RFA Management Company LLC, the multi-generational Rollins family office from March 2022 to the present. In addition, he has served as the Secretary of LOR, Inc., a private family investment company from March 2022 to the present. Previously, Mr. Slagle held multiple positions at Goldman Sachs from 2014 to 2022 including Managing Director and Mid-Atlantic Region Head of the firm’s Private Wealth Management division. Mr. Slagle brings capital allocation, strategic planning, and meaningful investment experience at both public and private companies to the Board. Prior to his time at Goldman Sachs, Mr. Slagle worked in various roles at AllianceBernstein, GE Energy and the US Navy, where he served as an officer onboard a nuclear-powered fast attack submarine. Mr. Slagle received a BS in systems engineering from the United States Naval Academy and an MBA from Emory University. +18 +Table of Contents +2026 ANNUAL +PROXY STATEMENT +PROPOSAL 1: ELECTION OF DIRECTORS +Overview +Our Board of Directors is currently composed of ten members. After a long service on the Board, Jerry Nix has chosen not to stand for re-election. The Board has nominated Wesley N. Slagle to stand for election, and the Board will continue to be comprised of ten members after the 2026 Annual Meeting of Stockholders. At the Annual Meeting all directors will be elected for a one-year term. Each director’s term continues until the next election, or until his or her successor has been elected and qualified, or until his or her earlier death, resignation or removal. +Nominees +At the Annual Meeting, all directors will be nominated to serve for a one-year term. The nominees for election at the 2026 Annual Meeting are currently directors of the Company with the exception of Wesley N. Slagle who was nominated by the Board on February 27, 2026, to stand for election. Unless authority is withheld, the proxy holders will vote for the election of each nominee named above as a director. Although management does not contemplate the possibility, in the event any nominee is not a candidate or is unable to serve as director at the time of the election, unless authority is withheld, the proxies will be voted for any nominee who shall be designated by the present Board of Directors and recommended by the Nominating and Corporate Governance Committee to fill such vacancy. +Our Board of Directors recommends a vote FOR each of the Director Nominees above. +19 +Table of Contents +2026 ANNUAL +PROXY STATEMENT +AUDIT MATTERS +Report of the Audit Committee +Management is responsible for the Company’s system of internal control over financial reporting, the preparation of its consolidated financial statements in accordance with accounting principles generally accepted in the United States, and the financial reporting process, including management’s assessment of Internal Control over Financial Reporting (ICFR). +The Company’s independent registered public accounting firm is responsible for performing an integrated independent audit of the Company’s consolidated financial statements and management reports on ICFR in accordance with the standards of the PCAOB and for issuing reports thereon. The Audit Committee’s responsibility is generally to monitor and oversee these processes, as described in the Audit Committee Charter. It is not the duty of the Audit Committee to plan or conduct audits, nor is it the Audit Committee’s responsibility to determine that the Company’s financial statements are complete and accurate and in accordance with generally accepted accounting principles; that is the responsibility of management. The Audit Committee presently consists of four independent directors, all of whom are considered financially literate under NYSE rules. +In fulfilling its oversight responsibilities with respect to the year ended December 31, 2025, the Audit Committee: +> Approved the engagement and terms of service of Grant Thornton LLP as the Company’s independent registered public accounting firm for the year ended December 31, 2025; +> Reviewed with management and the Company’s independent registered public accounting firm, the interim financial information included in the Company’s Forms 10-Q prior to their being filed with the SEC, as well as the financial information in each quarterly earnings release; +> Reviewed and discussed with the Company’s management (including internal audit) and the Company’s independent registered public accounting firm, the audited consolidated financial statements of the Company as of December 31, 2025 and 2024 and for the three years ended December 31, 2025 and the related ICFR; +> Discussed with the Company’s independent registered public accounting firm matters required to be discussed by the applicable requirements of the PCAOB and the SEC; and +> Received from the Company’s independent registered public accounting firm the written disclosures and the letter in accordance with the requirements of the PCAOB regarding the firm’s communications with the Audit Committee concerning independence and discussed with such firm its independence from the Company. +Based upon the review and discussions referred to previously, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements of the Company and subsidiaries as of December 31, 2025 and for the year then ended be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 for filing with the SEC. +In giving its recommendation to the Board of Directors, the Audit Committee has relied on (i) management’s representation that such financial statements have been prepared with integrity and objectivity and in conformity with accounting principles generally accepted in the United States of America; and (ii) the reports of the Company’s independent registered public accounting firm with respect to such financial statements and related internal controls. +Respectfully submitted by the Audit Committee of the Board of Directors +Patrick J. Gunning, Chairman +Susan R. Bell +Jerry W. Nix +John F. Wilson +20 +Table of Contents +2026 ANNUAL +PROXY STATEMENT +This report of the Audit Committee is required by the SEC and, in accordance with the SEC’s rules, will not be deemed to be part of, or incorporated by reference by any general statement incorporating by reference this proxy statement into, any filing under the Securities Act of 1933, as amended (the Securities Act), or under the Exchange Act, except to the extent that we specifically incorporate this information by reference, and will not otherwise be deemed “soliciting material” or “filed” under either the Securities Act or the Exchange Act. +Independent Registered Public Accounting Firm +Principal Auditor +Grant Thornton LLP served as the Company’s independent registered public accounting firm for the fiscal years ended December 31, 2025 and 2024. +The Audit Committee has appointed Grant Thornton LLP as RPC, Inc.’s independent registered public accounting firm for the fiscal year ending December 31, 2026. Grant Thornton LLP has served as the Company’s independent auditors since 2004 and is considered by management to be well qualified. Representatives of Grant Thornton LLP are expected to be present at the Annual Meeting, and they will have the opportunity to make a statement if they desire to do so and are expected to be available to respond to appropriate questions. See section titled Proposal No 2—Ratification of Appointment of Independent Registered Public Accounting Firm . +Aggregate fees billed by the Company’s independent registered public accounting firm are set forth below: +2025 +2024 +Audit fees (1) +$ +1,409,000 +$ +1,247,100 +Audit related fees +— +— +Tax fees +— +— +All other fees +— +— +(1) Audit fees represent fees for professional services provided in connection with the integrated audit of our financial statements, including internal controls over financial reporting, review of our quarterly financial statements, and audit services provided in connection with other statutory or regulatory filings. +Pre-approval of Services +All of the services described above were pre-approved by the Company’s Audit Committee. The Audit Committee has determined that the payments made to its independent registered public accounting firm for these services are compatible with maintaining such auditors’ independence. A majority of the hours expended on the principal accountant’s engagement to audit the financial statements of the Company for the years 2025 and 2024 were attributable to work performed by full-time, permanent employees of the principal accountant. The Audit Committee has no pre-approval policies or procedures other than as set forth below. +The Audit Committee is directly responsible for the appointment and termination, compensation, and oversight of the work of the independent registered public accounting firm, including resolution of disagreements between management and the independent registered public accounting firm regarding financial reporting. The Audit Committee is responsible for pre-approving all audit and non-audit services provided by the independent public accountants and ensuring that they are not engaged to perform the specific non-audit services proscribed by law or regulation. The Audit Committee has delegated pre-approval authority to the Chairman, and the Chairman may further delegate approval authority to another member of the Committee from time to time. The decisions of any Audit Committee member to whom pre-approval authority is delegated must be presented to the full Audit Committee at its next scheduled meeting. +21 +Table of Contents +2026 ANNUAL +PROXY STATEMENT +PROPOSAL 2: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +Overview +The Audit Committee of the Board of Directors has appointed Grant Thornton LLP as the Company’s independent registered public accounting firm to audit our consolidated financial statements for the fiscal year ending December 31, 2026. Grant Thornton has served as our independent registered public accounting firm since 2004. +During fiscal 2025, Grant Thornton LLP served as our independent registered public accounting firm. Representatives of Grant Thornton LLP are expected to attend the Annual Meeting and will have the opportunity to respond to appropriate questions and, if they desire, to make a statement. +See Audit Matters—Independent Public Registered Accounting Firm for additional information regarding Grant Thornton and fees paid to them in 2025 and 2024. +Although we are not required to seek ratification of this appointment, the Audit Committee and the Board of Directors believes it is appropriate to do so. If stockholders do not ratify the appointment of Grant Thornton LLP, the current appointment will stand, but the Audit Committee will consider that stockholder action in determining whether to retain Grant Thornton LLP as our independent registered public accounting firm for future fiscal years. +Our Board of Directors recommends a vote FOR the ratification of the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm for the 2026 fiscal year. +22 +Table of Contents +2026 ANNUAL +PROXY STATEMENT +PROPOSAL 3: NONBINDING VOTE ON EXECUTIVE COMPENSATION +As required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the Dodd-Frank Act), our Board of Directors is submitting a Say-on-Pay proposal for stockholder consideration. While the vote on executive compensation is nonbinding and solely advisory in nature, our Board of Directors and the Human Capital Management and Compensation Committee value the opinion of our stockholders and will review the voting results and seek to determine the causes of any significant negative voting result to better understand issues and concerns not previously presented. Stockholders who want to communicate with the Board of Directors or management should refer to the Director Communications section of this Proxy Statement for additional information. +Executive compensation is an important matter for our stockholders. The core of our executive compensation philosophy and practice continues to be pay for performance. Our executive officers are compensated in a manner consistent with our strategy, competitive practice, sound corporate governance principles, and stockholder interests and concerns. We believe our compensation program is strongly aligned with the long-term interests of our stockholders. Compensation of our executive officers is designed to enable us to attract and retain talented and experienced senior executives to lead us successfully in a competitive environment. +Our named executive officers are identified in the section titled Executive Compensation including the Compensation Discussion and Analysis (CD&A) of this Proxy Statement. The CD&A section of this proxy statement provides additional details on our executive compensation, including our compensation philosophy and objectives and the fiscal 2025 compensation of the named executive officers. +We are asking stockholders to vote on the following resolution: +"Resolved, that the stockholders approve, on an advisory basis, the compensation of the Company’s named executive officers as disclosed in the Proxy Statement for the 2026 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission (which disclosure includes the Compensation Discussion and Analysis, the Summary Compensation Table and other related tables and narrative disclosures).” +As indicated above, the stockholder vote on this resolution will not be binding on us or the Board of Directors and will not be construed as overruling any decision by us or the Board. The vote will not be construed to create or imply any change to our fiduciary duties or those of the Board, or to create or imply any additional fiduciary duties for us or the Board. +The affirmative vote of a majority of the shares of our common stock present or represented by proxy and voting at the Annual Meeting is required for approval of this proposal. If you own shares through a bank, broker or other holder of record, you must instruct your bank, broker or other holder of record how to vote in order for them to vote your shares so that your vote can be counted on this proposal. +Currently, we hold stockholder advisory votes on executive compensation every three years, and the next such vote after this years’ vote is currently scheduled to occur in 2029. +Our Board of Directors recommends that you vote FOR the approval, on an advisory basis, of the compensation of our named executive officers as disclosed in the Compensation Discussion and Analysis, the accompanying compensation tables, and the related narrative disclosure . +23 +Table of Contents +2026 ANNUAL +PROXY STATEMENT +EXECUTIVE OFFICERS +The following narrative summarizes the business experience over at least the last five years of our current executive officers, other than Messrs. Palmer and Hubbell whose business experience is described above in the section titled Information Regarding Director Nominees of this Proxy Statement. +Michael L. Schmit +Vice President, Chief Financial Officer, Treasurer and Corporate Secretary +Michael L. Schmit has been Vice President, Chief Financial Officer, Treasurer and Corporate Secretary of the Company since 2022. Mr. Schmit has also served as the Vice President, Chief Financial Officer, Treasurer and Corporate Secretary of Marine Products Corporation since 2022. Previously, he served as Chief Accounting Officer at Schweitzer-Mauduit International, Inc., a global performance materials engineering and manufacturing company, since 2019. In addition, he served as the Chief Accounting Officer and Controller of Chart Industries, Inc., a global manufacturer of highly engineered equipment servicing the clean energy and industrial gas markets in 2019 and 2018 and as Corporate Controller in 2017. Earlier in his career, Mr. Schmit worked for other public and private companies, including Georgia-Pacific, LLC, in various financial and risk management roles. He also worked in public accounting with Ernst & Young, both in the U.S. and Australia. Mr. Schmit holds a B.S. in Business Administration from the University of Nebraska with a major in accounting and holds a CPA certification as well as several other related professional designations. +24 +Table of Contents +2026 ANNUAL +PROXY STATEMENT +COMPENSATION DISCUSSION AND ANALYSIS +This Compensation Discussion and Analysis describes our executive compensation program and provides an overview of how the Human Capital Management and Compensation Committee made compensation decisions in 2025 for each of our Named Executive Officers (NEOs) which consist of our Principal Executive Officer, our Principal Financial Officer and our Executive Chairman of the Board who were serving in such capacities in fiscal 2025. For a complete understanding of the executive compensation program, this disclosure should be read in conjunction with the Summary Compensation Table and other executive compensation-related disclosures included in this Proxy Statement. +In fiscal year 2025, our Named Executive Officers were: +Named Executive Officer +Position with the Company in 2025 +Ben M. Palmer +President and Chief Executive Officer +Michael L. Schmit +Vice President, Chief Financial Officer, Treasurer and +Corporate Secretary +Richard A. Hubbell +Executive Chairman of the Board +Executive Summary +Fiscal Year 2025 Financial Highlights +> Revenues increased 15% compared to the prior year to $1.6 billion primarily due to the Pintail Completions acquisition which closed April 1, 2025. +> Net income was $32.1 million, down 65% compared to the prior year, and EPS was $0.15; Net income margin decreased 450 basis points compared to the prior year to 2.0%. +> Adjusted EBITDA* was $232.7 million, essentially unchanged from the prior year; Adjusted EBITDA margin* decreased 220 basis points sequentially to 14.3%. +> Net cash from operating activities was $201.3 million; free cash flow* was $52.9 million. +* See sections titled How we Evaluate our Operations and Non-GAAP Financial Measures under It em 7 of the RPC 10-K for the year ended December 31, 2025, filed on February 27, 2026, for a discussion of the usefulness of these non-GAAP financial measures and reconciliations to the most directly comparable GAAP measures. +25 +Table of Contents +2026 ANNUAL +PROXY STATEMENT +Executive Compensation Practices and Governance Policies +What We Do +What We Don’t Do +✓ +Pay for Performance +Majority of total compensation awarded to our Named Executive Officers is directly linked to the Company’s financial performance. +x +No Tax Gross-Ups +Our Named Executive Officers are not entitled to tax gross-ups under any of our compensation programs or policies. +✓ +Align the Interests of Executives with those of Our Stockholders +Equity compensation represents a significant portion of our Named Executive Officers’ total compensation. +x +No Hedging or Pledging +Under our Insider Trading Policy, we prohibit our employees, including our Named Executive Officers and the members of our Board of Directors, from hedging or pledging our securities. +✓ +Stock Ownership Guidelines +We maintain strong stock ownership requirements for our Directors and executive officers. +x +No Employment Contracts +There are no agreements or understandings between the Company and any executive officer that guarantee continued employment or guarantee any level of severance or compensation, including incentive or bonus payments, other than annual restricted stock grant agreements. +✓ +Independent Compensation Committee +Our Human Capital Management and Compensation Committee is composed solely of independent Directors. +RPC Goals +How Goal was Reinforced in Our 2025 Compensation Program +Generate strong financial performance and returns for our stockholders +Ø +Most of the executive compensation was delivered in the form of Annual Cash Incentives and Long-Term Incentive Compensation which align with stockholder interests. +Ø +Our 2025 Annual Incentive Compensation was based on OCF, a non-GAAP measure, as the primary performance metric. See section titled Annual Incentive Compensation of this report for schedule showing computation of OCF. +Ø +Our Long-Term Incentive Compensation incentivizes the creation of stockholder value through the grant of equity compensation including the use of absolute and relative Total Shareholder Return (TSR) performance goals for a portion of the Performance Share Unit awards (PSU). +Attract and retain highly qualified individuals, with a strong emphasis on teams working together to capitalize on opportunities and solve problems +Ø +We did not target a specific market percentile for executive compensation. Instead, executive compensation was set based on a holistic review of several factors, including market pay levels, individual performance and qualifications, and executive tenure. +Ø +Our Annual and Long-Term Incentive programs generally reward company-wide results rather than performance against individual objectives. +Ø +Our named executives’ compensation includes Long-Term Incentives that vest over a multi-year period to encourage their retention. +26 +Table of Contents +2026 ANNUAL +PROXY STATEMENT +General Compensation Objectives and Guidelines +The Company is engaged in a highly competitive industry. The success of the Company depends on our ability to attract and retain highly qualified and motivated executives. In order to accomplish this objective, we have endeavored to structure our executive compensation program in a fashion that gives our Human Capital Management and Compensation Committee the flexibility to take into account our operating performance and the individual performance of our executive officers. +The Human Capital Management and Compensation Committee endorses the philosophy that executive compensation should reflect Company performance and the contribution of executive officers to that performance. Our compensation policy is designed to achieve three fundamental objectives: +> attract and retain qualified executives; +> motivate performance to achieve Company objectives; and +> align the interests of our executives with the long-term interests of the Company’s stockholders. +The Human Capital Management and Compensation Committee recognizes that there are many intangibles involved in evaluating performance and in motivating performance, and that determining an appropriate compensation level is a highly subjective endeavor. The analysis of the Committee is not based upon a structured formula and the objectives referred to above are not weighted in any formal manner. During the year, none of the executive officers made recommendations or otherwise contributed input on their own compensation levels. +The Company’s executive officers are also executive officers of Marine Products Corporation (Marine Products) and receive compensation directly from Marine Products. The members of the Company’s Human Capital Management and Compensation Committee also constitute the Human Capital Management and Compensation Committee of Marine Products. In determining the compensation for the executive officers of the Company, the Committee considers these dual responsibilities and sources of compensation. The Company sets compensation of its executives at such levels so that the aggregate compensation received from both Marine Products and the Company is reasonable in light of their respective responsibilities and the performance of both companies, and so that the compensation from the Company for services solely to the Company is reasonable. A discussion of the Company’s executive officers’ compensation for 2025 at Marine Products will be contained in its Form 10-K/A filed with the SEC. On February 5, 2026, Marine Products entered into an Agreement and Plan of Merger (the Merger Agreement) with MasterCraft Boat Holdings, Inc., a Delaware corporation (MasterCraft), and two of its wholly owned subsidiaries. The Merger Agreement contemplates a 2-step merger (the Proposed Merger) following which the Marine Products business will operate as a subsidiary of MasterCraft. Following the closing of the Proposed Merger, the Company’s executive officers will not be employed by, or receive compensation from, Marine Products or MasterCraft. As a result, their total compensation will be materially reduced. The Committee intends to evaluate the compensation of each executive officer in connection with the closing of the Proposed Merger, and may make adjustments at that time or in the future; however, the Committee has not at this time determined whether or not any such adjustments will be made, or if so, the timing or the magnitude of any such adjustments. +Pursuant to our compensation philosophy, the total annual compensation of our executive officers is primarily made up of one or more of the following three core elements: +> base salary (fixed compensation); +> annual performance-based cash incentive compensation (cash incentive); and +> grants of stock-based awards such as restricted stock awards and performance share units (equity incentive). +In addition, we also provide retirement compensation plans, group welfare benefits and certain perquisites. +We believe (i) a competitive base salary is important to attract, retain and motivate our top executives; (ii) annual performance-based incentive compensation is valuable in recognizing and rewarding individual achievement towards the achievement of company-wide results; and (iii) equity-based compensation makes executives “think like owners” and, therefore, aligns their interests with those of our stockholders. Beginning in 2023, we included PSUs with three-year performance conditions in the equity incentive component, which we believe further aligns NEO compensation with sustained long-term value creation and enhances executive retention by requiring attainment of performance goals over multiple years. +27 +Table of Contents +2026 ANNUAL +PROXY STATEMENT +Fiscal 2025 Named Executive Officer Compensation Details +The table below reflects the approximate general distribution of the three core elements of NEO compensation earned for fiscal 2025 as determined by our Human Capital Management and Compensation Committee. +Total Direct Compensation +s +The numbers presented in the charts above are calculated in accordance with the presentation in the Summary Compensation Table included in the Executive Compensation section. Accordingly, the cash incentive component consists of the cash bonuses earned in prior years that are actually paid out for 2025 performance, but the stock awards are valued at fair value on the grant date. The valuation of the PSUs, which are subject to performance conditions and absolute and relative TSR performance, is based upon certain assumptions. See section titled Grants of Plan-Based Awards in 2025 for further information about their valuation. Actual value ultimately received by the NEOs with respect to these awards may be greater or lesser than the grant date fair value. Fixed compensation presented in the chart consists of base salary. The numbers presented for “Other Named Executive Officers” are averaged for simplicity of presentation, but the mix for individual NEOs varies depending upon their role and responsibilities, as the Human Capital Management and Compensation Committee has deemed appropriate. +Compensation Elements +The following table sets forth information regarding each of the three core elements of the target compensation for the executive officers in 2025, including a description of each element. +Compensation Element +Description +Base Salary +Fixed cash compensation based on each executive officer’s role, responsibilities, competitive market positioning, and individual performance. +Annual Incentive Compensation +Annual performance-based incentive cash compensation with target award amounts for each executive officer. Actual bonus amounts may be higher or lower than target based on the achievement of certain Company performance goals. +Long-Term Incentive Compensation +Grants of stock-based awards in the form of Time-Based Restricted Share Awards (RSAs) and PSUs . L ike annual incentive compensation, PSUs provide for target award payouts, but actual payout levels may be higher or lower than target based on achievement of Company performance goals and stock performance over a three-year term. +28 +Table of Contents +2026 ANNUAL +PROXY STATEMENT +Base Salary +Base salary represents the fixed element of the compensation of our executive officers and is an important element of compensation intended to attract and retain qualified executives. The Human Capital Management and Compensation Committee reviews the base salaries of our executive officers each year as part of its annual review of our executive compensation program with input from our CEO (except with respect to his own base salary). In making its determinations the Human Capital Management and Compensation Committee gives consideration to the Company’s operating performance for the prior fiscal year and the individual executive’s performance and compensation paid by Marine Products. Base salary increases are not automatic or guaranteed. +Base Salary Adjustments +Base salaries for 2025 were as follows: Ben M. Palmer: $618,000 (increased from $600,000 2024); Michael L. Schmit: $350,200 (increased from $340,000 in 2024) and Richard A. Hubbell: $515,000 (increased from $500,000 in 2024). At the January 2026 meeting, Ben M. Palmer, Michael L. Schmit, and Richard A. Hubbell’s base salary were set at $636,500, $360,700, and $530,500 respectively, effective January 1, 2026. The base salaries are adjusted from time to time in order to remain competitive with market rates, recognize strong individual and Company performance, and to reflect each executive officer’s experience, leadership contributions, duties and job responsibilities. +Annual incentive Compensation +The Company offers Performance-Based Incentive Cash Compensation to the executive officers. On an annual basis, the Human Capital Management and Compensation Committee establishes performance goals after the commencement of the performance period to which such goals relate. Performance goals for each participant may be based on corporate, business unit/function or individual performance, or a combination of one or more such measures. +In connection with the annual establishment of performance goals, the Committee sets a target award for each participant for the applicable year, which is expressed as a percentage of the participant’s base compensation (the Target Award) in effect on the last day of the final pay period of that year. If the participant’s performance goals are based upon a combination of performance measures, the Committee will weigh the importance of each performance measure by assigning a percentage (the Weighted Percentage) to each performance measure (Target Performance Goal). The participant’s cash award amount is then determined based upon the level of achievement that the participant attained with respect to each such performance measure, based on a performance value (Performance Value) which ranges from: +> threshold performance level (with a Performance Value of 50% of the Target Award); +> target performance level (with a Performance Value of 100% of the Target Award); to +> maximum performance level (with a Performance Value of 200% of the Target Award). +29 +Table of Contents +2026 ANNUAL +PROXY STATEMENT +To calculate a participant’s cash award amount for a given year where there is more than one performance measure, the amount earned for each such measure will be calculated individually first, and then they are totaled to determine the total payout. The amount earned for each performance measure equals the product of the Target Award multiplied by the Weighted Percentage assigned to that performance measure, multiplied by the Performance Value attained for that performance measure, multiplied by base salary. However, no bonus is earned if performance is below threshold level, and the bonus is capped at the maximum amount. The Committee determines the maximum cash award as a percentage of a participant’s base salary for each applicable year. In 2025, there was only one performance goal, so the Weighted Percentage multiplier was 100%. See diagram below for a visualization of the Performance-Based Incentive Cash Compensation calculation for 2025: +For 2025, the Committee established the target incentive award for the Chief Executive Officer and for the other members of executive management at the amounts shown in the following table: +Award Opportunity +Base Salary +Target Award +Target Award +Executive Officer +($) +(as a % of base salary) +($) +Ben M. Palmer +618,000 +100 +618,000 +Michael L. Schmit +350,200 +70 +245,140 +Richard A. Hubbell +515,000 +100 +515,000 +The performance criteria applicable to the participants for 2025 were determined based solely on corporate financial performance. The Human Capital Management and Compensation Committee established a corporate financial performance goal for 2025 using OCF as described below. +OCF was used for determining the Target Performance Goal in 2025 and is computed as Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) minus cash paid for capital expenditures. These calculations are subject to adjustments for unusual items, as approved by the Human Capital Management and Compensation Committee. For the year ended December 31, 2025, these adjustments included a net of reduction of $11.8 million comprising of the cashflows and costs related to a recently completed acquisition of $9.1 million and an insurance gain of $2.7 million. A table below shows the calculation in more detail. EBITDA is a widely used financial +30 +Table of Contents +2026 ANNUAL +PROXY STATEMENT +performance of short-term corporate profitability and is calculated by adding interest, tax, depreciation and amortization expenses to net income. +For 2025, the Target Performance Goal was set considering OCF achieved by the company in the last ten years. The Company was required to achieve at least 50% of the target performance goal for executive officers to be eligible for any incentive cash compensation. These awards are determined on a sliding scale between the threshold performance level which corresponds to 50% of the performance goal, and maximum performance level, which corresponds to 175% of the target performance goal. To be eligible for the bonus award for 2025, OCF was required to be at least $17.5 million to be at the threshold, $35.0 million to be at the target, and $61.3 million to be at the maximum. Each level of the target performance level has a corresponding bonus payout percentage ranging from 50% at the threshold performance level, 100% at the target performance level, and 200% at the maximum performance level. OCF of $57.0 million corresponds to 187% bonus payout percentage. The Company has consistently established Target Performance Goals for Executive compensation, and the Committee has not typically exercised discretion to waive the performance goals based on difficult industry conditions or other factors. The target criteria and actual fiscal 2025 results for OCF are as follows: +C +Metrics +Threshold (50%) +Target +(100%) +Maximum (200%) +Results +Percent Attained +of Target Award +OCF +$ 17.5 million +$35.0 million +$ 61.3 million +$56.7 million +187.0% +The actual fiscal 2025 result for OCF was calculated as follows: +2025 OCF Calculation (in Millions $’s) +EBITDA +$ 212.4 +Cash Capital Expenditures +(143.9) +Other Adjustments +(11.8) +OCF +$ 56.7 +The Company operates in a cyclical business where financial performance is influenced by, among other things, changes in oil and natural gas prices. The Company generated OCF at 162% of target, which resulted in incentive compensation of 187% of the target award for 2025. The table below sets forth the threshold, target and maximum percentages of base salary for awards, together with the achievement and actual Annual Cash Incentives paid to our NEOs, based on actual Company results. +Award Opportunity +Bonus Earned +Name +Threshold (1) +Target (1) +Maximum (1) +OCF +Target Achieved +% of +Target +Award (1) +$ +Ben M. Palmer +50% +100% +200% +162% +187% +1,155,660 +Michael L. Schmit +50% +100% +200% +162% +187% +458,412 +Richard A. Hubbell +50% +100% +200% +162% +187% +963,050 +(1) Award Opportunity is a percentage of Target Award +31 +Table of Contents +2026 ANNUAL +PROXY STATEMENT +For 2024, our NEOs received no short-term cash incentive, based on the performance achieved that year. For 2023, our NEOs were paid 128% of the target cash incentive award, based on the performance achieved that year. As of the proxy date, the 2026 cash incentives have been designed and set with similar performance goals as in 2025. +Long-term incentive compensation +Our Stock Incentive Plan (SIP) allows for a wide variety of stock-based awards including RSAs and PSUs. The terms and conditions of awards granted under the SIP are described in more detail below. +Awards under the Company’s SIP are purely discretionary, are not based upon any specific formula and may or may not be granted in any given fiscal year. For the past few years, we have granted RSAs to various employees, including our executive officers, during our regularly scheduled meeting of the Human Capital Management and Compensation Committee in which the Committee reviews executive compensation, and more recently incorporated PSUs into the executive compensation program. In order to balance performance and retention incentives, awards made during fiscal 2025 consisted of 75% RSAs and 25% PSUs, based on the number of shares subject to the award, counting PSUs at target. At the January 2026 meeting, 2026 awards also consisted of 75% RSAs and 25% PSUs. The Human Capital Management and Compensation Committee believes that RSAs promote an “ownership” culture, align executives’ interests with those of our Stockholders and provide retention incentives for our executive officers, while PSUs act as an additional tool for linking individual interests of our executive officers to those of our Stockholders. +Consistent with this practice, we granted the following awards to our executive officers: +RSAs: +Name +2025 +2024 +Ben M. Palmer +159,000 +120,000 +Michael L. Schmit +71,400 +45,000 +Richard A. Hubbell +102,000 +80,000 +PSUs: +Name +2025* +2024* +Ben M. Palmer +52,118 +30,000 +Michael L. Schmit +23,763 +11,250 +Richard A. Hubbell +33,947 +20,000 +* Represents target levels and assumes no adjustment due to the TSR modifier. +For 2025, total equity compensation granted is comprised of RSAs and PSUs that will be earned over time as described below: +RSAs –The RSAs granted in 2024 and later vest ratably over a period of three years and RSAs granted in 2023 vest over four years. Prior to 2023, the RSAs vested one-fifth per year beginning on the second anniversary of the grant date. RSAs have full voting and dividend rights. However, until the RSAs vest, they cannot be sold, transferred or pledged. Should the executive leave our employment for any reason prior to the vesting dates (other than due to disability or retirement on or after age 65), the unvested RSAs will be forfeited. In the event of death, or “change in control” as determined by the Board of Directors, all unvested RSAs shall vest immediately. +PSUs – For 2025 each of the officers was granted a target number of PSUs with each such unit representing the right to receive, to the extent then vested, an amount payable in stock, subject to certain performance conditions measured over the 3-year period ending in 2027. Potential payouts under the PSUs are based on levels of performance using “3-Year Cumulative EBITDA,” which is calculated by adding interest, tax, depreciation and amortization expenses to net income. This computation is subject to potential adjustments approved by the Human Capital and Compensation Committee but only if such an adjusted measure is disclosed in the Company’s SEC filings. The award provides for threshold, target and maximum levels of payout, so that attainment of 50% of the +32 +Table of Contents +2026 ANNUAL +PROXY STATEMENT +target 3-Year Cumulative EBITDA will result in a payout at 50% of target level, while attaining 130% of the target 3-Year Cumulative EBITDA will result in a maximum payout at 200% of target level awards; subject to further adjustment based upon a TSR Modifier. The TSR Modifier adjusts the payout levels upward or downward by an amount up to 20%, based on the applicable relative percentile ranking of our stock benchmarked against the Philadelphia Oil Services Sector. TSR is calculated as the net price change in the market price for our stock over the 3-Year period, based on the 20-trading day average price at the beginning of 2025 and the end of 2027. With respect to both measures, interpolation is used to determine the payouts associated with performance between the threshold, target and maximum levels. +Based on current estimates, 2025 PSU grants may meet or exceed the target performance level and 2024 PSU grants may meet or exceed threshold, although actual performance could be higher or lower than our estimates. See section titled Grants of Plan-Based Awards in 2025 below for threshold, target, and maximum share numbers and grant date fair values. The Human Capital Management and Compensation Committee reviews the performance levels of the outstanding awards for the past three years while setting performance targets for the current year PSU awards. The PSUs granted in 2025 are set to cliff-vest on December 31, 2027. Should the executive leave our employment for any reason prior to the vesting dates (other than due to death, disability or change in control as defined in the agreements), the unvested PSUs will be forfeited. In the event of death, disability or change in control as defined in the agreements, all unvested PSUs shall vest immediately at 100% of target levels, without regard to the actual EBITDA performance, and with no adjustment for the TSR modifier. The 2023 PSU awards did not meet the threshold performance level of cumulative EBITDA for three years totaling $1.0 billion and therefore did not vest at the end of the three-year period that ended on December 31, 2025. In addition, the target and maximum performance level of cumulative EBITDA for three years were set at totaling $1.3 billion and $1.6 billion respectively. The TSR modifier was not considered since the actual performance was below the threshold level. +PSU awards also include the right to “Dividend Equivalents” with respect to the underlying shares. Dividend equivalents are accrued over the performance period, in cash, based upon target payout level, subject to a true-up at the end of the three-year cycle. Accrued Dividend Equivalents will be paid out upon vesting of the PSUs, but no such Dividend Equivalents will be payable to the extent the awards fail to vest or are forfeited, or the performance goals are not met. PSUs confer no voting rights with respect to the underlying shares prior to vesting and payout. +The amount of the aggregate stock-based awards to our executive officers in any given year is influenced by the Company’s overall performance: for both RSAs and PSUs, the Committee takes into consideration both our historical performance and our projected goals and plans; in the case of PSUs, a certain minimum performance must be achieved in order for any shares to be issued. The amount of each grant to our executive officers is influenced in part by the Committee’s assessment of each individual’s respective contributions to achievement of the Company’s long-term goals and objectives, in addition to the recent prices of the Company’s common shares. In evaluating individual performance for these purposes, the Committee considers the overall contributions of executive management as a group and the Committee’s subjective assessment of each individual’s relative contribution to that performance rather than specific aspects of each individual’s performance over a short-term period. We expect to continue annual grants of RSAs and PSUs, although we reserve the right to modify or discontinue these or any of our other compensation practices at any time. Grants of RSAs and PSUs are made under our SIP which is administered pursuant to Rule 16b-3 under the Exchange Act. +Other Compensation +Health and Retirement Plans +The executive officers all participate in the Company’s regular employee benefit programs, including the 401(k) Plan with Company match, group life insurance, group medical and dental coverage and other group benefit plans. In 2024, the Board of Directors approved the termination of the Company’s non-qualified supplemental retirement plan (SRP or the Plan) available for its executives and certain other highly compensated employees. The Plan was dissolved in 2025, and participant balances were distributed in full in December 2025. +33 +Table of Contents +2026 ANNUAL +PROXY STATEMENT +Perquisites and Other Personal Benefits +In addition to the total direct compensation and benefits described above, the Company also provides its executive officers with certain perquisites as approved by the Human Capital Management and Compensation Committee and noted in the footnote to the Summary Compensation Table under Executive Compensation . The specific perquisites provided to the executive officers include the following: +> Company provided automobile with insurance and cost of gasoline, or an automobile allowance to facilitate reliable and efficient transportation for travel. +> Club dues are reimbursed for the Executive Chairman of the Board, where the membership is used for business related activities conducted in the ordinary course of business. +> Use of the Company’s aircraft for personal travel of the Executive Chairman of the Board and Chief Executive Officer for security, logistical or scheduling. All personal use is reported at the value calculated in accordance with applicable SEC and Internal Revenue Service (IRS) requirements. +Compensation Setting Process +Role of the Human Capital Management and Compensation Committee +Under its Charter the Human Capital Management and Compensation Committee is responsible for, among other things, reviewing our overall executive compensation philosophy and strategy, including base salary, performance-based incentive cash compensation, and stock-based incentives to ensure that the strategy supports our compensation policy. +The Human Capital Management and Compensation Committee is composed of three independent Non-Employee Directors: Jerry W. Nix (Chairman), Patrick J. Gunning, and John F. Wilson. +The Human Capital Management and Compensation Committee has the authority, at its sole discretion, to retain or obtain the advice of any compensation consultant, legal counsel or other advisor to assist the Committee in the performance of its duties and may at its discretion be directly responsible for the appointment, compensation and oversight of the work of any such compensation consultant, legal counsel or other advisor so retained. The Committee has not retained the services of any compensation consultants in determining or recommending the amount or form of executive compensation. The Human Capital Management and Compensation Committee may also, from time to time, and in its discretion, form, and delegate all or a portion of its authority to subcommittees; provided that such subcommittees meet the Committee’s composition requirements set forth in its Charter or under any applicable federal or state laws or New York Stock Exchange requirements. +Role of Management +The Human Capital Management and Compensation Committee solicits input from Richard A. Hubbell, Executive Chairman of the Board and Ben M. Palmer, President and Chief Executive Officer, with respect to the performance of our executive officers and their compensation levels. The Human Capital Management and Compensation Committee considers Mr. Hubbell’s and Mr. Palmer’s evaluation and each of their direct knowledge of each executive officer’s performance (other than with respect to themselves) and contributions when making compensation decisions. For decisions made in 2025, Management retained the services of Mercer, LLC (Mercer), an independent executive compensation advisory firm. In doing so, Management reviewed information regarding independence and potential conflicts of interest with Mercer. Management receives from Mercer information on general compensation data and advice on design of incentives, which is also shared with the Human Capital Management and Compensation Committee. From time to time Mercer attends the Human Capital Management and Compensation Committee meetings but does not provide specific advice directly to the Human Capital Management and Compensation Committee. Neither Mercer nor its affiliates provided additional services to the Company in an amount in excess of $120,000 in 2025. +34 +Table of Contents +2026 ANNUAL +PROXY STATEMENT +The Role of Stockholder Say-on-Pay Votes +We provide our stockholders with the opportunity to cast an advisory vote on executive compensation (a Say-on-Pay proposal) every three years. At our annual meeting of stockholders held in April 2023, a substantial majority of the votes cast on the Say-on-Pay proposal were voted in favor of the proposal. The Human Capital Management and Compensation Committee believes this affirms the stockholders’ support of our approach to executive compensation. The stockholders voted to hold a Say-on-Pay advisory vote on executive compensation every three years, and the Board resolved to accept the stockholders’ recommendation. As a result, the advisory vote on executive compensation is being held again at the 2026 Annual Meeting of Stockholders. The Human Capital Management and Compensation Committee will continue to consider the outcome of our Say-on-Pay votes when making future compensation decisions for our executive officers. +Equity Award grant policies +Equity awards are discretionary and are generally granted to our named executive officers in the first quarter of the applicable fiscal year. In certain circumstances, including the hiring or promotion of an officer, the Human Capital Management and Compensation Committee may approve grants to be effective at other times. RPC does not currently grant stock options to its employees. The Human Capital Management and Compensation Committee did not take material nonpublic information into account when determining the timing and terms of equity awards in 2025, and RPC does not time the disclosure of material nonpublic information for the purpose of affecting the value of executive compensation . +Policies Regarding Stock Ownership by Executive Officers +Stock Ownership Requirements +“Stock Ownership Guidelines” (the Guidelines) for our executive officers and other key executives were adopted by the Human Capital Management and Compensation Committee to align the interests of our executives with the interests of our stockholders and are summarized as follows: +> President and Chief Executive Officer – Ownership equal to 4 times base salary; +> Chief Financial Officer – Ownership equal to 3 times base salary; and +> Executive Chairman of the Board – Ownership equal to 4 times base salary. +Participants under the Guidelines have a period of five years in which to satisfy the Guidelines from the date of appointment to a qualifying position. Participants who become subject to these Guidelines will have their individual ownership requirement established based upon their base salary at the time they became subject to the Guidelines and the Company’s average closing common stock price for the prior calendar year. The share values are recalculated each year. Promotions into a different position category will require recalculation of a participant’s ownership requirements as appropriate. Once established, a participant’s ownership requirement does not change as a result of changes in their base salary. +Shares counted toward this requirement will be based on shares beneficially owned by such participant (as beneficial ownership is defined by the SEC’s rules and regulations) including: +> shares owned outright by the participant (including through open market purchases or acquired and held upon vesting of Company equity awards); +> unvested RSAs; and +> shares held in trust in the participant’s name. +Once achieved, ownership of the amount under the Guidelines must be maintained for as long as the participant is subject to the Guidelines and the participant is required to retain a minimum of 20% of any future equity awards. +35 +Table of Contents +2026 ANNUAL +PROXY STATEMENT +Prohibition on Hedging and Pledging of Common Stock +Under our “Insider Trading Policy,” we prohibit our employees, including our NEOs and the members of our Board of Directors, from hedging or pledging or otherwise encumbering individually owned or granted Company securities. +Clawback Policy +We have a “Policy Relating to Recovery of Erroneously Awarded Compensation” that complies with the NYSE clawback rules which were required by SEC Rule 10D-1. Under this policy, in the event that the Company is required to prepare an accounting restatement of its financial statements due to the Company’s material noncompliance with any financial reporting requirement under the securities laws, the policy requires that the Human Capital Management and Compensation Committee, to the extent legally permitted and pursuant to the terms of the policy, recover from current and former Section 16 officers any incentive-based compensation, as defined in the NYSE’s clawback rules, received by such officers that exceeds the amount of incentive-based compensation that otherwise would have been received had such incentive based compensation been determined according to the applicable accounting restatement. +Tax Deductibility of Compensation +As a result of the Tax Cuts and Jobs Act, starting with compensation payable in 2018, Section 162(m) of the Internal Revenue Code limits us from deducting compensation, including performance-based compensation, in excess of $1,000,000 paid to an individual NEO. The Human Capital Management and Compensation Committee will continue to retain full discretion to award compensation packages that best attract, retain and reward successful executive officers. Therefore, the Human Capital Management and Compensation Committee anticipates that it will award compensation that is not fully deductible under Section 162(m). +Compensation-Related Risk +The Company regularly assesses the risks related to our compensation programs, including our executive compensation programs and does not believe that the risks arising from our compensation policies and practices are reasonably likely to have a material adverse effect on the Company. Incentive award targets and bonus opportunities, including targets and opportunities under outstanding PSUs are reviewed annually, allowing the Committee to maintain an appropriate balance between rewarding high performance and avoiding excessive risk. +36 +Table of Contents +2026 ANNUAL +PROXY STATEMENT +HUMAN CAPITAL MANAGEMENT AND COMPENSATION COMMITTEE REPORT +The Human Capital Management and Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis contained in this Proxy Statement with management and based on such review and discussions the Human Capital Management and Compensation Committee recommended to our Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement. +Respectfully submitted by the Human Capital Management and +Compensation Committee of the Board of Directors +Jerry W. Nix, Chairman +Patrick J. Gunning +John F. Wilson +This report of the Human Capital Management and Compensation Committee is required by the SEC and, in accordance with the SEC’s rules, will not be deemed to be part of or incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933, as amended (Securities Act), or under the Exchange Act, except to the extent that we specifically incorporate this information by reference, and will not otherwise be deemed “soliciting material” or “filed” under either the Securities Act or the Exchange Act. +37 +Table of Contents +2026 ANNUAL +PROXY STATEMENT +EXECUTIVE COMPENSATION +There are no agreements or understandings between the Company and any executive officer that guarantee continued employment or guarantee any level of severance or compensation, including incentive or bonus payments, other than annual cash incentives, restricted stock awards and performance unit grants. The following table provides information regarding the annual and long-term compensation for services in all capacities paid to each of our named executive officers for the years indicated below. +SUMMARY COMPENSATION TABLE +Change in +Pension +Value and +Non-Equity +Nonqualified +Incentive +Deferred +Stock +Plan +Compensation +All Other +Salary +Awards +Compensation +Earnings +Compensation +Total +Name and Principal Position +Year +($) +($) (1) +($) (2) +($) +($) (3) +($) +Ben M. Palmer +2025 +618,000 +1,388,265 +1,155,660 +— +30,150 +3,192,075 +President and +2024 +600,000 +1,224,900 +— +— +29,930 +1,854,830 +Chief Executive Officer +2023 +600,000 +998,400 +768,000 +— +25,050 +2,391,450 +Michael L. Schmit +2025 +350,200 +625,919 +458,412 +— +30,150 +1,464,681 +Vice President, +2024 +340,000 +459,338 +— +— +29,930 +829,268 +Chief Financial Officer, Treasurer +2023 +300,000 +441,600 +268,800 +— +11,030 +1,021,430 +and Corporate Secretary +Richard A. Hubbell +2025 +515,000 +894,170 +963,050 +— +57,960 +2,430,180 +Executive Chairman +2024 +500,000 +816,600 +— +— +35,100 +1,351,700 +of the Board +2023 +500,000 +720,000 +640,000 +— +33,690 +1,893,690 +(1) Represents the fair value of the award at the date of grant computed in accordance with ASC Topic 718. See Note titled Retirement Plans to our Financial Statements contained in our Form 10-K for the period ended December 31, 2025 for a discussion of assumptions used in these computations. For this computation, we do not include an assumption for estimated forfeitures. Grant date fair value is comprised of the $1,023,960 related to RSAs and $364,305 related to PSUs for Mr. Palmer, $459,816 related to RSAs and $166,103 related to PSUs for Mr. Schmit, and $656,880 related to RSAs and $237,290 related to PSUs for Mr. Hubbell. For the PSUs, the fair value presented assumes that all of the awards will pay out at target levels with no adjustment for the TSR modifier. If the maximum level of performance is achieved, including maximum upward adjustment pursuant to the TSR Modifier, the grant date fair values of the PSUs would be $874,332 for Mr. Palmer; $398,648 for Mr. Schmit; and $569,495 for Mr. Hubbell. +(2) Annual incentive compensation is accrued in the fiscal year earned and paid in the following fiscal year. No bonuses were earned for 2024. +(3) All other compensation for 2025 includes the following items for: +Ben M. Palmer: +Includes 401(k) Plan Company match of $15,750 and allowance for automobile of $14,400. +Michael L. Schmit: +Includes 401(k) Plan Company match of $15,750 and allowance for automobile of $14,400. +Richard A. Hubbell: +Includes 401(k) Plan Company match of $15,750, cost of personal use of Company provided automobile of $14,808, personal use of plane $22,337, and cost of dining club dues. +38 +Table of Contents +2026 ANNUAL +PROXY STATEMENT +GRANTS OF PLAN-BASED AWARDS in 2025 +All Other +Grant Date +Estimated Future Payouts +Estimated Future Payouts +Stock Awards: +Fair Value +Under Non-Equity +Under Equity +Number of +of Stock +Incentive Plan Awards (1) +Incentive Plan Awards (2) +Shares +and Option +Threshold +Target +Maximum +Threshold +Target +Maximum +RSA +Awards +Name +Grant Date +($) +($) +($) +(#) +(#) +(#) +(#) (3) +($) (4) +Ben M. Palmer +2/18/2025 +309,000 +618,000 +1,236,000 +— +— +— +— +— +1/28/2025 +— +— +— +26,059 +52,118 +104,236 +— +364,305 +1/28/2025 +— +— +— +— +— +— +159,000 +1,023,960 +Michael L. Schmit +2/18/2025 +122,570 +245,140 +490,280 +— +— +— +— +— +1/28/2025 +— +— +— +11,882 +23,763 +47,526 +— +166,103 +1/28/2025 +— +— +— +— +— +— +71,400 +459,816 +Richard A. Hubbell +2/18/2025 +257,500 +515,000 +1,030,000 +— +— +— +— +— +1/28/2025 +— +— +— +16,974 +33,947 +67,894 +— +237,290 +1/28/2025 +— +— +— +— +— +— +102,000 +656,880 +(1) These amounts illustrate the potential bonus awards under the Management Incentive Plan for 2025. See Summary Compensation Table for actual amounts paid pursuant to these awards . +(2) PSUs are earned based upon the Company’s performance, over a three-year period, in each case subject to a potential adjustment based upon the application of the TSR modifier. The amounts shown do not include the upward or downward TSR modifier adjustment of 20%. PSUs entitled to certain Dividend Equivalents as described in the section titled Compensation, Discussion and Analysis – Long Term Incentive Compensation section . +(3) These amounts represent shares underlying RSAs granted during 2025 that vest ratably over three years . RSAs have full voting and dividend rights. However, until the shares vest, they cannot be sold, transferred or pledged. +(4) These amounts represent aggregate grant date fair value for grants of RSAs and PSUs awarded in fiscal year 2025 under our SIP computed in accordance with ASC Topic 718. The amounts reported with respect to PSUs are based on the probable outcome of the performance conditions as of the grant date, which is estimated at target, with no adjustment for the TSR modifier. Actual payouts may be different based on the Company’s performance. Please see footnote (1) to the Summary Compensation Table for additional details . +We have not issued any stock options since 2003 and have no immediate plans to issue additional stock options. +OUTSTANDING EQUITY AWARDS AT 2025 FISCAL YEAR-END +The Company does not have any outstanding option awards made in prior years to the executives named in our Summary Compensation Table. The table below sets forth the total number of unearned and unvested shares underlying PSUs that remained outstanding at December 31, 2025, as adjusted based upon achievement against performance targets to date, as well as restricted shares of Common Stock outstanding at December 31, 2025 that were granted in prior years to the executives, but had not yet vested on that date. The table also presents market values of those awards, calculated based on the $5.44 closing price of our Common Stock on December 31, 2025, the last trading day of the year. +39 +Table of Contents +2026 ANNUAL +PROXY STATEMENT +Stock Awards +Equity Incentive +Equity Incentive +Number of +Market Value +Plan Awards: +Plan Awards: +Shares or +of Shares or +Number of +Market or Payout +Units of +Units of +Unearned Shares, +Value of Unearned +Stock That +Stock That +Units or Other +Shares, Units or Other +Have Not +Have Not +Rights That +Rights That Have +Vested +Vested +Have Not Vested +Not Vested +Name +(#) (1) +($) +(#) (2) +($) +Ben M. Palmer +354,200 +1,926,848 +67,118 +365,122 +Michael L. Schmit +132,650 +721,616 +29,388 +159,871 +Richard A. Hubbell +273,459 +1,487,617 +43,947 +239,072 +(1) RSAs granted prior to 2023 vested one-fifth per year beginning on the second anniversary of the grant date. RSAs granted in 2023 vest one-fourth per year beginning on the first anniversary of the grant date. RSAs granted in 2024 and later vest one-third per year beginning on the first anniversary of the grant date. Shares of RSAs granted to the executive officers that have not vested as of December 31, 2025, are summarized in the table that follows: +Name +Number of shares +Grant date +Date fully vested +Ben M. Palmer +RSA +13,400 +1/28/2020 +1/28/2026 +RSA +26,800 +1/26/2021 +1/26/2027 +RSA +36,000 +5/18/2022 +1/26/2027 +RSA +39,000 +1/24/2023 +1/24/2027 +RSA +80,000 +4/23/2024 +1/23/2027 +RSA +159,000 +1/28/2025 +1/28/2028 +PSU (2) +15,000 +4/23/2024 +12/31/2026 +PSU (2) +52,118 +1/28/2025 +12/31/2027 +Michael L. Schmit +RSA +14,000 +5/18/2022 +1/26/2027 +RSA +17,250 +1/24/2023 +1/24/2027 +RSA +30,000 +4/23/2024 +1/23/2027 +RSA +71,400 +1/28/2025 +1/28/2028 +PSU (2) +5,625 +4/23/2024 +12/31/2026 +PSU (2) +23,763 +1/28/2025 +12/31/2027 +Richard A. Hubbell +RSA +20,000 +1/28/2020 +1/28/2026 +RSA +40,000 +1/26/2021 +1/26/2027 +RSA +30,000 +5/18/2022 +1/26/2027 +RSA +28,125 +1/24/2023 +1/24/2027 +RSA +53,334 +4/23/2024 +1/23/2027 +RSA +102,000 +1/28/2025 +1/28/2028 +PSU (2) +10,000 +4/23/2024 +12/31/2026 +PSU (2) +33,947 +1/28/2025 +12/31/2027 +(2) PSU amounts disclosed above are at threshold for 2024 and target for 2025 with no adjustment for the TSR modifier. PSU amounts granted in 2023 were forfeited as the performance conditions were not met. The actual number of shares and value realized may be different from the number presented and will depend upon the company’s actual achievement with respect to the performance criteria and our relative TSR over a three-year performance period. For more information regarding the PSUs, see section titled Compensation Discussion and Analysis – Long-term Incentive Compensation . +40 +Table of Contents +2026 ANNUAL +PROXY STATEMENT +OPTION EXERCISES AND STOCK VESTED +The following table sets forth: +> the number of restricted shares of Common Stock acquired by the executives named in the Summary Compensation Table upon the vesting of shares during the fiscal year ended December 31, 2025; +> the aggregate dollar amount realized on the vesting date for such RSAs computed by multiplying the number of shares vested by the market value of the shares on the vesting date; and +> the market value of shares was based on the closing price for the Company’s Common Stock on the date of exercise or vesting, as the case may be. The value realized for awards set forth in the table is calculated in accordance with SEC rules as described above, without regard to whether the NEO has actually transferred the stock or when; accordingly, the actual value realized by the NEOs may be greater or lesser than what is set forth in the table. +None of the Named Executive Officers owned any stock options to acquire our Common Stock during 2025. +Stock Awards +Number of Shares +Acquired on +Value Realized +Vesting +on Vesting +Name +(#) +($) +Ben M. Palmer +114,300 +772,289 +Michael L. Schmit +30,625 +208,681 +Richard A. Hubbell +110,728 +744,379 +41 +Table of Contents +2026 ANNUAL +PROXY STATEMENT +BENEFIT PLANS +Pension Benefits +The Company’s Retirement Income Plan, a trusteed defined benefit pension plan, that provided monthly benefits upon normal retirement at age 65 to eligible employees, was fully terminated in 2023. +401(k) Plan +Effective July 1, 1984, the Company adopted a qualified retirement plan designed to meet the requirements of Section 401(k) of the Code. The Company makes matching contributions of 100% for each dollar ($1.00) of a participant’s contribution to the 401(k) Plan for the first three percent of his or her annual compensation and fifty cents ($0.50) for each dollar ($1.00) for the next three percent of his or her annual compensation. The only form of benefit payment under the 401(k) Plan is a single lump-sum payment equal to the vested balance in the participant’s account on the date the distribution is processed. Under the 401(k) Plan, the full amount of a participant’s vested accrued benefit is payable upon his termination of employment, retirement, total and permanent disability, or death. During the course of employment, a participant may withdraw his or her pre-tax contributions to the extent of certain specified instances of financial hardship and may withdraw any amount from his or her pre-tax contribution account for any reason after attaining age 59½. Amounts contributed by the Company to the accounts of the Named Executive Officers under this plan are reported in the All Other Compensation column of the Summary Compensation Table of this Proxy Statement. +NONQUALIFIED DEFERRED COMPENSATION +The SRP was established as a nonqualified plan for the cash contributions made to certain longer serviced employees in lieu of freezing the Retirement Income Plan benefit accruals and a compensation deferral option for eligible employees. The contributions and deferrals to the SRP were invested in funds held in a rabbi trust. The Plan was terminated in 2024 and all of the participant balances were paid out in full in 2025 pursuant to the IRS rules. +Executive +Registrant +Aggregate +Aggregate +Aggregate +Contributions +Contributions +Earnings in +Withdrawals/ +Balance at +in Last FY +in Last FY +Last FY +Distributions +Last FYE +Name +($) (1) +($) +($) +($) (1) +($) +Ben M. Palmer +— +— +169,118 +1,620,756 +— +Michael L. Schmit +— +— +— +— +— +Richard A. Hubbell +— +— +86,050 +701,889 +— +(1) There were no deferrals in 2025. Ben M. Palmer’s deferrals were disclosed in the Summary Compensation Table in prior years when they were earned. Richard A. Hubbell did not defer any portion of his compensation to the SRP. +POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL +The following table describes the potential payments and benefits under the Company’s compensation and benefit plans and arrangements to which the Named Executive Officers would be entitled upon termination of employment or change in control of the Company as of December 31, 2025. Amounts presented in the table include amounts to which the NEOs would become entitled as of such date pursuant to their currently held, but unvested RSAs as well as PSUs. +The table does not include the value of benefits that are provided on the same basis to substantially all other salaried employees. There are no other agreements, arrangements or plans that entitle Executive Officers to severance, perquisites, or other enhanced benefits upon termination of their employment or change in control except as +42 +Table of Contents +2026 ANNUAL +PROXY STATEMENT +described here. Additional payments or benefits to a terminating executive officer would be at the discretion of the Human Capital Management and Compensation Committee. +The terms and vesting of RSAs and PSUs are discussed in the Compensation Discussion and Analysis – Long-term Incentive Compensation and Outstanding Equity Awards At 2025 Fiscal Year-End sections of this Proxy Statement. The values presented in the table below were calculated using the closing market price of $5.44 per share for our Common Stock as of December 31, 2025, which was the last trading day in fiscal year 2025. +Stock Awards +Number of shares underlying +Number of shares underlying +Unrealized value +unvested stock +unvested stock +of +PSUs +RSAs +unvested stock +Name +(#) +(#) +($) +Ben M. Palmer +· Retirement +— +95,608 +520,108 +· Disability +82,118 +145,881 +1,240,315 +· Death +82,118 +354,200 +2,373,570 +· Change in control +82,118 +354,200 +2,373,570 +Michael L. Schmit +· Retirement +— +— +— +· Disability +35,013 +49,854 +461,676 +· Death +35,013 +132,650 +912,087 +· Change in control +35,013 +132,650 +912,087 +Richard A. Hubbell +· Retirement +— +87,752 +477,371 +· Disability +53,947 +121,854 +956,357 +· Death +53,947 +273,459 +1,781,089 +· Change in control +53,947 +273,459 +1,781,089 +Accrued Pay and Regular Retirement Benefits +The amounts shown in the preceding table do not include the following since they are provided on a non-discriminatory basis to salaried employees generally upon termination of employment. These include: +> Accrued salary and vacation pay; and +> Distributions of plan balances under the 401(k) Plan. +change in control or severance +Change-in-Control or Severance . The Company does not have any severance agreements with its Executive Officers. However, upon the occurrence of a “ Change in Control ,” as determined by the Board of Directors, all unvested RSAs and PSUs shall immediately vest as disclosed above. +43 +Table of Contents +2026 ANNUAL +PROXY STATEMENT +PAY RATIO DISCLOSURE +The following table shows the annual disclosure of the ratio of the median employee’s total annual compensation to the total annual compensation of the principal executive officer (PEO). Ben M. Palmer has served as the Company’s PEO during the year ended December 31, 2025. The purpose of the required disclosure is to provide a measure of the equitability of pay within the organization. The Company believes its compensation philosophy and process yield an equitable result. +Median Employee total annual compensation +$ +104,276 +PEO total annual compensation +$ +3,192,075 +Ratio of PEO to Median Employee Compensation +30.6:1 +The Company identified the median employee as of December 31, 2023, and there have been no significant changes to its employee population or employee compensation arrangements that would significantly impact the pay ratio disclosure since that date. The compensation disclosed above represents the total annual compensation of the median employee for the year ended December 31, 2025. Employees totaling 330 from the Company’s recent acquisition of Pintail Completions were excluded from the pay ratio computation under the SEC’s guidance allowing exclusion of employees from a business acquired during the year. These employees will be considered in future calculations of the pay ratio disclosure. Employees from our foreign subsidiaries, which are located in North America and Asia, all of which combined were less than 5% of our total employees, were excluded, as permitted by SEC rules, under the “de minimis” exception. In order to identify the median employee from our employee population as of December 31, 2023, we reviewed the 2023 total compensation that included base salary, bonuses and long-term equity incentive grants as reflected in the annual compensation statements provided to each employee as part of the year-end compensation process. Employees on leave of absence were also excluded from the list and wages and salaries were annualized for those employees that were not employed for the full year of 2023 (other than seasonal or temporary employees). The median employee was selected from the annualized list. For simplicity, the value of the Company’s 401(k) Plan and medical benefits provided was excluded as all employees including the PEO are offered the exact same benefits. As of December 31, 2025, the Company employed 2,893 persons of which 61 were international employees and were employed in Canada (46), Mexico (8), and Saudi Arabia (7). +We believe that the pay ratio disclosure presented above is a reasonable estimate of the required disclosure. Because the SEC rules for identifying the median employee and calculating the pay ratio allow companies to use different methodologies, exemptions, estimates and assumptions, our pay ratio disclosure may not be comparable to the pay ratios reported by other companies. +44 +Table of Contents +2026 ANNUAL +PROXY STATEMENT +PAY VERSUS PERFORMANCE +In accordance with the SEC’s regulations, we are providing the following information about the relationship between executive compensation actually paid and certain financial performance of the Company and certain of its peers for the years 2025, 2024, 2023, 2022, and 2021. For further information concerning the Company’s compensation philosophy see section titled Compensation Discussion and Analysis (CD&A). +Average +Average +Summary +Summary +Value of Initial Fixed $100 +Compensation +Compensation +Investment Based On: +Summary +Summary +Table Total +Actually Paid +Operating +Compensation +Compensation +Compensation +Compensation +for Non-PEO +to Non-PEO +Peer Group +Net +Cash +Table Total +Table Total +Actually Paid +Actually Paid +Named +Named +Total +Total +Income/ +Flow +for first +for second +to first +to second +Executive +Executive +Shareholder +Shareholder +(Loss) +(OCF) (5) +Year +PEO (1) +PEO (1) +PEO (2) +PEO (2) +Officers (1) +Officers (3) +Return +Return (4) +(in millions) +(in millions) +($) +($) +($) +($) +($) +($) +($) +($) +($) +($) +2025 +— +3,192,075 +— +2,830,890 +1,947,430 +1,751,794 +187 +160 +32 +57 +2024 +— +1,854,830 +— +1,200,924 +1,090,484 +711,322 +198 +156 +91 +13 +2023 +— +2,391,450 +— +1,946,938 +1,457,560 +1,168,921 +237 +194 +195 +200 +2022 +2,138,360 +2,272,390 +3,327,790 +3,062,704 +819,670 +819,320 +284 +210 +218 +208 +2021 +1,371,410 +— +1,913,830 +— +733,150 +1,164,372 +144 +121 +7 +23 +(1) +Amounts disclosed for the first Principal Executive Officer (PEO), second PEO and other Non-PEO Named Executive Officers relate to reported compensation as follows: +> Richard A. Hubbell – was the President and Chief Executive Officer through May 17, 2022, and for the year 2021. He has been Executive Chairman of the Board Officer since May 17, 2022. His total compensation for 2022 and 2021 has been disclosed as amounts related to first PEO. For 2025, 2024 and 2023, his compensation has been included in amounts related to Non-PEO Named Executive Officers. +> Ben M. Palmer – is named PEO for 2025 and been the President and Chief Executive Officer effective May 17, 2022, and was Vice President, Chief Financial Officer and Corporate Secretary prior. For 2025, 2024, 2023 and 2022, his total compensation has been disclosed as amounts related to second PEO. For 2021, his compensation has been disclosed in amounts related to Non-PEO Named Executive Officers. +> Michael L. Schmit – has been Vice President, Chief Financial Officer and Corporate Secretary effective May 17, 2022, and his compensation has been included in amounts related to Non-PEO Named Executive Officers for 2025, 2024, 2023 and 2022. +(2) +The dollar amounts reported represent the amount of Compensation Actually Paid (CAP), computed in accordance with SEC rules. The dollar amounts do not reflect the actual amount of compensation earned by or paid to our PEO during the applicable year. To calculate the amounts in the CAP to PEO column in the table above, the following amounts were deducted from or added to (as applicable) the Total compensation as reported in the Summary Compensation Table (SCT): +Reported +Reported +Reported +Reported +Equity +Equity +Summary +Summary +Pension +Value of +Value of +Award +Award +Compensation +Compensation +Adjustments +Equity +Equity +Adjustments +Adjustments +Compensation +Compensation +Table Total for +Table Total for +to First +Awards to +Awards to +to first +to second +Actually Paid +Actually Paid +first PEO (a) +second PEO (a) +PEO +first PEO (b) +second PEO (b) +PEO (c) +PEO (c) +to first PEO +to second PEO +Year +($) +($) +($) +($) +($) +($) +($) +($) +($) +2025 +— +3,192,075 +— +— +( 1,388,265 ) +— +1,027,080 +— +2,830,890 +2024 +— +1,854,830 +— +— +( 1,224,900 ) +— +570,994 +— +1,200,924 +2023 +— +2,391,450 +— +— +( 998,400 ) +— +553,888 +— +1,946,938 +2022 +2,138,360 +2,272,390 +— +( 670,500 ) +( 804,600 ) +1,859,930 +1,594,914 +3,327,790 +3,062,704 +2021 +1,371,410 +— +— +( 387,000 ) +— +929,420 +— +1,913,830 +— +(a) The amounts disclosed represent the amounts reported as Total Compensation in the SCT. +(b) Represents the grant date fair value of the equity awards reported in the Stock Awards column of the SCT. +45 +Table of Contents +2026 ANNUAL +PROXY STATEMENT +(c) Represents the year-over-year change in the fair value of equity awards, as shown below. For 2022, the change in fair value of equity awards has been attributed to the Named Executive Officer who was PEO as of December 31, 2022: +2025 +2024 +2023 +2022 - First PEO +2022 - Second PEO +2021 +Fair Value of +($) +($) +($) +($) +($) +($) +Equity awards granted in Current Fiscal Year (CFY) outstanding and unvested as of end of CFY +1,148,481 +891,000 +757,120 +666,750 +800,100 +454,000 +Change in prior year awards outstanding and unvested as of end of CFY +( 194,200 ) +( 365,990 ) +( 266,938 ) +1,096,200 +730,800 +305,800 +Change in prior year awards that vested in current year +93,347 +( 3,536 ) +20,538 +83,900 +53,694 +169,620 +Prior year awards that fail to meet vesting conditions during CFY +( 77,220 ) +— +— +— +— +— +Dividends paid +56,672 +49,520 +43,168 +13,080 +10,320 +— +Total Equity Award Adjustments +1,027,080 +570,994 +553,888 +1,859,930 +1,594,914 +929,420 +(3) +The dollar amounts reported represent the amount of CAP, computed in accordance with SEC rules. The dollar amounts do not reflect the actual amount of compensation earned by or paid to our Non-PEO Named Executive Officers during the applicable year. To calculate the amounts in the CAP to Non-PEO Named Executive Officers column in the table above, the following amounts were deducted from or added to (as applicable) the Total Compensation as reported in the SCT: +Average +Reported +Equity +Average Summary +Summary Compensation +Value of Average Equity +Award Adjustments to +Compensation Actually +Table Total for Non-PEO +Awards to Non-PEO Named +Non-PEO Named +Paid to Non-PEO Named +Named Executive Officers (a) +Executive Officers (b) +Executive Officers (c) +Executive Officers +Year +($) +($) +($) +($) +2025 +1,947,430 +( 760,045 ) +564,408 +1,751,794 +2024 +1,090,484 +( 637,969 ) +258,807 +711,322 +2023 +1,457,560 +( 580,800 ) +292,161 +1,168,921 +2022 +819,670 +( 312,900 ) +312,550 +819,320 +2021 +733,150 +( 259,290 ) +690,512 +1,164,372 +(a) The amounts disclosed represent the average of the total amounts attributable to all non-PEO Named Executive Officers for the period each served, as included in the amounts reported as Total Compensation in the SCT. +(b) Represents the average grant date fair value of the equity awards reported in the Stock Awards column of the SCT. +(c) Represents the average year-over-year change in the fair value of equity awards, as shown below. +2025 +2024 +2023 +2022 +2021 +Fair Value of +($) +($) +($) +($) +($) +Equity awards granted in Current Fiscal year (CFY) outstanding and unvested as of end of CFY +628,619 +464,063 +440,440 +311,150 +304,180 +Change in prior year awards outstanding and unvested as of end of CFY +( 108,490 ) +( 232,060 ) +( 190,584 ) +— +201,272 +Change in prior year awards that vested in current year +56,711 +( 3,121 ) +13,685 +— +185,060 +Prior year awards that fail to meet vesting conditions during CFY +( 44,921 ) +— +— +— +— +Dividends paid +32,489 +29,925 +28,620 +1,400 +— +Total Equity Award Adjustments +564,408 +258,807 +292,161 +312,550 +690,512 +(4) +Reflects cumulative total shareholder return of the Peer Group as of December 31, 2025, calculated over the measurement period beginning as of December 31, 2020, established by the market close on that day through and including the end of 2025. The Peer Group used by the Company is the same as the one identified for purposes of Item 201(e) of Regulation S-K under the Exchange Act in its Form 10-K for the year ended December 31, 2025. +(5) +OCF is computed as EBITDA minus cash paid for capital expenditures, plus discretionary adjustments. For the year ended December 31, 2025, these adjustments included a net of reduction of $ 11.8 million comprising of the cashflows and costs related to a recently completed acquisition of $ 9.1 million and an insurance gain of $ 2.7 million. In 2023 discretionary adjustments totaling approximately $ 24.5 million related to pension plan termination, litigation settlement and expenses related to acquisitions were added back. There were no discretionary adjustments in computing OCF for the years 2024, 2022 and 2021. +46 +Table of Contents +2026 ANNUAL +PROXY STATEMENT +Financial Performance Measures +The Company has used OCF as the primary performance measure for 2025, 2024 and 2023. ROIC was used as the primary performance measurement for several years. ROIC is computed as the ratio of EBITDA to invested capital and was used for the years 2022 and 2021. Invested capital is computed as the aggregate average of stockholders’ equity, accumulated depreciation and long-term liabilities during each of the applicable years as disclosed on the Consolidated Balance Sheet in the Form 10-K for each of those years ended December 31. The Company used the following performance measures for 2025: +> Net Income ; +> OCF – calculated as EBITDA minus cash paid for capital expenditures, adjusted as described above; +> EBITDA ; and +> Total Shareholder Return . +See section titled Compensation Discussion and Analysis – Long Term Incentive Compensation for the performance goals used to grant PSUs in 2025. +Relationship between CAP and financial measures reported in the table +The Company’s TSR has performed consistently with the Peer Group over the five-year period ending in 2025. The Company reported lower net income in 2025 compared to the previous three years; net income in 2025 was higher than net income for years 2021. For 2025, the Company achieved a strong OCF performance compared to the Target Performance Goals set by the Committee. The total OCF performance was slightly greater than 2024 and 2021, but below the OCF achieved in 2023 and 2022. +The following graphs reflect the CAP paid to our PEOs and other Non-PEO Named Executive Officers over the five-year period ended December 31, 2025 and the performance of the Peer Group, and show the Company’s TSR, net income and OCF results over the same period. +47 +Table of Contents +2026 ANNUAL +PROXY STATEMENT +SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE +Section 16(a) of the Exchange Act requires our Executive Officers and Directors and persons who own more than 10% of a registered class of the Company’s equity securities to file reports of ownership and changes in ownership with the SEC. +Delinquent Section 16(a) Reports: Based on our review of the filed copies of such forms, we believe that during the fiscal year ended December 31, 2025, all filing requirements applicable to our Executive Officers, Directors and greater than 10% beneficial owners were timely satisfied. +48 +Table of Contents +2026 ANNUAL +PROXY STATEMENT +STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT +The following table sets forth information relating to the beneficial ownership of our common stock as of March 2, 2026 by: +> Each of our Named Executive Officers; +> Each of our Directors and Director nominees; +> All of our current Executive Officers, Directors and Director nominees as a group; and +> Each stockholder or group as that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, which beneficially owned five percent or more of the shares of Common Stock of the Company. +The number of shares beneficially owned by each stockholder is determined under rules issued by the SEC. Under these rules, beneficial ownership includes any shares as to which a person has sole or shared voting power or investment power. Unless otherwise indicated, we believe, based on the information furnished to us, that the persons named in the table below have sole voting and investment power with respect to all securities that they beneficially own, subject to community property laws where applicable. +The information contained in the following table is not necessarily indicative of beneficial ownership for any other purpose, and the inclusion of any shares in the table does not constitute an admission of beneficial ownership of those shares. Unless otherwise indicated, the business address of each beneficial owner listed in the table below is c/o of RPC, Inc., 2801 Buford Highway NE, Suite 300, Atlanta, Georgia 30329. The information provided in the table below is based on our records, information filed with the SEC, on which we are relying pursuant to applicable SEC regulations, and information provided to us. +Amount +Percent of +Beneficially +Outstanding +Name of Beneficial Owner +Owned (1) +Shares +Named Executive Officers: +Ben M. Palmer +1,220,529 +(2) +** +Michael L. Schmit +228,746 +(3) +** +Richard A. Hubbell +3,272,322 +(4) +1.5 +Directors and Director Nominees: +Amy R. Kreisler (5) +4,916,604 +(6) +2.2 +Timothy C. Rollins (5) +3,994,646 +(7) +1.8 +Jerry W. Nix +26,088 +** +Patrick J. Gunning +33,088 +** +Susan R. Bell +31,588 +** +Stephen E. Lewis +9,882 +** +John F. Wilson +27,088 +** +Gary Kolstad +11,834 +** +Other Stockholders: +Gary W. Rollins (5) +30,767,240 +(8) +13.9 +Gary W. Rollins Voting Trust U/A dated September 13, 1999 +85,125,180 +(9) +38.4 +R. Randall Rollins Voting Trust U/A Dated August 25, 1994 +85,125,180 +(10) +38.4 +LOR, Inc. +85,125,180 +(11) +38.4 +BlackRock Institutional Trust Company, N.A. +12,846,641 +(12) +5.8 +Dimensional Fund Advisors, L.P. +11,660,219 +(12) +5.3 +Control Group +125,483,551 +(13) +56.6 +All Directors and Executive Officers as a group (11 persons) +130,344,716 +(14) +58.8 +** +Less than one percent. +49 +Table of Contents +2026 ANNUAL +PROXY STATEMENT +(1) Except as otherwise noted, the nature of the beneficial ownership for all shares is sole voting and investment power. +(2) Includes 389,400 shares of restricted stock awards of Company Common Stock. +(3) Includes 156,825 shares of restricted stock awards of Company Common Stock. +(4) Includes 259,230 shares of restricted stock awards of Company Common Stock. +(5) Amy R. Kreisler and Timothy C. Rollins are siblings and are the niece and nephew of Gary W. Rollins. +(6) Includes the following shares of Company Common Stock: (a) 1,411,395 shares of Company Common Stock held in a charitable trust of which she is a co-trustee and the Executive Director and (b) 192,224 shares held by multiple trusts benefiting the grandchildren and more remote descendants of her deceased father, R. Randall Rollins (Ms. Kreisler is a trustee of each such trust). Excludes 1,171 shares held by the R. Randall Rollins Voting Trust U/A dated August 25, 1994, as to which Ms. Kreisler is a co-trustee. Ms. Kreisler is part of a control group (see footnote (13) to this table) holding Company securities, as disclosed on a Schedule 13D on file with the U.S. Securities and Exchange Commission. +(7) Includes the following shares of Company Common Stock: (a) 1,411,395 shares of Company Common Stock held in a charitable trust of which he is a co-trustee, (b) 369,040 shares held by multiple trusts benefiting the grandchildren and more remote descendants of his deceased father, R. Randall Rollins (Mr. Rollins is a trustee of each such trust), and (c) 54,323 shares held of record by a minor child under a Uniform Transfers to Minors Act account over which Mr. Rollins possesses voting and dispositive power as custodian of the account. Also includes 1,530 shares of Company Common Stock held by his wife, as to which Mr. Rollins disclaims any beneficial interest. Excludes 1,171 shares held by the R. Randall Rollins Voting Trust U/A dated August 25, 1994, as to which Mr. Rollins is a co-trustee. Mr. Rollins is part of a control group (see footnote (13) to this table) holding Company securities, as disclosed on a Schedule 13D on file with the U.S. Securities and Exchange Commission. +(8) Includes the following shares of Company Common Stock: (a) 6,593 shares of the Company Common Stock held in a charitable trust of which he is a co-trustee and as to which he shares voting and investment power; (b) 4,815,173 shares held by WNEG Investments, L.P., a Georgia limited partnership (Gary W. Rollins is the sole member of the sole general partner of WNEG Investments, L.P.); (c) 3,224,505 shares held by revocable trust established by Gary W. Rollins, of which he is the sole trustee; (d) 2,233,820 shares held by a trust for the benefit of the grandchildren and more remote descendants of his deceased father, O. Wayne Rollins (Mr. Rollins is a trustee of that trust); (e) 4,568,936 shares held by four trusts for the benefit of Mr. Rollins’ grandchildren and more remote descendants (the trustee of each of those trusts is a corporation over which Mr. Rollins has the ability to assert control within sixty days); and (f) 10,702,287 shares held by four trusts for the benefit of the surviving spouse, children and/or more remote descendants of his deceased brother, R. Randall Rollins (the trustee of each of those trusts is a corporation over which Mr. Rollins has the ability to assert control within sixty days). Also includes 16,097 shares of Company Common Stock held by his wife, as to which Mr. Rollins disclaims any beneficial interest. Mr. Rollins is part of a control group (see footnote (13) to this table) holding Company securities, as disclosed on a Schedule 13D on file with the U.S. Securities and Exchange Commission. +(9) The amount shown includes the following shares of Company Common Stock (a) 78,981,820 shares held by LOR, Inc., a Georgia corporation (the Gary W. Rollins Voting Trust has a 50% voting interest in LOR, Inc.) and (b) 6,143,360 shares held by RFT Investment Company, LLC (LOR, Inc. is the manager of RFT Investment Company, LLC. The reporting person disclaims beneficial ownership of these shares except to the extent of the reporting person’s pecuniary interest. The address for the Gary W. Rollins Voting Trust is c/o RFA Management Company, LLC, 1908 Cliff Valley Way NE, Atlanta, Georgia 30329. +(10) The amount shown includes the following shares of Company Common Stock 78,981,820 shares held by LOR, Inc., a Georgia corporation (the R. Randall Rollins Voting Trust has a 50% voting interest in LOR, Inc.). The address for the R. Randall Rollins Voting Trust is c/o RFA Management Company, LLC, 1908 Cliff Valley Way NE, Atlanta, Georgia 30329. +(11) The amount shown includes the following shares of Company Common Stock 6,143,360 shares held by RFT Investment Company, LLC (LOR, Inc. is the manager of RFT Investment Company, LLC). The reporting person disclaims beneficial ownership of these shares except to the extent of the reporting person’s pecuniary interest. The address for LOR, Inc. is c/o RFA Management Company, LLC, 1908 Cliff Valley Way NE, Atlanta, Georgia 30329. +(12) Based on most recently filed 13F. +(13) Control group includes Gary W. Rollins, Amy R. Kreisler, Timothy C. Rollins and certain companies under their control, that possess in excess of 50% of the Company’s voting power. See footnotes (6), (7), (8), (9), (10), (11) & (14) to this table for additional information. +(14) Shares held in trusts as to which more than one officer and/or director are co-trustees or entities in which there is common ownership have been included only once. Includes 805,455 shares of restricted stock awards for Company Common Stock awarded and issued to the executive officers pursuant to the Company’s Stock Incentive Plans. +50 +Table of Contents +2026 ANNUAL +PROXY STATEMENT +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +Pursuant to a Transition Support Services agreement, the Company provides certain administrative services to Marine Products on a cost reimbursement basis and the arrangement may be terminated upon six months’ notice. The services include administration of certain employee benefit programs and other administrative services. Charges from the Company (or from corporations which are subsidiaries of the Company) for such services aggregated approximately $1.1 million in 2025. +On February 5, 2026, Marine Products announced that it had entered into an Agreement and Plan of Merger with MasterCraft. The transaction is subject to shareholder and regulatory approvals and other closing conditions. If the Proposed Merger closes as planned, the Transition Support Services agreement is expected to be canceled on or about the closing date and a new Transition Support Services agreement is expected to be signed with Mastercraft. +RPC and Marine Products own 50% each of a limited liability company called 255 RC, LLC that was created for the joint purchase and ownership of a corporate aircraft. Each of RPC and Marine Products is currently a party to an operating lease agreement with 255 RC, LLC for a period of five years. During 2025, RPC recorded certain net operating costs comprised of rent and an allocable share of fixed costs of approximately $181 thousand for the corporate aircraft. +During 2025, we and our largest stockholder, LOR, Inc. (LOR), entered into a registration rights agreement (the Agreement), pursuant to which we have granted LOR and certain of its affiliates (collectively, the Selling Stockholders) and their permitted transferees the right to require, subject to certain conditions and limitations, us to register for resale all Company securities held by such stockholders, and certain customary piggy back registration rights with respect to registrations initiated by us. The Agreement also contains customary provisions relating to indemnification. The Agreement has a term of 15 years, and in addition to piggyback registration rights, allows the Selling Stockholders to make up to two demands for shelf takedowns per year, subject to a maximum of ten takedowns in total and a minimum requirement that at least $35 million of common stock, in the aggregate, be included in each takedown. The Selling Stockholders include Amy R. Kreisler, and Timothy C. Rollins, each of whom is a current director of the Company, as well as the other members of our controlling stockholder group. Pursuant to the Agreement, we have filed a shelf registration statement on Form S-3 with the SEC that expires on May 5, 2028. The Form S-3 shelf registration statement registers for the resale of up to 127,235,202 shares of our common stock, which represents a majority of the Company securities held by the Selling Stockholders. +Related party transactions, as defined in Regulation S-K, Item 404(a), must be reviewed and approved in advance by our Nominating and Corporate Governance Committee or, in the event that our Nominating and Corporate Governance Committee does not consist of all independent directors, by a Subcommittee (the Subcommittee) of the Nominating and Corporate Governance Committee consisting of all of the independent members thereof. As set forth in the Charter of our Nominating and Corporate Governance Committee, the Nominating and Corporate Governance Committee has the authority and responsibility to ensure that it approve all related party transactions, including material amendments that are in compliance with applicable law, consistent with the Company’s corporate governance policies (including those relative to conflicts of interest and usurpation of corporate opportunities) and on terms that are deemed to be fair to the Company. The Nominating and Corporate Governance Committee also has the authority to hire legal, accounting, financial or other advisors, as it may deem necessary or desirable and/or to delegate responsibilities to executive officers of the Company in connection with discharging its duties. These same rights and responsibilities apply equally to the Subcommittee. The Related Party Transaction Policy states that in the event that a member of the Nominating and Corporate Governance Committee has a direct or indirect material interest in a related party transaction, then the authority and responsibilities of the Nominating and Corporate Governance Committee with respect to related person transactions shall be assumed by the Audit Committee. A +51 +Table of Contents +2026 ANNUAL +PROXY STATEMENT +copy of the Charter of the Nominating and Corporate Governance Committee and of the Audit Committee is available on our website at www.rpc.net under the Governance section. All related party transactions for the fiscal year ended December 31, 2025 were reviewed, pre-approved and/or ratified by the Nominating and Corporate Governance Committee and/or Audit Committee in accordance with their Charters. +STOCKHOLDER PROPOSALS +AND BOARD NOMINATIONS +Appropriate proposals of stockholders intended to be presented at the Company’s 2027 Annual Meeting of Stockholders must be received by the Company by November 18, 2026 in order to be included, pursuant to Rule 14a-8 promulgated under the Exchange Act, in the Company’s proxy statement and form of proxy relating to that meeting. With regard to such stockholder proposals, if the date of the next annual meeting of stockholders is advanced or delayed more than 30 calendar days from April 28, 2027, the Company will, in a timely manner, inform its stockholders of the change and of the date by which such proposals must be received. Stockholders desiring to present business at the 2027 Annual Meeting of Stockholders outside of the stockholder proposal rules of Rule 14a-8 of the Exchange Act and instead pursuant to Article Twenty-Seventh of the Bylaws must prepare a written notice regarding such proposal addressed to The Corporate Secretary, RPC, Inc., 2801 Buford Highway NE, Suite 300, Atlanta, Georgia 30329, and it must be delivered or mailed and received no later than January 28, 2027 and no earlier than December 19, 2026. Stockholders should consult the Bylaws for other specific requirements related to such notice and proposed business. +With respect to stockholder nomination of directors, the Bylaws provide that nominations for the election of directors may be made by any stockholder entitled to vote for the election of directors. Nominations must comply with an advance notice procedure which generally requires with respect to nominations for directors for election at an annual meeting, that written notice be addressed to: The Corporate Secretary, RPC, Inc., 2801 Buford Highway NE, Suite 300, Atlanta, Georgia 30329, and be received not less than 90 nor more than 130 days prior to the anniversary of the prior year’s annual meeting and set forth, among other requirements specified in the Bylaws, the name, age, business address and, if known, residence address of the nominee proposed in the notice, the principal occupation or employment of the nominee for the past five years, the nominee’s qualifications, the class or series and number of shares of capital stock of the Company which are owned beneficially or of record by the person and any other information relating to the person that would be required to be disclosed in a proxy statement or other filings. Other specific requirements related to such notice, including required disclosures concerning the stockholder intending to present the nomination, are set forth in the Bylaws. Notices of nominations must be received by the Corporate Secretary of the Company no later than January 28, 2027 and no earlier than December 19, 2026, with respect to directors to be elected at the 2027 Annual Meeting of Stockholders. +In addition, a stockholder who intends to solicit proxies in support of director nominees submitted under the advance notice provisions of our Bylaws must provide notice to the Company with the information required by SEC Rule 14a-19, which notice must be postmarked or transmitted electronically to us at our principal executive offices no later than 60 days prior to the one year anniversary date of the prior year’s annual meeting (for the 2027 meeting, no later than February 28, 2027). Such notice should be delivered to our Corporate Secretary at our principal executive offices. If the date of the 2027 annual meeting is changed by more than 30 days from such anniversary date, however, then the stockholder must provide notice by the later of 60 days prior to the one year anniversary date of the 2026 annual meeting and the 10th day following the date on which public announcement of the date of the 2027 annual meeting is first made. +52 +Table of Contents +2026 ANNUAL +PROXY STATEMENT +EXPENSES OF SOLICITATION +The Company will bear the cost of soliciting proxies. Upon request, we will reimburse brokers, dealers and banks, or their nominees, for reasonable expenses incurred in forwarding copies of the proxy material to their beneficial stockholders of record. Solicitation of proxies will be made principally by mail. Proxies also may be solicited in person or by telephone, facsimile or other means by our directors, officers and regular employees. These individuals will receive no additional compensation for these services. The Company has retained Alliance Advisors, LLC to provide proxy solicitation services for an estimated fee of approximately $19,000 plus reasonable out of pocket expenses. +ANNUAL REPORT +The Company’s Annual Report to Stockholders, including its Annual Report on Form 10-K for the fiscal year ended December 31, 2025, without exhibits, is being provided to stockholders with this Proxy Statement. The Annual Report is not considered proxy-soliciting material. +FORM 10-K +Upon the written request of any record or beneficial owner of the Company’s Common Stock whose proxy was solicited in connection with the 2026 Annual Meeting of Stockholders, the Company will furnish such owner, without charge, a copy of its Annual Report on Form 10-K, including the financial statements and the financial statement schedules (but without exhibits), for its fiscal year ended December 31, 2025. Requests for a copy of such Annual Report on Form 10-K should be addressed to Mr. Michael L. Schmit, Corporate Secretary, at RPC, Inc., 2801 Buford Highway NE, Suite 300, Atlanta, Georgia 30329. +OTHER MATTERS +Our Board of Directors knows of no business other than the matters set forth herein which will be presented at the Annual Meeting. In as much as matters not known at this time may come before the Annual Meeting, the enclosed proxy confers discretionary authority with respect to such matters as may properly come before the Annual Meeting; and it is the intention of the persons named in the proxy to vote in accordance with their best judgment on such matters. +BY ORDER OF THE BOARD OF DIRECTORS +Michael L. Schmit +Corporate Secretary +Atlanta, Georgia +March 18, 2026 +53 +Table of Contents +2026 ANNUAL +PROXY STATEMENT +CAUTION CONCERNING FORWARD- LOOKING STATEMENTS +This Proxy Statement contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts contained in this Proxy Statement, including statements regarding future operations are forward-looking statements. In some cases, forward-looking statements may be identified by words such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “could,” “would,” “expect,” “objective,” “plan,” “potential,” “seek,” “grow,” “target,” “if,” or the negative of these terms and similar expressions intended to identify forward-looking statements. Forward-looking statements are made subject to the safe harbor provisions of the federal securities laws pursuant to Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We have based these forward-looking statements primarily on our current opinions, expectations, beliefs, plans, objectives, assumptions and projections about future events and trends that we believe may affect us. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the future events and trends discussed in this Proxy Statement, including our expectations for 2026, may not occur and actual results may differ materially and adversely from those anticipated or implied in the forward-looking statements. You should read this Proxy Statement with the understanding that our actual future results, levels of activity, performance and events and circumstances may be materially different from what we expect. These forward-looking statements include, without limitation, that we have positioned ourselves for long-term value creation, that our corporate objective is to create long-term shareholder value by delivering best-in-class oilfield services while maintaining conservative financial discipline, that we believe our execution has consistently aligned with that strategy, that we are actively exploring strategic growth opportunities to deploy capital and increase our scale,but we are doing so with the same rigor and economic discipline that has helped us achieve our strong financial position, that we launched several differentiated products and services in 2025 and are encouraged by initial feedback and these new products position RPC as an industry leader in innovation and service quality and strengthen our market positions. Statements regarding our consistent profitability and cash generation, despite market dynamics and industry headwinds, that our financial discipline has positioned us to continue pursuing strategic growth initiatives and capitalize on the investments made over the past year in our asset base and operational capabilities, that we have launched several internal initiatives aimed at enhancing execution and expanding margins and we continue to allocate capital toward differentiated innovative products and service enhancements, that based on initial customer feedback, we expect increased adoption of many of these differentiated products and services in 2026, that we are continuously evaluating acquisition opportunities to broaden and diversify our service offerings and scale and remain focused on evaluating acquisitions to expand and enhance our platform and continue to assess opportunities through a return-based framework. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in the section titled “Risk Factors” set forth in Part I, Item 1A of our 2025 Annual Report on Form 10-K, a copy of which is being provided with this Proxy Statement, and in our other SEC filings, which include, among other things, the dependence of our business on the oil and natural gas industries and related commodity pricing and volatility in oil and gas prices, potential reliance on large customers, adverse weather conditions, and the potential reliance on large customers, climate change and adverse weather conditions, our potential inability to identify accretive acquisitions and/or to integrate them cost effectively, and the potential impact on our business of wars and pandemics. Forward-looking statements speak only as of the date of this Proxy Statement, and you should not put undue reliance on any forward-looking statements. We assume no obligation to publicly update or revise any forward-looking statements because of new information, future events, changes in assumptions or otherwise, except to the extent required by applicable laws. If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements. While we believe that the information on which we have based these forward-looking statements provides a reasonable basis for these statements, such information may be limited or incomplete. Our statements +54 +Table of Contents +2026 ANNUAL +PROXY STATEMENT +should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements. +55 +NAME & ADDRESS HERE +BARCODE HERE +PLEASE DETACH ALONG PERFORATED LINE AND MAIL IN THE ENVELOPE PROVIDED. +NAME & ADDRESS HERE +CONTROL NUMBER +Address Change: +(If you noted any Address Changes above, +please mark box.) ☐ +RPC, INC. +ANNUAL MEETING OF STOCKHOLDERS +APRIL 28, 2026 AT 12:15 p.m. ET +THIS PROXY IS SOLICITED ON BEHALF OF +THE BOARD OF DIRECTORS OF RPC, INC. +The undersigned hereby constitutes and appoints Richard A. Hubbell and Ben M. Palmer, and each of them, jointly and severally, as proxies, with full power of +substitution, to vote all shares of Common Stock which the undersigned is entitled to vote at the Annual Meeting of Stockholders to be held on April 28, 2026 at +12:15 p.m. ET at 2170 Piedmont Road NE, Atlanta, GA 30324, or any adjournment of the meeting. +The undersigned acknowledges receipt of Notice of Annual Meeting of Stockholders and Proxy Statement, each dated March 18, 2026, and grants authority to +said proxies, or either of them, or their substitutes, to act in the absence of others, with all the powers which the undersigned would possess if personally present +at such meeting and hereby ratifies and confirms all that said proxies or their substitutes may lawfully do in the undersigned's name, place, and stead. The +undersigned instructs said proxies, or either of them, to vote as stated on the reverse side. +This proxy, when properly executed, will be voted in the manner +directed herein. If no such direction is made, this proxy will be +voted in accordance with the Board of Directors’ +recommendations. +Signature _____________________________________________________ +Date _________________________________________________________ +Title __________________________________________________________ +Signature (Joint Owners) ______________________________________ +NOTE: Please sign exactly as name(s) appear(s) hereon. When signing as attorney, +executor, administrator, or other fiduciary, please give full title as such. Joint owners +should each sign personally. If a corporation, limited liability company, or partnership, +please sign in full corporate, limited liability company, or partnership name by +authorized officer or person. +PROXY VOTING INSTRUCTIONS +Please have your 11-digit control number +ready when voting by Internet or Telephone. +Vote Your Proxy on the Internet: +Go to https://AALvote.com/RES +Have your proxy card available when you +access the above website. +Follow the prompts to vote your shares. +Vote Your Proxy by Phone: +Call 1-866-804-9616 +Use any touch-tone telephone to vote your +proxy. Have your proxy card available when +you call. Follow the voting instructions to vote +your shares. +Vote Your Proxy by Mail: +Mark, sign, and date your proxy card, then +detach it and return it in the postage-paid +envelope provided. +Vote in Person: +You may vote your shares in person at the 2026 +Annual Meeting on April 28, 2026 at 12:15 p.m. ET +at 2170 Piedmont Road NE, Atlanta, GA 30324 +Scan QR Code for Digital Voting +CONTROL NUMBER +As a stockholder of RPC, Inc., you have the option of voting your +shares electronically through the Internet or by telephone, eliminating +the need to return the proxy card. Your electronic or telephonic vote +authorizes the named proxies to vote your shares in the same manner +as if you marked, signed, dated, and returned the proxy card. Votes +submitted electronically over the Internet or by telephone must be +received by 11:59 p.m. ET on April 27, 2026. +PLEASE DETACH ALONG PERFORATED LINE AND MAIL IN THE ENVELOPE PROVIDED. +Important Notice Regarding the Availability of Proxy Materials for the +Annual Meeting of Stockholders to be held on April 28, 2026: +The Proxy Statement is available at: +https://web.viewproxy.com/RPC/2026 +This proxy will be voted as directed or, if no direction is given, will be voted “FOR ALL” the nominees named in +Proposal 1; and “FOR” Proposals 2 and 3. The proxies are authorized to vote in their judgment upon such other +business not known as may properly come before the Annual Meeting or any adjournments thereof. +Your Board of Directors recommends a vote “FOR” all the +nominees listed in Item 1. +Please mark your votes like this +1. To elect ten Nominees for a one-year term (expiring in 2027) +to the Board of Directors: +Your Board of Directors recommends a vote “FOR” Items 2 +and 3. +2. To ratify the appointment of Grant Thornton LLP as +independent registered public accounting firm for the +fiscal year ending December 31, 2026. +FOR ☐ AGAINST ☐ ABSTAIN ☐ +3. To hold a nonbinding vote to approve executive +compensation. +FOR ☐ AGAINST ☐ ABSTAIN ☐ +Note: To consider and act upon such other business +as may properly come before the Annual Meeting +or any adjournment of the meeting. +FOR AGAINST ABSTAIN +(1) Susan R. Bell ☐ ☐ ☐ +(2) Patrick J. Gunning ☐ ☐ ☐ +(3) Richard A. Hubbell ☐ ☐ ☐ +(4) Gary Kolstad ☐ ☐ ☐ +(5) Amy R. Kreisler ☐ ☐ ☐ +(6) Stephen E. Lewis ☐ ☐ ☐ +(7) Ben M. Palmer ☐ ☐ ☐ +(8) Timothy C. Rollins ☐ ☐ ☐ +(9) Wesley N. Slagle ☐ ☐ ☐ +(10) John F. Wilson ☐ ☐ ☐ \ No newline at end of file diff --git a/raw/proxies/0000742278/0001104659-26-030766/proxy_rpt.txt b/raw/proxies/0000742278/0001104659-26-030766/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..783567d79520add8e4ec27ecfb348e6ad282e6b3 --- /dev/null +++ b/raw/proxies/0000742278/0001104659-26-030766/proxy_rpt.txt @@ -0,0 +1,8 @@ +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +Pursuant to a Transition Support Services agreement, the Company provides certain administrative services to Marine Products on a cost reimbursement basis and the arrangement may be terminated upon six months’ notice. The services include administration of certain employee benefit programs and other administrative services. Charges from the Company (or from corporations which are subsidiaries of the Company) for such services aggregated approximately $1.1 million in 2025. +On February 5, 2026, Marine Products announced that it had entered into an Agreement and Plan of Merger with MasterCraft. The transaction is subject to shareholder and regulatory approvals and other closing conditions. If the Proposed Merger closes as planned, the Transition Support Services agreement is expected to be canceled on or about the closing date and a new Transition Support Services agreement is expected to be signed with Mastercraft. +RPC and Marine Products own 50% each of a limited liability company called 255 RC, LLC that was created for the joint purchase and ownership of a corporate aircraft. Each of RPC and Marine Products is currently a party to an operating lease agreement with 255 RC, LLC for a period of five years. During 2025, RPC recorded certain net operating costs comprised of rent and an allocable share of fixed costs of approximately $181 thousand for the corporate aircraft. +During 2025, we and our largest stockholder, LOR, Inc. (LOR), entered into a registration rights agreement (the Agreement), pursuant to which we have granted LOR and certain of its affiliates (collectively, the Selling Stockholders) and their permitted transferees the right to require, subject to certain conditions and limitations, us to register for resale all Company securities held by such stockholders, and certain customary piggy back registration rights with respect to registrations initiated by us. The Agreement also contains customary provisions relating to indemnification. The Agreement has a term of 15 years, and in addition to piggyback registration rights, allows the Selling Stockholders to make up to two demands for shelf takedowns per year, subject to a maximum of ten takedowns in total and a minimum requirement that at least $35 million of common stock, in the aggregate, be included in each takedown. The Selling Stockholders include Amy R. Kreisler, and Timothy C. Rollins, each of whom is a current director of the Company, as well as the other members of our controlling stockholder group. Pursuant to the Agreement, we have filed a shelf registration statement on Form S-3 with the SEC that expires on May 5, 2028. The Form S-3 shelf registration statement registers for the resale of up to 127,235,202 shares of our common stock, which represents a majority of the Company securities held by the Selling Stockholders. +Related party transactions, as defined in Regulation S-K, Item 404(a), must be reviewed and approved in advance by our Nominating and Corporate Governance Committee or, in the event that our Nominating and Corporate Governance Committee does not consist of all independent directors, by a Subcommittee (the Subcommittee) of the Nominating and Corporate Governance Committee consisting of all of the independent members thereof. As set forth in the Charter of our Nominating and Corporate Governance Committee, the Nominating and Corporate Governance Committee has the authority and responsibility to ensure that it approve all related party transactions, including material amendments that are in compliance with applicable law, consistent with the Company’s corporate governance policies (including those relative to conflicts of interest and usurpation of corporate opportunities) and on terms that are deemed to be fair to the Company. The Nominating and Corporate Governance Committee also has the authority to hire legal, accounting, financial or other advisors, as it may deem necessary or desirable and/or to delegate responsibilities to executive officers of the Company in connection with discharging its duties. These same rights and responsibilities apply equally to the Subcommittee. The Related Party Transaction Policy states that in the event that a member of the Nominating and Corporate Governance Committee has a direct or indirect material interest in a related party transaction, then the authority and responsibilities of the Nominating and Corporate Governance Committee with respect to related person transactions shall be assumed by the Audit Committee. A +51 +Table of Contents \ No newline at end of file diff --git a/raw/proxies/0000742278/0001144204-18-016018/proxy.txt b/raw/proxies/0000742278/0001144204-18-016018/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..09773aff2284e7b6b2ceda604e1ab45b186867ba --- /dev/null +++ b/raw/proxies/0000742278/0001144204-18-016018/proxy.txt @@ -0,0 +1,1164 @@ +DEF 14A +1 +tv488136-def14a.htm +DEF 14A +tv488136-def14a - none - 2.114339s +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A INFORMATION +Proxy Statement Pursuant to Section 14(a) of the Securities +Exchange Act of 1934 (Amendment No. ___) +Filed by the Registrant ☒ +Filed by a Party other than the Registrant ☐ +Check the appropriate box: +☐ +Preliminary Proxy Statement +☐ +Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +☒ +Definitive Proxy Statement +☐ +Definitive Additional Materials +☐ +Soliciting Material Pursuant to §240.14a-12 +RPC, Inc. +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +☒ +No fee required. +☐ +Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. +(1) +Title of each class of securities to which transaction applies: N/A +(2) +Aggregate number of securities to which transaction applies: N/A +(3) +Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): N/A +(4) +Proposed maximum aggregate value of transaction: N/A +(5) +Total fee paid: N/A +☐ +Fee paid previously with preliminary materials. +☐ +Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing: +(1) +Amount previously paid: N/A +(2) +Form, Schedule or Registration Statement No.: N/A +(3) +Filing party: N/A +(4) +Date Filed: N/A +RPC, INC. +NOTICE OF ANNUAL MEETING OF STOCKHOLDERS +2801 Buford Highway NE, Suite 520, Atlanta, Georgia 30329 +TO THE HOLDERS OF THE COMMON STOCK: +PLEASE TAKE NOTICE that the 2018 Annual Meeting of Stockholders of RPC, Inc., a Delaware corporation (“RPC” or the “Company”), will be held at 2170 Piedmont Road, NE, Atlanta, Georgia, on Tuesday, April 24, 2018, at 12:15 P.M., or any adjournment thereof, for the following purposes, as more fully described in the Proxy Statement accompanying this notice: +1. +To elect the three Class II nominees identified in the attached Proxy Statement to the Board of Directors; +2. +To ratify the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2018; and +3. +To consider and act upon such other business as may properly come before the Annual Meeting or any adjournment of the meeting. +The Proxy Statement dated March 21, 2018 is attached. +The Board of Directors has fixed the close of business on February 28, 2018 as the record date for the determination of stockholders entitled to notice of, and to vote at, the Annual Meeting or any adjournment thereof. +Stockholders who do not expect to be present at the meeting are urged to complete, date, sign and return the enclosed proxy. No postage is required if the enclosed envelope is mailed in the United States. +The Proxy Statement and 2017 Annual Report are available at www.edocumentview.com/RPC +BY ORDER OF THE BOARD OF DIRECTORS +Ben M. Palmer +Corporate Secretary +Atlanta, Georgia +March 21, 2018 +PROXY STATEMENT +This Proxy Statement and a form of proxy were first mailed to stockholders on or about March 21, 2018. The following information concerning the enclosed proxy and the matters to be acted upon at the Annual Meeting of the Stockholders to be held on April 24, 2018, is submitted by the Company to the stockholders in connection with the solicitation of proxies on behalf of the Company’s Board of Directors. +SOLICITATION OF AND POWER TO REVOKE PROXY +A form of proxy is enclosed. Each proxy submitted will be voted as directed, but if not otherwise specified, proxies solicited by the Board of Directors of the Company will be voted in favor of the candidates for election to the Board of Directors and in favor of ratification of the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2018. +A stockholder executing and delivering a proxy has power to revoke the same and the authority thereby given at any time prior to the exercise of such authority, if he so elects, by contacting either proxy holder, by timely submitting a later dated proxy changing his vote, or by attending the meeting and voting in person. However, a beneficial stockholder who holds his shares in street name must secure a proxy from his broker before he can attend the meeting and vote. All costs of solicitation have been, and will be, borne by the Company. +CAPITAL STOCK +The outstanding capital stock of the Company on February 28, 2018 consisted of 215,724,264 shares of Common Stock, par value $0.10 per share. Holders of Common Stock are entitled to one vote (non-cumulative) for each share of such stock registered in their respective names at the close of business on February 28, 2018, the record date for determining stockholders entitled to notice of, and to vote at, the meeting or any adjournment thereof. +A majority of the outstanding shares will constitute a quorum at the Annual Meeting. Abstentions will be counted for purposes of determining the presence or absence of a quorum for the transaction of business. In accordance with the General Corporation Law of the state of Delaware, the election of the nominees named herein as Directors will require the affirmative vote of a plurality of the votes cast by the shares of Company Common Stock entitled to vote in the election provided that a quorum is present at the Annual Meeting. In the case of a plurality vote requirement (as in the election of directors), where no particular percentage vote is required, the outcome is solely a matter of comparing the number of votes cast for each nominee, with those nominees receiving the most votes being elected, and hence only votes for director nominees (and not abstentions or broker non-votes) are relevant to the outcome. In this case, the three nominees receiving the most votes will be elected. The affirmative vote of a majority of shares of common stock present in person or represented by proxy and entitled to vote at the meeting is required to approve the ratification of the appointment of the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2018. Abstentions will have the effect of a vote against the proposal for the ratification of the appointment of the Company’s independent registered public accounting firm, while broker non-votes will have no effect on the proposal and will be disregarded. +There are no rights of appraisal or similar dissenter’s rights with respect to any matter to be acted upon pursuant to this Proxy Statement. It is expected that shares held of record by officers and directors of the Company, which in the aggregate represent approximately 74 percent of the outstanding shares of Common Stock, will be voted for the nominees for directors, and for the ratification of the appointment of the Company’s independent registered public accounting firm. +1 +STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT +The executives named in the Summary Compensation Table, and the name and address of each stockholder (or “group” as that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended) who owned beneficially five percent (5%) or more of the shares of Common Stock of the Company on February 28, 2018, together with the number of shares owned by each such person and the percentage of outstanding shares that ownership represents, and information as to Common Stock ownership of the directors and executive officers of the Company as a group (according to information received by the Company), are set out below: +Name and Address of Beneficial Owner +Amount +Beneficially +Owned (1) +Percent of +Outstanding +Shares +R. Randall Rollins +Chairman of the Board +2170 Piedmont Road, NE +Atlanta, Georgia +147,240,765 (2) +68.3 +Gary W. Rollins +Vice Chairman and Chief Executive Officer, Rollins, Inc. +2170 Piedmont Road, NE +Atlanta, Georgia +150,172,069 (3) +69.6 +Richard A. Hubbell +President and Chief Executive Officer +2801 Buford Highway, Suite 520 +Atlanta, Georgia +2,779,219 (4) +1.3 +Linda H. Graham (7) +Vice President and Secretary +2170 Piedmont Road, NE +Atlanta, Georgia +682,528 (5) +** +Ben M. Palmer (7) +Vice President, Chief Financial Officer, and Corporate Secretary +2801 Buford Highway, Suite 520 +Atlanta, Georgia +648,632 (6) +** +All Directors and Executive Officers as a group +(10 persons) +158,931,079 (8) +73.7 +** +Less than one percent +(1) +Except as otherwise noted, the nature of the beneficial ownership for all shares is sole voting and investment power. +(2) +Includes 3,505,614 shares of Company Common Stock held in two charitable trusts of which he is a co-trustee and as to which he shares voting and investment power. Also includes 129,876,265 shares of Company Common Stock held by RFPS Management Company II, L.P., a Georgia limited partnership. The general partner of RFPS Management Company II, L.P., is RFA Management Company, LLC, a Georgia limited liability company, the manager of which is LOR, Inc., a Georgia corporation. Mr. R. Randall Rollins is an officer and director of LOR, Inc. Mr. R. Randall Rollins and Mr. Gary W. Rollins have voting control of LOR, Inc. Also includes 11,292,525 shares of Company Common Stock held by RFT Investment Company, LLC. LOR, Inc., is the manager of RFT Investment Company, LLC. Also includes 1,228,400 shares of Company Common Stock held by RFPS Investments II, L.P., a Georgia limited partnership. LOR Investment Company, LLC, a Georgia limited liability company, is the general partner of RFPS Investments II, L.P. LOR, Inc., holds fifty percent of all voting interests in LOR Investment Company, LLC. Also includes 232,500 shares of restricted stock awards for Company Common Stock. This also includes 258,269 shares of Company Common Stock held by his wife, as to which Mr. R. Randall Rollins disclaims any beneficial interest. Mr. R. Randall Rollins is part of a control group holding Company securities that includes Mr. Gary W. Rollins, as disclosed on a Schedule 13D on file with the U.S. Securities and Exchange Commission. +(3) +Includes 3,505,614 shares of Company Common Stock held in two charitable trusts of which he is co-trustee and as to which he shares voting and investment power. Also includes 129,876,265 shares of Company Common Stock held by RFPS Management Company II, L.P., a Georgia limited partnership. The general partner of RFPS Management Company II, L.P., is RFA Management Company, LLC, a Georgia limited liability company, the manager of which is LOR, Inc., a Georgia corporation. Mr. Gary W. Rollins is an officer and director of LOR, Inc. Mr. R. Randall Rollins and Mr. Gary W. Rollins have voting control of LOR, Inc. Also includes 11,292,525 shares of Company Common Stock held by RFT Investment Company, LLC, a Georgia limited liability company. LOR, Inc., is the manager of RFT Investment Company, LLC. Also includes 1,228,400 shares of the +2 +Company Common Stock held by RFPS Investments II, L.P., a Georgia limited partnership. LOR Investment Company, LLC, a Georgia limited liability company, is the general partner of RFPS Investments II, L.P. LOR, Inc., holds fifty percent of all voting interests in LOR Investment Company, LLC. This also includes 2,970 shares of Company Common Stock held by his wife, as to which Mr. Rollins disclaims any beneficial interest. Mr. Gary W. Rollins is part of a control group holding Company securities that includes Mr. R. Randall Rollins, as disclosed on a Schedule 13D on file with the U.S. Securities and Exchange Commission. +(4) +Includes 232,500 shares of restricted stock awards for Company Common Stock. +(5) +Represents shares of Company Common Stock held in a revocable trust of which she is co-trustee and as to which she shares voting and investment power. +(6) +Includes 142,500 shares of restricted stock awards for Company Common Stock. +(7) +Ms. Linda H. Graham retired as the Vice President and Secretary effective June 30, 2017. Mr. Ben M. Palmer assumed responsibility as Corporate Secretary in July 2017. +(8) +Shares held in trusts as to which more than one officer and/or director are co-trustees or entities in which there is common ownership have been included only once. Includes 607,500 shares of restricted stock awards for Company Common Stock awarded and issued to all of the executive officers pursuant to the Company’s Stock Incentive Plans. +PROPOSAL 1: ELECTION OF DIRECTORS +At the Annual Meeting, Messrs. Gary W. Rollins, Richard A. Hubbell and Larry L. Prince will be nominated to serve as Class II directors. The nominees for election at the 2018 Annual Meeting are all now directors of the Company. The directors in each class serve for a term of three years. The director nominees will serve in their respective class until their successors are elected and qualified. Five other individuals serve as directors but are not standing for re-election because their terms as directors extend past this Annual Meeting pursuant to provisions of the Company’s Bylaws that provide for the election of directors for staggered terms, with each director serving a three-year term. Unless authority is withheld, the proxy holders will vote for the election of each nominee named below. Although management does not contemplate the possibility, in the event any nominee is not a candidate or is unable to serve as a director at the time of the election, unless authority is withheld, the proxies will be voted for any nominee who shall be designated by the present Board of Directors and recommended by the Nominating and Governance Committee, to fill such vacancy. +Director Qualifications +As described in more detail below, we believe that each of our directors is well suited to serve on our Board for a variety of individual reasons and because collectively they bring a wealth of experience from diverse backgrounds that have combined to provide us with an excellent mix of experiences and viewpoints. The name and age of each of our directors and each of the nominees, his or her principal occupation, together with the number of shares of Common Stock beneficially owned, directly or indirectly, by each and the percentage of outstanding shares that ownership represents, all as of the close of business on February 28, 2018 (according to information received by the Company), other board memberships and the period during which he or she has served us as a director are set forth as follows: +3 +Names of Directors +Principal Occupation (1) +Service as +Director +Age +Shares of +Common +Stock (2) +Percent of +Outstanding +Shares +Names of Director Nominees +Class II (Current Term Expires 2018; New Term Will Expire 2021) +Gary W. Rollins (3) +Vice Chairman and Chief Executive Officer of Rollins, Inc. (consumer services). +1984 to date +73 +150,172,069 (4) +69.6 +Richard A. Hubbell +President and Chief Executive Officer of the Company; President and Chief Executive Officer of Marine Products Corporation (boat manufacturing). +1987 to date +73 +2,779,219 (5) +1.3 +Larry L. Prince +Retired Chairman of the Board of Directors of Genuine Parts Company (automotive parts distributor). +2009 to date +79 +15,000 +** +Names of Directors Whose Terms Have Not Expired +Class III (Term Expires 2019) +Bill J. Dismuke +Retired President of Edwards Baking Company (manufacturer of pies and pie parts). +2005 to date +81 +7,593 +** +Amy Rollins Kreisler (6) +Executive Director – The O. Wayne Rollins Foundation and The Ma-Ran Foundation (private charitable entities). +2016 to date +48 +1,960,450 (7) +** +Class I (Term Expires 2020) +R. Randall Rollins (3)(6) +Chairman of the Board of the Company; +Chairman of the Board of Marine +Products Corporation (boat +manufacturing); Chairman of the Board +of Rollins, Inc. (consumer services). +1984 to date +86 +147,240,765 (8) +68.3 +Henry B. Tippie +Presiding Director of the Company; +Chairman of the Board and Chief +Executive Officer of Tippie Services, Inc. +(management services); Chairman of the +Board of Dover Downs Gaming & +Entertainment, Inc. (operator of +multi-purpose gaming and entertainment +complex); Chairman of the Board of +Dover Motorsports, Inc. (operator of +motor racing tracks). +1984 to date +91 +2,252,277 (9) +1.0 +James B. Williams +Retired Chairman of the Executive Committee, SunTrust Banks, Inc. (bank holding company). +1984 to date +84 +303,750 +** +** +Less than one percent +(1) +Except as noted, each of the directors has held the positions of responsibility set out in this column (but not necessarily his or her present title) for more than five years. In addition to the directorships listed in this column, the following individuals also serve on the Boards of Directors of the following companies: R. Randall Rollins: Dover Downs Gaming & Entertainment, Inc. and Dover Motorsports, Inc.; and Gary W. Rollins: Director Emeritus of Genuine Parts Company and Emory University. All of the directors shown in the above table, with the exception of Amy Rollins Kreisler, are also directors of Marine Products Corporation (“Marine Products” or “MPC”) and, with the exception of Richard A. Hubbell and Amy Rollins Kreisler, are also directors of Rollins, Inc. (“Rollins”). Larry L. Prince formerly served as a director of SunTrust Banks, Inc., Crawford & Company, Equifax, Inc., John H. Harland Company and Genuine Parts Company. James B. Williams formerly served as a Director of Genuine Parts Company, Georgia Pacific Corporation and The Coca-Cola Company. Amy Rollins Kreisler is a Trustee on The Lovett School Board of Trustees and also serves on their Executive Committee. She is Trustee on the Skyland Trail Board of Trustees where she is also the Chairman of the Governance Committee. +(2) +Except as otherwise noted, the nature of the beneficial ownership for all shares is sole voting and investment power. +(3) +R. Randall Rollins and Gary W. Rollins are brothers. +(4) +See information contained in footnote (3) to the table appearing in the Capital Stock section. +4 +(5) +See information contained in footnote (4) to the table appearing in the Capital Stock section. +(6) +Amy Rollins Kreisler is the daughter of R. Randall Rollins. +(7) +Includes 1,228,400 shares of Company Common Stock held by RFPS Investments II, L.P. Ms. Kreisler holds a voting interest in LOR Investment Company, LLC, the general partner of RFPS Investments II, L.P. Also includes 727,050 shares of Company Common Stock held indirectly through an undivided interest in a limited partnership. +(8) +See information contained in footnote (2) to the table appearing in the Capital Stock section. +(9) +Includes shares held by a wholly owned corporation that owns 2,277 shares. +Key Attributes, Experience and Skills of Directors +R. Randall Rollins was elected a Director of RPC in 1984. Mr. Rollins has extensive knowledge of the Company’s business and industry serving over 33 years at the Company. Mr. Rollins serves as Chairman of the Board of the Company. He is also Chairman of the Board for Marine Products Corporation, as well as Rollins, Inc. Mr. Rollins has been a Director of Dover Motorsports, Inc. since 1996 and a Director of Dover Downs Gaming & Entertainment, Inc. since 2002. Mr. Rollins served as a Director of SunTrust Banks, Inc. from 1995 to 2004. +Richard A. Hubbell was elected a Director of RPC in 1987. Mr. Hubbell has extensive knowledge of the Company’s business and industry serving over 33 years at the Company. He has served as the Chief Executive Officer of the Company since 2003. In addition, Mr. Hubbell serves as the President of the Company. Mr. Hubbell is also the President, Chief Executive Officer and a Director of Marine Products Corporation. +Gary W. Rollins was elected a Director of RPC in 1984. Mr. Rollins has extensive knowledge of the Company’s business and industry. In addition, Mr. Rollins serves as the Vice Chairman and Chief Executive Officer of Rollins, Inc. Mr. Rollins has been a Director of Marine Products Corporation since 2001 and a Director of Rollins, Inc. since 1981. Mr. Rollins has been a Director of Genuine Parts Company since 2005. +Henry B. Tippie was elected a Director of RPC in 1984. Mr. Tippie brings extensive financial and management experience to our Board of Directors serving as Controller and Chief Financial Officer of Rollins, Inc. from 1953 to 1970. Mr. Tippie has over 67 years of experience including being involved with publicly owned companies during the past 57 years in various positions including founder, CFO, CEO, President, Vice-Chairman and Chairman of the Board. He is currently Chairman of the Board of Dover Downs Gaming & Entertainment, Inc., as well as Dover Motorsports, Inc., and a Director of Marine Products Corporation and Rollins, Inc. +James B. Williams was elected a Director of RPC in 1984. Mr. Williams brings extensive financial and management experience to our Board of Directors serving over 33 years as a Director. He retired in March 1998 as Chairman of the Board and Chief Executive Officer of SunTrust Banks, Inc., a bank holding company. He is a Director of Marine Products Corporation and Rollins, Inc. Mr. Williams previously served as a Director of Genuine Parts Company, Georgia Pacific Corporation and The Coca-Cola Company. +Bill J. Dismuke was elected a Director of RPC in 2005. Mr. Dismuke brings extensive financial, management and manufacturing experience to our Board of Directors. He served as a Senior Vice President of Rollins, Inc. for five years from 1979 until 1984. He retired as President of Edwards Baking Company in 1995. Mr. Dismuke has also been a Director of Rollins, Inc. since 1984 and Marine Products Corporation since 2005. +Larry L. Prince was elected a Director of RPC in 2009. Mr. Prince brings extensive management experience to our Board of Directors. He served as Chairman of the Board of Genuine Parts Company from 1990 through February 2005 and as Chief Executive Officer from 1989 through August 2004. Mr. Prince is also a Director of Rollins, Inc. and Marine Products Corporation. Mr. Prince previously served as a Director of SunTrust Banks, Inc., Crawford & Company, Equifax, Inc., John H. Harland Company and Genuine Parts Company. +5 +Amy Rollins Kreisler was appointed as a Director of RPC in 2016. She is a former attorney of the law firm Arnall Golden Gregory LLP. Ms. Kreisler is a Trustee on The Lovett School Board of Trustees and also serves on their Executive Committee. She is Trustee on the Skyland Trail Board of Trustees where she is also the Chairman of the Governance Committee. Additionally, she is Executive Director of The O. Wayne Rollins Foundation and The Ma-Ran Foundation. Ms. Kreisler brings extensive financial and investment experience to our Board of Directors. +Our Board of Directors recommends a vote “FOR” the nominees listed above. +PROPOSAL 2: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +The Audit Committee of the Board of Directors has appointed Grant Thornton LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2018. During fiscal year 2017, Grant Thornton LLP served as the Company’s independent registered public accounting firm. Representatives of Grant Thornton LLP are expected to attend the annual meeting, where they will be available to respond to appropriate questions and, if they desire, to make a statement. +Although the Company is not required to seek ratification of this appointment, the Audit Committee and the Board of Directors believe that it is appropriate to do so. If stockholders do not ratify the appointment of Grant Thornton LLP, the current appointment will stand, but the Audit Committee will consider the stockholder action in determining whether to retain Grant Thornton LLP as the Company’s independent registered public accounting firm for future fiscal years. +Our Board of Directors recommends a vote “FOR” the ratification of the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm for the 2018 fiscal year. +CORPORATE GOVERNANCE AND BOARD OF DIRECTORS COMMITTEES AND MEETINGS +Board Meetings +The Board of Directors met five times during the fiscal year ended December 31, 2017. No director attended fewer than 75 percent of the aggregate of all Board meetings and meetings of committees on which he or she served during 2017. Board members are encouraged to attend the Company’s Annual Stockholders Meetings and a majority of the Board members were in attendance at last year’s meeting. +The Board of Directors has an Audit Committee, a Compensation Committee, a Diversity Committee and a Nominating and Governance Committee. +Below is a summary of our committee structure and membership information. +Committee Member +Audit +Committee +Compensation +Committee +Diversity +Committee +Nominating & +Governance +Committee +Executive +Committee +R. Randall Rollins (1) +Member +Henry B. Tippie (2) +Chair +Chair +Chair +Chair +Larry L. Prince (2) +Member +Member +Member +Member +James B. Williams (2) +Member +Member +Member +Member +Bill J. Dismuke (2) +Member +Gary W. Rollins +Member +(1) +Chairman of the Board of Directors +(2) +Financial Expert +Audit Committee +The Audit Committee of the Board of Directors of the Company consists of Henry B. Tippie (Chairman), Bill J. Dismuke, James B. Williams and Larry L. Prince, all of whom are independent as discussed below. The Audit Committee held five meetings during the fiscal year ended December 31, 2017, +6 +including a meeting to review the Company’s Form 10-K for the year ended December 31, 2016. The Board of Directors has determined that all of the Audit Committee members are independent as that term is defined by the rules of the Securities and Exchange Commission (“SEC”) and the New York Stock Exchange (“NYSE”). The Board of Directors has also determined that all of the Audit Committee members are “Audit Committee Financial Experts” as defined in the SEC rules. The Audit Committee meets with the Company’s independent registered public accountants, internal auditor, Chief Executive Officer and Chief Financial Officer to review the scope and results of audits and recommendations made with respect to controls over financial reporting and specific accounting and financial reporting issues. The Audit Committee has the authority to obtain advice and assistance from, and receive appropriate funding from the Company for, outside legal, accounting or other advisors as it deems necessary to carry out its duties. The Audit Committee Charter is available on the Company’s website at www.rpc.net under the Governance section. +Compensation Committee +The Compensation Committee of the Board of Directors of the Company consists of Henry B. Tippie (Chairman), James B. Williams, and Larry L. Prince. It held four meetings during the fiscal year ended December 31, 2017. The function of the Compensation Committee is to set the base salary and performance-based incentive cash compensation of all of the executive officers. The Compensation Committee also administers the Company’s Stock Incentive Plans. The Compensation Committee does not have a formal charter, and is not required to have one under the “controlled company” exemption under the NYSE rules, as described in the section titled “Director Independence and NYSE Requirements” below. +Diversity Committee +The Diversity Committee of the Board of Directors of the Company consists of Henry B. Tippie (Chairman), James B. Williams, and Larry L. Prince. It held one meeting during the fiscal year ended December 31, 2017. The function of the Diversity Committee is to monitor compliance with applicable non-discrimination laws. +Nominating and Governance Committee +The Nominating and Governance Committee of the Board of Directors of the Company consists of Henry B. Tippie (Chairman), James B. Williams, and Larry L. Prince, each of whom is independent, as discussed more fully under “Director Independence and NYSE Requirements.” The Committee was formed in 2002 pursuant to a resolution passed by the Board of Directors for the following purposes: +• +to recommend to the Board of Directors nominees for director and to consider any nominations properly made by a stockholder; +• +upon request of the Board of Directors, to review and report to the Board with regard to matters of corporate governance; and +• +to make recommendations to the Board of Directors regarding the agenda for the annual stockholders’ meetings and with respect to appropriate action to be taken in response to any stockholder proposals. +The Nominating and Governance Committee held one meeting during the fiscal year ended December 31, 2017. We are not required by law or by NYSE rules to have a nominating committee since we are a controlled corporation as described below under the heading “Director Independence and NYSE Requirements.” We established the Nominating and Governance Committee to promote responsible corporate governance practices and we currently intend to maintain the Committee going forward. +Director Nominations +Under Delaware law, there are no statutory criteria or qualifications for directors. No criteria or qualifications have been prescribed by the Board at this time. The Nominating and Governance Committee does not have a charter or a formal policy with regard to the consideration of director candidates. As such, there is no formal policy relative to diversity, although as noted below, it is one of many factors that the +7 +Nominating and Governance Committee has the discretion to factor into its decision making. This discretion would extend to how the Committee might define diversity in a particular instance – whether in terms of background, viewpoint, experience, education, race, gender, national origin or other considerations. The Committee acts under the guidance of the Corporate Governance Guidelines approved by the Board of Directors and posted on the Company’s website at www.rpc.net under the Governance section. The Board believes that it should preserve maximum flexibility in order to select directors with sound judgment and other desirable qualities. According to the Company’s Corporate Governance Guidelines, the Board of Directors will be responsible for selecting nominees for election to the Board of Directors. The Board delegates the screening process to the Nominating and Governance Committee. This Committee is responsible for determining the appropriate skills and characteristics required of Board members in the context of the then current make-up of the Board. This determination takes into account all factors which the Committee considers appropriate, such as independence, experience, strength of character, mature judgment, technical skills, diversity, age and the extent to which the individual would fill a present need on the Board. The Company’s Bylaws provide that nominations for the election of directors may be made by any stockholder entitled to vote for the election of directors. Nominations must comply with an advance notice procedure which generally requires, with respect to nominations for directors for election at an annual meeting, that written notice be addressed to: The Corporate Secretary, RPC, Inc., 2801 Buford Highway NE, Suite 520, Atlanta, Georgia 30329, and received not less than 90 nor more than 130 days prior to the anniversary of the prior year’s annual meeting and set forth, among other requirements specified in the Company’s Bylaws, the name, age, business address and, if known, residence address of the nominee proposed in the notice, the principal occupation or employment of the nominee for the past five years, the class or series and number of shares of capital stock of the Company which are owned beneficially or of record by the person and any other information relating to the person that would be required to be disclosed in a proxy statement or other filings. Other requirements related to the notice are contained in the Company’s Bylaws, and stockholders are advised to carefully review these requirements to ensure that nominations comply with the Bylaws. The Committee will consider nominations from stockholders who satisfy these requirements. The Committee is responsible for screening the nominees that are selected by the Board of Directors for nomination to the Board and for service on committees of the Board. To date, the Company has not received a recommendation for a director nominee from a stockholder. All of the nominees for directors being voted upon at the Annual Meeting to be held on April 24, 2018 are directors standing for re-election. +Board Leadership +The Company has had separate persons serving as its Chairman of the Board and Chief Executive Officer since 2003. Mr. R. Randall Rollins is our Chairman and chairs our Board meetings. Mr. Richard A. Hubbell is our President and Chief Executive Officer. We believe that it represents the appropriate structure for us at this time; the Chairman of the Board provides general oversight and strategic planning for the Company, while the President and Chief Executive Officer focuses on optimizing operational efficiencies. +Risk Oversight by Board +Our Board’s oversight of risk has not been delegated to any Board Committee. “Risk” is an extremely broad concept that extends to multiple functional areas and crosses multiple disciplines. As such, risk may be addressed from time to time by the full Board or by one or more of our Committees. Senior management is responsible for identifying and managing material risks that we face while insurable risks and litigation risks are handled primarily by the risk management department. Senior management provides the Board with a summary of insurance coverage annually and updates as deemed necessary. Liquidity risk, credit risk and risks associated with our credit facilities and cash management are handled primarily by our finance department which regularly provides a financial report to both the Audit Committee and to the full Board. Operational, business, regulatory and political risks are handled primarily by senior executive management which regularly provides various operational reports to, among others, the full Board or to the Executive Committee. +8 +Director Independence and NYSE Requirements +Controlled Company Exemption +The Company has elected to be treated as a “controlled company” as defined by NYSE Section 303A.00. This Section provides that a controlled company need not comply with the requirements of Sections 303A.01, 303A.04 and 303A.05 of the NYSE Listed Company Manual. Section 303A.01 requires that listed companies have a majority of independent directors. As a controlled company, this Section does not apply to the Company. Sections 303A.04 and 303A.05 require that listed companies have a nominating and corporate governance committee and a compensation committee, in each case composed entirely of independent directors, and that each of these committees must have a charter that addresses both the committee’s purpose and responsibilities and the need for an annual performance evaluation by the committee. While the Company has a nominating and corporate governance committee and a compensation committee, it is not required to and does not comply with all of the provisions of Sections 303A.04 and 303A.05. The Company is a “controlled company” because a group that includes the Company’s Chairman, R. Randall Rollins and his brother, Gary W. Rollins, who is a Director of the Company and certain companies under their control, possesses in excess of fifty percent of the Company’s voting power. This means that they have the ability to determine the outcome of the election of directors at the Company’s annual meetings and to determine the outcome of many significant corporate transactions, many of which only require the approval of a majority of the Company’s voting power. Such a concentration of voting power could also have the effect of delaying or preventing a third party from acquiring the Company at a premium. +The Company’s Audit Committee is composed of four “independent” directors as defined by the Company’s Corporate Governance Guidelines, the NYSE rules, the Securities Exchange Act of 1934, SEC regulations thereunder, and the Company’s Audit Committee Charter. All of the members of the Compensation, Diversity and Nominating and Governance Committees are also independent directors. The independent directors of the Company are Henry B. Tippie, James B. Williams, Bill J. Dismuke, and Larry L. Prince. +Independence Guidelines +Under NYSE listing standards, to be considered independent, a director must be determined to have no material relationship with the Company other than as a director. The NYSE standards set forth a nonexclusive list of relationships which are conclusively deemed material. The Company’s Independence Guidelines (Appendix A to the Company’s Corporate Governance Guidelines) are posted on the Company’s website at www.rpc.net under the Governance section and include categorical standards for determining independence in specific situations. +Audit Committee Charter +Under the Company’s Audit Committee Charter, in accordance with NYSE listing requirements and the Securities Exchange Act of 1934, all members of the Audit Committee must be independent of management and the Company. A member of the Audit Committee is considered independent as long as he or she (i) does not accept any consulting, advisory, or compensatory fee from the Company, other than as a director or committee member; (ii) is not an affiliated person of the Company or its subsidiaries; and (iii) otherwise meets the independence requirements of the NYSE and the Company’s Corporate Governance Guidelines. +Nonmaterial Relationships +After reviewing all of the relationships between the members of the Audit Committee and the Company, the Board of Directors determined that none of the members of the Audit Committee had any relationships not included within the categorical standards set forth in the Independence Guidelines and discussed above except as follows: +1. +Mr. Tippie was employed by Rollins, Inc. from 1953 to 1970, and held several offices with that company during that time, including as Executive Vice President – Finance, Secretary, Treasurer +9 +and Chief Financial Officer. Mr. Dismuke was employed by Rollins from 1979 to 1984 and held various offices within that company including Senior Vice President. Messrs. Randall and Gary Rollins are directors and executive officers of Rollins, Inc. and are part of a group that has voting control of Rollins, Inc. +2. +Mr. Tippie is Chairman of the Board of Directors of Dover Motorsports, Inc. and Dover Downs Gaming & Entertainment, Inc. Mr. Randall Rollins is also a director of these companies. +3. +Mr. Tippie is a co-trustee of The O. Wayne Rollins Foundation and of the Rollins Children’s Trust. Mr. O. Wayne Rollins is the father of Messrs. Randall and Gary Rollins. The beneficiaries of the Rollins Children’s Trust include the immediate family members of Messrs. Randall and Gary Rollins. +4. +Each of Messrs. Dismuke, Prince, Tippie and Williams also serve on the Boards of Rollins, Inc. and Marine Products, of which Messrs. Gary and Randall Rollins are directors, and voting control over which is held by a control group of which Messrs. Randall and Gary Rollins are a part. Mr. Randall Rollins is an executive officer of Marine Products. +5. +Mr. Williams is the Chairman of the Board of the Woodruff Foundation, the Ichauway Foundation and the Woodruff Fund, Inc. Mr. R. Randall Rollins serves on the Woodruff Fund, Inc., board. +As required by the Independence Guidelines, the Board of Directors unanimously concluded that the above-listed relationships would not affect the independent judgment of the independent directors, based on their experience, character and independent means, and therefore do not preclude an independence determination. All of the members of the Audit Committee are also independent under the heightened standards required for Audit Committee members. +In accordance with the NYSE corporate governance listing standards, Mr. Henry B. Tippie was elected as the Presiding Director. The Company’s non-management directors meet at regularly scheduled executive sessions without management. Mr. Tippie presides during these executive sessions. +Corporate Governance Guidelines +We have adopted Corporate Governance Guidelines to formalize and promote better understanding of our policies and procedures. At least annually, the Board reviews these guidelines. As required by the rules of the NYSE, our Corporate Governance Guidelines require that our non-management directors meet in regularly scheduled executive sessions each year without management, and such meetings are currently required to occur at least twice annually. +At the Company’s website at www.rpc.net, under the Governance section, you may access a copy of its Corporate Governance Guidelines, Audit Committee Charter, Code of Business Conduct and Code of Business Conduct and Ethics for Directors and Executive Officers and Related Party Transactions Policy. +Code of Business Conduct +The Company has adopted a Code of Business Conduct applicable to all directors, officers and employees generally, as well as a Code of Business Conduct and Ethics for Directors and Executive Officers and Related Party Transactions Policy applicable to the principal executive officer, principal financial officer, and directors. Both codes are available on the Company’s website at www.rpc.net under the Governance section. +10 +Director Communications +The Company also has a process for interested parties, including stockholders, to send communications to the Board of Directors, Presiding Director, any of the Board Committees or the non-management directors as a group. Such communications should be addressed as follows: +Mr. Henry B. Tippie +c/o Internal Audit Department +RPC, Inc. +2801 Buford Highway NE, Suite 520 +Atlanta, Georgia 30329 +The above instructions for communications with the directors are also posted on our website at www.rpc.net under the Governance section. All communications received from interested parties are forwarded to the Board of Directors. Any communication addressed solely to the Presiding Director or the non-management directors will be forwarded directly to the appropriate addressee(s). +COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION +None of the directors named above who serve on the Company’s Compensation Committee are or have ever been an employee of the Company. There are no Compensation Committee interlocks requiring disclosure. +11 +DIRECTOR COMPENSATION +The following table sets forth compensation to the Company’s directors for services rendered as a director for the year ended December 31, 2017. Two of the directors, Messrs. R. Randall Rollins, and Richard A. Hubbell are employees of the Company. Ms. Linda H. Graham was an employee of the Company and served as a director until her retirement, effective June 30, 2017. Their compensation is set forth in the Summary Compensation Table under Executive Compensation. The directors listed below have never been employed by the Company or paid a salary or bonus by the Company, have never been granted any options or other stock-based awards, and do not participate in any Company sponsored retirement plans. +Name +Fees Earned or +Paid in Cash +($) +Stock +Awards (1) +($) +Option +Awards (1) +($) +Total +($) +Henry B. Tippie +128,000 +–– +–– +128,000 +James B. Williams +76,000 +–– +–– +76,000 +Bill J. Dismuke +65,000 +–– +–– +65,000 +Gary W. Rollins +52,500 +–– +–– +52,500 +Larry L. Prince +76,000 +–– +–– +76,000 +Amy Rollins Kreisler +52,500 +–– +–– +52,500 +(1) +Directors are eligible for grants of stock awards under the Company’s Stock Incentive Plan (“SIP”). No stock awards have been granted to the non-management directors under the SIP. +Directors that are our employees do not receive additional compensation for services rendered as a director. +Under compensation arrangements effective since January 1, 2015, non-management directors each received an annual retainer fee of  $40,000. This retainer fee was increased to $50,000 effective January 1, 2018. In addition, the Chairman of the Audit Committee receives an annual retainer of  $20,000, the Chairman of the Compensation Committee receives an annual retainer of  $10,000, and the Chairman of each of the Nominating and Governance Committee and Diversity Committee receives an annual retainer of  $6,000. A director that chairs more than one committee receives a retainer with respect to each committee he chairs. All of the retainers are paid on a quarterly basis. Per meeting fees for non-management directors are as follows: +• +For meetings of the Board of Directors, $2,500. +• +For meetings of the Compensation Committee, $2,000. +• +For meetings of the Diversity Committee, $1,500. +• +For meetings of the Nominating and Governance Committee, $1,500. +• +For meetings of the Audit Committee either in person or over the telephone, $2,500. +• +In addition, the Chairman of the Audit Committee receives an additional $2,500 for preparing to conduct each quarterly Board and Board Committee meeting. +All non-management directors are also entitled to reimbursement of expenses for all services as a director, including committee participation or special assignments. +Notwithstanding anything to the contrary set forth in any of the Company’s previous filings under the Securities Act of 1933 or the Securities Exchange Act of 1934 that might incorporate future filings, including the Proxy Statement, in whole or in part, the Report of the Audit Committee shall not be incorporated by reference into any such filings. +12 +REPORT OF THE AUDIT COMMITTEE +Management is responsible for the Company’s internal controls, assessing the effectiveness of these controls and the financial reporting process. The Company’s independent registered public accounting firm is responsible for performing independent audits of the Company’s consolidated financial statements and the effectiveness of the Company’s internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States) and for issuing reports thereon. The Audit Committee’s responsibility is generally to monitor and oversee these processes, as described in the Audit Committee Charter. It is not the duty of the Audit Committee to plan or conduct audits or to determine that the Company’s financial statements are complete and accurate and in accordance with generally accepted accounting principles; that is the responsibility of management. +In fulfilling its oversight responsibilities with respect to the year ended December 31, 2017, the Audit Committee: +• +Approved the terms of engagement of Grant Thornton LLP as the Company’s independent registered public accounting firm for the year ended December 31, 2017; +• +Reviewed with management the interim financial information included in the Forms 10-Q prior to their being filed with the SEC. In addition, the Committee reviewed all earnings releases with management and the Company’s independent registered public accounting firm prior to their release; +• +Reviewed and discussed with the Company’s management and the independent registered public accounting firm the audited consolidated financial statements of the Company as of December 31, 2017 and 2016 and for the three years ended December 31, 2017; +• +Reviewed and discussed with the Company’s management and the independent registered public accounting firm, management’s assessment that the Company maintained effective control over financial reporting as of December 31, 2017; +• +Discussed with the independent registered public accounting firm matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board; and +• +Received from the independent registered public accounting firm the written disclosures and the letter in accordance with the requirements of the Public Company Accounting Oversight Board regarding the firm’s communications with the Committee concerning independence, and discussed with such firm its independence from the Company. +Based upon the review and discussions referred to above, the Committee recommended to the Board of Directors that the audited consolidated financial statements of the Company and subsidiaries as of December 31, 2017 and 2016 and for the three years ended December 31, 2017 be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 and for filing with the Securities and Exchange Commission. +In giving its recommendation to the Board of Directors, the Audit Committee has relied on (i) management’s representation that such financial statements have been prepared with integrity and objectivity and in conformity with accounting principles generally accepted in the United States of America and (ii) the report of the Company’s independent registered public accounting firm with respect to such financial statements. +Submitted by the Audit Committee of the Board of Directors. +Henry B. Tippie, Chairman +James B. Williams +Bill J. Dismuke +Larry L. Prince +13 +COMPENSATION DISCUSSION AND ANALYSIS +Compensation Committee +During the fiscal year ended December 31, 2017, the members of our Compensation Committee held primary responsibility for determining executive compensation levels. The Committee is composed of three of our non-management directors who do not participate in the Company’s compensation plans. The Committee determines the compensation and administers the performance-based incentive cash compensation plan for our executive officers. In addition, the Committee also administers our Stock Incentive Plans for all the employees. +The members of our Compensation Committee have extensive and varied experience with various public and private corporations – as investors and stockholders, as senior executives, and as directors charged with the oversight of management and the setting of executive compensation levels. Henry B. Tippie, the Chairman of the Compensation Committee, has served on the board of directors of twelve different publicly traded companies and has been involved in setting executive compensation levels at all of these companies. Messrs. James B. Williams and Larry L. Prince have served on the board of directors of several different publicly traded companies and have similarly been involved in setting executive compensation levels at many of these companies. +The Compensation Committee has authority to engage attorneys, accountants and consultants, including executive compensation consultants, to solicit input from management concerning compensation matters, and to delegate any of its responsibilities to one or more directors or members of management where it deems such delegation appropriate and permitted under applicable law. The Committee has not used the services of any compensation consultants in determining or recommending the amount or form of executive compensation. +The Compensation Committee believes that determinations relative to executive compensation levels are best left to the discretion of the Committee. In addition to the extensive experience and expertise of the Committee’s members and their familiarity with the Company’s performance and the performance of our executive officers, the Committee is able to draw on the experience of other Directors and on various legal and accounting executives employed by the Company, and the Committee has access to readily available public information relative to structuring executive compensation programs and setting appropriate compensation levels. The Committee also believes that the structure of our executive compensation programs should not become overly complicated or difficult to understand. The Committee solicits input from our Chairman with respect to the performance of our executive officers and their compensation levels. +The Role of Shareholder Say-on-Pay Votes +The Company provides its stockholders with the opportunity to cast an advisory vote on executive compensation (a “say-on-pay proposal”) once every three years. At the Company’s Annual Meeting of Stockholders held in April 2017, a substantial majority of the votes cast on the say-on-pay proposal at that meeting were voted in favor of the proposal. The Compensation Committee believes this affirms shareholders’ support of the Company’s approach to executive compensation. The stockholders voted to hold a say-on-pay advisory vote on executive compensation every three years, and the Board resolved to accept the stockholders’ recommendation. As a result, the advisory vote on executive compensation will be held again at the 2020 Annual Meeting of Stockholders. The Compensation Committee will continue to consider the outcome of the Company’s say-on-pay votes when making future compensation decisions for its executive officers. +General Compensation Objectives and Guidelines +The Company is engaged in a highly competitive industry. The success of the Company depends on its ability to attract and retain highly qualified and motivated executives. In order to accomplish this objective, the Company structures the executive compensation in a fashion that takes into account the Company’s overall performance and the individual performance of the executive. +The Compensation Committee endorses the philosophy that executive compensation should reflect Company performance and the contribution of executive officers to that performance. The Company’s compensation policy is designed to achieve three fundamental objectives: (i) attract and retain qualified +14 +executives, (ii) motivate performance to achieve Company objectives, and (iii) align the interests of our executives with the long-term interests of the Company’s stockholders. The Committee recognizes that there are many intangibles involved in evaluating performance and in motivating performance, and that determining an appropriate compensation level is a highly subjective endeavor. The analysis of the Committee is not based upon a structured formula and the objectives referred to above are not weighted in any formal manner. During the year, none of the executive officers made recommendations or otherwise contributed input on their own compensation. However, the Compensation Committee may from time to time solicit input from the Chairman when reviewing executive compensation. +The Company’s executive officers are also executive officers of Marine Products and receive compensation directly from Marine Products. The members of the Company’s Compensation Committee also constitute the Compensation Committee of Marine Products. In determining the compensation for the executive officers at the Company, the Committee considers these dual responsibilities and sources of compensation. The Company sets compensation of its executives at such levels so that the aggregate compensation received from both Marine Products and the Company is reasonable in light of their respective responsibilities and the performance of both companies, and so that the compensation from the Company for services solely to the Company is reasonable. A discussion of the Company’s executive officers’ compensation at Marine Products is contained in its annual Proxy Statement filed with the SEC. +Pursuant to the Company’s compensation philosophy, the total annual compensation of its executive officers is primarily comprised of base salary, performance-based incentive cash compensation and stock-based incentive compensation. In addition, the Company provides retirement compensation plans, group welfare benefits and certain perquisites. +We believe a competitive base salary is important to attract, retain and motivate top executives. We believe a performance-based incentive cash compensation plan is valuable in recognizing and rewarding individual achievement. Finally, we believe stock-based incentives make executives “think like owners” and, therefore, align their interests with those of our stockholders. +The Company does not have any formal stock ownership requirements for its executive officers, but notes that its current directors and executive officers are stockholders of the Company, as is disclosed elsewhere in this Proxy Statement. The Company is mindful of the stock ownership of our directors and executive officers but does not believe that it is appropriate to provide a mechanism or formula to take stock ownership (or gains from prior option or stock awards) into account when setting compensation levels. The Company provides in its insider trading policies that directors and executive officers may not sell Company securities short and may not sell puts, calls or other derivative securities tied to our Common Stock. +As a result of the Tax Cuts and Jobs Act, starting with compensation payable in 2018, Section 162(m) of the Internal Revenue Code will limit the Company from deducting compensation, including performance-based compensation, in excess of  $1,000,000 paid to our executive officers. The only exception to this rule is for compensation (including performance-based compensation) that is paid pursuant to a binding contract in effect on November 2, 2017, that would otherwise have been deductible under the prior Section 162(m) rules. Going forward, the Compensation Committee will, as before, retain full discretion to award compensation packages that best attract, retain and reward successful executive officers. Therefore, the Compensation Committee anticipates that it may award compensation that is not fully deductible under Section 162(m). +Our executive bonus agreements contain a provision that provides that, among other things, if any bonus amount is paid as a result of misrepresented or inaccurate performance, the Company may require repayment of some or all of the excess bonus paid, subject to applicable laws. This recoupment policy reflects the Company’s high ethical standards and strict compliance with accounting and other regulations applicable to public companies. As all incentives and awards remain within the discretion of the Compensation Committee, the Committee also retains the ability to take any restatements or adjustments into account in subsequent years. In addition, the Sarbanes-Oxley Act requires in the case of accounting restatements that result from material non-compliance with SEC financial reporting requirements, that the Chief Executive Officer and Chief Financial Officer must disgorge bonuses and other incentive-based compensation and profits on stock sales received during the 12 months following publication of the misstated financials, if the non-compliance results from misconduct. +15 +Base Salary +The salary of each executive officer is determined by the Compensation Committee. In making its determinations, the Committee gives consideration to the recent financial performance of the Company, the magnitude of responsibilities, the scope of the position, individual performance and compensation paid by Marine Products. The Committee solicits input from our Chairman with respect to the performance of our executive officers and their compensation levels. There was no change to the base salaries of the Company’s executive officers in 2017. Ms. Linda H. Graham retired from the Company and the Board effective June 2017 and Mr. Ben M. Palmer assumed responsibility as Corporate Secretary in July 2017. His annual base salary was consequently increased to $400,000 ($25,000 increase from 2016) effective August 1, 2017. In January 2018, the base salaries of our executive officers were increased to the following amounts: Mr. Richard A. Hubbell: $950,000 ($50,000 increase from 2017); Mr. Ben M. Palmer: $450,000 ($50,000 increase from 2017); and Mr. R. Randall Rollins: $850,000 ($50,000 increase from 2017). +Performance-Based Incentive Cash Compensation +The Company implemented the Performance-Based Incentive Cash Compensation Plan (the “Management Incentive Plan”) for the executive officers in 2006. Under the Management Incentive Plan, the Compensation Committee establishes performance goals annually within ninety days after the commencement of the performance period to which such goals relate. Performance goals for each participant may be based on corporate, business unit/function or individual performance, or a combination of one or more such measures. +In connection with the annual establishment of performance goals, the Compensation Committee sets a target award for each participant in the Management Incentive Plan for the applicable year, which is expressed as a percentage of the participant’s base compensation (the “Target Award”) in effect on the last day of the final pay period of that year. If the participant’s performance goals are based upon a combination of performance measures, the Compensation Committee will weigh the importance of each performance measure by assigning a percentage (the “Weighted Percentage”) to those performance measures. The participant’s cash award amount will also depend in part upon the level of achievement that the participant attained with respect to each such performance measure utilizing the formula set out in the Management Incentive Plan. This formula provides for a performance value (“Performance Value”) which ranges from: +• +threshold performance level (with a Performance Value of 25 percent of the Target Award), +• +target performance level (with a Performance Value up to 100 percent of the Target Award), to +• +superior performance level (with a Performance Value up to 200 percent of the Target Award). +Subject to the limitations set forth below, a participant’s cash award amount for each year under the Management Incentive Plan equals the product of the Target Award multiplied by the Weighted Percentage assigned to each performance measure used for a participant, multiplied by the Performance Value attained for each performance measure, multiplied by base compensation . The Committee will determine the maximum cash award as a percentage of participants’ base compensation for each applicable year. +16 +For 2017, the Compensation Committee established the target incentive award under the Management Incentive Plan for the Chief Executive Officer and for the other members of executive management at the amounts shown in the table below. The target awards that could be earned under the Management Incentive Plan for 2017 were the same as for the prior year. +Executive Officer +Target Award as a percentage +of base salary +Richard A. Hubbell +President and Chief Executive Officer +100 % +Ben M. Palmer +Vice President, Chief Financial Officer and Corporate Secretary +100 % +R. Randall Rollins +Chairman of the Board +100 % +The maximum bonus award for each participant under the Plan for 2017 and prior years was established at 150 percent of such participant’s base salary. The performance criteria applicable to the participants under the Management Incentive Plan for 2017 were determined based solely on corporate performance. The Compensation Committee established corporate performance goals for 2017 under the Management Incentive Plan based on cash flow return on invested capital. Return on invested capital (“ROIC”) is a widely used financial performance measure that typically correlates with long-term change in stockholder value. The Company has used ROIC as the sole performance goal under the Management Incentive Plan for several years. ROIC is computed as the ratio of earnings before interest, taxes, depreciation and amortization (EBITDA) to invested capital. Invested capital is generally equal to the aggregate of stockholders’ equity, accumulated depreciation and long-term liabilities. For 2017, the target performance goal established by the Company is in excess of the comparable historical average ROIC of our peers, is in excess of the Company’s weighted average cost of capital, and is an amount which the Company believes represents outstanding financial performance. Under the Management Incentive Plan for 2017, the Company was required to achieve at least 80 percent of the target performance goal for executive officers to be eligible for any bonus award. Bonus awards under the Management Incentive Plan are determined on a sliding scale between the threshold performance level and superior performance level, which corresponds to 175 percent of the target performance goal. To be eligible for the bonus award under the Management Incentive Plan for 2017, the ROIC was required to be in excess of 16 percent up to a maximum of 35 percent. The Company has consistently followed the same method to compute ROIC, and the Compensation Committee has not exercised discretion to waive the performance goals based on difficult industry conditions or other factors. +The Company operates in a cyclical business where financial performance is influenced by, among other things, changes in oil and natural gas prices. The Company generated ROIC that resulted in 36 percent of the target award in 2017. The Company’s computation of ROIC for 2016 and 2015 resulted in the threshold for bonus payments not being achieved. The operating environment improved significantly in 2017 after the significant drop in performance in 2016 and 2015 that was caused by the continued decline of oil prices and the associated impact on customer activity levels. Performance-based cash compensation earned under the Management Incentive Plan for 2017 was as follows: Mr. Richard A. Hubbell: $324,000; Mr. Ben M. Palmer: $144,000; and Mr. R. Randall Rollins: $288,000. Current trends and expectations for the oilfield industry indicate an operating environment in 2018 that shows continued improvement over the last year. +For 2018, the target awards, performance goal and maximum awards have been modified as follows: the Company is required to achieve at least 70 percent of the target performance goal for executive officers to be eligible for any bonus award. Bonus awards under the Management Incentive Plan are determined on a sliding scale between the threshold performance level and superior performance level, which corresponds to 175 percent of the target performance goal. To be eligible for the bonus award under the Management Incentive Plan for 2018, the ROIC is required to be in excess of 12.6 percent up to a maximum of 31.5 percent. +17 +Stock-Based Incentive Plans +Our Stock Incentive Plan allows for a wide variety of stock based awards such as stock options and restricted stock. We last issued stock options in fiscal year 2003 and have no current plans to issue additional stock options. We have never issued any stock appreciation rights. Partially in response to changes relative to the manner in which stock options are accounted for under generally accepted accounting principles, we have modified the structure and composition of the long-term equity-based component of our executive compensation. In recent years, we have awarded time-based restricted stock in lieu of granting stock options. The terms and conditions of these awards are described in more detail below. +Awards under the Company’s Stock Incentive Plan are purely discretionary, are not based upon any specific formula and may or may not be granted in any given fiscal year. For the past three years, we have granted time-based restricted stock to various employees, including our executive officers, in early January during our regularly scheduled meeting of the Compensation Committee during which the Committee reviews executive compensation. Consistent with this practice, we granted restricted stock awards to our executive officers in January 2018, 2017 and 2016 as follows: +Name +2018 +2017 +2016 +Richard A. Hubbell +45,000 +45,000 +75,000 +Ben M. Palmer +30,000 +27,000 +45,000 +R. Randall Rollins +45,000 +45,000 +75,000 +Linda H. Graham +— +15,000 +25,000 +The amount of the aggregate stock based awards to our executive officers in any given year is influenced by the Company’s overall performance. The amount of each grant to our executive officers is influenced in part by the Committee’s subjective assessment of each individual’s respective contributions to achievement of the Company’s long-term goals and objectives. In evaluating individual performance for these purposes, the Committee considers the overall contributions of executive management as a group and the Committee’s subjective assessment of each individual’s relative contribution to that performance rather than specific aspects of each individual’s performance over a short-term period. We expect to continue annual grants of restricted stock awards although we reserve the right to modify or discontinue this or any of our other compensation practices at any time. +All of our restricted stock awards granted since 2004 have had the same features. The shares vest one-fifth per year beginning on the second anniversary of the grant date. Restricted shares have full voting and dividend rights. However, until the shares vest, they cannot be sold, transferred or pledged. Should the executive leave our employment for any reason prior to the vesting dates (other than due to disability or retirement on or after age 65), the unvested shares will be forfeited. In the event of death, or “change in control” as determined by the Board of Directors, all unvested restricted shares shall vest immediately. +Grants are made under our Stock Incentive Plan and the plan is administered pursuant to Rule 16b-3 of the Securities Exchange Act of 1934. +Employment Agreements +There are no agreements or understandings between the Company and any executive officer which guarantee continued employment or guarantee any level of severance or compensation, including incentive or bonus payments, to the executive officer. +Retirement Plans +The Company maintains a defined benefit pension plan (“Retirement Income Plan”) for all our eligible employees, a non-qualified supplemental retirement plan for our executives and certain other highly compensated employees and a 401(k) Plan for the benefit of all of our eligible employees. In 2002, the Company’s Board of Directors approved a resolution to cease all future benefit accruals under the Retirement Income Plan effective March 31, 2002. During 2002, the Company began permitting selected highly compensated employees to defer a portion of their compensation into the Company’s nonqualified Supplemental Retirement Plan (“SRP”). The SRP is described in more detail under the caption “Nonqualified Deferred Compensation” on page 25 . +18 +Other Compensation +Other compensation to our executives includes typical employee benefits such as group medical, dental and vision coverage and group life insurance. The Company provides an automobile (or an automobile allowance) to Messrs. Richard A. Hubbell and Ben M. Palmer. +The following Compensation Committee Report shall not be incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933, as amended (the “Securities Act”), except to the extent that the Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under the Securities Act or the Exchange Act. +COMPENSATION COMMITTEE REPORT +We have reviewed and discussed the above “Compensation Discussion and Analysis” with management. +Based upon this review and discussion, we have recommended to the Board of Directors that the “Compensation Discussion and Analysis” be included in this Proxy Statement. +Submitted by the Compensation Committee of the Board of Directors. +Henry B. Tippie, Chairman +James B. Williams +Larry L. Prince +SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE +The Company has completed a review of Forms 3, 4, and 5 and amendments thereto furnished to the Company by all directors, officers and greater than 10 percent stockholders subject to the provisions of Section 16 of the Securities Exchange Act of 1934, as amended. In addition, the Company has a written representation from all directors, officers and greater than 10 percent stockholders from whom no Form 5 was received indicating that no Form 5 filing was required. Based solely on this review, the Company believes that filing requirements of such persons under Section 16 for the fiscal year ended December 31, 2017 have been satisfied except the following: On January 24, 2018 and February 16, 2018, Messrs. R. Randall Rollins, Gary W. Rollins and Ms. Amy Rollins Kreisler filed Forms 4 after their respective due dates with respect to sales on December 31, 2017 by Messrs. R. Randall Rollins and Gary W. Rollins and the purchase on December 31, 2017 by Ms. Amy Rollins Kreisler of an indirect interest in a partnership which owned a portfolio of assets including shares of RPC, Inc. common stock. +19 +EXECUTIVE COMPENSATION +Shown below is information concerning the annual and long-term compensation for services in all capacities to the Company for the calendar years ended December 31, 2017, 2016 and 2015 of those persons who were at December 31, 2017: +• +our Principal Executive Officer and Principal Financial Officer; and +• +our two other executive officers. +Pursuant to SEC rules, Ms. Graham who was not serving as an executive officer at December 31, 2017 is also included in the table. +SUMMARY COMPENSATION TABLE +Name and Principal Position +Year +Salary +($) +Stock +Awards +($) (1) +Non-Equity +Incentive +Plan +Compensation +($) (2) +Change in +Pension +Value and +Nonqualified +Deferred +Compensation +Earnings +($) (3) +All Other +Compensation +($) (4) +Total +($) +Richard A. Hubbell +President and Chief Executive Officer +2017 +900,000 +974,700 +324,000 +–– +13,260 +2,211,960 +2016 +900,000 +807,750 +–– +–– +13,180 +1,720,930 +2015 +900,000 +922,500 +–– +–– +13,640 +1,836,140 +Ben M. Palmer (5) +Vice President, Chief Financial Officer +and Corporate Secretary +2017 +385,420 +584,820 +144,000 +10,078 +19,600 +1,143,918 +2016 +375,000 +484,650 +–– +6,081 +19,700 +885,431 +2015 +375,000 +553,500 +–– +–– +19,660 +948,160 +R. Randall Rollins +Chairman of the Board +2017 +800,000 +974,700 +288,000 +–– +–– +2,062,700 +2016 +800,000 +807,750 +–– +–– +–– +1,607,750 +2015 +800,000 +922,500 +–– +–– +–– +1,722,500 +Linda H. Graham (5) +Vice President and Secretary +2017 +125,000 +324,900 +–– +22,700 +2,810 +475,410 +2016 +250,000 +269,250 +–– +–– +5,625 +524,875 +2015 +250,000 +307,500 +–– +–– +7,860 +565,360 +(1) +Represents the fair value of the award at the date of grant computed in accordance with ASC Topic 718. Please refer to Note 10 to our Financial Statements contained in our Form 10-K for the period ended December 31, 2017 for a discussion of assumptions used in this computation. For this computation, we do not include an assumption for estimated forfeitures. +(2) +Bonuses under the Management Incentive Plan are accrued in the fiscal year earned and paid in the following fiscal year. +(3) +The actuarial present value of the executive officers’ accumulated benefit, with the exception of Ben M. Palmer, under the defined benefit plan decreased during 2017 as follows: Messrs. Richard A. Hubbell $(4,056), and R. Randall Rollins $(83,521). Change represents impact of the change in discount rate only as no additional benefits are being accrued. +(4) +All other compensation for 2017 includes the following items for: +Mr. Richard A. Hubbell: +Insurance on automobile provided by the Company, cost of dining club dues, cost of gasoline for personal automobile, and 401(k) Plan Company match of  $7,875 in the aggregate. +Mr. Ben M. Palmer: +Automobile allowance, cost of gasoline for personal automobile and 401(k) Plan Company match of  $7,875 in the aggregate. +Ms. Linda H. Graham: +401(k) Plan Company match of  $2,810. +(5) +Ms. Linda H. Graham retired as the Vice President and Secretary effective June 30, 2017. Mr. Ben M. Palmer assumed responsibility as Corporate Secretary in July 2017. +20 +Pay Ratio Disclosure +Pursuant to a mandate of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd – Frank Act”), the Securities and Exchange Commission (“SEC”) adopted a rule requiring annual disclosure of the ratio of the median employee’s annual total compensation to the total annual compensation of the principal executive officer (“PEO”). The Company’s PEO is Mr. Richard A. Hubbell. The purpose of the new required disclosure is to provide a measure of the equitability of pay within the organization. The Company believes its compensation philosophy and process yield an equitable result. +Median Employee total annual compensation +$ +70,905 +Mr. Richard A. Hubbell (PEO) total annual compensation +$ +2,204,085 +Ratio of PEO to Median Employee Compensation +31.1:1 +In determining the median employee, a listing was prepared of all employees as of December 31, 2017. Employees from our foreign subsidiaries in North America and Asia, both of which combined were less than 5 percent of our total employees, were excluded and employees on leave of absence were excluded from the list and wages and salaries were annualized for those employees that were not employed for the full year of 2017 (other than seasonal or temporary employees). The median amount was selected from the annualized list. For simplicity, the value of the Company’s 401(k) Plan and medical benefits provided was excluded as all employees including the PEO are offered the exact same benefits and the Company utilizes the Internal Revenue Service guidelines for 401(k) discrimination testing. As of December 31, 2017 the Company employed approximately 3,500 persons of which 73 were employed in Canada, Mexico and China. +GRANTS OF PLAN-BASED AWARDS +Name +Grant Date +Estimated Future Payouts +Under Non-Equity +Incentive Plan Awards (1) +All Other +Stock +Awards: +Number of +Shares +of Stock +or Units +(#) +Grant Date +Fair Value +of Stock +and Option +Awards +($) (2) +Threshold +($) +Target +($) +Maximum +($) +Richard A. Hubbell +1/24/2017 +225,000 +900,000 +1,350,000 +1/24/2017 +45,000 +974,700 +Ben M. Palmer +1/24/2017 +100,000 +400,000 +600,000 +1/24/2017 +27,000 +584,820 +R. Randall Rollins +1/24/2017 +200,000 +800,000 +1,200,000 +1/24/2017 +45,000 +974,700 +Linda H. Graham +1/24/2017 +25,000 +100,000 +200,000 +1/24/2017 +15,000 +324,900 +(1) +These amounts illustrate the potential bonus awards under the Management Incentive Plan for 2017. See Summary Compensation Table on page 20 for actual amounts awarded in 2017. +(2) +These amounts represent aggregate grant date fair value for grants of restricted shares of Common Stock awarded in fiscal year 2017 under the Stock Incentive Plan computed in accordance with ASC Topic 718. Please refer to Note 10 to our Financial Statements contained in our Form 10-K for the period ended December 31, 2017 for a discussion of assumptions used in this computation. For this computation, we do not include an assumption for estimated forfeitures. Our Form 10-K has been included in our Annual Report and provided to our stockholders. +The table above reflects grants of restricted shares of Company Common Stock under the Stock Incentive Plan awarded in fiscal year 2017. All grants of restricted shares of Common Stock vest one-fifth per year beginning on the second anniversary of the grant date. Restricted shares have full voting and dividend rights. However, until the shares vest, they cannot be sold, transferred or pledged. Should the executive leave our employment for any reason prior to the vesting dates (other than due to death, disability, change in control or retirement on or after age 65), the unvested shares will be forfeited. We have not issued any stock options since 2003 and have no immediate plans to issue additional stock options. +21 +There are no agreements or understandings between the Company and any executive officer which guarantee continued employment or guarantee any level of severance or compensation, including incentive or bonus payments, to the executive officer. The existing compensation and benefits received by the Company’s Chief Executive Officer and the other executive officers are based on oral, at will arrangements. All of the executive officers are eligible for annual cash bonuses which are awarded under the Management Incentive Plan. The Compensation Committee’s decisions are based upon broad performance objectives under that plan. The executive officers are eligible to receive shares of Company Common Stock subject to options and restricted shares of Company Common Stock under the Company’s Stock Incentive Plans, in such amounts and with such terms and conditions as determined by the Compensation Committee at the time of grant. All of the executive officers are eligible to participate in the Company’s SRP. The executive officers are eligible to participate in the Company’s regular employee benefit programs, including the 401(k) Plan with Company match, group life insurance, group medical and dental coverage, vision and other group benefit plans. All of the executive officers are eligible for the Retirement Income Plan although benefit accruals were frozen in 2002. For more information on these plans, see “Compensation Discussion and Analysis” on page 14 , and “Benefit Plans” on page 24 . +22 +OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END +The Company does not have any outstanding option awards made in prior years to the executives named in our Summary Compensation Table. The table below sets forth the total number of restricted shares of Common Stock outstanding at December 31, 2017 that were granted in prior years to the executives, with the exception of Ms. Linda H. Graham named in our Summary Compensation Table, but have not yet vested, together with the market value of these unvested shares based on the $25.53 closing price of our Common Stock on December 29, 2017. +Option Awards +Stock Awards +Name +Number of +Securities +Underlying +Unexercised +Options +(#) +Exercisable +Number of +Securities +Underlying +Unexercised +Options +(#) +Un-exercisable +Option +Exercise +Price +($) +Option +Expiration +Date +Number of +Shares or +Units of Stock +That Have Not +Vested +(#) +Market Value +of Shares or +Units of Stock +That Have +Not Vested +($) +Richard A. Hubbell +— +— +— +— +258,750 (1) +6,605,890 +Ben M. Palmer +— +— +— +— +155,250 (1) +3,963,530 +R. Randall Rollins +— +— +— +— +258,750 (1) +6,605,890 +Linda H. Graham +— +— +— +— +— (2) +— (2) +(1) +The Company has granted employees time lapse restricted shares that vest one-fifth per year beginning on the second anniversary of the grant date. Shares of restricted stock granted to the executive officers that have not vested as of December 31, 2017 are summarized in the table that follows: +Name +Number of shares +Grant date +Date fully vested +Richard A. Hubbell +15,000 +1/24/2012 +1/24/2018 +30,000 +1/22/2013 +1/22/2019 +33,750 +1/28/2014 +1/28/2020 +60,000 +1/27/2015 +1/27/2021 +75,000 +1/26/2016 +1/26/2022 +45,000 +1/24/2017 +1/24/2023 +Ben M. Palmer +9,000 +1/24/2012 +1/24/2018 +18,000 +1/22/2013 +1/22/2019 +20,250 +1/28/2014 +1/28/2020 +36,000 +1/27/2015 +1/27/2021 +45,000 +1/26/2016 +1/26/2022 +27,000 +1/24/2017 +1/24/2023 +R. Randall Rollins +15,000 +1/24/2012 +1/24/2018 +30,000 +1/22/2013 +1/22/2019 +33,750 +1/28/2014 +1/28/2020 +60,000 +1/27/2015 +1/27/2021 +75,000 +1/26/2016 +1/26/2022 +45,000 +1/24/2017 +1/24/2023 +(2) +Ms. Linda H. Graham retired as the Vice President and Secretary effective June 30, 2017. +23 +OPTION EXERCISES AND STOCK VESTED +The following table sets forth: +• +the number of shares of Common Stock acquired by the executives named in the Summary Compensation Table upon the exercise of stock options during the fiscal year ended December 31, 2017; +• +the aggregate dollar amount realized on the exercise date for such options computed by multiplying the number of shares acquired by the difference between the market value of the shares on the exercise date and the exercise price of the options; +• +the number of restricted shares of Common Stock acquired by the executives named in the Summary Compensation Table upon the vesting of shares during the fiscal year ended December 31, 2017; and +• +the aggregate dollar amount realized on the vesting date for such restricted stock computed by multiplying the number of shares which vested by the market value of the shares on the vesting date. +Option Awards +Stock Awards +Name +Number of Shares +Acquired on Exercise +(#) +Value Realized on +Exercise +($) +Number of Shares +Acquired on Vesting +(#) +Value Realized on +Vesting +($) +Richard A. Hubbell +— +— +71,250 +1,560,710 +Ben M. Palmer +— +— +42,750 +936,430 +R. Randall Rollins +— +— +71,250 +1,560,710 +Linda H. Graham +— +— +108,500 (1) +2,231,210 +(1) +Pursuant to the action by the Compensation Committee, all of the outstanding unvested restricted stock awarded to Ms. Linda H. Graham, vested immediately upon her retirement in June 2017. +BENEFIT PLANS +The table below shows the present value of accumulated benefits payable to each of the named executive officers, including the number of years of service credited to each such named executive officer, under the Retirement Income Plan determined using interest rate and mortality rate assumptions consistent with those used in the Company’s financial statements. Information regarding the Retirement Income Plan can be found in Note 10 to our Financial Statements contained in our Form 10-K for the period ended December 31, 2017. +Pension Benefits +Name +Plan Name +Number of +Years Credited +Service +(#) +Present +Value of +Accumulated +Benefit +($) +Payments During +Last Fiscal Year +($) +Richard A. Hubbell +Retirement Income Plan +15 +439,419 +42,314 +Ben M. Palmer +Retirement Income Plan +4 +93,527 +— +R. Randall Rollins +Retirement Income Plan +30 +2,046,918 +261,571 +Linda H. Graham +Retirement Income Plan +15 +384,719 +48,705 +The Company’s Retirement Income Plan, a trusteed defined benefit pension plan, provides monthly benefits upon retirement at age 65 to eligible employees. In 2002, the Company’s Board of Directors approved a resolution to cease all future benefit accruals under the Retirement Income Plan effective March 31, 2002. Retirement Income Plan benefits are based on the average of the employee’s compensation from the Company for the five consecutive complete calendar years of highest compensation during the last ten consecutive complete calendar years (“final average compensation”) immediately preceding March 31, +24 +2002. The benefits are computed as the product of 1.5 percent of final average compensation multiplied by years of credited service (up to 30 years) reduced by an adjustment for benefits drawn from social security. Adjustments have been made for age and the IRS mandated compensation limitations. The final average compensation for Mr. Hubbell is $205,890, Mr. Palmer is $179,900 and Ms. Graham is $127,325. +The annual benefit payable at the later of retirement or age 65 for the named executive officers is $261,600 for Mr. Rollins, $42,400 for Mr. Hubbell, $48,800 for Ms. Graham and $9,400 for Mr. Palmer. The Plan also provides reduced early retirement benefits at age 55 or older with 15 or more years of service. Ms. Graham started receiving distributions voluntarily before her retirement in 2017 and will continue to receive them. Mr. Hubbell is voluntarily receiving distributions from the plan even though he has not retired from the Company. In addition, as an owner with stock ownership in excess of five percent of the Company’s voting securities, Mr. Rollins is required to receive mandatory distributions currently, even though he has not retired from the Company. The amount of distributions received during 2017 has been disclosed in the table above and is not subject to change after retirement. +401(k) Plan +Effective July 1, 1984, the Company adopted a qualified retirement plan designed to meet the requirements of Section 401(k) of the Code. The Company makes matching contributions of fifty cents ($0.50) for each dollar ($1.00) of a participant’s contribution to the 401(k) Plan that does not exceed six percent of his or her annual compensation. The only form of benefit payment under the 401(k) Plan is a single lump-sum payment equal to the vested balance in the participant’s account on the date the distribution is processed. Under the 401(k) Plan, the full amount of a participant’s vested accrued benefit is payable upon his termination of employment, retirement, total and permanent disability, or death. Also under the 401(k) Plan, a participant may withdraw his or her pre-tax contributions to the extent of certain specified instances of financial hardship and may withdraw any amount from his or her pre-tax contribution account for any reason after attaining age 59 1 ∕ 2 . In addition, a participant may withdraw any amount from his or her rollover account for any reason. Amounts contributed by the Company to the accounts of the named executive officers under this plan are reported in the “All Other Compensation” column of the Summary Compensation Table on page 20 . +NONQUALIFIED DEFERRED COMPENSATION +The SRP has been established as a nonqualified plan that is designed to comply with the provisions of the American Jobs Creation Act of 2004 (including Section 409A of the Internal Revenue Code) for the cash contributions made to certain longer serviced employees in lieu of freezing of the Retirement Income Plan benefit accruals effective in 2002; the SRP also has a compensation deferral option for eligible employees. The contributions and deferrals to the SRP are invested in funds held in a rabbi trust. +Name +Executive +Contributions +in Last FY +( $) (1) +Registrant +Contributions +in Last FY +($) +Aggregate +Earnings in +Last FY +($) +Aggregate +Withdrawals/ +Distributions +($) +Aggregate +Balance at +Last FYE +($) +Richard A. Hubbell +— +— +55,339 +— +393,086 +Ben M. Palmer +31,042 +— +100,056 +— +728,558 +R. Randall Rollins +— +— +— +— +— +Linda H. Graham +31,250 +— +276,440 +(197,435 ) +1,776,912 +(1) +Includes the following amounts related to the base salary for 2017 which have been deferred by the executive officer pursuant to the SRP and which are included in the Summary Compensation Table: Mr. Ben M. Palmer: $31,042 and Ms. Linda H. Graham: $31,250. The remaining deferral amounts, if any, represent deferrals of bonus compensation that was paid in 2017. Upon her retirement in June 2017, Ms. Graham received the first of 10 annual installments of the balance in the account, pursuant to the terms of her election. +The deferral option provides that participants may defer up to 50 percent of their base salary and up to 100 percent of their annual bonus with respect to any given plan year, subject to a $2,000 per plan year minimum. All of the salary and bonus deferrals are fully vested. Accounts are credited with hypothetical earnings, and/or debited with hypothetical losses, based on the performance of certain “Measurement +25 +Funds.” Account values are calculated as if the funds from deferrals and contributions had been converted into shares or other ownership units of selected Measurement Funds by purchasing (or selling, where relevant) such shares or units at the current purchase price of the relevant Measurement Fund at the time of the participant’s selection. The benefits are unsecured general obligations of the Company to the participants, and these obligations rank in parity with the Company’s other unsecured and unsubordinated indebtedness. To the extent that the Company’s obligations under the SRP exceed assets available under the trust, the Company may be required to seek additional funding sources to fund its liability under the SRP. +Generally, the SRP provides for distributions of any deferred amounts upon the earliest to occur of a participant’s death, disability, retirement or other termination of employment (a “Termination Event”). However, for any deferrals of base salary and bonus compensation (but not Company contributions), participants are entitled to designate a distribution date which is prior to a Termination Event. The SRP allows a participant to elect to receive distributions in installments or lump-sum payments. +POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL +The following table describes the potential payments and benefits under the Company’s compensation and benefit plans and arrangements to which the named executive officers would be entitled upon termination of employment. There are no other agreements, arrangements or plans that entitle executive officers to severance, perquisites, or other enhanced benefits upon termination of their employment except as described below. Additional payments or benefits to a terminating executive officer would be at the discretion of the Compensation Committee. +In accordance with the terms of the defined benefit plan, the executive officers are not entitled to additional benefits at death or disability. The amounts payable at retirement are disclosed in the “Benefit Plans” section on page 24 . The executive officers can choose to receive the amounts accumulated in the SRP either as a lump-sum or in installments at retirement, death or disability. Upon her retirement in June 2017, Ms. Linda H. Graham’s accumulated balance in the SRP of approximately $1,974,400 is being paid over 10 annual installments pursuant to the terms of her election. These amounts have been disclosed under the “Nonqualified Deferred Compensation” section on page 25 . The table below reflects the incremental restricted shares and their values that would become vested as of December 29, 2017 using the closing market price of  $25.53 per share for our Common Stock, as of that date, in the case of retirement, disability, death or change in control. +Stock Awards +Name +Number of shares +underlying unvested +stock +(#) +Unrealized value of +unvested stock +($) +Richard A. Hubbell +• Retirement +65,313 +1,667,440 +• Disability +96,926 +2,474,520 +• Death +258,750 +6,605,890 +• Change in control +258,750 +6,605,890 +Ben M. Palmer +• Retirement +— +— +• Disability +58,156 +1,484,720 +• Death +155,250 +3,963,530 +• Change in control +155,250 +3,963,530 +R. Randall Rollins +• Retirement +65,313 +1,667,440 +• Disability +96,926 +2,474,520 +• Death +258,750 +6,605,890 +• Change in control +258,750 +6,605,890 +26 +Accrued Pay and Regular Retirement Benefits +The amounts shown in the preceding table do not include the following since they are provided on a non-discriminatory basis to salaried employees generally upon termination of employment. These include: +• +Accrued salary and vacation pay. +• +Distributions of plan balances under the 401(k) Plan. +Pension Benefit and Deferred Compensation +The Retirement Income Plan does not provide for lump sum payments for a participant including executive officers for instances other than retirement. The Retirement Income Plan is described at “Pension Benefits” above. Upon termination, the executive officers will receive a distribution of the balance in their SRP account. These amounts are disclosed under the “Nonqualified Deferred Compensation” section on page 25 . +Severance . The Company does not have any severance arrangements for its executives. +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +Effective with the spin-off in 2001, the Company began providing certain administrative services to Marine Products. The service agreements between Marine Products and the Company provide for the provision of services on a cost reimbursement basis and may be terminated upon six months’ notice. The services covered by these agreements include administration of certain employee benefit programs and other administrative services. Charges from the Company (or from corporations which are subsidiaries of the Company) for such services aggregated approximately $849,000 in 2017. +RPC and Marine Products own 50 percent each of a limited liability company called 255 RC, LLC that was created for the joint purchase and ownership of a corporate aircraft. Each of RPC and Marine Products is a party to an operating lease agreement with 255 RC, LLC for a period of five years. During 2017, RPC recorded certain net operating costs comprised of rent and an allocable share of fixed costs of approximately $197,000 for the corporate aircraft. +During 2017, a subsidiary of RPC conducted business with companies owned by LOR, Inc. Mr. R. Randall Rollins, Chairman, and Mr. Gary W. Rollins, Director, are officers, directors and controlling stockholders of LOR, Inc. In 2017, payments totaling approximately $1,372,000 were made to these LOR, Inc. companies primarily for the purchase of parts and repair services related to certain of RPC’s oilfield operating equipment. RPC believes the charges incurred are at least as favorable as the charges that would have been incurred for similar purchases from unaffiliated third parties. +RPC receives certain administrative services including an allocation for office space from Rollins. The service agreements between Rollins and the Company provide for the provision of services on a cost reimbursement basis and are terminable on six months’ notice. The services covered by these agreements include office space, administration of certain employee benefit programs, and other administrative services. Charges to the Company (or to corporations which are subsidiaries of the Company) for such services and rent aggregated approximately $104,000 in 2017. +A group that includes the Company’s Chairman of the Board, R. Randall Rollins, his brother Gary W. Rollins who is also a director, and certain companies under their control, possesses in excess of fifty percent of the Company’s voting power. Please refer to the discussion above under the heading, “Corporate Governance and Board of Directors Committees and Meetings, Director Independence and NYSE Requirements, Controlled Company Exemption.” The group discussed above also controls in excess of fifty percent of Marine Products’ voting power. +Our Code of Business Conduct and Ethics for Directors and Executive Officers and Related Party Transactions Policy provides that related party transactions, as defined in Regulation S-K, Item 404(a) must be reviewed, approved and/or ratified by our Nominating and Corporate Governance Committee. As set forth in our Code, our Nominating and Corporate Governance Committee has the responsibility to ensure that it only approves or ratifies related party transactions that are in compliance with applicable law, consistent with the Company’s corporate governance policies (including those relative to conflicts of +27 +interest and usurpation of corporate opportunities) and on terms that are deemed to be fair to the Company. The Committee has the authority to hire legal, accounting, financial or other advisors as it may deem necessary or desirable and/or to delegate responsibilities to executive officers of the Company in connection with discharging its duties. A copy of the Code is available on our website at www.rpc.net under the Governance section. All related party transactions for the fiscal year ended December 31, 2017 were reviewed, approved and/or ratified by the Nominating and Governance Committee in accordance with the Code. +INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS +Principal Auditor +Grant Thornton LLP (“Grant Thornton”) served as the Company’s independent registered public accounting firm for the fiscal years ended December 31, 2017 and 2016. +The Audit Committee has appointed Grant Thornton as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2018. Grant Thornton has served as the Company’s independent registered public accounting firm for many years and is considered by management to be well qualified. Representatives of Grant Thornton are expected to be present at the Annual Meeting and will have an opportunity to make a statement if they so desire and will be available to respond to appropriate questions. +Aggregate fees billed by the Company’s independent registered public accounting firm are set forth below: +2017 +2016 +Audit fees and quarterly reviews (1) +$ +1,051,780 +$ +969,520 +Audit related fees +— +— +Tax fees +— +— +All other fees +— +— +(1) +Audit fees include fees for audit or review services in accordance with generally accepted auditing standards, such as statutory audits and services rendered for compliance with Section 404 of the Sarbanes-Oxley Act. +Pre-approval of Services +All of the services described above were pre-approved by the Company’s Audit Committee. The Audit Committee has determined that the payments made to its independent registered public accounting firm for these services are compatible with maintaining such auditors’ independence. A majority of the hours expended on the principal accountant’s engagement to audit the financial statements of the Company for the fiscal year ended December 31, 2017 was attributable to work performed by full-time, permanent employees of the principal accountant. +The Audit Committee is directly responsible for the appointment and termination, compensation, and oversight of the work of the independent registered public accounting firm, including resolution of disagreements between management and the independent registered public accounting firm regarding financial reporting. The Audit Committee is responsible for pre-approving all audit and non-audit services provided by the independent registered public accounting firm and ensuring that they are not engaged to perform the specific non-audit services proscribed by law or regulation. The Audit Committee has delegated pre-approval authority to its Chairman with the stipulation that his decision is to be presented to the full Committee at its next scheduled meeting. The Audit Committee has no other pre-approval policies. +28 +STOCKHOLDER PROPOSALS +Appropriate proposals of stockholders intended to be presented at the Company’s 2018 Annual Meeting of Stockholders must be received by the Company by November 21, 2018 in order to be included, pursuant to Rule 14a-8 promulgated under the Securities Exchange Act of 1934, as amended, in the proxy statement and form of proxy relating to that meeting. With regard to such stockholder proposals, if the date of the next annual meeting of stockholders is advanced or delayed more than 30 calendar days from April 24, 2019, the Company will, in a timely manner, inform its stockholders of the change and of the date by which such proposals must be received. Stockholders desiring to present business at the 2019 Annual Meeting of Stockholders outside of the stockholder proposal rules of Rule 14a-8 of the Securities Exchange Act of 1934 and instead pursuant to Article Twenty-Seventh of the Company’s by-laws must prepare a written notice regarding such proposal addressed to The Corporate Secretary, RPC, Inc., 2801 Buford Highway NE, Suite 520, Atlanta, Georgia 30329, and deliver to or mailed and received by no later than January 24, 2019 and no earlier than December 15, 2018. Stockholders should consult the by-laws for other specific requirements related to such notice and proposed business. +With respect to stockholder nomination of directors, the Company’s by-laws provide that nominations for the election of directors may be made by any stockholder entitled to vote for the election of directors. Nominations must comply with an advance notice procedure which generally requires with respect to nominations for directors for election at an annual meeting, that written notice be addressed to: The Corporate Secretary, RPC, Inc., 2801 Buford Highway NE, Suite 520, Atlanta, Georgia 30329, and be received not less than 90 nor more than 130 days prior to the anniversary of the prior year’s annual meeting and set forth, among other requirements specified in the by-laws, the name, age, business address and, if known, residence address of the nominee proposed in the notice, the principal occupation or employment of the nominee for the past five years, the nominee’s qualifications, the class or series and number of shares of capital stock of the Company which are owned beneficially or of record by the person and any other information relating to the person that would be required to be disclosed in a proxy statement or other filings. Other specific requirements related to such notice, including required disclosures concerning the stockholder intending to present the nomination, are set forth in the Company’s by-laws. Notices of nominations must be received by the Corporate Secretary of the Company no later than January 24, 2019 and no earlier than December 15, 2018, with respect to directors to be elected at the 2019 Annual Meeting of Stockholders. +EXPENSES OF SOLICITATION +The Company will bear the cost of soliciting proxies. Upon request, we will reimburse brokers, dealers and banks, or their nominees, for reasonable expenses incurred in forwarding copies of the proxy material to their beneficial stockholders of record. Solicitation of proxies will be made principally by mail. Proxies also may be solicited in person or by telephone, facsimile or other means by our directors, officers and regular employees. These individuals will receive no additional compensation for these services. The Company has retained Georgeson Shareholder Communications, Inc. to conduct a broker search and to send proxies by mail for an estimated fee of approximately $53,000 including shipping expenses. +ANNUAL REPORT +The Company’s Annual Report to Stockholders, including its Annual Report on Form 10-K for the fiscal year ended December 31, 2017, without exhibits, is being mailed to stockholders with this Proxy Statement. The Annual Report is not considered proxy-soliciting material. +FORM 10-K +Upon the written request of any record or beneficial owner of the Company’s Common Stock whose proxy was solicited in connection with the 2018 Annual Meeting of Stockholders, the Company will furnish such owner, without charge, a copy of its Annual Report on Form 10-K, including the financial statements and the financial statement schedules (but without exhibits), for its fiscal year ended December 31, 2017. Requests for a copy of such Annual Report on Form 10-K should be addressed to Mr. Ben M. Palmer, Corporate Secretary, at RPC, Inc., 2801 Buford Highway NE, Suite 520, Atlanta, Georgia 30329. +29 +OTHER MATTERS +Our Board of Directors knows of no business other than the matters set forth herein which will be presented at the Annual Meeting. In as much as matters not known at this time may come before the Annual Meeting, the enclosed proxy confers discretionary authority with respect to such matters as may properly come before the Annual Meeting; and it is the intention of the persons named in the proxy to vote in accordance with their best judgment on such matters. +BY ORDER OF THE BOARD OF DIRECTORS +Ben M. Palmer +Corporate Secretary +Atlanta, Georgia +March 21, 2018 +30 \ No newline at end of file diff --git a/raw/proxies/0000742278/0001144204-18-016018/proxy_rpt.txt b/raw/proxies/0000742278/0001144204-18-016018/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..ba3aa72e97473e60aefbd2c7c50fa082fdfd20b3 --- /dev/null +++ b/raw/proxies/0000742278/0001144204-18-016018/proxy_rpt.txt @@ -0,0 +1,9 @@ +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +Effective with the spin-off in 2001, the Company began providing certain administrative services to Marine Products. The service agreements between Marine Products and the Company provide for the provision of services on a cost reimbursement basis and may be terminated upon six months’ notice. The services covered by these agreements include administration of certain employee benefit programs and other administrative services. Charges from the Company (or from corporations which are subsidiaries of the Company) for such services aggregated approximately $849,000 in 2017. +RPC and Marine Products own 50 percent each of a limited liability company called 255 RC, LLC that was created for the joint purchase and ownership of a corporate aircraft. Each of RPC and Marine Products is a party to an operating lease agreement with 255 RC, LLC for a period of five years. During 2017, RPC recorded certain net operating costs comprised of rent and an allocable share of fixed costs of approximately $197,000 for the corporate aircraft. +During 2017, a subsidiary of RPC conducted business with companies owned by LOR, Inc. Mr. R. Randall Rollins, Chairman, and Mr. Gary W. Rollins, Director, are officers, directors and controlling stockholders of LOR, Inc. In 2017, payments totaling approximately $1,372,000 were made to these LOR, Inc. companies primarily for the purchase of parts and repair services related to certain of RPC’s oilfield operating equipment. RPC believes the charges incurred are at least as favorable as the charges that would have been incurred for similar purchases from unaffiliated third parties. +RPC receives certain administrative services including an allocation for office space from Rollins. The service agreements between Rollins and the Company provide for the provision of services on a cost reimbursement basis and are terminable on six months’ notice. The services covered by these agreements include office space, administration of certain employee benefit programs, and other administrative services. Charges to the Company (or to corporations which are subsidiaries of the Company) for such services and rent aggregated approximately $104,000 in 2017. +A group that includes the Company’s Chairman of the Board, R. Randall Rollins, his brother Gary W. Rollins who is also a director, and certain companies under their control, possesses in excess of fifty percent of the Company’s voting power. Please refer to the discussion above under the heading, “Corporate Governance and Board of Directors Committees and Meetings, Director Independence and NYSE Requirements, Controlled Company Exemption.” The group discussed above also controls in excess of fifty percent of Marine Products’ voting power. +Our Code of Business Conduct and Ethics for Directors and Executive Officers and Related Party Transactions Policy provides that related party transactions, as defined in Regulation S-K, Item 404(a) must be reviewed, approved and/or ratified by our Nominating and Corporate Governance Committee. As set forth in our Code, our Nominating and Corporate Governance Committee has the responsibility to ensure that it only approves or ratifies related party transactions that are in compliance with applicable law, consistent with the Company’s corporate governance policies (including those relative to conflicts of +27 +interest and usurpation of corporate opportunities) and on terms that are deemed to be fair to the Company. The Committee has the authority to hire legal, accounting, financial or other advisors as it may deem necessary or desirable and/or to delegate responsibilities to executive officers of the Company in connection with discharging its duties. A copy of the Code is available on our website at www.rpc.net under the Governance section. All related party transactions for the fiscal year ended December 31, 2017 were reviewed, approved and/or ratified by the Nominating and Governance Committee in accordance with the Code. \ No newline at end of file diff --git a/raw/proxies/0000742278/0001144204-19-015247/proxy.txt b/raw/proxies/0000742278/0001144204-19-015247/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..f3faf32c35363ea13064239ac7160c7964a3a2f6 --- /dev/null +++ b/raw/proxies/0000742278/0001144204-19-015247/proxy.txt @@ -0,0 +1,1110 @@ +DEF 14A +1 +tv515898-def14a.htm +DEF 14A +tv515898-def14a - none - 3.2100842s +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A INFORMATION +Proxy Statement Pursuant to Section 14(a) of the Securities +Exchange Act of 1934 (Amendment No. ___) +Filed by the Registrant ☒ +Filed by a Party other than the Registrant ☐ +Check the appropriate box: +☐ +Preliminary Proxy Statement +☐ +Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +☒ +Definitive Proxy Statement +☐ +Definitive Additional Materials +☐ +Soliciting Material Pursuant to §240.14a-12 +RPC, Inc. +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +☒ +No fee required. +☐ +Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. +(1) +Title of each class of securities to which transaction applies: N/A +(2) +Aggregate number of securities to which transaction applies: N/A +(3) +Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): N/A +(4) +Proposed maximum aggregate value of transaction: N/A +(5) +Total fee paid: N/A +☐ +Fee paid previously with preliminary materials. +☐ +Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing: +(1) +Amount previously paid: N/A +(2) +Form, Schedule or Registration Statement No.: N/A +(3) +Filing party: N/A +(4) +Date Filed: N/A +RPC, INC. +NOTICE OF ANNUAL MEETING OF STOCKHOLDERS +2801 Buford Highway NE, Suite 520, Atlanta, Georgia 30329 +TO THE HOLDERS OF THE COMMON STOCK: +PLEASE TAKE NOTICE that the 2019 Annual Meeting of Stockholders of RPC, Inc., a Delaware corporation (“RPC” or the “Company”), will be held at 2170 Piedmont Road, NE, Atlanta, Georgia, on Tuesday, April 23, 2019, at 12:15 P.M., or any adjournment thereof, for the following purposes, as more fully described in the Proxy Statement accompanying this notice: +1. +To elect the three Class III nominees identified in the attached Proxy Statement to the Board of Directors; +2. +To ratify the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2019; and +3. +To consider and act upon such other business as may properly come before the Annual Meeting or any adjournment of the meeting. +The Proxy Statement dated March 21, 2019 is attached. +The Board of Directors has fixed the close of business on February 28, 2019 as the record date for the determination of stockholders entitled to notice of, and to vote at, the Annual Meeting or any adjournment thereof. +This Proxy Statement and accompanying proxy card are being mailed to our stockholders along with the Company’s 2018 Annual Report for the fiscal year ended December 31, 2018. Voting can be completed by returning the proxy card, through the telephone at 1-800-652-8683 or online at www.envisionreports.com/RES +Important notice regarding the availability of proxy materials for the Annual Meeting of the Stockholders to be held on April 23, 2019: The proxy statement and 2018 Annual Report to security holders are available at www.envisionreports.com/RES +BY ORDER OF THE BOARD OF DIRECTORS +Ben M. Palmer +Corporate Secretary +Atlanta, Georgia +March 21, 2019 +Whether or not you expect to attend the annual meeting, please sign, date and return the enclosed proxy card promptly. Alternatively, you may vote your proxy by telephone or over the Internet by following the instructions on your proxy card. If you decide to attend the meeting, you may, if you wish, revoke the proxy and vote your shares in person. +PROXY STATEMENT +This Proxy Statement and a form of proxy were first mailed to stockholders on or about March 21, 2019. The following information concerning the enclosed proxy and the matters to be acted upon at the Annual Meeting of the Stockholders to be held on April 23, 2019, is submitted by the Company to the stockholders in connection with the solicitation of proxies on behalf of the Company’s Board of Directors. +SOLICITATION OF AND POWER TO REVOKE PROXY +A form of proxy is enclosed. Each proxy submitted will be voted as directed, but if not otherwise specified, proxies solicited by the Board of Directors of the Company will be voted in favor of the candidates for election to the Board of Directors and in favor of ratification of the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2019. +A stockholder executing and delivering a proxy has power to revoke the same and the authority thereby given at any time prior to the exercise of such authority, if he so elects, by contacting either proxy holder, by timely submitting a later dated proxy changing his vote, or by attending the meeting and voting in person. However, a beneficial stockholder who holds his shares in street name must secure a proxy from his broker before he can attend the meeting and vote. All costs of solicitation have been, and will be, borne by the Company. +CAPITAL STOCK +The outstanding capital stock of the Company on February 28, 2019 consisted of 215,210,979 shares of Common Stock, par value $0.10 per share. Holders of Common Stock are entitled to one vote (non-cumulative) for each share of such stock registered in their respective names at the close of business on February 28, 2019, the record date for determining stockholders entitled to notice of, and to vote at, the meeting or any adjournment thereof. +A majority of the outstanding shares will constitute a quorum at the Annual Meeting. Abstentions will be counted for purposes of determining the presence or absence of a quorum for the transaction of business. In accordance with the General Corporation Law of the state of Delaware, the election of the nominees named herein as Directors will require the affirmative vote of a plurality of the votes cast by the shares of Company Common Stock entitled to vote in the election provided that a quorum is present at the Annual Meeting. In the case of a plurality vote requirement (as in the election of directors), where no particular percentage vote is required, the outcome is solely a matter of comparing the number of votes cast for each nominee, with those nominees receiving the most votes being elected, and hence only votes for director nominees (and not abstentions or broker non-votes) are relevant to the outcome. In this case, the three nominees receiving the most votes will be elected. The affirmative vote of a majority of shares of common stock present in person or represented by proxy and entitled to vote at the meeting is required to approve the ratification of the appointment of the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2019. Abstentions will have the effect of a vote against the proposal for the ratification of the appointment of the Company’s independent registered public accounting firm, while broker non-votes will have no effect on the proposal and will be disregarded. +There are no rights of appraisal or similar dissenter’s rights with respect to any matter to be acted upon pursuant to this Proxy Statement. It is expected that shares held of record by officers and directors of the Company, which in the aggregate represent approximately 73.2 percent of the outstanding shares of Common Stock, will be voted for the nominees for directors, and for the ratification of the appointment of the Company’s independent registered public accounting firm. +1 +STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT +The executives named in the Summary Compensation Table, and the name and address of each stockholder (or “group” as that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) who owned beneficially five percent (5%) or more of the shares of Common Stock of the Company on February 28, 2019, together with the number of shares owned by each such person and the percentage of outstanding shares that ownership represents, and information as to Common Stock ownership of the directors and executive officers of the Company as a group (according to information received by the Company), are set out below: +Name and Address of Beneficial Owner +Amount +Beneficially +Owned (1) +Percent of +Outstanding +Shares +R. Randall Rollins +Chairman of the Board +2170 Piedmont Road, NE +Atlanta, Georgia +147,264,435 (2) +68.4 +Gary W. Rollins +Vice Chairman and Chief Executive Officer, Rollins, Inc. +2170 Piedmont Road, NE +Atlanta, Georgia +150,172,069 (3) +69.8 +Richard A. Hubbell +President and Chief Executive Officer +2801 Buford Highway NE, Suite 520 +Atlanta, Georgia +2,834,202 (4) +1.3 +Ben M. Palmer +Vice President, Chief Financial Officer and Corporate Secretary +2801 Buford Highway NE, Suite 520 +Atlanta, Georgia +670,427 (5) +** +All Directors and Executive Officers as a group +(9 persons) +157,616,949 (6) +73.2 +** +Less than one percent +(1) +Except as otherwise noted, the nature of the beneficial ownership for all shares is sole voting and investment power. +(2) +Includes 3,505,614 shares of Company Common Stock held in two charitable trusts of which he is a co-trustee and as to which he shares voting and investment power. Also includes 129,876,265 shares of Company Common Stock held by RFPS Management Company II, L.P., a Georgia limited partnership. The general partner of RFPS Management Company II, L.P., is RFA Management Company, LLC, a Georgia limited liability company, the manager of which is LOR, Inc., a Georgia corporation. Mr. R. Randall Rollins is an officer and director of LOR, Inc. Mr. R. Randall Rollins and Mr. Gary W. Rollins have voting control of LOR, Inc. Also includes 11,292,525 shares of Company Common Stock held by RFT Investment Company, LLC. LOR, Inc., is the manager of RFT Investment Company, LLC. Also includes 1,228,400 shares of Company Common Stock held by RFPS Investments II, L.P., a Georgia limited partnership. LOR Investment Company, LLC, a Georgia limited liability company, is the general partner of RFPS Investments II, L.P. LOR, Inc., holds fifty percent of all voting interests in LOR Investment Company, LLC. Also includes 242,250 shares of restricted stock awards for Company Common Stock. This also includes 260,390 shares of Company Common Stock held by his wife, as to which Mr. R. Randall Rollins disclaims any beneficial interest. Mr. R. Randall Rollins is part of a control group holding Company securities that includes Mr. Gary W. Rollins, as disclosed on a Schedule 13D on file with the U.S. Securities and Exchange Commission. +(3) +Includes 3,505,614 shares of Company Common Stock held in two charitable trusts of which he is co-trustee and as to which he shares voting and investment power. Also includes 129,876,265 shares of Company Common Stock held by RFPS Management Company II, L.P., a Georgia limited +2 +partnership. The general partner of RFPS Management Company II, L.P., is RFA Management Company, LLC, a Georgia limited liability company, the manager of which is LOR, Inc., a Georgia corporation. Mr. Gary W. Rollins is an officer and director of LOR, Inc. Mr. R. Randall Rollins and Mr. Gary W. Rollins have voting control of LOR, Inc. Also includes 11,292,525 shares of Company Common Stock held by RFT Investment Company, LLC, a Georgia limited liability company. LOR, Inc., is the manager of RFT Investment Company, LLC. Also includes 1,228,400 shares of the Company Common Stock held by RFPS Investments II, L.P., a Georgia limited partnership. LOR Investment Company, LLC, a Georgia limited liability company, is the general partner of RFPS Investments II, L.P. LOR, Inc., holds fifty percent of all voting interests in LOR Investment Company, LLC. This also includes 2,970 shares of Company Common Stock held by his wife, as to which Mr. Rollins disclaims any beneficial interest. Mr. Gary W. Rollins is part of a control group holding Company securities that includes Mr. R. Randall Rollins, as disclosed on a Schedule 13D on file with the U.S. Securities and Exchange Commission. +(4) +Includes 242,250 shares of restricted stock awards for Company Common Stock. +(5) +Includes 153,350 shares of restricted stock awards for Company Common Stock. +(6) +Shares held in trusts as to which more than one officer and/or director are co-trustees or entities in which there is common ownership have been included only once. Includes 637,850 shares of restricted stock awards for Company Common Stock awarded and issued to all of the executive officers pursuant to the Company’s Stock Incentive Plans. +PROPOSAL 1: ELECTION OF DIRECTORS +At the Annual Meeting, Mr. Bill J. Dismuke, Ms. Amy R. Kreisler and Ms. Pamela R. Rollins will be nominated to serve as Class III directors. The nominees for election at the 2019 Annual Meeting are all currently serving as members of our Board of Directors of the Company. The directors in each class serve for a term of three years. The director nominees will serve in their respective class until their successors are elected and qualified. Five other individuals serve as directors but are not standing for re-election because their terms as directors extend past this Annual Meeting pursuant to provisions of the Company’s Amended and Restated By-laws (the “By-laws”) that provide for the election of directors for staggered terms, with each director serving a three-year term. Mr. Larry L. Prince, a long-time director of the Company served as a Class II director until he passed away on March 5, 2019. At this time, the Company’s Board of Directors does not have plans to fill Mr. Prince’s vacated position on our Board. Ms. Amy R. Kreisler was recommended to the Nominating and Governance Committee as a director candidate by our Chairman, was appointed on October 25, 2016 as a Class III director by the Board of Directors and is currently standing for re-election. Ms. Pamela R. Rollins was recommended to the Nominating and Governance Committee as a director candidate by our Chairman, was appointed on January 22, 2019 as a Class III director by the Board of Directors and is currently standing for re-election. Unless authority is withheld, the proxy holders will vote for the election of each nominee named below. Although management does not contemplate the possibility, in the event any nominee is not a candidate or is unable to serve as a director at the time of the election, unless authority is withheld, the proxies will be voted for any nominee who shall be designated by the present Board of Directors and recommended by the Nominating and Governance Committee, to fill such vacancy. +Director Qualifications +As described in more detail below, we believe that each of our directors is well suited to serve on our Board of Directors for a variety of individual reasons and because collectively they bring a wealth of experience from diverse backgrounds that have combined to provide us with an excellent mix of experiences and viewpoints. The name and age of each of our directors and each of the nominees, his or her principal occupation, together with the number of shares of Common Stock beneficially owned, directly or indirectly, by each and the percentage of outstanding shares that ownership represents, all as of the close of business on February 28, 2019 (according to information received by the Company), other board memberships and the period during which he or she has served us as a director are set forth as follows: +3 +Names of Directors +Principal Occupation (1) +Service as +Director +Age +Shares of +Common +Stock (2) +Percent of +Outstanding +Shares +Names of Director Nominees +Class III (Current Term Expires 2019; New Term Will Expire 2022) +Bill J. Dismuke +Retired President of Edwards Baking +Company (manufacturer of pies and +pie parts). +2005 to date +82 +7,593 +** +Amy R. Kreisler (3) +Executive Director - The O. Wayne +Rollins Foundation and The Ma-Ran +Foundation (private charitable +entities). +2016 to date +49 +4,739,014 (4) +2.2 +Pamela R. Rollins (3) +Board Member for Young Harris College, National Monuments Foundation and The O. Wayne Rollins Foundation. Former Board Member of The Lovett School and an Emeritus Board Member of the Schenck School. +January 22, 2019 +to date +62 +2,101,013 (5) +1.0 +Names of Directors Whose Terms Have Not Expired +Class I (Current Term Expires 2020) +R. Randall Rollins (3)(6) +Chairman of the Board of the +Company; Chairman of the Board of +Marine Products Corporation (boat +manufacturing); Chairman of the +Board of Rollins, Inc. (consumer +services). +1984 to date +87 +147,264,435 (7) +68.4 +Henry B. Tippie +Lead Director of the Company; +Chairman of the Board and Chief +Executive Officer of Tippie Services, +Inc. (management services); +Chairman of the Board of Dover +Downs Gaming & Entertainment, +Inc. (operator of multi-purpose +gaming and entertainment complex); +Chairman of the Board of Dover +Motorsports, Inc. (operator of motor +racing tracks). +1984 to date +92 +2,252,277 (8) +1.0 +James B. Williams +Retired Chairman of the Executive Committee, SunTrust Banks, Inc. (bank holding company). +1984 to date +85 +303,750 +** +Class II (Current Term Expires 2021) +Gary W. Rollins ( 6 ) +Vice Chairman and Chief Executive +Officer of Rollins, Inc. (consumer +services). +1984 to date +74 +150,172,069 (9) +69.8 +Richard A. Hubbell +President and Chief Executive Officer of the Company; President and Chief Executive Officer of Marine Products Corporation (boat manufacturing). +1987 to date +74 +2,834,202 (10) +1.3 +** Less than one percent +(1) +Except as noted, each of the directors has held the positions of responsibility set out in this column (but not necessarily his or her present title) for more than five years. In addition to the directorships listed in this column, the following individuals also serve on the Boards of Directors of the following companies: R. Randall Rollins: Dover Downs Gaming & Entertainment, Inc. and Dover Motorsports, Inc.; and Gary W. Rollins: Director Emeritus of Genuine Parts Company and Emory University. All of the directors shown in the above table, with the exception of Amy R. Kreisler, are also directors of +4 +Marine Products Corporation (“Marine Products” or “MPC”) and, with the exception of Richard A. Hubbell and Amy R. Kreisler, are also directors of Rollins, Inc. (“Rollins”). James B. Williams formerly served as a Director of Genuine Parts Company, Georgia Pacific Corporation and The Coca-Cola Company. Amy R. Kreisler is a Trustee on The Lovett School Board of Trustees and also serves on their Executive Committee. She is Trustee on the Skyland Trail Board of Trustees where she is also the Chairman of the Governance Committee. Pamela R. Rollins serves on the boards of Young Harris College, the National Monuments Foundation and the O. Wayne Rollins Foundation. +(2) +Except as otherwise noted, the nature of the beneficial ownership for all shares is sole voting and investment power. +(3) +Amy R. Kreisler and Pamela R. Rollins are children of R. Randall Rollins. +(4) +Includes 1,228,400 shares of Company Common Stock held by RFPS Investments II, L.P. Ms. Kreisler holds a voting interest in LOR Investment Company, LLC, the general partner of RFPS Investments II, L.P. Also includes 3,505,614 shares of Company Common Stock held in two charitable trusts of which she is a co-trustee or Executive Director. Excludes 734,966 shares of Company Common Stock held indirectly through a family limited partnership, of which Ms. Kreisler is a general partner. +(5) +Includes 1,228,400 shares of Company Common Stock held by RFPS Investments II, L.P. Ms. Rollins holds a voting interest in LOR Investment Company, LLC, the general partner of RFPS Investments II, L.P. Also includes 862,613 shares of Company Common Stock held in a charitable trust of which she is a co-trustee. Excludes 734,966 shares of Company Common Stock held indirectly through a family limited partnership, of which Ms. Rollins is a general partner. +(6) +R. Randall Rollins and Gary W. Rollins are brothers. +(7) +See information contained in footnote (2) to the table appearing in the Capital Stock section. +(8) +Includes shares held by a wholly owned corporation that owns 2,277 shares. +(9) +See information contained in footnote (3) to the table appearing in the Capital Stock section. +(10) +See information contained in footnote (4) to the table appearing in the Capital Stock section. +Key Attributes, Experience and Skills of Directors and Director Nominees +R. Randall Rollins was elected a Director of RPC in 1984. Mr. Rollins has extensive knowledge of the Company’s business and industry serving over 34 years at the Company. Mr. Rollins serves as Chairman of the Board of the Company. He is also Chairman of the Board for Marine Products Corporation, as well as Rollins, Inc. Mr. Rollins has been a Director of Dover Motorsports, Inc. since 1996 and a Director of Dover Downs Gaming & Entertainment, Inc. since 2002. Mr. Rollins served as a Director of SunTrust Banks, Inc. from 1995 to 2004. +Richard A. Hubbell was elected a Director of RPC in 1987. Mr. Hubbell has extensive knowledge of the Company’s business and industry serving over 34 years at the Company. He has served as the Chief Executive Officer of the Company since 2003. In addition, Mr. Hubbell serves as the President of the Company. Mr. Hubbell is also the President, Chief Executive Officer and a Director of Marine Products Corporation. +Gary W. Rollins was elected a Director of RPC in 1984. Mr. Rollins has extensive knowledge of the Company’s business and industry. In addition, Mr. Rollins serves as the Vice Chairman and Chief Executive Officer of Rollins, Inc. Mr. Rollins has been a Director of Marine Products Corporation since 2001 and a Director of Rollins, Inc. since 1981. Mr. Rollins has been a Director of Genuine Parts Company since 2005. +Henry B. Tippie was elected a Director of RPC in 1984. Mr. Tippie brings extensive financial and management experience to our Board of Directors serving as Controller and Chief Financial Officer of Rollins, Inc. from 1953 to 1970. Mr. Tippie has over 68 years of experience including being involved with publicly owned companies during the past 58 years in various positions including founder, CFO, CEO, President, Vice-Chairman and Chairman of the Board. He is currently Chairman of the Board of Dover Downs Gaming & Entertainment, Inc., as well as Dover Motorsports, Inc., and a Director of Marine Products Corporation and Rollins, Inc. +5 +James B. Williams was elected a Director of RPC in 1984. Mr. Williams brings extensive financial and management experience to our Board of Directors serving over 34 years as a Director. He retired in March 1998 as Chairman of the Board and Chief Executive Officer of SunTrust Banks, Inc., a bank holding company. He is a Director of Marine Products Corporation and Rollins, Inc. Mr. Williams previously served as a Director of Genuine Parts Company, Georgia Pacific Corporation and The Coca-Cola Company. +Bill J. Dismuke was elected a Director of RPC in 2005. Mr. Dismuke brings extensive financial, management and manufacturing experience to our Board of Directors. He served as a Senior Vice President of Rollins, Inc. for five years from 1979 until 1984. He retired as President of Edwards Baking Company in 1995. Mr. Dismuke has also been a Director of Rollins, Inc. since 1984 and Marine Products Corporation since 2005. +Amy R. Kreisler was appointed as a Director of RPC in 2016. She is a former attorney of the law firm Arnall Golden Gregory LLP. Ms. Kreisler is a Trustee on The Lovett School Board of Trustees and also serves on their Executive Committee. She is Trustee on the Skyland Trail Board of Trustees where she is also the Chairman of the Governance Committee. Additionally, she is Executive Director of The O. Wayne Rollins Foundation and The Ma-Ran Foundation. Ms. Kreisler brings extensive financial and investment experience to our Board of Directors. +Pamela R. Rollins was appointed as a Director of RPC in January 2019. She serves on the boards of Young Harris College, the National Monuments Foundation, and the O. Wayne Rollins Foundation. Ms. Rollins is also a Director of Rollins, Inc. and Marine Products Corporation. She is a former board member of The Lovett School and an Emeritus Board Member of the Schenck School. Ms. Rollins brings a distinct interest in a wide range of matters regarding social responsibility. +Our Board of Directors recommends a vote “FOR” the Class III nominees listed above. +PROPOSAL 2: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +The Audit Committee of the Board of Directors has appointed Grant Thornton LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2019. During fiscal year 2018, Grant Thornton LLP served as the Company’s independent registered public accounting firm. Representatives of Grant Thornton LLP are expected to attend the annual meeting, where they will be available to respond to appropriate questions and, if they desire, to make a statement. +Although the Company is not required to seek ratification of this appointment, the Audit Committee and the Board of Directors believe that it is appropriate to do so. If stockholders do not ratify the appointment of Grant Thornton LLP, the current appointment will stand, but the Audit Committee will consider the stockholder action in determining whether to retain Grant Thornton LLP as the Company’s independent registered public accounting firm for future fiscal years. +Our Board of Directors recommends a vote “FOR” the ratification of the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm for the 2019 fiscal year. +CORPORATE GOVERNANCE AND BOARD OF DIRECTORS COMMITTEES AND MEETINGS +Board Meetings +The Board of Directors met five times during the fiscal year ended December 31, 2018. No director attended fewer than 75 percent of the aggregate of all Board meetings and meetings of committees on which he or she served during 2018. Board members are encouraged to attend the Company’s Annual Stockholders Meetings and a majority of the Board members were in attendance at last year’s meeting. +The Board of Directors has an Audit Committee, a Compensation Committee, a Diversity Committee and a Nominating and Governance Committee. +6 +Below is a summary of our committee structure and membership information. +Committee Member +Audit +Committee +Compensation +Committee +Diversity +Committee +Nominating & +Governance +Committee +Executive +Committee +R. Randall Rollins (1) +Member +Henry B. Tippie (2) +Chair +Chair +Chair +Chair +James B. Williams (2) +Member +Member +Member +Member +Bill J. Dismuke (2) +Member +Gary W. Rollins +Member +(1) +Chairman of the Board of Directors +(2) +Financial Expert +Audit Committee +The Audit Committee of the Board of Directors of the Company consists of Messrs. Henry B. Tippie (Chairman), Bill J. Dismuke and James B. Williams, all of whom are independent as discussed below. Mr. Larry L. Prince, a long-time independent director of the Company, served on the Audit Committee until he passed away on March 5, 2019. The Audit Committee held five meetings during the fiscal year ended December 31, 2018, including a meeting to review the Company’s Form 10-K for the year ended December 31, 2017. The Board of Directors has determined that all of the Audit Committee members are independent as that term is defined by the rules of the U.S. Securities and Exchange Commission (“SEC”) and the New York Stock Exchange (“NYSE”). The Board of Directors has also determined that all of the Audit Committee members are “Audit Committee Financial Experts” as defined in the SEC rules. The Audit Committee meets with the Company’s independent registered public accounting firm, internal auditor, Chief Executive Officer and Chief Financial Officer to review the scope and results of audits and recommendations made with respect to controls over financial reporting and specific accounting and financial reporting issues. The Audit Committee has the authority to obtain advice and assistance from, and receive appropriate funding from the Company for, outside legal, accounting or other advisors as it deems necessary to carry out its duties. The Audit Committee Charter is available on the Company’s website at www.rpc.net under the Governance section. +Compensation Committee +The Compensation Committee of the Board of Directors of the Company consists of Messrs. Henry B. Tippie (Chairman) and James B. Williams, both of whom are independent as discussed below. Mr. Larry L. Prince, a long-time independent director of the Company, served on the Compensation Committee until he passed away on March 5, 2019. It held two meetings during the fiscal year ended December 31, 2018. The function of the Compensation Committee is to set the base salary and performance-based incentive cash compensation of all of the executive officers. The Compensation Committee also administers the Company’s Stock Incentive Plans. The Compensation Committee does not have a formal charter, and is not required to have one under the “controlled company” exemption under the NYSE rules, as described in the section titled “Director Independence and NYSE Requirements” below. +Diversity Committee +The Diversity Committee of the Board of Directors of the Company consists of Messrs. Henry B. Tippie (Chairman) and James B. Williams, both of whom are independent as discussed below. Mr. Larry L. Prince, a long-time independent director of the Company, served on the Diversity Committee until he passed away on March 5, 2019. It held one meeting during the fiscal year ended December 31, 2018. The function of the Diversity Committee is to monitor compliance with applicable non-discrimination laws. +7 +Nominating and Governance Committee +The Nominating and Governance Committee of the Board of Directors of the Company consists of Messrs. Henry B. Tippie (Chairman) and James B. Williams, both of whom are independent, as discussed below. Mr. Larry L. Prince, a long-time independent director of the Company, served on the Nominating and Governance committee until he passed away on March 5, 2019. The Committee was formed in 2002 pursuant to a resolution passed by the Board of Directors for the following purposes: +• +to recommend to the Board of Directors nominees for director and to consider any nominations properly made by a stockholder; +• +upon request of the Board of Directors, to review and report to the Board with regard to matters of corporate governance; and +• +to make recommendations to the Board of Directors regarding the agenda for the annual stockholders’ meetings and with respect to appropriate action to be taken in response to any stockholder proposals. +The Nominating and Governance Committee held one meeting during the fiscal year ended December 31, 2018. We are not required by law or by NYSE rules to have a nominating committee since we are a controlled corporation as described below under the heading “Director Independence and NYSE Requirements.” We established the Nominating and Governance Committee to promote responsible corporate governance practices and we currently intend to maintain the Committee going forward. +Director Nominations +Under Delaware law, there are no statutory criteria or qualifications for directors. No criteria or qualifications have been prescribed by the Board at this time. The Nominating and Governance Committee does not have a charter or a formal policy with regard to the consideration of director candidates. As such, there is no formal policy relative to diversity, although as noted below, it is one of many factors that the Nominating and Governance Committee has the discretion to factor into its decision making. This discretion would extend to how the Committee might define diversity in a particular instance – whether in terms of background, viewpoint, experience, education, race, gender, national origin or other considerations. The Committee acts under the guidance of the Corporate Governance Guidelines approved by the Board of Directors and posted on the Company’s website at www.rpc.net under the Governance section. The Board believes that it should preserve maximum flexibility in order to select directors with sound judgment and other desirable qualities. According to the Company’s Corporate Governance Guidelines, the Board of Directors will be responsible for selecting nominees for election to the Board of Directors. The Board delegates the screening process to the Nominating and Governance Committee. This Committee is responsible for determining the appropriate skills and characteristics required of Board members in the context of the then current make-up of the Board. This determination takes into account all factors which the Committee considers appropriate, such as independence, experience, strength of character, mature judgment, technical skills, diversity, age and the extent to which the individual would fill a present need on the Board. The Company’s By-laws provide that nominations for the election of directors may be made by any stockholder entitled to vote for the election of directors. Nominations must comply with an advance notice procedure which generally requires, with respect to nominations for directors for election at an annual meeting, that written notice be addressed to: The Corporate Secretary, RPC, Inc., 2801 Buford Highway NE, Suite 520, Atlanta, Georgia 30329, and received not less than 90 nor more than 130 days prior to the anniversary of the prior year’s annual meeting and set forth, among other requirements specified in the By-laws, the name, age, business address and, if known, residence address of the nominee proposed in the notice, the principal occupation or employment of the nominee for the past five years, the class or series and number of shares of capital stock of the Company which are owned beneficially or of record by the person and any other information relating to the person that would be required to be disclosed in a proxy statement or other filings. Other requirements related to the notice are contained in the By-laws, and stockholders are advised to carefully review these requirements to ensure that nominations comply with the By-laws. The Committee will consider nominations from stockholders who satisfy these requirements. +8 +The Committee is responsible for screening the nominees that are selected by the Board of Directors for nomination to the Board and for service on committees of the Board. To date, the Company has not received a recommendation for a director nominee from a stockholder. All of the nominees for directors being voted upon at the Annual Meeting to be held on April 23, 2019 are currently standing for re-election. +Board Leadership +The Company has had separate persons serving as its Chairman of the Board and Chief Executive Officer since 2003. Mr. R. Randall Rollins is our Chairman and chairs our Board meetings. Mr. Richard A. Hubbell is our President and Chief Executive Officer. We believe that it represents the appropriate structure for us at this time; the Chairman of the Board provides general oversight and strategic planning for the Company, while the President and Chief Executive Officer focuses on optimizing operational efficiencies. +Risk Oversight by Board of Directors +Our Board of Directors’ oversight of risk has not been delegated to any Board Committee. “Risk” is an extremely broad concept that extends to multiple functional areas and crosses multiple disciplines. As such, risk may be addressed from time to time by the full Board or by one or more of our Committees. Senior management is responsible for identifying and managing material risks that we face while insurable risks and litigation risks are handled primarily by the risk management department. Senior management provides the Board with a summary of insurance coverage annually and updates as deemed necessary. Liquidity risk, credit risk and risks associated with our credit facilities and cash management are handled primarily by our finance department which regularly provides a financial report to both the Audit Committee and to the full Board. Operational, business, regulatory and political risks are handled primarily by senior executive management which regularly provides various operational reports to, among others, the full Board or to the Executive Committee. +Director Independence and NYSE Requirements +Controlled Company Exemption +The Company has elected to be treated as a “controlled company” as defined by NYSE Section 303A.00. This Section provides that a controlled company need not comply with the requirements of Sections 303A.01, 303A.04 and 303A.05 of the NYSE Listed Company Manual. Section 303A.01 requires that listed companies have a majority of independent directors. As a controlled company, this Section does not apply to the Company. Sections 303A.04 and 303A.05 require that listed companies have a nominating and corporate governance committee and a compensation committee, in each case composed entirely of independent directors, and that each of these committees must have a charter that addresses both the committee’s purpose and responsibilities and the need for an annual performance evaluation by the committee. While the Company has a nominating and corporate governance committee and a compensation committee, it is not required to and does not comply with all of the provisions of Sections 303A.04 and 303A.05. The Company is a “controlled company” because a group that includes the Company’s Chairman, R. Randall Rollins and his brother, Gary W. Rollins, who is a Director of the Company, and certain companies under their control, possesses in excess of fifty percent of the Company’s voting power. This means that they have the ability to determine the outcome of the election of directors at the Company’s annual meetings and to determine the outcome of many significant corporate transactions, many of which only require the approval of a majority of the Company’s voting power. Such a concentration of voting power could also have the effect of delaying or preventing a third party from acquiring the Company at a premium. +The Company’s Audit Committee is composed of three “independent” directors as defined by the Company’s Corporate Governance Guidelines, the NYSE rules, the Exchange Act, SEC regulations thereunder, and the Company’s Audit Committee Charter. All of the members of the Compensation, Diversity and Nominating and Governance Committees are also “independent” directors. The independent directors of the Company are Messrs. Henry B. Tippie, James B. Williams and Bill J. Dismuke. Mr. Larry L. Prince, a long-time independent director of the Company, served as a member of the Board of Directors until he passed away on March 5, 2019. +9 +Independence Guidelines +Under NYSE listing standards, to be considered independent, a director must be determined to have no material relationship with the Company other than as a director. The NYSE standards set forth a nonexclusive list of relationships which are conclusively deemed material. The Company’s Independence Guidelines are posted on the Company’s website at www.rpc.net under the Governance section and include categorical standards for determining independence in specific situations. +Audit Committee Charter +Under the Company’s Audit Committee Charter, in accordance with NYSE listing requirements and the Securities Exchange Act of 1934, all members of the Audit Committee must be independent of management and the Company. A member of the Audit Committee is considered independent as long as he or she (i) does not accept any consulting, advisory, or compensatory fee from the Company, other than as a director or committee member; (ii) is not an affiliated person of the Company or its subsidiaries; and (iii) otherwise meets the independence requirements of the NYSE and the Company’s Corporate Governance Guidelines. +Nonmaterial Relationships +After reviewing all of the relationships between the members of the Audit Committee and the Company, the Board of Directors determined that none of the members of the Audit Committee had any relationships not included within the categorical standards set forth in the Independence Guidelines and discussed above except as follows: +1. +Mr. Tippie was employed by Rollins, Inc. from 1953 to 1970, and held several offices with that company during that time, including as Executive Vice President – Finance, Secretary, Treasurer and Chief Financial Officer. Mr. Dismuke was employed by Rollins from 1979 to 1984 and held various offices within that company including Senior Vice President. Messrs. Randall and Gary Rollins are directors and executive officers of Rollins, Inc. and are part of a group that has voting control of Rollins, Inc. +2. +Mr. Tippie is Chairman of the Board of Directors of Dover Motorsports, Inc. and Dover Downs Gaming & Entertainment, Inc. Mr. Randall Rollins is also a director of these companies. +3. +Mr. Tippie is a co-trustee of The O. Wayne Rollins Foundation and of the Rollins Children’s Trust. Ms. Kreisler is Executive Director and Ms. Rollins is a trustee of The O. Wayne Rollins Foundation Mr. O. Wayne Rollins is the father of Messrs. Randall and Gary Rollins. The beneficiaries of the Rollins Children’s Trust include the immediate family members of Messrs. Randall and Gary Rollins. +4. +Messrs. Dismuke, Tippie, Williams and Ms. Rollins also serve on the Boards of Rollins, Inc. and Marine Products, of which Messrs. Randall and Gary Rollins are directors, and voting control over which is held by a control group of which Messrs. Randall and Gary Rollins are a part. Mr. Randall Rollins is an executive officer of Marine Products and Rollins. +5. +Mr. Williams is the Chairman of the Board of the Woodruff Foundation, the Ichauway Foundation and the Woodruff Fund, Inc. Mr. Randall Rollins serves on the Woodruff Fund, Inc. Board. +As required by the Independence Guidelines, the Board of Directors unanimously concluded that the above-listed relationships would not affect the independent judgment of the independent directors, based on their experience, character and independent means, and therefore do not preclude an independence determination. All of the members of the Audit Committee are also independent under the heightened standards required for Audit Committee members. +The Company’s non-management directors meet at regularly scheduled executive sessions without management. In accordance with the NYSE corporate governance listing standards, Mr. Henry B. Tippie was elected by the Board of Directors as the Lead Director and presides during these executive sessions. +10 +Corporate Governance Guidelines +We have adopted Corporate Governance Guidelines to formalize and promote better understanding of our policies and procedures. At least annually, the Board reviews these guidelines. As required by the rules of the NYSE, our Corporate Governance Guidelines require that our non-management directors meet in regularly scheduled executive sessions each year without management, and such meetings are currently required to occur at least twice annually. +At the Company’s website at www.rpc.net, under the Governance section, you may access a copy of its Corporate Governance Guidelines, Audit Committee Charter, Code of Business Conduct and Code of Business Conduct and Ethics for Directors and Executive Officers and Related Party Transactions Policy and Independence Guidelines. +Code of Business Conduct +The Company has adopted a Code of Business Conduct applicable to all directors, officers and employees generally, as well as a Code of Business Conduct and Ethics for Directors and Executive Officers and Related Party Transactions Policy applicable to the principal executive officer, principal financial officer, and directors. Both codes are available on the Company’s website at www.rpc.net under the Governance section. +Director Communications +The Company also has a process for interested parties, including stockholders, to send communications to the Board of Directors, Lead Director, any of the Board Committees or the non-management directors as a group. Such communications should be addressed as follows: +Mr. Henry B. Tippie +c/o Internal Audit Department +RPC, Inc. +2801 Buford Highway NE, Suite 520 +Atlanta, Georgia 30329 +The above instructions for communications with the directors are also posted on our website at www.rpc.net under the Governance section. All communications received from interested parties are forwarded to the Board of Directors. Any communication addressed solely to the Lead Director or the non-management directors will be forwarded directly to the appropriate addressee(s). +COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION +None of the directors named above who serve on the Company’s Compensation Committee are or have ever been an employee of the Company. There are no Compensation Committee interlocks requiring disclosure. +11 +DIRECTOR COMPENSATION +The following table sets forth compensation to the Company’s directors for services rendered as a director for the year ended December 31, 2018. Two of the directors, Messrs. R. Randall Rollins and Richard A. Hubbell are employees of the Company. Their compensation is set forth in the Summary Compensation Table under Executive Compensation. The directors listed below have never been employed by the Company or paid a salary or bonus by the Company, have never been granted any options or other stock-based awards, and do not participate in any Company sponsored retirement plans. +Name +Fees Earned or +Paid in Cash +($) +Stock +Awards (1) +($) +Option +Awards (1) +($) +Total +($) +Henry B. Tippie +134,000 +–– +–– +134,000 +James B. Williams +82,000 +–– +–– +82,000 +Bill J. Dismuke +75,000 +–– +–– +75,000 +Gary W. Rollins +62,500 +–– +–– +62,500 +Larry L. Prince (2) +82,000 +–– +–– +82,000 +Amy R. Kreisler +62,500 +–– +–– +62,500 +(1) +Directors are eligible for grants of stock awards under the Company’s 2014 Stock Incentive Plan (“SIP”). No stock awards have been granted to the non-management directors under the SIP. +(2) +Mr. Larry L. Prince, a long-time director of the Company served as a member of our Board of Directors until he passed away on March 5, 2019. +Directors that are our employees do not receive additional compensation for services rendered as a director. +Under compensation arrangements effective since January 1, 2018, non-management directors each received an annual retainer fee of  $50,000. The annual retainer fees was increased to $60,000 effective January 1, 2019. In addition, the Chairman of the Audit Committee receives an annual retainer of  $20,000, the Chairman of the Compensation Committee receives an annual retainer of  $10,000, and the Chairman of each of the Nominating and Governance Committee and Diversity Committee receives an annual retainer of  $6,000. A director that chairs more than one committee receives a retainer with respect to each committee he chairs. All of the retainers are paid on a quarterly basis. Per meeting fees for non-management directors are as follows: +• +For meetings of the Board of Directors, $2,500. +• +For meetings of the Compensation Committee, $2,000. +• +For meetings of the Diversity Committee, $1,500. +• +For meetings of the Nominating and Governance Committee, $1,500. +• +For meetings of the Audit Committee either in person or over the telephone, $2,500. +• +In addition, the Chairman of the Audit Committee receives an additional $2,500 for preparing to conduct each quarterly Board and Board Committee meeting. +All non-management directors are also entitled to reimbursement of expenses for all services as a director, including committee participation or special assignments. +Notwithstanding anything to the contrary set forth in any of the Company’s previous filings under the Securities Act of 1933, as amended (the “Securities Act”) or the Exchange Act that might incorporate future filings, including the Proxy Statement, in whole or in part, the Report of the Audit Committee shall not be incorporated by reference into any such filings. +12 +REPORT OF THE AUDIT COMMITTEE +Management is responsible for the Company’s internal controls, assessing the effectiveness of these controls and the financial reporting process. The Company’s independent registered public accounting firm is responsible for performing independent audits of the Company’s consolidated financial statements and the effectiveness of the Company’s internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States) and for issuing reports thereon. The Audit Committee’s responsibility is generally to monitor and oversee these processes, as described in the Audit Committee Charter. It is not the duty of the Audit Committee to plan or conduct audits or to determine that the Company’s financial statements are complete and accurate and in accordance with generally accepted accounting principles; that is the responsibility of management. +In fulfilling its oversight responsibilities with respect to the year ended December 31, 2018, the Audit Committee: +• +Approved the terms of engagement of Grant Thornton LLP as the Company’s independent registered public accounting firm for the year ended December 31, 2018; +• +Reviewed with management the interim financial information included in the Forms 10-Q prior to their being filed with the SEC. In addition, the Committee reviewed all earnings releases with management and the Company’s independent registered public accounting firm prior to their release; +• +Reviewed and discussed with the Company’s management and the independent registered public accounting firm the audited consolidated financial statements of the Company as of December 31, 2018 and 2017 and for the three years ended December 31, 2018; +• +Reviewed and discussed with the Company’s management and the independent registered public accounting firm, management’s assessment that the Company maintained effective control over financial reporting as of December 31, 2018; +• +Discussed with the independent registered public accounting firm matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board; and +• +Received from the independent registered public accounting firm the written disclosures and the letter in accordance with the requirements of the Public Company Accounting Oversight Board regarding the firm’s communications with the Committee concerning independence, and discussed with such firm its independence from the Company. +Based upon the review and discussions referred to above, the Committee recommended to the Board of Directors that the audited consolidated financial statements of the Company and subsidiaries as of December 31, 2018 and 2017 and for the three years ended December 31, 2018 be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 and for filing with the SEC. +In giving its recommendation to the Board of Directors, the Audit Committee has relied on (i) management’s representation that such financial statements have been prepared with integrity and objectivity and in conformity with accounting principles generally accepted in the United States of America and (ii) the report of the Company’s independent registered public accounting firm with respect to such financial statements. +Submitted by the Audit Committee of the Board of Directors. +Henry B. Tippie, Chairman +James B. Williams +Bill J. Dismuke +Larry L. Prince 1 +1 +Mr. Larry L. Prince, a long-time director of the Company, served on the Audit Committee until he passed away on March 5, 2019. +13 +COMPENSATION DISCUSSION AND ANALYSIS +Compensation Committee +During the fiscal year ended December 31, 2018, the members of our Compensation Committee held primary responsibility for determining executive compensation levels. The Committee is currently composed of two of our non-management directors who do not participate in the Company’s compensation plans. The Committee determines the compensation and administers the performance-based incentive cash compensation plan for our executive officers. In addition, the Committee also administers our Stock Incentive Plans for all the employees. +The members of our Compensation Committee have extensive and varied experience with various public and private corporations - as investors and stockholders, as senior executives, and as directors charged with the oversight of management and the setting of executive compensation levels. Henry B. Tippie, the Chairman of the Compensation Committee, has served on the board of directors of twelve different publicly traded companies and has been involved in setting executive compensation levels at all of these companies. Mr. James B. Williams has served on the board of directors of several different publicly traded companies and has similarly been involved in setting executive compensation levels at many of these companies. Mr. Larry L. Prince, a long-time director and member of the Compensation Committee of the Company, who passed away on March 5, 2019, also had similar experience in setting executive compensation levels for publicly traded companies. +The Compensation Committee has authority to engage attorneys, accountants and consultants, including executive compensation consultants, to solicit input from management concerning compensation matters, and to delegate any of its responsibilities to one or more directors or members of management where it deems such delegation appropriate and permitted under applicable law. The Committee has not used the services of any compensation consultants in determining or recommending the amount or form of executive compensation. +The Compensation Committee believes that determinations relative to executive compensation levels are best left to the discretion of the Committee. In addition to the extensive experience and expertise of the Committee’s members and their familiarity with the Company’s performance and the performance of our executive officers, the Committee is able to draw on the experience of other Directors and on various legal and accounting executives employed by the Company, and the Committee has access to readily available public information relative to structuring executive compensation programs and setting appropriate compensation levels. The Committee also believes that the structure of our executive compensation programs should not become overly complicated or difficult to understand. The Committee solicits input from our Chairman with respect to the performance of our executive officers and their compensation levels. +The Role of Shareholder Say-on-Pay Votes +The Company provides its stockholders with the opportunity to cast an advisory vote on executive compensation (a “say-on-pay proposal”) once every three years. At the Company’s Annual Meeting of Stockholders held in April 2017, a substantial majority of the votes cast on the say-on-pay proposal at that meeting were voted in favor of the proposal. The Compensation Committee believes this affirms shareholders’ support of the Company’s approach to executive compensation. The stockholders voted to hold a say-on-pay advisory vote on executive compensation every three years, and the Board resolved to accept the stockholders’ recommendation. As a result, the advisory vote on executive compensation will be held again at the 2020 Annual Meeting of Stockholders. The Compensation Committee will continue to consider the outcome of the Company’s say-on-pay votes when making future compensation decisions for its executive officers. +General Compensation Objectives and Guidelines +The Company is engaged in a highly competitive industry. The success of the Company depends on its ability to attract and retain highly qualified and motivated executives. In order to accomplish this objective, the Company structures the executive compensation in a fashion that takes into account the Company’s overall performance and the individual performance of the executive. +14 +The Compensation Committee endorses the philosophy that executive compensation should reflect Company performance and the contribution of executive officers to that performance. The Company’s compensation policy is designed to achieve three fundamental objectives: (i) attract and retain qualified executives, (ii) motivate performance to achieve Company objectives, and (iii) align the interests of our executives with the long-term interests of the Company’s stockholders. +The Committee recognizes that there are many intangibles involved in evaluating performance and in motivating performance, and that determining an appropriate compensation level is a highly subjective endeavor. The analysis of the Committee is not based upon a structured formula and the objectives referred to above are not weighted in any formal manner. During the year, none of the executive officers made recommendations or otherwise contributed input on their own compensation. However, the Compensation Committee may from time to time solicit input from the Chairman when reviewing executive compensation. +The Company’s executive officers are also executive officers of Marine Products and receive compensation directly from Marine Products. The members of the Company’s Compensation Committee also constitute the Compensation Committee of Marine Products. In determining the compensation for the executive officers at the Company, the Committee considers these dual responsibilities and sources of compensation. The Company sets compensation of its executives at such levels so that the aggregate compensation received from both Marine Products and the Company is reasonable in light of their respective responsibilities and the performance of both companies, and so that the compensation from the Company for services solely to the Company is reasonable. A discussion of the Company’s executive officers’ compensation at Marine Products is contained in its annual Proxy Statement filed with the SEC. +Pursuant to the Company’s compensation philosophy, the total annual compensation of its executive officers is primarily comprised of base salary, performance-based incentive cash compensation and stock-based incentive compensation. In addition, the Company provides retirement compensation plans, group welfare benefits and certain perquisites. +We believe a competitive base salary is important to attract, retain and motivate top executives. We believe a performance-based incentive cash compensation plan is valuable in recognizing and rewarding individual achievement. Finally, we believe stock-based incentives make executives “think like owners” and, therefore, align their interests with those of our stockholders. +The Company does not have any formal stock ownership requirements for its executive officers, but notes that its current directors and executive officers are stockholders of the Company, as is disclosed elsewhere in this Proxy Statement. The Company is mindful of the stock ownership of our directors and executive officers but does not believe that it is appropriate to provide a mechanism or formula to take stock ownership (or gains from prior option or stock awards) into account when setting compensation levels. The Company provides in its insider trading policies that directors and executive officers may not sell Company securities short and may not sell puts, calls or other derivative securities tied to our Common Stock. +As a result of the Tax Cuts and Jobs Act, starting with compensation payable in 2018, Section 162(m) of the Internal Revenue Code will limit the Company from deducting compensation, including performance-based compensation, in excess of  $1,000,000 paid to our executive officers. The only exception to this rule is for compensation (including performance-based compensation) that is paid pursuant to a binding contract in effect on November 2, 2017, that would otherwise have been deductible under the prior Section 162(m) rules. Going forward, the Compensation Committee will, as before, retain full discretion to award compensation packages that best attract, retain and reward successful executive officers. Therefore, the Compensation Committee anticipates that it will award compensation that is not fully deductible under Section 162(m). +Our executive bonus agreements contain a provision that provides that, among other things, if any bonus amount is paid as a result of misrepresented or inaccurate performance, the Company may require repayment of some or all of the excess bonus paid, subject to applicable laws. This recoupment policy reflects the Company’s high ethical standards and strict compliance with accounting and other regulations applicable to public companies. As all incentives and awards remain within the discretion of the Compensation Committee, the Committee also retains the ability to take any restatements or adjustments into account in subsequent years. In addition, the Sarbanes-Oxley Act requires in the case of accounting +15 +restatements that result from material non-compliance with SEC financial reporting requirements, that the Chief Executive Officer and Chief Financial Officer must disgorge bonuses and other incentive-based compensation and profits on stock sales received during the 12 months following publication of the misstated financials, if the non-compliance results from misconduct. +Base Salary +The salary of each executive officer is determined by the Compensation Committee. In making its determinations, the Committee gives consideration to the recent financial performance of the Company, the magnitude of responsibilities, the scope of the position, individual performance and compensation paid by Marine Products. The Committee solicits input from our Chairman with respect to the performance of our executive officers and their compensation levels. During 2018, the base salaries of our executive officers were increased to the following amounts: Mr. Richard A. Hubbell: $950,000 ($50,000 increase from 2017); Mr. Ben M. Palmer: $450,000 ($50,000 increase from 2017); and Mr. R. Randall Rollins: $850,000 ($50,000 increase from 2017). There were no changes to the base salaries of the Company’s executive officers in 2019 through the date of this proxy statement. +Performance-Based Incentive Cash Compensation +The Company implemented the Performance-Based Incentive Cash Compensation Plan (the “Management Incentive Plan”) for the executive officers in 2006. Under the Management Incentive Plan, the Compensation Committee establishes performance goals annually within ninety days after the commencement of the performance period to which such goals relate. Performance goals for each participant may be based on corporate, business unit/function or individual performance, or a combination of one or more such measures. +In connection with the annual establishment of performance goals, the Compensation Committee sets a target award for each participant in the Management Incentive Plan for the applicable year, which is expressed as a percentage of the participant’s base compensation (the “Target Award”) in effect on the last day of the final pay period of that year. If the participant’s performance goals are based upon a combination of performance measures, the Compensation Committee will weigh the importance of each performance measure by assigning a percentage (the “Weighted Percentage”) to those performance measures. The participant’s cash award amount will also depend in part upon the level of achievement that the participant attained with respect to each such performance measure utilizing the formula set out in the Management Incentive Plan. This formula provides for a performance value (“Performance Value”) which ranges from: +• +threshold performance level (with a Performance Value of 25 percent of the Target Award), +• +target performance level (with a Performance Value up to 100 percent of the Target Award), to +• +superior performance level (with a Performance Value up to 200 percent of the Target Award). +Subject to the limitations set forth below, a participant’s cash award amount for each year under the Management Incentive Plan equals the product of the Target Award multiplied by the Weighted Percentage assigned to each performance measure used for a participant, multiplied by the Performance Value attained for each performance measure, multiplied by base compensation . The Committee will determine the maximum cash award as a percentage of participants’ base compensation for each applicable year. +16 +For 2018, the Compensation Committee established the target incentive award under the Management Incentive Plan for the Chief Executive Officer and for the other members of executive management at the amounts shown in the table below. The target awards that could be earned under the Management Incentive Plan for 2018 were the same as for the prior year. +Executive Officer +Target Award as a percentage +of base salary +Richard A. Hubbell +President and Chief Executive Officer +100 % +Ben M. Palmer +Vice President, Chief Financial Officer and Corporate Secretary +100 % +R. Randall Rollins +Chairman of the Board +100 % +The maximum bonus award for each participant under the Plan for 2018 and prior years was established at 150 percent of such participant’s base salary. The performance criteria applicable to the participants under the Management Incentive Plan for 2018 were determined based solely on corporate performance. The Compensation Committee established corporate performance goals for 2018 under the Management Incentive Plan based on cash flow return on invested capital. Return on invested capital (“ROIC”) is a widely used financial performance measure that typically correlates with long-term change in stockholder value. The Company has used ROIC as the sole performance goal under the Management Incentive Plan for several years. ROIC is computed as the ratio of earnings before interest, taxes, depreciation and amortization to invested capital. Invested capital is generally equal to the aggregate of stockholders’ equity, accumulated depreciation and long-term liabilities. For 2018, the target performance goal established by the Company is in excess of the comparable historical average ROIC of our peers, is in excess of the Company’s weighted average cost of capital, and is an amount which the Company believes represents outstanding financial performance. Under the Management Incentive Plan for 2018, the Company was required to achieve at least 70 percent of the target performance goal for executive officers to be eligible for any bonus award. Bonus awards under the Management Incentive Plan are determined on a sliding scale between the threshold performance level and superior performance level, which corresponds to 175 percent of the target performance goal. To be eligible for the bonus award under the Management Incentive Plan for 2018, the ROIC was required to be in excess of 12.6 percent up to a maximum of 31.5 percent. The Company has consistently followed the same method to compute ROIC, and the Compensation Committee has not exercised discretion to waive the performance goals based on difficult industry conditions or other factors. +The Company operates in a cyclical business where financial performance is influenced by, among other things, changes in oil and natural gas prices. The Company generated ROIC that resulted in 48 percent of the target award in 2018 and 36 percent of the target award in 2017. The Company’s computation of ROIC for 2016 resulted in the threshold for bonus payments not being achieved. The operating environment improved in 2018 and 2017 after a significant drop in performance in 2016 that was caused by the continued low oil prices and the associated impact on customer activity levels. Performance-based cash compensation earned under the Management Incentive Plan for 2018 was as follows: Mr. Richard A. Hubbell: $456,000; Mr. Ben M. Palmer: $216,000; and Mr. R. Randall Rollins: $408,000. In 2019, current trends and expectations for the oilfield industry indicate a challenging operating environment. For 2019, the target awards, performance goal and maximum awards were established at the same levels as 2018. +Stock-Based Incentive Plans +Our SIP allows for a wide variety of stock based awards such as stock options and restricted stock. We last issued stock options in fiscal year 2003 and have no current plans to issue additional stock options. We have never issued any stock appreciation rights. Partially in response to changes relative to the manner in which stock options are accounted for under generally accepted accounting principles, we have modified the structure and composition of the long-term equity-based component of our executive compensation. In recent years, we have awarded time-based restricted stock in lieu of granting stock options. The terms and conditions of these awards are described in more detail below. +17 +Awards under the Company’s SIP are purely discretionary, are not based upon any specific formula and may or may not be granted in any given fiscal year. For the past three years, we have granted time-based restricted stock to various employees, including our executive officers, in early January during our regularly scheduled meeting of the Compensation Committee during which the Committee reviews executive compensation. Consistent with this practice, we granted restricted stock awards to our executive officers in January 2019, 2018 and 2017 as follows: +Name +2019 +2018 +2017 +Richard A. Hubbell +75,000 +45,000 +45,000 +Ben M. Palmer +50,000 +30,000 +27,000 +R. Randall Rollins +75,000 +45,000 +45,000 +The amount of the aggregate stock-based awards to our executive officers in any given year is influenced by the Company’s overall performance. The amount of each grant to our executive officers is influenced in part by the Committee’s subjective assessment of each individual’s respective contributions to achievement of the Company’s long-term goals and objectives, in addition to the stock price around grant date. In evaluating individual performance for these purposes, the Committee considers the overall contributions of executive management as a group and the Committee’s subjective assessment of each individual’s relative contribution to that performance rather than specific aspects of each individual’s performance over a short-term period. We expect to continue annual grants of restricted stock awards although we reserve the right to modify or discontinue this or any of our other compensation practices at any time. +All of our restricted stock awards granted since 2004 have had the same features. The shares vest one-fifth per year beginning on the second anniversary of the grant date. Restricted shares have full voting and dividend rights. However, until the shares vest, they cannot be sold, transferred or pledged. Should the executive leave our employment for any reason prior to the vesting dates (other than due to disability or retirement on or after age 65), the unvested shares will be forfeited. In the event of death, or “change in control” as determined by the Board of Directors, all unvested restricted shares shall vest immediately. +Grants are made under our SIP which is administered pursuant to Rule 16b-3 of the Exchange Act. +Employment Agreements +There are no agreements or understandings between the Company and any executive officer which guarantee continued employment or guarantee any level of severance or compensation, including incentive or bonus payments. +Retirement Plans +The Company maintains a defined benefit pension plan (“Retirement Income Plan”) for all our eligible employees, a non-qualified supplemental retirement plan for our executives and certain other highly compensated employees and a 401(k) Plan for the benefit of all of our eligible employees. In 2002, the Company’s Board of Directors approved a resolution to cease all future benefit accruals under the Retirement Income Plan effective March 31, 2002. During 2002, the Company began permitting selected highly compensated employees to defer a portion of their compensation into the Company’s nonqualified Supplemental Retirement Plan (“SRP”). The SRP is described in more detail under the caption “Nonqualified Deferred Compensation” on page 25 . +Other Compensation +Other compensation to our executives includes typical employee benefits such as group medical, dental and vision coverage and group life insurance. The Company provides an automobile (or an automobile allowance) to Messrs. Richard A. Hubbell and Ben M. Palmer. +The following Compensation Committee Report shall not be incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act, except to the extent that the Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under the Securities Act or the Exchange Act. +18 +COMPENSATION COMMITTEE REPORT +We have reviewed and discussed the above “Compensation Discussion and Analysis” with management. +Based upon this review and discussion, we have recommended to the Board of Directors that the “Compensation Discussion and Analysis” be included in this Proxy Statement. +Submitted by the Compensation Committee of the Board of Directors. +Henry B. Tippie, Chairman +James B. Williams +Larry L. Prince 1 +1 +Mr. Larry L. Prince, a long-time director of the Company served on the Compensation Committee until he passed away on March 5, 2019. +SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE +The Company has completed a review of Forms 3, 4, and 5 and amendments thereto furnished to the Company by all directors, officers and greater than 10 percent stockholders subject to the provisions of Section 16 of the Exchange Act. In addition, the Company has a written representation from all directors, officers and greater than 10 percent stockholders from whom no Form 5 was received indicating that no Form 5 filing was required. Based solely on this review, the Company believes that filing requirements of such persons under Section 16 for the fiscal year ended December 31, 2018 have been satisfied. +19 +EXECUTIVE COMPENSATION +Shown below is information concerning the annual and long-term compensation for services in all capacities to the Company for the calendar years ended December 31, 2018, 2017 and 2016 of those persons who were, at December 31, 2018: +• +our Principal Executive Officer and Principal Financial Officer; and +• +our one other executive officer: +SUMMARY COMPENSATION TABLE +Name and Principal Position +Year +Salary +($) +Stock +Awards +($) (1) +Non-Equity +Incentive +Plan +Compensation +($) (2) +Change in +Pension +Value and +Nonqualified +Deferred +Compensation +Earnings +($) (3) +All Other +Compensation +($) (4) +Total +($) +Richard A. Hubbell +President and +Chief Executive Officer +2018 +950,000 +1,130,850 +456,000 +–– +30,670 +2,567,520 +2017 +900,000 +974,700 +324,000 +–– +13,260 +2,211,960 +2016 +900,000 +807,750 +–– +–– +13,180 +1,720,930 +Ben M. Palmer +Vice President, Chief Financial Officer and Corporate Secretary +2018 +450,000 +753,900 +216,000 +–– +20,990 +1,440,890 +2017 +385,420 +584,820 +144,000 +10,078 +19,600 +1,143,918 +2016 +375,000 +484,650 +–– +6,081 +19,700 +885,431 +R. Randall Rollins +Chairman of the Board +2018 +850,000 +1,130,850 +408,000 +–– +–– +2,388,850 +2017 +800,000 +974,700 +288,000 +–– +–– +2,062,700 +2016 +800,000 +807,750 +–– +–– +–– +1,607,750 +(1) +Represents the fair value of the award at the date of grant computed in accordance with ASC Topic 718. Please refer to Note 11 to our Financial Statements contained in our Form 10-K for the period ended December 31, 2018 for a discussion of assumptions used in this computation. For this computation, we do not include an assumption for estimated forfeitures. +(2) +Bonuses under the Management Incentive Plan are accrued in the fiscal year earned and paid in the following fiscal year. +(3) +The actuarial present value of the executive officers’ accumulated benefit under the defined benefit plan decreased during 2018 as follows: Messrs. Richard A. Hubbell $(35,453), Ben M. Palmer $(7,712) and R. Randall Rollins $(165,595). Change represents impact of the change in discount rate only as no additional benefits are being accrued. +(4) +All other compensation for 2018 includes the following items for: +Mr. Richard A. Hubbell: +Insurance on automobile provided by the Company, cost of dining club dues, cost of gasoline for personal automobile, $16,330 of incremental costs to the Company for personal use of the Company’s airplane (calculated based on the actual variable costs to the Company for such usage) and 401(k) Plan Company match of  $8,250 in the aggregate. +Mr. Ben M. Palmer: +Automobile allowance, cost of gasoline for personal automobile and 401(k) Plan Company match of  $8,250 in the aggregate. +20 +Pay Ratio Disclosure +Pursuant to a mandate of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), the SEC adopted a rule requiring annual disclosure of the ratio of the median employee’s annual total compensation to the total annual compensation of the principal executive officer (“PEO”). The Company’s PEO is Mr. Richard A. Hubbell. The purpose of the required disclosure is to provide a measure of the equitability of pay within the organization. The Company believes its compensation philosophy and process yield an equitable result. +Median Employee total annual compensation +$ +81,520 +Mr. Richard A. Hubbell (PEO) total annual compensation +$ +2,559,270 +Ratio of PEO to Median Employee Compensation +31.4:1 +The Company has used the same median employee identified as of December 31, 2017 since there has been no significant change to its employee population or employee compensation arrangements that would significantly impact the pay ratio disclosure. The compensation disclosed above represents the total annual compensation of the median employee for the year ended December 31, 2018. Employees from our foreign subsidiaries in North America and Asia, both of which combined were less than 5 percent of our total employees, were excluded, as permitted by SEC rules, under “de minimus” exception. Employees on leave of absence were also excluded from the list and wages and salaries were annualized for those employees that were not employed for the full year of 2017 (other than seasonal or temporary employees). The median amount was selected from the annualized list. For simplicity, the value of the Company’s 401(k) Plan and medical benefits provided was excluded as all employees including the PEO are offered the exact same benefits and the Company utilizes the Internal Revenue Service guidelines for 401(k) discrimination testing. As of December 31, 2018 the Company employed approximately 3,600 persons of which 71 were employed in Canada, and Mexico. +The pay ratio disclosure presented above is a reasonable estimate. Because the SEC rules for identifying the median employee and calculating the pay ratio allow companies to use different methodologies, exemptions, estimates and assumptions, our pay ratio disclosure may not be comparable to the pay ratios reported by other companies. +GRANTS OF PLAN-BASED AWARDS +Name +Grant Date +Estimated Future Payouts +Under Non-Equity +Incentive Plan Awards (1) +All Other +Stock Awards: +Number of +Shares of +Stock or Units +(#) +Grant Date +Fair Value +of Stock +and Option +Awards +($) (2) +Threshold +($) +Target +($) +Maximum +($) +Richard A. Hubbell +1/23/2018 +237,500 +950,000 +1,425,000 +45,000 +1,130,850 +Ben M. Palmer +1/23/2018 +112,500 +450,000 +675,000 +30,000 +753,900 +R. Randall Rollins +1/23/2018 +212,500 +850,000 +1,275,000 +45,000 +1,130,850 +(1) +These amounts illustrate the potential bonus awards under the Management Incentive Plan for 2018. See Summary Compensation Table on page 20 for actual amounts awarded in 2018. +(2) +These amounts represent aggregate grant date fair value for grants of restricted shares of Common Stock awarded in fiscal year 2018 under the Stock Incentive Plan computed in accordance with ASC Topic 718. Please refer to Note 11 to our Financial Statements contained in our Form 10-K for the period ended December 31, 2018 for a discussion of assumptions used in this computation. For this computation, we do not include an assumption for estimated forfeitures. Our Form 10-K has been included in our Annual Report and provided to our stockholders. +The table above reflects grants of restricted shares of Company Common Stock under the Stock Incentive Plan awarded in fiscal year 2018. All grants of restricted shares of Common Stock vest one-fifth per year beginning on the second anniversary of the grant date. Restricted shares have full voting and dividend rights. However, until the shares vest, they cannot be sold, transferred or pledged. Should the +21 +executive leave our employment for any reason prior to the vesting dates (other than due to death, disability, change in control or retirement on or after age 65), the unvested shares will be forfeited. We have not issued any stock options since 2003 and have no immediate plans to issue additional stock options. +There are no agreements or understandings between the Company and any executive officer which guarantee continued employment or guarantee any level of severance or compensation, including incentive or bonus payments, to the executive officer. The existing compensation and benefits received by the Company’s Chief Executive Officer and the other executive officers are based on oral, at will arrangements. All of the executive officers are eligible for annual cash bonuses which are awarded under the Management Incentive Plan. The Compensation Committee’s decisions are based upon broad performance objectives under that plan. +The executive officers are eligible to receive shares of Company Common Stock subject to options and restricted shares of Company Common Stock under the Company’s Stock Incentive Plans, in such amounts and with such terms and conditions as determined by the Compensation Committee at the time of grant. All of the executive officers are eligible to participate in the Company’s SRP. The executive officers are eligible to participate in the Company’s regular employee benefit programs, including the 401(k) Plan with Company match, group life insurance, group medical and dental coverage, vision and other group benefit plans. All of the executive officers are eligible for the Retirement Income Plan although benefit accruals were frozen in 2002. For more information on these plans, see “Compensation Discussion and Analysis” on page 14 , and “Benefit Plans” on page 24 . +22 +OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END +The Company does not have any outstanding option awards made in prior years to the executives named in our Summary Compensation Table. The table below sets forth the total number of restricted shares of Common Stock outstanding at December 31, 2018 that were granted in prior years to the executives, but have not yet vested, together with the market value of these unvested shares based on the $9.87 closing price of our Common Stock on December 31, 2018. +Option Awards +Stock Awards +Name +Number of +Securities +Underlying +Unexercised +Options +(#) +Exercisable +Number of +Securities +Underlying +Unexercised +Options +(#) +Un-exercisable +Option +Exercise +Price +($) +Option +Expiration +Date +Number of +Shares or +Units of Stock +That Have Not +Vested +(#) +Market Value +of Shares or +Units of Stock +That Have +Not Vested +($) +Richard A. Hubbell +–– +–– +–– +–– +232,500 (1 ) +2,294,780 +Ben M. Palmer +–– +–– +–– +–– +142,500 (1 ) +1,406,480 +R. Randall Rollins +–– +–– +–– +–– +232,500 (1 ) +2,294,780 +(1) +The Company has granted employees time lapse restricted shares that vest one-fifth per year beginning on the second anniversary of the grant date. Shares of restricted stock granted to the executive officers that have not vested as of December 31, 2018 are summarized in the table that follows: +Name +Number of shares +Grant date +Date fully vested +Richard A. Hubbell +15,000 +1/22/2013 +1/22/2019 +22,500 +1/28/2014 +1/28/2020 +45,000 +1/27/2015 +1/27/2021 +60,000 +1/26/2016 +1/26/2022 +45,000 +1/24/2017 +1/24/2023 +45,000 +1/23/2018 +1/23/2024 +Ben M. Palmer +9,000 +1/22/2013 +1/22/2019 +13,500 +1/28/2014 +1/28/2020 +27,000 +1/27/2015 +1/27/2021 +36,000 +1/26/2016 +1/26/2022 +27,000 +1/24/2017 +1/24/2023 +30,000 +1/23/2018 +1/23/2024 +R. Randall Rollins +15,000 +1/22/2013 +1/22/2019 +22,500 +1/28/2014 +1/28/2020 +45,000 +1/27/2015 +1/27/2021 +60,000 +1/26/2016 +1/26/2022 +45,000 +1/24/2017 +1/24/2023 +45,000 +1/23/2018 +1/23/2024 +23 +OPTION EXERCISES AND STOCK VESTED +The following table sets forth: +• +the number of shares of Common Stock acquired by the executives named in the Summary Compensation Table upon the exercise of stock options during the fiscal year ended December 31, 2018; +• +the aggregate dollar amount realized on the exercise date for such options computed by multiplying the number of shares acquired by the difference between the market value of the shares on the exercise date and the exercise price of the options; +• +the number of restricted shares of Common Stock acquired by the executives named in the Summary Compensation Table upon the vesting of shares during the fiscal year ended December 31, 2018; and +• +the aggregate dollar amount realized on the vesting date for such restricted stock computed by multiplying the number of shares which vested by the market value of the shares on the vesting date. +Option Awards +Stock Awards +Name +Number of Shares +Acquired on Exercise +(#) +Value Realized on +Exercise +($) +Number of Shares +Acquired on Vesting +(#) +Value Realized on +Vesting +($) +Richard A. Hubbell +–– +–– +71,250 +997,990 +Ben M. Palmer +–– +–– +42,750 +645,070 +R. Randall Rollins +–– +–– +71,250 +997,790 +BENEFIT PLANS +The table below shows the present value of accumulated benefits payable to each of the named executive officers, including the number of years of service credited to each such named executive officer, under the Retirement Income Plan determined using interest rate and mortality rate assumptions consistent with those used in the Company’s financial statements. +Pension Benefits +Name +Plan Name +Number of +Years Credited +Service +(#) +Present +Value of +Accumulated +Benefit +($) +Payments During +Last Fiscal Year +($) +Richard A. Hubbell +Retirement Income Plan +15 +403,966 +42,314 +Ben M. Palmer +Retirement Income Plan +4 +85,815 +–– +R. Randall Rollins +Retirement Income Plan +30 +1,881,323 +261,571 +The Company’s Retirement Income Plan, a trusteed defined benefit pension plan, provides monthly benefits upon retirement at age 65 to eligible employees. In 2002, the Company’s Board of Directors approved a resolution to cease all future benefit accruals under the Retirement Income Plan effective March 31, 2002. Retirement Income Plan benefits are based on the average of the employee’s compensation from the Company for the five consecutive complete calendar years of highest compensation during the last ten consecutive complete calendar years (“final average compensation”) immediately preceding March 31, 2002. The benefits are computed as the product of 1.5 percent of final average compensation multiplied by years of credited service (up to 30 years) reduced by an adjustment for benefits drawn from social security. Adjustments have been made for age and the IRS mandated compensation limitations. The final average compensation for Mr. Palmer is $179,900. +24 +The annual benefit payable at the later of retirement or age 65 for the named executive officers is approximately $9,400 for Mr. Palmer. The Plan also provides reduced early retirement benefits at age 55 or older with 15 or more years of service. Mr. Hubbell is voluntarily receiving distributions from the plan even though he has not retired from the Company. In addition, as an owner with stock ownership in excess of five percent of the Company’s voting securities, Mr. Rollins is required to receive mandatory distributions currently, even though he has not retired from the Company. The amount of distributions received during 2018 has been disclosed in the table above and is not subject to change after retirement. +401(k) Plan +Effective July 1, 1984, the Company adopted a qualified retirement plan designed to meet the requirements of Section 401(k) of the Code. The Company made matching contributions of fifty cents ($0.50) for each dollar ($1.00) of a participant’s contribution to the 401(k) Plan that does not exceed six percent of his or her annual compensation as of December 31, 2018. Effective January 1, 2019, the Company makes 100 percent matching contributions for each dollar ($1.00) of a participant’s contribution to the 401(k) Plan for the first three percent of his or her annual compensation and fifty cents ($0.50) for each dollar ($1.00) of a participant’s contribution to the 401(k) Plan for the next three percent of his or her annual compensation. The only form of benefit payment under the 401(k) Plan is a single lump-sum payment equal to the vested balance in the participant’s account on the date the distribution is processed. Under the 401(k) Plan, the full amount of a participant’s vested accrued benefit is payable upon his termination of employment, retirement, total and permanent disability, or death. Also under the 401(k) Plan, a participant may withdraw his or her pre-tax contributions to the extent of certain specified instances of financial hardship and may withdraw any amount from his or her pre-tax contribution account for any reason after attaining age 59 ½. In addition, a participant may withdraw any amount from his or her rollover account for any reason. Amounts contributed by the Company to the accounts of the named executive officers under this plan are reported in the “All Other Compensation” column of the Summary Compensation Table on page 20 . +NONQUALIFIED DEFERRED COMPENSATION +The SRP has been established as a nonqualified plan that is designed to comply with the provisions of the American Jobs Creation Act of 2004 (including Section 409A of the Internal Revenue Code) for the cash contributions made to certain longer serviced employees in lieu of freezing of the Retirement Income Plan benefit accruals effective in 2002; the SRP also has a compensation deferral option for eligible employees. The contributions and deferrals to the SRP are invested in funds held in a rabbi trust. +Name +Executive +Contributions +in Last FY +($) (1) +Registrant +Contributions +in Last FY +($) +Aggregate +Earnings in +Last FY +($) +Aggregate +Withdrawals/ +Distributions +($) +Aggregate +Balance at +Last FYE +($) +Richard A. Hubbell +–– +–– +(20,430 ) +–– +372,656 +Ben M. Palmer +47,614 +–– +(40,713 ) +–– +735,459 +R. Randall Rollins +–– +–– +–– +–– +–– +(1) +Includes $36,114 of the base salary for 2018 disclosed in the Summary Compensation Table, which have been deferred by the executive officer pursuant to the SRP. The remaining deferral amounts, if any, represent deferrals of bonus compensation that was paid in 2018. +The deferral option provides that participants may defer up to 50 percent of their base salary and up to 100 percent of their annual bonus with respect to any given plan year, subject to a $2,000 per plan year minimum. All of the salary and bonus deferrals are fully vested. Accounts are credited with hypothetical earnings, and/or debited with hypothetical losses, based on the performance of certain “Measurement Funds.” Account values are calculated as if the funds from deferrals and contributions had been converted into shares or other ownership units of selected Measurement Funds by purchasing (or selling, where relevant) such shares or units at the current purchase price of the relevant Measurement Fund at the time of the participant’s selection. The benefits are unsecured general obligations of the Company to the +25 +participants, and these obligations rank in parity with the Company’s other unsecured and unsubordinated indebtedness. To the extent that the Company’s obligations under the SRP exceed assets available under the trust, the Company may be required to seek additional funding sources to fund its liability under the SRP. +Generally, the SRP provides for distributions of any deferred amounts upon the earliest to occur of a participant’s death, disability, retirement or other termination of employment (a “Termination Event”). However, for any deferrals of base salary and bonus compensation (but not Company contributions), participants are entitled to designate a distribution date which is prior to a Termination Event. The SRP allows a participant to elect to receive distributions in installments or lump-sum payments. +POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL +The following table describes the potential payments and benefits under the Company’s compensation and benefit plans and arrangements to which the named executive officers would be entitled upon termination of employment. There are no other agreements, arrangements or plans that entitle executive officers to severance, perquisites, or other enhanced benefits upon termination of their employment except as described below. Additional payments or benefits to a terminating executive officer would be at the discretion of the Compensation Committee. +In accordance with the terms of the defined benefit plan, the executive officers are not entitled to additional benefits at death or disability. The amounts payable at retirement are disclosed in the “Benefit Plans” section on page 24 . The executive officers can choose to receive the amounts accumulated in the SRP either as a lump-sum or in installments at retirement, death or disability. These amounts have been disclosed under the “Nonqualified Deferred Compensation” section on page 25 . The table below reflects the incremental restricted shares and their values that would become vested as of December 31, 2018 using the closing market price of  $9.87 per share for our Common Stock, as of that date, in the case of retirement, disability, death or change in control. +Stock Awards +Name +Number of shares +underlying unvested +stock +(#) +Unrealized value of +unvested stock +($) +Richard A. Hubbell +• +Retirement +59,813 +590,350 +• +Disability +87,968 +868,240 +• +Death +232,500 +2,294,780 +• +Change in control +232,500 +2,294,780 +Ben M. Palmer +• +Retirement +–– +–- +• +Disability +53,239 +525,470 +• +Death +142,500 +1,406,480 +• +Change in control +142,500 +1,406,480 +R. Randall Rollins +• +Retirement +59,813 +590,350 +• +Disability +87,968 +868,240 +• +Death +232,500 +2,294,780 +• +Change in control +232,500 +2,294,780 +26 +Accrued Pay and Regular Retirement Benefits +The amounts shown in the preceding table do not include the following since they are provided on a non-discriminatory basis to salaried employees generally upon termination of employment. These include: +• +Accrued salary and vacation pay. +• +Distributions of plan balances under the 401(k) Plan. +Pension Benefit and Deferred Compensation +The Retirement Income Plan does not provide for lump sum payments for a participant including executive officers for instances other than retirement. The Retirement Income Plan is described above. Upon termination, the executive officers will receive a distribution of the balance in their SRP account. These amounts are disclosed under the “Nonqualified Deferred Compensation” section on page 25 . +Change in Control or Severance. The Company does not have any severance for its executive officers. However, upon the occurrence of a “Change in Control,” as determined by the Board of Directors, all unvested time-lapse restricted stock shall immediately vest. +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +Effective with the spin-off in 2001, the Company began providing certain administrative services to Marine Products. The service agreements between Marine Products and the Company provide for the provision of services on a cost reimbursement basis and may be terminated upon six months’ notice. The services covered by these agreements include administration of certain employee benefit programs and other administrative services. Charges from the Company (or from corporations which are subsidiaries of the Company) for such services aggregated approximately $873,000 in 2018. +RPC and Marine Products own 50 percent each of a limited liability company called 255 RC, LLC that was created for the joint purchase and ownership of a corporate aircraft. Each of RPC and Marine Products is a party to an operating lease agreement with 255 RC, LLC for a period of five years. During 2018, RPC recorded certain net operating costs comprised of rent and an allocable share of fixed costs of approximately $199,000 for the corporate aircraft. +During 2018, a subsidiary of RPC conducted business with companies owned by LOR, Inc. Mr. R. Randall Rollins, Chairman and Mr. Gary W. Rollins, Director, are officers, directors and controlling stockholders of LOR, Inc. In 2018, payments totaling approximately $1,467,000 were made to these LOR, Inc. companies primarily for the purchase of parts and repair services related to certain of RPC’s oilfield operating equipment. RPC believes the charges incurred are at least as favorable as the charges that would have been incurred for similar purchases from unaffiliated third parties. +RPC receives certain administrative services including an allocation for office space from Rollins. The service agreements between Rollins and the Company provide for the provision of services on a cost reimbursement basis and are terminable on six months’ notice. The services covered by these agreements include office space, administration of certain employee benefit programs, and other administrative services. Charges to the Company (or to corporations which are subsidiaries of the Company) for such services and rent aggregated approximately $101,000 in 2018. +A group that includes the Company’s Chairman of the Board, R. Randall Rollins, his brother Gary W. Rollins, who is also a director, and certain companies under their control, possesses in excess of fifty percent of the Company’s voting power. Please refer to the discussion above under the heading, “Corporate Governance and Board of Directors Committees and Meetings, Director Independence and NYSE Requirements, Controlled Company Exemption.” The group discussed above also controls in excess of fifty percent of Marine Products’ voting power. +Our Code of Business Conduct and Ethics for Directors and Executive Officers and Related Party Transactions Policy provides that related party transactions, as defined in Regulation S-K, Item 404(a) must be reviewed, approved and/or ratified by our Nominating and Corporate Governance Committee. As set forth in our Code, our Nominating and Corporate Governance Committee has the responsibility to ensure that it only approves or ratifies related party transactions that are in compliance with applicable law, +27 +consistent with the Company’s corporate governance policies (including those relative to conflicts of interest and usurpation of corporate opportunities) and on terms that are deemed to be fair to the Company. The Committee has the authority to hire legal, accounting, financial or other advisors as it may deem necessary or desirable and/or to delegate responsibilities to executive officers of the Company in connection with discharging its duties. A copy of the Code is available on our website at www.rpc.net under the Governance section. All related party transactions for the fiscal year ended December 31, 2018 were reviewed, approved and/or ratified by the Nominating and Governance Committee in accordance with the Code. +INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +Principal Auditor +Grant Thornton LLP (“Grant Thornton”) served as the Company’s independent registered public accounting firm for the fiscal years ended December 31, 2018 and 2017. +The Audit Committee has appointed Grant Thornton as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2019. Grant Thornton has served as the Company’s independent registered public accounting firm for many years and is considered by management to be well qualified. Representatives of Grant Thornton are expected to be present at the Annual Meeting and will have an opportunity to make a statement if they so desire and will be available to respond to appropriate questions. +Aggregate fees billed by the Company’s independent registered public accounting firm are set forth below: +2018 +2017 +Audit fees and quarterly reviews (1) +$ +1,031,620 +$ +1,051,780 +Audit related fees +–– +–– +Tax fees +–– +–– +All other fees +–– +–– +(1) +Audit fees include fees for audit or review services in accordance with generally accepted auditing standards, such as statutory audits and services rendered for compliance with Section 404 of the Sarbanes-Oxley Act. +Pre-approval of Services +All of the services described above were pre-approved by the Company’s Audit Committee. The Audit Committee has determined that the payments made to its independent registered public accounting firm for these services are compatible with maintaining such auditors’ independence. A majority of the hours expended on the principal accountant’s engagement to audit the financial statements of the Company for the fiscal year ended December 31, 2018 was attributable to work performed by full-time, permanent employees of the principal accountant. +The Audit Committee is directly responsible for the appointment and termination, compensation, and oversight of the work of the independent registered public accounting firm, including resolution of disagreements between management and the independent registered public accounting firm regarding financial reporting. The Audit Committee is responsible for pre-approving all audit and non-audit services provided by the independent registered public accounting firm and ensuring that they are not engaged to perform the specific non-audit services proscribed by law or regulation. The Audit Committee has delegated pre-approval authority to its Chairman with the stipulation that his decision is to be presented to the full Committee at its next scheduled meeting. The Audit Committee has no other pre-approval policies. +28 +STOCKHOLDER PROPOSALS +Appropriate proposals of stockholders intended to be presented at the Company’s 2020 Annual Meeting of Stockholders must be received by the Company by November 22, 2019 in order to be included, pursuant to Rule 14a-8 promulgated under the Exchange Act, in the proxy statement and form of proxy relating to that meeting. With regard to such stockholder proposals, if the date of the next annual meeting of stockholders is advanced or delayed more than 30 calendar days from April 23, 2020, the Company will, in a timely manner, inform its stockholders of the change and of the date by which such proposals must be received. Stockholders desiring to present business at the 2020 Annual Meeting of Stockholders outside of the stockholder proposal rules of Rule 14a-8 of the Exchange Act and instead pursuant to Article Twenty-Seventh of the By-laws must prepare a written notice regarding such proposal addressed to The Corporate Secretary, RPC, Inc., 2801 Buford Highway NE, Suite 520, Atlanta, Georgia 30329, and deliver to or mailed and received by no later than January 25, 2020 and no earlier than December 16, 2019. Stockholders should consult the By-laws for other specific requirements related to such notice and proposed business. +With respect to stockholder nomination of directors, the By-laws provide that nominations for the election of directors may be made by any stockholder entitled to vote for the election of directors. Nominations must comply with an advance notice procedure which generally requires with respect to nominations for directors for election at an annual meeting, that written notice be addressed to: The Corporate Secretary, RPC, Inc., 2801 Buford Highway NE, Suite 520, Atlanta, Georgia 30329, and be received not less than 90 nor more than 130 days prior to the anniversary of the prior year’s annual meeting and set forth, among other requirements specified in the By-laws, the name, age, business address and, if known, residence address of the nominee proposed in the notice, the principal occupation or employment of the nominee for the past five years, the nominee’s qualifications, the class or series and number of shares of capital stock of the Company which are owned beneficially or of record by the person and any other information relating to the person that would be required to be disclosed in a proxy statement or other filings. Other specific requirements related to such notice, including required disclosures concerning the stockholder intending to present the nomination, are set forth in the By-laws. Notices of nominations must be received by the Corporate Secretary of the Company no later than January 25, 2020 and no earlier than December 16, 2019, with respect to directors to be elected at the 2020 Annual Meeting of Stockholders. +EXPENSES OF SOLICITATION +The Company will bear the cost of soliciting proxies. Upon request, we will reimburse brokers, dealers and banks, or their nominees, for reasonable expenses incurred in forwarding copies of the proxy material to their beneficial stockholders of record. Solicitation of proxies will be made principally by mail. Proxies also may be solicited in person or by telephone, facsimile or other means by our directors, officers and regular employees. These individuals will receive no additional compensation for these services. The Company has retained Georgeson Shareholder Communications, Inc. to conduct a broker search and to send proxies by mail for an estimated fee of approximately $66,000 including shipping expenses. +ANNUAL REPORT +The Company’s Annual Report to Stockholders, including its Annual Report on Form 10-K for the fiscal year ended December 31, 2018, without exhibits, is being mailed to stockholders with this Proxy Statement. The Annual Report is not considered proxy-soliciting material. +FORM 10-K +Upon the written request of any record or beneficial owner of the Company’s Common Stock whose proxy was solicited in connection with the 2019 Annual Meeting of Stockholders, the Company will furnish such owner, without charge, a copy of its Annual Report on Form 10-K, including the financial statements and the financial statement schedules (but without exhibits), for its fiscal year ended December 31, 2018. Requests for a copy of such Annual Report on Form 10-K should be addressed to Mr. Ben M. Palmer, Corporate Secretary, at RPC, Inc., 2801 Buford Highway NE, Suite 520, Atlanta, Georgia 30329. +29 +OTHER MATTERS +Our Board of Directors knows of no business other than the matters set forth herein which will be presented at the Annual Meeting. In as much as matters not known at this time may come before the Annual Meeting, the enclosed proxy confers discretionary authority with respect to such matters as may properly come before the Annual Meeting; and it is the intention of the persons named in the proxy to vote in accordance with their best judgment on such matters. +BY ORDER OF THE BOARD OF DIRECTORS +Ben M. Palmer +Corporate Secretary +Atlanta, Georgia +March 21, 2019 +30 +1 U P X Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. 02ZR9D + + Proposals — The Board of Directors recommend a vote FOR A Proposals 1 and 2. 2. To ratify the appointment of Grant Thornton LLP as independent registered public accounting firm of the Company for the fiscal year ending December 31, 2019. 1. To elect the three Class III nominees identified in the attached proxy statement to the Board of Directors: For Against Abstain Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title. Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box. B Authorized Signatures — This section must be completed for your vote to be counted. Please date and sign below. To consider and act upon such other business as may properly come before the Annual Meeting or any adjournment of the meeting. qIF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.q Annual Meeting Proxy Card 01 - Bill J. Dismuke 02 - Amy R. Kreisler 03 - Pamela R. Rollins 01 Mark here to WITHHOLD vote from all nominees Mark here to vote FOR all nominees For All EXCEPT - To withhold a vote for one or more nominees, mark the box to the left and the corresponding numbered box(es) to the right. 02 03 You may vote online or by phone instead of mailing this card. Online Go to www.envisionreports.com/RES or scan the QR code — login details are located in the shaded bar below. Phone Call toll free 1-800-652-VOTE (8683) within the USA, US territories and Canada Votes submitted electronically must be received by 5:00 p.m., Eastern Time, on April 22, 2019. Your vote matters – here’s how to vote! +Notice of 2019 Annual Meeting of Stockholders 2170 Piedmont Road, N.E., Atlanta, Georgia 30324 Proxy Solicited by Board of Directors for Annual Meeting — April 23, 2019 The undersigned hereby constitutes and appoints GARY W. ROLLINS and R. RANDALL ROLLINS, and each of them, jointly and severally, proxies, with full power of substitution, to vote all shares of Common Stock which the undersigned is entitled to vote at the Annual Meeting of Stockholders to be held on April 23, 2019, at 12:15 P.M. at 2170 Piedmont Road, NE, Atlanta, Georgia 30324, or any adjournment of the meeting. The undersigned acknowledges receipt of Notice of Annual Meeting of Stockholders and Proxy Statement, each dated March 21, 2019, grants authority to said proxies, or either of them, or their substitutes, to act in the absence of others, with all the powers which the undersigned would possess if personally present at such meeting and hereby ratifies and confirms all that said proxies or their substitutes may lawfully do in the undersigned’s name, place and stead. The undersigned instructs said proxies, or either of them, to vote as stated on the reverse side. (Continued and to be signed on the reverse side.) qIF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.q C Non-Voting Items + + Change of Address — Please print new address below. Proxy — RPC, INC. \ No newline at end of file diff --git a/raw/proxies/0000742278/0001144204-19-015247/proxy_rpt.txt b/raw/proxies/0000742278/0001144204-19-015247/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..8369135230b2e89729225389b989721486fa3433 --- /dev/null +++ b/raw/proxies/0000742278/0001144204-19-015247/proxy_rpt.txt @@ -0,0 +1,9 @@ +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +Effective with the spin-off in 2001, the Company began providing certain administrative services to Marine Products. The service agreements between Marine Products and the Company provide for the provision of services on a cost reimbursement basis and may be terminated upon six months’ notice. The services covered by these agreements include administration of certain employee benefit programs and other administrative services. Charges from the Company (or from corporations which are subsidiaries of the Company) for such services aggregated approximately $873,000 in 2018. +RPC and Marine Products own 50 percent each of a limited liability company called 255 RC, LLC that was created for the joint purchase and ownership of a corporate aircraft. Each of RPC and Marine Products is a party to an operating lease agreement with 255 RC, LLC for a period of five years. During 2018, RPC recorded certain net operating costs comprised of rent and an allocable share of fixed costs of approximately $199,000 for the corporate aircraft. +During 2018, a subsidiary of RPC conducted business with companies owned by LOR, Inc. Mr. R. Randall Rollins, Chairman and Mr. Gary W. Rollins, Director, are officers, directors and controlling stockholders of LOR, Inc. In 2018, payments totaling approximately $1,467,000 were made to these LOR, Inc. companies primarily for the purchase of parts and repair services related to certain of RPC’s oilfield operating equipment. RPC believes the charges incurred are at least as favorable as the charges that would have been incurred for similar purchases from unaffiliated third parties. +RPC receives certain administrative services including an allocation for office space from Rollins. The service agreements between Rollins and the Company provide for the provision of services on a cost reimbursement basis and are terminable on six months’ notice. The services covered by these agreements include office space, administration of certain employee benefit programs, and other administrative services. Charges to the Company (or to corporations which are subsidiaries of the Company) for such services and rent aggregated approximately $101,000 in 2018. +A group that includes the Company’s Chairman of the Board, R. Randall Rollins, his brother Gary W. Rollins, who is also a director, and certain companies under their control, possesses in excess of fifty percent of the Company’s voting power. Please refer to the discussion above under the heading, “Corporate Governance and Board of Directors Committees and Meetings, Director Independence and NYSE Requirements, Controlled Company Exemption.” The group discussed above also controls in excess of fifty percent of Marine Products’ voting power. +Our Code of Business Conduct and Ethics for Directors and Executive Officers and Related Party Transactions Policy provides that related party transactions, as defined in Regulation S-K, Item 404(a) must be reviewed, approved and/or ratified by our Nominating and Corporate Governance Committee. As set forth in our Code, our Nominating and Corporate Governance Committee has the responsibility to ensure that it only approves or ratifies related party transactions that are in compliance with applicable law, +27 +consistent with the Company’s corporate governance policies (including those relative to conflicts of interest and usurpation of corporate opportunities) and on terms that are deemed to be fair to the Company. The Committee has the authority to hire legal, accounting, financial or other advisors as it may deem necessary or desirable and/or to delegate responsibilities to executive officers of the Company in connection with discharging its duties. A copy of the Code is available on our website at www.rpc.net under the Governance section. All related party transactions for the fiscal year ended December 31, 2018 were reviewed, approved and/or ratified by the Nominating and Governance Committee in accordance with the Code. \ No newline at end of file diff --git a/raw/proxies/0000742278/0001558370-22-003630/proxy.txt b/raw/proxies/0000742278/0001558370-22-003630/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..fbcb02f9ed7ab92672c0f1afba8e8cbaa4d411d9 --- /dev/null +++ b/raw/proxies/0000742278/0001558370-22-003630/proxy.txt @@ -0,0 +1,1138 @@ +DEF 14A +1 +res-20220426xdef14a.htm +DEF 14A +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A INFORMATION +Proxy Statement Pursuant to Section 14(a) of the Securities +Exchange Act of 1934 (Amendment No. ) +Filed by the Registrant ☒ +Filed by a Party other than the Registrant ☐ +Check the appropriate box: +☐ +Preliminary Proxy Statement +☐ +Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +☒ +Definitive Proxy Statement +☐ +Definitive Additional Materials +☐ +Soliciting Material Pursuant to §240.14a-12 +RPC, Inc. +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +☒ +No fee required. +☐ +Fee paid previously with preliminary materials. +☐ +Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a6(i)(1) and 0-11 +RPC, INC. +NOTICE OF ANNUAL MEETING OF STOCKHOLDERS +2801 Buford Highway NE, Suite 300, Atlanta, Georgia 30329 +TO THE HOLDERS OF THE COMMON STOCK: +PLEASE TAKE NOTICE that the 2022 Annual Meeting of Stockholders of RPC, Inc., a Delaware corporation (“RPC” or the “Company”), will be held at 2170 Piedmont Road, NE, Atlanta, Georgia, on Tuesday, April 26, 2022, at 12:15 P.M., for the following purposes, as more fully described in the Proxy Statement accompanying this notice: +1. +To elect the three Class III nominees identified in the attached Proxy Statement to the Board of Directors; +2. +To ratify the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2022; and +3. +To consider and act upon such other business as may properly come before the Annual Meeting or any adjournment of the meeting. +The Proxy Statement dated March 15, 2022 is attached. +The Board of Directors has fixed the close of business on March 1, 2022 as the record date for the determination of stockholders entitled to notice of, and to vote at, the Annual Meeting or any adjournment thereof. +As permitted by the U.S. Securities and Exchange Commission rules, the Company is making the proxy materials relating to the Annual Meeting, including this Proxy Statement and the Company’s 2021 Annual Report on Form 10-K for the fiscal year ended December 31, 2021 (the “Annual Report”), available to our stockholders electronically via the Internet. On or about March 15, 2022, we mailed to our stockholders an Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be held on April 26, 2022 (the “Notice”) containing instructions on how to access this Proxy Statement and our Annual Report and vote online. If you received a Notice by mail, you will not receive a printed copy of the proxy materials in the mail unless you request a copy. The Notice instructs you on how to access and review all important information contained in the Proxy Statement and Annual Report. The Notice also instructs you on how you may submit your proxy over the Internet. If you received a Notice by mail and would like to receive a printed copy of our proxy materials, you should follow the instructions for requesting such materials contained on the Notice. +Important notice regarding the availability of proxy materials for the Annual Meeting of Stockholders to be held on April 26, 2022: The 2022 Proxy Statement and 2021 Annual Report on Form 10-K to security holders are available at https://www.proxy-direct.com/geo-32587. +Voting can be completed in one of four ways: +· +Returning the Proxy Card by Mail +· +Via Telephone at 1-800-337-3503 +· +Online at https://www.proxy-direct.com/geo-32587 +· +Attending the meeting to vote In Person +BY ORDER OF THE BOARD OF DIRECTORS +Ben M. Palmer +Corporate Secretary +Atlanta, Georgia +March 15, 2022 +Whether or not you expect to attend the annual meeting, please sign, date and return the enclosed proxy card promptly. Alternatively, you may vote your proxy by telephone or over the Internet by following the instructions on your proxy card or Notice. If you decide to attend the meeting, you may, if you wish, revoke the proxy and vote your shares in person. +PROXY STATEMENT +We are furnishing the proxy materials to stockholders on or about March 15, 2022. The Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be held on April 26, 2022, Proxy Statement and the Annual Report on Form 10-K are available at https://www.proxy-direct.com/geo-32587. +The following information concerning the proxy and the matters to be acted upon at the Annual Meeting of Stockholders to be held on April 26, 2022 is submitted by the Company to the stockholders in connection with the solicitation of proxies on behalf of the Company’s Board of Directors. +SOLICITATION OF AND POWER TO REVOKE PROXY +A form of proxy is enclosed. Each proxy submitted will be voted as directed, but if not otherwise specified, proxies solicited by the Board of Directors of the Company will be voted in favor of the candidates for election to the Board of Directors and in favor of ratification of the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2022. +A stockholder executing and delivering a proxy has power to revoke the same and the authority thereby given at any time prior to the exercise of such authority, if they so elect, by contacting either proxy holder, by timely submitting a later dated proxy changing their vote, or by attending the meeting and voting in person. However, a beneficial stockholder who holds his shares in street name must secure a proxy from their broker before they can attend the meeting and vote. All costs of solicitation have been, and will be, borne by the Company. +HOUSEHOLDING AND DELIVERY OF NOTICE OR PROXY MATERIALS +The Company has adopted the process called “householding” for any notice or proxy materials in order to reduce printing costs and postage fees. Householding means that stockholders who share the same last name and address will receive only one copy of the notice or proxy materials, unless we receive contrary instructions from any stockholder at that address. +If you prefer to receive multiple copies of the proxy materials at the same address, additional copies will be provided to you promptly upon written or oral request. If you are a stockholder of record, you may contact us by writing to the Company at 2801 Buford Highway NE, Suite 300, Atlanta, GA 30329 or by calling 404-321-2140. Eligible stockholders of record receiving multiple copies of the proxy materials can request householding by contacting the Company in the same manner. +CAPITAL STOCK +The outstanding capital stock of the Company on March 1, 2022 consisted of 216,493,794 shares of Common Stock, par value $0.10 per share. Holders of Common Stock are entitled to one vote (non-cumulative) for each share of such stock registered in their respective names at the close of business on March 1, 2022, the record date for determining stockholders entitled to notice of, and to vote at, the meeting or any adjournment thereof. +1 +A majority of the outstanding shares will constitute a quorum at the Annual Meeting. Abstentions will be counted for purposes of determining the presence or absence of a quorum for the transaction of business. In accordance with the General Corporation Law of the state of Delaware, the following votes are needed for approval of each proposal: +PROPOSAL +VOTE NEEDED FOR APPROVAL AND EFFECT OF ABSTENTION AND BROKER NON-VOTES +Proposal No. 1: The election of three Class III director nominees to serve as directors of the Company until our 2025 annual meeting of stockholders or until their successors are duly elected and qualified. +The election of the director nominees named herein will require the affirmative vote of a plurality of the votes cast by the shares of Company Common Stock entitled to vote in the election provided that a quorum is present at the Annual Meeting. +In the case of a plurality vote requirement (as in the election of directors), where no particular percentage vote is required, the outcome is solely a matter of comparing the number of votes cast for each nominee, with those nominees receiving the most votes being elected, and hence only votes for director nominees (and not abstentions or broker non-votes) are relevant to the outcome. In this case, the three nominees receiving the most votes will be elected. +Proposal No. 2: To ratify the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2022. +The affirmative vote of a majority of shares present in person or represented by proxy and entitled to vote at the meeting is required to approve the ratification of the appointment of the Company’s independent registered public accounting firm for fiscal year 2022. +Abstentions will have the effect of a vote against this proposal. +Broker non-votes will have no effect on this proposal and will be disregarded. +There are no rights of appraisal or similar dissenter’s rights with respect to any matter to be acted upon pursuant to this Proxy Statement. It is expected that shares held of record and beneficially by officers and directors of the Company and their affiliates, which in the aggregate represent approximately 66 percent of the outstanding shares of Common Stock, will be voted for the nominees and for the ratification of the appointment of the Company’s independent registered public accounting firm. +BOARD OF DIRECTORS AND CORPORATE GOVERNANCE +Meetings and Committees of the Board of Directors +The Company’s Board of Directors (Board) has an Audit Committee, Executive Committee, Human Capital Management and Compensation Committee and a Nominating and Corporate Governance Committee (Committees). The Board has adopted written charters for these Committees which are all available on our website at www.rpc .net under the section titled Governance . +2 +Under our Corporate Governance Guidelines, directors are expected to attend all regular and special meetings of the Board and Board committees upon which they serve. Directors are also expected to attend the Annual Stockholders Meeting. Each incumbent director attended at least 75 percent of the aggregate of all Board meetings and meetings of the Board committees on which they served during 2021, and all members of the Board at the time attended last year’s Annual Stockholders Meeting. +The following table shows the current membership (M) and chairperson (C) of the Board and each of the Board committees, the number of Board and Board committee meetings held in 2021 and actions taken by unanimous written consent in lieu of meetings: +Human Capital +Nominating & +Management and +Corporate +Board of +Audit +Executive +Compensation +Governance +Committee Member +Directors +Committee +Committee +Committee +Committee +Gary W. Rollins +C +M +Richard A. Hubbell +M +M +Susan R. Bell +M +M +Patrick J. Gunning +M +C +M +M +Jerry W. Nix (1) +M +M +C +C +Pamela R. Rollins +M +Amy Rollins Kreisler +M +Meetings Held +5 +5 +— +3 +2 +Actions Taken by Written Consent +1 +— +7 +— +— +(1) Lead Director +Audit Committee +The Audit Committee of the Board of Directors currently consists of Messrs. Patrick J. Gunning (Chairperson), Jerry W. Nix and Ms. Susan R. Bell. For the year ended December 31, 2021, Mr. Harry J. Cynkus served as the Chairperson of the Audit Committee and resigned at the end of 2021. The Audit Committee is responsible for, among other things: +● appointing the Company’s independent registered public accounting firm to audit the Company’s financial statements; +● assessing the independence and overseeing the performance of the Company’s independent registered public accounting firm; +● pre-approving all audit and all permissible non-audit services to be performed by the Company’s independent registered public accounting firm; +● discussing with the Company’s independent registered public accounting firm all matters required to be discussed under the standards of the Public Company Accounting Oversight Board, Securities and Exchange Commission (SEC) or other regulations; +● reviewing the Company’s financial statements and critical accounting policies and estimates; +● reviewing the adequacy and effectiveness of our internal controls and disclosure controls and procedures; +● assessing the performance of the Company’s internal audit department; +● reviewing the Company’s insider trading and anti-corruption policies; +● overseeing procedures for the receipt, retention, and treatment of complaints received by the Company regarding accounting, internal accounting controls, or auditing matters, and the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters; and +● overseeing compliance with the Company’s code of business conduct and ethics. +3 +The Board has determined that all of the members of the Audit Committee are independent as defined by the rules of the SEC and the New York Stock Exchange (NYSE). The Board has also determined that all members of the Audit Committee are qualified as “Audit Committee Financial Experts” within the meaning of the rules of the SEC and that they have accounting and related financial management expertise within the meaning of the NYSE listing standards. The Board has also determined that Ms. Bell’s simultaneous service on the audit committees of four public companies will not impair her ability to effectively serve on the Company’s Audit Committee. +Diversity Committee +In December 2021, the Board dissolved the Diversity Committee and changed the name of the Compensation Committee to the “Human Capital Management and Compensation Committee.” The Human Capital Management and Compensation Committee, among other things, is responsible for overseeing the Company’s diversity efforts as noted below. The previous function of the Diversity Committee until December 2021 was to monitor compliance with applicable non-discrimination laws. Each member of the Diversity Committee in 2021 was independent. +Human Capital Management and Compensation Committee +The Human Capital Management and Compensation Committee of the Board of Directors of the Company consists of Messrs. Jerry W. Nix (Chairman) and Patrick J. Gunning. The Human Capital Management and Compensation Committee is responsible for, among other things: +● reviewing the Company’s executive compensation philosophy and strategy; +● reviewing and approving the corporate goals and objectives relevant to the compensation of the Company’s CEO and executive officers; +● evaluating the performance of the Company’s CEO and executive officers; +● reviewing the compensation of the Company’s non-employee directors for service on the Board and its committees and recommending changes to the Company’s director compensation program as appropriate ; +● determining the stock ownership guidelines for the Company’s CEO, executive officers, and other key executives and monitoring compliance with such guidelines; +● overseeing the development and management of the Company’s human capital management strategy and policies, including, but not limited to, those policies and strategies regarding diversity, equity and inclusion; and +● reviewing, approving and administering incentive compensation and equity compensation plans for executive officers and directors. +As noted above, in December 2021, the Board dissolved the Diversity Committee and changed the name of the Compensation Committee to the Human Capital Management and Compensation Committee. The Board also approved a written charter of the Human Capital Management and Compensation Committee which outlines the Committee’s expanded responsibilities as outlined above. The Board has determined that all members of the Human Capital Management and Compensation Committee are independent as defined by the rules of the SEC and NYSE. In addition, each member of our Human Capital Management and Compensation Committee is also a non-employee director, as defined pursuant to Rule 16b-3 of the Exchange Act. +The Company is not required by law or by the NYSE rules to have a formal compensation committee charter since we are a controlled corporation as described below under the heading Director Independence and NYSE Requirements . However, we have established a written charter of the Human Capital Management and Compensation Committee to promote responsible corporate governance practices, and we currently intend to maintain the committee going forward. +4 +Human Capital Management and Compensation Committee Interlocks and Insider Participation +The Board has determined that each member of the Human Capital Management and Compensation Committee is independent in accordance with the NYSE rules. The Human Capital Management and Compensation Committee consists of Messrs. Nix and Gunning. Neither of these individuals is a current or former officer or employee of the Company or any of its subsidiaries. Related party transactions and the independence of the non-employee members of the Company’s Board are discussed in more detail under the following sections, Director Independence and NYSE Requirements, starting on page 7 and Certain Relationships and Related Party Transactions, starting on page 33 of this Proxy Statement. No executive officer of the Company has served as a director or member of the compensation committee or other board committee of another entity that had an executive officer who served on the Company’s Board or Human Capital Management and Compensation Committee. +Nominating and Corporate Governance Committee +The Nominating and Corporate Governance Committee of the Board of Directors of the Company consists of Messrs. Jerry W. Nix (Chairman) and Patrick J. Gunning. The Nominating and Corporate Governance Committee is responsible for, among other things: +● determining the appropriate qualifications required for the members of the Board; +● recommending Board committee chairs and assignments; +● recommending to our Board nominees for director and to consider any nominations properly made by a stockholder, to make recommendations to our Board of Directors regarding the agenda for our Annual Meetings of Stockholders, and appropriate action to be taken in response to any stockholder proposals; +● conducting periodic reviews of the composition and size of the Board and its committees, as well as the frequency and procedures of Board meetings; +● overseeing compliance with key corporate governance policies, including the company’s corporate governance guidelines and independence guidelines; +● reviewing and approving related party transactions; +● reviewing and monitoring the Company’s ESG practices, policies, programs and public disclosures; and +● reviewing and assessing the adequacy of the Company’s Code of Business Conduct and Ethics. +The Company is not required by law or by the NYSE rules to have a nominating committee since we are a controlled corporation as described below under the heading “ Director Independence and NYSE Requirements .” However, we have established a Nominating and Corporate Governance Committee and a written charter to promote responsible corporate governance practices, and we currently intend to maintain the committee going forward. +Director Nominations +Under Delaware law, there are no statutory criteria or qualifications for directors. No criteria or qualifications have been prescribed by the Board at this time. The Nominating and Corporate Governance Committee does not have a formal policy with regard to the consideration of director candidates. As such, there is no formal policy relative to diversity, although as noted below, it is one of many factors that the Nominating and Corporate Governance Committee has the discretion to factor into its decision making. This discretion would extend to how the Committee might define diversity in a particular instance — whether in terms of background, viewpoint, experience, education, race, gender, national origin or other considerations. The Committee acts under the guidance of the Corporate Governance Guidelines approved by the Board of Directors and posted on the Company’s website at www.rpc.net under the Governance section. The Board believes that it should preserve maximum flexibility in order to select directors with sound judgment and other desirable qualities. According to the Company’s Corporate Governance Guidelines, the Board of Directors will be responsible for selecting nominees for election to the Board of Directors. The Board delegates the screening process to the Nominating and Corporate Governance Committee. This Committee is responsible for determining the appropriate skills and characteristics required of Board members in the context of the then current makeup of the Board. This determination takes into account all factors which the Committee considers appropriate, such as independence, experience, strength of character, mature judgment, technical skills, +5 +diversity, age and the extent to which the individual would fill a present need on the Board. The Bylaws provide that nominations for the election of directors may be made by any stockholder entitled to vote for the election of directors. Nominations must comply with an advance notice procedure which generally requires, with respect to nominations for directors for election at an annual meeting, that written notice be addressed to: The Corporate Secretary, RPC, Inc., 2801 Buford Highway NE, Suite 300, Atlanta, Georgia 30329, and received not less than 90 nor more than 130 days prior to the anniversary of the prior year’s annual meeting and set forth among other requirements specified in the Bylaws, the name, age, business address and, if known, residence address of the nominee proposed in the notice, the principal occupation or employment of the nominee for the past five years, the nominee’s qualifications, the class or series and number of shares of capital stock of the Company which are owned beneficially or of record by the person and any other information relating to the person that would be required to be disclosed in a proxy statement or other filings. Other requirements related to the notice are contained in the Bylaws and stockholders are advised to carefully review those requirements to ensure that nominations comply with the Bylaws. The Committee will consider nominations from stockholders that satisfy these requirements. +The Committee is responsible for screening the nominees that are selected by the Board of Directors for nomination to the Board and for service on committees of the Board. All of the nominees for directors being voted upon at the Annual Meeting to be held on April 26, 2022 are currently serving on the Board of Directors. +Board Leadership +The Company has had separate persons serving as its Chairman of the Board and Chief Executive Officer since 2005. Mr. Gary W. Rollins is the Non-Executive Chairman and chairs our Board meetings. Mr. Richard A. Hubbell is our President and Chief Executive Officer. We believe that this represents the appropriate structure for us at this time; the Chairman of the Board provides general oversight and strategic planning for the Company, while the President and Chief Executive Officer focuses on optimizing operational efficiencies. +Risk Oversight by Board of Directors +Our Board of Directors’ oversight of risk has not been delegated to any Board Committee. “Risk” is an extremely broad concept that extends to multiple functional areas and crosses multiple disciplines. As such, risk may be addressed from time to time by the full Board or by one or more of our Committees. Senior management is responsible for identifying and managing material risks that we face while insurable risks and litigation risks are handled primarily by the risk management department. Senior management provides the Board with a summary of insurance coverage annually and updates as deemed necessary. Liquidity risk, credit risk and risks associated with our credit facilities and cash management are handled primarily by our finance department which regularly provides a financial report to both the Audit Committee and to the full Board. Operational, business, regulatory and political risks are handled primarily by senior executive management which regularly provides various operational reports to, among others, the full Board, the Executive Committee and the Audit Committee. +Cybersecurity Risk Oversight +Cybersecurity has become a particularly acute area of risk for companies of all sizes and in all industries, including our company. While management is primarily responsible for our cybersecurity program and managing our cybersecurity risks, including our procedures and day-to-day operations, our Audit Committee oversees our risk management program which includes oversight of cybersecurity risks. The Audit Committee reviews our cybersecurity risks and incidents and any other risks and incidents relevant to our information technology systems controls and security, and determines if any such risks and incidents should be disclosed in our periodic filings with the SEC. +In performing its oversight responsibilities, our Audit Committee receives periodic reports and reviews our information technology and cybersecurity risk profile. We use a variety of security products and vendors to protect our information technology infrastructure and data. Our programs continue to adapt and mature as threats continue to evolve. We maintain data encryption, monitoring, loss prevention, data storage, identity/authentication controls, including two-factor authentication tools, and anti-malware and anti-virus solutions. We also perform penetration tests and cyber simulations to +6 +practice our incident response procedures. Our cybersecurity plans are reviewed on an annual basis, and we prioritize new and updated programs as needed to respond to the cybersecurity risks we may face. We train employees on cybersecurity risks, conduct annual tabletop exercises and generate internal phishing campaigns to assess the effectiveness of the training. We also regularly review our privacy policies to ensure compliance with all applicable data privacy regulations. +Director Independence and NYSE Requirements +Controlled Company Exemption +The Company has elected to be treated as a “controlled company” as defined by NYSE Section 303A.00. This Section provides that a controlled company need not comply with the requirements of Sections 303A.01, 303A.04 and 303A.05 of the NYSE Listed Company Manual. Section 303A.01 requires that listed companies have a majority of independent directors. As a controlled company, this Section does not apply to the Company. Sections 303A.04 and 303A.05 require that listed companies have a nominating and corporate governance committee and a compensation committee, in each case composed entirely of independent directors, and that each of these committees must have a charter that addresses both the committee’s purpose and responsibilities and the need for an annual performance evaluation by the committee. While the Company has a nominating and corporate governance committee and a compensation committee, and each of these committees has a written charter that is available on the Company’s website, it is not required to and does not comply with all of the provisions of Sections 303A.04 and 303A.05. The Company is a “controlled company” because a group that includes the Company’s Non-Executive Chairman, Mr. Gary W. Rollins, and certain companies under his control, possesses in excess of fifty percent of the Company’s voting power. This means that they have the ability to determine the outcome of the election of directors at the Company’s annual meetings and to determine the outcome of many significant corporate transactions, many of which only require the approval of a majority of the Company’s voting power. Such a concentration of voting power could also have the effect of delaying or preventing a third party from acquiring the Company at a premium. +The Company’s Audit Committee is composed of three “independent” directors as defined by the Company’s Corporate Governance Guidelines, the NYSE rules, the Exchange Act, SEC regulations thereunder, and the Company’s Audit Committee Charter. All of the members of both the Human Capital Management and Compensation, and Nominating and Corporate Governance Committees are also “independent” directors. The current independent directors of the Company are Messrs. Jerry W. Nix and Patrick J. Gunning and Ms. Susan R. Bell. Mr. Harry J. Cynkus was an independent director during 2021. +Independence Guidelines +Under NYSE listing standards, to be considered independent, a director must be determined to have no material relationship with the Company other than as a director. The NYSE standards set forth a nonexclusive list of relationships which are conclusively deemed material. The Company’s Independence Guidelines are posted on the Company’s website at www.rpc.net under the Governance section and include categorical standards for determining independence in specific situations. +Audit Committee Charter +Under the Company’s Audit Committee Charter, in accordance with NYSE listing requirements and the Securities Exchange Act of 1934, all members of the Audit Committee must be independent of management and the Company. A member of the Audit Committee is considered independent as long as he or she (i) does not accept any consulting, advisory, or compensatory fee from the Company, other than as a director or committee member; (ii) is not an affiliated person of the Company or its subsidiaries; and (iii) otherwise meets the independence requirements of the NYSE and the Company’s Corporate Governance Guidelines. +7 +Nonmaterial Relationships +After reviewing all of the relationships between the independent directors and the Company, the Board of Directors determined that none of independent directors had any relationships not included within the categorical standards set forth in the Independence Guidelines and discussed above except as follows: +1. Mr. Cynkus was employed by Rollins, Inc. from 1998 to 2015 and held several positions during that time including Senior Vice President, Chief Financial Officer and Treasurer. +2. Messrs. Nix, Gunning, and Ms. Bell also serve on the Boards of Rollins, Inc. and Marine Products Corporation, of which Mr. Gary W. Rollins and Ms. Pamela R. Rollins are directors and have voting control over which is held by a control group of which Mr. Gary W, Rollins is a part. Mr. Gary W. Rollins is also an executive officer of Rollins, Inc. Mr. Cynkus was also a director of Rollins, Inc. and Marine Products Corporation during 2021. +As required by the Independence Guidelines, the Board of Directors unanimously concluded that the above-listed relationships would not affect the independent judgment of the independent directors, based on their experience, character and independent means, and therefore do not preclude an independence determination. All of the members of the Audit Committee are also independent under the heightened standards required for Audit Committee members. +The Company’s non-management directors meet at regularly scheduled executive sessions without management. In accordance with the NYSE corporate governance listing standards, Mr. Jerry W. Nix was elected Lead Director in 2021 and presided over the executive sessions held during 2021. +Corporate Governance Guidelines +We have adopted Corporate Governance Guidelines to formalize and promote better understanding of our policies and procedures. At least annually, the Board reviews these guidelines. As required by the rules of the NYSE, our Corporate Governance Guidelines require that our non-management directors meet in regularly scheduled executive sessions each year without management, and such meetings are currently required to occur at least twice annually. +At the Company’s website at www.rpc.net , under the Governance section, you may access a copy of its Corporate Governance Guidelines, Audit Committee Charter, Human Capital Management and Compensation Committee Charter, Nominating and Corporate Governance Committee Charter, Code of Business Conduct, Code of Business Conduct and Ethics for Directors and Executive Officers and Related Party Transactions Policy, and Independence Guidelines. +Code of Business Conduct +The Company has adopted a Code of Business Conduct applicable to all directors, officers and employees generally, as well as a Code of Business Conduct and Ethics for Directors and Executive Officers and Related Party Transactions Policy applicable to the principal executive officer, principal financial officer, and directors. Both codes are available on the Company’s website at www.rpc.net under the Governance section. +Director Communications +The Company also has a process for interested parties, including stockholders, to send communications to the Board of Directors, Lead Director, any of the Board committees or the non-management directors as a group. Such communications should be addressed as follows: +8 +Inc. +Suite 300 +Mr. Jerry W. Nix +c/o Internal Audit Department +RPC, Inc. +2801 Buford Highway NE, Suite 300 +Atlanta, Georgia 30329 +The above instructions for communications with the directors are also posted on our website at www.rpc.net under the Governance section. All communications received from interested parties are forwarded to the Board of Directors. Any communication addressed solely to the Lead Director or the non-management directors will be forwarded directly to the appropriate addressee(s). +DIRECTOR COMPENSATION +Overview of the Non-Employee Director Compensation Program +Members of the Board who are not employees (Non-Employee Directors) receive compensation for their service. As an RPC employee, Mr. Hubbell does not receive compensation for his service as a Board member. The compensation program for our Non-Employee Directors is intended to provide a total compensation package that enables us to attract and retain qualified and experienced individuals to serve as directors and to align our directors’ interests with those of our stockholders. All Non-Employee Directors are also entitled to reimbursement of expenses for all services as a director, including reasonable travel expenses incurred in connection with required in-person attendance at board and committee meetings, committee participation or special assignments. +The Human Capital Management and Compensation Committee annually reviews each element and the total of our Non-Employee Director compensation program. In December 2021, the Human Capital Management and Compensation Committee and the Board approved changes to the Non-Employee Director compensation program for 2022. +2021 Annual Non-Employee Director Compensation Program +Cash Compensation +Under the Director Compensation Program in effect in 2021, our Non-Employee Directors received an annual cash retainer and Committee Chairs received additional annual cash retainers. All retainers are payable in equal quarterly installments in arrears. In addition, al l Non-Employee Directors also received compensation for their attendance at all regular and special committee meetings, payable on or after the date of the meeting. For each Non-Employee Director who is elected or appointed for the first time, the first quarterly installment of the annual retainers will be paid for the first quarter that ends on or after the date of his or her initial election or appointment, prorated based on service during the quarter. The following table sets forth the 2021 Non-Employee Director Compensation Program: +Board/Committee +Annual Chair Retainer +($) +Annual Non-Chair Retainer ($) +Meeting Attendance Fee ($) +Board of Directors +60,000 +60,000 +2,500 +Audit Committee +20,000 +- +2,500 +Human Capital Management and Compensation Committee +10,000 +- +2,000 +Diversity Committee +6,000 +- +1,500 +Nominating and Corporate Governance Committee +6,000 +- +1,500 +The Lead Director also receives an additional $2,500 for preparing to conduct each quarterly Board meeting. +9 +2021 Director Compensation Table +The following table sets forth the compensation paid to our directors for services rendered as a director for the year ended December 31, 2021. One of our directors, Mr. Richard A. Hubbell is an employee of the Company and his employee compensation information is set forth in the Summary Compensation Table under the Executive Compensation section of this Proxy Statement. Directors that are our employees do not receive any additional compensation for services rendered as a director. +All of the directors shown below have never been employed by the Company or paid a salary or bonus by the Company, have never been granted any options or other stock-based awards, and do not participate or have never participated in any Company sponsored retirement plans. +Name +Fees Earned or +Paid in Cash ($) +Stock Awards +($) +Option Awards +($) +Total +($) +Susan R. Bell +85,000 +— +— +85,000 +Harry J. Cynkus +105,000 +— +— +105,000 +Patrick J. Gunning +95,500 +— +— +95,500 +Jerry W. Nix +115,000 +— +— +115,000 +Amy R. Kreisler +72,500 +— +— +72,500 +Gary W. Rollins +132,500 +— +— +132,500 +Pamela R. Rollins +72,500 +— +— +72,500 +Changes Made to the Non-Employee Director Compensation Program for 2022 +Cash and Equity Compensation +Under the Director Compensation Program in effect in 2021, our Non-Employee Directors did not receive equity. In December 2021, the Human Capital Management and Compensation Committee and the Board approved changes to the Director Compensation Program for 2022. Such changes included an annual equity grant in the form of Company common shares under the Company’s 2014 Equity Stock Incentive Plan (SIP) with a grant date value of $25,000. The Company common shares will be granted on the third business day following the Annual Meeting of Stockholders and will vest immediately on the grant date. +In addition to the equity compensation to be granted to Non-Employee Directors described above, the Human Capital Management and Compensation Committee and the Board also approved the following changes to the Non-Employee Director Compensation Program effective January 1, 2022: +● Annual cash retainer in the amount of $75,000; +● Lead Director annual cash retainer in the amount of $10,000; +● Elimination of Board and Committee meeting fees; +● Audit Committee Chair annual cash retainer in the amount of $20,000; +● Human Capital Management and Compensation Committee Chair annual cash retainer in the amount of $10,000; +● Nominating and Corporate Governance Committee Chair annual cash retainer in the amount of $6,000; +● Committee member annual cash retainer - Audit Committee of $6,000, Human Capital Management and Compensation Committee of $3,000, Nominating and Corporate Governance Committee of $2,000; and +● Non-Executive Chairman annual cash retainer remained unchanged in the amount of $60,000. +10 +Non-Employee Director Stock Ownership Guidelines +Under current Stock Ownership Guidelines, Non-Employee Directors are required to beneficially own, within five years of their initial grant, common stock of the Company equal to at least three times the annual equity retainer. Non-Employee Directors are prohibited from selling Company stock granted to such director by the Company for a period of one (1) year from the date of such grant until such director is in compliance with their ownership requirement under these Stock Ownership Guidelines. +Information Regarding Director Nominees and Continuing Directors +The following table sets forth the names, ages as of March 1, 2022, and certain other information for each of the nominees for election as a director at the Annual Meeting and for each of the continuing members of our Board following the Annual Meeting. Full biographical information follows the table. +Current Term +Name +Class +Age +Director Since +Expires +Independent +Director Nominees +Susan R. Bell +III +59 +2021 +2022 +ü +Amy R. Kreisler +III +52 +2016 +2022 +û +Pamela R. Rollins +III +65 +2019 +2022 +û +Continuing Directors +Jerry W. Nix +I +76 +2020 +2023 +ü +Patrick J. Gunning +I +62 +2021 +2023 +ü +Gary W. Rollins +II +77 +1984 +2024 +û +Richard A. Hubbell +II +77 +1987 +2024 +û +Key Attributes, Experience and Skills of Director Nominees and Continuing Directors +Director Nominees +Susan R. Bell +Retired Partner, Ernst & Young LLP +Independent Member of the Board of Directors +Member of the Audit Committee +Susan R. Bell has served as a Director of RPC, Inc. since January 2021. Ms. Bell brings extensive risk oversight, financial and strategic experience to our Board of Directors. Ms. Bell retired as partner from Ernst & Young LLP in 2020 after a 36-year career in public accounting. At Ernst & Young LLP, Ms. Bell served as both an audit and advisory partner, led the Southeast Risk Advisory practice and served as the Atlanta Office Managing Partner. Prior to working at Ernst & Young LLP, Ms. Bell started her career at Arthur Andersen LLP in 1984 where she served as an audit partner from 1996 to 2002. Ms. Bell currently serves as a member of the Board of Directors of Marine Products Corporation, Rollins, Inc. and First Advantage Corporation, roles she has held since 2021, and serves on the audit committees of those corporations. In addition, Ms. Bell serves on the boards of the non-profit, National Center for Civil & Human Rights and IWF Georgia, an international women’s forum. Ms. Bell graduated summa cum laude from Mississippi State University with a Bachelor of Professional Accountancy and is a Certified Public Accountant in Georgia and Tennessee. +11 +Amy R. Kreisler +Executive Director, The O. Wayne Rollins Foundation +Non-Independent Member of the Board of Directors +Amy Rollins Kreisler has served as a Director of RPC, Inc. since 2016. Ms. Kreisler is a Vice President at LOR, Inc. She is the Executive Director of The O. Wayne Rollins Foundation; Trustee of The Ma-Ran Foundation; and Trustee of The Lovett School Board of Trustees, also serving on their Executive Committee. She is a long-standing member of the Rollins School of Public Health’s Dean’s Council and a former Board member of the Emory University Board of Visitors. Ms. Kreisler is a former attorney of the law firm Arnall Golden Gregory LLP. She holds an English Degree from Hollins University and a Law Degree from The College of William and Mary Law School. +Pamela R. Rollins +Director, LOR, Inc. +Non-Independent Member of the Board of Directors +Pamela R. Rollins has served as a Director of RPC, Inc. since 2019. Ms. Rollins is a Trustee of Young Harris College and The O. Wayne Rollins Foundation, a Trustee Emeritus of The Schenck School, a board member of The National Monuments Foundation and a former board member of The Lovett School. Ms. Rollins has served as a Director of Rollins, Inc. since 2015 and Marine Products Corporation since 2017. Ms. Rollins received a Bachelor of Arts in Family Community Studies from Stephens College. +Continuing Directors: +Jerry W. Nix +Former Vice Chairman, Executive Vice President and Chief Financial Officer of Genuine Parts Company +Lead Independent Director of the Board of Directors +Chairperson of the Human Capital Management and Compensation Committee +Chairperson of the Nominating and Corporate Governance Committee +Member of the Audit Committee +Jerry W. Nix has served as a Director of RPC, Inc. since 2020. Mr. Nix brings extensive risk oversight, financial and strategic experience to our Board of Directors. Mr. Nix retired from Genuine Parts Company in 2013 where he served as Vice Chairman from 2005 to 2013, Chief Financial Officer from 2000 to 2013 and as Executive Vice President from 2000 to 2005. Prior to joining Genuine Parts in 1978, Mr. Nix was an auditor with Ernst & Young from 1974 to 1978 and a pilot in the U.S. Air Force from 1968 to 1974. Mr. Nix currently serves on the Board of Directors of RPC, Inc., and Rollins, Inc., roles he has held since 2020 and on various civic and non-profit boards. Mr. Nix received a Bachelor of Science in Education from Mississippi State University and a Bachelor of Science in Accounting from the University of Florida. +Patrick J. Gunning +Chief Financial Officer at The Woodruff Arts Center +Retired Partner, Ernst & Young LLP +Independent Member of the Board of Directors +Chairperson of the Audit Committee +Member of the Nominating and Corporate Governance Committee +Member of the Human Capital Management and Compensation Committee +Patrick J. Gunning has served as a Director of RPC, Inc. since January 2021. Mr. Gunning brings extensive risk oversight, financial and strategic experience to our Board of Directors. Mr. Gunning currently serves as the Chief Financial Officer of the Woodruff Arts Center, a non-profit organization, a role he has held since November 2020. Mr. Gunning retired as a partner from Ernst & Young LLP in June 2020, a role he held since May 2002, after a 39-year career in public accounting. Mr. Gunning held multiple leadership roles at Ernst & Young LLP including Southeast Region Leader of the Financial Accounting Advisory Services practice, Southeast Area Industry Leader of the Retail and Consumer Products practice, and lead audit partner. Prior to joining Ernst & Young LLP, Mr. Gunning worked at Arthur Andersen LLP from 1981 to 2002, where he served as a partner, lead audit partner and Assurance Division Leader. Mr. Gunning currently serves on the Board of Directors of Marine Products Corporation and Rollins, Inc., roles he has held since 2021. Mr. Gunning received a Bachelor of Business Administration in Accountancy from the University of Notre Dame. +12 +Gary W. Rollins +Non-Executive Chairman +Non-Independent Member of the Board of Directors +Member of the Executive Committee +Gary W. Rollins has served as a Director of RPC, Inc. since 1984. Mr. Rollins has extensive knowledge of the Company’s business and industry having served on the Board of the Company for over 38 years. He has served as the Non-Executive Chairman of the Board since 2020. Mr. Rollins currently serves as the Non-Executive Chairman of Marine Products Corporation and Chairman of the Board at Rollins, Inc., roles he has held since 2020. Mr. Rollins has been the Chief Executive Officer of Rollins, Inc., since 2001. Mr. Rollins previously served as a Director of Genuine Parts Company from 2013 to 2017. Mr. Rollins received a Bachelor of Science in Business Administration from the University of Tennessee. +Richard A. Hubbell +President and Chief Executive Officer +Non-Independent Member of the Board of Directors +Member of the Executive Committee +Mr. Hubbell has been President of RPC, Inc., since 1987 and CEO since April 2005. He has also been the President and Chief Executive Officer of Marine Products Corporation since February 2001. Mr. Hubbell serves on the Board of Directors for both of these companies. Previously, he was Executive Vice President of Rollins Communications, Inc., a media company. He joined Rollins, Inc. in 1970. Mr. Hubbell received a Bachelor of Arts in Economics from Westminster College. +PROPOSAL 1: +ELECTION OF DIRECTORS +Overview +Our Board of Directors is currently composed of 7 members. In accordance with our Amended and Restated Bylaws (Bylaws), our Board is divided into three classes of directors. At the Annual Meeting three Class III directors will be elected for a three-year term, so that the term of office of one class of directors shall expire in each year. Each director’s term continues until the election and qualification of his or her successor, or such director’s earlier death or resignation. Four other individuals serve as directors but are not standing for re-election because their terms as directors extend past this Annual Meeting pursuant to provisions of the Company’s Bylaws, which provide for the election of directors for staggered terms, with each director serving a three-year term. +Nominees +At the Annual Meeting, Mses. Susan R. Bell, Amy R. Kreisler and Pamela R. Rollins will be nominated to serve as Class III Directors. The nominees for election at the 2022 Annual Meeting are currently directors of the Company. A former director, Mr. Harry J. Cynkus, resigned from the Board effective December 31, 2021. Unless authority is withheld, the proxy holders will vote for the election of each nominee named above as a director. Although management does not contemplate the possibility, in the event any nominee is not a candidate or is unable to serve as director at the time of the election, unless authority is withheld, the proxies will be voted for any nominee who shall be designated by the present Board of Directors and recommended by the Nominating and Corporate Governance Committee to fill such vacancy. +Our Board of Directors recommends a vote FOR the Class III director nominees above. +13 +AUDIT MATTERS +Report of the Audit Committee +Management is responsible for the Company’s system of internal control over financial reporting, the preparation of its consolidated financial statements in accordance with accounting principles generally accepted in the United States, and the financial reporting process, including management’s assessment of Internal Control over Financial Reporting (ICFR). +The Company’s independent registered public accounting firm is responsible for performing an integrated independent audit of the Company’s consolidated financial statements and management reports on ICFR in accordance with the standards of the Public Company Accounting Oversight Board (PCAOB) and for issuing reports thereon. The Audit Committee’s responsibility is generally to monitor and oversee these processes, as described in the Audit Committee Charter. It is not the duty of the Audit Committee to plan or conduct audits or to determine that the Company’s financial statements are complete and accurate and in accordance with generally accepted accounting principles; that is the responsibility of management. The Audit Committee presently consists of three independent directors, all of which are considered financially literate under NYSE rules. +In fulfilling its oversight responsibilities with respect to the year ended December 31, 2021, the Audit Committee: +● Approved the engagement and terms of service of Grant Thornton LLP as the Company’s independent registered public accounting firm for the year ended December 31, 2021; +● Reviewed with management and the Company’s independent registered public accounting firm, the interim financial information included in the Company’s Forms 10-Q prior to their being filed with the SEC, as well as the financial information in each quarterly earnings release; +● Reviewed and discussed with the Company’s management (including internal audit) and the Company’s independent registered public accounting firm, the audited consolidated financial statements of the Company as of December 31, 2021 and 2020 and for the three years ended December 31, 2021 and the related ICFR; +● Discussed with the Company’s independent registered public accounting firm matters required to be discussed by the applicable requirements of the PCAOB and the SEC; and +● Received from the Company’s independent registered public accounting firm the written disclosures and the letter in accordance with the requirements of the PCAOB regarding the firm’s communications with the Audit Committee concerning independence and discussed with such firm its independence from the Company. +Based upon the review and discussions referred to previously, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements of the Company and subsidiaries as of December 31, 2021 and 2020 and for the three years ended December 31, 2021 be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 for filing with the SEC. +In giving its recommendation to the Board of Directors, the Audit Committee has relied on (i) management’s representation that such financial statements have been prepared with integrity and objectivity and in conformity with accounting principles generally accepted in the United States of America; and (ii) the reports of the Company’s independent registered public accounting firm with respect to such financial statements and related internal controls. +Respectfully submitted by the Audit Committee of the Board of Directors +Patrick J. Gunning, Chairperson +Susan R. Bell +Jerry W. Nix +This report of the Audit Committee is required by the SEC and, in accordance with the SEC’s rules, will not be deemed to be part of or incorporated by reference by any general statement incorporating by reference this proxy statement into any +14 +filing under the Securities Act of 1933, as amended (the “Securities Act”), or under the Exchange Act, except to the extent that we specifically incorporate this information by reference, and will not otherwise be deemed “soliciting material” or “filed” under either the Securities Act or the Exchange Act. +Independent Registered Public Accounting Firm +Principal Auditor +Grant Thornton LLP served as the Company’s independent registered public accounting firm for the fiscal years ended December 31, 2021 and 2020. +The Audit Committee has appointed Grant Thornton LLP as RPC, Inc.’s independent registered public accounting firm for the fiscal year ending December 31, 2022. Grant Thornton LLP has served as the Company’s independent auditors since 2004 and is considered by management to be well qualified. Representatives of Grant Thornton LLP are expected to be present at the annual meeting, and they will have the opportunity to make a statement if they desire to do so and are expected to be available to respond to appropriate questions. +Aggregate fees billed by the Company’s independent registered public accounting firm are set forth below: +2021 +2020 +Audit fees and quarterly reviews (1) +$ +1,060,610 +$ +1,124,840 +Audit related fees +— +— +Tax fees +— +— +All other fees +— +— +(1) Audit fees represent fees for professional services provided in connection with the integrated audit of our financial statements, including internal controls over financial reporting, review of our quarterly financial statements, and audit services provided in connection with other statutory or regulatory filings. +Pre-approval of Services +All of the services described above were pre-approved by the Company’s Audit Committee. The Audit Committee has determined that the payments made to its independent registered public accounting firm for these services are compatible with maintaining such auditors’ independence. A majority of the hours expended on the principal accountant’s engagement to audit the financial statements of the Company for the years 2021 and 2020 were attributable to work performed by full-time, permanent employees of the principal accountant. The Committee has no pre-approval policies or procedures other than as set forth below. +The Audit Committee is directly responsible for the appointment and termination, compensation, and oversight of the work of the independent registered public accounting firm, including resolution of disagreements between management and the independent registered public accounting firm regarding financial reporting. The Audit Committee is responsible for pre-approving all audit and non-audit services provided by the independent public accountants and ensuring that they are not engaged to perform the specific non-audit services proscribed by law or regulation. The Audit Committee has delegated pre-approval authority to the Chairperson, and the Chairperson may further delegate approval authority to another member of the Committee from time to time. The decisions of any Audit Committee member to whom pre-approval authority is delegated must be presented to the full Audit Committee at its next scheduled meeting. +15 +PROPOSAL 2: +RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +Overview +The Audit Committee of the Board of Directors has appointed Grant Thornton LLP as the Company’s independent registered public accounting firm to audit our consolidated financial statements for the fiscal year ending December 31, 2022. Grant Thornton has served as our independent registered public accounting firm since 2004. +During fiscal 2021, Grant Thornton LLP served as our independent registered public accounting firm. Representatives of Grant Thornton LLP are expected to attend the annual meeting and will have the opportunity to respond to appropriate questions and, if they desire, to make a statement. +Although we are not required to seek ratification of this appointment, the Audit Committee and the Board of Directors believes, it is appropriate to do so. If stockholders do not ratify the appointment of Grant Thornton LLP, the current appointment will stand, but the Audit Committee will consider the stockholder action in determining whether to retain Grant Thornton LLP as our independent registered public accounting firm for future fiscal years. +Our Board of Directors recommends a vote FOR the ratification of the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm for the 2022 fiscal year. +EXECUTIVE OFFICERS +The following narratives summarize the business experience over at least the last five years of our current executive officers, other than Mr. Hubbell, whose business experience is described above in the section titled Information Regarding Director Nominees and Continuing Directors beginning on page 11. +Ben M. Palmer +Vice President, Chief Financial Officer and Corporate Secretary +Mr. Palmer has been Vice President, Chief Financial Officer and Treasurer of RPC, Inc. since 1996 and assumed responsibility as Corporate Secretary in 2018. He is also Vice President, Chief Financial Officer, Treasurer and Corporate Secretary of Marine Products Corporation. He joined RPC following three years as the CFO of EQ Services, a commercial mortgage and asset management subsidiary of The Equitable Companies. Prior to that he spent ten years with Arthur Andersen in its audit and business advisory services division. Mr. Palmer has a Bachelor of Science in Business Administration from Auburn University. +16 +COMPENSATION DISCUSSION AND ANALYSIS +This Compensation Discussion and Analysis describes our executive compensation program and provides an overview of how the Human Capital Management and Compensation Committee made compensation decisions in 2021 for each of our named executive officers which consist of our Principal Executive Officer, and our Principal Financial Officer, who were serving in such capacity in fiscal 2021. For a complete understanding of the executive compensation program, this disclosure should be read in conjunction with the Summary Compensation Table and other executive compensation-related disclosures included in this Proxy Statement. +In fiscal year 2021, our named executive officers were : +Named Executive Officer +Position with the Company in 2021 +Richard A. Hubbell +President and Chief Executive Officer +Ben M. Palmer +Vice President, Chief Financial Officer and Corporate Secretary +Executive Summary +Fiscal Year 2021 Financial Highlights +● Net revenues of $864.9 million, an increase of 44.6 percent over the prior year’s revenue of $598.3 million +● $7.2 million net income, an improvement over $212.2 million net loss in 2020 which included $217.5 million in impairment and other charges. +Executive Compensation Practices and Governance Policies +What We Do +What We Don’t Do +✓ +Pay for Performance +The majority of our named executive officers’ total compensation is directly linked to the Company’s performance. +x +No Tax Gross-Ups +Our named executive officers are not entitled to tax gross-ups under any of our compensation programs or policies. +✓ +Align the Interests of Executives with those of Our Stockholders +Equity compensation represents a significant portion of our named executive officers’ total compensation. +x +No Hedging or Pledging +Under our Insider Trading Policy, we prohibit our employees, including our named executive officers and the members of our board of directors, from hedging or pledging our securities. +✓ +✓ +Stock Ownership Guidelines +We maintain strong stock ownership requirements for our directors and executive officers. +Independent Compensation Committee +Our Human Capital Management and Compensation Committee is composed solely of independent directors. +x +No Employment Contract +There are no agreements or understandings between the Company and any executive officer that guarantee continued employment or guarantee any level of severance or compensation, including incentive or bonus payments, other than annual restricted stock grant agreements. +17 +General Compensation Objectives and Guidelines +The Company is engaged in a highly competitive industry. The success of the Company depends on our ability to attract and retain highly qualified and motivated executives. In order to accomplish this objective, we have endeavored to structure our executive compensation program in a fashion that gives our Human Capital Management and Compensation Committee the flexibility to take into account our operating performance and the individual performance of our executive officers. +The Human Capital Management and Compensation Committee endorses the philosophy that executive compensation should reflect Company performance and the contribution of executive officers to that performance. Our compensation policy is designed to achieve three fundamental objectives: +● attract and retain qualified executives; +● motivate performance to achieve Company objectives; and +● align the interests of our executives with the long-term interests of the Company’s stockholders. +The Human Capital Management and Compensation Committee recognizes that there are many intangibles involved in evaluating performance and in motivating performance, and that determining an appropriate compensation level is a highly subjective endeavor. The analysis of the Committee is not based upon a structured formula and the objectives referred to above are not weighted in any formal manner. During the year, none of the executive officers made recommendations or otherwise contributed input on their own compensation. +The Company’s executive officers are also executive officers of Marine Products Corporation (Marine Products) and receive compensation directly from Marine Products. The members of the Company’s Human Capital Management and Compensation Committee also constitute the Human Capital Management and Compensation Committee of Marine Products. In determining the compensation for the executive officers at the Company, the Committee considers these dual responsibilities and sources of compensation. The Company sets compensation of its executives at such levels so that the aggregate compensation received from both Marine Products and the Company is reasonable in light of their respective responsibilities and the performance of both companies, and so that the compensation from the Company for services solely to the Company is reasonable. A discussion of the Company’s executive officers’ compensation at Marine Products is contained in its annual Proxy Statement filed with the SEC. +Pursuant to our compensation philosophy, the total annual compensation of our executive officers is primarily made up of one or more of the following three core elements: +● salary (fixed); +● annual performance-based cash incentive compensation (cash incentive); and +● grants of stock-based awards such as restricted stock (equity incentive). +In addition, we also provide retirement compensation plans, group welfare benefits and certain perquisites. +We believe (i) a competitive base salary is important to attract, retain and motivate our top executives; (ii) annual performance-based incentive compensation is valuable in recognizing and rewarding individual achievement; and (iii) equity-based compensation makes executives “think like owners” and, therefore, aligns their interests with those of our stockholders. +18 +Fiscal 2021 Named Executive Officer Compensation Details +The table below reflects the approximate general distribution of the three core elements of Named Executive Officer (NEO) compensation earned for fiscal 2021 as determined by our Human Capital Management and Compensation Committee. +Principal Position +Fixed Compensation +Cash Incentive +Equity Incentive +Total Performance-Based Compensation +Chief Executive Officer +71% +- +29% +29% +Other NEO +63% +- +37% +37% +Compensation Elements +The following table sets forth information regarding each of the three core elements of the target compensation for the executive officers in 2021, including a description of each element. +Compensation Element +Description +Base Salary +Fixed cash compensation based on each executive officer’s role, responsibilities, competitive market positioning, and individual performance. +Performance-Based Incentive Cash Compensation +Annual performance-based incentive cash compensation with target award amounts for each executive officer. Actual bonus amounts may be higher or lower than target based on the achievement of certain Company performance goals and individual performance. +Stock-Based Incentive Plans +Grants of stock-based awards in the form of restricted stock. +Base Salary +Base salary represents the fixed element of the compensation of our executive officers and is an important element of compensation intended to attract and retain qualified executives. The Human Capital Management and Compensation Committee reviews the base salaries of our executive officers each year as part of its annual review of our executive compensation program, with input from our CEO (except with respect to his own base salary). In making its determinations the Human Capital Management and Compensation Committee gives consideration to the Company’s operating performance for the prior fiscal year and the individual executive’s performance and compensation paid by Marine Products. Base salary increases are not automatic or guaranteed. +2021 Base Salary Adjustments +During 2020, in light of the difficult operating environment faced by the Company, the executive officers voluntarily reduced their annual base salaries by 25 percent to the following amounts, effective May 1, 2020: Mr. Richard A. Hubbell: $712,500 ($237,500 decrease); and Mr. Ben M. Palmer: $337,500 ($112,500 decrease);. Effective January 1, 2021, in light of the improved performance of the Company, the annual base salaries of the executive officers were restored. No other salary adjustments were made for executive officers in 2021 or 2022 through the date of this proxy statement. +19 +Performance-Based Incentive Cash Compensation +The Company implemented the Performance-Based Incentive Cash Compensation Plan (Management Incentive Plan) for the executive officers in 2006. Under the Management Incentive Plan, the Human Capital Management and Compensation Committee establishes performance goals annually within ninety days after the commencement of the performance period to which such goals relate. Performance goals for each participant may be based on corporate, business unit/function or individual performance, or a combination of one or more such measures. +In connection with the annual establishment of performance goals, the Committee sets a target award for each participant in the Management Incentive Plan for the applicable year, which is expressed as a percentage of the participant’s base compensation (the “Target Award”) in effect on the last day of the final pay period of that year. If the participant’s performance goals are based upon a combination of performance measures, the Committee will weigh the importance of each performance measure by assigning a percentage (the “Weighted Percentage”) to those performance measures. The participant’s cash award amount will also depend in part upon the level of achievement that the participant attained with respect to each such performance measure utilizing the formula set out in the Management Incentive Plan. This formula provides for a performance value (“Performance Value”) which ranges from: +● threshold performance level (with a Performance Value of 25 percent of the Target Award), +● target performance level (with a Performance Value up to 100 percent of the Target Award), to +● superior performance level (with a Performance Value up to 200 percent of the Target Award). +Subject to the limitations set forth below, a participant’s cash award amount for each year under the Management Incentive Plan equals the product of the Target Award multiplied by the Weighted Percentage assigned to each performance measure used for a participant, multiplied by the Performance Value attained for each performance measure, multiplied by base compensation. The Committee will determine the maximum cash award as a percentage of participants’ base compensation for each applicable year. +For 2021, the Committee established the target incentive award under the Management Incentive Plan for the Chief Executive Officer and for the other members of executive management at the amounts shown in the table below. The target awards that could be earned under the Management Incentive Plan for 2021 were the same as for the prior year. +Target Award as a percentage +Executive Officer +of base salary +Richard A. Hubbell +100% +President and Chief Executive Officer +Ben M. Palmer +100% +Vice President, Chief Financial Officer and Corporate Secretary +The maximum bonus award for each participant under the Plan for 2021 and prior years was established at 150 percent of such participant’s base salary. The performance criteria applicable to the participants under the Management Incentive Plan for 2021 were determined based solely on corporate performance. The Human Capital Management and Compensation Committee established corporate performance goals for 2021 under the Management Incentive Plan based on Return on Invested Capital (ROIC) as described below. +ROIC is a widely used financial performance measure that typically correlates with long-term change in stockholder value. The Company has used ROIC as the primary performance goal under the Management Incentive Plan for several years. ROIC is computed as the ratio of earnings before interest, taxes, depreciation and amortization to invested capital. Invested capital is generally equal to the aggregate of stockholders’ equity, accumulated depreciation and long-term liabilities. For 2021, the target performance goal established by the Company is in excess of the comparable historical ROIC average of our peers, approximates the Company’s weighted average cost of capital and is an amount which the Company believes represents outstanding financial performance. Under the Management Incentive Plan for 2021, the Company was required to achieve at least 70 percent of the target performance goal for executive officers to be eligible for any bonus award. Bonus +20 +awards under the Management Incentive Plan are determined on a sliding scale between the threshold performance level and superior performance level, which correspond to 175 percent of the target performance goal. To be eligible for the bonus award under the Management Incentive Plan for 2021, the ROIC was required to be in excess of 12.6 percent up to a maximum of 31.5 percent. The Company has consistently followed the same method to compute ROIC, and the Committee has not exercised discretion to waive the performance goals based on difficult industry conditions or other factors. +The Company operates in a cyclical business where financial performance is influenced by, among other things, changes in oil and natural gas prices. The Company did not achieve ROIC performance goals for 2021 or 2020. In addition, ROIC generated by the Company in 2021 was less than the threshold amount therefore no bonuses were earned by executive officers in 2021 or 2020. +Stock-Based Incentive Plans +Our Stock Incentive Plan (SIP) allows for a wide variety of stock-based awards such as stock options and restricted stock. In recent years, we have awarded time-based restricted stock in lieu of granting stock options. The terms and conditions of these awards are described in more detail below. +Awards under the Company’s SIP are purely discretionary, are not based upon any specific formula and may or may not be granted in any given fiscal year. For the past three years, we have granted time-based restricted stock to various employees, including our executive officers, in early January during our regularly scheduled meeting of the Human Capital Management and Compensation Committee during which the Committee reviews executive compensation. Consistent with this practice, we granted restricted stock awards to our executive officers in January 2021 and 2020 as follows: +Name +2022 +2021 +2020 +Richard A. Hubbell +— +100,000 +100,000 +Ben M. Palmer +— +67,000 +67,000 +Messrs. Hubbell and Palmer did not receive grants in January 2022 due to internal policy guidelines currently being reviewed that relate to stock ownership for executive officers. They are expected to be evaluated for grants of restricted stock awards at a later date in 2022. The amount of the aggregate stock-based awards to our executive officers in any given year is influenced by the Company’s overall performance. The amount of each grant to our executive officers is influenced in part by the Committee’s subjective assessment of each individual’s respective contributions to achievement of the Company’s long-term goals and objectives, in addition to the stock price around grant date. In evaluating individual performance for these purposes, the Committee considers the overall contributions of executive management as a group and the Committee’s subjective assessment of each individual’s relative contribution to that performance rather than specific aspects of each individual’s performance over a short-term period. We expect to continue annual grants of restricted stock awards although we reserve the right to modify or discontinue this or any of our other compensation practices at any time. +All of our restricted stock awards granted since 2004 have had the same features. The shares vest one-fifth per year beginning on the second anniversary of the grant date. Effective with the 2022 restricted stock grants, the shares shall vest in five equal installments beginning on the first anniversary of the grant date. Restricted shares have full voting and dividend rights. However, until the shares vest, they cannot be sold, transferred or pledged. Should the executive leave our employment for any reason prior to the vesting dates (other than due to disability or retirement on or after age 65), the unvested shares will be forfeited. In the event of death, or “change in control” as determined by the Board of Directors, all unvested restricted shares shall vest immediately. +Grants are made under our SIP which is administered pursuant to Rule 16b-3 of the Exchange Act. +21 +Other Compensation +Health and Retirement Plans +The executive officers all participate in the Company’s regular employee benefit programs, including the 401(k) Plan with Company match, group life insurance, group medical and dental coverage and other group benefit plans. The Company maintains a defined benefit pension plan (“Retirement Income Plan”) for all our eligible employees, a non-qualified supplemental retirement plan for our executives and certain other highly compensated employees, and a 401(k) Plan for the benefit of all of our eligible employees. In 2002, the Company’s Board of Directors approved a resolution to cease all future benefit accruals under the Retirement Income Plan effective March 31, 2002. During 2002, the Company began permitting selected highly compensated employees to defer a portion of their compensation into the Company’s nonqualified Supplemental Retirement Plan (SRP). The SRP is described in more detail under the caption Nonqualified Deferred Compensation on page 29. +Perquisites and Other Personal Benefits +In addition to the total direct compensation and benefits described above, the Company also provides its executive officers with certain perquisites as approved by the Board and noted in the footnote to the Summary Compensation Table below under “Executive Compensation.” The specific perquisites provided to the executive officers are as follows: +● an automobile or an automobile allowance +● use of the Company’s aircraft for personal travel. +Compensation Setting Process +Role of the Human Capital Management and Compensation Committee +Under its charter the Human Capital Management and Compensation Committee is responsible for, among other things, reviewing our overall executive compensation philosophy and strategy, including base salary, performance-based incentive cash compensation, and stock-based incentive plans, to ensure that the strategy supports our compensation policy. +The Human Capital Management and Compensation Committee is composed of two non-employee directors who do not participate in our compensation plans, Mr. Jerry W. Nix (Chairperson), and Patrick J. Gunning, each of whom is independent. +The Human Capital Management and Compensation Committee has the authority, at its sole discretion, to retain or obtain the advice of any compensation consultant, legal counselor or other advisor to assist the Committee in the performance of its duties, and shall be directly responsible for the appointment, compensation and oversight of the work of any such compensation consultant, legal counsel or other advisor so retained. The Committee has not used the services of any compensation consultants in determining or recommending the amount or form of executive compensation. The Human Capital Management and Compensation Committee may also, from time to time, and in its discretion, form and delegate all or a portion of its authority to subcommittees; provided that such subcommittees meet the Committee’s composition requirements set forth in its Charter or under any applicable federal or state laws. +Role of Management +The Human Capital Management and Compensation Committee solicits input from Mr. Richard A. Hubbell, Chief Executive Officer, with respect to the performance of our executive officers and their compensation levels. The Human Capital Management and Compensation Committee considers Mr. Hubbell’s evaluation and his direct knowledge of each executive officer’s performance and contributions when making compensation decisions. +22 +The Role of Stockholder Say-on-Pay Votes +We provide our stockholders with the opportunity to cast an advisory vote on executive compensation (a “say-on-pay proposal”) every three years. At our annual meeting of stockholders held in April 2020, a substantial majority of the votes cast on the say-on-pay proposal were voted in favor of the proposal. The Human Capital Management and Compensation Committee believes this affirms the stockholders’ support of our approach to executive compensation. The stockholders voted to hold a say-on-pay advisory vote on executive compensation every three years, and the Board resolved to accept the stockholders’ recommendation. As a result, the advisory vote on executive compensation will be held again at the 2023 Annual Meeting of Stockholders. The Human Capital Management and Compensation Committee will continue to consider the outcome of our say-on-pay votes when making future compensation decisions for our executive officers. +Policies Regarding Stock Ownership by Executive Officers +Stock Ownership Requirements +Stock Ownership Guidelines (the “Guidelines”) for our executive officers and other key executives, effective January 1, 2022, designated by the Human Capital Management and Compensation Committee to align the interests of our executives with the interests of our stockholders are as follows: +● President and CEO – Ownership equal to 4 times base salary; and +● Chief Financial Officer – Ownership equal to 3 times base salary. +Participants under the Guidelines have a period of four years in which to satisfy the Guidelines, from the date of appointment to a qualifying position. Participants who become subject to these Guidelines after January 1, 2022 will have their individual ownership requirement established based upon their base salary at the time they became subject to the Guidelines and the Company’s average closing common stock price for the prior 90 day period. Promotions into a different position category will require recalculation of a participant’s ownership requirements as appropriate. Once established, a participant’s ownership requirement does not change as a result of changes in their base salary or fluctuations in the Company’s common stock price. +Shares counted toward this requirement will be based on shares beneficially owned by such participant (as beneficial ownership is defined by the SEC’s rules and regulations) including: +● shares owned outright by the participant (including through open market purchases or acquired and held upon vesting of Company equity awards); +● restricted stock grants whether or not vested; and +● shares held in trust in the participant’s name. +Once achieved, ownership of the amount under the Guidelines must be maintained for as long as the participant is subject to the Guidelines and the participant is required to retain a minimum of 20 percent of any future equity awards. +In addition, the Human Capital Management and Compensation Committee approved and adopted stock ownership guidelines applicable to our non-employee directors. Information with respect to our non-employee directors’ stock ownership guidelines is set forth in Non-Employee Director Stock Ownership Guidelines on page 11 of this Proxy Statement. +Prohibition on Hedging and Pledging of Common Stock +As do many public companies, we have historically provided in our insider trading policies that directors and executive officers are prohibited from hedging, pledging or otherwise encumbering Company securities. +23 +Clawback Policy +Our executive bonus agreements contain a provision that provides that, among other things, if any bonus amount is paid as a result of misrepresented or inaccurate performance, the Company may require repayment of some or all of the excess bonus paid, subject to applicable laws. This recoupment policy reflects the Company’s high ethical standards and strict compliance with accounting and other regulations applicable to public companies. As all incentives and awards remain within the discretion of the Human Capital Management and Compensation Committee, the Committee also retains the ability to take any restatements or adjustments into account in subsequent years. In addition, the Sarbanes-Oxley Act requires in the case of accounting restatements that result from material non-compliance with SEC financial reporting requirements, that the Chief Executive Officer and Chief Financial Officer must disgorge bonuses and other incentive-based compensation and profits on stock sales received during the 12 months following publication of the misstated financials, if the non-compliance results from misconduct. +Tax Deductibility of Compensation +As a result of the Tax Cuts and Jobs Act, starting with compensation payable in 2018, Section 162(m) of the Internal Revenue Code limits us from deducting compensation, including performance-based compensation, in excess of $1,000,000 paid to our executive officers. The only exception to this rule is for compensation (including performance-based compensation) that is paid pursuant to a binding contract in effect on November 2, 2017, that would otherwise have been deductible under the prior Section 162(m) rules. The Human Capital Management and Compensation Committee will continue to retain full discretion to award compensation packages that best attract, retain and reward successful executive officers. Therefore, the Human Capital Management and Compensation Committee anticipates that it will award compensation that is not fully deductible under Section 162(m). +HUMAN CAPITAL MANAGEMENT AND COMPENSATION COMMITTEE REPORT +The Human Capital Management and Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis contained in this Proxy Statement with management and based on such review and discussions the Human Capital Management and Compensation Committee recommended to our board of directors that the Compensation Discussion and Analysis be included in this Proxy Statement. +Respectfully submitted by the Human Capital Management and Compensation Committee +of the Board of Directors +Jerry W. Nix, Chairperson +Patrick J. Gunning +This report of the Human Capital Management and Compensation Committee is required by the SEC and, in accordance with the SEC’s rules, will not be deemed to be part of or incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933, as amended (Securities Act), or under the Exchange Act, except to the extent that we specifically incorporate this information by reference, and will not otherwise be deemed “soliciting material” or “filed” under either the Securities Act or the Exchange Act. +24 +EXECUTIVE COMPENSATION +There are no agreements or understandings between the Company and any executive officer that guarantee continued employment or guarantee any level of severance or compensation, including incentive or bonus payments, other than annual restricted stock grants. The following table provides information regarding the annual and long-term compensation for services in all capacities to the Company for the calendar years ended December 31, 2021, 2020 and 2019 of our Principal Executive Officer and Principal Financial Officer. +SUMMARY COMPENSATION TABLE +Change in +Pension +Value and +Non-Equity +Nonqualified +Incentive +Deferred +Stock +Plan +Compensation +All Other +Salary +Awards +Compensation +Earnings +Compensation +Total +Name and Principal Position +Year +($) +($) (1) +($) (2) +($) (3) +($) (4) +($) +Richard A. Hubbell +2021 +950,000 +387,000 +— +— +34,410 +1,371,410 +President and Chief Executive Officer +2020 +791,667 +459,000 +— +7,322 +17,570 +1,275,559 +2019 +950,000 +854,250 +— +7,607 +18,900 +1,830,757 +Ben M. Palmer +2021 +450,000 +259,290 +— +— +23,860 +733,150 +Vice President, Chief Financial Officer and Corporate Secretary +2020 +375,000 +307,530 +— +— +23,050 +705,580 +2019 +450,000 +569,500 +— +19,567 +23,550 +1,062,617 +(1) Represents the fair value of the award at the date of grant computed in accordance with ASC Topic 718. See Note titled “Employee Benefit Plans” to our Financial Statements contained in our Form 10-K for the period ended December 31, 2021 for a discussion of assumptions used in this computation. For this computation, we do not include an assumption for estimated forfeitures. +(2) Bonuses under the Management Incentive Plan are accrued in the fiscal year earned and paid in the following fiscal year. No bonuses were earned for the periods presented. +(3) The actuarial present value of the executive officers’ accumulated benefit under the defined benefit plan decreased as follows: In 2021, Mr. Richard A. Hubbell - $(26,255). Decreases represent the impact of the change in discount rate or lump-sum payments as no additional benefits are being accrued. +(4) All other compensation for 2021 includes the following items for: +Mr. Richard A. Hubbell: +Insurance on automobile provided by the Company, cost of dining club dues, cost of gasoline for personal automobile and 401(k) Plan Company match of $13,050 in the aggregate; personal use of plane - $15,940. +Mr. Ben M. Palmer: +Automobile allowance, cost of gasoline for personal automobile and 401(k) Plan Company match of $13,050 in the aggregate. +25 +GRANTS OF PLAN-BASED AWARDS +All Other +Grant Date +Estimated Future Payouts +Stock Awards: +Fair Value +Under Non-Equity +Number of +of Stock +Incentive Plan Awards (1) +Shares of +and Option +Threshold +Target +Maximum +Stock or Units +Awards +Name +Grant Date +($) +($) +($) +(#) +($) (2) +Richard A. Hubbell +1/26/2021 +237,500 +950,000 +1,425,000 +100,000 +387,000 +Ben M. Palmer +1/26/2021 +112,500 +450,000 +675,000 +67,000 +259,290 +(1) These amounts illustrate the potential bonus awards under the Management Incentive Plan for 2021. See Summary Compensation Table on page 25 for actual amounts awarded in 2021. +(2) These amounts represent aggregate grant date fair value for grants of restricted shares of Common Stock awarded in fiscal year 2021 under the SIP computed in accordance with ASC Topic 718. Please see Note (1) to the Summary Compensation Table for additional details. +The table above shows grants of restricted shares of Company Common Stock under the SIP awarded in fiscal year 2021. All grants of restricted shares of Common Stock vest one-fifth per year beginning on the second anniversary of the grant date. Effective January 2022, all grants of restricted shares of Common Stock vest one-fifth per year beginning on the first anniversary of the grant date. Restricted shares have full voting and dividend rights. However, until the shares vest, they cannot be sold, transferred or pledged. Should the executive leave our employment for any reason prior to the vesting dates (other than due to death, disability, change in control or retirement on or after age 65), the unvested shares will be forfeited. We have not issued any stock options since 2003 and have no immediate plans to issue additional stock options. +26 +OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END +The Company does not have any outstanding option awards made in prior years to the executives named in our Summary Compensation Table. The table below sets forth the total number of restricted shares of Common Stock outstanding at December 31, 2021 that were granted in prior years to the executives, but have not yet vested, together with the market value of these unvested shares based on the $4.54 closing price of our Common Stock on December 31, 2021. +Option Awards +Stock Awards +Number of +Number of +Securities +Securities +Number of +Market Value +Underlying +Underlying +Shares or +of Shares or +Unexercised +Unexercised +Option +Units of Stock +Units of Stock +Options +Options +Exercise +Option +That Have +That Have +(#) +(#) +Price +Expiration +Not Vested +Not Vested +Name +Exercisable +Un-exercisable +($) +Date +(#) +($) +Richard A. Hubbell +— +— +— +— +320,000 +(1) +1,452,800 +Ben M. Palmer +— +— +— +— +211,800 +(1) +961,572 +(1) The Company has granted employees time lapse restricted shares that vest one-fifth per year beginning on the second anniversary of the grant date. Shares of restricted stock granted to the executive officers that have not vested as of December 31, 2021 are summarized in the table that follows: +Name +Number of shares +Grant date +Date fully vested +Richard A. Hubbell +15,000 +1/26/2016 +1/26/2022 +18,000 +1/24/2017 +1/24/2023 +27,000 +1/23/2018 +1/23/2024 +60,000 +1/22/2019 +1/22/2025 +100,000 +1/28/2020 +1/28/2026 +100,000 +1/26/2021 +1/26/2027 +Ben M. Palmer +9,000 +1/26/2016 +1/26/2022 +10,800 +1/24/2017 +1/24/2023 +18,000 +1/23/2018 +1/23/2024 +40,000 +1/22/2019 +1/22/2025 +67,000 +1/28/2020 +1/28/2026 +67,000 +1/26/2021 +1/26/2027 +27 +OPTION EXERCISES AND STOCK VESTED +The following table sets forth: +● the number of shares of Common Stock acquired by the executives named in the Summary Compensation Table upon the exercise of stock options during the fiscal year ended December 31, 2021; +● the aggregate dollar amount realized on the exercise date for such options computed by multiplying the number of shares acquired by the difference between the market value of the shares on the exercise date and the exercise price of the options; +● the number of restricted shares of Common Stock acquired by the executives named in the Summary Compensation Table upon the vesting of shares during the fiscal year ended December 31, 2021; and +● the aggregate dollar amount realized on the vesting date for such restricted stock computed by multiplying the number of shares which vested by the market value of the shares on the vesting date. +Option Awards +Stock Awards +Number of Shares +Number of Shares +Acquired on +Value Realized on +Acquired on +Value Realized +Exercise +Exercise +Vesting +on Vesting +Name +(#) +($) +(#) +($) +Richard A. Hubbell +— +— +63,000 +253,410 +Ben M. Palmer +— +— +39,400 +158,238 +BENEFIT PLANS +The table below shows the present value of accumulated benefits payable to each of the named executive officers, including the number of years of service credited to each such named executive officer, under the Retirement Income Plan determined using interest rate and mortality rate assumptions consistent with those used in the Company’s financial statements. +Pension Benefits +Present +Number of +Value of +Years Credited +Accumulated +Payments During +Service +Benefit +Last Fiscal Year +Name +Plan Name +(#) +($) +($) +Richard A. Hubbell +Retirement Income Plan +15 +392,640 +42,314 +Ben M. Palmer +Retirement Income Plan +4 +— +— +The Company’s Retirement Income Plan, a trusteed defined benefit pension plan, provides monthly benefits upon normal retirement at age 65, to eligible employees. The Plan provides reduced early retirement benefits at age 59 1 ∕ 2 , or 55 or older with 15 or more years of service. In 2002 the Company’s Board of Directors approved a resolution to cease all future benefit accruals under the Retirement Income Plan effective March 31, 2002. Retirement Income Plan benefits are based on the average of the employee’s compensation from the Company for the five consecutive complete calendar years of highest compensation during the last ten consecutive complete calendar years (“final average compensation”) immediately preceding March 31, 2002. The benefits are computed as the product of 1.5 percent of final average compensation multiplied by years of credited service (up to 30 years) reduced by an adjustment for benefits drawn from social security. Adjustments have been made for age and the IRS mandated compensation limitations. +28 +Mr. Hubbell is voluntarily receiving distributions from the plan even though he has not retired from the Company. The amount of distributions received during 2021 has been disclosed in the table above and is not subject to change after retirement. In 2020, the Company offered a limited lump-sum payment window for certain vested terminated participants and active employees with a vested balance. Mr. Palmer elected to receive his vested balance immediately as a lump-sum. +401(k) Plan +Effective July 1, 1984, the Company adopted a qualified retirement plan designed to meet the requirements of Section 401(k) of the Code. The Company makes matching contributions of 100 percent for each dollar ($1.00) of a participant’s contribution to the 401(k) Plan for the first three percent of his or her annual compensation and fifty cents ($0.50) for each dollar ($1.00) for the next three percent of his or her annual compensation. The only form of benefit payment under the 401(k) Plan is a single lump-sum payment equal to the vested balance in the participant’s account on the date the distribution is processed. Under the 401(k) Plan, the full amount of a participant’s vested accrued benefit is payable upon his termination of employment, retirement, total and permanent disability, or death. During the course of employment, a participant may withdraw his or her pre-tax contributions to the extent of certain specified instances of financial hardship and may withdraw any amount from his or her pre-tax contribution account for any reason after attaining age 59 1 ∕ 2 . Amounts contributed by the Company to the accounts of the named executive officers under this plan are reported in the All Other Compensation column of the Summary Compensation Table on page 25. +NONQUALIFIED DEFERRED COMPENSATION +The SRP has been established as a nonqualified plan that is designed to comply with the provisions of the American Jobs Creation Act of 2004 (including Section 409A of the Internal Revenue Code) for the cash contributions made to certain longer serviced employees in lieu of freezing the Retirement Income Plan benefit accruals effective in 2002; the SRP also has a compensation deferral option for eligible employees. The contributions and deferrals to the SRP are invested in funds held in a rabbi trust. +Executive +Registrant +Aggregate +Aggregate +Aggregate +Contributions +Contributions +Earnings in +Withdrawals/ +balance at +in Last FY +in Last FY +Last FY +Distributions +Last FYE +Name +($) (1) +($) +($) +($) +($) +Richard A. Hubbell +— +— +64,402 +— +581,082 +Ben M. Palmer +36,000 +— +81,104 +— +1,204,593 +(1) Includes $36,000 of base salary for 2021 disclosed in the Summary Compensation Table, which have been deferred by the executive officer pursuant to the SRP. The remaining deferral amounts, if any, represent deferrals of bonus compensation that was paid in 2021. +The deferral option provides that participants may defer up to 50 percent of their base salary and up to 100 percent of their annual bonus with respect to any given plan year, subject to a $2,000 per plan year minimum. All of the salary and bonus deferrals are fully vested. Accounts are credited with hypothetical earnings, and/or debited with hypothetical losses, based on the performance of certain “Measurement Funds.” Account values are calculated as if the funds from deferrals and contributions had been converted into shares or other ownership units of selected Measurement Funds by purchasing (or selling, where relevant) such shares or units at the current purchase price of the relevant Measurement Fund at the time of the participant’s selection. The benefits are unsecured general obligations of the Company to the participants, and these obligations rank in parity with the Company’s other unsecured and unsubordinated indebtedness. To the extent that the Company’s obligations under the SRP exceed assets available under the trust, the Company may be required to seek additional funding sources to fund its liability under the SRP. +Generally, the SRP provides for distributions of any deferred amounts upon the earliest to occur of a participant’s death, disability, retirement or other termination of employment (Termination Event). However, for any deferrals of base salary and bonus compensation (but not Company contributions), participants are entitled to designate a distribution date which is +29 +prior to a Termination Event. The SRP allows a participant to elect to receive distributions in installments or lump-sum payments. +POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL +The following table describes the potential payments and benefits under the Company’s compensation and benefit plans and arrangements to which the named executive officers would be entitled upon termination of employment. There are no other agreements, arrangements or plans that entitle executive officers to severance, perquisites, or other enhanced benefits upon termination of their employment except as described below. Additional payments or benefits to a terminating executive officer would be at the discretion of the Human Capital Management and Compensation Committee. +In accordance with the terms of the defined benefit plan, the executive officers are not entitled to additional benefits at death or disability. The amounts payable at retirement are disclosed in the Benefit Plans section on page 28. The executive officers can choose to receive the amounts accumulated in the SRP either as a lump-sum or in installments at retirement, death or disability. These amounts have been disclosed under the Nonqualified Deferred Compensation section on page 29. The table below reflects the incremental restricted shares and their values that would become vested as of December 31, 2021 using the closing market price of $4.54 per share for our Common Stock, as of that date, in the case of retirement, disability, death or change in control. +Stock Awards +Number of shares +underlying unvested +Unrealized value of +stock +unvested stock +Name +(#) +($) +Richard A. Hubbell +· Retirement +41,722 +189,418 +· Disability +103,588 +470,290 +· Death +320,000 +1,452,800 +· Change in control +320,000 +1,452,800 +Ben M. Palmer +· Retirement +— +— +· Disability +67,828 +307,939 +· Death +211,800 +961,572 +· Change in control +211,800 +961,572 +Accrued Pay and Regular Retirement Benefits +The amounts shown in the preceding table do not include the following since they are provided on a non-discriminatory basis to salaried employees generally upon termination of employment. These include: +● Accrued salary and vacation pay; and +● Distributions of plan balances under the 401(k) Plan. +Pension Benefit and Deferred Compensation +Retirement Income Plan benefits currently payable to the executive officers are disclosed under the Benefit Plans section on page 28. Upon termination, the executive officers will receive a distribution of the balance in their SRP account. These amounts are disclosed under the Nonqualified Deferred Compensation section on page 29. +Change in Control or Severance . The Company does not have any severance for its executive officers. However, upon the occurrence of a “ Change in Control ,” as determined by the Board of Directors, all unvested time-lapse restricted stock shall immediately vest. +30 +Pay Ratio Disclosure +Pursuant to a mandate of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the SEC adopted a rule requiring annual disclosure of the ratio of the median employee’s annual total compensation to the total annual compensation of the principal executive officer (PEO). The Company’s PEO is Mr. Richard A. Hubbell. The purpose of the required disclosure is to provide a measure of the equitability of pay within the organization. The Company believes its compensation philosophy and process yield an equitable result. +Median Employee total annual compensation +$ +77,520 +Mr. Richard A. Hubbell (PEO) total annual compensation +$ +1,358,360 +Ratio of PEO to Median Employee Compensation +17.5:1 +The Company has identified the median employee as of December 31, 2020 and the compensation disclosed above represents the total annual compensation of the median employee for the year ended December 31, 2021. Employees from our foreign subsidiaries in North America and Asia, both of which combined were less than 5 percent of our total employees, were excluded, as permitted by SEC rules, under “de minimis” exception. Employees on leave of absence were also excluded from the list and wages and salaries were annualized for those employees that were not employed for the full year of 2021 (other than seasonal or temporary employees). The median employee’s compensation was selected from the annualized list. For simplicity, the value of the Company’s 401(k) Plan and medical benefits provided was excluded as all employees including the PEO are offered the exact same benefits. As of December 31, 2021, the Company employed 2,250 persons of which 54 were employed in Canada, China and Mexico. +The pay ratio disclosure presented above is a reasonable estimate. Because the SEC rules for identifying the median employee and calculating the pay ratio allow companies to use different methodologies, exemptions, estimates and assumptions, our pay ratio disclosure may not be comparable to the pay ratios reported by other companies. +SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE +Section 16(a) of the Exchange Act requires our executive officers and directors and persons who own more than ten percent of a registered class of the Company’s equity securities to file reports of ownership and changes in ownership with the SEC. +Delinquent Section 16(a) Reports: Based on our review of the filed copies of such forms, we believe that during the fiscal year ended December 31, 2021, all filing requirements applicable to our executive officers, directors and greater than ten percent beneficial owners were timely satisfied, except that Mr. Gary W. Rollins and LOR, Inc. each filed three late Forms 4, disclosing three late transactions, and Mr. Patrick J. Gunning filed one late Form 3. +STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT +The following table sets forth information relating to the beneficial ownership of our common stock as of March 1, 2022 by: +● Each of our named executive officers; +● Each of our directors and director nominees; and +● All of our current executive officers, directors and director nominees as a group. +The number of shares beneficially owned by each stockholder is determined under rules issued by the SEC. Under these rules, beneficial ownership includes any shares as to which a person has sole or shared voting power or investment power. Unless otherwise indicated, we believe, based on the information furnished to us, that the persons named in the table below +31 +have sole voting and investment power with respect to all securities that they beneficially own, subject to community property laws where applicable. +The information contained in the following table is not necessarily indicative of beneficial ownership for any other purpose, and the inclusion of any shares in the table does not constitute an admission of beneficial ownership of those shares. Unless otherwise indicated, the business address of each beneficial owner listed in the table below is c/o of RPC, Inc., 2801 Buford Highway NE, Suite 300, Atlanta, Georgia 30329. The information provided in the table below is based on our records, information filed with the SEC, on which we are relying pursuant to applicable SEC regulations, and information provided to us. +Amount +Percent of +Beneficially +Outstanding +Name and Address of Beneficial Owner +Owned (1) +Shares +Named Executive Officers: +Richard A. Hubbell +2,973,536 +(2) +1.4 +Ben M. Palmer +709,762 +(3) +** +Director and Director Nominees: +Gary W. Rollins (4) +132,503,663 +(5) +61.2 +Amy R. Kreisler (4) +5,400,395 +(6) +2.5 +Pamela R. Rollins (4) +4,566,142 +(7) +2.1 +Jerry W. Nix +- +** +Patrick J. Gunning +7,000 +** +Susan R. Bell +5,500 +** +All Directors and Executive Officers as a group +142,747,735 +(8) +65.9 +(8 persons) +** +Less than one percent +(1) Except as otherwise noted, the nature of the beneficial ownership for all shares is sole voting and investment power. +(2) Includes 252,000 shares of restricted stock awards for Company Common Stock. +(3) Includes 168,000 shares of restricted stock awards for Company Common Stock. +(4) Amy R. Kreisler and Pamela R. Rollins are sisters and are nieces of Gary W. Rollins. +(5) Includes the following shares of Company Common Stock: (a) 69,091 shares of the Company Common Stock held in a charitable trust of which he is a co-trustee and as to which he shares voting and investment power; (b) 78,700,000 shares held by LOR, Inc., a Georgia corporation (Mr. Gary W. Rollins is an officer and director of LOR, Inc. and has a 50 percent voting interest in it); (c) 8,425,000 shares held by RFT Investment Company, LLC, a Georgia limited liability company (LOR, Inc. is the manager of RFT Investment Company, LLC); (d) 101,510 shares held by LOR Investment Company, LLC, a Georgia limited liability company (LOR Investment Company, LLC is member managed, and LOR, Inc. holds a majority of all voting interests in LOR Investment Company, LLC); (e) 2,544,785 shares held by Rollins Holding Company, Inc. a Georgia corporation (Mr. Gary W. Rollins is an officer and director of Rollins Holding Company, Inc. and has a 50 percent voting interest in it); (f) 15,677,032 shares held by RCTLOR, LLC, a Georgia limited liability company (LOR, Inc. is the managing member of RCTLOR, LLC); (g) 889,242 shares held by RFA Management Company, LLC, a Georgia limited liability company, the manager of which is LOR, Inc.; (h) 544,980 shares held by 1997 RRR Grandchildren’s Partnership, a Georgia general partnership, the partners of which are multiple trusts benefiting the grandchildren and more remote descendants of his deceased brother, Mr. R. Randall Rollins (Mr. Gary W. Rollins is a trustee of each such trust); (i) 4,815,173 shares held by WNEG Investments, L.P., a Georgia limited partnership (Mr. Gary W. Rollins is the sole member of the sole general partner of WNEG Investments, L.P.); (j) 3,224,505 shares held by revocable trust established by Mr. Gary W. Rollins, of which he is the sole trustee; (k) 10,905,886 shares held by eight trusts (the “Rollins Family Trusts”) for the benefit of the children and/or more remote +32 +descendants of his deceased brother, Mr. R. Randall Rollins; and (l) 1,404,028 shares held by the R. Randall Rollins 2012 Trust (the trustee of each of the Rollins Family Trusts and the R. Randall Rollins 2012 Trust is a corporation over which Mr. Rollins has the ability to assert control). Also includes 2,970 shares of Company Common Stock held by his wife, as to which Mr. Rollins disclaims any beneficial interest. Mr. Rollins is part of a control group holding Company securities, as disclosed on a Schedule 13D on file with the U.S. Securities and Exchange Commission. +(6) Includes the following shares of Company common stock: (a) 2,643,001 shares of Company Common Stock held in a charitable trust of which she is a co-trustee and the Executive Director; and (b) 387,631 shares held by the 2002 Amy R. Kreisler Trust, as to which she currently has the power to designate the members of the Investment Committee of the trustee. Excludes 1,171 shares held by the R. Randall Rollins Voting Trust U/A dated August 25, 1994, as to which Ms. Kreisler is a co-trustee. +(7) Includes the following shares of Company common stock: (a) 2,643,001 shares of Company Common Stock held in a charitable trust of which she is a co-trustee; and (b) 387,631 shares held by the 2002 Pamela R. Rollins Trust, as to which she currently has the power to designate the members of the Investment Committee of the trustee. Excludes 1,171 shares held by the R. Randall Rollins Voting Trust U/A dated August 25, 1994, as to which Ms. Rollins is a co-trustee. +(8) Shares held in trusts as to which more than one officer and/or director are co-trustees or entities in which there is common ownership have been included only once. Includes 420,000 shares of restricted stock awards for Company Common Stock awarded and issued to the executive officers pursuant to the Company’s Stock Incentive Plans. +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +Effective with the spin-off in 2001, the Company began providing certain administrative services to Marine Products. The service agreements between Marine Products and the Company provide for the provision of services on a cost reimbursement basis and may be terminated upon six months’ notice. The services covered by these agreements include administration of certain employee benefit programs and other administrative services. Charges from the Company (or from corporations which are subsidiaries of the Company) for such services aggregated approximately $867,000 in 2021. +RPC and Marine Products own 50 percent each of a limited liability company called 255 RC, LLC that was created for the joint purchase and ownership of a corporate aircraft. Each of RPC and Marine Products is currently a party to an operating lease agreement with 255 RC, LLC for a period of five years. During 2021, RPC recorded certain net operating costs comprised of rent and an allocable share of fixed costs of approximately $200,000 for the corporate aircraft. +During 2021, a subsidiary of RPC conducted business with companies owned by LOR, Inc. Mr. Gary W. Rollins, Non-Executive Chairman, is an officer, director and controlling stockholder of LOR, Inc. In 2021, payments totaling approximately $1,210,000 were made to these LOR, Inc. companies primarily for the purchase of parts and repair services related to certain of RPC’s oilfield operating equipment. RPC believes the charges incurred are at least as favorable as the charges that would have been incurred for similar purchases from unaffiliated third parties. +RPC receives certain administrative services from Rollins, Inc., a company of which Mr. Gary W. Rollins is also Chairman, and which is controlled by Mr. Rollins and his affiliates. The service agreements between Rollins, Inc. and the Company provide for the provision of services on a cost reimbursement basis and are terminable on six months’ notice. The services covered by these agreements include office space, administration of certain employee benefit programs, and other administrative services. Charges to the Company (or to corporations which are subsidiaries of the Company) for such services and rent aggregated approximately $108,000 in 2021. +A group that includes the Company’s Non-Executive Chairman of the Board, Mr. Gary W. Rollins, and certain companies under his control, possesses in excess of fifty percent of the Company’s voting power. Please refer to the discussion above under the heading, Board of Directors and Corporate Governance. The group discussed above also controls in excess of fifty percent of Marine Products’ voting power. +33 +Our Code of Business Conduct and Ethics for Directors and Executive Officers and Related Party Transactions Policy provides that related party transactions, as defined in Regulation S-K, Item 404(a) must be reviewed, approved and/or ratified by our Nominating and Corporate Governance Committee. As set forth in our Code, our Nominating and Corporate Governance Committee has the responsibility to ensure that it only approves or ratifies related party transactions that are in compliance with applicable law, consistent with the Company’s corporate governance policies (including those relative to conflicts of interest and usurpation of corporate opportunities) and on terms that are deemed to be fair to the Company. The Committee has the authority to hire legal, accounting, financial or other advisors as it may deem necessary or desirable and/or to delegate responsibilities to executive officers of the Company in connection with discharging its duties. A copy of the Code is available on our website at www.rpc.net under the Governance section. All related party transactions for the fiscal year ended December 31, 2021 were reviewed, pre-approved and/or ratified by the Nominating and Corporate Governance Committee in accordance with the Code. +STOCKHOLDER PROPOSALS +Appropriate proposals of stockholders intended to be presented at the Company’s 2023 Annual Meeting of Stockholders must be received by the Company by November 15, 2022 in order to be included, pursuant to Rule 14a-8 promulgated under the Exchange Act, in the proxy statement and form of proxy relating to that meeting. With regard to such stockholder proposals, if the date of the next annual meeting of stockholders is advanced or delayed more than 30 calendar days from April 26, 2023, the Company will, in a timely manner, inform its stockholders of the change and of the date by which such proposals must be received. Stockholders desiring to present business at the 2023 Annual Meeting of Stockholders outside of the stockholder proposal rules of Rule 14a-8 of the Exchange Act and instead pursuant to Article Twenty-Seventh of the Bylaws must prepare a written notice regarding such proposal addressed to The Corporate Secretary, RPC, Inc., 2801 Buford Highway NE, Suite 300, Atlanta, Georgia 30329, and deliver to or mailed and received by no later than January 26, 2023 and no earlier than December 17, 2022. Stockholders should consult the Bylaws for other specific requirements related to such notice and proposed business. +With respect to stockholder nomination of directors, the Bylaws provide that nominations for the election of directors may be made by any stockholder entitled to vote for the election of directors. Nominations must comply with an advance notice procedure which generally requires with respect to nominations for directors for election at an annual meeting, that written notice be addressed to: The Corporate Secretary, RPC, Inc., 2801 Buford Highway NE, Suite 300, Atlanta, Georgia 30329, and be received not less than 90 nor more than 130 days prior to the anniversary of the prior year’s annual meeting and set forth, among other requirements specified in the Bylaws, the name, age, business address and, if known, residence address of the nominee proposed in the notice, the principal occupation or employment of the nominee for the past five years, the nominee’s qualifications, the class or series and number of shares of capital stock of the Company which are owned beneficially or of record by the person and any other information relating to the person that would be required to be disclosed in a proxy statement or other filings. Other specific requirements related to such notice, including required disclosures concerning the stockholder intending to present the nomination, are set forth in the Bylaws. Notices of nominations must be received by the Corporate Secretary of the Company no later than January 26, 2023 and no earlier than December 17, 2022, with respect to directors to be elected at the 2023 Annual Meeting of Stockholders. +EXPENSES OF SOLICITATION +The Company will bear the cost of soliciting proxies. Upon request, we will reimburse brokers, dealers and banks, or their nominees, for reasonable expenses incurred in forwarding copies of the proxy material to their beneficial stockholders of record. Solicitation of proxies will be made principally by mail. Proxies also may be solicited in person or by telephone, facsimile or other means by our directors, officers and regular employees. These individuals will receive no additional compensation for these services. The Company has retained Georgeson Shareholder Communications, Inc. to conduct a broker search and to send proxies by mail for an estimated fee of approximately $32,000 including shipping expenses. +34 +ANNUAL REPORT +The Company’s Annual Report to Stockholders, including its Annual Report on Form 10-K for the fiscal year ended December 31, 2021, without exhibits, is being provided to stockholders with this Proxy Statement. The Annual Report is not considered proxy-soliciting material. +FORM 10-K +Upon the written request of any record or beneficial owner of the Company’s Common Stock whose proxy was solicited in connection with the 2022 Annual Meeting of Stockholders, the Company will furnish such owner, without charge, a copy of its Annual Report on Form 10-K, including the financial statements and the financial statement schedules (but without exhibits), for its fiscal year ended December 31, 2021. Requests for a copy of such Annual Report on Form 10-K should be addressed to Mr. Ben M. Palmer, Corporate Secretary, at RPC, Inc., 2801 Buford Highway NE, Suite 300, Atlanta, Georgia 30329. +OTHER MATTERS +Our Board of Directors knows of no business other than the matters set forth herein which will be presented at the Annual Meeting. In as much as matters not known at this time may come before the Annual Meeting, the enclosed proxy confers discretionary authority with respect to such matters as may properly come before the Annual Meeting; and it is the intention of the persons named in the proxy to vote in accordance with their best judgment on such matters. +BY ORDER OF THE BOARD OF DIRECTORS +Ben M. Palmer +Corporate Secretary +Atlanta, Georgia +March 15, 2022 +35 +EVERY VOTE IS IMPORTANT ADMISSION TICKET EASY VOTING OPTIONS: VOTE ON THE INTERNET Log on to: www.proxy-direct.com/geo-32587 or scan the QR code Follow the on-screen instructions available 24 hours will close at 11:59 p.m. Eastern Time, on April 25, 2022 VOTE BY PHONE Call 1-800-337-3503 Follow the recorded instructions available 24 hours will close at 11:59 p.m. Eastern Time, on April 25, 2022 VOTE BY MAIL Vote, sign and date this Proxy Card and return in the postage-paid envelope VOTE IN PERSON RPC, INC. 2170 Piedmont Road, NE, Atlanta, GA 30324 April 26, 2022 12:15 p.m. (local time) Please detach at perforation before mailing. RPC, INC. PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON APRIL 26, 2022 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF RPC, INC. The undersigned hereby constitutes and appoints GARY W. ROLLINS and R ICHARD A. HUBBELL, and each of them, jointly and severally, proxies, with full power of substitution, to vote all shares of Common Stock which the undersigned is entitled to vote at the Annual Meeting of Stockholders to be held on April 26, 2022, at 12:15 p.m. (local time), at 2170 Piedmont Road, NE, Atlanta, GA 30324, or any adjournment of the meeting. The undersigned acknowledges receipt of Notice of Annual Meeting of Stockholders and Proxy Statement, each dated March 15, 2022, grants authority to said proxies, or either of them, or their substitutes, to act in the absence of others, with all the powers which the undersigned would possess if personally present at such meeting and hereby ratifies and confirms all that said proxies or their substitutes may lawfully do in the undersigned's name, place and stead. The undersigned instructs said proxies, or either of them, to vote as stated on the reverse side. This proxy when properly executed will be voted in the manner directed on the reverse side. If no direction is made, this proxy will be voted “FOR” the election of the nominees named in Proposal 1 and “FOR” Proposal 2. The votes entitled to be cast by the Proxy holder will be cast at the discretion of the Proxy holder on any other matter that may properly come before the Annual Meeting or any postponement or adjournment thereof. VOTE VIA THE INTERNET: www.proxy-direct.com VOTE VIA THE TELEPHONE: 1-800-337-3503 To change the address on your account, please check the box and indicate your new address in the address space below. Please note that changes to the registered name(s) on £ the account may not be submitted via this method. RPC_32587_030422 PLEASE MARK, SIGN, DATE ON THE REVERSE SIDE AND RETURN THE PROXY CARD USING THE ENCLOSED ENVELOPE. xxxxxxxxxxxxxx code +EVERY VOTE IS IMPORTANT Important Notice Regarding the Availability of Proxy Materials for the RPC, INC. Annual Meeting of Stockholders to Be Held on April 26, 2022. The 2021 Annual Report and 2022 Proxy Statement are available at: https://www.proxy-direct.com/geo-32587 IF YOU VOTE BY TELEPHONE OR INTERNET, PLEASE DO NOT MAIL YOUR CARD. PROXIES RECEIVED BY APRIL 25, 2022, WILL BE COUNTED. Please detach at perforation before mailing. TO VOTE MARK BLOCKS BELOW IN BLUE OR BLACK INK AS SHOWN IN THIS EXAMPLE: A 1. Proposals THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE “FOR” PROPOSALS 1 AND 2. To elect three Class III Nominees (term expiring 2025) to the Board of Directors: FOR ALL £ WITHHOLD ALL £ FOR ALL EXCEPT £ 01. Susan R. Bell 02. Amy R. Kreisler 03. Pamela R. Rollins INSTRUCTIONS: To withhold authority to vote for any individual nominee(s), mark the box “FOR ALL EXCEPT” and write the nominee’s number on the line provided below. FOR £ AGAINST ABSTAIN £ £ 2. To ratify the appointment of Grant Thornton LLP as independent registered public accounting firm of the Company for the fiscal year ending December 31, 2022. To consider and act upon such other business as may properly come before the Annual Meeting or any adjournment of the meeting. YES £ NO £ Non-Voting Item I plan to attend the Annual Meeting B Authorized Signatures ─ This section must be completed for your vote to be counted. ─ Sign and Date Below Note: Please sign exactly as your name(s) appear(s) on this Proxy Card, and date it. When shares are held jointly, each holder should sign. When signing as attorney, executor, guardian, administrator, trustee, officer of corporation or other entity or in another representative capacity, please give the full title under the signature. Date (mm/dd/yyyy) ─ Please print date below Signature 1 ─ Please keep signature within the box Signature 2 ─ Please keep signature within the box xxxxxxxxxxxxxx RPC 32587 xxxxxxxx Scanner bar code // X \ No newline at end of file diff --git a/raw/proxies/0000742278/0001558370-22-003630/proxy_rpt.txt b/raw/proxies/0000742278/0001558370-22-003630/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..69d4c839f5ea950314b16bb33dce22431cbed607 --- /dev/null +++ b/raw/proxies/0000742278/0001558370-22-003630/proxy_rpt.txt @@ -0,0 +1,8 @@ +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +Effective with the spin-off in 2001, the Company began providing certain administrative services to Marine Products. The service agreements between Marine Products and the Company provide for the provision of services on a cost reimbursement basis and may be terminated upon six months’ notice. The services covered by these agreements include administration of certain employee benefit programs and other administrative services. Charges from the Company (or from corporations which are subsidiaries of the Company) for such services aggregated approximately $867,000 in 2021. +RPC and Marine Products own 50 percent each of a limited liability company called 255 RC, LLC that was created for the joint purchase and ownership of a corporate aircraft. Each of RPC and Marine Products is currently a party to an operating lease agreement with 255 RC, LLC for a period of five years. During 2021, RPC recorded certain net operating costs comprised of rent and an allocable share of fixed costs of approximately $200,000 for the corporate aircraft. +During 2021, a subsidiary of RPC conducted business with companies owned by LOR, Inc. Mr. Gary W. Rollins, Non-Executive Chairman, is an officer, director and controlling stockholder of LOR, Inc. In 2021, payments totaling approximately $1,210,000 were made to these LOR, Inc. companies primarily for the purchase of parts and repair services related to certain of RPC’s oilfield operating equipment. RPC believes the charges incurred are at least as favorable as the charges that would have been incurred for similar purchases from unaffiliated third parties. +RPC receives certain administrative services from Rollins, Inc., a company of which Mr. Gary W. Rollins is also Chairman, and which is controlled by Mr. Rollins and his affiliates. The service agreements between Rollins, Inc. and the Company provide for the provision of services on a cost reimbursement basis and are terminable on six months’ notice. The services covered by these agreements include office space, administration of certain employee benefit programs, and other administrative services. Charges to the Company (or to corporations which are subsidiaries of the Company) for such services and rent aggregated approximately $108,000 in 2021. +A group that includes the Company’s Non-Executive Chairman of the Board, Mr. Gary W. Rollins, and certain companies under his control, possesses in excess of fifty percent of the Company’s voting power. Please refer to the discussion above under the heading, Board of Directors and Corporate Governance. The group discussed above also controls in excess of fifty percent of Marine Products’ voting power. +33 +Our Code of Business Conduct and Ethics for Directors and Executive Officers and Related Party Transactions Policy provides that related party transactions, as defined in Regulation S-K, Item 404(a) must be reviewed, approved and/or ratified by our Nominating and Corporate Governance Committee. 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2020-12-31 0000742278 res:EquityAwardsAdjustmentsChangeInFairValueAsOfVestingDateOfPriorYearAwardsVestedDuringCurrentYearMember ecd:PeoMember 2020-01-01 2020-12-31 0000742278 res:EquityAwardsAdjustmentsChangeInFairValueAsOfVestingDateOfPriorYearAwardsVestedDuringCurrentYearMember ecd:NonPeoNeoMember 2020-01-01 2020-12-31 0000742278 2022-01-01 2022-12-31 iso4217:USD xbrli:pure +Table of Contents +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A INFORMATION +Proxy Statement Pursuant to Section 14(a) of the Securities +Exchange Act of 1934 (Amendment No. ) +Filed by the Registrant ☒ +Filed by a Party other than the Registrant ☐ +Check the appropriate box: +☐ Preliminary Proxy Statement +☐ Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +☒ Definitive Proxy Statement +☐ Definitive Additional Materials +☐ Soliciting Material Pursuant to §240.14a-12 +RPC, Inc. +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +☒ No fee required. +☐ Fee paid previously with preliminary materials. +☐ Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a6(i)(1) and 0-11 +Table of Contents +2801 Buford Highway NE, Suite 300, Atlanta, Georgia 30329 +TO THE HOLDERS OF THE COMMON STOCK: +P LEASE TAKE NOTICE that the 2023 Annual Meeting of Stockholders of RPC, Inc., a Delaware corporation (“RPC” or the “Company”), will be held at 2170 Piedmont Road, NE, Atlanta, Georgia, on Tuesday, April 25, 2023, at 12:15 P.M., for the following purposes, as more fully described in the Proxy Statement accompanying this notice: +1. To elect the three Class I nominees identified in the attached Proxy Statement to the Board of Directors; +2. To ratify the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2023; +3. To hold a nonbinding vote on executive compensation as disclosed in these materials; +4. To hold a nonbinding vote regarding the frequency of voting on executive compensation; and +5. To consider and act upon such other business as may properly come before the Annual Meeting or any adjournment of the meeting. +RPC, INC. +NOTICE OF ANNUAL MEETING OF STOCKHOLDERS +The Proxy Statement dated March 15, 2023 is attached. +The Board of Directors has fixed the close of business on March 1, 2023 as the record date for the determination of stockholders entitled to notice of, and to vote at, the Annual Meeting or any adjournment thereof. +As permitted by the U.S. Securities and Exchange Commission rules, the Company is making the proxy materials relating to the Annual Meeting, including this Proxy Statement and the Company’s 2022 Annual Report on Form 10-K for the fiscal year ended December 31, 2022 (the “Annual Report”), available to our stockholders electronically via the Internet. On or about March 15, 2023, we mailed to our stockholders an Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be held on April 25, 2023 (the “Notice”) containing instructions on how to access this Proxy Statement and our Annual Report and vote online. If you received a Notice by mail, you will not receive a printed copy of the proxy materials in the mail unless you request a copy. The Notice instructs you on how to access and review all important information contained in the Proxy Statement and Annual Report. The Notice also instructs you on how you may submit your proxy over the Internet. If you received a Notice by mail and would like to receive a printed copy of our proxy materials, you should follow the instructions for requesting such materials contained on the Notice. +I mportant Notice regarding the availability of proxy materials for the Annual Meeting of Stockholders to be held on April 25, 2023: The 2023 Proxy Statement and 2022 Annual Report on Form 10-K to security holders are available at https://www.viewproxy.com/RPC/2023 . +Voting can be completed in one of four ways: +Returning the Proxy Card by Mail +Via Telephone at 1-866-804-9616 +Online at https://www.aalvote.com/ +RES +Attending the meeting to vote In Person +By Order Of The Board Of Directors +Michael L. Schmit +Corporate Secretary +Atlanta, Georgia +March 15, 2023 +Whether or not you expect to attend the annual meeting, please sign, date and return the enclosed proxy card promptly. Alternatively, you may vote your proxy by telephone or over the Internet by following the instructions on your proxy card or Notice. If you decide to attend the meeting, you may, if you wish, revoke the proxy and vote your shares in person. +Table of Contents +TABLE OF CONTENTS +NOTICE OF ANNUAL MEETING OF STOCKHOLDERS +MESSAGE FROM OUR CHIEF EXECUTIVE OFFICER +ESG AT RPC +PROXY STATEMENT +1 +CAPITAL STOCK +2 +BOARD OF DIRECTORS AND CORPORATE GOVERNANCE +4 +DIRECTOR COMPENSATION +11 +INFORMATION REGARDING DIRECTOR NOMINEES AND CONTINUING DIRECTORS +13 +PROPOSAL 1: ELECTION OF DIRECTORS +17 +AUDIT MATTERS +18 +PROPOSAL 2: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +20 +PROPOSAL 3: NONBINDING VOTE ON EXECUTIVE COMPENSATION +21 +PROPOSAL 4: NONBINDING VOTE REGARDING THE FREQUENCY OF VOTING ON EXECUTIVE COMPENSATION +22 +EXECUTIVE OFFICERS +23 +COMPENSATION DISCUSSION AND ANALYSIS +24 +HUMAN CAPITAL MANAGEMENT AND COMPENSATION COMMITTEE REPORT +32 +EXECUTIVE COMPENSATION +33 +BENEFIT PLANS +36 +PAY RATIO DISCLOSURE +39 +PAY VERSUS PERFORMANCE +40 +SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE +43 +STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT +44 +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +46 +STOCKHOLDER PROPOSALS +47 +EXPENSES OF SOLICITATION +47 +ANNUAL REPORT +48 +FORM 10-K +48 +OTHER MATTERS +48 +CAUTION CONCERNING FORWARD-LOOKING STATEMENTS +49 +Table of Contents +MESSAGE FROM OUR CHIEF EXECUTIVE OFFICER +To our Stockholders, +On behalf of the Board of Directors, we are pleased to announce that we will hold our 2023 Annual Meeting of Stockholders on Tuesday April 25 th , 2023 at 12:15 P.M. +The year ended December 31, 2022 saw strong customer demand within our industry, including all the oilfield services that our company provides. We generated strong growth in both revenues and profits, leading to a significant increase in diluted earnings per share to $1.01, an increase compared to diluted earnings per share of $0.03 in the prior year. We also made selective investments in our businesses, upgrading our equipment to maintain our market share and continued to provide high quality services to our customers. Additionally, we reinstated our dividend in the third quarter of 2022 continuing our long-held practice of returning cash to shareholders. +During May 2022 we announced execuitve leadership changes at the Company when our longtime CEO, Richard A. Hubbell was named Executive Chairman of our Board of Directors, I was named Chief Executive Officer, and we added Michael L. Schmit to the executive team as our new Chief Financial Officer and Corporate Secretary. The continuity of the leadership team along with new financial talent at the Company has served us well in our efforts to maintain our strong financial performance at RPC. +We also continued our Environmental, Social and Governance (ESG) initiatives during the year. As we upgrade our existing equipment we are investing in more environmentally friendly technology, such as tier four dual-fuel engines. We have always undertaken efforts to make positive impacts in the communities in which we operate. We also support our employees with programs such as longtime support of United Way, college scholarship program and support of natural disaster emergency relief efforts. We also continue to focus on strong corporate governance through our Board of Directors’ Nominating and Corporate Governance Committee, which provides oversight of our ESG and other corporate governance acitivities. We’ve included additional information regarding our ESG initiatives in the following pages of this Proxy Statement. +As we begin 2023 we want to recognize the great work of our leadership teams and all of our amazing hard-working employees. Although oil prices have recently moderated from their highs, prices remain above levels sufficient to motivate our customers to drill and complete new wells, and we believe 2023 will be another year with strong financial performance. RPC will continue to focus on generating superior financial performance, building long-term shareholder value and maintaining our long tradition of returning cash to shareholders. Through a combination of dividends and open market share repurchases, RPC has returned over $536 million to shareholders over the last decade, and we will continue to make this a priority. +Sincerely, +Ben M. Palmer +President and Chief Executive Officer +Table of Contents +ESG AT RPC +ESG at RPC +At RPC, our mission is to provide best-in-class service to our customers, provide enduring long-term value to our Stockholders, support our employees and partners, and make a positive contribution to the communities where we live and work, while continuously improving our business practices to minimize our impact on the environment. Part of our ability to fulfill this mission is our capacity to identify and manage the ESG issues that can impact RPC and its stakeholders. To improve our capacity to manage these issues we have recently launched a new ESG initiative to highlight what RPC is already doing and to identify areas where enhancements would be beneficial. +2022 ESG Initiative +In September 2022, RPC launched its new corporate ESG initiative. In addition to reinforcing our current ESG-related efforts, this work will assist in the creation of a new ESG strategy and program and enhance disclosure of RPC’s ESG-related actions and information. This includes the development of new company statements to address the most important ESG issues for RPC. Once these statements are formally approved, they will be made publicly available on our website. RPC has also begun the process of conducting a Greenhouse Gas (GHG) blueprint. When completed, the GHG blueprint will help RPC calculate and understand our GHG emissions profile. +Current ESG Actions +While we launched our new ESG initiative in September, RPC has been taking steps to conduct our operations in an environmentally responsible way for many years. For example, RPC was an early participant in the FracFocus Hydraulic Fracturing Chemical Registry, voluntarily reporting data before many of our peers and making related investments in technology and process changes. RPC also has a division that recycles water from oilfield completion sites. In 2022, it treated approximately 36 million barrels and recycled 21 million barrels of water. Finally, RPC’s pressure pumping business is making significant investments in technology and improving processes that will reduce our GHG emissions by making engine usage more efficient. +In addition to the environment, RPC has also long been investing in our employees and our communities. We have a strong track record of recruiting and hiring recently discharged veterans. RPC also supports the educational goals of our employees’ children through our college scholarship program which awards four-year college scholarships, contributing more than $1 million to date. RPC also supports our local communities through natural disaster emergency relief efforts, and through our long history of supporting the United Way Campaign where our corporate headquarters is located. +ESG Oversight +Providing relevant guidance and oversight are our three board committees that support RPC’s ESG efforts in their respective areas. The Nominating and Corporate Governance Committee is responsible for monitoring our general ESG practices, policies, programs, and public disclosures. The Human Capital Management and Compensation Committee provides oversight of the development and management of RPC's human capital management strategies and policies – including diversity, equity, and inclusion. Finally, our Audit Committee is responsible for oversight of RPC’s cybersecurity risk management program and will provide company management with guidance on our sustainability and ESG reporting disclosures and related internal control procedures. +Table of Contents +2023 ANNUAL +PROXY STATEMENT +PROXY STATEMENT +We are furnishing the proxy materials to stockholders on or about March 15, 2023. The Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be held on April 25, 2023. Proxy Statement and the Annual Report on Form 10-K are available at https://www.viewproxy.com/RPC/2023 . +The following information concerning the proxy and the matters to be acted upon at the Annual Meeting of Stockholders to be held on April 25, 2023 is submitted by the Company to the stockholders in connection with the solicitation of proxies on behalf of the Company’s Board of Directors. +SOLICITATION OF AND POWER TO REVOKE PROXY +A form of proxy is enclosed. Each proxy submitted will be voted as directed, but if not otherwise specified, proxies solicited by the Board of Directors of the Company will be voted in favor of the candidates for election to the Board of Directors and in favor of ratification of the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2023, and in favor of the nonbinding proposals to approve executive compensation, and the frequency of such votes to be every three years. +A stockholder executing and delivering a proxy has power to revoke the same and the authority thereby given at any time prior to the exercise of such authority, if they so elect, by contacting either proxy holder, by timely submitting a later dated proxy changing their vote, or by attending the meeting and voting in person. However, a beneficial stockholder who holds his shares in street name must secure a proxy from their broker before they can attend the meeting and vote. All costs of solicitation have been, and will be, borne by the Company. +HOUSEHOLDING AND DELIVERY OF NOTICE OR PROXY MATERIALS +The Company has adopted the process called “householding” for any notice or proxy materials in order to reduce printing costs and postage fees. Householding means that stockholders who share the same last name and address will receive only one copy of the notice or proxy materials, unless we receive contrary instructions from any stockholder at that address. +If you prefer to receive multiple copies of the proxy materials at the same address, additional copies will be provided to you promptly upon written or oral request. If you are a stockholder of record, you may contact us by writing to the Company at 2801 Buford Highway NE, Suite 300, Atlanta, GA 30329 or by calling 404-321-2140. Eligible stockholders of record receiving multiple copies of the proxy materials can request householding by contacting the Company in the same manner. +1 +Table of Contents +2023 ANNUAL +PROXY STATEMENT +CAPITAL STOCK +The outstanding capital stock of the Company on March 1, 2023 consisted of 217,500,177 shares of Common Stock, par value $0.10 per share. Holders of Common Stock are entitled to one vote (non-cumulative) for each share of such stock registered in their respective names at the close of business on March 1, 2023, the record date for determining stockholders entitled to notice of, and to vote at, the meeting or any adjournment thereof. +A majority of the outstanding shares will constitute a quorum at the Annual Meeting . Abstentions will be counted for purposes of determining the presence or absence of a quorum for the transaction of business. With respect to routine matters, if your shares are held through a broker and you do not instruct the broker on how to vote your shares, your broker may choose to leave your shares unvoted or to vote your shares on the routine matters. Proposal 2, with respect to the ratification of the auditor, is the only routine matter on the agenda at this year’s Annual Meeting. With respect to Proposals 1, 3 and 4, without instructions, your broker cannot vote your shares, resulting in what are known as “broker non-votes.” Broker non-votes will not be considered present or entitled to vote on Proposals 1, 3 and 4, and will also not be counted for the purpose of determining the number of votes cast on these proposals. +In accordance with the General Corporation Law of the state of Delaware, the following votes are needed for approval of each proposal: +PROPOSAL +VOTE NEEDED FOR APPROVAL AND EFFECT OF ABSTENTION AND BROKER NON-VOTES +Proposal No. 1: The election of three Class I director nominees to serve as directors of the Company until our 2026 annual meeting of stockholders or until their successors are duly elected and qualified. +The election of the director nominees named herein will require the affirmative vote of a plurality of the votes cast by the shares of Company Common Stock entitled to vote in the election provided that a quorum is present at the Annual Meeting. +In the case of a plurality vote requirement (as in the election of directors), where no particular percentage vote is required, the outcome is solely a matter of comparing the number of votes cast for each nominee, with those nominees receiving the most votes being elected, and hence only votes for director nominees (and not abstentions or broker non-votes) are relevant to the outcome. In this case, the three nominees receiving the most votes will be elected. +Proposal No. 2: To ratify the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2023. +The affirmative vote of a majority of shares present in person or represented by proxy and entitled to vote at the meeting is required to approve the ratification of the appointment of the Company’s independent registered public accounting firm for fiscal year 2023. +Abstentions will have the effect of a vote against this proposal. +Broker non-votes will have no effect on this proposal and will be disregarded. +2 +Table of Contents +2023 ANNUAL +PROXY STATEMENT +PROPOSAL +VOTE NEEDED FOR APPROVAL AND EFFECT OF ABSTENTION AND BROKER NON-VOTES +Proposal No. 3: To hold a nonbinding vote on executive compensation. +The affirmative vote of a majority of shares present in person or represented by proxy and entitled to vote at the meeting is required to approve the nonbinding shareholder resolution on executive compensation. +Abstentions will have the effect of a vote against this proposal. +Broker non-votes will have no effect on this proposal and will be disregarded. +Proposal No. 4: To hold a nonbinding vote regarding the frequency of voting on executive compensation. +The affirmative vote of a plurality of shares present in person or represented by proxy and entitled to vote at the meeting is required to approve the nonbinding shareholder resolution on whether an advisory vote on executive compensation should be held every one, two or three years, meaning that the option that receives the highest number of favorable votes will be considered to represent the non-binding preference of stockholders for the frequency of future advisory votes on executive compensation. +Abstentions and Broker non-votes will have no effect on this proposal and will be disregarded. +There are no rights of appraisal or similar dissenter’s rights with respect to any matter to be acted upon pursuant to this Proxy Statement. It is expected that shares held of record and beneficially by officers and directors of the Company and their affiliates, which in the aggregate represent approximately 61 percent of the outstanding shares of Common Stock, will be voted for the nominees, for the ratification of the appointment of the Company’s independent registered public accounting firm, and for the approval, on an advisory basis, of the compensation of the Company’s named executive officers, and for a frequency of every six years for future advisory votes on executive compensation. +3 +Table of Contents +2023 ANNUAL +PROXY STATEMENT +BOARD OF DIRECTORS AND CORPORATE GOVERNANCE +MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS +The Company’s Board of Directors (Board) has an Audit Committee, Human Capital Management and Compensation Committee, Nominating and Corporate Governance Committee, and an Executive Committee (Committees). The Board has adopted written charters for certain of these Committees which are all available on our website at www.rpc .net under the section titled Governance . +Under our Corporate Governance Guidelines, directors are expected to attend all regular and special meetings of the Board and Board Committees upon which they serve. Directors are also expected to attend the Annual Stockholders Meeting. Each incumbent director attended at least 75 percent of the aggregate of all Board meetings and meetings of the Board Committees on which they served during 2022, and all members of the Board at the time attended last year’s Annual Stockholders Meeting. +The following table shows the current membership (M) and chairperson (C) of the Board and each of the Board committees, the number of Board and Board committee meetings held in 2022, and actions taken by unanimous written consent in lieu of meetings: +Human Capital +Nominating & +Management and +Corporate +Board of +Audit +Executive +Compensation +Governance +Name +Directors +Committee +Committee +Committee +Committee +Richard A. Hubbell +C +C +Susan R. Bell +M +M +Patrick J. Gunning +M +C +M +M +Amy Rollins Kreisler +M +M +Jerry W. Nix (1) +M +M +C +C +Ben M. Palmer +M +M +Gary W. Rollins +M +Pamela R. Rollins +M +Timothy C. Rollins +M +M +John F. Wilson +M +M +M +M +Meetings Held +6 +5 +— +5 +5 +Actions Taken by Written Consent +— +— +1 +1 +— +(1) Lead Director +Audit Committee +The Audit Committee of the Board of Directors currently consists of Patrick J. Gunning (Chairperson), Jerry W. Nix, Susan R. Bell and John F. Wilson, who was appointed during the year ended December 31, 2022. The Audit Committee is responsible for, among other things: +> appointing the Company’s independent registered public accounting firm to audit the Company’s financial statements; +> assessing the independence and overseeing the performance of the Company’s independent registered public accounting firm; +> pre-approving all audit and all permissible non-audit services to be performed by the Company’s independent registered public accounting firm; +4 +Table of Contents +2023 ANNUAL +PROXY STATEMENT +> discussing with the Company’s independent registered public accounting firm all matters required to be discussed under the standards of the Public Company Accounting Oversight Board, Securities and Exchange Commission (SEC) or other regulations; +> reviewing the Company’s financial statements and critical accounting policies and estimates; +> reviewing the adequacy and effectiveness of our internal controls and disclosure controls and procedures; +> assessing the performance of the Company’s internal audit department; +> reviewing the Company’s insider trading and anti-corruption policies; +> overseeing procedures for the receipt, retention, and treatment of complaints received by the Company regarding accounting, internal accounting controls, or auditing matters, and the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters; and +> overseeing compliance with the Company’s code of business conduct and ethics. +The Board has determined that all of the members of the Audit Committee are independent as defined by the rules of the SEC and the New York Stock Exchange (NYSE). The Board has also determined that all members of the Audit Committee with the exception of John F. Wilson are qualified as “Audit Committee Financial Experts” within the meaning of the rules of the SEC and that they have accounting and related financial management expertise within the meaning of the NYSE listing standards. In addition, the Board has determined that Mr. Wilson is “financially literate” within the meaning of and as required by the rules and regulations of the NYSE. The Board has also determined that Ms. Bell’s simultaneous service on the audit committees of four public companies will not impair her ability to effectively serve on the Company’s Audit Committee. +Human Capital Management and Compensation Committee +The Human Capital Management and Compensation Committee of the Board of Directors of the Company consists of Jerry W. Nix (Chairman), Patrick J. Gunning and John F. Wilson who was appointed during the year ended December 31, 2022. The Human Capital Management and Compensation Committee is responsible for, among other things: +> reviewing the Company’s executive compensation philosophy and strategy; +> reviewing and approving the corporate goals and objectives relevant to the compensation of the Company’s CEO and executive officers; +> evaluating the performance of the Company’s CEO and executive officers; +> reviewing the compensation of the Company’s non-employee directors for service on the Board and its committees and recommending changes to their compensation program as appropriate; +> determining the stock ownership guidelines for the Company’s CEO, executive officers, and other key executives and monitoring compliance with such guidelines; +> overseeing the development and management of the Company’s human capital management strategy and policies, including, but not limited to, those policies and strategies regarding diversity, equity and inclusion; and +> reviewing, approving and administering incentive compensation and equity compensation plans for executive officers and directors. +The Board has determined that all members of the Human Capital Management and Compensation Committee are independent as defined by the rules of the SEC and NYSE. In addition, each member of our Human Capital Management and Compensation Committee is also a non-employee director, as defined pursuant to Rule 16b-3 of the Exchange Act. +The Company is not required by law or by the NYSE rules to have a formal compensation committee charter since we are a controlled corporation as described below under the heading Director Independence and NYSE Requirements . However, we have established a written charter of the Human Capital Management and Compensation Committee to promote responsible corporate governance practices, and we currently intend to maintain the committee charter going forward. +5 +Table of Contents +2023 ANNUAL +PROXY STATEMENT +Human Capital Management and Compensation Committee Interlocks and Insider Participation +The Board has determined that each member of the Human Capital Management and Compensation Committee is independent in accordance with the NYSE rules. The Human Capital Management and Compensation Committee consists of Messrs. Nix, Gunning, and Wilson. None of these individuals is a current or former officer or employee of the Company or any of its subsidiaries. Related party transactions and the independence of the non-employee members of the Company’s Board are discussed in more detail under the following sections, Director Independence and NYSE Requirements, and Certain Relationships and Related Party Transactions, of this Proxy Statement. No executive officer of the Company has served as a director or member of the compensation committee or other board committee of another entity that had an executive officer who served on the Company’s Board or Human Capital Management and Compensation Committee. +Nominating and Corporate Governance Committee +The Nominating and Corporate Governance Committee of the Board of Directors of the Company consists of Jerry W. Nix (Chairman), Patrick J. Gunning, John F. Wilson, Timothy C. Rollins and Amy R. Kreisler. Messrs. Wilson and Rollins and Ms. Kreisler were appointed during the year ended December 31, 2022. The Nominating and Corporate Governance Committee is responsible for, among other things: +> determining the appropriate qualifications required for the members of the Board; +> recommending Board committee chairs and assignments; +> recommending to our Board nominees for director and to consider any nominations properly made by a stockholder, to make recommendations to our Board of Directors regarding the agenda for our Annual Meetings of Stockholders, and appropriate action to be taken in response to any stockholder proposals; +> conducting periodic reviews of the composition and size of the Board and its committees, as well as the frequency and procedures of Board meetings; +> overseeing compliance with key corporate governance policies, including the company’s corporate governance guidelines and independence guidelines; +> reviewing and approving related party transactions by a sub-committee of independent members: +> reviewing and monitoring the Company’s ESG practices, policies, programs and public disclosures; and +> reviewing and assessing the adequacy of the Company’s Code of Business Conduct and Ethics. +The Company is not required by law or by the NYSE rules to have a nominating committee since we are a controlled corporation as described below under the heading “ Director Independence and NYSE Requirements .” However, we have established a Nominating and Corporate Governance Committee and a written charter to promote responsible corporate governance practices. We currently intend to maintain the committee going forward, but as a controlled company, we rely upon the exemption from the requirement that we have a nominating committee comprised entirely of independent directors. +Director Nominations +Under Delaware law, there are no statutory criteria or qualifications for directors. No criteria or qualifications have been prescribed by the Board at this time. The Nominating and Corporate Governance Committee does not have a formal policy with regard to the consideration of director candidates. As such, there is no formal policy relative to diversity, although as noted below, it is one of many factors that the Nominating and Corporate Governance Committee has the discretion to factor into its decision making. This discretion would extend to how the Committee might define diversity in a particular instance – whether in terms of background, viewpoint, experience, education, race, gender, national origin or other considerations. The Committee acts under the guidance of the Corporate Governance Guidelines approved by the Board of Directors and posted on the Company’s website at www.rpc.net under the Governance section. The Board believes that it should preserve maximum flexibility in order to select directors with sound judgment and other desirable qualities. According to the Company’s Corporate Governance Guidelines, the Board of Directors is responsible for selecting nominees for election to the Board of Directors. The Board has delegated the screening process of director nominees for nomination to the Board and service on the committees of the Board to the Nominating and Corporate Governance Committee. The Nominating and +6 +Table of Contents +2023 ANNUAL +PROXY STATEMENT +Corporate Governance Committee is responsible for determining the appropriate skills and characteristics required of Board members in the context of the then current makeup of the Board. This determination takes into account all factors which the Committee considers appropriate, such as independence, experience, strength of character, mature judgment, technical skills, diversity, age and the extent to which the individual would fill a present need on the Board. The Bylaws provide that nominations for the election of directors may be made by any stockholder entitled to vote for the election of directors. Nominations must comply with an advance notice procedure which generally requires, with respect to nominations for directors for election at an annual meeting, that written notice be addressed to: The Corporate Secretary, RPC, Inc., 2801 Buford Highway NE, Suite 300, Atlanta, Georgia 30329, and received not less than 90 nor more than 130 days prior to the anniversary of the prior year’s annual meeting and set forth among other requirements specified in the Bylaws, the name, age, business address and, if known, residence address of the nominee proposed in the notice, the principal occupation or employment of the nominee for the past five years, the nominee’s qualifications, the class or series and number of shares of capital stock of the Company which are owned beneficially or of record by the person and any other information relating to the person that would be required to be disclosed in a proxy statement or other filings. Other requirements related to the notice are contained in the Bylaws and stockholders are advised to carefully review those requirements to ensure that nominations comply with the Bylaws. The Committee will consider nominations from stockholders that satisfy these requirements. +All of the nominees for directors being voted upon at the Annual Meeting to be held on April 25, 2023 are currently serving on the Board of Directors. +Board Leadership STRUCTURE +The Board believes the current leadership structure consisting of a separate Executive Chairman of the Board, Chief Executive Officer and Lead Independent Director represents the appropriate structure for the Company at this time. Richard A. Hubbell is the Executive Chairman of the Board and sets the agendas for Board meetings in consultation with the CEO, Corporate Secretary, and other members of the Board, and presides over all Board meetings and the Annual Meeting of Stockholders. Ben M. Palmer is our President and Chief Executive Officer and sets the operational leadership and strategic direction of the Company with a focus on optimizing operational efficiencies. Jerry W. Nix is the Lead Independent Director and serves as the liaison between the Chairman, CEO and the independent directors, sets the agenda for, and presides over, the executive sessions of the non-employee and independent directors, consults with the Chairman and CEO regarding information sent to the Board in connection with Board meetings and being available, if requested by the stockholders, when appropriate, for consultation and direct communication. +Risk Oversight +Our Board of Directors’ oversight of risk has not been delegated to any Board Committee. “Risk” is an extremely broad concept that extends to multiple functional areas and crosses multiple disciplines. As such, risk may be addressed from time to time by the full Board or by one or more of our Committees. Senior management is responsible for identifying and managing material risks that we face while insurable risks and litigation risks are handled primarily by the risk management department. Senior management provides the Board with a summary of insurance coverage annually and updates as deemed necessary. Liquidity risk, credit risk and risks associated with our credit facilities and cash management are handled primarily by our finance department which regularly provides a financial report to both the Audit Committee and to the full Board. Operational, business, regulatory and political risks are handled primarily by senior executive management which regularly provides various operational reports to, among others, the full Board, the Executive Committee and the Audit Committee. +Cybersecurity Risk Oversight +Cybersecurity has become a particularly acute area of risk for companies of all sizes and in all industries, including our company. While management is primarily responsible for our cybersecurity program and managing our cybersecurity risks, including our procedures and day-to-day operations, our Audit Committee oversees our risk management program which includes oversight of cybersecurity risks. The Audit Committee reviews our cybersecurity risks and incidents and any other risks and incidents relevant to our information technology systems +7 +Table of Contents +2023 ANNUAL +PROXY STATEMENT +controls and security, and determines if any such risks and incidents should be disclosed in our periodic filings with the SEC. +In performing its oversight responsibilities, our Audit Committee receives periodic reports and reviews our information technology and cybersecurity risk profile. We use a variety of security products and vendors to protect our information technology infrastructure and data. Our programs continue to adapt and mature as threats continue to evolve. We maintain data encryption, monitoring, loss prevention, data storage, identity/authentication controls, including two-factor authentication tools, and anti-malware and anti-virus solutions. We also perform penetration tests and cyber simulations to practice our incident response procedures. Our cybersecurity plans are reviewed on an annual basis, and we prioritize new and updated programs as needed to respond to the cybersecurity risks we may face. We train employees on cybersecurity risks, conduct annual tabletop exercises and generate internal phishing campaigns to assess the effectiveness of the training. We also regularly review our privacy policies to ensure compliance with all applicable data privacy regulations. +Director Independence and NYSE Requirements +Controlled Company Exemption +The Company has elected to be treated as a “controlled company” as defined by NYSE Section 303A.00. This Section provides that a controlled company need not comply with the requirements of Sections 303A.01, 303A.04 and 303A.05 of the NYSE Listed Company Manual. Section 303A.01 requires that listed companies have a majority of independent directors. As a controlled company, this Section does not apply to the Company. Sections 303A.04 and 303A.05 require that listed companies have a nominating and corporate governance committee and a compensation committee, in each case composed entirely of independent directors, and that each of these committees must have a charter that addresses both the committee’s purpose and responsibilities and the need for an annual performance evaluation by the committee. While the Company has a Nominating and Corporate Governance committee and a Human Capital Management and Compensation committee, and each of these committees has a written charter that is available on the Company’s website, it is not required to and does not comply with all of the provisions of Sections 303A.04 and 303A.05. The Company is a “controlled company” because a group that includes Gary W. Rollins, Pamela R. Rollins, Timothy C. Rollins, and Amy R. Kreisler, each of whom is a director of the Company, and certain companies under their control, controls in excess of fifty percent of the Company’s voting power. This means that they have the ability to determine the outcome of the election of directors at the Company’s annual meetings and to determine the outcome of many significant corporate transactions, many of which only require the approval of a majority of the Company’s voting power. Such a concentration of voting power could also have the effect of delaying or preventing a third party from acquiring the Company at a premium. +The Company’s Audit Committee is composed of four “independent” directors as defined by the Company’s Corporate Governance Guidelines, the NYSE rules, the Exchange Act, SEC regulations thereunder, and the Company’s Audit Committee Charter. All of the members of the Human Capital Management and Compensation Committee, and a majority of the members of Nominating and Corporate Governance Committee are also “independent” directors. The current independent directors of the Company are Jerry W. Nix, Patrick J. Gunning, John F. Wilson and Susan R. Bell. +Independence Guidelines +Under NYSE listing standards, to be considered independent, a director must be determined to have no material relationship with the Company other than as a director. The NYSE standards set forth a nonexclusive list of relationships which are conclusively deemed material. The Company’s Independence Guidelines are posted on the Company’s website at www.rpc.net under the Governance section and include categorical standards for determining independence in specific situations. +Audit Committee Charter +Under the Company’s Audit Committee Charter, in accordance with NYSE listing requirements and the Securities Exchange Act of 1934, all members of the Audit Committee must be independent of management and the Company. A member of the Audit Committee is considered independent as long as he or she (i) does not accept +8 +Table of Contents +2023 ANNUAL +PROXY STATEMENT +any consulting, advisory, or compensatory fee from the Company, other than as a director or committee member; (ii) is not an affiliated person of the Company or its subsidiaries; and (iii) otherwise meets the independence requirements of the NYSE and the Company’s Corporate Governance Guidelines. +Nonmaterial Relationships +After reviewing all of the relationships between the independent directors and the Company, the Board of Directors determined that none of independent directors had any relationships that impaired their independence and discussed the following: +● Jerry W. Nix, Patrick J. Gunning, Susan R. Bell and John F. Wilson also serve on the Boards of Rollins, Inc. and Marine Products Corporation. Gary W. Rollins and Pamela R. Rollins are directors of Rollins, Inc. and Marine Products Corporation and are part of a control group that has voting control over each of them. Gary W. Rollins and John F. Wilson are also executive officers of Rollins, Inc. +As required by the Independence Guidelines, the Board of Directors unanimously concluded that the above-listed relationships would not affect the independent judgment of the independent directors, based on their experience, character and independent means, and therefore do not preclude an independence determination. All of the members of the Audit Committee are also independent under the heightened standards required for Audit Committee members. +The Company’s non-management directors meet at regularly scheduled executive sessions without management. In accordance with the NYSE corporate governance listing standards and Mr. Jerry W. Nix, as Lead Director, presided over the executive sessions held during 2022. +Corporate Governance Guidelines +We have adopted Corporate Governance Guidelines to formalize and promote better understanding of our policies and procedures. At least annually, the Board reviews these guidelines. As required by the rules of the NYSE, our Corporate Governance Guidelines require that our non-management directors meet in regularly scheduled executive sessions each year without management, and such meetings are currently required to occur at least twice annually. +At the Company’s website at www.rpc.net , under the Governance section, you may access a copy of its Corporate Governance Guidelines, Audit Committee Charter, Human Capital Management and Compensation Committee Charter, Nominating and Corporate Governance Committee Charter, Code of Business Conduct, Code of Business Conduct and Ethics for Directors and Executive Officers and Related Party Transactions Policy, and Independence Guidelines. +Code of Business Conduct +The Company has adopted a Code of Business Conduct applicable to all directors, officers and employees generally, as well as a Code of Business Conduct and Ethics for Directors and Executive Officers and Related Party Transactions Policy applicable to the principal executive officer, principal financial officer, and directors. Both codes are available on the Company’s website at www.rpc.net under the Governance section. +9 +Table of Contents +2023 ANNUAL +PROXY STATEMENT +Director Communications +The Company also has a process for interested parties, including stockholders, to send communications to the Board of Directors, Lead Director, any of the Board committees or the non-management directors as a group. Such communications should be addressed as follows: +Mr. Jerry W. Nix +c/o Internal Audit Department +RPC, Inc. +2801 Buford Highway NE, Suite 300 +Atlanta, Georgia 30329 +The above instructions for communications with the directors are also posted on our website at www.rpc.net under the Governance section. All communications received from interested parties are forwarded to the Board of Directors. Any communication addressed solely to the Lead Director or the non-management directors will be forwarded directly to the appropriate addressee(s). +10 +Table of Contents +2023 ANNUAL +PROXY STATEMENT +DIRECTOR COMPENSATION +Overview of the Non-Employee Director Compensation Program +Members of the Board who are not employees (Non-Employee Directors) receive compensation for their service. As RPC employees, Messrs. Hubbell and Palmer do not receive compensation for their service as Board members. The compensation program for our Non-Employee Directors is intended to provide a total compensation package that enables us to attract and retain qualified and experienced individuals to serve as directors and to align our directors’ interests with those of our stockholders. All Non-Employee Directors are also entitled to reimbursement of expenses for all services as a director, including reasonable travel expenses incurred in connection with required in-person attendance at board and committee meetings, committee participation or special assignments. +The Human Capital Management and Compensation Committee annually reviews each element and the total of our Non-Employee Director compensation program. In October 2022, the Human Capital Management and Compensation Committee and the Board approved changes to the Non-Employee Director compensation program for 2023, as disclosed in the section titled Changes made to the Non-Employee Director Compensation Program for 2023 of this Proxy Statement. +2022 Annual Non-Employee Director Compensation Program +Cash and Equity Compensation +Under the Director Compensation Program in effect in 2022, our Non-Employee Directors received an annual cash retainer and an annual equity grant in the form of Company common shares under the Company’s 2014 Equity Stock Incentive Plan (SIP); Committee Chairs and members received additional annual cash retainers. All cash retainers are payable in equal quarterly installments in arrears. For each Non-Employee Director who is elected or appointed for the first time, the first quarterly installment of the annual cash retainers will be paid for the first quarter that ends on or after the date of his or her initial election or appointment, prorated based on service during the quarter. In addition, equity retainers are not granted to the Non-Employee Director who is elected to the Board during the latter half of a year. The following table sets forth the 2022 Non-Employee Director Compensation Program : +Annual +Annual +Annual +Committee +Chair +Non-Chair +Equity +Member Annual +Retainer +Retainer +Retainer +Cash Retainer +Board/Committee +($) +($) +($) +($) +Board of Directors +60,000 +75,000 +25,000 +— +Lead Director +10,000 +— +— +— +Audit Committee +20,000 +— +— +6,000 +Human Capital Management and Compensation Committee +10,000 +— +— +3,000 +Nominating and Corporate Governance Committee +6,000 +— +— +2,000 +11 +Table of Contents +2023 ANNUAL +PROXY STATEMENT +2022 Director Compensation Table +The following table sets forth the compensation paid to our directors for services rendered as a director for the year ended December 31, 2022. Two of our directors, Richard A. Hubbell and Ben M. Palmer are employees of the Company and each of their employee compensation information is set forth in the Summary Compensation Table under the Executive Compensation section of this Proxy Statement. Gary W. Rollins served as the Non-Executive Chairman until May 17, 2022 and has remained on the Board as a Director, after that date. John F. Wilson was elected to the Board effective April 26, 2022 and Timothy C. Rollins was elected to the Board effective October 25, 2022. Directors that are Company employees do not receive any additional compensation for services rendered as a director. +All of the directors shown below have never been employed by the Company or paid a salary or bonus by the Company and do not participate or have never participated in any Company-sponsored retirement plans. +Fees Earned or +Stock +Option +Paid in Cash +Awards +Awards +Total +Name +($) +($) +($) +($) +Susan R. Bell +81,000 +25,000 +— +106,000 +Patrick J. Gunning +100,000 +25,000 +— +125,000 +Amy R. Kreisler +76,363 +25,000 +— +101,363 +Jerry W. Nix +107,000 +25,000 +— +132,000 +Gary W. Rollins +97,747 +25,000 +— +122,747 +Pamela R. Rollins +75,000 +25,000 +— +100,000 +Timothy C. Rollins +13,810 +— +— +13,810 +John F. Wilson +55,187 +25,000 +— +80,187 +Non-Employee Director Stock Ownership Guidelines +Under current Stock Ownership Guidelines, Non-Employee Directors are required to beneficially own, within five years of their appointment to the Board, common stock of the Company equal to at least three times the annual equity retainer. Non-Employee Directors are prohibited from selling Company stock granted to such director by the Company from the date of such grant until such director is in compliance with their ownership requirement under these Stock Ownership Guidelines. +Changes Made to the Non-Employee Director Compensation Program for 2023 +Cash and Equity Compensation +In October 2022, the Human Capital Management and Compensation Committee approved changes to the Director Compensation Program for 2023. Such changes included an increase in the annual equity retainer from $25,000 to $50,000, paid in the form of Company common shares issued under the SIP. Equity retainers are granted on the third business day following the Annual Meeting of Stockholders and vest immediately on the grant date. No changes were made to the cash portion of Director compensation. +12 +Table of Contents +2023 ANNUAL +PROXY STATEMENT +INFORMATION REGARDING DIRECTOR NOMINEES AND CONTINUING DIRECTORS +The following table sets forth the names, ages as of March 1, 2023, and certain other information for each of the nominees for election as a director at the Annual Meeting and for each of the continuing members of our Board following the Annual Meeting. Full biographical information follows the table. +Current Term +Name +Class +Age +Director Since +Expires +Independent +DIRECTOR NOMINEES: +Jerry W. Nix +I +77 +2020 +2023 +✓ +Patrick J. Gunning +I +63 +2021 +2023 +✓ +Ben M. Palmer +I +62 +2022 +2023 +✘ +CONTINUING DIRECTORS: +Gary W. Rollins +II +78 +1984 +2024 +✘ +Richard A. Hubbell +II +78 +1987 +2024 +✘ +John F. Wilson +II +65 +2022 +2024 +✓ +Amy R. Kreisler +III +53 +2016 +2025 +✘ +Pamela R. Rollins +III +66 +2019 +2025 +✘ +Susan R. Bell +III +60 +2021 +2025 +✓ +Timothy C. Rollins +III +60 +2022 +2025 +✘ +Key Attributes, Experience and Skills of Director Nominees and Continuing Directors +Director Nominees +Jerry W. Nix +Former Vice Chairman, Executive Vice President and Chief Financial Officer of Genuine Parts Company +Lead Independent Director of the Board of Directors +Chairperson of the Human Capital Management and Compensation Committee +Chairperson of the Nominating and Corporate Governance Committee +Member of the Audit Committee +Jerry W. Nix has served as a Director of RPC, Inc. since 2020. Mr. Nix brings extensive risk oversight, financial and strategic experience to our Board of Directors. Mr. Nix retired from Genuine Parts Company in 2013 where he served as Vice Chairman from 2005 to 2013, Chief Financial Officer from 2000 to 2013 and as Executive Vice President from 2000 to 2005. Prior to joining Genuine Parts in 1978, Mr. Nix was an auditor with Ernst & Young from 1974 to 1978 and a pilot in the U.S. Air Force from 1968 to 1974. Mr. Nix currently serves on the Board of Directors of Marine Products Corporation. and Rollins, Inc., roles he has held since 2020 and on various civic and non-profit boards. Mr. Nix received a Bachelor of Science in Education from Mississippi State University and a Bachelor of Science in Accounting from the University of Florida. +13 +Table of Contents +2023 ANNUAL +PROXY STATEMENT +Patrick J. Gunning +Former Chief Financial Officer at The Woodruff Arts Center +Retired Partner, Ernst & Young LLP +Independent Member of the Board of Directors +Chairperson of the Audit Committee +Member of the Nominating and Corporate Governance Committee +Member of the Human Capital Management and Compensation Committee +Patrick J. Gunning has served as a Director of RPC, Inc. since 2021. Mr. Gunning brings extensive risk oversight, financial and strategic experience to our Board of Directors. Mr. Gunning served as the Chief Financial Officer of the Woodruff Arts Center, a non-profit organization, from November 2020 to June 2022. Mr. Gunning retired as a Partner from Ernst & Young LLP in June 2020, a role he held since May 2002, after a 39-year career in public accounting. Mr. Gunning held multiple leadership roles at Ernst & Young LLP including Southeast Region Leader of the Financial Accounting Advisory Services practice, Southeast Area Industry Leader of the Retail and Consumer Products practice, and lead audit partner. Prior to joining Ernst & Young LLP, Mr. Gunning worked at Arthur Andersen LLP from 1981 to 2002, where he served as a partner, lead audit partner and Assurance Division Leader. Mr. Gunning currently serves on the Board of Directors of Marine Products Corporation and Rollins, Inc., roles he has held since 2021. Mr. Gunning received a Bachelor of Business Administration in Accountancy from the University of Notre Dame and is a Certified Public Accountant in the state of Georgia. +Ben M. Palmer +President and Chief Executive Officer +Member of the Executive Committee +Non-Independent Member of the Board of Directors +Ben M. Palmer has been President and Chief Executive Officer of the Company, since May 17, 2022 and was first elected to the Board on that date. Previously, he served as Vice President, Chief Financial Officer and Treasurer of the Company since 1996 and assumed responsibility as Corporate Secretary in 2018. He is also the President and Chief Executive Officer of Marine Products Corporation and previously served as its Vice President, Chief Financial Officer, Treasurer and Corporate Secretary. Mr. Palmer also serves on the Board of Directors for Marine Products Corporation. He joined RPC following three years as the CFO of EQ Services, a commercial mortgage and asset management subsidiary of The Equitable Companies. Prior to that he spent ten years with Arthur Andersen LLP in its audit and business advisory services division. Mr. Palmer has a Bachelor of Science in Business Administration from Auburn University. +Continuing Directors +Gary W. Rollins +Executive Chairman of the Board, Rollins, Inc. +Non-Independent Member of the Board of Directors +Gary W. Rollins has served as a Director of RPC, Inc. since 1984. Mr. Rollins has extensive knowledge of the Company’s business and industry having served on the Board of the Company for over 38 years. He served as the Non-Executive Chairman of the Board until May 17, 2022. Mr. Rollins currently serves as the Executive Chairman of the Board of Rollins, Inc., a role he has held since 2021, and previously served as its Vice Chairman from 2013 to 2020 and its Chief Executive Officer from 2001 to 2022. Mr. Rollins previously served as the Non-Executive Chairman of Marine Products Corporation. until May 17, 2022 and currently is a member of the Board at Marine Products Corporation. Mr. Rollins previously served as a Director of Genuine Parts Company from 2013 to 2017. Mr. Rollins received a Bachelor of Science in Business Administration from the University of Tennessee. +14 +Table of Contents +2023 ANNUAL +PROXY STATEMENT +Richard A. Hubbell +Executive Chairman of the Board +Chairperson of the Executive Committee +Non-Independent Member of the Board of Directors +Richard A. Hubbell has been Executive Chairman of the Board since May 17, 2022. Prior to that, he served as a Director, the Company’s President since 1987 and its Chief Executive Officer since 2003. He is also the Executive Chairman of the Board at Marine Products Corporation. and previously served as its President and Chief Executive Officer since 2001. Previously, he was Executive Vice President of Rollins Communications, Inc., a media company. He joined Rollins, Inc. in 1970. Mr. Hubbell received a Bachelor of Arts in Economics from Westminster College. +John F. Wilson +Vice-Chairman, Rollins, Inc. +Independent Member of the Board of Directors +Member of the Audit Committee +Member of the Nominating and Corporate Governance Committee +Member of the Human Capital Management and Compensation Committee +John F. Wilson was elected to the Board of Directors at RPC, Inc. effective April 26, 2022. Mr. Wilson has served as a Director of Rollins, Inc. since 2013, and as Vice-Chairman of the Company since 2020. He previously served as Vice President of Rollins, Inc. from 2011 to 2013, President and Chief Operating Officer from 2013 to 2020, and as President of Orkin, LLC., from 2009 to 2013. Prior to these executive roles, Mr. Wilson held roles at Rollins, Inc. as sales inspector, branch manager, Central Commercial Region Manager, Atlantic Division Vice President, and President of the Southeast Division. Mr. Wilson was also elected to the Board of Directors at Marine Products Corporation effective April 26, 2022. Mr. Wilson received a Bachelor of Business Administration in Business Management from the University of Tennessee. +Amy R. Kreisler +Executive Director, The O. Wayne Rollins Foundation +Non-Independent Member of the Board of Directors +Member of the Nominating and Corporate Governance Committee +Amy Rollins Kreisler has served as a Director of RPC, Inc. since 2016. Ms. Kreisler is a Vice President at LOR, Inc. She is the Executive Director of The O. Wayne Rollins Foundation and a Trustee of The Ma-Ran Foundation. In each of these roles, she oversees grant-making activities and directs the administration of foundation assets. She also serves as the Trustee of The Lovett School Board of Trustees, also serving on their Executive Committee. She is a long-standing member of the Rollins School of Public Health’s Dean’s Council and a former Board member of the Emory University Board of Visitors. Ms. Kreisler was also appointed to the Board of Directors of Marine Products Corporation effective October 25, 2022. Ms. Kreisler is a former attorney of the law firm Arnall Golden Gregory LLP. She holds an English Degree from Hollins University and a Law Degree from The College of William and Mary Law School. +Pamela R. Rollins +Director, LOR, Inc. +Non-Independent Member of the Board of Directors +Pamela R. Rollins has served as a Director of RPC, Inc. since 2019. Ms. Rollins is a Trustee of Young Harris College, where she is the Chairperson of the Development and Investing in the Future Campaign Committees of the Board of Trustees. In these roles, she directs and supervises the activities of both Committees with the goal of securing endowments to Young Harris College for the support of its general educational activities. She is also a Trustee of The O. Wayne Rollins Foundation, a Trustee Emeritus of The Schenck School, a board member of The National Monuments Foundation and a former board member of The Lovett School. Ms. Rollins has served as a Director of Rollins, Inc. since 2015 and Marine Products Corporation since 2017. Ms. Rollins received a Bachelor of Arts in Family Community Studies from Stephens College. +15 +Table of Contents +2023 ANNUAL +PROXY STATEMENT +Susan R. Bell +Retired Partner, Ernst & Young LLP +Independent Member of the Board of Directors +Member of the Audit Committee +Susan R. Bell has served as a Director of RPC, Inc. since 2021. Ms. Bell brings extensive risk oversight, financial and strategic experience to our Board of Directors. Ms. Bell retired as Partner from Ernst & Young LLP in 2021 after a 36-year career in public accounting. At Ernst & Young LLP, Ms. Bell served as both an audit and advisory partner, led the Southeast Risk Advisory practice and served as the Atlanta Office Managing Partner. Prior to working at Ernst & Young LLP, Ms. Bell started her career at Arthur Andersen LLP in 1984 where she served as an audit partner from 1996 to 2002. Ms. Bell currently serves as a member of the Board of Directors of Marine Products Corporation, Rollins, Inc. and First Advantage Corporation, roles she has held since 2021, and serves on the audit committees of those corporations. In addition, Ms. Bell serves on the boards of the non-profit, National Center for Civil & Human Rights and IWF Georgia, an international women’s forum. Ms. Bell graduated summa cum laude from Mississippi State University with a Bachelor of Professional Accountancy and is a Certified Public Accountant in the states of Georgia and Tennessee. +Timothy C. Rollins +Vice President, LOR, Inc. +Non-Independent Member of the Board of Directors +Timothy C. Rollins was elected to the Board of Directors at RPC, Inc. effective October 25, 2022. Mr. Rollins is a Vice President at LOR, Inc. and manages its investments in fluid power distribution and cattle operations. In this role, he manages the Executive team of operations and approves major capital expenditures. He is also a Trustee of Emory University and of Woodruff Health Sciences Center. He has served as a Director of Marine Products Corporation since 2017. Mr. Rollins is also a former Board member of both Emory Board of Visitors and of Emory Department of Psychiatry Board of Visitors. Mr. Rollins holds a Bachelor of Science in Business Administration from Boston University. +16 +Table of Contents +2023 ANNUAL +PROXY STATEMENT +PROPOSAL 1: ELECTION OF DIRECTORS +Overview +Our Board of Directors is currently composed of 10 members. In accordance with our Amended and Restated Bylaws (Bylaws), our Board is divided into three classes of directors. At the Annual Meeting three Class I directors will be elected for a three-year term, so that the term of office of one class of directors shall expire in each year. Each director’s term continues until the election and qualification of his or her successor, or such director’s earlier death or resignation. Seven other individuals serve as directors but are not standing for re-election because their terms as directors extend past this Annual Meeting pursuant to provisions of the Company’s Bylaws, which provide for the election of directors for staggered terms, with each director serving a three-year term. +Nominees +At the Annual Meeting, Jerry W. Nix, Patrick J. Gunning and Ben M. Palmer will be nominated to serve as Class I Directors. The nominees for election at the 2023 Annual Meeting are currently directors of the Company. Unless authority is withheld, the proxy holders will vote for the election of each nominee named above as a director. Although management does not contemplate the possibility, in the event any nominee is not a candidate or is unable to serve as director at the time of the election, unless authority is withheld, the proxies will be voted for any nominee who shall be designated by the present Board of Directors and recommended by the Nominating and Corporate Governance Committee to fill such vacancy. +Our Board of Directors recommends a vote FOR the Class I Director Nominees above. +17 +Table of Contents +2023 ANNUAL +PROXY STATEMENT +AUDIT MATTERS +Report of the Audit Committee +Management is responsible for the Company’s system of internal control over financial reporting, the preparation of its consolidated financial statements in accordance with accounting principles generally accepted in the United States, and the financial reporting process, including management’s assessment of Internal Control over Financial Reporting (ICFR). +The Company’s independent registered public accounting firm is responsible for performing an integrated independent audit of the Company’s consolidated financial statements and management reports on ICFR in accordance with the standards of the Public Company Accounting Oversight Board (PCAOB) and for issuing reports thereon. The Audit Committee’s responsibility is generally to monitor and oversee these processes, as described in the Audit Committee Charter. It is not the duty of the Audit Committee to plan or conduct audits or to determine that the Company’s financial statements are complete and accurate and in accordance with generally accepted accounting principles; that is the responsibility of management. The Audit Committee presently consists of four independent directors, all of which are considered financially literate under NYSE rules. +In fulfilling its oversight responsibilities with respect to the year ended December 31, 2022, the Audit Committee: +> Approved the engagement and terms of service of Grant Thornton LLP as the Company’s independent registered public accounting firm for the year ended December 31, 2022; +> Reviewed with management and the Company’s independent registered public accounting firm, the interim financial information included in the Company’s Forms 10-Q prior to their being filed with the SEC, as well as the financial information in each quarterly earnings release; +> Reviewed and discussed with the Company’s management (including internal audit) and the Company’s independent registered public accounting firm, the audited consolidated financial statements of the Company as of December 31, 2022 and 2021 and for the three years ended December 31, 2022 and the related ICFR; +> Discussed with the Company’s independent registered public accounting firm matters required to be discussed by the applicable requirements of the PCAOB and the SEC; and +> Received from the Company’s independent registered public accounting firm the written disclosures and the letter in accordance with the requirements of the PCAOB regarding the firm’s communications with the Audit Committee concerning independence and discussed with such firm its independence from the Company. +Based upon the review and discussions referred to previously, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements of the Company and subsidiaries as of December 31, 2022 and 2021 and for the three years ended December 31, 2022 be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 for filing with the SEC. +In giving its recommendation to the Board of Directors, the Audit Committee has relied on (i) management’s representation that such financial statements have been prepared with integrity and objectivity and in conformity with accounting principles generally accepted in the United States of America; and (ii) the reports of the Company’s independent registered public accounting firm with respect to such financial statements and related internal controls. +Respectfully submitted by the Audit Committee of the Board of Directors +Patrick J. Gunning, Chairperson +Susan R. Bell +Jerry W. Nix +John F. Wilson +18 +Table of Contents +2023 ANNUAL +PROXY STATEMENT +This report of the Audit Committee is required by the SEC and, in accordance with the SEC’s rules, will not be deemed to be part of or incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933, as amended (the “Securities Act”), or under the Exchange Act, except to the extent that we specifically incorporate this information by reference, and will not otherwise be deemed “soliciting material” or “filed” under either the Securities Act or the Exchange Act. +Independent Registered Public Accounting Firm +Principal Auditor +Grant Thornton LLP served as the Company’s independent registered public accounting firm for the fiscal years ended December 31, 2022 and 2021. +The Audit Committee has appointed Grant Thornton LLP as RPC, Inc.’s independent registered public accounting firm for the fiscal year ending December 31, 2023. Grant Thornton LLP has served as the Company’s independent auditors since 2004 and is considered by management to be well qualified. Representatives of Grant Thornton LLP are expected to be present at the Annual Meeting, and they will have the opportunity to make a statement if they desire to do so and are expected to be available to respond to appropriate questions. +Aggregate fees billed by the Company’s independent registered public accounting firm are set forth below: +2022 +2021 +Audit fees and quarterly reviews (1) +$ +1,190,500 +$ +1,060,610 +Audit related fees +— +— +Tax fees +— +— +All other fees +— +— +(1) Audit fees represent fees for professional services provided in connection with the integrated audit of our financial statements, including internal controls over financial reporting, review of our quarterly financial statements, and audit services provided in connection with other statutory or regulatory filings. +Pre-approval of Services +All of the services described above were pre-approved by the Company’s Audit Committee. The Audit Committee has determined that the payments made to its independent registered public accounting firm for these services are compatible with maintaining such auditors’ independence. A majority of the hours expended on the principal accountant’s engagement to audit the financial statements of the Company for the years 2022 and 2021 were attributable to work performed by full-time, permanent employees of the principal accountant. The Committee has no pre-approval policies or procedures other than as set forth below. +The Audit Committee is directly responsible for the appointment and termination, compensation, and oversight of the work of the independent registered public accounting firm, including resolution of disagreements between management and the independent registered public accounting firm regarding financial reporting. The Audit Committee is responsible for pre-approving all audit and non-audit services provided by the independent public accountants and ensuring that they are not engaged to perform the specific non-audit services proscribed by law or regulation. The Audit Committee has delegated pre-approval authority to the Chairperson, and the Chairperson may further delegate approval authority to another member of the Committee from time to time. The decisions of any Audit Committee member to whom pre-approval authority is delegated must be presented to the full Audit Committee at its next scheduled meeting. +19 +Table of Contents +2023 ANNUAL +PROXY STATEMENT +PROPOSAL 2: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +Overview +The Audit Committee of the Board of Directors has appointed Grant Thornton LLP as the Company’s independent registered public accounting firm to audit our consolidated financial statements for the fiscal year ending December 31, 2023. Grant Thornton has served as our independent registered public accounting firm since 2004. +During fiscal 2022, Grant Thornton LLP served as our independent registered public accounting firm. Representatives of Grant Thornton LLP are expected to attend the Annual Meeting and will have the opportunity to respond to appropriate questions and, if they desire, to make a statement. +Although we are not required to seek ratification of this appointment, the Audit Committee and the Board of Directors believes, it is appropriate to do so. If stockholders do not ratify the appointment of Grant Thornton LLP, the current appointment will stand, but the Audit Committee will consider the stockholder action in determining whether to retain Grant Thornton LLP as our independent registered public accounting firm for future fiscal years. +Our Board of Directors recommends a vote FOR the ratification of the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm for the 2023 fiscal year. +20 +Table of Contents +2023 ANNUAL +PROXY STATEMENT +PROPOSAL 3: NONBINDING VOTE ON EXECUTIVE COMPENSATION +As required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the Dodd-Frank Act), our Board of Directors is submitting a Say-on-Pay proposal for stockholder consideration. While the vote on executive compensation is nonbinding and solely advisory in nature, our Board of Directors and the Human Capital Management and Compensation Committee value the opinion of our stockholders and will review the voting results and seek to determine the causes of any significant negative voting result to better understand issues and concerns not previously presented. Stockholders who want to communicate with the Board of Directors or management should refer to Director Communications of this Proxy Statement for additional information. +Executive compensation is an important matter for our stockholders. The core of our executive compensation philosophy and practice continues to be pay for performance. Our executive officers are compensated in a manner consistent with our strategy, competitive practice, sound corporate governance principles, and stockholder interests and concerns. We believe our compensation program is strongly aligned with the long-term interests of our stockholders. Compensation of our executive officers is designed to enable us to attract and retain talented and experienced senior executives to lead us successfully in a competitive environment. +Our named executive officers are identified in sections titled Information Regarding Director Nominees and Continuing Directors and Executive Officers , and the compensation of the named executive officers is described in section titled Executive Compensation including the Compensation Discussion and Analysis (CD&A) of this Proxy Statement. The CD&A section of this proxy statement provides additional details on our executive compensation, including our compensation philosophy and objectives and the fiscal 2022 compensation of the named executive officers. +We are asking stockholders to vote on the following resolution: +“Resolved, that the stockholders approve, on an advisory basis, the compensation of the Company’s named executive officers as disclosed in the Proxy Statement for the 2023 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission (which disclosure includes the Compensation Discussion and Analysis, the Summary Compensation Table and other related tables and narrative disclosures).” +As indicated above, the stockholder vote on this resolution will not be binding on us or the Board of Directors and will not be construed as overruling any decision by us or the Board. The vote will not be construed to create or imply any change to our fiduciary duties or those of the Board, or to create or imply any additional fiduciary duties for us or the Board. +The affirmative vote of a majority of the shares of our common stock present or represented by proxy and voting at the Annual Meeting is required for approval of this proposal. If you own shares through a bank, broker or other holder of record, you must instruct your bank, broker or other holder of record how to vote in order for them to vote your shares so that your vote can be counted on this proposal. +Currently, we hold stockholder advisory votes on executive compensation every three years, and the next such vote after this years’ vote is currently scheduled to occur in 2026. +Our Board of Directors unanimously recommends that you vote “FOR” the approval, on an advisory basis, of the compensation of our named executive officers as disclosed in the Compensation Discussion and Analysis, the accompanying compensation tables, and the related narrative disclosure. +21 +Table of Contents +2023 ANNUAL +PROXY STATEMENT +PROPOSAL 4: NONBINDING VOTE REGARDING THE FREQUENCY OF VOTING ON EXECUTIVE COMPENSATION +Under the Dodd-Frank Act, we are also required to seek a nonbinding advisory stockholder vote regarding the frequency of submission to stockholders of a Say-on-Pay advisory vote such as Proposal 3. The Dodd-Frank Act specifies that stockholders be given the opportunity to vote on our executive compensation program either annually, every two years or every three years. Although this vote is advisory and nonbinding, our Board of Directors will review voting results and give serious consideration to the outcome of such voting. +Our Board of Directors recognizes the importance of receiving regular input from our stockholders on important issues such as our compensation programs. Our Board also believes that a well-structured compensation program should include plans that drive creation of stockholder value over the long-term, and that it should receive advisory input from our stockholders. Accordingly, as indicated below, the Board recommends that you vote in favor of a three-year advisory vote on our compensation programs. The stockholders voted in 2017 to conduct advisory votes to approve executive compensation every three years, and consistent with that vote, we are holding a new vote to approve executive compensation at the 2023 Annual Meeting of Stockholders. The advisory vote on the frequency of voting on executive compensation is to be held not less frequently than every six years, with the next such vote to be held at the 2029 Annual Meeting of Stockholders. +Stockholders may cast their vote on their preferred voting frequency by choosing the option of one year, two years, three years, or abstain from voting when voting in response to the resolution set forth below: +“RESOLVED, that the holders of the common stock of the Company indicate, by their vote on this resolution, whether the vote on executive compensation should take place every one year, every two years or every three years.” +The option of one year, two years or three years that receives the highest number of votes cast by stockholders will be the frequency for the advisory vote on executive compensation that has been selected by stockholders. However, as indicated above, the stockholder vote on this resolution will not be binding on us or the Board of Directors and will not be construed as overruling any decision by us or the Board. The vote will not be construed to create or imply any change to our fiduciary duties or those of the Board, or to create or imply any additional fiduciary duties for us or the Board. +Currently, we hold stockholder advisory votes on executive compensation every three years, and the next such vote after this years’ vote is currently scheduled to occur in 2026. +Our Board of Directors unanimously recommends that you vote FOR the option of “Once Every Three Years” as the frequency with which stockholders are provided an advisory vote on executive compensation, as disclosed pursuant to the compensation disclosure rules of the SEC. +22 +Table of Contents +2023 ANNUAL +PROXY STATEMENT +EXECUTIVE OFFICERS +The following narratives summarize the business experience over at least the last five years of our current executive officers, other than Messrs. Palmer and Hubbell whose business experience is described above in the section titled Information Regarding Director Nominees and Continuing Directors of this Proxy Statement. +Michael L. Schmit +Vice President, Chief Financial Officer and Corporate Secretary +Michael L. Schmit has been Vice President, Chief Financial Officer and Corporate Secretary of the Company since May 17, 2022. He is also Vice President, Chief Financial Officer and Corporate Secretary of Marine Products Corporation. Previously, he served as Chief Accounting Officer at Schweitzer-Mauduit International, Inc., a global performance materials engineering and manufacturing company, since 2019. In addition, he served as the Chief Accounting Officer and Controller of Chart Industries, Inc., a global manufacturer of highly engineered equipment servicing the clean energy and industrial gas markets, in 2019 and 2018 and as Corporate Controller in 2017. Earlier in his career, Mr. Schmit worked for other public and private companies, including Georgia-Pacific, LLC, in various financial and risk management roles. He also worked in public accounting with Ernst & Young, both in the U.S. and Australia. Mr. Schmit holds a B.S. in Business Administration from the University of Nebraska with a major in accounting and holds a CPA certification as well as several other related professional designations. +23 +Table of Contents +2023 ANNUAL +PROXY STATEMENT +COMPENSATION DISCUSSION AND ANALYSIS +This Compensation Discussion and Analysis describes our executive compensation program and provides an overview of how the Human Capital Management and Compensation Committee made compensation decisions in 2022 for each of our named executive officers which consist of our Principal Executive Officer, our Principal Financial Officer and our Executive Chairman of the Board, who were serving in such capacity in fiscal 2022. For a complete understanding of the executive compensation program, this disclosure should be read in conjunction with the Summary Compensation Table and other executive compensation-related disclosures included in this Proxy Statement. +In fiscal year 2022, our named executive officers were: +Named Executive Officer +Position with the Company in 2022 +Ben M. Palmer +President and Chief Executive Officer effective May 17, 2022; Vice President, Chief Financial Officer and Corporate Secretary prior. +Michael L. Schmit +Vice President, Chief Financial Officer and Corporate Secretary effective May 17, 2022. +Richard A. Hubbell +Executive Chairman of the Board effective May 17, 2022; President and Chief Executive Officer prior. +Executive Summary +Fiscal Year 2022 Financial Highlights +> Revenues of $1.6 billion, an increase of 85.2 percent over prior year revenues of $864.9 million. +> Net income $218.4 million, a significant increase compared to $7.2 million net income in 2021. +24 +Table of Contents +2023 ANNUAL +PROXY STATEMENT +Executive Compensation Practices and Governance Policies +What We Do +What We Don’t Do +✓ +Pay for Performance +The majority of our named executive officers’ total compensation is directly linked to the Company’s performance. +x +No Tax Gross-Ups +Our named executive officers are not entitled to tax gross-ups under any of our compensation programs or policies. +✓ +Align the Interests of Executives with those of Our Stockholders +Equity compensation represents a significant portion of our named executive officers’ total compensation. +x +No Hedging or Pledging +Under our Insider Trading Policy, we prohibit our employees, including our named executive officers and the members of our board of directors, from hedging or pledging our securities. +✓ +Stock Ownership Guidelines +We maintain strong stock ownership requirements for our directors and executive officers. +x +No Employment Contract +There are no agreements or understandings between the Company and any executive officer that guarantee continued employment or guarantee any level of severance or compensation, including incentive or bonus payments, other than annual restricted stock grant agreements. +✓ +Independent Compensation Committee +Our Human Capital Management and Compensation Committee is composed solely of independent directors. +General Compensation Objectives and Guidelines +The Company is engaged in a highly competitive industry. The success of the Company depends on our ability to attract and retain highly qualified and motivated executives. In order to accomplish this objective, we have endeavored to structure our executive compensation program in a fashion that gives our Human Capital Management and Compensation Committee the flexibility to take into account our operating performance and the individual performance of our executive officers. +The Human Capital Management and Compensation Committee endorses the philosophy that executive compensation should reflect Company performance and the contribution of executive officers to that performance. Our compensation policy is designed to achieve three fundamental objectives: +> attract and retain qualified executives; +> motivate performance to achieve Company objectives; and +> align the interests of our executives with the long-term interests of the Company’s stockholders. +The Human Capital Management and Compensation Committee recognizes that there are many intangibles involved in evaluating performance and in motivating performance, and that determining an appropriate compensation level is a highly subjective endeavor. The analysis of the Committee is not based upon a structured formula and the objectives referred to above are not weighted in any formal manner. During the year, none of the executive officers made recommendations or otherwise contributed input on their own compensation. +The Company’s executive officers are also executive officers of Marine Products Corporation (Marine Products) and receive compensation directly from Marine Products. The members of the Company’s Human Capital Management and Compensation Committee also constitute the Human Capital Management and Compensation Committee of Marine Products. In determining the compensation for the executive officers at the Company, the Committee considers these dual responsibilities and sources of compensation. The Company sets compensation +25 +Table of Contents +2023 ANNUAL +PROXY STATEMENT +of its executives at such levels so that the aggregate compensation received from both Marine Products and the Company is reasonable in light of their respective responsibilities and the performance of both companies, and so that the compensation from the Company for services solely to the Company is reasonable. A discussion of the Company’s executive officers’ compensation at Marine Products is contained in its annual Proxy Statement filed with the SEC. +Pursuant to our compensation philosophy, the total annual compensation of our executive officers is primarily made up of one or more of the following three core elements: +> base salary (fixed); +> annual performance-based cash incentive compensation (cash incentive); and +> grants of stock-based awards such as restricted stock (equity incentive). +In addition, we also provide retirement compensation plans, group welfare benefits and certain perquisites. +We believe (i) a competitive base salary is important to attract, retain and motivate our top executives; (ii) annual performance-based incentive compensation is valuable in recognizing and rewarding individual achievement; and (iii) equity-based compensation makes executives “think like owners” and, therefore, aligns their interests with those of our stockholders. +Fiscal 2022 Named Executive Officer Compensation Details +The table below reflects the approximate general distribution of the three core elements of Named Executive Officer (NEO) compensation earned for fiscal 2022 as determined by our Human Capital Management and Compensation Committee. The Chief Executive Officer’s compensation shown in the table below includes the compensation of Ben M. Palmer, both as Chief Executive Officer from May 17, 2022 and as Chief Financial Officer, prior. +Principal Position +Fixed +Compensation +Cash +Incentive +Equity +Incentive +Total Performance-Based Compensation +Chief Executive Officer +24% +36% +40% +76% +Other NEOs +29% +34% +37% +71% +Compensation Elements +The following table sets forth information regarding each of the three core elements of the target compensation for the executive officers in 2022, including a description of each element. +Compensation Element +Description +Base Salary +Fixed cash compensation based on each executive officer’s role, responsibilities, competitive market positioning, and individual performance. +Performance-Based Incentive Cash Compensation +Annual performance-based incentive cash compensation with target award amounts for each executive officer. Actual bonus amounts may be higher or lower than target based on the achievement of certain Company performance goals and individual performance. +Stock-Based Incentives +Grants of stock-based awards in the form of restricted shares. +Base Salary +Base salary represents the fixed element of the compensation of our executive officers and is an important element of compensation intended to attract and retain qualified executives. The Human Capital Management and Compensation Committee reviews the base salaries of our executive officers each year as part of its annual review of our executive compensation program, with input from our CEO (except with respect to his own base salary). In making its determinations the Human Capital Management and Compensation Committee gives consideration to the Company’s operating performance for the prior fiscal year and the individual executive’s performance and compensation paid by Marine Products. Base salary increases are not automatic or guaranteed. +26 +Table of Contents +2023 ANNUAL +PROXY STATEMENT +2022 Base Salary Adjustments +Effective May 17, 2022, with the change in executive leadership and in light of the roles assumed, base salaries were set forth as follows: Ben M. Palmer: $600,000; Michael L. Schmit: $300,000 and Richard A. Hubbell: $500,000. No other salary adjustments were made for executive officers in 2022 or 2023 through the date of this Proxy Statement. +Performance-Based Incentive Cash Compensation +The Company has awarded Performance-Based Incentive Cash Compensation for the executive officers since 2006. On an annual basis, the Human Capital Management and Compensation Committee establishes performance goals within ninety days after the commencement of the performance period to which such goals relate. Performance goals for each participant may be based on corporate, business unit/function or individual performance, or a combination of one or more such measures. +In connection with the annual establishment of performance goals, the Committee sets a target award for each participant for the applicable year, which is expressed as a percentage of the participant’s base compensation (the “Target Award”) in effect on the last day of the final pay period of that year. If the participant’s performance goals are based upon a combination of performance measures, the Committee will weigh the importance of each performance measure by assigning a percentage (the “Weighted Percentage”) to those performance measures. The participant’s cash award amount will also depend in part upon the level of achievement that the participant attained with respect to each such performance measure, based on a performance value (“Performance Value”) which ranges from: +> threshold performance level (with a Performance Value of 25 percent of the Target Award); +> target performance level (with a Performance Value of 100 percent of the Target Award); to +> superior performance level (with a Performance Value of 150 percent of the Target Award). +Subject to the limitations set forth below, a participant’s cash award amount for each year equals the product of the Target Award multiplied by the Weighted Percentage assigned to each performance measure used for a participant, multiplied by the Performance Value attained for each performance measure, multiplied by base salary. The Committee determines the maximum cash award as a percentage of a participant’s base salary for each applicable year. +For 2022, the Committee established the target incentive award for the Chief Executive Officer and for the other members of executive management at the amounts shown in the following table. +Target Award As a Percentage +Executive Officer +Of Base Salary +Ben M. Palmer +100% +President and Chief Executive Officer +Michael L. Schmit +70% +Vice President, Chief Financial Officer and Corporate Secretary +Richard A. Hubbell +100% +Executive Chairman of the Board +The performance criteria applicable to the participants for 2022 were determined based solely on corporate performance. The Human Capital Management and Compensation Committee established a corporate financial performance goal for 2022 using Return on Invested Capital (ROIC) as described below. +ROIC is a widely used financial performance measure that typically correlates with long-term change in stockholder value. The Company has used ROIC as the primary performance goal for several years. ROIC is computed as the ratio of earnings before interest, taxes, depreciation and amortization to invested capital. Invested capital is generally equal to the aggregate of stockholders’ equity, accumulated depreciation and long-term liabilities. For 2022, the target performance goal established by the Company is in excess of the comparable historical ROIC average of our peers, approximates the Company’s weighted average cost of capital and is an +27 +Table of Contents +2023 ANNUAL +PROXY STATEMENT +amount which the Company believes represents outstanding financial performance. For 2022 the Company was required to achieve at least 70 percent of the target performance goal for executive officers to be eligible for any bonus award. Bonus awards are determined on a sliding scale between the threshold performance level and superior performance level, which correspond to 150 percent of the target performance goal. To be eligible for the bonus award for 2022, the ROIC was required to be in excess of 9.8 percent up to a maximum of 19.3 percent. The Company has consistently followed the same method to compute ROIC, and the Committee has not typically exercised discretion to waive the performance goals based on difficult industry conditions or other factors. +The Company operates in a cyclical business where financial performance is influenced by, among other things, changes in oil and natural gas prices. The Company generated ROIC that resulted in 150 percent of the target award in 2022. Performance-based cash compensation earned for 2022 was as follows: Ben M. Palmer: $900,000; Michael L. Schmit: $315,000; and Richard A. Hubbell: $750,000 and was calculated on year-end base salary with no proration for any current year changes in positions or employment start dates. The Company did not achieve ROIC performance goals for 2021 or 2020 and therefore no bonuses were earned by executive officers in those years. +Stock-Based Incentives +Our Stock Incentive Plan (SIP) allows for a wide variety of stock-based awards such as stock options and restricted stock. The terms and conditions of these awards are described in more detail below. +Awards under the Company’s SIP are purely discretionary, are not based upon any specific formula and may or may not be granted in any given fiscal year. We have granted Time-Based Restricted Share unit awards (RSUs) to various employees, including our executive officers during our regularly scheduled meeting of the Human Capital Management and Compensation Committee during which the Committee reviews executive compensation. Consistent with this practice, we granted RSUs to our executive officers as follows: +Name +2022 +2021 +Ben M. Palmer +90,000 +67,000 +Michael L. Schmit +35,000 +— +Richard A. Hubbell +75,000 +100,000 +For 2023, total equity compensation granted is comprised of RSUs and Performance Share Unit awards (PSUs) that will be earned over time as described below: +RSUs – The 2023 RSUs vest ratably over a period of four years; RSUs granted in 2022 vest ratably over a period of five years. Prior to 2022, the RSUs vested one-fifth per year beginning on the second anniversary of the grant date. RSUs have full voting and dividend rights. However, until the RSUs vest, they cannot be sold, transferred or pledged. Should the executive leave our employment for any reason prior to the vesting dates (other than due to disability or retirement on or after age 65), the unvested RSUs will be forfeited. In the event of death, or “change in control” as determined by the Board of Directors, all unvested RSUs shall vest immediately. +PSUs – For 2023 each of the officers was granted a target number of PSUs with each such unit representing the right to receive, to the extent then vested, an amount payable in stock. The performance criteria for the PSUs granted in 2023 are based on a combined three-year aggregate Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) target with a Total Stock Return (TSR) modifier, both set by the Committee at the time of grant of the PSUs. The shares are set to cliff-vest on December 31, 2025. Should the executive leave our employment for any reason prior to the vesting dates (other than due to disability), the unvested PSUs will be forfeited. In the event of death, or “change in control” as determined by the Board of Directors, all unvested PSUs shall vest immediately at 100 percent with no adjustment for the TSR modifier. +The amount of the aggregate stock-based awards to our executive officers in any given year is influenced by the Company’s overall performance. The amount of each grant to our executive officers is influenced in part by the Committee’s subjective assessment of each individual’s respective contributions to achievement of the Company’s long-term goals and objectives, in addition to the stock price around grant date. In evaluating individual +28 +Table of Contents +2023 ANNUAL +PROXY STATEMENT +performance for these purposes, the Committee considers the overall contributions of executive management as a group and the Committee’s subjective assessment of each individual’s relative contribution to that performance rather than specific aspects of each individual’s performance over a short-term period. We expect to continue annual grants of restricted stock awards, although we reserve the right to modify or discontinue this or any of our other compensation practices at any time. Grants are made under our SIP which is administered pursuant to Rule 16b-3 under the Exchange Act. +Other Compensation +Health and Retirement Plans +The executive officers all participate in the Company’s regular employee benefit programs, including the 401(k) Plan with Company match, group life insurance, group medical and dental coverage and other group benefit plans. The Company maintains a defined benefit pension plan (“Retirement Income Plan”) for all our eligible employees, a non-qualified supplemental retirement plan for our executives and certain other highly compensated employees, and a 401(k) Plan for the benefit of all of our eligible employees. In 2002, the Company’s Board of Directors approved a resolution to cease all future benefit accruals under the Retirement Income Plan effective March 31, 2002. During 2002, the Company began permitting selected highly compensated employees to defer a portion of their compensation into the Company’s nonqualified Supplemental Retirement Plan (SRP). The SRP is described in more detail under the caption Nonqualified Deferred Compensation of this Proxy Statement. +Perquisites and Other Personal Benefits +In addition to the total direct compensation and benefits described above, the Company also provides its executive officers with certain perquisites as approved by the Board and noted in the footnote to the Summary Compensation Table under Executive Compensation . The specific perquisites provided to the executive officers are as follows: +> an automobile or an automobile allowance; and +> use of the Company’s aircraft for personal travel of the Executive Chairman of the Board and Chief Executive Officer. +Compensation Setting Process +Role of the Human Capital Management and Compensation Committee +Under its Charter the Human Capital Management and Compensation Committee is responsible for, among other things, reviewing our overall executive compensation philosophy and strategy, including base salary, performance-based incentive cash compensation, and stock-based incentives, to ensure that the strategy supports our compensation policy. +The Human Capital Management and Compensation Committee is composed of three non-employee directors who do not participate in our compensation plans: Jerry W. Nix (Chairperson), Patrick J. Gunning, and John F. Wilson, each of whom is independent. +The Human Capital Management and Compensation Committee has the authority, at its sole discretion, to retain or obtain the advice of any compensation consultant, legal counselor or other advisor to assist the Committee in the performance of its duties and may at its discretion be directly responsible for the appointment, compensation and oversight of the work of any such compensation consultant, legal counsel or other advisor so retained. The Committee has not retained the services of any compensation consultants in determining or recommending the amount or form of executive compensation. The Human Capital Management and Compensation Committee may also, from time to time, and in its discretion, form, and delegate all or a portion of its authority to subcommittees; provided that such subcommittees meet the Committee’s composition requirements set forth in its Charter or under any applicable federal or state laws. +29 +Table of Contents +2023 ANNUAL +PROXY STATEMENT +Role of Management +The Human Capital Management and Compensation Committee solicits input from Richard A. Hubbell, Executive Chairman of the Board, with respect to the performance of our executive officers and their compensation levels. The Human Capital Management and Compensation Committee considers Mr. Hubbell’s evaluation and his direct knowledge of each executive officer’s performance and contributions when making compensation decisions. Management retains the services of compensation consultants from time to time for general compensation data and advice on design of incentives. +The Role of Stockholder Say-on-Pay Votes +We provide our stockholders with the opportunity to cast an advisory vote on executive compensation (a Say-on-Pay proposal) every three years. At our annual meeting of stockholders held in April 2020, a substantial majority of the votes cast on the Say-on-Pay proposal were voted in favor of the proposal. The Human Capital Management and Compensation Committee believes this affirms the stockholders’ support of our approach to executive compensation. The stockholders voted to hold a Say-on-Pay advisory vote on executive compensation every three years, and the Board resolved to accept the stockholders’ recommendation. As a result, the advisory vote on executive compensation is being held again at the 2023 Annual Meeting of Stockholders. The Human Capital Management and Compensation Committee will continue to consider the outcome of our Say-on-Pay votes when making future compensation decisions for our executive officers. +Policies Regarding Stock Ownership by Executive Officers +Stock Ownership Requirements +Stock Ownership Guidelines (the Guidelines) for our executive officers and other key executives, implemented in 2022 and revised with the change in executive leadership on May 17, 2022, designated by the Human Capital Management and Compensation Committee to align the interests of our executives with the interests of our stockholders are as follows: +> President and Chief Executive Officer – Ownership equal to 4 times base salary; +> Chief Financial Officer – Ownership equal to 3 times base salary; and +> Executive Chairman of the Board – Ownership equal to 4 times base salary. +Participants under the Guidelines have a period of five years in which to satisfy the Guidelines, from the date of appointment to a qualifying position. Participants who become subject to these Guidelines will have their individual ownership requirement established based upon their base salary at the time they became subject to the Guidelines and the Company’s average closing common stock price for the prior calendar year. Promotions into a different position category will require recalculation of a participant’s ownership requirements as appropriate. Once established, a participant’s ownership requirement does not change as a result of changes in their base salary. +Shares counted toward this requirement will be based on shares beneficially owned by such participant (as beneficial ownership is defined by the SEC’s rules and regulations) including: +> shares owned outright by the participant (including through open market purchases or acquired and held upon vesting of Company equity awards); +> unvested restricted stock awards; and +> shares held in trust in the participant’s name. +Once achieved, ownership of the amount under the Guidelines must be maintained for as long as the participant is subject to the Guidelines and the participant is required to retain a minimum of 20 percent of any future equity awards. +30 +Table of Contents +2023 ANNUAL +PROXY STATEMENT +In addition, the Human Capital Management and Compensation Committee approved and adopted stock ownership guidelines applicable to our non-employee directors. Information with respect to our non-employee directors’ stock ownership guidelines is set forth in Non-Employee Director Stock Ownership Guidelines of this Proxy Statement. +Prohibition on Hedging and Pledging of Common Stock +Under our Insider Trading Policy, we prohibit our employees, including our named executive officers and the members of our board of directors, from hedging or pledging or otherwise encumbering, individually owned or granted Company securities. +Clawback Policy +Our executive bonus arrangements contain a provision that provides that, among other things, if any bonus amount is paid as a result of misrepresented or inaccurate performance, the Company may require repayment of some or all of the excess bonus paid, subject to applicable laws. This recoupment policy reflects the Company’s high ethical standards and strict compliance with accounting and other regulations applicable to public companies. As all incentives and awards remain within the discretion of the Human Capital Management and Compensation Committee, the Committee also retains the ability to take any restatements or adjustments into account in subsequent years. In addition, the Sarbanes-Oxley Act requires in the case of accounting restatements that result from material non-compliance with SEC financial reporting requirements, that the Chief Executive Officer and Chief Financial Officer must disgorge bonuses and other incentive-based compensation and profits on stock sales received during the 12 months following publication of the misstated financials if the non-compliance results from misconduct. The Company will comply with New York Stock Exchange Rules regarding clawback of executive compensation when those rules take effect. +Tax Deductibility of Compensation +As a result of the Tax Cuts and Jobs Act, starting with compensation payable in 2018, Section 162(m) of the Internal Revenue Code limits us from deducting compensation, including performance-based compensation, in excess of $1,000,000 paid to our executive officers. The Human Capital Management and Compensation Committee will continue to retain full discretion to award compensation packages that best attract, retain and reward successful executive officers. Therefore, the Human Capital Management and Compensation Committee anticipates that it will award compensation that is not fully deductible under Section 162(m). +Compensation-Related Risk +The Company regularly assesses the risks related to our compensation programs, including our executive compensation programs and does not believe that the risks arising from our compensation policies and practices are reasonably likely to have a material adverse effect on the Company. Incentive award targets and bonus opportunities are reviewed annually, allowing the Committee to maintain an appropriate balance between rewarding high performance without encouraging excessive risk. +31 +Table of Contents +2023 ANNUAL +PROXY STATEMENT +HUMAN CAPITAL MANAGEMENT AND COMPENSATION COMMITTEE REPORT +The Human Capital Management and Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis contained in this Proxy Statement with management and based on such review and discussions the Human Capital Management and Compensation Committee recommended to our Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement. +Respectfully submitted by the Human Capital Management and +Compensation Committee of the Board of Directors +Jerry W. Nix, Chairperson +Patrick J. Gunning +John F. Wilson +This report of the Human Capital Management and Compensation Committee is required by the SEC and, in accordance with the SEC’s rules, will not be deemed to be part of or incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933, as amended (Securities Act), or under the Exchange Act, except to the extent that we specifically incorporate this information by reference, and will not otherwise be deemed “soliciting material” or “filed” under either the Securities Act or the Exchange Act. +32 +Table of Contents +2023 ANNUAL +PROXY STATEMENT +EXECUTIVE COMPENSATION +There are no agreements or understandings between the Company and any executive officer that guarantee continued employment or guarantee any level of severance or compensation, including incentive or bonus payments, other than annual restricted stock grants. The following table provides information regarding the annual and long-term compensation for services in all capacities paid to each of our named executive officers for the years indicated below. +SUMMARY COMPENSATION TABLE +Change in +Pension +Value and +Non-Equity +Nonqualified +Incentive +Deferred +Stock +Plan +Compensation +All Other +Salary +Awards +Compensation +Earnings +Compensation +Total +Name and Principal Position +Year +($) +($) (1) +($) (2) +($) (4) +($) (5) +($) +Ben M. Palmer (3) +2022 +543,750 +804,600 +900,000 +— +24,040 +2,272,390 +President and Chief Executive Officer +2021 +450,000 +259,290 +— +— +23,860 +733,150 +2020 +375,000 +307,530 +— +— +23,050 +705,580 +Michael L. Schmit (3) +2022 +186,460 +312,900 +315,000 +— +5,310 +819,670 +Vice President, Chief Financial Officer and +2021 +— +— +— +— +— +— +Corporate Secretary +2020 +— +— +— +— +— +— +Richard A. Hubbell (3) +2022 +668,750 +670,500 +750,000 +— +49,110 +2,138,360 +Executive Chairman of the Board +2021 +950,000 +387,000 +— +— +34,410 +1,371,410 +2020 +791,667 +459,000 +— +7,322 +17,570 +1,275,559 +(1) Represents the fair value of the award at the date of grant computed in accordance with ASC Topic 718. See Note titled “Employee Benefit Plans” to our Financial Statements contained in our Form 10-K for the period ended December 31, 2022 for a discussion of assumptions used in this computation. For this computation, we do not include an assumption for estimated forfeitures. +(2) Performance-based cash compensation is accrued in the fiscal year earned and paid in the following fiscal year. No bonuses were earned for 2021 and 2020. +(3) Effective May 17, 2022, the Board appointed Ben M. Palmer as President and Chief Executive Officer, Michael L. Schmit as Vice President, Chief Financial Officer and Corporate Secretary and Richard A. Hubbell as the Executive Chairman of the Board. Prior to May 17, 2022, Richard A. Hubbell served as the President and Chief Executive Officer and Ben M. Palmer served as the Vice President, Chief Financial Officer and Corporate Secretary. +(4) The actuarial present value of Richard A. Hubbell’s accumulated benefit under the defined benefit plan decreased by $61,750 in 2022. This decrease represents the impact of the change in discount rate as no additional benefits are being accrued. +(5) All other compensation for 2022 includes the following items for: +Ben M. Palmer: +Includes automobile allowance of $8,400, cost of gasoline for personal automobile and 401(k) Plan Company match of $13,725. +Michael L. Schmit: +Includes a utomobile allowance of $4,500 and cost of gasoline for personal automobile. +Richard A. Hubbell: +Includes i nsurance on automobile provided by the Company, cost of dining club dues, cost of gasoline for personal automobile, 401(k) Plan Company match of $13,725 and personal use of plane of $17,731. +33 +Table of Contents +2023 ANNUAL +PROXY STATEMENT +GRANTS OF PLAN-BASED AWARDS +All Other +Grant Date +Estimated Future Payouts +Stock Awards: +Fair Value +Under Non-Equity +Number of +of Stock +Incentive Plan Awards (1) +Shares of +and Option +Threshold +Target +Maximum +Stock or Units +Awards +Name +Grant Date +($) +($) +($) +(#) +($) (2) +Ben M. Palmer +5/18/2022 +150,000 +600,000 +900,000 +90,000 +804,600 +Michael L. Schmit +5/18/2022 +52,500 +210,000 +315,000 +35,000 +312,900 +Richard A. Hubbell +5/18/2022 +125,000 +500,000 +750,000 +75,000 +670,500 +(1) These amounts illustrate the potential bonus awards under the Management Incentive Plan for 2022. See Summary Compensation Table for actual amounts awarded in 2022. +(2) These amounts represent aggregate grant date fair value for grants of restricted shares of Common Stock awarded in fiscal year 2022 under the SIP computed in accordance with ASC Topic 718. Please see Note (1) to the Summary Compensation Table for additional details. +The table above includes grants of restricted shares of Company Common Stock under the SIP awarded in fiscal year 2022. Restricted shares of Common Stock granted in 2022 vest one-fifth per year beginning in January following the grant date. Restricted shares have full voting and dividend rights. However, until the shares vest, they cannot be sold, transferred or pledged. Should the executive leave our employment for any reason prior to the vesting dates (other than due to death, disability, change in control or retirement on or after age 65), the unvested shares will be forfeited. We have not issued any stock options since 2003 and have no immediate plans to issue additional stock options. +OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END +The Company does not have any outstanding option awards made in prior years to the executives named in our Summary Compensation Table. The table below sets forth the total number of restricted shares of Common Stock outstanding at December 31, 2022 that were granted in prior years to the executives, but have not yet vested, together with the market value of these unvested shares based on the $8.89 closing price of our Common Stock on December 30, 2022. +Option Awards +Stock Awards +Number of +Number of +Securities +Securities +Number of +Market Value +Underlying +Underlying +Shares or +of Shares or +Unexercised +Unexercised +Option +Units of Stock +Units of Stock +Options +Options +Exercise +Option +That Have +That Have +(#) +(#) +Price +Expiration +Not Vested +Not Vested +Name +Exercisable +Un-exercisable +($) +Date +(#) +($) +Ben M. Palmer +— +— +— +— +258,000 +(1) +2,293,620 +Michael L. Schmit +— +— +— +— +35,000 +(1) +311,150 +Richard A. Hubbell +— +— +— +— +327,000 +(1) +2,907,030 +(1) RSUs granted prior to 2022 vested one-fifth per year beginning on the second anniversary of the grant date. RSUs granted in 2022 vest one-fifth per year beginning on the first anniversary of the grant date. Shares of restricted stock granted to the executive officers that have not vested as of December 31, 2022 are summarized in the table that follows: +34 +Table of Contents +2023 ANNUAL +PROXY STATEMENT +Name +Number of shares +Grant date +Date fully vested +Ben M. Palmer +5,400 +1/24/2017 +1/24/2023 +12,000 +1/23/2018 +1/23/2024 +30,000 +1/22/2019 +1/22/2025 +53,600 +1/28/2020 +1/28/2026 +67,000 +1/26/2021 +1/26/2027 +90,000 +5/18/2022 +1/26/2027 +Michael L. Schmit +35,000 +5/18/2022 +1/26/2027 +Richard A. Hubbell +9,000 +1/24/2017 +1/24/2023 +18,000 +1/23/2018 +1/23/2024 +45,000 +1/22/2019 +1/22/2025 +80,000 +1/28/2020 +1/28/2026 +100,000 +1/26/2021 +1/26/2027 +75,000 +5/18/2022 +1/26/2027 +OPTION EXERCISES AND STOCK VESTED +The following table sets forth: +> the number of shares of Common Stock acquired by the executives named in the Summary Compensation Table upon the exercise of stock options during the fiscal year ended December 31, 2022; +> the aggregate dollar amount realized on the exercise date for such options computed by multiplying the number of shares acquired by the difference between the market value of the shares on the exercise date and the exercise price of the options; +> the number of restricted shares of Common Stock acquired by the executives named in the Summary Compensation Table upon the vesting of shares during the fiscal year ended December 31, 2022; and +> the aggregate dollar amount realized on the vesting date for such RSUs computed by multiplying the number of shares vested by the market value of the shares on the vesting date. +Option Awards +Stock Awards +Number of Shares +Number of Shares +Acquired on +Value Realized on +Acquired on +Value Realized +Exercise +Exercise +Vesting +on Vesting +Name +(#) +($) +(#) +($) +Ben M. Palmer (1) +— +— +43,800 +252,546 +Michael L. Schmit (1) +— +— +— +— +Richard A. Hubbell (1) +— +— +68,000 +392,620 +(1) Effective May 17, 2022, Ben M. Palmer was appointed as the President and Chief Executive Officer, Michael L. Schmit was appointed as Vice President, Chief Financial Officer and Richard A. Hubbell was appointed as the Executive Chairman of the Board. Prior to May 17, 2022, Richard A. Hubbell served as the President and Chief Executive Officer and Ben M. Palmer served as the Vice President, Chief Financial Officer and Corporate Secretary. +35 +Table of Contents +2023 ANNUAL +PROXY STATEMENT +BENEFIT PLANS +The table below shows the present value of accumulated benefits payable to each of the named executive officers, including the number of years of service credited to each such named executive officer, under the Retirement Income Plan determined using interest rate and mortality rate assumptions consistent with those used in the Company’s financial statements. +Pension Benefits +Present +Number of +Value of +Years Credited +Accumulated +Payments During +Service +Benefit +Last Fiscal Year +Name +Plan Name +(#) +($) +($) +Ben M. Palmer +Retirement Income Plan +— +— +— +Michael L. Schmit +Retirement Income Plan +— +— +— +Richard A. Hubbell +Retirement Income Plan +15 +330,890 +42,314 +The Company’s Retirement Income Plan, a trusteed defined benefit pension plan, provides monthly benefits upon normal retirement at age 65, to eligible employees. The Plan provides reduced early retirement benefits at age 59½, or 55 or older with 15 or more years of service. In 2002 the Company’s Board of Directors approved a resolution to cease all future benefit accruals under the Retirement Income Plan effective March 31, 2002. Retirement Income Plan benefits are based on the average of the employee’s compensation from the Company for the five consecutive complete calendar years of highest compensation during the last ten consecutive complete calendar years (“final average compensation”) immediately preceding March 31, 2002. The benefits are computed as the product of 1.5 percent of final average compensation multiplied by years of credited service (up to 30 years) reduced by an adjustment for benefits drawn from social security. Adjustments have been made for age and the IRS mandated compensation limitations. +Mr. Hubbell is voluntarily receiving distributions from the plan even though he has not retired from the Company. The amount of distributions received during 2022 has been disclosed in the table above and is not subject to change after retirement. In 2020, the Company offered a limited lump-sum payment window for certain vested terminated participants and active employees with a vested balance. Mr. Palmer elected to receive his vested balance immediately as a lump-sum. +401(k) Plan +Effective July 1, 1984, the Company adopted a qualified retirement plan designed to meet the requirements of Section 401(k) of the Code. The Company makes matching contributions of 100 percent for each dollar ($1.00) of a participant’s contribution to the 401(k) Plan for the first three percent of his or her annual compensation and fifty cents ($0.50) for each dollar ($1.00) for the next three percent of his or her annual compensation. The only form of benefit payment under the 401(k) Plan is a single lump-sum payment equal to the vested balance in the participant’s account on the date the distribution is processed. Under the 401(k) Plan, the full amount of a participant’s vested accrued benefit is payable upon his termination of employment, retirement, total and permanent disability, or death. During the course of employment, a participant may withdraw his or her pre-tax contributions to the extent of certain specified instances of financial hardship and may withdraw any amount from his or her pre-tax contribution account for any reason after attaining age 59½. Amounts contributed by the Company to the accounts of the named executive officers under this plan are reported in the All Other Compensation column of the Summary Compensation Table of this Proxy Statement. +36 +Table of Contents +2023 ANNUAL +PROXY STATEMENT +NONQUALIFIED DEFERRED COMPENSATION +The SRP has been established as a nonqualified plan that is designed to comply with the provisions of the American Jobs Creation Act of 2004 (including Section 409A of the Internal Revenue Code) for the cash contributions made to certain longer serviced employees in lieu of freezing the Retirement Income Plan benefit accruals effective in 2002; the SRP also has a compensation deferral option for eligible employees. The contributions and deferrals to the SRP are invested in funds held in a rabbi trust. +Executive +Registrant +Aggregate +Aggregate +Aggregate +Contributions +Contributions +Earnings in +Withdrawals/ +balance at +in Last FY +in Last FY +Last FY +Distributions +Last FYE +Name +($) (1) +($) +($) +($) +($) +Ben M. Palmer +15,562 +— +(178,674) +— +1,041,481 +Michael L. Schmit +— +— +— +— +— +Richard A. Hubbell +— +— +(95,824) +— +485,208 +(1) Represents base salary for 2022 disclosed in the Summary Compensation Table, which have been deferred by the executive officer pursuant to the SRP. +The deferral option provides that participants may defer up to 50 percent of their base salary and up to 100 percent of their annual bonus with respect to any given plan year, subject to a $2,000 per plan year minimum. All of the salary and bonus deferrals are fully vested. Accounts are credited with hypothetical earnings, and/or debited with hypothetical losses, based on the performance of certain “Measurement Funds.” Account values are calculated as if the funds from deferrals and contributions had been converted into shares or other ownership units of selected Measurement Funds by purchasing (or selling, where relevant) such shares or units at the current purchase price of the relevant Measurement Fund at the time of the participant’s selection. The benefits are unsecured general obligations of the Company to the participants, and these obligations rank in parity with the Company’s other unsecured and unsubordinated indebtedness. To the extent that the Company’s obligations under the SRP exceed assets available under the trust, the Company may be required to seek additional funding sources to fund its liability under the SRP. +Generally, the SRP provides for distributions of any deferred amounts upon the earliest to occur of a participant’s death, disability, retirement or other termination of employment (Termination Event). However, for any deferrals of base salary and bonus compensation (but not Company contributions), participants are entitled to designate a distribution date which is prior to a Termination Event. The SRP allows a participant to elect to receive distributions in installments or lump-sum payments. +POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL +The following table describes the potential payments and benefits under the Company’s compensation and benefit plans and arrangements to which the named executive officers would be entitled upon termination of employment. There are no other agreements, arrangements or plans that entitle executive officers to severance, perquisites, or other enhanced benefits upon termination of their employment except as described below. Additional payments or benefits to a terminating executive officer would be at the discretion of the Human Capital Management and Compensation Committee. +In accordance with the terms of the defined benefit plan, the executive officers are not entitled to additional benefits at death or disability. The amounts payable at retirement are disclosed in the Benefit Plans section of this Proxy Statement. The executive officers can choose to receive the amounts accumulated in the SRP either as a lump-sum or in installments at retirement, death or disability. These amounts have been disclosed under the Nonqualified Deferred Compensation section of this Proxy statement. The table below reflects the incremental restricted shares and their values that would become vested as of December 30, 2022 using the closing market price of $8.89 per share for our Common Stock, as of that date, in the case of retirement, disability, death or change in control. +37 +Table of Contents +2023 ANNUAL +PROXY STATEMENT +Stock Awards +Number of shares +underlying unvested +Unrealized value of +stock +unvested stock +Name +(#) +($) +Ben M. Palmer +· Retirement +— +— +· Disability +64,819 +576,241 +· Death +258,000 +2,293,620 +· Change in control +258,000 +2,293,620 +Michael L. Schmit +· Retirement +— +— +· Disability +4,375 +38,894 +· Death +35,000 +311,150 +· Change in control +35,000 +311,150 +Richard A. Hubbell +· Retirement +66,917 +594,892 +· Disability +97,763 +869,113 +· Death +327,000 +2,907,030 +· Change in control +327,000 +2,907,030 +Accrued Pay and Regular Retirement Benefits +The amounts shown in the preceding table do not include the following since they are provided on a non-discriminatory basis to salaried employees generally upon termination of employment. These include: +> Accrued salary and vacation pay; and +> Distributions of plan balances under the 401(k) Plan. +Pension BenefitS and Deferred Compensation +Retirement Income Plan benefits currently payable to the executive officers are disclosed under the Benefit Plans section of this Proxy Statement. Upon termination, the executive officers will receive a distribution of the balance in their SRP account. These amounts are disclosed under the Nonqualified Deferred Compensation section of this Proxy Statement. +Change-in-Control or Severance . The Company does not have any severance agreements with its executive officers. However, upon the occurrence of a “ Change in Control ,” as determined by the Board of Directors, all unvested time-lapse restricted stock shall immediately vest as disclosed above. +38 +Table of Contents +2023 ANNUAL +PROXY STATEMENT +PAY RATIO DISCLOSURE +The following table shows the annual disclosure of the ratio of the median employee’s annual total compensation to the total annual compensation of the principal executive officer (PEO). Ben M. Palmer has been the Company’s PEO since May 17, 2022 and Richard A. Hubbell was the PEO prior. Total annual compensation disclosed below is comprised of the compensation provided to each of them for the time they served as PEO during 2022. The purpose of the required disclosure is to provide a measure of the equitability of pay within the organization. The Company believes its compensation philosophy and process yield an equitable result. +Median Employee total annual compensation +$ +93,166 +PEO total annual compensation +$ +2,446,131 +Ratio of PEO to Median Employee Compensation +26.3:1 +The Company has identified the median employee as of December 31, 2020 and the compensation disclosed above represents the total annual compensation of the median employee for the year ended December 31, 2022. Employees from our foreign subsidiaries in North America and Asia, both of which combined were less than 5 percent of our total employees, were excluded, as permitted by SEC rules, under “de minimis” exception. Employees on leave of absence were also excluded from the list and wages and salaries were annualized for those employees that were not employed for the full year of 2022 (other than seasonal or temporary employees). The median employee’s compensation was selected from the annualized list. For simplicity, the value of the Company’s 401(k) Plan and medical benefits provided was excluded as all employees including the PEO are offered the exact same benefits. As of December 31, 2022, the Company employed 2,732 persons of which 56 were employed in Canada, China and Mexico. +The pay ratio disclosure presented above is a reasonable estimate. Because the SEC rules for identifying the median employee and calculating the pay ratio allow companies to use different methodologies, exemptions, estimates and assumptions, our pay ratio disclosure may not be comparable to the pay ratios reported by other companies. +39 +Table of Contents +2023 ANNUAL +PROXY STATEMENT +PAY VERSUS PERFORMANCE +In accordance with the SEC’s regulations, we are providing the following information about the relationship between executive compensation actually paid and certain financial performance of the Company and certain of its peers for the years 2022, 2021 and 2020. For further information concerning the Company’s compensation philosophy see section titled Compensation Discussion and Analysis (CD&A). +Average +Average +Summary +Summary +Value of Initial Fixed $100 +Compensation +Compensation +Investment Based On: +Summary +Summary +Table Total +Actually Paid +Return +Compensation +Compensation +Compensation +Compensation +for Non-PEO +to Non-PEO +Peer Group +Net +on +Table Total +Table Total +Actually Paid +Actually Paid +Named +Named +Total +Total +Income/ +Invested +for first +for second +to first +to second +Executive +Executive +Shareholder +Shareholder +(Loss) +Capital +Year +PEO (1) +PEO (1) +PEO (2)(4) +PEO (2)(4) +Officers (1) +Officers (3) +Return +Return (5) +(in thousands) +(ROIC) (6) +2022 +$ +2,138,360 +$ +2,272,390 +$ +3,327,790 +$ +3,062,704 +$ +819,670 +$ +819,320 +$ +167.00 +$ +113.26 +$ +218,363 +20.3 +% +2021 +1,371,410 +— +1,913,830 +— +733,150 +1,164,372 +86.64 +70.04 +7,217 +6.1 +% +2020 +1,275,559 +— +696,697 +— +818,133 +875,186 +60.11 +58.01 +( 212,192 ) +0.2 +% +(1) +Amounts disclosed for the first Principal Executive Officer (PEO), second PEO and other Non-PEO Named Executive Officers relate to reported compensation as follows: +> Richard A. Hubbell – was the President and Chief Executive Officer through May 17, 2022 and for the years 2021 and 2020. He has been Executive Chairman of the Board Officer since May 17, 2022. His total compensation for 2022, 2021 and 2020 has been disclosed as amounts related to first PEO. +> Ben M. Palmer – has been the President and Chief Executive Officer effective May 17, 2022, and was Vice President, Chief Financial Officer and Corporate Secretary prior. For 2022, his total compensation has been disclosed as amounts related to second PEO. For 2021 and 2020, his compensation has been disclosed in amounts related to Non-PEO Named Executive Officers. +> Michael L. Schmit – has been Vice President, Chief Financial Officer and Corporate Secretary effective May 17, 2022 and his compensation has been included in amounts related to Non-PEO Named Executive Officers. +> Randall R. Rollins – was the Executive Chairman of the Board until his passing in August 2020; his compensation until his death has been included in the amounts related to Non-PEO Named Executive Officers for that year. +(2) +The dollar amounts reported represent the amount of Compensation Actually Paid (CAP), computed in accordance with SEC rules. The dollar amounts do not reflect the actual amount of compensation earned by or paid to our PEO during the applicable year. To calculate the amounts in the CAP to PEO column in the table above, the following amounts were deducted from or added to (as applicable) the Total compensation as reported in the Summary Compensation Table (SCT): +Reported +Reported +Reported +Reported +Equity +Equity +Summary +Summary +Value of +Value of +Award +Award +Pension +Compensation +Compensation +Equity +Equity +Adjustments +Adjustments +Adjustments +Compensation +Compensation +Table Total for +Table Total for +Awards to +Awards to +to first +to second +to First +Actually Paid +Actually Paid +first PEO (a) +second PEO (a) +first PEO (b) +second PEO (b) +PEO (c) +PEO (c) +PEO (d) +to first PEO +to second PEO +Year +($) +($) +($) +($) +($) +($) +($) +($) +($) +2022 +2,138,360 +2,272,390 +( 670,500 ) +( 804,600 ) +1,859,930 +1,594,914 +— +3,327,790 +3,062,704 +2021 +1,371,410 +— +( 387,000 ) +— +929,420 +— +— +1,913,830 +— +2020 +1,275,559 +— +( 459,000 ) +— +( 112,540 ) +— +( 7,322 ) +696,697 +— +(a) The amounts disclosed represent the amounts reported as Total compensation in the SCT. +(b) Represents the grant dare fair value of the equity awards reported in the Stock Awards column of the SCT. +(c) Represents the year-over-year change in the fair value of equity awards, as shown below. +2022 - First PEO +2022 - Second PEO +2021 +2020 +Fair Value of +($) +($) +($) +($) +Equity awards granted in Current Fiscal Year (CFY) outstanding and unvested as of end of CFY +666,750 +800,100 +454,000 +315,000 +Change in prior year awards outstanding and unvested as of end of CFY +1,096,200 +730,800 +305,800 +( 382,470 ) +Change in prior year awards that vested in current year +83,900 +53,694 +169,620 +( 45,070 ) +Dividends paid +13,080 +10,320 +— +— +Total Equity Award Adjustments +1,859,930 +1,594,914 +929,420 +( 112,540 ) +40 +Table of Contents +2023 ANNUAL +PROXY STATEMENT +(3) +The dollar amounts reported represent the amount of CAP, computed in accordance with SEC rules. The dollar amounts do not reflect the actual amount of compensation earned by or paid to our Non-PEO Named Executive Officers during the applicable year. To calculate the amounts in the CAP to Non-PEO Named Executive Officers column in the table above, the following amounts were deducted from or added to (as applicable) the Total compensation as reported in the SCT: +Average +Reported +Equity +Average Summary +Summary Compensation +Value of Average Equity +Award Adjustments to +Compensation Actually +Table Total for Non- PEO +Awards to Non-PEO Named +Non-PEO Named +Paid to Non- PEO Named +Named Executive Officers (a) +Executive Officers (b) +Executive Officers (c) +Executive Officers +Year +($) +($) +($) +($) +2022 +819,670 +( 312,900 ) +312,550 +819,320 +2021 +733,150 +( 259,290 ) +690,512 +1,164,372 +2020 +818,133 +( 383,265 ) +440,318 +875,186 +(a) The amounts disclosed represent the average amounts attributable to each Named Executive Officer for the period he served and included in the amounts reported as Total compensation in the SCT. +(b) Represents the average grant date fair value of the equity awards reported in the Stock Awards column of the SCT. +(c) Represents the average year-over-year change in the fair value of equity awards, as shown below. For 2020, awards granted and vested in same CFY represents restricted shares granted to R. Randall Rollins that vested immediately upon his death pursuant to the terms of the restricted stock grants. +2022 +2021 +2020 +Fair Value of +($) +($) +($) +Equity awards granted in Current Fiscal year (CFY) outstanding and unvested as of end of CFY +311,150 +304,180 +263,025 +Change in prior year awards outstanding and unvested as of end of CFY +— +201,272 +( 122,474 ) +Awards granted and vested in same CFY +— +— +173,000 +Change in prior year awards that vested in current year +— +185,060 +126,767 +Dividends paid +1,400 +— +— +Total Equity Award Adjustments +312,550 +690,512 +440,318 +(4) +The actuarial present value of $ 7,322 attributable to Richard A. Hubbell in 2020 has been reduced in computing his CAP for that year. The Company’s defined benefit pension plan was frozen in 2002 and therefore no adjustments need to be made in computing the CAP. +(5) +Reflects cumulative total shareholder return of the Philadelphia Oil Services Sector (OSX) index, as of December 31, 2022, calculated over the measurement period beginning as of December 31, 2019 established by the market close on that day through and including the end of 2022. The OSX is the peer group used by the Company for purposes of Item 201(e) of Regulation S-K under the Exchange Act in its Form 10-K for the year ended December 31, 2022. +(6) +ROIC is computed as the ratio of Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) to invested capital, for the years 2022, 2021 and 2020. Invested capital is equal to the aggregate average of stockholders’ equity, accumulated depreciation and long-term liabilities during each of the applicable years. +Financial Performance Measures: +The Company has used ROIC as the primary performance measurement for several years. In addition, the Company also considers the following as important financial measures that may be used to link compensation actually paid to our Named Executive Officers: +> Earnings Per Share ; +> EBITDA ; and +> Free Cash Flow – calculated as net cash provided by operating activities less capital expenditures . +Relationship between CAP and financial measures reported on the table: +The Company’s TSR has performed better than the OSX peer group over the three-year period ending in 2022. The Company reported a significant improvement in net income in 2022 compared to the previous two years. For 2022, the Company achieved ROIC performance at the superior level, but ROIC performance in 2021 and 2020 was below the threshold level. +41 +Table of Contents +2023 ANNUAL +PROXY STATEMENT +RPC’s Stock price performance for the years reported was as follows and was the primary driver of differences between compensation reported on SCT and CAP calculated for the each of the years ended December 31: +> 95 percent increase at year-end 2022 compared to year-end 2021; +> 44 percent increase at year-end 2021 compared to year-end 2020; and +> 40 percent decrease at year-end 2020 compared to year-end 2019. +The following graphs reflect the CAP paid to our PEOs and other Non-PEO Named Executive Officers over the three-year period ended December 31, 2022 and show the Company’s TSR, net income and ROIC results over the same period. +42 +Table of Contents +2023 ANNUAL +PROXY STATEMENT +SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE +Section 16(a) of the Exchange Act requires our executive officers and directors and persons who own more than ten percent of a registered class of the Company’s equity securities to file reports of ownership and changes in ownership with the SEC. +Delinquent Section 16(a) Reports: Based on our review of the filed copies of such forms, we believe that during the fiscal year ended December 31, 2022, all filing requirements applicable to our executive officers, directors and greater than ten percent beneficial owners were timely satisfied, except that Ben M. Palmer and Richard A. Hubbell each filed one late Form 4. +43 +Table of Contents +2023 ANNUAL +PROXY STATEMENT +STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT +The following table sets forth information relating to the beneficial ownership of our common stock as of March 1, 2023 by: +> Each of our named executive officers; +> Each of our directors and director nominees; +> All of our current executive officers, directors and director nominees as a group; and +> Each stockholder or group as that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, who beneficially owned five percent of the shares of Common Stock of the Company. +The number of shares beneficially owned by each stockholder is determined under rules issued by the SEC. Under these rules, beneficial ownership includes any shares as to which a person has sole or shared voting power or investment power. Unless otherwise indicated, we believe, based on the information furnished to us, that the persons named in the table below have sole voting and investment power with respect to all securities that they beneficially own, subject to community property laws where applicable. +The information contained in the following table is not necessarily indicative of beneficial ownership for any other purpose, and the inclusion of any shares in the table does not constitute an admission of beneficial ownership of those shares. Unless otherwise indicated, the business address of each beneficial owner listed in the table below is c/o of RPC, Inc., 2801 Buford Highway NE, Suite 300, Atlanta, Georgia 30329. The information provided in the table below is based on our records, information filed with the SEC, on which we are relying pursuant to applicable SEC regulations, and information provided to us. +Amount +Percent of +Beneficially +Outstanding +Name of Beneficial Owner +Owned (1) +Shares +Named Executive Officers: +Ben M. Palmer +857,046 +(2) +** +Michael L. Schmit +67,022 +(3) +** +Richard A. Hubbell +3,077,484 +(4) +1.4 +Director and Director Nominees: +Gary W. Rollins (5) +122,084,763 +(6) +56.1 +Amy R. Kreisler (5) +4,337,924 +(7) +2.0 +Pamela R. Rollins (5) +3,099,115 +(8) +1.4 +Timothy C. Rollins +3,035,281 +(9) +1.4 +Jerry W. Nix +2,418 +** +Patrick J. Gunning +9,418 +** +Susan R. Bell +7,918 +** +John F. Wilson +3,418 +** +Other Stockholders: +Blackrock Institutional Trust Company, N.A. +12,028,157 +(10) +5.5 +Control Group +128,625,699 +(11) +59.1 +All Directors and Executive Officers as a group (11 persons) +132,921,028 +(12) +61.0 +** +Less than one percent +(1) Except as otherwise noted, the nature of the beneficial ownership for all shares is sole voting and investment power. +(2) Includes 269,800 shares of restricted stock awards of Company Common Stock. +(3) Includes 62,500 shares of restricted stock awards of Company Common Stock. +(4) Includes 295,250 shares of restricted stock awards of Company Common Stock. +(5) Amy R. Kreisler, Pamela R. Rollins and Timothy C. Rollins are siblings and are nieces and nephew of Gary W. Rollins. +44 +Table of Contents +2023 ANNUAL +PROXY STATEMENT +(6) Includes the following shares of Company Common Stock: (a) 69,091 shares of the Company Common Stock held in a charitable trust of which he is a co-trustee and as to which he shares voting and investment power; (b) 78,801,225 shares held by LOR, Inc., a Georgia corporation (Gary W. Rollins is an officer and director of LOR, Inc. and has a 50 percent voting interest in it); (c) 3,160,819 shares held by RFT Investment Company, LLC, a Georgia limited liability company (LOR, Inc. is the manager of RFT Investment Company, LLC); (d) 15,677,032 shares held by RCTLOR, LLC, a Georgia limited liability company (LOR, Inc. is the managing member of RCTLOR, LLC); (e) 889,242 shares held by RFA Management Company, LLC, a Georgia limited liability company, the manager of which is LOR, Inc.; (f) 527,413 shares held by multiple trusts benefiting the grandchildren and more remote descendants of his deceased brother,. R. Randall Rollins (Gary W. Rollins is a trustee of each such trust); (g) 4,815,173 shares held by WNEG Investments, L.P., a Georgia limited partnership (Gary W. Rollins is the sole member of the sole general partner of WNEG Investments, L.P.); (h) 3,224,505 shares held by revocable trust established by Gary W. Rollins, of which he is the sole trustee; and (i) 8,312,106 shares held by three trusts (the “Rollins Family Trusts”) for the benefit of the children and/or more remote descendants of his deceased brother, R. Randall Rollins. Also includes 6,970 shares of Company Common Stock held by his wife, as to which Mr. Rollins disclaims any beneficial interest. Mr. Rollins is part of a control group holding Company securities, as disclosed on a Schedule 13D on file with the U.S. Securities and Exchange Commission. +(7) Includes 1,965,692 shares of Company Common Stock held in a charitable trust of which she is a co-trustee and the Executive Director. Excludes 1,171 shares held by the R. Randall Rollins Voting Trust U/A dated August 25, 1994, as to which Ms. Kreisler is a co-trustee. Ms. Kreisler is part of a control group holding Company securities, as disclosed on a Schedule 13D on file with the U.S. Securities and Exchange Commission. +(8) Includes 1,965,692 shares of Company Common Stock held in a charitable trust of which she is a co-trustee. Excludes 1,171 shares held by the R. Randall Rollins Voting Trust U/A dated August 25, 1994, as to which Ms. Rollins is a co-trustee. Ms. Rollins is part of a control group holding Company securities, as disclosed on a Schedule 13D on file with the U.S. Securities and Exchange Commission. +(9) Includes 1,965,692 shares of Company Common Stock held in a charitable trust of which he is a co-trustee. Excludes 1,171 shares held by the R. Randall Rollins Voting Trust U/A dated August 25, 1994, as to which Mr. Rollins is a co-trustee. Includes 52,013 shares held pf record by minor child over which Mr. Rollins possesses voting and dispositive power. Also includes 1,530 shares of Company Common Stock held by his wife, as to which Mr. Rollins disclaims any beneficial interest. Mr. Rollins is part of a control group holding Company securities, as disclosed on a Schedule 13D on file with the U.S. Securities and Exchange Commission. +(10) Based on 13G filed on February 1, 2023. +(11) Control group includes Gary W. Rollins, Pamela R. Rollins, Amy R. Kreisler and Timothy C. Rollins, and certain companies under their control, that possesses in excess of fifty percent of the Company’s voting power. See footnotes (6), (7), (8), (9) & (12) to this table for additional information. +(12) Shares held in trusts as to which more than one officer and/or director are co-trustees or entities in which there is common ownership have been included only once. Includes 627,550 shares of restricted stock awards for Company Common Stock awarded and issued to the executive officers pursuant to the Company’s Stock Incentive Plans. +45 +Table of Contents +2023 ANNUAL +PROXY STATEMENT +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +The Company provides certain administrative services to Marine Products on a cost reimbursement basis and the arrangement may be terminated upon six months’ notice. The services include administration of certain employee benefit programs and other administrative services. Charges from the Company (or from corporations which are subsidiaries of the Company) for such services aggregated approximately $922,000 in 2022. +RPC and Marine Products own 50 percent each of a limited liability company called 255 RC, LLC that was created for the joint purchase and ownership of a corporate aircraft. Each of RPC and Marine Products is currently a party to an operating lease agreement with 255 RC, LLC for a period of five years. During 2022, RPC recorded certain net operating costs comprised of rent and an allocable share of fixed costs of approximately $200,000 for the corporate aircraft. +During 2022, a subsidiary of RPC conducted business with companies owned by LOR, Inc. Mr. Gary W. Rollins, a director at RPC, is an officer, director and controlling stockholder of LOR, Inc. In 2022, payments totaling approximately $1,750,000 were made to these LOR, Inc. companies primarily for the purchase of parts and repair services related to certain of RPC’s oilfield operating equipment. RPC believes the charges incurred are at least as favorable as the charges that would have been incurred for similar purchases from unaffiliated third parties. +RPC receives certain administrative services from Rollins, Inc., a company of which Mr. Gary W. Rollins is Chairman, and which is controlled by Mr. Rollins and his affiliates. The service agreements between Rollins, Inc. and the Company provide for the provision of services on a cost reimbursement basis and are terminable on six months’ notice. The services covered by these agreements include office space, administration of certain employee benefit programs, and other administrative services. Charges to the Company (or to corporations which are subsidiaries of the Company) for such services and rent aggregated approximately $71,000 in 2022. +A group that includes Gary W. Rollins, Pamela R. Rollins, Amy R. Kreisler and Timothy C. Rollins, each of whom is a director of the Company, and certain companies under their control, possesses in excess of fifty percent of the Company’s voting power. Please refer to the discussion above under the heading, Board of Directors and Corporate Governance. The group discussed above also controls in excess of fifty percent of Marine Products Corporation’s voting power. +Related party transactions, as defined in Regulation S-K, Item 404(a), must be reviewed and approved in advance, by our Nominating and Corporate Governance Committee or, in the event that our Nominating and Corporate Governance Committee does not consist of all independent directors, by a Subcommittee (the Subcommittee) of the Nominating and Corporate Governance Committee consisting of all of the independent members thereof. As set forth in the charter of our Nominating and Corporate Governance Committee, the Nominating and Corporate Governance Committee has the authority and responsibility to ensure that it approve all related party transactions, including material amendments that are in compliance with applicable law, consistent with the Company’s corporate governance policies (including those relative to conflicts of interest and usurpation of corporate opportunities) and on terms that are deemed to be fair to the Company. The Nominating and Corporate Governance Committee also has the authority to hire legal, accounting, financial or other advisors, as it may deem necessary or desirable and/or to delegate responsibilities to executive officers of the Company in connection with discharging its duties. These same rights and responsibilities apply equally to the Subcommittee. A copy of the Charter of the Nominating and Corporate Governance Committee is available on our website at www.rpc.net under the Governance section. All related party transactions for the fiscal year ended December 31, 2022 were reviewed, pre-approved and/or ratified by the Nominating and Corporate Governance Committee in accordance with the Charter. +46 +Table of Contents +2023 ANNUAL +PROXY STATEMENT +STOCKHOLDER PROPOSALS +Appropriate proposals of stockholders intended to be presented at the Company’s 2024 Annual Meeting of Stockholders must be received by the Company by November 16, 2023 in order to be included, pursuant to Rule 14a-8 promulgated under the Exchange Act, in the proxy statement and form of proxy relating to that meeting. With regard to such stockholder proposals, if the date of the next annual meeting of stockholders is advanced or delayed more than 30 calendar days from April 25, 2024, the Company will, in a timely manner, inform its stockholders of the change and of the date by which such proposals must be received. Stockholders desiring to present business at the 2024 Annual Meeting of Stockholders outside of the stockholder proposal rules of Rule 14a-8 of the Exchange Act and instead pursuant to Article Twenty-Seventh of the Bylaws must prepare a written notice regarding such proposal addressed to The Corporate Secretary, RPC, Inc., 2801 Buford Highway NE, Suite 300, Atlanta, Georgia 30329, and deliver to or mailed and received by no later than January 26, 2024 and no earlier than December 17, 2023. Stockholders should consult the Bylaws for other specific requirements related to such notice and proposed business. +With respect to stockholder nomination of directors, the Bylaws provide that nominations for the election of directors may be made by any stockholder entitled to vote for the election of directors. Nominations must comply with an advance notice procedure which generally requires with respect to nominations for directors for election at an annual meeting, that written notice be addressed to: The Corporate Secretary, RPC, Inc., 2801 Buford Highway NE, Suite 300, Atlanta, Georgia 30329, and be received not less than 90 nor more than 130 days prior to the anniversary of the prior year’s annual meeting and set forth, among other requirements specified in the Bylaws, the name, age, business address and, if known, residence address of the nominee proposed in the notice, the principal occupation or employment of the nominee for the past five years, the nominee’s qualifications, the class or series and number of shares of capital stock of the Company which are owned beneficially or of record by the person and any other information relating to the person that would be required to be disclosed in a proxy statement or other filings. Other specific requirements related to such notice, including required disclosures concerning the stockholder intending to present the nomination, are set forth in the Bylaws. Notices of nominations must be received by the Corporate Secretary of the Company no later than January 26, 2024 and no earlier than December 17, 2023, with respect to directors to be elected at the 2024 Annual Meeting of Stockholders. +EXPENSES OF SOLICITATION +The Company will bear the cost of soliciting proxies. Upon request, we will reimburse brokers, dealers and banks, or their nominees, for reasonable expenses incurred in forwarding copies of the proxy material to their beneficial stockholders of record. Solicitation of proxies will be made principally by mail. Proxies also may be solicited in person or by telephone, facsimile or other means by our directors, officers and regular employees. These individuals will receive no additional compensation for these services. The Company has retained Alliance Advisors, LLC to provide proxy solicitation services for an estimated fee of approximately $15,000 plus reasonable out of pocket expenses. +47 +Table of Contents +2023 ANNUAL +PROXY STATEMENT +ANNUAL REPORT +The Company’s Annual Report to Stockholders, including its Annual Report on Form 10-K for the fiscal year ended December 31, 2022, without exhibits, is being provided to stockholders with this Proxy Statement. The Annual Report is not considered proxy-soliciting material. +FORM 10-K +Upon the written request of any record or beneficial owner of the Company’s Common Stock whose proxy was solicited in connection with the 2023 Annual Meeting of Stockholders, the Company will furnish such owner, without charge, a copy of its Annual Report on Form 10-K, including the financial statements and the financial statement schedules (but without exhibits), for its fiscal year ended December 31, 2022. Requests for a copy of such Annual Report on Form 10-K should be addressed to Mr. Michael L. Schmit, Corporate Secretary, at RPC, Inc., 2801 Buford Highway NE, Suite 300, Atlanta, Georgia 30329. +OTHER MATTERS +Our Board of Directors knows of no business other than the matters set forth herein which will be presented at the Annual Meeting. In as much as matters not known at this time may come before the Annual Meeting, the enclosed proxy confers discretionary authority with respect to such matters as may properly come before the Annual Meeting; and it is the intention of the persons named in the proxy to vote in accordance with their best judgment on such matters. +BY ORDER OF THE BOARD OF DIRECTORS +Michael L. Schmit +Corporate Secretary +Atlanta, Georgia +March 15, 2023 +48 +Table of Contents +2023 ANNUAL +PROXY STATEMENT +CAUTION CONCERNING FORWARD- LOOKING STATEMENTS +This Proxy Statement contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts contained in this Proxy Statement, including statements regarding future operations are forward-looking statements. In some cases, forward-looking statements may be identified by words such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “could,” “would,” “expect,” “objective,” “plan,” “potential,” “seek,” “grow,” “target,” “if,” or the negative of these terms and similar expressions intended to identify forward-looking statements. Forward-looking statements are made subject to the safe harbor provisions of the federal securities laws pursuant to Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We have based these forward-looking statements primarily on our current opinions, expectations, beliefs, plans, objectives, assumptions and projections about future events and trends that we believe may affect us. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the future events and trends discussed in this Proxy Statement, including our expectations for 2023, may not occur and actual results may differ materially and adversely from those anticipated or implied in the forward-looking statements. You should read this Proxy Statement with the understanding that our actual future results, levels of activity, performance and events and circumstances may be materially different from what we expect. In addition, these forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in the section titled “Risk Factors” set forth in Part I, Item 1A of our 2022 Annual Report and in our other SEC filings, which include, among other things, the dependence of our business on the oil and natural gas industries and related commodity pricing, and the potential impact on our business of wars and pandemics. Forward-looking statements speak only as of the date of this Proxy Statement, and you should not put undue reliance on any forward-looking statements. We assume no obligation to publicly update or revise any forward-looking statements because of new information, future events, changes in assumptions or otherwise, except to the extent required by applicable laws. If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements. While we believe that such information provides a reasonable basis for these statements, such information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements. +49 + PLEASE DETACH ALONG PERFORATED LINE AND MAIL IN THE ENVELOPE PROVIDED.  +(Continued and to be marked, dated, and signed on other side) +PROXY +RPC, INC. +THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS +OF RPC, INC. +FOR THE 2023 ANNUAL MEETING OF STOCKHOLDERS +TO BE HELD ON APRIL 25, 2023 +The undersigned hereby constitutes and appoints RICHARD A. HUBBELL and BEN M. PALMER, and each of +them, jointly and severally, as proxies, with full power of substitution, to vote all shares of Common Stock which +the undersigned is entitled to vote at the Annual Meeting of Stockholders to be held on April 25, 2023, at +12:15 p.m. ET, at 2170 Piedmont Road, NE, Atlanta, GA 30324, or any adjournment of the meeting. +The undersigned acknowledges receipt of Notice of Annual Meeting of Stockholders and Proxy Statement, each +dated March 15, 2023, and grants authority to said proxies, or either of them, or their substitutes, to act in the +absence of others, with all the powers which the undersigned would possess if personally present at such +meeting and hereby ratifies and confirms all that said proxies or their substitutes may lawfully do in the +undersigned's name, place, and stead. The undersigned instructs said proxies, or either of them, to vote as +stated on the reverse side. +THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, WILL BE VOTED “FOR +ALL” THE NOMINEES NAMED IN PROPOSAL 1; “FOR” PROPOSALS 2 AND 3; AND “FOR” THE OPTION +OF “THREE YEARS” FOR PROPOSAL 4. THE PROXIES ARE AUTHORIZED TO VOTE IN THEIR +JUDGMENT UPON SUCH OTHER BUSINESS NOT KNOWN AS MAY PROPERLY COME BEFORE THE +ANNUAL MEETING OR ANY ADJOURNMENTS THEREOF. +Important Notice Regarding the Availability of Proxy Materials for the +RPC, INC. +Annual Meeting of Stockholders to Be Held on April 25, 2023. +The Notice and 2022 Annual Report and 2023 Proxy Statement are available at: +https://www.viewproxy.com/RPC/2023 + PLEASE DETACH ALONG PERFORATED LINE AND MAIL IN THE ENVELOPE PROVIDED.  +DO NOT PRINT IN THIS AREA +(Stockholder Name & Address Data) +The Board of Directors recommends a vote “FOR ALL” the nominees listed in Proposal 1; “FOR” Proposals 2 and 3; and “FOR” the +option of “Three Years” for Proposal 4. +Proposal 1. To elect three Class I Nominees (term expiring 2026) to the Board +of Directors: +NOMINEES: +FOR ALL +☐ +WITHHOLD ALL +☐ +FOR ALL EXCEPT +☐ +(1) Jerry W. Nix ☐ +(2) Patrick J. Gunning ☐ +(3) Ben M. Palmer ☐ +INSTRUCTIONS: To withhold authority to vote for any individual nominee(s), mark +“FOR ALL EXCEPT” and mark the box for each nominee you wish to withhold. +Address Change/Comments: (If you noted any Address Changes +and/or Comments above, please mark box.) ☐ +CONTROL NUMBER +Proposal 2. To ratify the appointment of Grant Thornton LLP as independent +registered public accounting firm of the Company for the fiscal +year ending December 31, 2023. +FOR ☐ AGAINST ☐ ABSTAIN ☐ +Proposal 3. To hold a nonbinding vote to approve executive compensation. +FOR ☐ AGAINST ☐ ABSTAIN ☐ +Proposal 4. To hold a nonbinding vote regarding the frequency of voting on +executive compensation. +1 Year ☐ 2 Years ☐ 3 Years ☐ ABSTAIN ☐ +Note: To consider and act upon such other business as may properly +come before the Annual Meeting or any adjournment of the +meeting. +Please sign exactly as name(s) appears herein. Joint owners should each sign. +When signing as attorneys, executor, administrator, corporate officer, trustee, +guardian, or custodian, please give full title. +Signature of Stockholder Date +Signature of Stockholder Date +CONTROL NUMBER +PROXY VOTING INSTRUCTIONS +Please have your 11-digit control number ready when voting by Internet or Telephone. +IN PERSON +Vote your Proxy +in Person: +You may vote your +shares in person at the +2023 Annual Meeting on +April 25, 2023, at +12:15 p.m. ET at +2170 Piedmont Road, +NE, Atlanta, GA 30324. +INTERNET TELEPHONE MAIL +Vote Your Proxy on the Internet: +Go to: www.aalvote.com/RES +Vote Your Proxy by Phone: +Call (866) 804-9616 +Vote Your Proxy by Mail: +Have your proxy card available +when you access the above +website. Follow the prompts to +vote your shares. Vote by +11:59 p.m. ET on +April 24, 2023. +Use any touch-tone +telephone to vote your +proxy. Have your proxy card +available when you call. +Follow the voting instructions +to vote your shares. Vote by +11:59 p.m. ET on +April 24, 2023. +Mark, sign, and date your +proxy card, then detach it, +and return it in the +postage-paid envelope +provided. +Please mark your vote in blue or black ink as shown here ☒ \ No newline at end of file diff --git a/raw/proxies/0000742278/0001558370-23-003893/proxy_rpt.txt b/raw/proxies/0000742278/0001558370-23-003893/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..8a417112f3268dc8464d085d1b9224144b16f380 --- /dev/null +++ b/raw/proxies/0000742278/0001558370-23-003893/proxy_rpt.txt @@ -0,0 +1,9 @@ +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +The Company provides certain administrative services to Marine Products on a cost reimbursement basis and the arrangement may be terminated upon six months’ notice. The services include administration of certain employee benefit programs and other administrative services. Charges from the Company (or from corporations which are subsidiaries of the Company) for such services aggregated approximately $922,000 in 2022. +RPC and Marine Products own 50 percent each of a limited liability company called 255 RC, LLC that was created for the joint purchase and ownership of a corporate aircraft. Each of RPC and Marine Products is currently a party to an operating lease agreement with 255 RC, LLC for a period of five years. During 2022, RPC recorded certain net operating costs comprised of rent and an allocable share of fixed costs of approximately $200,000 for the corporate aircraft. +During 2022, a subsidiary of RPC conducted business with companies owned by LOR, Inc. Mr. Gary W. Rollins, a director at RPC, is an officer, director and controlling stockholder of LOR, Inc. In 2022, payments totaling approximately $1,750,000 were made to these LOR, Inc. companies primarily for the purchase of parts and repair services related to certain of RPC’s oilfield operating equipment. RPC believes the charges incurred are at least as favorable as the charges that would have been incurred for similar purchases from unaffiliated third parties. +RPC receives certain administrative services from Rollins, Inc., a company of which Mr. Gary W. Rollins is Chairman, and which is controlled by Mr. Rollins and his affiliates. The service agreements between Rollins, Inc. and the Company provide for the provision of services on a cost reimbursement basis and are terminable on six months’ notice. The services covered by these agreements include office space, administration of certain employee benefit programs, and other administrative services. Charges to the Company (or to corporations which are subsidiaries of the Company) for such services and rent aggregated approximately $71,000 in 2022. +A group that includes Gary W. Rollins, Pamela R. Rollins, Amy R. Kreisler and Timothy C. Rollins, each of whom is a director of the Company, and certain companies under their control, possesses in excess of fifty percent of the Company’s voting power. Please refer to the discussion above under the heading, Board of Directors and Corporate Governance. The group discussed above also controls in excess of fifty percent of Marine Products Corporation’s voting power. +Related party transactions, as defined in Regulation S-K, Item 404(a), must be reviewed and approved in advance, by our Nominating and Corporate Governance Committee or, in the event that our Nominating and Corporate Governance Committee does not consist of all independent directors, by a Subcommittee (the Subcommittee) of the Nominating and Corporate Governance Committee consisting of all of the independent members thereof. As set forth in the charter of our Nominating and Corporate Governance Committee, the Nominating and Corporate Governance Committee has the authority and responsibility to ensure that it approve all related party transactions, including material amendments that are in compliance with applicable law, consistent with the Company’s corporate governance policies (including those relative to conflicts of interest and usurpation of corporate opportunities) and on terms that are deemed to be fair to the Company. The Nominating and Corporate Governance Committee also has the authority to hire legal, accounting, financial or other advisors, as it may deem necessary or desirable and/or to delegate responsibilities to executive officers of the Company in connection with discharging its duties. These same rights and responsibilities apply equally to the Subcommittee. A copy of the Charter of the Nominating and Corporate Governance Committee is available on our website at www.rpc.net under the Governance section. 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res:EquityAwardsAdjustmentsChangeInFairValueAsOfYearEndOfOutstandingAndUnvestedAwardsGrantedInPriorYearsMember ecd:NonPeoNeoMember 2020-01-01 2020-12-31 0000742278 res:EquityAwardsAdjustmentsChangeInFairValueAsOfVestingDateOfVestedAwardsDuringCurrentYearMember ecd:NonPeoNeoMember 2020-01-01 2020-12-31 0000742278 res:EquityAwardsAdjustmentsChangeInFairValueAsOfVestingDateOfPriorYearAwardsVestedDuringCurrentYearMember ecd:NonPeoNeoMember 2020-01-01 2020-12-31 0000742278 2023-01-01 2023-12-31 iso4217:USD xbrli:pure +Table of Contents +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A INFORMATION +Proxy Statement Pursuant to Section 14(a) of the Securities +Exchange Act of 1934 (Amendment No. ) +Filed by the Registrant ☒ +Filed by a Party other than the Registrant ☐ +Check the appropriate box: +☐ Preliminary Proxy Statement +☐ Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +☒ Definitive Proxy Statement +☐ Definitive Additional Materials +☐ Soliciting Material Pursuant to §240.14a-12 +RPC, Inc. +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +☒ No fee required. +☐ Fee paid previously with preliminary materials. +☐ Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a6(i)(1) and 0-11 +Table of Contents +2801 Buford Highway NE, Suite 300, Atlanta, Georgia 30329 +TO THE HOLDERS OF THE COMMON STOCK: +P LEASE TAKE NOTICE that the 2024 Annual Meeting of Stockholders of RPC, Inc., a Delaware corporation (“RPC” or the “Company”), will be held at 2170 Piedmont Road, NE, Atlanta, Georgia, on Tuesday, April 23, 2024, at 12:15 P.M., for the following purposes, as more fully described in the Proxy Statement accompanying this notice: +1. To elect the three Class II nominees identified in the attached Proxy Statement to the Board of Directors; +2. To ratify the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2024; +3. To approve the 2024 Stock Incentive Plan; and +4. To consider and act upon such other business as may properly come before the Annual Meeting or any adjournment of the meeting. +RPC, INC . +NOTICE OF ANNUAL MEETING OF STOCKHOLDERS +The Proxy Statement dated March 14, 2024, is attached. +The Board of Directors has fixed the close of business on March 1, 2024 as the record date for the determination of stockholders entitled to notice of, and to vote at, the Annual Meeting or any adjournment thereof. +As permitted by the U.S. Securities and Exchange Commission rules, the Company is making the proxy materials relating to the Annual Meeting, including this Proxy Statement and the Company’s 2023 Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (the “Annual Report”), available to our stockholders electronically via the Internet. On or about March 14, 2024, we mailed to our stockholders an Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be held on April 23, 2024 (the “Notice”) containing instructions on how to access this Proxy Statement and our Annual Report and vote online. If you received a Notice by mail, you will not receive a printed copy of the proxy materials in the mail unless you request a copy. The Notice instructs you on how to access and review all important information contained in the Proxy Statement and Annual Report. The Notice also instructs you on how you may submit your proxy over the Internet. If you received a Notice by mail and would like to receive a printed copy of our proxy materials, you should follow the instructions for requesting such materials contained on the Notice. +I mportant Notice regarding the availability of proxy materials for the Annual Meeting of Stockholders to be held on April 23, 2024: The 2024 Proxy Statement and 2023 Annual Report on Form 10-K to security holders are available at https://www.viewproxy.com/RPC/2024 . +Voting can be completed in one of four ways: +Returning the Proxy Card by Mail +Via Telephone at 1-866-804-9616 +Online at https://www.AALvote.com/ +RES +Attending the meeting to vote In Person +By Order Of The Board Of Directors +Michael L. Schmit +Corporate Secretary +Atlanta, Georgia +March 14, 2024 +Whether or not you expect to attend the annual meeting, please sign, date and return the enclosed proxy card promptly. Alternatively, you may vote your proxy by telephone or over the Internet by following the instructions on your proxy card or Notice. If you decide to attend the meeting, you may, if you wish, revoke the proxy and vote your shares in person. +Table of Contents +TABLE OF CONTENTS +NOTICE OF ANNUAL MEETING OF STOCKHOLDERS +MESSAGE FROM OUR CHIEF EXECUTIVE OFFICER +SUSTAINABILITY AT RPC +PROXY STATEMENT +6 +CAPITAL STOCK +7 +BOARD OF DIRECTORS AND CORPORATE GOVERNANCE +9 +DIRECTOR COMPENSATION +16 +INFORMATION REGARDING DIRECTOR NOMINEES AND CONTINUING DIRECTORS +18 +PROPOSAL 1: ELECTION OF DIRECTORS +24 +AUDIT MATTERS +25 +PROPOSAL 2: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +27 +PROPOSAL 3: APPROVAL OF THE 2024 STOCK INCENTIVE PLAN +28 +EXECUTIVE OFFICERS +36 +COMPENSATION DISCUSSION AND ANALYSIS +37 +HUMAN CAPITAL MANAGEMENT AND COMPENSATION COMMITTEE REPORT +49 +EXECUTIVE COMPENSATION +50 +BENEFIT PLANS +54 +PAY RATIO DISCLOSURE +57 +PAY VERSUS PERFORMANCE +58 +SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE +62 +STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT +63 +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +65 +STOCKHOLDER PROPOSALS +66 +EXPENSES OF SOLICITATION +67 +ANNUAL REPORT +67 +FORM 10-K +67 +OTHER MATTERS +68 +CAUTION CONCERNING FORWARD-LOOKING STATEMENTS +69 +APPENDIX A: 2024 STOCK INCENTIVE PLAN +A- 1 +Table of Contents +MESSAGE FROM OUR CHIEF EXECUTIVE OFFICER +To our Stockholders, +On behalf of the Board of Directors, we are pleased to announce that we will hold our 2024 Annual Meeting of Stockholders on Tuesday, April 23rd, 2024 at 12:15 P.M. +2023 was a year of several positive developments and milestones for RPC, marked by strong financial performance as we navigated a dynamic industry environment. While revenues increased 1% to $1.62 billion, and diluted earnings per share was $0.90, versus $1.01 in 2022, we generated approximately $395 million of cash from operating activities, nearly doubling the prior year amount. With a year-end cash position of $223 million and no debt, we are confident in our ability to invest in the business and continue returning capital to shareholders. In 2023 we paid nearly $35 million in dividends and bought back nearly $19 million of stock under our buyback program, building on our strong capital return track record. +We upgraded our asset base with new equipment this past year, as well as acquired the Spinnaker cementing business. Spinnaker is a high-quality industry leader, and this acquisition expanded our service lines and broadened our customer base. The acquisition has gone well, and we are proud of the organization’s success acquiring and integrating this outstanding business into the RPC family. We enter 2024 with a healthy balance sheet, an appetite to continue prudently expanding the business, and optimism for another year of solid financial performance. +We also have another important milestone we are proud to share – the publication of our first corporate sustainability report. Beyond increasing regulatory, operational, and disclosure requirements around ESG (Environmental, Social and Governance), we understand that communication about our ESG-related initiatives is important to customers, suppliers, employees, and investors. We look forward to making continued progress on all sustainability fronts and sharing updates through these reports on an annual basis. +As we begin 2024, we want to recognize our employees across the company for another year of dedication and resilience. We are especially proud that Thru Tubing Solutions, our downhole tools company, has been recognized as a 2023 Top Workplace by both USA TODAY and The Oklahoman . This prestigious accolade is a testament to our commitment to fostering a vibrant and inclusive work environment. We would also like to thank our loyal customers who continue to choose RPC for our reliability, value proposition and overall outstanding service. I want to express to all our stakeholders that we remain committed to the financial discipline and conservative approach that has been our hallmark for decades and the backbone of our longevity and success. +Sincerely, +Ben M. Palmer +President and Chief Executive Officer +Table of Contents +SUSTAINABILITY AT RPC +We are an oil and gas services company that provides a broad range of specialized oilfield services and equipment. RPC serves independent as well as major oilfield companies and oil and gas properties throughout the United States and in select international markets. We are highly regarded for our business ethics, fiscal management and our consistent focus on safety and the wellness of our employees. We consistently deliver high quality services to our customers, provide safe and rewarding work for our employees, and returns to shareholders throughout the many cycles and challenges of our sector. +During 2023, RPC made meaningful progress formalizing, documenting and enhancing policies and procedures to better communicate our corporate sustainability commitments to our stakeholders. This included surveying our stakeholders on the materiality of topics related to: +1) Environmental; +2) Social; and +3) Governance. +The results are in our 2023 Corporate Sustainability report and provided valuable insight to our Board, Executive Leadership and Steering Committee on material topics. +In addition, we found external stakeholders preferred key policies separated into formal documents preferred to incorporating these policies into a Code of Conduct like RPC had previously done. The Steering Committee worked to separate and enhance these policies before sending them to the Board for review. These new policies are available on our website as listed below: +● Climate change; +● Water stewardship; +● Human capital management; +● Environment; +● Workplace health and safety; and +● Human rights. +For 2024, RPC will review responses from external stakeholders on our first report publication and incorporate changes where needed. RPC will also focus on reducing data estimation and improving the collection process. +Providing relevant guidance and oversight are our three Board committees that support RPC’s ESG efforts in their respective areas: +● The Nominating and Corporate Governance Committee is responsible for monitoring our general ESG practices, policies, programs, and public disclosures. +● The Human Capital Management and Compensation Committee provides oversight of the development and management of RPC's human capital management strategies and policies – including diversity, equity, and inclusion. +● The Audit Committee is responsible for oversight of RPC’s cybersecurity risk management program and provides management with guidance on our sustainability and ESG reporting disclosures and related internal control procedures. +These matters are reviewed on a periodic basis by each respective Board committee. Additionally, a steering committee, which includes members of executive management along with representatives of other key stakeholder groups, meets more frequently to discuss relevant topics. +Table of Contents +2024 ANNUAL +PROXY STATEMENT +PROXY STATEMENT +We are furnishing the proxy materials to stockholders on or about March 14, 2024. The Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be held on April 23, 2024. Proxy Statement and the Annual Report on Form 10-K are available at https://www.viewproxy.com/RPC/2024 . +The following information concerning the proxy and the matters to be acted upon at the Annual Meeting of Stockholders to be held on April 23, 2024 is submitted by the Company to the stockholders in connection with the solicitation of proxies on behalf of the Company’s Board of Directors. +SOLICITATION OF AND POWER TO REVOKE PROXY +A form of proxy is enclosed. Each proxy submitted will be voted as directed, but if not otherwise specified, proxies solicited by the Board of Directors of the Company will be voted in favor of the candidates for election to the Board of Directors, in favor of ratification of the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2024, and in favor of the proposed 2024 Stock Incentive Plan. +A stockholder executing and delivering a proxy has power to revoke the same and the authority thereby given at any time prior to the exercise of such authority, if they so elect, by contacting either proxy holder, by timely submitting a later dated proxy changing their vote, or by attending the meeting and voting in person. However, a beneficial stockholder who holds his shares in street name must secure a proxy from his broker before he can attend the meeting and vote. All costs of solicitation have been, and will be, borne by the Company. +HOUSEHOLDING AND DELIVERY OF NOTICE OR PROXY MATERIALS +The Company has adopted the process called “householding” for any notice or proxy materials in order to reduce printing costs and postage fees. Householding means that stockholders who share the same last name and address will receive only one copy of the notice or proxy materials, unless we receive contrary instructions from any stockholder at that address. +If you prefer to receive multiple copies of the proxy materials at the same address, additional copies will be provided to you promptly upon written or oral request. If you are a stockholder of record, you may contact us by writing to the Company at 2801 Buford Highway NE, Suite 300, Atlanta, GA 30329 or by calling 404-321-2140. Eligible stockholders of record receiving multiple copies of the proxy materials can request householding by contacting the Company in the same manner. +6 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +CAPITAL STOCK +The outstanding capital stock of the Company on March 1, 2024 consisted of 215,445,403 shares of Common Stock, par value $0.10 per share. Holders of Common Stock are entitled to one vote (non-cumulative) for each share of such stock registered in their respective names at the close of business on March 1, 2024, the record date for determining stockholders entitled to notice of, and to vote at, the meeting or any adjournment thereof. +A majority of the outstanding shares will constitute a quorum at the Annual Meeting . Abstentions will be counted for purposes of determining the presence or absence of a quorum for the transaction of business. With respect to routine matters, if your shares are held through a broker and you do not instruct the broker on how to vote your shares, your broker may choose to leave your shares unvoted or to vote your shares on the routine matters. Proposal 2, with respect to the ratification of the auditor, is the only routine matter on the agenda at this year’s Annual Meeting. With respect to Proposal 1 and 3, without instructions, your broker cannot vote your shares, resulting in what are known as “broker non-votes.” Broker non-votes will not be entitled to be counted for the purpose of determining the number of votes cast and present and eligible to be cast on Proposals 1 and 3. +In accordance with the General Corporation Law of the state of Delaware, the following votes are needed for approval of each proposal: +PROPOSAL +VOTE NEEDED FOR APPROVAL AND EFFECT OF ABSTENTION AND BROKER NON-VOTES +Proposal No. 1: The election of three Class II director nominees to serve as directors of the Company until our 2027 annual meeting of stockholders or until their successors are duly elected and qualified. +The election of the director nominees named herein will require the affirmative vote of a plurality of the votes cast by the shares of Company Common Stock entitled to vote in the election provided that a quorum is present at the Annual Meeting. +In the case of a plurality vote requirement (as in the election of directors), where no particular percentage vote is required, the outcome is solely a matter of comparing the number of votes cast for each nominee, with those nominees receiving the most votes being elected, and hence only votes for director nominees (and not abstentions or broker non-votes) are relevant to the outcome. In this case, the three nominees receiving the most votes will be elected. +Proposal No. 2: To ratify the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2024. +The affirmative vote of a majority of shares present in person or represented by proxy and entitled to vote with respect to this proposal at the meeting is required to approve the ratification of the appointment of the Company’s independent registered public accounting firm for fiscal year 2024 provided that a quorum is present at the Annual Meeting. +Abstentions will have the effect of a vote against this proposal. +Broker non-votes will have no effect on this proposal and will be disregarded. +7 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +PROPOSAL +VOTE NEEDED FOR APPROVAL AND EFFECT OF ABSTENTION AND BROKER NON-VOTES +Proposal No. 3: To approve the proposed 2024 Stock Incentive Plan. +The approval of the 2024 Stock Incentive Plan will require the affirmative vote of a majority of shares present in person or represented by proxy and entitled to vote at the meeting with respect to this proposal provided that a quorum is present at the Annual Meeting. +Abstentions will have the effect of a vote against this proposal. +Broker non-votes will have no effect on this proposal and will be disregarded. +There are no rights of appraisal or similar dissenter’s rights with respect to any matter to be acted upon pursuant to this Proxy Statement. It is expected that shares held of record and beneficially by officers and directors of the Company and their affiliates, which in the aggregate represent approximately 60% of the outstanding shares of Common Stock, will be voted for the nominees, for the ratification of the appointment of the Company’s independent registered public accounting firm, and for the approval of the 2024 Stock Incentive Plan. +8 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +BOARD OF DIRECTORS AND CORPORATE GOVERNANCE +MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS +The Company’s Board of Directors (Board) has an Audit Committee, Human Capital Management and Compensation Committee, Nominating and Corporate Governance Committee, and an Executive Committee (Committees). The Board has adopted written charters for certain of these Committees which are all available on our website at www.rpc .net under the section titled Governance . +Under our Corporate Governance Guidelines, directors are expected to attend all regular and special meetings of the Board and Board Committees upon which they serve. Directors are also expected to attend the Annual Stockholders Meeting. Each incumbent director attended at least 75% of the aggregate of all Board meetings and meetings of the Board Committees on which they served during 2023, and all members of the Board at the time attended last year’s Annual Stockholders Meeting. +The following table shows the current membership (M) and chairperson (C) of the Board and each of the Board committees, the number of Board and Board committee meetings held in 2023, and actions taken by unanimous written consent in lieu of meetings: +Human Capital +Nominating & +Management and +Corporate +Board of +Audit +Executive +Compensation +Governance +Name +Directors +Committee +Committee +Committee +Committee +Richard A. Hubbell +C +C +Susan R. Bell +M +M +Patrick J. Gunning +M +C +M +M +Amy R. Kreisler +M +M +Jerry W. Nix (1) +M +M +C +C +Ben M. Palmer +M +M +Gary W. Rollins +M +Pamela R. Rollins +M +Timothy C. Rollins +M +M +John F. Wilson +M +M +M +M +Meetings Held +5 +6 +— +4 +3 +Actions Taken by Written Consent +— +— +1 +1 +— +(1) Lead Independent Director +Audit Committee +The Audit Committee of the Board of Directors currently consists of Patrick J. Gunning (Chairperson), Jerry W. Nix, Susan R. Bell and John F. Wilson. The Audit Committee is responsible for, among other things: +> appointing the Company’s independent registered public accounting firm to audit the Company’s financial statements; +> assessing the independence and overseeing the performance of the Company’s independent registered public accounting firm; +> pre-approving all audit and all permissible non-audit services to be performed by the Company’s independent registered public accounting firm; +9 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +> discussing with the Company’s independent registered public accounting firm all matters required to be discussed under the standards of the Public Company Accounting Oversight Board, Securities and Exchange Commission (SEC) or other regulations; +> reviewing the Company’s financial statements and critical accounting policies and estimates; +> reviewing the adequacy and effectiveness of our internal controls and disclosure controls and procedures; +> assessing the performance of the Company’s internal audit department; +> reviewing the Company’s insider trading and anti-corruption policies; +> overseeing procedures for the receipt, retention, and treatment of complaints received by the Company regarding accounting, internal accounting controls, or auditing matters, and the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters; and +> overseeing compliance with the Company’s Code of Business Conduct and Ethics. +The Board has determined that all of the members of the Audit Committee are independent as defined by the rules of the SEC and the New York Stock Exchange (NYSE). The Board has also determined that all members of the Audit Committee with the exception of John F. Wilson are qualified as “Audit Committee Financial Experts” within the meaning of the rules of the SEC and that they have accounting or related financial management expertise within the meaning of the NYSE listing standards. In addition, the Board has determined that Mr. Wilson is “financially literate” within the meaning of and as required by the rules and regulations of the NYSE. The Board has also determined that Ms. Bell’s simultaneous service on the audit committees of four public companies will not impair her ability to effectively serve on the Company’s Audit Committee. +Human Capital Management and Compensation Committee +The Human Capital Management and Compensation Committee of the Board of Directors of the Company consists of Jerry W. Nix (Chairman), Patrick J. Gunning and John F. Wilson. The Human Capital Management and Compensation Committee is responsible for, among other things: +> reviewing the Company’s executive compensation philosophy and strategy; +> reviewing and approving the corporate goals and objectives relevant to the compensation of the Company’s CEO and executive officers; +> evaluating the performance of the Company’s CEO and executive officers; +> reviewing the compensation of the Company’s Non-Employee Directors for service on the Board and its committees and recommending to the Board changes to their compensation program as appropriate; +> determining the stock ownership guidelines for the Company’s Non-Employee Directors, CEO, executive officers, and other key executives and monitoring compliance with such guidelines; +> overseeing the development and management of the Company’s human capital management strategy and policies, including, but not limited to, those policies and strategies regarding diversity, equity and inclusion; and +> reviewing, approving and administering incentive compensation and equity compensation plans for executive officers and directors. +The Board has determined that all members of the Human Capital Management and Compensation Committee are independent as defined by the rules of the SEC and NYSE. In addition, each member of our Human Capital Management and Compensation Committee is also a Non-Employee Director, as defined pursuant to Rule 16b-3 of the Exchange Act. +The Company is not required by law or by the NYSE rules to have a formal compensation committee charter since we are a controlled corporation as described below under the heading Director Independence and NYSE Requirements . However, we have established a written charter of the Human Capital Management and Compensation Committee to promote responsible corporate governance practices, and we currently intend to maintain the committee charter going forward. See section titled Compensation Discussion & Analysis—Compensation Setting Process for information regarding the Human Capital Management and Compensation Committee’s processes. +10 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +Human Capital Management and Compensation Committee Interlocks and Insider Participation +The Board has determined that each member of the Human Capital Management and Compensation Committee is independent in accordance with the NYSE rules. The Human Capital Management and Compensation Committee consists of Messrs. Nix, Gunning, and Wilson. None of these individuals is a current or former officer or employee of the Company or any of its subsidiaries. Related party transactions and the independence of the non-employee members of the Company’s Board are discussed in more detail under the following sections, Director Independence and NYSE Requirements, and Certain Relationships and Related Party Transactions, of this Proxy Statement. No executive officer of the Company has served as a director or member of the compensation committee or other board committee of another entity that had an executive officer who served on the Company’s Board or Human Capital Management and Compensation Committee. +Nominating and Corporate Governance Committee +The Nominating and Corporate Governance Committee of the Board of Directors of the Company consists of Jerry W. Nix (Chairman), Patrick J. Gunning, John F. Wilson, Timothy C. Rollins and Amy R. Kreisler. The Nominating and Corporate Governance Committee is responsible for, among other things: +> determining the appropriate qualifications required for the members of the Board; +> recommending Board committee chairs and assignments; +> recommending to our Board nominees for director and to consider any nominations properly made by a stockholder, to make recommendations to our Board of Directors regarding the agenda for our Annual Meetings of Stockholders, and appropriate action to be taken in response to any stockholder proposals; +> conducting periodic reviews of the composition and size of the Board and its committees, as well as the frequency and procedures of Board meetings; +> overseeing compliance with key corporate governance policies, including the Company’s Corporate Governance Guidelines and Independence Guidelines; +> reviewing and approving related party transactions by a sub-committee of independent members: +> reviewing and monitoring the Company’s ESG practices, policies, programs and public disclosures; and +> reviewing and assessing the adequacy of the Company’s Code of Business Conduct and Ethics. +The Company is not required by law or by the NYSE rules to have a nominating committee since we are a controlled corporation as described below under the heading “ Director Independence and NYSE Requirements .” However, we have established a Nominating and Corporate Governance Committee and a written charter to promote responsible corporate governance practices. We currently intend to maintain the committee going forward, but as a controlled company, we rely upon the exemption from the requirement that we have a nominating committee comprised entirely of independent directors. +Director Nominations +Under Delaware law, there are no statutory criteria or qualifications for directors. No criteria or qualifications have been prescribed by the Board at this time. The Nominating and Corporate Governance Committee does not have a formal policy with regard to the consideration of director candidates. As such, there is no formal policy relative to diversity, although as noted below, it is one of many factors that the Nominating and Corporate Governance Committee has the discretion to factor into its decision making. This discretion would extend to how the Committee might define diversity in a particular instance – whether in terms of background, viewpoint, experience, education, race, gender, national origin or other considerations. The Committee acts under the guidance of the Corporate Governance Guidelines approved by the Board of Directors and posted on the Company’s website at www.rpc.net under the Governance section. The Board believes that it should preserve maximum flexibility in order to select directors with sound judgment and other desirable qualities. According to the Company’s Corporate Governance Guidelines, the Board of Directors is responsible for selecting nominees for election to the Board of Directors. The Board has delegated the screening process of director nominees for nomination to the Board and service on the committees of the Board to the Nominating and Corporate Governance Committee. The Nominating and +11 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +Corporate Governance Committee is responsible for determining the appropriate skills and characteristics required of Board members in the context of the then current makeup of the Board. This determination takes into account all factors which the Committee considers appropriate, such as independence, experience, strength of character, mature judgment, technical skills, diversity, age and the extent to which the individual would fill a present need on the Board. The Bylaws provide that nominations for the election of directors may be made by any stockholder entitled to vote for the election of directors. Nominations must comply with an advance notice procedure which generally requires, with respect to nominations for directors for election at an annual meeting, that written notice be addressed to: The Corporate Secretary, RPC, Inc., 2801 Buford Highway NE, Suite 300, Atlanta, Georgia 30329, and received not less than 90 nor more than 130 days prior to the anniversary of the prior year’s annual meeting and set forth among other requirements specified in the Bylaws, the name, age, business address and, if known, residence address of the nominee proposed in the notice, the principal occupation or employment of the nominee for the past five years, the nominee’s qualifications, the class or series and number of shares of capital stock of the Company which are owned beneficially or of record by the person and any other information relating to the person that would be required to be disclosed in a proxy statement or other filings. Other requirements related to the notice are contained in the Bylaws and stockholders are advised to carefully review those requirements to ensure that nominations comply with the Bylaws; stockholders who intend to solicit proxies in support of director nominees other than the Board’s nominees must also comply with SEC Rule 14a-19(b). The Committee will consider nominations from stockholders that satisfy these requirements. +All of the nominees for directors being voted upon at the Annual Meeting to be held on April 23, 2024 are currently serving on the Board of Directors. +Board Leadership STRUCTURE +The Board believes the current leadership structure consisting of a separate Executive Chairman of the Board, Chief Executive Officer and Lead Independent Director represents the appropriate structure for the Company at this time. Richard A. Hubbell is the Executive Chairman of the Board and sets the agendas for Board meetings in consultation with the CEO, Corporate Secretary, and other members of the Board, and presides over all Board meetings and the Annual Meeting of Stockholders. Ben M. Palmer is the President and Chief Executive Officer and sets the operational leadership and strategic direction of the Company. Jerry W. Nix is the Lead Independent Director and serves as the liaison between the Executive Chairman, CEO and the independent directors, sets the agenda for, and presides over, the executive sessions of the non-employee and independent directors, consults with the Executive Chairman and CEO regarding information sent to the Board in connection with Board meetings and is available, if requested by the stockholders, when appropriate, for consultation and direct communication. +Risk Oversight +Our Board of Directors provides oversight of the Company’s overall risk management practices. “Risk” is an extremely broad concept that extends to multiple functional areas and crosses multiple disciplines. As such, risk may be addressed from time to time by the full Board or by one or more of our Committees. Senior management is responsible for identifying and managing material risks that we face while insurable risks and litigation risks are handled primarily by the risk management department. Senior management provides the Board with a summary of insurance coverage annually and updates as deemed necessary. Liquidity risk, credit risk and risks associated with our credit facilities and cash management are handled primarily by our finance department which regularly provides a financial report to both the Audit Committee and to the full Board. Operational, business, regulatory and political risks are handled primarily by senior executive management which regularly provides various operational reports to, among others, the full Board, the Executive Committee and the Audit Committee. +12 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +Cybersecurity Risk Oversight +The Board has delegated its responsibility for oversight of the Company’s cybersecurity and information security framework and risk management to the Audit Committee. The Audit Committee receives information and updates at least quarterly and actively engages with senior leaders with respect to the effectiveness of the Company’s cybersecurity and information security framework, data privacy, and risk management. In addition, the Audit Committee receives reports summarizing threat detection and mitigation plans, audits of internal controls, training and certification, and other cyber priorities and initiatives, as well as timely updates from senior leaders on material incidents relating to information systems security, including cybersecurity incidents. The Audit Committee includes members with experience in risk management including cybersecurity. +RPC’s cybersecurity program is overseen by the Chief Information Officer (CIO) as well as several key members of RPCs Enterprise Technology team including the Principal Security Architect. These key leaders collectively have over 50 years of experience in network security, cybersecurity and enterprise risk management. The Chief Executive Officer and CIO receive regular updates on cybersecurity matters, results of mitigation efforts related to existing risks and cybersecurity incident response and remediation. +Director Independence and NYSE Requirements +Controlled Company Exemption +The Company has elected to be treated as a “controlled company” as defined by NYSE Section 303A.00. This Section provides that a controlled company need not comply with the requirements of Sections 303A.01, 303A.04 and 303A.05 of the NYSE Listed Company Manual. Section 303A.01 requires that listed companies have a majority of independent directors. As a controlled company, this Section does not apply to the Company. Sections 303A.04 and 303A.05 require that listed companies have a nominating and corporate governance committee and a compensation committee, in each case composed entirely of independent directors, and that each of these committees must have a charter that addresses both the committee’s purpose and responsibilities and the need for an annual performance evaluation by the committee. While the Company has a Nominating and Corporate Governance committee and a Human Capital Management and Compensation committee, and each of these committees has a written charter that is available on the Company’s website, it is not required to and does not comply with all of the provisions of Sections 303A.04 and 303A.05. The Company is a “controlled company” because a group that includes Gary W. Rollins, Pamela R. Rollins, Timothy C. Rollins, and Amy R. Kreisler, each of whom is a director of the Company, and certain companies under their control, controls in excess of 50% of the Company’s voting power. This means that they have the ability to determine the outcome of the election of directors at the Company’s annual meetings and to determine the outcome of many significant corporate transactions, many of which only require the approval of a majority of the Company’s voting power. Such a concentration of voting power could also have the effect of delaying or preventing a third party from acquiring the Company at a premium. +The Company’s Audit Committee is composed of four “independent” directors as defined by the Company’s Corporate Governance Guidelines, the NYSE rules, the Exchange Act, SEC regulations thereunder, and the Company’s Audit Committee Charter. All of the members of the Human Capital Management and Compensation Committee, and a majority of the members of Nominating and Corporate Governance Committee are also “independent” directors. The current independent directors of the Company are Jerry W. Nix, Susan R. Bell Patrick J. Gunning, and John F. Wilson. +Independence Guidelines +Under NYSE listing standards, to be considered independent, a director must be determined to have no material relationship with the Company other than as a director. The NYSE standards set forth a nonexclusive list of relationships which are conclusively deemed material. The Company’s Independence Guidelines are posted on the Company’s website at www.rpc.net under the Governance section and include categorical standards for determining independence in specific situations. +13 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +Audit Committee Charter +Under the Company’s Audit Committee Charter, in accordance with NYSE listing requirements and the Securities Exchange Act of 1934, all members of the Audit Committee must be independent of management and the Company. A member of the Audit Committee is considered independent as long as he or she (i) does not accept any consulting, advisory, or compensatory fee from the Company, other than as a director or committee member; (ii) is not an affiliated person of the Company or its subsidiaries; and (iii) otherwise meets the independence requirements of the NYSE and the Company’s Corporate Governance Guidelines. +Nonmaterial Relationships +After reviewing all of the relationships between the independent directors and the Company, the Board of Directors determined that none of independent directors had any relationships that impaired their independence and discussed the following: +● Jerry W. Nix, Susan R. Bell, Patrick J. Gunning, and John F. Wilson served on the Boards of Rollins, Inc. and Marine Products Corporation. Gary W. Rollins, Pamela R. Rollins, Tim Rollins and Amy R. Kreisler are directors of Marine Products Corporation and are part of a control group that has voting control over the Company. Gary W. Rollins and Pamela R. Rollins are directors of Rollins, Inc, and along with Tim Rollins and Amy R. Kreisler, are part of a significant shareholder group that owns a controlling interest in the Company. That signficant shareholder group had a controlling interest in Rollins, Inc. prior to September 2023. Gary W. Rollins and John F. Wilson are also executive officers of Rollins, Inc. +As required by the Independence Guidelines, the Board of Directors unanimously concluded that the above-listed relationships would not affect the independent judgment of the independent directors, based on their experience, character and independent means, and therefore do not preclude an independence determination. All of the members of the Audit Committee are also independent under the heightened standards required for Audit Committee members. The Company’s non-management directors meet at regularly scheduled executive sessions, and the independent directors separately meet at least once annually, without management, in accordance with the NYSE corporate governance listing standards, and Mr. Jerry W. Nix, as Lead Independent Director, presided over the executive sessions held during 2023. +Corporate Governance Guidelines +We have adopted Corporate Governance Guidelines to formalize and promote better understanding of our policies and procedures. At least annually, the Board reviews these guidelines. As required by the rules of the NYSE, our Corporate Governance Guidelines require that our non-management directors meet in regularly scheduled executive sessions each year without management, and such meetings are currently required to occur at least twice annually. +At the Company’s website at www.rpc.net , under the Governance section, you may access a copy of the Company’s Corporate Governance Guidelines, Audit Committee Charter, Human Capital Management and Compensation Committee Charter, Nominating and Corporate Governance Committee Charter, Code of Business Conduct, Code of Business Conduct and Ethics for Directors and Executive Officers and Related Party Transactions Policy, and Independence Guidelines. +Code of Business Conduct +The Company has adopted a Code of Business Conduct applicable to all directors, officers and employees generally, as well as a Code of Business Conduct and Ethics for Directors and Executive Officers and Related Party Transactions Policy applicable to the principal executive officer, principal financial officer, and directors. Both codes are available on the Company’s website at www.rpc.net under the Governance section. +14 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +Director Communications +The Company also has a process for interested parties, including stockholders, to send communications to the Board of Directors, Lead Independent Director, any of the Board committees or the non-management or independent directors as a group. Such communications should be addressed as follows: +Mr. Jerry W. Nix +c/o Internal Audit Department +RPC, Inc. +2801 Buford Highway NE, Suite 300 +Atlanta, Georgia 30329 +The above instructions for communications with the directors are also posted on our website at www.rpc.net under the Governance section. All communications received from interested parties are forwarded to the Board of Directors. Any communication addressed solely to the Lead Director or the non-management or independent directors will be forwarded directly to the appropriate addressee(s). +15 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +DIRECTOR COMPENSATION +Overview of the Non-Employee Director Compensation Program +Members of the Board who are not employees (Non-Employee Directors) receive compensation for their service. As RPC employees, Messrs. Hubbell and Palmer do not receive compensation for their service as Board members. The compensation program for our Non-Employee Directors is intended to provide a total compensation package that enables us to attract and retain qualified and experienced individuals to serve as directors and to align our directors’ interests with those of our stockholders. All Non-Employee Directors are also entitled to reimbursement of expenses for all services as a director, including reasonable travel expenses incurred in connection with required in-person attendance at board and committee meetings, committee participation or special assignments. +The Human Capital Management and Compensation Committee annually reviews each element and the total of our Non-Employee Director Compensation Program and periodically makes recommendations for any changes to the Board. There were no changes made to the Non-Employee Director Compensation Program for 2024. +2023 Annual Non-Employee Director Compensation Program +Cash and Equity Compensation +Under the Director Compensation Program in effect in 2023, our Non-Employee Directors received an annual cash retainer and an annual equity grant in the form of fully vested Company common shares under the Company’s 2014 Equity Stock Incentive Plan (SIP); Committee Chairs and members received additional annual cash retainers. All cash retainers are payable in equal quarterly installments in arrears. For each Non-Employee Director who is elected or appointed for the first time, the first quarterly installment of the annual cash retainers will be paid for the first quarter that ends on or after the date of his or her initial election or appointment, prorated based on service during the quarter. In addition, equity retainers are not granted to the Non-Employee Director who is elected to the Board during the latter half of a year. The following table sets forth the 2023 Non-Employee Director Compensation Program : +Annual +Annual +Annual +Committee +Chair +Board Member +Equity +Member Annual +Retainer +Retainer +Retainer +Cash Retainer +Board/Committee +($) +($) +($) +($) +Board of Directors +— +75,000 +50,000 +— +Lead Independent Director +10,000 +— +— +— +Audit Committee +20,000 +— +— +6,000 +Human Capital Management and Compensation Committee +10,000 +— +— +3,000 +Nominating and Corporate Governance Committee +6,000 +— +— +2,000 +16 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +2023 Director Compensation Table +The following table sets forth the compensation paid to our directors for services rendered as a director for the year ended December 31, 2023. Two of our directors, Richard A. Hubbell and Ben M. Palmer are employees of the Company and each of their employee compensation information is set forth in the Summary Compensation Table under the Executive Compensation section of this Proxy Statement. Directors that are Company employees do not receive any additional compensation for services rendered as a director. +All of the directors shown below have never been employed by the Company or paid a salary or bonus by the Company and do not participate or have never participated in any Company-sponsored retirement plans. +Fees Earned or +Stock +Option +Paid in Cash +Awards (1) +Awards +Total +Name +($) +($) +($) +($) +Susan R. Bell +81,000 +50,000 +— +131,000 +Patrick J. Gunning +100,000 +50,000 +— +150,000 +Amy R. Kreisler +77,000 +50,000 +— +127,000 +Jerry W. Nix +107,000 +50,000 +— +157,000 +Gary W. Rollins +75,000 +50,000 +— +125,000 +Pamela R. Rollins +75,000 +50,000 +— +125,000 +Timothy C. Rollins +77,000 +50,000 +— +127,000 +John F. Wilson +86,000 +50,000 +— +136,000 +(1) All stock awards are fully vested at grant. +Non-Employee Director Stock Ownership Guidelines +Under Stock Ownership Guidelines, Non-Employee Directors are required to beneficially own, within five years of their appointment to the Board, common stock of the Company equal to at least three times the annual equity retainer. Non-Employee Directors are prohibited from selling Company stock granted to such director by the Company for a period of one year from the date of such grant and until such director is in compliance with their ownership requirement under these Stock Ownership Guideline s. +17 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +INFORMATION REGARDING DIRECTOR NOMINEES AND CONTINUING DIRECTORS +The following table sets forth the names, ages as of March 1, 2024, and certain other information for each of the nominees for election as a director at the Annual Meeting and for each of the continuing members of our Board following the Annual Meeting. Full biographical information follows the table. +Current Term +Name +Class +Age +Director Since +Expires +Independent +DIRECTOR NOMINEES: +Gary W. Rollins +II +79 +1984 +2024 +û +Richard A. Hubbell +II +79 +1987 +2024 +û +John F. Wilson +II +66 +2022 +2024 +ü +CONTINUING DIRECTORS: +Amy R. Kreisler +III +54 +2016 +2025 +û +Pamela R. Rollins +III +67 +2019 +2025 +û +Susan R. Bell +III +61 +2021 +2025 +ü +Timothy C. Rollins +III +61 +2022 +2025 +û +Jerry W. Nix +I +78 +2020 +2026 +ü +Patrick J. Gunning +I +64 +2021 +2026 +ü +Ben M. Palmer +I +63 +2022 +2026 +û +Key Attributes, Experience and Skills of Director Nominees and Continuing Directors +Director Nominees +Gary W. Rollins +Chairman of the Board, Rollins, Inc. +Non-Independent Member of the Board of Directors +Gary W. Rollins has served as a Director of RPC, Inc. since 1984. Mr. Rollins has extensive knowledge of the Company’s business and industry having served on the Board of the Company for over 38 years. He served as the Non-Executive Chairman of the Board from August 2020 until May 17, 2022. Mr. Rollins currently serves as the Chairman of the Board of Rollins, Inc., a role he has held since 2021, and previously served as its Vice Chairman from 2013 to 2020 and its Chief Executive Officer from 2001 to 2022. Mr. Rollins previously served as the Non-Executive Chairman of Marine Products Corporation from August 2020 until May 17, 2022 and currently is a member of the Board at Marine Products Corporation. Mr. Rollins previously served as a Director of Genuine Parts Company from 2013 to 2017. Mr. Rollins received a Bachelor of Science in Business Administration from the University of Tennessee. +18 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +Richard A. Hubbell +Executive Chairman of the Board +Chairperson of the Executive Committee +Non-Independent Member of the Board of Directors +Richard A. Hubbell has been Executive Chairman of the Board since May 17, 2022. Prior to that, he served as a Director, the Company’s President since 1987 and its Chief Executive Officer since 2003. This experience has given Mr. Hubbell extensive knowledge of the Company’s business and industry. He is also the Executive Chairman of the Board at Marine Products Corporation and previously served as its President and Chief Executive Officer since 2001. Previously, he was Executive Vice President of Rollins Communications, Inc., a media company. He joined Rollins, Inc. in 1970. Mr. Hubbell received a Bachelor of Arts in Economics from Westminster College. +John F. Wilson +Vice Chairman, Rollins, Inc. +Independent Member of the Board of Directors +Member of the Audit Committee +Member of the Nominating and Corporate Governance Committee +Member of the Human Capital Management and Compensation Committee +John F. Wilson has served as Director of RPC, inc. since 2022. Mr. Wilson has served as a Director of Rollins, Inc. since 2013, and as Vice Chairman of that company since 2020. He previously served as Vice President of Rollins, Inc. from 2011 to 2013, President and Chief Operating Officer from 2013 to 2020, and as President of Orkin, LLC., from 2009 to 2013. Prior to these executive roles, Mr. Wilson held roles at Rollins, Inc. as sales inspector, Branch Manager, Central Commercial Region Manager, Atlantic Division Vice President, and President of the Southeast Division. Mr. Wilson’s experience at Rollins has provided him with significant business management and public company expertise. Mr. Wilson is currently a member of the Board at Marine Products Corporation, and has served on that Board since 2022. Mr. Wilson received a Bachelor of Business Administration in Business Management from the University of Tennessee. +19 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +Continuing Directors +Amy R. Kreisler +Executive Director, The O. Wayne Rollins Foundation +Non-Independent Member of the Board of Directors +Member of the Nominating and Corporate Governance Committee +Amy R. Kreisler has served as a Director of RPC, Inc. since 2016. Ms. Kreisler is a Vice President at LOR, Inc., a private family investment company. She is the Executive Director of The O. Wayne Rollins Foundation and a Trustee of The Ma-Ran Foundation; and Trustee of The Lovett School Board of Trustees, also serving on their Executive Committee. In each of these roles, she oversees grant-making activities and directs the administration of foundation assets. Ms. Kreisler brings both legal and business experience to the Board. She is a long-standing member of the Rollins School of Public Health’s Dean’s Council and a former Board member of the Emory University Board of Visitors. Ms. Kreisler is currently a member of the Board at Marine Products Corporation. Ms. Kreisler is a former attorney of the law firm Arnall Golden Gregory LLP. She holds an English Degree from Hollins University and a Law Degree from The College of William and Mary Law School. +Pamela R. Rollins +Community Leader +Non-Independent Member of the Board of Directors +Pamela R. Rollins has served as a Director of RPC, Inc. since 2019. Ms. Rollins is a Trustee of Young Harris College, where she is the Chairperson of the Development and Investing in the Future Campaign Committees of the Board of Trustees. In these roles, she directs and supervises the activities of both Committees with the goal of securing endowments to Young Harris College for the support of its general educational activities. Ms. Rollins brings leadership and oversight experience to the Board. She is also a Trustee of The O. Wayne Rollins Foundation, a Trustee Emeritus of The Schenck School, a board member of The National Monuments Foundation and a former board member of The Lovett School. Ms. Rollins is currently a member of the Boards at Rollins, Inc. and Marine Products Corporation. Ms. Rollins received a Bachelor of Arts in Family Community Studies from Stephens College. +20 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +Susan R. Bell +Retired Partner, Ernst & Young LLP +Independent Member of the Board of Directors +Member of the Audit Committee +Susan R. Bell has served as a Director of RPC, Inc. since 2021. Ms. Bell brings extensive risk oversight, financial and strategic experience to our Board of Directors. Ms. Bell retired as Partner from Ernst & Young LLP in 2021 after a 36-year career in public accounting. At Ernst & Young LLP, Ms. Bell served as both an audit and advisory partner, led the Southeast Risk Advisory practice and served as the Atlanta Office Managing Partner. Prior to working at Ernst & Young LLP, Ms. Bell started her career at Arthur Andersen LLP in 1984 where she served as an audit partner from 1996 to 2002. Ms. Bell currently serves as a member of the Board of Directors of Marine Products Corporation, Rollins, Inc. and First Advantage Corporation. She also serves on the Board compensation committee of First Advantage Corporation and Board audit committee of Marine Products Corporation and chairs the audit committees of Rollins, Inc. and First Advantage Corporation. In addition, Ms. Bell serves on the boards of the non-profit, National Center for Civil & Human Rights and IWF Georgia, an international women’s forum. Ms. Bell graduated summa cum laude from Mississippi State University with a Bachelor of Professional Accountancy and is a Certified Public Accountant in the states of Georgia and Tennessee. +Timothy C. Rollins +Vice President, LOR, Inc. +Non-Independent Member of the Board of Directors +Member of the Nominating and Corporate Governance Committee +Timothy C. Rollins has served as a Director of RPC, Inc. since 2022. Mr. Rollins is a Vice President at LOR, Inc., a private family investment company, and manages its investments in fluid power distribution and cattle operations. In this role, he manages the Executive Team of Operations and approves major capital expenditures. He brings management and financial experience to the Board. He is also a Trustee of Emory University and of Woodruff Health Sciences Center. He is currently a member of the Board at Marine Products Corporation. Mr. Rollins is also a former Board member of both Emory Board of Visitors and of Emory Department of Psychiatry Board of Visitors. Mr. Rollins holds a Bachelor of Science in Business Administration from Boston University. +21 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +Jerry W. Nix +Former Vice Chairman, Executive Vice President and Chief Financial Officer of Genuine Parts Company +Lead Independent Director of the Board of Directors +Chairperson of the Human Capital Management and Compensation Committee +Chairperson of the Nominating and Corporate Governance Committee +Member of the Audit Committee +Jerry W. Nix has served as a Director of RPC, Inc. since 2020. Mr. Nix brings extensive risk oversight, financial and strategic experience to our Board of Directors. Mr. Nix retired from Genuine Parts Company in 2013 where he served as Vice Chairman from 2005 to 2013, Chief Financial Officer from 2000 to 2013 and as Executive Vice President from 2000 to 2005. Prior to joining Genuine Parts in 1978, Mr. Nix was an auditor with Ernst & Young from 1974 to 1978 and a pilot in the U.S. Air Force from 1968 to 1974. Mr. Nix currently serves on the Board of Directors of Marine Products Corporation and Rollins, Inc., roles he has held since 2020, and on various civic and non-profit boards. Mr. Nix received a Bachelor of Science in Education from Mississippi State University and a Bachelor of Science in Accounting from the University of Florida. +Patrick J. Gunning +Former Chief Financial Officer at The Woodruff Arts Center +Retired Partner, Ernst & Young LLP +Independent Member of the Board of Directors +Chairperson of the Audit Committee +Member of the Nominating and Corporate Governance Committee +Member of the Human Capital Management and Compensation Committee +Patrick J. Gunning has served as a Director of RPC, Inc. since 2021. Mr. Gunning brings extensive risk oversight, financial and strategic experience to our Board of Directors. Mr. Gunning served as the Chief Financial Officer of the Woodruff Arts Center, a non-profit organization, from November 2020 to June 2022. Mr. Gunning retired as a Partner from Ernst & Young LLP in June 2020, a role he had held since May 2002, after a 39-year career in public accounting. Mr. Gunning held multiple leadership roles at Ernst & Young LLP including Southeast Region Leader of the Financial Accounting Advisory Services practice, Southeast Area Industry Leader of the Retail and Consumer Products practice, and lead audit partner for numerous publicly traded and privately owned companies. Prior to joining Ernst & Young LLP, Mr. Gunning worked at Arthur Andersen LLP from 1981 to 2002, where he served as a partner, lead audit partner and Assurance Division Leader. Mr. Gunning currently serves on the Board of Directors of Marine Products Corporation and Rollins, Inc., roles he has held since 2021. Mr. Gunning received a Bachelor of Business Administration in Accountancy from the University of Notre Dame and is a Certified Public Accountant in the state of Georgia. +22 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +Served +Ben M. Palmer +President and Chief Executive Officer +Member of the Executive Committee +Non-Independent Member of the Board of Directors +Ben M. Palmer has served as a Director of RPC, Inc. since 2022. Mr. Palmer has been serving as President and Chief Executive Officer of the Company since May 17, 2022. Previously, he served as Vice President, Chief Financial Officer, and Treasurer of the Company beginning in 1996 and assumed responsibility as Corporate Secretary in 2018. This experience has given Mr. Palmer extensive knowledge of the Company’s business and industry. He is also the President and Chief Executive Officer of Marine Products Corporation and previously served as its Vice President, Chief Financial Officer, Treasurer and Corporate Secretary. Mr. Palmer is currently a member of the Board at Marine Products Corporation. Prior to joining RPC, Inc., he served for three years as the CFO of EQ Services, a commercial mortgage and asset management subsidiary of The Equitable Companies. Prior to that he spent ten years with Arthur Andersen LLP in its audit and business advisory services division. Mr. Palmer has a Bachelor of Science in Business Administration from Auburn University. +23 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +PROPOSAL 1: ELECTION OF DIRECTORS +Overview +Our Board of Directors is currently composed of 10 members. In accordance with our Amended and Restated Bylaws (Bylaws), our Board is divided into three classes of directors. At the Annual Meeting three Class II directors will be elected for a three-year term, so that the term of office of one class of directors shall expire in each year. Each director’s term continues until the election and qualification of his or her successor, or such director’s earlier death or resignation. Seven other individuals serve as directors but are not standing for re-election because their terms as directors extend past this Annual Meeting pursuant to provisions of the Company’s Bylaws, which provide for the election of directors for staggered terms, with each director serving a three-year term. +Nominees +At the Annual Meeting, Garry W. Rollins, Richard A. Hubbell, and John F. Wilson will be nominated to serve as Class II Directors. The nominees for election at the 2024 Annual Meeting are currently directors of the Company. Unless authority is withheld, the proxy holders will vote for the election of each nominee named above as a director. Although management does not contemplate the possibility, in the event any nominee is not a candidate or is unable to serve as director at the time of the election, unless authority is withheld, the proxies will be voted for any nominee who shall be designated by the present Board of Directors and recommended by the Nominating and Corporate Governance Committee to fill such vacancy. +Our Board of Directors recommends a vote FOR the Class II Director Nominees above. +24 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +AUDIT MATTERS +Report of the Audit Committee +Management is responsible for the Company’s system of internal control over financial reporting, the preparation of its consolidated financial statements in accordance with accounting principles generally accepted in the United States, and the financial reporting process, including management’s assessment of Internal Control over Financial Reporting (ICFR). +The Company’s independent registered public accounting firm is responsible for performing an integrated independent audit of the Company’s consolidated financial statements and management reports on ICFR in accordance with the standards of the Public Company Accounting Oversight Board (PCAOB) and for issuing reports thereon. The Audit Committee’s responsibility is generally to monitor and oversee these processes, as described in the Audit Committee Charter. It is not the duty of the Audit Committee to plan or conduct audits, nor is it the Audit Committee’s responsibility to determine that the Company’s financial statements are complete and accurate and in accordance with generally accepted accounting principles; that is the responsibility of management. The Audit Committee presently consists of four independent directors, all of whom are considered financially literate under NYSE rules. +In fulfilling its oversight responsibilities with respect to the year ended December 31, 2023, the Audit Committee: +> Approved the engagement and terms of service of Grant Thornton LLP as the Company’s independent registered public accounting firm for the year ended December 31, 2023; +> Reviewed with management and the Company’s independent registered public accounting firm, the interim financial information included in the Company’s Forms 10-Q prior to their being filed with the SEC, as well as the financial information in each quarterly earnings release; +> Reviewed and discussed with the Company’s management (including internal audit) and the Company’s independent registered public accounting firm, the audited consolidated financial statements of the Company as of December 31, 2023 and 2022 and for the three years ended December 31, 2023 and the related ICFR; +> Discussed with the Company’s independent registered public accounting firm matters required to be discussed by the applicable requirements of the PCAOB and the SEC; and +> Received from the Company’s independent registered public accounting firm the written disclosures and the letter in accordance with the requirements of the PCAOB regarding the firm’s communications with the Audit Committee concerning independence and discussed with such firm its independence from the Company. +Based upon the review and discussions referred to previously, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements of the Company and subsidiaries as of December 31, 2023 and for the year then ended December 31, 2023 be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 for filing with the SEC. +In giving its recommendation to the Board of Directors, the Audit Committee has relied on (i) management’s representation that such financial statements have been prepared with integrity and objectivity and in conformity with accounting principles generally accepted in the United States of America; and (ii) the reports of the Company’s independent registered public accounting firm with respect to such financial statements and related internal controls. +Respectfully submitted by the Audit Committee of the Board of Directors +Patrick J. Gunning, Chairperson +Susan R. Bell +Jerry W. Nix +John F. Wilson +25 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +This report of the Audit Committee is required by the SEC and, in accordance with the SEC’s rules, will not be deemed to be part of or incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933, as amended (the “Securities Act”), or under the Exchange Act, except to the extent that we specifically incorporate this information by reference, and will not otherwise be deemed “soliciting material” or “filed” under either the Securities Act or the Exchange Act. +Independent Registered Public Accounting Firm +Principal Auditor +Grant Thornton LLP served as the Company’s independent registered public accounting firm for the fiscal years ended December 31, 2023 and 2022. +The Audit Committee has appointed Grant Thornton LLP as RPC, Inc.’s independent registered public accounting firm for the fiscal year ending December 31, 2024. Grant Thornton LLP has served as the Company’s independent auditors since 2004 and is considered by management to be well qualified. Representatives of Grant Thornton LLP are expected to be present at the Annual Meeting, and they will have the opportunity to make a statement if they desire to do so and are expected to be available to respond to appropriate questions. See “Proposal No 2—Ratification of Appointment of Independent Registered Public Accounting Firm.” +Aggregate fees billed by the Company’s independent registered public accounting firm are set forth below: +2023 +2022 +Audit fees (1) +$ +1,154,500 +$ +1,190,500 +Audit related fees +— +— +Tax fees +— +— +All other fees +— +— +(1) Audit fees represent fees for professional services provided in connection with the integrated audit of our financial statements, including internal controls over financial reporting, review of our quarterly financial statements, and audit services provided in connection with other statutory or regulatory filings. +Pre-approval of Services +All of the services described above were pre-approved by the Company’s Audit Committee. The Audit Committee has determined that the payments made to its independent registered public accounting firm for these services are compatible with maintaining such auditors’ independence. A majority of the hours expended on the principal accountant’s engagement to audit the financial statements of the Company for the years 2023 and 2022 were attributable to work performed by full-time, permanent employees of the principal accountant. The Audit Committee has no pre-approval policies or procedures other than as set forth below. +The Audit Committee is directly responsible for the appointment and termination, compensation, and oversight of the work of the independent registered public accounting firm, including resolution of disagreements between management and the independent registered public accounting firm regarding financial reporting. The Audit Committee is responsible for pre-approving all audit and non-audit services provided by the independent public accountants and ensuring that they are not engaged to perform the specific non-audit services proscribed by law or regulation. The Audit Committee has delegated pre-approval authority to the Chairperson, and the Chairperson may further delegate approval authority to another member of the Committee from time to time. The decisions of any Audit Committee member to whom pre-approval authority is delegated must be presented to the full Audit Committee at its next scheduled meeting. +26 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +PROPOSAL 2: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +Overview +The Audit Committee of the Board of Directors has appointed Grant Thornton LLP as the Company’s independent registered public accounting firm to audit our consolidated financial statements for the fiscal year ending December 31, 2024. Grant Thornton has served as our independent registered public accounting firm since 2004. +During fiscal 2023, Grant Thornton LLP served as our independent registered public accounting firm. Representatives of Grant Thornton LLP are expected to attend the Annual Meeting and will have the opportunity to respond to appropriate questions and, if they desire, to make a statement. +Although we are not required to seek ratification of this appointment, the Audit Committee and the Board of Directors believes it is appropriate to do so. If stockholders do not ratify the appointment of Grant Thornton LLP, the current appointment will stand, but the Audit Committee will consider that stockholder action in determining whether to retain Grant Thornton LLP as our independent registered public accounting firm for future fiscal years. +Our Board of Directors recommends a vote FOR the ratification of the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm for the 2024 fiscal year. +27 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +PROPOSAL 3: APPROVAL OF THE 2024 STOCK INCENTIVE PLAN +Overview +The 2024 Stock Incentive Plan (the "2024 Plan”) is intended to replace the Company’s 2014 Employee Stock Incentive Plan (the "2014 Plan”), which expires in April 2024. If the 2024 Plan is approved, all future equity compensation awards by the Company will be made under the 2024 Plan. Under the 2024 Plan, the Company can tailor incentive awards to support its corporate objectives and to keep pace with competitive business practices. Generally, the 2024 Plan is intended to strengthen the mutuality of interests between award recipients and the Company’s stockholders. +As adopted by the Board of Directors, the 2024 Plan will reserve 8 million shares of Company Common Stock (“Shares”) effective upon and subject to approval by the Company’s stockholders. As of March 1, 2024, this reserve of Shares represented approximately 4% of our currently outstanding shares of Common Stock and 2% of our currently authorized shares of Common Stock. +Description of the 2024 Stock Incentive Plan +A copy of the 2024 Plan is attached to this Proxy Statement as Appendix A, and a summary of the 2024 Plan is set forth below. The summary is qualified in its entirety by reference to the 2024 Plan. +The Company intends to register the shares available for issuance under the 2024 Plan on a Registration Statement on Form S-8 under the Securities Act of 1933, as amended, as soon as is practicable after receiving stockholder approval. +Summary Description of the 2024 Plan +The following summarizes the major provisions of the 2024 Plan and is qualified in its entirety by the text of the 2024 Plan, which is attached as Appendix A to this Proxy Statement. +Generally, the 2024 Plan authorizes the Human Capital Management and Compensation Committee (or, if so designated by the Board of Directors, the full Board of Directors or some other committee of Non-Employee Directors) to grant to directors, officers and other key employees ("Participants”) stock options and other equity compensation more fully described below. The Human Capital Management and Compensation Committee may delegate its powers and duties under the 2024 Plan subject to the limitations set forth in the 2024 Plan. +Eligibility. Directors, officers and other key employees of the Company or its subsidiaries and affiliates who are responsible for or contribute to the growth and/or profitability of the business of the Company are eligible to be granted awards under the 2024 Plan. Notwithstanding the foregoing, incentive stock options (as defined in the 2024 Plan) may only be granted to employees of the Company and any of its subsidiaries or affiliates that are a "subsidiary corporation” (within the meaning of Section 424(f) of the Internal Revenue Code of 1986, as amended (the "Code”) and stock options and stock appreciation rights may be granted only to individuals with respect to whom the Shares will qualify as "service recipient stock” (within the meaning of Section 409A of the Code). Furthermore, no director who is not also an employee of the Company is eligible to receive incentive stock options. +28 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +Awards That May Be Issued Under the 2024 Plan. The 2024 Plan authorizes the grant of stock options, stock appreciation rights ("SARs”), and any other type of award valued by reference to (or otherwise based on) Shares, including, without limitation, restricted stock, restricted stock units, performance accelerated restricted stock, performance stock and performance units, as well as performance-based incentives payable in cash. If the Shares covered by an award are not delivered because the award is forfeited or canceled, or because the award is settled in cash or because such Shares are withheld from the award or otherwise tendered, physically or by attestation, to pay the exercise or purchase price of an award granted under the 2024 Plan or to satisfy applicable tax withholding obligations incurred in connection with the award, such Shares will not be deemed delivered for purposes of determining the number of Shares remaining available for delivery. The maximum number of Shares available for delivery under the 2024 Plan will be unaffected by the availability of Shares under any plan assumed in connection with the acquisition of an interest in another company or awards granted upon assumption of, or in substitution for, outstanding awards previously granted by a company or other entity acquired directly or indirectly by the Company or with which the Company combines. +The Human Capital Management and Compensation Committee has full authority to grant, pursuant to the terms of the 2024 Plan (i) stock options, including, without limitation, incentive stock options ("ISO”), non-qualified options ("NQOs”) and premium stock options, (ii) SARs and/or (iii) other stock-based awards, including, without limitation, restricted stock, restricted stock units (stock units are grants of a right to receive shares of stock in the future), performance-accelerated restricted stock, performance stock and performance units (as such terms are defined in the 2024 Plan), as well as performance-based incentives payable in cash. +Additional Plan Limitations. The 2024 Plan imposes additional limitations. Under the 2024 Plan, no more than 8 million Shares may be issued pursuant to ISOs. In addition, no one individual may be granted options, SARs or other stock-based awards representing over 200,000 Shares during any fiscal year. There is no maximum number of persons eligible to receive awards under the 2024 Plan. The Company estimates that approximately 220 persons are currently eligible, including three executive officers and eight Non-Employee Directors. +Plan Administration. The 2024 Plan may be administered by the Board of Directors, or any committee (the "Committee”) of at least two "Non-Employee Directors” (as that term is defined by Rule 16b-3 under the Exchange Act). The Company expects the 2024 Plan to be administered by the Human Capital Management and Compensation Committee which will have the authority to select participants and determine the timing, type, size and terms of each award, and to make all other determinations necessary or desirable in the interpretation and administration of the 2024 Plan. The Committee may also determine whether awards may be settled in cash. +Repricing and Amendment of Awards. If the exercise or base prices of any options or SARs exceed the current fair market value (as defined in the 2024 Plan) of the Shares, the Committee may, without stockholder approval, reprice such options or SARs to a price no lower than the then-current fair market value of the Shares. The Committee may also, without stockholder approval, amend any award to provide its holder with additional rights or benefits of the type otherwise permitted by the 2024 Plan, including extending its term. However, no amendment to the terms of any outstanding award that is subject to Section 409A of the Code may cause the award to violate such Section, no amendment to the terms of an outstanding award that is not subject to Section 409A of the Code may cause the award to become subject to such Section, and the term of an outstanding award may not be extended beyond the earlier of the latest date the award would have expired by its original terms or the tenth anniversary of the original grant date of the award, except to the extent that an award cannot be exercised because such exercise would violate the federal, state or local laws, then the expiration of such award shall automatically be tolled for the period in which such exercise would violate applicable law but not more than thirty (30) days. +Termination of the Plan. The 2024 Plan will terminate ten years from the date of stockholder approval. +Transferability . Except as may be provided by the Human Capital Management and Compensation Committee, awards will not be transferable except by will or by the laws of descent and distribution. +29 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +Termination of Employment. Generally, except as noted below, options and SARs are forfeited if the recipient’s employment or performance of services terminates before the award is exercised. +Clawback . Awards will be subject to the Company clawback policy and the applicable rules of the NYSE, and the administrator also may specify in an award agreement that the participant’s rights, payments, and benefits with respect to an award will be subject to reduction, cancellation, forfeiture, recoupment, reimbursement, or reacquisition upon the occurrence of certain specified events. The administrator may require a participant to forfeit, return, or reimburse the Company all or a portion of the award and any amounts paid under the award pursuant to the terms of the clawback policy or applicable laws. +However, the Human Capital Management and Compensation Committee may provide otherwise in certain instances, and there are limited exceptions where employment terminates because of death, disability or retirement. Generally, if an option or SAR holder’s employment terminates due to: +> death or disability, options or SARs exercisable at termination (or whose vesting was accelerated by the Committee) remain exercisable for twelve months or for the remaining term of the option, if shorter; and +> normal or approved early retirement, options or SARs exercisable at termination remain exercisable for a period of three months, less one day, or for the remaining term of the option, if shorter. +The Human Capital Management and Compensation Committee has discretion to alter the extension periods. Unless otherwise determined by the Committee, all unvested other stock-based awards, including without limitation restricted stock, restricted stock units and performance-accelerated restricted stock, are forfeited upon termination of the Participant’s employment for any reason other than death, disability or normal or approved early retirement. In the event of death, the 2024 Plan provides that all restricted stock will vest unless otherwise determined and, in the event of disability or normal or approved early retirement for restricted stock and restricted stock units, the 2024 Plan provides that a pro rata portion of such restricted stock or restricted stock units will vest based on the elapsed portion of the applicable vesting period unless otherwise determined. Performance stock units will generally vest as set forth above based on assumption that target performance levels have been achieved. +Option Pricing. The Human Capital Management and Compensation Committee has the authority to fix the exercise price of option awards. Generally, the exercise price of an ISO must be at least 100 percent of the fair market value of the Shares at the time of grant. However, if the grantee is a person with over ten percent of the voting power of the Company (or any subsidiary or parent of the Company), then the exercise price must be at least 110 percent of such fair market value. The exercise price of NQOs must be at least 100 percent of such fair market value. On March 1, 2024, the closing price of the Shares on the New York Stock Exchange was $7.51 per share. +Option Term. The term of each stock option will be fixed by the Human Capital Management and Compensation Committee, but no stock option shall be exercised more than ten years (or, in the case of an ISO granted to an employee who owns stock possessing more than ten percent of the total combined voting power of all classes of stock of the Company or any of its subsidiary or parent corporations, more than five years) after the date the option is granted. Options will become exercisable at such times and in such installments as the Human Capital Management and Compensation Committee shall determine. Payment of the option price must be made in full at the time of exercise in such form (including, but not limited to, cash, unrestricted common stock held for at least six months, or any combination thereof) as the Committee may determine. +Certain ISO Restrictions. In order to comply with certain federal tax restrictions, no employee may be granted an incentive stock option if, taking into account such option, the aggregate fair market value of the stock with respect to which incentive stock options are exercisable for the first time by such employee during any given calendar year, under this and all other incentive stock option plans of the Company, would exceed $100,000. +30 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +Cashless Exercises . Payment in full or in part of the exercise price of a Stock Option may be made in the form of unrestricted Shares, including shares withheld in connection with the exercise of the Stock Option, based, in each case, on the fair market value of the shares on the date the Stock Option is exercised, unless it shall be determined by the Human Capital Management and Compensation Committee, at or after grant, in its sole discretion, that unrestricted Shares are not a permissible form of payment with respect to any Stock Option or Options. If permitted by the Committee, a Participant may also elect to pay the exercise price upon the exercise of an option by irrevocably authorizing a third party to sell shares of stock (or a sufficient portion of the shares) acquired upon exercise of the option and remit to the Company a sufficient portion of the sale proceeds to pay the entire exercise price and any tax withholding resulting from such exercise. +SARs. Upon the exercise of a SAR, the holder shall be entitled to receive an amount in cash and/or Shares equal in value to the excess of the fair market value of the Shares on the date of exercise over the fair market value of the Shares on the date of grant, multiplied by the number of SARs exercised, with the Committee having the right to determine the form of payment. +Restricted Stock Awards. A restricted stock award is an award of a given number of shares of common stock which are subject to a restriction against transfer and to a risk of forfeiture during a period set by the Human Capital Management and Compensation Committee. During the restriction period, the Participant generally has the right to vote, and receive dividends on the shares. +Performance-Based Compensation. The Human Capital Management and Compensation Committee may designate whether any awards being granted to any Participant are intended to be “performance-based compensation,” as determined by the Human Capital Management and Compensation Committee in its sole discretion. Any such awards designated as intended to be “performance-based compensation” may be conditioned on the achievement of one or more performance measures. The performance measures that may be used by the Human Capital Management and Compensation Committee for such awards may be based on any one or more of the following, as selected by the Committee, or such other measures as the Human Capital Management and Compensation Committee shall determine: increase in stock price, return on capital or increase in pretax earnings of the Company and/or one or more divisions and/or subsidiaries, return on stockholders’ equity of the Company, increase in earnings per share of the Company, sales of the Company and/or one or more divisions and/or subsidiaries, pretax earnings of the Company and/or one or more divisions and/or subsidiaries, earnings before interest, taxes, depreciation and amortization (“EBITDA”) of the Company and/or one or more divisions and/or subsidiaries, adjusted EBITDA of the Company and/or one or more divisions, net earnings of the Company and/or one or more divisions and/or subsidiaries, control of operating and/or non-operating expenses of the Company and/or one or more divisions and/or subsidiaries, margins of the Company and/or one or more divisions and/or subsidiaries, cash flow of the Company and/or one or more divisions and/or subsidiaries, including without limitation, operating cash flow, free cash flow, and non-GAAP operating cash flow, and market price of the Company’s securities. +Amendment and Termination. The 2024 Plan is subject to amendment or termination by the Board of Directors without stockholder approval but no amendment may without stockholder approval (i) increase the number of Shares that may be issued under the 2024 Plan (except by certain adjustments provided for under the 2024 Plan); (ii) change the class of persons eligible to receive ISOs under the 2024 Plan; (iii) change the requirements regarding the exercise price; or (iv) amend the 2024 Plan in a manner that would require approval of the Company’s stockholders under applicable law, regulation or rule. Options may not be granted under the 2024 Plan after the date of termination of the 2024 Plan, but options granted prior to that date shall continue to be exercisable according to their terms. +31 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +Changes in Capital Structure. If the Company effects a subdivision or consolidation of Shares or other capital readjustment, the payment of a stock dividend, or other increase or reduction of the number of shares of the Company stock outstanding, without receiving compensation therefor in money, services or property, then the terms and conditions of the 2024 Plan and any then outstanding awards shall be adjusted proportionally in order to prevent dilution or enlargement of benefits or potential benefits under the 2024 Plan and awards made under the 2024 Plan. +Merger and Consolidation. In the event the Company is a party to a merger or other reorganization, outstanding awards shall be subject to the agreement of merger or reorganization. That agreement may provide, without limitation, for the assumption of outstanding awards by the surviving corporation or its parent, for their continuation by the Company (if the Company is a surviving corporation), for their cancellation, for accelerated vesting and accelerated expiration, or for settlement in cash. +New Plan Benefits +As of the date of this proxy statement, no awards have been granted under the 2024 Plan and none will be granted unless and until the 2024 Plan is approved by the Company’s stockholders. Because of the discretionary nature of any future awards under the 2024 Plan, the amount of such awards is not determinable at this time with respect to the Company’s directors, executive officers, including the executive officers named in the Summary Compensation Table, and the Company’s other employees. Information regarding restricted stock and performance share units granted in 2023 to the executive officers of the Company under the Company’s 2014 Plan is set forth in the table captioned "Grants of Plan-Based Awards,” and information regarding outstanding options and restricted stock under the Company’s stock plans to the Company’s executive officers is set forth in the table captioned "Outstanding Equity Awards at Fiscal Year-End.” In 2023, grants of restricted stock covering 1,181,500 Shares were made to the non-executive employee group under the 2014 Plan . In addition, target performance shares totaling 56,250 shares were granted under the 2014 Plan with a maximum payout of 112,500 shares without the effect of total shareholder return, which could result in an upward adjustment of 20%. Except as referred to in the preceding sentences, there were no other grants in 2023 under Company plans. +No awards have been granted under the 2024 Plan that are subject to shareholder approval. The Human Capital Management and Compensation Committee in its sole discretion will determine the number and types of awards that will be granted under the 2024 Plan. If the 2024 Plan is approved by our shareholders, the Human Capital Management and Compensation Committee may make grants with respect to 2024 at levels that are similar to 2023. +Federal Income Tax Consequences +The following discussion addresses certain anticipated United States federal income tax and certain employment tax consequences to the Company and to recipients of awards made under the 2024 Plan who are citizens or residents of the United States for federal income tax purposes. It is based on the Code and interpretations thereof in effect on the date of this proxy statement. This summary is not intended to be exhaustive and, among other things, does not describe state, local, or foreign tax consequences. Moreover, it is not intended as tax advice to any individual. +Options. +Grant of Options. There will be no federal income tax consequences to the grantee of an option or the Company upon the grant of either an ISO or an NQO under the 2024 Plan. +32 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +Exercise of NQOs. Upon the exercise of an NQO, the grantee generally will recognize ordinary compensation income, subject to withholding and employment taxes, in an amount equal to: (a) the fair market value, on the date of exercise, of the acquired shares of common stock, less (b) the exercise price paid for those shares. The Company will be entitled to a tax deduction equal to the compensation income recognized by the grantee. Gains or losses recognized by the grantee upon a subsequent disposition of the shares will be treated as long-term capital gain or loss if the shares are held for more than a year from the date of exercise. Such gains or losses will be short-term gains or losses if the shares are held for one year or less. For purposes of computing gain or loss, the grantee’s basis in the shares received will be the exercise price paid for the shares plus the amount of income, if any, recognized upon exercise of the option. +Exercise of ISOs. Upon the exercise of an ISO, the grantee will recognize no immediate taxable income for regular income tax purposes, provided the grantee was continuously employed by the Company or a subsidiary from the date of grant through the date which is three months prior to the date of exercise (or through the date which is one year prior to the exercise date in the case of termination of employment as a result of total disability). The exercise of an ISO may, however, result in alternative minimum tax liability to the grantee. If the grantee retains the shares acquired upon the exercise of the ISO for more than two years from the date of grant and more than one year from the date of exercise, any gain on a later sale of the shares will be treated as long-term capital gain, and the Company will not be entitled to any tax deduction with respect to the ISO. If the grantee disposes of the shares of common stock received upon the exercise of an ISO before the expiration of the two-year and one-year holding periods discussed above, a "Disqualifying Disposition” occurs. In that event, the grantee will have ordinary compensation income, and the Company will be entitled to a corresponding deduction, at the time of such disposition in the amount of such income. +Restricted Stock, Restricted Stock Units, Performance Units and Performance Stock. A recipient of restricted stock or restricted stock units generally does not recognize income and the Company generally is not entitled to a deduction at the time of grant. Instead, the recipient recognizes compensation income and the Company is entitled to a deduction on the date on which vesting occurs ("Vesting Date”) in the case of restricted stock, or on the date on which stock is issued or cash is paid in the case of restricted stock units. The amount of income recognized and the amount of the Company’s deduction will equal the fair market value of the vested stock or stock unit on the Vesting Date in the case of restricted stock, or on the date on which stock is issued or cash is paid in the case of restricted stock units. However, the recipient may elect to include in income the fair market value of restricted stock at the time of grant by making a timely election under Section 83(b) of the Code. If such Section 83(b) election is made, the Company’s deduction will equal the fair market value of the restricted stock at the time of grant and there is no further recognition of income when the restrictions lapse. If a recipient of restricted stock desires to make a Section 83(b) election, it must be made within thirty days from the date the restricted stock is issued. +A participant generally will recognize no income upon the grant of a performance unit or performance stock award. Upon the settlement of such awards, participants normally will recognize ordinary income in the year of receipt in an amount equal to the cash received and the fair market value of any cash or nonrestricted Shares received. If the participant is an employee, such ordinary income generally is subject to withholding of income and employment taxes. Upon the sale of any Shares received, any gain or loss, based on the difference between the sale price and the fair market value on the date the ordinary income tax event occurs, will be taxed as capital gain or loss. +Any dividends on restricted stock or performance shares, or dividend equivalents with respect to restricted stock units or performance units, paid to the recipient prior to the Vesting Date will be includible in the recipient’s income as compensation and deductible as such by the Company. +33 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +Section 162(m) Limitation. In general, Section 162(m) of the Code limits to $1 million the federal income tax deductions that may be claimed in any tax year of the Company with respect to certain compensation payable to any employee who is the chief executive officer, chief financial officer or one of the other three highest paid executive officers of the Company on the last day of that tax year. Under the tax rules in effect before 2018, the Section 162(m) deduction limit did not apply to "performance-based compensation” paid under a plan that met the requirements of Section 162(m) of the Code and the regulations promulgated thereunder. However, the U.S. Tax Cuts and Jobs Act of 2017 eliminated this performance-based compensation exception effective January 1, 2018, subject to a special rule that “grandfathers” certain awards and arrangements that were in effect on or before November 2, 2017. As a result, compensation awarded under the 2024 Plan in excess of $1 million to a named executive officer generally is not deductible. +Golden Parachute Tax and Section 280G of the Internal Revenue Code. The Human Capital Management and Compensation Committee may provide for immediate vesting of all then outstanding unvested awards upon a change in control of the Company. That immediate vesting may cause certain amounts to be characterized as "parachute payments” under Section 280G of the Code for certain employees of the Company. Section 280G of the Code generally applies to employees or other individuals who perform services for the Company if, within the 12-month period preceding the change in control, the individual is an officer of the Company, a shareholder owning more than 1% of the stock of the Company, or a member of the group consisting of the lesser of the highest paid 1% of the employees of the Company or the highest paid 250 employees of the Company. An employee generally is deemed to have received a parachute payment in the amount of compensation that is contingent upon an ownership change if such compensation exceeds, in the aggregate, three times the employee’s Base Amount. The "Base Amount” is generally the employee’s average annual compensation for the five preceding years. An employee’s "excess parachute payment” is the excess of the employee’s total parachute payments over the Base Amount. An employee will be subject to a 20% excise tax under Section 4999 of the Code, and the Company will be denied a deduction for any "excess parachute payment.” +Deferred Compensation . Awards made under the 2024 Plan, including awards granted under the 2024 Plan that are considered to be deferred compensation for purposes of Section 409A of the Internal Revenue Code, must satisfy the requirements of Code Section 409A to avoid adverse tax consequences to recipients, which could include the inclusion of amounts not payable currently in income and interest and an additional tax on any amount included in income. The Company intends to structure any awards under the 2024 Plan such that the requirements under Code Section 409A are either satisfied or are not applicable to such awards. +Certain Interests of Directors and Management +In considering the recommendations of the Board of Directors with respect to the 2024 Plan, stockholders should be aware that members of the Board of Directors and management have certain interests that may present them with conflicts of interest in connection with the proposal to approve the 2024 Plan. As discussed above, directors and employees of the Company are eligible for the grant of awards under the 2024 Plan. The Board of Directors believes that approval of the 2024 Plan will advance the interests of the Company and its stockholders by encouraging employees and directors to make significant contributions to the long-term success of the Company. +Required Vote +The approval of the 2024 Stock Incentive Plan will require the affirmative vote of a majority of shares present in person or represented by proxy and entitled to vote at the meeting with respect to this proposal provided that a quorum is present at the Annual Meeting. +34 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +Securities Authorized for Issuance Under Equity Compensation Plans +The following table sets forth certain information regarding equity compensation plans as of December 31, 2023: +(C) +Number of Securities +Remaining Available for +(A) +(B) +Future Issuance Under +Number of Securities To +Weighted Average +Equity Compensation +Be Issued Upon Exercise of +Exercise Price of +Plans (Excluding +Outstanding Options, +Outstanding Options, +Securities Reflected in +Plan category +Warrants and Rights +Warrants and Rights +Column (A)) (1) +Equity compensation plans approved by security holders +— +$ +— +911,997 +Equity compensation plans not approved by security holders +— +— +— +Total +— +$ +— +911,997 +(1) All of the securities can be issues in the form of restricted stock or other stock awards. +Our Board of Directors recommends a vote FOR the Proposal to Approve the 2024 Stock Incentive Plan. +35 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +EXECUTIVE OFFICERS +The following narratives summarize the business experience over at least the last five years of our current executive officers, other than Messrs. Palmer and Hubbell whose business experience is described above in the section titled Information Regarding Director Nominees and Continuing Directors of this Proxy Statement. +Michael L. Schmit +Vice President, Chief Financial Officer, Treasurer and Corporate Secretary +Michael L. Schmit has been Vice President, Chief Financial Officer, Treasurer and Corporate Secretary of the Company since May 17, 2022. He has also served as the Vice President, Chief Financial Officer, Treasurer and Corporate Secretary of Marine Products Corporation since May 17, 2022. Previously, he served as Chief Accounting Officer at Schweitzer-Mauduit International, Inc., a global performance materials engineering and manufacturing company, since 2019. In addition, he served as the Chief Accounting Officer and Controller of Chart Industries, Inc., a global manufacturer of highly engineered equipment servicing the clean energy and industrial gas markets in 2019 and 2018 and as Corporate Controller in 2017. Earlier in his career, Mr. Schmit worked for other public and private companies, including Georgia-Pacific, LLC, in various financial and risk management roles. He also worked in public accounting with Ernst & Young, both in the U.S. and Australia. Mr. Schmit holds a B.S. in Business Administration from the University of Nebraska with a major in accounting and holds a CPA certification as well as several other related professional designations. +36 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +COMPENSATION DISCUSSION AND ANALYSIS +This Compensation Discussion and Analysis describes our executive compensation program and provides an overview of how the Human Capital Management and Compensation Committee made compensation decisions in 2023 for each of our named executive officers (NEOs) which consist of our Principal Executive Officer, our Principal Financial Officer and our Executive Chairman of the Board who were serving in such capacities in fiscal 2023. For a complete understanding of the executive compensation program, this disclosure should be read in conjunction with the Summary Compensation Table and other executive compensation-related disclosures included in this Proxy Statement. +In fiscal year 2023, our named executive officers were: +Named Executive Officer +Position with the Company in 2023 +Ben M. Palmer +President and Chief Executive Officer +Michael L. Schmit +Vice President, Chief Financial Officer, Treasurer and +Corporate Secretary +Richard A. Hubbell +Executive Chairman of the Board +Executive Summary +Fiscal Year 2023 Financial Highlights +> Revenues increased 1% to $1.6 billion, compared to prior year. +> Net income was $195.1 million, a decrease compared to $218.4 million net income in prior year. +> Net cash flow from operating activities was $394.8 million, an increase of $193.5 million compared to prior year. +> The Company remained debt-free, paid $34.6 million in dividends, and repurchased $21.1 million of common stock in 2023. +> The Company acquired Spinnaker Oilwell Services, LLC, a leading provider of oilfield cementing services, effective July 1, expanding RPC’s existing cementing operations and customer relationships. +37 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +Executive Compensation Practices and Governance Policies +What We Do +What We Don’t Do +✓ +Pay for Performance +Majority of total compensation awarded to our named executive officers is directly linked to the Company’s financial performance. +x +No Tax Gross-Ups +Our named executive officers are not entitled to tax gross-ups under any of our compensation programs or policies. +✓ +Align the Interests of Executives with those of Our Stockholders +Equity compensation represents a significant portion of our named executive officers’ total compensation. +x +No Hedging or Pledging +Under our Insider Trading Policy, we prohibit our employees, including our named executive officers and the members of our board of directors, from hedging or pledging our securities. +✓ +Stock Ownership Guidelines +We maintain strong stock ownership requirements for our directors and executive officers. +x +No Employment Contract +There are no agreements or understandings between the Company and any executive officer that guarantee continued employment or guarantee any level of severance or compensation, including incentive or bonus payments, other than annual restricted stock grant agreements. +✓ +Independent Compensation Committee +Our Human Capital Management and Compensation Committee is composed solely of independent directors. +RPC Goals +How Goal was Reinforced in Our 2023 Compensation Program +Generate strong financial performance and returns for our stockholders +Ø +Most of the executive compensation was delivered in the form of Annual Cash Incentives and Long-Term Incentive Compensation which align with stockholder interests. +Ø +All of the 2023 Annual Incentive Compensation payouts were based on financial performance metrics. Our 2023 Annual Incentive Compensation rewarded executives for cash flow generation and profitability using Operating Cash Flow (OCF), a non-GAAP measure, as the primary performance metric. +Ø +Our Long-Term Incentive Compensation incentivizes the creation of stockholder value through the grant of equity compensation including the use of absolute and relative TSR performance goals for a portion of the Performance Share Unit awards (PSU). +Attract and retain highly qualified individuals, with a strong emphasis on teams working together to capitalize on opportunities and solve problems +Ø +We did not target a specific market percentile for executive compensation. Instead, executive compensation was set based on a holistic review of several factors, including market pay levels, individual performance and qualifications, and executive tenure. +Ø +Our annual and long-term Incentive programs generally reward company-wide results rather than performance against individual objectives. +Ø +Our named executives’ compensation includes Long-Term Incentives that vest over a multi-year period to encourage their retention. +38 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +General Compensation Objectives and Guidelines +The Company is engaged in a highly competitive industry. The success of the Company depends on our ability to attract and retain highly qualified and motivated executives. In order to accomplish this objective, we have endeavored to structure our executive compensation program in a fashion that gives our Human Capital Management and Compensation Committee the flexibility to take into account our operating performance and the individual performance of our executive officers. +The Human Capital Management and Compensation Committee endorses the philosophy that executive compensation should reflect Company performance and the contribution of executive officers to that performance. Our compensation policy is designed to achieve three fundamental objectives: +> attract and retain qualified executives; +> motivate performance to achieve Company objectives; and +> align the interests of our executives with the long-term interests of the Company’s stockholders. +The Human Capital Management and Compensation Committee recognizes that there are many intangibles involved in evaluating performance and in motivating performance, and that determining an appropriate compensation level is a highly subjective endeavor. The analysis of the Committee is not based upon a structured formula and the objectives referred to above are not weighted in any formal manner. During the year, none of the executive officers made recommendations or otherwise contributed input on their own compensation levels. +The Company’s executive officers are also executive officers of Marine Products Corporation (Marine Products) and receive compensation directly from Marine Products. The members of the Company’s Human Capital Management and Compensation Committee also constitute the Human Capital Management and Compensation Committee of Marine Products. In determining the compensation for the executive officers of the Company, the Committee considers these dual responsibilities and sources of compensation. The Company sets compensation of its executives at such levels so that the aggregate compensation received from both Marine Products and the Company is reasonable in light of their respective responsibilities and the performance of both companies, and so that the compensation from the Company for services solely to the Company is reasonable. A discussion of the Company’s executive officers’ compensation at Marine Products is contained in its annual Proxy Statement filed with the SEC. +Pursuant to our compensation philosophy, the total annual compensation of our executive officers is primarily made up of one or more of the following three core elements: +> base salary (fixed); +> annual performance-based cash incentive compensation (cash incentive); and +> grants of stock-based awards such as restricted stock and performance share units (equity incentive). +In addition, we also provide retirement compensation plans, group welfare benefits and certain perquisites. +We believe (i) a competitive base salary is important to attract, retain and motivate our top executives; (ii) annual performance-based incentive compensation is valuable in recognizing and rewarding individual achievement towards the achievement of company-wide results; and (iii) equity-based compensation makes executives “think like owners” and, therefore, aligns their interests with those of our stockholders. In 2023, we included PSUs with three-year performance conditions to the equity incentive component, which we believe will further align NEO compensation with sustained long-term value creation and enhance executive retention by requiring attainment of performance goals over multiple years. +39 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +Fiscal 2023 Named Executive Officer Compensation Details +The table below reflects the approximate general distribution of the three core elements of NEO compensation earned for fiscal 2023 as determined by our Human Capital Management and Compensation Committee. +Total Direct Compensation +s +The numbers presented in the charts above are calculated in accordance with the presentation in the Summary Compensation Table included in the Executive Compensation section. Accordingly, the cash incentive component consists of the cash bonuses actually paid out for 2023 performance, but the stock awards are valued at fair value on the grant date. The valuation of the PSUs, which are subject to performance conditions and a market condition, is based upon certain assumptions. See section titled Grants of Plan-Based Awards in 2023 for further information about their valuation. Actual value ultimately received by the NEOs with respect to these awards may be greater or lesser than the grant date fair value. Fixed compensation presented in the chart consists of base salary. The numbers presented for “Other Named Executive Officers” are averaged for simplicity of presentation, but the mix for individual NEOs varies depending upon their role and responsibilities, as the Human Capital Management and Compensation Committee has deemed appropriate. +Compensation Elements +The following table sets forth information regarding each of the three core elements of the target compensation for the executive officers in 2023, including a description of each element. +Compensation Element +Description +Base Salary +Fixed cash compensation based on each executive officer’s role, responsibilities, competitive market positioning, and individual performance. +Annual Incentive Compensation +Annual performance-based incentive cash compensation with target award amounts for each executive officer. Actual bonus amounts may be higher or lower than target based on the achievement of certain Company performance goals. +Long-Term Incentive Compensation +Grants of stock-based awards in the form of Time-Based Restricted Share Unit awards (RSUs) and PSUs . L ike annual incentive compensation, PSUs provide for target award payouts, but actual payout levels may be higher or lower than target based on achievement of Company performance goals and stock performance over a three-year term. +40 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +Base Salary +Base salary represents the fixed element of the compensation of our executive officers and is an important element of compensation intended to attract and retain qualified executives. The Human Capital Management and Compensation Committee reviews the base salaries of our executive officers each year as part of its annual review of our executive compensation program with input from our CEO (except with respect to his own base salary). In making its determinations the Human Capital Management and Compensation Committee gives consideration to the Company’s operating performance for the prior fiscal year and the individual executive’s performance and compensation paid by Marine Products. Base salary increases are not automatic or guaranteed. +2023 Base Salary Adjustments +Base salaries for 2023 were as follows: Ben M. Palmer: $600,000; Michael L. Schmit: $300,000 and Richard A. Hubbell: $500,000. No other salary adjustments were made for executive officers in 2023. At the January 2024 meeting, Michael L. Schmit’s base salary for 2024 was set at $340,000. +Annual incentive Compensation +The Company has awarded Performance-Based Incentive Cash Compensation to the executive officers since 2006. On an annual basis, the Human Capital Management and Compensation Committee establishes performance goals after the commencement of the performance period to which such goals relate. Performance goals for each participant may be based on corporate, business unit/function or individual performance, or a combination of one or more such measures. +In connection with the annual establishment of performance goals, the Committee sets a target award for each participant for the applicable year, which is expressed as a percentage of the participant’s base compensation (the “Target Award”) in effect on the last day of the final pay period of that year. If the participant’s performance goals are based upon a combination of performance measures, the Committee will weigh the importance of each performance measure by assigning a percentage (the “Weighted Percentage”) to each performance measures (“Target Performance Goal”). The participant’s cash award amount will also depend in part upon the level of achievement that the participant attained with respect to each such performance measure, based on a performance value (“Performance Value”) which ranges from: +> threshold performance level (with a Performance Value of 50% of the Target Award); +> target performance level (with a Performance Value of 100% of the Target Award); to +> maximum performance level (with a Performance Value of 200% of the Target Award). +To calculate a participant’s cash award amount for a given year where there is more than one performance measure, the amount earned for each such measure will be calculated individually first, and then they are totaled to determine the total payout. The amount earned for each performance measure equals the product of the Target Award multiplied by the Weighted Percentage assigned to that performance measure, multiplied by the Performance Value attained for that performance measure, multiplied by base salary. However, no bonus is earned if performance is below threshold level, and the bonus is capped at the maximum amount. The Committee determines the maximum cash award as a percentage of a participant’s base salary for each applicable year. In 2023, there was only one performance goal, so the Weighted Percentage multiplier was 100%. See diagram below for a visualization of the Performance-Based Incentive Cash Compensation calculation for 2023: +41 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +For 2023, the Committee established the target incentive award for the Chief Executive Officer and for the other members of executive management at the amounts shown in the following table: +Award Opportunity +Base Salary +Target Award +Target Award +Executive Officer +($) +(as a % of base salary) +($) +Ben M. Palmer +600,000 +100 +600,000 +Michael L. Schmit +300,000 +70 +210,000 +Richard A. Hubbell +500,000 +100 +500,000 +The performance criteria applicable to the participants for 2023 were determined based solely on corporate performance. The Human Capital Management and Compensation Committee established a corporate financial performance goal for 2023 using OCF as described below. +OCF was used for determining the Target Performance Goal in 2023 since there has been recent strong interest from the investment community. OCF is computed as Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) minus cash paid for capital expenditures, with discretionary adjustments totaling approximately $24.5 million related to pension plan termination, litigation settlement and expenses related to an acquisition. These calculations are subject to adjustments for unusual items, as approved by the Human Capital Management and Compensation Committee. EBITDA is a widely used financial performance of short-term corporate profitability and is calculated by adding interest, tax, depreciation and amortization expenses to net income. +For 2023, the Target Performance Goal was set considering recent OCF achieved by the company and was more than 50% higher than the average achieved in the last ten years. The Company was required to achieve at least 79% of the target performance goal for executive officers to be eligible for any incentive cash compensation. These awards are determined on a sliding scale between the threshold performance level and maximum performance level, which corresponds to 196% of the target performance goal. To be eligible for the bonus award for 2023, OCF was required to be at of $110.0 million to be at the threshold and increased to maximum if OCF was at $275.0 million. The actual performance achieved in 2023 was the second highest OCF achieved in the last six years The Company has consistently established Target Performance Goals for Executive compensation, and +42 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +the Committee has not typically exercised discretion to waive the performance goals based on difficult industry conditions or other factors. The target criteria and actual fiscal 2023 results for OCF are as follows: +C +Metrics +Threshold (50%) +Target +(100%) +Maximum (200%) +Results +Percent Attained +Operating Cashflow +$ 110 million +$140 million +$ 275 million +$199.6 million +142% +The actual fiscal 2023 result for OCF was calculated as follows: +2023 OCF Calculation (in Millions $’s) +EBITDA +$ 356.1 +Cash Capital Expenditures +(181.0) +Pension Plan Termination +18.3 +Vendor Settlement +5.4 +Acquisition Costs (External) +0.8 +OCF +$ 199.6 +The Company operates in a cyclical business where financial performance is influenced by, among other things, changes in oil and natural gas prices. The Company generated OCF at 142% of target that resulted in incentive compensation of 128% of the target award in 2023. The table below sets forth the threshold, target and maximum percentages of base salary for awards, together with the achievement and actual Annual Cash Incentives paid to our named executive officers, based on actual Company results. +Award Opportunity +Bonus Earned +Name +Threshold +Target +Maximum +Actual +% of Target Award +$ +Ben M. Palmer +50% of Target Award +100% of Target Award +200% of Target Award +142% +128% +768,000 +Michael L. Schmit +50% of Target Award +100% of Target Award +200% of Target Award +142% +128% +268,800 +Richard A. Hubbell +50% of Target Award +100% of Target Award +200% of Target Award +142% +128% +640,000 +For 2022, our NEO were paid 150% of the target cash incentive, based on the performance achieved that year. The Company did not achieve return on invested capital (ROIC) performance goals for 2021 and therefore no bonuses were earned by executive officers in that year. +43 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +Long-term incentive compensation +Our Stock Incentive Plan (SIP) allows for a wide variety of stock-based awards including RSUs and PSUs. The terms and conditions of awards granted under the SIP are described in more detail below. +Awards under the Company’s SIP are purely discretionary, are not based upon any specific formula and may or may not be granted in any given fiscal year. For the past few years, we have granted RSUs to various employees, including our executive officers, during our regularly scheduled meeting of the Human Capital Management and Compensation Committee in which the Committee reviews executive compensation, and more recently incorporated PSUs into the executive compensation program. In order to balance performance and retention incentives, awards made during fiscal 2023 consisted of 75% RSUs and 25% PSUs. The Human Capital Management and Compensation Committee believes that RSUs promote an “ownership” culture, align executives’ interests with those of our shareholders and provide retention incentives for our executive officers, while PSUs act as an additional tool for linking individual interests of our executive officers to those of our shareholders. +Consistent with this practice, we granted the following awards to our executive officers: +RSUs: +Name +2023 +2022 +Ben M. Palmer +78,000 +90,000 +Michael L. Schmit +34,500 +35,000 +Richard A. Hubbell +56,250 +75,000 +PSUs: +Name +2023* +2022 +Ben M. Palmer +26,000 +— +Michael L. Schmit +11,500 +— +Richard A. Hubbell +18,750 +— +* Represents target levels and assumes no adjustment due to the TSR modifier. +For 2023, total equity compensation granted is comprised of RSUs and PSUs that will be earned over time as described below: +RSUs –The RSUs granted in 2023 vested ratably over a period of four years and RSUs granted in 2022 vested over five years. Prior to 2022, the RSUs vested one-fifth per year beginning on the second anniversary of the grant date. RSUs granted in 2024 will vest over three years. RSUs have full voting and dividend rights. However, until the RSUs vest, they cannot be sold, transferred or pledged. Should the executive leave our employment for any reason prior to the vesting dates (other than due to disability or retirement on or after age 65), the unvested RSUs will be forfeited. In the event of death, or “change in control” as determined by the Board of Directors, all unvested RSUs shall vest immediately. +PSUs – For 2023 each of the officers was granted a target number of PSUs with each such unit representing the right to receive, to the extent then vested, an amount payable in stock, subject to certain performance conditions measured over the 3-yearending in 2025. Potential payouts under the PSUs are based on levels of performance using “3-Year Cumulative EBITDA," which is calculated by adding interest, tax, depreciation and amortization expenses to net income. This computation is, subject to potential adjustments approved by the Human Capital and Compensation Committee and if such an adjusted measure is disclosed in the Company’s SEC filings. The adjustments for fiscal 2023 are disclosed in Annual Cash Incentive section titled Compensation Discussion and Analysis - Annual Cash Incentive Compensation . The award provides for threshold, target and maximum levels of payout, so that attainment of 75% of the target 3-Year Cumulative EBITDA will result in a payout at 50% of target level, while attaining 120% of the target 3-Year Cumulative EBITDA will result in a payout at 200% of target level; subject to further adjustment based upon a TSR Modifier. The TSR Modifier adjusts the payout levels upward or downward by an amount up to 20%, based on the applicable relative percentile ranking +44 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +of our stock benchmarked against the Philadelphia Oil Services Sector. TSR is calculated as profit or loss from the net price change in the market price for our shares over the 3 year period, based on the 20-trading day average price at the beginning of 2023 and the end of 2025. With respect to both measures, interpolation is used to determine the payouts associated with performance between the threshold, target and maximum levels. After taking 2023 performance into consideration, we think it is likely that performance will exceed threshold, although actual performance could be higher or lower than our estimates. See section titled Grants of Plan-Based Awards in 2023 below for threshold, target, and maximum share numbers and grant date fair values. +The shares granted in 2023 are set to cliff-vest on December 31, 2025. Should the executive leave our employment for any reason prior to the vesting dates (other than due to death or disability as defined in the agreements), the unvested PSUs will be forfeited. In the event of death or disability as defined in the agreements, all unvested PSUs shall vest immediately at 100% of target levels, without regard to the actual EBITDA performance, and with no adjustment for the TSR modifier. In addition, the Committee has the discretion to determine the treatment of the PSUs in the event of a change of control, and currently intends that such awards would be accelerated in the event of a change of control and pay out at target levels in the same manner as described for death and disability. +PSU awards also include the right to “Dividend Equivalents” with respect to the underlying shares. Dividend equivalents are accrued over the performance period, in cash, based upon target payout level, subject to a true-up at the end of the three-year cycle. Accrued Dividend Equivalents will be paid out upon vesting of the PSUs, but no such Dividend Equivalents will be payable to the extent the awards fail to vest or are forfeited, or the performance goals are not met. PSUs confer no voting rights with respect to the underlying shares prior to vesting and payout. +The amount of the aggregate stock-based awards to our executive officers in any given year is influenced by the Company’s overall performance: for both RSUs and PSUs, the Committee takes into consideration both our historical performance and our projected goals and plans; in the case of PSUs, a certain minimum performance must be achieved in order for any shares to be issued. The amount of each grant to our executive officers is influenced in part by the Committee’s assessment of each individual’s respective contributions to achievement of the Company’s long-term goals and objectives, in addition to the recent prices of the Company’s common shares. In evaluating individual performance for these purposes, the Committee considers the overall contributions of executive management as a group and the Committee’s subjective assessment of each individual’s relative contribution to that performance rather than specific aspects of each individual’s performance over a short-term period. We expect to continue annual grants of RSUs and PSUs, although we reserve the right to modify or discontinue these or any of our other compensation practices at any time. Grants of RSUs and PSUs are made under our SIP which is administered pursuant to Rule 16b-3 under the Exchange Act. +Other Compensation +Health and Retirement Plans +The executive officers all participate in the Company’s regular employee benefit programs, including the 401(k) Plan with Company match, group life insurance, group medical and dental coverage and other group benefit plans. The Company maintains a non-qualified supplemental retirement plan (SRP) for our executives and certain other highly compensated employees, and a 401(k) Plan for the benefit of all of our eligible employees. The SRP is described in more detail under the caption Nonqualified Deferred Compensation of this Proxy Statement. +45 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +Perquisites and Other Personal Benefits +In addition to the total direct compensation and benefits described above, the Company also provides its executive officers with certain perquisites as approved by the Board and noted in the footnote to the Summary Compensation Table under Executive Compensation . The specific perquisites provided to the executive officers are as follows: +> an automobile or an automobile allowance; and +> use of the Company’s aircraft for personal travel of the Executive Chairman of the Board and Chief Executive Officer. +Compensation Setting Process +Role of the Human Capital Management and Compensation Committee +Under its Charter the Human Capital Management and Compensation Committee is responsible for, among other things, reviewing our overall executive compensation philosophy and strategy, including base salary, performance-based incentive cash compensation, and stock-based incentives to ensure that the strategy supports our compensation policy. +The Human Capital Management and Compensation Committee is composed of three Non-Employee Directors who do not participate in our compensation plans: Jerry W. Nix (Chairperson), Patrick J. Gunning, and John F. Wilson, each of whom is independent. +The Human Capital Management and Compensation Committee has the authority, at its sole discretion, to retain or obtain the advice of any compensation consultant, legal counsel or other advisor to assist the Committee in the performance of its duties and may at its discretion be directly responsible for the appointment, compensation and oversight of the work of any such compensation consultant, legal counsel or other advisor so retained. The Committee has not retained the services of any compensation consultants in determining or recommending the amount or form of executive compensation. The Human Capital Management and Compensation Committee may also, from time to time, and in its discretion, form, and delegate all or a portion of its authority to subcommittees; provided that such subcommittees meet the Committee’s composition requirements set forth in its Charter or under any applicable federal or state laws or New York Stock Exchange requirements. +Role of Management +The Human Capital Management and Compensation Committee solicits input from Richard A. Hubbell, Executive Chairman of the Board and Ben M. Palmer, President and Chief Executive Officer, with respect to the performance of our executive officers and their compensation levels. The Human Capital Management and Compensation Committee considers Mr. Hubbell’s and Mr. Palmer’s evaluation and each of their direct knowledge of each executive officer’s performance (other than with respect to themselves) and contributions when making compensation decisions. For decisions made in 2023, Management retained the services of Mercer, LLC (Mercer), an independent executive compensation advisory firm. In doing so, Management reviewed information regarding independence and potential conflicts of interest with Mercer. Management receives from Mercer information on general compensation data and advice on design of incentives. From time to time Mercer attends the Human Capital Management and Compensation Committee meetings but does not provide specific advice directly to the Human Capital Management and Compensation Committee. Neither Mercer nor its affiliates provided additional services to the Company in an amount in excess of $120,000 in 2023. +46 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +The Role of Stockholder Say-on-Pay Votes +We provide our stockholders with the opportunity to cast an advisory vote on executive compensation (a Say-on-Pay proposal) every three years. At our annual meeting of stockholders held in April 2023, a substantial majority of the votes cast on the Say-on-Pay proposal were voted in favor of the proposal. The Human Capital Management and Compensation Committee believes this affirms the stockholders’ support of our approach to executive compensation. The stockholders voted to hold a Say-on-Pay advisory vote on executive compensation every three years, and the Board resolved to accept the stockholders’ recommendation. As a result, the advisory vote on executive compensation is being held again at the 2026 Annual Meeting of Stockholders. The Human Capital Management and Compensation Committee will continue to consider the outcome of our Say-on-Pay votes when making future compensation decisions for our executive officers. +Policies Regarding Stock Ownership by Executive Officers +Stock Ownership Requirements +Stock Ownership Guidelines (the Guidelines) for our executive officers and other key executives was adopted by the Human Capital Management and Compensation Committee to align the interests of our executives with the interests of our stockholders are as follows: +> President and Chief Executive Officer – Ownership equal to 4 times base salary; +> Chief Financial Officer – Ownership equal to 3 times base salary; and +> Executive Chairman of the Board – Ownership equal to 4 times base salary. +Participants under the Guidelines have a period of five years in which to satisfy the Guidelines from the date of appointment to a qualifying position. Participants who become subject to these Guidelines will have their individual ownership requirement established based upon their base salary at the time they became subject to the Guidelines and the Company’s average closing common stock price for the prior calendar year. The share values get recalculated each year. Promotions into a different position category will require recalculation of a participant’s ownership requirements as appropriate. Once established, a participant’s ownership requirement does not change as a result of changes in their base salary. +Shares counted toward this requirement will be based on shares beneficially owned by such participant (as beneficial ownership is defined by the SEC’s rules and regulations) including: +> shares owned outright by the participant (including through open market purchases or acquired and held upon vesting of Company equity awards); +> unvested RSUs; and +> shares held in trust in the participant’s name. +Once achieved, ownership of the amount under the Guidelines must be maintained for as long as the participant is subject to the Guidelines and the participant is required to retain a minimum of 20% of any future equity awards. +Prohibition on Hedging and Pledging of Common Stock +Under our Insider Trading Policy, we prohibit our employees, including our named executive officers and the members of our board of directors, from hedging or pledging or otherwise encumbering individually owned or granted Company securities. +47 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +Clawback Policy +Our Board has adopted a clawback policy, effective as of October 19th, 2023, that complies with the NYSE clawback rules which were required by SEC Rule 10D-1. Under this policy, in the event that the Company is required to prepare an accounting restatement of its financial statements due to the Company's material noncompliance with any financial reporting requirement under the securities laws, the policy requires that the Human Capital Management and Compensation Committee, to the extent legally permitted and pursuant to the terms of the policy, recover from current and former Section 16 officers any incentive-based compensation, as defined in the NYSE's clawback rules, received by such officers that exceeds the amount of incentive-based compensation that otherwise would have been received had such incentive based compensation been determined according to the applicable accounting restatement. +Tax Deductibility of Compensation +As a result of the Tax Cuts and Jobs Act, starting with compensation payable in 2018, Section 162(m) of the Internal Revenue Code limits us from deducting compensation, including performance-based compensation, in excess of $1,000,000 paid to an individual named executive officer. The Human Capital Management and Compensation Committee will continue to retain full discretion to award compensation packages that best attract, retain and reward successful executive officers. Therefore, the Human Capital Management and Compensation Committee anticipates that it will award compensation that is not fully deductible under Section 162(m). +Compensation-Related Risk +The Company regularly assesses the risks related to our compensation programs, including our executive compensation programs and does not believe that the risks arising from our compensation policies and practices are reasonably likely to have a material adverse effect on the Company. Incentive award targets and bonus opportunities, including targets and opportunities under outstanding PSUs are reviewed annually, allowing the Committee to maintain an appropriate balance between rewarding high performance without encouraging excessive risk. +48 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +HUMAN CAPITAL MANAGEMENT AND COMPENSATION COMMITTEE REPORT +The Human Capital Management and Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis contained in this Proxy Statement with management and based on such review and discussions the Human Capital Management and Compensation Committee recommended to our Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement. +Respectfully submitted by the Human Capital Management and +Compensation Committee of the Board of Directors +Jerry W. Nix, Chairperson +Patrick J. Gunning +John F. Wilson +This report of the Human Capital Management and Compensation Committee is required by the SEC and, in accordance with the SEC’s rules, will not be deemed to be part of or incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933, as amended (Securities Act), or under the Exchange Act, except to the extent that we specifically incorporate this information by reference, and will not otherwise be deemed “soliciting material” or “filed” under either the Securities Act or the Exchange Act. +49 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +EXECUTIVE COMPENSATION +There are no agreements or understandings between the Company and any executive officer that guarantee continued employment or guarantee any level of severance or compensation, including incentive or bonus payments, other than annual restricted stock grants. The following table provides information regarding the annual and long-term compensation for services in all capacities paid to each of our named executive officers for the years indicated below. +SUMMARY COMPENSATION TABLE +Change in +Pension +Value and +Non-Equity +Nonqualified +Incentive +Deferred +Stock +Plan +Compensation +All Other +Salary +Awards +Compensation +Earnings +Compensation +Total +Name and Principal Position +Year +($) +($) (1) +($) (2) +($) (4) +($) (5) +($) +Ben M. Palmer (3) +2023 +600,000 +998,400 +768,000 +— +25,050 +2,391,450 +President and +2022 +543,750 +804,600 +900,000 +— +24,040 +2,272,390 +Chief Executive Officer +2021 +450,000 +259,290 +— +— +23,860 +733,150 +Michael L. Schmit (3) +2023 +300,000 +441,600 +268,800 +— +11,030 +1,021,430 +Vice President, +2022 +186,460 +312,900 +315,000 +— +5,310 +819,670 +Chief Financial Officer, Treasurer +2021 +— +— +— +— +— +— +and Corporate Secretary +Richard A. Hubbell (3) +2023 +500,000 +720,000 +640,000 +— +33,690 +1,893,690 +Executive Chairman +2022 +668,750 +670,500 +750,000 +— +49,110 +2,138,360 +of the Board +2021 +950,000 +387,000 +— +— +34,410 +1,371,410 +(1) Represents the fair value of the award at the date of grant computed in accordance with ASC Topic 718. See Note titled “Employee Benefit Plans” to our Financial Statements contained in our Form 10-K for the period ended December 31, 2023 for a discussion of assumptions used in these computations. For this computation, we do not include an assumption for estimated forfeitures. For the PSUs, the fair value presented assumes that all of the awards will pay out at target levels with no adjustment for the TSR modifier. The maximum number of shares that could be paid out under the 2023 PSUs assuming maximum upward adjustment for TSR modifier is 112,500. If the maximum level of performance is achieved, including maximum upward adjustment pursuant to the TSR Modifier, the grant date fair values of the PSUs would be $499,200 for Mr. Palmer; $220,800 for Mr. Schmit; and $360,000 for Mr. Hubbell. +(2) Annual incentive compensation is accrued in the fiscal year earned and paid in the following fiscal year. No bonuses were earned for 2021. +(3) Prior to May 17, 2022, Richard A. Hubbell served as the President and Chief Executive Officer and Ben M. Palmer served as the Vice President, Chief Financial Officer, Treasurer and Corporate Secretary. Michael L. Schmit has served as the Chief Financial Officer, Treasurer and Corporate Secretary since May 17, 2022. +(4) The actuarial present value of Richard A. Hubbell’s accumulated benefit under the defined benefit plan decreased by $330,890 in 2023. This decrease represents the impact of the change in discount rate as no additional benefits are being accrued. The defined benefit pension plan was fully terminated in 2023. +(5) All other compensation for 2023 includes the following items for: +Ben M. Palmer: +Includes automobile allowance of $8,400, cost of gasoline for personal automobile and 401(k) Plan Company match of $14,850. +Michael L. Schmit: +Includes a utomobile allowance of $7,200 and cost of gasoline for personal automobile of $1,680, and 401(k) Plan Company match of $2,160. +Richard A. Hubbell: +Includes i nsurance on automobile provided by the Company, cost of dining club dues, cost of gasoline for personal automobile, personal use of Company car of $13,940 and 401(k) Plan Company match of $14,850. +50 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +GRANTS OF PLAN-BASED AWARDS in 2023 +All Other +Grant Date +Estimated Future Payouts +Estimated Future Payouts +Stock Awards: +Fair Value +Under Non-Equity +Under Equity +Number of +of Stock +Incentive Plan Awards (1) +Incentive Plan Awards (2) +Shares +and Option +Threshold +Target +Maximum +Threshold +Target +Maximum +RSU +Awards +Name +Grant Date +($) +($) +($) +(#) +(#) +(#) +(#) (3) +($) (4) +Ben M. Palmer +300,000 +600,000 +1,200,000 +— +— +— +— +— +1/24/2023 +— +— +— +13,000 +26,000 +62,400 +— +— +1/24/2023 +— +— +— +— +— +— +78,000 +998,400 +Michael L. Schmit +105,000 +210,000 +420,000 +— +— +— +— +— +1/24/2023 +— +— +— +5,750 +11,500 +27,600 +— +— +1/24/2023 +— +— +— +— +— +— +34,500 +441,600 +Richard A. Hubbell +250,000 +500,000 +1,000,000 +— +— +— +— +— +1/24/2023 +— +— +— +9,375 +18,750 +45,000 +— +— +1/24/2023 +— +— +— +— +— +— +56,250 +720,000 +(1) These amounts illustrate the potential bonus awards under the Management Incentive Plan for 2023. See Summary Compensation Table for actual amounts awarded . +(2) PSUs are earned based upon the Company’s performance, over a three-year period, in each case subject to a potential adjustment based upon the application of the TSR modifier. PSUs entitled to certain Dividend Equivalents as described in the section titled Compensation, Discussion and Analysis – Long Term Incentive Compensation section . +(3) These amounts represent shares underlying RSUs granted during 2023 that vest ratably over four years . RSUs have full voting and dividend rights. However, until the shares vest, they cannot be sold, transferred or pledged. +(4) These amounts represent aggregate grant date fair value for grants of RSUs and PSUs awarded in fiscal year 2023 under our SIP computed in accordance with ASC Topic 718. The amounts reported with respect to PSUs are based on the probable outcome of the performance conditions as of the grant date, which is estimated at target, with no adjustment for the TSR modifier. Actual payouts may be different based on the Company’s performance. Please see footnote (1) to the Summary Compensation Table for additional details . +We have not issued any stock options since 2003 and have no immediate plans to issue additional stock options. +OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR-END +The Company does not have any outstanding option awards made in prior years to the executives named in our Summary Compensation Table. The table below sets forth the total number of unearned and unvested shares underlying PSUs that remained outstanding at December 31, 2023, as adjusted based upon achievement against performance targets to date, as well as restricted shares of Common Stock outstanding at December 31, 2023 that were granted in prior years to the executives, but had not yet vested on that date. The table also presents market values of those awards, calculated based on the $7.28 closing price of our Common Stock on December 29, 2023, the last trading day of the year. +51 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +Stock Awards +Equity Incentive +Equity Incentive +Number of +Market Value +Plan Awards: +Plan Awards: +Shares or +of Shares or +Number of +Market or Payout +Units of +Units of +Unearned Shares, +Value of Unearned +Stock That +Stock That +Units or Other +Shares, Units or Other +Have Not +Have Not +Rights That +Rights That Have +Vested +Vested +Have Not Vested +Not Vested +Name +(#) (1) +($) +(#) (2) +($) +Ben M. Palmer +269,800 +1,964,144 +26,000 +189,280 +Michael L. Schmit +62,500 +455,000 +11,500 +83,720 +Richard A. Hubbell +295,250 +2,149,420 +18,750 +136,500 +(1) RSUs granted prior to 2023 vested one-fifth per year beginning on the second anniversary of the grant date. RSUs granted in 2023 vest one-fourth per year beginning on the first anniversary of the grant date. Shares of RSUs granted to the executive officers that have not vested as of December 31, 2023, are summarized in the table that follows: +Name +Number of shares +Grant date +Date fully vested +Ben M. Palmer +RSU +6,000 +1/23/2018 +1/23/2024 +RSU +20,000 +1/22/2019 +1/22/2025 +RSU +40,200 +1/28/2020 +1/28/2026 +RSU +53,600 +1/26/2021 +1/26/2027 +RSU +72,000 +5/18/2022 +1/26/2027 +RSU +78,000 +1/24/2023 +1/24/2027 +PSU +26,000 +1/24/2023 +12/31/2025 +Michael L. Schmit +RSU +28,000 +5/18/2022 +1/26/2027 +RSU +34,500 +1/24/2023 +1/24/2027 +PSU +11,500 +1/24/2023 +12/31/2025 +Richard A. Hubbell +RSU +9,000 +1/23/2018 +1/23/2024 +RSU +30,000 +1/22/2019 +1/22/2025 +RSU +60,000 +1/28/2020 +1/28/2026 +RSU +80,000 +1/26/2021 +1/26/2027 +RSU +60,000 +5/18/2022 +1/26/2027 +RSU +56,250 +1/24/2023 +1/24/2027 +PSU +18,750 +1/24/2023 +12/31/2025 +(2) PSU amounts disclosed above are at target with no adjustment for the TSR modifier. The actual number of shares and value realized may be different from the number presented, and will depend upon the company’s actual achievement with respect to the performance criteria and our relative TSR over a three-year performance period. For more information regarding the PSUs, see section titled Compensation Discussion and Analysis – Long-term Incentive Compensation . +52 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +OPTION EXERCISES AND STOCK VESTED +The following table sets forth: +> the number of shares of Common Stock acquired by the executives named in the Summary Compensation Table upon the exercise of stock options during the fiscal year ended December 31, 2023; +> the aggregate dollar amount realized on the exercise date for such options computed by multiplying the number of shares acquired by the difference between the market value of the shares on the exercise date and the exercise price of the options; +> the number of restricted shares of Common Stock acquired by the executives named in the Summary Compensation Table upon the vesting of shares during the fiscal year ended December 31, 2023; +> the aggregate dollar amount realized on the vesting date for such RSUs computed by multiplying the number of shares vested by the market value of the shares on the vesting date; and +> the market value of shares was based on the closing price for the Company’s Common Stock on the date of exercise or vesting, as the case may be. The value realized for awards set forth in the table is calculated in accordance with SEC rules as described above, without regard to whether the NEO has actually transferred the stock or when; accordingly, the actual value realized by the NEOs may be greater or lesser than what is set forth in the table. +Option Awards +Stock Awards +Number of Shares +Number of Shares +Acquired on +Value Realized on +Acquired on +Value Realized +Exercise +Exercise +Vesting +on Vesting +Name +(#) +($) +(#) +($) +Ben M. Palmer +— +— +66,200 +609,060 +Michael L. Schmit +— +— +7,000 +66,500 +Richard A. Hubbell +— +— +88,000 +805,420 +53 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +BENEFIT PLANS +The table below shows the present value of accumulated benefits payable to each of the named executive officers, including the number of years of service credited to each such named executive officer, under the Retirement Income Plan determined using interest rate and mortality rate assumptions consistent with those used in the Company’s financial statements. +Pension Benefits +Present +Number of +Value of +Years Credited +Accumulated +Payments During +Service +Benefit +Last Fiscal Year +Name +Plan Name +(#) +($) +($) +Ben M. Palmer +Retirement Income Plan +— +— +— +Michael L. Schmit +Retirement Income Plan +— +— +— +Richard A. Hubbell +Retirement Income Plan +16 +— +489,627 +The Company’s Retirement Income Plan, a trusteed defined benefit pension plan, provides monthly benefits upon normal retirement at age 65, to eligible employees. The Plan provides reduced early retirement benefits at age 59½, or 55 or older with 15 or more years of service. In 2002 the Company’s Board of Directors approved a resolution to cease all future benefit accruals under the Retirement Income Plan effective March 31, 2002. Retirement Income Plan benefits are based on the average of the employee’s compensation from the Company for the five consecutive complete calendar years of highest compensation during the last ten consecutive complete calendar years (“final average compensation”) immediately preceding March 31, 2002. The benefits are computed as the product of 1.5% of final average compensation multiplied by years of credited service (up to 30 years) reduced by an adjustment for benefits drawn from social security. Adjustments have been made for age and the IRS mandated compensation limitations. +Mr. Hubbell is voluntarily receiving distributions from the plan even though he has not retired from the Company. The amount of distributions received during 2023 has been disclosed in the table above and is not subject to change after retirement. In 2020, the Company offered a limited lump-sum payment window for certain vested terminated participants and active employees with a vested balance. Mr. Palmer elected to receive his vested balance immediately as a lump-sum. +401(k) Plan +Effective July 1, 1984, the Company adopted a qualified retirement plan designed to meet the requirements of Section 401(k) of the Code. The Company makes matching contributions of 100% for each dollar ($1.00) of a participant’s contribution to the 401(k) Plan for the first three percent of his or her annual compensation and fifty cents ($0.50) for each dollar ($1.00) for the next three percent of his or her annual compensation. The only form of benefit payment under the 401(k) Plan is a single lump-sum payment equal to the vested balance in the participant’s account on the date the distribution is processed. Under the 401(k) Plan, the full amount of a participant’s vested accrued benefit is payable upon his termination of employment, retirement, total and permanent disability, or death. During the course of employment, a participant may withdraw his or her pre-tax contributions to the extent of certain specified instances of financial hardship and may withdraw any amount from his or her pre-tax contribution account for any reason after attaining age 59½. Amounts contributed by the Company to the accounts of the named executive officers under this plan are reported in the All Other Compensation column of the Summary Compensation Table of this Proxy Statement. +54 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +NONQUALIFIED DEFERRED COMPENSATION +The SRP has been established as a nonqualified plan that is designed to comply with the provisions of the American Jobs Creation Act of 2004 (including Section 409A of the Internal Revenue Code) for the cash contributions made to certain longer serviced employees in lieu of freezing the Retirement Income Plan benefit accruals effective in 2002; the SRP also has a compensation deferral option for eligible employees. The contributions and deferrals to the SRP are invested in funds held in a rabbi trust. +Executive +Registrant +Aggregate +Aggregate +Aggregate +Contributions +Contributions +Earnings in +Withdrawals/ +Balance at +in Last FY +in Last FY +Last FY +Distributions +Last FYE +Name +($) (1) +($) +($) +($) +($) (2) +Ben M. Palmer +45,000 +— +148,036 +— +1,234,517 +Michael L. Schmit +— +— +— +— +— +Richard A. Hubbell +— +— +71,577 +— +556,785 +(1) Represents the portion of base salary for 2023 disclosed in the Summary Compensation Table which has been deferred by the executive officer pursuant to the SRP. +The deferral option provides that participants may defer up to 50% of their base salary and up to 100% of their annual bonus with respect to any given plan year, subject to a $2,000 per plan year minimum. All of the salary and bonus deferrals are fully vested. Accounts are credited with hypothetical earnings, and/or debited with hypothetical losses, based on the performance of certain “Measurement Funds.” Account values are calculated as if the funds from deferrals and contributions had been converted into shares or other ownership units of selected Measurement Funds by purchasing (or selling, where relevant) such shares or units at the current purchase price of the relevant Measurement Fund at the time of the participant’s selection. The benefits are unsecured general obligations of the Company to the participants, and these obligations rank in parity with the Company’s other unsecured and unsubordinated indebtedness. To the extent that the Company’s obligations under the SRP exceed assets available under the trust, the Company may be required to seek additional funding sources to fund its liability under the SRP. +Generally, the SRP provides for distributions of any deferred amounts upon the earliest to occur of a participant’s death, disability, retirement or other termination of employment (Termination Event). However, for any deferrals of base salary and bonus compensation (but not Company contributions), participants are entitled to designate a distribution date which is prior to a Termination Event. The SRP allows a participant to elect to receive distributions in installments or lump-sum payments. +POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL +The following table describes the potential payments and benefits under the Company’s compensation and benefit plans and arrangements to which the named executive officers would be entitled upon termination of employment or change in control of the Company as of December 31, 2023. Amounts presented in the table include amounts to which the NEOs would become entitled as of such date pursuant to their currently held, but unvested restricted stock awards, as well as the PSUs. +The table does not include the value of amounts payable under the SRP. The executive officers can choose to receive the amounts accumulated in the SRP either as a lump-sum or in installments at retirement, death or disability. These amounts have been disclosed under the Nonqualified Deferred Compensation section of this Proxy Statement. The table also does not include the value of benefits that are provided on the same basis to substantially all other salaried employees. There are no other agreements, arrangements or plans that entitle executive officers to severance, perquisites, or other enhanced benefits upon termination of their employment or +55 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +change in control except as described here. Additional payments or benefits to a terminating executive officer would be at the discretion of the Human Capital Management and Compensation Committee. +The terms and vesting of RSUs and PSUs are discussed in the Outstanding Equity Awards At 2023 Fiscal Year-End section of this Proxy Statement. The values presented in the table below were calculated using the closing market price of $7.28 per share for our Common Stock, as of December 29, 2023, which was the last trading day in fiscal year 2023. +Stock Awards +Number of shares underlying +Number of shares underlying +Unrealized value +unvested stock +unvested stock +of +PSU +RSU +unvested stock +Name +(#) +(#) +($) +Ben M. Palmer +· Retirement +— +— +— +· Disability +26,000 +91,015 +851,869 +· Death +26,000 +269,800 +2,153,424 +· Change in control +26,000 +269,800 +2,153,424 +Michael L. Schmit +· Retirement +— +— +— +· Disability +11,500 +16,295 +202,348 +· Death +11,500 +62,500 +538,720 +· Change in control +11,500 +62,500 +538,720 +Richard A. Hubbell +· Retirement +— +72,417 +527,196 +· Disability +18,750 +107,788 +921,197 +· Death +18,750 +295,250 +2,285,920 +· Change in control +18,750 +295,250 +2,285,920 +Accrued Pay and Regular Retirement Benefits +The amounts shown in the preceding table do not include the following since they are provided on a non-discriminatory basis to salaried employees generally upon termination of employment. These include: +> Accrued salary and vacation pay; and +> Distributions of plan balances under the 401(k) Plan. +change in control or severance +Upon termination, the executive officers will receive a distribution of the balance in their SRP account. These amounts are disclosed under the Nonqualified Deferred Compensation section of this Proxy Statement. +Change-in-Control or Severance . The Company does not have any severance agreements with its executive officers. However, upon the occurrence of a “ Change in Control ,” as determined by the Board of Directors, all unvested time-lapse restricted stock shall immediately vest as disclosed above. In addition, the Committee has discretion to determine the treatment of PSUs upon a change in control, and it currently intends that the 2023 PSUs will pay out upon change in control in the same manner as upon death or disability. +56 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +PAY RATIO DISCLOSURE +The following table shows the annual disclosure of the ratio of the median employee’s annual total compensation to the total annual compensation of the principal executive officer (PEO). Ben M. Palmer has served as the Company’s PEO during the year ended December 31, 2023. The purpose of the required disclosure is to provide a measure of the equitability of pay within the organization. The Company believes its compensation philosophy and process yield an equitable result. +Median Employee total annual compensation +$ +99,744 +PEO total annual compensation +$ +2,391,450 +Ratio of PEO to Median Employee Compensation +24.0:1 +The Company has identified the median employee as of December 31, 2021 and the compensation disclosed above represents the total annual compensation of the median employee for the year ended December 31, 2023. Employees from our foreign subsidiaries in North America and Asia, both of which combined were less than 5% of our total employees, were excluded, as permitted by SEC rules, under the “de minimis” exception. In order to identify the median employee from our employee population as of December 31, 2023, we reviewed the 2023 total compensation that included base salary, bonuses and long-term equity incentive grants as reflected in the annual compensation statements provided to each employee as part of the year-end compensation process. Employees on leave of absence were also excluded from the list and wages and salaries were annualized for those employees that were not employed for the full year of 2023 (other than seasonal or temporary employees). The median employee was selected from the annualized list. For simplicity, the value of the Company’s 401(k) Plan and medical benefits provided was excluded as all employees including the PEO are offered the exact same benefits. As of December 31, 2023, the Company employed 2,776 persons of which 52 were employed in Canada (43) and Mexico (9). +The pay ratio disclosure presented above is a reasonable estimate. Because the SEC rules for identifying the median employee and calculating the pay ratio allow companies to use different methodologies, exemptions, estimates and assumptions, our pay ratio disclosure may not be comparable to the pay ratios reported by other companies. +57 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +PAY VERSUS PERFORMANCE +In accordance with the SEC’s regulations, we are providing the following information about the relationship between executive compensation actually paid and certain financial performance of the Company and certain of its peers for the years 2023, 2022, 2021 and 2020. For further information concerning the Company’s compensation philosophy see section titled Compensation Discussion and Analysis (CD&A). +Average +Average +Summary +Summary +Value of Initial Fixed $100 +Compensation +Compensation +Investment Based On: +Summary +Summary +Table Total +Actually Paid +Operating +Compensation +Compensation +Compensation +Compensation +for Non-PEO +to Non-PEO +Peer Group +Net +Cash +Table Total +Table Total +Actually Paid +Actually Paid +Named +Named +Total +Total +Income/ +Flow +for first +for second +to first +to second +Executive +Executive +Shareholder +Shareholder +(Loss) +(OCF) (6) +Year +PEO (1) +PEO (1) +PEO (2)(4) +PEO (2)(4) +Officers (1) +Officers (3) +Return +Return (5) +(in millions) +(in millions) +2023 +$ +— +$ +2,391,450 +$ +— +$ +1,946,938 +$ +1,457,560 +$ +1,168,921 +$ +139.56 +$ +116.66 +$ +195 +$ +200 +2022 +$ +2,138,360 +$ +2,272,390 +$ +3,327,790 +$ +3,062,704 +$ +819,670 +$ +819,320 +$ +167.00 +$ +113.26 +$ +218 +$ +208 +2021 +$ +1,371,410 +$ +— +$ +1,913,830 +$ +— +$ +733,150 +$ +1,164,372 +$ +86.64 +$ +70.04 +$ +7 +$ +23 +2020 +$ +1,275,559 +$ +— +$ +696,697 +$ +— +$ +818,133 +$ +875,186 +$ +60.11 +$ +58.01 +$ +( 212 ) +$ +( 62 ) +(1) +Amounts disclosed for the first Principal Executive Officer (PEO), second PEO and other Non-PEO Named Executive Officers relate to reported compensation as follows: +> Richard A. Hubbell – was the President and Chief Executive Officer through May 17, 2022 and for the years 2021 and 2020. He has been Executive Chairman of the Board Officer since May 17, 2022. His total compensation for 2022, 2021 and 2020 has been disclosed as amounts related to first PEO. For 2023, his compensation has been included in amounts related to Non-PEO Named Executive Officers. +> Ben M. Palmer – is named PEO for 2023 and been the President and Chief Executive Officer effective May 17, 2022, and was Vice President, Chief Financial Officer and Corporate Secretary prior. For 2022 and 2023, his total compensation has been disclosed as amounts related to second PEO. For 2021 and 2020, his compensation has been disclosed in amounts related to Non-PEO Named Executive Officers. +> Michael L. Schmit – has been Vice President, Chief Financial Officer and Corporate Secretary effective May 17, 2022 and his compensation has been included in amounts related to Non-PEO Named Executive Officers for 2022 and 2023. +> Randall R. Rollins – was the Executive Chairman of the Board until his passing in August 2020; his compensation until his death has been included in the amounts related to Non-PEO Named Executive Officers for that year. +(2) +The dollar amounts reported represent the amount of Compensation Actually Paid (CAP), computed in accordance with SEC rules. The dollar amounts do not reflect the actual amount of compensation earned by or paid to our PEO during the applicable year. To calculate the amounts in the CAP to PEO column in the table above, the following amounts were deducted from or added to (as applicable) the Total compensation as reported in the Summary Compensation Table (SCT): +Reported +Reported +Reported +Reported +Equity +Equity +Summary +Summary +Value of +Value of +Award +Award +Pension +Compensation +Compensation +Equity +Equity +Adjustments +Adjustments +Adjustments +Compensation +Compensation +Table Total for +Table Total for +Awards to +Awards to +to first +to second +to First +Actually Paid +Actually Paid +first PEO (a) +second PEO (a) +first PEO (b) +second PEO (b) +PEO (c) +PEO (c) +PEO (d) +to first PEO +to second PEO +Year +($) +($) +($) +($) +($) +($) +($) +($) +($) +2023 +— +2,391,450 +— +( 998,400 ) +— +553,888 +— +— +1,946,938 +2022 +2,138,360 +2,272,390 +( 670,500 ) +( 804,600 ) +1,859,930 +1,594,914 +— +3,327,790 +3,062,704 +2021 +1,371,410 +— +( 387,000 ) +— +929,420 +— +— +1,913,830 +— +2020 +1,275,559 +— +( 459,000 ) +— +( 112,540 ) +— +( 7,322 ) +696,697 +— +(a) The amounts disclosed represent the amounts reported as Total compensation in the SCT. +(b) Represents the grant dare fair value of the equity awards reported in the Stock Awards column of the SCT. +(c) Represents the year-over-year change in the fair value of equity awards, as shown below. For 2022, the change in fair value of equity awards has been attributed to the Named Executive Officer who was PEO as of December 31, 2022: +58 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +2023 +2022 - First PEO +2022 - Second PEO +2021 +2020 +Fair Value of +($) +($) +($) +($) +($) +Equity awards granted in Current Fiscal Year (CFY) outstanding and unvested as of end of CFY +757,120 +666,750 +800,100 +454,000 +315,000 +Change in prior year awards outstanding and unvested as of end of CFY +( 266,938 ) +1,096,200 +730,800 +305,800 +( 382,470 ) +Change in prior year awards that vested in current year +20,538 +83,900 +53,694 +169,620 +( 45,070 ) +Dividends paid +43,168 +13,080 +10,320 +— +— +Total Equity Award Adjustments +553,888 +1,859,930 +1,594,914 +929,420 +( 112,540 ) +(3) +The dollar amounts reported represent the amount of CAP, computed in accordance with SEC rules. The dollar amounts do not reflect the actual amount of compensation earned by or paid to our Non-PEO Named Executive Officers during the applicable year. To calculate the amounts in the CAP to Non-PEO Named Executive Officers column in the table above, the following amounts were deducted from or added to (as applicable) the Total compensation as reported in the SCT: +Average +Reported +Equity +Average Summary +Summary Compensation +Value of Average Equity +Award Adjustments to +Compensation Actually +Table Total for Non- PEO +Awards to Non-PEO Named +Non-PEO Named +Paid to Non- PEO Named +Named Executive Officers (a) +Executive Officers (b) +Executive Officers (c) +Executive Officers +Year +($) +($) +($) +($) +2023 +1,457,560 +( 580,800 ) +292,161 +1,168,921 +2022 +819,670 +( 312,900 ) +312,550 +819,320 +2021 +733,150 +( 259,290 ) +690,512 +1,164,372 +2020 +818,133 +( 383,265 ) +440,318 +875,186 +(a) The amounts disclosed represent the average of the total amounts attributable to all non-PEO Named Executive Officers for the period each served, as included in the amounts reported as Total compensation in the SCT. +(b) Represents the average grant date fair value of the equity awards reported in the Stock Awards column of the SCT. +(c) Represents the average year-over-year change in the fair value of equity awards, as shown below. For 2020, awards granted and vested in same CFY represents restricted shares granted to R. Randall Rollins that vested immediately upon his death pursuant to the terms of the restricted stock grants. +2023 +2022 +2021 +2020 +Fair Value of +($) +($) +($) +($) +Equity awards granted in Current Fiscal year (CFY) outstanding and unvested as of end of CFY +440,440 +311,150 +304,180 +263,025 +Change in prior year awards outstanding and unvested as of end of CFY +( 190,584 ) +— +201,272 +( 122,474 ) +Awards granted and vested in same CFY +— +— +— +173,000 +Change in prior year awards that vested in current year +13,685 +— +185,060 +126,767 +Dividends paid +28,620 +1,400 +— +— +Total Equity Award Adjustments +292,161 +312,550 +690,512 +440,318 +(4) +The actuarial present value of $ 7,322 attributable to Richard A. Hubbell and contained in the Change in Pension Value and Nonqualified Deferred Compensation Earnings Column of the SCT in 2020 has been deducted computing his CAP for that year. The Company’s defined benefit pension plan was frozen in 2002 and therefore no adjustments need to be made in computing the CAP. +(5) +Reflects cumulative total shareholder return of the Philadelphia Oil Services Sector (OSX) index, as of December 31, 2023, calculated over the measurement period beginning as of December 31, 2019 established by the market close on that day through and including the end of 2023. The OSX is the peer group used by the Company for purposes of Item 201(e) of Regulation S-K under the Exchange Act in its Form 10-K for the year ended December 31, 2023. +(6) +OCF is computed as EBITDA minus cash paid for capital expenditures, plus discretionary adjustments in 2023 totaling approximately $ 24.5 million related to pension plan termination, litigation settlement and expenses related to acquisitions for the year 2023.OCF for 2020 was calculated as EBITDA minus cash paid for capital expenditures pus discretionary adjustment totaling approximately $217 million related to impairment and other charges. There were no discretionary adjustments in computing OCF for the years 2022 and 2021. +59 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +Financial Performance Measures: +The Company has used OCF as the primary performance measure for 2023. ROIC was used as the primary performance measurement for several years. ROIC is computed as the ratio of EBITDA to invested capital, for the years 2022, 2021 and 2020. Invested capital is equal to the aggregate average of stockholders’ equity, accumulated depreciation and long-term liabilities during each of the applicable years. See section titled Compensation Discussion and Analysis – Long Term Incentive Compensation for the performance goals used to grant PSUs in 2023. In addition, the Company also considers the following as important financial measures that may be used to link compensation actually paid to our Named Executive Officers: +> Earnings Per Share ; +> EBITDA ; +> Free Cash Flow – calculated as net cash provided by operating activities less capital expenditures; and +> ROIC - calculated as the ratio of EBITDA to invested capital. +Relationship between CAP and financial measures reported in the table: +The Company’s TSR has performed better than the OSX peer group over the four-year period ending in 2023. The Company reported a slight decrease in net income in 2023 compared to the previous year; net income in 2023 was higher than net income for years 2021 and 2020. For 2023, the Company achieved strong OCF performance, slightly lower than OCF in 2022, but significantly higher than OCF achieve in 2021 and 2020. +The following graphs reflect the CAP paid to our PEOs and other Non-PEO Named Executive Officers over the four-year period ended December 31, 2023 and show the Company’s TSR, net income and ROIC results over the same period. +60 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +61 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE +Section 16(a) of the Exchange Act requires our executive officers and directors and persons who own more than 10% of a registered class of the Company’s equity securities to file reports of ownership and changes in ownership with the SEC. +Delinquent Section 16(a) Reports: Based on our review of the filed copies of such forms, we believe that during the fiscal year ended December 31, 2023, all filing requirements applicable to our executive officers, directors and greater than 10% beneficial owners were timely satisfied. +62 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT +The following table sets forth information relating to the beneficial ownership of our common stock as of March 1, 2024 by: +> Each of our named executive officers; +> Each of our directors and director nominees; +> All of our current executive officers, directors and director nominees as a group; and +> Each stockholder or group as that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, who beneficially owned five percent or more of the shares of Common Stock of the Company. +The number of shares beneficially owned by each stockholder is determined under rules issued by the SEC. Under these rules, beneficial ownership includes any shares as to which a person has sole or shared voting power or investment power. Unless otherwise indicated, we believe, based on the information furnished to us, that the persons named in the table below have sole voting and investment power with respect to all securities that they beneficially own, subject to community property laws where applicable. +The information contained in the following table is not necessarily indicative of beneficial ownership for any other purpose, and the inclusion of any shares in the table does not constitute an admission of beneficial ownership of those shares. Unless otherwise indicated, the business address of each beneficial owner listed in the table below is c/o of RPC, Inc., 2801 Buford Highway NE, Suite 300, Atlanta, Georgia 30329. The information provided in the table below is based on our records, information filed with the SEC, on which we are relying pursuant to applicable SEC regulations, and information provided to us. +Amount +Percent of +Beneficially +Outstanding +Name of Beneficial Owner +Owned (1) +Shares +Named Executive Officers: +Ben M. Palmer +832,005 +(2) +** +Michael L. Schmit +61,531 +(3) +** +Richard A. Hubbell +3,048,577 +(4) +1.4 +Director and Director Nominees: +Gary W. Rollins (5) +120,602,614 +(6) +56.0 +Amy R. Kreisler (5) +2,936,753 +(7) +1.4 +Pamela R. Rollins (5) +2,001,782 +(8) +0.9 +Timothy C. Rollins +1,907,233 +(9) +0.9 +Jerry W. Nix +9,184 +** +Patrick J. Gunning +16,184 +** +Susan R. Bell +14,684 +** +John F. Wilson +10,184 +** +Other Stockholders: +Blackrock Institutional Trust Company, N.A. +15,156,215 +(10) +7.0 +Control Group +126,179,694 +(11) +58.6 +All Directors and Executive Officers as a group (11 persons) +130,172,043 +(12) +60.4 +** +Less than one percent. +(1) Except as otherwise noted, the nature of the beneficial ownership for all shares is sole voting and investment power. +(2) Includes 189,500 shares of restricted stock awards of Company Common Stock. +(3) Includes 46,875 shares of restricted stock awards of Company Common Stock. +(4) Includes 202,187 shares of restricted stock awards of Company Common Stock. +63 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +(5) Amy R. Kreisler, Pamela R. Rollins and Timothy C. Rollins are siblings and are the nieces and nephew of Gary W. Rollins. +(6) Includes the following shares of Company Common Stock: (a) 6,593 shares of the Company Common Stock held in a charitable trust of which he is a co-trustee and as to which he shares voting and investment power; (b) 78,801,225 shares held by LOR, Inc., a Georgia corporation (Gary W. Rollins is an officer and director of LOR, Inc. and has a 50% voting interest in it); (c) 3,160,819 shares held by RFT Investment Company, LLC, a Georgia limited liability company (LOR, Inc. is the manager of RFT Investment Company, LLC); (d) 15,677,032 shares held by RCTLOR, LLC, a Georgia limited liability company (LOR, Inc. is the managing member of RCTLOR, LLC); (e) 4,815,173 shares held by WNEG Investments, L.P., a Georgia limited partnership (Gary W. Rollins is the sole member of the sole general partner of WNEG Investments, L.P.); (f) 3,224,505 shares held by revocable trust established by Gary W. Rollins, of which he is the sole trustee; and (g) 8,303,544 shares held by three trusts (the “Rollins Family Trusts”) for the benefit of the children and/or more remote descendants of his deceased brother, R. Randall Rollins; and (h) 1,404,028 shares held by the R. Randall Rollins 2012 Trust. Also includes 10,970 shares of Company Common Stock held by his wife, as to which Mr. Rollins disclaims any beneficial interest. Mr. Rollins is part of a control group (see footnote (11) to this table) holding Company securities, as disclosed on a Schedule 13D on file with the U.S. Securities and Exchange Commission. +(7) Includes the following shares of Company Common Stock: (a) 455,251 shares of Company Common Stock held in a charitable trust of which she is a co-trustee and the Executive Director and (b) 201,529 shares held by multiple trusts benefiting the grandchildren and more remote descendants of her deceased father, R. Randall Rollins (Ms. Kreisler is a trustee of each such trust). Excludes 1,171 shares held by the R. Randall Rollins Voting Trust U/A dated August 25, 1994, as to which Ms. Kreisler is a co-trustee. Ms. Kreisler is part of a control group (see footnote (11) to this table) holding Company securities, as disclosed on a Schedule 13D on file with the U.S. Securities and Exchange Commission. +(8) Includes the following shares of Company Common Stock: (a) 455,251 shares of Company Common Stock held in a charitable trust of which she is a co-trustee and (b) 456,388 shares held by multiple trusts benefiting the grandchildren and more remote descendants of her deceased father, R. Randall Rollins (Ms. Rollins is a trustee of each such trust). Excludes 1,171 shares held by the R. Randall Rollins Voting Trust U/A dated August 25, 1994, as to which Ms. Rollins is a co-trustee. Ms. Rollins is part of a control group (see footnote (11) to this table) holding Company securities, as disclosed on a Schedule 13D on file with the U.S. Securities and Exchange Commission. +(9) Includes the following shares of Company Common Stock: (a) 455,251 shares of Company Common Stock held in a charitable trust of which he is a co-trustee, (b) 396,909 shares held by multiple trusts benefiting the grandchildren and more remote descendants of his deceased father, R. Randall Rollins (Mr. Rollins is a trustee of each such trust), and (c) 54,323 shares held of record by a minor child over which Mr. Rollins possesses voting and dispositive power. Also includes 1,530 shares of Company Common Stock held by his wife, as to which Mr. Rollins disclaims any beneficial interest. Excludes 1,171 shares held by the R. Randall Rollins Voting Trust U/A dated August 25, 1994, as to which Mr. Rollins is a co-trustee. Mr. Rollins is part of a control group (see footnote (11) to this table) holding Company securities, as disclosed on a Schedule 13D on file with the U.S. Securities and Exchange Commission. +(10) Based on most recently filed 13F. +(11) Control group includes Gary W. Rollins, Pamela R. Rollins, Amy R. Kreisler and Timothy C. Rollins, and certain companies under their control, that possess in excess of 50% of the Company’s voting power. See footnotes (6), (7), (8), (9) & (12) to this table for additional information. +(12) Shares held in trusts as to which more than one officer and/or director are co-trustees or entities in which there is common ownership have been included only once. Includes 438,562 shares of restricted stock awards for Company Common Stock awarded and issued to the executive officers pursuant to the Company’s Stock Incentive Plans. +64 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +The Company provides certain administrative services to Marine Products on a cost reimbursement basis and the arrangement may be terminated upon six months’ notice. The services include administration of certain employee benefit programs and other administrative services. Charges from the Company (or from corporations which are subsidiaries of the Company) for such services aggregated approximately $1 million in 2023. The Company’s receivable due from Marine Products for these services was $120 thousand as of December 31, 2023. In addition, the Company owed $524 thousand to Marine Products, for using Marine Product’s assets in the Retirement Income Plan to settle its participant liabilities. Of the total Plan-related amounts owed, the Company reimbursed Marine Products $482 thousand during 2023. +RPC and Marine Products own 50% each of a limited liability company called 255 RC, LLC that was created for the joint purchase and ownership of a corporate aircraft. Each of RPC and Marine Products is currently a party to an operating lease agreement with 255 RC, LLC for a period of five years. During 2023, RPC recorded certain net operating costs comprised of rent and an allocable share of fixed costs of approximately $200 thousand for the corporate aircraft. +During 2023, a subsidiary of RPC conducted business with companies owned by LOR, Inc., a member of the control group. Mr. Gary W. Rollins, a director at RPC, is an officer, director and controlling stockholder of LOR, Inc., and Timothy C. Rollins, Vice President of LOR, Inc., Pamela R. Rollins, Director of LOR, Inc., and Amy R. Kreisler, Vice President of LOR Inc., are part of the controlling stockholders of LOR, Inc. Payments totaling approximately $1.7 million were made in 2023 and approximately $150 thousand were made in 2024 to these LOR, Inc. companies primarily for the purchase of parts and repair services related to certain of RPC’s oilfield operating equipment. RPC believes the charges incurred are at least as favorable as the charges that would have been incurred for similar purchases from unaffiliated third parties. +Related party transactions, as defined in Regulation S-K, Item 404(a), must be reviewed and approved in advance by our Nominating and Corporate Governance Committee or, in the event that our Nominating and Corporate Governance Committee does not consist of all independent directors, by a Subcommittee (the Subcommittee) of the Nominating and Corporate Governance Committee consisting of all of the independent members thereof. As set forth in the Charter of our Nominating and Corporate Governance Committee, the Nominating and Corporate Governance Committee has the authority and responsibility to ensure that it approve all related party transactions, including material amendments that are in compliance with applicable law, consistent with the Company’s corporate governance policies (including those relative to conflicts of interest and usurpation of corporate opportunities) and on terms that are deemed to be fair to the Company. The Nominating and Corporate Governance Committee also has the authority to hire legal, accounting, financial or other advisors, as it may deem necessary or desirable and/or to delegate responsibilities to executive officers of the Company in connection with discharging its duties. These same rights and responsibilities apply equally to the Subcommittee. A copy of the Charter of the Nominating and Corporate Governance Committee is available on our website at www.rpc.net under the Governance section. All related party transactions for the fiscal year ended December 31, 2023 were reviewed, pre-approved and/or ratified by the Nominating and Corporate Governance Committee in accordance with the Charter. +65 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +STOCKHOLDER PROPOSALS +AND BOARD NOMINATIONS +Appropriate proposals of stockholders intended to be presented at the Company’s 2025 Annual Meeting of Stockholders must be received by the Company by November 14, 2024 in order to be included, pursuant to Rule 14a-8 promulgated under the Exchange Act, in the Company’s proxy statement and form of proxy relating to that meeting. With regard to such stockholder proposals, if the date of the next annual meeting of stockholders is advanced or delayed more than 30 calendar days from April 23, 2025, the Company will, in a timely manner, inform its stockholders of the change and of the date by which such proposals must be received. Stockholders desiring to present business at the 2025 Annual Meeting of Stockholders outside of the stockholder proposal rules of Rule 14a-8 of the Exchange Act and instead pursuant to Article Twenty-Seventh of the Bylaws must prepare a written notice regarding such proposal addressed to The Corporate Secretary, RPC, Inc., 2801 Buford Highway NE, Suite 300, Atlanta, Georgia 30329, and deliver to or mailed and received by no later than January 23, 2025 and no earlier than December 14, 2024. Stockholders should consult the Bylaws for other specific requirements related to such notice and proposed business. +With respect to stockholder nomination of directors, the Bylaws provide that nominations for the election of directors may be made by any stockholder entitled to vote for the election of directors. Nominations must comply with an advance notice procedure which generally requires with respect to nominations for directors for election at an annual meeting, that written notice be addressed to: The Corporate Secretary, RPC, Inc., 2801 Buford Highway NE, Suite 300, Atlanta, Georgia 30329, and be received not less than 90 nor more than 130 days prior to the anniversary of the prior year’s annual meeting and set forth, among other requirements specified in the Bylaws, the name, age, business address and, if known, residence address of the nominee proposed in the notice, the principal occupation or employment of the nominee for the past five years, the nominee’s qualifications, the class or series and number of shares of capital stock of the Company which are owned beneficially or of record by the person and any other information relating to the person that would be required to be disclosed in a proxy statement or other filings. Other specific requirements related to such notice, including required disclosures concerning the stockholder intending to present the nomination, are set forth in the Bylaws. Notices of nominations must be received by the Corporate Secretary of the Company no later than January 23, 2025 and no earlier than December 14, 2024, with respect to directors to be elected at the 2025 Annual Meeting of Stockholders. +In addition, a stockholder who intends to solicit proxies in support of director nominees submitted under the advance notice provisions of our Bylaws must provide notice to the Company with the information required by SEC Rule 14a-19, which notice must be postmarked or transmitted electronically to us at our principal executive offices no later than 60 days prior to the one year anniversary date of the annual meeting (for the 2025 meeting, no later than February 22, 2025). Such notice should be delivered to our Corporate Secretary at our principal executive offices. If the date of the 2025 annual meeting is changed by more than 30 days from such anniversary date, however, then the stockholder must provide notice by the later of 60 days prior to the date of the 2025 annual meeting and the 10th day following the date on which public announcement of the date of the 2025 annual meeting is first made. +66 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +EXPENSES OF SOLICITATION +The Company will bear the cost of soliciting proxies. Upon request, we will reimburse brokers, dealers and banks, or their nominees, for reasonable expenses incurred in forwarding copies of the proxy material to their beneficial stockholders of record. Solicitation of proxies will be made principally by mail. Proxies also may be solicited in person or by telephone, facsimile or other means by our directors, officers and regular employees. These individuals will receive no additional compensation for these services. The Company has retained Alliance Advisors, LLC to provide proxy solicitation services for an estimated fee of approximately $15,000 plus reasonable out of pocket expenses. +ANNUAL REPORT +The Company’s Annual Report to Stockholders, including its Annual Report on Form 10-K for the fiscal year ended December 31, 2023, without exhibits, is being provided to stockholders with this Proxy Statement. The Annual Report is not considered proxy-soliciting material. +FORM 10-K +Upon the written request of any record or beneficial owner of the Company’s Common Stock whose proxy was solicited in connection with the 2024 Annual Meeting of Stockholders, the Company will furnish such owner, without charge, a copy of its Annual Report on Form 10-K, including the financial statements and the financial statement schedules (but without exhibits), for its fiscal year ended December 31, 2023. Requests for a copy of such Annual Report on Form 10-K should be addressed to Mr. Michael L. Schmit, Corporate Secretary, at RPC, Inc., 2801 Buford Highway NE, Suite 300, Atlanta, Georgia 30329. +67 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +OTHER MATTERS +Our Board of Directors knows of no business other than the matters set forth herein which will be presented at the Annual Meeting. In as much as matters not known at this time may come before the Annual Meeting, the enclosed proxy confers discretionary authority with respect to such matters as may properly come before the Annual Meeting; and it is the intention of the persons named in the proxy to vote in accordance with their best judgment on such matters. +BY ORDER OF THE BOARD OF DIRECTORS +Michael L. Schmit +Corporate Secretary +Atlanta, Georgia +March 14, 2024 +68 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +CAUTION CONCERNING FORWARD- LOOKING STATEMENTS +This Proxy Statement contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts contained in this Proxy Statement, including statements regarding future operations are forward-looking statements. In some cases, forward-looking statements may be identified by words such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “could,” “would,” “expect,” “objective,” “plan,” “potential,” “seek,” “grow,” “target,” “if,” or the negative of these terms and similar expressions intended to identify forward-looking statements. Forward-looking statements are made subject to the safe harbor provisions of the federal securities laws pursuant to Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We have based these forward-looking statements primarily on our current opinions, expectations, beliefs, plans, objectives, assumptions and projections about future events and trends that we believe may affect us. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the future events and trends discussed in this Proxy Statement, including our expectations for 2024, may not occur and actual results may differ materially and adversely from those anticipated or implied in the forward-looking statements. You should read this Proxy Statement with the understanding that our actual future results, levels of activity, performance and events and circumstances may be materially different from what we expect. These forward-looking statements include, without limitation, that we are confident in our ability to invest in the business and continue returning capital to shareholders, statements regarding our appetite to continue prudently expanding the business and optimism for another year of solid financial performance and growth investments, our statement that we look forward to making continued progress on all sustainability fronts and sharing updates through corporate sustainability reports on an annual basis, and our statement that we remain committed to the financial discipline and conservative approach that has been our hallmark for decades and the backbone of our longevity and success. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in the section titled “Risk Factors” set forth in Part I, Item 1A of our 2023 Annual Report and in our other SEC filings, which include, among other things, the dependence of our business on the oil and natural gas industries and related commodity pricing and volatility in oil and gas prices, potential reliance on large customers, adverse weather conditions, and the potential reliance on large customers, adverse weather conditions,, and the potential impact on our business of wars and pandemics. Forward-looking statements speak only as of the date of this Proxy Statement, and you should not put undue reliance on any forward-looking statements. We assume no obligation to publicly update or revise any forward-looking statements because of new information, future events, changes in assumptions or otherwise, except to the extent required by applicable laws. If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements. While we believe that the information on which we have based these forward-looking statements provides a reasonable basis for these statements, such information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements. +69 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +APPENDIX A: 2024 STOCK INCENTIVE PLAN +SECTION 1. DEFINITIONS. +The purpose of the RPC, Inc. 2024 Stock Incentive Plan (the “Plan”) is to enable RPC, Inc. (the “Company”) to attract, retain and reward directors and key employees of the Company and its Subsidiaries and Affiliates, and strengthen the mutuality of interests between such persons and the Company’s shareholders, by offering such persons performance-based stock incentives and/or other equity interests or equity-based incentives in the Company, as well as performance-based incentives payable in cash. +For purposes of this Plan, the following terms shall be defined as set forth below: +1. “Affiliate” means any entity other than the Company and its Subsidiaries that is designated by the Board as a participating employer under this Plan, provided that the Company directly or indirectly owns at least 20% of the combined voting power of all classes of stock of such entity or at least 50% of the ownership interests in such entity. +2. “Award” means any award or benefit granted under this Plan, including, without limitation, the grant of Options, Stock Appreciation Rights (SARs), Restricted Stock Unit Awards, Restricted Stock Awards, Performance Stock Awards, Performance Unit Awards and other equity awards hereunder, which may or may not be subject to vesting or performance criteria. “Award Agreement” shall have the meaning provided in Section 10(h) below. +3. “Board” means the Board of Directors of the Company. +4. “Book Value” means, at any given date, (i) the consolidated stockholders’ equity in the Company and its Subsidiaries, as shown on the Company’s consolidated balance sheet as of the end of the immediately preceding fiscal year, subject to such adjustments as the Committee shall in good faith specify at grant, divided by (ii) the number of shares of Outstanding Stock as of such year-end date (as adjusted by the Committee for subsequent events). +5. “Code” means the Internal Revenue Code of 1986, as amended from time to time, and the applicable rulings, regulations and guidance thereunder, and any successors to such Code and applicable rulings, regulations and guidance. +6. “Committee” means the Committee referred to in Section 2 of this Plan. If at any time no Committee shall be in office, then the functions of the Committee specified in this Plan may be exercised by the Board or the Human Capital Management and Compensation Committee of the Board, as set forth in Section 2 hereof. +7. “Company” means RPC, Inc., a corporation organized under the laws of the State of Delaware, or any successor corporation. +8. “Disability” means disability as determined under procedures established by the Committee for purposes of this Plan and shall in all events be consistent with the definition of “disabled” provided in Sections 422(c)(6) and 22(e)(3) of the Code; provided, however, that with respect to an Award subject to Section 409A of the Code that is paid or settled on account of a Participant’s “disability,” the payment or settlement of the Award shall be made only if the Participant has a “disability” as defined in Section 409A of the Code. +A- 1 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +9. “Early Retirement” means retirement with the express written consent of the Company (given for purposes of this Plan only at or before the time of such retirement) from active employment with the Company and/or any Subsidiary or Affiliate. +10. “Fair Market Value” means, unless otherwise determined by the Committee, in good faith and having due regard to Section 409A of the Code, as of any given date (the “Valuation Date”): +i. if the Stock is listed on an established stock exchange or exchanges, the closing price of one share of the Stock as reported on such exchange on the Valuation Date, or if no sale of Stock has been made on any exchange on the Valuation Date, on the next preceding day on which there was a sale of Stock; +ii. if the Stock is not listed on an established stock exchange but is instead traded over the counter, the mean of the dealer “bid” and “ask” prices of the Stock in the over-the-counter market on the applicable day, as reported by Financial Industry Regulatory Authority; and +iii. if the Stock is not listed on any exchange or traded over the counter, the fair market value of the Stock determined by the Committee in good faith and pursuant to a reasonable application of a reasonable valuation method in accordance with the relevant provisions of Section 409A of the Code. +11. “Incentive Stock Option” means any Stock Option designated as an “Incentive Stock Option” within the meaning of Section 422 of the Code. +12. “Non-Employee Director” shall have the meaning set forth in Rule 16b-3 promulgated pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”). +13. “Non-Qualified Stock Option” means any Stock Option that is not an Incentive Stock Option. +14. “Normal Retirement” means retirement from active employment with the Company and/or any Subsidiary or Affiliate on or after age 65. +15. “Other Stock-Based Award” means an Award granted to a Participant under Section 7 below that is valued in whole or in part by reference to, or is otherwise based on, Stock, including, without limitation, Restricted Stock, Restricted Stock Units, Performance-Accelerated Restricted Stock, Performance Stock, Performance Units and Awards (other than Options or SARs) valued by reference to Book Value or Subsidiary performance. +16. “Outstanding Stock” shall include all outstanding shares of Common Stock, $0.10 par value, of the Company as well as the number of shares of Common Stock into which then outstanding shares of capital stock of the Company, of whatever class, are convertible as of the year-end immediately preceding the date of calculation thereof (as adjusted by the Committee for certain events). +17. “Participants” shall include those persons who are granted one or more Awards under this Plan, subject to the terms and conditions of this Plan as the Committee shall determine and designate, from time to time, from among those eligible for Award grants hereunder. +18. “Performance-Accelerated Restricted Stock” means Restricted Stock which is subject to restrictions for a stated period of time based on continued employment, with the opportunity for the restriction period to be shortened based on the achievement of predetermined performance goals. +A- 2 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +19. “Performance Stock” means Stock awarded under Section 7 below at the end of a specified performance period, the amount of which is determined by multiplying a performance factor times either (i) the Fair Market Value of the Stock on the last day of the performance period, or (ii) the difference between the Fair Market Value of the Stock on the first and last days of the performance period, provided, however, that at the discretion of the Committee, Participants may receive the value of Performance Stock in cash, as determined by reference to the Fair Market Value on the date the amount of the award is determined. +20. “Performance Share Unit” means an Award pursuant to Section 7 with a starting value and an associated performance period, such that at the end of the performance period Participants receive an amount, payable in either cash or Stock, at the discretion of the Committee, equal to (i) the number of units earned based on a predetermined performance schedule times the starting unit value, or (ii) the number of units granted times the ending unit value based on a predetermined performance schedule. +21. “Plan” means this RPC, Inc. 2024 Stock Incentive Plan, as hereafter amended from time-to-time. +22. “Premium Stock Option” means any Stock Option with an exercise price in excess of the Fair Market Value, as computed on the date of grant of the Stock Option. +23. “Retirement” means Normal or Early Retirement. +24. “Restricted Stock” means Stock awarded under Section 7 below which is (i) subject to restrictions for a stated period of time based on continued employment, (ii) subject to restrictions which will lapse only upon the achievement of predetermined performance goals, or (iii) subject to a combination of the restrictions described in (i) and (ii) above. +25. “Restricted Stock Unit” means a bookkeeping entry representing a right granted to a Participant to receive one share of Stock, a cash payment equal to the value of one share of Stock, or a combination thereof, as determined in the sole discretion of the Committee. +26. “Stock” means the Common Stock, $0.10 par value per share, of the Company. +27. “Stock Appreciation Right” or “SAR” means the right pursuant to an award granted under Section 6 below to receive an amount in either cash or Stock, equal to the difference between the Fair Market Value of the Stock on the date of exercise and the Fair Market Value of the Stock on the date of grant of the right. +28. “Stock Option” or “Option” means any option to purchase shares of Stock granted pursuant to Section 5 below. +29. “Subsidiary” means any present or future subsidiary corporation of the Company within the meaning of Section 424(f) of the Code, and any present or future business venture designated by the Committee in which the Company has a significant interest, as determined in the discretion of the Committee. +30. “Substitute Awards” means Awards granted upon assumption of, or in substitution for, outstanding awards previously granted by a company or other entity acquired (directly or indirectly) by the Company or with which the Company combines. +SECTION 2. ADMINISTRATION. +This Plan shall be administered by the Board of Directors or by a Committee of not less than two Non-Employee Directors, who shall be members of the Board and who shall serve at the pleasure of the Board, such Committee to be designated by the Board. Except as otherwise directed by the Board, or delegated in accordance with the +A- 3 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +provisions hereof, the functions of the Committee specified in this Plan shall be exercised by the Human Capital Management and Compensation Committee of the Board. +The Committee shall have full authority to grant, pursuant to the terms of this Plan, to Participants under Section 4: (i) Stock Options, including, without limitation, Incentive Stock Options, Non-Qualified Stock Options and Premium Stock Options, (ii) Stock Appreciation Rights and/or (iii) Other Stock-Based Awards, including, without limitation, Restricted Stock, Restricted Stock Units, Performance-Accelerated Restricted Stock, Performance Stock, Performance Units and other equity awards hereunder, which may or may not be subject to vesting or performance conditions. +In particular, the Committee, or its permitted delegates, shall have the authority: +(a) subject to Section 4 hereof, to select the Participants to whom Stock Options, Stock Appreciation Rights, Other Stock-Based Awards and/or other Awards may from time to time be granted hereunder; +(b) to determine whether and to what extent Stock Options, Stock Appreciation Rights, Other Stock-Based Awards, other Awards, or any combination thereof, are to be granted hereunder to one or more Participants; +(c) to determine the number of shares of Stock to be covered by each such Award granted hereunder; +(d) to determine the terms and conditions, not inconsistent with the terms of this Plan, of any Award granted hereunder (including, but not limited to, the Award price (if any) and any restriction or limitation, or any vesting, acceleration or waiver of forfeiture restrictions regarding any Stock Option or other Award and/or the shares of Stock relating thereto, based in each case on such factors as the Committee shall determine, in its sole discretion); +(e) to determine whether and under what circumstances Stock Options, Stock Appreciation Rights, Performance Stock and Performance Units and other Awards may be settled in cash; and +(f) to the extent that Options or SARs have exercise or base prices that exceed the current Fair Market Value of the Stock, the Committee has the discretion, without obtaining shareholder approval, to re-price such Options or SARs and lower their exercise or base prices to prices not lower than the Fair Market Value of the Stock on the date of the action taken to affect the re-pricing. The Committee may also, without obtaining shareholder approval, amend any outstanding Award to provide the holder thereof with additional rights or benefits of the type otherwise permitted by this Plan, including without limitation, extending the term thereof; provided, however, that: +i. no amendment to the terms of an outstanding Award that is subject to Section 409A of the Code shall cause the Award to violate Section 409A of the Code; +ii. no amendment to the terms of an outstanding Award that is not subject to Section 409A of the Code shall cause the Award to become subject to Section 409A of the Code; and +iii. the term of an outstanding Award shall not be extended beyond the earlier of the latest date the Award would have expired by its original terms or the tenth anniversary of the original grant date of the Award, except that to the extent an Award cannot be exercised because such exercise would violate Federal, state or local laws, then the expiration of such Award shall automatically be tolled for the period during which such exercise would violate applicable law, but no more than 30 days. +The Committee shall have the authority to adopt, alter and repeal such rules, guidelines and practices governing this Plan as it shall, from time to time, deem advisable; to interpret the terms and provisions of this Plan and any Award issued under this Plan (and any agreements relating thereto); and to otherwise supervise the administration of this Plan. +A- 4 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +The Committee may delegate its powers and duties under this Plan to one or more directors (including a director who is also an officer of the Company) or a committee of directors, subject to such terms, conditions and limitations as the Committee may establish in its sole discretion; provided, however, that the Committee shall not delegate its powers and duties under this Plan with regard to officers or directors of the Company or any Affiliate who are subject to Section 16 of the Exchange Act. In addition, the Committee may authorize one or more officers of the Company to grant Awards under this Plan, subject to the limitations of Sections 152 and 157 of the Delaware General Corporation Law, as applicable; provided, however, that such officers shall not be authorized to grant Options to officers or directors of the Company or any Affiliate who are subject to Section 16 of the Exchange Act. +Except as otherwise provided by the Committee, Awards under this Plan are not transferable except as designated by the Participant by will or by the laws of descent and distribution. +Except as otherwise specifically provided herein, all decisions made by the Committee pursuant to the provisions of this Plan shall be made in the Committee’s sole discretion, shall not be subject to review by any person, and shall be final and binding on all persons, including the Company and all Plan Participants. +SECTION 3. STOCK SUBJECT TO PLAN AND ADJUSTMENTS. +(a) Aggregate Maximum Shares Available. Subject to adjustment in accordance with paragraph (d) of this Section 3, the maximum number of shares of Stock that may be delivered to Participants and their beneficiaries under this Plan shall be 8,000,000 shares of Stock. +(b) Calculation of Shares Delivered. To the extent any shares of Stock covered by an Award are not delivered to a Participant or beneficiary for any of the following reasons, such shares shall not be deemed delivered for purposes of determining the number of shares of Stock remaining available for delivery under this Plan, and will therefore be available for re-grant or re-issuance: +1 the Award is forfeited or canceled; +2 the Award is settled in cash; +3 such shares are withheld from the Award or otherwise tendered, physically or by attestation, to pay the exercise or purchase price of an Award granted under this Plan, or to satisfy applicable tax withholding obligations incurred in connection with the Award. +The maximum number of shares of Stock available for delivery under this Plan shall not be reduced for shares subject to plans assumed by the Company in an acquisition of an interest in another company or for Substitute Awards. +(c) Award Limitations. Subject to the aggregate maximum set forth in (a) above and to adjustment in accordance with paragraph (d) of this Section 3 (so long as such adjustment will not affect the status of any Award intended to qualify as an Incentive Stock Option), the following additional maximums are imposed under this Plan: +(i) The full number of shares of Stock available for delivery under this Plan may be delivered pursuant to Incentive Stock Options; +(ii) The maximum number of shares of Stock that may be covered by Awards granted to any one individual pursuant to Sections 5 and 6 (relating to Options and SARs) shall be 200,000 during any fiscal year; and +(iii) The maximum number of shares of Stock that may be covered by Awards granted to any one individual pursuant to Section 7 (relating to Other Stock-Based Awards) shall be 200,000 during any fiscal year. +A- 5 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +(d) Adjustments. +1 In general. The existence of outstanding Awards shall not affect in any way the right or power of the Company or its stockholders to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in the Company’s capital structure or its business, or any merger or consolidation of the Company, or any issue of bonds, debentures, preferred or prior preference stock ahead of or affecting the Stock or the rights thereof, or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise. +Furthermore, except as expressly provided in this Section 3 or otherwise expressly provided for in a writing approved by the Board or Committee, (i) the issuance by the Company of shares of stock or any class of securities convertible into shares of stock of any class, for cash, property, labor or services, upon direct sale, upon the exercise of rights or warrants to subscribe therefor, or upon conversion of shares or obligations of the Company convertible into such shares or other securities, (ii) the payment of a dividend in property other than Shares, or (iii) the occurrence of any similar transaction, and in any case whether or not for fair value, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number of Shares subject to Stock Options or other Awards theretofore granted or the purchase or repurchase price per Share. +2 Changes in Capital Structure. If the Company shall effect a subdivision or consolidation of shares or other capital readjustment, the payment of a stock dividend, or other increase or reduction of the number of shares of the Stock outstanding, without receiving compensation therefor in money, services or property, then the terms and conditions of this Plan and any then outstanding Awards shall be adjusted proportionately in order to prevent dilution or enlargement of the benefits or potential benefits intended to be provided under this Plan and Awards made hereunder as follows: +(a) the number and type of shares that may be granted subject to Awards granted under this Plan; +(b) the number and type of Awards that may be granted to any individual under this Plan; +(c) the terms of any SAR; +(d) the purchase price or repurchase price of any Stock Award; +(e) the exercise price and number and class of securities issuable under each outstanding Option; and +(f) the repurchase price of any securities substituted for shares underlying Awards that are subject to repurchase rights. +The specific adjustments to be made to effectuate the intent of the preceding sentence shall be determined by the Board or Committee, whose determination in this regard shall be final and binding on all parties. In the event of any other change to the capital structure of the Company, the Board or Committee shall have the discretion to determine what if any adjustments shall be made. Unless the Board or Committee specifies otherwise, any securities issuable as a result of any such adjustments shall be rounded down to the next lower whole security. The Board or Committee need not adopt the same rules for each Award or each holder of Awards. +3 Merger and Consolidation. Any other provision hereof to the contrary notwithstanding (except the preceding paragraphs of this Section 3(d)), in the event the Company is a party to a merger or other reorganization, outstanding Awards shall be subject to the agreement of merger or reorganization. Such agreement may provide, without limitation, for the assumption of outstanding Awards by the surviving corporation or its parent, for their continuation by the Company (if the Company is a surviving corporation), for their cancellation, for accelerated vesting and accelerated expiration, or for settlement in cash. Notwithstanding the foregoing, any action taken in connection with such merger or reorganization shall not (i) cause an Award that is not otherwise subject to Section 409A of the Code to become subject to such section or (ii) cause an Award that is subject to Section 409A of the Code to violate such section. +A- 6 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +SECTION 4. ELIGIBILITY. +Directors, officers and other key employees of the Company or its Subsidiaries and Affiliates who, in the sole judgment of the Committee or its designees, are responsible for or contribute to the growth and/or profitability of the business of the Company and/or its Subsidiaries and Affiliates are eligible to be granted Awards under this Plan. Notwithstanding the foregoing, Stock Options and SARs may be granted only to individuals with respect to whom the Company’s Stock will qualify as “Service Recipient Stock” under Section 409A of the Code and Incentive Stock Options may be granted only to employees of the Company and any of its Subsidiaries or Affiliates that is a “subsidiary corporation” within the meaning of Section 424(f) of the Code. Furthermore, no director who is also not an employee of the Company shall be eligible to receive Incentive Stock Options. +SECTION 5. STOCK OPTIONS. +Stock Options may be granted under this Plan, in such form as the Committee may from time to time approve. +Stock Options granted under this Plan may be of two types: (i) Incentive Stock Options and (ii) Non-Qualified Stock Options. Incentive Stock Options and Non-Qualified Stock Options may be issued as Premium Stock Options at the discretion of the Board. +Subject to the restrictions contained in Section 4 hereof concerning the grant of Incentive Stock Options, the Committee shall have the authority to grant to any Participant Incentive Stock Options, Non-Qualified Stock Options, or both types of Stock Options. To the extent that the Fair Market Value of the shares with respect to which Incentive Stock Options first become exercisable by an optionee during any calendar year (under this Plan and any other plans granting Incentive Stock Options which are established by the Company or its Subsidiaries) exceeds $100,000, such Options shall be treated as Non-Qualified Stock Options. +Options granted under this Plan shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of this Plan, as the Committee shall deem desirable: +(a) EXERCISE PRICE. The exercise price per share of Stock purchasable under a Stock Option shall be determined by the Committee at the time of grant; provided that: +(i) The exercise price shall not be less than 100% of the Fair Market Value of the Stock on the date of Stock Option grant; and +(ii) In the case of an Incentive Stock Option granted to an employee who owns stock representing more than 10% of the total combined voting power of all classes of capital stock of the Company or of any of its subsidiary or parent corporations, the exercise price shall not be less than 110% of the Fair Market Value of the Stock on the date of Stock Option grant. +Notwithstanding the foregoing, a Stock Option (whether an Incentive Stock Option or a Non-Qualified Stock Option) may be granted with an exercise price lower than the minimum exercise price set forth above if such Stock Option is granted pursuant to an assumption or substitution for another option in a manner qualifying under the provisions of Section 424(a) of the Code. +(b) OPTION TERM. The term of each Stock Option shall be determined by the Committee at grant, but no Stock Option shall be exercised more than ten years (or, in the case of an Incentive Stock Option granted to an employee who owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or any of its subsidiary or parent corporations, more than five years) after the date the Option is granted, except that to the extent a Stock Option cannot be exercised because such exercise would violate Federal, state or local laws, then the expiration of such Option shall automatically be tolled for the period during which such exercise would violate applicable law, but no more than 30 days. +A- 7 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +(c) EXERCISABILITY. Stock Options shall be exercised at such time or times and subject to such terms and conditions as shall be determined by the Committee at grant. If the Committee provides, in its sole discretion, that any Stock Option is exercisable only in installments, the Committee may waive such installment exercise provisions at any time after the grant date in whole or in part, based on such factors as the Committee shall determine, in its sole discretion. +(d) METHOD OF EXERCISE. Subject to whatever installment exercise provisions or other restrictions apply under Section 5(c), Stock Options may be exercised in whole or in part at any time during the option term, by giving written notice of exercise to the Company specifying the number of shares to be purchased; provided, however, that unless otherwise permitted by the Committee, if exercised in part, a Stock Option may not be exercised for fewer than 100 shares, unless the remaining balance of the Stock Option is less than 100 shares, in which case the Stock Option may be exercised for the remaining balance. +Such notice shall be accompanied by payment in full of the purchase price, either by cash or such instrument as the Committee may accept. Payment in full or in part may also be made in the form of unrestricted Stock, including shares withheld in connection with the exercise of the Stock Option, based, in each case, on the Fair Market Value of the Stock on the date the Stock Option is exercised, unless it shall be determined by the Committee, at or after grant, in its sole discretion, that unrestricted Stock is not a permissible form of payment with respect to any Stock Option or Options. +If permitted by the Committee, a Plan Participant may elect to pay the exercise price upon the exercise of an Option by irrevocably authorizing a third party to promptly sell shares of Stock (or a sufficient portion of the shares) acquired upon exercise of the Option and remit to the Company a sufficient portion of the sale proceeds to pay the entire exercise price and any tax withholding resulting from such exercise. +Subject to the immediately preceding paragraph, no shares of Stock shall be issued until full payment therefore has been made. Subject to Section 10(a) and any other limitations set forth in this Plan or relevant Award Agreement, an optionee shall generally have the rights to dividends or other rights of a shareholder with respect to shares subject to the Stock Option when the optionee has given written notice of exercise, has paid in full for such shares, and, if so requested, has given any representations requested pursuant in Section 10(a). +(e) TERMINATION BY DEATH. Subject to Section 3(d), if an optionee’s employment by the Company and/or any Subsidiary or Affiliate terminates by reason of death, any Stock Option held by such optionee may thereafter be exercised to the extent such option was exercisable at the time of death or on such accelerated basis as the Committee may determine at grant (or as may be determined in accordance with procedures established by the Committee), by the legal representative of the estate or by the legatee of the optionee under the will of the optionee, for a period of twelve months (or such other period as the Committee may specify at grant) from the date of such death or until the expiration of the stated term of such Stock Option, whichever period is the shorter. +(f) TERMINATION BY REASON OF DISABILITY. Subject to Section 3(d), if an optionee’s employment by the Company and/or any Subsidiary or Affiliate terminates by reason of Disability, any Stock Option held by such optionee may thereafter be exercised by the optionee or his/her guardian, to the extent it was exercisable at the time of termination or on such accelerated basis as the Committee may determine at grant (or as may be determined in accordance with procedures established by the Committee), for a period of one year (or such other period as the Committee may specify at grant) from the date of such termination of employment or until the expiration of the stated term of such Stock Option, whichever period is the shorter; provided, however, that, if the optionee dies within such one-year period (or such other period as the Committee may specify at grant), any unexercised Stock Option held by such optionee shall thereafter be exercisable only pursuant to Section 5(e). +A- 8 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +(g) TERMINATION BY REASON OF RETIREMENT. Subject to Section 3(d), if an optionee’s employment by the Company and/or any Subsidiary or Affiliate terminates by reason of Normal or Early Retirement, any Stock Option held by such optionee may be exercised by the optionee, to the extent it was exercisable at the time of such Retirement, for a period of three months, less one day (or such other period as the Committee may specify at grant), from the date of such termination, or the expiration of the stated term of such Stock Option, whichever period is the shorter; provided, however, that if the optionee dies within such period of three months less one day (or such other period as the Committee may specify at grant), any unexercised Stock Option held by such optionee shall thereafter be exercisable only pursuant to Section 5(e). +(h) OTHER TERMINATION. Unless otherwise determined by the Committee (or pursuant to procedures established by the Committee) at or after grant, if an optionee’s employment by the Company and/or any Subsidiary or Affiliate terminates for any reason other than death, Disability or Normal or Early Retirement, including without limitation in the case of voluntary or involuntary resignation of employment by the optionee, the entire Stock Option shall thereupon terminate and shall be immediately forfeited, regardless of its vesting status. +(i) BUYOUT PROVISIONS. The Committee may at any time offer to buy out for a payment in cash or Stock a Stock Option previously granted, based on such terms and conditions as the Committee shall establish and communicate to the optionee at the time that such offer is made. +(j) FRACTIONAL SHARE. If any adjustment referred to herein shall result in a fractional share for any optionee under any Stock Option hereunder, such fraction shall be completely disregarded and the optionee shall only be entitled to the whole number of shares resulting from such adjustment. +(k) COMPLIANCE WITH SECTION 422 OF THE CODE. To the extent that any Stock Option which is designated as an Incentive Stock Option hereunder fails for any reason to comply with the provisions of Section 422 of the Code it shall be treated as a Non-Qualified Stock Option. +SECTION 6. STOCK APPRECIATION RIGHTS. +(a) GRANT AND EXERCISE. The Committee may grant Stock Appreciation Rights under this Plan. +(b) TERMS AND CONDITIONS. Stock Appreciation Rights shall be subject to such terms and conditions, not inconsistent with the provisions of this Plan, as shall be determined from time to time by the Committee, including the following: +(i) The term of each Stock Appreciation Right shall be fixed by the Committee at grant, and no such Stock Appreciation Right shall be exercised more than ten years after the date it is granted, except that, to the extent a Stock Appreciation Right cannot be exercised during its initial term because such exercise would violate Federal, state or local laws, then the expiration of such Award shall automatically be tolled for the period during which such exercise would violate applicable law, but no more than 30 days. +(ii) Stock Appreciation Rights shall be exercised at such time or times and subject to such terms and conditions as shall be determined by the Committee at grant. If the Committee provides, in its sole discretion, that any Stock Appreciation Right is exercisable only in installments, the Committee may waive such installment exercise provisions at any time after grant in whole or in part, based on such factors as the Committee shall determine in its sole discretion. +A- 9 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +(iii) Upon the exercise of a Stock Appreciation Right, a Participant shall be entitled to receive an amount in cash and/or shares of Stock equal in value to the excess of Fair Market Value of the Stock on the date of exercise over the Fair Market Value of the Stock on the date of grant (the “Base Price”) multiplied by the number of Stock Appreciation Rights exercised, with the Committee having the right to determine the form of payment. +(iv) Subject to whatever installment exercise provisions or other restrictions apply hereunder, Stock Appreciation Rights may be exercised in whole or in part at any time during the term thereof by giving written notice of exercise to the Company specifying the number of rights to be exercised. +(v) Sections 5(e) through (j) hereof shall apply equally to all Stock Appreciation Rights granted pursuant to this Plan, as if each reference therein to a “Stock Option” was instead a reference to a “Stock Appreciation Right.” +SECTION 7. OTHER STOCK-BASED AWARDS. +(a) ADMINISTRATION. The Committee may grant such Other Stock-Based Awards not described above that the Committee determines to be consistent with the purpose of this Plan and the interests of the Company. Subject to the provisions of this Plan, the Committee shall have authority to determine the persons to whom and the time or times at which such Other Stock-Based Awards shall be made, the number of shares of Stock to be awarded pursuant to such Other Stock-Based Awards, and all other conditions of the Other Stock-Based Awards. The Committee may also provide for the grant of Stock upon the completion of a specified performance period or event. +The Committee may designate whether any such Awards being granted to any Participant are intended to be “performance-based compensation,” as determined by the Committee in its sole discretion. Any such Awards designated as intended to be “performance-based compensation” may be conditioned on the achievement of one or more performance measures. The performance measures that may be used by the Committee for such Awards may be based on any one or more of the following, as selected by the Committee, or such other measures as the Committee shall determine: increase in stock price, return on capital or increase in pretax earnings of the Company and/or one or more divisions and/or subsidiaries, return on stockholders’ equity of the Company, increase in earnings per share of the Company, sales of the Company and/or one or more divisions and/or subsidiaries, pretax earnings of the Company and/or one or more divisions and/or subsidiaries, earnings before interest, taxes, depreciation and amortization (“EBITDA”) of the Company and/or one or more divisions and/or subsidiaries, adjusted EBITDA of the Company and/or one or more divisions, net earnings of the Company and/or one or more divisions and/or subsidiaries, control of operating and/or non-operating expenses of the Company and/or one or more divisions and/or subsidiaries, margins of the Company and/or one or more divisions and/or subsidiaries, cash flow of the Company and/or one or more divisions and/or subsidiaries, including without limitation, operating cash flow, free cash flow, and non-GAAP operating cash flow, and market price of the Company’s securities. The provisions of Other Stock-Based Awards need not be the same with respect to each recipient. +(b) TERMS AND CONDITIONS. Other Stock-Based Awards made pursuant to this Section 7 shall be subject to the following terms and conditions: +(i) Transferability. Subject to the provisions of this Plan and the Award Agreement, Other Stock-Based Awards and shares subject to such Awards may not be sold, assigned, transferred, pledged or otherwise encumbered, in the case of shares of Stock, prior to the date on which the shares are issued, or, if later, the date on which any applicable restriction, performance or deferral period lapses, and in all other cases, not at all. +A- 10 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +(ii) Dividends and Interest. Subject to the provisions of this Plan and the Award Agreement and unless otherwise determined by the Committee at grant, the recipient of an Award under this Section 7 shall be entitled to receive interest or dividends or interest or dividend equivalents with respect to the number of shares covered by the Award, as determined at the time of the Award by the Committee, in its sole discretion, and the Committee may provide that such amounts (if any) shall be deemed to have been reinvested in additional Stock or otherwise reinvested. +(iii) Vesting and Forfeiture. Any Award under this Section 7 and any Stock covered by any such Award shall vest or be forfeited to the extent so provided in the Award Agreement, as determined by the Committee, in its sole discretion, at grant. +(iv) Settlement. In the case of any Other Stock-Based Award that is not subject to Section 8(a) below and that is subject to Section 409A of the Code, and that provides for a distribution upon the lapse of a risk of forfeiture, if the timing of such distribution is not otherwise specified in this Plan or Award Agreement or other governing document, the distribution shall be made no later than March 15 of the year following the calendar year in which receipt of such distribution is no longer subject to a “substantial risk of forfeiture” within the meaning of Section 409A of the Code. +(v) Waivers and Acceleration. In the event of the Participant’s Retirement, Disability or death, and in other instances, the Committee may, in its sole discretion, waive in whole or in part any or all of the remaining limitations, performance requirements or restrictions imposed (if any) with respect to any or all of an Award under this Section 7 and/or accelerate the payment of cash or Stock pursuant to any such Award; provided, however, that such acceleration of payment shall not result in such Award violating Section 409A of the Code. +(vi) Consideration. Stock (including securities convertible into Stock) issued on a bonus basis under this Section 7 may be issued for no cash consideration, subject to Section 11(a) below. +(vii) Restricted Stock. Normal Retirement, Disability or Death. Unless otherwise determined by the Committee at grant, and except as otherwise provided by the Committee or permitted by this Plan, if a Participant’s employment by the Company and/or any Subsidiary or Affiliate terminates by reason of (i) Normal Retirement or permanent Disability, a portion of such unvested Restricted Stock shall vest as determined by prorating the shares for the current vesting period based on ratio of vesting period over the term of the grant or (ii) death, all unvested Restricted Stock shall vest immediately. +(viii) Other Termination of Employment. Unless otherwise determined by the Committee (or pursuant to procedures established by the Committee) at or after grant, and except as otherwise provided by the Committee or permitted by this Plan, all unvested Other Stock-Based Awards shall be immediately forfeited upon the termination of a Participant’s employment by the Company and/or any Subsidiary or Affiliate for any reason other than Disability or death, including without limitation in the case of voluntary or involuntary resignation of employment by the Participant. In the event of Retirement, a portion of such unvested Restricted Stock may vest as determined by the Company. +(ix) Repurchase. The Committee may at any time offer to buy out for a payment in cash or Stock an Other Stock-Based Award previously granted, based on such terms and conditions as the Committee shall establish and communicate to the Participant at the time that such offer is made. +A- 11 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +SECTION 8. RESTRICTED STOCK UNITS AND PERFORMANCE STOCK AND SHARE UNITS. +In addition to the other terms and provisions of this Plan (including the terms and provisions of Section 7) which apply to Restricted Stock Units, Performance Stock and Performance Units as an Award which is an Other Stock-Based Award, the following terms and provisions shall apply to Restricted Stock Units, Performance Stock and Performance Units: +(a) Settlement. In all cases, payment of any Restricted Stock Unit, share of Performance Stock or Performance Unit will be made no later than March 15 of the year following the calendar year in which receipt of the payment thereon is no longer subject to a “substantial risk of forfeiture” within the meaning of Section 409A of the Code. +(b) Performance Stock and Share Units – Retirement, Death or Disability. Unless otherwise determined by the Committee at grant, and except as otherwise provided by the Committee or permitted by this Plan, if a Participant’s employment by the Company and/or any Subsidiary or Affiliate terminates by reason of Death or Disability, the estate of the Participant or the Participant, as applicable, will receive a portion of the Performance Stock and Units based on the terms of each award. All such Performance Stock and Units shall be made no later than 90 days following the date of the Participant’s death or Disability, as applicable. In the event of Retirement, a portion of such Performance Stock and Units may vest as determined by the Company. +(c) Restricted Stock Units – Normal Retirement, Death and Disability. Unless otherwise determined by the Committee at or after grant and except as otherwise provided by the Committee or permitted by this Plan, if a Participant’s employment by the Company and/or any Subsidiary or Affiliate terminates by reason of Normal Retirement or Disability, a pro rata portion of the restrictions pertaining to continued employment on any time-based Restricted Stock Unit will lapse, based on the number of full months the Participant was employed during the restriction period divided by the total number of months in the restriction period. To the extent that any Restricted Stock Unit is subject to performance conditions, the estate of the Participant or the Participant, as applicable, will receive a pro rata portion of the payment or Stock the Participant would have received based on the number of full months in the performance period prior to the Participant’s Normal Retirement or Disability, divided by the total number of months in the performance period. In the event of Death, all time-based Restricted Stock Unit shall vest immediately. All such pro rata payments of Restricted Stock Units shall be made no later than 90 days following the date of the Participant’s death or Disability, as applicable. +SECTION 9. AMENDMENTS AND TERMINATION. +The Board may amend, alter, or discontinue this Plan, and amend any Award granted hereunder, but, except as otherwise provided herein, no amendment, alteration, or discontinuation shall be made which would impair the rights of a Participant under a Stock Option, Stock Appreciation Right, Other Stock-Based Award or any other Award theretofore granted, without the Participant’s consent, or which, without the approval of the Company’s stockholders, would: +(a) increase the number of shares that may be issued under this Plan (except by certain adjustments provided for under this Plan); +(b) change the class of persons eligible to receive Incentive Stock Options under this Plan; +(c) change the requirements of Section 5 hereof regarding the exercise price; or +(d) amend this Plan in a manner that would require approval of the Company’s shareholders under applicable law, regulation or rule. +A- 12 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +Notwithstanding any of the foregoing, adjustments pursuant to Section 3 shall not be subject to the foregoing limitations of Section 9. Options may not be granted under this Plan after the date of termination of this Plan, but Options granted prior to that date shall continue to be exercisable according to their terms. Subject to the above provisions, the Board shall have broad authority to amend this Plan to take into account changes in applicable securities and tax laws and accounting rules, as well as other developments, without regard to whether such amendment adversely affects an individual Award or the rights of a holder thereof. +Notwithstanding the foregoing provisions of this Section 9 and any other provision of this Plan to the contrary, no action shall be taken under this Section 9 or any other provision of this Plan that would: (i) cause an Award that is not otherwise subject to Section 409A of the Code to become subject to such section or (ii) cause an Award subject to Section 409A of the Code to violate such section. +SECTION 10. UNFUNDED STATUS OF PLAN. +This Plan is intended to constitute an “unfunded” plan. With respect to any payments not yet made to a Participant by the Company, nothing contained herein shall give any such Participant any rights that are greater than those of a general creditor of the Company. In its sole discretion, the Committee may authorize the creation of trusts or other arrangements to meet the obligations created under this Plan to deliver Stock or payments in lieu of or with respect to Awards hereunder; provided, however, that, unless the Committee otherwise determines with the consent of the affected Participant, the existence of such trusts or other arrangements is consistent with the “unfunded” status of this Plan. +SECTION 11. GENERAL PROVISIONS. +(a) Compliance with Applicable Law. Notwithstanding anything contained herein to the contrary, the Company shall not be required to sell or issue shares of Stock under any Award if the issuance thereof would constitute a violation by the Participant or the Company of any provisions of any law or regulation of any governmental authority or any national securities exchange or interdealer quotation system or other forum in which shares of Stock are quoted or traded (including, without limitation, Sections 409A or 422 of the Code), and, as a condition of any sale or issuance of shares of Stock under an Award, the Committee may require such agreements or undertakings, if any, as the Committee may deem necessary or advisable to assure compliance with any such law or regulation. This Plan, the grant and exercise of Awards hereunder, and the obligation of the Company to sell and deliver shares of Stock, shall be subject to all applicable laws, rules and regulations and to such approvals by any government or regulatory agency as may be required. +In particular, the Company shall not be obligated to sell or issue any shares pursuant to any Option or other Award unless the shares underlying the Award are at the time effectively registered or exempt from registration under the Securities Act of 1933, as amended (the “1933 Act”) and applicable state securities laws. The Company shall have no obligation to register pursuant to the 1933 Act or any state securities laws any shares of Stock issued pursuant to this Plan. The Committee may require each person acquiring shares pursuant to an Award under this Plan to represent to and agree with the Company in writing that the Participant is acquiring the shares for investment and without a view to distribution thereof. The certificates for such shares may include any legend which the Committee deems appropriate to reflect any restrictions on transfer. +All certificates for shares of Stock or other securities delivered under this Plan shall be subject to such conditions, stop-transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations, and other requirements of the Securities and Exchange Commission, any stock exchange upon which the Stock is then listed, and any applicable federal or state securities law, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions. +A- 13 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +The Company shall not issue any shares of Stock under this Plan before the Company has received the consideration to be paid therefor to the extent required in order for such shares to be “fully paid” under Section 152 of the Delaware General Corporations Law, such consideration to have a value not less than the par value of such shares to the extent required by Section 153 of the Delaware General Corporation Law. +(b) Other Compensation. Nothing contained in this Plan shall prevent the Board from adopting other or additional compensation arrangements, subject to stockholder approval if such approval is required, and such arrangements may be either generally applicable or applicable only in specific cases. +(c) No Right to Employment. The adoption of this Plan shall not confer upon any employee of the Company or of any Subsidiary or Affiliate any right to continued employment with the Company or a Subsidiary or Affiliate, as the case may be, nor shall it interfere in any way with the right of the Company or a Subsidiary or Affiliate to terminate the employment of any of its employees at any time. +(d) Tax Withholding. No later than the date as of which an amount first becomes includable in the gross income of the Participant for federal income tax purposes with respect to the exercise of any Option or Stock Appreciation Right or any Award under this Plan, the Participant shall pay to the Company, or make arrangements satisfactory to the Committee regarding the payment of, any federal, state, or local taxes of any kind required by law to be withheld with respect to such amount. The obligations of the Company under this Plan shall be conditional on such payment or arrangements, and the Company and its Subsidiaries or Affiliates shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to the Participant. +(e) Dividend Reinvestment. The actual or deemed reinvestment of dividends or dividend equivalents in additional types of Awards at the time of any dividend payment shall only be permissible if sufficient shares of Stock are available under Section 3 for such reinvestment, taking into account other Awards then outstanding. +(f) Governing Law. This Plan and all Awards made and actions taken hereunder shall be governed by and construed in accordance with the Delaware General Corporation Law, to the extent applicable, and in accordance with the laws of the State of Georgia in all other respects. +(g) Other Benefits. The value of Awards made pursuant to this Plan shall not be included as part of the definition of “cash compensation” in connection with any other benefit offered by the Company. +(h) Award Agreements; Electronic Delivery. An Award under this Plan shall be subject to such terms and conditions, not inconsistent with this Plan, as the Committee shall, in its sole discretion, prescribe. The terms and conditions of any Award to any Participant shall be reflected in such form of written document or other evidence (including evidence in an electronic medium) as is approved by the Committee. A copy of such document or evidence shall be provided to the Participant. Such document or evidence is referred to in this Plan as an “Award Agreement” regardless of whether any Participant signature is required. +The Company may deliver by email or other electronic means (including posting on a web site maintained by the Company or by a third party under contract with the Company) all documents relating to this Plan or any Award thereunder (including without limitation prospectuses required by the SEC) and all other documents that the Company is required to deliver to its security holders (including without limitation annual reports and proxy statements). +A- 14 +Table of Contents +2024 ANNUAL +PROXY STATEMENT +(i) Severability. If any provision of this Plan or any Award is or becomes or is deemed to be invalid, illegal, or unenforceable in any jurisdiction as to any Person or Award, or would disqualify this Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to applicable laws, or if it cannot be construed or deemed amended without, in the determination of the Committee, materially altering the intent of this Plan or the Award, such provision shall be stricken as to such jurisdiction, person or Award and the remainder of this Plan and any such Award shall remain in full force and effect. +(j) No Liability. Subject to applicable law: (i) no Director shall be liable for anything whatsoever in connection with the exercise of authority under this Plan or the administration of this Plan except such Director’s own willful misconduct; (ii) under no circumstances shall any Director be liable for any act or omission of any other Director; and (iii) in the performance of its functions with respect to this Plan, the Board of Directors or Committee, or its designees, as the case may be, shall be entitled to rely upon information and advice furnished by the Company’s officers, the Company’s accountants, the Company’s counsel and any other party the Board or Committee or designee deems necessary, and no Director shall be liable for any action taken or not taken in good faith reliance upon any such advice. +SECTION 12. EFFECTIVE DATE OF PLAN. +This Plan shall be effective as of the date of its approval by the stockholders of the Company (the “Effective Date”). +SECTION 13. TERM OF PLAN. +No Stock Option, Stock Appreciation Right or Other Stock-Based Award shall be granted pursuant to this Plan on or after the tenth anniversary of the Effective Date of this Plan, but Awards granted prior to such tenth anniversary may extend beyond that date. +A- 15 + PLEASE DETACH ALONG PERFORATED LINE AND MAIL IN THE ENVELOPE PROVIDED.  +(Continued and to be marked, dated, and signed on other side) +PROXY +RPC, INC. +THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS +OF RPC, INC. +FOR THE 2024 ANNUAL MEETING OF STOCKHOLDERS +TO BE HELD ON APRIL 23, 2024 +The undersigned hereby constitutes and appoints RICHARD A. HUBBELL and BEN M. PALMER, and each of +them, jointly and severally, as proxies, with full power of substitution, to vote all shares of Common Stock which +the undersigned is entitled to vote at the Annual Meeting of Stockholders to be held on April 23, 2024, at +12:15 p.m. ET, at 2170 Piedmont Road, NE, Atlanta, GA 30324, or any adjournment of the meeting. +The undersigned acknowledges receipt of Notice of Annual Meeting of Stockholders and Proxy Statement, each +dated March 14, 2024, and grants authority to said proxies, or either of them, or their substitutes, to act in the +absence of others, with all the powers which the undersigned would possess if personally present at such +meeting and hereby ratifies and confirms all that said proxies or their substitutes may lawfully do in the +undersigned's name, place, and stead. The undersigned instructs said proxies, or either of them, to vote as +stated on the reverse side. +THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, WILL BE VOTED “FOR +ALL” THE NOMINEES NAMED IN PROPOSAL 1; AND “FOR” PROPOSALS 2 AND 3. THE PROXIES ARE +AUTHORIZED TO VOTE IN THEIR JUDGMENT UPON SUCH OTHER BUSINESS NOT KNOWN AS MAY +PROPERLY COME BEFORE THE ANNUAL MEETING OR ANY ADJOURNMENTS THEREOF. +Important Notice Regarding the Availability of Proxy Materials for the +RPC, INC. +Annual Meeting of Stockholders to Be Held on April 23, 2024. +The Notice and 2023 Annual Report and 2024 Proxy Statement are available at: +https://www.viewproxy.com/RPC/2024 + PLEASE DETACH ALONG PERFORATED LINE AND MAIL IN THE ENVELOPE PROVIDED.  +DO NOT PRINT IN THIS AREA +(Stockholder Name & Address Data) +The Board of Directors recommends a vote “FOR ALL” the nominees listed in Proposal 1; and “FOR” Proposals 2 and 3. +Proposal 1. To elect three Class II Nominees (term expiring 2027) to the +Board of Directors: +NOMINEES: +FOR ALL +☐ +WITHHOLD ALL +☐ +FOR ALL EXCEPT +☐ +(1) Gary W. Rollins ☐ +(2) Richard A. Hubbell ☐ +(3) John F. Wilson ☐ +INSTRUCTIONS: To withhold authority to vote for any individual nominee(s), mark +“FOR ALL EXCEPT” and mark the box for each nominee you wish to withhold. +Address Change/Comments: (If you noted any Address Changes +and/or Comments above, please mark box.) ☐ +CONTROL NUMBER +Proposal 2. To ratify the appointment of Grant Thornton LLP as independent +registered public accounting firm for the fiscal year ending +December 31, 2024. +FOR ☐ AGAINST ☐ ABSTAIN ☐ +Proposal 3. To approve the proposed 2024 Stock Incentive Plan. +FOR ☐ AGAINST ☐ ABSTAIN ☐ +Note: To consider and act upon such other business as may properly +come before the Annual Meeting or any adjournment of the +meeting. +Please sign exactly as name(s) appears herein. Joint owners should each sign. +When signing as attorneys, executor, administrator, corporate officer, trustee, +guardian, or custodian, please give full title. +Signature of Stockholder Date +Signature of Stockholder Date +XXXXXXXXXX +Number of Shares +CONTROL NUMBER +PROXY VOTING INSTRUCTIONS +Please have your 11-digit control number ready when voting by Internet or Telephone. +IN PERSON +Vote your Proxy +in Person: +You may vote your +shares in person at the +2024 Annual Meeting on +April 23, 2024, at +12:15 p.m. ET at +2170 Piedmont Road, +NE, Atlanta, GA 30324. +INTERNET TELEPHONE MAIL +Vote Your Proxy on the Internet: +Go to: www.aalvote.com/RES +Vote Your Proxy by Phone: +Call (866) 804-9616 +Vote Your Proxy by Mail: +Have your proxy card available +when you access the above +website. Follow the prompts to +vote your shares. Vote by +11:59 p.m. ET on +April 22, 2024. +Use any touch-tone +telephone to vote your +proxy. Have your proxy card +available when you call. +Follow the voting instructions +to vote your shares. Vote by +11:59 p.m. ET on +April 22, 2024. +Mark, sign, and date your +proxy card, then detach it, +and return it in the +postage-paid envelope +provided. +Please mark your vote in blue or black ink as shown here ☒ \ No newline at end of file diff --git a/raw/proxies/0000742278/0001558370-24-003185/proxy_rpt.txt b/raw/proxies/0000742278/0001558370-24-003185/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..8c7bf08e31587a15bca4ede7212ee42c00f1d086 --- /dev/null +++ b/raw/proxies/0000742278/0001558370-24-003185/proxy_rpt.txt @@ -0,0 +1,7 @@ +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +The Company provides certain administrative services to Marine Products on a cost reimbursement basis and the arrangement may be terminated upon six months’ notice. The services include administration of certain employee benefit programs and other administrative services. Charges from the Company (or from corporations which are subsidiaries of the Company) for such services aggregated approximately $1 million in 2023. The Company’s receivable due from Marine Products for these services was $120 thousand as of December 31, 2023. In addition, the Company owed $524 thousand to Marine Products, for using Marine Product’s assets in the Retirement Income Plan to settle its participant liabilities. Of the total Plan-related amounts owed, the Company reimbursed Marine Products $482 thousand during 2023. +RPC and Marine Products own 50% each of a limited liability company called 255 RC, LLC that was created for the joint purchase and ownership of a corporate aircraft. Each of RPC and Marine Products is currently a party to an operating lease agreement with 255 RC, LLC for a period of five years. During 2023, RPC recorded certain net operating costs comprised of rent and an allocable share of fixed costs of approximately $200 thousand for the corporate aircraft. +During 2023, a subsidiary of RPC conducted business with companies owned by LOR, Inc., a member of the control group. Mr. Gary W. Rollins, a director at RPC, is an officer, director and controlling stockholder of LOR, Inc., and Timothy C. Rollins, Vice President of LOR, Inc., Pamela R. Rollins, Director of LOR, Inc., and Amy R. Kreisler, Vice President of LOR Inc., are part of the controlling stockholders of LOR, Inc. Payments totaling approximately $1.7 million were made in 2023 and approximately $150 thousand were made in 2024 to these LOR, Inc. companies primarily for the purchase of parts and repair services related to certain of RPC’s oilfield operating equipment. RPC believes the charges incurred are at least as favorable as the charges that would have been incurred for similar purchases from unaffiliated third parties. +Related party transactions, as defined in Regulation S-K, Item 404(a), must be reviewed and approved in advance by our Nominating and Corporate Governance Committee or, in the event that our Nominating and Corporate Governance Committee does not consist of all independent directors, by a Subcommittee (the Subcommittee) of the Nominating and Corporate Governance Committee consisting of all of the independent members thereof. As set forth in the Charter of our Nominating and Corporate Governance Committee, the Nominating and Corporate Governance Committee has the authority and responsibility to ensure that it approve all related party transactions, including material amendments that are in compliance with applicable law, consistent with the Company’s corporate governance policies (including those relative to conflicts of interest and usurpation of corporate opportunities) and on terms that are deemed to be fair to the Company. The Nominating and Corporate Governance Committee also has the authority to hire legal, accounting, financial or other advisors, as it may deem necessary or desirable and/or to delegate responsibilities to executive officers of the Company in connection with discharging its duties. These same rights and responsibilities apply equally to the Subcommittee. A copy of the Charter of the Nominating and Corporate Governance Committee is available on our website at www.rpc.net under the Governance section. All related party transactions for the fiscal year ended December 31, 2023 were reviewed, pre-approved and/or ratified by the Nominating and Corporate Governance Committee in accordance with the Charter. +65 +Table of Contents \ No newline at end of file diff --git a/raw/proxies/0000742278/0001558370-25-002756/proxy.txt b/raw/proxies/0000742278/0001558370-25-002756/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..50c07ed62787c6e36dc0690726e776f480d806af --- /dev/null +++ b/raw/proxies/0000742278/0001558370-25-002756/proxy.txt @@ -0,0 +1,2184 @@ +RPC, Inc. +false 0000742278 DEF 14A 0000742278 res:PalmerMember 2024-01-01 2024-12-31 0000742278 res:PalmerMember 2023-01-01 2023-12-31 0000742278 res:PalmerMember 2022-01-01 2022-12-31 0000742278 res:HubbellMember 2022-01-01 2022-12-31 0000742278 res:HubbellMember 2021-01-01 2021-12-31 0000742278 res:HubbellMember 2020-01-01 2020-12-31 0000742278 4 2024-01-01 2024-12-31 0000742278 3 2024-01-01 2024-12-31 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res:EquityAwardsAdjustmentsChangeInFairValueAsOfVestingDateOfVestedAwardsDuringCurrentYearMember ecd:NonPeoNeoMember 2020-01-01 2020-12-31 0000742278 res:EquityAwardsAdjustmentsChangeInFairValueAsOfVestingDateOfPriorYearAwardsVestedDuringCurrentYearMember ecd:NonPeoNeoMember 2020-01-01 2020-12-31 0000742278 2024-01-01 2024-12-31 iso4217:USD xbrli:pure +Table of Contents +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A INFORMATION +Proxy Statement Pursuant to Section 14(a) of the Securities +Exchange Act of 1934 (Amendment No. ) +Filed by the Registrant ☒ +Filed by a Party other than the Registrant ☐ +Check the appropriate box: +☐ Preliminary Proxy Statement +☐ Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +☒ Definitive Proxy Statement +☐ Definitive Additional Materials +☐ Soliciting Material Pursuant to §240.14a-12 +RPC, Inc. +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +☒ No fee required. +☐ Fee paid previously with preliminary materials. +☐ Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a6(i)(1) and 0-11 +Table of Contents +2801 Buford Highway NE, Suite 300, Atlanta, Georgia 30329 +TO THE HOLDERS OF THE COMMON STOCK: +P LEASE TAKE NOTICE that the 2025 Annual Meeting of Stockholders of RPC, Inc., a Delaware corporation (“RPC” or the “Company”), will be held at 2170 Piedmont Road NE, Atlanta, Georgia, on Tuesday, April 22, 2025, at 12:15 P.M., for the following purposes, as more fully described in the Proxy Statement accompanying this notice: +1. To elect nine Nominees for a one-year term (expiring in 2026) to the Board of Directors: +2. To ratify the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2025; +3. To consider and act upon such other business as may properly come before the Annual Meeting or any adjournment of the meeting. +RPC, INC . +NOTICE OF ANNUAL MEETING OF STOCKHOLDERS +The Proxy Statement dated March 12, 2025, is attached. +The Board of Directors has fixed the close of business on February 28, 2025, as the record date for the determination of stockholders entitled to notice of, and to vote at, the Annual Meeting or any adjournment thereof. +As permitted by the U.S. Securities and Exchange Commission rules, the Company is making the proxy materials relating to the Annual Meeting, including this Proxy Statement and the Company’s 2024 Annual Report on Form 10-K for the fiscal year ended December 31, 2024 (the “Annual Report”), available to our stockholders electronically via the Internet. On or about March 12, 2025, we mailed to our stockholders an Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be held on April 22, 2025 (the “Notice”) containing instructions on how to access this Proxy Statement and our Annual Report and vote online. If you received a Notice by mail, you will not receive a printed copy of the proxy materials in the mail unless you request a copy. The Notice instructs you on how to access and review all important information contained in the Proxy Statement and Annual Report. The Notice also instructs you on how you may submit your proxy over the Internet. If you received a Notice by mail and would like to receive a printed copy of our proxy materials, you should follow the instructions for requesting such materials contained on the Notice. +I mportant Notice regarding the availability of proxy materials for the Annual Meeting of Stockholders to be held on April 22, 2025: The 2025 Proxy Statement and 2024 Annual Report on Form 10-K to security holders are available at https://www.viewproxy.com/RPC/2025 . +Voting can be completed in one of four ways: +Returning the Proxy Card by Mail +Via Telephone at 1-866-804-9616 +Online at https://www.aalvote.com/ +RES +Attending the meeting to vote In Person +By Order Of The Board Of Directors +Michael L. Schmit +Corporate Secretary +Atlanta, Georgia +March 12, 2025 +Whether or not you expect to attend the annual meeting, please sign, date and return the enclosed proxy card promptly. Alternatively, you may vote your proxy by telephone or over the Internet by following the instructions on your proxy card or Notice. If you decide to attend the meeting, you may, if you wish, revoke the proxy and vote your shares in person. +Table of Contents +TABLE OF CONTENTS +NOTICE OF ANNUAL MEETING OF STOCKHOLDERS +MESSAGE FROM OUR CHIEF EXECUTIVE OFFICER +SUSTAINABILITY AT RPC +PROXY STATEMENT +1 +CAPITAL STOCK +2 +BOARD OF DIRECTORS AND CORPORATE GOVERNANCE +3 +DIRECTOR COMPENSATION +11 +INFORMATION REGARDING DIRECTOR NOMINEES +13 +PROPOSAL 1: ELECTION OF DIRECTORS +18 +AUDIT MATTERS +19 +PROPOSAL 2: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +21 +EXECUTIVE OFFICERS +22 +COMPENSATION DISCUSSION AND ANALYSIS +23 +HUMAN CAPITAL MANAGEMENT AND COMPENSATION COMMITTEE REPORT +35 +EXECUTIVE COMPENSATION +36 +BENEFIT PLANS +40 +PAY RATIO DISCLOSURE +43 +PAY VERSUS PERFORMANCE +44 +SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE +47 +STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT +48 +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +50 +STOCKHOLDER PROPOSALS AND BOARD NOMINATIONS +51 +EXPENSES OF SOLICITATION +52 +ANNUAL REPORT +52 +FORM 10-K +52 +OTHER MATTERS +52 +CAUTION CONCERNING FORWARD-LOOKING STATEMENTS +53 +Table of Contents +a +MESSAGE FROM OUR CHIEF EXECUTIVE OFFICER +To our Stockholders, +On behalf of the Board of Directors, we are pleased to announce that we will hold our 2025 Annual Meeting of Stockholders on Tuesday, April 22, 2025, at 12:15 P.M. +In 2024 we continued to generate strong cash flow, launched new products and services and invested in new assets, while navigating a challenging oilfield services market. We remained focused on driving aspects of the business within our control and worked diligently to mitigate the impact of external factors. Our corporate objective is to create long-term shareholder value by delivering world-class oilfield services to our customers with a conservative financial management approach. We believe our actions have been consistent with that vision . +Even with a difficult environment in 2024, RPC remained profitable and boasted a rock-solid balance sheet with ample liquidity and no debt. Revenues declined to $1.4 billion and diluted earnings per share (EPS) to $0.43, with intense competition across the businesses putting pressure on margins. That said, we still generated operating cash flow of nearly $350 million, which we used to invest in our assets and pay steady dividends to our stockholders. We ended 2024 with over $325 million in cash, an increase of more than $100 million from year-end 2023. We are actively exploring strategic acquisition opportunities to deploy our capital and increase our scale but are doing so with the same rigor and economic discipline that has helped us achieve our strong financial position. +We upgraded our asset base with new equipment this past year, adding another Tier 4 dual-fuel pressure pumping fleet. We have also launched new products and services and are very encouraged by the marketplace response thus far. These new products represent an opportunity to differentiate RPC with innovation to drive customer outcomes, and we encourage shareholders to learn more about these new offerings in our Annual Report. +We are proud of our track record of profitability and cash generation even when the industry presents challenges and unfavorable trends. Our financial discipline has served us well, and we are poised to make investments to grow our business, which is a key strategic focus for us in 2025 and beyond. We have internal initiatives underway to improve our execution and margins and will continue to invest in innovative new products and services. We are also rigorously assessing opportunities to expand our business through potential acquisitions. We look forward to finding the right strategic and cultural fit for RPC and ultimately executing on value-creating transactions. +In closing, we want to recognize the hard-working people across our organization for demonstrating the resilience required to succeed in today’s competitive marketplace. We also thank our customers, for whom we work tirelessly to live up to our long reputation for delivering reliability, exceptional value, and overall outstanding service. In addition, we thank two of our Directors, Gary W. Rollins and Pamela R. Rollins, who have chosen not to stand for re-election at our upcoming Annual Meeting of Stockholders, for their many years of service and support on our Board. Lastly, I want to express to all our stakeholders that we remain committed to the financial discipline and conservative approach that has been our hallmark for decades and the backbone of our longevity and success. +Sincerely, +Ben M. Palmer +President and Chief Executive Officer +Table of Contents +SUSTAINABILITY AT RPC +We are an oil and gas services company that provides a broad range of specialized oilfield services and equipment. RPC serves independent, as well as major oilfield companies, and oil and gas properties throughout the United States and in select international markets. We are highly regarded for our business ethics, fiscal management and our consistent focus on safety and the wellness of our employees. We consistently deliver high quality services to our customers, provide safe and rewarding work for our employees, and returns to shareholders throughout the many cycles and challenges of our sector. +We published our first Corporate Sustainability Report in 2024 along with the following formal policies: +> Climate Change; +> Water Stewardship; +> Human Capital Management; +> Environment; +> Workplace Health and Safety; and +> Human Rights. +The following Board committees provide periodic relevant guidance and oversight that support RPC’s ESG efforts in their respective areas as outlined below: +> The Nominating and Corporate Governance Committee is responsible for monitoring our general ESG practices, policies, programs, and public disclosures. +> The Human Capital Management and Compensation Committee provides oversight of the development and management of our human capital management strategies and policies. +> The Audit Committee is responsible for oversight of our cybersecurity risk management program and ESG reporting disclosures and related internal controls. +Table of Contents +a +PROXY STATEMENT +We are furnishing the proxy materials to stockholders on or about March 12, 2025. The Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be held on April 22, 2025, Proxy Statement and the Annual Report on Form 10-K are available at https://www.viewproxy.com/RPC/2025 . +The following information concerning the proxy and the matters to be acted upon at the Annual Meeting of Stockholders to be held on April 22, 2025 is submitted by the Company to the stockholders in connection with the solicitation of proxies on behalf of the Company’s Board of Directors. +SOLICITATION OF AND POWER TO REVOKE PROXY +A form of proxy is enclosed. Each proxy submitted will be voted as directed, but if not otherwise specified, proxies solicited by the Board of Directors of the Company will be voted in favor of the candidates for election to the Board of Directors and in favor of ratification of the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2025. +A stockholder executing and delivering a proxy has power to revoke the same and the authority thereby given at any time prior to the exercise of such authority, if they so elect, by contacting either proxy holder, by timely submitting a later dated proxy changing their vote, or by attending the meeting and voting in person. However, a beneficial stockholder who holds shares in street name must secure a proxy from their broker before they can attend the meeting and vote. All costs of solicitation have been, and will be, borne by the Company. +HOUSEHOLDING AND DELIVERY OF NOTICE OR PROXY MATERIALS +The Company has adopted the process called “householding” for any notice or proxy materials in order to reduce printing costs and postage fees. Householding means that stockholders who share the same last name and address will receive only one copy of the notice or proxy materials, unless we receive contrary instructions from any stockholder at that address. +If you prefer to receive multiple copies of the proxy materials at the same address, additional copies will be provided to you promptly upon written or oral request. If you are a stockholder of record, you may contact us by writing to the Company at 2801 Buford Highway NE, Suite 300, Atlanta, GA 30329 or by calling 404-321-2140. Eligible stockholders of record receiving multiple copies of the proxy materials can request householding by contacting the Company in the same manner. +1 +Table of Contents +2025 ANNUAL +PROXY STATEMENT +CAPITAL STOCK +The outstanding capital stock of the Company on February 28, 2025 consisted of 216,052,632 shares of Common Stock, par value $0.10 per share. Holders of Common Stock are entitled to one vote (non-cumulative) for each share of such stock registered in their respective names at the close of business on February 28, 2025, the record date for determining stockholders entitled to notice of, and to vote at, the meeting or any adjournment thereof. +A majority of the outstanding shares will constitute a quorum at the Annual Meeting . Abstentions will be counted for purposes of determining the presence or absence of a quorum for the transaction of business. With respect to routine matters, if your shares are held through a broker and you do not instruct the broker on how to vote your shares, your broker may choose to leave your shares unvoted or to vote your shares on the routine matters. Proposal 2, with respect to the ratification of the auditor, is the only routine matter on the agenda at this year’s Annual Meeting. With respect to Proposal 1, without instructions, your broker cannot vote your shares, resulting in what are known as “broker non-votes.” Broker non-votes will be counted for purposes of determining the presence or absence of a quorum for the transaction of business. +In accordance with the General Corporation Law of the state of Delaware, the following votes are needed for approval of each proposal: +PROPOSAL +VOTE NEEDED FOR APPROVAL AND EFFECT OF ABSTENTION AND BROKER NON-VOTES +Proposal No. 1: The election of nine director nominees to serve as directors of the Company until our 2026 annual meeting of stockholders or until their successors are duly elected and qualified. +The election of the director nominees named herein will require the affirmative vote of a plurality of the votes cast by the shares of Company Common Stock entitled to vote in the election provided that a quorum is present at the Annual Meeting. +In the case of a plurality vote requirement (as in the election of directors), where no particular percentage vote is required, the outcome is solely a matter of comparing the number of votes cast for each nominee, with those nominees receiving the most votes being elected, and hence only votes for director nominees (and not abstentions or broker non-votes) are relevant to the outcome. In this case, the nine nominees receiving the most votes will be elected. +Proposal No. 2: To ratify the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2025. +The affirmative vote of a majority of shares present in person or represented by proxy and entitled to vote with respect to this proposal at the meeting is required to approve the ratification of the appointment of the Company’s independent registered public accounting firm for fiscal year 2025 provided that a quorum is present at the Annual Meeting. +Abstentions will have the effect of a vote against this proposal. +Broker non-votes will have no effect on this proposal and will be disregarded. +There are no rights of appraisal or similar dissenter’s rights with respect to any matter to be acted upon pursuant to this Proxy Statement. It is expected that shares held of record and beneficially by officers and directors of the Company and their affiliates, which in the aggregate represent approximately 61% of the outstanding shares of Common Stock, will be voted for the nominees and for the ratification of the appointment of the Company’s independent registered public accounting firm. +2 +Table of Contents +2025 ANNUAL +PROXY STATEMENT +BOARD OF DIRECTORS AND CORPORATE GOVERNANCE +MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS +The Company’s Board of Directors (Board) has an Audit Committee, Human Capital Management and Compensation Committee, Nominating and Corporate Governance Committee, and an Executive Committee (Committees). The Board has adopted written charters for certain of these Committees which are all available on our website at www.rpc .net under the section titled Governance . +Under our Corporate Governance Guidelines, directors are expected to attend all regular and special meetings of the Board and Board Committees upon which they serve. Directors are also expected to attend the Annual Stockholders Meeting. Each incumbent director attended at least 75% of the aggregate of all Board meetings and meetings of the Board Committees on which they served during 2024, and all members of the Board at the time attended last year’s Annual Stockholders Meeting. +The following table shows the current membership (M) and chairman (C) of the Board and each of the Board committees, the number of Board and Board committee meetings held in 2024, and actions taken by unanimous written consent in lieu of meetings: +Human Capital +Nominating and +Management and +Corporate +Board of +Audit +Executive +Compensation +Governance +Name +Directors +Committee +Committee +Committee +Committee +Richard A. Hubbell +C +C +Susan R. Bell +M +M +Patrick J. Gunning +M +C +M +M +Amy R. Kreisler +M +M +Jerry W. Nix (1) +M +M +C +C +Ben M. Palmer +M +M +Gary W. Rollins +M +Pamela R. Rollins +M +Timothy C. Rollins +M +M +John F. Wilson +M +M +M +M +Meetings Held +6 +6 +— +6 +4 +Actions Taken by Written Consent +— +— +3 +1 +— +(1) Lead Independent Director +3 +Table of Contents +2025 ANNUAL +PROXY STATEMENT +Audit Committee +The Audit Committee of the Board of Directors currently consists of Patrick J. Gunning (Chairman), Susan R. Bell, Jerry W. Nix and John F. Wilson. The Audit Committee is responsible for, among other things: +> appointing the Company’s independent registered public accounting firm to audit the Company’s financial statements; +> assessing the independence and overseeing the performance of the Company’s independent registered public accounting firm; +> pre-approving all audit and all permissible non-audit services to be performed by the Company’s independent registered public accounting firm; +> discussing with the Company’s independent registered public accounting firm all matters required to be discussed under the standards of the Public Company Accounting Oversight Board, Securities and Exchange Commission (SEC) or other regulations; +> reviewing the Company’s financial statements and critical accounting policies and estimates; +> reviewing the adequacy and effectiveness of our internal controls and disclosure controls and procedures; +> assessing the performance of the Company’s internal audit department; +> reviewing the Company’s insider trading and anti-corruption policies; +> overseeing procedures for the receipt, retention, and treatment of complaints received by the Company regarding accounting, internal accounting controls, or auditing matters, and the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters; and +> overseeing compliance with the Company’s Code of Business Conduct and Ethics. +The Board has determined that all of the members of the Audit Committee are independent as defined by the rules of the SEC and the New York Stock Exchange (NYSE). The Board has also determined that all members of the Audit Committee with the exception of John F. Wilson are qualified as “Audit Committee Financial Experts” within the meaning of the rules of the SEC and that they have accounting or related financial management expertise within the meaning of the NYSE listing standards. In addition, the Board has determined that Mr. Wilson is “financially literate” within the meaning of and as required by the rules and regulations of the NYSE. The Board has also determined that Ms. Bell’s simultaneous service on the audit committees of four public companies will not impair her ability to effectively serve on the Company’s Audit Committee. +Human Capital Management and Compensation Committee +The Human Capital Management and Compensation Committee of the Board of Directors of the Company consists of Jerry W. Nix (Chairman), Patrick J. Gunning and John F. Wilson. The Human Capital Management and Compensation Committee is responsible for, among other things: +> reviewing the Company’s executive compensation philosophy and strategy; +> reviewing and approving the corporate goals and objectives relevant to the compensation of the Company’s CEO and executive officers; +> evaluating the performance of the Company’s CEO and executive officers; +> reviewing the compensation of the Company’s Non-Employee Directors for service on the Board and its committees and recommending to the Board changes to their compensation program as appropriate; +> determining the stock ownership guidelines for the Company’s Non-Employee Directors, CEO, executive officers, and other key executives and monitoring compliance with such guidelines; +> overseeing the development and management of the Company’s human capital management strategy and policies, including, but not limited to, those policies and strategies regarding diversity, equity and inclusion; and +> reviewing, approving and administering incentive compensation and equity compensation plans for executive officers and directors. +4 +Table of Contents +2025 ANNUAL +PROXY STATEMENT +The Board has determined that all members of the Human Capital Management and Compensation Committee are independent as defined by the rules of the SEC and NYSE, without regard to NYSE independence rules applicable specifically to compensation committee members but which do not apply to the Company since it is a “controlled company” under NYSE rules. In addition, each member of our Human Capital Management and Compensation Committee is also a Non-Employee Director, as defined pursuant to Rule 16b-3 of the Exchange Act. +The Company is not required by law or by the NYSE rules to have a formal compensation committee charter since we are a controlled company as described below under the heading Director Independence and NYSE Requirements . However, we have established a written charter of the Human Capital Management and Compensation Committee to promote responsible corporate governance practices, and we currently intend to maintain the committee charter going forward. See section titled Compensation Discussion & Analysis—Compensation Setting Process for information regarding the Human Capital Management and Compensation Committee’s processes. +Human Capital Management and Compensation Committee Interlocks and Insider Participation +As noted above, the Board has determined that each member of the Human Capital Management and Compensation Committee is independent in accordance with the NYSE rules generally applicable to directors. The Human Capital Management and Compensation Committee consists of Messrs. Nix, Gunning and Wilson. None of these individuals is a current or former officer or employee of the Company or any of its subsidiaries. Related party transactions and the independence of the non-employee members of the Company’s Board are discussed in more detail under the following sections, Director Independence and NYSE Requirements, and Certain Relationships and Related Party Transactions, of this Proxy Statement. No executive officer of the Company has served as a director or member of the compensation committee or other board committee of another entity that had an executive officer who served on the Company’s Board or Human Capital Management and Compensation Committee. +Nominating and Corporate Governance Committee +The Nominating and Corporate Governance Committee of the Board of Directors of the Company consists of Jerry W. Nix (Chairman), Patrick J. Gunning, John F. Wilson, Timothy C. Rollins and Amy R. Kreisler. The Nominating and Corporate Governance Committee is responsible for, among other things: +> determining the appropriate qualifications required for the members of the Board; +> recommending Board committee chairs and assignments; +> recommending to our Board nominees for director and to consider any nominations properly made by a stockholder, to make recommendations to our Board of Directors regarding the agenda for our Annual Meetings of Stockholders, and appropriate action to be taken in response to any stockholder proposals; +> conducting periodic reviews of the composition and size of the Board and its committees, as well as the frequency and procedures of Board meetings; +> overseeing compliance with key corporate governance policies, including the Company’s Corporate Governance Guidelines and Independence Guidelines; +> reviewing and approving related party transactions by a sub-committee of independent members; +> reviewing and monitoring the Company’s ESG practices, policies, programs and public disclosures; and +> reviewing and assessing the adequacy of the Company’s Code of Business Conduct and Ethics. +The Company is not required by law or by the NYSE rules to have a nominating committee since we are a controlled company as described below under the heading “ Director Independence and NYSE Requirements .” However, we have established a Nominating and Corporate Governance Committee and a written charter to promote responsible corporate governance practices. We currently intend to maintain the committee going forward, but as a controlled company, we rely upon the exemption from the requirement that we have a nominating committee comprised entirely of independent directors. +5 +Table of Contents +2025 ANNUAL +PROXY STATEMENT +Director Nominations +Under Delaware law, there are no statutory criteria or qualifications for directors. No criteria or qualifications have been prescribed by the Board at this time. The Nominating and Corporate Governance Committee does not have a formal policy with regard to the consideration of director candidates. As such, there is no formal policy relative to diversity, although as noted below, it is one of many factors that the Nominating and Corporate Governance Committee has the discretion to factor into its decision making. This discretion would extend to how the Committee might define diversity in a particular instance – whether in terms of background, viewpoint, experience, education, race, gender, national origin or other considerations. The Committee acts under the guidance of the Corporate Governance Guidelines approved by the Board of Directors and posted on the Company’s website at www.rpc.net under the Governance section. The Board believes that it should preserve maximum flexibility in order to select directors with sound judgment and other desirable qualities. According to the Company’s Corporate Governance Guidelines, the Board of Directors is responsible for selecting nominees for election to the Board of Directors. The Board has delegated the screening process of director nominees for nomination to the Board and service on the committees of the Board to the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee is responsible for determining the appropriate skills and characteristics required of Board members in the context of the then current makeup of the Board. This determination takes into account all factors which the Committee considers appropriate, such as independence, experience, strength of character, mature judgment, technical skills, diversity, age and the extent to which the individual would fill a present need on the Board. The Bylaws provide that nominations for the election of directors may be made by any stockholder entitled to vote for the election of directors. Nominations must comply with an advance notice procedure which generally requires, with respect to nominations for directors for election at an annual meeting, that written notice be addressed to: The Corporate Secretary, RPC, Inc., 2801 Buford Highway NE, Suite 300, Atlanta, Georgia 30329, and received not less than 90 nor more than 130 days prior to the anniversary of the prior year’s annual meeting and set forth among other requirements specified in the Bylaws, the name, age, business address and, if known, residence address of the nominee proposed in the notice, the principal occupation or employment of the nominee for the past five years, the nominee’s qualifications, the class or series and number of shares of capital stock of the Company which are owned beneficially or of record by the person and any other information relating to the person that would be required to be disclosed in a proxy statement or other filings. Other requirements related to the notice are contained in the Bylaws and stockholders are advised to carefully review those requirements to ensure that nominations comply with the Bylaws; stockholders who intend to solicit proxies in support of director nominees other than the Board’s nominees must also comply with SEC Rule 14a-19(b). The Committee will consider nominations from stockholders that satisfy these requirements. +All of the nominees for directors being voted upon at the Annual Meeting to be held on April 22, 2025, other than Mr. Stephen E. Lewis, are currently serving on the Board of Directors. Mr. Stephen E. Lewis was recommended by the Nominating and Corporate Governance Committee as a director candidate and has been nominated for election as a director by the Board of Directors. After a long service on the Board of Directors, Ms. Pamela R. Rollins and Mr. Gary W. Rollins are not standing for re-election but will continue to serve until the 2025 Annual Meeting. As a result, the size of our Board will be comprised of nine members after the Annual Meeting of Stockholders. +6 +Table of Contents +2025 ANNUAL +PROXY STATEMENT +Board Leadership STRUCTURE +The Board believes the current leadership structure consisting of a separate Executive Chairman of the Board, Chief Executive Officer (CEO) and Lead Independent Director represents the appropriate structure for the Company at this time. Richard A. Hubbell is the Executive Chairman of the Board and sets the agendas for Board meetings in consultation with the CEO, Corporate Secretary, and other members of the Board, and presides over all Board meetings and the Annual Meeting of Stockholders. Ben M. Palmer is the President and Chief Executive Officer and sets the operational leadership and strategic direction of the Company. Jerry W. Nix is the Lead Independent Director and serves as the liaison between the Executive Chairman, CEO and the independent directors, sets the agenda for, and presides over, the executive sessions of the non-employee and independent directors, consults with the Executive Chairman and CEO regarding information sent to the Board in connection with Board meetings and is available, if requested by the stockholders, when appropriate, for consultation and direct communication. +Risk Oversight +Our Board of Directors provides oversight of the Company’s overall risk management practices. “Risk” is an extremely broad concept that extends to multiple functional areas and crosses multiple disciplines. As such, risk may be addressed from time to time by the full Board or by one or more of our Committees. Senior management is responsible for identifying and managing material risks that we face while insurable risks and litigation risks are handled primarily by the risk management department. Senior management provides the Board with a summary of insurance coverage annually and updates as deemed necessary. Liquidity risk, credit risk and risks associated with our credit facilities and cash management are handled primarily by our finance department which regularly provides a financial report to both the Audit Committee and to the full Board. Operational, business, regulatory and political risks are handled primarily by senior executive management which regularly provides various operational reports to, among others, the full Board, the Executive Committee and the Audit Committee. +Cybersecurity Risk Oversight +The Board has delegated its responsibility for oversight of the Company’s cybersecurity and information security framework and risk management to the Audit Committee. The Audit Committee receives information and updates at least quarterly and actively engages with senior leaders with respect to the effectiveness of the Company’s cybersecurity and information security framework, data privacy, and risk management. In addition, the Audit Committee receives reports summarizing threat detection and mitigation plans, audits of internal controls, training and certification, and other cyber priorities and initiatives, as well as timely updates from senior leaders on material incidents relating to information systems security, including cybersecurity incidents. The Audit Committee includes members with experience in risk management including cybersecurity. +RPC’s cybersecurity program is overseen by the Chief Information Officer (CIO) as well as several key members of RPC’s Enterprise Technology team including the Principal Security Architect. These key leaders collectively have over 50 years of experience in network security, cybersecurity and enterprise risk management. The Chief Executive Officer and CIO receive regular updates on cybersecurity matters, results of mitigation efforts related to existing risks and cybersecurity incident response and remediation. These leaders communicate closely with members of RPC’s Information Security Committee (ISC) which oversees the adopted CIS Control Framework, governs the Company’s information security programs and monitors the effectiveness of the Company’s cybersecurity and technology risk management practices. In addition, ISC provides oversight to align security strategies with business objectives. The Company also maintains business continuity and disaster recovery plans. +7 +Table of Contents +2025 ANNUAL +PROXY STATEMENT +Director Independence and NYSE Requirements +Controlled Company Exemption +The Company has elected to be treated as a “controlled company” as defined by NYSE Section 303A.00. This Section provides that a controlled company need not comply with the requirements of Sections 303A.01, 303A.04 and 303A.05 of the NYSE Listed Company Manual. Section 303A.01 requires that listed companies have a majority of independent directors. As a controlled company, this Section does not apply to the Company. Sections 303A.04 and 303A.05 require that listed companies have a nominating and corporate governance committee and a compensation committee, in each case composed entirely of independent directors, and that each of these committees must have a charter that addresses both the committee’s purpose and responsibilities and the need for an annual performance evaluation by the committee. While the Company has a Nominating and Corporate Governance committee and a Human Capital Management and Compensation committee, and each of these committees has a written charter that is available on the Company’s website, it is not required to and does not comply with all of the provisions of Sections 303A.04 and 303A.05. The Company is a “controlled company” because a group that includes Gary W. Rollins, Pamela R. Rollins, Timothy C. Rollins, and Amy R. Kreisler, each of whom is a director of the Company, and certain companies under their control, controls in excess of 50% of the Company’s voting power. This means that they have the ability to determine the outcome of the election of directors at the Company’s annual meetings and to determine the outcome of many significant corporate transactions, many of which only require the approval of a majority of the Company’s voting power. Such a concentration of voting power could also have the effect of delaying or preventing a third party from acquiring the Company at a premium. +The Company’s Audit Committee is composed of four “independent” directors as defined by the Company’s Corporate Governance Guidelines, the NYSE rules, the Exchange Act, SEC regulations thereunder, and the Company’s Audit Committee Charter. All of the members of the Human Capital Management and Compensation Committee, and a majority of the members of Nominating and Corporate Governance Committee are also “independent” directors, in accordance with the NYSE’s independence standards that apply to directors generally. The current independent directors of the Company are Jerry W. Nix, Susan R. Bell, Patrick J. Gunning, and John F. Wilson. If elected, Stephen E. Lewis will also be an independent director. +Independence Guidelines +Under NYSE listing standards, to be considered independent, a director must be determined to have no material relationship with the Company other than as a director. The NYSE standards set forth a nonexclusive list of relationships which are conclusively deemed material. The Company’s Independence Guidelines are posted on the Company’s website at www.rpc.net under the Governance section and include categorical standards for determining independence in specific situations. +Audit Committee Charter +Under the Company’s Audit Committee Charter, in accordance with NYSE listing requirements and the Securities Exchange Act of 1934, all members of the Audit Committee must be independent of management and the Company. A member of the Audit Committee is considered independent as long as he or she (i) does not accept any consulting, advisory, or compensatory fee from the Company, other than as a director or committee member; (ii) is not an affiliated person of the Company or its subsidiaries; and (iii) otherwise meets the independence requirements of the NYSE and the Company’s Corporate Governance Guidelines. +8 +Table of Contents +2025 ANNUAL +PROXY STATEMENT +Nonmaterial Relationships +After reviewing all of the relationships between the independent directors and the Company, the Board of Directors determined that none of the independent directors had any relationships that impaired their independence and discussed the following: +> Jerry W. Nix, Susan R. Bell, Patrick J. Gunning, and John F. Wilson currently serve on the Board of Marine Products Corporation. Gary W. Rollins, Pamela R. Rollins, Timothy C. Rollins and Amy R. Kreisler are directors of Marine Products Corporation and are part of a control group that has voting control over that company. Gary W. Rollins, Pamela R. Rollins, Patrick J. Gunning and Susan R. Bell are directors of Rollins, Inc. Gary W. Rollins is its Executive Chairman Emeritus and John F. Wilson is its Executive Chairman. Gary W. Rollins and Pamela R. Rollins are part of a group that owns in excess of 40% of the outstanding common stock of Rollins, Inc. +As required by the Independence Guidelines, the Board of Directors unanimously concluded that the above-listed relationships would not affect the independent judgment of the independent directors, based on their experience, character and independent means, and therefore do not preclude an independence determination. All the members of the Audit Committee are also independent under the heightened standards required for Audit Committee members. The Company’s non-management directors meet at regularly scheduled executive sessions, and the independent directors separately meet at least once annually, without management, in accordance with the NYSE Corporate Governance Listing Standards, and Mr. Jerry W. Nix, as Lead Independent Director, presided over the executive sessions held during 2024. +Corporate Governance Guidelines +We have adopted Corporate Governance Guidelines to formalize and promote better understanding of our policies and procedures. At least annually, the Board reviews these guidelines. As required by the rules of the NYSE, our Corporate Governance Guidelines require that our non-management directors meet in regularly scheduled executive sessions each year without management, and such meetings are currently required to occur at least twice annually. +At the Company’s website at www.rpc.net , under the Governance section, you may access a copy of the Company’s Corporate Governance Guidelines, Audit Committee Charter, Human Capital Management and Compensation Committee Charter, Nominating and Corporate Governance Committee Charter, Code of Business Conduct, Code of Business Conduct and Ethics for Directors and Executive Officers and Related Party Transactions Policy, and Independence Guidelines. +Code of Business Conduct +The Company has adopted a Code of Business Conduct applicable to all directors, officers and employees generally, as well as a Code of Business Conduct and Ethics for Directors and Executive Officers and Related Party Transactions Policy applicable to the principal executive officer, principal financial officer, and directors. Both Codes are available on the Company’s website at www.rpc.net under the Governance section. +9 +Table of Contents +2025 ANNUAL +PROXY STATEMENT +Director Communications +The Company also has a process for interested parties, including stockholders, to send communications to the Board of Directors, Lead Independent Director, any of the Board committees or the non-management or independent directors as a group. Such communications should be addressed as follows: +Mr. Jerry W. Nix +c/o Internal Audit Department +RPC, Inc. +2801 Buford Highway NE, Suite 300 +Atlanta, Georgia 30329 +The above instructions for communications with the directors are also posted on our website at www.rpc.net under the Governance section. All communications received from interested parties are forwarded to the Board of Directors. Any communication addressed solely to the Lead Director or the non-management or independent directors will be forwarded directly to the appropriate addressee(s). +Insider Trading Policy +We have adopted an Insider Trading Policy and procedures governing the purchase, sale and/or other dispositions of our securities by directors, officers and employees that is reasonably designed to promote compliance with insider trading laws, rules and regulations, and the New York Stock Exchange listing standards applicable to us. A copy of our Insider Trading Policy is filed as Exhibit 19 to our Annual Report on Form 10-K for the year ended December 31, 2024. In addition, with regard to the Company’s trading in its own securities, it is the Company’s policy to comply with the federal securities laws and the applicable exchange listing requirements. +10 +Table of Contents +2025 ANNUAL +PROXY STATEMENT +DIRECTOR COMPENSATION +Overview of the Non-Employee Director Compensation Program +Members of the Board who are not employees (Non-Employee Directors) receive compensation for their service. As RPC employees, Messrs. Hubbell and Palmer do not receive compensation for their service as Board members. The compensation program for our Non-Employee Directors is intended to provide a total compensation package that enables us to attract and retain qualified and experienced individuals to serve as directors and to align our directors’ interests with those of our stockholders. All Non-Employee Directors are also entitled to reimbursement of expenses for all services as a director, including reasonable travel expenses incurred in connection with required in-person attendance at board and committee meetings, committee participation or special assignments. +The Human Capital Management and Compensation Committee annually reviews each element and the total of our Non-Employee Director Compensation Program and periodically makes recommendations for any changes to the Board. There were no changes made to the Non-Employee Director Compensation Program for 2025. +2024 Annual Non-Employee Director Compensation Program +Cash and Equity Compensation +Under the Director Compensation Program in effect in 2024, our Non-Employee Directors received an annual cash retainer and an annual equity grant in the form of fully vested Company common shares under the Company’s 2024 Equity Stock Incentive Plan (SIP); Committee Chairs and members received additional annual cash retainers. All cash retainers are payable in equal quarterly installments in arrears. For each Non-Employee Director who is elected or appointed for the first time, the first quarterly installment of the annual cash retainers will be paid for the first quarter that ends on or after the date of his or her initial election or appointment, prorated based on service during the quarter. In addition, equity retainers are not granted to the Non-Employee Director who is elected to the Board during the latter half of a year. The following table sets forth the 2024 Non-Employee Director Compensation Program : +Annual +Annual +Annual +Committee +Chair +Board Member +Equity +Member Annual +Retainer +Cash Retainer +Retainer +Cash Retainer +Board/Committee +($) +($) +($) +($) +Board of Directors +— +75,000 +50,000 +— +Lead Independent Director +10,000 +— +— +— +Audit Committee +20,000 +— +— +6,000 +Human Capital Management and Compensation Committee +10,000 +— +— +3,000 +Nominating and Corporate Governance Committee +6,000 +— +— +2,000 +11 +Table of Contents +2025 ANNUAL +PROXY STATEMENT +2024 Director Compensation Table +The following table sets forth the compensation paid to our directors for services rendered as a director for the year ended December 31, 2024. Two of our directors, Richard A. Hubbell and Ben M. Palmer, are employees of the Company, and each of their employee compensation information is set forth in the Summary Compensation Table under the Executive Compensation section of this Proxy Statement. Directors that are Company employees do not receive any additional compensation for services rendered as a director. +All of the directors shown below have never been employed by the Company or paid a salary or bonus by the Company and do not participate in any Company-sponsored retirement plans. +Fees Earned or +Stock +Option +Paid in Cash +Awards (1) +Awards +Total +Name +($) +($) +($) +($) +Susan R. Bell +81,000 +50,000 +— +131,000 +Patrick J. Gunning +100,000 +50,000 +— +150,000 +Amy R. Kreisler +77,000 +50,000 +— +127,000 +Jerry W. Nix +107,000 +50,000 +— +157,000 +Gary W. Rollins +75,000 +50,000 +— +125,000 +Pamela R. Rollins +75,000 +50,000 +— +125,000 +Timothy C. Rollins +77,000 +50,000 +— +127,000 +John F. Wilson +86,000 +50,000 +— +136,000 +(1) All stock awards are fully vested at grant. +Non-Employee Director Stock Ownership Guidelines +Under Stock Ownership Guidelines, Non-Employee Directors are required to beneficially own, within five years of their appointment to the Board, common stock of the Company equal to at least three times the annual equity retainer. Non-Employee Directors are prohibited from selling Company stock granted to such director by the Company for a period of one year from the date of such grant and until such director is in compliance with their ownership requirement under these Stock Ownership Guideline s. +12 +Table of Contents +2025 ANNUAL +PROXY STATEMENT +INFORMATION REGARDING DIRECTOR NOMINEES +The following table sets forth the names, ages as of February 28, 2025, and certain other information for each of the nominees for election as a director at the Annual Meeting. Full biographical information follows the table. We have declassified our Board of Directors, and therefore, all of our directors that have terms expiring past this Annual Meeting of Stockholders have submitted their resignations effective immediately prior to the Annual Meeting of Stockholders to be held on April 22, 2025, and are standing for re-election term of one year. +Name +Age +Director Since +Independent +DIRECTOR NOMINEES: +Richard A. Hubbell +80 +1987 +û +Amy R. Kreisler +55 +2016 +û +Jerry W. Nix +79 +2020 +ü +Patrick J. Gunning +65 +2021 +ü +Susan R. Bell +62 +2021 +ü +Ben M. Palmer +64 +2022 +û +John F. Wilson +67 +2022 +ü +Timothy C. Rollins +62 +2022 +û +Stephen E. Lewis +58 +Nominated on January 28, 2025 +ü +13 +Table of Contents +2025 ANNUAL +PROXY STATEMENT +Key Attributes, Experience and Skills of Director Nominees +Director Nominees +Richard A. Hubbell +Executive Chairman of the Board +Non-Independent Member of the Board of Directors +Chairman of the Executive Committee +Richard A. Hubbell has been Executive Chairman of the Board since May 17, 2022. Prior to that, he served as a Director, the Company’s President since 1987 and its Chief Executive Officer since 2003. This experience has given Mr. Hubbell extensive knowledge of the Company’s business and industry. He is also the Executive Chairman of the Board of Directors at Marine Products Corporation and previously served as its President and Chief Executive Officer since 2001. Previously, he was Executive Vice President of Rollins Communications, Inc., a media company. He joined Rollins, Inc. in 1970. Mr. Hubbell received a Bachelor of Arts in Economics from Westminster College. +Amy R. Kreisler +Executive Director, The O. Wayne Rollins Foundation +Non-Independent Member of the Board of Directors +Member of the Nominating and Corporate Governance Committee +Amy R. Kreisler has served as a Director of RPC, Inc. since 2016. Ms. Kreisler is a Vice President at LOR, Inc., a private family investment company. She is the Executive Director of The O. Wayne Rollins Foundation and a Trustee of The Ma-Ran Foundation. In each of these roles, she oversees grant-making activities and directs the administration of foundation assets. She is also a member of The Lovett School Board of Trustees, serving on their Executive Committee and Endowment Committee. She is a board member of The Shepherd Center Foundation. Ms. Kreisler brings both legal and business experience to the Board. She is a long-standing member of the Rollins School of Public Health’s Dean’s Council and a former Board member of the Emory University Board of Visitors. Ms. Kreisler is currently a member of the Board of Directors at Marine Products Corporation. Ms. Kreisler is a former attorney of the law firm Arnall Golden Gregory LLP. She holds an English Degree from Hollins University and a Law Degree from The College of William and Mary Law School. +14 +Table of Contents +2025 ANNUAL +PROXY STATEMENT +Jerry W. Nix +Former Vice Chairman, Executive Vice President and Chief Financial Officer of Genuine Parts Company +Lead Independent Director of the Board of Directors +Chairman of the Human Capital Management and Compensation Committee +Chairman of the Nominating and Corporate Governance Committee +Member of the Audit Committee +Jerry W. Nix has served as a Director of RPC, Inc. since 2020. Mr. Nix brings extensive risk oversight, financial and strategic experience to our Board of Directors. Mr. Nix retired from Genuine Parts Company in 2013 where he served as Vice Chairman from 2005 to 2013, Chief Financial Officer from 2000 to 2013 and as Executive Vice President from 2000 to 2005. Prior to joining Genuine Parts in 1978, Mr. Nix was an auditor with Ernst & Young from 1974 to 1978 and a pilot in the U.S. Air Force from 1968 to 1974. Mr. Nix currently serves on the Board of Directors at Marine Products Corporation, a role he has held since 2020, and on various civic and non-profit boards. Mr. Nix received a Bachelor of Science in Education from Mississippi State University and a Bachelor of Science in Accounting from the University of Florida. +Patrick J. Gunning +Former Chief Financial Officer at The Woodruff Arts Center +Retired Partner, Ernst & Young LLP +Independent Member of the Board of Directors +Chairman of the Audit Committee +Member of the Nominating and Corporate Governance Committee +Member of the Human Capital Management and Compensation Committee +Patrick J. Gunning has served as a Director of RPC, Inc. since 2021. Mr. Gunning brings extensive risk oversight, financial and strategic experience to our Board of Directors. Mr. Gunning served as the Chief Financial Officer of the Woodruff Arts Center, a non-profit organization, from November 2020 to June 2022. Mr. Gunning retired as a Partner from Ernst & Young LLP in June 2020, a role he had held since May 2002, after a 39-year career in public accounting. Mr. Gunning held multiple leadership roles at Ernst & Young LLP including Southeast Region Leader of the Financial Accounting Advisory Services practice, Southeast Area Industry Leader of the Retail and Consumer Products practice, and lead audit partner for numerous publicly traded and privately owned companies. Prior to joining Ernst & Young LLP, Mr. Gunning worked at Arthur Andersen LLP from 1981 to 2002, where he served as a partner, lead audit partner and Assurance Division Leader. Mr. Gunning currently serves on the Board of Directors at Marine Products Corporation and Rollins, Inc., roles he has held since 2021. Mr. Gunning received a Bachelor of Business Administration in Accountancy from the University of Notre Dame and is a Certified Public Accountant in the state of Georgia. +15 +Table of Contents +2025 ANNUAL +PROXY STATEMENT +Susan R. Bell +Retired Partner, Ernst & Young LLP +Independent Member of the Board of Directors +Member of the Audit Committee +Susan R. Bell has served as a Director of RPC, Inc. since 2021. Ms. Bell brings extensive risk oversight, financial and strategic experience to our Board of Directors. Ms. Bell retired as Partner from Ernst & Young LLP in 2020 after a 36-year career in public accounting. At Ernst & Young LLP, Ms. Bell served as both an audit and advisory partner, led the Southeast Risk Advisory practice and served as the Atlanta Office Managing Partner. Prior to working at Ernst & Young LLP, Ms. Bell started her career at Arthur Andersen LLP in 1984 where she served as an audit partner from 1996 to 2002. Ms. Bell currently serves as a member of the Board of Directors at Marine Products Corporation, Rollins, Inc. and First Advantage Corporation. She also serves on the Board compensation committee of First Advantage Corporation and the Board audit committee of Marine Products Corporation, and chairs the audit committees of Rollins, Inc. and First Advantage Corporation. Ms. Bell graduated summa cum laude from Mississippi State University with a Bachelor of Professional Accountancy and is a Certified Public Accountant in the states of Georgia and Tennessee. +Ben M. Palmer +President and Chief Executive Officer +Non-Independent Member of the Board of Directors +Member of the Executive Committee +Ben M. Palmer has served as a Director of RPC, Inc. since 2022. Mr. Palmer has been serving as President and Chief Executive Officer of the Company since May 17, 2022. Previously, he served as Vice President, Chief Financial Officer, and Treasurer of the Company beginning in 1996 and also Corporate Secretary from 2018 to 2022. This experience has given Mr. Palmer extensive knowledge of the Company’s business and industry. He is also the President and Chief Executive Officer of Marine Products Corporation and previously served as its Vice President, Chief Financial Officer, Treasurer and Corporate Secretary. Mr. Palmer is currently a member of the Board of Directors at Marine Products Corporation. Prior to joining RPC, Inc., he served for three years as the CFO of EQ Services, a commercial mortgage and asset management subsidiary of The Equitable Companies. Prior to that he spent ten years with Arthur Andersen LLP in its audit and business advisory services division. Mr. Palmer has a Bachelor of Science in Business Administration from Auburn University. +16 +Table of Contents +2025 ANNUAL +PROXY STATEMENT +John F. Wilson +Executive Chairman of the Board, Rollins, Inc. +Independent Member of the Board of Directors +Member of the Audit Committee +Member of the Nominating and Corporate Governance Committee +Member of the Human Capital Management and Compensation Committee +John F. Wilson has served as a Director of RPC, Inc. since 2022. Mr. Wilson currently serves as the Executive Chairman of the Board of Rollins, Inc., a position he has held beginning January 1, 2025. He has served in the following roles on that company Board: as Vice-Chairman from 2020 to 2024, and as a Director since 2013. He previously served as President and Chief Operating Officer of Rollins, Inc. from 2013 to 2020, Vice President of Rollins, Inc. from 2011 to 2013, and as President of Orkin, LLC, from 2009 to 2013. Mr. Wilson’s experience at Rollins has provided him with significant business management and public company expertise. He also serves as Vice Chairman of the Professional Pest Management Association and a member of The Carter Center Board of Councilors, positions he has held since 2011 and 2015, respectively. Mr. Wilson is currently a member of the Board of Directors at Marine Products Corporation. +Timothy C. Rollins +Vice President, LOR, Inc. +Non-Independent Member of the Board of Directors +Member of the Nominating and Corporate Governance Committee +Timothy C. Rollins has served as a Director of RPC, Inc. since 2022. Mr. Rollins is a Vice President at LOR, Inc., a private family investment company, and manages its investments in cattle operations. In this role, he manages the Executive Team of Operations and approves major capital expenditures. He brings management and financial experience to the Board. He is also a Trustee of Emory University and of Woodruff Health Sciences Center. He is currently a member of the Board of Directors at Marine Products Corporation. Mr. Rollins is also a former Board member of both Emory Board of Visitors and of Emory Department of Psychiatry Board of Visitors. Mr. Rollins holds a Bachelor of Science in Business Administration from Boston University. +Stephen E. Lewis +Former Chair & CEO and Retired Partner, Troutman Pepper +Director Nominee +Stephen E. Lewis served as the Chair and Chief Executive Officer of Troutman Pepper from 2020 through 2023, having previously served as the Managing Partner and CEO of predecessor firm Troutman Sanders from 2016 to 2020. Mr. Lewis retired from Troutman Pepper at the end of 2024. Mr. Lewis has expertise in the professional and business services, real estate, manufacturing, transportation and logistics, and retail industries and has international business experience. Mr. Lewis was recently appointed to the board of directors at Piedmont Office Reality Trust, Inc., a real estate investment trust. He currently serves on the Board of Directors and Nominating Committee of the UNC School of Law Alumni Association. He previously served on the Executive Committee and the Finance Committee of the Metro Atlanta Chamber of Commerce, as the Chair of the Board of Trustees of Leadership Atlanta; on the Executive Committee of Junior Achievement of Georgia; on the Board of Visitors of the University of North Carolina at Chapel Hill; and on the Board of Directors of the Metro Atlanta YMCA. Mr. Lewis received a BS in Business Administration (Accounting Concentration) and a JD from the University of North Carolina at Chapel Hill and has been a member of the Georgia Bar since 1991. +17 +Table of Contents +2025 ANNUAL +PROXY STATEMENT +PROPOSAL 1: ELECTION OF DIRECTORS +Overview +Our Board of Directors is currently composed of 10 members. After a long service on the Board, Pamela R. Rollins and Gary W. Rollins have chosen not to stand for re-election. The Board has nominated Stephen E. Lewis to stand for election, and the Board will be comprised of nine members after the Annual Meeting of Stockholders. As a matter of good governance, we amended and restated our Bylaws to declassify our Board of Directors resulting in a fully declassified board of directors beginning with this year’s Annual Meeting of Stockholders. At the Annual Meeting all directors will be elected for a one-year term. Each director’s term continues until the next election, or such director’s earlier death or resignation. +Nominees +At the Annual Meeting, all directors will be nominated to serve for a one-year term. The nominees for election at the 2025 Annual Meeting are currently directors of the Company with the exception of Stephen E. Lewis who was nominated by the Board on January 28, 2025, to stand for election. Unless authority is withheld, the proxy holders will vote for the election of each nominee named above as a director. Although management does not contemplate the possibility, in the event any nominee is not a candidate or is unable to serve as director at the time of the election, unless authority is withheld, the proxies will be voted for any nominee who shall be designated by the present Board of Directors and recommended by the Nominating and Corporate Governance Committee to fill such vacancy. +Our Board of Directors recommends a vote FOR the Director Nominees above. +18 +Table of Contents +2025 ANNUAL +PROXY STATEMENT +AUDIT MATTERS +Report of the Audit Committee +Management is responsible for the Company’s system of internal control over financial reporting, the preparation of its consolidated financial statements in accordance with accounting principles generally accepted in the United States, and the financial reporting process, including management’s assessment of Internal Control over Financial Reporting (ICFR). +The Company’s independent registered public accounting firm is responsible for performing an integrated independent audit of the Company’s consolidated financial statements and management reports on ICFR in accordance with the standards of the Public Company Accounting Oversight Board (PCAOB) and for issuing reports thereon. The Audit Committee’s responsibility is generally to monitor and oversee these processes, as described in the Audit Committee Charter. It is not the duty of the Audit Committee to plan or conduct audits, nor is it the Audit Committee’s responsibility to determine that the Company’s financial statements are complete and accurate and in accordance with generally accepted accounting principles; that is the responsibility of management. The Audit Committee presently consists of four independent directors, all of whom are considered financially literate under NYSE rules. +In fulfilling its oversight responsibilities with respect to the year ended December 31, 2024, the Audit Committee: +> Approved the engagement and terms of service of Grant Thornton LLP as the Company’s independent registered public accounting firm for the year ended December 31, 2024; +> Reviewed with management and the Company’s independent registered public accounting firm, the interim financial information included in the Company’s Forms 10-Q prior to their being filed with the SEC, as well as the financial information in each quarterly earnings release; +> Reviewed and discussed with the Company’s management (including internal audit) and the Company’s independent registered public accounting firm, the audited consolidated financial statements of the Company as of December 31, 2024 and 2023 and for the three years ended December 31, 2024 and the related ICFR; +> Discussed with the Company’s independent registered public accounting firm matters required to be discussed by the applicable requirements of the PCAOB and the SEC; and +> Received from the Company’s independent registered public accounting firm the written disclosures and the letter in accordance with the requirements of the PCAOB regarding the firm’s communications with the Audit Committee concerning independence and discussed with such firm its independence from the Company. +Based upon the review and discussions referred to previously, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements of the Company and subsidiaries as of December 31, 2024 and for the year then ended December 31, 2024 be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 for filing with the SEC. +In giving its recommendation to the Board of Directors, the Audit Committee has relied on (i) management’s representation that such financial statements have been prepared with integrity and objectivity and in conformity with accounting principles generally accepted in the United States of America; and (ii) the reports of the Company’s independent registered public accounting firm with respect to such financial statements and related internal controls. +Respectfully submitted by the Audit Committee of the Board of Directors +Patrick J. Gunning, Chairman +Susan R. Bell +Jerry W. Nix +John F. Wilson +19 +Table of Contents +2025 ANNUAL +PROXY STATEMENT +This report of the Audit Committee is required by the SEC and, in accordance with the SEC’s rules, will not be deemed to be part of or incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933, as amended (the “Securities Act”), or under the Exchange Act, except to the extent that we specifically incorporate this information by reference, and will not otherwise be deemed “soliciting material” or “filed” under either the Securities Act or the Exchange Act. +Independent Registered Public Accounting Firm +Principal Auditor +Grant Thornton LLP served as the Company’s independent registered public accounting firm for the fiscal years ended December 31, 2024 and 2023. +The Audit Committee has appointed Grant Thornton LLP as RPC, Inc.’s independent registered public accounting firm for the fiscal year ending December 31, 2025. Grant Thornton LLP has served as the Company’s independent auditors since 2004 and is considered by management to be well qualified. Representatives of Grant Thornton LLP are expected to be present at the Annual Meeting, and they will have the opportunity to make a statement if they desire to do so and are expected to be available to respond to appropriate questions. See section titled Proposal No 2—Ratification of Appointment of Independent Registered Public Accounting Firm . +Aggregate fees billed by the Company’s independent registered public accounting firm are set forth below: +2024 +2023 +Audit fees (1) +$ +1,247,100 +$ +1,154,500 +Audit related fees +— +— +Tax fees +— +— +All other fees +— +— +(1) Audit fees represent fees for professional services provided in connection with the integrated audit of our financial statements, including internal controls over financial reporting, review of our quarterly financial statements, and audit services provided in connection with other statutory or regulatory filings. +Pre-approval of Services +All of the services described above were pre-approved by the Company’s Audit Committee. The Audit Committee has determined that the payments made to its independent registered public accounting firm for these services are compatible with maintaining such auditors’ independence. A majority of the hours expended on the principal accountant’s engagement to audit the financial statements of the Company for the years 2024 and 2023 were attributable to work performed by full-time, permanent employees of the principal accountant. The Audit Committee has no pre-approval policies or procedures other than as set forth below. +The Audit Committee is directly responsible for the appointment and termination, compensation, and oversight of the work of the independent registered public accounting firm, including resolution of disagreements between management and the independent registered public accounting firm regarding financial reporting. The Audit Committee is responsible for pre-approving all audit and non-audit services provided by the independent public accountants and ensuring that they are not engaged to perform the specific non-audit services proscribed by law or regulation. The Audit Committee has delegated pre-approval authority to the Chairman, and the Chairman may further delegate approval authority to another member of the Committee from time to time. The decisions of any Audit Committee member to whom pre-approval authority is delegated must be presented to the full Audit Committee at its next scheduled meeting. +20 +Table of Contents +2025 ANNUAL +PROXY STATEMENT +PROPOSAL 2: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +Overview +The Audit Committee of the Board of Directors has appointed Grant Thornton LLP as the Company’s independent registered public accounting firm to audit our consolidated financial statements for the fiscal year ending December 31, 2025. Grant Thornton has served as our independent registered public accounting firm since 2004. +During fiscal 2024, Grant Thornton LLP served as our independent registered public accounting firm. Representatives of Grant Thornton LLP are expected to attend the Annual Meeting and will have the opportunity to respond to appropriate questions and, if they desire, to make a statement. +See “ Audit Matters—Independent Public Registered Accounting Firm ” for additional information regarding Grant Thornton and fees paid to them in 2024 and 2023. +Although we are not required to seek ratification of this appointment, the Audit Committee and the Board of Directors believes it is appropriate to do so. If stockholders do not ratify the appointment of Grant Thornton LLP, the current appointment will stand, but the Audit Committee will consider that stockholder action in determining whether to retain Grant Thornton LLP as our independent registered public accounting firm for future fiscal years. +Our Board of Directors recommends a vote FOR the ratification of the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm for the 2025 fiscal year. +21 +Table of Contents +2025 ANNUAL +PROXY STATEMENT +EXECUTIVE OFFICERS +The following narrative summarizes the business experience over at least the last five years of our current executive officers, other than Messrs. Palmer and Hubbell whose business experience is described above in the section titled Information Regarding Director Nominees of this Proxy Statement. +Michael L. Schmit +Vice President, Chief Financial Officer, Treasurer and Corporate Secretary +Michael L. Schmit has been Vice President, Chief Financial Officer, Treasurer and Corporate Secretary of the Company since 2022. He has also served as the Vice President, Chief Financial Officer, Treasurer and Corporate Secretary of Marine Products Corporation since 2022. Previously, he served as Chief Accounting Officer at Schweitzer-Mauduit International, Inc., a global performance materials engineering and manufacturing company, since 2019. In addition, he served as the Chief Accounting Officer and Controller of Chart Industries, Inc., a global manufacturer of highly engineered equipment servicing the clean energy and industrial gas markets in 2019 and 2018 and as Corporate Controller in 2017. Earlier in his career, Mr. Schmit worked for other public and private companies, including Georgia-Pacific, LLC, in various financial and risk management roles. He also worked in public accounting with Ernst & Young, both in the U.S. and Australia. Mr. Schmit holds a B.S. in Business Administration from the University of Nebraska with a major in accounting and holds a CPA certification as well as several other related professional designations. +22 +Table of Contents +2025 ANNUAL +PROXY STATEMENT +COMPENSATION DISCUSSION AND ANALYSIS +This Compensation Discussion and Analysis describes our executive compensation program and provides an overview of how the Human Capital Management and Compensation Committee made compensation decisions in 2024 for each of our Named Executive Officers (NEOs) which consist of our Principal Executive Officer, our Principal Financial Officer and our Executive Chairman of the Board who were serving in such capacities in fiscal 2024. For a complete understanding of the executive compensation program, this disclosure should be read in conjunction with the Summary Compensation Table and other executive compensation-related disclosures included in this Proxy Statement. +In fiscal year 2024, our Named Executive Officers were: +Named Executive Officer +Position with the Company in 2024 +Ben M. Palmer +President and Chief Executive Officer +Michael L. Schmit +Vice President, Chief Financial Officer, Treasurer and +Corporate Secretary +Richard A. Hubbell +Executive Chairman of the Board +Executive Summary +Fiscal Year 2024 Financial Highlights +> Revenues decreased 13% to $1.4 billion, compared to prior year. +> Net income was $91.4 million, a decrease compared to $195.1 million net income in prior year. +> Net cash from operating activities was $349.4 million, a decrease compared to $394.8 million last year. +> The Company remains debt-free, paid $34.4 million in dividends, and repurchased $9.9 million of common stock in 2024. +23 +Table of Contents +2025 ANNUAL +PROXY STATEMENT +Executive Compensation Practices and Governance Policies +What We Do +What We Don’t Do +✓ +Pay for Performance +Majority of total compensation awarded to our Named Executive Officers is directly linked to the Company’s financial performance. +x +No Tax Gross-Ups +Our Named Executive Officers are not entitled to tax gross-ups under any of our compensation programs or policies. +✓ +Align the Interests of Executives with those of Our Stockholders +Equity compensation represents a significant portion of our Named Executive Officers’ total compensation. +x +No Hedging or Pledging +Under our Insider Trading Policy, we prohibit our employees, including our Named Executive Officers and the members of our Board of Directors, from hedging or pledging our securities. +✓ +Stock Ownership Guidelines +We maintain strong stock ownership requirements for our Directors and executive officers. +x +No Employment Contracts +There are no agreements or understandings between the Company and any executive officer that guarantee continued employment or guarantee any level of severance or compensation, including incentive or bonus payments, other than annual restricted stock grant agreements. +✓ +Independent Compensation Committee +Our Human Capital Management and Compensation Committee is composed solely of independent Directors. +RPC Goals +How Goal was Reinforced in Our 2024 Compensation Program +Generate strong financial performance and returns for our stockholders +Ø +Most of the executive compensation was delivered in the form of Annual Cash Incentives and Long-Term Incentive Compensation which align with stockholder interests. +Ø +Our 2024 Annual Incentive Compensation was based on Operating Cash Flow (OCF), a non-GAAP measure, as the primary performance metric. See section titled Annual Incentive Compensation of this report for schedule showing computation of OCF. +Ø +Our Long-Term Incentive Compensation incentivizes the creation of stockholder value through the grant of equity compensation including the use of absolute and relative Total Shareholder Return (TSR) performance goals for a portion of the Performance Share Unit awards (PSU). +Attract and retain highly qualified individuals, with a strong emphasis on teams working together to capitalize on opportunities and solve problems +Ø +We did not target a specific market percentile for executive compensation. Instead, executive compensation was set based on a holistic review of several factors, including market pay levels, individual performance and qualifications, and executive tenure. +Ø +Our Annual and Long-Term Incentive programs generally reward company-wide results rather than performance against individual objectives. +Ø +Our named executives’ compensation includes Long-Term Incentives that vest over a multi-year period to encourage their retention. +24 +Table of Contents +2025 ANNUAL +PROXY STATEMENT +General Compensation Objectives and Guidelines +The Company is engaged in a highly competitive industry. The success of the Company depends on our ability to attract and retain highly qualified and motivated executives. In order to accomplish this objective, we have endeavored to structure our executive compensation program in a fashion that gives our Human Capital Management and Compensation Committee the flexibility to take into account our operating performance and the individual performance of our executive officers. +The Human Capital Management and Compensation Committee endorses the philosophy that executive compensation should reflect Company performance and the contribution of executive officers to that performance. Our compensation policy is designed to achieve three fundamental objectives: +> attract and retain qualified executives; +> motivate performance to achieve Company objectives; and +> align the interests of our executives with the long-term interests of the Company’s stockholders. +The Human Capital Management and Compensation Committee recognizes that there are many intangibles involved in evaluating performance and in motivating performance, and that determining an appropriate compensation level is a highly subjective endeavor. The analysis of the Committee is not based upon a structured formula and the objectives referred to above are not weighted in any formal manner. During the year, none of the executive officers made recommendations or otherwise contributed input on their own compensation levels. +The Company’s executive officers are also executive officers of Marine Products Corporation (Marine Products) and receive compensation directly from Marine Products. The members of the Company’s Human Capital Management and Compensation Committee also constitute the Human Capital Management and Compensation Committee of Marine Products. In determining the compensation for the executive officers of the Company, the Committee considers these dual responsibilities and sources of compensation. The Company sets compensation of its executives at such levels so that the aggregate compensation received from both Marine Products and the Company is reasonable in light of their respective responsibilities and the performance of both companies, and so that the compensation from the Company for services solely to the Company is reasonable. A discussion of the Company’s executive officers’ compensation at Marine Products is contained in its annual Proxy Statement filed with the SEC. +Pursuant to our compensation philosophy, the total annual compensation of our executive officers is primarily made up of one or more of the following three core elements: +> base salary (fixed compensation); +> annual performance-based cash incentive compensation (cash incentive); and +> grants of stock-based awards such as restricted stock awards and performance share units (equity incentive). +In addition, we also provide retirement compensation plans, group welfare benefits and certain perquisites. +We believe (i) a competitive base salary is important to attract, retain and motivate our top executives; (ii) annual performance-based incentive compensation is valuable in recognizing and rewarding individual achievement towards the achievement of company-wide results; and (iii) equity-based compensation makes executives “think like owners” and, therefore, aligns their interests with those of our stockholders. Beginning in 2023, we included PSUs with three-year performance conditions in the equity incentive component, which we believe further aligns NEO compensation with sustained long-term value creation and enhances executive retention by requiring attainment of performance goals over multiple years. +25 +Table of Contents +2025 ANNUAL +PROXY STATEMENT +Fiscal 2024 Named Executive Officer Compensation Details +The table below reflects the approximate general distribution of the three core elements of NEO compensation earned for fiscal 2024 as determined by our Human Capital Management and Compensation Committee. +Total Direct Compensation +s +The numbers presented in the charts above are calculated in accordance with the presentation in the Summary Compensation Table included in the Executive Compensation section. Accordingly, the cash incentive component consists of the cash bonuses earned in prior years that are actually paid out for 2024 performance, which were zero in 2024, but the stock awards are valued at fair value on the grant date. The valuation of the PSUs, which are subject to performance conditions and a market condition, is based upon certain assumptions. See section titled Grants of Plan-Based Awards in 2024 for further information about their valuation. Actual value ultimately received by the NEOs with respect to these awards may be greater or lesser than the grant date fair value. Fixed compensation presented in the chart consists of base salary. The numbers presented for “Other Named Executive Officers” are averaged for simplicity of presentation, but the mix for individual NEOs varies depending upon their role and responsibilities, as the Human Capital Management and Compensation Committee has deemed appropriate. +Compensation Elements +The following table sets forth information regarding each of the three core elements of the target compensation for the executive officers in 2024, including a description of each element. +Compensation Element +Description +Base Salary +Fixed cash compensation based on each executive officer’s role, responsibilities, competitive market positioning, and individual performance. +Annual Incentive Compensation +Annual performance-based incentive cash compensation with target award amounts for each executive officer. Actual bonus amounts may be higher or lower than target based on the achievement of certain Company performance goals. +Long-Term Incentive Compensation +Grants of stock-based awards in the form of Time-Based Restricted Share Awards (RSAs) and PSUs . L ike annual incentive compensation, PSUs provide for target award payouts, but actual payout levels may be higher or lower than target based on achievement of Company performance goals and stock performance over a three-year term. +26 +Table of Contents +2025 ANNUAL +PROXY STATEMENT +Base Salary +Base salary represents the fixed element of the compensation of our executive officers and is an important element of compensation intended to attract and retain qualified executives. The Human Capital Management and Compensation Committee reviews the base salaries of our executive officers each year as part of its annual review of our executive compensation program with input from our CEO (except with respect to his own base salary). In making its determinations the Human Capital Management and Compensation Committee gives consideration to the Company’s operating performance for the prior fiscal year and the individual executive’s performance and compensation paid by Marine Products. Base salary increases are not automatic or guaranteed. +Base Salary Adjustments +Base salaries for 2024 were as follows: Ben M. Palmer: $600,000 (no change from 2023); Michael L. Schmit: $340,000 (increased from $300,000 in 2023) and Richard A. Hubbell: $500,000 (no change from 2023). At the January 2025 meeting, Ben M. Palmer, Michael L. Schmit, and Richard A. Hubbell’s base salary was set at $618,000, $350,200, and $515,000 respectively, effective January 1, 2025. The base salaries are adjusted from time to time in order to remain competitive with market rates and to reflect each executive officer’s duties and job responsibilities. +Annual incentive Compensation +The Company offers Performance-Based Incentive Cash Compensation to the executive officers. On an annual basis, the Human Capital Management and Compensation Committee establishes performance goals after the commencement of the performance period to which such goals relate. Performance goals for each participant may be based on corporate, business unit/function or individual performance, or a combination of one or more such measures. +In connection with the annual establishment of performance goals, the Committee sets a target award for each participant for the applicable year, which is expressed as a percentage of the participant’s base compensation (the “Target Award”) in effect on the last day of the final pay period of that year. If the participant’s performance goals are based upon a combination of performance measures, the Committee will weigh the importance of each performance measure by assigning a percentage (the “Weighted Percentage”) to each performance measures (“Target Performance Goal”). The participant’s cash award amount will also depend in part upon the level of achievement that the participant attained with respect to each such performance measure, based on a performance value (“Performance Value”) which ranges from: +> threshold performance level (with a Performance Value of 50% of the Target Award); +> target performance level (with a Performance Value of 100% of the Target Award); to +> maximum performance level (with a Performance Value of 200% of the Target Award). +27 +Table of Contents +2025 ANNUAL +PROXY STATEMENT +To calculate a participant’s cash award amount for a given year where there is more than one performance measure, the amount earned for each such measure will be calculated individually first, and then they are totaled to determine the total payout. The amount earned for each performance measure equals the product of the Target Award multiplied by the Weighted Percentage assigned to that performance measure, multiplied by the Performance Value attained for that performance measure, multiplied by base salary. However, no bonus is earned if performance is below threshold level, and the bonus is capped at the maximum amount. The Committee determines the maximum cash award as a percentage of a participant’s base salary for each applicable year. In 2024, there was only one performance goal, so the Weighted Percentage multiplier was 100%. See diagram below for a visualization of the Performance-Based Incentive Cash Compensation calculation for 2024: +For 2024, the Committee established the target incentive award for the Chief Executive Officer and for the other members of executive management at the amounts shown in the following table: +Award Opportunity +Base Salary +Target Award +Target Award +Executive Officer +($) +(as a % of base salary) +($) +Ben M. Palmer +600,000 +100 +600,000 +Michael L. Schmit +340,000 +70 +238,000 +Richard A. Hubbell +500,000 +100 +500,000 +The performance criteria applicable to the participants for 2024 were determined based solely on corporate performance. The Human Capital Management and Compensation Committee established a corporate financial performance goal for 2024 using OCF as described below. +OCF was used for determining the Target Performance Goal in 2024 and is computed as Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) minus cash paid for capital expenditures. These calculations are subject to adjustments for unusual items, as approved by the Human Capital Management and Compensation Committee. EBITDA is a widely used financial performance of short-term corporate profitability and is calculated by adding interest, tax, depreciation and amortization expenses to net income. +28 +Table of Contents +2025 ANNUAL +PROXY STATEMENT +For 2024, the Target Performance Goal was set considering OCF achieved by the company in the last ten years. The Company was required to achieve at least 80% of the target performance goal for executive officers to be eligible for any incentive cash compensation. These awards are determined on a sliding scale between the threshold performance level and maximum performance level, which corresponds to 170% of the target performance goal. To be eligible for the bonus award for 2024, OCF was required to be at $80.0 million to be at the threshold and $100 million to be at the target and increased to maximum if OCF was at $170.0 million. The Company has consistently established Target Performance Goals for Executive compensation, and the Committee has not typically exercised discretion to waive the performance goals based on difficult industry conditions or other factors. The target criteria and actual fiscal 2024 results for OCF are as follows: +C +Metrics +Threshold (50%) +Target +(100%) +Maximum (200%) +Results +Percent Attained of Target Award +Operating Cash Flow +$ 80 million +$100 million +$ 170 million +$13 million +13% +The actual fiscal 2024 result for OCF was calculated as follows: +2024 OCF Calculation (in Millions $’s) +EBITDA +$ 233 +Cash Capital Expenditures +(220) +OCF +$ 13 +The Company operates in a cyclical business where financial performance is influenced by, among other things, changes in oil and natural gas prices. The Company generated OCF below the threshold level and therefore no bonus was earned during 2024. The table below sets forth the threshold, target and maximum percentages of base salary for awards, together with the achievement and actual Annual Cash Incentives paid to our NEOs, based on actual Company results. +Award Opportunity +Bonus Earned +Name +Threshold (1) +Target (1) +Maximum (1) +Actual (1) +% of +Target +Award +$ +Ben M. Palmer +50% +100% +200% +13% +0% +- +Michael L. Schmit +50% +100% +200% +13% +0% +- +Richard A. Hubbell +50% +100% +200% +13% +0% +- +(1) Award Opportunity is a percentage of Target Award +For 2023, our NEOs were paid 128% of the target cash incentive, based on the performance achieved that year. For 2022, our NEOs were paid 150% of the target cash incentive, based on the performance achieved that year. As of the proxy date, the 2025 cash incentives have been designed and set with similar performance goals as in 2024. +29 +Table of Contents +2025 ANNUAL +PROXY STATEMENT +Long-term incentive compensation +Our Stock Incentive Plan (SIP) allows for a wide variety of stock-based awards including RSAs and PSUs. The terms and conditions of awards granted under the SIP are described in more detail below. +Awards under the Company’s SIP are purely discretionary, are not based upon any specific formula and may or may not be granted in any given fiscal year. For the past few years, we have granted RSAs to various employees, including our executive officers, during our regularly scheduled meeting of the Human Capital Management and Compensation Committee in which the Committee reviews executive compensation, and more recently incorporated PSUs into the executive compensation program. In order to balance performance and retention incentives, awards made during fiscal 2024 consisted of 80% RSAs and 20% PSUs. At the January 2025 meeting, 2025 awards consisted of 75% RSAs and 25% PSUs. The Human Capital Management and Compensation Committee believes that RSAs promote an “ownership” culture, align executives’ interests with those of our Stockholders and provide retention incentives for our executive officers, while PSUs act as an additional tool for linking individual interests of our executive officers to those of our Stockholders. +Consistent with this practice, we granted the following awards to our executive officers: +RSAs: +Name +2024 +2023 +Ben M. Palmer +120,000 +78,000 +Michael L. Schmit +45,000 +34,500 +Richard A. Hubbell +80,000 +56,250 +PSUs: +Name +2024* +2023* +Ben M. Palmer +30,000 +26,000 +Michael L. Schmit +11,250 +11,500 +Richard A. Hubbell +20,000 +18,750 +* Represents target levels and assumes no adjustment due to the TSR modifier. +For 2024, total equity compensation granted is comprised of RSAs and PSUs that will be earned over time as described below: +RSAs –The RSAs granted in 2024 and later vest ratably over a period of three years and RSAs granted in 2023 vest over four years. Prior to 2023, the RSAs vested one-fifth per year beginning on the second anniversary of the grant date. Beginning in 2024 RSAs granted vest over three years. RSAs have full voting and dividend rights. However, until the RSAs vest, they cannot be sold, transferred or pledged. Should the executive leave our employment for any reason prior to the vesting dates (other than due to disability or retirement on or after age 65), the unvested RSAs will be forfeited. In the event of death, or “change in control” as determined by the Board of Directors, all unvested RSAs shall vest immediately. +PSUs – For 2024 each of the officers was granted a target number of PSUs with each such unit representing the right to receive, to the extent then vested, an amount payable in stock, subject to certain performance conditions measured over the 3-year period ending in 2026. Potential payouts under the PSUs are based on levels of performance using “3-Year Cumulative EBITDA,” which is calculated by adding interest, tax, depreciation and amortization expenses to net income. This computation is subject to potential adjustments approved by the Human Capital and Compensation Committee but only if such an adjusted measure is disclosed in the Company’s SEC filings. The award provides for threshold, target and maximum levels of payout, so that attainment of 75% of the target 3-Year Cumulative EBITDA will result in a payout at 50% of target level, while attaining 120% of the target 3-Year Cumulative EBITDA will result in a payout at 200% of target level; subject to further adjustment based upon a TSR Modifier. The TSR Modifier adjusts the payout levels upward or downward by an amount up to 20%, based on the applicable relative percentile ranking of our stock benchmarked against the Philadelphia Oil Services Sector. TSR +30 +Table of Contents +2025 ANNUAL +PROXY STATEMENT +is calculated as the net price change in the market price for our stock over the 3-Year period, based on the 20-trading day average price at the beginning of 2024 and the end of 2026. With respect to both measures, interpolation is used to determine the payouts associated with performance between the threshold, target and maximum levels. +Based on current estimates, 2024 PSU grants may meet or exceed the threshold performance level, although actual performance could be higher or lower than our estimates. See section titled Grants of Plan-Based Awards in 2024 below for threshold, target, and maximum share numbers and grant date fair values. The shares granted in 2024 are set to cliff-vest on December 31, 2026. Should the executive leave our employment for any reason prior to the vesting dates (other than due to death, disability or change in control as defined in the agreements), the unvested PSUs will be forfeited. In the event of death, disability or change in control as defined in the agreements, all unvested PSUs shall vest immediately at 100% of target levels, without regard to the actual EBITDA performance, and with no adjustment for the TSR modifier. +PSU awards also include the right to “Dividend Equivalents” with respect to the underlying shares. Dividend equivalents are accrued over the performance period, in cash, based upon target payout level, subject to a true-up at the end of the three-year cycle. Accrued Dividend Equivalents will be paid out upon vesting of the PSUs, but no such Dividend Equivalents will be payable to the extent the awards fail to vest or are forfeited, or the performance goals are not met. PSUs confer no voting rights with respect to the underlying shares prior to vesting and payout. +The amount of the aggregate stock-based awards to our executive officers in any given year is influenced by the Company’s overall performance: for both RSAs and PSUs, the Committee takes into consideration both our historical performance and our projected goals and plans; in the case of PSUs, a certain minimum performance must be achieved in order for any shares to be issued. The amount of each grant to our executive officers is influenced in part by the Committee’s assessment of each individual’s respective contributions to achievement of the Company’s long-term goals and objectives, in addition to the recent prices of the Company’s common shares. In evaluating individual performance for these purposes, the Committee considers the overall contributions of executive management as a group and the Committee’s subjective assessment of each individual’s relative contribution to that performance rather than specific aspects of each individual’s performance over a short-term period. We expect to continue annual grants of RSAs and PSUs, although we reserve the right to modify or discontinue these or any of our other compensation practices at any time. Grants of RSAs and PSUs are made under our SIP which is administered pursuant to Rule 16b-3 under the Exchange Act. +Other Compensation +Health and Retirement Plans +The executive officers all participate in the Company’s regular employee benefit programs, including the 401(k) Plan with Company match, group life insurance, group medical and dental coverage and other group benefit plans. During 2024, the Company maintained a non-qualified supplemental retirement plan (SRP) for our executives and certain other highly compensated employees and a 401(k) Plan for the benefit of all of our eligible employees. In the fourth quarter of 2024, the Board of Directors approved the termination of the SRP. Pursuant to the Internal Revenue Service rules, participant balances will be distributed between 12 and 24 months after SRP termination. +Perquisites and Other Personal Benefits +In addition to the total direct compensation and benefits described above, the Company also provides its executive officers with certain perquisites as approved by the Human Capital Management and Compensation Committee and noted in the footnote to the Summary Compensation Table under Executive Compensation . The specific perquisites provided to the executive officers include the following: +> Company provided automobile with insurance and cost of gasoline, or an automobile allowance; +> club dues; and +> use of the Company’s aircraft for personal travel of the Executive Chairman of the Board and Chief Executive Officer. +31 +Table of Contents +2025 ANNUAL +PROXY STATEMENT +Compensation Setting Process +Role of the Human Capital Management and Compensation Committee +Under its Charter the Human Capital Management and Compensation Committee is responsible for, among other things, reviewing our overall executive compensation philosophy and strategy, including base salary, performance-based incentive cash compensation, and stock-based incentives to ensure that the strategy supports our compensation policy. +The Human Capital Management and Compensation Committee is composed of three Non-Employee Directors: Jerry W. Nix (Chairman), Patrick J. Gunning, and John F. Wilson, each of whom is independent. +The Human Capital Management and Compensation Committee has the authority, at its sole discretion, to retain or obtain the advice of any compensation consultant, legal counsel or other advisor to assist the Committee in the performance of its duties and may at its discretion be directly responsible for the appointment, compensation and oversight of the work of any such compensation consultant, legal counsel or other advisor so retained. The Committee has not retained the services of any compensation consultants in determining or recommending the amount or form of executive compensation. The Human Capital Management and Compensation Committee may also, from time to time, and in its discretion, form, and delegate all or a portion of its authority to subcommittees; provided that such subcommittees meet the Committee’s composition requirements set forth in its Charter or under any applicable federal or state laws or New York Stock Exchange requirements. +Role of Management +The Human Capital Management and Compensation Committee solicits input from Richard A. Hubbell, Executive Chairman of the Board and Ben M. Palmer, President and Chief Executive Officer, with respect to the performance of our executive officers and their compensation levels. The Human Capital Management and Compensation Committee considers Mr. Hubbell’s and Mr. Palmer’s evaluation and each of their direct knowledge of each executive officer’s performance (other than with respect to themselves) and contributions when making compensation decisions. For decisions made in 2024, Management retained the services of Mercer, LLC (Mercer), an independent executive compensation advisory firm. In doing so, Management reviewed information regarding independence and potential conflicts of interest with Mercer. Management receives from Mercer information on general compensation data and advice on design of incentives, which is also shared with the Human Capital Management and Compensation Committee. From time to time Mercer attends the Human Capital Management and Compensation Committee meetings but does not provide specific advice directly to the Human Capital Management and Compensation Committee. Neither Mercer nor its affiliates provided additional services to the Company in an amount in excess of $120,000 in 2024. +The Role of Stockholder Say-on-Pay Votes +We provide our stockholders with the opportunity to cast an advisory vote on executive compensation (a Say-on-Pay proposal) every three years. At our annual meeting of stockholders held in April 2023, a substantial majority of the votes cast on the Say-on-Pay proposal were voted in favor of the proposal. The Human Capital Management and Compensation Committee believes this affirms the stockholders’ support of our approach to executive compensation. The stockholders voted to hold a Say-on-Pay advisory vote on executive compensation every three years, and the Board resolved to accept the stockholders’ recommendation. As a result, the advisory vote on executive compensation is being held again at the 2026 Annual Meeting of Stockholders. The Human Capital Management and Compensation Committee will continue to consider the outcome of our Say-on-Pay votes when making future compensation decisions for our executive officers. +32 +Table of Contents +2025 ANNUAL +PROXY STATEMENT +Equity Award grant policies +Equity awards are discretionary and are generally granted to our named executive officers in the first quarter of the applicable fiscal year. In certain circumstances, including the hiring or promotion of an officer, the Human Capital Management and Compensation Committee may approve grants to be effective at other times. RPC does not currently grant stock options to its employees. The Human Capital Management and Compensation Committee did not take material nonpublic information into account when determining the timing and terms of equity awards in 2024, and RPC does not time the disclosure of material nonpublic information for the purpose of affecting the value of executive compensation . +Policies Regarding Stock Ownership by Executive Officers +Stock Ownership Requirements +Stock Ownership Guidelines (the Guidelines) for our executive officers and other key executives was adopted by the Human Capital Management and Compensation Committee to align the interests of our executives with the interests of our stockholders and are summarized as follows: +> President and Chief Executive Officer – Ownership equal to 4 times base salary; +> Chief Financial Officer – Ownership equal to 3 times base salary; and +> Executive Chairman of the Board – Ownership equal to 4 times base salary. +Participants under the Guidelines have a period of five years in which to satisfy the Guidelines from the date of appointment to a qualifying position. Participants who become subject to these Guidelines will have their individual ownership requirement established based upon their base salary at the time they became subject to the Guidelines and the Company’s average closing common stock price for the prior calendar year. The share values are recalculated each year. Promotions into a different position category will require recalculation of a participant’s ownership requirements as appropriate. Once established, a participant’s ownership requirement does not change as a result of changes in their base salary. +Shares counted toward this requirement will be based on shares beneficially owned by such participant (as beneficial ownership is defined by the SEC’s rules and regulations) including: +> shares owned outright by the participant (including through open market purchases or acquired and held upon vesting of Company equity awards); +> unvested RSAs; and +> shares held in trust in the participant’s name. +Once achieved, ownership of the amount under the Guidelines must be maintained for as long as the participant is subject to the Guidelines and the participant is required to retain a minimum of 20% of any future equity awards. +Prohibition on Hedging and Pledging of Common Stock +Under our Insider Trading Policy, we prohibit our employees, including our NEOs and the members of our Board of Directors, from hedging or pledging or otherwise encumbering individually owned or granted Company securities. +33 +Table of Contents +2025 ANNUAL +PROXY STATEMENT +Clawback Policy +Our Board has adopted a “Policy Relating to Recovery of Erroneously Awarded Compensation” that complies with the NYSE clawback rules which were required by SEC Rule 10D-1. Under this policy, in the event that the Company is required to prepare an accounting restatement of its financial statements due to the Company’s material noncompliance with any financial reporting requirement under the securities laws, the policy requires that the Human Capital Management and Compensation Committee, to the extent legally permitted and pursuant to the terms of the policy, recover from current and former Section 16 officers any incentive-based compensation, as defined in the NYSE’s clawback rules, received by such officers that exceeds the amount of incentive-based compensation that otherwise would have been received had such incentive based compensation been determined according to the applicable accounting restatement. +Tax Deductibility of Compensation +As a result of the Tax Cuts and Jobs Act, starting with compensation payable in 2018, Section 162(m) of the Internal Revenue Code limits us from deducting compensation, including performance-based compensation, in excess of $1,000,000 paid to an individual NEO. The Human Capital Management and Compensation Committee will continue to retain full discretion to award compensation packages that best attract, retain and reward successful executive officers. Therefore, the Human Capital Management and Compensation Committee anticipates that it will award compensation that is not fully deductible under Section 162(m). +Compensation-Related Risk +The Company regularly assesses the risks related to our compensation programs, including our executive compensation programs and does not believe that the risks arising from our compensation policies and practices are reasonably likely to have a material adverse effect on the Company. Incentive award targets and bonus opportunities, including targets and opportunities under outstanding PSUs are reviewed annually, allowing the Committee to maintain an appropriate balance between rewarding high performance without encouraging excessive risk. +34 +Table of Contents +2025 ANNUAL +PROXY STATEMENT +HUMAN CAPITAL MANAGEMENT AND COMPENSATION COMMITTEE REPORT +The Human Capital Management and Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis contained in this Proxy Statement with management and based on such review and discussions the Human Capital Management and Compensation Committee recommended to our Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement. +Respectfully submitted by the Human Capital Management and +Compensation Committee of the Board of Directors +Jerry W. Nix, Chairman +Patrick J. Gunning +John F. Wilson +This report of the Human Capital Management and Compensation Committee is required by the SEC and, in accordance with the SEC’s rules, will not be deemed to be part of or incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933, as amended (Securities Act), or under the Exchange Act, except to the extent that we specifically incorporate this information by reference, and will not otherwise be deemed “soliciting material” or “filed” under either the Securities Act or the Exchange Act. +35 +Table of Contents +2025 ANNUAL +PROXY STATEMENT +EXECUTIVE COMPENSATION +There are no agreements or understandings between the Company and any executive officer that guarantee continued employment or guarantee any level of severance or compensation, including incentive or bonus payments, other than annual cash incentives, restricted stock awards and performance unit grants. The following table provides information regarding the annual and long-term compensation for services in all capacities paid to each of our named executive officers for the years indicated below. +SUMMARY COMPENSATION TABLE +Change in +Pension +Value and +Non-Equity +Nonqualified +Incentive +Deferred +Stock +Plan +Compensation +All Other +Salary +Awards +Compensation +Earnings +Compensation +Total +Name and Principal Position +Year +($) +($) (1) +($) (2) +($) +($) +($) +Ben M. Palmer (3) +2024 +600,000 +1,224,900 +— +— +29,930 +1,854,830 +President and +2023 +600,000 +998,400 +768,000 +— +25,050 +2,391,450 +Chief Executive Officer +2022 +543,750 +804,600 +900,000 +— +24,040 +2,272,390 +Michael L. Schmit (3) +2024 +340,000 +459,338 +— +— +29,930 +829,268 +Vice President, +2023 +300,000 +441,600 +268,800 +— +11,030 +1,021,430 +Chief Financial Officer, Treasurer +2022 +186,460 +312,900 +315,000 +— +5,310 +819,670 +and Corporate Secretary +Richard A. Hubbell (3) +2024 +500,000 +816,600 +— +— +35,100 +1,351,700 +Executive Chairman +2023 +500,000 +720,000 +640,000 +— +33,690 +1,893,690 +of the Board +2022 +668,750 +670,500 +750,000 +— +49,110 +2,138,360 +(1) Represents the fair value of the award at the date of grant computed in accordance with ASC Topic 718. See Note titled “Employee Benefit Plans” to our Financial Statements contained in our Form 10-K for the period ended December 31, 2024 for a discussion of assumptions used in these computations. For this computation, we do not include an assumption for estimated forfeitures. For the PSUs, the fair value presented assumes that all of the awards will pay out at target levels with no adjustment for the TSR modifier. If the maximum level of performance is achieved, including maximum upward adjustment pursuant to the TSR Modifier, the grant date fair values of the PSUs would be $627,120 for Mr. Palmer; $235,170 for Mr. Schmit; and $418,080 for Mr. Hubbell. Grant date fair value is comprised of the $963,600 related to RSAs and $261,300 related to PSUs for Mr. Palmer, $361,350 related to RSAs and $97,988 related to PSUs for Mr. Schmit, and $642,400 related to RSAs and $174,200 related to PSUs for Mr. Hubbell. +(2) Annual incentive compensation is accrued in the fiscal year earned and paid in the following fiscal year. No bonuses were earned for 2024. +(3) Prior to May 17, 2022, Richard A. Hubbell served as the President and Chief Executive Officer and Ben M. Palmer served as the Vice President, Chief Financial Officer, Treasurer and Corporate Secretary. Michael L. Schmit has served as the Chief Financial Officer, Treasurer and Corporate Secretary since May 17, 2022. +(4) All other compensation for 2024 includes the following items for: +Ben M. Palmer: +Includes 401(k) Plan Company match of $15,520 and allowance for automobile of $14,400. +Michael L. Schmit: +Includes 401(k) Plan Company match of $15,520 and allowance for automobile of $14,400. +Richard A. Hubbell: +Includes 401(k) Plan Company match of $15,520, cost of personal use of Company provided automobile of $14,736, cost of dining club dues, and insurance and cost of gasoline for the Company provided automobile. +36 +Table of Contents +2025 ANNUAL +PROXY STATEMENT +GRANTS OF PLAN-BASED AWARDS in 2024 +All Other +Grant Date +Estimated Future Payouts +Estimated Future Payouts +Stock Awards: +Fair Value +Under Non-Equity +Under Equity +Number of +of Stock +Incentive Plan Awards (1) +Incentive Plan Awards (2) +Shares +and Option +Threshold +Target +Maximum +Threshold +Target +Maximum +RSA +Awards +Name +Grant Date +($) +($) +($) +(#) +(#) +(#) +(#) (3) +($) (4) +Ben M. Palmer +2/20/2024 +300,000 +600,000 +1,200,000 +— +— +— +— +— +4/23/2024 +— +— +— +15,000 +30,000 +60,000 +— +261,300 +4/23/2024 +— +— +— +— +— +— +120,000 +963,600 +Michael L. Schmit +2/20/2024 +170,000 +340,000 +680,000 +— +— +— +— +— +4/23/2024 +— +— +— +5,625 +11,250 +22,500 +— +97,988 +4/23/2024 +— +— +— +— +— +— +45,000 +361,350 +Richard A. Hubbell +2/20/2024 +250,000 +500,000 +1,000,000 +— +— +— +— +— +4/23/2024 +— +— +— +10,000 +20,000 +40,000 +— +174,200 +4/23/2024 +— +— +— +— +— +— +80,000 +642,400 +(1) These amounts illustrate the potential bonus awards under the Management Incentive Plan for 2024. See Summary Compensation Table for actual amounts awarded . +(2) PSUs are earned based upon the Company’s performance, over a three-year period, in each case subject to a potential adjustment based upon the application of the TSR modifier. The Maximum and Threshold amounts do not include the upward or downward TSR modifier adjustment of 20%. If applied, the maximum amount and threshold amount of PSUs is 134,500 units and 27,625 units, respectively. PSUs entitled to certain Dividend Equivalents as described in the section titled Compensation, Discussion and Analysis – Long Term Incentive Compensation section . +(3) These amounts represent shares underlying RSAs granted during 2024 that vest ratably over three years . RSAs have full voting and dividend rights. However, until the shares vest, they cannot be sold, transferred or pledged. +(4) These amounts represent aggregate grant date fair value for grants of RSAs and PSUs awarded in fiscal year 2024 under our SIP computed in accordance with ASC Topic 718. The amounts reported with respect to PSUs are based on the probable outcome of the performance conditions as of the grant date, which is estimated at target, with no adjustment for the TSR modifier. Actual payouts may be different based on the Company’s performance. Please see footnote (1) to the Summary Compensation Table for additional details . +We have not issued any stock options since 2003 and have no immediate plans to issue additional stock options. +OUTSTANDING EQUITY AWARDS AT 2024 FISCAL YEAR-END +The Company does not have any outstanding option awards made in prior years to the executives named in our Summary Compensation Table. The table below sets forth the total number of unearned and unvested shares underlying PSUs that remained outstanding at December 31, 2024, as adjusted based upon achievement against performance targets to date, as well as restricted shares of Common Stock outstanding at December 31, 2024 that were granted in prior years to the executives, but had not yet vested on that date. The table also presents market values of those awards, calculated based on the $5.94 closing price of our Common Stock on December 31, 2024, the last trading day of the year. +37 +Table of Contents +2025 ANNUAL +PROXY STATEMENT +Stock Awards +Equity Incentive +Equity Incentive +Number of +Market Value +Plan Awards: +Plan Awards: +Shares or +of Shares or +Number of +Market or Payout +Units of +Units of +Unearned Shares, +Value of Unearned +Stock That +Stock That +Units or Other +Shares, Units or Other +Have Not +Have Not +Rights That +Rights That Have +Vested +Vested +Have Not Vested +Not Vested +Name +(#) (1) +($) +(#) (2) +($) +Ben M. Palmer +309,500 +1,838,430 +43,000 +255,420 +Michael L. Schmit +91,875 +545,738 +17,000 +100,980 +Richard A. Hubbell +282,187 +1,676,191 +29,375 +174,488 +(1) RSAs granted prior to 2023 vested one-fifth per year beginning on the second anniversary of the grant date. RSAs granted in 2023 vest one-fourth per year beginning on the first anniversary of the grant date. RSAs granted in 2024 vest one-third per year beginning on the first anniversary of the grant date. Shares of RSAs granted to the executive officers that have not vested as of December 31, 2024, are summarized in the table that follows: +Name +Number of shares +Grant date +Date fully vested +Ben M. Palmer +RSA +10,000 +1/22/2019 +1/22/2025 +RSA +26,800 +1/28/2020 +1/28/2026 +RSA +40,200 +1/26/2021 +1/26/2027 +RSA +54,000 +5/18/2022 +1/26/2027 +RSA +58,500 +1/24/2023 +1/24/2027 +RSA +120,000 +4/23/2024 +1/23/2027 +PSU (2) +13,000 +1/24/2023 +1/24/2025 +PSU (2) +30,000 +4/23/2024 +1/23/2026 +Michael L. Schmit +RSA +21,000 +5/18/2022 +1/26/2027 +RSA +25,875 +1/24/2023 +1/24/2027 +RSA +45,000 +4/23/2024 +1/23/2027 +PSU (2) +5,750 +1/24/2023 +1/24/2025 +PSU (2) +11,250 +4/23/2024 +1/23/2026 +Richard A. Hubbell +RSA +15,000 +1/22/2019 +1/22/2025 +RSA +40,000 +1/28/2020 +1/28/2026 +RSA +60,000 +1/26/2021 +1/26/2027 +RSA +45,000 +5/18/2022 +1/26/2027 +RSA +42,187 +1/24/2023 +1/24/2027 +RSA +80,000 +4/23/2024 +1/23/2027 +PSU (2) +9,375 +1/24/2023 +1/24/2025 +PSU (2) +20,000 +4/23/2024 +1/23/2026 +(2) PSU amounts disclosed above are at threshold for 2023 and target for 2024 with no adjustment for the TSR modifier. The actual number of shares and value realized may be different from the number presented and will depend upon the company’s actual achievement with respect to the performance criteria and our relative TSR over a three-year performance period. For more information regarding the PSUs, see section titled Compensation Discussion and Analysis – Long-term Incentive Compensation . +38 +Table of Contents +2025 ANNUAL +PROXY STATEMENT +OPTION EXERCISES AND STOCK VESTED +The following table sets forth: +> the number of shares of Common Stock acquired by the executives named in the Summary Compensation Table upon the exercise of stock options during the fiscal year ended December 31, 2024; +> the aggregate dollar amount realized on the exercise date for such options computed by multiplying the number of shares acquired by the difference between the market value of the shares on the exercise date and the exercise price of the options; +> the number of restricted shares of Common Stock acquired by the executives named in the Summary Compensation Table upon the vesting of shares during the fiscal year ended December 31, 2024; +> the aggregate dollar amount realized on the vesting date for such RSAs computed by multiplying the number of shares vested by the market value of the shares on the vesting date; and +> the market value of shares was based on the closing price for the Company’s Common Stock on the date of exercise or vesting, as the case may be. The value realized for awards set forth in the table is calculated in accordance with SEC rules as described above, without regard to whether the NEO has actually transferred the stock or when; accordingly, the actual value realized by the NEOs may be greater or lesser than what is set forth in the table. +Option Awards +Stock Awards +Number of Shares +Number of Shares +Acquired on +Value Realized on +Acquired on +Value Realized +Exercise +Exercise +Vesting +on Vesting +Name +(#) +($) +(#) +($) +Ben M. Palmer +— +— +93,063 +670,001 +Michael L. Schmit +— +— +15,625 +115,005 +Richard A. Hubbell +— +— +80,300 +581,048 +39 +Table of Contents +2025 ANNUAL +PROXY STATEMENT +BENEFIT PLANS +The table below shows the present value of accumulated benefits payable to each of the Named Executive Officers, including the number of years of service credited to each such Named Executive Officer, under the Retirement Income Plan determined using interest rate and mortality rate assumptions consistent with those used in the Company’s financial statements. +Pension Benefits +The Company’s Retirement Income Plan, a trusteed defined benefit pension plan, that provide monthly benefits upon normal retirement at age 65 to eligible employees, was fully terminated in 2023. +401(k) Plan +Effective July 1, 1984, the Company adopted a qualified retirement plan designed to meet the requirements of Section 401(k) of the Code. The Company makes matching contributions of 100% for each dollar ($1.00) of a participant’s contribution to the 401(k) Plan for the first three percent of his or her annual compensation and fifty cents ($0.50) for each dollar ($1.00) for the next three percent of his or her annual compensation. The only form of benefit payment under the 401(k) Plan is a single lump-sum payment equal to the vested balance in the participant’s account on the date the distribution is processed. Under the 401(k) Plan, the full amount of a participant’s vested accrued benefit is payable upon his termination of employment, retirement, total and permanent disability, or death. During the course of employment, a participant may withdraw his or her pre-tax contributions to the extent of certain specified instances of financial hardship and may withdraw any amount from his or her pre-tax contribution account for any reason after attaining age 59½. Amounts contributed by the Company to the accounts of the Named Executive Officers under this plan are reported in the All Other Compensation column of the Summary Compensation Table of this Proxy Statement. +NONQUALIFIED DEFERRED COMPENSATION +The SRP has been established as a nonqualified plan that is designed to comply with the provisions of the American Jobs Creation Act of 2004 (including Section 409A of the Internal Revenue Code) for the cash contributions made to certain longer serviced employees in lieu of freezing the Retirement Income Plan benefit accruals effective in 2002; the SRP also has a compensation deferral option for eligible employees. The contributions and deferrals to the SRP are invested in funds held in a rabbi trust. +Executive +Registrant +Aggregate +Aggregate +Aggregate +Contributions +Contributions +Earnings in +Withdrawals/ +Balance at +in Last FY +in Last FY +Last FY +Distributions +Last FYE +Name +($) (1) +($) +($) +($) +($) +Ben M. Palmer +41,040 +— +175,330 +— +1,451,638 +Michael L. Schmit +— +— +— +— +— +Richard A. Hubbell +— +— +59,054 +— +615,839 +(1) Represents the portion of base salary for 2024 disclosed in the Summary Compensation Table which has been deferred by the executive officer pursuant to the SRP. +40 +Table of Contents +2025 ANNUAL +PROXY STATEMENT +The deferral option provides that participants may defer up to 50% of their base salary and up to 100% of their annual bonus with respect to any given plan year, subject to a $2,000 per plan year minimum. All of the salary and bonus deferrals are fully vested. Accounts are credited with hypothetical earnings, and/or debited with hypothetical losses, based on the performance of certain “Measurement Funds.” Account values are calculated as if the funds from deferrals and contributions had been converted into shares or other ownership units of selected Measurement Funds by purchasing (or selling, where relevant) such shares or units at the current purchase price of the relevant Measurement Fund at the time of the participant’s selection. The benefits are unsecured general obligations of the Company to the participants, and these obligations rank in parity with the Company’s other unsecured and unsubordinated indebtedness. To the extent that the Company’s obligations under the SRP exceed assets available under the trust, the Company may be required to seek additional funding sources to fund its liability under the SRP. In the fourth quarter of 2024, the Board of Directors approved the termination of the SRP. Pursuant to the Internal Revenue Service rules, participant balances will be distributed between 12 and 24 months after termination of the SRP. +POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL +The following table describes the potential payments and benefits under the Company’s compensation and benefit plans and arrangements to which the Named Executive Officers would be entitled upon termination of employment or change in control of the Company as of December 31, 2024. Amounts presented in the table include amounts to which the NEOs would become entitled as of such date pursuant to their currently held, but unvested RSAs as well as PSUs. +The table does not include the value of amounts payable under the SRP. The SRP has was terminated in the fourth quarter of 2024 and participant balances will be paid out between 12 and 24 months after termination of the SRP. These amounts have been disclosed under the Nonqualified Deferred Compensation section of this Proxy Statement. The table also does not include the value of benefits that are provided on the same basis to substantially all other salaried employees. There are no other agreements, arrangements or plans that entitle Executive Officers to severance, perquisites, or other enhanced benefits upon termination of their employment or change in control except as described here. Additional payments or benefits to a terminating executive officer would be at the discretion of the Human Capital Management and Compensation Committee. +41 +Table of Contents +2025 ANNUAL +PROXY STATEMENT +The terms and vesting of RSAs and PSUs are discussed in the Outstanding Equity Awards At 2024 Fiscal Year-End section of this Proxy Statement. The values presented in the table below were calculated using the closing market price of $5.94 per share for our Common Stock as of December 31, 2024, which was the last trading day in fiscal year 2024. +Stock Awards +Number of shares underlying +Number of shares underlying +Unrealized value +unvested stock +unvested stock +of +PSU +RSA +unvested stock +Name +(#) +(#) +($) +Ben M. Palmer +· Retirement +— +— +— +· Disability +43,000 +101,732 +859,708 +· Death +43,000 +309,500 +2,093,850 +· Change in control +43,000 +309,500 +2,093,850 +Michael L. Schmit +· Retirement +— +— +— +· Disability +17,000 +24,190 +244,669 +· Death +17,000 +91,875 +646,718 +· Change in control +17,000 +91,875 +646,718 +Richard A. Hubbell +· Retirement +— +77,058 +457,725 +· Disability +29,375 +109,982 +827,781 +· Death +29,375 +282,187 +1,850,678 +· Change in control +29,375 +282,187 +1,850,678 +Accrued Pay and Regular Retirement Benefits +The amounts shown in the preceding table do not include the following since they are provided on a non-discriminatory basis to salaried employees generally upon termination of employment. These include: +> Accrued salary and vacation pay; and +> Distributions of plan balances under the 401(k) Plan. +change in control or severance +Upon termination, the Executive Officers will receive a distribution of the balance in their SRP account. These amounts are disclosed under the Nonqualified Deferred Compensation section of this Proxy Statement. +Change-in-Control or Severance . The Company does not have any severance agreements with its Executive Officers. However, upon the occurrence of a “ Change in Control ,” as determined by the Board of Directors, all unvested time-lapse restricted stock shall immediately vest as disclosed above. In addition, the Committee has discretion to determine the treatment of PSUs upon a change in control, and it currently intends that all PSUs will pay out upon change in control in the same manner as upon death or disability. +42 +Table of Contents +2025 ANNUAL +PROXY STATEMENT +PAY RATIO DISCLOSURE +The following table shows the annual disclosure of the ratio of the median employee’s total annual compensation to the total annual compensation of the principal executive officer (PEO). Ben M. Palmer has served as the Company’s PEO during the year ended December 31, 2024. The purpose of the required disclosure is to provide a measure of the equitability of pay within the organization. The Company believes its compensation philosophy and process yield an equitable result. +Median Employee total annual compensation +$ +101,161 +PEO total annual compensation +$ +1,854,830 +Ratio of PEO to Median Employee Compensation +18.3:1 +The Company identified the median employee as of December 31, 2023, and there have been no significant changes to its employee population or employee compensation arrangements that would significantly impact the pay ratio disclosure since that date. The compensation disclosed above represents the total annual compensation of the median employee for the year ended December 31, 2024. Employees from our foreign subsidiaries, which are located in North America and Asia, and both of which combined were less than 5% of our total employees, were excluded, as permitted by SEC rules, under the “de minimis” exception. In order to identify the median employee from our employee population as of December 31, 2023, we reviewed the 2023 total compensation that included base salary, bonuses and long-term equity incentive grants as reflected in the annual compensation statements provided to each employee as part of the year-end compensation process. Employees on leave of absence were also excluded from the list and wages and salaries were annualized for those employees that were not employed for the full year of 2023 (other than seasonal or temporary employees). The median employee was selected from the annualized list. For simplicity, the value of the Company’s 401(k) Plan and medical benefits provided was excluded as all employees including the PEO are offered the exact same benefits. As of December 31, 2024, the Company employed 2,597 persons of which 67 were international employees and were employed in Canada (47), Mexico (9), Saudi Arabia (4), Australia (2), India (2), Russia (1), UAE (1), Trinidad (1). +We believe that the pay ratio disclosure presented above is a reasonable estimate of the required disclosure. Because the SEC rules for identifying the median employee and calculating the pay ratio allow companies to use different methodologies, exemptions, estimates and assumptions, our pay ratio disclosure may not be comparable to the pay ratios reported by other companies. +43 +Table of Contents +2025 ANNUAL +PROXY STATEMENT +PAY VERSUS PERFORMANCE +In accordance with the SEC’s regulations, we are providing the following information about the relationship between executive compensation actually paid and certain financial performance of the Company and certain of its peers for the years 2024, 2023, 2022, 2021 and 2020. For further information concerning the Company’s compensation philosophy see section titled Compensation Discussion and Analysis (CD&A). +Average +Average +Summary +Summary +Value of Initial Fixed $100 +Compensation +Compensation +Investment Based On: +Summary +Summary +Table Total +Actually Paid +Operating +Compensation +Compensation +Compensation +Compensation +for Non-PEO +to Non-PEO +Peer Group +Net +Cash +Table Total +Table Total +Actually Paid +Actually Paid +Named +Named +Total +Total +Income/ +Flow +for first +for second +to first +to second +Executive +Executive +Shareholder +Shareholder +(Loss) +(OCF) (5) +Year +PEO (1) +PEO (1) +PEO (2) +PEO (2) +Officers (1) +Officers (3) +Return +Return (4) +(in millions) +(in millions) +($) +($) +($) +($) +($) +($) +($) +($) +($) +($) +2024 +— +1,854,830 +— +1,200,924 +1,090,484 +711,322 +119 +117 +91 +13 +2023 +— +2,391,450 +— +1,946,938 +1,457,560 +1,168,921 +140 +145 +195 +200 +2022 +2,138,360 +2,272,390 +3,327,790 +3,062,704 +819,670 +819,320 +167 +158 +218 +208 +2021 +1,371,410 +— +1,913,830 +— +733,150 +1,164,372 +87 +91 +7 +23 +2020 +1,275,559 +— +696,697 +— +818,133 +875,186 +60 +75 +( 212 ) +( 62 ) +(1) +Amounts disclosed for the first Principal Executive Officer (PEO), second PEO and other Non-PEO Named Executive Officers relate to reported compensation as follows: +> Richard A. Hubbell – was the President and Chief Executive Officer through May 17, 2022, and for the years 2021 and 2020. He has been Executive Chairman of the Board Officer since May 17, 2022. His total compensation for 2022, 2021 and 2020 has been disclosed as amounts related to first PEO. For 2024 and 2023, his compensation has been included in amounts related to Non-PEO Named Executive Officers. +> Ben M. Palmer – is named PEO for 2024 and been the President and Chief Executive Officer effective May 17, 2022, and was Vice President, Chief Financial Officer and Corporate Secretary prior. For 2024, 2023 and 2022, his total compensation has been disclosed as amounts related to second PEO. For 2021 and 2020, his compensation has been disclosed in amounts related to Non-PEO Named Executive Officers. +> Michael L. Schmit – has been Vice President, Chief Financial Officer and Corporate Secretary effective May 17, 2022, and his compensation has been included in amounts related to Non-PEO Named Executive Officers for 2024, 2023 and 2022. +> Randall R. Rollins – was the Executive Chairman of the Board until his passing in August 2020; his compensation until his death has been included in the amounts related to Non-PEO Named Executive Officers for that year. +(2) +The dollar amounts reported represent the amount of Compensation Actually Paid (CAP), computed in accordance with SEC rules. The dollar amounts do not reflect the actual amount of compensation earned by or paid to our PEO during the applicable year. To calculate the amounts in the CAP to PEO column in the table above, the following amounts were deducted from or added to (as applicable) the Total compensation as reported in the Summary Compensation Table (SCT): +Reported +Reported +Reported +Reported +Equity +Equity +Summary +Summary +Pension +Value of +Value of +Award +Award +Compensation +Compensation +Adjustments +Equity +Equity +Adjustments +Adjustments +Compensation +Compensation +Table Total for +Table Total for +to First +Awards to +Awards to +to first +to second +Actually Paid +Actually Paid +first PEO (a) +second PEO (a) +PEO (b) +first PEO (c) +second PEO (c) +PEO (d) +PEO (d) +to first PEO +to second PEO +Year +($) +($) +($) +($) +($) +($) +($) +($) +($) +2024 +— +1,854,830 +— +— +( 1,224,900 ) +— +570,994 +— +1,200,924 +2023 +— +2,391,450 +— +— +( 998,400 ) +— +553,888 +— +1,946,938 +2022 +2,138,360 +2,272,390 +— +( 670,500 ) +( 804,600 ) +1,859,930 +1,594,914 +3,327,790 +3,062,704 +2021 +1,371,410 +— +— +( 387,000 ) +— +929,420 +— +1,913,830 +— +2020 +1,275,559 +— +( 7,322 ) +( 459,000 ) +— +( 112,540 ) +— +696,697 +— +(a) The amounts disclosed represent the amounts reported as Total Compensation in the SCT. +(b) The actuarial present value of $ 7,322 attributable to Richard A. Hubbell and contained in the Pension Adjustments to First PEO Column of the SCT in 2020 has been deducted computing his CAP for that year. The Company’s defined benefit pension plan was frozen in 2002 and therefore no adjustments need to be made in computing the CAP. +(c) Represents the grant date fair value of the equity awards reported in the Stock Awards column of the SCT. +44 +Table of Contents +2025 ANNUAL +PROXY STATEMENT +(d) Represents the year-over-year change in the fair value of equity awards, as shown below. For 2022, the change in fair value of equity awards has been attributed to the Named Executive Officer who was PEO as of December 31, 2022: +2024 +2023 +2022 - First PEO +2022 - Second PEO +2021 +2020 +Fair Value of +($) +($) +($) +($) +($) +($) +Equity awards granted in Current Fiscal Year (CFY) outstanding and unvested as of end of CFY +891,000 +757,120 +666,750 +800,100 +454,000 +315,000 +Change in prior year awards outstanding and unvested as of end of CFY +( 365,990 ) +( 266,938 ) +1,096,200 +730,800 +305,800 +( 382,470 ) +Change in prior year awards that vested in current year +( 3,536 ) +20,538 +83,900 +53,694 +169,620 +( 45,070 ) +Dividends paid +49,520 +43,168 +13,080 +10,320 +— +— +Total Equity Award Adjustments +570,994 +553,888 +1,859,930 +1,594,914 +929,420 +( 112,540 ) +(3) +The dollar amounts reported represent the amount of CAP, computed in accordance with SEC rules. The dollar amounts do not reflect the actual amount of compensation earned by or paid to our Non-PEO Named Executive Officers during the applicable year. To calculate the amounts in the CAP to Non-PEO Named Executive Officers column in the table above, the following amounts were deducted from or added to (as applicable) the Total Compensation as reported in the SCT: +Average +Reported +Equity +Average Summary +Summary Compensation +Value of Average Equity +Award Adjustments to +Compensation Actually +Table Total for Non-PEO +Awards to Non-PEO Named +Non-PEO Named +Paid to Non-PEO Named +Named Executive Officers (a) +Executive Officers (b) +Executive Officers (c) +Executive Officers +Year +($) +($) +($) +($) +2024 +1,090,484 +( 637,969 ) +258,807 +711,322 +2023 +1,457,560 +( 580,800 ) +292,161 +1,168,921 +2022 +819,670 +( 312,900 ) +312,550 +819,320 +2021 +733,150 +( 259,290 ) +690,512 +1,164,372 +2020 +818,133 +( 383,265 ) +440,318 +875,186 +(a) The amounts disclosed represent the average of the total amounts attributable to all non-PEO Named Executive Officers for the period each served, as included in the amounts reported as Total Compensation in the SCT. +(b) Represents the average grant date fair value of the equity awards reported in the Stock Awards column of the SCT. +(c) Represents the average year-over-year change in the fair value of equity awards, as shown below. For 2020, awards granted and vested in same CFY represents restricted shares granted to R. Randall Rollins that vested immediately upon his death pursuant to the terms of the restricted stock grants. +2024 +2023 +2022 +2021 +2020 +Fair Value of +($) +($) +($) +($) +($) +Equity awards granted in Current Fiscal year (CFY) outstanding and unvested as of end of CFY +464,063 +440,440 +311,150 +304,180 +263,025 +Change in prior year awards outstanding and unvested as of end of CFY +( 232,060 ) +( 190,584 ) +— +201,272 +( 122,474 ) +Awards granted and vested in same CFY +— +— +— +— +173,000 +Change in prior year awards that vested in current year +( 3,121 ) +13,685 +— +185,060 +126,767 +Dividends paid +29,925 +28,620 +1,400 +— +— +Total Equity Award Adjustments +258,807 +292,161 +312,550 +690,512 +440,318 +(4) +Reflects cumulative total shareholder return of the Peer Group as of December 31, 2024, calculated over the measurement period beginning as of December 31, 2019, established by the market close on that day through and including the end of 2024. The Peer Group used by the Company is the same as the one identified for purposes of Item 201(e) of Regulation S-K under the Exchange Act in its Form 10-K for the year ended December 31, 2024. +(5) +OCF is computed as EBITDA minus cash paid for capital expenditures, plus discretionary adjustments. In 2023 discretionary adjustments totaled approximately $ 24.5 million related to pension plan termination, litigation settlement and expenses related to acquisitions for the year 2024. OCF for 2020 was calculated as EBITDA minus cash paid for capital expenditures plus discretionary adjustments totaling approximately $217 million related to impairment and other charges. There were no discretionary adjustments in computing OCF for the years 2024, 2022 and 2021. +45 +Table of Contents +2025 ANNUAL +PROXY STATEMENT +Financial Performance Measures +The Company has used OCF as the primary performance measure for 2024 and 2023. ROIC was used as the primary performance measurement for several years. ROIC is computed as the ratio of EBITDA to invested capital and was used for the years 2022, 2021 and 2020. Invested capital is equal to the aggregate average of stockholders’ equity, accumulated depreciation and long-term liabilities during each of the applicable years. The Company used the following performance measures for 2024: +> Net Income ; +> OCF – calculated as EBITDA minus cash paid for capital expenditures; +> EBITDA ; and +> Total Shareholder Return . +See section titled Compensation Discussion and Analysis – Long Term Incentive Compensation for the performance goals used to grant PSUs in 2024. +Relationship between CAP and financial measures reported in the table +The Company’s TSR has performed consistently with the Peer Group over the five-year period ending in 2024. The Company reported lower net income in 2024 compared to the previous year; net income in 2024 was higher than net income for years 2021 and 2020. For 2024, the Company did not achieve the threshold OCF performance level. +The following graphs reflect the CAP paid to our PEOs and other Non-PEO Named Executive Officers over the five-year period ended December 31, 2024 and the performance of the Peer Group, and show the Company’s TSR, net income and OCF results over the same period. +46 +Table of Contents +2025 ANNUAL +PROXY STATEMENT +SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE +Section 16(a) of the Exchange Act requires our Executive Officers and Directors and persons who own more than 10% of a registered class of the Company’s equity securities to file reports of ownership and changes in ownership with the SEC. +Delinquent Section 16(a) Reports: Based on our review of the filed copies of such forms, we believe that during the fiscal year ended December 31, 2024, all filing requirements applicable to our Executive Officers, Directors and greater than 10% beneficial owners were timely satisfied. +47 +Table of Contents +2025 ANNUAL +PROXY STATEMENT +STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT +The following table sets forth information relating to the beneficial ownership of our common stock as of February 28, 2025 by: +> Each of our Named Executive Officers; +> Each of our Directors and Director nominees; +> All of our current Executive Officers, Directors and Director nominees as a group; and +> Each stockholder or group as that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, who beneficially owned five percent or more of the shares of Common Stock of the Company. +The number of shares beneficially owned by each stockholder is determined under rules issued by the SEC. Under these rules, beneficial ownership includes any shares as to which a person has sole or shared voting power or investment power. Unless otherwise indicated, we believe, based on the information furnished to us, that the persons named in the table below have sole voting and investment power with respect to all securities that they beneficially own, subject to community property laws where applicable. +The information contained in the following table is not necessarily indicative of beneficial ownership for any other purpose, and the inclusion of any shares in the table does not constitute an admission of beneficial ownership of those shares. Unless otherwise indicated, the business address of each beneficial owner listed in the table below is c/o of RPC, Inc., 2801 Buford Highway NE, Suite 300, Atlanta, Georgia 30329. The information provided in the table below is based on our records, information filed with the SEC, on which we are relying pursuant to applicable SEC regulations, and information provided to us. +Amount +Percent of +Beneficially +Outstanding +Name of Beneficial Owner +Owned (1) +Shares +Named Executive Officers: +Ben M. Palmer +1,075,869 +(2) +** +Michael L. Schmit +167,599 +(3) +** +Richard A. Hubbell +3,196,462 +(4) +1.5 +Director and Director Nominees: +Gary W. Rollins (5) +119,205,608 +(6) +55.2 +Amy R. Kreisler (5) +4,338,498 +(7) +2.0 +Pamela R. Rollins (5) +3,394,263 +(8) +1.6 +Timothy C. Rollins +3,309,019 +(9) +1.5 +Jerry W. Nix +16,206 +** +Patrick J. Gunning +23,206 +** +Susan R. Bell +21,706 +** +Stephen E. Lewis +— +** +John F. Wilson +17,206 +** +Other Stockholders: +BlackRock Institutional Trust Company, N.A. +13,094,700 +(10) +6.1 +Dimensional Fund Advisors, L.P. +11,620,598 +(10) +5.4 +The Vanguard Group, Inc. +10,862,226 +(10) +5.0 +Control Group +126,189,213 +(11) +58.4 +All Directors and Executive Officers as a group (11 persons) +130,707,467 +(12) +60.5 +** +Less than one percent. +(1) Except as otherwise noted, the nature of the beneficial ownership for all shares is sole voting and investment power. +(2) Includes 354,200 shares of restricted stock awards of Company Common Stock. +48 +Table of Contents +2025 ANNUAL +PROXY STATEMENT +(3) Includes 132,650 shares of restricted stock awards of Company Common Stock. +(4) Includes 273,459 shares of restricted stock awards of Company Common Stock. +(5) Amy R. Kreisler, Pamela R. Rollins and Timothy C. Rollins are siblings and are the nieces and nephew of Gary W. Rollins. +(6) Includes the following shares of Company Common Stock: (a) 6,593 shares of the Company Common Stock held in a charitable trust of which he is a co-trustee and as to which he shares voting and investment power; (b) 78,801,255 shares held by LOR, Inc., a Georgia corporation (Gary W. Rollins is an officer and director of LOR, Inc. and has a 50% voting interest in it); (c) 3,160,819 shares held by RFT Investment Company, LLC, a Georgia limited liability company (LOR, Inc. is the manager of RFT Investment Company, LLC); (d) 15,677,032 shares held by RCTLOR, LLC, a Georgia limited liability company (LOR, Inc. is the managing member of RCTLOR, LLC); (e) 4,815,173 shares held by WNEG Investments, L.P., a Georgia limited partnership (Gary W. Rollins is the sole member of the sole general partner of WNEG Investments, L.P.); (f) 3,224,505 shares held by revocable trust established by Gary W. Rollins, of which he is the sole trustee; and (g) 8,303,544 shares held by three trusts (the “Rollins Family Trusts”) for the benefit of the surviving spouse, children and/or more remote descendants of his deceased brother, R. Randall Rollins. Also includes 10,970 shares of Company Common Stock held by his wife, as to which Mr. Rollins disclaims any beneficial interest. Mr. Rollins is part of a control group (see footnote (11) to this table) holding Company securities, as disclosed on a Schedule 13D on file with the U.S. Securities and Exchange Commission. +(7) Includes the following shares of Company Common Stock: (a) 1,859,279 shares of Company Common Stock held in a charitable trust of which she is a co-trustee and the Executive Director and (b) 192,224 shares held by multiple trusts benefiting the grandchildren and more remote descendants of her deceased father, R. Randall Rollins (Ms. Kreisler is a trustee of each such trust). Excludes 1,171 shares held by the R. Randall Rollins Voting Trust U/A dated August 25, 1994, as to which Ms. Kreisler is a co-trustee. Ms. Kreisler is part of a control group (see footnote (11) to this table) holding Company securities, as disclosed on a Schedule 13D on file with the U.S. Securities and Exchange Commission. +(8) Includes the following shares of Company Common Stock: (a) 1,859,279 shares of Company Common Stock held in a charitable trust of which she is a co-trustee and (b) 437,819 shares held by multiple trusts benefiting the grandchildren and more remote descendants of her deceased father, R. Randall Rollins (Ms. Rollins is a trustee of each such trust). Excludes 1,171 shares held by the R. Randall Rollins Voting Trust U/A dated August 25, 1994, as to which Ms. Rollins is a co-trustee. Ms. Rollins is part of a control group (see footnote (11) to this table) holding Company securities, as disclosed on a Schedule 13D on file with the U.S. Securities and Exchange Commission. +(9) Includes the following shares of Company Common Stock: (a) 1,859,279 shares of Company Common Stock held in a charitable trust of which he is a co-trustee, (b) 387,645 shares held by multiple trusts benefiting the grandchildren and more remote descendants of his deceased father, R. Randall Rollins (Mr. Rollins is a trustee of each such trust), and (c) 54,323 shares held of record by a minor child over which Mr. Rollins possesses voting and dispositive power. Also includes 1,530 shares of Company Common Stock held by his wife, as to which Mr. Rollins disclaims any beneficial interest. Excludes 1,171 shares held by the R. Randall Rollins Voting Trust U/A dated August 25, 1994, as to which Mr. Rollins is a co-trustee. Mr. Rollins is part of a control group (see footnote (11) to this table) holding Company securities, as disclosed on a Schedule 13D on file with the U.S. Securities and Exchange Commission. Based on most recently filed 13F. +(10) Based on most recently filed 13F. +(11) Control group includes Gary W. Rollins, Pamela R. Rollins, Amy R. Kreisler and Timothy C. Rollins, and certain companies under their control, that possess in excess of 50% of the Company’s voting power. See footnotes (6), (7), (8), (9) & (12) to this table for additional information. +(12) Shares held in trusts as to which more than one officer and/or director are co-trustees or entities in which there is common ownership have been included only once. Includes 760,309 shares of restricted stock awards for Company Common Stock awarded and issued to the executive officers pursuant to the Company’s Stock Incentive Plans. +49 +Table of Contents +2025 ANNUAL +PROXY STATEMENT +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +The Company provides certain administrative services to Marine Products on a cost reimbursement basis and the arrangement may be terminated upon six months’ notice. The services include administration of certain employee benefit programs and other administrative services. Charges from the Company (or from corporations which are subsidiaries of the Company) for such services aggregated approximately $1.1 million in 2024. +RPC and Marine Products own 50% each of a limited liability company called 255 RC, LLC that was created for the joint purchase and ownership of a corporate aircraft. Each of RPC and Marine Products is currently a party to an operating lease agreement with 255 RC, LLC for a period of five years. During 2024, RPC recorded certain net operating costs comprised of rent and an allocable share of fixed costs of approximately $230 thousand for the corporate aircraft. +During 2024, a subsidiary of RPC conducted business with companies owned by LOR, Inc., a member of the control group. Mr. Gary W. Rollins, a director at RPC, is an officer, director and controlling stockholder of LOR, Inc., and Timothy C. Rollins, Vice President of LOR, Inc., Pamela R. Rollins, Director of LOR, Inc., and Amy R. Kreisler, Vice President of LOR Inc., are part of the controlling stockholders of LOR, Inc. Payments totaling approximately $1.6 million were made in 2024 to these LOR, Inc. companies primarily for the purchase of parts and repair services related to certain of RPC’s oilfield operating equipment. RPC believes the charges incurred are at least as favorable as the charges that would have been incurred for similar purchases from unaffiliated third parties. +Related party transactions, as defined in Regulation S-K, Item 404(a), must be reviewed and approved in advance by our Nominating and Corporate Governance Committee or, in the event that our Nominating and Corporate Governance Committee does not consist of all independent directors, by a Subcommittee (the Subcommittee) of the Nominating and Corporate Governance Committee consisting of all of the independent members thereof. As set forth in the Charter of our Nominating and Corporate Governance Committee, the Nominating and Corporate Governance Committee has the authority and responsibility to ensure that it approve all related party transactions, including material amendments that are in compliance with applicable law, consistent with the Company’s corporate governance policies (including those relative to conflicts of interest and usurpation of corporate opportunities) and on terms that are deemed to be fair to the Company. The Nominating and Corporate Governance Committee also has the authority to hire legal, accounting, financial or other advisors, as it may deem necessary or desirable and/or to delegate responsibilities to executive officers of the Company in connection with discharging its duties. These same rights and responsibilities apply equally to the Subcommittee. A copy of the Charter of the Nominating and Corporate Governance Committee is available on our website at www.rpc.net under the Governance section. All related party transactions for the fiscal year ended December 31, 2024 were reviewed, pre-approved and/or ratified by the Nominating and Corporate Governance Committee in accordance with the Charter. +50 +Table of Contents +2025 ANNUAL +PROXY STATEMENT +STOCKHOLDER PROPOSALS +AND BOARD NOMINATIONS +Appropriate proposals of stockholders intended to be presented at the Company’s 2026 Annual Meeting of Stockholders must be received by the Company by November 12, 2025 in order to be included, pursuant to Rule 14a-8 promulgated under the Exchange Act, in the Company’s proxy statement and form of proxy relating to that meeting. With regard to such stockholder proposals, if the date of the next annual meeting of stockholders is advanced or delayed more than 30 calendar days from April 22, 2026, the Company will, in a timely manner, inform its stockholders of the change and of the date by which such proposals must be received. Stockholders desiring to present business at the 2026 Annual Meeting of Stockholders outside of the stockholder proposal rules of Rule 14a-8 of the Exchange Act and instead pursuant to Article Twenty-Seventh of the Bylaws must prepare a written notice regarding such proposal addressed to The Corporate Secretary, RPC, Inc., 2801 Buford Highway NE, Suite 300, Atlanta, Georgia 30329, and deliver to or mailed and received by no later than January 22, 2026 and no earlier than December 13, 2025. Stockholders should consult the Bylaws for other specific requirements related to such notice and proposed business. +With respect to stockholder nomination of directors, the Bylaws provide that nominations for the election of directors may be made by any stockholder entitled to vote for the election of directors. Nominations must comply with an advance notice procedure which generally requires with respect to nominations for directors for election at an annual meeting, that written notice be addressed to: The Corporate Secretary, RPC, Inc., 2801 Buford Highway NE, Suite 300, Atlanta, Georgia 30329, and be received not less than 90 nor more than 130 days prior to the anniversary of the prior year’s annual meeting and set forth, among other requirements specified in the Bylaws, the name, age, business address and, if known, residence address of the nominee proposed in the notice, the principal occupation or employment of the nominee for the past five years, the nominee’s qualifications, the class or series and number of shares of capital stock of the Company which are owned beneficially or of record by the person and any other information relating to the person that would be required to be disclosed in a proxy statement or other filings. Other specific requirements related to such notice, including required disclosures concerning the stockholder intending to present the nomination, are set forth in the Bylaws. Notices of nominations must be received by the Corporate Secretary of the Company no later than January 22, 2026 and no earlier than December 13, 2025, with respect to directors to be elected at the 2026 Annual Meeting of Stockholders. +In addition, a stockholder who intends to solicit proxies in support of director nominees submitted under the advance notice provisions of our Bylaws must provide notice to the Company with the information required by SEC Rule 14a-19, which notice must be postmarked or transmitted electronically to us at our principal executive offices no later than 60 days prior to the one year anniversary date of the annual meeting (for the 2026 meeting, no later than February 22, 2026). Such notice should be delivered to our Corporate Secretary at our principal executive offices. If the date of the 2026 annual meeting is changed by more than 30 days from such anniversary date, however, then the stockholder must provide notice by the later of 60 days prior to the date of the 2026 annual meeting and the 10th day following the date on which public announcement of the date of the 2026 annual meeting is first made. +51 +Table of Contents +2025 ANNUAL +PROXY STATEMENT +EXPENSES OF SOLICITATION +The Company will bear the cost of soliciting proxies. Upon request, we will reimburse brokers, dealers and banks, or their nominees, for reasonable expenses incurred in forwarding copies of the proxy material to their beneficial stockholders of record. Solicitation of proxies will be made principally by mail. Proxies also may be solicited in person or by telephone, facsimile or other means by our directors, officers and regular employees. These individuals will receive no additional compensation for these services. The Company has retained Alliance Advisors, LLC to provide proxy solicitation services for an estimated fee of approximately $18,000 plus reasonable out of pocket expenses. +ANNUAL REPORT +The Company’s Annual Report to Stockholders, including its Annual Report on Form 10-K for the fiscal year ended December 31, 2024, without exhibits, is being provided to stockholders with this Proxy Statement. The Annual Report is not considered proxy-soliciting material. +FORM 10-K +Upon the written request of any record or beneficial owner of the Company’s Common Stock whose proxy was solicited in connection with the 2025 Annual Meeting of Stockholders, the Company will furnish such owner, without charge, a copy of its Annual Report on Form 10-K, including the financial statements and the financial statement schedules (but without exhibits), for its fiscal year ended December 31, 2024. Requests for a copy of such Annual Report on Form 10-K should be addressed to Mr. Michael L. Schmit, Corporate Secretary, at RPC, Inc., 2801 Buford Highway NE, Suite 300, Atlanta, Georgia 30329. +OTHER MATTERS +Our Board of Directors knows of no business other than the matters set forth herein which will be presented at the Annual Meeting. In as much as matters not known at this time may come before the Annual Meeting, the enclosed proxy confers discretionary authority with respect to such matters as may properly come before the Annual Meeting; and it is the intention of the persons named in the proxy to vote in accordance with their best judgment on such matters. +BY ORDER OF THE BOARD OF DIRECTORS +Michael L. Schmit +Corporate Secretary +Atlanta, Georgia +March 12, 2025 +52 +Table of Contents +2025 ANNUAL +PROXY STATEMENT +CAUTION CONCERNING FORWARD- LOOKING STATEMENTS +This Proxy Statement contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts contained in this Proxy Statement, including statements regarding future operations are forward-looking statements. In some cases, forward-looking statements may be identified by words such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “could,” “would,” “expect,” “objective,” “plan,” “potential,” “seek,” “grow,” “target,” “if,” or the negative of these terms and similar expressions intended to identify forward-looking statements. Forward-looking statements are made subject to the safe harbor provisions of the federal securities laws pursuant to Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We have based these forward-looking statements primarily on our current opinions, expectations, beliefs, plans, objectives, assumptions and projections about future events and trends that we believe may affect us. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the future events and trends discussed in this Proxy Statement, including our expectations for 2025, may not occur and actual results may differ materially and adversely from those anticipated or implied in the forward-looking statements. You should read this Proxy Statement with the understanding that our actual future results, levels of activity, performance and events and circumstances may be materially different from what we expect. These forward-looking statements include, without limitation, that our corporate objective is to create long-term shareholder value by delivering world-class oilfield services to our customers with a conservative financial management approach, that we are exploring strategic acquisition opportunities to deploy our capital and increase our scale, that our new products represent an opportunity to differentiate RPC with innovation to drive customer outcomes, that we are poised to make investments to grow our business, which is a key strategic focus for us in 2025 and beyond, that we have internal initiatives underway to improve our execution and margins and will continue to invest in innovative new products and services, that we are also rigorously assessing opportunities to expand our business through potential acquisitions and look forward to finding the right strategic and cultural fit for RPC and ultimately executing on value-creating transactions, that we consistently deliver high quality services to our customers, provide safe and rewarding work for our employees, and returns to shareholders throughout the many cycles and challenges of our sector, These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in the section titled “Risk Factors” set forth in Part I, Item 1A of our 2024 Annual Report on Form 10-K and in our other SEC filings, which include, among other things, the dependence of our business on the oil and natural gas industries and related commodity pricing and volatility in oil and gas prices, potential reliance on large customers, adverse weather conditions, and the potential reliance on large customers, climate change and adverse weather conditions, our potential inability to identify accretive acquisitions and/or to integrate them cost effectively, and the potential impact on our business of wars and pandemics. Forward-looking statements speak only as of the date of this Proxy Statement, and you should not put undue reliance on any forward-looking statements. We assume no obligation to publicly update or revise any forward-looking statements because of new information, future events, changes in assumptions or otherwise, except to the extent required by applicable laws. If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements. While we believe that the information on which we have based these forward-looking statements provides a reasonable basis for these statements, such information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements. +53 +PLEASE FOLD ALONG PERFORATED LINE AND MAIL IN THE ENVELOPE PROVIDED. +DO NOT PRINT IN THIS AREA +(Stockholder Name & Address Data) +PROXY +ANNUAL MEETING OF STOCKHOLDERS +RPC, INC. +APRIL 22, 2025 +This Proxy is solicited by the Board of Directors of RPC, Inc., +which recommends that you vote “FOR ALL” the nominees listed in Proposal 1 and “FOR” Proposal 2. +The undersigned hereby constitutes and appoints RICHARD A. HUBBELL and BEN M. PALMER, and each of them, jointly +and severally, as proxies, with full power of substitution, to vote all shares of Common Stock which the undersigned +is entitled to vote at the Annual Meeting of Stockholders to be held on April 22, 2025, at 12:15 p.m. ET, at 2170 Piedmont +Road, NE, Atlanta, GA 30324, or any adjournment of the meeting. +The undersigned acknowledges receipt of Notice of Annual Meeting of Stockholders and Proxy Statement, each +dated March 12, 2025, and grants authority to said proxies, or either of them, or their substitutes, to act in the +absence of others, with all the powers which the undersigned would possess if personally present at such meeting +and hereby ratifies and confirms all that said proxies or their substitutes may lawfully do in the undersigned's name, +place, and stead. The undersigned instructs said proxies, or either of them, to vote as stated on the reverse side. +THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, WILL BE VOTED “FOR ALL” THE NOMINEES +NAMED IN PROPOSAL 1; AND “FOR” PROPOSAL 2. THE PROXIES ARE AUTHORIZED TO VOTE IN THEIR JUDGMENT UPON +SUCH OTHER BUSINESS NOT KNOWN AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING OR ANY +ADJOURNMENTS THEREOF. +HAVE YOUR PROXY CARD READY AND PLEASE USE +ONE OF THE EASY VOTING METHODS BELOW +Internet: +www.aalvote.com/RES +• Cast your vote online +• Have your Proxy Card ready +• Follow the simple instructions to record your vote +Phone: +1-866-804-9616 +• Use any touch tone telephone +• Have your Proxy Card ready +• Follow the simple recorded instructions +Mail: +• Mark, sign, and date your Proxy Card +• Fold and return your Proxy Card in the Prepaid +Envelope provided +In Person: +• You may vote your shares in person at the 2025 +Annual Meeting on April 22, 2025, at 12:15 p.m. ET at: +2170 Piedmont Road, NE, Atlanta, GA 30324 +Scan QR Code +for Digital Voting +CONTROL NUMBER +RPC, INC. +Annual Meeting of Stockholders +Tuesday, April 22, 2025, at 12:15 p.m. Eastern Time. +Annual Meeting of Stockholders will be held at: +2170 Piedmont Road, NE, Atlanta, GA 30324. +PLEASE FOLD ALONG PERFORATED LINE AND MAIL IN THE ENVELOPE PROVIDED. +DO NOT PRINT IN THIS AREA +(Stockholder Name & Address Data) +Proposal 1. To elect nine Nominees for a one-year term (expiring in +2026) to the Board of Directors: +☐ FOR ALL NOMINEES LISTED BELOW +(except as marked to the contrary below) +☐ WITHHOLD AUTHORITY TO VOTE FOR ALL +NOMINEES LISTED BELOW +INSTRUCTION: TO WITHOLD AUTHORITY TO VOTE FOR ONE OR MORE +INDIVIDUAL NOMINEES STRIKE A LINE THROUGH THE NOMINEE NAMES +BELOW: +NOMINEES: NOMINEES: +(1) Susan R. Bell (6) Jerry W. Nix +(2) Patrick J. Gunning (7) Ben M. Palmer +(3) Richard A. Hubbell (8) Timothy C. Rollins +(4) Amy R. Kreisler (9) John F. Wilson +(5) Stephen E. Lewis +Proposal 2. To ratify the appointment of Grant Thornton LLP as +independent registered public accounting firm for the fiscal year +ending December 31, 2025. +FOR ☐ AGAINST ☐ ABSTAIN ☐ +Note: To consider and act upon such other business as may +properly come before the Annual Meeting or any adjournment of the +meeting. +2025 +Date +Signature(s) of Stockholders +Number of Shares +Please sign exactly as name(s) appears herein. Joint owners should +each sign. When signing as attorneys, executor, administrator, +corporate officer, trustee, guardian, or custodian, please give full title. +Address change/Comments: If you noted any Address Changes +and/or Comments, please mark box. ☐ +CONTROL NUMBER +PLEASE MARK YOUR VOTE AS THIS EXAMPLE \ No newline at end of file diff --git a/raw/proxies/0000742278/0001558370-25-002756/proxy_rpt.txt b/raw/proxies/0000742278/0001558370-25-002756/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..d28160a9765e1efe1f66b1cf30195c34dc41447a --- /dev/null +++ b/raw/proxies/0000742278/0001558370-25-002756/proxy_rpt.txt @@ -0,0 +1,7 @@ +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +The Company provides certain administrative services to Marine Products on a cost reimbursement basis and the arrangement may be terminated upon six months’ notice. The services include administration of certain employee benefit programs and other administrative services. Charges from the Company (or from corporations which are subsidiaries of the Company) for such services aggregated approximately $1.1 million in 2024. +RPC and Marine Products own 50% each of a limited liability company called 255 RC, LLC that was created for the joint purchase and ownership of a corporate aircraft. Each of RPC and Marine Products is currently a party to an operating lease agreement with 255 RC, LLC for a period of five years. During 2024, RPC recorded certain net operating costs comprised of rent and an allocable share of fixed costs of approximately $230 thousand for the corporate aircraft. +During 2024, a subsidiary of RPC conducted business with companies owned by LOR, Inc., a member of the control group. Mr. Gary W. Rollins, a director at RPC, is an officer, director and controlling stockholder of LOR, Inc., and Timothy C. Rollins, Vice President of LOR, Inc., Pamela R. Rollins, Director of LOR, Inc., and Amy R. Kreisler, Vice President of LOR Inc., are part of the controlling stockholders of LOR, Inc. Payments totaling approximately $1.6 million were made in 2024 to these LOR, Inc. companies primarily for the purchase of parts and repair services related to certain of RPC’s oilfield operating equipment. RPC believes the charges incurred are at least as favorable as the charges that would have been incurred for similar purchases from unaffiliated third parties. +Related party transactions, as defined in Regulation S-K, Item 404(a), must be reviewed and approved in advance by our Nominating and Corporate Governance Committee or, in the event that our Nominating and Corporate Governance Committee does not consist of all independent directors, by a Subcommittee (the Subcommittee) of the Nominating and Corporate Governance Committee consisting of all of the independent members thereof. As set forth in the Charter of our Nominating and Corporate Governance Committee, the Nominating and Corporate Governance Committee has the authority and responsibility to ensure that it approve all related party transactions, including material amendments that are in compliance with applicable law, consistent with the Company’s corporate governance policies (including those relative to conflicts of interest and usurpation of corporate opportunities) and on terms that are deemed to be fair to the Company. The Nominating and Corporate Governance Committee also has the authority to hire legal, accounting, financial or other advisors, as it may deem necessary or desirable and/or to delegate responsibilities to executive officers of the Company in connection with discharging its duties. These same rights and responsibilities apply equally to the Subcommittee. A copy of the Charter of the Nominating and Corporate Governance Committee is available on our website at www.rpc.net under the Governance section. All related party transactions for the fiscal year ended December 31, 2024 were reviewed, pre-approved and/or ratified by the Nominating and Corporate Governance Committee in accordance with the Charter. +50 +Table of Contents \ No newline at end of file diff --git a/raw/proxies/0000742278/0001571049-15-002123/proxy.txt b/raw/proxies/0000742278/0001571049-15-002123/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..81c802ac40a6fc12d79034e2eadf45cf00b61c54 --- /dev/null +++ b/raw/proxies/0000742278/0001571049-15-002123/proxy.txt @@ -0,0 +1,1353 @@ +DEF 14A +1 +t81651_def14a.htm +SCHEDULE 14A +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A INFORMATION +Proxy Statement Pursuant to Section +14(a) of the Securities +Exchange Act of 1934 (Amendment No. +___) +Filed by the Registrant x +Filed by a Party other than the Registrant o +Check the appropriate box: +o +Preliminary Proxy Statement +o +Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +x +Definitive Proxy Statement +o +Definitive Additional Materials +o +Soliciting Material Pursuant to §240.14a-12 +RPC, Inc. +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +x +No fee required. +o +Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. +(1) +Title of each class of securities to which transaction applies: N/A +(2) +Aggregate number of securities to which transaction applies: N/A +(3) +Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule +0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): +N/A +(4) +Proposed maximum aggregate value of transaction: N/A +(5) +Total fee paid: N/A +o +Fee paid previously with preliminary materials. +o +Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the +filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, +or the Form or Schedule and the date of its filing: +(1) +Amount previously paid: N/A +(2) +Form, Schedule or Registration Statement No.: N/A +(3) +Filing party: N/A +(4) +Date Filed: N/A +RPC, INC. +NOTICE OF ANNUAL MEETING OF STOCKHOLDERS +2801 BUFORD HIGHWAY NE, SUITE 520, ATLANTA, GEORGIA 30329 +TO THE HOLDERS OF THE COMMON STOCK: +PLEASE TAKE NOTICE that the 2015 Annual Meeting of Stockholders of RPC, Inc., a Delaware corporation (“RPC” or the “Company”), will be held at 2170 Piedmont Road, NE, Atlanta, Georgia, 30324 on Tuesday, April 28, 2015, at 12:30 P.M., or any adjournment thereof, for the following purposes: +1. +To elect the three Class II nominees identified in the attached proxy statement to the Board of Directors; +2. +To ratify the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2015; +3. +To vote on the stockholder proposal requesting that the Company issue a sustainability report, if properly presented at the meeting; and +4. +To consider and act upon such other business as may properly come before the Annual Meeting or any adjournment of the meeting. +The Proxy Statement dated March 20, 2015 is attached. +The Board of Directors has fixed the close of business on March 2, 2015 as the record date for the determination of stockholders entitled to notice of, and to vote at, the Annual Meeting or any adjournment thereof. +Stockholders who do not expect to be present at the meeting are urged to complete, date, sign and return the enclosed proxy. No postage is required if the enclosed envelope is mailed in the United States. +The Proxy Statement and 2014 Annual Report are available at http://www.astproxyportal.com/ast/26231/ +BY ORDER OF THE BOARD OF DIRECTORS +/s/ Linda H. Graham +Linda H. Graham, Secretary +Atlanta, Georgia +March 20, 2015 +PROXY STATEMENT +This Proxy Statement and a form of proxy were first mailed to stockholders on or about March 20, 2015. The following information concerning the enclosed proxy and the matters to be acted upon at the Annual Meeting of the Stockholders to be held on April 28, 2015, is submitted by the Company to the stockholders in connection with the solicitation of proxies on behalf of the Company’s Board of Directors. +SOLICITATION OF AND POWER TO REVOKE PROXY +A form of proxy is enclosed. Each proxy submitted will be voted as directed, but if not otherwise specified, proxies solicited by the Board of Directors of the Company will be voted in favor of the candidates for election to the Board of Directors, in favor of ratification of the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2015, and against the stockholder proposal requesting that the Company issue a sustainability report. +A stockholder executing and delivering a proxy has power to revoke the same and the authority thereby given at any time prior to the exercise of such authority, if he so elects, by contacting either proxy holder, by timely submitting a later dated proxy changing his vote or by attending the meeting and voting in person. However, a beneficial stockholder who holds his shares in street name must secure a proxy from his broker before he can attend the meeting and vote. +CAPITAL STOCK +The outstanding capital stock of the Company on March 2, 2015 consisted of 217,090,722 shares of Common Stock, par value $0.10 per share. Holders of Common Stock are entitled to one vote (non-cumulative) for each share of such stock registered in their respective names at the close of business on March 2, 2015, the record date for determining stockholders entitled to notice of, and to vote at, the meeting or any adjournment thereof. +A majority of the outstanding shares will constitute a quorum at the Annual Meeting. Abstentions will be counted for purposes of determining the presence or absence of a quorum for the transaction of business. In accordance with the General Corporation Law of the state of Delaware, the election of the nominees named herein as Directors will require the affirmative vote of a plurality of the votes cast by the shares of Company Common Stock entitled to vote in the election provided that a quorum is present at the Annual Meeting. In the case of a plurality vote requirement (as in the election of directors), where no particular percentage vote is required, the outcome is solely a matter of comparing the number of votes cast for each nominee, with those nominees receiving the most votes being elected, and hence only votes for director nominees (and not abstentions) are relevant to the outcome. In this case, the three nominees receiving the most votes will be elected. The affirmative vote of a majority of a quorum of the Company’s outstanding shares of common stock present and entitled to vote at the meeting is required to approve the ratification of the appointment of the Company’s independent registered public accounting firm for fiscal year ending December 31, 2015, and approve the stockholder proposal requesting that the Company issue a sustainability report. Abstentions will have the effect of a vote against such proposals. Broker non-votes will have no effect on such proposals. +There are no rights of appraisal or similar dissenter’s rights with respect to any matter to be acted upon pursuant to this Proxy Statement. It is expected that shares held of record by officers and directors of the Company, which in the aggregate represent approximately 73.5 percent of the outstanding shares of Common Stock, will be voted for the nominees for directors, and against the stockholder proposal requesting that the Company issue a sustainability report. +1 +STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT +The executives named in the Summary Compensation Table, and the name and address of each stockholder (or “group” as that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended) who owned beneficially five percent (5%) or more of the shares of Common Stock of the Company on March 2, 2015, together with the number of shares owned by each such person and the percentage of outstanding shares that ownership represents, and information as to Common Stock ownership of the directors and executive officers of the Company as a group (according to information received by the Company), are set out below: +Amount +Percent of +Beneficially +Outstanding +Name and Address of Beneficial Owner +Owned (1) +Shares +R. Randall Rollins +147,783,797 +(2) +68.1 +Chairman of the Board +2170 Piedmont Road, NE +Atlanta, Georgia 30324 +Gary W. Rollins +150,941,849 +(3) +69.5 +Vice Chairman and Chief Executive Officer, Rollins, Inc. +2170 Piedmont Road, NE +Atlanta, Georgia 30324 +Richard A. Hubbell +2,926,998 +(4) +1.3 +President and Chief Executive Officer +2801 Buford Highway, Suite 520 +Atlanta, Georgia 30329 +Linda H. Graham +948,659 +(5) +** +Vice President and Secretary +2170 Piedmont Road, NE +Atlanta, Georgia 30324 +Ben M. Palmer +638,599 +(6) +** +Vice President, Chief Financial Officer and Treasurer +2801 Buford Highway, Suite 520 +Atlanta, Georgia 30329 +All Directors and Executive Officers as a group +159,623,913 +(7) +73.5 +(10 persons) +** +Less than one percent +(1) +Except as otherwise noted, the nature of the beneficial ownership for all shares is sole voting and investment power. +(2) +Includes 3,377,514 shares of Company Common Stock held in two trusts of which he is Co-Trustee and as to which he shares voting and investment power. Also includes 701,750 shares of Company Common Stock held indirectly on account of his roles as a corporate fiduciary. Also includes 129,876,265 shares of the Company Common Stock held by RFPS Management Company II, L.P. of which RFA Management Company, LLC (“RFAM”), a Georgia limited liability company, is the general partner. The voting interests of RFAM are held by two revocable trusts, one of which each of Mr. Gary W. Rollins or Mr. R. Randall Rollins is the grantor and sole trustee. LOR, Inc. is the manager of RFAM. Also includes 11,292,525 shares of the Company Common Stock held by RFT Investment Company, LLC of which LOR, Inc. is the manager. Mr. R. Randall Rollins and Mr. Gary W. Rollins have voting control of LOR, Inc. Also includes 1,228,400 shares of the Company Common Stock held by RFPS Investments II, L.P. of which RFAM is the general partner. Included herein are 277,500 shares of restricted stock awards for Company Common Stock. This also includes 253,577 shares of Company Common Stock held by his wife, as to which Mr. Rollins disclaims any beneficial interest. Mr. Rollins is part of a control group holding Company securities that includes Mr. Gary W. Rollins, as disclosed on a Schedule 13D on file with the U.S. Securities and Exchange Commission. +2 +(3) +Includes 3,377,514 +shares of the Company Common Stock held in two trusts of which he is Co-Trustee and as to which he shares voting and +investment power. Also includes 701,750 shares of Company Common Stock held indirectly on account of his roles as +a corporate fiduciary. Also includes 129,876,265 shares of the Company Common Stock held by RFPS Management +Company II, L.P. of which RFAM is the general partner. The voting interests of RFAM are held by two revocable trusts, one of +which each of Mr. Gary W. Rollins or Mr. R. Randall Rollins is the grantor and sole trustee. LOR, Inc. is the manager of +RFAM. Also includes 11,292,525 shares of the Company Common Stock held by RFT Investment Company, LLC of which +LOR, Inc. is the manager. Mr. R. Randall Rollins and Mr. Gary W. Rollins have voting control of LOR, +Inc. Also includes 1,228,400 shares of the Company Common Stock held by RFPS Investments II, L.P. of which RFAM is +the general partner. Mr. Rollins is part of a control group holding Company securities that includes Mr. R. +Randall Rollins, as disclosed on a Schedule 13D on file with the U.S. Securities and Exchange Commission. +(4) +Includes 277,500 shares of restricted stock awards for Company Common Stock. +(5) +Includes 89,850 shares of restricted stock awards for Company Common Stock. +(6) +Includes 166,950 shares of restricted stock awards for Company Common Stock. +(7) +Shares held in trusts as to which more than one officer and/or director are Co-Trustees or entities in which there is common ownership have been included only once. Includes 811,800 shares of restricted stock awards for Company Common Stock awarded and issued to all of the executive officers pursuant to the Company’s Stock Incentive Plans. +PROPOSAL 1: ELECTION OF DIRECTORS +At the Annual Meeting, Messrs. Gary W. Rollins, Richard A. Hubbell and Larry L. Prince will be nominated to serve as Class II directors. The nominees for election at the 2015 Annual Meeting are all now directors of the Company. The directors in each class serve for a term of three years. The director nominees will serve in their respective class until their successors are elected and qualified. Six other individuals serve as directors but are not standing for re-election because their terms as directors extend past this Annual Meeting pursuant to provisions of the Company’s Bylaws that provide for the election of directors for staggered terms, with each director serving a term of three years. Unless authority is withheld, the proxy holders will vote for the election of each nominee named below. Although management does not contemplate the possibility, in the event any nominee is not a candidate or is unable to serve as a director at the time of the election, unless authority is withheld, the proxies will be voted for any nominee who shall be designated by the present Board of Directors and recommended by the Nominating and Governance Committee, to fill such vacancy. +Director Qualifications +The name and age of each of our directors and each of the nominees, his or her principal occupation, together with the number of shares of Common Stock beneficially owned, directly or indirectly, by each and the percentage of outstanding shares that ownership represents, all as of the close of business on March 2, 2015 (according to information received by the Company), other board memberships and the period during which he or she has served us as a director are set forth as follows: +3 +Names of Directors +Principal Occupation (1) +Service as +Director +Age +Shares of +Common +Stock (2) +Percent of +Outstanding +Shares +Names of Director Nominees +Class II (Current Term Expires 2015; New Term Will Expire 2018) +Gary W. Rollins (3) +Vice Chairman and Chief Executive Officer of Rollins, Inc. (consumer services). +1984 to date +70 +150,941,849 +(4) +69.5 +Richard A. Hubbell +President and Chief Executive Officer of the Company; President and Chief Executive Officer of Marine Products Corporation (boat manufacturing). +1987 to date +70 +2,926,998 +(5) +1.3 +Larry L. Prince +Retired Chairman of the Board of Directors of Genuine Parts Company (automotive parts distributor). +2009 to date +76 +15,000 +** +Names of Directors Whose Terms Have Not Expired +Class III (Term Expires 2016) +Linda H. Graham +Vice President and Secretary of the Company; Vice President and Secretary of Marine Products Corporation (boat manufacturing). +2001 to date +78 +948,659 +(6) +** +Bill J. Dismuke +Retired President of Edwards Baking Company (manufacturer of pies and pie parts). +2005 to date +78 +7,593 +** +James A. Lane, Jr. +Executive Vice President of Marine Products Corporation (boat manufacturing) and President of Chaparral Boats, Inc. +1987 to date +72 +281,845 +** +Class I (Term Expires 2017) +R. Randall Rollins (3) +Chairman of the Board of the Company; Chairman of the Board of Marine Products Corporation (boat manufacturing); Chairman of the Board of Rollins, Inc. (consumer services). +1984 to to date +83 +147,783,797 +(7) +68.1 +Henry B. Tippie +Presiding Director of the Company; Chairman of the Board and Chief Executive Officer of Tippie Services, Inc. (management services); Chairman of the Board of Dover Downs Gaming & Entertainment, Inc. (operator of multi purpose gaming and entertainment complex); Chairman of the Board of Dover Motorsports, Inc. (operator of motor racing tracks). +1984 to date +88 +2,252,277 +(8) +1.0 +James B. Williams +Retired Chairman of the Executive Committee, SunTrust Banks, Inc. (bank holding company) +1984 to date +81 +303,750 +** +** Less than one percent +4 +(1) +Unless otherwise noted, each of the directors has held the positions of responsibility set out in this column (but not necessarily his or her present title) for more than five years. In addition to the directorships listed in this column, the following individuals also serve on the Boards of Directors of the following companies: R. Randall Rollins: Dover Downs Gaming & Entertainment, Inc. and Dover Motorsports, Inc.; and Gary W. Rollins: Genuine Parts Company and Emory University. All of the directors shown in the above table are also directors of Marine Products Corporation (“Marine Products” or “MPC”) and, with the exception of Messrs. Hubbell and Lane and Ms. Graham, are also directors of Rollins, Inc. (“Rollins”). Larry L. Prince formerly served as a Director of Crawford & Company, Equifax, Inc., SunTrust Banks, Inc. and Genuine Parts Company and James B. Williams formerly served as a Director of The Coca-Cola Company. +(2) +Except as otherwise noted, the nature of the beneficial ownership for all shares is sole voting and investment power. +(3) +R. Randall Rollins and Gary W. Rollins are brothers. +(4) +See information contained in footnote (3) to the table appearing in Capital Stock section. +(5) +See information contained in footnote (4) to the table appearing in Capital Stock section. +(6) +See information contained in footnote (5) to the table appearing in Capital Stock section. +(7) +See information contained in footnote (2) to the table appearing in Capital Stock section. +(8) +Includes shares held by a wholly owned corporation that owns 2,277 shares. +Key Attributes, Experience and Skills of Directors +R. Randall Rollins was elected a Director of RPC in 1984. Mr. Rollins has extensive knowledge of the Company’s business and industry serving over 30 years at the Company. Mr. Rollins serves as Chairman of the Board of the Company. He is also Chairman of the Board for Marine Products Corporation as well as Rollins, Inc. Mr. Rollins has been a Director of Dover Motorsports, Inc. since 1996 and a Director of Dover Downs Gaming & Entertainment, Inc. since 2002. Mr. Rollins served as a Director of SunTrust Banks, Inc. from 1995 to 2004. +Richard A. Hubbell was elected a Director of RPC in 1987. Mr. Hubbell has extensive knowledge of the Company’s business and industry serving over 30 years at the Company. He has served as the Chief Executive Officer of the Company since 2003. In addition, Mr. Hubbell serves as the President of the Company. Mr. Hubbell is also the President, Chief Executive Officer and a Director of Marine Products Corporation. +Gary W. Rollins was elected a Director of RPC in 1984. Mr. Rollins has extensive knowledge of the Company’s business and industry. In addition, Mr. Rollins serves as the Vice Chairman and Chief Executive Officer of Rollins, Inc. Mr. Rollins has been a Director of Marine Products since 2001 and as a Director of Rollins, Inc. since 1981. Mr. Rollins has been a Director of Genuine Parts Company since 2005. +Henry B. Tippie was elected a Director of RPC in 1984. Mr. Tippie brings extensive financial and management experience to our Board of Directors serving as Controller and Chief Financial Officer of Rollins, Inc. from 1953 to 1970. Mr. Tippie has over 64 years of experience including being involved with publicly owned companies during the past 54 years in various positions including founder, CFO, CEO, President, Vice-Chairman and Chairman of the Board. He is currently Chairman of the Board of Dover Downs Gaming & Entertainment, Inc. as well as Dover Motorsports, Inc. and is also a Director of Marine Products Corporation and Rollins, Inc. +James B. Williams was elected a Director of RPC in 1984. Mr. Williams brings extensive financial and management experience to our Board of Directors serving over 30 years as a Director. He retired in March 1998 as Chairman of the Board and Chief Executive Officer of SunTrust Banks, Inc., a bank holding company, which positions he had held for more than five years. He is a Director of Marine Products Corporation and Rollins, Inc. He previously served as a Director of The Coca-Cola Company. +Bill J. Dismuke was elected a Director of RPC in 2005. Mr. Dismuke brings extensive financial, management and manufacturing experience to our Board of Directors. He served as a Senior Vice President of Rollins, Inc. for five years from 1979 until 1984. He retired as President of Edwards Baking Company in 1995. Mr. Dismuke has also been a Director of Rollins, Inc. since 1984 and Marine Products Corporation since 2005. +5 +Larry L. Prince was elected a Director of RPC in 2009. Mr. Prince brings extensive management experience to our Board of Directors. He served as the Chairman of the Executive Committee of the Board of Directors of Genuine Parts Company until his retirement in 2013. He also served as Chairman of the Board of Genuine Parts Company from 1990 through February 2005 and as Chief Executive Officer from 1989 through August 2004. Mr. Prince is also a Director of Rollins, Inc. and Marine Products Corporation. Mr. Prince previously served as a Director of SunTrust Banks, Inc., Crawford & Company, Equifax, Inc. and John H. Harland Company. +James A. Lane, Jr. was elected a Director of RPC in 1984. Mr. Lane brings extensive financial, management and manufacturing experience to our Board of Directors. He has held the position of President of Chaparral Boats, Inc. (formerly a subsidiary of RPC) since 1976. Mr. Lane has been Executive Vice President and a Director of Marine Products Corporation since 2001. +Linda H. Graham was elected a Director of RPC in 2001. Ms. Graham brings extensive management experience to our Board of Directors. She has been the Vice President and Secretary of RPC since 1987. She also serves as the Vice President and Secretary of Marine Products Corporation. In addition, Ms. Graham serves as a Director of Marine Products Corporation. +Our Board of Directors recommends a vote “FOR” the nominees listed above. +PROPOSAL 2: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +The Audit Committee of the Board has appointed Grant Thornton LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2015. During fiscal year 2014, Grant Thornton LLP served as the Company’s independent registered public accounting firm. Representatives of Grant Thornton LLP are expected to attend the annual meeting, where they will be available to respond to appropriate questions and, if they desire, to make a statement. +Although the Company is not required to seek ratification of this appointment, the Audit Committee and the Board of Directors believes that it is appropriate to do so. If stockholders do not ratify the appointment of Grant Thornton LLP, the current appointment will stand, but the Audit Committee will consider the stockholder action in determining whether to retain Grant Thornton LLP as the Company’s independent registered public accounting firm. +Our Board of Directors recommends a vote “FOR” the ratification of the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm for the 2015 fiscal year. +6 +PROPOSAL 3: STOCKHOLDER PROPOSAL REQUESTING THAT THE COMPANY ISSUE A SUSTAINABILITY REPORT +A stockholder, Walden Asset Management, a division of Boston Trust & Investment Management Company, One Beacon Street, Boston, Massachusetts 02108, has informed the Company that it intends to present the following proposal at the Company’s Annual Meeting of Stockholders on April 28, 2015. Walden Asset Management indicated in its proposal that it holds 27,100 shares of our common stock. The proposal is co-filed by Friends Fiduciary Corporation and Missionary Oblates of Mary Immaculate. The addresses and stockholdings of the co-filers will be furnished by the Company to any stockholder promptly upon the receipt of any oral or written request. +STOCKHOLDER PROPOSAL +SUSTAINABILITY REPORTING +RESOLVED +Shareholders request that RPC, Inc. issue a sustainability report describing the company’s environmental, social and governance (ESG) risks and opportunities including greenhouse gas (GHG) emissions reduction targets and goals. The report should be available by year end 2015, prepared at reasonable cost, omitting proprietary information. +SUPPORTING STATEMENT +We believe tracking and reporting on ESG business practices makes a company more responsive to a transforming global business environment characterized by finite natural resources, changing legislation, and heightened public expectations for corporate accountability. Reporting also helps companies better integrate and gain strategic value from existing sustainability efforts, identify gaps and opportunities, develop company-wide communications, recruit and retain employees, and receive feedback. +Support for and the practice of sustainability reporting continues to gain momentum: +(1) +In 2013, KPMG found that of 4,100 global +companies 71% had ESG reports +(2) +The United Nations Principles for Responsible +Investment initiative has more than 1,200 signatories with over $45 trillion of assets under management. These members +seek ESG information from companies to be able to analyze fully the risks and opportunities associated with existing and potential +investments. +(3) +Carbon Disclosure Project (CDP), representing +767 institutional investors globally with approximately $92 trillion in assets, calls for company disclosure on their Greenhouse +Gas emissions and climate change management programs. Over two thirds of the S&P 500 now report to CDP. +Currently, RPC does not report on its sustainability efforts nor disclose GHG data. RPC claimed in the 2014 proxy that it already sets “annual quality, health, safety and environmental targets for improvement,” and monitors performance. However, shareholders currently have no information with which to assess the validity and extent of this statement. We believe that this is a serious gap. +Climate change is one of the most financially significant environmental issues currently facing RPC’s investors and customers. Occupational safety and health, vendor and labor standards, waste and water reduction targets and product-related environmental impacts are particularly important ESG considerations in RPC’s sector. Not managing these properly could pose significant regulatory, legal, reputational and financial risks. +Competitors like Baker Hughes, Inc., Halliburton Company and Schlumberger offer shareholders important information through comprehensive sustainability reports and by responding to CDP. C&J Energy, a more size-comparable competitor, has also begun to exhibit better ESG disclosure than RPC by aggregating their Quality, Health, Safety, and Environmental Policy, and other policies and commitments onto a “Responsibility” section of their website. By not reporting, we are concerned that RPC may be missing opportunities that larger peers are actively recognizing and lagging its peer group in terms of risk management. +7 +We recommend that the report include a company-wide review of policies, practices, metrics, and goals related to ESG performance. A Global Reporting Initiative (GRI) index could be a helpful checklist for guidance. The GRI Guidelines are the most widely used reporting framework, enabling companies to focus on their most important ESG issues. +THE COMPANY’S STATEMENT IN OPPOSITION TO PROPOSAL +Global Reporting Initiative (“GRI”) Guidelines are a lengthy, complex and often vague reporting framework, which would require us to conduct extensive and detailed scientific and technical analyses, invest significant amounts of time and financial resources, and potentially engage consultants with specialized expertise. In addition, the proposed sustainability report would require us to collect, analyze and disclose certain information that we are not currently required to disclose pursuant to applicable laws, rules or regulations. +RPC has always been committed to ethical business practices and to compliance with the law in all aspects of our business, as stated in our Code of Business Conduct which is posted on our website. In addition, the Company has established an environmental management system that reviews and creates process and practices that minimize our impact on the environment, and conducts environmental audits of facilities to ensure compliance. We also set annual quality, health, safety and environment performance targets for improvement, and we monitor our performance. The Company continually seeks products and processes such as low-toxicity additives, alternative fuel sources, and silica sand dust control that help conduct our operations in an environmentally responsible manner. The Company is also dedicated to cultivating a safe environment and provides our employees with continual training on accident prevention, environmental protection, and current industry standards from certified trainers. The Company has achieved ISO 14001 environmental certification. +The proposal fails to articulate the burden on human resources or the considerable expense involved in preparing a sustainability report. After careful consideration of the stockholder proposal, the Board has concluded that preparation of a sustainability report would not result in effective or prudent utilization of our human and financial resources, and would not be in the best interest of our stockholders. The amount of time, effort and resources required to produce such a sustainability report would divert significant resources that we believe could be better utilized in strengthening our business and creating value for our stockholders. +Required Vote +The affirmative vote of a majority of the Company’s shares of common stock present (or represented by proxy) and entitled to vote on the proposal is required to approve the stockholder proposal. Abstentions will have the effect of a vote against the stockholder proposal, but broker non-votes will not be included in the vote calculation, which means they will not count as affirmative or negative votes. +Our Board of Directors recommends a vote “AGAINST” the stockholder proposal requesting that the Company issue a sustainability report. +8 +CORPORATE GOVERNANCE AND BOARD OF DIRECTORS COMMITTEES AND MEETINGS +Board Meetings +The Board of Directors met five times during the fiscal year ended December 31, 2014. No director attended fewer than 75 percent of the aggregate of all Board meetings and meetings of committees on which he or she served during 2014. Board members are encouraged to attend the Company’s Annual Stockholder Meetings and a majority of the Board members were in attendance at last year’s meeting. +The Board of Directors has an Audit Committee, a Compensation Committee, a Diversity Committee and a Nominating and Governance Committee. +Below is a summary of our committee structure and membership information. +Nominating & +Audit +Compensation +Diversity +Governance +Executive +Committee Members +Committee +Committee +Committee +Committee +Committee +R. Randall Rollins (1) +Member +Henry B. Tippie (2) +Chair +Chair +Chair +Chair +Larry L. Prince (2) +Member +Member +Member +Member +James B. Williams (2) +Member +Member +Member +Member +Bill J. Dismuke (2) +Member +Gary W. Rollins +Member +(1) Chairman of the Board of Directors +(2) Financial Expert +Audit Committee +The Audit Committee of the Board of Directors of the Company consists of Henry B. Tippie (Chairman), Bill J. Dismuke, James B. Williams and Larry L. Prince, all of whom are independent as discussed below. The Audit Committee held five meetings during the fiscal year ended December 31, 2014, including a meeting to review the Company’s Form 10-K for the year ended December 31, 2013. The Board of Directors has determined that all of the Audit Committee members are independent as that term is defined by the rules of the Securities and Exchange Commission (“SEC”) and the New York Stock Exchange (“NYSE”). The Board of Directors has also determined that all of the Audit Committee members are “Audit Committee Financial Experts” as defined in the SEC rules. The Audit Committee meets with the Company’s independent registered public accountants, internal auditor, Chief Executive Officer and Chief Financial Officer to review the scope and results of audits and recommendations made with respect to controls over financial reporting and specific accounting and financial reporting issues. The Audit Committee has the authority to obtain advice and assistance from, and receive appropriate funding from the Company for, outside legal, accounting or other advisors as it deems necessary to carry out its duties. The Audit Committee charter is available on the Company’s website at www.rpc.net under the Governance section. +Compensation Committee +The Compensation Committee of the Board of Directors of the Company consists of Henry B. Tippie (Chairman), James B. Williams, and Larry L. Prince. It held two meetings during the fiscal year ended December 31, 2014. The function of the Compensation Committee is to set the base salary and cash based incentive compensation of all of the executive officers. The Compensation Committee also administers the Company’s Stock Incentive Plans. The Compensation Committee does not have a formal charter, and is not required to have one under the “controlled company” exemption under the NYSE rules, as described in the section titled “Director Independence and NYSE Requirements” below. +9 +Diversity Committee +The Diversity Committee of the Board of Directors of the Company consists of Henry B. Tippie (Chairman), James B. Williams, and Larry L. Prince. It held one meeting during the fiscal year ended December 31, 2014. The function of the Diversity Committee is to monitor compliance with applicable non-discrimination laws. +Nominating and Governance Committee +The Nominating and Governance Committee of the Board of Directors of the Company consists of Henry B. Tippie (Chairman), James B. Williams, and Larry L. Prince, each of whom is independent, as discussed more fully under “Director Independence and NYSE Requirements.” The Committee was formed in 2002 pursuant to a resolution passed by the Board of Directors for the following purposes: +● +to recommend to the Board of Directors +nominees for director and to consider any nominations properly made by a stockholder; +● +upon request of the Board of Directors, +to review and report to the Board with regard to matters of corporate governance; and +● +to make recommendations to the Board of +Directors regarding the agenda for Annual Stockholders’ Meetings and with respect to appropriate action to be taken in response +to any stockholder proposals. +The Nominating and Governance Committee held one meeting during the fiscal year ended December 31, 2014. +Director Nominations +Under Delaware law, there are no statutory criteria or qualifications for directors. No criteria or qualifications have been prescribed by the Board at this time. The Nominating and Governance Committee does not have a charter or a formal policy with regard to the consideration of director candidates. As such, there is no formal policy relative to diversity, although as noted below, it is one of many factors that the Nominating and Corporate Governance Committee has the discretion to factor into its decision making. This discretion would extend to how the Committee might define diversity in a particular instance – whether in terms of background, viewpoint, experience, education, race, gender, national origin or other considerations. The Committee acts under the guidance of the Corporate Governance Guidelines approved by the Board of Directors and posted on the Company’s website at www.rpc.net under the Governance section. The Board believes that it should preserve maximum flexibility in order to select directors with sound judgment and other desirable qualities. According to the Company’s Corporate Governance Guidelines, the Board of Directors will be responsible for selecting nominees for election to the Board of Directors. The Board delegates the screening process to the Nominating and Governance Committee. This Committee is responsible for determining the appropriate skills and characteristics required of Board members in the context of the then current make-up of the Board. This determination takes into account all factors which the Committee considers appropriate, such as independence, experience, strength of character, mature judgment, technical skills, diversity, age and the extent to which the individual would fill a present need on the Board. The Company’s Bylaws provide that nominations for the election of directors may be made by any stockholder entitled to vote for the election of directors. Nominations must comply with an advance notice procedure which generally requires, with respect to nominations for directors for election at an annual meeting, that written notice be addressed to: Secretary, RPC, Inc., 2170 Piedmont Road, NE, Atlanta, Georgia 30324, and received not less than ninety days prior to the anniversary of the prior year’s annual meeting and set forth, among other requirements specified in the Company’s Bylaws, the name, age, business address and, if known, residence address of the nominee proposed in the notice, the principal occupation or employment of the nominee for the past five years, the class or series and number of shares of capital stock of the Company which are owned beneficially or of record by the person and any other information relating to the person that would be required to be disclosed in a proxy statement or other filings. Other requirements related to the notice are contained in the Company’s Bylaws, and stockholders are advised to carefully review these requirements to ensure that nominations comply with the Bylaws. The Committee will consider nominations from stockholders who satisfy these requirements. The Committee is responsible for screening the nominees that are selected by the Board of Directors for nomination to the Board and for service on committees of the Board. To date, the Company has not received a recommendation for a director nominee from a stockholder. All of the nominees for directors being voted upon, at the Annual Meeting to be held on April 28, 2015 are directors standing for re-election. +10 +Board Leadership +The Company has had separate persons serving as its Chairman of the Board and Chief Executive Officer since 2003. Mr. Randall Rollins is our Chairman and chairs our Board meetings. Mr. Richard Hubbell is our President and Chief Executive Officer. We believe that it represents the appropriate structure for us at this time; the Chairman of the Board provides general oversight and strategic planning for the Company while the President focuses on optimizing operational efficiencies. +Risk Oversight by Board +Our Board’s oversight of risk has not been delegated to any Board Committee. “Risk” is an extremely broad concept that extends to multiple functional areas and crosses multiple disciplines. As such, risk may be addressed from time to time by the full Board or by one or more of our Committees. Senior management is responsible for identifying and managing material risks that we face while insurable risks and litigation risks are handled primarily by the risk management department. Senior management provides the Board with a summary of insurance coverage annually and updates as deemed necessary. Liquidity risk, credit risk and risks associated with our credit facilities and cash management are handled primarily by our finance department which regularly provides a financial report to both the Audit Committee and to the full Board. Operational, business, regulatory and political risks are handled primarily by senior executive management which regularly provides various operational reports to, among others, the full Board or to the Executive Committee. +Director Independence and NYSE Requirements +Controlled Company Exemption +The Company is not required by law or NYSE listing requirements to have a Nominating or Compensation Committee composed of independent directors, nor to have a Board of Directors, the majority of which are independent. Because the Company is a “controlled corporation,” as defined by NYSE Rule 303A.00, the Company is exempt from NYSE Rules 303A.01, 303A.04 and 303A.05 and does not undertake compliance with those provisions. The Company is a “controlled corporation” because a group that includes the Company’s Chairman of the Board, R. Randall Rollins, his brother Gary W. Rollins who is also a director and certain companies under their control, possesses in excess of fifty percent of the Company’s voting power. +The Company’s Audit Committee is composed of four “independent” directors as defined by the Company’s Corporate Governance Guidelines, the NYSE rules, the Securities Exchange Act of 1934, SEC regulations thereunder, and the Company’s Audit Committee Charter. All of the members of the Compensation, Diversity and Nominating and Governance Committees are also independent directors. The independent directors of the Company are Henry B. Tippie, James B. Williams, Bill J. Dismuke, and Larry L. Prince. +Independence Guidelines +Under NYSE listing standards, to be considered independent, a director must be determined to have no material relationship with the Company other than as a director. The NYSE standards set forth a nonexclusive list of relationships which are conclusively deemed material. The Company’s Independence Guidelines (Appendix A to the Company’s Corporate Governance Guidelines) are posted on the Company’s website at www.rpc.net under the Governance section. +Audit Committee Charter +Under the Company’s Audit Committee Charter, in accordance with NYSE listing requirements and the Securities Exchange Act of 1934, all members of the Audit Committee must be independent of management and the Company. A member of the Audit Committee is considered independent as long as he or she (i) does not accept any consulting, advisory, or compensatory fee from the Company, other than as a director or committee member; (ii) is not an affiliated person of the Company or its subsidiaries; and (iii) otherwise meets the independence requirements of the NYSE and the Company’s Corporate Governance Guidelines. +11 +Nonmaterial Relationships +After reviewing all of the relationships between the members of the Audit Committee and the Company, the Board of Directors determined that none of the members of the Audit Committee had any relationships not included within the categorical standards set forth in the Independence Guidelines and disclosed above except as follows: +1. +Mr. Tippie was employed by Rollins from 1953 to 1970, and held several offices with that company during that time, including as Executive Vice President – Finance, Secretary, Treasurer and Chief Financial Officer. Mr. Dismuke was employed by Rollins from 1979 to 1984 and held various offices within that company including Senior Vice President. Messrs. Randall and Gary Rollins are directors and executive officers of Rollins and are part of a group that has voting control of Rollins. +2. +Mr. Tippie is Chairman of the Board of Directors of Dover Motorsports, Inc. and Dover Downs Gaming & Entertainment, Inc. Mr. Randall Rollins is also a director of these companies. +3. +Mr. Tippie is the trustee of the O. Wayne Rollins Foundation and of the Rollins Children’s Trust. O. Wayne Rollins is the father of Gary and Randall Rollins. The beneficiaries of the Rollins Children’s Trust include the immediate family members of Messrs. Randall and Gary Rollins. +4. +Each of Messrs. Dismuke, Prince, Tippie and Williams also serve on the Boards of Rollins and Marine Products, of which Messrs. Gary and Randall Rollins are directors, and voting control over which is held by a control group of which Messrs. Randall and Gary Rollins are a part. Mr. Randall Rollins is an executive officer of Marine Products. +As required by the Independence Guidelines, the Board of Directors unanimously concluded that the above-listed relationships would not affect the independent judgment of the independent directors, based on their experience, character and independent means, and therefore do not preclude an independence determination. All of the members of the Audit Committee are also independent under the heightened standards required for Audit Committee members. +In accordance with the NYSE corporate governance listing standards, Mr. Henry B. Tippie was elected as the Presiding Director. The Company’s non-management directors meet at regularly scheduled executive sessions without management. Mr. Tippie presides during these executive sessions. +Corporate Governance Guidelines +We have adopted Corporate Governance Guidelines to promote better understanding of our policies and procedures. At least annually, the Board reviews these guidelines. As required by the rules of the New York Stock Exchange, our Corporate Governance Guidelines require that our non-management directors meet in at least two regularly scheduled executive sessions per year without management. +At the Company’s website at www.rpc.net, under the Governance section, you may access a copy of our Corporate Governance Guidelines, our Audit Committee Charter, our Code of Business Conduct and our Code of Business Conduct and Ethics for Directors and Executive Officers and Related Party Transactions Policy. +Code of Business Conduct +The Company has adopted a Code of Business Conduct applicable to all directors, officers and employees generally, as well as a Code of Business Conduct and Ethics for Directors and Executive Officers and Related Party Transactions Policy applicable to the principal executive officer, principal financial officer, and directors. Both codes are available on the Company’s website at www.rpc.net under the Governance section. +12 +Director Communications +The Company also has a process for interested parties, including stockholders, to send communications to the Board of Directors, Presiding Director, any of the Board Committees or the non-management directors as a group. Such communications should be addressed as follows: +Mr. Henry B. Tippie +c/o Internal Audit Department +RPC, Inc. +2801 Buford Highway NE, Suite 520 +Atlanta, Georgia 30329 +The above instructions for communications with the directors are also posted on our website at www.rpc.net under the Governance section. All communications received from interested parties are forwarded to the Board of Directors. Any communication addressed solely to the Presiding Director or the non-management directors will be forwarded directly to the appropriate addressee(s). +COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION +None of the directors named above who serve on the Company’s Compensation Committee are or have ever been an employee of the Company. There are no Compensation Committee interlocks requiring disclosure. +DIRECTOR COMPENSATION +The following table sets forth compensation to the Company’s directors for services rendered as a director for 2014. Three of the directors, Messrs. R. Randall Rollins, Richard A. Hubbell and Ms. Linda H. Graham are employees of the Company. Their compensation is set forth in the Summary Compensation Table under Executive Compensation. The directors listed below have never been employed by the Company or paid a salary or bonus by the Company, have never been granted any options or other stock-based awards, and do not participate in any Company sponsored retirement plans, with the exception of Mr. James A. Lane, Jr. who was an employee of the Company until the spin-off of Marine Products in 2001. +Fees Earned or +Stock +Option +Paid in Cash +Awards (1) +Awards (1) +Total +Name +($) +($) +($) +($) +Henry B. Tippie +110,000 +— +— +110,000 +James B. Williams +58,000 +— +— +58,000 +Bill J. Dismuke +51,000 +— +— +51,000 +Gary W. Rollins +38,500 +— +— +38,500 +James A. Lane, Jr. +38,500 +— +— +38,500 +Larry L. Prince +58,000 +— +— +58,000 +(1) +Directors are eligible for grants of stock awards under the Company’s Stock Incentive Plan (“SIP”). No stock awards have been granted to the non-management directors under the SIP. +Directors that are our employees do not receive additional compensation for services rendered as a director. +Under current compensation arrangements effective since January 1, 2015, non-management directors each receive an annual retainer fee of $40,000. In addition, the Chairman of the Audit Committee receives an annual retainer of $20,000, the Chairman of the Compensation Committee receives an annual retainer of $10,000, and the Chairman of each of the Nominating and Governance Committee and Diversity Committee receives an annual retainer of $6,000. A director that chairs more than one committee receives a retainer with respect to each committee he chairs. All of the retainers are paid on a quarterly basis. Per meeting fees for non-management directors are as follows: +13 +● +For meetings of the Board of Directors, $2,500. +● +For meetings of the Compensation Committee, $2,000. +● +For meetings of the Diversity Committee and Nominating and Governance Committee, $1,500. +● +For meetings of the Audit Committee either in person or over the telephone, $2,500. +● +In addition, the Chairman of the Audit Committee receives an additional $2,500 for preparing to conduct each quarterly Board and Board Committee meetings. +All non-management directors are also entitled to reimbursement of expenses for all services as a director, including committee participation or special assignments. +Notwithstanding anything to the contrary set forth in any of the Company’s previous filings under the Securities Act of 1933 or the Securities Exchange Act of 1934, that might incorporate future filings, including the Proxy Statement, in whole or in part, the Report of the Audit Committee shall not be incorporated by reference into any such filings. +REPORT OF THE AUDIT COMMITTEE +Management is responsible for the Company’s internal controls, assessing the effectiveness of these controls and the financial reporting process. The Company’s independent registered public accounting firm is responsible for performing independent audits of the Company’s consolidated financial statements and the effectiveness of the Company’s internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States) and for issuing reports thereon. The Audit Committee’s responsibility is generally to monitor and oversee these processes, as described in the Audit Committee Charter. It is not the duty of the Audit Committee to plan or conduct audits or to determine that the Company’s financial statements are complete and accurate and in accordance with generally accepted accounting principles; that is the responsibility of management. +In fulfilling its oversight responsibilities with respect to the year ended December 31, 2014, the Audit Committee: +● +Approved the terms of engagement of Grant Thornton LLP as the Company’s independent registered public accounting firm for the year ended December 31, 2014; +● +Reviewed with management the interim financial information included in the Forms 10-Q prior to their being filed with the SEC. In addition, the Committee reviewed all earnings releases with management and the Company’s independent registered public accounting firm prior to their release; +● +Reviewed and discussed with the Company’s management and the independent registered public accounting firm the audited consolidated financial statements of the Company as of December 31, 2014 and 2013 and for the three years ended December 31, 2014; +● +Reviewed and discussed with the Company’s management and the independent registered public accounting firm, management’s assessment that the Company maintained effective control over financial reporting as of December 31, 2014; +● +Discussed with the independent registered public accounting firm matters required to be discussed by Auditing Standard No. 16, “Communications with Audit Committees,” as adopted by the Public Company Accounting Oversight Board; and +● +Received from the independent registered public accounting firm the written disclosures and the letter in accordance with the requirements of the Public Company Accounting Oversight Board regarding the firm’s communications with the Committee concerning independence, and discussed with such firm its independence from the Company. +14 +Based upon the review and discussions referred to above, the Committee recommended to the Board of Directors that the audited consolidated financial statements of the Company and subsidiaries as of December 31, 2014 and 2013 and for the three years ended December 31, 2014 be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 and for filing with the Securities and Exchange Commission. +In giving its recommendation to the Board of Directors, the Audit Committee has relied on (i) management’s representation that such financial statements have been prepared with integrity and objectivity and in conformity with accounting principles generally accepted in the United States of America and (ii) the report of the Company’s independent registered public accounting firm with respect to such financial statements. +Submitted by the Audit Committee of the Board of Directors. +Henry B. Tippie, Chairman +James B. Williams +Bill J. Dismuke +Larry L. Prince +COMPENSATION DISCUSSION AND ANALYSIS +Compensation Committee +During the fiscal year ended December 31, 2014, the members of our Compensation Committee held primary responsibility for determining executive compensation levels. The Committee is composed of three of our non-management directors who do not participate in the Company’s compensation plans. The Committee determines the compensation and administers the performance-based incentive cash compensation plan for our executive officers. In addition, the Committee also administers our Stock Incentive Plans for all the employees. +The members of our Compensation Committee have extensive and varied experience with various public and private corporations - as investors and stockholders, as senior executives, and as directors charged with the oversight of management and the setting of executive compensation levels. Henry B. Tippie, the Chairman of the Compensation Committee, has served on the board of directors of twelve different publicly traded companies and has been involved in setting executive compensation levels at all of these companies. Messrs. James B. Williams and Larry L. Prince have served on the board of directors of several different publicly traded companies and have similarly been involved in setting executive compensation levels at many of these companies. +The Compensation Committee has authority to engage attorneys, accountants and consultants, including executive compensation consultants, to solicit input from management concerning compensation matters, and to delegate any of its responsibilities to one or more directors or members of management where it deems such delegation appropriate and permitted under applicable law. The Committee has not used the services of any compensation consultants in determining or recommending the amount or form of executive compensation. +The Compensation Committee believes that determinations relative to executive compensation levels are best left to the discretion of the Committee. In addition to the extensive experience and expertise of the Committee’s members and their familiarity with the Company’s performance and the performance of our executive officers, the Committee is able to draw on the experience of other Directors and on various legal and accounting executives employed by the Company, and the Committee has access to readily available public information relative to structuring executive compensation programs and setting appropriate compensation levels. The Committee also believes that the structure of our executive compensation programs should not become overly complicated or difficult to understand. The Committee solicits input from our Chairman with respect to the performance of our executive officers and their compensation levels. +15 +The Role of Shareholder Say-on-Pay Votes +The Company provides its shareholders with the opportunity to cast an advisory vote on executive compensation (a “say-on-pay proposal”) once every three years. At the Company’s Annual Meeting of Stockholders held in April 2014, a substantial majority of the votes cast on the say-on-pay proposal at that meeting were voted in favor of the proposal. The Compensation Committee believes this affirms shareholders’ support of the Company’s approach to executive compensation. The shareholders voted to hold a say-on-pay advisory vote on executive compensation every three years, and the Board resolved to accept the shareholders’ recommendation. As a result, the advisory vote on executive compensation will be held again at the 2017 Annual Meeting of Stockholders. The Compensation Committee will continue to consider the outcome of the Company’s say-on-pay votes when making future compensation decisions for its executive officers. +General Compensation Objectives and Guidelines +The Company is engaged in a highly competitive industry. The success of the Company depends on its ability to attract and retain highly qualified and motivated executives. In order to accomplish this objective, the Company structures the executive compensation in a fashion that takes into account the Company’s overall performance and the individual performance of the executive. +The Compensation Committee endorses the philosophy that executive compensation should reflect Company performance and the contribution of executive officers to that performance. The Company’s compensation policy is designed to achieve three fundamental objectives: (i) attract and retain qualified executives, (ii) motivate performance to achieve Company objectives, and (iii) align the interests of our executives with the long-term interests of the Company’s stockholders. The Committee recognizes that there are many intangibles involved in evaluating performance and in motivating performance, and that determining an appropriate compensation level is a highly subjective endeavor. The analysis of the Committee is not based upon a structured formula and the objectives referred to above are not weighted in any formal manner. +The Company’s executive officers are also executive officers of Marine Products and receive compensation directly from Marine Products. The members of the Company’s Compensation Committee also constitute the Compensation Committee of Marine Products. In determining the compensation for the executive officers at the Company, the Committee considers these dual responsibilities and sources of compensation. The Company sets compensation of its executives at such levels so that the aggregate compensation received from both Marine Products and the Company is reasonable in light of their respective responsibilities and the performance of both companies, and so that the compensation from the Company for services solely to the Company is reasonable. A discussion of the Company’s executive officers’ compensation at Marine Products is contained in its annual Proxy Statement filed with the SEC. During the year, none of the executive officers made recommendations or otherwise contributed input on their own compensation. However, the Compensation Committee may from time to time solicit input from the Chairman when reviewing executive compensation. +Pursuant to the Company’s compensation philosophy, the total annual compensation of its executive officers is primarily comprised of base salary, performance-based incentive cash compensation and stock-based incentive compensation. In addition, the Company provides retirement compensation plans, group welfare benefits and certain perquisites. +We believe a competitive base salary is important to attract, retain and motivate top executives. We believe a performance-based incentive cash compensation plan is valuable in recognizing and rewarding individual achievement. Finally, we believe stock-based incentives make executives “think like owners” and, therefore, align their interests with those of our stockholders. +The Company does not have any formal stock ownership requirements for its executive officers but notes that its current directors and executive officers are stockholders of the Company, as is disclosed elsewhere in this Proxy Statement. The Company is mindful of the stock ownership of our directors and executive officers but does not believe that it is appropriate to provide a mechanism or formula to take stock ownership (or gains from prior option or stock awards) into account when setting compensation levels. The Company provides in its insider trading policies that directors and executive officers may not sell Company securities short and may not sell puts, calls or other derivative securities tied to our Common Stock. +16 +The Company does not have a formal policy relative to the adjustment or recovery of incentives or awards in the event that the performance measures upon which incentives or awards were based are later restated or otherwise adjusted in a manner that would have reduced the size of an incentive or award. However, as all incentives and awards remain within the discretion of the Compensation Committee, the Committee retains the ability to take any such restatements or adjustments into account in subsequent years. In addition, the Sarbanes-Oxley Act requires in the case of accounting restatements that result from material non-compliance with SEC financial reporting requirements, that Chief Executive Officers and Chief Financial Officers must disgorge bonuses and other incentive-based compensation and profits on stock sales, if the non-compliance results from misconduct. +Base Salary +The salary of each executive officer is determined by the Compensation Committee. In making its determinations, the Committee gives consideration to the recent financial performance of the Company, the magnitude of responsibilities, the scope of the position, individual performance and compensation paid by Marine Products. The Committee solicits input from our Chairman with respect to the performance of our executive officers and their compensation levels. There was no change to the base salaries of the Company’s executive officers in 2014 or 2015 through the date of this proxy statement. +Performance-Based Incentive Cash Compensation +The Company implemented the Performance-Based Incentive Cash Compensation Plan (the “Management Incentive Plan”) for the executive officers in 2006. Under the Management Incentive Plan, the Compensation Committee establishes performance goals annually within ninety days after the commencement of the performance period to which such goals relate. Performance goals for each participant may be based on corporate, business unit/function or individual performance, or a combination of one or more such measures. +In connection with the annual establishment of performance goals, the Compensation Committee sets a target award for each participant in the Management Incentive Plan for the applicable year, which is expressed as a percentage of the participant’s base compensation (the “Target Award”) in effect on the last day of the final pay period of that year. If the participant’s performance goals are based upon a combination of performance measures, the Compensation Committee will weigh the importance of each performance measure by assigning a percentage (the “Weighted Percentage”) to those performance measures. The participant’s cash award amount will also depend in part upon the level of achievement that the participant attained with respect to each such performance measure utilizing the formula set out in the Management Incentive Plan. This formula provides for a performance value (“Performance Value”) which ranges from: +● threshold performance level (with a Performance Value of 25 percent of the Target Award), +● target performance level (with a Performance Value up to 100 percent of the Target Award), to +● superior performance level (with a Performance Value up to 200 percent of the Target Award). +Subject to the limitations set forth below, a participant’s cash award amount for each year under the Management Incentive Plan equals the product of the Target Award multiplied by the Weighted Percentage assigned to each performance measure used for a participant, multiplied by the Performance Value attained for each performance measure, multiplied by base compensation. The Committee will determine the maximum cash award as a percentage of participants’ base compensation for each applicable year. +For 2014, the Compensation Committee established the target incentive award under the Management Incentive Plan for the Chief Executive Officer and for the other members of executive management at the amounts shown in the table below. The target awards that could be earned under the Management Incentive Plan for 2014 were the same as for the prior year. +17 +Target Award as a +Executive Officer +percentage of base salary +Richard A. Hubbell +President and Chief Executive Officer +100% +Ben M. Palmer +Vice President, Chief Financial Officer and Treasurer +100% +R. Randall Rollins +Chairman of the Board +100% +Linda H. Graham +Vice President and Secretary +40% +The maximum bonus award for each participant under the Plan for 2014 and prior years was established at 150 percent of such participant’s base salary. The performance criteria applicable to the participants under the Management Incentive Plan for 2014 were determined based solely on corporate performance. The Compensation Committee established corporate performance goals for 2014 under the Management Incentive Plan based on cash flow return on invested capital. Return on invested capital (“ROIC”) is a widely used financial performance measure that typically correlates with long term change in stockholder value. The Company has used ROIC as the sole performance goal under the Management Incentive Plan for several years. ROIC is computed as the ratio of earnings before interest, taxes, depreciation and amortization (EBITDA) to invested capital. Invested capital is generally equal to the aggregate of stockholders’ equity, accumulated depreciation and long-term liabilities. For 2014, the target performance goal established by the Company is in excess of the comparable historical average ROIC of our peers, is in excess of the Company’s weighted average cost of capital, and is an amount which the Company believes represents outstanding financial performance. Under the Management Incentive Plan, the Company must achieve at least 80 percent of the target performance goal for executive officers to be eligible for any bonus award. Bonus awards under the Management Incentive Plan are determined on a sliding scale between the threshold performance level and a superior performance level, which corresponds to 175 percent of the target performance goal. To be eligible for the bonus award under the Management Incentive Plan, the ROIC must be in excess of 16 percent up to a maximum of 35 percent. The Company has consistently followed the same method to compute ROIC, and the Compensation Committee has not exercised discretion to waive the performance goals based on difficult industry conditions or other factors. +The Company operates in a cyclical business where financial performance is influenced by, among other things, changes in oil and natural gas prices. The Company generated ROIC that resulted in 141 percent of the target award in 2014, 120 percent of the target award in 2013 and 192 percent of the target award in 2012. The level of performance achieved improved in 2014 after trending downward in 2013 following a strong performance in 2012 consistent with the cyclical nature of industry performance and the performance of our peers. Based upon current trends and expectations for the oilfield industry, the operating environment in 2015 will be very challenging. +For 2014, the executive officers earned awards that were higher than target but lower than the superior performance level which qualified the officers to receive bonus awards up to 120 percent of the target incentive award. Performance-based cash compensation earned under the Management Incentive Plan for 2014 was as follows: +Mr. Richard A. Hubbell: $1,269,000; Mr. Ben M. Palmer: $528,750; Mr. R. Randall Rollins: $1,128,000 and Ms. Linda H. Graham: $141,000. For 2015, the target awards, performance goal and maximum awards were established at the same levels as 2014. +18 +Stock Based Incentive Plans +Our Stock Incentive Plan allows for a wide variety of stock based awards such as stock options and restricted stock. We last issued stock options in fiscal year ended 2003 and have no current plans to issue additional stock options. We have never issued any stock appreciation rights. Partially in response to changes relative to the manner in which stock options are accounted for under generally accepted accounting principles, we have modified the structure and composition of the long-term equity based component of our executive compensation. In recent years, we have awarded time-based restricted stock in lieu of granting stock options. The terms and conditions of these awards are described in more detail below. +Awards under the Company’s Stock Incentive Plan are purely discretionary, are not based upon any specific formula and may or may not be granted in any given fiscal year. For the past three years, we have granted time-based restricted stock to various employees, including our executive officers, in early January during our regularly scheduled meetings of the Compensation Committee during which the Committee reviews executive compensation. Consistent with this practice, we granted restricted stock awards to our executive officers in January 2015, 2014 and 2013 as follows: +Name +2015 +2014 +2013 +Richard A. Hubbell +75,000 +56,250 +75,000 +Ben M. Palmer +45,000 +33,750 +45,000 +R. Randall Rollins +75,000 +56,250 +75,000 +Linda H. Graham +25,000 +18,750 +25,000 +The amount of the aggregate stock based awards to our executive officers in any given year is influenced by the Company’s overall performance. The amount of each grant to our executive officers is influenced in part by the Committee’s subjective assessment of each individual’s respective contributions to achievement of the Company’s long-term goals and objectives. In evaluating individual performance for these purposes, the Committee considers the overall contributions of executive management as a group and the Committee’s subjective assessment of each individual’s relative contribution to that performance rather than specific aspects of each individual’s performance over a short-term period. We expect to continue yearly grants of restricted stock awards although we reserve the right to modify or discontinue this or any of our other compensation practices at any time. +All of our restricted stock awards granted since 2004 have had the same features. The shares vest one-fifth per year beginning on the second anniversary of the grant date. Restricted shares have full voting and dividend rights. However, until the shares vest, they cannot be sold, transferred or pledged. Should the executive leave our employment for any reason prior to the vesting dates (other than due to disability or retirement on or after age 65), the unvested shares will be forfeited. In the event of death or “change in control” as determined by the Board of Directors, all unvested restricted shares shall vest immediately. +Grants are made under our 2014 Stock Incentive Plan and the plan is administered pursuant to Rule 16b-3 of the Securities Exchange Act of 1934. +Employment Agreements +There are no agreements or understandings between the Company and any executive officer which guarantee continued employment or guarantee any level of compensation, including incentive or bonus payments, to the executive officer. +19 +Retirement Plans +The Company maintains a defined benefit pension plan (called the Retirement Income Plan) for all our eligible employees, a non-qualified supplemental retirement plan for our executives and certain other highly compensated employees and a 401(k) Plan for the benefit of all regular full time employees. In 2002, the Company’s Board of Directors approved a resolution to cease all future benefit accruals under the Retirement Income Plan effective March 31, 2002. During 2002, the Company began permitting selected highly compensated employees to defer a portion of their compensation into the Company’s non-qualified Supplemental Retirement Plan (“SRP”). The SRP is described in more detail under the caption “Nonqualified Deferred Compensation” below. +Other Compensation +Other compensation to our executives includes typical employee benefits such as group medical, dental and vision coverage and group life insurance. The Company provides an automobile (or an automobile allowance) to Messrs. Richard A. Hubbell and Ben M. Palmer. +The following Compensation Committee Report shall not be incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933, as amended (the “Securities Act”), except to the extent that the Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under the Securities Act or the Exchange Act. +COMPENSATION COMMITTEE REPORT +We have reviewed and discussed the above “Compensation Discussion and Analysis” with management. +Based upon this review and discussion, we have recommended to the Board of Directors that the “Compensation Discussion and Analysis” be included in this Proxy Statement. +Submitted by the Compensation Committee of the Board of Directors. +Henry B. Tippie, Chairman +James B. Williams +Larry L. Prince +SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE +The Company has completed a review of Forms 3, 4, and 5 and amendments thereto furnished to the Company by all directors, officers and greater than 10 percent stockholders subject to the provisions of Section 16 of the Securities Exchange Act of 1934, as amended. In addition, the Company has a written representation from all directors, officers and greater than 10 percent stockholders from whom no Form 5 was received indicating that no Form 5 filing was required. Based solely on this review, the Company believes that filing requirements of such persons under Section 16 for the fiscal year ended December 31, 2014 have been satisfied with the exception of Mr. Larry L. Prince who had one late Section 16(a) filing. The Form 4 reflecting open market purchase of 10,500 shares was filed late on November 12, 2014. +20 +EXECUTIVE COMPENSATION +Shown below is information concerning the annual and long-term compensation for services in all capacities to the Company for the calendar years ended December 31, 2014, 2013 and 2012 of those persons who were at December 31, 2014: +● our Principal Executive Officer and Principal Financial Officer; and +● our two other executive officers: +SUMMARY COMPENSATION TABLE +Change in +Pension +Value and +Non-Equity +Nonqualified +Incentive +Deferred +Stock +Plan +Compensation +All Other +Salary +Awards +Compensation +Earnings +Compensation +Name and Principal Position +Year +($) +($) (1) +($) (2) +($) (3) +($) (4) +Total ($) +Richard A. Hubbell +2014 +900,000 +1,059,750 +1,269,000 +61,096 +14,000 +3,303,846 +President and +2013 +900,000 +1,026,000 +1,080,000 +— +16,830 +3,022,830 +Chief Executive Officer +2012 +900,000 +876,750 +1,350,000 +18,439 +13,890 +3,159,079 +Ben M. Palmer +2014 +375,000 +635,850 +528,750 +24,466 +21,050 +1,585,116 +Vice President, +2013 +375,000 +615,600 +450,000 +— +19,800 +1,460,400 +Chief Financial Officer and +2012 +375,000 +526,050 +562,500 +14,224 +20,620 +1,498,394 +Treasurer +R. Randall Rollins +2014 +800,000 +1,059,750 +1,128,000 +300,265 +— +3,288,015 +Chairman of the Board +2013 +800,000 +1,026,000 +960,000 +— +— +2,786,000 +2012 +800,000 +876,750 +1,200,000 +24,168 +— +2,900,918 +Linda H. Graham +2014 +250,000 +353,250 +140,000 +9,181 +7,290 +759,721 +Vice President and Secretary +2013 +250,000 +342,000 +120,000 +— +6,360 +718,360 +2012 +250,000 +263,025 +192,000 +8,763 +6,840 +720,628 +(1) +Represents the fair value of the award at the date of grant computed in accordance with ASC Topic 718. Please refer to Note 10 to our Financial Statements contained in our Form 10-K for the period ended December 31, 2014 for a discussion of assumptions used in this computation. For this computation, we do not include an assumption for estimated forfeitures. +(2) +Bonuses under the Management Incentive Plan are accrued in the fiscal year earned and paid in the following fiscal year. +(3) +Change represents impact of change in discount rate only as no additional benefits are being accrued. +(4) +All other compensation for 2014 includes the following items for: +Mr. Richard A. Hubbell: +Insurance on automobile provided by the Company, cost of dining club dues, cost of gasoline for personal automobile, and 401(k) Plan Company match of $7,800. +Mr. Ben M. Palmer: +Automobile allowance, cost of gasoline for personal automobile and 401(k) Plan Company match of $7,800. +Ms. Linda H. Graham: +401(k) Plan Company match of $7,290. +21 +GRANTS OF PLAN-BASED AWARDS +Estimated Future Payouts +All Other +Grant Date +Under Non-Equity +Stock Awards: +Fair Value +Incentive Plan Awards (1) +Number of Shares +of Stock and +Grant +Threshold +Target +Maximum +of Stock or Units +Option Awards +Name +Date +($) +($) +($) +(#) +($) (2) +Mr. Richard A. Hubbell +1/28/14 +225,000 +900,000 +1,350,000 +1/28/14 +56,250 +1,059,750 +Mr. Ben M. Palmer +1/28/14 +93,750 +375,000 +562,500 +1/28/14 +33,750 +635,850 +Mr. R. Randall Rollins +1/28/14 +200,000 +800,000 +1,200,000 +1/28/14 +56,250 +1,059,750 +Ms. Linda H. Graham +1/28/14 +25,000 +100,000 +200,000 +1/28/14 +18,750 +353,250 +(1) +These amounts illustrate the potential bonus awards under the Management Incentive Plan for 2014. See Summary Compensation Table on page 21 for actual amounts awarded in 2014. +(2) +These amounts represent aggregate grant date fair value for grants of restricted shares of Common Stock awarded in fiscal year 2014 under the Stock Incentive Plan computed in accordance with ASC Topic 718. Please refer to Note 10 to our Financial Statements contained in our Form 10-K for the period ended December 31, 2014 for a discussion of assumptions used in this computation. For this computation, we do not include an assumption for estimated forfeitures. Our Form 10-K has been included in our Annual Report and provided to our stockholders. +The table above reflects grants of restricted shares of Company Common Stock under the Stock Incentive Plan awarded in fiscal year 2014. All grants of restricted shares of Common Stock vest one-fifth per year beginning on the second anniversary of the grant date. Restricted shares have full voting and dividend rights. However, until the shares vest, they cannot be sold, transferred or pledged. Should the executive leave our employment for any reason prior to the vesting dates (other than due to death, disability, change in control or retirement on or after age 65), the unvested shares will be forfeited. We have not issued any stock options since 2003 and have no immediate plans to issue additional stock options. +The Company’s employment contracts with its Chief Executive Officer and the Company’s other executive officers are oral, at will arrangements. All of the executive officers are eligible for annual cash bonuses which are awarded under the Management Incentive Plan. The Compensation Committee’s decisions are based upon broad performance objectives under that plan. The executive officers are eligible to receive shares of Company Common Stock subject to options and restricted shares of Company Common Stock under the Company’s Stock Incentive Plans, in such amounts and with such terms and conditions as determined by the Compensation Committee at the time of grant. All of the executive officers are eligible to participate in the Company’s SRP. The executive officers are eligible to participate in the Company’s regular employee benefit programs, including the 401(k) Plan with Company match, group life insurance, group medical and dental coverage, vision and other group benefit plans. All of the executive officers are eligible for the Retirement Income Plan although benefit accruals were frozen in 2002. For more information on these plans, see “Compensation Discussion and Analysis” on page 15, and “Benefit Plans” on page 24. +22 +OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END +The Company does not have any outstanding option awards made in prior years to the executives named in our Summary Compensation Table. The table below sets forth the total number of restricted shares of Common Stock that were granted in prior years to the executives named in our Summary Compensation Table but which have not yet vested, together with the market value of these unvested shares based on the $13.04 closing price of our Common Stock on December 31, 2014. +Option Awards +Stock Awards +Name +Number of +Securities +Underlying +Unexercised +Options (#) +Exercisable +Number of +Securities +Underlying +Unexercised +Options (#) +Unexercisable +Option +Exercise +Price ($) +Option +Expiration +Date +Number of +Shares or +Units of Stock +That Have Not +Vested (#) +Market Value +of Shares or +Units of Stock +That Have +Not Vested ($) +Richard A. Hubbell +–– +–– +–– +–– +272,250 +(1) +3,550,140 +Ben M. Palmer +–– +–– +–– +–– +165,150 +(1) +2,153,560 +R. Randall Rollins +–– +–– +–– +–– +272,250 +(1) +3,550,140 +Linda H. Graham +–– +–– +–– +–– +86,950 +(1) +1,133,830 +(1) +The Company has granted employees time lapse restricted shares that vest one-fifth per year beginning on the second anniversary of the grant date. Shares of restricted stock granted to the executive officers that have not vested as of December 31, 2014 are summarized in the table that follows: +Name +Number of shares +Grant date +Date fully vested +Richard A. Hubbell +13,500 +1/27/2009 +1/27/2015 +22,500 +1/26/2010 +1/26/2016 +45,000 +1/25/2011 +1/25/2017 +60,000 +1/24/2012 +1/24/2018 +75,000 +1/22/2013 +1/22/2019 +56,250 +1/28/2014 +1/28/2020 +Ben M. Palmer +9,000 +1/27/2009 +1/27/2015 +14,400 +1/26/2010 +1/26/2016 +27,000 +1/25/2011 +1/25/2017 +36,000 +1/24/2012 +1/24/2018 +45,000 +1/22/2013 +1/22/2019 +33,750 +1/28/2014 +1/28/2020 +R. Randall Rollins +13,500 +1/27/2009 +1/27/2015 +22,500 +1/26/2010 +1/26/2016 +45,000 +1/25/2011 +1/25/2017 +60,000 +1/24/2012 +1/24/2018 +75,000 +1/22/2013 +1/22/2019 +56,250 +1/28/2014 +1/28/2020 +Linda H. Graham +4,500 +1/27/2009 +1/27/2015 +7,200 +1/26/2010 +1/26/2016 +13,500 +1/25/2011 +1/25/2017 +18,000 +1/24/2012 +1/24/2018 +25,000 +1/22/2013 +1/22/2019 +18,750 +1/28/2014 +1/28/2020 +23 +OPTION EXERCISES AND STOCK VESTED +The following table sets forth: +● +the number of shares of Common Stock acquired by the executives named in the Summary Compensation Table upon the exercise of stock options during the fiscal year ended December 31, 2014; +● +the aggregate dollar amount realized on the exercise date for such options computed by multiplying the number of shares acquired by the difference between the market value of the shares on the exercise date and the exercise price of the options; +● +the number of restricted shares of Common Stock acquired by the executives named in the Summary Compensation Table upon the vesting of shares during the fiscal year ended December 31, 2014; and +● +the aggregate dollar amount realized on the vesting date for such restricted stock computed by multiplying the number of shares which vested by the market value of the shares on the vesting date. +Option Awards +Stock Awards +Name +Number of Shares +Acquired on Exercise +(#) +Value Realized on +Exercise +($) +Number of Shares +Acquired on Vesting +(#) +Value Realized on +Vesting +($) +Richard A. Hubbell +— +— +63,750 +1,188,610 +Ben M. Palmer +— +— +38,700 +720,940 +R. Randall Rollins +— +— +63,750 +1,188,610 +Linda H. Graham +— +— +19,350 +360,470 +BENEFIT PLANS +The table below shows the present value of accumulated benefits payable to each of the named executive officers, including the number of years of service credited to each such named executive officer, under the Retirement Income Plan determined using interest rate and mortality rate assumptions consistent with those used in the Company’s financial statements. Information regarding the Retirement Income Plan can be found in Note 10 to our Financial Statements contained in our Form 10-K for the period ended December 31, 2014. +Pension Benefits +Name +Plan Name +Number of +Years Credited +Service (#) +Present +Value of +Accumulated +Benefit +($) +Payments During +Last Fiscal Year +($) +Mr. Richard A. Hubbell +Retirement Income Plan +15 +500,386 +42,314 +Mr. Ben M. Palmer +Retirement Income Plan +4 +83,734 +— +Mr. R. Randall Rollins +Retirement Income Plan +30 +2,518,571 +261,571 +Ms. Linda H. Graham +Retirement Income Plan +15 +423,279 +48,705 +The Company’s Retirement Income Plan, a trusteed defined benefit pension plan, provides monthly benefits upon retirement at age 65 to eligible employees. In 2002, the Company’s Board of Directors approved a resolution to cease all future benefit accruals under the Retirement Income Plan effective March 31, 2002. Retirement Income Plan benefits are based on the average of the employee’s compensation from the Company for the five consecutive complete calendar years of highest compensation during the last ten consecutive complete calendar years (“final average compensation”) immediately preceding March 31, 2002. The benefits are computed as the product of 1.5 percent of final average compensation multiplied by years of credited service (up to 30 years) reduced by an adjustment for benefits drawn from social security. Adjustments have been made for age and IRS mandated compensation limitations. The final average compensation for Mr. Hubbell is $205,890, Mr. Palmer is $179,900 and Ms. Graham is $127,325. +24 +The +annual benefit payable at the later of retirement or age 65 for the named executive officers is $261,600 for Mr. Rollins, +$42,400 for Mr. Hubbell, $48,800 for Ms. Graham and $9,400 for Mr. Palmer. The Plan also provides reduced early retirement +benefits at age 55 or older with 15 or more years of service. Ms. Graham and Mr. Hubbell are voluntarily receiving +distributions from the plan even though they have not retired from the Company. In addition, as an owner with stock ownership +in excess of five percent of the Company’s voting securities, Mr. Rollins is required to receive mandatory +distributions currently, even though he has not retired from the Company. The amount of distributions received during 2014 +has been disclosed in the table above and is not subject to change after retirement. +401(k) Plan +Effective July 1, 1984, the Company adopted a qualified retirement plan designed to meet the requirements of Section 401(k) of the Code. The Company makes matching contributions of fifty cents ($0.50) for each dollar ($1.00) of a participant’s contribution to the 401(k) Plan that does not exceed six percent of his or her annual compensation. The only form of benefit payment under the 401(k) Plan is a single lump-sum payment equal to the vested balance in the participant’s account on the date the distribution is processed. Under the 401(k) Plan, the full amount of a participant’s vested accrued benefit is payable upon his termination of employment, retirement, total and permanent disability, or death. Also under the 401(k) Plan, a participant may withdraw his or her pre-tax contributions to the extent of certain specified instances of financial hardship and may withdraw any amount from his or her pre-tax contribution account for any reason after attaining age 59 1 / 2 . In addition, a participant may withdraw any amount from his or her rollover account for any reason. Amounts contributed by the Company to the accounts of the named executive officers under this plan are reported in the “All Other Compensation” column of the Summary Compensation Table on page 21. +NONQUALIFIED DEFERRED COMPENSATION +The SRP has been established as a nonqualified plan that is designed to comply with the provisions of the American Jobs Creation Act of 2004 (including Section 409A of the Internal Revenue Code) for the cash contributions made to certain longer serviced employees in lieu of freezing of benefit accruals effective in 2002; the SRP also has a compensation deferral option for eligible employees. The contributions and deferrals to the SRP are invested in funds held in a rabbi trust. +Name +Executive +Contributions in +last FY ($) (1) +Registrant +contributions in +last FY ($) +Aggregate +earnings in last +FY ($) +Aggregate +withdrawals/ +distributions ($) +Aggregate +balance at last +FYE ($) +Richard A. Hubbell +— +— +16,244 +— +320,217 +Ben M. Palmer +66,000 +— +23,395 +— +466,828 +R. Randall Rollins +— +— +— +— +— +Linda H. Graham +122,500 +— +68,684 +— +1,388,110 +(1) +Includes the following amounts related to the base salary for 2014 which have been deferred by the executive officer pursuant to the SRP and which are included in the Summary Compensation Table: Mr. Ben M. Palmer: $30,000 and Ms. Linda H. Graham: $62,500. The remaining deferral amounts, if any, represent deferrals of bonus compensation that were paid in 2014. +The deferral option provides that participants may defer up to 50 percent of their base salary and up to 100 percent of their annual bonus with respect to any given plan year, subject to a $2,000 per plan year minimum. All of the salary and bonus deferrals are fully vested. Accounts are credited with hypothetical earnings, and/or debited with hypothetical losses, based on the performance of certain “Measurement Funds.” Account values are calculated as if the funds from deferrals and contributions had been converted into shares or other ownership units of selected Measurement Funds by purchasing (or selling, where relevant) such shares or units at the current purchase price of the relevant Measurement Fund at the time of the participant’s selection. The benefits are unsecured general obligations of the Company to the participants, and these obligations rank in parity with the Company’s other unsecured and unsubordinated indebtedness. To the extent that the Company’s obligations under the SRP exceed assets available under the trust, the Company may be required to seek additional funding sources to fund its liability under the SRP. +25 +Generally, the SRP provides for distributions of any deferred amounts upon the earliest to occur of a participant’s death, disability, retirement or other termination of employment (a “Termination Event”). However, for any deferrals of base salary and bonus compensation (but not Company contributions), participants are entitled to designate a distribution date which is prior to a Termination Event. The SRP allows a participant to elect to receive distributions in installments or lump-sum payments. +POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL +The following table describes the potential payments and benefits under the Company’s compensation and benefit plans and arrangements to which the named executive officers would be entitled upon termination of employment. There are no other agreements, arrangements or plans that entitle executive officers to severance, perquisites, or other enhanced benefits upon termination of their employment except as described below. Additional payments or benefits to a terminating executive officer would be at the discretion of the Compensation Committee. +In accordance with the terms of the defined benefit plan, the executive officers are not entitled to additional benefits at death or disability. The amounts payable at retirement are disclosed in the “Benefit Plans” section on page 24. The executive officers can choose to receive the amounts accumulated in the SRP either as a lump-sum or in installments at retirement, death or disability. These amounts have been disclosed under the “Nonqualified Deferred Compensation” section on page 25. The table below reflects the incremental restricted shares that would become vested as of December 31, 2014 using the closing market price of $13.04 per share for our Common Stock, as of that date, in the case of retirement, disability, death or change in control. +Stock Awards +Name +Number of shares +underlying unvested +stock (#) +Unrealized value of +unvested stock ($) +Richard A. Hubbell +● Retirement +63,938 +833,750 +● Disability +97,875 +1,276,290 +● Death +272,250 +3,550,140 +● Change in control +272,250 +3,550,140 +Ben M. Palmer +● Retirement +— +— +● Disability +60,056 +783,130 +● Death +165,150 +2,153,560 +● Change in control +165,150 +2,153,560 +R. Randall Rollins +● Retirement +63,938 +833,750 +● Disability +97,875 +1,276,290 +● Death +272,250 +3,550,140 +● Change in control +272,250 +3,550,140 +Linda H. Graham +● Retirement +20,258 +264,160 +● Disability +31,115 +405,740 +● Death +86,950 +1,133,830 +● Change in control +86,950 +1,133,830 +26 +Accrued Pay and Regular Retirement Benefits +The amounts shown in the table above do not include the following since they are provided on a non-discriminatory basis to salaried employees generally upon termination of employment. These include: +● Accrued salary and vacation pay. +● Distributions of plan balances under the 401(k) Plan. +Pension Benefit and Deferred Compensation +The Retirement Income Plan does not provide for lump sum payments for a participant including executive officers for instances other than retirement. The Retirement Income Plan is described at “Pension Benefits” above. Upon termination, the executive officers will receive a distribution of the balance in their SRP account. These amounts are disclosed under the “Nonqualified Deferred Compensation” section on page 25. +Severance. The Company does not have any severance arrangements for its executives. +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +Effective with the spin-off in 2001, the Company began providing certain administrative services to Marine Products. The service agreements between Marine Products and the Company provide for the provision of services on a cost reimbursement basis and may be terminated upon six months’ notice. The services covered by these agreements include administration of certain employee benefit programs and other administrative services. Charges from the Company (or from corporations which are subsidiaries of the Company) for such services aggregated approximately $663,000 in 2014. +During the year ended December 31, 2014, RPC and Marine Products entered into a joint venture creating a limited liability company called 255 RC, LLC, that is owned 50 percent each for the purchase and ownership of a corporate aircraft. 255 RC, LLC was funded with a contribution of approximately $2,554,000 each from RPC and Marine Products. The purchase of the aircraft was completed in January 2015 and each of RPC and Marine Products have entered into an operating lease agreement with 255 RC, LLC for a period of five years. +During 2014, a subsidiary of RPC conducted business with companies owned by LOR, Inc. Mr. R. Randall Rollins, Chairman, and Mr. Gary W. Rollins, Director, are officers, directors and controlling stockholders of LOR, Inc. In 2014, payments totaling approximately $1,092,000 were made to these LOR, Inc. companies primarily for the purchase of parts and repair services related to certain of RPC’s oilfield operating equipment. RPC believes the charges incurred are at least as favorable as the charges that would have been incurred for similar purchases from unaffiliated third parties. +RPC receives certain administrative services including an allocation for office space from Rollins. The service agreements between Rollins and the Company provide for the provision of services on a cost reimbursement basis and are terminable on six months’ notice. The services covered by these agreements include office space, administration of certain employee benefit programs, and other administrative services. Charges to the Company (or to corporations which are subsidiaries of the Company) for such services and rent aggregated approximately $84,000 in 2014. +A group that includes the Company’s Chairman of the Board, R. Randall Rollins, his brother Gary W. Rollins who is also a director, and certain companies under their control, possesses in excess of fifty percent of the Company’s voting power. Please refer to the discussion above under the heading, “Corporate Governance and Board of Directors Committees and Meetings, Director Independence and NYSE Requirements, Controlled Company Exemption.” The group discussed above also controls in excess of fifty percent of Marine Products’ voting power. +27 +Our Code of Business Conduct and Ethics for Directors and Executive Officers and Related Party Transactions Policy provides that related party transactions, as defined in Regulation S-K, Item 404(a) must be reviewed, approved and/or ratified by our Nominating and Corporate Governance Committee. As set forth in our Code, our Nominating and Corporate Governance Committee has the responsibility to ensure that it only approves or ratifies related party transactions that are in compliance with applicable law, consistent with the Company’s corporate governance policies (including those relative to conflicts of interest and usurpation of corporate opportunities) and on terms that are deemed to be fair to the Company. The Committee has the authority to hire legal, accounting, financial or other advisors as it may deem necessary or desirable and/or to delegate responsibilities to executive officers of the Company in connection with discharging its duties. A copy of the Code is available on our website at www.rpc.net under the Governance section. All related party transactions for the fiscal year ended December 31, 2014 were reviewed, approved and/or ratified by the Nominating and Corporate Governance Committee in accordance with the Code. +INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS +Principal Auditor +Grant Thornton LLP (“Grant Thornton”) served as the Company’s independent registered public accounting firm for the fiscal years ended December 31, 2014 and 2013. +The Audit Committee has appointed Grant Thornton as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2015. Grant Thornton has served as the Company’s independent auditors for many years and is considered by management to be well qualified. Representatives of Grant Thornton are expected to be present at the Annual Meeting and will have an opportunity to make a statement if they so desire and will be available to respond to appropriate questions. +Aggregate fees billed by the Company’s independent registered public accounting firm are set forth below: +2014 +2013 +Audit fees and quarterly reviews (1) +$ +994,070 +$ +947,970 +Audit related fees +— +— +Tax fees +— +— +All other fees +— +— +(1) +Audit fees include fees for audit or review services in accordance with generally accepted auditing standards, such as statutory audits and services rendered for compliance with Section 404 of the Sarbanes-Oxley Act. +Pre-approval of Services +All of the services described above were pre-approved by the Company’s Audit Committee. The Audit Committee has determined that the payments made to its independent registered public accounting firm for these services are compatible with maintaining such auditors’ independence. A majority of the hours expended on the principal accountant’s engagement to audit the financial statements of the Company for the fiscal year ended December 31, 2014 was attributable to work performed by full-time, permanent employees of the principal accountant. +The Audit Committee is directly responsible for the appointment and termination, compensation, and oversight of the work of the independent registered public accounting firm, including resolution of disagreements between management and the independent registered public accounting firm regarding financial reporting. The Audit Committee is responsible for pre-approving all audit and non-audit services provided by the independent registered public accounting firm and ensuring that they are not engaged to perform the specific non-audit services proscribed by law or regulation. The Audit Committee has delegated pre-approval authority to its Chairman with the stipulation that his decision is to be presented to the full Committee at its next scheduled meeting. The Audit Committee has no other pre-approval policies. +28 +STOCKHOLDER PROPOSALS +Appropriate proposals of stockholders intended to be presented at the Company’s 2016 Annual Meeting of the Stockholders must be received by the Company by November 21, 2015 in order to be included, pursuant to Rule 14a-8 promulgated under the Securities Exchange Act of 1934, as amended, in the proxy statement and form of proxy relating to that meeting. With regard to such stockholder proposals, if the date of the next annual meeting of stockholders is advanced or delayed more than 30 calendar days from April 28, 2016, the Company will, in a timely manner, inform its stockholders of the change and of the date by which such proposals must be received. Stockholders desiring to present business at the 2016 Annual Meeting of Stockholders outside of the stockholder proposal rules of Rule 14a-8 of the Securities Exchange Act of 1934 and instead pursuant to Article Twenty-Seventh of the Company’s by-laws must prepare a written notice regarding such proposal addressed to Secretary, RPC, Inc., 2170 Piedmont Road, NE, Atlanta, Georgia 30324, and deliver to or mailed and received no later than January 29, 2016 and no earlier than December 20, 2015. Stockholders should consult the by-laws for other specific requirements related to such notice and proposed business. +With respect to stockholder nomination of directors, the Company’s by-laws provide that nominations for the election of directors may be made by any stockholder entitled to vote for the election of directors. Nominations must comply with an advance notice procedure which generally requires with respect to nominations for directors for election at an annual meeting, that written notice be addressed to: Secretary, RPC, Inc., 2170 Piedmont Road, N.E., Atlanta, Georgia 30324, and be received not less than 90 nor more than 130 days prior to the anniversary of the prior year’s annual meeting and set forth, among other requirements specified in the by-laws, the name, age, business address and, if known, residence address of the nominee proposed in the notice, the principal occupation or employment of the nominee for the past five years, the nominee’s qualifications, the class or series and number of shares of capital stock of the Company which are owned beneficially or of record by the person and any other information relating to the person that would be required to be disclosed in a proxy statement or other filings. Other specific requirements related to such notice, including required disclosures concerning the stockholder intending to present the nomination, are set forth in the Company’s by-laws. Notices of nominations must be received by the Secretary of the Company no later than January 29, 2016 and no earlier than December 20, 2015, with respect to directors to be elected at the 2016 Annual Meeting of Stockholders. +EXPENSES OF SOLICITATION +The Company will bear the cost of soliciting proxies. Upon request, we will reimburse brokers, dealers and banks, or their nominees, for reasonable expenses incurred in forwarding copies of the proxy material to their beneficial stockholders of record. Solicitation of proxies will be made principally by mail. Proxies also may be solicited in person or by telephone, facsimile or other means by our directors, officers and regular employees. These individuals will receive no additional compensation for these services. The Company has retained Georgeson Shareholder Communications, Inc. to conduct a broker search and to send proxies by mail for an estimated fee of approximately $75,000 including shipping expenses. +29 +MISCELLANEOUS +The Company’s Annual Report to Stockholders, including its Annual Report on Form 10-K for the fiscal year ended December 31, 2014, without exhibits, is being mailed to stockholders with this Proxy Statement. +Upon the written request of any record or beneficial owner of the Company’s Common Stock whose proxy was solicited in connection with the 2015 Annual Meeting of Stockholders, the Company will furnish such owner, without charge, a copy of its Annual Report on Form 10-K, including the financial statements and the financial statement schedules (but without exhibits), for its fiscal year ended December 31, 2014. Requests for a copy of such Annual Report on Form 10-K should be addressed to Ms. Linda H. Graham, Secretary, at RPC, Inc., 2170 Piedmont Road NE, Atlanta, Georgia 30324. +Management knows of no business other than the matters set forth herein which will be presented at the Annual Meeting. In as much as matters not known at this time may come before the Annual Meeting, the enclosed proxy confers discretionary authority with respect to such matters as may properly come before the Annual Meeting; and it is the intention of the persons named in the proxy to vote in accordance with their best judgment on such matters. +BY ORDER OF THE BOARD OF DIRECTORS +/s/ Linda H. Graham +Linda H. Graham, Secretary +Atlanta, Georgia +March 20, 2015 +30 +ANNUAL MEETING OF STOCKHOLDERS OF +RPC, INC. +Tuesday, April 28, 2015, 12:30 P.M. +PROXY VOTING INSTRUCTIONS +INTERNET - Access “ www.voteproxy.com ” and follow the on-screen instructions or scan the QR code with your smartphone. Have your proxy card available when you access the web page. +TELEPHONE - Call toll-free 1-800-PROXIES (1-800-776-9437) in the United States or 1-718-921-8500 from foreign countries from any touch-tone telephone and follow the instructions. Have your proxy card available when you call. +Vote online/phone until 11:59 PM EST the day before the meeting. +COMPANY NUMBER +MAIL - Sign, date and mail your proxy card in the envelope provided as soon as possible. +IN PERSON - You may vote your shares in person by attending the Annual Meeting. +GO GREEN - e-Consent makes it easy to go paperless. With e-Consent, you can quickly access your proxy material, statements and other eligible documents online, while reducing costs, clutter and paper waste. Enroll today via www.amstock.com to enjoy online access. +ACCOUNT NUMBER +CONTROL NUMBER +SHARES +NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL : +The Proxy Statement and 2014 Annual Report +http://www.astproxyportal.com/ast/26231/ +Please detach along perforated line and mail in the envelope provided IF you are not voting via telephone or the Internet. +20330300000000000000 3 +042815 +THE BOARD OF DIRECTORS RECOMMENDS A +VOTE “FOR” ALL THE NOMINEES LISTED ON PROPOSAL 1, +“FOR” PROPOSAL 2, AND “AGAINST” PROPOSAL 3. +PLEASE +SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE ☒ +1. +To elect the three Class II nominees identified in the attached proxy statement to the Board of Directors; +FOR +AGAINST +ABSTAIN +2. +To ratify the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2015; +☐ +☐ +☐ +NOMINEES: +☐ +FOR ALL NOMINEES +O +GARY W. ROLLINS +O +RICHARD A. HUBBELL +☐ +WITHHOLD AUTHORITY +O +LARRY L. PRINCE +FOR +AGAINST +ABSTAIN +FOR ALL NOMINEES +3. +To vote on the stockholder proposal requesting that the Company issue a sustainability report, if properly presented at the meeting; and +☐ +☐ +☐ +☐ +FOR ALL EXCEPT +(See instructions below) +4. +To consider and act upon such other business as may properly come before the Annual Meeting or any adjournment of the meeting. +ALL PROXIES SIGNED AND RETURNED WILL BE VOTED OR NOT VOTED IN ACCORDANCE WITH YOUR INSTRUCTIONS, BUT THOSE WITH NO CHOICE INDICATED WILL BE VOTED “ FOR ” THE ABOVE-NAMED NOMINEES FOR DIRECTOR, “ FOR” THE RATIFICATION OF THE APPOINTMENT OF GRANT THORNTON LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM, AND “ AGAINST ” THE STOCKHOLDER PROPOSAL REQUESTING THAT THE COMPANY ISSUE A SUSTAINABILITY REPORT. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY. +NO POSTAGE REQUIRED IF THIS PROXY IS RETURNED IN THE ENCLOSED ENVELOPE AND MAILED IN THE UNITED STATES. +INSTRUCTIONS: To withhold authority to vote for any individual nominee(s), mark “FOR ALL EXCEPT” and fill in the circle next to each nominee you wish to withhold, as shown here: ● +To change the address on your account, please check the box at right and indicate your new address in the address space above. Please note that changes to the registered name(s) on the account may not be submitted via this method. +☐ +Signature of Stockholder +Date: +Signature of Stockholder +Date: +Note: +Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person. +☐ +RPC, INC. +Proxy for Annual Meeting of Stockholders on Tuesday, April 28, 2015 +Solicited on Behalf of the Board of Directors +The undersigned hereby constitutes and appoints GARY W. ROLLINS and R. RANDALL ROLLINS, and each of them, jointly and severally, proxies, with full power of substitution, to vote all shares of Common Stock which the undersigned is entitled to vote at the Annual Meeting of Stockholders to be held on April 28, 2015, at 12:30 P.M. at 2170 Piedmont Road, NE, Atlanta, Georgia 30324, or any adjournment of the meeting. +The undersigned acknowledges receipt of Notice of Annual Meeting of Stockholders and Proxy Statement, each dated March 20, 2015, grants authority to said proxies, or either of them, or their substitutes, to act in the absence of others, with all the powers which the undersigned would possess if personally present at such meeting and hereby ratifies and confirms all that said proxies or their substitutes may lawfully do in the undersigned ’ s name, place, and stead. The undersigned instructs said proxies, or either of them, to vote as stated on the reverse side. +(Continued and to be signed on the reverse side.) +1.1 +14475 +ANNUAL MEETING OF STOCKHOLDERS OF +RPC, INC. +Tuesday, April 28, 2015, 12:30 P.M. +GO GREEN +e-Consent makes it easy to go paperless. With e-Consent, you can quickly access your proxy material, statements and other eligible documents online, while reducing costs, clutter and paper waste. Enroll today via www.amstock.com to enjoy online access. +NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL : +The Proxy Statement and 2014 Annual Report +http://www.astproxyportal.com/ast/26231/ +Please sign, date and mail +your proxy card in the +envelope provided as soon +as possible. +Please detach along perforated line and mail in the envelope provided. +20330300000000000000 3 +042815 +THE BOARD OF DIRECTORS RECOMMENDS A +VOTE “FOR” ALL THE NOMINEES LISTED ON PROPOSAL 1, +“FOR” PROPOSAL 2, AND “AGAINST” PROPOSAL 3. +PLEASE SIGN, DATE +AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE ☒ +1. +To elect the three Class II nominees identified in the attached proxy statement to the Board of Directors; +FOR +AGAINST +ABSTAIN +2. +To ratify the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2015; +☐ +☐ +☐ +NOMINEES: +☐ +FOR ALL NOMINEES +O +GARY W. ROLLINS +FOR +AGAINST +ABSTAIN +☐ +WITHHOLD AUTHORITY +FOR ALL NOMINEES +O +O +RICHARD A. HUBBELL +LARRY L. PRINCE +3. +To vote on the stockholder proposal requesting that the Company issue a sustainability report, if properly presented at the meeting; and +☐ +☐ +☐ +☐ +FOR ALL EXCEPT +(See instructions below) +4. +To consider and act upon such other business as may properly come before the Annual Meeting or any adjournment of the meeting. +INSTRUCTIONS: To withhold authority to vote for any individual nominee(s), mark “FOR ALL EXCEPT” and fill in the circle next to each nominee you wish to withhold, as shown here: ● +ALL PROXIES SIGNED AND RETURNED WILL BE VOTED OR NOT VOTED IN ACCORDANCE WITH YOUR INSTRUCTIONS, BUT THOSE WITH NO CHOICE INDICATED WILL BE VOTED “ FOR ” THE ABOVE-NAMED NOMINEES FOR DIRECTOR, “ FOR ” THE RATIFICATION OF THE APPOINTMENT OF GRANT THORNTON LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM, AND “ AGAINST ” THE STOCKHOLDER PROPOSAL REQUESTING THAT THE COMPANY ISSUE A SUSTAINABILITY REPORT. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY. +NO POSTAGE REQUIRED IF THIS PROXY IS RETURNED IN THE ENCLOSED ENVELOPE AND MAILED IN THE UNITED STATES. +To change the address on your account, please check the box at right and indicate your new address in the address space above. Please note that changes to the registered name(s) on the account may not be submitted via this method. +☐ +Signature of Stockholder +Date: +Signature of Stockholder +Date: +Note: +Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person. \ No newline at end of file diff --git a/raw/proxies/0000742278/0001571049-15-002123/proxy_rpt.txt b/raw/proxies/0000742278/0001571049-15-002123/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..37b6e08a3e07855ff618467a5d30191f498747de --- /dev/null +++ b/raw/proxies/0000742278/0001571049-15-002123/proxy_rpt.txt @@ -0,0 +1,8 @@ +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +Effective with the spin-off in 2001, the Company began providing certain administrative services to Marine Products. The service agreements between Marine Products and the Company provide for the provision of services on a cost reimbursement basis and may be terminated upon six months’ notice. The services covered by these agreements include administration of certain employee benefit programs and other administrative services. Charges from the Company (or from corporations which are subsidiaries of the Company) for such services aggregated approximately $663,000 in 2014. +During the year ended December 31, 2014, RPC and Marine Products entered into a joint venture creating a limited liability company called 255 RC, LLC, that is owned 50 percent each for the purchase and ownership of a corporate aircraft. 255 RC, LLC was funded with a contribution of approximately $2,554,000 each from RPC and Marine Products. The purchase of the aircraft was completed in January 2015 and each of RPC and Marine Products have entered into an operating lease agreement with 255 RC, LLC for a period of five years. +During 2014, a subsidiary of RPC conducted business with companies owned by LOR, Inc. Mr. R. Randall Rollins, Chairman, and Mr. Gary W. Rollins, Director, are officers, directors and controlling stockholders of LOR, Inc. In 2014, payments totaling approximately $1,092,000 were made to these LOR, Inc. companies primarily for the purchase of parts and repair services related to certain of RPC’s oilfield operating equipment. RPC believes the charges incurred are at least as favorable as the charges that would have been incurred for similar purchases from unaffiliated third parties. +RPC receives certain administrative services including an allocation for office space from Rollins. The service agreements between Rollins and the Company provide for the provision of services on a cost reimbursement basis and are terminable on six months’ notice. The services covered by these agreements include office space, administration of certain employee benefit programs, and other administrative services. Charges to the Company (or to corporations which are subsidiaries of the Company) for such services and rent aggregated approximately $84,000 in 2014. +A group that includes the Company’s Chairman of the Board, R. Randall Rollins, his brother Gary W. Rollins who is also a director, and certain companies under their control, possesses in excess of fifty percent of the Company’s voting power. Please refer to the discussion above under the heading, “Corporate Governance and Board of Directors Committees and Meetings, Director Independence and NYSE Requirements, Controlled Company Exemption.” The group discussed above also controls in excess of fifty percent of Marine Products’ voting power. +27 +Our Code of Business Conduct and Ethics for Directors and Executive Officers and Related Party Transactions Policy provides that related party transactions, as defined in Regulation S-K, Item 404(a) must be reviewed, approved and/or ratified by our Nominating and Corporate Governance Committee. As set forth in our Code, our Nominating and Corporate Governance Committee has the responsibility to ensure that it only approves or ratifies related party transactions that are in compliance with applicable law, consistent with the Company’s corporate governance policies (including those relative to conflicts of interest and usurpation of corporate opportunities) and on terms that are deemed to be fair to the Company. The Committee has the authority to hire legal, accounting, financial or other advisors as it may deem necessary or desirable and/or to delegate responsibilities to executive officers of the Company in connection with discharging its duties. A copy of the Code is available on our website at www.rpc.net under the Governance section. All related party transactions for the fiscal year ended December 31, 2014 were reviewed, approved and/or ratified by the Nominating and Corporate Governance Committee in accordance with the Code. \ No newline at end of file diff --git a/raw/proxies/0000742278/0001571049-16-013214/proxy.txt b/raw/proxies/0000742278/0001571049-16-013214/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..3d942025f69c98d30272ac5a2946e3cd6b176a04 --- /dev/null +++ b/raw/proxies/0000742278/0001571049-16-013214/proxy.txt @@ -0,0 +1,1340 @@ +DEF 14A +1 +t1600651-proxy.htm +DEFINITIVE PROXY STATEMENT +t1600651-proxy - none - 4.4684468s +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A INFORMATION +Proxy Statement Pursuant to Section 14(a) of the Securities +Exchange Act of 1934 (Amendment No. ___) +Filed by the Registrant ☒ +Filed by a Party other than the Registrant ☐ +Check the appropriate box: +☐ +Preliminary Proxy Statement +☐ +Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +☒ +Definitive Proxy Statement +☐ +Definitive Additional Materials +☐ +Soliciting Material Pursuant to §240.14a-12 +RPC, Inc. +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +☒ +No fee required. +☐ +Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. +(1) +Title of each class of securities to which transaction applies: N/A +(2) +Aggregate number of securities to which transaction applies: N/A +(3) +Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): N/A +(4) +Proposed maximum aggregate value of transaction: N/A +(5) +Total fee paid: N/A +☐ +Fee paid previously with preliminary materials. +☐ +Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing: +(1) +Amount previously paid: N/A +(2) +Form, Schedule or Registration Statement No.: N/A +(3) +Filing party: N/A +(4) +Date Filed: N/A +RPC, INC. +NOTICE OF ANNUAL MEETING OF STOCKHOLDERS +2801 Buford Highway NE, Suite 520, Atlanta, Georgia 30329 +TO THE HOLDERS OF THE COMMON STOCK: +PLEASE TAKE NOTICE that the 2016 Annual Meeting of Stockholders of RPC, Inc., a Delaware corporation (“RPC” or the “Company”), will be held at 2170 Piedmont Road, NE, Atlanta, Georgia, 30324 on Tuesday, April 26, 2016, at 12:15 P.M., or any adjournment thereof, for the following purposes: +1. +To elect the three Class III nominees identified in the attached proxy statement to the Board of Directors; +2. +To ratify the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2016; +3. +To re-approve the performance-based incentive cash compensation plan for the executive officers; and +4. +To consider and act upon such other business as may properly come before the Annual Meeting or any adjournment of the meeting. +The Proxy Statement dated March 21, 2016 is attached. +The Board of Directors has fixed the close of business on February 29, 2016 as the record date for the determination of stockholders entitled to notice of, and to vote at, the Annual Meeting or any adjournment thereof. +Stockholders who do not expect to be present at the meeting are urged to complete, date, sign and return the enclosed proxy. No postage is required if the enclosed envelope is mailed in the United States. +The Proxy Statement and 2015 Annual Report are available at http://www.astproxyportal.com/ast/26231/ +BY ORDER OF THE BOARD OF DIRECTORS +Linda H. Graham, Secretary +Atlanta, Georgia +March 21, 2016 +PROXY STATEMENT +This Proxy Statement and a form of proxy were first mailed to stockholders on or about March 21, 2016. The following information concerning the enclosed proxy and the matters to be acted upon at the Annual Meeting of the Stockholders to be held on April 26, 2016, is submitted by the Company to the stockholders in connection with the solicitation of proxies on behalf of the Company’s Board of Directors. +SOLICITATION OF AND POWER TO REVOKE PROXY +A form of proxy is enclosed. Each proxy submitted will be voted as directed, but if not otherwise specified, proxies solicited by the Board of Directors of the Company will be voted in favor of the candidates for election to the Board of Directors, in favor of ratification of the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2016, and in favor of the performance-based incentive cash compensation plan for the executive officers. +A stockholder executing and delivering a proxy has power to revoke the same and the authority thereby given at any time prior to the exercise of such authority, if he so elects, by contacting either proxy holder, by timely submitting a later dated proxy changing his vote or by attending the meeting and voting in person. However, a beneficial stockholder who holds his shares in street name must secure a proxy from his broker before he can attend the meeting and vote. +CAPITAL STOCK +The outstanding capital stock of the Company on February 29, 2016 consisted of 217,616,291 shares of Common Stock, par value $0.10 per share. Holders of Common Stock are entitled to one vote (non-cumulative) for each share of such stock registered in their respective names at the close of business on February 29, 2016, the record date for determining stockholders entitled to notice of, and to vote at, the meeting or any adjournment thereof. +A majority of the outstanding shares will constitute a quorum at the Annual Meeting. Abstentions will be counted for purposes of determining the presence or absence of a quorum for the transaction of business. In accordance with the General Corporation Law of the state of Delaware, the election of the nominees named herein as Directors will require the affirmative vote of a plurality of the votes cast by the shares of Company Common Stock entitled to vote in the election provided that a quorum is present at the Annual Meeting. In the case of a plurality vote requirement (as in the election of directors), where no particular percentage vote is required, the outcome is solely a matter of comparing the number of votes cast for each nominee, with those nominees receiving the most votes being elected, and hence only votes for director nominees (and not abstentions) are relevant to the outcome. In this case, the three nominees receiving the most votes will be elected. The affirmative vote of a majority of a quorum of the Company’s outstanding shares of common stock present and entitled to vote at the meeting is required to approve the ratification of the appointment of the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2016, and re-approve the performance-based incentive cash compensation plan for the executive officers. Abstentions will have the effect of a vote against such proposals. Broker non-votes will have no effect on such proposals. +There are no rights of appraisal or similar dissenter’s rights with respect to any matter to be acted upon pursuant to this Proxy Statement. It is expected that shares held of record by officers and directors of the Company, which in the aggregate represent approximately 73.4 percent of the outstanding shares of Common Stock, will be voted for the nominees for directors, the ratification of the appointment of the Company’s independent registered public accounting firm and for the re-approval of the performance-based incentive cash compensation plan for the executive officers. +1 +STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT +The executives named in the Summary Compensation Table, and the name and address of each stockholder (or “group” as that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended) who owned beneficially five percent (5%) or more of the shares of Common Stock of the Company on February 29, 2016, together with the number of shares owned by each such person and the percentage of outstanding shares that ownership represents, and information as to Common Stock ownership of the directors and executive officers of the Company as a group (according to information received by the Company), are set out below: +Name and Address of Beneficial Owner +Amount +Beneficially +Owned (1) +Percent of +Outstanding +Shares +R. Randall Rollins +Chairman of the Board +2170 Piedmont Road, NE +Atlanta, Georgia +147,811,807 (2) +67.9 +Gary W. Rollins +Vice Chairman and Chief Executive Officer, Rollins, Inc. +2170 Piedmont Road, NE +Atlanta, Georgia +150,947,827 (3) +69.4 +Richard A. Hubbell +President and Chief Executive Officer +2801 Buford Highway, Suite 520 +Atlanta, Georgia +2,839,345 (4) +1.3 +Linda H. Graham +Vice President and Secretary +2170 Piedmont Road, NE +Atlanta, Georgia +966,129 (5) +** +Ben M. Palmer +Vice President, Chief Financial Officer and Treasurer +2801 Buford Highway, Suite 520 +Atlanta, Georgia +669,583 (6) +** +All Directors and Executive Officers as a group +(10 persons) +159,585,694 (7) +73.4 +** +Less than one percent +(1) +Except as otherwise noted, the nature of the beneficial ownership for all shares is sole voting and investment power. +(2) +Includes 3,377,514 shares of Company Common Stock held in two trusts of which he is Co-Trustee and as to which he shares voting and investment power. Also includes 704,758 shares of Company Common Stock held indirectly on account of his role as a corporate fiduciary. Also includes 129,876,265 shares of the Company Common Stock held by RFPS Management Company II, L.P. of which RFA Management Company, LLC (“RFAM’’), a Georgia limited liability company, is the general partner. The voting interests of RFAM are held by two revocable trusts, one of which each of Mr. Gary W. Rollins or Mr. R. Randall Rollins is the grantor and sole trustee. LOR, Inc. is the manager of RFAM. Also includes 11,292,525 shares of the Company Common Stock held by RFT Investment Company, LLC of which LOR, Inc. is the manager. Mr. R. Randall Rollins and Mr. Gary W. Rollins have voting control of LOR, Inc. Also includes 1,228,400 shares of the Company Common Stock held by RFPS Investments II, L.P. of which RFAM is the general partner. Included herein are 285,000 shares of restricted stock awards for Company Common Stock. This also includes 255,677 shares of Company Common Stock held by his wife, as to which Mr. Rollins disclaims any beneficial interest. Mr. Rollins is part of a control group holding Company securities that includes Mr. Gary W. Rollins, as disclosed on a Schedule 13D on file with the U.S. Securities and Exchange Commission. +2 +(3) +Includes 3,377,514 shares of the Company Common Stock held in two trusts of which he is Co-Trustee and as to which he shares voting and investment power. Also includes 704,758 shares of Company Common Stock held indirectly on account of his roles as a corporate fiduciary. Also includes 129,876,265 shares of the Company Common Stock held by RFPS Management Company II, L.P. of which RFAM is the general partner. The voting interests of RFAM are held by two revocable trusts, one of which each of Mr. Gary W. Rollins or Mr. R. Randall Rollins is the grantor and sole trustee. LOR, Inc. is the manager of RFAM. Also includes 11,292,525 shares of the Company Common Stock held by RFT Investment Company, LLC of which LOR, Inc. is the manager. Mr. R. Randall Rollins and Mr. Gary W. Rollins have voting control of LOR, Inc. Also includes 1,228,400 shares of the Company Common Stock held by RFPS Investments II, L.P. of which RFAM is the general partner. This also includes 2,970 shares of Company Common Stock held by his wife, as to which Mr. Rollins disclaims any beneficial interest. Mr. Rollins is part of a control group holding Company securities that includes Mr. R. Randall Rollins, as disclosed on a Schedule 13D on file with the U.S. Securities and Exchange Commission. +(4) +Includes 285,000 shares of restricted stock awards for Company Common Stock. +(5) +Includes 93,500 shares of restricted stock awards for Company Common Stock. +(6) +Includes 171,000 shares of restricted stock awards for Company Common Stock. +(7) +Shares held in trusts as to which more than one officer and/or director are Co-Trustees or entities in which there is common ownership have been included only once. Includes 834,500 shares of restricted stock awards for Company Common Stock awarded and issued to all of the executive officers pursuant to the Company’s Stock Incentive Plans. +PROPOSAL 1: ELECTION OF DIRECTORS +At the Annual Meeting, Ms. Linda H. Graham and Messrs. Bill J. Dismuke and James A. Lane, Jr. will be nominated to serve as Class III directors. The nominees for election at the 2016 Annual Meeting are all now directors of the Company. The directors in each class serve for a term of three years. The director nominees will serve in their respective class until their successors are elected and qualified. Six other individuals serve as directors but are not standing for re-election because their terms as directors extend past this Annual Meeting pursuant to provisions of the Company’s Bylaws that provide for the election of directors for staggered terms, with each director serving a term of three years. Unless authority is withheld, the proxy holders will vote for the election of each nominee named below. Although management does not contemplate the possibility, in the event any nominee is not a candidate or is unable to serve as a director at the time of the election, unless authority is withheld, the proxies will be voted for any nominee who shall be designated by the present Board of Directors and recommended by the Nominating and Governance Committee, to fill such vacancy. +Director Qualifications +The name and age of each of our directors and each of the nominees, his or her principal occupation, together with the number of shares of Common Stock beneficially owned, directly or indirectly, by each and the percentage of outstanding shares that ownership represents, all as of the close of business on February 29, 2016 (according to information received by the Company), other board memberships and the period during which he or she has served us as a director are set forth as follows: +3 +Names of Directors +Principal Occupation (1) +Service as +Director +Age +Shares of +Common +Stock (2) +Percent of +Outstanding +Shares +Names of Director Nominees +Class III (Current Term Expires 2016; New Term Will Expire 2019) +Linda H. Graham +Vice President and Secretary of the Company; Vice President and Secretary of Marine Products Corporation (boat manufacturing). +2001 to +date +79 +966,129 (3) +** +Bill J. Dismuke +Retired President of Edwards Baking +Company (manufacturer of pies and +pie parts). +2005 to +date +79 +7,593 +** +James A. Lane, Jr. +Executive Vice President of Marine Products Corporation (boat manufacturing) and President of Chaparral Boats, Inc. +1987 to +date +73 +251,845 +** +Names of Directors Whose Terms Have Not Expired +Class I (Term Expires 2017) +R. Randall Rollins (4) . +Chairman of the Board of the +Company; Chairman of the Board +of Marine Products Corporation +(boat manufacturing); Chairman of +the Board of Rollins, Inc. (consumer +services). +1984 to +date +84 +147,811,807 (5) +67.9 +Henry B. Tippie +Presiding Director of the Company; +Chairman of the Board and Chief +Executive Officer of Tippie Services, +Inc. (management services); +Chairman of the Board of Dover +Downs Gaming & Entertainment, +Inc. (operator of multi-purpose +gaming and entertainment complex); +Chairman of the Board of Dover +Motorsports, Inc. (operator of +motor racing tracks). +1984 to +date +89 +2,252,277 (6) +1.0 +James B. Williams +Retired Chairman of the Executive Committee, SunTrust Banks, Inc. (bank holding company) +1984 to +date +82 +303,750 +** +Class II (Term Expires 2018) +Gary W. Rollins (4) +Vice Chairman and Chief Executive +Officer of Rollins, Inc. (consumer +services). +1984 to +date +71 +150,947,827 (7) +69.4 +Richard A. Hubbell +President and Chief Executive +Officer of the Company; President +and Chief Executive Officer of +Marine Products Corporation (boat +manufacturing). +1987 to +date +71 +2,839,345 (8) +1.3 +Larry L. Prince +Retired Chairman of the Board of Directors of Genuine Parts Company (automotive parts distributor). +2009 to +date +77 +15,000 +** +** +Less than one percent +4 +(1) +Except as noted, each of the directors has held the positions of responsibility set out in this column (but not necessarily his or her present title) for more than five years. In addition to the directorships listed in this column, the following individuals also serve on the Boards of Directors of the following companies: R. Randall Rollins: Dover Downs Gaming & Entertainment, Inc. and Dover Motorsports, Inc.; and Gary W. Rollins: Genuine Parts Company and Emory University. All of the directors shown in the above table are also directors of Marine Products Corporation (“Marine Products” or “MPC”) and, with the exception of Messrs. Hubbell and Lane and Ms. Graham, are also directors of Rollins, Inc. (“Rollins”). Larry L. Prince formerly served as a Director of Genuine Parts Company. James B. Williams formerly served as a Director of The Coca-Cola Company. +(2) +Except as otherwise noted, the nature of the beneficial ownership for all shares is sole voting and investment power. +(3) +See information contained in footnote (5) to the table appearing in the Capital Stock section. +(4) +R. Randall Rollins and Gary W. Rollins are brothers. +(5) +See information contained in footnote (2) to the table appearing in the Capital Stock section. +(6) +Includes shares held by a wholly owned corporation that owns 2,277 shares. +(7) +See information contained in footnote (3) to the table appearing in the Capital Stock section. +(8) +See information contained in footnote (4) to the table appearing in the Capital Stock section. +Key Attributes, Experience and Skills of Directors +R. Randall Rollins was elected a Director of RPC in 1984. Mr. Rollins has extensive knowledge of the Company’s business and industry serving over 31 years at the Company. Mr. Rollins serves as Chairman of the Board of the Company. He is also Chairman of the Board for Marine Products Corporation as well as Rollins, Inc. Mr. Rollins has been a Director of Dover Motorsports, Inc. since 1996 and a Director of Dover Downs Gaming & Entertainment, Inc. since 2002. Mr. Rollins served as a Director of SunTrust Banks, Inc. from 1995 to 2004. +Richard A. Hubbell was elected a Director of RPC in 1987. Mr. Hubbell has extensive knowledge of the Company’s business and industry serving over 31 years at the Company. He has served as the Chief Executive Officer of the Company since 2003. In addition, Mr. Hubbell serves as the President of the Company. Mr. Hubbell is also the President, Chief Executive Officer and a Director of Marine Products Corporation. +Gary W. Rollins was elected a Director of RPC in 1984. Mr. Rollins has extensive knowledge of the Company’s business and industry. In addition, Mr. Rollins serves as the Vice Chairman and Chief Executive Officer of Rollins, Inc. Mr. Rollins has been a Director of Marine Products Corporation since 2001 and as a Director of Rollins, Inc. since 1981. Mr. Rollins has been a Director of Genuine Parts Company since 2005. +Henry B. Tippie was elected a Director of RPC in 1984. Mr. Tippie brings extensive financial and management experience to our Board of Directors serving as Controller and Chief Financial Officer of Rollins, Inc. from 1953 to 1970. Mr. Tippie has over 65 years of experience including being involved with publicly owned companies during the past 55 years in various positions including founder, CFO, CEO, President, Vice-Chairman and Chairman of the Board. He is currently Chairman of the Board of Dover Downs Gaming & Entertainment, Inc. as well as Dover Motorsports, Inc. and is also a Director of Marine Products Corporation and Rollins, Inc. +James B. Williams was elected a Director of RPC in 1984. Mr. Williams brings extensive financial and management experience to our Board of Directors serving over 31 years as a Director. He retired in March 1998 as Chairman of the Board and Chief Executive Officer of SunTrust Banks, Inc., a bank holding company, which positions he had held for more than five years. He is a Director of Marine Products Corporation and Rollins, Inc. Mr. Williams previously served as a Director of Genuine Parts Company, Georgia Pacific Corporation and The Coca-Cola Company. +Bill J. Dismuke was elected a Director of RPC in 2005. Mr. Dismuke brings extensive financial, management and manufacturing experience to our Board of Directors. He served as a Senior Vice President of Rollins, Inc. for five years from 1979 until 1984. He retired as President of Edwards Baking Company in 1995. Mr. Dismuke has also been a Director of Rollins, Inc. since 1984 and Marine Products Corporation since 2005. +5 +Larry L. Prince was elected a Director of RPC in 2009. Mr. Prince brings extensive management experience to our Board of Directors. He also served as Chairman of the Board of Genuine Parts Company from 1990 through February 2005 and as Chief Executive Officer from 1989 through August 2004. Mr. Prince is also a Director of Rollins, Inc. and Marine Products Corporation. Mr. Prince previously served as a Director of SunTrust Banks, Inc., Crawford & Company, Equifax, Inc., John H. Harland Company and Genuine Parts Company. +James A. Lane, Jr. was elected a Director of RPC in 1984. Mr. Lane brings extensive financial, management and manufacturing experience to our Board of Directors. He has held the position of President of Chaparral Boats, Inc. (formerly a subsidiary of RPC) since 1976. Mr. Lane has been Executive Vice President and a Director of Marine Products Corporation since 2001. +Linda H. Graham was elected a Director of RPC in 2001. Ms. Graham brings extensive management experience to our Board of Directors. She has been the Vice President and Secretary of RPC since 1987. She has been Vice President and Secretary of Marine Products Corporation since 2001. In addition, Ms. Graham has served as a Director of Marine Products Corporation since 2001. +Our Board of Directors recommends a vote “FOR” the nominees listed above. +PROPOSAL 2: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +The Audit Committee of the Board has appointed Grant Thornton LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2016. During fiscal year 2015, Grant Thornton LLP served as the Company’s independent registered public accounting firm. Representatives of Grant Thornton LLP are expected to attend the annual meeting, where they will be available to respond to appropriate questions and, if they desire, to make a statement. +Although the Company is not required to seek ratification of this appointment, the Audit Committee and the Board of Directors believes that it is appropriate to do so. If stockholders do not ratify the appointment of Grant Thornton LLP, the current appointment will stand, but the Audit Committee will consider the stockholder action in determining whether to retain Grant Thornton LLP as the Company’s independent registered public accounting firm. +Our Board of Directors recommends a vote “FOR” the ratification of the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm for the 2016 fiscal year. +PROPOSAL 3: RE-APPROVE THE PERFORMANCE-BASED INCENTIVE CASH COMPENSATION PLAN FOR THE EXECUTIVE OFFICERS +We are submitting the material terms of the performance goals under the Performance-Based Incentive Cash Compensation Plan (the “Plan”) for stockholder re-approval to meet the requirements under Section 162(m) of the Internal Revenue Code. We are not seeking to make any changes with respect to the material terms of the performance goals or any other terms of the Plan at this time. +6 +Background +The Internal Revenue Code limits the tax deduction for expense in connection with compensation of a company’s chief executive officer and the three other most highly-compensated executive officers for any fiscal year (other than the company’s chief financial officer) to the extent that the remuneration of such person exceeds $1 million during such fiscal year, excluding remuneration that qualifies as “performance-based compensation.” Section 162(m) of the Internal Revenue Code provides that in order for remuneration to be treated as qualified performance-based compensation, the material terms of the performance goals must be disclosed to and approved by the stockholders of the employer. Material terms of a performance-based compensation plan include: (1) the employees eligible to participate in the plan, (2) the business criteria upon which the performance goals will be based, and (3) either the maximum dollar amount of compensation that is payable to an employee or the formula used to calculate the amount of compensation that is payable to an employee if the performance goals are met. With regard to stockholder approval, the Section162(m) regulations further require that a company obtain stockholder approval of its performance-based compensation plan every five years following the last such approval or if the material terms of the plan, including performance goals, are changed in the interim. +The Plan is intended to allow the Company to pay compensation that may be exempt under the qualified performance-based compensation exception under Section 162(m) of the Internal Revenue Code. Stockholder approval of the material terms of the Plan is only one of several requirements under Section 162(m) that must be satisfied for the compensation paid under the Plan to qualify for the performance-based compensation exception to Section 162(m), and stockholder approval of the material terms of the Plan does not alone ensure that all compensation paid under the Plan will qualify as tax-deductible compensation. There is no guarantee that amounts payable under the Plan will be treated as qualified performance-based compensation under Section 162(m). In addition, the Company has the discretion to pay compensation with terms that will result in the compensation not being treated as qualifying performance-based compensation under 162(m) and, therefore, not tax-deductible. +Summary Description of the Performance-Based Incentive Cash Compensation Plan +The following discussion summarizes the material terms, including performance objectives, of the Plan. +Plan Administration: The Plan is administered by the Compensation Committee of the Company’s Board of Directors. +Eligibility: The participants in the Plan are the executive officers of the Company who are annually designated as plan participants by the Compensation Committee. +Performance Goals: The Compensation Committee establishes performance goals annually within ninety days after the commencement of the performance period to which such goals relate . Performance goals for each participant may be based on corporate, business unit/function or individual performance, or a combination of one or more such measures. +1. +Corporate Performance . The performance measures for corporate performance may be established based on such measures as stock price, market share, revenues, earnings per share, return on equity, return on average assets, return on invested capital, expense management, or other objective criteria. +2. +Business Unit/Function Performance . The performance measures for business unit/function performance may be established separately for each participant whose performance goals are based in whole or in part on business unit/function performance. Such performance measures may be based on such business criteria as achievement of financial or non-financial goals, safety record, training goals, or other objective criteria. +3. +Individual Performance . The performance measures for individual performance may be established separately for each participant whose performance goals are based in whole or in part on individual performance. Such performance measures may be based on such business criteria as process improvement, expense management, achievement of particular management objectives, or other objective criteria. +7 +Cash Award Amounts: In connection with the annual establishment of performance goals, the Compensation Committee sets a target award for each participant in the Plan for the applicable year, which is expressed as a percentage of the participant’s base compensation (the “Target Award”) in effect on the last day of the final pay period of that year. If the Participant’s performance goals are based upon a combination of performance measures, the Compensation Committee will weigh the importance of each performance measure by assigning a percentage (the “Weighted Percentage”) to those performance measures. The participant’s cash award amount will also depend in part upon the level of achievement that the participant attained with respect to each such performance measure utilizing the formula set out in the Plan. This formula provides for a performance value (“Performance Value”) which ranges from: +• +threshold performance level (with a performance value of 25 percent of the Target Award), +• +target performance level (with a performance value up to 100 percent of the Target Award), to +• +superior performance level (with a performance value up to 200 percent of the Target Award). +Subject to the limitations set forth in the next sentence, a participant’s cash award amount for each year under the Plan equals the product of the Target Award multiplied by the Weighted Percentage assigned to each performance measure used for a participant, multiplied by the Performance Value attained for each performance measure, multiplied by base compensation. The Committee will determine the maximum cash award as a percentage of participants’ base compensation for each applicable year but in no event will a cash award amount exceed 200 percent of participants’ base compensation, or $2,000,000, whichever is less. +The Plan may be amended from time to time by the Board of Directors or the Compensation Committee. It is not possible to currently determine the amounts payable under the performance-based incentive cash compensation plan for the year ending December 31, 2016 since they are dependent on the Company’s financial performance. However, the following table sets forth information regarding the theoretical maximum amounts that could have been earned by each of the following executives for the fiscal year ended December 31, 2015. +PLAN BENEFITS +MAXIMUM PERFORMANCE-BASED INCENTIVE CASH COMPENSATION FOR +RPC, INC. NAMED EXECUTIVE OFFICERS +Name and Position +Dollar Value of Maximum 200% of +2015 Base Salary ($) (1) +Richard A. Hubbell +President and Chief Executive Officer +$ +1,800,000 +Ben M. Palmer +Vice President, Chief Financial Officer and Treasurer +$ +750,000 +R. Randall Rollins +Chairman of the Board +$ +1,600,000 +Linda H. Graham +Vice President and Secretary +$ +400,000 +Executive Group +$ +4,550,000 +(1) +This illustration shows a maximum of 200% of base salary in bonus compensation. The officers did not receive bonus compensation for the year ended December 31, 2015. +Our Board of Directors recommends a vote “FOR” re-approval of the performance-based incentive cash compensation plan for the executive officers. +8 +CORPORATE GOVERNANCE AND BOARD OF DIRECTORS COMMITTEES AND MEETINGS +Board Meetings +The Board of Directors met five times during the fiscal year ended December 31, 2015. No director attended fewer than 75 percent of the aggregate of all Board meetings and meetings of committees on which he or she served during 2015. Board members are encouraged to attend the Company’s Annual Stockholders Meetings and a majority of the Board members were in attendance at last year’s meeting. +The Board of Directors has an Audit Committee, a Compensation Committee, a Diversity Committee and a Nominating and Governance Committee. +Below is a summary of our committee structure and membership information. +Committee Member +Audit +Committee +Compensation +Committee +Diversity +Committee +Nominating & +Governance +Committee +Executive +Committee +R. Randall Rollins (1) +Member +Henry B. Tippie (2) +Chair +Chair +Chair +Chair +Larry L. Prince (2) +Member +Member +Member +Member +James B. Williams (2) +Member +Member +Member +Member +Bill J. Dismuke (2) +Member +Gary W. Rollins +Member +(1) +Chairman of the Board of Directors +(2) +Financial Expert +Audit Committee +The Audit Committee of the Board of Directors of the Company consists of Henry B. Tippie (Chairman), Bill J. Dismuke, James B. Williams and Larry L. Prince, all of whom are independent as discussed below. The Audit Committee held five meetings during the fiscal year ended December 31, 2015, including a meeting to review the Company’s Form 10-K for the year ended December 31, 2014. The Board of Directors has determined that all of the Audit Committee members are independent as that term is defined by the rules of the Securities and Exchange Commission (“SEC”) and the New York Stock Exchange (“NYSE”). The Board of Directors has also determined that all of the Audit Committee members are “Audit Committee Financial Experts” as defined in the SEC rules. The Audit Committee meets with the Company’s independent registered public accountants, internal auditor, Chief Executive Officer and Chief Financial Officer to review the scope and results of audits and recommendations made with respect to controls over financial reporting and specific accounting and financial reporting issues. The Audit Committee has the authority to obtain advice and assistance from, and receive appropriate funding from the Company for, outside legal, accounting or other advisors as it deems necessary to carry out its duties. The Audit Committee charter is available on the Company’s website at www.rpc.net under the Governance section. +Compensation Committee +The Compensation Committee of the Board of Directors of the Company consists of Henry B. Tippie (Chairman), James B. Williams, and Larry L. Prince. It held two meetings during the fiscal year ended December 31, 2015. The function of the Compensation Committee is to set the base salary and cash based incentive compensation of all of the executive officers. The Compensation Committee also administers the Company’s Stock Incentive Plans. The Compensation Committee does not have a formal charter, and is not required to have one under the “controlled company” exemption under the NYSE rules, as described in the section titled “Director Independence and NYSE Requirements” below. +Diversity Committee +The Diversity Committee of the Board of Directors of the Company consists of Henry B. Tippie (Chairman), James B. Williams, and Larry L. Prince. It held one meeting during the fiscal year ended December 31, 2015. The function of the Diversity Committee is to monitor compliance with applicable non-discrimination laws. +9 +Nominating and Governance Committee +The Nominating and Governance Committee of the Board of Directors of the Company consists of Henry B. Tippie (Chairman), James B. Williams, and Larry L. Prince, each of whom is independent, as discussed more fully under “Director Independence and NYSE Requirements.” The Committee was formed in 2002 pursuant to a resolution passed by the Board of Directors for the following purposes: +• +to recommend to the Board of Directors nominees for director and to consider any nominations properly made by a stockholder; +• +upon request of the Board of Directors, to review and report to the Board with regard to matters of corporate governance; and +• +to make recommendations to the Board of Directors regarding the agenda for the Annual Stockholders Meetings and with respect to appropriate action to be taken in response to any stockholder proposals. +The Nominating and Governance Committee held one meeting during the fiscal year ended December 31, 2015. +Director Nominations +Under Delaware law, there are no statutory criteria or qualifications for directors. No criteria or qualifications have been prescribed by the Board at this time. The Nominating and Governance Committee does not have a charter or a formal policy with regard to the consideration of director candidates. As such, there is no formal policy relative to diversity, although as noted below, it is one of many factors that the Nominating and Corporate Governance Committee has the discretion to factor into its decision making. This discretion would extend to how the Committee might define diversity in a particular instance – whether in terms of background, viewpoint, experience, education, race, gender, national origin or other considerations. The Committee acts under the guidance of the Corporate Governance Guidelines approved by the Board of Directors and posted on the Company’s website at www.rpc.net under the Governance section. The Board believes that it should preserve maximum flexibility in order to select directors with sound judgment and other desirable qualities. According to the Company’s Corporate Governance Guidelines, the Board of Directors will be responsible for selecting nominees for election to the Board of Directors. The Board delegates the screening process to the Nominating and Governance Committee. This Committee is responsible for determining the appropriate skills and characteristics required of Board members in the context of the then current make-up of the Board. This determination takes into account all factors which the Committee considers appropriate, such as independence, experience, strength of character, mature judgment, technical skills, diversity, age and the extent to which the individual would fill a present need on the Board. The Company’s Bylaws provide that nominations for the election of directors may be made by any stockholder entitled to vote for the election of directors. Nominations must comply with an advance notice procedure which generally requires, with respect to nominations for directors for election at an annual meeting, that written notice be addressed to: Secretary, RPC, Inc., 2170 Piedmont Road, NE, Atlanta, Georgia 30324, and received not less than ninety days prior to the anniversary of the prior year’s annual meeting and set forth, among other requirements specified in the Company’s Bylaws, the name, age, business address and, if known, residence address of the nominee proposed in the notice, the principal occupation or employment of the nominee for the past five years, the class or series and number of shares of capital stock of the Company which are owned beneficially or of record by the person and any other information relating to the person that would be required to be disclosed in a proxy statement or other filings. Other requirements related to the notice are contained in the Company’s Bylaws, and stockholders are advised to carefully review these requirements to ensure that nominations comply with the Bylaws. The Committee will consider nominations from stockholders who satisfy these requirements. The Committee is responsible for screening the nominees that are selected by the Board of Directors for nomination to the Board and for service on committees of the Board. To date, the Company has not received a recommendation for a director nominee from a stockholder. All of the nominees for directors being voted upon, at the Annual Meeting to be held on April 26, 2016 are directors standing for re-election. +10 +Board Leadership +The Company has had separate persons serving as its Chairman of the Board and Chief Executive Officer since 2003. Mr. Randall Rollins is our Chairman and chairs our Board meetings. Mr. Richard Hubbell is our President and Chief Executive Officer. We believe that it represents the appropriate structure for us at this time; the Chairman of the Board provides general oversight and strategic planning for the Company while the President focuses on optimizing operational efficiencies. +Risk Oversight by Board +Our Board’s oversight of risk has not been delegated to any Board Committee. “Risk” is an extremely broad concept that extends to multiple functional areas and crosses multiple disciplines. As such, risk may be addressed from time to time by the full Board or by one or more of our Committees. Senior management is responsible for identifying and managing material risks that we face while insurable risks and litigation risks are handled primarily by the risk management department. Senior management provides the Board with a summary of insurance coverage annually and updates as deemed necessary. Liquidity risk, credit risk and risks associated with our credit facilities and cash management are handled primarily by our finance department which regularly provides a financial report to both the Audit Committee and to the full Board. Operational, business, regulatory and political risks are handled primarily by senior executive management which regularly provides various operational reports to, among others, the full Board or to the Executive Committee. +Director Independence and NYSE Requirements +Controlled Company Exemption +The Company is not required by law or NYSE listing requirements to have a Nominating or Compensation Committee composed of independent directors, nor to have a Board of Directors, the majority of which are independent. Because the Company is a “controlled corporation,” as defined by NYSE Rule 303A.00, the Company is exempt from NYSE Rules 303A.01, 303A.04 and 303A.05 and does not undertake compliance with those provisions. The Company is a “controlled corporation” because a group that includes the Company’s Chairman of the Board, R. Randall Rollins, his brother Gary W. Rollins who is also a director and certain companies under their control, possesses in excess of fifty percent of the Company’s voting power. +The Company’s Audit Committee is composed of four “independent” directors as defined by the Company’s Corporate Governance Guidelines, the NYSE rules, the Securities Exchange Act of 1934, SEC regulations thereunder, and the Company’s Audit Committee Charter. All of the members of the Compensation, Diversity and Nominating and Governance Committees are also independent directors. The independent directors of the Company are Henry B. Tippie, James B. Williams, Bill J. Dismuke, and Larry L. Prince. +Independence Guidelines +Under NYSE listing standards, to be considered independent, a director must be determined to have no material relationship with the Company other than as a director. The NYSE standards set forth a nonexclusive list of relationships which are conclusively deemed material. The Company’s Independence Guidelines (Appendix A to the Company’s Corporate Governance Guidelines) are posted on the Company’s website at www.rpc.net under the Governance section. +Audit Committee Charter +Under the Company’s Audit Committee Charter, in accordance with NYSE listing requirements and the Securities Exchange Act of 1934, all members of the Audit Committee must be independent of management and the Company. A member of the Audit Committee is considered independent as long as he or she (i) does not accept any consulting, advisory, or compensatory fee from the Company, other than as a director or committee member; (ii) is not an affiliated person of the Company or its subsidiaries; and (iii) otherwise meets the independence requirements of the NYSE and the Company’s Corporate Governance Guidelines. +11 +Nonmaterial Relationships +After reviewing all of the relationships between the members of the Audit Committee and the Company, the Board of Directors determined that none of the members of the Audit Committee had any relationships not included within the categorical standards set forth in the Independence Guidelines and disclosed above except as follows: +1. +Mr. Tippie was employed by Rollins, Inc. from 1953 to 1970, and held several offices with that company during that time, including as Executive Vice President – Finance, Secretary, Treasurer and Chief Financial Officer. Mr. Dismuke was employed by Rollins from 1979 to 1984 and held various offices within that company including Senior Vice President. Messrs. Randall and Gary Rollins are directors and executive officers of Rollins, Inc. and are part of a group that has voting control of Rollins, Inc. +2. +Mr. Tippie is Chairman of the Board of Directors of Dover Motorsports, Inc. and Dover Downs Gaming & Entertainment, Inc. Mr. Randall Rollins is also a director of these companies. +3. +Mr. Tippie is the trustee of the O. Wayne Rollins Foundation and of the Rollins Children’s Trust. O. Wayne Rollins is the father of Gary and Randall Rollins. The beneficiaries of the Rollins Children’s Trust include the immediate family members of Messrs. Randall and Gary Rollins. +4. +Each of Messrs. Dismuke, Prince, Tippie and Williams also serve on the Boards of Rollins, Inc. and Marine Products, of which Messrs. Gary and Randall Rollins are directors, and voting control over which is held by a control group of which Messrs. Randall and Gary Rollins are a part. Mr. Randall Rollins is an executive officer of Marine Products. +As required by the Independence Guidelines, the Board of Directors unanimously concluded that the above-listed relationships would not affect the independent judgment of the independent directors, based on their experience, character and independent means, and therefore do not preclude an independence determination. All of the members of the Audit Committee are also independent under the heightened standards required for Audit Committee members. +In accordance with the NYSE corporate governance listing standards, Mr. Henry B. Tippie was elected as the Presiding Director. The Company’s non-management directors meet at regularly scheduled executive sessions without management. Mr. Tippie presides during these executive sessions. +Corporate Governance Guidelines +We have adopted Corporate Governance Guidelines to promote better understanding of our policies and procedures. At least annually, the Board reviews these guidelines. As required by the rules of the New York Stock Exchange, our Corporate Governance Guidelines require that our non-management directors meet in at least two regularly scheduled executive sessions each year without management. +At the Company’s website at www.rpc.net, under the Governance section, you may access a copy of our Corporate Governance Guidelines, our Audit Committee Charter, our Code of Business Conduct and our Code of Business Conduct and Ethics for Directors and Executive Officers and Related Party Transactions Policy. +Code of Business Conduct +The Company has adopted a Code of Business Conduct applicable to all directors, officers and employees generally, as well as a Code of Business Conduct and Ethics for Directors and Executive Officers and Related Party Transactions Policy applicable to the principal executive officer, principal financial officer, and directors. Both codes are available on the Company’s website at www.rpc.net under the Governance section. +12 +Director Communications +The Company also has a process for interested parties, including stockholders, to send communications to the Board of Directors, Presiding Director, any of the Board Committees or the non-management directors as a group. Such communications should be addressed as follows: +Mr. Henry B. Tippie +c/o Internal Audit Department +RPC, Inc. +2801 Buford Highway NE, Suite 520 +Atlanta, Georgia 30329 +The above instructions for communications with the directors are also posted on our website at www.rpc.net under the Governance section. All communications received from interested parties are forwarded to the Board of Directors. Any communication addressed solely to the Presiding Director or the non-management directors will be forwarded directly to the appropriate addressee(s). +13 +COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION +None of the directors named above who serve on the Company’s Compensation Committee are or have ever been an employee of the Company. There are no Compensation Committee interlocks requiring disclosure. +DIRECTOR COMPENSATION +The following table sets forth compensation to the Company’s directors for services rendered as a director for 2015. Three of the directors, Messrs. R. Randall Rollins, Richard A. Hubbell and Ms. Linda H. Graham are employees of the Company. Their compensation is set forth in the Summary Compensation Table under Executive Compensation. The directors listed below have never been employed by the Company or paid a salary or bonus by the Company, have never been granted any options or other stock-based awards, and do not participate in any Company sponsored retirement plans, with the exception of Mr. James A. Lane, Jr. who was an employee of the Company until the spin-off of Marine Products in 2001. +Name +Fees Earned or +Paid in Cash +($) +Stock +Awards (1) +($) +Option +Awards (1) +($) +Total +($) +Henry B. Tippie +124,000 +–– +–– +124,000 +James B. Williams +72,000 +–– +–– +72,000 +Bill J. Dismuke +65,000 +–– +–– +65,000 +Gary W. Rollins +52,500 +–– +–– +52,500 +James A. Lane, Jr. +52,500 +–– +–– +52,500 +Larry L. Prince +72,000 +–– +–– +72,000 +(1) +Directors are eligible for grants of stock awards under the Company’s Stock Incentive Plan (“SIP”). No stock awards have been granted to the non-management directors under the SIP. +Directors that are our employees do not receive additional compensation for services rendered as a director. +Under current compensation arrangements effective since January 1, 2015, non-management directors each receive an annual retainer fee of  $40,000. In addition, the Chairman of the Audit Committee receives an annual retainer of  $20,000, the Chairman of the Compensation Committee receives an annual retainer of  $10,000, and the Chairman of each of the Nominating and Governance Committee and Diversity Committee receives an annual retainer of  $6,000. A director that chairs more than one committee receives a retainer with respect to each committee he chairs. All of the retainers are paid on a quarterly basis. Per meeting fees for non-management directors are as follows: +• +For meetings of the Board of Directors, $2,500. +• +For meetings of the Compensation Committee, $2,000. +• +For meetings of the Diversity Committee and Nominating and Governance Committee, $1,500. +• +For meetings of the Audit Committee either in person or over the telephone, $2,500. +• +In addition, the Chairman of the Audit Committee receives an additional $2,500 for preparing to conduct each quarterly Board and Board Committee meetings. +All non-management directors are also entitled to reimbursement of expenses for all services as a director, including committee participation or special assignments. +Notwithstanding anything to the contrary set forth in any of the Company’s previous filings under the Securities Act of 1933 or the Securities Exchange Act of 1934, that might incorporate future filings, including the Proxy Statement, in whole or in part, the Report of the Audit Committee shall not be incorporated by reference into any such filings. +14 +REPORT OF THE AUDIT COMMITTEE +Management is responsible for the Company’s internal controls, assessing the effectiveness of these controls and the financial reporting process. The Company’s independent registered public accounting firm is responsible for performing independent audits of the Company’s consolidated financial statements and the effectiveness of the Company’s internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States) and for issuing reports thereon. The Audit Committee’s responsibility is generally to monitor and oversee these processes, as described in the Audit Committee Charter. It is not the duty of the Audit Committee to plan or conduct audits or to determine that the Company’s financial statements are complete and accurate and in accordance with generally accepted accounting principles; that is the responsibility of management. +In fulfilling its oversight responsibilities with respect to the year ended December 31, 2015, the Audit Committee: +• +Approved the terms of engagement of Grant Thornton LLP as the Company’s independent registered public accounting firm for the year ended December 31, 2015; +• +Reviewed with management the interim financial information included in the Forms 10-Q prior to their being filed with the SEC. In addition, the Committee reviewed all earnings releases with management and the Company’s independent registered public accounting firm prior to their release; +• +Reviewed and discussed with the Company’s management and the independent registered public accounting firm the audited consolidated financial statements of the Company as of December 31, 2015 and 2014 and for the three years ended December 31, 2015; +• +Reviewed and discussed with the Company’s management and the independent registered public accounting firm, management’s assessment that the Company maintained effective control over financial reporting as of December 31, 2015; +• +Discussed with the independent registered public accounting firm matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board; and +• +Received from the independent registered public accounting firm the written disclosures and the letter in accordance with the requirements of the Public Company Accounting Oversight Board regarding the firm’s communications with the Committee concerning independence, and discussed with such firm its independence from the Company. +Based upon the review and discussions referred to above, the Committee recommended to the Board of Directors that the audited consolidated financial statements of the Company and subsidiaries as of December 31, 2015 and 2014 and for the three years ended December 31, 2015 be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 and for filing with the Securities and Exchange Commission. +In giving its recommendation to the Board of Directors, the Audit Committee has relied on (i) management’s representation that such financial statements have been prepared with integrity and objectivity and in conformity with accounting principles generally accepted in the United States of America and (ii) the report of the Company’s independent registered public accounting firm with respect to such financial statements. +Submitted by the Audit Committee of the Board of Directors. +Henry B. Tippie, Chairman +James B. Williams +Bill J. Dismuke +Larry L. Prince +15 +COMPENSATION DISCUSSION AND ANALYSIS +Compensation Committee +During the fiscal year ended December 31, 2015, the members of our Compensation Committee held primary responsibility for determining executive compensation levels. The Committee is composed of three of our non-management directors who do not participate in the Company’s compensation plans. The Committee determines the compensation and administers the performance-based incentive cash compensation plan for our executive officers. In addition, the Committee also administers our Stock Incentive Plans for all the employees. +The members of our Compensation Committee have extensive and varied experience with various public and private corporations - as investors and stockholders, as senior executives, and as directors charged with the oversight of management and the setting of executive compensation levels. Henry B. Tippie, the Chairman of the Compensation Committee, has served on the board of directors of twelve different publicly traded companies and has been involved in setting executive compensation levels at all of these companies. Messrs. James B. Williams and Larry L. Prince have served on the board of directors of several different publicly traded companies and have similarly been involved in setting executive compensation levels at many of these companies. +The Compensation Committee has authority to engage attorneys, accountants and consultants, including executive compensation consultants, to solicit input from management concerning compensation matters, and to delegate any of its responsibilities to one or more directors or members of management where it deems such delegation appropriate and permitted under applicable law. The Committee has not used the services of any compensation consultants in determining or recommending the amount or form of executive compensation. +The Compensation Committee believes that determinations relative to executive compensation levels are best left to the discretion of the Committee. In addition to the extensive experience and expertise of the Committee’s members and their familiarity with the Company’s performance and the performance of our executive officers, the Committee is able to draw on the experience of other Directors and on various legal and accounting executives employed by the Company, and the Committee has access to readily available public information relative to structuring executive compensation programs and setting appropriate compensation levels. The Committee also believes that the structure of our executive compensation programs should not become overly complicated or difficult to understand. The Committee solicits input from our Chairman with respect to the performance of our executive officers and their compensation levels. +The Role of Shareholder Say-on-Pay Votes +The Company provides its stockholders with the opportunity to cast an advisory vote on executive compensation (a “say-on-pay proposal”) once every three years. At the Company’s Annual Meeting of Stockholders held in April 2014, a substantial majority of the votes cast on the say-on-pay proposal at that meeting were voted in favor of the proposal. The Compensation Committee believes this affirms shareholders’ support of the Company’s approach to executive compensation. The stockholders voted to hold a say-on-pay advisory vote on executive compensation every three years, and the Board resolved to accept the stockholders’ recommendation. As a result, the advisory vote on executive compensation will be held again at the 2017 Annual Meeting of Stockholders. The Compensation Committee will continue to consider the outcome of the Company’s say-on-pay votes when making future compensation decisions for its executive officers. +General Compensation Objectives and Guidelines +The Company is engaged in a highly competitive industry. The success of the Company depends on its ability to attract and retain highly qualified and motivated executives. In order to accomplish this objective, the Company structures the executive compensation in a fashion that takes into account the Company’s overall performance and the individual performance of the executive. +The Compensation Committee endorses the philosophy that executive compensation should reflect Company performance and the contribution of executive officers to that performance. The Company’s compensation policy is designed to achieve three fundamental objectives: (i) attract and retain qualified +16 +executives, (ii) motivate performance to achieve Company objectives, and (iii) align the interests of our executives with the long-term interests of the Company’s stockholders. The Committee recognizes that there are many intangibles involved in evaluating performance and in motivating performance, and that determining an appropriate compensation level is a highly subjective endeavor. The analysis of the Committee is not based upon a structured formula and the objectives referred to above are not weighted in any formal manner. +The Company’s executive officers are also executive officers of Marine Products and receive compensation directly from Marine Products. The members of the Company’s Compensation Committee also constitute the Compensation Committee of Marine Products. In determining the compensation for the executive officers at the Company, the Committee considers these dual responsibilities and sources of compensation. The Company sets compensation of its executives at such levels so that the aggregate compensation received from both Marine Products and the Company is reasonable in light of their respective responsibilities and the performance of both companies, and so that the compensation from the Company for services solely to the Company is reasonable. A discussion of the Company’s executive officers’ compensation at Marine Products is contained in its annual Proxy Statement filed with the SEC. During the year, none of the executive officers made recommendations or otherwise contributed input on their own compensation. However, the Compensation Committee may from time to time solicit input from the Chairman when reviewing executive compensation. +Pursuant to the Company’s compensation philosophy, the total annual compensation of its executive officers is primarily comprised of base salary, performance-based incentive cash compensation and stock-based incentive compensation. In addition, the Company provides retirement compensation plans, group welfare benefits and certain perquisites. +We believe a competitive base salary is important to attract, retain and motivate top executives. We believe a performance-based incentive cash compensation plan is valuable in recognizing and rewarding individual achievement. Finally, we believe stock-based incentives make executives “think like owners” and, therefore, align their interests with those of our stockholders. +The Company does not have any formal stock ownership requirements for its executive officers but notes that its current directors and executive officers are stockholders of the Company, as is disclosed elsewhere in this Proxy Statement. The Company is mindful of the stock ownership of our directors and executive officers but does not believe that it is appropriate to provide a mechanism or formula to take stock ownership (or gains from prior option or stock awards) into account when setting compensation levels. The Company provides in its insider trading policies that directors and executive officers may not sell Company securities short and may not sell puts, calls or other derivative securities tied to our Common Stock. +The Company does not have a formal policy relative to the adjustment or recovery of incentives or awards in the event that the performance measures upon which incentives or awards were based are later restated or otherwise adjusted in a manner that would have reduced the size of an incentive or award. However, as all incentives and awards remain within the discretion of the Compensation Committee, the Committee retains the ability to take any such restatements or adjustments into account in subsequent years. In addition, the Sarbanes-Oxley Act requires in the case of accounting restatements that result from material non-compliance with SEC financial reporting requirements, that Chief Executive Officers and Chief Financial Officers must disgorge bonuses and other incentive-based compensation and profits on stock sales, if the non-compliance results from misconduct. +Base Salary +The salary of each executive officer is determined by the Compensation Committee. In making its determinations, the Committee gives consideration to the recent financial performance of the Company, the magnitude of responsibilities, the scope of the position, individual performance and compensation paid by Marine Products. The Committee solicits input from our Chairman with respect to the performance of our executive officers and their compensation levels. There was no change to the base salaries of the Company’s executive officers in 2015 or 2016 through the date of this proxy statement. +17 +Performance-Based Incentive Cash Compensation +The Company implemented the Performance-Based Incentive Cash Compensation Plan (the “Management Incentive Plan”) for the executive officers in 2006. Under the Management Incentive Plan, the Compensation Committee establishes performance goals annually within ninety days after the commencement of the performance period to which such goals relate. Performance goals for each participant may be based on corporate, business unit/function or individual performance, or a combination of one or more such measures. +In connection with the annual establishment of performance goals, the Compensation Committee sets a target award for each participant in the Management Incentive Plan for the applicable year, which is expressed as a percentage of the participant’s base compensation (the “Target Award”) in effect on the last day of the final pay period of that year. If the participant’s performance goals are based upon a combination of performance measures, the Compensation Committee will weigh the importance of each performance measure by assigning a percentage (the “Weighted Percentage”) to those performance measures. The participant’s cash award amount will also depend in part upon the level of achievement that the participant attained with respect to each such performance measure utilizing the formula set out in the Management Incentive Plan. This formula provides for a performance value (“Performance Value”) which ranges from: +• +threshold performance level (with a Performance Value of 25 percent of the Target Award), +• +target performance level (with a Performance Value up to 100 percent of the Target Award), to +• +superior performance level (with a Performance Value up to 200 percent of the Target Award). +Subject to the limitations set forth below, a participant’s cash award amount for each year under the Management Incentive Plan equals the product of the Target Award multiplied by the Weighted Percentage assigned to each performance measure used for a participant, multiplied by the Performance Value attained for each performance measure, multiplied by base compensation . The Committee will determine the maximum cash award as a percentage of participants’ base compensation for each applicable year. +For 2015, the Compensation Committee established the target incentive award under the Management Incentive Plan for the Chief Executive Officer and for the other members of executive management at the amounts shown in the table below. The target awards that could be earned under the Management Incentive Plan for 2015 were the same as for the prior year. +Executive Officer +Target Award as a percentage +of base salary +Richard A. Hubbell +President and Chief Executive Officer +100 % +Ben M. Palmer +Vice President, Chief Financial Officer and Treasurer +100 % +R. Randall Rollins +Chairman of the Board +100 % +Linda H. Graham +Vice President and Secretary +40 % +The maximum bonus award for each participant under the Plan for 2015 and prior years was established at 150 percent of such participant’s base salary. The performance criteria applicable to the participants under the Management Incentive Plan for 2015 were determined based solely on corporate performance. The Compensation Committee established corporate performance goals for 2015 under the Management Incentive Plan based on cash flow return on invested capital. Return on invested capital (“ROIC”) is a widely used financial performance measure that typically correlates with long term change in stockholder value. The Company has used ROIC as the sole performance goal under the Management Incentive Plan for several years. ROIC is computed as the ratio of earnings before interest, taxes, depreciation and amortization (EBITDA) to invested capital. Invested capital is generally equal to the aggregate of stockholders’ equity, accumulated depreciation and long-term liabilities. For 2015, the target performance goal established by the Company is in excess of the comparable historical average ROIC of +18 +our peers, is in excess of the Company’s weighted average cost of capital, and is an amount which the Company believes represents outstanding financial performance. Under the Management Incentive Plan, the Company must achieve at least 80 percent of the target performance goal for executive officers to be eligible for any bonus award. Bonus awards under the Management Incentive Plan are determined on a sliding scale between the threshold performance level and a superior performance level, which corresponds to 175 percent of the target performance goal. To be eligible for the bonus award under the Management Incentive Plan, the ROIC must be in excess of 16 percent up to a maximum of 35 percent. The Company has consistently followed the same method to compute ROIC, and the Compensation Committee has not exercised discretion to waive the performance goals based on difficult industry conditions or other factors. +The Company operates in a cyclical business where financial performance is influenced by, among other things, changes in oil and natural gas prices. The Company’s computation of ROIC for 2015 resulted in the threshold for bonus payments not being achieved. The Company generated ROIC that resulted in 141 percent of the target award in 2014 and 120 percent of the target award in 2013. The level of performance dropped significantly in 2015 primarily due to the continued decline of oil prices and the associated impact on customer activity levels, pricing for our services and consequently the Company profitability. Current trends and expectations for the oilfield industry indicate an operating environment in 2016 that will continue to be challenging. For 2016, the target awards, performance goal and maximum awards were established at the same levels as 2015. +Stock Based Incentive Plans +Our Stock Incentive Plan allows for a wide variety of stock based awards such as stock options and restricted stock. We last issued stock options in fiscal year 2003 and have no current plans to issue additional stock options. We have never issued any stock appreciation rights. Partially in response to changes relative to the manner in which stock options are accounted for under generally accepted accounting principles, we have modified the structure and composition of the long-term equity based component of our executive compensation. In recent years, we have awarded time-based restricted stock in lieu of granting stock options. The terms and conditions of these awards are described in more detail below. +Awards under the Company’s Stock Incentive Plan are purely discretionary, are not based upon any specific formula and may or may not be granted in any given fiscal year. For the past three years, we have granted time-based restricted stock to various employees, including our executive officers, in early January during our regularly scheduled meetings of the Compensation Committee during which the Committee reviews executive compensation. Consistent with this practice, we granted restricted stock awards to our executive officers in January 2016, 2015 and 2014 as follows: +Name +2016 +2015 +2014 +Richard A. Hubbell +75,000 +75,000 +56,250 +Ben M. Palmer +45,000 +45,000 +33,750 +R. Randall Rollins +75,000 +75,000 +56,250 +Linda H. Graham +25,000 +25,000 +18,750 +The amount of the aggregate stock based awards to our executive officers in any given year is influenced by the Company’s overall performance. The amount of each grant to our executive officers is influenced in part by the Committee’s subjective assessment of each individual’s respective contributions to achievement of the Company’s long-term goals and objectives. In evaluating individual performance for these purposes, the Committee considers the overall contributions of executive management as a group and the Committee’s subjective assessment of each individual’s relative contribution to that performance rather than specific aspects of each individual’s performance over a short-term period. We expect to continue annual grants of restricted stock awards although we reserve the right to modify or discontinue this or any of our other compensation practices at any time. +All of our restricted stock awards granted since 2004 have had the same features. The shares vest one-fifth per year beginning on the second anniversary of the grant date. Restricted shares have full voting and dividend rights. However, until the shares vest, they cannot be sold, transferred or pledged. Should the +19 +executive leave our employment for any reason prior to the vesting dates (other than due to disability or retirement on or after age 65), the unvested shares will be forfeited. In the event of death or “change in control” as determined by the Board of Directors, all unvested restricted shares shall vest immediately. +Grants are made under our 2014 Stock Incentive Plan and the plan is administered pursuant to Rule 16b-3 of the Securities Exchange Act of 1934. +Employment Agreements +There are no agreements or understandings between the Company and any executive officer which guarantee continued employment or guarantee any level of compensation, including incentive or bonus payments, to the executive officer. +Retirement Plans +The Company maintains a defined benefit pension plan (“Retirement Income Plan”) for all our eligible employees, a non-qualified supplemental retirement plan for our executives and certain other highly compensated employees and a 401(k) Plan for the benefit of all regular full time employees. In 2002, the Company’s Board of Directors approved a resolution to cease all future benefit accruals under the Retirement Income Plan effective March 31, 2002. During 2002, the Company began permitting selected highly compensated employees to defer a portion of their compensation into the Company’s nonqualified Supplemental Retirement Plan (“SRP”). The SRP is described in more detail under the caption “Nonqualified Deferred Compensation” below. +Other Compensation +Other compensation to our executives includes typical employee benefits such as group medical, dental and vision coverage and group life insurance. The Company provides an automobile (or an automobile allowance) to Messrs. Richard A. Hubbell and Ben M. Palmer. +The following Compensation Committee Report shall not be incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933, as amended (the “Securities Act”), except to the extent that the Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under the Securities Act or the Exchange Act. +COMPENSATION COMMITTEE REPORT +We have reviewed and discussed the above “Compensation Discussion and Analysis” with management. +Based upon this review and discussion, we have recommended to the Board of Directors that the “Compensation Discussion and Analysis” be included in this Proxy Statement. +Submitted by the Compensation Committee of the Board of Directors. +Henry B. Tippie, Chairman +James B. Williams +Larry L. Prince +20 +SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE +The Company has completed a review of Forms 3, 4, and 5 and amendments thereto furnished to the Company by all directors, officers and greater than 10 percent stockholders subject to the provisions of Section 16 of the Securities Exchange Act of 1934, as amended. In addition, the Company has a written representation from all directors, officers and greater than 10 percent stockholders from whom no Form 5 was received indicating that no Form 5 filing was required. Based solely on this review, the Company believes that filing requirements of such persons under Section 16 for the fiscal year ended December 31, 2015 have been satisfied, except the following: On February 1, 2016, Gary W. Rollins filed a Form 4 after its due date with respect to gift of shares of RPC, Inc. common stock made on December 30, 2014 and December 31, 2014. +EXECUTIVE COMPENSATION +Shown below is information concerning the annual and long-term compensation for services in all capacities to the Company for the calendar years ended December 31, 2015, 2014 and 2013 of those persons who were at December 31, 2015: +• +our Principal Executive Officer and Principal Financial Officer; and +• +our two other executive officers: +SUMMARY COMPENSATION TABLE +Name and Principal Position +Year +Salary +($) +Stock +Awards +($) (1) +Non-Equity +Incentive +Plan +Compensation +($) (2) +Change in +Pension +Value and +Nonqualified +Deferred +Compensation +Earnings ($) (3) +All Other +Compensation +($) (4) +Total +($) +Richard A. Hubbell +President and Chief Executive Officer +2015 +900,000 +922,500 +–– +–– +13,640 +1,836,140 +2014 +900,000 +1,059,750 +1,269,000 +61,096 +14,000 +3,303,846 +2013 +900,000 +1,026,000 +1,080,000 +–– +16,830 +3,022,830 +Ben M. Palmer +Vice President, Chief Financial Officer and Treasurer +2015 +375,000 +553,500 +–– +–– +19,660 +948,160 +2014 +375,000 +635,850 +528,750 +24,466 +21,050 +1,585,116 +2013 +375,000 +615,600 +450,000 +–– +19,800 +1,460,400 +R. Randall Rollins +Chairman of the Board +2015 +800,000 +922,500 +–– +–– +–– +1,722,500 +2014 +800,000 +1,059,750 +1,128,000 +300,265 +–– +3,288,015 +2013 +800,000 +1,026,000 +960,000 +–– +–– +2,786,000 +Linda H. Graham +Vice President and Secretary +2015 +250,000 +307,500 +–– +–– +7,860 +565,360 +2014 +250,000 +353,250 +140,000 +9,181 +7,290 +759,721 +2013 +250,000 +342,000 +120,000 +–– +6,360 +718,360 +(1) +Represents the fair value of the award at the date of grant computed in accordance with ASC Topic 718. Please refer to Note 10 to our Financial Statements contained in our Form 10-K for the period ended December 31, 2015 for a discussion of assumptions used in this computation. For this computation, we do not include an assumption for estimated forfeitures. +(2) +Bonuses under the Management Incentive Plan are accrued in the fiscal year earned and paid in the following fiscal year. +(3) +The actuarial present value of the executive officers’ accumulated benefit under the defined benefit plan decreased during 2015 as follows: Messrs. Richard A. Hubbell $(44,695), Ben M. Palmer $(6,366), R. Randall Rollins $(259,180) and Ms. Linda H. Graham $(42,134). Change represents impact of the change in discount rate only as no additional benefits are being accrued. +(4) +All other compensation for 2015 includes the following items for: +Mr. Richard A. Hubbell: +Insurance on automobile provided by the Company, cost of dining club dues, cost of gasoline for personal automobile, and 401(k) Plan Company match of  $7,950. +Mr. Ben M. Palmer: +Automobile allowance, cost of gasoline for personal automobile and 401(k) Plan Company match of  $7,950. +Ms. Linda H. Graham: +401(k) Plan Company match of  $7,860. +21 +GRANTS OF PLAN-BASED AWARDS +Name +Grant Date +Estimated Future Payouts +Under Non-Equity +Incentive Plan Awards (1) +All Other +Stock +Awards: +Number +of Shares +of Stock +or Units +(#) +Grant Date +Fair Value of +Stock and +Option +Awards +($) (2) +Threshold +($) +Target +($) +Maximum +($) +Richard A. Hubbell +1/27/15 +225,000 +900,000 +1,350,000 +1/27/15 +75,000 +922,500 +Ben M. Palmer +1/27/15 +93,750 +375,000 +562,500 +1/27/15 +45,000 +553,500 +R. Randall Rollins +1/27/15 +200,000 +800,000 +1,200,000 +1/27/15 +75,000 +922,500 +Linda H. Graham +1/27/15 +25,000 +100,000 +200,000 +1/27/15 +25,000 +307,500 +(1) +These amounts illustrate the potential bonus awards under the Management Incentive Plan for 2015. See Summary Compensation Table on page 21 for actual amounts awarded in 2015. +(2) +These amounts represent aggregate grant date fair value for grants of restricted shares of Common Stock awarded in fiscal year 2015 under the Stock Incentive Plan computed in accordance with ASC Topic 718. Please refer to Note 10 to our Financial Statements contained in our Form 10-K for the period ended December 31, 2015 for a discussion of assumptions used in this computation. For this computation, we do not include an assumption for estimated forfeitures. Our Form 10-K has been included in our Annual Report and provided to our stockholders. +The table above reflects grants of restricted shares of Company Common Stock under the Stock Incentive Plan awarded in fiscal year 2015. All grants of restricted shares of Common Stock vest one-fifth per year beginning on the second anniversary of the grant date. Restricted shares have full voting and dividend rights. However, until the shares vest, they cannot be sold, transferred or pledged. Should the executive leave our employment for any reason prior to the vesting dates (other than due to death, disability, change in control or retirement on or after age 65), the unvested shares will be forfeited. We have not issued any stock options since 2003 and have no immediate plans to issue additional stock options. +The Company’s employment contracts with its Chief Executive Officer and the Company’s other executive officers are oral, at will arrangements. All of the executive officers are eligible for annual cash bonuses which are awarded under the Management Incentive Plan. The Compensation Committee’s decisions are based upon broad performance objectives under that plan. The executive officers are eligible to receive shares of Company Common Stock subject to options and restricted shares of Company Common Stock under the Company’s Stock Incentive Plans, in such amounts and with such terms and conditions as determined by the Compensation Committee at the time of grant. All of the executive officers are eligible to participate in the Company’s SRP. The executive officers are eligible to participate in the Company’s regular employee benefit programs, including the 401(k) Plan with Company match, group life insurance, group medical and dental coverage, vision and other group benefit plans. All of the executive officers are eligible for the Retirement Income Plan although benefit accruals were frozen in 2002. For more information on these plans, see “Compensation Discussion and Analysis” on page 16, and “Benefit Plans” on page 24. +22 +OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END +The Company does not have any outstanding option awards made in prior years to the executives named in our Summary Compensation Table. The table below sets forth the total number of restricted shares of Common Stock that were granted in prior years to the executives named in our Summary Compensation Table but have not yet vested, together with the market value of these unvested shares based on the $11.95 closing price of our Common Stock on December 31, 2015. +Option Awards +Stock Awards +Name +Number of +Securities +Underlying +Unexercised +Options (#) +Exercisable +Number of +Securities +Underlying +Unexercised +Options (#) +Un-exercisable +Option +Exercise +Price +($) +Option +Expiration +Date +Number of +Shares or +Units of +Stock That +Have Not +Vested (#) +Market +Value of +Shares or +Units of +Stock +That Have +Not Vested +($) +Richard A. Hubbell +–– +–– +–– +–– +277,500 (1 ) +3,316,130 +Ben M. Palmer +–– +–– +–– +–– +166,950 (1 ) +1,995,050 +R. Randall Rollins +–– +–– +–– +–– +277,500 (1 ) +3,316,130 +Linda H. Graham +–– +–– +–– +–– +89,850 (1 ) +1,073,710 +(1) +The Company has granted employees time lapse restricted shares that vest one-fifth per year beginning on the second anniversary of the grant date. Shares of restricted stock granted to the executive officers that have not vested as of December 31, 2015 are summarized in the table that follows: +Name +Number of shares +Grant date +Date fully vested +Richard A. Hubbell +11,250 +1/26/2010 +1/26/2016 +30,000 +1/25/2011 +1/25/2017 +45,000 +1/24/2012 +1/24/2018 +60,000 +1/22/2013 +1/22/2019 +56,250 +1/28/2014 +1/28/2020 +75,000 +1/27/2015 +1/27/2021 +Ben M. Palmer +7,200 +1/26/2010 +1/26/2016 +18,000 +1/25/2011 +1/25/2017 +27,000 +1/24/2012 +1/24/2018 +36,000 +1/22/2013 +1/22/2019 +33,750 +1/28/2014 +1/28/2020 +45,000 +1/27/2015 +1/27/2021 +R. Randall Rollins +11,250 +1/26/2010 +1/26/2016 +30,000 +1/25/2011 +1/25/2017 +45,000 +1/24/2012 +1/24/2018 +60,000 +1/22/2013 +1/22/2019 +56,250 +1/28/2014 +1/28/2020 +75,000 +1/27/2015 +1/27/2021 +Linda H. Graham +3,600 +1/26/2010 +1/26/2016 +9,000 +1/25/2011 +1/25/2017 +13,500 +1/24/2012 +1/24/2018 +20,000 +1/22/2013 +1/22/2019 +18,750 +1/28/2014 +1/28/2020 +25,000 +1/27/2015 +1/27/2021 +23 +OPTION EXERCISES AND STOCK VESTED +The following table sets forth: +• +the number of shares of Common Stock acquired by the executives named in the Summary Compensation Table upon the exercise of stock options during the fiscal year ended December 31, 2015; +• +the aggregate dollar amount realized on the exercise date for such options computed by multiplying the number of shares acquired by the difference between the market value of the shares on the exercise date and the exercise price of the options; +• +the number of restricted shares of Common Stock acquired by the executives named in the Summary Compensation Table upon the vesting of shares during the fiscal year ended December 31, 2015; and +• +the aggregate dollar amount realized on the vesting date for such restricted stock computed by multiplying the number of shares which vested by the market value of the shares on the vesting date. +Option Awards +Stock Awards +Name +Number of Shares +Acquired on Exercise +(#) +Value Realized on +Exercise +($) +Number of Shares +Acquired on Vesting +(#) +Value Realized on +Vesting +($) +Richard A. Hubbell +–– +–– +69,750 +841,240 +Ben M. Palmer +–– +–– +43,200 +521,230 +R. Randall Rollins +–– +–– +69,750 +841,240 +Linda H. Graham +–– +–– +22,100 +266,780 +BENEFIT PLANS +The table below shows the present value of accumulated benefits payable to each of the named executive officers, including the number of years of service credited to each such named executive officer, under the Retirement Income Plan determined using interest rate and mortality rate assumptions consistent with those used in the Company’s financial statements. Information regarding the Retirement Income Plan can be found in Note 10 to our Financial Statements contained in our Form 10-K for the period ended December 31, 2015. +Pension Benefits +Name +Plan Name +Number of +Years Credited +Service (#) +Present +Value of +Accumulated +Benefit +($) +Payments During +Last Fiscal Year +($) +Richard A. Hubbell +Retirement Income Plan +15 +455,691 +42,314 +Ben M. Palmer +Retirement Income Plan +4 +77,368 +–– +R. Randall Rollins +Retirement Income Plan +30 +2,259,392 +261,571 +Linda H. Graham +Retirement Income Plan +15 +381,145 +48,705 +24 +The Company’s Retirement Income Plan, a trusteed defined benefit pension plan, provides monthly benefits upon retirement at age 65 to eligible employees. In 2002, the Company’s Board of Directors approved a resolution to cease all future benefit accruals under the Retirement Income Plan effective March 31, 2002. Retirement Income Plan benefits are based on the average of the employee’s compensation from the Company for the five consecutive complete calendar years of highest compensation during the last ten consecutive complete calendar years (“final average compensation”) immediately preceding March 31, 2002. The benefits are computed as the product of 1.5 percent of final average compensation multiplied by years of credited service (up to 30 years) reduced by an adjustment for benefits drawn from social security. Adjustments have been made for age and the IRS mandated compensation limitations. The final average compensation for Mr. Hubbell is $205,890, Mr. Palmer is $179,900 and Ms. Graham is $127,325. +The annual benefit payable at the later of retirement or age 65 for the named executive officers is $261,600 for Mr. Rollins, $42,400 for Mr. Hubbell, $48,800 for Ms. Graham and $9,400 for Mr. Palmer. The Plan also provides reduced early retirement benefits at age 55 or older with 15 or more years of service. Ms. Graham and Mr. Hubbell are voluntarily receiving distributions from the plan even though they have not retired from the Company. In addition, as an owner with stock ownership in excess of five percent of the Company’s voting securities, Mr. Rollins is required to receive mandatory distributions currently, even though he has not retired from the Company. The amount of distributions received during 2015 has been disclosed in the table above and is not subject to change after retirement. +401(k) Plan +Effective July 1, 1984, the Company adopted a qualified retirement plan designed to meet the requirements of Section 401(k) of the Code. The Company makes matching contributions of fifty cents ($0.50) for each dollar ($1.00) of a participant’s contribution to the 401(k) Plan that does not exceed six percent of his or her annual compensation. The only form of benefit payment under the 401(k) Plan is a single lump-sum payment equal to the vested balance in the participant’s account on the date the distribution is processed. Under the 401(k) Plan, the full amount of a participant’s vested accrued benefit is payable upon his termination of employment, retirement, total and permanent disability, or death. Also under the 401(k) Plan, a participant may withdraw his or her pre-tax contributions to the extent of certain specified instances of financial hardship and may withdraw any amount from his or her pre-tax contribution account for any reason after attaining age 59 ½. In addition, a participant may withdraw any amount from his or her rollover account for any reason. Amounts contributed by the Company to the accounts of the named executive officers under this plan are reported in the “All Other Compensation” column of the Summary Compensation Table on page 21. +NONQUALIFIED DEFERRED COMPENSATION +The SRP has been established as a nonqualified plan that is designed to comply with the provisions of the American Jobs Creation Act of 2004 (including Section 409A of the Internal Revenue Code) for the cash contributions made to certain longer serviced employees in lieu of freezing of the Retirement Income Plan benefit accruals effective in 2002; the SRP also has a compensation deferral option for eligible employees. The contributions and deferrals to the SRP are invested in funds held in a rabbi trust. +Name +Executive +Contributions in +last FY ($) (1) +Registrant +contributions in +last FY ($) +Aggregate +earnings in last +FY ($) +Aggregate +withdrawals/ +distributions ($) +Aggregate +balance at last +FYE ($) +Richard A. Hubbell +–– +–– +(830 ) +–– +319,387 +Ben M. Palmer +69,700 +–– +(1,000 ) +–– +535,528 +R. Randall Rollins +–– +–– +–– +–– +–– +Linda H. Graham +132,500 +–– +(5,916 ) +–– +1,514,694 +(1) +Includes the following amounts related to the base salary for 2015 which have been deferred by the executive officer pursuant to the SRP and which are included in the Summary Compensation Table: Mr. Ben M. Palmer: $30,000 and Ms. Linda H. Graham: $62,500. The remaining deferral amounts, if any, represent deferrals of bonus compensation that was paid in 2015. +25 +The deferral option provides that participants may defer up to 50 percent of their base salary and up to 100 percent of their annual bonus with respect to any given plan year, subject to a $2,000 per plan year minimum. All of the salary and bonus deferrals are fully vested. Accounts are credited with hypothetical earnings, and/or debited with hypothetical losses, based on the performance of certain “Measurement Funds.” Account values are calculated as if the funds from deferrals and contributions had been converted into shares or other ownership units of selected Measurement Funds by purchasing (or selling, where relevant) such shares or units at the current purchase price of the relevant Measurement Fund at the time of the participant’s selection. The benefits are unsecured general obligations of the Company to the participants, and these obligations rank in parity with the Company’s other unsecured and unsubordinated indebtedness. To the extent that the Company’s obligations under the SRP exceed assets available under the trust, the Company may be required to seek additional funding sources to fund its liability under the SRP. +Generally, the SRP provides for distributions of any deferred amounts upon the earliest to occur of a participant’s death, disability, retirement or other termination of employment (a “Termination Event”). However, for any deferrals of base salary and bonus compensation (but not Company contributions), participants are entitled to designate a distribution date which is prior to a Termination Event. The SRP allows a participant to elect to receive distributions in installments or lump-sum payments. +POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL +The following table describes the potential payments and benefits under the Company’s compensation and benefit plans and arrangements to which the named executive officers would be entitled upon termination of employment. There are no other agreements, arrangements or plans that entitle executive officers to severance, perquisites, or other enhanced benefits upon termination of their employment except as described below. Additional payments or benefits to a terminating executive officer would be at the discretion of the Compensation Committee. +In accordance with the terms of the defined benefit plan, the executive officers are not entitled to additional benefits at death or disability. The amounts payable at retirement are disclosed in the “Benefit Plans” section on page 24. The executive officers can choose to receive the amounts accumulated in the SRP either as a lump-sum or in installments at retirement, death or disability. These amounts have been disclosed under the “Nonqualified Deferred Compensation” section on page 25. The table below reflects the incremental restricted shares that would become vested as of December 31, 2015 using the closing market price of  $11.95 per share for our Common Stock, as of that date, in the case of retirement, disability, death or change in control. +Stock Awards +Name +Number of shares +underlying unvested +stock (#) +Unrealized value of +unvested stock ($) +Richard A. Hubbell +• Retirement +61,875 +739,410 +• Disability +96,770 +1,156,400 +• Death +277,500 +3,316,130 +• Change in control +277,500 +3,316,130 +Ben M. Palmer +• Retirement +–– +–– +• Disability +58,481 +698,850 +• Death +166,950 +1,995,050 +• Change in control +166,950 +1,995,050 +R. Randall Rollins +• Retirement +61,875 +739,410 +• Disability +96,770 +1,156,400 +• Death +277,500 +3,316,130 +• Change in control +277,500 +3,316,130 +26 +Stock Awards +Name +Number of shares +underlying unvested +stock (#) +Unrealized value of +unvested stock ($) +Linda H. Graham +• Retirement +19,571 +233,870 +• Disability +30,938 +369,710 +• Death +89,850 +1,073,710 +• Change in control +89,850 +1,073,710 +Accrued Pay and Regular Retirement Benefits +The amounts shown in the table above do not include the following since they are provided on a non-discriminatory basis to salaried employees generally upon termination of employment. These include: +• +Accrued salary and vacation pay. +• +Distributions of plan balances under the 401(k) Plan. +Pension Benefit and Deferred Compensation +The Retirement Income Plan does not provide for lump sum payments for a participant including executive officers for instances other than retirement. The Retirement Income Plan is described at “Pension Benefits” above. Upon termination, the executive officers will receive a distribution of the balance in their SRP account. These amounts are disclosed under the “Nonqualified Deferred Compensation” section on page 25. +Severance . The Company does not have any severance arrangements for its executives. +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +Effective with the spin-off in 2001, the Company began providing certain administrative services to Marine Products. The service agreements between Marine Products and the Company provide for the provision of services on a cost reimbursement basis and may be terminated upon six months’ notice. The services covered by these agreements include administration of certain employee benefit programs and other administrative services. Charges from the Company (or from corporations which are subsidiaries of the Company) for such services aggregated approximately $753,000 in 2015. +RPC and Marine Products own 50 percent each of a limited liability company called 255 RC, LLC that was created for the joint purchase and ownership of a corporate aircraft. The purchase of the aircraft was completed in January 2015, and the purchase was funded primarily by a $2,554,000 contribution by each company to 255 RC, LLC. Each of RPC and Marine Products is a party to an operating lease agreement with 255 RC, LLC for a period of five years. During 2015, RPC recorded certain net operating costs comprised of rent and an allocable share of fixed costs of approximately $186,000 for the corporate aircraft. +During 2015, a subsidiary of RPC conducted business with companies owned by LOR, Inc. Mr. R. Randall Rollins, Chairman, and Mr. Gary W. Rollins, Director, are officers, directors and controlling stockholders of LOR, Inc. In 2015, payments totaling approximately $1,127,000 were made to these LOR, Inc. companies primarily for the purchase of parts and repair services related to certain of RPC’s oilfield operating equipment. RPC believes the charges incurred are at least as favorable as the charges that would have been incurred for similar purchases from unaffiliated third parties. +RPC receives certain administrative services including an allocation for office space from Rollins. The service agreements between Rollins and the Company provide for the provision of services on a cost reimbursement basis and are terminable on six months’ notice. The services covered by these agreements include office space, administration of certain employee benefit programs, and other administrative services. Charges to the Company (or to corporations which are subsidiaries of the Company) for such services and rent aggregated approximately $100,000 in 2015. +27 +A group that includes the Company’s Chairman of the Board, R. Randall Rollins, his brother Gary W. Rollins who is also a director, and certain companies under their control, possesses in excess of fifty percent of the Company’s voting power. Please refer to the discussion above under the heading, “Corporate Governance and Board of Directors Committees and Meetings, Director Independence and NYSE Requirements, Controlled Company Exemption.” The group discussed above also controls in excess of fifty percent of Marine Products’ voting power. +Our Code of Business Conduct and Ethics for Directors and Executive Officers and Related Party Transactions Policy provides that related party transactions, as defined in Regulation S-K, Item 404(a) must be reviewed, approved and/or ratified by our Nominating and Corporate Governance Committee. As set forth in our Code, our Nominating and Corporate Governance Committee has the responsibility to ensure that it only approves or ratifies related party transactions that are in compliance with applicable law, consistent with the Company’s corporate governance policies (including those relative to conflicts of interest and usurpation of corporate opportunities) and on terms that are deemed to be fair to the Company. The Committee has the authority to hire legal, accounting, financial or other advisors as it may deem necessary or desirable and/or to delegate responsibilities to executive officers of the Company in connection with discharging its duties. A copy of the Code is available on our website at www.rpc.net under the Governance section. All related party transactions for the fiscal year ended December 31, 2015 were reviewed, approved and/or ratified by the Nominating and Corporate Governance Committee in accordance with the Code. +INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS +Principal Auditor +Grant Thornton LLP (“Grant Thornton”) served as the Company’s independent registered public accounting firm for the fiscal years ended December 31, 2015 and 2014. +The Audit Committee has appointed Grant Thornton as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2016. Grant Thornton has served as the Company’s independent registered public accounting firm for many years and is considered by management to be well qualified. Representatives of Grant Thornton are expected to be present at the Annual Meeting and will have an opportunity to make a statement if they so desire and will be available to respond to appropriate questions. +Aggregate fees billed by the Company’s independent registered public accounting firm are set forth below: +2015 +2014 +Audit fees and quarterly reviews (1) +$ +926,210 +$ +994,070 +Audit related fees +–– +–– +Tax fees +–– +–– +All other fees +–– +–– +(1) +Audit fees include fees for audit or review services in accordance with generally accepted auditing standards, such as statutory audits and services rendered for compliance with Section 404 of the Sarbanes-Oxley Act. +Pre-approval of Services +All of the services described above were pre-approved by the Company’s Audit Committee. The Audit Committee has determined that the payments made to its independent registered public accounting firm for these services are compatible with maintaining such auditors’ independence. A majority of the hours expended on the principal accountant’s engagement to audit the financial statements of the Company for the fiscal year ended December 31, 2015 was attributable to work performed by full-time, permanent employees of the principal accountant. +The Audit Committee is directly responsible for the appointment and termination, compensation, and oversight of the work of the independent registered public accounting firm, including resolution of disagreements between management and the independent registered public accounting firm regarding +28 +financial reporting. The Audit Committee is responsible for pre-approving all audit and non-audit services provided by the independent registered public accounting firm and ensuring that they are not engaged to perform the specific non-audit services proscribed by law or regulation. The Audit Committee has delegated pre-approval authority to its Chairman with the stipulation that his decision is to be presented to the full Committee at its next scheduled meeting. The Audit Committee has no other pre-approval policies. +STOCKHOLDER PROPOSALS +Appropriate proposals of stockholders intended to be presented at the Company’s 2017 Annual Meeting of Stockholders must be received by the Company by November 21, 2016 in order to be included, pursuant to Rule 14a-8 promulgated under the Securities Exchange Act of 1934, as amended, in the proxy statement and form of proxy relating to that meeting. With regard to such stockholder proposals, if the date of the next annual meeting of stockholders is advanced or delayed more than 30 calendar days from April 26, 2017, the Company will, in a timely manner, inform its stockholders of the change and of the date by which such proposals must be received. Stockholders desiring to present business at the 2017 Annual Meeting of Stockholders outside of the stockholder proposal rules of Rule 14a-8 of the Securities Exchange Act of 1934 and instead pursuant to Article Twenty-Seventh of the Company’s by-laws must prepare a written notice regarding such proposal addressed to Secretary, RPC, Inc., 2170 Piedmont Road, NE, Atlanta, Georgia 30324, and deliver to or mailed and received by no later than January 26, 2017 and no earlier than December 17, 2016. Stockholders should consult the by-laws for other specific requirements related to such notice and proposed business. +With respect to stockholder nomination of directors, the Company’s by-laws provide that nominations for the election of directors may be made by any stockholder entitled to vote for the election of directors. Nominations must comply with an advance notice procedure which generally requires with respect to nominations for directors for election at an annual meeting, that written notice be addressed to: Secretary, RPC, Inc., 2170 Piedmont Road, N.E., Atlanta, Georgia 30324, and be received not less than 90 nor more than 130 days prior to the anniversary of the prior year’s annual meeting and set forth, among other requirements specified in the by-laws, the name, age, business address and, if known, residence address of the nominee proposed in the notice, the principal occupation or employment of the nominee for the past five years, the nominee’s qualifications, the class or series and number of shares of capital stock of the Company which are owned beneficially or of record by the person and any other information relating to the person that would be required to be disclosed in a proxy statement or other filings. Other specific requirements related to such notice, including required disclosures concerning the stockholder intending to present the nomination, are set forth in the Company’s by-laws. Notices of nominations must be received by the Secretary of the Company no later than January 26, 2017 and no earlier than December 17, 2016, with respect to directors to be elected at the 2017 Annual Meeting of Stockholders. +EXPENSES OF SOLICITATION +The Company will bear the cost of soliciting proxies. Upon request, we will reimburse brokers, dealers and banks, or their nominees, for reasonable expenses incurred in forwarding copies of the proxy material to their beneficial stockholders of record. Solicitation of proxies will be made principally by mail. Proxies also may be solicited in person or by telephone, facsimile or other means by our directors, officers and regular employees. These individuals will receive no additional compensation for these services. The Company has retained Georgeson Shareholder Communications, Inc. to conduct a broker search and to send proxies by mail for an estimated fee of approximately $62,000 including shipping expenses. +29 +MISCELLANEOUS +The Company’s Annual Report to Stockholders, including its Annual Report on Form 10-K for the fiscal year ended December 31, 2015, without exhibits, is being mailed to stockholders with this Proxy Statement. +Upon the written request of any record or beneficial owner of the Company’s Common Stock whose proxy was solicited in connection with the 2016 Annual Meeting of Stockholders, the Company will furnish such owner, without charge, a copy of its Annual Report on Form 10-K, including the financial statements and the financial statement schedules (but without exhibits), for its fiscal year ended December 31, 2015. Requests for a copy of such Annual Report on Form 10-K should be addressed to Ms. Linda H. Graham, Secretary, at RPC, Inc., 2170 Piedmont Road NE, Atlanta, Georgia 30324. +Management knows of no business other than the matters set forth herein which will be presented at the Annual Meeting. In as much as matters not known at this time may come before the Annual Meeting, the enclosed proxy confers discretionary authority with respect to such matters as may properly come before the Annual Meeting; and it is the intention of the persons named in the proxy to vote in accordance with their best judgment on such matters. +BY ORDER OF THE BOARD OF DIRECTORS +Linda H. Graham, Secretary +Atlanta, Georgia +March 21, 2016 +30 +RPC, INC. +PERFORMANCE-BASED INCENTIVE CASH COMPENSATION PLAN +1. +The Plan. The purpose of this Performance-Based Incentive Cash Compensation Plan (the “Plan”) is to provide “selected executives” of RPC, Inc. or an affiliate thereof  (the “Company”) with cash awards (the “Awards”) based upon pre-established, objective performance goals, thereby promoting alignment of the participating employees’ interests with the interests of the Company and its shareholders, and focusing that employees’ efforts toward enhancing the efficiency, profitability, growth and value of the Company. +2. +Plan Administration. The Plan shall be administered by the Compensation Committee of the Board of Directors of the Company or a subcommittee thereof  (the “Committee”). The Committee shall have full authority to interpret and administer the Plan and establish rules and regulations for the administration of the Plan. Any actions of the Committee may be taken by a written instrument signed by all of the members of the Committee and such action so taken by written consent shall be as fully effective as if it had been taken by a majority of the members at a meeting duly held and called. The decisions and determinations of the Committee in all matters regarding the Plan shall be in its sole discretion. Any decision made, or action taken, by the Committee in connection with the administration of the Plan shall be final, binding and conclusive. No member of the Committee shall be liable to any participant for any action, determination or decision made in good faith with respect to the Plan or any Award paid under it. Notwithstanding the foregoing, the Committee may delegate the administration of the Plan to one or more of its designees, but only with respect to matters regarding participants who are not in the executive management class. All matters regarding the participants in the executive management class shall be the sole responsibility of the Committee. +3. +Eligibility. The participants in the Plan (collectively, the “Participants” or individually, a “Participant”) shall be those executive officers of the Company who are designated each year as Participants by the Committee. Such designation shall be made during the first 90 days of each calendar year. Participation in the Plan in any one calendar year does not guarantee that an executive will be selected to participate in the Plan in any following calendar year. +4. +Size of Awards. Each calendar year, the Committee shall establish a target award for each Participant in the Plan, which shall be expressed as a percentage of his “Base Compensation” (the “Target Award”). For this purpose, “Base Compensation” means the base compensation in effect on the last day of the final pay period of the current Plan year. If and to the extent the performance goals established for the Participant by the Committee pursuant to Section 5 are met, the Participant’s Award shall be determined in part based upon a range from the amount of his “Threshold Award” to the amount of his “Superior Award as set forth in Section 6. The Committee will determine the maximum cash award as a percentage of participants’ base compensation for each applicable year but in no event will a cash award amount exceed 200 percent of participants’ base compensation, or $2,000,000, whichever is less. The Target Award of each Participant or class of Participants (e.g., executive management) shall be established in writing by the Committee within the first 90 days of each calendar year. +5. +Establishment of Performance Goals. Within the first 90 days of each calendar year and at a time when the outcome is substantially uncertain, the Committee shall establish performance goals for each Participant. The performance goals established for each Participant or class of Participants (e.g., executive management) shall be in writing. The following rules shall apply in establishing performance goals: +a. +Types of performance. The performance goals established by the Committee shall be based on one or more performance measures that apply to the Participant alone (“Individual Performance”), the Participant’s business unit/function performance (“Business Unit/Function Performance”), the Company as a whole (“Corporate Performance”), or any combination of one or more of Individual Performance, Business Unit/Function Performance or Corporate Performance. If a Participant’s performance goals are based on a combination of Individual +Performance, Business Unit/Function Performance or Corporate Performance, the Committee shall weight the importance of each type of performance that applies to such Participant by assigning a percentage to it (the “Weighted Percentage”). In no event shall the aggregate Weighted Percentages exceed 100 percent. +b. +Performance measures. The Committee shall establish the performance measures that apply to Corporate Performance, Business Unit/Function Performance and Individual Performance. +i. +Corporate Performance. The performance measures for Corporate Performance shall be established based on such measures as stock price, market share, revenues, earnings per share, return on equity, return on average assets, return on invested capital, expense management, or other objective criteria. +ii. +Business Unit/Function Performance. The performance measures for Business Unit/Function Performance shall be established separately for each Participant whose performance goals are based in whole or in part on Business Unit/Function Performance. Such performance measures shall be based on such business criteria as achievement of financial or non-financial goals, safety record, training goals, or other objective criteria. +iii. +Individual Performance. The performance measures for Individual Performance shall be established separately for each Participant whose performance goals are based in whole or in part on Individual Performance. Such performance measures shall be based on such business criteria as process improvement, expense management, achievement of particular management objectives, or other objective criteria. +If more than one business criteria is used as a performance measure for a type of performance (e.g., Corporate Performance), the Committee shall weight the importance of each business criteria by assigning a percentage to it. In no event shall the aggregate percentages exceed 100 percent. +6. +Levels of performance. The Committee shall establish a threshold, target and superior level of performance with respect to each measure of performance. A “Performance Value” shall be assigned to each such level of performance as follows: +Level of Performance +Performance Value +Threshold +25 % +Target +100 % +Superior +200 % +Interpolation shall be used to determine the Performance Value associated with performance between the threshold, target and superior performance levels. Performance below the threshold level shall have a 0 value and performance above the superior level shall have a value equal to 200%. +7. +Determination and Payment of Cash Award Amounts. The determination of the Award (if any) payable to a Participant shall be made as soon as practicable after the end of each calendar year by the Committee. The Cash Award Amount shall be determined in accordance with the following formula: +[(AxBxC) + (AxDxE) + (AxFxG)] x Base Compensation = Cash Award Amount +where: +(A) +is the Participant’s Target Award; +(B) +is the Participant’s Weighted Percentage (if any) for Individual Performance; +(C) +is the Performance Value assigned to the level of performance attained by the Participant for Individual Performance; +(D) +is the Participant’s Weighted Percentage (if any) for Business Unit/Function Performance; +(E) +is the Performance Value assigned to the level of performance attained by the Participant for Business Unit/Function Performance; +(F) +is the Participant’s Weighted Percentage (if any) for Corporate Performance; and +(G) +is the Performance Value assigned to the level of performance attained by the Participant for Corporate Performance. +The Award, if any, earned by a Participant with respect to a calendar year shall be paid to him in cash as soon as practicable following the determination of the Award and the Committee’s written certification that the Participant achieved his performance goals. The Committee shall not have any discretion to increase the amount of an Award otherwise earned and payable pursuant to the terms of the Plan to a Participant. The Committee shall have the discretion to reduce or eliminate the amount of an Award otherwise earned and payable pursuant to the terms of the Plan to any Participant. No Award shall be paid under the Plan to a Participant with respect to any particular performance measure if his performance under the measure is below the threshold level of performance established by the Committee for that measure. However, see 13.j. where Committee has discretion to pay amounts outside of the Plan for outstanding performance. +8. +Termination For Reasons Other Than Death, Disability or Retirement. If a Participant’s employment as an executive officer with the Company is terminated for any reason other than death, disability or retirement during a calendar year or thereafter prior to payment of an Award , he shall forfeit his right to receive any Award under this Plan, except that the Committee may elect, in its sole and absolute discretion, to pay an Award to such Participant based on his performance and Base Compensation for that portion of the calendar year during which he was employed as an executive officer of the Company. +9. +Termination Due to Death, Disability or Retirement. If a Participant’s employment with the Company as an executive officer of the Company is terminated during a calendar year or thereafter prior to payment of an Award by reason of death, disability or retirement, and the Participant has been actively employed by the Company as an executive officer of the Company for a minimum of 6 calendar months during such calendar year, he shall be eligible for an Award based on his performance and Base Compensation for that portion of the calendar year in which he was employed. The determination and payment of such Award shall be made by the Committee at the end of such calendar year in the manner described in Section 7. If a Participant’s employment as an executive officer of the Company shall terminate during the calendar year for any reason with less than 6 calendar months of such employment, he shall forfeit his right to receive any Award under this Plan, except that the Committee may elect, in its sole and absolute discretion, to pay an Award to such Participant based on his performance and Base Compensation for that portion of the calendar year during which he was employed. +10. +No Implied Contract. Nothing contained in this Plan shall be construed as conferring upon any Participant the right or imposing upon him the obligation to continue in the employment of the Company, nor shall it be construed as imposing upon the Company the obligation to continue to employ the Participant. +11. +Amendments. The Board of Directors of the Company or the Committee may amend or terminate the Plan in whole or in part at any time; provided, that no such action shall adversely affect any Award earned and payable under the Plan as of the date of such amendment or termination. +12. +Effective Date. The Plan shall become effective on March 31, 2016, subject to the approval by a majority vote of the stockholders of the Company voting on the proposal at the annual meeting of stockholders for 2016. +13. +Miscellaneous. +a. +Taxes and other deductions. Any tax required to be withheld by any government authority shall be deducted from each Award. Other deductions such as 401(k) may also be deducted. +b. +Non-assignability. Awards under the Plan shall not be subject to anticipation, alienation, pledge, transfer or assignment by any person entitled thereto, except by designation of a beneficiary or by will or the laws of descent and distribution. +c. +No trust. The obligation of the Company to make payments hereunder shall constitute a liability of the Company to the Participants. Such payments shall be made from the general funds of the Company, and the Company shall not be required to establish or maintain any special or separate fund, or otherwise to segregate assets to assure that such payments shall be made, and neither the Participants nor their beneficiaries shall have any interest in any particular assets of the Company by reason of its obligations hereunder. Nothing contained in this Plan shall create or be construed as creating a trust of any kind or any other fiduciary relationship between the Company and the Participants or any other person. To the extent that any person acquires a right to receive payments from the Company hereunder, such right shall be no greater than the right of an unsecured creditor of the Company. +d. +Facility of payments. If a Participant or any other person entitled to receive an Award under this Plan (the “recipient”) shall, at the time payment of any such amount is due, be incapacitated so that such recipient cannot legally receive or acknowledge receipt of the payment, then the Committee, in its sole and absolute discretion, may but shall not be required to direct that the payment be made to the legal guardian, attorney-in-fact or person with whom such recipient is residing, and such payment shall be in full satisfaction of the Company’s obligation under the Plan with respect to such amount. +e. +Beneficiary designation. Each Participant may designate a beneficiary hereunder. Such designation shall be in writing, shall be made in the form and manner prescribed by the Committee, and shall be effective only if filed with the Committee prior to the Participant’s death. A Participant may, at any time prior to his death, and without the consent of his beneficiary, change his designation of beneficiary by filing a written notice of such change with the Committee in the form and manner prescribed by the Committee. In the absence of a designated beneficiary, or if the designated beneficiary and any designated contingent beneficiary predecease the Participant, the beneficiary shall be the Participant’s surviving spouse, or if the Participant has no surviving spouse, the Participant’s estate. +f. +Governing Law. The Plan shall be construed and its provisions enforced and administered in accordance with the laws of the State of Georgia. +g. +A Participant must be employed in the same position on December 31 to be eligible for payment of an Award, except as described below in i. +h. +A Participant will not receive an Award if for any reason he or she is in a position on December 31 that is not eligible for an Award or if you are not actively employed on the date that the Award is paid. +i. +Actions May Prohibit Bonus. A Participant will not receive any bonus if he or she shall falsify documents, violate Company policy or know of such actions by employees under his or her direction without taking corrective actions. +j. +Bonuses Outside the Plan. The Compensation Committee reserves the right to reward performance in situations by awarding a Participant an award outside the terms of this Plan. +k. +Adjustment or modification of performance goals. The Committee, in its discretion may adjust or modify the calculation of Performance Goals in the event of, in recognition of, or in anticipation of, any unanticipated, unusual nonrecurring or extraordinary corporate item, transaction, event, or development, or in response to, or in anticipation of, changes in applicable laws, regulations, accounting principles, or business conditions. +This RPC, Inc. Performance-Based Incentive Cash Compensation Plan has been executed on behalf of the Company as of the 31st day of March, 2006. +RPC, Inc. +By: +/s/ Richard A. Hubbell +Richard A. Hubbell +President and Chief Executive Officer +Attest: +/s/ Linda H. Graham +Linda H. Graham +Secretary +[Corporate Seal] \ No newline at end of file diff --git a/raw/proxies/0000742278/0001571049-16-013214/proxy_rpt.txt b/raw/proxies/0000742278/0001571049-16-013214/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..07ddefda0157d65f9a31860dd229ba6f9b493ef1 --- /dev/null +++ b/raw/proxies/0000742278/0001571049-16-013214/proxy_rpt.txt @@ -0,0 +1,8 @@ +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +Effective with the spin-off in 2001, the Company began providing certain administrative services to Marine Products. The service agreements between Marine Products and the Company provide for the provision of services on a cost reimbursement basis and may be terminated upon six months’ notice. The services covered by these agreements include administration of certain employee benefit programs and other administrative services. Charges from the Company (or from corporations which are subsidiaries of the Company) for such services aggregated approximately $753,000 in 2015. +RPC and Marine Products own 50 percent each of a limited liability company called 255 RC, LLC that was created for the joint purchase and ownership of a corporate aircraft. The purchase of the aircraft was completed in January 2015, and the purchase was funded primarily by a $2,554,000 contribution by each company to 255 RC, LLC. Each of RPC and Marine Products is a party to an operating lease agreement with 255 RC, LLC for a period of five years. During 2015, RPC recorded certain net operating costs comprised of rent and an allocable share of fixed costs of approximately $186,000 for the corporate aircraft. +During 2015, a subsidiary of RPC conducted business with companies owned by LOR, Inc. Mr. R. Randall Rollins, Chairman, and Mr. Gary W. Rollins, Director, are officers, directors and controlling stockholders of LOR, Inc. In 2015, payments totaling approximately $1,127,000 were made to these LOR, Inc. companies primarily for the purchase of parts and repair services related to certain of RPC’s oilfield operating equipment. RPC believes the charges incurred are at least as favorable as the charges that would have been incurred for similar purchases from unaffiliated third parties. +RPC receives certain administrative services including an allocation for office space from Rollins. The service agreements between Rollins and the Company provide for the provision of services on a cost reimbursement basis and are terminable on six months’ notice. The services covered by these agreements include office space, administration of certain employee benefit programs, and other administrative services. Charges to the Company (or to corporations which are subsidiaries of the Company) for such services and rent aggregated approximately $100,000 in 2015. +27 +A group that includes the Company’s Chairman of the Board, R. Randall Rollins, his brother Gary W. Rollins who is also a director, and certain companies under their control, possesses in excess of fifty percent of the Company’s voting power. Please refer to the discussion above under the heading, “Corporate Governance and Board of Directors Committees and Meetings, Director Independence and NYSE Requirements, Controlled Company Exemption.” The group discussed above also controls in excess of fifty percent of Marine Products’ voting power. +Our Code of Business Conduct and Ethics for Directors and Executive Officers and Related Party Transactions Policy provides that related party transactions, as defined in Regulation S-K, Item 404(a) must be reviewed, approved and/or ratified by our Nominating and Corporate Governance Committee. As set forth in our Code, our Nominating and Corporate Governance Committee has the responsibility to ensure that it only approves or ratifies related party transactions that are in compliance with applicable law, consistent with the Company’s corporate governance policies (including those relative to conflicts of interest and usurpation of corporate opportunities) and on terms that are deemed to be fair to the Company. The Committee has the authority to hire legal, accounting, financial or other advisors as it may deem necessary or desirable and/or to delegate responsibilities to executive officers of the Company in connection with discharging its duties. A copy of the Code is available on our website at www.rpc.net under the Governance section. All related party transactions for the fiscal year ended December 31, 2015 were reviewed, approved and/or ratified by the Nominating and Corporate Governance Committee in accordance with the Code. \ No newline at end of file diff --git a/raw/proxies/0000742278/0001571049-17-002670/proxy.txt b/raw/proxies/0000742278/0001571049-17-002670/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..85ff06df6563a0f38e5047872893ad3955f30fab --- /dev/null +++ b/raw/proxies/0000742278/0001571049-17-002670/proxy.txt @@ -0,0 +1,1218 @@ +DEF 14A +1 +t1700645-def14a.htm +DEFINITIVE PROXY STATEMENT +t1700645-def14a - none - 4.2044204s +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A INFORMATION +Proxy Statement Pursuant to Section 14(a) of the Securities +Exchange Act of 1934 (Amendment No. ___) +Filed by the Registrant ☒ +Filed by a Party other than the Registrant ☐ +Check the appropriate box: +☐ +Preliminary Proxy Statement +☐ +Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +☒ +Definitive Proxy Statement +☐ +Definitive Additional Materials +☐ +Soliciting Material Pursuant to §240.14a-12 +RPC, Inc. +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +☒ +No fee required. +☐ +Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. +(1) +Title of each class of securities to which transaction applies: N/A +(2) +Aggregate number of securities to which transaction applies: N/A +(3) +Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): N/A +(4) +Proposed maximum aggregate value of transaction: N/A +(5) +Total fee paid: N/A +☐ +Fee paid previously with preliminary materials. +☐ +Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing: +(1) +Amount previously paid: N/A +(2) +Form, Schedule or Registration Statement No.: N/A +(3) +Filing party: N/A +(4) +Date Filed: N/A +RPC, INC. +NOTICE OF ANNUAL MEETING OF STOCKHOLDERS +2801 Buford Highway NE, Suite 520, Atlanta, Georgia 30329 +TO THE HOLDERS OF THE COMMON STOCK: +PLEASE TAKE NOTICE that the 2017 Annual Meeting of Stockholders of RPC, Inc., a Delaware corporation (“RPC” or the “Company”), will be held at 2170 Piedmont Road, NE, Atlanta, Georgia, on Tuesday, April 25, 2017, at 12:15 P.M., or any adjournment thereof, for the following purposes, as more fully described in the Proxy Statement accompanying this notice: +1. +To elect the three Class I nominees identified in the attached Proxy Statement to the Board of Directors; +2. +To ratify the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2017; +3. +To hold a nonbinding vote on executive compensation as disclosed in these materials; +4. +To hold a nonbinding vote regarding the frequency of voting on executive compensation; and +5. +To consider and act upon such other business as may properly come before the Annual Meeting or any adjournment of the meeting. +The Proxy Statement dated March 21, 2017 is attached. +The Board of Directors has fixed the close of business on February 28, 2017 as the record date for the determination of stockholders entitled to notice of, and to vote at, the Annual Meeting or any adjournment thereof. +Stockholders who do not expect to be present at the meeting are urged to complete, date, sign and return the enclosed proxy. No postage is required if the enclosed envelope is mailed in the United States. +The Proxy Statement and 2016 Annual Report are available at http://www.astproxyportal.com/ast/26231/ +BY ORDER OF THE BOARD OF DIRECTORS +Linda H. Graham, Secretary +Atlanta, Georgia +March 21, 2017 +PROXY STATEMENT +This Proxy Statement and a form of proxy were first mailed to stockholders on or about March 21, 2017. The following information concerning the enclosed proxy and the matters to be acted upon at the Annual Meeting of the Stockholders to be held on April 25, 2017, is submitted by the Company to the stockholders in connection with the solicitation of proxies on behalf of the Company’s Board of Directors. +SOLICITATION OF AND POWER TO REVOKE PROXY +A form of proxy is enclosed. Each proxy submitted will be voted as directed, but if not otherwise specified, proxies solicited by the Board of Directors of the Company will be voted in favor of the candidates for election to the Board of Directors, in favor of ratification of the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2017, and in favor of the nonbinding proposals to approve executive compensation and the frequency of such votes to be every three years. +A stockholder executing and delivering a proxy has power to revoke the same and the authority thereby given at any time prior to the exercise of such authority, if he so elects, by contacting either proxy holder, by timely submitting a later dated proxy changing his vote, or by attending the meeting and voting in person. However, a beneficial stockholder who holds his shares in street name must secure a proxy from his broker before he can attend the meeting and vote. All costs of solicitation have been, and will be, borne by the Company. +CAPITAL STOCK +The outstanding capital stock of the Company on February 28, 2017 consisted of 217,792,539 shares of Common Stock, par value $0.10 per share. Holders of Common Stock are entitled to one vote (non-cumulative) for each share of such stock registered in their respective names at the close of business on February 28, 2017, the record date for determining stockholders entitled to notice of, and to vote at, the meeting or any adjournment thereof. +A majority of the outstanding shares will constitute a quorum at the Annual Meeting. Abstentions will be counted for purposes of determining the presence or absence of a quorum for the transaction of business. In accordance with the General Corporation Law of the state of Delaware, the election of the nominees named herein as Directors will require the affirmative vote of a plurality of the votes cast by the shares of Company Common Stock entitled to vote in the election provided that a quorum is present at the Annual Meeting. In the case of a plurality vote requirement (as in the election of directors), where no particular percentage vote is required, the outcome is solely a matter of comparing the number of votes cast for each nominee, with those nominees receiving the most votes being elected, and hence only votes for director nominees (and not abstentions or broker non-votes) are relevant to the outcome. In this case, the three nominees receiving the most votes will be elected. The affirmative vote of a majority of shares of common stock present in person or represented by proxy and entitled to vote at the meeting is required to approve the ratification of the appointment of the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2017, and to approve the nonbinding shareholder resolution on executive compensation. Abstentions will have the effect of a vote against the non-binding proposal on executive compensation and the proposal for the ratification of the appointment of the Company’s independent registered public accounting firm, while broker non-votes will have no effect on either proposal and will be disregarded. The affirmative vote of a plurality of the votes cast by the shares of Company Common Stock entitled to vote at the meeting is required on the proposal on whether an advisory vote on executive compensation should be held every one, two or three years, meaning that the option that receives the highest number of favorable votes will be considered to represent the non-binding preference of stockholders for the frequency of future advisory votes on executive compensation. +There are no rights of appraisal or similar dissenter’s rights with respect to any matter to be acted upon pursuant to this Proxy Statement. It is expected that shares held of record by officers and directors of the Company, which in the aggregate represent approximately 74 percent of the outstanding shares of Common Stock, will be voted for the nominees for directors, for the ratification of the appointment of the Company’s independent registered public accounting firm, for the approval, on an advisory basis, of the compensation of the Company’s named executive officers, and for a frequency of every three years for future advisory votes on executive compensation. +1 +STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT +The executives named in the Summary Compensation Table, and the name and address of each stockholder (or “group” as that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended) who owned beneficially five percent (5%) or more of the shares of Common Stock of the Company on February 28, 2017, together with the number of shares owned by each such person and the percentage of outstanding shares that ownership represents, and information as to Common Stock ownership of the directors and executive officers of the Company as a group (according to information received by the Company), are set out below: +Name and Address of Beneficial Owner +Amount +Beneficially +Owned (1) +Percent of +Outstanding +Shares +R. Randall Rollins +Chairman of the Board +2170 Piedmont Road, NE +Atlanta, Georgia +147,949,000 (2) +67.9 +Gary W. Rollins +Vice Chairman and Chief Executive Officer, Rollins, Inc. +2170 Piedmont Road, NE +Atlanta, Georgia +150,883,131 (3) +69.3 +Richard A. Hubbell +President and Chief Executive Officer +2801 Buford Highway NE, Suite 520 +Atlanta, Georgia +2,760,396 (4) +1.3 +Linda H. Graham +Vice President and Secretary +2170 Piedmont Road, NE +Atlanta, Georgia +973,170 (5) +** +Ben M. Palmer +Vice President, Chief Financial Officer and Treasurer +2801 Buford Highway NE, Suite 520 +Atlanta, Georgia +632,086 (6) +** +All Directors and Executive Officers as a group +(10 persons) +160,025,150 (7) +73.5 +** +Less than one percent +(1) +Except as otherwise noted, the nature of the beneficial ownership for all shares is sole voting and investment power. +(2) +Includes 3,505,614 shares of Company Common Stock held in two charitable trusts of which he is a co-trustee and as to which he shares voting and investment power. Also includes 711,062 shares of Company Common Stock held indirectly on account of his role in a corporate fiduciary. Also includes 129,876,265 shares of Company Common Stock held by RFPS Management Company II, L.P., a Georgia limited partnership. The general partner of RFPS Management Company II, L.P., is RFA Management Company, LLC, a Georgia limited liability company, the manager of which is LOR, Inc., a Georgia corporation. Mr. R. Randall Rollins is an officer and director of LOR, Inc. Mr. R. Randall Rollins and Mr. Gary W. Rollins have voting control of LOR, Inc. Also includes 11,292,525 shares of Company Common Stock held by RFT Investment Company, LLC. LOR, Inc., is the manager of RFT Investment Company, LLC. Also includes 1,228,400 shares of Company Common Stock held by RFPS Investments II, L.P., a Georgia limited partnership. LOR Investment Company, LLC, a Georgia limited liability company, is the general partner of RFPS Investments II, L.P. LOR, Inc., holds fifty percent of all voting interests in LOR Investment Company, LLC. Also includes 258,750 shares of restricted stock awards for Company Common Stock. This also includes 257,106 shares of Company Common Stock held by his wife, as to which Mr. Rollins disclaims any beneficial interest. Mr. R. Randall Rollins is part of a control group holding Company securities that includes Mr. Gary W. Rollins, as disclosed on a Schedule 13D on file with the U.S. Securities and Exchange Commission. +(3) +Includes 3,505,614 shares of Company Common Stock held in two charitable trusts of which he is co-trustee and as to which he shares voting and investment power. Also includes 711,062 shares of Company Common Stock held indirectly on account of his role in a corporate fiduciary. Also includes 129,876,265 shares of Company Common Stock held by RFPS Management Company II, L.P., a Georgia limited partnership. The general partner of RFPS Management Company II, L.P., is RFA Management Company, LLC, a Georgia limited liability company, the manager of which is LOR, Inc., a Georgia corporation. Mr. Gary W. Rollins is an officer and director of LOR, Inc. Mr. R. Randall Rollins and Mr. Gary W. Rollins have voting control +2 +of LOR, Inc. Also includes 11,292,525 shares of Company Common Stock held by RFT Investment Company, LLC, a Georgia limited liability company. LOR, Inc., is the manager of RFT Investment Company, LLC. Also includes 1,228,400 shares of the Company Common Stock held by RFPS Investments II, L.P., a Georgia limited partnership. LOR Investment Company, LLC, a Georgia limited liability company, is the general partner of RFPS Investments II, L.P. LOR, Inc., holds fifty percent of all voting interests in LOR Investment Company, LLC. This also includes 2,970 shares of Company Common Stock held by his wife, as to which Mr. Rollins disclaims any beneficial interest. Mr. Gary W. Rollins is part of a control group holding Company securities that includes Mr. R. Randall Rollins, as disclosed on a Schedule 13D on file with the U.S. Securities and Exchange Commission. +(4) +Includes 258,750 shares of restricted stock awards for Company Common Stock. +(5) +Includes 85,750 shares of restricted stock awards for Company Common Stock. +(6) +Includes 155,250 shares of restricted stock awards for Company Common Stock. +(7) +Shares held in trusts as to which more than one officer and/or director are co-trustees or entities in which there is common ownership have been included only once. Includes 758,500 shares of restricted stock awards for Company Common Stock awarded and issued to all of the executive officers pursuant to the Company’s Stock Incentive Plans. +PROPOSAL 1: ELECTION OF DIRECTORS +At the Annual Meeting, Messrs. R. Randall Rollins, Henry B. Tippie and James B. Williams will be nominated to serve as Class I directors. The nominees for election at the 2017 Annual Meeting are all now directors of the Company. The directors in each class serve for a term of three years. The director nominees will serve in their respective class until their successors are elected and qualified. Six other individuals serve as directors but are not standing for re-election because their terms as directors extend past this Annual Meeting pursuant to provisions of the Company’s Bylaws that provide for the election of directors for staggered terms, with each director serving a three-year term. Ms. Amy Rollins Kreisler was recommended to the Nominating and Governance Committee as a director candidate by our Chairman, was appointed on October 25, 2016 as a Class III director by the Board of Directors to fill the seat vacated upon the death of former director Mr. James A. Lane, Jr., and will stand for election in 2019 when the Class III directors are up for re-election. Unless authority is withheld, the proxy holders will vote for the election of each nominee named below. Although management does not contemplate the possibility, in the event any nominee is not a candidate or is unable to serve as a director at the time of the election, unless authority is withheld, the proxies will be voted for any nominee who shall be designated by the present Board of Directors and recommended by the Nominating and Governance Committee, to fill such vacancy. +Director Qualifications +As described in more detail below, we believe that each of our directors is well suited to serve on our Board for a variety of individual reasons and because collectively they bring a wealth of experience from diverse backgrounds that have combined to provide us with an excellent mix of experiences and viewpoints. The name and age of each of our directors and each of the nominees, his or her principal occupation, together with the number of shares of Common Stock beneficially owned, directly or indirectly, by each and the percentage of outstanding shares that ownership represents, all as of the close of business on February 28, 2017 (according to information received by the Company), other board memberships and the period during which he or she has served us as a director are set forth as follows: +3 +Names of Directors +Principal Occupation (1) +Service as +Director +Age +Shares of +Common +Stock (2) +Percent of +Outstanding +Shares +Names of Director Nominees +Class I (Current Term Expires 2017; New Term Will Expire 2020) +R. Randall Rollins (3)(9) +Chairman of the Board of the Company; +Chairman of the Board of Marine +Products Corporation (boat +manufacturing); Chairman of the Board +of Rollins, Inc. (consumer services). +1984 to date +85 +147,949,000 (4) +67.9 +Henry B. Tippie +Presiding Director of the Company; +Chairman of the Board and Chief +Executive Officer of Tippie Services, Inc. +(management services); Chairman of the +Board of Dover Downs Gaming & +Entertainment, Inc. (operator of +multi-purpose gaming and entertainment +complex); Chairman of the Board of +Dover Motorsports, Inc. (operator of +motor racing tracks). +1984 to date +90 +2,252,277 (5) +1.0 +James B. Williams +Retired Chairman of the Executive Committee, SunTrust Banks, Inc. (bank holding company) +1984 to date +83 +303,750 +** +Names of Directors Whose Terms Have Not Expired +Class II (Term Expires 2018) +Gary W. Rollins (3) +Vice Chairman and Chief Executive Officer of Rollins, Inc. (consumer services). +1984 to date +72 +150,883,131 (6) +69.3 +Richard A. Hubbell +President and Chief Executive Officer of the Company; President and Chief Executive Officer of Marine Products Corporation (boat manufacturing). +1987 to date +72 +2,760,396 (7) +1.3 +Larry L. Prince +Retired Chairman of the Board of Directors of Genuine Parts Company (automotive parts distributor). +2009 to date +78 +15,000 +** +Class III (Term Expires 2019) +Linda H. Graham +Vice President and Secretary of the +Company; Vice President and Secretary of +Marine Products Corporation (boat +manufacturing). +2001 to date +80 +973,170 (8) +** +Bill J. Dismuke +Retired President of Edwards Baking Company (manufacturer of pies and pie parts). +2005 to date +80 +7,593 +** +Amy Rollins Kreisler (9) +Executive Director – The O. Wayne Rollins Foundation and The Ma-Ran Foundation (private charitable entities). +October 25, +2016 to date +47 +1,228,400 (10) +** +** +Less than one percent +(1) +Except as noted, each of the directors has held the positions of responsibility set out in this column (but not necessarily his or her present title) for more than five years. In addition to the directorships listed in this column, the following individuals also serve on the Boards of Directors of the following companies: R. Randall Rollins: Dover Downs Gaming & Entertainment, Inc. and Dover Motorsports, Inc.; and Gary W. Rollins: Genuine Parts Company and Emory University. All of the directors shown in the above table are also directors of Marine Products Corporation (“Marine Products” or “MPC”) and, with the exception of Mr. Hubbell and Ms. Graham, are also directors of Rollins, Inc. (“Rollins”). Larry L. Prince formerly served as a Director of Genuine Parts Company. James B. Williams formerly served as a Director of The Coca-Cola Company. Amy Rollins Kreisler is a Trustee on The Lovett School Board of Trustees and also serves on their Executive Committee. She is Trustee on the Skyland Trail Board of Trustees where she is also the Chairman of the Governance Committee. +(2) +Except as otherwise noted, the nature of the beneficial ownership for all shares is sole voting and investment power. +4 +(3) +R. Randall Rollins and Gary W. Rollins are brothers. +(4) +See information contained in footnote (2) to the table appearing in the Capital Stock section. +(5) +Includes shares held by a wholly owned corporation that owns 2,277 shares. +(6) +See information contained in footnote (3) to the table appearing in the Capital Stock section. +(7) +See information contained in footnote (4) to the table appearing in the Capital Stock section. +(8) +See information contained in footnote (5) to the table appearing in the Capital Stock section. +(9) +Amy Rollins Kreisler is the daughter of R. Randall Rollins. +(10) +Represents shares of Company Common Stock held by RFPS Investments II, L.P. Ms. Kreisler holds a voting interest in LOR Investment Company, LLC, the general partner of RFPS Investments II, L.P. +Key Attributes, Experience and Skills of Directors +R. Randall Rollins was elected a Director of RPC in 1984. Mr. Rollins has extensive knowledge of the Company’s business and industry serving over 32 years at the Company. Mr. Rollins serves as Chairman of the Board of the Company. He is also Chairman of the Board for Marine Products Corporation as well as Rollins, Inc. Mr. Rollins has been a Director of Dover Motorsports, Inc. since 1996 and a Director of Dover Downs Gaming & Entertainment, Inc. since 2002. Mr. Rollins served as a Director of SunTrust Banks, Inc. from 1995 to 2004. +Richard A. Hubbell was elected a Director of RPC in 1987. Mr. Hubbell has extensive knowledge of the Company’s business and industry serving over 32 years at the Company. He has served as the Chief Executive Officer of the Company since 2003. In addition, Mr. Hubbell serves as the President of the Company. Mr. Hubbell is also the President, Chief Executive Officer and a Director of Marine Products Corporation. +Gary W. Rollins was elected a Director of RPC in 1984. Mr. Rollins has extensive knowledge of the Company’s business and industry. In addition, Mr. Rollins serves as the Vice Chairman and Chief Executive Officer of Rollins, Inc. Mr. Rollins has been a Director of Marine Products Corporation since 2001 and as a Director of Rollins, Inc. since 1981. Mr. Rollins has been a Director of Genuine Parts Company since 2005. +Henry B. Tippie was elected a Director of RPC in 1984. Mr. Tippie brings extensive financial and management experience to our Board of Directors serving as Controller and Chief Financial Officer of Rollins, Inc. from 1953 to 1970. Mr. Tippie has over 66 years of experience including being involved with publicly owned companies during the past 56 years in various positions including founder, CFO, CEO, President, Vice-Chairman and Chairman of the Board. He is currently Chairman of the Board of Dover Downs Gaming & Entertainment, Inc. as well as Dover Motorsports, Inc. and is also a Director of Marine Products Corporation and Rollins, Inc. +James B. Williams was elected a Director of RPC in 1984. Mr. Williams brings extensive financial and management experience to our Board of Directors serving over 32 years as a Director. He retired in March 1998 as Chairman of the Board and Chief Executive Officer of SunTrust Banks, Inc., a bank holding company. He is a Director of Marine Products Corporation and Rollins, Inc. Mr. Williams previously served as a Director of Genuine Parts Company, Georgia Pacific Corporation and The Coca-Cola Company. +Bill J. Dismuke was elected a Director of RPC in 2005. Mr. Dismuke brings extensive financial, management and manufacturing experience to our Board of Directors. He served as a Senior Vice President of Rollins, Inc. for five years from 1979 until 1984. He retired as President of Edwards Baking Company in 1995. Mr. Dismuke has also been a Director of Rollins, Inc. since 1984 and Marine Products Corporation since 2005. +Larry L. Prince was elected a Director of RPC in 2009. Mr. Prince brings extensive management experience to our Board of Directors. He served as Chairman of the Board of Genuine Parts Company from 1990 through February 2005 and as Chief Executive Officer from 1989 through August 2004. Mr. Prince is also a Director of Rollins, Inc. and Marine Products Corporation. Mr. Prince previously served as a Director of SunTrust Banks, Inc., Crawford & Company, Equifax, Inc., John H. Harland Company and Genuine Parts Company. +5 +Linda H. Graham was elected a Director of RPC in 2001. Ms. Graham brings extensive management experience to our Board of Directors. She has been the Vice President and Secretary of RPC since 1987. She has been Vice President and Secretary of Marine Products Corporation since 2001. In addition, Ms. Graham has served as a Director of Marine Products Corporation since 2001. +Amy Rollins Kreisler was nominated as a Director of RPC in October 2016. Ms. Kreisler received her B.A. in English from Hollins University and her juris doctor from The College of William and Mary Law School. She is a former attorney of the law firm Arnall Golden Gregory LLP. Ms. Kreisler is a Trustee on The Lovett School Board of Trustees and also serves on their Executive Committee. She is Trustee on the Skyland Trail Board of Trustees where she is also the Chairman of the Governance Committee. Additionally, she is Executive Director of The O. Wayne Rollins Foundation and The Ma-Ran Foundation. Ms. Kreisler brings extensive financial and investment experience to our Board of Directors. +Our Board of Directors recommends a vote “FOR” the nominees listed above. +PROPOSAL 2: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +The Audit Committee of the Board of Directors has appointed Grant Thornton LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2017. During fiscal year 2016, Grant Thornton LLP served as the Company’s independent registered public accounting firm. Representatives of Grant Thornton LLP are expected to attend the annual meeting, where they will be available to respond to appropriate questions and, if they desire, to make a statement. +Although the Company is not required to seek ratification of this appointment, the Audit Committee and the Board of Directors believes that it is appropriate to do so. If stockholders do not ratify the appointment of Grant Thornton LLP, the current appointment will stand, but the Audit Committee will consider the stockholder action in determining whether to retain Grant Thornton LLP as the Company’s independent registered public accounting firm for future fiscal years. +Our Board of Directors recommends a vote “FOR” the ratification of the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm for the 2017 fiscal year. +PROPOSAL 3: NONBINDING VOTE ON EXECUTIVE COMPENSATION +As required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”), our Board of Directors is submitting a “Say on Pay” proposal for stockholder consideration. While the vote on executive compensation is nonbinding and solely advisory in nature, our Board of Directors and the Compensation Committee value the opinion of our stockholders and will review the voting results and seek to determine the causes of any significant negative voting result to better understand issues and concerns not previously presented. Stockholders who want to communicate with the Board of Directors or management should refer to “Director Communications” on page 12 of this proxy statement for additional information. +Executive compensation is an important matter for our stockholders. The core of our executive compensation philosophy and practice continues to be pay for performance. Our executive officers are compensated in a manner consistent with our strategy, competitive practice, sound corporate governance principles, and stockholder interests and concerns. We believe our compensation program is strongly aligned with the long-term interests of our stockholders. Compensation of our executive officers is designed to enable us to attract and retain talented and experienced senior executives to lead us successfully in a competitive environment. +Our named executive officers are identified on page 2, and the compensation of the named executive officers is described on pages 15 to 26, including the Compensation Discussion and Analysis (“CD&A”) on pages 15 to 19. The CD&A section of this proxy statement provides additional details on our executive compensation, including our compensation philosophy and objectives and the fiscal 2016 compensation of the named executive officers. +6 +We are asking stockholders to vote on the following resolution: +“Resolved, that the stockholders approve, on an advisory basis, the compensation of the Company’s named executive officers as disclosed in the Proxy Statement for the 2017 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission (which disclosure includes the Compensation Discussion and Analysis, the Summary Compensation Table and other related tables and narrative disclosures).” +As indicated above, the stockholder vote on this resolution will not be binding on us or the Board of Directors, and will not be construed as overruling any decision by us or the Board. The vote will not be construed to create or imply any change to our fiduciary duties or those of the Board, or to create or imply any additional fiduciary duties for us or the Board. +The affirmative vote of a majority of the shares of our common stock present or represented by proxy and voting at the annual meeting is required for approval of this proposal. If you own shares through a bank, broker or other holder of record, you must instruct your bank, broker or other holder of record how to vote in order for them to vote your shares so that your vote can be counted on this proposal. +Currently, we hold stockholder advisory votes on executive compensation every three years, and the next such vote after this years’ vote is scheduled to occur in 2020. +Our Board of Directors unanimously recommends that you vote “FOR” the approval, on an advisory basis, of the compensation of our named executive officers as disclosed in the Compensation Discussion and Analysis, the accompanying compensation tables, and the related narrative disclosure. +PROPOSAL 4: NONBINDING VOTE REGARDING THE FREQUENCY OF VOTING ON EXECUTIVE COMPENSATION +Under the Dodd-Frank Act, we are also required to seek a nonbinding advisory stockholder vote regarding the frequency of submission to stockholders of a “Say on Pay” advisory vote such as Proposal 3. The Dodd-Frank Act specifies that stockholders be given the opportunity to vote on our executive compensation program either annually, every two years or every three years. Although this vote is advisory and nonbinding, our Board of Directors will review voting results and give serious consideration to the outcome of such voting. +Our Board of Directors recognizes the importance of receiving regular input from our stockholders on important issues such as our compensation programs. Our Board also believes that a well-structured compensation program should include plans that drive creation of stockholder value over the long-term, and that it should receive advisory input from our stockholders. Accordingly, as indicated below, the Board recommends that you vote in favor of a three-year advisory vote on our compensation programs. The stockholders voted in 2011 to conduct advisory votes to approve executive compensation every three years, and consistent with that vote, the next advisory vote to approve executive compensation will be held at the 2017 Annual Meeting of Stockholders. The advisory vote on the frequency of voting on executive compensation is to be held not less frequently than every six years, with the next such vote in the 2023 Annual Meeting of Stockholders. +Stockholders may cast their vote on their preferred voting frequency by choosing the option of one year, two years, three years, or abstain from voting when voting in response to the resolution set forth below: +“Resolved that the option once every one year, two years or three years that receives the highest number of votes cast for this resolution will be determined to be the preferred frequency with which the Company is to hold a stockholder vote to approve the compensation of the named executive officers, as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission (which disclosure includes the Compensation Discussion and Analysis, the Summary Compensation Table and other related tables and narrative disclosures).” +The option of one year, two years or three years that receives the highest number of votes cast by stockholders will be the frequency for the advisory vote on executive compensation that has been selected by stockholders. However, as indicated above, the stockholder vote on this resolution will not be binding on +7 +us or the Board of Directors, and will not be construed as overruling any decision by us or the Board. The vote will not be construed to create or imply any change to our fiduciary duties or those of the Board, or to create or imply any additional fiduciary duties for us or the Board. +Currently, we hold stockholder advisory votes on executive compensation every three years, and the next such vote after this years’ vote is scheduled to occur in 2020. +Our Board of Directors unanimously recommends that you vote FOR the option of  “Once Every Three Years” as the frequency with which stockholders are provided an advisory vote on executive compensation, as disclosed pursuant to the compensation disclosure rules of the SEC. +CORPORATE GOVERNANCE AND BOARD OF DIRECTORS COMMITTEES AND MEETINGS +Board Meetings +The Board of Directors met five times during the fiscal year ended December 31, 2016. No director attended fewer than 75 percent of the aggregate of all Board meetings and meetings of committees on which he or she served during 2016. Board members are encouraged to attend the Company’s Annual Stockholders Meetings and a majority of the Board members were in attendance at last year’s meeting. +The Board of Directors has an Audit Committee, a Compensation Committee, a Diversity Committee and a Nominating and Governance Committee. +Below is a summary of our committee structure and membership information. +Committee Member +Audit +Committee +Compensation +Committee +Diversity +Committee +Nominating & +Governance +Committee +Executive +Committee +R. Randall Rollins (1) +Member +Henry B. Tippie (2) +Chair +Chair +Chair +Chair +Larry L. Prince (2) +Member +Member +Member +Member +James B. Williams (2) +Member +Member +Member +Member +Bill J. Dismuke (2) +Member +Gary W. Rollins +Member +(1) +Chairman of the Board of Directors +(2) +Financial Expert +Audit Committee +The Audit Committee of the Board of Directors of the Company consists of Henry B. Tippie (Chairman), Bill J. Dismuke, James B. Williams and Larry L. Prince, all of whom are independent as discussed below. The Audit Committee held five meetings during the fiscal year ended December 31, 2016, including a meeting to review the Company’s Form 10-K for the year ended December 31, 2015. The Board of Directors has determined that all of the Audit Committee members are independent as that term is defined by the rules of the Securities and Exchange Commission (“SEC”) and the New York Stock Exchange (“NYSE”). The Board of Directors has also determined that all of the Audit Committee members are “Audit Committee Financial Experts” as defined in the SEC rules. The Audit Committee meets with the Company’s independent registered public accountants, internal auditor, Chief Executive Officer and Chief Financial Officer to review the scope and results of audits and recommendations made with respect to controls over financial reporting and specific accounting and financial reporting issues. The Audit Committee has the authority to obtain advice and assistance from, and receive appropriate funding from the Company for, outside legal, accounting or other advisors as it deems necessary to carry out its duties. The Audit Committee Charter is available on the Company’s website at www.rpc.net under the Governance section. +Compensation Committee +The Compensation Committee of the Board of Directors of the Company consists of Henry B. Tippie (Chairman), James B. Williams, and Larry L. Prince. It held two meetings during the fiscal year ended +8 +December 31, 2016. The function of the Compensation Committee is to set the base salary and cash based incentive compensation of all of the executive officers. The Compensation Committee also administers the Company’s Stock Incentive Plans. The Compensation Committee does not have a formal charter, and is not required to have one under the “controlled company” exemption under the NYSE rules, as described in the section titled “Director Independence and NYSE Requirements” below. +Diversity Committee +The Diversity Committee of the Board of Directors of the Company consists of Henry B. Tippie (Chairman), James B. Williams, and Larry L. Prince. It held one meeting during the fiscal year ended December 31, 2016. The function of the Diversity Committee is to monitor compliance with applicable non-discrimination laws. +Nominating and Governance Committee +The Nominating and Governance Committee of the Board of Directors of the Company consists of Henry B. Tippie (Chairman), James B. Williams, and Larry L. Prince, each of whom is independent, as discussed more fully under “Director Independence and NYSE Requirements.” The Committee was formed in 2002 pursuant to a resolution passed by the Board of Directors for the following purposes: +• +to recommend to the Board of Directors nominees for director and to consider any nominations properly made by a stockholder; +• +upon request of the Board of Directors, to review and report to the Board with regard to matters of corporate governance; and +• +to make recommendations to the Board of Directors regarding the agenda for the Annual Stockholders Meetings and with respect to appropriate action to be taken in response to any stockholder proposals. +The Nominating and Governance Committee held two meetings during the fiscal year ended December 31, 2016. We are not required by law or by New York Stock Exchange rules to have a nominating committee since we are a controlled corporation as described below under the heading “Director Independence and NYSE Requirements.” We established the Nominating and Corporate Governance Committee to promote responsible corporate governance practices and we currently intend to maintain the Committee going forward. +Director Nominations +Under Delaware law, there are no statutory criteria or qualifications for directors. No criteria or qualifications have been prescribed by the Board at this time. The Nominating and Governance Committee does not have a charter or a formal policy with regard to the consideration of director candidates. As such, there is no formal policy relative to diversity, although as noted below, it is one of many factors that the Nominating and Corporate Governance Committee has the discretion to factor into its decision making. This discretion would extend to how the Committee might define diversity in a particular instance – whether in terms of background, viewpoint, experience, education, race, gender, national origin or other considerations. The Committee acts under the guidance of the Corporate Governance Guidelines approved by the Board of Directors and posted on the Company’s website at www.rpc.net under the Governance section. The Board believes that it should preserve maximum flexibility in order to select directors with sound judgment and other desirable qualities. According to the Company’s Corporate Governance Guidelines, the Board of Directors will be responsible for selecting nominees for election to the Board of Directors. The Board delegates the screening process to the Nominating and Governance Committee. This Committee is responsible for determining the appropriate skills and characteristics required of Board members in the context of the then current make-up of the Board. This determination takes into account all factors which the Committee considers appropriate, such as independence, experience, strength of character, mature judgment, technical skills, diversity, age and the extent to which the individual would fill a present need on the Board. The Company’s Bylaws provide that nominations for the election of directors may be made by any stockholder entitled to vote for the election of directors. Nominations must comply with an advance notice procedure which generally requires, with respect to nominations for directors for +9 +election at an annual meeting, that written notice be addressed to: The Secretary, RPC, Inc., 2170 Piedmont Road, NE, Atlanta, Georgia 30324, and received not less than 90 nor more than 130 days prior to the anniversary of the prior year’s annual meeting and set forth, among other requirements specified in the Company’s Bylaws, the name, age, business address and, if known, residence address of the nominee proposed in the notice, the principal occupation or employment of the nominee for the past five years, the class or series and number of shares of capital stock of the Company which are owned beneficially or of record by the person and any other information relating to the person that would be required to be disclosed in a proxy statement or other filings. Other requirements related to the notice are contained in the Company’s Bylaws, and stockholders are advised to carefully review these requirements to ensure that nominations comply with the Bylaws. The Committee will consider nominations from stockholders who satisfy these requirements. The Committee is responsible for screening the nominees that are selected by the Board of Directors for nomination to the Board and for service on committees of the Board. To date, the Company has not received a recommendation for a director nominee from a stockholder. All of the nominees for directors being voted upon at the Annual Meeting to be held on April 25, 2017 are directors standing for re-election. +Board Leadership +The Company has had separate persons serving as its Chairman of the Board and Chief Executive Officer since 2003. Mr. Randall Rollins is our Chairman and chairs our Board meetings. Mr. Richard Hubbell is our President and Chief Executive Officer. We believe that it represents the appropriate structure for us at this time; the Chairman of the Board provides general oversight and strategic planning for the Company while the President and Chief Executive Officer focuses on optimizing operational efficiencies. +Risk Oversight by Board +Our Board’s oversight of risk has not been delegated to any Board Committee. “Risk” is an extremely broad concept that extends to multiple functional areas and crosses multiple disciplines. As such, risk may be addressed from time to time by the full Board or by one or more of our Committees. Senior management is responsible for identifying and managing material risks that we face while insurable risks and litigation risks are handled primarily by the risk management department. Senior management provides the Board with a summary of insurance coverage annually and updates as deemed necessary. Liquidity risk, credit risk and risks associated with our credit facilities and cash management are handled primarily by our finance department which regularly provides a financial report to both the Audit Committee and to the full Board. Operational, business, regulatory and political risks are handled primarily by senior executive management which regularly provides various operational reports to, among others, the full Board or to the Executive Committee. +Director Independence and NYSE Requirements +Controlled Company Exemption +The Company is not required by law or NYSE listing requirements to have a Nominating or Compensation Committee composed of independent directors, nor to have a Board of Directors, the majority of which are independent. Because the Company is a “controlled corporation,” as defined by NYSE Rule 303A.00, the Company is exempt from NYSE Rules 303A.01, 303A.04 and 303A.05 and does not undertake compliance with those provisions. The Company is a “controlled corporation” because a group that includes the Company’s Chairman of the Board, R. Randall Rollins, his brother Gary W. Rollins who is also a director and certain companies under their control, possesses in excess of fifty percent of the Company’s voting power. +The Company’s Audit Committee is composed of four “independent” directors as defined by the Company’s Corporate Governance Guidelines, the NYSE rules, the Securities Exchange Act of 1934, SEC regulations thereunder, and the Company’s Audit Committee Charter. All of the members of the Compensation, Diversity and Nominating and Governance Committees are also independent directors. The independent directors of the Company are Henry B. Tippie, James B. Williams, Bill J. Dismuke, and Larry L. Prince. +10 +Independence Guidelines +Under NYSE listing standards, to be considered independent, a director must be determined to have no material relationship with the Company other than as a director. The NYSE standards set forth a nonexclusive list of relationships which are conclusively deemed material. The Company’s Independence Guidelines (Appendix A to the Company’s Corporate Governance Guidelines) are posted on the Company’s website at www.rpc.net under the Governance section and include categorical standards for determining independence in specific situations. +Audit Committee Charter +Under the Company’s Audit Committee Charter, in accordance with NYSE listing requirements and the Securities Exchange Act of 1934, all members of the Audit Committee must be independent of management and the Company. A member of the Audit Committee is considered independent as long as he or she (i) does not accept any consulting, advisory, or compensatory fee from the Company, other than as a director or committee member; (ii) is not an affiliated person of the Company or its subsidiaries; and (iii) otherwise meets the independence requirements of the NYSE and the Company’s Corporate Governance Guidelines. +Nonmaterial Relationships +After reviewing all of the relationships between the members of the Audit Committee and the Company, the Board of Directors determined that none of the members of the Audit Committee had any relationships not included within the categorical standards set forth in the Independence Guidelines and discussed above except as follows: +1. +Mr. Tippie was employed by Rollins, Inc. from 1953 to 1970, and held several offices with that company during that time, including as Executive Vice President – Finance, Secretary, Treasurer and Chief Financial Officer. Mr. Dismuke was employed by Rollins from 1979 to 1984 and held various offices within that company including Senior Vice President. Messrs. Randall and Gary Rollins are directors and executive officers of Rollins, Inc. and are part of a group that has voting control of Rollins, Inc. +2. +Mr. Tippie is Chairman of the Board of Directors of Dover Motorsports, Inc. and Dover Downs Gaming & Entertainment, Inc. Mr. Randall Rollins is also a director of these companies. +3. +Mr. Tippie is a co-trustee of The O. Wayne Rollins Foundation and of the Rollins Children’s Trust. O. Wayne Rollins is the father of Gary and Randall Rollins. The beneficiaries of the Rollins Children’s Trust include the immediate family members of Messrs. Randall and Gary Rollins. +4. +Each of Messrs. Dismuke, Prince, Tippie and Williams also serve on the Boards of Rollins, Inc. and Marine Products, of which Messrs. Gary and Randall Rollins are directors, and voting control over which is held by a control group of which Messrs. Randall and Gary Rollins are a part. Mr. Randall Rollins is an executive officer of Marine Products. +5. +Mr. James B. Williams is the Chairman of the Board of the Woodruff Foundation, the Ichauway Foundation and the Woodruff Fund, Inc. Mr. R. Randall Rollins serves on the Woodruff Fund board. +As required by the Independence Guidelines, the Board of Directors unanimously concluded that the above-listed relationships would not affect the independent judgment of the independent directors, based on their experience, character and independent means, and therefore do not preclude an independence determination. All of the members of the Audit Committee are also independent under the heightened standards required for Audit Committee members. +In accordance with the NYSE corporate governance listing standards, Mr. Henry B. Tippie was elected as the Presiding Director. The Company’s non-management directors meet at regularly scheduled executive sessions without management. Mr. Tippie presides during these executive sessions. +11 +Corporate Governance Guidelines +We have adopted Corporate Governance Guidelines to formalize and promote better understanding of our policies and procedures. At least annually, the Board reviews these guidelines. As mandated by the rules of the New York Stock Exchange, our Corporate Governance Guidelines require that our non-management directors meet in at least two regularly scheduled executive sessions each year without management. +At the Company’s website at www.rpc.net, under the Governance section, you may access a copy of our Corporate Governance Guidelines, our Audit Committee Charter, our Code of Business Conduct and our Code of Business Conduct and Ethics for Directors and Executive Officers and Related Party Transactions Policy. +Code of Business Conduct +The Company has adopted a Code of Business Conduct applicable to all directors, officers and employees generally, as well as a Code of Business Conduct and Ethics for Directors and Executive Officers and Related Party Transactions Policy applicable to the principal executive officer, principal financial officer, and directors. Both codes are available on the Company’s website at www.rpc.net under the Governance section. +Director Communications +The Company also has a process for interested parties, including stockholders, to send communications to the Board of Directors, Presiding Director, any of the Board Committees or the non-management directors as a group. Such communications should be addressed as follows: +Mr. Henry B. Tippie +c/o Internal Audit Department +RPC, Inc. +2801 Buford Highway NE, Suite 520 +Atlanta, Georgia 30329 +The above instructions for communications with the directors are also posted on our website at www.rpc.net under the Governance section. All communications received from interested parties are forwarded to the Board of Directors. Any communication addressed solely to the Presiding Director or the non-management directors will be forwarded directly to the appropriate addressee(s). +COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION +None of the directors named above who serve on the Company’s Compensation Committee are or have ever been an employee of the Company. There are no Compensation Committee interlocks requiring disclosure. +12 +DIRECTOR COMPENSATION +The following table sets forth compensation to the Company’s directors for services rendered as a director for the year ended December 31, 2016. Three of the directors, Messrs. R. Randall Rollins, Richard A. Hubbell and Ms. Linda H. Graham are employees of the Company. Their compensation is set forth in the Summary Compensation Table under Executive Compensation. The directors listed below have never been employed by the Company or paid a salary or bonus by the Company, have never been granted any options or other stock-based awards, and do not participate in any Company sponsored retirement plans, with the exception of Mr. James A. Lane, Jr. who was an employee of the Company until the spin-off of Marine Products in 2001; he passed away in March 2016. +Name +Fees Earned or +Paid in Cash +($) +Stock +Awards (1) +($) +Option +Awards (1) +($) +Total +($) +Henry B. Tippie +125,500 +–– +–– +125,500 +James B. Williams +73,500 +–– +–– +73,500 +Bill J. Dismuke +65,000 +–– +–– +65,000 +Gary W. Rollins +52,500 +–– +–– +52,500 +James A. Lane, Jr. +15,000 +–– +–– +15,000 +Larry L. Prince +73,500 +–– +–– +73,500 +Amy Rollins Kreisler +10,000 +–– +–– +10,000 +(1) +Directors are eligible for grants of stock awards under the Company’s Stock Incentive Plan (“SIP”). No stock awards have been granted to the non-management directors under the SIP. +Directors that are our employees do not receive additional compensation for services rendered as a director. +Under current compensation arrangements effective since January 1, 2015, non-management directors each receive an annual retainer fee of  $40,000. In addition, the Chairman of the Audit Committee receives an annual retainer of  $20,000, the Chairman of the Compensation Committee receives an annual retainer of  $10,000, and the Chairman of each of the Nominating and Governance Committee and Diversity Committee receives an annual retainer of  $6,000. A director that chairs more than one committee receives a retainer with respect to each committee he chairs. All of the retainers are paid on a quarterly basis. Per meeting fees for non-management directors are as follows: +• +For meetings of the Board of Directors, $2,500. +• +For meetings of the Compensation Committee, $2,000. +• +For meetings of the Diversity Committee and Nominating and Governance Committee, $1,500. +• +For meetings of the Audit Committee either in person or over the telephone, $2,500. +• +In addition, the Chairman of the Audit Committee receives an additional $2,500 for preparing to conduct each quarterly Board and Board Committee meetings. +All non-management directors are also entitled to reimbursement of expenses for all services as a director, including committee participation or special assignments. +Notwithstanding anything to the contrary set forth in any of the Company’s previous filings under the Securities Act of 1933 or the Securities Exchange Act of 1934, that might incorporate future filings, including the Proxy Statement, in whole or in part, the Report of the Audit Committee shall not be incorporated by reference into any such filings. +13 +REPORT OF THE AUDIT COMMITTEE +Management is responsible for the Company’s internal controls, assessing the effectiveness of these controls and the financial reporting process. The Company’s independent registered public accounting firm is responsible for performing independent audits of the Company’s consolidated financial statements and the effectiveness of the Company’s internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States) and for issuing reports thereon. The Audit Committee’s responsibility is generally to monitor and oversee these processes, as described in the Audit Committee Charter. It is not the duty of the Audit Committee to plan or conduct audits or to determine that the Company’s financial statements are complete and accurate and in accordance with generally accepted accounting principles; that is the responsibility of management. +In fulfilling its oversight responsibilities with respect to the year ended December 31, 2016, the Audit Committee: +• +Approved the terms of engagement of Grant Thornton LLP as the Company’s independent registered public accounting firm for the year ended December 31, 2016; +• +Reviewed with management the interim financial information included in the Forms 10-Q prior to their being filed with the SEC. In addition, the Committee reviewed all earnings releases with management and the Company’s independent registered public accounting firm prior to their release; +• +Reviewed and discussed with the Company’s management and the independent registered public accounting firm the audited consolidated financial statements of the Company as of December 31, 2016 and 2015 and for the three years ended December 31, 2016; +• +Reviewed and discussed with the Company’s management and the independent registered public accounting firm, management’s assessment that the Company maintained effective control over financial reporting as of December 31, 2016; +• +Discussed with the independent registered public accounting firm matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board; and +• +Received from the independent registered public accounting firm the written disclosures and the letter in accordance with the requirements of the Public Company Accounting Oversight Board regarding the firm’s communications with the Committee concerning independence, and discussed with such firm its independence from the Company. +Based upon the review and discussions referred to above, the Committee recommended to the Board of Directors that the audited consolidated financial statements of the Company and subsidiaries as of December 31, 2016 and 2015 and for the three years ended December 31, 2016 be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 and for filing with the Securities and Exchange Commission. +In giving its recommendation to the Board of Directors, the Audit Committee has relied on (i) management’s representation that such financial statements have been prepared with integrity and objectivity and in conformity with accounting principles generally accepted in the United States of America and (ii) the report of the Company’s independent registered public accounting firm with respect to such financial statements. +Submitted by the Audit Committee of the Board of Directors. +Henry B. Tippie, Chairman +James B. Williams +Bill J. Dismuke +Larry L. Prince +14 +COMPENSATION DISCUSSION AND ANALYSIS +Compensation Committee +During the fiscal year ended December 31, 2016, the members of our Compensation Committee held primary responsibility for determining executive compensation levels. The Committee is composed of three of our non-management directors who do not participate in the Company’s compensation plans. The Committee determines the compensation and administers the performance-based incentive cash compensation plan for our executive officers. In addition, the Committee also administers our Stock Incentive Plans for all the employees. +The members of our Compensation Committee have extensive and varied experience with various public and private corporations – as investors and stockholders, as senior executives, and as directors charged with the oversight of management and the setting of executive compensation levels. Henry B. Tippie, the Chairman of the Compensation Committee, has served on the board of directors of twelve different publicly traded companies and has been involved in setting executive compensation levels at all of these companies. Messrs. James B. Williams and Larry L. Prince have served on the board of directors of several different publicly traded companies and have similarly been involved in setting executive compensation levels at many of these companies. +The Compensation Committee has authority to engage attorneys, accountants and consultants, including executive compensation consultants, to solicit input from management concerning compensation matters, and to delegate any of its responsibilities to one or more directors or members of management where it deems such delegation appropriate and permitted under applicable law. The Committee has not used the services of any compensation consultants in determining or recommending the amount or form of executive compensation. +The Compensation Committee believes that determinations relative to executive compensation levels are best left to the discretion of the Committee. In addition to the extensive experience and expertise of the Committee’s members and their familiarity with the Company’s performance and the performance of our executive officers, the Committee is able to draw on the experience of other Directors and on various legal and accounting executives employed by the Company, and the Committee has access to readily available public information relative to structuring executive compensation programs and setting appropriate compensation levels. The Committee also believes that the structure of our executive compensation programs should not become overly complicated or difficult to understand. The Committee solicits input from our Chairman with respect to the performance of our executive officers and their compensation levels. +The Role of Shareholder Say-on-Pay Votes +The Company provides its stockholders with the opportunity to cast an advisory vote on executive compensation (a “say-on-pay proposal”) once every three years. At the Company’s Annual Meeting of Stockholders held in April 2014, a substantial majority of the votes cast on the say-on-pay proposal at that meeting were voted in favor of the proposal. The Compensation Committee believes this affirms shareholders’ support of the Company’s approach to executive compensation. The stockholders voted to hold a say-on-pay advisory vote on executive compensation every three years, and the Board resolved to accept the stockholders’ recommendation. As a result, the advisory vote on executive compensation will be held again at the 2017 Annual Meeting of Stockholders. The Compensation Committee will continue to consider the outcome of the Company’s say-on-pay votes when making future compensation decisions for its executive officers. +General Compensation Objectives and Guidelines +The Company is engaged in a highly competitive industry. The success of the Company depends on its ability to attract and retain highly qualified and motivated executives. In order to accomplish this objective, the Company structures the executive compensation in a fashion that takes into account the Company’s overall performance and the individual performance of the executive. +The Compensation Committee endorses the philosophy that executive compensation should reflect Company performance and the contribution of executive officers to that performance. The Company’s compensation policy is designed to achieve three fundamental objectives: (i) attract and retain qualified +15 +executives, (ii) motivate performance to achieve Company objectives, and (iii) align the interests of our executives with the long-term interests of the Company’s stockholders. The Committee recognizes that there are many intangibles involved in evaluating performance and in motivating performance, and that determining an appropriate compensation level is a highly subjective endeavor. The analysis of the Committee is not based upon a structured formula and the objectives referred to above are not weighted in any formal manner. During the year, none of the executive officers made recommendations or otherwise contributed input on their own compensation. However, the Compensation Committee may from time to time solicit input from the Chairman when reviewing executive compensation. +The Company’s executive officers are also executive officers of Marine Products and receive compensation directly from Marine Products. The members of the Company’s Compensation Committee also constitute the Compensation Committee of Marine Products. In determining the compensation for the executive officers at the Company, the Committee considers these dual responsibilities and sources of compensation. The Company sets compensation of its executives at such levels so that the aggregate compensation received from both Marine Products and the Company is reasonable in light of their respective responsibilities and the performance of both companies, and so that the compensation from the Company for services solely to the Company is reasonable. A discussion of the Company’s executive officers’ compensation at Marine Products is contained in its annual Proxy Statement filed with the SEC. +Pursuant to the Company’s compensation philosophy, the total annual compensation of its executive officers is primarily comprised of base salary, performance-based incentive cash compensation and stock-based incentive compensation. In addition, the Company provides retirement compensation plans, group welfare benefits and certain perquisites. +We believe a competitive base salary is important to attract, retain and motivate top executives. We believe a performance-based incentive cash compensation plan is valuable in recognizing and rewarding individual achievement. Finally, we believe stock-based incentives make executives “think like owners” and, therefore, align their interests with those of our stockholders. +The Company does not have any formal stock ownership requirements for its executive officers but notes that its current directors and executive officers are stockholders of the Company, as is disclosed elsewhere in this Proxy Statement. The Company is mindful of the stock ownership of our directors and executive officers but does not believe that it is appropriate to provide a mechanism or formula to take stock ownership (or gains from prior option or stock awards) into account when setting compensation levels. The Company provides in its insider trading policies that directors and executive officers may not sell Company securities short and may not sell puts, calls or other derivative securities tied to our Common Stock. +Our executive bonus agreements contain a provision that provides that, among other things, if any bonus amount is paid as a result of misrepresented or inaccurate performance, the Company may require repayment of some or all of the excess bonus paid, subject to applicable laws. This recoupment policy reflects the Company’s high ethical standards and strict compliance with accounting and other regulations applicable to public companies. As all incentives and awards remain within the discretion of the Compensation Committee, the Committee also retains the ability to take any restatements or adjustments into account in subsequent years. In addition, the Sarbanes-Oxley Act requires in the case of accounting restatements that result from material non-compliance with SEC financial reporting requirements, that the Chief Executive Officer and Chief Financial Officer must disgorge bonuses and other incentive-based compensation and profits on stock sales received during the 12 months following publication of the misstated financials, if the non-compliance results from misconduct. +Base Salary +The salary of each executive officer is determined by the Compensation Committee. In making its determinations, the Committee gives consideration to the recent financial performance of the Company, the magnitude of responsibilities, the scope of the position, individual performance and compensation paid by Marine Products. The Committee solicits input from our Chairman with respect to the performance of our executive officers and their compensation levels. There was no change to the base salaries of the Company’s executive officers in 2016 or 2017 through the date of this proxy statement. +16 +Performance-Based Incentive Cash Compensation +The Company implemented the Performance-Based Incentive Cash Compensation Plan (the “Management Incentive Plan”) for the executive officers in 2006. Under the Management Incentive Plan, the Compensation Committee establishes performance goals annually within ninety days after the commencement of the performance period to which such goals relate. Performance goals for each participant may be based on corporate, business unit/function or individual performance, or a combination of one or more such measures. +In connection with the annual establishment of performance goals, the Compensation Committee sets a target award for each participant in the Management Incentive Plan for the applicable year, which is expressed as a percentage of the participant’s base compensation (the “Target Award”) in effect on the last day of the final pay period of that year. If the participant’s performance goals are based upon a combination of performance measures, the Compensation Committee will weigh the importance of each performance measure by assigning a percentage (the “Weighted Percentage”) to those performance measures. The participant’s cash award amount will also depend in part upon the level of achievement that the participant attained with respect to each such performance measure utilizing the formula set out in the Management Incentive Plan. This formula provides for a performance value (“Performance Value”) which ranges from: +• +threshold performance level (with a Performance Value of 25 percent of the Target Award), +• +target performance level (with a Performance Value up to 100 percent of the Target Award), to +• +superior performance level (with a Performance Value up to 200 percent of the Target Award). +Subject to the limitations set forth below, a participant’s cash award amount for each year under the Management Incentive Plan equals the product of the Target Award multiplied by the Weighted Percentage assigned to each performance measure used for a participant, multiplied by the Performance Value attained for each performance measure, multiplied by base compensation . The Committee will determine the maximum cash award as a percentage of participants’ base compensation for each applicable year. +For 2016, the Compensation Committee established the target incentive award under the Management Incentive Plan for the Chief Executive Officer and for the other members of executive management at the amounts shown in the table below. The target awards that could be earned under the Management Incentive Plan for 2016 were the same as for the prior year. +Executive Officer +Target Award as a percentage +of base salary +Richard A. Hubbell +President and Chief Executive Officer +100 % +Ben M. Palmer +Vice President, Chief Financial Officer and Treasurer +100 % +R. Randall Rollins +Chairman of the Board +100 % +Linda H. Graham +Vice President and Secretary +40 % +The maximum bonus award for each participant under the Plan for 2016 and prior years was established at 150 percent of such participant’s base salary. The performance criteria applicable to the participants under the Management Incentive Plan for 2016 were determined based solely on corporate performance. The Compensation Committee established corporate performance goals for 2016 under the Management Incentive Plan based on cash flow return on invested capital. Return on invested capital (“ROIC”) is a widely used financial performance measure that typically correlates with long term change in stockholder value. The Company has used ROIC as the sole performance goal under the Management Incentive Plan for several years. ROIC is computed as the ratio of earnings before interest, taxes, depreciation and amortization (EBITDA) to invested capital. Invested capital is generally equal to the aggregate of stockholders’ equity, accumulated depreciation and long-term liabilities. For 2016, the target performance goal established by the Company is in excess of the comparable historical average ROIC of +17 +our peers, is in excess of the Company’s weighted average cost of capital, and is an amount which the Company believes represents outstanding financial performance. Under the Management Incentive Plan, the Company must achieve at least 80 percent of the target performance goal for executive officers to be eligible for any bonus award. Bonus awards under the Management Incentive Plan are determined on a sliding scale between the threshold performance level and superior performance level, which corresponds to 175 percent of the target performance goal. To be eligible for the bonus award under the Management Incentive Plan, the ROIC must be in excess of 16 percent up to a maximum of 35 percent. The Company has consistently followed the same method to compute ROIC, and the Compensation Committee has not exercised discretion to waive the performance goals based on difficult industry conditions or other factors. +The Company operates in a cyclical business where financial performance is influenced by, among other things, changes in oil and natural gas prices. The Company’s computation of ROIC for 2016 and 2015 resulted in the threshold for bonus payments not being achieved. The Company generated ROIC that resulted in 141 percent of the target award in 2014. The level of performance dropped significantly in 2016 and 2015 primarily due to the continued decline of oil prices and the associated impact on customer activity levels, pricing for our services and consequently the Company’s profitability. Current trends and expectations for the oilfield industry indicate an operating environment in 2017 that shows some improvement over the last couple of years. For 2017, the target awards, performance goal and maximum awards were established at the same levels as 2016. +Stock Based Incentive Plans +Our Stock Incentive Plan allows for a wide variety of stock based awards such as stock options and restricted stock. We last issued stock options in fiscal year 2003 and have no current plans to issue additional stock options. We have never issued any stock appreciation rights. Partially in response to changes relative to the manner in which stock options are accounted for under generally accepted accounting principles, we have modified the structure and composition of the long-term equity based component of our executive compensation. In recent years, we have awarded time-based restricted stock in lieu of granting stock options. The terms and conditions of these awards are described in more detail below. +Awards under the Company’s Stock Incentive Plan are purely discretionary, are not based upon any specific formula and may or may not be granted in any given fiscal year. For the past three years, we have granted time-based restricted stock to various employees, including our executive officers, in early January during our regularly scheduled meetings of the Compensation Committee during which the Committee reviews executive compensation. Consistent with this practice, we granted restricted stock awards to our executive officers in January 2017, 2016 and 2015 as follows: +Name +2017 +2016 +2015 +Richard A. Hubbell +45,000 +75,000 +75,000 +Ben M. Palmer +27,000 +45,000 +45,000 +R. Randall Rollins +45,000 +75,000 +75,000 +Linda H. Graham +15,000 +25,000 +25,000 +The amount of the aggregate stock based awards to our executive officers in any given year is influenced by the Company’s overall performance. The amount of each grant to our executive officers is influenced in part by the Committee’s subjective assessment of each individual’s respective contributions to achievement of the Company’s long-term goals and objectives. In evaluating individual performance for these purposes, the Committee considers the overall contributions of executive management as a group and the Committee’s subjective assessment of each individual’s relative contribution to that performance rather than specific aspects of each individual’s performance over a short-term period. We expect to continue annual grants of restricted stock awards although we reserve the right to modify or discontinue this or any of our other compensation practices at any time. +All of our restricted stock awards granted since 2004 have had the same features. The shares vest one-fifth per year beginning on the second anniversary of the grant date. Restricted shares have full voting and dividend rights. However, until the shares vest, they cannot be sold, transferred or pledged. Should the +18 +executive leave our employment for any reason prior to the vesting dates (other than due to disability or retirement on or after age 65), the unvested shares will be forfeited. In the event of death or “change in control” as determined by the Board of Directors, all unvested restricted shares shall vest immediately. +Grants are made under our 2014 Stock Incentive Plan and the plan is administered pursuant to Rule 16b-3 of the Securities Exchange Act of 1934. +Employment Agreements +There are no agreements or understandings between the Company and any executive officer which guarantee continued employment or guarantee any level of severance or compensation, including incentive or bonus payments, to the executive officer. +Retirement Plans +The Company maintains a defined benefit pension plan (“Retirement Income Plan”) for all our eligible employees, a non-qualified supplemental retirement plan for our executives and certain other highly compensated employees and a 401(k) Plan for the benefit of all regular full time employees. In 2002, the Company’s Board of Directors approved a resolution to cease all future benefit accruals under the Retirement Income Plan effective March 31, 2002. During 2002, the Company began permitting selected highly compensated employees to defer a portion of their compensation into the Company’s nonqualified Supplemental Retirement Plan (“SRP”). The SRP is described in more detail under the caption “Nonqualified Deferred Compensation” below. +Other Compensation +Other compensation to our executives includes typical employee benefits such as group medical, dental and vision coverage and group life insurance. The Company provides an automobile (or an automobile allowance) to Messrs. Richard A. Hubbell and Ben M. Palmer. +The following Compensation Committee Report shall not be incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933, as amended (the “Securities Act”), except to the extent that the Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under the Securities Act or the Exchange Act. +COMPENSATION COMMITTEE REPORT +We have reviewed and discussed the above “Compensation Discussion and Analysis” with management. +Based upon this review and discussion, we have recommended to the Board of Directors that the “Compensation Discussion and Analysis” be included in this Proxy Statement. +Submitted by the Compensation Committee of the Board of Directors. +Henry B. Tippie, Chairman +James B. Williams +Larry L. Prince +19 +SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE +The Company has completed a review of Forms 3, 4, and 5 and amendments thereto furnished to the Company by all directors, officers and greater than 10 percent stockholders subject to the provisions of Section 16 of the Securities Exchange Act of 1934, as amended. In addition, the Company has a written representation from all directors, officers and greater than 10 percent stockholders from whom no Form 5 was received indicating that no Form 5 filing was required. Based solely on this review, the Company believes that filing requirements of such persons under Section 16 for the fiscal year ended December 31, 2016 have been satisfied. +EXECUTIVE COMPENSATION +Shown below is information concerning the annual and long-term compensation for services in all capacities to the Company for the calendar years ended December 31, 2016, 2015 and 2014 of those persons who were at December 31, 2016: +• +our Principal Executive Officer and Principal Financial Officer; and +• +our two other executive officers: +SUMMARY COMPENSATION TABLE +Name and Principal Position +Year +Salary +($) +Stock +Awards +($) (1) +Non-Equity +Incentive +Plan +Compensation +($) (2) +Change in +Pension +Value and +Nonqualified +Deferred +Compensation +Earnings +($) (3) +All Other +Compensation +($) (4) +Total +($) +Richard A. Hubbell +President and Chief Executive Officer +2016 +900,000 +807,750 +— +— +13,180 +1,720,930 +2015 +900,000 +922,500 +— +— +13,640 +1,836,140 +2014 +900,000 +1,059,750 +1,269,000 +61,096 +14,000 +3,303,846 +Ben M. Palmer +Vice President, Chief Financial Officer and Treasurer +2016 +375,000 +484,650 +— +6,081 +19,700 +885,431 +2015 +375,000 +553,500 +— +— +19,660 +948,160 +2014 +375,000 +635,850 +528,750 +24,466 +21,050 +1,585,116 +R. Randall Rollins +Chairman of the Board +2016 +800,000 +807,750 +— +— +— +1,607,750 +2015 +800,000 +922,500 +— +— +— +1,722,500 +2014 +800,000 +1,059,750 +1,128,000 +300,265 +— +3,288,015 +Linda H. Graham +Vice President and Secretary +2016 +250,000 +269,250 +— +— +5,625 +524,875 +2015 +250,000 +307,500 +— +— +7,860 +565,360 +2014 +250,000 +353,250 +140,000 +9,181 +7,290 +759,721 +(1) +Represents the fair value of the award at the date of grant computed in accordance with ASC Topic 718. Please refer to Note 10 to our Financial Statements contained in our Form 10-K for the period ended December 31, 2016 for a discussion of assumptions used in this computation. For this computation, we do not include an assumption for estimated forfeitures. +(2) +Bonuses under the Management Incentive Plan are accrued in the fiscal year earned and paid in the following fiscal year. +(3) +The actuarial present value of the executive officers’ accumulated benefit, with the exception of Ben M. Palmer, under the defined benefit plan decreased during 2016 as follows: Messrs. Richard A. Hubbell $(12,216), R. Randall Rollins $(128,952) and Ms. Linda H. Graham $(19,126). Change represents impact of the change in discount rate only as no additional benefits are being accrued. +(4) +All other compensation for 2016 includes the following items for: +Mr. Richard A. Hubbell: +Insurance on automobile provided by the Company, cost of dining club dues, cost of gasoline for personal automobile, and 401(k) Plan Company match of  $7,875. +Mr. Ben M. Palmer: +Automobile allowance, cost of gasoline for personal automobile and 401(k) Plan Company match of  $7,760. +Ms. Linda H. Graham: +401(k) Plan Company match of  $5,625. +20 +GRANTS OF PLAN-BASED AWARDS +Name +Grant Date +Estimated Future Payouts +Under Non-Equity +Incentive Plan Awards (1) +All Other +Stock +Awards: +Number of +Shares +of Stock +or Units +(#) +Grant Date +Fair Value +of Stock +and Option +Awards +($) (2) +Threshold +($) +Target +($) +Maximum +($) +Richard A. Hubbell +1/26/16 +225,000 +900,000 +1,350,000 +1/26/16 +75,000 +807,750 +Ben M. Palmer +1/26/16 +93,750 +375,000 +562,500 +1/26/16 +45,000 +484,650 +R. Randall Rollins +1/26/16 +200,000 +800,000 +1,200,000 +1/26/16 +75,000 +807,750 +Linda H. Graham +1/26/16 +25,000 +100,000 +200,000 +1/26/16 +25,000 +269,250 +(1) +These amounts illustrate the potential bonus awards under the Management Incentive Plan for 2016. See Summary Compensation Table on page 20 for actual amounts awarded in 2016. +(2) +These amounts represent aggregate grant date fair value for grants of restricted shares of Common Stock awarded in fiscal year 2016 under the Stock Incentive Plan computed in accordance with ASC Topic 718. Please refer to Note 10 to our Financial Statements contained in our Form 10-K for the period ended December 31, 2016 for a discussion of assumptions used in this computation. For this computation, we do not include an assumption for estimated forfeitures. Our Form 10-K has been included in our Annual Report and provided to our stockholders. +The table above reflects grants of restricted shares of Company Common Stock under the Stock Incentive Plan awarded in fiscal year 2016. All grants of restricted shares of Common Stock vest one-fifth per year beginning on the second anniversary of the grant date. Restricted shares have full voting and dividend rights. However, until the shares vest, they cannot be sold, transferred or pledged. Should the executive leave our employment for any reason prior to the vesting dates (other than due to death, disability, change in control or retirement on or after age 65), the unvested shares will be forfeited. We have not issued any stock options since 2003 and have no immediate plans to issue additional stock options. +The Company’s employment contracts with its Chief Executive Officer and the Company’s other executive officers are oral, at will arrangements. All of the executive officers are eligible for annual cash bonuses which are awarded under the Management Incentive Plan. The Compensation Committee’s decisions are based upon broad performance objectives under that plan. The executive officers are eligible to receive shares of Company Common Stock subject to options and restricted shares of Company Common Stock under the Company’s Stock Incentive Plans, in such amounts and with such terms and conditions as determined by the Compensation Committee at the time of grant. All of the executive officers are eligible to participate in the Company’s SRP. The executive officers are eligible to participate in the Company’s regular employee benefit programs, including the 401(k) Plan with Company match, group life insurance, group medical and dental coverage, vision and other group benefit plans. All of the executive officers are eligible for the Retirement Income Plan although benefit accruals were frozen in 2002. For more information on these plans, see “Compensation Discussion and Analysis” on page 15, and “Benefit Plans” on page 23. +21 +OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END +The Company does not have any outstanding option awards made in prior years to the executives named in our Summary Compensation Table. The table below sets forth the total number of restricted shares of Common Stock outstanding at December 31, 2016 that were granted in prior years to the executives named in our Summary Compensation Table but have not yet vested, together with the market value of these unvested shares based on the $19.81 closing price of our Common Stock on December 30, 2016. +Option Awards +Stock Awards +Name +Number of +Securities +Underlying +Unexercised +Options +(#) +Exercisable +Number of +Securities +Underlying +Unexercised +Options +(#) +Un-exercisable +Option +Exercise +Price +($) +Option +Expiration +Date +Number of +Shares or +Units of Stock +That Have Not +Vested +(#) +Market Value +of Shares or +Units of Stock +That Have +Not Vested +($) +Richard A. Hubbell +— +— +— +— +285,000 (1 ) +5,645,850 +Ben M. Palmer +— +— +— +— +171,000 (1 ) +3,387,510 +R. Randall Rollins +— +— +— +— +285,000 (1 ) +5,645,850 +Linda H. Graham +— +— +— +— +93,500 (1 ) +1,852,240 +(1) +The Company has granted employees time lapse restricted shares that vest one-fifth per year beginning on the second anniversary of the grant date. Shares of restricted stock granted to the executive officers that have not vested as of December 31, 2016 are summarized in the table that follows: +Name +Number of shares +Grant date +Date fully vested +Richard A. Hubbell +15,000 +1/25/2011 +1/25/2017 +30,000 +1/24/2012 +1/24/2018 +45,000 +1/22/2013 +1/22/2019 +45,000 +1/28/2014 +1/28/2020 +75,000 +1/27/2015 +1/27/2021 +75,000 +1/26/2016 +1/26/2022 +Ben M. Palmer +9,000 +1/25/2011 +1/25/2017 +18,000 +1/24/2012 +1/24/2018 +27,000 +1/22/2013 +1/22/2019 +27,000 +1/28/2014 +1/28/2020 +45,000 +1/27/2015 +1/27/2021 +45,000 +1/26/2016 +1/26/2022 +R. Randall Rollins +15,000 +1/25/2011 +1/25/2017 +30,000 +1/24/2012 +1/24/2018 +45,000 +1/22/2013 +1/22/2019 +45,000 +1/28/2014 +1/28/2020 +75,000 +1/27/2015 +1/27/2021 +75,000 +1/26/2016 +1/26/2022 +Linda H. Graham +4,500 +1/25/2011 +1/25/2017 +9,000 +1/24/2012 +1/24/2018 +15,000 +1/22/2013 +1/22/2019 +15,000 +1/28/2014 +1/28/2020 +25,000 +1/27/2015 +1/27/2021 +25,000 +1/26/2016 +1/26/2022 +22 +OPTION EXERCISES AND STOCK VESTED +The following table sets forth: +• +the number of shares of Common Stock acquired by the executives named in the Summary Compensation Table upon the exercise of stock options during the fiscal year ended December 31, 2016; +• +the aggregate dollar amount realized on the exercise date for such options computed by multiplying the number of shares acquired by the difference between the market value of the shares on the exercise date and the exercise price of the options; +• +the number of restricted shares of Common Stock acquired by the executives named in the Summary Compensation Table upon the vesting of shares during the fiscal year ended December 31, 2016; and +• +the aggregate dollar amount realized on the vesting date for such restricted stock computed by multiplying the number of shares which vested by the market value of the shares on the vesting date. +Option Awards +Stock Awards +Name +Number of Shares +Acquired on Exercise +(#) +Value Realized on +Exercise +($) +Number of Shares +Acquired on Vesting +(#) +Value Realized on +Vesting +($) +Richard A. Hubbell +— +— +67,500 +734,210 +Ben M. Palmer +— +— +40,950 +445,370 +R. Randall Rollins +— +— +67,500 +734,210 +Linda H. Graham +— +— +21,350 +232,500 +BENEFIT PLANS +The table below shows the present value of accumulated benefits payable to each of the named executive officers, including the number of years of service credited to each such named executive officer, under the Retirement Income Plan determined using interest rate and mortality rate assumptions consistent with those used in the Company’s financial statements. Information regarding the Retirement Income Plan can be found in Note 10 to our Financial Statements contained in our Form 10-K for the period ended December 31, 2016. +Pension Benefits +Name +Plan Name +Number of +Years Credited +Service +(#) +Present +Value of +Accumulated +Benefit +($) +Payments During +Last Fiscal Year +($) +Richard A. Hubbell +Retirement Income Plan +15 +443,475 +42,314 +Ben M. Palmer +Retirement Income Plan +4 +83,449 +— +R. Randall Rollins +Retirement Income Plan +30 +2,130,440 +261,571 +Linda H. Graham +Retirement Income Plan +15 +362,019 +48,705 +23 +The Company’s Retirement Income Plan, a trusteed defined benefit pension plan, provides monthly benefits upon retirement at age 65 to eligible employees. In 2002, the Company’s Board of Directors approved a resolution to cease all future benefit accruals under the Retirement Income Plan effective March 31, 2002. Retirement Income Plan benefits are based on the average of the employee’s compensation from the Company for the five consecutive complete calendar years of highest compensation during the last ten consecutive complete calendar years (“final average compensation”) immediately preceding March 31, 2002. The benefits are computed as the product of 1.5 percent of final average compensation multiplied by years of credited service (up to 30 years) reduced by an adjustment for benefits drawn from social security. Adjustments have been made for age and the IRS mandated compensation limitations. The final average compensation for Mr. Hubbell is $205,890, Mr. Palmer is $179,900 and Ms. Graham is $127,325. +The annual benefit payable at the later of retirement or age 65 for the named executive officers is $261,600 for Mr. Rollins, $42,400 for Mr. Hubbell, $48,800 for Ms. Graham and $9,400 for Mr. Palmer. The Plan also provides reduced early retirement benefits at age 55 or older with 15 or more years of service. Ms. Graham and Mr. Hubbell are voluntarily receiving distributions from the plan even though they have not retired from the Company. In addition, as an owner with stock ownership in excess of five percent of the Company’s voting securities, Mr. Rollins is required to receive mandatory distributions currently, even though he has not retired from the Company. The amount of distributions received during 2016 has been disclosed in the table above and is not subject to change after retirement. +401(k) Plan +Effective July 1, 1984, the Company adopted a qualified retirement plan designed to meet the requirements of Section 401(k) of the Code. The Company makes matching contributions of fifty cents ($0.50) for each dollar ($1.00) of a participant’s contribution to the 401(k) Plan that does not exceed six percent of his or her annual compensation. The only form of benefit payment under the 401(k) Plan is a single lump-sum payment equal to the vested balance in the participant’s account on the date the distribution is processed. Under the 401(k) Plan, the full amount of a participant’s vested accrued benefit is payable upon his termination of employment, retirement, total and permanent disability, or death. Also under the 401(k) Plan, a participant may withdraw his or her pre-tax contributions to the extent of certain specified instances of financial hardship and may withdraw any amount from his or her pre-tax contribution account for any reason after attaining age 59 ½. In addition, a participant may withdraw any amount from his or her rollover account for any reason. Amounts contributed by the Company to the accounts of the named executive officers under this plan are reported in the “All Other Compensation” column of the Summary Compensation Table on page 20. +NONQUALIFIED DEFERRED COMPENSATION +The SRP has been established as a nonqualified plan that is designed to comply with the provisions of the American Jobs Creation Act of 2004 (including Section 409A of the Internal Revenue Code) for the cash contributions made to certain longer serviced employees in lieu of freezing of the Retirement Income Plan benefit accruals effective in 2002; the SRP also has a compensation deferral option for eligible employees. The contributions and deferrals to the SRP are invested in funds held in a rabbi trust. +Name +Executive +Contributions +in last FY +($) (1) +Registrant +contributions +in last FY +($) +Aggregate +earnings in +last FY +($) +Aggregate +withdrawals/ +distributions ($) +Aggregate +balance at +last FYE +($) +Richard A. Hubbell +— +— +18,360 +— +337,747 +Ben M. Palmer +30,000 +— +31,932 +— +597,460 +R. Randall Rollins +— +— +— +— +— +Linda H. Graham +62,500 +— +89,463 +— +1,666,657 +(1) +Includes the following amounts related to the base salary for 2016 which have been deferred by the executive officer pursuant to the SRP and which are included in the Summary Compensation Table: Mr. Ben M. Palmer: $30,000 and Ms. Linda H. Graham: $62,500. The remaining deferral amounts, if any, represent deferrals of bonus compensation that was paid in 2016. +24 +The deferral option provides that participants may defer up to 50 percent of their base salary and up to 100 percent of their annual bonus with respect to any given plan year, subject to a $2,000 per plan year minimum. All of the salary and bonus deferrals are fully vested. Accounts are credited with hypothetical earnings, and/or debited with hypothetical losses, based on the performance of certain “Measurement Funds.” Account values are calculated as if the funds from deferrals and contributions had been converted into shares or other ownership units of selected Measurement Funds by purchasing (or selling, where relevant) such shares or units at the current purchase price of the relevant Measurement Fund at the time of the participant’s selection. The benefits are unsecured general obligations of the Company to the participants, and these obligations rank in parity with the Company’s other unsecured and unsubordinated indebtedness. To the extent that the Company’s obligations under the SRP exceed assets available under the trust, the Company may be required to seek additional funding sources to fund its liability under the SRP. +Generally, the SRP provides for distributions of any deferred amounts upon the earliest to occur of a participant’s death, disability, retirement or other termination of employment (a “Termination Event”). However, for any deferrals of base salary and bonus compensation (but not Company contributions), participants are entitled to designate a distribution date which is prior to a Termination Event. The SRP allows a participant to elect to receive distributions in installments or lump-sum payments. +POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL +The following table describes the potential payments and benefits under the Company’s compensation and benefit plans and arrangements to which the named executive officers would be entitled upon termination of employment. There are no other agreements, arrangements or plans that entitle executive officers to severance, perquisites, or other enhanced benefits upon termination of their employment except as described below. Additional payments or benefits to a terminating executive officer would be at the discretion of the Compensation Committee. +In accordance with the terms of the defined benefit plan, the executive officers are not entitled to additional benefits at death or disability. The amounts payable at retirement are disclosed in the “Benefit Plans” section on page 23. The executive officers can choose to receive the amounts accumulated in the SRP either as a lump-sum or in installments at retirement, death or disability. These amounts have been disclosed under the “Nonqualified Deferred Compensation” section on page 24. The table below reflects the incremental restricted shares that would become vested as of December 30, 2016 using the closing market price of  $19.81 per share for our Common Stock, as of that date, in the case of retirement, disability, death or change in control. +Stock Awards +Name +Number of shares +underlying unvested +stock (#) +Unrealized value of +unvested stock ($) +Richard A. Hubbell +• Retirement +65,313 +1,293,850 +• Disability +100,884 +1,998,510 +• Death +285,000 +5,645,850 +• Change in control +285,000 +5,645,850 +Ben M. Palmer +• Retirement +— +— +• Disability +60,531 +1,199,120 +• Death +171,000 +3,387,510 +• Change in control +171,000 +3,387,510 +R. Randall Rollins +• Retirement +65,313 +1,293,850 +• Disability +100,884 +1,998,510 +• Death +285,000 +5,645,850 +• Change in control +285,000 +5,645,850 +25 +Stock Awards +Name +Number of shares +underlying unvested +stock (#) +Unrealized value of +unvested stock ($) +Linda H. Graham +• Retirement +20,854 +413,120 +• Disability +32,615 +646,100 +• Death +93,500 +1,852,240 +• Change in control +93,500 +1,852,240 +Accrued Pay and Regular Retirement Benefits +The amounts shown in the table above do not include the following since they are provided on a non-discriminatory basis to salaried employees generally upon termination of employment. These include: +• +Accrued salary and vacation pay. +• +Distributions of plan balances under the 401(k) Plan. +Pension Benefit and Deferred Compensation +The Retirement Income Plan does not provide for lump sum payments for a participant including executive officers for instances other than retirement. The Retirement Income Plan is described at “Pension Benefits” above. Upon termination, the executive officers will receive a distribution of the balance in their SRP account. These amounts are disclosed under the “Nonqualified Deferred Compensation” section on page 24. +Severance . The Company does not have any severance arrangements for its executives. +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +Effective with the spin-off in 2001, the Company began providing certain administrative services to Marine Products. The service agreements between Marine Products and the Company provide for the provision of services on a cost reimbursement basis and may be terminated upon six months’ notice. The services covered by these agreements include administration of certain employee benefit programs and other administrative services. Charges from the Company (or from corporations which are subsidiaries of the Company) for such services aggregated approximately $739,000 in 2016. +RPC and Marine Products own 50 percent each of a limited liability company called 255 RC, LLC that was created for the joint purchase and ownership of a corporate aircraft. Each of RPC and Marine Products is a party to an operating lease agreement with 255 RC, LLC for a period of five years. During 2016, RPC recorded certain net operating costs comprised of rent and an allocable share of fixed costs of approximately $197,000 for the corporate aircraft. +During 2016, a subsidiary of RPC conducted business with companies owned by LOR, Inc. Mr. R. Randall Rollins, Chairman, and Mr. Gary W. Rollins, Director, are officers, directors and controlling stockholders of LOR, Inc. In 2016, payments totaling approximately $895,000 were made to these LOR, Inc. companies primarily for the purchase of parts and repair services related to certain of RPC’s oilfield operating equipment. RPC believes the charges incurred are at least as favorable as the charges that would have been incurred for similar purchases from unaffiliated third parties. +RPC receives certain administrative services including an allocation for office space from Rollins. The service agreements between Rollins and the Company provide for the provision of services on a cost reimbursement basis and are terminable on six months’ notice. The services covered by these agreements include office space, administration of certain employee benefit programs, and other administrative services. Charges to the Company (or to corporations which are subsidiaries of the Company) for such services and rent aggregated approximately $111,000 in 2016. +26 +A group that includes the Company’s Chairman of the Board, R. Randall Rollins, his brother Gary W. Rollins who is also a director, and certain companies under their control, possesses in excess of fifty percent of the Company’s voting power. Please refer to the discussion above under the heading, “Corporate Governance and Board of Directors Committees and Meetings, Director Independence and NYSE Requirements, Controlled Company Exemption.” The group discussed above also controls in excess of fifty percent of Marine Products’ voting power. +Our Code of Business Conduct and Ethics for Directors and Executive Officers and Related Party Transactions Policy provides that related party transactions, as defined in Regulation S-K, Item 404(a) must be reviewed, approved and/or ratified by our Nominating and Corporate Governance Committee. As set forth in our Code, our Nominating and Corporate Governance Committee has the responsibility to ensure that it only approves or ratifies related party transactions that are in compliance with applicable law, consistent with the Company’s corporate governance policies (including those relative to conflicts of interest and usurpation of corporate opportunities) and on terms that are deemed to be fair to the Company. The Committee has the authority to hire legal, accounting, financial or other advisors as it may deem necessary or desirable and/or to delegate responsibilities to executive officers of the Company in connection with discharging its duties. A copy of the Code is available on our website at www.rpc.net under the Governance section. All related party transactions for the fiscal year ended December 31, 2016 were reviewed, approved and/or ratified by the Nominating and Corporate Governance Committee in accordance with the Code. +INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS +Principal Auditor +Grant Thornton LLP (“Grant Thornton”) served as the Company’s independent registered public accounting firm for the fiscal years ended December 31, 2016 and 2015. +The Audit Committee has appointed Grant Thornton as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2017. Grant Thornton has served as the Company’s independent registered public accounting firm for many years and is considered by management to be well qualified. Representatives of Grant Thornton are expected to be present at the Annual Meeting and will have an opportunity to make a statement if they so desire and will be available to respond to appropriate questions. +Aggregate fees billed by the Company’s independent registered public accounting firm are set forth below: +2016 +2015 +Audit fees and quarterly reviews (1) +$ +969,520 +$ +926,210 +Audit related fees +— +— +Tax fees +— +— +All other fees +— +— +(1) +Audit fees include fees for audit or review services in accordance with generally accepted auditing standards, such as statutory audits and services rendered for compliance with Section 404 of the Sarbanes-Oxley Act. +Pre-approval of Services +All of the services described above were pre-approved by the Company’s Audit Committee. The Audit Committee has determined that the payments made to its independent registered public accounting firm for these services are compatible with maintaining such auditors’ independence. A majority of the hours expended on the principal accountant’s engagement to audit the financial statements of the Company for the fiscal year ended December 31, 2016 was attributable to work performed by full-time, permanent employees of the principal accountant. +The Audit Committee is directly responsible for the appointment and termination, compensation, and oversight of the work of the independent registered public accounting firm, including resolution of disagreements between management and the independent registered public accounting firm regarding +27 +financial reporting. The Audit Committee is responsible for pre-approving all audit and non-audit services provided by the independent registered public accounting firm and ensuring that they are not engaged to perform the specific non-audit services proscribed by law or regulation. The Audit Committee has delegated pre-approval authority to its Chairman with the stipulation that his decision is to be presented to the full Committee at its next scheduled meeting. The Audit Committee has no other pre-approval policies. +STOCKHOLDER PROPOSALS +Appropriate proposals of stockholders intended to be presented at the Company’s 2018 Annual Meeting of Stockholders must be received by the Company by November 21, 2017 in order to be included, pursuant to Rule 14a-8 promulgated under the Securities Exchange Act of 1934, as amended, in the proxy statement and form of proxy relating to that meeting. With regard to such stockholder proposals, if the date of the next annual meeting of stockholders is advanced or delayed more than 30 calendar days from April 25, 2018, the Company will, in a timely manner, inform its stockholders of the change and of the date by which such proposals must be received. Stockholders desiring to present business at the 2018 Annual Meeting of Stockholders outside of the stockholder proposal rules of Rule 14a-8 of the Securities Exchange Act of 1934 and instead pursuant to Article Twenty-Seventh of the Company’s by-laws must prepare a written notice regarding such proposal addressed to The Secretary, RPC, Inc., 2170 Piedmont Road, NE, Atlanta, Georgia 30324, and deliver to or mailed and received by no later than January 25, 2018 and no earlier than December 16, 2017. Stockholders should consult the by-laws for other specific requirements related to such notice and proposed business. +With respect to stockholder nomination of directors, the Company’s by-laws provide that nominations for the election of directors may be made by any stockholder entitled to vote for the election of directors. Nominations must comply with an advance notice procedure which generally requires with respect to nominations for directors for election at an annual meeting, that written notice be addressed to: The Secretary, RPC, Inc., 2170 Piedmont Road, N.E., Atlanta, Georgia 30324, and be received not less than 90 nor more than 130 days prior to the anniversary of the prior year’s annual meeting and set forth, among other requirements specified in the by-laws, the name, age, business address and, if known, residence address of the nominee proposed in the notice, the principal occupation or employment of the nominee for the past five years, the nominee’s qualifications, the class or series and number of shares of capital stock of the Company which are owned beneficially or of record by the person and any other information relating to the person that would be required to be disclosed in a proxy statement or other filings. Other specific requirements related to such notice, including required disclosures concerning the stockholder intending to present the nomination, are set forth in the Company’s by-laws. Notices of nominations must be received by the Secretary of the Company no later than January 25, 2018 and no earlier than December 16, 2017, with respect to directors to be elected at the 2018 Annual Meeting of Stockholders. +EXPENSES OF SOLICITATION +The Company will bear the cost of soliciting proxies. Upon request, we will reimburse brokers, dealers and banks, or their nominees, for reasonable expenses incurred in forwarding copies of the proxy material to their beneficial stockholders of record. Solicitation of proxies will be made principally by mail. Proxies also may be solicited in person or by telephone, facsimile or other means by our directors, officers and regular employees. These individuals will receive no additional compensation for these services. The Company has retained Georgeson Shareholder Communications, Inc. to conduct a broker search and to send proxies by mail for an estimated fee of approximately $62,000 including shipping expenses. +28 +ANNUAL REPORT +The Company’s Annual Report to Stockholders, including its Annual Report on Form 10-K for the fiscal year ended December 31, 2016, without exhibits, is being mailed to stockholders with this Proxy Statement. The Annual Report is not considered proxy-soliciting material. +FORM 10-K +Upon the written request of any record or beneficial owner of the Company’s Common Stock whose proxy was solicited in connection with the 2017 Annual Meeting of Stockholders, the Company will furnish such owner, without charge, a copy of its Annual Report on Form 10-K, including the financial statements and the financial statement schedules (but without exhibits), for its fiscal year ended December 31, 2016. Requests for a copy of such Annual Report on Form 10-K should be addressed to Ms. Linda H. Graham, Secretary, at RPC, Inc., 2170 Piedmont Road NE, Atlanta, Georgia 30324. +OTHER MATTERS +Our Board of Directors knows of no business other than the matters set forth herein which will be presented at the Annual Meeting. In as much as matters not known at this time may come before the Annual Meeting, the enclosed proxy confers discretionary authority with respect to such matters as may properly come before the Annual Meeting; and it is the intention of the persons named in the proxy to vote in accordance with their best judgment on such matters. +BY ORDER OF THE BOARD OF DIRECTORS +Linda H. Graham, Secretary +Atlanta, Georgia +March 21, 2017 +29 +ANNUAL MEETING OF STOCKHOLDERS OF RPC, INC. Tuesday, April 25, 2017, 12:15 P.M. PROXY VOTING INSTRUCTIONS INTERNET - Access “www.voteproxy.com” and follow the on-screen instructions or scan the QR code with your smartphone. Have your proxy card available when you access the web page. TELEPHONE - Call toll-free 1-800-PROXIES (1-800-776-9437) in the United States or 1-718-921-8500 from foreign countries from any touch-tone telephone and follow the instructions. Have your proxy card available when you call. Vote online/phone until 11:59 PM EST the day before the meeting. MAIL - Sign, date and mail your proxy card in the envelope provided as soon as possible. IN PERSON - You may vote your shares in person by attending the Annual Meeting. GO GREEN - e-Consent makes it easy to go paperless. With e-Consent, you can quickly access your proxy material, statements and other eligible documents online, while reducing costs, clutter and paper waste. Enroll today via www.amstock.com to enjoy online access. COMPANY NUMBER ACCOUNT NUMBER CONTROL NUMBER SHARES NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL: The Proxy Statement and 2016 Annual Report are available at http://www.astproxyportal.com/ast/26231/Please detach along perforated line and mail in the envelope provided IF you are not voting via telephone or the Internet. 20330304000000000000 5 042517 THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL THE NOMINEES LISTED ON PROPOSAL 1 AND "FOR" PROPOSAL 2 AND PROPOSAL 3, AND “ONCE EVERY THREE YEARS” FOR PROPOSAL 4. PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE x1. To elect the three Class I nominees identified in the attached proxy statement to the Board of Directors; NOMINEES: 2. To ratify the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31,2017. FOR AGAINST ABSTAIN FOR ALL NOMINEES WITHHOLD AUTHORITY FOR ALL NOMINEES FOR ALL EXCEPT (See instructions below) O R. RANDALL ROLLINS O HENRY B. TIPPIE O JAMES B. WILLIAMS 3. To hold a nonbinding vote to approve executive compensation; 4. To hold a nonbinding vote regarding the frequency of voting on executive compensation; and FOR AGAINST ABSTAIN 1 year 2 years 3 years ABSTAIN 5. To consider and act upon such other business as may properly come before the Annual Meeting or any adjournment of the meeting. INSTRUCTIONS: To withhold authority to vote for any individual nominee(s), mark “FOR ALL EXCEPT” and fill in the circle next to each nominee you wish to withhold, as shown here: ALL PROXIES SIGNED AND RETURNED WILL BE VOTED OR NOT VOTED IN ACCORDANCE WITH YOUR INSTRUCTIONS, BUT THOSE WITH NO CHOICE INDICATED WILL BE VOTED "FOR" THE ABOVE-NAMED NOMINEES FOR DIRECTOR, "FOR THE RATIFICATION" OF THE APPOINTMENT OF GRANT THORNTON LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM, "FOR" A NONBINDING VOTE TO APPROVE EXECUTIVE COMPENSATION AND “FOR” A FREQUENCY OF "ONCE EVERY THREE YEARS" ON NONBINDING VOTE REGARDING FREQUENCY OF VOTING ON EXECUTIVE COMPENSATION. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY. NO POSTAGE REQUIRED IF THIS PROXY IS RETURNED IN THE ENCLOSED ENVELOPE AND MAILED IN THE UNITED STATES. To change the address on your account, please check the box at right and indicate your new address in the address space above. Please note that changes to the registered name(s) on the account may not be submitted via this method. Signature of Stockholder Date: Signature of Stockholder Date: Note: Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person. +ANNUAL MEETING OF STOCKHOLDERS OF RPC, INC. Tuesday, April 25, 2017, 12:15 P.M. GO GREENe-Consent makes it easy to go paperless. With e-Consent, you can quickly access your proxy material, statements and other eligible documents online, while reducing costs, clutter and paper waste. Enroll today via www.amstock.com to enjoy online access. NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL: The Proxy Statement and 2016 Annual Report are available at http://www.astproxyportal.com/ast/26231/Please sign, date and mail your proxy card in the envelope provided as soon as possible. Please detach along perforated line and mail in the envelope provided. 20330304000000000000 5 042517THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL THE NOMINEES LISTED ON PROPOSAL 1AND "FOR" PROPOSAL 2 AND PROPOSAL 3, AND “ONCE EVERY THREE YEARS” FOR PROPOSAL 4. PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE x1. To elect the three Class I nominees identified in the attached proxy statement to the Board of Directors; NOMINEES: 2. To ratify the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31,2017.FOR AGAINST ABSTAIN FOR ALL NOMINEES WITHHOLD AUTHORITY FOR ALL NOMINEES FOR ALL EXCEPT (See instructions below) O R. RANDALL ROLLINS O HENRY B. TIPPIE O JAMES B. WILLIAMS 3. To hold a nonbinding vote to approve executive compensation; 4. To hold a nonbinding vote regarding the frequency of voting on executive compensation; and FOR AGAINST ABSTAIN 1 year 2 years 3 years ABSTAIN 5. To consider and act upon such other business as may properly come before the Annual Meeting or any adjournment of the meeting. INSTRUCTIONS: To withhold authority to vote for any individual nominee(s), mark “FOR ALL EXCEPT” and fill in the circle next to each nominee you wish to withhold, as shown here: ALL PROXIES SIGNED AND RETURNED WILL BE VOTED OR NOT VOTED IN ACCORDANCE WITH YOUR INSTRUCTIONS, BUT THOSE WITH NO CHOICE INDICATED WILL BE VOTED "FOR" THE ABOVE-NAMED NOMINEES FOR DIRECTOR, "FOR THE RATIFICATION" OF THE APPOINTMENT OF GRANT THORNTON LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM, "FOR" A NONBINDING VOTE TO APPROVE EXECUTIVE COMPENSATION AND “FOR” A FREQUENCY OF "ONCE EVERY THREE YEARS" ON NONBINDING VOTE REGARDING FREQUENCY OF VOTING ON EXECUTIVE COMPENSATION. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY. NO POSTAGE REQUIRED IF THIS PROXY IS RETURNED IN THE ENCLOSED ENVELOPE AND MAILED IN THE UNITED STATES. To change the address on your account, please check the box at right and indicate your new address in the address space above. Please note that changes to the registered name(s) on the account may not be submitted via this method. Signature of Stockholder Date: Signature of Stockholder Date: Note: Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person. +-0RPC, INC. Proxy for Annual Meeting of Stockholders on Tuesday, April 25, 2017, 12:15 P.M. Solicited on Behalf of the Board of Directors The undersigned hereby constitutes and appoints GARY W. ROLLINS and R. RANDALL ROLLINS, and each of them, jointly and severally, proxies, with full power of substitution, to vote all shares of Common Stock which the undersigned is entitled to vote at the Annual Meeting of Stockholders to be held on April 25, 2017, at 12:15 P.M. at 2170 Piedmont Road, NE, Atlanta, Georgia 30324, or any adjournment of the meeting. The undersigned acknowledges receipt of Notice of Annual Meeting of Stockholders and Proxy Statement, each dated March 21, 2017, grants authority to said proxies, or either of them, or their substitutes, to act in the absence of others, with all the powers which the undersigned would possess if personally present at such meeting and hereby ratifies and confirms all that said proxies or their substitutes may lawfully do in the undersigned's name, place, and stead. The undersigned instructs said proxies, or either of them, to vote as stated on the reverse side. (Continued and to be signed on the reverse side.) 1.1 14475 \ No newline at end of file diff --git a/raw/proxies/0000742278/0001571049-17-002670/proxy_rpt.txt b/raw/proxies/0000742278/0001571049-17-002670/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..b6fc015c179d613c80d39b33f9f440367dadb4fd --- /dev/null +++ b/raw/proxies/0000742278/0001571049-17-002670/proxy_rpt.txt @@ -0,0 +1,8 @@ +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +Effective with the spin-off in 2001, the Company began providing certain administrative services to Marine Products. The service agreements between Marine Products and the Company provide for the provision of services on a cost reimbursement basis and may be terminated upon six months’ notice. The services covered by these agreements include administration of certain employee benefit programs and other administrative services. Charges from the Company (or from corporations which are subsidiaries of the Company) for such services aggregated approximately $739,000 in 2016. +RPC and Marine Products own 50 percent each of a limited liability company called 255 RC, LLC that was created for the joint purchase and ownership of a corporate aircraft. Each of RPC and Marine Products is a party to an operating lease agreement with 255 RC, LLC for a period of five years. During 2016, RPC recorded certain net operating costs comprised of rent and an allocable share of fixed costs of approximately $197,000 for the corporate aircraft. +During 2016, a subsidiary of RPC conducted business with companies owned by LOR, Inc. Mr. R. Randall Rollins, Chairman, and Mr. Gary W. Rollins, Director, are officers, directors and controlling stockholders of LOR, Inc. In 2016, payments totaling approximately $895,000 were made to these LOR, Inc. companies primarily for the purchase of parts and repair services related to certain of RPC’s oilfield operating equipment. RPC believes the charges incurred are at least as favorable as the charges that would have been incurred for similar purchases from unaffiliated third parties. +RPC receives certain administrative services including an allocation for office space from Rollins. The service agreements between Rollins and the Company provide for the provision of services on a cost reimbursement basis and are terminable on six months’ notice. The services covered by these agreements include office space, administration of certain employee benefit programs, and other administrative services. Charges to the Company (or to corporations which are subsidiaries of the Company) for such services and rent aggregated approximately $111,000 in 2016. +26 +A group that includes the Company’s Chairman of the Board, R. Randall Rollins, his brother Gary W. Rollins who is also a director, and certain companies under their control, possesses in excess of fifty percent of the Company’s voting power. Please refer to the discussion above under the heading, “Corporate Governance and Board of Directors Committees and Meetings, Director Independence and NYSE Requirements, Controlled Company Exemption.” The group discussed above also controls in excess of fifty percent of Marine Products’ voting power. +Our Code of Business Conduct and Ethics for Directors and Executive Officers and Related Party Transactions Policy provides that related party transactions, as defined in Regulation S-K, Item 404(a) must be reviewed, approved and/or ratified by our Nominating and Corporate Governance Committee. As set forth in our Code, our Nominating and Corporate Governance Committee has the responsibility to ensure that it only approves or ratifies related party transactions that are in compliance with applicable law, consistent with the Company’s corporate governance policies (including those relative to conflicts of interest and usurpation of corporate opportunities) and on terms that are deemed to be fair to the Company. The Committee has the authority to hire legal, accounting, financial or other advisors as it may deem necessary or desirable and/or to delegate responsibilities to executive officers of the Company in connection with discharging its duties. A copy of the Code is available on our website at www.rpc.net under the Governance section. All related party transactions for the fiscal year ended December 31, 2016 were reviewed, approved and/or ratified by the Nominating and Corporate Governance Committee in accordance with the Code. \ No newline at end of file diff --git a/raw/proxies/0000874499/0001193125-15-161979/proxy.txt b/raw/proxies/0000874499/0001193125-15-161979/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..deb50e7fb07b0f4243201d87fdfdef07fd641b95 --- /dev/null +++ b/raw/proxies/0000874499/0001193125-15-161979/proxy.txt @@ -0,0 +1,2657 @@ +DEF 14A +1 +d917270ddef14a.htm +DEF 14A +DEF 14A +Table of Contents +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Proxy Statement Pursuant to Section 14(a) of the +Securities Exchange Act of 1934 +x Filed by the +Registrant ¨ +Filed by a Party other than the Registrant +Check the appropriate box: +¨ +Preliminary Proxy Statement +¨ +Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +x +Definitive Proxy Statement +¨ +Definitive Additional Materials +¨ +Soliciting Material under §240.14a-12 +Gulfport Energy Corporation +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +x +No fee required +¨ +Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. +1) +Title of each class of securities to which transaction applies: +2) +Aggregate number of securities to which transaction applies: +3) +Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing +fee is calculated and state how it was determined): +4) +Proposed maximum aggregate value of transaction: +5) +Total fee paid: +¨ +Fee paid previously with written preliminary materials. +¨ +Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement +number, or the Form or Schedule and the date of its filing. +1) +Amount Previously Paid: +2) +Form, Schedule or Registration Statement No.: +3) +Filing Party: +4) +Date Filed: +Table of Contents +14313 North May Avenue, Suite 100 +Oklahoma City, Oklahoma 73134 +NOTICE OF +2015 +ANNUAL +STOCKHOLDERS +MEETING +and +PROXY +STATEMENT +Thursday +June 18, 2015 +10:00 a.m. local time +14313 North May Avenue +Suite 100 +Oklahoma City +Oklahoma 73134 +April 30, 2015 +Dear Gulfport Energy Corporation Stockholder: +On behalf of your board of directors and management, you are cordially invited to attend the Annual Meeting of Stockholders to be held at 14313 North May +Avenue, Suite 100, Oklahoma City, Oklahoma 73134 on Thursday, June 18, 2015, at 10:00 a.m. +It is important that your shares be represented at the meeting. Whether or not you plan to attend the meeting, please complete and return the enclosed proxy +card in the accompanying envelope. Please note that submitting a proxy will not prevent you from attending the meeting and voting in person. +You will find information regarding the matters to be voted on at the meeting in the enclosed proxy statement. Our 2014 Annual Report to Stockholders is either +enclosed with these materials or has previously been mailed to you. This proxy statement and our 2014 Annual Report to Stockholders are also available on our website at www.gulfportenergy.com/proxy. +In addition to the formal items of business to be brought before the meeting, there will +be a report on our operations, followed by a question and answer period. Your interest in Gulfport Energy Corporation is appreciated. We look forward to seeing you on June 18, 2015. +Sincerely, +Michael G. Moore +David L. Houston +Chief Executive Officer and President +Chairman of the Board +Table of Contents +GULFPORT ENERGY CORPORATION +14313 North May Avenue, Suite 100 +Oklahoma City, Oklahoma 73134 +NOTICE OF +ANNUAL MEETING OF STOCKHOLDERS +TO BE HELD ON JUNE 18, 2015 +To our Stockholders: +The Annual Meeting of Stockholders of +Gulfport Energy Corporation will be held on June 18, 2015 at 10:00 a.m., local time, at 14313 North May Avenue, Suite 100, Oklahoma City, Oklahoma 73134, for the following purposes: +1. +To elect six directors to serve until the Company’s 2016 Annual Meeting of Stockholders; +2. +To hold an advisory vote on the Company’s executive compensation; +3. +To ratify the appointment of Grant Thornton LLP as the Company’s independent auditors for the fiscal year ending December 31, 2015; and +4. +To transact such other business as may properly come before the Annual Meeting and any adjournment or postponement thereof. +Your vote is important. Please carefully consider the proposals and vote in one of these ways: +• +Mark, sign, date and promptly return the enclosed proxy card in the postage-paid envelope; or +• +Submit a ballot at the Annual Meeting. +Only stockholders of record at the close of business on April 22, +2015 or their proxy holders may vote at the meeting. Directions to the meeting can be obtained from the Company. +IMPORTANT NOTICE REGARDING THE +AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 18, 2015 . This proxy statement and the Company’s 2014 Annual Report to Stockholders are available on the Company’s website at +www.gulfportenergy.com/proxy. +By Order of the Board of Directors, +Michael G. Moore +Chief Executive Officer and President +This notice and proxy statement are first being mailed to stockholders on or about May 14, 2015. +Table of Contents +GULFPORT ENERGY CORPORATION +14313 North May Avenue, Suite 100 +Oklahoma City, Oklahoma 73134 +PROXY +STATEMENT +TABLE OF CONTENTS +About the Annual Meeting +1 +Board of Directors Information +4 +Election of Directors and Director Biographies +5 +Corporate Governance Matters and Communications with the Board +9 +Nominating Process for Directors, Director Qualifications and Review of Director Nominees +10 +Director Leadership Structure +12 +Board of Director’s Role in Risk Oversight +13 +Audit Committee Report +13 +Executive Officers +15 +Executive Compensation +16 +Compensation Discussion and Analysis +16 +Compensation Decisions for 2014 and Changes in 2015 +18 +Compensation Components +24 +Effect of Our Compensation Policies and Practices on Risk and Risk Management +28 +Deductibility of Executive Compensation +29 +Accounting Implications of Executive Compensation Policy +29 +The Role of Stockholders’ Say-on-Pay Vote +30 +Compensation Committee Report on Executive Compensation +30 +Compensation Committee Interlocks and Insider Participation +30 +Compensation Tables +31 +Benefit Plans +36 +401(k) Plan +36 +2013 Restated Stock Incentive Plan +36 +2014 Executive Annual Incentive Compensation Plan +37 +Employment Agreements +40 +Employment Agreement with Our Chief Executive Officer +40 +Employment Agreement with our Chief Financial Officer and Chief Operating Officer +42 +Prior Employment Agreement with our Former Chief Executive Officer +45 +Potential Payments Upon Termination, Resignation or Change of Control +45 +Stock Ownership +47 +Holdings of Major Stockholders +47 +Holdings of Officers and Directors +49 +Section 16(a) Beneficial Ownership Reporting Compliance +51 +Certain Relationships and Related Transactions +51 +Review and Approval of Related Party Transactions +51 +Proposal to Approve, on an Advisory Basis, the Company’s Executive Compensation +51 +Proposal to Ratify the Appointment of Our Independent Auditors +52 +Solicitation by Board; Expenses of Solicitation +53 +Submission of Future Stockholder Proposals +53 +Availability of Form 10-K and Annual Report to Stockholders +54 +Householding +54 +Other Matters +54 +i +Table of Contents +About the Annual Meeting +Who is soliciting my vote? +The board of directors of +Gulfport Energy Corporation, which we refer to as Gulfport, the Company and we in this proxy statement, is soliciting your vote at the 2015 Annual Meeting of Stockholders. In accordance with the Dodd-Frank Wall Street Reform and Consumer Protection +Act of 2010, or the Dodd-Frank Act, and consistent with the advisory vote of the Company’s stockholders obtained in 2011, the Company’s board of directors is providing the Company’s stockholders with a non-binding advisory vote on, +among other proposals, the Company’s executive compensation. This and other proposals to be voted on by the Company’s stockholders at the 2015 Annual Meeting of Stockholders are described in more detail below. +What am I voting on? +You are voting on: +• +The election of directors (see Proposal 1 beginning on page 5); +• +The approval, on an advisory basis, of the compensation paid to the Company’s named executive officers as reported in this proxy statement ( see Proposal 2 beginning on page 51 ); +• +The ratification of Grant Thornton LLP as our independent auditors for 2015 ( see Proposal 3 beginning on page 52 ); and +• +Any other business properly coming before the meeting. +How does the board of directors recommend that I +vote my shares? +Unless you give other instructions on your proxy card, the persons named as proxy holders on the proxy card will vote in accordance +with the recommendations of our board of directors. The board of directors’ recommendations can be found with the description of each item in this proxy statement. In summary, the board of directors recommends a vote: +• +FOR the proposal to elect the nominated directors; +• +FOR the proposal to approve, on an advisory basis, the compensation paid to the Company’s named executive officers as reported in this proxy statement; and +• +FOR the proposal to ratify Grant Thornton LLP as the Company’s independent auditors for 2015. +Who is +entitled to vote? +You may vote if you were the record owner of our common stock as of the close of business on the record date, which is +April 22, 2015. Each share of common stock is entitled to one vote. As of April 22, 2015, we had 96,641,075 shares of common stock outstanding and entitled to vote, excluding 424,590 shares of our restricted common stock granted under our +2013 Restated Stock Incentive Plan or its predecessors, but not yet vested. There is no cumulative voting. +How many votes must be present to hold the +meeting? +Your shares are counted as present at the Annual Meeting if you attend the meeting and vote in person or if you properly return a proxy by +mail. In order for us to hold our meeting, holders of a majority of the voting power of our outstanding shares of common stock as of the close of business on April 22, 2015 must be present in person or by proxy at the meeting. This is referred +to as a quorum. Abstentions and broker non-votes will be counted for purposes of establishing a quorum at the meeting. +1 +Table of Contents +What is a broker non-vote? +If a broker does not have discretion to vote shares held in street name on a particular proposal and does not receive instructions from the beneficial owner on +how to vote those shares, the broker may return the proxy card without voting on that proposal. This is known as a broker non-vote . No broker may vote your shares without your specific instructions on any of the proposals to be considered at +the Annual Meeting other than the ratification of our independent auditors. +How many votes are needed to approve each of the proposals? +In April 2014, our board of directors amended our bylaws to provide for the election of directors in uncontested elections by a majority of the votes cast by +the stockholders present in person or represented by proxy at the meeting and entitled to vote thereon. The number of shares voted “FOR” a director nominee must exceed the number of votes cast “AGAINST” that nominee. Abstentions +and broker non-votes will not be counted for voting purposes with respect to the re-election of directors. Stockholders may not cumulate their votes with respect to the re-election of directors. If any incumbent director is not elected because he +does not receive a majority of the votes cast, he is required to immediately tender his or her resignation for consideration by our board of directors. Our board of directors will evaluate whether to accept or reject such resignation, or whether +other action should be taken; provided, however, that the board will act on such resignation and publicly disclose its decision to accept or reject such resignation and the rationale behind such decision within 90 days from the date of the +certification of the director election results. +Each of Proposals 2 and 3 requires the affirmative “FOR” vote of a majority of the votes cast +by the stockholders present in person or represented by proxy at the Annual Meeting and entitled to vote thereon. Only votes for or against Proposal 2 will be counted as votes cast, and abstentions and broker non-votes will not be counted for voting +purposes. Broker non-votes will be counted as votes cast with respect to Proposal 3. +How do I vote? +You can vote either in person at the meeting or by proxy without attending the meeting. +To vote by proxy, you must fill out the enclosed proxy card , date and sign it, and return it in the enclosed postage-paid envelope. +Even if you plan to attend the meeting, we encourage you to vote your shares by proxy. If you plan to vote in person at the Annual Meeting, and you hold your +stock in street name, you must obtain a proxy from your broker and bring that proxy to the meeting. +Can I change my vote? +Yes. You can change or revoke your vote at any time before the polls close at the Annual Meeting. You can do this by: +• +Signing another proxy card with a later date and returning it to us prior to the meeting; +• +Sending our Corporate Secretary a written document revoking your earlier proxy; or +• +Voting again at the meeting. +Who counts the votes? +We have hired Computershare Trust Company, N.A., our transfer agent, to act as the tabulation agent and count the votes represented by proxies cast by mail or +ballot. Employees of Computershare Trust Company, N.A. will act as inspectors of election. +2 +Table of Contents +Will my vote be confidential? +Yes. As a matter of Company policy, proxies, ballots and voting tabulations that identify individual stockholders are treated as confidential. Only the +tabulation agent and the inspectors of election have access to your vote. Directors and employees of the Company may see your vote only if there is a contested proxy solicitation, as required by law or in certain other special circumstances. +Will my shares be voted if I don’t provide my proxy and don’t attend the Annual Meeting? +If you do not provide a proxy or vote your shares held in your name at the meeting, your shares will not be voted. +If you hold your shares in street name, your broker may be able to vote your shares for certain “routine” matters even if you do not provide the +broker with voting instructions. The ratification of Grant Thornton LLP as our independent auditors for 2015 is considered routine. For matters not considered “routine,” if you do not give your broker instructions on how to vote your +shares, the broker will return the proxy card without voting on that proposal. This is a broker non-vote. The proposals to elect directors and to approve, on an advisory basis, the Company’s executive compensation are not considered routine. As +a result, no broker may vote your shares on these proposals without your specific instructions. +How are votes counted? +In the election of directors contemplated by Proposal 1, you may vote “FOR,” “AGAINST” or “ABSTAIN” with respect to one or more +of the nominees. For Proposals 2 and 3, you may vote “FOR,” “AGAINST” or “ABSTAIN.” +What if I return my proxy but +don’t indicate my vote on the matters listed on my proxy card? +If you return a signed proxy card without indicating your vote, your shares will +be voted FOR the director nominees listed on the card, FOR approving, on an advisory basis, the Company’s executive compensation as described in this proxy statement and FOR the ratification of Grant Thornton LLP as our independent auditors for +2015. +Could other matters be decided at the Annual Meeting? +We have not received any stockholder proposals and are not aware of any other matters that will be considered at the Annual Meeting. If any other matters arise +at the Annual Meeting, the persons named in your proxies will vote in accordance with their best judgment. +Who can attend the meeting? +The Annual Meeting is open to all holders of our common stock. +What do I need to bring to attend the Annual Meeting? +You will need proof of ownership of our common stock to enter the meeting. If your shares are in the name of your broker or bank or other nominee, you will +need to bring evidence of your stock ownership, such as your most recent brokerage statement. All stockholders will be required to present valid picture identification. IF YOU DO NOT HAVE VALID PICTURE IDENTIFICATION AND PROOF THAT YOU OWN SHARES OF +OUR COMMON STOCK, YOU MAY NOT BE ADMITTED INTO THE MEETING. +How can I access the Company’s proxy materials and annual report electronically? +This proxy statement and the Company’s 2014 Annual Report to Stockholders are available on the Company’s website at +www.gulfportenergy.com/proxy. +3 +Table of Contents +Board of Directors Information +What is the makeup of the board of directors and how often are the members elected? +Our board of directors currently consists of six members who are elected annually. The majority of these directors are independent under the Nasdaq listing +standards. +What if a nominee is unable or unwilling to serve? +That is not expected to occur. If it does, shares represented by proxies will be voted for a substitute nominated by the board of directors. +How are directors compensated? +Our policy is that +members of our board of directors who are also our officers or employees do not receive compensation for their services as directors. The compensation of our non-employee directors is described below. +Cash Compensation +Consistent with +the recommendations of Longnecker & Associates, an independent compensation consulting firm, effective January 1, 2014, we paid our non-employee directors an annual retainer of $40,000, an attendance fee of $1,000 for each board +meeting attended in person in 2014, increasing to $1,500 in 2015, and an attendance fee of $500 for each board meeting attended telephonically in 2014, increasing to $750 in 2015. In addition, effective January 1, 2014, the Chairman of the +Board receives an additional $65,000 annual retainer, the audit committee chairman receives an additional $15,000 annual retainer and the chairman of each of the compensation committee and the nominating and corporate governance committee receives +an additional $10,000 annual retainer. The annual retainer paid in 2014 to each committee member that was not the chairman of the respective committee was $3,000 per year, and effective January 1, 2014, each committee member was entitled to a +$500 attendance fee for each committee meeting attended in person in 2014, increasing to $1,000 in 2015, and a $250 attendance fee for each committee meeting attended telephonically in 2014, increasing to $500 in 2015. +In March 2015, consistent with the recommendations of Longnecker & Associates in its December 2014 analysis of non-employee director compensation, +the compensation committee recommended, and our board of directors approved, changes in compensation paid to non-employee directors of the Company for 2015. Effective January 1, 2015, our non-employee directors receive an annual retainer of +$60,000, an attendance fee of $1,500 for each board meeting attended in person in 2015, and an attendance fee of $750 for each board meeting attended telephonically in 2015. The fees payable to our non-executive Chairman of the Board and the +chairpersons of the audit, compensation and nominating and corporate governance committees remained at the 2014 levels discussed above. However, effective January 1, 2015, members of the audit, compensation and nominating and corporate +governance committees of the board of directors who are not chairpersons of the respective committee no longer receive any additional retainers for such service. Each committee member will continue to receive attendance fees for each committee +meeting, which, effective January 1, 2015, were set at $1,000 per each committee meeting attended in person and $500 for each committee meeting attended telephonically. The compensation committee also recommended, and the board of directors +approved, an increase in the value of the annual grant of our restricted common stock to each non-employee director discussed in more detail under the heading “—Equity Compensation” below. +Equity Compensation +Effective +January 1, 2014, our non-employee directors were entitled to receive an annual grant of restricted stock with an aggregate value of approximately $100,000 based on the closing price of our common stock on the date of grant, with vesting to +occur in the following year. On July 10, 2014, we granted the 2014 annual director grant +4 +Table of Contents +in the amount of 1,609 shares of our restricted common stock to each of our then-serving non-employee directors under our 2013 Restated Stock Incentive Plan, which shares will vest on +June 12, 2015 if the non-employee director is in continuous service on that date. Michael S. Reddin, one of our then-serving non-employee directors, resigned as a director of the Company effective August 4, 2014 and, in connection with +such resignation, declined to accept the 1,609 shares of restricted stock granted to him on July 10, 2014 under the 2013 Restated Stock Incentive Plan. Further, in connection with the appointment of Ben T. Morris as a director of the Company +effective August 4, 2014, Mr. Morris received grants under our 2013 Restated Stock Incentive Plan of (i) 374 shares of our restricted common stock as a signing bonus, which shares will vest on August 4, 2015, and (ii) 1,556 +shares of our restricted common stock, which shares will vest on June 12, 2015 if he is in continuous service on that date, representing pro-rated equity compensation payable to our non-employee directors in 2014, based on Mr. Morris’ +service on the board of directors commencing on August 4, 2014. Further information regarding our director compensation in 2014 is set forth under the heading “2014 Director Compensation” below. +As discussed above, effective January 1, 2015, the compensation committee also recommended, and the board of directors approved, a $25,000 increase in +the value of the annual grant of our restricted common stock to each non-employee director (based on the market value of our common stock at the time of grant) to $125,000, with vesting to occur in the following year. +Insurance and Indemnification +We +provide liability insurance for our directors and officers at a current annual cost of approximately $596,717. We have also entered into indemnification agreements with each of our current directors. These agreements require us to indemnify these +individuals to the fullest extent permitted under Delaware law against liabilities that may arise by reason of their service to us, and to advance expenses incurred as a result of any proceeding against them as to which they could be indemnified. +In addition, our certificate of incorporation sets forth limitations on our directors’ liability to our stockholders. Further, our bylaws contain +indemnification and advancement of expenses provisions for the benefit of our directors and officers. +How often did the board of directors meet in +2014? +The board of directors met 14 times in 2014. In addition to these meetings, the board of directors adopted resolutions by unanimous written +consent. Each director attended at least 75% of the aggregate meetings of the board of directors and the meetings of the committees on which he served. +Election of Directors and Director Biographies +(Proposal 1 on the Proxy Card) +Who are this year’s nominees? +The directors +standing for election this year to hold office until the 2016 Annual Meeting of Stockholders and until each such director’s successor is elected are: +MICHAEL G. MOORE, age 58. Mr. Moore was appointed as our Chief Executive Officer and as a member of our board of directors on April 22, 2014, +and has served as our President since August 2013. He served as our Chief Financial Officer and Secretary from July 2000 to April 2014 and as our Vice President from July 2000 until his appoint as President in August 2013. Mr. Moore also served +as our Interim Chief Executive Officer from February 15, 2014 until his appointment as our Chief Executive Officer on April 22, 2014. From May 1998 through July 2000, Mr. Moore served as Vice President and Chief Financial Officer of +Indian Oil Company. From September 1995 through May 1998, Mr. Moore served as Controller of DLB Oil & Gas, Inc. Prior to that, Mr. Moore served as Controller of LEDCO, Inc., a Houston based gas marketing company. Mr. Moore +received both his Bachelor of Business Administration Degree in Finance and his Master’s in Business Administration from the University of Central Oklahoma. +5 +Table of Contents +DONALD L. DILLINGHAM, age 53. Mr. Dillingham has served as a director of the Company since November +2007. Since April 2007, Mr. Dillingham has served as Chief Executive Officer of Oak Hills Holdings, a holding company comprised of Avondale Investments, LLC, Merit Advisors, Inc. and Oak Hills Securities, each of which is a registered +investment advisor. From August 2001 until July 2003, Mr. Dillingham served as the Senior Portfolio Manager for two mutual funds, a member of the investment committee of Merit Advisors, Inc. and the Vice-President/Treasurer and director of the +Merit Advisors Investment Trust. From August 2002 to December 2004, Mr. Dillingham served as an adjunct professor of finance at the University of Oklahoma. From April 1998 to August 2001, Mr. Dillingham served as Senior Vice President, +portfolio manager and state director for J.P. Morgan Investment Management. From March 1996 to April 1998, Mr. Dillingham served American Express as the state director responsible for managing the financial planning services and product sales +for the state of Oklahoma. From May 1994 to December 1996, Mr. Dillingham worked for Bank of America as Vice-President of Investment Banking. Mr. Dillingham began his career in the finance industry with Stifel, Nicolaus as a fixed income +analyst, risked based market maker and sales manager from August 1984 to May 1994. Mr. Dillingham is also the founder of Fortress Storage Solutions, a multi-unit self-storage company, and Dillingham Outdoor, an advertising company. +Mr. Dillingham has also served since May 2009 as an independent director and chairman of the audit committee for Emerging Brands, a privately-held restaurant holding company. From 2009 to 2011, Mr. Dillingham served as an independent +director and chairman of the audit committee for The Beard Company, a publicly-traded energy company. Mr. Dillingham is active in the community and has served in a variety of leadership roles in local organizations. He is an enrolled member of +the Muscogee (Creek) Indian Nation, and after ten years of service, recently rotated off the board of Oklahoma’s Native American Cultural and Education Authority. Mr. Dillingham received a Bachelor’s of Business and Administration in +Accounting from the University of Oklahoma and his Master’s of Business and Administration in Finance from Oklahoma City University. Mr. Dillingham is a Chartered Financial Analyst, a Certified Public Accountant and a Certified Financial +Planner. +CRAIG GROESCHEL, age 47. Mr. Groeschel has served as a director of the Company since August 2011. Since 1996, Mr. Groeschel has +served as a founding pastor of LifeChurch.tv, one of the largest churches in the United States, reaching over 30,000 people each weekend. Since founding LifeChurch, Mr. Groeschel has served on its Board of Directors. Under +Mr. Groeschel’s leadership, LifeChurch has grown to 15 locations in the United States. Mr. Groeschel received a Bachelor’s in Business Marketing from the Oklahoma City University and a Master’s of Divinity from the Phillips +Graduate Seminary. Mr. Groeschel is a frequent speaker at various domestic and international forums and an author of a number of books. +DAVID L. +HOUSTON, age 62. Mr. Houston has served as a director of the Company since July 1998 and as Chairman of the Board since July 2013. Since 1991, Mr. Houston has been the principal of Houston Financial, a firm that offers life and +disability insurance, compensation and benefits plans and wealth management services with a focus on the energy sector. Since 2000, Mr. Houston has managed a mineral trust with approximately 9,200 net acres in Oklahoma, Texas, Kansas and New +Mexico, which includes responsibility for leasing and production matters. Mr. Houston served on the board of directors and executive committee of Deaconess Hospital, Oklahoma City, Oklahoma, from January 1993 until December 2008. +Mr. Houston has served as the lead director on the board of directors of Diamondback Energy, Inc. (Nasdaq Global Market: FANG) since October 2012, is a member of its audit and compensation committees and is the chair of its nominating and +corporate governance committee. He also served as a director of Bronco Drilling Company from May 2005 until December 2010 and was a member of its audit committee. Mr. Houston received a Bachelor of Science Degree in business from Oklahoma State +University and a graduate degree in banking from Louisiana State University. +BEN T. MORRIS, age 69 . Mr. Morris has served as a director of +the Company since August 4, 2014. From 2009 to 2012, Mr. Morris served as the Vice Chairman of the board of directors of the Sanders Morris Harris Group, a financial services and wealth management company he co-founded in 1987, or SMHG. +Since its founding, Mr. Morris has served in various capacities with SMHG, including Executive Vice President and Director of Investment Banking, President and Chief Executive Officer and a member of the board of directors of SMH Capital, a +subsidiary of SMHG, and Chief Executive Officer and a member of the board of directors of +6 +Table of Contents +SMHG. Since 2012, Mr. Morris has continued as an employee of Sanders Morris Harris, Inc., a former subsidiary of SMHG. From 1980 to 1986, Mr. Morris served as the Chief Operating +Officer of Tatham Corporation, a privately-held company engaged in natural gas transportation and marketing and oil and gas exploration and production. Mr. Morris began his career as an accountant at Price Waterhouse & Co. in 1967, and +in 1973 joined Mid American Oil and Gas Inc. as Chief Financial Officer, eventually serving as President of the company until its sale in 1979. Since July 2011, Mr. Morris has served as a member of the board of directors and Chairman of the +audit committee of Yuma Energy, Inc., a privately-held exploration and production company. Mr. Morris has also served on the boards of several public companies, including Capital Title Group from 1998 to 2006, American Equity Investment Life +Holding Company from 1997 to 2006, Tyler Technologies, Inc. from 2002 until 2005, where he served as Chairman of its audit committee, Fresh America Corp. from 1992 until 1996, where he served as a member of the compensation committee, and Deeptech +International Inc. from 1988 until 1997. Mr. Morris has an extensive financial background, with over 20 years of experience in various aspects of the investment banking business. Mr. Morris received his Bachelor of Business Administration +Degree from the University of North Texas, and also holds a Certified Public Accountant certificate from the State of Texas, along with several securities licenses. +SCOTT E. STRELLER, age 47. Mr. Streller has served as a director of the Company since August 2006. He currently serves as chairman of +Company’s nominating and corporate governance committee and as a member on the audit and compensation committees. In 1992, Mr. Streller founded the Scott Streller Insurance and Financial Services Agency (Farmers Insurance), which has been +recognized both regionally and nationally as one of the top agencies within the Farmers Insurance Group of Companies. Mr. Streller is active in the community and has served in a variety of leadership roles in local public and non-profit +organizations. Additionally, Mr. Streller frequently serves as a guest lecturer at local universities and insurance and financial services seminars. Mr. Streller earned a Bachelor’s Degree in Business Management from the University of +Central Oklahoma. In addition, Mr. Streller received a Master’s in Athletic Administration from Oklahoma State University, where he served as a Graduate Assistant Coach in men’s basketball under Coach Eddie Sutton. +What does the board of directors recommend? +THE BOARD +RECOMMENDS THAT YOU VOTE “FOR” THE ELECTION OF THESE DIRECTORS +What are the committees of the Board? +Our board of directors has an audit committee, nominating and corporate governance committee, which we refer to herein as the nominating committee, and +compensation committee, which committees perform the following functions: +Committee +Members +Principal Functions +Number of +Meetings in +2014 +Audit +Donald L. Dillingham +David L. Houston* +Ben T. Morris** +Scott E. Streller +• Reviews and discusses with management and the +independent auditors the integrity of our accounting policies, internal controls, financial statements, accounting and auditing processes and risk management compliance. +• Monitors and oversees our accounting, auditing and financial reporting +processes generally, including the qualifications, independence and performance of the independent auditor. +• Monitors our compliance with legal and regulatory requirements. +• Establishes procedures for the receipt, retention and treatment of +complaints received by the Company regarding accounting, internal +Ten (10) +7 +Table of Contents +Committee +Members +Principal Functions +Number of +Meetings in +2014 +accounting controls or auditing matters, and the confidential, anonymous submission by employees of concerns regarding +questionable accounting or auditing matters. +• Reviews and approves related party transactions. +• Appoints, determines compensation, evaluates and terminates our +independent auditors. +• Pre-approves audit and permissible non-audit services to be performed +by the independent auditors. +• Prepares the report required by the Securities and Exchange +Commission, or the SEC, for the inclusion in our annual proxy statement. +• Reviews and reassesses the adequacy of the audit committee charter on +a periodic basis. +Compensation# +David L. Houston* +Scott E. Streller +• Oversees and administers our executive compensation +policies, plans and practices and evaluates their impact on risk and risk management. +• Assists the board of directors in discharging its responsibilities +relating to the compensation of our executives, including our chief executive officer, and other key employees. +• Administers our equity-based compensation plans, including the grants +of stock options, restricted stock awards and other equity awards under such plans. +• Reviews, approves and administers our cash-based incentive bonus +plans, including the establishment of performance criteria, targets and awards under our 2014 Executive Annual Incentive Compensation Plan. +Six (6) +• Makes recommendations to the board with respect to +incentive compensation. +• Conducts annual performance evaluation of the committee. +• Reviews disclosure related to executive compensation in our proxy +statement. +• Reviews and considers the stockholders’ advisory vote on +executive compensation and the frequency of holding such advisory vote. +• Reviews and reassesses the adequacy of the compensation committee +charter. +8 +Table of Contents +Committee +Members +Principal Functions +Number of +Meetings in +2014 +Nominating# +Donald L. Dillingham +David L. Houston +Ben T. Morris** +Scott E. Streller* +• Assists the board of directors in developing +criteria for, identifying and evaluating individuals qualified to serve as members of our board of directors. +• Selects and recommends director candidates to the board of directors +to be submitted for election at the Annual Meeting and to fill any vacancies on the board of directors. +• Periodically reviews and makes recommendations regarding the +composition and size of the board of directors and each of its committees. +• Reviews and recommends to the board of directors appropriate corporate +governance policies and procedures for the Company. +• Conducts an annual assessment of the qualifications and performance of +the board of directors. +• Annually reviews and reports to the board of directors on the +performance of management. +• Reviews and reassesses the adequacy of the nominating committee +charter. +Four (4) +* +Committee Chairperson. +** +Mr. Morris joined the audit committee and the nominating committee effective upon his appointment to our board of directors on August 4, 2014. +# +Michael S. Reddin, one of our then non-employee directors, served as a member of the compensation and nominating committees of the board of directors from April 22, 2014 until his resignation from the board of +directors and these committees effective August 4, 2014. +Do the committees have written charters? +Yes. The charters for our audit committee, compensation committee and nominating committee can be found on our website at www.gulfportenergy.com under +the “Corporate Governance” caption. You may also obtain copies of these charters, as well as our Code of Business Conduct and Ethics, which is described below, by writing to our Assistant Corporate Secretary, Paul K. Heerwagen IV, at +Gulfport Energy Corporation, 14313 N. May Avenue, Suite 100, Oklahoma City, Oklahoma 73134. +Corporate +Governance Matters and Communications with the Board +Who are our independent directors? +Our board of directors has determined that Donald L. Dillingham, Craig Groeschel, David L. Houston, Ben T. Morris and Scott E. Streller meet the standards +regarding independence set forth in the Nasdaq listing standards and are free of any relationship which, in the opinion of our board of directors, would interfere with the exercise of independent judgment in carrying out their responsibilities as +directors of the Company. +Our board of directors has determined that each member of the audit committee is independent for purposes of serving on such +committee under the Nasdaq listing standards and applicable federal law. In addition, our board of directors has determined that each current member of the audit committee is financially literate under the +9 +Table of Contents +Nasdaq listing standards and that each of Mr. Houston, who serves as the Chairman of the audit committee, and Mr. Dillingham qualifies as the “audit committee financial +expert,” as such term is defined in Item 407(d) of Regulation S-K. +Our board of directors has also determined that each member of the +compensation committee and the nominating committee meets the independence requirements applicable to those committees under the Nasdaq rules. In addition, our board of directors determined that each member of our compensation committee is an +“outside director” in accordance with Section 162(m) of the Internal Revenue Code of 1986, as amended, or the Code, and a “non-employee director” in accordance with Rule 16b-3 under the Securities Exchange Act of 1934, as +amended, or the Exchange Act. +Do our non-management directors meet separately without management? +Our non-management directors have the opportunity to meet in an executive session following each regularly scheduled meeting of the board of directors. During +2014, our non-management directors met in an executive session on June 12, 2014. +How can I communicate with the board of directors? +Individuals may communicate with our board of directors or individual directors by writing to our Assistant Corporate Secretary, Paul K. Heerwagen IV, at +Gulfport Energy Corporation, 14313 N. May Avenue, Suite 100, Oklahoma City, Oklahoma 73134. Our Assistant Corporate Secretary will review all such correspondence and forward to our board of directors a summary of all such correspondence and copies +of all correspondence that, in the opinion of our Assistant Corporate Secretary, relates to the functions of our board of directors or a committee thereof or that he otherwise determines requires their attention. Directors may review a log of all +such correspondence received by us and request copies. Concerns relating to accounting, internal control over financial reporting or auditing matters will be immediately brought to the attention of the chairman of the audit committee and handled in +accordance with the audit committee procedures established with respect to such matters. +Do directors attend the Annual Meeting? +Recognizing that director attendance at our Annual Meeting can provide our stockholders with an opportunity to communicate with directors about issues +affecting the Company, we actively encourage our directors to attend the Annual Meeting of Stockholders. All of our six directors then-serving attended the 2014 Annual Meeting of Stockholders in person. +Code of Business Conduct and Ethics +We have adopted a +Code of Business Conduct and Ethics designed to help directors and employees resolve ethical issues. Our Code of Business Conduct and Ethics applies to all directors and employees, including the Chief Executive Officer, the Chief Financial Officer +and all senior financial officers. Our Code of Business Conduct and Ethics covers various topics including, but not limited to, conflicts of interest, fair dealing, discrimination and harassment, confidentiality, compliance procedures and employee +complaint procedures. Our Code of Business Conduct and Ethics is posted on our website under the “Investor Relations—Corporate Governance” caption. +Nominating Process for Directors, Director Qualifications and Review of Director Nominees +The nominating committee is comprised of four non-employee directors, all of whom are independent under Nasdaq listing standards. As provided by the nominating +committee’s charter, our nominating committee identifies, investigates and recommends to our board of directors candidates with the goal of creating a balance +10 +Table of Contents +of knowledge, experience and diversity. Generally, the committee identifies candidates through the personal, business and organizational contacts of the directors and management and through the +use of third-party search firms. +Potential directors should possess the highest personal and professional ethics, integrity and values, and be committed +to representing the interests of our stockholders. In addition to reviewing a candidate’s background and accomplishments, candidates for director nominees are reviewed in the context of the current composition of our board of directors and the +evolving needs of our business. It is the policy of our board of directors that at all times at least a majority of its members meets the standards of independence promulgated by Nasdaq and the SEC and that all members reflect a range of talents, +ages, skills and expertise, particularly in the areas of accounting and finance, management, leadership and oil and gas related industries sufficient to provide sound and prudent guidance with respect to our operations and the interests of our +stockholders. In addition to the foregoing factors, our nominating committee considers diversity in its evaluation of candidates for board membership. Although our board of directors does not have a formal diversity policy, our board believes that +diversity with respect to viewpoint, skills and experience should be an important factor in board composition. Our nominating committee ensures that diversity considerations are discussed in connection with each potential nominee, as well as on a +periodic basis in connection with its periodic review of the composition of the board and the size of the board as a whole. +We also require that the +members of our board of directors be able to dedicate the time and resources sufficient to ensure the diligent performance of their duties on our behalf, including attending meetings of the board of directors and applicable committee meetings. In +accordance with its charter, our nominating committee periodically reviews the criteria for the selection of directors to serve on our board and recommends any proposed changes to our board of directors for approval. +Our board of directors will consider stockholder nominations for director candidates upon written submission of such recommendation to our Corporate Secretary +along with, among other things, the nominee’s qualifications and certain biographical information regarding the nominee, such nominee’s written consent to serving as a director if elected and being named in the proxy or information +statement and certain information regarding the status of the stockholder submitting the recommendation, all in the manner required by our amended and restated bylaws and the applicable rules and regulations promulgated under the Exchange Act. +Following verification of the stockholder status of persons proposing candidates, recommendations will be aggregated and considered by our board of directors at a regularly scheduled or special meeting. If any materials are provided by a stockholder +in connection with the nomination of a director candidate, such materials will be forwarded to our board of directors. See “Submission of Future Stockholder Proposals” below for additional detail regarding submitting director nominees. +Our board of directors may also review materials provided by professional search firms or other parties in connection with a nominee who is not proposed +by a stockholder. In evaluating such nominations, our board of directors will seek to achieve a balance of knowledge, experience and capability on the board. Our board of directors uses the same criteria for evaluating candidates nominated by +stockholders as it does for those proposed by current board members, professional search firms and other persons. After completing its evaluation, our board of directors approves the final slate of director nominees. +Our nominating committee approved the director nominees submitted for election at this Annual Meeting. Each nominee is a current board member and brings a +strong and unique background and set of skills to our board of directors, giving our board of directors as a whole competence and experience in a variety of areas, including corporate governance and board service, executive management, oil and +natural gas industry, accounting and finance and risk assessment and management. Specifically, in nominating the candidates submitted for election at this Annual Meeting, our nominating committee considered such candidates’ past service on our +board and the information discussed in each of the directors’ individual biographies set forth beginning on page 5 above. In particular, with regard to Mr. Dillingham, our nominating committee considered his strong background in +11 +Table of Contents +finance and risk assessment and management developed as part of his career as a registered investment advisor and portfolio manager, as well as his academic experience. With regard to +Mr. Groeschel, our nominating committee considered his leadership and prior board service at a non-profit organization, community involvement and administrative and public speaking skills. With regard to Messrs. Houston and Streller, our +nominating committee considered their respective business backgrounds and risk assessment skills. Mr. Moore’s public company experience while serving in various executive officer capacities at Gulfport and leadership skills that led to his +promotion as our Chief Executive Officer in April 2014, as well as his strong oil and natural gas background and extensive experience in finance, accounting, financial reporting, internal controls and corporate governance, led our nominating +committee to appoint Mr. Moore as a director, effective April 22, 2014, and a nominee and to conclude that he should serve as one of our directors. Mr. Morris’ prior public company experience, extensive financial background, with +over 20 years of experience in various aspects of the investment banking business, and strong oil and natural gas background led our nominating committee, following an extensive search process undertaken by Preng & Associates, an +independent third-party search firm, in which approximately 80 potential candidates were reviewed, to appoint Mr. Morris as a director, effective August 4, 2014, and to recommend Mr. Morris as a nominee and to conclude that he should +serve as one of our directors. Each of the director nominees has consented to serve as a director if elected. +Director Leadership Structure +Since December 2005, the positions of Chairman of the Board and Chief Executive Officer have been held by two different individuals. In July 2013, our board of +directors amended our bylaws to make the Chairman of the Board a non-executive position to be elected from among the directors by the board, and named Mr. Houston as Chairman of the Board until his successor is duly appointed. On +February 14, 2014, as previously announced, James D. Palm retired as our Chief Executive Officer and resigned from our board of directors. He was replaced as our Chief Executive Officer and as a member of our board of directors by Michael G. +Moore. Separating the positions of Chairman of the Board and Chief Executive Officer has allowed our Chief Executive Officer to focus on our day-to-day business and operations, while allowing our Chairman of the Board to lead the board in its +fundamental role of providing advice to and oversight of management. The Chairman of the Board has provided leadership to our board of directors and worked with the board of directors to define its structure and activities in the fulfillment of its +responsibilities. The Chairman of the Board has set the board agendas, with the input from other members of the board and our management, facilitated communications among and information flow to directors, has the power to call special meetings of +our board of directors and stockholders and presided at meetings of our board of directors and stockholders. The Chairman of the Board has also advised and counseled our Chief Executive Officer and other officers. Our board of directors does not +have a position of a lead director. +We believe that our directors bring a broad range of leadership experience to the boardroom and regularly contribute +to the thoughtful discussion involved in effectively overseeing the business and affairs of the Company. We believe that the atmosphere of our board is collegial, that all board members are well engaged in their responsibilities, and that all board +members express their views and consider the opinions expressed by other directors. Five out of six of our director nominees are independent under the Nasdaq listing standards and SEC rules. We believe that all of our independent directors have +demonstrated leadership in business enterprises and are familiar with board processes. Our independent directors are involved in the leadership structure of our board by serving on our Audit, Nominating and Compensation committees, each having an +independent chairperson. Specifically, the chair of our audit committee oversees the accounting and financial reporting processes, as well as compliance with legal and regulatory requirements. The chair of our compensation committee oversees our +compensation policies and practices and their impact on risk and risk management. The chair of our nominating committee monitors matters such as the composition of the board and its committees, board performance and best practices in corporate +governance. As such, each committee chair provides independent leadership for purposes of many important functions delegated by our board of directors to such committee. +12 +Table of Contents +Board of Director’s Role in Risk Oversight +As an exploration and production company, we face a number of risks, including risks associated with the supply of and demand for oil and natural gas, +volatility of oil and natural gas prices, exploring for, developing, producing and delivering oil and natural gas, declining production, environmental and other government regulations and taxes, weather conditions, including hurricanes, that can +affect oil and natural gas operations over a wide area, adequacy of our insurance coverage, political instability or armed conflict in oil and natural gas producing regions and overall economic environment. Management is responsible for the +day-to-day management of risks we face as a company, while our board of directors, as a whole and through its committees, has responsibility for the oversight of risk management. In its risk oversight role, our board of directors has the +responsibility to satisfy itself that the risk management processes designed and implemented by management are adequate and functioning as designed. +Our +board of directors believes that full and open communication between management and the board of directors is essential for effective risk management and oversight. Our Chairman of the Board meets regularly with our Chief Executive Officer to +discuss strategy and risks facing the Company. Our executive officers regularly attend the board meetings and are available to address any questions or concerns raised by the board on risk management-related and any other matters. Other members of +our management team periodically attend board meetings or are otherwise available to confer with the board to the extent their expertise is required to address risk management matters. Periodically, our board of directors receives presentations from +senior management on strategic matters involving our operations. During such meetings, our board of directors also discusses strategies, key challenges, and risks and opportunities for the Company with senior management. +While our board of directors is ultimately responsible for risk oversight at the Company, our three committees assist the board in fulfilling its oversight +responsibilities in certain areas of risk. Our audit committee assists the board in fulfilling its oversight responsibilities with respect to risk management in the areas of financial reporting, internal controls and compliance with legal and +regulatory requirements, and discusses policies with respect to risk assessment and risk management. Our compensation committee assists the board in fulfilling its oversight responsibilities with respect to the management of risks arising from our +compensation policies and programs. Our nominating committee assists the board in fulfilling its oversight responsibilities with respect to the management of risks associated with board organization, membership and structure, succession planning for +our directors and executive officers and corporate governance. +Audit Committee Report +The audit committee is responsible for providing independent, objective oversight for the integrity of the Company’s financial reporting process and +internal control system. Other primary responsibilities of the audit committee include the review, oversight and appraisal of the qualifications, independence and audit performance of the Company’s independent registered public accounting firm +and providing an open venue for communication among the independent registered public accounting firm, financial and senior management, our internal auditors and the board of directors of the Company. A more detailed description of the +responsibilities of the audit committee is set forth in its written charter, which is posted on our website at www.gulfportenergy.com . The following report summarizes certain of the audit committee’s activities with respect to its +responsibilities during 2014. +Review with Management and Independent Registered Public Accounting Firm. The audit committee has reviewed and +discussed with management and Grant Thornton LLP, an independent registered public accounting firm, the audited consolidated financial statements of the Company for the year ended December 31, 2014. +Controls and Procedures. Management has established and maintains a system of disclosure controls and procedures designed to provide reasonable +assurance that information required to be disclosed by the Company in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and +includes controls and procedures designed to +13 +Table of Contents +provide reasonable assurance that information required to be disclosed by us in those reports is accumulated and communicated to our management, including our Chief Executive Officer and Chief +Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. As of December 31, 2014, management conducted an evaluation of our disclosure controls and procedures. Based on this evaluation, our Chief Executive +Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective to provide reasonable assurance that the information required to be disclosed by us in the reports we file or submit under the Exchange Act is +recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. The audit committee discussed with management and Grant Thornton LLP the quality and adequacy of the Company’s disclosure controls +and procedures. +Management has also established and maintains a system of internal controls over financial reporting as defined in Rules 13a-15(f) and +15d-15(f) under the Exchange Act. These internal controls are designed to provide reasonable assurance that the reported financial information is presented fairly, that disclosures are adequate and that the judgments inherent in the preparation of +financial statements are reasonable. Management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring +Organizations of the Treadway Commission. Based on management’s evaluation under the framework in Internal Control—Integrated Framework, management did not identify any material weaknesses in our internal control over financial reporting +and concluded that our internal control over financial reporting was effective as of December 31, 2014, as discussed in more detail in Management’s Report on Internal Control Over Financial Reporting, which was included in our Annual +Report on Form 10-K for the year ended December 31, 2014, filed with the SEC on February 27, 2015. Our internal control over financial reporting as of December 31, 2014 has been audited by Grant Thornton LLP, as stated in its +attestation report, which was included in our Annual Report on Form 10-K for the year ended December 31, 2014, filed with the SEC on February 27, 2015. The audit committee reviewed and discussed with management and Grant Thornton LLP the +Company’s system of internal control over financial reporting in compliance with Section 404 of the Sarbanes-Oxley Act of 2002. +Discussions +with Independent Auditing Firm. The audit committee has discussed with Grant Thornton LLP, independent auditors for the Company, the matters required to be discussed by Rules on Auditing Standard No. 16, Communication with Audit Committees, +as amended. The audit committee has received the written disclosures and the letter from Grant Thornton LLP required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s +communications with the audit committee concerning independence and has discussed with that firm its independence from the Company. +Recommendation to +the board of directors. Based on its review and discussions noted above, the audit committee recommended to the board of directors that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the year +ended December 31, 2014. +THE AUDIT COMMITTEE +David L. +Houston, Chairman +Donald L. Dillingham +Ben T. +Morris +Scott E. Streller +14 +Table of Contents +Executive Officers +The following table sets forth the name, age and positions of each of our executive officers as of the record date: +Name +Age +Position +Michael G. Moore +58 +Chief Executive Officer and President +Aaron Gaydosik +39 +Chief Financial Officer +J. Ross Kirtley +60 +Chief Operating Officer +Stuart A. Maier +61 +Vice President of Geosciences +Steve R. Baldwin +61 +Vice President of Reservoir Engineering +Biographical information for Mr. Moore is set forth in this proxy statement under the heading “Election of Directors +and Director Biographies.” +AARON GAYDOSIK . Mr. Gaydosik has served as Chief Financial Officer of the Company since August 11, 2014. +From July 2013 until joining the Company, Mr. Gaydosik served as Vice President of Finance at Kodiak Oil & Gas Corp., an independent energy company with operations focused primarily in the Williston Basin of North Dakota. From May 2007 +through July 2013, Mr. Gaydosik held various positions of increasing levels of responsibility at Credit Suisse Securities (USA), LLC, most recently as a Director in its Oil and Gas Group, focused on capital markets and advisory transactions +primarily for exploration and production companies. His prior investment banking experience also includes two years in the energy group at Wachovia Securities. Mr. Gaydosik holds a Bachelor of Business Administration in Finance from Southern +Methodist University and a Masters of Business Administration from the University of Chicago Booth School of Business. +J. ROSS KIRTLEY . +Mr. Kirtley has served as Chief Operating Officer of the Company since April 22, 2014. Previously, Mr. Kirtley served as Chief Operating Officer of our Ohio activities from October 2013 through April 22, 2014. From January 2007 +to January 2013, he served as Vice President of Services for Sandridge Energy, Inc. and President of Lariat Services, Inc., Hondo Heavy Haul, Inc. and Chapparal Supply, LLC, each a wholly-owned subsidiary of Sandridge Energy, Inc. Prior to joining +Sandridge Energy, Inc., Mr. Kirtley served as Business Manager for NOMAC Drilling, Inc., a wholly-owned subsidiary of Chesapeake Energy Corporation for one year. Mr. Kirtley graduated from Southwestern Oklahoma State University in 1977. +STUART A. MAIER. Mr. Maier has served as Vice President of Geosciences since August 2013. Prior to that position, he served as +Geological/Geophysical Manager of the Company since May 1998. From 1993 to May 1998, Mr. Maier had served as Senior Geologist with DLB Oil & Gas, Inc. From 1992 until joining DLB Oil & Gas, Inc., Mr. Maier was a +consulting geologist/geophysicist and, from 1981 to 1991, Mr. Maier was a geologist/geophysicist with The Anschutz Corporation, an oil and natural gas exploration and production company. From 1979 to 1981, Mr. Maier was a production +geologist for Gulf Oil Exploration and Production Company. From 1977 to 1979, Mr. Maier was a well site geologist. Mr. Maier received a Bachelor of Science Degree in Geology from the University of Missouri. Mr. Maier is a member of +the American Association of Petroleum Geologists. +STEVE R. BALDWIN. Mr. Baldwin has served as Vice President of Reservoir Engineering since +August 2013. Prior to that position, he served as Senior Reservoir Engineer of the Company since October 2006. From February 2001 through September 2006, he served as Senior Reservoir and Acquisition Engineer for Chaparral Energy Inc. From 1996 to +December 2000, Mr. Baldwin served as Senior Operations Engineer for Saba Energy of Texas, Inc. Prior to that, Mr. Baldwin served as Operations Manager for Merrico Resources. Mr. Baldwin began his career with Mobil Oil Corporation +after receiving his Bachelor of Science Degree from the University of Oklahoma. Mr. Baldwin is a member of the Society of Petroleum Engineers. +15 +Table of Contents +Executive Compensation +Compensation Discussion and Analysis +Overview +The compensation +discussion and analysis set forth below provides an overview of our compensation program, including the objectives and rationale of each element of compensation, for each of our named executive officers. This section also describes the actions and +decisions of the compensation committee of our board of directors, and of our board of directors, as they relate to our executive compensation decisions. The compensation committee, which is composed entirely of independent directors, is primarily +responsible for establishing, implementing and monitoring our compensation programs, including those applicable to our executive officers. In particular, the compensation committee’s current role is to oversee, on behalf of our board of +directors, our compensation and benefit plans and policies, administer our stock plans (including reviewing and approving equity grants to directors and executive officers), administer our annual cash incentive bonus plans (including the +establishment of performance criteria, targets and awards under our 2014 Executive Annual Incentive Compensation Plan) and review and approve annually all compensation decisions relating to our named executive officers. In fulfilling its +responsibilities, the compensation committee may delegate any or all of its responsibilities to a member of the committee or to a subcommittee consisting of members of the committee, although no such delegations were made in 2014. The compensation +committee meets at least annually to review executive compensation programs, approve compensation levels, consider performance targets, review management performance and administer our equity-based compensation plans and cash incentive bonus plans. +The compensation committee operates in accordance with its charter, which was amended and restated in January 2014 and sets forth the committee’s powers and responsibilities, which are described in more detail under the heading “Election +of Directors and Director Biographies—What are the committees of the Board?” +As discussed in more detail below under “Employment +Agreements—Potential Payments Upon Termination, Resignation or Change of Control—Severance Payments Received by our Former Chief Executive Officer in Connection with Retirement in February 2014,” James D. Palm, our former Chief +Executive Officer and a former member of the board of directors, retired from all positions with the Company effective February 15, 2014. We began a nationwide search with Preng & Associates for Mr. Palm’s successor in +February 2014, and the board of directors conducted a review of both internal and external candidates. During this interim period, Michael G. Moore, our President and then-Chief Financial Officer, assumed management responsibilities associated with +the office and acted as Interim Chief Executive Officer pending the conclusion of the board’s search. Upon the conclusion of this search, the board determined that it is in the best interests of the Company and its stockholders to appoint +Mr. Moore as Chief Executive Officer and as a member of our board of directors, and he was appointed to serve in these capacities on April 22, 2014. Mr. Moore has continued to serve as our President. Mr. Moore also continued to +serve as our Chief Financial Officer until the appointment of Aaron Gaydosik as our new Chief Financial Officer effective August 11, 2014. +Compensation Philosophy and Objectives +The objectives of our compensation program are to: +• +attract and retain key executives; +• +align the interests of our executives with those of our stockholders; and +• +motivate and reward individual performance and contributions to the Company’s success and financial performance. +16 +Table of Contents +Highlights of Company Performance in 2014 +• +EBITDA increased 78% during the year ended December 31, 2014 as compared to the year ended December 31, 2013. +• +Production increased 255% to approximately 87,719 MMcfe for the year ended December 31, 2014 from approximately 24,709 MMcfe for the year ended December 31, 2013. +Production +• +Year-end 2014 total proved reserves increased 305% to approximately 933.6 Bcfe from approximately 230.6 Bcfe in 2013 and year-end 2014 total proved developed reserves increased 204% to approximately 453.8 Bcfe from +approximately 149.4 Bcfe in 2013. +Proved Reserves and Proved +Developed Reserves +• +During 2014, we spud 130 gross (112 net) wells, participated in an additional 112 gross (13 net) wells that were drilled by other operators on our Utica Shale and Bakken acreage and recompleted 161 gross and net wells. +Of our 130 new wells spud during 2014, 73 were completed as producing wells, seven were non-productive and, at year end, 44 were in various stages of completion and six were drilling. +• +In 2014, we acquired approximately 8,200 net acres in the Utica Shale from Rhino Exploration LLC for a total purchase price of $182.0 million ($179.5 million net of purchase price adjustments). We are the operator of +substantially all of this acreage. +• +As of December 31, 2014, we held leasehold interests in approximately 185,000 gross (180,000 net) acres in the Utica Shale. During 2014, we spud 85 gross (67.2 net) wells on our Utica Shale acreage. +• +In June, September and November of 2014, we sold our remaining Diamondback common stock in underwritten public offerings for an aggregate of $258.4 million in net proceeds. +17 +Table of Contents +• +In August of 2014, we issued $300.0 million in aggregate principal amount of our 7.750% Senior Notes due 2020, resulting in net proceeds to us of approximately $312.0 million, a portion of which we used to repay all +outstanding borrowings under our senior secured revolving credit facility. We used the remaining net proceeds for general corporate purposes, which included funding a portion of our 2014 capital development plan. +The following performance graph compares our cumulative total stockholder return (assuming dividend reinvestment) from January 1, 2010 through +January 1, 2015, against the average performance of our 2014 proxy peer group identified by Longnecker & Associates, as described below under “—Compensation Decisions for 2014 and Changes in 2015,” and against the +Standard & Poor’s 500 Stock Index, a broad market index, or the S&P 500 Index. The graph assumes an investment of $100 on such date, and that all dividends were reinvested. In 2014 and over this five-year period, we outperformed +each of the peer group and the S&P 500 Index. +01/01/2010 +01/01/2011 +01/01/2012 +01/01/2013 +01/01/2014 +01/01/2015 +Gulfport Energy +$ +100.00 +$ +189.34 +$ +257.21 +$ +333.80 +$ +551.35 +$ +364.54 +Peer Group +$ +100.00 +$ +139.49 +$ +128.73 +$ +114.45 +$ +156.24 +$ +101.02 +S&P 500 +$ +100.00 +$ +124.91 +$ +127.85 +$ +152.60 +$ +210.78 +$ +245.83 +Compensation Decisions for 2014 and Changes in 2015 +Compensation Decisions for 2014 +In +September 2013, the compensation committee engaged Longnecker & Associates, an independent compensation consulting firm, to, among other things, (i) conduct a peer analysis to aid the committee in +18 +Table of Contents +determining the appropriate peer group based on data derived from proxy statements filed by peer companies in 2013 and other publicly available market data, which we refer to as the September +2013 peer group, (ii) conduct an analysis of the Company’s executive compensation for Mr. Palm (our then Chief Executive Officer) and Mr. Moore (our then President and Chief Financial Officer), including with respect to base +salary, targeted annual incentives and targeted total direct compensation, (iii) conduct an analysis of the compensation of the board of directors, including with respect to annual retainers, meeting fees, equity grants and total director +compensation, (iv) provide the compensation committee with an opinion related to the payout of bonuses, including the analysis performed of market prevalence and competitiveness, and (v) conduct a review of the compensation +committee’s charter. In establishing the September 2013 peer group, Longnecker & Associates initially identified candidates of similar size, with similar operations in the onshore oil and gas exploration and production industry, and +with similar operations in comparable geographies. Based on Longnecker & Associates’ evaluation, the September 2013 peer group consisted of the following 16 companies: Athlon Energy Inc.; Kodiak Oil & Gas Corp.; Laredo +Petroleum Holdings, Inc.; Oasis Petroleum Inc.; Rosetta Resources, Inc.; Denbury Resources Inc.; Energen Corp.; QEP Resources, Inc.; Whiting Petroleum Corp.; Newfield Exploration Co.; Concho Resources, Inc.; Range Resources Corporation; Energy XXI +(Bermuda) Limited; SM Energy Company; Cimarex Energy Co.; and Kosmos Energy Ltd. In selecting the September 2013 peer group, Longnecker & Associates sought to include companies that are operationally similar to Gulfport, while maintaining +appropriate relative financial alignment. These considerations resulted in the September 2013 peer group including companies that operate in similar plays, focus on onshore exploration and production and have similar reserve and production +characteristics (i.e. blend of gas and oil) and market capitalizations that are within a range of 0.5x – 2.0x that of Gulfport’s market capitalization. Longnecker & Associates believed that focusing on companies with similar +market capitalization was appropriate for the Company after evaluating its operations and the significant stock price growth the Company has experienced. Given Gulfport’s diverse and unique operational locales, Longnecker & Associates +focused on companies with a majority of operations in the continental U.S. rather than in any more specific geographic region. Among the September 2013 peer group, Gulfport falls in the 17th percentile in revenue, 30th percentile in assets, 73rd +percentile in market capitalization, 69th percentile in net income and 64th percentile in enterprise value, in each case for the trailing 12 months effective October 8, 2013. +In December 2013, the compensation committee met to consider, among other things, the 2013 compensation analysis prepared by Longnecker & Associates +with respect to the compensation of Mr. Moore and our then Chief Executive Officer, Mr. Palm, for 2014. The compensation committee discussed and evaluated the compensation packages for Mr. Moore and Mr. Palm in light of the +Company’s performance, the value each such executive brings to the Company, market trends, competitive market data, economic climate, the respective experience and leadership roles of these executives and the Company’s desire to retain +these executives. The compensation committee also evaluated the 2014 compensation packages for the members of the board of directors of the Company considering the same factors. The compensation committee noted that the Company demonstrated strong +performance metrics compared to its peers. The compensation committee made the 2013 bonus determinations for our then named executive officers, but left the annual base salaries for such named executive officers for 2014 unchanged from the prior +year. The compensation committee determined to award each of Messrs. Maier and Baldwin a grant of 40,000 shares of restricted stock under our 2013 Restated Stock Incentive Plan, vesting in three substantially equal installments beginning on +December 12, 2013 discussed in more detail below under “—Compensation Components—Long-Term Incentive Compensation,” based on the recommendation of our then-Chief Executive Officer, Mr. Palm, considering their increased +role within the organization and their significant contributions to the development of the Company. The compensation committee did not make any other changes to the compensation packages for Messrs. Maier and Baldwin for 2014. Further, the +compensation committee deferred any equity award decisions for Mr. Moore and Mr. Palm until such time as the Company’s annual financial and operating results for 2013 were finalized in early 2014. +In February 2014, the compensation committee awarded 24,868 shares of restricted stock to Mr. Moore under our 2013 Restated Stock Incentive Plan as a +retention award in connection with his assumption of duties as Interim Chief Executive Officer after the retirement of Mr. Palm and in view of the uncertainty relating to his position in +19 +Table of Contents +recognition of the then-ongoing search for a new Chief Executive Officer. The retention award was subject to Mr. Moore’s continuous service with the Company and was to vest in two equal +annual installments beginning on February 24, 2015, unless earlier vesting occurred upon his involuntary termination without cause, termination for good reason, death, disability or termination for any reason except cause or voluntary +termination without good reason within 24 months after a change in control. As described below, this retention award was rescinded when Mr. Moore was named our Chief Executive Officer. +On April 1, 2014, the compensation committee recommended the approval of, and the board of directors approved, the 2014 Executive Annual Incentive +Compensation Plan, subject to stockholder approval at the 2014 Annual Meeting of Stockholders. This plan, which we refer to as our Annual Incentive Plan, was approved in response to general stockholder concerns relating to certain public +companies’ practices of awarding guaranteed minimum bonuses to their executives and as part of the Company’s ongoing initiative to revise its cash-based compensation philosophy and programs away from a guaranteed minimum bonus structure to +a mix of base compensation and performance based incentive compensation. The Annual Incentive Plan is described in more detail elsewhere in this proxy statement. On April 1, 2014, the compensation committee also determined to provide +Mr. Moore, as an additional incentive, a cash retention bonus equal to $400,000 in view of the uncertainty relating to his position in recognition of the then-ongoing search for a new Chief Executive Officer. The cash bonus amount was to vest +and become payable in two equal annual installments, beginning on February 24, 2015, subject to Mr. Moore’s continuous service with the Company, unless earlier vesting occurs upon his involuntary termination without cause, termination +for good reason, death, disability or termination for any reason except cause or voluntary termination without good reason within 24 months after a change in control. As described below, this cash bonus award was also rescinded when Mr. Moore +was named our Chief Executive Officer. In addition, the compensation committee agreed to increase Mr. Moore’s 2013 annual discretionary bonus under his employment agreement from $500,000 to $800,000. This increase was designed to recognize +the significant financial and operating performance gains experienced by the Company in 2013, Mr. Moore’s overall performance and the additional duties and responsibilities he assumed upon his appointment as President in August 2013, his +service as Chief Financial Officer and Secretary of the Company and his leadership through transformative acquisitions and related capital market transactions in 2013. +On April 22, 2014, Mr. Moore was appointed Chief Executive Officer of the Company. He has continued to serve as President of the Company. +Mr. Moore also continued to serve as Chief Financial Officer until the appointment of Aaron Gaydosik as our new Chief Financial Officer effective August 11, 2014. In connection with Mr. Moore’s new responsibilities, we entered +into an amended and restated employment agreement with Mr. Moore dated April 30, 2014 but effective April 22, 2014 based on terms recommended by Longnecker & Associates. Material terms of this agreement are discussed below. +See “Employment Agreements.” +On July 10, 2014, the Company appointed Mr. Gaydosik as our Chief Financial Officer, effective +August 11, 2014. In connection with his appointment, the compensation committee set Mr. Gaydosik’s annual base salary at $300,000, subject to increases as may be determined from time to time by the compensation committee. Under the +terms of his employment, Mr. Gaydosik was entitled to receive a one-time sign-on bonus consisting of (i) $150,000 payable in cash and (ii) a restricted stock award valued at $225,000, vesting in two approximately equal annual +installments beginning on August 1, 2015 (which was granted to Mr. Gaydosik on February 24, 2015). +The compensation committee also +approved Mr. Gaydosik’s participation in the Company’s annual incentive compensation plan, under which he was entitled to receive an annual award representing 50%, 75% or up to a potential maximum of 200% of his base salary, depending +on reaching pre-determined financial and/or operational metrics. Mr. Gaydosik was also entitled to receive an annual long-term equity incentive award, consisting of time-vested restricted stock, vesting in three approximately equal annual +installments beginning on the date of grant, with a target level of 300% of his annual base salary. The timing and the amount of such annual long-term equity incentive award was to be determined by the compensation committee of the Board in its sole +discretion and would be prorated for 2014, based on the number of months served during 2014. +20 +Table of Contents +The Company also appointed Mr. Kirtley as the Chief Operating Officer effective April 22, 2014. In +connection with his appointment, the compensation committee set his annual base salary at $325,000. +2014 Compensation Analysis and +Compensation Decisions for 2015 +In the fall of 2014, the compensation committee again engaged Longnecker & Associates to among other +things (i) conduct a peer analysis to aid the committee in determining the appropriate peer group, based on data derived from proxy statements filed by peer companies in 2014 and other publicly available market data, (ii) conduct an +analysis of the Company’s executive compensation for Mr. Moore, our Chief Executive Officer and President, Mr. Kirtley, our Chief Operating Officer, and Mr. Gaydosik, our Chief Financial Officer, including with respect to base +salary, targeted annual incentives and targeted total direct compensation, (iii) conduct an analysis of the compensation of the board of directors, including with respect to annual retainers, meeting fees, equity grants and total director +compensation, and (iv) provide the compensation committee with an opinion related to the payout of bonuses, including the analysis performed of market prevalence and competitiveness. In establishing our peer group for 2014, +Longnecker & Associates reviewed the September 2013 peer group and removed Athlon Energy Inc., Cimarex Energy Co., Concho Resources, Inc., Energy XXI (Bermuda) Limited, Kodiak Oil & Gas Corp. and Kosmos Energy Ltd. due to either +changes in size (primarily in market capitalization) or acquisition of certain of these companies by competitors. Five new companies, Carrizo Oil & Gas, Inc., PDC Energy Inc., SandRidge Energy, Inc., Ultra Petroleum Corp. and WPX Energy, +Inc., with operations in the exploration and production industry and similar market capitalization in 2014, were added to our 2014 peer group. Based on Longnecker & Associates’ evaluation, our peer group for 2014 consisted of the +following 15 companies: Laredo Petroleum Holdings, Inc.; Oasis Petroleum Inc.; Rosetta Resources, Inc.; Denbury Resources Inc.; Energen Corp.; QEP Resources, Inc.; Whiting Petroleum Corp.; Newfield Exploration Co.; Range Resources Corporation; SM +Energy Company; Carrizo Oil & Gas, Inc.; PDC Energy Inc.; SandRidge Energy, Inc.; Ultra Petroleum Corp.; and WPX Energy, Inc. Among our 2014 peer group, Gulfport falls in the 14th percentile in assets, 67th percentile in market +capitalization, 43rd percentile in net income (although the lowest in revenue) and 23rd percentile in enterprise value, in each case for the trailing 12 months effective October 21, 2014. +In its 2014 compensation analysis, Longnecker & Associates provided competitive data for similarly situated executives at the peer group companies, +focusing on the following elements of compensation: (i) the annual base salary; (ii) the targeted total annual cash compensation consisting of the annual base salary and targeted annual incentive bonus; (iii) the value of long-term +incentive awards as of the date of grant; and (v) targeted total direct compensation, consisting of the targeted total annual cash compensation and the value of long-term incentive awards as of the date of grant. The compensation consultant +also analyzed how these elements of compensation compare to elements of compensation afforded to our Chief Executive Officer and President, Chief Operating Officer and Chief Financial Officer. +In its analysis, the compensation consultant determined that the 2014 base salary and the targeted total annual cash compensation afforded to our Chief +Executive Officer, Chief Operating Officer and Chief Financial Officer were generally in the bottom quartile of being competitive with the peer group. The compensation consultant concluded that the 2014 annual base salaries for each of our Chief +Executive Officer, Chief Operating Officer and Chief Financial Officer was below the 25th percentile range of annual base salaries paid to similarly situated executive officers in the peer group. The compensation consultant recommended a multi-year +base salary adjustment plan for our Chief Executive Officer, with the goal of achieving alignment between the 25th and 50th percentiles of the peer group within three years. The compensation consultant also recommended that the respective annual +base salaries of our Chief Operating Officer and Chief Financial Officer be increased. In the case of our Chief Operating Officer, the compensation consultant recommended aligning his annual base salary closer to the 25th percentile of the peer +group and, in the case of our Chief Financial Officer, the compensation consultant recommended a cost of living increase due to his recent hire. The compensation consultant also recommended to align the targeted total cash opportunity for these +named executive officers between the 25th and 50th percentiles of the peer group, while allowing the compensation committee to determine the performance targets. The compensation consultant also concluded that current target awards of 150% and 75% +of the annual +21 +Table of Contents +base salary for our Chief Executive Officer and Chief Financial Officer, respectively, contemplated by the terms of their respective employment were competitive with the peer group. The +compensation consultant recommended to establish an annual incentive target of 75% to 85% of the annual base salary for our Chief Operating Officer to align his annual cash incentive opportunity with that of our Chief Financial Officer. The +compensation consultant also provided market values with respect to the annual long-term incentive awards granted to similarly situated executives at the peer group companies to assist the compensation committee in making these determinations with +respect to our Chief Executive Officer, Chief Operating Officer and Chief Financial Officer for 2015. The compensation consultant concluded that an annual grant of 40,000 shares of our restricted common stock contemplated by the terms of our Chief +Executive Officer’s employment agreement is subject to market fluctuations and may not provide a competitive value of long-term incentive to him from one year to the next. The compensation consultant also concluded that the targeted annual +equity award representing 300% of his annual base salary contemplated by the terms of our Chief Financial Officer’s employment is competitive with the peer group (falls above the 75th percentile range of the peer group). The compensation +consultant recommended that a consistent methodology be implemented by the compensation committee to establish annual long-term incentive grants as a percentage of base salary or as a targeted dollar amount for each of our Chief Executive Officer, +Chief Operating Officer and Chief Financial Officer to properly incentivize such named executive officers and make such long-term incentive grants competitive with the peer group. +The compensation committee considered the compensation consultant’s recommendations discussed above and, effective January 1, 2015, increased annual +base salaries for our Chief Executive Officer, Chief Operating Officer and Chief Financial Officer to $460,000, $338,000 and $309,000, respectively. Further, on February 24, 2015, the compensation committee granted new restricted stock awards +to our Chief Executive Officer, Chief Operating Officer and Chief Financial Officer in the amount of 52,225 shares, 23,025 shares and 21,049 shares, respectively, with the grant date value representing 500% of the annual base salary for our Chief +Executive Officer and 300% of the annual base salary for each of our Chief Operating Officer and Chief Financial Officer, to provide further long-term incentive to such named executive officers and align them more closely with the competitive ranges +for equity awards afforded to similarly situated executives at peer group companies. For more information regarding these awards, see “—Compensation Components—Long-Term Incentive Compensation—2015 Awards” below. Further, in +March 2015, the compensation committee approved our entry into employment agreements with Messrs. Kirtley and Gaydosik to facilitate their retention by the Company, effective April 22, 2014 and August 11, 2014, respectively, and, in April +2015, the compensation committee approved our entry into an amended and restated employment agreement with Mr. Moore, in each such case on the terms consistent with Longnecker & Associates’ recommendations discussed above and, in the +case of Mr. Gaydosik, to formalize the terms of his employment we negotiated with Mr. Gaydosik at the time of his appointment as our Chief Financial Officer in August 2014. For a detailed description of these employment agreements, see +“Employment Agreements—Employment Agreement with Our Chief Financial Officer and Chief Operating Officer” below. +Compensation Policy +The key +elements of our compensation program are base salary, annual bonus and long-term incentive compensation. We use these elements to meet our compensation objectives as follows: +• +Attract and retain key executives . We believe that to attract and retain talented executives, we must offer compensation that is +competitive with the compensation of similarly-situated executives of comparable companies within the oil and natural gas industry. To facilitate the retention of Michael G. Moore, our Chief Executive Officer and President, we entered into an +amended and restated employment agreement with Mr. Moore, effective April 22, 2014 and subsequently amended and restated such agreement as of April 29, 2015. See “Employment Agreements—Employment Agreement with Our Chief +Executive Officer” below for more information regarding the terms of this agreement. In March 2015, to facilitate the retention of Messrs. Kirtley and Gaydosik, we entered into employment agreements with these named executive officers, +effective April 22, 2014 and August 11, 2014, respectively. See “Employment Agreements—Employment Agreement with Our Chief Financial +22 +Table of Contents +Officer and Chief Operating Officer” below for more information regarding the terms of these agreements. +• +Align the interests of our executives with those of our stockholders . Since 2006, we have used only restricted stock awards to incentivize our named executive officers. It is anticipated that in the future +the compensation committee will continue to structure our long-term incentive compensation in the form of restricted stock awards (including restricted stock units), consistent with peer group companies’ practices. For a discussion of the +Company’s long-term incentive policy, see “—Compensation Components—Long-Term Incentive Compensation” below. +• +Restricted Stock Awards . Restricted stock awards are awards of our common stock that are subject to certain restrictions on vesting, forfeiture and transferability as provided under the terms of the applicable +equity incentive plan and the terms of the specific restricted stock award as determined by the compensation committee as the plan administrator. Restricted stock awards are an essential component of our long-term incentive compensation strategy for +our executives. In 2014 and 2015, we granted restricted stock awards to our named executive officers under our 2013 Restated Stock Incentive Plan. For a description of these awards, see “—Compensation Components—Long-Term Incentive +Compensation—2014 Awards” and “—2015 Awards” below. +• +Stock Options . Stock options represent the right of an option holder to buy shares of our common stock at an exercise price equal to the market value of our common stock on the date of grant. Under our +outstanding stock options, the right to buy underlying shares generally vested in 36 substantially equal monthly installments from the date of grant, except that certain options vested in five substantially equal annual installments beginning on the +first anniversary of the date of grant. We have not granted stock options since 2005. All outstanding options have now vested. We awarded these stock options in order to align compensation with company performance as the options become valuable to +the executive only if the stock price increases from the date of grant. Also, stock options require a long-term commitment by executives to realize the appreciation potential of the options. +• +Performance-Based Cash Incentive Compensation . On April 1, 2014, the compensation committee recommended the approval of, and the board of directors approved, the Annual Incentive Plan, subject to stockholder +approval at the 2014 Annual Meeting of Stockholders. Also on April 1, 2014, the compensation committee established the performance criteria and targets for 2014 under the Annual Incentive Plan, again subject to stockholder approval of the Plan. +Our stockholders approved the Annual Incentive Plan at the 2014 Annual Meeting. For 2014, the performance levels require achieving certain financial and operational metrics, including growth in EBITDA, estimated proved reserves and oil and natural +gas production, as compared to the prior year period. Straight line interpolation will apply to determine the amount of the bonus for performance that is above the threshold target and between performance levels. The performance-based cash incentive +awards and targets for 2014 and 2015 are discussed in more detail under the “—Compensation Components—Performance-Based Cash Incentive Compensation” below. The compensation committee believes that performance-based cash incentive +compensation, with meaningful performance targets, will further align our executives’ interests with those of our stockholders, motivate our executives to contribute to the Company’s growth and profitability by encouraging the successful +implementation of the annual business plan and objectives and link a larger portion of our executives’ compensation to the performance of the Company. In response to stockholder input, the compensation committee has determined that objective +performance-based bonus opportunities should be used to compensate our executives in place of discretionary or minimum bonus requirements. +• +Motivate and reward individual performance and contributions to the Company’s success and financial performance . The Company’s +evaluation of the individual performance of each executive officer affects most aspects of the executive’s compensation. Individual performance and level of +23 +Table of Contents +responsibility are considered in determining an executive’s annual salary, and are important factors in deciding whether to grant an equity award under the 2013 Restated Stock Incentive Plan +or cash-incentive award opportunity under the Annual Incentive Plan. The compensation committee also believes that the establishment of meaningful performance targets under the Annual Incentive Plan will motivate our executives to perform at a +higher level and contribute to the Company’s financial and operational performance. See “—Compensation Policy—Align the interests of our executives with those of our stockholders” and “—Compensation +Components—Performance-Based Cash Incentive Compensation.” +Compensation Components +Base Salary +Base salary is +designed to provide basic economic security for our executives and be competitive with salary levels for comparable executives at our peer group companies. As discussed under the heading “Employment Agreements” below, we entered into +employment agreements with Mr. Palm, our then Chief Executive Officer, and Mr. Moore, our former Vice President and Chief Financial Officer, in November 2012, and we entered into an amended and restated employment agreement with +Mr. Moore effective as of April 22, 2014 in connection with his appointment as our new Chief Executive Officer. As discussed elsewhere in this proxy statement, Mr. Palm retired as our Chief Executive Officer and from our board of +directors in February 2014, at which time his employment agreement was terminated. Also, in March 2015, we entered into employment agreements with Mr. Gaydosik, our Chief Financial Officer, and Mr. Kirtley, our Chief Operating Officer, +effective as of August 11, 2014 and April 22, 2014, respectively. Under each of these employment agreements, the named executive officer is entitled to a base salary in each year of such executive’s employment agreement, the amount of +which is to be reviewed from time to time by the compensation committee and may be adjusted upward, but not downward, by the compensation committee in its sole discretion. In determining the amount of the base salaries of Mr. Moore, +Mr. Gaydosik and Mr. Kirtley in connection with the negotiation of their respective employment agreements, the compensation committee considered numerous factors, including the compensation of executive officers of comparable companies +within the oil and natural gas industry, Longnecker & Associates’ recommendations, the performance of such executive officer, the experience and leadership qualities of such executive officer, the value such executive officers brought +to the Company and the Company’s strategy for recruiting, retaining and motivating key employees. In the future, we anticipate that the compensation committee will continue to review the base salaries of our named executive officers on an +annual basis, subject to the terms of any employment agreements that we may have with our named executive officers, and will consider similar factors in making base salary determinations. Under the terms of his amended and restated employment +agreement effective April 22, 2014, Mr. Moore’s annual base salary for 2014 remained at $400,000. Mr. Gaydosik’s and Mr. Kirtley’s annual base salaries for 2014 were $300,000 and $325,000, respectively. For +additional information, see “—Compensation Decisions for 2014 and Changes in 2015” above. The compensation committee also did not make any changes in the base salary for Messrs. Maier and Baldwin for 2014. +Performance-Based Cash Incentive Compensation +On April 1, 2014, the compensation committee recommended the approval of, and the board of directors approved, the 2014 Executive Annual Incentive +Compensation Plan, subject to stockholder approval at the 2014 Annual Meeting of Stockholders. The 2014 Executive Annual Incentive Compensation Plan, which we refer to as the Annual Incentive Plan, is designed to provide an incentive to executive +officers and other selected employees of the Company to contribute to the growth, profitability and increased value of the Company by providing cash incentive compensation that may qualify as “performance-based compensation” within the +meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended, or the Code. We adopted the Annual Incentive Plan, in response to certain stockholder concerns, as part of an ongoing initiative to eliminate the use of +24 +Table of Contents +minimum discretionary bonus arrangements in the employment agreements of our executive officers in favor of performance-based bonuses. +The Annual Incentive Plan focuses on achievement of certain annual objectives and goals, as determined by the compensation committee at the beginning of each +calendar year, and provides that the participants may earn a pre-determined percentage of their respective base salaries for the achievement of such specified goals. Under the Annual Incentive Plan, the payout opportunity is contingent upon meeting +the threshold performance levels, and thereafter varies for performance above and below the pre-established target performance levels, subject to a maximum award level. The target award to a participant will represent a percentage of such +participant’s base salary, as adjusted based upon meeting or exceeding the performance levels established by the compensation committee for that year, and cannot exceed a maximum payment limit specified by the compensation committee. The terms +of the Annual Incentive Plan are described in more detail below. +On April 1, 2014, the compensation committee established the performance criteria +and targets for 2014 under the Annual Incentive Plan and specified the weighting attributable to such performance metrics, subject to the approval of the Annual Incentive Plan by the Company’s stockholders at the 2014 annual meeting of +stockholders. For 2014, the performance levels require achieving certain financial and operational metrics, including growth in EBITDA, estimated proved reserves and oil and natural gas production, as compared to the prior year period. The +compensation committee determined that these metrics were principal drivers of profitability and growth for the Company for 2014. Also on April 1, 2014, the compensation committee granted an award to Michael G. Moore, who at that time was our +Interim Chief Executive Officer, President and Chief Financial Officer, under the Annual Incentive Plan, which award represented 50%, 100% or up to a of maximum of 200% of his base salary, depending on reaching the threshold, target or above-target +performance levels. Under the terms of Mr. Moore’s amended and restated employment agreement effective April 22, 2014 in connection with his appointment as our Chief Executive Officer, the potential amount of the award was increased +to 75%, 150% or up to a maximum of 300% of his base salary, subject to the same performance criteria and targets established by the compensation committee on April 1, 2014. In connection with Mr. Gaydosik’s appointment as our Chief +Financial Officer effective August 11, 2014, the compensation committee approved Mr. Gaydosik’s participation in the Company’s annual incentive compensation plan, under which he was entitled to receive an annual award +representing 50%, 75% or up to a maximum of 200% of his base salary depending on reaching pre-determined financial and/or operational metrics, which provision was formalized in Mr. Gaydosik’s employment agreement. Under the terms of the +employment agreement with Mr. Kirtley, Mr. Kirtley was entitled to an annual award under the Annual Incentive Plan representing 50%, 75% or up to a maximum 200% of his annual base salary subject to the same performance criteria and targets +established by the compensation committee on April 1, 2014. Straight line interpolation applied to determine the amount of the bonus for performance that is above the threshold target and between performance levels for each of these named +executive officers. The compensation committee believes that performance-based cash incentive compensation, with meaningful performance targets, will further align our executives’ interests with those of our stockholders, motivate our +executives to contribute to the Company’s growth and profitability and link a larger portion of our executives’ compensation to the performance of the Company. On February 24, 2015, the compensation committee certified to the +attainment of the pre-established performance goals and targets for 2014, which were achieved at the above-target levels but slightly below the maximum level for both growth in EBITDA and oil and natural gas production and at a maximum level for the +growth of estimated proved reserves. In connection with reaching these goals, the compensation committee approved awards to Mr. Moore, Mr. Kirtley and Mr. Gaydosik, representing 275.5%, 137.75% and 137.75%, respectively, of their +annual base salaries for 2014, except that our Chief Financial Officer’s annual base salary for 2014 was prorated to reflect his appointment in this capacity effective August 11, 2014. For information regarding the performance-based cash +incentive bonuses awarded to our named executive officers for 2014, see “Compensation Tables—2014, 2013 and 2012 Summary Compensation Table” below. +25 +Table of Contents +PAY FOR PERFORMANCE +On March 30, 2015, the compensation committee established the performance criteria and targets for 2015 for the named +executive officers and other covered employees under the Annual Incentive Plan and specified the weighting attributable to such performance metrics. Similar to 2014, the performance levels for 2015 require achieving certain financial and operational +metrics. For 2015, these performance factors include growth in estimated proved reserves and oil and natural gas production. The compensation committee believes that these performance levels, as well as bonus compensation targets set forth in our +named executive officers’ employment agreements, as may be adjusted by the compensation committee from time to time, will continue to (i) further motivate our named executive officers to contribute to the Company’s performance and +growth, (ii) align our named executive officers’ interests with those of our stockholders and (iii) put a larger portion of our named executives’ compensation at risk. +Long-Term Incentive Compensation +Long-Term Incentive Policy . Although in the past we awarded both options and restricted stock as part of our long-term incentive compensation program, +our board of directors and the compensation committee believe that restricted stock awards are an essential component of our compensation strategy, and currently intend to primarily offer such awards in the future. Further, we anticipate that any +equity awards granted to our executive officers during 2015 will be in the form of restricted stock. The compensation committee may also determine to issue other forms of stock-based awards to our named executive officers or other eligible +participants under our 2013 Restated Stock Incentive Plan or other equity incentive plans in effect at that time. Our current equity incentive plan is described below under the heading “Benefit Plans—2013 Restated Stock Incentive +Plan” below. The compensation committee did not establish any objective performance targets for 2014 or 2015 with respect to our executive officers’ equity incentive compensation. +2014 Awards . In 2014, the compensation committee reviewed and discussed the Company’s current equity compensation plan and objectives. The +compensation committee also considered the need to issue new equity awards as old awards become fully vested to provide future incentives to our executive officers. As discussed above, on February 24, 2014, the compensation committee granted +24,868 shares of restricted stock to Mr. Moore under the 2013 Restated Stock Incentive Plan as a retention award in connection with his assumption of duties as interim Chief Executive Officer after the retirement of Mr. Palm and in view of +the uncertainty relating to his position in recognition of the then-ongoing search for a new Chief Executive Officer. The retention award was subject to Mr. Moore’s continuous service with the Company and was to vest in two equal annual +installments beginning on February 24, 2015, unless earlier vesting occurred upon his involuntary termination without cause, termination for good reason, death, disability or termination for any reason except cause or voluntary termination +without good reason within 24 months after a change in control. This retention award was rescinded when Mr. Moore was named our Chief Executive Officer. On April 30, 2014, the compensation committee granted Mr. Moore 40,000 shares of +restricted stock in connection with his appointment as our new Chief Executive Officer, of which shares 13,333 vested on May 12, 2014, 13,333 vested on April 22, 2015 and +26 +Table of Contents +the remaining 13,334 will vest on April 22, 2016. On January 31, 2014, Mr. Palm was granted 80,000 shares of our restricted stock units granted under our 2013 Restated Stock +Incentive Plan in connection with his retirement, which shares vest in three substantially equal annual installments beginning on February 15, 2015, subject to certain forfeiture provisions. See the description of Mr. Palm’s severance +agreement below under the heading “Employment Agreements—Potential Payments Upon Termination, Resignation or Change of Control—Severance Payments Received by our Former Chief Executive Officer in Connection with Retirement in February +2014.” Since each of Messrs. Maier and Baldwin received a restricted stock award of 40,000 shares of restricted common stock in December 2013, vesting in three substantially equal annual installments beginning on December 12, 2013, the +compensation committee did not grant any additional equity awards to these named executive officers in 2014. +2015 Awards . In February 2015, the +compensation committee granted new restricted stock awards to our Chief Executive Officer, Chief Financial Officer and Chief Operating Officer in the amount of 52,225 shares, 21,049 shares and 23,025 shares, respectively, to provide further +long-term incentive to such named executive officers and align them more closely with the competitive ranges for equity awards afforded to similarly situated executives at peer group companies based on Longnecker and Associates’ recommendation. +These restricted stock awards vest in three approximately equal annual installments beginning, in the case of our Chief Executive Officer, on March 1, 2015 and, in the case of the two other named executive officers referenced above, beginning +on March 1, 2016. Further, in February 2015, the compensation committee granted 3,297 shares of our restricted common stock to Mr. Gaydosik to which Mr. Gaydosik was entitled upon commencement of his employment with us on +August 11, 2014, but which were not granted until February 2015. Of these shares of restricted common stock, 1,964 will vest on August 1, 2015 and the remaining 1,963 will vest on August 1, 2016. +Termination and Change of Control Benefits +Our employment agreement with Mr. Moore provides for specified payments and benefits upon certain termination events, including termination following a +change of control. This employment agreement contains termination and change of control provisions that we believe are comparable to similar provisions employed by a majority of the companies in our industry peer group. The compensation committee +believes that this agreement will encourage Mr. Moore to remain in our employment in the event of a change of control of the Company and during circumstances which indicate that a change of control might occur. The compensation committee +believes termination and change of control benefits are important in maintaining strong leadership and in encouraging retention in these situations and encourages our executives to act in the best interests of stockholders without distraction based +on uncertainty regarding their employment status. +We did not have an employment agreement with Mr. Kirtley, Mr. Maier or Mr. Baldwin at +December 31, 2014, but, under the terms of the restricted stock awards made to them, the shares of restricted stock may be accelerated in the discretion of the compensation committee upon a change of control. The value of the unvested +restricted stock held by Mr. Kirtley, Mr. Maier and Mr. Baldwin was $459,182, $765,261 and $695,681, respectively, as of December 31, 2014. See “Employment Agreements—Potential Payments Upon Termination, Resignation or +Change of Control.” +In connection with Mr. Gaydosik’s appointment as our Chief Financial Officer effective August 11, 2014, the +compensation committee determined that Mr. Gaydosik would be entitled to certain termination benefits. If Mr. Gaydosik’s employment with the Company or its successor was terminated within 18 months (extended to 24 months in his +employment agreement discussed below) of the date of occurrence of a change in control, Mr. Gaydosik would have been eligible to receive a cash payment equal to two times his annual base salary and target annual incentive bonus, which would +have been $1,050,000, if he was terminated under these circumstance on December 31, 2014. In addition, upon such termination following a change in control, all equity awards that had been granted to Mr. Gaydosik prior to such termination +would have been immediately vested on the date of termination and he would have been entitled to continuous medical coverage under COBRA valued at $30,561. If, in the absence of a change in control, Mr. Gaydosik’s employment with the +Company was terminated for any +27 +Table of Contents +reason other than for cause, he would have received severance in an amount equal to one year of his annual base salary and target annual incentive bonus, which at December 31, 2014 would +have been $525,000. In addition, all equity awards that had been granted to Mr. Gaydosik prior to such termination would have immediately vested on the date of termination, having a value of $0 as of December 31, 2014, and he would have +been entitled to one-year continuation of benefits valued at $19,975 as of December 31, 2014. +In March of 2015, we entered into an employment +agreement with each of Mr. Gaydosik and Mr. Kirtley containing, among other things, certain change in control provisions. For more information regarding such change in control provisions, see “Employment Agreements—Employment +Agreement with Our Chief Financial Officer and Chief Operating Officer” below. +Perquisites and Other Personal Benefits +We provide certain of our named executive officers with a limited number of perquisites or other personal benefits, primarily consisting of life +insurance premiums and, in the case of Mr. Palm, prior to his retirement as our Chief Executive Officer, Mr. Moore, our current Chief Executive Officer and President, and Mr. Kirtley, our Chief Operating Officer, a company vehicle, +that we believe help provide a competitive package of compensation and benefits. The value of these benefits is disclosed in the Summary Compensation Table below. +Broad-Based Employee Benefits +401(k) Plan . We have a retirement savings plan in which our named executive officers currently participate. The retirement plan is a tax qualified +401(k) plan that covers all eligible employees including the named executive officers. Under the plan, we make a safe harbor contribution equal to 3% of each eligible employee’s gross annual compensation for the prior calendar year. We also +have the ability to make an additional, discretionary contribution that is allocated based on each eligible employee’s gross annual compensation for the prior calendar year. Both contributions are or may be made regardless of employee’s +deferrals into the plan. In 2014, we made safe harbor and discretionary contributions totaling 3% of eligible compensation for eligible employees, subject to certain limitations provided by our 401(k) plan and Internal Revenue Service regulations. +All contributions made by us on behalf of an employee are 100% vested when contributed. For more details regarding our 401(k) plan, see “Benefit Plans—401(k) Plan” below. +Other Benefits . Our named executive officers are eligible to participate in all of our other employee benefit plans which include medical, dental, +group life, disability and accidental death and dismemberment insurance, in each case on the same basis as all other employees. +Effect of Our Compensation Policies and Practices on Risk and Risk Management +The compensation committee reviews the risks and rewards associated +with our compensation policies and programs. We believe that such policies and programs encourage and reward prudent business judgment and avoid encouraging excessive risk-taking over the long term. With respect to specific elements of compensation: +• +We believe that our programs balance short- and long-term incentives for our executive officers providing for an appropriate mix of fixed, performance-based, discretionary and equity compensation that encourages +long-term performance. +• +We believe that annual base salaries for our named executive officers do not encourage excessive risk-taking as they are fixed amounts that are subject to discretionary increases by our compensation committee that may +be based on, among other factors, annual performance evaluations. We also believe that such annual base salaries are set at reasonable levels, as compared to the base salaries of similarly-situated individuals at our peer group companies, and +therefore do not negate the effect of other compensation elements that encourage long-term service, growth and performance that may increase stockholder value. +28 +Table of Contents +• +On April 1, 2014, the compensation committee recommended the approval of the Annual Incentive Plan and established performance criteria thereunder, and the board of directors approved the Annual Incentive Plan. Our +stockholders approved the Annual Incentive Plan at the 2014 Annual Meeting of Stockholders. The compensation committee believes that performance-based cash incentive compensation, with meaningful performance targets, such as those under our Annual +Incentive Plan, will further align our executives’ interests with those of our stockholders, will motivate our executives to contribute to the Company’s growth and profitability and will link a larger portion of our executives’ +compensation to the performance of the Company. The compensation committee has eliminated the use of minimum discretionary bonus arrangements in all of the Company’s employment agreements in recognition of the Company’s shift to the use of +performance-based bonuses. +• +Restricted stock awards and stock options granted to our named executive officers are subject to time vesting provisions. We award restricted stock awards to ensure that our executives have a continuing stake in the +long-term success of the Company as the value of the award will depend on the stock price at and after the time of vesting. We have in the past awarded stock options to align compensation with company performance, as the options become valuable to +the executive only if the stock price increases from the date of grant. Also, stock options require a long-term commitment by executives to realize the appreciation potential of the options. However, we have not awarded stock options to our +executive officers since 2005. We believe that our long-term equity awards do not encourage excessive risk taking that may be associated with equity awards that vest based strictly on achieving certain targets. We also believe that our long-term +equity awards provide incentive to our named executive officers to reasonably encourage growth and financial performance that may increase stockholder value, as well as long-term service, and serve to align the interests of our executives with those +of our stockholders. +Based on the foregoing, the compensation committee believes that the Company does not utilize compensation policies +and programs creating risks that are reasonably likely to have a material adverse impact on the Company. +Deductibility of +Executive Compensation +Section 162(m) of the Code limits the deductibility for federal income tax purposes of executive compensation paid to the +Chief Executive Officer and the three other most highly compensated officers (other than the Chief Executive Officer and the Chief Financial Officer) of a public company to $1,000,000 per year, but contains an exception for certain performance-based +compensation. Our policy is to periodically review and consider whether particular compensation and incentive payments to our executives will be deductible for federal income tax purposes. We intend, to the extent feasible and when we believe it is +in the best interests of the Company and its stockholders, to attempt to qualify executive compensation as tax deductible where it does not adversely affect the development and execution of our compensation plans. However, the compensation committee +may from time to time approve non-deductible payments in order to maintain flexibility in structuring appropriate compensation programs in the interests of the Company and our stockholders. For example, the compensation committee has in the past +granted stock options with time based vesting provisions that would be considered performance based compensation, but in recent years has granted restricted stock that is subject to time based vesting and does not constitute performance based +compensation that will satisfy the exception to the deduction limit. +Accounting Implications of Executive Compensation +Policy +We are required to recognize compensation expense of all stock-based awards pursuant to the provisions of FASB ASC Topic 718, +“Compensation—Stock Compensation.” Non-vested shares are deemed issued and outstanding from a legal perspective; however, under U.S. generally accepted accounting principles, or GAAP, only vested shares are included in basic shares +outstanding. Also, under GAAP, non-vested shares are included in diluted shares outstanding when the effect is dilutive. +29 +Table of Contents +The Role of Stockholders’ Say-on-Pay Vote +We provide our stockholders with the opportunity to cast an annual advisory vote on executive compensation (a “say-on-pay proposal”) in accordance +with the Dodd-Frank Act. At our June 2011 annual meeting of stockholders, our stockholders expressed substantial support for the compensation of our named executive officers, with approximately 99.7% of the votes cast for approval of the +“say-on-pay” advisory vote. The compensation committee evaluated the results of the 2011 “say-on-pay” advisory vote at its October 2011 meeting. At our June 2012, 2013 and 2014 annual meetings of stockholders, our stockholders +again expressed support for the compensation of our named executive officers, with approximately 94.4%, 63.6% and 91.1%, respectively, of the votes cast for approval of the “say-on-pay” advisory vote. The compensation committee believes +that these prior results of the “say on pay” advisory votes affirm our stockholders’ support of our executive compensation policies and practices, but the compensation committee has implemented the Annual Incentive Plan to more +closely align our executives’ interests with those of our stockholders and to link a larger portion of our executives’ compensation to the performance of the Company. The Annual Incentive Plan was approved in response to general +stockholder concerns relating to certain public companies’ practices of awarding guaranteed minimum bonuses to their executives and as part of our broader initiative to revise the Company’s cash-based compensation philosophy and programs +away from a guaranteed minimum bonus structure to a mix of base compensation and performance based incentive compensation. The compensation committee also has committed to eliminate the use of minimum discretionary bonus arrangements in future +employment agreements, in recognition of the Company’s shift to the use of performance-based bonuses. The compensation committee believes that our executive compensation policies and practices, including the Annual Incentive Plan, approved by +our board of directors on April 1, 2014 and by our stockholders on June 12, 2014, and our shift away from discretionary bonus arrangements, are appropriate and reasonably consistent with market practices and with the long-term interests of +the Company and its stockholders. The compensation committee will continue to consider the outcome of our stockholders’ future “say-on-pay” votes when making compensation decisions for our named executive officers. +Compensation Committee Report on Executive Compensation +The compensation committee has reviewed and discussed the foregoing Compensation Discussion and Analysis with management. Based on its review and discussion +with management, the compensation committee recommended that the Compensation Discussion and Analysis be included in this proxy statement. +Respectfully +submitted by the compensation committee: +David L. Houston, Chairman +Scott E. Streller +Compensation +Committee Interlocks and Insider Participation +No current member of our compensation committee has ever been an officer or employee of ours. None of +our executive officers serves, or has served during the past fiscal year, as a member of the board of directors or compensation committee of any other company that has one or more executive officers serving as member of our board of directors or +compensation committee. +30 +Table of Contents +Compensation Tables +2014, 2013 and 2012 SUMMARY COMPENSATION TABLE +The following table provides information concerning compensation of our principal executive officer, principal financial officer and our next three most +highly paid executive officers for the fiscal years ended December 31, 2014, December 31, 2013 and December 31, 2012. +Name and Principal Position +Year +Salary ($) +Bonus ($) +Stock +Awards +($)(1) +Non-Equity +Incentive Plan +Compensation +($)(2) +All Other +Compensation +($)(3) +Total +($) +Michael G. Moore(4) +2014 +$ +400,000 +$ +300,000 +(5) +$ +2,946,800 +(6) +$ +1,102,000 +$ +30,234 +$ +4,779,034 +Chief Executive Officer and President +2013 +$ +383,333 +$ +500,000 +$ +1,790,000 +(7) +$ +— +$ +31,005 +$ +2,704,338 +2012 +$ +300,000 +$ +500,000 +$ +1,494,400 +(8) +$ +— +$ +30,093 +$ +2,324,493 +Aaron Gaydosik(9) +2014 +$ +118,269 +$ +150,000 +(10) +$ +— +(11) +$ +160,708 +$ +1,153 +$ +430,130 +Chief Financial Officer +Ross Kirtley(12) +2014 +$ +325,000 +$ +— +$ +— +$ +447,688 +$ +26,390 +$ +799,078 +Chief Operating Officer +Stuart A. Maier +2014 +$ +400,000 +$ +150,000 +$ +— +$ +— +$ +21,193 +$ +571,193 +Vice President of Geosciences +2013 +$ +400,000 +$ +175,000 +$ +2,316,400 +(13) +$ +— +$ +22,504 +$ +2,913,904 +Steve R. Baldwin +2014 +$ +200,000 +$ +125,000 +$ +— +$ +— +$ +24,009 +$ +349,009 +Vice President of Reserve Engineering +2013 +$ +195,833 +$ +200,000 +$ +2,316,400 +(14) +$ +— +$ +23,160 +$ +2,735,393 +James D. Palm +2014 +$ +50,000 +$ +— +$ +5,112,800 +(15) +$ +— +$ +1,819,539 +$ +6,982,339 +Former Chief Executive Officer +2013 +$ +383,333 +$ +500,000 +$ +1,790,000 +(16) +$ +— +$ +46,905 +$ +2,720,238 +2012 +$ +258,333 +$ +500,000 +$ +2,521,800 +(17) +$ +— +$ +23,380 +$ +3,303,513 +(1) +The amount reported in the Stock Awards column reflects the fair value of the restricted stock award on the award date. The amount was calculated using certain assumptions, as set forth in Note 9 to our consolidated +financial statements for the fiscal year ended December 31, 2014 under the heading “Stock-Based Compensation,” included in our Annual Report on Form 10-K, filed with the SEC on February 27, 2015. +(2) +The amounts shown reflect performance-based annual incentive bonuses granted under the 2014 Executive Annual Incentive Compensation Plan. The compensation committee certified the attainment of the related performance +goal on February 24, 2015, and the Company paid these performance-based annual incentive bonuses on February 27, 2015. +(3) +The amounts for Mr. Moore for 2014, 2013 and 2012 represent our 401(k) plan contributions of $19,539, $19,197 and $18,846, respectively, $2,995, $6,413 and $6,250, respectively, attributable to use of a Company +owned vehicle, $7,700, $5,090 and $4,972 attributable to Company sponsored sporting tickets in 2014, 2013 and 2012, respectively, and $305 and $25 attributable to Company sponsored health club membership in 2013 and 2012, respectively. Amount for +Messrs. Gaydosik and Kirtley represent $0 and $19,539, respectively, in our 401(k) contributions, $1,100 and $2,200, respectively, attributable to Company sponsored sporting tickets, $53 and $320, respectively, attributable to Company sponsored +health club membership and, with respect to Mr. Kirtley, $4,331 attributable to use of a Company owned vehicle. Amounts for Mr. Maier in 2014 and 2013 include our 401(k) plan contribution of $19,539 and $19,197, respectively, $554 and +$611, respectively, attributable to Company sponsored health club membership and $1,100 and $2,696, respectively, attributable to Company sponsored sporting tickets. Amounts for Mr. Baldwin include our 401(k) plan contribution of $19,539 and +$19,197, respectively, $320 and $305, respectively, attributable to Company sponsored health club membership and $4,150 and $3,658, respectively, attributable to Company sponsored sporting tickets. Amounts for Mr. Palm include our 401(k) plan +contributions of $19,539, $19,197, $18,846 for 2014, 2013, 2012, respectively, $5,332 and $4,534 attributable to Company sponsored sporting tickets in 2013 and 2012, respectively, and $22,376 attributable to use of a company vehicle in 2013. For +Mr. Palm, the amount under “All Other Compensation” also includes $1,800,000 in severance payments received by Mr. Palm in connection with his retirement effective February 15, 2015. +(4) +Effective April 22, 2014, Mr. Moore became our Chief Executive Officer and has continued to serve as our President. He also continued to serve as our Chief Financial Officer until the appointment of +Mr. Gaydosik as our new Chief Financial Officer effective August 11, 2014. +31 +Table of Contents +(5) +On April 1, 2014, the compensation committee awarded Mr. Moore an additional cash bonus of $300,000 attributable to his performance in 2013. +(6) +Mr. Moore’s restricted stock award of 40,000 shares of our restricted common stock granted in connection with his appointment as our new Chief Executive Officer on April 30, 2014 vest in three +approximately equal annual installments, of which 13,333 shares vested on May 12, 2014, 13,333 shares vested on April 22, 2015 and the remaining 13,334 shares vest on April 22, 2016. +(7) +Mr. Moore’s 2013 restricted stock award of 50,000 shares of our restricted common stock vests in 12 quarterly installments, with 36,667 shares vested as of December 31, 2014 and 13,333 shares vesting in +2015. +(8) +Mr. Moore’s 2012 restricted stock award of 40,000 shares of our restricted common stock vests in 12 quarterly installments, with all such shares vested as of December 31, 2014. +(9) +Mr. Gaydosik has served as our Chief Financial Officer since August 11, 2014. +(10) +Mr. Gaydosik received $150,000 as part of his one-time sign-on bonus in connection with his appointment as our Chief Financial Officer effective August 11, 2014. +(11) +Mr. Gaydosik was entitled to receive shares of our restricted common stock valued at $225,000 as of the close of trading on August 11, 2014, the date his employment began, which equaled 3,297 shares, as part +of his one-time sign-on bonus in connection with his appointment as our Chief Financial Officer. This restricted stock award was granted on February 24, 2015. The grant date fair value of these shares of restricted common stock was $172,945. Of +these shares of restricted common stock, 1,964 will vest on August 1, 2015 and the remaining 1,963 will vest on August 1, 2016. +(12) +Mr. Kirtley was appointed as our Chief Operating Officer effective April 22, 2014. +(13) +Mr. Maier was granted in 2013 an award of 40,000 shares of restricted common stock that vest in three substantially equal annual installments beginning on December 12, 2013, of which 26,666 shares had vested +as of December 31, 2014. +(14) +Mr. Baldwin was granted in 2013 an award of 40,000 shares of restricted common stock that vest in three substantially equal annual installments beginning on December 12, 2013, of which 26,667 shares had vested +as of December 31, 2014. +(15) +On January 31, 2014, Mr. Palm was granted 80,000 shares of our restricted stock units under our 2013 Restated Stock Incentive Plan in connection with his retirement, which shares vest in three substantially +equal annual installments beginning on February 15, 2015, subject to certain forfeiture provisions. See the description of Mr. Palm’s severance agreement below under the heading “Employment Agreements—Potential Payments Upon +Termination, Resignation or Change of Control—Severance Payments Received by our Former Chief Executive Officer in Connection with Retirement in February 2014.” +(16) +Mr. Palm’s 2013 restricted stock award of 50,000 shares of our restricted common stock was scheduled to vest in 12 quarterly installments beginning on March 15, 2013, of which 20,000 shares vested in +2013, and 16,667 shares were scheduled to vest in 2014 and 13,333 shares were scheduled to vest in 2015. Under the terms of the Separation Agreement entered into with Mr. Palm in connection with his retirement, these unvested shares of +restricted stock became fully vested on February 15, 2014, Mr. Palm’s retirement date. +(17) +Mr. Palm’s 2012 restricted stock award of 67,500 shares of our restricted common stock was scheduled to vest in 12 quarterly installments, of which 37,500 shares vested in 2012, 20,000 shares vested in 2013 +and 10,000 shares were scheduled to vest in 2014. Under the terms of the Separation Agreement entered into with Mr. Palm in connection with his retirement, these unvested shares of restricted stock became fully vested on February 15, 2014, +Mr. Palm’s retirement date. +32 +Table of Contents +2014 GRANTS OF PLAN-BASED AWARDS +The following table provides information concerning each grant of an award made to our principal executive officer, our principal financial officer and our +next three most highly paid executive officers in the fiscal year ended December 31, 2014 under any Company plan. +Estimated Future Payouts Under Non-Equity +Incentive Plan +Awards(1) +All Other +Stock +Awards: +Number of +Shares of +Stock or +Units +(#) +All Other +Option +Awards: +Number of +Securities +Underlying +Options +(#) +Exercise +or Base +Price of +Option +Awards +($/Sh) +Grant Date +Fair Value +of Stock +and Option +Awards ($) +Name +Grant Date +Threshold +($) +Target +($) +Maximum +($) +Michael G. Moore +4/30/2014 +$ +300,000 +$ +600,000 +$ +1,200,000 +40,000 +(3) +— +— +$ +2,946,800 +Chief Executive Officer and President(2) +Aaron Gaydosik +8/11/2014 +$ +58,335 +$ +87,503 +$ +175,005 +— +(4) +— +— +— +Chief Financial Officer +Ross Kirtley +— +$ +162,500 +$ +243,750 +$ +487,500 +— +— +— +— +Chief Operating Officer +Stuart A. Maier +— +— +— +— +— +— +— +— +Vice President of Geosciences +Steve R. Baldwin +— +— +— +— +— +— +— +— +Vice President of Reservoir Engineering +James D. Palm +1/31/2014 +— +— +— +80,000 +(5) +— +— +$ +5,112,800 +Former Chief Executive Officer +(1) +Reflects performance-based annual incentive bonuses granted under the 2014 Executive Annual Incentive Compensation Plan. +(2) +Effective April 22, 2014, Mr. Moore became our Chief Executive Officer and has continued to serve as our President. He also continued to serve as our Chief Financial Officer until the appointment of Aaron +Gaydosik as our new Chief Financial Officer effective August 11, 2014. +(3) +Mr. Moore’s award of 40,000 shares of our restricted common stock was granted on April 30, 2014 and vests in three approximately equal annual installments, of which 13,333 shares was vested on +May 12, 2014, 13,333 shares vested on April 22, 2015 and the remaining 13,334 shares vest on April 22, 2016. +(4) +Mr. Gaydosik was entitled to receive shares of our restricted common stock valued at $225,000 as of the close of trading on August 11, 2014, the date his employment began, which equaled 3,297 shares, as part +of his one-time sign-on bonus in connection with his appointment as our Chief Financial Officer. This restricted stock award was granted on February 24, 2015. The grant date fair value of these shares of restricted common stock was $172,945. Of +these shares of restricted common stock, 1,964 will vest on August 1, 2015 and the remaining 1,963 will vest on August 1, 2016. +(5) +Mr. Palm’s restricted stock units were granted to him under our 2013 Restated Stock Incentive Plan in connection with his retirement and vest in three substantially equal annual installments beginning on +February 15, 2015, subject to certain forfeiture provisions. See the description of Mr. Palm’s severance agreement below under the heading “Employment Agreements—Potential Payments Upon Termination, Resignation or Change of +Control—Severance Payments Received by our Former Chief Executive Officer in Connection with Retirement in February 2014.” +33 +Table of Contents +OUTSTANDING EQUITY AWARDS AT 2014 FISCAL YEAR-END +The following table provides information concerning equity awards outstanding for our principal executive officer, our principal financial officer and our +next three most highly paid executive officers at December 31, 2014. +Name +Number of +Securities +Underlying +Unexercised +Options +(#) +Exercisable +Number of +Securities +Underlying +Unexercised +Options +(#) +Unexercisable +Option +Exercise +Price +($) +Option +Expiration +Date +Number +of Shares +or Units +of Stock +That +Have Not +Vested +(#) +Market +Value of +Shares or +Units of +Stock That +Have Not +Vested +($)(1) +Michael G. Moore +— +— +$ +— +— +48,333 +(2) +$ +2,017,419 +Aaron Gaydosik +— +— +$ +— +— +— +(3) +$ +— +(3) +Ross Kirtley +— +— +$ +— +— +11,001 +(4) +$ +459,182 +Stuart A. Maier +— +— +$ +— +— +18,334 +(5) +$ +765,261 +Steve R. Baldwin +— +— +$ +— +— +16,667 +(6) +$ +695,681 +James D. Palm +— +— +$ +— +— +80,000 +(7) +$ +3,339,200 +(1) +Market value of shares or units that have not vested is based on the closing price of $41.74 per share of our common stock on the NASDAQ Global Select Market on December 31, 2014, the last trading day of 2014. +(2) +Of these shares of restricted stock, (i) 8,333 shares vest on June 17, 2015, (ii) 13,333 shares vest in four quarterly installments in 2015, (iii) 13,333 shares vested on April 22, 2015 and +(iv) 13,334 shares vest on April 22, 2016. +(3) +Mr. Gaydosik was entitled to receive shares of our restricted common stock valued at $225,000 as of the close of trading on August 11, 2014, the date his employment began, which equaled 3,297 shares, as part +of his one-time sign-on bonus in connection with his appointment as our Chief Financial Officer. This restricted stock award was granted on February 24, 2015. The grant date fair value of these shares of restricted common stock was $172,945. Of +these shares of restricted common stock, 1,964 will vest on August 1, 2015 and the remaining 1,963 will vest on August 1, 2016. +(4) +Of these unvested shares of restricted stock, 1,000 shares will vest on September 1, 2015, 7,001 shares will vest on December 1, 2015, 1,333 shares will vest on September 1, 2016 and 1,667 shares will +vest on September 1, 2017. +(5) +Of these unvested shares of restricted stock, (i) 5,000 shares vest in June 2015 and (ii) 13,334 vest on December 1, 2015. +(6) +Of these unvested shares of restricted stock, (i) 3,334 shares vest in June 2015 and (ii) 13,333 vest on December 1, 2015. +(7) +On January 31, 2014, Mr. Palm was granted 80,000 shares of our restricted stock units under our 2013 Restated Stock Incentive Plan in connection with his retirement, which shares vest in three substantially +equal annual installments beginning on February 15, 2015, subject to certain forfeiture provisions. See the description of Mr. Palm’s severance agreement below under the heading “Employment Agreements—Potential Payments Upon +Termination, Resignation or Change of Control—Severance Payments Received by our Former Chief Executive Officer in Connection with Retirement in February 2014.” +34 +Table of Contents +2014 OPTION EXERCISES AND STOCK VESTED +The following table provides certain information for the named executive officers on stock option exercises during 2014, including the number of shares +acquired upon exercise and the value realized, and the number of shares acquired upon the vesting of restricted stock awards. +Name +Option Awards +Stock Awards +Number of Shares +Acquired on Exercise +(#) +Value Realized on +Exercise +($) +Number of Shares +Acquired on Vesting +(#) +Value Realized on +Vesting +($)(1) +Michael G. Moore +— +— +56,667 +$ +3,084,867 +Aaron Gaydosik +— +— +— +— +Ross Kirtley +— +— +9,666 +$ +455,313 +Stuart A. Maier +— +— +17,333 +$ +876,785 +Steve R. Baldwin +— +— +16,000 +$ +790,075 +James D. Palm +— +— +40,000 +$ +2,556,464 +(1) +Value realized on vesting is based on the vesting date closing price per share of our common stock on the NASDAQ Global Select Market. +2014 DIRECTOR COMPENSATION +The following +table contains information with respect to 2014 compensation of our non-employee directors who served in such capacity during 2014. Employee directors do not receive compensation for serving as directors of the Company. +Name +Fees Earned or +Paid in Cash +(1)($) +Stock +Awards +($)(2) +Option +Awards +($)(2) +Total +($) +Donald L. Dillingham +$ +68,250 +$ +100,048 +— +$ +168,298 +Craig Groeschel +$ +56,500 +$ +100,048 +— +$ +156,548 +David L. Houston +$ +159,743 +$ +100,048 +— +$ +259,791 +Ben Morris +$ +25,667 +$ +103,332 +— +$ +128,999 +Michael S. Reddin(3) +$ +17,333 +— +— +$ +17,333 +Scott E. Streller +$ +79,000 +$ +100,048 +— +$ +179,048 +(1) +For additional information regarding the fees earned or paid in cash to our non-employee directors in 2014, please see “Board of Directors Information—How are directors compensated?—Equity +Compensation.” +(2) +The amounts shown reflect the grant date fair value of restricted stock awards granted, determined in accordance with FASB ASC Topic 718. See Note 9, “Stock-Based Compensation,” to our consolidated financial +statements for the fiscal year ended December 31, 2014, included in our Annual Report on Form 10-K, filed with the SEC on February 27, 2015, regarding assumptions underlying valuations of equity awards for 2014. There were 1,609, +1,609, 1,609, 1,930 and 1,609 shares of unvested restricted common stock outstanding at the end of 2014 for Messrs. Dillingham, Groeschel, Houston, Mr. Morris and Streller, respectively. +(3) +Mr. Reddin was appointed as a director of the Company effective April 22, 2014, and he resigned effective August 4, 2014. On July 10, 2014, Mr. Reddin was granted 1,609 shares of restricted +stock under the 2013 Restated Stock Incentive Plan, which would have vested on June 12, 2015 if Mr. Reddin was in continuous service on such date. Mr. Reddin had 30 days to accept this award and, in connection with his resignation on +August 4, 2014, Mr. Reddin declined to accept this award and, therefore, as of that date, did not own any shares of our common stock. +35 +Table of Contents +Benefit Plans +401(k) Plan +We maintain a +retirement savings plan, or a 401(k) Plan, for the benefit of our eligible employees who have attained the age of 18. Currently, employees may elect to defer their compensation up to the statutorily prescribed limit. During the following year, we +make a safe harbor contribution equal to 3% of each eligible employee’s eligible annual compensation for the prior calendar year. We also have the ability to make an additional, discretionary contribution based on each eligible employee’s +eligible annual compensation for the prior calendar year. Both contributions are made, regardless of employee’s deferrals into the plan. In 2014, we made safe harbor and discretionary contributions totaling 3% of eligible compensation for +eligible employees, subject to certain limitations provided by our 401(k) plan and Internal Revenue Service regulations. All contributions made by us on behalf of an employee are 100% vested when contributed. The 401(k) Plan is intended to qualify +under Sections 401(a) and 501(a) of the Code. As such, contributions to the 401(k) Plan and earnings on those contributions are not taxable to the employees until distributed from the 401(k) Plan, and all contributions are deductible by us when +made. +2013 Restated Stock Incentive Plan +Our 2013 Restated Stock Incentive Plan, which amended and restated our Amended and Restated 2005 Stock Incentive Plan, was adopted to enable us, and any of our +affiliates, to attract and retain the services of the types of employees, consultants and directors who will contribute to our long range success and to provide incentives which are linked directly to increases in share value which will inure to the +benefit of our stockholders. The plan provides a means by which eligible recipients of awards may be given an opportunity to benefit from increases in value of our common stock through the granting of incentive stock options, nonstatutory stock +options, restricted awards (restricted stock and restricted stock units), performance awards and stock appreciation rights. Our compensation committee serves as the plan administrator. +Eligible award recipients are employees, consultants and directors of ours and any present or future parent or subsidiary of ours. Incentive stock options may +be granted only to our employees. Awards other than incentive stock options may be granted to employees, consultants and directors. The shares that may be issued pursuant to awards consist of our authorized but unissued common stock, and the maximum +aggregate amount of such common stock which may be issued upon exercise of all awards in the plan, including incentive stock options, may not exceed 7,500,000 shares, subject to adjustment to reflect certain corporate transactions or changes in our +capital structure. For a description of the awards granted under the plan to our named executive officers, see “Executive Compensation—Compensation Decisions for 2014 and Changes in 2015—Compensation Policy—Align the interests of +our executives with those of our stockholders—Restricted Stock Awards” above. On April 1, 2015, 5,000 shares were issuable upon exercise of outstanding options and 1,397,554 shares of restricted common stock had been granted under +this plan. There were 4,373,590 shares available for future grants under this plan as of April 1, 2015. +In the event of a transaction involving a +change in control (as defined in the plan) of the Company, a dissolution or liquidation of the Company, an exchange of shares or any corporate separation or division, including, but not limited to, a split-up, a split-off or a spin-off, or a sale, +in one transaction or a series of related transactions, of all or substantially all of our assets or a merger, consolidation, or reverse merger in which we are not the surviving entity, then all outstanding stock awards under our 2013 Restated Stock +Incentive Plan may, in the sole discretion of the plan administrator, be assumed, continued, or substituted for by any surviving or acquiring entity (or its parent company), or may be cancelled either with or without consideration for the vested +portion of the awards. In the event an option award would be cancelled without consideration paid to the extent vested, the option award recipient may exercise the option award in full or in part for a period of ten days. The plan administrator may +also exercise its discretionary authority to accelerate the vesting of an award under our 2013 Restated Stock Incentive Plan in the event of a change in control. +36 +Table of Contents +2014 Executive Annual Incentive Compensation Plan +The Annual Incentive Compensation Plan, or Annual Incentive Plan, was approved by our board of directors on April 1, 2014 and by our stockholders at the +2014 Annual Meeting on June 11, 2014. The Annual Incentive Plan is effective as of April 1, 2014 with respect to the fiscal year performance period beginning January 1, 2014. +Our executive officers and selected employees and those of our subsidiaries are eligible to receive awards under the Annual Incentive Plan. The Annual +Incentive Plan provides for awards of incentive compensation that are contingent on the attainment of specific performance targets. Under the Annual Incentive Plan, the compensation committee, as the plan administrator, establishes the performance +targets for each award and the performance period during which the performance is to be measured, which will generally be our fiscal year. Performance targets may include a minimum level of performance below which no payment will be made, levels of +performance at which specified percentages of the award will be paid, and a maximum level of performance above which no additional award will be paid. The plan administrator must adopt the performance targets and criteria for awards granted to +executive officers subject to the limits of Section 162(m) of the Code, whom we refer to as Covered Employees, no later than the earlier of: +• +90 days after the beginning of the performance period, or +• +the time when 25% of the performance period has elapsed. +In addition, award amounts to be paid to any Covered +Employee for any one year may not exceed the lesser of: (i) 300% of base salary at the time the award is established, or (ii) $6.0 million. Individual awards may be subject to lesser limits as specified in the discretion of the +compensation committee. +Performance targets for each award will be based on pre-established performance factors, which may include any or all of the +following, individually or in combination: +• +revenue; +• +net sales; +• +operating income; +• +earnings before all or any of interest, taxes, depreciation and/or amortization (“EBIT,” “EBITA” or “EBITDA”); +• +growth of oil and natural gas production; +• +growth of estimated or proved reserves; +• +capital efficiency based on revenue per barrel of oil equivalent (“BOE”) produced; +• +lease operating expenses; +• +general and administrative expenses; +• +net cash provided by operating activities or other cash flow measurements; +• +working capital and components thereof; +• +return on equity or average stockholders’ equity; +• +return on assets; +• +market share; +• +net or gross sales measured by product line, territory, one or more customers, or other category; +• +stock price; +• +earnings per share; +37 +Table of Contents +• +earnings from continuing operations; +• +net worth; +• +credit rating; +• +levels of expense, cost or liability by category, operating unit, or any other delineation; or +• +any increase or decrease of one or more of the foregoing over a specified period. +These performance factors +may relate to the performance of the Company or the performance of a business unit, product line, territory or any combination of these. Performance targets for employees who are not executive officers may also be based on other additional objective +or subjective performance criteria established by the plan administrator. +The plan administrator may at any time establish additional conditions and +terms of payment of awards, including additional financial, strategic or individual goals, which may be objective or subjective. The plan administrator may exercise negative discretion to reduce the amount of an award, but may not adjust upwards the +amount payable pursuant to any award to a Covered Employee, nor may it waive the achievement of the performance target requirement for any Covered Employee, except in the case of the death or disability of the participant or a change in control of +the Company. +Unless the plan administrator provides otherwise, a participant must be employed by us on the date that awards are paid to receive an award +payment, except in the case of death or disability. If a participant dies or becomes disabled during a performance period, the participant (or the participant’s beneficiary) will receive a pro-rated award payment at the same time all other +awards are paid for the performance period. In the event of a change in control, each named executive officer will be paid the target award amount (mid-point of any specified range of potential award payment amount) based on the assumption that the +performance target was attained at the target level (mid-point of any specified range of performance targets) for the entire performance period. The target award amount will be paid within ten (10) days following the consummation of the change +in control transaction. +Before payment of any award to a Covered Employee, our compensation committee must certify in writing that the performance target +requirement for such award was met. +The plan administrator may at any time amend the Annual Incentive Plan, subject to approval by our stockholders to +the extent stockholder approval is necessary to continue to qualify as “performance-based compensation” under Section 162(m) of the Code. The plan administrator may at any time terminate the Annual Incentive Plan in whole or in part. +Our board of directors has delegated its authority to administer the Annual Incentive Plan to the compensation committee, to whom we refer as the plan +administrator. The compensation committee is expected to consist solely of two or more “outside directors” within the meaning of Section 162(m) of the Code. The plan administrator has the authority to administer the Annual Incentive +Plan and to exercise all the powers and authorities either specifically granted to it under the Annual Incentive Plan or necessary or advisable in the administration of the Annual Incentive Plan, including (but not limited to) the following: +• +to interpret the Annual Incentive Plan and any award; +• +to prescribe rules relating to the Annual Incentive Plan; +• +to determine the persons to receive awards; +• +to determine the terms, conditions, restrictions and performance criteria, including performance factors and performance targets, relating to any award; +• +to accelerate an award that is designed not to be deferred compensation subject to Code Section 409A (after the attainment of the applicable performance target or targets); +38 +Table of Contents +• +to adjust performance targets in recognition of specified events such as unusual or non-recurring events affecting us or our financial statements, including certain asset dispositions, cessation of operations resulting +from a natural disaster, or in response to changes in applicable laws, regulations, or accounting principles as specified in the Annual Incentive Plan or in the performance targets established for any performance period; +• +to waive restrictive conditions for an award (but not performance targets); and +• +to make any other determinations that may be necessary or advisable for administration of the Annual Incentive Plan. +Federal Income Tax Consequences of the Annual Incentive Plan. +Under federal income tax laws currently in effect: +Participants +in the Annual Incentive Plan will recognize in the year of payment ordinary income equal to the award amount, which is subject to applicable income and employment tax withholding by us (including the additional tax of 0.9% imposed on wages in excess +of $200,000 under Section 3101(b)(2) of the Code). Under current regulations and guidance, we expect that awards under the Annual Incentive Plan will not be subject to Section 409A of the Code, which imposes restrictions on nonqualified +deferred compensation arrangements and penalizes participants for violating these restrictions. +Section 162(m) of the Code imposes a $1.0 million +annual limit on the amount of compensation that we may deduct for federal income tax purposes with respect to our chief executive officer and each of our three highest compensated officers (other than our chief executive officer and our chief +financial officer), subject to certain exceptions. The Annual Incentive Plan is intended to qualify for the exception under Section 162(m) for “performance-based compensation.” We expect that we will be entitled to a tax deduction in +connection with the payment of each award under the Annual Incentive Plan in an amount equal to the ordinary income realized by the participant without regard to the $1.0 million annual deduction limitation under Section 162(m) of the Code, if +certain requirements of Section 162(m) are satisfied. However, the plan administrator may award compensation that is or may become non-deductible, and expects to consider whether it believes such grants are in the best interest of the Company, +balancing tax efficiency with long-term strategic objectives. While the plan administrator is mindful of the limitation imposed by Section 162(m) of the Code, it also recognizes that facts and circumstances may render compliance with those +limitations inappropriate, at odds with the best interests of the Company or out of step with the then-prevailing competitive market conditions. In such event, the plan administrator’s priority will be determining what is in the best interest +of the Company and its stockholders rather than compliance with the technical limitations imposed by the Code. +39 +Table of Contents +EQUITY COMPENSATION PLAN INFORMATION +The following table sets forth, as of December 31, 2014, certain information with respect to all compensation plans under which equity securities are +authorized for issuance. +Plan Category +Number of securities to +be issued upon exercise +of outstanding options, +warrants and rights +(a)(1)(2) +Weighted average +exercise price of +outstanding options, +warrants and rights +(b)(3) +Number of securities +remaining available +for future issuance +under equity +compensation +plans +(excluding securities +reflected in column +(a))(c) +Equity compensation plans approved by security holders(1) +392,245 +$ +9.07 +4,473,816 +(1) +Refers to our 2013 Restated Stock Incentive Plan (which amended and restated our Amended and Restated 2005 Stock Incentive Plan) and our 1999 Stock Option Plan. +(2) +Includes 387,245 shares of unvested restricted common stock granted under our 2013 Restated Stock Incentive Plan (including shares originally issued under our Amended and Restated 2005 Stock Incentive Plan). +(3) +The weighted average exercise price does not take into account shares of restricted common stock because they have no exercise price. +Employment Agreements +Employment Agreement with Our Chief Executive Officer +Effective April 22, 2014, we entered into an amended and restated employment agreement with Mr. Moore in connection with his new responsibilities as +Chief Executive Officer. The employment agreement was further amended and restated as of April 29, 2015 to reflect recommendations of the compensation consultant that were approved by the compensation committee. The agreement has a three-year term +commencing effective April 22, 2014 and provided for an annual base salary of $400,000 that can be increased from time to time by the compensation committee, but not decreased. The agreement, as amended and restated as of April 29, 2015, +reflects the compensation committee’s decision to increase Mr. Moore’s annual base salary to $460,000 for 2015 and the determination by the compensation committee to continue to increase Mr. Moore’s annual base salary during 2016 +and 2017 so as to achieve alignment between the 25th and 50th percentile of our compensation peer group disclosed in our annual proxy statement (as it may be adjusted from time to time). Mr. Moore is also entitled to receive a target annual +bonus of 150% of his base salary upon achievement of performance goals established by the compensation committee. The annual bonus may be less than, or more than, the 150% target, up to a maximum of 300% of base salary in the event performance +exceeds the target level established by the compensation committee. The agreement also provided that he would be entitled to receive annual grants of 40,000 shares of restricted stock that would vest in three substantially equal annual installments +commencing in the year granted. The agreement, as amended and restated as of April 29, 2015, eliminates Mr. Moore’s right to receive a fixed annual grant of 40,000 shares of restricted stock. Instead, consistent with the recommendation of the +compensation consultant and approved by the compensation committee, the agreement now provides that Mr. Moore is entitled to receive an award of restricted stock equal to 500% of his annual base salary. The vesting schedule remained unchanged. +Mr. Moore is also entitled to five weeks of paid vacation, to participate in such medical insurance and other welfare benefit plans that we establish from time to time, a $500,000 life insurance policy and to the use of a company vehicle. +Mr. Moore is subject to certain restrictive covenants in his employment agreement, including a restriction on using our trade secrets and a 12-month restriction on solicitation of our employees, consultants and customers. +40 +Table of Contents +Rights Upon Termination Without Cause, Resignation for Good Reason or Death or Disability +The continued employment of Mr. Moore with us is “at-will,” meaning that either we or Mr. Moore may terminate the employment +relationship at any time and for any reason, with or without notice. However, under the terms of his amended and restated employment agreement, if (i) we terminate Mr. Moore without “cause,” (ii) Mr. Moore terminates his +employment for “good reason” or (iii) Mr. Moore’s employment is terminated due to death or disability, then, subject to Mr. Moore signing and delivering a general release of any and all claims against us, the following would +occur: +• +we would be obligated to make a lump sum payment on the termination date equal to all accrued and unpaid salary and other compensation payable to Mr. Moore (including vacation and sick pay) with respect to services +rendered through the termination date; +• +within 60 days of termination, we would be obligated to make a lump sum payment equal to 225% of the amount Mr. Moore would have earned as base salary during the two-year period following the termination date had +Mr. Moore’s employment not been terminated; +• +we would be obligated to immediately issue to Mr. Moore on a fully vested basis the restricted stock grants that he would have been entitled to during the two-year period following the termination date had +Mr. Moore’s employment not been terminated; +• +all restricted stock, restricted stock units, stock options and stock appreciation rights granted to Mr. Moore that would have vested during the three-year period following the termination date solely as a result +of Mr. Moore’s continued service to the Company would vest immediately on the termination date and, with respect to any such stock options and stock appreciation rights, would remain exercisable in accordance with the terms applicable to +such options or rights; +• +we would be obligated to continue providing a Company-owned car for two years following termination; and +• +we would be required to pay the premiums for certain continuing health care benefits for Mr. Moore and his family for a period of 18 months or until Mr. Moore becomes eligible for group health plan benefits +with another employer. +For purposes of the employment agreement with Mr. Moore, “cause” is generally defined as: +• +Mr. Moore’s conviction (including any plea of guilty or no contest) of any felony involving the embezzlement, theft or misappropriation of monies or other property, of the Company or otherwise or any crime of +moral turpitude; +• +gross misconduct in the performance of Mr. Moore’s duties; or +• +the repeated failure by Mr. Moore (except by reason of disability) to render full and proper services as required by the terms of Mr. Moore’s employment after failure to cure such failure within 30 days +after receiving written notice from the Company or the board of directors detailing the alleged failure. +“Good reason,” as used +in the employment agreement with Mr. Moore, means (i) a material diminution in the duties, authority or responsibilities of Mr. Moore or a material breach of the employment agreement by the Company, or (ii) requiring +Mr. Moore to relocate his principal place of employment to a location that is more than 35 miles from the location of the Company’s principal office in the Oklahoma City area as of the effective date of the employment agreement, provided +that the Company fails to cure such material diminution, breach or relocation within 30 days of receipt of a written notice from Mr. Moore. +Rights Upon Termination for Cause or Resignation Other than for Good Reason +Under the terms of our employment agreement with Mr. Moore, in the event Mr. Moore is terminated for “cause” or Mr. Moore voluntarily +terminates his employment other than for “good reason,” Mr. Moore would be entitled +41 +Table of Contents +to a lump sum payment on the termination date equal to all accrued and unpaid salary and other compensation payable to Mr. Moore (including vacation and sick pay) with respect to services +rendered through the termination date and, subject to Mr. Moore signing a general release of any and all claims against us and, as consideration for such release, an amount equal to his base salary amount in effect immediately preceding such +termination pro rated based on the number of days between the first day of the contract year and the termination date, divided by 365. +Rights Upon Termination Following a Change of Control +Under the terms of our employment agreement with Mr. Moore, if Mr. Moore’s employment with the Company or its successor is terminated on or +before the second anniversary of the date of occurrence of a “change of control” either (a) by the Company or its successor other than for “cause,” (b) by Mr. Moore for “good reason,” or (c) as a +result of Mr. Moore’s death or disability, then, in addition to the benefits described under the heading “—Rights Upon Termination Without Cause, Resignation for Good Reason or Death or Disability” above: +• +all restricted stock and restricted stock units that have been granted to Mr. Moore by the Company prior to the date of the amended and restated employment agreement and that would have vested at any time after the +date of Mr. Moore’s termination solely as a result of Mr. Moore’s continued service to the Company will immediately vest on the date of termination; and +• +all stock options and stock appreciation rights that have been granted to Mr. Moore by the Company prior to the date of the amended and restated employment agreement and that would have vested at any time after the +date of Mr. Moore’s termination solely as a result of his continued service to the Company will immediately vest and become exercisable on the date of termination. +Under the terms of Mr. Moore’s employment agreement, any equity awards granted on or after the date of the agreement will provide that such equity +awards will vest upon the occurrence of a change of control. A “change of control” will be deemed to have occurred upon the occurrence of any of the following: +• +any consolidation or merger of the Company into or with another person or entity pursuant to which shares of the Company’s common stock would be converted into cash, securities or other property, other than any +consolidation or merger of the Company in which the persons who were stockholders of the Company immediately prior to the consummation of such consolidation or merger are the beneficial owners, immediately following the consummation of such +consolidation or merger, of more than 50% of the combined voting power of the then outstanding voting securities of the person or entity surviving or resulting from such consolidation or merger; +• +any sale, lease or other transfer (in one transaction or a series of related transactions) of all or substantially all of the assets of the Company; or +• +the approval by the stockholders of the Company of any plan or proposal for the liquidation or dissolution of the Company. +Employment Agreement with our Chief Financial Officer and Chief Operating Officer +On March 13, 2015, we entered into an employment agreement with Aaron Gaydosik, our Chief Financial Officer. The employment agreement provides for a +three-year term commencing as of August 11, 2014, which will be extended for successive one-year periods unless we or the executive elects to not extend the term. Mr. Gaydosik’s initial annual base salary was $300,000, increasing to +$309,000 effective January 1, 2015, which can be increased from time to time by the compensation committee, but not decreased. Subject to the achievement of certain performance goals as determined by our board of directors or the compensation +committee for each fiscal year, Mr. Gaydosik is eligible to receive a target annual bonus of 75%, and a maximum target bonus of up to 200%, of his annual base salary, provided he remains employed by us on the payment date. Mr. Gaydosik is +also entitled to participate in any life and medical insurance plans and other similar plans that we establish from time to time for our executive employees. +42 +Table of Contents +Under his employment agreement, Mr. Gaydosik is eligible to participate in our 2013 Restated Stock Incentive +Plan or such other equity incentive plan or plans then in existence for the benefit of employees, and may in the discretion of the compensation committee receive an equity award, with a target level of 300% of his base salary, in accordance with the +terms of such plan or plans. The timing and amount of such equity awards, any target performance goals and the vesting terms of such awards will be determined by the compensation committee in its sole discretion. If Mr. Gaydosik’s +employment terminates prior to any scheduled vesting date then, except if he is involuntarily terminated without “cause” (as defined below) or as expressly provided in any existing or future equity award, he will forfeit all rights and +interests in and to such unvested equity awards. If Mr. Gaydosik is terminated for “cause,” he will forfeit all rights and interests in and to all outstanding equity awards, whether vested or unvested. +Mr. Gaydosik has agreed to certain restrictive covenants in his employment agreement, including, without limitation, his agreement not to compete with +us, not to interfere with any of our employees, suppliers or regulators and not to solicit our customers or employees, in each case during Mr. Gaydosik’s affiliation with us and for a period of 12 months thereafter. +Mr. Gaydosik’s continued employment with us is terminable by either party. We may terminate Mr. Gaydosik’s employment at any time, with or without advance notice. Mr. Gaydosik may terminate the employment relationship at any +time and for any reason. However, if (i) we terminate Mr. Gaydosik’s employment without “cause,” or (ii) Mr. Gaydosik resigns for “good reason” (as defined below), then Mr. Gaydosik will be entitled +to severance pay in an amount equal to 12 months’ base salary plus target bonus; provided, in each case, that the executive continues to comply with the restrictive covenants described above and the executive executes a full general release in +our favor, except that the restriction on competition will not apply in the event the executive resigns for good reason within 12 months following our change of control. In the event Mr. Gaydosik’s employment is terminated for +“cause” (as defined below), our obligations will terminate with respect to the payment of any base salary or bonuses effective as of the termination date. +If Mr. Gaydosik’s employment with us or our successor is terminated on or before the second anniversary of the date of occurrence of a “change +of control” (as defined below) either (a) by us or our successor other than for “cause” or (b) by Mr. Gaydosik for “good reason,” then, in addition to the benefits described above, (i) all equity awards +that have been granted to Mr. Gaydosik that would have vested at any time after the date of Mr. Gaydosik’s termination solely as a result of Mr. Gaydosik’s continued service to the Company will immediately vest on the date +of termination, and (ii) Mr. Gaydosik will be entitled to receive a lump sum payment equal to his base salary and target annual bonus during the two year period after his termination and the continuation of COBRA coverage for 18 months. +On March 13, 2015, we entered into an employment agreement with Ross Kirtley, our Chief Operating Officer. The employment agreement provides for a +two-year term commencing as of April 22, 2014, which will be extended for successive one-year periods unless we or the executive elects to not extend the term. Mr. Kirtley’s initial annual base salary was $325,000, increasing to +$338,000 effective January 1, 2015, which can be increased from time to time by the compensation committee, but not decreased. Subject to the achievement of certain performance goals as determined by our board of directors or the compensation +committee for each fiscal year, Mr. Kirtley is eligible to receive a target annual bonus of 75%, and a maximum target bonus of up to 200%, of his annual base salary, provided he remains employed by us on the payment date. Mr. Kirtley is +also entitled to participate in any life and medical insurance plans and other similar plans that we establish from time to time for our executive employees. +Under his employment agreement, Mr. Kirtley is eligible to participate in our 2013 Restated Stock Incentive Plan or such other equity incentive plan or +plans then in existence for the benefit of employees, and may in the discretion of the compensation committee receive an equity award, with a target level of 300% of his base salary, in accordance with the terms of such plan or plans. The timing and +amount of such equity awards, any target performance goals and the vesting terms of such awards will be determined by the compensation committee in its sole discretion. If Mr. Kirtley’s employment terminates prior to any scheduled vesting +date then, except as +43 +Table of Contents +expressly provided in any existing or future equity award, he will forfeit all rights and interests in and to such unvested equity awards. If Mr. Kirtley is terminated for “cause,” +he will forfeit all rights and interests in and to all outstanding equity awards, whether vested or unvested. +Mr. Kirtley has agreed to certain +restrictive covenants in his employment agreement, including, without limitation, his agreement not to compete with us, not to interfere with any of our employees, suppliers or regulators and not to solicit our customers or employees, in each case +during Mr. Kirtley’s affiliation with us and for a period of 12 months thereafter. Mr. Kirtley’s continued employment with us is terminable by either party. We may terminate Mr. Kirtley’s employment at any time, with or +without advance notice. Mr. Kirtley may terminate the employment relationship at any time and for any reason. However, if (i) we terminate Mr. Kirtley’s employment without “cause,” or (ii) Mr. Kirtley resigns +for “good reason” (as defined below), then Mr. Kirtley will be entitled to severance pay in an amount equal to 12 months’ base salary plus target bonus; provided, in each case, that the executive continues to comply with the +restrictive covenants described above and the executive executes a full general release in our favor, except that the restriction on competition will not apply in the event the executive resigns for good reason within 12 months following our change +of control. In the event Mr. Kirtley’s employment is terminated for “cause” (as defined below), our obligations will terminate with respect to the payment of any base salary or bonuses effective as of the termination date. +If Mr. Kirtley’s employment with us or our successor is terminated on or before the second anniversary of the date of occurrence of a “change +of control” (as defined below) either (a) by us or our successor other than for “cause” or (b) by Mr. Kirtley for “good reason,” then, in addition to the benefits described above, (i) all equity awards +that have been granted to Mr. Kirtley that would have vested at any time after the date of Mr. Kirtley’s termination solely as a result of Mr. Kirtley’s continued service to the Company will immediately vest on the date of +termination, and (ii) Mr. Kirtley will be entitled to receive a lump sum payment equal to his base salary and target annual bonus during the two year period after his termination and the continuation of COBRA coverage for 18 months. +Under the employment agreements with Messrs. Gaydosik and Kirtley: +A “change of control” will be deemed to have occurred upon the occurrence of any of the following: (a) any consolidation or merger of us into or +with another person or entity pursuant to which our shares of common stock would be converted into cash, securities or other property, other than any consolidation or merger in which the persons who were our stockholders immediately prior to the +consummation of such consolidation or merger are the beneficial owners, immediately following the consummation of such consolidation or merger, of more than 50% of the combined voting power of the then outstanding voting securities of the person or +entity surviving or resulting from such consolidation or merger; (b) any sale, lease or other transfer (in one transaction or a series of related transactions) of all or substantially all of our assets; or (c) the approval by our +stockholders of any plan or proposal for our liquidation or dissolution. +“Cause” is generally defined as such named executive officer’s +(a) gross misconduct in performing his duties, (b) material breach of his employment agreement or the Company’s Code of Conduct, (c) conviction of, or a plea of guilty or nolo contendere to, a criminal act that constitutes a +felony or any crime of moral turpitude, or (d) failure to comply with directives of our board of directors. +“Good reason” means without +the executive’s consent (i) a material diminution in the duties, authority or responsibilities of the executive or a material breach of his employment agreement by us, or (ii) requiring the executive to relocate his principal place of +employment to a location that is more than 35 miles from the location of our principal office in the Oklahoma City area as of the effective date of his employment agreement, provided that we fail to cure such material diminution, breach or +relocation with 30 days of receipt of a written notice from the executive of such event, provided, however, that such notice must be provided by the executive within 90 days following the occurrence of such event. +44 +Table of Contents +Prior Employment Agreement with our Former Chief Executive Officer +Effective November 1, 2012, we entered into an employment agreement with James D. Palm. His employment agreement had an initial term of three years and +automatically renewed for successive one-year terms thereafter unless either we or the executive gave notice to the other party of our or the executive’s election, as the case may be, to not renew the agreement. Mr. Palm was initially +entitled to a base salary of $300,000, which amount could be increased, but not decreased, by the compensation committee in its sole discretion. In February 2013, the compensation committee increased the base salary for Mr. Palm to $400,000. In +addition, Mr. Palm was entitled to receive an annual discretionary cash bonus, the amount of which to be determined by the compensation committee, provided that such amount would not be less than $500,000 each year. Mr. Palm was also +entitled to participate in the Company’s equity incentive plan. Whether an executive received an equity award under the incentive plan, and the timing and amount of any such award, was to be determined by the compensation committee in its sole +discretion. Other benefits afforded to each executive under the terms of his employment agreement included four weeks of paid vacation each year, participation in all group health plans of the Company then in effect, entitlement to receive life +insurance coverage providing a death benefit of not less than $500,000 and participation in all retirement plans of the Company then in effect. Mr. Palm agreed to certain restrictive covenants in his employment agreement, including, without +limitation, his agreement to not (i) disclose trade secrets or confidential information during the term of employment and so long thereafter as such trade secrets or information are not generally known to the public, (ii) compete with the +Company while making use of trade secrets of the Company at any time and (iii) solicit any employees, agents, consultants, customers or clients of the Company for the term of his employment with the Company plus twelve months thereafter. +As discussed elsewhere in this proxy statement, the employment agreement with Mr. Palm was terminated on the date of his resignation as the Chief +Executive Officer of the Company in February 2014 in connection with his retirement. The description of the separation agreement entered into with Mr. Palm in connection with his retirement are discussed below under the heading +“—Potential Payments Upon Termination, Resignation or Change of Control.” +Potential Payments Upon +Termination, Resignation or Change of Control +The following table provides information regarding potential payments as of December 31, 2014 to +each of our named executive officers with whom we had an employment agreement as of December 31, 2014 in connection with certain termination events, including a termination related to a change of control of the Company. +Benefits and Payments Upon Termination of +Michael G. +Moore (1) +Voluntary +Resignation +(No Good +Reason) +Resignation +for Good +Reason/ +Termination +Without +Cause or +Upon Death +or Disability +Termination +for Cause +Termination +Following +Change of +Control +Severance Payments +$ +— +(2) +$ +1,800,000 +(3) +$ +— +(2) +$ +1,800,000 +(3) +Long-Term Incentives: +Unvested Restricted Stock +— +$ +5,356,619 +(4) +— +$ +5,356,619 +(5) +Unvested Stock Options/SARs +— +— +— +— +Benefits Continuation +— +$ +30,561 +(6) +— +$ +30,561 +(6) +Other +— +$ +52,000 +(7) +— +$ +52,000 +(7) +Total +$ +— +$ +7,239,180 +$ +— +$ +7,239,180 +(1) +The executive’s base salary as of December 31, 2014 was $400,000. Information in this table assumes a termination date of December 31, 2014 and a price per share of our common stock of $41.74 (the closing +market price per share on December 31, 2014), and applies the terms of his amended and restated employment agreement effective as of April 22, 2014, entered into in connection with Mr. Moore’s appointment as our Chief Executive +Officer. +45 +Table of Contents +(2) +Upon a voluntary termination other than for Good Reason or a termination for Cause, the executive is entitled to receive a lump sum payment on the termination date equal to all accrued and unpaid salary and other +compensation payable to the executive (including vacation and sick pay) with respect to services rendered through the termination date and a pro rata portion of the executive’s minimum annual bonus for the contract year in which termination +occurs, which shall be calculated by multiplying the executive’s minimum annual bonus by a fraction, the number of which is the number of days in the contract year that have elapsed and the denominator of which is the total number of days (365 +or 366) in the contract year. +(3) +Reflects receipt by the executive, subject to his execution and delivery of a general release of all claims against us, of (i) a lump sum payment on the termination date equal to all accrued and unpaid salary and +other compensation payable to Mr. Moore (including vacation and sick pay) with respect to services rendered through the termination date, (ii) within 60 days of termination, a lump sum payment equal to 225% of the amount Mr. Moore +would have earned as base salary during the two-year period following the termination date had Mr. Moore’s employment not been terminated. +(4) +Reflects (i) issuance to Mr. Moore of restricted stock that he would have been entitled to receive during the two-year period following the termination date had Mr. Moore’s employment not been +terminated and (ii) immediate vesting on the termination date of all restricted stock and any restricted stock units, stock options and stock appreciation rights granted to Mr. Moore that would have vested during the three-year period +following the termination date solely as a result of Mr. Moore’s continued service to the Company, with any such stock options and stock appreciation rights remaining exercisable in accordance with the terms applicable to such options or +rights. +(5) +Contemplates termination of Mr. Moore’s employment with the Company or its successor on or before the second anniversary of the date of occurrence of a “change of control” either (a) by the +Company or its successor other than for “cause,” (b) by Mr. Moore for “good reason,” or (c) as a result of Mr. Moore’s death or disability and reflects (i) issuance to Mr. Moore of restricted +stock that he would have been entitled to receive during the two-year period following the termination date had Mr. Moore’s employment not been terminated and (ii) immediate vesting on the termination date of all restricted stock and +any restricted stock units, stock options and stock appreciation rights granted to Mr. Moore that would have vested during the three-year period following the termination date solely as a result of Mr. Moore’s continued service to the +Company, with any such stock options and stock appreciation rights remaining exercisable in accordance with the terms applicable to such options or rights. +(6) +Reflects the value of Company-paid continuation coverage under the Company’s group health plans and under the Consolidated Omnibus Budget Reconciliation Act of 1985 for the executive and his eligible family members +for a period of 18 months following the date of termination. +(7) +Reflects the value of a Company-owned vehicle provided for the executive’s use for a period of two years following termination, including the payment by the Company of all insurance and maintenance costs during +such two-year period. +Severance Payments Received by our Former Chief Executive Officer in Connection with Retirement +in February 2014 +As previously disclosed, on January 29, 2014, we announced that Mr. Palm, our former Chief Executive Officer and a +former member of the Board of Directors, informed us of his decision to retire from all positions he held with the Company, effective as of February 15, 2014. In connection with Mr. Palm’s retirement, we entered into a separation and +release agreement with Mr. Palm, which we refer to as the Separation Agreement, pursuant to which Mr. Palm has agreed, among other things, to provide such advice and transition assistance to the board of directors and management of the +Company as may be requested by the Company from time to time and not to compete with the Company, in each case for a period of three years commencing on Mr. Palm’s retirement date. Under the Separation Agreement, we agreed to provide +Mr. Palm with certain compensation and benefits in satisfaction of all contractual obligations under Mr. Palm’s existing employment agreement with the Company and in exchange for the non-competition obligations and the transition +services to be provided by Mr. Palm to us during the non-compete period under the Separation Agreement, including: (i) all of Mr. Palm’s accrued but unpaid salary and unreimbursed expenses through Mr. Palm’s retirement +date, (ii) health care benefits for Mr. Palm and his dependents for up to +46 +Table of Contents +eighteen (18) months following his retirement date, (iii) a lump-sum cash payment of $1,800,000, (iv) $200,000 per year for a period of three years in consulting and +non-competition fees, payable in arrears in three equal annual installments beginning on February 15, 2015 and (v) a restricted stock unit award for 80,000 shares of the Company’s common stock, which will vest in three substantially +equal annual installments beginning on the first anniversary of Mr. Palm’s retirement date, provided, however, that the payments specified in clause (iv) and the vesting of common stock specified in clause (v) are contingent upon +Mr. Palm’s compliance with his obligations under the Separation Agreement and in the event of a violation of these obligations any unpaid payments and unvested common stock will be forfeited. In addition, under the Separation Agreement, +all unvested stock options, restricted stock or any other equity awards that had previously been granted to Mr. Palm became fully vested as of his retirement date. Under the Separation Agreement, Mr. Palm is subject to certain covenants +regarding non-competition, ownership of inventions, confidentiality and non-solicitation. The Separation Agreement also contains customary waiver and release provisions pursuant to which Mr. Palm waived, released and discharged the Company and +certain other related parties from any and all claims that Mr. Palm may have had against the Company or such other parties as of the date of the Separation Agreement. +Change of Control Arrangements with Other Named Executive Officers +We did not have an employment agreement with either Mr. Kirtley, Mr. Maier or Mr. Baldwin at December 31, 2014 but, under the terms of the +restricted stock awards made to Mr. Kirtley, Mr. Maier and Mr. Baldwin, the shares of restricted stock held by Mr. Kirtley, Mr. Maier and Mr. Baldwin may be accelerated in the discretion of the compensation committee +upon a change of control. The value of the restricted stock held by Mr. Kirtley, Mr. Maier and Mr. Baldwin was $459,182, $765,261 and $695,681, respectively, as of December 31, 2014. +In connection with Mr. Gaydosik’s appointment as our Chief Financial Officer effective August 11, 2014, the compensation committee determined +that Mr. Gaydosik would be entitled to certain termination benefits. If Mr. Gaydosik’s employment with the Company or its successor was terminated within 18 months (subsequently extended to 24 months in his employment agreement +discussed below) of the date of occurrence of a change in control, Mr. Gaydosik would have been eligible to receive a cash payment equal to two times his annual base salary and target annual incentive bonus, which would have been $1,050,000, if +he was terminated under these circumstance on December 31, 2014. In addition, upon such termination following a change in control, all equity awards that have been granted to Mr. Gaydosik prior to such termination would have been +immediately vested on the date of termination and he would have been entitled to continuous medical coverage under COBRA valued at $30,561. If, in the absence of a change in control, Mr. Gaydosik’s employment with the Company was +terminated for any reason other than for cause, he would have received severance in the amount equal to one year of his annual base salary and target annual incentive bonus, which at December 31, 2014 would have been $525,000. In addition, all +equity awards that have been granted to Mr. Gaydosik prior to such termination would have immediately vested on the date of termination, having a value of $0 as of December 31, 2014, and he would have been entitled to one-year continuation +of benefits valued at $19,975 as of December 31, 2014. If Mr. Gaydosik was terminated for cause or voluntarily resigns from his employment with the Company, he would have lost all rights to his unvested equity awards. +As discussed above, on March 13, 2015, we entered into employment agreement with each of Mr. Gaydosik and Mr. Kirtley, effective +August 11, 2014 and April 22, 2014, respectively, containing, among other things, certain change in control provisions. For a detailed description of such change in control provisions, see “—Employment Agreement with Our Chief +Financial Officer and Chief Operating Officer” above. +Stock Ownership +Holdings of Major Stockholders +The following table sets forth certain information regarding the beneficial ownership as of April 1, 2015 of shares of our common stock by each person or +entity known to us to be a beneficial owner of 5% or more of our common stock. +47 +Table of Contents +MAJOR STOCKHOLDER TABLE +Name and Address of Beneficial Owner(1) +Amount and +Nature of +Beneficial +Ownership +Percent of +Class(1) +BlackRock, Inc. +10,509,109 +(2) +12.2 +% +40 East 52 nd Street +New York, NY 10022 +Citadel GP LLC +7,763,392 +(3) +9.0 +% +c/o Citadel LLC +131 S. Dearborn Street, 32nd Floor +Chicago, Illinois 60603 +Putnam Investments, LLC +5,535,071 +(4) +6.4 +% +One Post Office Square +Boston, Massachusetts 02109 +The Vanguard Group +5,297,939 +(5) +6.2 +% +100 Vanguard Blvd. +Malvern, PA 19355 +Credit Suisse AG. +4,292,589 +(6) +5.0 +% +Uetlibergstrasse 231 +P.O. Box 900 +CH 8070 +Zurich, Switzerland +(1) +Beneficial ownership is determined in accordance with SEC rules. The percentage of shares beneficially owned is based on 86,142,909 shares of common stock outstanding as of April 1, 2015, including 427,090 shares +of restricted common stock awarded under our 2013 Restated Stock Incentive Plan or our Amended and Restated 2005 Stock Incentive Plan, but not yet vested. +(2) +Based solely on Schedule 13G/A filed with the SEC on January 9, 2015 by BlackRock, Inc. BlackRock, Inc. reported sole voting and dispositive power of such shares of common stock. +(3) +Based solely on Schedule 13G/A jointly filed with the SEC on February 17, 2015 by Citadel Advisors LLC, or Citadel Advisors, Citadel Advisors Holdings II LP, or CAH2, Citadel GP LLC, or CGP, and Mr. Kenneth +Griffin with respect to shares of common stock (and options to purchase common stock) of the issuer owned by Surveyor Capital Ltd., a Cayman Islands limited company, or SC, Citadel Quantitative Strategies Master Fund Ltd., a Cayman Islands limited +company, or CQ, Citadel Equity Ltd., a Cayman Islands limited company, or CEF, and Citadel Securities LLC, a Delaware limited liability company, or Citadel Securities. Citadel Advisors is the portfolio manager for SC and CEF and reported shared +voting and dispositive power of 7,551,791 shares reported therein. Citadel Advisors II LLC, a Delaware limited liability company, or CA2, is the portfolio manager of CQ. CAH2 was, as of December 31, 2014, the managing member of Citadel Advisors +and CA2 and reported shared voting and dispositive power of 7,684,789 shares reported therein. CALC III LP, a Delaware limited partnership, or CALC3, is the non-member manager of Citadel Securities. CGP is the general partner of CALC3 and CAH2 and +reported shared voting and dispositive power over 7,763,392 shares reported therein. Mr. Griffin is the President and Chief Executive Officer of, and owns a controlling interest in, CGP, and reported shared voting and dispositive power over +7,763,392 shares reported therein. +(4) +Based solely on Schedule 13G filed with the SEC on February 17, 2015 by Putnam Investments, LLC, or Putnam Investments, Putnam Investment +Management, LLC, or Putnam Management, and Putnam Advisory Company, LLC, or Putnam Advisory. Putnam Investments wholly owns two registered investment advisers: Putnam Management, which is the investment adviser to the Putnam family of mutual funds, +and Putnam Advisory, which is the investment adviser to Putnam’s institutional clients. Putnam Investments reported sole voting power of 110,072 shares of common stock and sole dispositive power of 5,535,071 shares of common stock. Both Putnam +Management and Putnam Advisory have dispositive power over +48 +Table of Contents +shares as investment managers, with Putnam Management reporting sole dispositive power of 5,425,109 shares of common stock and Putnam Advisory reporting sole dispositive power of 109,962 shares +of common stock. Putnam Management reported sole voting power of 17,116 shares of common stock. In the case of shares held by the Putnam mutual funds managed by Putnam Management, the mutual funds through their boards of trustees, have voting power. +Putnam Advisory has sole voting power of 92,956 shares of common stock and shared voting power over the shares held by its institutional clients. +(5) +Based solely on Schedule 13G filed with the SEC February 11, 2015 by The Vanguard Group. The Vanguard Group reported sole voting power of 56,972 shares of common stock, sole dispositive power of 5,248,067 shares of +common stock and shared dispositive power of 49,872 shares of common stock. +(6) +Based solely on Schedule 13G filed with the SEC on February 4, 2015 by Credit Suisse AG reporting shared voting and dispositive power of such shares of common stock. +Holdings of Officers and Directors +The following table sets forth certain information regarding the beneficial ownership as of April 1, 2015 of shares of our common stock by each of our +directors, by each named executive officer and by all directors and executive officers as a group: +Name of Beneficial Owner(1) +Amount and +Nature of +Beneficial +Ownership +Percent of +Class +Donald L. Dillingham(2) +10,156 +* +Craig Groeschel(3) +8,811 +* +David L. Houston(4) +35,804 +* +Scott E. Streller(5) +19,770 +* +Ben T. Morris(6) +2,930 +Michael G. Moore(7) +118,225 +* +Aaron Gaydosik(8) +24,976 +Stuart A. Maier(9) +30,411 +* +Steve R. Baldwin(10) +32,400 +* +Ross Kirtley(11) +41,626 +James D. Palm(12) +10,000 +* +Directors and Executive Officers as a Group (11 persons) +335,109 +* +* +Less than 1%. +(1) +Beneficial ownership is determined in accordance with SEC rules. In computing percentage ownership of each person, shares of common stock subject to options held by that person that are exercisable as of April 1, +2015, or exercisable within 60 days of April 1, 2015, are deemed to be beneficially owned. These shares, however, are not deemed outstanding for the purpose of computing the percentage ownership of each other person. The percentage of shares +beneficially owned is based on 86,142,909 shares of common stock outstanding as April 1, 2015, including 427,090 shares of restricted common stock awarded under our 2013 Restated Stock Incentive Plan or our Amended and Restated 2005 Stock +Incentive Plan, but not yet vested. Unless otherwise indicated, all amounts exclude shares issuable upon the exercise of outstanding options that are not exercisable as of April 1, 2015 or within 60 days of April 1, 2015. Except as +otherwise noted, each stockholder has sole voting and investment power with respect to the shares beneficially owned. None of the shares beneficially owned by our executive officers or directors are pledged as security. +(2) +Represents (i) 8,547 shares of our common stock held by Mr. Dillingham directly and (ii) 1,609 unvested shares of our common stock granted under our 2013 Restated Stock Incentive Plan, which will vest on +June 12, 2015 if Mr. Dillingham is in continuous service on such date. +(3) +Represents (i) 7,202 shares of our common stock held by Mr. Groeschel directly and (ii) 1,609 unvested shares of our common stock granted under our 2013 Restated Stock Incentive Plan, which will vest on +June 12, 2015 if Mr. Groeschel is in continuous service on such date. +49 +Table of Contents +(4) +Represents (i) 34,195 shares of our common stock held by Mr. Houston directly and (ii) 1,609 unvested shares of restricted common stock granted under our 2013 Restated Stock Incentive Plan, which shares +will vest on June 12, 2015 if Mr. Houston is in continuous service on such date. +(5) +Represents (i) 18,161 shares of our common stock held by Mr. Streller directly, (ii) 1,609 unvested shares of restricted common stock granted under our 2013 Restated Stock Incentive Plan, which shares +will vest on June 12, 2015 if Mr. Streller is in continuous service on such date. +(6) +Represents (i) 1,000 shares of our common stock held by Mr. Morris directly, (ii) 1,556 unvested shares of restricted common stock granted under our 2013 Restated Stock Incentive Plan, which shares will +vest on June 12, 2015 if Mr. Morris is in continuous service on such date and (iii) 374 unvested shares of restricted common stock granted under our 2013 Restated Stock Incentive Plan, which shares will vest on August 4, 2015. +(7) +Represents (i) 38,409 shares of our common stock held by Mr. Moore directly, (ii) 9,999 unvested shares of restricted common stock granted under our Amended and Restated 2005 Stock Incentive Plan, which +vest in three remaining quarterly installments during the remainder of 2015, (iii) 8,333 unvested shares of restricted common stock granted under our Amended and Restated 2005 Stock Incentive Plan, which shares vest on June 17, 2015, +(iv) 26,667 unvested shares of restricted common stock granted under our 2013 Restated Stock Inventive Plan, which shares will vest in two remaining approximately equal annual installments beginning on April 22, 2015 and (v) 34,817 +unvested shares of restricted common stock granted under our 2013 Restricted Stock Incentive Plan, which shares will vest in two remaining approximately equal annual installments beginning March 1, 2016. Excludes 24,868 shares of restricted +stock granted to Mr. Moore under our 2013 Restated Stock Incentive Plan as a retention award in connection with his assumption of duties as interim Chief Executive Officer after the retirement of Mr. Palm in February 2015, which award was +rescinded when Mr. Moore was named our Chief Executive Officer. +(8) +Represents (i) 21,049 unvested shares of restricted stock granted to Mr. Gaydosik under our 2013 Restated Stock Incentive Plan, which shares vest in three approximately equal annual installments beginning on +March 1, 2016 and (ii) 3,927 unvested shares of restricted stock granted under our 2013 Restated Stock Incentive Plan, of which shares 1,964 will vest on August 1, 2015 and the remaining 1,963 will vest on August 1, 2016. +(9) +Represents (i) 12,077 shares of our common stock held by Mr. Maier directly, (ii) 5,000 unvested shares of restricted common stock granted under our Amended and Restated 2005 Stock Incentive Plan that +vest in June 2015 and (iii) 13,334 unvested shares of restricted common stock granted under our 2013 Restated Stock Incentive Plan that will vest on December 1, 2015. +(10) +Represents (i) 15,733 shares of our common stock held by Mr. Baldwin directly, (ii) 3,334 unvested shares of restricted common stock granted under our Amended and Restated 2005 Stock Incentive Plan that +vest in June 2015; and (iii) 13,333 unvested shares of restricted common stock granted under our 2013 Restated Stock Incentive Plan that will vest on December 1, 2015. +(11) +Represents (i) 7,600 shares of our common stock held by Mr. Kirtley directly, (ii) 23,025 unvested shares of restricted common stock granted to Mr. Kirtley under our Restated 2013 Stock Incentive +Plan, which shares will vest in three equal annual installments beginning on March 1, 2016 and (iii) 11,001 unvested shares of restricted common stock granted to Mr. Kirtley under our 2013 Restated Stock Incentive Plan, of which +shares 1,000 will vest on September 1, 2015, 7,001 will vest on December 1, 2015, 1,333 will vest on September 1, 2016 and 1,667 will vest on September 1, 2017. +(12) +Represents 10,000 shares of our common stock, of which Mr. Palm and his spouse, Terri Palm, have shared voting and investment powers. Excludes 53,333 unvested restricted stock units granted to Mr. Palm under +our 2013 Restated Stock Incentive Plan as part of the grant received by Mr. Palm under his separation and release agreement with us in connection with his retirement as our Chief Executive Officer on February 15, 2014, which will vest in +two remaining substantially equal annual installments beginning on February 15, 2016. Mr. Palm is no longer a reporting person. +50 +Table of Contents +Section 16(a) Beneficial Ownership Reporting Compliance +Section 16(a) of the Exchange Act requires our directors and executive officers, and persons who beneficially own more than 10% of a registered class of +the Company’s equity securities, to file reports of ownership and changes in ownership with the SEC and to furnish us with copies of the forms they file. To our knowledge, based solely on a review of the copies of such reports furnished to us +and written representations of our officers and directors, all Section 16(a) reports for the year ended December 31, 2014 applicable to our officers and directors and such other persons were filed on a timely basis. +Certain Relationships and Related Transactions +Review and Approval of Related Party Transactions +The audit committee, as provided in its charter, reviews and approves related party transactions. The Company does not have a formal set of standards to be +substantively applied to each transaction reviewed by the audit committee. Instead of a formalized policy, related party transactions are reviewed and judgment is applied to determine whether such transactions are in the best interests of the +Company. Further, the Company’s Code of Business Conduct and Ethics governs various compliance areas, including conflicts of interest and fair dealings, which are considered in the process of the review and approval of related party +transactions. +The Company’s policy is that all of its employees and directors, as well as their family members, must avoid any activity that is or +has the appearance of conflicting with the Company’s business interest. This policy is included in the Company’s Code of Business Conduct and Ethics posted on its website. Each director and executive officer is instructed to always inform +the designated compliance officer when confronted with any situation that may be perceived as a conflict of interest. Only the board of directors or a committee consisting solely of independent directors may grant waivers of the provisions of the +Code of Business Conduct and Ethics for the Company’s executive officers and directors. In addition, at least annually, each director and executive officer completes a detailed questionnaire specifying any business relationship that may give +rise to a conflict of interest. +Further, under the audit committee charter, the audit committee is responsible for reviewing and monitoring compliance +with our Code of Business Conduct and Ethics and recommending any warranted changes to the board of directors. In addition, the board of directors and, pursuant to its written charter, the audit committee, reviews and approves all relationships and +transactions in which the Company and its directors, director nominees and executive officers and their immediate family members, as well as holders of more than 5% of any class of our voting securities and their family members, have a direct or +indirect material interest. The board of directors and the audit committee approve only those transactions that, in light of known circumstances, are consistent, or are not inconsistent with, the Company’s best interests, as they determine in +the good faith exercise of their discretion. +Proposal to Approve, on an Advisory Basis, the Company’s +Executive Compensation +(Item 2 on the Proxy Card) +In accordance with Section 14A of the Exchange Act, our board of directors is providing our stockholders with a non-binding advisory vote on the +Company’s executive compensation as reported in this proxy statement, or “say on pay” vote. The Company’s stockholders are being asked to vote on the following resolution: +“RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to Item 402 of +Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby approved.” +This vote is +advisory, which means that the vote on executive compensation is not binding on the Company, our board of directors or the compensation committee. While the vote on executive compensation is solely advisory in nature, our board of directors and the +compensation committee will review and consider the “say on pay” voting results when making future decisions regarding our executive compensation program. +51 +Table of Contents +Stockholders are encouraged to carefully review the “Executive Compensation—Compensation Discussion and +Analysis” section of this proxy statement, which discusses in detail the Company’s compensation policy and compensation arrangements which the Company believes are appropriate and reasonably consistent with market practice and with the +long-term interests of the Company and its stockholders. In furtherance of the Company’s goals and objectives, the compensation committee, among other things, ensures that the Company’s executive compensation arrangements (i) do not +incentivize executives to take unnecessary risks, (ii) do not include excessive change in control provisions and (iii) include long-term vesting provisions in the restricted stock grants to encourage executives to focus on long-term +performance. +We have determined that our stockholders should cast an advisory vote on the compensation of our named executive officers on an annual +basis. Unless this policy changes, the next advisory vote on the compensation of our named executive officers will be at the 2016 annual meeting of stockholders. +THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THIS PROPOSAL 2. +Proposal to Ratify the Appointment of Our Independent Auditors +(Item 3 on the Proxy Card) +What +am I voting on? +You are voting on a proposal to ratify the appointment of Grant Thornton LLP as our independent auditors for fiscal year 2014. The +audit committee has appointed Grant Thornton to serve as independent auditors. +What services do the independent auditors provide? +Audit services of Grant Thornton for fiscal 2014 included an audit of our consolidated financial statements and services related to periodic filings made with +the SEC. Additionally, Grant Thornton provided certain services related to the consolidated quarterly reports and annual and other periodic reports, registration statements and comfort letters and other services as described below. +How much were the independent auditors paid in 2013 and 2014? +Grant Thornton’s fees for professional services totaled $707,235 for 2013 and $661,833 for 2014. Grant Thornton’s fees for professional services +included the following: +• +Audit Fees —aggregate fees for audit services, which relate to the fiscal year consolidated audit, quarterly reviews, registration statements, comfort letters, statutory and regulatory audits and accounting +consultations were $652,835 in 2013 and $661,833 in 2014. +• +Audit-Related Fees —aggregate fees for audit-related services, consisting of audits in connection with proposed or consummated dispositions, benefit plan audits, other subsidiary audits, special reports, and +accounting consultations, were $54,400 in 2013 and $0 in 2014. +• +Tax and All Other Fees —there were no tax or other fees for products or services provided by Grant Thornton in addition to the services described above in 2013 and 2014. +Does the audit committee approve the services provided by Grant Thornton? +It is our audit committee’s policy to pre-approve all audit, audit related and permissible non-audit services rendered to us by our independent auditor. +Consistent with such policy, all of the fees listed above that we incurred for services rendered by Grant Thornton LLP in fiscal 2013 and 2014 were pre-approved by our audit committee. No non-audit services were provided to us by Grant Thornton in +2013 or 2014. +52 +Table of Contents +Will a representative of Grant Thornton LLP be present at the meeting? +Yes, one or more representatives of Grant Thornton will be present at the meeting. The representatives will have an opportunity to make a statement if they +desire and will be available to respond to appropriate questions from the stockholders. +What vote is required to approve this proposal? +Stockholder ratification of the appointment of our independent auditors is not required by the Company’s bylaws or otherwise. However, we are submitting +this proposal to the stockholders as a matter of good corporate practice. Approval of this proposal requires the affirmative vote of a majority of the votes cast on the proposal. If the appointment of Grant Thornton is not ratified, the audit +committee will reconsider the appointment. Even if the appointment is ratified, the audit committee in its discretion may direct the appointment of a different independent audit firm at any time during the year if it is determined that such change +would be in best interests of the Company and its stockholders. +Has Grant Thornton LLP always served as Gulfport’s independent auditors? +Grant Thornton has served as our independent auditors since 2005. +What does the board of directors recommend? +THE BOARD +OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF GRANT THORNTON LLP AS THE COMPANY’S INDEPENDENT AUDITORS FOR THE YEAR 2015. +Solicitation by Board; Expenses of Solicitation +Our board of directors has sent you this proxy statement. Our directors, officers and employees may solicit proxies by mail, by telephone or in person. Those +persons will receive no additional compensation for any solicitation activities. We will request banking institutions, brokerage firms, custodians, trustees, nominees and fiduciaries to forward solicitation materials to the beneficial owners of +common stock held of record by those entities, and we will, upon the request of those record holders, reimburse reasonable forwarding expenses. We will pay the costs of preparing, printing, assembling and mailing the proxy material used in the +solicitation of proxies. +Submission of Future Stockholder Proposals +Under SEC rules, a stockholder who intends to present a proposal, including with respect to the nomination of directors, at the 2016 Annual Meeting of +Stockholders and who wishes the proposal to be included in the proxy statement for that meeting must submit the proposal in writing to our Corporate Secretary. The proposal must be received no later than January 15, 2016. +Stockholders who wish to propose a matter for action at the 2016 Annual Meeting, including with respect to the nomination of directors, but who do not wish to +have the proposal or nomination included in the proxy statement, must notify the Company in writing of the information required by the provisions of our by-laws dealing with stockholder proposals. The notice must be delivered to our Corporate +Secretary between February 19, 2016 and March 20, 2016. You can obtain a copy of our by-laws by writing the Corporate Secretary at the address below, or via the Internet at www.gulfportenergy.com under our “Corporate +Governance” caption. +All written proposals should be directed to Paul K. Heerwagen IV, our Assistant Corporate Secretary at Gulfport Energy +Corporation, 14313 North May Avenue, Suite 100, Oklahoma City, Oklahoma 73134. +53 +Table of Contents +The board of directors is responsible for selecting and recommending director candidates and will consider +nominees recommended by stockholders. If you wish to have the board of directors consider a nominee for director, you must send a written notice to our Corporate Secretary at the address provided above and include the information required by our +bylaws and discussed beginning on page 10 of this proxy statement. +Availability of Form 10-K and Annual +Report to Stockholders +SEC rules require us to provide an Annual Report to stockholders who receive this proxy statement. Additional copies +of the Annual Report, along with copies of our Annual Report on Form 10-K for the fiscal year ended December 31, 2014, including the financial statements and the financial statement schedules, are available without charge to stockholders upon +written request to Director of Investor Relations, Gulfport Energy Corporation, 14313 North May Avenue, Suite 100, Oklahoma City, Oklahoma 73134 or via the Internet at www.gulfportenergy.com . We will furnish the exhibits to our Annual +Report on Form 10-K upon payment of our copying and mailing expenses. +Householding +The SEC permits a single set of annual reports and proxy statements to be sent to any household at which two or more stockholders reside if they appear to be +members of the same family. Each stockholder continues to receive a separate proxy card. This procedure, referred to as householding, reduces the volume of duplicate information stockholders receive and reduces our mailing and printing expenses. +If you would like to receive your own set of the annual report and proxy statement this year or in future years, follow the instructions described below. +Similarly, if you share an address with another Gulfport stockholder and together both of you would like to receive in the future only a single annual report and proxy statement, follow these instructions: +• +If your shares of our common stock are registered in your own name, please contact our transfer agent, Computershare Trust Company, N.A., and inform them of your request by calling their toll-free number: +(800) 962-4284 or by mail: Computershare Trust Company, N.A., 250 Royall Street, Canton, MA 02021. +• +If a broker or other nominee holds your shares, please contact your broker or nominee. +Other Matters +The board of directors does not intend to present any other items of business other than those stated in the Notice of Annual +Meeting of Stockholders. If other matters are properly brought before the meeting, the persons named as your proxies will vote the shares represented by it in accordance with their best judgment. Discretionary authority to vote on other matters is +included in the proxy. +54 +Table of Contents +PROXY +FOR THE ANNUAL MEETING OF STOCKHOLDERS OF +Gulfport Energy Corporation +This Proxy Is Solicited On Behalf Of The Board Of Directors +The undersigned hereby appoints Michael G. Moore and J. Ross Kirtley (together, the “Proxies”), and each of them, with full power of substitution, +as proxies to vote the shares that the undersigned is entitled to vote at the Annual Meeting of Stockholders of Gulfport Energy Corporation (the “Company”) to be held on June 18, 2015 at 10:00 a.m. Oklahoma City time and at any +adjournments and postponements thereof. Such shares shall be voted as indicated with respect to the proposals listed on the reverse side hereof and in the Proxies’ discretion on such other matters as may properly come before the meeting or any +adjournment or postponement thereof. +The undersigned acknowledges receipt of the 2015 Notice of Annual Meeting and accompanying Proxy Statement and +revokes all prior proxies for said meeting. +THE SHARES REPRESENTED BY THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY +THE UNDERSIGNED STOCKHOLDER. IF NO SPECIFIC DIRECTION IS GIVEN AS TO THE PROPOSALS ON THE REVERSE SIDE, THIS PROXY WILL BE VOTED FOR EACH OF THE NOMINEES NAMED IN PROPOSAL 1 AND FOR EACH OF THE PROPOSALS 2 AND 3 IN ACCORDANCE WITH THE BOARD OF +DIRECTOR’S RECOMMENDATION. PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY. +(Continued and to be marked, dated and +signed on reverse side.) +Detach here from proxy voting card. +GULFPORT ENERGY CORPORATION +Proposal 1 – ELECTION OF DIRECTORS +01 Michael G. Moore +For +¨ +Against +¨ +Abstain +¨ +02 Donald L. Dillingham +For +¨ +Against +¨ +Abstain +¨ +03 Craig Groeschel +For +¨ +Against +¨ +Abstain +¨ +04 David L. Houston +For +¨ +Against +¨ +Abstain +¨ +05 Ben T. Morris +For +¨ +Against +¨ +Abstain +¨ +06 Scott E. Streller +For +¨ +Against +¨ +Abstain +¨ +Proposal 2 – Proposal to Approve, on an Advisory Basis, the Company’s Executive Compensation +For +¨ +Against +¨ +Abstain +¨ +Proposal 3 – Proposal to Ratify the Appointment of Our Independent Auditors, Grant Thornton LLP, for fiscal year 2015 +For +¨ +Against +¨ +Abstain +¨ +This proxy, when properly signed, will be voted in the manner directed herein by the undersigned stockholder. +IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ALL NOMINEES FOR ELECTION OF DIRECTORS UNDER PROPOSAL 1 AND FOR EACH OF THE PROPOSALS 2 AND 3 IN ACCORDANCE WITH THE BOARD OF DIRECTOR’S RECOMMENDATION. +IMPORTANT – PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY. THANK YOU FOR VOTING. +Signature +Signature, if held jointly +Dated , 2015 +Table of Contents +When shares are held by joint tenants, both should sign. When signing as attorney, executor, +administrator, trustee, or guardian, please give full title as such. If a corporation, please sign in full corporate name by the president or another authorized officer. If a partnership, please sign in partnership name by an authorized person. +Proxy – Gulfport Energy Corporation +You are cordially invited to attend the Annual Meeting of Stockholders +To be held on June 18, 2015, at +10:00 a.m. Oklahoma City time, at +14313 North May Avenue, Suite 100, Oklahoma City, Oklahoma 73134. \ No newline at end of file diff --git a/raw/proxies/0000874499/0001193125-15-161979/proxy_rpt.txt b/raw/proxies/0000874499/0001193125-15-161979/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..1f1cbc08c42a7790affd197a5e41511d81008822 --- /dev/null +++ b/raw/proxies/0000874499/0001193125-15-161979/proxy_rpt.txt @@ -0,0 +1,16 @@ +Certain Relationships and Related Transactions +Review and Approval of Related Party Transactions +The audit committee, as provided in its charter, reviews and approves related party transactions. The Company does not have a formal set of standards to be +substantively applied to each transaction reviewed by the audit committee. Instead of a formalized policy, related party transactions are reviewed and judgment is applied to determine whether such transactions are in the best interests of the +Company. Further, the Company’s Code of Business Conduct and Ethics governs various compliance areas, including conflicts of interest and fair dealings, which are considered in the process of the review and approval of related party +transactions. +The Company’s policy is that all of its employees and directors, as well as their family members, must avoid any activity that is or +has the appearance of conflicting with the Company’s business interest. This policy is included in the Company’s Code of Business Conduct and Ethics posted on its website. Each director and executive officer is instructed to always inform +the designated compliance officer when confronted with any situation that may be perceived as a conflict of interest. Only the board of directors or a committee consisting solely of independent directors may grant waivers of the provisions of the +Code of Business Conduct and Ethics for the Company’s executive officers and directors. In addition, at least annually, each director and executive officer completes a detailed questionnaire specifying any business relationship that may give +rise to a conflict of interest. +Further, under the audit committee charter, the audit committee is responsible for reviewing and monitoring compliance +with our Code of Business Conduct and Ethics and recommending any warranted changes to the board of directors. In addition, the board of directors and, pursuant to its written charter, the audit committee, reviews and approves all relationships and +transactions in which the Company and its directors, director nominees and executive officers and their immediate family members, as well as holders of more than 5% of any class of our voting securities and their family members, have a direct or +indirect material interest. The board of directors and the audit committee approve only those transactions that, in light of known circumstances, are consistent, or are not inconsistent with, the Company’s best interests, as they determine in +the good faith exercise of their discretion. \ No newline at end of file diff --git a/raw/proxies/0000874499/0001193125-16-569716/proxy.txt b/raw/proxies/0000874499/0001193125-16-569716/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..ebad2eb7a7ff848a2cb36b943b35fb4da0b8ebd6 --- /dev/null +++ b/raw/proxies/0000874499/0001193125-16-569716/proxy.txt @@ -0,0 +1,3319 @@ +DEF 14A +1 +d133991ddef14a.htm +DEF 14A +DEF 14A +Table of Contents +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Proxy Statement Pursuant to Section 14(a) of the +Securities Exchange Act of 1934 +x Filed by the +Registrant ¨ +Filed by a Party other than the Registrant +Check the appropriate box: +¨ +Preliminary Proxy Statement +¨ +Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +x +Definitive Proxy Statement +¨ +Definitive Additional Materials +¨ +Soliciting Material under §240.14a-12 +Gulfport Energy Corporation +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +x +No fee required +¨ +Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. +1) +Title of each class of securities to which transaction applies: +2) +Aggregate number of securities to which transaction applies: +3) +Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing +fee is calculated and state how it was determined): +4) +Proposed maximum aggregate value of transaction: +5) +Total fee paid: +¨ +Fee paid previously with written preliminary materials. +¨ +Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement +number, or the Form or Schedule and the date of its filing. +1) +Amount Previously Paid: +2) +Form, Schedule or Registration Statement No.: +3) +Filing Party: +4) +Date Filed: +Table of Contents +14313 North May Avenue, Suite 100 +Oklahoma City, Oklahoma 73134 +NOTICE OF +2016 +ANNUAL +STOCKHOLDERS +MEETING +and +PROXY +STATEMENT +Friday +June 10, 2016 +10:00 a.m., local time +14313 North May Avenue +Suite 100 +Oklahoma City +Oklahoma 73134 +April 29, 2016 +Dear Gulfport Energy Corporation Stockholder: +On behalf of your board of directors and management, you are cordially invited to attend the Annual Meeting of Stockholders to be held at 14313 North May +Avenue, Suite 100, Oklahoma City, Oklahoma 73134 on Friday, June 10, 2016, at 10:00 a.m., local time. +It is important that your shares be represented at the meeting. Whether or not you plan to attend the meeting, please vote by telephone or via Internet or +complete and return the enclosed proxy card in the accompanying envelope, in each case in accordance with the instructions provided in the enclosed proxy card. Please note that submitting a proxy will not prevent you from attending the meeting and +voting in person. +You will find information regarding the matters to be voted on at +the meeting in the enclosed proxy statement. Our 2015 Annual Report to Stockholders is either enclosed with these materials or has previously been mailed to you. This proxy statement and our 2015 Annual Report to Stockholders are also available on +our website at www.gulfportenergy.com/proxy. +In addition to the formal items of +business to be brought before the meeting, there will be a report on our operations, followed by a question and answer period. Your interest in Gulfport Energy Corporation is appreciated. We look forward to seeing you on June 10, 2016. +Sincerely, +Michael G. Moore +David L. Houston +Chief Executive Officer and President +Chairman of the Board +Table of Contents +GULFPORT ENERGY CORPORATION +14313 North May Avenue, Suite 100 +Oklahoma City, Oklahoma 73134 +NOTICE OF +ANNUAL MEETING OF STOCKHOLDERS +TO BE HELD ON JUNE 10, 2016 +To our Stockholders: +The Annual Meeting of Stockholders of +Gulfport Energy Corporation will be held on June 10, 2016 at 10:00 a.m., local time, at 14313 North May Avenue, Suite 100, Oklahoma City, Oklahoma 73134, for the following purposes: +1. +To elect six directors to serve until the Company’s 2017 Annual Meeting of Stockholders; +2. +To hold an advisory vote on the compensation paid to the Company’s named executive officers; +3. +To ratify the appointment of Grant Thornton LLP as the Company’s independent auditors for the fiscal year ending December 31, 2016; +4. +To consider a stockholder proposal, if properly presented at the meeting, regarding a methane emissions report; and +5. +To transact such other business as may properly come before the Annual Meeting and any adjournment or postponement thereof. +Your vote is important. Please carefully consider the proposals and vote in one of these ways: +• +Vote by telephone or via Internet in accordance with the instructions provided in the enclosed proxy card; +• +Mark, sign, date and promptly return the enclosed proxy card in the postage-paid envelope; or +• +Submit a ballot at the Annual Meeting. +Only stockholders of record at the close of business on April 21, +2016 or their proxy holders may vote at the meeting. Directions to the meeting can be obtained from the Company. +IMPORTANT NOTICE REGARDING THE +AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 10, 2016 . This proxy statement and the Company’s 2015 Annual Report to Stockholders are available on the Company’s website at +www.gulfportenergy.com/proxy. +By Order of the Board of Directors, +Michael G. Moore +Chief Executive Officer and President +This notice and proxy statement are first being mailed to stockholders on or about May 6, 2016. +Table of Contents +GULFPORT ENERGY CORPORATION +14313 North May Avenue, Suite 100 +Oklahoma City, Oklahoma 73134 +PROXY +STATEMENT +TABLE OF CONTENTS +About the Annual Meeting +1 +Board of Directors Information +5 +Election of Directors and Director Biographies +6 +Corporate Governance Matters and Communications with the Board +10 +Nominating Process for Directors, Director Qualifications and Review of Director +Nominees +11 +Director Leadership Structure +13 +Board of Director’s Role in Risk Oversight +13 +Audit Committee Report +14 +Executive Officers +16 +Compensation Discussion and Analysis +18 +Executive Summary +18 +Total Stockholder Return Performance +19 +Oversight of Compensation Programs +23 +Executive Compensation Objectives and Features +23 +Executive Compensation Components +25 +Compensation Decisions for 2016 +29 +Termination and Change of Control Benefits +31 +Perquisites and Other Personal Benefits +32 +Broad-Based Employee Benefits +32 +Effect of Our Compensation Policies and Practices on Risk and Risk Management +32 +Deductibility of Executive Compensation +33 +Clawback Provisions +33 +Anti-Hedging and Pledging Policies +34 +Accounting Implications of Executive Compensation Policy +34 +The Role of Stockholders’ Say-on-Pay +34 +Compensation Committee Report on Executive Compensation +35 +Compensation Committee Interlocks and Insider Participation +35 +Compensation Tables +36 +Benefit Plans +41 +401(k) Plan +41 +2013 Restated Stock Incentive Plan +41 +2014 Executive Annual Incentive Compensation Plan +42 +Employment Agreements +45 +Employment Agreement with Our Chief Executive Officer +45 +Employment Agreement with our Chief Financial Officer and Chief Operating Officer +47 +Potential Payments Upon Termination, Resignation or Change of +Control +50 +Stock Ownership +53 +Holdings of Major Stockholders +53 +Holdings of Officers and Directors +55 +Section 16(a) Beneficial Ownership Reporting Compliance +57 +i +Table of Contents +Certain Relationships and Related Transactions +57 +Review and Approval of Related Party Transactions +57 +Proposal to Approve, on an Advisory Basis, the Compensation Paid to the Company’s +Named Executive Officers +58 +Proposal to Ratify the Appointment of Our Independent +Auditors +59 +Stockholder Proposal Regarding a Methane Emissions Report +60 +Solicitation by Board; Expenses of Solicitation +63 +Submission of Future Stockholder Proposals +63 +Availability of Form 10-K and Annual Report to +Stockholders +63 +Householding +64 +Other Matters +64 +ii +Table of Contents +About the Annual Meeting +Who is soliciting my vote? +The board of directors of +Gulfport Energy Corporation, which we refer to as Gulfport, the Company and we in this proxy statement, is soliciting your vote at the 2016 Annual Meeting of Stockholders. The proposals to be voted on by the Company’s stockholders at the 2016 +Annual Meeting of Stockholders are described below. +What am I voting on? +You are voting on: +• +The election of directors (see Proposal 1 beginning on page 6); +• +The approval, on an advisory basis, of the compensation paid to the Company’s named executive officers as reported in this proxy statement ( see Proposal 2 beginning on page 58 ); +• +The ratification of Grant Thornton LLP as our independent auditors for 2016 ( see Proposal 3 beginning on page 59 ); +• +The stockholder proposal, if properly presented at the meeting, regarding a methane emissions report ( see Proposal 4 beginning on page 60 ); and +• +Any other business properly coming before the meeting. +How does the board of directors recommend that I +vote my shares? +Unless you give other instructions on your proxy card, the persons named as proxy holders on the proxy card will vote in accordance +with the recommendations of our board of directors. The board of directors’ recommendations can be found with the description of each item in this proxy statement. In summary, the board of directors recommends a vote: +• +FOR the proposal to elect the nominated directors; +• +FOR the proposal to approve, on an advisory basis, the compensation paid to the Company’s named executive officers as reported in this proxy statement; +• +FOR the proposal to ratify Grant Thornton LLP as the Company’s independent auditors for 2016; and +• +AGAINST the stockholder proposal, if properly presented at the meeting, regarding a methane emissions report. +Who is entitled to vote? +You may vote if you were the +record owner of our common stock as of the close of business on the record date, which is April 21, 2016. Each share of common stock is entitled to one vote. As of April 21, 2016, we had 125,327,560 shares of common stock outstanding, +excluding an aggregate of 615,801 shares of restricted stock and restricted stock units awarded under our 2013 Restated Stock Incentive Plan or its predecessors, but not yet vested. There is no cumulative voting. +How many votes must be present to hold the meeting? +Your +shares are counted as present at the Annual Meeting if you attend the meeting and vote in person or if you properly return a proxy by mail. In order for us to hold our meeting, holders of a majority of the voting power of our outstanding shares of +common stock as of the close of business on April 21, 2016 must be present in person or by proxy at the meeting. This is referred to as a quorum. Abstentions and broker non-votes will be counted for purposes of establishing a quorum at the +meeting. +1 +Table of Contents +What is a broker non-vote? +If a broker does not have discretion to vote shares held in street name on a particular proposal and does not receive instructions from the beneficial owner on +how to vote those shares, the broker may return the proxy card without voting on that proposal. This is known as a broker non-vote . No broker may vote your shares without your specific instructions on any of the proposals to be considered at +the Annual Meeting other than the ratification of our independent auditors. +How many votes are needed to approve each of the proposals? +Our bylaws provide for the election of directors in uncontested elections by a majority of the votes cast by the stockholders present in person or represented +by proxy at the meeting and entitled to vote thereon. The number of shares voted “FOR” a director nominee must exceed the number of votes cast “AGAINST” that nominee. Abstentions and broker non-votes will not be counted for +voting purposes with respect to the re-election of directors. Stockholders may not cumulate their votes with respect to the re-election of directors. If any incumbent director is not elected because he does not receive a majority of the votes cast, +he is required to immediately tender his or her resignation for consideration by our board of directors. Our board of directors will evaluate whether to accept or reject such resignation, or whether other action should be taken; provided, however, +that the board will act on such resignation and publicly disclose its decision to accept or reject such resignation and the rationale behind such decision within 90 days from the date of the certification of the director election results. +Each of Proposals 2, 3 and 4 requires the affirmative “FOR” vote of a majority of the votes cast by the stockholders present in person or +represented by proxy at the Annual Meeting and entitled to vote thereon. Only votes for or against Proposal 2 and 4 will be counted as votes cast, and abstentions and broker non-votes will not be counted for voting purposes. Broker non-votes will be +counted as votes cast with respect to Proposal 3. +How do I vote? +You can vote either in person by submitting a ballot at the meeting, or by proxy without attending the meeting. +To vote by proxy, you can vote in one of the following ways: +• +by telephone or via Internet in accordance with the instructions provided in the enclosed proxy card; or +• +by marking, signing, dating and promptly returning the enclosed proxy card in the postage-paid envelope. +Even +if you plan to attend the meeting, we encourage you to vote your shares by proxy. If you plan to vote in person at the Annual Meeting, and you hold your stock in street name, you must obtain a proxy from your broker and bring that proxy to the +meeting. +Can I change my vote? +Yes. You can change +or revoke your vote at any time before the polls close at the Annual Meeting. You can do this by: +• +Voting by telephone or Internet at a later date, but prior to the deadline for telephonic and Internet voting specified in the enclosed proxy card; +• +Signing another proxy card with a later date and returning it to us prior to the meeting; +• +Sending our Assistant Corporate Secretary a written document revoking your earlier proxy; or +• +Voting again at the meeting. +2 +Table of Contents +Who counts the votes? +We have hired Computershare Trust Company, N.A., our transfer agent, to act as the tabulation agent and count the votes represented by proxies cast by mail or +ballot. Employees of Computershare Trust Company, N.A. will act as inspectors of election. +Will my vote be confidential? +Yes. As a matter of Company policy, proxies, ballots and voting tabulations that identify individual stockholders are treated as confidential. Only the +tabulation agent and the inspectors of election have access to your vote. Directors and employees of the Company may see your vote only if there is a contested proxy solicitation, as required by law or in certain other special circumstances. +Will my shares be voted if I don’t provide my proxy and don’t attend the Annual Meeting? +If you do not provide a proxy (by voting by telephone, via Internet or sending a proxy card, in each case in accordance with the instructions included in the +enclosed proxy card) or vote your shares held in your name at the meeting, your shares will not be voted. +If you hold your shares in street name, your +broker may be able to vote your shares for certain “routine” matters even if you do not provide the broker with voting instructions. The ratification of Grant Thornton LLP as our independent auditors for 2016 is considered routine. For +matters not considered “routine,” if you do not give your broker instructions on how to vote your shares, the broker will return the proxy card without voting on that proposal. This is a broker non-vote. The proposals to elect directors, +to approve, on an advisory basis, the compensation paid to the Company’s named executive officers and to approve the stockholder proposal regarding a methane emissions report are not considered routine. As a result, no broker may vote your +shares on these proposals without your specific instructions. +How are votes counted? +In the election of directors contemplated by Proposal 1, you may vote “FOR,” “AGAINST” or “ABSTAIN” with respect to one or more +of the nominees. For Proposals 2, 3 and 4, you may vote “FOR,” “AGAINST” or “ABSTAIN.” +What if I vote by proxy but +don’t indicate my vote on the matters listed on my proxy card? +If you return a signed proxy card without indicating your vote, your shares will +be voted FOR the director nominees listed on the card, FOR approving, on an advisory basis, the compensation paid to the Company’s named executive officers as described in this proxy statement, FOR the ratification of Grant Thornton LLP as our +independent auditors for 2016 and AGAINST the stockholder proposal regarding a methane emissions report. +Could other matters be decided at the Annual +Meeting? +We have not received any stockholder proposals and are not aware of any other matters that will be considered at the Annual Meeting. If any +other matters arise at the Annual Meeting, the persons named in your proxies will vote in accordance with their best judgment. +Who can attend the +meeting? +The Annual Meeting is open to all holders of our common stock. +3 +Table of Contents +What do I need to bring to attend the Annual Meeting? +You will need proof of ownership of our common stock to enter the meeting. If your shares are in the name of your broker or bank or other nominee, you will +need to bring evidence of your stock ownership, such as your most recent brokerage statement. All stockholders will be required to present valid picture identification. IF YOU DO NOT HAVE VALID PICTURE IDENTIFICATION AND PROOF THAT YOU OWN SHARES OF +OUR COMMON STOCK, YOU MAY NOT BE ADMITTED INTO THE MEETING. +How can I access the Company’s proxy materials and annual report electronically? +This proxy statement and the Company’s 2015 Annual Report to Stockholders are available on the Company’s website at +www.gulfportenergy.com/proxy. +4 +Table of Contents +Board of Directors Information +What is the makeup of the board of directors and how often are the members elected? +Our board of directors currently consists of seven members who are elected annually. The majority of these directors are independent under the Nasdaq listing +standards. On April 27, 2016, one of our current directors, Donald L. Dillingham, informed us that he did not intend to stand for re-election at the Annual Meeting. The slate of director candidates for the Annual Meeting consists of our six +other directors. We are not aware of any disagreement between us and Mr. Dillingham relating to our operations, policies or practices. +What if a +nominee is unable or unwilling to serve? +That is not expected to occur. If it does, shares represented by proxies will be voted for a substitute +nominated by the board of directors. +How are directors compensated? +Our policy is that members of our board of directors who are also our officers or employees do not receive compensation for their services as directors. The +compensation of our non-employee directors is described below. +Cash Compensation +Our non-employee directors are paid an annual retainer of $60,000, an attendance fee of $1,500 for each board meeting attended in person, and an attendance fee +of $750 for each board meeting attended telephonically. In addition, the Chairman of the Board receives an additional $65,000 annual retainer, the audit committee chairman receives an additional $15,000 annual retainer and the chairman of each of +the compensation committee and the nominating and corporate governance committee receives an additional $10,000 annual retainer. Each committee member is also paid a $1,000 attendance fee for each committee meeting attended in person and a $500 +attendance fee for each committee meeting attended telephonically. +Equity Compensation +Our non-employee directors are entitled to receive an annual grant of restricted stock with an aggregate value of approximately $125,000 based on the closing +price of our common stock on the date of grant, with vesting to occur in the following year. On September 10, 2015, we awarded the 2015 annual director grant in the amount of 3,830 shares of our restricted stock to each of our then-serving +non-employee directors under our 2013 Restated Stock Incentive Plan, which shares will vest on June 18, 2016 if the non-employee director is in continuous service on that date. In connection with the appointment of C. Doug Johnson as a director +of the Company effective September 10, 2015, Mr. Johnson received a grant of 2,951 shares of our restricted stock, which shares will vest on June 18, 2016, if he is in continuous service on that date, representing a pro-rated portion +of the annual non-employee director grant to reflect Mr. Johnson’s service on the board of directors commencing on September 10, 2015. Further information regarding our director compensation in 2015 is set forth under the heading +“2015 Director Compensation” below. +Insurance and Indemnification +We provide liability insurance for our directors and officers at a current annual cost of approximately $596,717. We have also entered into indemnification +agreements with each of our current directors. These agreements require us to indemnify these individuals to the fullest extent permitted under Delaware law against liabilities that may arise by reason of their service to us, and to advance expenses +incurred as a result of any proceeding against them as to which they could be indemnified. +5 +Table of Contents +In addition, our certificate of incorporation sets forth limitations on our directors’ liability to our +stockholders. Further, our bylaws contain indemnification and advancement of expenses provisions for the benefit of our directors and officers. +How +often did the board of directors meet in 2015? +The board of directors met eight times in 2015. In addition to these meetings, the board of directors +adopted resolutions by unanimous written consent. Each director attended at least 75% of the aggregate meetings of the board of directors and the meetings of the committees on which he served. +Election of Directors and Director Biographies +(Proposal 1 on the Proxy Card) +Who are this year’s nominees? +The directors +standing for election this year to hold office until the 2016 Annual Meeting of Stockholders and until each such director’s successor is elected are: +MICHAEL G. MOORE, age 59. Mr. Moore was appointed as our Chief Executive Officer and as a member of our board of directors on April 22, 2014, +and has served as our President since August 2013. He served as our Chief Financial Officer and Secretary from July 2000 to April 2014 and as our Vice President from July 2000 until his appointment as President in August 2013. Mr. Moore also +served as our Interim Chief Executive Officer from February 15, 2014 until his appointment as our Chief Executive Officer on April 22, 2014. From May 1998 through July 2000, Mr. Moore served as Vice President and Chief Financial +Officer of Indian Oil Company. From September 1995 through May 1998, Mr. Moore served as Controller of DLB Oil & Gas, Inc. Prior to that, Mr. Moore served as Controller of LEDCO, Inc., a Houston based gas marketing company. +Mr. Moore received both his Bachelor of Business Administration Degree in Finance and his Master’s in Business Administration from the University of Central Oklahoma. +DAVID L. HOUSTON, age 63. Mr. Houston has served as a director of the Company since July 1998 and as Chairman of the Board since July 2013. Since +1991, Mr. Houston has been the principal of Houston Financial, a firm providing wealth management products and services with a focus on the energy sector. Since 2000, Mr. Houston has managed a mineral trust with approximately 9,200 net +acres in Oklahoma, Texas, Kansas and New Mexico, which includes responsibility for leasing and production matters. Mr. Houston served on the board of directors and executive committee of Deaconess Hospital, Oklahoma City, Oklahoma, from January +1993 until December 2008. Mr. Houston has served as the lead director on the board of directors of Diamondback Energy, Inc. (Nasdaq Global Market: FANG) since October 2012, is a member of its audit and compensation committees and is the chair +of its nominating and corporate governance committee. He also served as a director of Bronco Drilling Company from May 2005 until December 2010 and was a member of its audit committee. Mr. Houston received a Bachelor of Science Degree in +business from Oklahoma State University and a graduate degree in banking from Louisiana State University. +BEN T. MORRIS, age 70 . Mr. Morris +has served as a director of the Company since August 4, 2014. From 2009 to 2012, Mr. Morris served as the Vice Chairman of the board of directors of the Sanders Morris Harris Group, a financial services and wealth management company he +co-founded in 1987, or SMHG. Since its founding, Mr. Morris has served in various capacities with SMHG, including Executive Vice President and Director of Investment Banking, President and Chief Executive Officer and a member of the board of +directors of SMH Capital, a subsidiary of SMHG, and Chief Executive Officer and a member of the board of directors of SMHG. Since 2012, Mr. Morris has continued as an employee of Sanders Morris Harris, Inc., a former subsidiary of SMHG. From +1980 to 1986, Mr. Morris served as the Chief Operating Officer of Tatham Corporation, a privately-held company engaged in natural gas transportation and marketing and oil and gas exploration and +6 +Table of Contents +production. Mr. Morris began his career as an accountant at Price Waterhouse & Co. in 1967, and in 1973 joined Mid American Oil and Gas Inc. as Chief Financial Officer, eventually +serving as President of the company until its sale in 1979. Since July 2011, Mr. Morris has served as a member of the board of directors and Chairman of the audit committee of Yuma Energy, Inc., a publicly traded exploration and production +company. Mr. Morris has also served on the boards of several public companies, including Capital Title Group from 1998 to 2006, American Equity Investment Life Holding Company from 1997 to 2006, Tyler Technologies, Inc. from 2002 until 2005, +where he served as Chairman of its audit committee, Fresh America Corp. from 1992 until 1996, where he served as a member of the compensation committee, and Deeptech International Inc. from 1988 until 1997. Mr. Morris has an extensive financial +background, with over 25 years of experience in various aspects of the investment banking business. Mr. Morris received his Bachelor of Business Administration Degree from the University of North Texas, and also holds a Certified Public +Accountant certificate from the State of Texas, along with several securities licenses. +C. DOUG JOHNSON, age 56 . Mr. Johnson has served as a +director of the Company since September 2015. Since August 1981, Mr. Johnson served in various roles at Phillips 66 and its predecessors Phillips Petroleum Co. and ConocoPhillips Company, which was formed by the merger of Philips Petroleum Co. +and Conoco Inc. in 2002. Mr. Johnson most recently served as Vice President, Controller and principal accounting officer of Phillips 66, a publicly traded company engaged in mid-stream, chemicals, and refining, from April 2012 until his +retirement on December 31, 2014. During the same period, he also served as Vice President, Controller and principal accounting officer of Phillips 66 Partners GP LLC, the general partner of Phillips 66 Partners LP, a publicly traded pipeline +subsidiary of Phillips 66. From June 2010 until April 2012, Mr. Johnson served as General Manager, Upstream Finance, Strategy and Planning at ConocoPhillips. Prior to that, Mr. Johnson’s tenure at ConocoPhillips included his service +as General Manager, Downstream Finance from 2008 to 2010 and General Manager, Upstream Finance from 2005 to 2008. Mr. Johnson also served on the board of Chevron Phillips Chemical Company LLC, a joint venture of Phillips 66 Partners LP and +Chevron Corp., and its audit committee, where he was co-chairman, from April 2012 until December 2014. Mr. Johnson has an extensive financial and accounting background, with over 33 years of service in the oil and natural gas industry. +Mr. Johnson received his Bachelor of Science Degree in Accounting from the University of Arkansas, and also holds a Certified Public Accountant certificate from the State of Oklahoma. +SCOTT E. STRELLER, age 48. Mr. Streller has served as a director of the Company since August 2006. He currently serves as chairman of +Company’s compensation committee and as a member on the audit and nominating and corporate governance committees. In 1992, Mr. Streller founded the Scott Streller Insurance and Financial Services Agency (Farmers Insurance), which has been +recognized both regionally and nationally as one of the top agencies within the Farmers Insurance Group of Companies. Mr. Streller is active in the community and has served in a variety of leadership roles in local public and non-profit +organizations. Additionally, Mr. Streller frequently serves as a guest lecturer at local universities and insurance and financial services seminars. Mr. Streller earned a Bachelor’s Degree in Business Management from the University of +Central Oklahoma. In addition, Mr. Streller received a Master’s in Athletic Administration from Oklahoma State University. +CRAIG GROESCHEL, +age 48. Mr. Groeschel has served as a director of the Company since August 2011. Since 1996, Mr. Groeschel has served as a founding pastor of LifeChurch, one of the largest churches in the United States. Since founding LifeChurch, +Mr. Groeschel has served on its Board of Directors. Under Mr. Groeschel’s leadership, LifeChurch has grown to 25 locations in seven states. Mr. Groeschel received a Bachelor’s Degree in Business Marketing from the Oklahoma +City University, a Master’s of Divinity Degree from the Phillips Graduate Seminary and an Honorary Doctorate of Human Letters from Southeastern Christian University. Mr. Groeschel is a frequent speaker at various domestic and international +forums and an author of a number of books. +7 +Table of Contents +What does the board of directors recommend? +THE BOARD RECOMMENDS THAT YOU VOTE “FOR” THE ELECTION OF THESE DIRECTORS +What are the committees of the Board? +Our board of +directors has an audit committee, a nominating and corporate governance committee, which we refer to herein as the nominating committee, and a compensation committee, which committees perform the functions specified below. The members of each +committee are as of the date of this proxy statement. +Committee +Members +Principal Functions +Number of +Meetings in +2015 +Audit +David L. Houston* +Donald L. Dillingham+ +C. Doug Johnson +Ben T. Morris +Scott E. Streller +• Reviews and discusses with management and the independent +auditors the integrity of our accounting policies, internal controls, financial statements, accounting and auditing processes and risk management compliance. +• Monitors and oversees our accounting, auditing and financial reporting +processes generally, including the qualifications, independence and performance of the independent auditor. +• Monitors our compliance with legal and regulatory requirements. +• Establishes procedures for the receipt, retention and treatment of +complaints received by the Company regarding accounting, internal accounting controls or auditing matters, and the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters. +• Reviews +and approves related party transactions. +• Appoints, determines compensation, evaluates and terminates our independent +auditors. +• Pre-approves audit and permissible non-audit services to be performed by the +independent auditors. +• Prepares the report required by the Securities and Exchange Commission, or +the SEC, for the inclusion in our annual proxy statement. +• Reviews and reassesses the adequacy of the audit committee charter on a +periodic basis. +• Inform our independent auditors of the audit committee’s understanding +of significant relationships and transactions with related parties and review and discuss with our independent auditors the auditors’ evaluation of our identification of, accounting for and disclosure of our relationships and transactions with +related parties, including any significant matters arising from the audit regarding our relationships and transactions with related parties. +Four (4) +8 +Table of Contents +Committee +Members +Principal Functions +Number of +Meetings in +2015 +Compensation +Scott E. Streller* +Craig Groeschel +David L. Houston +C. Doug Johnson +• Oversees and administers our executive compensation +policies, plans and practices and evaluates their impact on risk and risk management. +• Assists the board of directors in discharging its responsibilities relating +to the compensation of our executives, including our chief executive officer, and other key employees. +• Administers our equity-based compensation plans, including the grants of +stock options, restricted stock awards and other equity awards under such plans. +• Reviews, approves and administers our cash-based incentive bonus plans, +including the establishment of performance criteria, targets and awards under our 2014 Executive Annual Incentive Compensation Plan. +• Makes recommendations to the board with respect to incentive +compensation. +• Where appropriate or required, makes recommendations to our stockholders +with respect to incentive compensation and equity-based plans. +• Conducts annual performance evaluation of the committee. +• Reviews +disclosure related to executive compensation in our proxy statement and prepares an annual compensation committee report. +• Reviews and considers the stockholders’ advisory vote on executive +compensation and the frequency of holding such advisory vote. +• Reviews and reassesses the adequacy of the compensation committee +charter. +Six (6) +Nominating and Corporate Governance +Ben T. Morris* +Donald L. Dillingham+ +David L. Houston +Scott E. Streller +• Assists the board of directors in developing criteria for, +identifying and evaluating individuals qualified to serve as members of our board of directors. +• Selects and recommends director candidates to the board of directors to be +submitted for election at the Annual Meeting and to fill any vacancies on the board of directors. +• Periodically reviews and makes recommendations regarding the composition and +size of the board of directors and each of its committees. +Three (3) +9 +Table of Contents +Committee +Members +Principal Functions +Number of +Meetings in +2015 +• Reviews and recommends to the board of directors +appropriate corporate governance policies and procedures for the Company. +• Conducts an annual assessment of the qualifications and performance of +the board of directors. +• Annually reviews and reports to the board of directors on the +performance of management. +• Reviews and reassesses the adequacy of the nominating committee +charter. +* +Committee Chairperson. ++ +Mr. Dillingham informed us that he did not intend to stand for re-election at the Annual Meeting. +Do +the committees have written charters? +Yes. The charters for our audit committee, compensation committee and nominating committee can be found on our +website at www.gulfportenergy.com under the “Corporate Governance” caption. You may also obtain copies of these charters, as well as our Code of Business Conduct and Ethics, which is described below, by writing to our Assistant +Corporate Secretary, Paul K. Heerwagen IV, at Gulfport Energy Corporation, 14313 N. May Avenue, Suite 100, Oklahoma City, Oklahoma 73134. +Corporate Governance Matters and Communications with the Board +Who are our independent directors? +Our board of +directors has determined that current board members Donald L. Dillingham, Craig Groeschel, David L. Houston, C. Doug Johnson, Ben T. Morris and Scott E. Streller meet the standards regarding independence set forth in the Nasdaq listing standards and +are free of any relationship which, in the opinion of our board of directors, would interfere with the exercise of independent judgment in carrying out their responsibilities as directors of the Company. +Our board of directors has determined that each member of the audit committee is independent for purposes of serving on such committee under the Nasdaq +listing standards and applicable federal law. In addition, our board of directors has determined that each current member of the audit committee is financially literate under the Nasdaq listing standards and that each of Mr. Houston, who serves +as the Chairman of the audit committee, Mr. Morris, Mr. Johnson and Mr. Dillingham qualifies as an “audit committee financial expert,” as such term is defined in Item 407(d) of Regulation S-K. +Our board of directors has also determined that each member of the compensation committee and the nominating committee meets the independence requirements +applicable to those committees under the Nasdaq rules. In addition, our board of directors determined that each member of our compensation committee is an “outside director” in accordance with Section 162(m) of the Internal Revenue +Code of 1986, as amended, or the Code, and a “non-employee director” in accordance with Rule 16b-3 under the Securities Exchange Act of 1934, as amended, or the Exchange Act. +10 +Table of Contents +Do our non-management directors meet separately without management? +Our non-management directors have the opportunity to meet in an executive session following each regularly scheduled meeting of the board of directors. During +2015, our non-management members of the board of directors met in an executive session on May 5, 2015, and our audit committee and our compensation committee met in executive session an aggregate of five times. +How can I communicate with the board of directors? +Individuals may communicate with our board of directors or individual directors by writing to our Assistant Corporate Secretary, Paul K. Heerwagen IV, at +Gulfport Energy Corporation, 14313 N. May Avenue, Suite 100, Oklahoma City, Oklahoma 73134. Our Assistant Corporate Secretary will review all such correspondence and forward to our board of directors a summary of all such correspondence and copies +of all correspondence that, in the opinion of our Assistant Corporate Secretary, relates to the functions of our board of directors or a committee thereof or that he otherwise determines requires their attention. Directors may review a log of all +such correspondence received by us and request copies. Concerns relating to accounting, internal control over financial reporting or auditing matters will be immediately brought to the attention of the chairman of the audit committee and handled in +accordance with the audit committee procedures established with respect to such matters. +Do directors attend the Annual Meeting? +Recognizing that director attendance at our Annual Meeting can provide our stockholders with an opportunity to communicate with directors about issues +affecting the Company, we actively encourage our directors to attend the Annual Meeting of Stockholders. All of our six directors then-serving attended the 2015 Annual Meeting of Stockholders in person. +Code of Business Conduct and Ethics +We have adopted a +Code of Business Conduct and Ethics designed to help directors and employees resolve ethical issues. Our Code of Business Conduct and Ethics applies to all directors and employees, including the Chief Executive Officer, the Chief Financial Officer, +Chief Accounting Officer and all senior financial officers. Our Code of Business Conduct and Ethics covers various topics including, but not limited to, conflicts of interest, fair dealing, discrimination and harassment, confidentiality, compliance +procedures and employee complaint procedures. Our Code of Business Conduct and Ethics is posted on our website under the “Investor Relations—Corporate Governance” caption. +Nominating Process for Directors, Director Qualifications and Review of Director Nominees +The nominating committee is currently comprised of four non-employee directors, all of whom are independent under Nasdaq listing standards. As provided by the +nominating committee’s charter, our nominating committee identifies, investigates and recommends to our board of directors candidates with the goal of creating a balance of knowledge, experience and diversity. Generally, the committee +identifies candidates through the personal, business and organizational contacts of the directors and management and through the use of third-party search firms. +Potential directors should possess the highest personal and professional ethics, integrity and values, and be committed to representing the interests of our +stockholders. In addition to reviewing a candidate’s background and accomplishments, candidates for director nominees are reviewed in the context of the current composition of our board of directors and the evolving needs of our business. It is +the policy of our board of directors that at all times at least a majority of its members meets the standards of independence promulgated by Nasdaq and the SEC and that all members reflect a range of talents, ages, skills and expertise, particularly +in the areas of +11 +Table of Contents +accounting and finance, management, leadership and oil and gas related industries sufficient to provide sound and prudent guidance with respect to our operations and the interests of our +stockholders. In addition to the foregoing factors, our nominating committee considers diversity in its evaluation of candidates for board membership. Although our board of directors does not have a formal diversity policy, our board believes that +diversity with respect to viewpoint, skills and experience should be an important factor in board composition. Our nominating committee ensures that diversity considerations are discussed in connection with each potential nominee, as well as on a +periodic basis in connection with its periodic review of the composition of the board and the size of the board as a whole. +We also require that the +members of our board of directors be able to dedicate the time and resources sufficient to ensure the diligent performance of their duties on our behalf, including attending meetings of the board of directors and applicable committee meetings. In +accordance with its charter, our nominating committee periodically reviews the criteria for the selection of directors to serve on our board and recommends any proposed changes to our board of directors for approval. +Our board of directors will consider stockholder nominations for director candidates upon written submission of such recommendation to our Assistant Corporate +Secretary along with, among other things, the nominee’s qualifications and certain biographical information regarding the nominee, such nominee’s written consent to serving as a director if elected and being named in the proxy or +information statement and certain information regarding the status of the stockholder submitting the recommendation, all in the manner required by our amended and restated bylaws and the applicable rules and regulations promulgated under the +Exchange Act. Following verification of the stockholder status of persons proposing candidates, recommendations will be aggregated and considered by our board of directors at a regularly scheduled or special meeting. If any materials are provided by +a stockholder in connection with the nomination of a director candidate, such materials will be forwarded to our board of directors. See “Submission of Future Stockholder Proposals” below for additional detail regarding submitting director +nominees. +Our board of directors may also review materials provided by professional search firms or other parties in connection with a nominee who is not +proposed by a stockholder. In evaluating such nominations, our board of directors will seek to achieve a balance of knowledge, experience and capability on the board. Our board of directors uses the same criteria for evaluating candidates nominated +by stockholders as it does for those proposed by current board members, professional search firms and other persons. After completing its evaluation, our board of directors approves the final slate of director nominees. On April 27, 2016, +Mr. Dillingham informed us that he did not intend to stand for re-election at the Annual Meeting. The slate of director candidates for the Annual Meeting consists of our six other directors. We are not aware of any disagreement between us and +Mr. Dillingham relating to our operations, policies or practices. +Our nominating committee approved the director nominees submitted for election at +this Annual Meeting. Each nominee is a current board member and brings a strong and unique background and set of skills to our board of directors, giving our board of directors as a whole competence and experience in a variety of areas, including +corporate governance and board service, executive management, oil and natural gas industry, accounting and finance and risk assessment and management. Specifically, in nominating the candidates submitted for election at this Annual Meeting, our +nominating committee considered such candidates’ past service on our board and the information discussed in each of the directors’ individual biographies set forth beginning on page 6 above. In particular, with regard to Messrs. Houston +and Streller, our nominating committee considered their respective business backgrounds and risk assessment skills. Mr. Moore’s public company experience while serving in various executive officer capacities at Gulfport and leadership +skills that led to his promotion as our Chief Executive Officer, as well as his strong oil and natural gas background and extensive experience in finance, accounting, financial reporting, internal controls and corporate governance, led our +nominating committee to conclude that he should serve as one of our directors. Mr. Morris’s prior public company experience, extensive financial background, with over 25 years of experience in various aspects of the investment banking +business, +12 +Table of Contents +and strong oil and natural gas background were considered by our nominating committee. With regard to Mr. Groeschel, our nominating committee considered his leadership and prior board +service at a non-profit organization, community involvement and communication skills. Mr. Johnson’s prior public company experience, as well as his strong oil and natural gas background and financial experience, led our nominating +committee to appoint Mr. Johnson as a director, effective September 10, 2015, and to recommend Mr. Johnson as a nominee to continue to serve as one of our directors. Each of the director nominees has consented to serve as a director +if elected. +Director Leadership Structure +The positions of Chairman of the Board and Chief Executive Officer are held by two different individuals, and the Chairman of the Board is a non-executive +position elected from among the directors by the board. Separating the positions of Chairman of the Board and Chief Executive Officer has allowed our Chief Executive Officer to focus on our day-to-day business and operations, while allowing our +Chairman of the Board to lead the board in its fundamental role of providing advice to and oversight of management. The Chairman of the Board has provided leadership to our board of directors and worked with the board of directors to define its +structure and activities in the fulfillment of its responsibilities. The Chairman of the Board has set the board agendas, with the input from other members of the board and our management, facilitated communications among and information flow to +directors, has the power to call special meetings of our board of directors and stockholders and presided at meetings of our board of directors and stockholders. The Chairman of the Board has also advised and counseled our Chief Executive Officer +and other officers. Our board of directors does not have a position of a lead director. +We believe that our directors bring a broad range of leadership +experience to the boardroom and regularly contribute to the thoughtful discussion involved in effectively overseeing the business and affairs of the Company. We believe that the atmosphere of our board is collegial, that all board members are well +engaged in their responsibilities, and that all board members express their views and consider the opinions expressed by other directors. Five out of six of our director nominees are independent under the Nasdaq listing standards and SEC rules. We +believe that all of our independent directors have demonstrated leadership in business enterprises and are familiar with board processes. Our independent directors are involved in the leadership structure of our board by serving on our audit, +nominating and compensation committees, each having an independent chairperson. Specifically, the chair of our audit committee oversees the accounting and financial reporting processes, as well as compliance with legal and regulatory requirements. +The chair of our compensation committee oversees our compensation policies and practices and their impact on risk and risk management. The chair of our nominating committee monitors matters such as the composition of the board and its committees, +board performance and best practices in corporate governance. As such, each committee chair provides independent leadership for purposes of many important functions delegated by our board of directors to such committee. +Board of Director’s Role in Risk Oversight +As an exploration and production company, we face a number of risks, including risks associated with the supply of and demand for oil and natural gas, +volatility of oil and natural gas prices, exploring for, developing, producing and delivering oil and natural gas, declining production, environmental and other government regulations and taxes, weather conditions, including hurricanes, that can +affect oil and natural gas operations over a wide area, adequacy of our insurance coverage, political instability or armed conflict in oil and natural gas producing regions and overall economic environment. Management is responsible for the +day-to-day management of risks we face as a company, while our board of directors, as a whole and through its committees, has responsibility for the oversight of risk management. In its risk oversight role, our board of directors has the +responsibility to satisfy itself that the risk management processes designed and implemented by management are adequate and functioning as designed. +13 +Table of Contents +Our board of directors believes that full and open communication between management and the board of directors is +essential for effective risk management and oversight. Our Chairman of the Board meets regularly with our Chief Executive Officer to discuss strategy and risks facing the Company. Our executive officers regularly attend the board meetings and are +available to address any questions or concerns raised by the board on risk management-related and any other matters. Other members of our management team periodically attend board meetings or are otherwise available to confer with the board to the +extent their expertise is required to address risk management matters. Periodically, our board of directors receives presentations from senior management on strategic matters involving our operations. During such meetings, our board of directors +also discusses strategies, key challenges, and risks and opportunities for the Company with senior management. +While our board of directors is ultimately +responsible for risk oversight at the Company, our three committees assist the board in fulfilling its oversight responsibilities in certain areas of risk. Our audit committee assists the board in fulfilling its oversight responsibilities with +respect to risk management in the areas of financial reporting, internal controls and compliance with legal and regulatory requirements, and discusses policies with respect to risk assessment and risk management. Our compensation committee assists +the board in fulfilling its oversight responsibilities with respect to the management of risks arising from our compensation policies and programs. Our nominating committee assists the board in fulfilling its oversight responsibilities with respect +to the management of risks associated with board organization, membership and structure, succession planning for our directors and executive officers and corporate governance. +Audit Committee Report +The audit committee is responsible for providing independent, objective oversight for the integrity of the Company’s financial reporting process and +internal control system. Other primary responsibilities of the audit committee include the review, oversight and appraisal of the qualifications, independence and audit performance of the Company’s independent registered public accounting firm +and providing an open venue for communication among the independent registered public accounting firm, financial and senior management, our internal auditors and the board of directors of the Company. A more detailed description of the +responsibilities of the audit committee is set forth in its written charter, which is posted on our website at www.gulfportenergy.com . The following report summarizes certain of the audit committee’s activities with respect to its +responsibilities during 2015. +Review with Management and Independent Registered Public Accounting Firm. The audit committee has reviewed and +discussed with management and Grant Thornton LLP, an independent registered public accounting firm, the audited consolidated financial statements of the Company for the year ended December 31, 2015. +Controls and Procedures. Management has established and maintains a system of disclosure controls and procedures designed to provide reasonable +assurance that information required to be disclosed by the Company in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and +includes controls and procedures designed to provide reasonable assurance that information required to be disclosed by us in those reports is accumulated and communicated to our management, including our Chief Executive Officer and Chief Accounting +Officer, as appropriate, to allow timely decisions regarding required disclosure. As of December 31, 2015, management conducted an evaluation of our disclosure controls and procedures. Based on this evaluation, our Chief Executive Officer and +Chief Accounting Officer concluded that our disclosure controls and procedures are effective to provide reasonable assurance that the information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, +processed, summarized and reported within the time periods specified in the SEC’s rules and forms. The audit committee discussed with management and Grant Thornton LLP the quality and adequacy of the Company’s disclosure controls and +procedures. +Management has also established and maintains a system of internal controls over financial reporting as defined in Rules 13a-15(f) and +15d-15(f) under the Exchange Act. These internal controls are designed to provide reasonable assurance that the reported financial information is presented fairly, that disclosures are adequate and +14 +Table of Contents +that the judgments inherent in the preparation of financial statements are reasonable. Management conducted an evaluation of the effectiveness of our internal control over financial reporting +based on the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on management’s evaluation under the framework in Internal Control—Integrated +Framework, management did not identify any material weaknesses in our internal control over financial reporting and concluded that our internal control over financial reporting was effective as of December 31, 2015, as discussed in more detail +in Management’s Report on Internal Control Over Financial Reporting, which was included in our Annual Report on Form 10-K for the year ended December 31, 2015, filed with the SEC on February 19, 2016. Our internal control over +financial reporting as of December 31, 2015 has been audited by Grant Thornton LLP, as stated in its attestation report, which was included in our Annual Report on Form 10-K for the year ended December 31, 2015, filed with the SEC on +February 19, 2016. The audit committee reviewed and discussed with management and Grant Thornton LLP the Company’s system of internal control over financial reporting in compliance with Section 404 of the Sarbanes-Oxley Act of 2002. +Discussions with Independent Auditing Firm. The audit committee has discussed with Grant Thornton LLP, independent auditors for the Company, the +matters required to be discussed by Rules on Auditing Standard No. 16, Communication with Audit Committees, as amended. The audit committee has received the written disclosures and the letter from Grant Thornton LLP required by applicable +requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the audit committee concerning independence and has discussed with that firm its independence from the Company. +Recommendation to the board of directors. Based on its review and discussions noted above, the audit committee recommended to the board of directors +that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015. +THE AUDIT +COMMITTEE +David L. Houston, Chairman +Donald L. +Dillingham +C. Doug Johnson +Ben T. Morris +Scott E. Streller +15 +Table of Contents +Executive Officers +The following table sets forth the name, age and positions of each of our executive officers as of the record date: +Name +Age +Position +Michael G. Moore +59 +Chief Executive Officer and President +Aaron Gaydosik +40 +Chief Financial Officer +J. Ross Kirtley +61 +Chief Operating Officer +Keri Crowell +41 +Chief Accounting Officer +Stuart A. Maier +62 +Vice President of Geosciences +Steve R. Baldwin +62 +Vice President of Reservoir Engineering +Biographical information for Mr. Moore is set forth in this proxy statement under the heading “Election of Directors +and Director Biographies.” +AARON GAYDOSIK . Mr. Gaydosik has served as Chief Financial Officer of the Company since August 11, 2014. +From July 2013 until joining the Company, Mr. Gaydosik served as Vice President of Finance at Kodiak Oil & Gas Corp., an independent energy company with operations focused primarily in the Williston Basin of North Dakota. From May 2007 +through July 2013, Mr. Gaydosik held various positions of increasing levels of responsibility at Credit Suisse Securities (USA), LLC, most recently as a Director in its Oil and Gas Group, focused on capital markets and advisory transactions +primarily for exploration and production companies. His prior investment banking experience also includes two years in the energy group at Wachovia Securities. Mr. Gaydosik holds a Bachelor of Business Administration in Finance from Southern +Methodist University and a Masters of Business Administration from the University of Chicago Booth School of Business. +J. ROSS KIRTLEY . +Mr. Kirtley has served as Chief Operating Officer of the Company since April 22, 2014. Previously, Mr. Kirtley served as Chief Operating Officer of our Ohio activities from October 2013 through April 22, 2014. From January 2007 +to January 2013, he served as Vice President of Services for Sandridge Energy, Inc. and President of Lariat Services, Inc., Hondo Heavy Haul, Inc. and Chapparal Supply, LLC, each a wholly-owned subsidiary of Sandridge Energy, Inc. Prior to joining +Sandridge Energy, Inc., Mr. Kirtley served as Business Manager for NOMAC Drilling, Inc., a wholly-owned subsidiary of Chesapeake Energy Corporation for one year. Mr. Kirtley graduated from Southwestern Oklahoma State University in 1977. +KERI CROWELL . Ms. Crowell has served as Chief Accounting Officer of the Company since September 10, 2015. Prior to her appointment, +Ms. Crowell served as a Vice President of the Company since April 2014 and Controller since March 2006. Ms. Crowell joined the Company in October 2005 as Assistant Controller. Prior to joining the Company, Ms. Crowell served in +various accounting and/or audit roles at Ernst and Young LLP, Arthur Andersen LLP and an Oklahoma City-based accounting firm. Ms. Crowell holds a Bachelor of Science in Business Administration and Accounting and Masters of Business +Administration degrees from Oklahoma State University, and also holds a Certified Public Accountant license from the State of Oklahoma. Ms. Crowell is a member of Oklahoma Society of Certified Public Accountants and Financial Executives +International, or FEI, and served as a board member and the treasurer of the FEI Oklahoma City chapter from 2012 until 2014. +STUART A. MAIER. +Mr. Maier has served as Vice President of Geosciences since August 2013. Prior to that position, he served as Geological/Geophysical Manager of the Company since May 1998. From 1993 to May 1998, Mr. Maier had served as Senior Geologist +with DLB Oil & Gas, Inc. From 1992 until joining DLB Oil & Gas, Inc., Mr. Maier was a consulting geologist/geophysicist and, from 1981 to 1991, Mr. Maier was a geologist/geophysicist with The Anschutz Corporation, an oil +and natural gas exploration and production company. From 1979 to 1981, Mr. Maier was a production geologist for Gulf Oil Exploration and Production Company. From 1977 to 1979, Mr. Maier was a well site geologist. Mr. Maier received a +Bachelor of Science Degree in Geology from the University of Missouri. Mr. Maier is a member of the American Association of Petroleum Geologists. +16 +Table of Contents +STEVE R. BALDWIN. Mr. Baldwin has served as Vice President of Reservoir Engineering since August +2013. Prior to that position, he served as Senior Reservoir Engineer of the Company since October 2006. From February 2001 through September 2006, he served as Senior Reservoir and Acquisition Engineer for Chaparral Energy Inc. From 1996 to December +2000, Mr. Baldwin served as Senior Operations Engineer for Saba Energy of Texas, Inc. Prior to that, Mr. Baldwin served as Operations Manager for Merrico Resources. Mr. Baldwin began his career with Mobil Oil Corporation after +receiving his Bachelor of Science Degree from the University of Oklahoma. Mr. Baldwin is a member of the Society of Petroleum Engineers. +17 +Table of Contents +Compensation Discussion and Analysis +Executive Summary +2015 Performance Highlights +Despite a prolonged low commodity price environment and unfavorable macro-economic conditions, we accomplished many objectives that we believe will help us +continue to navigate a tough commodity price market and focus on enhancing our operational performance and stockholder returns. +• Year-end 2015 total proved reserves grew to 1.7 Tcfe, as compared to +933.6 Bcfe at year-end 2014, an increase of 83% year-over-year. +• Production increased 128% to approximately 200,089 MMcfe for the year ended +December 31, 2015 from approximately 87,719 MMcfe for the year ended December 31, 2014. +• Reduced our per unit operating costs by 35% from $2.04 per Mcfe in 2014 to $1.32 per +Mcfe in 2015. +• Oil and natural gas revenues increased 6% to $709.0 million for the year ended +December 31, 2015 from $670.8 million for the year ended December 31, 2014. +• In June 2015, we acquired 6,198 gross and net acres located in Belmont and Jefferson +Counties, Ohio from American Energy-Utica, LLC, or AEU, for a purchase price of approximately $68.2 million. +• In June 2015, we acquired 38,965 gross (27,228 net) acres located in Monroe County, +Ohio, approximately 14.6 MMcf per day of average net production prior to the acquisition, 18 gross (11.3 net) drilled but uncompleted wells, an 11 mile gas gathering system and a four well pad location from AEU for a total purchase price of +approximately $319.0 million. +• In April 2015, we issued 10,925,000 shares of our common stock in an underwritten public +offering for net proceeds of approximately $501.8 million. +• In April 2015, we issued $350.0 million in aggregate principal amount of our 6.625% +senior unsecured notes due 2023, resulting in net proceeds to us of $343.6 million. +• In June 2015, we issued 11,500,000 shares of our common stock in an underwritten public +offering for net proceeds of approximately $479.7 million. +• The net proceeds from these offerings were used primarily to fund our 2015 Utica Shale +acreage acquisitions and capital development program. +18 +Table of Contents +Total Stockholder Return Performance +Our industry has experienced a decline in commodity prices since the fourth quarter of 2014, which has had an adverse effect on the entire energy industry. +However, we believe we have positioned the Company to better manage this challenging commodity price environment than most of our competitors in the oil and gas industry, including our 2015 Peer Group. This has been reflected in our maintaining a +strong relative total stockholder return, or TSR. +In a comparison of stockholder returns, assuming a hypothetical investment of $100 on December 31, +2010 (with reinvestment of all dividends) in our common stock, with that of the median returns of our 2014 and 2015 Peer Groups, as well as the SIG Oil Exploration and Production Index, which we refer to as the SIG Index, we achieved a 191% +three-year TSR to our investors from 2011 to 2013, when the average three-year TSR of our 2014 and 2015 Peer Groups was 13% and 37%, respectively. Five-year TSR yielded a positive return for us while the TSR for both Peer Groups for the same +five-year period yielded significantly negative returns. We believe this evidences our ability to have positioned the Company for success even through a tough pricing environment and to have served our investors’ interests better during this +period than our peers. See also “Executive Compensation Objectives and Features—Compensation Should be Benchmarked” for more information on our 2015 Peer Group. +12/31/2010 +12/31/2011 +12/31/2012 +12/31/2013 +12/31/2014 +12/31/2015 +Gulfport Energy Corporation +$ +100.00 +$ +135.84 +$ +176.29 +$ +291.19 +$ +192.53 +$ +113.33 +S&P 500 +$ +100.00 +$ +102.45 +$ +122.96 +$ +169.95 +$ +198.61 +$ +200.39 +2015 Peer Group +$ +100.00 +$ +104.34 +$ +96.82 +$ +137.70 +$ +99.98 +$ +69.53 +2014 Peer Group +$ +100.00 +$ +93.44 +$ +85.09 +$ +113.66 +$ +69.81 +$ +45.20 +SIG Index +$ +100.00 +$ +102.09 +$ +115.95 +$ +173.37 +$ +172.07 +$ +115.51 +19 +Table of Contents +Pay-for-Performance: Pay Aligned with Stockholder Interests +It is our philosophy to ensure that our executives’ interests are aligned with those of our stockholders. The compensation committee believes that this is +best achieved through a significant portion of compensation being delivered through incentive compensation and long-term stock-based awards. For 2015, the aggregate annual incentive compensation and long-term equity incentive awards accounted for +approximately 82% of total compensation for our Chief Executive Officer, Chief Operating Officer and Chief Financial Officer. +Although we experienced a +strong operational year, as mentioned above, our stockholders were negatively impacted by the macro-economic conditions and prolonged low commodity prices, which had a negative impact on our stock price. Despite our compensation programs being +structured to reward our management team through performance-based annual incentives and equity awards, we found that in 2015 the annual incentive formula resulted in a pay-for-performance disconnect as it related to the alignment of our +executives’ interests with the TSR realized by our stockholders. +For 2015, the awards granted under our 2014 Annual Incentive Plan, which we refer +to as the Annual Incentive Plan, were structured to measure the growth in our oil and natural gas production and our proved reserves. The growth in our oil and natural gas production from 2014 to 2015 was 128%, which exceeded the targeted level by +153%. Proved reserves grew 83% from 2014 as compared to 2015, which represented a 163% increase above the targeted performance level. Management’s hard work and operational focus resulted in maximum performance levels being exceeded and maximum +bonus payouts of 200% of target being achieved. This equated to 300% of base salary for the Chief Executive Officer, and 150% of base salary for each of the Chief Operating Officer and Chief Financial Officer. Although our stock price was not +impacted as materially as many of our industry peers, in recognition of the negative stock price impact felt by our stockholders, in March 2016, the compensation committee, with management’s support, exercised negative discretion to reduce the +calculated awards to targeted levels. This represented a bonus reduction of 50% for each executive. +20 +Table of Contents +2015 Executive Compensation Vote +We provide our stockholders with the opportunity to cast an annual advisory vote on executive compensation (a “say-on-pay proposal”) in accordance +with the Dodd-Frank Act. At our June 2014 and 2015 annual meetings of stockholders, our stockholders expressed support for the compensation of our named executive officers, with approximately 91% and 69%, respectively, of the votes cast for approval +of the “say-on-pay” advisory vote. The compensation committee carefully considers the level of voting support from our stockholders on the say-on-pay advisory vote. Although the compensation committee believes that the 2014 result of the +“say-on-pay” advisory vote affirmed our stockholders’ support of our executive compensation policies and practices, the compensation committee carefully examined our compensation practices in response to the 2015 stockholder vote. +Enhancements to 2015 Executive Compensation Programs +The compensation committee strongly believes in developing pay-for-performance executive compensation practices through increasing the percentage of pay which +is at-risk. As such, during the course of the regular compensation assessment process, and in an effort to better align executive compensation with stockholders’ interests and to further enhance our pay-for-performance philosophy, in March +2015, the compensation committee implemented enhancements to our executive compensation program to include a greater focus on achieving specific goals to earn performance-based compensation. Additional details of these enhancements are provided +below in this Compensation Discussion and Analysis; however, the following highlights certain actions taken by the compensation committee in March 2015: +• +No Guaranteed Bonuses . The compensation committee discontinued any guaranteed bonuses to our executives. +• +Metric Driven Performance Bonus Program. While target annual bonus levels for 2015 remained unchanged from 2014, new performance metrics were established for 2015 that were based upon the level of achievement of +growth in our oil and natural gas production and estimated proved reserves. +• +Long-term Incentive Targets . Established a consistent approach with respect to long-term equity awards whereby each executive is assigned an annual equity value based on a percentage of base salary. Prior to this +change, the Chief Executive Officer was provided a fixed number of shares each year and other executives were assigned a targeted percentage. +21 +Table of Contents +We believe the changes made to our annual bonus and long-term equity-based compensation for 2015 continue to +enhance our executive pay structure and further align our executives’ pay opportunities with the interests of our stockholders. Additionally, the following table summarizes the compensation best practices that we follow and the disfavored +compensation practices that we avoid. +Compensation Best Practices that We Follow +Pay for Performance —We tie pay to performance. A significant portion of our executive pay is based upon performance and not +guaranteed. We have established clear goals for corporate performance and in establishing annual base salary and eligibility to participate in incentive compensation programs. In establishing goals, we select performance metrics that drive both our +short-term and long-term corporate strategy in accordance with our strategic plan. +Mitigate Undue Risk —We mitigate undue risk associated with compensation, including using multiple performance targets and +robust board and management processes, to avoid unnecessary or excessive risk taking. +Minimal Perquisites —We provide only minimal perquisites to our named executive officers that are not generally available to +all other employees. +Regular Review of Share Utilization —We evaluate share utilization by reviewing overhang levels (dilutive impact of equity +compensation on our stockholders) and annual burn rates (the aggregate shares awarded as a percentage of total outstanding shares) when determining the number of shares to award. +Clawback Policy —The compensation committee is committed to instituting a clawback policy once the SEC has issued clear +guidance on this topic. +Deductibility of Executive Pay —We consider deductibility when structuring executive compensation. +Independent Compensation Consulting Firm —The compensation committee uses an independent compensation consulting firm, +Longnecker & Associates, to assist it with evaluation of its executive compensation programs and market practices, which provides no other services to the Company. +Annual Advisory “Say-on-Pay” Vote —We hold an annual advisory “say-on-pay” vote. +Disfavored Compensation Practices that We do not Follow +No liberal share counting under our stock incentive plan. +No re-pricing of underwater stock options. +No hedging of Gulfport securities, including publicly traded options, puts, calls and short sales by named executive officers or directors +permitted. +No holding of Gulfport securities in a margin account by named executive officers or directors is permitted, nor may they pledge any +Gulfport securities except in certain limited circumstances and subject to prior approval by our compliance officer or the compensation committee. +No guaranteed or discretionary cash bonuses are provided to our Chief Executive Officer, Chief Operating Officer and Chief Financial +Officer. +No Gross-ups —Employment agreements entered into do not contain provisions entitling employees to tax gross-up +payments. +No Pension or Supplemental Executive Retirement Plans —We do not offer pension or supplemental executive retirement plans to +our current executives (except for our broad-based 401(k) plan). +22 +Table of Contents +Oversight of Compensation Programs +The compensation committee is composed entirely of independent, non-employee members of the board. The compensation committee has overall responsibility for +setting the compensation for the Chief Executive Officer and for approving the compensation of the other executive officers, including the other named executive officers. The compensation committee also advises the board of directors on the adoption +of policies that govern our compensation programs and administers the Annual Incentive Plan and our long-term stock incentive plan. The compensation committee periodically meets with its independent executive compensation consultant, +Longnecker & Associates, or Longnecker, which assists the compensation committee with evaluation of its executive compensation programs and market practices. Longnecker provides no other services to the Company. The services Longnecker +provides include: +• +analyzing the appropriateness of the 2015 Peer Group (discussed below); +• +providing and analyzing competitive market compensation data; +• +analyzing the effectiveness of executive compensation programs and making recommendations to the compensation committee with respect to any proposed changes, as may be appropriate; and +• +evaluating how well our compensation programs adhere to the philosophies and principles of the Company. +On +matters pertaining to director compensation, the compensation committee also receives competitive market data and recommendations on any adjustments from Longnecker, as may be appropriate. +Executive Compensation Objectives and Features +Objectives +The guiding philosophy +and specific objectives of our executive compensation program are to: (1) align executive compensation design and outcomes with our business strategy; (2) encourage management to create sustained value for our stockholders; +(3) attract, retain, and engage our executives; and (4) support a performance-based culture for our named executive officers and all other employees. These primary objectives are evaluated at least annually by: (a) measuring and +managing executive compensation, with the goal of focusing a growing portion of the total compensation package on a balance of short-term and long-term incentives; (b) aligning the Annual Incentive Plan goals with stockholder value-added +measures; and (c) having an open and objective discussion with management and the compensation committee in setting goals for and measuring performance of the named executive officers tying it to the Company’s performance. +We believe that each of these objectives is important to our compensation program. Our compensation program is designed to reward our executives for meeting +or exceeding the short-term operational and financial goals and furthering our long-term strategy without subjecting us to excessive or unnecessary risk. Specifically, the components of our executives’ compensation, such as base salaries, +performance-based annual incentive bonuses and long-term equity incentive awards, are evaluated and determined on a periodic basis to ensure the amount and type of compensation received by each executive corresponds to the executive’s +performance and goals for the Company’s performance and are competitive with our peers. +Compensation Philosophy +The key elements of our compensation program are: +• +base salary; +• +annual performance-based cash incentive compensation; and +• +long-term equity-based compensation. +23 +Table of Contents +We believe that to attract and retain talented executives, we must offer compensation that is competitive with +the compensation of similarly-situated executives of comparable companies within the oil and natural gas industry. Our compensation program includes the issuance of restricted stock awards to incentivize our executive officers. It is anticipated +that in the future the compensation committee will continue to structure our long-term incentive compensation in the form of restricted stock awards (including restricted stock units), consistent with peer group companies’ practices. +In the first quarter of each year, the compensation committee establishes the performance criteria and targets for certain of our executive officers and other +covered employees under our performance-based Annual Incentive Plan. The compensation committee believes that performance-based cash incentive compensation, with meaningful performance targets, further aligns our executives’ interests with +those of our stockholders, motivates our executives to contribute to the Company’s growth and profitability by encouraging the successful implementation of the annual business plan and objectives and links a larger portion of our +executives’ compensation to the performance of the Company. In response to stockholder input, the compensation committee has determined that objective performance-based bonus opportunities should be used to compensate our executives in place of +discretionary or minimum bonus requirements. +The compensation committee also evaluates the individual performance of each executive officer. Individual +performance and level of responsibility are considered in determining an executive’s annual salary, and are important factors in deciding whether to grant long-term equity awards under the Stock Incentive Plan or cash-incentive award +opportunity under the performance-based Annual Incentive Plan. +24 +Table of Contents +Compensation Should be Benchmarked +We operate in an environment where the market for executive talent is highly competitive. The compensation committee engages its independent compensation +consultant to conduct annual assessments of our peer group to ensure each peer remains appropriate year-over-year. To accomplish this and position the compensation committee to make informed decisions, our compensation consultants assessed over 50 +potential peers based on multiple metrics, including revenue, assets, market cap, enterprise value and operational similarity. The compensation consultant narrows down potential peers based on a size similarity process whereby the best choice of +peers in the exploration and production industry are generally within a range of 0.5 to 3.0 times the Company for the various metrics. Final peer group selections were made from within this group with further consideration given to operational +similarity, market capitalization and companies with which we compete with for talent. The compensation committee approves any revisions to the peer group on an annual basis. The following 15 companies comprised the peer group used in 2015, or the +2015 Peer Group, in connection with executive compensation decisions: +Company Name +Ticker +Market Cap +($MM) +Revenue +($MM) +Assets +($MM) +Enterprise +Value +($MM) +Newfield Exploration Co. +NFX +5,263 +1,557 +4,768 +7,754 +Range Resources Corp +RRC +4,088 +1,598 +6,900 +7,675 +Energen Corp +EGN +3,230 +879 +4,614 +3,979 +Gulfport Energy Corporation +GPOR +2,660 +709 +3,335 +3,396 +QEP Resources Inc. +QEP +2,368 +2,019 +8,426 +4,091 +PDC Energy Inc. +PDCE +2,109 +595 +2,371 +2,768 +Whiting Petroleum Corp +WLL +1,927 +2,051 +11,389 +7,152 +Carrizo Oil & Gas Inc. +CRZO +1,725 +429 +2,027 +3,136 +Laredo Petroleum Holdings +LPI +1,688 +607 +1,813 +3,027 +WPX Energy Inc. +WPX +1,580 +1,888 +8,350 +5,220 +SM Energy Co. +SM +1,336 +1,557 +5,622 +3,870 +Oasis Petroleum Inc. +OAS +1,025 +790 +5,649 +3,393 +Denbury Resources Inc. +DNR +694 +1,258 +5,920 +4,039 +Ultra Petroleum Corp +UPL +383 +839 +971 +3,766 +SandRidge Energy Inc. +SDOC +115 +769 +2,991 +3,925 +Rosetta Resources Inc.(1) +ROSE +— +— +— +— +GPOR Percentile Rank +79 +% +21 +% +36 +% +29 +% +(1) +Effective July 20, 2015, Rosetta Resources, Inc. was acquired by Noble Energy Inc. +(2) +All data is as of December 31, 2015. +The compensation committee used this data from the 2015 Peer Group, +in connection with published industry survey data, to benchmark our executives’ base salary, annual bonus opportunities, total cash compensation, long-term incentive compensation and total direct compensation. Additionally, the compensation +committee used the data to evaluate if, for each executive position, the compensation committee’s compensation actions were appropriate, reasonable and consistent with our compensation philosophy, practices and policies, considering the market +in which we compete for executive talent. +Executive Compensation Components +The compensation of the named executive officers consists of the following components: +• +base salary; +• +annual performance bonus; +• +long-term equity-based compensation; +25 +Table of Contents +• +severance and change of control benefits; and +• +perquisites and other benefits. +We believe that each of these components is necessary to achieve our +objective of retaining highly qualified executives and motivating them to maximize stockholder returns. +Base Salary +Base salary is designed to provide basic economic security for our executives and be competitive with salary levels for comparable executive positions at +companies in our 2015 Peer Group. The compensation committee reviews comparable salary information provided by Longnecker as one factor to be considered in determining the base pay for the named executive officers and aims for base salaries for our +executives to be between the 25 th and 50th percentiles of our peer groups. The analysis conducted by Longnecker determined that each executive’s base salary was below the 25 th percentile in 2015. +Other factors the compensation committee considers in determining base pay for +each of the named executive officers are such executive officer’s responsibilities, experience, leadership, potential future contribution and demonstrated individual performance. The relative importance of these factors varies among our +executives depending on their positions and the particular operations and functions for which they are responsible. The employment agreements of the named executive officers provide that base salary will be reviewed and may be increased (but not +decreased) at any time and from time to time. In 2015, the compensation committee entered into an amended and restated employment agreement with the Chief Executive Officer which contains a multi-year base salary adjustment plan, with the goal of +achieving alignment between the 25th and 50th percentiles of the peer group within three years. The compensation committee considers all of these factors and ultimately makes a decision regarding any upward adjustments to the base salary of the +named executive officers in its discretion. +The compensation committee reviewed the base salary of the following named executive officers in February +2015 and awarded increases effective January 1, 2015. Base salaries were increased in recognition of relative alignment to the peer group, and in keeping with our desire to remain competitive in the marketplace for executives. See also +“Executive Compensation—Employment Agreements.” +Named Executive Officer +2015 +Salary +2014 +Salary +Michael Moore +$ +460,000 +$ +400,000 +Ross Kirtley +$ +338,000 +$ +325,000 +Aaron Gaydosik +$ +309,000 +$ +300,000 +Additionally, the Company promoted Ms. Keri Crowell to serve as our Chief Accounting Officer, effective +September 10, 2015. In connection with her promotion, the compensation committee set Ms. Crowell’s annual base salary at $275,000. Ms. Crowell is also eligible to participate in the Company’s equity, cash incentive and other +benefit plans available to other similarly situated officers of the Company. +Performance-Based Annual Incentive Bonus +The compensation committee has established a performance-based annual incentive program aimed at tying pay to performance for our executives. In connection +with the program, the compensation committee has established targeted annual incentive award levels based on market information supplied by the compensation consultant, as well as a performance metric system. +26 +Table of Contents +In setting competitive compensation levels, the compensation committee obtained information from the compensation +consultant, and, using this information, determined appropriate annual incentive award targets for each named executive officer participating in the Annual Incentive Plan as follows: +Named Executive Officer +Annual Incentive Target as +% of Base Salary +Michael Moore +150 +% +Ross Kirtley +75 +% +Aaron Gaydosik +75 +% +For 2015, each such executive’s annual bonus opportunity ranged from zero to 200% of target depending on the actual level +of performance versus the performance metric targets. +The compensation committee determined certain operational metrics based on our performance in +setting the annual bonus targets for our named executive officers participating in the Annual Incentive Plan. The performance levels for each metric were approved by the compensation committee based on our 2015 corporate plan and the compensation +committee’s discussions with its independent compensation consultant. The table below sets forth the operational metrics, targets and actual performance. +Performance Metric +Threshold +Target +Maximum +Actual +Actual as % +of Target +Growth of Oil and Natural Gas Production +60 +% +75 +% +90 +% +128 +% +153 +% +Growth of Estimated Proved Reserves +15 +% +20 +% +25 +% +83 +% +163 +% +In March 2016, the compensation committee certified to the attainment of the pre-established performance goals and targets for +2015, which consisted of (i) growth of our oil and natural gas production, as a percentage of our production achieved in the prior year, and (ii) growth of estimated proved reserves, as a percentage of estimated proved reserves reported in +the prior year, as set forth above, with each such measure weighted at 50%. The compensation committee certified that these targets were achieved at the maximum level for both growth in oil and natural gas production and growth of estimated proved +reserves. While acknowledging that the leadership team executed beyond the maximum performance levels previously established, the compensation committee, with management’s support, exercised negative discretion and approved the following annual +incentive bonuses at only 50% of the cash payments that were otherwise due to these named executive officers. The compensation committee did so after taking into consideration the decrease in our stock price during 2015, which was negatively +impacted by the general decrease in commodity prices: +Named Executive Officer +Payout +Earned +Actual +Payout +% of Earned +Actually Paid +Michael Moore +$ +1,380,000 +$ +690,000 +50 +% +Ross Kirtley +$ +507,000 +$ +253,500 +50 +% +Aaron Gaydosik +$ +463,500 +$ +231,750 +50 +% +Mr. Maier and Ms. Crowell did not participate in the Annual Incentive Plan during 2015 and received bonuses of $200,000 and +$150,000, respectively, for 2015. +Long-Term Equity Incentive Awards +The objectives of our long-term incentive plan are to: (a) attract and retain the services of key employees, qualified independent directors, and +qualified consultants and independent contractors; (b) create significant alignment between our named executive officers and other key employees, on the one hand, and our stockholders, on the other hand; and (c) encourage a sense of +proprietorship in and stimulate the active interest of those persons in our development and financial success. We intend to achieve these objectives by making awards designed to provide our named executive officers and other participants in the plan +with a proprietary interest in our growth and performance. +27 +Table of Contents +Determining Award Structure +The compensation committee chose to maintain the use of time-vested restricted stock awards for the 2015 grants because the majority of our competitors have +shifted to restricted stock types of awards and away from stock options or stock appreciation right awards. In addition, in the compensation committee’s opinion, based in part on the advice of its compensation consultant, restricted stock +awards provide a more effective retention incentive than stock options or stock appreciation rights. This is important for us because each of our named executive officers is either relatively new to his current position and/or new to the Company, +necessitating a focus on increasing ownership in Gulfport and creating alignment with our stockholders. +The compensation committee ultimately makes a +decision regarding the size of awards granted to the named executive officers at its discretion. Generally, the restricted stock awards granted to our named executive officers vest in three substantially equal annual installments over the three-year +period commencing on the first anniversary of grant, except for the awards granted to our Chief Executive Officer, which vest in three substantially equal annual installments beginning on the date of grant. The compensation committee may, however, +determine to change the terms, types or mix of equity-based awards in the future. +Setting the Target Award Opportunity +The compensation committee reviewed market values with respect to the annual long-term incentive awards granted to similarly situated executives at the peer +group companies to assist the compensation committee in making these determinations with respect to our Chief Executive Officer, Chief Operating Officer and Chief Financial Officer for 2015. With advice from the compensation consultant, the +compensation committee concluded that an annual grant of 40,000 shares of our restricted stock, as then contemplated by the terms of our Chief Executive Officer’s employment agreement before it was amended and restated in March 2015, was +subject to market fluctuations and may not provide a competitive value of long-term incentive to him from one year to the next. Instead, each year, the compensation committee now establishes a target long-term incentive opportunity, as a percentage +of base salary, for each named executive officer, taking into consideration market data obtained from Longnecker as previously described. The compensation committee then makes annual grants of long-term equity awards, which in 2015 consisted solely +of restricted stock awards, as it deems appropriate. The equity awards are made after the compensation committee has had an opportunity to evaluate the Company’s operating results for the prior year and at the same time that the Company is +making its major compensation decisions for the current fiscal year. +Prior to granting an award, the compensation committee has the discretion to +increase or decrease the dollar value of a named executive officer’s long-term incentive package from the pre-determined target based on an assessment of the officer’s individual contribution to our financial and operational results, as +well as external market factors. For our named executive officers other than the Chief Executive Officer, the recommendations of the Chief Executive Officer are considered. The compensation committee considers both the target dollar value of the +long-term incentive package and the package’s potential dilutive effect on our outstanding shares of common stock in determining the aggregate equivalent dollar value available for individual long-term incentive awards, and the aggregate amount +of total awards available for our executives. The compensation committee evaluates stockholder dilution based on equity compensation “burn rates,” which refers to the annual rate at which shares are awarded under our stockholder approved +stock incentive compensation plans compared to the total amount of the Company’s outstanding common stock. +For reasons described above under +“—Executive Compensation Program Objectives and Features—Compensation Should be Benchmarked,” we generally provide, and in 2015 did provide, long-term incentive awards at target levels that approximate an average of the 50th +percentile of our 2015 Peer Group. The compensation committee made decisions regarding the target long-term incentive opportunity for each named executive officer with respect to 2016 in March 2016. +28 +Table of Contents +Restricted Stock Awards +In 2015, the compensation committee granted restricted stock unit awards that vest ratably in multi-year tranches to deliver a meaningful long-term incentive +by benefiting from the vesting of the awards and the increase in the value of our stock price that balances risk and potential reward. These awards also serve as an effective incentive for our superior executive performers to remain with the Company +and continue such performance. +The number of restricted stock awards granted were determined by dividing the executive’s long-term incentive +opportunity, as displayed below, by our common stock price on the date of grant. +Named Executive Officer +LTI Target as % of Base +Michael Moore +500 +% +Ross Kirtley +300 +% +Aaron Gaydosik +300 +% +Restricted stock awards are only earned if the individual continues to be employed by us on each applicable vesting date of +the award. +The following table provides the total number of restricted stock awards provided to each executive in February 2015, based on the 2015 target +award opportunity, as part of the annual compensation review process. +Named Executive Officer +2015 LTI Award +Michael Moore +52,225 +Ross Kirtley +23,025 +Aaron Gaydosik +21,049 +Further, in February 2015, the compensation committee granted 3,927 shares of our restricted stock to Mr. Gaydosik to +which Mr. Gaydosik was entitled upon commencement of his employment with us on August 11, 2014, but which had not previously been granted. Of these shares of restricted stock, 1,964 vested on August 1, 2015 and the remaining 1,963 +will vest on August 1, 2016. +In August 2015, the compensation committee determined to award Mr. Maier, our Vice President of Geosciences, a +grant of 10,000 shares of restricted stock and Ms. Crowell, our Chief Accounting Officer, a grant of 16,000 shares of restricted stock, in each case under our Stock Incentive Plan, effective as of August 7, 2015 and vesting in three +substantially equal installments beginning on August 15, 2016. +Compensation Decisions for 2016 +The compensation committee met multiple times in February and March of 2016 to discuss potential adjustments to the executive compensation plan for 2016 and +approved adjustments after taking into account a variety of factors discussed in more detail below. +29 +Table of Contents +Peer Group Adjustments +The depressed state of the energy industry has had a profoundly negative effect on many of our peers. In accordance with our normal process, the compensation +committee asked the compensation consultant to assess the 2015 peer group and make recommendations for any appropriate adjustments for 2016. Upon assessment of the 2015 peer group, the compensation committee determined that as a result of +acquisitions, significant financial changes and geographical considerations, the peer group needed adjustments for 2016. The following table provides the approved 2016 peer group which, based on consultation with the compensation consultant, the +compensation committee believes is representative of Gulfport’s peers. +Company Name +Ticker +Market Cap +($MM) +Revenue +($MM) +Assets +($MM) +Enterprise +Value +($MM) +Continental Resources Inc. +CLR +11,228 +3,485 +14,378 +18,334 +Cimarex Energy Co. +XEC +9,269 +2,314 +8,399 +9,976 +Diamondback Energy Inc. +FANG +5,481 +359 +2,047 +6,190 +Range Resources Corp +RRC +4,088 +1,598 +6,900 +7,675 +Energen Corp +EGN +3,230 +879 +4,614 +3,979 +Gulfport Energy Corporation +GPOR +2,660 +709 +3,335 +3,396 +PDC Energy Inc. +PDCE +2,109 +595 +2,371 +2,768 +Memorial Resource Development Corp +MRD +2,092 +765 +3,044 +5,748 +Rice Energy Inc. +RICE +1,878 +271 +2,502 +3,832 +Matador Resources Co. +MTDR +1,768 +305 +1,133 +2,144 +Carrizo Oil & Gas Inc. +CRZO +1,725 +429 +2,027 +3,136 +Laredo Petroleum Holdings +LPI +1,688 +607 +1,813 +3,027 +SM Energy Co. +SM +1,336 +1,557 +5,622 +3,870 +Oasis Petroleum Inc. +OAS +1,025 +790 +5,649 +3,393 +Vanguard Natural Resources, LLC +VNR +183 +432 +3,010 +2,811 +Halcon Resources Corp +HK +112 +1,197 +5,729 +3,162 +GPOR Percentile Rank +67 +% +20 +% +40 +% +60 +% +Base Salary +The +compensation committee reviewed the base salaries of the named executive officers in March 2016 and awarded increases effective January 1, 2016. Based on market information and guidance provided by the compensation consultant with respect to +our Chief Executive Officer, and our Chief Executive Officer’s recommendation with respect to our other named executive officers, the compensation committee determined to increase 2016 annual base salaries by 5% for each named executive +indicated below. Even with these increases, these executive officers base salaries fall below the 25 th percentile of the base salary for similar positions at the peer companies. The compensation +committee left salaries of our other named executive officers at 2015 levels. +Named Executive Officer +2016 +Salary +2015 +Salary +Michael Moore +$ +483,000 +$ +460,000 +Ross Kirtley +$ +354,900 +$ +338,000 +Aaron Gaydosik +$ +324,450 +$ +309,000 +2016 Annual Incentive Bonus Targets +In 2016, the compensation committee continued to incentivize the performance of our Chief Executive Officer, Chief Operating Officer and Chief Financial +Officer through their participation in the Annual Incentive Plan, establishing performance factors and performance targets for 2016. In recognition of the changing market and the +30 +Table of Contents +need to incentivize executives in other manners than solely production and reserves, on March 31, 2016, the compensation committee established performance factors and performance targets for +2016 under the Annual Incentive Plan based on operational and financial targets, stock performance, capital efficiency and strategic initiatives. The compensation committee specified the threshold, target and maximum bonus levels as a stated +percentage of the target bonus and base salary amounts for our Chief Executive Officer, Chief Financial Officer and Chief Operating Officer and specified the weight attributable to each performance factor for purposes of reaching the performance +targets for 2016. Mr. Maier and Ms. Crowell are not participating in the Annual Incentive Plan in 2016. +2016 Restricted Stock Unit Awards Under +Employment Agreements +On March 31, 2016, the compensation committee approved restricted stock unit awards to each of our Chief Executive Officer, +Chief Financial Officer and Chief Operating Officer, with a value of 500%, 300% and 300%, respectively, of such named executive officer’s annual base salary consistent with the terms of their employment agreements. Each such award will vest in +three substantially equal annual installments beginning on March 31, 2017, except in the case of our Chief Executive Officer’s award, which shall vest in three substantially equal installments beginning on March 31, 2016. +Additional Restricted Stock Unit Awards +In light of our +stockholders’ ongoing focus on tying elements of our executives’ compensation to the Company’s performance, the compensation committee considered the goal of recognizing our key executives’ contribution to our outstanding +operational performance in 2015, specifically with respect to growing our production and proved reserves, and incentivize such executives’ efforts with respect to our operational and financial performance in future periods. Also, the +compensation committee considered the competitive market for talented executives, both from competitors as well as from private equity firms seeking to recruit executives with good track records in the exploration and production industry. +Accordingly, the compensation committee solicited advice from the compensation consultant as to both the precedent for, and potential levels of, an additional equity award. Upon receiving feedback that such awards are being used in the exploration +and production industry, the compensation committee used information obtained from the compensation consultant to determine award levels. In doing so, the compensation committee granted equity awards in the amounts of 40,367 restricted stock units +to Mr. Moore, 13,558 restricted stock units to Mr. Gaydosik and 14,830 restricted stock units to Mr. Kirtley, in each case vesting in four approximately equal annual installments beginning on March 10, 2017, to (a) recognize +their contributions to the Company’s performance in 2015, enhance retention of these executives, incentivize their future performance and further align their interests with those of our stockholders, and (b) make a larger component of such +executives’ compensation tied to performance of our stock over a longer period of time. +Termination and Change of +Control Benefits +Our employment agreement with Mr. Moore provides for specified payments and benefits upon certain termination events, including +termination following a change of control. This employment agreement contains termination and change of control provisions that we believe are comparable to similar provisions employed by a majority of the companies in our industry peer group. The +compensation committee believes that this agreement will encourage Mr. Moore to remain in our employment in the event of a change of control of the Company and during circumstances which indicate that a change of control might occur. The +compensation committee believes termination and change of control benefits are important in maintaining strong leadership and in encouraging retention in these situations and encourages our executives to act in the best interests of stockholders +without distraction based on uncertainty regarding their employment status. In March 2015, we entered into an employment agreement with each of Mr. Gaydosik and Mr. Kirtley containing, among other things, certain change in control +provisions. For more information regarding such change in control provisions, see “Employment Agreements—Employment Agreement with Our Chief Financial Officer and Chief Operating Officer” below. +31 +Table of Contents +We do not have an employment agreement with Ms. Crowell or Mr. Maier, but under the terms of the +restricted stock awards made to them, the shares of restricted common stock are not subject to automatic acceleration in connection with a change of control, but may be accelerated in the discretion of the compensation committee upon a change of +control. The value of the unvested restricted stock held by Ms. Crowell and Mr. Maier was $687,960 and $245,700, respectively, as of December 31, 2015. See “Employment Agreements—Potential Payments Upon Termination, +Resignation or Change of Control.” +Perquisites and Other Personal Benefits +We provide certain of our named executive officers with a limited number of perquisites or other personal benefits, primarily consisting of life insurance +premiums and, in two instances, use of a Company owned vehicle, that we believe help provide a competitive package of compensation and benefits. The value of these benefits is disclosed in the Summary Compensation Table below. +Broad-Based Employee Benefits +401(k) Plan . We have a retirement savings plan in which our named executive officers currently participate. The retirement plan is a tax qualified +401(k) plan that covers all eligible employees including the named executive officers. Under the plan, we make a safe harbor contribution equal to 3% of each eligible employee’s gross annual compensation for the prior calendar year. We also +have the ability to make an additional, discretionary contribution that is allocated based on each eligible employee’s gross annual compensation for the prior calendar year. Both contributions are or may be made regardless of employee’s +deferrals into the plan. In 2015, we made safe harbor and discretionary contributions totaling 3% of eligible compensation for eligible employees, subject to certain limitations provided by our 401(k) plan and Internal Revenue Service regulations. +All contributions made by us on behalf of an employee are 100% vested when contributed. For more details regarding our 401(k) plan, see “Benefit Plans—401(k) Plan” below. +Other Benefits . Our named executive officers are eligible to participate in all of our other employee benefit plans which include medical, dental, +group life, disability and accidental death and dismemberment insurance, in each case on the same basis as all other employees. +Effect of Our Compensation Policies and Practices on Risk and Risk Management +The compensation committee reviews the risks and rewards associated +with our compensation policies and programs. We believe that such policies and programs encourage and reward prudent business judgment and avoid encouraging excessive risk-taking over the long term. With respect to specific elements of compensation: +• +We believe that our programs balance short- and long-term incentives for our executive officers providing for an appropriate mix of fixed, performance-based, discretionary and equity compensation that encourages +long-term performance. +• +We believe that annual base salaries for our named executive officers do not encourage excessive risk-taking as they are fixed amounts that are subject to discretionary increases by our compensation committee that may +be based on, among other factors, annual performance evaluations. We also believe that such annual base salaries are set at reasonable levels, as compared to the base salaries of similarly-situated individuals at our peer group companies, and +therefore do not negate the effect of other compensation elements that encourage long-term service, growth and performance that may increase stockholder value. +• +The compensation committee believes that performance-based cash incentive compensation granted pursuant to the Annual Incentive Plan, with meaningful performance targets, such as those under our Annual Incentive Plan, +will further align our executives’ interests with those of our stockholders, will motivate our executives to contribute to the Company’s growth and profitability and will link a larger portion of our executives’ compensation to the +performance of the Company. The compensation committee has eliminated the use of minimum discretionary bonus arrangements in all of the Company’s employment agreements in recognition of the Company’s shift to the use of performance-based +bonuses. +32 +Table of Contents +• +Restricted common stock awards and stock options granted to our named executive officers are subject to time vesting provisions. We award restricted common stock awards to ensure that our executives have a continuing +stake in the long-term success of the Company as the value of the award will depend on the stock price at and after the time of vesting. We have in the past awarded stock options to align compensation with company performance, as the options become +valuable to the executive only if the stock price increases from the date of grant. Also, stock options require a long-term commitment by executives to realize the appreciation potential of the options. However, we have not awarded stock options to +our executive officers since 2005. We believe that our long-term equity awards do not encourage excessive risk taking that may be associated with equity awards that vest based strictly on achieving certain targets. We also believe that our long-term +equity awards provide incentive to our named executive officers to reasonably encourage growth and financial performance that may increase stockholder value, as well as long-term service, and serve to align the interests of our executives with those +of our stockholders. +Based on the foregoing, the compensation committee believes that the Company does not utilize compensation policies +and programs creating risks that are reasonably likely to have a material adverse impact on the Company. +Deductibility of +Executive Compensation +Section 162(m) of the Code limits the deductibility for federal income tax purposes of executive compensation paid to the +Chief Executive Officer and the three other most highly compensated officers (other than the Chief Executive Officer and the Chief Financial Officer) of a public company to $1,000,000 per year, but contains an exception for certain performance-based +compensation. Our policy is to periodically review and consider whether particular compensation and incentive payments to our executives will be deductible for federal income tax purposes. We intend, to the extent feasible and when we believe it is +in the best interests of the Company and its stockholders, to attempt to qualify executive compensation as tax deductible where it does not adversely affect the development and execution of our compensation plans. However, the compensation committee +may from time to time approve non-deductible payments in order to maintain flexibility in structuring appropriate compensation programs in the interests of the Company and our stockholders. For example, the compensation committee has in the past +granted stock options with time based vesting provisions that would be considered performance based compensation, but in recent years has granted restricted common stock that is subject to time based vesting and does not constitute performance based +compensation that will satisfy the exception to the deduction limit. +Clawback Provisions +Other than legal requirements under the Sarbanes-Oxley Act of 2002, or the SOX Act, we have not adopted express “clawback” provisions with respect to +compensation elements with would allow us to recoup paid compensation from designated officers in the event of a financial restatement. Under the SOX Act, our Chief Executive Officer and Chief Financial Officer may be subject to clawbacks in the +event of a restatement. The compensation committee has deferred taking action on clawbacks until such time as the proposed regulations published by the SEC in July 2015 pursuant to Section 954 of the Dodd-Frank Wall Street Report and Consumer +Protection Act are finalized to ensure that our policy will comply with the final regulations. Under the 2012 Plan, unless an award certificate provides otherwise, the plan administrator may cancel, rescind, suspend, withhold or otherwise restrict +any unexpired, unpaid or deferred award of the participant at any time in the event of certain activities, including violations of material company policies, termination of employment for cause or conduct that is detrimental to our business or +reputation. Further, under the terms of our employment agreement with each of our Chief Operating Officer and Chief Financial Officer, in the event such named executive officer’s employment with us is terminated for “cause,” he will +forfeit all rights and interests in and to all outstanding equity awards, whether vested or unvested. +33 +Table of Contents +Anti-Hedging and Pledging Policies +We have a policy prohibiting directors, executive officers and certain other designated employees from speculative trading in our securities, including hedging +transactions, short selling, and trading in put options, call options, swaps or collars, or holding our securities in margin accounts. We also have a policy prohibiting directors, executive officers and certain other designated employees from +pledging Gulfport securities, except in certain limited circumstances and subject to prior approval by our compliance officer or the compensation committee. To our knowledge, all such individuals are in compliance with these policies. Our policy is +to also strongly encourage all other employees from engaging in hedging and pledging activities in our stock and any such transactions require notice and pre-approval, and will only be considered with a valid justification. +Accounting Implications of Executive Compensation Policy +We are required to recognize compensation expense of all stock-based awards pursuant to the provisions of FASB ASC Topic 718, “Compensation—Stock +Compensation.” Non-vested shares are deemed issued and outstanding from a legal perspective; however, under U.S. generally accepted accounting principles, or GAAP, only vested shares are included in basic shares outstanding. Also, under GAAP, +non-vested shares are included in diluted shares outstanding when the effect is dilutive. +The Role of Stockholders’ +Say-on-Pay +We provide our stockholders with the opportunity to cast an annual advisory vote on executive compensation (a “say-on-pay +proposal”) in accordance with the Dodd-Frank Act. At our June 2014 and 2015 annual meetings of stockholders, our stockholders expressed support for the compensation of our named executive officers, with approximately 91% and 69%, respectively, +of the votes cast for approval of the “say-on-pay” advisory vote. The compensation committee carefully considers the level of voting support from our stockholders on the say-on-pay advisory vote. Although the compensation committee +believes that 2014 results of the “say-on-pay” advisory votes affirmed our stockholders’ support of our executive compensation policies and practices, the compensation committee carefully examined our compensation practices in +response to the 2015 stockholder vote. +The compensation committee evaluated the 2015 packages for our Chief Executive Officer and our other named +executive officers and determined that, with respect to our Chief Executive Officer, Chief Operating Officer and Chief Financial Officer, approximately 82% of 2015 compensation was paid through equity awards and annual performance bonuses, providing +direct alignment with returns to stockholders and incentive to drive long-term business success. Although the performance targets for 2015 were achieved at the maximum levels for both growth in oil and natural gas production and growth of estimated +proved reserves and would have resulted in cash payouts to our named executive officers participating in the Annual Incentive Plan equal to 200% of the previously approved target levels, the compensation committee determined to exercise its negative +discretion under the Annual Incentive Plan to reduce by 50% the cash payments that would otherwise be due to each of such named executive officers. +In +setting compensation packages for 2016, the compensation committee emphasized long-term equity awards and annual performance bonuses under the previously implemented Annual Incentive Plan to more closely align our senior executives’ interests +with those of our stockholders and to link a larger portion of such executives’ compensation to the performance of our stock and our operational performance. The compensation committee also believes that it set meaningful performance targets +for 2016 under the Annual Incentive Plan. Further, in 2014, the compensation committee eliminated, and since that time has not used and does not intend to use, minimum discretionary cash bonus arrangements for our Chief Executive Officer, Chief +Financial Officer and Chief Operating Officer in recognition of the Company’s focus on the use of performance-based bonuses. The compensation committee believes that our shift to linking a larger portion of such executive officers’ +compensation to long-term equity incentive awards and our shift away from discretionary cash bonuses to performance-based bonus arrangements for such executive officers appropriately align with the long-term +34 +Table of Contents +interests of the Company and its stockholders and are consistent with market practices. The compensation committee also believes that our current compensation policies and practices enhance +retention of executive talent through multi-year vesting of stock awards and do no encourage unnecessary and excessive risk taking. The compensation committee further believes that our other compensation policies and practices, such as our policy +prohibiting pledging (except in certain limited circumstances and subject to prior approval by our compliance officer or the compensation committee) or hedging of our stock by our executive officers and directors, as well as the lack of significant +prerequisites and absence of pension or supplemental retirement benefits, aside from those afforded under our broad-based 401(k) plan, for our executive officers are consistent with prudent compensation philosophy and the interests of our +stockholders. The compensation committee will continue to consider the outcome of our stockholders’ future “say-on-pay” votes when making compensation decisions for our named executive officers. +Compensation Committee Report on Executive Compensation +The compensation committee has reviewed and discussed the foregoing Compensation Discussion and Analysis with management. Based on its review and discussion +with management, the compensation committee recommended that the Compensation Discussion and Analysis be included in this proxy statement. +Respectfully +submitted by the compensation committee: +David L. Houston, Chairman +Scott E. Streller +Dated: March 31, 2016 +Compensation Committee Interlocks and Insider Participation +No current member of our compensation committee has ever been an officer or employee of ours. None of our executive officers serves, or has served during the +past fiscal year, as a member of the board of directors or compensation committee of any other company that has one or more executive officers serving as member of our board of directors or compensation committee. +35 +Table of Contents +Compensation Tables +2015, 2014 and 2013 SUMMARY COMPENSATION TABLE +The following table provides information concerning compensation of our principal executive officer, principal financial officer and our next three most +highly paid executive officers for the fiscal years ended December 31, 2015, December 31, 2014 and December 31, 2013. +Name and Principal Position +Year +Salary ($) +Bonus ($) +Stock +Awards +($)(1) +Non-Equity +Incentive Plan +Compensation +($)(2) +All Other +Compensation +($)(3) +Total +($) +Michael G. Moore(4) +2015 +$ +460,000 +$ +— +$ +2,299,989 +(5) +$ +690,000 +$ +42,505 +$ +3,492,494 +Chief Executive Officer and President +2014 +$ +400,000 +$ +300,000 +(6) +$ +2,946,800 +(7) +$ +1,102,000 +$ +30,234 +$ +4,779,034 +2013 +$ +383,333 +$ +500,000 +$ +1,790,000 +(8) +$ +— +$ +31,005 +$ +2,704,338 +Aaron Gaydosik(9) +2015 +$ +309,000 +$ +— +$ +1,099,943 +(10) +$ +231,750 +$ +23,876 +$ +1,664,569 +Chief Financial Officer +2014 +$ +118,269 +$ +150,000 +(11) +$ +— +$ +160,708 +$ +1,153 +$ +430,130 +Ross Kirtley(12) +2015 +$ +338,000 +$ +— +$ +1,014,021 +(13) +$ +253,500 +$ +31,523 +$ +1,637,044 +Chief Operating Officer +2014 +$ +325,000 +$ +— +$ +— +$ +447,688 +$ +26,390 +$ +799,078 +Stuart A. Maier +2015 +$ +400,000 +$ +200,000 +$ +331,600 +(14) +$ +— +$ +23,159 +$ +954,759 +Vice President of Geosciences +2014 +$ +400,000 +$ +150,000 +$ +— +$ +— +$ +21,193 +$ +571,193 +2013 +$ +400,000 +$ +175,000 +$ +2,316,400 +(15) +$ +— +$ +22,504 +$ +2,913,904 +Keri Crowell(16) +2015 +$ +250,000 +$ +150,000 +$ +530,560 +(17) +$ +— +$ +22,254 +$ +952,814 +Chief Accounting Officer +(1) +The amount reported in the Stock Awards column reflects the fair value of the applicable restricted common stock award or restricted stock unit award on the award date. The amount was calculated using certain +assumptions, as set forth in Note 8 to our consolidated financial statements for the fiscal year ended December 31, 2015 under the heading “Stock-Based Compensation,” included in our Annual Report on Form 10-K, filed with the SEC on +February 19, 2016. +(2) +The amounts shown reflect performance-based annual incentive bonuses granted under the 2014 Executive Annual Incentive Compensation Plan. With respect to the 2015 amounts, the compensation committee certified the +attainment of the related performance goals on March 10, 2016, and the Company paid these performance-based annual incentive bonuses on March 11, 2016. With respect to the 2014 amounts, the compensation committee certified the attainment +of the related performance goals on February 24, 2015, and the Company paid these performance-based annual incentive bonuses on February 27, 2015. +(3) +The amounts for Mr. Moore for 2015, 2014 and 2013 represent our 401(k) plan contributions of $19,890, $19,539, and $19,197, respectively, $22,615, $2,995, and $6,413, respectively, attributable to use of a Company +owned vehicle, $0, $7,700, and $5,090 attributable to Company sponsored sporting tickets in 2015, 2014 and 2013, respectively, and $305 attributable to a Company sponsored health club membership in 2013. Amounts for Mr. Gaydosik in 2015 and +2014 represent $19,890 and $0, respectively, in contributions to our 401(k) plan, $3,666 and $1,100, respectively, attributable to Company sponsored sporting tickets and $320 and $53, respectively, attributable to a Company sponsored health club +membership. Amounts for Mr. Kirtley in 2015 and 2014 represent $19,890 and $19,539, respectively, in contributions to our 401(k) plan, $1,022 and $2,200, respectively, attributable to Company sponsored sporting tickets, $320 and $320, +respectively, attributable to a Company sponsored health club membership and $10,291 and $4,331, respectively, attributable to use of a Company owned vehicle. Amounts for Mr. Maier in 2015, 2014 and 2013 include contributions to our 401(k) plan +of $19,890, $19,539 and $19,197, respectively, $0, $554 and $611, respectively, attributable to a Company sponsored health club membership and $3,269, $1,100 and $2,696, respectively, attributable to Company sponsored sporting tickets. Amount for +Ms. Crowell includes our 401(k) plan contribution of $19,890, $320 attributable to a Company sponsored health club membership and $2,044 attributable to Company sponsored sporting tickets. +(4) +Effective April 22, 2014, Mr. Moore became our Chief Executive Officer and has continued to serve as our President. He also continued to serve as our Chief Financial Officer until the appointment of +Mr. Gaydosik as our new Chief Financial Officer effective August 11, 2014. +(5) +Mr. Moore’s award of 52,225 shares of our restricted common stock was granted on February 24, 2015 and vests in three approximately equal annual installments, of which 34,816 shares have vested and the +remaining 17,409 shares will vest on March 1, 2017. +36 +Table of Contents +(6) +On April 1, 2014, the compensation committee awarded Mr. Moore an additional cash bonus of $300,000 attributable to his performance in 2013. +(7) +Mr. Moore’s restricted common stock award of 40,000 shares of our restricted common stock granted in connection with his appointment as our new Chief Executive Officer on April 30, 2014 vested in three +approximately equal annual installments. +(8) +Mr. Moore’s 2013 restricted common stock award of 50,000 shares of our restricted common stock vested in 12 approximately equal quarterly installments. +(9) +Mr. Gaydosik has served as our Chief Financial Officer since August 11, 2014. +(10) +Mr. Gaydosik’s award of 21,049 shares of our restricted common stock was granted on February 24, 2015 and vests in three approximately equal annual installments, of which 7,016 shares vested on +March 1, 2016 and the remaining 14,033 will vest in two approximately equal installments beginning on March 1, 2017. In addition, Mr. Gaydosik was entitled to receive shares of our restricted common stock valued at $225,000 as of the +close of trading on August 11, 2014, the date his employment began, which equaled 3,927 shares, as part of his one-time sign-on bonus in connection with his appointment as our Chief Financial Officer. This restricted common stock award was +granted on February 24, 2015. The grant date fair value of these shares of restricted common stock was $172,945. Of these shares of restricted common stock, 1,964 vested on August 1, 2015 and the remaining 1,963 will vest on August 1, +2016. +(11) +Mr. Gaydosik received $150,000 as part of his one-time sign-on bonus in connection with his appointment as our Chief Financial Officer effective August 11, 2014. +(12) +Mr. Kirtley was appointed as our Chief Operating Officer effective April 22, 2014. +(13) +Mr. Kirtley’s award of 23,025 shares of our restricted common stock was granted on February 24, 2015 and vests in three approximately equal annual installments, of which 7,675 shares vested on +March 1, 2016 and the remaining 15,350, which shares will vest in two approximately equal installments beginning on March 1, 2017. +(14) +Mr. Maier’s award of 10,000 shares of our restricted common stock was granted on August 7, 2015 and vests in three approximately equal annual installments beginning on August 15, 2016. +(15) +Mr. Maier was granted an award of 40,000 shares of restricted common stock that vested in three substantially equal annual installments beginning on December 12, 2013. +(16) +Ms. Crowell was appointed as our Chief Accounting Officer effective September 10, 2015. +(17) +Ms. Crowell’s award of 16,000 shares of restricted common stock was granted on August 7, 2015 and vests in three approximately equal installments beginning on August 15, 2016. +37 +Table of Contents +2015 GRANTS OF PLAN-BASED AWARDS +The following table provides information concerning each grant of an award made to our principal executive officer, our principal financial officer and our +next three most highly paid executive officers in the fiscal year ended December 31, 2015 under any Company plan. +Estimated Future Payouts Under Non-Equity +Incentive Plan Awards(1) +All Other +Stock +Awards: +Number of +Shares of +Stock or +Units +(#) +All Other +Option +Awards: +Number of +Securities +Underlying +Options +(#) +Exercise +or Base +Price of +Option +Awards +($/Sh) +Grant Date +Fair Value +of Stock +and Option +Awards ($) +Name +Grant Date +Threshold +($) +Target +($) +Maximum +($) +Michael G. Moore +2/24/2015 +345,000 +690,000 +1,380,000 +52,225 +(2) +— +— +$ +2,299,989 +Chief Executive Officer and President +Aaron Gaydosik +2/24/2015 +115,875 +231,750 +463,500 +21,049 +(3) +— +— +$ +926,998 +Chief Financial Officer +2/24/2015 +3,927 +(4) +172,945 +Ross Kirtley +2/24/2015 +126,750 +253,500 +507,000 +23,025 +(5) +— +— +$ +1,014,021 +Chief Operating Officer +Stuart A. Maier +8/7/2015 +— +— +— +10,000 +(6) +— +— +$ +331,600 +Vice President of Geosciences +Keri Crowell +8/7/2015 +— +— +— +16,000 +(7) +— +— +$ +530,560 +Chief Accounting Officer +(1) +Reflects performance-based annual incentive bonuses granted under the 2014 Executive Annual Incentive Compensation Plan. +(2) +Mr. Moore’s award of 52,225 shares of our restricted common stock was granted on February 24, 2015 and vests in three approximately equal annual installments, of which 34,816 shares have vested and the +remaining 17,409 shares will vest on March 1, 2017. +(3) +Mr. Gaydosik’s award of 21,049 shares of our restricted common stock was granted on February 24, 2015 and vests in three approximately equal annual installments, of which 7,016 shares vested on +March 1, 2016 and the remaining 14,033 will vest in two approximately equal installments beginning on March 1, 2017. +(4) +Mr. Gaydosik was entitled to receive shares of our restricted common stock valued at $225,000 as of the close of trading on August 11, 2014, the date his employment began, which equaled 3,927 shares, as part +of his one-time sign-on bonus in connection with his appointment as our Chief Financial Officer. This restricted common stock award was granted on February 24, 2015. The grant date fair value of these shares of restricted common stock was +$172,945. Of these shares of restricted common stock, 1,964 vested on August 1, 2015 and the remaining 1,963 will vest on August 1, 2016. +(5) +Mr. Kirtley’s award of 23,025 shares of our restricted common stock was granted on February 24, 2015 and vests in three approximately equal annual installments, of which 7,675 shares vested on +March 1, 2016 and the remaining 15,350, which shares will vest in two approximately equal installments beginning on March 1, 2017. +(6) +Mr. Maier’s award of 10,000 shares of our restricted common stock was granted on August 7, 2015 and vests in three approximately equal annual installments beginning on August 15, 2016. +(7) +Ms. Crowell’s award of 16,000 shares of our restricted common stock was granted on August 7, 2015 and vests in three approximately equal annual installments beginning on August 15, 2016. +38 +Table of Contents +OUTSTANDING EQUITY AWARDS AT 2015 FISCAL YEAR-END +The following table provides information concerning equity awards outstanding for our principal executive officer, our principal financial officer and our +next three most highly paid executive officers at December 31, 2015. +Name +Number of +Securities +Underlying +Unexercised +Options +(#) +Exercisable +Number of +Securities +Underlying +Unexercised +Options +(#) +Unexercisable +Option +Exercise +Price +($) +Option +Expiration +Date +Number +of Shares +or Units +of Stock +That +Have Not +Vested +(#) +Market +Value of +Shares or +Units of +Stock That +Have Not +Vested +($)(1) +Michael G. Moore +— +— +$ +— +— +48,151 +(2) +$ +1,183,070 +Aaron Gaydosik +— +— +$ +— +— +23,012 +(3) +$ +565,405 +Ross Kirtley +— +— +$ +— +— +26,025 +(4) +$ +639,434 +Stuart A. Maier +— +— +$ +— +— +10,000 +(5) +$ +245,700 +Keri Crowell +— +— +$ +— +— +28,000 +(6) +$ +687,960 +(1) +Market value of shares or units that have not vested is based on the closing price of $24.57 per share of our common stock on the NASDAQ Global Select Market on December 31, 2015, the last trading day of 2015. +(2) +Of these shares of restricted common stock, (i) 17,408 shares vested on March 1, 2016, (ii) 13,334 shares vested on April 22, 2016, and (iii) 17,409 shares vest on March 1, 2017. +(3) +Of these shares of restricted common stock, (i) 7,016 shares vested on March 1, 2016, (ii) 14,033 shares vest in two approximately equal annual installments beginning on March 1, 2017 and +(iii) 1,963 shares vest on August 1, 2016. +(4) +Of these unvested shares of restricted common stock, (i) 1,333 shares will vest on September 1, 2016, (ii) 1,667 shares will vest on September 1, 2017, (iii) 7,675 shares vested on March 1, +2016 and (iv) 15,350 shares vest in two equal annual installments beginning on March 1, 2017. +(5) +These unvested shares of restricted common stock vest in three approximately equal annual installments beginning on August 15, 2016. +(6) +Of these unvested shares of restricted common stock, (i) 5,333 shares vest on August 15, 2016, (ii) 5,332 shares vest on December 1, 2016, (iii) 5,333 shares vest on August 15, 2017, +(iv) 6,668 shares will vest on December 1, 2017 and (v) 5,334 shares will vest on August 15, 2018. +39 +Table of Contents +2015 OPTION EXERCISES AND STOCK VESTED +The following table provides certain information for the named executive officers on stock option exercises during 2015, including the number of shares +acquired upon exercise and the value realized, and the number of shares acquired upon the vesting of restricted common stock awards. +Name +Option Awards +Stock Awards +Number of Shares +Acquired on Exercise +(#) +Value Realized on +Exercise +($) +Number of Shares +Acquired on Vesting +(#) +Value Realized on +Vesting +($)(1) +Michael G. Moore +— +— +52,407 +$ +2,302,012 +Aaron Gaydosik +— +— +1,964 +$ +64,308 +Ross Kirtley +— +— +8,001 +$ +214,626 +Stuart A. Maier +— +— +18,333 +$ +563,284 +Keri Crowell +— +— +8,168 +$ +287,658 +(1) +Value realized on vesting is based on the vesting date closing price per share of our common stock on the NASDAQ Global Select Market. +2015 DIRECTOR COMPENSATION +The following +table contains information with respect to 2015 compensation of our non-employee directors who served in such capacity during 2015. Employee directors do not receive compensation for serving as directors of the Company. +Name +Fees Earned or +Paid in Cash +(1)($) +Stock +Awards +($)(2) +Option +Awards +($)(2) +Total +($) +Donald L. Dillingham +$ +75,500 +$ +125,011 +— +$ +200,511 +Craig Groeschel +$ +68,250 +$ +125,011 +— +$ +193,261 +David L. Houston +$ +167,500 +$ +125,011 +— +$ +292,511 +C. Doug Johnson(3) +$ +20,833 +$ +96,321 +— +$ +117,154 +Ben T. Morris +$ +74,750 +$ +125,011 +— +$ +199,761 +Scott E. Streller +$ +89,250 +$ +125,011 +— +$ +214,261 +(1) +For additional information regarding the fees earned or paid in cash to our non-employee directors in 2015, please see “Board of Directors Information—How are directors compensated?—Equity +Compensation.” +(2) +The amounts shown reflect the grant date fair value of restricted common stock awards granted, determined in accordance with FASB ASC Topic 718. See Note 8, “Stock-Based Compensation,” to our consolidated +financial statements for the fiscal year ended December 31, 2015, included in our Annual Report on Form 10-K, filed with the SEC on February 19, 2016, regarding assumptions underlying valuations of equity awards for 2015. There were 3,803, +3,803, 3,803, 2,951, 3,803, and 3,803 shares of unvested restricted common stock outstanding at the end of 2015 for Messrs. Dillingham, Groeschel, Houston, Johnson, Morris and Streller, respectively. +(3) +Mr. Johnson was appointed as a director of the Company effective September 10, 2015, and he was granted 2,951 shares of restricted stock under the 2013 Restated Stock Incentive Plan, which shares will vest on +June 18, 2016, if he is in continuous service on that date, representing pro-rated portion of the annual non-employee director grant to reflect Mr. Johnson’s service on the board of directors commencing on September 10, 2015. +40 +Table of Contents +Benefit Plans +401(k) Plan +We maintain a +retirement savings plan, or a 401(k) Plan, for the benefit of our eligible employees who have attained the age of 18. Currently, employees may elect to defer their compensation up to the statutorily prescribed limit. During the following year, we +make a safe harbor contribution equal to 3% of each eligible employee’s eligible annual compensation for the prior calendar year. We also have the ability to make an additional, discretionary contribution based on each eligible employee’s +eligible annual compensation for the prior calendar year. Both contributions are made, regardless of employee’s deferrals into the plan. In 2015, we made safe harbor and discretionary contributions totaling 3% of eligible compensation for +eligible employees, subject to certain limitations provided by our 401(k) plan and Internal Revenue Service regulations. All contributions made by us on behalf of an employee are 100% vested when contributed. The 401(k) Plan is intended to qualify +under Sections 401(a) and 501(a) of the Code. As such, contributions to the 401(k) Plan and earnings on those contributions are not taxable to the employees until distributed from the 401(k) Plan, and all contributions are deductible by us when +made. +2013 Restated Stock Incentive Plan +Our 2013 Restated Stock Incentive Plan, which amended and restated our Amended and Restated 2005 Stock Incentive Plan, was adopted to enable us, and any of our +affiliates, to attract and retain the services of the types of employees, consultants and directors who will contribute to our long range success and to provide incentives which are linked directly to increases in share value which will inure to the +benefit of our stockholders. The plan provides a means by which eligible recipients of awards may be given an opportunity to benefit from increases in value of our common stock through the granting of incentive stock options, nonstatutory stock +options, restricted awards (restricted stock and restricted stock units), performance awards and stock appreciation rights. Our compensation committee serves as the plan administrator. +Eligible award recipients are employees, consultants and directors of ours and any present or future parent or subsidiary of ours. Incentive stock options may +be granted only to our employees. Awards other than incentive stock options may be granted to employees, consultants and directors. The shares that may be issued pursuant to awards consist of our authorized but unissued common stock, and the maximum +aggregate amount of such common stock which may be issued upon exercise of all awards in the plan, including incentive stock options, may not exceed 7,500,000 shares, subject to adjustment to reflect certain corporate transactions or changes in our +capital structure. For a description of the awards granted under the plan to our named executive officers, see “Compensation Discussion and Analysis—Compensation Decisions for Executive Compensation Components—Long-Term Equity +Incentive Awards—Restricted Stock Awards” above. On April 1, 2016, an aggregate of 1,863,006 shares of restricted common stock and restricted stock units had been granted under this plan. There were 3,885,127 shares available for +future grants under this plan as of April 1, 2016. +In the event of a transaction involving a change in control (as defined in the plan) of the +Company, a dissolution or liquidation of the Company, an exchange of shares or any corporate separation or division, including, but not limited to, a split-up, a split-off or a spin-off, or a sale, in one transaction or a series of related +transactions, of all or substantially all of our assets or a merger, consolidation, or reverse merger in which we are not the surviving entity, then all outstanding stock awards under our 2013 Restated Stock Incentive Plan may, in the sole +discretion of the plan administrator, be assumed, continued, or substituted for by any surviving or acquiring entity (or its parent company), or may be cancelled either with or without consideration for the vested portion of the awards. In the event +an option award would be cancelled without consideration paid to the extent vested, the option award recipient may exercise the option award in full or in part for a period of ten days. The plan administrator may also exercise its discretionary +authority to accelerate the vesting of an award under our 2013 Restated Stock Incentive Plan in the event of a change in control. +41 +Table of Contents +2014 Executive Annual Incentive Compensation Plan +The 2014 Annual Incentive Compensation Plan, or Annual Incentive Plan, was approved by our board of directors on April 1, 2014 and by our stockholders at +the 2014 Annual Meeting on June 11, 2014. Our executive officers and selected employees and those of our subsidiaries are eligible to receive awards under the Annual Incentive Plan. The Annual Incentive Plan provides for awards of incentive +compensation that are contingent on the attainment of specific performance targets. Under the Annual Incentive Plan, the compensation committee, as the plan administrator, establishes the performance targets for each award and the performance period +during which the performance is to be measured, which will generally be our fiscal year. Performance targets may include a minimum level of performance below which no payment will be made, levels of performance at which specified percentages of the +award will be paid, and a maximum level of performance above which no additional award will be paid. The plan administrator must adopt the performance targets and criteria for awards granted to executive officers subject to the limits of +Section 162(m) of the Code, whom we refer to as Covered Employees, no later than the earlier of: +• +90 days after the beginning of the performance period, or +• +the time when 25% of the performance period has elapsed. +In addition, award amounts to be paid to any Covered +Employee for any one year may not exceed the lesser of: (i) 300% of base salary at the time the award is established, or (ii) $6.0 million. Individual awards may be subject to lesser limits as specified in the discretion of the +compensation committee. +Performance targets for each award will be based on pre-established performance factors, which may include any or all of the +following, individually or in combination: +• +revenue; +• +net sales; +• +operating income; +• +earnings before all or any of interest, taxes, depreciation and/or amortization (“EBIT,” “EBITA” or “EBITDA”); +• +growth of oil and natural gas production; +• +growth of estimated or proved reserves; +• +capital efficiency based on revenue per barrel of oil equivalent (“BOE”) produced; +• +lease operating expenses; +• +general and administrative expenses; +• +net cash provided by operating activities or other cash flow measurements; +• +working capital and components thereof; +• +return on equity or average stockholders’ equity; +• +return on assets; +• +market share; +• +net or gross sales measured by product line, territory, one or more customers, or other category; +• +stock price; +• +earnings per share; +• +earnings from continuing operations; +42 +Table of Contents +• +net worth; +• +credit rating; +• +levels of expense, cost or liability by category, operating unit, or any other delineation; or +• +any increase or decrease of one or more of the foregoing over a specified period. +These performance factors +may relate to the performance of the Company or the performance of a business unit, product line, territory or any combination of these. Performance targets for employees who are not executive officers may also be based on other additional objective +or subjective performance criteria established by the plan administrator. +The plan administrator may at any time establish additional conditions and +terms of payment of awards, including additional financial, strategic or individual goals, which may be objective or subjective. The plan administrator may exercise negative discretion to reduce the amount of an award, but may not adjust upwards the +amount payable pursuant to any award to a Covered Employee, nor may it waive the achievement of the performance target requirement for any Covered Employee, except in the case of the death or disability of the participant or a change in control of +the Company. +Unless the plan administrator provides otherwise, a participant must be employed by us on the date that awards are paid to receive an award +payment, except in the case of death or disability. If a participant dies or becomes disabled during a performance period, the participant (or the participant’s beneficiary) will receive a pro-rated award payment at the same time all other +awards are paid for the performance period. In the event of a change in control, each named executive officer will be paid the target award amount (mid-point of any specified range of potential award payment amount) based on the assumption that the +performance target was attained at the target level (mid-point of any specified range of performance targets) for the entire performance period. The target award amount will be paid within ten (10) days following the consummation of the change +in control transaction. +Before payment of any award to a Covered Employee, our compensation committee must certify in writing that the performance target +requirement for such award was met. +The plan administrator may at any time amend the Annual Incentive Plan, subject to approval by our stockholders to +the extent stockholder approval is necessary to continue to qualify as “performance-based compensation” under Section 162(m) of the Code. The plan administrator may at any time terminate the Annual Incentive Plan in whole or in part. +Our board of directors has delegated its authority to administer the Annual Incentive Plan to the compensation committee, to whom we refer as the plan +administrator. The compensation committee is expected to consist solely of two or more “outside directors” within the meaning of Section 162(m) of the Code. The plan administrator has the authority to administer the Annual Incentive +Plan and to exercise all the powers and authorities either specifically granted to it under the Annual Incentive Plan or necessary or advisable in the administration of the Annual Incentive Plan, including (but not limited to) the following: +• +to interpret the Annual Incentive Plan and any award; +• +to prescribe rules relating to the Annual Incentive Plan; +• +to determine the persons to receive awards; +• +to determine the terms, conditions, restrictions and performance criteria, including performance factors and performance targets, relating to any award; +• +to accelerate an award that is designed not to be deferred compensation subject to Code Section 409A (after the attainment of the applicable performance target or targets); +43 +Table of Contents +• +to adjust performance targets in recognition of specified events such as unusual or non-recurring events affecting us or our financial statements, including certain asset dispositions, cessation of operations resulting +from a natural disaster, or in response to changes in applicable laws, regulations, or accounting principles as specified in the Annual Incentive Plan or in the performance targets established for any performance period; +• +to waive restrictive conditions for an award (but not performance targets); and +• +to make any other determinations that may be necessary or advisable for administration of the Annual Incentive Plan. +Federal Income Tax Consequences of the Annual Incentive Plan. +Under federal income tax laws currently in effect: +Participants +in the Annual Incentive Plan will recognize in the year of payment ordinary income equal to the award amount, which is subject to applicable income and employment tax withholding by us (including the additional tax of 0.9% imposed on wages in excess +of $200,000 under Section 3101(b)(2) of the Code). Under current regulations and guidance, we expect that awards under the Annual Incentive Plan will not be subject to Section 409A of the Code, which imposes restrictions on nonqualified +deferred compensation arrangements and penalizes participants for violating these restrictions. +Section 162(m) of the Code imposes a $1.0 million +annual limit on the amount of compensation that we may deduct for federal income tax purposes with respect to our chief executive officer and each of our three highest compensated officers (other than our chief executive officer and our chief +financial officer), subject to certain exceptions. The Annual Incentive Plan is intended to qualify for the exception under Section 162(m) for “performance-based compensation.” We expect that we will be entitled to a tax deduction in +connection with the payment of each award under the Annual Incentive Plan in an amount equal to the ordinary income realized by the participant without regard to the $1.0 million annual deduction limitation under Section 162(m) of the Code, if +certain requirements of Section 162(m) are satisfied. However, the plan administrator may award compensation that is or may become non-deductible, and expects to consider whether it believes such grants are in the best interest of the Company, +balancing tax efficiency with long-term strategic objectives. While the plan administrator is mindful of the limitation imposed by Section 162(m) of the Code, it also recognizes that facts and circumstances may render compliance with those +limitations inappropriate, at odds with the best interests of the Company or out of step with the then-prevailing competitive market conditions. In such event, the plan administrator’s priority will be determining what is in the best interest +of the Company and its stockholders rather than compliance with the technical limitations imposed by the Code. +44 +Table of Contents +EQUITY COMPENSATION PLAN INFORMATION +The following table sets forth, as of December 31, 2015, certain information with respect to all compensation plans under which equity securities are +authorized for issuance. +Plan Category +Number of securities to +be issued upon exercise +of outstanding options, +warrants and rights +(a)(1)(2) +Weighted average +exercise price of +outstanding options, +warrants and rights +(b)(3) +Number of securities +remaining available +for future issuance +under equity +compensation +plans +(excluding securities +reflected in column +(a))(c) +Equity compensation plans approved by security holders(1) +484,239 +$ +— +4,121,211 +(1) +Refers to our 2013 Restated Stock Incentive Plan (which amended and restated our Amended and Restated 2005 Stock Incentive Plan) and our 1999 Stock Option Plan. +(2) +Includes 484,239 shares of unvested restricted common stock granted under our 2013 Restated Stock Incentive Plan (including shares originally issued under our Amended and Restated 2005 Stock Incentive Plan). +(3) +No options were outstanding as of December 31, 2015, and shares of restricted common stock have no exercise price. +Employment Agreements +Employment Agreement with Our Chief Executive Officer +Effective April 22, 2014, we entered into an amended and restated employment agreement with Mr. Moore in connection with his new responsibilities as +Chief Executive Officer. The employment agreement was further amended and restated as of April 29, 2015 to reflect recommendations of the compensation consultant that were approved by the compensation committee. The agreement has a three-year +term commencing effective April 22, 2014 and provided for an annual base salary of $400,000 that can be increased from time to time by the compensation committee, but not decreased. The agreement, as amended and restated as of April 29, +2015, reflects the compensation committee’s decision to increase Mr. Moore’s annual base salary to $460,000 for 2015 and the determination by the compensation committee to continue to increase Mr. Moore’s annual base salary +during 2016 and 2017 so as to achieve alignment between the 25th and 50th percentile of our compensation peer group disclosed in our annual proxy statement (as it may be adjusted from time to time). Mr. Moore is also entitled to receive a +target annual bonus of 150% of his base salary upon achievement of performance goals established by the compensation committee. The annual bonus may be less than, or more than, the 150% target, up to a maximum of 300% of base salary in the event +performance exceeds the target level established by the compensation committee. The agreement also provided that he would be entitled to receive annual grants of 40,000 shares of restricted common stock that would vest in three substantially equal +annual installments commencing in the year granted. The agreement, as amended and restated as of April 29, 2015, eliminates Mr. Moore’s right to receive a fixed annual grant of 40,000 shares of restricted common stock. Instead, +consistent with the recommendation of the compensation consultant and approved by the compensation committee, the agreement now provides that Mr. Moore is entitled to receive an award of restricted common stock equal to 500% of his annual base +salary. The vesting schedule remained unchanged. Mr. Moore is also entitled to five weeks of paid vacation, to participate in such medical insurance and other welfare benefit plans that we establish from time to time, a $500,000 life insurance +policy and to the use of a company vehicle. Mr. Moore is subject to certain restrictive covenants in his employment agreement, including a restriction on using our trade secrets and a 12-month restriction on solicitation of our employees, +consultants and customers. +45 +Table of Contents +Rights Upon Termination Without Cause, Resignation for Good Reason or Death or Disability +The continued employment of Mr. Moore with us is “at-will,” meaning that either we or Mr. Moore may terminate the employment +relationship at any time and for any reason, with or without notice. However, under the terms of his amended and restated employment agreement, if (i) we terminate Mr. Moore without “cause,” (ii) Mr. Moore terminates +his employment for “good reason” or (iii) Mr. Moore’s employment is terminated due to death or disability, then, subject to Mr. Moore signing and delivering a general release of any and all claims against us, the +following would occur: +• +we would be obligated to make a lump sum payment on the termination date equal to all accrued and unpaid salary and other compensation payable to Mr. Moore (including vacation and sick pay) with respect to services +rendered through the termination date; +• +within 60 days of termination, we would be obligated to make a lump sum payment equal to 225% of the amount Mr. Moore would have earned as base salary during the two-year period following the termination date had +Mr. Moore’s employment not been terminated; +• +we would be obligated to immediately issue to Mr. Moore on a fully vested basis the restricted common stock grants that he would have been entitled to during the two-year period following the termination date had +Mr. Moore’s employment not been terminated; +• +all restricted stock, restricted stock units, stock options and stock appreciation rights granted to Mr. Moore that would have vested during the three-year period following the termination date solely as a result +of Mr. Moore’s continued service to the Company would vest immediately on the termination date and, with respect to any such stock options and stock appreciation rights, would remain exercisable in accordance with the terms applicable to +such options or rights; +• +we would be obligated to continue providing a Company-owned car for two years following termination; and +• +we would be required to pay the premiums for certain continuing health care benefits for Mr. Moore and his family for a period of 18 months or until Mr. Moore becomes eligible for group health plan benefits +with another employer. +For purposes of the employment agreement with Mr. Moore, “cause” is generally defined as: +• +Mr. Moore’s conviction (including any plea of guilty or no contest) of any felony involving the embezzlement, theft or misappropriation of monies or other property, of the Company or otherwise or any crime of +moral turpitude; +• +gross misconduct in the performance of Mr. Moore’s duties; or +• +the repeated failure by Mr. Moore (except by reason of disability) to render full and proper services as required by the terms of Mr. Moore’s employment after failure to cure such failure within 30 days +after receiving written notice from the Company or the board of directors detailing the alleged failure. +“Good reason,” as used +in the employment agreement with Mr. Moore, means (i) a material diminution in the duties, authority or responsibilities of Mr. Moore or a material breach of the employment agreement by the Company, or (ii) requiring +Mr. Moore to relocate his principal place of employment to a location that is more than 35 miles from the location of the Company’s principal office in the Oklahoma City area as of the effective date of the employment agreement, provided +that the Company fails to cure such material diminution, breach or relocation within 30 days of receipt of a written notice from Mr. Moore. +Rights Upon Termination for Cause or Resignation Other than for Good Reason +Under the terms of our employment agreement with Mr. Moore, in the event Mr. Moore is terminated for “cause” or Mr. Moore voluntarily +terminates his employment other than for “good reason,” Mr. Moore would be entitled to a lump sum payment on the termination date equal to all accrued and unpaid salary and other compensation +46 +Table of Contents +payable to Mr. Moore (including vacation and sick pay) with respect to services rendered through the termination date and, subject to Mr. Moore signing a general release of any and all +claims against us and, as consideration for such release, an amount equal to his base salary amount in effect immediately preceding such termination prorated based on the number of days between the first day of the contract year and the termination +date, divided by 365. +Rights Upon Termination Following a Change of Control +Under the terms of our employment agreement with Mr. Moore, if Mr. Moore’s employment with the Company or its successor is terminated on or +before the second anniversary of the date of occurrence of a “change of control” either (a) by the Company or its successor other than for “cause,” (b) by Mr. Moore for “good reason,” or (c) as a +result of Mr. Moore’s death or disability, then, in addition to the benefits described under the heading “—Rights Upon Termination Without Cause, Resignation for Good Reason or Death or Disability” above: +• +all restricted stock and restricted stock units that have been granted to Mr. Moore by the Company prior to the date of the amended and restated employment agreement and that would have vested at any time after the +date of Mr. Moore’s termination solely as a result of Mr. Moore’s continued service to the Company will immediately vest on the date of termination; and +• +all stock options and stock appreciation rights that have been granted to Mr. Moore by the Company prior to the date of the amended and restated employment agreement and that would have vested at any time after the +date of Mr. Moore’s termination solely as a result of his continued service to the Company will immediately vest and become exercisable on the date of termination. +Under the terms of Mr. Moore’s employment agreement, any equity awards granted on or after the date of the agreement will provide that such equity +awards will vest upon the occurrence of a change of control. A “change of control” will be deemed to have occurred upon the occurrence of any of the following: +• +any consolidation or merger of the Company into or with another person or entity pursuant to which shares of the Company’s common stock would be converted into cash, securities or other property, other than any +consolidation or merger of the Company in which the persons who were stockholders of the Company immediately prior to the consummation of such consolidation or merger are the beneficial owners, immediately following the consummation of such +consolidation or merger, of more than 50% of the combined voting power of the then outstanding voting securities of the person or entity surviving or resulting from such consolidation or merger; +• +any sale, lease or other transfer (in one transaction or a series of related transactions) of all or substantially all of the assets of the Company; or +• +the approval by the stockholders of the Company of any plan or proposal for the liquidation or dissolution of the Company. +Employment Agreement with our Chief Financial Officer and Chief Operating Officer +On March 13, 2015, we entered into an employment agreement with Aaron Gaydosik, our Chief Financial Officer. The employment agreement provides for a +three-year term commencing as of August 11, 2014, which will be extended for successive one-year periods unless we or the executive elects to not extend the term. Mr. Gaydosik’s initial annual base salary was $300,000, and increased +to $309,000 effective January 1, 2015, which can be increased from time to time by the compensation committee, but not decreased. Subject to the achievement of certain performance goals as determined by our board of directors or the +compensation committee for each fiscal year, Mr. Gaydosik is eligible to receive a target annual bonus of 75%, and a maximum target bonus of up to 200%, of his annual base salary, provided he remains employed by us on the payment date. +Mr. Gaydosik is also entitled to participate in any life and medical insurance plans and other similar plans that we establish from time to time for our executive employees. +47 +Table of Contents +Under his employment agreement, Mr. Gaydosik is eligible to participate in our 2013 Restated Stock Incentive +Plan or such other equity incentive plan or plans then in existence for the benefit of employees, and may in the discretion of the compensation committee receive an equity award, with a target level of 300% of his base salary, in accordance with the +terms of such plan or plans. The timing and amount of such equity awards, any target performance goals and the vesting terms of such awards will be determined by the compensation committee in its sole discretion. If Mr. Gaydosik’s +employment terminates prior to any scheduled vesting date then, except if he is involuntarily terminated without “cause” (as defined below) or as expressly provided in any existing or future equity award, he will forfeit all rights and +interests in and to such unvested equity awards. If Mr. Gaydosik is terminated for “cause,” he will forfeit all rights and interests in and to all outstanding equity awards, whether vested or unvested. +Mr. Gaydosik has agreed to certain restrictive covenants in his employment agreement, including, without limitation, his agreement not to compete with +us, not to interfere with any of our employees, suppliers or regulators and not to solicit our customers or employees, in each case during Mr. Gaydosik’s affiliation with us and for a period of 12 months thereafter. +Mr. Gaydosik’s continued employment with us is terminable by either party. We may terminate Mr. Gaydosik’s employment at any time, with or without advance notice. Mr. Gaydosik may terminate the employment relationship at any +time and for any reason. However, if (i) we terminate Mr. Gaydosik’s employment without “cause,” or (ii) Mr. Gaydosik resigns for “good reason” (as defined below), then Mr. Gaydosik will be entitled +to severance pay in an amount equal to 12 months’ base salary plus target bonus; provided, in each case, that the executive continues to comply with the restrictive covenants described above and the executive executes a full general release in +our favor, except that the restriction on competition will not apply in the event the executive resigns for good reason within 12 months following our change of control. In the event Mr. Gaydosik’s employment is terminated for +“cause” (as defined below), our obligations will terminate with respect to the payment of any base salary or bonuses effective as of the termination date. +If Mr. Gaydosik’s employment with us or our successor is terminated on or before the second anniversary of the date of occurrence of a “change +of control” (as defined below) either (a) by us or our successor other than for “cause” or (b) by Mr. Gaydosik for “good reason,” then, in addition to the benefits described above, (i) all equity awards +that have been granted to Mr. Gaydosik that would have vested at any time after the date of Mr. Gaydosik’s termination solely as a result of Mr. Gaydosik’s continued service to the Company will immediately vest on the date +of termination, and (ii) Mr. Gaydosik will be entitled to receive a lump sum payment equal to his base salary and target annual bonus during the two year period after his termination and the continuation of COBRA coverage for 18 months. +On March 13, 2015, we entered into an employment agreement with Ross Kirtley, our Chief Operating Officer. The employment agreement provides for a +two-year term commencing as of April 22, 2014, which extends for successive one-year periods unless we or the executive elects to not extend the term. Mr. Kirtley’s initial annual base salary was $325,000, and increased to $338,000 +effective January 1, 2015, which can be increased from time to time by the compensation committee, but not decreased. Subject to the achievement of certain performance goals as determined by our board of directors or the compensation committee +for each fiscal year, Mr. Kirtley is eligible to receive a target annual bonus of 75%, and a maximum target bonus of up to 200%, of his annual base salary, provided he remains employed by us on the payment date. Mr. Kirtley is also +entitled to participate in any life and medical insurance plans and other similar plans that we establish from time to time for our executive employees. +Under his employment agreement, Mr. Kirtley is eligible to participate in our 2013 Restated Stock Incentive Plan or such other equity incentive plan or +plans then in existence for the benefit of employees, and may in the discretion of the compensation committee receive an equity award, with a target level of 300% of his base salary, in accordance with the terms of such plan or plans. The timing and +amount of such equity awards, any target performance goals and the vesting terms of such awards will be determined by the compensation committee in its sole discretion. If Mr. Kirtley’s employment terminates prior to any scheduled vesting +date then, except as expressly provided in any existing or future equity award, he will forfeit all rights and interests in and to such +48 +Table of Contents +unvested equity awards. If Mr. Kirtley is terminated for “cause,” he will forfeit all rights and interests in and to all outstanding equity awards, whether vested or unvested. +Mr. Kirtley has agreed to certain restrictive covenants in his employment agreement, including, without limitation, his agreement not to compete with us, +not to interfere with any of our employees, suppliers or regulators and not to solicit our customers or employees, in each case during Mr. Kirtley’s affiliation with us and for a period of 12 months thereafter. Mr. Kirtley’s +continued employment with us is terminable by either party. We may terminate Mr. Kirtley’s employment at any time, with or without advance notice. Mr. Kirtley may terminate the employment relationship at any time and for any reason. +However, if (i) we terminate Mr. Kirtley’s employment without “cause,” or (ii) Mr. Kirtley resigns for “good reason” (as defined below), then Mr. Kirtley will be entitled to severance pay in an +amount equal to 12 months’ base salary plus target bonus; provided, in each case, that the executive continues to comply with the restrictive covenants described above and the executive executes a full general release in our favor, except that +the restriction on competition will not apply in the event the executive resigns for good reason within 12 months following our change of control. In the event Mr. Kirtley’s employment is terminated for “cause” (as defined +below), our obligations will terminate with respect to the payment of any base salary or bonuses effective as of the termination date. +If +Mr. Kirtley’s employment with us or our successor is terminated on or before the second anniversary of the date of occurrence of a “change of control” (as defined below) either (a) by us or our successor other than for +“cause” or (b) by Mr. Kirtley for “good reason,” then, in addition to the benefits described above, (i) all equity awards that have been granted to Mr. Kirtley that would have vested at any time after the date +of Mr. Kirtley’s termination solely as a result of Mr. Kirtley’s continued service to the Company will immediately vest on the date of termination, and (ii) Mr. Kirtley will be entitled to receive a lump sum payment +equal to his base salary and target annual bonus during the two year period after his termination and the continuation of COBRA coverage for 18 months. +Under the employment agreements with Messrs. Gaydosik and Kirtley: +A “change of control” will be deemed to have occurred upon the occurrence of any of the following: (a) any consolidation or merger of us into or +with another person or entity pursuant to which our shares of common stock would be converted into cash, securities or other property, other than any consolidation or merger in which the persons who were our stockholders immediately prior to the +consummation of such consolidation or merger are the beneficial owners, immediately following the consummation of such consolidation or merger, of more than 50% of the combined voting power of the then outstanding voting securities of the person or +entity surviving or resulting from such consolidation or merger; (b) any sale, lease or other transfer (in one transaction or a series of related transactions) of all or substantially all of our assets; or (c) the approval by our +stockholders of any plan or proposal for our liquidation or dissolution. +“Cause” is generally defined as such named executive officer’s +(a) gross misconduct in performing his duties, (b) material breach of his employment agreement or the Company’s Code of Conduct, (c) conviction of, or a plea of guilty or nolo contendere to, a criminal act that constitutes a +felony or any crime of moral turpitude, or (d) failure to comply with directives of our board of directors. +“Good reason” means without +the executive’s consent (i) a material diminution in the duties, authority or responsibilities of the executive or a material breach of his employment agreement by us, or (ii) requiring the executive to relocate his principal place of +employment to a location that is more than 35 miles from the location of our principal office in the Oklahoma City area as of the effective date of his employment agreement, provided that we fail to cure such material diminution, breach or +relocation with 30 days of receipt of a written notice from the executive of such event, provided, however, that such notice must be provided by the executive within 90 days following the occurrence of such event. +49 +Table of Contents +Potential Payments Upon Termination, Resignation or Change of Control +The following tables provide information regarding potential payments as of December 31, 2015 to each of our named executive officers with whom we had an +employment agreement as of December 31, 2015 in connection with certain termination events, including a termination related to a change of control of the Company. +Benefits and Payments Upon Termination of +Michael G. +Moore(1) +Voluntary +Resignation +(No Good +Reason) +Resignation +for Good +Reason/ +Termination +Without +Cause or +Upon Death +or Disability +Termination +for Cause +Termination +Following +Change of +Control +Severance Payments +$ +— +(2) +$ +2,070,000 +(3) +$ +— +(2) +$ +2,070,000 +(3) +Long-Term Incentives: +Unvested Restricted Stock +— +$ +1,183,070 +(4) +— +$ +1,183,070 +(5) +Unvested Stock Options/SARs +— +— +— +— +Benefits Continuation +— +$ +32,287 +(6) +— +$ +32,287 +(6) +Other +— +$ +45,330 +(7) +— +$ +45,330 +(7) +Total +$ +— +$ +3,330,687 +$ +— +$ +3,330,687 +(1) +The executive’s base salary as of December 31, 2015 was $460,000. Information in this table assumes a termination date of December 31, 2015 and a price per share of our common stock of $24.57 (the closing +market price per share on December 31, 2015), and applies the terms of his amended and restated employment agreement effective as of April 29, 2015. +(2) +Upon a voluntary termination other than for Good Reason or a termination for Cause, the executive is entitled to receive a lump sum payment on the termination date equal to all accrued and unpaid salary and other +compensation payable to the executive (including vacation and sick pay) with respect to services rendered through the termination date and, subject to the executive signing a general release of all claims against us, in consideration for such +release, an amount equal to his base salary amount in effect immediately preceding such termination prorated based on the number of days between the first day of the contract year and the termination date, divided by 365. +(3) +Reflects receipt by the executive, subject to his execution and delivery of a general release of all claims against us, of (i) a lump sum payment on the termination date equal to all accrued and unpaid salary and +other compensation payable to Mr. Moore (including vacation and sick pay) with respect to services rendered through the termination date and (ii) within 60 days of termination, a lump sum payment equal to 225% of the amount Mr. Moore +would have earned as base salary during the two-year period following the termination date had Mr. Moore’s employment not been terminated. +(4) +Reflects immediate vesting on the termination date of all restricted stock and any restricted stock units, stock options and stock appreciation rights granted to Mr. Moore that would have vested during the +three-year period following the termination date solely as a result of Mr. Moore’s continued service to the Company, with any such stock options and stock appreciation rights remaining exercisable in accordance with the terms applicable to +such options or rights. +(5) +Contemplates termination of Mr. Moore’s employment with the Company or its successor on or before the second anniversary of the date of occurrence of a “change of control” either (a) by the +Company or its successor other than for “cause,” (b) by Mr. Moore for “good reason,” or (c) as a result of Mr. Moore’s death or disability and reflects (i) immediate vesting on the termination date +of all restricted stock and any restricted stock units granted to Mr. Moore that would have vested during the three-year period following the termination date solely as a result of Mr. Moore’s continued service to the Company and +(ii) immediate vesting and exercisability of all stock options and stock appreciation rights granted to Mr. Moore by the Company prior to the date of his amended and restated employment agreement that would have vested at any time after +the date of Mr. Moore’s termination solely as a result of his continued service to the Company. +50 +Table of Contents +(6) +Reflects the value of Company-paid continuation coverage under the Company’s group health plans and under the Consolidated Omnibus Budget Reconciliation Act of 1985 for the executive and his eligible family members +for a period of 18 months following the date of termination. +(7) +Reflects the value of a Company-owned vehicle provided for the executive’s use for a period of two years following termination. +Benefits and Payments Upon Termination of +J. Ross Kirtley(1) +Voluntary +Resignation +(No Good +Reason) +Resignation +for Good +Reason/ +Termination +Without +Cause +Termination +Upon Death +or Disability +Termination +for Cause +Termination +Following +Change of +Control +Severance Payments +$ +— +$ +591,500 +(2)(5) +$ +— +$ +— +(2)(6) +$ +1,183,000 +(2)(7) +Long-Term Incentives: +Unvested Restricted Stock +— +$ +— +(3)(5) +— +— +(4) +$ +639,434 +(7) +Unvested Stock Options/SARs +— +— +— +— +— +Benefits Continuation +— +$ +— +— +— +$ +22,395 +(7) +Total +$ +— +$ +591,500 +$ +— +$ +— +$ +1,844,829 +(1) +The executive’s base salary as of December 31, 2015 was $338,000. Information in this table assumes a termination date of December 31, 2015 and a price per share of our common stock of $24.57 (the closing +market price per share on December 31, 2015), and applies the terms of his employment agreement entered into on March 13, 2015, effective as of April 22, 2014. +(2) +Subject to the achievement of certain performance goals as determined by our board of directors or the compensation committee for each fiscal year, Mr. Kirtley is eligible to receive a target annual bonus of 75%, +and a maximum target bonus of up to 200%, of his annual base salary, provided he remains employed by us on the payment date. +(3) +Mr. Kirtley may in the discretion of the compensation committee receive an equity award, with a target level of 300% of his base salary. If Mr. Kirtley’s employment terminates prior to any scheduled +vesting date then, except as expressly provided in any existing or future equity award, he will forfeit all rights and interests in and to such unvested equity awards. +(4) +If Mr. Kirtley is terminated for “cause,” he will forfeit all rights and interest in and to all outstanding equity awards, whether vested or unvested. +(5) +If (i) we terminate Mr. Kirtley’s employment without “cause,” or (ii) Mr. Kirtley resigns for “good reason,” then Mr. Kirtley will be entitled to severance pay in an +amount equal to 12 months’ base salary plus target bonus; provided, in each case, that the executive continues to comply with the restrictive covenants described above and the executive executes a full general release in our favor, except that +the restriction on competition will not apply in the event the executive resigns for good reason within 12 months following our change of control. +(6) +In the event Mr. Kirtley’s employment is terminated for “cause,” our obligations will terminate with respect to the payment of any base salary or bonuses effective as of the termination date. +(7) +If Mr. Kirtley’s employment with us or our successor is terminated on or before the second anniversary of the date of occurrence of a “change of control” (as defined below) either (a) by us or +our successor other than for “cause” or (b) by Mr. Kirtley for “good reason,” then, in addition to the benefits described above, (i) all equity awards that have been granted to Mr. Gaydosik that would have +vested at any time after the date of Mr. Kirtley’s termination solely as a result of Mr. Kirtley’s continued service to the Company will immediately vest on the date of termination, and (ii) Mr. Kirtley will be entitled +to receive a lump sum payment equal to his base salary and target annual bonus during the two year period after his termination and the continuation of COBRA coverage for 18 months. +51 +Table of Contents +Benefits and Payments Upon Termination of +Aaron Gaydosik(1) +Voluntary +Resignation +(No Good +Reason) +Resignation +for Good +Reason/ +Termination +Without +Cause +Termination +Upon Death +or Disability +Termination +for Cause +Termination +Following +Change of +Control +Severance Payments +$ +— +$ +540,750 +(2)(5) +$ +— +$ +— +(2)(6) +$ +1,081,500 +(2)(7) +Long-Term Incentives: +Unvested Restricted Stock +— +$ +— +(3)(5) +— +— +(4) +$ +565,405 +(7) +Unvested Stock Options/SARs +— +— +— +— +— +Benefits Continuation +— +$ +— +— +— +$ +32,287 +(7) +Total +$ +— +$ +540,750 +$ +— +$ +— +$ +1,679,192 +(1) +The executive’s base salary as of December 31, 2015 was $309,000. Information in this table assumes a termination date of December 31, 2015 and a price per share of our common stock of $24.57 (the closing +market price per share on December 31, 2015), and applies the terms of his employment agreement entered into on March 13, 2015, effective as of August 11, 2014. +(2) +Subject to the achievement of certain performance goals as determined by our board of directors or the compensation committee for each fiscal year, Mr. Gaydosik is eligible to receive a target annual bonus of 75%, +and a maximum target bonus of up to 200%, of his annual base salary, provided he remains employed by us on the payment date. +(3) +Mr. Gaydosik may in the discretion of the compensation committee receive an equity award, with a target level of 300% of his base salary. If Mr. Gaydosik’s employment terminates prior to any scheduled +vesting date then, except if he is involuntarily terminated without “cause” or as expressly provided in any existing or future equity award, he will forfeit all rights and interests in and to such unvested equity awards. +(4) +If Mr. Gaydosik is terminated for “cause,” he will forfeit all rights and interest in and to all outstanding equity awards, whether vested or unvested. +(5) +If (i) we terminate Mr. Gaydosik’s employment without “cause,” or (ii) Mr. Gaydosik resigns for “good reason,” then Mr. Gaydosik will be entitled to severance pay in an +amount equal to 12 months’ base salary plus target bonus; provided, in each case, that the executive continues to comply with the restrictive covenants described above and the executive executes a full general release in our favor, except that +the restriction on competition will not apply in the event the executive resigns for good reason within 12 months following our change of control. +(6) +In the event Mr. Gaydosik’s employment is terminated for “cause,” our obligations will terminate with respect to the payment of any base salary or bonuses effective as of the termination date. +(7) +If Mr. Gaydosik’s employment with us or our successor is terminated on or before the second anniversary of the date of occurrence of a “change of control” (as defined below) either (a) by us or +our successor other than for “cause” or (b) by Mr. Gaydosik for “good reason,” then, in addition to the benefits described above, (i) all equity awards that have been granted to Mr. Gaydosik that would have +vested at any time after the date of Mr. Gaydosik’s termination solely as a result of Mr. Gaydosik’s continued service to the Company will immediately vest on the date of termination, and (ii) Mr. Gaydosik will be +entitled to receive a lump sum payment equal to his base salary and target annual bonus during the two year period after his termination and the continuation of COBRA coverage for 18 months. +Severance Payments Received by our Former Chief Executive Officer in Connection with Retirement in February 2014 +As previously disclosed, on January 29, 2014, we announced that Mr. Palm, our former Chief Executive Officer and a former member of the Board of +Directors, informed us of his decision to retire from all positions he held with the Company, effective as of February 15, 2014. In connection with Mr. Palm’s retirement, we entered into a separation and release agreement with +Mr. Palm, which we refer to as the Separation Agreement, pursuant to which Mr. Palm has agreed, among other things, to provide such advice and transition assistance to the board of directors and management of the Company as may be +requested by the Company from time to time and not to compete with the Company, in each case for a period of three years commencing on Mr. Palm’s retirement date. +52 +Table of Contents +Under the Separation Agreement, we agreed to provide Mr. Palm with certain compensation and benefits in satisfaction of all contractual obligations under Mr. Palm’s existing +employment agreement with the Company and in exchange for the non-competition obligations and the transition services to be provided by Mr. Palm to us during the non-compete period under the Separation Agreement, including: (i) all of +Mr. Palm’s accrued but unpaid salary and unreimbursed expenses through Mr. Palm’s retirement date, (ii) health care benefits for Mr. Palm and his dependents for up to eighteen (18) months following his retirement +date, (iii) a lump-sum cash payment of $1,800,000, (iv) $200,000 per year for a period of three years in consulting and non-competition fees, payable in arrears in three equal annual installments beginning on February 15, 2015 and +(v) a restricted stock unit award for 80,000 shares of the Company’s common stock, which will vest in three substantially equal annual installments beginning on the first anniversary of Mr. Palm’s retirement date, provided, +however, that the payments specified in clause (iv) and the vesting of common stock specified in clause (v) are contingent upon Mr. Palm’s compliance with his obligations under the Separation Agreement and in the event of a +violation of these obligations any unpaid payments and unvested common stock will be forfeited. In addition, under the Separation Agreement, all unvested stock options, restricted stock or any other equity awards that had previously been granted to +Mr. Palm became fully vested as of his retirement date. Under the Separation Agreement, Mr. Palm is subject to certain covenants regarding non-competition, ownership of inventions, confidentiality and non-solicitation. The Separation +Agreement also contains customary waiver and release provisions pursuant to which Mr. Palm waived, released and discharged the Company and certain other related parties from any and all claims that Mr. Palm may have had against the Company +or such other parties as of the date of the Separation Agreement. +Change of Control Arrangements with Other Named Executive +Officers +We did not have an employment agreement with either Ms. Crowell or Mr. Maier at December 31, 2015 but, under the terms of +the restricted stock awards made to Ms. Crowell and Mr. Maier, the shares of restricted stock held by Ms. Crowell and Mr. Maier may be accelerated in the discretion of the compensation committee upon a change of control. The +value of the restricted stock held by Ms. Crowell and Mr. Maier was $687,960 and $245,700, respectively, as of December 31, 2015. +Stock Ownership +Holdings of Major Stockholders +The following table sets forth certain information regarding the beneficial ownership as of April 1, 2016 of shares of our common stock by each person or +entity known to us to be a beneficial owner of 5% or more of our common stock. +53 +Table of Contents +MAJOR STOCKHOLDER TABLE +Name and Address of Beneficial Owner(1) +Amount and +Nature of +Beneficial +Ownership +Percent of +Class(1) +BlackRock, Inc. +13,247,554 +(2) +10.5 +% +40 East 52 nd Street +New York, New York 10022 +Putnam Investments, LLC +8,787,215 +(3) +7.0 +% +One Post Office Square +Boston, Massachusetts 02109 +Viking Global Investors LP +7,893,422 +(4) +6.3 +% +55 Railroad Avenue +Greenwich, Connecticut 06830 +The Vanguard Group +7,549,208 +(5) +6.0 +% +100 Vanguard Blvd. +Malvern, Pennsylvania 19355 +(1) +Beneficial ownership is determined in accordance with SEC rules. The percentage of shares beneficially owned is based on 125,943,361 shares of common stock outstanding as of April 1, 2016, including 615,801 shares +of restricted stock awarded under our 2013 Restated Stock Incentive Plan or our Amended and Restated 2005 Stock Incentive Plan, but not yet vested. +(2) +Based solely on Schedule 13G/A filed with the SEC on January 8, 2016 by BlackRock, Inc. BlackRock, Inc. reported sole voting power of 12,800,241 shares of common stock sole dispositive power of 13,247,554 shares of +common stock. +(3) +Based solely on Schedule 13G/A jointly filed with the SEC on February 16, 2016 by Putnam Investments, LLC, or Putnam Investments, Putnam Investment Management, LLC, or Putnam Management, and Putnam Advisory +Company, LLC, or Putnam Advisory. Putnam Investments wholly owns two registered investment advisers: Putnam Management, which is the investment adviser to the Putnam family of mutual funds, and Putnam Advisory, which is the investment adviser to +Putnam’s institutional clients. Putnam Investments reported sole voting power of 198,463 shares of common stock and sole dispositive power of 8,787,215 shares of common stock. Both Putnam Management and Putnam Advisory have dispositive power +over shares as investment managers, with Putnam Management reporting sole dispositive power of 8,605,374 shares of common stock and Putnam Advisory reporting sole dispositive power of 181,841 shares of common stock. Putnam Management reported sole +voting power of 17,826 shares of common stock. In the case of shares held by the Putnam mutual funds managed by Putnam Management, the mutual funds through their boards of trustees, have voting power. Putnam Advisory has sole voting power of 180,637 +shares of common stock and shared voting power over the shares held by its institutional clients. On June 9, 2015, Putnam Investment Management, Putnam Advisory and certain managed accounts, or the Putnam Funds, and certain other entities and +individuals affiliated with Putnam, or the Other Putnam Investors, entered into a Voting Rights Waiver Agreement, or the Voting Rights Waiver, with Gulfport in connection with a sale of shares to the Putnam Funds. Pursuant to the Voting Rights +Waiver, Putnam Investments, Putnam Investment Management, Putnam Advisory, the Putnam Funds and the Other Putnam Investors have agreed to waive all voting rights that they may have in respect of any voting securities issued by Gulfport that exceed, +in the aggregate, 4.99% of the total voting rights exercisable by the Gulfport’s outstanding voting securities. The Voting Rights Waiver provides for an apportionment of any voting rights waived by Putnam Investments, Putnam Investment +Management, Putnam Advisory, the Putnam Funds or the Other Putnam Investors and expiration of the Voting Rights Waiver, among other terms, as set forth in the Agreement, which is included as Exhibit 4.1 to the Gulfport’s Current Report on Form +8-K dated June 12, 2015. +(4) +Based solely on Schedule 13G/A jointly filed with the SEC on January 29, 2016 by Viking Global Investors LP, +or VGI, Viking Global Performance LLC, or VGP, Viking Global Equities LP, or VGE, Viking Global Equities II LP, or VGEII, VGE III Portfolio Ltd., or VGEIII, Viking Long Fund GP LLC, or VLFGP, +54 +Table of Contents +Viking Long Fund Master Ltd., or VLFM, O. Andreas Halvorsen, David C. Ott and Daniel S. Sundheim. VGI provides managerial services to VGE, VGEII, VGEIII and VLFM and reported shared voting power +of 7,893,422 shares of common stock and shared dispositive power of 7,893,422 shares of common stock. VGP reported shared voting power of 5,829,711 shares of common stock and shared dispositive power of 5,829,711 shares of common stock. VGE reported +shared voting power and shared dispositive power of 1,987,933 shares of common stock. VGEII reported shared voting power and shared dispositive power of 116,594 shares of common stock. VGEIII reported shared voting power and shared dispositive power +of 3,725,184 shares of common stock. Each of VLFGP and VLFM reported shared voting power and shared dispositive power of 2,063,711 shares of common stock. Each of O. Andreas Halvorsen, Daniel S. Sundheim and David C. Ott reported shared voting power +and shared dispositive power of 7,893,422 shares of common stock. +(5) +Based solely on Schedule 13G/A filed with the SEC February 11, 2016 by The Vanguard Group. The Vanguard Group reported sole voting power of 77,818 shares of common stock, sole dispositive power of 7,472,190 shares +of common stock, shared dispositive power of 70,818 shares of common stock and shared voting power of 5,500 shares of common stock. Vanguard Fiduciary Trust Company and Vanguard Investments Australia, Ltd., both wholly owned subsidiaries of +Vanguard, are the beneficial owners of 71,518 and 11,800 shares, respectively, of common stock. +Holdings of +Officers and Directors +The following table sets forth certain information regarding the beneficial ownership as of April 1, 2016 of shares of our +common stock by each of our directors, by each named executive officer and by all directors and executive officers as a group: +Name of Beneficial Owner(1) +Amount and +Nature of +Beneficial +Ownership +Percent of +Class +Donald L. Dillingham(2) +13,986 +* +Craig Groeschel(3) +12,016 +* +David L. Houston(4) +39,634 +* +C. Doug Johnson(5) +5,951 +* +Scott E. Streller(6) +23,600 +* +Ben T. Morris(7) +7,760 +* +Michael G. Moore(8) +124,130 +* +Aaron Gaydosik(9) +24,976 +* +Stuart A. Maier(10) +30,366 +* +Ross Kirtley(11) +41,626 +* +Keri Crowell(12) +37,092 +* +Directors and Executive Officers as a Group (12 persons) +397,337 +* +* +Less than 1%. +(1) +Beneficial ownership is determined in accordance with SEC rules. In computing percentage ownership of each person, shares of common stock subject to options held by that person that are exercisable as of April 1, +2016, or exercisable within 60 days of April 1, 2016, are deemed to be beneficially owned. These shares, however, are not deemed outstanding for the purpose of computing the percentage ownership of each other person. The percentage of shares +beneficially owned is based on 125,943,361 shares of common stock outstanding as of April 1, 2016, including 615,801 shares of restricted stock awarded under our 2013 Restated Stock Incentive Plan or our Amended and Restated 2005 Stock +Incentive Plan, but not yet vested. Unless otherwise indicated, all amounts exclude shares issuable upon the exercise of outstanding options that are not exercisable as of April 1, 2016 or within 60 days of April 1, 2016. Except as +otherwise noted, each stockholder has sole voting and investment power with respect to the shares beneficially owned. None of the shares beneficially owned by our executive officers or directors are pledged as security. +55 +Table of Contents +(2) +Represents (i) 10,156 shares of our common stock held by Mr. Dillingham directly and (ii) 3,830 unvested shares of our common stock granted under our 2013 Restated Stock Incentive Plan, which will vest on +June 18, 2016 if Mr. Dillingham is in continuous service on such date. +(3) +Represents (i) 8,186 shares of our common stock held by Mr. Groeschel directly and (ii) 3,830 unvested shares of our common stock granted under our 2013 Restated Stock Incentive Plan, which will vest on +June 18, 2016 if Mr. Groeschel is in continuous service on such date. +(4) +Represents (i) 35,804 shares of our common stock held by Mr. Houston directly and (ii) 3,830 unvested shares of restricted stock granted under our 2013 Restated Stock Incentive Plan, which shares will +vest on June 18, 2016 if Mr. Houston is in continuous service on such date. +(5) +Represents (i) 3,000 shares of our common stock held in a joint account with Mr. Johnson and his spouse and (ii) 2,951 unvested shares of restricted stock granted under our 2013 Restated Stock Incentive +Plan, which shares will vest on June 18, 2016 if Mr. Johnson is in continuous service on such date. +(6) +Represents (i) 19,770 shares of our common stock held by Mr. Streller directly, and (ii) 3,830 unvested shares of restricted stock granted under our 2013 Restated Stock Incentive Plan, which shares will +vest on June 18, 2016 if Mr. Streller is in continuous service on such date. +(7) +Represents (i) 3,930 shares of our common stock held by Mr. Morris directly, and (ii) 3,830 unvested shares of restricted stock granted under our 2013 Restated Stock Incentive Plan, which shares will vest +on June 18, 2016 if Mr. Morris is in continuous service on such date. +(8) +Represents (i) 78,316 shares of our common stock held by Mr. Moore directly, (ii) 17,409 unvested shares of restricted stock granted under our 2013 Restated Stock Incentive Plan, which shares will vest on +March 1, 2017, and (iii) 28,405 restricted stock units granted under our 2013 Restated Stock Incentive Plan, which restricted stock units vested on March 31, 2016, with the settlement to occur on the second business day after the +applicable trading window opens. Excludes (i) 24,868 shares of restricted stock granted under our 2013 Restated Stock Incentive Plan as a retention award in connection with his assumption of duties as interim Chief Executive Officer after the +retirement of Mr. Palm in February 2014, which award was rescinded when Mr. Moore was named our Chief Executive Officer, (ii) 40,367 unvested restricted stock units granted under our 2013 Restated Stock Incentive Plan, which +restricted stock units will vest in four approximately equal annual installments beginning on March 10, 2017 and (iii) 56,810 unvested restricted stock units granted under our 2013 Restated Stock Incentive Plan, which restricted stock +units will vest in two substantially equal annual installments beginning on March 31, 2017. +(9) +Represents (i) 8,980 shares of our common stock held by Mr. Gaydosik directly, (ii) 14,033 unvested shares of restricted stock granted to Mr. Gaydosik under our 2013 Restated Stock Incentive Plan, +which shares will vest in two approximately equal annual installments beginning on March 1, 2017 and (iii) 1,963 unvested shares of restricted stock granted under our 2013 Restated Stock Incentive Plan, which shares will vest on +August 1, 2016. Excludes (i) 13,558 unvested restricted stock units granted under our 2013 Restated Stock Incentive Plan, which restricted stock units will vest in four approximately equal annual installments beginning on March 10, +2017 and (ii) 34,345 unvested restricted stock units granted under our 2013 Restated Stock Incentive Plan, which restricted stock units will vest in three substantially equal annual installments beginning on March 31, 2017. +(10) +Represents (i) 20,366 shares of our common stock held by Mr. Maier directly, (ii) 10,000 unvested shares of restricted stock granted under our 2013 Restated Stock Incentive Plan that will vest in three +approximately equal installments beginning on August 15, 2016. +(11) +Represents (i) 23,276 shares of our common stock held by Mr. Kirtley directly, (ii) 15,350 unvested shares of restricted stock granted to Mr. Kirtley under our Restated 2013 Stock Incentive Plan, +which shares will vest in two equal annual installments beginning on March 1, 2017 and (iii) 3,000 unvested shares of restricted stock granted under our 2013 Restated Stock Incentive Plan, of which 1,333 will vest on September 1, 2016 +and 1,667 will vest on September 1, 2017. Excludes (i) 14,830 unvested restricted stock units granted under our 2013 Restated Stock Incentive Plan, which restricted stock units will vest in four approximately equal annual installments +beginning on March 10, 2017 and (ii) 37,569 unvested restricted stock units granted under our 2013 Restated Stock Incentive Plan, which restricted stock units will vest in three substantially equal annual installments beginning on +March 31, 2017. +56 +Table of Contents +(12) +Represents (i) 9,092 shares of our common stock held by Ms. Crowell directly, and (ii) 28,000 unvested shares of restricted stock granted under our 2013 Restated Stock Incentive Plan, of which 5,333 +shares will vest on August 15, 2016, 5,332 shares will vest on December 1, 2016, 5,333 shares will vest on August 15, 2017, 6,668 shares will vest on December 1, 2017 and 5,334 shares will vest on August 15, 2018. +Section 16(a) Beneficial Ownership Reporting Compliance +Section 16(a) of the Exchange Act requires our directors and executive officers, and persons who beneficially own more than 10% of a registered class of +the Company’s equity securities, to file reports of ownership and changes in ownership with the SEC and to furnish us with copies of the forms they file. To our knowledge, based solely on a review of the copies of such reports furnished to us +and written representations of our officers and directors, all Section 16(a) reports for the year ended December 31, 2015 applicable to our officers and directors and such other persons were filed on a timely basis. +Certain Relationships and Related Transactions +Review and Approval of Related Party Transactions +The audit committee, as provided in its charter, reviews and approves related party transactions. The Company does not have a formal set of standards to be +substantively applied to each transaction reviewed by the audit committee. Instead of a formalized policy, related party transactions are reviewed and judgment is applied to determine whether such transactions are in the best interests of the +Company. Further, the Company’s Code of Business Conduct and Ethics governs various compliance areas, including conflicts of interest and fair dealings, which are considered in the process of the review and approval of related party +transactions. +The Company’s policy is that all of its employees and directors, as well as their family members, must avoid any activity that is or +has the appearance of conflicting with the Company’s business interest. This policy is included in the Company’s Code of Business Conduct and Ethics posted on its website. Each director and executive officer is instructed to always inform +the designated compliance officer when confronted with any situation that may be perceived as a conflict of interest. Only the board of directors or a committee consisting solely of independent directors may grant waivers of the provisions of the +Code of Business Conduct and Ethics for the Company’s executive officers and directors. In addition, at least annually, each director and executive officer completes a detailed questionnaire specifying any business relationship that may give +rise to a conflict of interest. +Further, under the audit committee charter, the audit committee is responsible for reviewing and monitoring compliance +with our Code of Business Conduct and Ethics and recommending any warranted changes to the board of directors. In addition, the board of directors and, pursuant to its written charter, the audit committee, reviews and approves all relationships and +transactions in which the Company and its directors, director nominees and executive officers and their immediate family members, as well as holders of more than 5% of any class of our voting securities and their family members, have a direct or +indirect material interest. The board of directors and the audit committee approve only those transactions that, in light of known circumstances, are consistent, or are not inconsistent with, the Company’s best interests, as they determine in +the good faith exercise of their discretion. +57 +Table of Contents +Proposal to Approve, on an Advisory Basis, the Compensation Paid to +the Company’s Named Executive Officers +(Item 2 on the Proxy Card) +In accordance with Section 14A of the Exchange Act, our board of directors is providing our stockholders with a non-binding advisory vote on the +compensation paid to the Company’s named executive officers as reported in this proxy statement, or “say on pay” vote. The Company’s stockholders are being asked to vote on the following resolution: +“RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to Item 402 of Regulation +S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby approved.” +This vote is advisory, +which means that the vote on executive compensation is not binding on the Company, our board of directors or the compensation committee. While the vote on executive compensation is solely advisory in nature, our board of directors and the +compensation committee will review and consider the “say on pay” voting results when making future decisions regarding our executive compensation program. +Stockholders are encouraged to carefully review the “Compensation Discussion and Analysis” section of this proxy statement, which discusses in +detail the Company’s compensation policy and compensation arrangements which the Company believes are appropriate and reasonably consistent with market practice and with the long-term interests of the Company and its stockholders. In +furtherance of the Company’s goals and objectives, the compensation committee, among other things, emphasizes long-term equity awards and annual performance bonuses under the previously implemented Annual Incentive Plan to more closely align +our executives’ interests with those of our stockholders and to link a larger portion of our executives’ compensation to the performance of our stock and our operational performance. The compensation committee also believes that it sets +meaningful performance targets under the Annual Incentive Plan. Further, in 2014, the compensation committee eliminated, and since that time has not used and does not intend to use, minimum discretionary cash bonus arrangements for its Chief +Executive Officer, Chief Financial Officer and Chief Operating Officer in recognition of the Company’s focus on the use of performance-based bonuses. The compensation committee believes that our shift to linking a larger portion of such +executive officers’ compensation to long-term equity incentive awards and our shift away from discretionary cash bonuses to performance-based bonus arrangements for such executive officers appropriately align with the long-term interests of the +Company and its stockholders and are consistent with market practices. The compensation committee also believes that our current compensation policies and practices enhance retention of executive talent through multi-year vesting of stock awards and +do no encourage unnecessary and excessive risk taking. The compensation committee further believes that our other compensation policies and practices, such as our policy prohibiting pledging (except in certain limited circumstances and subject to +prior approval by our compliance officer or the compensation committee) or hedging of our stock by our executive officers and directors, as well as the lack of significant prerequisites and absence of pension or supplemental retirement benefits, +aside from those afforded under our broad-based 401(k) plan, for our executive officers are consistent with prudent compensation philosophy and the interests of our stockholders. +We have determined that our stockholders should cast an advisory vote on the compensation of our named executive officers on an annual basis. Unless this +policy changes, the next advisory vote on the compensation of our named executive officers will be at the 2017 annual meeting of stockholders. +THE +BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THIS PROPOSAL 2. +58 +Table of Contents +Proposal to Ratify the Appointment of Our Independent Auditors +(Item 3 on the Proxy Card) +What am I voting on? +You are voting on a proposal to +ratify the appointment of Grant Thornton LLP as our independent auditors for fiscal year 2016. The audit committee has appointed Grant Thornton LLP to serve as independent auditors. +What services do the independent auditors provide? +Audit +services of Grant Thornton LLP for fiscal 2015 included an audit of our consolidated financial statements and services related to periodic filings made with the SEC. Additionally, Grant Thornton LLP provided certain services related to the +consolidated quarterly reports and annual and other periodic reports, registration statements and comfort letters and other services as described below. +How much were the independent auditors paid in 2014 and 2015? +Grant Thornton LLP’s fees for professional services totaled $661,833 for 2014 and $910,515 for 2015. Grant Thornton LLP’s fees for professional +services included the following: +• +Audit Fees —aggregate fees for audit services, which relate to the fiscal year consolidated audit, quarterly reviews, registration statements, comfort letters, statutory and regulatory audits and accounting +consultations were $661,833 in 2014 and $910,515 in 2015. +• +Audit-Related Fees —aggregate fees for audit-related services, consisting of audits in connection with proposed or consummated dispositions, benefit plan audits, other subsidiary audits, special reports, and +accounting consultations, were $0 in 2014 and $0 in 2015. +• +Tax and All Other Fees —there were no tax or other fees for products or services provided by Grant Thornton LLP in addition to the services described above in 2014 and 2015. +Does the audit committee approve the services provided by Grant Thornton LLP? +It is our audit committee’s policy to pre-approve all audit, audit related and permissible non-audit services rendered to us by our independent auditor. +Consistent with such policy, all of the fees listed above that we incurred for services rendered by Grant Thornton LLP in fiscal 2014 and 2015 were pre-approved by our audit committee. No non-audit services were provided to us by Grant Thornton LLP +in 2014 or 2015. +Will a representative of Grant Thornton LLP be present at the meeting? +Yes, one or more representatives of Grant Thornton LLP will be present at the meeting. The representatives will have an opportunity to make a statement if they +desire and will be available to respond to appropriate questions from the stockholders. +What vote is required to approve this proposal? +Stockholder ratification of the appointment of our independent auditors is not required by the Company’s bylaws or otherwise. However, we are submitting +this proposal to the stockholders as a matter of good corporate practice. Approval of this proposal requires the affirmative vote of a majority of the votes cast on the proposal. If the appointment of Grant Thornton LLP is not ratified, the audit +committee will reconsider the appointment. Even if the appointment is ratified, the audit committee in its discretion may direct the appointment of a different independent audit firm at any time during the year if it is determined that such change +would be in best interests of the Company and its stockholders. +59 +Table of Contents +Has Grant Thornton LLP always served as Gulfport’s independent auditors? +Grant Thornton LLP has served as our independent auditors since 2005. +What does the board of directors recommend? +THE BOARD +OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF GRANT THORNTON LLP AS THE COMPANY’S INDEPENDENT AUDITORS FOR THE YEAR 2016. +Stockholder Proposal Regarding a Methane Emissions Report +(Item 4 on the Proxy Card) +We have +received a stockholder proposal submitted by California State Teachers’ Retirement System, located at 100 Waterfront Place, MS-04, West Sacramento, California 95605-2807, or the Proponent, for inclusion in this proxy statement and for +consideration by our stockholders at the 2016 Annual Meeting. The Proponent’s resolution and supporting statement, along with the board of directors’ statement in opposition to the proposal, are set forth below. As of the time the proposal +was submitted, the Proponent is the beneficial owner of more than $2,000 worth of our common stock. +A representative of the Proponent is expected to +present the resolution set forth below at the 2016 Annual Meeting for consideration by our stockholders. In accordance with applicable SEC rules, the Proponent’s resolution, for which we accept no responsibility, is set forth below exactly as +they were submitted by the Proponent. +What vote is required to approve this proposal? +Approval of this stockholder proposal, if properly presented, requires the affirmative vote of a majority of the votes cast by the stockholders present in +person or represented by proxy at the 2016 Annual Meeting and entitled to vote thereon. Abstentions and broker non-votes will not be counted in determining the number of shares necessary for approval. Properly executed proxies will be voted at the +2016 Annual Meeting in accordance with the instructions specified on the proxy; if no such instructions are given, the persons named as agents and proxies in the accompanying form of proxy will vote such proxy “AGAINST” this proposal. +The Stockholder Proposal +WHEREAS: +We believe that reporting on environmental risk management makes a company more responsive to its shareholders who are seeking information on how the company +is navigating growing regulation, evolving legislation, and increasing public expectations around how corporate behavior impacts the environment. +Companies in the oil and gas industry face risk due to intended and unintended emissions of methane gas from their operations. According to the Environmental +Protection Agency (EPA), the oil and gas sector in the United States is the largest industrial source of methane pollution and leaks more than 7 million metric tons of methane emissions each year, enough to meet the cooking and heating needs of +over 5 million American homes. +Methane gas emissions are a significant contributor to climate change. According to the Environmental Defense Fund +(EDF), methane is a climate pollutant 84 times more powerful than carbon dioxide over a 20 year period and is responsible for one quarter of the global warming we feel today. +60 +Table of Contents +Regulation surrounding methane emissions is growing. In 2014, Colorado became the first state in the United +States to directly regulate methane emissions from oil and natural gas operations. In August 2015, the EPA proposed the first-ever direct regulation of methane pollution for new and modified sources in the oil and gas industry. +Increased disclosure surrounding methane emissions management could improve public trust in oil and gas companies. According to a December 2013 research +report published by Research + Data Insights, if oil and gas companies were to provide greater visibility into efforts to cut down on emissions... they have an opportunity to see a dramatic increase in public trust. +Methane emissions also represent the loss of a saleable product. A recent analysis by the Rhodium Group found that in 2012, about 3.5 trillion cubic feet of +unburned natural gas, worth about $30 billion, was emitted globally from the oil and gas industry as a result of leaks and intentional releases. +Low cost +solutions to address methane reductions exist. A 2014 report by the consulting firm ICF International found that a 40 percent reduction in methane emissions by 2018 would cost $108 million a year in operational expenditures, working out to roughly +one penny per thousand cubic foot of gas produced on average in the United States. +Gulfport Energy Corporation has not provided adequate disclosure, in +public filings, on its website, or through a report, that discusses the Company’s strategies to mitigate risk associated with the emission of methane gas from its operations. +RESOLVED +Shareholders request that the Board of Directors issue +a report describing how the company is monitoring and managing the level of methane emissions from its operations. The requested report should include a company-wide review of the policies, practices, and metrics related to Gulfport Energy +Corporation’s methane emissions risk management strategy. The report should be prepared at reasonable cost, omitting proprietary information, and made available to shareholders by December 31, 2016. +Board of Directors’ Statement In Opposition to Stockholder Proposal +Our board of directors has carefully considered the stockholder proposal and does not believe that preparing a report reviewing our policies on methane +emissions is in the best interests of our stockholders at this time. +We are committed to the exploration, exploitation, acquisition and production of +natural gas, natural gas liquids and crude oil in an environmentally responsible manner and in compliance with applicable federal, state and local environmental laws, including laws regulating emissions of greenhouse gases, or GHGs, such as methane. +Accordingly, we currently measure, mitigate and take actions to reduce methane emissions from our operations. The proposed report would unnecessarily alter and add to existing efforts at additional cost, providing limited, if any, benefit to the +Company and our stockholders. +The federal government, as well as many state governments, has begun to regulate stringently GHG emissions, including +methane. For example, the United States Environmental Protection Agency, or the EPA, has adopted regulations under the Clean Air Act that, among other things, provide that major sources of GHG emissions required to obtain Prevention of Significant +Deterioration, or PSD, construction permits for their emission of criteria pollutants may also be required to obtain such permits for GHG emissions. Facilities required to obtain PSD permits for their GHG emissions must meet “best available +control technology” standards that will be established by the states on a case-by-case basis, subject to oversight by the EPA. In addition, on September 18, 2015, the EPA published a suite of proposed rules to reduce methane and volatile +organic compounds, or VOC, emissions from the oil and gas industry, including new “downstream” requirements covering equipment in the +61 +Table of Contents +natural gas transmission segment of the industry that is not regulated by the existing rules. The proposed rule would require operators to use currently available technologies and equipment to +reduce flaring, periodically inspect their operations for leaks and replace outdated equipment that vents large quantities of gas into the air. Finally, on January 22, 2016, the Bureau of Land Management announced a proposed rule to reduce the +flaring, venting and leaking of methane from oil and gas operations on federal and Indian lands. The board of directors believes that these and similar regulatory programs are likely to achieve the objectives of the proposal more effectively and +uniformly than the proponent’s proposed approach. +The Company monitors its GHG emissions and is subject to annual GHG reporting obligations pursuant +to EPA’s Mandatory Greenhouse Gas Reporting regulations (40 CFR Part 98). Under Subpart A, C and W, the Company reports direct methane emissions to the EPA via the EPA’s online electronic greenhouse gas reporting tool (e-GGRT). Reported +data is publicly available on the EPA’s website. We are and will continue measuring and monitoring GHG emissions from our operations in accordance with the GHG emissions reporting rules and believe that our monitoring and reporting activities +are in compliance with applicable reporting obligations. +Moreover, we already take steps for emissions mitigation. We adhere to the gas well completions +requirements per the state and federal regulations for both natural gas and condensate wells pursuant to the EPA’s New Source Performance Standards (NSPS) Subpart OOOO regulations. Under our operations, wells are brought online only when a +flowline is available from the gathering and processing provider. All salable gas is routed to the flowline as soon as practicable, except certain rare time periods for which there are upset conditions. In such rare cases, gas is sent to a +combustion device to be destructed. We also comply with state and federal air quality permitting regulations that require us to carry out leak detection and repair, or LDAR, programs at many of our facilities. Currently, we are in compliance with +both Ohio (where most of our production and proved reserves are concentrated) and Colorado’s LDAR programs. These LDAR programs enable us to identify and repair leaks from certain equipment, reducing emissions, including methane emissions. We +are complying and will continue to comply with currently applicable permitting requirements, and will comply with any applicable new methane emission standards that come into effect. +We also take steps beyond those required by law to reduce methane emissions. We plan to further reduce methane emissions by employing similar practices on a +voluntary basis in our activities in Louisiana, which currently does not require us to carry out such programs, and believe that such voluntary practices will assist us in reducing fugitive emissions for our operations on a Company-wide basis. Since +July 2015, we have installed instrument air as opposed to gas to control our pneumatic devices on all new pads in our Ohio operations and, at this time, all of our existing pads in our Ohio operations have been converted to instrument air, which we +believe to be more effective (having gas driven pneumatic devices as a backup). These conversions have significantly decreased our fugitive emissions. In addition, at our West Cote Blanche Bay facility in Louisiana, we have replaced the four +pneumatic chemical pumps with electric pumps, which will decrease the overall facility emissions. Through these efforts, we have proven our commitment to environmental sustainability and recognized the importance of environmental stewardship and the +growing interest concerning levels of emissions of GHG and their potential effects on the earth’s climate. We expect to achieve further reductions through these and other initiatives and through implementation of regulatory-mandated procedures +and equipment modifications under the NSPS Subpart OOOO regulations. +Finally, the creation of the report called for by the proposal would require an +extensive analysis of many individual field facilities operated by the Company, unnecessarily layering additional and potentially inconsistent requirements on top of existing efforts to measure, mitigate and reduce methane emissions. +In light of (i) the costs associated with the preparation of the report requested in the proposal and (ii) such a report’s limited value in +assisting the Company in improving its environmental performance, which the Company continues to monitor and address through what it believes are more cost effective and relevant means, the board of directors believes that the preparation of such a +report would ultimately be an inefficient use of corporate resources and an unnecessary expense. The board of directors believes that the long-term interests of +62 +Table of Contents +stockholders are best served by growing, managing and operating our business in a financially responsible manner that is focused on long-term value creation with due regard for the environment, +which the Company continuously strives to achieve. +THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING “AGAINST” THE APPROVAL OF THE +STOCKHOLDER PROPOSAL. +Solicitation by Board; Expenses of Solicitation +Our board of directors has sent you this proxy statement. Our directors, officers and employees may solicit proxies by mail, by telephone or in person. Those +persons will receive no additional compensation for any solicitation activities. We will request banking institutions, brokerage firms, custodians, trustees, nominees and fiduciaries to forward solicitation materials to the beneficial owners of +common stock held of record by those entities, and we will, upon the request of those record holders, reimburse reasonable forwarding expenses. We will pay the costs of preparing, printing, assembling and mailing the proxy material used in the +solicitation of proxies. +Submission of Future Stockholder Proposals +Under SEC rules, a stockholder who intends to present a proposal, including with respect to the nomination of directors, at the 2017 Annual Meeting of +Stockholders and who wishes the proposal to be included in the proxy statement for that meeting must submit the proposal in writing to our Assistant Corporate Secretary. The proposal must be received no later than January 7, 2017. +Stockholders who wish to propose a matter for action at the 2017 Annual Meeting, including with respect to the nomination of directors, but who do not wish to +have the proposal or nomination included in the proxy statement, must notify the Company in writing of the information required by the provisions of our bylaws dealing with stockholder proposals. The notice must be delivered to our Assistant +Corporate Secretary between February 10, 2017 and March 12, 2017. You can obtain a copy of our bylaws by writing the Assistant Corporate Secretary at the address below, or via the Internet at www.gulfportenergy.com under our +“Corporate Governance” caption. +All written proposals should be directed to Paul K. Heerwagen IV, our Assistant Corporate Secretary at Gulfport +Energy Corporation, 14313 North May Avenue, Suite 100, Oklahoma City, Oklahoma 73134. +The board of directors is responsible for selecting and +recommending director candidates and will consider nominees recommended by stockholders. If you wish to have the board of directors consider a nominee for director, you must send a written notice to our Assistant Corporate Secretary at the address +provided above and include the information required by our bylaws and discussed beginning on page 11 of this proxy statement. +Availability of Form 10-K and Annual Report to Stockholders +SEC rules require us to provide an Annual Report to stockholders who receive +this proxy statement. Additional copies of the Annual Report, along with copies of our Annual Report on Form 10-K for the fiscal year ended December 31, 2015, including the financial statements and the financial statement schedules, are +available without charge to stockholders upon written request to Director of Investor Relations, Gulfport Energy Corporation, 14313 North May Avenue, Suite 100, Oklahoma City, Oklahoma 73134 or via the Internet at www.gulfportenergy.com . +We will furnish the exhibits to our Annual Report on Form 10-K upon payment of our copying and mailing expenses. +63 +Table of Contents +Householding +The SEC permits a single set of annual reports and proxy statements to be sent to any household at which two or more stockholders reside if they appear to be +members of the same family. Each stockholder continues to receive a separate proxy card. This procedure, referred to as householding, reduces the volume of duplicate information stockholders receive and reduces our mailing and printing expenses. +If you would like to receive your own set of the annual report and proxy statement this year or in future years, follow the instructions described below. +Similarly, if you share an address with another Gulfport stockholder and together both of you would like to receive in the future only a single annual report and proxy statement, follow these instructions: +• +If your shares of our common stock are registered in your own name, please contact our transfer agent, Computershare Trust Company, N.A., and inform them of your request by calling their toll-free number: +(800) 962-4284 or by mail: Computershare Trust Company, N.A., 250 Royall Street, Canton, MA 02021. +• +If a broker or other nominee holds your shares, please contact your broker or nominee. +Other Matters +The board of directors does not intend to present any other items of business other than those stated in the Notice of Annual +Meeting of Stockholders. If other matters are properly brought before the meeting, the persons named as your proxies will vote the shares represented by it in accordance with their best judgment. Discretionary authority to vote on other matters is +included in the proxy. +64 +Table of Contents +IMPORTANT ANNUAL MEETING INFORMATION 000004 +ENDORSEMENT_LINE SACKPACK +MR A SAMPLE +DESIGNATION (IF ANY) ADD 1 ADD 2 ADD 3 ADD 4 +NNNNNNNNN ADD 5 +ADD 6 +Using a black ink pen, mark your votes with an X as shown in X this example. Please do not write outside the designated areas. +C123456789 +000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext +000000000.000000 ext 000000000.000000 ext +Electronic Voting Instructions +Available 24 hours a day, 7 days a week! +Instead of mailing your proxy, you +may choose one of the voting methods outlined below to vote your proxy. +VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR. +Proxies submitted by the Internet or telephone must be received by 1:00 a.m., Central Time, on June 10, 2016. +Vote by Internet +Go to www.investorvote.com/GPOR +Or scan the QR code with your smartphone +Follow the steps outlined on the secure website +Vote by telephone +Call toll free 1-800-652-VOTE (8683) within the USA, +US territories & Canada on a touch tone telephone +Follow the instructions provided by the recorded message +Annual Meeting Proxy Card 1234 5678 9012 345 +IF YOU HAVE NOT VOTED VIA THE INTERNET OR +TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. +A Proposals — The Board of Directors recommends a vote +FOR all the nominees listed in Proposal 1, FOR Proposals 2 and 3, and +AGAINST Proposal 4. +1. ELECTION OF DIRECTORS: For Withhold For Withhold For Withhold + +01—Michael G. Moore +02—Craig Groeschel 03—David L. Houston +04—C. Doug Johnson 05—Ben T. Morris 06—Scott E. Streller +For Against Abstain For Against Abstain +2. Proposal to Approve, on an Advisory Basis, the +Compensation 3. Proposal to Ratify the Appointment of Our Independent +Paid to the Company’s Named Executive Officers Auditors, Grant Thornton LLP, for fiscal +year 2016 +4. Stockholder Proposal Regarding a Methane Emissions Report +B +Non-Voting Items +Change of Address — Please print new address below. +C +Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below +When shares are held by joint tenants, both +should sign. When signing as attorney, executor, administrator, trustee, or guardian, please give full title as such. If a corporation, please sign in full +corporate name by the president or another authorized officer. If a partnership, please sign in partnership name by an authorized person. +Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box. +C 1234567890 J N T MR A SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE +140 CHARACTERS) MR A SAMPLE +AND MR A SAMPLE AND +MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND +NNNNNNN +1UPX 2 8 0 0 0 6 1 MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND + +02CZND +Table of Contents +Proxy – Gulfport Energy Corporation +You are +cordially invited to attend the Annual Meeting of Stockholders To be held on June 10, 2016, at 10:00 a.m. Oklahoma City time, at 14313 North May Avenue, Suite 100, Oklahoma City, Oklahoma 73134. +PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. +Proxy — GULFPORT ENERGY CORPORATION +FOR THE ANNUAL MEETING OF STOCKHOLDERS OF Gulfport +Energy Corporation This Proxy Is Solicited On Behalf Of The Board Of Directors +The undersigned hereby appoints Michael G. Moore and Aaron Gaydosik (together, the +“Proxies”), and each of them, with full power of substitution, as proxies to vote the shares that the undersigned is entitled to vote at the Annual Meeting of Stockholders of Gulfport Energy Corporation (the “Company”) to be held +on June 10, 2016 at 10:00 a.m. Oklahoma City time and at any adjournments and postponements thereof. Such shares shall be voted as indicated with respect to the proposals listed on the reverse side hereof and in the Proxies’ discretion on +such other matters as may properly come before the meeting or any adjournment or postponement thereof. +The undersigned acknowledges receipt of the 2016 Notice of +Annual Meeting and accompanying Proxy Statement and revokes all prior proxies for said meeting. +THE SHARES REPRESENTED BY THIS PROXY WHEN PROPERLY EXECUTED WILL BE +VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO SPECIFIC DIRECTION IS GIVEN AS TO THE PROPOSALS ON THE REVERSE SIDE, THIS PROXY WILL BE VOTED FOR EACH OF THE NOMINEES NAMED IN PROPOSAL 1, FOR EACH OF THE PROPOSALS 2 AND 3, +AND AGAINST PROPOSAL 4 IN ACCORDANCE WITH THE BOARD OF DIRECTOR’S RECOMMENDATION. PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY. +IMPORTANT – +PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY. THANK YOU FOR VOTING. +(Continued and to be marked, dated and signed on reverse side.) \ No newline at end of file diff --git a/raw/proxies/0000874499/0001193125-16-569716/proxy_rpt.txt b/raw/proxies/0000874499/0001193125-16-569716/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..dcc7e5adf4de7d2b3f25d68aa496ed1d7bbeee93 --- /dev/null +++ b/raw/proxies/0000874499/0001193125-16-569716/proxy_rpt.txt @@ -0,0 +1,83 @@ +and approves related party transactions. +• Appoints, determines compensation, evaluates and terminates our independent +auditors. +• Pre-approves audit and permissible non-audit services to be performed by the +independent auditors. +• Prepares the report required by the Securities and Exchange Commission, or +the SEC, for the inclusion in our annual proxy statement. +• Reviews and reassesses the adequacy of the audit committee charter on a +periodic basis. +• Inform our independent auditors of the audit committee’s understanding +of significant relationships and transactions with related parties and review and discuss with our independent auditors the auditors’ evaluation of our identification of, accounting for and disclosure of our relationships and transactions with +related parties, including any significant matters arising from the audit regarding our relationships and transactions with related parties. +Four (4) +8 +Table of Contents +Committee +Members +Principal Functions +Number of +Meetings in +2015 +Compensation +Scott E. Streller* +Craig Groeschel +David L. Houston +C. Doug Johnson +• Oversees and administers our executive compensation +policies, plans and practices and evaluates their impact on risk and risk management. +• Assists the board of directors in discharging its responsibilities relating +to the compensation of our executives, including our chief executive officer, and other key employees. +• Administers our equity-based compensation plans, including the grants of +stock options, restricted stock awards and other equity awards under such plans. +• Reviews, approves and administers our cash-based incentive bonus plans, +including the establishment of performance criteria, targets and awards under our 2014 Executive Annual Incentive Compensation Plan. +• Makes recommendations to the board with respect to incentive +compensation. +• Where appropriate or required, makes recommendations to our stockholders +with respect to incentive compensation and equity-based plans. +• Conducts annual performance evaluation of the committee. +• Reviews +disclosure related to executive compensation in our proxy statement and prepares an annual compensation committee report. +• Reviews and considers the stockholders’ advisory vote on executive +compensation and the frequency of holding such advisory vote. +• Reviews and reassesses the adequacy of the compensation committee +charter. +Six (6) +Nominating and Corporate Governance +Ben T. Morris* +Donald L. Dillingham+ +David L. Houston +Scott E. Streller +• Assists the board of directors in developing criteria for, +identifying and evaluating individuals qualified to serve as members of our board of directors. +• Selects and recommends director candidates to the board of directors to be +submitted for election at the Annual Meeting and to fill any vacancies on the board of directors. +• Periodically reviews and makes recommendations regarding the composition and +size of the board of directors and each of its committees. +Three (3) +9 +Table of Contents +Committee +Members +Principal Functions +Number of +Meetings in +2015 +• Reviews and recommends to the board of directors +appropriate corporate governance policies and procedures for the Company. +• Conducts an annual assessment of the qualifications and performance of +the board of directors. +• Annually reviews and reports to the board of directors on the +performance of management. +• Reviews and reassesses the adequacy of the nominating committee +charter. +* +Committee Chairperson. ++ +Mr. Dillingham informed us that he did not intend to stand for re-election at the Annual Meeting. +Do +the committees have written charters? +Yes. The charters for our audit committee, compensation committee and nominating committee can be found on our +website at www.gulfportenergy.com under the “Corporate Governance” caption. You may also obtain copies of these charters, as well as our Code of Business Conduct and Ethics, which is described below, by writing to our Assistant +Corporate Secretary, Paul K. Heerwagen IV, at Gulfport Energy Corporation, 14313 N. May Avenue, Suite 100, Oklahoma City, Oklahoma 73134. \ No newline at end of file diff --git a/raw/proxies/0000874499/0001193125-17-152242/proxy.txt b/raw/proxies/0000874499/0001193125-17-152242/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..c7d8f8e23e0d95ea9fcfcd173ff28315b5bd23b5 --- /dev/null +++ b/raw/proxies/0000874499/0001193125-17-152242/proxy.txt @@ -0,0 +1,3324 @@ +DEF 14A +1 +d284692ddef14a.htm +DEF 14A +DEF 14A +Table of Contents +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Proxy Statement Pursuant to Section 14(a) of the +Securities Exchange Act of 1934 +☒ Filed by the +Registrant ☐ Filed by a Party other than the Registrant +Check the appropriate box: +☐ +Preliminary Proxy Statement +☐ +Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +☒ +Definitive Proxy Statement +☐ +Definitive Additional Materials +☐ +Soliciting Material under §240.14a-12 +Gulfport Energy +Corporation +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +☒ +No fee required +☐ +Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. +1) +Title of each class of securities to which transaction applies: +2) +Aggregate number of securities to which transaction applies: +3) +Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing +fee is calculated and state how it was determined): +4) +Proposed maximum aggregate value of transaction: +5) +Total fee paid: +☐ +Fee paid previously with written preliminary materials. +☐ +Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement +number, or the Form or Schedule and the date of its filing. +1) +Amount Previously Paid: +2) +Form, Schedule or Registration Statement No.: +3) +Filing Party: +4) +Date Filed: +Table of Contents +3001 Quail Springs Parkway +Oklahoma City, Oklahoma 73134 +NOTICE OF +2017 +ANNUAL +STOCKHOLDERS +MEETING +and +PROXY +STATEMENT +Thursday +June 8, 2017 +10:00 a.m., local time +3001 Quail Springs Parkway +Oklahoma City +Oklahoma 73134 +May 1, 2017 +Dear Gulfport Energy Corporation Stockholder: +On behalf of your board of directors and management, you are cordially invited to attend the Annual Meeting of Stockholders to be held at 3001 Quail Springs +Parkway, Oklahoma City, Oklahoma 73134 on Thursday, June 8, 2017, at 10:00 a.m., local time. +It is important that your shares be represented at the meeting. Whether or not you plan to attend the meeting, please vote by telephone or via Internet or +complete and return the enclosed proxy card in the accompanying envelope, in each case in accordance with the instructions provided in the enclosed proxy card. Please note that submitting a proxy will not prevent you from attending the meeting and +voting in person. +You will find information regarding the matters to be voted on at +the meeting in the enclosed proxy statement. Our 2016 Annual Report to Stockholders is either enclosed with these materials or has previously been mailed to you. This proxy statement and our 2016 Annual Report to Stockholders are also available on +our website at www.gulfportenergy.com/proxy. +In addition to the formal items of +business to be brought before the meeting, there will be a report on our operations, followed by a question and answer period. Your interest in Gulfport Energy Corporation is appreciated. We look forward to seeing you on June 8, 2017. +Sincerely, +Michael G. Moore +David L. Houston +Chief Executive Officer and President +Chairman of the Board +Table of Contents +GULFPORT ENERGY CORPORATION +3001 Quail Springs Parkway +Oklahoma City, Oklahoma 73134 +NOTICE OF +ANNUAL MEETING OF STOCKHOLDERS +TO BE HELD ON JUNE 8, 2017 +To our Stockholders: +The Annual Meeting of Stockholders of +Gulfport Energy Corporation will be held on June 8, 2017 at 10:00 a.m., local time, at 3001 Quail Springs Parkway, Oklahoma City, Oklahoma 73134, for the following purposes: +1. +To elect six directors to serve until the Company’s 2018 Annual Meeting of Stockholders; +2. +To hold an advisory vote on the compensation paid to the Company’s named executive officers; +3. +To ratify the appointment of Grant Thornton LLP as the Company’s independent auditors for the fiscal year ending December 31, 2017; +4. +To hold an advisory vote on the frequency of holding an advisory vote on the compensation paid to the Company’s named executive officers; and +5. +To transact such other business as may properly come before the Annual Meeting and any adjournment or postponement thereof. +Your vote is important. Please carefully consider the proposals and vote in one of these ways: +• +Vote by telephone or via Internet in accordance with the instructions provided in the enclosed proxy card; +• +Mark, sign, date and promptly return the enclosed proxy card in the postage-paid envelope; or +• +Submit a ballot at the Annual Meeting. +Only stockholders of record at the close of business on April 19, +2017 or their proxy holders may vote at the meeting. Directions to the meeting can be obtained from the Company. +IMPORTANT NOTICE REGARDING THE +AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 8, 2017 . This proxy statement and the Company’s 2016 Annual Report to Stockholders are available on the Company’s website at +www.gulfportenergy.com/proxy. +By Order of the Board of Directors, +Michael G. Moore +Chief Executive Officer and President +This notice and proxy statement are first being mailed to stockholders on or about May 6, 2017. +Table of Contents +GULFPORT ENERGY CORPORATION +3001 Quail Springs Parkway +Oklahoma City, Oklahoma 73134 +PROXY +STATEMENT +TABLE OF CONTENTS +About the Annual Meeting +1 +Board of Directors Information +5 +Election of Directors and Director Biographies +6 +Corporate Governance Matters and Communications with the Board +10 +Nominating Process for Directors, Director Qualifications and Review of Director +Nominees +11 +Director Leadership Structure +12 +Board of Director’s Role in Risk Oversight +13 +Audit Committee Report +14 +Executive Officers +16 +Compensation Discussion and Analysis +18 +Executive Summary +19 +Executive Compensation Philosopy and Components +21 +2016 Compensation Decisions +22 +Termination and Change of Control Benefits +29 +Perquisites and Other Personal Benefits +29 +Broad-Based Employee Benefits +30 +2017 Compensation Program +30 +Compensation Policies and Practices +31 +Independent Compensation Consultant +33 +Deductibility of Executive Compensation +34 +Effect of Our Compensation Policies and Practices on Risk and Risk Management +34 +Clawback Provisions +35 +Anti-Hedging and Pledging Policies +35 +Accounting Implications of Executive Compensation Policy +35 +The Role of Stockholders’ Say-on-Pay +36 +Compensation Committee Report on Executive Compensation +36 +Compensation Committee Interlocks and Insider Participation +37 +Compensation Tables +37 +Benefit Plans +42 +401(k) Plan +42 +2013 Restated Stock Incentive Plan +42 +2014 Executive Annual Incentive Compensation Plan +43 +Employment Agreements +46 +Employment Agreement with Our Chief Executive Officer +46 +Employment Agreements with our Chief Financial Officer, Senior Vice President of Geosciences and Vice +President—Reservoir Engineering +49 +Potential Payments Upon Termination, Resignation or Change of Control +50 +Stock Ownership +53 +Holdings of Major Stockholders +53 +Holdings of Officers and Directors +56 +i +Table of Contents +Section 16(a) Beneficial Ownership Reporting Compliance +57 +Certain Relationships and Related Transactions +57 +Review and Approval of Related Party Transactions +57 +Proposal to Approve, on an Advisory Basis, the Compensation Paid to the Company’s +Named Executive Officers +58 +Proposal to Ratify the Appointment of Our Independent +Auditors +59 +Proposal to Approve, on an Advisory Basis, the Frequency of Advisory Stockholder +Vote on the Compensation Paid to the Company’s Named Executive Officers +60 +Solicitation by Board; Expenses of Solicitation +61 +Submission of Future Stockholder Proposals +61 +Availability of Form 10-K and Annual +Report to Stockholders +61 +Householding +61 +Other Matters +62 +ii +Table of Contents +About the Annual Meeting +Who is soliciting my vote? +The board of directors of +Gulfport Energy Corporation, which we refer to as Gulfport, the Company and we in this proxy statement, is soliciting your vote at the 2017 Annual Meeting of Stockholders. The proposals to be voted on by the Company’s stockholders at the 2017 +Annual Meeting of Stockholders are described below. +What am I voting on? +You are voting on: +• +The election of directors (see Proposal 1 beginning on page 6); +• +The approval, on an advisory basis, of the compensation paid to the Company’s named executive officers as reported in this proxy statement ( see Proposal 2 beginning on page 58 ); +• +The ratification of Grant Thornton LLP as our independent auditors for 2017 ( see Proposal 3 beginning on page 59 ); +• +The approval, on an advisory basis, of the frequency of holding an advisory vote on the compensation paid to the Company’s named executive officers at an interval of “every one year,” “every two +years” or “every three years” ( see Proposal 4 on page 60 ); +• +Any other business properly coming before the meeting. +How does the board of directors recommend that I +vote my shares? +Unless you give other instructions on your proxy card, the persons named as proxy holders on the proxy card will vote in accordance +with the recommendations of our board of directors. The board of directors’ recommendations can be found with the description of each item in this proxy statement. In summary, the board of directors recommends a vote: +• +FOR the proposal to elect the nominated directors; +• +FOR the proposal to approve, on an advisory basis, the compensation paid to the Company’s named executive officers as reported in this proxy statement; +• +FOR the proposal to ratify Grant Thornton LLP as the Company’s independent auditors for 2017; and +• +FOR holding an advisory vote on the compensation paid to the Company’s named executive officers every year. +Who is entitled to vote? +You may vote if you were the +record owner of our common stock as of the close of business on the record date, which is April 19, 2017. Each share of common stock is entitled to one vote. As of April 19, 2017, we had 182,835,801 shares of common stock outstanding, +excluding an aggregate of 871,518 shares of restricted stock and restricted stock units awarded under our 2013 Restated Stock Incentive Plan, but not yet vested. There is no cumulative voting. +How many votes must be present to hold the meeting? +Your +shares are counted as present at the Annual Meeting if you attend the meeting and vote in person or if you properly return a proxy by mail. In order for us to hold our meeting, holders of a majority of the voting power of our outstanding shares of +common stock as of the close of business on April 19, 2017 must be present in person or by proxy at the meeting. This is referred to as a quorum. Abstentions and broker non-votes will be counted for +purposes of establishing a quorum at the meeting. +1 +Table of Contents +What is a broker non-vote? +If a broker does not have discretion to vote shares held in street name on a particular proposal and does not receive instructions from the beneficial owner on +how to vote those shares, the broker may return the proxy card without voting on that proposal. This is known as a broker non-vote . No broker may vote your shares without your specific instructions on +any of the proposals to be considered at the Annual Meeting other than the ratification of our independent auditors. +How many votes are needed to +approve each of the proposals? +Our bylaws provide for the election of directors in uncontested elections by a majority of the votes cast by the +stockholders present in person or represented by proxy at the meeting and entitled to vote thereon. The number of shares voted “FOR” a director nominee must exceed the number of votes cast “AGAINST” that nominee. Abstentions and +broker non-votes will not be counted for voting purposes with respect to the re-election of directors. Stockholders may not cumulate their votes with respect to the re-election of directors. If any incumbent director is not elected because he does not receive a majority of the votes cast, he is required to immediately tender his or her resignation for consideration by our board +of directors. Our board of directors will evaluate whether to accept or reject such resignation, or whether other action should be taken; provided, however, that the board will act on such resignation and publicly disclose its decision to accept or +reject such resignation and the rationale behind such decision within 90 days from the date of the certification of the director election results. +Each +of Proposals 2 and 3 requires the affirmative “FOR” vote of a majority of the votes cast by the stockholders present in person or represented by proxy at the Annual Meeting and entitled to vote thereon. Only votes for or against Proposal 2 +will be counted as votes cast, and abstentions and broker non-votes will not be counted for voting purposes. Broker non-votes will be counted as votes cast with respect +to Proposal 3. +With respect to Proposal 4 to approve, on an advisory basis, the frequency of holding an advisory vote on the compensation paid to the +Company’s named executive officers, stockholders will be able to choose among four options, namely whether future stockholder votes to approve executive compensation should occur every year, every two years or every three years, or whether the +stockholder abstains from voting. The affirmative vote of a majority of the votes cast by the stockholders present in person or represented by proxy at the Annual Meeting and entitled to vote thereon in favor of one of the voting options +contemplated by Proposal 4 is required to approve, on an advisory basis, Proposal 4. If one of the voting options is not adopted by the required vote of the stockholders, our board of directors will evaluate the votes cast for each of the voting +options and will deem the voting option receiving the greatest number of votes to be the voting option approved by the stockholders. +How do I vote? +You can vote either in person by submitting a ballot at the meeting, or by proxy without attending the meeting. +To vote by proxy, you can vote in one of the following ways: +• +by telephone or via Internet in accordance with the instructions provided in the enclosed proxy card; or +• +by marking, signing, dating and promptly returning the enclosed proxy card in the postage-paid envelope. +Even +if you plan to attend the meeting, we encourage you to vote your shares by proxy. If you plan to vote in person at the Annual Meeting, and you hold your stock in street name, you must obtain a proxy from your broker and bring that proxy to the +meeting. +2 +Table of Contents +Can I change my vote? +Yes. You can change or revoke your vote at any time before the polls close at the Annual Meeting. You can do this by: +• +Voting by telephone or Internet at a later date, but prior to the deadline for telephonic and Internet voting specified in the enclosed proxy card; +• +Signing another proxy card with a later date and returning it to us prior to the meeting; +• +Sending our Senior Vice President of Corporate Development and Strategy a written document revoking your earlier proxy; or +• +Voting again at the meeting. +Who counts the votes? +We have hired Computershare Trust Company, N.A., our transfer agent, to act as the tabulation agent and count the votes represented by proxies cast by mail or +ballot. Employees of Computershare Trust Company, N.A. will act as inspectors of election. +Will my vote be confidential? +Yes. As a matter of Company policy, proxies, ballots and voting tabulations that identify individual stockholders are treated as confidential. Only the +tabulation agent and the inspectors of election have access to your vote. Directors and employees of the Company may see your vote only if there is a contested proxy solicitation, as required by law or in certain other special circumstances. +Will my shares be voted if I don’t provide my proxy and don’t attend the Annual Meeting? +If you do not provide a proxy (by voting by telephone, via Internet or sending a proxy card, in each case in accordance with the instructions included in the +enclosed proxy card) or vote your shares held in your name at the meeting, your shares will not be voted. +If you hold your shares in street name, your +broker may be able to vote your shares for certain “routine” matters even if you do not provide the broker with voting instructions. The ratification of Grant Thornton LLP as our independent auditors for 2017 is considered routine. For +matters not considered “routine,” if you do not give your broker instructions on how to vote your shares, the broker will return the proxy card without voting on that proposal. This is a broker +non-vote. The proposals to elect directors, to approve, on an advisory basis, the compensation paid to the Company’s named executive officers and to approve, on an advisory basis, the frequency of holding +an advisory vote on the compensation paid to the Company’s named executive offices are not considered routine. As a result, no broker may vote your shares on these proposals without your specific instructions. +How are votes counted? +In the election of directors +contemplated by Proposal 1, you may vote “FOR,” “AGAINST” or “ABSTAIN” with respect to one or more of the nominees. For Proposals 2 and 3, you may vote “FOR,” “AGAINST” or “ABSTAIN.” To +approve, on an advisory basis, the frequency of holding an advisory vote on the compensation paid to the Company’s named executive officers contemplated by Proposal 4, you may vote in favor of holding such advisory vote every year, every two +years or every three years or may “ABSTAIN” from the vote. +What if I vote by proxy but don’t indicate my vote on the matters listed on +my proxy card? +If you return a signed proxy card without indicating your vote, your shares will be voted FOR the director nominees listed on the card, +FOR approving, on an advisory basis, the compensation paid to the Company’s +3 +Table of Contents +named executive officers as described in this proxy statement, FOR the ratification of Grant Thornton LLP as our independent auditors for 2017 and FOR approving, on an advisory basis, of holding +an advisory vote on the compensation paid to the Company’s named executive officers every year. +Could other matters be decided at the Annual +Meeting? +We have not received any stockholder proposals and are not aware of any other matters that will be considered at the Annual Meeting. If any +other matters arise at the Annual Meeting, the persons named in your proxies will vote in accordance with their best judgment. +Who can attend the +meeting? +The Annual Meeting is open to all holders of our common stock. +What do I need to bring to attend the Annual Meeting? +You will need proof of ownership of our common stock to enter the meeting. If your shares are in the name of your broker or bank or other nominee, you will +need to bring evidence of your stock ownership, such as your most recent brokerage statement. All stockholders will be required to present valid picture identification. IF YOU DO NOT HAVE VALID PICTURE IDENTIFICATION AND PROOF THAT YOU OWN SHARES OF +OUR COMMON STOCK, YOU MAY NOT BE ADMITTED INTO THE MEETING. +How can I access the Company’s proxy materials and annual report electronically? +This proxy statement and the Company’s 2016 Annual Report to Stockholders are available on the Company’s website at +www.gulfportenergy.com/proxy. +4 +Table of Contents +Board of Directors Information +What is the makeup of the board of directors and how often are the members elected? +Our board of directors currently consists of six members who are elected annually. The five of these six directors are independent under the Nasdaq listing +standards. +What if a nominee is unable or unwilling to serve? +That is not expected to occur. If it does, shares represented by proxies will be voted for a substitute nominated by the board of directors. +How are directors compensated? +Our policy is that +members of our board of directors who are also our officers or employees do not receive compensation for their services as directors. The compensation of our non-employee directors is described below. +Cash Compensation +Our non-employee directors are paid an annual retainer of $60,000, an attendance fee of $1,500 for each board meeting attended in person, and an attendance fee of $750 for each board meeting attended telephonically. In +addition, the Chairman of the Board receives an additional $65,000 annual retainer, the audit committee chairman receives an additional $15,000 annual retainer and the chairman of each of the compensation committee and the nominating and corporate +governance committee receives an additional $10,000 annual retainer. Each committee member is also paid a $1,000 attendance fee for each committee meeting attended in person and a $500 attendance fee for each committee meeting attended +telephonically. +Equity Compensation +Our non-employee directors are entitled to receive an annual grant of restricted stock units with an aggregate value of +approximately $125,000 based on the closing price of our common stock on the date of grant, with vesting to occur in the following year. On June 10, 2016, we awarded the 2016 annual director grant in the amount of 3,824 shares of our restricted +stock to each of our then-serving non-employee directors under our 2013 Restated Stock Incentive Plan, which shares will vest on June 10, 2017 if the non-employee +director is in continuous service on that date. Further information regarding our director compensation in 2016 is set forth under the heading “2016 Director Compensation” below. +Insurance and Indemnification +We +provide liability insurance for our directors and officers at a current annual cost of approximately $540,948. We have also entered into indemnification agreements with each of our current directors. These agreements require us to indemnify these +individuals to the fullest extent permitted under Delaware law against liabilities that may arise by reason of their service to us, and to advance expenses incurred as a result of any proceeding against them as to which they could be indemnified. +In addition, our certificate of incorporation sets forth limitations on our directors’ liability to our stockholders. Further, our bylaws contain +indemnification and advancement of expenses provisions for the benefit of our directors and officers. +How often did the board of directors meet in +2016? +The board of directors met 15 times in 2016. In addition to these meetings, the board of directors adopted resolutions by unanimous written +consent. Each director attended at least 75% of the aggregate meetings of the board of directors and the meetings of the committees on which he served. +5 +Table of Contents +Election of Directors and Director Biographies +(Proposal 1 on the Proxy Card) +Who are this year’s nominees? +The directors +standing for election this year to hold office until the 2018 Annual Meeting of Stockholders and until each such director’s successor is elected are: +MICHAEL G. MOORE, age 60. Mr. Moore was appointed as our Chief Executive Officer and as a member of our board of directors on April 22, 2014, +and has served as our President since August 2013. He served as our Chief Financial Officer and Secretary from July 2000 to April 2014 and as our Vice President from July 2000 until his appointment as President in August 2013. Mr. Moore also +served as our Interim Chief Executive Officer from February 15, 2014 until his appointment as our Chief Executive Officer on April 22, 2014. From May 1998 through July 2000, Mr. Moore served as Vice President and Chief Financial +Officer of Indian Oil Company. From September 1995 through May 1998, Mr. Moore served as Controller of DLB Oil & Gas, Inc. Prior to that, Mr. Moore served as Controller of LEDCO, Inc., a Houston based gas marketing company. +Mr. Moore received both his Bachelor of Business Administration Degree in Finance and his Master’s in Business Administration from the University of Central Oklahoma. +DAVID L. HOUSTON, age 64. Mr. Houston has served as a director of the Company since July 1998 and as Chairman of the Board since July 2013. Since +1991, Mr. Houston has been the principal of Houston Financial, a firm providing wealth management products and services with a focus on the energy sector. Since 2000, Mr. Houston has managed a mineral trust with approximately 9,200 net +acres in Oklahoma, Texas, Kansas and New Mexico, which includes responsibility for leasing and production matters. Mr. Houston served on the board of directors and executive committee of Deaconess Hospital, Oklahoma City, Oklahoma, from January +1993 until December 2008. Mr. Houston has served as the lead director on the board of directors of Diamondback Energy, Inc. (Nasdaq Global Market: FANG) since October 2012, is a member of its audit and compensation committees and is the chair +of its nominating and corporate governance committee. He also served as a director of Bronco Drilling Company from May 2005 until December 2010 and was a member of its audit committee. Mr. Houston received a Bachelor of Science Degree in +business from Oklahoma State University and a graduate degree in banking from Louisiana State University. +BEN T. MORRIS, age 71 . Mr. Morris +has served as a director of the Company since August 4, 2014. From 2009 to 2012, Mr. Morris served as the Vice Chairman of the board of directors of the Sanders Morris Harris Group, a financial services and wealth management company he co-founded in 1987, or SMHG. Since its founding, Mr. Morris has served in various capacities with SMHG, including Executive Vice President and Director of Investment Banking, President and Chief Executive +Officer and a member of the board of directors of SMH Capital, a subsidiary of SMHG, and Chief Executive Officer and a member of the board of directors of SMHG. Since 2012, Mr. Morris has continued as an employee of Sanders Morris Harris, Inc., +a former subsidiary of SMHG. From 1980 to 1986, Mr. Morris served as the Chief Operating Officer of Tatham Corporation, a privately-held company engaged in natural gas transportation and marketing and oil and gas exploration and production. +Mr. Morris began his career as an accountant at Price Waterhouse & Co. in 1967, and in 1973 joined Mid American Oil and Gas Inc. as Chief Financial Officer, eventually serving as President of the company until its sale in 1979. From +2011 to 2016, Mr. Morris served as a member of the board of directors and Chairman of the audit committee of Yuma Energy, Inc., a publicly traded exploration and production company. Mr. Morris has also served on the boards of several +public companies, including Capital Title Group from 1998 to 2006, American Equity Investment Life Holding Company from 1997 to 2006, Tyler Technologies, Inc. from 2002 until 2005, where he served as Chairman of its audit committee, Fresh America +Corp. from 1992 until 1996, where he served as a member of the compensation committee, and Deeptech International Inc. from 1988 until 1997. Mr. Morris has an extensive financial background, with over 25 years of experience in various aspects +of the investment banking business. Mr. Morris received his Bachelor of Business Administration Degree from the University of North Texas, and also holds a Certified Public Accountant certificate from the State of Texas, along with several +securities licenses. +6 +Table of Contents +C. DOUG JOHNSON, age 57 . Mr. Johnson has served as a director of the Company since September 2015. +Since August 1981, Mr. Johnson served in various roles at Phillips 66 and its predecessors Phillips Petroleum Co. and ConocoPhillips Company, which was formed by the merger of Philips Petroleum Co. and Conoco Inc. in 2002. Mr. Johnson most +recently served as Vice President, Controller and principal accounting officer of Phillips 66, a publicly traded company engaged in mid-stream, chemicals, and refining, from April 2012 until his retirement on +December 31, 2014. During the same period, he also served as Vice President, Controller and principal accounting officer of Phillips 66 Partners GP LLC, the general partner of Phillips 66 Partners LP, a publicly traded pipeline subsidiary of +Phillips 66. From June 2010 until April 2012, Mr. Johnson served as General Manager, Upstream Finance, Strategy and Planning at ConocoPhillips. Prior to that, Mr. Johnson’s tenure at ConocoPhillips included his service as General +Manager, Downstream Finance from 2008 to 2010 and General Manager, Upstream Finance from 2005 to 2008. Mr. Johnson also served on the board of Chevron Phillips Chemical Company LLC, a joint venture of Phillips 66 Partners LP and Chevron Corp., +and its audit committee, where he was co-chairman, from April 2012 until December 2014. Mr. Johnson has an extensive financial and accounting background, with over 33 years of service in the oil and +natural gas industry. Mr. Johnson received his Bachelor of Science Degree in Accounting from the University of Arkansas, and also holds a Certified Public Accountant certificate from the State of Oklahoma. +SCOTT E. STRELLER, age 49. Mr. Streller has served as a director of the Company since August 2006. He currently serves as chairman of +Company’s compensation committee and as a member on the audit and nominating and corporate governance committees. In 1992, Mr. Streller founded the Scott Streller Insurance and Financial Services Agency (Farmers Insurance), which has been +recognized both regionally and nationally as one of the top agencies within the Farmers Insurance Group of Companies. Mr. Streller is active in the community and has served in a variety of leadership roles in local public and non-profit organizations. Additionally, Mr. Streller frequently serves as a guest lecturer at local universities and insurance and financial services seminars. Mr. Streller earned a Bachelor’s Degree +in Business Management from the University of Central Oklahoma. In addition, Mr. Streller received a Master’s in Athletic Administration from Oklahoma State University. +CRAIG GROESCHEL, age 49. Mr. Groeschel has served as a director of the Company since August 2011. Since 1996, Mr. Groeschel has served as a +founding pastor of LifeChurch, one of the largest churches in the United States. Since founding LifeChurch, Mr. Groeschel has served on its Board of Directors. Under Mr. Groeschel’s leadership, LifeChurch has grown to 25 locations in +seven states. Mr. Groeschel received a Bachelor’s Degree in Business Marketing from the Oklahoma City University, a Master’s of Divinity Degree from the Phillips Graduate Seminary and an Honorary Doctorate of Human Letters from +Southeastern Christian University. Mr. Groeschel is a frequent speaker at various domestic and international forums and an author of a number of books. +7 +Table of Contents +What does the board of directors recommend? +THE BOARD RECOMMENDS THAT YOU VOTE “FOR” THE ELECTION OF THESE DIRECTORS +What are the committees of the Board? +Our board of +directors has an audit committee, a nominating and corporate governance committee, which we refer to herein as the nominating committee, and a compensation committee, which committees perform the functions specified below. The members of each +committee are as of the date of this proxy statement. +Committee +Members +Principal Functions +Number of +Meetings in +2016 +Audit+ +David L. Houston* +C. Doug Johnson +Ben T. Morris +Scott E. Streller +• Reviews and +discusses with management and the independent auditors the integrity of our accounting policies, internal controls, financial statements, accounting and auditing processes and risk management compliance. +• Monitors and +oversees our accounting, auditing and financial reporting processes generally, including the qualifications, independence and performance of the independent auditor. +• Monitors our +compliance with legal and regulatory requirements. +• Establishes +procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters, and the confidential, anonymous submission by employees of concerns regarding +questionable accounting or auditing matters. +• Reviews and +approves related party transactions. +• Appoints, determines compensation, evaluates and terminates our independent auditors. +• Pre-approves audit and permissible non-audit services to be performed by the independent auditors. +• Prepares the +report required by the Securities and Exchange Commission, or the SEC, for the inclusion in our annual proxy statement. +• Reviews and +reassesses the adequacy of the audit committee charter on a periodic basis. +• Inform our +independent auditors of the audit committee’s understanding of significant relationships and transactions with related parties and review and discuss with our independent auditors the auditors’ evaluation of our identification of, +accounting for and disclosure of our relationships and transactions with related parties, including any significant matters arising from the audit regarding our relationships and transactions with related parties. +4 +8 +Table of Contents +Committee +Members +Principal Functions +Number of +Meetings in +2016 +Compensation +Scott E. Streller* +Craig Groeschel +David L. Houston +C. Doug Johnson +• Oversees and +administers our executive compensation policies, plans and practices and evaluates their impact on risk and risk management. +• Assists the board +of directors in discharging its responsibilities relating to the compensation of our executives, including our chief executive officer, and other key employees. +• Administers our +equity-based compensation plans, including the grants of stock options, restricted stock awards and other equity awards under such plans. +• Reviews, approves +and administers our cash-based incentive bonus plans, including the establishment of performance criteria, targets and awards under our 2014 Executive Annual Incentive Compensation Plan. +• Makes +recommendations to the board with respect to incentive compensation. +• Where appropriate +or required, makes recommendations to our stockholders with respect to incentive compensation and equity-based plans. +• Conducts annual +performance evaluation of the committee. +• Reviews +disclosure related to executive compensation in our proxy statement and prepares an annual compensation committee report. +• Reviews and +considers the stockholders’ advisory vote on executive compensation and the frequency of holding such advisory vote. +• Reviews and +reassesses the adequacy of the compensation committee charter. +10 +Nominating and Corporate Governance+ +Ben T. Morris* +David L. Houston +Scott E. Streller +• Assists the board +of directors in developing criteria for, identifying and evaluating individuals qualified to serve as members of our board of directors. +• Selects and +recommends director candidates to the board of directors to be submitted for election at the Annual Meeting and to fill any vacancies on the board of directors. +• Periodically +reviews and makes recommendations regarding the composition and size of the board of directors and each of its committees. +• Reviews and +recommends to the board of directors appropriate corporate governance policies and procedures for the Company. +• Conducts an +annual assessment of the qualifications and performance of the board of directors. +2 +9 +Table of Contents +Committee +Members +Principal Functions +Number of +Meetings in +2016 +• Annually reviews +and reports to the board of directors on the performance of management. +• Reviews and +reassesses the adequacy of the nominating committee charter. +* +Committee Chairperson. ++ +Our former director, Mr. Donald L. Dillingham, who, as previously disclosed, did not stand for re-election at our 2016 Annual Meeting of Stockholders, served on the +audit committee and the nominating and corporate governance committee of our board of directors during 2016 until the date of our 2016 Annual Meeting of Stockholders. +Do the committees have written charters? +Yes. The +charters for our audit committee, compensation committee and nominating committee can be found on our website at www.gulfportenergy.com under the “Corporate Governance” caption. You may also obtain copies of these charters, as well +as our Code of Business Conduct and Ethics, which is described below, by writing to our Senior Vice President of Corporate Development and Strategy, Paul K. Heerwagen IV, at Gulfport Energy Corporation, 3001 Quail Springs Parkway, Oklahoma City, +Oklahoma 73134. +Corporate Governance Matters and Communications with the Board +Who are our independent directors? +Our board of +directors has determined that current board members Craig Groeschel, David L. Houston, C. Doug Johnson, Ben T. Morris and Scott E. Streller meet the standards regarding independence set forth in the Nasdaq listing standards and are free of any +relationship which, in the opinion of our board of directors, would interfere with the exercise of independent judgment in carrying out their responsibilities as directors of the Company. +Our board of directors has determined that each member of the audit committee is independent for purposes of serving on such committee under the Nasdaq listing +standards and applicable federal law. In addition, our board of directors has determined that each current member of the audit committee is financially literate under the Nasdaq listing standards and that each of Mr. Houston, who serves as the +Chairman of the audit committee, Mr. Morris and Mr. Johnson qualifies as an “audit committee financial expert,” as such term is defined in Item 407(d) of Regulation S-K. +Our board of directors has also determined that each member of the compensation committee and the nominating committee meets the independence requirements +applicable to those committees under the Nasdaq rules. In addition, our board of directors determined that each member of our compensation committee is an “outside director” in accordance with Section 162(m) of the Internal Revenue +Code of 1986, as amended, or the Code, and a “non-employee director” in accordance with Rule 16b-3 under the Securities Exchange Act of 1934, as amended, or +the Exchange Act. +Do our non-management directors meet separately without management? +Our non-management directors have the opportunity to meet in an executive session following each regularly scheduled +meeting of the board of directors. During 2016, our non-management members of the board of directors met in executive session an aggregate of four times and our audit committee and our compensation committee +met in executive session an aggregate of four and two times, respectively. +How can I communicate with the board of directors? +Individuals may communicate with our board of directors or individual directors by writing to our Senior Vice President of Corporate Development and Strategy, +Paul K. Heerwagen IV, at Gulfport Energy Corporation, 3001 +10 +Table of Contents +Quail Springs Parkway, Oklahoma City, Oklahoma 73134. Our Senior Vice President of Corporate Development and Strategy will review all such correspondence and forward to our board of directors a +summary of all such correspondence and copies of all correspondence that, in the opinion of our Senior Vice President of Corporate Development and Strategy, relates to the functions of our board of directors or a committee thereof or that he +otherwise determines requires their attention. Directors may review a log of all such correspondence received by us and request copies. Concerns relating to accounting, internal control over financial reporting or auditing matters will be +immediately brought to the attention of the chairman of the audit committee and handled in accordance with the audit committee procedures established with respect to such matters. +Do directors attend the Annual Meeting? +Recognizing that +director attendance at our Annual Meeting can provide our stockholders with an opportunity to communicate with directors about issues affecting the Company, we actively encourage our directors to attend the Annual Meeting of Stockholders. All of our +six directors then serving attended the 2016 Annual Meeting of Stockholders in person, except Mr. Dillingham, who, as previously disclosed, did not stand for re-election at our 2016 Annual Meeting of +Stockholders. +Code of Business Conduct and Ethics +We have adopted a Code of Business Conduct and Ethics designed to help directors and employees resolve ethical issues. Our Code of Business Conduct and Ethics +applies to all directors and employees, including the Chief Executive Officer, the Chief Financial Officer and all senior financial officers. Our Code of Business Conduct and Ethics covers various topics including, but not limited to, conflicts of +interest, fair dealing, discrimination and harassment, confidentiality, compliance procedures and employee complaint procedures. Our Code of Business Conduct and Ethics is posted on our website under the “Investor Relations—Corporate +Governance” caption. +Nominating Process for Directors, Director Qualifications and Review of Director +Nominees +The nominating committee is currently comprised of three non-employee directors, all of whom are +independent under Nasdaq listing standards. As provided by the nominating committee’s charter, our nominating committee identifies, investigates and recommends to our board of directors candidates with the goal of creating a balance of +knowledge, experience and diversity. Generally, the committee identifies candidates through the personal, business and organizational contacts of the directors and management and through the use of third-party search firms. +Potential directors should possess the highest personal and professional ethics, integrity and values, and be committed to representing the interests of our +stockholders. In addition to reviewing a candidate’s background and accomplishments, candidates for director nominees are reviewed in the context of the current composition of our board of directors and the evolving needs of our business. It is +the policy of our board of directors that at all times at least a majority of its members meets the standards of independence promulgated by Nasdaq and the SEC and that all members reflect a range of talents, ages, skills and expertise, particularly +in the areas of accounting and finance, management, leadership and oil and gas related industries sufficient to provide sound and prudent guidance with respect to our operations and the interests of our stockholders. In addition to the foregoing +factors, our nominating committee considers diversity in its evaluation of candidates for board membership. Although our board of directors does not have a formal diversity policy, our board believes that diversity with respect to viewpoint, skills +and experience should be an important factor in board composition. Our nominating committee ensures that diversity considerations are discussed in connection with each potential nominee, as well as on a periodic basis in connection with its periodic +review of the composition of the board and the size of the board as a whole. +We also require that the members of our board of directors be able to +dedicate the time and resources sufficient to ensure the diligent performance of their duties on our behalf, including attending meetings of the board of directors and applicable committee meetings. In accordance with its charter, our nominating +committee periodically reviews the criteria for the selection of directors to serve on our board and recommends any proposed changes to our board of directors for approval. +11 +Table of Contents +Our board of directors will consider stockholder nominations for director candidates upon written submission of +such recommendation to our Senior Vice President of Corporate Development and Strategy along with, among other things, the nominee’s qualifications and certain biographical information regarding the nominee, such nominee’s written consent +to serving as a director if elected and being named in the proxy or information statement and certain information regarding the status of the stockholder submitting the recommendation, all in the manner required by our amended and restated bylaws +and the applicable rules and regulations promulgated under the Exchange Act. Following verification of the stockholder status of persons proposing candidates, recommendations will be aggregated and considered by our board of directors at a regularly +scheduled or special meeting. If any materials are provided by a stockholder in connection with the nomination of a director candidate, such materials will be forwarded to our board of directors. See “Submission of Future Stockholder +Proposals” below for additional detail regarding submitting director nominees. +Our board of directors may also review materials provided by +professional search firms or other parties in connection with a nominee who is not proposed by a stockholder. In evaluating such nominations, our board of directors will seek to achieve a balance of knowledge, experience and capability on the board. +Our board of directors uses the same criteria for evaluating candidates nominated by stockholders as it does for those proposed by current board members, professional search firms and other persons. After completing its evaluation, our board of +directors approves the final slate of director nominees. +Our nominating committee approved the director nominees submitted for election at this Annual +Meeting. Each nominee is a current board member and brings a strong and unique background and set of skills to our board of directors, giving our board of directors as a whole competence and experience in a variety of areas, including corporate +governance and board service, executive management, oil and natural gas industry, accounting and finance and risk assessment and management. Specifically, in nominating the candidates submitted for election at this Annual Meeting, our nominating +committee considered such candidates’ past service on our board and the information discussed in each of the directors’ individual biographies set forth beginning on page 6 above. In particular, with regard to Messrs. Houston and Streller, +our nominating committee considered their respective business backgrounds and risk assessment skills. Mr. Moore’s public company experience while serving in various executive officer capacities at Gulfport and leadership skills that led to +his promotion as our Chief Executive Officer, as well as his strong oil and natural gas background and extensive experience in finance, accounting, financial reporting, internal controls and corporate governance, led our nominating committee to +conclude that he should serve as one of our directors. Mr. Morris’s prior public company experience, extensive financial background, with over 25 years of experience in various aspects of the investment banking business, and strong oil and +natural gas background were considered by our nominating committee. With regard to Mr. Groeschel, our nominating committee considered his leadership and prior board service at a non-profit organization, +community involvement and communication skills. With respect to Mr. Johnson, our nominating committee considered Mr. Johnson’s prior public company experience, as well as his strong oil and natural gas background and financial +experience. Each of the director nominees has consented to serve as a director if elected. +Director +Leadership Structure +The positions of Chairman of the Board and Chief Executive Officer are held by two different individuals, and the Chairman of the +Board is a non-executive position elected from among the directors by the board. Separating the positions of Chairman of the Board and Chief Executive Officer has allowed our Chief Executive Officer to focus +on our day-to-day business and operations, while allowing our Chairman of the Board to lead the board in its fundamental role of providing advice to and oversight of +management. The Chairman of the Board has provided leadership to our board of directors and worked with the board of directors to define its structure and activities in the fulfillment of its responsibilities. The Chairman of the Board has set the +board agendas, with the input from other members of the board and our management, facilitated communications among and information flow to directors, has the power to call special meetings of our board of directors and stockholders and presided at +meetings of our board of directors and stockholders. The Chairman of the Board has also advised and counseled our Chief Executive Officer and other officers. Our board of directors does not have a position of a lead director. +12 +Table of Contents +We believe that our directors bring a broad range of leadership experience to the boardroom and regularly +contribute to the thoughtful discussion involved in effectively overseeing the business and affairs of the Company. We believe that the atmosphere of our board is collegial, that all board members are well engaged in their responsibilities, and that +all board members express their views and consider the opinions expressed by other directors. Five out of six of our director nominees are independent under the Nasdaq listing standards and SEC rules. We believe that all of our independent directors +have demonstrated leadership in business enterprises and are familiar with board processes. Our independent directors are involved in the leadership structure of our board by serving on our audit, nominating and compensation committees, each having +an independent chairperson. Specifically, the chair of our audit committee oversees the accounting and financial reporting processes, as well as compliance with legal and regulatory requirements. The chair of our compensation committee oversees our +compensation policies and practices and their impact on risk and risk management. The chair of our nominating committee monitors matters such as the composition of the board and its committees, board performance and best practices in corporate +governance. As such, each committee chair provides independent leadership for purposes of many important functions delegated by our board of directors to such committee. +Board of Director’s Role in Risk Oversight +As an exploration and production company, we face a number of risks, including risks associated with the supply of and demand for oil and natural gas, +volatility of oil and natural gas prices, exploring for, developing, producing and delivering oil and natural gas, declining production, environmental and other government regulations and taxes, weather conditions, including hurricanes, that can +affect oil and natural gas operations over a wide area, adequacy of our insurance coverage, political instability or armed conflict in oil and natural gas producing regions and overall economic environment. Management is responsible for the day-to-day management of risks we face as a company, while our board of directors, as a whole and through its committees, has responsibility for the oversight of risk +management. In its risk oversight role, our board of directors has the responsibility to satisfy itself that the risk management processes designed and implemented by management are adequate and functioning as designed. +Our board of directors believes that full and open communication between management and the board of directors is essential for effective risk management and +oversight. Our Chairman of the Board meets regularly with our Chief Executive Officer to discuss strategy and risks facing the Company. Our executive officers regularly attend the board meetings and are available to address any questions or concerns +raised by the board on risk management-related and any other matters. Other members of our management team periodically attend board meetings or are otherwise available to confer with the board to the extent their expertise is required to address +risk management matters. Periodically, our board of directors receives presentations from senior management on strategic matters involving our operations. During such meetings, our board of directors also discusses strategies, key challenges, and +risks and opportunities for the Company with senior management. +While our board of directors is ultimately responsible for risk oversight at the Company, +our three committees assist the board in fulfilling its oversight responsibilities in certain areas of risk. Our audit committee assists the board in fulfilling its oversight responsibilities with respect to risk management in the areas of financial +reporting, internal controls and compliance with legal and regulatory requirements, and discusses policies with respect to risk assessment and risk management. Our compensation committee assists the board in fulfilling its oversight responsibilities +with respect to the management of risks arising from our compensation policies and programs. Our nominating committee assists the board in fulfilling its oversight responsibilities with respect to the management of risks associated with board +organization, membership and structure, succession planning for our directors and executive officers and corporate governance. +13 +Table of Contents +Audit Committee Report +The audit committee is responsible for providing independent, objective oversight for the integrity of the Company’s financial reporting process and +internal control system. Other primary responsibilities of the audit committee include the review, oversight and appraisal of the qualifications, independence and audit performance of the Company’s independent registered public accounting firm +and providing an open venue for communication among the independent registered public accounting firm, financial and senior management, our internal auditors and the board of directors of the Company. A more detailed description of the +responsibilities of the audit committee is set forth in its written charter, which is posted on our website at www.gulfportenergy.com . The following report summarizes certain of the audit committee’s activities with respect to its +responsibilities during 2016. +Review with Management and Independent Registered Public Accounting Firm. The audit committee has reviewed and +discussed with management and Grant Thornton LLP, an independent registered public accounting firm, the audited consolidated financial statements of the Company for the year ended December 31, 2016. +Controls and Procedures. Management has established and maintains a system of disclosure controls and procedures designed to provide reasonable +assurance that information required to be disclosed by the Company in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and +includes controls and procedures designed to provide reasonable assurance that information required to be disclosed by us in those reports is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial +Officer, as appropriate, to allow timely decisions regarding required disclosure. As of December 31, 2016, management conducted an evaluation of our disclosure controls and procedures. Based on this evaluation, our Chief Executive Officer and +Chief Financial Officer concluded that our disclosure controls and procedures are effective to provide reasonable assurance that the information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, +processed, summarized and reported within the time periods specified in the SEC’s rules and forms. The audit committee discussed with management and Grant Thornton LLP the quality and adequacy of the Company’s disclosure controls and +procedures. +Management has also established and maintains a system of internal controls over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. These internal controls are designed to provide reasonable assurance that the reported financial information is presented +fairly, that disclosures are adequate and that the judgments inherent in the preparation of financial statements are reasonable. Management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the +framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on management’s evaluation under the framework in Internal Control—Integrated Framework, +management did not identify any material weaknesses in our internal control over financial reporting and concluded that our internal control over financial reporting was effective as of December 31, 2016, as discussed in more detail in +Management’s Report on Internal Control Over Financial Reporting, which was included in our Annual Report on Form 10-K for the year ended December 31, 2016, filed with the SEC on February 14, +2017. Our internal control over financial reporting as of December 31, 2016 has been audited by Grant Thornton LLP, as stated in its attestation report, which was included in our Annual Report on Form +10-K for the year ended December 31, 2016, filed with the SEC on February 14, 2017. The audit committee reviewed and discussed with management and Grant Thornton LLP the Company’s system of +internal control over financial reporting in compliance with Section 404 of the Sarbanes-Oxley Act of 2002. +Discussions with Independent Auditing +Firm. The audit committee has discussed with Grant Thornton LLP, independent auditors for the Company, the matters required to be discussed by Rules on Auditing Standard No. 16, Communication with Audit Committees, as amended. The audit +committee has received the written disclosures and the letter from Grant Thornton LLP required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the audit +committee concerning independence and has discussed with that firm its independence from the Company. +14 +Table of Contents +Recommendation to the board of directors. Based on its review and discussions noted above, the audit +committee recommended to the board of directors that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. +THE AUDIT COMMITTEE +David L. Houston, Chairman +C. Doug Johnson +Ben T. Morris +Scott E. Streller +15 +Table of Contents +Executive Officers +The following table sets forth the name, age and positions of each of our executive officers as of the record date: +Name +Age +Position +Michael G. Moore +60 +Chief Executive Officer and President +Keri Crowell +42 +Chief Financial Officer +Stuart A. Maier +63 +Senior Vice President of Geosciences +Lester Zitkus +51 +Senior Vice President of Land +Mark Malone +54 +Senior Vice President of Operations +Robert Jones +55 +Senior Vice President of Drilling +Paul Heerwagen +32 +Senior Vice President of Corporate Development and Strategy +Ty Peck +40 +Senior Vice President of Midstream and Marketing +Steve R. Baldwin +63 +Vice President of Reservoir Engineering +Biographical information for Mr. Moore is set forth in this proxy statement under the heading “Election of Directors +and Director Biographies.” +KERI CROWELL . Ms. Crowell has served as Chief Financial Officer of the Company since January 2017 and, prior +to such appointment, as Chief Accounting Officer of the Company since September 10, 2015. Prior to that appointment, Ms. Crowell served as a Vice President of the Company since April 2014 and Controller since March 2006. Ms. Crowell +joined the Company in October 2005 as Assistant Controller. Prior to joining the Company, Ms. Crowell served in various accounting and/or audit roles at Ernst and Young LLP, Arthur Andersen LLP and an Oklahoma City-based accounting firm. +Ms. Crowell holds a Bachelor of Science in Business Administration and Accounting and Masters of Business Administration degrees from Oklahoma State University, and also holds a Certified Public Accountant license from the State of Oklahoma. +Ms. Crowell is a member of Oklahoma Society of Certified Public Accountants and Financial Executives International, or FEI, and served as a board member and the treasurer of the FEI Oklahoma City chapter from 2012 until 2014. +STUART A. MAIER. Mr. Maier has served as Vice President of Geosciences since August 2013. Prior to that position, he served as +Geological/Geophysical Manager of the Company since May 1998. From 1993 to May 1998, Mr. Maier had served as Senior Geologist with DLB Oil & Gas, Inc. From 1992 until joining DLB Oil & Gas, Inc., Mr. Maier was a +consulting geologist/geophysicist and, from 1981 to 1991, Mr. Maier was a geologist/geophysicist with The Anschutz Corporation, an oil and natural gas exploration and production company. From 1979 to 1981, Mr. Maier was a production +geologist for Gulf Oil Exploration and Production Company. From 1977 to 1979, Mr. Maier was a well site geologist. Mr. Maier received a Bachelor of Science Degree in Geology from the University of Missouri. Mr. Maier is a member of +the American Association of Petroleum Geologists. +LESTER ZITKUS . Mr. Zitkus has served as Senior Vice President of Land effective January +2017 and, prior to such time, as Vice President of Land since March 2014. Prior to joining the Company, Mr. Zitkus served as an independent consultant from October 2013 to March 2014 and as Vice President of Land for Chesapeake Energy +Corporation from May 2007 to October 2013. During his 20-year tenure with Equitable Resources Inc. (now EQT Corp.), he held various positions, including Vice President of Operations and Senior Vice President +of Land, between 1987 and 2007. He holds a degree in Mineral Land Management from the University of Evansville. Mr. Zitkus is a member of the American Association of Professional Landmen and Past Regional Director of the Independent Producers +Association of America. +MARK MALONE . Mr. Malone has served as Senior Vice President of Operations effective January 2017 and prior to such +appointment, as Vice President of Operations since November 16, 2013. Prior to joining the Company, Mr. Malone was with Sierra Engineering, LLC from August 2012 to November 2013, serving as Engineering Manager. Prior to joining Sierra +Engineering, Mr. Malone served as Senior Asset Manager for the Marcellus Shale at Chesapeake Energy Corporation from January 2010 to November 2013. Mr. Malone also +16 +Table of Contents +served as Vice President of Stimulation & Production for New Tech Engineering from July 2007 to January 2010. Mr. Malone started his career and subsequently served 20 years with The +Western Company of North America and BJ Services Company from December 1987 to July 2007 in various engineering and management positions of increasing responsibility until ending his career with BJ Services where he spent the last ten years as +Permian Region Technical Manager. Mr. Malone is an active member of the Board of Directors for the Southwestern Petroleum Short Course, an SPE member since 1989, an author of multiple technical publications, +co-author of text on hydraulic fracturing and a patent holder. Mr. Malone graduated with a Bachelor’s Degree in Agricultural Engineering from Texas Tech University in 1987. +ROBERT JONES . Mr. Jones has served as Senior Vice President of Drilling effective January 2017 and prior to such appointment, as Vice President of +Drilling since November 2013. Prior to joining the Company, Mr. Jones was previously with Chesapeake Energy Corporation, serving as Drilling Engineering Manager for the Haynesville, Barnett and Eagle Ford from February 2001 to September 2013. +Prior to this role, during his tenure at Chesapeake Energy Corporation, Mr. Jones served as District Manager for the Permian Basin and Senior Drilling Engineer for operations across Oklahoma, Texas and New Mexico. Mr. Jones graduated with +a Bachelor’s Degree in Petroleum Engineering from the University of Oklahoma in 1985. +PAUL HEERWAGEN . Mr. Heerwagen has served as Senior +Vice President of Corporate Development and Strategy effective January 2017 and, prior to such appointment, as Vice President of Corporate Development since May 2014. Since January 2017, Mr. Heerwagen has served as a director of Mammoth Energy +Services, Inc., a Nasdaq-listed oilfield services company, as the Company’s nominee. Prior to his current role with the Company, Mr. Heerwagen served as our Director of Investor Relations and Corporate Affairs from May 2008 to May 2014. +From March 2012 through December 2014, Mr. Heerwagen served as President of Stingray Pressure Pumping LLC and Stingray Logistics LLC. He has also served in various financial, investor relations and corporate affairs roles since joining the +Company in 2006. Mr. Heerwagen holds a Bachelor’s Degree in Finance from Oklahoma State University. +TY PEC K. Mr. Peck has served as +Senior Vice President of Midstream and Marketing effective January 2017 and, prior to such appointment, served as Managing Director of our midstream operations from December 16, 2013 until January 2017. Prior to joining the Company, +Mr. Peck was previously with Access Midstream Partners, serving as the Director of Commercial Services. In addition, prior to joining Access Midstream Partners, Mr. Peck served as Producer Services Manager at Enogex LLC. Mr. Peck +graduated with a Bachelor’s Degree in Finance from the University of Central Oklahoma in 2000 and holds a Master’s Degree in Business Administration from the University of Oklahoma. +STEVE R. BALDWIN. Mr. Baldwin has served as Vice President of Reservoir Engineering since August 2013. Prior to that position, he served as Senior +Reservoir Engineer of the Company since October 2006. From February 2001 through September 2006, he served as Senior Reservoir and Acquisition Engineer for Chaparral Energy Inc. From 1996 to December 2000, Mr. Baldwin served as Senior +Operations Engineer for Saba Energy of Texas, Inc. Prior to that, Mr. Baldwin served as Operations Manager for Merrico Resources. Mr. Baldwin began his career with Mobil Oil Corporation after receiving his Bachelor of Science Degree from +the University of Oklahoma. Mr. Baldwin is a member of the Society of Petroleum Engineers. +17 +Table of Contents +Compensation Discussion and Analysis +The Compensation Committee of our Board oversees our compensation programs for executive officers and all employees. This Compensation Discussion and +Analysis, or CD&A, explains the Compensation Committee’s compensation philosophy, summarizes our executive compensation programs, and describes compensation decisions for Gulfport’s Chief Executive Officer, or CEO, Chief Operating +Officer, or COO, Chief Financial Officer, or CFO, and next two highest paid executives for 2016. These officers, known as the NEOs, are: +Michael G. +Moore – Chief Executive Officer, President and Director +Aaron Gaydosik – Former Chief Financial Officer +Ross Kirtley – Former Chief Operating Officer +Keri Crowell – Chief Accounting Officer +Stuart A. +Maier – Vice President of Geosciences +Steve R. Baldwin – Vice President of Reservoir Engineering +This CD&A, which should be read together with the compensation tables and related disclosures under “Executive Compensation Tables” beginning on +page 37, is divided into five sections. +I. +Executive Summary (beginning on page 19): Provides a high-level overview of our NEO compensation decisions for 2016, and our recent stockholder outreach initiatives. +II. +Executive Compensation Philosophy and Components (beginning on page 21): Describes the philosophy and objectives of our executive compensation program, the direct compensation elements provided to our NEOs, the +purpose of each element, and the pay for performance alignment. +III. +2016 Compensation Decisions (beginning on page 22): Discusses the specific compensation decisions made for our NEOs for 2016. +IV. +2017 Compensation Program (beginning on page 30): Discusses changes to our executive compensation program for 2017. +V. +Compensation Policies and Practices (beginning on page 31): Discusses compensation-related policies we have implemented to reflect our commitment to the best corporate governance practices. +18 +Table of Contents +I. Executive Summary +DIRECT COMPENSATION COMPONENTS +In support of our +compensation philosophy and objectives described below, total direct compensation received by our NEOs for 2016 is made up of the elements included in the chart below. Indirect compensation (such as retirement benefits and perquisites) is discussed +below under “– 2016 Compensation Decisions – Other Compensation.” +OVERVIEW OF EXECUTIVE COMPENSATION PROGRAM FOR FISCAL 2016 +Reward +Element +Form +Purpose +Valuation Parameters +Fixed +Base Salary +Cash +• Provides a market competitive level of fixed compensation for the fundamental duties +required of the position to attract and retain executive talent +• Compensates executive officers for their level of responsibility, skills, +capabilities, experience and leadership +At +Risk +Annual Incentive Awards +Cash +• Motivates and rewards performance achievement against a set of pre-established annual Company performance factors and targets +• Measures Company performance, which for 2016 was based on certain operational metrics +consisting of net production, adjusted EBITDA and capital expenditure targets, weighted at 30%, total stockholder return as compared to the Company’s peers, weighted at 20%, capital efficiency (well cost per foot) target, weighted at 20%, and +certain strategic initiative metrics, weighted at 30%. +Equity Based Compensation +Time- +Based +RSU’s +• Primarily rewards performance against our near-term strategies +• Rewards creation of long-term stockholder value and achievements consistent with our +long-term business strategies +• Aligns NEO compensation with increasing stockholder +value +• Builds a consistent ownership in the Company that aligns the interests of executive +officers and stockholders while attracting, motivating and retaining key employees +• Time-based awards have a three-year ratable schedule for all of our NEOs, except for our +CEO, whose awards vest in three equal annual installments, commencing on the date of grant. +Over the last several years, the Compensation Committee has shifted more NEO total direct compensation towards variable +“at risk” components (annual incentive cash awards and long-term equity-based incentive awards), where actual amounts earned may differ from target amounts based on Company performance (measured against the +pre-established targets) with respect to annual incentive cash awards, and Company performance and individual contribution to such performance with respect to long-term equity-based awards. The shift away from +guaranteed bonuses improved the alignment of our executive compensation with our near- and long-term business strategies. +19 +Table of Contents +The Compensation Committee believes that a program weighted towards variable, +at-risk compensation ensures NEO interests are appropriately aligned with stockholder interests. The charts below illustrate the mix of 2016 reported total direct compensation for our CEO and other NEOs. +The charts above are based on 2016 base salaries, bonus amounts paid under our 2016 annual incentive program and the grant +date fair value for the 2016 grants of time-based restricted stock units, or RSUs. The amounts actually realized by our NEOs with respect to the annual incentive cash awards and RSUs depend on the level of attainment of the relevant performance +goals and the value of our common stock when RSUs vest, respectively. +KEY 2016 EXECUTIVE COMPENSATION ACTIONS +As described in more detail throughout this CD&A, our executive compensation programs and actions delivered outcomes aligned with our operational, +financial and strategic performance in 2016 and the current market conditions, which are reflected in the compensation decisions and outcomes: +Base +Salary +In accordance with Mr. Moore’s employment agreement and taking into consideration below market base salary levels for each of our +CEO, CFO and COO relative to our peer group, the Compensation Committee approved slight increases to their base salary levels. Although the Compensation Committee recognized market trends and the need to maintain fixed general and administrative, +costs in a difficult operating environment for exploration and production and other energy companies, it also determined that ensuring reasonable compensation levels is an important competitive factor that required attention in 2016. As such, each +of our CEO, CFO and COO was provided a 5% increase in 2016 as outlined in the “2016 Compensation Decisions – Base Salary” section. +Annual Incentive Award +The Compensation Committee +established the 2016 performance measures under our annual incentive award program to continue to emphasize near-term and relative operational performance measures, as well as total stockholder return relative to our peers, and specifically focus on +near-term goals related to controlling cash expenses and driving capital investments. Based on the actual results of 2016 performance, the Compensation Committee certified the attainment of the performance measures at an aggregate level of 137% of +individual target amounts established by the Compensation Committee (including, as contractual obligations). See “2016 Compensation Decisions – Annual Incentive Awards” for a description of the performance metrics/goals and the +relative weightings assigned for purposes of determining the 2016 annual incentive awards for each of our NEOs who were participants, as well as the actual results. +Long-Term Incentive Award +The Compensation Committee +granted time-based RSUs to our CEO and certain of our other NEOs for 2016. The Compensation Committee ultimately makes its decision regarding the size of awards granted to the named executive officers at its discretion, although targets have been +established in certain employment agreements which aid in guiding those decisions. Generally, the restricted stock awards granted to our named executive officers vest in three substantially equal annual installments over the three-year period +commencing on the first +20 +Table of Contents +anniversary of grant except for the awards granted to our CEO, which vest in three substantially equal annual installments beginning on the date of grant. The Compensation Committee may, however, +determine to change the terms, types or mix of equity-based awards in the future, subject to any contractual obligations. See “2016 Compensation Decisions – Long Term Equity-Based Incentive Awards.” +ANNUAL SAY-ON-PAY ADVISORY VOTE AND STOCKHOLDER OUTREACH +The Compensation Committee values the insight it gleans from our stockholder outreach and from our annual say-on-pay advisory vote on executive compensation. In 2016, approximately 92% of the total votes cast were in favor of our +say-on-pay proposal. Although this vote demonstrates a strong stockholder approval of our executive compensation programs, the Compensation Committee continues to +carefully review our executive pay programs and focus on emphasizing the alignment with long-term stockholder interests and pay for performance in making compensation decisions. Historically, our management has undertaken stockholder engagement +efforts to ensure ongoing stockholder support. +During 2016, we continued to engage our stockholders and discuss our executive compensation programs, +corporate governance, safety and environmental programs, corporate responsibility and other important issues through investor presentations and earnings and other investor calls. During 2016, we engaged in discussions with stockholders representing +over 50% of our outstanding common stock. Our Board and its relevant committees discussed this constructive feedback and it was used as we implemented our compensation programs and addressed our disclosure practices and other governance matters. +II. Executive Compensation Philosophy and Components +PHILOSOPHY AND OBJECTIVES +Our executive compensation +philosophy is guided by the following objectives: +Competitive Compensation +The Compensation Committee believes it is imperative to maintain market-competitive compensation programs to attract, retain and motivate executives and our +future leaders that are in line with the compensation of similar executive positions at peer companies. +Emphasis on At Risk Compensation, Alignment +with Long-Term Stockholder Interest and Pay for Performance +The Compensation Committee is focused on rewarding our executives for the Company’s +annual and long-term performance by creating annual incentive cash award programs based on achievement of certain pre-established Company performance factors and targets, and awarding a significant portion of +our NEOs compensation in long-term equity awards, making most of our NEOs’ total direct compensation at risk. +By providing a significant portion of +compensation in the form of long-term equity incentive awards, such as RSUs, we also closely align the interests of our executives with those of our stockholders. +We believe our executive compensation programs play an important role in helping us achieve our business objectives and effectively reward our executive +officers for our Company’s annual and long-term performance and our executives’ contributions to such performance. With respect to annual incentive cash awards, the Compensation Committee has used various metrics tied to our Company’s +performance in certain key operational and financial categories as well as measured by total stockholder return in relation to our peers. With respect to long-term equity awards, the Compensation Committee also takes into consideration the +individual performance of our executives. As a result, our compensation programs made 90% of our CEO’s compensation at risk and 72% of our other NEOs’ total direct compensation at risk in 2016, while emphasizing “pay for +performance” as an important component of our NEOs’ compensation. +As described above, the target total direct compensation of our NEOs is +heavily weighted towards variable, at-risk compensation, with the actual amounts realized or realizable at a given time often resulting in different amounts as compared to those reported in the Summary +Compensation Table. +21 +Table of Contents +The table below shows the difference between our CEO’s 2016 compensation at (a) reported level as shown +in the Summary Compensation Table and (b) actual realized value in 2016. The Compensation Committee believes that realized compensation is more representative of compensation actually earned than the compensation reported in the Summary +Compensation Table. In 2016, we reported a strong operational performance relative to certain pre-established metrics and achieved either above target or maximum performance levels with respect to key +operational, capital efficiency and strategic initiative metrics. However, we performed below the threshold in our total stockholder return category and below the threshold in certain of our capital expenditure category (exploration and production, +land and midstream) due to an acceleration of our drilling program later in 2016 as commodity prices strengthened. As a result, the cash awards under our Annual Incentive Plan for 2016 vested at approximately 137% of each participating NEO’s +targeted bonus, resulting in the following NEOs receiving the specified annual incentive cash bonuses: Mike Moore $993,089 and Keri Crowell $282,712. Ross Kirtley, our former Chief Operating Officer, and Aaron Gaydosik, our former Chief Financial +Officer, did not receive any annual cash incentive bonuses as they were no longer with the Company at the time of the Compensation Committee’s certification of 2016 performance goals under our Annual Incentive Plan. Their compensation for 2016 +is described in the Compensation Tables and under the headings “Severance Payments Received by our Former Chief Operating Officer in Connection with Termination in August 2016” and “Termination of Employment Agreement with Our Former +Chief Financial Officer,” respectively. In addition, the actual realized value of our RSU awards as of December 31, 2016 was below the CEO’s target grant opportunity, which reinforces the program’s alignment with stockholder +interests and Company performance. +III. 2016 Compensation Decisions +The following is a discussion of the Compensation Committee’s process, analysis and specific decisions with respect to the direct and indirect +compensation elements provided to our NEOs in 2016. Variances in the amount of direct compensation awarded to the NEOs generally reflect differences in individual responsibility and experience, as well as the compensation levels provided to officers +in comparable positions in our 2016 Compensation Peer Group. +22 +Table of Contents +COMPENSATION SETTING PROCESS +Each year, the Compensation Committee enters into an extensive process of ensuring proper governance surrounding the establishment of executive compensation +programs. The following table provides an overview of this process. +Period +Compensation Decisions +JAN- +FEB +• Consider +NEO individual evaluations, the recommendation of the CEO with respect to other NEO compensation, the input provided by compensation consultants, as well as performance against the Company’s performance metrics and each NEO’s performance +against his or her individual goals in setting NEO’s total compensation packages. +• Determine +whether annual performance targets for the prior year have been met, resulting in annual incentive awards for prior year performance, individual adjustments to such awards and any adjustments to base salary. +• Grant Long-term equity awards for the current year based on prior year performance. +MAR- +MAY +• Set annual +performance metrics for the current year under the Annual Incentive Plan. Review compensation risk management disclosure. +• Determine +compensation consultant independence. +• File proxy +statement. +• Review and +discuss succession and workforce planning. +• Consider Company performance relative to annual performance goals. +JUN- +SEP +• Hold +Annual Meeting (including Director Elections and Annual Say on Pay Vote). +• Conduct +stockholder outreach on NEO compensation. +• Administer +non-officer LTI grants. +• Consider Company performance relative to annual performance goals. +OCT- +DEC +• Conduct +compensation risk assessment. +• Review and +determine a compensation peer group. +• Consider Company performance relative to annual performance goals. +COMPENSATION PEER GROUP +Gulfport utilizes a peer group of companies, or Compensation Peer Group, to assess and establish both compensation levels for executives as well as program +structures in an effort to maintain competitiveness in the market. Due to the Company’s successful execution of its strategic plan and the continued transformation of Gulfport’s financial strength, operational characteristics and +geographic positioning in the fourth quarter of 2015, the Compensation Peer Group for 2016 was revised from Gulfport’s 2015 Compensation Peer Group. +2016 Compensation Peer Group +The Compensation Committee +reviews data regarding compensation awarded to similarly-situated officers by companies in the Compensation Peer Group to ensure that our NEOs’ base salaries, target annual incentive award opportunities and equity grants are competitive. +The Compensation Peer Group is intended to reflect North American, onshore exploration and production companies that compete with, or could potentially compete +with, Gulfport for executive talent. This group was developed taking into consideration peer company metrics such as revenue, assets, market capitalization, enterprise value, total stockholder return and the availability of reported compensation +data. The composition of this peer group is reviewed periodically to ensure the appropriateness of the identified peers. For 2016, due to changes to Gulfport’s size and scope and in order for Gulfport to rank at or close to the median of the +Compensation Peer Group with respect to key metrics, the Compensation Committee removed nine companies (Abraxas Petroleum, Approach Resources, Athlon Energy, Energy XXI, Goodrich Petroleum, Kodiak Oil & Gas, PetroQuest Energy, Resolute +Energy and Rosetta Resources) that had been included in the 2015 Compensation Peer Group, and added five companies. +23 +Table of Contents +The 2016 Compensation Peer Group consisted of the following companies: +2016 Compensation Peer Group +Continental Resources, Inc. +*Energen Corp. +*Rice Energy Inc. +SM Energy Company +Halcon Resources Corporation +*PDC Energy, Inc. +Cimarex Energy Co. +Laredo Petroleum, Inc. +*Matador Resources Company +Range Resources Corporation +Carrizo Oil & Gas Inc. +*CONSOL Energy, Inc. +Oasis Petroleum Inc. +*Diamondback Energy, Inc. +*Antero Resources Corporation +* Added in 2016 +The +revision of the peer group resulted in relative alignment to the following metrics at the time of establishment: Revenue = 36 th percentile; Assets = +45 th percentile, Market Cap = 60 th percentile and Enterprise Value = 33 rd percentile. The +average percentile ranking of Gulfport to the peer group was the 44 th percentile. +BASE SALARY +The Compensation Committee reviews executive officer base salary levels on an annual basis, typically at the beginning of the year, with a goal of +providing market competitive, fixed cash compensation. Base salary is designed to provide basic economic security for our executives and be competitive with salary levels for comparable executive positions outlined at companies in our Compensation +Peer Group. The Compensation Committee reviews comparable salary information provided by its independent compensation consultant Longnecker & Associates, or Longnecker, as one factor to be considered in determining the base pay for the +named executive officers and aims for base salaries for our executives to be between the 25th and 50th percentiles of our peer groups. The analysis conducted by Longnecker determined that the base salary of each of the CEO, CFO and COO was below the +25 th percentile in 2016. Other factors the Compensation Committee considers in determining base pay for each of the named executive officers are: the executive officer’s responsibilities, +experience, leadership, potential future contribution and demonstrated individual performance. The relative importance of these factors varies among our executives depending on their positions and the particular operations and functions for which +they are responsible. The employment agreements for our CEO, CFO and COO that were in effect during 2016 provide that base salary will be reviewed and may be increased (but not decreased) at any time and from time to time. In 2015, the Compensation +Committee entered into an amended and restated employment agreement with the Chief Executive Officer which contains a multi-year base salary adjustment plan to achieve alignment between the 25 th +and 50 th percentiles of the peer group within three years. The Compensation Committee considers all of these factors and ultimately makes a decision regarding any upward adjustments to the base +salary of the named executive officers in its discretion. +The Compensation Committee reviewed the base salary of the following named executive officers in +February 2016 and awarded increases effective January 1, 2016 or held base salaries flat for 2016. Base salaries adjustments were made in recognition of relative alignment to the peer group, and in keeping with our desire to remain competitive +in the marketplace for executives. See also “Executive Compensation — Employment Agreements” for a description of the employment agreement with our CEO and other NEOs. +Named Executive Officer +2015 Base Salary +2016 Base Salary +% Change +Michael Moore, Chief Executive Officer +$ +460,000 +$ +483,000 +5% +Ross Kirtley, Former Chief Operating Officer +$ +338,000 +$ +354,900 +5% +Aaron Gaydosik, Former Chief Financial Officer +$ +309,000 +$ +324,450 +5% +Keri Crowell, Chief Accounting Officer +$ +250,000 +$ +275,000 +10% +Stuart Maier, Vice President of Geosciences +$ +400,000 +$ +400,000 +0% +Steve Baldwin, Vice President of Reservoir +Engineering +$ +200,000 +$ +208,333 +4% +24 +Table of Contents +ANNUAL INCENTIVE AWARDS +The Compensation Committee has established a performance-based annual incentive program aimed at tying pay to performance for our executives participating in +the program. In connection with the program, the Compensation Committee has established targeted annual incentive award levels based on market information supplied by the compensation consultant, as well as a performance metric system. Individual +awards may be decreased in the discretion of the Compensation Committee based on overall corporate performance for the year and certain other considerations. +Target Bonus Amounts +After reviewing the 2016 +Compensation Peer Group data with our independent compensation consultant, the Compensation Committee set the target bonus percentages and amounts, with a minimum potential payout of 0% and maximum potential payout of 200% of the applicable target +bonus amount. Target bonus percentages and dollar amounts for the participating NEOs for 2016 were as follows: +Named Executive Officer* +Target Bonus +Percentage +Target Bonus +Amount +Michael Moore, Chief Executive Officer +150% +$ +724,500 +Ross Kirtley, Former Chief Operating Officer +75% +$ +266,175 +Aaron Gaydosik, Former Chief Financial Officer +75% +$ +243,338 +Keri Crowell, Chief Accounting Officer +75% +$ +206,250 +*Steve +Baldwin and Stuart Maier did not participate in the program in 2016. +2016 Company Performance Measures +In March 2016, in connection with the establishment of the terms of the awards under the Annual Incentive Plan for 2016, the Compensation Committee reviewed +potential performance measures, such as operational and financial performance, TSR relative to our peer group, capital efficiency goals and strategic initiatives to be undertaken in 2016, as well as the weightings and goals with respect to those +measures, and selected the following performance metrics and weighting in four categories under the Annual Incentive Plan for 2016: +Weighting +Performance Metric +Why We Use It +Operational +Targets +10% +Net Production (Mmcfe) +Benchmarks the efficiency of the CAPEX program +(balanced by two metrics below) +10% +Adjusted EBITDA/Mcfe +Focuses the Company on the margin earned on the +production metric above (i.e. not incentivized to grow at any price) +10% +CAPEX - E&P, Land & Midstream +Provides balance to the net production metric +above (i.e. can’t overspend to meet production goal) +Stock +Performance +20% +Total Stockholder Return (Percentile) +Ties the short-term incentive program to the +relative equity performance of the peer group +Capital +Efficiency +20% +Well Cost per Foot +Provides metric for management to drive +operational performance down to the field level +25 +Table of Contents +Weighting +Performance Metric +Why We Use It +Strategic +Initiatives +30% +Execution Against Strategic Plan +Balances the absolute stock metric goal +(short-term in nature) against management’s execution of the long-term plan +Safety Training Compliance and Subcontractor Management +Balances operational targets with the goal of +safety (i.e. no incentive to cut safety corners to save money) +Environmental Incident Record +Balances operational targets with goal of +protecting the environment (i.e., no incentive to cut environmental corners to save money) +Sarbanes Oxley Compliance +Incentivizes good governance on employee and +senior management levels +Annual Incentive Plan Goal Achievement for 2016 +The 2016 metrics under the Annual Incentive Plan included threshold, target and maximum goals for each operational performance measure, with a corresponding +payout range. Generally, target goals for the operational measures are based on Gulfport’s approved budget and operating plan for the year, and reflect performance improvement relative to 2015 outcomes. Threshold goals reflect the level of +performance the Compensation Committee believes must be met before any payout is warranted. The stretch goals challenge management to achieve exceptional performance. The Compensation Committee actively monitors our performance against the +established goals, and discusses progress against those goals at each Compensation Committee meeting. +For 2016, the Compensation Committee also set goals +and expectations with respect to the strategic initiatives portion under the Annual Incentive Plan for that year, taking into consideration input received from management. These goals are meant to further motivate the NEOs to pursue Gulfport’s +long-term strategy and value creation. The Compensation Committee established threshold (50%), target (100%) and stretch (200%) payout ranges for the operational and strategic measurement goals. Because the strategic goals are qualitative in nature, +success does not necessarily depend on attaining a particular metric; rather, success may be evaluated based on past norms, expectations and responses to unanticipated obstacles or opportunities. +The 2016 operational metrics, targets and actual performance under the Annual Incentive Plan are set forth below. The Compensation Committee also assessed +Gulfport’s performance against the strategic priorities that made up the strategic initiatives portion under the Annual Incentive Plan for 2016. +Performance Metric +Threshold +Target +Maximum +Actual +Actual +as a % +of +Target +Operational +Targets +Net Production (Mmcfe) +660 +695 +730 +719.8 +171% +Adjusted EBITDA/Mcfe +$1.04 +$1.26 +$1.48 +$1.58 +200% +CAPEX - E&P, Land & Midstream +$525 +$475.00 +$425.00 +$549 +0% +Stock +Performance +Total Shareholder Return (Percentile) +Top +75 th +percentile +Top 50th +percentile +Top 25th +percentile +Below +threshold +0% +Capital +Efficiency +Well Cost per Foot +$1,300 +$1,250 +$1,200 +$1,129 +200% +26 +Table of Contents +Performance Metric +Threshold +Target +Maximum +Actual +Actual +as a % +of +Target +Strategic +Initiatives +Execution Against Strategic Plan +Committee Assessment +200% +Safety Training Compliance and Subcontractor Management +Committee Assessment +Environmental Incident Record +Committee Assessment +Sarbanes Oxley Compliance +Committee Assessment +The Compensation Committee’s evaluation of the overall performance of Gulfport and the participating NEOs for 2016 +resulted in the approval of the following 2016 AIP award payout amount: +Named Executive Officer +Target Bonus +Percentage +Target Bonus +Amount +Actual Bonus +Amount +Actual Bonus +as a Percent +of Target +Bonus +Michael Moore, Chief Executive Officer +150% +$ 724,500 +$ +993,089 +137.07% +Ross Kirtley, Former Chief Operating Officer +75% +$ 266,175 +— +0.00% +Aaron Gaydosik, Former Chief Financial Officer +75% +$ 243,338 +— +0.00% +Keri Crowell, Chief Accounting Officer +75% +$ 206,250 +$ +282,712 +137.07% +Messrs. Baldwin and Maier did not participate in the 2016 annual incentive program. +LONG-TERM EQUITY-BASED INCENTIVE AWARDS +Each year we +typically grant our NEOs long-term equity-based incentive awards. The Compensation Committee determines the amount of these awards, as well as the mix of equity vehicles. The objectives of our long-term incentive plan are to: (a) attract and +retain the services of key employees, qualified independent directors and qualified consultants and independent contractors; (b) create significant alignment between our named executive officers and other key employees, on the one hand, and our +stockholders, on the other hand; and (c) encourage a sense of proprietorship in and stimulate the active interest of those persons in our development and financial success. We intend to achieve these objectives by making awards designed to +provide our named executive officers and other participants in the plan with a proprietary interest in our growth and performance. +Determining Award +Structure +The Compensation Committee chose to maintain the use of time-vested restricted stock unit awards for the 2016 grants because the majority of +our competitors have shifted to restricted stock types of awards and away from stock options or stock appreciation right awards. In addition, in the Compensation Committee’s opinion, based in part on the advice of our compensation consultant, +restricted stock unit awards provide a more effective retention incentive than stock options or stock appreciation rights. +The Compensation Committee +ultimately makes a decision regarding the size of awards granted to the named executive officers at its discretion, taking into consideration the terms of any existing employment agreements. +Generally, the restricted stock unit awards granted to our named executive officers vest in three substantially equal annual installments over the three-year +period commencing on the first anniversary of grant except for the awards granted to our Chief Executive Officer, which vest in three substantially equal annual installments beginning on the date of grant. The Compensation Committee may, however, +determine to change the terms, types or mix of equity-based awards in the future, subject to the terms of applicable employment agreements. +27 +Table of Contents +Setting the Target Award Opportunity +The Compensation Committee reviewed market values with respect to the annual long-term incentive awards granted to similarly situated executives at the +Compensation Peer Group companies to assist the Compensation Committee in making these determinations with respect to our CEO, COO and CFO for 2016. With advice from the compensation consultant, the Compensation Committee established a target +long-term incentive opportunity, as a percentage of base salary, for each named executive officer, taking into consideration market data obtained from Longnecker, as previously describe, and the terms of the applicable employment agreements, for the +CEO, CFO and COO. The Compensation Committee then made annual grants of long-term equity awards, which in 2016 consisted solely of restricted stock unit awards. These equity awards were made after the Compensation Committee had an opportunity to +evaluate the Company’s operating results for the prior year and at the same time that the Company was making its major compensation decisions for the current fiscal year. +The Compensation Committee has discretion to determine awards under the Company’s 2013 Restated Stock Incentive Plan. Certain of our named executive +officers (Messrs. Moore, Gaydosik and Kirtley) are or during 2016 were parties to employment agreements that establish annual award parameters for equity awards based on a percentage of base compensation. These employment agreement provisions +(summarized below) were negotiated by the Compensation Committee with each of the respective executives and the Compensation Committee considers these contractual obligations in determining awards under the Plan. For our named executive officers +other than the Chief Executive Officer, the recommendations of the Chief Executive Officer also are considered. The Compensation Committee considers the grant date dollar value of the long-term incentive package, the package’s potential +dilutive effect on our outstanding shares of common stock and the number of shares available for grant under the Plan in determining the aggregate number of shares to be awarded as individual long-term incentive awards for our executives. The +Compensation Committee evaluates stockholder dilution based on equity compensation “burn rates,” which refers to a measure of the speed at which companies use (or burn) shares available for grant in their equity compensation plans compared +to the total amount of the Company’s outstanding common stock. +We generally provide, and in 2016 did provide, long-term incentive awards for our CEO, +CFO and COO at target levels that approximate an average of the 25th percentile of our 2016 Compensation Peer Group. The Compensation Committee made decisions regarding the target long-term incentive opportunity for each named executive officer with +respect to 2017 in February 2017. +Restricted Stock Unit Awards +In February 2016, the Compensation Committee granted restricted stock unit awards that vest ratably in multi-year tranches to deliver a meaningful long-term +incentive by benefiting from the vesting of the awards and the increase in the value of our stock price that balances risk and potential reward. These awards are also intended to serve as an effective incentive to remain with the Company and +continue such performance. +The number of restricted stock awards granted were determined by dividing the executive’s long-term incentive target +opportunity, as displayed below, by our common stock price on the date of grant. +Named Executive Officer +LTI Target as a +Percentage of Base +LTI Target GDFV +Michael Moore, Chief Executive Officer +500% +$ 2,415,000 +Ross Kirtley, Former Chief Operating Officer +300% +$ 1,064,700 +Aaron Gaydosik, Former Chief Financial +Officer +300% +$ 973,350 +Restricted stock awards are only earned if the individual continues to be employed by us on each applicable vesting date of +the award. As a result of Mr. Gaydosik’s resignation as CFO effective January 4, 2017, any awards provided to him in 2016 were forfeited. See “Termination of Employment Agreement with Our Former Chief Financial Officer.” In +connection with the termination of Mr. Kirtley’s employment agreement effective August 5, 2016, we entered into a separation and release agreement pursuant to which, among other provisions, certain of Mr. Kirtley’s unvested +restricted stock units, including 14,830 of the 52,399 RSUs granted to him in +28 +Table of Contents +2016, vested, provided that such 2016 restricted stock units would be settled in four substantially equal annual installments in accordance with the original vesting schedule. For more +information, see “Severance Payments Received by our former Chief Operating Officer in Connection with Termination in August 2016.” +The +following table provides the total number of restricted stock unit awards provided to each executive in February 2016, based on the 2016 target award opportunity, as part of the annual compensation review process. +Named Executive Officer +2016 LTI Award +Michael Moore, Chief Executive Officer +125,582 +Ross Kirtley, Former Chief Operating Officer +52,399 +(1) +Aaron Gaydosik, Former Chief Financial Officer +47,903 +(1) +(1) +In connection with Mr. Gaydosik’s resignation as our CFO effective January 4, 2017, all of his unvested restricted stock units, including those granted in 2016, were forfeited. See “Termination of +Employment Agreement with our Former Chief Financial Officer” below. For a description of treatment of certain of Mr. Kirtley’s unvested restricted stock units, see “Severance Payments Received by our former Chief Operating +Officer in Connection with Termination in August 2016.” +In August 2016, the Compensation Committee granted 8,000 restricted stock units +to Ms. Crowell. The Compensation Committee did not grant any restricted stock unit awards to Mr. Maier or Mr. +Baldwin in 2016. +TERMINATION AND CHANGE OF CONTROL BENEFITS +Our employment agreement with Mr. Moore provides for specified payments and benefits upon certain termination events, including termination following a +change of control. This employment agreement contains termination and change of control provisions that we believe are generally comparable to similar provisions employed by a majority of the companies in our industry Peer Group. The Compensation +Committee believes that this agreement will encourage Mr. Moore to remain in our employment in the event of a change of control of the Company and during circumstances which indicate that a change of control might occur. The Compensation +Committee believes termination and change of control benefits are important in maintaining strong leadership and in encouraging retention in these situations and encourages our executives to act in the best interests of stockholders without +distraction based on uncertainty regarding their employment status. In March 2015, we entered into an employment agreement with each of Mr. Kirtley and Mr. Gaydosik containing, among other things, certain change in control provisions. The +employment agreements with Mr. Kirtley and Mr. Gaydosik were terminated in August 2016 and January 2017, respectively. See “Severance Payments Received by Our Former Chief Operating Officer in Connection with Termination in August +2016” and “Termination of Employment Agreement with our Former Chief Financial Officer” below. +On April 28, 2017, we entered into an +employment agreement with each of Ms. Crowell, Mr. Maier and Mr. Baldwin, effective as of January 1, 2017, provides for certain change in control benefits, including immediate vesting of each such NEO’s equity awards upon +his or her termination on or before the second anniversary of the date of occurrence of a change of control other than for cause. The value of the unvested restricted stock held by Ms. Crowell, Mr. Maier and Mr. Baldwin was $548,228, +$144,274 and $72,148, respectively, as of December 31, 2016. See “Change in Control Arrangements with Other Named Executive Officers.” For additional information regarding these employment agreements and termination and change of +control provisions, see “Employment Agreements with Our Chief Financial Officer, Senior Vice President of Geosciences and Vice President—Reservoir Engineering.” +PERQUISITES AND OTHER PERSONAL BENEFITS +We provide certain of our named executive officers with a limited number of perquisites or other personal benefits, primarily consisting of life insurance +premiums and, in the case of our CEO and our former COO, use of a Company-owned vehicle, that we believe help provide a competitive package of compensation and benefits. The value of these benefits is disclosed in the Summary Compensation Table +below. +29 +Table of Contents +BROAD-BASED EMPLOYEE BENEFITS +401(k) Plan +We have a broad-based retirement savings plan +in which our named executive officers currently participate. The retirement plan is a tax qualified 401(k) plan that covers all eligible employees including the named executive officers. Under the plan, we make a safe harbor contribution equal to 3% +of each eligible employee’s gross annual compensation for the prior calendar year. We also have the ability to make an additional, discretionary contribution that is allocated based on each eligible employee’s gross annual compensation for +the prior calendar year. Both contributions are or may be made regardless of employee’s deferrals into the plan. In 2016, we made safe harbor and discretionary contributions totaling 3% of eligible compensation for eligible employees, subject +to certain limitations provided by our 401(k) plan and Internal Revenue Service regulations. All contributions made by us on behalf of an employee are 100% vested when contributed. For more details regarding our 401(k) plan, see “Benefit Plans +— 401(k) Plan” below. +Other Benefits +Our +named executive officers are eligible to participate in all of our other employee benefit plans which include medical, dental, group life, disability and accidental death and dismemberment insurance, in each case on the same basis as all other +employees. +IV. 2017 Compensation Program +CHANGES TO THE PEER GROUP FOR 2017 +As part of its annual +evaluation of our competitive position, the Compensation Committee directed management to coordinate with our compensation consultant to undertake a comprehensive review and analysis of our Compensation Peer Group taking into account announcement of +the then-pending acquisition of assets in the SCOOP. +For 2017, the Compensation Committee removed eight companies (Antero Resources Corporation, +Continental Resources, Inc., Laredo Petroleum, Diamondback Energy, Inc., PDC Energy, Halcon Resources, Carrizo Oil & Gas, Inc. and Matador Resources Company) that had been included in the 2016 Compensation Peer Group, and added eight +companies. In an effort to account for the increased revenue projections of the acquisition, the 2016 Compensation Peer Group was assessed and revised based on a pro-forma revenue projection. The revision of +the peer group resulted in relative alignment to the key metrics at the time of establishment as follows: Revenue = 57th percentile and Market Cap = 21st percentile. +The 2017 Compensation Peer Group consists of the following companies: +2017 Compensation Peer Group +CONSOL Energy Inc. +Newfield Exploration Company * +Cabot Oil & Gas Corporation * +Murphy Oil Corporation * +Range Resources Corporation +EP Energy Corporation * +WPX Energy, Inc. * +Cimarex Energy Co. +Oasis Petroleum Inc. +Concho Resources Inc. * +Whiting Petroleum Corporation * +Rice Energy Inc. +QEP Resources, Inc. * +SM Energy Company +Energen Corporation +* Added in 2017 +CHANGES TO +OUR COMPENSATION PROGRAM FOR 2017 +2017 Base Salary +The Compensation Committee engaged Longnecker to review the overall competitiveness of our executive compensation programs for 2017, with continued focus on +ensuring the alignment of management compensation with performance and Gulfport’s strategy generally. +30 +Table of Contents +In recognition of the terms of Mr. Moore’s employment agreement, his current relative alignment to +market competitive levels and his historically low base salary relative to our Compensation Peer Groups, the Compensation Committee determined that a base salary adjustment was necessary. His base salary was increased, per the table below, resulting +in relative alignment between the 25 th and 50 th percentiles of the market, effectively conforming with the terms of his employment agreement. +Ms. Crowell was promoted to CFO, effective January 4, 2017, and her base salary was increased in connection with the promotion. +Named Executive Officer* +2016 Base Salary +2017 Base Salary +Michael Moore, Chief Executive Officer +$ 483,000 +$ 700,000 +Keri Crowell, Chief Financial Officer +$ 275,000 +$ 350,000 +Stuart Maier, Vice President of Geosciences +$ 400,000 +$ 400,000 +Steve Baldwin, Vice President of Reservoir Engineering +$ 208,333 +$ 210,000 +* +Mr. Gaydosik and Mr. Kirtley are not included as they are no longer employed by the Company. +2017 Annual Incentive Bonus Targets +In 2017, the Compensation Committee continued to incentivize the performance of our Chief Executive Officer and other executives through their participation in +the Annual Incentive Plan, establishing performance factors and performance targets for 2017. In recognition of the changing market and the need to incentivize executives based on metrics other than solely production and reserves, the Compensation +Committee worked with management to identify critical metrics which align with the strategic plan of the Company. Accordingly, the Compensation Committee established metrics based on operational targets, capital efficiency targets and strategic +initiative targets. The Compensation Committee also specified the threshold, target and maximum bonus levels as a stated percentage of the target bonus and base salary amounts for our Chief Executive Officer and other executives, and specified the +weight attributable to each performance factor for purposes of reaching the performance targets for 2017. +In connection with Mr. Moore’s base +salary increase to within market competitive levels, the Compensation Committee adjusted Mr. Moore’s annual bonus target under the Annual Incentive Plan from 150% for 2016 to 100% for 2017. Based on guidance from our compensation +consultant, our CFO’s annual bonus target under the Annual Incentive Plan for 2017 was set at 80% of her annual base salary in recognition of her promotion to this position effective January 4, 2017 and the annual incentive bonus target +for each of our other NEOs for 2017 was set at 60% of such NEO’s annual base salary. The threshold and maximum opportunities for each NEO under the Annual Incentive Plan were set at 50% and 200%, respectively, of the individual target bonus +opportunities established for each such NEO. +2017 Restricted Stock Unit Awards under Employment Agreements +On February 27, 2017, the Compensation Committee approved a grant of 187,768 restricted stock units to our Chief Executive Officer, with a value of 500% +of annual base salary, consistent with the terms of Mr. Moore’s employment agreement. The award will vest in three substantially equal annual installments beginning on February 27, 2017. On February 27, 2017, the Compensation +Committee also made restricted stock unit awards to certain other executive officers, including Ms. Crowell, Mr. Maier and Mr. Baldwin, in the amounts of 55,000, 32,000 and 15,000 RSUs, respectively, vesting, in each case, in three +substantially equal annual installments beginning on August 27, 2017. +V. Compensation Policies and Practices +PROCESS FOR DETERMINING EXECUTIVE COMPENSATION +The +Compensation Committee generally reviews and makes its decisions regarding the annual compensation of our NEOs at its regular meetings in February and March. These decisions include certifying annual incentive awards for the prior year’s +performance and adjustments to base salary, establishing target incentive +31 +Table of Contents +opportunities and applicable performance objectives for the current year’s annual incentive awards, and granting long-term equity-based incentive awards for the current year. The +Compensation Committee also adjusts compensation as necessary at other times during the year, such as in the case of promotions, other changes in employment status and significant corporate events, as well as for competitive purposes. In making its +decisions, the Compensation Committee assesses each NEO’s impact during the year and overall value to Gulfport, specifically considering the NEO’s leadership skills, recommendations from our CEO and the independent compensation consultant, +impact on strategic initiatives, performance in the NEO’s primary area of responsibility, the NEO’s role and trajectory in succession planning and development, and other intangible qualities that contribute to corporate and individual +success. +Annually, our CEO provides the Compensation Committee with an evaluation of his own performance that is based, in large part, upon the Company +performance metrics described above, as well as his leadership roles as a member of the Board and our lead representative to the investment community. The Compensation Committee evaluates our CEO on these and other criteria, and his total +compensation package is determined by the Compensation Committee, based on its evaluation and input from the compensation consultant, and reflects his performance, Gulfport’s performance, competitive industry practices and the terms of his +employment agreement. Each year, our CEO evaluates each of the other NEOs and makes compensation recommendations to the Compensation Committee. In developing his recommendations, the CEO considers the recommendations of his executive team and input +from Longnecker, as well as performance against the Company performance metrics. The compensation consultant reviews and provides comments to the Compensation Committee on our CEO’s recommendations. +Additionally, the following table summarizes the compensation best practices that we follow and the disfavored compensation practices that we avoid: +Compensation Best Practices that We Follow +At Risk Compensation and Alignment with Long-Term Stockholder Interests +A significant portion of our executive pay is at risk and not guaranteed, with a portion of such +compensation tied to pre-established Company performance metrics that drive both our short-term and long-term corporate strategy in accordance with our strategic plan. A large portion of our executives’ +compensation consists of long-term equity awards, further aligning our executives’ compensation with stockholder interests. +Mitigate Undue Risk +We mitigate undue risk associated with compensation, including using multiple performance targets +and robust board and management processes, to avoid unnecessary or excessive risk taking. +Minimal Perquisites +We provide only minimal perquisites to our named executive officers that are not generally +available to all other employees. +Regular Review of Share Utilization +We evaluate share utilization by reviewing overhang levels (dilutive impact of equity compensation +on our stockholders) and annual burn rates (the aggregate shares awarded as a percentage of total outstanding shares) when determining the number of shares to award. +Clawback Policy +The compensation committee is committed to instituting a clawback policy once the SEC has issued +clear guidance on this topic. +Deductibility of Executive Pay +We consider deductibility when structuring executive compensation. +32 +Table of Contents +Compensation Best Practices that We Follow +Independent Compensation Consulting Firm +The compensation committee uses an independent compensation consulting firm, Longnecker & +Associates, to assist it with evaluation of its executive compensation programs and market practices and preparation of the CD&A, while providing no other services to the Company. +Annual Advisory “Say-on-Pay” Vote +We hold an annual advisory “Say-on-Pay” vote. +Disfavored Compensation Practices that We Do Not Follow +No liberal share counting under our stock incentive plan. +No re-pricing of underwater stock options. +No hedging of Gulfport securities, including publicly traded options, puts, calls and short sales by +named executive officers or directors permitted. +No holding of Gulfport securities in a margin account by named executive officers or directors is +permitted, nor may they pledge any Gulfport securities except in certain limited circumstances and subject to prior approval by our compliance officer or the compensation committee. +Eliminated discretionary bonuses in our employment agreements with our executive officers, with all +executive officers currently eligible only for a performance-based bonus under the Annual Incentive Plan. +Employment agreements entered into do not contain provisions entitling employees to tax gross-up payments. +We do not offer pension or supplemental executive retirement plans to our current executives +(except for our broad-based 401(k) plan). +INDEPENDENT COMPENSATION CONSULTANT +The Compensation Committee retained Longnecker as its independent compensation consultant. The Compensation Committee did not engage any other consultants to +provide executive compensation consulting services during 2016 or, to date, during 2017. +Longnecker assists the Compensation Committee in developing a +competitive total compensation program that is consistent with our philosophy of goal-oriented pay for performance and that allows us to attract, retain and motivate talented executives. For 2016, Longnecker’s services included providing an +annual analysis of the compensation of our top executive officers and their counterparts at peer companies. The analysis compares each element of compensation and total direct compensation awarded by Gulfport and by our peers to our respective +executive officers. In addition, for 2016, Longnecker helped the Compensation Committee consider the allocation between annual incentive and long-term equity-based compensation and between the types of long-term equity-based incentive awards. +Longnecker provides assistance in the design of compensation programs and ongoing support with respect to regulatory and other considerations that affect compensation programs generally, as requested by the Compensation Committee, as well as +assistance in preparation of the CD&A. +Longnecker reports exclusively to the Compensation Committee, which has sole authority to retain any +compensation consultant. The Compensation Committee reviewed the independence of Longnecker and determined that there were no conflicts of interest as a result of the Compensation Committee’s engagement of Longnecker, based on the following: +• +Longnecker supplies no services to Gulfport other than those as advisor to the Compensation Committee. +• +The fees for service Longnecker was expected to charge Gulfport in 2016 amounted to less than 1% of Longnecker’s annual revenues. +33 +Table of Contents +• +It is Longnecker’s policy to maintain up-to-date nondisclosure and trade restriction agreements with its employees to ensure no +conflicts of interest exist. +• +Except with respect to the engagement by the Compensation Committee, neither Longnecker nor its principal representatives to Gulfport maintains any business or personal relationship with any Gulfport executive officer +or Director. +• +Neither Longnecker nor its principal representatives to Gulfport owns any Gulfport stock. +DEDUCTIBILITY OF EXECUTIVE COMPENSATION +Section 162(m) of the Code limits the deductibility for federal income tax purposes of executive +compensation paid to the Chief Executive Officer and the three other most highly compensated officers (other than the Chief Executive Officer and the Chief Financial Officer) of a public company to $1,000,000 per year, but contains an exception for +certain performance-based compensation. Our policy is to periodically review and consider whether particular compensation and incentive payments to our executives will be deductible for federal income tax purposes. We intend, to the extent feasible +and when we believe it is in the best interests of the Company and its stockholders, to attempt to qualify executive compensation as tax deductible where it does not adversely affect the development and execution of our compensation plans. However, +the Compensation Committee may from time to time approve non-deductible payments in order to maintain flexibility in structuring appropriate compensation programs in the interests of the Company and our +stockholders. For example, the Compensation Committee has in the past granted stock options with time-based vesting provisions that would be considered performance based compensation, but in recent years has granted restricted common stock that is +subject to time based vesting and does not constitute performance based compensation that will satisfy the exception to the deduction limit. +EFFECT OF OUR COMPENSATION POLICIES AND PRACTICES ON RISK AND RISK MANAGEMENT +The Compensation Committee reviews the risks and rewards associated +with our compensation policies and programs. We believe that such policies and programs encourage and reward prudent business judgment and avoid encouraging excessive risk-taking over the long term. With respect to specific elements of compensation: +• +We believe that our programs balance short- and long-term incentives for our executive officers providing for an appropriate mix of fixed, performance-based, discretionary and equity compensation that encourages +long-term performance. +• +We believe that annual base salaries for our named executive officers do not encourage excessive risk-taking as they are fixed amounts that are subject to discretionary increases by our Compensation Committee that may +be based on, among other factors, annual performance evaluations. We also believe that such annual base salaries are set at reasonable levels, as compared to the base salaries of similarly-situated individuals at our peer group companies, and +therefore do not negate the effect of other compensation elements that encourage long-term service, growth and performance that may increase stockholder value. +• +Our annual incentive awards are determined based on Company and individual performance measures, both operational and strategic, which mitigates excessive risk-taking that could produce unsustainable gains in one area +of performance at the expense of our overall long-term interests. The Company’s goals are designed to ensure a proper balance between stock performance, operational measures, financial goals and strategic goals. In addition, the Compensation +Committee sets performance goals that it believes are reasonable in light of our past performance, then-current business projections and market conditions. +• +The Compensation Committee believes that performance-based cash incentive compensation granted pursuant to the Annual Incentive Plan, with meaningful performance targets, such as those under our Annual Incentive Plan, +will further align our executives’ interests with those of our stockholders, will motivate our executives to contribute to the Company’s growth and profitability and will link a larger portion of our executives’ compensation to the +performance of the Company. The Compensation Committee has eliminated the use of minimum or discretionary bonus arrangements in all of the Company’s employment agreements in recognition of the Company’s shift to the use of +performance-based bonuses. +34 +Table of Contents +• +Moreover, our annual incentive awards are subject to maximum payout caps that limit the amount an executive may earn on inputs for certain of the operational measures. +• +Restricted stock unit awards to our named executive officers are subject to time vesting provisions. We award restricted stock unit awards to ensure that our executives have a continuing stake in the long-term success +of the Company as the value of the award will depend on the stock price at and after the time of vesting. We believe that our long-term equity awards do not encourage excessive risk taking that may be associated with equity awards that vest based +strictly on achieving certain targets. We also believe that our long-term equity awards provide incentive to our named executive officers to reasonably encourage growth and financial performance that may increase stockholder value, as well as +long-term service, and serve to align the interests of our executives with those of our stockholders. +Based on the foregoing, the +Compensation Committee believes that the Company does not utilize compensation policies and programs creating risks that are reasonably likely to have a material adverse impact on the Company. +CLAWBACK PROVISIONS +Other than +legal requirements under the Sarbanes-Oxley Act of 2002, or the SOX Act, we have not adopted express “clawback” provisions with respect to compensation elements with would allow us to recoup paid compensation from designated officers in +the event of a financial restatement. Under the SOX Act, our Chief Executive Officer and Chief Financial Officer may be subject to clawbacks in the event of a restatement. The Compensation Committee has deferred taking action on clawbacks until such +time as the proposed regulations published by the SEC in July 2015 pursuant to Section 954 of the Dodd-Frank Wall Street Report and Consumer Protection Act are finalized to ensure that our policy will comply with the final regulations. Under +our 2013 Restated Stock Incentive Plan, unless an award certificate provides otherwise, the plan administrator may cancel, rescind, suspend, withhold or otherwise restrict any unexpired, unpaid or deferred award of the participant at any time in the +event of certain activities, including violations of material Company policies, termination of employment for cause or conduct that is detrimental to our business or reputation. Further, under the terms of our employment agreements entered into by +us in April 2017, effective as of January 1, 2017, with each of Ms. Crowell, Mr. Maier and Mr. Baldwin and our other executive officers, any equity awards granted to such executive, any proceeds of any equity awards that +previously have been sold, transferred or otherwise disposed of, and any incentive bonus award will be subject to clawback by us, now or in the future, under the Dodd Frank Act and the Sarbanes-Oxley Act of 2002, each as amended, and rules, +regulations and binding, published guidance thereunder. +ANTI-HEDGING AND PLEDGING POLICIES +We have a policy prohibiting directors, executive officers and certain other designated employees from speculative trading in our securities, including hedging +transactions, short selling, and trading in put options, call options, swaps or collars, or holding our securities in margin accounts. We also have a policy prohibiting directors, executive officers and certain other designated employees from +pledging Gulfport securities, except in certain limited circumstances and subject to prior approval by our compliance officer or the Compensation Committee. To our knowledge, all such individuals are in compliance with these policies. Our policy is +to also strongly encourage all other employees from engaging in hedging and pledging activities in our stock and any such transactions require notice and pre-approval, and will only be considered with a valid +justification. +ACCOUNTING IMPLICATIONS OF EXECUTIVE COMPENSATION POLICY +We are required to recognize compensation expense of all stock-based awards pursuant to the provisions of FASB ASC Topic 718, “Compensation-Stock +Compensation.” Under U.S. generally accepted accounting principles, or GAAP, only vested shares are included in basic shares outstanding. Also, under GAAP, non-vested shares are included in diluted shares +outstanding when the effect is dilutive. +35 +Table of Contents +THE ROLE OF STOCKHOLDERS’ SAY-ON-PAY +We provide our stockholders with the opportunity to cast an annual advisory vote on executive +compensation (a “say-on-pay proposal”) in accordance with the Dodd-Frank Act. At our 2016 annual meetings of stockholders, our stockholders expressed strong +support for the compensation of our named executive officers, with approximately 92% of the votes cast for approval of the “say-on-pay” advisory vote. The Compensation Committee carefully considers +the level of voting support from our stockholders on the say-on-pay advisory vote. +Although the Compensation Committee believes that 2016 results of the +“say-on-pay” advisory votes affirmed our stockholders’ support of our executive compensation policies and practices, the Compensation Committee carefully +examined our compensation practices in response to the 2016 stockholder vote. +The Compensation Committee evaluated the 2016 packages for our Chief +Executive Officer and our other named executive officers and determined that, with respect to our Chief Executive Officer, approximately 70% of 2016 compensation was paid through equity awards and 20% in annual performance bonus, providing direct +alignment with returns to stockholders and incentive to drive long-term business success. Although the performance targets for 2016 were achieved for most of key metrics at targeted or maximum levels, the TSR and certain capital expenditure goals +were achieved at below-target levels, resulting in a payout under the Annual Incentive Plan for 2016 at approximately 137% of the target annual incentive bonus for each participating NEO. +In setting compensation packages for 2017, the Compensation Committee again emphasized long-term equity awards and annual performance bonuses under the +previously implemented Annual Incentive Plan to more closely align our senior executives’ interests with those of our stockholders and to continue to link a larger portion of such executives’ compensation to the performance of our stock +and our operational performance. The Compensation Committee also believes that it set meaningful performance targets for 2017 under the Annual Incentive Plan. Further, in 2014, the Compensation Committee eliminated, and since that time has not used +and does not intend to use, minimum discretionary cash bonus arrangements for our Chief Executive Officer, COO and CFO serving in those capacities at that time, and effective January 1, 2017, it eliminated the use of discretionary bonuses for +all of our executive officers, including NEOs, in recognition of the Company’s focus on the use of performance-based bonuses. The Compensation Committee believes that our shift to linking a larger portion of such executive officers’ +compensation to long-term equity incentive awards and our shift away from discretionary cash bonuses to performance-based bonus arrangements for such executive officers appropriately align with the long-term interests of the Company and its +stockholders and are consistent with market practices. The Compensation Committee also believes that our current compensation policies and practices enhance retention of executive talent through multi-year vesting of stock awards and do not +encourage unnecessary and excessive risk taking. The Compensation Committee further believes that our other compensation policies and practices, such as our policy prohibiting pledging (except in certain limited circumstances and subject to prior +approval by our compliance officer or the Compensation Committee) or hedging of our stock by our executive officers and directors, as well as the lack of significant prerequisites and absence of pension or supplemental retirement benefits, aside +from those afforded under our broad-based 401(k) plan, for our executive officers are consistent with prudent compensation philosophy and the interests of our stockholders. The Compensation Committee will continue to consider the outcome of our +stockholders’ future “say-on-pay” votes when making compensation decisions for our named executive officers. +COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION +The Compensation Committee has reviewed and discussed the foregoing Compensation Discussion and Analysis with management. Based on its review and discussion +with management, the Compensation Committee recommended that the Compensation Discussion and Analysis be included in this proxy statement. +Respectfully +submitted by the Compensation Committee: +Scott E. Streller, Chairman +David L. Houston +Craig Groeschel +C. Doug Johnson +Dated: May 1, 2017 +36 +Table of Contents +COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION +No current member of our Compensation Committee has ever been an officer or employee of ours. None of our executive officers serves, or has served during the +past fiscal year, as a member of the board of directors or compensation committee of any other company that has one or more executive officers serving as a member of our board of directors or Compensation Committee. +Compensation Tables +2016, 2015 and 2014 SUMMARY COMPENSATION TABLE +The following table provides information concerning compensation of our principal executive officer, principal financial officer and our next three most +highly paid executive officers for the fiscal years ended December 31, 2016, December 31, 2015 and December 31, 2014. +Name and Principal Position +Year +Salary ($) +Bonus ($) +Stock +Awards +($)(1) +Non-Equity +Incentive Plan +Compensation +($)(2) +All Other +Compensation +($)(3) +Total +($) +Michael G. Moore(4) +2016 +$ +483,000 +$ +— +$ +3,450,003(5) +$ +993,089 +$ +45,307 +$ +4,971,399 +Chief Executive Officer and President +2015 +$ +460,000 +$ +— +$ +2,299,989(6) +$ +690,000 +$ +42,505 +$ +3,492,494 +2014 +$ +400,000 +$ +300,000(7) +$ +2,946,800(8) +$ +1,102,000 +$ +30,234 +$ +4,779,034 +Aaron Gaydosik(9) +2016 +$ +324,450 +$ +— +$ +1,320,964(10) +$ +— +$ +20,919 +$ +1,666,333 +Chief Financial Officer +2015 +$ +309,000 +$ +— +$ +1,099,943(11) +$ +231,750 +$ +23,876 +$ +1,664,569 +2014 +$ +118,269 +$ +150,000(12) +$ +— +$ +160,708 +$ +1,153 +$ +430,130 +Ross Kirtley(13) +2016 +$ +213,870 +$ +— +$ +1,444,946(14) +$ +— +$ +51,523 +$ +1,710,339 +Chief Operating Officer +2015 +$ +338,000 +$ +— +$ +1,014,021(15) +$ +253,500 +$ +31,523 +$ +1,637,044 +2014 +$ +325,000 +$ +— +$ +— +$ +447,688 +$ +26,390 +$ +799,078 +Keri Crowell(16) +Chief Accounting Officer +2016 +$ +275,000 +$ +75,000(17) +$ +223,120(18) +$ +282,712 +$ +21,637 +$ +877,469 +2015 +$ +250,000 +$ +150,000 +$ +530,560(19) +$ +— +$ +22,254 +$ +952,814 +Stuart A. Maier +2016 +$ +400,000 +$ +225,000 +$ +— +$ +— +$ +21,781 +$ +646,781 +Vice President of Geosciences +2015 +$ +400,000 +$ +200,000 +$ +331,600(20) +$ +— +$ +23,159 +$ +954,759 +2014 +$ +400,000 +$ +150,000 +$ +— +$ +— +$ +21,193 +$ +571,193 +Steve Baldwin +2016 +$ +208,333 +$ +130,000 +$ +— +$ +— +$ +21,219 +$ +359,552 +Vice President of Reservoir Engineering +2015 +$ +200,000 +$ +125,000 +$ +165,800(21) +$ +— +$ +20,346 +$ +511,146 +2014 +$ +200,000 +$ +125,000 +$ +— +$ +— +$ +24,009 +$ +349,009 +(1) +The amount reported in the Stock Awards column reflects the fair value of the applicable restricted common stock award or restricted stock unit award on the award date. The amount was calculated using certain +assumptions, as set forth in Note 8 to our consolidated financial statements for the fiscal year ended December 31, 2016 under the heading “Stock-Based Compensation,” included in our Annual Report on Form 10-K, filed with the SEC on February 14, 2017. +(2) +The amounts shown reflect performance-based annual incentive bonuses granted under the 2014 Executive Annual Incentive Compensation Plan. With respect to the 2016 amounts, the compensation committee certified the +attainment of the related performance goals on February 27, 2017, and the Company paid these performance-based annual incentive bonuses on March 2, 2017. With respect to the 2015 amounts, the compensation committee certified the attainment of +the related performance goals on March 10, 2016, and the Company paid these performance-based annual incentive bonuses on March 11, 2016. With respect to the 2014 amounts, the compensation committee certified the attainment of the related +performance goals on February 24, 2015, and the Company paid these performance-based annual incentive bonuses on February 27, 2015. +(3) +The amounts for Mr. Moore for 2016, 2015 and 2014 represent our 401(k) plan contributions of $20,295, $19,890 +and $19,539, respectively, $23,990, $22,615 and $2,995, respectively, attributable to use of a Company owned vehicle, and $1,022, $0 and $7,700 attributable to Company sponsored sporting tickets in 2016, 2015 and 2014, respectively. Amounts for +Mr. Gaydosik in 2016, 2015 and 2014 represent $20,295, $19,890 and $0, respectively, in contributions to our 401(k) plan, $304, $3,666 and $1,100, respectively, attributable to Company sponsored sporting tickets and $320, $320 and $53, +respectively, attributable to a Company sponsored health club membership. Amounts for Mr. Kirtley in +37 +Table of Contents +2016, 2015 and 2014 represent $20,295, $19,890 and $19,539, respectively, in contributions to our 401(k) plan, $0, $1,022 and $2,200, respectively, attributable to Company sponsored sporting +tickets, $0, $320 and $320, respectively, attributable to a Company sponsored health club membership and $31,228, $10,291 and $4,331, respectively, attributable to use of a Company owned vehicle. Amounts for Ms. Crowell for 2016 and 2015 +include our 401(k) plan contributions of $20,295 and $19,890, respectively, $320 and $320, respectively, attributable to a Company sponsored health club membership and $1,022 and $2,044, respectively, attributable to Company sponsored sporting +tickets. Amounts for Mr. Maier in 2016, 2015 and 2014 include contributions to our 401(k) plan of $20,295, $19,890 and $19,539, respectively, $0, $0 and $554, respectively, attributable to a Company sponsored health club membership and $1,486, +$3,269 and $1,100, respectively, attributable to Company sponsored sporting tickets. Amounts for Mr. Baldwin for 2016, 2015 and 2014 include our 401(k) plan contributions of $20,295, $19,890 and $19,539, respectively, $320, $320 and $320, +respectively, attributable to a Company sponsored health club membership and $604, $136 and $4,150, respectively, attributable to Company sponsored sporting tickets. +(4) +Effective April 22, 2014, Mr. Moore became our Chief Executive Officer and has continued to serve as our President. He also continued to serve as our Chief Financial Officer until the appointment of +Mr. Gaydosik as our then Chief Financial Officer effective August 11, 2014. +(5) +Mr. Moore’s award of 40,367 restricted stock units was granted on March 10, 2016 and vests in four approximately equal annual installments, of which 10,092 have vested and the remaining 30,275 restricted +stock units will vest in three equal annual installments beginning March 10, 2018. Mr. Moore’s award of 85,215 restricted stock units was granted on March 31, 2016 and vests in three approximately equal annual installments, of +which 56,810 restricted stock units have vested and the remaining 28,405 restricted stock units will vest in on March 31, 2018. +(6) +Mr. Moore’s award of 52,225 shares of our restricted common stock was granted on February 24, 2015 and vested in three approximately annual installments. +(7) +On April 1, 2014, the compensation committee awarded Mr. Moore an additional cash bonus of $300,000 attributable to his performance in 2013. +(8) +Mr. Moore’s restricted common stock award of 40,000 shares of our restricted common stock granted in connection with his appointment as our new Chief Executive Officer on April 30, 2014 vested in three +approximately equal annual installments. +(9) +Mr. Gaydosik served as our Chief Financial Officer from August 11, 2014 to January 4, 2017. +(10) +Mr. Gaydosik’s award of 13,558 restricted stock units was granted on March 10, 2016 and was to vest in four approximately equal annual installments, however, all of these restricted stock units were +forfeited upon his resignation. Mr. Gaydosik’s award of 34,345 shares of restricted stock units was granted on March 31, 2016 and was to vest in three approximately equal annual installments, however, all of these restricted stock +units were forfeited upon his resignation. +(11) +Mr. Gaydosik’s award of 21,049 shares of our restricted common stock was granted on February 24, 2015 and was to vest in three approximately equal annual installments, of which 7,016 shares vested on +March 1, 2016 and the remaining 14,033 shares were forfeited upon his resignation. In addition, Mr. Gaydosik was entitled to receive shares of our restricted common stock valued at $225,000 as of the close of trading on August 11, +2014, the date his employment began, which equaled 3,927 shares, as part of his one-time sign-on bonus in connection with his appointment as our Chief Financial Officer. +This restricted common stock award was granted on February 24, 2015. The grant date fair value of these shares of restricted common stock was $172,945. +(12) +Mr. Gaydosik received $150,000 as part of his one-time sign-on bonus in connection with his appointment as our Chief Financial Officer +effective August 11, 2014. +(13) +Mr. Kirtley served as our Chief Operating Officer effective April 22, 2014 through August 5, 2017. +(14) +Mr. Kirtley’s award of 14,830 restricted stock units was granted on March 10, 2016 and was to vest in four approximately equal annual installments beginning in March 2012. All of these restricted stock +units became vested upon the termination of his employment in August 2016, however, the shares of common stock underlying this award will be issued based on the original vesting schedule. Mr. Kirtley’s award of 37,569 restricted stock +units was granted on March 31, 2016 and would have vested in three approximately equal annual installments beginning in March 2017. All of these restricted stock units were forfeited upon the termination of his employment on August 5, 2017. +(15) +Mr. Kirtley’s award of 23,025 shares of our restricted common stock was granted on February 24, 2015 and vested in three approximately equal annual installments, of which 7,675 shares vested on +March 1, 2016 and the remaining 15,350 shares were forfeited upon the termination of his employment on August 5, 2017. +(16) +Ms. Crowell was appointed as our Chief Accounting Officer effective September 10, 2015. +(17) +During 2016, after a lengthy evaluation process, the Company made the decision to convert to a more fully integrated financial reporting system. As a result, the Company appointed an internal team to coordinate the 18 +month conversion process. To incentivize that group to meet implementation deadlines, goals were established with incentives provided for achieving each incremental goal. In November 2016, Ms. Crowell was awarded a bonus of $75,000 for achieving her +goals to date on this project. +38 +Table of Contents +(18) +Ms. Crowell’s award of 8,000 restricted stock units was granted on August 2, 2016 and vests in four approximately equal annual installments beginning on August 15, 2017. +(19) +Ms. Crowell’s award of 16,000 restricted stock units was granted on August 7, 2015 and vests in three approximately equal installments, of which 5,333 shares vested on August 15, 2016 and the +remaining 10,667 will vest in two approximately equal annual installments beginning August 15, 2017. +(20) +Mr. Maier’s award of 10,000 restricted stock units was granted on August 7, 2015 and vests in three approximately equal annual installments, of which 3,333 vested on August 15, 2016 and the remaining +6,667 will vest in two approximately equal annual installments beginning August 15, 2017. +(21) +Mr. Baldwin’s award of 5,000 restricted stock units was granted on August 7, 2015 and vests in three approximately equal annual installments, of which 1,666 shares vested on August 15, 2016 and the +remaining 3,334 vest in two approximately equal annual installments beginning on August 15, 2017. +2016 GRANTS OF +PLAN-BASED AWARDS +The following table provides information concerning each grant of an award made to our principal executive officer, our principal +financial officer and our next three most highly paid executive officers in the fiscal year ended December 31, 2016 under any Company plan. +Estimated Future Payouts Under Non-Equity +Incentive Plan Awards(1) +All Other +Stock +Awards: +Number of +Shares of +Stock or +Units +(#) +All Other +Option +Awards: +Number of +Securities +Underlying +Options +(#) +Exercise +or Base +Price of +Option +Awards +($/Sh) +Grant Date +Fair Value +of Stock +and Option +Awards ($) +Name +Grant Date +Threshold +($) +Target +($) +Maximum +($) +Michael G. Moore +3/31/2016 +362,250 +724,500 +1,449,000 +85,215 +(2) +— +— +$ +2,414,993 +Chief Executive Officer and +3/10/2016 +40,367 +(3) +— +— +$ +1,035,010 +President +Keri Crowell +8/2/2016 +103,125 +206,250 +412,500 +8,000 +(4) +— +— +$ +223,120 +Chief Accounting Officer +Aaron Gaydosik +3/31/2016 +121,669 +243,338 +486,675 +34,345 +(5) +— +— +$ +973,337 +Chief Financial Officer +3/10/2016 +13,558 +(6) +— +— +$ +347,627 +Ross Kirtley +3/31/2016 +133,088 +266,175 +532,350 +37,569 +(7) +— +— +$ +1,064,705 +Chief Operating Officer +3/10/2016 +14,830 +(8) +— +— +$ +380,241 +(1) +Reflects performance-based annual incentive bonuses granted under the 2014 Executive Annual Incentive Compensation Plan. +(2) +Reflects Mr. Moore’s award of 85,215 restricted stock units granted on March 31, 2016 which vest in three approximately equal annual installments, of which 28,405 shares have vested on March 31, +2016, 28,405 shares have vested on March 31, 2017, and the remaining 28,405 shares will vest on March 31, 2018. +(3) +Reflects Mr. Moore’s award of 40,367 restricted stock units granted on March 10, 2016 which vest in four approximately equal annual installments, of which 10,092 shares have vested on March 10, 2017 +and the remaining 30,275 shares will vest in three approximately equal annual installments beginning on March 10, 2018. +(4) +Reflects Ms. Crowell’s award of 8,000 restricted stock units granted on August 2, 2016 which vest in four approximately equal annual installments beginning on August 15, 2017. +(5) +Mr. Gaydosik’s award of 34,345 restricted stock units was granted on March 31, 2016 and was to vest in three approximately equal annual installments beginning on March 31, 2017. All unvested equity +awards granted to Mr. Gaydosik were forfeited upon his resignation on January 4, 2017. +(6) +Mr. Gaydosik’s award of 13,558 restricted stock units was granted on March 10, 2016 and was to vest in four approximately equal annual installments beginning on March 10, 2017. All unvested awards +granted to Mr. Gaydosik were forfeited upon his resignation on January 4, 2017. +(7) +Mr. Kirtley’s award of 37,569 restricted stock units was granted on March 31, 2016 and such restricted stock units were to vest in three approximately equal annual installments beginning on March 31, +2017. Pursuant to the Kirtley Separation Agreement, such award was forfeited. +39 +Table of Contents +(8) +Mr. Kirtley’s award of 14,830 restricted stock units was granted on March 10, 2016 and was to vest in four approximately equal annual installments beginning on March 10, 2017. Pursuant to the Kirtley +Separation Agreement, such restricted stock units became vested will be settled in four substantially equal annual installments, of which, 3,708 have settled on March 10, 2017 and 11,122 will settle beginning on March 10, 2018 in +accordance with the original vesting schedule. +OUTSTANDING EQUITY AWARDS AT 2016 FISCAL +YEAR-END +The following table provides information concerning equity awards outstanding for our principal +executive officer, our principal financial officer and our next three most highly paid executive officers at December 31, 2016. +Name +Number of +Securities +Underlying +Unexercised +Options +(#) +Exercisable +Number of +Securities +Underlying +Unexercised +Options +(#) +Unexercisable +Option +Exercise +Price +($) +Option +Expiration +Date +Number +of Shares +or Units +of Stock +That +Have Not +Vested +(#) +Market +Value of +Shares or +Units of +Stock That +Have Not +Vested +($)(1) +Michael G. Moore +— +— +$ — +— +114,586(2) +$ +2,479,641 +Keri Crowell +— +— +$ — +— +25,334(3) +$ +548,228 +Stuart A. Maier +— +— +$ — +— +6,667(4) +$ +144,274 +Steve Baldwin +— +— +$ — +— +3,334(5) +$ +72,148 +Aaron Gaydosik +— +— +$ — +— +61,937(6) +$ +1,340,317 +Ross Kirtley +— +— +$ — +— +14,830(7) +$ +320,921 +(1) +Market value of shares or units that have not vested is based on the closing price of $21.64 per share of our common stock on the NASDAQ Global Select Market on December 30, 2016, the last trading day of 2016. +(2) +Of these securities, (i) 17,409 restricted stock units vested on March 1, 2017, (ii) 10,092 vested on March 10, 2017, (iii) 28,405 vested on March 31, 2017, (iv) 30,275 restricted stock units will vest in +three approximately equal annual installments beginning on March 10, 2018 and (v) 28,405 will vest on March 31, 2018. +(3) +Of these securities, (i) 5,333 restricted stock units will vest on August 15, 2017, (ii) 6,667 unvested shares of restricted stock will vest on December 1, 2017, (iii) 5,334 restricted stock units will vest on +August 15, 2018 and (iv) 8,000 restricted stock units will vest in four equal annual installments beginning on August 15, 2017. +(4) +These unvested restricted stock units vest in two approximately equal annual installments beginning on August 15, 2017. +(5) +These unvested restricted stock units vest in two approximately equal annual installments beginning on August 15, 2017. +(6) +All unvested awards granted to Mr. Gaydosik under the Company’s 2014 Executive Annual Incentive Compensation Plan forfeited upon his resignation on January 4, 2017. +(7) +Pursuant to the Kirtley Separation Agreement, 37,569 of unvested restricted stock units granted in 2016 were forfeited during 2016. Mr. Kirtley’s award of 14,830 restricted stock units was granted on +March 10, 2016 and such restricted stock units were to vest in four approximately equal annual installments beginning on March 10, 2017. Pursuant to the Kirtley Separation Agreement, such award became vested, provided that such restricted +stock units will be settled in four substantially equal annual installments, of which, 3,708 settled on March 10, 2017 and 11,122 will settle beginning on March 10, 2018 in accordance with the original vesting schedule. +40 +Table of Contents +2016 OPTION EXERCISES AND STOCK VESTED +The following table provides certain information for the named executive officers on stock option exercises during 2016, including the number of shares +acquired upon exercise and the value realized, and the number of shares acquired upon the vesting of restricted common stock awards and restricted stock unit awards. +Name +Option Awards +Stock Awards +Number of Shares +Acquired on Exercise +(#) +Value Realized on +Exercise +($) +Number of Shares +Acquired on Vesting +(#) +Value Realized on +Vesting +($)(1) +Michael G. Moore +— +— +59,147 +$ +1,632,016 +Keri Crowell +— +— +10,666 +$ +284,516 +Stuart A. Maier +— +— +3,333 +$ +89,691 +Steve Baldwin +— +— +1,666 +$ +44,832 +Aaron Gaydosik +— +— +8,979 +$ +225,111 +Ross Kirtley +— +— +10,675 +$ +256,661 +(1) +Value realized on vesting is based on the vesting date closing price per share of our common stock on The NASDAQ Global Select Market. +41 +Table of Contents +2016 DIRECTOR COMPENSATION +The following table contains information with respect to 2016 compensation of our non-employee directors who served in +such capacity during 2016. Employee directors do not receive compensation for serving as directors of the Company. +Name +Fees Earned or +Paid in Cash +(1)($) +Stock +Awards +($)(2) +Option +Awards +($)(2) +Total +($) +Donald L. Dillingham* +$ +30,917 +$ +— +— +$ +30,917 +Craig Groeschel +$ +77,750 +$ +125,007 +— +$ +202,757 +David L. Houston +$ +178,394 +$ +125,007 +— +$ +303,401 +C. Doug Johnson +$ +81,750 +$ +125,007 +— +$ +206,757 +Ben T. Morris +$ +78,000 +$ +125,007 +— +$ +203,007 +Scott E. Streller +$ +97,500 +$ +125,007 +— +$ +222,507 +* +Mr. Dillingham did not stand for re-election at our 2016 Annual Meeting of Stockholders. He served as a director and as a member of the audit committee and the nominating and +corporate governance committee of our board of directors, and received compensation for such services, during 2016 until the date of our 2016 Annual Meeting of Stockholders. +(1) +For additional information regarding the fees earned or paid in cash to our non-employee directors in 2016, please see “Board of Directors Information—How are directors +compensated?—Equity Compensation.” +(2) +The amounts shown reflect the grant date fair value of restricted common stock awards granted, determined in accordance with FASB ASC Topic 718. See Note 8, “Stock-Based Compensation,” to our consolidated +financial statements for the fiscal year ended December 31, 2016, included in our Annual Report on Form 10-K, filed with the SEC on February 14, 2017, regarding assumptions underlying valuations of +equity awards for 2016. There were 3,824 unvested restricted stock units at the end of 2016 for Messrs. Groeschel, Houston, Johnson, Morris and Streller, respectively. +Benefit Plans +401(k) Plan +We maintain a +retirement savings plan, or a 401(k) Plan, for the benefit of our eligible employees who have attained the age of 18. Currently, employees may elect to defer their compensation up to the statutorily prescribed limit. During the following year, we +make a safe harbor contribution equal to 3% of each eligible employee’s eligible annual compensation for the prior calendar year. We also have the ability to make an additional, discretionary contribution based on each eligible employee’s +eligible annual compensation for the prior calendar year. Both contributions are made, regardless of employee’s deferrals into the plan. In 2015, we made safe harbor and discretionary contributions totaling 3% of eligible compensation for +eligible employees, subject to certain limitations provided by our 401(k) plan and Internal Revenue Service regulations. All contributions made by us on behalf of an employee are 100% vested when contributed. The 401(k) Plan is intended to qualify +under Sections 401(a) and 501(a) of the Code. As such, contributions to the 401(k) Plan and earnings on those contributions are not taxable to the employees until distributed from the 401(k) Plan, and all contributions are deductible by us when +made. +2013 Restated Stock Incentive Plan +Our 2013 Restated Stock Incentive Plan, which amended and restated our Amended and Restated 2005 Stock Incentive Plan, was adopted to enable us, and any of our +affiliates, to attract and retain the services of the types of employees, consultants and directors who will contribute to our long range success and to provide incentives which are linked directly to increases in share value which will inure to the +benefit of our stockholders. The plan provides a means by which eligible recipients of awards may be given an opportunity to benefit from increases in +42 +Table of Contents +value of our common stock through the granting of incentive stock options, nonstatutory stock options, restricted awards (restricted stock and restricted stock units), performance awards and +stock appreciation rights. Our compensation committee serves as the plan administrator. +Eligible award recipients are employees, consultants and +directors of ours and any present or future parent or subsidiary of ours. Incentive stock options may be granted only to our employees. Awards other than incentive stock options may be granted to employees, consultants and directors. The shares that +may be issued pursuant to awards consist of our authorized but unissued common stock, and the maximum aggregate amount of such common stock which may be issued upon exercise of all awards in the plan, including incentive stock options, may not +exceed 7,500,000 shares, subject to adjustment to reflect certain corporate transactions or changes in our capital structure. For a description of the awards granted under the plan to our named executive officers, see “Compensation Discussion +and Analysis—Compensation Decisions for Executive Compensation Components—Long-Term Equity Incentive Awards—Restricted Stock Awards” above. On April 1, 2016, an aggregate of 2,424,847 shares of restricted common stock and +restricted stock units had been granted under this plan. There were 3,192,202 shares available for future grants under this plan as of April 1, 2016. +In the event of a transaction involving a change in control (as defined in the plan) of the Company, a dissolution or liquidation of the Company, an exchange +of shares or any corporate separation or division, including, but not limited to, a split-up, a split-off or a spin-off, or a +sale, in one transaction or a series of related transactions, of all or substantially all of our assets or a merger, consolidation, or reverse merger in which we are not the surviving entity, then all outstanding stock awards under our 2013 Restated +Stock Incentive Plan may, in the sole discretion of the plan administrator, be assumed, continued, or substituted for by any surviving or acquiring entity (or its parent company), or may be cancelled either with or without consideration for the +vested portion of the awards. In the event an option award would be cancelled without consideration paid to the extent vested, the option award recipient may exercise the option award in full or in part for a period of ten days. The plan +administrator may also exercise its discretionary authority to accelerate the vesting of an award under our 2013 Restated Stock Incentive Plan in the event of a change in control. +2014 Executive Annual Incentive Compensation Plan +The 2014 Annual Incentive Compensation Plan, or Annual Incentive Plan, was approved by our board of directors on April 1, 2014 and by our stockholders at +the 2014 Annual Meeting on June 11, 2014. Our executive officers and selected employees and those of our subsidiaries are eligible to receive awards under the Annual Incentive Plan. The Annual Incentive Plan provides for awards of incentive +compensation that are contingent on the attainment of specific performance targets. Under the Annual Incentive Plan, the compensation committee, as the plan administrator, establishes the performance targets for each award and the performance period +during which the performance is to be measured, which will generally be our fiscal year. Performance targets may include a minimum level of performance below which no payment will be made, levels of performance at which specified percentages of the +award will be paid, and a maximum level of performance above which no additional award will be paid. The plan administrator must adopt the performance targets and criteria for awards granted to executive officers subject to the limits of +Section 162(m) of the Code, whom we refer to as Covered Employees, no later than the earlier of: +• +90 days after the beginning of the performance period, or +• +the time when 25% of the performance period has elapsed. +In addition, award amounts to be paid to any Covered +Employee for any one year may not exceed the lesser of: (i) 300% of base salary at the time the award is established, or (ii) $6.0 million. Individual awards may be subject to lesser limits as specified in the discretion of the +compensation committee. +43 +Table of Contents +Performance targets for each award will be based on pre-established +performance factors, which may include any or all of the following, individually or in combination: +• +revenue; +• +net sales; +• +operating income; +• +earnings before all or any of interest, taxes, depreciation and/or amortization (“EBIT,” “EBITA” or “EBITDA”); +• +growth of oil and natural gas production; +• +growth of estimated or proved reserves; +• +capital efficiency based on revenue per barrel of oil equivalent (“BOE”) produced; +• +lease operating expenses; +• +general and administrative expenses; +• +net cash provided by operating activities or other cash flow measurements; +• +working capital and components thereof; +• +return on equity or average stockholders’ equity; +• +return on assets; +• +market share; +• +net or gross sales measured by product line, territory, one or more customers, or other category; +• +stock price; +• +earnings per share; +• +earnings from continuing operations; +• +net worth; +• +credit rating; +• +levels of expense, cost or liability by category, operating unit, or any other delineation; or +• +any increase or decrease of one or more of the foregoing over a specified period. +These performance factors +may relate to the performance of the Company or the performance of a business unit, product line, territory or any combination of these. Performance targets for employees who are not executive officers may also be based on other additional objective +or subjective performance criteria established by the plan administrator. +The plan administrator may at any time establish additional conditions and +terms of payment of awards, including additional financial, strategic or individual goals, which may be objective or subjective. The plan administrator may exercise negative discretion to reduce the amount of an award, but may not adjust upwards the +amount payable pursuant to any award to a Covered Employee, nor may it waive the achievement of the performance target requirement for any Covered Employee, except in the case of the death or disability of the participant or a change in control of +the Company. +Unless the plan administrator provides otherwise, a participant must be employed by us on the date that awards are paid to receive an award +payment, except in the case of death or disability. If a participant dies or becomes disabled during a performance period, the participant (or the participant’s beneficiary) will receive a pro-rated +44 +Table of Contents +award payment at the same time all other awards are paid for the performance period. In the event of a change in control, each named executive officer will be paid the target award amount (mid-point of any specified range of potential award payment amount) based on the assumption that the performance target was attained at the target level (mid-point of any +specified range of performance targets) for the entire performance period. The target award amount will be paid within ten (10) days following the consummation of the change in control transaction. +Before payment of any award to a Covered Employee, our compensation committee must certify in writing that the performance target requirement for such award +was met. +The plan administrator may at any time amend the Annual Incentive Plan, subject to approval by our stockholders to the extent stockholder +approval is necessary to continue to qualify as “performance-based compensation” under Section 162(m) of the Code. The plan administrator may at any time terminate the Annual Incentive Plan in whole or in part. +Our board of directors has delegated its authority to administer the Annual Incentive Plan to the compensation committee, to whom we refer as the plan +administrator. The compensation committee is expected to consist solely of two or more “outside directors” within the meaning of Section 162(m) of the Code. The plan administrator has the authority to administer the Annual Incentive +Plan and to exercise all the powers and authorities either specifically granted to it under the Annual Incentive Plan or necessary or advisable in the administration of the Annual Incentive Plan, including (but not limited to) the following: +• +to interpret the Annual Incentive Plan and any award; +• +to prescribe rules relating to the Annual Incentive Plan; +• +to determine the persons to receive awards; +• +to determine the terms, conditions, restrictions and performance criteria, including performance factors and performance targets, relating to any award; +• +to accelerate an award that is designed not to be deferred compensation subject to Code Section 409A (after the attainment of the applicable performance target or targets); +• +to adjust performance targets in recognition of specified events such as unusual or non-recurring events affecting us or our financial statements, including certain asset +dispositions, cessation of operations resulting from a natural disaster, or in response to changes in applicable laws, regulations, or accounting principles as specified in the Annual Incentive Plan or in the performance targets established for any +performance period; +• +to waive restrictive conditions for an award (but not performance targets); and +• +to make any other determinations that may be necessary or advisable for administration of the Annual Incentive Plan. +Federal Income Tax Consequences of the Annual Incentive Plan. +Under federal income tax laws currently in effect: +Participants +in the Annual Incentive Plan will recognize in the year of payment ordinary income equal to the award amount, which is subject to applicable income and employment tax withholding by us (including the additional tax of 0.9% imposed on wages in excess +of $200,000 under Section 3101(b)(2) of the Code). Under current regulations and guidance, we expect that awards under the Annual Incentive Plan will not be subject to Section 409A of the Code, which imposes restrictions on nonqualified +deferred compensation arrangements and penalizes participants for violating these restrictions. +Section 162(m) of the Code imposes a +$1.0 million annual limit on the amount of compensation that we may deduct for federal income tax purposes with respect to our chief executive officer and each of our three highest +45 +Table of Contents +compensated officers (other than our chief executive officer and our chief financial officer), subject to certain exceptions. The Annual Incentive Plan is intended to qualify for the exception +under Section 162(m) for “performance-based compensation.” We expect that we will be entitled to a tax deduction in connection with the payment of each award under the Annual Incentive Plan in an amount equal to the ordinary income +realized by the participant without regard to the $1.0 million annual deduction limitation under Section 162(m) of the Code, if certain requirements of Section 162(m) are satisfied. However, the plan administrator may award +compensation that is or may become non-deductible, and expects to consider whether it believes such grants are in the best interest of the Company, balancing tax efficiency with long-term strategic objectives. +While the plan administrator is mindful of the limitation imposed by Section 162(m) of the Code, it also recognizes that facts and circumstances may render compliance with those limitations inappropriate, at odds with the best interests of the +Company or out of step with the then-prevailing competitive market conditions. In such event, the plan administrator’s priority will be determining what is in the best interest of the Company and its stockholders rather than compliance with the +technical limitations imposed by the Code. +EQUITY COMPENSATION PLAN INFORMATION +The following table sets forth, as of December 31, 2016, certain information with respect to all compensation plans under which equity securities are +authorized for issuance. +Plan Category +Number of securities to +be issued upon exercise +of outstanding options, +warrants and rights +(a)(1)(2) +Weighted average +exercise price of +outstanding options, +warrants and rights +(b)(3) +Number of securities +remaining available +for future issuance +under equity +compensation +plans +(excluding securities +reflected in column +(a))(c) +Equity compensation plans approved by security holders(1) +613,056 +$ +— +3,669,970 +(1) +Refers to our 2013 Restated Stock Incentive Plan (which amended and restated our Amended and Restated 2005 Stock Incentive Plan) and our 1999 Stock Option Plan. +(2) +Includes an aggregate of 613,056 unvested restricted stock units and shares of unvested restricted common stock granted under our 2013 Restated Stock Incentive Plan. +(3) +No options were outstanding as of December 31, 2016, and neither restricted stock units nor shares of restricted common stock have an exercise price. +Employment Agreements +Employment Agreement with Our Chief Executive Officer +Effective April 22, 2014, we entered into an amended and restated employment agreement with Mr. Moore in connection with his new responsibilities as +Chief Executive Officer. The employment agreement was further amended and restated as of April 29, 2015 to reflect recommendations of the compensation consultant that were approved by the compensation committee. The agreement has a three-year +term commencing effective April 22, 2014 and provided for an annual base salary of $400,000 that can be increased from time to time by the compensation committee, but not decreased. The agreement, as amended and restated as of April 29, +2015, reflects the compensation committee’s decision to increase Mr. Moore’s annual base salary to $460,000 for 2015 and the determination by the compensation committee to continue to increase Mr. Moore’s annual base salary +during 2016 and 2017 so as to achieve alignment between the 25th and 50th percentile of our compensation peer group disclosed in our annual proxy statement (as it may be adjusted from time to time). Mr. Moore is also entitled to receive a +target annual bonus of 150% of his base salary upon achievement of performance goals established by the compensation committee. The annual bonus may be less than, or more than, the 150% target, up to a maximum of 300% of base salary in the event +performance exceeds the target level established by the +46 +Table of Contents +compensation committee. The agreement also provided that he would be entitled to receive annual grants of 40,000 shares of restricted common stock that would vest in three substantially equal +annual installments commencing in the year granted. The agreement, as amended and restated as of April 29, 2015, eliminates Mr. Moore’s right to receive a fixed annual grant of 40,000 shares of restricted common stock. Instead, +consistent with the recommendation of the compensation consultant and approved by the compensation committee, the agreement now provides that Mr. Moore is entitled to receive an award of restricted common stock equal to 500% of his annual base +salary. The vesting schedule remained unchanged. Mr. Moore is also entitled to five weeks of paid vacation, to participate in such medical insurance and other welfare benefit plans that we establish from time to time, a $500,000 life insurance +policy and to the use of a company vehicle. Mr. Moore is subject to certain restrictive covenants in his employment agreement, including a restriction on using our trade secrets and a 12-month restriction +on solicitation of our employees, consultants and customers. +Rights Upon Termination Without Cause, Resignation for Good Reason or +Death or Disability +The continued employment of Mr. Moore with us is “at-will,” meaning +that either we or Mr. Moore may terminate the employment relationship at any time and for any reason, with or without notice. However, under the terms of his amended and restated employment agreement, if (i) we terminate Mr. Moore +without “cause,” (ii) Mr. Moore terminates his employment for “good reason” or (iii) Mr. Moore’s employment is terminated due to death or disability, then, subject to Mr. Moore signing and delivering +a general release of any and all claims against us, the following would occur: +• +we would be obligated to make a lump sum payment on the termination date equal to all accrued and unpaid salary and other compensation payable to Mr. Moore (including vacation and sick pay) with respect to services +rendered through the termination date; +• +within 60 days of termination, we would be obligated to make a lump sum payment equal to 225% of the amount Mr. Moore would have earned as base salary during the two-year +period following the termination date had Mr. Moore’s employment not been terminated; +• +we would be obligated to immediately issue to Mr. Moore on a fully vested basis the restricted common stock grants that he would have been entitled to during the two-year +period following the termination date had Mr. Moore’s employment not been terminated; +• +all restricted stock, restricted stock units, stock options and stock appreciation rights granted to Mr. Moore that would have vested during the three-year period following the termination date solely as a result +of Mr. Moore’s continued service to the Company would vest immediately on the termination date and, with respect to any such stock options and stock appreciation rights, would remain exercisable in accordance with the terms applicable to +such options or rights; +• +we would be obligated to continue providing a Company-owned car for two years following termination; and +• +we would be required to pay the premiums for certain continuing health care benefits for Mr. Moore and his family for a period of 18 months or until Mr. Moore becomes eligible for group health plan benefits +with another employer. +For purposes of the employment agreement with Mr. Moore, “cause” is generally defined as: +• +Mr. Moore’s conviction (including any plea of guilty or no contest) of any felony involving the embezzlement, theft or misappropriation of monies or other property, of the Company or otherwise or any crime of +moral turpitude; +• +gross misconduct in the performance of Mr. Moore’s duties; or +• +the repeated failure by Mr. Moore (except by reason of disability) to render full and proper services as required by the terms of Mr. Moore’s employment after failure to cure such failure within 30 days +after receiving written notice from the Company or the board of directors detailing the alleged failure. +47 +Table of Contents +“Good reason,” as used in the employment agreement with Mr. Moore, means (i) a material +diminution in the duties, authority or responsibilities of Mr. Moore or a material breach of the employment agreement by the Company, or (ii) requiring Mr. Moore to relocate his principal place of employment to a location that is more +than 35 miles from the location of the Company’s principal office in the Oklahoma City area as of the effective date of the employment agreement, provided that the Company fails to cure such material diminution, breach or relocation within 30 +days of receipt of a written notice from Mr. Moore. +Rights Upon Termination for Cause or Resignation Other than for Good +Reason +Under the terms of our employment agreement with Mr. Moore, in the event Mr. Moore is terminated for “cause” or +Mr. Moore voluntarily terminates his employment other than for “good reason,” Mr. Moore would be entitled to a lump sum payment on the termination date equal to all accrued and unpaid salary and other compensation payable to +Mr. Moore (including vacation and sick pay) with respect to services rendered through the termination date and, subject to Mr. Moore signing a general release of any and all claims against us and, as consideration for such release, an +amount equal to his base salary amount in effect immediately preceding such termination prorated based on the number of days between the first day of the contract year and the termination date, divided by 365. +Rights Upon Termination Following a Change of Control +Under the terms of our employment agreement with Mr. Moore, if Mr. Moore’s employment with the Company or its successor is terminated on or +before the second anniversary of the date of occurrence of a “change of control” either (a) by the Company or its successor other than for “cause,” (b) by Mr. Moore for “good reason,” or (c) as a +result of Mr. Moore’s death or disability, then, in addition to the benefits described under the heading “—Rights Upon Termination Without Cause, Resignation for Good Reason or Death or Disability” above: +• +all restricted stock and restricted stock units that have been granted to Mr. Moore by the Company prior to the date of the amended and restated employment agreement and that would have vested at any time after the +date of Mr. Moore’s termination solely as a result of Mr. Moore’s continued service to the Company will immediately vest on the date of termination; and +• +all stock options and stock appreciation rights that have been granted to Mr. Moore by the Company prior to the date of the amended and restated employment agreement and that would have vested at any time after the +date of Mr. Moore’s termination solely as a result of his continued service to the Company will immediately vest and become exercisable on the date of termination. +Under the terms of Mr. Moore’s employment agreement, any equity awards granted on or after the date of the agreement will provide that such equity +awards will vest upon the occurrence of a change of control. A “change of control” will be deemed to have occurred upon the occurrence of any of the following: +• +any consolidation or merger of the Company into or with another person or entity pursuant to which shares of the Company’s common stock would be converted into cash, securities or other property, other than any +consolidation or merger of the Company in which the persons who were stockholders of the Company immediately prior to the consummation of such consolidation or merger are the beneficial owners, immediately following the consummation of such +consolidation or merger, of more than 50% of the combined voting power of the then outstanding voting securities of the person or entity surviving or resulting from such consolidation or merger; +• +any sale, lease or other transfer (in one transaction or a series of related transactions) of all or substantially all of the assets of the Company; or +• +the approval by the stockholders of the Company of any plan or proposal for the liquidation or dissolution of the Company. +48 +Table of Contents +Employment Agreements with our Chief Financial Officer, Senior Vice President of +Geosciences and Vice President—Reservoir Engineering +On April 28, 2017, effective as of January 1, 2017, we entered +into an employment agreement with each of Keri Crowell, our Chief Financial Officer, Stuart Maier, our Senior Vice President of Geosciences, and Steve Baldwin, our Vice President—Reservoir Engineering. Each employment agreement provides for a one-year term commencing as of January 1, 2017, or the Initial Period, which will automatically be extended for successive one-year periods unless we or the executive +elects to not extend the term by giving written notice to the other party at least 30 days prior to the end of the Initial Period or any anniversary thereof. Ms. Crowell, Mr. Maier and Mr. Baldwin will receive annual base salary of +$350,000, $400,000 and $210,000, respectively, subject to periodic review by the compensation committee and adjustment from time to time. Subject to the achievement of certain performance goals as determined by our board of directors or the +compensation committee for each fiscal year, each of Ms. Crowell, Mr. Maier and Mr. Baldwin is eligible to participate in our annual cash incentive program, with an opportunity to receive an annual bonus (payable in a single lump +sum), based on criteria determined in the discretion of the board of directors or the compensation committee. For 2017, the compensation committee set Ms. Crowell’s target bonus at 80%, with a maximum target bonus of up to 200%, of her +annual base salary, Mr. Maier’s target bonus at 60%, with a maximum target bonus of up to 200% of his annual base salary, and Mr. Baldwin’s target bonus at 60%, with a maximum target bonus of up to 200%, provided each such +executive remains employed by us on the payment date. Each such executive is also entitled to participate in any life, disability, health insurance and 401(k) plans and other similar plans that we establish from time to time for our executive +employees. +Under his or her employment agreement, each executive may receive, as determined by the board of directors or the compensation +committee thereof in its sole discretion, an equity award under our long term incentive plan or plans, subject to the terms and conditions thereof and any equity award agreement. Any equity awards granted to such executive, any proceeds of any +equity awards that previously have been sold, transferred or otherwise disposed of, and any incentive bonus award will be subject to clawback by us, now or in the future, the Dodd Frank Act and the Sarbanes-Oxley Act of 2002, each as amended, and +rules, regulations and binding, published guidance thereunder. +Each executive has agreed to certain restrictive covenants in his or her +employment agreement, including, without limitation, such executive’s agreement not to interfere with any of our employees, suppliers, vendors, joint venturers or licensors and not to solicit our customers or employees, in each case during such +executive’s employment with us and for a period of two years thereafter, (ii) not to disclose our confidential information or trade secrets and (iii) not to compete with us while using our trade secrets. We may terminate each such +executive’s employment at any time for any or no reason, in our sole discretion, upon not less than 10 days’ advance written notice to the executive. The executive may terminate the employment relationship upon 10 days’ advance +written notice to us. However, if we terminate such executive’s employment without “cause,” then he or she will be entitled to (i) any accrued benefits (defined below), (ii) severance pay in an amount equal to one months’ +base salary for each full year of employment with us, not to exceed 12 months, and (iii) COBRA coverage; provided that, in the case of clauses (ii) and (iii), the executive continues to comply with the restrictive covenants described above +and the executive executes a full general release in our favor. In the event the executive’s employment terminates upon his or her death or disability, the executive or his or her estate will be entitled to any accrued benefits. In the event +such executive’s employment is terminated for “cause” (as defined below) or as a result of non-extension of his or her employment agreement, our obligations under such agreement will terminate, +except for any accrued benefits. +If the executive’s employment with us or our successor is terminated on or before the second +anniversary of the date of occurrence of a “change of control” (as defined below) other than for “cause,” then, in addition to the benefits described above, (i) all equity awards that have been granted to such executive that +would have vested at any time after the date of his or her termination solely as a result of her continued service to the Company will immediately vest on the date of termination, and (ii) such executive will be entitled to receive a lump sum +49 +Table of Contents +payment equal to his or her severance payment described above times two, plus an amount equal to his or her target annual bonus during the severance period and the continuation of COBRA coverage +for 18 months. +Under the employment agreements with each of Ms. Crowell, Mr. Maier and Mr. Baldwin: +“Accrued benefits” are (a) any base salary through the date of termination, (b) reimbursement for any unreimbursed +business expenses incurred through the date of termination, (c) any accrued but unused vacation time in accordance with the Company’s policy and (d) all other payments, benefits or fringe benefits to which the executive may be +entitled under the terms of any applicable compensation arrangement or benefit, equity or fringe benefit plan or program or grant or his or her employment agreement. +A “change of control” will be deemed to have occurred upon the occurrence of any of the following: (a) any consolidation or +merger of us into or with another person or entity pursuant to which our shares of common stock would be converted into cash, securities or other property, other than any consolidation or merger in which the persons who were our stockholders +immediately prior to the consummation of such consolidation or merger are the beneficial owners, immediately following the consummation of such consolidation or merger, of more than 50% of the combined voting power of the then outstanding voting +securities of the person or entity surviving or resulting from such consolidation or merger; (b) any sale, lease or other transfer (in one transaction or a series of related transactions) of all or substantially all of our assets; or +(c) the approval by our stockholders of any plan or proposal for our liquidation or dissolution. +“Cause” is generally +defined as such named executive officer’s (a) gross negligence, gross incompetence or misconduct in performing the executive’s duties, (b) failure to perform, without proper legal reason, such executive’s duties and +responsibilities to us or any of our affiliates, (c) material breach of such executive’s employment agreement or any agreement or corporate policy or code of conduct established by us or our affiliates, (d) conduct that is, or could +reasonably be expected to be, materially injurious to us or any of our affiliates, (e) act of theft, fraud, embezzlement or misappropriation against or breach of a fiduciary duty to us or any of our affiliates or (f) conviction of, or a +plea of guilty or no contest to, or receipt of adjudicated probation or deferred adjudication in connection with, a crime involving fraud, dishonesty or moral turpitude or any felony (or a crime of similar import in a foreign jurisdiction). +Potential Payments Upon Termination, Resignation or Change of Control +The following tables provide information regarding potential payments as of December 31, 2016 to each of our named executive officers with whom we had an +employment agreement as of December 31, 2016 in connection with certain termination events, including a termination related to a change of control of the Company. +Benefits and Payments Upon +Termination of +Michael G. +Moore(1) +Voluntary +Resignation +(No Good +Reason) +Resignation +for Good +Reason/ +Termination +Without +Cause or +Upon Death +or Disability +Termination +for Cause +Termination +Following +Change of +Control +Severance Payments +$ +— (2) +$ +2,173,500(3) +$ +— (2) +$ +2,173,500(3) +Long-Term Incentives: +Unvested Restricted Stock +— +$ +2,479,641(4) +— +$ +2,479,641(5) +Unvested Stock Options/SARs +— +— +— +— +Benefits Continuation +— +$ +22,395(6) +— +$ +22,395(6) +Other +— +$ +47,981(7) +— +$ +47,981(7) +Total +$ +— +$ +4,723,517 +$ +— +$ +4,723,517 +50 +Table of Contents +(1) +The executive’s base salary as of December 31, 2016 was $483,000. Information in this table assumes a termination date of December 31, 2016 and a price per share of our common stock of $21.64 (the closing +market price per share on December 30, 2016, the last trading day of 2016), and applies the terms of his amended and restated employment agreement effective as of April 29, 2015. +(2) +Upon a voluntary termination other than for Good Reason or a termination for Cause, the executive is entitled to receive a lump sum payment on the termination date equal to all accrued and unpaid salary and other +compensation payable to the executive (including vacation and sick pay) with respect to services rendered through the termination date and, subject to the executive signing a general release of all claims against us, in consideration for such +release, an amount equal to his base salary amount in effect immediately preceding such termination prorated based on the number of days between the first day of the contract year and the termination date, divided by 365. +(3) +Reflects receipt by the executive, subject to his execution and delivery of a general release of all claims against us, of (i) a lump sum payment on the termination date equal to all accrued and unpaid salary and +other compensation payable to Mr. Moore (including vacation and sick pay) with respect to services rendered through the termination date and (ii) within 60 days of termination, a lump sum payment equal to 225% of the amount Mr. Moore +would have earned as base salary during the two-year period following the termination date had Mr. Moore’s employment not been terminated. +(4) +Reflects immediate vesting on the termination date of all restricted stock and any restricted stock units, stock options and stock appreciation rights granted to Mr. Moore that would have vested during the +three-year period following the termination date solely as a result of Mr. Moore’s continued service to the Company, with any such stock options and stock appreciation rights remaining exercisable in accordance with the terms applicable to +such options or rights. +(5) +Contemplates termination of Mr. Moore’s employment with the Company or its successor on or before the second anniversary of the date of occurrence of a “change of control” either (a) by the +Company or its successor other than for “cause,” (b) by Mr. Moore for “good reason,” or (c) as a result of Mr. Moore’s death or disability and reflects (i) immediate vesting on the termination date of all +restricted stock and any restricted stock units granted to Mr. Moore that would have vested during the three-year period following the termination date solely as a result of Mr. Moore’s continued service to the Company and +(ii) immediate vesting and exercisability of all stock options and stock appreciation rights granted to Mr. Moore by the Company prior to the date of his amended and restated employment agreement that would have vested at any time after +the date of Mr. Moore’s termination solely as a result of his continued service to the Company. +(6) +Reflects the value of Company-paid continuation coverage under the Company’s group health plans and under the Consolidated Omnibus Budget Reconciliation Act of 1985 for the executive and his eligible family members +for a period of 18 months following the date of termination. +(7) +Reflects the value of a Company-owned vehicle provided for the executive’s use for a period of two years following termination. +Benefits and Payments Upon +Termination of +Aaron Gaydosik(1) +Voluntary +Resignation +(No Good +Reason) +Resignation +for Good +Reason/ +Termination +Without +Cause +Termination +Upon Death +or Disability +Termination +for Cause +Termination +Following +Change of +Control +Severance Payments +$ +— +$ +567,788(2)(5) +$ +— +$ +— (2)(6) +$ +1,135,575(2)(7) +Long-Term Incentives: +Unvested Restricted Stock +— +$ +— (3)(5) +— +— (4) +$ +1,340,317(7) +Unvested Stock Options/SARs +— +— +— +— +— +Benefits Continuation +— +$ +— +— +— +$ +32,287(7) +Total +$ +— +$ +567,788 +$ +— +$ +— +$ +2,508,179 +51 +Table of Contents +(1) +The executive’s base salary as of December 31, 2016 was $324,450. Information in this table assumes a termination date of December 31, 2016 and a price per share of our common stock of $21.64 (the closing +market price per share on December 30, 2016, the last trading day of 2016), and applies the terms of his employment agreement entered into on March 13, 2015, effective as of August 11, 2014. +(2) +Subject to the achievement of certain performance goals as determined by our board of directors or the compensation committee for each fiscal year, Mr. Gaydosik is eligible to receive a target annual bonus of 75%, +and a maximum target bonus of up to 200%, of his annual base salary, provided he remains employed by us on the payment date. +(3) +Mr. Gaydosik may in the discretion of the compensation committee receive an equity award, with a target level of 300% of his base salary. If Mr. Gaydosik’s employment terminates prior to any scheduled +vesting date then, except if he is involuntarily terminated without “cause” or as expressly provided in any existing or future equity award, he will forfeit all rights and interests in and to such unvested equity awards. +(4) +If Mr. Gaydosik is terminated for “cause,” he will forfeit all rights and interest in and to all outstanding equity awards, whether vested or unvested. +(5) +If (i) we terminate Mr. Gaydosik’s employment without “cause,” or (ii) Mr. Gaydosik resigns for “good reason,” then Mr. Gaydosik will be entitled to severance pay in an +amount equal to 12 months’ base salary plus target bonus; provided, in each case, that the executive continues to comply with the restrictive covenants described above and the executive executes a full general release in our favor, except that +the restriction on competition will not apply in the event the executive resigns for good reason within 12 months following our change of control. +(6) +In the event Mr. Gaydosik’s employment is terminated for “cause,” our obligations will terminate with respect to the payment of any base salary or bonuses effective as of the termination date. +(7) +If Mr. Gaydosik’s employment with us or our successor is terminated on or before the second anniversary of the date of occurrence of a “change of control” (as defined below) either (a) by us or +our successor other than for “cause” or (b) by Mr. Gaydosik for “good reason,” then, in addition to the benefits described above, (i) all equity awards that have been granted to Mr. Gaydosik that would have +vested at any time after the date of Mr. Gaydosik’s termination solely as a result of Mr. Gaydosik’s continued service to the Company will immediately vest on the date of termination, and (ii) Mr. Gaydosik will be +entitled to receive a lump sum payment equal to his base salary and target annual bonus during the two year period after his termination and the continuation of COBRA coverage for 18 months. +Severance Payments Received by our Former Chief Operating Officer in Connection with Termination in August 2016 +As previously disclosed, on August 5, 2016, Mr. Kirtley’s employment as the Company’s Chief Operating Officer terminated. In connection +with Mr. Kirtley’s termination, on November 2, 2016, we entered into a separation and release agreement with Mr. Kirtley, which we refer to as the Kirtley Separation Agreement, pursuant to which the Company agreed to provide +Mr. Kirtley with (i) the cash compensation specified in his employment agreement, (ii) health care benefits for Mr. Kirtley and his eligible dependents for up to eighteen (18) months following the termination date, +(iii) his company vehicle, (iv) the vesting of 3,000 shares of restricted stock and (v) the vesting of 14,830 restricted stock units provided that such restricted stock units will be settled in four substantially +equal annual installments beginning in March 2017 in accordance with the original vesting schedule. All other restricted stock and restricted stock unit awards granted to Mr. Kirtley were forfeited and terminated. +Under the Kirtley Separation Agreement, Mr. Kirtley is subject to certain covenants regarding confidentiality, +non-solicitation, non-competition, trade secrets, unfair competition and inventions. The Kirtley Separation Agreement also contains customary waiver and release +provisions pursuant to which Mr. Kirtley waived, released and discharged the Company and certain other related parties from any and all claims that Mr. Kirtley may have had against the Company or such other parties as of the date of the +Separation Agreement. +52 +Table of Contents +Termination of Employment Agreement with our Former Chief Financial Officer +In connection with his resignation as the Company’s Chief Financial Officer effective January 4, 2017, Mr. Gaydosik’s employment agreement +was terminated effective as of that date. As provided in such employment agreement, upon resignation, Mr. Gaydosik was entitled only to his earned but unpaid salary, if any, through the date of resignation. Any unvested awards granted to +Mr. Gaydosik under the Company’s equity incentive plan lapsed. +Change of Control Arrangements with Other Named Executive +Officers +We did not have an employment agreement with either Ms. Crowell, Mr. Maier or Mr. Baldwin at December 31, 2016 but, +under the terms of the restricted stock awards made to Ms. Crowell, Mr. Maier and Mr. Baldwin, the shares of restricted stock and/or the restricted stock units held by Ms. Crowell, Mr. Maier and Mr. Baldwin may be +accelerated in the discretion of the compensation committee upon a change of control. The value of such awards held by Ms. Crowell, Mr. Maier and Mr. Baldwin was $548,228, $144,274 and $72,148, respectively, as of December 31, +2016. As disclosed above, on April 28, 2017, the Company has entered into employment agreements with each of Ms. Crowell, Mr. Maier and Mr. Baldwin, effective as of January 1, 2017. +Stock Ownership +Holdings of Major Stockholders +The following table sets forth certain information regarding the beneficial ownership as of April 1, 2017 of shares of our common stock by each person or +entity known to us to be a beneficial owner of 5% or more of our common stock. +53 +Table of Contents +MAJOR STOCKHOLDER TABLE +Name and Address of Beneficial Owner(1) +Amount and +Nature of +Beneficial +Ownership +Percent of +Class(1) +Vitruvian II Woodford, LLC +23,852,117 +(2) +13.0 +% +4 Waterway Square Place, Suite 400 +The Woodlands, Texas 77380 +Vitruvian Exploration II Holdings, LLC +23,852,117 +(3) +13.0 +% +1401 McKinney Street, Suite 2700 +Houston, Texas 77010 +LG WF L.P. +23,852,117 +(4) +13.0 +% +c/o Lindsay Goldberg LLC +630 Fifth Avenue, 30th Floor +New York, NY 10111 +BlackRock, Inc. +19,759,946 +(5) +10.8 +% +55 East 52nd Street +New York, New York 10022 +Boston Partners +16,580,482 +(6) +9.0 +% +One Beacon Street +30th Floor +Boston, MA 02108 +The Vanguard Group +11,927,653 +(7) +6.5 +% +100 Vanguard Blvd. +Malvern, Pennsylvania 19355 +Viking Global Investors LP +9,133,350 +(8) +5.0 +% +55 Railroad Avenue +Greenwich, Connecticut 06830 +(1) +Beneficial ownership is determined in accordance with SEC rules. The percentage of shares beneficially owned is based on 183,707,319 shares of common stock outstanding as of April 1, 2017, including 871,518 shares +of restricted stock awarded under our 2013 Restated Stock Incentive Plan or our Amended and Restated 2005 Stock Incentive Plan, but not yet vested. +(2) +Based solely on Schedule 13G filed with the SEC on February 27, 2017 by Vitruvian II Woodford, LLC, or Vitruvian. Vitruvian reported sole dispositive power and sole voting power of 23,852,117 shares of common +stock. +(3) +Based solely on Schedule 13G jointly filed with the SEC on February 27, 2017 by Vitruvian Exploration II Holdings, LLC, or VX Holdings, Vitruvian Exploration II, LLC, or VEX, +Q-VEX II, LP, or Q-VEX, QEM V, LLC, or QEM, and S. Wil VanLoh, Jr. Each reporting person reported sole dispositive power and sole voting power of 23,852,117 shares of +common stock. The holdings reported represent the shares of common stock held by Vitruvian. VEX Holdings holds a majority of the capital interests of Vitruvian and has the right to appoint four of the nine directors of the Vitruvian Board (such +directors referred to herein as the VEX Holdings Directors). Certain actions of Vitruvian, including certain dispositions, require the approval of the VEX Holdings Directors. VEX has the right to appoint a majority of the board of directors of VEX +Holdings. Q-VEX has the right to appoint a majority of the board of directors of VEX. QEM is the sole general partner of Q-VEX. Any decision taken by QEM to vote, or to +direct to vote, and to dispose, or to direct the disposition of, the Vitruvian Shares has to be approved by a majority of the members of the investment committee of QEM, which majority must include S. Wil VanLoh, Jr. Therefore, VEX Holdings, VEX, Q-VEX, QEM and S. Wil VanLoh, Jr. may be deemed to share voting and dispositive power over the Vitruvian Shares and may also be deemed to be the beneficial owners of such securities. +(4) +Based solely on Schedule 13G jointly filed with the SEC on February 27, 2017 by LG WF L.P., Alan E. Goldberg +and Robert D. Lindsay. Each of the reporting persons reported shared dispositive power and +54 +Table of Contents +shared voting power of 23,852,117 shares of common stock. The holdings reported represent the shares of common stock held by Vitruvian. Pursuant to the Vitruvian Limited Liability Company +Agreement, and subject to the conditions described therein, certain dispositions of common stock by Vitruvian require the approval of LG WF L.P., as a member of Vitruvian. As such, LG WF L.P. may be deemed to beneficially own the common stock held +by Vitruvian. The general partner of LG WF L.P. is LG WF GP LLC. Alan E. Goldberg and Robert D. Lindsay are the executive managers of LG WF GP LLC and, through a series of affiliated investment funds, share ownership and voting control of LG WF GP +LLC. Goldberg and Lindsay, by virtue of this relationship, may be deemed to have or share indirect beneficial ownership. Messrs. Goldberg and Lindsay do not beneficially own securities of the Company directly. +(5) +Based solely on Schedule 13G/A filed with the SEC on January 12, 2017 by BlackRock, Inc. BlackRock, Inc. reported sole voting power of 19,178,358 shares of common stock and sole dispositive power of 19,759,946 +shares of common stock. +(6) +Based solely on Schedule 13G/A filed with the SEC on February 8, 2017 by Boston Partners. Boston Partners reported sole voting power of 13,196,951 shares of common stock, sole dispositive power of 16,580,482 shares +of common stock and shared voting power of 36,289 shares of common stock. +(7) +Based solely on Schedule 13G/A filed with the SEC on February 13, 2016 by The Vanguard Group. The Vanguard Group reported sole voting power of 84,840 shares of common stock, sole dispositive power of 11,836,245 +shares of common stock, shared dispositive power of 91,408 shares of common stock and shared voting power of 13,023 shares of common stock. Vanguard Fiduciary Trust Company and Vanguard Investments Australia, Ltd., both wholly owned subsidiaries of +Vanguard, are the beneficial owners of 78,385 and 19,478 shares, respectively, of common stock. +(8) +Based solely on Schedule 13G jointly filed with the SEC on March 20, 2017 by Viking Global Investors LP, or VGI, Viking Global Performance LLC, or VGP, Viking Global Equities LP, or VGE, Viking Global Equities II +LP, or VGEII, VGE III Portfolio Ltd., or VGEIII, Viking Long Fund GP LLC, or VLFGP, Viking Long Fund Master Ltd., or VLFM, Viking Global Opportunities GP LLC, or Opportunities GP, Viking Global Opportunities Portfolio GP LLC, or Opportunities +Portfolio GP, Viking Global Opportunities Liquid Portfolio Sub-Master LP, or Opportunities Fund, O. Andreas Halvorsen, David C. Ott and Daniel S. Sundheim. VGI provides managerial services to VGE, VGEII, +VGEIII, VLFM and Opportunities Fund and reported shared voting power and shared dispositive power of 9,133,350 shares of common stock. VGP reported shared voting power and shared dispositive power of 6,050,578 shares of common stock. VGE reported +shared voting power and shared dispositive power of 2,057,196 shares of common stock. VGEII reported shared voting power and shared dispositive power of 121,011 shares of common stock. VGEIII reported shared voting power and shared dispositive power +of 3,872,371 shares of common stock. Each of VLFGP and VLFM reported shared voting power and shared dispositive power of 2,462,585 shares of common stock. Each of Opportunities GP, Opportunities Portfolio GP and Opportunities Fund reported shared +voting power and shared dispositive power of 620,187 shares of common stock. Each of O. Andreas Halvorsen, Daniel S. Sundheim and David C. Ott reported shared voting power and shared dispositive power of 9,133,350 shares of common stock. +55 +Table of Contents +Holdings of Officers and Directors +The following table sets forth certain information regarding the beneficial ownership as of April 1, 2017 of shares of our common stock by each of our +directors, by each named executive officer and by all directors and executive officers as a group: +Name of Beneficial Owner(1) +Amount and +Nature of +Beneficial +Ownership +Percent of +Class +Craig Groeschel(2) +12,016 +* +David L. Houston(2) +39,634 +* +C. Doug Johnson(2) +5,951 +* +Scott E. Streller(2) +23,600 +* +Ben T. Morris(2) +7,760 +* +Michael G. Moore(3) +205,216 +* +Keri Crowell(4) +23,425 +* +Stuart A. Maier(5) +13,699 +* +Steve Baldwin(6) +18,300 +* +Aaron Gaydosik(7) +10,943 +* +Ross Kirtley(8) +41,106 +* +Directors and Executive Officers as a Group (14 persons) +381,033 +* +* +Less than 1%. +(1) +Beneficial ownership is determined in accordance with SEC rules. In computing percentage ownership of each person, shares of common stock subject to options held by that person that are exercisable as of April 1, +2017, or exercisable within 60 days of April 1, 2017, are deemed to be beneficially owned. These shares, however, are not deemed outstanding for the purpose of computing the percentage ownership of each other person. The percentage of shares +beneficially owned is based on 183,707,319 shares of common stock outstanding as of April 1, 2017, including 871,518 shares of restricted stock awarded under our 2013 Restated Stock Incentive Plan but not yet vested. Unless otherwise indicated, +all amounts exclude shares issuable upon the exercise of outstanding options and vesting of restricted stock units that that are not exercisable and/or vested as of April 1, 2017 or within 60 days of April 1, 2017. Except as otherwise +noted, each stockholder has sole voting and investment power with respect to the shares beneficially owned. +(2) +Excludes 3,824 restricted stock units, which will vest on June 10, 2017 if such director is in continuous service on such date. +(3) +Excludes (i) 24,868 shares of restricted stock granted under our 2013 Restated Stock Incentive Plan as a retention award in connection with his assumption of duties as interim Chief Executive Officer after the +retirement of Mr. Palm in February 2014, which award was rescinded when Mr. Moore was named our Chief Executive Officer, (ii) 30,275 unvested restricted stock units granted under our 2013 Restated Stock Incentive Plan, which restricted +stock units will vest in three approximately equal annual installments beginning on March 10, 2018, (iii) 28,405 unvested restricted stock units, which will vest on March 31, 2018 and (iv) 125,179 unvested restricted stock units, which +will vest in two approximately equal annual installments beginning on February 27, 2018. Mr. Moore has pledged 86,715 shares of common stock as collateral for a loan the proceeds from which were used to pay taxes due upon the vesting of equity +awards. +(4) +Includes 6,667 unvested shares of restricted stock, which will vest on December 1, 2017. Excludes (i) 10,667 unvested restricted stock units, which will vest in two approximately equal annual installments beginning +on August 15, 2017, (ii) 8,000 unvested restricted stock units, which will vest in four approximately equal annual installments beginning on August 15, 2017 and (iii) 55,000 unvested restricted stock units, which will vest in three +approximately equal annual installments beginning on August 27, 2017. +56 +Table of Contents +(5) +Excludes 6,667 unvested restricted stock units, which will vest in two approximately equal installments beginning on August 15, 2017. Excludes 32,000 unvested restricted stock units, which will vest in three +approximately equal annual installments beginning on August 27, 2017. +(6) +Excludes 3,334 unvested restricted stock units, which will vest in two approximately equal installments beginning on August 15, 2017. Excludes 15,000 unvested restricted stock units, which will vest in three +approximately equal annual installments beginning on August 27, 2017. +(7) +Excludes an aggregate of 61,936 unvested restricted stock units and unvested shares of restricted stock, all of which forfeited upon Mr. Gaydosik’s resignation effective January 4, 2017. Mr. Gaydosik +is no longer a reposting person. +(8) +Includes 3,000 shares of restricted stock and 14,830 restricted stock units, all of which have vested pursuant to the terms of the Kirtley Separation Agreement, and of which 11,122 restricted stock units will settle in +three approximately equal annual installments beginning on March 10, 2018. Excludes an aggregate of 52,919 unvested restricted stock units and unvested shares of restricted stock, all of which were forfeited and terminated pursuant to the +Kirtley Separation Agreement. Mr. Kirtley is no longer a reposting person. +Section 16(a) Beneficial +Ownership Reporting Compliance +Section 16(a) of the Exchange Act requires our directors and executive officers, and persons who beneficially own +more than 10% of a registered class of the Company’s equity securities, to file reports of ownership and changes in ownership with the SEC and to furnish us with copies of the forms they file. To our knowledge, based solely on a review of the +copies of such reports furnished to us and written representations of our officers and directors, all Section 16(a) reports for the year ended December 31, 2016 applicable to our officers and directors and such other persons were filed on +a timely basis. +Certain Relationships and Related Transactions +Review and Approval of Related Party Transactions +The audit committee, as provided in its charter, reviews and approves related party transactions. The Company does not have a formal set of standards to be +substantively applied to each transaction reviewed by the audit committee. Instead of a formalized policy, related party transactions are reviewed and judgment is applied to determine whether such transactions are in the best interests of the +Company. Further, the Company’s Code of Business Conduct and Ethics governs various compliance areas, including conflicts of interest and fair dealings, which are considered in the process of the review and approval of related party +transactions. +The Company’s policy is that all of its employees and directors, as well as their family members, must avoid any activity that is or +has the appearance of conflicting with the Company’s business interest. This policy is included in the Company’s Code of Business Conduct and Ethics posted on its website. Each director and executive officer is instructed to always inform +the designated compliance officer when confronted with any situation that may be perceived as a conflict of interest. Only the board of directors or a committee consisting solely of independent directors may grant waivers of the provisions of the +Code of Business Conduct and Ethics for the Company’s executive officers and directors. In addition, at least annually, each director and executive officer completes a detailed questionnaire specifying any business relationship that may give +rise to a conflict of interest. +Further, under the audit committee charter, the audit committee is responsible for reviewing and monitoring compliance +with our Code of Business Conduct and Ethics and recommending any warranted changes to the board of directors. In addition, the board of directors and, pursuant to its written charter, the audit committee, reviews and approves all relationships and +transactions in which the Company and its directors, director nominees and executive officers and their immediate family members, as well as holders of more than 5% of any class of our voting securities and their family members, have a direct or +indirect material interest. The board of +57 +Table of Contents +directors and the audit committee approve only those transactions that, in light of known circumstances, are consistent, or are not inconsistent with, the Company’s best interests, as they +determine in the good faith exercise of their discretion. +AMM Design, Inc., or AMM, provided landscape design, site preparation, landscape plants and +materials and landscape installation services to our general contractor in connection with the construction of our new headquarters building in Oklahoma City. Our general contractor paid approximately $492,000 to AMM for these goods and services, +all of which was paid by AMM to third parties for landscape plants and related materials and labor. In addition, AMM provided landscape maintenance services to us in 2016 for which we paid approximately $29,000. AMM is owned by the son of Michael +Moore, our Chief Executive Officer. +Proposal to Approve, on an Advisory Basis, the Compensation Paid to the +Company’s Named Executive Officers +(Item 2 on the Proxy Card) +In accordance with Section 14A of the Exchange Act, our board of directors is providing our stockholders with a +non-binding advisory vote on the compensation paid to the Company’s named executive officers as reported in this proxy statement, or “say on pay” vote. The Company’s stockholders are being +asked to vote on the following resolution: +“RESOLVED, that the compensation paid to the Company’s named executive officers, as +disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby approved.” +This vote is advisory, which means that the vote on executive compensation is not binding on the Company, our board of directors or the compensation +committee. While the vote on executive compensation is solely advisory in nature, our board of directors and the compensation committee will review and consider the “say on pay” voting results when making future decisions regarding our +executive compensation program. +Stockholders are encouraged to carefully review the “Compensation Discussion and Analysis” section of this +proxy statement, which discusses in detail the Company’s compensation policy and compensation arrangements which the Company believes are appropriate and reasonably consistent with market practice and with the long-term interests of the Company +and its stockholders. In furtherance of the Company’s goals and objectives, the compensation committee, among other things, emphasizes long-term equity awards and annual performance bonuses under the previously implemented Annual Incentive Plan +to more closely align our executives’ interests with those of our stockholders and to link a larger portion of our executives’ compensation to the performance of our stock and our operational performance. The compensation committee also +believes that it sets meaningful performance targets under the Annual Incentive Plan. Further, in 2014, the compensation committee eliminated, and since that time has not used and does not intend to use, minimum discretionary cash bonus arrangements +for its Chief Executive Officer, Chief Financial Officer and Chief Operating Officer who served in those capacities during 2014, 2015 and 2016, in recognition of the Company’s focus on the use of performance-based bonuses. Further, beginning in +2017, in keeping with our enhanced focus on performance-based compensation, the compensation committee also eliminated discretionary bonuses for our other named executive officers, tying their bonuses for 2017 to certain pre-established Company performance metrics under the Annual Incentive Plan, as described in more detail under the “Compensation Discussion and Analysis.” The compensation committee believes that our shift +to linking a larger portion of such executive officers’ compensation to long-term equity incentive awards and our shift away from discretionary cash bonuses to performance-based bonus arrangements for such executive officers appropriately align +with the long-term interests of the Company and its stockholders and are consistent with market practices. The compensation committee also believes that our current compensation policies and practices enhance retention of executive talent through +multi-year vesting of stock awards and do not encourage unnecessary and excessive risk taking. The compensation committee further +58 +Table of Contents +believes that our other compensation policies and practices, such as our policy prohibiting pledging (except in certain limited circumstances and subject to prior approval by our compliance +officer or the compensation committee) or hedging of our stock by our executive officers and directors, as well as the lack of significant prerequisites and absence of pension or supplemental retirement benefits, aside from those afforded under our +broad-based 401(k) plan, for our executive officers are consistent with prudent compensation philosophy and the interests of our stockholders. +We have +determined that our stockholders should cast an advisory vote on the compensation of our named executive officers on an annual basis. Unless this policy changes, the next advisory vote on the compensation of our named executive officers will be at +the 2018 annual meeting of stockholders. +THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THIS PROPOSAL 2. +Proposal to Ratify the Appointment of Our Independent Auditors +(Item 3 on the Proxy Card) +What +am I voting on? +You are voting on a proposal to ratify the appointment of Grant Thornton LLP as our independent auditors for fiscal year 2017. The +audit committee has appointed Grant Thornton LLP to serve as independent auditors. +What services do the independent auditors provide? +Audit services of Grant Thornton LLP for fiscal 2016 included an audit of our consolidated financial statements and services related to periodic filings made +with the SEC. Additionally, Grant Thornton LLP provided certain services related to the consolidated quarterly reports and annual and other periodic reports, registration statements and comfort letters and other services as described below. +How much were the independent auditors paid in 2015 and 2016? +Grant Thornton LLP’s fees for professional services totaled $910,515 for 2015 and $1,072,950 for 2016. Grant Thornton LLP’s fees for professional +services included the following: +• +Audit Fees —aggregate fees for audit services, which relate to the fiscal year consolidated audit, quarterly reviews, registration statements, comfort letters, statutory and regulatory audits and accounting +consultations were $910,515 in 2015 and $1,072,950 for 2016. +• +Audit-Related Fees —aggregate fees for audit-related services, consisting of audits in connection with proposed or consummated dispositions, benefit plan audits, other subsidiary audits, special reports, and +accounting consultations, were $0 in 2015 and $0 for 2016. +• +Tax and All Other Fees —there were no tax or other fees for products or services provided by Grant Thornton LLP in addition to the services described above in 2015 and 2016. +Does the audit committee approve the services provided by Grant Thornton LLP? +It is our audit committee’s policy to pre-approve all audit, audit related and permissible non-audit services rendered to us by our independent auditor. Consistent with such policy, all of the fees listed above that we incurred for services rendered by Grant Thornton LLP in fiscal years 2015 and 2016 were +pre-approved by our audit committee. No non-audit services were provided to us by Grant Thornton LLP in 2015 or 2016. +59 +Table of Contents +Will a representative of Grant Thornton LLP be present at the meeting? +Yes, one or more representatives of Grant Thornton LLP will be present at the meeting. The representatives will have an opportunity to make a statement if they +desire and will be available to respond to appropriate questions from the stockholders. +What vote is required to approve this proposal? +Stockholder ratification of the appointment of our independent auditors is not required by the Company’s bylaws or otherwise. However, we are submitting +this proposal to the stockholders as a matter of good corporate practice. Approval of this proposal requires the affirmative vote of a majority of the votes cast on the proposal. If the appointment of Grant Thornton LLP is not ratified, the audit +committee will reconsider the appointment. Even if the appointment is ratified, the audit committee in its discretion may direct the appointment of a different independent audit firm at any time during the year if it is determined that such change +would be in best interests of the Company and its stockholders. +Has Grant Thornton LLP always served as Gulfport’s independent auditors? +Grant Thornton LLP has served as our independent auditors since 2005. +What does the board of directors recommend? +THE BOARD +OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF GRANT THORNTON LLP AS THE COMPANY’S INDEPENDENT AUDITORS FOR THE YEAR 2017. +Proposal to Approve, on an Advisory Basis, the Frequency of Advisory Stockholder Vote on the Compensation Paid to +the Company’s Named Executive Officers +( Item 4 on the Proxy Card ) +In accordance with the Dodd Frank Act, our board of directors is also providing our stockholders with a non-binding advisory vote on whether future advisory +votes on executive compensation of the nature reflected in Proposal 2 should be held every year, every two years or every three years. While this vote is non-binding and solely advisory in nature, our board of directors and the compensation +committee will carefully review and consider the voting results when determining the frequency of future advisory votes on executive compensation. +Our +board of directors believes that a frequency of “every year” for the advisory vote on executive compensation is the appropriate interval for conducting and responding to a “say on pay” vote. This approach provides for a frequent +input by stockholders on our executive compensation programs and policies and allows our board of directors to consider and make any appropriate adjustments to our executive compensation structure on an annual basis. Our stockholders can also bring +their specific concerns to the attention of our board of directors by communicating them to our board of directors following procedures described under “Corporate Governance Matters and Communications with the Board” elsewhere in this +proxy statement. +The enclosed proxy card gives stockholders four choices for voting on this item. Stockholders can choose whether the advisory vote on +executive compensation should be conducted every year, every two years or every three years. Stockholders may also abstain from voting on this item. Stockholders are not voting to approve or disapprove the board of directors’ recommendation on +this item. +THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE OPTION OF “EVERY YEAR” FOR FUTURE ADVISORY VOTES ON +EXECUTIVE COMPENSATION. +60 +Table of Contents +Solicitation by Board; Expenses of Solicitation +Our board of directors has sent you this proxy statement. Our directors, officers and employees may solicit proxies by mail, by telephone or in person. Those +persons will receive no additional compensation for any solicitation activities. We will request banking institutions, brokerage firms, custodians, trustees, nominees and fiduciaries to forward solicitation materials to the beneficial owners of +common stock held of record by those entities, and we will, upon the request of those record holders, reimburse reasonable forwarding expenses. We will pay the costs of preparing, printing, assembling and mailing the proxy material used in the +solicitation of proxies. +Submission of Future Stockholder Proposals +Under SEC rules, a stockholder who intends to present a proposal, including with respect to the nomination of directors, at the 2018 Annual Meeting of +Stockholders and who wishes the proposal to be included in the proxy statement for that meeting must submit the proposal in writing to our Senior Vice President of Corporate Development and Strategy. The proposal must be received no later than +January 5, 2018. +Stockholders who wish to propose a matter for action at the 2018 Annual Meeting, including with respect to the nomination of +directors, but who do not wish to have the proposal or nomination included in the proxy statement, must notify the Company in writing of the information required by the provisions of our bylaws dealing with stockholder proposals. The notice must be +delivered to our Senior Vice President of Corporate Development and Strategy between February 7, 2018 and March 9, 2018. You can obtain a copy of our bylaws by writing the Senior Vice President of Corporate Development and Strategy at the +address below, or via the Internet at www.gulfportenergy.com under our “Corporate Governance” caption. +All written proposals +should be directed to Paul K. Heerwagen IV, our Senior Vice President of Corporate Development and Strategy at Gulfport Energy Corporation, 3001 Quail Springs Parkway, Oklahoma City, Oklahoma 73134. +The board of directors is responsible for selecting and recommending director candidates and will consider nominees recommended by stockholders. If you wish +to have the board of directors consider a nominee for director, you must send a written notice to our Senior Vice President of Corporate Development and Strategy at the address provided above and include the information required by our bylaws and +discussed beginning on page 11 of this proxy statement. +Availability of Form +10-K and Annual Report to Stockholders +SEC rules require us to provide an Annual Report to stockholders who +receive this proxy statement. Additional copies of the Annual Report, along with copies of our Annual Report on Form 10-K for the fiscal year ended December 31, 2016, including the +financial statements and the financial statement schedules, are available without charge to stockholders upon written request to Director of Investor Relations, Gulfport Energy Corporation, 3001 Quail Springs Parkway, Oklahoma City, Oklahoma 73134 +or via the Internet at www.gulfportenergy.com . We will furnish the exhibits to our Annual Report on Form 10-K upon payment of our copying and mailing expenses. +Householding +The SEC permits +a single set of annual reports and proxy statements to be sent to any household at which two or more stockholders reside if they appear to be members of the same family. Each stockholder continues to receive a separate proxy card. This procedure, +referred to as householding, reduces the volume of duplicate information stockholders receive and reduces our mailing and printing expenses. +61 +Table of Contents +If you would like to receive your own set of the annual report and proxy statement this year or in future years, +follow the instructions described below. Similarly, if you share an address with another Gulfport stockholder and together both of you would like to receive in the future only a single annual report and proxy statement, follow these instructions: +• +If your shares of our common stock are registered in your own name, please contact our transfer agent, Computershare Trust Company, N.A., and inform them of your request by calling their toll-free number: (800) 962-4284 or by mail: Computershare Trust Company, N.A., 250 Royall Street, Canton, MA 02021. +• +If a broker or other nominee holds your shares, please contact your broker or nominee. +Other Matters +The board of directors does not intend to present any other items of business other than those stated in the Notice of Annual +Meeting of Stockholders. If other matters are properly brought before the meeting, the persons named as your proxies will vote the shares represented by it in accordance with their best judgment. Discretionary authority to vote on other matters is +included in the proxy. +62 +Table of Contents +Electronic Voting Instructions +Available 24 hours a day, 7 days a week! +Instead of mailing your proxy, you may choose one of the voting +methods outlined below to vote your proxy. +VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR. +Proxies submitted by the Internet or telephone must be received +by 1:00 a.m., Central Time, on June 8, 2017. +Vote by Internet +• Go to +www.investorvote.com/GPOR +• Or scan the QR code with your smartphone +• Follow the steps outlined on the +secure website +Vote by telephone +• Call toll +free 1-800-652-VOTE (8683) within the USA, US territories & Canada on a touch tone telephone +• Follow the instructions provided by the recorded message +Using a black ink pen, mark your votes with an X as shown in +this example. Please do not write outside the designated areas. +☒ +q IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED +ENVELOPE. q +A +Proposals — The Board of Directors recommends a vote FOR all the nominees listed in Proposal 1, FOR Proposals 2 and 3, and Every 1 Year with respect to Proposal +4. +1. +Election of Directors: +For +Against +Abstain +For +Against +Abstain +For +Against +Abstain +01 - Michael G. Moore +☐ +☐ +☐ +02 - Craig Groeschel +☐ +☐ +☐ +03 - David L. Houston +☐ +☐ +☐ +04 - C. Doug Johnson +☐ +☐ +☐ +05 - Ben T. Morris +☐ +☐ +☐ +06 - Scott E. Streller +☐ +☐ +☐ +For +Against +Abstain +For +Against +Abstain +2. +Proposal to Approve, on an Advisory Basis, the Compensation Paid to the Company’s Named Executive Officers +☐ +☐ +☐ +3. +Proposal to Ratify the Appointment of Our Independent Auditors, Grant Thornton LLP, for fiscal year 2017 +☐ +☐ +☐ +1 Year +2 Years +3 Years +Abstain +4. +Proposal to approve, on an advisory basis, the frequency of advisory stockholder vote on the Company’s executive compensation +☐ +☐ +☐ +☐ +B +Non-Voting Items +Change of Address — Please print new address below. +C +Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below +When shares are held by joint tenants, both should sign. When signing as attorney, +executor, administrator, trustee, or guardian, please give full title as such. If a corporation, please sign in full corporate name by the president or another authorized officer. If a partnership, please sign in partnership name by an authorized +person. +Date (mm/dd/yyyy) — Please print date below. +Signature 1 — Please keep signature within the box. +Signature 2 — Please keep signature within the box. +/ +/ +02LVMA +Table of Contents +Proxy – Gulfport Energy Corporation +You are cordially invited to attend the Annual Meeting of Stockholders +To be held on June 8, 2017, at +10:00 +a.m. Oklahoma City time, at +3001 Quail Springs Parkway, +Oklahoma City, Oklahoma 73134 +q PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q +Proxy — GULFPORT ENERGY CORPORATION +FOR THE ANNUAL MEETING OF STOCKHOLDERS OF +Gulfport Energy Corporation +This Proxy Is +Solicited On Behalf Of The Board Of Directors +The undersigned +hereby appoints Michael G. Moore and Keri Crowell (together, the “Proxies”), and each of them, with full power of substitution, as proxies to vote the shares that the undersigned is entitled to vote at the Annual Meeting of Stockholders of +Gulfport Energy Corporation (the “Company”) to be held on June 8, 2017 at 10:00 a.m. Oklahoma City time and at any adjournments and postponements thereof. Such shares shall be voted as indicated with respect to the proposals listed on +the reverse side hereof and in the Proxies’ discretion on such other matters as may properly come before the meeting or any adjournment or postponement thereof. +The undersigned acknowledges receipt of the 2017 Notice of Annual +Meeting and accompanying Proxy Statement and revokes all prior proxies for said meeting. +THE SHARES REPRESENTED BY THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO SPECIFIC +DIRECTION IS GIVEN AS TO THE PROPOSALS ON THE REVERSE SIDE, THIS PROXY WILL BE VOTED FOR EACH OF THE NOMINEES NAMED IN PROPOSAL 1 AND FOR EACH OF THE PROPOSALS 2, 3 AND 4, IN ACCORDANCE WITH THE BOARD OF DIRECTOR’S +RECOMMENDATION. PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY. +IMPORTANT – PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY. THANK YOU FOR VOTING. +(Continued and to be marked, dated and signed on reverse +side.) \ No newline at end of file diff --git a/raw/proxies/0000874499/0001193125-17-152242/proxy_rpt.txt b/raw/proxies/0000874499/0001193125-17-152242/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..b3388c94e3f3440a6b3ffe00205828e5bfb3e62d --- /dev/null +++ b/raw/proxies/0000874499/0001193125-17-152242/proxy_rpt.txt @@ -0,0 +1,82 @@ +approves related party transactions. +• Appoints, determines compensation, evaluates and terminates our independent auditors. +• Pre-approves audit and permissible non-audit services to be performed by the independent auditors. +• Prepares the +report required by the Securities and Exchange Commission, or the SEC, for the inclusion in our annual proxy statement. +• Reviews and +reassesses the adequacy of the audit committee charter on a periodic basis. +• Inform our +independent auditors of the audit committee’s understanding of significant relationships and transactions with related parties and review and discuss with our independent auditors the auditors’ evaluation of our identification of, +accounting for and disclosure of our relationships and transactions with related parties, including any significant matters arising from the audit regarding our relationships and transactions with related parties. +4 +8 +Table of Contents +Committee +Members +Principal Functions +Number of +Meetings in +2016 +Compensation +Scott E. Streller* +Craig Groeschel +David L. Houston +C. Doug Johnson +• Oversees and +administers our executive compensation policies, plans and practices and evaluates their impact on risk and risk management. +• Assists the board +of directors in discharging its responsibilities relating to the compensation of our executives, including our chief executive officer, and other key employees. +• Administers our +equity-based compensation plans, including the grants of stock options, restricted stock awards and other equity awards under such plans. +• Reviews, approves +and administers our cash-based incentive bonus plans, including the establishment of performance criteria, targets and awards under our 2014 Executive Annual Incentive Compensation Plan. +• Makes +recommendations to the board with respect to incentive compensation. +• Where appropriate +or required, makes recommendations to our stockholders with respect to incentive compensation and equity-based plans. +• Conducts annual +performance evaluation of the committee. +• Reviews +disclosure related to executive compensation in our proxy statement and prepares an annual compensation committee report. +• Reviews and +considers the stockholders’ advisory vote on executive compensation and the frequency of holding such advisory vote. +• Reviews and +reassesses the adequacy of the compensation committee charter. +10 +Nominating and Corporate Governance+ +Ben T. Morris* +David L. Houston +Scott E. Streller +• Assists the board +of directors in developing criteria for, identifying and evaluating individuals qualified to serve as members of our board of directors. +• Selects and +recommends director candidates to the board of directors to be submitted for election at the Annual Meeting and to fill any vacancies on the board of directors. +• Periodically +reviews and makes recommendations regarding the composition and size of the board of directors and each of its committees. +• Reviews and +recommends to the board of directors appropriate corporate governance policies and procedures for the Company. +• Conducts an +annual assessment of the qualifications and performance of the board of directors. +2 +9 +Table of Contents +Committee +Members +Principal Functions +Number of +Meetings in +2016 +• Annually reviews +and reports to the board of directors on the performance of management. +• Reviews and +reassesses the adequacy of the nominating committee charter. +* +Committee Chairperson. ++ +Our former director, Mr. Donald L. Dillingham, who, as previously disclosed, did not stand for re-election at our 2016 Annual Meeting of Stockholders, served on the +audit committee and the nominating and corporate governance committee of our board of directors during 2016 until the date of our 2016 Annual Meeting of Stockholders. +Do the committees have written charters? +Yes. The +charters for our audit committee, compensation committee and nominating committee can be found on our website at www.gulfportenergy.com under the “Corporate Governance” caption. You may also obtain copies of these charters, as well +as our Code of Business Conduct and Ethics, which is described below, by writing to our Senior Vice President of Corporate Development and Strategy, Paul K. Heerwagen IV, at Gulfport Energy Corporation, 3001 Quail Springs Parkway, Oklahoma City, +Oklahoma 73134. \ No newline at end of file diff --git a/raw/proxies/0000874499/0001193125-18-143903/proxy.txt b/raw/proxies/0000874499/0001193125-18-143903/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..e8ddef0fe0edadcd27a738e9a24f577c011d3a3e --- /dev/null +++ b/raw/proxies/0000874499/0001193125-18-143903/proxy.txt @@ -0,0 +1,3415 @@ +DEF 14A +1 +d527373ddef14a.htm +DEF 14A +DEF 14A +Table of Contents +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Proxy Statement Pursuant to Section 14(a) of the +Securities Exchange Act of 1934 +☒ Filed by the +Registrant ☐ Filed by a Party other than the Registrant +Check the appropriate box: +☐ +Preliminary Proxy Statement +☐ +Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +☒ +Definitive Proxy Statement +☐ +Definitive Additional Materials +☐ +Soliciting Material under §240.14a-12 +Gulfport Energy +Corporation +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +☒ +No fee required +☐ +Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. +1) +Title of each class of securities to which transaction applies: +2) +Aggregate number of securities to which transaction applies: +3) +Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing +fee is calculated and state how it was determined): +4) +Proposed maximum aggregate value of transaction: +5) +Total fee paid: +☐ +Fee paid previously with written preliminary materials. +☐ +Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement +number, or the Form or Schedule and the date of its filing. +1) +Amount Previously Paid: +2) +Form, Schedule or Registration Statement No.: +3) +Filing Party: +4) +Date Filed: +Table of Contents +3001 Quail Springs Parkway +Oklahoma City, Oklahoma 73134 +NOTICE OF +2018 +ANNUAL +STOCKHOLDERS +MEETING +and +PROXY +STATEMENT +Wednesday +May 30, 2018 +10:00 a.m., local time +3001 Quail Springs Parkway +Oklahoma City +Oklahoma 73134 +April 30, 2018 +Dear Gulfport Energy Corporation Stockholder: +On behalf of your board of directors and management, you are cordially invited to attend +the Annual Meeting of Stockholders to be held at 3001 Quail Springs Parkway, Oklahoma City, Oklahoma 73134 on Wednesday, May 30, 2018, at 10:00 a.m., local time. +It is important that your shares be represented at the meeting. Whether or not you plan to attend the meeting, please vote by telephone or via Internet or +complete and return the enclosed proxy card in the accompanying envelope, in each case in accordance with the instructions provided in the enclosed proxy card. Please note that submitting a proxy will not prevent you from attending the meeting and +voting in person. +You will find information regarding the matters to be voted on at +the meeting in the enclosed proxy statement. Our 2017 Annual Report to Stockholders is either enclosed with these materials or has previously been mailed to you. This proxy statement and our 2017 Annual Report to Stockholders are also available on +our website at www.gulfportenergy.com/proxy. +In addition to the formal items of +business to be brought before the meeting, there will be a report on our operations, followed by a question and answer period. Your interest in Gulfport Energy Corporation is appreciated. We look forward to seeing you on May 30, 2018. +Sincerely, +Michael G. Moore +David L. Houston +Chief Executive Officer and President +Chairman of the Board +Table of Contents +GULFPORT ENERGY CORPORATION +3001 Quail Springs Parkway +Oklahoma City, Oklahoma 73134 +NOTICE OF +ANNUAL MEETING OF STOCKHOLDERS +TO BE HELD ON May 30, 2018 +To our Stockholders: +The Annual Meeting of Stockholders of +Gulfport Energy Corporation will be held on May 30, 2018 at 10:00 a.m., local time, at 3001 Quail Springs Parkway, Oklahoma City, Oklahoma 73134, for the following purposes: +1. +To elect eight directors to serve until the Company’s 2019 Annual Meeting of Stockholders; +2. +To hold an advisory vote on the compensation paid to the Company’s named executive officers; +3. +To ratify the appointment of Grant Thornton LLP as the Company’s independent auditors for the fiscal year ending December 31, 2018; and +4. +To transact such other business as may properly come before the Annual Meeting and any adjournment or postponement thereof. +Your vote is important. Please carefully consider the proposals and vote in one of these ways: +• +Vote by telephone or via Internet in accordance with the instructions provided in the enclosed proxy card; +• +Mark, sign, date and promptly return the enclosed proxy card in the postage-paid envelope; or +• +Submit a ballot at the Annual Meeting. +Only stockholders of record at the close of business on April 10, +2018 or their proxy holders may vote at the meeting. Directions to the meeting can be obtained from the Company. +IMPORTANT NOTICE REGARDING THE +AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING STOCKHOLDERS TO BE HELD ON MAY 30, 2018 . This proxy statement and the Company’s 2017 Annual Report to Stockholders are available on the Company’s website at +www.gulfportenergy.com/proxy. +By Order of the Board of Directors, +Michael G. Moore +Chief Executive Officer and +President +This notice and proxy statement are first being mailed to stockholders on or about April 30, 2018. +Table of Contents +GULFPORT ENERGY CORPORATION +3001 Quail Springs Parkway +Oklahoma City, Oklahoma 73134 +PROXY +STATEMENT +TABLE OF CONTENTS +About the Annual Meeting +1 +Board of Directors Information +4 +Election of Directors and Director Biographies +6 +Corporate Governance Matters and Communications with the Board +11 +Nominating Process for Directors, Director Qualifications and Review of Director +Nominees +13 +Director Leadership Structure +14 +Board of Director’s Role in Risk Oversight +15 +Audit Committee Report +16 +Executive Officers +18 +Compensation Discussion and Analysis +20 +Compensation Committee Interlocks and Insider Participation +40 +Compensation Tables +40 +Benefit Plans +45 +401(k) Plan +45 +2013 Restated Stock Incentive Plan +45 +2014 Executive Annual Incentive Compensation Plan +46 +Employment Agreements with our Chief Financial Officer, Senior Vice President +of Geosciences, Senior Vice President of Drilling and Senior Vice President of Operations +52 +Potential Payments Upon Termination, Resignation or Change of +Control +54 +Stock Ownership +58 +Holdings of Major Stockholders +58 +Holdings of Officers and Directors +60 +Section 16(a) Beneficial Ownership Reporting Compliance +61 +Certain Relationships and Related Transactions +61 +Review and Approval of Related Party Transactions +61 +Proposal to Approve, on an Advisory Basis, the Compensation Paid to the Company’s +Named Executive Officers +62 +Proposal to Ratify the Appointment of Our Independent +Auditors +63 +Solicitation by Board; Expenses of Solicitation +64 +Submission of Future Stockholder Proposals +64 +Availability of Form 10-K and Annual +Report to Stockholders +65 +Householding +65 +Other Matters +65 +i +Table of Contents +About the Annual Meeting +Who is soliciting my vote? +The board of directors of +Gulfport Energy Corporation, which we refer to as Gulfport, the Company and we in this proxy statement, is soliciting your vote at the 2018 Annual Meeting of Stockholders. The proposals to be voted on by the Company’s stockholders at the 2018 +Annual Meeting of Stockholders are described below. +What am I voting on? +You are voting on: +• +The election of directors (see Proposal 1 beginning on page 6) ; +• +The approval, on an advisory basis, of the compensation paid to the Company’s named executive officers as reported in this proxy statement ( see Proposal 2 beginning on page 62 ); +• +The ratification of Grant Thornton LLP as our independent auditors for 2017 ( see Proposal 3 beginning on page 63 ); and +• +Any other business properly coming before the meeting. +How does the board of directors recommend that I +vote my shares? +Unless you give other instructions on your proxy card, the persons named as proxy holders on the proxy card will vote in accordance +with the recommendations of our board of directors. The board of directors’ recommendations can be found with the description of each item in this proxy statement. In summary, the board of directors recommends a vote: +• +FOR the proposal to elect the nominated directors; +• +FOR the proposal to approve, on an advisory basis, the compensation paid to the Company’s named executive officers as reported in this proxy statement; and +• +FOR the proposal to ratify Grant Thornton LLP as the Company’s independent auditors for 2018. +Who is +entitled to vote? +You may vote if you were the record owner of our common stock as of the close of business on the record date, which is +April 10, 2018. Each share of common stock is entitled to one vote. As of April 10, 2018, we had 173,523,487 shares of common stock outstanding, excluding an aggregate of 1,000,198 shares of restricted stock and restricted stock units +awarded under our 2013 Restated Stock Incentive Plan, but not yet vested. There is no cumulative voting. +How many votes must be present to hold the +meeting? +Your shares are counted as present at the Annual Meeting if you attend the meeting and vote in person or if you properly return a proxy by +mail. In order for us to hold our meeting, holders of a majority of the voting power of our outstanding shares of common stock as of the close of business on April 10, 2018 must be present in person or by proxy at the meeting. This is referred +to as a quorum. Abstentions and broker non-votes will be counted for purposes of establishing a quorum at the meeting. +What is a broker non-vote? +If a broker does not have discretion to vote shares held in street name on a particular proposal and does not receive instructions from the beneficial owner on +how to vote those shares, the broker may return the proxy card without voting on that proposal. This is known as a broker non-vote . No broker may vote your shares without your specific instructions on +any of the proposals to be considered at the Annual Meeting other than the ratification of our independent auditors. +1 +Table of Contents +How many votes are needed to approve each of the proposals? +Our bylaws provide for the election of directors in uncontested elections by a majority of the votes cast by the stockholders present in person or represented +by proxy at the meeting and entitled to vote thereon. The number of shares voted “FOR” a director nominee must exceed the number of votes cast “AGAINST” that nominee. Abstentions and broker +non-votes will not be counted for voting purposes with respect to the re-election of directors. Stockholders may not cumulate their votes with respect to the re-election of directors. If any incumbent director is not elected because he does not receive a majority of the votes cast, he is required to immediately tender his or her resignation for consideration by our board +of directors. Our board of directors will evaluate whether to accept or reject such resignation, or whether other action should be taken; provided, however, that the board will act on such resignation and publicly disclose its decision to accept or +reject such resignation and the rationale behind such decision within 90 days from the date of the certification of the director election results. +Each +of Proposals 2 and 3 requires the affirmative “FOR” vote of a majority of the votes cast by the stockholders present in person or represented by proxy at the Annual Meeting and entitled to vote thereon. Only votes for or against Proposal 2 +will be counted as votes cast, and abstentions and broker non-votes will not be counted for voting purposes. Broker non-votes will be counted as votes cast with respect +to Proposal 3. +How do I vote? +You can vote either +in person by submitting a ballot at the meeting, or by proxy without attending the meeting. +To vote by proxy, you can vote in one of the +following ways: +• +by telephone or via Internet in accordance with the instructions provided in the enclosed proxy card; or +• +by marking, signing, dating and promptly returning the enclosed proxy card in the postage-paid envelope. +Even +if you plan to attend the meeting, we encourage you to vote your shares by proxy. If you plan to vote in person at the Annual Meeting, and you hold your stock in street name, you must obtain a proxy from your broker and bring that proxy to the +meeting. +Can I change my vote? +Yes. You can change +or revoke your vote at any time before the polls close at the Annual Meeting. You can do this by: +• +Voting by telephone or Internet at a later date, but prior to the deadline for telephonic and Internet voting specified in the enclosed proxy card; +• +Signing another proxy card with a later date and returning it to us prior to the meeting; +• +Sending our Senior Vice President of Corporate Development and Strategy a written document revoking your earlier proxy; or +• +Voting again at the meeting. +Who counts the votes? +We have hired Computershare Trust Company, N.A., our transfer agent, to act as the tabulation agent and count the votes represented by proxies cast by mail or +ballot. Employees of Computershare Trust Company, N.A. will act as inspectors of election. +2 +Table of Contents +Will my vote be confidential? +Yes. As a matter of Company policy, proxies, ballots and voting tabulations that identify individual stockholders are treated as confidential. Only the +tabulation agent and the inspectors of election have access to your vote. Directors and employees of the Company may see your vote only if there is a contested proxy solicitation, as required by law or in certain other special circumstances. +Will my shares be voted if I don’t provide my proxy and don’t attend the Annual Meeting? +If you do not provide a proxy (by voting by telephone, via Internet or sending a proxy card, in each case in accordance with the instructions included in the +enclosed proxy card) or vote your shares held in your name at the meeting, your shares will not be voted. +If you hold your shares in street name, your +broker may be able to vote your shares for certain “routine” matters even if you do not provide the broker with voting instructions. The ratification of Grant Thornton LLP as our independent auditors for 2018 is considered routine. For +matters not considered “routine,” if you do not give your broker instructions on how to vote your shares, the broker will return the proxy card without voting on that proposal. This is a broker +non-vote. The proposals to elect directors and to approve, on an advisory basis, the compensation paid to the Company’s named executive officers are not considered routine. As a result, no broker may vote +your shares on these proposals without your specific instructions. +How are votes counted? +In the election of directors contemplated by Proposal 1, you may vote “FOR,” “AGAINST” or “ABSTAIN” with respect to one or more +of the nominees. For Proposals 2 and 3, you may vote “FOR,” “AGAINST” or “ABSTAIN.” +What if I vote by proxy but +don’t indicate my vote on the matters listed on my proxy card? +If you return a signed proxy card without indicating your vote, your shares will +be voted FOR the director nominees listed on the card, FOR approving, on an advisory basis, the compensation paid to the Company’s named executive officers as described in this proxy statement and FOR the ratification of Grant Thornton LLP as +our independent auditors for 2018. +Could other matters be decided at the Annual Meeting? +We have not received any stockholder proposals and are not aware of any other matters that will be considered at the Annual Meeting. If any other matters arise +at the Annual Meeting, the persons named in your proxies will vote in accordance with their best judgment. +Who can attend the meeting? +The Annual Meeting is open to all holders of our common stock. +What do I need to bring to attend the Annual Meeting? +You will need proof of ownership of our common stock to enter the meeting. If your shares are in the name of your broker or bank or other nominee, you will +need to bring evidence of your stock ownership, such as your most recent brokerage statement. All stockholders will be required to present valid picture identification. IF YOU DO NOT HAVE VALID PICTURE IDENTIFICATION AND PROOF THAT YOU OWN SHARES OF +OUR COMMON STOCK, YOU MAY NOT BE ADMITTED INTO THE MEETING. +How can I access the Company’s proxy materials and annual report electronically? +This proxy statement and the Company’s 2017 Annual Report to Stockholders are available on the Company’s website at +www.gulfportenergy.com/proxy. +3 +Table of Contents +Board of Directors Information +What is the makeup of the board of directors and how often are the members elected? +Our board of directors currently consists of eight members who are elected annually. Seven of these eight directors are independent under the Nasdaq listing +standards. +What if a nominee is unable or unwilling to serve? +That is not expected to occur. If it does, shares represented by proxies will be voted for a substitute nominated by the board of directors. +How are directors compensated? +Our policy is that +members of our board of directors who are also our officers or employees do not receive compensation for their services as directors. The compensation of our non-employee directors is described below. +Cash Compensation +Our non-employee directors are paid an annual retainer of $60,000, an attendance fee of $1,500 for each board meeting attended in person, and an attendance fee of $750 for each board meeting attended telephonically. In +addition, the Chairman of the Board receives an additional $65,000 annual retainer, the audit committee chairman receives an additional $15,000 annual retainer and the chairman of each of the compensation committee and the nominating and corporate +governance committee receives an additional $10,000 annual retainer. Each committee member is also paid a $1,000 attendance fee for each committee meeting attended in person and a $500 attendance fee for each committee meeting attended +telephonically. +Equity Compensation +Our non-employee directors are entitled to receive an annual grant of restricted stock units with an aggregate value of +approximately $125,000 based on the closing price of our common stock on the date of grant, with vesting to occur in the following year. On June 8, 2017, we awarded the 2017 annual director grant in the amount of 9,608 shares of our restricted +stock units to each of our then-serving non-employee directors under our 2013 Restated Stock Incentive Plan, which shares will vest on the earlier of the date of our 2018 Annual Meeting of Stockholders and +June 8, 2018 if the non-employee director is in continuous service on that date. Paul D. Westerman, who was appointed to our board of directors in October 2017, received a +pro-rata grant of 5,488 shares of our restricted stock units, which is subject to the same vesting terms. Deborah G. Adams, who was appointed to our board of directors in March 2018, received a pro-rata grant of 2,898 shares of our restricted stock units, which is also subject to the same vesting terms. Further information regarding our director compensation in 2017 is set forth under the heading +“2017 Director Compensation” below. +Insurance and Indemnification +We provide liability insurance for our directors and officers at a current annual cost of approximately $506,137. We have also entered into indemnification +agreements with each of our current directors. These agreements require us to indemnify these individuals to the fullest extent permitted under Delaware law against liabilities that may arise by reason of their service to us, and to advance expenses +incurred as a result of any proceeding against them as to which they could be indemnified. +In addition, our certificate of incorporation sets forth +limitations on our directors’ liability to our stockholders. Further, our bylaws contain indemnification and advancement of expenses provisions for the benefit of our directors and officers. +4 +Table of Contents +How often did the board of directors meet in 2017? +The board of directors met seven times in 2017. In addition to these meetings, the board of directors adopted resolutions by unanimous written consent. Each +director attended at least 75% of the aggregate meetings of the board of directors and the meetings of the committees on which he served. +5 +Table of Contents +Election of Directors and Director Biographies +(Proposal 1 on the Proxy Card) +Who are this year’s nominees? +The directors +standing for election this year to hold office until the 2019 Annual Meeting of Stockholders and until each such director’s successor is elected are listed below. All of these director nominees, except for our Chief Executive Officer, are +independent under the Nasdaq listing standards, comprising a supermajority of independent directors currently serving on our board of directors. +MICHAEL G. MOORE, age 61. Mr. Moore was appointed as our Chief Executive Officer and as a member of our board of directors on April 22, 2014, +and has served as our President since August 2013. He served as our Chief Financial Officer and Secretary from July 2000 to April 2014 and as our Vice President from July 2000 until his appointment as President in August 2013. Mr. Moore also +served as our Interim Chief Executive Officer from February 15, 2014 until his appointment as our Chief Executive Officer on April 22, 2014. From May 1998 through July 2000, Mr. Moore served as Vice President and Chief Financial +Officer of Indian Oil Company. From September 1995 through May 1998, Mr. Moore served as Controller of DLB Oil & Gas, Inc. Prior to that, Mr. Moore served as Controller of LEDCO, Inc., a Houston based gas marketing company. +Mr. Moore has served on the Board of Directors of the Independent Petroleum Association of America since November 2017, the Oklahoma Independent Petroleum Association since May 2017 and the Ohio Chamber of Commerce since December 2014. +Mr. Moore received both his Bachelor of Business Administration Degree in Finance and his Master’s in Business Administration from the University of Central Oklahoma. +DAVID L. HOUSTON, age 65. Mr. Houston has served as a director of the Company since July 1998 and as Chairman of the Board since July 2013. Since +1991, Mr. Houston has been the principal of Houston Financial, a firm providing wealth management products and services with a focus on the energy sector. Since 2000, Mr. Houston has managed a mineral trust with approximately 9,200 net +acres in Oklahoma, Texas, Kansas and New Mexico, which includes responsibility for leasing and production matters. Mr. Houston served on the board of directors and executive committee of Deaconess Hospital, Oklahoma City, Oklahoma, from January +1993 until December 2008. Mr. Houston has served as the lead director on the board of directors of Diamondback Energy, Inc. (Nasdaq Global Market: FANG) since October 2012, is a member of its audit and compensation committees and is the chair +of its nominating and corporate governance committee. He also served as a director of Bronco Drilling Company from May 2005 until December 2010 and was a member of its audit committee. Mr. Houston received a Bachelor of Science Degree in +business from Oklahoma State University and a graduate degree in banking from Louisiana State University. Mr. Houston was recognized as a Top 100 Graduate of the College of Business at Oklahoma State University in the last 100 years and served +on the faculty of the Louisiana State University Graduate School of Banking from 1980 to 1981. +BEN T. MORRIS, age 72 . Mr. Morris has served +as a director of the Company since August 4, 2014. From 2009 to 2012, Mr. Morris served as the Vice Chairman of the board of directors of the Sanders Morris Harris Group, a financial services and wealth management company he co-founded in 1987, or SMHG. Since its founding, Mr. Morris has served in various capacities with SMHG, including Executive Vice President and Director of Investment Banking, President and Chief Executive +Officer and a member of the board of directors of SMH Capital, a subsidiary of SMHG, and Chief Executive Officer and a member of the board of directors of SMHG. Since 2012, Mr. Morris has continued as an employee of Sanders Morris Harris, Inc., +a former subsidiary of SMHG. From 1980 to 1986, Mr. Morris served as the Chief Operating Officer of Tatham Corporation, a privately-held company engaged in natural gas transportation and marketing and oil and gas exploration and production. +Mr. Morris began his career as an accountant at Price Waterhouse & Co. in 1967, and in 1973 joined Mid American Oil and Gas Inc. as Chief Financial Officer, eventually serving as President of the company until its sale in 1979. From +2011 to 2016, Mr. Morris served as a member of the board of directors and Chairman of the audit committee of Yuma Energy, Inc., a publicly traded exploration and production company. Mr. Morris +6 +Table of Contents +has also served on the boards of several public companies, including Capital Title Group from 1998 to 2006, American Equity Investment Life Holding Company from 1997 to 2006, Tyler Technologies, +Inc. from 2002 until 2005, where he served as Chairman of its audit committee, Fresh America Corp. from 1992 until 1996, where he served as a member of the compensation committee, and Deeptech International Inc. from 1988 until 1997. Mr. Morris +has an extensive financial background, with over 25 years of experience in various aspects of the investment banking business. Mr. Morris received his Bachelor of Business Administration Degree from the University of North Texas, and also holds +a Certified Public Accountant certificate from the State of Texas, along with several securities licenses. +C. DOUG JOHNSON, age 58 . +Mr. Johnson has served as a director of the Company since September 2015. Since August 1981, Mr. Johnson served in various roles at Phillips 66 and its predecessors Phillips Petroleum Co. and ConocoPhillips Company, which was formed by the +merger of Philips Petroleum Co. and Conoco Inc. in 2002. Mr. Johnson most recently served as Vice President, Controller and principal accounting officer of Phillips 66, a publicly traded company engaged in +mid-stream, chemicals, and refining, from April 2012 until his retirement on December 31, 2014. During the same period, he also served as Vice President, Controller and principal accounting officer of +Phillips 66 Partners GP LLC, the general partner of Phillips 66 Partners LP, a publicly traded pipeline subsidiary of Phillips 66. From June 2010 until April 2012, Mr. Johnson served as General Manager, Upstream Finance, Strategy and Planning +at ConocoPhillips. Prior to that, Mr. Johnson’s tenure at ConocoPhillips included his service as General Manager, Downstream Finance from 2008 to 2010 and General Manager, Upstream Finance from 2005 to 2008. Mr. Johnson also served on +the board of Chevron Phillips Chemical Company LLC, a joint venture of Phillips 66 Partners LP and Chevron Corp., and its audit committee, where he was co-chairman, from April 2012 until December 2014. +Mr. Johnson has an extensive financial and accounting background, with over 33 years of service in the oil and natural gas industry. Mr. Johnson received his Bachelor of Science Degree in Accounting from the University of Arkansas, and +also holds a Certified Public Accountant certificate from the State of Oklahoma. +SCOTT E. STRELLER, age 50. Mr. Streller has served as a +director of the Company since August 2006. In 1992, Mr. Streller founded the Scott Streller Insurance and Financial Services Agency (Farmers Insurance), which has been recognized both regionally and nationally as one of the top agencies within +the Farmers Insurance Group of Companies. Mr. Streller is active in the community and has served in a variety of leadership roles in local public and non-profit organizations. Additionally, +Mr. Streller frequently serves as a guest lecturer at local universities and insurance and financial services seminars. Mr. Streller earned a Bachelor’s Degree in Business Management from the University of Central Oklahoma. In +addition, Mr. Streller received a Master’s in Athletic Administration from Oklahoma State University. +CRAIG GROESCHEL, age 50. +Mr. Groeschel has served as a director of the Company since August 2011. Since 1996, Mr. Groeschel has served as a founding pastor of LifeChurch, one of the largest churches in the United States. Since founding LifeChurch, +Mr. Groeschel has served on its Board of Directors. Under Mr. Groeschel’s leadership, LifeChurch has grown to 29 locations in nine states. Mr. Groeschel received a Bachelor’s Degree in Business Marketing from the Oklahoma +City University, a Master’s of Divinity Degree from the Phillips Graduate Seminary and an Honorary Doctorate of Human Letters from Southeastern Christian University. Mr. Groeschel is a frequent speaker at various domestic and international +forums and an author of a number of books. +PAUL D. WESTERMAN, age 62 . Mr. Westerman has served as a director of the Company since October +2017. Mr. Westerman has served as a Trustee and Director of the Westerman Family Trusts and Westerman Interest Inc., respectively, since 1999. From September 2011 to December 2012, Mr. Westerman served as Senior Executive Vice President +and Chief Business Development Officer of J-W Energy Company, a diversified energy company engaged in exploration and production, energy services, midstream and manufacturing, among other businesses. +Mr. Westerman joined J-W Energy Company in 1984 and, during his time there, he served in several other leadership roles, including as Chief Operating Officer. Prior to joining J-W Energy Company, Mr. Westerman served in various positions at Phillips Petroleum Company, Terra Resources and Kerr-McGee +7 +Table of Contents +Corporation. Mr. Westerman has served on the Board of Directors of J-W Energy Company since 1996. Mr. Westerman has also served on the Board of +Directors of Oakwood Bank since February 2018. Mr. Westerman previously served as a Director of Vintage Bank, Benedictine College, the Dallas Petroleum Club, the Dallas Wildcatters Association and the Dallas Hard Hatters Association. +Mr. Westerman is also a member of the National Association of Corporate Directors and the Society of Petroleum Engineers. Mr. Westerman earned his bachelor’s degree in petroleum engineering from the University of Oklahoma and is a +Registered Professional Engineer in the State of Texas. +DEBORAH G. ADAMS, age 57. Ms. Adams has served as a director of the Company since +March 2018. Ms. Adams served as Senior Vice President of Health and Safety, Project and Procurement with Phillips 66 from May 2014 until her retirement in October 2016. From 2008 to May 2014, Ms. Adams served as President of Transportation +for Phillips 66 and ConocoPhillips. Prior to this position, Ms. Adams worked as general manager and Chief Procurement Officer for ConocoPhillips beginning in 2005. From 2003 to 2005, Ms. Adams served as general manager, International +Refining, for ConocoPhillips. Before this role, Ms. Adams served as general manager, Global Downstream Information Systems following the ConocoPhillips merger in 2002. Ms. Adams began her career in 1983 as a process engineer in the +refining division of the Conoco Global Engineering Department before moving through a variety of business development, planning, supply and trading and operations positions. She also served on several of ConocoPhillips’ joint venture boards +during her tenure at ConocoPhillips. In addition, Ms. Adams has served on the board of directors of MRC Global Inc. and as a member of its audit committee and its compensation committee since October 2017. Ms. Adams served two full terms +on the board of BakerRipley from February 2012 to February 2018 and currently serves as a member of the Foundation Board of Trustees and the Board of Governors for the Oklahoma State University. In 2014, Ms. Adams was inducted into the Oklahoma +State University College of Engineering, Architecture and Technology Hall of Fame and in 2015, the Oil and Gas Diversity Council named Ms. Adams to the list of the Top 50 Most Powerful Women in Oil and Gas. Ms. Adams received a Bachelor of +Science degree in chemical engineering from Oklahoma State University in 1983. +8 +Table of Contents +What does the board of directors recommend? +THE BOARD RECOMMENDS THAT YOU VOTE “FOR” THE ELECTION OF THESE DIRECTORS +What are the committees of the Board? +Our board of +directors has an audit committee, a nominating and corporate governance committee, which we refer to herein as the nominating committee, and a compensation committee, which committees perform the functions specified below. The members of each +committee are as of the date of this proxy statement. +Committee +Members +Principal Functions +Number of +Meetings in +2017 +Audit +David L. Houston +C. Doug Johnson* +Ben T. Morris +Scott E. Streller +Deborah G. Adams** +• Reviews and +discusses with management and the independent auditors the integrity of our accounting policies, internal controls, financial statements, accounting and auditing processes and risk management compliance. +• Monitors and +oversees our accounting, auditing and financial reporting processes generally, including the qualifications, independence and performance of the independent auditor. +• Monitors our +compliance with legal and regulatory requirements. +• Establishes +procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters, and the confidential, anonymous submission by employees of concerns regarding +questionable accounting or auditing matters. +• Reviews and +approves related party transactions. +• Appoints, determines compensation, evaluates and terminates our independent auditors. +• Pre-approves audit and permissible non-audit services to be performed by the independent auditors. +• Prepares the +report required by the Securities and Exchange Commission, or the SEC, for the inclusion in our annual proxy statement. +• Reviews and +reassesses the adequacy of the audit committee charter on a periodic basis. +• Inform our +independent auditors of the audit committee’s understanding of significant relationships and transactions with related parties and review and discuss with our independent auditors the auditors’ evaluation of our identification of, +accounting for and disclosure of our relationships and transactions with related parties, including any significant matters arising from the audit regarding our relationships and transactions with related parties. +4 +9 +Table of Contents +Committee +Members +Principal Functions +Number of +Meetings in +2017 +Compensation +Scott E. Streller* +Craig Groeschel +David L. Houston +C. Doug Johnson +Paul D. Westerman*** +Deborah G. Adams** +• Oversees and +administers our executive compensation policies, plans and practices and evaluates their impact on risk and risk management. +• Assists the board +of directors in discharging its responsibilities relating to the compensation of our executives, including our chief executive officer, and other key employees. +• Administers our +equity-based compensation plans, including the grants of stock options, restricted stock awards and other equity awards under such plans. +• Reviews, approves +and administers our cash-based incentive bonus plans, including the establishment of performance criteria, targets and awards under our 2014 Executive Annual Incentive Compensation Plan. +• Makes +recommendations to the board with respect to incentive compensation. +• Where appropriate +or required, makes recommendations to our stockholders with respect to incentive compensation and equity-based plans. +• Conducts annual +performance evaluation of the committee. +• Reviews +disclosure related to executive compensation in our proxy statement and prepares an annual compensation committee report. +• Reviews and +considers the stockholders’ advisory vote on executive compensation and the frequency of holding such advisory vote. +• Reviews and +reassesses the adequacy of the compensation committee charter. +4 +Nominating +and Corporate Governance +Ben T. Morris* +David L. Houston +Scott E. Streller +Paul D. Westerman*** +• Assists the board +of directors in developing criteria for, identifying and evaluating individuals qualified to serve as members of our board of directors. +• Selects and +recommends director candidates to the board of directors to be submitted for election at the Annual Meeting and to fill any vacancies on the board of directors. +• Periodically +reviews and makes recommendations regarding the composition and size of the board of directors and each of its committees. +• Reviews and +recommends to the board of directors appropriate corporate governance policies and procedures for the Company. +• Conducts an +annual assessment of the qualifications and performance of the board of directors. +3 +10 +Table of Contents +Committee +Members +Principal Functions +Number of +Meetings in +2017 +• Annually reviews +and reports to the board of directors on the performance of management. +• Reviews and +reassesses the adequacy of the nominating committee charter. +* +Committee Chairperson. +** +Ms. Adams was appointed to the Audit Committee and the Compensation Committee on March 19, 2018. +*** +Mr. Westerman was appointed to the Compensation Committee and the Nominating and Governance Committee on October 30, 2017. +Do the committees have written charters? +Yes. The +charters for our audit committee, compensation committee and nominating committee can be found on our website at www.gulfportenergy.com under the “Investors—Corporate Governance” captions. You may also obtain copies of these +charters, as well as our Code of Business Conduct and Ethics, which is described below, by writing to our Senior Vice President of Corporate Development and Strategy, Paul K. Heerwagen IV, at Gulfport Energy Corporation, 3001 Quail Springs Parkway, +Oklahoma City, Oklahoma 73134. +Corporate Governance Matters and Communications with the Board +Corporate Governance Highlights +We believe that +effective corporate governance should include regular constructive discussions with our stockholders. We have a proactive stockholder engagement process that encourages feedback from our stockholders. This feedback helps shape our governance +practices, which include: +• +Increased size of the board of directors from six to eight; +• +All independent director nominees, except for our Chief Executive Officer; +• +Independent chair of the board of directors; +• +Majority voting to elect directors; +• +Advancement of board diversity, with the addition of a female director to our board and emphasis on diversity in the nominating and corporate governance committee’s charter; +• +Declassified board of directors; +• +Active stockholder outreach; +• +Active board oversight of risk and risk management; +• +Commitment to social responsibility with respect to our people, community and environment; +• +Periodic board and committee self-assessments; +• +Independent director meetings in executive sessions; +• +89% attendance at 2017 board and committee meetings; and +• +All financially literate audit committee members and four audit committee financial experts in 2017. +Who +are our independent directors? +Our board of directors has determined that current board members Craig Groeschel, David L. Houston, C. Doug Johnson, +Ben T. Morris, Scott E. Streller, Paul D. Westerman and Deborah G. Adams meet the standards +11 +Table of Contents +regarding independence set forth in the Nasdaq listing standards and are free of any relationship which, in the opinion of our board of directors, would interfere with the exercise of independent +judgment in carrying out their responsibilities as directors of the Company. In determining Ms. Adams’s independence, the board considered Ms. Adams’s service on the board of directors and the audit and compensation committees of +MRC Global Inc., an NYSE-listed company from which we purchase products and services. +Our board of directors has determined that each member of the audit +committee is independent for purposes of serving on such committee under the Nasdaq listing standards and applicable federal law. In addition, our board of directors has determined that each current member of the audit committee is financially +literate under the Nasdaq listing standards and that each of Mr. Houston, who serves as the Chairman of the audit committee, Mr. Morris, Mr. Johnson and Ms. Adams qualifies as an “audit committee financial expert,” as +such term is defined in Item 407(d) of Regulation S-K. +Our board of directors has also determined that each +member of the compensation committee and the nominating committee meets the independence requirements applicable to those committees under the Nasdaq rules. In addition, our board of directors determined that each member of our compensation +committee is an “outside director” in accordance with Section 162(m) of the Internal Revenue Code of 1986, as amended, or the Code (as such Section 162(m) was in effect prior to January 1, 2018), and a “non-employee director” in accordance with Rule 16b-3 under the Securities Exchange Act of 1934, as amended, or the Exchange Act. +Do our non-management directors meet separately without management? +Our non-management directors have the opportunity to meet in an executive session following each regularly scheduled +meeting of the board of directors. During 2017, our non-management members of the board of directors met in executive session four times and our audit committee and our compensation committee met in executive +session four and zero times, respectively. +How can I communicate with the board of directors? +Individuals may communicate with our board of directors or individual directors by writing to our Senior Vice President of Corporate Development and Strategy, +Paul K. Heerwagen IV, at Gulfport Energy Corporation, 3001 Quail Springs Parkway, Oklahoma City, Oklahoma 73134. Our Senior Vice President of Corporate Development and Strategy will review all such correspondence and forward to our board of +directors a summary of all such correspondence and copies of all correspondence that, in the opinion of our Senior Vice President of Corporate Development and Strategy, relates to the functions of our board of directors or a committee thereof or +that he otherwise determines requires their attention. Directors may review a log of all such correspondence received by us and request copies. Concerns relating to accounting, internal control over financial reporting or auditing matters will be +immediately brought to the attention of the chairman of the audit committee and handled in accordance with the audit committee procedures established with respect to such matters. +Do directors attend the Annual Meeting? +Recognizing that +director attendance at our Annual Meeting can provide our stockholders with an opportunity to communicate with directors about issues affecting the Company, we actively encourage our directors to attend the Annual Meeting of Stockholders. All of our +six directors then serving attended the 2017 Annual Meeting of Stockholders in person. +Code of Business Conduct and Ethics +We have adopted a Code of Business Conduct and Ethics designed to help directors and employees resolve ethical issues. Our Code of Business Conduct and Ethics +applies to all directors and employees, including the Chief Executive Officer, the Chief Financial Officer and all senior financial officers. Our Code of Business +12 +Table of Contents +Conduct and Ethics covers various topics including, but not limited to, conflicts of interest, fair dealing, discrimination and harassment, confidentiality, compliance procedures and employee +complaint procedures. Our Code of Business Conduct and Ethics is posted on our website at www.gulfportenergy.com under the “Investors—Corporate Governance” captions. +Political Contribution Policy +Engagement in the +political, legislative and regulatory process is important to the success of the Company. The Company has adopted a political contributions and activity policy that sets forth the ways by which the Company and its employees may participate in the +political, legislative and regulatory process. All political contributions and activities comply with applicable laws. Compliance and oversight over the Company’s political engagements is provided by the Company’s compliance officer. +Nominating Process for Directors, Director Qualifications and Review of Director Nominees +The nominating committee is currently comprised of four non-employee directors, all of whom are independent under +Nasdaq listing standards. As provided by the nominating committee’s charter, our nominating committee identifies, investigates and recommends to our board of directors candidates with the goal of creating a balance of knowledge, experience and +diversity. Generally, the committee identifies candidates through the personal, business and organizational contacts of the directors and management and through the use of third-party search firms. +It is our policy that potential directors should possess the highest personal and professional ethics, integrity and values, and be committed to representing +the interests of our stockholders. In addition to reviewing a candidate’s background and accomplishments, candidates for director nominees are reviewed in the context of the current composition of our board of directors and the evolving needs +of our business. It is the policy of our board of directors that at all times at least a majority of its members meets the standards of independence promulgated by Nasdaq and the SEC and that all members reflect a range of talents, skills and +expertise, particularly in the areas of accounting and finance, management, leadership and oil and gas related industries sufficient to provide sound and prudent guidance with respect to our operations and the interests of our stockholders. In +addition to the foregoing factors, it is our policy that our nominating committee shall consider diversity in its evaluation of candidates for board membership. To reflect this policy, our nominating committee, in accordance with its charter, seeks +to include diverse candidates in all director searches, taking into account diversity of gender, race, ethnicity, background, age, thought and tenure on our board (in connection with the consideration of the renomination of an existing director), +including by affirmatively instructing any search firm retained to assist the nominating committee in identifying director candidates to seek to include diverse candidates from traditional and nontraditional candidate groups. In accordance with its +charter, our nominating committee periodically reviews and makes recommendations regarding the composition of the board and the size of the board. +We also +require that the members of our board of directors be able to dedicate the time and resources sufficient to ensure the diligent performance of their duties on our behalf, including attending meetings of the board of directors and applicable +committee meetings. In accordance with its charter, our nominating committee periodically reviews the criteria for the selection of directors to serve on our board and recommends any proposed changes to our board of directors for approval. +Our board of directors will consider stockholder nominations for director candidates upon written submission of such recommendation to our Senior Vice +President of Corporate Development and Strategy along with, among other things, the nominee’s qualifications and certain biographical information regarding the nominee, such nominee’s written consent to serving as a director if elected and +being named in the proxy or information statement and certain information regarding the status of the stockholder submitting the recommendation, all in the manner required by our amended and restated bylaws and the applicable rules and regulations +promulgated under the Exchange Act. Following verification of the stockholder status of persons proposing candidates, recommendations will be aggregated and considered by our board of directors at a regularly scheduled or special +13 +Table of Contents +meeting. If any materials are provided by a stockholder in connection with the nomination of a director candidate, such materials will be forwarded to our board of directors. See “Submission +of Future Stockholder Proposals” below for additional detail regarding submitting director nominees. +Our board of directors may also review materials +provided by professional search firms or other parties in connection with a nominee who is not proposed by a stockholder. In evaluating such nominations, our board of directors will seek to achieve a balance of knowledge, experience and diversity on +the board. Our board of directors uses the same criteria for evaluating candidates nominated by stockholders as it does for those proposed by current board members, professional search firms and other persons. After completing its evaluation, our +board of directors approves the final slate of director nominees. +Our nominating committee approved the director nominees submitted for election at this +Annual Meeting. Each nominee is a current board member and brings a strong and unique background and set of skills to our board of directors, giving our board of directors as a whole competence and experience in a variety of areas, including +corporate governance and board service, executive management, oil and natural gas industry, accounting and finance and risk assessment and management. Specifically, in nominating the candidates submitted for election at this Annual Meeting, our +nominating committee considered such candidates’ past service on our board and the information discussed in each of the directors’ individual biographies set forth beginning on page 6 above. In particular, with regard to Messrs. Houston +and Streller, our nominating committee considered their respective business backgrounds and risk assessment skills. Mr. Moore’s public company experience while serving in various executive officer capacities at Gulfport and leadership +skills that led to his promotion as our Chief Executive Officer, as well as his strong oil and natural gas background and extensive experience in finance, accounting, financial reporting, internal controls and corporate governance, led our +nominating committee to conclude that he should serve as one of our directors. Mr. Morris’s prior public company experience, extensive financial background, with over 25 years of experience in various aspects of the investment banking +business, and strong oil and natural gas background were considered by our nominating committee. With regard to Mr. Groeschel, our nominating committee considered his leadership and prior board service at a +non-profit organization, community involvement and communication skills. With respect to Mr. Johnson, our nominating committee considered Mr. Johnson’s prior public company experience, as well +as his strong oil and natural gas background and financial experience. Mr. Westerman’s strong background in oil and energy services, as well as his executive roles at an energy services company, were considered by our nominating committee. +Our nominating committee considered Ms. Adams’s experience in the oil and gas industry, as well as her management positions at a public oil and gas company, when nominating her to serve on our board. Each of the director nominees has +consented to serve as a director if elected. +Director Leadership Structure +The positions of Chairman of the Board and Chief Executive Officer are held by two different individuals, and the Chairman of the Board is a non-executive position elected from among the directors by the board. Separating the positions of Chairman of the Board and Chief Executive Officer has allowed our Chief Executive Officer to focus on our day-to-day business and operations, while allowing our Chairman of the Board to lead the board in its fundamental role of providing advice to and oversight of management. The +Chairman of the Board has provided leadership to our board of directors and worked with the board of directors to define its structure and activities in the fulfillment of its responsibilities. The Chairman of the Board has set the board agendas, +with the input from other members of the board and our management, facilitated communications among and information flow to directors, has the power to call special meetings of our board of directors and stockholders and presided at meetings of our +board of directors and stockholders. The Chairman of the Board has also advised and counseled our Chief Executive Officer and other officers. Our board of directors does not have a position of a lead director. +14 +Table of Contents +We believe that our directors bring a broad range of leadership experience to the boardroom and regularly +contribute to the thoughtful discussion involved in effectively overseeing the business and affairs of the Company. We believe that the atmosphere of our board is collegial, that all board members are well engaged in their responsibilities, and that +all board members express their views and consider the opinions expressed by other directors. Seven out of eight of our director nominees are independent under the Nasdaq listing standards and SEC rules. We believe that all of our independent +directors have demonstrated leadership in business enterprises and are familiar with board processes. Our independent directors are involved in the leadership structure of our board by serving on our audit, nominating and compensation committees, +each having an independent chairperson. Specifically, the chair of our audit committee oversees the accounting and financial reporting processes, as well as compliance with legal and regulatory requirements. The chair of our compensation committee +oversees our compensation policies and practices and their impact on risk and risk management. The chair of our nominating committee monitors matters such as the composition of the board and its committees, board performance and best practices in +corporate governance. As such, each committee chair provides independent leadership for purposes of many important functions delegated by our board of directors to such committee. +Board of Director’s Role in Risk Oversight +As an exploration and production company, we face a number of risks, including risks associated with the supply of and demand for oil and natural gas, +volatility of oil and natural gas prices, exploring for, developing, producing and delivering oil and natural gas, declining production, environmental and other government regulations and taxes, weather conditions, including hurricanes, that can +affect oil and natural gas operations over a wide area, adequacy of our insurance coverage, political instability or armed conflict in oil and natural gas producing regions and overall economic environment. Management is responsible for the day-to-day management of risks we face as a company, while our board of directors, as a whole and through its committees, has responsibility for the oversight of risk +management. In its risk oversight role, our board of directors has the responsibility to satisfy itself that the risk management processes designed and implemented by management are adequate and functioning as designed. +Our board of directors believes that full and open communication between management and the board of directors is essential for effective risk management and +oversight. Our Chairman of the Board meets regularly with our Chief Executive Officer to discuss strategy and risks facing the Company. Our executive officers regularly attend the board meetings and are available to address any questions or concerns +raised by the board on risk management-related and any other matters. Other members of our management team periodically attend board meetings or are otherwise available to confer with the board to the extent their expertise is required to address +risk management matters. Periodically, our board of directors receives presentations from senior management on strategic matters involving our operations. During such meetings, our board of directors also discusses strategies, key challenges, and +risks and opportunities for the Company with senior management. +While our board of directors is ultimately responsible for risk oversight at the Company, +our three committees assist the board in fulfilling its oversight responsibilities in certain areas of risk. Our audit committee assists the board in fulfilling its oversight responsibilities with respect to risk management in the areas of financial +reporting, internal controls and compliance with legal and regulatory requirements, and discusses policies with respect to risk assessment and risk management. Our compensation committee assists the board in fulfilling its oversight responsibilities +with respect to the management of risks arising from our compensation policies and programs. Our nominating committee assists the board in fulfilling its oversight responsibilities with respect to the management of risks associated with board +organization, membership and structure, succession planning for our directors and executive officers and corporate governance. +15 +Table of Contents +Audit Committee Report +The audit committee is responsible for providing independent, objective oversight for the integrity of the Company’s financial reporting process and +internal control system. Other primary responsibilities of the audit committee include the review, oversight and appraisal of the qualifications, independence and audit performance of the Company’s independent registered public accounting firm +and providing an open venue for communication among the independent registered public accounting firm, financial and senior management, our internal auditors and the board of directors of the Company. A more detailed description of the +responsibilities of the audit committee is set forth in its written charter, which is posted on our website at www.gulfportenergy.com under the “Investors—Corporate Governance” captions. The following report summarizes certain +of the audit committee’s activities with respect to its responsibilities during 2017. +Review with Management and Independent Registered Public +Accounting Firm. The audit committee has reviewed and discussed with management and Grant Thornton LLP, an independent registered public accounting firm, the audited consolidated financial statements of the Company for the year ended +December 31, 2017. +Controls and Procedures. Management has established and maintains a system of disclosure controls and procedures designed +to provide reasonable assurance that information required to be disclosed by the Company in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s +rules and forms, and includes controls and procedures designed to provide reasonable assurance that information required to be disclosed by us in those reports is accumulated and communicated to our management, including our Chief Executive Officer +and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. As of December 31, 2017, management conducted an evaluation of our disclosure controls and procedures. Based on this evaluation, our Chief +Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective to provide reasonable assurance that the information required to be disclosed by us in the reports we file or submit under the Exchange +Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. The audit committee discussed with management and Grant Thornton LLP the quality and adequacy of the Company’s disclosure +controls and procedures. +Management has also established and maintains a system of internal controls over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. These internal controls are designed to provide reasonable assurance that the reported financial information is presented +fairly, that disclosures are adequate and that the judgments inherent in the preparation of financial statements are reasonable. Management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the +framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on management’s evaluation under the framework in Internal Control—Integrated Framework, +management did not identify any material weaknesses in our internal control over financial reporting and concluded that our internal control over financial reporting was effective as of December 31, 2017, as discussed in more detail in +Management’s Report on Internal Control Over Financial Reporting, which was included in our Annual Report on Form 10-K for the year ended December 31, 2017, filed with the SEC on February 22, +2018. Our internal control over financial reporting as of December 31, 2017 has been audited by Grant Thornton LLP, as stated in its attestation report, which was included in our Annual Report on Form +10-K for the year ended December 31, 2017, filed with the SEC on February 22, 2018. The audit committee reviewed and discussed with management and Grant Thornton LLP the Company’s system of +internal control over financial reporting in compliance with Section 404 of the Sarbanes-Oxley Act of 2002. +Discussions with Independent Auditing +Firm. The audit committee has discussed with Grant Thornton LLP, independent auditors for the Company, the matters required to be discussed by Rules on Auditing Standard No. 16, Communication with Audit Committees, as amended. The audit +committee has received the written disclosures and the letter from Grant Thornton LLP required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the audit +committee concerning independence and has discussed with that firm its independence from the Company. +16 +Table of Contents +Recommendation to the board of directors. Based on its review and discussions noted above, the audit +committee recommended to the board of directors that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. +THE AUDIT COMMITTEE +C. Doug Johnson, Chairman +David L. Houston +Ben T. Morris +Scott E. Streller +Deborah G. Adams +17 +Table of Contents +Executive Officers +The following table sets forth the name, age and positions of each of our executive officers as of the record date: +Name +Age +Position +Michael G. Moore +61 +Chief Executive Officer and President +Donnie Moore +53 +Chief Operating Officer +Keri Crowell +43 +Chief Financial Officer +Paul Heerwagen +33 +Senior Vice President of Corporate Development and Strategy +Robert Jones +56 +Senior Vice President of Drilling +Stuart Maier +64 +Senior Vice President of Geosciences +Mark Malone +55 +Senior Vice President of Operations +Ty Peck +41 +Senior Vice President of Midstream and Marketing +Lester Zitkus +52 +Senior Vice President of Land +Steve Baldwin +64 +Vice President of Reservoir Engineering +Biographical information for Michael Moore is set forth in this proxy statement under the heading “Election of Directors +and Director Biographies.” +DONNIE MOORE. Mr. Moore has served as Chief Operating Officer of the Company since January 2018. From 2007 +until December 2017, Mr. Moore worked at Noble Energy, Inc., or Noble, where he most recently served as Vice President of Noble’s Texas operations for its Eagle Ford and Delaware Basin assets. Prior to that, Mr. Moore held various +leadership roles at Noble including Vice President of the Marcellus Business Unit, Manager for Operations of the Wattenberg/DJ Business Unit, Manager of Operations for the Gunflint discovery in the Deepwater Gulf of Mexico and Development Manager +for Noble’s Mid-Continent and Gulf Coast positions. From 1989 until 2007, Mr. Moore served in a variety of roles with ARCO Oil and Gas Company, Vastar Resources, Inc. and BP America. Mr. Moore +holds a Bachelor of Science degree in Petroleum Engineering from Louisiana Tech University. Mr. Donnie Moore is not related to Mr. Michael G. Moore, our Chief Executive Officer. +KERI CROWELL . Ms. Crowell has served as Chief Financial Officer of the Company since January 2017 and, prior to such appointment, served as Chief +Accounting Officer of the Company since September 10, 2015. Prior to that appointment, Ms. Crowell served as a Vice President of the Company since April 2014 and Controller since March 2006. Ms. Crowell joined the Company in October +2005 as Assistant Controller. Prior to joining the Company, Ms. Crowell served in various accounting and/or audit roles at Ernst and Young LLP, Arthur Andersen LLP and an Oklahoma City-based accounting firm. Ms. Crowell holds a Bachelor of +Science in Business Administration and Accounting and Masters of Business Administration degrees from Oklahoma State University, and also holds a Certified Public Accountant license from the State of Oklahoma. Ms. Crowell is a member of +Oklahoma Society of Certified Public Accountants and Financial Executives International, or FEI, and served as a board member and the treasurer of the FEI Oklahoma City chapter from 2012 until 2014. +PAUL HEERWAGEN . Mr. Heerwagen has served as Senior Vice President of Corporate Development and Strategy effective January 2017 and, prior to such +appointment, served as Vice President of Corporate Development since May 2014. Since January 2017, Mr. Heerwagen has served as a director of Mammoth Energy Services, Inc., a Nasdaq-listed oilfield services company, as the Company’s +nominee. Prior to his Corporate Development role with the Company, Mr. Heerwagen served as our Director of Investor Relations and Corporate Affairs from May 2008 to May 2014. From March 2012 through December 2014, Mr. Heerwagen served as +President of Stingray Pressure Pumping LLC and Stingray Logistics LLC. He has also served in various financial, investor relations and corporate affairs roles since joining the Company in 2006. Mr. Heerwagen has served on the Legislative +Committee of the Oklahoma Independent Petroleum Association since May 2017. Mr. Heerwagen holds a Bachelor’s Degree in Finance from Oklahoma State University. +ROBERT JONES . Mr. Jones has served as Senior Vice President of Drilling effective January 2017 and, prior to such appointment, served as Vice +President of Drilling since November 2013. Prior to joining the Company, Mr. Jones was with Chesapeake Energy Corporation, or Chesapeake, serving as Drilling Engineering Manager +18 +Table of Contents +for the Haynesville, Barnett and Eagle Ford from February 2001 to September 2013. Prior to this role, during his tenure at Chesapeake, Mr. Jones served as District Manager for the Permian +Basin and Senior Drilling Engineer for operations across Oklahoma, Texas and New Mexico. Mr. Jones graduated with a Bachelor’s Degree in Petroleum Engineering from the University of Oklahoma in 1985. +STUART MAIER. Mr. Maier has served as Senior Vice President of Geosciences since March of 2017 and, prior to such appointment, served as Vice +President of Geosciences since August 2013. Prior to that position, he served as Geological/Geophysical Manager of the Company since May 1998. From 1993 to May 1998, Mr. Maier had served as Senior Geologist with DLB Oil & Gas, Inc. +From 1992 until joining DLB Oil & Gas, Inc., Mr. Maier was a consulting geologist/geophysicist and, from 1981 to 1991, Mr. Maier was a geologist/geophysicist with The Anschutz Corporation, an oil and natural gas exploration and +production company. From 1979 to 1981, Mr. Maier was a production geologist for Gulf Oil Exploration and Production Company. From 1977 to 1979, Mr. Maier was a well site geologist. Mr. Maier received a Bachelor of Science Degree in +Geology from the University of Missouri. Mr. Maier is a member of the American Association of Petroleum Geologists. +MARK MALONE . +Mr. Malone has served as Senior Vice President of Operations effective January 2017 and prior to such appointment, served as Vice President of Operations since November 16, 2013. Prior to joining the Company, Mr. Malone was with +Sierra Engineering, LLC from August 2012 to November 2013, serving as Engineering Manager. Prior to joining Sierra Engineering, Mr. Malone served as Senior Asset Manager for the Marcellus Shale at Chesapeake from January 2010 to November 2013. +Mr. Malone also served as Vice President of Stimulation & Production for New Tech Engineering from July 2007 to January 2010. Mr. Malone started his career and subsequently served 20 years with The Western Company of North America +and BJ Services Company from December 1987 to July 2007 in various engineering and management positions of increasing responsibility until ending his career with BJ Services where he spent the last ten years as Permian Region Technical Manager. +Mr. Malone is a member of the Board of Directors for the Southwestern Petroleum Short Course, an SPE member since 1989, an author of multiple technical publications, co-author of text on hydraulic +fracturing and a patent holder. Mr. Malone graduated with a Bachelor’s Degree in Agricultural Engineering from Texas Tech University in 1987. +TY PECK . Mr. Peck has served as Senior Vice President of Midstream and Marketing effective January 2017 and, prior to such appointment, served as +Managing Director of our midstream operations from December 16, 2013 until January 2017. Prior to joining the Company, Mr. Peck was previously with Access Midstream Partners, serving as the Director of Commercial Services. In addition, +prior to joining Access Midstream Partners, Mr. Peck served as Producer Services Manager at Enogex LLC. Mr. Peck graduated with a Bachelor’s Degree in Finance from the University of Central Oklahoma in 2000 and holds a Master’s +Degree in Business Administration from the University of Oklahoma. +LESTER ZITKUS . Mr. Zitkus has served as Senior Vice President of Land +effective January 2017 and, prior to such time, served as Vice President of Land since March 2014. Prior to joining the Company, Mr. Zitkus served as an independent consultant from October 2013 to March 2014 and as Vice President of Land for +Chesapeake from May 2007 to October 2013. During his 20-year tenure with Equitable Resources Inc. (now EQT Corp.), he held various positions, including Vice President of Operations and Senior Vice President of +Land, between 1987 and 2007. He holds a degree in Mineral Land Management from the University of Evansville. Mr. Zitkus is a member of the American Association of Professional Landmen and Past Regional Director of the Independent Producers +Association of America. +STEVE BALDWIN. Mr. Baldwin has served as Vice President of Reservoir Engineering since August 2013. Prior to that +position, he served as Senior Reservoir Engineer of the Company since October 2006. From February 2001 through September 2006, he served as Senior Reservoir and Acquisition Engineer for Chaparral Energy Inc. From 1996 to December 2000, +Mr. Baldwin served as Senior Operations Engineer for Saba Energy of Texas, Inc. Prior to that, Mr. Baldwin served as Operations Manager for Merrico Resources. Mr. Baldwin began his career with Mobil Oil Corporation after receiving his +Bachelor of Science Degree from the University of Oklahoma. Mr. Baldwin is a member of the Society of Petroleum Engineers. +19 +Table of Contents +Compensation Discussion and Analysis +The Compensation Committee of our Board oversees our compensation programs for executive officers and all employees. This Compensation Discussion and Analysis, +or CD&A, explains the Compensation Committee’s compensation philosophy, summarizes our executive compensation programs and describes compensation decisions for Gulfport’s Chief Executive Officer, or CEO, Chief Financial Officer, or +CFO, and next three highest paid executives for 2017. These officers, known as our NEOs, are: +Michael G. Moore +Chief Executive Officer and President +Keri Crowell +Chief Financial Officer +Stuart Maier +Senior Vice President of Geosciences +Robert Jones +Senior Vice President of Drilling +Mark Malone +Senior Vice President of Operations +Mr. Gaydosik, our former CFO, resigned effective January 4, 2017. +This CD&A, which should be read together with the compensation tables and related disclosures under “Compensation Tables” beginning on page 40, +is divided into five sections. +• +Executive Summary (beginning on page 21): Provides a high-level overview of our NEO compensation decisions for 2017, and our recent stockholder outreach initiatives. +• +Executive Compensation Philosophy and Components (beginning on page 25): Describes the philosophy and objectives of our executive compensation program, the direct compensation elements provided to our NEOs, the +purpose of each element and the pay for performance alignment. +• +2017 Compensation Decisions (beginning on page 27): Discusses the specific compensation decisions made for our NEOs for 2017. +• +2018 Compensation Program (beginning on page 33): Discusses changes to our executive compensation program for 2018. +• +Compensation Policies and Practices (beginning on page 35): Discusses compensation-related policies we have implemented to reflect our commitment to the best corporate governance practices. +20 +Table of Contents +EXECUTIVE SUMMARY +2017 Business Performance Highlights +During 2017, we +continued to work to position ourselves for recovery from a historic industry downturn and to capitalize on rising commodity prices. We remained focused on capital efficiency, generating free cash flow, and growing production volumes, while also +emphasizing our strategic goals of operational and capital efficiencies, safety and environmental stewardship. +Key business accomplishments during 2017 +included: +• +Production increased 51% to approximately 397,543 MMcfe for the year ended December 31, 2017 from approximately 263,430 MMcfe for the year ended December 31, 2016. +• +On February 17, 2017, we completed our acquisition of certain assets from Vitruvian II Woodford, LLC, which we refer to as our SCOOP acquisition, for a total purchase price of approximately $1.85 billion, +consisting of $1.35 billion in cash and approximately 23.9 million shares of our common stock. Our SCOOP acquisition included approximately 46,000 net surface acres with multiple producing zones, including the Woodford and Springer +formations in the South Central Oklahoma Oil Province, or SCOOP, resource play, in Grady, Stephens and Garvin Counties, Oklahoma. +• +On June 5, 2017, we acquired approximately 2.0 million shares of common stock of Mammoth Energy Services, Inc. (NASDAQ: TUSK), or Mammoth Energy, in connection with our contribution of all of our membership +interests in Sturgeon Acquisitions LLC, Stingray Energy Services LLC and Stingray Cementing LLC, bringing our equity interest in Mammoth Energy to approximately 25.1%. +• +During 2017, we spud 126 gross (117.4 net) wells, turned to sales 81 gross (72.1 net) operated wells, participated in an additional 57 gross (9.4 net) wells that were drilled by other operators on our Utica Shale and +SCOOP acreage and recompleted 81 gross and net wells in our Southern Louisiana fields. Of our 126 new wells spud during 2017, 50 were completed as producing wells, two were non-productive and, at year end, 66 +were in various stages of completion and eight were drilling. +• +Oil and natural gas revenues, before the impact of derivatives, increased 97% to $1.1 billion for the year ended December 31, 2017 from $560.4 million for the year ended December 31, 2016. +• +During 2017, we reduced our unit lease operating expense by 23% to $0.20 per Mcfe from $0.26 per Mcfe during 2016. +• +During 2017, we reduced our unit general and administrative expense by 19% to $0.13 per Mcfe from $0.16 per Mcfe during 2016. +• +On October 11, 2017, we issued $450.0 million in aggregate principal amount of our 6.375% Senior Notes due 2026, with the net proceeds from such offering used to repay all of our then outstanding borrowings +under our secured revolving credit facility and to fund the remaining outspend related to our 2017 capital development plans. +• +In January 2018, our board of directors approved a stock repurchase program to acquire up to $100.0 million of our outstanding common stock during 2018, which underscores the confidence we have in our business +model, financial performance and asset base. +21 +Table of Contents +Compensation Program Design Aligned with Long-Term Stockholder Interests +Our Compensation Committee remains focused on ensuring alignment of our executive compensation program with long-term interests of our stockholders and +mitigating excessive risk-taking in the design and administration of such program. The following table summarizes the compensation best practices that we follow and the disfavored compensation practices that we avoid: +Good Compensation Program Governance Practices +What We Do +What We Don’t Do +Vast majority of NEO pay is at risk, with a significant portion of +compensation conditioned on achievement of pre-determined operational, capital efficiency and strategic targets under our performance-based annual incentive plan +No liberal share recycling in our stock incentive plan +Beginning with 2018, implementation of total stockholder return +relative to our peer group, or RTSR, as an important target in determining annual incentive bonus payouts under our performance-based annual incentive plan +No repricing of underwater stock options +Provide robust disclosure of our performance metrics and targets +No hedging of Gulfport securities by NEOs or directors +Beginning with 2018, eliminated single trigger vesting provisions in +equity awards granted to our CEO, completing the transition of our NEOs awards to double-trigger vesting, which we had already implemented in prior years for our other NEOs +No holding of Gulfport securities in a margin account by our NEOs or directors +Transition to full three-year vesting for equity grants to our NEOs in 2018, except for our CEO, whose equity awards vest in three tranches beginning with the +year of grant +No pledging of Gulfport securities by our NEOs or directors, except in certain limited circumstances +and subject to prior approval by our compliance officer or the Compensation Committee +Minimal use of perquisites +No guaranteed or discretionary bonuses +Regular review of share utilization and dilution when granting equity awards +No tax gross-ups +Clawback policy that allows us to recover incentive compensation +based on misconduct or, in certain instances, if our financial results are restated, as well as in certain other circumstances. See “—Clawback Provisions” below. +No pension or supplemental executive retirement plans to our current executive officers (except for a our broad-based 401(k) plan) +Use of independent compensation consulting firm +Annual advisory “say-on-pay” vote +22 +Table of Contents +Good Compensation Program Governance Practices +What We Do +What We Don’t Do +Active stockholder outreach efforts with respect to executive +compensation and corporate governance +Compensation committee comprised of all independent directors +Balanced approach to compensation, combining performance and +time-based, short-term and long-term, and cash and equity compensation +2017 Compensation Decisions +To reflect our compensation philosophy and objectives described below, total direct compensation received by our NEOs for 2017 consisted of the elements +included in the chart below. Indirect compensation (such as retirement benefits and perquisites) is discussed below under “—Perquisites and Other Personal Benefits.” +Overview of Total Direct Compensation Components for Fiscal Year 2017 +Direct +Compensation +Element +Form +Alignment with Long-Term Stockholder +Interests and Other Considerations +Fixed +Base Salary +• Base level +of cash compensation critical to attracting and retaining executives +• Established at conservative level relative to peers and subject to increase based upon annual merit +review +At Risk +Annual Incentive +• Annual cash +incentive earned based upon achievement of predetermined operational, capital efficiency and strategic goals for the year, with the addition of the RTSR target as an important metric under our performance-based annual incentive plan for 2018 +• Places a significant portion of our NEOs annual cash compensation at risk depending on our performance +against these pre-determined targets and focuses management on critical near-term goals which drive our long-term success +Equity Based Compensation +• Annual +grants of time-vested restricted stock units vesting in three tranches, transitioning to full three-year vesting for equity grants to our NEOs in 2018, except for our CEO, whose equity awards continue to vest in three tranches beginning with the +year of grant +• Enforces talent retention and alignment with long-term stockholder interests by placing a significant +portion of pay at risk for continued employment, with realized value directly tied to the performance of Gulfport stock +• Award values set at conservative levels relative to peers with careful evaluation of impact on +stockholder dilution +As part of our compensation philosophy, the Compensation Committee places a significant portion of NEO pay at risk, with the +largest single component of pay in the form of long-term equity awards. The charts below illustrate the mix of 2017 target total direct compensation for our CEO and other NEOs. +23 +Table of Contents +Emphasis on At-Risk Variable Compensation +Key 2017 Executive Compensation Actions +2017 compensation actions were aligned with our operational, capital efficiency and strategic performance in 2017 and the current market conditions: +• +Base salaries were increased for our CEO and CFO to better align their respective total direct compensation with the 25 th percentile of our peer group and to +recognize Ms. Crowell’s promotion as our CFO. A discussion of base salaries of these and other NEOs for 2017 is included in the “2017 Compensation Decisions—Base Salary” section. +• +Annual Incentive Award s were paid out at 95% of target . Strong EBITDA performance and production growth as well as achievement of several key strategic goals were offset by below-median TSR performance relative +to peers and failure to meet our capital efficiency threshold. Calculated payout was at 97.4% of target, but the Compensation Committee used its discretion to reduce payout to 95% of target in light of a broader evaluation of Company performance. +See “2017 Compensation Decisions—Annual Incentive Awards” for a description of the performance metrics/goals and the relative weightings assigned for purposes of determining the 2017 annual incentive awards for each of our +participating NEOs, as well as the actual results and payouts achieved under the annual incentive plan. +• +2017 Long-Term Incentive Awards, comprising the largest single component of NEO pay, were approved with the goal to achieve, on average, an alignment of the NEOs’ total direct compensation with the 25 th percentile of the peer group . We continue to believe that an approach which relies upon relatively conservative equity grants entirely in the form of time-vested restricted stock units +promotes executive talent retention, alignment with long-term stockholder interests and long-term stock ownership by management, without creating excessive levels of dilution for our stockholders. Our Compensation Committee continues to +evaluate the appropriate mix of equity incentive award types going forward. See “2017 Compensation Decisions—Long-Term Equity-Based Incentive Awards” for further discussion. +CEO Compensation Aligned with Performance +As described above, the target total direct compensation of our NEOs is heavily weighted towards variable, at-risk +compensation, with the actual amounts realized or realizable at a given time often resulting in different amounts as compared to those reported in the Summary Compensation Table. +The table below shows the difference between our CEO’s 2017 compensation at (i) the reported (target) level as shown in the Summary Compensation +Table, (ii) potentially realizable value in 2017 and (iii) the actual realized value in 2017. Target value includes the grant-date (reported) value of equity-based compensation and our CEO’s target annual incentive opportunity. +Realizable compensation includes the actual annual cash incentive paid and the value of restricted stock units granted during the year as of December 31, 2017. Realized compensation +24 +Table of Contents +includes the actual annual cash incentive paid and the value of restricted stock units that vested during the year. As shown, both realizable and realized pay to our CEO for 2017 amounted to less +than reported pay, in part due to the below-target payout on our annual incentive plan and in part due to our stock price performance during the year. +Annual Say-On-Pay Advisory Vote and +Stockholder Outreach +The Compensation Committee values the insight it gleans from our stockholder outreach and from our annual say-on-pay advisory vote on executive compensation. In 2017, approximately 96% of the total votes cast were in favor of our say-on-pay proposal. Although this vote demonstrates a strong stockholder approval of our executive compensation programs, the Compensation Committee continues to carefully review our executive pay programs +and focus on emphasizing the alignment with long-term stockholder interests and pay for performance in making compensation decisions. Historically, our management has undertaken stockholder engagement efforts to ensure ongoing stockholder support. +During 2017, we continued to engage our stockholders and discuss our executive compensation programs, corporate governance, safety and environmental +programs, corporate responsibility and other important issues through investor presentations and earnings and other investor calls. +EXECUTIVE +COMPENSATION PHILOSOPHY AND COMPONENTS +Philosophy and Objectives +Our executive compensation philosophy is guided by the following objectives: +• +Competitive Compensation : The Compensation Committee believes it is imperative to maintain competitive compensation programs with our peer group to attract, retain and motivate executives and our future leaders +that are in line with the compensation of similar executive positions at peer companies. +• +Pay for Performance: The Compensation Committee is focused on rewarding our executives for the Company’s annual and long-term performance by creating annual incentive cash award programs based on achievement +of certain pre-established Company performance factors and targets, and awarding a significant portion of our NEOs compensation in long-term equity awards, making our NEOs’ realized total direct +compensation heavily dependent upon Company performance. +• +Alignment with Long-Term Stockholder Interests: by providing a significant portion of compensation in the form of long-term equity incentive awards, managing dilution to our stockholders, stressing pay for +performance, and encouraging an ownership culture we also closely align the interests of our executives with those of our stockholders. +25 +Table of Contents +We believe our executive compensation programs play an important role in helping us achieve our business +objectives and effectively reward our executive officers for our Company’s annual and long-term performance and our executives’ contributions to such performance. +Process for Determining Executive Compensation +The +Role of Our Compensation Committee +The Compensation Committee generally reviews and makes its decisions regarding the annual compensation of our NEOs +at its regular meetings in the first quarter of each year. These decisions include: +• +Certifying annual incentive awards for the prior year’s performance; +• +Approving adjustments to base salary; +• +Establishing target incentive opportunities and applicable performance objectives for the current year’s annual incentive awards; and +• +Granting long-term equity-based incentive awards for the current year. +The Compensation Committee may also +adjust compensation as necessary at other times during the year, such as in the case of promotions, other changes in employment status and significant corporate events, as well as to reflect changing market conditions or for other competitive +purposes. +In making its decisions, the Compensation Committee assesses each NEO’s impact during the year and overall value to Gulfport, specifically +considering the NEO’s leadership skills, recommendations from our CEO with respect to our other NEOs, recommendations of our independent compensation consultant, impact on strategic initiatives, performance in the NEO’s primary area of +responsibility, the NEO’s role and trajectory in succession planning and development, and other intangible qualities that contribute to corporate and individual success. +The Role of our CEO +The Compensation Committee evaluates +our CEO, based on the Company performance metrics described above, his leadership roles as a member of the Board and our lead representative to the investment community and other similar criteria, and his total compensation package is ultimately +determined by the Compensation Committee, based upon its evaluation and input from the compensation consultant, and reflects our CEO’s performance, Gulfport’s performance, competitive industry practices and the terms of his employment +agreement. +Each year, our CEO also evaluates each of the other NEOs and makes compensation recommendations to the Compensation Committee. In developing +his recommendations, the CEO considers the recommendations of the Compensation Committee’s independent compensation consultant, as well as each such NEO’s performance against the Company performance metrics. The compensation consultant +reviews and provides comments to the Compensation Committee based on our CEO’s recommendation with respect to our NEOs, other than our CEO. +The +Role of the Independent Compensation Consultant +For 2017, the Compensation Committee retained Longnecker & Associates, or Longnecker, as its +independent compensation consultant, and for 2018, the Compensation Committee retained Pearl Meyer & Partners, LLC, or Pearl Meyer, as its independent compensation consultant. The Compensation Committee did not engage any other consultants +to provide executive compensation consulting services during 2017 or, to date, during 2018. +For 2017, Longnecker assisted the Compensation Committee in +developing a competitive total compensation program that is consistent with our philosophy of goal-oriented pay for performance and that allows us to attract, retain and motivate talented executives. For 2017, Longnecker’s services included +providing an annual analysis of the compensation of our top executive officers and their counterparts at peer companies. The analysis compares each element of compensation and total direct compensation awarded by Gulfport and by our peers to our +respective executive officers. In addition, for 2017, Longnecker helped the Compensation Committee consider the allocation between annual incentive and long-term equity-based compensation and between the types of long-term equity-based incentive +awards. During 2017, Longnecker provided assistance in the design of +26 +Table of Contents +compensation programs and ongoing support with respect to regulatory and other considerations that affect compensation programs generally, as requested by the Compensation Committee, as well as +assistance in preparation of the CD&A. +During early 2018, Pearl Meyer provided input to the Compensation Committee with respect to the executive +compensation program design for 2018, the metrics and targets under the Company’s annual incentive plan for 2018 and considerations relevant to the Compensation Committee’s decision to exercise its negative discretion, reducing actual +payouts to the NEOs under the annual incentive plan for 2017. +Both Longnecker and Pearl Meyer reported exclusively to the Compensation Committee, which +has the sole authority to retain any compensation consultant. During 2017 and 2018, the Compensation Committee reviewed the independence of Longnecker and Pearl Meyer, respectively, and determined that there were no conflicts of interest as a result +of the Compensation Committee’s engagement of each such consultant during the applicable period of its engagement. +The Committee continues to +evaluate the independence of its compensation consultant(s) on an ongoing basis. +Compensation Peer Group +Gulfport utilizes a peer group of companies, or Compensation Peer Group, as a reference point when establishing both compensation levels for executives as well +as program structures, in an effort to maintain competitiveness in the market. +2017 Compensation Peer Group +The Compensation Committee reviews data regarding compensation awarded to similarly-situated officers by companies in the Compensation Peer Group to ensure +that our NEOs’ base salaries, target annual incentive award opportunities and equity grants are competitive. +The Compensation Peer Group is intended +to reflect North American, onshore exploration and production companies that compete with, or could potentially compete with, Gulfport for executive talent. This group was developed taking into consideration peer company metrics such as revenue, +assets, market capitalization, enterprise value, total stockholder return and the availability of reported compensation data. The composition of this peer group is reviewed periodically to ensure the appropriateness of the identified peers. +The 2017 Compensation Peer Group consists of the following companies: +2017 Compensation Peer Group +CONSOL Energy Inc. +Newfield Exploration Company* +Cabot Oil & Gas Corporation* +Murphy Oil Corporation* +Range Resources Corporation +EP Energy Corporation* +WPX Energy, Inc.* +Cimarex Energy Co. +Oasis Petroleum Inc. +Concho Resources Inc.* +Whiting Petroleum Corporation* +Rice Energy Inc. +QEP Resources, Inc.* +SM Energy Company +Energen Corporation +* Added in 2017 +The +revision of the peer group resulted in relative alignment to the key metrics at the time of establishment as follows: Revenue = 57 th percentile and Market Cap = 21 st percentile. The average percentile ranking of Gulfport to the peer group was the 39 th percentile. +2017 COMPENSATION DECISIONS +Base +Salary +The Compensation Committee reviews executive officer base salary levels on an annual basis, typically at the beginning of the year, with a +goal of providing market competitive, fixed cash compensation. The Compensation Committee reviews comparable salary information provided by its independent compensation consultant as one factor to be considered in determining the base pay for the +named executive officers and aims for base salaries for our executives to be between the 25 th and 50 th percentiles of our peer group. +27 +Table of Contents +For 2017, the Compensation Committee with input from its consultant determined that the base salaries for +our CEO and CFO were below the 25 th percentile. Other factors the Compensation Committee considers in determining base pay for each of the named executive officers are: the executive +officer’s responsibilities, experience, leadership, potential future contribution and demonstrated individual performance. The relative importance of these factors varies among our executives depending on their positions and the particular +operations and functions for which they are responsible. +The Compensation Committee reviewed the base salaries of our NEOs in February 2017 and any +increases were made effective as of January 1, 2017. Base salaries adjustments were made in recognition of relative alignment to the peer group, and in keeping with our desire to remain competitive in the marketplace for executives. See also +“Employment Agreements” for a description of the employment agreement with our CEO and other NEOs. +Named Executive Officer +2016 Base Salary +2017 Base Salary +% Change +Michael G. Moore, Chief Executive Officer +$ +483,000 +$ +700,000 +45% +Keri Crowell, Chief Financial Officer* +$ +275,000 +$ +350,000 +27% +Stuart Maier, Senior Vice President of +Geosciences +$ +400,000 +$ +400,000 +0% +Robert Jones, Senior Vice President of Drilling +$ +315,000 +$ +340,000 +8% +Mark Malone, Senior Vice President of +Operations +$ +315,000 +$ +340,000 +8% +*Ms. Crowell was named our CFO effective January 4, 2017. Mr. Gaydosik, our former CFO, resigned effective January 4, 2017. +Annual Incentive Awards +The +Compensation Committee has established a performance-based annual incentive program aimed at tying pay to performance for our executives participating in the program. In connection with the program, the Compensation Committee has established +targeted annual incentive award levels based on market information supplied by the compensation consultant, as well as a performance metric system. Individual awards may be decreased in the discretion of the Compensation Committee based on overall +corporate performance for the year and certain other considerations. +2017 Target Bonus Amounts +After reviewing the 2017 Compensation Peer Group data with our independent compensation consultant, the Compensation Committee set the target bonus percentages +and amounts, with a minimum potential payout of 0% and maximum potential payout of 200% of the applicable target bonus amount. Target bonus percentages and dollar amounts for the participating NEOs for 2017 were as follows: +Named Executive Officer* +Target Bonus +Percentage +Target Bonus +Amount +Michael G. Moore, Chief Executive Officer +100% +$ +700,000 +Keri Crowell, Chief Financial Officer +80% +$ +280,000 +Stuart Maier, Senior Vice President of Geosciences +60% +$ +240,000 +Robert Jones, Senior Vice President of Drilling +60% +$ +204,000 +Mark Malone, Senior Vice President of Operations +60% +$ +204,000 +*Mr. Gaydosik, our former CFO, resigned effective January 4, 2017 and did not participate in the program in 2017. +28 +Table of Contents +2017 Company Performance Measures +In March 2017, in connection with the establishment of the terms of the awards under the Annual Incentive Plan for 2017, the Compensation Committee reviewed +potential performance measures, such as operational and financial performance, TSR relative to our peer group, capital efficiency goals and strategic initiatives to be undertaken in 2017, as well as the weightings and goals with respect to those +measures, and selected the following performance metrics and weighting in four categories under the Annual Incentive Plan for 2017: +Metric +Weighting +Performance Metric +Why We Use It +Operational Targets +25% +Net Production (Mmcfe) +Benchmarks the efficiency of the CAPEX program +(balanced by two metrics below) +25% +Adjusted EBITDA/Mcfe +Focuses the Company on the margin earned on the +production metric above (i.e. not incentivized to grow at any price) +Capital Efficiency +25% +Well Cost per Foot +Provides metric for management to drive +operational performance down to the field level +Strategic Initiatives +25% +Execution Against Strategic Plan +Balances the absolute stock metric goal +(short-term in nature) against management’s execution of the long-term plan +Safety Training Compliance and Subcontractor Management +Balances operational targets with the goal of +safety (i.e. no incentive to cut safety corners to save money) +Environmental Incident Record +Balances operational targets with goal of +protecting the environment (i.e., no incentive to cut environmental corners to save money) +Succession Planning +Incentivizes succession planning to provide for +continuity of senior management +Annual Incentive Plan Goal Achievement for 2017 +The Compensation Committee established threshold (50%), target (100%) and stretch (200%) payout ranges for the operational and strategic measurement goals. For +2017, the Compensation Committee also set goals and expectations with respect to the strategic initiatives portion under the Annual Incentive Plan for that year, taking into consideration input received from management. These goals are meant to +further motivate the NEOs to pursue Gulfport’s long-term strategy and value creation. Because the strategic goals are qualitative in nature, success does not necessarily depend on attaining a particular metric; rather, success may be evaluated +based on past norms, expectations and responses to unanticipated obstacles or opportunities. +The 2017 operational metrics, targets and actual performance +under the Annual Incentive Plan are set forth below. The Compensation Committee also assessed Gulfport’s performance against the strategic priorities that made up the strategic initiatives portion under the Annual Incentive Plan for 2017. +Performance Metric +Threshold(1) +Target +Maximum +Actual +Actual +as a % +of +Target +Operational +Targets +Net Production (Mmcfe) +1045 +1070 +1200 +1089 +114.7% +Adjusted EBITDA/Mcfe +$1.47 +$1.65 +$1.82 +$1.83 +200.0% +Capital +Efficiency +Well Cost per Foot +$1,220 +$1,170 +$1,100 +$1,237 +0.0% +29 +Table of Contents +Performance Metric +Threshold(1) +Target +Maximum +Actual +Actual +as a % +of +Target +Strategic +Initiatives +Execution Against Strategic Plan +Committee assessment +Below threshold +0.0% +Safety Training Compliance and Subcontractor Management +Committee assessment +Target +100.0% +Environmental Incident Record +Committee assessment +Target +100.0% +Succession Planning +Committee assessment +Target +100.0% +Calculated Payout Percent +97.4% +Approved Payout Percent +95.0% +(1) No payouts are made under the Annual Incentive Plan if the performance levels fall below the +pre-determined thresholds. +Although, in the aggregate, we obtained approximately 97.4% of the target bonus +amounts, after taking into account other factors related to the Company and its performance in 2017, the Compensation Committee determined to exercise its negative discretion and reduce the cash awards under our Annual Incentive Plan for 2017 to +95.0% of each participating NEO’s targeted bonus, resulting in the following payout amounts: +Named Executive Officer* +Target Bonus +Percentage +Target Bonus +Amount +Actual Bonus +Amount +Actual Bonus +as a Percent +of +Target +Bonus +Michael G. Moore, Chief Executive Officer +100% +$ +700,000 +$ +665,000 +95.0% +Keri Crowell, Chief Financial Officer +80% +$ +280,000 +$ +266,000 +95.0% +Stuart Maier, Senior Vice President of Geosciences +60% +$ +240,000 +$ +228,000 +95.0% +Robert Jones, Senior Vice President of Drilling +60% +$ +204,000 +$ +193,800 +95.0% +Mark Malone, Senior Vice President of Operations +60% +$ +204,000 +$ +193,800 +95.0% +*Mr. Gaydosik resigned as our CFO effective January 4, 2017 and did not participate in the 2017 annual incentive program. +Long-Term Equity-Based Incentive Awards +Each year we +typically grant our NEOs long-term equity-based incentive awards. The Compensation Committee determines the amount of these awards, as well as the mix of equity vehicles. The objectives of our long-term incentive plan are to: (i) attract and +retain the services of key employees, qualified independent directors and qualified consultants and independent contractors; (ii) create significant alignment between our named executive officers and other key employees, on the one hand, and +our stockholders, on the other hand; and (iii) encourage a sense of proprietorship in and stimulate the active interest of those persons in our development and financial success. We intend to achieve these objectives by making awards designed +to provide our named executive officers and other participants in the plan with a proprietary interest in our growth and performance. +Determining Award Structure +The +Compensation Committee chose to maintain the use of time-vested restricted stock unit awards for the 2017. The majority of our competitors have shifted to restricted stock types of awards and away from stock options or stock appreciation right +awards. In addition, in the Compensation Committee’s opinion, based in part on the +30 +Table of Contents +advice of our compensation consultant, based upon our relatively conservative award targets the use of time-vested restricted stock units provide a strong retention incentive and promote +alignment with long-term interests of our stockholders while still managing dilution levels to our stockholders. +The Compensation Committee ultimately +makes a decision regarding the size of awards granted to the named executive officers at its discretion, taking into consideration the terms of any existing employment agreements. +The restricted stock unit awards granted to our named executive officers in 2017 vest in three substantially equal annual installments over the three-year +period commencing on the six-month anniversary of grant except for the awards granted to our Chief Executive Officer, which vest in three substantially equal annual installments beginning on the date of grant. +The Compensation Committee may, however, determine to change the terms, types or mix of equity-based awards in the future, subject to the terms of applicable employment agreements. +Setting the Target Award Opportunity +The Compensation Committee reviewed market values with respect to the annual long-term incentive awards granted to similarly situated executives at the +Compensation Peer Group companies to assist the Compensation Committee in making these determinations with respect to our CEO and other NEO s for 2017. With advice from the compensation consultant, the Compensation Committee targeted long-term +equity-based incentive opportunity to be between 25 th and 50 th percentiles of the Compensation Peer Group, after giving consideration to the +targeted total direct compensation for each NEO, market data obtained from Longnecker and, with respect to our NEO, the minimum LTI target set forth in his employment agreement. The Compensation Committee then made annual grants of long-term equity +awards, which in 2017 consisted solely of restricted stock unit awards. These equity awards were made after the Compensation Committee had an opportunity to evaluate the Company’s operating results for 2016 and at the same time that the Company +was making its major compensation decisions for 2017. +The Compensation Committee has discretion to determine awards under our 2013 Restated Stock +Incentive Plan. During 2017, Mr. Moore’s employment agreement established a minimum equity award threshold equal to 500% of his base compensation, and the Compensation Committee considered this contractual obligation in determining his +award under the Plan. For our NEOs other than our CEO the recommendations of our CEO also are considered. The Compensation Committee considers the grant date dollar value of the long-term incentive package, the package’s potential dilutive +effect on our outstanding shares of common stock and the number of shares available for grant under the Plan in determining the aggregate number of shares to be awarded as individual long-term incentive awards for our executives. The Compensation +Committee evaluates stockholder dilution based on equity compensation “burn rates,” which refers to a measure of the speed at which companies use (or burn) shares available for grant in their equity compensation plans compared to the total +amount of the Company’s outstanding common stock. +In 2017, we provided long-term incentive awards for our CEO and other participating NEOs at target +levels that, on average, were aligned between the 25th and 50th percentiles of our 2017 Compensation Peer Group, depending on their respective targeted total direct compensation. +Restricted Stock Unit Awards +In +February 2017, the Compensation Committee granted restricted stock unit awards that vest ratably in multi-year tranches to deliver a meaningful long-term incentive by benefiting from the vesting of the awards and potential increases in the value of +our stock price that balances risk and potential reward. These awards are also intended to serve as an effective incentive to remain with the Company and continue such performance. +The number of restricted stock unit awards granted to our CEO in 2017 was determined by dividing the executive’s long-term equity-based incentive target +opportunity, as displayed below, by our common stock price on the date of grant. +Named Executive Officer +LTI Target as a +Percentage of Base +LTI Target GDFV +Michael G. Moore, Chief Executive Officer +500% +$ 3,500,000 +31 +Table of Contents +The number of restricted stock units granted to our other participating NEOs in 2017 was granted targeting +the 25 th to 50 th percentiles of the Compensation Peer Group, after giving consideration to the targeted total direct compensation for each NEO +and market data obtained from Longnecker. +Restricted stock unit awards are only earned if the individual continues to be employed by us on each applicable +vesting date of the award. +The following table provides the total number of restricted stock unit awards provided to each NEO in February 2017, as part of +the annual compensation review process and after giving consideration to their respective targeted total direct compensation and, for our CEO, the minimum LTI target set forth in his employment agreement. +Named Executive Officer +2017 LTI Award (RSUs) +Michael G. Moore, +Chief Executive Officer +187,768 +Keri Crowell, +Chief Financial Officer +55,000 +Stuart Maier, +Senior Vice President of Geosciences +32,000 +Robert Jones, +Senior Vice President of Drilling +35,000 +Mark Malone, +Senior Vice President of Operations +35,000 +* +Mr. Gaydosik resigned as our CFO effective January 4, 2017, and was not granted any awards in 2017. +Termination and Change of Control Benefits +On +April 30, 2018, our CEO’s existing employment agreement, which we refer to as the 2014 employment agreement, was amended and restated, which we refer to as the 2018 employment agreement. The 2014 employment agreement provided, and the 2018 +employment agreement continues to provide, Mr. Moore with specified payments and benefits upon certain termination events, including termination following a change of control. The Compensation Committee believes that these provisions will +encourage Mr. Moore to remain in our employment in the event of a change of control of the Company and during circumstances which indicate that a change of control might occur. The Compensation Committee believes termination and change of +control benefits are important in maintaining strong leadership and in encouraging retention in these situations and encourages our executives to act in the best interests of stockholders without distraction based on uncertainty regarding their +employment status. For additional information regarding the 2018 employment agreement and termination and change of control provisions, see “2018 Employment Agreement with Our Chief Executive Officer, Amending and Restating the 2014 Employment +Agreement” below. +We have entered into an employment agreement with each of Ms. Crowell, Mr. Maier, Mr. Jones and Mr. Malone, +each effective as of January 1, 2017, which provide for certain change in control benefits, including immediate vesting of each such NEO’s equity awards upon his or her termination on or before the second anniversary of the date of +occurrence of a change of control other than for cause. The value of the unvested restricted stock held by Ms. Crowell, Mr. Maier, Mr. Jones and Mr. Malone was $612,493, $314,764, $348,795 and $348,795, respectively, as of +December 31, 2017, based on the closing value on December 29, 2017, the last trading day of 2017. See “Change of Control Arrangements with Other Named Executive Officers.” For additional information regarding these employment +agreements and termination and change of control provisions, see “Employment Agreements with Our Chief Financial Officer, Senior Vice President of Geoscience, Senior Vice President of Drilling and Senior Vice President of Operations.” +Perquisites and Other Personal Benefits +We provide +certain of our named executive officers with a limited number of perquisites or other personal benefits, primarily consisting of life insurance premiums and, in the case of our CEO, Senior Vice President of Drilling and Senior Vice President of +Operations, use of a Company-owned vehicle, that we believe help provide a competitive package of compensation and benefits. The value of these benefits is disclosed in the “Summary Compensation Table” below. +32 +Table of Contents +Broad-Based Employee Benefits +401(k) Plan +We have a broad-based +retirement savings plan in which our named executive officers currently participate. The retirement plan is a tax qualified 401(k) plan that covers all eligible employees including the named executive officers. Under the plan, we make a safe harbor +contribution equal to 3% of each eligible employee’s gross annual compensation for the prior calendar year. We also have the ability to make an additional, discretionary contribution that is allocated based on each eligible employee’s +gross annual compensation for the prior calendar year. Both contributions are or may be made regardless of employee’s deferrals into the plan. In 2017, we made safe harbor and discretionary contributions totaling 3% of eligible compensation for +eligible employees, subject to certain limitations provided by our 401(k) plan and Internal Revenue Service regulations. All contributions made by us on behalf of an employee are 100% vested when contributed. For more details regarding our 401(k) +plan, see “Benefit Plans—401(k) Plan” below. +Other Benefits +Our named executive officers are eligible to participate in all of our other employee benefit plans which include medical, dental, group life, disability and +accidental death and dismemberment insurance, in each case on the same basis as all other employees. +2018 COMPENSATION PROGRAM +Changes to the Peer Group for 2018 +As part of its annual +evaluation of our competitive position, the Compensation Committee directed management to coordinate with our compensation consultant to undertake a comprehensive review and analysis of our peer group. +As a result of such analysis, five companies that had been included in the 2017 Compensation Peer Group were removed from, and four companies were added to, +the 2018 Compensation Peer Group. These changes were made to capture the range of companies with which we compete for talent, determined based on criteria that included revenue, assets, total production, production of natural gas as a percentage of +total production and market capitalization. The revision of the peer group resulted in relative alignment to the key metrics at the time of establishment as follows: 2017 Revenue = 27 th +percentile; Assets= 39 th percentile; Total Production=32 nd percentile; Natural Gas as Percentage of Total Production=84 th percentile; and Market Cap = 51 st percentile. +The +2018 Compensation Peer Group consists of the following companies: +2018 Compensation Peer Group +Antero Resources Corporation* +Newfield Exploration Company +Cabot Oil & Gas Corporation +Southwestern Energy Company* +Range Resources Corporation +PDC Energy, Inc.* +WPX Energy, Inc. +Cimarex Energy Co. +Oasis Petroleum Inc. +CNX Resources Corporation* +Whiting Petroleum Corporation +Rice Energy Inc. +QEP Resources, Inc. +SM Energy Company +Energen Corporation +Laredo Petroleum, Inc.* +*Added in +2018. +Changes to our Compensation Program for 2018 +2018 Base Salary +The Compensation +Committee engaged Pearl Meyer & Partners, LLC, or Pearl Meyer, to review the overall competitiveness of our executive compensation programs for 2018, with continued focus on ensuring the alignment of management compensation with performance +and Gulfport’s strategy generally. +33 +Table of Contents +In April 2018, the Compensation Committee approved the 2018 employment agreement with Mr. Moore, +which amended and restated Mr. Moore’s 2014 employment agreement to bring his compensation arrangement more in line with best compensation practices for similarly situated CEOs of peer group companies and align his total direct +compensation closer to the 25 th percentile of the 2018 Compensation Peer Group. +In +recognition of Mr. Moore’s relinquishment of certain benefits in the 2018 employment agreement and the relative alignment to market competitive levels, the Compensation Committee determined that an adjustment of his 2017 base pay was +appropriate. In accordance with the terms of Mr. Moore’s 2018 employment agreement, his base salary was increased from $700,000 to $750,000, as disclosed in the table below. The base salaries of our other NEOs were also adjusted, by 3.5% +for 2018, to bring the total direct compensation of such NEOs to approximately the 25 th percentile, on average, of total compensation paid to similarly situated executives at the 2018 Compensation +Peer Group. +Named Executive Officer +2017 Base Salary +2018 Base Salary +Michael G. Moore, Chief Executive Officer +$ +700,000 +$ +750,000 +Keri Crowell, Chief Financial Officer +$ +350,000 +$ +362,300 +Stuart Maier, Senior Vice President of Geosciences +$ +400,000 +$ +414,000 +Robert Jones, Senior Vice President of Drilling +$ +340,000 +$ +351,900 +Mark Malone, Senior Vice President of Operations +$ +340,000 +$ +351,900 +2018 Annual Incentive Bonus Targets +In 2018, the Compensation Committee continued to provide incentives relating to the performance of our CEO and other executives through their participation in +the Annual Incentive Plan, establishing performance factors and performance targets for 2018. In recognition of market practices and the need to incentivize executives to contribute to Company performance and stockholder value creation, the +Compensation Committee worked with management to identify critical performance metrics to tie them to objective performance criteria and total stockholder return relative to the Company’s peer group for 2018 and stimulate appropriate levels of +growth versus capital efficiencies. To achieve this objective, the Compensation Committee established a set of balanced metrics based on the following production, financial performance and strategic initiative goals: (i) net production per +share (Mcfe/share) weighted at 10%; (ii) Adjusted EBITDA per Mcfe weighted at 10%; (iii) return on average capital employed weighted at 35%; (iv) one-year total stockholder return relative to our peer group +weighted at 20%; and (v) strategic initiatives relating to our performance with respect to our non-core asset divestiture efforts and safety, weighted at 25%. In setting these metrics, the Compensation +Committee carefully considered each of these metrics’ impact on our business, profitability, production and stockholder return, as well as our desire to balance operational, financial and stockholder return targets with the goal to execute on +our strategic initial goals and continue to improve our safety record, including the following specific considerations: +• +Net Production Per Share Metric . This metric is one of the key drivers of value in our business, focused on our ability to protect and deliver base production and execute our drilling and completion +program with maximum efficiency. This metric is measured on a per share basis to ensure maximum value impact to our stockholders. +• +Per-Unit Adjusted EBITDA Metric . This metric is intended to incentivize our profitability from operations while managing costs and our marketing portfolio. This metric +focuses on the margin earned on the production metric, without encouraging growth at any price. +• +Return on Average Capital Employed Metric . This metric is intended to encourage the efficiency of capital allocation to profitable investing activities. +• +Relative One-Year Total Stockholder Return Metric . This metric is intended to measure our performance relative to our peer group and our stockholder value creation. +34 +Table of Contents +• +Strategic Initiatives Metrics: +• +Non-Core Asset Divestitures . This metric sets goals for total value to be realized through these divestitures, which includes the quantitative threshold, target and +maximum, and is focused on our efforts to monetize certain of our non-core investments within our portfolio; and +• +Safety . This metric is focused on balancing our operational targets with our goal to continue to improve in the areas of environmental responsibility, motor vehicle safety and other health and safety initiatives. +The Compensation Committee also set the threshold, target and maximum performance targets for each of these metrics for 2018, and +established the bonus target opportunity for each of the NEOs, expressed as a percentage of their respective annual salaries. For 2018, the bonus target opportunities under the Annual Incentive Plan were set as follows: for our CEO, 120% of his +annual base salary, as specified in his 2018 employment agreement; for our CFO, 80% of her annual base salary; and for each of our other NEOs, 60% of such NEO’s annual base salary, in each case subject to the achievement of performance targets +discussed above, with no payouts to be made if the achieved performance levels fall below the pre-determined thresholds. The threshold and maximum opportunities for each NEO under the Annual Incentive Plan +were set at 50% and 200%, respectively, of the individual target bonus opportunities established for each such NEO. +2018 Restricted Stock Unit Awards +On April 30, 2018, the Compensation Committee approved a grant of restricted stock units to our Chief Executive Officer, with a value of 500% of his +annual base salary, consistent with the terms of Mr. Moore’s 2018 employment agreement. The award will vest in three substantially equal annual installments beginning on the date of grant. On April 18, 2018, the Compensation Committee +made restricted stock unit awards to certain our other NEOs, including Ms. Crowell, Mr. Maier, Mr. Malone and Mr. Jones, in the amounts of 115,800, 73,645, 73,645 and 73,645 restricted stock units, respectively, vesting, in each +case, in three substantially equal annual installments beginning on the first anniversary of the date of grant. These 2018 awards were granted to our other NEOs with a goal to achieve an overall total direct compensation posture of 25 th percentile of the 2018 Compensation Peer Group. These 2018 long-term equity awards represent at least a majority, and in most cases, approximately two-thirds +of the total direct compensation of our NEOs, closely aligning their interests with those of our stockholders and putting a large portion of their 2018 target compensation at risk. +COMPENSATION POLICIES AND PRACTICES +Deductibility of +Executive Compensation +The Compensation Committee considers the expected tax treatment to the Company and its executive officers as one of the factors +in determining compensation matters. Section 162(m) of the Code generally denies a federal income tax deduction for certain compensation in excess of $1 million to a “covered employee” of a publicly traded corporation in any +fiscal year. Prior to January 1, 2018, certain types of compensation, including qualifying “performance-based compensation,” were not subject to the limits on deductibility. For these purposes, prior to January 1, 2018, +“covered employees” consisted of our Chief Executive Officer and the three most highly compensated executive officers other than our Chief Executive Officer and our Chief Financial Officer. In making compensation decisions in 2017 and +prior years, the Compensation Committee has considered the requirements for performance-based compensation and believes that awards under our Annual Incentive Plan meet these requirements and, therefore, such compensation paid to our named executive +officers pursuant to the terms of these plans would generally be exempt from the limitations on deductibility. +A number of significant changes were made +to Section 162(m) by the Tax Cuts and Jobs Act, enacted on December 22, 2017, including the elimination of the ability to rely on this performance-based exception, effective as of January 1, 2018, and expansion of the scope of +“covered employees” to include the chief financial officer and certain former named executive officers. As a result of these changes, compensation paid to any covered employee generally will not be deductible, to the extent that it exceeds +$1 million, in 2018 or future years. The Compensation Committee currently considers the deductibility under Section 162(m) of compensation awarded to its executives to the extent reasonably practical and consistent with our objectives, but +the +35 +Table of Contents +Compensation Committee may nonetheless approve compensation that does not fall within these requirements and may authorize compensation that results in +non-deductible amounts above the Section 162(m) limits if it determines that such compensation is in our best interests. +Effect of our Compensation Policies and Practices on Risk and Risk Management +The Compensation Committee reviews the risks and rewards associated with our compensation policies and programs. We believe that such policies and programs +encourage and reward prudent business judgment and avoid encouraging excessive risk-taking over the long term. With respect to specific elements of compensation: +• +We believe that our programs balance short- and long-term incentives for our executive officers providing for an appropriate mix of fixed, performance-based, discretionary and equity compensation that encourages +long-term performance. +• +We believe that annual base salaries for our named executive officers do not encourage excessive risk-taking as they are fixed amounts that are subject to discretionary increases by our Compensation Committee that may +be based on, among other factors, annual performance evaluations. We also believe that such annual base salaries are set at reasonable levels, as compared to the base salaries of similarly-situated individuals at our peer group companies, and +therefore do not negate the effect of other compensation elements that encourage long-term service, growth and performance that may increase stockholder value. +• +Our annual incentive awards are determined based on Company and individual performance measures, both operational and strategic, which mitigates excessive risk-taking that could produce unsustainable gains in one area +of performance at the expense of our overall long-term interests. The Company’s goals are designed to ensure a proper balance between stock performance, operational measures, financial goals and strategic goals. In addition, the Compensation +Committee sets performance goals that it believes are reasonable in light of our past performance, then-current business projections and market conditions. +• +The Compensation Committee believes that performance-based cash incentive compensation granted pursuant to the Annual Incentive Plan, with meaningful performance targets, such as those under our Annual Incentive Plan, +will further align our executives’ interests with those of our stockholders, will motivate our executives to contribute to the Company’s growth and profitability and will link a larger portion of our executives’ compensation to the +performance of the Company. The Compensation Committee has eliminated the use of minimum or discretionary bonus arrangements in all of the Company’s employment agreements in recognition of the Company’s shift to the use of +performance-based bonuses. +• +Moreover, our annual incentive awards are subject to maximum payout caps that limit the amount an executive may earn on inputs for certain of the operational measures. +• +Restricted stock unit awards to our named executive officers are subject to time vesting provisions. We award restricted stock unit awards to ensure that our executives have a continuing stake in the long-term success +of the Company as the value of the award will depend on the stock price at and after the time of vesting. We believe that our long-term equity awards do not encourage excessive risk taking that may be associated with equity awards that vest based +strictly on achieving certain targets. We also believe that our long-term equity awards provide incentive to our named executive officers to reasonably encourage growth and financial performance that may increase stockholder value, as well as +long-term service, and serve to align the interests of our executives with those of our stockholders. +Based on the foregoing, the +Compensation Committee believes that the Company does not utilize compensation policies and programs creating risks that are reasonably likely to have a material adverse impact on the Company. +36 +Table of Contents +Clawback Provisions +Under the Sarbanes-Oxley Act of 2002, or SOX Act, our CEO and CFO may be subject to clawbacks in the event of a restatement. Under our 2013 Restated Stock +Incentive Plan, unless an award certificate provides otherwise, the plan administrator may cancel, rescind, suspend, withhold or otherwise restrict any unexpired, unpaid or deferred award of the participant at any time in the event of certain +activities, including violations of material Company policies, termination of employment for cause or conduct that is detrimental to our business or reputation. Further, under the terms of our employment agreements effective as of January 1, +2017, with each of Ms. Crowell, Mr. Maier, Mr. Jones and Mr. Malone and certain of our other executive officers, any equity awards granted to such executive, any proceeds of any equity awards that previously have been sold, +transferred or otherwise disposed of, and any incentive bonus award will be subject to clawback by us, now or in the future, under the Dodd-Frank Act and the SOX Act, each as amended, and rules, regulations and binding, published guidance +thereunder. +Anti-Hedging and Pledging Policies +We +have a policy prohibiting directors, executive officers and certain other designated employees from speculative trading in our securities, including hedging transactions, short selling, and trading in put options, call options, swaps or collars, or +holding our securities in margin accounts. We also have a policy prohibiting directors, executive officers and certain other designated employees from pledging Gulfport securities, except in certain limited circumstances and subject to prior +approval by our compliance officer or the Compensation Committee. To our knowledge, all such individuals are in compliance with these policies. +Accounting Implications of Executive Compensation Policy +We are required to recognize compensation expense of all stock-based awards pursuant to the provisions of FASB ASC Topic 718, “Compensation-Stock +Compensation.” Under U.S. generally accepted accounting principles, or GAAP, only vested shares are included in basic shares outstanding. Also, under GAAP, non-vested shares are included in diluted shares +outstanding when the effect is dilutive. +37 +Table of Contents +The Role of Stockholders’ +Say-On-Pay +We provide our stockholders with the opportunity to cast an +annual advisory vote on executive compensation (a “say-on-pay proposal”) in accordance with the Dodd-Frank Act. At our 2017 annual meetings of stockholders, +our stockholders expressed strong support for the compensation of our named executive officers, with approximately 96% of the votes cast for approval of the +“say-on-pay” advisory vote. The Compensation Committee carefully considers the level of voting support from our stockholders on the say-on-pay advisory vote. +Although the Compensation Committee believes that 2017 +results of the “say-on-pay” advisory votes affirmed our stockholders’ support of our executive compensation policies and practices, the Compensation +Committee carefully examined our compensation practices in response to the 2017 stockholder vote. +The Compensation Committee evaluated the 2017 packages +for our Chief Executive Officer and our other named executive officers and determined that, with respect to our Chief Executive Officer, approximately 71% of 2017 compensation was paid through equity awards and 14% in annual performance bonus, +providing direct alignment with returns to stockholders and incentive to drive long-term business success. Although the performance targets for 2017 were achieved for most of key metrics at targeted or higher levels, the execution against our +strategic plan goal was achieved at a below-target level, and the Compensation Committee used its negative discretion to reduce the annual bonuses, resulting in a payout under the Annual Incentive Plan for 2017 at approximately 95.0% of the target +annual incentive bonus for each participating NEO. +Actions Taken In Response to our Stockholder Outreach Efforts +In setting compensation packages for 2018, the Compensation Committee considered input from our stockholder outreach efforts and: +• +emphasized long-term equity awards and annual performance bonuses under the previously implemented Annual Incentive Plan to more closely align our senior executives’ interests with those of our stockholders and to +continue to link a larger portion of such executives’ compensation to the performance of our stock and our operational performance; +• +provided robust disclosure of our performance metrics and targets; +• +set meaningful operational, financial and strategic performance targets for 2018, including a one-year total stockholder return target against our peer group, under the Annual +Incentive Plan; +• +effective January 1, 2017, fully eliminated the use of guaranteed or discretionary bonuses for all of our executive officers, including NEOs, in recognition of the Company’s focus on the use of +performance-based bonuses; +• +effective January 1, 2018, all new equity awards granted to our NEOs, except for our CEO, will vest in three substantially equal annual installments beginning on the first anniversary of the date of grant; and +• +beginning with 2018, eliminated single trigger vesting provisions in equity awards granted to our CEO, completing the transition of our NEOs awards to double-trigger vesting, which we had already implemented in prior +years for our other NEOs. +The Compensation Committee believes that our shift to linking a larger portion of such executive officers’ +compensation to long-term equity incentive awards and to performance-based bonus arrangements with meaningful performance metrics for such executive officers appropriately align with the long-term interests of the Company and its stockholders and +are consistent with market practices. The Compensation Committee also believes that our current compensation policies and practices enhance retention of executive talent through multi-year vesting of stock awards and do not encourage unnecessary and +excessive risk taking. The Compensation Committee further believes that our other compensation policies and practices, such as our policy prohibiting pledging (except in certain limited circumstances and subject to prior approval by our compliance +officer or the Compensation Committee) or hedging of our stock by our executive officers and directors, as well as the lack of significant prerequisites and absence of pension or supplemental retirement benefits, aside from those afforded +38 +Table of Contents +under our broad-based 401(k) plan, for our executive officers are consistent with prudent compensation philosophy and the interests of our stockholders. The Compensation Committee will continue +to consider the outcome of our stockholders’ future “say-on-pay” votes when making compensation decisions for our named executive officers. +Compensation Committee Report on Executive Compensation +The Compensation Committee has reviewed and discussed the foregoing Compensation Discussion and Analysis with management. Based on its review and discussion +with management, the Compensation Committee recommended that the Compensation Discussion and Analysis be included in this proxy statement. +Respectfully +submitted by the Compensation Committee: +Scott E. Streller, Chairman +David L. Houston +Craig Groeschel +C. Doug Johnson +Paul D. Westerman +Deborah G. Adams +Dated: April 30, 2018 +39 +Table of Contents +Compensation Committee Interlocks and Insider Participation +No current member of our Compensation Committee has ever been an officer or employee of ours. None of our executive officers serves, or has served during the +past fiscal year, as a member of the board of directors or compensation committee of any other company that has one or more executive officers serving as a member of our board of directors or Compensation Committee. +Compensation Tables +2017, 2016 and 2015 SUMMARY COMPENSATION TABLE +The following table provides information concerning compensation of our principal executive officer, principal financial officer and our next three most +highly paid executive officers for the fiscal years ended December 31, 2017, December 31, 2016 and December 31, 2015. +Name and Principal Position +Year +Salary($) +Bonus($) +Stock +Awards +($)(1) +Non-Equity +Incentive Plan +Compensation +($)(2) +All Other +Compensation +($)(3) +Total +($) +Michael G. Moore +2017 +$ +700,000 +$ +— +$ +3,334,760(4) +$ +665,000 +$ +38,396 +$ +4,738,156 +Chief Executive Officer and President +2016 +$ +483,000 +$ +— +$ +3,450,003(5) +$ +993,089 +$ +45,307 +$ +4,971,399 +2015 +$ +460,000 +$ +— +$ +2,299,989(6) +$ +690,000 +$ +42,505 +$ +3,492,494 +Aaron Gaydosik(7) +2017 +$ +16,973 +$ +— +$ +— +$ +— +$ +20,295 +$ +37,268 +Former Chief Financial Officer +2016 +$ +324,450 +$ +— +$ +1,320,964(8) +$ +— +$ +20,919 +$ +1,666,333 +2015 +$ +309,000 +$ +— +$ +1,099,943(9) +$ +231,750 +$ +23,876 +$ +1,664,569 +Keri Crowell(10) +2017 +$ +349,495 +$ +— +$ +976,800(11) +$ +266,000 +$ +21,337 +$ +1,613,632 +Chief Financial Officer +2016 +$ +275,000 +$ +75,000(12) +$ +223,120(13) +$ +282,712 +$ +21,637 +$ +877,469 +2015 +$ +250,000 +$ +150,000 +$ +530,560(14) +$ +— +$ +22,254 +$ +952,814 +Stuart Maier +2017 +$ +400,000 +$ +— +$ +568,320(15) +$ +228,000 +$ +21,687 +$ +1,218,007 +Senior Vice President +of Geosciences +2016 +$ +400,000 +$ +225,000 +$ +— +$ +— +$ +21,781 +$ +646,781 +2015 +$ +400,000 +$ +200,000 +$ +331,600(16) +$ +— +$ +23,159 +$ +954,759 +Robert Jones +2017 +$ +340,000 +$ +— +$ +621,600(17) +$ +193,800 +$ +27,585 +$ +1,182,985 +Senior Vice President of Drilling +Mark Malone +2017 +$ +340,000 +$ +— +$ +621,600(18) +$ +193,800 +$ +26,646 +$ +1,182,046 +Senior Vice President of Operations +(1) +The amount reported in the Stock Awards column reflects the fair value of the applicable restricted common stock award or restricted stock unit award on the award date. The amount was calculated using certain +assumptions, as set forth in Note 1 and Note 8 to our consolidated financial statements for the fiscal year ended December 31, 2017 under the headings “Summary of Significant Accounting Policies – Accounting for Stock-Based +Compensation” and “Stock-Based Compensation,” respectively, included in our Annual Report on Form 10-K, filed with the SEC on February 22, 2018. +(2) +The amounts shown reflect performance-based annual incentive bonuses granted under the 2014 Executive Annual Incentive Compensation Plan. With respect to the 2017 amounts, the compensation committee certified the +attainment of the related performance goals in March 2018, and the Company paid these performance-based annual incentive bonuses in March 2018. With respect to the 2016 amounts, the compensation committee certified the attainment of the related +performance goals in February 2017, and the Company paid these performance-based annual incentive bonuses in March 2017. With respect to the 2015 amounts, the compensation committee certified the attainment of the related performance goals in March +2016, and the Company paid these performance-based annual incentive bonuses in March 2016. +(3) +The amounts for Mr. Moore for 2017, 2016 and 2015 represent $20,295, $20,295 and $19,890, respectively, for +our 401(k) plan contributions, $18,101, $23,990 and $22,615, respectively, attributable to use of a Company owned vehicle and $0, $1,022 and $0, respectively, attributable to Company sponsored sporting tickets. Amounts for Mr. Gaydosik in +40 +Table of Contents +2017, 2016 and 2015 represent $20,295, $20,295 and $19,890, respectively, for contributions to our 401(k) plan, $0, $304 and $3,666, respectively, attributable to Company sponsored sporting +tickets and $0, $320 and $320, respectively, attributable to a Company sponsored health club membership. Amounts for Ms. Crowell for 2017, 2016 and 2015 represent $20,295, $20,295 and $19,890, respectively, for our 401(k) plan contributions, +$0, $320 and $320, respectively, attributable to a Company sponsored health club membership and $1,042, $1,022 and $2,044, respectively, attributable to Company sponsored sporting tickets. Amounts for Mr. Maier in 2017, 2016 and 2015 include +$20,295, $20,295 and $19,890, respectively, for our 401(k) plan contributions, and $1,392, $1,486 and $3,269, respectively, attributable to Company sponsored sporting tickets. Amounts for Mr. Jones for 2017 include $20,295 for our 401(k) plan +contributions, $5,176 attributable to use of a Company owned vehicle and $2,114 attributable to Company sponsored sporting tickets. Amounts for Mr. Malone for 2017 include $20,295 for our 401(k) plan contributions and $6,351 attributable to use +of a Company owned vehicle. +(4) +Mr. Moore’s award of 187,768 shares of our restricted stock units was granted on February 27, 2017 and vests in three approximately equal annual installments, of which 125,178 restricted stock units have +vested and the remaining 62,590 restricted stock units vest on February 27, 2019. +(5) +Mr. Moore’s award of 40,367 restricted stock units was granted on March 10, 2016 and vest in four approximately equal annual installments, of which 20,183 restricted stock units have vested, and the +remaining 20,184 restricted stock units will vest in two equal annual installments beginning March 10, 2019. Mr. Moore’s award of 85,215 restricted stock units was granted on March 31, 2016 and vested in three approximately equal +annual installments beginning on the grant date. +(6) +Mr. Moore’s award of 52,225 shares of our restricted common stock was granted on February 24, 2015 and vested in three approximately equal annual installments. +(7) +Mr. Gaydosik served as our Chief Financial Officer from August 11, 2014 to January 4, 2017. +(8) +Mr. Gaydosik’s award of 13,558 restricted stock units was granted on March 10, 2016 and was to vest in four approximately equal annual installments, however, all of these restricted stock units were +forfeited upon his resignation. Mr. Gaydosik’s award of 34,345 shares of restricted stock units was granted on March 31, 2016 and was to vest in three approximately equal annual installments, however, all of these restricted stock +units were forfeited upon his resignation. +(9) +Mr. Gaydosik’s award of 21,049 shares of our restricted common stock was granted on February 24, 2015 and was to vest in three approximately equal annual installments, of which 7,016 shares vested on +March 1, 2016 and the remaining 14,033 shares were forfeited upon his resignation. In addition, Mr. Gaydosik was entitled to receive shares of our restricted common stock valued at $225,000 as of the close of trading on August 11, +2014, the date his employment began, which equaled 3,927 shares, as part of his one-time sign-on bonus in connection with his appointment as our Chief Financial Officer. +This restricted common stock award was granted on February 24, 2015. The grant date fair value of these shares of restricted common stock was $172,945. +(10) +Ms. Crowell was appointed as our Chief Financial Officer on January 4, 2017. +(11) +Ms. Crowell’s award of 55,000 restricted stock units was granted on February 27, 2017 and vests in three approximately equal annual installments, of which 18,333 restricted stock units have vested and the +remaining 36,667 restricted stock units vest in two approximately equal annual installments beginning August 27, 2018. +(12) +During 2016, after a lengthy evaluation process, the Company made the decision to convert to a more fully integrated financial reporting system. As a result, the Company appointed an internal team to coordinate the 18 +month conversion process. To incentivize that group to meet implementation deadlines, goals were established with incentives provided for achieving each incremental goal. In November 2016, Ms. Crowell was awarded a bonus of $75,000 for +achieving her goals to date on this project. +(13) +Ms. Crowell’s award of 8,000 restricted stock units was granted on August 2, 2016 and vests in four approximately equal annual installments of which 2,000 restricted stock units have vested, and the +remaining 6,000 restricted stock units vest in three equal annual installments beginning on August 15, 2018. +(14) +Ms. Crowell’s award of 16,000 shares of restricted stock was granted on August 7, 2015 and vests in three approximately equal installments, of which 10,666 shares have vested and the remaining 5,334 +shares vest on August 15, 2018. +(15) +Mr. Maier’s award of 32,000 restricted stock units was granted on February 27, 2017 and vests in three approximately equal installments, of which 10,666 restricted stock units have vested and the +remaining 21,334 restricted stock units vest in two equal annual installments beginning on August 27, 2018. +(16) +Mr. Maier’s award of 10,000 shares of restricted stock was granted on August 7, 2015 and vests in three approximately equal annual installments, of which 6,666 shares have vested and the remaining 3,334 +shares vest on August 15, 2018. +(17) +Mr. Jones’s award of 35,000 restricted stock units was granted on February 27, 2017 and vests in +three approximately equal installments, of which 11,666 restricted stock units have vested, and the remaining 23,334 restricted stock units vest in two equal annual installments beginning on August 27, 2018. +41 +Table of Contents +(18) +Mr. Malone’s award of 35,000 restricted stock units was granted on February 27, 2017 and vests in three approximately equal installments, of which 11,666 restricted stock units have vested, and the +remaining 23,334 restricted stock units vest in two equal annual installments beginning on August 27, 2018. +2017 +GRANTS OF PLAN-BASED AWARDS +The following table provides information concerning each grant of an award made to our principal executive officer, our +principal financial officer and our next three most highly paid executive officers in the fiscal year ended December 31, 2017 under any Company plan. +Estimated Future Payouts Under Non-Equity +Incentive Plan Awards(1) +All Other +Stock +Awards: +Number of +Shares of +Stock or +Units +(#)(2) +All Other +Option +Awards: +Number of +Securities +Underlying +Options +(#) +Exercise +or Base +Price of +Option +Awards +($/Sh) +Grant Date +Fair Value +of Stock +and Option +Awards +($) +Name +Grant +Date +Threshold +($) +Target +($) +Maximum +($) +Michael G. Moore +2/27/2017 +$ +350,000 +$ +700,000 +$ +1,400,000 +187,768 +(3) +— +— +$ +3,334,760 +Chief Executive Officer and President +Keri Crowell +2/27/2017 +$ +140,000 +$ +280,000 +$ +560,000 +55,000 +(4) +— +— +$ +976,800 +Chief Financial Officer +Stuart Maier +2/27/2017 +$ +120,000 +$ +240,000 +$ +480,000 +32,000 +(5) +— +— +$ +568,320 +Senior Vice President of Geosciences +Robert Jones +2/27/2017 +$ +102,000 +$ +204,000 +$ +408,000 +35,000 +(6) +— +— +$ +621,600 +Senior Vice President of Drilling +Mark Malone +2/27/2017 +$ +102,000 +$ +204,000 +$ +408,000 +35,000 +(7) +$ +621,600 +Senior Vice President of Operations +(1) +Reflects performance-based annual incentive bonuses granted under the 2014 Executive Annual Incentive Compensation Plan. +(2) +Reflects restricted stock units subject to time based vesting granted under the 2013 Restated Stock Incentive Plan. +(3) +Reflects Mr. Moore’s award of 187,768 restricted stock units granted on February 27, 2017 which vest in three approximately equal annual installments, of which 62,589 restricted stock units vested on +February 27, 2017, 62,589 restricted stock units vested on February 27, 2018, and the remaining 62,590 restricted stock units vest on February 27, 2019. +(4) +Reflects Ms. Crowell’s award of 55,000 restricted stock units granted on February 27, 2017 which vest in three approximately equal annual installments, of which 18,333 restricted stock units vested on +August 27, 2017, and the remaining 36,667 restricted stock units vest in two approximately equal annual installments beginning on August 27, 2018. +(5) +Reflects Mr. Maier’s award of 32,000 restricted stock units granted on February 27, 2017 which vest in three approximately equal annual installments, of which 10,666 restricted stock units vested on +August 27, 2017, and the remaining 21,334 restricted stock units vest in two equal annual installments beginning on August 27, 2018. +(6) +Reflects Mr. Jones’s award of 35,000 restricted stock units granted on February 27, 2017 which vest in three equal annual installments, of which 11,666 restricted stock units vested on August 27, +2017, and the remaining 23,334 restricted stock units vest in two equal annual installments beginning on August 27, 2018. +(7) +Reflects Mr. Malone’s award of 35,000 restricted stock units granted on February 27, 2017 which vest in three equal annual installments, of which 11,666 restricted stock units vested on August 27, +2017, and the remaining 23,334 restricted stock units vest in two equal annual installments beginning on August 27, 2018. +42 +Table of Contents +OUTSTANDING EQUITY AWARDS AT 2017 FISCAL YEAR-END +The following table provides information concerning equity awards outstanding for our principal executive officer, our principal financial officer +and our next three most highly paid executive officers at December 31, 2017. +Name +Number of +Securities +Underlying +Unexercised +Options +(#) +Exercisable +Number of +Securities +Underlying +Unexercised +Options +(#) +Unexercisable +Option +Exercise +Price +($) +Option +Expiration +Date +Number of +Shares or +Units of +Stock That +Have Not +Vested +(#) +Market Value +of Shares or +Units of Stock +That Have +Not Vested +($)(1) +Michael G. Moore +— +— +$ — +— +183,866(2) +$ +2,346,130 +Keri Crowell +— +— +$ — +— +48,001(3) +$ +612,493 +Stuart Maier +— +— +$ — +— +24,668(4) +$ +314,764 +Robert Jones +— +— +$ — +— +27,335(5) +$ +348,795 +Mark Malone +— +— +$ — +— +27,335(6) +$ +348,795 +Aaron Gaydosik +— +— +$ — +— +0(7) +$ +0 +(1) +Market value of shares or units that have not vested is based on the closing price of $12.76 per share of our common stock on the Nasdaq Global Select Market on December 29, 2017, the last trading day of 2017. +(2) +Of these securities, (i) 62,589 restricted stock units vested on February 27, 2018, (ii) 28,411 restricted stock units vested on March 31, 2018, (iii) 10,092 restricted stock units vested on March 10, +2018, (iv) 62,590 restricted stock units vest on February 27, 2019, (v) 10,092 restricted stock units vest on March 10, 2019 and (vi) 10,092 restricted stock units vest on March 10, 2020. +(3) +Of these securities, (i) 5,334 shares of restricted stock vest on August 15, 2018, (ii) 6,000 unvested restricted stock units vest in three equal annual installments beginning on August 15, 2018 and (iii) +36,667 restricted stock units vest in two approximately equal annual installments beginning on August 27, 2018. +(4) +Of these securities, (i) 3,334 shares of restricted stock vest on August 15, 2018 and (ii) 21,334 restricted stock units vest in two equal annual installments beginning on August 27, 2018. +(5) +Of these securities, (i) 4,001 restricted stock units vest on August 15, 2018 and (ii) 23,334 restricted stock units vest in two equal annual installments beginning on August 27, 2018. +(6) +Of these securities, (i) 4,001 restricted stock units vest on August 15, 2018 and (ii) 23,334 restricted stock units vest in two equal annual installments beginning on August 27, 2018 +(7) +All unvested awards granted to Mr. Gaydosik under the Company’s 2014 Executive Annual Incentive Compensation Plan forfeited upon his resignation as our CFO on January 4, 2017. +2017 OPTION EXERCISES AND STOCK VESTED +The following table provides certain information for the named executive officers on stock option exercises during 2017, including the number of shares +acquired upon exercise and the value realized, and the number of shares acquired upon the vesting of restricted common stock awards and restricted stock unit awards. +Option Awards +Stock Awards +Name +Number of Shares +Acquired on Exercise +(#) +Value Realized on +Exercise +($) +Number of Shares +Acquired on Vesting +(#) +Value Realized on +Vesting +($)(1) +Michael G. Moore +— +— +118,494 +$ +2,077,835 +Keri Crowell +— +— +32,333 +$ +394,416 +Stuart Maier +— +— +13,999 +$ +167,421 +Robert Jones +— +— +15,666 +$ +187,312 +Mark Malone +15,666 +$ +187,312 +Aaron Gaydosik +— +— +0 +$ +0 +43 +Table of Contents +(1) +Value realized on vesting is based on the vesting date closing price per share of our common stock on The Nasdaq Global Select Market. If the vesting date was not a trading day, the value is based on the closing price +per share of our common stock on The Nasdaq Global Select Market on the last trading day prior to the vesting date. +44 +Table of Contents +2017 DIRECTOR COMPENSATION +The following table contains information with respect to 2017 compensation of our non-employee directors who served in +such capacity during 2017. Employee directors do not receive compensation for serving as directors of the Company. +Name +Fees Earned or +Paid in Cash +($)(1) +Stock Awards +($)(2) +Option +Awards +($)(2) +Total +($) +Craig Groeschel +$ +68,500 +$ +125,000 +— +$ +193,500 +David L. Houston +$ +168,500 +$ +125,000 +— +$ +293,500 +C. Doug Johnson +$ +75,500 +$ +125,000 +— +$ +200,500 +Ben T. Morris +$ +75,250 +$ +125,000 +— +$ +200,250 +Scott E. Streller +$ +88,500 +$ +125,000 +— +$ +213,500 +Paul D. Westerman* +$ +12,000 +$ +73,155 +— +$ +85,155 +* +Mr. Westerman has served as a director of the Company since October 2017. +(1) +For additional information regarding the fees earned or paid in cash to our non-employee directors in 2017, please see “Board of Directors Information—How are directors +compensated?—Equity Compensation.” +(2) +The amounts shown reflect the grant date fair value of restricted stock unit awards granted, determined in accordance with FASB ASC Topic 718. See Note 1 and Note 8 to our consolidated financial statements for the +fiscal year ended December 31, 2017 under the headings “Summary of Significant Accounting Policies – Accounting for Stock-Based Compensation” and “Stock-Based Compensation,” respectively, included in our Annual Report +on Form 10-K, filed with the SEC on February 22, 2018, regarding assumptions underlying valuations of equity awards for 2017. There were 9,608 unvested restricted stock units at the end of 2017 for each +of Messrs. Groeschel, Houston, Johnson, Morris and Streller, reflecting the award granted to each such director on June 8, 2017, and 5,488 unvested restricted stock units at the end of 2017 for Mr. Westerman, reflecting the award granted +to Mr. Westerman on November 3, 2017. +Benefit Plans +401(k) Plan +We maintain a +retirement savings plan, or a 401(k) Plan, for the benefit of our eligible employees who have attained the age of 18. Currently, employees may elect to defer their compensation up to the statutorily prescribed limit. During the following year, we +make a safe harbor contribution equal to 3% of each eligible employee’s eligible annual compensation for the prior calendar year. We also have the ability to make an additional, discretionary contribution based on each eligible employee’s +eligible annual compensation for the prior calendar year. Both contributions are made, regardless of employee’s deferrals into the plan. In 2017, we made safe harbor and discretionary contributions totaling 3% of eligible compensation for +eligible employees, subject to certain limitations provided by our 401(k) plan and Internal Revenue Service regulations. All contributions made by us on behalf of an employee are 100% vested when contributed. The 401(k) Plan is intended to qualify +under Sections 401(a) and 501(a) of the Code. As such, contributions to the 401(k) Plan and earnings on those contributions are not taxable to the employees until distributed from the 401(k) Plan, and all contributions are deductible by us when +made. +2013 Restated Stock Incentive Plan +Our 2013 Restated Stock Incentive Plan, which amended and restated our Amended and Restated 2005 Stock Incentive Plan, was adopted to enable us, and any of our +affiliates, to attract and retain the services of the types of employees, consultants and directors who will contribute to our long range success and to provide incentives +45 +Table of Contents +which are linked directly to increases in share value which will inure to the benefit of our stockholders. The plan provides a means by which eligible recipients of awards may be given an +opportunity to benefit from increases in value of our common stock through the granting of incentive stock options, nonstatutory stock options, restricted awards (restricted stock and restricted stock units), performance awards and stock +appreciation rights. Our compensation committee serves as the plan administrator. +Eligible award recipients are employees, consultants and directors of +ours and any present or future parent or subsidiary of ours. Incentive stock options may be granted only to our employees. Awards other than incentive stock options may be granted to employees, consultants and directors. The shares that may be +issued pursuant to awards consist of our authorized but unissued common stock, and the maximum aggregate amount of such common stock which may be issued upon exercise of all awards in the plan, including incentive stock options, may not exceed +7,500,000 shares, subject to adjustment to reflect certain corporate transactions or changes in our capital structure. For a description of the awards granted under the plan to our named executive officers, see “Compensation Discussion and +Analysis—2017 Compensation Decisions—Long-Term Equity-Based Incentive Awards—Restricted Stock Unit Awards” above. On April 1, 2018, an aggregate of 2,933,569 shares of restricted common stock and restricted stock units had +been granted under this plan. There were 2,653,083 shares available for future grants under this plan as of April 1, 2018. +In the event of a +transaction involving a change in control (as defined in the plan) of the Company, a dissolution or liquidation of the Company, an exchange of shares or any corporate separation or division, including, but not limited to, a split-up, a split-off or a spin-off, or a sale, in one transaction or a series of related transactions, of all or substantially all of +our assets or a merger, consolidation, or reverse merger in which we are not the surviving entity, then all outstanding stock awards under our 2013 Restated Stock Incentive Plan may, in the sole discretion of the plan administrator, be assumed, +continued, or substituted for by any surviving or acquiring entity (or its parent company), or may be cancelled either with or without consideration for the vested portion of the awards. In the event an option award would be cancelled without +consideration paid to the extent vested, the option award recipient may exercise the option award in full or in part for a period of ten days. The plan administrator may also exercise its discretionary authority to accelerate the vesting of an award +under our 2013 Restated Stock Incentive Plan in the event of a change in control. +2014 Executive Annual Incentive +Compensation Plan +The 2014 Annual Incentive Compensation Plan, or Annual Incentive Plan, was approved by our board of directors on April 1, 2014 +and by our stockholders at the 2014 Annual Meeting on June 11, 2014. Our executive officers and selected employees and those of our subsidiaries are eligible to receive awards under the Annual Incentive Plan. The Annual Incentive Plan provides +for awards of incentive compensation that are contingent on the attainment of specific performance targets. Under the Annual Incentive Plan, the compensation committee, as the plan administrator, establishes the performance targets for each award +and the performance period during which the performance is to be measured, which will generally be our fiscal year. Performance targets may include a minimum level of performance below which no payment will be made, levels of performance at which +specified percentages of the award will be paid, and a maximum level of performance above which no additional award will be paid. The plan administrator must adopt the performance targets and criteria for awards granted to executive officers subject +to the limits of Section 162(m) of the Code, whom we refer to as Covered Employees, no later than the earlier of: +• +90 days after the beginning of the performance period, or +• +the time when 25% of the performance period has elapsed. +In addition, award amounts to be paid to any Covered +Employee for any one year may not exceed the lesser of: (i) 300% of base salary at the time the award is established, or (ii) $6.0 million. Individual awards may be subject to lesser limits as specified in the discretion of the +compensation committee. +46 +Table of Contents +Performance targets for each award will be based on pre-established +performance factors, which may include any or all of the following, individually or in combination: +• +revenue; +• +net sales; +• +operating income; +• +earnings before all or any of interest, taxes, depreciation and/or amortization (“EBIT,” “EBITA” or “EBITDA”); +• +growth of oil and natural gas production; +• +growth of estimated or proved reserves; +• +capital efficiency based on revenue per barrel of oil equivalent (“BOE”) produced; +• +lease operating expenses; +• +general and administrative expenses; +• +net cash provided by operating activities or other cash flow measurements; +• +working capital and components thereof; +• +return on equity or average stockholders’ equity; +• +return on assets; +• +market share; +• +net or gross sales measured by product line, territory, one or more customers, or other category; +• +stock price; +• +earnings per share; +• +earnings from continuing operations; +• +net worth; +• +credit rating; +• +levels of expense, cost or liability by category, operating unit, or any other delineation; or +• +any increase or decrease of one or more of the foregoing over a specified period. +These performance factors +may relate to the performance of the Company or the performance of a business unit, product line, territory or any combination of these. Performance targets for employees who are not executive officers may also be based on other additional objective +or subjective performance criteria established by the plan administrator. +The plan administrator may at any time establish additional conditions and +terms of payment of awards, including additional financial, strategic or individual goals, which may be objective or subjective. The plan administrator may exercise negative discretion to reduce the amount of an award, but may not adjust upwards the +amount payable pursuant to any award to a Covered Employee, nor may it waive the achievement of the performance target requirement for any Covered Employee, except in the case of the death or disability of the participant or a change in control of +the Company. +Unless the plan administrator provides otherwise, a participant must be employed by us on the date that awards are paid to receive an award +payment, except in the case of death or disability. If a participant dies or becomes disabled during a performance period, the participant (or the participant’s beneficiary) will receive a pro-rated +47 +Table of Contents +award payment at the same time all other awards are paid for the performance period. In the event of a change in control, each named executive officer will be paid the target award amount (mid-point of any specified range of potential award payment amount) based on the assumption that the performance target was attained at the target level (mid-point of any +specified range of performance targets) for the entire performance period. The target award amount will be paid within ten (10) days following the consummation of the change in control transaction. +Before payment of any award to a Covered Employee, our compensation committee must certify in writing that the performance target requirement for such award +was met. +The plan administrator may at any time amend the Annual Incentive Plan, subject to approval by our stockholders to the extent stockholder +approval is necessary to continue to qualify as “performance-based compensation” under Section 162(m) of the Code (as in effect prior to January 1, 2018). The plan administrator may at any time terminate the Annual Incentive Plan +in whole or in part. +Our board of directors has delegated its authority to administer the Annual Incentive Plan to the compensation committee, to whom we +refer as the plan administrator. The compensation committee is expected to consist solely of two or more “outside directors” within the meaning of Section 162(m) of the Code (as in effect prior to January 1, 2018). The plan +administrator has the authority to administer the Annual Incentive Plan and to exercise all the powers and authorities either specifically granted to it under the Annual Incentive Plan or necessary or advisable in the administration of the Annual +Incentive Plan, including (but not limited to) the following: +• +to interpret the Annual Incentive Plan and any award; +• +to prescribe rules relating to the Annual Incentive Plan; +• +to determine the persons to receive awards; +• +to determine the terms, conditions, restrictions and performance criteria, including performance factors and performance targets, relating to any award; +• +to accelerate an award that is designed not to be deferred compensation subject to Code Section 409A (after the attainment of the applicable performance target or targets); +• +to adjust performance targets in recognition of specified events such as unusual or non-recurring events affecting us or our financial statements, including certain asset +dispositions, cessation of operations resulting from a natural disaster, or in response to changes in applicable laws, regulations, or accounting principles as specified in the Annual Incentive Plan or in the performance targets established for any +performance period; +• +to waive restrictive conditions for an award (but not performance targets); and +• +to make any other determinations that may be necessary or advisable for administration of the Annual Incentive Plan. +Federal Income Tax Consequences of the Annual Incentive Plan. +Under federal income tax laws currently in effect: +Participants +in the Annual Incentive Plan will recognize in the year of payment ordinary income equal to the award amount, which is subject to applicable income and employment tax withholding by us (including the additional tax of 0.9% imposed on wages in excess +of $200,000 under Section 3101(b)(2) of the Code). Under current regulations and guidance, we expect that awards under the Annual Incentive Plan will not be subject to Section 409A of the Code, which imposes restrictions on nonqualified +deferred compensation arrangements and penalizes participants for violating these restrictions. +48 +Table of Contents +Section 162(m) of the Code imposes a $1.0 million annual limit on the amount of compensation that +we may deduct for federal income tax purposes with respect to our chief executive officer and each of our three highest compensated officers (other than our chief executive officer and our chief financial officer), and, effective as of +January 1, 2018, our chief financial officer and certain former named executive officers. For 2017 and prior years, the Annual Incentive Plan was intended to qualify for an exception under Section 162(m) for “performance-based +compensation.” As a result of new tax legislation enacted on December 22, 2017, this exception is not available for taxable years beginning after December 31, 2017, unless such performance-based compensation qualifies for certain +transition relief contemplated in the new tax legislation. We expect that we will be entitled to a tax deduction for 2017 in connection with the payment of each award under the Annual Incentive Plan in an amount equal to the ordinary income realized +by the participant without regard to the $1.0 million annual deduction limitation under Section 162(m). As a result of the new tax legislation, compensation paid in excess of $1.0 million to individuals who, after December 31, +2017, are subject to Section 162(m), is not expected to be deductible under Section 162(m) of the Code. Therefore, awards under our Annual Incentive Plan originally designed with the intent that such awards qualify as +“performance-based compensation” may not be deductible in the future. +EQUITY COMPENSATION PLAN INFORMATION +The following table sets forth, as of December 31, 2017, certain information with respect to all compensation plans under which equity securities are +authorized for issuance. +Plan Category +Number of securities to +be issued upon exercise +of outstanding options, +warrants and rights +(a)(1)(2) +Weighted average +exercise price of +outstanding options, +warrants and rights +(b)(3) +Number of securities +remaining available +for future issuance +under equity +compensation plans +(excluding +securities +reflected in column +(a)) (c) +Equity compensation plans approved by security holders(1) +976,027 +$ +— +2,793,124 +(1) +Refers to our 2013 Restated Stock Incentive Plan (which amended and restated our Amended and Restated 2005 Stock Incentive Plan) and our 1999 Stock Option Plan. +(2) +Includes an aggregate of 976,027 unvested restricted stock units and shares of unvested restricted common stock granted under our 2013 Restated Stock Incentive Plan. +(3) +No options were outstanding as of December 31, 2017, and neither restricted stock units nor shares of restricted common stock have an exercise price. +2018 Employment Agreement with Our Chief Executive Officer, Amending and Restating the 2014 Employment Agreement +2014 Employment Agreement +We +entered into an amended and restated employment agreement with Mr. Moore on April 22, 2014 in connection with his promotion as our CEO and amended and restated that agreement as of April 29, 2015, as so amended and restated, that +agreement is referred to as the 2014 employment agreement. The 2014 employment agreement had an initial three-year term commencing effective April 22, 2014, and automatically extended for successive +one-year periods. It also provided for an initial annual base salary of $400,000 that could be increased from time to time by the compensation committee, but not decreased. The compensation committee +subsequently increased Mr. Moore’s annual base salary to $460,000 for 2015 and agreed to continue to increase Mr. Moore’s annual base salary during 2016, 2017 and 2018 so as to achieve alignment between the 25th and 50th +percentile of our compensation peer group disclosed in our annual proxy statement (as it may be adjusted from time to time). Mr. Moore was also entitled to receive a target annual bonus of 150% of his base salary upon achievement +49 +Table of Contents +of performance goals established by the compensation committee. Under the 2014 employment agreement, the annual bonus could be less than, or more than, the 150% target, up to a maximum of 300% of +base salary in the event performance exceeds the target level established by the compensation committee. The 2014 employment agreement also provided that he would be entitled to receive an award of restricted common stock or other equity award with +an equivalent value equal to 500% of his annual base salary. Mr. Moore was also entitled to five weeks of paid vacation, to participate in such medical insurance and other welfare benefit plans that we establish from time to time, a $500,000 +life insurance policy and to the use of a company vehicle. +Mr. Moore’s employment with us +is “at-will,” meaning that either we or Mr. Moore may terminate the employment relationship at any time and for any reason, with or without notice. However, under the terms of the 2014 +employment agreement, if (i) we terminated Mr. Moore without “cause,” including non-renewal, (ii) Mr. Moore terminated his employment for “good reason” or +(iii) Mr. Moore’s employment was terminated due to death or disability, then, subject to Mr. Moore signing and delivering a general release of any and all claims against us, we would be obligated to: +• +make a lump sum payment on the termination date equal to all accrued and unpaid salary and other compensation payable to Mr. Moore (including vacation and sick pay) with respect to services rendered through the +termination date; +• +within 60 days of termination, make a lump sum payment equal to 225% of the amount Mr. Moore would have earned as base salary during the two-year period following +the termination date had Mr. Moore’s employment not been terminated; +• +immediately issue to Mr. Moore on a fully vested basis the restricted stock grants that he would have been entitled to during the two-year period following the termination +date had Mr. Moore’s employment not been terminated: +• +vest all restricted stock, restricted stock units, stock options and stock appreciation rights granted to Mr. Moore that would have vested during the three-year period following the termination date solely as a +result of Mr. Moore’s continued service to the Company and, with respect to any stock options and stock appreciation rights, they would remain exercisable in accordance with the terms applicable to such options or rights; +• +continue providing a Company-owned car for two years following termination; and +• +pay the premiums for certain continuing health care benefits for Mr. Moore and his family for a period of 18 months or until Mr. Moore becomes eligible for group health plan benefits with another employer. +Under the terms of the 2014 employment agreement, in the event Mr. Moore was terminated for “cause” or Mr. Moore +voluntarily terminated his employment other than for “good reason,” Mr. Moore would have been entitled to a lump sum payment on the termination date equal to all accrued and unpaid salary and other compensation payable to +Mr. Moore (including vacation and sick pay) with respect to services rendered through the termination date and, subject to Mr. Moore signing a general release of any and all claims against us and, as consideration for such release, an +amount equal to his base salary amount in effect immediately preceding such termination prorated based on the number of days between the first day of the contract year and the termination date, divided by 365. +Under the terms of the 2014 employment agreement, if Mr. Moore’s employment with the Company or its successor was terminated on or before the second +anniversary of the date of occurrence of a “change of control” either (i) by the Company or its successor other than for “cause,” (ii) by Mr. Moore for “good reason,” or (iii) as a result of +Mr. Moore’s death or disability, then, in addition to the benefits described under the heading “—Rights Upon Termination Without Cause, Resignation for Good Reason or Death or Disability” above: +• +all restricted stock and restricted stock units that had then been granted to Mr. Moore by the Company prior +to the date of the amended and restated employment agreement and that would have +50 +Table of Contents +vested at any time after the date of Mr. Moore’s termination solely as a result of Mr. Moore’s continued service to the Company will immediately vest on the date of +termination; and +• +all stock options and stock appreciation rights that had then been granted to Mr. Moore by the Company prior to the date of the amended and restated employment agreement and that would have vested at any time after +the date of Mr. Moore’s termination solely as a result of his continued service to the Company will immediately vest and become exercisable on the date of termination. +For purposes of the 2014 employment agreement, “cause” was generally defined as: +• +Mr. Moore’s conviction (including any plea of guilty or no contest) of any felony involving the embezzlement, theft or misappropriation of monies or other property, of the Company or otherwise or any crime of +moral turpitude; +• +gross misconduct in the performance of Mr. Moore’s duties; or +• +the repeated failure by Mr. Moore (except by reason of disability) to render full and proper services as required by the terms of Mr. Moore’s employment after failure to cure such failure within 30 days +after receiving written notice from the Company or the board of directors detailing the alleged failure. +“Good reason,” as used +in the 2014 employment agreement, was defined as (i) a material diminution in the duties, authority or responsibilities of Mr. Moore or a material breach of the employment agreement by the Company, or (ii) requiring Mr. Moore to +relocate his principal place of employment to a location that is more than 35 miles from the location of the Company’s principal office in the Oklahoma City area as of the effective date of the employment agreement, provided that the Company +fails to cure such material diminution, breach or relocation within 30 days of receipt of a written notice from Mr. Moore. +Under the terms of the +2014 employment agreement, a “change of control” was deemed to have occurred upon the occurrence of any of the following: +• +any consolidation or merger of the Company into or with another person or entity pursuant to which shares of the Company’s common stock would be converted into cash, securities or other property, other than any +consolidation or merger of the Company in which the persons who were stockholders of the Company immediately prior to the consummation of such consolidation or merger are the beneficial owners, immediately following the consummation of such +consolidation or merger, of more than 50% of the combined voting power of the then outstanding voting securities of the person or entity surviving or resulting from such consolidation or merger; +• +any sale, lease or other transfer (in one transaction or a series of related transactions) of all or substantially all of the assets of the Company; or +• +the approval by the stockholders of the Company of any plan or proposal for the liquidation or dissolution of the Company. +2018 Employment Agreement +On +April 30, 2018, we amended and restated the 2014 employment agreement with Mr. Moore, as so amended and restated, the 2018 employment agreement. Similar to the 2014 employment agreement, the 2018 employment agreement provides for a +three-year term commencing effective April 30, 2018, which automatically extends for successive one-year periods unless we or Mr. Moore elect to not extend the term by giving written notice to the +other party at least ninety days prior to the end of any then-current term. The 2018 employment agreement is substantially similar to the 2014 employment agreement, except as follows: +• +Base Salary . Mr. Moore’s base salary was increased from $700,000 to $750,000, however, the requirement that his annual base salary be increased to achieve and maintain alignment between the 25 th and 50 th percentiles of our compensation peer group was eliminated. +51 +Table of Contents +• +Annual Incentive Bonus . The performance-based annual incentive bonus target percentage of 150% of base pay up to a maximum of 300% was eliminated. Under the 2018 employment agreement, Mr. Moore’s target +annual incentive bonus amount will be determined by the compensation committee each year as a percentage of Mr. Moore’s annual base salary. For 2018, such target amount was set at 120% of his base salary upon achievement of performance +goals established by the compensation committee, up to a maximum of 240% of his base salary. +• +Long-Term Equity Awards . Mr. Moore’s right to receive an annual equity award equal to 500% of his annual base salary was eliminated following his grant in April 2018. In lieu of the specified amount of +annual equity awards, Mr. Moore will be entitled to receive equity awards under our equity compensation plans at the discretion of the compensation committee. +• +Rights Upon Termination Without Cause, Resignation for Good Reason or Death or Disability . +• +Within 60 days of termination, we would be obligated to make a lump sum payment equal to 200% of Mr. Moore’s then current base salary and target bonus amount, rather than 225% of Mr. Moore’s base +salary during the two-year period following the termination date; +• +if the termination occurs after December 31, 2018, we would no longer be obligated to immediately issue to Mr. Moore on a fully vested basis any equity awards; +• +we would no longer be obligated to provide Mr. Moore with a Company-owned car following his termination; and +• +we would be obligated to make a lump sum payment of $10,800 to enable Mr. Moore to obtain six months of additional health insurance coverage beyond the 18-month period for +continuing benefits under the Company’s health care plan. +• +Rights Upon Termination upon Change of Control : +• +the lump sum payment we would be required to make within 60 days of termination described under the heading “—Rights Upon Termination Without Cause, Resignation for Good Reason or Death or Disability” +above would be calculated on a 300% multiplier (no similar multiplier was provided in the 2014 employment agreement); +• +a double-trigger vesting provision for equity awards granted on or after the date of the 2018 employment agreement was implemented, in contrast to single-trigger change of control vesting provisions contained in the +2014 employment agreement; and +• +the lump sum payment we would be obligated to pay Mr. Moore to obtain health coverage in excess of the benefits under the continuing health care plan described under the heading “—Rights Upon Termination +Without Cause, Resignation for Good Reason or Death or Disability” above would be $32,400, which would enable Mr. Moore to obtain 18 months additional health coverage in excess of the benefits under the continuing health care plan. +• +Signing Bonus . To provide an incentive to Mr. Moore to enter into the 2018 employment agreement and reduce or eliminate certain compensation elements under the 2014 employment agreement, we paid +Mr. Moore a one-time signing bonus of $500,000. +Employment +Agreements with our Chief Financial Officer, Senior Vice President of Geosciences, Senior Vice President of Drilling and Senior Vice President of Operations +In 2017, we entered into an employment agreement with each of Keri Crowell, our Chief Financial Officer, Stuart Maier, our Senior Vice +President of Geosciences, Robert Jones, our Senior Vice President of Drilling and Mark Malone, our Senior Vice President of Operations, each effective as of January 1, 2017. Each employment agreement provides for a one-year term commencing as of January 1, 2017, which we refer to as the Initial Period, that will automatically be extended for successive one-year periods unless we or +the executive elects to not extend the term by giving written notice to the other party at least 30 days prior to the end of the Initial +52 +Table of Contents +Period or any anniversary thereof. Ms. Crowell, Mr. Maier, Mr. Jones and Mr. Malone receive annual base salary of $350,000, $400,000, $340,000 and $340,000, respectively, +subject to periodic review by the compensation committee and adjustment from time to time. In accordance with the respective agreements, the compensation committee determined to increase the base salaries of Ms. Crowell, Mr. Maier, +Mr. Jones and Mr. Malone for 2018 by 3.5% to $362,300, $414,000, $351,900 and $351,900, respectively. Subject to the achievement of certain performance goals as determined by our board of directors or the compensation committee for each +fiscal year, each of Ms. Crowell, Mr. Maier, Mr. Jones and Mr. Malone is eligible to participate in our annual cash incentive program, with an opportunity to receive an annual bonus (payable in a single lump sum), based on +criteria determined in the discretion of the board of directors or the compensation committee. For 2018, the compensation committee set Ms. Crowell’s target bonus at 80% of her annual base salary, with a maximum target bonus of up to 200%, +of her target bonus, Mr. Maier’s target bonus at 60% of his annual base salary, with a maximum target bonus of up to 200% of his target bonus, Mr. Jones’s target bonus at 60% of his annual base salary, with a maximum target bonus +of up to 200% of his target bonus, and Mr. Malone’s target bonus at 60% of his annual base salary, with a maximum target bonus of up to 200% of his target bonus provided each such executive remains employed by us on the payment date. Each +such executive is also entitled to participate in any life, disability, health insurance and 401(k) plans and other similar plans that we establish from time to time for our executive employees. +Under his or her employment agreement, each executive may receive, as determined by the board of directors or the compensation committee in +its sole discretion, an equity award under our long term incentive plan or plans, subject to the terms and conditions thereof and any equity award agreement. Any equity awards granted to such executive, any proceeds of any equity awards that +previously have been sold, transferred or otherwise disposed of, and any incentive bonus award will be subject to clawback by us, now or in the future, the Dodd-Frank Act and the SOX Act, each as amended, and rules, regulations and binding, +published guidance thereunder. +Each executive has agreed to certain restrictive covenants in his or her employment agreement, including +such executive’s agreement not to interfere with any of our employees, suppliers, vendors, joint venturers or licensors and not to solicit our customers or employees, in each case during such executive’s employment with us and for a period +of two years thereafter, (ii) not to disclose our confidential information or trade secrets and (iii) not to compete with us while using our trade secrets. We may terminate each such executive’s employment at any time for any or no +reason, in our sole discretion, upon not less than 10 days’ advance written notice to the executive. The executive may terminate the employment relationship upon 10 days’ advance written notice to us. However, if we terminate such +executive’s employment without “cause,” then he or she will be entitled to (i) any accrued benefits (defined below), (ii) severance pay in an amount equal to one months’ base salary for each full year of employment with us, +not to exceed 12 months, and (iii) COBRA coverage as required by applicable law; provided that, in the case of clauses (ii) and (iii), the executive continues to comply with the restrictive covenants described above and the executive +executes a full general release in our favor. In the event the executive’s employment terminates upon his or her death or disability, the executive or his or her estate will be entitled to any accrued benefits. In the event such +executive’s employment is terminated for “cause” (as defined below) or as a result of non-extension of his or her employment agreement, our obligations under such agreement will terminate, +except for any accrued benefits. +If the executive’s employment with us or our successor is terminated on or before the second +anniversary of the date of occurrence of a “change of control” (as defined below) other than for “cause,” then, in addition to the benefits described above, (i) all equity awards that have been granted to such executive that +would have vested at any time after the date of his or her termination solely as a result of her continued service to the Company will immediately vest on the date of termination, and (ii) such executive will be entitled to receive a lump sum +payment equal to his or her severance payment described above times two, plus an amount equal to his or her target annual bonus during the severance period and the continuation of COBRA coverage for 18 months. +53 +Table of Contents +Under the employment agreements with each of Ms. Crowell, Mr. Maier, Mr. Jones and Mr. +Malone: +“Accrued benefits” are (i) any base salary through the date of termination, (ii) reimbursement for any +unreimbursed business expenses incurred through the date of termination, (iii) any accrued but unused vacation time in accordance with the Company’s policy and (iv) all other payments, benefits or fringe benefits to which the +executive may be entitled under the terms of any applicable compensation arrangement or benefit, equity or fringe benefit plan or program or grant or his or her employment agreement. +A “change of control” will be deemed to have occurred upon the occurrence of any of the following: (i) any consolidation or +merger of us into or with another person or entity pursuant to which our shares of common stock would be converted into cash, securities or other property, other than any consolidation or merger in which the persons who were our stockholders +immediately prior to the consummation of such consolidation or merger are the beneficial owners, immediately following the consummation of such consolidation or merger, of more than 50% of the combined voting power of the then outstanding voting +securities of the person or entity surviving or resulting from such consolidation or merger; (ii) any sale, lease or other transfer (in one transaction or a series of related transactions) of all or substantially all of our assets; or +(iii) the approval by our stockholders of any plan or proposal for our liquidation or dissolution. +“Cause” is generally +defined as such named executive officer’s (i) gross negligence, gross incompetence or misconduct in performing the executive’s duties, (ii) failure to perform, without proper legal reason, such executive’s duties and +responsibilities to us or any of our affiliates, (iii) material breach of such executive’s employment agreement or any agreement or corporate policy or code of conduct established by us or our affiliates, (iv) conduct that is, or +could reasonably be expected to be, materially injurious to us or any of our affiliates, (v) act of theft, fraud, embezzlement or misappropriation against or breach of a fiduciary duty to us or any of our affiliates or (vi) conviction of, +or a plea of guilty or no contest to, or receipt of adjudicated probation or deferred adjudication in connection with, a crime involving fraud, dishonesty or moral turpitude or any felony (or a crime of similar import in a foreign jurisdiction). +Potential Payments Upon Termination, Resignation or Change of Control +The following tables provide information regarding potential payments as of December 31, 2017 to each of our named executive officers with whom we had an +employment agreement as of December 31, 2017 in connection with certain termination events, including a termination related to a change of control of the Company. +Benefits and Payments Upon +Termination of +Michael G. +Moore(1) +Voluntary +Resignation +(No +Good +Reason) +Resignation +for Good +Reason/ +Termination +Without +Cause or +Upon Death +or Disability +Termination +for Cause +Termination +Following +Change of +Control +Severance Payments +$ +700,000(2) +$ +10,150,000(3) +$ +700,000(2) +$ +10,150,000(3) +Long-Term Incentives: +Unvested Restricted Stock +— +$ +2,346,130(4) +— +$ +2,346,130(5) +Unvested Stock Options/SARs +— +— +— +— +Benefits Continuation +— +$ +22,395(6) +— +$ +22,395(6) +Other +— +$ +36,201(7) +— +$ +36,201(7) +Total +$ +700,000(2) +$ +12,554,726 +$ +700,000(2) +$ +12,554,726 +(1) +The executive’s base salary as of December 31, 2017 was $700,000. Information in this table assumes a termination date of December 31, 2017 and a price per share of our common stock of $12.76 (the closing +market price per share on December 29, 2017, the last trading day of 2017), and applies the terms of the 2014 employment agreement in effect as of December 31, 2017. +54 +Table of Contents +(2) +Upon a voluntary termination other than for Good Reason or a termination for Cause, the executive is entitled to receive a lump sum payment on the termination date equal to all accrued and unpaid salary and other +compensation payable to the executive (including vacation and sick pay) with respect to services rendered through the termination date and, subject to the executive signing a general release of all claims against us, in consideration for such +release, an amount equal to his base salary amount in effect immediately preceding such termination prorated based on the number of days between the first day of the contract year and the termination date, divided by 365. +(3) +Reflects receipt by the executive, subject to his execution and delivery of a general release of all claims against us, of (i) a lump sum payment on the termination date equal to all accrued and unpaid salary and +other compensation payable to Mr. Moore (including vacation and sick pay) with respect to services rendered through the termination date, (ii) within 60 days of termination, a lump sum payment equal to 225% of the amount Mr. Moore +would have earned as base salary during the two-year period following the termination date had Mr. Moore’s employment not been terminated and (iii) the issuance, on a fully vested basis, of +shares of common stock with a value equal to the equity awards that he would have been entitled to during the two-year period following the termination date had Mr. Moore’s employment not been +terminated. +(4) +Reflects immediate vesting on the termination date of all restricted stock and any restricted stock units, stock options and stock appreciation rights granted to Mr. Moore that would have vested during the +three-year period following the termination date solely as a result of Mr. Moore’s continued service to the Company, with any such stock options and stock appreciation rights remaining exercisable in accordance with the terms applicable to +such options or rights. +(5) +Contemplates termination of Mr. Moore’s employment with the Company or its successor on or before the second anniversary of the date of occurrence of a “change of control” either (i) by the +Company or its successor other than for “cause,” (ii) by Mr. Moore for “good reason” or (iii) as a result of Mr. Moore’s death or disability and reflects (a) immediate vesting on the termination date of +all restricted stock and any restricted stock units granted to Mr. Moore that would have vested at any time following the termination date solely as a result of Mr. Moore’s continued service to the Company and (b) immediate +vesting and exercisability of all stock options and stock appreciation rights granted to Mr. Moore by the Company prior to the date of his amended and restated employment agreement that would have vested at any time after the date of +Mr. Moore’s termination solely as a result of his continued service to the Company. +(6) +Reflects the value of Company-paid continuation coverage under the Company’s group health plans and under the Consolidated Omnibus Budget Reconciliation Act of 1985 for the executive and his eligible family members +for a period of 18 months following the date of termination. +(7) +Reflects the value of a Company-owned vehicle provided for the executive’s use for a period of two years following termination. +55 +Table of Contents +Benefits and Payments Upon +Termination of +the Following Executive Officers(1) +Termination +Without +Cause(6)(7) +Termination +Upon Death +or Disability(8) +Termination +for Cause(8) +Termination +Following +Change of +Control(9) +Keri Crowell(2) +Severance Payments +$ +350,000 +$ +— +$ +— +$ +980,000 +Long-Term Incentives: +Unvested Restricted Stock +$ +— +— +— +$ +612,493 +Unvested Stock Options/SARs +— +— +— +— +Benefits Continuation +$ +7,153 +— +— +$ +7,153 +Total +$ +357,153 +$ +— +$ +— +$ +1,599,646 +Stuart Maier(3) +Severance Payments +$ +400,000 +$ +— +$ +— +$ +1,040,000 +Long-Term Incentives: +Unvested Restricted Stock +— +— +— +$ +314,764 +Unvested Stock Options/SARs +— +— +— +— +Benefits Continuation +$ +7,153 +— +— +$ +10,730 +Total +$ +407,153 +$ +— +$ +— +$ +1,365,494 +Robert Jones(4) +Severance Payments +$ +85,000 +$ +— +$ +— +$ +221,000 +Long-Term Incentives: +Unvested Restricted Stock +$ +— +— +— +$ +348,795 +Unvested Stock Options/SARs +— +— +— +— +Benefits Continuation +$ +5,381 +— +— +$ +5,381 +Total +$ +90,381 +$ +— +$ +— +$ +575,176 +Mark Malone(5) +Severance Payments +$ +85,000 +$ +— +$ +— +$ +221,000 +Long-Term Incentives: +Unvested Restricted Stock +$ +— +— +— +$ +348,795 +Unvested Stock Options/SARs +— +— +— +— +Benefits Continuation +$ +5,381 +— +— +$ +5,381 +Total +$ +90,381 +$ +— +$ +— +$ +575,176 +(1) +Information in this table assumes a termination date of December 31, 2017 and a price per share of our common stock of $12.76 (the closing market price per share on December 29, 2017, the last trading day of +2017). +(2) +Ms. Crowell’s base salary as of December 31, 2017 was $350,000. The information in this table for Ms. Crowell applies the terms of her employment agreement, effective as of January 1, 2017. +(3) +Mr. Maier’s base salary as of December 31, 2017 was $400,000. The information in this table for Mr. Maier applies the terms of his employment agreement effective as of January 1, 2017. +(4) +Mr. Jones’s base salary as of December 31, 2017 was $340,000. The information in this table for Mr. Jones applies the terms of his employment agreement effective as of January 1, 2017. +(5) +Mr. Malone’s base salary as of December 31, 2017 was $340,000. The information in this table for Mr. Malone applies the terms of his employment agreement effective as of January 1, 2017 +(6) +If we terminate the executive’s employment without “cause,” the executive will be entitled to his +or her monthly base salary, paid monthly for the “Severance Period,” provided in each case that the executive (i) continues to comply with the restrictive covenants described above regarding confidential information and trade secrets, +(ii) continues to comply with the provisions relating to non-solicitation and non-interference in the Company’s business and (iii) executes a full general +release in our favor . The executive will also be entitled to his or her Accrued Benefits (as defined below). The “Severance Period” +56 +Table of Contents +for the executive is equal to one month for each full year of employment with the Company, not to exceed twelve months. As of December 31, 2017, Ms. Crowell, Mr. Maier, +Mr. Jones and Mr. Malone had twelve, nineteen, three and three full years of employment with the Company, respectively. +(7) +If we terminate the executive’s employment without “cause,” the executive will be entitled to the continuation of certain benefits paid by the Company. The “Benefits Continuation” reflects the +value of Company-paid continuation coverage under the Company’s group health plans and under the Consolidated Omnibus Budget Reconciliation Act of 1985, or COBRA, for the executive and his or her eligible dependents for such executive’s +Severance Period following the date of termination. The Company’s obligation to pay this amount is subject to the executive’s timely election of continuation of coverage and the executive’s continued copayment of premiums. The +executive must also (i) continue to comply with the restrictive covenants described above regarding confidential information and trade secrets, (ii) continue to comply with the provisions relating to +non-solicitation and non-interference in the Company’s business and (iii) execute a full general release in our favor. +(8) +If the executive’s employment terminates on account of such executive’s death or disability, if we terminate the executive’s employment for cause, or if either the Company or the executive elects not to +extend the term of the employment agreement prior to an automatic renewal date, the executive is entitled to receive a payment from the Company equal to all accrued and unpaid salary payable to the executive (including vacation pay) with respect to +services rendered through the termination date, any unreimbursed business expenses through the termination date and all other payments, benefits or fringe benefits the executive may be entitled to under the terms of any applicable compensation +arrangement, benefit plan or grant (the foregoing, the “Accrued Benefits”). In the case of death or disability, this amount will be paid in a lump sum within 60 days following termination of employment. +(9) +If the executive’s employment with us or our successor is terminated on or before the second anniversary of the date of occurrence of a “change of control” (as defined above) by us or our successor other +than for “cause,” then (i) all equity awards that have been granted to such executive that would have vested at any time after the date of such executive’s termination solely as a result of such executive’s continued service +to the Company will immediately vest on the date of termination, (ii) the executive will be entitled to receive a lump sum payment from the Company equal to his or her monthly base salary rate times such executive’s Severance Period times +two, plus an amount equal to the executive’s target annual bonus during the Severance Period and (iii) the executive will be entitled to the continuation of COBRA coverage by the Company for the Severance Period, up to a term of 18 months. +The executive will also be entitled to their Accrued Benefits The executive must also (a) continue to comply with the restrictive covenants described above regarding confidential information and trade secrets, (b) continue to comply with +the provisions relating to non-solicitation and non-interference in the Company’s business and (c) execute a full general release in our favor. +Termination of Employment Agreement with our Former Chief Financial Officer +In connection with his resignation as the Company’s Chief Financial Officer effective January 4, 2017, Mr. Gaydosik’s employment agreement +was terminated effective as of that date. As provided in such employment agreement, upon resignation, Mr. Gaydosik was entitled only to his earned but unpaid salary, if any, through the date of resignation. Any unvested awards granted to +Mr. Gaydosik under the Company’s equity incentive plan lapsed. +CEO Pay Ratio Disclosure +Pursuant to Item 402(u) of Regulation S-K, we are disclosing the pay ratio and supporting information comparing the +median of the annual total compensation of our employees (including full-time, part-time, seasonal and temporary employees) other than Michael Moore, our CEO and President, and the annual total compensation of Mr. Moore. The pay ratio is +calculated in a manner consistent with Item 402(u) of Regulation S-K. +57 +Table of Contents +For the year ended December 31, 2017, our last completed fiscal year: +• +The median of the annual total compensation of all of our employees, other than Mr. Moore was $90,439. +• +The annual total compensation of Mr. Moore was $4,738,156. +Based on this information, for 2017 the ratio +of the annual total compensation of Mr. Moore, our CEO and President, to the median of the annual total compensation of all other employees was 52:1. +We selected December 31, 2017 as the date upon which we identified the “median employee.” To identify the median employee, we examined the +Medicare Taxable Earnings as reported on Internal Revenue Service Form W-2 (Box 5) for 2017 for all individuals employed by us on December 31, 2017 (other than Mr. Moore). +Once we identified our median employee, we calculated that employee’s annual total compensation for 2017 in the same manner that we determined the total +compensation of our named executive officers for purposes of the Summary Compensation Table set forth above. This resulted in an annual total compensation of $90,439 for the identified employee for the year ended December 31, 2017. The +calculation of the total compensation for Mr. Moore is included in the Summary Compensation Table set forth above. We made no material assumptions, adjustments, or estimates to identify the median employee or to determine total compensation, +and we did not annualize the compensation for any employees that were not employed by us the entire year. +Stock Ownership +Holdings of Major Stockholders +The following table sets forth certain information regarding the beneficial ownership as of April 1, 2018 of shares of our common stock by each person or +entity known to us to be a beneficial owner of 5% or more of our common stock. +58 +Table of Contents +MAJOR STOCKHOLDER TABLE +Name and Address of Beneficial Owner(1) +Amount and +Nature of +Beneficial +Ownership +Percent of +Class(1) +Vitruvian II Woodford, LLC +15,068,360 +(2) +8.6 +% +2445 Technology Forest Blvd., Suite 1100 +The Woodlands, Texas 77381 +Vitruvian Exploration II Holdings, LLC +15,068,360 +(3) +8.6 +% +1401 McKinney Street, Suite 2700 +Houston, Texas 77010 +BlackRock, Inc. +14,234,791 +(4) +8.2 +% +55 East 52nd Street +New York, NY 10055 +The Vanguard Group +13,243,282 +(5) +7.6 +% +100 Vanguard Blvd. +Malvern, Pennsylvania 19355 +(1) +Beneficial ownership is determined in accordance with SEC rules. The percentage of shares beneficially owned is based on 174,523,685 shares of common stock outstanding as of April 1, 2018, including 1,000,198 +shares of restricted stock awarded under our 2013 Restated Stock Incentive Plan or our Amended and Restated 2005 Stock Incentive Plan, but not yet vested. +(2) +Based solely on Schedule 13G/A filed with the SEC on February 8, 2018 by Vitruvian II Woodford, LLC, or Vitruvian. Vitruvian reported sole dispositive power and sole voting power of 15,068,360 shares of common +stock. +(3) +Based solely on Schedule 13G/A jointly filed with the SEC on February 8, 2018 by Vitruvian Exploration II Holdings, LLC, or VEX Holdings, Vitruvian Exploration II, LLC, or VEX, +Q-VEX II, LP, or Q-VEX, QEM V, LLC, or QEM, and S. Wil VanLoh, Jr. Each reporting person reported sole dispositive power and sole voting power of 15,068,360 shares of +common stock. The holdings reported represent the shares of common stock held by Vitruvian. VEX Holdings holds a majority of the capital interests of Vitruvian and has the right to appoint four of the six managers of the Vitruvian Board (such +managers referred to herein as the VEX Holdings Managers). Certain actions of Vitruvian, including certain dispositions, require the approval of the VEX Holdings Managers. VEX has the right to appoint a majority of the board of managers of VEX +Holdings. Q-VEX has the right to appoint a majority of the board of managers of VEX. QEM is the sole general partner of Q-VEX. Any decision taken by QEM to vote, or to +direct to vote, and to dispose, or to direct the disposition of, the Vitruvian Shares has to be approved by a majority of the members of the investment committee of QEM, which majority must include S. Wil VanLoh, Jr. Therefore, VEX Holdings, VEX, Q-VEX, QEM and S. Wil VanLoh, Jr. may be deemed to share voting and dispositive power over the Vitruvian Shares and may also be deemed to be the beneficial owners of such securities. +(4) +Based solely on Schedule 13G/A filed with the SEC on January 25, 2018 by BlackRock, Inc. BlackRock, Inc. reported sole voting power of 13,628,673 shares of common stock and sole dispositive power of 14,234,791 +shares of common stock. +(5) +Based solely on Schedule 13G/A filed with the SEC on February 9, 2018 by The Vanguard Group, or Vanguard. Vanguard reported sole voting power of 86,194 shares of common stock, sole dispositive power of 13,155,052 +shares of common stock, shared dispositive power of 88,230 shares of common stock and shared voting power of 15,183 shares of common stock. Vanguard Fiduciary Trust Company and Vanguard Investments Australia, Ltd., both wholly owned subsidiaries of +Vanguard, are the beneficial owners of 73,047 and 28,330 shares, respectively, of common stock. +59 +Table of Contents +Holdings of Officers and Directors +The following table sets forth certain information regarding the beneficial ownership as of April 1, 2018 of shares of our common stock by each of our +directors, by each named executive officer and by all directors and executive officers as a group: +Name of Beneficial Owner(1) +Amount and +Nature of +Beneficial +Ownership +Percent of +Class +Craig Groeschel(2) +18,389 +* +David L. Houston(2) +53,066 +* +C. Doug Johnson(2)(3) +19,883 +* +Scott E. Streller(2) +39,032 +* +Ben T. Morris(2) +21,192 +* +Paul D. Westerman(4) +25,488 +* +Deborah G. Adams(5) +2,898 +* +Michael G. Moore(6)(7) +187,807 +* +Keri Crowell(8)(9) +33,091 +* +Stuart Maier(10)(9) +21,743 +* +Robert Jones(11)(9) +16,492 +* +Mark Malone(12)(9) +13,412 +* +Aaron Gaydosik(13) +10,943 +* +Directors and Executive Officers as a Group (18 persons)(9) +550,929 +* +* +Less than 1%. +(1) +Beneficial ownership is determined in accordance with SEC rules. In computing percentage ownership of each person, shares of common stock subject to options held by that person that are exercisable as of April 1, +2018, or exercisable within 60 days of April 1, 2018, are deemed to be beneficially owned. These shares, however, are not deemed outstanding for the purpose of computing the percentage ownership of each other person. The percentage of shares +beneficially owned is based on 174,523,685 shares of common stock outstanding as of April 1, 2018, including 1,000,198 shares of restricted stock awarded under our 2013 Restated Stock Incentive Plan but not yet vested. Unless otherwise +indicated, all amounts exclude shares issuable upon the exercise of outstanding options and vesting of restricted stock units that that are not exercisable and/or vested as of April 1, 2018 or within 60 days of April 1, 2018. Except as +otherwise noted, each stockholder has sole voting and investment power with respect to the shares beneficially owned. +(2) +Includes 9,608 restricted stock units, which will vest on the earlier of June 8, 2018 and the date of the 2018 Annual Meeting of Stockholders, in each case if such director is in continuous service on such date. +(3) +Mr. Johnson holds 3,500 of these shares in a joint account owned by Mr. Johnson and his spouse, resulting in shared voting and dispositive power of such shares. +(4) +Includes 5,488 restricted stock units, which will vest on the earlier of June 8, 2018 and the date of the 2018 Annual Meeting of Stockholders if such director is in continuous service on such date. +Mr. Westerman shares voting and dispositive power of the other 20,000 shares with his spouse. +(5) +Includes 2,898 restricted stock units, which will vest on the earlier of June 8, 2018 and the date of the 2018 Annual Meeting of Stockholders if such director is in continuous service on such date. +(6) +Excludes (i) 24,868 shares of restricted stock granted under our 2013 Restated Stock Incentive Plan as a retention award in connection with his assumption of duties as interim Chief Executive Officer after the +retirement of Mr. Palm in February 2014, which award was rescinded when Mr. Moore was named our Chief Executive Officer, (ii) 20,184 unvested restricted stock units granted under our 2013 Restated Stock Incentive Plan, 10,092 of which vest +on each of March 10, 2019 and 2020 and (iii) 62,590 unvested restricted stock units, which vest on February 27, 2019. Mr. Moore has pledged 86,715 shares of common stock as collateral for a loan the proceeds from which were used to +pay taxes due upon the vesting of equity awards. +60 +Table of Contents +(7) +Excludes the 403,226 restricted stock units granted to Mr. Moore on April 30, 2018 described above under “Compensation Discussion and Analysis—2018 Compensation Program—2018 Restricted Stock Unit +Awards.” +(8) +Excludes (i) 5,334 shares of restricted stock, which vest on August 15, 2018, (ii) 6,000 unvested restricted stock units, which vest in three equal annual installments beginning on August 15, 2018 and (iii) +36,667 unvested restricted stock units, which vest in two approximately equal annual installments beginning on August 27, 2018. +(9) +Excludes the awards granted to certain of our named executive officers on April 18, 2018 described above under “Compensation Discussion and Analysis—2018 Compensation Program—2018 Restricted Stock +Unit Awards.” +(10) +Of these shares, 111 are held by the S. Maier Revocable Trust, of which Mr. Maier is the trustee. Excludes (i) 3,334 shares of restricted stock, which will vest on August 15, 2018 and (ii) 21,334 unvested +restricted stock units, which vest in two equal annual installments beginning on August 27, 2018. +(11) +Excludes (i) 4,001 unvested restricted stock units, which vest on August 15, 2018 and (ii) 23,334 unvested restricted stock units, which vest in two equal annual installments beginning on August 27, 2018. +(12) +Excludes (i) 4,001 unvested restricted stock units, which vest on August 15, 2018 and (ii) 23,334 unvested restricted stock units, which vest in two equal annual installments beginning on August 27, 2018. +(13) +Amount is as of March 31, 2016, the date of the last Form 4 filed by Mr. Gaydosik reporting ownership in the Company. Excludes an aggregate of 61,936 unvested restricted stock units and unvested shares of +restricted stock, all of which forfeited upon Mr. Gaydosik’s resignation effective January 4, 2017. Mr. Gaydosik is no longer a reposting person. +Section 16(a) Beneficial Ownership Reporting Compliance +Section 16(a) of the Exchange Act requires our directors and executive officers, and persons who beneficially own more than 10% of a registered class of +the Company’s equity securities, to file reports of ownership and changes in ownership with the SEC and to furnish us with copies of the forms they file. To our knowledge, based solely on a review of the copies of such reports furnished to us +and written representations of our officers and directors, all Section 16(a) reports for the year ended December 31, 2017 applicable to our officers and directors and such other persons were filed on a timely basis. +Certain Relationships and Related Transactions +Review and Approval of Related Party Transactions +The audit committee, as provided in its charter, reviews and approves related party transactions. The Company does not have a formal set of standards to be +substantively applied to each transaction reviewed by the audit committee. Instead of a formalized policy, related party transactions are reviewed and judgment is applied to determine whether such transactions are in the best interests of the +Company. Further, the Company’s Code of Business Conduct and Ethics governs various compliance areas, including conflicts of interest and fair dealings, which are considered in the process of the review and approval of related party +transactions. +The Company’s policy is that all of its employees and directors, as well as their family members, must avoid any activity that is or +has the appearance of conflicting with the Company’s business interest. This policy is included in the Company’s Code of Business Conduct and Ethics posted on its website. Each director and executive officer is instructed to always inform +the designated compliance officer when confronted with any situation that may be perceived as a conflict of interest. Only the board of directors or a committee consisting solely of independent directors may grant waivers of the provisions of the +Code of Business Conduct and Ethics for the Company’s executive officers and directors. In addition, at least annually, each director and executive officer completes a detailed questionnaire specifying any business relationship that may give +rise to a conflict of interest. +61 +Table of Contents +Further, under the audit committee charter, the audit committee is responsible for reviewing and monitoring +compliance with our Code of Business Conduct and Ethics and recommending any warranted changes to the board of directors. In addition, the board of directors and, pursuant to its written charter, the audit committee, reviews and approves all +relationships and transactions in which the Company and its directors, director nominees and executive officers and their immediate family members, as well as holders of more than 5% of any class of our voting securities and their family members, +have a direct or indirect material interest. The board of directors and the audit committee approve only those transactions that, in light of known circumstances, are consistent, or are not inconsistent with, the Company’s best interests, as +they determine in the good faith exercise of their discretion. +On February 17, 2017, we, through a wholly-owned subsidiary, completed our +acquisition of certain assets, or the Vitruvian Acquisition, from Vitruvian II Woodford, LLC, or Vitruvian, an unrelated third-party seller at the time of the Vitruvian Acquisition. The consideration paid to Vitruvian was $1.85 billion, which +included approximately 23.9 million shares of our common stock. As a result of the Vitruvian Acquisition, Vitruvian acquired more than 5% of our common stock. In connection with the Vitruvian Acquisition, we entered into a registration rights +agreement with Vitruvian, pursuant to which we agreed to file a shelf registration statement with respect to the registration under the Securities Act of 1933, as amended, of the resale of the shares issued to Vitruvian and any shares of our common +stock that may be issued or distributed in respect of the shares issued to Vitruvian upon certain events, which shelf registration statement became effective in April 2017. Under the registration rights agreement, we also agreed to provide certain +demand and piggyback registration rights to Vitruvian. As Vitruvian was not a related party at the time of the transaction, our policies did not require the Vitruvian Acquisition go through the review process described above. However, the +transaction was considered and approved by our board of directors. +Proposal to Approve, on an Advisory +Basis, the Compensation Paid to the Company’s Named Executive Officers +(Item 2 on the Proxy Card) +In accordance with Section 14A of the Exchange Act, our board of directors is providing our stockholders with a +non-binding advisory vote on the compensation paid to the Company’s named executive officers as reported in this proxy statement, or “say on pay” vote. The Company’s stockholders are being +asked to vote on the following resolution: +“RESOLVED, that the compensation paid to the Company’s named executive officers, as +disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby approved.” +This vote is advisory, which means that the vote on executive compensation is not binding on the Company, our board of directors or the compensation +committee. While the vote on executive compensation is solely advisory in nature, our board of directors and the compensation committee will review and consider the “say on pay” voting results when making future decisions regarding our +executive compensation program. +Stockholders are encouraged to carefully review the “Compensation Discussion and Analysis” section of this +proxy statement, which discusses in detail the Company’s compensation policy and compensation arrangements which the Company believes are appropriate and reasonably consistent with market practice and with the long-term interests of the Company +and its stockholders. In furtherance of the Company’s goals and objectives, the compensation committee, among other things, emphasizes long-term equity awards and annual performance bonuses under the previously implemented Annual Incentive Plan +to more closely align our executives’ interests with those of our stockholders and to link a larger portion of our executives’ compensation to the performance of our stock and our operational performance. The compensation committee also +believes that it sets meaningful performance targets under the Annual Incentive Plan. Further, in 2014, the compensation committee eliminated, and since that time has not used and does not intend to use, minimum discretionary cash bonus arrangements +for our Chief Executive Officer, Chief Financial Officer and Chief Operating Officer, in recognition of the +62 +Table of Contents +Company’s focus on the use of performance-based bonuses. Further, beginning in 2017, in keeping with our enhanced focus on performance-based compensation, the compensation committee also +eliminated discretionary bonuses for our other named executive officers, tying their bonuses for 2017 and 2018 to certain pre-established Company performance metrics under the Annual Incentive Plan, as +described in more detail under the “Compensation Discussion and Analysis.” The compensation committee believes that our shift to linking a larger portion of such executive officers’ compensation to long-term equity incentive awards +and our shift away from discretionary cash bonuses to performance-based bonus arrangements for such executive officers appropriately align with the long-term interests of the Company and its stockholders and are consistent with market practices. The +compensation committee also believes that our current compensation policies and practices enhance retention of executive talent through multi-year vesting of stock awards and do not encourage unnecessary and excessive risk taking. The compensation +committee further believes that our other compensation policies and practices, such as our policy prohibiting pledging (except in certain limited circumstances and subject to prior approval by our compliance officer or the compensation committee) or +hedging of our stock by our executive officers and directors, as well as the lack of significant prerequisites and absence of pension or supplemental retirement benefits, aside from those afforded under our broad-based 401(k) plan, for our executive +officers are consistent with prudent compensation philosophy and the interests of our stockholders. +We have determined that our stockholders should cast +an advisory vote on the compensation of our named executive officers on an annual basis. Unless this policy changes, the next advisory vote on the compensation of our named executive officers will be at the 2019 annual meeting of stockholders. +THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THIS PROPOSAL 2. +Proposal to Ratify the Appointment of Our Independent Auditors +(Item 3 on the Proxy Card) +What am I voting on? +You are voting on a proposal to +ratify the appointment of Grant Thornton LLP as our independent auditors for fiscal year 2018. The audit committee has appointed Grant Thornton LLP to serve as independent auditors. +What services do the independent auditors provide? +Audit +services of Grant Thornton LLP for fiscal year 2017 included an audit of our consolidated financial statements and services related to periodic filings made with the SEC. Additionally, Grant Thornton LLP provided certain services related to the +consolidated quarterly reports and annual and other periodic reports, registration statements and comfort letters and other services as described below. +How much were the independent auditors paid in 2016 and 2017? +Grant Thornton LLP’s fees for professional services totaled $1,072,950 for 2016 and $1,176,500 for 2017. Grant Thornton LLP’s fees for professional +services included the following: +• +Audit Fees —aggregate fees for audit services, which relate to the fiscal year consolidated audit, quarterly reviews, registration statements, comfort letters, statutory and regulatory audits and accounting +consultations were $1,072,950 for 2016 and $1,176,500 for 2017. +• +Audit-Related Fees —aggregate fees for audit-related services, consisting of audits in connection with proposed or consummated dispositions, benefit plan audits, other subsidiary audits, special reports, and +accounting consultations, were $0 in 2016 and $0 for 2017. +• +Tax and All Other Fees —there were no tax or other fees for products or services provided by Grant Thornton LLP in addition to the services described above in 2016 and 2017. +63 +Table of Contents +Does the audit committee approve the services provided by Grant Thornton LLP? +It is our audit committee’s policy to pre-approve all audit, audit related and permissible non-audit services rendered to us by our independent auditor. Consistent with such policy, all of the fees listed above that we incurred for services rendered by Grant Thornton LLP in fiscal years 2016 and 2017 were +pre-approved by our audit committee. No non-audit services were provided to us by Grant Thornton LLP in 2016 or 2017. +Will a representative of Grant Thornton LLP be present at the meeting? +Yes, one or more representatives of Grant Thornton LLP will be present at the meeting. The representatives will have an opportunity to make a statement if they +desire and will be available to respond to appropriate questions from the stockholders. +What vote is required to approve this proposal? +Stockholder ratification of the appointment of our independent auditors is not required by the Company’s bylaws or otherwise. However, we are submitting +this proposal to the stockholders as a matter of good corporate practice. Approval of this proposal requires the affirmative vote of a majority of the votes cast on the proposal. If the appointment of Grant Thornton LLP is not ratified, the audit +committee will reconsider the appointment. Even if the appointment is ratified, the audit committee in its discretion may direct the appointment of a different independent audit firm at any time during the year if it is determined that such change +would be in best interests of the Company and its stockholders. +Has Grant Thornton LLP always served as Gulfport’s independent auditors? +Grant Thornton LLP has served as our independent auditors since 2005. +What does the board of directors recommend? +THE BOARD +OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF GRANT THORNTON LLP AS THE COMPANY’S INDEPENDENT AUDITORS FOR THE YEAR 2018. +Solicitation by Board; Expenses of Solicitation +Our board of directors has sent you this proxy statement. Our directors, officers and employees may solicit proxies by mail, by telephone or in person. Those +persons will receive no additional compensation for any solicitation activities. We will request banking institutions, brokerage firms, custodians, trustees, nominees and fiduciaries to forward solicitation materials to the beneficial owners of +common stock held of record by those entities, and we will, upon the request of those record holders, reimburse reasonable forwarding expenses. We will pay the costs of preparing, printing, assembling and mailing the proxy material used in the +solicitation of proxies. +Submission of Future Stockholder Proposals +Under SEC rules, a stockholder who intends to present a proposal, including with respect to the nomination of directors, at the 2019 Annual Meeting of +Stockholders and who wishes the proposal to be included in the proxy statement for that meeting must submit the proposal in writing to our Senior Vice President of Corporate Development and Strategy. The proposal must be received no later than +December 31, 2018. +Stockholders who wish to propose a matter for action at the 2019 Annual Meeting, including with respect to the nomination of +directors, but who do not wish to have the proposal or nomination included in the proxy statement, +64 +Table of Contents +must notify the Company in writing of the information required by the provisions of our bylaws dealing with stockholder proposals. The notice must be delivered to our Senior Vice President of +Corporate Development and Strategy between January 30, 2019 and March 1, 2019. You can obtain a copy of our bylaws by writing the Senior Vice President of Corporate Development and Strategy at the address below, or from the SEC website at +www.sec.gov, which is listed as an exhibit to our latest report on Form 10-K filed with the SEC on February 22, 2018. +All written proposals should be directed to Paul K. Heerwagen IV, our Senior Vice President of Corporate Development and Strategy at Gulfport Energy +Corporation, 3001 Quail Springs Parkway, Oklahoma City, Oklahoma 73134. +The board of directors is responsible for selecting and recommending director +candidates and will consider nominees recommended by stockholders. If you wish to have the board of directors consider a nominee for director, you must send a written notice to our Senior Vice President of Corporate Development and Strategy at the +address provided above and include the information required by our bylaws and discussed beginning on page 13 of this proxy statement. +Availability of Form 10-K and Annual Report to Stockholders +SEC rules require us to provide an Annual Report to stockholders who receive this proxy statement. Additional copies of the Annual Report, along with copies +of our Annual Report on Form 10-K for the fiscal year ended December 31, 2017, including the financial statements and the financial statement schedules, are available without charge to +stockholders upon written request to Director of Investor Relations, Gulfport Energy Corporation, 3001 Quail Springs Parkway, Oklahoma City, Oklahoma 73134 or via the Internet at www.gulfportenergy.com . We will furnish the exhibits to our Annual +Report on Form 10-K upon payment of our copying and mailing expenses. +Householding +The SEC permits a single set of annual reports and proxy statements to be sent to any household at which two or more stockholders reside if they +appear to be members of the same family, unless instructions have been received to the contrary. Each stockholder continues to receive a separate proxy card. This procedure, referred to as householding, reduces the volume of duplicate information +stockholders receive and reduces our mailing and printing expenses. +If you would like to receive your own set of the annual report and proxy statement +this year or in future years, follow the instructions described below, and we will promptly deliver a separate copy to you. Similarly, if you share an address with another Gulfport stockholder and together both of you would like to receive in the +future only a single annual report and proxy statement, follow these instructions: +• +If your shares of our common stock are registered in your own name, please contact our transfer agent, Computershare Trust Company, N.A., and inform them of your request by calling their toll-free number: (800) 962-4284 or by mail: Computershare Trust Company, N.A., 250 Royall Street, Canton, MA 02021. +• +If a broker or other nominee holds your shares, please contact your broker or nominee. +Other Matters +The board of directors does not intend to present any other items of business other than those stated in the Notice of Annual +Meeting of Stockholders. If other matters are properly brought before the meeting, the persons named as your proxies will vote the shares represented by it in accordance with their best judgment. Discretionary authority to vote on other matters is +included in the proxy. +65 +Table of Contents +Electronic Voting Instructions +Available 24 hours a day, 7 days a week! +Instead of mailing your proxy, you may choose one of the voting +methods outlined below to vote your proxy. +VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE +BAR. +Proxies submitted by the Internet or telephone must be received +by 1:00 a.m., Central Time, on May 30, 2018. +Vote by Internet +• Go to +www.investorvote.com/GPOR +• Or scan the QR code with your smartphone +• Follow the steps outlined on the +secure website +Vote by telephone +• Call +toll free 1-800-652-VOTE (8683) within the USA, US territories & Canada on a touch tone telephone +• Follow the instructions provided by the recorded message +Using a black ink pen, mark your votes with an X as shown in +this example. Please do not write outside the designated areas. +☒ +q IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED +ENVELOPE. q +A +Proposals — The Board of Directors recommends a vote FOR all the nominees listed in Proposal 1 and FOR Proposals 2 and 3. +1. +Election of Directors: +For +Against +Abstain +For +Against +Abstain +For +Against +Abstain +01 - Michael G. Moore +☐ +☐ +☐ +02 - Craig Groeschel +☐ +☐ +☐ +03 - David L. Houston +☐ +☐ +☐ +04 - C. Doug Johnson +☐ +☐ +☐ +05 - Ben T. Morris +☐ +☐ +☐ +06 - Scott E. Streller +☐ +☐ +☐ +07 - Paul D. Westerman +☐ +☐ +☐ +08 - Deborah G. Adams +☐ +☐ +☐ +For +Against +Abstain +For +Against +Abstain +2. +Proposal to Approve, on an Advisory Basis, the Compensation Paid to the Company’s Named Executive Officers +☐ +☐ +☐ +3. +Proposal to Ratify the Appointment of Our Independent Auditors, Grant Thornton LLP, for fiscal year 2018 +☐ +☐ +☐ +B +Non-Voting Items +Change of Address — Please print new address below. +C +Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below +When shares are held by joint tenants, both should sign. When signing as attorney, +executor, administrator, trustee, or guardian, please give full title as such. If a corporation, please sign in full corporate name by the president or another authorized officer. If a partnership, please sign in partnership name by an authorized +person. +Date (mm/dd/yyyy) — Please print date below. +Signature 1 — Please keep signature within the box. +Signature 2 — Please keep signature within the box. +/ +/ +02U5HA +Table of Contents +Proxy – Gulfport Energy Corporation +You are cordially invited to attend the Annual Meeting of Stockholders +To be held on May 30, 2018, at +10:00 a.m. +Oklahoma City time, at +3001 Quail Springs Parkway, +Oklahoma City, Oklahoma 73134 +q PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q +Proxy — GULFPORT ENERGY CORPORATION +FOR THE ANNUAL MEETING OF STOCKHOLDERS OF +Gulfport Energy Corporation +This Proxy Is +Solicited On Behalf Of The Board Of Directors +The +undersigned hereby appoints Michael G. Moore and Keri Crowell (together, the “Proxies”), and each of them, with full power of substitution, as proxies to vote the shares that the undersigned is entitled to vote at the Annual Meeting of +Stockholders of Gulfport Energy Corporation (the “Company”) to be held on May 30, 2018 at 10:00 a.m. Oklahoma City time and at any adjournments and postponements thereof. Such shares shall be voted as indicated with respect to the +proposals listed on the reverse side hereof and in the Proxies’ discretion on such other matters as may properly come before the meeting or any adjournment or postponement thereof. +The undersigned acknowledges receipt of the 2018 Notice of Annual +Meeting and accompanying Proxy Statement and revokes all prior proxies for said meeting. +THE SHARES REPRESENTED BY THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO SPECIFIC +DIRECTION IS GIVEN AS TO THE PROPOSALS ON THE REVERSE SIDE, THIS PROXY WILL BE VOTED FOR EACH OF THE NOMINEES NAMED IN PROPOSAL 1 AND FOR EACH OF THE PROPOSALS 2 AND 3 IN ACCORDANCE WITH THE BOARD OF DIRECTOR’S RECOMMENDATION. +PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY. +IMPORTANT – PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY. THANK YOU FOR VOTING. +(Continued and to be marked, dated and signed on reverse +side.) \ No newline at end of file diff --git a/raw/proxies/0000874499/0001193125-18-143903/proxy_rpt.txt b/raw/proxies/0000874499/0001193125-18-143903/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..535d409a0f7eac454be95ae1cbb9b6bde38abe26 --- /dev/null +++ b/raw/proxies/0000874499/0001193125-18-143903/proxy_rpt.txt @@ -0,0 +1,25 @@ +Certain Relationships and Related Transactions +Review and Approval of Related Party Transactions +The audit committee, as provided in its charter, reviews and approves related party transactions. The Company does not have a formal set of standards to be +substantively applied to each transaction reviewed by the audit committee. Instead of a formalized policy, related party transactions are reviewed and judgment is applied to determine whether such transactions are in the best interests of the +Company. Further, the Company’s Code of Business Conduct and Ethics governs various compliance areas, including conflicts of interest and fair dealings, which are considered in the process of the review and approval of related party +transactions. +The Company’s policy is that all of its employees and directors, as well as their family members, must avoid any activity that is or +has the appearance of conflicting with the Company’s business interest. This policy is included in the Company’s Code of Business Conduct and Ethics posted on its website. Each director and executive officer is instructed to always inform +the designated compliance officer when confronted with any situation that may be perceived as a conflict of interest. Only the board of directors or a committee consisting solely of independent directors may grant waivers of the provisions of the +Code of Business Conduct and Ethics for the Company’s executive officers and directors. In addition, at least annually, each director and executive officer completes a detailed questionnaire specifying any business relationship that may give +rise to a conflict of interest. +61 +Table of Contents +Further, under the audit committee charter, the audit committee is responsible for reviewing and monitoring +compliance with our Code of Business Conduct and Ethics and recommending any warranted changes to the board of directors. In addition, the board of directors and, pursuant to its written charter, the audit committee, reviews and approves all +relationships and transactions in which the Company and its directors, director nominees and executive officers and their immediate family members, as well as holders of more than 5% of any class of our voting securities and their family members, +have a direct or indirect material interest. The board of directors and the audit committee approve only those transactions that, in light of known circumstances, are consistent, or are not inconsistent with, the Company’s best interests, as +they determine in the good faith exercise of their discretion. +On February 17, 2017, we, through a wholly-owned subsidiary, completed our +acquisition of certain assets, or the Vitruvian Acquisition, from Vitruvian II Woodford, LLC, or Vitruvian, an unrelated third-party seller at the time of the Vitruvian Acquisition. The consideration paid to Vitruvian was $1.85 billion, which +included approximately 23.9 million shares of our common stock. As a result of the Vitruvian Acquisition, Vitruvian acquired more than 5% of our common stock. In connection with the Vitruvian Acquisition, we entered into a registration rights +agreement with Vitruvian, pursuant to which we agreed to file a shelf registration statement with respect to the registration under the Securities Act of 1933, as amended, of the resale of the shares issued to Vitruvian and any shares of our common +stock that may be issued or distributed in respect of the shares issued to Vitruvian upon certain events, which shelf registration statement became effective in April 2017. Under the registration rights agreement, we also agreed to provide certain +demand and piggyback registration rights to Vitruvian. As Vitruvian was not a related party at the time of the transaction, our policies did not require the Vitruvian Acquisition go through the review process described above. However, the +transaction was considered and approved by our board of directors. \ No newline at end of file diff --git a/raw/proxies/0000874499/0001193125-19-129779/proxy.txt b/raw/proxies/0000874499/0001193125-19-129779/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..6272d5a5e5340f66a50b2f5e83a22d22f178bae3 --- /dev/null +++ b/raw/proxies/0000874499/0001193125-19-129779/proxy.txt @@ -0,0 +1,5030 @@ +DEF 14A +1 +d652757ddef14a.htm +DEF 14A +DEF 14A +Table of Contents +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Proxy Statement Pursuant to Section 14(a) of the +Securities Exchange Act of 1934 +☒ Filed by the +Registrant ☐ Filed by a Party other than the Registrant +Check the appropriate box: +☐ +Preliminary Proxy Statement +☐ +Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +☒ +Definitive Proxy Statement +☐ +Definitive Additional Materials +☐ +Soliciting Material under §240.14a-12 +Gulfport Energy +Corporation +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +☒ +No fee required +☐ +Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. +1) +Title of each class of securities to which transaction applies: +2) +Aggregate number of securities to which transaction applies: +3) +Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing +fee is calculated and state how it was determined): +4) +Proposed maximum aggregate value of transaction: +5) +Total fee paid: +☐ +Fee paid previously with written preliminary materials. +☐ +Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement +number, or the Form or Schedule and the date of its filing. +1) +Amount Previously Paid: +2) +Form, Schedule or Registration Statement No.: +3) +Filing Party: +4) +Date Filed: +Table of Contents +3001 Quail Springs Parkway +Oklahoma City, Oklahoma 73134 +NOTICE OF +2019 +ANNUAL +STOCKHOLDERS +MEETING +and +PROXY +STATEMENT +Thursday +June 6, 2019 +10:00 a.m., local time +3001 Quail Springs Parkway +Oklahoma City +Oklahoma 73134 +April 30, 2019 +Dear Fellow Stockholders: +On behalf of your board of directors and management, you are cordially invited to attend the Annual Meeting of Stockholders to be held at 3001 Quail Springs +Parkway, Oklahoma City, Oklahoma 73134 on Thursday, June 6, 2019, at 10:00 a.m., local time. +It is important that your shares be represented at the meeting. Whether or not you plan to attend the meeting, please vote by telephone or via Internet or +complete and return the enclosed proxy card in the accompanying envelope, in each case in accordance with the instructions provided in the enclosed proxy card. Please note that submitting a proxy will not prevent you from attending the meeting and +voting in person. +You will find information regarding the matters to be voted on at +the meeting in the enclosed proxy statement. Our 2018 Annual Report to Stockholders is either enclosed with these materials or has previously been mailed to you. This proxy statement and our 2018 Annual Report to Stockholders are also available on +our website at www.gulfportenergy.com/proxy. +In addition to the formal items of +business to be brought before the meeting, there will be a report on our operations, followed by a question and answer period. Your interest in Gulfport Energy Corporation is appreciated. We look forward to seeing you on June 6, 2019. +Sincerely, +David M. Wood +David L. Houston +Chief Executive Officer and President +Chairman of the Board +Table of Contents +GULFPORT ENERGY CORPORATION +3001 Quail Springs Parkway +Oklahoma City, Oklahoma 73134 +NOTICE OF +ANNUAL MEETING OF STOCKHOLDERS +TO BE HELD ON June 6, 2019 +Dear Fellow Stockholders: +The Annual Meeting of Stockholders +of Gulfport Energy Corporation will be held on June 6, 2019 at 10:00 a.m., local time, at 3001 Quail Springs Parkway, Oklahoma City, Oklahoma 73134, for the following purposes: +1. +To elect eight directors to serve until the Company’s 2020 Annual Meeting of Stockholders; +2. +To approve the Company’s 2019 Amended and Restated Stock Incentive Plan; +3. +To hold an advisory vote on the compensation paid to the Company’s named executive officers; +4. +To ratify the appointment of Grant Thornton LLP as the Company’s independent auditors for the fiscal year +ending December 31, 2019; and +5. +To transact such other business as may properly come before the Annual Meeting and any adjournment or +postponement thereof. +Your vote is important. Please carefully consider the proposals and vote in one of these ways: +• +Vote by telephone or via Internet in accordance with the instructions provided in the enclosed proxy card; +• +Mark, sign, date and promptly return the enclosed proxy card in the postage-paid envelope; or +• +Submit a ballot at the Annual Meeting. +Only stockholders of record at the close of business on April 17, 2019 or their proxy holders may vote at the meeting. Directions to the meeting can be +obtained from the Company. +IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING STOCKHOLDERS TO BE HELD ON +JUNE 6, 2019 . This proxy statement and the Company’s 2018 Annual Report to Stockholders are available on the Company’s website at www.gulfportenergy.com/proxy. +By Order of the Board of Directors, +David M. Wood +Chief Executive Officer and +President +This notice and proxy statement are first being mailed to stockholders on or about May 2, 2019. +Table of Contents +GULFPORT ENERGY CORPORATION +3001 Quail Springs Parkway +Oklahoma City, Oklahoma 73134 +PROXY +STATEMENT +TABLE OF CONTENTS +About the Annual Meeting +1 +Board of Directors Information +5 +Election of Directors and Director Biographies +7 +Corporate Governance Matters and Communications with the Board +13 +Nominating Process for Directors, Director Qualifications and Review of Director +Nominees +15 +Director Leadership Structure +17 +Board of Director’s Role in Risk Oversight +18 +Corporate Responsibility and Sustainability +18 +Audit Committee Report +20 +Executive Officers +22 +Compensation Discussion and Analysis +25 +Compensation Committee Interlocks and Insider Participation +48 +Compensation Tables +48 +Benefit Plans +53 +401(k) Plan +53 +2013 Restated Stock Incentive Plan +53 +2014 Executive Annual Incentive Compensation Plan +54 +Equity Compensation Plan Information +57 +Compensation Arrangement with Our Chief Executive Officer +57 +Employment Agreements with our Chief Financial Officer and Senior Vice President +of Geosciences +58 +Compensation Arrangements with our Chief Operating Officer and our Senior Vice +President of Corporate Development and Strategy +59 +Potential Payments Upon Termination, Resignation or Change of +Control +60 +Severance Agreement with our Former Chief Executive Officer and +President +63 +CEO Pay Ratio Disclosure +63 +Beneficial Ownership +63 +Holdings of Major Stockholders +63 +Holdings of Officers and Directors +65 +Section 16(a) Beneficial Ownership Reporting Compliance +66 +Certain Relationships and Related Transactions Review and Approval of Related +Party Transactions +67 +Proposal to Approve the 2019 Amended and Restated Stock Incentive +Plan +67 +Proposal to Approve, on an Advisory Basis, the Compensation Paid to the Company’s +Named Executive Officers +74 +Proposal to Ratify the Appointment of Our Independent +Auditors +75 +Solicitation by Board; Expenses of Solicitation +76 +Submission of Future Stockholder Proposals +76 +Availability of Form 10-K and Annual +Report to Stockholders +77 +Householding +77 +Other Matters +78 +i +Table of Contents +About the Annual Meeting +Who is soliciting my vote? +The board of directors of +Gulfport Energy Corporation, which we refer to as Gulfport, the Company and we in this proxy statement, is soliciting your vote at the 2019 Annual Meeting of Stockholders. The proposals to be voted on by the Company’s stockholders at the 2019 +Annual Meeting of Stockholders are described below. +What am I voting on? +You are voting on: +• +The election of directors (see Proposal 1 beginning on page 7) ; +• +The approval of the Company’s 2019 Amended and Restated Stock Incentive Plan ( see Proposal 2 on page +67 ) +• +The approval, on an advisory basis, of the compensation paid to the Company’s named executive officers as +reported in this proxy statement ( see Proposal 3 beginning on page 74 ); +• +The ratification of Grant Thornton LLP as our independent auditors for 2019 ( see Proposal 4 beginning on page +75 ); and +• +Any other business properly coming before the meeting. +How does the board of directors recommend that I vote my shares? +Unless you give other instructions on your proxy card, the persons named as proxy holders on the proxy card will vote in accordance with the recommendations of +our board of directors. The board of directors’ recommendations can be found with the description of each proposal in this proxy statement. In summary, the board of directors recommends a vote: +• +FOR the proposal to elect the nominated directors; +• +FOR the proposal to approve the Company’s 2019 Amended and Restated Stock Incentive Plan; +• +FOR the proposal to approve, on an advisory basis, the compensation paid to the Company’s named executive +officers as reported in this proxy statement; and +• +FOR the proposal to ratify Grant Thornton LLP as the Company’s independent auditors for 2019. +Who is entitled to vote? +You may +vote if you were the record owner of our common stock as of the close of business on the record date, which is April 17, 2019. Each share of common stock is entitled to one vote. As of April 17, 2019, we had 159,197,402 shares of common +stock outstanding, excluding an aggregate of 1,946,741 shares of restricted stock and restricted stock units awarded under our 2013 Restated Stock Incentive Plan, but not yet vested. There is no cumulative voting. +How many votes must be present to hold the meeting? +Your +shares are counted as present at the Annual Meeting if you attend the meeting and vote in person or if you properly return a proxy by mail. In order for us to hold our meeting, holders of a majority of the voting power of our outstanding shares of +common stock as of the close of business on April 17, 2019 must be present in person or by proxy at the meeting. This is referred to as a quorum. Abstentions and broker non-votes will be counted for +purposes of establishing a quorum at the meeting. +1 +Table of Contents +What is a broker non-vote? +If a broker does not have discretion to vote shares held in street name on a particular proposal and does not receive instructions from the beneficial owner on +how to vote those shares, the broker may return the proxy card without voting on that proposal. This is known as a broker non-vote . No broker may vote your shares without your specific instructions on +any of the proposals to be considered at the Annual Meeting other than the ratification of our independent auditors. +How many votes are needed to +approve each of the proposals? +Our bylaws provide for the election of directors in uncontested elections by a majority of the votes cast by the +stockholders present in person or represented by proxy at the meeting and entitled to vote thereon. The number of shares voted “FOR” a director nominee must exceed the number of votes cast “AGAINST” that nominee. Abstentions and +broker non-votes will not be counted for voting purposes with respect to the re-election of directors. Stockholders may not cumulate their votes with respect to the re-election of directors. If any incumbent director is not elected because he does not receive a majority of the votes cast, he is required to immediately tender his or her resignation for consideration by our board +of directors. Our board of directors will evaluate whether to accept or reject such resignation, or whether other action should be taken; provided, however, that the board will act on such resignation and publicly disclose its decision to accept or +reject such resignation and the rationale behind such decision within 90 days from the date of the certification of the director election results. +Each +of Proposals 2, 3 and 4 requires the affirmative “FOR” vote of a majority of the votes cast by the stockholders present in person or represented by proxy at the Annual Meeting and entitled to vote thereon. Only votes for or against +Proposals 2 and 3 will be counted as votes cast, and abstentions and broker non-votes will not be counted for voting purposes. Broker non-votes will be counted as votes +cast with respect to Proposal 4. +How do I vote? +You +can vote either in person by submitting a ballot at the meeting, or by proxy without attending the meeting. +To vote by proxy, you can vote +in one of the following ways: +• +by telephone or via Internet in accordance with the instructions provided in the enclosed proxy card; or +• +by marking, signing, dating and promptly returning the enclosed proxy card in the postage-paid envelope. +Even if you plan to attend the meeting, we encourage you to vote your shares by proxy. If you plan to vote in person at the Annual +Meeting, and you hold your stock in street name, you must obtain a proxy from your broker and bring that proxy to the meeting. +Can I change my vote? +Yes. You can change or revoke your vote at any time before the polls close at the Annual Meeting. You can do this by: +• +Voting by telephone or Internet at a later date, but prior to the deadline for telephonic and Internet voting +specified in the enclosed proxy card; +• +Signing another proxy card with a later date and returning it to us prior to the meeting; +• +Sending our Senior Vice President of Corporate Development and Strategy a written document revoking your earlier +proxy; or +• +Voting again at the meeting. +2 +Table of Contents +Who counts the votes? +We have hired Computershare Trust Company, N.A., our transfer agent, to act as the tabulation agent and count the votes represented by proxies cast by mail or +ballot. Employees of Computershare Trust Company, N.A. will act as inspectors of election. +Will my vote be confidential? +Yes. As a matter of Company policy, proxies, ballots and voting tabulations that identify individual stockholders are treated as confidential. Only the +tabulation agent and the inspectors of election have access to your vote. Directors and employees of the Company may see your vote only if there is a contested proxy solicitation, as required by law or in certain other special circumstances. +Will my shares be voted if I don’t provide my proxy and don’t attend the Annual Meeting? +If you do not provide a proxy (by voting by telephone, via Internet or sending a proxy card, in each case in accordance with the instructions included in the +enclosed proxy card) or vote your shares held in your name at the meeting, your shares will not be voted. +If you hold your shares in street name, your +broker may be able to vote your shares for certain “routine” matters even if you do not provide the broker with voting instructions. The ratification of Grant Thornton LLP as our independent auditors for 2019 is considered routine. For +matters not considered “routine,” if you do not give your broker instructions on how to vote your shares, the broker will return the proxy card without voting on that proposal. This is a broker +non-vote. The proposals to elect directors, to approve our 2019 Amended and Restated Stock Incentive Plan and to approve, on an advisory basis, the compensation paid to the Company’s named executive +officers are not considered routine. As a result, no broker may vote your shares on these proposals without your specific instructions. +How are votes +counted? +In the election of directors contemplated by Proposal 1, you may vote “FOR,” “AGAINST” or “ABSTAIN” with +respect to one or more of the nominees. For Proposals 2, 3 and 4, you may vote “FOR,” “AGAINST” or “ABSTAIN.” +What if I +vote by proxy but don’t indicate my vote on the matters listed on my proxy card? +If you return a signed proxy card without indicating your vote, +your shares will be voted FOR the director nominees listed on the card, FOR approving our 2019 Amended and Restated Stock Incentive Plan, FOR approving, on an advisory basis, the compensation paid to the Company’s named executive officers as +described in this proxy statement and FOR the ratification of Grant Thornton LLP as our independent auditors for 2019. +Could other matters be decided +at the Annual Meeting? +We have not received any stockholder proposals and are not aware of any other matters that will be considered at the Annual +Meeting. If any other matters arise at the Annual Meeting, the persons named in your proxies will vote in accordance with their best judgment. +Who can +attend the meeting? +The Annual Meeting is open to all holders of our common stock. +What do I need to bring to attend the Annual Meeting? +You will need proof of ownership of our common stock to enter the meeting. If your shares are in the name of your broker or bank or other nominee, you will +need to bring evidence of your stock ownership, such as your +3 +Table of Contents +most recent brokerage statement. All stockholders will be required to present valid picture identification. IF YOU DO NOT HAVE VALID PICTURE IDENTIFICATION AND PROOF THAT YOU OWN SHARES OF OUR +COMMON STOCK, YOU MAY NOT BE ADMITTED INTO THE MEETING. +How can I access the Company’s proxy materials and annual report? +The notice of the Annual Meeting, this proxy statement and the Company’s 2018 Annual Report are first being mailed to stockholders on or about May 2, +2019. Additionally, the notice of the Annual Meeting, this proxy statement and the Company’s 2018 Annual Report to Stockholders are available electronically on the Company’s website at www.gulfportenergy.com/proxy. +4 +Table of Contents +Board of Directors Information +What is the makeup of the board of directors and how often are the members elected? +Our board of directors currently consists of eight members who are elected annually. Seven of these eight directors are independent under the Nasdaq listing +standards. +What if a nominee is unable or unwilling to serve? +That is not expected to occur. If it does, shares represented by proxies will be voted for a substitute nominated by the board of directors. +How are directors compensated? +Our policy is that +members of our board of directors who are also our officers or employees do not receive compensation for their services as directors. The compensation of our non-employee directors is described below. +Cash Compensation +During 2018, +our non-employee directors were paid an annual retainer of $60,000, an attendance fee of $1,500 for each board meeting attended in person, and an attendance fee of $750 for each board meeting attended +telephonically. In addition, the Chairman of the Board received an additional $65,000 annual retainer, the audit committee chairman received an additional $15,000 annual retainer and the chairman of each of the compensation committee and the +nominating and corporate governance committee received an additional $10,000 annual retainer. Each committee member was also paid a $1,000 attendance fee for each committee meeting attended in person and a $500 attendance fee for each committee +meeting attended telephonically. The board of directors also determined that the work of the chairman of the audit committee and each audit committee member during 2018 merited an additional one-time retainer +of $25,000 for the chairman and $10,000 for each audit committee member. Further information regarding our director cash compensation in 2018 is set forth under the heading “2018 Director Compensation” below. +During 2018, the Compensation Committee engaged the Company’s compensation consultant, Pearl Meyer & Partners, LLC, or Pearl Meyer, to conduct a +competitive review of director compensation within the Company’s peer group. Effective January 1, 2019, based on the recommendation of Pearl Meyer, our board of directors eliminated attendance fees for board and committee meetings and +increased the annual retainer for each non-employee director to $85,000. In addition, effective January 1, 2019, the Chairman of the Board receives an additional $85,000 annual retainer and the +chairpersons of the audit committee, the compensation committee, the nominating and governance committee and the operating excellence and corporate responsibility committee receive $20,000, $15,000, $10,000 and $10,000, respectively, in additional +annual retainers. +Equity Compensation +During 2018, our non-employee directors were entitled to receive an annual grant of restricted stock units with an +aggregate value of approximately $125,000 based on the closing price of our common stock on the date of grant, with vesting to occur in the following year. On May 31, 2018, we awarded the 2018 annual director grant in the amount of 11,201 +shares of our restricted stock units to each of our then-serving non-employee directors under our 2013 Restated Stock Incentive Plan. Deborah G. Adams, also received a +pro-rata grant of 2,898 shares of our restricted stock units on March 19, 2018 in connection with her appointment to our board of directors, which restricted stock units vested on May 31, 2018. +Further information regarding our director equity compensation in 2018 is set forth under the heading “2018 Director Compensation” below. +Effective January 1, 2019, our board of directors, based on the recommendation of the independent compensation consultant and the Compensation Committee, +increased the annual grant of restricted stock units for our +5 +Table of Contents +non-employee directors to an aggregate value of approximately $175,000 based on the closing price of our common stock on the date of grant, which +represents approximately two-thirds of our non-employee director’s annual compensation. Each grant of restricted stock will vest on the earlier of (a) the date +of our next annual meeting of stockholders and (b) the one year anniversary of the date of the grant, so long as the non-employee director is in continuous service on that date. +Program Component +2018 Program +2019 Program +Effective 1/1/2019 +Annual base cash retainer for Board service +$ +60,000 +$ +85,000 +Additional cash retainer to +non-executive Chairman +$ +65,000 +$ +85,000 +Audit committee chair cash retainer +$ +15,000 +$ +20,000 +Compensation committee chair cash retainer +$ +10,000 +$ +15,000 +Nominating committee chair cash retainer +$ +10,000 +$ +10,000 +Operating excellence committee chair retainer +— +$ +10,000 +In-person meeting +fee +$ +1,000 +— +Telephonic meeting fee +$ +500 +— +Annual equity grant +$ +125,000 +$ +175,000 +Stock ownership guideline +— +5.0x annual base retainer +Insurance and Indemnification +We provide liability insurance for our directors and officers at a current annual cost of approximately $525,000. We have also entered into indemnification +agreements with each of our current directors. These agreements require us to indemnify these individuals to the fullest extent permitted under Delaware law against liabilities that may arise by reason of their service to us, and to advance expenses +incurred as a result of any proceeding against them as to which they could be indemnified. +In addition, our certificate of incorporation sets forth +limitations on our directors’ liability to our stockholders. Further, our bylaws contain indemnification and advancement of expenses provisions for the benefit of our directors and officers. +Stock Ownership Guidelines for Directors +We believe it is important for members of our board of directors to align their financial interests with those of our stockholders. Accordingly, effective +January 1, 2019, our board of directors adopted a formal stock ownership policy that requires our non-employee directors to achieve a stock ownership level equal to the value of common stock that is five +times the value of their annual retainer within five years of the effective date of such stock ownership policy, calculated based on the average closing price of a share of our common stock over the 30 calendar day period ended immediately prior to +the measurement date. Effective January 1, 2019, our Chief Executive Officer is also subject to the stock ownership policy that requires him to achieve a stock ownership level equal to the value of common stock that is five times the value of +his annual based salary within five years of the effective date of such stock ownership policy, calculated based on the same methodology. The compensation committee also designated our other executive officers that are subject to Section 16 +reporting obligations under the Securities Exchange Act of 1934, as amended, to be subject to the stock ownership policy. The stock ownership levels for such other executives are discussed under “Compensation Discussion and Analysis—Stock +Ownership Guidelines for Executive Officers” below. +How often did the board of directors meet in 2018? +The board of directors met 15 times in 2018. In addition to these meetings, the board of directors adopted resolutions by unanimous written consent. Each +director attended at least 75% of the aggregate meetings of the board of directors and the meetings of the committees on which he or she served. +6 +Table of Contents +Election of Directors and Director Biographies +(Proposal 1 on the Proxy Card) +Who are this year’s nominees? +The directors +standing for election this year to hold office until the 2020 Annual Meeting of Stockholders and until each such director’s successor is elected are listed below. All of these director nominees, except for our Chief Executive Officer, are +independent under the Nasdaq listing standards, comprising a supermajority of independent directors currently serving on our board of directors. There is no family relationship among any of the nominees, directors and/or any of the executive +officers of the Company. +DAVID M. WOOD, age 62. Mr. Wood has served as the Chief Executive Officer and President of the Company, and as a +member of its board of directors, since December 2018. Prior to joining the Company, Mr. Wood served as the Chief Executive Officer and Chairman of the Board of Directors of Arsenal Resources LLC, which we refer to as Arsenal, a West Virginia +focused natural gas producer and portfolio company of First Reserve Corporation, an energy-focused private equity firm, which we refer to as First Reserve, where he most recently served as Chairman of its board of directors and previously held the +role of the Chief Executive Officer. Prior to his tenure at Arsenal, Mr. Wood served as a Senior Advisor to First Reserve from 2013 to 2016, serving on several of its portfolio company boards. Prior to his position at First Reserve, +Mr. Wood spent more than 17 years at Murphy Oil Corporation (NYSE: MUR), a global oil and natural gas exploration and production company, which we refer to as Murphy Oil, including as its Chief Executive Officer, President and a member of the +board of directors from 2009 to 2012. From 1980 to 1994, Mr. Wood held various senior positions with Ashland Exploration and Production, an oil and natural gas exploration and production company. Mr. Wood began his career as a well-site +geologist in Saudi Arabia. Mr. Wood has served on the board of directors of Lilis Energy, Inc. (NYSE: LLEX), an exploration and development company operating in the Delaware Basin since June 2018. Mr. Wood also served on the board of +directors of the general partner of Crestwood Equity Partners LP (NYSE: CEQP) and its wholly-owned subsidiary, Crestwood Midstream Partners LP, an owner and operator of crude oil and natural gas midstream assets. Mr. Wood also served on the +board of directors of several private oil and natural gas companies, including Deep Gulf Energy LP (prior to its acquisition by Kosmos Energy Ltd.) and Berkana Energy Corp. (when it was majority owned by Murphy Oil). Mr. Wood previously served +on the board of directors and as an executive committee member of the American Petroleum Institute. He was also a member of the National Petroleum Council and is a member of the Society of Exploration Geophysicists. Mr. Wood holds a B.S. in +Geology from the University of Nottingham in England and completed Harvard University’s Advanced Management Program. +DAVID L. HOUSTON, age +66. Mr. Houston has served as a director of the Company since July 1998 and as Chairman of the Board since July 2013. Since 1991, Mr. Houston has been the principal of Houston Financial, a firm providing wealth management products and +services with a focus on the energy sector. Since 2000, Mr. Houston has managed a mineral trust with approximately 9,200 net acres in Oklahoma, Texas, Kansas and New Mexico, which includes responsibility for leasing and production matters. +Mr. Houston served on the board of directors and executive committee of Deaconess Hospital, Oklahoma City, Oklahoma, from January 1993 until December 2008. Mr. Houston has served as the lead director on the board of directors of +Diamondback Energy, Inc. (Nasdaq Global Market: FANG) since October 2012, is a member of its audit and compensation committees and is the chair of its nominating and corporate governance committee. He also served as a director of Bronco Drilling +Company from May 2005 until December 2010 and was a member of its audit committee. Mr. Houston received a Bachelor of Science Degree in business from Oklahoma State University and a graduate degree in banking from Louisiana State University. +Mr. Houston was recognized as a Top 100 Graduate of the College of Business at Oklahoma State University in the last 100 years and served on the faculty of the Louisiana State University Graduate School of Banking from 1980 to 1981. +DEBORAH G. ADAMS, age 58. Ms. Adams has served as a director of the Company since March 2018. Ms. Adams served as Senior Vice President of +Health and Safety, Project and Procurement with Phillips 66 from +7 +Table of Contents +May 2014 until her retirement in October 2016. From 2008 to May 2014, Ms. Adams served as President of Transportation for Phillips 66 and ConocoPhillips. Prior to this position, +Ms. Adams worked as general manager and Chief Procurement Officer for ConocoPhillips beginning in 2005. From 2003 to 2005, Ms. Adams served as general manager, International Refining, for ConocoPhillips. Before this role, Ms. Adams +served as general manager, Global Downstream Information Systems following the ConocoPhillips merger in 2002. Ms. Adams began her career in 1983 as a process engineer in the refining division of the Conoco Global Engineering Department before +moving through a variety of business development, planning, supply and trading and operations positions. She also served on several of ConocoPhillips’ joint venture boards during her tenure at ConocoPhillips. In addition, Ms. Adams has +served on the board of directors of MRC Global Inc. and as a member of its audit committee and its compensation committee since October 2017. Ms. Adams has also served on the board of directors of Austin Industries, Inc., an employee-owned +construction company, and as a member of its audit committee, human resources committee and nomination and governance committee since May 2018. Ms. Adams served two full terms on the board of BakerRipley from February 2012 to February 2018 and +currently serves as a member of the Foundation Board of Trustees and the Board of Governors for the Oklahoma State University. In 2014, Ms. Adams was inducted into the Oklahoma State University College of Engineering, Architecture and +Technology Hall of Fame and in 2015, the Oil and Gas Diversity Council named Ms. Adams to the list of the Top 50 Most Powerful Women in Oil and Gas. Ms. Adams is also a member and a governance fellow of the National Association of +Corporate Directors. Ms. Adams received a Bachelor of Science degree in chemical engineering from Oklahoma State University in 1983. +BEN T. +MORRIS, age 73 . Mr. Morris has served as a director of the Company since August 4, 2014. From 2009 to 2012, Mr. Morris served as the Vice Chairman of the board of directors of the Sanders Morris Harris Group, a financial services +and wealth management company he co-founded in 1987, or SMHG. Since its founding, Mr. Morris has served in various capacities with SMHG, including Executive Vice President and Director of Investment +Banking, President and Chief Executive Officer and a member of the board of directors of SMH Capital, a subsidiary of SMHG, and Chief Executive Officer and a member of the board of directors of SMHG. Since 2012, Mr. Morris has continued as an +employee of Sanders Morris Harris, Inc., a former subsidiary of SMHG. From 1980 to 1986, Mr. Morris served as the Chief Operating Officer of Tatham Corporation, a privately-held company engaged in natural gas transportation and marketing and +oil and gas exploration and production. Mr. Morris began his career as an accountant at Price Waterhouse & Co. in 1967, and in 1973 joined Mid American Oil and Gas Inc. as Chief Financial Officer, eventually serving as President of the +company until its sale in 1979. From 2011 to 2016, Mr. Morris served as a member of the board of directors and Chairman of the audit committee of Yuma Energy, Inc., a publicly traded exploration and production company. Mr. Morris has also +served on the boards of several public companies, including Capital Title Group from 1998 to 2006, American Equity Investment Life Holding Company from 1997 to 2006, Tyler Technologies, Inc. from 2002 until 2005, where he served as Chairman of its +audit committee, Fresh America Corp. from 1992 until 1996, where he served as a member of the compensation committee, and Deeptech International Inc. from 1988 until 1997. Mr. Morris is currently a member of the board of directors of Centrax +International Corporation, a private electrical equipment company. Mr. Morris has an extensive financial background, with over 25 years of experience in various aspects of the investment banking business. Mr. Morris received his Bachelor +of Business Administration Degree from the University of North Texas, and also holds a Certified Public Accountant certificate from the State of Texas, along with several securities licenses. +C. DOUG JOHNSON, age 59 . Mr. Johnson has served as a director of the Company since September 2015. Since August 1981, Mr. Johnson served in +various roles at Phillips 66 and its predecessors Phillips Petroleum Co. and ConocoPhillips Company, which was formed by the merger of Philips Petroleum Co. and Conoco Inc. in 2002. Mr. Johnson most recently served as Vice President, Controller +and principal accounting officer of Phillips 66, a publicly traded company engaged in mid-stream, chemicals, and refining, from April 2012 until his retirement on December 31, 2014. During the same +period, he also served as Vice President, Controller and principal accounting officer of Phillips 66 Partners GP LLC, the general partner of Phillips 66 Partners LP, a publicly traded pipeline subsidiary of Phillips 66. From June 2010 until April +2012, Mr. Johnson served as General Manager, Upstream Finance, Strategy and Planning at ConocoPhillips. Prior to that, Mr. Johnson’s +8 +Table of Contents +tenure at ConocoPhillips included his service as General Manager, Downstream Finance from 2008 to 2010 and General Manager, Upstream Finance from 2005 to 2008. Mr. Johnson also served on the +board of Chevron Phillips Chemical Company LLC, a joint venture of Phillips 66 Partners LP and Chevron Corp., and its audit committee, where he was co-chairman, from April 2012 until December 2014. +Mr. Johnson has also served on the board of directors of Altus Midstream Company, a publicly-traded company, and as chairman of its audit committee since November 2018. Mr. Johnson has an extensive financial and accounting background, with +over 33 years of service in the oil and natural gas industry. Mr. Johnson received his Bachelor of Science Degree in Accounting from the University of Arkansas, and also holds a Certified Public Accountant certificate from the State of +Oklahoma. +SCOTT E. STRELLER, age 51. Mr. Streller has served as a director of the Company since August 2006. In 1992, Mr. Streller +founded the Scott Streller Insurance and Financial Services Agency (Farmers Insurance), which has been recognized both regionally and nationally as one of the top agencies within the Farmers Insurance Group of Companies. Mr. Streller is active +in the community and has served in a variety of leadership roles in local public and non-profit organizations. Additionally, Mr. Streller frequently serves as a guest lecturer at local universities and +insurance and financial services seminars. Mr. Streller earned a Bachelor’s Degree in Business Management from the University of Central Oklahoma. In addition, Mr. Streller received a Master’s in Athletic Administration from +Oklahoma State University. +CRAIG GROESCHEL, age 51. Mr. Groeschel has served as a director of the Company since August 2011. Since 1996, +Mr. Groeschel has served as a founding pastor of LifeChurch, one of the largest churches in the United States. Since founding LifeChurch, Mr. Groeschel has served on its Board of Directors. Under Mr. Groeschel’s leadership, +LifeChurch has grown to 33 locations. Mr. Groeschel received a Bachelor’s Degree in Business Marketing from the Oklahoma City University, a Master’s of Divinity Degree from the Phillips Graduate Seminary and an Honorary Doctorate of +Human Letters from Southeastern Christian University. Mr. Groeschel is a frequent speaker at various domestic and international forums and an author of a number of books. +PAUL D. WESTERMAN, age 63 . Mr. Westerman has served as a director of the Company since October 2017. Mr. Westerman has served as a Trustee +and Director of the Westerman Family Trusts and Westerman Interest Inc., respectively, since 1999. From September 2011 to December 2012, Mr. Westerman served as Senior Executive Vice President and Chief Business Development Officer of J-W Energy Company, a diversified energy company engaged in exploration and production, energy services, midstream and manufacturing, among other businesses. Mr. Westerman joined +J-W Energy Company in 1984 and, during his time there, he served in several other leadership roles, including as Chief Operating Officer. Prior to joining J-W Energy +Company, Mr. Westerman served in various positions at Phillips Petroleum Company, Terra Resources and Kerr-McGee Corporation. Mr. Westerman has served on the Board of Directors of J-W Energy Company +since 1996. Mr. Westerman has also served on the Board of Directors of Oakwood Bank since February 2018. Mr. Westerman previously served as a Director of Vintage Bank, Benedictine College, the Dallas Petroleum Club, the Dallas Wildcatters +Association and the Dallas Hard Hatters Association. Mr. Westerman is also a member of the National Association of Corporate Directors and the Society of Petroleum Engineers. Mr. Westerman earned his bachelor’s degree in petroleum +engineering from the University of Oklahoma and is a Registered Professional Engineer in the State of Texas. +9 +Table of Contents +What does the board of directors recommend? +THE BOARD RECOMMENDS THAT YOU VOTE “FOR” THE ELECTION OF THESE DIRECTORS +What are the committees of the Board? +Our board of +directors has an audit committee, a compensation committee, a nominating and corporate governance committee, which we refer to herein as the nominating committee, an operating excellence and corporate responsibility committee, which committees +perform the functions specified below. The members of each committee are as of the date of this proxy statement. +Committee +Members +Principal Functions +Number of +Meetings in +2018 +Audit +C. Doug Johnson* +David L. Houston +Ben T. Morris +Scott E. Streller +Deborah G. Adams +•   Reviews and discusses with management and the independent auditors the integrity of our +accounting policies, internal controls, financial statements, accounting and auditing processes and risk management compliance. +•   Monitors and oversees our accounting, auditing and financial reporting processes generally, +including the qualifications, independence and performance of the independent auditor. +•   Monitors our compliance with legal and regulatory requirements. +•   Establishes procedures +for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters, and the confidential, anonymous submission by employees of concerns regarding questionable +accounting or auditing matters. +•   Reviews and approves related party transactions. +•   Appoints, determines +compensation, evaluates and terminates our independent auditors. +•   Pre-approves audit and permissible non-audit services to be performed by the independent auditors. +•   Prepares the report required by the Securities and Exchange Commission, or the SEC, for the +inclusion in our annual proxy statement. +•   Reviews and reassesses the adequacy of the audit committee charter on a periodic basis. +•   Inform our independent +auditors of the audit committee’s understanding of significant relationships and transactions with related parties and review and discuss with our independent auditors the auditors’ evaluation of our identification of, accounting for and +disclosure of our relationships and transactions with related parties, including any significant matters arising from the audit regarding our relationships and transactions with related parties. +17 +10 +Table of Contents +Committee +Members +Principal Functions +Number of +Meetings in +2018 +Compensation +Scott E. Streller* +Craig Groeschel +David L. Houston +C. Doug Johnson +Paul D. Westerman +Deborah G. Adams +•   Oversees and administers our executive compensation policies, plans and practices, +including our stock retention guidelines, and evaluates their impact on risk and risk management. +•   Assists the board of directors in discharging its responsibilities relating to the +compensation of our executives, including our chief executive officer, and other key employees. +•   Administers our equity-based compensation plans, including the grants of stock options, +restricted stock awards and other equity awards under such plans. +•   Reviews, approves and administers our cash-based incentive bonus plans, including the +establishment of performance criteria, targets and awards under our 2014 Executive Annual Incentive Compensation Plan. +•   Makes recommendations to the board with respect to incentive compensation. +•   Where appropriate or +required, makes recommendations to our stockholders with respect to incentive compensation and equity-based plans. +•   Conducts annual performance evaluation of the committee. +•   Reviews disclosure +related to executive compensation in our proxy statement and prepares an annual compensation committee report. +•   Reviews and considers the stockholders’ advisory vote on executive compensation and +the frequency of holding such advisory vote. +•   Reviews and reassesses the adequacy of the compensation committee charter. +15 +Nominating and Corporate Governance +Ben T. Morris* +David L. Houston +Scott E. Streller +Paul D. Westerman +•   Assists the board of directors in developing criteria for, identifying and evaluating +individuals qualified to serve as members of our board of directors. +•   Selects and recommends director candidates to the board of directors to be submitted for +election at the Annual Meeting and to fill any vacancies on the board of directors. +•   Periodically reviews and makes recommendations regarding the composition and size of the +board of directors and each of its committees. +•   Reviews and recommends to the board of directors appropriate corporate governance policies +and procedures for the Company. +2 +11 +Table of Contents +Committee +Members +Principal Functions +Number of +Meetings in +2018 +•   Conducts an annual assessment of the qualifications and performance of the board of +directors. +•   Annually reviews and reports to the board of directors on the performance of +management. +•   Reviews and reassesses the adequacy of the nominating committee charter. +Operating Excellence and Corporate Responsibility Committee (1) +Deborah G. Adams* +Craig Groeschel +C. Doug Johnson +Paul D. Westerman +•   Review and make recommendations to our board of directors regarding the health, safety and +environmental protection, and corporate responsibility matters, including governmental relations, political contributions and corporate philanthropy, which we refer to herein as HSE and corporate responsibility matters, and their impact on our +business and operations. +•   Monitor and evaluate management’s actions with respect to the HSE and corporate +responsibility matters. +•   Review reports from our management, consultants or other advisors regarding (i) our +performance with respect to the HSE and corporate responsibility matters and compliance with any related laws and regulations applicable to us, (ii) any significant litigation relating to the HSE and corporate responsibility matters involving +our company, and (iii) any significant legislation or regulations, judicial decisions, treaties, protocols, conventions or other agreements, public policies or other scientific, medical or technological developments involving HSE and corporate +responsibility matters that will or may have a material effect on our business and operations. +•   Review the risks and exposures relating to the HSE and corporate responsibility matters, +including mitigation and remedial actions. +•   Review crisis management planning procedures relating to the HSE and corporate +responsibility matters. +•   If it deems necessary or appropriate, conduct investigations or studies affecting us as +they pertain to the HSE and corporate responsibility matters. +•   Review the effectiveness of internal systems and controls necessary to ensure our +compliance with applicable health, safety and environmental laws, rules and regulations. +0 +12 +Table of Contents +Committee +Members +Principal Functions +Number of +Meetings in +2018 +•   Review our compliance with best industry practices in the areas of health, safety and +environmental protection. +•   Review our political, charitable and educational contributions/programs and the +administration of any political action or similar committees of our employees (commonly known as PACs). +•   Prepare for our board of directors an annual performance evaluation of the Committee. +•   Review and reassess +the adequacy the corporate responsibility committee charter and recommend any appropriate revisions to our board of directors. +•   Carry out any other duties and responsibilities relating to the HSE and corporate +responsibility matters that may be delegated to the corporate responsibility committee by our board of directors from time to time. +* +Committee Chairperson. +(1) +This Committee was formed on October 30, 2018. +Do the committees have written charters? +Yes. The +charters for each of our committees can be found on our website at www.gulfportenergy.com under the “Investors—Corporate Governance” captions. You may also obtain copies of these charters, as well as our Code of Business +Conduct and Ethics, which is described below, by writing to our Senior Vice President of Corporate Development and Strategy, Paul K. Heerwagen IV, at Gulfport Energy Corporation, 3001 Quail Springs Parkway, Oklahoma City, Oklahoma 73134. +Corporate Governance Matters and Communications with the Board +Corporate Governance Highlights +We believe that +effective corporate governance should include regular constructive discussions with our stockholders. We have a proactive stockholder engagement process that encourages feedback from our stockholders. This feedback helps shape our corporate +governance practices, and has specifically resulted in: +• +Adoption of stock ownership guidelines for our non-employee directors and +executive officers to further align the long-term financial interests of our directors and executive officers with those of our stockholders; +• +Increased the size of the board of directors from six to eight; +• +All director nominees are independent, except for our Chief Executive Officer; +• +Independent chair of the board of directors; +• +Majority voting to elect directors; +• +Advancement of board diversity, with the inclusion of a female director to our board and emphasis on diversity in +the nominating and corporate governance committee’s charter; +13 +Table of Contents +• +Creation of the operating excellence and corporate responsibility committee to further develop our commitment to +HSE and corporate responsibility maters and their impact on our business and operations; +• +Active stockholder outreach; +• +Active board oversight of risk and risk management; +• +Periodic board and committee self-assessments conducted by outside law firm; +• +Independent director meetings in executive sessions; +• +93% attendance at 2018 board and committee meetings; and +• +All financially literate audit committee members and four audit committee financial experts in 2018. +Who are our independent directors? +Our board of directors has determined that seven of our eight current board members (Deborah G. Adams, Craig Groeschel, David L. Houston, C. Doug Johnson, Ben +T. Morris, Scott E. Streller and Paul D. Westerman) meet the standards regarding independence set forth in the Nasdaq listing standards and are free of any relationship which, in the opinion of our board of directors, would interfere with the +exercise of independent judgment in carrying out their responsibilities as directors of the Company. In determining Ms. Adams’s independence, the board considered Ms. Adams’s service on the board of directors and the audit and +compensation committees of MRC Global Inc., an NYSE-listed company from which in 2018 we purchased products and services representing less than 1% of either company’s revenues. In determining Mr. Westerman’s independence, the board +considered Mr. Westerman’s service on the board of directors of J-W Energy Company, which performs certain compression and related oilfield services to the Company representing less than 1% of either +company’s revenues in 2018. +Our board of directors has determined that each member of the audit committee is independent for purposes of serving on +such committee under the Nasdaq listing standards and applicable federal law. In addition, our board of directors has determined that each current member of the audit committee is financially literate under the Nasdaq listing standards and that each +of Mr. Johnson, who serves as the Chairman of the audit committee, Ms. Adams, Mr. Houston and Mr. Morris qualifies as an “audit committee financial expert,” as such term is defined in Item 407(d) of Regulation S-K. +Our board of directors has also determined that each member of the compensation committee and the nominating +committee meets the independence requirements applicable to those committees under the Nasdaq rules. In addition, our board of directors determined that each member of our compensation committee is an “outside director” in accordance with +Section 162(m) of the Internal Revenue Code of 1986, as amended, or the Code (as such Section 162(m) was in effect prior to January 1, 2018), and a “non-employee director” in +accordance with Rule 16b-3 under the Securities Exchange Act of 1934, as amended, or the Exchange Act. +Do our non-management directors meet separately without management? +Our +non-management directors have the opportunity to meet in an executive session following each regularly scheduled meeting of the board of directors. During 2018, our +non-management members of the board of directors met in executive session five times. Our operating excellence and corporate responsibility committee was formed in December 2018 and did not meet in 2018. +How can I communicate with the board of directors? +Individuals may communicate with our board of directors or individual directors by writing to our Senior Vice President of Corporate Development and Strategy, +Paul K. Heerwagen IV, at Gulfport Energy Corporation, 3001 +14 +Table of Contents +Quail Springs Parkway, Oklahoma City, Oklahoma 73134. Our Senior Vice President of Corporate Development and Strategy will review all such correspondence and forward to our board of directors a +summary of all such correspondence and copies of all correspondence that, in the opinion of our Senior Vice President of Corporate Development and Strategy, relates to the functions of our board of directors or a committee thereof or that he +otherwise determines requires their attention. Directors may review a log of all such correspondence received by us and request copies. Concerns relating to accounting, internal control over financial reporting or auditing matters will be +immediately brought to the attention of the chairman of the audit committee and handled in accordance with the audit committee procedures established with respect to such matters. +Do directors attend the Annual Meeting? +Recognizing that +director attendance at our Annual Meeting can provide our stockholders with an opportunity to communicate with directors about issues affecting the Company, we actively encourage our directors to attend the Annual Meeting of Stockholders. All eight +of our directors then serving attended the 2018 Annual Meeting of Stockholders in person. +Code of Business Conduct and Ethics +We have adopted a Code of Business Conduct and Ethics designed to help directors and employees resolve ethical issues. Our Code of Business Conduct and Ethics +applies to all directors and employees, including the Chief Executive Officer, the Chief Financial Officer and all senior financial officers. Our Code of Business Conduct and Ethics covers various topics including, but not limited to, conflicts of +interest, fair dealing, discrimination and harassment, confidentiality, compliance procedures and employee complaint procedures. Our Code of Business Conduct and Ethics is posted on our website at www.gulfportenergy.com under the +“Investors—Corporate Governance” captions. +Political Contribution Policy +Engagement in the political, legislative and regulatory process is important to the success of the Company. The Company has delegated compliance and oversight +over this function to the operating excellence and corporate responsibility committee and has adopted a political contributions and activity policy that sets forth the ways by which the Company and its employees may participate in the political, +legislative and regulatory process. All political contributions and activities are subject to compliance with applicable laws. +Aircraft Use Policy +In February 2019, we adopted an aircraft use policy that sets forth our policy with respect to the use of any aircraft chartered or owned by the +Company consistent with best corporate governance practices. We restrict personal use of Company owned or chartered aircraft by our executive officers and other employees, as well as by members of our board of directors. Our aircraft use policy +requires that any personal use of Company owned or chartered aircraft by any NEO be reported as a perquisite, based on the aggregate incremental value of such personal use. See “Summary Compensation Table.” +Nominating Process for Directors, Director Qualifications and Review of Director Nominees +The nominating committee is currently comprised of four non-employee directors, all of whom are independent under +Nasdaq listing standards. As provided by the nominating committee’s charter, our nominating committee identifies, investigates and recommends to our board of directors candidates with the goal of creating a balance of knowledge, experience and +diversity. The committee identifies candidates through the use of third-party search firms, as well as through the extensive networks of our directors and management team in the oil and natural gas industry. +15 +Table of Contents +It is our policy that potential directors should possess the highest personal and professional ethics, +integrity and values, and be committed to representing the interests of our stockholders. In addition to reviewing a candidate’s background and accomplishments, candidates for director nominees are reviewed in the context of the current +composition of our board of directors and the evolving needs of our business. It is the policy of our board of directors that at all times at least a majority of its members meets the standards of independence promulgated by Nasdaq and the SEC and +that all members reflect a range of talents, skills and expertise, particularly in the areas of accounting and finance, management, leadership and oil and gas related industries sufficient to provide sound and prudent guidance with respect to our +operations and the interests of our stockholders. In addition to the foregoing factors, it is our policy that our nominating committee shall consider diversity in its evaluation of candidates for board membership. To reflect this policy, our +nominating committee, in accordance with its charter, seeks to include diverse candidates in all director searches, taking into account diversity of gender, race, ethnicity, background, age, thought and tenure on our board (in connection with the +consideration of the renomination of an existing director), including by affirmatively instructing any search firm retained to assist the nominating committee in identifying director candidates to seek to include diverse candidates from traditional +and nontraditional candidate groups. In accordance with its charter, our nominating committee periodically reviews and makes recommendations regarding the composition of the board and the size of the board. +We also require that the members of our board of directors be able to dedicate the time and resources sufficient to ensure the diligent performance of their +duties on our behalf, including attending meetings of the board of directors and applicable committee meetings. In accordance with its charter, our nominating committee periodically reviews the criteria for the selection of directors to serve on our +board and recommends any proposed changes to our board of directors for approval. +Our board of directors will consider stockholder nominations for +director candidates upon written submission of such recommendation to our Senior Vice President of Corporate Development and Strategy along with, among other things, the nominee’s qualifications and certain biographical information regarding +the nominee, such nominee’s written consent to serving as a director if elected and being named in the proxy or information statement and certain information regarding the status of the stockholder submitting the recommendation, all in the +manner required by our amended and restated bylaws and the applicable rules and regulations promulgated under the Exchange Act. Following verification of the stockholder status of persons proposing candidates, recommendations will be aggregated and +considered by our board of directors at a regularly scheduled or special meeting. If any materials are provided by a stockholder in connection with the nomination of a director candidate, such materials will be forwarded to our board of directors. +See “Submission of Future Stockholder Proposals” below for additional detail regarding submitting director nominees. +Our board of directors may +also review materials provided by professional search firms or other parties in connection with a nominee who is not proposed by a stockholder. In evaluating such nominations, our board of directors will seek to achieve a balance of knowledge, +experience and diversity on the board. Our board of directors uses the same criteria for evaluating candidates nominated by stockholders as it does for those proposed by current board members, professional search firms and other persons. After +completing its evaluation, our board of directors approves the final slate of director nominees. +Our nominating committee approved the director nominees +submitted for election at this Annual Meeting. Each nominee is a current board member and brings a strong and unique background and set of skills to our board of directors, giving our board of directors as a whole competence and experience in a +variety of areas, including corporate governance and board service, executive management, oil and natural gas industry, accounting and finance and risk assessment and management. +Specifically, in nominating the candidates submitted for election at this Annual Meeting, our nominating committee considered such candidates’ past +service on our board and the information discussed in each of the directors’ individual biographies set forth beginning on page 7 above. In particular, with regard to Messrs. Houston and Streller, our nominating committee considered their +respective decades of business success and +16 +Table of Contents +proven risk assessment skills. With respect to Mr. Wood, his extensive experience as a Chief Executive Officer and director of public exploration and production companies and energy-focused +private equity firms, executive management skills and extensive knowledge of the oil and natural gas sector and corporate governance led our nominating committee to conclude that he should serve as one of our directors. The nominating committee +nominated Mr. Morris due to his prior public company experience, extensive financial background (including over 25 years of experience in various aspects of the investment banking business), and strong oil and natural gas background. With +regard to Mr. Groeschel, our nominating committee considered his leadership and prior board services at a non-profit organization, community involvement and communication skills. The nominating committee +recommended Mr. Johnson due to his prior public company experience, strong oil and natural gas background and financial expertise. Mr. Westerman’s strong background in oil and energy services, as well as his executive roles at an +energy services company, were considered by our nominating committee. The nominating committee nominated Ms. Adams’s due to her diverse experience in various segments of the oil and gas industry, her high-level management positions at a +public oil and gas company and recognition as one of the top 50 women in the oil and gas industry. Each of the director nominees has agreed to serve as a director if elected. +Director Leadership Structure +The positions of Chairman of the Board and Chief Executive Officer are held by two different individuals, and the Chairman of the Board is a non-executive position elected from among the directors by the board. Separating the positions of Chairman of the Board and Chief Executive Officer has allowed our Chief Executive Officer to focus on business +development strategies as well as our day-to-day business and operations, while allowing our Chairman of the Board to lead the board in its fundamental role of providing +advice to and oversight of management. The Chairman of the Board has provided leadership to our board of directors and worked with the board of directors to define its structure and activities in the fulfillment of its responsibilities. The Chairman +of the Board has set the board agendas, with the input from other members of the board and our management, facilitated communications among and information flow to directors, has the power to call special meetings of our board of directors and +stockholders and presided at meetings of our board of directors and stockholders. The Chairman of the Board has also advised and counseled our Chief Executive Officer and other officers. Our board of directors does not have a position of a lead +director. +We believe that our directors bring a broad range of leadership experience to the boardroom and regularly contribute to the thoughtful +discussion involved in effectively overseeing the business and affairs of the Company. We believe that the atmosphere of our board is collegial, that all board members are well engaged in their responsibilities, and that all board members express +their views and consider the opinions expressed by other directors. Seven out of eight of our director nominees are independent under the Nasdaq listing standards and SEC rules. We believe that all of our independent directors have demonstrated +leadership in business enterprises and are familiar with board processes. Our independent directors are involved in the leadership structure of our board by serving on our audit, nominating, operating excellence and corporate responsibility and +compensation committees, comprised entirely of independent directors and each having an independent chairperson. +Specifically, the chair of our audit +committee oversees the accounting and financial reporting processes, as well as compliance with legal and regulatory requirements. The chair of our compensation committee oversees our compensation policies and practices and their impact on risk and +risk management. The chair of our operating excellence and corporate responsibility committee oversees our practices relating to health, safety and environmental protections, as well as governmental relations, political contributions and corporate +philanthropy. The chair of our nominating committee monitors matters such as the composition of the board and its committees, board performance and best practices in corporate governance. As such, each committee chair provides independent leadership +for purposes of many important functions delegated by our board of directors to such committee. +17 +Table of Contents +Board of Director’s Role in Risk Oversight +As an exploration and production company, we produce natural gas, natural gas liquids and oil and face a number of risks, including risks associated with the +supply of and demand for natural gas and natural gas liquids, volatility of hydrocarbon prices, exploring for, developing, producing and delivering natural gas and natural gas liquids, declining production, environmental and other government +regulations and taxes, weather conditions, including hurricanes and tornadoes, that can affect oil and natural gas operations over a wide area, adequacy of our insurance coverage, political instability or armed conflict in oil and natural gas +producing regions and overall economic environment. Management is responsible for the day-to-day management of risks we face as a company, while our board of directors, +as a whole and through its committees, has responsibility for the oversight of risk management. In its risk oversight role, our board of directors has the responsibility to satisfy itself that the risk management processes designed and implemented +by management are adequate and functioning as designed. +Our board of directors believes that full and open communication between management and the board +of directors is essential for effective risk management and oversight. Our Chairman of the Board meets regularly with our Chief Executive Officer to discuss strategy and risks facing the Company. Our executive officers regularly attend the board +meetings and are available to address any questions or concerns raised by the board on risk management-related and any other matters. Other members of our management team periodically attend board and committee meetings or are otherwise available to +confer with the board to the extent their expertise is required to address risk management matters. Periodically, our board of directors receives presentations from senior management on strategic matters involving our operations. During such +meetings, our board of directors also discusses strategies, key challenges, and risks and opportunities for the Company with senior management. +While our +board of directors is ultimately responsible for risk oversight at the Company, our four committees assist the board in fulfilling its oversight responsibilities in certain areas of risk. Our audit committee assists the board in fulfilling its +oversight responsibilities with respect to risk management in the areas of financial reporting, internal controls and compliance with legal and regulatory requirements, and discusses policies with respect to risk assessment and risk management. Our +compensation committee assists the board in fulfilling its oversight responsibilities with respect to the management of risks arising from our compensation policies and programs. Our operating excellence and corporate responsibility committee +assists the board in fulfilling its oversight responsibilities with respect to the management of risks relating to actions of the Company that may impact the environment or public health, as well as our involvement with governmental entities, +including political contributions. Our nominating committee assists the board in fulfilling its oversight responsibilities with respect to the management of risks associated with board organization, membership and structure, succession planning for +our directors and executive officers and corporate governance. +Corporate Responsibility and Sustainability +We believe that the natural gas, natural gas liquids and oil we produce as an exploration and production company contribute to economic growth and to +society and view the connection between responsible operations and business success as a fundamental necessity. We are committed to the safe and responsible development of our resources in the geographic areas in which we operate, including the +Utica Shale in Ohio and the SCOOP basin in Oklahoma. We operate in the same areas in which our employees and their families live, and are dedicated to preserving and protecting the environment for the benefit of our stockholders, employees and our +communities. We have identified key topics where we have an impact, or that impact our business: energy, emissions, waste and spills, water use, compliance, health, safety and environmental protection, training and education, and community. We also +formed an operational excellence and corporate responsibility committee of our board of directors, which oversees matters concerning the health, safety and environmental protection, corporate responsibility, including governmental relations, +political contributions and corporate philanthropy, and their impact on our business and operations, and monitors and evaluates management’s actions with respect to such matters. Our operational excellence and corporate responsibility committee +also monitors our political, charitable +18 +Table of Contents +and educational contributions and programs. One of our strategic initiatives for 2018 and 2019 include our performance in the area of health, safety and environmental responsibility, which +directly impacts evaluation of our executives’ performance and is one of the targets under our annual cash incentive plan for our participating executive officers, further motivating them to contribute to the Company’s continuous efforts +and strong records in those areas. +Commitment to Protecting People . We continue to make protection of our employees and contractors a +fundamental component of our corporate responsibility efforts. We maintain a formal health and safety program that includes employee training and new hire orientation on a variety of environmental and safety topics, including proper reporting. It +also ensures employees have all necessary equipment to operate safely. Employees also undergo significant training and education each year to become experts on regulatory compliance, industry standards and innovative opportunities to effectively +manage the challenges of developing our resources. In light of the nature of our work and the locations of some sites in and near communities, we also proactively prepare for the unexpected by developing emergency response plans to cover every +possible situation, including natural disasters and human threats. +Commitment to Environmental Responsibility . We are committed to +exploration, exploitation, acquisition and production of natural gas, natural gas liquids and oil in an environmentally responsible manner and in compliance with applicable federal, state and local environmental laws, including laws regulating +emissions of greenhouse gases, such as methane. We take actions beyond those required by law to reduce methane emissions, recycle an increasing percentage of water and make significant investment in infrastructure to reduce environmental footprint +and potential impact on climate change. In keeping with that commitment, our overall approach includes these key activities: +• +Investing in and implementing the best available technology; +• +Focusing on the hydrocarbon gathering infrastructure, as well as freshwater disposal and produced-water +recycling; +• +Safely transporting natural gas, natural gas liquids and oil, minimizing impacts from air emissions, flared gas +and spills; and +• +Maximizing hydrocarbon transportation via pipelines. +Commitment to Community . Giving back to society and the community in which we operate is part of who we are and we strongly believe these +investments of time, money and compassion allow our employees to both experience and demonstrate the core values of our company. +Political +Contribution . Engagement in the political, legislative and regulatory process is important to the success of the Company and we have adopted a political contributions and activity policy that sets forth the ways by which the Company and its +employees may participate in the political, legislative and regulatory process, subject to compliance with applicable laws. See “Political Contribution Policy” above. +Future Focus . We believe that our achievements to date demonstrate a serious and growing commitment to corporate, environmental, community and +political responsibility. Our core values as a company are focused on leadership, integrity, excellence, people and teamwork. We will continue to benchmark our operations against industry peers and best practices and strive for continuous +improvement. As we enhance our corporate responsibility efforts and increase stockholder value, we look forward to providing periodic updates to our stockholders that detail both our challenges and successes. +19 +Table of Contents +Audit Committee Report +The audit committee is responsible for providing independent, objective oversight for the integrity of the Company’s financial reporting process and +internal control system. Other primary responsibilities of the audit committee include the review, oversight and appraisal of the qualifications, independence and audit performance of the Company’s independent registered public accounting firm +and providing an open venue for communication among the independent registered public accounting firm, financial and senior management, our internal auditors and the board of directors of the Company. A more detailed description of the +responsibilities of the audit committee is set forth in its written charter, which is posted on our website at www.gulfportenergy.com under the “Investors—Corporate Governance” captions. The following report summarizes certain +of the audit committee’s activities with respect to its responsibilities during 2018. +Review with Management and Independent Registered Public +Accounting Firm. The audit committee has reviewed and discussed with management and Grant Thornton LLP, an independent registered public accounting firm, the audited consolidated financial statements of the Company for the year ended +December 31, 2018. +Controls and Procedures. Management has established and maintains a system of disclosure controls and procedures designed +to provide reasonable assurance that information required to be disclosed by the Company in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s +rules and forms, and includes controls and procedures designed to provide reasonable assurance that information required to be disclosed by us in those reports is accumulated and communicated to our management, including our Chief Executive Officer +and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. As of December 31, 2018, management conducted an evaluation of our disclosure controls and procedures. Based on this evaluation, our Chief +Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective to provide reasonable assurance that the information required to be disclosed by us in the reports we file or submit under the Exchange +Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. The audit committee discussed with management and Grant Thornton LLP the quality and adequacy of the Company’s disclosure +controls and procedures. +Management has also established and maintains a system of internal controls over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. These internal controls are designed to provide reasonable assurance that the reported financial information is presented +fairly, that disclosures are adequate and that the judgments inherent in the preparation of financial statements are reasonable. Management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the +framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on management’s evaluation under the framework in Internal Control—Integrated Framework, +management did not identify any material weaknesses in our internal control over financial reporting and concluded that our internal control over financial reporting was effective as of December 31, 2018, as discussed in more detail in +Management’s Report on Internal Control Over Financial Reporting, which was included in our Annual Report on Form 10-K for the year ended December 31, 2018, filed with the SEC on February 28, +2019. Our internal control over financial reporting as of December 31, 2018 has been audited by Grant Thornton LLP, as stated in its attestation report, which was included in our Annual Report on Form +10-K for the year ended December 31, 2018, filed with the SEC on February 28, 2018. The audit committee reviewed and discussed with management and Grant Thornton LLP the Company’s system of +internal control over financial reporting in compliance with Section 404 of the Sarbanes-Oxley Act of 2002. +Discussions with Independent Auditing +Firm. The audit committee has discussed with Grant Thornton LLP, independent auditors for the Company, the matters required to be discussed by Rules on Auditing Standard No. 16, Communication with Audit Committees, as amended. The audit +committee has received the written disclosures and the letter from Grant Thornton LLP required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the audit +committee concerning independence and has discussed with that firm its independence from the Company. +20 +Table of Contents +Recommendation to the board of directors. Based on its review and discussions noted above, the audit +committee recommended to the board of directors that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. +THE AUDIT COMMITTEE +C. Doug Johnson, Chairman +David L. Houston +Ben T. Morris +Scott E. Streller +Deborah G. Adams +21 +Table of Contents +Executive Officers +The following table sets forth the name, age and positions of each of our executive officers as of the record date: +Name +Age +Position +David M. Wood +62 +Chief Executive Officer and President, Director +Donnie Moore +54 +Chief Operating Officer +Keri Crowell +44 +Chief Financial Officer and Secretary +Michael Sluiter +46 +Senior Vice President, Reservoir Engineer +Paul Heerwagen +34 +Senior Vice President of Corporate Development and Strategy +Robert Jones +57 +Senior Vice President of Drilling +Stuart Maier +65 +Senior Vice President of Geosciences +Mark Malone +56 +Senior Vice President of Operations +Ty Peck +42 +Senior Vice President of Midstream and Marketing +Lester Zitkus +53 +Senior Vice President of Land +Steve Baldwin +65 +Vice President of Reservoir Engineering +Biographical information for David M. Wood is set forth in this proxy statement under the heading “Election of Directors +and Director Biographies.” +DONNIE MOORE. Mr. D. Moore has served as Chief Operating Officer of the Company since January 2018. +He also served as Interim Chief Executive Officer of the Company from October 29, 2018, the date our former Chief Executive Officer and President left the Company, to December 18, 2018, the dated of the appointment of Mr. Wood as our +new Chief Executive Officer and President. From 2007 until December 2017, Mr. D. Moore worked at Noble Energy, Inc., or Noble, where he most recently served as Vice President of Noble’s Texas operations for its Eagle Ford and Delaware +Basin assets. Prior to that, Mr. D. Moore held various leadership roles at Noble including Vice President of the Marcellus Business Unit, Manager for Operations of the Wattenberg/DJ Business Unit, Manager of Operations for the Gunflint +discovery in the Deepwater Gulf of Mexico and Development Manager for Noble’s Mid-Continent and Gulf Coast positions. From 1989 until 2007, Mr. D. Moore served in a variety of roles with ARCO Oil and +Gas Company, Vastar Resources, Inc. and BP America. Mr. D. Moore holds a Bachelor of Science degree in Petroleum Engineering from Louisiana Tech University. +KERI CROWELL . Ms. Crowell has served as Chief Financial Officer of the Company since January 2017 and as Secretary since October 2017. Prior to +these roles, Ms. Crowell served as Chief Accounting Officer of the Company from September 10, 2015 until her appointment as Chief Financial Officer in January 2017. Ms. Crowell also served as a Vice President of the Company from April +2014 until her appointment as Chief Financial Officer in January 2017 and as Controller from March 2006 until her appointment as the Chief Accounting Officer in September 2015. Ms. Crowell joined the Company in October 2005 as Assistant +Controller. Prior to joining the Company, Ms. Crowell served in various accounting and/or audit roles at Ernst and Young LLP, Arthur Andersen LLP and an Oklahoma City-based accounting firm. Ms. Crowell holds a Bachelor of Science in +Business Administration and Accounting and Masters of Business Administration degrees from Oklahoma State University, and also holds a Certified Public Accountant license from the State of Oklahoma. Ms. Crowell is a member of Oklahoma Society +of Certified Public Accountants and Financial Executives International, or FEI, and served as a board member and the treasurer of the FEI Oklahoma City chapter from 2012 until 2014. +MICHAEL SLUITER . Mr. Sluiter has served as Senior Vice President of Reservoir Engineering of the Company since December 2018. Mr. Sluiter +joined the Company from Noble Energy, Inc., where he held various +22 +Table of Contents +engineering positions from January 2012 to November 2018, including, most recently, as the Permian Basin Business Unit Manager. Mr. Sluiter has over 17 years of experience in unconventional +resource development, reservoir engineering, subsurface development and business development and acquisitions, as well as leadership skills, which he developed at Noble Energy, Santos Australia and Santos USA. Mr. Sluiter began his career as a +wireline field services engineer for Schlumberger in Thailand. Mr. Sluiter holds a Bachelor of Science degree in Chemical Engineering from the University of Sydney, Australia. +PAUL HEERWAGEN . Mr. Heerwagen has served as Senior Vice President of Corporate Development and Strategy effective January 2017 and, prior to such +appointment, served as Vice President of Corporate Development since May 2014. Since January 2017, Mr. Heerwagen has served as a director of Mammoth Energy Services, Inc., a Nasdaq-listed oilfield services company, as the Company’s +nominee. Prior to his Corporate Development role with the Company, Mr. Heerwagen served as our Director of Investor Relations and Corporate Affairs from May 2008 to May 2014. From March 2012 through December 2014, Mr. Heerwagen served as +President of Stingray Pressure Pumping LLC and Stingray Logistics LLC. He has also served in various financial, investor relations and corporate affairs roles since joining the Company in 2006. Mr. Heerwagen has served on the Legislative +Committee of the Oklahoma Independent Petroleum Association since May 2017. Mr. Heerwagen holds a Bachelor’s Degree in Finance from Oklahoma State University. +ROBERT JONES . Mr. Jones has served as Senior Vice President of Drilling effective January 2017 and, prior to such appointment, served as Vice +President of Drilling since November 2013. Prior to joining the Company, Mr. Jones was with Chesapeake Energy Corporation, or Chesapeake, serving as Drilling Engineering Manager for the Haynesville, Barnett and Eagle Ford from February 2001 to +September 2013. Prior to this role, during his tenure at Chesapeake, Mr. Jones served as District Manager for the Permian Basin and Senior Drilling Engineer for operations across Oklahoma, Texas and New Mexico. Mr. Jones graduated with a +Bachelor’s Degree in Petroleum Engineering from the University of Oklahoma in 1985. +STUART MAIER. Mr. Maier has served as Senior Vice +President of Geosciences since March of 2017 and, prior to such appointment, served as Vice President of Geosciences since August 2013. Prior to that position, he served as Geological/Geophysical Manager of the Company since May 1998. From 1993 to +May 1998, Mr. Maier had served as Senior Geologist with DLB Oil & Gas, Inc. From 1992 until joining DLB Oil & Gas, Inc., Mr. Maier was a consulting geologist/geophysicist and, from 1981 to 1991, Mr. Maier was a +geologist/geophysicist with The Anschutz Corporation, an oil and natural gas exploration and production company. From 1979 to 1981, Mr. Maier was a production geologist for Gulf Oil Exploration and Production Company. From 1977 to 1979, +Mr. Maier was a well site geologist. Mr. Maier received a Bachelor of Science Degree in Geology from the University of Missouri. Mr. Maier is a member of the American Association of Petroleum Geologists. +MARK MALONE . Mr. Malone has served as Senior Vice President of Operations effective January 2017 and prior to such appointment, served as Vice +President of Operations since November 16, 2013. Prior to joining the Company, Mr. Malone was with Sierra Engineering, LLC from August 2012 to November 2013, serving as Engineering Manager. Prior to joining Sierra Engineering, +Mr. Malone served as Senior Asset Manager for the Marcellus Shale at Chesapeake from January 2010 to November 2013. Mr. Malone also served as Vice President of Stimulation & Production for New Tech Engineering from July 2007 to +January 2010. Mr. Malone started his career and subsequently served 20 years with The Western Company of North America and BJ Services Company from December 1987 to July 2007 in various engineering and management positions of increasing +responsibility until ending his career with BJ Services where he spent the last ten years as Permian Region Technical Manager. Mr. Malone is a member of the Board of Directors for the Southwestern Petroleum Short Course, an SPE member since +1989, an author of multiple technical publications, co-author of text on hydraulic fracturing and a patent holder. Mr. Malone graduated with a Bachelor’s Degree in Agricultural Engineering from Texas +Tech University in 1987. +TY PECK . Mr. Peck has served as Senior Vice President of Midstream and Marketing effective January 2017 and, prior +to such appointment, served as Managing Director of our midstream operations from December 16, +23 +Table of Contents +2013 until January 2017. Prior to joining the Company, Mr. Peck was previously with Access Midstream Partners, serving as the Director of Commercial Services. In addition, prior to joining +Access Midstream Partners, Mr. Peck served as Producer Services Manager at Enogex LLC. Mr. Peck graduated with a Bachelor’s Degree in Finance from the University of Central Oklahoma in 2000 and holds a Master’s Degree in Business +Administration from the University of Oklahoma. +LESTER ZITKUS . Mr. Zitkus has served as Senior Vice President of Land effective January 2017 +and, prior to such time, served as Vice President of Land since March 2014. Prior to joining the Company, Mr. Zitkus served as an independent consultant from October 2013 to March 2014 and as Vice President of Land for Chesapeake from May 2007 +to October 2013. During his 20-year tenure with Equitable Resources Inc. (now EQT Corp.), he held various positions, including Vice President of Operations and Senior Vice President of Land, between 1987 and +2007. He holds a degree in Mineral Land Management from the University of Evansville. Mr. Zitkus is a member of the American Association of Professional Landmen and Past Regional Director of the Independent Producers Association of America. +STEVE BALDWIN . Mr. Baldwin has served as Vice President of Reservoir Engineering since August 2013. Prior to that position, he served as +Senior Reservoir Engineer of the Company since October 2006. From February 2001 through September 2006, he served as Senior Reservoir and Acquisition Engineer for Chaparral Energy Inc. From 1996 to December 2000, Mr. Baldwin served as Senior +Operations Engineer for Saba Energy of Texas, Inc. Prior to that, Mr. Baldwin served as Operations Manager for Merrico Resources. Mr. Baldwin began his career with Mobil Oil Corporation after receiving his Bachelor of Science Degree from +the University of Oklahoma. Mr. Baldwin is a member of the Society of Petroleum Engineers. +24 +Table of Contents +Compensation Discussion and Analysis +This Compensation Discussion and Analysis, or CD&A, explains the Compensation Committee’s compensation philosophy, summarizes our executive +compensation programs and describes compensation decisions for Gulfport’s Chief Executive Officer, or CEO, Chief Financial Officer, or CFO, and next three highest paid executives for 2018. These officers, known as our NEOs, are: +David M. Wood +Chief Executive Officer and President +Michael G. Moore +Former Chief Executive Officer and President +Keri Crowell +Chief Financial Officer +Donnie Moore +Chief Operating Officer +Stuart Maier +Senior Vice President of Geosciences +Paul Heerwagen +Senior Vice President of Corporate Development +and Strategy +David M. Wood, jointed the Company as our Chief Executive Officer and President on December 18, 2018. Michael G. Moore, +our former Chief Executive Officer and President, stepped down from these roles, and as a member of our board of directors, effective October 29, 2018. Donnie Moore is not related to Michael G. Moore, our former Chief Executive Officer and +President. +25 +Table of Contents +EXECUTIVE SUMMARY +Our Market Environment and Business Performance in 2018 +During 2018, the oil and natural gas industry continued to experience volatility, with oil and natural gas prices fluctuating significantly in response to +changes in supply and demand, market uncertainty and a variety of other factors beyond our control. During this period, we continued to focus on operational efficiencies in an effort to reduce our overall well costs and deliver better results in a +more economical manner, all while growing our production volumes. In response to current declining forward natural gas prices, we have shifted to building an organization that is focused on disciplined capital allocation, cash flow generation and a +commitment to executing a thoughtful, clearly communicated business plan that enhances value for all of our stockholders. Our current goal is to maximize results with the core assets in our portfolio today and focus on returns that will allow us to +operate within our cash flow. These market and business considerations were factored in by the Compensation Committee when setting our executives’ compensation for 2018, focused on measurable performance and alignment with long-term interests +of our stockholders, operational and capital efficiencies and stockholder return, as well as our competition for and retention of top executive talent as our Company and industry continue to respond to volatility in the energy sector. +Our key business accomplishments during 2018 included: +• +Production increased 25% to approximately 496,505 MMcfe for the year ended December 31, 2018 from +approximately 397,543 MMcfe for the year ended December 31, 2017. +• +Oil and natural gas revenues, before the impact of derivatives, increased 36% to $1.5 billion for the year +ended December 31, 2018 from $1.1 billion for the year ended December 31, 2017. +• +During 2018, we reduced our unit lease operating expense by 10% to $0.18 per Mcfe from $0.20 per Mcfe during the +year ended December 31, 2017. +• +During 2018, we reduced our unit general and administrative expense by 15% to $0.11 per Mcfe from $0.13 per Mcfe +during the year ended December 31, 2017. +• +In 2018, we reduced our unit midstream gathering and processing expense by 8% to $0.58 per Mcfe from $0.63 per +Mcfe during the year ended December 31, 2017. +• +We spud 36 gross (31.6 net) wells, turned to sales 50 gross (47.8 net) operated wells, participated in an +additional 68 gross (7.5 net) wells that were drilled by other operators on our Utica Shale and SCOOP acreage and recompleted 47 existing wells in our Southern Louisiana fields. Of our 36 new wells spud during 2018, seven were completed as producing +wells and, at year end, 29 were in various stages of completion. +• +In January 2018, our board of directors approved a stock repurchase program to acquire up to $100.0 million +of our outstanding common stock, and in May 2018 expanded this program to acquire up to an additional $100.0 million of our common stock during 2018 for a total of up to $200.0 million, which we believe underscores the confidence we have +in our business model, financial performance and asset base. During 2018, we purchased 20.7 million shares of our outstanding common stock for a total of approximately $200.0 million. +• +On May 1, 2018, we sold our 25% equity interest in Strike Force Midstream LLC to EQT Midstream Partners, LP +for $175.0 million in cash. +• +On June 29, 2018, we sold 1,235,600 shares, and on July 30, 2018 we sold an additional 118,974 shares, +of common stock of Mammoth Energy, Inc., or Mammoth Energy, in an underwritten public offering and related partial exercise of the underwriters’ option to purchase additional shares for aggregate net proceeds to us of approximately +$51.5 million. Following the sale of these shares, we owned 9,829,548 shares, or 21.9% at December 31, 2018, of Mammoth Energy’s outstanding common stock. +26 +Table of Contents +• +In January 2019, our board of directors approved a new stock repurchase program to acquire up to +$400.0 million of our outstanding common stock within a 24 month period, which we believe underscores the confidence we have in our business model, financial performance and asset base. +Good Compensation Program Governance Practices +Our +Compensation Committee remains committed to mitigating excessive risk-taking in the design and administration of our compensation program to ensure the alignment of our program with the long-term interests of our stockholders. The following table +summarizes the compensation and governance best practices that we follow and the disfavored practices that we avoid: +Good Compensation Practices +What We Do +What We Don’t Do +Vast majority of NEO pay is at risk, with a significant portion conditioned on achievement of pre-determined +operational, capital efficiency and safety and environmental responsibility targets, and a relative TSR, or RTSR, metric +No liberal share recycling in our stock incentive plan +Beginning with 2019, implementation of performance-based equity awards, based on RTSR over a three-year performance period, comprising 50% of all NEO equity +awards granted in 2019 +No outstanding stock options and no grants of stock options +Robust disclosure of our performance metrics and targets +No hedging of Gulfport securities by our NEOs or directors +Balanced approach to executive compensation, combining long-term and short term and equity and cash compensation, prioritizing long-term equity compensation and +focusing on performance-based equity and cash compensation +No holding of Gulfport securities in a margin account by our NEOs or directors +Full three-year vesting for equity grants to our NEOs +No pledging of Gulfport securities by our NEOs or our directors +Regular review of share utilization and dilution when granting equity awards +No guaranteed or discretionary bonuses, except in certain limited circumstances +Robust stock-ownership guidelines for directors and executive officers (NEW in 2019) +No tax gross-ups +Annual enterprise risk assessments +No pension or supplemental executive retirement plans to our current executive officers (except for a +our broad-based 401(k) plan) +Clawback policy that allows us to recover incentive compensation +No excessive perquisites +Use of independent compensation consulting firm +No single-trigger vesting of equity awards in connection with a change of control for awards granted +in 2019 and beyond +27 +Table of Contents +Good Compensation Practices +What We Do +What We Don’t Do +Annual advisory “say-on-pay” vote +No employment contract with our new Chief +Executive Officer and President +Active stockholder outreach efforts with respect to executive compensation and corporate governance +Compensation Committee comprised of all independent directors +Key 2018 Executive Compensation Actions +Compensation actions in 2018 were aligned with our operational, capital efficiency and strategic performance and the current market conditions during the year: +• +In April 2018, the base salaries of our NEOs who were employed by the Company at that time were +increased by approximately 3.5% to bring the total direct compensation for such NEOs to approximately the 25 th percentile, on average, of total compensation paid to similarly executives at the +2018 Compensation Peer Group. In connection with Mr. Wood’s appointment as our CEO and President in December 2018, the Compensation Committee set his annual base salary for the balance of 2018, which was aligned with approximately the 25 th percentile of our 2018 Compensation Peer Group. A discussion of annual base salaries of Mr. Wood and other NEOs for 2018 is included in the “2018 Compensation Decisions—Base +Salary” section. +• +Annual Incentive Awards were paid out at 85% of target . Strong EBITDA performance, production growth and +return on average capital employed targets for 2018 were offset by below-threshold RTSR and our inability to achieve designated strategic objectives. Calculated payout was at 120% of target, but the Compensation Committee exercised its negative +discretion granted under our Annual Incentive Plan and reduced payout to 85% of target in light of a broader evaluation of Company performance and the RTSR achieved during the performance period. See “2018 Compensation Decisions—Annual +Incentive Awards” for a description of the performance metrics/goals and the relative weightings assigned for purposes of determining the 2018 annual incentive awards for each of our participating NEOs, as well as the actual results and payouts +achieved under the annual incentive plan. +• +Added new metrics to the annual incentive plan to focus on returns . Added return on average capital +employed (ROACE) and reduced the number of strategic measures in the scorecard. +• +2018 long-term incentive, or LTI, awards, comprising the largest single component of NEO pay, were approved +with the goal to achieve, on average, an alignment of the NEOs’ total direct compensation with the 25 th percentile of the peer group . In 2018, we granted relatively +conservative equity grants in the form of time-vesting restricted stock units to our NEOs. We believe these awards, which provided for a three-year vesting schedule with respect to our NEOs that remain in continuous service with the Company, promote +executive talent retention, alignment with long-term stockholder interests and long-term stock ownership by management, without creating excessive levels of dilution for our stockholders. +• +Added performance-based LTI awards in 2019 . After taking into consideration the input received from our +stockholders and the recommendation of the independent compensation consultant, the Compensation Committee determined that for 2019: (i) 50% of the equity awards granted to our NEOs will consist of performance-based restricted stock units, vesting +over a three-year performance period, based on the Company’s achievement of targeted weighted average RTSR during the performance period and the executive’s continuous service through the last day of the performance +28 +Table of Contents +period; and (ii) 50% of the equity awards granted to our NEOs will consist of time vesting restricted stock units, vesting over a three-year period. The Compensation Committee will continue to +evaluate the appropriate mix of equity incentive award types going forward. See “2018 Compensation Decisions—Long-Term Equity-Based Incentive Awards” and “Changes to Our Compensation Program for 2019” for further discussion. +CEO Compensation Aligned with Performance +As described above, the target total direct compensation of our NEOs is heavily weighted towards variable, at-risk +compensation, causing their total realizable and realized compensation to reflect the impact of recent challenging market conditions in the energy sector. This compensation structure often results in our NEOs realizing different amounts than what is +reported in the Summary Compensation Table. For example, in 2018, the realizable and realized value of our NEO compensation was meaningfully less than the NEOs’ target opportunities. +Components of Pay +Base Salary +Annual Incentive +Long-Term Incentives +Target Compensation +Annualized 2018 salary +Target annual incentive opportunity +Grant date value of RSUs granted during the year +Realizable Compensation +Actual salary paid +Actual incentive paid +Face value of RSUs granted during 2018, as of December 31, 2018 +Realized Compensation +Actual salary paid +Actual incentive paid +Value realized upon vesting of RSUs during 2018 +As shown below, our former CEO and President’s realized and realizable pay for 2018 was also negatively impacted by his +departure from the Company in October 2018, as a result of which he forfeited all of his unvested restricted stock units and was not entitled to receive performance-based cash compensation under our annual incentive plan. +2018 CEO Pay +Target vs Realizable +vs Realized +29 +Table of Contents +Annual Say-On-Pay +Advisory Vote +The Compensation Committee values the insight it gleans from our stockholder outreach and from our annual +say-on-pay advisory vote on executive compensation. In 2018, approximately 97% of the total votes cast were in favor of our say-on-pay proposal. Although this vote demonstrates a strong stockholder approval of our executive compensation programs, the Compensation Committee continues to carefully review our executive pay programs +to ensure they emphasize pay for performance and are aligned with the interests of our stockholder and the Company’s value drivers. +Stockholder +Outreach and Our Response +We engage in ongoing communications with our stockholders to ensure they are apprised of our business performance and are +aligned with our compensation decisions. During 2018, we engaged our stockholders through investor presentations and earnings calls to specifically discuss our executive compensation programs, corporate governance, safety and environmental programs, +corporate responsibility and other important issues. +In setting compensation packages for 2019, the Compensation Committee considered input from our +investors and other value drivers, competitive market practices and the Company’s forward-looking strategy, and: +• +introduced performance-based equity awards in the form of performance-based restricted stock units tied to +RTSR, vesting over a three-year performance period, comprising 50% of all equity awards granted in 2019; +• +adjusted annual performance bonuses opportunities and long-term equity award targets to more closely align +our executives’ financial interests with those of our stockholders and to continue to link a larger portion of such executives’ compensation to the performance of our stock and our operational performance; +• +provided more robust disclosure of our performance metrics and targets for both performance-based cash and +equity awards; +• +modified metrics in the annual incentive plan by both adding free cash flow and production per +debt-adjusted share to the scorecard and replacing the strategic initiative carve-out with a quantifiable health, safety, and environment measure; +• +adopted formal stock ownership and retention guidelines to ensure our board of directors and executive +officers own a stake in the Company that is sufficient to align their interests with their fellow stockholders; and +• +added metrics in annual performance reviews that directly tie executives’ compensation to the increase in +value of Gulfport shares . +The Compensation Committee will continue to consider the feedback from our stockholders when making +compensation decisions for our NEOs. +30 +Table of Contents +EXECUTIVE COMPENSATION PHILOSOPHY AND COMPONENTS +Philosophy and Objectives +Our executive compensation +philosophy is guided by the following objectives: +•  Alignment with Stockholder Interests: By providing the majority of +compensation in long-term equity awards, managing dilution to our stockholders, stressing pay for performance, and encouraging an ownership culture, we aim to align the interests of our executives with those of our stockholders. +•  Pay for Performance: The Compensation Committee is focused on rewarding for +the Company’s performance by creating incentive awards based on achievement of pre-established performance factors and targets. Additionally, a significant portion of our NEOs’ compensation is delivered in long-term equity awards, making +our NEOs’ realized total direct compensation heavily dependent upon Company performance. +•  Competitive Compensation: The Compensation Committee believes it is imperative +to maintain competitive compensation programs with our peer group to attract, retain and motivate executives and our future leaders that are in line with the compensation of executive positions at similar companies. +Our executive compensation programs play an important role in helping us achieve our business objectives and effectively +reward our executive officers for our Company’s annual and long-term performance and individual contributions to such performance. +Overview of +NEO Total Direct Compensation Components for Fiscal Year 2018 +Direct +Compensation +Element +Form +Alignment with Long-Term Stockholder +Interests and Other Considerations +Fixed +Base Salary +• Base level +of cash compensation critical to attracting and retaining executives +• Established at conservative level relative to peers and subject to increase based upon annual merit +review +31 +Table of Contents +Direct +Compensation +Element +Form +Alignment with Long-Term Stockholder +Interests and Other Considerations +At Risk +Annual Incentive +• Annual cash incentive earned based upon achievement of predetermined operational, financial and stock +performance goals for the year +• Places a significant portion of our NEOs annual cash compensation at risk and dependent on our +performance against pre-determined targets, which focuses management on critical near-term goals and share growth +Equity Based Compensation +• Annual +grants of full three-year time-vested restricted stock units for all NEOs currently in continuous service with the Company +• Ties NEO compensation directly to long term performance of Gulfport stock and thereby encourages +prioritization of long-term share value maximization +• Beginning in 2019, 50% of equity-based +compensation will be delivered in the form of performance-based stock units +• Enforces talent retention by placing a significant portion of pay at risk for continued employment +• Award values set at conservative +levels relative to peers with careful +evaluation of impact on stockholder +dilution +• (New in 2019) Performance-based +awards comprising 50% of all equity +awards tied to RTSR will further link +executive +compensation directly to +stockholder value creation +As part of our compensation philosophy, the Compensation Committee places a significant portion of NEO pay at risk, with the +largest single component of pay in the form of long-term equity awards, which for 2019 is equally divided between performance-based and time-vesting equity awards vesting over a three-year period. The charts below illustrate the mix of 2018 target +total direct compensation for our CEO and other NEOs. +Emphasis on At-Risk Variable Compensation +32 +Table of Contents +Determining our Executive Compensation +Benchmarking Against Our Compensation Peer Group +Gulfport utilizes a peer group of companies, or the Compensation Peer Group, as a reference point when establishing both compensation levels for executives as +well as program structures, in an effort to maintain competitiveness in the market. +2018 Compensation Peer Group +The Compensation Committee utilizes a Compensation Peer Group of similarly situated companies to evaluate our executive officer compensation. +The Compensation Peer Group is intended to reflect North American, onshore exploration and production companies that compete with, or could potentially +compete with, Gulfport for executive talent. This group was developed taking into consideration peer company metrics such as revenue, assets, total production, production of natural gas as a percentage of total production, and market capitalization. +The composition of this peer group is reviewed periodically to ensure the appropriateness of the identified peers. The 2018 Compensation Peer Group consists of the following companies: +2018 Compensation Peer Group +Antero Resources Corporation* +Newfield Exploration Company +Cabot Oil & Gas Corporation +Southwestern Energy Company* +Range Resources Corporation +PDC Energy, Inc.* +WPX Energy, Inc. +Cimarex Energy Co. +Oasis Petroleum Inc. +CNX Resources Corporation* +Whiting Petroleum Corporation +Rice Energy Inc. +QEP Resources, Inc. +SM Energy Company +Energen Corporation +Laredo Petroleum, Inc.* +*Added in 2018. +The +revision of the peer group resulted in relative alignment of Gulfport’s key metrics at the time of establishment as follows: Revenue = 27th percentile; Assets= 39th percentile; Total Production=32nd percentile; Natural Gas as Percentage of +Total Production=84th percentile; and Market Cap = 51st percentile. The increase in the number of peer companies for 2018 was also intended to provide a more robust data set for benchmarking the executive compensation. +Process for Determining Executive Compensation +The +Compensation Committee of our board of directors oversees our compensation programs for executive officers and all employees. During 2018, the Compensation Committee was comprised of Mr. Streller, the Compensation Committee chairman, +Ms. Adams, Mr. Groeschel, Mr. Houston, Mr. Johnson and Mr. Westerman, all of whom are independent directors. +The Role of Our Compensation Committee +The Compensation Committee generally reviews and makes its decisions regarding the annual compensation of our NEOs at its regular meetings in the first quarter +of each year. These decisions include: +• +Certifying annual performance-based incentive awards, based in part on the Company’s increase in value; +• +Establishing target incentive opportunities and applicable performance objectives for the current year’s +annual incentive awards; +33 +Table of Contents +• +Approving adjustments to base salary; and +• +Granting long-term equity-based incentive awards and determining the types of such awards for the current year. +The Compensation Committee may also adjust compensation as necessary at other times during the year, such as in the case of promotions, +other changes in employment status and significant corporate events, as well as to reflect changing market conditions or for other competitive purposes. +In making its decisions, the Compensation Committee assesses each NEO’s impact during the year and overall value to Gulfport, specifically considering +the NEO’s contribution to the growth of Gulfport’s value, Gulfport’s operational and financial performance, performance in the NEO’s primary area of responsibility, impact on strategic initiatives, recommendations of our +independent compensation consultant, the NEO’s role and trajectory in succession planning and development, recommendations from our CEO with respect to our other NEOs, and other intangible qualities that contribute to corporate and individual +success. +The Role of our CEO +The Compensation Committee evaluates our CEO based on the Company performance metrics described above, his leadership roles as a member of the Board and our +lead representative to the investment community, and other similar criteria, and his total compensation package is ultimately determined by the Compensation Committee, based upon its evaluation and input from our independent compensation consultant. +Our CEO’s compensation ultimately reflects Gulfport’s performance, his performance, competitive industry practices and the terms of his employment arrangement. +Each year, our CEO evaluates each of the other NEOs and makes compensation recommendations to the Compensation Committee. In developing his recommendations, +the CEO considers the recommendations of the Compensation Committee’s independent compensation consultant, as well as each such NEO’s performance against the Company performance metrics and contribution to Gulfport’s performance. The +independent compensation consultant reviews and provides comments to the Compensation Committee based on our CEO’s recommendation with respect to our NEOs, other than our CEO. Our CEO does not participate in deliberations or decisions +concerning his own compensation. +The Role of the Compensation Consultants +For 2018 and 2019, the Compensation Committee retained Pearl Meyer as its independent compensation consultant. For 2018, Pearl Meyer assisted the Compensation +Committee in developing a competitive total compensation program that is consistent with our philosophy of goal-oriented pay for performance and that allows us to attract, retain and motivate talented executives. Pearl Meyer’s services included +providing an annual analysis of the compensation of our top executive officers and their counterparts at peer companies. The analysis compares each element of compensation and total direct compensation awarded by Gulfport and by our peers to our +respective executive officers. In addition, Pearl Meyer helped the Compensation Committee consider the allocation between annual incentive and long-term equity-based compensation and between the types of long-term equity-based incentive awards. +Pearl Meyer also provided support with respect to regulatory and other considerations that affect compensation programs generally, as requested by the Compensation Committee, as well as assistance in preparation of the CD&A. +During early 2019, Pearl Meyer provided input to the Compensation Committee with respect to the executive compensation program design for 2019, the metrics +and targets under the Company’s annual incentive plan for 2019 and considerations relevant to the Compensation Committee’s 2019 compensation decisions. +Pearl Meyer reported exclusively to the Compensation Committee. During 2018 and 2019, the Compensation Committee reviewed the independence of Pearl Meyer and +determined that there were no conflicts of interest as a result of the Compensation Committee’s engagement of such consultant. +34 +Table of Contents +The Compensation Committee continues to evaluate the independence of its compensation consultant(s) on an +ongoing basis. +At the end of 2018, management engaged Frederic W. Cook & Co., Inc., or FW Cook, to serve as management’s outside +compensation consultant. FW Cook provided market data and other information to management in connection with the design of the Company’s executive compensation program for 2019, including a review of base salary, total cash compensation and +total direct compensation levels for the Chief Executive Officer and other senior executives. Certain of the market data and other information provided by FW Cook was also made available to the Compensation Committee and Pearl Meyer. +2018 COMPENSATION PROGRAM DESCRIPTION +Base Salary +The Compensation +Committee reviews executive officer base salaries on an annual basis, with a goal of providing market competitive, fixed cash compensation. The Compensation Committee assesses comparable salary information provided by its independent compensation +consultant as one factor when determining the base pay for the NEOs. +Other factors the Compensation Committee considers in determining base pay for each +of the NEOs are: the executive officer’s responsibilities, experience, leadership, potential future contribution and demonstrated individual performance. The relative importance of these factors varies by executive depending on his or her +position and the particular operations and functions for which the individual is responsible. In 2018, the Compensation Committee targeted base salaries between the 25th percentile and 50% percentile of the 2018 Compensation Peer Group. +The Compensation Committee reviewed the base salaries of our NEOs in February of 2018 (other than Mr. Wood who had not yet joined the Company) and any +increases in compensation were made effective as of January 1, 2018. In connection with Mr. Wood’s appointment as our Chief Executive Officer and President on December 18, 2018, the Compensation Committee reviewed and approved +the compensation for Mr. Wood for the balance of 2018. Base salary determinations were made to keep our NEOs compensation in relative alignment to the 2018 Compensation Peer Group, and in keeping with our desire to remain competitive in the +marketplace for our executives. See also “Employment Agreements” for a description of the employment agreements with certain of our NEOs. +Named Executive Officer +2017 Base +Salary +2018 Base +Salary +% +Change +David M. Wood, Chief +Executive Officer and President(1) +— +$ +750,000 +N/A +Michael G. Moore(2) +$ +700,000 +$ +750,000 +6.7 +% +Donnie Moore(3) +$ +430,125 +N/A +Keri Crowell +$ +350,000 +$ +362,300 +3.5 +% +Stuart Maier +$ +400,000 +$ +414,000 +3.5 +% +Paul Heerwagen +$ +335,000 +$ +346,700 +3.5 +% +(1) +Mr. Wood was appointed as our Chief Executive Officer and President on December 18, 2018. +Mr. Wood received a pro-rated base salary for 2018 with respect to his period of service during the year. +(2) +Michael G. Moore stepped down as our Chief Executive Officer and President on October 29, 2018. +Mr. M. Moore received a pro-rated base salary for 2018 with respect to his period of service during the year. +(3) +Donnie Moore was appointed as our Chief Operating Officer effective January 8, 2018. Mr. D. Moore +also served as our Interim Chief Executive Officer from when our former Chief Executive Officer and President stepped down until the appointment of Mr. Wood as our Chief Executive Officer and President on December 18, 2018. Donnie Moore is +not related to Michael G. Moore, our former Chief Executive Officer and President. +35 +Table of Contents +Annual Incentive Awards +The Compensation Committee established a performance-based annual incentive program for 2018 that tied our executives’ compensation directly to the pre-established performance metrics. Targeted annual incentive award levels were based on market information supplied by the independent compensation consultant, as well as a performance metric system. Individual +awards may be decreased in the discretion of the Compensation Committee based on overall corporate performance for the year and certain other considerations. +2018 Target Bonus Amounts +Target +bonus percentages and amounts were set with a minimum potential payout of 0% and maximum potential payout of 200% of the applicable target bonus amount. Target bonus percentages and dollar amounts for the participating NEOs for 2018 were as follows: +Named Executive Officer +Target Bonus +Percentage +Target Bonus +Amount +David M. +Wood(1) +— % +$ +— +Michael G. +Moore(2) +120% +$ +900,000 +Donnie +Moore +80% +$ +344,100 +Keri +Crowell +80% +$ +289,840 +Stuart +Maier +60% +$ +248,400 +Paul +Heerwagen +60% +$ +208,020 +(1) +Mr. Wood was appointed as our Chief Executive Officer and President on December 18, 2018 and did not +participate in the 2018 Annual Cash Incentive Plan. +(2) +Michael G. Moore stepped down as our Chief Executive Officer and President on October 29, 2018 and did not +receive a performance bonus for 2018. +36 +Table of Contents +2018 Annual Incentive Performance Measures +In March 2018, the Compensation Committee reviewed performance measures such as operational and financial performance, total stock return relative to our peer +group, capital efficiency goals, and strategic initiatives to be undertaken in 2018, as well as the impact each metric could have on our business, profitability, production and stockholder return, and selected the following performance metrics and +weightings to determine our executive annual performance based bonuses under the Annual Incentive Plan for 2018: +Metric +Weighting +Performance Metric +Why We Use It +Production +10% +Net Production Per Share (MCFE/Share) +Focuses on our ability to protect and deliver base production and execute our +drilling and completion program with maximum efficiency. We measure it on a per share basis to ensure maximum value impact to our stockholders. +Adjusted EBITDA Per MCFE ($/MCFE) +10% +Adjusted EBITDA/MCFE +Incentivizes our +profitability from operations while managing costs and our marketing portfolio. It focuses on the margin earned on the production metric, without encouraging growth at any price. +Return on Average Capital Employed (ROACE) +35% +Return on Average Capital Employed Metric +Encourages the efficiency of capital allocation to profitable investing activities. +One Year RTSR +20% +Increase in price per GPOR share +Measures our performance relative to our peer group and our stockholder value creation. +Strategic Initiatives +25% +Non-Core Asset Divestitures +Sets goals for total value that should be +realized through divestitures, including the quantitative threshold, target and maximum. Metric is also focused on our efforts to monetize certain of our non-core investments within our portfolio. +Environmental and Safety Record +Focus on balancing our operational targets +while maintaining an emphasis on environmental responsibility, motor vehicle safety and other health and safety initiatives. +Annual Incentive Plan Goal Achievement for 2018 +The Compensation Committee established threshold (50%), target (100%) and stretch (200%) payout ranges for our operational, capital efficiency, RTSR and +strategic measurement goals. These goals are meant to further motivate the NEOs to pursue Gulfport’s long-term strategy and value creation for its stockholders. Because the strategic goals are qualitative in nature, success does not necessarily +depend on attaining a particular metric; rather, success may be evaluated based on past norms, expectations and responses to unanticipated obstacles or opportunities. +37 +Table of Contents +The 2018 operational metrics, targets and actual performance under the Annual Incentive Plan are set forth +below. The Compensation Committee also assessed Gulfport’s performance against the strategic priorities that made up the strategic initiatives portion under the Annual Incentive Plan for 2018. +Performance Metric +Threshold(1) +Target +Maximum +Actual +Actual +as a % +of +Target +Production +Net Production Per Share (MCFE/Share) Metric +2.63 +2.68 +2.82 +3.05 +20% +Adjusted EBITDA per MCFE +Adjusted EBITDA/MCFE +($/MCFE) Metric +$1.70 +$1.80 +$1.90 +$2.11 +20.0% +Return On Average Capital Employed (ROACE) +Return on Average Capital Employed Metric +6.25% +7.25% +8.25% +10.42% +70% +One Year RTSR +Increase in Gulfport Price Per Share against the Peer Group +25 th +percentile +50 th +percentile +75 th +percentile +25 th +percentile +10% +Strategic Initiatives +Non-core asset divestitures +Committee assessment +$ +227,000,000 +0% +Environmental and Safety Record +Committee assessment of improvement +0% +Calculated Payout Percent +120% +Negative Discretion +(35%) +Approved Payout Percent +85% +(1) +No payouts are made under the Annual Incentive Plan if the performance levels fall below the pre-determined thresholds. +Although, in the aggregate, we obtained approximately 120% of the target +bonus amounts, in light of a broader evaluation of Company performance and the RTSR achieved during the performance period, the Compensation Committee exercised its negative discretion and reduced the cash awards under our Annual Incentive Plan for +2018 to 85.0% of each participating NEO’s targeted bonus. +Named Executive Officer +Target Bonus +Percentage +Target Bonus +Amount +Actual Bonus +Amount +Actual Bonus +as a Percent +of Target +Bonus +David M. Wood(1) +— +% +— +— +— +% +Michael G. Moore(2) +120 +% +$ +900,000 +$ +— +— +% +Donnie Moore +80 +% +$ +344,100 +$ +292,485 +85 +% +Keri Crowell +80 +% +$ +289,840 +$ +246,364 +85 +% +Stuart Maier +60 +% +$ +248,400 +$ +211,140 +85 +% +Paul Heerwagen +60 +% +$ +208,020 +$ +176,829 +85 +% +(1) +Mr. Wood was appointed as our Chief Executive Officer and President on December 18, 2018 and did not +participate in the 2018 Annual Cash Incentive Plan. +(2) +Michael G. Moore stepped down as our Chief Executive Officer and President effective as of October 29, +2018 and did not receive a performance bonus for 2018. +38 +Table of Contents +Although, as a general policy, we do not grant discretionary bonuses to our NEOs, in February 2019 the +Compensation Committee awarded one-time bonuses to our Chief Operating Officer and our Senior Vice President of Corporate Development and Strategy in the amounts of $150,000 and $50,000, respectively, in +recognition of their additional services during the transition period from the time our former Chief Executive Officer and President stepped down in October 2018 until the appointment of Mr. Wood as our Chief Executive Officer and President in +December 2018, including, in the case of our Chief Operating Officer, for his services as our Interim Chief Executive Officer. +Long-Term Equity-Based +Incentive Awards +Each year we grant our NEOs long-term equity-based incentive awards. The Compensation Committee determines the amount of these +awards, as well as the mix of equity vehicles. The objectives of our long-term incentive plan are to: (i) create significant alignment between the interests of our NEOs and our stockholders; (ii) attract and retain the services of critical +talent; and (iii) focus our executives on our sustained growth and financial success. +Determining Award Structure +The Compensation Committee chose to maintain the use of time-vested restricted stock unit awards for 2018, which are an important retention tool as our Company +and industry continue to respond to volatility in the energy sector. The Compensation Committee is committed to our long-term success and consider continuity of our key personnel critical to the successful execution of our operational and strategic +objectives. +The restricted stock unit awards granted in 2018 to our NEOs vest in three substantially equal annual installments over the three-year period +commencing approximately on the one-year anniversary of the grant, so long as the applicable NEO remains in continuous service. The Compensation Committee determines the size of awards granted to the NEOs at +its discretion, taking into consideration the terms of any existing employment agreements. +For 2019, the Compensation Committee determined that for our +NEOs (i) 50% of the equity awards will consist of performance-based restricted stock units, vesting over a three-year performance period, based on the Company’s achievement of targeted weighted average TSR in comparison to the peer group during +the performance period and the executive’s continuous service through the last day of the performance period and (ii) 50% of the equity awards will consist of time vesting restricted stock units, vesting over a three-year period commencing on +the one-year anniversary of the grant. +Setting the Target Award Opportunity +The Compensation Committee reviewed market values with respect to the annual long-term incentive awards granted to similarly situated executives at the +Compensation Peer Group companies to help guide the value of the awards granted for 2018. The Compensation Committee targeted long-term equity-based incentive opportunity to be between 25th and 50th percentiles of the Compensation Peer Group, after +giving consideration to the targeted total direct compensation for each NEO, market data obtained from Pearl Meyer and, with respect to our CEO, the minimum LTI target set forth in his employment agreement. Awards were made after the Compensation +Committee had an opportunity to evaluate the Company’s operating results for 2017 and at the same time that the Company was making its major compensation decisions for 2018. +The Compensation Committee has discretion to determine awards under our 2013 Restated Stock Incentive Plan, or the Plan. In determining the equity awards to +be granted to our former Chief Executive Officer and President, the Compensation Committee considered our contractual obligations under Mr. M. Moore’s employment agreement then in effect. Mr. M. Moore forfeited all of his unvested +equity awards in connection with his departure in October 2018. For a description of our separation agreement with Mr. M. Moore, see “Separation and Release Agreement with Our Former Chief Executive Officer and President” below. +The Compensation Committee considers the grant date dollar value of the long-term incentive package, the package’s potential dilutive effect on +our outstanding shares of common stock and the number of shares available +39 +Table of Contents +for grant under the Plan in determining the aggregate number of shares to be awarded as individual long-term incentive awards for our executives. The Compensation Committee evaluates stockholder +dilution based on equity compensation “burn rates,” which refers to a measure of the speed at which companies use (or burn) shares available for grant in their equity compensation plans compared to the total amount of the Company’s +outstanding common stock. For NEOs other than the CEO, the Compensation Committee considers the recommendations of the CEO. In 2018, we provided long-term incentive awards for our NEOs at target levels that, on average, were aligned between the 25th +and 50th percentiles of our 2018 Compensation Peer Group, depending on their respective targeted total direct compensation. Mr. Wood, who joined us as our Chief Executive Officer and President on December 18, 2018 received his long-term +incentive awards in February of 2019, as discussed in more detail under “Compensation Arrangement with Our Chief Executive Officer” below. In determining the equity awards to be granted to Mr. Wood in connection with his employment, the +Compensation Committee considered the total compensation of top executives at the companies in the 2018 Compensation Peer Group, Mr. Wood’s extensive experience as an executive and director in public oil and gas companies and the +competitive hiring environment for top executives. +Restricted Stock Unit Awards +On April 30, 2018, the Compensation Committee approved a grant of restricted stock units to Mr. M. Moore, our former Chief Executive Officer and +President, with a value of 500% of his annual base salary, consistent with the terms of Mr. M. Moore’s 2018 employment agreement, one-third of which award vested on April 30, 2018. The remaining +unvested restricted stock units were forfeited by Mr. M. Moore in connection with his departure in October 2018. On April 18, 2018, the Compensation Committee made restricted stock unit awards to certain our other NEOs, including +Ms. Crowell, Mr. Maier and Mr. Heerwagen, in the amounts of 115,800, 73,645 and 73,645 restricted stock units, respectively, vesting, in each case, in three substantially equal annual installments beginning on the first anniversary of +the date of grant. These 2018 awards were granted to our other NEOs with a goal to achieve an overall total direct compensation posture between the 25th percentile and 50th percentile of the 2018 Compensation Peer Group. These 2018 long-term equity +awards represent at least a majority, and in most cases, approximately two-thirds of the total direct compensation of our NEOs, closely aligning their interests with those of our stockholders and putting a +large portion of their 2018 target compensation at risk. +The number of restricted stock unit awards granted to our former Chief Executive Officer and +President in 2018 was determined by dividing the executive’s long-term equity-based incentive target opportunity, as displayed below, by our common stock price on the date of grant. +Named Executive Officer +LTI Target as a +Percentage of Base +LTI Target +Grant Date Fair Value +Michael G. Moore(1) +500 +% +$ +3,750,000 +(1) +All of Mr. M. Moore’s unvested restricted stock units were forfeited when he stepped down in October +2018. +Mr. Wood, who was appointed as our Chief Executive Officer and President on December 18, 2018, did not receive any +equity awards in 2018. Equity awards received by Mr. Wood in 2019 under the terms of his employment with us are discussed in more detail below under “Compensation Arrangement with Our Chief Executive Officer.” +40 +Table of Contents +Restricted stock unit awards are only earned if the individual continues to be employed by us on each +applicable vesting date of the award. The following table provides the total number of restricted stock unit awards provided to each NEO in April 2018 as part of the annual compensation review process and after giving consideration to their +respective targeted total direct compensation and, for Mr. M. Moore, the minimum LTI target set forth in his then-in-effect employment agreements. +Named Executive Officer +2018 LTI Award (RSUs) +David M. Wood(1) +— +Michael G. Moore(2) +403,226 +Donnie Moore +137,143 +Keri Crowell +115,800 +Stuart Maier +73,645 +Paul Heerwagen +73,645 +(1) +Mr. Wood, who was appointed as our Chief Executive Officer and President on December 18, 2018, did +not receive any equity awards in 2018. +(2) +Michael G. Moore stepped down as our Chief Executive Officer and President effective as of October 29, +2018. Of this amount, 268,818 restricted stock units, and all of his other unvested restricted stock units, were forfeited in connection with Mr. M. Moore’s departure in October 2018. +2019 COMPENSATION PROGRAM +Changes to the Peer Group +for 2019 +As part of its annual evaluation of our competitive position, the Compensation Committee directed management to coordinate with our +independent compensation consultant to undertake a comprehensive review and analysis of our compensation peer group. +As a result of such analysis, seven +companies that had been included in the 2018 Compensation Peer Group were removed from, and 12 companies were added to, the 2019 Compensation Peer Group. These changes were made to capture the range of companies with which we compete for talent, +determined based on criteria that included revenue, market capitalization, enterprise value and commodity mix. The revision of the peer group resulted in relative alignment of Gulfport’s key metrics at the time of establishment to the peer +group to those of such peer group as follows: 2019 Projected Revenue =55%; Market Cap=38%; Enterprise Value=49% and Commodity Mix=21%, representing, on average, Gulfport’s alignment close to the median of the 2019 Compensation Peer Group. The +2019 Compensation Peer Group consists of the following companies: +2019 Compensation Peer Group +Antero Resources Corporation +Berry Petroleum Corporation* +Cabot Oil & Gas Corporation +Carrizo Oil & Gas, Inc.* +Chaparral Energy, Inc.* +Chesapeake Energy Corporation* +CNX Resources Corporation +Comstock Resources, Inc.* +Eclipse Resources Corporation* +EQT Corporation* +Extraction Oil & Gas, Inc.* +Laredo Petroleum, Inc. +Magnolia Oil & Gas Corporation* +Matador Resources Company* +PDC Energy Inc. +QEP Resources, Inc. +Range Resources Corporation +Roan Resources, Inc.* +SM Energy Company +Southwestern Energy Company SRC Energy Inc.* +*Added in +2019. +41 +Table of Contents +Changes to our Compensation Program for 2019 +2019 Base Salary +The Compensation +Committee engaged Pearl Meyer, its independent compensation consultant, to review the overall competitiveness of our executive compensation programs for 2019, with continued focus on ensuring the alignment of management compensation with performance +and Gulfport’s strategy generally. +In February 2019, the Compensation Committee, in consultation with Pearl Meyer, reviewed the base pay levels for +our NEOs. Based on the Company’s position within the 2019 Compensation Peer Group and in recognition of the changes to the composition of equity grants to 50% performance vesting, the Compensation Committee determined to set 2019 compensation +levels at approximately the median of the Company’s 2019 Compensation Peer Group. +2019 Annual Incentive Bonus Metrics +In 2019, the Compensation Committee continued to incentivize our executives to increase Gulfport’s value through our pay for performance Annual Incentive +Plan. This Annual Incentive Plan aligns our executives’ interests with those of our stockholders by making the executive compensation heavily dependent on increasing Gulfport’s operational and financial performance, as well as rewarding +our executives for executing the Company’s long-term strategic goals, including in the areas of health, safety and environmental responsibility. +To +achieve these objectives, the Compensation Committee, consistent with market practices, identified critical performance metrics that are tied to objective performance criteria, including total stockholder return relative to the Company’s peer +group for 2019 and stimulating appropriate levels of growth versus capital efficiencies, and established a set of balanced metrics discussed below and assigned weights that it deemed appropriate to each such metric. In setting these metrics and +assigning weights, the Compensation Committee carefully considered each of these metrics’ impact on our business, profitability, production and stockholder return, as well as our desire to balance operational, financial and stockholder return +targets with the goal to execute on our strategic initial goals and continue to improve our safety and environmental record, including the following specific considerations: +• +Free Cash Flow Metric (35%) . This metric is a strong measure of our Company’s health, improves +ability for future investment and is aligned with Company strategy and investor expectations. +• +Return on Average Capital Employed Metric (20%) . This metric is a strong capital efficiency measure, which +measures the Company’s balance sheet health through two core metrics of debt and profitability and is aligned with investor expectations. +• +Production Per Debt Adjusted Share Metric (15%) . This metric motivates maintenance of balance sheet +strength while pursuing growth, keeps incentive plan from overweighting growth and is aligned with Company strategy and investor expectations. This metric is measured on a per debt adjusted share basis, calculated as outstanding debt at year end +divided by share price plus total shares outstanding. +• +Cash Flow Margin ( Adjusted EBITDA per MCFE) Metric (20%) . This metric is a good indicator of +operating efficiency and profitability and is aligned with investor expectations. +• +Health, Safety and Environmental (10%) . This metric is focused on balancing our operational targets with +our goal to continue to improve in the areas of environmental responsibility, motor vehicle safety and other health and safety initiatives. +The Compensation Committee set the threshold, target and maximum performance targets for each of these metrics for 2019, and establishes the bonus target +opportunity for each of the NEOs, expressed as a percentage of their respective annual salaries. +42 +Table of Contents +2019 Long-Term Incentive Awards—Introduced Performance-Based LTI Awards +In February 2019, the Compensation Committee determined that 2019 equity awards granted to our participating NEOs would be equally divided between +performance-based and time-vesting equity awards. Accordingly, and consistent with the terms of Mr. Wood’s employment as our Chief Executive Officer and President on December 18, 2018, the Compensation Committee, on February 26, +2018, granted him 228,659 performance-based restricted stock units and 228,659 time-vesting restricted stock units, with an aggregate value of 500% of his initial $750,000 annual base salary specified in his offer letter. At that time, the +Compensation Committee also granted 121,951 time-vesting restricted stock units, vesting over a three-year period, to Mr. Wood as an inducement award to accept employment with us, as specified in his offer letter. +The Compensation Committee has determined that any equity awards granted to our NEOs in 2019 will be equally divided between performance-based restricted +stock units tied to RTSR, vesting over a three-year performance period, and time-based restricted stock units, vesting over a three-year period. Any restricted unit awards granted to our NEOs in 2019 will contain double trigger change of control +provisions and provide for an acceleration of such awards in the event of such NEO’s death or disability during the continuous service with the Company. +COMPENSATION POLICIES AND PRACTICES +Compensation Risk +Management +The Compensation Committee reviews the risks and rewards associated with our compensation policies and programs. We believe that our +policies and programs encourage and reward prudent business judgment, encourage short-term stockholder value creation, and prioritize long-term growth by discouraging excessive risk taking. With respect to specific elements of compensation: +• +Integrated Approach —Our programs balance short- and long-term incentives for our executive officers +by providing an appropriate mix of fixed, performance-based, discretionary and equity compensation, with the goal of creating both short- and long-term stockholder value. +• +Attract Top Talent —Annual base salaries for our NEOs do not encourage excessive risk-taking as they +are fixed amounts that are subject to discretionary increases by our Compensation Committee that may be based on, among other factors, annual performance evaluations. We believe that such annual base salaries are set at reasonable levels, as +compared to the base salaries of similarly-situated individuals at our peer group companies, and therefore do not negate the effect of other compensation elements that encourage long-term service, growth and performance that may increase stockholder +value. +• +Support Business Objectives and Strategic Goals —Our annual incentive awards are determined based on +Company and individual performance measures, both operational and strategic, which mitigates excessive risk-taking that could produce unsustainable gains in one area of performance at the expense of our overall long-term interests. The +Company’s goals are designed to ensure a proper balance between stock performance, operational measures, financial goals and strategic goals. In addition, the Compensation Committee sets performance goals that it believes are reasonable in +light of our past performance, then-current business projections and market conditions. +• +Pay for Performance —The Compensation Committee believes that performance-based equity awards tied to +RTSR and cash compensation, with meaningful performance targets, such as those under the Annual Incentive Plan, will further align our executives’ interests with those of our stockholders, will motivate our executives to contribute to the +Company’s growth and profitability and will link a larger portion of our executives’ compensation to the performance of the Company. +• +Maximize Stockholder Value —Our annual incentive awards are subject to maximum payout caps that limit +the amount an executive may earn on inputs for certain of our operational measures. +43 +Table of Contents +• +Create Ownership Culture —Performance-based and time-vesting restricted stock unit awards vesting over +a three-year period granted to our executive officers, as well as the implementation of robust stock ownership guidelines for our executive officers and non-employee directors, promote stock ownership culture +and ensure that our executives and directors have a continuing stake in the long-term success of the Company. We believe that our long-term equity awards to our executive officers discourage excessive risk taking, as they are equally balanced +between performance-based and time-vesting awards and moderates the risk that may otherwise exist if equity awards were to vest based strictly on achieving certain targets. +Based on the foregoing, the Compensation Committee believes that the Company utilizes compensation policies and programs such that there are no risks that are +reasonably likely to have a material adverse impact on the Company. +Clawback Provisions +Under the Sarbanes-Oxley Act of 2002, our Chief Executive Officer and Chief Financial Officer may be subject to clawbacks in the event of a restatement. Under +our 2013 Restated Stock Incentive Plan, each award pursuant to that plan is conditioned on repayment or forfeiture in accordance with applicable laws, our Company policies and any relevant provisions in the related award agreements. Further, under +the terms of our employment agreements effective as of January 1, 2017, with each of Ms. Crowell and Mr. Maier and certain of our other executive officers, any equity awards granted to such executive, any proceeds of any equity awards +that previously have been sold, transferred or otherwise disposed of, and any incentive bonus award will be subject to clawback by us, now or in the future, under the Dodd-Frank Act and the SOX Act, each as amended, and rules, regulations and +binding, published guidance thereunder. +Stock Ownership Guidelines for Executive Officers +We believe it is important for our executive officers to align their financial interests with those of our stockholders. Accordingly, effective January 1, +2019, our board of directors adopted a formal stock ownership policy that requires our CEO to achieve a stock ownership level equal to the value of common stock that is five times the value of his annual base salary within five years of the +effective date of such stock ownership policy, calculated based on the average closing price of a share of our common stock over the 30 calendar day period ended immediately prior to the measurement date. The Compensation Committee also designated +our other executive officers that are subject to Section 16 reporting obligations under the Securities Exchange Act of 1934, as amended, to be subject to the stock ownership policy. The stock ownership level for our other NEOs and +Section 16 officers is three times the value of their respective annual base salaries to be achieved within five years of the effective date of our stock ownership policy, calculated based on the same methodology discussed above. +Our non-employee directors are also subject to the stock ownership policy discussed above under “Stock Ownership +Guidelines for Directors.” +Anti-Hedging and Pledging Policies +We have a policy prohibiting directors, executive officers and certain other designated employees from speculative trading in our securities, including hedging +transactions, short selling, and trading in put options, call options, swaps or collars, or holding our securities in margin accounts. We also have a policy prohibiting directors, executive officers and certain other designated employees from +pledging Gulfport securities. To our knowledge, all such individuals are in compliance with these policies. +Termination and Change of Control Benefits +Mr. Wood was appointed as our Chief Executive Officer and President on December 18, 2018. Although we do not have an employment agreement +with Mr. Wood, in his role as our Chief Executive Officer and President, +44 +Table of Contents +Mr. Wood will be entitled to receive specified payments and benefits upon certain termination events, including termination following a change of control. The Compensation Committee believes +that these provisions will encourage Mr. Wood to remain in our employment in the event of a change of control of the Company and during circumstances which indicate that a change of control might occur. The Compensation Committee believes +termination and change of control benefits are important in maintaining strong leadership and in encouraging retention in these situations and encourages our executives to act in the best interests of stockholders without distraction based on +uncertainty regarding their employment status. For additional information regarding the terms of Mr. Wood’s employment with us and termination and change of control provisions, see “Compensation Arrangement with Our Chief Executive +Officer” below. +We have entered into an employment agreement with each of Ms. Crowell and Mr. Maier, each effective as of January 1, +2017, which provide for certain change in control benefits, including immediate vesting of each such NEO’s equity awards upon his or her termination on or before the second anniversary of the date of occurrence of a change of control other than +for cause. The value of the unvested restricted stock held by Ms. Crowell and Mr. Maier was $904,778 and $552,244, respectively, as of December 31, 2018, based on the closing value on December 31, 2018, the last trading day of +2018. See “Change of Control Arrangements with Other Named Executive Officers.” For additional information regarding these employment agreements and termination and change of control provisions, see “Employment Agreements with Our +Chief Financial Officer and Senior Vice President of Geoscience.” +We do not currently have employment agreements or termination or change of control +arrangements with Donnie Moore, our Chief Operating Officer, or Paul Heerwagen, our Senior Vice President of Corporate Development and Strategy, except for those contained in their respective restricted stock unit agreements discussed in more detail +under “Potential Payments upon Termination, Resignation or Change of Control” below. Upon termination for any reason, each of Donnie Moore and Paul Heerwagen would be entitled to receive all of his accrued and unpaid salary and any other +compensation payable to such executive (including vacation and sick pay) with respect to services rendered through the termination date. +Separation Agreement with Our Former Chief Executive Officer and President +Michael G. Moore stepped down from his position as our Chief Executive Officer and President, and as a member of our board of directors, effective as of +October 29, 2018. In connection with Mr. M. Moore’s departure, we entered into a separation agreement with Mr. M. Moore, under which we paid Mr. M. Moore severance payments in the aggregate amount of $400,000 and agreed to +reimburse Mr. M. Moore’s portion of COBRA premiums for a maximum period of six months, which reimbursement will cease at any time he becomes eligible for group medical coverage from another employer. For more details regarding this +separation agreement, see “Severance Agreement with our Former Chief Executive Officer and President” below. +Perquisites and Other Personal +Benefits +We provide certain of our NEOs with a limited number of perquisites or other personal benefits, primarily consisting of life insurance +premiums and, in the case of our former Chief Executive Officer and certain other NEOs, use of a Company-owned vehicle. We believe these limited benefits help provide a competitive compensation package. The value of these benefits is disclosed in +the “Summary Compensation Table” below. +In February 2019, we adopted an aircraft use policy that sets forth our policy with respect to the use +of any aircraft chartered or owned by the Company consistent with best corporate governance practices. We restrict personal use of Company owned or chartered aircraft by our executive officers and other employees, as well as by members of our board +of directors. Our aircraft use policy requires that any personal use of Company owned or chartered aircraft by any NEO be reported as a perquisite, based on the aggregate incremental value of such personal use. See “Summary Compensation +Table.” +45 +Table of Contents +Broad-Based Employee Benefits +401(k) Plan +We have a broad-based +retirement savings plan in which our NEOs currently participate. The retirement plan is a tax qualified 401(k) plan that covers all eligible employees including the NEOs. Under the plan, we make a safe harbor contribution equal to 3% of each +eligible employee’s eligible annual compensation with each pay period. We also have the ability to make an additional, discretionary contribution based on each eligible employee’s eligible annual compensation for the prior calendar year. +Both contributions are made, regardless of employee’s deferrals into the plan. In 2018, we made safe harbor contributions of 3% and discretionary contributions of 2% of eligible compensation for eligible employees, subject to certain +limitations provided by our 401(k) plan and Internal Revenue Service regulations. All contributions made by us on behalf of an employee are 100% vested when contributed. For more details regarding our 401(k) plan, see “Benefit Plans—401(k) +Plan” below. +Other Benefits +Our NEOs are eligible to participate in all of our other employee benefit plans which include medical, dental, group life, disability and accidental death and +dismemberment insurance, in each case on the same basis as all other employees. +Deductibility of Executive Compensation +The Compensation Committee considers the expected tax treatment to the Company and its executive officers as one of the factors in determining compensation +matters. Section 162(m) of the Code generally denies a federal income tax deduction for certain compensation in excess of $1 million to a “covered employee” of a publicly traded corporation in any fiscal year. Prior to +January 1, 2018, certain types of compensation, including qualifying “performance-based compensation,” were not subject to the limits on deductibility. For these purposes, prior to January 1, 2018, “covered employees” +consisted of our Chief Executive Officer and the three most highly compensated executive officers other than our Chief Executive Officer and our Chief Financial Officer. +A number of significant changes were made to Section 162(m) by the Tax Cuts and Jobs Act, enacted on December 22, 2017, including the elimination of +the ability to rely on this performance-based exception, effective as of January 1, 2018, and expansion of the scope of “covered employees” to include the chief financial officer and certain former NEOs. As a result of these changes, +compensation paid to any covered employee generally will not be deductible, to the extent that it exceeds $1 million, in 2018 or future years, unless such compensation qualifies for transition relief for written binding contracts that were in +effect as of November 2, 2017. The Compensation Committee currently considers the deductibility under Section 162(m) of compensation awarded to its executives to the extent reasonably practical and consistent with our objectives, but the +Compensation Committee may nonetheless authorize compensation that results in non-deductible amounts above the Section 162(m) limits if it determines that such compensation is in our best interests. +Accounting Implications of Executive Compensation Policy +We are required to recognize compensation expense of all stock-based awards pursuant to the provisions of FASB ASC Topic 718, “Compensation-Stock +Compensation.” Under U.S. generally accepted accounting principles, or GAAP, only vested shares are included in basic shares outstanding. Also, under GAAP, non-vested shares are included in diluted shares +outstanding when the effect is dilutive. +The Compensation Committee believes that linking a large portion of our executive officers’ compensation to +both performance-based long-term equity incentive awards and performance-based bonus arrangements, with meaningful performance metrics, appropriately aligns our executives’ interests with those of our stockholders and are consistent with market +practices. The Compensation Committee also believes that our current compensation policies and practices enhance retention of executive talent through multi-year vesting of stock +46 +Table of Contents +awards and discourage unnecessary and excessive risk taking. The Compensation Committee further believes that our other compensation policies and practices, such as our policy generally +prohibiting pledging and hedging of our stock by our executive officers and directors, as well as the lack of significant prerequisites and absence of pension or supplemental retirement benefits (aside from those afforded under our broad-based +401(k) plan) for our executive officers are consistent with prudent compensation philosophy and the interests of our stockholders. The Compensation Committee will continue to consider the outcome of our stockholders’ future “say-on-pay” votes when making compensation decisions for our NEOs. +Compensation Committee Report on Executive Compensation +The Compensation Committee has reviewed and discussed the foregoing Compensation Discussion and Analysis with management. Based on its review and discussion +with management, the Compensation Committee recommended that the Compensation Discussion and Analysis be included in this proxy statement. +Respectfully +submitted by the Compensation Committee: +Scott E. Streller, Chairman +David L. Houston +Craig Groeschel +C. Doug Johnson +Paul D. Westerman +Deborah G. Adams +Dated: April 30, 2019 +47 +Table of Contents +Compensation Committee Interlocks and Insider Participation +No current member of our Compensation Committee has ever been an officer or employee of ours. None of our executive officers serves, or has served during the +past fiscal year, as a member of the board of directors or compensation committee of any other company that has one or more executive officers serving as a member of our board of directors or Compensation Committee. +Compensation Tables +2018, 2017 and 2016 SUMMARY COMPENSATION TABLE +The following table provides information concerning compensation of our principal executive officer, principal financial officer and our next three most +highly paid executive officers for the fiscal years ended December 31, 2018, December 31, 2017 and December 31, 2016. +Name and Principal Position +Year +Salary($) +Bonus($) +Stock +Awards +($)(1) +Non-Equity +Incentive Plan +Compensation +($)(2) +All Other +Compensation +($)(3) +Total +($) +David M. Wood(4) +2018 +$ +11,538 +$ +— +$ +— +$ +— +$ +347 +$ +11,885 +Chief Executive Officer and President +Michael G. Moore(5) +2018 +$ +637,500 +$ +500,000 +$ +3,750,002(6) +$ +— +$ +612,658 +$ +5,500,160 +Former Chief Executive +Officer and President +2017 +$ +700,000 +$ +— +$ +3,334,760(7) +$ +665,000 +$ +208,392 +$ +4,908,152 +2016 +$ +483,000 +$ +— +$ +3,450,003(8) +$ +993,089 +$ +185,987 +$ +5,112,079 +Keri Crowell(9) +2018 +$ +362,300 +$ +— +$ +1,098,942(10) +$ +246,364 +$ +18,943 +$ +1,726,549 +Chief Financial Officer +2017 +$ +349,495 +$ +— +$ +976,800(11) +$ +266,000 +$ +22,717 +$ +1,615,012 +2016 +$ +275,000 +$ +75,000 +(12) +$ +223,120(13) +$ +282,712 +$ +23,017 +$ +878,849 +Donnie Moore(14) +Chief Operating Officer +2018 +$ +413,581 +$ +400,000 +$ +1,200,001(15) +$ +292,485 +$ +10,772 +$ +2,316,835 +Stuart Maier +2018 +$ +414,000 +$ +— +$ +698,891(16) +$ +211,140 +$ +19,315 +$ +1,343,346 +Senior Vice President of Geosciences +2017 +$ +400,000 +$ +— +$ +568,320(17) +$ +228,000 +$ +23,067 +$ +1,219,387 +2016 +$ +400,000 +$ +225,000 +$ +— +$ +— +$ +23,161 +$ +648,161 +Paul Heerwagen +2018 +$ +346,700 +$ +50,000 +$ +698,891 +$ +176,829 +$ +17,871 +$ +1,290,288 +Senior Vice President of Corporate Development and Strategy +(1) +The amount reported in the Stock Awards column reflects the fair value of the applicable restricted common stock +award or restricted stock unit award on the award date. The amount was calculated using certain assumptions, as set forth in Note 1 and Note 8 to our consolidated financial statements for the fiscal year ended December 31, 2018 under the +headings “Summary of Significant Accounting Policies – Accounting for Stock-Based Compensation” and “Stock-Based Compensation,” respectively, included in our Annual Report on Form +10-K, filed with the SEC on February 28, 2019. +(2) +The amounts shown reflect performance-based annual incentive bonuses granted under the 2014 Executive Annual +Incentive Compensation Plan. With respect to the 2018 amounts, the Compensation Committee certified the attainment of the related performance goals in March 2019, and the Company paid these performance-based annual incentive bonuses in March 2019. +With respect to the 2017 amounts, the Compensation Committee certified the attainment of the related performance goals in March 2018, and the Company paid these performance-based annual incentive bonuses in March 2018. With respect to the 2016 +amounts, the Compensation Committee certified the attainment of the related performance goals in February 2017, and the Company paid these performance-based annual incentive bonuses in March 2017. +(3) +The amount for Mr. Wood for 2018 includes $347 for our 401(k) plan contribution. Amounts for Michael G. +Moore for 2018, 2017 and 2016 represent $16,506, $20,295 and $20,295, respectively, for our 401(k) plan contributions, $14,057, $18,101 and $23,990, respectively, attributable to use of a Company owned vehicle, $0, $0 and $1,022, respectively, +48 +Table of Contents +attributable to Company sponsored sporting tickets and $1,253, $1,380 and $1,380, respectively, attributable to group term life insurance coverage. The amount for Michael G. Moore for 2018 also +includes $400,000 separation payment and $115,069 as a paid time off balance payout. The amounts for Michael G. Moore for 2018, 2017 and 2016 also include (i) the aggregate incremental aircraft usage costs associated with his personal use of +the Company’s chartered aircraft of approximately $63,800, $163,600 and $138,700, respectively, with such incremental costs calculated based on the excess costs that the Company would not have incurred but for such use by the former Chief +Executive Officer and personal guests, including the hourly fee charged by the charter company for the specific flight, and per flight fees, fuel variable charges, domestic segment fees, federal excise tax and other actual fees charged by the +charter company related to the specific flight, but excluding any fixed costs, and (ii) the aggregate incremental costs of $1,973, $5,016 and $600, respectively, associated with his personal charges to his Company credit card prior to +repayment, with such incremental costs calculated based on the Company’s weighted average borrowing rate under its revolving credit facility during the applicable period (regardless of whether any amounts were actually outstanding under the +revolving credit facility during such period). We are seeking reimbursement of these incremental costs from Mr. M. Moore . Amounts for Ms. Crowell for 2018, 2017 and 2016 represent $16,506, $20,295 and $20,295, respectively, for our +401(k) plan contributions, $0, $0 and $320, respectively, attributable to a Company sponsored health club membership, $1,072, $1,042 and $1,022, respectively, attributable to Company sponsored sporting tickets and $1,365, $1,380 and $1,380, +respectively, attributable to group term life insurance coverage. Amounts for Donnie Moore for 2018 include $8,250 for our 401(k) plan contribution, $1,272 attributable to Company sponsored sporting tickets and $1,250 attributable to group term life +insurance coverage. Amounts for Mr. Maier for 2018, 2017, 2016 include $16,506, $20,295 and $20,295, respectively, for our 401(k) plan contributions, $1,444, $1,392 and $1,486, respectively, attributable to Company sponsored sporting tickets +and $1,365, $1,380 and $1,380, respectively, attributable to group term life insurance coverage. Amounts for Mr. Heerwagen for 2018 include $16,506 for our 401(k) plan contributions and $1,365 attributable to group term life insurance coverage. +(4) +Mr. Wood was appointed to serve as our Chief Executive Officer and President, and as a member of our board +of directors, effective December 18, 2018. +(5) +Michael G. Moore stepped down from his position as our Chief Executive Officer and President, and as a member of +our board of directors, effective October 29, 2018. +(6) +Mr. M. Moore’s award of 403,226 shares of our restricted stock units was granted on April 30, +2018, of which 134,408 restricted stock units vested on April 30, 2018, and the remaining 268,818 restricted stock units were forfeited in connection with his departure in October 2018. +(7) +Mr. M. Moore’s award of 187,768 shares of our restricted stock units was granted on February 27, +2017, vesting in three approximately equal annual installments, of which 125,178 restricted stock units have vested and the remaining 62,590 restricted stock units were forfeited in connection with his departure in October 2018. +(8) +Mr. M. Moore’s award of 40,367 restricted stock units was granted on March 10, 2016, vesting in +four approximately equal annual installments, of which 20,183 restricted stock units have vested, and the remaining 20,184 restricted stock units were forfeited in connection with his departure in October 2018. Mr. M. Moore’s award of +85,215 restricted stock units was granted on March 31, 2016 and vested in three approximately equal annual installments beginning on the grant date. +(9) +Ms. Crowell was appointed as our Chief Financial Officer on January 4, 2017. +(10) +Ms. Crowell’s award of 115,800 restricted stock units was granted on April 18, 2018, of which +38,600 restricted stock units vested on April 18, 2019 and the remaining 77,200 will vest in two equal annual installments beginning on April 18, 2020. +(11) +Ms. Crowell’s award of 55,000 restricted stock units was granted on February 27, 2017, vesting in +three approximately equal annual installments, of which 36,666 restricted stock units have vested and the remaining 18,334 restricted stock units vest on August 27, 2019. +(12) +During 2016, after a lengthy evaluation process, the Company made the decision to convert to a more fully +integrated financial reporting system. As a result, the Company appointed an internal team to coordinate the 18 month conversion process. To incentivize that group to meet implementation deadlines, goals were established with incentives provided for +achieving each incremental goal. In November 2016, Ms. Crowell was awarded a bonus of $75,000 for achieving her goals to date on this project. +(13) +Ms. Crowell’s award of 8,000 restricted stock units was granted on August 2, 2016, vesting in +four approximately equal annual installments of which 4,000 restricted stock units have vested, and the remaining 4,000 restricted stock units vest in two equal annual installments beginning on August 15, 2019. +(14) +Donnie Moore was appointed as out Chief Operating Officer effective January 8, 2018. He also served as +Interim Chief Executive Officer of the Company from October 29, 2018, the date our former Chief Executive Officer and President left the Company, to December 18, 2018, the dated of the appointment of Mr. Wood as our Chief Executive +Officer and President. +49 +Table of Contents +(15) +Donnie Moore’s award of 137,143 restricted stock units was granted on February 19, 2018, of which +45,714 vested on February 27, 2019 and the remaining 91,429 restricted stock units will vest in two approximately equal annual installments beginning on February 27, 2020. +(16) +Mr. Maier’s award of 73,645 was granted on April 18, 2018, of which 24,548 restricted stock units +vested on April 18, 2019 and the remaining 49,097 restricted stock units vest in two equal annual installments beginning on April 18, 2020. +(17) +Mr. Maier’s award of 32,000 restricted stock units was granted on February 27, 2017, vesting in +three approximately equal installments, of which 21,333 restricted stock units have vested and the remaining 10,667 restricted stock units vest on August 27, 2019. +(18) +Mr. Heerwagen’s award of 73,645 was granted on April 18, 2018, of which 24,548 restricted stock +units vested on April 18, 2019 and the remaining 49,097 restricted stock units vest in two equal annual installments beginning on April 18, 2020. +2018 GRANTS OF PLAN-BASED AWARDS +The +following table provides information concerning each grant of an award made to our principal executive officer, our principal financial officer and our next three most highly paid executive officers in the fiscal year ended December 31, 2018 +under any Company plan. +Estimated Future Payouts Under +Non-Equity Incentive Plan +Awards(1) +All Other +Stock +Awards: +Number of +Shares of +Stock or +Units +(#)(2) +All Other +Option +Awards: +Number of +Securities +Underlying +Options +(#) +Exercise +or Base +Price of +Option +Awards +($ /Sh) +Grant Date +Fair Value +of Stock +and Option +Awards +($) +Name +Grant +Date +Threshold +($) +Target +($) +Maximum +($) +David M. Wood(3) +— +$ +— +$ +— +$ +— +— +— +— +$ +— +Chief Executive Officer and President +Michael G. Moore(4) +4/30/18 +$ +— +$ +— +$ +— +403,226 +(5) +— +— +$ +3,750,002 +Former Chief Executive Officer and President +Keri Crowell +4/18/18 +$ +144,920 +$ +289,840 +$ +579,680 +115,800 +(6) +— +— +$ +1,098,942 +Chief Financial Officer +Donnie Moore +2/19/18 +$ +172,050 +$ +344,100 +$ +688,200 +137,143 +(7) +— +— +$ +1,200,001 +Chief Operating Officer +Stuart Maier +4/18/18 +$ +124,200 +$ +248,400 +$ +496,800 +73,645 +(8) +— +— +$ +698,891 +Senior Vice President of Geosciences +Paul Heerwagen +4/18/18 +$ +104,010 +$ +208,020 +$ +416,040 +73,645 +(9) +— +— +$ +698,891 +Senior Vice President of Corporate Development and Strategy +(1) +Reflects performance-based annual incentive bonuses granted under the 2014 Executive Annual Incentive +Compensation Plan. +(2) +Reflects restricted stock units subject to time based vesting granted under the 2013 Restated Stock Incentive +Plan. +(3) +Mr. Wood was appointed to serve as our Chief Executive Officer and President, and as a member of our board +of directors, effective December 18, 2018. +(4) +Michael G. Moore stepped down from his position as our Chief Executive Officer and President, and as a member of +our board of directors, effective October 29, 2018. +(5) +Reflects Mr. M. Moore’s award of 403,226 shares of our restricted stock units granted on +April 30, 2018, of which 134,408 restricted stock units vested on April 30, 2018, and the remaining 268,818 restricted stock units were forfeited in connection with his departure in October 2018. +50 +Table of Contents +(6) +Reflects Ms. Crowell’s award of 115,800 restricted stock units granted on April 18, 2018, of +which 38,600 restricted stock units vested on April 18, 2019 and the remaining 77,200 will vest in two equal annual installments beginning on April 18, 2020. +(7) +Reflects Donnie Moore’s award of 137,143 restricted stock units granted on February 19, 2018, of which +45,714 vested on February 27, 2019 and the remaining 91,429 restricted stock units will vest in two approximately equal annual installments beginning on February 27, 2020. Donnie Moore also served as Interim Chief Executive Officer of the +Company from October 29, 2018, the date our former Chief Executive Officer and President left the Company, to December 18, 2018, the dated of the appointment of Mr. Wood as our Chief Executive Officer and President. +(8) +Reflects Mr. Maier’s award of 73,645 granted on April 18, 2018, of which 24,548 restricted stock +units vested on April 18, 2019 and the remaining 49,097 restricted stock units vest in two equal annual installments beginning on April 18, 2020. +(9) +Reflects Mr. Heerwagen’s award of 73,645 granted on April 18, 2018, of which 24,548 restricted +stock units vested on April 18, 2019 and the remaining 49,097 restricted stock units vest in two equal annual installments beginning on April 18, 2020. +OUTSTANDING EQUITY AWARDS AT 2018 FISCAL YEAR-END +The following table provides information concerning equity awards outstanding for our principal executive officer, our principal financial officer and our +next three most highly paid executive officers at December 31, 2018. +Name +Number of +Securities +Underlying +Unexercised +Options +(#) +Exercisable +Number of +Securities +Underlying +Unexercised +Options +(#) +Unexercisable +Option +Exercise +Price +($) +Option +Expiration +Date +Number of +Shares or +Units of +Stock That +Have Not +Vested +(#) +Market Value +of Shares or +Units of Stock +That Have +Not Vested +($)(1) +David M. Wood +— +— +$ — +— +— (2) +$ +— +Michael G. Moore +— +— +$ — +— +— (3) +$ +— +Keri Crowell +— +— +$ — +— +138,134(4) +$ +904,778 +Donnie Moore +— +— +$ — +— +137,143(5) +$ +898,287 +Stuart Maier +— +— +$ — +— +84,312 (6) +$ +552,244 +Paul Heerwagen +— +— +$ — +— +89,312 (7) +$ +584,994 +(1) +Market value of shares or units that have not vested is based on the closing price of $6.55 per share of our +common stock on the Nasdaq Global Select Market on December 31, 2018, the last trading day of 2018. +(2) +Mr. Wood was appointed to serve as our Chief Executive Officer and President, and as a member of our board +of directors, effective December 18, 2018. +(3) +Michael G. Moore stepped down from his position as our Chief Executive Officer and President, and as a member +of our board of directors, effective October 29, 2018. All of this unvested restricted stock or restricted stock units were forfeited as of that date. +(4) +Of these securities, (i) 18,334 unvested restricted stock units vest on August 27, 2019, (ii) 4,000 +unvested restricted stock units vest in two equal annual installments beginning on August 15, 2019, (iii) 38,600 restricted stock units vested on April 18, 2019 and (iv) 77,200 unvested restricted stock units vest in two equal annual +installments beginning on April 18, 2020. +(5) +Of these securities, (i) 45,714 restricted stock units vested on February 27, 2019 and (ii) 91,429 +unvested restricted stock units vest in two approximately equal annual installments beginning on February 27, 2020. +(6) +Of these securities (i) 10,667 unvested restricted stock units vest on August 27, 2019, (ii) 24,548 +restricted stock units vested on April 18, 2019 and (iii) 49,097 unvested restricted stock vest in two approximately equal annual installments beginning on April 18, 2020. +(7) +Of these securities, (i) 11,667 unvested restricted stock units vest on August 27, 2019, (ii) 4,000 +unvested restricted stock units vest in two equal annual installments beginning on August 15, 2019, (iii) 24,548 restricted stock units vested on April 18, 2019 and (iv) 49,097 unvested restricted stock units vest in two approximately +equal annual installments beginning on April 18, 2020. +51 +Table of Contents +2018 OPTION EXERCISES AND STOCK VESTED +The following table provides certain information for the named executive officers on stock option exercises during 2018, including the number of shares +acquired upon exercise and the value realized, and the number of shares acquired upon the vesting of restricted common stock awards and restricted stock unit awards. +Option Awards +Stock Awards +Name +Number of Shares +Acquired on Exercise +(#) +Value Realized on +Exercise +($) +Number of Shares +Acquired on Vesting +(#) +Value Realized on +Vesting +($)(1) +David M. Wood(2) +— +— +— +$ +— +Michael G. Moore(3) +— +— +235,500 +$ +2,244,336 +Keri Crowell +— +— +25,667 +$ +226,126 +Donnie Moore +— +— +— +$ +— +Stuart Maier +— +— +14,001 +$ +162,118 +Paul Heerwagen +— +— +19,002 +$ +218,479 +(1) +Value realized on vesting is based on the vesting date closing price per share of our common stock on The +Nasdaq Global Select Market. If the vesting date was not a trading day, the value is based on the closing price per share of our common stock on The Nasdaq Global Select Market on the last trading day prior to the vesting date. +(2) +Mr. Wood was appointed to serve as our Chief Executive Officer and President, and as a member of our board +of directors, effective December 18, 2018. +(3) +Michael G. Moore stepped down from his position as our Chief Executive Officer and President, and as a member +of our board of directors, effective October 29, 2018. All of his unvested restricted stock or restricted stock units were forfeited as of that date. +52 +Table of Contents +2018 DIRECTOR COMPENSATION +The following table contains information with respect to 2018 compensation of our non-employee directors who served in +such capacity during 2018. The CEO does not receive compensation for serving as a director of the Company. +Name +Fees Earned or +Paid in Cash +($)(1) +Stock Awards +($)(2) +Option +Awards +($)(2) +Total +($) +Deborah G. Adams(3) +$ +80,347 +$ +152,177 +— +$ +232,524 +Craig Groeschel +$ +83,000 +$ +124,443 +— +$ +207,443 +David L. Houston(3)(4) +$ +198,167 +$ +124,443 +— +$ +322,610 +C. Doug Johnson(4)(5) +$ +151,750 +$ +124,443 +— +$ +276,193 +Ben T. Morris(3) +$ +118,250 +$ +124,443 +— +$ +242,693 +Scott E. Streller(3)(6) +$ +132,000 +$ +124,443 +— +$ +256,443 +Paul D. Westerman +$ +85,500 +$ +124,443 +— +$ +209,943 +(1) +For additional information regarding the fees earned or paid in cash to our +non-employee directors in 2018, please see “Board of Directors Information—How are directors compensated?—Equity Compensation.” +(2) +The amounts shown reflect the grant date fair value of restricted stock unit awards granted, determined in +accordance with FASB ASC Topic 718. See Note 1 and Note 8 to our consolidated financial statements for the fiscal year ended December 31, 2018 under the headings “Summary of Significant Accounting Policies —Accounting for Stock-Based +Compensation” and “Stock-Based Compensation,” respectively, included in our Annual Report on Form 10-K, filed with the SEC on February 28, 2019, regarding assumptions underlying valuations +of equity awards for 2018. There were 11,201 unvested restricted stock units at the end of 2018 for each of Ms. Adams and Messrs. Groeschel, Houston, Johnson, Morris, Streller and Westerman, reflecting the award granted to each such director on +May 31, 2018. +(3) +Includes a one-time fee of $10,000 for additional services as an audit +committee member. +(4) +Includes a one-time fee of $10,000 for services as a member of the +special executive search committee. +(5) +Includes a one-time fee of $25,000 for additional services as a chair +of the audit committee. +(6) +Includes a one-time fee of $15,000 for services as a chair of the +special executive search committee. +Benefit Plans +401(k) Plan +We maintain a +retirement savings plan, or a 401(k) Plan, for the benefit of our eligible employees who have attained the age of 18. Currently, employees may elect to defer their compensation up to the statutorily prescribed limit. During the year, we make a safe +harbor contribution equal to 3% of each eligible employee’s eligible annual compensation with each pay period. We also have the ability to make an additional, discretionary contribution based on each eligible employee’s eligible annual +compensation for the prior calendar year. Both contributions are made, regardless of employee’s deferrals into the plan. In 2018, we made safe harbor contributions of 3% and discretionary contributions of 2% of eligible compensation for +eligible employees, subject to certain limitations provided by our 401(k) plan and Internal Revenue Service regulations. All contributions made by us on behalf of an employee are 100% vested when contributed. The 401(k) Plan is intended to qualify +under Sections 401(a) and 501(a) of the Code. As such, contributions to the 401(k) Plan and earnings on those contributions are not taxable to the employees until distributed from the 401(k) Plan, and all contributions are deductible by us when +made. +2013 Restated Stock Incentive Plan +Our 2013 Restated Stock Incentive Plan, which amended and restated our Amended and Restated 2005 Stock Incentive Plan, was adopted and approved by our +stockholders to enable us, and any of our affiliates, to attract +53 +Table of Contents +and retain the services of the types of employees, consultants and directors who will contribute to our long range success and to provide incentives which are linked directly +to increases in share value which will inure to the benefit of our stockholders. The plan provides a means by which eligible recipients of awards may be given +an opportunity to benefit from increases in value of our common stock through the granting of incentive stock options, nonstatutory stock options, restricted awards (restricted stock and restricted stock units), performance awards and stock +appreciation rights. The Compensation Committee serves as the plan administrator. On April 1, 2019, an aggregate of 4,451,404 shares of restricted common stock and restricted stock units had been granted under this plan. There were 1,423,990 +shares available for future grants under this plan as of April 1, 2019. +On April 29, 2019, the Compensation Committee unanimously adopted, subject +to stockholder approval at the 2019 Annual Meeting, our 2019 Amended and Restated Stock Incentive Plan, amending and restating our 2013 Restated Stock Incentive Plan, which, as so amended and restated, is referred to as the Stock Incentive Plan. A +summary of the material terms of the Stock Incentive Plan is set forth under Proposal 2, beginning on page 67. +2014 +Executive Annual Incentive Compensation Plan +The 2014 Annual Incentive Compensation Plan, or Annual Incentive Plan, was approved by our board of +directors on April 1, 2014 and by our stockholders at the 2014 Annual Meeting on June 11, 2014. Our executive officers and selected employees and those of our subsidiaries are eligible to receive awards under the Annual Incentive Plan. The +Annual Incentive Plan provides for awards of incentive compensation that are contingent on the attainment of specific performance targets. Under the Annual Incentive Plan, the compensation committee, as the plan administrator, establishes the +performance targets for each award and the performance period during which the performance is to be measured, which will generally be our fiscal year. Performance targets may include a minimum level of performance below which no payment will be +made, levels of performance at which specified percentages of the award will be paid, and a maximum level of performance above which no additional award will be paid. The plan administrator must adopt the performance targets and criteria for awards +granted to executive officers subject to the limits of Section 162(m) of the Code, whom we refer to as Covered Employees, no later than the earlier of: +• +90 days after the beginning of the performance period, or +• +the time when 25% of the performance period has elapsed. +In addition, award amounts to be paid to any Covered Employee for any one year may not exceed the lesser of: (i) 300% of base salary at the time the award is +established, or (ii) $6.0 million. Individual awards may be subject to lesser limits as specified in the discretion of the Compensation Committee. +Performance targets for each award will be based on pre-established performance factors, which may include any or all +of the following, individually or in combination: +• +revenue; +• +net sales; +• +operating income; +• +earnings before all or any of interest, taxes, depreciation and/or amortization (“EBIT,” +“EBITA” or “EBITDA”); +• +growth of oil and natural gas production; +• +growth of estimated or proved reserves; +• +capital efficiency based on revenue per barrel of oil equivalent (“BOE”) produced; +54 +Table of Contents +• +lease operating expenses; +• +general and administrative expenses; +• +net cash provided by operating activities or other cash flow measurements; +• +working capital and components thereof; +• +return on equity or average stockholders’ equity; +• +return on assets; +• +market share; +• +net or gross sales measured by product line, territory, one or more customers, or other category; +• +stock price; +• +earnings per share; +• +earnings from continuing operations; +• +net worth; +• +credit rating; +• +levels of expense, cost or liability by category, operating unit, or any other delineation; or +• +any increase or decrease of one or more of the foregoing over a specified period. +These performance factors may relate to the performance of the Company or the performance of a business unit, product line, territory or any combination of +these. Performance targets for employees who are not executive officers may also be based on other additional objective or subjective performance criteria established by the plan administrator. +The plan administrator may at any time establish additional conditions and terms of payment of awards, including additional financial, strategic or individual +goals, which may be objective or subjective. The plan administrator may exercise negative discretion to reduce the amount of an award, but may not adjust upwards the amount payable pursuant to any award to a Covered Employee, nor may it waive the +achievement of the performance target requirement for any Covered Employee, except in the case of the death or disability of the participant or a change in control of the Company. +Unless the plan administrator provides otherwise, a participant must be employed by us on the date that awards are paid to receive an award payment, except in +the case of death or disability. If a participant dies or becomes disabled during a performance period, the participant (or the participant’s beneficiary) will receive a pro-rated award payment at the +same time all other awards are paid for the performance period. In the event of a change in control, each named executive officer will be paid the target award amount (mid-point of any specified range of +potential award payment amount) based on the assumption that the performance target was attained at the target level (mid-point of any specified range of performance targets) for the entire performance period. +The target award amount will be paid within ten (10) days following the consummation of the change in control transaction. +Before payment of any +award to a Covered Employee, our Compensation Committee must certify in writing that the performance target requirement for such award was met. +The plan +administrator may at any time amend the Annual Incentive Plan, subject to approval by our stockholders to the extent stockholder approval is necessary to continue to qualify as “performance-based compensation” under Section 162(m) of +the Code (as in effect prior to January 1, 2018). The plan administrator may at any time terminate the Annual Incentive Plan in whole or in part. +Our board of directors has delegated its authority to administer the Annual Incentive Plan to the Compensation Committee, to whom we refer as the plan +administrator. The Compensation Committee is expected to consist +55 +Table of Contents +solely of two or more “outside directors” within the meaning of Section 162(m) of the Code (as in effect prior to January 1, 2018). The plan administrator has the authority to +administer the Annual Incentive Plan and to exercise all the powers and authorities either specifically granted to it under the Annual Incentive Plan or necessary or advisable in the administration of the Annual Incentive Plan, including (but not +limited to) the following: +• +to interpret the Annual Incentive Plan and any award; +• +to prescribe rules relating to the Annual Incentive Plan; +• +to determine the persons to receive awards; +• +to determine the terms, conditions, restrictions and performance criteria, including performance factors and +performance targets, relating to any award; +• +to accelerate an award that is designed not to be deferred compensation subject to Code Section 409A (after +the attainment of the applicable performance target or targets); +• +to adjust performance targets in recognition of specified events such as unusual or non-recurring events affecting us or our financial statements, including certain asset dispositions, cessation of operations resulting from a natural disaster, or in response to changes in applicable laws, +regulations, or accounting principles as specified in the Annual Incentive Plan or in the performance targets established for any performance period; +• +to waive restrictive conditions for an award (but not performance targets); and +• +to make any other determinations that may be necessary or advisable for administration of the Annual Incentive +Plan. +Federal Income Tax Consequences of the Annual Incentive Plan. +Under federal income tax laws currently in effect: +Participants +in the Annual Incentive Plan will recognize in the year of payment ordinary income equal to the award amount, which is subject to applicable income and employment tax withholding by us (including the additional tax of 0.9% imposed on wages in excess +of $200,000 under Section 3101(b)(2) of the Code). Under current regulations and guidance, we expect that awards under the Annual Incentive Plan will not be subject to Section 409A of the Code, which imposes restrictions on nonqualified +deferred compensation arrangements and penalizes participants for violating these restrictions. +Section 162(m) of the Code imposes a +$1.0 million annual limit on the amount of compensation that we may deduct for federal income tax purposes with respect to our chief executive officer and each of our three highest compensated officers (other than our chief executive officer +and our chief financial officer), and, effective as of January 1, 2018, our chief financial officer and certain former named executive officers. For 2017 and prior years, the Annual Incentive Plan was intended to qualify for an exception under +Section 162(m) for “performance-based compensation.” As a result of new tax legislation enacted on December 22, 2017, this exception is not available for taxable years beginning after December 31, 2017, unless such +performance-based compensation qualifies for transition relief for written binding contracts that were in effect as of November 2, 2017. As a result of the new tax legislation, compensation paid in excess of $1.0 million to a covered +employee is not expected to be deductible under Section 162(m) of the Code. Therefore, awards under our Annual Incentive Plan originally designed with the intent that such awards qualify as “performance-based compensation” may not be +deductible in the future. +56 +Table of Contents +EQUITY COMPENSATION PLAN INFORMATION +The following table sets forth, as of December 31, 2018, certain information with respect to all compensation plans under which equity securities are +authorized for issuance. +Plan Category +Number of securities to +be issued upon exercise +of outstanding options, +warrants and +rights +(a)(1)(2) +Weighted average +exercise price of +outstanding options, +warrants and rights +(b)(3) +Number of securities +remaining available +for future issuance +under equity +compensation +plans +(excluding securities +reflected in column +(a))(c) +Equity compensation plans approved by security holders(1) +1,535,811 +$ +— +1,889,474 +(1) +Refers to our 2013 Restated Stock Incentive Plan (which amended and restated our Amended and Restated 2005 +Stock Incentive Plan) and our 1999 Stock Option Plan. +(2) +Includes an aggregate of 1,535,811 unvested restricted stock units and shares of unvested restricted common +stock granted under our 2013 Restated Stock Incentive Plan. +(3) +No options were outstanding as of December 31, 2018, and neither restricted stock units nor shares of +restricted common stock have an exercise price. +Compensation Arrangement with Our Chief Executive Officer +Mr. Wood was appointed to serve as our Chief Executive Officer and President, and as a member of our board of directors, effective +December 18, 2018. We do not have an employment agreement with Mr. Wood. In his role as our Chief Executive Officer and President, in 2018, Mr. Wood received an initial annual base salary of $750,000. On February 26, 2019, in +accordance with the terms of his appointment, Mr. Wood was granted an inducement restricted stock unit award granted under the our long-term equity incentive plan, with a value of $1,000,000, in the amount of 121,951 restricted stock units +determined based on the closing price per share of our common stock on The Nasdaq Global Market on February 25, 2019. In addition to the inducement restricted stock award, Mr. Wood is entitled to receive annual grants of restricted stock +units (or other equity awards with an equivalent value) with a grant date value of 500% of his annual base salary, 50% of which award to be time-based, vesting in three substantially equal annual installments beginning on the first anniversary of +the grant date, and the remaining 50% of such award to be performance-based, subject to the performance goals and criteria determined in the discretion of our board of directors or the Compensation Committee. The annual restricted stock unit awards +for 2019 were granted to Mr. Wood on February 26, 2019 and consisted of 228,659 performance-based restricted stock units, vesting over a three-year performance period, based on the achievement of certain RTSR targets and continuous service +on the last day of the performance period, and 228,659 time-vesting restricted stock units, vesting over a three-year period. +Mr. Wood is also +eligible to participate in the Company’s annual cash incentive program, which provides an opportunity to receive an annual bonus payable in a single lump sum based on a target amount of 125% of Mr. Wood’s annual base salary and such +performance goals and criteria determined in the discretion of our board of directors or the Compensation Committee. Mr. Wood is also eligible to participate in other employee benefit plans generally available to similarly situated Company +employees, as in effect from time to time. +The Company reimbursed Mr. Wood for certain customary relocation and moving expenses in the amount of +$21,281. +In the event Mr. Wood’s employment is terminated by the Company, other than for cause, Mr. Wood will be entitled to his +earned but unpaid compensation, as well as an amount of severance equal to his annual base salary and target bonus in effect as of the date of such termination, which we refer to as the severance payment, payable in accordance with our normal +payroll practices for a period of 12 months following such termination, and +57 +Table of Contents +continuation of health coverage for Mr. Wood and his dependents for a period of 12 months. Upon an involuntary termination without cause that occurs within 12 months following a change in +control, Mr. Wood will be entitled to receive the severance payment for a period of 24 months and health coverage continuation for a period of 18 months. +Employment Agreements with our Chief Financial Officer and Senior Vice President of Geosciences +In 2017, we entered into an employment agreement with each of Keri Crowell, our Chief Financial Officer, and Stuart Maier, our Senior Vice President of +Geosciences, each effective as of January 1, 2017. Each employment agreement provides for a one-year term commencing as of January 1, 2017, which we refer to as the Initial Period, that is +automatically extended for successive one-year periods unless we or the executive elects to not extend the term by giving written notice to the other party at least 30 days prior to the end of the Initial +Period or any anniversary thereof. +Ms. Crowell and Mr. Maier received one-year extensions of their +respective employment contracts, which included an annual base salary of $362,300 and $414,000, respectively, subject to periodic review by the compensation committee and adjustment from time to time. Subject to the achievement of certain +performance goals as determined by our board of directors or the compensation committee for each fiscal year, each of Ms. Crowell and Mr. Maier is eligible to participate in our annual cash incentive program, with an opportunity to receive +an annual bonus (payable in a single lump sum), based on criteria determined in the discretion of the board of directors or the Compensation Committee. For 2018, Ms. Crowell’s target bonus was 80% of her annual base salary, with a maximum +target bonus of up to 200%, of her target bonus and Mr. Maier’s target bonus was 60% of his annual base salary, with a maximum target bonus of up to 200% of his target bonus, provided each such executive remains employed by us on the +payment date. Each such executive is also entitled to participate in any life, disability, health insurance and 401(k) plans and other similar plans that we establish from time to time for our executive employees. +Under his or her employment agreement, each executive may receive, as determined by the board of directors or the Compensation Committee in its sole +discretion, an equity award under our long term incentive plan or plans, subject to the terms and conditions thereof and any equity award agreement. +The +Compensation Committee has determined that any equity awards granted to our NEOs in 2019 will be equally divided between performance-based restricted stock units tied to RTSR, vesting over a three-year performance period, and time-based restricted +stock units, vesting over a three-year period. +Any equity awards granted to such executive, any proceeds of any equity awards that previously have been +sold, transferred or otherwise disposed of, and any incentive bonus award will be subject to clawback by us, now or in the future, the Dodd-Frank Act and the SOX Act, each as amended, and rules, regulations and binding, published guidance +thereunder. +Each executive has agreed to certain restrictive covenants in his or her employment agreement, including such executive’s agreement not +to interfere with any of our employees, suppliers, vendors, joint venturers or licensors and not to solicit our customers or employees, in each case during such executive’s employment with us and for a period of two years thereafter, +(ii) not to disclose our confidential information or trade secrets and (iii) not to compete with us while using our trade secrets. We may terminate each such executive’s employment at any time for any or no reason, in our sole +discretion, upon not less than ten days’ advance written notice to the executive. The executive may terminate the employment relationship upon ten days’ advance written notice to us. However, if we terminate such executive’s +employment without “cause,” then he or she will be entitled to (i) any accrued benefits (defined below), (ii) severance pay in an amount equal to one months’ base salary for each full year of employment with us, not to exceed 12 +months, and (iii) COBRA coverage as required by applicable law; provided that, in the case of clauses (ii) and (iii), the executive continues to comply with the restrictive covenants +58 +Table of Contents +described above and the executive executes a full general release in our favor. In the event the executive’s employment terminates upon his or her death or disability, the executive or his +or her estate will be entitled to any accrued benefits. In the event such executive’s employment is terminated for “cause” (as defined below) or as a result of non-extension of his or her +employment agreement, our obligations under such agreement will terminate, except for any accrued benefits. +If the executive’s employment with us or +our successor is terminated on or before the second anniversary of the date of occurrence of a “change of control” (as defined below) other than for “cause,” then, in addition to the benefits described above, (i) all equity +awards that have been granted to such executive that would have vested at any time after the date of his or her termination solely as a result of her continued service to the Company will immediately vest on the date of termination, and +(ii) such executive will be entitled to receive a lump sum payment equal to his or her severance payment described above times two, plus an amount equal to his or her target annual bonus during the severance period and the continuation of COBRA +coverage for 18 months. +Under the employment agreements with each of Ms. Crowell and Mr. Maier: +“Accrued benefits” are (i) any base salary through the date of termination, (ii) reimbursement for any unreimbursed business expenses +incurred through the date of termination, (iii) any accrued but unused vacation time in accordance with the Company’s policy and (iv) all other payments, benefits or fringe benefits to which the executive may be entitled under the +terms of any applicable compensation arrangement or benefit, equity or fringe benefit plan or program or grant or his or her employment agreement. +A +“change of control” will be deemed to have occurred upon the occurrence of any of the following: (i) any consolidation or merger of us into or with another person or entity pursuant to which our shares of common stock would be +converted into cash, securities or other property, other than any consolidation or merger in which the persons who were our stockholders immediately prior to the consummation of such consolidation or merger are the beneficial owners, immediately +following the consummation of such consolidation or merger, of more than 50% of the combined voting power of the then outstanding voting securities of the person or entity surviving or resulting from such consolidation or merger; (ii) any sale, +lease or other transfer (in one transaction or a series of related transactions) of all or substantially all of our assets; or (iii) the approval by our stockholders of any plan or proposal for our liquidation or dissolution. +“Cause” is generally defined as such named executive officer’s (i) gross negligence, gross incompetence or misconduct in performing the +executive’s duties, (ii) failure to perform, without proper legal reason, such executive’s duties and responsibilities to us or any of our affiliates, (iii) material breach of such executive’s employment agreement or any +agreement or corporate policy or code of conduct established by us or our affiliates, (iv) conduct that is, or could reasonably be expected to be, materially injurious to us or any of our affiliates, (v) act of theft, fraud, embezzlement +or misappropriation against or breach of a fiduciary duty to us or any of our affiliates or (vi) conviction of, or a plea of guilty or no contest to, or receipt of adjudicated probation or deferred adjudication in connection with, a crime +involving fraud, dishonesty or moral turpitude or any felony (or a crime of similar import in a foreign jurisdiction). +Compensation Arrangements with our Chief Operating Officer and our Senior Vice President of Corporate Development and Strategy +We do not have an employment agreement with either Donnie Moore, our Chief Operating Officer, or Paul Heerwagen, our Senior Vice President of +Corporate Development and Strategy. +As our Chief Operating Officer, in 2018, Donnie Moore received an annual base salary of $430,125. In connection with +his appointment as our Chief Operating Officer in January 2018, he received a sign-on bonus of $250,000. On February 19, 2018, Mr. D. Moore also received a grant of 137,143 restricted stock units +with a value of approximately $1,200,000 on the date of grant, which vest in three approximately equal annual +59 +Table of Contents +installments beginning on February 27, 2019. In addition to the 2018 restricted stock unit award, Mr. D. Moore is entitled to receive future annual grants of restricted stock units (or +other form of equity award with an equivalent value) with a grant date value of 350% of his annual base salary. +Under the terms of his employment with +us, Mr. D. Moore is eligible to participate in our annual cash incentive program, which will provide an opportunity to receive an annual, calendar-year bonus (payable in a single lump sum) based on a target amount of 80% of his annual base +salary and such performance goals and criteria determined in the discretion of our board of directors or its Compensation Committee. Mr. D. Moore is also eligible to participate in any other benefit plans available to our other similarly +situated employees, subject to the terms and conditions of such plans. In 2018, we also reimbursed Mr. D. Moore for the cost of certain of his direct and incidental relocation expenses in the aggregate amount of $28,233. +As our Senior Vice President of Corporate Development and Strategy, in 2018, Paul Heerwagen received an annual base salary of $346,700. Under the terms of his +employment with us, Mr. Heerwagen is eligible to participate in our annual cash incentive program, which will provide an opportunity to receive an annual, calendar-year bonus (payable in a single lump sum) based on a target amount of his annual +base salary and such performance goals and criteria determined in the discretion of our board of directors or its Compensation Committee. For 2018, Mr. Heerwagen’s target bonus was 60% of his annual base salary, with a maximum target bonus +of up to 200%, of his target bonus. Mr. Heerwagen is also eligible to participate in any other benefit plans available to our other similarly situated employees, subject to the terms and conditions of such plans. +Mr. Heerwagen is also eligible to receive restricted stock unit awards under our stock incentive plan. +The Compensation Committee has determined that any equity awards granted to our NEOs in 2019 will be equally divided between performance-based restricted +stock units tied to RTSR, vesting over a three-year performance period, and time-based restricted stock units, vesting over a three-year period. +Potential Payments Upon Termination, Resignation or Change of Control +The following tables provide information regarding potential payments as of +December 31, 2018 to each of our named executive officers as of December 31, 2018 in connection with certain termination events, including a termination related to a change of control of the Company. +Benefits and Payments Upon +Termination of +David M. Wood(1) +Voluntary +Resignation/Death or +Disability(2) +Termination by +Company +Other than for +Cause +Termination +for Cause +Involuntary +Termination +Within 12 Months +Following +Change of +Control +Severance Payments +$ +— +$ +1,687,500(3) +$ +— +$ +3,375,000(4) +Long-Term Incentives: +Unvested Restricted Stock Units(5) . +— +$ +— +— +$ +— +Unvested Stock Options/SARs +— +— +— +— +Benefits Continuation +— +$ +14,930(6) +— +$ +22,395(7) +Other +— +$ +— +— +$ +— +Total +$ +— +$ +1,702,430 +— +$ +3,397,395 +(1) +The executive’s annual base salary as of December 31, 2018 was $750,000. Information in this table +assumes a termination date of December 31, 2018 and a price per share of our common stock of $6.55 (the closing market price per share on December 31, 2017, the last trading day of 2018), and applies the terms of Mr. Wood’s +compensation arrangement as of December 31, 2018. +60 +Table of Contents +(2) +Upon a voluntary resignation, or upon death or disability, the executive or his estate, as applicable, is +entitled to receive all accrued and unpaid salary and other compensation payable to the executive (including vacation and sick pay) with respect to services rendered through the termination date. +(3) +Reflects receipt by the executive of a payment representing his earned but unpaid compensation, as well as an +amount of severance equal to his annual base salary and target bonus in effect as of December 31, 2018 (the “severance payment”), payable in accordance with the Company’s normal payroll practices for a period of 12 months +following such termination. +(4) +Reflects receipt by the executive of a payment representing the severance payment for a period of 24 months. +(5) +Does not give effect to the performance-based and time-vesting restricted stock units granted during 2019, +which contain double trigger change of control provisions and provide for an acceleration of such awards in the event of Mr. Wood’s death or disability during his continuous service with the Company. +(6) +Reflects the value of Company-paid continuation coverage under the Company’s group health plans and under +the Consolidated Omnibus Budget Reconciliation Act of 1985 for the executive and his eligible family members for a period of 12 months following the date of termination. +(7) +Reflects the value of Company-paid continuation coverage under the Company’s group health plans and under +the Consolidated Omnibus Budget Reconciliation Act of 1985 for the executive and his eligible family members for a period of 18 months following the date of termination. +Benefits and Payments Upon +Termination of +the Following Executive +Officers(1) +Termination +Without +Cause(4)(5) +Termination +Upon Death +or Disability(6) +Termination +for Cause +Termination +Following +Change of +Control(7) +Keri Crowell(2) +Severance Payments +$ +362,300 +$ +— +$ +— +$ +1,014,440 +Long-Term Incentives: +Unvested Restricted Stock +$ +— +— +— +$ +904,778 +Unvested Stock Options/SARs +— +— +— +— +Benefits Continuation +$ +7,153 +— +— +$ +7,749 +Total +$ +369,453 +$ +— +$ +— +$ +1,926,967 +Stuart Maier(3) +Severance Payments +$ +414,000 +$ +— +$ +— +$ +1,076,400 +Long-Term Incentives: +Unvested Restricted Stock +— +— +— +$ +552,244 +Unvested Stock Options/SARs +— +— +— +— +Benefits Continuation +$ +7,153 +— +— +$ +10,730 +Total +$ +421,153 +$ +— +$ +— +$ +1,639,374 +(1) +Information in this table assumes a termination date of December 31, 2018 and a price per share of our +common stock of $6.55 (the closing market price per share on December 31, 2018, the last trading day of 2018). +(2) +Ms. Crowell’s base salary as of December 31, 2018 was $362,300. The information in this table +for Ms. Crowell applies the terms of her employment agreement, effective as of January 1, 2017. +(3) +Mr. Maier’s base salary as of December 31, 2018 was $414,000. The information in this table for +Mr. Maier applies the terms of his employment agreement effective as of January 1, 2017. +(4) +If we terminate the executive’s employment without “cause,” the executive will be entitled to +his or her monthly base salary, paid monthly for the “Severance Period,” provided in each case that the executive (i) continues to comply with the restrictive covenants described above regarding confidential information and trade +secrets, (ii) continues to comply with the provisions relating to non-solicitation and non-interference in the Company’s business and (iii) executes a +full general release in our favor . The executive will also be entitled to his or her Accrued Benefits (as defined below). The “Severance Period” for the executive is equal to one month for each full year of employment with the +Company, not to exceed +61 +Table of Contents +twelve months. As of December 31, 2018, Ms. Crowell and Mr. Maier had thirteen and twenty full years of employment with the Company, respectively. +(5) +If we terminate the executive’s employment without “cause,” the executive will be entitled to +the continuation of certain benefits paid by the Company. The “Benefits Continuation” reflects the value of Company-paid continuation coverage under the Company’s group health plans and under the Consolidated Omnibus Budget +Reconciliation Act of 1985, or COBRA, for the executive and his or her eligible dependents for such executive’s Severance Period following the date of termination. The Company’s obligation to pay this amount is subject to the +executive’s timely election of continuation of coverage and the executive’s continued copayment of premiums. The executive must also (i) continue to comply with the restrictive covenants described above regarding confidential +information and trade secrets, (ii) continue to comply with the provisions relating to non-solicitation and non-interference in the Company’s business and +(iii) execute a full general release in our favor. +(6) +If the executive’s employment terminates on account of such executive’s death or disability, if we +terminate the executive’s employment for cause, or if either the Company or the executive elects not to extend the term of the employment agreement prior to an automatic renewal date, the executive is entitled to receive a payment from the +Company equal to all accrued and unpaid salary payable to the executive (including vacation pay) with respect to services rendered through the termination date, any unreimbursed business expenses through the termination date and all other payments, +benefits or fringe benefits the executive may be entitled to under the terms of any applicable compensation arrangement, benefit plan or grant (the foregoing, the “Accrued Benefits”). In the case of death or disability, this amount will be +paid in a lump sum within 60 days following termination of employment. +(7) +If the executive’s employment with us or our successor is terminated on or before the second anniversary +of the date of occurrence of a “change of control” (as defined above) by us or our successor other than for “cause,” then (i) all equity awards that have been granted to such executive that would have vested at any time +after the date of such executive’s termination solely as a result of such executive’s continued service to the Company will immediately vest on the date of termination, (ii) the executive will be entitled to receive a lump sum payment from +the Company equal to his or her monthly base salary rate times such executive’s Severance Period times two, plus an amount equal to the executive’s target annual bonus during the Severance Period and (iii) the executive will be +entitled to the continuation of COBRA coverage by the Company for the Severance Period, up to a term of 18 months. The executive will also be entitled to their Accrued Benefits The executive must also (a) continue to comply with the restrictive +covenants described above regarding confidential information and trade secrets, (b) continue to comply with the provisions relating to non-solicitation and +non-interference in the Company’s business and (c) execute a full general release in our favor. +We do not currently have termination or change of control arrangements with Donnie Moore, our Chief Operating Officer, or Paul Heerwagen, our Senior Vice +President of Corporate Development and Strategy, except for the change in control provisions set forth in their respective restricted stock unit award agreements. Upon termination for any reason, each of Mr. D. Moore and Mr. Heerwagen +would be entitled to receive all of his accrued and unpaid salary and any other compensation payable to such executive (including vacation and sick pay) with respect to services rendered through the termination date. The restricted stock unit award +agreements covering the unvested restricted stock units granted to Mr. D. Moore in 2018 contain a change of control provision providing for acceleration of vesting of any such unvested restricted stock units in the event of a change of control, +as such term is defined in the award agreement. The restricted stock unit award agreements covering the unvested restricted stock units granted to Mr. Heerwagen in 2018 contained a change of control provision providing for acceleration of +vesting of any such unvested restricted stock units in the event of a change of control, as such term is defined in the applicable award agreement, and involuntary termination within a 12-month period from +such event. As of December 31, 2018, the value of such unvested restricted stock units held by Messrs. D. Moore and Heerwagen would have been $904,778 and $584,994]], respectively. Any new awards granted to our NEOs in 2019 and in the future +will contain a double trigger change of control provisions, providing for acceleration of vesting of any such unvested restricted stock units in the event of a change of control, as such term is defined in the applicable award agreement, and +involuntary termination within a +62 +Table of Contents +12-month period. Any new awards to our NEOs will also provide for acceleration of the restricted stock units in the event of the NEO’s death or +disability during a period of continuous service. +Severance Agreement with our Former Chief Executive Officer and President +Effective October 29, 2018, Michael G. Moore stepped down from his position as our Chief Executive Officer and President and as a member of our +board of directors. In connection with Mr. Michael Moore’s departure, we entered into a Separation and Release Agreement with Mr. Michael Moore which we refer to as the separation agreement. Under the terms of the separation +agreement, we paid Mr. Michael Moore separation payments in the aggregate amount of $400,000. Also, we agreed to reimburse Mr. Michael Moore’s portion of COBRA premiums for a maximum of six months, which reimbursement will cease at +any time he becomes eligible for group medical coverage from another employer. The separation agreement also includes a release of claims by Mr. Michael Moore against us, our directors, stockholders, employees, agents, attorneys, consultants +and affiliates. +CEO Pay Ratio Disclosure +Pursuant to Item 402(u) of Regulation S-K, we are disclosing the pay ratio and supporting information comparing the +median of the annual total compensation of our employees (including full-time, part-time, seasonal and temporary employees) other than Michael G. Moore, our former Chief Executive Officer and President, and the annual total compensation of +Mr. M. Moore. Mr. Wood, our new Chief Executive Officer and President, served in these roles beginning with December 18, 2018. The pay ratio is calculated in a manner consistent with Item 402(u) of Regulation S-K. +For the year ended December 31, 2018, our last completed fiscal year: +• +The median of the annual total compensation of all of our employees, other than Mr. Michael Moore and +Mr. Wood was $107,741. +• +The annual total compensation of Mr. Michael Moore was $5,500,160. +Based on this information, for 2018 the ratio of the annual total compensation of Mr. Michael Moore, our former Chief Executive Officer and President, to +the median of the annual total compensation of all other employees was 51:1. +We selected December 31, 2018 as the date upon which we identified the +“median employee.” To identify the median employee, we examined the Medicare Taxable Earnings as reported on Internal Revenue Service Form W-2 (Box 5) for 2018 for all individuals employed by us on +December 31, 2018 (other than Mr. Michael Moore and Mr. Wood). +Once we identified our median employee, we calculated that employee’s +annual total compensation for 2018 in the same manner that we determined the total compensation of our named executive officers for purposes of the Summary Compensation Table set forth above. This resulted in an annual total compensation of $107,741 +for the identified employee for the year ended December 31, 2018. The calculation of the total compensation for Mr. Michael Moore is included in the Summary Compensation Table set forth above. We made no material assumptions, adjustments, +or estimates to identify the median employee or to determine total compensation, and we did not annualize the compensation for any employees that were not employed by us the entire year. +Beneficial Ownership +Holdings of Major Stockholders +The following table sets forth certain information regarding the beneficial ownership as of April 1, 2019 of shares of our common stock by each person or +entity known to us to be a beneficial owner of 5% or more of our common stock. +63 +Table of Contents +MAJOR STOCKHOLDER TABLE +Name and Address of Beneficial Owner(1) +Amount and +Nature of +Beneficial +Ownership +Percent of +Class(1) +State Street Corporation +10,129,701 +6.3 +% +State Street Financial Center +One Lincoln Street +Boston, MA 02111 +Vitruvian Exploration II Holdings, LLC +13,704,357 +(2) +8.5 +% +1401 McKinney Street, Suite 2700 +Houston, Texas 77010 +Vitruvian II Woodford, LLC +13,704,357 +(3) +8.5 +% +2445 Technology Forest Blvd., Suite 1100 +The Woodlands, Texas 77381 +The Vanguard Group +15,333,435 +(4) +9.5 +% +100 Vanguard Blvd. +Malvern, Pennsylvania 19355 +Dimensional Fund Advisors LP +14,687,995 +(5) +9.1 +% +Building One +6300 Bee Cave Road +Austin, Texas 78746 +BlackRock, Inc. +24,561,132 +(6) +15.2 +% +55 East 52nd Street +New York, NY 10055 +Firefly Value Partners, LP +14,077,000 +(7) +8.7 +% +55 East 52nd Street +New York, NY 10055 +(1) +Beneficial ownership is determined in accordance with SEC rules. The percentage of shares beneficially owned is +based on 161,144,143 shares of common stock outstanding as of April 1, 2019, including 1,946,741 shares of restricted stock awarded under our 2013 Restated Stock Incentive Plan or our Amended and Restated 2005 Stock Incentive Plan, but not yet +vested. +(2) +Based solely on Schedule 13G/A jointly filed with the SEC on February 12, 2019 by Vitruvian Exploration II +Holdings, LLC, or VEX Holdings, Vitruvian Exploration II, LLC, or VEX, Q-VEX II, LP, or Q-VEX, QEM V, LLC, or QEM, and S. Wil VanLoh, Jr. Each reporting person reported +sole dispositive power and sole voting power of 13,704,357 shares of common stock, or the Vitruvian Shares. The holdings reported represent the shares of common stock held by Vitruvian. VEX Holdings holds a majority of the capital interests of +Vitruvian and has the right to appoint four of the six managers of the Vitruvian Board (such managers referred to herein as the VEX Holdings Managers). Certain actions of Vitruvian, including certain dispositions, require the approval of the VEX +Holdings Managers. VEX has the right to appoint a majority of the board of managers of VEX Holdings. Q-VEX has the right to appoint a majority of the board of managers of VEX. QEM is the sole general partner +of Q-VEX. Any decision taken by QEM to vote, or to direct to vote, and to dispose, or to direct the disposition of, the Vitruvian Shares has to be approved by a majority of the members of the investment +committee of QEM, which majority must include S. Wil VanLoh, Jr. Therefore, VEX Holdings, VEX, Q-VEX, QEM and S. Wil VanLoh, Jr. may be deemed to share voting and dispositive power over the Vitruvian Shares +and may also be deemed to be the beneficial owners of such securities. +(3) +Based solely on Schedule 13G/A filed with the SEC on February 12, 2019 by Vitruvian II Woodford, LLC, or +Vitruvian. Vitruvian reported sole dispositive power and sole voting power of 13,704,357 shares of common stock. +64 +Table of Contents +(4) +Based solely on Schedule 13G/A filed with the SEC on February 11, 2019 by The Vanguard Group, or Vanguard, +Vanguard reported sole voting power of 166,847 shares of common stock, sole dispositive power of 15,168,976 shares of common stock, shared dispositive power of 164,459 shares of common stock and shared voting power of 15,183 shares of common stock. +Vanguard Fiduciary Trust Company and Vanguard Investments Australia, Ltd., both wholly owned subsidiaries of Vanguard, are the beneficial owners of 149,276 and 32,754 shares, respectively, of common stock. +(5) +Based solely on Schedule 13G filed with the SEC on February 8, 2019 by Dimensional Fund Advisors LP, or +Dimensional. Dimensional reported sole dispositive power of 14,687,995 shares of commons stock and sole voting power of 14,295,489 shares of common stock. +(6) +Based solely on Schedule 13G/A filed with the SEC on January 28, 2019 by BlackRock, Inc. BlackRock, Inc. +reported sole voting power of 24,132,245 shares of common stock and sole dispositive power of 24,561,132 shares of common stock, owned through BlackRock Fund Advisors, a wholly owned subsidiary of BlackRock, Inc. iShares Core S&P Small-Cap ETF, or iShare, an entity managed indirectly by BlackRock, Inc., has the right to proceeds from the sale of such securities. Therefore, BlackRock, Inc., BlackRock Fund Advisors, and iShares may be deemed +to be the beneficial owners of such securities. +(7) +Based solely on Schedule 13D/A filed with the SEC on January 17, 2019, by FVP Master Fund, L.P., or FVP +Master, Firefly Value Partners, LP, or Firefly Value, FVP GP, LLC, or FVP GP, Firefly Management Company GP, LLC, or Firefly Management, Ryan Heslop, and Ariel Warsazawski. Each reporting person reported sole dispositive power and sole voting power +of 14,077,000 shares of common stock, or the Firefly Shares. The holdings reported represent the shares of common stock held by FVP Master. Firefly Value is the investment manager of FVP Master. FVP GP is the general partner of, and therefore has +the right to control, FVP Master. Firefly Management is the general partner of, and therefore has the right to control, Firefly Value. Mr. Heslop and Mr. Warsazawski are each managing members of FVP GP and Firefly Management, and therefore +have the ability to control each such entity. Therefore, FVP Master, Firefly Value, FVP GP, Firefly Management, Ryan Heslop, and Ariel Warsazawski may be deemed to share voting and dispositive power over the Firefly Shares and may also be deemed to +be the beneficial owners of such securities. +Holdings of Officers and Directors +The following table sets forth certain information regarding the beneficial ownership as of April 1, 2019 of shares of our common stock by each of our +directors, by each named executive officer and by all directors and executive officers as a group: +Name of Beneficial Owner(1) +Amount and +Nature of +Beneficial +Ownership +Percent of +Class +David M. Wood(2) +10,000 +* +Craig Groeschel(3) +29,590 +* +David L. Houston(3) +64,267 +* +C. Doug Johnson(3)(4) +31,084 +* +Scott E. Streller(3) +50,233 +* +Ben T. Morris(3) +32,393 +* +Paul D. Westerman(3)(5) +56,689 +* +Deborah G. Adams(3) +14,099 +* +Donnie Moore(6) +30,548 +* +Keri Crowell(7) +89,055 +* +Stuart Maier(8)(9) +58,292 +* +Paul Heerwagen(10) +67,881 +* +Michael G. Moore(11) +187,807 +* +Directors and Executive Officers as a Group (18 persons) +721,938 +* +65 +Table of Contents +* +Less than 1%. +(1) +Beneficial ownership is determined in accordance with SEC rules. In computing percentage ownership of each +person, shares of common stock subject to options held by that person that are exercisable as of April 1, 2019, or exercisable within 60 days of April 1, 2019, are deemed to be beneficially owned. These shares, however, are not deemed +outstanding for the purpose of computing the percentage ownership of each other person. The percentage of shares beneficially owned is based on 161,144,143 shares of common stock outstanding as of April 1, 2019, including 1,946,741 shares of +restricted stock awarded under our 2013 Restated Stock Incentive Plan but not yet vested. Unless otherwise indicated, all amounts exclude shares issuable upon the exercise of outstanding options and vesting of restricted stock units that that are +not exercisable and/or vested as of April 1, 2019 or within 60 days of April 1, 2019. Except as otherwise noted, each stockholder has sole voting and investment power with respect to the shares beneficially owned. +(2) +Excludes (i) 121,951 restricted stock units that were granted as an inducement award to accept employment with +us as our Chief Executive Officer, (ii) 228,659 time-vesting restrictive stock units representing 50% of Mr. Wood’s annual equity award for 2019, all of which will vest in three approximately equal annual installments beginning on +February 26, 2020 and (iii) 228,659 performance-based restricted stock units representing the remaining 50% of Mr. Wood’s annual equity award for 2019, vesting of which depends on the attainment of certain RTSR targets over the +three-year performance period, subject to the Compensation Committee’s certification of the attainment of such targets and continuous service with the Company on the last day of the performance period. +(3) +Includes 11,201 restricted stock units, which will vest on the earlier of May 31, 2019 and the date of the +2019 Annual Meeting of Stockholders, in each case if such director is in continuous service on such date. +(4) +Mr. Johnson holds 3,500 of these shares in a joint account owned by Mr. Johnson and his spouse, +resulting in shared voting and dispositive power of such shares. +(5) +Mr. Westerman shares voting and dispositive power of 50,976 shares with his spouse. +(6) +Excludes 91,429 unvested restricted stock units, which will vest in two equal annual installments beginning on +February 27, 2020. +(7) +Excludes (i) 4,000 unvested restricted stock units, which vest in two equal annual installments beginning on +August 15, 2019 and (ii) 18,333 unvested restricted stock units, which vest August 27, 2019. Also excludes 77,200 unvested restricted stock units, which will vest in two equal annual installments beginning on April 18, 2020. +(8) +Excludes (i) 10,667 unvested restricted stock units, which will vest on August 27, 2019 and (ii) 49,097 +unvested restricted stock units, which will vest in two equal annual installments beginning on April 18, 2020. +(9) +Of these shares, 111 are held by the S. Maier Revocable Trust, of which Mr. Maier is the trustee. +(10) +Excludes (i) 4,000 unvested restricted stock units, which vest in two equal annual installments beginning on +August 15, 2019, (ii) 11,667 unvested restricted stock units, which vest August 27, 2019 and (iii) 49,097 unvested restricted stock units, which will vest in two equal annual installments beginning on April 18, 2020, +(11) +Michael G. Moore stepped down from his position as our Chief Executive Officer and President and as a member of +our board of directors effective October 29, 2018. All of his unvested restricted stock or restricted stock units were forfeited as of that date. +Section 16(a) Beneficial Ownership Reporting Compliance +Section 16(a) of the Exchange Act requires our directors and executive officers, and persons who beneficially own more than 10% of a registered class of +the Company’s equity securities, to file reports of ownership and changes in ownership with the SEC and to furnish us with copies of the forms they file. To our knowledge, based solely on a review of the copies of such reports furnished to us +and written representations of our officers and directors, all Section 16(a) reports for the year ended December 31, 2018 applicable to our officers and directors and such other persons were filed on a timely basis. +66 +Table of Contents +Certain Relationships and Related Transactions Review and +Approval of Related Party Transactions +The audit committee, as provided in its charter, reviews and approves related party transactions. The Company +does not have a formal set of standards to be substantively applied to each transaction reviewed by the audit committee. Instead of a formalized policy, related party transactions are reviewed and judgment is applied to determine whether such +transactions are in the best interests of the Company. Further, the Company’s Code of Business Conduct and Ethics governs various compliance areas, including conflicts of interest and fair dealings, which are considered in the process of the +review and approval of related party transactions. +The Company’s policy is that all of its employees and directors, as well as their family members, +must avoid any activity that is or has the appearance of conflicting with the Company’s business interest. This policy is included in the Company’s Code of Business Conduct and Ethics posted on its website. Each director and executive +officer is instructed to always inform the designated compliance officer when confronted with any situation that may be perceived as a conflict of interest. Only the board of directors or a committee consisting solely of independent directors may +grant waivers of the provisions of the Code of Business Conduct and Ethics for the Company’s executive officers and directors. In addition, at least annually, each director and executive officer completes a detailed questionnaire specifying any +business relationship that may give rise to a conflict of interest. +Further, under the audit committee charter, the audit committee is responsible for +reviewing and monitoring compliance with our Code of Business Conduct and Ethics and recommending any warranted changes to the board of directors. In addition, the board of directors and, pursuant to its written charter, the audit committee, reviews +and approves all relationships and transactions in which the Company and its directors, director nominees and executive officers and their immediate family members, as well as holders of more than 5% of any class of our voting securities and their +family members, have a direct or indirect material interest. The board of directors and the audit committee approve only those transactions that, in light of known circumstances, are consistent, or are not inconsistent with, the Company’s best +interests, as they determine in the good faith exercise of their discretion. +Separation Agreement with Our Former Chief Executive Officer and +President and Other Related Party Transaction +Michael G. Moore stepped down from his position as our Chief Executive Officer and President, and as a +member of our board of directors, effective as of October 29, 2018. In connection with Mr. M. Moore’s departure, we entered into a separation agreement with Mr. M. Moore. For a description of Mr. M. Moore’s severance +and other provisions of his separation agreement with us, see “Severance Agreement with our Former Chief Executive Officer and President” above. +AMM Design, Inc., or AMM, provided landscape and related services to the third party building manager for our offices in Oklahoma City in 2018. We paid the +building manager approximately $149,000 in respect of these services. AMM is owned by the son of Michael G. Moore, our former Chief Executive Officer and President. +Proposal to Approve the 2019 Amended and Restated Stock Incentive Plan +(Proposal 2 on the Proxy Card) +After careful consideration, on April 29, 2019, the Compensation Committee, acting upon authority delegated to it by our board of directors, unanimously +adopted, subject to stockholder approval, our 2019 Amended and Restated Stock Incentive Plan, amending and restating our 2013 Restated Stock Incentive Plan, which we refer to as the Stock Incentive Plan or the Plan. If approved by our stockholders, +the amendment and restatement of the Plan will do the following: +• +Change the name of the Plan. +• +Increase the share reserve under the Plan by an additional 5,000,000 shares. +67 +Table of Contents +• +Limit the total annual amount of all compensation to our non-employee +directors to $750,000. +• +Eliminate the recycling of shares underlying awards that are settled in cash instead of shares. +• +Update the Plan to reflect recent changes to the Internal Revenue Code. +• +Extend the expiration date of the Plan from April 18, 2023, to April 28, 2029. +Rationale for Approval +The Stock Incentive Plan +authorizes the grant of various forms of stock-based compensation, referred to as equity awards. The Board believes that stock-based compensation is a very important factor in attracting and retaining experienced and talented employees who can +contribute significantly to the management, growth and profitability of our business. Additionally, the Board believes that stock-based compensation aligns the interests of our management with the interests of our stockholders. The availability of +equity awards not only increases employees’ focus on the creation of stockholder value, but also enhances employee retention and generally provides increased motivation for our employees to contribute to the future success of the Company. +The Stock Incentive Plan is the only plan pursuant to which we can grant equity awards, and the limited number of shares remaining available under the Plan +restricts our ability to grant equity awards. As of March 31, 2019, approximately 1,423,990 shares remained available for future awards under the Plan. Our average annual shares issued for the past three years is approximately 969,333 (based on +the average award shares granted) or 784,929 (based in the average award shares granted net of forfeitures). The amendment and restatement of the Plan will add 5,000,000 shares to the Plan’s share reserve, by increasing the maximum number of +shares available for issuance from 7,500,000 shares to 12,500,000 shares. Based upon current price and the structure of our long-term incentive program for 2019, we anticipate that the requested reserve will provide between three and five years of +grants. +The amendment to the Plan to provide that awards settled in cash instead of shares are counted against the maximum share reserve in the same +manner as if they were settled in shares of common stock reflects current market practices in compensation. +Approval of the 2019 Amended and Restated +Stock Incentive Plan is intended to enable us to obtain and retain the services of the types of employees, consultants and directors who will contribute to our long range success and to provide incentives linked directly to increases in share value, +which will inure to the benefit of all of our stockholders. The key terms of the Plan are substantially similar to our 2013 Restated Stock Incentive Plan, which was approved by our stockholders in 2013. +Potential Dilution. At March 31, 2019, approximately 1,423,990 shares remained available for issuance under the Stock Incentive Plan. The +amendment and restatement of the Plan provides that the total number of shares of common stock available for issuance under the Plan will include (a) the 5,000,000 newly authorized shares of common stock plus (b) the 1,423,990 shares +available for future issuance under the Plan at March 31, 2019, which would represent approximately 4% percent of our 159,421,965 shares of common stock outstanding as of March 31, 2019. +Burn Rate . The “burn rate” measures the potential dilutive effect of our annual equity awards. The annual burn rate expresses the amount of +stock awards a company grants annually relative to its shares of common stock outstanding, by dividing the number of shares granted during the applicable fiscal year by the weighted average number of shares outstanding for that year. +68 +Table of Contents +The following table provides information on the annual burn rate and the three-year average burn rate for +the past three fiscal years: +Shares Awarded Under 2013 Restated Stock Incentive Plan +Year +Shares Subject +to Options +Shares Subject to +Restricted Stock and +RSU Awards +Granted +Total Adjusted +Awards(1) +Weighted Average Number +of Shares Outstanding +Burn Rate (%) +2018 +— +1,579,911 +2,369,867 +174,675,840 +1.4 +% +2017 +— +876,846 +1,315,269 +179,834,146 +0.7 +% +2016 +— +451,241 +676,862 +122,952,866 +0.6 +% +Average +1,453,999 +0.9 +% +Applying the ISS assigned premium multiplier of 1.5X to full value awards granted under the Stock Incentive Plan. +Summary of the Plan as Amended and Restated +The +following is a summary of the material terms of the Stock Incentive Plan as amended and restated. This summary is qualified in its entirety by reference to the Plan as amended. A copy of the 2019 Amended and Restated Stock Incentive Plan is attached +as Appendix A to this proxy statement. +Effective Date and Duration. If the stockholders approve the amendment and restatement of the Plan, it will +become effective on the date of the Annual Meeting and remain in effect until April 28, 2029, unless otherwise terminated earlier by the board of directors or the Compensation Committee. No awards may be granted under the Plan after its termination +date, but awards granted before the Plan’s termination will continue to be effective in accordance with their respective terms and conditions. +Administration. The Stock Incentive Plan is administered by the Compensation Committee of our board of directors, or the “committee.” Among +other responsibilities, the committee selects individuals to receive awards, establishes the terms of awards, and administers and takes whatever action it determines to be necessary or advisable in administering the Plan. The committee may amend, +suspend or terminate the Plan at any time. Amendments will not be effective without stockholder approval if stockholder approval is required by applicable law or stock exchange requirements. +Eligibility. The committee may grant awards under the Stock Incentive Plan to employees, consultants and directors of the Company and its related +companies. Incentive stock options may be granted only to employees. Awards other than incentive stock options may be granted to employees, consultants and directors. +Share Reserve. Subject to adjustments for certain changes in corporate capitalization, the maximum number of shares of common stock authorized for +issuance under awards granted under the Stock Incentive Plan (the “share reserve”) is 12,500,000 shares. All such shares are available for incentive stock options or any other awards. Shares covered by awards that expire or otherwise +terminate without having been exercised in full or that are forfeited or repurchased by us will again be available for future awards under the Plan. However, awards settled in cash instead of shares are counted against the maximum share reserve in +the same manner as if they were settled in shares of common stock. Shares tendered or withheld to pay the exercise price or tax obligations pursuant to any award, or that are otherwise not issued in connection with the exercise of an option or a +stock appreciation right, are not available for future awards under the Plan. +Limitations on Awards. No participant may receive awards +under the Stock Incentive Plan covering more than 1,000,000 shares in the aggregate during any calendar year. In addition, each non-employee director’s total annual compensation, including awards under +the Plan and cash paid under the Plan or otherwise, is limited to $750,000. +69 +Table of Contents +Types of Awards under the Stock Incentive Plan +Stock Options. The committee may grant incentive stock options intended to comply with Section 422 of the Code or “nonstatutory” stock +options that are not intended to qualify as incentive stock options. Employees, directors and consultants may be granted nonstatutory stock options, but only employees may be granted incentive stock options. The committee determines the exercise +price of a stock option, which generally cannot be less than 100% (or 110% in the case of an incentive stock option granted to a more than 10% stockholder) of the fair market value of our common stock on the date of grant, except when assuming or +substituting options in limited situations such as an acquisition. Generally, options granted under the Plan will vest ratably over a five-year period and have a term of ten years (or five years in the case of an incentive stock option granted to a +more than 10% stockholder), unless otherwise specified by the committee in the option agreement. The committee determines the methods and form of payment for the exercise price per share on exercise of a stock option. Stock options generally are not +transferable except by will or the laws of descent and distribution, unless the committee provides otherwise with respect to a nonstatutory stock option (and solely with respect to transfers to certain family members and estate planning vehicles). +Restricted Awards. Restricted awards may be in the form of restricted stock awards or restricted stock units. A restricted stock award consists of +shares of our common stock that generally are non-transferable and subject to forfeiture or other restrictions imposed by the committee. Any certificates representing shares of restricted stock that are +registered in a participant’s name will bear an appropriate legend referring to the applicable terms, conditions and restrictions, and may be retained in the Company’s possession until all applicable restrictions have lapsed. A restricted +stock unit award represents the right to receive a specified number of shares of our common stock, or a cash payment equal to the fair market value of a specified number of shares of our common stock as of a specified date, subject to any vesting or +other restrictions deemed appropriate by the committee. Restrictions on restricted awards may lapse separately or in combination, at such times, in such circumstances, in installments or otherwise as determined by the committee. If a participant +terminates employment or services during the restricted period, then any unvested restricted award will be forfeited except as otherwise provided in the award agreement. The committee may waive any restrictions or forfeiture conditions relating to a +restricted award. Restricted stock units will be settled at the time designated by the committee in the award agreement, in the form of cash or shares of common stock, or in a combination of both, as provided by the committee in the award +agreement. +Performance Awards. Performance awards entitle the recipient to vest in or acquire shares of common stock or in the right to +receive a specified number of shares of common stock, a cash payment equal to the fair market value of a specified number of shares as of a specified date, or a combination of shares and cash, upon the attainment of specified performance goals. +Performance awards may be granted independent of or in connection with the granting of any other award under the Plan. +Performance goals are +established by the committee based on one or more of the following business criteria that apply to the participant, a business unit, or us and our affiliates: +• +revenue; +• +sales; +• +earnings before all or any of interest expense, taxes, depreciation and/or amortization (“EBIT,” +“EBITA,” or “EBITDA”); +• +funds from operations; +• +funds from operations per share; +• +operating income; +• +operating income per share; +70 +Table of Contents +• +pre-tax or after-tax income; +• +net cash provided by operating activities; +• +cash available for distribution; +• +cash available for distribution per share; +• +working capital and components thereof; +• +sales (net or gross) measured by product line, territory, customer or customers, or other category; +• +return on equity or average stockholders’ equity, including total stockholder return on equity based on the +net stock price change over a given period plus the dividends paid during that period; +• +return on assets; +• +return on capital; +• +enterprise value or economic value added; +• +share price performance; +• +improvements in the Company’s attainment of expense levels; +• +implementation or completion of critical projects; +• +improvement in cash-flow (before or after tax); +• +net earnings; +• +earnings per share; +• +earnings from continuing operations; +• +net worth; +• +credit rating; +• +levels of expense, cost, or liability by category, operating unit, or any other delineation; +• +any increase or decrease of one or more of the foregoing over a specified period; or +• +the occurrence of a Change in Control. +Performance goals will be objective and determined before 25% of the service period has elapsed, and in any event not later than 90 days after the beginning +of the service period. No payout will be made on a performance award granted to a named executive officer unless all applicable performance goals and service requirements are achieved. Performance awards are +non-transferable and generally terminate on a participant’s termination of service during the service period. +Stock Appreciation Rights. Stock appreciation rights may be granted independent of or in tandem with any option under the Plan. The strike price of a +stock appreciation right is determined by the committee, but as a general rule will not be less than the fair market value of our common stock on the date of grant. The strike price of a stock appreciation right granted in tandem with an option is +the same as the exercise price of the option. A stock appreciation right generally entitles the holder to receive, on exercise, the excess of the fair market value of a share of our common stock on the date of exercise over the strike price, +multiplied by the number of shares for which the right is exercised. Payment may be made in cash, delivery of stock or a combination of cash and stock as determined by the committee. +Other Provisions of the Stock Incentive Plan +Capitalization Adjustments. In the event of certain corporate events or changes in our common stock, the committee will proportionally adjust awards, +the number and class of shares available under the Plan and the maximum number of shares that may be granted under awards to any participant in a calendar year as it determines to be appropriate. +71 +Table of Contents +Change in Control and other Corporate Transactions. In the event of a change in control transaction +or other corporate transaction such as a dissolution or liquidation of our Company, or any corporate separation or division, all outstanding awards under the Plan may be assumed, continued or substituted for by any surviving or acquiring entity (or +its parent company), or may be cancelled either with or without consideration for the vested portion of the awards, all as determined by the committee. If an award would be cancelled without payment of consideration to the extent vested, the +participant may exercise the award in full or in part for a period of ten days. +Tax Withholding. We may deduct or withhold, or require a +participant to remit, an amount sufficient to satisfy any taxes required by law or regulation to be withheld with respect to any award under the Plan. This includes the authority to withhold or receive shares of common stock and to make cash +payments or require a participants to make cash payments in satisfaction of participant tax obligations. +Clawback or Recoupment. Awards +granted under the Plan are subject to the Company’s clawback policy, which allows us to recover incentive compensation based on misconduct or, in certain circumstances, if our financial results are restated. +U.S. Federal Tax Consequences of Awards under the 2019 Amended and Restated Equity incentive Plan +The following is a brief summary of certain federal income tax consequences relating to awards granted under the Stock Incentive Plan. This summary does not +purport to address all aspects of federal income taxation and does not describe state, local, or foreign tax consequences. This discussion is based upon provisions of the Code and the treasury regulations issued thereunder, and judicial and +administrative interpretations under the Code and regulations, all as in effect as of the date hereof, and all of which are subject to change (possibly on a retroactive basis) or different interpretation. +Stock Options. Stock options may be intended to qualify as incentive stock options under Code Section 422 or may be nonstatutory stock options +governed by Code Section 83. A participant generally will not recognize any taxable income, and we will not be entitled to a tax deduction, on the grant of an option. On exercise of a nonstatutory stock option a participant generally will +recognize ordinary taxable income equal to the excess of the fair market value of the acquired common stock on the exercise date over the exercise price paid for those shares. Subject to satisfying applicable reporting requirements and any deduction +limitations under the Code (discussed below), we should be entitled to a corresponding income tax deduction. A participant generally will not recognize taxable income on exercise of an incentive stock option and we will not be entitled to a +deduction. However, the excess of the fair market value of the acquired common stock on the exercise date over the exercise price for those shares could result in alternative minimum tax liability for the participant. A participant’s +disposition of shares acquired on exercise of any option will ordinarily result in capital gain or loss. However, a disposition of shares acquired on exercise of an incentive stock option less than two years after the grant date or one year after +the exercise date (referred to as a “disqualifying disposition”) generally will result in ordinary taxable income equal to the excess of the fair market value of the acquired common stock on the exercise date and the exercise price for +those shares, with any excess of the amount received by the participant over the fair market value of the stock on the exercise date being treated as capital gain. We may be entitled to a deduction corresponding to the participant’s ordinary +taxable income in the case of such a disqualifying disposition. +Restricted Stock and Performance Stock. A participant who receives a restricted +stock award, including performance stock generally will recognize ordinary income only when the shares are no longer subject to forfeiture or restrictions, generally equal to the fair market value of the shares of restricted stock at the time of +vesting. However, a participant may make an election under Code section 83(b) at the time of grant to recognize ordinary income on the grant date equal to the fair market value of such shares (determined without regard to the restrictions on such +shares) on the grant date. If a participant does not make a Section 83(b) election, the participant will recognize as ordinary income any dividends received with respect to shares of restricted stock. Subject to satisfying applicable income +reporting requirements and any applicable deduction limitation under the +72 +Table of Contents +Code, we should be entitled to a corresponding income tax deduction at the same time as the participant recognizes ordinary income. When the participant sells the shares, any gain (or loss) +realized by the participant will be treated as either short-term or long-term capital gain (or loss) depending on the holding period. For purposes of determining any gain or loss realized, the participant’s tax basis will be the amount +previously taxable as ordinary income for such shares. +Restricted Stock Units and Performance Units. The grant of a restricted stock unit award, +including performance units, will not result in taxable income to the participant. The participant generally will recognize ordinary income when the award is settled in an amount equal to the fair market value of the shares or the amount of any cash +received on the date of settlement. Subject to satisfying applicable income reporting requirements and any deduction limitations under the Code, we should be entitled to a corresponding income tax deduction. The participant’s disposition of any +shares received on settlement of a restricted stock unit will result in capital gain (or loss) on the difference between the disposition price and the amount recognized as income at settlement, and will be long-term or short-term depending on the +holding period. +Stock Appreciation Rights. The grant or vesting of a stock appreciation right generally will not result in taxable income to a +participant. The participant will recognize ordinary taxable income on exercise of the right equal to the amount of cash received or the fair market value of shares received. Subject to satisfying applicable income reporting requirements and any +deduction limitations under the Code, we should be entitled to a corresponding income tax deduction. The participant’s disposition of any shares received on exercise of a stock appreciation right will result in capital gain (or loss) on the +difference between the disposition price and the amount recognized as income at exercise, and will be long-term or short-term depending on the holding period. +Million Dollar Deduction Limit and Other Tax Matters. +Section 162(m) of the Code generally prohibits us from deducting annual compensation exceeding $1 million per person to our Chief Executive Officer +and other “covered employees” as defined in Section 162(m). Prior to 2018, an exception to this deduction limitation was available for compensation qualifying as “performance-based compensation,” which required compliance +with certain requirements under Section 162(m) of the Code and the applicable regulations. The Stock Incentive Plan was designed, and prior to 2018 the Company generally granted awards under the Plan, to satisfy these requirements for qualified +performance-based compensation and thereby be fully deductible by the Company. As a result of tax legislation enacted at the end of 2017, the exception for performance-based compensation is no longer available for taxable years beginning after +December 31, 2017, unless such compensation qualifies for transition relief for written binding contracts that were in effect as of November 2, 2017. Accordingly, compensation paid to a covered employee under awards granted under the Plan +after November 2, 2017, will count towards the $1 million deduction limit, and may thereby be partially or fully nondeductible. +Section 409A of the Code imposes complex rules on nonqualified deferred compensation arrangements. Generally, Code section 409A should not apply to +awards under the Stock Incentive Plan, but may apply in some cases to restricted stock units and performance units. For such awards subject to Code section 409A, certain key employees of the Company may experience a +six-month delay in the settlement of such awards. +Under certain circumstances, the granting or enhancement of +awards, the accelerated vesting or exercise of stock options or the accelerated lapse of restrictions with respect to other awards in connection with a change in control (as defined in the Stock Incentive Plan) could be deemed an “excess +parachute payment” under the golden parachute tax provisions of Code section 280G. To the extent this happens, the participant could be subject to a 20% excise tax and the Company could be denied a federal income tax deduction. +73 +Table of Contents +New Plan Benefits +Because future awards under the Stock Incentive Plan will be granted in amounts and to persons in the sole discretion of the committee, the type, number, +recipients and other terms of such awards cannot be determined at this time. Therefore, we have omitted the tabular disclosure of the benefits or amounts allocated under the Stock Incentive Plan. +Board Voting Recommendation +THE BOARD OF DIRECTORS +UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE APPROVAL OF THE 2019 AMENDED AND RESTATED EQUITY INCENTIVE PLAN. +Proposal to Approve, on an Advisory Basis, the Compensation Paid to the Company’s Named Executive Officers +(Proposal 3 +on the Proxy Card) +In accordance with Section 14A of the Exchange Act, our board of directors is providing our stockholders with a non-binding advisory vote on the compensation paid to the Company’s named executive officers as reported in this proxy statement, or “say on pay” vote. The Company’s stockholders are being asked +to vote on the following resolution: +“RESOLVED, that the compensation paid to the Company’s named executive officers, as +disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby approved.” +This vote is advisory, which means that the vote on executive compensation is not binding on the Company, our board of directors or the Compensation +Committee. While the vote on executive compensation is solely advisory in nature, our board of directors and the Compensation Committee will review and consider the “say on pay” voting results when making future decisions regarding our +executive compensation program. +Stockholders are encouraged to carefully review the “Compensation Discussion and Analysis” section of this +proxy statement, which discusses in detail the Company’s compensation policy and compensation arrangements which the Company believes are appropriate and reasonably consistent with market practice and with the long-term interests of the Company +and its stockholders. In furtherance of the Company’s goals and objectives, the Compensation Committee, among other things, emphasizes long-term equity awards and annual performance bonuses under the previously implemented Annual Incentive Plan +to more closely align our executives’ interests with those of our stockholders and to link a larger portion of our executives’ compensation to the performance of our stock and our operational performance. +For 2019, the Compensation Committee also introduced performance-based equity awards in the form of performance-based restricted stock units tied to RTSR, +vesting over a three-year performance period, comprising 50% of all equity awards granted in 2019 and adjusted annual performance bonuses targets and long-term equity awards to more closely align our executives’ financial interests with those +of our stockholders and to continue to link a larger portion of such executives’ compensation to the performance of our stock and our operational performance. Our board of directors also adopted formal stock ownership and retention guidelines +to ensure our board of directors and other executive officers own a stake in the company that is sufficient to align their interests with their fellow stockholders. +Further, since 2014, the Compensation Committee eliminated, and since that time has not used and does not intend to use, minimum discretionary cash bonus +arrangements for our Chief Executive Officer and Chief Financial Officer in recognition of the Company’s focus on the use of performance-based bonuses. Further, beginning in 2017, in keeping with our enhanced focus on performance-based +compensation, the Compensation +74 +Table of Contents +Committee also eliminated discretionary bonuses for our other named executive officers, tying their bonuses for 2017 and 2018 to certain pre-established +Company performance metrics under the Annual Incentive Plan, as described in more detail under the “Compensation Discussion and Analysis,” except in certain exceptional and limited circumstances under which, in February 2019, the +Compensation Committee authorized the discretionary bonuses to our Chief Operating Officer and our Senior Vice President of Corporate Development and Strategy in the amounts of $150,000 and $50,000, respectively, in recognition of their additional +services during the transition period from the time of the departure of our former Chief Executive Officer and President in October 2018 to the time of the appointment of Mr. Wood as our Chief Executive Officer and President in December 2018, +including, in the case of our Chief Operating Officer for his services as our Interim Chief Executive Officer. +We believe that linking a large portion of +our executive officers’ compensation to both performance-based long-term equity incentive awards and performance-based bonus arrangements, with meaningful performance metrics, appropriately aligns our executives’ interests with those of +our stockholders and are consistent with market practices. We also believe that our current compensation policies and practices enhance retention of executive talent through multi-year vesting of stock awards and discourage unnecessary and excessive +risk taking. We further believe that our other compensation policies and practices, such as our policy generally prohibiting pledging and hedging of our stock by our executive officers and directors, as well as the lack of significant prerequisites +and absence of pension or supplemental retirement benefits (aside from those afforded under our broad-based 401(k) plan) for our executive officers are consistent with prudent compensation philosophy and the interests of our stockholders. We will +continue to consider the outcome of our stockholders’ future “say-on-pay” votes when making compensation decisions for our named executive officers. +We have determined that our stockholders should cast an advisory vote on the compensation of our named executive officers on an annual basis. Unless this +policy changes, the next advisory vote on the compensation of our named executive officers will be at the 2019 annual meeting of stockholders. +THE +BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THIS PROPOSAL 3. +Proposal to Ratify the Appointment of Our Independent Auditors +(Proposal 4 on the Proxy Card) +What am I voting on? +You are voting on a proposal to +ratify the appointment of Grant Thornton LLP as our independent auditors for fiscal year 2019. The audit committee has appointed Grant Thornton LLP to serve as independent auditors. +What services do the independent auditors provide? +Audit +services of Grant Thornton LLP for fiscal year 2018 included an audit of our consolidated financial statements and services related to periodic filings made with the SEC. Additionally, Grant Thornton LLP provided certain services related to the +consolidated quarterly reports and annual and other periodic reports, registration statements and comfort letters and other services as described below. +How much were the independent auditors paid in 2017 and 2018? +Grant Thornton LLP’s fees for professional services totaled $1,176,500 for 2017 and $966,750 for 2018. Grant Thornton LLP’s fees for professional +services included the following: +• +Audit Fees—aggregate fees for audit services, which relate to the fiscal year consolidated audit, +quarterly reviews, registration statements, comfort letters, statutory and regulatory audits and accounting consultations were $1,176,500 for 2017 and $966,750 for 2018. +75 +Table of Contents +• +Audit-Related Fees— aggregate fees for audit-related services, consisting of audits in +connection with proposed or consummated dispositions, benefit plan audits, other subsidiary audits, special reports, and accounting consultations, were $0 in 2017 and $0 for 2018. +• +Tax and All Other Fees— there w ere no tax or other fees for products or services provided by +Grant Thornton LLP in addition to the services described above in 2017 and 2018. +Does the audit committee approve the services +provided by Grant Thornton LLP? +It is our audit committee’s policy to pre-approve all audit, audit +related and permissible non-audit services rendered to us by our independent auditor. Consistent with such policy, all of the fees listed above that we incurred for services rendered by Grant Thornton LLP in +fiscal years 2017 and 2018 were pre-approved by our audit committee. No non-audit services were provided to us by Grant Thornton LLP in 2017 or 2018. +Will a representative of Grant Thornton LLP be present at the meeting? +Yes, one or more representatives of Grant Thornton LLP will be present at the meeting. The representatives will have an opportunity to make a statement if they +desire and will be available to respond to appropriate questions from the stockholders. +What vote is required to approve this proposal? +Stockholder ratification of the appointment of our independent auditors is not required by the Company’s bylaws or otherwise. However, we are submitting +this proposal to the stockholders as a matter of good corporate practice. Approval of this proposal requires the affirmative vote of a majority of the votes cast on the proposal. If the appointment of Grant Thornton LLP is not ratified, the audit +committee will reconsider the appointment. Even if the appointment is ratified, the audit committee in its discretion may direct the appointment of a different independent audit firm at any time during the year if it is determined that such change +would be in best interests of the Company and its stockholders. +Has Grant Thornton LLP always served as Gulfport’s independent auditors? +Grant Thornton LLP has served as our independent auditors since 2005. +What does the board of directors recommend? +THE BOARD +OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF GRANT THORNTON LLP AS THE COMPANY’S INDEPENDENT AUDITORS FOR THE YEAR 2019. +Solicitation by Board; Expenses of Solicitation +Our board of directors has sent you this proxy statement. Our directors, officers and employees may solicit proxies by mail, by telephone or in person. Those +persons will receive no additional compensation for any solicitation activities. We will request banking institutions, brokerage firms, custodians, trustees, nominees and fiduciaries to forward solicitation materials to the beneficial owners of +common stock held of record by those entities, and we will, upon the request of those record holders, reimburse reasonable forwarding expenses. We will pay the costs of preparing, printing, assembling and mailing the proxy material used in the +solicitation of proxies. +Submission of Future Stockholder Proposals +Under SEC rules, a stockholder who intends to present a proposal, including with respect to the nomination of directors, at the 2020 Annual Meeting of +Stockholders and who wishes the proposal to be included in the proxy statement for that meeting must submit the proposal in writing to our Senior Vice President of Corporate Development and Strategy. The proposal must be received no later than +January 3, 2020. +76 +Table of Contents +Stockholders who wish to propose a matter for action at the 2019 Annual Meeting, including with respect to +the nomination of directors, but who do not wish to have the proposal or nomination included in the proxy statement, must notify the Company in writing of the information required by the provisions of our bylaws dealing with stockholder proposals +and nominations of directors. The notice must be delivered to our Senior Vice President of Corporate Development and Strategy between February 7, 2020 and March 8, 2020. You can obtain a copy of our bylaws by writing the Senior Vice +President of Corporate Development and Strategy at the address below, or from the SEC website at www.sec.gov, which is listed as an exhibit to our latest report on Form 10-K filed with the SEC on +February 28, 2019. +Under our certificate of the incorporation, to be timely, notice of business to be brought at our annual meeting, +including with respect to the nomination of directors, by any of our stockholders entitled to vote at such meeting must be delivered to or mailed and received at the principal executive offices of the Company not less than 60 days nor more than 90 +days prior to the meeting, provided, however, that in the event that less than 70 days’ notice or prior public disclosure of the date of the meeting is given or made to stockholders, notice by the stockholder to be timely must be so received +not later than the close of business on the 10th day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure was made. Such notice must include the information required by the provisions of our +certificate of incorporation dealing with stockholder proposals and nominations of directors. +All written proposals should be directed to Paul K. +Heerwagen IV, our Senior Vice President of Corporate Development and Strategy at Gulfport Energy Corporation, 3001 Quail Springs Parkway, Oklahoma City, Oklahoma 73134. +The board of directors is responsible for selecting and recommending director candidates and will consider nominees recommended by stockholders. If you wish +to have the board of directors consider a nominee for director, you must send a written notice to our Senior Vice President of Corporate Development and Strategy at the address provided above and include the information required by our bylaws and +discussed on page 16 of this proxy statement. +Availability of Form +10-K and Annual Report to Stockholders +SEC rules require us to provide an Annual Report to stockholders who +receive this proxy statement. Additional copies of the Annual Report, along with copies of our Annual Report on Form 10-K for the fiscal year ended December 31, 2018, including the financial statements +and the financial statement schedules, are available without charge to stockholders upon written request to Director of Investor Relations, Gulfport Energy Corporation, 3001 Quail Springs Parkway, Oklahoma City, Oklahoma 73134 or via the Internet at +www.gulfportenergy.com . We will furnish the exhibits to our Annual Report on Form 10-K upon payment of our copying and mailing expenses. +Householding +The SEC permits +a single set of annual reports and proxy statements to be sent to any household at which two or more stockholders reside if they appear to be members of the same family, unless instructions have been received to the contrary. Each stockholder +continues to receive a separate proxy card. This procedure, referred to as householding, reduces the volume of duplicate information stockholders receive and reduces our mailing and printing expenses. +If you would like to receive your own set of the annual report and proxy statement this year or in future years, follow the instructions described below, and +we will promptly deliver a separate copy to you. Similarly, if you share an address with another Gulfport stockholder and together both of you would like to receive in the future only a single annual report and proxy statement, follow these +instructions: +• +If your shares of our common stock are registered in your own name, please contact our transfer agent, +Computershare Trust Company, N.A., and inform them of your request by calling their toll- +77 +Table of Contents +free number: (800) 962-4284 or by mail: Computershare Trust Company, N.A., 250 Royall Street, Canton, MA 02021. +• +If a broker or other nominee holds your shares, please contact your broker or nominee. +Other Matters +The board of directors does not intend to present any other items of business other than those stated in the Notice of Annual Meeting of Stockholders. If other +matters are properly brought before the meeting, the persons named as your proxies will vote the shares represented by it in accordance with their best judgment. Discretionary authority to vote on other matters is included in the proxy. +78 +Table of Contents +Appendix A +GULFPORT ENERGY CORPORATION +2019 AMENDED AND RESTATED STOCK INCENTIVE PLAN +Appendix A +Table of Contents +GULFPORT ENERGY CORPORATION +2019 AMENDED AND RESTATED STOCK INCENTIVE PLAN +TABLE OF CONTENTS +Page +Article 1 Purpose, Eligibility +A-1 +1.1 +General Purpose +A-1 +1.2 +Eligible Award Recipients +A-1 +1.3 +Available Awards +A-1 +Article 2 Definitions +A-1 +2.1 +“Administrator” +A-1 +2.2 +“Award” +A-1 +2.3 +“Award Agreement” +A-1 +2.4 +“Beneficial Owner” +A-1 +2.5 +“Board” +A-1 +2.6 +“Cashless Exercise” +A-1 +2.7 +“Cause” +A-1 +2.8 +“Change in Control” +A-2 +2.9 +“Code” +A-2 +2.10 +“Committee” +A-2 +2.11 +“Common Stock” +A-2 +2.12 +“Company” +A-2 +2.13 +“Consultant” +A-2 +2.14 +“Continuous Service” +A-3 +2.15 +“Covered Employee” +A-3 +2.16 +“Date of Grant” +A-3 +2.17 +“Detrimental Activity” +A-3 +2.18 +“Director” +A-3 +2.19 +“Disability” +A-3 +2.20 +“Effective Date” +A-4 +2.21 +“Employee” +A-4 +2.22 +“Established Securities Market” +A-4 +2.23 +“Exchange Act” +A-4 +2.24 +“Exercise Price” +A-4 +2.25 +“Fair Market Value” +A-4 +2.26 +“Free Standing SAR” +A-4 +2.27 +“Incentive Stock Option” +A-5 +2.28 +“Incumbent Directors” +A-5 +2.29 +“Insider” +A-5 +2.30 +“Market Standoff” +A-5 +2.31 +“Non-Employee Director” +A-5 +2.32 +“Nonstatutory Stock Option” +A-5 +2.33 +“Officer” +A-5 +2.34 +“Option” +A-5 +2.35 +“Option Agreement” +A-5 +2.36 +“Optionholder” +A-5 +2.37 +“Outside Director” +A-5 +2.38 +“Participant” +A-5 +2.39 +“Performance Award” +A-5 +2.40 +“Permitted Transferee” +A-5 +2.41 +“Person” +A-6 +(A-i) +Table of Contents +Page +2.42 +“Plan” +A-6 +2.43 +“Prior Plan” +A-6 +2.44 +“Prohibited Personal Loan” +A-6 +2.45 +“Related Company” +A-6 +2.46 +“Restricted Award” +A-6 +2.47 +“Restricted Period” +A-6 +2.48 +“Restricted Stock” +A-6 +2.49 +“Restricted Stock Unit” +A-6 +2.50 +“Right of Repurchase” +A-6 +2.51 +“Rule 16b-3” +A-6 +2.52 +“Securities Act” +A-6 +2.53 +“Stock Appreciation Right” or “SAR” +A-6 +2.54 +“Stock for Stock Exchange” +A-6 +2.55 +“Strike Price” +A-6 +2.56 +“Surviving Entity” +A-6 +2.57 +“Tandem SAR” +A-7 +2.58 +“Ten Percent Stockholder” +A-7 +Article 3 Administration +A-7 +3.1 +Administration by Board +A-7 +3.2 +Authority of Administrator +A-7 +3.3 +Specific Authority +A-7 +3.4 +Decisions Final +A-8 +3.5 +The Committee +A-8 +3.6 +Indemnification +A-9 +Article 4 Shares Subject to the Plan +A-9 +4.1 +Share Reserve +A-9 +4.2 +Reversion of Shares to the Share Reserve +A-9 +4.3 +Source of Shares +A-9 +Article 5 Eligibility +A-10 +5.1 +Eligibility for Specific Awards +A-10 +5.2 +Ten Percent Stockholders +A-10 +5.3 +Award Limitation +A-10 +5.4 +Directors +A-10 +Article 6 Option Provisions +A-10 +6.1 +Term +A-10 +6.2 +Exercise Price +A-10 +6.3 +Consideration +A-11 +6.4 +Transferability of an Incentive Stock Option +A-11 +6.5 +Transferability of a Nonstatutory Stock Option +A-12 +6.6 +Vesting Generally +A-12 +6.7 +Termination of Continuous Service +A-12 +6.8 +Extension of Termination Date +A-12 +6.9 +Disability of Optionholder +A-13 +6.10 +Death of Optionholder +A-13 +6.11 +Incentive Stock Option $100,000 Limitation +A-13 +6.12 +Early Exercise +A-13 +6.13 +Transfer, Approved Leave of Absence +A-13 +6.14 +Disqualifying Dispositions +A-13 +(A-ii) +Table of Contents +Page +Article 7 Provisions of Awards Other Than Options +A-13 +7.1 +Restricted Awards +A-13 +7.2 +Performance Awards +A-15 +7.3 +Stock Appreciation Rights +A-17 +Article 8 Covenants of the Company +A-18 +8.1 +Availability of Shares +A-18 +8.2 +Securities Law Compliance +A-18 +Article 9 Use of Proceeds from Stock +A-18 +Article 10 Miscellaneous +A-19 +10.1 +Acceleration of Exercisability and Vesting +A-19 +10.2 +Stockholder Rights +A-19 +10.3 +No Employment or Other Service Rights +A-19 +10.4 +Transfer, Approved Leave of Absence +A-19 +10.5 +Investment Assurances +A-19 +10.6 +Withholding Obligations +A-19 +10.7 +Right of Repurchase +A-20 +Article 11 Adjustments upon Changes in Stock +A-20 +11.1 +Capitalization Adjustments +A-20 +11.2 +Dissolution or Liquidation +A-21 +11.3 +Change in Control – Asset Sale, Merger, Consolidation or Reverse Merger +A-21 +Article 12 Amendment of the Plan and Awards +A-21 +12.1 +Amendment of Plan +A-21 +12.2 +Stockholder Approval +A-21 +12.3 +Contemplated Amendments +A-21 +12.4 +Amendment of Awards +A-22 +12.5 +No Impairment of Rights +A-22 +Article 13 General Provisions +A-22 +13.1 +Other Compensation Arrangements +A-22 +13.2 +Recapitalizations +A-22 +13.3 +Delivery +A-22 +13.4 +Other Provisions +A-22 +13.5 +Cancellation and Rescission of Awards for Detrimental Activity +A-22 +13.6 +Clawback or Forfeiture +A-23 +Article 14 Market Standoff +A-23 +Article 15 Effective Date of Plan +A-23 +Article 16 Termination or Suspension of the Plan +A-24 +Article 17 Choice of Law +A-24 +Article 18 Limitation on Liability +A-24 +Article 19 Execution +A-24 +(A-iii) +Table of Contents +GULFPORT ENERGY CORPORATION +2019 AMENDED AND RESTATED STOCK INCENTIVE PLAN +ARTICLE 1 +PURPOSE, ELIGIBILITY +1.1 General Purpose. The name of the Plan is the Gulfport Energy Corporation 2019 Amended and Restated Stock Incentive Plan. This Plan is an amendment and restatement of the Gulfport Energy Corporation 2013 Restated Stock Incentive Plan, +which previously restated the Gulfport Energy Corporation 2005 Stock Incentive Plan. The purpose of the Plan is to enable the Company and any Related Company to obtain and retain the services of the types of Employees, Consultants, and Directors who +will contribute to the Company’s long range success and to provide incentives that are linked directly to increases in share value which will inure to the benefit of all stockholders of the Company. +1.2 Eligible Award Recipients. The persons eligible to receive Awards are the Employees, Consultants and +Directors of the Company and its Related Companies. +1.3 Available Awards. The Plan provides a means by +which eligible recipients of Awards may be given an opportunity to benefit from increases in value of the Common Stock through the granting of one or more of the following Awards: Incentive Stock Options, Nonstatutory Stock Options, Restricted +Awards (Restricted Stock and Restricted Stock Units), Performance Awards and Stock Appreciation Rights. +ARTICLE 2 +DEFINITIONS +2.1 “Administrator” means the Board or the Committee appointed by the Board in accordance with Section 3.5 . +2.2 “Award” means any right granted under the Plan, including an Incentive Stock Option, a +Nonstatutory Stock Option, a Restricted Award (Restricted Stock and Restricted Stock Units), a Performance Award and a Stock Appreciation Right. +2.3 “Award Agreement” means a written agreement between the Company and a holder of an Award +evidencing the terms and conditions of an individual Award grant. Each Award Agreement will be subject to the terms and conditions of the Plan and need not be identical. +2.4 “Beneficial Owner” has the meaning assigned to that term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial ownership of any particular Person, that Person will be deemed to have beneficial +ownership of all securities that that Person has the right to acquire by conversion or exercise of other securities, whether the right is currently exercisable or is exercisable only after the passage of time, the satisfaction of performance goals +or both. The terms “Beneficially Owns” and “Beneficially Owned” have a corresponding meaning. +2.5 “Board” means the Board of Directors of the Company. +2.6 “Cashless +Exercise” has the meaning set forth in Section 6.3 . +2.7 “Cause” means, +(a) with respect to any Participant who is a party to an employment or service agreement or employment policy manual with the Company or its Related Companies and which agreement or policy manual provides for a definition of Cause, as defined +therein; and (b) with respect to all other Participants, (i) the commission of, or plea of guilty or no contest to, a felony or a crime involving moral turpitude or the +A-1 +Table of Contents +commission of any other act involving willful malfeasance or material fiduciary breach with respect to the Company or a Related Company; (ii) conduct tending to bring the Company into +substantial public disgrace or disrepute; (iii) gross negligence or willful misconduct with respect to the Company or a Related Company; or (iv) material violation of state or federal securities laws. The Administrator, in its absolute +discretion, shall determine the effect of all matters and questions relating to whether a Participant has been discharged for Cause. +2.8 “Change in Control” means: +(a) The direct or indirect sale, transfer, conveyance or other disposition (other than +by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the assets of the Company to any Person; +(b) The Incumbent Directors cease for any reason to constitute a majority of the Board; +(c) The adoption of a plan relating to the liquidation or dissolution of the Company; or +(d) The consummation of any transaction (including, without limitation, any merger, consolidation or exchange) resulting in any Person +becoming the Beneficial Owner of more than 50% of the combined voting power of the Company (which voting power shall be calculated by assuming the conversion of all equity securities convertible (immediately or at some future time) into shares +entitled to vote, but not assuming the exercise of any warrant or right to subscribe to or purchase those shares) of the continuing or Surviving Entity’s securities outstanding immediately after such merger, consolidation, reorganization or +sale of stock is owned, directly or indirectly, by persons who were not stockholders of the Company immediately prior to such merger, consolidation, reorganization or sale of stock; provided, however, that in making the determination of ownership by +the stockholders of the Company, immediately after the reorganization, equity securities which persons own immediately before the reorganization as stockholders of another party to the transaction shall be disregarded. +The foregoing notwithstanding, a transaction will not constitute a Change in Control if (x) its sole purpose is to change the state of +the Company’s incorporation or to create a holding company that will be owned in substantially the same proportions by the Persons who held the Company’s securities immediately before the transaction; (y) it constitutes an initial +public offering or a secondary public offering that results in any security of the Company being listed (or approved for listing) on any securities exchange or designated (or approved for designation) as a security on an interdealer quotation +system; or (z) solely because 50% or more of the total voting power of the Company’s then outstanding securities is acquired by (1) a trustee or other fiduciary holding securities under one or more employee benefit Plans of the +Company or any Related Company, or (2) any company that, immediately before the acquisition, is owned directly or indirectly by the stockholders of the Company in substantially the same proportion as their ownership of stock in the Company +immediately before the acquisition. +2.9 “Code” means the Internal Revenue Code of 1986, as +amended. +2.10 “Committee” means a committee of one or more members of the Board +appointed by the Board to administer the Plan in accordance with Section 3.5 . +2.11 +“Common Stock” means the common stock of the Company. +2.12 “Company” means +Gulfport Energy Corporation, a Delaware corporation. +2.13 “Consultant” means any +natural person who provides bona fide consulting or advisory services to the Company or a Related Company pursuant to a written agreement, so long as those services are not in connection with the offer or sale of securities in a capital raising +transaction, and do not directly or indirectly promote or maintain a market for the Company’s securities. +A-2 +Table of Contents +2.14 “Continuous Service” means that the +Participant’s service with the Company or a Related Company, whether as an Employee, Director or Consultant, is not interrupted or terminated. The Participant’s Continuous Service will not be deemed to have terminated merely because of a +change in the capacity in which the Participant renders service to the Company or a Related Company as an Employee, Director or Consultant or a change in the entity for which the Participant renders service, so long as there is no interruption or +termination of the Participant’s Continuous Service. For example, a change in status from an Employee of the Company to a Consultant of a Related Company or a Director will not constitute an interruption of Continuous Service. The Administrator +or its delegate, in its sole discretion, may determine whether Continuous Service will be considered interrupted in the case of any leave of absence approved by that party, including sick leave, military leave or any other personal or family leave +of absence. +2.15 “Covered Employee” means an Employee who is or could become a +“covered employee” within the meaning of Code Section 162(m)(3) and the regulations and interpretive guidance issued thereunder. +2.16 “Date of Grant” means, if the key terms and conditions of the Award are communicated to the +Participant within a reasonable period following the Administrator’s action, the date on which the Administrator adopts a resolution or takes other appropriate action, expressly granting an Award to a Participant that specifies the key terms +and conditions of the Award and from which the Participant begins to benefit from or be adversely affected by subsequent changes in the Fair Market Value of the Common Stock or, if a subsequent date is set forth in the resolution or determined by +the Administrator as the Date of Grant, then the date set forth in the resolution. In any situation where the terms of the Award are subject to negotiation with the Participant, the Date of Grant will not be earlier than the date the key terms and +conditions of the Award are communicated to the Participant. +2.17 “Detrimental Activity” +means: (a) violation of the terms of any agreement with the Company concerning non-disclosure, confidentiality, intellectual property, privacy or exclusivity; (b) disclosure of the Company’s +confidential information to anyone outside the Company, without prior written authorization from the Company or in conflict with the interests of the Company, whether the confidential information was acquired or disclosed by the Participant during +or after employment by the Company; (c) failure or refusal to disclose promptly or assign to the Company all right, title, and interest in any invention, work product or idea, patentable or not, made or conceived by the Participant during +employment by the Company, relating in any manner to the interests of the Company or, the failure or refusal to do anything reasonably necessary to enable the Company to secure a patent where appropriate in the United States and in other countries; +(d) activity that is discovered to be grounds for or results in termination of the Participant’s employment for Cause; (e) any breach of a restrictive covenant contained in any employment or service agreement, Award Agreement or other +agreement between the Participant and the Company, during any period for which a restrictive covenant prohibiting Detrimental Activity or other similar conduct or act, is applicable to the Participant during or after employment by the Company; +(f) any attempt directly or indirectly to induce any Employee of the Company to be employed or perform services or acts in conflict with the interests of the Company; (g) any attempt, in conflict with the interests of the Company, directly +or indirectly, to solicit the trade or business of any current or prospective customer, client, supplier or partner of the Company; (h) the conviction of, or guilty plea entered by, the Participant for any felony or a crime involving moral +turpitude whether or not connected with the Company; or (i) the commission of any other act involving willful malfeasance or material fiduciary breach with respect to the Company. +2.18 “Director” means a member of the Board. +2.19 “Disability” means the Participant’s inability to substantially perform his or her +duties to the Company or any Related Company by reason of a medically determinable physical or mental impairment that is expected to last for a period of six months or longer or to result in death; except that for purposes of determining the term of +an Incentive Stock Option pursuant to Section 6.9 hereof, the term Disability has the meaning ascribed to it under Code Section 22(e)(3). The Administrator will determine whether an individual has a Disability under procedures +established by the Administrator. Except in situations where the Administrator is determining +A-3 +Table of Contents +Disability within the meaning of Code Section 22(e)(3) for purposes of the term of an Incentive Stock Option pursuant to Section 6.9 hereof, the Administrator may rely on any +determination that a Participant is disabled for purposes of benefits under any long-term disability plan maintained by the Company or any Related Company in which a Participant participates. +2.20 “Effective Date” means April 29, 2019, the date the Board adopted the amendment and +restatement of the Plan. The Plan originally was adopted effective January 24, 2005. +2.21 +“Employee” means any person employed by the Company or a Related Company. Mere service as a Director or payment of a director’s fee by the Company or a Related Company is not sufficient to constitute “employment” by the +Company or a Related Company. +2.22 “Established Securities Market” means a national +securities exchange that is registered under Section 6 of the Exchange Act; a foreign national securities exchange that is officially recognized, sanctioned or supervised by governmental authority; and any over-the-counter market that is reflected by the existence of an interdealer quotation system. +2.23 “Exchange Act” means the Securities Exchange Act of 1934, as amended. +2.24 “Exercise Price” has the meaning set forth in Section 6.2 of the Plan. +2.25 “Fair Market Value” means, as of any date, the value of the Common Stock +determined using a method consistent with the definition of fair market value found in Treasury Regulation section 1.409A-1(b)(5)(iv) and any regulatory interpretations issued thereunder, and will be +determined using a method that is a presumptively reasonable valuation method thereunder as determined below. +(a) On any date on which +shares of Common Stock are readily tradable on an Established Securities Market, if the Common Stock is admitted to trading on an exchange or market for which closing prices are reported on any date, Fair Market Value may be determined based on the +last sale before or the first sale after the Date of Grant of an Award; the closing price on the trading day before the Date of Grant of an Award or on the Date of Grant; or may be based on an average selling price during a specified period that is +within 30 days before or 30 days after the Date of Grant of an Award, provided that the commitment to grant an Award based on that valuation method must be irrevocable before the beginning of the specified period, and the valuation method must be +used consistently for grants of Awards under the same and substantially similar programs. +(b) If the Common Stock is readily tradable on +an Established Securities Market but closing prices are not reported, Fair Market Value may be determined based upon the average of the highest bid and lowest asked prices of the Common Stock reported on the trading day before the Date of Grant of +an Award or on the Date of Grant; or may be based upon an average of the highest bid and lowest asked prices during a specified period that is within 30 days before or 30 days after the Date of Grant of an Award, provided that the commitment to +grant an Award based on that valuation method must be irrevocable before the beginning of the specified period, and the valuation method must be used consistently for grants of Awards under the same and substantially similar programs. +(c) If the Common Stock is not readily tradable on an Established Securities Market, the Administrator shall determine the Fair Market Value +through the reasonable application of a reasonable valuation method based on the facts and circumstances as of the valuation date, including, at the election of the Administrator, by an independent appraisal that meets the requirements of Code +Section 401(a)(28)(C) and the regulations issued thereunder as of a date that is no more than 12 months before the relevant transaction to which the valuation is applied (for example, an Option’s Date of Grant), and that determination will +be conclusive and binding on all Persons. +2.26 “Free Standing SAR” has the meaning set +forth in Section 7.3(a) . +A-4 +Table of Contents +2.27 “Incentive Stock Option” means an Option +intended to qualify as an incentive stock option within the meaning of Section 422 of the Code and the regulations issued thereunder. +2.28 “Incumbent Directors” means individuals who, on the Effective Date, constitute the Board, +and any individual becoming a Director subsequent to the Effective Date whose election or nomination for election to the Board was approved by a vote of at least two-thirds of the Incumbent Directors then on +the Board (either by a specific vote or by approval of the proxy statement of the Company in which that person is named as a nominee for Director without objection to the nomination) will be an Incumbent Director. No individual initially elected or +nominated as a Director of the Company as a result of an actual or threatened election contest with respect to Directors or as a result of any other actual or threatened solicitation of proxies by or on behalf of any person other than the Board will +be an Incumbent Director. +2.29 “Insider” means an individual subject to Section 16 of +the Exchange Act and includes an Officer, a Director or any other person who is directly or indirectly the Beneficial Owner of more than 10% of any class of any equity security of the Company (other than an exempted security) that is registered +pursuant to Section 12 of the Exchange Act. +2.30 “Market Standoff” has the meaning set +forth in Article 14 . +2.31 “Non-Employee +Director” means a Director who is a “non-employee director” within the meaning of Rule 16b-3. +2.32 “Nonstatutory Stock Option” means an Option not intended to qualify as an Incentive Stock +Option. +2.33 “Officer” means (a) before the first date on which any security of the +Company is registered under Section 12 of the Exchange Act, any person designated by the Company as an officer; and (b) on and after the first date on which any security of the Company is registered under Section 12 of the Exchange +Act, a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations issued thereunder. +2.34 “Option” means an Incentive Stock Option or a Nonstatutory Stock Option granted pursuant to +the Plan. +2.35 “Option Agreement” means a written agreement between the Company and an +Optionholder evidencing the terms and conditions of an individual Option grant. Each Option Agreement will be subject to the terms and conditions of the Plan and need not be identical. +2.36 “Optionholder” means a person to whom an Option is granted pursuant to the +Plan or, if applicable, such other person who holds an outstanding Option. +2.37 “Outside +Director” means a Director who is an “outside director” within the meaning of Section 162(m) of the Code and Treasury Regulation section 1.162-27(e)(3) (as each was in effect on +December 31, 2017). +2.38 “Participant” means a person to whom an Award is granted +pursuant to the Plan or, if applicable, such other person who holds an outstanding Award. +2.39 +“Performance Award” means an Award granted pursuant to Section 7.2 . +2.40 “Permitted Transferee” means (a) any spouse, parents, siblings (by blood, marriage or +adoption) or lineal descendants (by blood, marriage or adoption) of a Participant; (b) any trust or other similar entity for the benefit of a Participant or the Participant’s spouse, parents, siblings or lineal descendants; except and on +A-5 +Table of Contents +condition that any transfer made by a Participant to a Permitted Transferee may only be made if the Permitted Transferee, prior to the time of transfer of stock, agrees in writing to be bound by +the terms of the Plan and provides written notice to the Company of the transfer. +2.41 +“Person” means an individual, partnership, limited liability company, corporation, association, joint stock company, trust, joint venture, labor organization, unincorporated organization, governmental entity or political subdivision +thereof or any other entity, and includes a syndicate or group as those terms are used in Section 13(d)(3) or 14(d)(2) of the Exchange Act. +2.42 “Plan” means this Gulfport Energy Corporation 2019 Amended and Restated Stock Incentive +Plan. Prior to this amendment and restatement, the Plan was known as Gulfport Energy Corporation 2013 Restated Stock Incentive Plan, a restatement of the Gulfport Energy Corporation 2005 Stock Incentive Plan. +2.43 “Prior Plan” means the Gulfport Energy Corporation 1999 Stock Option Plan. +2.44 “Prohibited Personal Loan” means any direct or indirect extension of credit or arrangement +of an extension of credit to a Director or executive officer (or equivalent thereof) by the Company or a Related Company that is prohibited by Section 402(a) of the Sarbanes-Oxley Act (codified as Section 13(k) of the Exchange Act). +2.45 “Related Company” means any parent corporation or subsidiary corporation of the Company, +whether now or hereafter existing, as those terms are defined in Code Sections 424(e) and (f), respectively. +2.46 “Restricted Award” means any Award granted pursuant to Section 7.1 , including +Restricted Stock and Restricted Stock Units. +2.47 “Restricted Period” has the +meaning set forth in Section 7.1 . +2.48 “Restricted Stock” +has the meaning set forth in Section 7.1 . +2.49 “Restricted Stock +Unit” means a hypothetical Common Stock unit having a value equal to the Fair Market Value of an identical number of shares of Common Stock as determined in Section 7.1 . +2.50 “Right of Repurchase” means the Company’s option to repurchase unvested Common Stock +acquired under the Plan upon the Participant’s termination of Continuous Service pursuant to Section +10.7 . +2.51 “Rule 16b-3” means Rule 16b-3 issued under the Exchange Act or any successor to Rule 16b-3. +2.52 “Securities Act” means the Securities Act of 1933, as amended. +2.53 “Stock Appreciation Right” or “SAR” means the right pursuant to an Award granted +under Section 7.3 to receive an amount equal to the excess, if any, of (a) the Fair Market Value, as of the date the Stock Appreciation Right or portion thereof is surrendered, of the shares of Common Stock covered by the right or +portion thereof, over (b) the aggregate Strike Price of the right or portion thereof. +2.54 +“Stock for Stock Exchange” has the meaning set forth in Section 6.3 . +2.55 +“Strike Price” means the threshold value per share of Common Stock, the excess over which will be payable upon exercise of a Stock Appreciation Right, as determined by the Administrator pursuant to Section 7.3(d) and set +forth in the Award Agreement for a Stock Appreciation Right. +2.56 “Surviving Entity” means +the Company if immediately following any merger, consolidation or similar transaction, the holders of outstanding voting securities of the Company immediately prior to the merger or +A-6 +Table of Contents +consolidation own equity securities possessing more than 50% of the voting power of the entity existing following the merger, consolidation or similar transaction. In all other cases, the other +entity to the transaction and not the Company will be the Surviving Entity. In making the determination of ownership by the stockholders of an entity immediately after a merger, consolidation or similar transaction, equity securities that the +stockholders owned immediately before the merger, consolidation or similar transaction as stockholders of another party to the transaction will be disregarded. Further, outstanding voting securities of an entity will be calculated by assuming the +conversion of all equity securities convertible (immediately or at some future time whether or not contingent on the satisfaction of performance goals) into shares entitled to vote. +2.57 “Tandem SAR” has the meaning set forth in Section 7.3(a) . +2.58 “Ten Percent Stockholder” means a person who owns (or is deemed to own pursuant to +Section 424(d) of the Code) stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of any of its Related Companies. +ARTICLE 3 +ADMINISTRATION +3.1 Administration by Board . The Board shall administer the Plan unless and until the Board delegates administration to a Committee, as provided in Section 3.5 . +3.2 Authority of Administrator. The Administrator will have the power and authority to select Participants +and grant Awards pursuant to the terms of the Plan. +3.3 Specific Authority. In particular, the +Administrator will have the authority to: +(a) construe and interpret the Plan and apply its provisions; +(b) promulgate, amend, and rescind rules and regulations relating to the administration of the Plan; +(c) authorize any person to execute, on behalf of the Company, any instrument required to carry out the purposes of the Plan; +(d) delegate its authority to one or more Officers of the Company with respect to Awards that do not involve Covered Employees or Insiders, +which delegation shall be pursuant to a resolution that specifies the total number of shares of Common Stock that may be subject to Awards by the Officer and the Officer may not make an Award to himself or herself; +(e) determine when Awards are to be granted under the Plan; +(f) select, subject to the limitations set forth in the Plan, those Participants to whom Awards will be granted; +(g) determine the number of shares of Common Stock to be made subject to each Award; +(h) determine whether each Option is to be an Incentive Stock Option or a Nonstatutory Stock Option; +(i) prescribe the terms and conditions of each Award, including, without limitation, the Strike Price or Exercise Price and medium of payment, +vesting provisions and Right of Repurchase provisions, and to specify the provisions of the Award Agreement relating to the grant or sale; +A-7 +Table of Contents +(j) subject to the restrictions applicable under Section 12.4 , amend any +outstanding Awards, including for the purpose of modifying the time or manner of vesting, the purchase price, Exercise Price or Strike Price or the term of any outstanding Award; except that if any such amendment impairs a Participant’s rights +or increases a Participant’s obligations under his or her Award, the amendment will also be subject to the Participant’s consent (for the avoidance of doubt, a cancellation of an Award where the Participant receives a payment equal in +value to the Fair Market Value of the vested Award or, in the case of vested Options, the difference between the Fair Market Value of the Common Stock subject to an Option and the Exercise Price, will not constitute an impairment of the +Participant’s rights that requires consent); +(k) determine the duration and purpose of leaves of absences that may be granted to a +Participant without constituting termination of their Continuous Service for purposes of the Plan, which periods will be no shorter than the periods generally applicable to Employees under the Company’s employment policies or as required under +applicable law; +(l) make decisions with respect to outstanding Awards that may become necessary upon a Change in Control or an event that +triggers capital adjustments; and +(m) exercise discretion to make any and all other determinations that it may determine to be necessary +or advisable for administration of the Plan. +3.4 Decisions Final. All decisions made by the +Administrator pursuant to the provisions of the Plan will be final and binding on the Company and the Participants, unless such decisions are determined by a court having jurisdiction to be arbitrary and capricious. +3.5 The Committee. +(a) General. The Board may delegate administration of the Plan to a Committee or Committees of one or more members of the Board, and +the term “Committee” will apply to any person or persons to whom that authority has been delegated. If administration is delegated to a Committee, the Committee will have, in connection with the administration of the Plan, the powers +theretofore possessed by the Board, including the power to delegate to a subcommittee any of the administrative powers the Committee is authorized to exercise (and references in the Plan to the Board or the Administrator will thereafter be to the +Committee or subcommittee), subject, however, to such resolutions, consistent with the provisions of the Plan, as the Board may adopt. The Board may abolish the Committee at any time and revest in the Board the administration of the Plan. The +members of the Committee will be appointed by and serve at the pleasure of the Board. The Board may increase or decrease the size of the Committee, add additional members to, remove members (with or without cause) from, appoint new members in +substitution therefor, and fill vacancies, however caused, in the Committee. The Committee shall act pursuant to a vote of the majority of its members or, in the case of a Committee comprised of only two members, the unanimous consent of its +members, whether present or not, or by the written consent of the majority of its members and shall keep minutes of all of its meetings. Subject to the limitations prescribed by the Plan and the Board, the Committee shall establish and follow such +rules and regulations for the conduct of its business as it may determine to be advisable. +(b) Committee Composition when Common Stock +is Registered. Whenever the Common Stock is required to be registered under Section 12 of the Exchange Act, in the discretion of the Board, a Committee may consist solely of two or more Non-Employee +Directors who are also Outside Directors. The Board will have discretion to determine whether or not it intends to comply with the exemption requirements of Rule 16b-3, Code Section 162(m), or both. If, +however, the Board intends to satisfy those exemption requirements, with respect to Awards to any Covered Employee or to any Officer or Director, the Committee must at all times consist solely of two or more +Non-Employee Directors who are also Outside Directors. Within the scope of that authority, the Board or the Committee may (i) delegate to a committee of one or more members of the Board who are not +Outside Directors the authority to grant Awards to eligible persons who are either (A) not then Covered Employees and are not expected to be Covered Employees at the time of recognition of income resulting from +A-8 +Table of Contents +the Award or (B) not persons with respect to whom the Company wishes to comply with Code Section 162(m); or (ii) delegate to a committee of one or more members of the Board who are +not Non-Employee Directors the authority to grant Awards to eligible persons who are not then Insiders. Nothing in this Plan is intended to create an inference that an Award is not validly granted under the +Plan in the event Awards are granted under the Plan by a committee of the Board that does not at all times consist solely of two or more Non-Employee Directors who are also Outside Directors. +3.6 Indemnification . In addition to such other rights of indemnification as they may have as Directors or +members of the Committee, and to the extent allowed by applicable law, the Company shall indemnify the Administrator against the reasonable expenses, including attorney’s fees, actually incurred in connection with any action, suit or proceeding +or in connection with any appeal therein, to which the Administrator may be party by reason of any action taken or failure to act under or in connection with the Plan or any Award granted under the Plan, and against all amounts paid by the +Administrator in settlement thereof (subject, however, to the Company’s approval of the settlement, which approval the Company shall not unreasonably withhold) or paid by the Administrator in satisfaction of a judgment in any such action, suit +or proceeding, except in relation to matters as to which it is adjudged in the action, suit or proceeding that the Administrator did not act in good faith and in a manner that the person reasonably believed to be in the best interests of the +Company, and in the case of a criminal proceeding, had no reason to believe that the conduct complained of was lawful. Notwithstanding the foregoing, it is a condition precedent to the Company’s obligations in this Section 3.6 that +within 60 days after institution of any such action, suit or proceeding, the Administrator or Committee member shall, in writing, offer the Company the opportunity at its own expense to handle and defend the action, suit or proceeding. +ARTICLE 4 +SHARES SUBJECT TO THE PLAN +4.1 Share Reserve . Subject to adjustment pursuant to Section 11.1 , the maximum aggregate +number of shares of Common Stock that may be issued upon exercise of all Awards under the Plan is 12,500,000 shares, all of which may be used for Incentive Stock Options or any other Awards. Prior to this amendment and restatement, an aggregate of +7,500,000 shares were reserved for issuance under the Plan. This amendment and restatement authorizes an additional 5,000,000 shares that may be issued in connection with Awards under the Plan. +4.2 Reversion of Shares to the Share Reserve . If any Award for any reason is forfeited, cancelled, expires +or otherwise terminates without exercise or settlement, in whole or in part, the shares of Common Stock not acquired under the Award will revert to and again become available for issuance under the Plan. If the Company reacquires shares of Common +Stock issued under the Plan pursuant to the terms of any forfeiture provision, including the Right of Repurchase of unvested Common Stock under Section 10.7 , those shares will again be available for purposes of the Plan. Each share of +Common Stock subject to any Award granted hereunder will be counted against the share reserve set forth in Section 4.1 on the basis of one share for every share subject thereto. Notwithstanding anything in the Plan to the contrary, +shares of Common Stock used to pay the required Exercise Price or tax obligations or shares not issued in connection with settlement of an Option or SAR or that are used or withheld to satisfy tax obligations of the Participant, will not be +available again for other Awards under the Plan. Awards, or portions thereof, that are settled in cash and not in shares of Common Stock will be counted against the foregoing maximum share limitations. Any shares of Common Stock attributable to +options that are forfeited, cancelled, expire unexercised or are settled in cash instead of stock under the Prior Plan will be available, subject to the limitations set forth in this Article 4 , for issuance under the Plan. +4.3 Source of Shares . The shares that may be issued pursuant to Awards will consist of shares of the +Company’s authorized but unissued Common Stock and any shares of the Common Stock held by the Company as treasury shares. +A-9 +Table of Contents +ARTICLE 5 +ELIGIBILITY +5.1 Eligibility for Specific Awards . Incentive Stock Options may be granted only to Employees. Awards other than Incentive Stock Options may be granted to Employees, Directors and Consultants. +5.2 Ten Percent Stockholders . An Incentive Stock Option granted to a Ten Percent Stockholder must have an +Exercise Price no less than 110% of the Fair Market Value of the Common Stock at the Date of Grant and must not be exercisable after the expiration of five years from the Date of Grant. +5.3 Award Limitation . Subject to the provisions of Section 11.1 relating to adjustments upon +changes in the shares of Common Stock, no Person will be eligible to be granted Awards (including, without limitation, Options and SARs) covering more than 1,000,000 shares in the aggregate during any calendar year. +5.4 Directors . +(a) Each Director of the Company who is not an Employee will be eligible to receive discretionary grants of Awards under the Plan. If the +Board or the compensation committee of the Board separately has adopted or in the future adopts a compensation policy covering some or all Directors that provides for a predetermined formula grant that specifies the type of Award, the timing of the +Date of Grant and the number of shares to be awarded under the terms of the Plan, that formula grant will be incorporated by reference and will be administered as if those terms were provided under the terms of the Plan without any requirement that +the Administrator separately take action to determine the terms of those Awards. +(b) Notwithstanding the foregoing, the aggregate dollar +value of Awards (calculated as the Date of Grant fair value of such Awards for financial reporting purposes) granted under this Plan and cash compensation granted under this Plan or otherwise paid by the Company during any calendar year to any one +Director who is not an Employee shall not exceed $750,000, rounded up to the nearest full Share. The foregoing limit shall not count any Tandem SARs (as defined in Section 7.3(a)) . +ARTICLE 6 +OPTION PROVISIONS +Each +Option will be in such form and will contain such terms and conditions as the Administrator deems appropriate. All Options will be separately designated Incentive Stock Options or Nonstatutory Stock Options at the time of grant, and, if certificates +are issued, a separate certificate or certificates will be issued for shares of Common Stock purchased on exercise of each type of Option. Notwithstanding the foregoing, the Company will have no liability to any Participant or any other person if an +Option designated as an Incentive Stock Option fails to qualify as an Incentive Stock Option at any time. The provisions of separate Options need not be identical, but each Option will include (through incorporation of provisions hereof by reference +in the Option or otherwise) the substance of each of the following provisions: +6.1 Term . +Subject to the provisions of Section 5.2 regarding Ten Percent Stockholders, no Option will be exercisable after the expiration of 10 years from the Date of Grant. +6.2 Exercise Price . The exercise price per share of Common Stock for each Option (the “ Exercise +Price ”) will not be less than 100% of the Fair Market Value per share on the Date of Grant; except that in the case of an Incentive Stock Option granted to a Ten Percent Stockholder, the Exercise Price will be no less than 110% of the +Fair Market Value per share of Common Stock on the Date of Grant. Notwithstanding the foregoing, an Option granted pursuant to an assumption or substitution for another stock option in a manner satisfying the provisions of Section 424(a) of the +Code, as if the Option was a statutory stock option, may be granted with an Exercise Price lower than the Fair Market Value per share on the Date of Grant. +A-10 +Table of Contents +6.3 Consideration . The Optionholder shall pay the +Exercise Price of Common Stock acquired pursuant to an Option, to the extent permitted by applicable statutes and regulations, either (a) in cash or by certified or bank check at the time the Option is exercised, or (b) in the +Administrator’s discretion and upon such terms as the Administrator approves: (i) by delivery to the Company of other Common Stock, duly endorsed for transfer to the Company, with a Fair Market Value on the date of delivery equal to the +Exercise Price (or portion thereof) due for the number of shares being acquired or by means of attestation whereby the Participant identifies for delivery specific shares of Common Stock held by the Participant that have a Fair Market Value on the +date of attestation equal to the Exercise Price (or portion thereof) and receives a number of shares of Common Stock equal to the difference between the number of shares thereby purchased and the number of identified attestation shares of Common +Stock (a “ Stock for Stock Exchange ”); (ii) during any period for which the Common Stock is readily tradable on an Established Securities Market, by a copy of instructions to a broker directing the broker to sell the Common +Stock for which the Option is exercised and to remit to the Company the aggregate Exercise Price of the Option (a “ Cashless Exercise ”); (iii) subject to the Administrator’s discretion and on such terms as the +Administrator may approve, by notice of exercise including a statement directing the Company to retain the number of shares of Common Stock from any transfer to the Optionholder (“ Share Withholding ”) that otherwise would have +been delivered by the Company on exercise of the Option having a Fair Market Value equal to all or part of the exercise price of the Option exercise, in which case the Option will be deemed surrendered and cancelled with respect to the number of +shares retained by the Company; or (iv) in any other form of legal consideration that may be acceptable to the Administrator, including without limitation with a full-recourse promissory note; except that, if applicable law requires, the +Optionholder shall pay the par value (if any) of Common Stock, if newly issued, in cash or cash equivalents. The interest rate payable under the terms of the promissory note may not be less than the minimum rate (if any) required to avoid the +imputation of additional interest under the Code. Subject to the foregoing, the Administrator (in its sole discretion) shall specify the term, interest rate, amortization requirements (if any) and other provisions of the note. Unless the +Administrator determines otherwise, the holder shall pledge to the Company shares of Common Stock having a Fair Market Value at least equal to the principal amount of the loan as security for payment of the unpaid balance of the loan, which pledge +must be evidenced by a pledge agreement, the terms of which the Administrator shall determine, in its discretion; except that each loan must comply with all applicable laws, regulations and rules of the Board of Governors of the Federal Reserve +System and any other governmental agency having jurisdiction. Unless the Administrator determines otherwise, the purchase price of Common Stock acquired pursuant to an Option that is paid by delivery (or attestation) to the Company of other shares +of Common Stock acquired, directly or indirectly from the Company, will be paid only by shares of Common Stock that satisfy any requirements necessary to avoid liability award accounting treatment. Notwithstanding the foregoing, during any period +for which the Company has any class of its securities listed on a national securities exchange in the United States, has securities registered under Section 12 of the Exchange Act, is required to file reports under Section 13(a) or 15(d) +of the Exchange Act or has a registration statement pending under the Securities Act, an exercise with a promissory note or other transaction by an Optionholder that involves or may involve a Prohibited Personal Loan is prohibited with respect to +any Option under the Plan. Unless otherwise provided in the terms of an Option Agreement, payment of the Exercise Price by a Participant who is an Insider in the form of a Stock for Stock Exchange is subject to +pre-approval by the Administrator, in its sole discretion. The Administrator shall document any such pre-approval in the case of a Participant who is an Officer or +Director in a manner that complies with the specificity requirements of Rule 16b-3, including the name of the Participant involved in the transaction, the nature of the transaction, the number of shares to be +acquired or disposed of by the Participant and the material terms of the Options involved in the transaction. +6.4 Transferability of an Incentive Stock Option. An Incentive Stock Option will not be transferable except by will or by the laws of descent and distribution and will be exercisable during the lifetime of the Optionholder only by the +Optionholder. Notwithstanding the foregoing, the Optionholder may, by delivering written notice to the Company, in a form satisfactory to the Company, designate a third party who, upon the death of the Optionholder, will thereafter be entitled to +exercise the Option. +A-11 +Table of Contents +6.5 Transferability of a Nonstatutory Stock Option. A +Nonstatutory Stock Option may, in the sole discretion of the Administrator, be transferable to a Permitted Transferee upon written approval by the Administrator to the extent provided in the Option Agreement. A Permitted Transferee includes: +(a) a transfer by gift or domestic relations order to a member of the Optionholder’s immediate family (child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, +son-in-law, daughter-in-law, brother-in-law or sister-in-law, including adoptive relationships), any person sharing the Optionholder’s household (other +than a tenant or employee), a trust in which these persons (or the Optionholder) have more than 50% of the beneficial interest, a foundation in which these persons (or the Optionholder) control the management of assets, and any other entity in which +these persons (or the Optionholder) own more than 50% of the voting interests; (b) third parties designated by the Administrator in connection with a program established and approved by the Administrator pursuant to which Participants may +receive a cash payment or other consideration in consideration for the transfer of the Nonstatutory Stock Option; and (c) such other transferees as may be permitted by the Administrator in its sole discretion. If the Nonstatutory Stock Option +does not provide for transferability, then the Nonstatutory Stock Option will not be transferable except by will or by the laws of descent and distribution and will be exercisable during the lifetime of the Optionholder only by the Optionholder. +Notwithstanding the foregoing, the Optionholder may, by delivering written notice to the Company, in a form satisfactory to the Company, designate a third party who, upon the death of the Optionholder, will thereafter be entitled to exercise the +Option. +6.6 Vesting Generally. The Option may, but need not, vest and therefore become exercisable in +periodic installments that may, but need not, be equal. The Option may be subject to such other terms and conditions on the time or times when it may be exercised (which may be based on performance or other criteria) as the Administrator may deem +appropriate. The vesting provisions of individual Options may vary. The Administrator may, but will not be required to, provide that no Option may be exercised for a fraction of a share of Common Stock. The Administrator may, but will not be +required to, provide for an acceleration of vesting and exercisability in the terms of any Option Agreement upon the occurrence of a specified event. Unless otherwise specified in the terms of any Option Agreement, each Option granted pursuant to +the terms of the Plan will become exercisable at a rate of 33.333% per year over the three-year period commencing on the Date of Grant of the Option. +6.7 Termination of Continuous Service. Unless otherwise provided in an Option Agreement or in an +employment or service agreement the terms of which have been approved by the Administrator, if an Optionholder’s Continuous Service terminates (other than upon the Optionholder’s death or Disability or termination by the Company for +Cause), the Optionholder may exercise his or her Option (to the extent that the Optionholder was entitled to exercise the Option as of the date of termination) but only within the period ending on the earlier of (a) the date three months +following the termination of the Optionholder’s Continuous Service, or (b) the expiration of the term of the Option as set forth in the Option Agreement. If, after termination, the Optionholder does not exercise his or her Option within +the time specified in the Option Agreement, the Option will terminate. Unless otherwise provided in an Option Agreement or in an employment or service agreement the terms of which have been approved by the Administrator, or as otherwise provided in +Sections 6.8 , 6.9 and 6.10 , outstanding Options that are not exercisable at the time an Optionholder’s Continuous Service terminates for any reason other than for Cause (including an Optionholder’s death or Disability) +will be forfeited and expire at the close of business on the date of termination. If the Optionholder’s Continuous Service terminates for Cause, all outstanding Options (whether or not vested) will be forfeited and expire as of the beginning of +business on the date of termination for Cause. +6.8 Extension of Termination Date. An Option Agreement +may also provide that if the exercise of the Option following the termination of the Optionholder’s Continuous Service for any reason (other than upon the Optionholder’s death or Disability or termination by the Company for Cause) would +violate any applicable federal, state or local law, the Option will terminate on the earlier of (a) the expiration of the term of the Option in accordance with Section 6.1 , or (b) the date that is 30 days after the exercise of +the Option would no longer violate any applicable federal, state or local law. +A-12 +Table of Contents +6.9 Disability of Optionholder. Unless otherwise +provided in an Option Agreement or in an employment or service agreement the terms of which have been approved by the Administrator, if an Optionholder’s Continuous Service terminates as a result of the Optionholder’s Disability, the +Optionholder may exercise his or her Option (to the extent that the Optionholder was entitled to exercise the Option as of the date of termination), but only within the period ending on the earlier of (a) the date 12 months following +termination, or (b) the expiration of the term of the Option as set forth in the Option Agreement. If, after termination, the Optionholder does not exercise his or her Option within the time specified in this Section 6.9 , the Option +will terminate. +6.10 Death of Optionholder. Unless otherwise provided in an Option Agreement or in an +employment or service agreement the terms of which have been approved by the Administrator, if an Optionholder’s Continuous Service terminates as a result of the Optionholder’s death, then the Option may be exercised (to the extent the +Optionholder was entitled to exercise the Option as of the date of death) by the Optionholder’s estate, by a person who acquired the right to exercise the Option by bequest or inheritance or by a person designated to exercise the Option upon +the Optionholder’s death, but only within the period ending on the earlier of (a) the date 12 months following the date of death, or (b) the expiration of the term of the Option as set forth in the Option Agreement. If, after death, +the Option is not exercised within the time specified this Section +6.10 , the Option will terminate. +6.11 Incentive Stock Option $100,000 Limitation. To the extent +that the aggregate Fair Market Value of Common Stock on the Date of Grant with respect to which Incentive Stock Options are exercisable for the first time by any Optionholder during any calendar year (under all plans of the Company and its Related +Companies) exceeds $100,000, the Options or portions thereof which exceed that limit (according to the order in which they were granted) will be treated as Nonstatutory Stock Options. +6.12 Early Exercise. The Option may, but need not, include a provision whereby the Optionholder may elect +at any time before the Optionholder’s Continuous Service terminates to exercise the Option as to any part or all of the shares of Common Stock subject to the Option prior to the full vesting of the Option. In that case, the shares of Common +Stock acquired on exercise will be subject to the vesting schedule that otherwise would apply to determine the exercisability of the Option. Any unvested shares of Common Stock so purchased may be subject to any other restriction the Administrator +determines to be appropriate. +6.13 Transfer, Approved Leave of Absence. For purposes of Incentive +Stock Options, no termination of employment by an Employee will be deemed to result from either (a) a transfer to the employment of the Company from a Related Company, from the Company to a Related Company or from one Related Company to +another; or (b) an approved leave of absence for military service or sickness or for any other purpose approved by the Company, if the period of leave does not exceed three months or, if longer, the Employee’s right to re-employment is guaranteed either by a statute or by contract. +6.14 +Disqualifying Dispositions. Any Participant who makes a “disposition” (as defined in Section 424 of the Code) of all or any portion of shares of Common Stock acquired upon exercise of an Incentive Stock Option within two years +from the Date of Grant of the Incentive Stock Option or within one year after the issuance of the shares of Common Stock acquired upon exercise of the Incentive Stock Option will be required to immediately advise the Company in writing as to the +occurrence of the sale and the price realized upon the sale of those shares of Common Stock. +ARTICLE 7 +PROVISIONS OF AWARDS OTHER THAN OPTIONS +7.1 Restricted Awards. A Restricted Award is an Award of actual shares of Common Stock +(“Restricted Stock”) or hypothetical Common Stock units (“Restricted Stock Units”) having a value equal to the Fair Market Value of an identical number of shares of Common Stock, which may, but need +not, provide that the Restricted Award may not be sold, assigned, transferred or otherwise disposed of, pledged or hypothecated as collateral for +A-13 +Table of Contents +a loan or as security for the performance of any obligation or for any other purpose for the period (the “Restricted Period”) determined by the Administrator. Each +Restricted Award will be in such form and will contain terms, conditions, and Restricted Periods as the Administrator deems appropriate, including the treatment of dividends or dividend equivalents, as the case may be. The Administrator in its +discretion may provide for the acceleration of the end of the Restricted Period in the terms of any Restricted Award, at any time, including in the event of a Change in Control. The terms and conditions of the Restricted Award may change from time +to time, and the terms and conditions of separate Restricted Awards need not be identical, but each Restricted Award must include (through incorporation of provisions hereof by reference in the agreement or otherwise) the substance of each of the +following provisions: +(a) Purchase Price. The purchase price of Restricted Awards, if any, will be determined by the +Administrator, and may be stated as cash, property or prior or future services. Shares of Common Stock acquired in connection with any Restricted Award may be issued for such consideration, having a value not less than the par value thereof, as +determined by the Administrator. +(b) Consideration. The Participant shall pay the consideration for Common Stock acquired pursuant +to the Restricted Award either: (i) in cash at the time of purchase; or (ii) in any other form of legal consideration that may be acceptable to the Administrator in its discretion including, without limitation, a recourse promissory note, +property, a Stock for Stock Exchange or prior or future services that the Administrator determines have a value at least equal to the Fair Market Value of the Common Stock. Notwithstanding the foregoing, during any period for which the Company has +any class of its securities listed on a national securities exchange in the United States, has securities registered under Section 12 of the Exchange Act, is required to file reports under Section 13(a) or 15(d) of the Exchange Act or has +a registration statement pending under the Securities Act, payment with a promissory note or other transaction by a Participant that involves or may involve a Prohibited Personal Loan is prohibited with respect to any Restricted Award under the +Plan. +(c) Vesting . The Restricted Award, and any shares of Common Stock acquired under the Restricted Award, may, but need not, be +subject to a Restricted Period that specifies a Right of Repurchase in favor of the Company, or forfeiture where the consideration was in the form of services, in accordance with a vesting schedule to be determined by the Administrator. The +Administrator in its discretion may provide for an acceleration of vesting in the terms of any Restricted Award, at any time, including upon a Change in Control. The Administrator in its discretion may grant a Restricted Award that is, in whole or +in part, vested upon grant and not subject to a Restricted Period. +(d) Termination of Participant’s Continuous Service . +Unless otherwise provided in a Restricted Award or in an employment or service agreement the terms of which have been approved by the Administrator, if a Participant’s Continuous Service terminates for any reason, the Company may exercise its +Right of Repurchase or otherwise reacquire, or the Participant shall forfeit, the unvested portion of a Restricted Award acquired in consideration of services, and any or all of the shares of Common Stock held by the Participant that have not vested +as of the date of termination under the terms of the Restricted Award will be forfeited and the Participant will have no rights with respect to the Award. +(e) Transferability . Rights to acquire shares of Common Stock under the Restricted Award will be transferable by the Participant only +upon the terms and conditions set forth in the Award Agreement, as the Administrator shall determine in its discretion, so long as Common Stock awarded under the Restricted Award remains subject to the terms of the Award Agreement. +(f) Concurrent Tax Payment . The Administrator, in its sole discretion, may (but will not be required to) provide for payment of a +concurrent cash award in an amount equal, in whole or in part, to the estimated after-tax amount required to satisfy applicable federal, state or local tax withholding obligations arising from the receipt and +deemed vesting of Restricted Stock for which an election under Code Section 83(b) may be required. +A-14 +Table of Contents +(g) Lapse of Restrictions . Upon the expiration or termination of the Restricted +Period and the satisfaction of any other conditions prescribed by the Administrator (including, without limitation, the Participant’s satisfaction of applicable tax withholding obligations attributable to the Award), the restrictions applicable +to the Restricted Award will lapse and a stock certificate for the number of shares of Common Stock with respect to which the restrictions have lapsed will be delivered, free of any restrictions except those that may be imposed by law, the terms of +the Plan or the terms of a Restricted Award, to the Participant or the Participant’s beneficiary or estate, as the case may be, unless the Restricted Award is subject to a deferral condition that complies with Section 409A of the Code and +the regulations thereunder as may be allowed or required by the Administrator in its sole discretion. The Company will not be required to deliver any fractional share of Common Stock but shall pay, in lieu thereof, the Fair Market Value of the +fractional share in cash to the Participant or the Participant’s beneficiary or estate, as the case may be. With respect only to Restricted Stock Units, unless otherwise subject to a deferral condition that complies with Section 409A of +the Code, the Common Stock certificate will be issued and delivered and the Participant will be entitled to the beneficial ownership rights of the Common Stock not later than (i) the date that is 2 1 ⁄ 2 months after the end of the Participant’s taxable year (or the end of the Company’s taxable year, if later) for which the Restricted Period ends and the Restricted Stock Unit is no longer subject to a +substantial risk of forfeiture, or (ii) such earlier date as may be necessary to avoid application of Section 409A of the Code to the Award. +(h) Rights as a Stockholder . Prior to the expiration or termination of the Restricted Period, a Participant who receives an Award of +Restricted Stock will have beneficial ownership rights as a stockholder (voting and dividend rights) only to the extent specified in the Award Agreement. The Award Agreement may specify the extent, if any, of Participant’s voting and dividend +rights under the Restricted Stock prior to the expiration or termination of the Restricted Period, including whether dividends attributable to unvested shares of Restricted Stock will be paid currently or withheld until the shares vest. A +Participant receiving a Restricted Award that is denominated in hypothetical Restricted Stock Units will have the rights of a stockholder only as to shares actually received by the Participant. +7.2 Performance Awards . +(a) Nature of Performance Awards . A Performance Award is an Award entitling the recipient to vest in or acquire shares of Common Stock +or hypothetical Common Stock units having a value equal to the Fair Market Value of an identical number of shares of Common Stock that will be settled in the form of shares of Common Stock upon the attainment of specified performance goals. The +Administrator may make Performance Awards independent of or in connection with the granting of any other Award under the Plan. Performance Awards may be granted under the Plan to any Participant, including those who qualify for awards under other +performance plans of the Company. The Administrator in its sole discretion will determine whether and to whom Performance Awards will be made, the performance goals applicable under each Award, the period or periods during which performance is to be +measured, and all other limitations and conditions applicable to Performance Awards. The Administrator, in its discretion, may rely on the performance goals and other standards applicable to other performance plans of the Company in setting the +standards for Performance Awards under the Plan. +(b) Performance Goals . +(i) Performance goals will be based on a pre-established objective formula or standard +that specifies the manner of determining the number of shares of Common Stock under the Performance Award that will be granted or will vest if the performance goal is attained. The Administrator shall determine the performance goals before the time +that 25% of the service period has elapsed, but not later than 90 days after the commencement of the service period to which the performance goal relates. +(ii) Performance goals may be based on one or more of the following business criteria, which may be applied to a Participant, a +business unit or the Company and its Related Companies: revenue; sales; earnings before all or any of interest expense, taxes, depreciation and/or amortization (“ EBIT ,” “ EBITA ,” or +“ EBITDA ”); funds from operations; funds from operations per share; operating income; operating income +A-15 +Table of Contents +per share; pre-tax or after-tax income; net cash provided by operating activities; cash available for distribution; +cash available for distribution per share; working capital and components thereof; sales (net or gross) measured by product line, territory, customer or customers or other category; return on equity or average stockholders’ equity; return on +assets; return on capital; enterprise value or economic value added; share price performance; improvements in the Company’s attainment of expense levels; implementation or completion of critical projects; improvement in cash-flow (before or +after tax); net earnings; earnings per share; earnings from continuing operations; net worth; credit rating; levels of expense, cost or liability by category, operating unit or any other delineation; or any increase or decrease of one or more of the +foregoing over a specified period; or the occurrence of a Change in Control. +(iii) A performance goal may be measured over +a performance period on a periodic, annual, cumulative or average basis, may be based on growth rate or compound annual growth rate, and may be established on a corporate-wide basis or with respect to one or more operating units, divisions, +subsidiaries, acquired businesses, minority investments, partnerships or joint ventures. More than one performance goal may be incorporated in a performance objective, in which case achievement with respect to each performance goal may be assessed +individually or in combination with each other. The Administrator may, in connection with the establishment of performance goals for a performance period, establish a matrix setting forth the relationship between performance on two or more +performance goals and the amount of the Performance Award payable for that performance period. The level or levels of performance specified with respect to a performance goal may be established in absolute terms, as objectives relative to +performance in prior periods, as an objective compared to the performance of one or more comparable companies or an index covering multiple companies or otherwise as the Administrator may determine. The Administrator also may establish certain +objective specified adjustments at the time the performance goals are established. +(iv) Performance goals will be +objective, and may differ for Performance Awards granted to any one Participant or to different Participants. A Performance Award to a Participant who is a Covered Employee will (unless the Administrator determines otherwise) provide that if the +Participant’s Continuous Service ceases prior to the end of the performance period for any reason, the Award will be payable only (A) if the applicable performance objectives are achieved; and (B) to the extent, if any, determined by +the Administrator. These objective performance goals are not required to be based on increases in a specific business criterion, but may be based on maintaining the status quo or limiting economic losses. With respect to Participants who are not +Covered Employees, the Administrator may establish additional objective or subjective performance goals. +(c) Restrictions on +Transfer. Performance Awards and all rights with respect to the Performance Awards may not be sold, assigned, transferred, pledged or otherwise encumbered. +(d) Satisfaction of Performance Goals . A Participant will be entitled to receive a stock certificate evidencing the acquisition of +shares of Common Stock under a Performance Award only upon satisfaction of all conditions specified in the written instrument evidencing the Performance Award (or in a performance plan adopted by the Administrator), including, without limitation, +the Participant’s satisfaction of applicable tax withholding obligations attributable to the Award. With respect only to a Performance Award that is denominated in hypothetical Common Stock units, the Common Stock certificate will be issued and +delivered and the Participant will be entitled to the beneficial ownership rights of the Common Stock not later than (i) the date that is 2 1 ⁄ 2 months after the +end of the Participant’s taxable year (or the end of the Company’s taxable year, if later) for which the Administrator certifies that the Performance Award conditions have been satisfied and the Performance Award is no longer subject to a +substantial risk of forfeiture, and (ii) such earlier date as may be necessary to avoid application of Section 409A of the Code to the Award. +(e) Termination . Except as may otherwise be provided by the Administrator at any time, a Participant’s rights in all Performance +Awards will automatically terminate upon the Participant’s termination of employment (or business relationship) with the Company and its Related Companies for any reason. +A-16 +Table of Contents +(f) Acceleration, Waiver, Etc . With respect to Participants who are not Covered +Employees, at any time before the Participant’s termination of Continuous Service by the Company and its Related Companies, the Administrator may in its sole discretion accelerate, waive or, subject to Article 12 hereof, amend any or all +of the goals, restrictions or conditions imposed under any Performance Award. The Administrator in its discretion may provide for an acceleration of vesting in the terms of any Performance Award at any time, including upon a Change in Control. +Notwithstanding the foregoing, with respect to a Covered Employee, no amendment or waiver of the performance goal will be permitted, and no acceleration of payment (other than in the form of unvested Common Stock) will be permitted (except in the +event of the Participant’s death, Disability or upon the occurrence of a Change in Control) unless the performance goal has been attained and the Award is discounted to reasonably reflect the time value of money attributable to the +acceleration. +(g) Certification . Following the completion of each performance period, the Administrator shall certify in writing +whether the performance objectives and other material terms of a Performance Award have been achieved or met. Unless the Administrator determines otherwise, Performance Awards will not be settled until the Administrator has made the certification +specified under this Section 7.2(g) . +7.3 Stock Appreciation Rights . +(a) General . Stock Appreciation Rights may be granted either alone (“Free Standing SARs”) or, if the requirements of +Section 7.3(b) are satisfied, in tandem with all or part of any Option granted under the Plan (“Tandem SARs”). In the case of a Nonstatutory Stock Option, Tandem SARs may be granted either at or after the time of the grant of +the Option. In the case of an Incentive Stock Option, Tandem SARs may be granted only at the time of the grant of the Incentive Stock Option. +(b) Grant Requirements . A Stock Appreciation Right may only be granted if it does not provide for the deferral of compensation within +the meaning of Section 409A of the Code. A Stock Appreciation Right does not provide for a deferral of compensation if: (i) the Strike Price may never be less than the Fair Market Value per share of Common Stock on the Date of Grant, +(ii) the compensation payable under the Stock Appreciation Right can never be greater than the difference between the Strike Price and the Fair Market Value per share of Common Stock on the date the Stock Appreciation Right is exercised, +(iii) the number of shares of Common Stock subject to the Stock Appreciation Right is fixed on the Date of Grant of the Stock Appreciation Right, and (iv) the Stock Appreciation Right does not include any feature for the deferral of +compensation other than the deferral of recognition of income until the exercise of the right. +(c) Exercise and Payment . Upon +delivery to the Administrator of a written request to exercise a Stock Appreciation Right, the holder of the Stock Appreciation Right will be entitled to receive from the Company, an amount equal to the product of (i) the excess of the Fair +Market Value, on the date of exercise, of one share of Common Stock over the Strike Price per share specified in the Stock Appreciation Right or its related Option; multiplied by (ii) the number of shares for which the Stock Appreciation Right +is exercised. Payment with respect to the exercise of a Stock Appreciation Right will be paid on the date of exercise and made in shares of Common Stock valued at Fair Market Value on the date of exercise. Payment may be made in the form of shares +of Common Stock (with or without restrictions as to substantial risk of forfeiture and transferability, as determined by the Administrator in its sole discretion), cash or a combination thereof, as determined by the Administrator in its sole +discretion. +(d) Strike Price . The Administrator shall determine the Strike Price of a Free Standing SAR, which may not be less +than 100% of the Fair Market Value per share of Common Stock on the Date of Grant of the Stock Appreciation Right. The Strike Price of a Tandem SAR granted simultaneously with or subsequent to the grant of an Option and in conjunction therewith or +in the alternative thereto will be the Exercise Price of the related Option. A Tandem SAR will be transferable only upon the same terms and conditions as the related Option, and will be exercisable only to the same extent as the related Option; +except that a Tandem SAR, by its terms, will be exercisable only when the Fair Market Value per share of Common Stock subject to the Tandem SAR and related Option exceeds the Strike Price per share thereof. +A-17 +Table of Contents +(e) Reduction in the Underlying Option Shares . Upon any exercise of a Stock +Appreciation Right, the number of shares of Common Stock for which any related Option will be exercisable will be reduced by the number of shares for which the Stock Appreciation Right has been exercised. The number of shares of Common Stock for +which a Tandem SAR is exercisable will be reduced upon any exercise of any related Option by the number of shares of Common Stock for which the Option has been exercised. +(f) Written Request . Unless otherwise determined by the Administrator in its sole discretion, Stock Appreciation Rights will be settled +in the form of Common Stock. If permitted in the Award Agreement, a Participant may request that any exercise of a Stock Appreciation Right be settled for cash, but a Participant will not have any right to demand a cash settlement. A request for a +cash settlement may be made only by a written request filed with the Corporate Secretary of the Company during the period beginning on the third business day following the date of release for publication by the Company of quarterly or annual summary +statements of earnings and ending on the twelfth business day following that date. Within 30 days of the receipt by the Company of a written request to receive cash in full or partial settlement of a Stock Appreciation Right or to exercise the Stock +Appreciation Right for cash, the Administrator shall, in its sole discretion, either consent to or disapprove, in whole or in part, the written request. A written request to receive cash in full or partial settlement of a Stock Appreciation Right or +to exercise a Stock Appreciation Right for cash may provide that, if the Administrator disapproves the written request, the written request will be deemed an exercise of the Stock Appreciation Right for shares of Common Stock. +(g) Disapproval by Administrator . If the Administrator disapproves in whole or in part any request by a Participant to receive cash in +full or partial settlement of a Stock Appreciation Right or to exercise the Stock Appreciation Right for cash, the disapproval will not affect the Participant’s right to exercise the Stock Appreciation Right at a later date, to the extent that +the Stock Appreciation Right will be otherwise exercisable, or to request a cash form of payment at a later date, in each case subject to the approval of the Administrator. Additionally, the disapproval will not affect the Participant’s right +to exercise any related Option. +(h) Restrictions on Transfer . Stock Appreciation Rights and all rights with respect to Stock +Appreciation Rights may not be sold, assigned, transferred, pledged or otherwise encumbered. +ARTICLE 8 +COVENANTS OF THE COMPANY +8.1 Availability of Shares . During the terms of the Awards, the Company shall keep available at all times +the number of shares of Common Stock required to satisfy the Awards. +8.2 Securities Law Compliance . +Each Award Agreement will provide that no shares of Common Stock may be purchased or sold thereunder unless and until any then applicable requirements of state, federal or applicable foreign laws and regulatory agencies have been fully complied with +to the satisfaction of the Company and its counsel. The Company shall use reasonable efforts to seek to obtain from each regulatory commission or agency having jurisdiction over the Plan such authority as may be required to grant Awards and to issue +and sell shares of Common Stock upon exercise of Awards; however, this undertaking will not require the Company to register under the Securities Act the Plan, any Award or any Common Stock issued or issuable pursuant to any Award. If, after +reasonable efforts, the Company is unable to obtain from any such regulatory commission or agency the authority that counsel for the Company deems necessary for the lawful issuance and sale of Common Stock under the Plan, the Company will be +relieved from any liability for failure to issue and sell Common Stock upon exercise of any Awards unless and until that authority is obtained. +ARTICLE 9 +USE OF PROCEEDS FROM STOCK +Proceeds from the sale of Common Stock pursuant to Awards will constitute general funds of the Company. +A-18 +Table of Contents +ARTICLE 10 +MISCELLANEOUS +10.1 Acceleration of Exercisability and Vesting . The Administrator will have the power to accelerate the time at which an Award may first be exercised or the time during which an Award or any part thereof will vest in accordance with the +Plan, notwithstanding the provisions in the Award stating the time at which it may first be exercised or the time during which it will vest. +10.2 Stockholder Rights . Except as provided in Section 11.1 hereof or as otherwise provided +in an Award Agreement, no Participant will be deemed to be the holder of, or to have any of the rights of a holder with respect to, any shares of Common Stock subject to an Award unless and until the Participant has satisfied all requirements for +exercise, payment or delivery of the Award, as applicable, pursuant to its terms, and no adjustment will be made for dividends (ordinary or extraordinary, whether in cash, securities or other property) or distributions of other rights for which the +record date is prior to the date of issue of a Common Stock certificate. +10.3 No Employment or Other +Service Rights . Nothing in the Plan or any instrument executed or Award granted pursuant thereto will confer upon any Participant any right to continue to serve the Company or a Related Company in the capacity in effect at the time the Award was +granted or will affect the right of the Company or a Related Company to terminate (a) the employment of an Employee with or without notice and with or without Cause; (b) the service of a Consultant pursuant to the terms of the +Consultant’s agreement with the Company or a Related Company; or (c) the service of a Director pursuant to the Bylaws of the Company or a Related Company, and any applicable provisions of the corporate law of the state in which the Company +or the Related Company is incorporated, as the case may be. +10.4 Transfer, Approved Leave of +Absence . For purposes of the Plan, no termination of employment by an Employee will be deemed to result from either (a) a transfer to the employment of the Company from a Related Company, from the Company to a Related Company or from one +Related Company to another; or (b) an approved leave of absence for military service or sickness or for any other purpose approved by the Company, if the period of leave does not exceed three months or, if longer, the Employee’s right to re-employment is guaranteed either by a statute or by contract. +10.5 +Investment Assurances . The Company may require a Participant, as a condition of exercising or acquiring Common Stock under any Award, (a) to give written assurances satisfactory to the Company as to the Participant’s knowledge and +experience in financial and business matters and/or to employ a purchaser representative reasonably satisfactory to the Company who is knowledgeable and experienced in financial and business matters and that he or she is capable of evaluating, alone +or together with the purchaser representative, the merits and risks of exercising the Award; and (b) to give written assurances satisfactory to the Company stating that the Participant is acquiring Common Stock subject to the Award for the +Participant’s own account and not with any present intention of selling or otherwise distributing the Common Stock. The foregoing requirements, and any assurances given pursuant to those requirements, will be inoperative if (x) the +issuance of the shares of Common Stock upon the exercise or acquisition of Common Stock under the Award has been registered under a then currently effective registration statement under the Securities Act; or (y) as to any particular +requirement, a determination is made by counsel for the Company that that requirement need not be met in the circumstances under the then applicable securities laws. The Company may, upon advice of counsel to the Company, place legends on stock +certificates issued under the Plan as that counsel deems necessary or appropriate in order to comply with applicable securities laws, including, but not limited to, legends restricting the transfer of the Common Stock. +10.6 Withholding Obligations. To the extent provided by the terms of an Award Agreement and subject to +the discretion of the Administrator, the Participant may satisfy any federal, state or local tax withholding obligation relating to the exercise or acquisition of Common Stock under an Award by any one or combination of +A-19 +Table of Contents +the following means (in addition to the Company’s right to withhold from any compensation paid to the Participant by the Company): (a) tendering a cash payment; (b) authorizing the +Company to withhold a number of shares of Common Stock from the shares otherwise issuable to the Participant as a result of the exercise or acquisition of Common Stock under the Award, the Fair Market Value of which does not exceed the maximum +statutory tax rates in the applicable jurisdictions (subject to the Participant’s written request to withhold more than the required regular tax withholding in the applicable jurisdictions) and in which case the Award will be surrendered and +cancelled with respect to the number of shares of Common Stock retained by the Company; (c) delivering to the Company previously owned and unencumbered shares of Common Stock; or (d) by execution of a recourse promissory note by a +Participant. Notwithstanding the foregoing, during any period for which the Company has any class of its securities listed on a national securities exchange in the United States, has securities registered under Section 12 of the Exchange Act, +is required to file reports under Section 13(a) or 15(d) of the Exchange Act or has a registration statement pending under the Securities Act, payment of the tax withholding with a promissory note or other transaction by a Participant that +involves or may involve a Prohibited Personal Loan is prohibited with respect to any Award. Unless otherwise provided in the terms of an Award Agreement, payment of the tax withholding by a Participant who is an Insider by delivering previously +owned and unencumbered shares of Common Stock or in the form of share withholding is subject to pre-approval by the Administrator, in its sole discretion. The Administrator shall document any pre-approval in the case of a Participant who is an Officer or Director in a manner that complies with the specificity requirements of Rule 16b-3, including the name of the +Participant involved in the transaction, the nature of the transaction, the number of shares to be acquired or disposed of by the Participant and the material terms of the Award involved in the transaction. +10.7 Right of Repurchase. Each Award Agreement may provide that, following a termination of the +Participant’s Continuous Service, the Company may repurchase the Participant’s unvested Common Stock acquired under the Plan as provided in this Section 10.7 (the “Right of Repurchase”) . The Right of +Repurchase for unvested Common Stock will be exercisable at a price equal to the lesser of the purchase price at which the Common Stock was acquired under the Plan or the Fair Market Value of the Common Stock (if an Award is granted solely in +consideration of past services without payment of any additional consideration, the unvested Common Stock will be forfeited without any repurchase). The Award Agreement may specify the period following a termination of the Participant’s +Continuous Service during which the Right of Repurchase may be exercised. +ARTICLE 11 +ADJUSTMENTS UPON CHANGES IN STOCK +11.1 Capitalization Adjustments. If any change is made in the Common Stock subject to the Plan or subject +to any Award, without the receipt of consideration by the Company (through merger, consolidation, reorganization, recapitalization, reincorporation, stock dividend, dividend in property other than cash, stock split, liquidating dividend, combination +of shares, exchange of shares, change in corporate structure or other transaction not involving the receipt of consideration by the Company), then (a) the aggregate number of shares of Common Stock or class of shares that may be purchased +pursuant to Awards granted hereunder, (b) the aggregate number of shares of Common Stock or class of shares that may be purchased pursuant to Incentive Stock Options granted hereunder, (c) the number and/or class of shares of Common Stock +covered by outstanding Awards, (d) the maximum number of shares of Common Stock with respect to which Awards may be granted to any single Person during any calendar year, and (e) the Exercise Price of any Option and the Strike Price of any +Stock Appreciation Right in effect prior to the change shall be proportionately adjusted by the Administrator to reflect any increase or decrease in the number of issued shares of Common Stock or change in the Fair Market Value of the Common Stock +resulting from the transaction; provided, however, that any fractional shares resulting from the adjustment shall be eliminated by rounding down. The Administrator shall make these adjustments in a manner that will provide an +appropriate adjustment that neither increases nor decreases the value of the Award as in effect immediately prior to the corporate change, and its determination +A-20 +Table of Contents +will be final, binding and conclusive. The conversion of any securities of the Company that are by their terms convertible will not be treated as a transaction “without receipt of +consideration” by the Company. +11.2 Dissolution or Liquidation. In the event of a dissolution +or liquidation of the Company, then, subject to Section 11.3 , all outstanding Awards will terminate immediately prior to that dissolution or liquidation. +11.3 Change in Control – Asset Sale, Merger, Consolidation or Reverse Merger. In the event of a +Change in Control, a dissolution or liquidation of the Company, an exchange of shares or any corporate separation or division, including, but not limited to, a split-up, a +split-off or a spin-off or a sale, in one or a series of related transactions, of all or substantially all of the assets of the Company; a merger or consolidation in +which the Company is not the Surviving Entity; or a reverse merger in which the Company is the Surviving Entity, but the shares of Common Stock outstanding immediately preceding the merger are converted by virtue of the merger into other property, +whether in the form of securities, cash or otherwise, then the Company, to the extent permitted by applicable law, but otherwise in the sole discretion of the Administrator may provide for: (a) the continuation of outstanding Awards by the +Company (if the Company is the Surviving Entity); (b) the assumption of the Plan and the outstanding Awards by the Surviving Entity or its parent; (c) the substitution by the Surviving Entity or its parent of awards with substantially the same +terms (including an award to acquire the same consideration paid to the stockholders in the transaction described in this Section 11.3 ) for the outstanding Awards and, if appropriate, subject to the equitable adjustment provisions of +Section 11.1 hereof; (d) the cancellation of the outstanding Awards in consideration for a payment (in the form of stock or cash) equal in value to the Fair Market Value of vested Awards, or in the case of an Option, the difference +between the Fair Market Value and the Exercise Price for all shares of Common Stock subject to exercise (i.e., to the extent vested) under any outstanding Option; or (e) the cancellation of the outstanding Awards without payment of any +consideration. If the Awards would be canceled without consideration for vested Awards, the Participant will have the right, exercisable during the later of the 10-day period ending on the fifth day prior to +the merger or consolidation or 10 days after the Administrator provides the Award holder a notice of cancellation, to exercise the Awards in whole or in part without regard to any installment exercise provisions in the Option Agreement. +ARTICLE 12 +AMENDMENT OF THE PLAN AND AWARDS +12.1 Amendment of Plan. The Board at any time may amend or terminate the Plan. However, except as +provided in Section 11.1 relating to adjustments upon changes in Common Stock, no amendment will be effective unless approved by the stockholders of the Company to the extent stockholder approval is necessary to satisfy any applicable +law or any securities exchange listing requirements. At the time of any amendment, the Board shall determine, upon advice from counsel, whether the amendment will be contingent on stockholder approval. +12.2 Stockholder Approval. The Board may, in its sole discretion, submit any other amendment to the Plan +for stockholder approval, including, but not limited to, amendments to the Plan intended to satisfy the requirements of Section 162(m) of the Code and the regulations thereunder regarding the exclusion of performance-based compensation from the +limit on corporate deductibility of compensation paid to certain executive officers who are Covered Employees. +12.3 Contemplated Amendments. It is expressly contemplated that the Board may amend the Plan in any respect the Board deems necessary or advisable to provide eligible Employees with the maximum benefits provided or to be provided under the +provisions of the Code and the regulations issued thereunder relating to Incentive Stock Options or to the nonqualified deferred compensation provisions of Section 409A of the Code and to bring the Plan and Awards granted hereunder into +compliance therewith. Notwithstanding the foregoing, neither the Board nor the Company nor any Related Company will have any liability to any Participant or any other Person as to (a) any tax consequences expected, but not realized, by a +Participant or any other person due to the receipt, exercise or settlement of any Award granted hereunder; or (b) the failure of any Award to comply with Section 409A of the Code. +A-21 +Table of Contents +12.4 Amendment of Awards. The Administrator at any time +may amend the terms of any one or more Awards. However, subject to Section 12.5 , no amendment may impair the rights under any Award granted before the amendment. Except as otherwise permitted under Article 11, unless stockholder approval +is obtained: (a) no amendment or modification may reduce the Exercise Price of any Option or the Strike Price of any SAR; (b) the Committee may not cancel any outstanding Option or SAR and replace it with a new Option or SAR, another Award +or cash, if doing so would be considered a “repricing” for purposes of the stockholder approval rules of the applicable securities exchange or inter-dealer quotation system on which the Common Stock is listed or quoted; and (c) the +Committee may not take any other action that is considered a repricing for purposes of the stockholder approval rules of the applicable securities exchange or inter-dealer quotation system on which the Common Stock is listed or quoted. +12.5 No Impairment of Rights. No amendment of the Plan or an Award may impair rights under any Award +granted before the amendment unless (a) the Company requests the consent of the Participant and (b) the Participant consents in writing. For the avoidance of doubt, a cancellation of an Award where the Participant receives a payment equal +in value to the Fair Market Value of the vested Award or, in the case of vested Options or SAR, the difference between the Fair Market Value and the Exercise Price or Strike Price, is not an impairment of the Participant’s rights that requires +consent of the Participant. +ARTICLE 13 +GENERAL PROVISIONS +13.1 Other Compensation Arrangements. Nothing contained in the Plan will prevent the Board from adopting other or additional compensation arrangements, subject to stockholder approval if stockholder approval is required; and those +arrangements may be either generally applicable or applicable only in specific cases. +13.2 +Recapitalizations. Each Award Agreement will contain provisions required to reflect the provisions of Section +11.1 . +13.3 Delivery. Upon exercise of a right granted pursuant to an Award under the Plan, the +Company shall issue Common Stock or pay any amounts due within a reasonable period thereafter. Subject to any statutory or regulatory obligations the Company may otherwise have, for purposes of the Plan, 30 days will be considered a reasonable +period. +13.4 Other Provisions. The Award Agreements authorized under the Plan may contain such other +provisions not inconsistent with the Plan, including, without limitation, restrictions upon the exercise of the Awards, as the Administrator may deem advisable. +13.5 Cancellation and Rescission of Awards for Detrimental Activity. +(a) Upon exercise, payment or delivery pursuant to an Award, the Administrator may require a Participant to certify in a manner acceptable to +the Company that the Participant has not engaged in any Detrimental Activity. +(b) Unless the Award Agreement specifies otherwise, the +Administrator may cancel, rescind, suspend, withhold or otherwise limit or restrict any unexpired, unpaid or deferred Awards at any time if the Participant engages in any Detrimental Activity. +(c) If a Participant engages in Detrimental Activity after any exercise, payment or delivery pursuant to an Award, during any period for which +any restrictive covenant prohibiting such activity is applicable to the Participant, that exercise, payment or delivery may be rescinded within one year thereafter. In the event of any such rescission, the Participant shall pay to the Company the +amount of any gain realized or payment received as +A-22 +Table of Contents +a result of the exercise, payment or delivery, in such manner and on such terms and conditions as may be required by the Company. The Company will be entitled to +set-off against the amount of that gain any amount owed to the Participant by the Company. +13.6 Clawback or Forfeiture. Notwithstanding any provision in this Plan or any Award Agreement to the contrary, the Company may cancel any Award, require reimbursement of any Award by a Participant, and effect any other right of recoupment +of equity or other compensation provided under the Plan in accordance with the requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Sarbanes–Oxley Act of 2002, other applicable law or securities exchange listing +requirements or any Company policies that may be adopted or modified from time to time (the “ Clawback Policy”) . In addition, a Participant may be required to repay to the Company previously paid compensation, whether provided +pursuant to the Plan or an Award Agreement, in accordance with the Clawback Policy. By accepting an Award, the Participant is agreeing to be bound by the Clawback Policy, as in effect or as may be adopted or modified from time to time by the Company +in its discretion (including, without limitation, to comply with applicable law or securities exchange listing requirements), regardless of whether or not such condition is expressly stated in the Award Agreement. +ARTICLE 14 +MARKET STANDOFF +Each +Option Agreement and Award Agreement will provide that, in connection with any underwritten public offering by the Company of its equity securities, the Participant shall agree not to sell, make any short sale of, loan, hypothecate, pledge, grant +any option for the repurchase of, transfer the economic consequences of ownership or otherwise dispose or transfer for value or otherwise agree to engage in any of the foregoing transactions with respect to any Common Stock without the prior written +consent of the Company or its underwriters, for the period from and after the effective date of such registration statement as may be requested by the Company or the underwriters (the “ Market Standoff”) . In order to enforce +the Market Standoff, the Company may impose stop-transfer instructions with respect to the shares of Common Stock acquired under the Plan until the end of the applicable standoff period. If there is any change in the number of outstanding shares of +Common Stock by reason of a stock split, reverse stock split, stock dividend, recapitalization, combination, reclassification, dissolution or liquidation of the Company, any corporate separation or division (including, but not limited to, a split-up, a split-off or a spin-off), a merger or consolidation; a reverse merger or similar transaction, then any new, substituted or +additional securities that are by reason of the transaction distributed with respect to any shares of Common Stock subject to the Market Standoff or into which the shares of Common Stock thereby become convertible, will immediately be subject to the +Market Standoff. +ARTICLE 15 +EFFECTIVE DATE OF PLAN +This amendment and restatement of the Plan becomes effective on the Effective Date. Solely with respect to the additional Shares authorized +under the amended and restated Plan and the extension of the term of the Plan in Article 16 , no Award granted on or after the Effective Date may be exercised (or, in the case of an Award denominated in Shares, may be granted) unless and until +the Plan has been approved by the stockholders of the Company, which approval must be within 12 months before or after the date the Plan is adopted by the Board. The amended and restated Plan shall be subject to approval by the stockholders of the +Company at the annual meeting of stockholders of the Company to be held on June 6, 2019 and, if approved, the amended and restated Plan shall be effective as of the Effective Date. If the stockholders of the Company fail to approve the amended +and restated Plan, the terms of the Plan, as approved by stockholders prior to the amendment and restatement of the Plan, will continue to be effective. +A-23 +Table of Contents +ARTICLE 16 +TERMINATION OR SUSPENSION OF THE PLAN +The Plan will terminate automatically on the day before the 10th anniversary of the Effective Date. No Award may be granted pursuant to the +Plan after that date, but Awards theretofore granted may extend beyond that date. The Board may suspend or terminate the Plan at any earlier date pursuant to Section 12.1 hereof. No Awards may be granted under the Plan while the Plan is +suspended or after it is terminated. +ARTICLE 17 +CHOICE OF LAW +The law of +the State of Delaware will govern all questions concerning the construction, validity and interpretation of the Plan, without regard to that state’s conflict of law rules. +ARTICLE 18 +LIMITATION ON LIABILITY +The Company and any Related Company that is in existence or that hereafter comes into existence will have no liability to any Participant or +any other person as to (1) the non-issuance or sale of shares of Common Stock as to which the Company has been unable to obtain from any regulatory body having jurisdiction the authority deemed by counsel +to the Company necessary to the lawful issuance and sale of any shares hereunder; (2) any tax consequences expected, but not realized, by a Participant or any other person due to the receipt, exercise or settlement of any Award granted +hereunder; or (3) the failure of any Award that is determined to constitute “nonqualified deferred compensation” to comply with Section 409A of the Code and the regulations thereunder. +ARTICLE 19 +EXECUTION +To record the +adoption of the Plan by the Board, the Company has caused its authorized officer to execute the Plan as of the date specified below. +A-24 +Table of Contents +IN WITNESS WHEREOF, upon authorization of the Board, the undersigned has executed the +Gulfport Energy Corporation 2019 Amended and Restated Stock Incentive Plan, effective as of the Effective Date, on the date opposite his or her signature. +GULFPORT ENERGY CORPORATION +Dated: April 29, 2019 +By: +/s/ David M. Wood +David M. Wood, Chief Executive Officer +A-25 +Table of Contents +Your vote matters – here’s how to vote! +You may vote online or by phone instead of mailing this card. +Votes submitted electronically must be received by 1:00 a.m., Central Time, on June 6, 2019. +Online +Go to www.investorvote.com/GPOR or scan the QR code – login details are located in the shaded bar below. +Phone +Call toll free 1-800-652-VOTE (8683) within the USA, US territories and Canada +Using a black ink pen, mark your votes with an X as shown in +this example. Please do not write outside the designated areas. +☒ +Save paper, time and money! +Sign up for electronic +delivery at www.investorvote.com/GPOR +q IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q +A +Proposals — The Board of Directors recommends a vote FOR all the nominees listed in Proposal 1 and FOR Proposals 2, 3 +and 4. +1. +Election of Directors: +For +Against +Abstain +For +Against +Abstain +For +Against +Abstain +01 - David M. Wood +☐ +☐ +☐ +02 - Craig Groeschel +☐ +☐ +☐ +03 - David L. Houston +☐ +☐ +☐ +04 - C. Doug Johnson +☐ +☐ +☐ +05 - Ben T. Morris +☐ +☐ +☐ +06 - Scott E. Streller +☐ +☐ +☐ +07 - Paul D. Westerman +☐ +☐ +☐ +08 - Deborah G. Adams +☐ +☐ +☐ +For +Against +Abstain +For +Against +Abstain +2. +Proposal to approve the Company’s 2019 Amended and Restated Stock Incentive Plan. +☐ +☐ +☐ +3. +Proposal to Approve, on an Advisory Basis, the Compensation Paid to the Company’s Named Executive Officers. +☐ +☐ +☐ +4. +Proposal to Ratify the Appointment of the Company’s Independent Auditors, Grant Thornton LLP, for the fiscal year ending December 31, 2019. +☐ +☐ +☐ +B +Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below. +When shares are held by joint tenants, both should sign. When signing +as attorney, executor, administrator, trustee, or guardian, please give full title as such. If a corporation, please sign in full corporate name by the president or another authorized officer. If a partnership, please sign in partnership name by an +authorized person. +Date (mm/dd/yyyy) — Please print date below. +Signature 1 — Please keep signature within the box. +Signature 2 — Please keep signature within the box. +/ +/ +0323BA +Table of Contents +Proxy – Gulfport Energy Corporation +You are cordially invited to attend the Annual Meeting of Stockholders +To be held on June 6, 2019, at +10:00 a.m. +Oklahoma City time, at +3001 Quail Springs Parkway, +Oklahoma City, Oklahoma 73134 +Small steps make an impact. +Help the environment by consenting to receive electronic +delivery, sign up at www.investorvote.com/GPOR +q IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED +ENVELOPE. q +Proxy — GULFPORT ENERGY CORPORATION +FOR THE ANNUAL MEETING OF STOCKHOLDERS OF +Gulfport Energy Corporation +This Proxy Is +Solicited On Behalf Of The Board Of Directors +The +undersigned hereby appoints David M. Wood and Keri Crowell (together, the “Proxies”), and each of them, with full power of substitution, as proxies to vote the shares that the undersigned is entitled to vote at the Annual Meeting of +Stockholders of Gulfport Energy Corporation (the “Company”) to be held on June 6, 2019 at 10:00 a.m. Oklahoma City time and at any adjournments and postponements thereof. Such shares shall be voted as indicated with respect to the +proposals listed on the reverse side hereof and in the Proxies’ discretion on such other matters as may properly come before the meeting or any adjournment or postponement thereof. +The undersigned acknowledges receipt of the 2019 Notice of Annual +Meeting and accompanying Proxy Statement and revokes all prior proxies for said meeting. +THE SHARES REPRESENTED BY THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO SPECIFIC +DIRECTION IS GIVEN AS TO THE PROPOSALS ON THE REVERSE SIDE, THIS PROXY WILL BE VOTED FOR EACH OF THE NOMINEES NAMED IN PROPOSAL 1 AND FOR EACH OF THE PROPOSALS 2, 3 AND 4 IN ACCORDANCE WITH THE BOARD OF DIRECTOR’S RECOMMENDATION. PLEASE MARK, +SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY. +IMPORTANT – +PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY. THANK YOU FOR VOTING. +(Continued and to be marked, dated and signed on reverse side.) +C +Non-Voting Items +Change of Address — Please print new address below. \ No newline at end of file diff --git a/raw/proxies/0000874499/0001193125-19-129779/proxy_rpt.txt b/raw/proxies/0000874499/0001193125-19-129779/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..7cb92854ee3dd3ad37c339268a6fefb90670be56 --- /dev/null +++ b/raw/proxies/0000874499/0001193125-19-129779/proxy_rpt.txt @@ -0,0 +1,23 @@ +Certain Relationships and Related Transactions Review and +Approval of Related Party Transactions +The audit committee, as provided in its charter, reviews and approves related party transactions. The Company +does not have a formal set of standards to be substantively applied to each transaction reviewed by the audit committee. Instead of a formalized policy, related party transactions are reviewed and judgment is applied to determine whether such +transactions are in the best interests of the Company. Further, the Company’s Code of Business Conduct and Ethics governs various compliance areas, including conflicts of interest and fair dealings, which are considered in the process of the +review and approval of related party transactions. +The Company’s policy is that all of its employees and directors, as well as their family members, +must avoid any activity that is or has the appearance of conflicting with the Company’s business interest. This policy is included in the Company’s Code of Business Conduct and Ethics posted on its website. Each director and executive +officer is instructed to always inform the designated compliance officer when confronted with any situation that may be perceived as a conflict of interest. Only the board of directors or a committee consisting solely of independent directors may +grant waivers of the provisions of the Code of Business Conduct and Ethics for the Company’s executive officers and directors. In addition, at least annually, each director and executive officer completes a detailed questionnaire specifying any +business relationship that may give rise to a conflict of interest. +Further, under the audit committee charter, the audit committee is responsible for +reviewing and monitoring compliance with our Code of Business Conduct and Ethics and recommending any warranted changes to the board of directors. In addition, the board of directors and, pursuant to its written charter, the audit committee, reviews +and approves all relationships and transactions in which the Company and its directors, director nominees and executive officers and their immediate family members, as well as holders of more than 5% of any class of our voting securities and their +family members, have a direct or indirect material interest. The board of directors and the audit committee approve only those transactions that, in light of known circumstances, are consistent, or are not inconsistent with, the Company’s best +interests, as they determine in the good faith exercise of their discretion. +Separation Agreement with Our Former Chief Executive Officer and +President and Other Related Party Transaction +Michael G. Moore stepped down from his position as our Chief Executive Officer and President, and as a +member of our board of directors, effective as of October 29, 2018. In connection with Mr. M. Moore’s departure, we entered into a separation agreement with Mr. M. Moore. For a description of Mr. M. Moore’s severance +and other provisions of his separation agreement with us, see “Severance Agreement with our Former Chief Executive Officer and President” above. +AMM Design, Inc., or AMM, provided landscape and related services to the third party building manager for our offices in Oklahoma City in 2018. We paid the +building manager approximately $149,000 in respect of these services. AMM is owned by the son of Michael G. Moore, our former Chief Executive Officer and President. \ No newline at end of file diff --git a/raw/proxies/0000874499/0001213900-20-014841/proxy.txt b/raw/proxies/0000874499/0001213900-20-014841/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..2c29eb7f09b5549949617729c8d85bb06b154c85 --- /dev/null +++ b/raw/proxies/0000874499/0001213900-20-014841/proxy.txt @@ -0,0 +1,3258 @@ +DEF 14A +1 +def14a0620_gulfport.htm +DEFINITIVE PROXY STATEMENT +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +________________ +SCHEDULE 14A +Proxy Statement Pursuant to Section 14(a) of the +Securities Exchange Act of 1934 +________________ +S Filed by the Registrant +£ Filed by a Party other than the Registrant +Check the appropriate box: +£ +Preliminary Proxy Statement +£ +Confidential, for Use of the Commission Only (as permitted by Rule 14a -6 (e)(2)) +S +Definitive Proxy Statement +£ +Definitive Additional Materials +£ +Soliciting Material under §240.14a -12 +Gulfport Energy Corporation +(Name of Registrant as Specified in Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +S +No fee required +£ +Fee computed on table below per Exchange Act Rules 14a -6 (i)(1) and 0 -11 . +1) +Title of each class of securities to which transaction applies: +2) +Aggregate number of securities to which transaction applies: +3) +Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0 -11 (set forth the amount on which the filing fee is calculated and state how it was determined): +4) +Proposed maximum aggregate value of transaction: +5) +Total fee paid: +£ +Fee paid previously with written preliminary materials. +£ +Check box if any part of the fee is offset as provided by Exchange Act Rule 0 -11 (a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. +1) +Amount Previously Paid: +2) +Form, Schedule or Registration Statement No.: +3) +Filing Party: +4) +Date Filed: +June 12, 2020 +Dear Fellow Stockholders, +On behalf of your Board of Directors (the “Board”) and management, you are cordially invited to attend the 2020 Annual Meeting of Stockholders of Gulfport Energy Corporation to be held at 3001 Quail Springs Parkway, Oklahoma City, Oklahoma 73134 on July 16, 2020, at 10:30 a.m. Central Time (including any adjournments or postponements thereof, the “Annual Meeting”). Included with this letter are the Notice of 2020 Annual Meeting, a proxy statement detailing the business to be conducted at the Annual Meeting, a proxy card and our annual report for the fiscal year ended December 31, 2019. +Due to the public health impact of the COVID -19 outbreak, we are planning for the possibility that the Annual Meeting may be held at a different location or held solely by means of remote communication. If we take this step, we will announce the decision to do so in advance, including by providing written notice to registered stockholders in advance of the Annual Meeting. We will also provide details in this case on how to participate in a press release issued by the Company and available in the “Investors – News/Events” section of our website at www.gulfportenergy.com . +We look forward to greeting those of you who will be able to attend the Annual Meeting. Regardless of whether you plan to join us at the Annual Meeting, it is important that your voice be heard. Accordingly, we request that you vote in advance of the Annual Meeting by signing, dating and returning the enclosed proxy card in the postage -paid envelope provided or by telephone or Internet by following the instructions on the enclosed proxy card. +Thank you for your continued support and interest in Gulfport. +Sincerely, +David M. Wood +David L. Houston +Alvin Bledsoe +Chief Executive Officer and President +Outgoing Chairman of the Board +Incoming Chairman of the Board +NOTICE OF +2020 +ANNUAL +STOCKHOLDERS +MEETING +AND +PROXY STATEMENT +July 16 , 2020 +10:30 a.m. Central Time +3001 Quail Springs Parkway +Oklahoma City, Oklahoma 73134 +3001 Quail Springs Parkway +Oklahoma City, Oklahoma 73134 +June 12 , 2020 +Notice is hereby given that the 2020 Annual Meeting of Stockholders (including any adjournments or postponements thereof, the “Annual Meeting”) of Gulfport Energy Corporation, a Delaware corporation (“Gulfport” or the “Company”) will be held on July 16, 2020 at 10:30 a.m. Central Time at the location listed in the table below and to vote on the proposals listed in the same table. +It is important that your voice be heard, and your shares be represented at the Annual Meeting whether or not you are able to attend in person. We urge you to vote TODAY by completing, signing and dating the enclosed proxy card and promptly mailing it in the enclosed, postage pre -paid envelope provided or following the instructions on the enclosed proxy card to vote by the Internet or telephone. If your bank, broker or other nominee is the holder of record of your shares (i.e., your shares are held in “street name”), you will receive voting instructions from such holder of record. You must follow those instructions in order for your shares to be voted. Please refer to the section entitled “About the Annual Meeting” on page 72 of the attached proxy statement and the instructions on the enclosed proxy card for more information. +The accompanying proxy statement provides detailed information about the matters to be considered at the Annual Meeting. +THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING “FOR” THE ELECTION OF THE BOARD’S NOMINEES UNDER PROPOSAL 1 AND “FOR” EACH OF PROPOSALS 2, 3 AND 4. +In addition to the formal items of business to be brought before the Annual Meeting, there will be a report on our operations and a question and answer period. +If you have any questions or require any assistance with voting your shares, please contact our proxy solicitor: +Morrow Sodali LLC +470 West Avenue +Stamford, CT 06902 +Stockholders may call toll -free : (800) 662 -5200 +Banks and Brokers may call collect: (203) 658 -9400 +Email: GPOR@investor.morrowsodali.com +GULFPORT ENERGY CORPORATION +3001 Quail Springs Parkway +Oklahoma City, Oklahoma 73134 +NOTICE OF 2020 ANNUAL MEETING OF STOCKHOLDERS +Date and Time +July 16, 2020 at 10:30 a.m. Central Time +Place +3001 Quail Springs Parkway, Oklahoma City, Oklahoma 73134 +Due to the public health impact of the COVID -19 outbreak, Gulfport is planning for the possibility that the Annual Meeting may be held at a different location or held solely by means of remote communication. If we take this step, we will announce the decision to do so in advance, including by providing written notice to registered stockholders in advance of the Annual Meeting. We will also provide details in this case on how to participate in a press release issued by the Company and available in the “Investors – News / Events” section of our website at www.gulfportenergy.com . +All persons attending the Annual Meeting will be required to present a current form of government -issued picture identification. If you are a holder of record and attend the Annual Meeting, you may vote by ballot in person even if you have previously voted on a proxy card. If you hold your shares in “street name” and wish to attend the Annual Meeting and vote in person, you must provide a “legal proxy” from your bank, broker or other nominee and proof of ownership on the record date (such as a recent brokerage statement) or the voting instruction form mailed to you by your bank, broker or other nominee. +Proposals +1. To elect eight directors to serve until the Company’s 2021 Annual Meeting of Stockholders or until their respective successors have been duly elected and qualified (the Election of Directors Proposal or Proposal 1 ); +2. To approve, on an advisory, non -binding basis, on the compensation paid to the Company’s named executive officers (the Say on Pay Proposal or Proposal 2 ); +3. To ratify the appointment of Grant Thornton LLP as the Company’s independent auditors for the fiscal year ending December 31, 2020 (the Auditors Ratification Proposal or Proposal 3 ) and +4. To approve, on an advisory, non -binding basis, the continuation of the Company’s Tax Benefits Preservation Plan dated April 30, 2020 (the Tax Benefits Preservation Plan Proposal or Proposal 4 ). +We will also transact any other business as may properly come before the Annual Meeting. +Record Date +June 16, 2020 at the close of business +PROXY VOTING +Stockholders of the Company as of the record date are entitled to vote by proxy in the following ways: +By calling the telephone number on your proxy card or voting instruction form +Online by visiting the website provided on your proxy card or voting instruction form +By returning by mail a properly +completed, signed and dated +proxy card or voting instruction form +IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JULY 16 , 2020: This proxy statement and the Company’s 2019 Annual Report to Stockholders are available free of charge on the Company’s website at www.gulfportenergy.com/proxy . +By order of the Board of Directors, +Patrick K. Craine +General Counsel and Corporate Secretary +This notice and proxy statement are first being mailed to stockholders on June 12 , 2020. +TABLE OF CONTENTS +GULFPORT ENERGY CORPORATION +3001 Quail Springs Parkway +Oklahoma City, Oklahoma 73134 +_____________________ +PROXY STATEMENT +_____________________ +Proxy Statement Summary +1 +Board Summary +4 +Corporate Responsibility and Sustainability Highlights +6 +Proposal 1 — Election of Directors and Director Biographies +10 +Corporate Governance Matters and Communications with the Board +22 +Nominating Process for Directors, Director Qualifications and Review of Director Nominees +25 +Director Leadership Structure +27 +Board of Directors’ Role in Risk Oversight +28 +Executive Officers +29 +Compensation Discussion and Analysis +30 +Executive Summary +32 +Compensation Tables +48 +Benefit Plans +53 +401(k) Plan +53 +2019 Amended and Restated Stock Incentive Plan +53 +2014 Executive Annual Incentive Compensation Plan +53 +Equity Compensation Plan Information +55 +Termination, Resignation or Change of Control +57 +CEO Pay Ratio Disclosure +59 +Beneficial Ownership +61 +Holdings of Directors, Director Nominees and Officers +61 +Holdings of Major Stockholders +62 +Certain Relationships and Review and Approval of Related Party Transactions +64 +Proposal 2 — Proposal to Approve, on an Advisory, Non-Binding Basis, the Compensation Paid to the Company’s Named Executive Officers +65 +Proposal 3 — Proposal to Ratify the Appointment of Our Independent Auditors +66 +Audit Committee Report +67 +Proposal 4 — Proposal to Approve, on an Advisory, Non-Binding Basis, the Continuation of the Tax Benefits Preservation Plan +68 +About the Annual Meeting +72 +Availability of Form 10-K and Annual Report to Stockholders +78 +Householding +79 +Other Matters +80 +Additional Information Regarding this Proxy Solicitation and Director Nominees +81 +Forward-looking Statements +82 +Submission of Future Stockholder Proposals +83 +Annex A — Tax Benefits Preservation Plan +A-i +2020 PROXY STATEMENT i +PROXY STATEMENT SUMMARY +The summary below highlights information contained elsewhere in this proxy statement. It does not contain all of the information that you should consider in connection with the matters before the 2020 Annual Meeting of Stockholders (including any postponements or adjournments, the “Annual Meeting”). Please read the entire proxy statement carefully before voting your shares. +ANNUAL MEETING INFORMATIO N +This proxy statement is being furnished to you in connection with the solicitation of proxies by the Board of Directors (the “Board” or the “Board of Directors”) of Gulfport Energy Corporation, a Delaware corporation (“Gulfport,” the “Company,” “we,” “our” or “us”) for use at the Annual Meeting. The notice and proxy statement are first being made available to stockholders on June 12, 2020. +Date: +July 16, 2020 +Location: +3001 Quail Springs Pkwy, Oklahoma City, Oklahoma 73134 +Time: +10:30 a.m. Central Time +Record Date: +June 16, 2020 +Voting: +Stockholders at the close of business on the record date will be entitled to vote at the Annual Meeting. On June 11, 2020, 159,994,101 shares of the Company’s common stock were outstanding and we do not expect that figure will change materially as of the record date. Stockholders are entitled to one vote for each share of common stock held. For more information on voting and attending the Annual Meeting, please see “About the Annual Meeting” on page 72 of this proxy statement. +YOUR VOTE IS VERY IMPORTANT. Whether or not you plan to attend the Annual Meeting, we hope you will vote as soon as possible so that your shares are represented. We urge you to vote TODAY by completing, signing and dating the enclosed proxy card and promptly mailing it in the enclosed, postage pre -paid envelope provided or following the instructions on the enclosed proxy card to vote by the Internet or telephone. Returning your proxy card will not prevent you from voting in person, but rather, will ensure that your vote is counted if you are unable to attend. +PROPOSALS REQUIRING YOUR VOTE. Our Board of Directors is soliciting your vote on the following matters: +Proposal +Board +Recommendation +Vote Required for +Approval +Broker +Discretionary +Voting +Effect of +Abstentions +and Broker +Non-votes +Page Reference +(for more detail) +1: Election of Directors Proposal +FOR each Board nominee +Majority of +votes cast +Not permitted +No effect +10 +2: Say on Pay Proposal +FOR +Majority of +votes cast +Not permitted +No effect +65 +3: Auditors Ratification Proposal +FOR +Majority of +votes cast +Permitted +No effect +66 +4: Tax Benefits Preservation Plan Proposal +FOR +Majority of +votes cast +Not permitted +No effect +68 +2020 PROXY STATEMENT 1 +P ROXY STATEMENT SUMMARY +About Gulfport +Gulfport Energy Corporation operates in two of the premier gas -weighted plays in the United States – the Utica Shale play of Eastern Ohio and the South Central Oklahoma Oil Province (SCOOP) play in Oklahoma. Our corporate strategy is focused on the economic development of our asset base in an effort to generate sustainable free cash flow. Our substantial inventory of hydrocarbon resources, including unproved acreage positions in each of our key basins, provides a strong foundation to create future value. Concentrated blocks of unproved acreage provide us the opportunity to apply best -in-class techniques including optimum well spacing, leading completion practices and lateral length optimization to maximize overall capital efficiency. We have improved our capital and operating efficiency metrics over the last several years and today have a low -cost structure in both our Utica and SCOOP operating areas. We believe our low -cost structure provides a significant competitive advantage in the current commodity price environment, and it is our strategy to continue to seek capital and operating efficiencies to grow this advantage. +We continue focusing on reducing our leverage profile, increasing cash flow from operations, improving margins through financial discipline and operating efficiencies while at the same time maintaining strong health, safety and environmental performance. To accomplish these goals, we allocate capital to projects offering the highest rate of return, deploy leading drilling and completion techniques and technologies, and explore merger, acquisition and divestiture opportunities that strengthen our cost structure, deepen our inventory and improve our asset portfolio. +We believe that our dedication to financial discipline, the flexibility and efficiency of our capital program and our continued focus on safety and environmental stewardship provides opportunities for sustainable value creation. +Core Assets +Employees +2019 Production +2019 Production Mix +Utica Shale and SCOOP +298 people +as of Dec. 31, 2019 +1,375 MMcfe +per day +91% natural gas and 9% liquids +Director Highlights +Board Composition +Key Competencies +Independent Oversight +✓ Oil & Gas Industry Knowledge +✓ Significant Operating Experience +✓ Accounting & Financial Expertise +✓ Executive Leadership Experience +✓ Public Company Board and Corporate Governance Experience +✓ All directors are independent other than the CEO, including an independent Chairman +✓ Recently adopted Board Diversity Policy and Corporate Governance Guidelines to enhance our director recruitment and corporate governance practices +✓ Over 40% of our independent director nominees are female, including the Chair of our Sustainability Committee +✓ Tenure of i ndependent directors seeking re -election – average 2.2 years +✓ 5+ years: 1 +✓ 3 – 5 years: 1 +✓ < 3 years: 3 +2 2020 PROXY STATEMENT +P ROXY STATEMENT SUMMARY +Board Refreshment +The Board continuously evaluates its needs in light of our long -term strategy and Board refreshment remains ongoing. +2020 PROXY STATEMENT 3 +Board Summar y +The following table provides summary information about each director nominee who is standing for election at the Annual Meeting. For more information about the background and qualifications of each nominee, please see “Election of Directors and Director Biographies” on page 10 of this proxy statement. We ask you to vote “ FOR ” each of our director nominees. +Nominee Skills +Director’s Key Work Experience +Other Current US Public Company Directorships +Dir. Since +Age +Ind. +Core Industry Experience (1) +Financial / Audit & Risks (2) +Senior +Executive (3) +Environmental / Social (4) +Technical / Engineering (5) +Health & Safety (6) +M&A / Capital Markets (7) +David M. Wood +CEO and President of the Company since Dec. 2018 +2018 +63 +▪ +▪ +▪ +▪ +▪ +▪ +▪ +NEW +Alvin Bledsoe +Various senior roles at PwC, including global leader for PwC’s Energy, Mining and Utilities Industries Assurance and Business Advisory Services Group +Crestwood Equity Partners LP +(NYSE: CEQP) +SunCoke Energy, Inc. +(NYSE: SXC) +2020 +72 +✓ +▪ +▪ +▪ +▪ +Deborah G. Adams +SVP of Health and Safety, Project and Procurement with Phillips 66 from May 2014 until her retirement in Oct. 2016 +Austin Industries Inc. +Enlink Midstream +(NYSE: ENLC) +MRC Global Inc. +(NYSE:MRC) +2018 +59 +✓ +▪ +▪ +▪ +▪ +NEW +Samantha Holroyd +Consultant and former Managing Director at Lantana Energy Advisors and TPG Sixth Street Partners +2020 +51 +✓ +▪ +▪ +▪ +▪ +NEW +Valerie Jochen +Currently Professor in Practice of Reservoir Engineering at Texas A&M University; various senior roles at Schlumberger (NYSE: SLB) before her retirement in 2017, most recently, as a SLB Fellow and Technical Dir. of Unconventional Resources +2020 +63 +✓ +▪ +▪ +▪ +▪ +▪ +C. Doug Johnson +Various senior roles at Phillips 66 and its predecessors from 1981 until 2014, most recently, as VP, Controller and principal accounting officer of Phillips 66 +Altus Midstream Company +(NASDAQ: ALTM) +2015 +60 +✓ +▪ +▪ +▪ +▪ +Ben T. Morris +Various senior roles at SMHG subsidiary, Sanders Morris Harris, Inc. since 2012 +2014 +74 +✓ +▪ +▪ +▪ +▪ +NEW +John W. Somerhalder II +Interim President and Chief Executive Officer of CenterPoint Energy +CenterPoint Energy +(NYSE: CNP) +Enable Midstream +Partners, LP +(NYSE: ENBL) +2020 +64 +✓ +▪ +▪ +▪ +▪ +▪ +▪ +▪ +(1) Relevant experience in the industry; degree in the area +4 2020 PROXY STATEMENT +BOARD SUMMARY +(2) CPA, CA, CFA, former CFO role (financial expert); current or former partner of an audit firm, current or former finance industry; degree in the area +(3) Current or former executive of public company or large private multinational company +(4) Former or current executive role with direct control and responsibility for or direct accountability for environmental and sustainability in the same industry; proven knowledge of global environmental management; degree in the area +(5) Knowledge and understanding of upstream development and production; degree in the area +(6) Former or current executive role with direct control and responsibility for health, safety and environment; former or current role with direct accountability for health, safety and environment in the same industry; former or current executive role in HR; current member of health, safety and environment committee of a large cap company +(7) Current or former role in investment banking, funds management, proven experience in M&A; proven experience with capital raises; current or former advisory role +2020 PROXY STATEMENT 5 +Corporate Responsibility and +Sustainability Highlight s +Gulfport is proud to play its part in the responsible and efficient development of domestic natural gas which is critical to our country’s economic success as it provides the primary fuel for efficient power generation in the United States. We are aware of the positive influence and potential impact we may have on the communities where we operate and live. Gulfport prioritizes safety, environmental protection, operational excellence and giving back to the communities in which we operate. +We have identified several key areas where our business could have an impact on the communities where we operate, including: greenhouse gas emissions, waste and spills, water usage, health, safety and environmental (HSE) protection, employee training and education, and community involvement. We recently renamed and refocused our Operating Excellence and Corporate Responsibility Committee as our Sustainability Committee, which oversees environmental, social, sustainability and governance (ESG) matters. Continuously improving our HSE performance remains a top priority in 2020. Our HSE performance also directly impacts the compensation of all our employees as it is one of the performance goals included in our cash incentive compensation plan. We believe having measurable HSE metrics as part of our incentive compensation program leads to improved accountability and reinforces our cultural focus on operating safely and protecting employees, the environment and the communities in which we operate. +Environmental Stewardship. Gulfport strives to minimize the environmental impact of our operations by consistently focusing on finding ways to reduce our environmental footprint. Gulfport minimizes our environmental impact by, among other things: +• Selecting and designing our well sites to minimize impacts to sensitive habitats and surrounding areas; +• Reducing water disposal volumes and freshwater consumption through water re -use or water sharing agreements with other operators where possible; +• Investing in and implementing technology to reduce emissions, waste and our physical footprint on our drilling locations; +• Testing spill prevention and response programs to confirm equipment is maintained and operating practices are continually improved to prevent spills and minimize the impact of our operations to the soil, air and water; and +• Employing air quality programs, monitoring and operating practices to ensure that we comply with or exceed applicable regulations. +We are a member of The Environmental Partnership which is committed to continuous improvements in environmental performance, including the reduction of methane and volatile organic compound emissions. Limiting greenhouse gas emissions, waste water and oil spills are included as part of our 2019 and 2020 incentive compensation programs to ensure we hold ourselves accountable for being good environmental stewards. +In 2019, Gulfport issued a corporate environmental policy that supports our commitment to operational excellence and our compliance obligations. The policy fosters environmental awareness and guides employee behavior consistent with Gulfport’s expectations. All Gulfport employees are expected to act and make decisions within the guidelines of the policy to ensure our business complies with all local, state and federal environmental laws and regulations applicable to our operations. Each employee and contractor is expected to protect the environment, minimize and manage waste responsibly, reduce and eliminate emissions and limit spills and discharges. +Safety. Safety is the primary priority for all Gulfport employees and contractors supporting our activities. Gulfport provides comprehensive safety training to all employees and is fully committed to a safe working environment. We utilize and apply performance metrics to drive and improve a leading position in safe operations. Gulfport has designed and instituted emergency response and business continuity plans to address incidents involving operational disruptions, pandemics and natural disasters. These measures include prompt notification procedures enabling Gulfport personnel to quickly evaluate and mitigate risks. Limiting safety incidents is included as part of our 2019 and 2020 incentive compensation programs to ensure we train and hold our employees accountable for operating safely. +In 2019, Gulfport established the Work Safe Programs which focuses on a combination of twelve rules derived from Company policies (critical tasks) and cultural conditions that have been linked to serious safety incidents in our industry. Critical Task Rules are those requiring specific operating procedures to mitigate hazardous work site conditions to complete work safely. Cultural Condition Rules are defined as work site conditions or human behaviors that have been linked to the root cause of most incidents. +6 2020 PROXY STATEMENT +Corporate Responsibility and Sustainability Highlights +Employees and contractors are expected to live by, apply and follow the requirements that coincide with the twelve rules. Our goal is to not only improve our safety performance but to proactively prevent incidents before they happen. +Stop Work is one of the Work Safe Program’s critical tasks. Our Chief Executive Officer, David Wood, and Chief Operating Officer, Donnie Moore, signed and communicated a Stop Work Authority and Obligation letter to the Company’s employees and our contractors. This letter outlines Gulfport’s commitment to health, safety and the environment and provides the expectation and support to all Gulfport employees and contract partners to stop work when conditions warrant. Every person on a Gulfport work site has, not only the authority, but also the obligation to stop any work that is believed to cause an unsafe condition, or places personnel or the environment at risk. +Health, Safety & Environment Highlights for 2019 +• Reduced reportable spills by 38% year -over-year +• Reduced Total Recordable Incident Rate (combined employee and contractor) by 36% year -over-year +• Reduced Lost Time Incident Rate (combined employee and contractor) by 82% year -over-year +• Reduced our Preventable Motor Vehicle Accident rate by 85% year -over-year by implementing numerous initiatives, including a safe driver training and recognition program +Community Engagement. Gulfport consistently strives to positively impact and improve the communities where we live and operate. We form partnerships focused on education and work with local authorities to ensure the safety and well -being of the populations where we operate. Gulfport has also formed a strong partnership with the Foundation for Appalachian Ohio and the Communities Foundation of Oklahoma and created the Gulfport Energy Fund in both Ohio and Oklahoma. Through these funds, Gulfport makes direct monetary contributions to local organizations to improve education, youth development, health, human services and environmental stewardship. +2020 PROXY STATEMENT 7 +Corporate Responsibility and Sustainability Highlights +2019 Business Highlights +2019 demonstrated Gulfport’s unwavering commitment to capital discipline. Our ability to generate free cash flow, despite an extremely challenging price environment, was accomplished through the dedication of our team who worked to increase operational efficiencies, improve our cost structure and implement a strong hedging program. The table below highlights our 2019 strategic, operational and financial achievements. +Strategic Achievements +Operational Achievements +Financial Achievements +Enhanced senior management team with hiring of highly qualified CFO and General Counsel and Corporate Secretary +Increased production 1% year -over-year while reducing capital expenditures by 26% +Generated free cash flow in a challenging price environment +Refreshed key accounting, control and finance functions through several key management hires +Reduced our unit lease operating expense by 10% year -over-year +Repurchased $190 million of bonds in the open market capturing $50 million discount +Continued to refresh Board with four new highly qualified additions +Reduced average SCOOP drilling days by 36% and Utica by 12% from 2018 levels +Repurchased 3.8 million shares for $30 million under board approved repurchase program +Completed non -core asset divestitures that generated $49 million in proceeds; closed additional non -core divestiture in January 2020 for $50 million +Reduced Total Recordable Incident Rate 36% year -over-year +Reduced general and administrative expense by 4% year -over-year +Reduced Company headcount by 13%, the majority of which was achieved through a voluntary program +Reduced reportable spills 38% year -over-year +Ended 2019 with available borrowing capacity of $636 million under our credit facility; further enhanced in January 2020 with $50 million divestiture of non -core assets +Compensation Highlights +Continue to Strengthen Compensation Governance Practices +Added Relative Total Stockholder Return (RTSR) performance -based LTI awards in 2019 for the first time . After taking into consideration the input received from our stockholders and the recommendation of Pearl Meyer & Partners, LLC, the Compensation Committee’s independent compensation consultant (“Pearl Meyer”), the Compensation Committee determined that for 2019: (i) 50% of the equity awards granted to our named executive officers (NEOs) would consist of performance -based restricted stock units, vesting after a three -year performance period, based on the Company’s achievement of weighted average RTSR, with target performance set at the 55th percentile of the peer group, and a payout cap of 100% if the Company’s absolute Total Stockholder Return (TSR) is negative during the performance period in addition to a service condition requiring the executive’s continuous service through the last day of the performance period; and (ii) 50% of the equity awards granted to our NEOs will consist of time vesting restricted stock units, vesting over a three -year period. +Stockholder Engagement and Annual Say-On-Pay Advisory Vote +At the Annual Meeting, our stockholders will again have an opportunity to cast an advisory say -on-pay vote on the compensation paid to our named executive officers. The details of the executive compensation program and its pay for performance alignment are discussed in the “Compensation Discussion and Analysis” (CD&A) on page 30 of this proxy statement. This alignment is evident in the substantially lower realized pay received by our CEO relative to target levels as we did not achieve all of our target goals, as discussed in the CD&A. +Since the 2019 Annual Meeting of Stockholders (the “2019 Annual Meeting”), Gulfport has engaged in discussions with our stockholders at investor conferences and through direct calls and meetings with the Company’s management team that represented approximately 67% of the shares outstanding. Through these conversations our stockholders emphasized their expectation that our compensation programs should be designed to focus our executive team on driving results that ensure the financial health of the organization while also driving long -term stockholder value. +8 2020 PROXY STATEMENT +Corporate Responsibility and Sustainability Highlights +Specifically, after carefully considering input from stockholders, the Company took the following actions in 2019: +• Introduced performance -based equity awards in the form of performance -based restricted stock units tied to RTSR, vesting over a three -year performance period, comprising 50% of all equity awards granted to NEOs in August 2019; +• Adjusted annual performance bonus opportunities and long -term equity award targets to more closely align our executives’ financial interests with those of our stockholders and to continue to link a larger portion of executives’ compensation to the performance of our stock and our operational performance; +• Provided more robust disclosure of our performance metrics and targets for both performance -based cash and equity awards; +• Modified metrics in the annual incentive plan to include financial metrics directly tied to the financial health of the Company and including specific and quantifiable health, safety, and environmental metrics; and +• Adopted formal stock ownership guidelines to ensure our Board of Directors and executive officers own a stake in the Company that aligns their interests with their fellow stockholders. +2020 PROXY STATEMENT 9 +ELECTION OF DIRECTORS AND DIRECTOR BIOGRAPHIES +(Proposal 1 ) +The Company is asking its stockholders to vote to elect eight directors to serve on the Board of Directors until the 2021 Annual Meeting of Stockholders (the “2021 Annual Meeting”) or until their respective successors have been duly elected and qualified. +Our Board of Directors currently consists of eight members who are elected annually. Seven of these eight directors are independent under the Nasdaq Stock Market (the “Nasdaq”) listing standards. Messrs. Houston and Westerman are not standing for re -election at the Annual Meeting. +The directors standing for election this year are listed below. All nominees named below have consented to being named in this proxy statement and to serve as directors of the Company if elected. It is expected that all nominees proposed by the Board will be able to serve on the Board if elected. If any nominee, however, should decline election or should become unable to serve as a director of our Company for any reason before election at the Annual Meeting, votes will be cast by the persons appointed as proxies for a substitute nominee, if any, designated by the Board of Directors. +There are no family relationships among any of the director nominees, directors or executive officers. +Vote Required and Board Voting Recommendation +Directors will be elected at the Annual Meeting by a majority of the votes cast. Abstentions and broker non -votes will have no effect on the voting results for Proposal 1. +THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE ELECTION OF EACH OF THE FOLLOWING +NOMINEES FOR DIRECTOR. +10 2020 PROXY STATEMENT +E LECTION OF DIRECTORS AND DIRECTOR BIOGRAPHIES +David M. Wood +Age: 63 +Director since: December 2018 +Business Experience: +Mr. Wood has served as the Chief Executive Officer and President of the Company since December 2018. From 2016 to December 2018, Mr. Wood served as the Chief Executive Officer and Chairman of the Board of Directors of Arsenal Resources LLC (“Arsenal”), a West Virginia -focused natural gas producer and portfolio company of First Reserve Corporation (“First Reserve”), an energy -focused private equity firm, where he most recently served as Chairman of its Board of Directors and previously held the role of Chief Executive Officer. Prior to his tenure at Arsenal, Mr. Wood served as a Senior Advisor to First Reserve from 2013 to 2016, serving on several of its portfolio company boards. Prior to his position at First Reserve, Mr. Wood spent more than 17 years at Murphy Oil Corporation (NYSE: MUR), a global oil and natural gas exploration and production company, which we refer to as Murphy Oil, including as its Chief Executive Officer, President and a member of the Board of Directors from 2009 to 2012. From 1980 to 1994, Mr. Wood held various senior positions with Ashland Exploration and Production, an oil and natural gas exploration and production company. Mr. Wood began his career as a well -site geologist in Saudi Arabia. Mr. Wood also served on the Board of Directors of the general partner of Crestwood Equity Partners LP (NYSE: CEQP) and its wholly owned subsidiary, Crestwood Midstream Partners LP, an owner and operator of crude oil and natural gas midstream assets. In addition, Mr. Wood served as the Chairman of the Board of Directors for Lilis Energy, Inc. (NYSE: LLEX), an exploration and development company operating in the Delaware Basin. Mr. Wood also served on the Board of Directors of several private oil and natural gas companies, including Deep Gulf Energy LP (prior to its acquisition by Kosmos Energy Ltd.) and Berkana Energy Corp. (when it was majority owned by Murphy Oil). +Other Memberships and Positions: +Mr. Wood previously served on the Board of Directors and as an executive committee member of the American Petroleum Institute. He was also a member of the National Petroleum Council and is a member of the Society of Exploration Geophysicists. +Educational Background: +Mr. Wood holds a B.S. in Geology from the University of Nottingham in England and completed Harvard University’s Advanced Management Program. +Board Membership Qualifications: +Mr. Woods’ extensive experience as a Chief Executive Officer and director of public exploration and production companies and energy -focused private equity firms, executive management skills and extensive knowledge of the oil and natural gas sector and corporate governance led the Nominating and Corporate Governance Committee to conclude that he should serve as one of our directors. +Alvin Bledsoe +Age: 72 +Director since: January 2020 +Current Public Company +Directorships: +Crestwood Equity Partners LP. (NYSE: CEQP) +(since July 2007) +SunCoke Energy, Inc. (NYSE: SXC) +(since June 2011) +Business Experience: +Mr. Bledsoe is an experienced finance and public accounting executive with governance, strategic planning, managerial and leadership expertise, having led the development and execution of market and sector strategies for clients in the energy, mining and utilities industries for PricewaterhouseCoopers LLP, a multinational professional services firm (“PwC”). From 1972 to 2005, Mr. Bledsoe served in various senior roles, including as global leader for PwC’s Energy, Mining and Utilities Industries Assurance and Business Advisory Services Group, a member of the firm’s senior leadership team, Regional and Office Managing Partner and as audit and senior relationship partner on some of the firm’s largest energy industry clients. Mr. Bledsoe currently serves as Director, Audit Committee chair and Compensation Committee member of Crestwood Equity GP LLC (general partner of Crestwood Equity Partners LP, a natural gas and crude oil logistics master limited partnership holding company). In addition, he serves as Director and Audit Committee chair of SunCoke Energy, Inc. (NYSE: SXC). +Educational Background: +Mr. Bledsoe received his Bachelor of Science Degree in Accounting from Auburn University and holds a Certified Public Accountant license from the State of Texas. +Board Membership Qualifications: +The Nominating and Corporate Governance Committee nominated Mr. Bledsoe due to his background and experience as finance and public accounting executive with governance, strategic planning, managerial and leadership expertise, having led the development and execution of market and sector strategies for clients in the energy, mining and utilities industries for PwC. +2020 PROXY STATEMENT 11 +E LECTION OF DIRECTORS AND DIRECTOR BIOGRAPHIES +Deborah G. Adams +Age: 59 +Director since: March 2018 +Current Public Company +Directorships: +Austin Industries Inc. +(since May 2018) +Enlink Midstream (NYSE: ENLC) +(since March 2020) +MRC Global Inc. (NYSE: MRC) +(since October 2017) +Business Experience: +Ms. Adams served as Senior Vice President of Health and Safety, Project and Procurement with Phillips 66, a diversified manufacturing and logistics company, from May 2014 until her retirement in October 2016. From 2008 to May 2014, Ms . Adams served as President of Transportation for Phillips 66 and ConocoPhillips. Prior to this position, Ms. Adams worked as general manager and Chief Procurement Officer for ConocoPhillips beginning in 2005. From 2003 to 2005, Ms. Adams served as general manager, International Refining, for ConocoPhillips. Before this role, Ms. Adams served as general manager, Global Downstream Information Systems following the ConocoPhillips merger in 2002. Ms. Adams began her career in 1983 as a process engineer in the refining division of the Conoco Global Engineering Department before moving through a variety of business development, planning, supply and trading and operations positions. Ms. Adams has served on the Board of Directors of MRC Global Inc. and as a member of its Audit and Compensation Committees since October 2017, and has served on the Board of Directors of Enlink Midstream and as a member of its Audit Committee since March 2020. Ms. Adams has served on the Board of Directors of Austin Industries, Inc., an employee -owned construction company, since May 2018, and serves as a member of its Audit, Human Resources and N omination and Governance Committees. +Other Memberships and Positions: +Ms. Adams served two full terms on the Board of BakerRipley from February 2012 to February 2018 and currently serves as a member of the Foundation Board of Trustees and the Board of Governors for the Oklahoma State University. Ms. Adams is also a governance fellow of the National Association of Corporate Directors. +Recognition and Honors: +In 2014, Ms. Adams was inducted into the Oklahoma State University College of Engineering, Architecture and Technology Hall of Fame and in 2015, the Oil and Gas Diversity Council named Ms. Adams to the list of the Top 50 Most Powerful Women in Oil and Gas. +Educational Background: +Ms. Adams received a Bachelor of Science degree in chemical engineering from Oklahoma State University in 1983. +Board Qualifications: +The Nominating and Corporate Governance Committee nominated Ms. Adams due to her diverse experience in various segments of the oil and gas industry, her high -level management positions at a public oil and gas company and recognition as one of the top 50 women in the oil and gas industry. +12 2020 PROXY STATEMENT +E LECTION OF DIRECTORS AND DIRECTOR BIOGRAPHIES +Samantha Holroyd +Age: 51 +Director Nominee +BUSINESS EXPERIENCE: +Ms. Holroyd has served as an independent consultant to the oil and gas industry since February 2020 through Golden Advisory Services, LLC, a consulting firm. Previously, Ms. Holroyd served as a Managing Director at Lantana Energy Advisors, an energy divestiture and advisory firm, which is a division of SunTrust Robinson Humphrey, Inc., the corporate and investment banking arm of Truist Financial Corporation (NYSE: TFC), a bank holding company, from February 2018 to February 2020. Prior to that, she served as a Managing Director at TPG Sixth Street Partners, a global finance and investment firm, from September 2016 to January 2018, and as Technical Director at Denham Capital Management LP, an energy and resources -focused global private equity firm, from October 2011 to September 2016. Additionally, Ms. Holroy d previously served as Global Reserves Audit Manager and Business Opportunity Manager at Royal Dutch Shell PLC (NYSE: RDS.A; OTCMKTS: RYDAF), an oil and gas company, Vice President of EIG Global Energy Partners, a provider of institutional capital to the global energy industry, and Vice President of Ryder Scott Company, a petroleum consulting firm. Earlier in her career, she served as a Senior Reservoir Engineer with Tenneco Ventures Corporation, which was an oil and gas exploration, production and financing company, and as a Reservoir Engineer with Atlantic Richfield Company (formerly NYSE: ARC), an oil and gas company. +OTHER MEMBERSHIPS AND POSITIONS: +Ms. Holroyd was honored as one of the 25 Influential Women in Energy for 2020 by Oil and Gas Investor and Hart Energy. She previously served on the Executive Committee of the Society of Petroleum Evaluation Engineers. +EDUCATIONAL BACKGROUND: +Ms. Holroyd received her Bachelor of Science degree in Petroleum Engineering from the Colorado School of Mines and is a Registered Professional Engineer in the State of Texas. +BOARD QUALIFICATIONS: +The Nominating and Corporate Governance Committee nominated Ms. Holroyd due to her various domestic and international oil and gas experience, reservoir engineering expertise, financial expertise and recognition as one of the top 25 Influential Women in Energy. +Valerie Jochen +Age: 63 +Director since: February 2020 +Business Experience: +Ms. Jochen has more than 35 years of technical industry experience and brings significant expertise in petroleum engineering and analysis of unconventional reservoirs to Gulfport. Ms. Jochen currently serves as a Professor of Practice in Reservoir Engineering at Texas A&M University, where she began in January 2018 following a nearly 20 -year career at Schlumberger Limited (NYSE: SLB), an international oilfield services company. From July 2010 to May 2016, Ms. Jochen served as a Schlumberger Fellow and Technical Director of Unconventional Resources, focused on the technology and resources needed to optimize the development of unconventional reservoirs. From November 1997 to July 2010, Ms. Jochen held various other senior level positions with Schlumberger, including Technology Director of Reservoir Stimulation, Technical Director of Unconventional Gas and Domain Career Leader for Reservoir Engineering. From May 1991 to November 1997, Ms. Jochen served as a Reservoir Engineer and Division Vice President for S.A. Holditch and Associates, and from December 1984 to December 1989, she worked as a Reservoir Engineering and Planning Supervisor for Mobil Exploration & Production. Ms. Jochen began her career in 1979 with Superior Oil Company and served in a variety of production and reservoir engineering positions. +Educational Background: +Ms. Jochen holds a Bachelor of Science degree, a Master of Science degree and a Doctor of Philosophy in petroleum engineering from Texas A&M University. In addition, Ms. Jochen is a registered Professional Engineer in the State of Texas. +Board Qualifications: +The Nominating and Corporate Governance Committee nominated Ms. Adams due to her more than 35 years of technical industry experience and significant expertise in petroleum engineering and analysis of unconventional reservoirs. +2020 PROXY STATEMENT 13 +E LECTION OF DIRECTORS AND DIRECTOR BIOGRAPHIES +C. Doug Johnson +Age: 60 +Director since: September 2015 +Current Public Company +Directorships: +Altus Midstream Company +(Nasdaq: ALTM) +(since November 2018) +Business Experience: +Mr. Johnson has an extensive financial and accounting background, with over 33 years of service in the oil and natural gas industry. Since 1981, Mr. Johnson served in various roles at Phillips 66 and its predecessors Phillips Petroleum Co. and ConocoPhillips. Mr. Johnson most recently served as Vice President, Controller and principal accounting officer of Phillips 66, a publicly traded company engaged in midstream, chemicals, and refining, from April 2012 until his retirement on December 31, 2014. During the same period, he also served as Vice President, Controller and principal accounting officer of Phillips 66 Partners GP LLC, the general partner of Phillips 66 Partners LP, a publicly traded pipeline subsidiary of Phillips 66. From June 2010 until April 2012, Mr. Johnson served as General Manager, Upstream Finance, Strategy and Planning at ConocoPhillips. Prior to that, Mr. Johnson’s tenure at ConocoPhillips included his service as General Manager, Downstream Finance from 2008 to 2010 and General Manager, Upstream Finance from 2005 to 2008. Mr. Johnson has served on the Board of Directors of Altus Midstream Company since November 2018. +Other Memberships and Positions: +Mr. Johnson also served on the board of Chevron Phillips Chemical Company LLC, a joint venture of Phillips 66 Partners LP and Chevron Corp., and its Audit Committee, where he was co -chairman , from April 2012 until December 2014. +Educational Background: +Mr. Johnson received his Bachelor of Science Degree in Accounting from the University of Arkansas and holds a Certified Public Accountant certificate from the State of Oklahoma. +Board Qualifications: +The Nominating and Corporate Governance Committee recommended Mr. Johnson due to his prior public company experience, strong oil and natural gas background and financial expertise. +Ben T. Morris +Age: 74 +Director since: August 2014 +Business Experience: +From 2009 to 2012, Mr. Morris served as the Vice Chairman of the Board of Directors of the Sanders Morris Harris Group, a financial services and wealth management company he co -founded in 1987, or SMHG. Since its founding, Mr. Morris has served in various capacities with SMHG, including Executive Vice President and Director of Investment Banking, President and Chief Executive Officer and a member of the Board of Directors of SMH Capital, a subsidiary of SMHG, and Chief Executive Officer and a member of the Board of Directors of SMHG. Since 2012, Mr. Morris has continued as an employee of Sanders Morris Harris, Inc., a former subsidiary of SMHG. From 1980 to 1986, Mr. Morris served as the Chief Operating Officer of Tatham Corporation, a privately -held company engaged in natural gas transportation and marketing and oil and gas exploration and production. Mr. Morris began his career as an accountant at Price Waterhouse & Co. in 1967, and in 1973 joined Mid American Oil and Gas Inc. as Chief Financial Officer, eventually serving as President of the company until its sale in 1979. +Other Memberships and Positions: +From 2011 to 2016, Mr. Morris served as a member of the Board of Directors and Chairman of the Audit Committee of Yuma Energy, Inc. (OTCMKTS: YUMAQ), a publicly traded exploration and production company. Mr. Morris has also served on the boards of several public companies, including Capital Title Group from 1998 to 2006, American Equity Investment Life Holding Company from 1997 to 2006, Tyler Technologies, Inc. from 2002 until 2005, where he served as Chairman of its Audit Committee, Fresh America Corp. from 1992 until 1996, where he served as a member of the Compensation Committee, and Deeptech International Inc. from 1988 until 1997. Mr. Morris is currently a member of the Board of Directors of Centrax International Corporation, a private holding company with its largest subsidiary in the oil and gas service industry. Mr. Morris has an extensive financial background, with over 25 years of experience in various aspects of the investment banking business. +Educational background: +Mr. Morris received his Bachelor of Business Administration Degree from the University of North Texas and holds a Certified Public Accountant certificate from the State of Texas, along with several securities licenses. +Board Qualifications: +The Nominating and Corporate Governance Committee nominated Mr. Morris due to his prior public company experience, extensive financial background (including over 25 years of experience in various aspects of the investment banking business), and strong oil and natural gas background. +14 2020 PROXY STATEMENT +E LECTION OF DIRECTORS AND DIRECTOR BIOGRAPHIES +John W. Somerhalder II +Age: 64 +Director Nominee +Current Public Company +Directorships: +CenterPoint Energy +(NYSE: CNP) +Enable Midstream Partners, LP +(NYSE: ENBL) +(since February 2020) +Business Experience: +Mr. Somerhalder has served as Interim President and Chief Executive Officer of CenterPoint Energy (NYSE: CNP), an electric and natural gas utility serving markets in several regions of the United States, since February 2020 and has been a member of the CenterPoint Energy Board of Directors since 2016. Mr. Somerhalder also serves as a Director and Chairman of the Board of Enable Midstream Partners, LP (NYSE: ENBL). Mr. Somerhalder served as Interim President and CEO of Colonial Pipeline from February 2017 until October 2017. Colonial Pipeline is the largest refined products pipeline in the US, transporting more than 100 million gallons of fuel daily from Houston, Texas to the New York Harbor. From October 2013 to February 2020, Mr. Somerhalder served as director at Crestwood Equity GP LLC, the general partner of Crestwood Equity Partners LP (NYSE: CEQP), a master limited partnership that is a developer and operator of midstream assets. Mr. Somerhalder was named President and Chief Executive Officer of AGL Resources (NYSE: GAS) in March 2006 and was named Chairman of the company’s Board of Directors in November 2007. He retired from AGL Resources, an Atlanta -based energy services holding company with operations in natural gas distribution, retail operations, wholesale services and midstream operations, on December 31, 2015. Mr. Somerhalder joined AGL Resources from El Paso Corporation, where he spent almost 30 years, rising through the ranks from engineer to president of El Paso Pipeline Group and executive vice president of El Paso Corporation. +Other Memberships and Positions: +Mr. Somerhalder served on the Board of Directors of the American Gas Association, which he chaired in 2011. He also served on the boards of the Georgia Chamber of Commerce and the Metro Atlanta Chamber of Commerce. He has served as past chairman of the Interstate Natural Gas Association of America. Mr. Somerhalder currently serves as a director of CenterPoint Energy, Enable Midstream Partners, Piedmont Healthcare and the Gas Technology Institute. Mr. Somerhalder is chairman of the board of the Atlanta BeltLine, Inc., which is leading the development of the Atlanta BeltLine along 22 miles of historic railroad around the city. A past member of the board of the United Way of Metropolitan Atlanta, he successfully chaired the 2009 United Way Campaign for metro Atlanta during difficult economic times and served a second term as chair of the 2010 campaign. +Educational Background: +Mr. Somerhalder holds a Bachelor of Science degree in chemical engineering from the University of Arizona. +Board Qualifications: +The Nominating and Corporate Governance Committee nominated Mr. Somerhalder due to his service as a public company executive and Director, more than four decades of experience in the energy industry, including state and regulatory experience in multiple jurisdictions, and proven leadership abilities. +2020 PROXY STATEMENT 15 +E LECTION OF DIRECTORS AND DIRECTOR BIOGRAPHIES +Directors Not Standing for Re -election +David L. Houston +Age: 67 +Director since: December 1998 +Business Experience: +Mr. Houston has served as a director of the Company since July 1998 and as Chairman of the Board since July 2013. Since 1991, Mr. Houston has been the principal of Houston Financial, a firm providing wealth management products and services with a focus on the energy sector. Since 2000, Mr. Houston has managed a mineral trust with approximately 9,200 net acres in Oklahoma, Texas, Kansas and New Mexico, which includes responsibility for leasing and production matters. Mr. Houston was recognized as a Top 100 Graduate of the College of Business at Oklahoma State University in the last 100 years and served on the faculty of the Louisiana State University Graduate School of Banking from 1980 to 1981. +Other Memberships and Positions: +Mr. Houston served on the Board of Directors and Executive Committee of Deaconess Hospital, Oklahoma City, Oklahoma, from January 1993 until December 2008. Mr. Houston has served as the lead director on the Board of Directors of Diamondback Energy, Inc. (Nasdaq: FANG) since October 2012, is a member of its Audit and Compensation Committees and is the chair of its Nominating and Corporate Governance Committee. He also served as a director of Bronco Drilling Company from May 2005 until December 2010 and was a member of its Audit Committee. +Educational Background: +Mr. Houston received a Bachelor of Science Degree in business from Oklahoma State University and a graduate degree in banking from Louisiana State University. +Paul D. Westerman +Age: 64 +Director since: October 2017 +Business Experience: +Mr. Westerman has served as a Trustee and Director of the Westerman Family Trusts and Westerman Interest Inc., both of which are private wealth management vehicles, since 1999. From September 2011 to December 2012, Mr. Westerman served as Senior Executive Vice President and Chief Business Development Officer of J -W Energy Company, a diversified energy company engaged in exploration and production, energy services, midstream and manufacturing, among other businesses. Mr. Westerman joined J -W Energy Company in 1984 and, during his time there, he served in several other leadership roles, including as Chief Operating Officer. Prior to joining J -W Energy Company, Mr. Westerman served in various positions at Phillips Petroleum Company, Terra Resources and Kerr -McGee Corporation. +Other Memberships and Positions: +Mr. Westerman has served on the Board of Directors of J -W Energy Company and J -W Power Company since 1996. Mr. Westerman has also served on the Board of Directors of Oakwood Bank since February 2018. Mr. Westerman previously served as a Director of Vintage Bank, Benedictine College, the Dallas Petroleum Club, the Dallas Wildcatters Association and the Dallas Hard Hatters Association. Mr. Westerman is also a member of the National Association of Corporate Directors and the Society of Petroleum Engineers. +Educational Background: +Mr. Westerman earned his bachelor’s degree in petroleum engineering from the University of Oklahoma and is a Registered Professional Engineer in the State of Texas. +16 2020 PROXY STATEMENT +ELECTION OF DIRECTORS AND DIRECTOR BIOGRAPHIES +WHAT ARE THE COMMITTEES OF THE BOARD? +Our Board of Directors has an Audit Committee, a Compensation Committee, a Nominating and Corporate Governance Committee and a Sustainability Committee. The table below summarizes committee membership as of the date of this proxy statement along with the functions each committee is responsible for performing. +AUDIT COMMITTEE +Members +Doug Johnson C^+ +Alvin Bledsoe ^+ +Valerie Jochen + +Paul Westerman + +Number of Meetings in 2019 +4 +Principal Functions +• Reviews and discusses with management and the independent auditors the integrity of our accounting policies, internal controls, financial statements, accounting and auditing processes and risk management compliance. +• Monitors and oversees our accounting, auditing and financial reporting processes generally, including the qualifications, independence and performance of the independent auditor. +• Monitors our compliance with legal and regulatory requirements. +• Monitors compliance with the Company’s Code of Business Conduct and Ethics. +• Establishes and oversees procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters, and the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters. +• Reviews and approves related party transactions. +• Appoints, determines compensation, evaluates and terminates our independent auditors. +• Pre -approves audit and permissible non -audit services to be performed by the independent auditors. +• Prepares the report required by the U.S. Securities and Exchange Commission (the “SEC”), for the inclusion in our annual proxy statement. +• Reviews and reassesses the adequacy of the Audit Committee charter. +• Informs our independent auditors of the Audit Committee’s understanding of significant relationships and transactions with related parties and review and discuss with our independent auditors the auditors’ evaluation of our identification of, accounting for and disclosure of our relationships and transactions with related parties, including any significant matters arising from the audit regarding our relationships and transactions with related parties. +C Committee Chairperson. ++ Satisfies Nasdaq independence and other applicable independence rules for membership on such Committees. +^ Audit Committee financial expert. +2020 PROXY STATEMENT 17 +ELECTION OF DIRECTORS AND DIRECTOR BIOGRAPHIES +compensation committee +Members +Ben T. Morris C+ +Deborah G. Adams + +Alvin Bledsoe + +Number of Meetings in 2019 +5 +Principal Functions +• Oversees and administers our executive compensation policies, plans and practices, including our stock retention guidelines, and evaluates their impact on risk and risk management. +• Assists the Board of Directors in discharging its responsibilities relating to the compensation of our executives, including our Chief Executive Officer, and other key employees. +• Administers our equity -based compensation plans, including the grants of stock options, restricted stock awards and other equity awards under such plans. +• Reviews, approves and administers our cash -based incentive bonus plans, including the establishment of performance criteria, targets and awards under our 2019 Executive Annual Incentive Compensation Plan. +• Makes recommendations to the Board with respect to incentive compensation. +• Where appropriate or required, makes recommendations to our stockholders with respect to incentive compensation and equity -based plans. +• Conducts annual performance evaluation of the Compensation Committee. +• Reviews disclosure related to executive compensation in our proxy statement and prepares an annual Compensation Committee report. +• Reviews and considers the stockholders’ advisory vote on executive compensation and the frequency of holding such advisory vote. +• Reviews and reassesses the adequacy of the Compensation Committee charter. +C Committee Chairperson. ++ Satisfies Nasdaq independence and other applicable independence rules for membership on such Committees. +18 2020 PROXY STATEMENT +ELECTION OF DIRECTORS AND DIRECTOR BIOGRAPHIES +NOMINATING AND CORPORATE GOVERNANCE COMMITTEE +Members +Alvin Bledsoe C+ +Valerie Jochen + +Ben T. Morris + +Number of Meetings in 2019 +2 +Principal Functions +• Assists the Board of Directors in developing criteria for, identifying and evaluating individuals qualified to serve as members of our Board of Directors. +• Selects and recommends director candidates to the Board of Directors to be submitted for election at each annual meeting of stockholders and to fill any vacancies on the Board of Directors. +• Periodically reviews and makes recommendations regarding the composition and size of the Board of Directors and each of its Committees. +• Reviews and recommends to the Board of Directors appropriate corporate governance guidelines and procedures for the Company. +• Conducts an annual assessment of the qualifications and performance of the Board of Directors. +• Reviews and reports to the Board of Directors on the performance of management annually. +• Reviews the development and leadership capabilities of the executive officers and management’s succession process. +• Reviews and reassesses the adequacy of the Nominating and Corporate Governance Committee charter. +C Committee Chairperson. ++ Satisfies Nasdaq independence and other applicable independence rules for membership on such Committees. +2020 PROXY STATEMENT 19 +ELECTION OF DIRECTORS AND DIRECTOR BIOGRAPHIES +Sustainability Committee (1) +Members +Deborah G. Adams C+ +Doug Johnson + +Paul D. Westerman + +Number of Meetings in 2019 +4 +Principal Functions +• Reviews and makes recommendations to our Board of Directors regarding health, safety and environmental (“HSE”) and corporate responsibility matters, including governmental relations, political contributions and corporate philanthropy, and their impact on our business and operations. +• Monitors and evaluates management’s actions with respect to the HSE and corporate responsibility matters. +• Reviews reports from our management, consultants or other advisors regarding (i) our performance with respect to HSE and corporate responsibility matters and compliance with any related laws and regulations applicable to us, (ii) any significant litigation relating to the HSE and corporate responsibility matters, and (iii) any significant legislation or regulations, judicial decisions, treaties, protocols, conventions or other agreements, public policies or other scientific, medical or technological developments involving HSE and corporate responsibility matters that will or may have a material effect on our business and operations. +• Reviews the risks and exposures relating to HSE and corporate responsibility matters, including mitigation and remedial actions. +• Reviews crisis management planning procedures. +• Conducts investigations or studies affecting Gulfport as they pertain to HSE and corporate responsibility matters. +• Reviews the effectiveness of internal systems and controls necessary to ensure our compliance with applicable health, safety and environmental laws, rules and regulations. +• Reviews our compliance with industry practices in the areas of health, safety and environmental protection. +• Reviews our political, charitable and educational contributions/programs and the administration of any political action or similar committees of our employees. +• Oversees the policies and practices promoting inclusion and diversity within the Company and the Company’s human and workplace rights and policies. +• Reviews and provides guidance on public policy advocacy efforts to confirm alignment with Company policies and values. +• Prepares an annual performance evaluation of the Sustainability Committee. +• Reviews and reassess the adequacy of the Sustainability Committee charter. +• Carries out any other duties and responsibilities relating to HSE and corporate responsibility matters that may be delegated to the Sustainability Committee by our Board of Directors from time to time. +C Committee Chairperson. ++ Satisfies Nasdaq independence and other applicable independence rules for membership on such Committees. +(1) The Sustainability Committee was formed on October 30, 2018 as the Operating Excellence and Corporate Responsibility Committee and was renamed the Sustainability Committee to incorporate additional ESG responsibilities on April 9, 2020. +20 2020 PROXY STATEMENT +ELECTION OF DIRECTORS AND DIRECTOR BIOGRAPHIES +DO THE COMMITTEES HAVE WRITTEN CHARTERS? +Yes. The charters for each of our Committees can be found on our website at www.gulfportenergy.com under the “Investors — Corporate Governance” captions. You may also obtain copies of these charters, as well as our Code of Business Conduct and Ethics, which is described below, by writing to our General Counsel and Corporate Secretary, Patrick K. Craine, at Gulfport Energy Corporation, 3001 Quail Springs Parkway, Oklahoma City, Oklahoma 73134. +2020 PROXY STATEMENT 21 +CORPORATE GOVERNANCE MATTERS AND +COMMUNICATIONS WITH THE BOAR D +Corporate Governance Highlights +We believe effective corporate governance requires regular constructive discussions with our stockholders. We have a proactive engagement process that encourages feedback from our stockholders. This feedback helps shape our corporate governance practices, and has specifically resulted in: +• Adoption of stock ownership guidelines for our non -employee directors and executive officers to further align the long -term financial interests of our directors and executive officers with those of our stockholders; +• Adoption of Corporate Governance Guidelines to ensure best practices and reflect the Board’s commitment to monitor the effectiveness of policy and decision making at the Board and management levels; +• Ongoing Board refreshment process which resulted in two new independent directors being added in Q1 2020 and two new independent directors nominated in Q2 2020; +• All director nominees are independent, except for our Chief Executive Officer; +• Independent chair of the Board of Directors; +• Advancement of Board diversity, with two current female directors, one new female director nominee, emphasis on diversity in the Nominating and Corporate Governance Committee’s charter and the adoption of a Board Diversity Policy; +• Amendment of the Bylaws to change the supermajority vote requirement for stockholders to amend the Bylaws to a majority vote requirement; +• Majority voting to elect directors in uncontested elections and plurality voting to elect directors in contested elections; +• Creation of the Sustainability Committee to further develop our commitment to HSE and corporate responsibility and sustainability matters and their impact on our business and operations; +• Active stockholder outreach throughout 2019, holding over 250 in -person investor meetings, attending 8 industry conferences and numerous investor outreach phone calls; +• Active board oversight of risk and risk management; +• Periodic Board and Committee self -assessments conducted by an outside law firm; +• Independent director meetings in executive sessions at all regularly scheduled Board meetings; and +• 93% attendance at 2019 Board and Committee meetings. +22 2020 PROXY STATEMENT +CORPORATE GOVERNANCE MATTERS AND COMMUNICATIONS WITH THE BOARD +WHO ARE OUR INDEPENDENT DIRECTORS? +Our Board of Directors has determined that seven of our eight current Board members (Deborah G. Adams, Alvin Bledsoe, Valerie Jochen, David L. Houston, Doug Johnson, Ben T. Morris and Paul D. Westerman), and our two director nominees (Mr. Somerhalder and Ms. Holroyd) meet the independence requirements in the Nasdaq listing standards and are free of any relationship that, in the opinion of our Board of Directors, would interfere with the exercise of independent judgment in carrying out their responsibilities as directors of the Company. In determining Ms. Adams’ independence, the Board considered Ms. Adams’ service on the Board of Directors and the Audit and Compensation Committees of MRC Global Inc., a company listed on the New York Stock Exchange (the “NYSE”) from which we purchased products and services representing less than 1% of either Company’s revenues in 2019. In determining Mr. Westerman’s independence, the Board considered Mr. Westerman’s service on the Board of Directors of J -W Energy Company and J -W Power Company, which perform certain compression and related oilfield services to the Company representing less than 1% of either Company’s revenues in 2019. +Annual Board Self -Assessment Process +Board and Committee Evaluations +Director Performance Evaluations +How often did the Board of Directors meet in 2019? +The Board of Directors met 14 times in 2019. In addition to these meetings, the Board of Directors adopted resolutions by unanimous written consent. Each director attended at least 93% of the aggregate meetings of the Board of Directors and the meetings of the Committees on which he or she served. +Do our non -management directors meet separately without management? +Our non -management directors routinely meet in an executive session following each regularly scheduled meeting of the Board of Directors. +2020 PROXY STATEMENT 23 +CORPORATE GOVERNANCE MATTERS AND COMMUNICATIONS WITH THE BOARD +How can I communicate with the Board of Directors? +Individuals may communicate with our Board of Directors or individual directors by writing to our General Counsel and Corporate Secretary, Patrick K. Craine, at Gulfport Energy Corporation, 3001 Quail Springs Parkway, Oklahoma City, Oklahoma 73134. Our General Counsel and Corporate Secretary will review all correspondence and forward our Board of Directors correspondence that, in the opinion of our General Counsel and Corporate Secretary, relates to the function of our Board of Directors or a Board Committee or otherwise requires their attention. Directors may review a log of all correspondence received by us and request copies. Concerns relating to accounting, internal control over financial reporting or auditing matters will be immediately brought to the attention of the chairman of the Audit Committee and handled in accordance with our Audit Committee’s procedures. +WILL directors attend the Annual Meeting? +Recognizing that director attendance at our Annual Meeting can provide our stockholders an opportunity to communicate with directors about issues affecting the Company, we actively encourage our directors to attend the Annual Meeting. All eight of our directors then serving attended the 2019 Annual Meeting in person or telephonically. +Code of Business Conduct and Ethics +We have adopted a Code of Business Conduct and Ethics designed to help directors and employees resolve ethical issues. Our Code of Business Conduct and Ethics applies to all directors and employees. Our Code of Business Conduct and Ethics covers various topics including, but not limited to, conflicts of interest, fair dealing, discrimination and harassment, confidentiality, compliance procedures and employee complaint procedures. Our Code of Business Conduct and Ethics, together with any amendments or waivers, is posted on our website at www.gulfportenergy.com under the “Investors – Corporate Governance” captions. +Bylaw Amendment for Stockholder Vote Standard +On May 29, 2020, the Board of Directors amended our Second Amended and Restated Bylaws (as amended, the “Bylaws”) to permit our stockholders to amend the Bylaws by the affirmative vote of at least a majority of all outstanding shares of capital stock of the Company entitled to vote in the election of directors. As part of its commitment to best -in-class corporate governance, the Board of Directors regularly evaluates opportunities to improve the Company’s governance features. The Board of Directors determined, in light of evolving corporate governance practices, that it would be in the best interest of our stockholders to replace the supermajority vote standard required for stockholders to amend the Bylaws with a majority vote standard. The Board of Directors believes that adopting this majority standard will balance the opportunity for stockholders to participate meaningfully in the corporate governance of the Company with the desire to protect the interests of all stockholders from action that may only be in the interest of a small portion of stockholders. +Political Contribution Policy +Engagement in the political, legislative and regulatory process is important to the success of the Company. The Company has delegated compliance and oversight over this function to the Sustainability Committee and has adopted a political contributions and activity policy that sets forth the ways by which the Company and its employees may participate in the political, legislative and regulatory process. All political contributions and activities are subject to compliance with applicable laws. +Aircraft Use Policy +In February 2019, we adopted an aircraft use policy for aircraft chartered or owned by the Company. We restrict personal use of Company -owned or chartered aircraft by our executive officers and other employees, as well as by members of our Board of Directors. Our aircraft use policy requires that any personal use of Company -owned or chartered aircraft by any NEO be reported as a perquisite, based on the aggregate incremental value of such personal use. There was no personal use of Company -owned or chartered aircraft in 2019. +24 2020 PROXY STATEMENT +NOMINATING PROCESS FOR DIRECTORS, DIRECTOR QUALIFICATIONS AND REVIEW OF DIRECTOR NOMINEE S +Director Qualifications +As provided by the Nominating and Corporate Governance Committee’s charter, our Nominating and Corporate Governance Committee identifies, investigates and recommends to our Board of Directors candidates with the goal of creating a balance of knowledge, experience and diversity. The Committee identifies candidates through the use of third -party search firms, as well as through the extensive networks of our directors and management team in the oil and natural gas industry. +It is our policy that potential directors should possess the highest personal and professional ethics, integrity and values and be committed to representing the interests of our stockholders. In addition to reviewing a candidate’s background and accomplishments, candidates are reviewed in the context of the current composition of our Board of Directors, the skills necessary to provide effective oversight in critical areas and the evolving needs of our business. It is the policy of our Board of Directors that, at all times, at least a majority of its members meets the standards of independence promulgated by the Nasdaq and the SEC and that all members reflect a range of talents, skills and expertise, particularly in the areas of accounting and finance, management, leadership and oil and gas -related industries to provide sound and prudent guidance with respect to our operations and the interests of our stockholders. +Board Diversity Policy +Our Nominating and Corporate Governance Committee is dedicated to diversity and adopted a Board Diversity Policy in November 2019. The policy requires that the Nominating and Corporate Governance Committee consider diversity in its evaluation of candidates for Board membership. Our Nominating and Corporate Governance Committee, in accordance with its charter, seeks to include diverse candidates in all director searches, taking into account diversity of gender, race, ethnicity, background, age, thought and tenure on our Board (in connection with the consideration of the renomination of an existing director), including by affirmatively instructing any search firm retained to assist the Nominating and Corporate Governance Committee in identifying director candidates to seek to include diverse candidates from traditional and nontraditional candidate groups. In accordance with its charter, our Nominating and Corporate Governance Committee periodically reviews and makes recommendations regarding the composition of the Board and the size of the Board. +We also require that the members of our Board of Directors be able to dedicate the time and resources sufficient to ensure the diligent performance of their duties on our behalf, including attending meetings of the Board of Directors and applicable Committee meetings. In accordance with its charter, our Nominating and Corporate Governance Committee periodically reviews the criteria for the selection of directors to serve on our Board and recommends any proposed changes to our Board of Directors for approval. +Nomination Process +Our Board of Directors will consider stockholder nominations for director candidates upon written submission to our General Counsel and Corporate Secretary along with, among other things, the nominee’s qualifications and certain biographical information regarding the nominee, the nominee’s written consent to serving as a director if elected and being named in the proxy or information statement and certain information regarding the status of the stockholder submitting the recommendation, all in the manner required by the Bylaws and the applicable rules and regulations promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Following verification of the stockholder status of persons proposing candidates, recommendations will be aggregated and considered by our Board of Directors at a regularly scheduled or special Board meeting. If any materials are provided by a stockholder in connection with the nomination of a director candidate, the materials will be forwarded to our Board of Directors. See “Submission of Future Stockholder Proposals” on page 83 of this proxy statement for additional detail regarding submitting director nominees. +Our Board of Directors may also review materials provided by professional search firms or other parties in connection with a nominee who is not proposed by a stockholder. In evaluating nominations, our Board of Directors will seek to achieve a balance of knowledge, experience and diversity on the Board. Our Board of Directors uses the same criteria for evaluating candidates nominated by stockholders as it does for those proposed by current Board members, professional search firms and other persons. After completing its evaluation, our Board of Directors approves the final slate of director nominees. +2020 PROXY STATEMENT 25 +NOMINATING PROCESS FOR DIRECTORS, DIRECTOR QUALIFICATIONS AND REVIEW OF DIRECTOR NOMINEES +Our Nominating and Corporate Governance Committee approved the director nominees submitted for election at the Annual Meeting. Two of the eight nominees, Ms. Holroyd and Mr. Somerhalder, are not directors standing for re -election . Ms. Holroyd was originally recommended for nomination to the Board of Directors by a stockholder of the Company. Mr. Somerhalder was originally recommended for nomination to the Board of Directors by the Nominating and Corporate Governance Committee following the submission of his name by a nationally -recognized third -party search firm engaged by the Nominating and Corporate Governance Committee. Each of the eight nominees brings a strong and unique background and set of skills to our Board of Directors, giving our Board of Directors, as a whole, competence and experience in a variety of areas, including corporate governance and Board service, executive management, oil and natural gas industry, accounting and finance and risk assessment and management. +26 2020 PROXY STATEMENT +DIRECTOR LEADERSHIP STRUCTUR E +Role of Chairman and Chief Executive Officer +The positions of Chairman of the Board and Chief Executive Officer are held by two different individuals, and the Chairman of the Board is a non -executive position elected from among the directors by the Board. Separating the positions of Chairman of the Board and Chief Executive Officer allows our Chief Executive Officer to focus on business development strategies as well as our day -to-day business and operations, while allowing our Chairman of the Board to lead the Board in its fundamental role of providing advice to and oversight of management. The Chairman of the Board provides leadership to our Board of Directors and works with the Board of Directors to define its structure and activities in the fulfillment of its responsibilities. +The duties of the non -executive Chairman of the Board include: +• Presiding at meetings of our Board of Directors and stockholders; +• Setting board agendas with the input from other members of the Board and our management; +• Facilitating communication among and information flow to directors; +• Calling special meetings of our Board of Directors and stockholders; and +• Advising and counseling our Chief Executive Officer and other officers. +Our Board of Directors does not have a lead director. +Directors +We believe that our directors bring a broad range of leadership experience to the boardroom and regularly contribute to the thoughtful discussion involved in effectively overseeing the business and affairs of the Company. We believe that the atmosphere of our Board is collegial, that all Board members are well engaged in their responsibilities and that all Board members express their views and consider the opinions expressed by other directors. Seven out of eight director nominees are independent under the Nasdaq listing standards and SEC rules. We believe that all our independent directors have demonstrated leadership in business enterprises and are familiar with Board processes. Our independent directors are involved in the leadership structure of our Board by serving on our Audit, Nominating and Corporate Governance, Sustainability and Compensation Committees, comprised entirely of independent directors and each having an independent chairperson. +Committee Chairs +Specifically, our Audit Committee Chair oversees the accounting and financial reporting processes and compliance with legal and regulatory requirements. Our Compensation Committee Chair oversees our compensation policies and practices and their impact on risk and risk management. The Chair of our Sustainability Committee oversees our practices relating to health, safety and environmental protections, as well as social and governance matters. Our Nominating and Corporate Governance Committee Chair monitors matters related to Board and Committee composition, Board performance and best practices in corporate governance. As such, each Committee Chair provides independent leadership for purposes of many important functions delegated by our Board of Directors to each Committee. +2020 PROXY STATEMENT 27 +BOARD OF DIRECTORS’ ROLE IN RISK OVERSIGH T +While our management team is responsible for the day -to-day management of risks, the Board of Directors has primary responsibility for risk oversight. Boards typically exercise this oversight during regular Board meetings, but our Board of Directors also maintains constant and open dialogue with management and reviews and monitors key processes. As a result, they are better able to respond to emerging risks and to influence our strategy to address those risks. +While our Board of Directors is ultimately responsible for risk oversight at the Company, our four Committees assist the Board in fulfilling its oversight responsibilities in the areas of risk below: +Committee +Risk Areas of Focus +Audit +• Financial Reporting +• Internal Controls +• Legal Compliance +• Regulatory Compliance +• Reserves Reporting +• Risk Management +Compensation +• Compensation Policies +• Executive Performance +Sustainability +• Environment +• Public Health +• Government Relations +• Political Contributions +Nominating and Corporate Governance +• Board Organization +• Membership +• Structure +• Succession Planning +• Corporate Governance +28 2020 PROXY STATEMENT +EXECUTIVE OFFICER S +The following table sets forth the name, age, positions and business experience of each of our executive officers (other than David M. Wood, who also serves as a member of our Board and who is listed under “Election of Directors and Director Biographies” on page 11 of this proxy statement): +NAME +POSITIONS AND EXPERIENCE +Donnie Moore +Age: 55 +Executive Vice President, Chief Operating Officer since January 2018 +Mr. Moore has served as Executive Vice President, Chief Operating Officer since January 2018. Mr. Moore had also served as Interim Chief Executive Officer of the Company from October 29, 2018, the date our former Chief Executive Officer and President left the Company, to December 18, 2018, the date of the appointment of Mr. Wood as our new Chief Executive Officer and President. From 2007 until December 2017, Mr. Moore worked at Noble Energy, Inc. (“Noble”), an independent oil and gas exploration and production company, where he most recently served as Vice President of Noble’s Texas operations for its Eagle Ford and Delaware Basin assets. Prior to that, Mr. Moore held various leadership roles at Noble including Vice President of the Marcellus Business Unit, Manager for Operations of the Wattenberg/DJ Business Unit, Manager of Operations for the Gunflint discovery in the Deepwater Gulf of Mexico and Development Manager for Noble’s Mid -Continent and Gulf Coast positions. From 1989 until 2007, Mr. Moore served in a variety of roles with ARCO Oil and Gas Company, Vastar Resources, Inc. and BP America. Mr. Moore holds a Bachelor of Science degree in Petroleum Engineering from Louisiana Tech University. +Quentin Hicks +Age: 45 +Executive Vice President, Chief Financial Officer since August 2019 +Prior to joining the Company, Mr. Hicks served as the Executive Vice President and Chief Financial Officer of Halcón Resources Corporation (“Halcón”), an independent energy company, a position he held since March 2019, having previously served as Executive Vice President, Finance, Capital Markets and Investor Relations of Halcón since January 2018. Prior to that, Mr. Hicks held various roles at Halcón focused primarily on finance and investor relations, starting in August 1, 2012. Prior to Halcón, Mr. Hicks worked for GeoResources Inc., where he served as Director of Acquisitions and Financial Planning from 2011 until GeoResources merged with Halcón in August 2012. From 2004 to 2011, he worked in investment banking with Bear Stearns, Sanders Morris Harris and most recently Madison Williams, where he was a Director in their energy investment banking practice. Prior to that, Mr. Hicks worked as Manager of Financial Reporting for Continental Airlines. Mr. Hicks began his career in 1998 working as an auditor for Ernst and Young LLP. Mr. Hicks graduated from Texas A&M University with a Bachelor of Business Administration and a Master of Science degree in Accounting. In addition, Mr. Hicks holds a Master of Business Administration degree in Finance from Vanderbilt University and holds a Certified Public Accountant license from the State of Texas. +Patrick Craine +Age: 48 +Executive Vice President, General Counsel and Corporate Secretary since May 2019 +Mr. Craine has served as Executive Vice President, General Counsel and Corporate Secretary of the Company since May 2019. Mr. Craine has over 20 years of extensive senior -level experience handling a broad range of securities, corporate, regulatory, governance, compliance and litigation matters, with particular expertise in the energy industry. He joined Gulfport from Chesapeake Energy Corporation (NY SE: CH K) (“Chesapeake”), a hydrocarbon exploration company, where he served as Deputy General Counsel – Chief Risk and Compliance Officer from 2013 until 2019. Prior to joining Chesapeake, Mr. Craine was a partner with Bracewell LLP, a global law firm, where his practice focused on securities and corporate regulatory matters and investigations. Before Mr. Craine entered private practice, he served as a lawyer with the SEC and the Financial Industry Regulatory Authority, where he held leadership positions in their Oil and Gas Task Forces. Mr. Craine received his Bachelor of Arts degree, summa cum laude, Phi Beta Kappa, from Wabash College, and his Juris Doctorate, cum laude, from the Southern Methodist University Dedman School of Law. +Michael Sluiter +Age: 47 +Senior Vice President, Reservoir Engineer since December 2018 +Mr. Sluiter joined the Company from Noble Energy, Inc., where he held various engineering positions from 2007 to 2018, including, most recently, as the Permian Basin Business Unit Manager. Mr. Sluiter has over 20 years of experience in unconventional resource development, reservoir engineering, subsurface development, business development and acquisitions, as well as leadership skills, which he developed at Noble Energy, Santos Australia and Santos USA. Mr. Sluiter began his career as a wireline field services engineer for Schlumberger in Thailand. Mr. Sluiter holds a Bachelor of Science degree in Chemical Engineering from the University of Sydney, Australia. +2020 PROXY STATEMENT 29 +COMPENSATION DISCUSSION AND ANALYSI S +Letter from the Compensation Committee Chair +As members of Gulfport’s Compensation Committee, our goal is to create an executive compensation program that promotes long -term value creation for our stockholders, strikes the right balance of pay for performance, attracts and retains an exceptionally talented executive team and steers Gulfport’s leadership to meet ambitious goals without taking undue risk. This framework was of particular importance in fiscal year 2019, which was very much a transformative year for the Company, in light of changes made to both our senior management team and our Board. The Committee recognizes that as Gulfport continues to evolve, our executive compensation programs have been, and will continue to be, essential to our ongoing success through this period of meaningful change. +Our refreshed Compensation Committee brought new ideas and viewpoints. In 2019, we approved a number of changes to the composition of our leadership teams and Committees. As part of this refreshment, Mr. Morris assumed the role of Committee Chair, and Mr. Bledsoe joined the Committee as a new member in 2020. Over the past 12 months, we performed an in -depth review of the Company’s executive compensation plans which included an assessment of peer groups, total compensation philosophy, equity usage and appropriate incentive metrics and governance practices while reflecting on the feedback of our stockholders received during the course of our ongoing engagement efforts. +We implemented a number of changes and decisions to support the Company’s transformation. In fiscal year 2019, we: +• Aligned CEO pay with industry benchmark peer group data for base pay, short -term and long -term incentives after reviewing median pay data for other similar positions provided by the independent consultant to the Board; +• Introduced performance -based equity awards in the form of performance -based restricted stock units tied to RTSR, vesting over a three -year performance period, comprising 50% of all equity awards granted in 2019; +• Provided more robust disclosure of our performance metrics and targets for both performance -based cash and equity awards; +• Adopted formal stock ownership guidelines to ensure our Board of Directors and executive officers own a stake in the Company that is sufficient to align their interests with their fellow stockholders; and +• Introduced free cash flow and production per debt -adjusted share metrics into the annual incentive plan and replaced the qualitative strategic initiative metric with quantifiable health, safety and environmental targets. +We conducted a substantial stockholder outreach effort that included the Committee Chair and management. This effort involved meeting and having a robust dialog with stockholders representing over 67% of the Company’s outstanding common stock. We were glad to hear support for bringing in a talented group of executives as our refreshed management team, and for implementing specific changes to the program that would help further promote transparency and alignment. We remain committed to maintaining healthy and productive ongoing conversations with our stockholders as we guide Gulfport through our shared future and will continue to consider the different viewpoints of our stockholders as we discuss future enhancements to our compensation programs. +We believe that the changes in the development of our program follow the input we have heard and are the right steps to align our management team with our financial and strategic goals. We have the highest confidence in the skills and leadership of our new CEO and his entire Gulfport senior management team, and we look forward to continued execution of our business strategy. +Thank you for your confidence and investment in Gulfport Energy. +Respectfully submitted by the Compensation Committee, +Ben T. Morris, Chairman +Dated: May 27, 2020 +30 2020 PROXY STATEMENT +COMPENSATION DISCUSSION AND ANALYSIS +This Compensation Discussion and Analysis, or CD&A, explains the Compensation Committee’s compensation philosophy, summarizes our executive compensation programs and describes compensation decisions for Gulfport’s Chief Executive Officer, or CEO, Chief Financial Officer, or CFO, the next three highest paid executives for 2019 and two former executives who departed from the Company during 2019. These officers, known as our NEOs, are: +David M. Wood +Chief Executive Officer and President +Quentin R. Hicks +Executive Vice President, Chief Financial Officer +Donnie Moore +Executive Vice President, Chief Operating Officer +Patrick K. Craine +Executive Vice President, General Counsel and Corporate Secretary +Michael Sluiter +Senior Vice President of Reservoir Engineering +Keri Crowell +Former Chief Financial Officer +Stuart Maier +Former Senior Vice President of Geosciences +2020 PROXY STATEMENT 31 +EXECUTIVE SUMMAR Y +Gulfport 2019 Business Performance Highlights +2019 was a challenging year for the oil and natural gas industry. Our ability to generate free cash flow despite a declining price environment was made possible by our strong commitment to capital discipline and the dedication and focus of our operations teams who worked to optimize efficiencies and improve our cost structure throughout the year. We continued to simplify our portfolio by divesting non -core assets and utilizing sale proceeds to improve our balance sheet through discounted bond repurchases, taking advantage of opportunities to retire debt on a heavily discounted basis. +Key accomplishments in 2019 included: +Strategic +• Enhanced senior management team with hiring of a highly -qualified CFO and General Counsel and Corporate Secretary; +• Completed non -core asset divestitures that generated $49 million in proceeds in 2019; closed additional non -core divestiture for $50 million in January 2020; +• Reduced Company headcount by 13%, the majority of which was achieved through a voluntary program; and +• Refreshed key finance, accounting and control functions through several key management hires. +Financial +• Generated free cash flow in a challenged commodity price environment; +• Repurchased $190 million of bonds in the open market capturing $50 million discount; +• Reduced general and administrative expense by 4% to $48 million from $50 million during 2018; +• Ended 2019 with available borrowing of $636 million; further enhanced with $50 million non -core asset divestiture in January 2020; and +• Significantly improved financial planning and analysis process to optimize performance. +Operational +• Increased production 1% year -over-year while reducing capital expenditures by 26% year -over-year ; +• Reduced our unit lease operating expense by 10% to $0.17 per Mcfe year -over-year ; and +• Reduced average SCOOP drilling days by 36% and Utica by 12% year -over-year . +Health, Safety & Environmental +• Reduced reportable spills 38% year -over-year ; +• Reduced Total Recordable Incident Rate (combined employee and contractor) 36% year -over-year ; +• Reduced Loss Time Incident Rate (combined employee and contractor) 82% year -over-year ; and +• Reduced Preventable Motor Vehicle Accident (PMVA) rate 85% year -over-year by implementing numerous initiatives, including a safe driver training and recognition program. +Corporate Social Responsibility +• Awarded approximately 30 educational and environmental grants through the Ohio Gulfport Energy Fund and the Oklahoma Gulfport Energy Fund during 2019; +• Awarded grants for programs that improve the lives of more than 15,000 individuals in our operating counties in Ohio; +32 2020 PROXY STATEMENT +EXECUTIVE SUMMARY +• Partnered with the Imagination Library in Ohio to provide books to more than 7,900 children in Belmont, Jefferson and Monroe Counties; +• Provided educational grants through the Oklahoma Gulfport Energy Fund that will benefit more than 5,000 Oklahomans; and +• Participated in a partnership with the American Heart Association and sponsorships with the American Red Cross, Big Brothers Big Sisters of Oklahoma, National Kidney Foundation, St. Jude and the United Way. +Key 2019 Executive Compensation Actions +In consideration of our long -term strategy and considering stockholder feedback following a robust program of engagement (see “Proposal to Approve on an Advisory, Non -Binding Basis, the Compensation Paid to the Company’s Named Executive Officers” on page 65 of this proxy statement), the Company took the following actions in 2019: +• Implemented key changes to the equity award structure in 2019: +• (i) 50% of the equity awards granted to our NEOs consisting of performance -based restricted stock units, vesting after a three -year performance period, based on the Company’s achievement of targeted weighted average RTSR during the performance period and the executive’s continuous service through the last day of the performance period with target performance set at the 55th percentile of the peer group and a cap of 100% in case of negative absolute TSR; and +• (ii) 50% of the equity awards granted to our NEOs will consist of time -vesting restricted stock units, vesting over a three -year period; +• Adjusted annual performance bonus opportunities and long -term equity award targets to more closely align our executives’ financial interests with those of our stockholders and to continue to link a larger portion of each executive’s compensation to the performance of our stock and operational performance; +• Modified metrics in the annual incentive plan to include financial metrics directly tied to the financial health of the Company and including specific and quantifiable health, safety and environmental metrics: +• Added a Free Cash Flow metric to further align with long -term value creation, peer benchmarking and stockholder feedback; and +• Evaluated annual incentive award achievement, resulting in a payout of 50% against preset, aggressive targets for 2019, and included achievement of predetermined HSE goals as measured against improvement on 2018 results; +• Provided more robust disclosure of our performance metrics and targets for both performance -based cash and equity awards; +• Enhanced the senior leadership team with the hiring of Patrick Craine as the General Counsel and Corporate Secretary in May 2019 and Quentin Hicks as Chief Financial Officer in August 2019; +• Entered into employment agreements with our CEO, CFO, COO and General Counsel to evidence the terms and conditions of their employment, their compensation and severance benefits and their obligations to Gulfport during their employment and thereafter (e.g., confidentiality, non -solicitation , etc.); +• Adjusted the base salaries of our CEO and our COO to reflect competitive pay levels when compared to other median base pay levels for similar positions at peer firms. Mr. Wood’s base salary was set at $834,000 and Mr. Moore’s base salary was set at $505,000, which more accurately reflected base pay at the 50 th percentile for the CEO and COO positions as compared to our compensation peer group. No other changes to our NEOs’ base salaries were made during 2019; and +• Adopted formal stock ownership guidelines to ensure our Board of Directors and executive officers own a stake in the Company that is sufficient to align their interests with their fellow stockholders. +2020 PROXY STATEMENT 33 +EXECUTIVE SUMMARY +The Compensation Committee will continue to consider the feedback from our stockholders when making compensation decisions for our NEOs. +Practices We Follow +✓ +Incentives Aligned with Stockholders . All long -term incentives granted in 2019 were time or performance -based restricted stock awards, a portion of which included a RTSR metric tied to share price further aligning management with stockholders. +✓ +Majority of NEO pay is at -risk . The majority of executive compensation is conditioned on achievement of pre -determined operational, capital efficiency and safety and environmental targets and a RTSR metric. +✓ +Performance -based awards are prevalent. Beginning with 2019, 50% of all NEO equity awards granted were of performance -based equity awards, based on RTSR over a three -year performance period. +✓ +Robust disclosure of our performance metrics and targets. We provide detailed disclosure of our performance metrics in our CD&A. +✓ +Balanced approach to executive compensation. We view the combination of long -term , short -term and equity and cash compensation, prioritizing long -term equity compensation and focusing on performance -based equity and cash compensation when analyzing total compensation plans. +✓ +We believe long -term incentives should be long -term . We have three -year vesting for equity grants to our NEOs. +✓ +Ownership guidelines. We adopted robust stock -ownership guidelines for directors and executive officers in 2019. +✓ +Risk Management. We perform annual enterprise risk assessments to ensure our use of incentive metrics doesn’t add undue risk to the business. +✓ +Clawback and recoupment processes. We have a Clawback policy that allows us to recover incentive compensation. +✓ +Executive Compensation best practices. The Compensation Committee uses an independent compensation consulting firm to provide input into the executive compensation programs. +Practices We Prohibit +û +Minimum bonuses or guarantees. The Company does not guarantee minimum bonuses and relies on target achievement to determine bonus payments. +û +Single -trigger vesting of equity awards. The Company does not allow for single -trigger vesting of equity awards in connection with a change of control for any awards granted in 2019 and beyond. +û +Providing tax gross -ups . No tax gross -ups are provided to NEOs. +û +Hedging or pledging Gulfport Energy Stock. The Company does not allow hedging or pledging of Gulfport securities by our NEOs or directors. +û +Liberal share recycling. We do not allow liberal share recycling in our stock incentive plan. +û +Holding Gulfport Energy stock in a margin account. The Company does not allow securities to be held in a margin account by our NEOs or directors. +û +Excessive perquisites or executive benefits plans. No pension, supplemental executive retirement plan or other excessive perquisite plans are made available to our executive officers (except for our broad -based 401(k) plan and broad -based medical and insurance plans available to other non -NEOs ). +û +Repricing of Stock Options. The Company has not granted stock options in 2019, currently has no plans to grant stock options in the future and would not reprice any outstanding stock options that might be outstanding. +34 2020 PROXY STATEMENT +EXECUTIVE SUMMARY +Compensation Aligned with Performance +The Compensation Committee believes that executive compensation should be designed around delivering competitive pay when performance targets are achieved. The majority of executive compensation should be at -risk and when business results exceed targets, executives should share in those rewards based on their efforts. If the Company does not achieve established performance metrics, the executive team should receive pay that reflects that lower achievement. We believe the pay for performance alignment is working as it should as our realized pay for 2019 was substantially lower than target pay levels due to not achieving all our targets as illustrated below: +CEO Compensation Aligned with Performance +The target total direct compensation of our NEOs is largely influenced by pay -at-risk or variable compensation, which ties the pay of the executive to the Company’s performance and share price. As illustrated below, the decline of the Company stock price, the achievement of some, but not all, of the Company’s performance targets established for the 2019 annual incentive plan and the longer -term nature of equity awards resulted in actual payments of about 25% of targeted compensation for 2019. +Components of Pay +Base +Annual Incentives +Inducement +Long-Term Incentives (1) +Target Compensation +Annualized 2019 salary +Target annual incentive opportunity +Target value of inducement award +Grant date value of restricted stock and performance -based restricted stock units granted during the year +Realizable Compensation +Actual salary paid +Actual incentive paid +Market value of shares as of December 31, 2019 +Market value of restricted stock and performance -based restricted stock units granted during 2019 as of December 31, 2019 +Realized Compensation +Actual salary paid +Actual incentive paid +Value realized upon vesting during 2019 +Value realized upon vesting of restricted stock and restricted stock units during 2019 +(1) The value of Long -Term Incentives represents any shares that actually vested in February of 2020 as though they actually vested on December 31, 2019, as Mr. Wood had no equity awards eligible for vesting during 2019. +2020 PROXY STATEMENT 35 +EXECUTIVE SUMMARY +Stockholder Engagement and Annual Say -On-Pay Advisory Vote +The Compensation Committee is committed to engaging with our stockholders and learning their expectations for executive compensation, corporate governance, safety, environmental and other social responsibility issues at Gulfport Energy. The 2019 Say -on-Pay vote was quite favorable with 97% percent of votes cast by stockholders approving the executive compensation programs. Based on the results of the Company’s last advisory vote on the frequency of future Say -on-Pay votes at the Company, also known as a say on frequency vote, the Company will continue to hold annual Say -On-Pay votes until the Company’s next say on frequency vote in 2023. +Since the 2019 Annual Meeting, the Company had discussions with various stockholders that represented approximately 67% of shares outstanding. Through these conversations, our stockholders emphasized their expectation that management should be focused on driving results that deliver stockholder value. Specifically, our stockholders expressed the need to focus on actions that increase share price, address balance sheet concerns and rationalize production and capital spend in a weaker commodity price environment. Our stockholders were pleased to see an increase of equity compensation at -risk through the introduction of RTSR performance -based restricted stock units. They agree that executives should not be paid at target levels unless financial targets were achieved and expressed a desire to see specific and measurable targets for the year in a clear and concise way. We also heard that our stockholders want to see that our management team is aligned with stockholders by owning a meaningful amount of the Company’s shares. In addition, an increasing number of stockholders showed renewed interest in Gulfport’s environmental, social and governance practices. +After carefully considering input from stockholders, the Company took the following actions in 2019: +• Introduced performance -based equity awards in the form of performance -based restricted stock units tied to RTSR, vesting after a three -year performance period, comprising 50% of all equity awards granted to NEOs in August 2019; +• Adjusted annual performance bonuses opportunities and long -term equity award targets to more closely align our executives’ financial interests with those of our stockholders and to continue to link a larger portion of executives’ compensation to our operational and share price performance; +• Provided more robust disclosure of our performance metrics and targets for both performance -based cash and equity awards; +• Modified metrics in the annual incentive plan to include financial metrics directly tied to the financial health of the Company and including specific and quantifiable health, safety and environmental metrics; and +• Adopted formal stock ownership guidelines to ensure our Board of Directors and executive officers own a stake in the Company that is sufficient to align their interests with their fellow stockholders. +The Compensation Committee will continue to consider the feedback from our stockholders when making compensation decisions for our NEOs. +36 2020 PROXY STATEMENT +EXECUTIVE SUMMARY +EXECUTIVE COMPENSATION PHILOSOPHY AND COMPONENTS +Philosophy and Objectives +Our executive compensation philosophy is guided by the following objectives: +EXECUTIVE COMPENSATION +Alignment with +Stockholder Interests +By providing the majority of compensation in long -term equity awards, stressing pay for performance, managing dilution to our stockholders and encouraging an ownership culture, we aim to align the interests of our executives with those of our stockholders. +Pay for Performance +The Company is focused on rewarding performance by creating incentive awards based on achievement of preset targets and performance factors. A significant portion of our NEOs’ compensation is delivered in long -term incentives, making our NEOs’ realized total direct compensation heavily dependent upon Company performance and stock price. +Competitive +Compensation +The Company believes it is imperative to maintain compensation programs competitive with our peer group to attract, retain and motivate executives and our future leaders in a way that is in line with the compensation of executive positions at similar companies. +Our executive compensation programs play an important role in helping us achieve our business objectives and effectively reward executive officers for our Company’s annual and long -term performance and individual contributions to performance. +Overview of NEO Total Direct Compensation Components for Fiscal Year 2019 +Pay Element +Vehicle +Philosophy +Long-Term Incentives +• Performance Shares (RTSR for 2019) +• 3 -yr cliff -vested shares that are measured on the cumulative stockholder return relative to the compensation peer group for the same 3 -yr period. If RTSR performance exceeds the peer group, the executive is rewarded for that incremental performance. If the TSR performance does not meet the relative performance of the peer group, the executive receives either no award or a reduced reward based on the percentile ranking of the Company’s RTSR. +• Time -Vesting Restricted Shares +• Time -Vesting Restricted share grants that vest over 3 years. If the executive remains with the Company, the executive experiences either increased or decreased pay levels based on the performance of the stock price as the executive is fully aligned with the return of the Company’s stock. +Short-Term Incentive +• Annual incentive opportunity to earn a percentage of base pay on annual operating objectives +• Provides incentive opportunities that are aligned with approximately the median opportunity of our peer group when targets are achieved. When targets are exceeded, the executive should be rewarded for their efforts with pay that exceeds the median of the peer group. When targets are not achieved, the executive should earn pay levels below the median of the peer group. +Base Pay +• Base Pay rates that are reviewed annually and subject to Compensation Committee recommendations +• Provide fixed salaries that are competitive at approximately the median of the peer group. Base pay should allow the Company to provide market -competitive pay for the primary duties associated with the role of the executive. +Benefits +• Health, Dental and Vision Insurance available to all employees. 401K program, vacation policy and disability plans to provide income replacement due to long -term or short -term illness +• Provide core health, welfare and retirement savings plans for executives. Provide with substantially the same programs for all employees with minimal executive perquisites. +2020 PROXY STATEMENT 37 +EXECUTIVE SUMMARY +As part of our compensation philosophy, the Compensation Committee places a significant portion of NEO pay at risk, with the largest single component of pay in the form of long -term equity awards, which for 2019 is equally divided between performance -based and time -vesting equity awards vesting over a three -year period. +Emphasis on At-Risk Variable Compensation +Determining our Executive Compensation +Benchmarking Against Our Compensation Peer Group +Gulfport utilizes a peer group of companies, or the Compensation Peer Group, as a reference point when establishing both compensation levels for executives and program structures to achieve competitiveness in the market. +2019 Compensation Peer Group +The Compensation Committee directed its independent compensation consultant to conduct a thorough review of the Compensation Peer Group for 2019. It was decided after that review that significant changes were needed to properly position the peer group against similarly situated companies. Some of the companies were removed following mergers or acquisitions that left the surviving company as either not publicly -traded or no longer a suitable peer. The companies added to the 2019 Compensation Peer Group reflected a peer group of North American, onshore exploration and production companies that compete with Gulfport Energy for people, resources and investments and are appropriate comparators given factors such as market capitalization, revenue, production and oil and gas product mix. +38 2020 PROXY STATEMENT +EXECUTIVE SUMMARY +The revision of the Compensation Peer Group resulted in relative alignment of Gulfport’s key metrics at the time the peer group was established, as follows: 2019 Projected Revenue=55%; Market Cap=38%; Enterprise Value=49% and Commodity Mix=21%. This represents, on average, Gulfport’s close alignment to the median of the 2019 Compensation Peer Group. The table below shows companies removed or added as peers to formulate the final 2019 Compensation Peer Group: +Removed for 2019 +Added for 2019 +2019 Compensation Peer Group +Cimarex Energy Co. +Energen Corporation +Newfield Exploration Company +Oasis Petroleum Inc. +Rice Energy +Whiting Petroleum Corporation +WPX Energy, Inc. +Berry Petroleum Corporation +Carrizo Oil & Gas, Inc. +Chaparral Energy, Inc. +Chesapeake Energy Corporation +Comstock Resources, Inc. +Eclipse Resources Corporation +EQT Corporation +Extraction Oil and Gas, Inc. +Magnolia Oil and Gas Corporation +Matador Resources Company +Roan Resources, Inc. +SRC Energy Inc. +Antero Resources Corporation +Berry Petroleum Corporation +Cabot Oil & Gas, Inc. +Carrizo Oil & Gas, Inc. +Chaparral Energy, Inc. +Chesapeake Energy Corporation +CNX Resources Corporation +Comstock Resources, Inc. +Eclipse Resources Corporation +EQT Corporation +Extraction Oil and Gas, Inc. +Laredo Petroleum, Inc. +Magnolia Oil and Gas Corporation +Matador Resources Company +PDC Energy, Inc. +QEP Resources, Inc. +Range Resources Corporation +Roan Resources, Inc. +SM Energy Company +Southwestern Energy Company +SRC Energy Inc. +PROCESS FOR DETERMINING EXECUTIVE COMPENSATION +The Compensation Committee of our Board of Directors oversees our compensation programs for executive officers and all employees. During 2019, the Compensation Committee was comprised of Deborah G. Adams, Craig Groeschel, David L. Houston, Ben T. Morris, Scott Streller and Paul D. Westerman, all of whom are independent directors. +The Role of Our Compensation Committee +The Compensation Committee generally reviews and typically makes its decisions regarding the annual compensation of our NEOs at its regular meetings in the first quarter of each year. These decisions include: +• Certifying annual performance -based incentive awards; +• Establishing target incentive opportunities and applicable performance objectives for the current year’s annual incentive awards; +2020 PROXY STATEMENT 39 +EXECUTIVE SUMMARY +• Approving adjustments to base salary, annual incentive levels and long -term incentive levels; and +• Granting long -term incentive awards and determining the types of awards for the current year. +The Compensation Committee may also adjust compensation as necessary at other times during the year, such as in the case of promotions, other changes in employment status and significant corporate events, as well as to reflect changing market conditions or for other competitive purposes. +In making its decisions, the Compensation Committee assesses each NEO’s impact during the year and overall value to Gulfport, specifically considering the NEO’s contribution to the growth of Gulfport’s value, operational and financial performance, performance in the NEO’s primary area of responsibility, impact on strategic initiatives, recommendations of our independent compensation consultant, the NEO’s role and trajectory in succession planning and development, recommendations from our CEO with respect to our other NEOs and other intangible qualities that contribute to corporate and individual success. +The Role of our CEO +The Compensation Committee evaluates our CEO based on the Company’s performance metrics, leadership roles as a member of the Board, our lead representative to the investment community and other criteria. The total compensation package is ultimately determined by the Compensation Committee, based upon its evaluation and input from our independent compensation consultant. Our CEO’s compensation ultimately reflects Gulfport’s performance, personal performance, competitive industry practices and the terms of our employment arrangement. +Each year, our CEO evaluates each of the other NEOs and makes compensation recommendations to the Compensation Committee. In developing recommendations, the CEO considers the recommendations of the Compensation Committee’s independent compensation consultant, as well as each NEO’s performance against the Company performance metrics and contribution to Gulfport’s performance. The independent compensation consultant reviews and provides comments to the Compensation Committee based on our CEO’s recommendation with respect to our NEOs, other than our CEO. Our CEO does not participate in deliberations or decisions concerning his own compensation. +The Role of the Compensation Consultants +The Compensation Committee has retained Pearl Meyer as its independent compensation consultant. For 2019, Pearl Meyer assisted the Compensation Committee in developing a competitive total compensation program that is consistent with our philosophy of goal -oriented pay for performance. This allows us to attract, retain and motivate talented executives. Pearl Meyer’s services included providing an annual analysis of the compensation of our top executive officers and their counterparts at peer companies, as well as the peer group review described above. The analysis compares each element of compensation and total direct compensation awarded by Gulfport and our peers. In addition, Pearl Meyer helped the Compensation Committee consider the allocation between annual incentive and long -term equity -based compensation and between the types of long -term equity -based incentive awards. Pearl Meyer also provided support with regulatory and other considerations that affect compensation programs generally, as requested by the Compensation Committee, as well as assistance in preparation of the CD&A. +During early 2019, Pearl Meyer provided input to the Compensation Committee with respect to the executive compensation program design for 2019, the metrics and targets under the Company’s annual incentive plan for 2019 and considerations relevant to the Compensation Committee’s 2019 compensation decisions. +Pearl Meyer reported exclusively to the Compensation Committee. The Compensation Committee reviewed the independence of Pearl Meyer and determined that there were no conflicts of interest as a result of the Compensation Committee’s engagement. +The Compensation Committee evaluates the independence of its compensation consultant(s) on an ongoing basis. +During 2019, management engaged Frederic W. Cook & Co., Inc., or FW Cook, to serve as management’s outside compensation consultant, who provided market data and other information to management in connection with the design of the Company’s executive compensation program for 2019, including a review of base salary, total cash compensation and total direct compensation levels for the Chief Executive Officer and other senior executives. Certain of the market data and other information provided by FW Cook was also made available to the Compensation Committee and Pearl Meyer. +40 2020 PROXY STATEMENT +EXECUTIVE SUMMARY +2019 COMPENSATION PROGRAM DESCRIPTION +Base Salary +The Compensation Committee engaged Pearl Meyer to review the overall competitiveness of our executive compensation programs for 2019, with continued focus on ensuring the alignment of management compensation with performance and the achievement of Gulfport’s long -term strategic goals. The Compensation Committee reviews executive officer base salaries on an annual basis, with a goal of providing market competitive, fixed cash compensation. The Compensation Committee assesses comparable salary information provided by its independent compensation consultant as one factor when determining the base pay for NEOs. +Other factors the Compensation Committee considers in determining base pay for each of the NEOs are: the executive officer’s responsibilities, experience, leadership, potential future contribution and demonstrated individual performance. The relative weighting of these factors varies by executive depending on his or her position and responsibilities. In August 2019, the base salaries of our CEO and COO were adjusted to reflect competitive pay levels when compared to other similar positions after reviewing median base pay levels at our Company’s selected peer group firms. As reflected in the employment agreements for Mr. Wood and Mr. Moore, which were entered into effective August 1, 2019, Mr. Wood’s base salary was set at $834,000, and Mr. Moore’s base salary was set at $505,000, which more accurately reflected base pay at the 50 th percentile for the CEO and COO positions as compared to our compensation peer group. Mr. Hicks’ base salary was set at $425,000 in his employment agreement entered into on August 9, 2019. Mr. Craine’s base salary was set at $435,000 upon his hire date of May 20, 2019. No other changes were made to NEOs’ base salaries during 2019. +Annual Incentive Awards +The Compensation Committee established a performance -based annual incentive program for 2019 that tied our executives’ compensation directly to pre -established performance metrics. Targeted annual incentive award levels were based on market information supplied by the independent compensation consultant. Individual awards may be decreased at the discretion of the Compensation Committee based on overall corporate performance for the year and other considerations. +2019 Annual Incentive Bonus Metrics +In 2019, the Compensation Committee continued to incentivize our executives to increase Gulfport’s value through our pay for performance Annual Incentive Plan. This Annual Incentive Plan aligns our executives’ interests with those of our stockholders by making the executive compensation heavily dependent on increasing Gulfport’s operational and financial performance, as well as rewarding our executives for executing the Company’s long -term strategic goals, including in the areas of health, safety and environmental responsibility. The Compensation Committee, after carefully reviewing the operational plan and commodity pricing forecast for 2019, established performance targets as described below in the first quarter of 2019. +To achieve these objectives, the Compensation Committee, consistent with market practices, identified critical performance metrics that are based on objective criteria, including total stockholder return relative to the Company’s peer group for 2019 and stimulating appropriate levels of growth versus capital efficiencies, and established a set of balanced metrics discussed below and assigned weights that it deemed appropriate to each metric. In setting these metrics and assigning weights, the Compensation Committee carefully considered each of these metrics’ impact on our business, profitability, production and stockholder return, as well as our desire to balance operational, financial and stockholder return targets with the goal to execute on our strategic goals and continue to improve our safety and environmental record, including the following specific considerations: +• Free Cash Flow Metric (35%) . This metric is a strong measure of our Company’s health as it improves ability for future investment and is aligned with Company strategy and investor expectations. We define free cash flow as cash flow from operating activities before changes in operating assets and liabilities less capital expenditures incurred. This metric was integrated into the 2019 annual incentive bonus plan in direct response to our stockholders’ feedback. +• Return on Average Capital Employed Metric (20%) . This metric is a strong capital efficiency measure which measures the Company’s balance sheet health through two core metrics of debt and profitability and is aligned with investor expectations. +2020 PROXY STATEMENT 41 +EXECUTIVE SUMMARY +• Cash Flow Margin ( Adjusted EBITDA per MCFE) Metric (20%) . This metric is a good indicator of operating efficiency and profitability and is aligned with investor expectations. We define this measure as EBITDA less non -cash derivative change in fair value, litigation settlement, insurance proceeds, rig terminations fees, restructuring costs, gain on debt extinguishment, non -recurring general and administrative expenses and loss from equity method investments divided by our total production on an MCFE basis. +• Production Per Debt Adjusted Share Metric (15%) . This metric motivates maintenance of balance sheet strength while pursuing growth, keeps the incentive plan from rewarding growth at all costs and is aligned with Company strategy and investor expectations. This metric is measured on a per debt adjusted share basis, calculated as outstanding debt at year -end divided by share price plus total shares outstanding. +• Health, Safety and Environmental (10%) . This metric is focused on balancing our operational targets with our commitment to continue improving in the areas of environmental responsibility, motor vehicle safety and other health and safety initiatives. +The 2019 annual incentive thresholds, targets and maximums set by the Compensation Committee were based on predetermined financial and key performance measures determined in the first quarter of 2019. The Compensation Committee reviewed financial results, as disclosed below, and key performance indicators and approved 2019 payout results based on those achievements which resulted in an overall payout of 50% of target awards. Below is a summary of results for 2019. +2019 STI Metrics +Weighting +Threshold +Target +Maximum +2019 +Actual +2019 +Payout +Free Cash Flow +35% +$90 +$100 +$120 +$38 +0% +Return on Average Capital Employed (ROACE) +20% +10% +12% +14% +6% +0% +Cash Flow Margin (Adj. EBITDA per Mcfe) +20% +$1.63 +$1.67 +$1.74 +$1.63 +10% +Production per Debt Adjusted Share (MCFE/share) +15% +3.56 +3.62 +3.72 +4.28 +30% +Health, Safety & Environmental +10% +Qualitative +10% (1) +Total Achievement Payout +100% +50% +(1) Based on 36% decrease in Total Recordable Incident Rate year -over-year , 82% decrease in loss -time injuries year -over-year , 38% reduction in reportable spills year -over-year , and 85% reduction in preventable motor vehicle accidents year -over-year . +2019 Target Annual Incentive Opportunities and Actual Annual Incentive Payments +The Compensation Committee established the target annual incentive opportunity for each NEO, taking into consideration the terms of any applicable employment agreement, and approved the following payments based on the Company’s 2019 performance as described above. +Name +Target Annual Incentive +(as % of Base Salary) +Target Annual +Incentive +Actual Annual Incentive +(as % of Target Annual Incentive) +2019 Payment +David M. Wood +125% +$1,042,500 +50% +$521,250 +Quentin R. Hicks (1) +90% +$ 382,500 +50% +$ 66,406 +Donnie Moore +100% +$ 505,000 +50% +$252,500 +Patrick K. Craine (1) +90% +$ 391,500 +50% +$120,169 +Michael Sluiter +60% +$ 216,000 +50% +$108,000 +Keri Crowell (2) +80% +$ 289,840 +50% +— +Stuart Maier (2) +80% +$ 331,200 +50% +— +(1) Mr. Hicks’ and Mr. Craine’s annual incentive payments were pro -rated based on their hire dates. +(2) Ms. Crowell and Mr. Maier terminated employment with the Company during 2019, and did not receive an annual incentive payment for 2019. +42 2020 PROXY STATEMENT +EXECUTIVE SUMMARY +Inducement/Sign-On Bonus +Pursuant to Mr. Hicks’ employment agreement, Mr. Hicks received a one -time $150,000 cash inducement bonus when he joined the Company. Additionally, Mr. Craine received a sign -on bonus of $50,000 and Mr. Sluiter received a sign -on bonus of $150,000 in 2019. +Long-Term Incentive Awards +Each year we grant our NEOs long -term incentive awards, that have historically consisted of equity -based awards. The Compensation Committee determines the amount of these awards, as well as the mix of equity vehicles. The objectives of our long -term incentive plan are to: (i) create significant alignment between the interests of our NEOs and our stockholders; (ii) attract and retain the services of critical talent; and (iii) focus our executives on our sustained growth and financial success. +Subsequent Events +Pursuant to our Current Report on Form 8 -K , filed with the SEC on March 17, 2020, Gulfport approved a new form of incentive plan which allows for the grant of cash awards in 2020 and thereafter, in each case, subject to the achievement of one or more performance goals or service -based compensation conditions. +DETERMINING AWARD STRUCTURE AND SETTING THE TARGET AWARD OPPORTUNITY +The Compensation Committee reviewed market values with respect to the annual long -term incentive awards granted to similarly situated executives at the Compensation Peer Group companies as well as executive compensation data provided by Pearl Meyer and FW Cook when determining the appropriate value of awards to grant for 2019. The Compensation Committee targeted long -term equity -based incentive opportunity at approximately the median of the Compensation Peer Group. Awards were made after the financial results for the most recently completed fiscal quarter had been reported. The Compensation Committee had an opportunity to evaluate the Company’s operating results for 2018 and at the same time the Company was making its major compensation decisions for 2019. +For 2019, in response to our stockholders’ feedback, the Compensation Committee determined that for our NEOs: (i) 50% of the equity awards will consist of performance -based restricted stock units, vesting after a three -year performance period, based on the Company’s achievement of targeted weighted average RTSR in comparison to the peer group during the performance period and the executive’s continuous service through the last day of the performance period, and (ii) 50% of the equity awards will consist of time -vesting restricted stock units, vesting over a three -year period commencing on the one -year anniversary of the grant. TSR for a company is its average fair market value for the 20 -trading days at the end of the performance period, minus its average fair market value for the 20 -trading days ending on the first day of the performance period, plus dividends paid per share of common stock during the performance period, divided by the fair market value on the first day of the performance period. The RTSR generally requires the Company’s TSR to be ranked at the 55 th percentile of the peer group to result in target payout of 100%, and any payout is capped at 100% if absolute TSR is negative over the measurement period. +The Compensation Committee considers the grant date fair value of the long -term incentive package, the package’s potential dilutive effect on our outstanding shares of common stock and the number of shares available for grant under the 2019 Amended and Restated Stock Incentive Plan (“the Stock Incentive Plan”) in determining the aggregate number of shares to be awarded as individual long -term incentive awards for our executives. The Compensation Committee evaluates stockholder dilution based on equity compensation “burn rates,” which refers to a measure of the speed at which companies use (or burn) shares available for grant in their equity compensation plans compared to the total amount of the Company’s outstanding common stock. In determining the appropriate long -term incentive awards to grant NEOs other than the CEO, the Compensation Committee considers the recommendations of the CEO. In 2019, we provided long -term incentive awards for our NEOs at target levels that, on average, were aligned with the 50 th percentile of our Compensation Peer Group, depending on their respective targeted total direct compensation. Mr. Wood, who joined us as our Chief Executive Officer and President on December 18, 2018, received his long -term incentive awards in February of 2019, which was approved by stockholders at the 2019 Annual Meeting. In determining the equity awards to be granted to Mr. Wood in connection with his employment, the Compensation Committee considered the total compensation of top executives at the companies in the 2019 Compensation Peer Group, Mr. Wood’s extensive experience as an executive and director in public oil and gas companies and the competitive hiring environment for top executives. +2020 PROXY STATEMENT 43 +EXECUTIVE SUMMARY +2019 Long-Term Incentive Awards – Introduced Performance-Based LTI Awards +The Compensation Committee has determined equity awards granted to our NEOs in 2019 would be equally divided between performance -based restricted stock units tied to RTSR, vesting at the end of a three -year cumulative performance period as compared to the 2019 Compensation Peer Group, and time -vesting restricted stock units, vesting ratably over a three -year period. +For the performance -based restricted stock units, the Compensation Committee selected the RTSR performance measure because it believes executive pay under a long -term , capital accumulation program such as this should mirror our long -term performance in stockholder return as compared to other public companies in our industry. Payments pursuant to the performance -based restricted stock units will be made in Company stock. +From 0% to 200% of the target award will be paid out following a three -year performance period (January 1, 2019 to December 31, 2021) based upon the Company’s TSR relative to the TSR of companies in our 2019 Compensation Peer Group; provided that the grantee must remain in continuous employment with the Company through December 31, 2021. Based on the Company’s RTSR rank among the 2019 Compensation Peer Group for the performance period, a grantee will receive a payout equal to a percentage of the target award determined by the Company’s percentile rank as follows: +Long-Term Incentive Payout Percentages +The Company’s Percentile Rank +Payout Percentage of Target Award +80 th or higher +200% +55 th +100% +30 th +50% +Less than 30 th +0% +For percentile ranks falling between the 30 th and 55 th percentile or between the 55 th and the 80 th percentile of the 2019 Compensation Peer Group, the payout percentage of the target award will be linearly interpolated based on the actual percentile ranking of the Company in relation to the payout levels. If the Company’s absolute TSR is negative, the payout percentage will be limited to a maximum of 100% of the target award. +While any payout for the performance -based restricted stock units would occur after the performance period (2019 -2021 ) and would be based on the RTSR of Gulfport Energy stock, the period -to-date performance is below the threshold performance goal and would not result in any payout at this time. +Equity Awards – Performance-based Restricted Stock Units/Time-vesting Restricted Stock Units +Payments with respect to performance -based restricted stock unit awards (PSUs) are only earned if performance measurements are achieved and the individual continues to be employed at the end of the performance period. Payments with respect to time -vesting restricted stock unit awards (RSUs) are only earned if the individual continues to be employed by us on each applicable vesting date of the award. The following table provides each NEO’s annual target equity award and the total number of performance -based and time -vesting restricted stock unit awards provided to each NEO in August 2019 as part of the annual compensation review process, after giving consideration to their respective targeted total direct compensation and, for Mr. Wood, in accordance with the terms of his appointment. +Named Executive Officer +2019 LTI Award (RSUs) +2019 LTI Award (PSUs) +David M. Wood (1) +350,610 +228,659 +Quentin Hicks (2) +— +— +Donnie Moore +242,742 +242,742 +Patrick K. Craine (3) +212,265 +140,323 +Michael Sluiter (4) +236,122 +116,129 +Keri Crowell +— +— +Stuart Maier (5) +112,742 +112,742 +(1) On February 26, 2019, in accordance with the terms of his appointment and his offer letter, Mr. Wood was granted an award of 121,951 time -vesting restricted stock units granted under the Stock Incentive Plan, with a value of $1,000,000 determined based on the closing price +44 2020 PROXY STATEMENT +EXECUTIVE SUMMARY +per share of our common stock on The Nasdaq Global Market on February 25, 2019. In addition, he received a grant of 228,659 time -vesting restricted stock units that will vest annually in three approximately equal installments beginning February 26, 2020 and 228,659 performance -based restricted stock units that will vest based on performance and continued service over a three -year period, in accordance with the Stock Incentive Plan. +(2) Mr. Hicks, who was appointed as our Executive Vice President, Chief Financial Officer on August 26, 2019, did not receive any equity awards in 2019. +(3) Mr. Craine, who joined the Company as Executive Vice President, General Counsel and Corporate Secretary, effective May 20, 2019, was granted an inducement award of 71,942 restricted stock units under the Stock Incentive Plan, with a value of $386,329, determined based on the closing price per share of common stock on the Nasdaq Global Market on June 6, 2019. In addition, he received a grant of 140,323 time -vesting restricted stock units that will vest annually in three approximately equal installments beginning August 6, 2020 and 140,323 performance -based restricted stock units that will vest based on performance and continued service over a three -year period, in accordance with the Stock Incentive Plan. +(4) Mr. Sluiter, who joined the Company as Senior Vice President of Reservoir Engineering, effective December 3, 2018. On February 26, 2019, in accordance with the term of his appointment and offer letter, Mr Sluiter was granted an inducement award of 119,993 restricted stock units under the Stock Incentive Plan, with a value of $983,943, determined based on the closing price per share of common stock on the Nasdaq Global Market on February 25, 2019. In addition, he received a grant of 116,129 time -vesting restricted stock units that will vest annually in three approximately equal installments beginning August 6, 2020 and 116,129 performance -based restricted stock units that will vest based on performance and continued service over a three -year period, in accordance with the Stock Incentive Plan. +(5) Mr. Maier separated from the Company as Senior Vice President of Geosciences, effective December 20, 2019. All unvested stock units were forfeited in connection with Mr. Maier’s departure in December 2019. +COMPENSATION POLICIES AND PRACTICES +Compensation Risk Management +The Compensation Committee reviews the risks and rewards associated with our compensation policies and programs. We believe that our policies and programs encourage and reward prudent business judgment, encourage short -term stockholder value creation, and prioritize long -term growth by discouraging excessive risk taking. Specific elements of compensation include: +• Integrated Approach – Our programs balance short- and long -term incentives for our executive officers by providing an appropriate mix of fixed, performance -based , discretionary and equity compensation, with the goal of creating both short- and long -term stockholder value. +• Attract Top Talent – Annual base salaries for our NEOs do not encourage excessive risk -taking as they are fixed amounts that are subject to discretionary increases by our Compensation Committee that may be based on, among other factors, annual performance evaluations. We believe that annual base salaries are set at reasonable levels, as compared to the base salaries of similarly -situated individuals at our peer group companies, and do not negate the effect of other compensation elements that encourage long -term service, growth and performance that may increase stockholder value. +• Support Business Objectives and Strategic Goals – Our annual incentive awards are determined based on Company and individual performance measures, both operational and strategic, which mitigate excessive risk -taking that could produce unsustainable gains in one area of performance at the expense of our overall long -term interests. The Company’s goals are designed to ensure a proper balance between stock performance, operational measures, financial goals and strategic goals. In addition, the Compensation Committee sets performance goals that it believes are reasonable considering our past performance, then -current business projections and market conditions. +• Pay for Performance – The Compensation Committee believes that performance -based equity awards tied to RTSR and cash compensation, with meaningful performance targets, such as those under the Annual Incentive Plan, will further align our executives’ interests with those of our stockholders, will motivate our executives to contribute to the Company’s growth and profitability and will link a larger portion of our executives’ compensation to the performance of the Company. +• Maximize Stockholder Value – Our annual incentive awards are subject to maximum payout caps that limit the amount an executive may earn on inputs for certain of our operational measures. +• Create Ownership Culture – Performance -based and time -vesting restricted stock unit awards, in each case, vesting over a three -year period, granted to our executive officers, as well as the implementation of robust stock ownership guidelines for our executive officers and non -employee directors, promote stock ownership culture and ensure that +2020 PROXY STATEMENT 45 +EXECUTIVE SUMMARY +our executives and directors have a continuing stake in the long -term success of the Company. We believe that our long -term equity awards to our executive officers discourage excessive risk taking, as they are equally balanced between performance -based and time -vesting awards and moderates the risk that may otherwise exist if equity awards were to vest based strictly on achieving certain targets. +The Compensation Committee believes that the Company utilizes compensation policies and programs that minimize risks that may have a material adverse impact on the Company. +Clawback Provisions +Under the Sarbanes -Oxley Act of 2002, incentive compensation received by our Chief Executive Officer and Chief Financial Officer may be subject to clawback in the event of a restatement of our financial statements. Under the Stock Incentive Plan, each award pursuant to the Stock Incentive Plan is conditioned on repayment or forfeiture in accordance with applicable laws, our Company policies and any relevant provisions in the related award agreements. Further, under the terms of our employment agreements effective as of January 1, 2017, with Ms. Crowell and Mr. Maier, August 1, 2019, with Messrs. Wood, Moore, and Craine, and August 9, 2019 with Mr. Hicks (the “Employment Agreements”), any equity awards granted, any proceeds of any equity awards that previously have been sold, transferred or otherwise disposed of, and any annual incentive award will be subject to clawback by us, now or in the future, under the Dodd -Frank Act and the Sarbanes -Oxley Act, each as amended, and their rules, regulations and binding, published guidance. +Stock Ownership Guidelines for Executive Officers +We believe it is important for our executive officers to align their financial interests with those of our stockholders. Accordingly, effective January 1, 2019, our Board of Directors adopted a formal stock ownership policy that requires our CEO to achieve a stock ownership level equal to the value of common stock that is five times the value of his annual base salary within five years of the effective date of the stock ownership policy. The Compensation Committee also designated that NEOs are subject to the stock ownership policy. The stock ownership level for our NEOs is three times the value of their respective annual base salaries to be achieved within five years of the effective date of our stock ownership policy. None of our executive officers have been in their position long enough to be required to meet the minimum stock ownership guidelines, however all are on track to do so within the prescribed timeframe, either through expected grants or open market purchases made by several executives. +Our non -employee directors are also subject to the stock ownership policy discussed above under “Stock Ownership Guidelines for Directors.” +Anti-Hedging and Pledging Policies +We have a policy prohibiting directors, executive officers and certain other designated employees from speculative trading in our securities, including hedging transactions, short selling, and trading in put options, call options, swaps or collars or holding our securities in margin accounts. We also have a policy prohibiting directors, executive officers and certain other designated employees from pledging Gulfport securities. To our knowledge, all individuals are in compliance with these policies. +Termination and Change of Control Benefits +As noted above, certain of our NEOs are (or were formerly) parties to Employment Agreements with the Company which provides (or provided) for certain payments and benefits in the event of a termination under specific circumstances. The agreements are designed to avoid distraction potentially detrimental to stockholder value upon a change in control and to enhance protection for the executives in connection with such events. These agreements are described in more detail under “Employment Agreements and Termination and Change of Control Benefits.” +Perquisites and Other Personal Benefits +We provide certain of our NEOs with a limited number of perquisites or other personal benefits, primarily consisting of life insurance premiums, Company -sponsored sporting events tickets, and in Mr. Wood and Mr. Hicks’ cases, customary relocation and moving expenses. We believe these limited benefits help provide a competitive compensation package. The value of these benefits is disclosed in the “Summary Compensation Table.” +46 2020 PROXY STATEMENT +EXECUTIVE SUMMARY +In February 2019, we adopted an aircraft use policy for aircraft chartered or owned by the Company. We restrict personal use of Company -owned or chartered aircraft by our executive officers and other employees, as well as by members of our Board of Directors. Our aircraft use policy requires that any personal use of Company -owned or chartered aircraft by any NEO be reported as a perquisite, based on the aggregate incremental value of such personal use. There was no personal use of Company -owned or chartered aircraft in 2019. +Accounting Implications of Executive Compensation Policy +We are required to recognize compensation expense of all stock -based awards pursuant to the provisions of FASB ASC Topic 718, “Compensation -Stock Compensation.” Under U.S. generally accepted accounting principles, or GAAP, only vested shares are included in basic shares outstanding. Also, under GAAP, non -vested shares are included in diluted shares outstanding when the effect is dilutive. +The Compensation Committee believes that linking a large portion of our executive officers’ compensation to both performance -based long -term equity incentive awards and performance -based bonus arrangements, with meaningful performance metrics, appropriately aligns our executives’ interests with those of our stockholders and are consistent with market practices. The Compensation Committee also believes that our current compensation policies and practices enhance retention of executive talent through multi -year vesting of stock awards and discourage unnecessary and excessive risk taking. The Compensation Committee further believes that our other compensation policies and practices, such as our policy prohibiting pledging and hedging of our stock by our executive officers and directors, as well as the lack of significant perquisites and absence of pension or supplemental retirement benefits (aside from those afforded under our broad -based 401(k) plan) for our executive officers are consistent with prudent compensation philosophy and the interests of our stockholders. The Compensation Committee will continue to consider the outcome of our stockholders’ future “say -on-pay ” votes when making compensation decisions for our NEOs. +Compensation Committee Report +The Compensation Committee has reviewed and discussed the foregoing Compensation Discussion and Analysis with management. Based on its review and discussion with management, the Compensation Committee recommended that the Compensation Discussion and Analysis be included in this proxy statement. +Respectfully submitted by the Compensation Committee: +Ben T. Morris, Chairman +Deborah G. Adams +Alvin Bledsoe +Dated: May 27, 2020 +Compensation Committee Interlocks and Insider Participation +No member of our Compensation Committee during the past fiscal year is or has ever been an officer or employee of ours, or has engaged in any related party transaction in which our Company was a participant. None of our executive officers during the past fiscal year serves, or has served during the past fiscal year, as a member of the Board of Directors or Compensation Committee of any other company that has one or more executive officers serving, or that has served during the past fiscal year, as a member of our Board of Directors or Compensation Committee. +2020 PROXY STATEMENT 47 +Compensation Tables +SUMMARY COMPENSATION TABLE +The following table provides information concerning compensation for the fiscal years ended December 31, 2019, December 31, 2018 and December 31, 2017 of our principal executive officer, our current and former principal financial officers, our next three most highly paid executive officers and a former Company executive who departed from the Company during 2019. +Name and Principal Position +Year +Salary +($) +Bonus +($) (1) +Stock +Awards +($) (2) +Non-Equity +Incentive Plan +Compensation +($) (3) +All Other +Compensation +($) (4) +Total +($) +David M. Wood (5) +2019 +$782,840 +— +$5,083,848 (6) +$521,250 +$ 36,080 +$6,424,018 +Chief Executive Officer and President +2018 +$ 11,538 +— +— +— +$ 347 +$ 11,885 +2017 +— +— +— +— +— +— +Quentin R. Hicks (7) +2019 +$138,944 +$150,000 +— +$ 66,406 +$ 80,825 +$ 436,175 +Executive Vice President, +2018 +— +— +— +— +— +— +Chief Financial Officer +2017 +— +— +— +— +— +— +Donnie Moore (8) +2019 +$459,398 +— +$1,233,129 (9) +$252,500 +$ 29,870 +$1,974,897 +Executive Vice President, +2018 +$413,581 +$400,000 +$1,200,001 (10) +$292,485 +$ 10,772 +$2,316,835 +Chief Operating Officer +2017 +— +— +— +— +— +— +Patrick K. Craine (11) +2019 +$259,333 +$ 50,000 +$1,099,169 (12) +$120,169 +$ 9,052 +$1,537,723 +Executive Vice President, +2018 +— +— +— +— +— +— +General Counsel and Corporate Secretary +2017 +— +— +— +— +— +— +Michael Sluiter (13) +2019 +$360,004 +$150,000 +$1,573,878 (14) +$108,000 +$ 72,099 +$2,263,981 +Senior Vice President of Reservoir +2018 +— +— +— +— +— +— +2017 +— +— +— +— +— +— +Keri Crowell (15) +2019 +$229,926 +— +— +— +$552,728 +$ 782,654 +Former Chief Financial Officer +2018 +$362,300 +— +$1,098,942 (16) +$246,364 +$ 18,943 +$1,726,549 +2017 +$349,495 +— +$ 976,800 (17) +$266,000 +$ 22,717 +$1,615,012 +Stuart Maier (18) +2019 +$414,002 +— +$ 572,729 (19) +— +$448,036 +$1,434,767 +Former Senior Vice +2018 +$414,000 +— +$ 698,891 (20) +$211,140 +$ 19,315 +$1,343,346 +President of Geosciences +2017 +$400,000 +— +$ 568,320 (21) +$228,000 +$ 23,067 +$1,219,387 +(1) Represents one -time cash inducement bonuses paid to Mr. Hicks, Mr. Craine and Mr. Sluiter upon joining the Company. +(2) The amount reported in the Stock Awards column reflects the fair value of the applicable award of restricted stock, performance -based restricted stock units or time -vesting restricted stock units on the award date. The amounts were calculated in accordance with FASB ASC Topic 718 using certain assumptions, as set forth in Note 1 and Note 7 to our consolidated financial statements for the fiscal year ended December 31, 2019 under the headings “Summary of Significant Accounting Policies – Accounting for Stock -based Compensation” and “Stock -Based Compensation,” respectively, included in our Annual Report on Form 10 -K , filed with the SEC on February 27, 2020. Restricted stock unit values are based on the closing price of the Company’s common stock on the grant date. In valuing the performance share unit awards, the Company used a Monte Carlo simulation. Performance share units vest based on performance and continued service over a three -year period common and the maximum award opportunity for each NEO for the 2019 PSU awards as of the grant date is as follows: Mr. Wood 457,318, Mr. Moore 485,484, Mr. Craine 280,646, Mr. Sluiter 232,258 and Mr. Maier 225,484. +(3) The amounts shown reflect performance -based annual incentive bonuses granted under the 2014 Executive Annual Incentive Compensation Plan. For the 2019 amounts, the Compensation Committee certified the attainment of the related performance goals February 25, 2020, and the Company paid these performance -based annual incentive bonuses March 27, 2020. +(4) The amount for Mr. Wood for 2019 and 2018 includes $8,746 and $347, respectively for our 401(k) plan contribution and in 2019, $1,697 attributable to Company sponsored sporting event tickets, $4,356 attributable to group term life insurance and relocation of $21,281. The amount for Mr. Hicks in 2019 includes $8,400 for our 401(k) plan contribution, $2,165 attributable to Company sponsored sporting event tickets, $260 attributable to group term life insurance coverage, and relocation of $70,000. Amounts for Mr. Moore for 2019 and 2018 include $21,048 and $8,250, respectively for our 401(k) plan contribution, $5,984 and $1,272, respectively, attributable to Company sponsored sporting event tickets and $2,838 and $1,250, respectively, attributable to group term life insurance coverage. The amount for Mr. Craine in 2019 includes $8,400 for our 401(k) plan contribution and $652 attributable to group term life insurance. The amount for Mr. Sluiter in 2019 includes $10,823 for our 401(k) plan contribution, $286 attributable to Company sponsored sporting event tickets, $990 attributable to group term life insurance coverage and relocation of $60,000. Amounts for Ms. Crowell for 2019, 2018, and 2017 represent $21,048, $16,506, and $20,295, respectively, for our 401(k) plan contributions, $1,594, $1,072, and $1,042, respectively, attributable to Company sponsored sporting tickets and $600, $1,365, and $1,380, respectively, attributable to group term life insurance coverage. The amount for Ms. Crowell also includes a $362,500 separation payment, $43,787 as a paid time off balance payout, a $2,399 Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) reimbursement and $120,800 payable for services as an independent contractor. Amounts for Mr. Maier for 2019, 2018, and 2017 include $21,048, $16,506, and $20,295, respectively, for our 401(k) plan contributions, $2,884, $1,444, and $1,392, respectively, attributable to Company sponsored sporting event tickets and $8,382, $1,365, and $1,380, respectively, attributable to group term life insurance coverage. The amount for Mr. Maier also includes a $368,460 separation payment, $40,159 as a paid time off balance payout and a $7,103 COBRA reimbursement. +48 2020 PROXY STATEMENT +Compensation Tables +(5) Mr. Wood was appointed to serve as our Chief Executive Officer and President, and as a member of our Board of Directors, effective December 18, 2018. +(6) Mr. Wood was granted an inducement award amount of 121,951 restricted stock units under the Stock Incentive Plan, with a value of $1,000,000 determined based on the closing price per share of common stock on the Nasdaq Global Market on February 25, 2019. In addition, he received a grant of 228,659 restricted stock units that will vest annually in three approximately equal installments beginning February 26, 2020 and 228,659 performance -based restricted stock units that will vest based on performance and continued service over a three -year period, in accordance with the Stock Incentive Plan. +(7) Mr. Hicks was appointed as our Chief Financial Officer on August 26, 2019. +(8) Mr. Moore was appointed as our Chief Operating Officer effective January 8, 2018. He also served as Interim Chief Executive Officer of the Company from October 29, 2018, the date our former Chief Executive Officer and President left the Company, to December 18, 2018, the date of the appointment of Mr. Wood as our Chief Executive Officer and President. +(9) Mr. Moore was granted an award of 242,742 restricted stock units that will vest annually in three approximately equal installments beginning August 6, 2020 and 242,742 performance -based restricted stock units that will vest based on performance and continued service over a three -year period, in accordance with the Stock Incentive Plan. +(10) Mr. Moore’s award of 137,143 restricted stock units was granted on February 19, 2018, of which 45,714 vested on February 27, 2019, 45,714 vested on February 27, 2020 and the remaining 45,715 restricted stock units will vest on February 27, 2021. +(11) Mr. Craine was appointed our General Counsel and Corporate Secretary on May 20, 2019. +(12) Mr. Craine was granted an inducement award amount of 71,942 restricted stock units under the Stock Incentive Plan, with a value of $386,329 determined based on the closing price per share of common stock on the Nasdaq Global Market on June 6, 2019. In addition, he received a grant of 140,323 restricted stock units that will vest in annually three approximately equal installments beginning August 6, 2020 and 140,323 performance -based restricted stock units that will vest based on performance and continued service over a three -year period, in accordance with the Stock Incentive Plan. +(13) Mr. Sluiter is a named executive officer for the first time, and his compensation for 2018 has been omitted in reliance upon the SEC’s interpretive guidance. +(14) Mr. Sluiter, who joined the Company as Senior Vice President of Reservoir Engineering, effective December 3, 2018, was granted an inducement award amount of 119,993 restricted stock units under the Stock Incentive Plan, with a value of $983,943 determined based on the closing price per share of common stock on the Nasdaq Global Market on February 25, 2019. In addition, he received a grant of 116,129 restricted stock units that will vest annually in three approximately equal installments beginning August 6, 2020 and 116,129 performance -based restricted stock units that will vest based on performance and continued service over a three -year period, in accordance with the Stock Incentive Plan. +(15) Ms. Crowell was appointed as our Chief Financial Officer on January 4, 2017 and separated from the Company on August 9, 2019. +(16) Ms. Crowell’s award of 115,800 restricted stock units was granted on April 18, 2018, of which 38,600 restricted stock units vested on April 18, 2019 and the remaining 77,200 were forfeited in connection with Ms. Crowell’s departure in August 2019. +(17) Ms. Crowell’s award of 55,000 restricted stock units was granted on February 27, 2017, vested in three approximately equal annual installments ending on August 27, 2019. +(18) Mr. Maier separated from the Company as Senior Vice President of Geosciences, effective December 20, 2019. +(19) Mr. Maier’s award of 225,484 time and performance based restricted stock units was granted on August 6, 2019, all of which were forfeited in connection with Mr. Maier’s departure in 2019. +(20) Mr. Maier’s award of 73,645 restricted stock units was granted on April 18, 2018, of which 24,548 restricted stock units vested on April 18, 2019, and the remaining 49,097 restricted stock units were forfeited in connection with Mr. Maier’s departure in 2019. +(21) Mr. Maier’s award of 32,000 restricted stock units was granted on February 27, 2017, vested in three approximately equal annual installments ending on August 27, 2019. +2020 PROXY STATEMENT 49 +Compensation Tables +2019 GRANTS OF PLAN -BASED AWARDS +The following table provides information concerning each grant of an award made to our NEOs in the fiscal year ended December 31, 2019 under any Company plan. +Estimated Future Payouts Under +Non-Equity Incentive Plan Awards (1) +Estimated Future Payouts under +Equity Incentive Plan Awards (2) +All Other +Stock Awards: Number of +Shares of Stock +or Units +(#) (3) +Grant Date +Fair Value of +Stock +Awards +($) (4) +Name +Grant +Date +Threshold +($) +Target +($) +Maximum +($) +Threshold +(#) +Target +(#) +Maximum +(#) +David M. Wood +— +$ 521,250 +$1,042,500 +$2,085,000 +— +— +— +— +— +Chief Executive +2/26/19 +— +— +— +— +— +— +121,951 +$1,000,000 +Officer and +2/26/19 +— +— +— +114,330 +228,659 +457,318 +— +$2,208,844 +President +2/26/19 +— +— +— +— +— +— +228,659 +$1,875,004 +Quentin R. Hicks (5) +— +$ 66,406 +$ 132,812 +$ 265,624 +— +— +— +— +— +Chief Financial Officer +Donnie Moore +— +$ 252,500 +$ 505,000 +$1,010,000 +— +— +— +— +— +Chief Operating +8/6/19 +— +— +— +121,371 +242,742 +485,484 +— +$ 480,629 +Officer +8/6/19 +— +— +— +— +— +— +242,742 +$ 752,500 +Patrick K. Craine (5) +— +$ 120,169 +$ 240,338 +$ 480,676 +— +— +— +— +— +Executive Vice President, General Counsel +6/6/19 +— +— +— +— +— +— +71,942 +$ 386,329 +and Corporate +8/6/19 +— +— +— +70,162 +140,323 +280,646 +— +$ 277,840 +Secretary +8/6/19 +— +— +— +— +— +— +140,323 +$ 435,001 +Michael Sluiter +— +$ 108,000 +$ 216,000 +$ 432,000 +— +— +— +— +— +Senior Vice +2/26/19 +— +— +— +— +— +— +119,993 +$ 983,943 +President of +8/6/19 +— +— +— +— +— +— +116,129 +$ 360,000 +Reservoir +8/6/19 +— +— +— +58,065 +116,129 +232,258 +— +$ 229,935 +Keri Crowell +— +— +— +— +— +— +— +— +— +Former Chief Financial Officer +Stuart Maier +8/6/19 +— +— +— +— +— +— +112,742 +$ 349,500 +Former Senior +8/6/19 +— +— +— +56,371 +112,742 +225,484 +— +$ 223,229 +Vice President +of Geosciences +(1) Reflects performance -based annual incentives granted under the 2019 Annual Incentive Plan and assumes threshold performance achievement on all metrics as described above. +(2) Reflects performance -based restricted stock units granted under the 2019 Long Term Incentive Plan. +(3) Reflects time -vesting restricted stock units granted under the Stock Incentive Plan. +(4) The amounts reported for performance and time -based restricted stock units in the “Grant Date Fair Value of Stock Awards” column reflect the fair value of the applicable awards on the award date. The amounts were calculated in accordance with FASB ASC Topic 718 using certain assumptions, as set forth in Note 1 and Note 7 to our consolidated financial statements for the fiscal year ended December 31, 2019 under the headings “Summary of Significant Accounting Policies — Accounting for Stock -based Compensation” and “Stock -Based Compensation,” respectively, included in our Annual Report on Form 10 -K , filed with the SEC on February 27, 2020. +(5) Mr. Hicks’ and Mr. Craine’s annual incentive awards were pro -rated based on their hire dates. +50 2020 PROXY STATEMENT +Compensation Tables +OUTSTANDING EQUITY AWARDS AT 2019 FISCAL YEAR -END +The following table provides information concerning equity awards outstanding for our NEOs and our next three most highly paid executive officers at December 31, 2019. +Stock Awards +Name +Number of +Shares or +Units of Stock +That Have +Not Vested (1) +(#) +Market Value of +Shares or +Units of Stock +That Have +Not Vested (1) +($) +Equity Incentive +Plan Awards: +Number of +Unearned +Shares, Units +or Other Rights +That Have +Not Vested +(#) (2) +Equity Incentive +Plan Awards: +Market of +Payout Value of +Unearned Shares, +Units or Other +Rights That Have +Not Vested +($) (2) +David M. Wood (3) +350,610 +$1,065,854 +114,330 +$347,562 +Quentin R. Hicks (4) +— +— +— +— +Donnie Moore (5) +334,171 +$1,015,880 +121,371 +$368,968 +Patrick K. Craine (6) +212,265 +$ 645,286 +70,162 +$213,291 +Michael Sluiter (7) +236,122 +$ 717,811 +58,065 +$176,516 +Keri Crowell (8) +— +— +— +— +Stuart Maier (9) +— +— +— +— +(1) Market value of shares or units that have not vested is based on the closing price of $3.04 per share of our common stock on the Nasdaq Global Select Market on December 31, 2019, the last trading day of 2019. +(2) Performance -based restricted stock units granted during 2019 shown at the threshold level based on results for the first year of the 2019 -2021 performance period. The performance units awarded in 2019 will vest based on performance and continued service over a three -year period, and payout occurs in shares of common stock or cash at the end of the three -year period. +(3) Mr. Wood was granted an inducement award amount of 121,951 restricted stock units under the Plan, that will vest annually in three approximately equal installments beginning February 26, 2020. In addition, he received a grant of 228,659 restricted stock units that will vest annually in three approximately equal installments beginning February 26, 2020, and 228,659 performance -based restricted stock units that will vest based on performance and continued service over a three -year period, in accordance with the plan, per the terms of his offer letter, which was approved by stockholders at the 2019 Annual Meeting. +(4) Mr. Hicks, who was appointed as our Chief Financial Officer on August 26, 2019, did not receive any equity awards in 2019. +(5) Mr. Moore’s award of 137,143 restricted stock units was granted on February 19, 2018, of which 45,714 vested on February 27, 2019, 45,714 vested on February 27, 2020 and the remaining 45,715 restricted stock units will vest on February 27, 2021. In addition, Mr. Moore received a grant of 242,742 restricted stock units that will vest in three approximately equal installments beginning August 6, 2020, and 242,742 performance share units that will vest based on performance and continued service over a three -year period, in accordance with the plan. +(6) Mr. Craine received an inducement award of 71,942 restricted stock units that will vest in three approximately equal installments beginning June 6, 2020. In addition, he received a grant of 140,323 restricted stock units that will vest in three approximately equal installments beginning August 6, 2020, and 140,323 performance share units that will vest based on performance and continued service over a three -year period, in accordance with the plan. +(7) Mr. Sluiter received an inducement award of 119,993 restricted stock units that will vest in three approximately equal installments beginning February 26, 2020. In addition, he received a grant of 116,129 restricted stock units that will vest in three approximately equal installments beginning August 6, 2020, and 116,129 performance share units that will vest based on performance and continued service over a three -year period, in accordance with the plan. +(8) Ms. Crowell separated from the Company as Chief Financial Officer, effective August 9, 2019. All of Ms. Crowell’s unvested restricted stock or restricted stock units were forfeited as of that date. +(9) Mr. Maier separated from the Company as Senior Vice President of Geosciences, effective December 20, 2019. All of Mr. Maier’s unvested restricted stock or restricted stock units were forfeited as of that date. +2020 PROXY STATEMENT 51 +Compensation Tables +2019 STOCK VESTED +The following table provides the number of shares acquired upon vesting of restricted stock awards for our named executive officers. +Stock Awards +Name +Number +of Shares +Acquired on +Vesting +(#) +Value +Realized on +Vesting (1) +($) +David M. Wood (2) +— +— +Quentin R. Hicks (3) +— +— +Donnie Moore +45,714 +$354,741 +Patrick K. Craine (4) +— +— +Michael Sluiter (5) +— +— +Keri Crowell (6) +58,934 +$308,666 +Stuart Maier (7) +35,215 +$190,147 +(1) Value realized on vesting is based on the vesting date closing price per share of our common stock on The Nasdaq Global Select Market. If the vesting date was not a trading day, the value is based on the closing price per share of our common stock on The Nasdaq Global Select Market on the last trading day prior to the vesting date. +(2) Mr. Wood was appointed to serve as our Chief Executive Officer and President, and as a member of our Board of Directors, effective December 18, 2018. On February 26, 2019, Mr. Wood received an inducement award of 121,951 restricted stock units and a long -term equity incentive award of 228,659 restricted stock units which will vest in three approximately equal installments. None of his previous grants vested in 2019. +(3) Mr. Hicks, who was appointed as our Chief Financial Officer on August 26, 2019, did not receive any equity awards in 2019. +(4) Mr. Craine joined the Company as General Counsel and Corporate Secretary on May 24, 2019. He received an inducement award of 71,942 on June 6, 2019, and a long -term equity incentive award of 140,323 restricted stock units on August 6, 2019, which will vest in three approximately equal installments. None of his previous grants vested in 2019. +(5) Mr. Sluiter joined the Company as Senior Vice President of Reservoir Engineering, effective December 3, 2018. He received an inducement award of 119, 993 on February 26, 2019, and a long -term equity incentive award of 116,129 restricted stock units on August 6, 2019, which will vest in three approximately equal installments. None of his previous grants vested in 2019. +(6) Ms. Crowell separated from the Company on August 9, 2019. All of Ms. Crowell’s remaining unvested restricted stock awards were forfeited as of that date. +(7) Mr. Maier separated from the Company on December 20, 2019. All of Mr. Maier’s remaining unvested restricted stock or restricted stock units were forfeited as of that date. +52 2020 PROXY STATEMENT +Benefit Plans +401(k) Plan +We maintain a retirement savings plan, or a 401(k) Plan, for the benefit of our eligible employees who have attained the age of 18. Currently, employees may elect to defer their compensation up to the statutorily prescribed limit. During the year, we make a safe harbor contribution equal to 3% of each eligible employee’s eligible annual compensation with each pay period. We also have the ability to make an additional, discretionary contribution based on each eligible employee’s eligible annual compensation for the prior calendar year. Both contributions are made, regardless of employees’ deferrals into the plan. In 2019, we made safe harbor contributions of 3% and discretionary contributions of 3% of eligible compensation for eligible employees, subject to certain limitations provided by our 401(k) Plan and Internal Revenue Service (“IRS”) regulations. All contributions made by us on behalf of an employee are 100% vested when contributed. The 401(k) Plan is intended to qualify under Sections 401(a) and 501(a) of the Code. Contributions to the 401(k) Plan and earnings on those contributions are not taxable to the employees until distributed from the 401(k) Plan, and all contributions are deductible by us when made. +2019 AMENDED AND Restated Stock Incentive Pla n +The Stock Incentive Plan, which amended and restated our 2013 Restated Stock Incentive Plan, was adopted and approved by our stockholders during the 2019 Annual Meeting. The Stock Incentive Plan authorizes the grant of various forms of stock -based compensation, referred to as equity awards. The Board believes that stock -based compensation is a very important factor in attracting and retaining experienced and talented employees who can contribute significantly to the management, growth and profitability of our business. This authorization enabled us to attract and retain the services of the types of employees, consultants and directors who will contribute to our long -term success and to provide incentives that are linked directly to increases in share value that will benefit our stockholders. The Board believes that stock -based compensation is critical for alignment of the interests of our management with the interests of our stockholders. The availability of equity awards not only increases employees’ focus on the creation of stockholder value, but also enhances employee retention and generally provides increased motivation for our employees to contribute to the future success of the Company. +The Stock Incentive Plan provides eligible recipients an opportunity to receive awards and benefit from increases in value of our common stock through the granting of incentive stock options, nonstatutory stock options, restricted awards (restricted stock and restricted stock units), performance awards and stock appreciation rights. The Compensation Committee serves as the plan administrator and as of December 31, 2019, an aggregate of 9,306,056 shares of restricted common stock, restricted stock units and incentive stock options had been granted under this plan and there remained 3,193,944 shares available for future grants under this plan. The amendment and restatement of the Stock Incentive Plan added 5,000,000 shares to the Stock Incentive Plan’s share reserve, by increasing the maximum number of shares available for issuance from 7,500,000 shares to 12,500,000 shares. +2014 Executive Annual Incentive Compensation Pla n +The 2014 Annual Incentive Compensation Plan, or Annual Incentive Plan, was approved by our Board of Directors on April 1, 2014, and by our stockholders at the 2014 Annual Meeting of Stockholders on June 11, 2014. Our executive officers and selected employees are eligible to receive awards under the Annual Incentive Plan. The Annual Incentive Plan provides for awards of incentive compensation that are contingent on the attainment of specific performance targets. Under the Annual Incentive Plan, the Compensation Committee, as the plan administrator, establishes the performance targets for each award and the performance period during which the performance is to be measured, which will generally be our fiscal year. Performance targets may include a minimum level of performance below which no payment will be made, levels of performance at which specified percentages of the award will be paid, and a maximum level of performance above which payment will be capped at the highest specified percentage. +Performance targets for each award will be based on pre -established performance factors that may relate to the performance of the Company or the performance of a business unit, product line, territory or any combination of these. Performance targets for employees who are not executive officers may also be based on other additional objective or subjective performance criteria established by the plan administrator. +The plan administrator may at any time establish additional conditions and terms of payment of awards, including additional financial, strategic or individual goals, which may be objective or subjective. +2020 PROXY STATEMENT 53 +Benefit Plans +Unless the plan administrator provides otherwise, a participant must be employed by us on the date that awards are paid to receive an award payment, except in the case of death or disability. If a participant dies or becomes disabled during a performance period, the participant (or the participant’s beneficiary) will receive a pro -rated award payment at the same time all other awards are paid for the performance period. In the event of a change in control, each named executive officer will be paid the target award amount (mid -point of any specified range of potential award payment amount) based on the assumption that the performance target was attained at the target level (mid -point of any specified range of performance targets) for the entire performance period. The target award amount will be paid within 10 days following the consummation of the change in control transaction. +The plan administrator may at any time amend or terminate the Annual Incentive Plan in whole or in part. +Our Board of Directors has delegated its authority to administer the Annual Incentive Plan to the Compensation Committee, to whom we refer as the plan administrator. The plan administrator has the authority to administer the Annual Incentive Plan and to exercise all the powers and authorities either specifically granted to it under the Annual Incentive Plan or necessary or advisable in the administration of the Annual Incentive Plan, including (but not limited to) the following: +• Interpret the Annual Incentive Plan and any award; +• Prescribe rules relating to the Annual Incentive Plan; +• Determine the persons to receive awards; +• Determine the terms, conditions, restrictions and performance criteria, including performance factors and performance targets, relating to any award; +• Accelerate an award that is designed not to be deferred compensation subject to Code Section 409A (after the attainment of the applicable performance target or targets); +• Adjust performance targets in recognition of specified events such as unusual or non -recurring events affecting us or our financial statements, including certain asset dispositions, cessation of operations resulting from a natural disaster, or in response to changes in applicable laws, regulations, or accounting principles as specified in the Annual Incentive Plan or in the performance targets established for any performance period; +• Waive restrictive conditions for an award (but not performance targets); and +• Make any other determinations that may be necessary or advisable for administration of the Annual Incentive Plan. +54 2020 PROXY STATEMENT +Benefit Plans +EQUITY COMPENSATION PLAN INFORMATIO N +The following table sets forth, as of December 31, 2019, certain information with respect to all compensation plans under which equity securities are authorized for issuance. 30 +Plan Category +Number of +securities to +be issued upon +exercise of +outstanding +options, +warrants and +rights (a) (1)(2)(3) +Weighted +average +exercise price +of outstanding +options, +warrants and +rights (b) (3) +Number of +securities +remaining +available for +future issuance +under equity +compensation +plans excluding +securities +reflected in +column (a) +Equity compensation plans approved by security holders (1) +4,672,300 +$ — +3,193,944 +(1) Refers to the Stock Incentive Plan (which amended and restated our 2013 Restated Stock Incentive Plan, which in turn, amended and restated our Amended and Restated 2005 Stock Incentive Plan) and our 1999 Stock Option Plan. +(2) Includes an aggregate of 4,672,300 unvested restricted stock units and shares of unvested restricted stock granted under the Stock Incentive Plan. +(3) No options were outstanding as of December 31, 2019, and neither restricted stock units nor shares of restricted common stock have an exercise price. +Employment Agreements and Termination and Change of Control Benefits +As indicated above, certain of our NEOs are (or were formerly) parties to an Employment Agreement with the Company. Pursuant to the Employment Agreements (“Current Employment Agreements”) with Messrs. Wood, Moore, Hicks and Craine (“Covered NEOs”), each Current Employment Agreement provides for an initial term that extends through December 31, 2023; provided that the agreement will automatically renew for successive one -year terms unless the Company or the Covered NEOs gives written notice not to renew at least 90 days before the end of the initial term or any renewal term. If a change of control (as described in the Current Employment Agreement) occurs during the term thereof, the term will be extended to the later of the original expiration date of the term or the date that is 24 months after the effective date of the change of control. The Current Employment Agreements provide each Covered NEO with, among other things: (i) an annual base salary of $834,000, $505,000, $425,000 and $435,000, for Messrs. Wood, Moore, Hicks and Craine, respectively, (ii) eligibility to earn a target annual bonus under the Company’s annual incentive plan equal to 125%, 100%, 90% and 90% of base salary for Messrs. Wood, Moore, Hicks and Craine, respectively, (iii) eligibility for annual grants of equity awards as determined in the sole discretion of the Compensation Committee pursuant to the Company’s equity compensation plans; provided that, with respect to the calendar year ending December 31, 2020, each of Messrs. Wood, Moore, Hicks and Craine will receive awards that have a target aggregate fair value of 500%, 350%, 200% and 200% of base pay, respectively, and (iv) benefits that are customarily provided to similarly situated executives of the Company. In addition, our Covered NEOs will be entitled to receive specified payments and benefits upon certain termination events pursuant to the Current Employment Agreements, including termination following a change of control. The Compensation Committee believes that these provisions will encourage our Covered NEOs to remain in our employment in the event of a change of control of the Company and during circumstances which indicate that a change of control might occur. The Compensation Committee believes termination and change of control benefits are important in maintaining strong leadership and in encouraging retention in these situations and encourages our Covered NEOs to act in the best interests of stockholders without distraction based on uncertainty regarding their employment status. Under the Current Employment Agreements, if a Covered NEO’s employment is terminated without “cause” by the Company or by the Covered NEO for “good reason” during such time that is not within the 24 month period following a “change of control” (as such terms are defined or described in the Current Employment Agreements), such Covered NEO will be entitled to severance compensation equal to: +• 100% of annual base salary and target annual bonus; +• pro -rata target annual bonus; +• pro -rata vesting of the Covered NEO’s unvested equity awards (with performance award vesting based on performance through the termination date); +2020 PROXY STATEMENT 55 +Benefit Plans +• immediate vesting of any Company matching or other contributions to the Company’s non -qualified deferred compensation plans, if any (“Company Non -Qualified Contributions”); and +• a lump sum payment equal to the Covered NEO’s monthly COBRA premium for a 12 -month period. +If, however, such Covered NEO’s employment is terminated without cause by the Company or by the Covered NEO for good reason, in each case, within 24 months following a change of control, such Covered NEO will be entitled to severance compensation equal to: +• 200% of annual base salary and target annual bonus; +• pro -rata target annual bonus; +• immediate vesting of the Covered NEO’s unvested equity awards (with performance award vesting based on performance through the termination date); +• immediate vesting of any Company Non -Qualified Contributions; and +• a lump sum payment equal to the Covered NEO’s monthly COBRA premium for an 18 -month period. +Under the Current Employment Agreements: +“Good reason” is generally defined as (i) the elimination of the Covered NEO’s position, a material reduction in the duties and/or reassignment of the Covered NEO to a new position of materially less authority; or (ii) a material reduction in the Covered NEO’s base salary, in either case, subject to a cure period of 30 days. +“Cause” is generally defined as (i) the Covered NEO’s willful and continued failure to perform substantially such Covered NEO’s duties with the Company (other than any such failure resulting from incapacity due to physical or mental illness) or (ii) the Covered NEO’s willful engaging in illegal conduct or gross misconduct which is materially and demonstrably injurious to the Company. +Severance benefits payable under the Current Employment Agreements are generally conditioned on timely execution of a waiver and release of claims. Each such Current Employment Agreement also contains a one -year post -employment non -solicitation clause and standard confidentiality, trade secrets and cooperation provisions. +We previously entered into Employment Agreements (the “Legacy Employment Agreements”) with each of Keri Crowell, our former Chief Financial Officer, and Stuart Maier, our former Senior Vice President of Geosciences, each effective as of January 1, 2017. +Ms. Crowell and Mr. Maier each agreed to certain restrictive covenants in his or her Legacy Employment Agreement, including such executive’s agreement (i) not to interfere with any of our employees, suppliers, vendors, joint venturers or licensors and not to solicit our customers or employees, in each case during such executive’s employment with us and for a period of two years thereafter, (ii) not to disclose our confidential information or trade secrets and (iii) not to compete with us while using our trade secrets. Upon a termination without “cause,” the Legacy Employment Agreements provided that the applicable executive would be entitled to receive (i) any accrued benefits (defined below), (ii) severance pay in an amount equal to one months’ base salary for each full year of employment with us, not to exceed 12 months, and (iii) COBRA coverage as required by applicable law; provided that, in the case of clauses (ii) and (iii), the executive continues to comply with the restrictive covenants described above and the executive executes a full general release in our favor. +On August 9, 2019, Ms. Crowell separated from the Company. As part of her severance arrangement, Ms. Crowell was paid, $362,500 and reimbursement for COBRA benefits for a period of up to 12 months. Ms. Crowell forfeited any unvested shares upon her termination. In addition, Mr. Maier separated from the Company effective December 20, 2019, as part of a headcount reduction program. As part of his severance arrangement, Mr. Maier was paid, $7,103 for COBRA benefits for a period of up to 12 months. Mr. Maier forfeited any unvested shares upon his termination. +56 2020 PROXY STATEMENT +Benefit Plans +Termination, Resignation or Change of Contro l +The following tables provide information regarding potential payments as of December 31, 2019 to each of our named executive officers as of December 31, 2019 in connection with certain termination events, including a termination related to a change of control of the Company. +Benefits and Payments Upon Termination (1) +Termination +Upon +Death or +Disability (2) +Termination +by Company +Other than +for Cause +Termination +for Cause +Involuntary +Termination +Within +24 Months +Following +Change of +Control +David M. Wood +Severance Payments +— +$2,919,000 (3) +— +$4,795,500 (4) +Long -Term Incentives: +Unvested Restricted Stock Units (5) +$1,065,854 +$ 299,802 +— +$1,065,854 +Unvested Performance Stock Units (5) +$ 695,123 +$ 195,523 +— +$ 695,123 +Benefits Continuation (6)(7) +— +$ 16,617 +— +$ 24,925 +Total +$1,760,977 +$3,430,942 +— +$6,581,402 +Quentin R. Hicks +Severance Payments +— +$ 940,589 (3) +— +$1,748,089 (4) +Long -Term Incentives: +Unvested Restricted Stock Units (5) +— +— +— +— +Unvested Performance Stock Units (5) +— +— +— +— +Benefits Continuation (6)(7) +— +$ 20,316 +— +$ 30,473 +Total +— +$ 960,905 +— +$1,778,562 +Donnie Moore +Severance Payments +$1,515,000 (3) +— +$2,525,000 (4) +Long -Term Incentives: +Unvested Restricted Stock Units (5) +$1,015,880 +$ 219,000 +— +$1,015,880 +Unvested Performance Stock Units (5) +$ 737,936 +$ 99,065 +— +$ 737,936 +Benefits Continuation (6)(7) +— +$ 20,316 +— +$ 30,473 +Total +$1,753,816 +$1,853,381 +— +$4,309,289 +Patrick K. Craine +Severance Payments +— +$1,067,836 (3) +— +$1,894,336 (4) +Long -Term Incentives: +Unvested Restricted Stock Units (5) +$ 645,286 +$ 98,811 +— +$ 645,286 +Unvested Performance Stock Units (5) +$ 426,582 +$ 57,267 +— +$ 426,582 +Benefits Continuation (6)(7) +— +$ 20,459 +— +$ 30,689 +Total +$1,071,868 +$1,244,373 +— +$2,996,893 +(1) Information in this table assumes a termination date of December 31, 2019 and a price per share of our common stock of $3.04 (the closing market price per share on December 31, 2019, the last trading day of 2019), and applies the terms of the executives’ compensation agreements as of August 2019. Performance -based bonuses are calculated using 100% achievement for illustration, though payouts may vary based on actual results. Mr. Hicks’ and Mr. Craine’s annual incentive amounts were pro -rated based on their hire dates. Ms. Crowell and Mr. Maier’s employment terminated in 2019 and the terms of their severance are described above the table. +2020 PROXY STATEMENT 57 +Benefit Plans +(2) Upon death or disability, the executive or their estate, as applicable, is entitled to receive all accrued and unpaid salary, immediate vesting of all restricted stock units and performance stock units and other compensation payable to the executive (including vacation and sick pay) with respect to services rendered through the termination date. +(3) Reflects receipt by the executive of a payment representing their earned but unpaid compensation, as well as an amount of severance equal to the annual base salary and target bonus in effect as of December 31, 2019 (the “severance payment”), payable in accordance with the terms of the agreement. +(4) Reflects receipt by the executive of a payment representing their earned but unpaid compensation, as well as an amount of severance equal to two times the annual base salary and target bonus in effect as of December 31, 2019 (the “severance payment”), payable in accordance with the terms of the agreement. +(5) Pro -rated unvested restricted stock units and performance stock units vest upon termination by the Company other than for cause or termination within 24 months following a change of control. +(6) Reflects the value of Company -paid continuation coverage under the Company’s group health plans and under COBRA for the executive and eligible family members for a period of 12 months following the date of termination. +(7) Reflects the value of Company -paid continuation coverage under the Company’s group health plans and under COBRA for the executive and eligible family members for a period of 18 months following the date of termination. +58 2020 PROXY STATEMENT +CEO Pay Ratio Disclosur e +Pursuant to Item 402(u) of Regulation S -K , we are disclosing the pay ratio and supporting information comparing the median of the annual total compensation of our employees (including full -time , part -time , seasonal and temporary employees) other than Mr. Wood, our Chief Executive Officer and President, and the annual total compensation of Mr. Wood, our Chief Executive Officer and President. The pay ratio is calculated in a manner consistent with Item 402(u) of Regulation S -K . +For the year ended December 31, 2019, our last completed fiscal year: +• The median of the annual total compensation of all our employees, other than Mr. Wood was $107,741. +• The annual total compensation of Mr. Wood was $6,424,018. +Based on this information, for 2019 the ratio of the annual total compensation of Mr. Wood, our Chief Executive Officer and President, to the median of the annual total compensation of all other employees was 60:1. +We selected December 31, 2019 as the date upon which we identified the “median employee.” To identify the median employee, we examined the Medicare Taxable Earnings as reported on IRS Form W -2 (Box 5) for 2019 for all individuals employed by us on December 31, 2019 (other than Mr. Wood). +Once we identified our median employee, we calculated that employee’s annual total compensation for 2019 in the same manner that we determined the total compensation of our named executive officers for purposes of the Summary Compensation Table set forth above. This resulted in an annual total compensation of $107,741 for the identified employee for the year ended December 31, 2019. The calculation of the total compensation for Mr. Wood is included in the Summary Compensation Table set forth above. We made no material assumptions, adjustments, or estimates to identify the median employee or to determine total compensation, and we did not annualize the compensation for any employees that were not employed by us the entire year. +We believe that the above pay ratio is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S -K . In addition, because the Securities and Exchange Commission rules for identifying the median employee allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios. +2019 DIRECTOR COMPENSATION +Our policy is that members of our Board of Directors who are also our officers or employees do not receive compensation for their services as directors. The compensation of our non -employee directors for 2019 is described below. +Cash Compensation +Effective January 1, 2019, based on the recommendation of Pearl Meyer, our Board of Directors eliminated attendance fees for Board and Committee meetings and increased the annual retainer for each non -employee director from $65,000 to $85,000. In addition, effective January 1, 2019, the Chairman of the Board receives an additional $85,000 annual retainer and the chairperson of each of our Board Committees receives an additional annual retainer as set forth in the table below. +Equity Compensation +Effective January 1, 2019, our Board of Directors, based on the recommendation of the independent compensation consultant and the Compensation Committee, increased the annual grant of restricted stock units for our non -employee directors from an aggregate value of approximately $125,000 for 2018 to approximately $175,000 for 2019 based on the closing price of our common stock on the date of grant, which represents approximately two -thirds of our non -employee director’s annual compensation. Each grant of restricted stock will vest on the earlier of (a) the date of our next annual meeting of stockholders and (b) the one -year anniversary of the date of the grant, so long as the non -employee director is in continuous service on that date. +2020 PROXY STATEMENT 59 +CEO Pay Ratio Disclosure +Program Component +2019 Program +Annual base cash retainer for Board service +$ 85,000 +Additional cash retainer to non -executive Chairman +$ 85,000 +Audit Committee Chair cash retainer +$ 20,000 +Compensation Committee Chair cash retainer +$ 15,000 +Nominating and Corporate Governance Committee Chair cash retainer +$ 10,000 +Sustainability Committee Chair retainer +$ 10,000 +Annual equity grant +$ 175,000 +Stock ownership guideline +5.0x annual +base retainer +Stock Ownership Guidelines for Directors +We believe it is important for members of our Board of Directors to align their financial interests with those of our stockholders. Accordingly, effective January 1, 2019, our Board of Directors adopted a formal stock ownership policy that requires our non -employee directors to achieve a stock ownership level equal to the value of common stock that is five times the value of their annual retainer within five years of the effective date of our stock ownership policy. +2019 Director Compensation Table +The following table contains 2019 compensation information for our non -employee directors who served during 2019. The CEO does not receive compensation for serving as a director of the Company. +Name +Fees Earned or +Paid in Cash +($) (1) +Stock +Awards +($) (2) +Option +Awards +($) (2) +Total +($) +Alvin Bledsoe (3) +— +— +— +— +Deborah G. Adams +$ 95,000 +$174,988 +— +$269,998 +Craig Groeschel +$ 85,000 +$174,988 +— +$259,998 +David L. Houston +$170,000 +$174,988 +— +$344,998 +Valerie Jochen (3) +— +— +— +— +C. Doug Johnson +$105,000 +$174,988 +— +$279,998 +Ben T. Morris +$ 95,000 +$174,988 +— +$269,998 +Scott E. Streller +$100,000 +$174,988 +— +$274,998 +Paul D. Westerman +$ 85,000 +$174,988 +— +$259,998 +(1) For additional information regarding the fees earned or paid in cash to our non -employee directors in 2019, please see “2019 Director Compensation – Cash Compensation” on page 59 of this proxy statement. In addition, the non -executive Chairman receives a $85,000 cash retainer, the Audit Committee Chair receives a $20,000 cash retainer, the Compensation Committee Chair receives a $15,000 cash retainer and the Nominating and Corporate Governance Committee Chair and Sustainability Committee Chair each receive $10,000 cash retainers. +(2) The amounts shown reflect the grant date fair value of restricted stock unit awards granted, determined in accordance with FASB ASC Topic 718. See Note 1 and Note 7 to our consolidated financial statements for the fiscal year ended December 31, 2019 under the headings “Summary of Significant Accounting Policies – Accounting for Stock -based Compensation” and “Stock -Based Compensation,” respectively, included in our Annual Report on Form 10 -K , filed with the SEC on February 27, 2020, regarding assumptions underlying valuations of equity awards for 2019. There were 32,588 unvested restricted stock units at the end of 2019 for each of Ms. Adams and Messrs. Groeschel, Houston, Johnson, Morris, Streller and Westerman, reflecting the award granted to each director on June 6, 2019. +(3) Mr. Bledsoe joined the Board in January 2020 and Ms. Jochen joined the Board in February 2020. As a result, neither received compensation in 2019. +60 2020 PROXY STATEMENT +BENEFICIAL OWNERSHIP +HOLDINGS OF DIRECTORS, DIRECTOR NOMINEES AND OFFICERS +The following table sets forth certain information regarding the beneficial ownership as of May 1, 2020 of shares of our common stock by each of our directors, by each named executive officer and by all directors, executive officers and nominees as a group: +Name of Beneficial Owner (1) +Amount and Nature of +Beneficial Ownership +Percent of Class +David M. Wood (2) +166,870 +* +Alvin Bledsoe (3) +— +Deborah G. Adams (4) +46,687 +* +Samantha Holroyd (5) +20,500 +* +David L. Houston (4) +96,855 +* +Valerie Jochen (6) +— +* +C. Doug Johnson ( 4)(7) +63,672 +* +Ben T. Morris (4) +64,981 +* +Paul D. Westerman (4)(8) +89,277 +* +John W. Somerhalder II (9) +— +* +Quentin R. Hicks (10) +15,000 +* +Donnie Moore (11) +76,262 +* +Patrick K. Craine (12) +38,981 +* +Michael Sluiter (13) +39,998 +* +Directors, Executive Officers and Nominee as a Group (14 persons) +719,083 +* +* Less than 1%. +(1) Beneficial ownership is determined in accordance with SEC rules. In computing percentage ownership of each person, shares of common stock subject to options held by that person that are exercisable as of May 1, 2020, or exercisable within 60 days of May 1, 2020, are deemed to be beneficially owned. These shares, however, are not deemed outstanding for the purpose of computing the percentage ownership of each other person. The percentage of shares beneficially owned is based on 159,872,688 shares of common stock outstanding as of May 1, 2020, including 5,806,422 shares of restricted stock awarded under the Stock Incentive Plan but not yet vested. Unless otherwise indicated, all amounts exclude shares issuable upon the exercise of outstanding options and vesting of restricted stock units that that are not exercisable and/or vested as of May 1, 2020 or within 60 days of May 1, 2020. Except as otherwise noted, each stockholder has sole voting and investment power with respect to the shares beneficially owned. +(2) Excludes (i) 233,740 unvested restricted stock units, which vest in two equal annual installments beginning on February 26, 2021 and (ii) 809,644 unvested restricted stock units, which vest in three approximately equal annual installments beginning on March 11, 2021. Also excludes (iii) 228,659 performance -based restricted stock units granted in 2019, vesting of which depends on the attainment of certain RTSR targets over the three -year performance period, subject to the Compensation Committee’s certification of the attainment of such targets and continuous service with the Company on the last day of the performance period. +(3) Excludes 65,574 restricted stock units, which will vest on January 3, 2021, if such director is in continuous service on such date. +(4) Includes 32,588 restricted stock units, which will vest on the earlier of June 6, 2020 and the date of the Annual Meeting, in each case if such director is in continuous service on such date. +(5) Ms. Holroyd is a director nominee. Based on a Form 4 filed by Ms. Holroyd with the SEC on April 21, 2020. +(6) Excludes 127,737 restricted stock units, which will vest on February 7, 2021, if such director is in continuous service on such date. +(7) Mr. Johnson holds 3,500 of these shares in a joint account owned by Mr. Johnson and his spouse, resulting in shared voting and dispositive power of such shares. +(8) Mr. Westerman shares voting and dispositive power of 56,689 shares with his spouse. +(9) Mr. Somerhalder is a director nominee. +(10) Excludes 191,411 unvested restricted stock units, which will vest in three approximately equal annual installments beginning on March 11, 2021. +(11) Excludes (i) 45,715 unvested restricted stock units, which will vest on February 26, 2021, (ii) 242,742 unvested restricted stock units, which will vest in three approximately equal annual installments beginning on August 6, 2020 and (iii) 352,981 unvested restricted stock units, which will vest in three approximately +2020 PROXY STATEMENT 61 +BENEFICIAL OWNERSHIP +equal annual installments beginning on March 11, 2021. Also excludes (iv) 242,742 performance -based restricted stock units granted in 2019, vesting of which depends on the attainment of certain RTSR targets over the three -year performance period, subject to the Compensation Committee’s certification of the attainment of such targets and continuous service with the Company on the last day of the performance period. +(12) Includes (i) 23,981 restricted stock units, which will vest on June 6, 2020. Excludes (ii) 47,961 unvested restricted stock units, which will vest in two approximately equal annual installments beginning on June 6, 2021, (iii) 140,323 unvested restricted stock units, which will vest in three approximately equal annual installments beginning on August 6, 2020 and (iv) 195,945 unvested restricted stock units, which will vest in three approximately equal annual installments beginning on March 11, 2021. Also excludes (v) 140,323 performance -based restricted stock units granted in 2019, vesting of which depends on the attainment of certain RTSR targets over the three -year performance period, subject to the Compensation Committee’s certification of the attainment of such targets and continuous service with the Company on the last day of the performance period. +(13) Excludes (i) 79,995 unvested restricted stock units, which will vest in two approximately equal annual installments beginning on February 26, 2021 (ii) 116,129 unvested restricted stock units, which will vest in three approximately equal annual installments beginning on August 6, 2020 and (iii) 145,386 unvested restricted stock units, which will vest in three approximately equal annual installments beginning on March 11, 2021. Also excludes (iv) 116,129 performance -based restricted stock units granted in 2019, vesting of which depends on the attainment of certain RTSR targets over the three -year performance period, subject to the Compensation Committee’s certification of the attainment of such targets and continuous service with the Company on the last day of the performance period. +Holdings of Major Stockholder s +The following table sets forth certain information regarding the beneficial ownership as of May 1, 2020 of shares of our common stock by each person or entity known to us to be a beneficial owner of 5% or more of our common stock. +Name and Address of Beneficial Owner (1) +Amount and Nature of +Beneficial Ownership +Percent of +Class (1) +BlackRock, Inc. +23,659,141 (2) +14.8% +55 East 52 nd Street +New York, NY 10055 +Firefly Value Partners, LP +20,906,000 (3) +13.1% +601 West 26 th Street, Suite 1520 +New York, NY 10001 +The Vanguard Group +15,992,674 (4) +10.0% +100 Vanguard Blvd. +Malvern, PA 19355 +Vitruvian II Woodford, LLC +13,704,357 (5) +8.6% +2445 Technology Forest Blvd., Suite 1100 +The Woodlands, TX 77381 +Dimensional Fund Advisors LP +12,822,209 (6) +8.0% +Building One +6300 Bee Cave Road +Austin, TX 78746 +Shah Capital Management +11,593,239 (7) +7.3% +8601 Six Forks Road Suite 630 +Raleigh, NC 27615 +State Street Global Advisors +11,501,138 (8) +7.2% +One Lincoln Street +Boston, MA 02111 +LSV Asset Management +7,973,953 (9) +5.0% +155 N. Wacker Drive, Suite 4600 +Chicago, IL 60606 +(1) Beneficial ownership is determined in accordance with SEC rules. The percentage of shares beneficially owned is based on 159,872,688 shares of common stock outstanding as of May 1, 2020, including 5,806,422 shares of restricted stock awarded under the Stock Incentive Plan or our Amended and Restated 2005 Stock Incentive Plan, but not yet vested. +62 2020 PROXY STATEMENT +BENEFICIAL OWNERSHIP +(2) Based solely on Schedule 13G/A filed with the SEC on February 4, 2020 by BlackRock, Inc. reported sole voting power of 23,659,141 shares of common stock and sole dispositive power of 23,260,265 shares of common stock, owned through BlackRock Fund Advisors, a wholly owned subsidiary of BlackRock, Inc. iShares Core S&P Small -Cap ETF, or iShare, an entity managed indirectly by BlackRock, Inc., has the right to proceeds from the sale of such securities. Therefore, BlackRock, Inc., BlackRock Fund Advisors, and iShares may be deemed to be the beneficial owners of such securities. +(3) Based solely on the Schedule 13D/A filed with the SEC on June 4, 2020, by FVP Master Fund, L.P. (“FVP Master”), Firefly Value Partners, LP, (“Firefly Value”), FVP GP, LLC (“FVP GP”), Firefly Management Company GP, LLC (“Firefly Management”), Ryan Heslop, Ariel Warszawski and Samantha Holroyd. The business address of each of Firefly Value, FVP GP, Firefly Management and Messrs. Heslop and Warszawski is 601 West 26 th Street, Suite 1520, New York, NY 10001. The business address of FVP Master is c/o dms Corporate Services, Ltd., P.O. Box 1344, dms House, 20 Genesis Close, Grand Cayman, KY1 -1108 , Cayman Islands. Each reporting person reported sole dispositive power and sole voting power of 20,906,000 shares of common stock (“the Firefly Shares”). The Firefly Shares represent the shares of common stock held by FVP Master. Firefly Value is the investment manager of FVP Master. FVP GP is the general partner of, and therefore has the right to control, FVP Master. Firefly Management is the general partner of, and therefore has the right to control, Firefly Value. Mr. Heslop and Mr. Warszawski are each managing members of FVP GP and Firefly Management, and therefore have the ability to control each such entity. Therefore, FVP Master, Firefly Value, FVP GP, Firefly Management, Ryan Heslop and Ariel Warszawski may be deemed to share voting and dispositive power over the Firefly Shares and may also be deemed to be the beneficial owners of such securities. Ms. Holroyd has disclaimed beneficial ownership of the Firefly Shares. The same Schedule 13D/A filed with the SEC on June 4, 2020 announced that Ms. Holroyd was no longer a member of the group of reporting persons for purposes of Schedule 13D filings. +(4) Based solely on Schedule 13G/A filed with the SEC on June 10, 2020 by The Vanguard Group, or Vanguard. Vanguard reported sole dispositive power of 15,742,621 shares of common stock, shared dispositive power of 250,053 shares of common stock and shared voting power of 154,783 shares of common stock. +(5) Based solely on Schedule 13G/A jointly filed with the SEC on February 12, 2019 by Vitruvian Exploration II Holdings, LLC, or VEX Holdings, Vitruvian Exploration II, LLC, or VEX, Q -VEX II, LP, or Q -VEX , QEM V, LLC, or QEM, and S. Wil VanLoh, Jr. Each reporting person reported sole dispositive power and sole voting power of 13,704,357 shares of common stock, or the Vitruvian Shares. The holdings reported represent the shares of common stock held by Vitruvian. VEX Holdings holds a majority of the capital interests of Vitruvian and has the right to appoint four of the six managers of the Vitruvian Board (such managers referred to herein as the VEX Holdings Managers). Certain actions of Vitruvian, including certain dispositions, require the approval of the VEX Holdings Managers. VEX has the right to appoint a majority of the board of managers of VEX Holdings. Q -VEX has the right to appoint a majority of the board of managers of VEX. QEM is the sole general partner of Q -VEX . Any decision taken by QEM to vote, or to direct to vote, and to dispose, or to direct the disposition of, the Vitruvian Shares has to be approved by a majority of the members of the investment committee of QEM, which majority must include S. Wil VanLoh, Jr. Therefore, VEX Holdings, VEX, Q -VEX , QEM and S. Wil VanLoh, Jr. may be deemed to share voting and dispositive power over the Vitruvian Shares and may also be deemed to be the beneficial owners of such securities. +(6) Based solely on Schedule 13G filed with the SEC on February 12, 2020 by Dimensional Fund Advisors LP, or Dimensional. Dimensional reported sole dispositive power of 12,822,209 shares of commons stock and sole voting power of 12,655,800 shares of common stock. +(7) Based solely on Schedule 13F filed with the SEC on April 8, 2020 by Shah Capital Management reported sole voting power of 11,593,239 shares of common stock. +(8) Based solely on Schedule 13G/A filed with the SEC on February 13, 2020 by State Street Corp. reported shared voting power of 10,865,406 shares of common stock and shared dispositive power of 11,501,138 shares of common stock. +(9) Based solely on Schedule 13G/A filed with the SEC on February 12, 2020 by LSV Asset Management. reported sole voting power of 5,907,553 shares of common stock and sole dispositive power of 7,973,953 shares of common stock. +CHANGE IN CONTROL +Except as otherwise disclosed in this proxy statement, we know of no arrangements, including any pledge by any person of our securities, the operation of which may at a subsequent date result in a change in control of the Company. +2020 PROXY STATEMENT 63 +Certain Relationships and Review and +Approval of Related Party Transactions +The Audit Committee, as provided in its charter, reviews and approves related party transactions. The Company does not have a formal set of standards to be substantively applied to each transaction reviewed by the Audit Committee. Instead of a formalized policy, related party transactions are reviewed and judgment is applied to determine whether such transactions are in the best interests of the Company. The Company’s Code of Business Conduct and Ethics governs various compliance areas, including conflicts of interest and fair dealings, which are considered in the process of the review and approval of related party transactions. +The Company’s policy is that all its employees and directors, as well as their family members, must avoid any activity that is or has the appearance of conflicting with the Company’s business interest. This policy is included in the Company’s Code of Business Conduct and Ethics posted on its website. Each director and executive officer is instructed to always inform the designated compliance officer when confronted with any situation that may be perceived as a conflict of interest. Only the Board of Directors or a committee consisting solely of independent directors may grant waivers of the provisions of the Code of Business Conduct and Ethics for the Company’s executive officers and directors. In addition, at least annually, each director and executive officer completes a detailed questionnaire specifying any business relationship that may give rise to a conflict of interest. +Under the Audit Committee charter, the Audit Committee is responsible for reviewing and monitoring compliance with our Code of Business Conduct and Ethics and recommending any warranted changes to the Board of Directors. In addition, the Board of Directors and, pursuant to its written charter, the Audit Committee, reviews and approves all relationships and transactions in which the Company and its directors, director nominees and executive officers and their immediate family members, as well as holders of more than 5% of any class of our voting securities and their family members, have a direct or indirect material interest. The Board of Directors and the Audit Committee approve only those transactions that, in light of known circumstances, are consistent, or are not inconsistent with, the Company’s best interests, as they determine in the good faith exercise of their discretion. +64 2020 PROXY STATEMENT +Proposal to Approve, on an Advisory, NON -BINDING Basis, +the Compensation Paid to the Company’s +Named Executive Officers +(Proposal 2 ) +The company is asking its stockholders to vote to approve, on an advisory, non -binding basis, the compensation paid to the Company’s named executive officers as reported in this proxy statement. This is also known as a “say on pay” vote. The Company’s stockholders are being asked to vote on the following resolution: +“RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S -K , including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby approved.” +This vote is advisory, which means that the vote on executive compensation is not binding on the Company, our Board of Directors or the Compensation Committee. While the vote on executive compensation is solely advisory in nature, our Board of Directors and the Compensation Committee will review and consider the “say on pay” voting results when making future decisions regarding our executive compensation program. +Stockholders are encouraged to carefully review the “Compensation Discussion and Analysis” section of this proxy statement, which discusses in detail the Company’s compensation policy and compensation arrangements which the Company believes are appropriate and reasonably consistent with market practice and with the long -term interests of the Company and its stockholders. In furtherance of the Company’s goals and objectives, the Compensation Committee, among other things, emphasizes long -term equity awards and annual performance bonuses under the previously implemented Annual Incentive Plan to more closely align our executives’ interests with those of our stockholders and to link a larger portion of our executives’ compensation to the performance of our stock and our operational performance. +We have determined that our stockholders should cast an advisory vote on the compensation of our named executive officers on an annual basis. Unless this policy changes, the next advisory vote on the compensation of our named executive officers will be at the 2021 Annual Meeting. +Vote Required and Board Voting Recommendation +Proposal 2 requires an affirmative vote “for” the proposal by a majority of the votes cast by the stockholders present in person or represented by proxy at the Annual Meeting and entitled to vote thereon. The persons named as proxies for the Company intend to vote the proxies “ FOR ” Proposal 2, unless otherwise specified. Abstentions and broker non -votes will have no effect on the voting results for Proposal 2. +THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” +THE APPROVAL, ON AN ADVISORY, NON -BINDING BASIS, OF THE COMPENSATION PAID TO +THE COMPANY’S NAMED EXECUTIVE OFFICERS. +2020 PROXY STATEMENT 65 +Proposal to Ratify the Appointment of Our Independent Auditors +(Proposal 3 ) +The Company is asking its stockholders to vote to ratify the appointment of Grant Thornton LLP as our independent auditors for fiscal year ending December 31, 2020. The Audit Committee has appointed Grant Thornton LLP to serve as independent auditors. +What services do the independent auditors provide? +Audit services of Grant Thornton LLP for fiscal year 2019 included an audit of our consolidated financial statements and services related to periodic filings made with the SEC. Additionally, Grant Thornton LLP provided certain services related to the consolidated quarterly reports as described below. +How much were the independent auditors paid in 2018 and 2019? +Grant Thornton LLP’s fees for professional services totaled $966,750 for 2018 and $966,000 for 2019. Grant Thornton LLP’s fees for professional services included the following: +• Audit Fees – aggregate fees for audit services, which relate to the fiscal year consolidated audit, quarterly reviews and accounting consultations were $966,750 for 2018 and $966,000 for 2019. +• Audit -Related Fees – aggregate fees for audit -related services, consisting of audits in connection with proposed or consummated dispositions, benefit plan audits, other subsidiary audits, special reports, and accounting consultations, were $0 in 2018 and $0 for 2019. +• Tax and All Other Fees – there w ere no tax or other fees for products or services provided by Grant Thornton LLP in addition to the services described above in 2018 and 2019. +Does the Audit Committee approve the services provided by Grant Thornton LLP? +It is our Audit Committee’s policy to pre -approve all audit, audit related and permissible non -audit services rendered to us by our independent auditor. Consistent with such policy, all of the fees listed above that we incurred for services rendered by Grant Thornton LLP in fiscal years 2018 and 2019 were pre -approved by our Audit Committee. No non -audit services were provided to us by Grant Thornton LLP in 2018 or 2019. +Will a representative of Grant Thornton LLP be present at the meeting? +Yes, one or more representatives of Grant Thornton LLP will be present at the meeting. The representatives will have an opportunity to make a statement if they desire and will be available to respond to appropriate questions from the stockholders. +Has Grant Thornton LLP always served as Gulfport’s independent auditors? +Grant Thornton LLP has served as our independent auditors since 2005. +Vote Required and Board Recommendation +Stockholder ratification of the appointment of our independent auditors is not required by the Bylaws or otherwise. However, we are submitting this proposal to the stockholders as a matter of good corporate practice. Approval of this proposal requires the affirmative vote “for” the proposal of a majority of the votes cast by the stockholders present in person or represented by proxy at the Annual Meeting and entitled to vote thereon. The persons named as proxies for the Company intend to vote the proxies “FOR” Proposal 3, unless otherwise specified. Abstentions and broker non -votes will have no effect on the voting results for Proposal 3. +If the appointment of Grant Thornton LLP is not ratified, the Audit Committee will reconsider the appointment. Even if the appointment is ratified, the Audit Committee in its discretion may direct the appointment of a different independent audit firm at any time during the year if it is determined that such change would be in best interests of the Company and its stockholders. +THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF GRANT THORNTON LLP AS THE COMPANY’S INDEPENDENT AUDITORS FOR THE YEAR 2020. +66 2020 PROXY STATEMENT +Audit Committee Repor t +The primary role of the Audit Committee is to assist the Board of Directors in its oversight of the Company’s accounting and financial reporting processes. In doing so, the Audit Committee is responsible for the appointment and compensation of the Company’s independent registered public accounting firm and has oversight for its qualification, independence and performance. The Audit Committee charter guides our duties and responsibilities. The Audit Committee charter, which was last amended during 2020, is available on the Company’s website at www.gulfportenergy.com. As set forth in the charter, management is responsible for the internal controls and accounting and financial reporting processes of Gulfport Energy Corporation. The independent registered public accounting firm is responsible for expressing opinions on the conformity of Gulfport Energy Corporation’s audited consolidated financial statements with generally accepted accounting principles and on the effectiveness of the Company’s internal control over financial reporting. Our responsibilities include monitoring and overseeing these processes. +Our Committee is comprised of four non -employee , independent members of the Board of Directors. No member serves on more than two other public company audit committees. The Board of Directors has determined that all of the members of the Audit Committee are financially literate and that Doug Johnson and Alvin Bledsoe are financial experts as that term is defined by the SEC. The members of our Committee are not professionally engaged in the practice of accounting or auditing. The Audit Committee’s considerations and discussions referred to below do not assure that the audit of the Company’s financial statements has been carried out in accordance with generally accepted auditing standards, that the financial statements are presented in accordance with generally accepted accounting principles or that the Company’s auditors are in fact “independent”. +In the performance of our oversight function, we have reviewed and discussed the audited financial statements of the Company for the fiscal year ended December 31, 2019 and management’s assessment of the effectiveness of the Company’s internal control over financial reporting with the management of Gulfport Energy Corporation. We have met with Grant Thornton LLP, the Company’s independent registered public accounting firm, with and without management present. We discussed with Grant Thornton LLP the matters required to be discussed under the applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”) and the SEC and such other matters as we have deemed to be appropriate, including the overall scope and plans for the audit. We also have received the written disclosures and the letter from Grant Thornton LLP required by the applicable PCAOB requirements regarding the independent accountant’s communications with the Audit Committee concerning independence, and we have discussed with Grant Thornton LLP that firm’s independence from management and the Company. We also reviewed the amount of fees paid to Grant Thornton LLP for both audit and non -audit services. In doing so, we considered whether the provision of non -audit services to the Company was compatible with maintaining the independence of Grant Thornton LLP. +Based on the reports and discussions above, we recommended to the Board of Directors that the audited financial statements be included in the Gulfport Energy Corporation 2019 Annual Report on Form 10K. +This report is not soliciting material, is not deemed to be filed with the SEC, and is not to be incorporated by reference in any filing of the Company under the Securities Act of 1933, as amended, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing. +This report has been furnished by the Audit Committee of the Board of Directors. +THE AUDIT COMMITTEE +Doug Johnson, Chairman +Alvin Bledsoe +Valerie Jochen +Paul Westerman +2020 PROXY STATEMENT 67 +Proposal to Approve, on an Advisory, +Non -Binding Basis, the Continuation of the +Tax Benefits Preservation Plan +(Proposal 4 ) +The Company is asking its stockholders to approve, on an advisory, non -binding basis, the continuation of the Tax Benefits Preservation Plan dated April 30, 2020. +Overview +On April 30, 2020, the Board adopted a limited duration tax benefits preservation plan (the “Tax Benefits Preservation Plan”) and declared a dividend of one preferred share purchase right (a “Right”) for each outstanding share of common stock of the Company. The dividend was paid to stockholders of record at the close of business on May 15, 2020. The Rights may cause substantial dilution to any person or group that acquires 4.9% or more of our common stock without the approval of the Board. +The Company adopted the Tax Benefits Preservation Plan in order to protect stockholder value against a possible limitation on the Company’s ability to use its tax net operating losses (“NOLs”) and certain other tax benefits to reduce potential future U.S. federal income tax obligations. As of December 31, 2019, the Company had approximately $1.3 billion of NOLs available to offset its future taxable income. The Company’s ability to use these NOLs would be substantially limited if we experienced an “ownership change” within the meaning of Section 382 of the Code. Generally, an “ownership change” occurs if the percentage of the Company’s stock owned by one or more of its “five -percent shareholders” (as such term is defined in Section 382 of the Code) increases by more than 50 percentage points over a three -year period. +Consistent with market practice, the Company engaged a nationally recognized accounting firm to prepare a Section 382 ownership change analysis. The accounting firm’s study documented significant changes in ownership in recent years. The accounting firm found that Section 382 ownership changes generally fluctuated from 31% to 45%. In light of the high volatility and trading volumes in the Company’s stock in the midst of the market disruptions caused by the COVID -19 pandemic and the sharp decline in commodity prices, the Board determined to adopt the Tax Benefits Preservation Plan to prevent an inadvertent impairment of its NOLs. Under the Tax Benefits Preservation Plan, the Rights are set to expire no later than April 29, 2021, or approximately one year from the date that the Tax Benefits Preservation Plan was adopted. +The Tax Benefits Preservation Plan and applicable law do not require stockholder approval or ratification of the Tax Benefits Preservation Plan. However, the Board considers a proposal for stockholders to approve the continuation of the Tax Benefits Preservation Plan a matter of good corporate governance. If the stockholders do not approve Proposal 4, the Board will consider, consistent with its fiduciary duties, whether to continue the Tax Benefits Preservation Plan in its current form, to amend one or more of its provisions, or cause a termination of the Tax Benefits Preservation Plan prior to its currently -set expiration date of April 29, 2021. In weighing such alternatives, the Board will take into account a number of factors, including the nature of stockholders’ objections to the Tax Benefits Preservation Plan (to the extent discernible), the then current market conditions, and the Board’s evaluation of the extent of the Company’s need to continue to prevent an inadvertent impairment of its NOLs and to thereby preserve the Company’s ability to use its NOLs and certain other tax benefits to reduce potential future U.S. federal income tax obligations. +Description of Tax Benefits Preservation Plan +The following summary of the Tax Benefits Preservation Plan does not purport to be complete and is qualified in its entirety by reference to the Tax Benefits Preservation Plan. A copy of the Tax Benefits Preservation Plan is attached to this proxy statement as Annex A and incorporated by reference herein. +On April 30, 2020, the Board declared a dividend distribution of one Right for each outstanding share of our common stock to stockholders of record at the close of business on May 15, 2020 (the “Rights Record Date”). Each Right entitles its holder, under the circumstances described below, to purchase from the Company one one -thousandth of a share of Series B Junior Participating Preferred Stock of the Company, par value $0.01 per share, at an exercise price of $8.00 per Right (the “Exercise Price”), subject to adjustment. The description and terms of the Rights are set forth in the Tax Benefits Preservation Plan, dated as of April 30, 2020, between the Company and Computershare Trust Company, N.A., as rights agent (and any successor rights agent, the “Rights Agent”). +68 2020 PROXY STATEMENT +Proposal to Approve, ON AN ADVISORY, NON -BINDING BASIS, the Continuation of the Tax Benefits Preservation Plan +Distribution and Transfer of Rights; Distribution Date; Rights Certificates +The Rights will not be exercisable until after the Distribution Date (as defined below). The Rights will expire on the earliest to occur of (1) the close of business on April 29, 2021, (2) the time at which the Rights are redeemed or exchanged, (3) upon the closing of any merger or other acquisition transaction involving the Company pursuant to a merger or other acquisition agreement that has been approved by the Board before any person or group becomes an Acquiring Person (as defined below) and (4) the time at which the Board determines that the NOLs are utilized in all material respects or that an ownership change under Section 382 of the Code would not adversely impact in any material respect the time period in which the Company could use the NOLs or materially impair the amount of NOLs that could be used by the Company in any particular time period, for applicable tax purposes. +Subject to certain exceptions specified in the Tax Benefits Preservation Plan, the Rights will separate from the shares of common stock and become exercisable following the earlier of (i) the close of business on the 10th day after the date of the first public announcement (or such other date as determined by the Board) that a person or any of its affiliates and associates has become an Acquiring Person or (ii) the close of business on the 10th business day (or such later day as may be determined by the Board before any person has become an Acquiring Person) after the date of the commencement of a tender or exchange offer by any person which would, if consummated, result in such person becoming an Acquiring Person (the earlier of such dates being called the “Distribution Date”). Except in certain situations, a person or group of affiliated or associated persons becomes an “Acquiring Person” upon acquiring beneficial ownership of 4.9% or more of the outstanding common stock. Certain synthetic interests in securities created by derivative positions—whether or not such interests are considered to be ownership of the underlying common shares or are reportable for purposes of Regulation 13D of the Exchange Act—are treated as beneficial ownership of the number of shares of common stock equivalent to the economic exposure created by the derivative positions, to the extent actual shares are directly or indirectly beneficially owned by counterparties to such derivative contracts. +The Rights will initially trade with, and will be inseparable from, the shares of common stock, and the registered holders of the shares will be deemed to be the registered holders of the Rights. Issuances of new shares of common stock after the Rights Record Date but before the Distribution Date will be accompanied by new Rights. Prior to the Distribution Date, the Rights will be evidenced by the certificates for (or by the book entry account that evidences record ownership of) the common stock. After the Distribution Date, the Rights Agent will mail separate certificates evidencing the Rights to each record holder of shares of our common stock as of the close of business on the Distribution Date, and thereafter the Rights will be transferable separately from the common stock. +Series B Junior Participating Preferred Stock Purchasable Upon Exercise of Rights +Because of the nature of the Series B Junior Participating Preferred Stock’s dividend, liquidation and voting rights, the value of the one -thousandth interest in a share of our Series B Junior Participating Preferred Stock purchasable upon exercise of a Right should approximate the value of one share of our common stock, subject to adjustment. +Flip-In Trigger +Subject to the Company’s exchange rights described below, at any time after any person has become an Acquiring Person, each holder of a Right (other than an Acquiring Person and its affiliates and associates) will be entitled to purchase for each Right held, at the Exercise Price, a number of shares of common stock having a market value of twice the Exercise Price. +Flip -Over Trigger +If, after a person or group has become an Acquiring Person, (1) the Company is involved in a merger or other business combination in which the Company is not the surviving corporation or its common stock is exchanged for other securities or assets or (2) the Company and/or one or more of its subsidiaries sell or otherwise transfer assets or earning power aggregating more than 50% of the assets or earning power of the Company and its subsidiaries, taken as a whole, then each Right (other than Rights beneficially owned by an Acquiring Person and its affiliates and associates) will entitle the holder to purchase for each Right held, for the Exercise Price, a number of common shares, or shares of common stock, as applicable, of the other party to such business combination or sale (or in certain circumstances, an affiliate) having a market value of twice the Exercise Price. +Exchange +At any time on or after any person has become an Acquiring Person (but before any person becomes the beneficial owner of 50% or more of the outstanding common stock or the occurrence of any of the events described in the “Flip -Over Trigger” section), the Board may exchange all or part of the Rights (other than Rights beneficially owned by an Acquiring Person and its affiliates and associates) for shares of our common stock at an exchange ratio of one share of common stock per Right. +2020 PROXY STATEMENT 69 +Proposal to Approve, ON AN ADVISORY, NON -BINDING BASIS, the Continuation of the Tax Benefits Preservation Plan +Redemption +The Board may redeem all of the Rights at a price of $0.001 per Right at any time before any person has become an Acquiring Person. If the Board redeems any Rights, it must redeem all of the Rights. Once the Rights are redeemed, the only right of the holders of Rights will be to receive the redemption price per Right. The redemption price will be subject to adjustment. +Amendments +At any time before any person has become an Acquiring Person, the Tax Benefits Preservation Plan may be amended in any respect. After such time, the Tax Benefits Preservation Plan may only be amended (1) in any respect that does not adversely affect Rights holders (other than any Acquiring Person and its affiliates and associates), (2) to cure any ambiguity, (3) to correct any inconsistent provision or (4) to shorten or lengthen any time period under the Tax Benefits Preservation Plan. +Voting Rights; Other Stockholder Rights +Prior to exercise, Rights holders in their capacity as such have no rights as stockholders of the Company, including the right to vote and to receive dividends. +Anti-Dilution Provisions +The Tax Benefits Preservation Plan includes anti -dilution provisions designed to prevent efforts to diminish the effectiveness of the Rights. +Certain Considerations Relating to the Tax Benefits Rights Plan +Anti -Takeover Effect +The triggering of the Rights may cause substantial dilution to any person or group that increases its ownership of our common stock to 4.9% or more of the outstanding common stock without the approval of the Board. As a result, the Tax Benefits Preservation Plan may have an “anti -takeover effect” because it may deter a person or group of persons from acquiring beneficial ownership of 4.9% or more of our common stock or, in the case of a person or group of persons that already own 4.9% or more of our common stock, from acquiring any additional shares of our common stock. The overall effect of the Tax Benefits Preservation Plan and the issuance of the Rights might be to render more difficult or discourage a merger, tender or exchange offer or other business combination involving the Company that is not approved by the Board. However, the Tax Benefits Preservation Plan is neither intended to prevent a takeover of the Company, nor, as evidenced by the recent proxy solicitation by Firefly, a proxy contest. On the contrary, the Tax Benefits Preservation Plan is designed to protect the Company’s valuable NOLs. Since the Board may cause an early termination of the Tax Benefits Preservation Plan or redeem the Rights prior to the Distribution Date, the Rights will not interfere with any merger or other business combination approved by the Board. +The Tax Benefits Preservation Plan is not expected to interfere with the day -to-day operations of the Company. The continuation of the existing outstanding Rights and the issuance of additional Rights in the future is not expected to alter the financial condition of the Company, impede its business plans or alter its financial statements. +Future Use and Amount of the NOLs is Uncertain +Our use of the NOLs depends on our ability to generate taxable income in the future. We cannot assure you as to whether we will have taxable income in any applicable period or, if we do, whether such income or the NOLs at such time will exceed any potential limitation in Section 382 of the Code. +Potential Challenge to the Tax Benefits +The amount of the NOLs has not been audited or otherwise validated by the IRS. The IRS could challenge the amount of the NOLs, which could result in an increase in our liability in the future for income taxes. In addition, determining whether an “ownership change” has occurred is subject to uncertainty, both because of the complexity and ambiguity of Section 382 of the Code and because of limitations on the knowledge that any publicly traded company can have about the ownership of, and transactions in, its securities on a timely basis. Therefore, we cannot assure you that the IRS or other taxing authority will not claim that we experienced an “ownership change” and attempt to reduce the benefit of the NOLs even if the Tax Benefits Preservation Plan is in place. +70 2020 PROXY STATEMENT +Proposal to Approve, ON AN ADVISORY, NON -BINDING BASIS, the Continuation of the Tax Benefits Preservation Plan +Continued Risk of Ownership Change +Although the Tax Benefits Preservation Plan is intended to diminish the likelihood of an “ownership change,” we cannot assure you that it will be effective. The amount by which an ownership interest may change in the future could, for example, be affected by purchases and sales of shares by stockholders holding 5% or more of our outstanding common stock, over which we have no control, and new issuances of shares by us, should we choose to do so. +Potential Effects on Liquidity +The Tax Benefits Preservation Plan is intended to deter persons or groups of persons from acquiring beneficial ownership of our common stock in excess of the specified limitations. A stockholder’s ability to dispose of shares of our common stock may be limited if the Tax Benefits Preservation Plan reduces the number of persons willing to acquire shares of our common stock or the amount they are willing to acquire. A stockholder may become an Acquiring Person upon actions taken by persons related to, or affiliated with, them. Stockholders are advised to carefully monitor their ownership of our common stock and consult their own legal advisors and/or us to determine whether their ownership of the shares approaches the proscribed level. +Potential Impact on Value +The Tax Benefits Preservation Plan could negatively impact the value of our common stock by deterring persons or groups of persons from acquiring our common stock, including in acquisitions for which some stockholders might receive a premium above market value. +Vote Required and Board Voting Recommendation +Proposal 4 requires an affirmative vote “for” the proposal of a majority of the votes cast by the stockholders present in person or represented by proxy at the meeting and entitled to vote thereon. The persons named as proxies for the Company intend to vote the proxies “ FOR ” Proposal 4, unless otherwise specified. Abstentions and broker non -votes will have no effect on the voting results for Proposal 4. +THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE APPROVAL, ON AN ADVISORY, NON -BINDING BASIS, OF THE CONTINUATION OF THE TAX BENEFITS PRESERVATION PLAN. +2020 PROXY STATEMENT 71 +ABOUT THE ANNUAL MEETIN G +Why am I receiving these materials? +The Board of Directors has sent you this proxy statement and the accompanying proxy card to ask for your vote, as a stockholder of the Company, on certain matters that will be voted on at the Annual Meeting. +Who is soliciting my vote? +The Board of Directors is soliciting your vote at the Annual Meeting. The proposals to be voted on by the Company’s stockholders at the Annual Meeting are described below. +What am I voting on? +You are voting on: +• The election of eight directors to serve until the 2021 Annual Meeting ( see ”Election of Directors and Director Biographies (Proposal 1)” beginning on page 10 of this proxy statement ); +• The approval, on an advisory, non -binding basis, of the compensation paid to the Company’s named executive officers ( see ”Proposal to Approve, on an Advisory, Non -Binding Basis, the Compensation Paid to the Company’s Named Executive Officers (Proposal 2)” beginning on page 65 of this proxy statement ); +• The ratification of Grant Thornton LLP as our independent auditors for the year ended December 31, 2020 ( see ”Proposal to Ratify the Appointment of Our Independent Auditors (Proposal 3)” beginning on page 66 of this proxy statement ); +• The approval, on an advisory, non -binding basis, of the continuation of the Company’s Tax Benefits Preservation Plan dated April 30, 2020 ( see ”Proposal to Approve, on an Advisory, Non -Binding Basis, the Continuation of the Tax Benefits Preservation Plan (Proposal 4)” beginning on page 68 of this proxy statement ); and +• Any other business properly coming before the Annual Meeting. +How does the Board of Directors recommend that I vote my shares? +Unless you give other instructions on your proxy card, the persons named as proxy holders on the proxy card will vote in accordance with the recommendations of our Board of Directors. The Board of Directors’ recommendations can be found with the description of each proposal in this proxy statement. In summary, the Board of Directors recommends a vote: +• “ FOR ” the proposal to elect the eight directors nominated by the Board of Directors; +• “ FOR ” the proposal to approve, on an advisory, non -binding basis, the compensation paid to the Company’s named executive officers; +• “ FOR ” the proposal to ratify Grant Thornton LLP as the Company’s independent auditors for the fiscal year ended December 31, 2020; and +• “ FOR ” the proposal to approve, on an advisory, non -binding basis, the continuation of the Company’s Tax Benefits Preservation Plan dated April 30, 2020. +What is a proxy? +A proxy is your legal designation of another person to vote the shares of common stock that you own. That other person is also referred to as a “proxy.” If you designate someone as your proxy in a written document, that document is a called a proxy or a proxy card. We have designated David M. Wood, our President and Chief Executive Officer, and Patrick K. Craine, our General Counsel and Corporate Secretary, as the Company’s proxies for the Annual Meeting. +72 2020 PROXY STATEMENT +about the annual meeting +Who is entitled to vote? +You may vote if you were the record owner of our common stock as of the close of business on the record date, which is June 16, 2020. Each share of common stock is entitled to one vote. As of June 11, 2020, we had 159,994,101 shares of common stock outstanding, excluding an aggregate of 5,554,325 shares of restricted stock and restricted stock units awarded under the Stock Incentive Plan, but not yet vested. We do not expect these numbers will change materially as of the record date. There is no cumulative voting. +How many votes must be present to hold the Annual Meeting? +Your shares are counted as present at the Annual Meeting if you attend the meeting in person or if you return a properly executed proxy by mail. In order for us to hold our meeting, holders of a majority of the voting power of our outstanding shares of common stock as of the close of business on June 16, 2020 must be present in person or by proxy at the Annual Meeting. This is referred to as a “quorum.” Abstentions and broker non -votes will be counted for purposes of establishing a quorum at the Annual Meeting (see “What is the effect of abstentions and broker non -votes ?” below). +What vote is required to elect directors (Proposal 1)? +The election of directors at the Annual Meeting will be conducted under a majority of the votes cast standard. This means that with respect to each director nominee, the number of votes cast “for” the director nominee must exceed the number of votes cast “against” the nominee. Abstentions will have no effect on the outcome of the election. +What vote is required to approve, on an advisory, non-binding basis, the compensation of the Company’s named executive officers (Proposal 2)? +The proposal to approve, on an advisory, non -binding basis, the compensation of the Company’s named executive officers will be adopted if a majority of the votes present in person or by proxy and voting on this matter are cast “for” the proposal. You may vote “for,” “against” or “abstain” from approving the proposal. Abstentions will have no effect on the outcome of the proposal. +What vote is required to approve, on an advisory, non-binding basis, the ratification of the appointment of the Company’s independent auditor (Proposal 3)? +The proposal to approve, on an advisory, non -binding basis, the appointment of Grant Thornton LLP as Gulfport’s independent auditor for the year ending December 31, 2020 will be adopted if a majority of the votes present in person or by proxy and voting on this matter are cast “for” the proposal. You may vote “for,” “against” or “abstain” from approving the proposal. Abstentions will have no effect on the outcome of the proposal. +What vote is required to approve, on an advisory, non-binding basis, the continuation of the Company’s Tax Benefits Preservation Plan (Proposal 4)? +The proposal to approve, on an advisory, non -binding basis, the continuation of the Company’s Tax Benefits Preservation Plan dated April 30, 2020 will be adopted if a majority of the votes present in person or by proxy and voting on this matter are cast “for” the proposal. You may vote “for,” “against” or “abstain” from approving the proposal. Abstentions will have no effect on the outcome of the proposal. +What is the effect of abstentions and broker non-votes? +If you specify that you wish to “abstain” from voting on an item, then your shares will not be voted on that particular item. Because the votes cast in favor of each director nominee must exceed the votes cast against such nominee under Proposal 1 and because the votes cast in favor of the action must exceed the votes cast opposing the action in order to approve Proposals 2, 3 and 4 at the Annual Meeting, abstentions will not have an effect on the outcome of any proposal at the Annual Meeting. +A “broker non -vote ” occurs when a beneficial holder does not provide instructions to a broker and such broker lacks discretionary voting power to vote shares with respect to a particular proposal. Under NYSE rules, brokers are permitted to exercise discretionary voting authority on “routine” matters, but beneficial owners of shares must provide voting instructions to their brokers with respect to “non -routine ” matters in order for their brokers to exercise voting authority with respect to such shares +2020 PROXY STATEMENT 73 +about the annual meeting +on such matters. Under NYSE rules, the proposal to approve the appointment of an independent auditor is considered a “routine” matter. This means that brokers may vote in their discretion on Proposal 3 on behalf of clients who have not furnished voting instructions with respect to such proposal. In contrast, Proposals 1, 2 and 4 are “non -routine ” matters. This means brokers that have not received voting instructions from their clients on these proposals may not vote on these proposals in their own discretion, which results in “broker non -votes .” Broker non -votes will be included in the calculation of the number of votes considered to be present at the meeting for purposes of determining a quorum, but will have no effect on the outcome of the vote for any proposal at the Annual Meeting. +Will stockholders have any appraisal rights with respect to any matter to be acted upon at the Annual Meeting? +No, stockholders will not have any appraisal rights in connection with any matters to be acted upon at the Annual Meeting. +Who is a registered stockholder and who is a beneficial stockholder? +Registered Stockholders : A “registered stockholder” is a person or entity whose name appears in the Company’s registered list of stockholders as an owner of one or more shares of the Company’s common stock. If you are a registered stockholder, these proxy materials are being sent directly to you. +Beneficial Stockholders : A “beneficial stockholder” or “beneficial owner” is a person or entity whose shares of the Company’s common stock are held by a bank, broker or other nominee (a.k.a. in “street name”). Most holders of our common stock hold their shares beneficially through a bank, broker or other nominee rather than of record directly in their own name. If you are a beneficial stockholder, these proxy materials are being forwarded to you by your bank, broker or other nominee, who is considered the registered stockholder of those shares. As the beneficial stockholder, you have the right to direct your bank, broker or other nominee on how to vote your shares and you are also invited to attend the Annual Meeting. Your bank, broker or other nominee has provided a voting instruction form for you to use in directing your bank, broker or other nominee as to how to vote your shares. You must follow these instructions in order for your shares to be voted. Your nominee is required to vote those shares in accordance with your instructions. If you do not give instructions to your broker, your broker will be able to vote your shares at its discretion with regard to Proposal 3, but will not be able to vote your shares at its discretion with respect to Proposals 1, 2 and 4. +How do I vote? +Registered Stockholders : If you are a “registered stockholder,” you can vote your shares in the following four ways: +• By Internet : You may vote by submitting a proxy over the Internet. Go to the website listed on your proxy card or voting instruction form and follow the instructions. You should have your proxy card, including your control number, in hand when you access the website. +• By Telephone : Stockholders located in the United States who receive proxy materials by mail may vote by submitting a proxy by telephone by calling the toll -free telephone number on the proxy card or voting instruction form and following the instructions. +• By Mail : If you received proxy materials by mail, you can vote by submitting a proxy by mail by completing, signing and dating the proxy card and mailing it in the enclosed, postage pre -paid envelope. +• In Person : If you attend the Annual Meeting, you may deliver your completed proxy card in person or you may vote by completing a ballot, which we will provide to you at the Annual Meeting. You are encouraged to complete, sign and date the proxy card and mail it in the enclosed postage pre -paid envelope regardless of whether you plan to attend the Annual Meeting. +Beneficial Stockholders : If you are a “beneficial stockholder,” then you will receive instructions from your bank, broker or other nominee on how to vote your shares. +If you do not give your broker instructions on how to vote your shares, your broker will be able to vote your shares at its discretion with regard to Proposal 3, but will not be able to vote your shares at its discretion with respect to Proposals 1, 2 and 4. +74 2020 PROXY STATEMENT +about the annual meeting +If you are a “beneficial stockholder,” you will need proof of ownership to be admitted to the Annual Meeting. For more information, please see “About the Annual Meeting — Who can attend the Annual Meeting?” on page 76 of this proxy statement. +Can I change my vote or revoke my proxy? +Yes. You can change or revoke your vote at any time before the polls close at the Annual Meeting. +Only your latest dated proxy will count. +Registered Stockholders : If you are a “registered stockholder” who has properly executed and delivered a proxy, you may revoke such proxy at any time before the Annual Meeting in any of the following ways: +• submitting another proxy with a later date by telephone, by Internet or by signing, dating and returning your proxy card using the instructions on your proxy card; +• sending a written notice of revocation to our General Counsel and Corporate Secretary at Gulfport Energy Corporation, 3001 Quail Springs Parkway, Oklahoma City, Oklahoma 73134; or +• voting in person at the Annual Meeting. +Beneficial Stockholders : If you are a “beneficial stockholder,” you may change your vote by submitting new voting instructions to your nominee in accordance with such nominee’s procedures. +What should I do if I receive more than one proxy card or set of proxy materials from the Company? +Your shares may be owned through more than one brokerage or other share ownership account. In order to vote all of the shares that you own, you must either sign and return all of the proxy cards or follow the instructions for any alternative voting procedure on each of the proxy cards that you receive. +Who counts the votes? +All votes will be tabulated as required by Delaware law by American Election Services, LLC, an independent inspector of election appointed for the Annual Meeting. +Will my shares be voted if I don’t provide my proxy and don’t attend the Annual Meeting? +No. If your shares are registered in your name, you must sign and return a proxy card in order for your shares to be voted, unless you vote via telephone or the Internet or vote in person at the Annual Meeting. +If your shares are held in “street name” and you do not give your broker instructions on how to vote your shares, your broker will be able to vote your shares at its discretion with regard to Proposal 3, but will not be able to vote your shares at its discretion with respect to Proposals 1, 2 and 4. +To assure that your shares are represented at the Annual Meeting, we urge you to vote TODAY by completing, signing and dating the enclosed proxy card and promptly mailing it in the postage -paid envelope provided, or to vote using the Internet or telephone by following the instructions on the proxy card, whether or not you plan to attend the Annual Meeting. You can revoke your proxy at any time before the proxy or proxies you appointed cast your votes. If your bank, broker or other nominee is the holder of record of your shares (i.e., your shares are held in “street name”), you will receive voting instructions from such holder of record. You must follow these instructions in order for your shares to be voted. +How will my shares be voted if I return the proxy card? +The shares represented by any proxy card that is properly executed and received by the Company prior to or at the Annual Meeting will be voted in accordance with the specifications made on that proxy card where choices have been specified on the proxy card with respect to the proposals. +2020 PROXY STATEMENT 75 +about the annual meeting +What if I vote by proxy but don’t indicate my vote on the matters listed on my proxy card? +If you return a validly executed proxy card without indicating how your shares should be voted on a matter and you do not revoke your proxy, your proxy will be voted: “FOR” the election of the eight director nominees of the Board (Proposal 1); “FOR” the approval, on an advisory, non -binding basis, of the compensation of the Company’s named executive officers (Proposal 2); “FOR” the approval, on an advisory, non -binding basis, of the appointment of Grant Thornton LLP as the independent registered public accounting firm of the Company for the year ending December 31, 2020 (Proposal 3); and “FOR” the approval, on an advisory, non -binding basis, of the continuation of the Company’s Tax Benefits Preservation Plan dated April 30, 2020 (Proposal 4). +Could other matters be decided at the Annual Meeting? +We have not received any stockholder proposals and are not aware of any other matters that are expected to come before the Annual Meeting other than those described in this proxy statement. If any other matter should be presented at the Annual Meeting upon which a vote may be properly taken, shares represented by all proxy cards received by the Board will be voted with respect thereto at the discretion of the person or persons named as proxies on the proxy cards. +Who can attend the Annual Meeting? +Only the Company’s stockholders or their duly authorized and constituted proxies may attend the Annual Meeting. Proof of ownership of our common stock must be presented in order to be admitted to the Annual Meeting. After the chairman of the meeting opens the Annual Meeting, further entry will be prohibited. +Due to the public health impact of the novel coronavirus outbreak, the Company is planning for the possibility that the Annual Meeting may be held at a different location or held solely by means of remote communication. If we take this step, we will announce the decision to do so in advance, including by providing written notice to registered stockholders at least 10 days in advance of the Annual Meeting if we hold the Annual Meeting solely by means of remote communication. We will also provide details on how to participate in a press release issued by the Company and available in the “News—Press Releases” section of our website at www.gulfportenergy.com. +No cameras, recording equipment, electronic devices, large bags, briefcases or packages will be permitted in the Annual Meeting. The use of mobile phones during the Annual Meeting is also prohibited. +What do I need to bring to attend the Annual Meeting? +All persons attending the Annual Meeting will be required to present a valid government -issued picture identification, such as a driver’s license or passport, and proof of ownership of our common stock to gain admittance to the Annual Meeting. If you are a beneficial stockholder and you plan to attend the Annual Meeting in person, you must bring a brokerage statement, the proxy card mailed to you by your bank, broker or other nominee or other proof of ownership as of the close of business on June 16, 2020, the record date, to be admitted to the Annual Meeting. Otherwise, proper documentation of a duly authorized and constituted proxy must be presented. This proof can be a brokerage statement or letter from a broker, bank or other nominee indicating ownership on the record date, a proxy card or a valid, legal proxy provided by your broker, bank or other nominee. IF YOU DO NOT HAVE VALID PICTURE IDENTIFICATION AND PROOF THAT YOU OWN SHARES OF OUR COMMON STOCK, YOU MAY NOT BE ADMITTED INTO THE MEETING. +How can I access the Company’s proxy materials and annual report? +The notice of the Annual Meeting, this proxy statement and the Company’s 2019 Annual Report are first being mailed to stockholders on June 12, 2020. Additionally, the notice of the Annual Meeting, this proxy statement and the Company’s 2019 Annual Report to Stockholders are available electronically on the Company’s website at www.gulfportenergy.com/proxy . +Where can I find the results of the Annual Meeting? +We intend to announce preliminary voting results at the Annual Meeting and intend to publish final results in a Current Report on Form 8 -K , which we will file with the SEC within four business days after the Annual Meeting. +76 2020 PROXY STATEMENT +about the annual meeting +Who can help answer any other questions I may have? +If you have any questions or require any assistance with voting your shares, or if you need additional copies of the proxy materials, please contact: +Morrow Sodali LLC +470 West Avenue +Stamford, CT 06902 +Stockholders may call toll -free : (800) 662 -5200 +Banks and Brokers may call collect: (203) 658 -9400 +Email: GPOR@investor.morrowsodali.com +2020 PROXY STATEMENT 77 +Availability of Form 10 -K and +Annu al Report to Stockholder s +SEC rules require us to provide an Annual Report to stockholders who receive this proxy statement. Additional copies of the Annual Report, along with copies of our Annual Report on Form 10 -K for the fiscal year ended December 31, 2019, including the financial statements and the financial statement schedules, are available without charge to stockholders upon written request to Director of Investor Relations, Gulfport Energy Corporation, 3001 Quail Springs Parkway, Oklahoma City, Oklahoma 73134 or via the Internet at www.gulfportenergy.com . We will furnish the exhibits to our Annual Report on Form 10 -K upon payment of our copying and mailing expenses. +78 2020 PROXY STATEMENT +HOUSEHOLDIN G +The SEC permits a single set of annual reports and proxy statements to be sent to any household at which two or more stockholders reside if they appear to be members of the same family, unless instructions have been received to the contrary. Each stockholder continues to receive a separate proxy card. This procedure, referred to as householding, reduces the volume of duplicate information stockholders receive and reduces our mailing and printing expenses. +If you would like to receive your own set of the annual report and proxy statement this year or in future years, follow the instructions described below, and we will promptly deliver a separate copy to you. Similarly, if you share an address with another Gulfport stockholder and together both of you would like to receive in the future only a single annual report and proxy statement, follow the instructions below: +• If your shares of our common stock are registered in your own name, please contact our transfer agent, Computershare Trust Company, N.A., and inform them of your request by calling their toll -free number: (800) 962 -4284 or by mail: Computershare Trust Company, N.A., 250 Royall Street, Canton, MA 02021. +• If a broker or other nominee holds your shares, please contact your broker or nominee. +2020 PROXY STATEMENT 79 +Other Matter s +The Board of Directors does not intend to present any other items of business other than those stated in the notice of Annual Meeting. If any other matter should be presented at the Annual Meeting upon which a vote may be properly taken, shares represented by all proxy cards received by the Board will be voted with respect thereto at the discretion of the person or persons named as proxies on the proxy cards. +80 2020 PROXY STATEMENT +ADDITIONAL INFORMATION REGARDiNG THIS PROXY +Solicitation AND DIRECTOR NOMINEE S +Participants in the Solicitation +We are required by law to convene an annual meeting of our stockholders at which directors are elected. Because shares of our common stock are widely held, it would be impractical for our stockholders to meet physically in sufficient numbers to hold a meeting. Accordingly, the Company is soliciting proxies from our stockholders. Our directors, director nominees, officers and employees may solicit proxies in person, or via mail, telephone, facsimile or email. Those persons will receive no additional compensation for any solicitation activities. +Expenses of Solicitation +U.S. federal securities laws require us to send you this proxy statement and any amendments or supplements thereto, and to specify the information required to be contained in it. The Company will bear the expenses of calling and holding the Annual Meeting and the solicitation of proxies therefor. +We have retained Morrow Sodali LLC (“Morrow”) to solicit proxies in connection with the Annual Meeting. Under our agreement with Morrow, Morrow will receive up to $150,000 plus expenses. The Company has also agreed to indemnify Morrow against certain liabilities relating to, or arising out of, its retention. Morrow will solicit proxies in person or by mail, telephone, facsimile or email. +Agreements of Director Nominees +Except as described in this proxy statement, there are no arrangements or understandings between a director, director nominee or executive officer of the Company and any other person pursuant to which he or she was or is to be selected as a director, director nominee or officer, respectively. +In connection with Ms. Holroyd’s consent to be nominated by the Board of Directors for election at the Annual Meeting, the Company committed to indemnify her against any claims by Firefly Value Partners, LP and its affiliates (“Firefly”) related to her nomination by the Board of Directors. Prior to this, in connection with Ms. Holroyd’s earlier nomination for election to the Board of Directors by Firefly, Ms. Holroyd and Firefly entered into three agreements on March 2, 2020. First, Firefly and Ms. Holroyd entered into an agreement pursuant to which Firefly agreed to indemnify her against claims arising from Firefly’s planned solicitation of proxies from the Company’s stockholders at the Annual Meeting. Second, Firefly and Ms. Holroyd entered into an agreement pursuant to which Firefly agreed to pay Ms. Holroyd an aggregate amount of $25,000 following Firefly’s nomination of her for election as a director of the Company and Firefly’s filing of a preliminary proxy statement with the SEC to solicit proxies in favor of her election. Under this agreement, Ms. Holroyd agreed to use the after -tax proceeds from this compensation to acquire securities of the Company. Third, Firefly and Ms. Holroyd entered into an agreement pursuant to which, among other things, the parties agreed to solicit proxies for the election of the persons nominated by Firefly to the Board at the Annual Meeting. Firefly withdrew its nominations for election to the Board of Directors, including its nomination of Ms. Holroyd, on June 2, 2020. +2020 PROXY STATEMENT 81 +FORWARD -LOOKING STATEMENT S +This proxy statement contains forward -looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Exchange Act and the Private Securities Litigation Reform Act of 1995. All statements relating to events or results that may occur in the future, including, but not limited to, the Company’s future costs of solicitation, record or meeting dates, compensation arrangements, plans or amendments, Company policies, documents or amendments as well as capital and corporate structure (including major stockholders, Board structure and Board composition), are forward -looking statements. +Forward -looking statements generally can be identified by words such as “expect,” “will,” “change,” “intend,” “target,” “future,” “potential,” “estimate,” “anticipate,” “to be” and similar expressions. These statements are based on numerous assumptions and involve known and unknown risks, uncertainties and other factors that could significantly affect the Company’s operations and may cause the Company’s actual actions, results, financial condition, performance or achievements to be substantially different from any future actions, results, financial condition, performance or achievements expressed or implied by any such forward -looking statements. Those factors include, but are not limited to, the risks, uncertainties and factors indicated from time to time in the Company’s reports and filings with the SEC, including, without limitation, the Company’s Annual Report on Form 10 -K for the fiscal year ended December 31, 2019, under the heading “Item 1A — Risk Factors,” the Company’s Quarterly Report on Form 10 -Q for the quarter ended March 31, 2020 under the heading “Item 1A—Risk Factors” and the Company’s Current Report on Form 8 -K filed on April 30, 2020 under the heading “Item 8.01—Other Events.” +Unless required by law, the Company does not intend, and undertakes no obligation, to update or publicly release any revision to any such forward -looking statements, whether as a result of the receipt of new information, the occurrence of subsequent events, a change in circumstances or otherwise. Each forward -looking statement contained in this proxy statement is specifically qualified in its entirety by the aforementioned factors. Readers are advised to carefully read this proxy statement in conjunction with the important disclaimers set forth above prior to reaching any conclusions or making any investment decisions, and not to place undue reliance on these forward -looking statements, which apply only as of the date of this proxy statement. +82 2020 PROXY STATEMENT +Submission of Future Stockholder Proposal s +Under Rule 14a -8 under the Exchange Act (“Rule 14a -8 ”), a stockholder who intends to present a proposal for business at the 2021 Annual Meeting and who wishes the proposal to be included in the proxy statement and form of proxy for that meeting must submit the proposal in writing to our Corporate Secretary no later than February 12, 2021. Such proposal must comply with the requirements of Rule 14a -8 under the Exchange Act and our Bylaws to be eligible for inclusion in the Company’s proxy materials. +If a stockholder wishes to submit a proposal for business or nomination of directors at the 2021 Annual Meeting other than in reliance on Rule 14a -8 , in order for such proposal to be considered timely pursuant to the Company’s Restated Certificate of Incorporation (as amended, the “Charter”) and the Bylaws, the stockholder’s notice must be delivered to or mailed and received by the Corporate Secretary at the principal executive offices of the Company not 60 days nor more than 90 days prior to the 2021 Annual Meeting, provided, however, that in the event that less than 70 days’ prior public disclosure of the date of the 2021 Annual Meeting is given or made to stockholders by the Company, notice by the stockholder to be timely must be so received not later than the close of business on the 10th day following the day on which such notice of the date of the 2021 Annual Meeting was mailed or such public disclosure was made. At present, the Company has not announced a meeting date for the 2021 Annual Meeting. The Company expects to announce the date of the 2021 Annual Meeting and provide formal notice thereof in 2021. +You can obtain a copy of our Charter and Bylaws by writing to the Corporate Secretary at the address below, or from the SEC website at www.sec.gov (the Charter and Bylaws are filed as exhibits to our latest report on Form 10 -K filed with the SEC on February 27, 2020, and the recent amendment to our Bylaws is filed as an exhibit to our Current Report on Form 8 -K filed with the SEC on May 29, 2020). +All written proposals and inquiries for copies of the Charter and Bylaws should be directed to Patrick K. Craine, our General Counsel and Corporate Secretary, at Gulfport Energy Corporation, 3001 Quail Springs Parkway, Oklahoma City, Oklahoma 73134. +2020 PROXY STATEMENT 83 +ANNEX A +TAX BENEFITS PRESERVATION PLA N +TAX BENEFITS PRESERVATION PLAN +Gulfport Energy Corporation +and +Computershare Trust Company, N.A. +as Rights Agent +Dated as of April 30, 2020 +ANNEX A +Table of Contents +Page +Section 1. +Certain Definitions +A-1 +Section 2. +Appointment of Rights Agent +A-6 +Section 3. +Issuance of Rights Certificates +A-7 +Section 4. +Form of Rights Certificates +A-8 +Section 5. +Countersignature and Registration +A-9 +Section 6. +Transfer, Split Up, Combination and Exchange of Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates +A-9 +Section 7. +Exercise of Rights; Exercise Price; Expiration Time of Rights +A-10 +Section 8. +Cancellation and Destruction of Rights Certificates +A-11 +Section 9. +Reservation and Availability of Capital Stock +A-11 +Section 10. +Preferred Stock Record Date +A-12 +Section 11. +Adjustment of Exercise Price, Number and Kind of Shares or Number of Rights +A-12 +Section 12. +Certificate of Adjusted Exercise Price or Number of Shares +A-17 +Section 13. +Consolidation, Merger or Sale or Transfer of Assets, Cash Flow or Earning Power +A-17 +Section 14. +Fractional Rights and Fractional Shares +A-19 +Section 15. +Rights of Action +A-20 +Section 16. +Agreement of Rights Holders +A-20 +Section 17. +Rights Certificate Holder Not Deemed a Stockholder +A-21 +Section 18. +Concerning the Rights Agent +A-21 +Section 19. +Merger or Consolidation or Change of Name of Rights Agent +A-22 +Section 20. +Duties of Rights Agent +A-22 +Section 21. +Change of Rights Agent +A-24 +Section 22. +Issuance of New Rights Certificates +A-25 +Section 23. +Redemption and Termination +A-25 +Section 24. +Exchange +A-25 +Section 25. +Notice of Certain Events +A-26 +Section 26. +Notices +A-27 +Section 27. +Supplements and Amendments +A-28 +Section 28. +Successors +A-28 +Section 29. +Determination and Action by the Board +A-28 +Section 30. +Benefits of this Agreement +A-28 +Section 31. +Tax Compliance and Withholding +A-28 +Section 32. +Process to Seek Exemption +A-29 +Section 33. +Severability +A-29 +Section 34. +Governing Law; Submission to Jurisdiction +A-29 +Section 35. +Counterparts +A-30 +Section 36. +Descriptive Headings; Interpretation +A-30 +Section 37. +Force Majeure +A-30 +Exhibit A — Form of Certificate of Designation +Exhibit B — Form of Rights Certificate +Exhibit C — Summary of Rights to Purchase Preferred Stock +2020 PROXY STATEMENT A-i +ANNEX A +TAX BENEFITS PRESERVATION PLAN +This TAX BENEFITS PRESERVATION PLAN, dated as of April 30, 2020 (this “ Agreement ”), by and between Gulfport Energy Corporation, a Delaware corporation (the “ Company ”), and Computershare Trust Company, N.A., a national banking association, as rights agent (the “ Rights Agent ”). +W I T N E S S E T H: +WHEREAS, the Company has generated net operating losses for United States federal income tax purposes (“ NOLs ”) and certain other tax benefits may potentially provide valuable tax benefits to the Company, the Company desires to avoid an “ownership change” within the meaning of Section 382 (as defined below) and thereby preserve the ability to utilize fully such NOLs and certain other tax benefits and, in furtherance of such objective, the Company desires to enter into this Agreement; and +WHEREAS, on April 30, 2020 (the “ Rights Dividend Declaration Date ”), the board of directors of the Company (the “ Board ”) authorized and declared a dividend distribution of one right (a “ Right ”) for each share of Common Stock outstanding at the Close of Business on May 15, 2020 (the “ Record Date ”), each Right initially representing the right to purchase one one -thousandth of one share of Series B Junior Participating Preferred Stock of the Company having the rights, powers and preferences set forth in the form of Certificate of Designation attached hereto as Exhibit A , upon the terms and subject to the conditions hereinafter set forth, and has further authorized the issuance of one Right (as such number may hereinafter be adjusted pursuant to Section 11 ) for each share of Common Stock that shall become outstanding between the Record Date (whether originally issued or delivered from the Company’s treasury) and the earlier of the Distribution Time and the Expiration Time or, in certain circumstances provided in Section 22 , after the Distribution Time. +NOW, THEREFORE, in consideration of the premises and the mutual agreements herein set forth, the parties hereby agree as follows: +Section 1. Certain Definitions . For purposes of this Agreement, the following terms have the meanings indicated: +“ Acquiring Person ” shall mean any Person, which, together with all of its Related Persons, is the Beneficial Owner of 4.9% or more of the shares of Common Stock then outstanding, but shall exclude the Exempt Persons and any Grandfathered Persons. +Notwithstanding anything in this Agreement to the contrary, no Person shall become an “Acquiring Person”: +(i) as the result of an acquisition of shares of Common Stock by the Company which, by reducing the number of shares of Common Stock outstanding, increases the percentage of the shares of Common Stock Beneficially Owned by such Person, together with all of its Related Persons, to 4.9% or more of the shares of Common Stock then outstanding; provided , however , that if a Person, together with all of its Related Persons, becomes the Beneficial Owner of 4.9% or more of the shares of Common Stock then outstanding by reason of share acquisitions by the Company and, after such share acquisitions by the Company, becomes the Beneficial Owner of any additional shares of Common Stock (other than pursuant to a dividend or distribution paid or made by the Company on the outstanding Common Stock or pursuant to a split or subdivision of the outstanding Common Stock), then such Person shall be deemed to be an “Acquiring Person” unless, upon becoming the Beneficial Owner of such additional shares of Common Stock, such Person, together with all of its Related Persons, does not Beneficially Own 4.9% or more of the Common Stock then outstanding; +(ii) if (A) the Board determines that such Person has become an “Acquiring Person” inadvertently (including because (1) such Person was unaware that it Beneficially Owned a percentage of the then outstanding Common Stock that would otherwise cause such Person to be an “Acquiring Person” or (2) such Person was aware of the extent of its Beneficial Ownership of Common Stock but had no actual knowledge of the consequences of such Beneficial Ownership under this Agreement); and (B) such Person divests as promptly as practicable (as determined by the Board) a sufficient number of shares of Common Stock so that such Person would no longer be an “Acquiring Person”; +(iii) solely as a result of any unilateral grant of any security by the Company, or through the exercise of any options, warrants, rights or similar interests (including restricted stock) granted by the Company to its directors, officers or employees; provided , however , that if a Person, together with all of its Related Persons, becomes the Beneficial Owner of 4.9% or more of the shares of Common Stock then outstanding by reason of a unilateral grant of a security by the Company, or through the exercise of any options, warrants, rights or similar interests (including restricted stock) granted by the Company to its directors, officers and employees, then such Person shall nevertheless be deemed to be an “Acquiring Person” if, subject to clause (a)(ii) above, such Person, together with all of its Related Persons, thereafter becomes the Beneficial Owner of any additional shares of Common Stock (unless upon becoming the Beneficial Owner of additional +2020 PROXY STATEMENT A-1 +ANNEX A +shares of Common Stock, such Person, together with all of its Related Persons, does not Beneficially Own 4.9% or more of the Common Stock then outstanding), except as a result of (A) a dividend or distribution paid or made by the Company on the outstanding Common Stock or a split or subdivision of the outstanding Common Stock or (B) the unilateral grant of a security by the Company, or through the exercise of any options, warrants, rights or similar interest (including restricted stock) granted by the Company to its directors, officers or employees; +(iv) by means of share purchases or issuances (including debt to equity exchanges), directly from the Company or indirectly through an underwritten offering of the Company, in a transaction approved by the Board; provided , however , that a Person shall be deemed to be an “Acquiring Person” if such Person (A) is or becomes the Beneficial Owner of 4.9% or more of the shares of Common Stock then outstanding following such transaction and (B) following such transaction, becomes the Beneficial Owner of any additional shares of Common Stock without the prior written consent of the Company and then Beneficially Owns 4.9% or more of the shares of Common Stock then outstanding; +(v) if such Person is a bona fide swaps dealer who has become an “Acquiring Person” as a result of its actions in the ordinary course of its business that the Board determines, in its sole discretion, were taken without the intent or effect of evading or assisting any other Person to evade the purposes and intent of this Agreement, or otherwise seeking to control or influence the management or policies of the Company. +Notwithstanding the foregoing definition of “Acquiring Person,” the Board may also determine that any Person is an “Acquiring Person” under this Agreement if such Person becomes the Beneficial Owner of 4.9% of the Common Stock of the Company then outstanding (as the term “stock” is defined in Treasury Regulations Sections 1.382 -2 (a)(3) and 1.382 -2T (f)(18)). +“ Act ” shall mean the Securities Act of 1933, as amended. +“ Adjustment Shares ” shall have the meaning set forth in Section 11(a)(ii) . +“ Affiliate ” shall have the meaning ascribed to such term in Rule 12b -2 of the Exchange Act Regulations as in effect on the date of this Agreement and, to the extent not included within the foregoing clause, shall also include, with respect to any Person, any other Person (other than an Exempt Person or a Grandfathered Person) whose shares of Common Stock would be deemed constructively owned by such first Person or otherwise aggregated with shares owned by such first Person, pursuant to the provisions of Section 382 and the Treasury Regulations; provided, however , that a Person will not be deemed to be an Affiliate of another Person solely because either or both Persons are or were directors or officers of the Company. +“ Agreement ” shall have the meaning set forth in the preamble to this Agreement. +“ Associate ” shall have the meaning ascribed to such term in Rule 12b -2 of the Exchange Act Regulations as in effect on the date of this Agreement and, to the extent not included within the foregoing clause, shall also include, with respect to any Person, any other Person (other than an Exempt Person or a Grandfathered Person) whose shares of Common Stock would be deemed constructively owned by such first Person or otherwise aggregated with shares owned by such first Person, pursuant to the provisions of Section 382 and the Treasury Regulations; provided, however , that a Person will not be deemed to be an Associate of another Person solely because either or both Persons are or were directors or officers of the Company. +A Person shall be deemed the “ Beneficial Owner ” of, and shall be deemed to “ Beneficially Own ” and have “ Beneficial Ownership ” of any securities (that are as such, “ Beneficially Owned ”): +(i) that such Person would be deemed to directly, indirectly or constructively own (as determined for purposes of Section 382 or the Treasury Regulations), including any coordinated acquisition of securities by any Persons who have a formal or informal understanding with respect to such acquisition (to the extent ownership of such securities would be attributed to such Persons under Section 382 and the Treasury Regulations); +(ii) that such Person or any of such Person’s Related Persons beneficially owns, directly or indirectly, as determined pursuant to Rule 13d -3 of the Exchange Act Regulations as in effect on the date of this Agreement; +(iii) that such Person or any of such Person’s Related Persons, directly or indirectly, has the right or obligation to acquire (whether such right is exercisable, or such obligation is required to be performed, immediately or only after the passage of time or the satisfaction of other conditions) pursuant to any agreement, arrangement or understanding (whether or not in writing and other than customary agreements with and between underwriters and selling group members with respect to a bona fide public offering of securities) or upon the exercise of conversion rights, exchange rights, rights (other than the Rights), warrants or options, or otherwise; provided, however , that a Person shall not be deemed the “Beneficial +A-2 2020 PROXY STATEMENT +ANNEX A +Owner” of, or to “beneficially own,” (A) securities tendered pursuant to a tender or exchange offer made in accordance with the Exchange Act Regulations by or on behalf of such Person or any of such Person’s Related Persons until such tendered securities are accepted for purchase or exchange, (B) securities issuable upon exercise of Rights at any time prior to the occurrence of a Triggering Event, (C) securities issuable upon exercise of Rights from and after the occurrence of a Triggering Event which Rights were acquired by such Person or any such Person’s Related Persons prior to the Distribution Time or pursuant to Section 22 (the “ Original Rights ”) or pursuant to Section 11(i) in connection with an adjustment made with respect to any Original Rights or (D) securities which such Person or any of such Person’s Related Persons may acquire, does or do acquire or may be deemed to have the right to acquire, pursuant to any merger or other acquisition agreement between the Company and such Person (or one or more of such Person’s Related Persons), if such agreement has been approved by the Board prior to such Person’s becoming an Acquiring Person; +(iv) that such Person or any of such Person’s Related Persons, directly or indirectly, has the right to vote pursuant to any agreement, arrangement or understanding; +(v) that are Beneficially Owned, directly or indirectly, by any other Person (or any Related Person of such Person) with which such Person (or any of such Person’s Related Persons) has any agreement, arrangement or understanding (whether or not in writing and other than customary agreements with and between underwriters and selling group members with respect to a bona fide public offering of securities); provided, however , that a Person shall not be deemed the “Beneficial Owner” of, or to “beneficially own,” any security if such agreement, arrangement or understanding (1) arises solely from a revocable proxy or consent given in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable provisions of the Exchange Act Regulations and (2) is not also then reportable by such Person on Schedule 13D under the Exchange Act (or any comparable or successor report); or +(vi) that are Beneficially Owned, directly or indirectly, by a Counterparty (or any of such Counterparty’s Related Persons) under any Derivatives Contract (without regard to any short or similar position under the same or any other Derivatives Contract) to which such Person or any of such Person’s Related Persons is a Receiving Party; provided, however , that the number of shares of Common Stock that a Person is deemed to Beneficially Own pursuant to this clause (vi) in connection with a particular Derivatives Contract shall not exceed the number of Notional Common Shares with respect to such Derivatives Contract; provided, further , that the number of securities Beneficially Owned by each Counterparty (including its Related Persons) under a Derivatives Contract shall, for purposes of this clause (vi) include all securities that are Beneficially Owned, directly or indirectly, by any other Counterparty (or any of such other Counterparty’s Related Persons) under any Derivatives Contract to which such first Counterparty (or any of such first Counterparty’s Related Persons) is a Receiving Party, with this proviso being applied to successive Counterparties as appropriate. +Nothing in this definition shall cause a Person engaged in business as an underwriter of securities to be the “Beneficial Owner” of, or to “beneficially own,” any securities acquired through such Person’s participation in good faith in a firm commitment underwriting until the expiration of forty (40) days after the date of such acquisition, and no officer or director of the Company shall be deemed to Beneficially Own any securities of any other Person solely by virtue of any actions that such officer or director takes in such capacity. +With respect to any Person, for all purposes of this Agreement, any calculation of the number of shares of Common Stock outstanding at any particular time, including for purposes of determining the particular percentage of the outstanding shares of Common Stock of which such Person is the Beneficial Owner, shall include the number of shares of Common Stock not outstanding at the time of such calculation that such Person is otherwise deemed to Beneficially Own for purposes of this Agreement, provided, however , that the number of shares of Common Stock not outstanding that such Person is otherwise deemed to Beneficially Own for purposes of this Agreement shall not be included for the purpose of computing the percentage of the outstanding shares of Common Stock Beneficially Owned by any other Person (unless such other Person is also deemed to Beneficially Own, for purposes of this Agreement, such shares of Common Stock not outstanding). +“ Board ” shall have the meaning set forth in the recitals of this Agreement. +“ Business Day ” shall mean any day other than a Saturday, a Sunday or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close. +“ Close of Business ” on any given date shall mean 5:00 P.M., New York City time, on such date, provided, however , that if such date is not a Business Day, “Close of Business” shall mean 5:00 P.M., New York City time, on the next succeeding Business Day. +2020 PROXY STATEMENT A-3 +ANNEX A +“ Closing Price ” in respect of any security for any day shall mean the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the Nasdaq or the NYSE or, if such shares of common stock (or other security) are not listed or admitted to trading on the Nasdaq or the NYSE, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which such shares of common stock (or other security) are listed or admitted to trading or, if such shares of common stock (or other security) are not listed or admitted to trading on any national securities exchange, the last quoted price or, if not so quoted, the average of the high bid and low asked prices in the over -the-counter market, as reported by the OTC Bulletin Board service or such other quotation system then in use, or, if on any such date such shares of common stock (or other security) are not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in such common stock (or other security) selected by the Board. If on any such date no such market maker is making a market in such common stock (or other security), the fair value of such common stock (or other security) on such date as determined in good faith by the Board shall be used. +“ Code ” means the Internal Revenue Code of 1986, as amended, or any successor statute. +“ Common Stock ” shall mean the common stock, par value $0.01 per share, of the Company and any other interest that the Board determines would be treated as “stock” of the Company for purposes of Section 382 of the Code (including Treasury Regulation Section 1.382 -2T (f)(18)) in this Agreement in which such meaning is necessary in order to ensure that this Agreement is effective in preserving the Company’s NOLs and certain other tax benefits. +“ Common Stock Equivalents ” shall have the meaning set forth in Section 11(a)(iii) . +“ Company ” shall have the meaning set forth in the preamble to this Agreement. +“ Counterparty ” shall have the meaning set forth in the definition of “ Derivatives Contract .” +“ Current Market Price ” shall have the meaning set forth in Section 11(d)(i) . +“ Current Value ” shall have the meaning set forth in Section 11(a)(iii) . +“ Derivatives Contract ” shall mean a contract, including all related documentation, between two parties (the “ Receiving Party ” and the “ Counterparty ”) that is designed to produce economic benefits and risks to the Receiving Party that correspond substantially to the ownership by the Receiving Party of a number of shares of Common Stock specified or referenced in such contract (the number corresponding to such economic benefits and risks, the “ Notional Common Shares ”), regardless of whether obligations under such contract are required or permitted to be settled through the delivery of cash, shares of Common Stock or other property, without regard to any short position under the same or any other Derivatives Contract. For the avoidance of doubt, interests in broad -based index options, broad -based index futures and broad -based publicly traded market baskets of stocks approved for trading by the appropriate federal governmental authority shall not be deemed “Derivatives Contracts.” +“ Distribution Time ” shall mean the earlier of (i) the Close of Business on the tenth (10th) day after the Stock Acquisition Date (or, if the tenth (10th) day after the Stock Acquisition Date occurs before the Record Date, the Close of Business on the Record Date) or (ii) the Close of Business on the tenth (10th) Business Day (or, if such tenth (10th) Business Day occurs before the Record Date, the Close of Business on the Record Date), or such later date as may be determined by action of the Board prior to such time as any Person becomes an Acquiring Person, after the date that a tender or exchange offer by any Person (other than any Exempt Person) is first published or sent or given within the meaning of Rule 14d -2 (a) of the Exchange Act Regulations, if upon consummation thereof, such Person would become an Acquiring Person. +“ Equivalent Preferred Stock ” shall have the meaning set forth in Section 11(b) . +“ Exchange Act ” shall mean the Securities Exchange Act of 1934, as amended. +“ Exchange Act Regulations ” shall mean the general rules and regulations promulgated under the Exchange Act. +“ Exchange Ratio ” shall have the meaning set forth in Section 24(a) . +“ Exempt Person ” shall mean (i) the Company or any of its Subsidiaries, (ii) any officer, director or employee of the Company or any of its Subsidiaries solely in respect of such Person’s status or authority as such (including any fiduciary capacity), (iii) any employee benefit plan of the Company or of any Subsidiary of the Company or any entity or trustee holding (or acting in a fiduciary capacity in respect of) shares of capital stock of the Company for or pursuant to the terms of any such plan, or for the +A-4 2020 PROXY STATEMENT +ANNEX A +purpose of funding other employee benefits for employees of the Company or any Subsidiary of the Company or (iv) any other Person (together with all of its Related Persons) whose Beneficial Ownership of 4.9% or more of the then -outstanding shares of Common Stock will not jeopardize or endanger the availability to the Company of any Tax Benefit, as determined by the Board in its sole discretion prior to the time any Person becomes an Acquiring Person, provided, however , that such Person will cease to be an Exempt Person if the Board subsequently makes a contrary determination in its sole discretion, regardless of the reason for such contrary determination. +“ Exemption Request ” shall have the meaning set forth in Section 32 . +“ Exercise Price ” shall have the meaning set forth in Section 4(a) . +“ Expiration Time ” shall have the meaning set forth in Section 7(a) . +“ Final Expiration Time ” shall have the meaning set forth in Section 7(a) . +“ Flip -in Event ” shall have the meaning set forth in Section 11(a)(ii) . +“ Flip -in Trigger Date ” shall have the meaning set forth in Section 11(a)(iii) . +“ Flip -over Event ” shall have the meaning set forth in Section 13(a) . +“ Flip -over Party ” shall have the meaning set forth in Section 13(b) . +“ Flip -over Stock ” shall mean the capital stock (or similar equity interest) with the greatest voting power in respect of the election of directors (or other Persons similarly responsible for the direction of the business and affairs) of the Flip -over Party. +“ Grandfathered Person ” shall mean (x) any Person who or which, together with all of such Person’s Related Persons, is, as of immediately prior to the first public announcement of the adoption of this Agreement, the Beneficial Owner of 4.9% or more of the shares of Common Stock then outstanding and (y) any Person who or which becomes the Beneficial Owner of 4.9% or more of the shares of Common Stock then outstanding as a result of the acquisition of Beneficial Ownership of shares of Common Stock from an individual described in the preceding clause (x) if such acquisition occurs upon such individual’s death pursuant to such individual’s will or pursuant to a charitable trust created by such individual for estate planning purposes. A Person ceases to be a “Grandfathered Person” if and when (i) such Person becomes the Beneficial Owner of less than 4.9% of the shares of Common Stock then outstanding or (ii) such Person increases such Person’s Beneficial Ownership of shares of Common Stock to an amount equal to or greater than the greater of (A) 4.9% of the shares of Common Stock then outstanding and (B) the sum of (1) the lowest Beneficial Ownership of such Person as a percentage of the shares of Common Stock outstanding as of any time from and after the first public announcement of the adoption of this Agreement (other than as a result of an acquisition of shares of Common Stock by the Company) plus (2) one share of Common Stock. The foregoing definition shall grandfather the security or instrument underlying such Beneficial Ownership only in the type and form as of the date of this Agreement and shall not grandfather any subsequent change, modification, swap or exchange of such security or instrument into a different type or form of security or instrument (unless such change, modification, swap or exchange is contemplated explicitly by the terms of such security or instrument). For the avoidance of doubt, the swap or exchange of contracts for differences for shares of Common Stock or other equity securities of the Company shall not be grandfathered under this Agreement. +“ Nasdaq ” shall mean the Nasdaq Stock Market. +“ NOLs ” shall have the meaning set forth in the recitals of this Agreement. +“ Notional Common Shares ” shall have the meaning set forth in the definition of “Derivatives Contract.” +“ NYSE ” shall mean the New York Stock Exchange. +“ Person ” shall mean any individual, partnership, firm, corporation, limited liability company, association, trust, limited liability partnership or other entity, or a group of Persons making a “coordinated acquisition” of shares or otherwise treated as an entity within the meaning of Section 1.382 -3 (a)(1) of the Treasury Regulations, and shall include any successor (by merger or otherwise) of such individual or entity, but shall not include a “Public Group” (as such term is defined in Section 1.382 -2T (f)(13) of the Treasury Regulations). +“ Preferred Stock ” shall mean the Series B Junior Participating Preferred Stock, par value $0.01 per share, of the Company having the designations, rights and preferences set forth in the form of certificate of designation attached to this Agreement +2020 PROXY STATEMENT A-5 +ANNEX A +as Exhibit A , and, to the extent that there is not a sufficient number of shares of Series B Junior Participating Preferred Stock authorized to permit the full exercise of the Rights, any other series of preferred stock, par value $0.01 per share, of the Company designated for such purpose containing terms substantially similar to the terms of the Series B Junior Participating Preferred Stock. “ Receiving Party ” shall have the meaning set forth in the definition of “Derivatives Contract.” +“ Record Date ” shall have the meaning set forth in the recitals of this Agreement. +“ Redemption Period ” shall have the meaning set forth in Section 23(a) . +“ Redemption Price ” shall have the meaning set forth in Section 23(a) . +“ Related Person ” shall mean, as to any Person, any Affiliate or Associate of such Person. +“ Requesting Person ” shall have the meaning set forth in Section 32 . +“ Right ” shall have the meaning set forth in the recitals of this Agreement. +“ Rights Agent ” shall have the meaning set forth in the preamble to this Agreement. +“ Rights Certificate ” shall have the meaning set forth in Section 3(b) . +“ Rights Dividend Declaration Date ” shall have the meaning set forth in the recitals of this Agreement. +“ Section 382 ” shall mean Section 382 of the Code or any successor or replacement provision. +“ Spread ” shall have the meaning set forth in Section 11(a)(iii) . +“ Stock Acquisition Date ” shall mean the first date of public announcement (which, for purposes of this definition, shall include a report filed pursuant to Section 13(d) under the Exchange Act) by the Company or an Acquiring Person indicating that an Acquiring Person has become such, or such other date, as determined by the Board, on which a Person has become an Acquiring Person. +“ Subsidiary ” shall mean, with reference to any Person, any Person of which (i) a majority of the voting power of the voting securities or equity interests is Beneficially Owned, directly or indirectly, by such first -mentioned Person or otherwise controlled by such first -mentioned Person or (ii) an amount of voting securities or equity interests sufficient to elect at least a majority of the directors (or other Persons similarly responsible for the direction of the business and affairs of such other Person) of such corporation or other Person is Beneficially Owned, directly or indirectly, by such Person, or otherwise controlled by such Person. +“ Substitution Period ” shall have the meaning set forth in Section 11(a)(iii) . +“ Summary of Rights ” shall have the meaning set forth in Section 3(c) . +“ Tax Benefits ” shall mean NOLs, capital loss carryovers, general business credit carryovers, alternative minimum tax credit carryovers, foreign tax credit carryovers, any loss or deduction attributable to a “net unrealized built -in loss” within the meaning of Section 382, and any other attribute the benefit of which is subject to possible limitation under Section 382. +“ Trading Day ” shall mean a day on which the principal national securities exchange on which shares of an issuer’s common stock (or other security) are listed or admitted to trading is open for the transaction of business or, if such shares of common stock (or other security) are not listed or admitted to trading on any national securities exchange, a Business Day. +“ Treasury Regulations ” shall mean final, temporary and proposed tax regulations promulgated under the Code, including any amendments thereto. +“ Triggering Event ” shall mean a Flip -in Event or a Flip -over Event. +“ Trust ” shall have the meaning set forth in Section 24(a) . +“ Trust Agreement ” shall have the meaning set forth in Section 24(a) . +Section 2. Appointment of Rights Agent . The Company hereby appoints the Rights Agent to act as agent for the Company in accordance with the express terms and conditions of this Agreement (and no implied terms and conditions), and the Rights Agent hereby accepts such appointment. The Company may from time to time appoint such co -Rights Agents as it may deem necessary +A-6 2020 PROXY STATEMENT +ANNEX A +or desirable (the term “Rights Agent” being used herein to refer, collectively, to the Rights Agent together with any such co -Rights Agents), upon ten (10) days’ prior written notice to the Rights Agent. In the event the Company appoints one or more co -Rights Agents, the respective duties of the Rights Agent and any co -Rights Agents shall be as the Company reasonably determines, provided that such duties are consistent with the terms and conditions of this Agreement and that contemporaneously with such appointment the Company shall notify, in writing, the Rights Agent and any co -Rights Agents of any such duties. The Rights Agent shall have no duty to supervise, and shall in no event be liable for, the acts or omissions of any such co -Rights Agents. +Section 3. Issuance of Rights Certificates . +(a) Until the earlier of the Distribution Time and the Expiration Time, (i) with respect to shares of Common Stock outstanding as of the Record Date, or which become outstanding subsequent to the Record Date, the Rights shall be evidenced by the certificates for shares of Common Stock registered in the names of the holders of shares of Common Stock (or, in the case of uncertificated shares of Common Stock, by the book -entry account that evidences record ownership of such shares) (which certificates or book entries for Common Stock shall be deemed also to be certificates or book entries for Rights), and not by separate certificates (or book entries), (ii) the surrender for transfer of any certificate representing shares of Common Stock (or, in the case of uncertificated shares of Common Stock, the effectuation of a book -entry transfer of such shares of Common Stock) in respect of which Rights have been issued shall also constitute the transfer of the Rights associated with such shares of Common Stock and (iii) the Rights shall be transferable only in connection with the transfer of the underlying shares of Common Stock. As of and after the Distribution Time, the Rights shall be evidenced solely by such Rights Certificates, and the Rights Certificates and the Rights shall be transferable separately from the Common Stock. +(b) The Company shall promptly notify the Rights Agent of a Distribution Time and request its transfer agent (if such transfer agent is not the Rights Agent) to give the Rights Agent a stockholder list together with all other relevant information. As soon as practicable after the Rights Agent is notified of the Distribution Time and receives such information, the Rights Agent shall send by first -class , insured, postage prepaid mail, to each record holder of the Common Stock as of the Close of Business on the Distribution Time, at the address of such holder shown on the records of the Company, one or more Rights certificates, in substantially the form of Exhibit B (the “ Rights Certificates ”), evidencing one Right for each share of Common Stock so held, subject to adjustment as provided herein. To the extent that a Flip -in Event has also occurred, the Company may implement such procedures, as it deems appropriate in its sole discretion (but which do not affect the rights, duties, liabilities or responsibilities of the Rights Agent), to minimize the possibility that Rights Certificates are received by Persons whose Rights would be null and void under Section 7(e) and provide reasonably prompt written notice thereof to the Rights Agent. In the event that any adjustment in the number of Rights per share of Common Stock has been made pursuant to Section 11 , at the time of distribution of the Rights Certificates, the Company shall make the necessary and appropriate rounding adjustments (in accordance with Section 14(a) ) so that Rights Certificates representing only whole numbers of Rights are distributed and cash is paid in lieu of any fractional Rights. +(c) The Company shall make available, as promptly as practicable, a copy of a Summary of Rights, in substantially the form attached as Exhibit C (the “ Summary of Rights ”), to any holder of Rights who may so request from time to time prior to the Expiration Time. +(d) Rights shall be issued in respect of all shares of Common Stock that are issued (whether originally issued or from the Company’s treasury) after the Record Date but prior to the earlier of the Distribution Time or the Expiration Time or, in certain circumstances provided in Section 22 , after the Distribution Time. Certificates representing such shares of Common Stock shall also be deemed to be certificates for Rights, and shall bear a legend substantially in the following form: +“[This certificate] [These shares] also evidence[s] and entitle[s] the holder hereof to certain rights (the “ Rights ”) as set forth in the Tax Benefits Preservation Plan by and between Gulfport Energy Corporation, a Delaware corporation (the “ Company ”) and Computershare Trust Company, N.A. dated as of April 30, 2020, as the same may be amended from time to time (the “ Tax Benefits Preservation Plan ”), the terms of which are hereby incorporated herein by reference and a copy of which is on file at the principal executive offices of the Company. Under certain circumstances, as set forth in the Tax Benefits Preservation Plan, such Rights shall be evidenced by separate certificates and will no longer be evidenced by [this certificate] [these shares]. The Company will mail to the holder of [this certificate] [these shares] a copy of the Tax Benefits Preservation Plan, as in effect on the date of mailing, without charge, upon receipt of a written request therefor. +Under certain circumstances set forth in the Tax Benefits Preservation Plan, Rights that are Beneficially Owned by any Person who or which is, was or becomes an Acquiring Person or any Related Persons thereof or specified transferees of such Acquiring Person (or Related Person thereof) (as such terms are defined in the Tax Benefits Preservation Plan) whether currently held by or on behalf of such Person or by any subsequent holder, may become null and void and will no longer be transferable.” +2020 PROXY STATEMENT A-7 +ANNEX A +With respect to any book -entry shares of Common Stock, such legend shall be included in a notice to the record holder of such shares to the extent required by applicable law. With respect to certificated shares of Common Stock containing the foregoing legend, or any notice of the foregoing legend delivered to record holders of book -entry shares, until the earlier of (i) the Distribution Time or (ii) the Expiration Time, the Rights associated with such shares of Common Stock represented by such stock certificates or registered in book -entry form shall be evidenced by such certificates alone, or such registration in book -entry form alone, and registered holders of such shares of Common Stock shall also be the registered holders of the associated Rights, and the transfer of any of such shares of Common Stock represented by such certificates or book -entries shall also constitute the transfer of the Rights associated with the shares of Common Stock represented by such certificates or book entries. In the event the Company purchases or acquires any shares of Common Stock after the Record Date but prior to the Distribution Time, any Rights associated with such shares shall be deemed cancelled and retired so that the Company shall not be entitled to exercise any Rights associated with shares of Common Stock that are no longer outstanding. The omission of any legend described in this Section 3 shall not affect the status, validity or enforceability of any part of this Agreement or the rights of any holder of the Rights. +Section 4. Form of Rights Certificates . +(a) The Rights Certificates (and the forms of election to purchase and of assignment to be printed on the reverse thereof), when and if issued, shall each be substantially in the form set forth in Exhibit B and may have such marks of identification or designation and such legends, summaries or endorsements printed thereon as the Company may deem appropriate (but which do not affect the rights, duties, liabilities or responsibilities of the Rights Agent) and as are not inconsistent with this Agreement, or as may be required to comply with any applicable law or with any rule or regulation made pursuant thereto or with any rule or regulation of any stock exchange on which the Rights may from time to time be listed, or to conform to customary usage. Subject to Section 11 and Section 22 , the Rights Certificates, whenever distributed, shall be dated as of the Record Date or, in the case of Rights with respect to shares of Common Stock issued or becoming outstanding after the Record Date, the same date as the date of the stock certificate evidencing such shares (or, with respect to uncertificated shares of Common Stock, the date of the issuance of such shares of Common Stock indicated in the books of the registrar and transfer agent), and on their face shall entitle the holders thereof to purchase such number of one one -thousandths of a share of Preferred Stock as shall be set forth therein at the price set forth therein (such exercise price per one one -thousandth of a share, the “ Exercise Price ”), but the amount and type of securities purchasable upon the exercise of each Right and the Exercise Price thereof shall be subject to adjustment from time to time as provided in Section 11 and Section 13(a) . +(b) Any Rights Certificate issued pursuant to Section 3(a), Section 11(a)(ii) or Section 22 that represents Rights Beneficially Owned by any Person known to be (i) an Acquiring Person or any Related Person of an Acquiring Person, (ii) a transferee of an Acquiring Person (or of any such Related Person) who becomes a transferee after the Acquiring Person becomes such or (iii) a transferee of an Acquiring Person (or of any such Related Person) who becomes a transferee prior to or concurrently with the Acquiring Person becoming such and receives such Rights pursuant to either (A) a transfer (whether or not for consideration) from the Acquiring Person (or any Related Person thereof) to holders of equity interests in such Acquiring Person (or any Related Person thereof) or to any Person with whom such Acquiring Person (or any Related Person thereof) has any continuing agreement, arrangement or understanding regarding the transferred Rights or (B) a transfer which the Board has determined is part of a plan, arrangement or understanding which has as a primary purpose or effect of avoidance of Section 7(e), and any Rights Certificate issued pursuant to Section 6 or Section 11 upon transfer, exchange, replacement or adjustment of any other Rights Certificate referred to in this sentence, shall contain (to the extent feasible) the following legend: +“The Rights represented by this Rights Certificate are or were Beneficially Owned by a Person who was or became an Acquiring Person or a Related Person of an Acquiring Person (as such terms are defined in the Tax Benefits Preservation Plan dated as of April 30, 2020, by and between Gulfport Energy Corporation and Computershare Trust Company, N.A. (the “ Tax Benefits Preservation Plan ”)). Accordingly, this Rights Certificate and the Rights represented hereby may become null and void in the circumstances specified in Section 7(e) of such Tax Benefits Preservation Plan.” +The absence of the foregoing legend on any Rights Certificate shall in no way affect any of the other provisions of this Agreement, including the provisions of Section 7(e) . The Company shall instruct the Rights Agent in writing of the Right that should be so legended. The Company shall give written notice to the Rights Agent as soon as practicable after it becomes aware of the existence and identity of any Acquiring Person or any Related Person thereof. +A-8 2020 PROXY STATEMENT +ANNEX A +Section 5. Countersignature and Registration . +(a) The Rights Certificates shall be executed on behalf of the Company by its Chairman of the Board, Chief Executive Officer, President, Chief Financial Officer, General Counsel, Corporate Secretary or any Assistant Secretary of the Company, or any other officer of the Company, either manually or by facsimile or other electronic signature. The Rights Certificates shall have affixed thereto the Company’s corporate seal (or a facsimile thereof), and shall be attested by the Company’s Secretary. The Rights Certificates shall be countersigned manually or by facsimile or other electronic signature by the Rights Agent and shall not be valid for any purpose unless so countersigned. In case any officer of the Company who shall have signed or attested any of the Rights Certificates shall cease to be such officer of the Company before countersignature by the Rights Agent and issuance and delivery by the Company, such Rights Certificates, nevertheless, may be countersigned by the Rights Agent and issued and delivered by the Company with the same force and effect as though the Person who signed or attested such Rights Certificates had not ceased to be such officer of the Company; and any Rights Certificates may be signed or attested on behalf of the Company by any Person who, at the actual date of the execution of such Rights Certificate, shall be a proper officer of the Company to sign or attest such Rights Certificate, although at the date of the execution of this Agreement any such Person was not such an officer. +(b) Following the Distribution Time, the Rights Agent shall keep or cause to be kept, at its offices designated as the appropriate place for surrender of Rights Certificates upon exercise or transfer, books for registration and transfer of the Rights Certificates issued hereunder. Such books shall show the names and addresses of the respective holders of the Rights Certificates, the number of Rights evidenced on its face by each of the Rights Certificates and the certificate number and the date of each of the Rights Certificates. +Section 6. Transfer, Split Up, Combination and Exchange of Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates . +(a) Subject to Section 4(b), Section 7(e) and Section 14, at any time after the Close of Business on the Distribution Time, and at or prior to the Close of Business on the Expiration Time, any Rights Certificate (other than Rights Certificates representing Rights that have become null and void pursuant to Section 7(e), that have been redeemed pursuant to Section 23 or that have been exchanged pursuant to Section 24) may be transferred, split up, combined or exchanged for another Rights Certificate, entitling the registered holder to purchase a like number of one one -thousandths of a share of Preferred Stock (or, following a Triggering Event, Common Stock, other securities, cash or other assets, as the case may be) as the Rights Certificate surrendered then entitled such holder (or former holder in the case of a transfer) to purchase. Any registered holder desiring to transfer, split up, combine or exchange any Rights Certificate shall make such request in writing delivered to the Rights Agent, and shall surrender the Rights Certificate to be transferred, split up, combined or exchanged at the offices of the Rights Agent designated for such purpose. Neither the Rights Agent nor the Company shall be obligated to take any action whatsoever with respect to the transfer, split up, combination or exchange of any such surrendered Rights Certificate until the registered holder has properly completed and duly executed the certificate contained in the form of assignment on the reverse side of such Rights Certificate accompanied by a signature guarantee and such other documentation as the Rights Agent reasonably requests. Thereupon the Rights Agent shall, subject to Section 4(b), Section 7(e), Section 14 and Section 24, countersign and deliver to the Person entitled thereto a Rights Certificate or Rights Certificates, as the case may be, as so requested. The Company may require payment of a sum sufficient to cover any tax or governmental charge that may be imposed in connection with any transfer, split up, combination or exchange of Rights Certificates. If and to the extent the Company does require payment of any such taxes or charges, the Company shall give the Rights Agent prompt written notice thereof and the Rights Agent shall not deliver any Rights Certificate unless and until it is satisfied that all such payments have been made, and the Rights Agent shall forward any such sum collected by it to the Company or to such Persons as the Company specifies by written notice. The Rights Agent shall have no duty or obligation to take any action with respect to a Rights holder under this Agreement that requires the payment by such Rights holder of applicable taxes and/or charges unless and until the Rights Agent is satisfied that all such taxes and/or charges have been paid. +(b) Upon receipt by the Company and the Rights Agent of evidence reasonably satisfactory to them of the loss, theft, destruction or mutilation of a valid Rights Certificate, and, in case of loss, theft or destruction, of indemnity or security satisfactory to them, and reimbursement to the Company and the Rights Agent of all reasonable expenses incidental thereto, and upon surrender to the Rights Agent and cancellation of the Rights Certificates if mutilated, the Company shall prepare, execute and deliver a new Rights Certificate of like tenor to the Rights Agent for countersignature and delivery to the registered owner in lieu of the Rights Certificate so lost, stolen, destroyed or mutilated. +2020 PROXY STATEMENT A-9 +ANNEX A +(c) Notwithstanding any other provision hereof, the Company and the Rights Agent may amend this Agreement to provide for uncertificated Rights in addition to or in lieu of Rights evidenced by Rights Certificates, to the extent permitted by applicable law. +Section 7. Exercise of Rights; Exercise Price; Expiration Time of Rights . +(a) Subject to Section 7(e) , the registered holder of any Rights Certificate may exercise the Rights evidenced thereby (except as otherwise provided herein including the restrictions on exercisability set forth in Section 7(c) , Section 9(c) , Section 11(a)(iii) and Section 23(a) ) in whole or in part at any time after the Distribution Time upon surrender of the Rights Certificate, with the form of election to purchase and the certificate on the reverse side thereof properly completed and duly executed, to the Rights Agent at the offices of the Rights Agent designated for such purpose, accompanied by a signature guarantee and such other documentation as the Rights Agent may reasonably request together with payment of the aggregate Exercise Price with respect to the total number of one one -thousandths of a share of Preferred Stock (or Common Stock, other securities, cash or other assets, as the case may be) as to which such surrendered Rights are then exercisable, at or prior to the earliest of (i) the Close of Business on April 29, 2021 (the “ Final Expiration Time ”), (ii) the time at which the Rights are redeemed as provided in Section 23 , (iii) the time at which such Rights are exchanged pursuant Section 24 , (iv) the closing of any merger or other acquisition transaction involving the Company pursuant to an agreement of the type described in Section 13(f) , at which time, the Rights are terminated and (v) the time at which the Board determines that the NOLs are utilized in all material respects or that an ownership change under Section 382 would not adversely impact in any material respect the time period in which the Company could use the NOLs, or materially impair the amount of the NOLs that could be used by the Company in any particular time period, for applicable tax purposes (the earliest of (i), (ii), (iii), (iv) and (v) being herein referred to as the “ Expiration Time ”). +(b) The Exercise Price for each one one -thousandth of a share of Preferred Stock pursuant to the exercise of a Right shall initially be $8.00, and shall be subject to adjustment from time to time as provided in Section 11 and Section 13(a) and shall be payable in accordance with Section 7(c) . +(c) Upon receipt of a Rights Certificate representing exercisable Rights, with the form of election to purchase and the certificate properly completed and duly executed, accompanied by payment, with respect to each Right so exercised, of the Exercise Price per one one -thousandth of a share of Preferred Stock (or other shares, securities, cash or other assets, as the case may be) to be purchased as set forth below and an amount equal to any applicable transfer tax or charge required to be paid by the holder of the Rights Certificate in accordance with Section 9(e) , the Rights Agent shall, subject to Section 20(l) , thereupon promptly (i) (A) requisition from any transfer agent of the shares of Preferred Stock (or make available, if the Rights Agent is the transfer agent for such shares) certificates for the total number of one one -thousandths of a share of Preferred Stock (or fractions of shares that are integral multiples of one one -thousandth of a share of Preferred Stock) to be purchased and the Company hereby irrevocably authorizes its transfer agent to comply with all such requests, or (B) if the Company has elected to deposit the total number of shares of Preferred Stock issuable upon exercise of the Rights hereunder with a depositary agent, requisition from the depositary agent depositary receipts representing such number of one one -thousandths of a share of Preferred Stock as are to be purchased (in which case certificates for the shares of Preferred Stock represented by such receipts shall be deposited by the transfer agent with the depositary agent) and the Company shall direct the depositary agent to comply with such request, (ii) requisition from the Company the amount of cash, if any, to be paid in lieu of fractional shares in accordance with Section 14 , (iii) after receipt of such certificates or depositary receipts, cause the same to be delivered to or upon the order of the registered holder of such Rights Certificate, registered in such name or names as may be designated by such holder, and (iv) after receipt thereof, deliver such cash, if any, to or upon the order of the registered holder of such Rights Certificate. The payment of the Exercise Price (as such amount may be reduced pursuant to Section 11(a)(iii) ) shall be made in cash or by certified bank check or bank draft payable to the order of the Company. In the event that the Company is obligated to issue other securities (including Common Stock) of the Company, pay cash and/or distribute other property pursuant to Section 11(a) , the Company shall make all arrangements necessary so that such other securities, cash and/or other property are available for distribution by the Rights Agent, if and when necessary to comply with the terms of this Agreement, and until so received, the Rights Agent shall have no duties or obligations with respect to such securities, cash and/or property. The Company reserves the right to require prior to the occurrence of a Triggering Event that, upon any exercise of Rights, a number of Rights be exercised so that only whole shares of Preferred Stock would be issued. +(d) In case the registered holder of any Rights Certificate exercises less than all the Rights evidenced thereby, a new Rights Certificate evidencing Rights equivalent to the Rights remaining unexercised shall be issued by the Rights Agent and delivered to, or upon the order of, the registered holder of such Rights Certificate, registered in such name or names as may be designated by such holder, subject to Section 14 . +A-10 2020 PROXY STATEMENT +ANNEX A +(e) Notwithstanding anything in this Agreement to the contrary, from and after the first occurrence of a Flip -in Event, any Rights Beneficially Owned by (i) an Acquiring Person or a Related Person of an Acquiring Person, (ii) a transferee of an Acquiring Person (or of any such Related Person) who becomes a transferee after the Acquiring Person becomes such or (iii) a transferee of an Acquiring Person (or of any such Related Person) who becomes a transferee prior to or concurrently with the Acquiring Person becoming such and receives such Rights pursuant to either (A) a transfer (whether or not for consideration) from the Acquiring Person (or any Related Person thereof) to holders of equity interests in such Acquiring Person (or any Related Person thereof) or to any Person with whom the Acquiring Person (or any Related Person thereof) has any continuing agreement, arrangement or understanding, whether or not in writing, regarding the transferred Rights or (B) a transfer which the Board has determined is part of an agreement, arrangement or understanding which has as a primary purpose or effect the avoidance of this Section 7(e) , shall become null and void without any further action and no holder of such Rights shall have any rights whatsoever with respect to such Rights, whether under any provision of this Agreement or otherwise. The Company shall notify the Rights Agent in writing when this Section 7(e) applies and shall use commercially reasonable efforts to ensure that this Section 7(e) and Section 4(b) are complied with, but neither the Company nor the Rights Agent shall have any liability to any holder of Rights or other Person (without limiting the rights of the Rights Agent under Section 18 ) as a result of the Company’s failure to make any determinations with respect to an Acquiring Person or any of its Related Persons or transferees hereunder. +(f) Notwithstanding anything in this Agreement to the contrary, neither the Rights Agent nor the Company shall be obligated to undertake any action with respect to a registered holder upon the occurrence of any purported exercise as set forth in this Section 7 unless such registered holder has (i) properly completed and duly executed the certificate contained in the form of election to purchase set forth on the reverse side of the Rights Certificate surrendered for such exercise and (ii) provided such additional evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or Related Persons thereof as the Company or the Rights Agent reasonably requests. +Section 8. Cancellation and Destruction of Rights Certificates . All Rights Certificates surrendered for the purpose of exercise, transfer, split up, combination or exchange shall, if surrendered to the Company or any of its agents, be delivered to the Rights Agent for cancellation or in cancelled form, or, if surrendered to the Rights Agent, shall be cancelled by it, and no Rights Certificates shall be issued in lieu thereof, except as expressly permitted by this Agreement. The Company shall deliver to the Rights Agent for cancellation and retirement, and the Rights Agent shall so cancel and retire, any other Rights Certificates purchased or acquired by the Company otherwise than upon the exercise thereof. At the expense of the Company, the Rights Agent shall deliver all cancelled Rights Certificates to the Company, or shall, at the written request of the Company, destroy or cause to be destroyed such cancelled Rights Certificates, and in such case shall deliver a certificate of destruction thereof, executed by the Rights Agent, to the Company. +Section 9. Reservation and Availability of Capital Stock . +(a) The Company shall cause to be reserved and kept available out of its authorized and unissued shares of Preferred Stock (and, following the occurrence of a Triggering Event, out of its authorized and unissued shares of Common Stock and/or other securities, or out of its authorized and issued shares held in its treasury), the number of shares of Preferred Stock (and, following the occurrence of a Triggering Event, Common Stock and/or other securities) that, as provided in this Agreement, including Section 11(a)(iii) , shall be sufficient to permit the exercise in full of all outstanding Rights. +(b) So long as the shares of Preferred Stock (and, following the occurrence of a Triggering Event, Common Stock and/or other securities) issuable and deliverable upon the exercise of the Rights may be listed on any national securities exchange, the Company shall use commercially reasonable efforts to cause, from and after such time as the Rights become exercisable, all shares reserved for such issuance to be listed on such exchange, upon official notice of issuance upon such exercise. +(c) If the Company is required to file a registration statement pursuant to the Act with respect to the securities purchasable upon exercise of the Rights, the Company shall use commercially reasonable efforts to (i) prepare and file, as soon as practicable following the earliest date after the first occurrence of a Flip -in Event on which the consideration to be delivered by the Company upon exercise of the Rights has been determined in accordance with Section 11(a)(iii) , or as soon as is required by applicable law following the Distribution Time, as the case may be, a registration statement under the Act with respect to the securities purchasable upon exercise of the Rights on an appropriate form, (ii) cause such registration statement to become effective as soon as practicable after such filing and (iii) cause such registration statement to remain effective (with a prospectus at all times meeting the requirements of the Act) until the earlier of (A) the date as of which the Rights are no longer exercisable for such securities and (B) the Expiration Time. The Company shall also take such action as may be appropriate under, or to ensure compliance with, the securities or “blue sky” laws of the various states in connection with the exercisability of the Rights. The Company may temporarily suspend (with prompt written notice to the Rights Agent), for a period of time not to exceed ninety +2020 PROXY STATEMENT A-11 +ANNEX A +(90) days after the date set forth in clause (i) of the first sentence of this Section 9(c) , the exercisability of the Rights in order to prepare and file such registration statement and permit it to become effective. Upon any such suspension, the Company shall issue a public announcement (with prompt written notice thereof to the Rights Agent) stating that the exercisability of the Rights has been temporarily suspended, as well as a public announcement (with prompt written notice thereof to the Rights Agent) at such time as the suspension is no longer in effect. In addition, if the Company determines that a registration statement is required following the Distribution Time, and a Flip -in Event has not occurred, the Company may temporarily suspend (with prompt written notice thereof to the Rights Agent) the exercisability of Rights until such time as a registration statement has been declared effective. Notwithstanding any provision of this Agreement to the contrary, the Rights shall not be exercisable in any jurisdiction if the requisite qualification or exemption in such jurisdiction shall not have been obtained, the exercise thereof shall not be permitted under applicable law or a registration statement shall not have been declared effective. +(d) The Company shall take all such actions as may be necessary to ensure that all one one -thousandths of a share of Preferred Stock (and, following the occurrence of a Triggering Event, shares of Common Stock and/or other securities) delivered upon exercise of Rights shall, at the time of delivery of the certificates for such shares (subject to payment of the Exercise Price), be duly and validly authorized and issued and fully paid and nonassessable. +(e) The Company shall be responsible for the payment of any and all transfer taxes and governmental charges which may be payable in respect of the issuance or delivery of the Rights Certificates and of any certificates for a number of one one -thousandths of a share of Preferred Stock (or Common Stock and/or other securities) upon the exercise of Rights. The Company shall not, however, be required to pay any tax or charge that may be payable in respect of any transfer or delivery of Rights Certificates to a Person other than, or the issuance or delivery of a number of one one -thousandths of a share of Preferred Stock (or Common Stock and/or other securities) in respect of a name other than that of, the registered holder of the Rights Certificates evidencing Rights surrendered for exercise or to issue or deliver any certificates for a number of one one -thousandths of a share of Preferred Stock (or Common Stock and/or other securities) in a name other than that of the registered holder upon the exercise of any Rights until such tax has been paid (any such tax being payable by the holder of such Rights Certificate at the time of surrender) or until it has been established to the Company’s satisfaction that no such tax or charge is due. +Section 10. Preferred Stock Record Date . Each Person in whose name any certificate for Preferred Stock (or Common Stock and/or other securities) is issued upon the exercise of Rights shall for all purposes be deemed to have become the holder of record of such shares of Preferred Stock (or Common Stock and/or other securities) represented thereby on, and such certificate shall be dated, the date upon which the Rights Certificate evidencing such Rights was duly surrendered and payment of the Exercise Price (and all applicable transfer taxes) was made; provided, however, that if the date of such surrender and payment is a date upon which the applicable transfer books of the Company are closed, such Person shall be deemed to have become the record holder of such securities (fractional or otherwise) on, and such certificate shall be dated, the next succeeding Business Day on which the applicable transfer books of the Company are open; provided, further, that if delivery of a number of one one -thousandths of a share of Preferred Stock is delayed pursuant to Section 9(c) , such Persons shall be deemed to have become the record holders of such number of one one -thousandths of a share of Preferred Stock only when such shares of Preferred Stock first become deliverable. Prior to the exercise of the Rights evidenced thereby, the holder of a Rights Certificate shall not be entitled to any rights of a stockholder of the Company with respect to shares or other securities for which the Rights are exercisable, including the right to vote, to receive dividends or other distributions or to exercise any preemptive rights, and shall not be entitled to receive any notice of any proceedings of the Company, except as provided herein +Section 11. Adjustment of Exercise Price, Number and Kind of Shares or Number of Rights . The Exercise Price, the number and kind of shares covered by each Right and the number of Rights outstanding are subject to adjustment from time to time as provided in this Section 11 . +(a) +(i) In the event the Company at any time after the date of this Agreement (A) declares a dividend on any outstanding shares of Preferred Stock payable in shares of Preferred Stock, (B) subdivides any outstanding shares of Preferred Stock, (C) combines any outstanding shares of Preferred Stock into a smaller number of shares or (D) issues any shares of its capital stock in a reclassification of the Preferred Stock (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing or surviving entity), except as otherwise provided in this Section 11(a) and Section 7(e) , the Exercise Price in effect at the time of the record date for such dividend or of the effective date of such subdivision, combination or reclassification, and the number and kind of shares (or fractions thereof) of Preferred Stock or capital stock, as the case may be, issuable on such date, shall be proportionately adjusted so that the holder of any Right exercised after such time shall be entitled to receive, upon payment of the Exercise Price then in +A-12 2020 PROXY STATEMENT +ANNEX A +effect, the aggregate number and kind of shares (or fractions thereof) of Preferred Stock or capital stock, as the case may be, which, if such Right had been exercised immediately prior to such date and at a time when the transfer books of the Company were open, such holder would have owned upon such exercise and been entitled to receive by virtue of such dividend, subdivision, combination or reclassification. If an event occurs that would require an adjustment under both this Section 11(a)(i) and Section 11(a)(ii) , the adjustment provided for in this Section 11(a)(i) shall be in addition to, and shall be made prior to, any adjustment required pursuant to Section 11(a)(ii) . +(ii) Subject to Section 24 , in the event any Person (other than any Exempt Person) becomes an Acquiring Person (such event, a “ Flip -in Event ”), unless the event causing such Person to become an Acquiring Person is a Flip -over Event, then proper provision shall be made so that promptly following the Redemption Period, each holder of a Right (except as provided below and in Section 7(e) ) thereafter has the right to receive, upon exercise thereof at a price equal to the then -current Exercise Price in accordance with the terms of this Agreement, in lieu of a number of one one -thousandths of a share of Preferred Stock, such number of shares of Common Stock as shall be equal to the result obtained by (A) multiplying the then -current Exercise Price by the then number of one one -thousandths of a share of Preferred Stock for which a Right was exercisable immediately prior to the first occurrence of a Flip -in Event and (B) dividing that product (which, following such first occurrence shall thereafter be referred to as the “Exercise Price” for each Right and for all purposes of this Agreement) by fifty percent (50%) of the Current Market Price per share of Common Stock on the date of such first occurrence (such number of shares, the “ Adjustment Shares ”). +(iii) In the event that the number of shares of Common Stock authorized by the Restated Certificate of Incorporation of the Company (as amended from time to time, the “ Certificate of Incorporation ”) but not outstanding or reserved for issuance for purposes other than upon exercise of the Rights, is not sufficient to permit the exercise in full of the Rights in accordance with Section 11(a)(ii) , the Board shall, to the extent permitted by applicable law and by any agreements or instruments then in effect to which the Company is a party, (A) determine the excess of (1) the value of the Adjustment Shares issuable upon the exercise of a Right (the “ Current Value ”) over (2) the Exercise Price (such excess being the “ Spread ”) and (B) with respect to each Right (subject to Section 7(e) ), make adequate provision to substitute for some or all of the Adjustment Shares, upon the exercise of a Right and payment of the applicable Exercise Price, (1) cash; (2) a reduction in the Exercise Price, (3) shares or fractions of a share of Preferred Stock or other equity securities of the Company (including shares, or units of shares, of Preferred Stock which the Board has determined to have substantially the same value or economic rights as shares of Common Stock) (such shares of equity securities being herein called “ Common Stock Equivalents ”), (4) debt securities of the Company, (5) other assets or (6) any combination of the foregoing, having an aggregate value equal to the Current Value (less the amount of any reduction in the Exercise Price), where such aggregate value has been determined by the Board based upon the advice of a financial advisor selected by the Board; provided, however , if the Company has not made adequate provision to deliver value pursuant to clause (B) above within thirty (30) days following the later of (x) the first occurrence of a Flip -in Event and (y) the date on which the Redemption Period expires (the later of (x) and (y) being referred to herein as the “ Flip -in Trigger Date ”), then the Company shall be obligated to deliver, to the extent permitted by applicable law, upon the surrender for exercise of a Right and without requiring payment of the Exercise Price, shares of Common Stock (to the extent available), and then, if necessary, such number or fractions of shares of Preferred Stock (to the extent available) and then, if necessary, cash, which shares and/or cash have an aggregate value equal to the Spread. If, upon the occurrence of a Flip -in Event, the Board determines in good faith that it is likely that sufficient additional shares of Common Stock could be authorized for issuance upon exercise in full of the Rights, the thirty (30) day period set forth above may be extended to the extent necessary, but not more than ninety (90) days after the Flip -in Trigger Date, in order that the Company may seek stockholder approval for the authorization of such additional shares (such thirty (30) day period, as it may be extended, the “ Substitution Period ”). To the extent the Company determines that action should be taken pursuant to the first sentence or third sentence of this Section 11(a)(iii) , the Company (X) shall provide, subject to Section 7(e) , that such action shall apply uniformly to all outstanding Rights and (Y) may suspend the exercisability of the Rights until the expiration of the Substitution Period in order to seek such stockholder approval for authorization of additional shares and/or to decide the appropriate form of distribution to be made pursuant to such first sentence and to determine the value thereof. In the event of any such suspension, the Company shall issue a public announcement stating that the exercisability of the Rights has been temporarily suspended, as well as a public announcement at such time as the suspension is no longer in effect (with prompt written notice of such announcements to the Rights Agent). For purposes of this Section 11(a)(iii) , the value of each Adjustment Share shall be the Current Market Price per share of Common Stock on the Flip -in Trigger Date and the value of any Common Stock Equivalent shall be deemed to equal the Current Market Price per share of the Common Stock on such date. The Board may establish procedures to allocate the right to receive shares of Common Stock upon the exercise of the Rights among holders of Rights pursuant to this Section 11(a)(iii) . +2020 PROXY STATEMENT A-13 +ANNEX A +(b) In case the Company fixes a record date for the issuance of rights (other than the Rights), options or warrants to all holders of Preferred Stock entitling them to subscribe for or purchase (for a period expiring within forty -five (45) days after such record date) Preferred Stock (or shares having the same rights, privileges and preferences as the shares of Preferred Stock (“ Equivalent Preferred Stock ”)) or securities convertible into Preferred Stock or Equivalent Preferred Stock at a price per share of Preferred Stock or per share of Equivalent Preferred Stock (or having a conversion price per share, if a security convertible into Preferred Stock or Equivalent Preferred Stock) less than the Current Market Price per share of Preferred Stock on such record date, the Exercise Price to be in effect after such record date shall be determined by multiplying the Exercise Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the number of shares of Preferred Stock and/or Equivalent Preferred Stock outstanding on such record date, plus the number of shares of Preferred Stock and/or Equivalent Preferred Stock which the aggregate offering price of the total number of shares of Preferred Stock and/or Equivalent Preferred Stock so to be offered (and/or the aggregate initial conversion price of the convertible securities so to be offered) would purchase at such Current Market Price, and the denominator of which shall be the number of shares of Preferred Stock and/or Equivalent Preferred Stock outstanding on such record date, plus the number of additional shares of Preferred Stock and/or Equivalent Preferred Stock to be offered for subscription or purchase (or into which the convertible securities so to be offered are initially convertible). In case such subscription price may be paid by delivery of consideration part or all of which may be in a form other than cash, the value of such consideration shall be as determined in good faith by the Board, whose determination shall be described in a statement filed with the Rights Agent and shall be binding on the Rights Agent and the holders of the Rights. Shares of Preferred Stock and Equivalent Preferred Stock owned by or held for the account of the Company shall not be deemed outstanding for the purpose of any such computation. Such adjustment shall be made successively whenever such a record date is fixed, and in the event that such rights, options or warrants are not so issued, the Exercise Price shall be adjusted to be the Exercise Price which would then be in effect if such record date had not been fixed. +(c) In case the Company fixes a record date for a distribution to all holders of Preferred Stock (including any such distribution made in connection with a consolidation or merger in which the Company is the continuing or surviving entity) of evidences of indebtedness, cash (other than a regular periodic cash dividend out of the earnings or retained earnings of the Company), assets (other than a dividend payable in Preferred Stock, but including any dividend payable in stock other than Preferred Stock) or subscription rights, options or warrants (excluding those referred to in Section 11(b) ), the Exercise Price to be in effect after such record date shall be determined by multiplying the Exercise Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the Current Market Price per share of Preferred Stock on such record date, less the fair market value (as determined in good faith by the Board, whose determination shall be described in a statement filed with the Rights Agent and shall be binding on the Rights Agent and the holders of the Rights) of the portion of the cash, assets or evidences of indebtedness so to be distributed or of such subscription rights or warrants applicable to a share of Preferred Stock and the denominator of which shall be such Current Market Price per share of Preferred Stock. Such adjustments shall be made successively whenever such a record date is fixed, and in the event that such distribution is not so made, the Exercise Price shall be adjusted to be the Exercise Price that would have been in effect if such record date had not been fixed. +(d) +(i) For the purpose of any computation hereunder, other than computations made pursuant to Section 11(a)(iii) , the “ Current Market Price ” per share of common stock (or similar equity interest) of an issuer on any date shall be deemed to be the average of the daily Closing Prices per share of such common stock (or other security) for the thirty (30) consecutive Trading Days immediately prior to but not including such date, and for purposes of computations made pursuant to Section 11(a)(iii) , the “ Current Market Price ” per share of Common Stock on any date shall be deemed to be the average of the daily Closing Prices per share of such Common Stock for the ten (10) consecutive Trading Days immediately following but not including such date; provided, however , that in the event that the Current Market Price per share of common stock (or other security) of an issuer is determined during a period following the announcement by the issuer of such common stock (or other security) of (A) a dividend or distribution on such common stock (or other security) payable in shares of such common stock (or other security) or securities convertible into shares of such common stock (or other security) (other than the Rights) or (B) any subdivision, combination or reclassification of such common stock (or other security), and the ex -dividend date for such dividend or distribution, or the record date for such subdivision, combination or reclassification shall not have occurred prior to the commencement of the requisite thirty (30) Trading Day or ten (10) Trading Day period, as set forth above, then, and in each such case, the “Current Market Price” shall be properly adjusted to take into account any trading during the period prior to such ex -dividend date or record date. +A-14 2020 PROXY STATEMENT +ANNEX A +If an issuer’s shares of common stock (or other security) are not publicly held or not so listed or traded, “ Current Market Price ” per share shall mean the fair value per share as determined in good faith by the Board, whose determination shall be described in a statement filed with the Rights Agent and shall be conclusive for all purposes. +(ii) For the purpose of any computation hereunder, the “ Current Market Price ” per share of Preferred Stock shall be determined in the same manner as set forth above for the Common Stock in Section 11(d)(i) (other than the last sentence thereof). If the Current Market Price per share of Preferred Stock cannot be determined in the manner provided above, or if the Preferred Stock is not publicly held or listed or traded in a manner described in Section 11(d)(i) , the “ Current Market Price ” per share of Preferred Stock shall be conclusively deemed to be an amount equal to 1,000 (as such number may be appropriately adjusted for such events as stock splits, reverse stock splits, stock dividends and recapitalizations with respect to the Common Stock occurring after the date of this Agreement) multiplied by the Current Market Price per share of the Common Stock. If neither the Common Stock nor the Preferred Stock is publicly held or so listed or traded, “ Current Market Price ” per share of the Preferred Stock shall mean the fair value per share as determined in good faith by the Board, whose determination shall be described in a statement filed with the Rights Agent and shall be binding on the Rights Agent and the holders of the Rights. For all purposes of this Agreement, the “ Current Market Price ” of one one -thousandth of a share of Preferred Stock shall be equal to the Current Market Price of one share of Preferred Stock divided by 1,000. +(e) Notwithstanding anything in this Agreement to the contrary, no adjustment in the Exercise Price shall be required unless such adjustment would require an increase or decrease of at least one percent (1%) in the Exercise Price; provided, however , that any adjustments which by reason of this Section 11(e) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Section 11 shall be made to the nearest cent or to the nearest one ten -thousandth of a share of Common Stock or one one -millionth of a share of Preferred Stock or one ten -thousandth of any other share or security, as the case may be. Notwithstanding the first sentence of this Section 11(e) , any adjustment required by this Section 11 shall be made no later than the earlier of (i) three (3) years from the date of the transaction which mandates such adjustment or (ii) the Expiration Time. +(f) If as a result of an adjustment made pursuant to Section 11(a)(ii) or Section 13(a) , the holder of any Right thereafter exercised becomes entitled to receive any shares of capital stock other than Preferred Stock, thereafter the number of such other shares so receivable upon exercise of any Right and the Exercise Price thereof shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Preferred Stock contained in Section 11(a) , (b) , (c) , (e) , (g) , (h) , (i) , (j) , (k) and (m) , and the provisions with respect to the Preferred Stock of Sections 7 , 9 , 10 , 13 and 14 shall apply on like terms to any such other shares. +(g) All Rights originally issued by the Company subsequent to any adjustment made to the Exercise Price hereunder shall evidence the right to purchase, at the adjusted Exercise Price, the number of one one -thousandths of a share of Preferred Stock (or other securities, other assets or amount of cash or combination thereof) purchasable from time to time hereunder upon exercise of the Rights, all subject to further adjustment as provided herein. +(h) Unless the Company has exercised its election as provided in Section 11(i) , upon each adjustment of the Exercise Price as a result of the calculations made in Section 11(b) and Section 11(c) , each Right outstanding immediately prior to the making of such adjustment shall thereafter evidence the right to purchase, at the adjusted Exercise Price, that number of one -thousandths of a share of Preferred Stock (calculated to the nearest one -millionth ) obtained by (i) multiplying (A) the number of one one -thousandths of a share covered by a Right immediately prior to this adjustment, by (B) the Exercise Price in effect immediately prior to such adjustment of the Exercise Price, and (ii) dividing the product so obtained by the Exercise Price in effect immediately after such adjustment of the Exercise Price. +(i) The Company may elect on or after the date of any adjustment of the Exercise Price to adjust the number of Rights, in lieu of any adjustment in the number of one one -thousandths of a share of Preferred Stock purchasable upon the exercise of a Right. Each of the Rights outstanding after the adjustment in the number of Rights shall be exercisable for the number of one one -thousandths of a share of Preferred Stock for which a Right was exercisable immediately prior to such adjustment. Each Right held of record prior to such adjustment of the number of Rights shall become that number of Rights (calculated to the nearest one ten -thousandth ) obtained by dividing the Exercise Price in effect immediately prior to adjustment of the Exercise Price by the Exercise Price in effect immediately after adjustment of the Exercise Price. The Company shall make a public announcement (with prompt written notice thereof to the Rights Agent) of its election to adjust the number of Rights, indicating the record date for the adjustment, and, if known at the time, the amount of the adjustment to be made. This record date may be the date on which the Exercise Price is adjusted or any day thereafter, but, if the Rights Certificates have been issued, shall be at least ten (10) days later than the date of the public announcement. If Rights Certificates have been issued, upon each adjustment of the number of Rights +2020 PROXY STATEMENT A-15 +ANNEX A +pursuant to this Section 11(i) , the Company shall, as promptly as practicable, cause to be distributed to holders of record of Rights Certificates on such record date Rights Certificates evidencing, subject to Section 14 , the additional Rights to which such holders shall be entitled as a result of such adjustment, or, at the option of the Company, shall cause to be distributed to such holders of record in substitution and replacement for the Rights Certificates held by such holders prior to the date of adjustment, and upon surrender thereof, if required by the Company, new Rights Certificates evidencing all the Rights to which such holders shall be entitled after such adjustment. Rights Certificates so to be distributed shall be issued, executed and countersigned in the manner provided for herein (and may bear, at the option of the Company, the adjusted Exercise Price) and shall be registered in the names of the holders of record of Rights Certificates on the record date specified in the public announcement. +(j) Irrespective of any adjustment or change in the Exercise Price or the number of one one -thousandths of a share of Preferred Stock issuable upon the exercise of the Rights, the Rights Certificates theretofore and thereafter issued may continue to express the Exercise Price per one one -thousandth of a share and the number of one one -thousandths of a share which were expressed in the initial Rights Certificates issued hereunder. +(k) Before taking any action that would cause an adjustment reducing the Exercise Price below the then stated value, if any, of the number of one one -thousandths of a share of Preferred Stock issuable upon exercise of the Rights, the Company shall take any corporate action which may, upon advice of its counsel, be necessary in order that the Company may validly and legally issue fully paid and nonassessable shares of Preferred Stock at such adjusted Exercise Price. +(l) In any case in which this Section 11 requires that an adjustment in the Exercise Price be made effective as of a record date for a specified event, the Company may elect to defer (with prompt written notice thereof to the Rights Agent) until the occurrence of such event the issuance to the holder of any Right exercised after such record date the number of one one -thousandths of a share of Preferred Stock and other capital stock or securities of the Company, if any, issuable upon such exercise over and above the number of one one -thousandths of a share of Preferred Stock and other capital stock or securities of the Company, if any, issuable upon such exercise on the basis of the Exercise Price in effect prior to such adjustment (and shall provide the Rights Agent prompt written notice of such election); provided, however , that the Company shall deliver to such holder a due bill or other appropriate instrument evidencing such holder’s right to receive such additional shares (fractional or otherwise) or securities upon the occurrence of the event requiring such adjustment. +(m) Notwithstanding anything in this Section 11 to the contrary, the Company shall be entitled (but not obligated) to make such reductions in the Exercise Price, in addition to those adjustments expressly required by this Section 11 , as and to the extent that the Board, in its good faith judgment, shall determine to be advisable in order that any (i) consolidation or subdivision of Preferred Stock, (ii) issuance wholly for cash of any shares of Preferred Stock at less than the Current Market Price, (iii) issuance wholly for cash of shares of Preferred Stock or securities that by their terms are convertible into or exchangeable for shares of Preferred Stock, (iv) stock dividends or (v) issuance of rights, options or warrants referred to in this Section 11 , hereafter made by the Company to holders of its Preferred Stock shall not be taxable to such stockholders. +(n) The Company shall not, at any time after the Distribution Time, (i) consolidate with any other Person (other than a direct or indirect, wholly owned Subsidiary of the Company in a transaction that complies with Section 11(o) ), (ii) merge with or into any other Person (other than a direct or indirect, wholly owned Subsidiary of the Company in a transaction that complies with Section 11(o) ) or (iii) sell or transfer (or permit any Subsidiary to sell or transfer), in one transaction, or a series of related transactions, assets, cash flow or earning power aggregating to fifty percent (50%) or more of the assets, cash flow or earning power of the Company and its Subsidiaries (taken as a whole) to any other Person or Persons (other than the Company or any of its Subsidiaries in one or more transactions each of which complies with Section 11(o) ), if (A) at the time of or immediately after such consolidation, merger, sale or transfer there are any rights, warrants or other instruments or securities outstanding or agreements in effect that would substantially diminish or otherwise eliminate the benefits intended to be afforded by the Rights or (B) prior to, simultaneously with or immediately after such consolidation, merger, sale or transfer, the stockholders of the Person who constitutes, or would constitute, the “Flip -over Party” for purposes of Section 13(a) shall have received a distribution of Rights previously owned by such Person or any of its Related Persons; provided, however , this Section 11(n) shall not affect the ability of any Subsidiary of the Company to consolidate with, merge with or into, or sell or transfer assets of earning power to, any other Subsidiary of the Company. +(o) After the Distribution Time, and as long as any Rights are outstanding (other than Rights that have become null and void pursuant to Section 7(e) ), the Company shall not, except as permitted by Section 23 , Section 24 or Section 27 , take (or permit any Subsidiary to take) any action if at the time such action is taken it is reasonably foreseeable that such action will diminish substantially or otherwise eliminate the benefits intended to be afforded by the Rights. +A-16 2020 PROXY STATEMENT +ANNEX A +(p) Notwithstanding anything in this Agreement to the contrary, in the event that the Company at any time after the Rights Dividend Declaration Date and prior to the Distribution Time (i) declares a dividend on the outstanding shares of Common Stock payable in shares of Common Stock, (ii) subdivides any outstanding shares of Common Stock, (iii) combines any of the outstanding shares of Common Stock into a smaller number of shares or (iv) issues any shares of its capital stock in a reclassification of the Common Stock (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing or surviving entity), then the number of Rights associated with each share of Common Stock then outstanding, or issued or delivered thereafter but prior to the Distribution Time, shall be proportionately adjusted so that the number of Rights thereafter associated with each share of Common Stock following any such event equals the result obtained by multiplying the number of Rights associated with each share of Common Stock immediately prior to such event by a fraction the numerator of which shall be the total number of shares of Common Stock outstanding immediately prior to the occurrence of the event and the denominator of which shall be the total number of shares of Common Stock outstanding immediately following the occurrence of such event. The adjustments provided for in this Section 11(p) shall be made successively whenever such a dividend is declared or paid or such a subdivision, combination or reclassification is effected. If an event occurs that would require an adjustment under Section 11(a)(ii) and this Section 11(p) , the adjustments provided for in this Section 11(p) shall be in addition and prior to any adjustment required pursuant to Section 11(a)(ii) . +Section 12. Certificate of Adjusted Exercise Price or Number of Shares . Whenever an adjustment is made as provided in Section 11 or Section 13 , the Company shall (a) promptly prepare a certificate setting forth such adjustment and a brief, reasonably detailed statement of the facts and computations accounting for such adjustment, (b) promptly file with the Rights Agent, and with each transfer agent for the Preferred Stock and the Common Stock, a copy of such certificate and (c) if a Distribution Time has occurred, mail a brief summary thereof to each holder of a Rights Certificate in accordance with Section 26 . Notwithstanding the foregoing sentence, the failure of the Company to make such certification or give such notice shall not affect the validity of or the force or effect of the requirement for such adjustment. Any adjustment to be made pursuant to Section 11 or Section 13 shall be effective as of the date of the event giving rise to such adjustment. The Rights Agent shall be fully protected in relying on any such certificate and on any adjustment therein contained and shall have no duty or liability with respect to, and shall not be deemed to have knowledge of such adjustment unless and until it shall have received such certificate. +Section 13. Consolidation, Merger or Sale or Transfer of Assets, Cash Flow or Earning Power . +(a) In the event that, following the Stock Acquisition Date, directly or indirectly, (i) the Company shall consolidate with, or merge with and into, any other Person (other than a direct or indirect, wholly -owned Subsidiary of the Company in a transaction that complies with Section 11(o) ), and the Company is not the continuing or surviving entity of such consolidation or merger, (ii) any Person (other than a direct or indirect, wholly -owned Subsidiary of the Company in a transaction that complies with Section 11(o) ) shall engage in a share exchange with or shall consolidate with, or merge with or into, the Company, and the Company is the continuing or surviving entity of such consolidation or merger and, in connection with such share exchange, consolidation or merger, all or part of the outstanding shares of Common Stock is converted into or exchanged for stock or other securities of any other Person or cash or any other property or (iii) the Company sells or otherwise transfers (or one or more of its direct or indirect, wholly -owned Subsidiaries sells or otherwise transfers) in one transaction or a series of related transactions, assets, cash flow or earning power aggregating to fifty percent (50%) or more of the assets, cash flow or earning power of the Company and its Subsidiaries (taken as a whole) to any Person or Persons (other than the Company or any of its direct or indirect, wholly -owned Subsidiaries in one or more transactions each of which complies with Section 11(o) ) (any event described in clause (i), (ii) or (iii) of this Section 13(a) following the Stock Acquisition Date, a “ Flip -over Event ”), then, and in each such case, proper provision shall be made so that: (A) each holder of a Right, except as provided in Section 7(e) , shall have the right to receive upon the exercise thereof at the then -current Exercise Price in accordance with the terms of this Agreement, in lieu of a number of one one -thousandths of a share of Preferred Stock, such number of validly authorized and issued, fully paid, non -assessable and freely tradeable shares of Flip -over Stock, not subject to any liens, encumbrances, rights of first refusal or other adverse claims, as shall be equal to the result obtained by (1) multiplying the then -current Exercise Price by the number of one one -thousandths of a share of Preferred Stock for which a Right is exercisable immediately prior to the first occurrence of a Flip -over Event (or, if a Flip -in Event has occurred prior to the first occurrence of a Flip -over Event, multiplying the number of such one one -thousandths of a share of Preferred Stock for which a Right was exercisable immediately prior to the first occurrence of a Flip -in Event by the Exercise Price in effect immediately prior to such first occurrence) and (2) dividing that product (which, following the first occurrence of a Flip -over Event, shall be referred to as the “Exercise Price” for each Right and for all purposes of this Agreement) by fifty percent (50%) of the Current Market Price (determined pursuant to Section 11(d)(i) ) per share of the Flip -over Stock on the date of consummation of such Flip -over Event; (B) such Flip -over Party shall thereafter be liable for, and shall assume, by virtue of such Flip -over Event, all the obligations and duties of the Company pursuant to this Agreement; (C) the term “Company” shall thereafter be deemed to refer to such Flip -over Party, it being specifically +2020 PROXY STATEMENT A-17 +ANNEX A +intended that the provisions of Section 11 shall apply only to such Flip -over Party following the first occurrence of a Flip -over Event; (D) such Flip -over Party shall take such steps (including the reservation of a sufficient number of shares of Flip -over Stock) in connection with the consummation of any such transaction as may be necessary to assure that the provisions hereof shall thereafter be applicable, as nearly as reasonably may be, in relation to its shares of Common Stock thereafter deliverable upon the exercise of the Rights; and (E) the provisions of Section 11(a)(ii) shall be of no effect following the first occurrence of any Flip -over Event. +(b) “Flip -over Party” shall mean: +(i) in the case of any transaction described in Section 13(a)(i) or (ii) , (A) the Person (including the Company as successor thereto or as the surviving entity) that is the issuer of any securities into which shares of Common Stock are converted or exchanged in such share exchange, consolidation or merger, or, if there is more than one such issuer, the issuer whose common stock (or similar equity interest) has the highest aggregate market value; and (B) if no securities are so issued, (1) the Person that is the other party to such merger, if such Person survives the merger, or, if there is more than one such Person, the Person whose common stock (or similar equity interest) has the highest aggregate market value, (2) if the Person that is the other party to such share exchange, consolidation or merger does not survive the merger, the Person that does survive the merger (including the Company, if it survives) or (3) the Person resulting from the consolidation; and +(ii) in the case of any transaction described in Section 13(a)(iii) , the Person that is the party receiving the greatest portion of the assets, cash flow or earning power transferred pursuant to such transaction or transactions, or, if each Person that is a party to such transaction or transactions receives the same portion of the assets, cash flow or earning power transferred pursuant to such transaction or transactions or if the Person receiving the greatest portion of the assets, cash flow or earning power cannot be determined, whichever such Person the common stock (or similar equity interest) of which has the highest aggregate market value; +provided , however , that in any such case described in the foregoing clause (i) or (ii) of this Section 13(b) , (x) if the common stock (or similar equity interest) of such Person is not at such time and has not been continuously over the preceding twelve (12) month period registered under Section 12 of the Exchange Act, and such Person is a direct or indirect Subsidiary of another Person, the common stock (or similar equity interest) of which is and has been so registered, “Flip -over Party” shall refer to such other Person; (y) in case such Person is a Subsidiary, directly or indirectly, of more than one Person, the common stock (or similar equity interest) of two or more of which are and have been so registered, “Flip -over Party” shall refer to whichever of such Persons is the issuer of the common stock (or similar equity interest) having the greatest aggregate market value; and (z) if the common stock (or similar equity interest) of such Person is not at such time and has not been so registered and such Person is owned, directly or indirectly, by a joint venture formed by two or more Persons that are not owned, directly or indirectly, by the same Person, the rules set forth in the foregoing clauses (x) and (y) will apply to each of the chains of ownership having an interest in such joint venture as if such Person were a Subsidiary of both or all of such joint ventures, and the Flip -over Parties in each such chain shall bear the obligations set forth in this Section 13 in the same ratio as their direct or indirect interests in such Person bear to the total of such interests. +(c) The Company shall not consummate any Flip -over Event unless the Flip -over Party has a sufficient number of authorized shares of Flip -over Stock (or similar equity interest) which have not been issued or reserved for issuance to permit the exercise in full of the Rights in accordance with this Section 13 and unless prior thereto the Company and such Flip -over Party shall have executed and delivered to the Rights Agent a supplemental agreement providing for the terms set forth in Section 13(a) and Section 13(b) and further providing that, as soon as practicable after the date of any exchange, consolidation, merger, sale or transfer of assets mentioned in Section 13(a) , the Flip -over Party, at its own expense, shall: +(i) if required to file a registration statement under the Act with respect to the Rights and the securities purchasable upon exercise of the Rights, (A) prepare and file such registration statement on an appropriate form and (B) use its best efforts to cause such registration statement to become effective as soon as practicable after such filing and remain effective (with a prospectus at all times meeting the requirements of the Act) until the Expiration Time; +(ii) qualify or register the Rights and take such action as may be required to ensure that any such acquisition of such securities purchasable upon exercise of the Rights under blue sky laws of each jurisdiction, as may be necessary or appropriate; +(iii) deliver to holders of the Rights historical financial statements for the Flip -over Party and each of its Affiliates that comply in all respects with the requirements for registration on Form 10 under the Exchange Act; +A-18 2020 PROXY STATEMENT +ANNEX A +(iv) use its best efforts to obtain any and all necessary regulatory approvals as may be required with respect to the securities purchasable upon exercise of the Rights; +(v) use its best efforts, if the common stock of the Flip -over Party is listed or admitted to trading on the Nasdaq, the NYSE or on another national securities exchange, to list or admit to trading (or continue the listing of) the Rights and the securities purchasable upon exercise of the Rights on the Nasdaq, the NYSE or on such securities exchange, or if the securities of the Flip -over Party that may be acquired upon exercise of the Rights are not listed or admitted to trading on the Nasdaq, the NYSE or on another national securities exchange, to cause the Rights and the securities purchasable upon exercise of the Rights to be authorized for quotation on any other system then in use; and +(vi) obtain waivers of any rights of first refusal or preemptive rights in respect of the common stock of the Flip -over Party subject to purchase upon exercise of outstanding Rights. +(d) In case the Flip -over Party has, at any relevant time (including the time of the Flip -over Event or immediately thereafter), a provision in any of its authorized securities or in its certificate or articles of incorporation, bylaws or other instrument governing its affairs, or any other agreements or arrangements, which provision would have the effect of (i) causing such Flip -over Party to issue (other than to holders of Rights pursuant to this Section 13 ), in connection with, or as a consequence of, the consummation of a Flip -over Event, shares of common stock (or similar equity interests) of such Flip -over Party at less than the then Current Market Price or securities exercisable for, or convertible into, common stock of such Flip -over Party at less than such then Current Market Price; (ii) providing for any special payment, tax or similar provision in connection with the issuance of common stock of such Flip -over Party pursuant to this Section 13 or (iii) otherwise eliminating or substantially diminishing the benefits intended to be afforded by the Rights in connection with, or as a consequence of, a Flip -over Event, then in each such case, the Company may not consummate any such Flip -over Event unless prior thereto, the Company and such Flip -over Party have executed and delivered to the Rights Agent a supplemental agreement providing that the provision in question of such Flip -over Party has been cancelled, waived or amended, or that the authorized securities have been redeemed, so that the applicable provision will have no effect in connection with, or as a consequence of, the consummation of such Flip -over Event. +(e) The Company covenants and agrees that it shall not, at any time after a Flip -in Event, enter into any transaction of the type described in Section 13(a)(i) through Section 13(a)(iii) if (i) at the time of or immediately after such transaction there are any rights, warrants or other instruments or securities outstanding or agreements in effect which would substantially diminish or otherwise eliminate the benefits intended to be afforded by the Rights; (ii) prior to, simultaneously with or immediately after such transaction, the stockholders of the Person who constitutes, or would constitute, the Flip -over Party for purposes of Section 13(b) has received a distribution of Rights previously owned by such Person or any Related Person thereof or (iii) the form or nature of organization of the Flip -over Party would preclude or limit the exercisability of the Rights. +(f) Notwithstanding anything herein to the contrary, in the event of any merger or acquisition transaction involving the Company pursuant to a merger or other acquisition agreement between the Company and any Person (or one or more of such Person’s Related Persons), which agreement has been approved by the Board prior to any Person becoming an Acquiring Person, this Agreement and the rights of holders of Rights hereunder shall be terminated in accordance with Section 7(a) . +(g) The provisions of this Section 13 shall similarly apply to successive exchanges, consolidations, mergers, sales or other transfers. In the event that a Flip -over Event occurs at any time after the occurrence of a Flip -in Event, the Rights that have not theretofore been exercised shall thereafter become exercisable in the manner described in Section 13(a) . +Section 14. Fractional Rights and Fractional Shares . +(a) The Company shall not be required to issue fractions of Rights, except prior to the Distribution Time as provided in Section 11 , or to distribute Rights Certificates which evidence fractional Rights. In lieu of such fractional Rights, there shall be paid to the registered holders of the Rights Certificates with regard to which such fractional Rights would otherwise be issuable, an amount in cash equal to the same fraction of the current market value of a whole Right. For purposes of this Section 14(a) , the current market value of a whole Right shall be the Closing Price of the Rights for the Trading Day immediately prior to the date on which such fractional Rights would have been otherwise issuable. +(b) The Company shall not be required to issue fractions of shares of Preferred Stock (other than fractions that are integral multiples of one one -thousandth of a share of Preferred Stock) upon exercise of the Rights or to distribute certificates which evidence fractional shares of Preferred Stock (other than fractions that are integral multiples of one one -thousandth of a share of Preferred Stock). Fractions of shares of Preferred Stock in integral multiples of one one -thousandth of a share may, at the election of the Company, be evidenced by depositary receipts pursuant to an appropriate agreement between the Company and a +2020 PROXY STATEMENT A-19 +ANNEX A +depositary selected by it; provided, however , that such agreement shall provide that the holders of such depositary receipts shall have all the rights, privileges and preferences to which they are entitled as Beneficial Owners of the shares represented by such depositary receipts. In lieu of fractional shares of Preferred Stock that are not integral multiples of one one -thousandth of a share of Preferred Stock, the Company shall pay to the registered holders of Rights Certificates at the time such Rights are exercised as herein provided an amount in cash equal to the same fraction of the current market value of one one -thousandth of a share of Preferred Stock. For purposes of this Section 14(b) , the current market value of one one -thousandth of a share of Preferred Stock shall be one one -thousandth of the Closing Price of a share of Preferred Stock for the Trading Day immediately prior to the date of such exercise. +(c) Following the occurrence of a Triggering Event, the Company shall not be required to issue fractions of shares of Common Stock, Common Stock Equivalents or other securities upon exercise of the Rights or to distribute certificates which evidence fractional shares of Common Stock, Common Stock Equivalents or other securities. In lieu of fractional shares of Common Stock, Common Stock Equivalents or other securities, the Company shall pay to the registered holders of Rights Certificates at the time such Rights are exercised as herein provided an amount in cash equal to the same fraction of the current market value of one share of Common Stock, Common Stock Equivalents or such other securities. For purposes of this Section 14(c) , the current market value of one share of Common Stock or other security (other than a Common Stock Equivalent) shall be the Closing Price of one share of Common Stock or such other security, as applicable, for the Trading Day immediately prior to the date of such exercise, and the current market value of a Common Stock Equivalent shall be deemed to equal the Closing Price of one share of Common Stock for the Trading Day immediately prior to the date of such exercise. +(d) The holder of a Right by the acceptance of the Rights expressly waives such holder’s right to receive any fractional Rights or any fractional shares upon exercise of a Right, except as permitted by this Section 14 . +(e) Whenever a payment for fractional Rights or fractional shares is to be made by the Rights Agent under this Agreement, the Company shall (i) promptly prepare and deliver to the Rights Agent a certificate setting forth in reasonable detail the facts related to such payment and the prices or formulas utilized in calculating such payments and (ii) provide sufficient monies to the Rights Agent in the form of fully collected funds to make such payments. The Rights Agent may rely upon such a certificate and has no duty with respect to, and will not be deemed to have knowledge of, any payment for fractional Rights or fractional shares under any Section of this Agreement relating to the payment of fractional Rights or fractional shares unless and until the Rights Agent has received such a certificate and sufficient monies. +Section 15. Rights of Action . All rights of action in respect of this Agreement, other than rights of action vested in the Rights Agent pursuant to the terms of this Agreement, are vested in the respective registered holders of the Rights Certificates (and, prior to the Distribution Time, the registered holders of the Common Stock); and any registered holder of any Rights Certificate (or, prior to the Distribution Time, any registered holder of shares of the Common Stock), without the consent of the Rights Agent or of the holder of any other Rights Certificate (or, prior to the Distribution Time, of the Common Stock), may, in such holder’s own behalf and for such holder’s own benefit, enforce, and may institute and maintain any suit, action or proceeding against the Company or any other Person to enforce, or otherwise act in respect of, such holder’s right to exercise the Rights evidenced by such Rights Certificate in the manner provided in such Rights Certificate and in this Agreement. Without limiting the foregoing or any remedies available to the holders of Rights, it is specifically acknowledged that the holders of Rights would not have an adequate remedy at law for any breach of this Agreement by the Company and shall be entitled to specific performance of the obligations hereunder and injunctive relief against actual or threatened violations of the obligations of the Company under this Agreement. +Section 16. Agreement of Rights Holders . Every holder of a Right, by accepting such Right, consents and agrees with the Company and the Rights Agent and with every holder of a Right that: +(a) prior to the Distribution Time, the Rights shall be transferable only in connection with the transfer of shares of Common Stock; +(b) after the Distribution Time, the Rights Certificates shall be transferable only on the registry books of the Rights Agent if surrendered at the offices of the Rights Agent designated for such purposes, duly endorsed or accompanied by a proper instrument of transfer and with the appropriate forms and certificates properly completed and duly executed, accompanied by a signature guarantee and such other documentation as the Rights Agent may reasonably request; +(c) subject to Section 6(a) and Section 7(f) , the Company and the Rights Agent may deem and treat the Person in whose name a Rights Certificate (or, prior to the Distribution Time, any associated Common Stock certificate) is registered as the +A-20 2020 PROXY STATEMENT +ANNEX A +absolute owner thereof and of the Rights evidenced thereby (notwithstanding any notations of ownership or writing on the Rights Certificates or any associated Common Stock certificates made by anyone other than the Company or the Rights Agent) for all purposes whatsoever, and neither the Company nor the Rights Agent, subject to the last sentence of Section 7(e) , shall be required to be affected by any notice to the contrary; and +(d) notwithstanding anything in this Agreement to the contrary, neither the Company nor the Rights Agent shall have any liability to any holder of a Right or other Person as a result of its inability to perform any of its obligations under this Agreement by reason of any preliminary or permanent injunction or other order, decree, judgment or ruling (whether interlocutory or final) issued by a court of competent jurisdiction or by a governmental, regulatory, self -regulatory or administrative agency or commission, or any statute, rule, regulation or executive order promulgated or enacted by any governmental authority, prohibiting or otherwise restraining performance of such obligation; provided, however , the Company shall use commercially reasonable efforts to have any such injunction, order, decree, judgment or ruling lifted or otherwise overturned as promptly as practicable. +Section 17. Rights Certificate Holder Not Deemed a Stockholder . No holder, as such, of any Rights Certificate shall be entitled to vote, receive dividends or be deemed for any purpose to be the holder of the number of one one -thousandths of a share of Preferred Stock or any other securities of the Company that may at any time be issuable upon the exercise of the Rights represented thereby, nor shall anything contained herein or in any Rights Certificate be construed to confer upon the holder of any Rights Certificate, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action, or to receive notice of meetings or other actions affecting stockholders (except as provided in Section 25 ), or to receive dividends or subscription rights, or otherwise, until the Right or Rights evidenced by such Rights Certificate shall have been exercised in accordance with the provisions hereof. +Section 18. Concerning the Rights Agent . +(a) The Company agrees to pay to the Rights Agent reasonable compensation for all services rendered by it hereunder in accordance with a fee schedule to be mutually agreed upon and, from time to time, on demand of the Rights Agent, its reasonable and documented expenses and counsel fees and disbursements and other disbursements incurred in the preparation, negotiation, execution, administration, delivery and amendment of this Agreement and the exercise and performance of its duties hereunder. The Company also covenants and agrees to indemnify the Rights Agent for, and to hold it harmless against, any loss, liability, damage, judgment, fine, penalty, claim, demand, settlement, cost or expense (including the reasonable fees and expenses of legal counsel) that may be paid, incurred or suffered by it, or to which it may become subject, without gross negligence, bad faith or willful misconduct on the part of the Rights Agent (which gross negligence, bad faith, or willful misconduct must be determined by a final, non -appealable judgment of a court of competent jurisdiction) for any action taken, suffered or omitted by the Rights Agent in connection with the execution, acceptance, administration, exercise and performance of its duties under this Agreement, including the reasonable costs and expenses of defending against any claim of liability arising therefrom, directly or indirectly, or of enforcing its rights under this Agreement. +(b) The Rights Agent shall be authorized and protected and shall incur no liability for or in respect of any action taken, suffered or omitted to be taken by it in connection with its acceptance and administration of this Agreement and the exercise and performance of its duties hereunder in reliance upon any Rights Certificate or Common Stock certificate or for other securities of the Company, instrument of assignment or transfer, power of attorney, endorsement, affidavit, letter, notice, instruction, direction, consent, certificate, statement, or other paper or document believed by it to be genuine and to be duly signed, executed and, where necessary, guaranteed, verified or acknowledged, by the proper Person or Persons, or otherwise upon the advice of counsel as set forth in Section 20 . The Rights Agent shall not be deemed to have knowledge of any event of which it was supposed to receive notice thereof hereunder, and the Rights Agent shall be fully protected and shall incur no liability for failing to take action in connection therewith unless and until it has received such notice in writing. +(c) To the extent the Company is not also a party to an action, proceeding, suit or claim against the Rights Agent concerning this Agreement or the performance by the Rights Agent of its duties hereunder, the Rights Agent shall as promptly as practicable notify the Company in accordance with Section 26 of the assertion of such action, proceeding, suit or claim against the Rights Agent, after the Rights Agent has actual notice of such assertion of an action, proceeding, suit or claim or has been served with the summons or other first legal process giving information as to the nature and basis of the action, proceeding, suit or claim; provided that the failure to provide such notice shall not affect the rights of the Right Agent hereunder, except to the extent a court of competent jurisdiction determines that such failure actually prejudiced the Company. The Company shall be entitled to +2020 PROXY STATEMENT A-21 +ANNEX A +participate, at its own expense, in the defense of any such action, proceeding, suit or claim. The Rights Agent agrees not to settle any litigation in connection with any action, proceeding, suit or claim with respect to which it may seek indemnification from the Company without the prior written consent of the Company, which shall not be unreasonably withheld, conditioned or delayed. +(d) Section 18 and Section 20 shall survive the termination of this Agreement, the resignation, replacement or removal of the Rights Agent and the exercise, termination and expiration of the Rights. Notwithstanding anything in this Agreement to the contrary, in no event shall the Rights Agent be liable for special, punitive, incidental, indirect or consequential loss or damage of any kind whatsoever, even if the Rights Agent has been advised of the likelihood of such loss or damage and regardless of the form of the action. Notwithstanding anything to the contrary herein, any liability of the Rights Agent under this Agreement shall be limited to the amount of fees (but not including any reimbursed costs) paid by the Company to the Rights Agent during the twelve (12) months immediately preceding the event for which recovery from the Rights Agent is being sought. +Section 19. Merger or Consolidation or Change of Name of Rights Agent . +(a) Any Person into which the Rights Agent or any successor Rights Agent may be merged or with which it may be consolidated, or any Person resulting from any merger or consolidation to which the Rights Agent or any successor Rights Agent shall be a party, or any Person succeeding to the stock transfer or other shareholder services business of the Rights Agent or any successor Rights Agent, shall be the successor to the Rights Agent under this Agreement without the execution or filing of any paper or any further act on the part of any of the parties hereto; provided, however , that such Person would be eligible for appointment as a successor Rights Agent under Section 21 . The purchase of all or substantially all of the Rights Agent’s assets employed in the performance of the transfer agent activities shall be deemed a merger or consolidation for purposes of this Section 19 . In case at the time such successor Rights Agent succeeds to the agency created by this Agreement, any of the Rights Certificates has been countersigned but not delivered, any such successor Rights Agent may adopt the countersignature of a predecessor Rights Agent and deliver such Rights Certificates so countersigned; and in case at the time any of the Rights Certificates has not been countersigned, any successor Rights Agent may countersign such Rights Certificates either in the name of the predecessor or in the name of the successor Rights Agent; and in all such cases such Rights Certificates shall have the full force provided in the Rights Certificates and in this Agreement. +(b) In case at any time the name of the Rights Agent is changed, and at such time any of the Rights Certificates has been countersigned but not delivered, the Rights Agent may adopt the countersignature under its prior name and deliver Rights Certificates so countersigned; and in case, at that time, any of the Rights Certificates has not been countersigned, the Rights Agent may countersign such Rights Certificates either in its prior name or in its changed name; and in all such cases such Rights Certificates shall have the full force provided in the Rights Certificates and in this Agreement. +Section 20. Duties of Rights Agent . The Rights Agent undertakes to perform only the duties and obligations expressly set forth in this Agreement, and no implied duties or obligations shall be read into this Agreement against the Rights Agent. The Rights Agent shall perform such duties and obligations, by all of which the Company and the holders of Rights or shares of Common Stock or Preferred Stock by their acceptance thereof, shall be bound. +(a) The Rights Agent may consult with legal counsel selected by it (who may be legal counsel for the Company), and the advice or opinion of such counsel shall be full and complete authorization and protection to the Rights Agent, and the Rights Agent shall have no liability for or in respect of, any action taken or omitted by it in the absence of bad faith and in accordance with such advice or opinion. +(b) Whenever in the performance of its duties under this Agreement the Rights Agent deems it necessary or desirable that any fact or matter (including the identity of any Acquiring Person and the determination of the Current Market Price) be proved or established by the Company prior to taking, suffering or omitting to take any action hereunder, such fact or matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a certificate signed by the Chairman of the Board, Chief Executive Officer, President, Chief Financial Officer, General Counsel, Corporate Secretary or any Assistant Secretary of the Company, or any other authorized officer of the Company and delivered to the Rights Agent; and such certificate shall be full and complete authorization and protection to the Rights Agent, and the Rights Agent shall incur no liability for or in respect of any action taken, suffered or omitted to be taken by it under this Agreement in reliance upon such certificate. The Rights Agent shall have no duty to act without such certificate as set forth in this Section 20(b) . +(c) The Rights Agent shall not be liable for or by reason of any of the statements of fact or recitals contained in this Agreement or in the Rights Certificates or be required to verify the same (except as to its countersignature on such Rights Certificates), but all such statements and recitals are and shall be deemed to have been made by the Company only. +A-22 2020 PROXY STATEMENT +ANNEX A +(d) The Rights Agent shall not have any liability for or be under any responsibility in respect of the validity of this Agreement or the execution and delivery hereof (except the due execution hereof by the Rights Agent) or in respect of the legality or validity or execution of any Rights Certificate (except its countersignature thereof); nor shall it be responsible for any breach by the Company of any covenant or condition contained in this Agreement or in any Rights Certificate; nor shall it be liable or responsible for any adjustment or calculation required under Section 11 , Section 13 , Section 14 or Section 24 or responsible for the manner, method or amount of any such adjustment or the ascertaining of the existence of facts that would require any such adjustment or calculation (except with respect to the exercise of Rights evidenced by Rights Certificates subject to the terms and conditions hereof after actual notice of any such adjustment); nor shall it by any act hereunder be deemed to make any representation or warranty as to the authorization or reservation of any shares of Common Stock or Preferred Stock to be issued pursuant to this Agreement or any Rights Certificate or as to whether any shares of Common Stock or Preferred Stock will, when so issued, be validly authorized and issued, fully paid and nonassessable. +(e) The Rights Agent shall not be liable or responsible for any failure of the Company to comply with any of its obligations relating to any registration statement filed with the Securities and Exchange Commission or this Agreement, including obligations under applicable regulation or law. +(f) The Rights Agent shall not have any duty or responsibility in the case of the receipt of any written demand from any holder of Rights with respect to any action or default by the Company, including, without limiting the generality of the foregoing, any duty or responsibility to initiate or attempt to initiate any proceedings at law or otherwise or to make any demand upon the Company. +(g) The Company agrees that it shall perform, execute, acknowledge and deliver or cause to be performed, executed, acknowledged and delivered all such further and other acts, instruments and assurances as may reasonably be required or requested by the Rights Agent for the carrying out or performing by the Rights Agent of this Agreement. +(h) The Rights Agent is hereby authorized and directed to accept instructions with respect to the performance of its duties hereunder from any person reasonably believed by the Rights Agent to be the Chairman of the Board, Chief Executive Officer, Chief Financial Officer, Corporate Secretary or any Assistant Secretary of the Company and to apply to such officers for advice or instructions in connection with its duties under this Agreement, and such instructions shall provide full authorization and protection to the Rights Agent and the Rights Agent shall not be liable for and it shall incur no liability for or in respect of any action taken, suffered or omitted by it in accordance with instructions of any such officer. Any application by the Rights Agent for written instructions from the Company may, at the option of the Rights Agent, set forth in writing any action proposed to be taken, suffered or omitted to be taken by the Rights Agent under this Agreement and the date on and/or after which such action shall be taken or such omission shall be effective. The Rights Agent shall be fully authorized and protected in relying upon the most recent instructions received from any such officer, and shall not be liable for any action taken, suffered or omitted to be taken by the Rights Agent in accordance with a proposal included in any such application on or after the date specified in such application unless, prior to taking any such action (or the effective date, in the case of an omission), the Rights Agent has received written instructions in response to such application specifying the action to be taken or omitted. +(i) The Rights Agent and any stockholder, director, Affiliate, officer or employee of the Rights Agent may buy, sell or deal in any of the Rights or other securities of the Company or become pecuniarily interested in any transaction in which the Company may be interested, or contract with or lend money to the Company or otherwise act as fully and freely as though it were not Rights Agent under this Agreement. Nothing herein shall preclude the Rights Agent from acting in any other capacity for the Company or for any other Person. +(j) The Rights Agent may execute and exercise any of the rights or powers hereby vested in it or perform any duty hereunder either itself or by or through its attorneys or agents, and the Rights Agent shall not be answerable or accountable for any act, omission, default, neglect or misconduct of any such attorneys or agents or for any loss to the Company or any other Person resulting from any such act, omission, default, neglect or misconduct, absent gross negligence or bad faith in the selection and continued employment thereof (which gross negligence or bad faith must be determined by a final, non -appealable judgment of a court of competent jurisdiction). +(k) No provision of this Agreement shall require the Rights Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of its rights or powers if the Rights Agent if there are reasonable grounds for believing that repayment of such funds or adequate indemnification against such risk or liability is not reasonably assured to it. +2020 PROXY STATEMENT A-23 +ANNEX A +(l) If, with respect to any Rights Certificate surrendered to the Rights Agent for exercise or transfer, the certificate attached to the form of assignment or form of election to purchase, as the case may be, has either not been properly completed or indicates an affirmative response to clause 1 or 2 thereof, the Rights Agent shall not take any further action with respect to such requested exercise or transfer without first consulting with the Company; provided, however that Rights Agent shall not be liable for any delays arising from the duties under this Section 20(l) . +(m) The Rights Agent shall have no responsibility to the Company, any holders of Rights or any other Person for interest or earnings on any moneys held by the Rights Agent pursuant to this Agreement. +(n) The Rights Agent shall not be required to take notice or be deemed to have notice of any event or condition hereunder, including any event or condition that may require action by the Rights Agent, unless the Rights Agent shall be specifically notified in writing of such event or condition by the Company, and all notices or other instruments required by this Agreement to be delivered to the Rights Agent must, in order to be effective, be received by the Rights Agent as specified in Section 26 hereof, and in the absence of such notice so delivered, the Rights Agent may conclusively assume no such event or condition exists. +(o) The Rights Agent may rely on and be fully authorized and protected in acting or failing to act upon (a) any guaranty of signature by an “eligible guarantor institution” that is a member or participant in the Securities Transfer Agents Medallion Program or other comparable “signature guarantee program” or insurance program in addition to, or in substitution for, the foregoing; or (b) any law, act, regulation or any interpretation of the same. +(p) In the event the Rights Agent believes any ambiguity or uncertainty exists hereunder or in any notice, instruction, direction, request or other communication, paper or document received by the Rights Agent hereunder, the Rights Agent, may (upon notice to the Company of such ambiguity or uncertainty), in its sole discretion, refrain from taking any action, and shall be fully protected and shall not be liable in any way to Company, the holder of any Rights Certificate or any other Person for refraining from taking such action, unless the Rights Agent receives written instructions signed by the Company which eliminates such ambiguity or uncertainty to the satisfaction of Rights Agent. +Section 21. Change of Rights Agent . The Rights Agent or any successor Rights Agent may resign and be discharged from its duties under this Agreement upon thirty (30) days’ notice in writing to the Company, and to the holders of the Rights Certificates by first -class mail. In the event any transfer agency relationship in effect between the Company and the Rights Agent terminates, the Rights Agent will be deemed to have resigned automatically and be discharged from its duties under this Agreement as of the effective date of such termination, and the Company shall be responsible for sending any required notice. The Company may remove the Rights Agent or any successor Rights Agent upon no less than thirty (30) days’ notice in writing, mailed to the Rights Agent or successor Rights Agent, as the case may be, and to each transfer agent of the Common Stock and the Preferred Stock, by registered or certified mail, and, if such removal occurs after the Distribution Time, to the holders of the Rights Certificates by first -class mail. If the Rights Agent resigns or is removed or otherwise becomes incapable of acting, the Company shall appoint a successor to the Rights Agent. If the Company fails to make such appointment within a period of thirty (30) days after giving notice of such removal or after it has been notified in writing of such resignation or incapacity by the resigning or incapacitated Rights Agent or by any registered holder of a Rights Certificate (who shall, with such notice, submit such holder’s Rights Certificate for inspection by the Company), then any registered holder of any Rights Certificate may apply to any court of competent jurisdiction for the appointment of a new Rights Agent. Any successor Rights Agent, whether appointed by the Company or by such a court, shall be (a) a Person organized and doing business under the laws of the United States or any state thereof, in good standing, which is authorized under such laws to exercise corporate trust, stock transfer or stockholder services powers and is subject to supervision or examination by federal or state authority and which has at the time of its appointment as Rights Agent a combined capital and surplus of at least $50,000,000 or (b) an Affiliate of such Person. After appointment, the successor Rights Agent shall be vested with the same powers, rights, duties and responsibilities as if it had been originally named as Rights Agent under this Agreement without further act or deed; but the predecessor Rights Agent shall deliver and transfer to the successor Rights Agent any property at the time held by it hereunder, and execute and deliver any further reasonable assurance, conveyance, act or deed necessary for the purpose, but such predecessor Rights Agent shall not be required to make any additional expenditure or assume any additional liability in connection with the foregoing. Not later than the effective date of any such appointment, the Company shall file notice thereof in writing with the predecessor Rights Agent and each transfer agent of the Common Stock and the Preferred Stock, and, if such appointment occurs after the Distribution Time, mail a notice thereof in writing to the registered holders of the Rights Certificates. Failure to give any notice provided for in this Section 21 or any defect therein shall not affect the legality or validity of the resignation or removal of the Rights Agent or the appointment of the successor Rights Agent, as the case may be. +A-24 2020 PROXY STATEMENT +ANNEX A +Section 22. Issuance of New Rights Certificates . Notwithstanding any of the provisions of this Agreement or of the Rights to the contrary, the Company may, at its option, issue new Rights Certificates evidencing Rights in such form as may be approved by its Board to reflect any adjustment or change in the Exercise Price and the number or kind or class of shares or other securities or property purchasable under the Rights Certificates made in accordance with this Agreement. In addition, in connection with the issuance or sale of shares of Common Stock following the Distribution Time and prior to the redemption or expiration of the Rights, the Company (a) shall, with respect to shares of Common Stock so issued or sold pursuant to the exercise of stock options or under any employee plan or arrangement, granted or awarded prior to the Distribution Time, or upon the exercise, conversion or exchange of securities hereinafter issued by the Company, and (b) may, in any other case, if deemed necessary or appropriate by the Board, issue Rights Certificates representing an appropriate number of Rights in connection with such issuance or sale; provided, however, that (i) no such Rights Certificate shall be issued if, and to the extent that, the Company shall be advised by counsel that such issuance would create a significant risk of material adverse tax consequences to the Company or the Person to whom such Rights Certificate would be issued and (ii) no such Rights Certificate shall be issued if, and to the extent that, appropriate adjustment shall otherwise have been made in lieu of the issuance thereof. +Section 23. Redemption and Termination . +(a) The Board may, at its option, at any time prior to the earlier of (i) the Stock Acquisition Date and (ii) the Final Expiration Time (such time being hereinafter referred to as the “ Redemption Period ”), cause the Company to redeem all but not less than all of the then outstanding Rights at a redemption price of $0.001 per Right, as such amount may be appropriately adjusted to reflect any stock split, reverse stock split, stock dividend or similar transaction occurring after the date hereof (such redemption price being hereinafter referred to as the “ Redemption Price ”). Notwithstanding anything contained in this Agreement to the contrary, the Rights shall not be exercisable after the first occurrence of a Flip -in Event until such time as the Company’s right of redemption hereunder has expired. The Company may, at its option, pay the Redemption Price in cash, shares of Common Stock (based on the Current Market Price of the Common Stock at the time of redemption) or any other form of consideration deemed appropriate by the Board. The redemption of the Rights by the Board may be made effective at such time, on such basis and with such conditions as the Board in its sole discretion may establish. +(b) Immediately upon the action of the Board ordering the redemption of the Rights pursuant to Section 23(a) or such later time as the Board may establish for the effectiveness of such redemption, evidence of which shall have been filed with the Rights Agent and without any further action and without any notice, the right to exercise the Rights will terminate and the only right thereafter of the holders of Rights shall be to receive the Redemption Price for each Right so held. Within ten (10) days after the action of the Board ordering the redemption of the Rights, the Company shall give notice of such redemption to the Rights Agent and the holders of the then outstanding Rights by mailing such notice to the Rights Agent and to all such holders at each holder’s last address as it appears upon the registry books of the Rights Agent or, prior to the Distribution Time, on the registry books of the transfer agent for the Common Stock; provided, however , that the failure to give, or any defect in, such notice shall not affect the validity of such redemption. Any notice which is mailed in the manner herein provided shall be deemed given, whether or not the holder receives the notice. Each such notice of redemption shall state the method by which the payment of the Redemption Price will be made. +Section 24. Exchange . +(a) The Board may, at its option, at any time after any Person becomes an Acquiring Person, exchange all or part of the then outstanding and exercisable Rights (which shall not include Rights that have become null and void pursuant to Section 7(e) ) for shares of Common Stock at an exchange ratio of one share of Common Stock per Right, appropriately adjusted to reflect any stock split, reverse stock split, stock dividend or similar transaction occurring after the date hereof (such exchange ratio being hereinafter referred to as the “ Exchange Ratio ”). Notwithstanding the foregoing, the Board shall not be empowered to effect such exchange at any time after any Acquiring Person, together with all of its Related Persons, becomes the Beneficial Owner of fifty percent (50%) or more of the Common Stock then outstanding. From and after the occurrence of a Flip -over Event, any rights that theretofore have not been exchanged pursuant to this Section 24(a) shall thereafter be exercisable only in accordance with Section 13 and may not be exchanged pursuant to this Section 24(a) . Before effecting an exchange pursuant to this Section 24 , the Board may direct the Company to enter into a trust agreement in such form and with such terms as the Board shall then approve (the “ Trust Agreement ”). If the Board so directs, the Company shall enter into the Trust Agreement and shall issue to the trust created by such agreement (the “ Trust ”) all or some (as designated by the Board) of the shares of Common Stock issuable pursuant to the exchange, and all or some (as designated by the Board) holders of Rights entitled to receive shares pursuant to the exchange shall be entitled to receive such shares (and any dividends paid or distributions made thereon after the date on which such shares are deposited in the Trust) only from the Trust and solely upon compliance with the relevant terms and provisions of the Trust Agreement. +2020 PROXY STATEMENT A-25 +ANNEX A +(b) Immediately upon the effectiveness of the action of the Board ordering the exchange of any Rights pursuant to Section 24(a) and without any further action and without any notice, the right to exercise such Rights shall terminate and the only right thereafter of a holder of any such Rights shall be to receive that number of shares of Common Stock equal to the number of such Rights held by such holder multiplied by the Exchange Ratio. The Company shall promptly give public notice (with prompt written notice thereof to the Rights Agent) of any exchange. The Company promptly thereafter shall mail a notice of any such exchange to all of the holders of such Rights at their last addresses as they appear upon the registry books of the Rights Agent. Any notice which is mailed in the manner herein provided shall be deemed given, whether or not the holder receives the notice. Each such notice of exchange shall state the method by which the exchange of the shares of Common Stock for Rights shall be effected and, in the event of any partial exchange, the number of Rights which will be exchanged. Any partial exchange shall be effected pro rata based on the number of Rights (other than Rights which have become null and void pursuant to Section 7(e) ) held by each holder of Rights. Prior to effecting any exchange and registering shares of Common Stock in any Person’s name, including any nominee or transferee of a Person, the Company may require (or cause the trustee of the Trust to require), as a condition thereof, that any holder of Rights provide evidence, including the identity of the Beneficial Owners thereof and their Related Persons (or former Beneficial Owners thereof and their Related Persons) as the Company reasonably requests in order to determine if such Rights are null and void. If any Person fails to comply with such request, the Company shall be entitled conclusively to deem the Rights formerly held by such Person to be null and void pursuant to Section 7(e) . No failure to give, or any defect in, any notice provided under this Section 24(b) shall affect the validity of any exchange. Any shares of Common Stock or other securities issued at the direction of the Board in connection herewith shall be validly issued, fully paid and non -assessable shares of Common Stock or of such other securities, as the case may be. +(c) Upon declaring an exchange pursuant to this Section 24 , or as promptly as reasonably practicable thereafter, the Company may implement such procedures as it deems appropriate, in its sole discretion, for the purpose of ensuring that the Common Stock (or such other consideration) issuable upon an exchange pursuant to this Section 24 is not received by holders of Rights that have become null and void pursuant to Section 7(e) . +(d) In any exchange pursuant to this Section 24 , the Company, at its option, may substitute shares of Preferred Stock (or Equivalent Preferred Stock) for shares of Common Stock exchangeable for Rights, at the initial rate of one one -thousandth of a share of Preferred Stock (or Equivalent Preferred Stock) for each share of Common Stock, as appropriately adjusted to reflect adjustments in the voting rights of the Preferred Stock pursuant to the terms thereof, so that the fraction of a share of Preferred Stock delivered in lieu of each share of Common Stock shall have the same voting rights as one share of Common Stock. +(e) In the event that there are not sufficient shares of Common Stock issued but not outstanding or authorized but unissued to permit any exchange of Rights as contemplated in accordance with this Section 24 , the Company shall take all such actions as may be necessary to authorize additional shares of Common Stock for issuance upon exchange of the Rights. In the event the Company, after good faith effort, is unable to take all such actions as may be necessary to authorize such additional shares of Common Stock, the Company shall substitute, for each share of Common Stock that would otherwise be issuable upon exchange of a Right, a number of shares of Preferred Stock or fraction thereof such that the current per share market price of one share of Preferred Stock multiplied by such number or fraction is equal to the current per share market price of one share of Common Stock as of the date of issuance of such shares of Preferred Stock or fraction thereof. +(f) The Company shall not be required to issue fractions of shares of Common Stock or to distribute certificates which evidence fractional shares of Common Stock. In lieu of such fractional shares of Common Stock, there shall be paid to the registered holders of the Rights Certificates with regard to which such fractional shares of Common Stock would otherwise be issuable, an amount in cash equal to the same fraction of the current market value of a whole share of Common Stock. For the purposes of this Section 24(f) , the current market value of a whole share of Common Stock shall be the Closing Price of a share of Common Stock for the Trading Day immediately prior to the date of exchange pursuant to this Section 24 . +Section 25. Notice of Certain Events . +(a) In the event the Company proposes, at any time after the earlier of the Distribution Time or the Stock Acquisition Date, (i) to pay any dividend payable in stock of any class or series to the holders of Preferred Stock or to make any other distribution to the holders of Preferred Stock (other than a regular periodic cash dividend out of earnings or retained earnings of the Company), (ii) to offer to the holders of Preferred Stock rights or warrants to subscribe for or to purchase any additional shares of Preferred Stock or shares of stock of any class or any other securities, rights or options, (iii) to effect any reclassification of its Preferred Stock (other than a reclassification involving only the subdivision of outstanding shares of Preferred Stock), (iv) to effect any consolidation or merger into or with any other Person (other than a direct or indirect, wholly owned Subsidiary of the Company in a transaction which complies with Section 11(o) ), or to effect any sale or other transfer (or to permit one or more of its Subsidiaries to effect any sale or other transfer), in one transaction or a series of related transactions, of fifty percent +A-26 2020 PROXY STATEMENT +ANNEX A +(50%) or more of the assets, cash flow or earning power of the Company and its Subsidiaries (taken as a whole) to any other Person or Persons (other than the Company or any of its Subsidiaries in one or more transactions each of which complies with Section 11(o) ), or (v) to effect the liquidation, dissolution or winding up of the Company, then, in each such case, the Company shall give to the Rights Agent and to each holder of a Rights Certificate, to the extent feasible and in accordance with Section 26 , a notice of such proposed action, which shall specify the record date for the purposes of such stock dividend, distribution of rights or warrants, or the date on which such reclassification, consolidation, merger, sale, transfer, liquidation, dissolution, or winding up is to take place and the date of participation therein by the holders of the shares of Preferred Stock, if any such date is to be fixed, and such notice shall be so given in the case of any action covered by the foregoing clause (i) or (ii) at least twenty (20) days prior to the record date for determining holders of the shares of Preferred Stock for purposes of such action, and in the case of any such other action, at least twenty (20) days prior to the date of the taking of such proposed action or the date of participation therein by the holders of the shares of Preferred Stock, whichever shall be the earlier; provided, however , that no such action shall be taken pursuant to this Section 25(a) that will or would conflict with any provision of the Certificate of Incorporation, provided further that no such notice is required pursuant to this Section 25 if any Subsidiary of the Company effects a consolidation or merger with or into, or effects a sale or other transfer of assets or earning power to, any other Subsidiary of the Company. +(b) In case a Flip -in Event occurs, then, in any such case, (i) the Company shall as soon as practicable thereafter give to each holder of a Rights Certificate, to the extent feasible and in accordance with Section 26 , a notice of the occurrence of such event, which shall specify the event and the consequences of the event to holders of Rights under Section 11(a)(ii) , and (ii) all references in the preceding paragraph to Preferred Stock shall be deemed thereafter to refer to Common Stock and/or, if appropriate, other securities. +(c) In case any Flip -over Event occurs, the Company shall, as soon as practicable thereafter, give to each registered holder of a Rights Certificate, to the extent feasible, and to the Rights Agent in accordance with Section 26 , a written notice of the occurrence of such event, which notice shall describe such event and the consequences of such event to holders of Rights under Section 13(a). +Section 26. Notices . Notices or demands authorized by this Agreement to be given or made by the Rights Agent or by the holder of any Rights Certificate to or on the Company shall be sufficiently given or made if in writing and sent by first -class or express United States mail, Federal Express or United Parcel Service or any other nationally recognized courier service, postage prepaid, addressed (until another address is filed in writing with the Rights Agent) or by facsimile transmission (with receipt confirmation) as follows: +Gulfport Energy Corporation +3001 Quail Springs Parkway +Oklahoma City, OK 73134 +Attention: Patrick Craine +Email: pcraine@gulfportenergy.com +with a copy to: +Sidley Austin LLP +787 Seventh Avenue +New York, NY 10019 +Attention: Kai H. Liekefett, Esq. +Email: kliekefett@sidley.com +Subject to Section 21 , any notice or demand authorized by this Agreement to be given or made by the Company or by the holder of any Rights Certificate to or on the Rights Agent shall be sufficiently given or made if in writing and sent by first -class or express United States mail, Federal Express or United Parcel Service or any other nationally recognized courier service, postage prepaid, addressed (until another address is filed in writing with the Company) or by facsimile transmission (with receipt confirmation) as follows: +Computershare Trust Company, N.A. +150 Royall Street +Canton, MA 02021 +Attention: Client Services +Facsimile: (781) 575 -4210 +2020 PROXY STATEMENT A-27 +ANNEX A +Notices or demands authorized by this Agreement to be given or made by the Company or the Rights Agent to the holder of any Rights Certificate (or, if prior to the Distribution Time, to the holder of shares of Common Stock) shall be sufficiently given or made if in writing, sent by first -class or express United States mail, Federal Express or United Parcel Service or any other overnight delivery service, postage prepaid and properly addressed to such holder at the address of such holder as shown on the registry books of the Company. +Section 27. Supplements and Amendments . Except as otherwise provided in this Section 27 , the Company, by action of the Board, may from time to time and in its sole and absolute discretion, and the Rights Agent shall, if the Company so directs, from time to time supplement or amend this Agreement in any respect without the approval of any holders of Rights (a) prior to the Stock Acquisition Date, in any respect, and (b) on or after the Stock Acquisition Date, (i) to make any changes that the Company may deem necessary or desirable that would not materially adversely affect the interests of the holders of Rights (other than the Acquiring Person, any Related Person thereof or any transferee of any Acquiring Person or any Related Person thereof), (ii) to cure any ambiguity, (iii) to correct or supplement any provision contained herein that may be inconsistent with any other provision herein, including any change in order to satisfy any applicable law, rule or regulation or (iv) to shorten or lengthen any time period under this Agreement. Without limiting the foregoing, the Company, by action of the Board, may, at any time before any Person becomes an Acquiring Person, amend this Agreement to make this Agreement inapplicable to a particular transaction by which a Person might otherwise become an Acquiring Person or to otherwise alter the terms and conditions of this Agreement as they may apply with respect to any such transaction. For the avoidance of doubt, the Company shall be entitled to adopt and implement such procedures and arrangements (including with third parties) as it may deem necessary or desirable to facilitate the exercise, exchange, trading, issuance or distribution of the Rights (and the shares of Preferred Stock issuable and deliverable upon the exercise of the Rights) as contemplated hereby and to ensure that an Acquiring Person and its Related Persons and transferees do not obtain the benefits thereof, and any amendment in respect of the foregoing shall be deemed not to adversely affect the interests of the holders of Rights. No supplement or amendment to this Agreement shall be effective unless duly executed by the Rights Agent and the Company. The Rights Agent shall duly execute and deliver any supplement or amendment hereto requested by the Company in writing, provided that the Company has delivered to the Rights Agent a certificate from the Chairman of the Board, Chief Executive Officer, President, Chief Financial Officer, General Counsel, Corporate Secretary or any Assistant Secretary of the Company, or any other officer of the Company that states that the proposed supplement or amendment complies with the terms of this Agreement, including this Section 27 . Notwithstanding anything in this Agreement to the contrary, the Rights Agent may, but shall not be obligated to, enter into any supplement or amendment that adversely affects the Rights Agent’s own rights, duties, immunities or obligations under this Agreement. Prior to the Distribution Time, the interests of the holders of Rights shall be deemed coincident with the interests of holders of the Common Stock. +Section 28. Successors . All the covenants and provisions of this Agreement by or for the benefit of the Company or the Rights Agent shall bind and inure to the benefit of their respective successors and assigns hereunder. +Section 29. Determination and Action by the Board . The Board, or a duly authorized committee thereof, shall have the exclusive power and authority to administer this Agreement and to exercise all rights and powers specifically granted to the Board or to the Company, or as may be necessary or advisable in the administration of this Agreement, including the right and power to (a) interpret the provisions of this Agreement and (b) make all determinations deemed necessary or advisable for the administration of this Agreement (including a determination to redeem the Rights, to exchange the Rights and/or to amend this Agreement). Without limiting any of the rights and immunities of the Rights Agent, all such actions, calculations, interpretations and determinations (including for purposes of the following clause (ii), all omissions with respect to the foregoing) which are done or made by the Board in good faith shall (i) be final, conclusive and binding on the Company, the Rights Agent, the holders of the Rights and all other Persons and (ii) not subject the Board to any liability to the holders of the Rights. The Rights Agent is entitled always to assume the Board acted in good faith and shall be fully protected and incur no liability in reliance thereon. +Section 30. Benefits of this Agreement . Nothing in this Agreement shall be construed to give to any Person other than the Company, the Rights Agent and the registered holders of the Rights Certificates (and, prior to the Distribution Time, registered holders of the Common Stock) any legal or equitable right, remedy or claim under this Agreement; but this Agreement shall be for the sole and exclusive benefit of the Company, the Rights Agent and the registered holders of the Rights Certificates (and, prior to the Distribution Time, registered holders of the Common Stock). +Section 31. Tax Compliance and Withholding . The Company hereby authorizes the Rights Agent to deduct from all payments disbursed by the Rights Agent to the holders of the Rights, if applicable, the tax required to be withheld pursuant to the Code or by any federal or state statutes subsequently enacted, and to make the necessary returns and payments of such tax to +A-28 2020 PROXY STATEMENT +ANNEX A +the relevant taxing authority. The Company will provide withholding and reporting instructions in writing to the Rights Agent from time to time as relevant, and upon request of the Rights Agent. The Rights Agent shall have no responsibilities with respect to tax withholding, reporting or payment except as specifically instructed by the Company. +Section 32. Process to Seek Exemption . Any Person who desires to effect any transaction that might, if consummated, result in such Person becoming the Beneficial Owner of 4.9% or more of the then -outstanding shares of Common Stock (a “ Requesting Person ”) may, prior to the date of the transaction for which the Requesting Person is seeking a determination, request in writing that the Board make a determination under this Agreement so that such Person would be deemed to be an “Exempt Person” for the purposes of this Agreement (an “ Exemption Request ”). Any Exemption Request must be delivered by registered mail, return receipt requested, to the Company at the address listed in Section 26 . Such Exemption Request will be deemed to have been made when actually received by the Company. Any Exemption Request must include: (i) the name, address and telephone number of the Requesting Person; (ii) the number and percentage of shares of Common Stock then Beneficially Owned by the Requesting Person; (iii) a reasonably detailed description of the transaction or transactions by which the Requesting Person would propose to acquire Beneficial Ownership of shares of Common Stock, the maximum number and percentage of shares of Common Stock that the Requesting Person proposes to acquire and the proposed tax treatment thereof; and (iv) a commitment by the Requesting Person that such Requesting Person will not acquire Beneficial Ownership of 4.9% or more of the then -outstanding shares of Common Stock or, if such Requesting Person Beneficially Owns 4.9% or more of the then -outstanding shares of Common Stock, any additional shares of Common Stock prior to such time as the Board has responded to, or is deemed to have responded to, the Exemption Request pursuant to this Section 32 . The Board will endeavor to respond to any Exemption Request within 30 calendar days of receiving such Exemption Request; provided, however , that the failure of the Board to make a determination within such period will be deemed to constitute the denial by the Board of the Exemption Request. The Requesting Person must respond promptly to reasonable and appropriate requests for additional information from the Company or the Board and its advisors to assist the Board in making its determination. As a condition to making any determination requested pursuant to this Section 32 , the Board may, in its discretion, require (at the expense of the Requesting Person) a report from advisors selected by the Board to the effect that the proposed transaction or transactions will not result in the application of any limitations on the use by the Company of the Tax Benefits taking into account any and all other transactions that have been consummated prior to receipt of the Exemption Request, any and all other proposed transactions that have been approved by the Board prior to its receipt of the Exemption Request and any such other actual or proposed transactions involving the Common Stock as the Board may require; provided, further , that the Board may make the determination requested in the Exemption Request notwithstanding the effect of the proposed transaction or transactions on the Tax Benefits if it determines that such determination is in the best interests of the Company. The Board may impose any conditions that it deems reasonable and appropriate in connection with a determination pursuant to this Section 32 , including restrictions on the ability of the Requesting Person to transfer shares of Common Stock acquired by it in the transaction or transactions to which such determination relates. Any Exemption Request may be submitted on a confidential basis and, except to the extent required by applicable law, the Company shall maintain the confidentiality of such Exemption Request and the determination of the Board with respect thereto, unless the information contained in the Exemption Request or the determination of the Board with respect thereto otherwise becomes publicly available. +Section 33. Severability . If any term, provision, covenant or restriction of this Agreement or the Rights is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement and the Rights shall remain in full force and effect and shall in no way be affected, impaired or invalidated; provided, however , that notwithstanding anything in this Agreement to the contrary, if any such term, provision, covenant or restriction is held by such court or authority to be invalid, void or unenforceable and the Board determines in its good faith judgment that severing the invalid language from this Agreement or the Rights would adversely affect the purpose or effect of this Agreement, the right of redemption set forth in Section 23 shall be reinstated and shall not expire until the Close of Business on the tenth (10th) day following the date of such determination by the Board; further, provided, however , that if such excluded provision shall materially and adversely affect the rights, immunities, liabilities, duties or obligations of the Rights Agent, the Rights Agent shall be entitled to resign immediately upon written notice to the Company. +Section 34. Governing Law; Submission to Jurisdiction . This Agreement, each Right and each Rights Certificate issued hereunder shall be deemed to be a contract made under the laws of the State of Delaware and for all purposes shall be governed by and construed in accordance with the laws of such State applicable to contracts made and to be performed entirely within such State. The Company and each holder of Rights hereby irrevocably submits to the exclusive jurisdiction of the Court of Chancery of the State of Delaware, or, if such court lacks subject matter jurisdiction, the United States District Court for the District of Delaware, over any suit, action or proceeding arising out of or relating to this Agreement. The Company and each holder of Rights acknowledge that the forum designated by this Section 34 has a reasonable relation to this Agreement and to such Persons’ +2020 PROXY STATEMENT A-29 +ANNEX A +relationship with one another. The Company and each holder of Rights hereby waive, to the fullest extent permitted by applicable law, any objection which they now or hereafter have to personal jurisdiction or to the laying of venue of any such suit, action or proceeding brought in any court referred to in this Section 34 . The Company and each holder of Rights undertake not to commence any action subject to this Agreement in any forum other than the forum described in this Section 34 . The Company and each holder of Rights agree that, to the fullest extent permitted by applicable law, a final and non -appealable judgment in any such suit, action or proceeding brought in any such court shall be conclusive and binding upon such Persons. +Section 35. Counterparts . This Agreement may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument. Delivery of an executed signature page of the Agreement by facsimile or other customary means of electronic transmission (e.g., “pdf”) shall be effective as delivery of a manually executed counterpart hereof. +Section 36. Descriptive Headings; Interpretation . Descriptive headings of the several Sections of this Agreement are inserted for convenience only and shall not control or affect the meaning or construction of any of the provisions hereof. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” Each reference in this Agreement to a period of time following or after a specified date or event shall be calculated without including such specified date or the day on which such specified event occurs. +Section 37. Force Majeure . Notwithstanding anything to the contrary contained herein, the Rights Agent will not have any liability for not performing, or a delay in the performance of, any act, duty, obligation or responsibility by reason of any occurrence beyond the reasonable control of the Rights Agent (including any act or provision or any present or future law or regulation or governmental authority, any act of God, epidemics, pandemics, war, civil or military disobedience or disorder, riot, rebellion, terrorism, insurrection, fire, earthquake, storm, flood, strike, work stoppage, interruptions or malfunctions of computer facilities, loss of data due to power failures or mechanical difficulties, labor dispute, accident or failure or malfunction of any utilities communication or computer services or similar occurrence). +* * * * * * * +A-30 2020 PROXY STATEMENT +ANNEX A +IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written. +GULFPORT ENERGY CORPORATION +By: +/s/ Patrick Craine +Name: Patrick Craine +Title: EVP -GC +COMPUTERSHARE TRUST COMPANY, N.A. +By: +/s/ Patrick Hayes +Name: Patrick Hayes +Title: Vice President & Manager +[Signature Page to Tax Benefits Preservation Plan] +2020 PROXY STATEMENT A-31 +ANNEX A +Exhibit A +FORM OF +CERTIFICATE OF DESIGNATION +OF +SERIES B JUNIOR PARTICIPATING PREFERRED STOCK +OF +GULFPORT ENERGY CORPORATION +Pursuant to Section 151 of the +General Corporation Law of the State of Delaware +The undersigned hereby certifies that the following resolution was duly adopted by the board of directors of Gulfport Energy Corporation, a Delaware corporation (the “ Corporation ”), on April 30, 2020: +RESOLVED, that pursuant to the authority vested in the board of directors of the Corporation (the “ Board ”) by the Restated Certificate of Incorporation of the Corporation (as may be amended from time to time, the “ Charter ”), the Board hereby creates, authorizes and provides for the issue of a series of Preferred Stock, par value $0.01 per share, of the Corporation, to be designated “Series B Junior Participating Preferred Stock” (hereinafter referred to as the “ Series B Preferred Stock ”), initially consisting of 200,000 shares, and to the extent that the designations, powers, preferences and relative and other special rights and the qualifications, limitations or restrictions of the Series B Preferred Stock are not stated and expressed in the Charter, hereby fixes and herein states and expresses such designations, powers, preferences and relative and other special rights and the qualifications, limitations and restrictions thereof, as follows: +Section 1. Designation and Amount . The shares of such series shall be designated as “Series B Junior Participating Preferred Stock,” and the number of shares constituting such series shall be 200,000. Such number of shares may be increased or decreased by resolution of the Board; provided, however , that no decrease shall reduce the number of shares of Series B Preferred Stock to a number less than the number of shares then outstanding plus the number of shares reserved for issuance upon the exercise of outstanding options, rights or warrants or upon the conversion of any outstanding securities issued by the Corporation convertible into Series B Preferred Stock. +Section 2. Dividends and Distributions . +(a) Subject to the prior and superior rights of the holders of any shares of any series of Preferred Stock (as defined in the Charter) ranking prior and superior to the shares of Series B Preferred Stock with respect to dividends, the holders of shares of Series B Preferred Stock, in preference to the holders of common stock, par value $0.01 per share, of the Corporation (the “ Common Stock ”) shall be entitled to receive, when, as and if declared by the Board out of funds legally available for the purpose, quarterly dividends payable in cash on the last business day of March, June, September and December in each year (each such date being referred to herein as a “ Quarterly Dividend Payment Date ”), commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or fraction of a share of Series B Preferred Stock, in an amount per share (rounded to the nearest cent) equal to the greater of (i) $1,000 or (ii) subject to the provision for adjustment hereinafter set forth, 1,000 times the aggregate per share amount of all cash dividends, plus 1,000 times the aggregate per share amount (payable in kind) of all non -cash dividends or other distributions other than a dividend payable in shares of Common Stock or a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise), declared on the Common Stock since the immediately preceding Quarterly Dividend Payment Date, or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a share of Series B Preferred Stock. In the event the Corporation at any time after April 30, 2020 (the “ Rights Declaration Date ”) (x) declares any dividend on Common Stock payable in shares of Common Stock, (y) subdivides the outstanding Common Stock or (z) combines the outstanding Common Stock into a smaller number of shares, then in each case the amount to which holders of shares of Series B Preferred Stock were entitled immediately prior to such event under clause (ii) of the preceding sentence shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. +A-32 2020 PROXY STATEMENT +ANNEX A +(b) The Corporation shall declare a dividend or distribution on the Series B Preferred Stock as provided in Section 2(a) immediately after it declares a dividend or distribution on the Common Stock (other than a dividend payable in shares of Common Stock); provided, however , that, in the event no dividend or distribution shall have been declared on the Common Stock during the period between any Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, subject to the prior and superior rights of the holders of any shares of any series of Preferred Stock ranking prior to and superior to the shares of Series B Preferred Stock with respect to dividends, a dividend of $1.00 per share on the Series B Preferred Stock shall nevertheless be payable on such subsequent Quarterly Dividend Payment Date. +(c) Dividends shall begin to accrue and be cumulative on outstanding shares of Series B Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issue of such shares of Series B Preferred Stock, unless the date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date, in which case dividends on such shares shall begin to accrue from the date of issue of such shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a date after the record date for the determination of holders of shares of Series B Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either of which events such dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on the shares of Series B Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share -by-share basis among all such shares at the time outstanding. The Board may fix a record date for the determination of holders of shares of Series B Preferred Stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall be no more than sixty (60) days prior to the date fixed for the payment thereof. +Section 3. Voting Rights . The holders of shares of Series B Preferred Stock shall have the following voting rights: +(a) Subject to the provision for adjustment hereinafter set forth, each share of Series B Preferred Stock shall entitle the holder thereof to 1,000 votes on all matters submitted to a vote of the stockholders of the Corporation. In the event the Corporation at any time after the Rights Declaration Date (i) declares any dividend on Common Stock payable in shares of Common Stock, (ii) subdivides the outstanding Common Stock or (iii) combines the outstanding Common Stock into a smaller number of shares, then in each such case the number of votes per share to which holders of shares of Series B Preferred Stock were entitled immediately prior to such event shall be adjusted by multiplying such number by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. +(b) Except as otherwise provided herein or by law, the holders of shares of Series B Preferred Stock and the holders of shares of Common Stock shall vote collectively as one class on all matters submitted to a vote of stockholders of the Corporation. +(c) Except as set forth herein or as otherwise provided by law, holders of Series B Preferred Stock shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of Common Stock as set forth herein) for taking any corporate action. +Section 4. Certain Restrictions . +(a) Whenever quarterly dividends or other dividends or distributions payable on the Series B Preferred Stock as provided in Section 2 are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on shares of Series B Preferred Stock outstanding shall have been paid in full, the Corporation shall not: +(i) declare or pay dividends on, make any other distributions on, or redeem or purchase or otherwise acquire for consideration any shares of capital stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series B Preferred Stock; +(ii) declare or pay dividends on or make any other distributions on any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series B Preferred Stock, except dividends paid ratably on the Series B Preferred Stock and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled; +(iii) redeem or purchase or otherwise acquire for consideration shares of any capital stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series B Preferred Stock other than (A) such redemptions or purchases that may be deemed to occur upon the exercise of stock options, warrants or similar rights or grant, vesting or lapse of restrictions on the grant of any performance shares, restricted stock, restricted stock units or other equity awards to the extent +2020 PROXY STATEMENT A-33 +ANNEX A +that such shares represent all or a portion of (x) the exercise or purchase price of such options, warrants or similar rights or other equity awards or (y) the amount of withholding taxes owed by the holder of such award in respect of such grant, exercise, vesting or lapse of restrictions; (B) such purchases necessary to satisfy the issuance of any shares upon the exercise or satisfy the vesting and settlement of any options, warrants or similar rights or other equity awards pursuant to the terms of the Corporation’s equity plans maintained for the benefit of its employees, directors and other service providers; or (C) the repurchase, redemption or other acquisition or retirement for value of any such shares from employees, directors, former directors, consultants or former consultants of the Corporation or their respective estate, spouse, former spouse or family member, pursuant to the terms of the agreement pursuant to which such shares were acquired; provided , that the Corporation may at any time redeem, purchase or otherwise acquire shares of any such parity stock in exchange for shares of any capital stock of the Corporation ranking junior (either as to dividends or upon dissolution, liquidation or winding up) to the Series B Preferred Stock; or +(iv) purchase or otherwise acquire for consideration any shares of Series B Preferred Stock, or any shares of capital stock ranking on a parity with the Series B Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Board) to all holders of such shares upon such terms as the Board, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes. +(b) The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of stock of the Corporation unless the Corporation could, under Section 4(a) , purchase or otherwise acquire such shares at such time and in such manner. +Section 5. Reacquired Shares . Any shares of Series B Preferred Stock purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and cancelled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but unissued shares of Preferred Stock and may be reissued as part of a new series of Preferred Stock to be created by resolution or resolutions of the Board, subject to the conditions and restrictions on issuance set forth herein. +Section 6. Liquidation, Dissolution or Winding Up . +(a) Upon any liquidation (voluntary or otherwise), dissolution or winding up of the Corporation, no distribution shall be made to the holders of shares of capital stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series B Preferred Stock unless, prior thereto, the holders of shares of Series B Preferred Stock shall have received $1,000 per share, plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment (the “ Series B Liquidation Preference ”). Following the payment of the full amount of the Series B Liquidation Preference, no additional distributions shall be made to the holders of shares of Series B Preferred Stock unless, prior thereto, the holders of shares of Common Stock have received an amount per share (the “ Common Adjustment ”) equal to the quotient obtained by dividing (i) the Series B Liquidation Preference by (ii) 1,000 (as appropriately adjusted as set forth in Section 6(c) below to reflect such events as stock splits, reverse stock splits, stock dividends and recapitalizations with respect to the Common Stock) (such number in clause (ii), the “ Adjustment Number ”). Following the payment of the full amount of the Series B Liquidation Preference and the Common Adjustment in respect of all outstanding shares of Series B Preferred Stock and Common Stock, respectively, and the payment of liquidation preferences of all other shares of capital stock which rank prior to or on a parity with Series B Preferred Stock, holders of Series B Preferred Stock and holders of shares of Common Stock shall receive their ratable and proportionate share of the remaining assets to be distributed in the ratio of the Adjustment Number to 1 with respect to such Preferred Stock and Common Stock, on a per share basis, respectively. +(b) In the event, however, that there are not sufficient assets available to permit payment in full of the Series B Liquidation Preference and the liquidation preferences of all other series of Preferred Stock, if any, which rank on a parity with the Series B Preferred Stock, then such remaining assets shall be distributed ratably to the holders of such parity shares in proportion to their respective liquidation preferences. In the event, however, that there are not sufficient assets available to permit payment in full of the Common Adjustment, then such remaining assets shall be distributed ratably to the holders of Common Stock. +(c) In the event the Corporation at any time after the Rights Declaration Date (i) declares a dividend on Common Stock payable in shares of Common Stock, (ii) subdivides outstanding Common Stock or (iii) combines the outstanding Common Stock into a smaller number of shares, then in each such case the Adjustment Number in effect immediately prior to such event shall be adjusted by multiplying such Adjustment Number by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. +A-34 2020 PROXY STATEMENT +ANNEX A +Section 7. Consolidation, Merger, Etc . In case the Corporation enters into any consolidation, merger, combination or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case each share of Series B Preferred Stock shall at the same time be similarly exchanged or changed into an amount per share (subject to the provision for adjustment hereinafter set forth) equal to 1,000 times the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, for which or into which each share of Common Stock is exchanged or changed. In the event the Corporation at any time after the Rights Declaration Date (i) declares any dividend on Common Stock payable in shares of Common Stock, (ii) subdivides the outstanding Common Stock or (iii) combines the outstanding Common Stock into a smaller number of shares, then in each such case the amount set forth in the preceding sentence with respect to the exchange or change of shares of Series B Preferred Stock shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. +Section 8. No Redemption . The shares of Series B Preferred Stock shall not be redeemable. +Section 9. Ranking . The Series B Preferred Stock shall rank junior to all other series of the Corporation’s Preferred Stock as to the payment of dividends and the distribution of assets, whether or not upon the dissolution, liquidation or winding up of the Corporation, unless the terms of any such series provides otherwise. +Section 10. Amendment . The Charter shall not be amended in any manner which would materially alter or change the powers, preferences or special rights of the Series B Preferred Stock so as to affect them adversely without the affirmative vote of the holders of two -thirds of the outstanding shares of Series B Preferred Stock, voting separately as a class. +Section 11. Fractional Shares . Series B Preferred Stock may be issued in fractions of a share that entitle the holder, in proportion to such holder’s fractional shares, to exercise voting rights, receive dividends, participate in distributions and have the benefit of all other rights of holders of Series B Preferred Stock. +* * * * * * * +2020 PROXY STATEMENT A-35 +ANNEX A +IN WITNESS WHEREOF, the Corporation has executed this Certificate of Designation as of April 30, 2020. +GULFPORT ENERGY CORPORATION +By: +Name: +Title: +[Signature Page to Certificate of Designation] +A-36 2020 PROXY STATEMENT +ANNEX A +Exhibit B +[Form of Rights Certificate] +Certificate No. R- +_____________Rights +NOT EXERCISABLE AFTER APRIL 29, 2021 OR EARLIER IF REDEEMED OR EXCHANGED BY THE COMPANY OR SUCH OTHER EARLIER EXPIRATION TIME (AS DEFINED IN THE TAX BENEFITS PRESERVATION PLAN). AS SET FORTH IN THE TAX BENEFITS PRESERVATION PLAN, THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $0.001 PER RIGHT, AND TO EXCHANGE ON THE TERMS SET FORTH IN THE TAX BENEFITS PRESERVATION PLAN. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN “ACQUIRING PERSON” OR ANY “AFFILIATE” OR “ASSOCIATE” OF AN “ACQUIRING PERSON” (AS SUCH TERMS ARE DEFINED IN THE TAX BENEFITS PRESERVATION PLAN) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS SHALL BECOME NULL AND VOID. +[THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN “ACQUIRING PERSON” OR AN “AFFILIATE” OR “ASSOCIATE” OF AN “ACQUIRING PERSON” (AS SUCH TERMS ARE DEFINED IN THE TAX BENEFITS PRESERVATION PLAN). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY SHALL BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF SUCH AGREEMENT.] † +____________ +† The portion of the legend in brackets shall be inserted only if applicable and shall replace the preceding sentence. +2020 PROXY STATEMENT A-37 +ANNEX A +Rights Certificate +GULFPORT ENERGY CORPORATION +This certifies that ___________, or registered assigns, is the registered owner of the number of Rights set forth above, each of which entitles the owner thereof, subject to the terms, provisions and conditions of the Tax Benefits Preservation Plan, dated as of April 30, 2020, as amended from time to time (the “ Tax Benefits Preservation Plan ”), by and between Gulfport Energy Corporation, a Delaware corporation (the “ Company ”), and Computershare Trust Company, N.A., the rights agent (and any successor rights agent, the “ Rights Agent ”), to purchase from the Company at any time prior to the Expiration Time (as such term is defined in the Tax Benefits Preservation Plan at the office or offices of the Rights Agent designated for such purpose, or its successors as Rights Agent, one one -thousandth of a fully paid, nonassessable share of Series B Junior Participating Preferred Stock, par value $0.01 per share (the “ Preferred Stock ”), of the Company, at an exercise price of $8.00 per one one -thousandth of a share (the “ Exercise Price ”), upon presentation and surrender of this Rights Certificate with the Form of Election to Purchase and related Certificate properly completed and duly executed. The number of Rights evidenced by this Rights Certificate (and the number of shares which may be purchased upon exercise thereof) set forth above, and the Exercise Price per share set forth above, are the number and Exercise Price as of April 30, 2020, based on the Preferred Stock as constituted at such date. The Company reserves the right to require prior to the occurrence of a Triggering Event (as such term is defined in the Tax Benefits Preservation Plan) that, upon any exercise of Rights, a number of Rights be exercised so that only whole shares of Preferred Stock will be issued. Capitalized terms used and not defined herein shall having the meanings specified in the Tax Benefits Preservation Plan. +Upon the occurrence of a Flip -in Event, if the Rights evidenced by this Rights Certificate are Beneficially Owned by (1) an Acquiring Person or a Related Person of any such Acquiring Person, (2) a transferee of any such Acquiring Person or Related Person or (3) under certain circumstances specified in the Tax Benefits Preservation Plan, a transferee of a Person who, after such transfer, became an Acquiring Person or a Related Person of such Acquiring Person, such Rights shall become null and void and no holder hereof shall have any right with respect to such Rights from and after the occurrence of such Flip -in Event. +As provided in the Tax Benefits Preservation Plan, the Exercise Price and the number and kind of shares of Preferred Stock or other securities which may be purchased upon the exercise of the Rights evidenced by this Rights Certificate are subject to modification and adjustment upon the happening of certain events, including Triggering Events. +This Rights Certificate is subject to all of the terms, provisions and conditions of the Tax Benefits Preservation Plan, which terms, provisions and conditions are hereby incorporated herein by reference and made a part hereof and to which Tax Benefits Preservation Plan reference is hereby made for a full description of the rights, limitations of rights, obligations, duties and immunities hereunder of the Rights Agent, the Company and the holders of the Rights Certificates, which limitations of rights include the temporary suspension of the exercisability of such Rights under the specific circumstances set forth in the Tax Benefits Preservation Plan. Copies of the Tax Benefits Preservation Plan are on file at the office of the Company and are also available upon written request to the Company. +This Rights Certificate, with or without other Rights Certificates, upon surrender at the offices of the Rights Agent designated for such purpose, may be exchanged for another Rights Certificate or Rights Certificates of like tenor and date evidencing Rights entitling the holder to purchase a like aggregate number of one one -thousandths of a share of Preferred Stock as the Rights evidenced by the Rights Certificates surrendered shall have entitled such holder to purchase. If this Rights Certificate shall be exercised in part, the holder shall be entitled to receive upon surrender hereof another Rights Certificate or Rights Certificates for the number of whole Rights not exercised. +Subject to the Tax Benefits Preservation Plan, the Rights evidenced by this Rights Certificate may, in each case at the option of the Company, be (1) redeemed by the Company at a Redemption Price of $0.001 per Right or (2) exchanged in whole or in part for shares of Common Stock, par value $0.01 per share, of the Company. Immediately upon the action of the Board of Directors of the Company authorizing redemption, the Rights shall terminate and the only right of the holders of Rights shall be to receive the Redemption Price. +No fractional shares of Preferred Stock shall be issued upon the exercise of any Right or Rights evidenced hereby (other than fractions which are integral multiples of one one -thousandth of a share of Preferred Stock, which may, at the election of the Company, be evidenced by depositary receipts), but in lieu thereof a cash payment shall be made, as provided in the Tax Benefits Preservation Plan. +A-38 2020 PROXY STATEMENT +ANNEX A +No holder of this Rights Certificate shall be entitled to vote or receive dividends or be deemed for any purpose the holder of shares of Preferred Stock or of any other securities of the Company which may at any time be issuable on the exercise hereof, nor shall anything contained in the Tax Benefits Preservation Plan or herein be construed to confer upon the holder hereof, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action, or to receive notice of meetings or other actions affecting stockholders (except as provided in the Tax Benefits Preservation Plan), or to receive dividends or subscription rights, or otherwise, until the Right or Rights evidenced by this Rights Certificate shall have been exercised as provided in the Tax Benefits Preservation Plan. +This Rights Certificate shall not be valid or obligatory for any purpose until it has been countersigned manually or by facsimile signature by the Rights Agent. +* * * * * * * +2020 PROXY STATEMENT A-39 +ANNEX A +WITNESS the facsimile signature of the proper officer of the Company. +Dated as of _______ __, 20__ +GULFPORT ENERGY CORPORATION +By: +Name: +Title: +Countersigned: +COMPUTERSHARE TRUST COMPANY, N.A. +By: +Name: +Title: +A-40 2020 PROXY STATEMENT +ANNEX A +[Form of Reverse Side of Rights Certificate] +FORM OF ASSIGNMENT +(To be executed by the registered holder if such +holder desires to transfer the Rights Certificate.) +FOR VALUE RECEIVED ________________________________________ hereby sells, assigns and transfers unto _______________________________________________________________________________________________________________ (Please print name and address of transferee) this Rights Certificate, together with all right, title and interest therein, and does hereby irrevocably constitute and appoint ____________ as attorney, to transfer the within Rights Certificate on the books of the within -named Company, with full power of substitution. +Dated: ______________, _______ +Signature +Signature Guaranteed: +2020 PROXY STATEMENT A-41 +ANNEX A +CERTIFICATE +The undersigned hereby certifies by checking the appropriate boxes that: +(1) this Rights Certificate [ ] is [ ] is not being sold, assigned and transferred by or on behalf of a Person who is or was an Acquiring Person or a Related Person of an Acquiring Person (as such terms are defined pursuant to the Tax Benefits Preservation Plan); and +(2) after due inquiry and to the best knowledge of the undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this Rights Certificate from any Person who or which is, was or subsequently became an Acquiring Person or a Related Person of an Acquiring Person. +Dated: ______________, _______ +Signature +Signature Guaranteed: +A-42 2020 PROXY STATEMENT +ANNEX A +NOTICE +The signature to the foregoing Assignment and Certificate must correspond to the name as written upon the face of this Rights Certificate in every particular, without alteration or enlargement or any change whatsoever. +In the event the certification set forth above is not completed, the Company shall deem the Beneficial Owner of the Rights evidenced by this Rights Certificate to be an Acquiring Person or a Related Person thereof (as such terms are defined in the Tax Benefits Preservation Plan) and the Election to Purchase will not be honored. +2020 PROXY STATEMENT A-43 +ANNEX A +FORM OF ELECTION TO PURCHASE +(To be executed if holder desires to exercise Rights represented by the Rights Certificate.) +TO: GULFPORT ENERGY CORPORATION +The undersigned hereby irrevocably elects to exercise ______ Rights represented by this Rights Certificate to purchase the shares of Preferred Stock issuable upon the exercise of the Rights (or such other securities of the Company or of any other person which may be issuable upon the exercise of the Rights) and requests that certificates for such shares (or other securities) be issued in the name of and delivered to: +Please insert social security or other identifying number: ______________________ +________________________________________________________________ +(Please print name and address) +________________________________________________________________ +If such number of Rights shall not be all the Rights evidenced by this Rights Certificate, a new Rights Certificate for the balance of such Rights shall be registered in the name of and delivered to: +Please insert social security or other identifying number: ______________________ +________________________________________________________________ +(Please print name and address) +________________________________________________________________ +Dated: ______________, _______ +Signature +Signature Guaranteed: +A-44 2020 PROXY STATEMENT +ANNEX A +CERTIFICATE +The undersigned hereby certifies by checking the appropriate boxes that: +(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not being exercised by or on behalf of a Person who is or was an Acquiring Person or a Related Person of an Acquiring Person (as such terms are defined pursuant to the Tax Benefits Preservation Plan); and +(2) after due inquiry and to the best knowledge of the undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this Rights Certificate from any Person who or which is, was or became an Acquiring Person or a Related Person of an Acquiring Person. +Dated: ______________, _______ +Signature +Signature Guaranteed: +2020 PROXY STATEMENT A-45 +ANNEX A +NOTICE +The signature to the foregoing Election to Purchase and Certificate must correspond to the name as written upon the face of this Rights Certificate in every particular, without alteration or enlargement or any change whatsoever. +In the event the certification set forth above is not completed, the Company shall deem the Beneficial Owner of the Rights evidenced by this Rights Certificate to be an Acquiring Person or a Related Person thereof (as such terms are defined in the Tax Benefits Preservation Plan) and, in the case of an Assignment, shall affix a legend to that effect on any Rights Certificates issued in exchange for this Rights Certificate. +A-46 2020 PROXY STATEMENT +ANNEX A +Exhibit C +SUMMARY OF RIGHTS TO PURCHASE PREFERRED STOCK +On April 30, 2020, the board of directors (the “ Board ”) of Gulfport Energy Corporation (the “ Company ”) adopted a tax benefits preservation plan and declared a dividend distribution of one right (a “ Right ”) for each outstanding share of Company common stock, par value $0.01 per share (the “ Common Stock ”) to stockholders of record at the close of business on May 15, 2020 (the “ Record Date ”). Each Right entitles its holder, under the circumstances described below, to purchase from the Company one one -thousandth of a share of Series B Junior Participating Preferred Stock of the Company, par value $0.01 per share (the “ Preferred Stock ”), at an exercise price of $8.00 per Right, subject to adjustment. The description and terms of the Rights are set forth in the tax benefits preservation plan (the “ Tax Benefits Preservation Plan ”), dated as of April 30, 2020, between the Company and Computershare Trust Company, N.A., as rights agent (and any successor rights agent, the “ Rights Agent ”). +The Company adopted the Tax Benefits Preservation Plan in order to protect shareholder value against a possible limitation on the Company’s ability to use its net operating losses (the “ NOLs ”) and certain other tax benefits to reduce potential future U.S. federal income tax obligations. The NOLs are a valuable asset to the Company, which may inure to the benefit of the Company and its stockholders. However, if the Company experiences an “ownership change,” as defined in Section 382 of the Internal Revenue Code of 1986, as amended (the “ Code ”), its ability to fully utilize the NOLs and certain other tax benefits will be substantially limited and the timing of the usage of the NOLs and such other benefits could be substantially delayed, which could significantly impair the value of those assets. Generally, an “ownership change” occurs if the percentage of the Company’s stock owned by one or more of its “five -percent shareholders” (as such term is defined in Section 382 of the Code) increases by more than 50 percentage points over the lowest percentage of stock owned by such stockholder or stockholders at any time over a three -year period. The Tax Benefits Preservation Plan is intended to prevent against such an “ownership change” by deterring any person or group, together with its affiliates and associates, from acquiring beneficial ownership of 4.9% or more of the Company’s securities. +The Rights . Initially, the Rights are associated with shares of Common Stock and evidenced by Common Stock certificates or, in the case of uncertificated shares of Common Stock, the book -entry account that evidences record ownership of such shares, which shall contain a notation incorporating the Tax Benefits Preservation Plan by reference, and are transferable with and only with the underlying shares of Common Stock. New Rights shall attach to any shares of Common Stock that become outstanding after the Record Date and prior to the earlier of the Distribution Time (as defined below) and the Expiration Time (as defined below). +Separation and Distribution of Rights; Exercisability . Subject to certain exceptions, the Rights become exercisable and trade separately from Common Stock only upon the “ Distribution Time ,” which occurs upon the earlier of: +• the close of business on the tenth (10th) day after the “ Stock Acquisition Date ,” which is (a) the first date of public announcement that a person or group of affiliated or associated persons (with certain exceptions, an “ Acquiring Person ”) has acquired, or obtained the right or obligation to acquire, beneficial ownership of 4.9% or more of the outstanding shares of Common Stock (with certain exceptions) or (b) such other date, as determined by the Board, on which a person or group has become an Acquiring Person, or +• the close of business on the tenth (10th) business day (or later date as may be determined by the Board prior to such time as any person or group becomes an Acquiring Person) following the commencement of a tender offer or exchange offer which, if consummated, would result in a person or group becoming an Acquiring Person. +Any existing stockholder or group that beneficially owns 4.9% or more of Common Stock shall be grandfathered at its current ownership level, but the Rights shall not be exercisable if, at any time after the announcement of the Tax Benefits Preservation Plan, such stockholder or group increases its ownership of Common Stock by one share of Common Stock. Certain synthetic interests in securities created by derivative positions, whether or not such interests are considered to be ownership of the underlying Common Stock or are reportable for purposes of Regulation 13D of the Securities Exchange Act of 1934, as amended, are treated as beneficial ownership of the number of shares of Common Stock equivalent to the economic exposure created by the derivative position, to the extent actual shares of Common Stock are directly or indirectly held by counterparties to the derivatives contracts. +Until the earlier of the Distribution Time and the Expiration Time, the surrender for transfer of any shares of Common Stock shall also constitute the transfer of the Rights associated with those shares. As soon as practicable after the Distribution Time, separate rights certificates shall be mailed to holders of record of Common Stock as of the close of business on the Distribution +2020 PROXY STATEMENT A-47 +ANNEX A +Time. From and after the Distribution Time, the separate rights certificates alone shall represent the Rights. Except as otherwise provided in the Tax Benefits Preservation Plan, only shares of Common Stock issued prior to the Distribution Time will be issued with Rights. +The Rights are not exercisable until the Distribution Time. +Expiration Time . The Rights shall expire on the earliest to occur of (1) the close of business on April 29, 2021 (the “ Final Expiration Time ”), (2) the time at which the Rights are redeemed or exchanged by the Company (as described below), (3) upon the closing of any merger or other acquisition transaction involving the Company pursuant to a merger or other acquisition agreement that has been approved by the Board before any person or group becomes an Acquiring Person and (4) the time at which the Board determines that the NOLs are utilized in all material respects or that an ownership change under Section 382 would not adversely impact in any material respect the time period in which the Company could use the NOLs or materially impair the amount of NOLs that could be used by the Company in any particular time period, for applicable tax purposes (the earliest of (1), (2), (3) and (4) being herein referred to as the “ Expiration Time ”). +Flip -in Event . In the event that any person or group (other than certain exempt persons) becomes an Acquiring Person (a “ Flip -in Event ”), each holder of a Right (other than any Acquiring Person and certain related parties, whose Rights automatically become null and void) shall have the right to receive, upon exercise, shares of Common Stock having a value equal to two times the exercise price of the Right. +For example, at an exercise price of $8.00 per Right, each Right not owned by an Acquiring Person (or by certain related parties) following a Flip -in Event would entitle its holder to purchase $16.00 worth of shares of Common Stock (or other consideration, as noted above) for $8.00. Assuming that Common Stock had a per share value of $2.23 at that time, the holder of each valid Right would be entitled to purchase 7.17 shares of Common Stock for $1.12 per share. +Flip -over Event . In the event that, at any time following the Stock Acquisition Date, any of the following occurs (each, a “ Flip -over Event ”): +• the Company consolidates with, or merges with and into, any other entity, and the Company is not the continuing or surviving entity; +• any entity engages in a share exchange with or consolidates with, or merges with or into, the Company, and the Company is the continuing or surviving entity and, in connection with such share exchange, consolidation or merger, all or part of the outstanding shares of Common Stock are changed into or exchanged for stock or other securities of any other entity or cash or any other property; or +• the Company sells or otherwise transfers, in one transaction or a series of related transactions, fifty percent (50%) or more of the Company’s assets, cash flow or earning power, +each holder of a Right (except Rights which previously have been voided as described above) will have the right to receive, upon exercise, common stock of the acquiring company having a value equal to two times the exercise price of the Right. +Preferred Share Provisions. Each share of Preferred Stock, if issued: shall not be redeemable, shall entitle the holder thereof, when, as and if declared, to quarterly dividend payments equal to the greater of $1,000 per share and 1,000 times the amount of all cash dividends plus 1,000 times the amount of non -cash dividends or other distributions paid on one share of Common Stock, shall entitle the holder thereof to receive $1,000 plus accrued and unpaid dividends per share upon liquidation, shall have the same voting power as 1,000 shares of Common Stock and, if shares of Common Stock are exchanged via merger, consolidation or a similar transaction, shall entitle the holder thereof to a per share payment equal to the payment made on 1,000 shares of Common Stock. +Anti -dilution Adjustments . The exercise price payable and the number of shares of Preferred Stock or other securities or property issuable, upon exercise of the Rights are subject to adjustment from time to time to prevent dilution: +• in the event of a stock dividend on, or a subdivision, combination or reclassification of, the Preferred Stock, +• if holders of the Preferred Stock are granted certain rights, options or warrants to subscribe for Preferred Stock or convertible securities at less than the current market price of the Preferred Stock or +• upon the distribution to holders of the Preferred Stock of evidences of indebtedness or assets (excluding regular quarterly cash dividends) or of subscription rights or warrants (other than those referred to above). +A-48 2020 PROXY STATEMENT +ANNEX A +With certain exceptions, no adjustment in the exercise price shall be required until cumulative adjustments amount to at least one percent (1%) of the exercise price. No fractional shares of Preferred Stock shall be issued and, in lieu thereof, an adjustment in cash shall be made based on the market price of the Preferred Stock on the last trading day prior to the date of exercise. +Redemption; Exchange . At any time prior to the earlier of (1) the Stock Acquisition Date and (2) the Final Expiration Time, the Company may redeem the Rights in whole, but not in part, at a price of $0.001 per Right (subject to adjustment and payable in cash, Common Stock or other consideration deemed appropriate by the Board). Immediately upon the action of the Board authorizing any redemption, the Rights shall terminate and the only right of the holders of Rights shall be to receive the redemption price. At any time after any person or group becomes an Acquiring Person and prior to the acquisition by the Acquiring Person of fifty percent (50%) or more of the outstanding shares of Common Stock, the Company may exchange the Rights (other than Rights owned by the Acquiring Person, which shall have become null and void), in whole or in part, at an exchange ratio of one share of Common Stock, or one one -thousandth of a share of Preferred Stock (or of a share of a class or series of the Company’s preferred stock having equivalent rights, preferences and privileges), per Right (subject to adjustment). +Exemption Requests. The Board may exempt certain persons from the 4.9% ownership threshold if the Board determines that their beneficial ownership of more than 4.9% of Common Stock will not jeopardize the availability of the Company’s NOLs. A person may also request that the Board exempt a transaction that would cause such person to become the beneficial owner of 4.9% or more of Common Stock. +No Rights as Stockholder . Until a Right is exercised, its holder shall have no rights as a stockholder of the Company, including, without limitation, the right to vote or to receive dividends. +Amendment of the Tax Benefits Preservation Plan . The Company and the Rights Agent may from time to time amend or supplement the Tax Benefits Preservation Plan without the consent of the holders of the Rights. However, on or after the Stock Acquisition Date, no amendment can materially adversely affect the interests of the holders of the Rights (other than the Acquiring Person, certain related parties thereof or any transferee of the foregoing persons). +Additional Information . A copy of the Tax Benefits Preservation Plan has been filed with the Securities and Exchange Commission as an exhibit to a registration statement on Form 8 -A and a current report on Form 8 -K dated April 30, 2020. A copy of the Tax Benefits Preservation Plan is also available free of charge from the Company. +* * * * * +This description of the Rights does not purport to be complete and is qualified in its entirety by reference to the Tax Benefits Preservation Plan, which is incorporated herein by reference. +2020 PROXY STATEMENT A-49 \ No newline at end of file diff --git a/raw/proxies/0000874499/0001213900-20-014841/proxy_rpt.txt b/raw/proxies/0000874499/0001213900-20-014841/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..ad5e529eb86f4755b84c823f968343b3b9243041 --- /dev/null +++ b/raw/proxies/0000874499/0001213900-20-014841/proxy_rpt.txt @@ -0,0 +1,4 @@ +Approval of Related Party Transactions +The Audit Committee, as provided in its charter, reviews and approves related party transactions. The Company does not have a formal set of standards to be substantively applied to each transaction reviewed by the Audit Committee. Instead of a formalized policy, related party transactions are reviewed and judgment is applied to determine whether such transactions are in the best interests of the Company. The Company’s Code of Business Conduct and Ethics governs various compliance areas, including conflicts of interest and fair dealings, which are considered in the process of the review and approval of related party transactions. +The Company’s policy is that all its employees and directors, as well as their family members, must avoid any activity that is or has the appearance of conflicting with the Company’s business interest. This policy is included in the Company’s Code of Business Conduct and Ethics posted on its website. Each director and executive officer is instructed to always inform the designated compliance officer when confronted with any situation that may be perceived as a conflict of interest. Only the Board of Directors or a committee consisting solely of independent directors may grant waivers of the provisions of the Code of Business Conduct and Ethics for the Company’s executive officers and directors. In addition, at least annually, each director and executive officer completes a detailed questionnaire specifying any business relationship that may give rise to a conflict of interest. +Under the Audit Committee charter, the Audit Committee is responsible for reviewing and monitoring compliance with our Code of Business Conduct and Ethics and recommending any warranted changes to the Board of Directors. In addition, the Board of Directors and, pursuant to its written charter, the Audit Committee, reviews and approves all relationships and transactions in which the Company and its directors, director nominees and executive officers and their immediate family members, as well as holders of more than 5% of any class of our voting securities and their family members, have a direct or indirect material interest. The Board of Directors and the Audit Committee approve only those transactions that, in light of known circumstances, are consistent, or are not inconsistent with, the Company’s best interests, as they determine in the good faith exercise of their discretion. \ No newline at end of file diff --git a/raw/proxies/0000874499/0001213900-22-023197/proxy.txt b/raw/proxies/0000874499/0001213900-22-023197/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..3ab4c95e4d9713223306bba88f3aad5f808f0902 --- /dev/null +++ b/raw/proxies/0000874499/0001213900-22-023197/proxy.txt @@ -0,0 +1,2410 @@ +DEF 14A +1 +def14a0422_gulfportenergy.htm +DEFINITIVE PROXY STATEMENT +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +________________ +Schedule 14A +Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 +(Amendment No. ) +________________ +Filed by the Registrant +☒ +Filed by a party other than the Registrant +☐ +Check the appropriate box: +☐ +Preliminary Proxy Statement +☐ +Confidential, for Use of the Commission Only (as permitted by Rule 14a -6 (e)(2)) +☒ +Definitive Proxy Statement +☐ +Definitive Additional Materials +☐ +Soliciting Material under §240.14a -12 +Gulfport Energy Corporation +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check all boxes that apply): +☒ +No fee required +☐ +Fee paid previously with preliminary materials. +☐ +Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a- 6(i)(1) and 0 -11 +May 2, 2022 +Dear Stockholders, +On behalf of the Board of Directors (the “Board”), management, and employees of Gulfport Energy Corporation (“Gulfport”, “Gulfport Energy,” the “Company,” “we,” “our” and “us”), you are cordially invited to participate in the 2022 Annual Meeting of Stockholders “Annual Meeting” to be held on June 14, 2022, at 9:00 a.m. Central Time via live webcast at https://meetnow.global/MHFVXJ2 . The attached Notice of 2022 Annual Meeting of Stockholders and this proxy statement will serve as your guide to the business conducted during the Annual Meeting. +We are mailing most of our stockholders a Notice of Internet Availability of Proxy Materials for the 2022 Annual Meeting (the “Notice”), which provides instructions regarding how stockholders can access and review proxy materials over the internet and submit their proxy electronically. We believe the Notice process allows us to provide our stockholders with the information they desire in a timely manner, while reducing costs and the environmental impact of our Annual Meeting. If you received the Notice and would prefer to receive a paper copy of the proxy materials, please follow the instructions for requesting the materials that are provided in the Notice. +Your vote is very important to us. To assure your representation at the annual meeting, please vote your shares over the internet or through the toll -free telephone number as instructed in the Notice. +Thank you for your continued support and interest in Gulfport. +Sincerely, +Timothy J. Cutt +Chairman and Chief Executive Officer +GULFPORT ENERGY CORPORATION +3001 Quail Springs Parkway +Oklahoma City, Oklahoma 73134 +NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS +May 2, 2022 +Notice is given that the 2022 Annual Meeting of Stockholders (including any adjournments or postponements, the Annual Meeting) of Gulfport Energy will be held on June 14, 2022 at 9:00 a.m., Central Time in a virtual format online and live webcast to vote on the proposals listed in the following table. +Date and Time +June 14, 2022 at 9:00 a.m., Central Time +Place +The Annual Meeting will be a held in a virtual meeting format only, conducted by live webcast at 9:00 a.m. Central Time, allowing for real -time communication and easy access for stockholders and facilitating participation for stockholders from any location. +You will be able to attend and participate in the Annual Meeting online, vote your shares electronically and submit your questions prior to and during the meeting by visiting https://meetnow.global/MHFVXJ2 at the meeting date and time described above. +Proposals +1. To elect five directors to serve until the Company’s 2023 Annual Meeting of Stockholders or until their respective successors have been duly elected and qualified (the Election of Directors Proposal or Proposal 1 ) . +2. To approve, on an advisory, non -binding basis, the compensation paid to the Company’s named executive officers as described in this proxy statement (the Say on Pay Proposal or Proposal 2 ) . +3. To ratify the appointment of Grant Thornton LLP as the Company’s independent auditors for the fiscal year ending December 31, 2022 (the Auditors Ratification Proposal or Proposal 3 ) . +We will also transact any other business as may properly come before the Annual Meeting. +Record Date +April 20, 2022 at the close of business +Holders of record of our common stock, par value $0.0001 per share and preferred stock, par value $0.0001, in each case, outstanding as of April 20, 2022 at the close of business, the record date for the annual meeting, will be entitled to notice of the annual meeting and to vote at the annual meeting or any adjournment or postponement. +PROXY VOTING +Stockholders of the Company as of the record date are entitled to vote by proxy in the following ways: +By calling the telephone number on your proxy card or voting instruction form +Online by visiting the website provided on your proxy card or voting instruction form +By returning by mail a properly +completed, signed and dated +proxy card or voting instruction form +IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON June 14, 2022: This proxy statement and additional information are available free of charge on the Company’s website at www.gulfportenergy.com/proxy . +By order of the Board of Directors, +Patrick K. Craine +Chief Legal and Administrative Officer and Corporate Secretary +The Notice of Internet Availability of Proxy Materials is first being mailed to stockholders on or about May 5, 2022 , and the proxy materials relating to the Annual Meeting will be made available on or about the same date . +TABLE OF CONTENTS +GULFPORT ENERGY CORPORATION +3001 Quail Springs Parkway +Oklahoma City, Oklahoma 73134 +_____________________ +PROXY STATEMENT +_____________________ +Proxy Statement Summary +1 +Board Summary +2 +Corporate Responsibility and Sustainability Highlights +3 +Election of Directors and Director Biographies +7 +Corporate Governance Matters and Communications with the Board +14 +Nominating Process for Directors, Director Qualifications and Review of Director Nominees +16 +Director Leadership Structure +18 +Board of Directors’ Role in Risk Oversight +19 +Executive Officers +20 +Compensation Discussion and Analysis +21 +Executive Summary +23 +Compensation Committee Interlocks and Insider Participation +37 +Compensation Tables +38 +Benefit Plans +43 +401(k) Plan +43 +2019 Restated Stock Incentive Plan +43 +2021 Stock Incentive Plan +43 +2014 Executive Annual Incentive Compensation Plan +43 +Equity Compensation Plan Information +44 +Termination, Resignation or Change of Control +48 +CEO Pay Ratio Disclosure +50 +Beneficial Ownership +53 +Who Are this Year’s Nominees? +Holdings of Major Stockholders +54 +Certain Relationships and Review and Approval of Related Party Transactions +55 +Proposal to Approve, on an Advisory, Non-Binding Basis, the Compensation Paid to the Company’s Named Executive Officers +56 +Proposal to Ratify the Appointment of Our Independent Auditors +57 +Audit Committee Report +58 +About the Annual Meeting +59 +Availability of Form 10-K and Annual Report to Stockholders +64 +Householding +65 +Other Matters +66 +Solicitation by the Board of Directors +67 +Forward-looking Statements +68 +Submission of Future Stockholder Proposals +69 +Annex A — Additional Information Regarding +Participants in this Proxy Solicitation +A-1 +2022 PROXY STATEMENT i +PROXY STATEMENT SUMMARY +The summary below highlights information contained elsewhere in this proxy statement. It does not contain all the information that you should consider in connection with the matters before the Annual Meeting. Please read the entire proxy statement carefully before voting your shares. +ABOUT GULFPORT +Gulfport is an independent natural gas -weighted exploration and production company with assets primarily located in the Appalachia and Anadarko basins. Our principal properties are in Eastern Ohio, where we target development in what is commonly referred to as the Utica formation, and Central Oklahoma where we target development in the South Central Oklahoma Oil Province (“SCOOP”) Woodford and Springer formations. Gulfport’s predecessor was incorporated in the State of Delaware in July 1997. Our corporate headquarters are in Oklahoma City, Oklahoma, and shares of Gulfport’s common stock trade on the New York Stock Exchange (“NYSE”) under the ticker symbol “GPOR”. Our corporate strategy is focused on the economic development of our asset base to generate sustainable free cash flow. +EMERGENCE FROM VOLUNTARY REORGANIZATION UNDER CHAPTER 11 OF THE BANKRUPTCY CODE +On November 13, 2020, we and certain of our subsidiaries (the “Debtors”) filed voluntary petitions for relief under Chapter 11 of Title 11 of the United States Code in the United States Bankruptcy Court for the Southern District of Texas. The Chapter 11 Cases were administered jointly under the caption In re Gulfport Energy Corporation, et al., Case No. 20 -35562 (DRJ). The Bankruptcy Court confirmed the Plan and entered the confirmation order on April 28, 2021, and the Debtors emerged from Chapter 11 on May 17, 2021 (“emergence”). On May 18, 2021, our common stock began trading on the NYSE under the symbol “GPOR”. +We believe we have emerged from Chapter 11 as a fundamentally stronger company, built to generate sustainable free cash flow, with a strengthened balance sheet. As a result of Chapter 11, we reduced our total indebtedness by $1.4 billion by issuing equity in a reorganized entity to the holders of our unsecured notes and allowed general unsecured claimants. In addition, Gulfport reassessed its organizational needs post - emergence and significantly reduced its general and administrative expense to ensure its cost structure is competitive with industry peers. We continue to focus on optimizing development of our resource plays, reducing our operating costs, per well drilling costs, general and administrative costs, and managing our liquidity. We believe our plan to generate free cash flow on an annual basis will allow us to further strengthen our balance sheet and return capital to stockholders. +BUSINESS STRATEGY +Gulfport aims to create sustainable value through the economic development of our significant resource plays in the Utica and SCOOP operating areas. Our strategy is to develop our assets in an environmentally responsible manner, while generating sustainable cash flow, improving margins and operating efficiencies and returning capital to stockholders. To accomplish these goals, we allocate capital expenditures to projects we believe offer the highest rate of return and deploy leading drilling and completion techniques and technologies in our development efforts. +Core Assets +Employees +2021 Production +2021 Production Mix +Utica Shale and SCOOP +212 people +as of Dec. 31, 2021 +1,003 MMcfe +per day +91% natural gas and 9% liquids +DIRECTORS +The composition of our board of directors changed significantly upon emergence from bankruptcy. Our new board is comprised of five directors, including the Company’s Chief Executive Officer, Timothy J. Cutt, and four non -employee directors, David Wolf, Guillermo (Bill) Martinez, Jason Martinez and David Reganato. They are diverse, industry -leading experts with an average of 25 years of industry leadership experience across multiple disciplines. Each of our directors will stand for election annually and must be elected by a majority of shares voted. +2022 PROXY STATEMENT 1 +Board Summar y +The following table provides summary information about each director nominee who is standing for election at the Annual Meeting. For more information about the background and qualifications of each nominee, please see “Election of Directors and Director Biographies” on page 7 of this proxy statement. We ask you to vote “ FOR ” each of our director nominees. +Director +Board Positions +Dir. Since +Age +Ind. +Principal Occupation +Timothy J. Cutt +Chairman & CEO +2021 +62 +Chief Executive Officer of Gulfport Energy +David Wolf +Lead Independent Director +2021 +51 + +Corporate Development Partner at Enduring Resources +Guillermo (Bill) Martinez +Independent Director +2021 +55 + +Executive Vice President and Chief Operating Officer at Mitsui E&P USA LLC +Jason Martinez +Independent Director +2021 +48 + +Managing Director at Pickering Energy Partners +David Reganato +Independent Director +2021 +42 + +Partner at Silver Point Capital +2 2022 PROXY STATEMENT +Corporate Responsibility and +Sustainability Highlight s +Gulfport is proud to play its part in the responsible and efficient development of domestic natural gas which is critical to our country’s economic success as it provides the primary fuel for efficient power generation in the United States. We are aware of the positive influence and potential impact we may have on the communities where we operate and live. Gulfport prioritizes safety, environmental protection, operational excellence and giving back to the communities in which we operate. +We have identified several key areas where our business could have an impact on the communities where we operate, including: greenhouse gas emissions, waste and spills, water usage, health, safety and environmental (“HSE”) protection, employee training and education, and community involvement. Our Board Nominating, Environmental, Social and Governance Committee oversees environmental, safety, social, sustainability and governance (“ESG”) matters. Continuously improving our HSE performance remains a top priority. Our HSE performance also directly impacts the compensation of all our employees as it is one of the performance goals included in our cash incentive compensation plan. We believe having measurable HSE metrics as part of our incentive compensation program leads to improved accountability and reinforces our cultural focus on operating safely and protecting employees, the environment and the communities in which we operate. +Environmental Stewardship. Gulfport strives to minimize the environmental impact of our operations by consistently focusing on finding ways to reduce our environmental footprint. Some of the ways Gulfport minimizes our environmental impact include: +• Selecting and designing our well sites to minimize impacts to sensitive habitats and surrounding areas; +• Reducing water disposal volumes and freshwater consumption through water re -use or water sharing agreements with other operators where possible; +• Investing in and implementing technology to reduce emissions, waste and our physical footprint on our drilling locations; +• Testing spill prevention and response programs to confirm equipment is maintained and operating practices are continually improved to prevent spills and minimize the impact of our operations to the soil, air and water; and +• Employing air quality programs, monitoring and operating practices to ensure that we comply with or exceed regulations. +We are a member of The Environmental Partnership which is committed to continuous improvements in environmental performance, including the reduction of methane and volatile organic compound emissions. Gulfport’s corporate environmental policy supports our commitment to operational excellence and our compliance obligations. The policy fosters environmental awareness and guides employee behavior consistent with Gulfport’s standards. All Gulfport employees are expected to act and make decisions within the guidelines of the policy to ensure our business complies with all local, state and federal environmental laws and regulations. Every employee and contractor is expected to protect the environment, minimize and manage waste responsibly, reduce and eliminate emissions and limit spills and discharges. +In 2021 we finalized a Supplier Code of Conduct which establishes Gulfport’s expectations regarding environmental, health and safety obligations, in addition to conduct and ethics standards. +Safety. Safety is the primary priority for all Gulfport employees and contractors supporting our activities. Gulfport provides comprehensive safety training to all employees and contractors and is fully committed to a safe working environment. We utilize and apply performance metrics to drive and improve safe operations. Gulfport has designed and instituted emergency response and business continuity plans to address incidents involving operational disruptions, pandemics and natural disasters. These measures include prompt notification procedures enabling Gulfport personnel to quickly evaluate and mitigate risks. Limiting safety incidents is included as part of our incentive compensation programs to ensure we train and hold our employees accountable for operating safely. +2022 PROXY STATEMENT 3 +Corporate Responsibility and Sustainability Highlights +Gulfport’s Work Safe Program focuses on a combination of twelve rules derived from Company policies (critical tasks) and cultural conditions that have been linked to serious safety incidents in our industry. Critical Task Rules are those requiring specific operating procedures to mitigate hazardous work site conditions to complete work safely. Cultural Condition Rules are defined as work site conditions or human behaviors that have been linked to the root cause of most incidents. Employees and contractors are expected to apply and follow the requirements that coincide with the twelve rules. Our goal is to not only improve our safety performance but to proactively prevent incidents before they happen. +Stop Work is one of the Work Safe Program’s critical tasks. Our Chief Executive Officer, Timothy J. Cutt, signed and communicated a Stop Work Authority and Obligation letter to the Company’s employees and our contractors. This letter outlines Gulfport’s commitment to health, safety and the environment and provides the expectation and support to all Gulfport employees and contract partners to stop work when conditions warrant. Every person on a Gulfport work site has the authority, and obligation to stop any work that is believed to cause an unsafe condition, or places personnel or the environment at risk. +Health, Safety & Environment Highlights for 2021: +• Reduced number of total OSHA recordable injuries by 25% from 2019; +• Reduced reportable spills by 60% year -over-year ; +• Launched monthly vendor safety meetings; +• Developed and delivered a Supervisor’s Work Safe Program training for our leaders to guide them in leading safety -related conversations, meetings, and performance discussions; +• Created a new program Work Green with three focus areas – air, land, and water – to highlight and emphasize our commitment to being environmental stewards in the communities where we operate; and +• Completed two environmental volunteer efforts in Ohio and Oklahoma, planting trees and cleaning up a river to highlight the launch of Work Green. +Community Engagement. Gulfport consistently strives to positively impact and improve the communities where we live and operate. We form partnerships focused on education and work with local authorities to ensure the safety and well -being of the populations where we operate. Gulfport has also formed a strong partnership with the Foundation for Appalachian Ohio and the Communities Foundation of Oklahoma and created the Gulfport Energy Fund in both Ohio and Oklahoma. Through these funds, Gulfport has made direct monetary contributions to local organizations to improve education, youth development, health, human services and environmental stewardship. +4 2022 PROXY STATEMENT +Corporate Responsibility and Sustainability Highlights +2021 Business Highlights +Through our restructuring we were able to emerge with a strengthened balance sheet and materially improved fixed -cost structure. Gulfport is beginning this new chapter with a strategy focused on continuing to reduce costs and generating sustainable free cash flow to drive stockholder value. During 2021, we had the following notable achievements: +• Emerged from restructuring process with improved balance sheet and fixed -cost structure on May 17, 2021; +• Right -sized firm transportation commitments and negotiated new, cost -competitive midstream agreements to better align with our operating plan; +• Reduced total debt by more than $1.4 billion and materially reduced annual cash interest expense; +• Significantly improved our leverage ratios; +• Amended and refinanced our Exit Credit Facility with a New Credit Facility, increasing our elected commitment from $580 million to $700 million and our liquidity by more than $160 million; +• Delivered total net production 2% above and capital expenditures 2% below the midpoint of original 2021 guidance; +• Reduced total per unit expense, which includes lease operating expense, midstream transportation, gathering and processing expense, taxes other than income, recurring general and administrative expense and interest by approximately 20% when compared to 2020; and +• Reported year -end estimated net proved reserves of 3.9 Tcfe (Trillion cubic feet of gas equivalent) and total discounted future net cash flows of $4.1 billion. +Corporate Governance Highlights +We believe effective corporate governance requires regular constructive discussions with our stockholders. We have a proactive engagement process that encourages feedback from our stockholders. This feedback helps shape our corporate governance practices, and has specifically resulted in: +• Amendment of the Bylaws to change the supermajority vote requirement for stockholders to amend the Bylaws to a majority vote requirement; +• Adoption of stock ownership guidelines for our non -employee directors and executive officers to further align the long -term financial interests of our directors and executive officers with those of our stockholders; +• Adoption of Corporate Governance Guidelines to ensure best practices and reflect the Board’s commitment to monitor the effectiveness of policy and decision making at the Board and management levels; +• All director nominees are independent, except for our Chief Executive Officer; +• Lead Independent Director appointed; +• Advancement of Board diversity, emphasis on diversity in the Nominating, Environmental, Social and Governance Committee’s charter; +• Majority voting to elect directors in uncontested elections and plurality voting to elect directors in contested elections; +• Creation of the Nominating, Environmental, Social and Governance Committee to further develop our commitment to HSE and corporate responsibility and sustainability matters and their impact on our business and operations; +• Active stockholder outreach since emergence, engaging in discussions with our stockholders at investor conferences and through direct calls and meetings with the Company’s management team that represent approximately 70% of the shares outstanding; +• Active board oversight of risk and risk management; +• Periodic Board and Committee self -assessments conducted by an outside law firm; +• Independent director meetings in executive sessions at all regularly scheduled Board meetings; and +• 99% attendance at 2021 Board and Committee meetings. +2022 PROXY STATEMENT 5 +Corporate Responsibility and Sustainability Highlights +COMPENSATION HIGHLIGHTS +In connection with the unprecedented circumstances affecting the industry and market volatility resulting from the COVID -19 pandemic, beginning in March 2020, the Former Compensation Committee (as defined below) reviewed the annual and long -term incentive programs to determine whether those programs appropriately aligned compensation opportunities with the Company’s then current goals and ensured the stability of the Company’s workforce. Following this review, in August 2020, the Former Compensation Committee approved changing the incentive compensation program for the organization, including the named executive officers (“NEOs”), to an all cash program consisting of a Retention Bonus Award and a Quarterly Incentive Award. +Following our emergence from the bankruptcy process, our New Compensation Committee (as defined below) immediately began setting a new course for our post -emergence compensation program, reinstituting long -term performance equity awards in line with compensation best practices and good governance policies. +Stockholder Engagement and Annual Say-On-Pay Advisory Vote +At the Annual Meeting, our stockholders will again have an opportunity to cast an advisory say -on-pay vote on the compensation paid to our named executive officers as described in this proxy statement. The details of the executive compensation program and its pay for performance alignment are discussed in the “Compensation Discussion & Analysis (CD&A)” on page 26 of this proxy statement. +Since emergence, Gulfport Energy has engaged in discussions with our stockholders at investor conferences and through direct calls and meetings with the Company’s management team that represented approximately 70% of the shares outstanding. Through these conversations our stockholders emphasized their expectation that our compensation programs should be designed to focus our executive team on driving results that ensure the financial health of the organization while also driving long -term stockholder value. Specifically, after carefully considering input from stockholders, the Company took the following actions in 2021: +• Introduced performance -based equity awards in the form of performance -based restricted stock units tied to relative total shareholder return (“TSR”) and absolute return, vesting over a three -year performance period, comprising 50 -60 % of all equity awards granted to NEOs in August 2021; +• Adjusted post -emergence performance incentive opportunities and long -term equity award targets to closely align our executives’ financial interests with those of our stockholders and to continue to link a large portion of executives’ compensation to the performance of our stock and our operational performance; +• Provided robust disclosure of our performance metrics and targets for both performance -based cash and equity awards; and +• Modified metrics in the annual incentive plan to include financial metrics directly tied to the financial health of the Company and including specific and quantifiable health, safety, and environmental metrics. +6 2022 PROXY STATEMENT +ELECTION OF DIRECTORS AND DIRECTOR BIOGRAPHIES +(Proposal 1 ) +The Company is asking its stockholders to vote to elect five directors to serve on the Board of Directors until the 2023 Annual Meeting of Stockholders (the “2023 Annual Meeting”) or until their respective successors have been duly elected and qualified. +Our Board of Directors currently consists of five members who are elected annually. Four of these five directors are non -employee directors, and four of these five directors are independent under the NYSE listing standards. Each director was appointed to the Board in May 2021 in connection with our emergence from bankruptcy. +The directors standing for election this year are listed below. If any nominee should decline election or should become unable to serve as a director of our Company for any reason before election at the Annual Meeting, votes will be cast by the persons appointed as proxies for a substitute nominee, if any, designated by the Board of Directors. +There are no family relationships among any of the nominees, directors or any of the executive officers. +Vote Required and Board Voting Recommendation +Directors will be elected at the Annual Meeting by a majority of the votes cast. Abstentions and broker non -votes will have no effect on the voting results for Proposal 1. +2022 PROXY STATEMENT 7 +ELECTION OF DIRECTORS AND DIRECTOR BIOGRAPHIES +Timothy J. Cutt +Age: 6 2 +Director since: May 2021 +Directorships: +QEP +(January 2019 – March 2021) +Cobalt +( July 2016 – April 2018) +Business Experience: +Mr. Cutt joined Gulfport as the Interim Chief Executive Officer in May 2021 and assumed the role of Chief Executive Officer in September 2021. Mr. Cutt is a Petroleum Engineer with 3 9 years of energy experience. He served as Chief Executive Officer and as a director of QEP Resources from January 2019 to March 2021. Prior to joining QEP, Mr. Cutt was the Chief Executive Officer and a director of Cobalt International Energy from 2016 to 2018. Previously, Mr. Cutt held several executive positions with BHP Billiton before serving as President of the Petroleum Division from 2013 to 2016. During this time, he was also a member of BHP Billiton’s Corporate Leadership Team. Mr. Cutt began his career with Mobil and worked for ExxonMobil for 24 years and served in various management roles including President of ExxonMobil de Venezuela, President ExxonMobil Canada Energy and President Hibernia Management & Development Company. +Other Memberships and Positions: +Mr. Cutt joined the board of the American Exploration and Production Council in May 2021 and previously served as a board member of the American Petroleum Institute from 2013 to 2018. +Educational Background: +Mr. Cutt received his Bachelor of Science Degree in Petroleum Engineering from Louisiana Tech University. +BOARD MEMBERSHIP QUALIFICATIONS: +Mr. Cutt’s extensive experience as a CEO and director of public exploration and production companies, executive management skills and extensive knowledge of the oil and natural gas sector and corporate governance qualify him to serve as a director. +David Wolf +Age: 51 +Director since: May 2021 +Current Directorships: +EP Energy Corporation +(October 2020 – March 2022 ) +Business Experience: +Mr. Wolf serves as Lead Independent Director and has an extensive financial background, with over 2 7 years of experience in the energy and oil and gas industries. Currently, Mr. Wolf serves as a partner at Enduring Resources. He previously served as Executive Vice President and Chief Financial Officer of Vantage Energy and President, Chief Executive Officer, and a Board Member of Fuse Energy LLC. Prior to joining Fuse Energy, Mr. Wolf served as Executive Vice President and Chief Financial Officer of Berry Petroleum Co and a Managing Director in the Global Oil & Gas Group at JP Morgan Chase & Co. +Educational Background: +Mr. Wolf received his Bachelor of Science degree in Economics from Rollins College and Master of Business Administration degree from Crummer School of Business, Rollins College. +BOARD QUALIFICATIONS: +Mr. Wolf’s prior experience as a Chief Financial Officer, strong oil and natural gas industry background and financial acumen qualify him to serve as a director. +Guillermo (Bill) Martinez +Age: 55 +Director since: May 2021 +Business Experience: +Mr. Martinez has more than 32 years of industry experience, first joining the oil and gas industry in 1989. Currently, Mr. Martinez serves as Executive Vice President and Chief Operating Officer at Mitsui E&P USA LLC. He joined Mitsui E&P USA in 2019 as Senior Vice President of Operations to help guide Mitsui’s efforts to transform and grow its upstream operations. Previously, Mr. Martinez worked for Burlington Resources, Anadarko Petroleum and Chesapeake Energy in various leadership roles responsible for asset management and business delivery for a variety of assets including many US onshore basins, Continental Shelf, and Deepwater Gulf of Mexico . Mr. Martinez began his career with Exxon and held various operational, technical, and business roles of increasing responsibility. +Educational Background: +Mr. Martinez received his engineering degree from the University of Texas – El Paso and his Masters of Business Administration degree from Rice University in Houston. +BOARD QUALIFICATIONS: +Mr. Martinez’s strong oil and natural gas background and financial acumen qualify him to serve as a director. +8 2022 PROXY STATEMENT +ELECTION OF DIRECTORS AND DIRECTOR BIOGRAPHIES +Jason Martinez +Age: 48 +Director since: May 2021 +BUSINESS EXPERIENCE: +Mr. Martinez has had a 25 -year energy industry career, the last 19 years as an investment banker. Currently, Mr. Martinez serves as a Managing Director at Pickering Energy Partners, leading its Energy Transition Advisory practice. Over the course of his career, his client and deal work spans a dozen -plus countries and over $100bn of announced transactions, including mergers, acquisitions, divestitures, all forms of public and private capital raising, and commercial lending. Previously, he held positions at Bank of Montreal Capital Markets, Nomura Securities International, Deutsche Bank Securities, and JPMorgan Securities. At Bank of Montreal, he led the Acquisitions and Divestitures practice. He began his energy career in Andersen Consulting’s Natural Resources group. +EDUCATIONAL BACKGROUND: +Mr. Martinez received his Master of Business Administration degree from the Harvard Business School and a Bachelor of Arts degree from Rice University. +BOARD QUALIFICATIONS: +Mr. Martinez’s financial acumen and extensive private equity experience qualify him to serve as a director. +David Reganato +Age: 42 +Director since: May 2021 +Current Directorships: +Rotech Healthcare Holdings, Inc. +(since September 2013) +Studio City International Holdings +(since March 2014) +New Cotai, LLC +(since Ma rch 201 4 ) +Trident Holding Company, LLC, +(holding company of TridentCare) +(since September 2019 ) +Granite Broadcasting LLC +(since July 2011 ) +Business Experience: +Mr. Reganato has over 20 years of experience in the investment industry, including significant knowledge of the oil and gas sector. Currently, Mr. Reganato serves as a Partner with Silver Point Capital, L.P., an investment advisor, which he joined in November 2002. Prior to Silver Point Capital, L.P., Mr. Reganato worked in the investment banking division of Morgan Stanley. +Educational Background: +Mr. Reganato received his Bachelor of Science degree in Finance and Accounting from the Stern School of Business at New York University. +BOARD QUALIFICATIONS: +Mr. Reganato’s financial acumen, knowledge of the oil and natural gas sector and previous board experience qualify him to serve as a director. +2022 PROXY STATEMENT 9 +ELECTION OF DIRECTORS AND DIRECTOR BIOGRAPHIES +WHAT ARE THE COMMITTEES OF THE BOARD? +Our Board of Directors has an Audit Committee, a Compensation Committee, and a Nominating, Environmental, Social and Governance Committee. The table below summarizes committee membership as of the date of this proxy statement along with the functions each committee is responsible for performing. +AUDIT COMMITTEE +Members +David Wolf C+^ +Guillermo (Bill) Martinez + +Jason Martinez +^ +David Reganato +^ +Number of Meetings in 2021 +7 +Principal Functions +• Reviews and discusses with management and the independent auditors the integrity of our accounting policies, internal controls, financial statements, accounting and auditing processes and risk management compliance. +• Monitors and oversees our accounting, auditing and financial reporting processes generally, including the qualifications, independence and performance of the independent auditor. +• Monitors our compliance with legal and regulatory requirements. +• Monitors compliance with the Company’s Code of Business Conduct and Ethics. +• Establishes and oversees procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters, and the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters. +• Reviews and approves related party transactions. +• Appoints, determines compensation, evaluates and terminates our independent auditors. +• Pre -approves audit and permissible non -audit services to be performed by the independent auditors. +• Prepares the report required by the U.S. Securities and Exchange Commission (the “SEC”), for the inclusion in our annual proxy statement. +• Reviews and reassesses the adequacy of the Audit Committee charter on a periodic basis. +• Informs our independent auditors of the Audit Committee’s understanding of significant relationships and transactions with related parties and review and discuss with our independent auditors the auditors’ evaluation of our identification of, accounting for and disclosure of our relationships and transactions with related parties, including any significant matters arising from the audit regarding our relationships and transactions with related parties. +C Committee Chairperson. ++ Satisfies NYSE independence and other applicable independence rules for membership on such Committees. +^ Audit Committee financial expert. +10 2022 PROXY STATEMENT +ELECTION OF DIRECTORS AND DIRECTOR BIOGRAPHIES +compensation committee +Members +Jason Martinez C+ +David Wolf + +Guillermo (Bill) Martinez + +David Reganato + +Number of Meetings in 2021 +5 +Principal Functions +• Oversees and administers our executive compensation policies, plans and practices, including our stock retention guidelines, and evaluates their impact on risk and risk management. +• Assists the Board of Directors in discharging its responsibilities relating to the compensation of our executives, including our Chief Executive Officer, and other key employees. +• Administers our equity -based compensation plans, including the grants of stock options, restricted stock awards and other equity awards under such plans. +• Reviews, approves and administers our cash -based incentive bonus plans, including the establishment of performance criteria, targets and awards under our 2021 Executive Annual Incentive Compensation Plan. +• Makes recommendations to the Board with respect to incentive compensation. +• Where appropriate or required, makes recommendations to our stockholders with respect to incentive compensation and equity -based plans. +• Conducts annual performance evaluation of the Committee. +• Reviews disclosure related to executive compensation in our proxy statement and prepares an annual Compensation Committee report. +• Reviews and considers the stockholders’ advisory vote on executive compensation and the frequency of holding such advisory vote. +• Reviews and reassesses the adequacy of the Compensation Committee charter. +C Committee Chairperson. ++ Satisfies NYSE independence and other applicable independence rules for membership on such Committees. +2022 PROXY STATEMENT 11 +ELECTION OF DIRECTORS AND DIRECTOR BIOGRAPHIES +NOMINATING, ENVIRONMENTAL, SOCIAL AND GOVERNANCE COMMITTEE (1) +Members +Guillermo (Bill) Martinez C+ +David Wolf + +Jason Martinez + +David Reganato + +Number of Meetings in 2021 +3 +Principal Functions +• Assists the Board of Directors in developing criteria for, identifying and evaluating individuals qualified to serve as members of our Board of Directors. +• Selects and recommends director candidates to the Board of Directors to be submitted for election at each annual meeting of stockholders and to fill any vacancies on the Board of Directors. +• Periodically reviews and makes recommendations regarding the composition and size of the Board of Directors and its Committees. +• Reviews and recommends to the Board of Directors appropriate corporate governance guidelines and procedures for the Company. +• Conducts an annual assessment of the qualifications and performance of the Board of Directors. +• Reviews and reports to the Board of Directors on the performance of management annually. +• Reviews the development and leadership capabilities of the executive officers and management’s succession process. +• Reviews and makes recommendations to our Board of Directors regarding the health, safety and environmental protection, and corporate responsibility matters, including governmental relations, political contributions and corporate philanthropy, which we refer to as HSE and corporate responsibility matters, and their impact on our business and operations. +• Monitors and evaluates management’s actions with respect to HSE and corporate responsibility matters. +• Reviews reports from our management, consultants or other advisors regarding (i) our performance with respect to HSE and corporate responsibility matters and compliance with any related laws and regulations applicable to us, (ii) any significant litigation relating to HSE and corporate responsibility matters involving our Company, and (iii) any significant legislation or regulations, judicial decisions, treaties, protocols, conventions or other agreements, public policies or other scientific, medical or technological developments involving HSE and corporate responsibility matters that will or may have a material effect on our business and operations. +• Reviews the risks and exposures relating to HSE and corporate responsibility matters, including mitigation and remedial actions. +• Reviews crisis management planning procedures relating to HSE and corporate responsibility matters. +• Conducts investigations or studies affecting Gulfport as they pertain to HSE and corporate responsibility matters. +• Reviews the effectiveness of internal systems and controls necessary to ensure our compliance with applicable health, safety and environmental laws, rules and regulations. +• Reviews our compliance with industry practices in the areas of health, safety and environmental protection. +• Reviews our political, charitable and educational contributions/programs and the administration of any political action or similar Committees of our employees. +• Oversees the policies and practices promoting diversity and inclusion within the Company and the Company’s human and workplace rights and policies. +• Reviews and provides guidance on public policy advocacy efforts to confirm alignment with Company policies and values. +• Reviews and reassesses the adequacy of the Nominating, Environmental, Social and Governance Committee charter. +C Committee Chairperson. ++ Satisfies NYSE independence and other applicable independence rules for membership on such Committees. +(1) This Committee was formed in May 2021 and combined Nominating and Sustainability Committee responsibilities. +12 2022 PROXY STATEMENT +ELECTION OF DIRECTORS AND DIRECTOR BIOGRAPHIES +DO THE COMMITTEES HAVE WRITTEN CHARTERS? +Yes. The charters for each Committee can be found on our website at www.gulfportenergy.com under the “Investors — Governance” captions. You may also obtain copies of these charters, as well as our Code of Business Conduct and Ethics, which is described below, by writing to our Chief Legal and Administrative Officer and Corporate Secretary, Patrick K. Craine, at Gulfport Energy Corporation, 3001 Quail Springs Parkway, Oklahoma City, Oklahoma 73134. +2022 PROXY STATEMENT 13 +CORPORATE GOVERNANCE MATTERS AND +COMMUNICATIONS WITH THE BOAR D +WHO ARE OUR INDEPENDENT DIRECTORS? +Our Board of Directors has determined that four of our five current Board members (David Wolf, Guillermo (Bill) Martinez, Jason Martinez and David Reganato) meet the independence requirements in the NYSE listing standards and are free of any relationship that, in the opinion of our Board of Directors, would interfere with the exercise of independent judgment in carrying out their responsibilities as directors of the Company. Mr. Cutt, our Chairman and Chief Executive Officer, is not considered by the Board of Directors to be an independent director because of his current employment with the Company. +Prior to the Company’s emergence from Chapter 11 in May 2021, the Company’s Board of Directors consisted of David M. Wood, Alvin Bledsoe, Deborah G. Adams, Samantha Holroyd, Valerie Jochen, C. Doug Johnson, Ben T. Morris and John W. Somerhalder. On April 30, 2021, the then -current Board of Directors affirmatively determined that Alvin Bledsoe, Deborah G. Adams, Samantha Holroyd, Valerie Jochen, C. Doug Johnson, Ben T. Morris and John W. Somerhalder were independent. +Annual Board Self -Assessment Process +Board and Committee Evaluations +Director Performance Evaluations +How often did the Board of Directors meet in 2021? +The Board of Directors met 20 times in 2021. In addition to these meetings, the Board of Directors adopted resolutions by unanimous written consent. Each director attended at least 99% of the aggregate meetings of the Board of Directors and the meetings of the Committees on which he served. During the bankruptcy process, the Company did not hold an Annual Meeting in 2021. +Do our non -management directors meet separately without management? +Our non -management directors routinely meet in an executive session following each regularly scheduled meeting of the Board of Directors. +14 2022 PROXY STATEMENT +CORPORATE GOVERNANCE MATTERS AND COMMUNICATIONS WITH THE BOARD +How can I communicate with the Board of Directors? +Individuals may communicate with our Board of Directors or individual directors by writing to our Chief Legal and Administrative Officer and Corporate Secretary, Patrick K. Craine, at Gulfport Energy Corporation, 3001 Quail Springs Parkway, Oklahoma City, Oklahoma 73134. Our Chief Legal and Administrative Officer and Corporate Secretary will review all correspondence and forward our Board of Directors correspondence that, in the opinion of our Chief Legal and Administrative Officer and Corporate Secretary, relates to the function of our Board of Directors or a Board Committee or otherwise requires their attention. Directors may review a log of all correspondence received by us and request copies. Concerns relating to accounting, internal control over financial reporting or auditing matters will be immediately brought to the attention of the chairman of the Audit Committee and handled in accordance with our Audit Committee’s procedures. +WILL directors attend the Annual Meeting? +Recognizing that director attendance at our Annual Meeting can provide stockholders an opportunity to communicate with directors about issues affecting the Company, we actively encourage our directors to attend the Annual Meeting of Stockholders. +Code of Business Conduct and Ethics +We have adopted a Code of Business Conduct and Ethics designed to help directors and employees resolve ethical issues. Our Code of Business Conduct and Ethics applies to all directors and employees. Our Code of Business Conduct and Ethics covers various topics including, but not limited to, conflicts of interest, fair dealing, discrimination and harassment, confidentiality, compliance procedures and employee complaint procedures. Our Code of Business Conduct and Ethics, together with any amendments or waivers, is posted on our website at www.gulfportenergy.com under the “Investors – Governance” captions. +Political Contribution Policy +Engagement in the political, legislative and regulatory process is important to the success of the Company. The Company has delegated compliance and oversight over this function to the Nominating, Environmental, Social and Governance Committee and has adopted a political contributions and activity policy that sets forth the ways by which the Company and its employees may participate in the political, legislative and regulatory process. All political contributions and activities are subject to compliance with applicable laws. +2022 PROXY STATEMENT 15 +NOMINATING PROCESS FOR DIRECTORS, DIRECTOR +QUALIFICATIONS AND REVIEW OF DIRECTOR NOMINEE S +Director Qualifications +As provided by the Nominating, Environmental, Social and Governance Committee’s charter, the Committee identifies, investigates and recommends candidates to our Board of Directors with the goal of creating a balance of knowledge, experience and diversity. The Committee identifies candidates using third -party search firms, as well as through the extensive networks of our directors and management team in the oil and natural gas industry. +It is our policy that potential directors should possess the highest personal and professional ethics, integrity and values and be committed to representing the interests of our stockholders. In addition to reviewing a candidate’s background and accomplishments, candidates are reviewed in the context of the current composition of our Board of Directors, the skills necessary to provide effective oversight in critical areas and the evolving needs of our business. It is the policy of our Board of Directors that, at all times, at least a majority of its members meets the standards of independence promulgated by the NYSE and the SEC and that all members reflect a range of talents, skills and expertise, particularly in the areas of accounting and finance, management, leadership and oil and gas -related industries sufficient to provide sound and prudent guidance with respect to our operations and the interests of our stockholders. +Board Diversity Policy +Our Nominating, Environmental, Social and Governance Committee is dedicated to diversity and adopted a Board Diversity Policy in November 2019. The policy requires that the Nominating, Environmental, Social and Governance Committee consider diversity in its evaluation of candidates for Board membership. Our Nominating, Environmental, Social and Governance Committee, in accordance with its charter, seeks to include diverse candidates in all director searches, taking into account diversity of gender, race, ethnicity, background, age, thought and tenure on our Board (in connection with the consideration of the renomination of an existing director), including by affirmatively instructing any search firm retained to assist the Nominating, Environmental, Social and Governance Committee in identifying director candidates to include diverse candidates from traditional and non - traditional candidate groups. In accordance with its charter, our Nominating, Environmental, Social and Governance Committee periodically reviews and makes recommendations regarding the composition of the Board and the size of the Board. +We also require that the members of our Board of Directors be able to dedicate the time and resources sufficient to ensure the diligent performance of their duties on our behalf, including attending meetings of the Board of Directors and applicable Committee meetings. In accordance with its charter, our Nominating, Environmental, Social and Governance Committee periodically reviews the criteria for the selection of directors to serve on our Board and recommends any proposed changes to our Board of Directors for approval. +Nomination Process +Our Board of Directors will consider stockholder nominations for director candidates upon written submission to our Chief Legal and Administrative Officer and Corporate Secretary along with, among other things, the nominee’s qualifications and certain biographical information regarding the nominee, the nominee’s written consent to serving as a director if elected and being named in the proxy or information statement and information regarding the status of the stockholder submitting the recommendation, all in the manner required by the Second Amended and Restated Bylaws of the Company (the “Bylaws”) and the applicable rules and regulations promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Following verification of the stockholder status of persons proposing candidates, recommendations will be aggregated and considered by our Board of Directors at a regularly scheduled or special Board meeting. If any materials are provided by a stockholder in connection with the nomination of a director candidate, materials will be forwarded to our Board of Directors. See “Submission of Future Stockholder Proposals” below for additional detail regarding submitting director nominees. +16 2022 PROXY STATEMENT +NOMINATING PROCESS FOR DIRECTORS, DIRECTOR QUALIFICATIONS AND REVIEW OF DIRECTOR NOMINEES +Our Board of Directors may also review materials provided by professional search firms or other parties in connection with a nominee who is not proposed by a stockholder. In evaluating nominations, our Board of Directors will seek to achieve a balance of knowledge, experience and diversity on the Board. To be nominated to serve as a director, a nominee need not meet any specific minimum criteria. Our Board of Directors uses the same criteria for evaluating candidates nominated by stockholders as it does for those proposed by current Board members, professional search firms and other people. After completing its evaluation, our Board of Directors approves the final slate of director nominees. +Our Nominating, Environmental, Social and Governance Committee approved the director nominees submitted for election at the Annual Meeting. Each nominee brings a strong and unique background and set of skills to our Board of Directors, giving our Board of Directors competence and experience in a variety of areas, including corporate governance and Board service, executive management, the oil and natural gas industry, accounting and finance and risk assessment and management. +2022 PROXY STATEMENT 17 +DIRECTOR LEADERSHIP STRUCTUR E +Chairman +Historically, the Board of Directors’ leadership structure has separated the CEO and Chairman of the Board positions. However, due to Mr. Wood’s departure as our CEO mid -2021 , Mr. Cutt was appointed Interim CEO in addition to his role as Chairman at the time of emergence from our restructuring process. In September 2021, the Board appointed Mr. Cutt as CEO on a permanent basis in addition to his role as Chairman. The Board does not have a fixed policy regarding the separation of the offices of Chairman of the Board and CEO and believes that a Chairman who understands Gulfport’s day -to-day business and the important issues to be addressed by the Board is currently in the best interest of the Company and its stockholders. +Lead Independent Director +The Board has appointed Mr. Wolf to serve as lead director with responsibilities typically performed by an independent Chairman, including acting as chair at meetings of the Board of Directors when the Chairman is not present and preparing the agenda and presiding over executive sessions of the non -management directors of the Board of Directors. +Directors +We believe that our directors bring a broad range of leadership experience to the boardroom and regularly contribute to the thoughtful discussion involved in effectively overseeing the business and affairs of the Company. We believe that the atmosphere of our Board is collegial, that all Board members are well engaged in their responsibilities and that all Board members express their views and consider the opinions expressed by other directors. Four out of five director nominees are independent under NYSE listing standards and SEC rules. We believe that our independent directors have demonstrated leadership in business enterprises and are familiar with Board processes. Our independent directors are involved in the leadership structure of our Board by serving on our Audit, Nominating, Environmental, Social and Governance and Compensation Committees, comprised entirely of independent directors and each having an independent chairperson. +Committee Chairs +Specifically, our Audit Committee Chair oversees the accounting and financial reporting processes and compliance with legal and regulatory requirements. Our Compensation Committee Chair oversees our compensation policies and practices and their impact on risk and risk management. The Chair of our Nominating, Environmental, Social and Governance Committee oversees our practices relating to health, safety and environmental protection, as well as social and governance matters. Our Nominating, Environmental, Social and Governance Committee Chair also monitors matters related to Board and Committee composition, Board performance and best practices in corporate governance. Each Committee Chair provides independent leadership for purposes of many important functions delegated by our Board of Directors to such Committee. +18 2022 PROXY STATEMENT +BOARD OF DIRECTORS’ ROLE IN RISK OVERSIGH T +While our management team is responsible for the day -to -day management of risks, the Board of Directors has primary responsibility for risk oversight. Boards typically exercise this oversight during regular Board meetings, but our Board of Directors also maintains constant and open dialogue with management and reviews and monitors key processes. As a result, they are better able to respond to emerging risks and to influence our strategy to address those risks. +While our Board of Directors is ultimately responsible for risk oversight at the Company, our three Committees assist the Board in fulfilling its oversight responsibilities in the areas of risk below: +Committee +Risk Areas of Focus +Audit +• Financial Reporting +• Internal Controls +• Legal Compliance +• Regulatory Compliance +• Reserves Reporting +• Risk Management +Compensation +• Compensation Policies +• Executive Performance +Nominating, Environmental, Social and Governance +• Board Organization +• Membership +• Structure +• Succession Planning +• Corporate Governance +• Environment +• Public Health +• Government Relations +• Political Contributions +2022 PROXY STATEMENT 19 +EXECUTIVE OFFICER S +The following table sets forth the name, age, positions and business experience of each of our executive officers (other than Timothy J. Cutt, who also serves as a member of our Board and who is listed under “Election of Directors and Director Biographies”): +NAME +POSITIONS AND EXPERIENCE +William J. Buese +Age: 50 +Executive Vice President, Chief Financial Officer since May 2021 +Prior to joining the Company, Mr. Buese served as Vice President, Chief Financial Officer and Treasurer of QEP Resources from January 2020 to March 2021. He joined QEP Resources in 2012 and held positions of increasing responsibility over a nine -year period, including Vice President of Finance and Treasurer and Director of Finance. Prior to joining QEP, Mr. Buese was Director of Finance at MarkWest Energy Partners, LP and served in various finance, treasury, accounting and investor relations roles from 2005 to 2012. Mr. Buese has over 16 years of financial expertise in the energy industry and more than 25 years of financial experience overall. Mr. Buese received his Bachelor of Arts degree in Accounting from Michigan State University and Master of Science degree in Information Systems from the University of Colorado Denver. +Patrick K. Craine +Age: 50 +Executive Vice President, Chief Legal and Administrative Officer since June 2021 +Mr. Craine joined Gulfport as Executive Vice President, General Counsel and Corporate Secretary in May 2019. Mr. Craine has over 2 5 years of extensive senior -level experience handling a broad range of securities, corporate, regulatory, governance, compliance and litigation matters, with particular expertise in the energy industry. He joined Gulfport from Chesapeake Energy Corporation (NYSE: CHK) (“Chesapeake”), a hydrocarbon exploration company, where he served as Deputy General Counsel – Chief Risk and Compliance Officer from 2013 until 2019. Prior to joining Chesapeake, Mr. Craine was a partner with Bracewell LLP, a global law firm, where his practice focused on securities and corporate regulatory matters and investigations. Before Mr. Craine entered private practice, he served as a lawyer with the SEC and the Financial Industry Regulatory Authority, where he held leadership positions in their Oil and Gas Task Forces. Mr. Craine received his Bachelor of Arts degree, summa cum laude, Phi Beta Kappa, from Wabash College, and his Juris Doctorate, cum laude, from the Southern Methodist University Dedman School of Law. +Michael J. Sluiter +Age: 4 9 +Senior Vice President, Reservoir Engineer since December 2018 +Mr. Sluiter joined Gulfport from Noble Energy, Inc., where he held various engineering positions from January 2012 to November 2018, including, most recently, as the Permian Basin Business Unit Manager. Mr. Sluiter has over 17 years of experience in unconventional resource development, reservoir engineering, subsurface development, business development and acquisitions, as well as leadership skills, which he developed at Noble Energy, Santos Australia and Santos USA. Mr. Sluiter began his career as a wireline field services engineer for Schlumberger in Thailand. Mr. Sluiter received a Bachelor of Science degree in Chemical Engineering from the University of Sydney, Australia. +Robert J. Moses +Age: 42 +Senior Vice President, Operations and Drilling since March 2020 +Mr. Moses joined Gulfport as the Vice President of Operations, Appalachia in August 2019. Prior to joining the Company, Mr. Moses spent over 15 years at Noble Energy, Inc., where he most recently served as a Director of Operations for Noble’s Eagle Ford and Denver -Julesburg (DJ) business units, managing approximately one -third of Noble’s total production at the time. Prior to that, he held various leadership roles including Operations Manager for Noble’s Marcellus business unit along with several international roles including Asset Manager for the Tamar asset (offshore Israel), Project Manager for West Africa subsea development and Lead Reservoir Engineer for West Africa. In addition, Mr. Moses served as a Senior Financial Analyst in the International division and spent four years as an international drilling and completion engineer for Noble. Mr. Moses received a Bachelor of Science degree in Petroleum Engineering from Texas A&M University and a Master of Business Administration degree from Texas Christian University. +20 2022 PROXY STATEMENT +COMPENSATION DISCUSSION AND ANALYSI S +Letter from the Compensation Committee Chair +Our new Board and Compensation Committee provided new perspectives and ideas . In May 2021, we emerged from bankruptcy with a newly constituted Board and a new Interim Chief Executive Officer and Chief Financial Officer. Upon emergence, the members of the New Compensation Committee included Mr. J. Martinez, Mr. G. Martinez, Mr. Reganato and Mr. Wolf. The Compensation Committee performed an in -depth review of the Company’s executive compensation plans which included an assessment of peer groups, total compensation philosophy, equity usage and appropriate incentive metrics and governance practices while reflecting on the feedback of our stockholders received during the course of our emergence and stockholder engagement efforts. +While Gulfport Energy adopted certain pay practices and strategies during the bankruptcy process, these steps allowed the Company to retain key executive talent and provided an opportunity to focus leadership’s efforts on delivering solid results for 2021 for both the stockholders and Gulfport Energy employees, and to establish a platform for our future success. +The Compensation Committee also understood the need to properly align executives and stockholders upon emergence from bankruptcy, and we are confident that as you read through this Compensation Discussion and Analysis you will understand that these steps were necessary and in the best interest of both the stockholders and Gulfport Energy executives and employees. We also want to share our commitment to executive compensation practices that are in -line with industry best practices going forward in the areas of base pay, incentive pay and equity awards. We consider 2021 to be the end of operating under a distressed company model. +We would expect that on a go - forward basis we will continue to benchmark our pay against similar companies in terms of structure and practices. We will also continue to work very closely with our stockholders on their views on pay for performance and alignment on executive compensation. +Thank you for your confidence and investment in Gulfport Energy. +Respectfully submitted by the Compensation Committee, +Jason Martinez, Chair +Guillermo (Bill) Martinez +David Reganato +David Wolf +Dated: May 2, 2022 +2022 PROXY STATEMENT 21 +COMPENSATION DISCUSSION AND ANALYSIS +This Compensation Discussion and Analysis, or CD&A, explains the Compensation Committee’s compensation philosophy, summarizes our executive compensation programs and describes compensation decisions for Gulfport’s Chief Executive Officer, or CEO, Chief Financial Officer, or CFO, the next three highest paid executive officers for 2021 and three former executive officers who departed from the Company during 2021. These executive officers, known as our NEOs, are as follows: +Timothy J. Cutt +Chief Executive Officer and Chairman of the Board +William J. Buese +Executive Vice President, Chief Financial Officer +Patrick K. Craine +Executive Vice President, Chief Legal and Administrative Officer and Corporate Secretary +Michael J. Sluiter +Senior Vice President of Reservoir Engineering +Robert J. Moses +Senior Vice President of Operations and Drilling +David M. Wood +Former Chief Executive Officer and President +Quentin R. Hicks +Former Executive Vice President, Chief Financial Officer +Donnie G. Moore +Former Executive Vice President, Chief Operating Officer +22 2022 PROXY STATEMENT +EXECUTIVE SUMMAR Y +Gulfport 2021 Business Performance Highlights +Through our restructuring we were able to emerge with a strengthened balance sheet and materially improved fixed -cost structure. Gulfport is beginning this new chapter with a strategy focused on continuing to reduce costs and generating sustainable free cash flow to drive stockholder value. +Key accomplishments in 2021 included: +Strategic +• Emerged from restructuring process on May 17, 2021 with an improved balance sheet and fixed -cost structure; +• Right -sized firm transportation commitments and negotiated new, cost -competitive midstream agreements to better align with our operating plan; +• Reduced our total debt by more than $1.4 billion and materially reduced annual cash interest expense; and +• Significantly improved our leverage ratios. +Financial +• Amended and refinanced our Exit Credit Facility with a New Credit Facility, increasing our elected commitment from $580 million to $700 million and our liquidity by more than $160 million; and +• Reduced total per unit expense, which includes lease operating expense, midstream transportation, gathering and processing expense, taxes other than income, recurring general and administrative expense and interest by approximately 20% when compared to 2020. +Operational +• Delivered total net production 2% above and capital expenditures 2% below the midpoint of original 2021 guidance; and +• Reported year -end estimated net proved reserves of 3.9 Tcfe and total discounted future net cash flows of $4.1 billion. +Health, Safety & Environmental +• Launched monthly vendor safety meetings ; +• Developed and delivered a Supervisor’s Work Safe Program training for our leaders to guide them in leading safety -related conversations, meetings, and performance discussions ; and +• Created a new program called Work Green with three focus areas – air, land, and water – to highlight and emphasize our commitment to being environmental stewards in the communities where we operate . +Corporate Social Responsibility +• Partnered with Dolly Parton’s Imagination Library in Ohio to provide books to more than 3,750 children in Belmont, Jefferson and Monroe Counties; +• Participated in partnerships with the American Heart Association and the Oklahoma City Energy FC Sidekicks; and +• Completed environmental volunteer efforts in Ohio and Oklahoma, planting trees and river remediation efforts to highlight the launch of Gulfport’s Work Green program. +2022 PROXY STATEMENT 23 +EXECUTIVE SUMMARY +Key 2021 Executive Compensation Actions +In consideration of our long -term strategy and stockholder feedback following a robust program of engagement (see “Stockholder Engagement and Annual Say -on -Pay Advisory Vote” below), the Company took the following actions in 2021: +• Upon emergence, on May 17, 2021, the Board of Directors appointed Timothy J. Cutt as Interim Chief Executive Officer and Chair of the Board and William Buese as Chief Financial Officer. On September 2, 2021, Mr. Cutt assumed the role of Chief Executive Officer and Chairman of the Board. +• Existing employment agreements with Messrs. Craine, Sluiter and Moses were affirmed through the bankruptcy. The Company entered into an employment agreement with Mr. Buese upon his hire as Chief Financial Officer on May 17, 2021. +• Implemented key changes to the Company’s equity award structure in 2021: +• Certain of our executives received a grant of post -emergence equity awards consisting of 60% performance -based restricted stock units that vest after a three -year performance period and 40% time -based restricted stock units that vest in three equal installments over a three -year period; +• Pursuant to his offer letter, Mr. Cutt received a grant of post -emergence equity awards consisting of 50% performance -based restricted stock units that vest after a three -year performance period and 50% time - based restricted stock units that vest in eight equal bi -annual installments over a four -year period; and +• These performance -based restricted stock units include targets for both absolute total shareholder return, or TSR, and relative TSR as measured against a peer group of companies, to ensure shareholder alignment. +• Established annual performance bonus opportunities and long -term equity award targets to closely align our NEOs’ financial interests with those of our stockholders and to continue to link a larger portion of such NEOs’ compensation to the performance of our stock and operational performance. +• Selected metrics in our annual incentive plan to include financial metrics directly tied to the financial health of the Company and specific and quantifiable health, safety and environmental metrics: +• Achievement of pre -emergence and post -emergence short -term incentive plan key performance indicators (“KPIs”) exceeded pre -set targets. +• Continued to provide robust disclosure of our performance metrics and targets for both performance -based cash and equity awards. +• Reaffirmed formal stock ownership guidelines to ensure our Board of Directors and executive officers own a stake in the Company that is sufficient to align their interests with their fellow stockholders. +24 2022 PROXY STATEMENT +EXECUTIVE SUMMARY +The Compensation Committee will continue to consider the feedback from our stockholders when making compensation decisions for our NEOs. +Practices We Follow + +Incentives Aligned with Stockholders . All post -emergence long -term equity incentive awards granted in 2021 were in the form of either time -based or performance -based restricted stock units , and the performance -based restricted stock units vest based on absolute and relative TSR metric s tied to share price , further aligning management with stockholders. + +NEO pay is at -risk . The majority of our post -emergence executive compensation is conditioned on achievement of pre -determined operational, capital efficiency and safety and environmental targets , as well as absolute TSR and relative TSR metric s measured against a broad peer group. + +Performance -based awards are prevalent. Upon emergence, 60% of the NEOs’ equity incentive awards ( 50% for the CEO) consisted of performance -based equity awards that vest based on absolute and relative TSR metrics measured over a three -year performance period. + +Robust disclosure of our performance metrics and targets. We provide detailed disclosure of our performance metrics in our CD&A. + +Balanced approach to executive compensation. We view the combination of long -term , short -term and equity and cash compensation, prioritizing long -term equity compensation and focusing on performance -based equity and cash compensation when analyzing total compensation plans. + +Ownership guidelines. Reaffirmed robust stock -ownership guidelines for directors and executive officers. + +Risk Management. We perform annual enterprise risk assessments to ensure our use of incentive metrics doesn’t add undue risk to the business. + +Clawback and recoupment processes. We maintain a c lawback policy that allows us to recover incentive compensation in certain circumstances . + +Executive Compensation best practices. The Compensation Committee uses an independent compensation consulting firm to provide input into our executive compensation programs. +Practices We Prohibit +û +Minimum bonuses or guarantees. The Company does not guarantee minimum bonuses and relies on target achievement to determine annual bonus payments. +û +Single -trigger vesting of equity awards. The Company does not allow for single -trigger vesting of equity awards in connection with a change of control. +û +Providing tax gross -ups . No tax gross -up payments have been provided to our NEOs. +û +Hedging or pledging Gulfport Energy Stock. The Company does not allow hedging or pledging of Gulfport securities by our NEOs or directors. +û +Liberal share recycling. We do not allow liberal share recycling in our stock incentive plan. +û +Holding Gulfport Energy stock in a margin account. The Company does not allow securities to be held in a margin account by our NEOs or directors. +û +Excessive perquisites or executive benefits plans. No pension, supplemental executive retirement plan or other excessive perquisite plans are made available to our NEOs. +û +Repricing of Stock Options. The Company did not grant stock options in 2021, currently has no plans to grant stock options in the future and would not reprice any outstanding stock options that might be outstanding. +2022 PROXY STATEMENT 25 +EXECUTIVE SUMMARY +Compensation Aligned with Performance +The Compensation Committee believes that executive compensation should be designed to deliver competitive pay when performance targets are achieved. Most of the executive compensation should be at -risk and when business results exceed targets, executives should share in those rewards based on their efforts. If the Company does not achieve established performance metrics, the executive team should receive pay that reflects that lower achievement. We believe this pay for performance alignment is working as realized pay for 2021 was above target levels due to exceeding pre - set performance thresholds. +The target total direct compensation of our NEO’s under the pre -emergen ce portion of 2021 was largely fixed in 2020 and consisted of base pay and short -term incentive targets established in 2020. No long -term incentive awards were issued to our NEOs until post -emergence grants were made in July of 2021. Since our emergence, the majority of our current NEOs total compensation is dependent on the successful achievement of company results as measured by either short -term incentive plan metric achievement or achievement of performance measures and stock price appreciation of the Company’s common stock. While the post -emergence period only covered August through December of 2021, we are comfortable that both the overachievement of short -term incentive metrics and the appreciation in the Company’s common stock share price during that time were properly aligned and expect that alignment to continue. The target total direct compensation of our NEOs is largely influenced by pay -at -risk or variable compensation, tying the pay of the executive to the Company’s performance and share price of the Company’s common stock. +Stockholder Engagement and Annual Say -On-Pay Advisory Vote +The Compensation Committee is committed to engaging with our stockholders and learning their expectations for executive compensation, corporate governance and safety, environmental and other social responsibility matters at Gulfport Energy. Although the Company did not hold a Say - On - Pay vote in 2021 due to the restructuring process, the Company did consider the results of the last vote held in 2020 and remains committed to meeting with stockholders to solicit feedback on our executive compensation practices and did so following emergence. Based on the results of the Company’s last advisory vote on the frequency of future Say - O n -Pay votes at the Company, also known as a say - on - frequency vote, the Company will continue to hold annual Say -On -Pay votes until the Company’s next say - on - frequency vote in 2023. +Since emergence, the Company held discussions with stockholders representing approximately 70% of shares outstanding. Through these conversations, our stockholders emphasized their expectation that management should be focused on driving results that deliver stockholder value. Our stockholders agree that executives should not be paid at target levels unless financial targets are achieved and expressed a desire to see specific and measurable targets for the year. Stockholders also expressed a desire for executives to have exposure to the absolute return of the Company’s common stock without regard to broader market fluctuation. As a result, changes were made to the performance -based restricted stock unit payout matrix upon emergence to incorporate this concept. In addition, an increasing number of stockholders showed continued interest in Gulfport’s environmental, social, and governance practices. +After carefully considering input from stockholders, the Company took the following actions in 2021: +• Granted performance -based equity awards in the form of performance -based restricted stock units tied to absolute and relative TSR, vesting over a three -year performance period, comprising at least 60% of all the equity awards granted to our NEOs (50% for the CEO) in July 2021; +• Adjusted post -emergence short -term incentive opportunities and long -term equity award targets to more closely align our NEOs’ financial interests with those of our stockholders and to continue to link a larger portion of NEOs’ compensation to our operational and share price performance; +• Provided robust disclosure of our performance metrics and targets for both performance -based cash and equity awards; and +• Utilized metrics in the pre- and post -emergence annual incentive plan s to include financial metrics directly tied to the financial health of the Company and including specific and quantifiable health, safety and environmental metrics. +The Compensation Committee will continue to consider the feedback from our stockholders when making compensation decisions for our NEOs. +26 2022 PROXY STATEMENT +EXECUTIVE SUMMARY +EXECUTIVE COMPENSATION PHILOSOPHY AND COMPONENTS +Philosophy and Objectives +Our executive compensation philosophy post -emergence is guided by the following objectives: +EXECUTIVE COMPENSATION +Alignment with +Stockholder Interests +By providing the majority of compensation in long -term equity awards, stressing pay for performance, managing dilution to our stockholders and encouraging an ownership culture, we aim to align the interests of our executives with those of our stockholders. +Pay for Performance +The Company is focused on rewarding performance by creating incentive awards based on achievement of pre -set targets and performance factors. A significant portion of our NEOs’ compensation is delivered in long -term incentives, making our NEOs’ realized total direct compensation heavily dependent upon Company performance and stock price. +Competitive +Compensation +The Company believes it is imperative to maintain compensation programs competitive with our peer group to attract, retain and motivate executives and our future leaders in a way that is in line with the compensation of executive positions at similar companies. +Our executive compensation programs play an important role in helping us achieve our business objectives and effectively reward executive officers for our Company’s annual and long -term performance and individual contributions to performance. +Overview of Post-emergence NEO Total Direct Compensation Components for 2021 +Pay Element +Vehicle +Philosophy +Long-Term Incentives +• Performance -Based Restricted Stock Units +• Performance -based restricted stock units that are tied to total shareholder return over a performance period that aligns stockholders and executive interests, providing an additional reward opportunity for the executive when absolute and/or relative returns exceed those of our peer group. +• Time - Based Restricted Stock Units +• Time - based r estricted stock unit grants that vest in equal annual installments over 3 years , or in the case of our CEO, in eight bi -annual installments over 4 years . If the executive remains with the Company, the executive experiences either increased or decreased pay levels based on the performance of the stock price as the executive is fully aligned with the return of the Company’s stock. +Short-Term Incentive +• Annual incentive opportunity to earn a percentage of base pay based on annual operating objectives +• Provides incentive opportunities that are aligned with the approximate median opportunity of our peer group when performance targets are achieved. When targets are exceeded, the executive should be rewarded for their efforts with pay that exceeds the median of the peer group. When targets are not achieved, the executive should earn pay levels below the median of the peer group. +Base Pay +• Base p ay rates that are reviewed annually and subject to Compensation Committee recommendations +• Provide fixed base salaries that are competitive at the approximate median of our peer group. Base pay should allow the Company to provide market competitive pay for the primary duties associated with the role of the executive. +Benefits +• Health, d ental and v ision i nsurance available to all employees. 401K program, vacation policy and disability plans to provide income replacement due to long -term or short -term illness +• Provide core health, welfare and retirement savings plans for executives. Provide substantially the same programs for all employees with minimal executive perquisites. +2022 PROXY STATEMENT 27 +EXECUTIVE SUMMARY +As part of our post -emergence executive compensation philosophy, the Compensation Committee places a significant portion of NEO pay at risk, with the largest single component of pay in the form of long -term equity awards, which for 2021 consisted of performance -based and time - based restricted stock units. +Determining our Executive Compensation +Benchmarking Against Our Compensation Peer Group +Gulfport utilizes a peer group of companies, or the Compensation Peer Group, as a reference point when establishing both compensation levels for NEOs as well as program structures, to achieve competitiveness in the market. +2021 Compensation Peer Group +The compensation committee engaged its independent consultant, WTW, formerly Willis Towers Watson, to establish the appropriate peer group for executive compensation for 2021. Potential peers were identified using revenue, primary business, equity value/debt ratio, other relevant financial metrics (EBITDA, market capitalization, assets, net income, etc.), gas weighting and the number of operations/regions. Upon review and analysis of potential peers using these criteria, the peers below were identified as both suitable and relevant to comprise the Company’s 2021 peer group. The revision of the Compensation Peer Group resulted in relative alignment of Gulfport’s key metrics at the time the peer group was established. +In general, and consistent with a performance -based compensation philosophy, the Compensation Committee seeks to establish executive base pay within a competitive range of the appropriate peer group median, with an opportunity to earn greater overall compensation in the event it is warranted by our performance. The exact level of targeted compensation for each NEO varies based on the individual’s role in Gulfport, experience, and contribution to our success. For benchmarking purposes, the Compensation Committee compares the total compensation for each NEO position to the compensation paid for similar positions by companies in our Peer Group, as set forth in those companies’ proxy statements for the prior year. WTW proposes companies to be included in the Compensation Peer Group and the methodology for selecting that peer group and may consult with management to confirm that the most appropriate companies are selected. The Compensation Committee then reviews and, as it may deem appropriate, approves the Compensation Peer Group for the applicable compensation year. The companies identified were at their time of selection, in the view of the Compensation Committee the best and most appropriate companies for benchmarking compensation within our industry. The Compensation Committee will continue to review and monitor the Compensation Peer Group on an annual basis and select peers based on appropriate screening criteria, metrics and competition for executive talent. The Compensation Committee also uses industry -specific survey data as an additional reference point to assist in the compensation decisions making process. +2021 Compensation Peer Group +Berry Petroleum Corporation +Centennial Resource Development, Inc. +Comstock Resources, Inc. +Laredo Petroleum, Inc. +Murphy Oil Corporation +SM Energy Company +Cabot Oil & Gas, Inc. +Cimarex Energy Co. +EQT Corporation +Magnolia Oil and Gas Corporation +PDC Energy, Inc. +Southwestern Energy Company +Callon Petroleum Company +CNX Resources Corporation +Extraction Oil and Gas, Inc. +Matador Resources Company +Range Resources Corporation +Talos Energy Inc. +PROCESS FOR DETERMINING EXECUTIVE COMPENSATION +The Compensation Committee of our Board of Directors oversees our compensation programs for executive officers and all employees. From January 1, 2021 until May 16, 2021, the Compensation Committee was comprised of Ben T. Morris (Chair), Deborah G. Adams and John Somerhalder, all of whom were independent directors (the “Former Compensation Committee”). Beginning May 17, 2021, the Compensation Committee was comprised of Jason Martinez (Chair), David Reganato, David Wolf, and Guillermo (Bill) Martinez (the “New Compensation Committee”). All members of the Compensation Committee are independent directors. +28 2022 PROXY STATEMENT +EXECUTIVE SUMMARY +The Role of Our Compensation Committee +The Compensation Committee generally reviews and typically makes its decisions regarding the annual compensation of our NEOs at its regular meetings in the first half of each year. These decisions include: +• Certifying annual performance -based cash incentive awards; +• Establishing target incentive opportunities and applicable performance objectives for the current year’s annual cash incentive awards; +• Approving adjustments to base salary, annual cash incentive levels and long -term equity -based incentive levels; and +• Granting long -term equity -based incentive awards and determining the types of awards for the current year. +The Compensation Committee may also adjust compensation as necessary at other times during the year, such as in the case of promotions, other changes in employment status and significant corporate events, as well as to reflect changing market conditions or for other competitive purposes. +In making its decisions, the Compensation Committee assesses each NEO’s impact during the year and overall value to Gulfport, specifically considering the NEO’s contribution to the growth of Gulfport’s value, operational and financial performance, performance in the NEO’s primary area of responsibility, impact on strategic initiatives, recommendations of our independent compensation consultant, the NEO’s role and trajectory in succession planning and development, recommendations from our CEO with respect to our other NEOs and other intangible qualities that contribute to corporate and individual success. +The Role of our CEO +The Compensation Committee evaluates our CEO based on the Company’s performance metrics, leadership roles as a member of the Board and our lead representative to the investment community and other criteria. The CEO’s total compensation package is determined by the Compensation Committee, based upon its evaluation and input from our independent compensation consultant. Our CEO’s compensation ultimately reflects Gulfport’s performance, personal performance, competitive industry practices and the terms of our employment arrangement with the CEO. +Our CEO evaluates each of the other NEOs and makes compensation recommendations to the Compensation Committee. In developing recommendations, the CEO considers the recommendations of the Compensation Committee’s independent compensation consultant, as well as each NEO’s performance against the Company performance metrics and contribution to Gulfport’s performance. The independent compensation consultant reviews and provides comments to the Compensation Committee based on our CEO’s recommendation with respect to our NEOs, other than our CEO. Our CEO does not participate in deliberations or decisions concerning his own compensation. +The Role of the Compensation Consultants +Prior to entering bankruptcy, the Compensation Committee engaged in a request for proposal for executive compensation advisory services and conducted an extensive interview with multiple consultants. Although WTW had been retained by the previous Compensation Committee in 2020, they did not provide pre -bankruptcy advisory services on specific programs. The committee retained the service of WTW to perform executive compensation advisory services, reporting directly to the Compensation Committee Chair. Upon emergence from bankruptcy, the Compensation Committee solicited proposals from several executive compensation consulting service providers. Upon evaluating the proposals, the Compensation Committee decided to continue the relationship with WTW for executive compensation consulting. The Compensation Committee determined that the expertise that WTW had in the executive compensation consulting space with other similar Exploration and Production (“E&P”) companies navigating the bankruptcy process, in addition to deep insights into compensation practices of other similar companies, was critical for Gulfport Energy. WTW provided contemporary best practices in base pay administration, short -term incentive plan design and long -term incentive plan design, specifically in management incentive plans for emerging companies. This information, which included reviews of peers, a broader E&P group and general industry practices, was used by the Compensation Committee to determine base salary, short -term incentives and long -term incentives for executives upon emergence. +2022 PROXY STATEMENT 29 +EXECUTIVE SUMMARY +WTW also provided support with regulatory and other considerations that affect compensation programs generally, as requested by the Compensation Committee, as well as assistance in preparation of the CD&A. +WTW reported exclusively to the Compensation Committee, with respect to the services described above. During 2021, WTW provided other services to us, but the total fees for services did not exceed $120,000. The Compensation Committee reviewed the independence of WTW and determined that there were no conflicts of interest because of the Compensation Committee’s engagement of WTW. +The Compensation Committee evaluates the independence of its compensation consultant(s) on an ongoing basis. +2021 COMPENSATION PROGRAM DESCRIPTION +As previously disclosed in our Amendment No. 1 to our Annual Report on Form 10 -K /A for the fiscal year ended December 31, 2020, filed on April 30, 2021, the (the “2020 10 -K /A”), the Company’s executive compensation program changed in August 2020 from the plan adopted during the restructuring and in light of a possible bankruptcy filing, to a program aligned with company metrics upon emergence. +Base Salary +The Compensation Committee engaged WTW to review the overall competitiveness of our executive compensation program for 2021, with continued focus on ensuring the alignment of management compensation with performance and the achievement of Gulfport’s long -term strategic goals. This engagement occurred prior to entering bankruptcy, during the bankruptcy process and upon emergence once the new Board had been installed. The Compensation Committee reviews NEO base salaries on an annual basis, with a goal of providing market competitive, fixed cash compensation. The Compensation Committee assesses comparable salary information provided by its independent compensation consultant as one factor when determining the base pay for NEOs. +Name +Base Salary YE +2020 +Percent +Increase (%) +Base Salary YE +2021 +Timothy J. Cutt +— +— +$750,000 +William J. Buese +— +— +$450,000 +Patrick K. Craine +$435,000 +3.4% +$450,000 +Michael J. Sluiter +$360,000 +— +$360,000 +Robert J. Moses +$350,000 +— +$350,000 +David M. Wood +$834,000 +— +— +Quentin R. Hicks +$425,000 +— +— +Donnie G. Moore +$505,000 +— +— +Other factors the Compensation Committee considers in determining base pay for each of the NEOs include, but are not limited to: the NEO’s responsibilities, experience, leadership, potential future contribution and demonstrated individual performance. The relative weighting of these factors varies by NEO depending on their position and responsibilities. In August 2021, the base salary of our Chief Legal and Administrative Officer Mr. Craine was adjusted by 3.4% from $435,000 to $450,000 to reflect increased responsibility and competitive pay levels when compared to other similar positions after reviewing median base pay levels at our Company’s selected peer group firms. No other changes were made to NEOs’ base salaries during 2021. +Annual Incentive Awards +The Compensation Committee established a performance -based annual cash incentive program for 2021 that tied our NEOs’ compensation directly to pre -established performance metrics. Targeted annual incentive award levels were based on market information supplied by the independent compensation consultant. Individual awards may be decreased at the discretion of the Compensation Committee based on overall corporate performance for the year and other considerations. +30 2022 PROXY STATEMENT +EXECUTIVE SUMMARY +2021 Annual Short-Term Incentive Bonus Metrics +Pre-emergence Metrics +As previously disclosed in the 2020 10 -K /A, the pre -emergence short -term incentive plan, or STI Plan, for 2021 covered the period of January 1, 2021 to July 31, 2021 and was comprised of pre -emergence incentive targets set by the Compensation Committee. The 2021 portion of the STI Plan was defined and approved in 2020 in connection with entering the bankruptcy process and was the continuation of a program that covered the period beginning August 1, 2020. The metrics of the 2021 portion of the STI Plan focused on the key performance objectives identified at the beginning of the bankruptcy process as the most important objectives for Gulfport to successfully emerge as soon as possible while focusing on cost control and containment and safety and environmental best practices. The metrics were identified with pre -established targets and performance periods identified through July of 2021 which were determined to be in the best interest of the Company. While these performance targets were pre -paid , all NEOs were subject to a clawback feature if performance targets were not achieved and maximum performance payouts were capped at 100%. Following the close of the performance period, the Compensation Committee reviewed the actual performance of each KPI and determined that the actual performance goals were exceeded and as a result, performance -based cash incentives would be paid out at 100% for the pre -emergence plan. Specific performance targets and achievement of actual results are included in the table below. +2021 STI Metrics (Pre -EMERGENCE ) +Weighting +Threshold +Target +Maximum +Cumulative +2021 +Actual +2021 +Performance Achievement % +G&A Costs ($MM) +20% +$ 57.3 +$ 53.3 +$ 49.3 +$3 6.4 +150% +Operational LO E ($/Mcfe) +20% +$0.17 +$0.15 +$0.14 +$0.1 48 +109% +Safety Incidents/ Reportable Spills +20% +17/25 +12/20 +7/15 +8/4 +131% +Strategic Goal 1 +20% +Secure DIP financing. Pass 100%/Fail 0% +100% +Strategic Goal 2 +20% +Secure exit financing. Pass 100%/Fail 0% +100% +Total Achievement Percentage (1) +118% +(1) Bonuses were prepaid in 2020 at target achievement, subject to clawback if performance metrics were not met, as part of the Company’s Revised 2020 Incentive Compensation Program (the “Revised 2020 Incentive Compensation Program”) prior to and during the restructuring, and the maximum payout for the NEOs was capped at 100% achievement. +Post-emergence Metrics +Upon emergence from the bankruptcy process, the Compensation Committee determined the appropriate KPIs for the STI plan for the balance of 2021 and set performance targets accordingly. The KPIs included thresholds, targets and maximums that were based on predetermined financial and key performance metrics. At the completion of the performance period ending December 31, 2021, the Compensation Committee reviewed financial results, as disclosed below, and key performance indicators and approved 2021 STI payout results based on those achievements. This achievement resulted in an overall payout of 107% of target awards. Below is a summary of KPIs and results for the 2021 post -emergence STI plan. +2021 STI Metrics (POST -EMERGENCE ) +Weighting +Threshold +Target +Maximum +2021 +Actual +2021 +Payout +Recurring Cash G&A ($MM) (1) +33% +$22.2 +$20.7 +$19.1 +$15.7 +150% +Operat ed LO E per Mcfe ($/Mcfe) +33% +$0.149 +$0.136 +$0.122 +$0.143 +72% +Safety Incidents/Spills +34% +4/4 +3/3 +2/2 +1/4 +100% +Total Achievement Payout +107% +(1) Recurring general and administrative expense is a non -GAAP financial measure equal to general and administrative expense presented on the income statement, plus capitalized G&A and less any non -recurring general and administrative expense. Non -recurring general and administrative expenses are related to certain legal, financial advisory and consulting charges. +2022 PROXY STATEMENT 31 +EXECUTIVE SUMMARY +2021 Target Annual STI Opportunities and Actual Annual STI Payments +The Compensation Committee established the target annual cash STI opportunity for each of the NEOs, taking into consideration the terms of any applicable employment agreement, and approved the following cash payments based on the Company’s 2021 pre- and post -emergence results performance as described above. +PRE -EMERGENCE REVISED 202 0 INCENTIVE COMPENSATION PLAN +Name +Revised 2020 +Incentive Compensation +Program Incentive Target (1) +(August 2020 – July 2021) +(Quarterly Incentive Target) +Actual Annual +Incentive +(as % of Target +Annual Incentive) (2) +Portion Earned +in 2020 (3) +Portion Earned +in 2021 (4) +Patrick K. Craine +$ 957,000 +100% +$ 398,750 +$ 558,250 +Michael J. Sluiter +$ 468,000 +100% +$ 195,000 +$ 273,000 +Robert J. Moses +$ 265,417 +100% +$ 189,583 +$ 265,417 +David M. Wood +$2,606,250 +100% +$ 1,085,938 +$ 1,520,313 +Quentin R. Hicks +$ 935,000 +100% +$ 389,583 +$ 545,417 +Donnie G. Moore +$1,136,250 +100% +$ 473,438 +$ 662,813 +(1) These amounts represent the pre -emergenc e prepaid incentive target awards granted to our NEOs in 2020 under the Revised 2020 Incentive Compensation Program (the “Pre -Emergence Incentive Awards”) . +(2) The actual performance achievement of the Pre -Emergence Incentive Awards was 118%, as shown on page 31, when measured against the applicable pre -set KPI targets. However, t he payment of the Pre -Emergence Incentive Awards was capped at 100% due to prepayment of the Pre -Emergence I ncentive Awards in 2020, which was subject to clawback if the performance targets were not met. +(3) Amounts in this column represent the portion of the Pre -Emergence Incentive Awards that was earned as of December 31, 2020. +(4) A mount s in this column represent the portion of the Pre -Emergence Incentive Awards that was earned in 2021. +Post -Emergence 2021 STI Plan +Name +Target Annual Incentive +(as % of Base Salary) +Target Annual +Incentive +Actual Annual Incentive +Performance Achievement +(as % of Target Annual Incentive) (1) +2021 Payment (2) +Timothy J. Cutt +100% +$ 750,000 +107% (pro-rated from date of hire) +$ 509,279 +William J. Buese +90% +$ 405,000 +107% (pro-rated from date of hire) +$ 275,011 +Patrick K. Craine (3) +90% +$ 405,000 +107% (pro-rated for 5 months) +$ 183,340 +Michael J. Sluiter +60% +$ 216,000 +107% (pro-rated for 5 months) +$ 97,782 +Robert J. Moses +60% +$ 210,000 +107% (pro-rated for 5 months) +$ 95,065 +(1) Proration for the calculation of Mr. Cutt’s and Mr. Buese’s post -emergence target annual incentive awards was based on their respective dates of hire, and was calculated based on the number of payroll cycles that occurred during the performance period. +(2) This amount was prorated based on eligible payroll earnings during the performance period , rather than aggregate base salary. +(3) Mr. Craine’s base salary was increased from $435,000 to $450,000 on August 5, 2021 and his post -emergence target annual incentive award was calculated based on this new rate. +Inducement /Sign-On Bonus +Pursuant to their respective offer letter or employment agreement, Mr. Cutt and Mr. Buese each received a one -time $75,000 signing bonus when they joined the Company in May 2021. This inducement award also covered any non -business -related travel such as commuting expenses which are paid for by the executive and not eligible for reimbursement. +32 2022 PROXY STATEMENT +EXECUTIVE SUMMARY +Long-Term Incentive Awards +Each year we grant our NEOs long -term incentive awards, that have historically consisted of equity -based awards. The Compensation Committee determines the amount of these awards, as well as the mix of equity vehicles. The objectives of our long -term incentive plan are to: (i) create significant alignment between the interests of our NEOs and our stockholders; (ii) attract and retain the services of critical talent; and (iii) focus our executives on our sustained growth and financial success. +Pre- e mergence Plan +As previously discussed in the 2020 10 -K /A, the Compensation Committee conducted a comprehensive review of the Company’s compensation programs and in consultation with its independent compensation consultant with expertise in executive compensation practices in distressed situations and other legal advisors, the Compensation Committee determined that significant changes were necessary to retain and motivate the Company’s employees. The Compensation Committee adopted a compensation model focused on cash retention and short -term incentives through bankruptcy emergence. Upon emergence, new metrics were established considering best practices among similarly situated companies, and as a result no long -term pre -emergence awards were granted in 2021. +Post -emergence P lan +As previously discussed in the 2020 10 -K /A, the Company, after considering the advice of the experts in distressed company executive compensation practices, had previously relied upon a compensation model that focused on cash retention and short -term incentives under a distressed company model through bankruptcy emergence. Upon emergence from bankruptcy, the newly constituted Compensation Committee, in consultation with the independent compensation consultant and other legal advisors, focused on determining the appropriate long -term incentive awards for the NEOs for 2021. The Compensation Committee determined that since any previous equity executives might have had was forfeited upon emergence from bankruptcy, there was an immediate need to retain and align executives and stockholders through equity grants. In July of 2021, the Compensation Committee granted multi -year equity grants that were comprised of performance and time -based restricted stock units. +Equity Awards +As is customary for companies emerging from bankruptcy where all previous shares that might have been granted to an executive were forfeited, post -emergence grants were made to our NEOs. The objective of the post -emergence grants to our NEOs was to encourage our NEOs to remain employed with the Company and to provide alignment with our new stockholders. An explanation of the post -emergence grants, including the number of shares granted to each executive and the vesting conditions, is detailed below. +DETERMINING AWARD STRUCTURE AND SETTING THE TARGET AWARD OPPORTUNITY +The Compensation Committee considers the grant date fair value of the long -term incentive package, the package’s potential dilutive effect on our outstanding shares of common stock and the number of shares available for grant under the 2021 Incentive Plan (as defined below) in determining the aggregate number of shares to be awarded as individual long -term incentive awards for our NEOs. The Compensation Committee evaluates stockholder dilution based on equity compensation plans compared to the total amount of the Company’s outstanding common stock. In determining the appropriate long -term incentive awards to grant NEOs other than the CEO, the Compensation Committee considers the recommendations of the CEO. The Compensation Committee reviewed market values with respect to the annual long -term incentive awards granted to similarly situated executives at the Compensation Peer Group and other oil and gas companies that had recently emerged from bankruptcy, as well as other executive compensation data provided by WTW, when determining the appropriate value of equity awards to grant post -emergence for 2021. For 2021, the Compensation Committee determined that the CEO would receive an equity grant consisting of 50% performance -based restricted stock units and 50% time -based restricted stock units in accordance with his offer letter as Interim Chief Executive Officer and Chairman of the Board. Certain of our other NEOs received an equity grant consisting of 60% performance -based restricted stock units and 40% time -based restricted stock units. The time -based restricted stock units vest in equal annual installments over a three -year period (other than for our CEO). Per Mr. Cutt’s offer letter, his time -based +2022 PROXY STATEMENT 33 +EXECUTIVE SUMMARY +restricted stock units vest in eight equal bi -annual installments over a four -year period. The performance based restricted stock units vest after a three -year performance period, based on the Company’s achievement of relative TSR as compared to a peer group of companies and absolute TSR, in each case, as described in the chart below. +Relative TSR +> 75 th percentile of the Peer +Companies +50 th percentile – +< 75 th percentile +of the Peer +Companies +25 th percentile – +< 50 th percentile +of the Peer +Companies +< 25 th percentile +of the Peer +Companies +Annualized +Company +TSR +< 5.0% +0% +0% +0% +0% +> 5.0% – 7.5% +50% +25% +0% +0% +> 7.5% – 10.0% +125% +100% +75% +50% +> 10.0% – 15.0% +150% +125% +100% +75% +> 15.0% – 20.0% +175% +150% +125% +100% +> 20.0% +200% +175% +150% +125% +2021 Post-Emergence Equity Awards +Named Executive Officer +2021 LTI Award +(RSUs) +Grant Award +Value ($) (1) +2021 LTI +Award +(PSUs) +Grant Award +Value ($) (2) +Timothy J. Cutt (3) +24,590 +$1,616,793 +24,590 +$1,616,793 +William J. Buese (4) +17,377 +$1,142,538 +26,066 +$1,713,840 +Patrick K. Craine (5) +41,722 +$2,743,222 +62,711 +$4,123,248 +Michael J. Sluiter (6) +8,345 +$ 548,684 +12,542 +$ 824,637 +Robert J. Moses (7) +8,345 +$ 548,684 +12,542 +$ 824,637 +(1) The time -based restricted stock unit values are based on the closing price of the Company’s common stock on the grant date. +(2) The performance -based restricted stock unit awards are shown in this table based on the target number of shares subject to the awards and the closing price of the Company’s common stock on the grant date. The Company used a Monte Carlo simulation for purposes of determining the grant date fair value of these awards as reflected in the Summary Compensation Table. Please see note 2 to the Summary Compensation Table. +(3) On July 21, 2021, in accordance with the terms of his appointment and his offer letter, Mr. Cutt was granted the following under the 2021 Incentive Plan: (i) 24,590 time - based restricted stock units that will vest bi -annually over the four -year period commencing as of the grant date, subject to continued employment through each applicable vesting date, and (ii) 24,590 performance -based restricted stock units that will vest based on performance over a three -year period and continued service through May 17, 2022. +(4) On July 21, 2021, in accordance with the terms of his appointment and his employment agreement, Mr. Buese was granted the following under the 2021 Incentive Plan: (i) 17,377 restricted stock units that will vest annually in three equal installments over the three -year period commencing as of the grant date, subject to continued employment through each applicable vesting date, and (ii) 26,066 performance -based restricted stock units that will vest based on performance and continued service over a three -year period. +(5) On July 21, 2021, Mr. Craine was granted the following under the 2021 Incentive Plan: (i) 41,722 time - based restricted stock units that will vest annually in three equal installments over the three -year period commencing as of the grant date, subject to continued employment through each applicable vesting date, and (ii) 62,711 performance -based restricted stock units that will vest based on performance and continued service over a three -year period. +(6) On July 21, 2021, Mr. Sluiter was granted the following under the 2021 Incentive Plan: (i) 8,345 time - based restricted stock units that will vest annually in three equal installments over the three -year period commencing as of the grant date, subject to continued employment through each applicable vesting date, and (ii) 12,542 performance -based restricted stock units that will vest based on performance and continued service over a three -year period. +(7) On July 21, 2021, Mr. Moses was granted the following under the 2021 Incentive Plan: (i) 8,345 time - based restricted stock units that will vest annually in three equal installments over the three -year period commencing as of the grant date, subject to continued employment through each applicable vesting date, and (ii) 12,542 performance -based restricted stock units that will vest based on performance and continued service over a three -year period. +34 2022 PROXY STATEMENT +EXECUTIVE SUMMARY +COMPENSATION POLICIES AND PRACTICES +Compensation Risk Management +Upon emergence from bankruptcy and returning to customary executive compensation practices, the Compensation Committee continues to review the risks and rewards associated with our compensation policies and programs. We believe that our policies and programs encourage and reward prudent business judgment, encourage short -term stockholder value creation, and prioritize long -term growth by discouraging excessive risk taking. With respect to specific elements of compensation: +• Integrated Approach – Our programs balance short- and long -term incentives for our executive officers by providing an appropriate mix of fixed, performance -based , discretionary and equity compensation, with the goal of creating both short- and long -term stockholder value. +• Attract Top Talent – Annual base salaries for our NEOs do not encourage excessive risk -taking as they are fixed amounts that are subject to discretionary increases by our Compensation Committee that may be based on, among other factors, annual performance evaluations. We believe that annual base salaries are set at reasonable levels, as compared to the base salaries of similarly -situated individuals at our peer group companies, and therefore do not negate the effect of other compensation elements that encourage long -term service, growth and performance that may increase stockholder value. +• Support Business Objectives and Strategic Goals – Our annual incentive awards are determined based on Company and individual performance measures, both operational and strategic, which mitigate excessive risk -taking that could produce unsustainable gains in one area of performance at the expense of our overall long -term interests. The Company’s goals are designed to ensure a proper balance between stock performance, operational measures, financial goals and strategic goals. In addition, the Compensation Committee sets performance goals that it believes are reasonable considering our past performance, then -current business projections and market conditions. +• Pay for Performance – The Compensation Committee believes that performance -based equity awards tied to the Company’s stock price and relative performance versus peers, and cash compensation, with meaningful performance targets, such as those under our Annual Incentive Plan (as defined below), will further align our NEOs’ interests with those of our stockholders, will motivate our NEOs to contribute to the Company’s growth and profitability and will link a larger portion of our NEOs’ compensation to the performance of the Company. +• Maximize Stockholder Value – Our annual incentive awards are subject to maximum payout caps that limit the amount a NEO may earn on any individual metric or operational measures. +• Create Ownership Culture – Performance -based and time - based restricted stock unit awards, in each case, vesting over time, as well as robust stock ownership guidelines for our NEOs and non -employee directors, promote stock ownership culture and ensure that our NEOs and directors have a continuing stake in the long -term success of the Company. We believe that our long -term equity awards granted to our NEO s discourage excessive risk taking, as there is a balance between performance -based and time - based awards that moderates the risk that may otherwise exist if equity awards were to vest based solely on achieving performance targets. +Based on the foregoing, the Compensation Committee believes that the Company utilizes compensation policies and programs such that there are no risks that are reasonably likely to have a material adverse impact on the Company. +Clawback Provisions +Under the Sarbanes -Oxley Act of 2002, incentive compensation received by our Chief Executive Officer and Chief Financial Officer may be subject to clawback in the event of a restatement of our financial statements. Each award granted pursuant to the 2021 Incentive Plan (including awards granted to our NEOs) is conditioned on repayment or forfeiture in accordance with applicable laws, our Company policies and any relevant provisions in the related award agreements. Further, under the terms of our employment agreements with Messrs. Wood, Moore, and Craine, dated August 1, 2019, with Mr. Hicks dated August 9, 2019, with Messrs. Sluiter and Moses dated November 13, 2020 and with Mr. Buese dated May 17, 2021, any equity awards granted, any proceeds of any equity awards that previously have been sold, transferred or otherwise disposed of, and any annual incentive award will be subject to clawback by us, now or in the future, under the Dodd -Frank Act and the Sarbanes -Oxley Act, each as amended, and their rules, regulations and binding, published guidance. +2022 PROXY STATEMENT 35 +EXECUTIVE SUMMARY +Stock Ownership Guidelines for Executive Officers +We believe it is important for our executive officers to align their financial interests with those of our stockholders. Accordingly, effective January 1, 2019, our Board of Directors adopted a formal stock ownership policy that requires our CEO to achieve a stock ownership level equal to the value of common stock that is five times the value of his annual base salary within five years of the effective date of such stock ownership policy. The Compensation Committee also designated our other executive officers that are subject to Section 16 reporting obligations under the Exchange Act, to be subject to the stock ownership policy. The stock ownership level for our other NEOs and Section 16 officers is three times the value of their respective annual base salaries to be achieved within five years of the effective date of our stock ownership policy. None of our executive officers have been in their position long enough to be required to meet the minimum stock ownership reaffirmed guidelines, particularly given the Company’s restructuring in 2020; however, all are on track to do so within the prescribed timeframe through expected grants. +Our non -employee directors are also subject to the stock ownership policy discussed above under “Stock Ownership Guidelines for Directors.” +Anti-Hedging and Pledging Policies +We have a policy prohibiting directors, executive officers and certain other designated employees from speculative trading in our securities, including hedging transactions, short selling, and trading in put options, call options, swaps or collars, or holding our securities in margin accounts. We also have a policy prohibiting directors, executive officers and certain other designated employees from pledging Gulfport securities. To our knowledge, all individuals follow these policies. +Termination and Change of Control Benefits +As noted above, certain of our NEOs are (or were formerly) party to an employment agreement with the Company which provides (or provided) for certain payments and benefits in the event of a termination of such NEO under specific circumstances. The NEOs’ employment agreements are designed to avoid distraction potentially detrimental to stockholder value upon a change in control and to enhance protection for the NEOs in connection with such events. These agreements (and the severance payments referenced below) are described in more detail under “NEO Employment Agreements and Termination and Change of Control Benefits.” +Our emergence from bankruptcy on May 17, 2021 constituted a change of control under certain NEOs’ employment agreements, and following emergence the Board reached an agreement with Mr. Wood that he would no longer serve as Chief Executive Officer and a member of the Board, and an agreement with Mr. Hicks that he would no longer serve as our Chief Financial Officer. The termination of Messrs. Wood’s and Hicks’ employment was treated as a termination without “cause” during a “change of control” period (each as defined in the applicable employment agreement). Subject to Messrs. Wood’s and Hicks’ execution and non -revocation of the release of claims substantially in the form attached to the applicable employment agreement, Messrs. Wood and Hicks received the severance payments set forth in Section 6.1.2(c) of the applicable employment agreement. +On June 3, 2021, the Board accepted Donnie Moore’s notice of resignation and intent to retire and reached an agreement where Mr. Moore relinquished his position as Chief Operating Officer effective as of June 11, 2021. The Board treated Mr. Moore’s departure from the Company as a termination without “cause” during a “change of control” period (each as defined in his employment agreement) pursuant to his employment agreement. Subject to Mr. Moore’s execution and non -revocation of the release of claims substantially in the form attached to his employment agreement, Mr. Moore received the severance payments set forth in Section 6.1.2(c) of his employment agreement. +Perquisites and Other Personal Benefits +We provide certain of our NEOs with a limited number of perquisites or other personal benefits, primarily consisting of life insurance premiums and Company -sponsored sporting events tickets. The Company does not offer any excessive perquisites to executives that are not generally provided to other non -executives . We believe these limited benefits help provide a competitive compensation package. The value of these benefits is disclosed in the “Summary Compensation Table.” +In February 2019, we adopted an aircraft use policy for aircraft chartered or owned by the Company. As part of the bankruptcy process the Company terminated any chartered aircraft arrangements and as of emergence from bankruptcy the Company does not have any private or chartered aircraft arrangements. We restrict personal use of Company -owned or chartered aircraft by our +36 2022 PROXY STATEMENT +EXECUTIVE SUMMARY +executive officers and other employees, as well as by members of our Board of Directors. Our aircraft use policy requires that any personal use of a chartered aircraft by any NEO be reported as a perquisite, based on the aggregate incremental value of such personal use. There was no personal use of Company -owned or chartered aircraft in 2021. +Accounting Implications of Executive Compensation Policy +We are required to recognize compensation expense of all stock -based awards pursuant to the provisions of FASB ASC Topic 718, “Compensation -Stock Compensation.” Under U.S. generally accepted accounting principles, or GAAP, only vested shares are included in basic shares outstanding. Also, under GAAP, non -vested shares are included in diluted shares outstanding when the effect is dilutive. +The Compensation Committee believes that linking a large portion of our executive officers’ compensation to both performance -based long -term equity incentive awards and performance -based bonus arrangements, with meaningful performance metrics, appropriately aligns our executives’ interests with those of our stockholders and are consistent with market practices. The Compensation Committee also believes that our current compensation policies and practices enhance retention of executive talent through multi -year vesting of stock awards and discourage unnecessary and excessive risk taking. The Compensation Committee further believes that our other compensation policies and practices, such as our policy prohibiting pledging and hedging of our stock by our executive officers and directors, as well as the lack of significant perquisites and absence of pension or supplemental retirement benefits (aside from those afforded under our broad -based 401(k) plan) for our executive officers are consistent with prudent compensation philosophy and the interests of our stockholders. The Compensation Committee will continue to consider the outcome of our stockholders’ future “say -on -pay ” votes when making compensation decisions for our NEOs. +Compensation Committee Report +The Compensation Committee has reviewed and discussed the foregoing Compensation Discussion and Analysis with management. Based on its review and discussion with management, the Compensation Committee recommended that the Compensation Discussion and Analysis be included in this proxy statement. +Respectfully submitted by the Compensation Committee: +Dated: May 2, 2022 +Compensation Committee Interlocks and Insider Participation +No member of our Compensation Committee during the past fiscal year is or has ever been an officer or employee of ours, or has engaged in any related party transaction in which our Company was a participant. None of our executive officers during the past fiscal year serves, or has served during the past fiscal year, as a member of the Board of Directors or Compensation Committee of any other company that has one or more executive officers serving, or that has served during the past fiscal year, as a member of our Board of Directors or Compensation Committee (other than Mr. Cutt, who was appointed as our Interim Chief Executive Officer and Chairman of the Board on May 17, 2021, and assumed the role of Chief Executive Officer and Chairman of the Board on September 2, 2021). +2022 PROXY STATEMENT 37 +Compensation Tables +SUMMARY COMPENSATION TABLE +The following table provides information concerning compensation of our NEOs for the fiscal years ended December 31, 2021, December 31, 2020 and December 31, 2019. +Name and Principal Position +Year +Salary +($) +Bonus +($) (1) +Stock +Awards +($) (2) +Non-Equity +Incentive Plan +Compensation +($) (3) +All Other +Compensation +($) (4) +Total +($) +Timothy J. Cutt ( 5 ) +2021 +$447,119 +$ 75,000 +$ 2,788,998 +$ 509,2 7 9 +$ 3,003 +$3,823, 399 +Chief Executive Officer +2020 +— +— +— +— +— +— +and Chairman of the Board +2019 +— +— +— +— +— +— +William J. Buese ( 6 ) +2021 +$266,327 +$ 75,000 +$ 2,385,104 +$ 275,011 +$ 15,036 +$3,016,477 +Executive Vice President, +2020 +— +— +— +— +— +— +Chief Financial Officer +2019 +— +— +— +— +— +— +Patrick K. Craine ( 7 ) +2021 +$438,911 +$435,000 +$ 5,732,655 +$1, 698,590 +$ 24,426 +$8,003,332 +Executive Vice President, +2020 +$411,590 +— +$ 76,419 +$ 627,214 +$ 15,420 +$1,130,643 +Chief Legal and Administrative Officer +2019 +$259,333 +$ 50,000 +$ 1,099,169 +$ 120,169 +$ 9,052 +$1,537,723 +Michael J. Sluiter ( 8 ) +2021 +$358,621 +$360,000 +$ 1,146,561 +$ 838,782 +$ 24,582 +$2,458,546 +Senior Vice President of Reservoir +2020 +$340,619 +— +$ 56,701 +$ 321,049 +$ 15,508 +$ 733,877 +2019 +$360,004 +$150,000 +$ 1,573,878 +$ 108,000 +$ 72,099 +$2,263,981 +Robert J. Moses ( 9 ) +2021 +$348,655 +$350,000 +$ 1,146,561 +$ 815,482 +$ 12,983 +$2,411,182 +Senior Vice President of Operations +2020 +— +— +— +— +— +— +and Drilling +2019 +— +— +— +— +— +— +David M. Wood ( 10 ) +2021 +$415,388 +$834,000 +— +$4, 126,563 +$4,192,530 +$8,942,980 +Former Chief Executive Officer and President +2020 +$744,193 +— +$ 315,761 +$1,694,301 +$ 19,398 +$2,773,653 +2019 +$782,840 +— +$ 5,083,848 +$ 521,250 +$ 36,080 +$6,424,018 +Quentin R. Hicks ( 11 ) +2021 +$228,062 +$425,000 +— +$1, 480,417 +$1,809,401 +$3,624,129 +Former Executive Vice President, +2020 +$402,124 +— +$ 74,662 +$ 612,796 +$ 15,420 +$1,105,002 +Chief Financial Officer +2019 +$138,944 +$150,000 +— +$ 66,406 +$ 80,825 +$ 436,175 +Donnie G. Moore (#) +2021 +$290,658 +$505,000 +— +$1, 799,063 +$2,296,991 +$4,512,962 +Executive Vice President, +2020 +$477,810 +— +$ 137,663 +$ 768,136 +$ 18,461 +$1,402,070 +Chief Operating Officer +2019 +$459,398 +— +$ 1,233,129 +$ 252,500 +$ 29,870 +$1,974,897 +(1) The amounts in this column reflect (i) one -time cash inducement bonuses paid to Mr. Cutt ($75,000), Mr. Buese ($75,000), Mr. Craine ($50,000), Mr. Sluiter ($150,000) and Mr. Hicks ($150,000) upon joining the Company and the service -based cash “Standard Award” made to certain of our NEOs on March 27, 2020 that vested in 2021 (as previously defined and reported in the Company’s 2020 10 -K /A). +(2) The amount reported in the Stock Awards column reflects the fair value of the applicable award of restricted stock, performance -based restricted stock units or time - based restricted stock units on the grant date. The amounts were calculated in accordance with FASB ASC Topic 718 using certain assumptions, as set forth in Note 1 and Note 8 to our consolidated financial statements for the fiscal year ended December 31, 2021 under the headings “Summary of Significant Accounting Policies — Accounting for Stock -based Compensation” and “Stock -Based Compensation,” respectively, included in our Annual Report on Form 10 -K , filed with the SEC on March 1, 2022. Restricted stock unit values are based on the closing price of the Company’s common stock on the grant date. In valuing the performance -based restricted stock unit awards, the Company used a Monte Carlo simulation. Performance -based restricted stock units vest based on performance and continued service over a three -year performance period (except for Mr. Cutt, whose service -vesting date is May 17, 2022, and the maximum award opportunity for each applicable NEO for the 2021 performance -based restricted stock unit awards as of the grant date is as follows: Mr. Cutt $2,344,411, Mr. Buese $2,485,132, Mr. Craine $5,978,867, Mr. Sluiter $1,195,754 and Mr. Moses $1,195,754. As previously disclosed in the 2020 10 -K /A, the shares granted in 2020 were forfeited in connection with the adoption of the Revised 2020 Incentive Compensation Program, and any remaining unvested pre -emergence stock awards were cancelled in connection with our emergence from bankruptcy. +(3) The amounts in this column reflect (i) performance -based annual incentive bonuses granted under our post -emergence 2021 STI Plan and (ii) amounts earned in 2021 pursuant to the Company’s Revised 2020 Incentive Compensation Program. The amounts earned by certain of our NEOs in 2021 pursuant to the Company’s short -term incentive programs were as follows: for the post -emergence 2021 STI Plan, Mr. Cutt $509,279, Mr. Buese $275,011, Mr. Craine $183,340, Mr Sluiter $97,782 and Mr. Moses $95,065; and for the Revised 2020 Incentive Compensation program, Mr. Craine $1,515,250, Mr. Sluiter $741,000, Mr. Moses $720,417, Mr. Wood $4,126,563, Mr. Hicks $1,480,417, Mr. Moore $1,799,063. +(4) The amount for Mr. Cutt for 2021 includes $3,003 attributable to group term life insurance coverage. The amount for Mr. Buese for 2021 includes $11,619 for our 401(k) plan contribution, $1,047 attributable to group term life insurance coverage, and $2,370 attributable to long -term disability imputed income. The amount for Mr. Craine for 2021 includes $14,500 for our 401(k) plan contribution, a $2,294 attributable 401(k) true up payment, $1,170 attributable to group term life insurance coverage, and $6,462 attributable to long -term disability imputed income. The amount for Mr. Sluiter for 2021 includes $14,500 for our 401(k) plan contribution, a $2,600 attributable 401(k) true up payment, $1,170 attributable to group term life insurance coverage, and $6,312 attributable +38 2022 PROXY STATEMENT +Compensation Tables +to long -term disability imputed income. The amount for Mr. Moses for 2021 includes $6,664 for our 401(k) plan contribution, a $1,239 a 401(k) true up payment, $777 attributable to group term life insurance coverage, and $4,304 attributable to long -term disability imputed income. The amount for Mr. Wood in 2021 includes $4,144,295 in severance payments, $13,490 for our 401(k) plan contribution, a $3,428 401(k) true up payment, $2,145 attributable to group term life insurance coverage, $25,940 in COBRA payments, and $3,232 attributable to long -term disability imputed income. The amount for Mr. Hicks for 2021 includes $1,759,616 in severance payments, $11,330 for our 401(k) plan contribution, a $3,651 401(k) true up payment, $488 attributable to group term life insurance coverage, $32,074 in COBRA payments, and $2,242 attributable to long -term disability imputed income. The amount for Mr. Moore in 2021 includes $2,244,137 in severance payments, $14,500 for our 401(k) plan contribution, $1,677 attributable to group term life insurance coverage, $31,859 in COBRA payments, and $4,818 attributable to long -term disability imputed income. +(5) Mr. Cutt was appointed as our Interim Chief Executive Officer and Chairman of the Board effective May 17, 2021, and assumed the role of Chief Executive Officer and Chairman of the Board on September 2, 2021. Mr. Cutt is an NEO for the first time in 2021. +(6) Mr. Buese was appointed as our Chief Financial Officer on May 17, 2021. Mr. Buese is an NEO for the first time in 2021. +(7) Mr. Craine was appointed as our General Counsel and Corporate Secretary on May 20, 2019, and assumed the role of Chief Legal and Administrative Officer on August 5, 2021. +(8) Mr. Sluiter joined the Company as its Senior Vice President of Reservoir Engineering on December 3, 2018. +(9) Mr. Moses joined the Company on August 19, 2019 and was promoted to Senior Vice President of Operations and Drilling on March 30, 2020. Mr. Moses is an NEO for the first time in 2021. +(10) Mr. Wood was appointed to serve as our Chief Executive Officer and President, and as a member of our Board of Directors, effective December 18, 2018. Mr. Wood’s employment with the Company was terminated upon our emergence from bankruptcy on May 17, 2021. +(11) Mr. Hicks was appointed as our Chief Financial Officer on August 26, 2019. Mr. Hicks’ employment with the Company was terminated upon our emergence from bankruptcy on May 17, 2021. +(12) Mr. Moore was appointed as our Chief Operating Officer effective January 8, 2018. He also served as Interim Chief Executive Officer of the Company from October 29, 2018, the date our former Chief Executive Officer and President left the Company, to December 18, 2018, the date of the appointment of Mr. Wood as our Chief Executive Officer and President. Mr. Moore separated from the Company on June 11, 2021. +2022 PROXY STATEMENT 39 +Compensation Tables +2021 GRANTS OF PLAN -BASED AWARDS +The following table provides information concerning each grant of an award made to our NEOs in the fiscal year ended December 31, 2021 under any Company plan. +Estimated Future Payouts Under +Non-Equity Incentive Plan Awards (1) +Estimated Future Payouts under +Equity Incentive Plan Awards (2) +All Other +Stock Awards: +Number of +Shares of Stock +or Units +(#) (3) +Grant Date +Fair Value of +Stock +Awards +($) (4) +Name +Grant +Date +Threshold +($) +Target +($) +Maximum +($) +Threshold +(#) +Target +(#) +Maximum +(#) +Timothy J. Cutt +— +$375,000 +$750,000 +$1,125,000 +— +— +— +— +— +Chief Executive +Officer and +Chairman +of the Board +7 / 21 / 21 +— +— +— +— +— +— +24,590 +$1,616,793 +7 / 21 / 21 +— +— +— +6,148 +24,590 +49,180 +— +$ 1,172,205 +William J. Buese +— +$202,500 +$405,000 +$ 607,500 +— +— +— +— +— +Chief Financial +Officer +7 / 21 / 21 +— +— +— +— +— +— +17,377 +$1,142,538 +7 / 21 / 21 +— +— +— +6,517 +26,066 +52,132 +$ 1,242,566 +Patrick K. Craine (5) +— +$ 202,500 +$405,000 +$ 607,500 +— +— +— +— +$ — +Executive Vice +President, +Chief Legal and +Administrative Officer and +Corporate +Secretary +7/21/21 +— +— +— +— +— +— +4 1 ,722 +$2,743,222 +7/21/21 +— +— +— +15,678 +62,711 +125,422 +— +$ 2,989,433 +Michael J. Sluiter +— +$ 108,000 +$ 216,000 +$ 324,000 +— +— +— +— +$ — +Senior Vice +President of +Reservoir +7/21/21 +— +— +— +— +— +— +8,345 +$ 548,684 +7/21/21 +— +— +— +3,136 +12,542 +25,084 +— +$ 597,877 +Robert J. Moses +— +$ 105,000 +$ 210,000 +$ 315,000 +— +— +— +— +$ — +Senior Vice +President of +Operations and +Drilling +7/21/21 +— +— +— +— +— +— +8,345 +$ 548,684 +7/21/21 +— +— +— +3,136 +12,542 +25,084 +— +$ 597,877 +(1) Reflects performance -based annual cash incentives granted to certain of our NEOs in 2021 under our Annual Incentive Plan. +(2) Reflects awards of performance -based restricted stock units granted to certain of our NEOs in 2021 under the 2021 Stock Incentive Plan. +(3) Reflects awards of time - based restricted stock units granted to certain of our NEOs in 2021 under the 2021 Incentive Plan. +(4) The amounts reported for performance -based and time -based restricted stock units in this column reflect the fair value of the applicable awards on the grant date. The amounts were calculated in accordance with FASB ASC Topic 718 using certain assumptions, as set forth in Note 1 and Note 8 to our consolidated financial statements for the fiscal year ended December 31, 2021 under the headings “Summary of Significant Accounting Policies — Accounting for Stock -based Compensation” and “Stock -Based Compensation,” respectively, included in our Annual Report on Form 10 -K , filed with the SEC on March 1, 2022. +40 2022 PROXY STATEMENT +Compensation Tables +OUTSTANDING EQUITY AWARDS AT 2021 FISCAL YEAR -END +The following table provides information concerning equity awards granted to our NEOs that were outstanding as of December 31, 2021. +Stock Awards +Name +Number of +Shares or +Units of Stock +That Have +Not Vested (1) +(#) +Market Value of +Shares or +Units of Stock +That Have +Not Vested ( 2 ) +($) +Equity Incentive +Plan Awards: +Number of +Unearned +Shares, Units +or Other Rights +That Have +Not Vested +(#) ( 3 ) +Equity Incentive +Plan Awards: +Market of +Payout Value of +Unearned Shares, +Units or Other +Rights That Have +Not Vested +($) (2) +Timothy J. Cutt +24,590 +$ 1,771,218 +24,590 +$1,771,218 +William J. Buese +17,377 +$ 1,251,665 +26,066 +$1,877,534 +Patrick K. Craine +41,722 +$ 3,005,236 +62,711 +$4,517,073 +Michael J. Sluiter +8,345 +$ 601,090 +12,542 +$ 903,400 +Robert J. Moses +8,345 +$ 601,090 +12,542 +$ 903,400 +(1) Represents awards of time -based restricted stock units granted to certain of our NEOs on July 21, 2021 under the 2021 Incentive Plan, each of which vest annually in three equal installments over the three -year period commencing as of the grant date, subject to continued employment through each applicable vesting date (except for Mr. Cutt, whose time -based restricted stock units vest bi -annually in eight equal installments over the four -year period commencing as of the grant date, subject to continued employment through each applicable vesting date). +(2) The market value of restricted stock units that have not vested is based on the closing price of $72.03 per share of our common stock on the NYSE Global Select Market on December 31, 2021, the last trading day of 2021. +(3) Represents awards of performance -based restricted stock units granted to certain of our NEOs on July 21, 2021 under the 2021 Incentive Plan, each of which vest based on the Company’s achievement of certain absolute and relative TSR metrics and the applicable NEOs’ continued employment over a three -year performance period (except for Mr. Cutt, whose service -vesting date is May 17, 2022). Such performance -based restricted stock units are shown above at the threshold level based on results for the first year of the 2021 -202 4 performance period. +2022 PROXY STATEMENT 41 +Compensation Tables +2021 STOCK VESTED +The following table provides the number of shares acquired upon vesting of restricted stock awards for certain of our NEOs. All vesting described in the table below occurred pre -emergence and such vested shares were cancelled in connection with the bankruptcy. +Stock Awards +Name +Number +of Shares +Acquired on +Vesting +(#) +Value +Realized on +Vesting (1) +($) +Timothy J. Cutt +— +— +William J. Buese +— +— +Patrick K. Craine ( 2 ) +— +— +Michael J. Sluiter ( 3 ) +39,998 +$ 3,512 +Robert J. Moses +— +— +David M. Wood ( 4 ) +116,870 +$10,261 +Quentin R. Hicks +— +— +Donnie G. Moore (5) +45,715 +$ 4,014 +(1) Reflects OTC trading value of the Company’s stock during bankruptcy at a value of $0.0878 on the vesting date closing price per share of our common stock. If the vesting date was not a trading day, the value is based on the closing price per share of our common stock on the last trading day prior to the vesting date. +(2) Mr. Craine’s pre -emergence stock awards did not vest in 2021 prior to our emergence from bankruptcy. All unvested pre -emergence stock awards were cancelled in connection with our emergence from bankruptcy. +(3) Mr. Sluiter was granted an inducement award amount of 119,993 restricted stock units under the 2019 Incentive Plan, with a value of $983,943 determined based on the closing price per share of common stock on the Nasdaq Global Market on February 25, 2019. In addition, he received a grant of 116,129 restricted stock units that was scheduled to vest annually in three approximately equal installments beginning August 6, 2020 and 116,129 performance -based restricted stock units that were scheduled to vest based on performance and continued service over a three -year period, in accordance with the 2019 Incentive Plan. The shares granted to Mr. Sluiter in 2020 were forfeited in connection with the adoption of the Revised 2020 Incentive Compensation Program and Mr. Sluiter’s remaining unvested pre -emergence stock awards were cancelled in connection with our emergence from bankruptcy. +(4) Mr. Wood was granted an inducement award amount of 121,951 restricted stock units under the 2019 Incentive Plan, with a value of $1,000,000 determined based on the closing price per share of common stock on the Nasdaq Global Market on February 25, 2019. In addition, he received a grant of 228,659 restricted stock units that was scheduled to vest annually in three approximately equal installments beginning February 26, 2020 and 228,659 performance -based restricted stock units that were scheduled to vest based on performance and continued service over a three -year period, in accordance with the 2019 Incentive Plan. The shares granted to Mr. Wood in 2020 were forfeited in connection with the adoption of the Revised 2020 Incentive Compensation Program and Mr. Wood’s remaining unvested pre -emergence stock awards were cancelled in connection with our emergence from bankruptcy. +(5) Mr. Moore was granted an award of 242,742 restricted stock units under the 2019 Incentive Plan that was scheduled to vest annually in three approximately equal installments beginning August 6, 2020 and 242,742 performance -based restricted stock units that were scheduled to vest based on performance and continued service over a three -year period, in accordance with the 2019 Incentive Plan. Mr. Moore’s award of 137,143 restricted stock units was granted on February 19, 2018, of which 45,714 vested on February 27, 2019, 45,714 vested on February 27, 2020 and the remaining 45,715 restricted stock units vested on February 27, 2021. The shares granted to Mr. Moore in 2020 were forfeited in connection with the adoption of the Revised 2020 Incentive Compensation Program and Mr. Moore’s remaining unvested pre -emergence stock awards were cancelled in connection with our emergence from bankruptcy. +42 2022 PROXY STATEMENT +Benefit Plans +401(k) Plan +We maintain a retirement savings plan, or the 401(k) Plan, for the benefit of our eligible employees who have attained the age of 18. Currently, employees may elect to defer their compensation up to the statutorily prescribed limit. During the plan year, we make a safe - harbor contribution based on a formula that provides a company match of 100% of the first 4% of eligible compensation and a 50% match of deferrals that exceed 4% of compensation but do not exceed 6% of compensation with each pay period. We also have the ability to make an additional, discretionary contribution based on each eligible employee’s eligible annual compensation for the prior calendar year. All contributions made by us on behalf of an employee are 100% vested when contributed. The 401(k) Plan is intended to qualify under Sections 401(a) and 501(a) of the Code. As such, contributions to the 401(k) Plan and earnings on those contributions are not taxable to the employees until distributed from the 401(k) Plan, and all contributions are deductible by us when made. +2019 Restated Stock Incentive Pla n +Our 2019 Restated Stock Incentive Plan (the “2019 Incentive Plan”) which amended and restated our Amended and Restated 2005 Stock Incentive Plan, was adopted and approved by our stockholders during the 2019 Annual Meeting. Following the adoption of the 2021 Incentive Plan (as defined below), no additional grants were made under the 2019 Incentive Plan. +2021 STOCK INCENTIVE PLA N +Upon emergence on May 17, 2021, our Board adopted the Gulfport Energy Corporation 2021 Stock Incentive Plan (the “2021 Incentive Plan”) and authorized and reserved 2,828,123 shares of Gulfport’s common stock for issuance to Gulfport’s employees (including our NEOs), consultants and non -employee directors pursuant to equity incentive awards to be granted under the 2021 Incentive Plan, which may be in the form of incentive stock options, nonqualified stock options, restricted stock, restricted stock units, stock appreciation rights and performance awards or any combination of the foregoing. +2014 Executive Annual Incentive Compensation Pla n +The 2014 Annual Incentive Compensation Plan (the “Annual Incentive Plan”), was approved by our Board of Directors on April 1, 2014 and by our stockholders at the 2014 Annual Meeting of Stockholders on June 11, 2014. Our executive officers and selected employees and those of our subsidiaries are eligible to receive awards under the Annual Incentive Plan. The Annual Incentive Plan provides for awards of incentive compensation that are contingent on the attainment of specific performance targets. Under the Annual Incentive Plan, the Compensation Committee, as the plan administrator, establishes the performance targets for each award and the performance period during which the performance is to be measured, which will generally be our fiscal year. Performance targets may include a minimum level of performance below which no payment will be made, levels of performance at which specified percentages of the award will be paid, and a maximum level of performance above which payment will be capped at the highest specified percentage. +Performance targets for each award will be based on pre -established performance factors that may relate to the performance of the Company or the performance of a business unit, product line, territory or any combination of these. Performance targets for employees who are not executive officers may also be based on other additional objective or subjective performance criteria established by the plan administrator. +The plan administrator may at any time establish additional conditions and terms of payment of awards, including additional financial, strategic or individual goals, which may be objective or subjective. +Unless the plan administrator provides otherwise, a participant must be employed by us on the date that awards are paid to receive an award payment, except in the case of death or disability. If a participant dies or becomes disabled during a performance period, the participant (or the participant’s beneficiary) will receive a pro -rated award payment at the same time all other awards are paid for the performance period. In the event of a change in control, each named executive officer will be paid the target award amount (mid -point of any specified range of potential award payment amount) based on the assumption that the performance target was attained at the target level (mid -point of any specified range of performance targets) for the entire performance period. The target award amount will be paid within ten (10) days following the consummation of the change in control transaction. +2022 PROXY STATEMENT 43 +Benefit Plans +The plan administrator may at any time amend or terminate the Annual Incentive Plan in whole or in part. +Our Board of Directors has delegated its authority to administer the Annual Incentive Plan to the Compensation Committee, to whom we refer as the plan administrator. The plan administrator has the authority to administer the Annual Incentive Plan and to exercise all the powers and authorities either specifically granted to it under the Annual Incentive Plan or necessary or advisable in the administration of the Annual Incentive Plan, including (but not limited to) the following: +• to interpret the Annual Incentive Plan and any award; +• to prescribe rules relating to the Annual Incentive Plan; +• to determine the persons to receive awards; +• to determine the terms, conditions, restrictions and performance criteria, including performance factors and performance targets, relating to any award; +• to accelerate an award that is designed not to be deferred compensation subject to Code Section 409A (after the attainment of the applicable performance target or targets); +• to adjust performance targets in recognition of specified events such as unusual or non -recurring events affecting us or our financial statements, including certain asset dispositions, cessation of operations resulting from a natural disaster, or in response to changes in applicable laws, regulations, or accounting principles as specified in the Annual Incentive Plan or in the performance targets established for any performance period; +• to waive restrictive conditions for an award (but not performance targets); and +• to make any other determinations that may be necessary or advisable for administration of the Annual Incentive Plan. +EQUITY COMPENSATION PLAN INFORMATIO N +The following table sets forth, as of December 31, 2021, certain information with respect to all compensation plans under which equity securities are authorized for issuance. +Plan Category +Number of +securities to +be issued upon +exercise of +outstanding +options, +warrants and +rights (a) (1)(2)(3) +Weighted +average +exercise price +of outstanding +options, +warrants and +rights (b) (3) +Number of +securities +remaining +available for +future issuance +under equity +compensation +plans excluding +securities +reflected in +column (a) +Equity compensation plans approved by security holders (1) +351,551 +$ — +2,476,572 +(1) Refers to the 2021 Stock Incentive Plan. +(2) Includes an aggregate of 351,551 unvested restricted stock units and shares of unvested restricted stock granted under the 2021 Stock Incentive Plan. +(3) No options were outstanding as of December 31, 2021, and neither restricted stock units nor shares of restricted common stock have an exercise price. +Chief Executive Officer Offer Letter +On May 17, 2021, we entered into an offer letter with Mr. Cutt to serve as our Interim Chief Executive Officer and Chairman of the Board. +On September 2, 2021, Mr. Cutt assumed the role of Chief Executive Officer and Chairman of the Board, and we entered into an amendment to the offer letter with Mr. Cutt. +44 2022 PROXY STATEMENT +Benefit Plans +Pursuant to his offer letter, as amended, Mr. Cutt serves as our Chief Executive Officer and Chairman of the Board. The offer letter provides for no fixed term of employment (although Mr. Cutt agrees to give 90 days’ notice of intent to resign as Chief Executive Officer at any time), and Mr. Cutt will continue to serve as Chairman of the Board following the termination of his term of employment (subject to the Board’s ability to remove him at any time). The offer letter also provides for, among other things, (i) an annual base salary of $750,000, (ii) eligibility to receive an annual bonus with a target bonus opportunity of 100% of base salary, and (iii) a $75,000 signing bonus. +Upon Mr. Cutt’s termination of employment by the Company without “cause” (as defined in the offer letter) following the occurrence of a “change of control” (as defined in the 2021 Incentive Plan), subject to his execution and non -revocation of a release of claims, Mr. Cutt will receive severance in an amount equal to three times the sum of his (i) then -current base salary plus (ii) target annual bonus for the year in which such termination occurs, payable in a lump sum on the 60 th day following such termination of employment. If Mr. Cutt breaches any of the restrictive covenants contained in his offer letter (as described below), his right to receive any severance will cease and he will be required to repay any previously paid severance. +Mr. Cutt’s offer letter provides for the following treatment of his equity awards: (i) unless mutually agreed between the parties, Mr. Cutt agrees to forfeit 100% of his performance -based restricted stock units granted on July 21, 2021 if the term of his employment ends prior to May 17, 2022 other than due to a change of control, (ii) upon a change of control, all time -based and performance -based restricted stock units will vest, and (iii) in the event of a termination of employment due to (x) voluntary resignation or termination for cause, all unvested time -based and performance -based restricted stock units will be forfeited for no consideration or (y) a termination without cause, death or disability, all unvested time -based and performance -based restricted stock units will fully vest and be settled on the 60th day following such termination, subject, in the cause of a termination without cause, to Mr. Cutt’s execution and non -revocation of an effective release of claims. +Mr. Cutt’s offer letter also contains a one -year post -employment non -solicitation clause and standard confidentiality, trade secrets and cooperation provisions. +Under his offer letter, “cause” generally means (i) Mr. Cutt’s willful and continued failure to perform substantially his duties with the Company (other than for failures resulting from incapacity due to physical or mental illness) or (ii) willful engaging in illegal conduct or gross misconduct which is materially and demonstrably injurious to the Company. +NEO Employment Agreements and Termination and Change of Control Benefits +As indicated above, certain of our NEOs are (or were formerly) parties to an employment agreement with the Company. +Pursuant to the employment agreements with Messrs. Wood, Moore, Hicks, Craine, Sluiter, Moses and Buese (collectively, the “Employment Agreements”, and such individuals, the “Covered NEOs”), each current employment agreement provides for an initial term that extends through December 31, 2023 (or December 31, 2024 for Mr. Buese); provided that the term will automatically renew for successive one -year terms unless the Company or the Covered NEO gives written notice not to renew at least 90 days before the end of the initial term or any renewal term. If a “change of control” (as described in the applicable Employment Agreement) occurs during the term thereof, the term will be extended to the later of the original expiration date of the term or the date that is 24 months after the effective date of the change of control. +The Employment Agreements provide each Covered NEO with, among other things: (i) an annual base salary of $834,000, $505,000, $425,000, $435,000 (increased to $450,000 in August 2021), $360,000, $350,000 and $450,000 for Messrs. Wood, Moore, Hicks, Craine, Sluiter, Moses and Buese respectively, (ii) eligibility to earn a target annual bonus under the Company’s Annual Incentive Plan equal to 125%, 100%, 90%, 90%, 60%, 60% and 90% of base salary for Messrs. Wood, Moore, Hicks, Craine, Sluiter, Moses and Buese, respectively, (iii) eligibility for annual grants of equity awards as determined in the sole discretion of the Compensation Committee pursuant to the Company’s equity compensation plans; provided that, with respect to the calendar year ending December 31, 2020, each of Messrs. Wood, Moore, Hicks and Craine will receive awards that have a target aggregate fair value of 500%, 350%, 200% and 200% of base pay, respectively, and (iv) benefits that are customarily provided to similarly situated executives of the Company. +In addition, our Covered NEOs will be entitled to receive (or have already received) specified payments and benefits upon certain termination events pursuant to the Employment Agreements, including termination following a change of control. The Compensation Committee believes that these provisions encourage our Covered NEOs to remain in our employment, as applicable, in the event of a change of control of the Company and during circumstances which indicate that a change of control might occur. The Compensation Committee believes termination and change of control benefits are important in maintaining strong leadership and in encouraging retention in these situations and encourages our Covered NEOs to act in the best interests of +2022 PROXY STATEMENT 45 +Benefit Plans +stockholders without distraction based on uncertainty regarding their employment status, as applicable. Under the Employment Agreements, if a Covered NEO’s employment is terminated without “cause” by the Company or by the applicable Covered NEO for “good reason” during such time that is not within the 24 -month period following a “change of control” (as such terms are defined in the Employment Agreements), such Covered NEO will be entitled to severance compensation equal to: +• 100% of annual base salary and target annual bonus; +• pro -rata target annual bonus; +• pro -rat ed vesting of the Covered NEO’s unvested equity awards (with performance award vesting based on performance through the termination date); however, see “2021 RSU and PSU Grant Agreements” for terms applicable to equity awards granted in 2021; +• immediate vesting of any Company matching or other contributions to the Company’s non -qualified deferred compensation plans, if any (“Company Non -Qualified Contributions”) (except for Mr. Buese); and +• a lump sum payment equal to the Covered NEO’s monthly COBRA premium for a 12 -month period. +If, however, such Covered NEO’s employment is terminated without cause by the Company or by the Covered NEO for good reason, in each case, within 24 months following a change of control, such Covered NEO will instead be entitled to severance compensation equal to: +• 200% of annual base salary and target annual bonus (100% for Mr. Sluiter and Mr. Moses); +• pro -rat ed target annual bonus; +• immediate vesting of the Covered NEO’s unvested equity awards (with performance award vesting based on performance through the termination date); however, see “2021 RSU and PSU Grant Agreements” for terms applicable to equity awards granted in 2021; +• immediate vesting of any Company Non -Qualified Contributions (except for Mr. Buese); and +• a lump sum payment equal to the Covered NEO’s monthly COBRA premium for an 18 -month period. +Notwithstanding the terms described above, the agreement each NEO entered into in connection with the Revised 2020 Incentive Compensation Program provides that the NEO will not be entitled to any severance amount with respect to a pro -rated annual bonus for a termination that occurs in 2020 or 2021. In addition, upon a termination without cause or a resignation for good reason (i) the Retention Component of the Revised 2020 Incentive Compensation Program will be fully vested and no longer subject to clawback and (ii) the Performance Component of the Revised 2020 Incentive Compensation Program will remain outstanding and eligible to vest based on actual performance through the end of the performance period as if the NEO’s employment had not terminated, and any vested portion of the performance component will no longer be subject to clawback. +As noted above in “Termination and Change of Control Benefits”, in 2021 Messrs. Wood, Hicks and Moore incurred a termination of employment by the Company without cause during a change in control period, and received the severance payments set forth in Section 6.1.2(c) of the applicable Employment Agreement. +Under the Employment Agreements: +“Good reason” is generally defined as (i) the elimination of the Covered NEO’s position, a material reduction in the duties and/or reassignment of the Covered NEO to a new position of materially less authority; or (ii) a material reduction in the Covered NEO’s base salary, in either case, subject to a cure period of 30 days. For Mr. Buese, “good reason” also includes (x) a requirement that he relocate to a location outside of a 50 mile radius of his office or principal base of operation immediately prior to a change of control or (y) a requirement that he spend more than 50% of his time in Gulfport’s Oklahoma City headquarters on an ongoing basis. +“Cause” is generally defined as (i) the Covered NEO’s willful and continued failure to perform substantially such Covered NEO’s duties with the Company (other than any such failure resulting from incapacity due to physical or mental illness) or (ii) the Covered NEO’s willful engaging in illegal conduct or gross misconduct which is materially and demonstrably injurious to the Company. +46 2022 PROXY STATEMENT +Benefit Plans +Severance benefits payable under the Employment Agreements are generally conditioned on timely execution of a waiver and release of claims. +Each such Employment Agreement also contains a one -year post -employment non -solicitation clause and standard confidentiality, trade secrets and cooperation provisions. +2021 RSU and PSU Grant Agreements: +On July 21, 2021, Messrs. Cutt, Buese, Craine, Sluiter and Moses each received an award of time -based restricted stock units (“RSUs”) and performance -based restricted stock units (“PSUs”) under the 2021 Incentive Plan. +Pursuant to the applicable award agreement, upon the applicable NEO’s termination of employment or service for any reason, any unvested RSUs or PSUs will be immediately forfeited for no consideration. For Mr. Cutt, if he continues to provide services to the Company as a member of the Board following his termination of employment, his RSUs will continue to vest in accordance with the vesting schedule set forth in his RSU award agreement. In addition, Mr. Cutt’s PSUs will be considered fully time -vested as of May 17, 2022. +Upon a termination of the applicable NEO’s employment or service due to death or “disability”, by the Company without “cause” (each as defined in the 2021 Incentive Plan) or due to a resignation by the applicable NEO for “good reason” (as defined in the applicable award agreement), (i) any unvested RSUs will accelerate and fully vest, and (ii) a prorated portion of the PSUs will vest based on the actual achievement of the performance conditions to be determined at the expiration of the performance period, and any remaining unvested PSUs will be forfeited (provided, that if the applicable NEO is terminated by the Company without cause or resigns for good reason within the first 18 months of the performance period (or for Mr. Cutt, prior to May 17, 2022), the Compensation Committee will have sole discretion whether the PSUs will accelerate and vest in such manner). +Upon the occurrence of a “change in control” (as defined in the 2021 Incentive Plan), to the extent the RSUs or PSUs, as applicable, are not assumed by the surviving entity, (i) any unvested RSUs will accelerate and fully vest, and (ii) the applicable NEO will become vested in 100% of the target award of PSUs or, if greater, the percentage of the target award of PSUs earned based on the actual achievement of the performance conditions to be determined as if the change in control was the last day of the performance period (except that the TSR for the Company and each of the peer companies will be determined using the closing price as of the closing date of the change in control compared to the reference value). +Upon the occurrence of a change in control, to the extent the RSUs or PSUs, as applicable, are assumed by the surviving entity, (i) upon the termination of the applicable NEO’s employment or service due to death or disability, by the Company without cause or by the applicable NEO for good reason within the 24 month period following such change in control, any unvested RSUs will accelerate and fully vest, and (ii) the PSUs will be converted, as of the date of such change in control, into time -based restricted stock units (the “Converted RSUs”), subject to the applicable NEO’s continuous employment or service through the date of such change in control, with the number of PSUs to be converted equal to 100% of the target award of PSUs or, if greater, the percentage of the target award of PSUs earned based on the actual achievement of the performance conditions to be determined as if the change in control was the last day of the performance period (except that the TSR for the Company and each of the peer companies will be determined using the closing price as of the closing date of the change in control compared to the reference value), and 100% of the Converted RSUs will vest, if at all, on the last day of the performance period, subject to the applicable NEO’s continuous employment or service through such date; provided, that if the applicable NEO’s employment or service is terminated due to death or disability, by the Company without cause or by the applicable for good reason following such change in control, 100% of the Converted RSUs will vest as of the date of such termination. +In the event of (i) a change in the composition of the Board such that, for a period of 30 days, the majority of the members of the Board are no longer considered “independent” (as described in the applicable award agreement) or (ii) any stockholder becomes the beneficial owner of more than 75% of the total combined voting power of all classes of stock of the Company (each such event, a “Special CiC Event”), (x) any unvested RSUs will accelerate and fully vest, and (y) the applicable NEO will become vested in 100% of the target award of PSUs or, if greater the percentage of the target award of PSUs earned based on the actual achievement of the performance conditions to be determined as of the Special CiC Event (determined as if the Special CiC Event was the last day of the performance period). +2022 PROXY STATEMENT 47 +Benefit Plans +Termination, Resignation or Change of Contro l +The following tables provide information regarding potential payments to each of our NEOs as of December 31, 2021 in connection with certain termination events, including a termination related to a change of control of the Company. +Benefits and Payments Upon Termination (1) +Termination +Due to +Death or +Disability +Termination +by the Company +Without +Cause or by +the NEO for +Good Reason +(a “Qualifying +Termination”) +Termination +by the +Company +for Cause +Qualifying +Termination +Within +24 Months +Following +Change of +Control +Change in +Control with +no Qualifying +Termination (2) +Timothy J. Cutt +Cash Severance Payments +— +— +— +$4,500,000 (3) +— +Accelerated Vesting of Equity Awards : (4) +Unvested RSUs +$1,771,218 +$1,771,218 +— +$1,771,218 +$1,771,218 +Unvested PSUs +$ 0 +$ 0 +— +$1,771,218 +$1,771,218 +Total +$1,771,218 +$1,771,218 +— +$8,042,436 +$3,542,436 +William J. Buese +Cash Severance Payments (5) +— +$1,260,000 +— +$2,115,000 +— +Accelerated Vesting of Equity Awards : (4) +Unvested RSUs +$1,251,665 +$1,251,665 +— +$1,251,665 +$1,251,665 +Unvested PSUs +$ 0 +$ 0 +— +$1,877,534 +$1,877,534 +Accelerated Vesting of Company Non -Qualified Contributions (6) +COBRA Payments (7) +— +$ 21,329 +— +$ 31,859 +— +Total +$1,251,665 +$2,532,994 +— +$5,276,058 +$3,129,199 +Patrick K. Craine +Cash Severance Payments (5) +— +$2,115,000 ( 8 ) +— +$2,115,000 (8) +— +Accelerated Vesting of Equity Awards : (4) +Unvested RSUs +$3,005,236 +$3,005,236 +— +$3,005,236 +$3,005,236 +Unvested PSUs +$ 0 +$ 0 +— +$4,517,073 +$4,517,073 +Accelerated Vesting of Company Non -Qualified Contributions (6) +COBRA Payments (7) +— +$ 21,383 +— +$ 32,074 +— +Total +$3,005,236 +$5,141,619 +— +$9,669,383 +$7,522,309 +Michael J. Sluiter +Cash Severance Payments (5) +$ 792,000 +— +$ 792,000 +— +Accelerated Vesting of Equity Awards : (4) +Unvested RSUs +$ 601,090 +$ 601,090 +— +$ 601,090 +$ 601,090 +Unvested PSUs +$ 0 +$ 0 +— +$ 903,400 +$ 903,400 +Accelerated Vesting of Company Non -Qualified Contributions (6) +COBRA Payments (7) +— +$ 21,383 +— +$ 32,074 +Total +$ 601,090 +$1,414,473 +— +$2,328,564 +$1,504,490 +48 2022 PROXY STATEMENT +Benefit Plans +Benefits and Payments Upon Termination (1) +Termination +Due to +Death or +Disability +Termination +by the Company +Without +Cause or by +the NEO for +Good Reason +(a “Qualifying +Termination”) +Termination +by the +Company +for Cause +Qualifying +Termination +Within +24 Months +Following +Change of +Control +Change in +Control with +no Qualifying +Termination (2) +Robert J. Moses +Cash Severance Payments (5) +— +$ 770,000 +— +$ 770,000 +— +Accelerated Vesting of Equity Awards : (4) +Unvested RSUs +$ 601,090 +$ 601,090 +— +$ 601,090 +$ 601,090 +Unvested PSUs +$ 0 +$ 0 +— +$ 903,400 +$ 903,400 +Accelerated Vesting of Company Non -Qualified Contributions (6) +COBRA Payments (7) +— +$ 21,239 +— +$ 31,859 +— +Total +$ 601,090 +$1,392,329 +— +$2,306,349 +$1,504,490 +(1) Information in this table assumes a termination date of December 31, 2021 and a price per share of our common stock of $72.03 (the closing market price per share on December 31, 2021, the last trading day of 2021), and applies the terms of the NEOs’ compensation arrangements as of December 31, 2021. Performance -based bonuses are calculated using 100% achievement for illustration, though payouts may vary based on actual results. +(2) Represents the aggregate value of the applicable NEO’s 2021 equity awards that will accelerate on a Special CiC Event, or, in the case of Mr. Cutt, a change in control (as defined in the 2021 Incentive Plan). See “2021 RSU and PSU Grant Agreements” above. +(3) Represents the cash severance payment payable to Mr. Cutt in the event of a termination by the Company without cause following a change of control (as defined in the 2021 Incentive Plan). +(4) Represents the aggregate value of the applicable NEO’s accelerated equity awards payable to the NEO in accordance with the terms of the applicable agreement, assuming a termination date of December 31, 2021. +(5) Represents the aggregate cash severance payments payable to the NEO (calculated based on the base salary and target annual bonus in effect as of December 31, 2021) in accordance with the terms of the applicable agreement, assuming a termination date of December 31, 2021. +(6) Represents the aggregate value of the applicable NEO’s accelerated Company Non -Qualified Contributions payable to the NEO in accordance with the terms of the applicable agreement, assuming a termination date of December 31, 2021, as applicable. +(7) Represents the aggregate COBRA payments payable to the NEO in accordance with the terms of the applicable agreement, assuming a termination date of December 31, 2021. +(8) Our emergence from bankruptcy on May 17, 2021 constituted a change of control under Mr. Craine's employment agreement. Accordingly, these values represent the aggregate cash severance payments payable to Mr. Craine (calculated based on the base salary and target annual bonus in effect as of December 31, 2021) in accordance with his employment agreement, assuming a termination date of December 31, 2021 (which would be within the twenty -four month period following a change of control). +2022 PROXY STATEMENT 49 +CEO Pay Ratio Disclosur e +Pursuant to Item 402(u) of Regulation S -K , we are disclosing the pay ratio and supporting information comparing the median of the annual total compensation of our employees (including full -time , part -time , seasonal and temporary employees) other than Mr. Cutt, our Chief Executive Officer and Chairman of the Board, as of December 31, 2021 (the date selected to identify the ‘median employee’, as further described below), and the annual total compensation of Mr. Cutt. The pay ratio is calculated in a manner consistent with Item 402(u) of Regulation S -K . +For the year ended December 31, 2021, our last completed fiscal year: +• The annual total compensation of our median employee was $107,634. +• The annual total compensation of Mr. Cutt was $4,369,146. +Based on this information, for 2021 the ratio of the annual total compensation of Mr. Cutt to the median of the annual total compensation of all other employees was approximately 41:1. +We selected December 31, 2021 as the date upon which we identified the median employee. We reviewed the Medicare Taxable Earnings as reported on IRS Form W -2 (Box 5) for 2021 for all individuals employed by us on December 31, 2021 (other than Mr. Cutt) and identified the median employee based off of Medicare Taxable Earnings. +Once we identified our median employee, we calculated that employee’s annual total compensation for 2021 in the same manner that we determined the total compensation of our named executive officers for purposes of the Summary Compensation Table set forth above. This resulted in an annual total compensation of $107,634 for the identified employee for the year ended December 31, 2021. The total compensation for Mr. Cutt was calculated based on the values included in the Summary Compensation Table set forth above, and was then annualized for 2021, by assuming Mr. Cutt earned a full year of base salary ($750,000), and was paid a full year of STI payment at target achievement ($750,000). Mr. Cutt does not participate in the Company’s benefit plans with the exception of imputed income on Company -paid life insurance provided to all employees. We made no material assumptions, adjustments, or estimates to identify the median employee or to determine total compensation, and we did not annualize the compensation for any employees that were not employed by us the entire year (other than for Mr. Cutt, as described above). +We believe that the above pay ratio is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S -K . In addition, because the Securities and Exchange Commission rules for identifying the median employee allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios. +2021 DIRECTOR COMPENSATION +Our policy is that members of our Board of Directors who are also our officers or employees do not receive compensation for their services as directors. The compensation of our non -employee directors for 2021 is described below. +Pre-emergence Cash Compensation +Effective January 1, 2019, based on the recommendation of Pearl Meyer, our Board of Directors eliminated attendance fees for Board and Committee meetings. In addition, the Chairman of the Board received an additional $85,000 annual retainer and the members and chairperson of each of our Board Committees received an additional cash retainer as set forth in the table below. During the bankruptcy process, in lieu of a 2021 equity grant, each director received a monthly cash payment equivalent to $175,000 annually. +Pre-emergence Equity Compensation +The Compensation Committee approved the 2020 revised program on August 2, 2020, replacing the 2020 program for an all -cash incentive program, as referenced above. The July 2020 equity grants were forfeited in connection with the adoption of the all -cash program. No additional pre -emergence equity grants were made to our non -employee directors in 2021. +50 2022 PROXY STATEMENT +CEO Pay Ratio Disclosure +Pre-emergence Director Fees +Program Component +2021 Program +Annual base cash retainer for Board service +$ 85,000 +All-cash program (in lieu of 2021 equity grant) +$175,000 +Additional cash retainer to non-executive Chairman +$ 85,000 +Audit Committee Chair cash retainer +$ 20,000 +Compensation Committee Chair cash retainer +$ 15,000 +Nominating and Corporate Governance Committee Chair cash retainer +$ 10,000 +Sustainability Committee Chair cash retainer +$ 10,000 +Restructuring and Finance Chair cash retainer +$300,000 +Restructuring and Finance Committee member cash retainer +$180,000 +Restructuring Special Committee Chair cash retainer +$300,000 +Restructuring Special Committee member cash retainer +$180,000 +Annual equity grant (forfeited for all cash program) +$ 0 +Stock ownership guideline +5.0x annual +base retainer +Post-emergence Cash Compensation +Upon emergence, the annual retainer for each non -employee director increased from $85,000 to $100,000. In addition, the Chairman of the Board will receive an additional $50,000 annual retainer, however, since Mr. Cutt is both a director and an employee of the Company, he is not eligible to receive this retainer. The members and chairperson of each of our Board Committees receives an additional annual retainer as set forth in the table below. +Post-emergence Equity Compensation +Following emergence, in 2021 each non -employee director received a grant of restricted stock units with a grant date fair value of $559,000 under the 2021 Incentive Plan that vests in four equal annual installments. +Post-emergence Director Fees +Program Component +2021 Program +Annual base cash retainer for Board service +$100,000 +Additional cash retainer to non-executive Chairman (1) +$ 50,000 +Additional cash retainer to Lead Director +$ 25,000 +Audit Committee Chair cash retainer +$ 25,000 +Compensation Committee Chair cash retainer +$ 15,000 +Nominating, Environmental and Social Governance Committee Chair cash retainer +$ 10,000 +Audit Committee member cash retainer +$ 10,000 +Compensation Committee member cash retainer +$ 5,000 +Nominating, Environmental and Social Governance member cash retainer +$ 5,000 +E quity grant +$559,000 +Stock ownership guideline +5.0x annual +base retainer +(1) Mr. Cutt does not receive any compensation for serving as a director of the Company. +2022 PROXY STATEMENT 51 +CEO Pay Ratio Disclosure +Stock Ownership Guidelines for Directors +We believe it is important for members of our Board of Directors to align their financial interests with those of our stockholders. Accordingly, effective January 1, 2019, our Board of Directors adopted a formal stock ownership policy that requires our non -employee directors to achieve a stock ownership level equal to the value of common stock that is five times the value of their annual retainer within five years of the effective date of such stock ownership policy. +2021 Director Compensation Table +The following table contains information with respect to 2021 compensation of our non -employee directors who served in such capacity during 2021. Mr. Cutt, our Chief Executive Officer and Chairman, does not receive any compensation for serving as a director of the Company. +Current Board Compensation +Name +Fees Earned or +Paid in Cash +($) (1) +Stock +Awards +($) (2) +Option +Awards +($) +Total +($) +David Wolf +$106,667 +$559,335 +— +$666,002 +Guillermo (Bill) Martinez +$ 83,333 +$559,335 +— +$642,668 +Jason Martinez +$ 86,667 +$559,335 +— +$646,002 +David Reganato +$ 80,000 +$559,335 +— +$639,335 +Former Board Compensation +Name +Fees Earned or +Paid in Cash +($) (1) +Stock +Awards +($) (2) +Option +Awards +($) +Total +($) +Alvin Bledsoe +$343,750 +— +— +$343,750 +Deborah Adams +$112,500 +— +— +$112,500 +Samantha Holroyd +$108,333 +— +— +$108,333 +Valerie Jochen +$108,333 +— +— +$108,333 +C. Doug Johnson +$116,667 +— +— +$116,667 +Ben T. Morris +$189,583 +— +— +$189,583 +John W. Somerhalder II +$312,500 +— +— +$312,500 +(1) For additional information regarding the fees earned or paid in cash to our non -employee directors in 2021, please see “Director Compensation – Cash Compensation.” In addition, the Restructuring and Finance Committee Chair received a $300,000 cash retainer, each Restructuring and Finance Committee Member received a $180,000 cash retainer, the Restructuring Special Committee Chair received a $300,000 cash retainer, the Restructuring Special Committee Member received a $180,000 cash retainer, the non -executive Chair received a $85,000 cash retainer, the Audit Committee Chair receives a $20,000 cash retainer, the Compensation Committee Chair received a $15,000 cash retainer and the Nominating and Corporate Governance Committee Chair and Sustainability Committee Chair each received $10,000 cash retainers. These annual cash retainers were pro -rated based on dates of service as a director. +(2) The amounts shown reflect the grant date fair value of restricted stock unit awards granted, determined in accordance with FASB ASC Topic 718. See Note 1 and Note 8 to our consolidated financial statements for the fiscal year ended December 31, 2021 under the headings “Summary of Significant Accounting Policies – Accounting for Stock -based Compensation” and “Stock -Based Compensation,” respectively, included in our Annual Report on Form 10 -K for the fiscal year ended December 31, 2021, filed with the SEC on March 1, 2022, regarding assumptions underlying valuations of equity awards for 2021. There were 8,507 unvested restricted stock units at the end of 2021 for each of Mr. Wolf, Mr. G. Martinez, Mr. J. Martinez and Mr. Reganato, reflecting the award granted to each such director on July 21, 2021. +52 2022 PROXY STATEMENT +BENEFICIAL OWNERSHIP +The following table sets forth certain information regarding the beneficial ownership as of April 1, 2022 of shares of our common stock by each of our directors, by each named executive officer and by all directors, executive officers and nominees as a group. None of the executive officers, directors or individuals listed below are holders of the Company's outstanding preferred stock. +Name of Beneficial Owner (1) +Amount and Nature of +Beneficial Ownership +Percent of Class +Timothy J. Cutt (2) +1,885 +* +David Wolf (3) +— +— +Guillermo (Bill) Martinez (3) +— +— +Jason Martinez (3) +— +— +David Reganato (assigned to SilverPoint) (4) +— +— +William J. Buese (5) +— +— +Patrick K. Craine (6) +— +— +Michael J. Sluiter (7) +— +— +Robert J. Moses ( 7 ) +— +— +David M. Wood +— +— +Quentin R. Hicks +— +— +Donnie G. Moore +— +— +Directors and Executive Officers as a Group (12 persons) +1,885 +* +* Less than 1%. +(1) Beneficial ownership is determined in accordance with SEC rules. In computing percentage ownership of each person, shares of common stock subject to options held by that person that are exercisable as of April 1, 2022, or exercisable within 60 days of April 1, 2022, are deemed to be beneficially owned. These shares, however, are not deemed outstanding for the purpose of computing the percentage ownership of each other person. The percentage of shares beneficially owned is based on 21,099,847 shares of common stock outstanding as of April 1, 2022, excluding 349,065 shares of restricted stock awarded under our 2021 Restated Stock Incentive Plan but not yet vested. Unless otherwise indicated, all amounts exclude shares issuable upon the exercise of outstanding options and vesting of restricted stock units that that are not exercisable and/or vested as of April 1, 2022 or within 60 days of April 1, 2022. Except as otherwise noted, each stockholder has sole voting and investment power with respect to the shares beneficially owned. +(2) Excludes the remaining 21,516 unvested restricted stock units of Mr. Cutt’s grant on July 21, 2021, which began vesting bi -annually over four years beginning January 21, 2022 and 24,590 performance -based restricted stock units that will vest based on performance and continued service over a three -year period, in accordance with the plan. +(3) Excludes 8,507 restricted stock units, which will vest in four approximately equal annual installments beginning on July 21, 2022, if such director is in continuous service on such date. +(4) Excludes 8,507 restricted stock units, which will vest in four approximately equal annual installments beginning on July 21, 2022, if such director is in continuous service on such date. Mr. Reganato has an understanding with Silver Point pursuant to which he holds such restricted shares for the benefit of Silver Point and certain of its affiliates. Accordingly, Mr. Reganato disclaims beneficial ownership of the restricted shares except to the extent of his pecuniary interest therein. +(5) Excludes 17,377 unvested restricted stock units, which vest annually over three years beginning July 21, 2022 and 26,066 performance -based restricted stock units that will vest based on performance and continued service over a three -year period, in accordance with the plan. +(6) Excludes 41,722 unvested restricted stock units, which vest annually over three years beginning July 21, 2022 and 62,711 performance -based restricted stock units that will vest based on performance and continued service over a three -year period, in accordance with the plan. +(7) Excludes 8,345 unvested restricted stock units, which vest annually over three years beginning July 21, 2022 and 12,542 performance -based restricted stock units that will vest based on performance and continued service over a three -year period, in accordance with the plan. +2022 PROXY STATEMENT 53 +BENEFICIAL OWNERSHIP +Holdings of Major Stockholder s +The following table sets forth certain information regarding the beneficial ownership as of April 1, 2022 of shares of our common stock by each person or entity known to us to be a beneficial owner of 5% or more of our common stock. The following table does not include information regarding ownership of shares of our preferred stock due to the securities not being listed on a major U.S. national or regional securities exchange and requirements for ownership reporting. +MAJOR STOCKHOLDER TABLE +Name and Address of Beneficial Owner (1) +Amount and Nature of +Beneficial Ownership +Percent of +Class (1) +Silver Point Capital, L.P. +9,158,318 (2,3,4) +43.4% +2 Greenwich Plaza, First Floor +Greenwich, CT 06830 +MacKay Shields, LLC +2,174,259 (5) +10.3% +1345 Avenue of Americas +New York, NY 10105 +J.P. Morgan Investment Management, Inc. +1,539,219 (6) +7.3% +383 Madison Avenue +New York, NY 10179 +AllianceBernstein L.P. +1,247,342 (7) +5.9% +1345 Avenue of the Americas +New York, NY 10105 +(1) Beneficial ownership is determined in accordance with SEC rules. The percentage of shares beneficially owned is based on 21,099,847 shares of common stock outstanding as of April 1, 2022, excluding 349,065 shares of restricted stock awarded under our 2021 Stock Incentive Plan, but not yet vested. +(2) Based solely on Form 4 with the SEC on December 20, 2021 by Silver Point Capital, L.P. that reported amount of securities beneficially owned of 9,158,138 shares of common stock. Silver Point Capital, L.P. (“Silver Point”) or its wholly owned subsidiaries are the investment managers of Silver Point Capital Fund, L.P., Silver Point Capital Offshore Master Fund, L.P., Silver Point Distressed Opportunities Fund, L.P., Silver Point Distressed Opportunities Offshore Master Fund, L.P., Silver Point Distressed Opportunity Institutional Partners, L.P. and Silver Point Distressed Opportunity Institutional Partners Master Fund (Offshore), L.P. (the “Funds”) and, by reason of such status, may be deemed to be the beneficial owner of all of the reported securities held by the Funds. Silver Point Capital Management, LLC (“Management”) is the general partner of Silver Point and as a result may be deemed to be the beneficial owner of all securities held by the Funds. +(3) Messrs. Edward A. Mule and Robert J. O’Shea are each members of Management and as a result may be deemed to be the beneficial owner of all of the securities held by the Funds. Silver Point, Management and Messrs. Mule and O’Shea disclaim beneficial ownership of the reported securities held by Funds except to the extent of their pecuniary interests. +(4) Includes (i) up to 536,203 shares of the Issuer’s common stock that may be distributed to the Reporting Persons upon satisfaction of certain unsecured creditors’ claims in the Issuer (Docket Nos. 1291, 1294 and 1295 of In re Gulfport Energy Corporation, Chapter 11 Case No. 20 -35562 , filed in the United States Bankruptcy Court for the Southern District of Texas, Houston Division), and (ii) up to 368,714 shares of the Issuer’s common stock that may be distributed to the Reporting Persons as holders of claims relating to certain notes of the Issuer, which shares have been held in reserve and are contingent upon the resolution of certain legal proceedings. Does not include 1,601,929 shares of common stock issuable upon the conversion of the 22,427 shares of Preferred Stock outstanding beneficially owned by the Reporting Persons based solely on Schedule 13D filed with the SEC on June 17, 2021. +(5) Based solely on Schedule 13F filed with the SEC on February 4, 2022 by MacKay Shields LLC that reported ownership of 2,174,259 shares of common stock. MacKay Shields LLC, an investment adviser registered under Section 203 of the Investment Advisers Act of 1940, may be deemed to be a beneficial owner of reported securities held. The MainStay High Yield Corporate Bond Fund, a registered investment Company for which Mackay Shields acts as sub -investment adviser, may also be deemed to be a beneficial owner of the reported securities held. New York Life Investment Management LLC, an indirect wholly owned subsidiary of New York Life and an affiliate of Mackay Shields LLC, is the manager of MainStay High Yield Corporate Bond Fund. +(6) Based solely on Schedule 13G filed with the SEC on January 21, 2022 by JPMorgan Chase & Co. reported sole voting power of 1,411,437 shares of common stock and sole dispositive power of 1,539,219 shares of common stock. +(7) Based solely on Schedule 13G filed with the SEC on February 14, 2022 by AllianceBernstein L.P. reported sole voting power of 1,247,342 shares of common stock. +54 2022 PROXY STATEMENT +Certain Relationships and Review and +Approval of Related Party Transactions +The Audit Committee, as provided in its charter, reviews and approves related party transactions. The Company does not have a formal set of standards to be substantively applied to each transaction reviewed by the Audit Committee. Instead of a formalized policy, related party transactions are reviewed and judgment is applied to determine whether such transactions are in the best interests of the Company. Further, the Company’s Code of Business Conduct and Ethics governs various compliance areas, including conflicts of interest and fair dealings, which are considered in the process of the review and approval of related party transactions. +The Company’s policy is that all its employees and directors, as well as their family members, must avoid any activity that is or has the appearance of conflicting with the Company’s business interest. This policy is included in the Company’s Code of Business Conduct and Ethics posted on its website. Each director and executive officer is instructed to always inform the designated compliance officer when confronted with any situation that may be perceived as a conflict of interest. Only the Board of Directors or a committee consisting solely of independent directors may grant waivers of the provisions of the Code of Business Conduct and Ethics for the Company’s executive officers and directors. In addition, at least annually, each director and executive officer completes a detailed questionnaire specifying any business relationship that may give rise to a conflict of interest. +Further, under the Audit Committee charter, the Audit Committee is responsible for reviewing and monitoring compliance with our Code of Business Conduct and Ethics and recommending any warranted changes to the Board of Directors. In addition, the Board of Directors and, pursuant to its written charter, the Audit Committee, reviews and approves all relationships and transactions in which the Company and its directors, director nominees and executive officers and their immediate family members, as well as holders of more than 5% of any class of our voting securities and their family members, have a direct or indirect material interest. The Board of Directors and the Audit Committee approve only those transactions that, in light of known circumstances, are consistent, or are not inconsistent with, the Company’s best interests, as they determine in the good faith exercise of their discretion. +2022 PROXY STATEMENT 55 +Proposal to Approve, on an Advisory, NON -BINDING Basis, +the Compensation Paid to the Company’s +Named Executive Officers +(Proposal 2 ) +The company is asking its stockholders to vote to approve, on an advisory, non -binding basis, the compensation paid to the Company’s named executive officers as reported in this proxy statement. This is also known as a “say on pay” vote. The Company’s stockholders are being asked to vote on the following resolution: +“RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S -K , including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby approved.” +This vote is advisory, which means that the vote on executive compensation is not binding on the Company, our Board of Directors or the Compensation Committee. While the vote on executive compensation is solely advisory in nature, our Board of Directors and the Compensation Committee will review and consider the “say on pay” voting results when making future decisions regarding our executive compensation program. +Stockholders are encouraged to carefully review the “Compensation Discussion and Analysis” section of this proxy statement, which discusses in detail the Company’s compensation policy and compensation arrangements which the Company believes are appropriate and reasonably consistent with market practice and with the long -term interests of the Company and its stockholders. In furtherance of the Company’s goals and objectives, the Compensation Committee, among other things, emphasizes long -term equity awards and annual performance bonuses under the previously implemented Annual Incentive Plan to more closely align our executives’ interests with those of our stockholders and to link a larger portion of our executives’ compensation to the performance of our stock and our operational performance. +We have determined that our stockholders should cast an advisory vote on the compensation of our named executive officers on an annual basis. Unless this policy changes, the next advisory vote on the compensation of our named executive officers will be at the 2023 Annual Meeting. +Vote Required and Board Voting Recommendation +Proposal 2 requires an affirmative vote “for” the proposal by a majority of the votes cast by the stockholders present in person or represented by proxy at the Annual Meeting and entitled to vote thereon. The persons named as proxies for the Company intend to vote the proxies “ FOR ” Proposal 2. Abstentions and broker non -votes , if any, will have no effect on the voting results for Proposal 2. +THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THIS PROPOSAL 2. +56 2022 PROXY STATEMENT +Proposal to Ratify the Appointment of Our Independent Auditors +(Proposal 3 ) +The Company is asking its stockholders to vote to ratify the appointment of Grant Thornton LLP as our independent auditors for fiscal year ending December 31, 2022. The Audit Committee has appointed Grant Thornton LLP to serve as independent auditors. +What services do the independent auditors provide? +Audit services of Grant Thornton LLP for fiscal year 2021 included an audit of our consolidated financial statements and services related to periodic filings made with the SEC. Additionally, Grant Thornton LLP provided certain services related to the consolidated quarterly reports as described below. +How much were the independent auditors paid in 2021 and 2020? +Grant Thornton LLP’s fees for professional services totaled $1,107,000 for 2021 and $866,250 for 2020. Grant Thornton LLP’s fees for professional services included the following: +• Audit Fees – aggregate fees for audit services, which relate to the fiscal year consolidated audit, quarterly reviews and accounting consultations were $1,107,000 for 2021 and $866,250 for 2020. +• Audit -Related Fees – aggregate fees for audit -related services, consisting of audits in connection with proposed or consummated dispositions, benefit plan audits, other subsidiary audits, special reports, and accounting consultations, were $0 in 2021 and 2020. +• Tax and All Other Fees – there w ere no tax or other fees for products or services provided by Grant Thornton LLP in addition to the services described above in 2021 and 2020. +Does the Audit Committee approve the services provided by Grant Thornton LLP? +It is our Audit Committee’s policy to pre -approve all audit, audit related and permissible non -audit services rendered to us by our independent auditor. Consistent with such policy, all of the fees listed above that we incurred for services rendered by Grant Thornton LLP in fiscal years 2021 and 2020 were pre -approved by our Audit Committee. No non -audit services were provided to us by Grant Thornton LLP in 2021 or 2020. +Will a representative of Grant Thornton LLP be present at the meeting? +Yes, one or more representatives of Grant Thornton LLP will be present at the meeting. The representatives will have an opportunity to make a statement if they desire and will be available to respond to appropriate questions from the stockholders. +Has Grant Thornton LLP always served as Gulfport’s independent auditors? +Grant Thornton LLP has served as our independent auditors since 2005. +Vote Required and Board Recommendation +Stockholder ratification of the appointment of our independent auditors is not required by the Bylaws or otherwise. However, we are submitting this proposal to the stockholders as a matter of good corporate practice. Approval of this proposal requires the affirmative vote “for” the proposal of a majority of the votes cast by the stockholders present in person or represented by proxy at the Annual Meeting and entitled to vote thereon. The persons named as proxies for the Company intend to vote the proxies “FOR” Proposal 3. Abstentions and broker non -votes , if any, will have no effect on the voting results for Proposal 3. +If the appointment of Grant Thornton LLP is not ratified, the Audit Committee will reconsider the appointment. Even if the appointment is ratified, the Audit Committee in its discretion may direct the appointment of a different independent audit firm at any time during the year if it is determined that such change would be in best interests of the Company and its stockholders. +THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF GRANT THORNTON LLP AS THE COMPANY’S INDEPENDENT AUDITORS FOR THE YEAR 2022. +2022 PROXY STATEMENT 57 +Audit Committee Repor t +The primary role of the Audit Committee is to assist the Board of Directors in its oversight of the Company’s accounting and financial reporting processes. In doing so, the Audit Committee is responsible for the appointment and compensation of the Company’s independent registered public accounting firm and has oversight for its qualification, independence and performance. The Audit Committee charter guides our duties and responsibilities. The Audit Committee charter, which was last amended during 2021, is available on the Company’s website at www.gulfportenergy.com . As set forth in the charter, management is responsible for the internal controls and accounting and financial reporting processes of Gulfport Energy Corporation. The independent registered public accounting firm is responsible for expressing opinions on the conformity of Gulfport Energy Corporation’s audited consolidated financial statements with generally accepted accounting principles and on the effectiveness of the Company’s internal control over financial reporting. Our responsibilities include monitoring and overseeing these processes. +Our Committee is comprised of four non -employee , independent members of the Board of Directors. No member serves on more than two other public company audit committees. The Board of Directors has determined that all of the members of the Audit Committee are financially literate and that David Wolf, Jason Martinez and David Reganato are financial experts as that term is defined by the SEC. The members of our Committee are not professionally engaged in the practice of accounting or auditing. The Audit Committee’s considerations and discussions referred to below do not assure that the audit of the Company’s financial statements has been carried out in accordance with generally accepted auditing standards, that the financial statements are presented in accordance with generally accepted accounting principles or that the Company’s auditors are in fact “independent”. +In the performance of our oversight function, we have reviewed and discussed the audited financial statements of the Company for the fiscal year ended December 31, 2021 and management’s assessment of the effectiveness of the Company’s internal control over financial reporting with the management of Gulfport Energy Corporation. We have met with Grant Thornton LLP, the Company’s independent registered public accounting firm, with and without management present. We discussed with Grant Thornton LLP the matters required to be discussed under the applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”) and the SEC and such other matters as we have deemed to be appropriate, including the overall scope and plans for the audit. We also have received the written disclosures and the letter from Grant Thornton LLP required by the applicable PCAOB requirements regarding the independent accountant’s communications with the Audit Committee concerning independence, and we have discussed with Grant Thornton LLP that firm’s independence from management and the Company. We also reviewed the amount of fees paid to Grant Thornton LLP for both audit and non -audit services. In doing so, we considered whether the provision of non -audit services to the Company was compatible with maintaining the independence of Grant Thornton LLP. +Based on the reports and discussions above, we recommended to the Board of Directors that the audited financial statements be included in the Gulfport Energy Corporation 2021 Annual Report on Form 10K. +This report is not soliciting material, is not deemed to be filed with the SEC, and is not to be incorporated by reference in any filing of the Company under the Securities Act of 1933, as amended, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing. +This report has been furnished by the Audit Committee of the Board of Directors. +THE AUDIT COMMITTEE +David Wolf, Chairman +Guillermo (Bill) Martinez +Jason Martinez +David Reganato +58 2022 PROXY STATEMENT +ABOUT THE ANNUAL MEETIN G +Why am I receiving these materials? +The Board of Directors has sent you this proxy statement and the accompanying proxy card to ask for your vote, as a stockholder of the Company, on certain matters that will be voted on at the Annual Meeting. +Who is soliciting my vote? +The Board of Directors is soliciting your vote at the Annual Meeting. The proposals to be voted on by the Company’s stockholders at the Annual Meeting are described below. +What am I voting on? +You are voting on: +• The election of five directors to serve until the 2023 Annual Meeting ( see Proposal 1 beginning on page 7 of this proxy statement ); +• The approval, on an advisory, non -binding basis, of the compensation paid to the Company’s named executive officers as described in this proxy statement ( see Proposal 2 beginning on page 56 of this proxy statement ); +• The ratification of Grant Thornton LLP as our independent auditors for the year ended December 31, 2022 ( see Proposal 3 beginning on page 57 of this proxy statement ); and +• Any other business properly coming before the meeting. +How does the Board of Directors recommend that I vote my shares? +Unless you give other instructions on your proxy card, the persons named as proxy holders on the proxy card will vote in accordance with the recommendations of our Board of Directors. The Board of Directors’ recommendations can be found with the description of each proposal in this proxy statement. In summary, the Board of Directors recommends a vote: +• “ FOR ” each of our director nominees; +• “ FOR ” the proposal to approve, on an advisory, non -binding basis, the compensation paid to the Company’s named executive officers as described in this proxy statement; and +• “ FOR ” the proposal to ratify Grant Thornton LLP as the Company’s independent auditors for the fiscal year ended December 31, 2022. +What is a proxy? +A proxy is your legal designation of another person to vote the shares of common stock that you own. That other person is also referred to as a “proxy.” If you designate someone as your proxy in a written document, that document is called a proxy or a proxy card. We have designated Timothy J. Cutt, our Chairman and Chief Executive Officer, and Patrick K. Craine, our Chief Legal and Administrative Officer and Corporate Secretary, as the Company’s proxies for the Annual Meeting. +Who is entitled to vote? +You may vote if you were the record owner of our common shares or preferred shares as of the close of business on the record date, which is April 20, 2022. Gulfport had 21,006,607 common shares outstanding as of the record date. Each share of common stock is entitled to one vote. In addition, Gulfport had 55,212 preferred shares outstanding as of the record date. The holders of Gulfport’s preferred stock are entitled to vote on all matters submitted to the stockholders for a vote, voting together with the holders of the common stock as a single class, on an as -converted basis. Gulfport’s 55,212 preferred shares outstanding as of the record date, on an as -converted basis, totaled approximately 3,943,714 common shares entitled to vote. +2022 PROXY STATEMENT 59 +about the annual meeting +In aggregate, as of April 20, 2022, we had approximately 24,950,321 shares entitled to vote, excluding an aggregate of 349,065 shares of restricted stock units and performance -based restricted stock units awarded under our 2021 Stock Incentive Plan, but not yet vested. There is no cumulative voting. +How many votes must be present to hold the Annual Meeting? +Your shares are counted as present at the Annual Meeting if you attend the meeting and vote in person or if you return a properly executed proxy by mail. In order for us to hold our meeting, holders of a majority of the voting power of our outstanding shares of common stock and preferred stock as of the close of business on April 20, 2022 must be present in person or by proxy at the Annual Meeting. This is referred to as a “quorum.” Votes withheld and abstentions will be counted for purposes of establishing a quorum at the Annual Meeting. Broker non -votes , if any, will not be counted for purposes of establishing a quorum at the Annual meeting (see “What is the effect of abstentions, withhold votes and broker non -votes ?” below) +What vote is required to elect directors (Proposal 1)? +The election of directors at the Annual Meeting will be conducted under a majority of the votes cast standard. This means that with respect to each director nominee, the number of votes cast “for” the director nominee must exceed the number of votes cast “against” the nominee. Abstentions will have no effect on the outcome of the election. +What vote is required to approve, on an advisory, non-binding basis, the compensation of the Company’s named executive officers (Proposal 2)? +The proposal to approve, on an advisory, non -binding basis, the compensation of the Company’s named executive officers will be adopted if a majority of the votes present in person or by proxy and voting on this matter are cast “for” the proposal. You may vote “for,” “against” or “abstain” from approving the proposal. Abstentions will have no effect on the outcome of the proposal. +What vote is required to approve, on an advisory, non-binding basis, the ratification of the appointment of the Company’s independent auditor (Proposal 3)? +The proposal to approve, on an advisory, non -binding basis, the appointment of Grant Thornton LLP as Gulfport’s independent auditor for the year ending December 31, 2022 will be adopted if a majority of the votes present in person or by proxy and voting on this matter are cast “for” the proposal. You may vote “for,” “against” or “abstain” from approving the proposal. Abstentions will have no effect on the outcome of the proposal. +What is the effect of abstentions, withhold votes and broker non-votes? +If you specify that you wish to “abstain” or “withhold” from voting on an item, then your shares will not be voted on that particular item. +Because the votes cast in favor of each director nominee must exceed the votes cast against such nominee under Proposal 1 and because the votes cast in favor of the action must exceed the votes cast opposing the action in order to approve Proposals 2, and 3 at the Annual Meeting, abstentions will not have an effect on the outcome of those proposals. +A “broker non -vote ” occurs when a beneficial holder does not provide instructions to a broker and such broker lacks discretionary voting power to vote shares with respect to a particular proposal. Under NYSE rules, brokers are permitted to exercise discretionary voting authority on “routine” matters, but beneficial owners of shares must provide voting instructions to their brokers with respect to “non -routine ” matters in order for their brokers to exercise voting authority with respect to such shares on such matters. Under NYSE rules, the proposal to approve the appointment of an independent auditor is considered a “routine” matter. This means that brokers may vote in their discretion on Proposal 3 on behalf of clients who have not furnished voting instructions with respect to such proposal. In contrast, Proposals 1 and 2 are “non -routine ” matters. This means brokers that have not received voting instructions from their clients on these proposals may not vote on these proposals in their own discretion, which results in “broker non -votes .” +60 2022 PROXY STATEMENT +about the annual meeting +Who is a registered stockholder and who is a beneficial stockholder? +Registered Stockholders: A “registered stockholder” is a person or entity whose name appears in the Company’s registered list of stockholders as an owner of one or more shares of the Company’s common stock and / or preferred stock. If you are a registered stockholder, these proxy materials are being sent directly to you. +Beneficial Stockholders: A “beneficial stockholder” or “beneficial owner” is a person or entity whose shares of the Company’s common stock and / or preferred stock are held by a bank, broker or other nominee (a.k.a. in “street name”). Most holders of our common stock hold their shares beneficially through a bank, broker or other nominee rather than of record directly in their own name. If you are a beneficial stockholder, these proxy materials are being forwarded to you by your bank, broker or other nominee, who is considered the registered stockholder of those shares. As the beneficial stockholder, you have the right to direct your bank, broker or other nominee on how to vote your shares and you are also invited to attend the Annual Meeting. Your bank, broker or other nominee has provided a voting instruction form for you to use in directing your bank, broker or other nominee as to how to vote your shares. You must follow these instructions in order for your shares to be voted. Your nominee is required to vote those shares in accordance with your instructions. If you do not give instructions to your broker, your broker will be able to vote your shares at its discretion with regard to Proposal 3, but will not be able to vote your shares at its discretion with respect to Proposals 1 and 2. +How do I vote? +Registered Stockholders : If you are a “registered stockholder,” you can vote your shares in the following four ways: +• By Internet : You may vote by submitting a proxy over the Internet. Go to the website listed on your proxy card or voting instruction form and follow the instructions. You should have your proxy card, including your control number, in hand when you access the website. +• By Telephone : Stockholders located in the United States who receive proxy materials by mail may vote by submitting a proxy by telephone by calling the toll -free telephone number on the proxy card or voting instruction form and following the instructions. +• By Mail : If you received proxy materials by mail, you can vote by submitting a proxy by mail by completing, signing and dating the proxy card and mailing it in the enclosed, postage pre -paid envelope. +• In Person : You may attend virtually and vote at the Annual Meeting. +Beneficial Stockholders: If you are a “beneficial stockholder,” then you will receive instructions from your bank, broker or other nominee on how to vote your shares. If you are a “beneficial stockholder,” you will need proof of ownership to be admitted to the Annual Meeting. +Who counts the votes? +We have hired Computershare Trust Company, N.A., our transfer agent, to act as the tabulation agent and count the votes represented by proxies cast by mail or ballot. Employees of Computershare Trust Company, N.A. will act as inspectors of election. +Could other matters be decided at the Annual Meeting? +We have not received any stockholder proposals and are not aware of any other matters that are expected to come before the Annual Meeting other than those described in this proxy statement. If any other matter should be presented at the Annual Meeting upon which a vote may be properly taken, shares represented by all proxy cards received by the Board will be voted with respect thereto at the discretion of the person or persons named as proxies on the enclosed proxy card. +2022 PROXY STATEMENT 61 +about the annual meeting +How can I attend the annual meeting ? +The Annual Meeting will be a completely virtual meeting of stockholders, which will be conducted exclusively by webcast. You are entitled to participate in the Annual Meeting only if you were a stockholder of the Company as of the close of business on the Record Date, or if you hold a valid proxy for the Annual Meeting. No physical meeting will be held. +You will be able to attend the Annual Meeting online and submit your questions during the meeting by visiting http s://meetnow.global/MHF VXJ2 . You also will be able to vote your shares online by attending the Annual Meeting by webcast. +To participate in the Annual Meeting, you will need to review the information included on your Notice, on your proxy card or on the instructions that accompanied your proxy materials. +If you hold your shares through an intermediary, such as a bank or broker, you must register in advance using the instructions below. +The online meeting will begin promptly at 9:00 a.m., Central Time. We encourage you to access the meeting prior to the start time leaving ample time for the check in. Please follow the registration instructions as outlined in this proxy statement. +How do I register to attend the Annual Meeting virtually on the Internet? +If you are a registered stockholder (i.e., you hold your shares through our transfer agent, Computershare), you do not need to register to attend the Annual Meeting virtually on the Internet. Please follow the instructions on the notice or proxy card that you received. +If you hold your shares through an intermediary, such as a bank or broker, you must register in advance to attend the Annual Meeting virtually on the Internet. +To register to attend the Annual Meeting online by webcast you must submit proof of your proxy power (legal proxy) reflecting your Gulfport Energy holdings along with your name and email address to Computershare. Requests for registration must be labeled as “Legal Proxy” and be received no later than 5:00 p.m., Eastern Time, on June 8 (3 business days in advance of the meeting), 2022. +You will receive a confirmation of your registration by email after we receive your registration materials. +Requests for registration should be directed to us at the following: +By email +Forward the email from your broker, or attach an image of your legal proxy, to legalproxy@computershare.com +By mail +Computershare +COMPANY Legal Proxy +P.O. Box 43001 +Providence, RI 02940 -3001 +Why are you holding a virtual meeting instead of a physical meeting? +We are excited to embrace the latest technology to provide expanded access, improved communication and cost savings for our stockholders and the Company. We believe that hosting a virtual meeting will enable more of our stockholders to attend and participate in the meeting since our stockholders can participate from any location around the world with Internet access. +62 2022 PROXY STATEMENT +about the annual meeting +What if I have trouble accessing the Annual Meeting virtually? +The virtual meeting platform is fully supported across browsers (MS Edge, Firefox, Chrome and Safari) and devices (desktops, laptops, tablets and cell phones) running the most up -to-date version of applicable software and plugins. Note: Internet Explorer is not a supported browser. Participants should ensure that they have a strong WiFi connection wherever they intend to participate in the meeting. We encourage you to access the meeting prior to the start time. For further assistance should you need it you may call 1 -888-724-2416 . +How can I access the Company’s proxy materials and annual report? +We have elected, in accordance with the Securities and Exchange Commission’s “Notice and Access” rule, to deliver a Notice of Internet Availability of Proxy Materials (the “Notice”) to our stockholders and to post our proxy statement and the Company’s 2021 Annual Report on Form 10 -K (collectively, the “proxy materials”) electronically. The Notice is first being mailed to our stockholders on or about May 5, 2022. The proxy materials will first be made available to our stockholders on or about the same date. The Notice instructs you how to access and review the proxy materials and how to submit your proxy via the Internet. The Notice also instructs you how to request and receive a paper copy of the proxy materials, including a proxy card or voting instruction form, at no charge. We will not mail a paper copy of the proxy materials to you unless specifically requested to do so. Additionally, the notice of the Annual Meeting, this proxy statement and the Company’s 2021 Annual Report on Form 10 -K to Stockholders are available electronically on the Company’s website at w ww.gulfportenergy.com/proxy . +Where can I find the results of the Annual Meeting? +We intend to announce preliminary voting results at the Annual Meeting and intend to publish final results in a Current Report on Form 8 -K , which we will file with the SEC within four business days after the Annual Meeting. +2022 PROXY STATEMENT 63 +Availability of Form 10 -K and +Annu al Report to Stockholder s +SEC rules require us to provide an Annual Report to stockholders who receive this proxy statement. Additional copies of our Annual Report on Form 10 -K for the fiscal year ended December 31, 2021 , including the financial statements and the financial statement schedules, are available without charge to stockholders upon written request to Director of Investor Relations, Gulfport Energy Corporation, 3001 Quail Springs Parkway, Oklahoma City, Oklahoma 73134 or via the Internet at www.gulfportenergy.com . We will furnish the exhibits to our Annual Report on Form 10 -K upon payment of our copying and mailing expenses. +64 2022 PROXY STATEMENT +HOUSEHOLDIN G +The SEC permits a single Notice or set of annual reports and proxy statements to be sent to any household at which two or more stockholders reside if they appear to be members of the same family, unless instructions have been received to the contrary. Each stockholder continues to receive a separate proxy card. This procedure, referred to as householding, reduces the volume of duplicate information stockholders receive and reduces our mailing and printing expenses. +If you would like to receive your own Notice or set of the annual report and proxy statement this year or in future years, follow the instructions described below, and we will promptly deliver a separate copy to you. Similarly, if you share an address with another Gulfport stockholder and together both of you would like to receive in the future only a single Notice or annual report and proxy statement, follow the instructions below: +• If your shares of our common stock are registered in your own name, please contact our transfer agent, Computershare Trust Company, N.A., and inform them of your request by calling their toll -free number: (800) 962 -4284 or by mail: Computershare Trust Company, N.A., 250 Royall Street, Canton, MA 02021. +• If a broker or other nominee holds your shares, please contact your broker or nominee. +2022 PROXY STATEMENT 65 +Other Matter s +The Board of Directors does not intend to present any other items of business other than those stated in the notice of Annual Meeting. If any other matter should be presented at the Annual Meeting upon which a vote may be properly taken, shares represented by all proxy cards received by the Board will be voted with respect thereto at the discretion of the person or persons named as proxies on the enclosed proxy card. +66 2022 PROXY STATEMENT +Solicitation by THE Board OF DIRECTOR S +Participants in the Solicitation +We are required by law to convene an annual meeting of our stockholders at which directors are elected. Because shares of our common stock are widely held, it would be impractical for our stockholders to meet physically in sufficient numbers to hold a meeting. Accordingly, the Company is soliciting proxies from our stockholders. Our directors, director nominees, officers and employees may solicit proxies in person, or via mail, telephone, facsimile or email. Those persons will receive no additional compensation for any solicitation activities. +Expenses of Solicitation +U.S. federal securities laws require us to send you this proxy statement and any amendments or supplements thereto, and to specify the information required to be contained in it. The Company will bear the expenses of calling and holding the Annual Meeting and the solicitation of proxies therefor. These expenses will include, among other things, the costs of preparing, assembling, printing and mailing the proxy materials to stockholders of record and beneficial owners, and reimbursement paid to brokerage firms, banks and other fiduciaries for their reasonable out -of-pocket expenses for forwarding proxy materials to stockholders and obtaining beneficial owners’ voting instructions. +2022 PROXY STATEMENT 67 +FORWARD -LOOKING STATEMENT S +This proxy statement contains forward -looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Exchange Act and the Private Securities Litigation Reform Act of 1995. All statements relating to events or results that may occur in the future, including, but not limited to, the Company’s future prospects and performance, costs of solicitation, record or meeting dates, compensation arrangements, plans or amendments, Company policies, documents or amendments as well as capital and corporate structure (including major stockholders, Board structure and Board composition), are forward -looking statements. +Forward -looking statements are statements other than statements of historical fact. They include statements regarding Gulfport’s current expectations, management’s outlook guidance or forecasts of future events, projected cash flow and liquidity, share repurchases, its ability to enhance cash flow and financial flexibility, future production and commodity mix, plans and objectives for future operations, the ability of our employees, portfolio strength and operational leadership to create long -term value, the rejection of certain midstream contracts and the assumptions on which such statements are based. Gulfport believes the expectations and forecasts reflected in the forward -looking statements are reasonable, Gulfport can give no assurance they will prove to have been correct. They can be affected by inaccurate or changed assumptions or by known or unknown risks and uncertainties. Important risks, assumptions and other important factors that could cause future results to differ materially from those expressed in the forward -looking statements are described under “Risk Factors” in Item 1A of Gulfport’s annual report on Form 10 -K for the year ended December 31, 2021 and any updates to those factors set forth in Gulfport’s subsequent quarterly reports on Form 10 -Q or current reports on Form 8 -K (available at https://www.gulfportenergy.com/investors/sec -filings ). +Investors should note that Gulfport announces financial information in SEC filings, press releases and public conference calls. Gulfport may use the Investors section of its website ( www.gulfportenergy.com ) to communicate with investors. It is possible that the financial and other information posted there could be deemed to be material information. The information on Gulfport’s website is not incorporated into or a part of this filing. +Unless required by law, the Company does not intend, and undertakes no obligation, to update or publicly release any revision to any such forward -looking statements, whether as a result of the receipt of new information, the occurrence of subsequent events, a change in circumstances or otherwise. Each forward -looking statement contained in this proxy statement is specifically qualified in its entirety by the aforementioned factors. Readers are advised to carefully read this proxy statement in conjunction with the important disclaimers set forth above prior to reaching any conclusions or making any investment decisions, and not to place undue reliance on these forward -looking statements, which apply only as of the date of this proxy statement. +68 2022 PROXY STATEMENT +Submission of Future Stockholder Proposal s +Under Rule 14a -8 under the Exchange Act (“Rule 14a -8 ”), a stockholder who intends to present a proposal for business at the 2023 Annual Meeting and who wishes the proposal to be included in the proxy statement and form of proxy for that meeting must submit the proposal in writing to our Corporate Secretary no later than January 30, 2023. Such proposal must comply with the requirements of Rule 14a -8 under the Exchange Act and our Bylaws to be eligible for inclusion in the Company’s proxy materials. +If a stockholder wishes to submit a proposal for business or nomination of directors at the 2023 Annual Meeting other than in reliance on Rule 14a -8 , in order for such proposal to be considered timely pursuant to our Charter and Bylaws, the stockholder’s notice must be delivered to or mailed and received by the Corporate Secretary at the principal executive offices of the Company not less than 60 days nor more than 90 days prior to June 14, 2023 (i.e., the first anniversary of the 2022 Annual Meeting). Accordingly, the stockholder’s notice must be delivered to or mailed and received by the Corporate Secretary not later than April 17, 2023 and not earlier than March 16, 2023. However, in the event that the date of the 2023 Annual Meeting is advanced by more than 30 days, or delayed by more than 70 days, from June 14, 2023, notice by the stockholder to be timely must be so received not later than the close of business on the 10th day following the day on which public announcement of the date of the 2023 Annual Meeting was first made. At present, the Company has not announced a meeting date for the 2023 Annual Meeting. The Company expects to announce the date of the 2023 Annual Meeting and provide formal notice thereof in 2023. +In addition to satisfying the foregoing requirements under our Bylaws, to comply with the universal proxy rules (once effective), stockholders who intend to solicit proxies in support of director nominees other than our nominees must provide a notice to our Company that sets forth the information required by Rule 14a -19 under the Exchange Act no later than April 17, 2023. +You can obtain a copy of the Charter and Bylaws by writing to the Corporate Secretary at the address below, or from the SEC website at www.sec.gov (the Charter and Bylaws are filed as exhibits to our latest report on Form 10 -K filed with the SEC on March 1, 2022). +All written proposals and inquiries for copies of the Charter and Bylaws should be directed to Patrick K. Craine, our Chief Legal and Administrative Officer and Corporate Secretary, at Gulfport Energy Corporation, 3001 Quail Springs Parkway, Oklahoma City, Oklahoma 73134. +2022 PROXY STATEMENT 69 +Your vote matters – here’s how to vote! You may vote online or by phone instead of mailing this card. Online Go to www.envisionreports.com/GPOR or scan the QR code — login details are located in the shaded bar below. Save paper, time and money! Sign up for electronic delivery at www.envisionreports.com/GPOR Phone Call toll free 1 -800-652-VOTE (8683) within the USA, US territories and Canada Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. 2022 Annual Meeting Proxy Card IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. A Proposals — The Board of Directors recommend a vote FOR all the nominees listed and A FOR Proposals 2 and 3. 1. Election of Directors: 01 - Timothy J. Cutt 04 - Jason Martinez For Against Abstain 02 - David Wolf 05 - David Reganato For Against Abstain 03 - Guillermo (Bill) Martinez For Against Abstain 2. Proposal to approve, on an advisory, non -binding basis, the compensation paid to the Company’s named executive officers. For Against Abstain 3. Proposal to ratify the appointment of Company’s independent auditors, Grant Thornton LLP, for the fiscal year ending December 31, 2022. For Against Abstain B Authorized Signatures — This section must be completed for your vote to count. Please date and sign below. Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title. Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box. 1 U P X 03MXNB +2022 Annual Meeting Admission Ticket 2022 Annual Meeting of Gulfport Energy Corporation stockholders June 14, 2022, 9:00 am CT, virtually via the Internet at meetnow.global/MHFVXJ2. To access the virtual meeting, you must have the information that is printed in the shaded bar located on the reverse side of this form. Important notice regarding the Internet availability of proxy materials for the Annual Meeting of Stockholders. The material is available at: www.envisionreports.com/GPOR Small steps make an impact. Help the environment by consenting to receive electronic delivery, sign up at www.envisionreports.com/GPOR IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. Gulfport Energy Corporation Notice of 2022 Annual Meeting of Stockholders Proxy Solicited by Board of Directors for Annual Meeting — June 14, 2022 The undersigned hereby appoints Timothy J. Cutt and Patrick K. Craine (together, the “Proxies”), and each of them, with full power of substitution, as proxies to vote the shares that the undersigned is entitled to vote at the Annual Meeting of Stockholders of Gulfport Energy Corporation (the “Company”) to be held on June 14, 2022 at 9:00 a.m. Central Time and at any adjournments and postponements thereof. Such shares shall be voted as indicated with respect to the proposals listed on the reverse side hereof and in the Proxies’ discretion on such other matters as may properly come before the meeting or any adjournment or postponement thereof. The undersigned acknowledges receipt of the 2022 Notice of Annual Meeting and accompanying Proxy Statement and revokes all prior proxies for said meeting. THE SHARES REPRESENTED BY THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO SPECIFIC DIRECTION IS GIVEN AS TO THE PROPOSALS ON THE REVERSE SIDE, THIS PROXY WILL BE VOTED FOR EACH OF THE NOMINEES NAMED IN PROPOSAL 1 AND FOR EACH OF THE PROPOSALS 2 AND 3 IN ACCORDANCE WITH THE BOARD OF DIRECTOR’S RECOMMENDATION. PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY. IMPORTANT – PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY. THANK YOU FOR VOTING. (Items to be voted appear on reverse side) C Non -Voting Items Change of Address — Please print new address below. Comments — Please print your comments below. \ No newline at end of file diff --git a/raw/proxies/0000874499/0001213900-22-023197/proxy_rpt.txt b/raw/proxies/0000874499/0001213900-22-023197/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..6f09fbaef9556eafa7a955be9c40806dc4036eb8 --- /dev/null +++ b/raw/proxies/0000874499/0001213900-22-023197/proxy_rpt.txt @@ -0,0 +1,4 @@ +Approval of Related Party Transactions +The Audit Committee, as provided in its charter, reviews and approves related party transactions. The Company does not have a formal set of standards to be substantively applied to each transaction reviewed by the Audit Committee. Instead of a formalized policy, related party transactions are reviewed and judgment is applied to determine whether such transactions are in the best interests of the Company. Further, the Company’s Code of Business Conduct and Ethics governs various compliance areas, including conflicts of interest and fair dealings, which are considered in the process of the review and approval of related party transactions. +The Company’s policy is that all its employees and directors, as well as their family members, must avoid any activity that is or has the appearance of conflicting with the Company’s business interest. This policy is included in the Company’s Code of Business Conduct and Ethics posted on its website. Each director and executive officer is instructed to always inform the designated compliance officer when confronted with any situation that may be perceived as a conflict of interest. Only the Board of Directors or a committee consisting solely of independent directors may grant waivers of the provisions of the Code of Business Conduct and Ethics for the Company’s executive officers and directors. In addition, at least annually, each director and executive officer completes a detailed questionnaire specifying any business relationship that may give rise to a conflict of interest. +Further, under the Audit Committee charter, the Audit Committee is responsible for reviewing and monitoring compliance with our Code of Business Conduct and Ethics and recommending any warranted changes to the Board of Directors. In addition, the Board of Directors and, pursuant to its written charter, the Audit Committee, reviews and approves all relationships and transactions in which the Company and its directors, director nominees and executive officers and their immediate family members, as well as holders of more than 5% of any class of our voting securities and their family members, have a direct or indirect material interest. The Board of Directors and the Audit Committee approve only those transactions that, in light of known circumstances, are consistent, or are not inconsistent with, the Company’s best interests, as they determine in the good faith exercise of their discretion. \ No newline at end of file diff --git a/raw/proxies/0000874499/0001213900-23-028650/proxy.txt b/raw/proxies/0000874499/0001213900-23-028650/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..891c214bc7d826c2ecb1b5fdaf1b7c742113dcb9 --- /dev/null +++ b/raw/proxies/0000874499/0001213900-23-028650/proxy.txt @@ -0,0 +1,2668 @@ +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +________________ +Schedule 14A +Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 +(Amendment No. ) +________________ +Filed by the Registrant +☒ +Filed by a party other than the Registrant +☐ +Check the appropriate box: +☐ +Preliminary Proxy Statement +☐ +Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +☒ +Definitive Proxy Statement +☐ +Definitive Additional Materials +☐ +Soliciting Material under §240.14a-12 +Gulfport Energy Corporation +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check all boxes that apply): +☒ +No fee required +☐ +Fee paid previously with preliminary materials. +☐ +Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a- 6(i)(1) and 0-11 +April 10, 2023 +Dear Stockholders, +On behalf of the Board of Directors (the “Board”), management, and employees of Gulfport Energy Corporation (“Gulfport”, “Gulfport Energy,” the “Company,” “we,” “our” and “us”), you are cordially invited to participate in the 2023 Annual Meeting of Stockholders (the “Annual Meeting”) to be held on May 24, 2023 at 9:00 a.m. Central Time. Our annual meeting will be held in person at 713 Market Drive, Oklahoma City, OK 73114. The attached Notice of 2023 Annual Meeting of Stockholders and this proxy statement will serve as your guide to the business conducted during the Annual Meeting. +We are mailing most of our stockholders a Notice of Internet Availability of Proxy Materials for the 2023 Annual Meeting (the “Notice”), which provides instructions regarding how stockholders can access and review proxy materials over the internet and submit their proxy electronically. We believe the Notice process allows us to provide our stockholders with the information they desire in a timely manner, while reducing costs and the environmental impact of our Annual Meeting. If you received the Notice and would prefer to receive a paper copy of the proxy materials, please follow the instructions for requesting the materials that are provided in the Notice. +Your vote is very important to us. To assure your representation at the Annual Meeting, please vote your shares over the internet or through the toll -free telephone number as instructed in the Notice. +Thank you for your continued support and interest in Gulfport. +Sincerely, +Timothy Cutt +Chairman of the Board +GULFPORT ENERGY CORPORATION +713 Market Drive +Oklahoma City, Oklahoma 73114 +NOTICE OF 2023 ANNUAL MEETING OF STOCKHOLDERS +April 10, 2023 +Notice is given that the 2023 Annual Meeting of Stockholders (including any adjournments or postponements, the “Annual Meeting”) of Gulfport Energy will be held on May 24, 2023 at 9:00 a.m., Central Time at Gulfport Headquarters located at 713 Market Drive, Oklahoma City, OK 73114 to vote on the proposals listed in the following table. +Date and Time +May 24, 2023 at 9:00 a.m., Central Time +Place +The Annual Meeting will be held in person at Gulfport Headquarters located at 713 Market Drive, Oklahoma City, OK 73114. +Proposals +1. To elect seven directors to serve until the Company’s 2024 Annual Meeting of Stockholders or until their respective successors have been duly elected and qualified (the Election of Directors Proposal or Proposal 1 ). +2. To ratify the appointment of Grant Thornton LLP as the Company’s independent auditors for the fiscal year ending December 31, 2023 (the Auditors Ratification Proposal or Proposal 2 ). +3. To approve, on an advisory, non-binding basis, the compensation paid to the Company’s named executive officers as described in this proxy statement (the Say -On-Pay Proposal or Proposal 3 ). +4. To approve, on an advisory, non-binding basis, the frequency of advisory stockholder votes on the compensation paid to the Company’s named executive officers (the Say on Frequency Proposal or Proposal 4 ). +We will also transact any other business as may properly come before the Annual Meeting. +Record Date +March 30, 2023, at the close of business +Holders of record of our common stock, par value $0.0001 per share, and preferred stock, par value $0.0001 per share, in each case, outstanding as of March 30, 2023 at the close of business, the record date for the Annual Meeting, will be entitled to Notice of the Annual Meeting and to vote at the Annual Meeting or any adjournment or postponement. +PROXY VOTING +Stockholders of the Company as of the record date are entitled to vote by proxy in the following ways: +By calling the telephone number on your proxy card or voting instruction form +Online by visiting the website provided on your proxy card or voting instruction form +By returning by mail a properly +completed, signed and dated +proxy card or voting instruction form +By attending in person and submitting a ballot at the Annual Meeting +IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON May 24, 2023: This proxy statement and additional information are available free of charge on the Company’s website at www.gulfportenergy.com/proxy . +By order of the Board of Directors, +Patrick Craine +Chief Legal and Administrative Officer and Corporate Secretary +The Notice of Internet Availability of Proxy Materials is first being mailed to stockholders on or about April 14, 2023, and the proxy materials relating to the Annual Meeting will be made available on or about the same date. +TABLE OF CONTENTS +GULFPORT ENERGY CORPORATION +713 Market Drive +Oklahoma City, Oklahoma 73114 +_____________________ +PROXY STATEMENT +_____________________ +Proxy Statement Summary +1 +Board Summary +2 +Corporate Responsibility and Sustainability Highlights +3 +Election of Directors and Director Biographies +6 +Corporate Governance Matters and Communications with the Board +15 +Nominating Process for Directors, Director Qualifications and Review of Director Nominees +17 +Director Leadership Structure +19 +Board of Directors’ Role in Risk Oversight +20 +Executive Officers +21 +Compensation Discussion and Analysis +23 +Executive Summary +25 +Compensation Committee Interlocks and Insider Participation +38 +Compensation Tables +39 +Benefit Plans +43 +401(k) Plan +43 +2021 Stock Incentive Plan +43 +Equity Compensation Plan Information +44 +Termination, Resignation or Change of Control +49 +CEO Pay Ratio Disclosure +51 +Pay Versus Performance +52 +Beneficial Ownership +56 +Who Are this Year’s Nominees? +Holdings of Major Stockholders +57 +Certain Relationships and Review and Approval of Related Party Transactions +58 +Proposal to Ratify the Appointment of Our Independent Auditors +59 +Proposal to Approve, on an Advisory, Non-Binding Basis, the Compensation Paid to the Company’s Named Executive Officers +60 +Proposal to Approve, on an Advisory, Non-Binding Basis, the Frequency of Advisory Stockholder Votes on the Compensation Paid to the Company’s Named Executive Officers +61 +Audit Committee Report +62 +About the Annual Meeting +63 +Availability of Form 10-K and Annual Report to Stockholders +67 +Householding +68 +Other Matters +69 +Solicitation by the Board of Directors +70 +Forward-looking Statements +71 +Submission of Future Stockholder Proposals +72 +2023 PROXY STATEMENT i +PROXY STATEMENT SUMMARY +The summary below highlights information contained elsewhere in this proxy statement. It does not contain all the information that you should consider in connection with the matters before the Annual Meeting. Please read the entire proxy statement carefully before voting your shares. +ABOUT GULFPORT +Gulfport is an independent natural gas -weighted exploration and production company with assets primarily located in the Appalachia and Anadarko basins. Our principal properties are located in eastern Ohio, where we target development in what is commonly referred to as the Utica formation, and central Oklahoma where we target development in the SCOOP Woodford and Springer formations. Gulfport’s Predecessor was incorporated in the State of Delaware in July 1997. Our corporate headquarters are in Oklahoma City, Oklahoma and shares of Gulfport’s Common Stock trade on the New York Stock Exchange (NYSE) under the ticker symbol “GPOR”. +BUSINESS STRATEGY +Gulfport aims to create sustainable value through the economic development of our significant resource plays in the Utica and SCOOP operating areas. Our strategy is to develop our assets in a manner that generates sustainable cash flow, improves margins and operating efficiencies, while improving our ESG and safety performance. To accomplish these goals, we allocate capital to projects we believe offer the highest rate of return and deploy leading drilling and completion techniques and technologies in our development efforts. We believe our plan to generate free cash flow on an annual basis will allow us to further strengthen our balance sheet, return capital to shareholders and increase our resource depth through incremental leasehold opportunities that provide optionality to our future development plans. +Core Assets +Employees +2022 Production +2022 Production Mix +Utica Shale and SCOOP +223 people +as of Dec. 31, 2022 +983 MMcfe +per day +90% natural gas, 7% natural gas liquids and 3% oil +DIRECTORS +Our Board is comprised of six directors, including the Company’s Chief Executive Officer, John Reinhart, and five non -employee directors, Timothy Cutt, David Wolf, Guillermo (Bill) Martinez, Jason Martinez and David Reganato. They are diverse, industry -leading experts with an average of approximately 30 years of industry leadership experience across multiple disciplines. Each of our directors will stand for election annually and must be elected by a majority of shares voted. +2023 PROXY STATEMENT 1 +Board Summary +The following table provides summary information about each director nominee who is standing for election at the Annual Meeting. For more information about the background and qualifications of each nominee, please see “Election of Directors and Director Biographies” on page 6 of this proxy statement. We ask you to vote “ FOR ” each of our director nominees. +Director +Board Positions +Dir. Since +Age +Ind. +Principal Occupation +Timothy Cutt +Chairman +2021 +62 +Chairman of the Board of Gulfport Energy +David Wolf +Lead Independent Director +2021 +52 +🗸 +Partner at Enduring Resources +Guillermo (Bill) Martinez +Independent Director +2021 +56 +🗸 +Executive Vice President and Chief Operating Officer at Mitsui E&P USA LLC +Jason Martinez +Independent Director +2021 +49 +🗸 +Managing Director at Pickering Energy Partners +David Reganato +Independent Director +2021 +43 +🗸 +Partner at Silver Point Capital +John Reinhart +Director +2023 +54 +President and Chief Executive Officer of Gulfport Energy +Mary Shafer -Malicki (1) +Independent Director +— +62 +🗸 +Director at Callon Petroleum +____________ +(1) The Chairman of the Board recommended Ms. Malicki’s nomination for this position. +2 2023 PROXY STATEMENT +Corporate Responsibility and +Sustainability Highlights +Gulfport is proud to play its part in the responsible and efficient development of domestic natural gas which is critical to our country’s economic success as it provides the primary fuel for efficient power generation in the United States. We are aware of the positive influence and potential impact we may have on the communities where we operate and live. Gulfport prioritizes safety, environmental protection, operational excellence and giving back to the communities in which we operate. +We have identified several key areas where our business could have an impact on the communities where we operate, including: greenhouse gas emissions, waste and spills, water usage, health, safety and environmental (“HSE”) protection, employee training and education, and community involvement. Our Board Nominating, Environmental, Social and Governance Committee oversees environmental, safety, social, sustainability and governance (“ESG”) matters. Continuously improving our HSE performance remains a top priority. Our HSE performance also directly impacts the compensation of all our employees as it is one of the performance goals included in our cash incentive compensation plan. We believe having measurable HSE metrics as part of our incentive compensation program leads to improved accountability and reinforces our cultural focus on operating safely and protecting employees, the environment and the communities in which we operate. +Environmental Stewardship. Gulfport strives to minimize the environmental impact of our operations by consistently focusing on finding ways to reduce our environmental footprint. Some of the ways Gulfport minimizes our environmental impact include: +• Selecting and designing our well sites to minimize impacts to sensitive habitats and surrounding areas; +• Reducing water disposal volumes and freshwater consumption through water re -use or water sharing agreements with other operators where possible; +• Investing in and implementing technology to reduce emissions, waste and our physical footprint on our drilling locations; +• Testing spill prevention and response programs to confirm equipment is maintained and operating practices are continually improved to prevent spills and minimize the impact of our operations to the soil, air and water; and +• Employing air quality programs, monitoring and operating practices to ensure that we comply with or exceed regulations. +We are a member of The Environmental Partnership which is committed to continuous improvements in environmental performance, including the reduction of methane and volatile organic compound emissions. Gulfport’s corporate environmental policy supports our commitment to operational excellence and our compliance obligations. The policy fosters environmental awareness and guides employee behavior consistent with Gulfport’s standards. All Gulfport employees are expected to act and make decisions within the guidelines of the policy to ensure our business complies with all local, state and federal environmental laws and regulations. All employees and contractors are expected to protect the environment, minimize and manage waste responsibly, reduce and eliminate emissions and limit spills and discharges. +Safety. Safety is the primary priority for all Gulfport employees and contractors supporting our activities. Gulfport provides comprehensive safety training to all employees and contractors and is fully committed to a safe working environment. We utilize and apply performance metrics to drive and improve safe operations. Gulfport has designed and instituted emergency response and business continuity plans to address incidents involving operational disruptions, pandemics and natural disasters. These measures include prompt notification procedures enabling Gulfport personnel to quickly evaluate and mitigate risks. Limiting safety incidents is included as part of our incentive compensation programs to ensure we train and hold our employees accountable for operating safely. +2023 PROXY STATEMENT 3 +Corporate Responsibility and Sustainability Highlights +Gulfport’s Work Safe Program focuses on a combination of twelve rules derived from Company policies (critical tasks) and cultural conditions that have been linked to serious safety incidents in our industry. Critical Task Rules require specific operating procedures to mitigate hazardous work site conditions to complete work safely. Cultural Condition Rules are defined as work site conditions or human behaviors that have been linked to the root cause of most incidents. Employees and contractors are expected to apply and follow the requirements that coincide with the twelve rules. Our goal is to not only improve our safety performance but to proactively prevent incidents before they happen. +Stop Work is one of the Work Safe Program’s critical tasks. Our Chairman and former Chief Executive Officer, Timothy Cutt, signed and communicated a Stop Work Authority and Obligation letter to the Company’s employees and our contractors. This letter outlines Gulfport’s commitment to health, safety and the environment and provides the expectation and support to all Gulfport employees and contract partners to stop work when conditions warrant. Every person on a Gulfport work site has the authority, and obligation to stop any work that is believed to cause an unsafe condition, or places personnel or the environment at risk. +Health, Safety & Environment Highlights for 2022: +• Reduced number of total OSHA recordable injuries by 33% from 2021; +• Reduced reportable spills by 63% year -over-year ; +• Continued improving our Contractor Management processes by performing safety audits for new contractors, refreshing safety audits for existing contractors and developing a new contractor orientation video; +• Advanced our WORK SAFE Program using visual aids in the field and ensuring contractor training requirements have been met; +• Created and delivered WORK GREEN Program training on the three focus areas – air, land, and water to reinforce our environmental procedures and policies; and +• Performed a gap assessment on our methane emissions management processes to initiate a gas certification project in Ohio. +Diversity. Diversity and inclusion are paramount to our organization. We obtained 100% compliance across our Company in diversity and inclusion training. Diversity is also important at our Board level, where over 40% of our directors to identify as gender or ethnically diverse. We are also committed to supporting veterans and do so through our recruiting and hiring efforts as well as supporting several causes that assist veterans and active -duty military. +Community Engagement. Gulfport consistently strives to positively impact and improve the communities where we live and operate. We uphold our corporate responsibility and put our core tenets into action by forming partnerships that are impactful in our operating areas. We have created a Community Impact Strategy that focuses our volunteering and giving efforts supporting education, health and human services, environmental stewardship, and veterans. +In 2022, we completed a multi -year pledge to the Dolly Parton Imagination Library supporting multiple counties in our Ohio operating area by providing literacy support for young children. We also continued our partnership with the River Protectors in Oklahoma by volunteering to remove trash on the North Canadian River. The River Protectors is an organization that works to remove trash as it arrives on riverbanks and focuses on driving a cultural shift to eliminate the problem. +4 2023 PROXY STATEMENT +Corporate Responsibility and Sustainability Highlights +Corporate Governance Highlights +We believe effective corporate governance requires regular constructive discussions with our stockholders. We have a proactive engagement process that encourages feedback from our stockholders. This feedback helps shape our corporate governance practices, and has specifically resulted in: +• Amendment of the Bylaws to change the supermajority vote requirement for stockholders to amend the Bylaws to a majority vote requirement; +• Adoption of stock ownership guidelines for our non -employee directors and executive officers to further align the long -term financial interests of our directors and executive officers with those of our stockholders; +• Adoption of Corporate Governance Guidelines to ensure best practices and reflect the Board’s commitment to monitor the effectiveness of policy and decision making at the Board and management levels; +• Separation of Chief Executive Officer and Chairman roles on January 24, 2023; +• Lead Independent Director appointed; +• Advancement of Board diversity, emphasis on diversity in the Nominating, Environmental, Social and Governance Committee’s charter; +• Majority voting to elect directors in uncontested elections and plurality voting to elect directors in contested elections; +• Creation of the Nominating, Environmental, Social and Governance Committee to further develop our commitment to HSE and corporate responsibility and sustainability matters and their impact on our business and operations; +• Active stockholder outreach, engaging in discussions with our stockholders at investor conferences and through direct calls and meetings with the Company’s management team that represent approximately 75% of the shares outstanding; +• Active Board oversight of risk and risk management; +• Periodic Board and Committee self -assessments reviewed by an outside law firm; +• Non -employee director meetings in executive sessions at regularly scheduled Board meetings; and +• 94% attendance at 2022 Board and Committee meetings. +COMPENSATION HIGHLIGHTS +Stockholder Engagement and Annual Say-On-Pay Advisory Vote +At the Annual Meeting, our stockholders will again have an opportunity to cast an advisory Say -On-Pay vote on the compensation paid to our named executive officers as described in this proxy statement. The details of the executive compensation program and its pay for performance alignment are discussed in the “Compensation Discussion & Analysis (CD&A)” on page 23 of this proxy statement. +Gulfport Energy has engaged in discussions with our stockholders at investor conferences and through direct calls and meetings with the Company’s management team that represented approximately 75% of the shares outstanding. Through these conversations our stockholders emphasized their expectation that our compensation programs should be designed to focus our executive team on driving results that ensure the financial health of the organization while also driving long -term stockholder value. Specifically, after carefully considering input from stockholders, the Company took the following actions in 2022: +• Utilized performance -based and time -based equity awards in the form of performance -based restricted stock units tied to relative total shareholder return (“TSR”) and absolute return, vesting over a three -year performance period in 2022; 60% of all equity awards to NEOs were performance -based ; +• Adjusted performance incentive opportunities and long -term equity award targets to closely align our executives’ financial interests with those of our stockholders and to continue to link a large portion of executives’ compensation to the performance of our stock and our operational performance; +• Modified metrics in the annual incentive plan to include financial metrics directly tied to the financial health of the Company, including production per day, capital expenses, lease operating expenses, free cash flow generation, and specific and quantifiable health, safety, environmental and social metrics; and +• Provided robust disclosure of our performance metrics and targets for both performance -based cash and equity awards. +2023 PROXY STATEMENT 5 +ELECTION OF DIRECTORS AND DIRECTOR BIOGRAPHIES +(Proposal 1) +The Company is asking its stockholders to vote to elect seven directors to serve on the Board of Directors until the 2024 Annual Meeting of Stockholders (the “2024 Annual Meeting”) or until their respective successors have been duly elected and qualified. +Our Board of Directors currently consists of six members who are elected annually. Five of these six directors are non -employee directors, and four of the six directors are independent under the NYSE listing standards. +The directors standing for election this year are listed below. If any nominee should decline election or should become unable to serve as a director of our Company for any reason before election at the Annual Meeting, votes will be cast by the persons appointed as proxies for a substitute nominee, if any, designated by the Board of Directors. +There are no family relationships among any of the nominees, directors or any of the executive officers. +Vote Required and Board Voting Recommendation +Directors will be elected at the Annual Meeting by a majority of the votes cast. Abstentions and broker non -votes will have no effect on the voting results for Proposal 1. +6 2023 PROXY STATEMENT +ELECTION OF DIRECTORS AND DIRECTOR BIOGRAPHIES +Timothy Cutt +Age: 62 +Director since: May 2021 +Other Public Company Directorships Held in the Past Five Years: +QEP +(January 2019 – March 2021) +Cobalt +(July 2016 – April 2018) +Business Experience: +Mr. Cutt has served as non-executive Chairman of the Board since March 2023 and joined Gulfport as Chairman of the Board and Interim Chief Executive Officer in May 2021 and assumed the role of Chief Executive Officer in September 2021. Mr. Cutt is a Petroleum Engineer with over 40 years of energy experience. He served as Chief Executive Officer and as a director of QEP Resources from January 2019 to March 2021. Prior to joining QEP, Mr. Cutt was the Chief Executive Officer and a director of Cobalt International Energy from 2016 to 2018. Previously, Mr. Cutt held several executive positions with BHP Billiton before serving as President of the Petroleum Division from 2013 to 2016. During this time, he was also a member of BHP Billiton’s Corporate Leadership Team. Mr. Cutt began his career with Mobil and worked for ExxonMobil for 24 years and served in various management roles including President of ExxonMobil de Venezuela, President ExxonMobil Canada Energy and President Hibernia Management & Development Company. +Other Memberships and Positions: +Mr. Cutt joined the board of the American Exploration and Production Council in May 2021 and previously served as a board member of the American Petroleum Institute from 2013 to 2018. +Educational Background: +Mr. Cutt received his Bachelor of Science Degree in Petroleum Engineering from Louisiana Tech University. +BOARD MEMBERSHIP QUALIFICATIONS: +Mr. Cutt’s extensive experience as a CEO and director of public exploration and production companies, executive management skills and extensive knowledge of the oil and natural gas sector and corporate governance qualify him to serve as a director. +David Wolf +Age: 52 +Director since: May 2021 +Other Public Company Directorships Held in the Past Five Years: +EP Energy Corporation +(Since October 2020) +Business Experience: +Mr. Wolf serves as Lead Independent Director and has an extensive financial background, with over 28 years of experience in the energy and oil and gas industries. Currently, Mr. Wolf serves as a partner at Enduring Resources. He previously served as Executive Vice President and Chief Financial Officer of Vantage Energy and President, Chief Executive Officer, and a Board Member of Fuse Energy LLC. Prior to joining Fuse Energy, Mr. Wolf served as Executive Vice President and Chief Financial Officer of Berry Petroleum Co and a Managing Director in the Global Oil & Gas Group at JP Morgan Chase & Co. +Educational Background: +Mr. Wolf received his Bachelor of Science degree in Economics from Rollins College and Master of Business Administration degree from Crummer School of Business, Rollins College. +BOARD QUALIFICATIONS: +Mr. Wolf’s prior experience as a Chief Financial Officer, strong oil and natural gas industry background and financial acumen qualify him to serve as a director. +2023 PROXY STATEMENT 7 +ELECTION OF DIRECTORS AND DIRECTOR BIOGRAPHIES +Guillermo (Bill) Martinez +Age: 56 +Director since: May 2021 +Business Experience: +Mr. Martinez has more than 30 years of upstream oil and gas experience, beginning his career in Midland, Texas working for Exxon then ExxonMobil. Currently, Mr. Martinez serves as Executive Vice President and Chief Operating Officer at Mitsui E&P USA LLC. He joined Mitsui E&P USA in 2019 as Senior Vice President of Operations to help guide Mitsui’s efforts to transform and grow its upstream operations. Previously, Mr. Martinez worked for Burlington Resources, Anadarko Petroleum and Chesapeake Energy in various leadership roles responsible for asset management and business delivery for a variety of assets including many US onshore basins, Continental Shelf, and Deepwater Gulf of Mexico. Mr. Martinez began his career with Exxon and held various operational, technical, and business roles of increasing responsibility. +Educational Background: +Mr. Martinez received his engineering degree from the University of Texas – El Paso and his Master of Business Administration degree from Rice University in Houston. +BOARD QUALIFICATIONS: +Mr. Martinez’s strong oil and natural gas background and financial acumen qualify him to serve as a director. +Jason Martinez +Age: 49 +Director since: May 2021 +BUSINESS EXPERIENCE: +Mr. Martinez has had a 27-year energy industry career, and over 20 years as an investment banker. Currently, Mr. Martinez serves as a Managing Director at Pickering Energy Partners, leading its Energy Transition Advisory practice. Over the course of his career, his client and deal work span a dozen-plus countries and over $100 billion of announced transactions, including mergers, acquisitions, divestitures, all forms of public and private capital raising, and commercial lending. Previously, he held positions at Bank of Montreal Capital Markets, Nomura Securities International, Deutsche Bank Securities, and JPMorgan Securities. At Bank of Montreal, he led the Acquisitions and Divestitures practice. He began his energy career in Andersen Consulting’s Natural Resources group. +EDUCATIONAL BACKGROUND: +Mr. Martinez received his Master of Business Administration degree from the Harvard Business School and a Bachelor of Arts degree from Rice University. +BOARD QUALIFICATIONS: +Mr. Martinez’s financial acumen and extensive private equity experience qualify him to serve as a director. +8 2023 PROXY STATEMENT +ELECTION OF DIRECTORS AND DIRECTOR BIOGRAPHIES +David Reganato +Age: 43 +Director since: May 2021 +Other Public Company Directorships Held in the Past Five Years: +Rotech Healthcare Holdings, Inc. +(since September 2013) +Studio City International Holdings +(since March 2014) +New Cotai, LLC +(since March 2014) +Trident Holding Company, LLC, +(holding company of TridentCare) +(since September 2019) +Granite Broadcasting LLC +(since July 2011) +Business Experience: +Mr. Reganato has over 20 years of experience in the investment industry, including significant knowledge of the oil and gas sector. Currently, Mr. Reganato serves as a Partner with Silver Point Capital, L.P., an investment advisor, which he joined in November 2002. Prior to Silver Point Capital, L.P., Mr. Reganato worked in the investment banking division of Morgan Stanley. +Educational Background: +Mr. Reganato received his Bachelor of Science degree in Finance and Accounting from the Stern School of Business at New York University. +BOARD QUALIFICATIONS: +Mr. Reganato’s financial acumen, knowledge of the oil and natural gas sector and previous board experience qualify him to serve as a director. +John Reinhart +Age: 54 +Director since: January 2023 +Other Public Company Directorships Held in the Past Five Years: +Montage Resources +(March 2019 – November 2020) +Blue Ridge Mountain Resources Inc. +(January 2017 – March 2019) +BUSINESS EXPERIENCE: +Mr. Reinhart has over 20 years of oil and gas industry leadership experience. Most recently, he served as President, Chief Executive Officer and member of the board of directors of Montage Resources Corporation where he led actions that positioned Montage as an attractive strategic partner with sufficient scale, low debt profile and achievement of top-quartile operational and financial metrics. Mr. Reinhart previously served as President, Chief Executive Officer and member of the board of directors of Blue Ridge Mountain Resources and as Chief Operating Officer at Ascent Resources. He started his oil and gas career at Schlumberger before joining Chesapeake Energy Corporation, where he held operations roles with increasing responsibility. Mr. Reinhart began his career in the United States Army, serving tours in Panama and Iraq. +Educational Background: +Mr. Reinhart graduated from West Virginia University with a Bachelor of Science degree in Mechanical Engineering. +BOARD QUALIFICATIONS: +Mr. Reinhart’s considerable operational, technical, cultural, and executive experience in the oil and natural gas industry, including his prior service as an executive and director of both Montage Resources and Blue Ridge Mountain Resources qualify him to serve as a director. +2023 PROXY STATEMENT 9 +ELECTION OF DIRECTORS AND DIRECTOR BIOGRAPHIES +Mary Shafer-Malicki +Age: 62 +Other Public Company Directorships Held in the Past Five Years: +Callon Petroleum +(Since January 2022) +QEP Resources +(July 2017 – March 2021) +McDermott International Inc. +(November 2011 – May 2020) +BUSINESS EXPERIENCE: +Ms. Shafer-Malicki retired in 2009 after a 26-year career with BP Exploration Operating Company (BP) and Amoco Corporation, where she held domestic and international leadership roles across the energy value chain. She served as Senior Vice President/CEO and Chief Operating Officer/General Manager for BP’s operations in Angola from 2005 to 2009 and Director General for BP’s operations in Vietnam from 2003 to 2005. Prior to this, she served as the Business Unit Leader for BP’s Central North Sea gas business in Scotland from 2001 to 2003, General Manager for support services to all of BP’s Continental Shelf upstream operations in the United Kingdom from 2000 to 2001 and President and General Manager for Amoco/BP’s Dutch onshore and offshore production and gas storage operations in the Netherlands from 1998 to 2000. +Her significant board experience includes service as Chair of the Board for QEP Resources and as a board member for Wood plc, McDermott International Inc., and Ausenco Limited. In addition, Ms. Shafer-Malicki currently serves as a director of Callon Petroleum, the University of Wyoming Foundation, as well as a member of industry advisory boards for the Chemical Engineering departments at the University of Wyoming and Oklahoma State University. +Educational Background: +Ms. Shafer-Malicki graduated from Oklahoma State University with a Bachelor of Science degree in Chemical Engineering. +BOARD QUALIFICATIONS: +Ms. Shafer-Malicki’s extensive energy industry experience, including her serving in senior executive positions, and her experience as a director on multiple public company boards qualify her to serve as a director. +10 2023 PROXY STATEMENT +ELECTION OF DIRECTORS AND DIRECTOR BIOGRAPHIES +WHAT ARE THE COMMITTEES OF THE BOARD? +Our Board of Directors has an Audit Committee, a Compensation Committee, and a Nominating, Environmental, Social and Governance Committee. The table below summarizes committee membership as of the date of this proxy statement along with the functions each committee is responsible for performing. +AUDIT COMMITTEE +Members +David Wolf C+^ +Guillermo (Bill) Martinez + +Jason Martinez +^ +David Reganato +^ +Number of Meetings in 2022 +8 +Principal Functions +• Reviews and discusses with management and the independent auditors the integrity of our accounting policies, internal controls, financial statements, accounting and auditing processes and risk management compliance. +• Monitors and oversees our accounting, auditing and financial reporting processes generally, including the qualifications, independence and performance of the independent auditor. +• Monitors our compliance with legal and regulatory requirements. +• Monitors compliance with the Company’s Code of Business Conduct and Ethics. +• Establishes and oversees procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters, and the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters. +• Reviews and approves related party transactions. +• Appoints, determines compensation, evaluates and terminates our independent auditors. +• Pre -approves audit and permissible non -audit services to be performed by the independent auditors. +• Prepares the report required by the U.S. Securities and Exchange Commission (the “SEC”), for the inclusion in our annual proxy statement. +• Reviews and reassesses the adequacy of the Audit Committee charter on a periodic basis. +• Informs our independent auditors of the Audit Committee’s understanding of significant relationships and transactions with related parties and review and discuss with our independent auditors the auditors’ evaluation of our identification of, accounting for and disclosure of our relationships and transactions with related parties, including any significant matters arising from the audit regarding our relationships and transactions with related parties. +C Committee Chairperson. ++ Satisfies NYSE independence and other applicable independence rules for membership on such Committees. +^ Audit Committee financial expert. +2023 PROXY STATEMENT 11 +ELECTION OF DIRECTORS AND DIRECTOR BIOGRAPHIES +compensation committee +Members +Jason Martinez C+ +David Wolf + +Guillermo (Bill) Martinez + +David Reganato + +Number of Meetings in 2022 +5 +Principal Functions +• Oversees and administers our executive compensation policies, plans and practices, including our stock retention guidelines, and evaluates their impact on risk and risk management. +• Assists the Board of Directors in discharging its responsibilities relating to the compensation of our executives, including our Chief Executive Officer, and other key employees. +• Administers our equity -based compensation plans, including the grants of stock options, restricted stock awards and other equity awards under such plans. +• Develops, reviews and approves our cash -based incentive bonus plans, including the establishment of performance criteria, targets and awards under our 2022 Executive Annual Incentive Compensation Plan. +• Makes recommendations to the Board with respect to incentive compensation. +• Where appropriate or required, makes recommendations to our stockholders with respect to incentive compensation and equity -based plans. +• Conducts annual performance evaluation of the Committee. +• Reviews disclosure related to executive compensation in our proxy statement and prepares an annual Compensation Committee report. +• Reviews and considers the stockholders’ advisory vote on executive compensation and the frequency of holding such advisory vote. +• Reviews and reassesses the adequacy of the Compensation Committee charter. +C Committee Chairperson. ++ Satisfies NYSE independence and other applicable independence rules for membership on such Committees. +12 2023 PROXY STATEMENT +ELECTION OF DIRECTORS AND DIRECTOR BIOGRAPHIES +NOMINATING, ENVIRONMENTAL, SOCIAL AND GOVERNANCE COMMITTEE +Members +Guillermo (Bill) Martinez C+ +David Wolf + +Jason Martinez + +David Reganato + +Number of Meetings in 2022 +5 +Principal Functions +• Assists the Board of Directors in developing criteria for identifying and evaluating individuals qualified to serve as members of our Board of Directors. +• Selects and recommends director candidates to the Board of Directors to be submitted for election at each annual meeting of stockholders and to fill any vacancies on the Board of Directors. +• Periodically reviews and makes recommendations regarding the composition and size of the Board of Directors and its Committees. +• Reviews and recommends to the Board of Directors appropriate corporate governance guidelines and procedures for the Company. +• Conducts an annual assessment of the qualifications and performance of the Board of Directors. +• Reviews and reports to the Board of Directors on the performance of management annually. +• Reviews the development and leadership capabilities of the executive officers and management’s succession process. +• Reviews and makes recommendations to our Board of Directors regarding the health, safety and environmental protection, and corporate responsibility matters, including governmental relations, political contributions and corporate philanthropy, which we refer to as HSE and corporate responsibility matters, and their impact on our business and operations. +• Monitors and evaluates management’s actions with respect to HSE and corporate responsibility matters. +• Reviews reports from our management, consultants or other advisors regarding (i) our performance with respect to HSE and corporate responsibility matters and compliance with any related laws and regulations applicable to us, (ii) any significant litigation relating to HSE and corporate responsibility matters involving our Company, and (iii) any significant legislation or regulations, judicial decisions, treaties, protocols, conventions or other agreements, public policies or other scientific, medical or technological developments involving HSE and corporate responsibility matters that will or may have a material effect on our business and operations. +• Reviews the risks and exposures relating to HSE and corporate responsibility matters, including mitigation and remedial actions. +• Reviews crisis management planning procedures relating to HSE and corporate responsibility matters. +• Conducts investigations or studies affecting Gulfport as they pertain to HSE and corporate responsibility matters. +• Reviews the effectiveness of internal systems and controls necessary to ensure our compliance with applicable health, safety and environmental laws, rules and regulations. +• Reviews our compliance with industry practices in the areas of health, safety and environmental protection. +• Reviews our political, charitable and educational contributions/programs and the administration of any political action or similar Committees of our employees. +• Oversees the policies and practices promoting diversity and inclusion within the Company and the Company’s human and workplace rights and policies. +• Reviews and provides guidance on public policy advocacy efforts to confirm alignment with Company policies and values. +• Reviews and reassesses the adequacy of the Nominating, Environmental, Social and Governance Committee charter. +C Committee Chairperson. ++ Satisfies NYSE independence and other applicable independence rules for membership on such Committees. +2023 PROXY STATEMENT 13 +ELECTION OF DIRECTORS AND DIRECTOR BIOGRAPHIES +DO THE COMMITTEES HAVE WRITTEN CHARTERS? +Yes. The charters for each Committee can be found on our website at www.gulfportenergy.com under the “Investors — Governance” captions. You may also obtain copies of these charters, as well as our Code of Business Conduct and Ethics, which is described below, by writing to our Chief Legal and Administrative Officer and Corporate Secretary, Patrick Craine, at Gulfport Energy Corporation, 713 Market Drive, Oklahoma City, Oklahoma 73114. +14 2023 PROXY STATEMENT +CORPORATE GOVERNANCE MATTERS AND +COMMUNICATIONS WITH THE BOARD +WHO ARE OUR INDEPENDENT DIRECTORS? +Our Board of Directors has determined that four of our six current Board members (David Wolf, Guillermo (Bill) Martinez, Jason Martinez and David Reganato) meet the independence requirements in the NYSE listing standards and are free of any relationship that, in the opinion of our Board of Directors, would interfere with the exercise of independent judgment in carrying out their responsibilities as directors of the Company. Mr. Reinhart, our Chief Executive Officer and Director, is not considered by the Board of Directors to be an independent director because of his current employment with the Company. Mr. Cutt, our Chairman of the Board, is not considered by the Board of Directors to be an independent director because of his previous employment as Chief Executive Officer of the Company. Our Board is currently over 33% diverse, and it will be over 40% diverse with the addition of one new female director nominee. +Annual Board Self -Assessment Process +Board and Committee Evaluations +Director Performance Evaluations +How often did the Board of Directors meet in 2022? +The Board of Directors met 14 times in 2022. In addition to these meetings, the Board of Directors adopted resolutions by unanimous written consent. Each director attended over 85% of the aggregate meetings of the Board of Directors and the meetings of the Committees on which he served. +Do our non -management directors meet separately without management? +Our non -management directors routinely meet in an executive session following regularly scheduled meetings of the Board of Directors. +2023 PROXY STATEMENT 15 +CORPORATE GOVERNANCE MATTERS AND COMMUNICATIONS WITH THE BOARD +How can I communicate with the Board of Directors? +Individuals may communicate with our Board of Directors or individual directors by writing to our Chief Legal and Administrative Officer and Corporate Secretary, Patrick Craine, at Gulfport Energy Corporation, 713 Market Drive, Oklahoma City, Oklahoma 73114. Our Chief Legal and Administrative Officer and Corporate Secretary will review all correspondence and forward our Board of Directors correspondence that, in the opinion of our Chief Legal and Administrative Officer and Corporate Secretary, relates to the function of our Board of Directors or a Board Committee or otherwise requires their attention. Directors may review a log of all correspondence received by us and request copies. Concerns relating to accounting, internal control over financial reporting or auditing matters will be immediately brought to the attention of the chairman of the Audit Committee and handled in accordance with our Audit Committee’s procedures. +WILL directors attend the Annual Meeting? +Recognizing that director attendance at our Annual Meeting can provide stockholders an opportunity to communicate with directors about issues affecting the Company, we actively encourage our directors to attend the Annual Meeting of Stockholders. All Directors attended our 2022 Annual Meeting of Shareholders. +Code of Business Conduct and Ethics +We have adopted a Code of Business Conduct and Ethics designed to help directors and employees resolve ethical issues. Our Code of Business Conduct and Ethics applies to all directors and employees. Our Code of Business Conduct and Ethics covers various topics including, but not limited to, conflicts of interest, fair dealing, discrimination and harassment, confidentiality, compliance procedures and employee complaint procedures. Our Code of Business Conduct and Ethics, together with any amendments or waivers, is posted on our website at www.gulfportenergy.com under the “Investors – Governance” captions. +Political Contribution Policy +Engagement in the political, legislative and regulatory process is important to the success of the Company. The Company has delegated compliance and oversight over this function to the Nominating, Environmental, Social and Governance Committee and has adopted a political contributions and activity policy that sets forth the ways by which the Company and its employees may participate in the political, legislative and regulatory process. All political contributions and activities are subject to compliance with applicable laws. +16 2023 PROXY STATEMENT +NOMINATING PROCESS FOR DIRECTORS, DIRECTOR +QUALIFICATIONS AND REVIEW OF DIRECTOR NOMINEES +Director Qualifications +As provided by the Nominating, Environmental, Social and Governance Committee’s charter, the Committee identifies, investigates and recommends candidates to our Board of Directors with the goal of creating a balance of knowledge, experience and diversity. The Committee identifies candidates using third -party search firms, as well as through the extensive networks of our directors and management team in the oil and natural gas industry. +It is our policy that potential directors should possess the highest personal and professional ethics, integrity and values and be committed to representing the interests of our stockholders. In addition to reviewing a candidate’s background and accomplishments, candidates are reviewed in the context of the current composition of our Board of Directors, the skills necessary to provide effective oversight in critical areas and the evolving needs of our business. It is the policy of our Board of Directors that, at all times, at least a majority of its members meets the standards of independence promulgated by the NYSE and the SEC and that its members reflect a range of talents, skills and expertise, particularly in the areas of accounting and finance, management, leadership and oil and gas -related industries sufficient to provide sound and prudent guidance with respect to our operations and the interests of our stockholders. +Board Diversity Policy +Our Nominating, Environmental, Social and Governance Committee is dedicated to diversity and adopted a Board Diversity Policy in November 2019. The policy requires that the Nominating, Environmental, Social and Governance Committee consider diversity in its evaluation of candidates for Board membership. Our Nominating, Environmental, Social and Governance Committee, in accordance with its charter, seeks to include diverse candidates in all director searches, taking into account diversity of gender, race, ethnicity, background, age, thought and tenure on our Board (in connection with the consideration of the renomination of an existing director), including by affirmatively instructing any search firm retained to assist the Nominating, Environmental, Social and Governance Committee in identifying director candidates to include diverse candidates from traditional and non -traditional candidate groups. In accordance with its charter, our Nominating, Environmental, Social and Governance Committee periodically reviews and makes recommendations regarding the composition of the Board and the size of the Board. +We also require that the members of our Board of Directors be able to dedicate the time and resources sufficient to ensure the diligent performance of their duties on our behalf, including attending meetings of the Board of Directors and applicable Committee meetings. In accordance with its charter, our Nominating, Environmental, Social and Governance Committee periodically reviews the criteria for the selection of directors to serve on our Board and recommends any proposed changes to our Board of Directors for approval. +Nomination Process +Our Board of Directors will consider stockholder nominations for director candidates upon written submission to our Chief Legal and Administrative Officer and Corporate Secretary along with, among other things, the nominee’s qualifications and certain biographical information regarding the nominee, the nominee’s written consent to serve as a director if elected and being named in the proxy or information statement and information regarding the status of the stockholder submitting the recommendation, all in the manner required by the Second Amended and Restated Bylaws of the Company (the “Bylaws”) and the applicable rules and regulations promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Following verification of the stockholder status of persons proposing candidates, recommendations will be aggregated and considered by our Board of Directors at a regularly scheduled or special Board meeting. If any materials are provided by a stockholder in connection with the nomination of a director candidate, materials will be forwarded to our Board of Directors. See “Submission of Future Stockholder Proposals” below for additional detail regarding submitting director nominees. +2023 PROXY STATEMENT 17 +NOMINATING PROCESS FOR DIRECTORS, DIRECTOR QUALIFICATIONS AND REVIEW OF DIRECTOR NOMINEES +Our Board of Directors may also review materials provided by professional search firms or other parties in connection with a nominee who is not proposed by a stockholder. In evaluating nominations, our Board of Directors will seek to achieve a balance of knowledge, experience and diversity on the Board. To be nominated to serve as a director, a nominee need not meet any specific minimum criteria. Our Board of Directors uses the same criteria for evaluating candidates nominated by stockholders as it does for those proposed by current Board members, professional search firms and other people. After completing its evaluation, our Board of Directors approves the final slate of director nominees. +Our Nominating, Environmental, Social and Governance Committee approved the director nominees submitted for election at the Annual Meeting. Each nominee brings a strong and unique background and set of skills to our Board of Directors, giving our Board of Directors competence and experience in a variety of areas, including corporate governance and Board service, executive management, the oil and natural gas industry, accounting and finance and risk assessment and management. +18 2023 PROXY STATEMENT +DIRECTOR LEADERSHIP STRUCTURE +Chairman +Timothy Cutt was appointed interim CEO in addition to his role as Chairman in mid -2021 . In September 2021 the Board appointed Mr. Cutt as CEO on a permanent basis in addition to his role as Chairman. +Effective January 24, 2023, the positions of Chairman of the Board and Chief Executive Officer are held by two different individuals, and the Chairman of the Board is a non -executive position elected from among the directors by the Board. Separating the positions of Chairman of the Board and Chief Executive Officer allows our Chief Executive Officer to focus on business development strategies as well as our day -to-day business and operations, while allowing our Chairman of the Board to lead the Board in its fundamental role of providing advice to and oversight of management. The Chairman of the Board provides leadership to our Board of Directors and works with the Board of Directors to define its structure and activities in the fulfillment of its responsibilities. +The duties of the non -executive Chairman of the Board include: +• Presiding at meetings of our Board of Directors and stockholders; +• Setting Board agendas with input from other members of the Board and our management; +• Facilitating communication among, and information flow to, directors; +• Calling special meetings of our Board of Directors and stockholders; and +• Advising and counseling our Chief Executive Officer and other officers. +Lead Independent Director +The Board has appointed Mr. Wolf to serve as lead director with responsibilities typically performed by an independent Chairman, including acting as chair at meetings of the Board of Directors when the Chairman is not present. +Directors +We believe that our directors bring a broad range of leadership experience to the boardroom and regularly contribute to the thoughtful discussion involved in effectively overseeing the business and affairs of the Company. We believe that the atmosphere of our Board is collegial, that all Board members are well engaged in their responsibilities and that all Board members express their views and consider the opinions expressed by other directors. Five out of seven director nominees are independent under NYSE listing standards and SEC rules. We believe that our independent directors have demonstrated leadership in business enterprises and are familiar with Board processes. Our independent directors are involved in the leadership structure of our Board by serving on our Audit, Nominating, Environmental, Social and Governance and Compensation Committees, comprised entirely of independent directors and each having an independent chairperson. +Committee Chairs +Specifically, our Audit Committee Chair oversees the accounting and financial reporting processes and compliance with legal and regulatory requirements. Our Compensation Committee Chair oversees our compensation policies and practices and their impact on risk and risk management. The Chair of our Nominating, Environmental, Social and Governance Committee oversees our practices relating to health, safety and environmental protection, as well as social and governance matters. Our Nominating, Environmental, Social and Governance Committee Chair also monitors matters related to Board and Committee composition, Board performance and best practices in corporate governance. Each Committee Chair provides independent leadership for the purposes of many important functions delegated by our Board of Directors to such Committee. +2023 PROXY STATEMENT 19 +BOARD OF DIRECTORS’ ROLE IN RISK OVERSIGHT +While our management team is responsible for the day -to-day management of risks, the Board of Directors has primary responsibility for risk oversight. Boards typically exercise this oversight during regular Board meetings, but our Board of Directors also maintains constant and open dialogue with management and reviews and monitors key processes. As a result, they are better able to respond to emerging risks and to influence our strategy to address those risks. +While our Board of Directors is responsible for risk oversight at the Company, our three Committees assist the Board in fulfilling its oversight responsibilities in the areas of risk below: +Committee +Risk Areas of Focus +Audit +• Cybersecurity +• Financial Reporting +• Internal Controls +• Legal Compliance +• Regulatory Compliance +• Reserves Reporting +• Risk Management +Compensation +• Compensation Policies +• Executive Performance +Nominating, Environmental, Social and Governance +• Board Organization +• Corporate Governance +• Environment +• Government Relations +• Membership +• Political Contributions +• Public Health +• Safety +• Structure +• Succession Planning +20 2023 PROXY STATEMENT +EXECUTIVE OFFICERS +The following table sets forth the name, age, positions and business experience of each of our executive officers (other than John Reinhart, who also serves as a member of our Board and who is listed under “Election of Directors and Director Biographies”): +NAME +POSITIONS AND EXPERIENCE +Michael Hodges +Age: 44 +Executive Vice President, Chief Financial Officer since April 2023 +Prior to joining the Company, Mr. Hodges served as Senior Vice President, Finance and Accounting at Leon Capital Group. Prior to joining Leon Capital, he was the Executive Vice President and Chief Financial Officer for Montage Resources Corporation until its merger with Southwestern Energy Company in November 2020. From 2012 until joining Montage Resources in 2018, Mr. Hodges served as the Chief Financial Officer for three upstream energy companies focused on near-term value creation through the acquisition and early-stage development of oil and natural gas resources. Mr. Hodges received his Bachelor of Business Administration in Finance from the University of Oklahoma and a Master of Science in Energy Management from Oklahoma City University and is a Certified Public Accountant in the State of Oklahoma. +Patrick Craine +Age: 50 +Executive Vice President, Chief Legal and Administrative Officer since June 2021 +Mr. Craine joined Gulfport as Executive Vice President, General Counsel and Corporate Secretary in May 2019. Mr. Craine has over 25 years of extensive senior-level experience handling a broad range of securities, corporate, regulatory, governance, compliance and litigation matters, with particular expertise in the energy industry. He joined Gulfport from Chesapeake Energy Corporation (NYSE: CHK) (“Chesapeake”), a hydrocarbon exploration company, where he served as Deputy General Counsel – Chief Risk and Compliance Officer from 2013 until 2019. Prior to joining Chesapeake, Mr. Craine was a partner with Bracewell LLP, a global law firm, where his practice focused on securities and corporate regulatory matters and investigations. Before Mr. Craine entered private practice, he served as a lawyer with the SEC and the Financial Industry Regulatory Authority, where he held leadership positions in their Oil and Gas Task Forces. Mr. Craine received his Bachelor of Arts degree, summa cum laude, Phi Beta Kappa, from Wabash College, and his Juris Doctorate, cum laude, from the Southern Methodist University Dedman School of Law. +Matthew Rucker +Age: 37 +Senior Vice President, Operations since March 2023 +Prior to joining the Company, Mr. Rucker served as Vice President, Production Operations of Javelin Energy Partners since August 2022. He joined Javelin in July 2022 as the Vice President of Business Development. Prior to joining Javelin, Mr. Rucker served as the Executive Vice President, Chief Operating Officer of Montage Resources Corporation following Montage’s successful business combination transaction with Blue Ridge Mountain Resources in June 2020. Prior to Montage, Mr. Rucker served as Vice President, Resource Planning and Development of Blue Ridge from 2016 to 2020. Prior to joining Blue Ridge, Mr. Rucker served as a Production Superintendent for Chesapeake Energy Corporation from January 2014 to October 2016, overseeing Chesapeake’s Utica Shale production. As a member of Chesapeake’s Eastern Division leadership team, Mr. Rucker focused on the safe and efficient optimization of production in the Utica Shale and led an operating team of over 45 employees. During his service at Chesapeake, Mr. Rucker held several engineering positions in the Marcellus and Utica Shale Asset Teams within reservoir, primarily focused on strategic joint ventures, divestitures, acquisitions and resource development planning. Mr. Rucker graduated with a Bachelor of Science degree in Petroleum Engineering from Marietta College, where he continues to serve on the Marietta College Industry Advisory Council. He is a member of the Society of Petroleum Engineers. +2023 PROXY STATEMENT 21 +EXECUTIVE OFFICERS +NAME +POSITIONS AND EXPERIENCE +Michael Sluiter +Age: 50 +Senior Vice President, Reservoir Engineer since December 2018 +Mr. Sluiter joined Gulfport from Noble Energy, Inc., where he held various engineering positions from January 2012 to November 2018, including, most recently, as the Permian Basin Business Unit Manager. Mr. Sluiter has over 18 years of experience in unconventional resource development, reservoir engineering, subsurface development, business development and acquisitions, as well as leadership skills, which he developed at Noble Energy, Santos Australia and Santos USA. Mr. Sluiter began his career as a wireline field services engineer for Schlumberger in Thailand. Mr. Sluiter received a Bachelor of Science degree in Chemical Engineering from the University of Sydney, Australia. +Lester Zitkus +Age: 57 +Senior Vice President, Land since January 2017 +Mr. Zitkus joined Gulfport as Vice President of Land in March 2014. Prior to joining the Company, Mr. Zitkus served as an independent consultant from October 2013 to March 2014 and as Vice President of Land for Chesapeake Energy Corporation from May 2007 to October 2013. During his 20-year tenure with Equitable Resources Inc. (now EQT Corp.), he held various positions, including Vice President of Operations and Senior Vice President of Land, between 1987 and 2007. He holds a degree in Mineral Land Management from the University of Evansville. Mr. Zitkus is a member of the American Association of Professional Landmen and Past Regional Director of the Independent Petroleum Association of America. +22 2023 PROXY STATEMENT +COMPENSATION DISCUSSION AND ANALYSIS +Letter from the Compensation Committee Chair +2022 was an important turning point for Gulfport Energy. Once the restructuring process was successfully completed, a new Board of Directors was in place and key senior management team members were appointed, the Company was positioned to transition to a contemporary, best -in-class natural gas provider. Throughout the year, external factors such as high inflation and ongoing sourcing and logistical issues presented new challenges. The Company was able to effectively manage those issues while delivering solid operational results, which our shareholders expect. +From an executive compensation perspective, we were able to set realistic, challenging targets for our short and long -term incentive plans. We were pleased to see the financial and operational results exceeded our expectations. We were able to deliver on our strategy of providing compensation opportunities that were tied to Company performance. Our philosophy is to remain competitive within the oil and gas industry for similarly situated operations. +Please review the Compensation Discussion and Analysis, where we explain how we tie pay and performance to reward our executives. We are confident our shareholders will once again agree with the compensation decisions we made regarding our executive team as they did overwhelmingly based on the 99.7% of votes we received on our 2022 Say -On-Pay vote. +Thank you for your confidence and investment in Gulfport Energy. +Respectfully submitted by the Compensation Committee, +Jason Martinez, Chair +Guillermo (Bill) Martinez +David Reganato +David Wolf +Dated: April 10, 2023 +2023 PROXY STATEMENT 23 +COMPENSATION DISCUSSION AND ANALYSIS +This Compensation Discussion and Analysis, or CD&A, explains the Compensation Committee’s compensation philosophy, summarizes our executive compensation programs and describes compensation decisions for Gulfport’s Chief Executive Officer, or CEO, Chief Financial Officer, or CFO, and the next three highest paid executive officers for 2022. These executive officers, known as our NEOs, are as follows: +Timothy Cutt +Chief Executive Officer and Chairman of the Board +William Buese +Executive Vice President, Chief Financial Officer +Patrick Craine +Chief Legal and Administrative Officer and Corporate Secretary +Michael Sluiter +Senior Vice President of Reservoir Engineering +Lester Zitkus +Senior Vice President of Land +24 2023 PROXY STATEMENT +EXECUTIVE SUMMARY +Gulfport 2022 Business Performance Highlights +During 2022, we had the following notable achievements: +Financial +• Increased the borrowing base under the revolving credit facility from $850 million to $1.0 billion; +• Reduced total debt by $19 million; +• Generated significant adjusted free cash flow and utilized it to repurchase 2.9 million shares of common stock for $250.8 million during 2022; +• Expanded common stock repurchase program; and +• Reported year -end estimated net proved reserves of 4.0 Tcfe and total discounted future net cash flows of $8.3 billion. +Health, Safety & Environmental +• Reduced our total recordable incident rate and number of agency reportable spills year -over-year ; +• Continued to improve our Contractor Management processes by performing safety audits for new contractors, refreshing safety audits for existing contractors and developing a new contractor orientation video; +• Advanced our WORK SAFE Program using visual aids in the field and ensuring contractor training requirements have been met; +• Created and delivered WORK GREEN Program training on the three focus areas – air, land, and water – to reinforce our environmental procedures, and policies; and +• Performed a gap assessment on our methane emissions management processes to initiate a gas certification project in Ohio. +Corporate Social Responsibility +• Completed a multi -year pledge to support Dolly Parton’s Imagination Library in Ohio to provide books to more than 3,750 children in Belmont, Jefferson and Monroe Counties; and +• Completed an environmental volunteer effort in Oklahoma, removing trash from the North Canadian River to continue the focus on our WORK GREEN program. +2023 PROXY STATEMENT 25 +EXECUTIVE SUMMARY +Key 2022 Executive Compensation Actions +In consideration of our long -term strategy and stockholder feedback following a robust program of engagement (see “Stockholder Engagement and Annual Say -on-Pay Advisory Vote” below), the Company took the following actions in 2022: +• Provided an equity grant to the Chief Executive Officer and Chief Financial Officer who joined the Company in 2021 to provide a competitive package that is commensurate with the competitive market. No grants were made to our other NEOs in 2022 as the grants made during 2021 were intended to cover a multi -year period. +• Continued to use absolute and relative TSR and time -based vesting in equity plan grants to maximize the link between performance -based pay of our executives and shareholder value over time. +• Established annual performance bonus opportunities and long -term equity award targets to closely align our NEOs’ financial interests with those of our stockholders and to continue to link a larger portion of NEOs’ compensation to the performance of our stock and operational performance. +• Selected metrics in our annual incentive plan to include financial metrics directly tied to the financial health of the Company and specific and quantifiable health, safety and environmental metrics. +• Continued to provide robust disclosure of our performance metrics and targets for both performance -based cash and equity awards. +• Utilized formal stock ownership guidelines to ensure our Board of Directors and executive officers own a stake in the Company that is sufficient to align their interests with their fellow stockholders. +26 2023 PROXY STATEMENT +EXECUTIVE SUMMARY +The Compensation Committee will continue to consider the feedback from our stockholders when making compensation decisions for our NEOs. +Practices We Follow +🗸 +Incentives Aligned with Stockholders. All long-term equity incentive awards granted in 2022 were in the form of either time-based or performance-based restricted stock units, and the performance-based restricted stock units vest based on absolute and relative TSR metrics tied to share price, providing strong alignment between management and stockholders. +🗸 +NEO pay is at -risk . A significant portion of executive compensation is conditioned on achievement of pre-determined operational, capital efficiency and safety and environmental targets, as well as absolute TSR and relative TSR metrics measured against a broad peer group. +🗸 +Performance -based awards are prevalent. 60% of the NEOs’ equity incentive awards consisted of performance-based equity awards that vest based on absolute and relative TSR metrics measured over a three-year performance period. +🗸 +Robust disclosure of our performance metrics and targets. We provide detailed disclosure of our performance metrics in our CD&A. +🗸 +Balanced approach to executive compensation. We view the combination of long-term equity and short-term cash compensation, prioritizing long-term equity compensation and focusing on performance-based equity and cash compensation when analyzing total compensation plans. +🗸 +Ownership guidelines. We have robust stock-ownership guidelines for directors and executive officers. +🗸 +Risk Management. We perform annual enterprise risk assessments to ensure our use of incentive metrics doesn’t add undue risk to the business. +🗸 +Clawback and recoupment processes. We maintain a clawback policy that allows us to recover incentive compensation in certain circumstances. +🗸 +Executive Compensation best practices. The Compensation Committee uses an independent compensation consulting firm to provide input into our executive compensation programs. +Practices We Prohibit +û +Minimum bonuses or guarantees. The Company does not guarantee minimum bonuses and relies on target achievement to determine annual bonus payments. +û +Single -trigger vesting of equity awards. The Company does not allow for single-trigger vesting of equity awards in connection with a change of control. +û +Providing tax gross -ups . No tax gross-up payments have been provided to our NEOs. +û +Hedging or pledging Gulfport Energy Stock. The Company does not allow hedging or pledging of Gulfport securities by our NEOs or directors. +û +Liberal share recycling. We do not allow liberal share recycling in our stock incentive plan. +û +Holding Gulfport Energy stock in a margin account. The Company does not allow securities to be held in a margin account by our NEOs or directors. +û +Excessive perquisites or executive benefits plans. No pension, supplemental executive retirement plan or excessive perquisite plans are made available to our NEOs. +û +Repricing of Stock Options. The Company did not grant stock options in 2022, currently has no plans to grant stock options in the future and would not reprice any outstanding stock options that might be outstanding. +2023 PROXY STATEMENT 27 +EXECUTIVE SUMMARY +Compensation Aligned with Performance +The Compensation Committee believes that executive compensation should be designed to deliver competitive pay when performance targets are achieved, and when business results exceed targets, executives should share in those rewards based on their efforts. If the Company does not achieve established performance goals, the executive team should receive pay that reflects that lower achievement. We believe this pay for performance alignment is working as realized pay for 2022 was above target levels due to exceeding pre -set , target -performance goals. +The majority of our current NEO’s total compensation is dependent on the successful achievement of Company results as measured by either short -term incentive plan metric achievement or achievement of performance measures and stock price appreciation of the Company’s common stock. The target total direct compensation of our NEOs is largely influenced by pay -at-risk or variable compensation, tying the pay of the executive to the Company’s performance and share price of the Company’s common stock. Short -term incentive plan targets for 2022 were exceeded, resulting in actual awards to executives that were higher than target amounts and demonstrating the alignment between performance and pay. +Stockholder Engagement and Annual Say -On-Pay Advisory Vote +The Compensation Committee is committed to engaging with our stockholders and learning their expectations for executive compensation, corporate governance and safety, environmental and other social responsibility matters at Gulfport Energy. In 2022, 99.7% of shareholders voted to approve the Company’s executive compensation program and practices. The Company is pleased that shareholders continue to strongly support our executive pay program and remains committed to meeting with stockholders to solicit feedback on our executive compensation practices in the future. For information regarding this year’s advisory, non -binding vote on the frequency of future shareholder advisory votes regarding compensation paid to the Company’s named executive officers, see Proposal 4. +The Company held discussions with stockholders representing approximately 75% of shares outstanding. Through these conversations, our stockholders emphasized their expectation that management should be focused on driving results that deliver stockholder value. Our stockholders agree that executives should not be paid at target levels unless financial targets are achieved and expressed a desire to see specific and measurable targets for the year. Stockholders also expressed a desire for executives to have exposure to the absolute return of the Company’s common stock without regard to broader market fluctuation. The Company is confident that the metrics selected for both short -term and long -term incentives are appropriate and continue to align with shareholder preferences. Changes were made to metrics selected in the annual incentive plan to incorporate environmental, safety and other social practices for 2022. +After carefully considering input from stockholders, the Company took the following actions in 2022: +• Granted performance -based equity awards in the form of performance -based restricted stock units tied to absolute and relative TSR, vesting over a three -year performance period, comprising at least 60% of all the equity awards granted to our Chief Executive Officer and Chief Financial Officer in April 2022. No grants were made to our other NEOs in 2022 as the grants made during 2021 were intended to cover a multi -year period; +• Established short -term incentive opportunities and long -term equity award targets that closely align our NEOs’ financial interests with those of our stockholders and continue linking a larger portion of NEOs’ compensation to our operational and share price performance; +• Provided robust disclosure of our performance metrics and targets for both performance -based cash and equity awards; and +• Utilized metrics in the annual incentive plan to include financial metrics directly tied to the financial health of the Company and including production per day, capital expenses, lease operating expenses, free cash flow generation, and specific and quantifiable health, safety, environmental and social metrics. +The Compensation Committee will continue to consider the feedback from our stockholders when making compensation decisions for our NEOs. +28 2023 PROXY STATEMENT +EXECUTIVE SUMMARY +EXECUTIVE COMPENSATION PHILOSOPHY AND COMPONENTS +Philosophy and Objectives +Our executive compensation philosophy post -emergence is guided by the following objectives: +EXECUTIVE COMPENSATION +Alignment with +Stockholder Interests +By providing the majority of compensation in long-term equity awards, stressing pay for performance, managing dilution to our stockholders and encouraging an ownership culture, we aim to align the interests of our executives with those of our stockholders. +Pay for Performance +The Company is focused on rewarding performance by creating incentive awards based on achievement of clearly defined performance targets. A significant portion of our NEOs’ compensation is delivered in long-term incentives, making our NEOs’ realized total direct compensation heavily dependent upon Company performance and stock price. +Competitive +Compensation +The Company believes it is imperative to maintain compensation programs competitive with our peer group to attract, retain and motivate executives and our future leaders in a way that is in line with the compensation of executive positions at similar companies. +Our executive compensation programs play a key role in helping us achieve our business objectives and effectively reward executive officers for our Company’s annual and long -term performance and individual contributions to performance. +Total Direct Compensation Components for 2022 +Pay Element +Vehicle +Philosophy +Benefits +• Health, dental and vision insurance available to all employees. 401K program, vacation policy and disability plans to provide income replacement due to long-term or short-term illness +• Provide core health, welfare and retirement savings plans for executives. Provide substantially the same programs for all employees with minimal executive perquisites. +Base Pay +• Base pay rates that are reviewed annually and subject to Compensation Committee recommendations +• Provide compensation that is competitive with the median peer group practices. Base pay levels reflect the unique skills and abilities of our executives and accounting for the primary duties associated with the executive’s role. +Short-Term Incentive +• Annual incentive opportunity to earn a percentage of base pay based on annual operating objectives +• Provides incentive opportunities that approximate median peer group pay when performance targets are achieved. When targets are exceeded, the executive should be rewarded for their efforts with pay that exceeds the median of the peer group. When targets are not achieved, the executive should earn pay levels below the median of the peer group. +Long-Term Incentives +• Time-Based Restricted Stock Units +• Time-based restricted stock unit grants that vest in equal annual installments over 3 years, or in the case of our Chairman, in eight bi-annual installments over 4 years. If the executive remains with the Company, the executive experiences either increased or decreased pay levels based on the performance of the stock price, fully aligning our executives with the return of the Company’s stock. +• Performance-Based Restricted Stock Units +• Performance-based restricted stock units that are tied to total shareholder return over a performance period that aligns stockholders and executive interests, providing an additional reward opportunity for the executive when absolute and/or relative returns exceed those of our peer group. +2023 PROXY STATEMENT 29 +EXECUTIVE SUMMARY +Determining our Executive Compensation +Benchmarking Against Our Compensation Peer Group +Gulfport utilizes a peer group of companies, or the Compensation Peer Group, as a reference point when establishing both compensation levels for NEOs as well as program structures, to achieve competitiveness in the market. +2022 Compensation Peer Group +The Compensation Committee engaged its independent consultant, WTW, formerly Willis Towers Watson, to establish the appropriate peer group for executive compensation for 2022. Potential peers were identified using revenue, primary business, equity value/debt ratio, other relevant financial metrics (EBITDA, market capitalization, assets, net income, etc.), gas weighting and the number of operations/regions. Upon review and analysis of potential peers using these criteria, the peers below were identified as both suitable and relevant to comprise the Company’s 2022 peer group. The revision of the Compensation Peer Group resulted in relative alignment of Gulfport’s key metrics at the time the peer group was established. +2022 Compensation Peer Group +Berry Corporation +Comstock Resources, Inc. +Magnolia Oil & Gas Corporation* +PDC Energy, Inc. +Ranger Oil Corporation* +Callon Petroleum Company +Earthstone Energy, Inc.* +Matador Resources Company +Permian Resources Corporation** +SM Energy Company +CNX Resources Corporation +Laredo Petroleum, Inc. +Murphy Oil Corporation +Range Resources Corporation +Talos Energy Inc. +* Denotes a new peer added in 2022. +** Centennial Resource Development, Inc. changed its name to Permian Resources Corporation in September 2022. +Based on the recommendation from the Compensation Consultant, Southwestern Energy, EQT Corporation and Coterra Energy were removed due to excessive size when compared to Gulfport. Coterra Energy was the successor company following the merger of Cabot Oil & Gas, Inc. and Cimarex Energy Co., who were 2021 peers. +In general, and consistent with a performance -based compensation philosophy, the Compensation Committee seeks to establish executive base pay within a competitive range of the appropriate peer group median, with an opportunity to earn greater overall compensation in the event it is warranted by our performance. The exact level of targeted compensation for each NEO varies based on the individual’s role in Gulfport, experience, and contribution to our success. For benchmarking purposes, the Compensation Committee compares the total compensation for each NEO position to the compensation paid for similar positions by companies in our Peer Group, as set forth in those companies’ proxy statements for the prior year. WTW proposes companies to be included in the Compensation Peer Group and the methodology for selecting that peer group and may consult with management to confirm that the most appropriate companies are selected. The Compensation Committee then reviews and, as it may deem appropriate, approves the Compensation Peer Group for the applicable compensation year. The companies identified were at their time of selection, in the view of the Compensation Committee the best and most appropriate companies for benchmarking compensation within our industry. The Compensation Committee will continue to review and monitor the Compensation Peer Group annually and select peers based on appropriate screening criteria, metrics and competition for executive talent. The Compensation Committee also uses industry -specific survey data as an additional reference point to assist in the compensation decision -making process. +30 2023 PROXY STATEMENT +EXECUTIVE SUMMARY +PROCESS FOR DETERMINING EXECUTIVE COMPENSATION +The Compensation Committee of our Board of Directors oversees our compensation programs for executive officers and all employees. During 2022, the Compensation Committee was comprised of Jason Martinez (Chair), Guillermo (Bill) Martinez, David Reganato, and David Wolf. All members of the Compensation Committee are independent directors. +The Role of Our Compensation Committee +The Compensation Committee generally reviews and typically makes its decisions regarding the annual compensation of our NEOs at its regular meetings in the first half of each year. These decisions include: +• Certifying annual performance -based cash incentive awards; +• Establishing target incentive opportunities and applicable performance objectives for the current year’s annual cash incentive awards; +• Approving adjustments to base salary, annual cash incentive levels and long -term equity -based incentive levels; and +• Granting long -term equity -based incentive awards and determining the types of awards for the current year. +The Compensation Committee may also adjust compensation as necessary at other times during the year, such as in the case of promotions, other changes in employment status and significant corporate events, as well as to reflect changing market conditions or for other competitive purposes. +In making its decisions, the Compensation Committee assesses each NEO’s impact during the year and overall value to Gulfport, specifically considering the NEO’s contribution to the growth of Gulfport’s value, operational and financial performance, performance in the NEO’s primary area of responsibility, impact on strategic initiatives, recommendations of our independent compensation consultant, the NEO’s role and trajectory in succession planning and development, recommendations from our CEO with respect to our other NEOs and other intangible qualities that contribute to corporate and individual success. +The Role of our CEO +The Compensation Committee evaluates our CEO based on the Company’s performance metrics, leadership roles as a member of the Board and our lead representative to the investment community and other criteria. The CEO’s total compensation package is determined by the Compensation Committee, based upon its evaluation and input from our independent compensation consultant. Our CEO’s compensation ultimately reflects Gulfport’s performance, personal performance, competitive industry practices and the terms of our employment arrangement with the CEO. +Our CEO evaluates each of the other NEOs and makes compensation recommendations to the Compensation Committee. In developing recommendations, the CEO considers the recommendations of the Compensation Committee’s independent compensation consultant, as well as each NEO’s performance against the Company performance metrics and contribution to Gulfport’s performance. The independent compensation consultant reviews and provides comments to the Compensation Committee based on our CEO’s recommendation with respect to our NEOs, other than our CEO. Our CEO does not participate in deliberations or decisions concerning his own compensation. +The Role of the Compensation Consultants +For 2022, the Compensation Committee retained the service of WTW to perform executive compensation advisory services, reporting directly to the Compensation Committee Chair. The Compensation Committee determined that the expertise that WTW had in the executive compensation consulting space with other similar Exploration and Production (“E&P”) companies, in addition to deep insights into compensation practices of other similar companies, was critical for Gulfport Energy. WTW provided contemporary best practices in base pay administration, short -term incentive plan design and long -term incentive plan design. This information, which included reviews of peers, a broader E&P group and general industry practices, was used by the Compensation Committee to determine base salary, short -term incentives and long -term incentives for our executives. +2023 PROXY STATEMENT 31 +EXECUTIVE SUMMARY +WTW also provided support with regulatory and other considerations that affect compensation programs generally, as requested by the Compensation Committee, as well as assistance in preparation of the CD&A. +WTW reported exclusively to the Compensation Committee, with respect to the services described above. During 2022, WTW provided other non -executive compensation consulting services to us, but the total fees for such services did not exceed $120,000. The Compensation Committee reviewed the independence of WTW and determined that there were no conflicts of interest because of the Compensation Committee’s engagement of WTW. +The Compensation Committee evaluates the independence of its compensation consultant(s) on an ongoing basis. +2022 COMPENSATION PROGRAM DESCRIPTION +As previously disclosed in our 2021 Proxy, the Company made certain grants to key executives and new employees that are customary when emerging from bankruptcy, referred to as emergence grants. These grants included larger than normal course of business grants and as a result, no additional grants were made to most of the NEO group in 2022. The exceptions were grants made to Timothy Cutt, our Chief Executive Officer, and Bill Buese, our Chief Financial Officer, who joined the Company upon emergence from bankruptcy. Their total compensation was evaluated during the 2022 compensation review cycle, and it was determined that adjustments were necessary to remain competitive with the market and consistent with our pay philosophy. +Base Salary +The Compensation Committee engaged WTW to review the overall competitiveness of our executive compensation program for 2022, with continued focus on ensuring the alignment of management compensation with performance and the achievement of Gulfport’s long -term strategic goals. The Compensation Committee reviews NEO base salaries on an annual basis, with a goal of providing market competitive, fixed cash compensation. The Compensation Committee assesses comparable salary information provided by its independent compensation consultant as a factor when determining the base pay for NEOs. +Other factors the Compensation Committee considers in determining base pay for each of the NEOs include, but are not limited to: the NEO’s responsibilities, experience, leadership, potential future contribution and demonstrated individual performance. The relative weighting of these factors varies by NEO depending on their position and responsibilities. In April 2022, the base salaries of the executive team were reviewed and targeted changes were made to certain executives after reviewing the current labor market for executive talent, performance and other job -related factors for each executive. A summary of the changes is reflected in the table below. +Name +Base Salary YE +2021 +Percent +Increase (%) +Base Salary YE +2022 +Timothy Cutt +$750,000 +4.7% +$785,000 +William Buese +$450,000 +4.4% +$470,000 +Patrick Craine +$450,000 +4.4% +$470,000 +Michael Sluiter +$360,000 +5.0% +$378,000 +Lester Zitkus +$351,900 +— +$351,900 +Annual Incentive Awards +The Compensation Committee established a performance -based annual cash incentive program for 2022 that tied our NEOs’ compensation directly to pre -established performance metrics. Targeted annual incentive award levels were based on market information supplied by the independent compensation consultant. Individual awards may be decreased at the discretion of the Compensation Committee based on overall corporate performance for the year and other considerations. +2022 Annual Short-Term Incentive “STI” Bonus Metrics and Annual STI Payments +The Compensation Committee determined that the appropriate Key Performance Indicators (“KPIs”) for the 2022 STI plan should focus primarily on generating free cash flow and executing certain strategic objectives that were important to the continued success of the organization and were responsive to shareholder feedback. After reviewing the operating and financial targets for 2022 with the +32 2023 PROXY STATEMENT +EXECUTIVE SUMMARY +Board of Directors, the Gulfport Energy executive management team and the independent compensation advisor, the Compensation Committee approved performance targets accordingly. The KPIs included thresholds, targets and maximums that were based on predetermined financial and key performance metrics. +The financial metrics chosen were generally common measures in the oil and gas industry and were viewed as measures of success by our shareholders. The Compensation Committee also believed it was critical to focus on other strategic initiatives that while not directly measured in financial terms, are key indicators of successful companies in the oil and gas industry. Total Recordable Incident Rate (“TRIR”) and spills are common measurements and targets that reflect either industry benchmark information (TRIR) or improvement over prior results (spills). The Compensation Committee also adopted a set of strategic initiatives that focused on environmental and corporate and social governance activities. Specifically, the organization would be measured on making substantial improvement in the areas of greenhouse gas emission management, diversity and inclusion and other key corporate responsibility areas such as succession planning. +In April of 2022, after performance targets for the annual STI had been set in March of 2022, the Board of Directors made a strategic decision to increase the Company’s 2022 capital program to take advantage of the current leasehold landscape and account for certain inflationary pressures that the Board concluded to be outside of management control. Realizing that these additional expenditures were not included in the initial target setting process, the Board of Directors decided not to include those amounts in the 2022 incentive payment results. Additionally, in March of 2022, the Company experienced a casing failure that impacted multiple wells and the associated capital, completion timing and expected first sales dates. The Company believes these failures were caused by defective manufacturing by an external vendor, and the Board concluded the incident to be outside of management control. The casing remediation and associated impacts to full year 2022 capital and production were excluded from the 2022 incentive payment results. +At the completion of the performance period ending December 31, 2022, the Compensation Committee reviewed financial and operating results and the attainment of key performance indicators and approved 2022 STI payout results based on those achievements. This achievement resulted in an overall payout of 119% of target awards. Below is a summary of KPIs and results for the 2022 plan year. +2022 STI Metrics +Weighting +Threshold +Target +Maximum +2022 +Actual (2) +2022 +Approved +Payout (2) +Production (MMcfe/day) +20% +960 +980 +1020 +997 +29% +Capex ($MM) +20% +$380 +$360 +$330 +$362 +19% +LOE per Mcfe ($/Mcfe) +15% +$0.19 +$0.17 +$0.14 +$0.18 +12% +Adjusted Free Cash Flow ($MM) (1) +15% +$275 +$335 +$440 +$338 +15% +TRIR +10% +0.9 +0.7 +0.5 +0.6 +14% +Spills +10% +8 +6 +4 +3 +20% +Strategic Initiatives +10% +Qualitative +10% +Total Achievement Percentage +119% +(1) Adjusted Free Cash Flow is a non-GAAP measure defined as net cash provided by operating activities from the Company’s Consolidated Statement of Cash Flows less the sum of changes in operating assets and liabilities included in the operating activities section of the Consolidated Statement of Cash Flows less non-recurring general and administrative and other expenses from the Consolidated Statement of Operations less incurred capital expenditures and capitalized expenses. Adjusted Free Cash Flow was calculated assuming realized commodity pricing received throughout the year was consistent with the forward curve pricing used to set the approved Adjusted Free Cash Flow Metric in March of 2022. +(2) The impact of the changes to the Company’s 2022 capital program on the 2022 incentive payment results as described above consisted of capital expenditures of $67 million, which reduced the Capex metric and increased the Adjusted Free Cash Flow metric 2022 actual results by that amount. Additionally, the casing remediation and associated impacts consisted of a production impact of 14 MMcfe/day and capital expenditures of $21 million. These adjustments increased the production metric 2022 actual results by 14 MMcfe/day, reduced the Capex metric 2022 actual results by $21 million, reduced the LOE per Mcfe metric 2022 actual results by less than $0.01 per Mcfe, and increased the Adjusted Free Cash Flow metric 2022 actual results by $36 million. Without these adjustments, the payout percentage for each of the impacted metrics would have resulted in the following: production – 22%, Capex – 0%, LOE/MCFE – 11%, and Adjusted Free Cash Flow – 0%. These payout percentages would have resulted in a total achievement percentage of 76%. +2023 PROXY STATEMENT 33 +EXECUTIVE SUMMARY +2022 Target Annual STI Opportunities and Actual Annual STI Payments +The Compensation Committee established the target annual cash STI opportunity for each of the NEOs, taking into consideration the terms of any applicable employment agreement, and approved the following cash payments based on the Company’s 2022 results performance as described above. +2022 INCENTIVE COMPENSATION PLAN +Name +2022 +Incentive Compensation +Program Incentive +Target +Actual Annual +Incentive +Achievement +(as % of Target +Annual Incentive) +Actual +Incentive +Earned in +2022 +Timothy Cutt +$785,000 +119% +$1,120,980 +William Buese +$470,000 +119% +$ 559,300 +Patrick Craine +$470,000 +119% +$ 503,370 +Michael Sluiter +$378,000 +119% +$ 269,892 +Lester Zitkus +$352,000 +119% +$ 251,328 +Long-Term Incentive Awards +Each year we grant our NEOs long -term incentive awards, that have historically consisted of equity -based awards. The Compensation Committee determines the amount of these awards, as well as the mix of equity vehicles. The objectives of our long -term incentive plan are to: (i) create significant alignment between the interests of our NEOs and our stockholders; (ii) attract and retain the services of critical talent; and (iii) focus our executives on our sustained growth and financial success. +DETERMINING AWARD STRUCTURE AND SETTING THE TARGET AWARD OPPORTUNITY +The Compensation Committee considers the grant date fair value of the long -term incentive package, the package’s potential dilutive effect on our outstanding shares of common stock and the number of shares available for grant under the 2021 Incentive Plan (as defined below) in determining the aggregate number of shares to be awarded as individual long -term incentive awards for our NEOs. The Compensation Committee evaluates stockholder dilution based on equity compensation plans compared to the total amount of the Company’s outstanding common stock. In determining the appropriate long -term incentive awards to grant NEOs other than the CEO, the Compensation Committee considers the recommendations of the CEO. The Compensation Committee reviewed market values with respect to the annual long -term incentive awards granted to similarly situated executives at the Compensation Peer Group. In 2022, the Compensation Committee determined that the CEO and CFO would receive equity grants consisting of 60% performance -based restricted stock units and 40% time -based restricted stock units. No grants were made to our other NEOs in 2022 as the grants made during 2021 were intended to cover a multi -year period. +The time -based restricted stock units granted to our CEO and CFO vest in equal annual installments over a three -year period. +34 2023 PROXY STATEMENT +EXECUTIVE SUMMARY +The performance based restricted stock units vest after a three -year performance period, based on the Company’s achievement of relative TSR as compared to a peer group of companies and absolute TSR, in each case, as described in the chart below. +Relative TSR +> 75 th percentile +of the Peer +Companies +50 th percentile – +< 75 th percentile +of the Peer +Companies +25 th percentile – +< 50 th percentile +of the Peer +Companies +< 25 th percentile +of the Peer +Companies +Annualized +Company +TSR +< 5.0% +0% +0% +0% +0% +> 5.0% – 7.5% +50% +25% +0% +0% +> 7.5% – 10.0% +125% +100% +75% +50% +> 10.0% – 15.0% +150% +125% +100% +75% +> 15.0% – 20.0% +175% +150% +125% +100% +> 20.0% +200% +175% +150% +125% +2022 Equity Awards +Named Executive Officer +2022 LTI Award +(RSUs) +Grant Award +Value ($) (1) +2022 LTI +Award +(PSUs) +Grant Award +Value ($) (2) +Timothy Cutt (3) +23,409 +$2,199,978 +35,113 +$3,299,920 +William Buese (4) +1,702 +$ 159,954 +2,553 +$ 239,931 +Patrick Craine +— +$ — +— +$ — +Michael Sluiter +— +$ — +— +$ — +Lester Zitkus +— +— +— +— +(1) The time-based restricted stock unit values are based on the closing price of the Company’s common stock on the grant date. +(2) The performance-based restricted stock unit awards are shown in this table based on the target number of shares subject to the awards and the closing price of the Company’s common stock on the grant date. The Company used a Monte Carlo simulation for purposes of determining the grant date fair value of these awards as reflected in the Summary Compensation Table. Please see note 2 to the Summary Compensation Table. +(3) On April 29, 2022, Mr. Cutt was granted the following under the 2021 Incentive Plan: (i) 23,409 time-based restricted stock units that will vest annually over the three-year period commencing as of the grant date, subject to continued employment through each applicable vesting date, and (ii) 35,113 performance-based restricted stock units that will vest based on performance over a three-year period and continued service. +(4) On April 29, 2022, Mr. Buese was granted the following under the 2021 Incentive Plan: (i) 1,702 restricted stock units that will vest annually in three equal installments over the three-year period commencing as of the grant date, subject to continued employment through each applicable vesting date, and (ii) 2,553 performance-based restricted stock units that will vest based on performance and continued service over a three-year period. +2023 PROXY STATEMENT 35 +EXECUTIVE SUMMARY +COMPENSATION POLICIES AND PRACTICES +Compensation Risk Management +The Compensation Committee continues to review the risks and rewards associated with our compensation policies and programs. We believe that our policies and programs encourage and reward prudent business judgment, encourage short -term stockholder value creation, and prioritize long -term growth by discouraging excessive risk taking. With respect to specific elements of compensation: +• Integrated Approach – Our programs balance short- and long -term incentives for our executive officers by providing an appropriate mix of fixed, performance -based , discretionary and equity compensation, with the goal of creating both short- and long -term stockholder value. +• Attract Top Talent – Annual base salaries for our NEOs do not encourage excessive risk -taking as they are fixed amounts that are subject to discretionary increases by our Compensation Committee that may be based on, among other factors, annual performance evaluations. We believe that annual base salaries are set at reasonable levels, as compared to the base salaries of similarly situated individuals at our peer group companies, and therefore do not negate the effect of other compensation elements that encourage long -term service, growth and performance that may increase stockholder value. +• Support Business Objectives and Strategic Goals – Our annual incentive awards are determined based on financial, operational and strategic Company performance measures, which mitigate excessive risk -taking that could produce unsustainable gains in one area of performance at the expense of our overall long -term interests. The Company’s goals are designed to ensure a proper balance between stock performance, operational measures, financial goals and strategic goals. In addition, the Compensation Committee sets performance goals that it believes are reasonable considering our past performance, then -current business projections and market conditions. +• Pay for Performance – The Compensation Committee believes that performance -based equity awards tied to the Company’s stock price and relative performance versus peers, and cash compensation, with meaningful performance targets, such as those under our Annual Incentive Plan (as defined below), will further align our NEOs’ interests with those of our stockholders, will motivate our NEOs to contribute to the Company’s growth and profitability and will link a larger portion of our NEOs’ compensation to the performance of the Company. +• Maximize Stockholder Value – Our annual incentive awards are subject to maximum payout caps that limit the amount an NEO may earn on any individual metric or operational measures. +• Create Ownership Culture – Performance -based and time -based restricted stock unit awards, in each case, vesting over time, as well as robust stock ownership guidelines for our NEOs and non -employee directors, promote stock ownership culture and ensure that our NEOs and directors have a continuing stake in the long -term success of the Company. We believe that our long-term equity awards granted to our NEOs discourage excessive risk taking, as there is a balance between performance-based and time-based awards that moderates the risk that may otherwise exist if equity awards were to vest based solely on achieving performance targets. +Based on the foregoing, the Compensation Committee believes that the Company utilizes compensation policies and programs such that there are no risks that are reasonably likely to have a material adverse impact on the Company. +Clawback Provisions +Under the Sarbanes -Oxley Act of 2002, incentive compensation received by our Chief Executive Officer and Chief Financial Officer may be subject to clawback in the event of a restatement of our financial statements. Each award granted pursuant to the 2021 Incentive Plan (including awards granted to our NEOs) is conditioned on repayment or forfeiture in accordance with applicable laws, our Company policies and any relevant provisions in the related award agreements. Further, under the terms of our employment agreements with Mr. Cutt dated April 29, 2022, Mr. Craine, dated August 1, 2019, with Messrs. Sluiter and Zitkus dated November 13, 2020 and with Mr. Buese dated May 17, 2021, any equity awards granted, any proceeds of any equity awards that previously have been sold, transferred or otherwise disposed of, and any annual incentive award will be subject to clawback by us, now or in the future, under the Dodd -Frank Act and the Sarbanes -Oxley Act, each as amended, and their rules, regulations and binding, published guidance. +36 2023 PROXY STATEMENT +EXECUTIVE SUMMARY +Stock Ownership Guidelines for Executive Officers +We believe it is important for our executive officers to align their financial interests with those of our stockholders. Accordingly, effective January 1, 2019, our Board of Directors adopted a formal stock ownership policy that requires our CEO to achieve a stock ownership level equal to the value of common stock that is five times the value of his annual base salary within five years of the effective date of such stock ownership policy. The Compensation Committee also designated our other executive officers that are subject to Section 16 reporting obligations under the Exchange Act, to be subject to the stock ownership policy. The stock ownership level for our other NEOs and Section 16 officers is three times the value of their respective annual base salaries to be achieved within five years of the effective date of our stock ownership policy. None of our executive officers have been in their position long enough to be required to meet the minimum stock ownership reaffirmed guidelines, particularly given the Company’s restructuring in 2020; however, all are on track to do so within the prescribed timeframe through expected grants. +Our non -employee directors are also subject to the stock ownership policy discussed above under “Stock Ownership Guidelines for Directors.” +Anti-Hedging and Pledging Policies +We have a policy prohibiting directors, executive officers and certain other designated employees from speculative trading in our securities, including hedging transactions, short selling, and trading in put options, call options, swaps or collars, or holding our securities in margin accounts. We also have a policy prohibiting directors, executive officers and certain other designated employees from pledging Gulfport securities. To our knowledge, all individuals follow these policies. +Termination and Change of Control Benefits +As noted above, certain of our NEOs are (or were formerly) party to an employment agreement with the Company which provides (or provided) for certain payments and benefits in the event of a termination of such NEO under specific circumstances. The NEOs’ employment agreements are designed to avoid distraction potentially detrimental to stockholder value upon a change in control and to enhance protection for the NEOs in connection with such events. These agreements (and the severance payments referenced below) are described in more detail under “NEO Employment Agreements and Termination and Change of Control Benefits.” +Perquisites and Other Personal Benefits +We provide certain of our NEOs with a limited number of perquisites or other personal benefits, primarily consisting of life insurance premiums and Company -sponsored sporting events tickets. The Company does not offer any excessive perquisites to executives that are not generally provided to other non -executives . We believe these limited benefits help provide a competitive compensation package. The value of these benefits is disclosed in the “Summary Compensation Table.” +In February 2019, we adopted an aircraft use policy for aircraft chartered or owned by the Company. As part of the bankruptcy process the Company terminated any chartered aircraft arrangements and as of emergence from bankruptcy the Company does not have any private or chartered aircraft arrangements. We restrict personal use of Company -owned or chartered aircraft by our executive officers and other employees, as well as members of our Board of Directors. Our aircraft use policy requires that any personal use of a chartered aircraft by any NEO be reported as a perquisite, based on the aggregate incremental value of such personal use. There was no personal use of Company -owned or chartered aircraft in 2022. +Accounting Implications of Executive Compensation Policy +We are required to recognize compensation expense of all stock -based awards pursuant to the provisions of FASB ASC Topic 718, “Compensation -Stock Compensation.” Under U.S. generally accepted accounting principles, or GAAP, only vested shares are included in basic shares outstanding. Also, under GAAP, non -vested shares are included in diluted shares outstanding when the effect is dilutive. +The Compensation Committee believes that linking a large portion of our executive officers’ compensation to both performance -based long -term equity incentive awards and performance -based bonus arrangements, with meaningful performance metrics, appropriately aligns our executives’ interests with those of our stockholders and are consistent with market practices. The Compensation Committee also believes that our current compensation policies and practices enhance retention of executive talent +2023 PROXY STATEMENT 37 +EXECUTIVE SUMMARY +through multi -year vesting of stock awards and discourage unnecessary and excessive risk taking. The Compensation Committee further believes that our other compensation policies and practices, such as our policy prohibiting pledging and hedging of our stock by our executive officers and directors, as well as the lack of significant perquisites and absence of pension or supplemental retirement benefits (aside from those afforded under our broad -based 401(k) plan) for our executive officers are consistent with prudent compensation philosophy and the interests of our stockholders. The Compensation Committee will continue to consider the outcome of our stockholders’ future “Say -On-Pay ” votes when making compensation decisions for our NEOs. +Compensation Committee Report +The Compensation Committee has reviewed and discussed the foregoing Compensation Discussion and Analysis with management. Based on its review and discussion with management, the Compensation Committee recommended that the Compensation Discussion and Analysis be included in this proxy statement. +Respectfully submitted by the Compensation Committee: +Jason Martinez +David Wolf +Guillermo (Bill) Martinez +David Reganato +Dated: April 10, 2023 +Compensation Committee Interlocks and Insider Participation +None of Messrs. Martinez (Chair), Wolf, Martinez or Reganato, representing all the directors who served on the Compensation Committee during the past fiscal year, is or has ever been an officer or employee of ours or has engaged in any related party transaction in which our Company was a participant. None of our executive officers during the past fiscal year serves, or has served during the past fiscal year, as a member of the Board of Directors or Compensation Committee of any other company that has one or more executive officers serving, or that has served during the past fiscal year, as a member of our Board of Directors or Compensation Committee. +38 2023 PROXY STATEMENT +Compensation Tables +SUMMARY COMPENSATION TABLE +The following table provides information concerning compensation of our NEOs for the fiscal years ended December 31, 2022, December 31, 2021, and December 31, 2020. +Name and Principal Position +Year +Salary +($) +Bonus +($) (1) +Stock +Awards +($) (2) +Non-Equity +Incentive Plan +Compensation +($) (3) +All Other +Compensation +($) (4) +Total +($) +Timothy Cutt (5) +2022 +$772,288 +— +$4,546,228 +$1,120,980 +$ 8,048 +$6,447,544 +Chief Executive Officer +2021 +$447,119 +$ 75,000 +$2,788,998 +$ 509,279 +$ 3,003 +$3,823,399 +and Chairman of the Board +William Buese (6) +2022 +$462,744 +— +$ 330,545 +$ 559,300 +$29,649 +$1,382,238 +Chief Financial Officer +2021 +$266,327 +$ 75,000 +$2,385,104 +$ 275,011 +$15,036 +$3,016,477 +Patrick Craine (7) +2022 +$462,744 +— +— +$ 503,370 +$26,406 +$ 992,520 +Chief Legal and Administrative Officer +2021 +$438,911 +$435,000 +$5,732,655 +$1,698,590 +$24,426 +$8,003,332 +2020 +$411,590 +— +$ 76,419 +$ 627,214 +$15,420 +$1,130,643 +Michael Sluiter (8) +2022 +$371,470 +— +— +$ 269,892 +$26,076 +$ 667,438 +Senior Vice President of Reservoir +2021 +$358,621 +$360,000 +$1,146,561 +$ 838,782 +$24,582 +$ 2,458,546 +Engineering +2020 +$340,619 +— +$ 56,701 +$ 321,049 +$15,508 +$ 733,877 +Lester Zitkus (9) +2022 +$351,913 +$225,000 +— +$ 251,328 +$26,435 +$ 854,676 +Senior Vice President of Land +2021 +— +— +— +— +— +— +2020 +— +— +— +— +— +— +(1) The amounts in this column reflect (i) one -time cash inducement bonuses paid to Mr. Cutt ($75,000) and Mr. Buese ($75,000), upon joining the Company and the service -based cash “Standard Award” made to certain of our NEOs on March 27, 2020 that vested in 2021 as previously defined and reported in the Company’s Amended Annual Report on Form 10 -K /A, filed with the SEC on April 30, 2021 (the “2020 10 -K /A”), and a service -based cash retention award for Mr. Zitkus as part of the bankruptcy emergence process which was earned on November 12, 2022. +(2) The amount reported in the Stock Awards column reflects the fair value of the applicable award of restricted stock, performance -based restricted stock units or time -based restricted stock units on the grant date. The amounts were calculated in accordance with FASB ASC Topic 718 using certain assumptions, as set forth in Note 1 and Note 8 to our consolidated financial statements for the fiscal year ended December 31, 2022 under the headings “Summary of Significant Accounting Policies — Accounting for Stock -based Compensation” and “Stock -Based Compensation,” respectively, included in our Annual Report on Form 10 -K , filed with the SEC on March 1, 2023. Restricted stock unit values are based on the closing price of the Company’s common stock on the grant date. In valuing the performance -based restricted stock unit awards, the Company used a Monte Carlo simulation. Performance -based restricted stock units vest based on performance and continued service over a three -year performance period (except for Mr. Cutt, whose service -vesting date is May 17, 2022, and the maximum award opportunity for each applicable NEO for the 2021 performance -based restricted stock unit awards as of the grant date is as follows: Mr. Cutt $4,692,501 and Mr. Buese $341,183. As previously disclosed in the 2020 10 -K /A, the shares granted in 2020 were forfeited in connection with the adoption of the Revised 2020 Incentive Compensation Program, and any remaining unvested pre -emergence stock awards were cancelled in connection with our emergence from bankruptcy. +(3) The amounts in this column reflect (i) performance -based annual incentive bonuses granted under our 2020, 2021 and 2022 STI Plans. +(4) The amount for Mr. Cutt for 2022 includes $5,148 attributable to group term life insurance coverage and $2,900 attributable to our 401(k) plan contribution. The amount for Mr. Buese for 2022 includes $20,743 for our 401(k) plan contribution, $1,794 attributable to group term life insurance coverage, and $7,111 attributable to long -term disability imputed income. The amount for Mr. Craine for 2022 includes $18,150 for our 401(k) plan contribution, $1,794 attributable to group term life insurance coverage, and $6,462 attributable to long -term disability imputed income. The amount for Mr. Sluiter for 2022 includes $17,969 for our 401(k) plan contribution, $1,794 attributable to group term life insurance coverage, and $6,312 attributable to long -term disability imputed income. The amount for Mr. Zitkus for 2022 includes $17,911 for our 401(k) plan contribution, $3,354 attributable to group term life insurance coverage, and $5,091 attributable to long -term disability imputed income. +(5) Mr. Cutt was appointed as our Interim Chief Executive Officer and Chairman of the Board effective May 17, 2021, and assumed the role of Chief Executive Officer and Chairman of the Board on September 2, 2021. As previously reported in the Company’s Current Report on Form 8 -K filed on January 19, 2023, the Company’s Board of Directors appointed John Reinhart to succeed Mr. Cutt as the Company’s Chief Executive Officer, effective as of January 24, 2023. +(6) Mr. Buese was appointed as our Chief Financial Officer on May 17, 2021. He stepped down as Chief Financial Officer on April 3, 2023, and he will remain as an advisor to the Company until May 3, 2023. +(7) Mr. Craine was appointed as our General Counsel and Corporate Secretary on May 20, 2019, and assumed the role of Chief Legal and Administrative Officer on August 5, 2021. +(8) Mr. Sluiter joined the Company as its Senior Vice President of Reservoir Engineering on December 3, 2018. +(9) Mr. Zitkus joined the Company on March 10, 2014, and was promoted to Senior Vice President of Land on January 1, 2017. Mr. Zitkus is a NEO for the first time in 2022. +2023 PROXY STATEMENT 39 +Compensation Tables +2022 GRANTS OF PLAN -BASED AWARDS +The following table provides information concerning each grant of an award made to our NEOs in the fiscal year ended December 31, 2022 under any Company plan. +Estimated Future Payouts Under +Non-Equity Incentive Plan Awards +Estimated Future Payouts under +Equity Incentive Plan Awards (1) +All Other +Stock Awards: +Number of +Shares of Stock +or Units +(#) (2) +Grant Date +Fair Value of +Stock +Awards +($) (3) +Name +Grant +Date +Threshold +($) +Target +($) +Maximum +($) +Threshold +(#) +Target +(#) +Maximum +(#) +Timothy Cutt +— +$392,500 +$785,000 +$1,570,000 +— +— +— +— +— +Chief Executive +Officer and +Chairman +of the Board +4/29/22 +— +— +— +— +— +— +23,409 +$2,199,978 +4/29/22 +— +— +— +8,778 +35,113 +70,226 +— +$2,346,251 +William Buese +— +$211,500 +$423,000 +$ 846,000 +— +— +— +— +— +Chief Financial +Officer +4/29/22 +— +— +— +— +— +— +1,702 +$ 159,954 +4/29/22 +— +— +— +638 +2,553 +5,106 +$ 170,591 +(1) Reflects awards of performance -based restricted stock units granted to certain of our NEOs in 2022 under the 2021 Stock Incentive Plan. +(2) Reflects awards of time -based restricted stock units granted to certain of our NEOs in 2022 under the 2021 Incentive Plan. +(3) The amounts reported for performance -based and time -based restricted stock units in this column reflect the fair value of the applicable awards on the grant date. The amounts were calculated in accordance with FASB ASC Topic 718 using certain assumptions, as set forth in Note 1 and Note 8 to our consolidated financial statements for the fiscal year ended December 31, 2022 under the headings “Summary of Significant Accounting Policies — Accounting for Stock -based Compensation” and “Stock -Based Compensation,” respectively, included in our Annual Report on Form 10 -K , filed with the SEC on March 1, 2023. +40 2023 PROXY STATEMENT +Compensation Tables +OUTSTANDING EQUITY AWARDS AT 2022 FISCAL YEAR -END +The following table provides information concerning equity awards granted to our NEOs that were outstanding as of December 31, 2022. +Stock Awards +Name +Number of +Shares or +Units of Stock +That Have +Not Vested (1) +(#) +Market Value of +Shares or +Units of Stock +That Have +Not Vested (2) +($) +Equity Incentive +Plan Awards: +Number of +Unearned +Shares, Units +or Other Rights +That Have +Not Vested +(#) (3) +Equity Incentive +Plan Awards: +Market of +Payout Value of +Unearned Shares, +Units or Other +Rights That Have +Not Vested +($) (2) +Timothy Cutt +41,851 +$3,081,908 +59,703 +$4,396,529 +William Buese +13,287 +$ 978,455 +28,619 +$2,107,503 +Patrick Craine +27,815 +$2,048,297 +62,711 +$4,618,038 +Michael Sluiter +5,563 +$ 409,659 +12,542 +$ 923,593 +Lester Zitkus +4,348 +$ 320,187 +11,441 +$ 842,515 +(1) Represents awards of time -based restricted stock units granted to certain of our NEOs on July 21, 2021 under the 2021 Incentive Plan, each of which vest annually in three equal installments over the three -year period commencing as of the grant date, subject to continued service through each applicable vesting date (except for Mr. Cutt, whose time -based restricted stock units vest bi -annually in eight equal installments over the four -year period commencing as of the grant date, subject to continued service through each applicable vesting date). These amounts also include restricted stock units granted to Messrs. Cutt and Buese on April 29, 2022, each of which vest annually in three equal installments over the three -year period commencing as of the grant date, subject to continued service through each applicable vesting date. +(2) The market value of restricted stock units that have not vested is based on the closing price of $73.64 per share of our common stock on the NYSE on December 31, 2022, the last trading day of 2022. +(3) Represents awards of performance -based restricted stock units granted to certain of our NEOs on July 21, 2021, under the 2021 Incentive Plan, each of which vest based on the Company’s achievement of certain absolute and relative TSR metrics and the applicable NEOs’ continued service over a three -year performance period (except for Mr. Cutt, whose service -vesting date is May 17, 2022). These amounts also include performance stock units granted to Messrs. Cutt and Buese on April 29, 2022, each of which vest based on the Company’s achievement of certain absolute and relative TSR metrics and the applicable NEOs’ continued service over a three -year performance period. Such performance -based restricted stock units are shown above at the threshold level based on results for the first year of the 2021 -2024 performance period. +2023 PROXY STATEMENT 41 +Compensation Tables +2022 STOCK VESTED +The following table provides the number of shares acquired upon vesting of restricted stock awards for certain of our NEOs. +Stock Awards +Name +Number +of Shares +Acquired on +Vesting +(#) +Value +Realized on +Vesting (1) +($) +Timothy Cutt +6,148 +$ 465,588 +William Buese +5,792 +$ 491,683 +Patrick Craine +13,907 +$1,180,565 +Michael Sluiter +2,782 +$ 236,164 +Lester Zitkus +2,174 +$ 193,066 +(1) The amounts reflected in this column represent the market value of the underlying Common Shares as of the vesting date. If the vesting date was not a trading day, the value is based on the closing price per share of our common stock on the last trading day prior to the vesting date. +42 2023 PROXY STATEMENT +Benefit Plans +401(k) Plan +We maintain a retirement savings plan, or the 401(k) Plan, for the benefit of our eligible employees who have attained the age of 18. Currently, employees may elect to defer their compensation up to the statutorily prescribed limit. During the plan year, we make a safe -harbor contribution based on a formula that provides a Company match of 100% of the first 4% of eligible compensation and a 50% match of deferrals that exceed 4% of compensation but do not exceed 6% of compensation with each pay period. We also may make an additional, discretionary contribution based on each eligible employee’s eligible annual compensation for the prior calendar year. All contributions made by us on behalf of an employee are 100% vested when contributed. The 401(k) Plan is intended to qualify under Sections 401(a) and 501(a) of the Code. As such, contributions to the 401(k) Plan and earnings on those contributions are not taxable to the employees until distributed from the 401(k) Plan, and all contributions are deductible by us when made. +2021 STOCK INCENTIVE PLAN +Upon emergence on May 17, 2021, our Board adopted the Gulfport Energy Corporation 2021 Stock Incentive Plan (the “2021 Incentive Plan”) and authorized and reserved 2,828,123 shares of Gulfport’s common stock for issuance to Gulfport’s employees (including our NEOs), consultants and non -employee directors pursuant to equity incentive awards to be granted under the 2021 Incentive Plan, which may be in the form of incentive stock options, nonqualified stock options, restricted stock, restricted stock units, stock appreciation rights and performance awards or any combination of the foregoing. +The plan administrator may at any time amend or terminate the Annual Incentive Plan in whole or in part. +Our Board of Directors has delegated its authority to administer the Annual Incentive Plan to the Compensation Committee, to whom we refer as the plan administrator. The plan administrator has the authority to administer the Annual Incentive Plan and to exercise all the powers and authorities either specifically granted to it under the Annual Incentive Plan or necessary or advisable in the administration of the Annual Incentive Plan, including (but not limited to) the following: +• to interpret the Annual Incentive Plan and any award; +• to prescribe rules relating to the Annual Incentive Plan; +• to determine the persons to receive awards; +• to determine the terms, conditions, restrictions and performance criteria, including performance factors and performance targets, relating to any award; +• to accelerate an award that is designed not to be deferred compensation subject to Code Section 409A (after the attainment of the applicable performance target or targets); +• to adjust performance targets in recognition of specified events such as unusual or non -recurring events affecting us or our financial statements, including certain asset dispositions, cessation of operations resulting from a natural disaster, or in response to changes in applicable laws, regulations, or accounting principles as specified in the Annual Incentive Plan or in the performance targets established for any performance period; +• to waive restrictive conditions for an award (but not performance targets); and +• to make any other determinations that may be necessary or advisable for administration of the Annual Incentive Plan. +2023 PROXY STATEMENT 43 +Benefit Plans +EQUITY COMPENSATION PLAN INFORMATION +The following table sets forth, as of December 31, 2022, certain information with respect to all compensation plans under which equity securities are authorized for issuance. +Plan Category +Number of +securities to +be issued upon +exercise of +outstanding +options, +warrants and +rights (a) (1)(2)(3) +Weighted +average +exercise price +of outstanding +options, +warrants and +rights (b) (3) +Number of +securities +remaining +available for +future issuance +under equity +compensation +plans excluding +securities +reflected in +column (a) +Equity compensation plans approved by security holders (1) +388,576 +$ — +2,371,983 +(1) Refers to the 2021 Stock Incentive Plan. +(2) Includes an aggregate of 388,576 unvested restricted stock units and shares of unvested restricted stock granted under the 2021 Stock Incentive Plan. +(3) No options were outstanding as of December 31, 2022, and neither restricted stock units nor shares of restricted common stock have an exercise price. +Chief Executive Officer Offer Letter and Employment Agreement +On May 17, 2021, we entered into an offer letter with Mr. Cutt to serve as our Interim Chief Executive Officer and Chairman of the Board. +On September 2, 2021, Mr. Cutt assumed the role of Chief Executive Officer and Chairman of the Board, and we entered into an amendment to the offer letter with Mr. Cutt. +Pursuant to his offer letter, as amended, Mr. Cutt serves as our Chief Executive Officer and Chairman of the Board. The offer letter provides for no fixed term of employment (although Mr. Cutt agrees to give 90 days’ notice of intent to resign as Chief Executive Officer at any time), and Mr. Cutt will continue to serve as Chairman of the Board following the termination of his term of employment (subject to the Board’s ability to remove him at any time). The offer letter also provides for, among other things, (i) an annual base salary of $750,000, (ii) eligibility to receive an annual bonus with a target bonus opportunity of 100% of base salary, and (iii) a $75,000 signing bonus. +Upon Mr. Cutt’s termination of employment by the Company without “cause” (as defined in the offer letter) following the occurrence of a “change of control” (as defined in the 2021 Incentive Plan), subject to his execution and non -revocation of a release of claims, Mr. Cutt will receive severance in an amount equal to three times the sum of his (i) then -current base salary plus (ii) target annual bonus for the year in which such termination occurs, payable in a lump sum on the 60 th day following such termination of employment. If Mr. Cutt breaches any of the restrictive covenants contained in his offer letter (as described below), his right to receive any severance will cease and he will be required to repay any previously paid severance. +Mr. Cutt’s offer letter provides for the following treatment of his equity awards: (i) unless mutually agreed between the parties, Mr. Cutt agrees to forfeit 100% of his performance -based restricted stock units granted on July 21, 2021 if the term of his employment ends prior to May 17, 2022 other than due to a change of control, (ii) upon a change of control, all time -based and performance -based restricted stock units will vest, and (iii) in the event of a termination of employment due to (x) voluntary resignation or termination for cause, all unvested time -based and performance -based restricted stock units will be forfeited for no consideration or (y) a termination without cause, death or disability, all unvested time -based and performance -based restricted stock units will fully vest and be settled on the 60th day following such termination, subject, in the cause of a termination without cause, to Mr. Cutt’s execution and non -revocation of an effective release of claims. +Mr. Cutt’s offer letter also contains a one -year post -employment non -solicitation clause and standard confidentiality, trade secrets and cooperation provisions. +44 2023 PROXY STATEMENT +Benefit Plans +Under his offer letter, “cause” generally means (i) Mr. Cutt’s willful and continued failure to perform substantially his duties with the Company (other than for failures resulting from incapacity due to physical or mental illness) or (ii) willful engaging in illegal conduct or gross misconduct which is materially and demonstrably injurious to the Company. +On April 29, 2022, we entered into an employment agreement with Mr. Cutt to serve as our Chief Executive Officer and Executive Chairman of the Board of Directors. +Pursuant to the employment agreement, the term of Mr. Cutt’s service as Chief Executive Officer shall continue until such time as either Mr. Cutt or the Company gives notice of intent to terminate. Mr. Cutt will continue to serve as Chairman of the Board following the termination of his employment as Chief Executive Officer (subject to the Board’s ability to remove him at any time). The employment agreement also provides for, among other things, (i) an annual base salary of $785,000, (ii) eligibility to receive an annual bonus with a target bonus opportunity of 120% of base salary; (iii) eligibility for annual grants of equity awards as determined in the sole discretion of the Compensation Committee pursuant to the Company’s equity compensation plans; and (iv) benefits that are customarily provided to similarly situated executives of the Company. +In addition, Mr. Cutt will be entitled to receive specified payments and benefits upon certain termination events pursuant to the Employment Agreements, including termination following a change of control. The Compensation Committee believes that these provisions encourage Mr. Cutt to remain in our employment, as applicable, in the event of a change of control of the Company and during circumstances which indicate that a change of control might occur. The Compensation Committee believes termination and change of control benefits are important in maintaining strong leadership and in encouraging retention in these situations and encourages Mr. Cutt to act in the best interests of stockholders without distraction based on uncertainty regarding their employment status, as applicable. Under the Employment Agreement, if Mr. Cutt’s employment is terminated without “cause” by the Company or for “good reason” by Mr. Cutt during such time that is not within the 24 -month period following a “change of control” (as such terms are defined in the Employment Agreement), Mr. Cutt will be entitled to severance compensation equal to: +• 100% of annual base salary and target annual bonus; +• pro -rata target annual bonus; +• pro -rated vesting of the Covered NEO’s unvested equity awards (with performance award vesting based on performance through the termination date); however, see “2021 RSU and PSU Grant Agreements” for terms applicable to equity awards granted in 2021, and “2022 RSU and PSU Grant Agreements” for terms applicable to equity awards granted in 2022; +• immediate vesting of any Company matching or other contributions to the Company’s non -qualified deferred compensation plans, if any (“Company Non -Qualified Contributions”); and +• a lump sum payment equal to Mr. Cutt’s monthly COBRA premium for a 12 -month period. +If, however, Mr. Cutt’s employment is terminated without cause by the Company or by Mr. Cutt for good reason, in each case, within 24 months following a change of control, Mr. Cutt will instead be entitled to severance compensation equal to: +• 300% of annual base salary and target annual bonus; +• pro -rata target annual bonus; +• immediate vesting of the Covered NEO’s unvested equity awards (with performance award vesting based on performance through the termination date); however, see “2021 RSU and PSU Grant Agreements” for terms applicable to equity awards granted in 2021, and “2022 RSU and PSU Grant Agreements” for terms applicable to equity awards granted in 2022; +Mr. Cutt’s employment agreement also contains a one -year post -employment non -solicitation clause and standard confidentiality, trade secrets and cooperation provisions. +Under his employment agreement, “cause” generally means (i) Mr. Cutt’s willful and continued failure to perform substantially his duties with the Company (other than for failures resulting from incapacity due to physical or mental illness) or (ii) willful engaging in illegal conduct or gross misconduct which is materially and demonstrably injurious to the Company. +2023 PROXY STATEMENT 45 +Benefit Plans +NEO Employment Agreements and Termination and Change of Control Benefits +As indicated above, certain of our NEOs are (or were formerly) parties to an employment agreement with the Company. +Pursuant to the employment agreements with Messrs. Craine, Sluiter, Zitkus and Buese (collectively, the “Employment Agreements”, and such individuals, the “Covered NEOs”), each current employment agreement provides for an initial term that extends through December 31, 2026; provided that the term will automatically renew for successive one -year terms unless the Company or the Covered NEO gives written notice not to renew at least 90 days before the end of the initial term or any renewal term. If a “change of control” (as described in the applicable Employment Agreement) occurs during the term thereof, the term will be extended to the later of the original expiration date of the term or the date that is 24 months after the effective date of the change of control. +The Employment Agreements provide each Covered NEO with, among other things: (i) an annual base salary of $450,000 (increased to $470,000 in April 2022), $360,000 (increased to $378,000 in April 2022), $351,900, and $450,000 (increased to $470,000 in April 2022) for Messrs. Craine, Sluiter, Zitkus, and Buese respectively, (ii) eligibility to earn a target annual bonus under the Company’s Annual Incentive Plan equal to 90%, 60%, 60%, and 90% (increased to 100% in April 2022) of base salary for Messrs. Craine, Sluiter, Zitkus, and Buese, respectively, (iii) eligibility for annual grants of equity awards as determined in the sole discretion of the Compensation Committee pursuant to the Company’s equity compensation plans, and (iv) benefits that are customarily provided to similarly situated executives of the Company. +In addition, our Covered NEOs will be entitled to receive (or have already received) specified payments and benefits upon certain termination events pursuant to the Employment Agreements, including termination following a change of control. The Compensation Committee believes that these provisions encourage our Covered NEOs to remain in our employment, as applicable, in the event of a change of control of the Company and during circumstances which indicate that a change of control might occur. The Compensation Committee believes termination and change of control benefits are important in maintaining strong leadership and in encouraging retention in these situations and encourages our Covered NEOs to act in the best interests of stockholders without distraction based on uncertainty regarding their employment status, as applicable. Under the Employment Agreements, if a Covered NEO’s employment is terminated without “cause” by the Company or by the applicable Covered NEO for “good reason” during such time that is not within the 24 -month period following a “change of control” (as such terms are defined in the Employment Agreements), such Covered NEO will be entitled to severance compensation equal to: +• 100% of annual base salary and target annual bonus; +• pro -rata target annual bonus; +• pro -rated vesting of the Covered NEO’s unvested equity awards (with performance award vesting based on performance through the termination date); however, see “2021 RSU and PSU Grant Agreements” for terms applicable to equity awards granted in 2021; +• immediate vesting of any Company matching or other contributions to the Company’s non -qualified deferred compensation plans, if any (“Company Non -Qualified Contributions”) (except for Mr. Buese); and +• a lump sum payment equal to the Covered NEO’s monthly COBRA premium for a 12 -month period. +If, however, such Covered NEO’s employment is terminated without cause by the Company or by the Covered NEO for good reason, in each case, within 24 months following a change of control, such Covered NEO will instead be entitled to severance compensation equal to: +• 200% of annual base salary and target annual bonus (100% for Messrs. Sluiter and Zitkus); +• pro -rated target annual bonus; +• immediate vesting of the Covered NEO’s unvested equity awards (with performance award vesting based on performance through the termination date); however, see “2021 RSU and PSU Grant Agreements” for terms applicable to equity awards granted in 2021; +• immediate vesting of any Company Non -Qualified Contributions (except for Mr. Buese); and +• a lump sum payment equal to the Covered NEO’s monthly COBRA premium for an 18 -month period. +46 2023 PROXY STATEMENT +Benefit Plans +Under the Employment Agreements: +“Good reason” is generally defined as (i) the elimination of the Covered NEO’s position, a material reduction in the duties and/or reassignment of the Covered NEO to a new position of materially less authority; or (ii) a material reduction in the Covered NEO’s base salary, in either case, subject to a cure period of 30 days. For Mr. Buese, “good reason” also includes (x) a requirement that he relocate to a location outside of a 50 -mile radius of his office or principal base of operation immediately prior to a change of control or (y) a requirement that he spend more than 50% of his time in Gulfport’s Oklahoma City headquarters on an ongoing basis. +“Cause” is generally defined as (i) the Covered NEO’s willful and continued failure to perform substantially such Covered NEO’s duties with the Company (other than any failure resulting from incapacity due to physical or mental illness) or (ii) the Covered NEO’s willful engaging in illegal conduct or gross misconduct which is materially and demonstrably injurious to the Company. +Severance benefits payable under the Employment Agreements are generally conditioned on timely execution of a waiver and release of claims. +Each Employment Agreement also contains a one -year post -employment non -solicitation clause and standard confidentiality, trade secrets and cooperation provisions. +RSU and PSU Grant Agreements: +On April 29, 2022, Messrs. Cutt and Buese each received an award of time -based restricted stock units and performance -based restricted stock units under the 2021 Stock Incentive Plan. +Pursuant to the applicable award agreement, upon the applicable NEO’s termination of employment or service for cause, any unvested RSUs or PSUs will be immediately forfeited for no consideration. For Mr. Cutt, if he continues to provide services to the Company as a member of the Board following his termination of employment, his RSUs will continue to vest in accordance with the vesting schedule set forth in his RSU award agreement. +Upon a termination of the applicable NEO’s employment or service due to death or “disability”, by the Company without “cause” (each as defined in the 2021 Incentive Plan) or due to a resignation by the applicable NEO for “good reason” (as defined in the applicable award agreement), (i) any unvested RSUs will accelerate and fully vest, and (ii) a prorated portion of the PSUs will vest based on the actual achievement of the performance conditions to be determined at the expiration of the performance period, and any remaining unvested PSUs will be forfeited (provided, that if the applicable NEO is terminated by the Company without cause or resigns for good reason within the first 18 months of the performance period (or for Mr. Cutt, prior to May 17, 2022), the Compensation Committee will have sole discretion whether the PSUs will accelerate and vest in such manner). For Mr. Cutt, if he continues to provide services to the Company as a member of the Board following his termination of employment, his RSUs and PSUs will continue to vest in accordance with the vesting schedule set forth in his RSU and PSU award agreement. +Upon the occurrence of a “change in control” (as defined in the 2021 Incentive Plan), to the extent the RSUs or PSUs, as applicable, are not assumed by the surviving entity, (i) any unvested RSUs will accelerate and fully vest, and (ii) the applicable NEO will become vested in 100% of the target award of PSUs or, if greater, the percentage of the target award of PSUs earned based on the actual achievement of the performance conditions to be determined as if the change in control was the last day of the performance period (except that the TSR for the Company and each of the peer companies will be determined using the closing price as of the closing date of the change in control compared to the reference value). +Upon the occurrence of a change in control, to the extent the RSUs or PSUs, as applicable, are assumed by the surviving entity, (i) upon the termination of the applicable NEO’s employment or service due to death or disability, by the Company without cause or by the applicable NEO for good reason within the 24 month period following such change in control, any unvested RSUs will accelerate and fully vest, and (ii) the PSUs will be converted, as of the date of such change in control, into time -based restricted stock units (the “Converted RSUs”), subject to the applicable NEO’s continuous employment or service through the date of such change in control, with the number of PSUs to be converted equal to 100% of the target award of PSUs or, if greater, the percentage of the target award of PSUs earned based on the actual achievement of the performance conditions to be determined as if the change in control was the last day of the performance period (except that the TSR for the Company and each of the peer +2023 PROXY STATEMENT 47 +Benefit Plans +companies will be determined using the closing price as of the closing date of the change in control compared to the reference value), and 100% of the Converted RSUs will vest, if at all, on the last day of the performance period, subject to the applicable NEO’s continuous employment or service through such date; provided, that if the applicable NEO’s employment or service is terminated due to death or disability, by the Company without cause or by the applicable for good reason following such change in control, 100% of the Converted RSUs will vest as of the date of such termination. +In the event of (i) a change in the composition of the Board such that, for a period of 30 days, the majority of the members of the Board are no longer considered “independent” (as described in the applicable award agreement) or (ii) any stockholder becomes the beneficial owner of more than 75% of the total combined voting power of all classes of stock of the Company (each such event, a “Special CiC Event”), (x) any unvested RSUs will accelerate and fully vest, and (y) the applicable NEO will become vested in 100% of the target award of PSUs or, if greater the percentage of the target award of PSUs earned based on the actual achievement of the performance conditions to be determined as of the Special CiC Event (determined as if the Special CiC Event was the last day of the performance period). +48 2023 PROXY STATEMENT +Benefit Plans +Termination, Resignation or Change of Control +The following tables provide information regarding potential payments to each of our NEOs as of December 31, 2022, in connection with certain termination events, including a termination related to a change of control of the Company. +Benefits and Payments Upon Termination (1) +Termination +Due to +Death or +Disability +Termination +by the Company +Without +Cause or by +the NEO for +Good Reason +(a “Qualifying +Termination”) +Termination +by the +Company +for Cause +Qualifying +Termination +Within +24 Months +Following +Change of +Control +Change in +Control with +no Qualifying +Termination (2) +Timothy Cutt +Cash Severance Payments +— +$2,669,000 +— +$ 4,710,000 (3) +— +Accelerated Vesting of Equity Awards: (4) +Unvested RSUs +$3,081,908 +$3,081,908 +— +$ 3,081,908 +$3,081,908 +Unvested PSUs +$ 655,210 +$ 655,210 +— +$ 4,776,240 +$4,776,240 +Total +$3,737,118 +$6,406,118 +— +$12,568,148 +$7,858,148 +William Buese +Cash Severance Payments (5) +— +$ 940,000 +— +$ 1,880,000 +— +Accelerated Vesting of Equity Awards: (4) +Unvested RSUs +$ 978,455 +$ 978,455 +— +$ 978,455 +$ 978,455 +Unvested PSUs +$ 925,630 +$ 925,630 +— +$ 1,877,534 +$1,877,534 +Accelerated Vesting of Company Non-Qualified Contributions (6) +COBRA Payments (7) +— +$ 21,664 +— +$ 32,496 +— +Total +$1,904,085 +$2,865,749 +— +$ 4,768,485 +$ 2,855,989 +Patrick Craine +Cash Severance Payments (5) +— +$1,316,000 (8) +— +$ 2,209,000 (8) +— +Accelerated Vesting of Equity Awards: (4) +Unvested RSUs +$2,048,297 +$2,048,297 +— +$ 2,048,297 +$2,048,297 +Unvested PSUs +$2,226,930 +$2,226,930 +— +$ 4,517,073 +$4,517,073 +Accelerated Vesting of Company Non-Qualified Contributions (6) +COBRA Payments (7) +— +$ 21,811 +— +$ 32,716 +— +Total +$4,275,227 +$5,613,038 +— +$ 8,807,086 +$6,565,370 +Michael Sluiter +Cash Severance Payments (5) +— +$ 831,600 +— +$ 831,600 +— +Accelerated Vesting of Equity Awards: (4) +Unvested RSUs +$ 409,659 +$ 409,659 +— +$ 409,659 +$ 409,659 +Unvested PSUs +$ 445,379 +$ 445,379 +— +$ 842,515 +$ 842,515 +Accelerated Vesting of Company Non-Qualified Contributions (6) +COBRA Payments (7) +— +$ 21,811 +— +$ 32,716 +— +Total +$ 855,038 +$1,708,449 +— +$ 2,116,490 +$1,252,174 +2023 PROXY STATEMENT 49 +Benefit Plans +Benefits and Payments Upon Termination (1) +Termination +Due to +Death or +Disability +Termination +by the Company +Without +Cause or by +the NEO for +Good Reason +(a “Qualifying +Termination”) +Termination +by the +Company +for Cause +Qualifying +Termination +Within +24 Months +Following +Change of +Control +Change in +Control with +no Qualifying +Termination (2) +Lester Zitkus +Cash Severance Payments (5) +— +$ 774,180 +— +$ 774,180 +— +Accelerated Vesting of Equity Awards: (4) +Unvested RSUs +$ 320,187 +$ 320,187 +— +$ 320,187 +$ 320,187 +Unvested PSUs +$ 406,281 +$ 406,281 +— +$ 842,515 +$ 842,515 +Accelerated Vesting of Company Non-Qualified Contributions (6) +COBRA Payments (7) +— +$ 21,664 +— +$ 32,496 +— +Total +$ 726,468 +$ 1,522,312 +$ 1,969,378 +$1,162,702 +(1) Information in this table assumes a termination date of December 31, 2022, and a price per share of our common stock of $73.64 (the closing market price per share on December 31, 2022, the last trading day of 2022), and applies the terms of the NEOs’ compensation arrangements as of December 31, 2022. Performance share units are pro -rated from the Company’s May 17, 2021, emergence date through December 31, 2022. Performance -based bonuses are calculated using 100% achievement for illustration, though payouts may vary based on actual results. +(2) Represents the aggregate value of the applicable NEO’s 2022 equity awards that will accelerate on a Special CiC Event, or, in the case of Mr. Cutt, a change in control (as defined in the 2021 Incentive Plan). See “RSU and PSU Grant Agreements” above. +(3) Represents the cash severance payment payable to Mr. Cutt in the event of a termination by the Company without cause following a change of control (as defined in the 2021 Incentive Plan). +(4) Represents the aggregate value of the applicable NEO’s accelerated equity awards payable to the NEO in accordance with the terms of the applicable agreement, assuming a termination date of December 31, 2022. +(5) Represents the aggregate cash severance payments payable to the NEO (calculated based on the base salary and target annual bonus in effect as of December 31, 2022) in accordance with the terms of the applicable agreement, assuming a termination date of December 31, 2022. +(6) Represents the aggregate value of the applicable NEO’s accelerated Company Non -Qualified Contributions payable to the NEO in accordance with the terms of the applicable agreement, assuming a termination date of December 31, 2022, as applicable. +(7) Represents the aggregate COBRA payments payable to the NEO in accordance with the terms of the applicable agreement, assuming a termination date of December 31, 2022. +(8) Our emergence from bankruptcy on May 17, 2021, constituted a change of control under Mr. Craine's employment agreement. Accordingly, these values represent the aggregate cash severance payments payable to Mr. Craine (calculated based on the base salary and target annual bonus in effect as of December 31, 2021) in accordance with his employment agreement, assuming a termination date of December 31, 2022 (which would be within the 24 -month period following a change of control). +50 2023 PROXY STATEMENT +CEO Pay Ratio Disclosure +Pursuant to Item 402(u) of Regulation S -K , we are disclosing the pay ratio and supporting information comparing the median of the annual total compensation of our employees (including full -time , part -time , seasonal and temporary employees) other than Mr. Cutt, our Chief Executive Officer and Chairman of the Board, as of December 31, 2022 (the date selected to identify the ‘median employee’, as further described below), and the annual total compensation of Mr. Cutt. The pay ratio is calculated in a manner consistent with Item 402(u) of Regulation S -K . +For the year ended December 31, 2022, our last completed fiscal year: +• The annual total compensation of our median employee was $117,986. +• The annual total compensation of Mr. Cutt was $6,447,544. +Based on this information, for 2022 the ratio of the annual total compensation of Mr. Cutt to the median of the annual total compensation of all other employees was approximately 55:1. +We selected December 31, 2022, as the date upon which we identified the median employee. We reviewed the Medicare Taxable Earnings as reported on IRS Form W -2 (Box 5) for 2022 for all individuals employed by us on December 31, 2022 (other than Mr. Cutt) and identified the median employee based on Medicare Taxable Earnings. +Once we identified our median employee, we calculated that employee’s annual total compensation for 2022 in the same manner that we determined the total compensation of our named executive officers for purposes of the Summary Compensation Table set forth above. This resulted in an annual total compensation of $117,986 for the identified employee for the year ended December 31, 2022. The total compensation for Mr. Cutt was calculated based on the values included in the Summary Compensation Table set forth above, and was then annualized for 2022, by assuming Mr. Cutt earned a full year of base salary ($772,288) and was paid a full year of STI payment at target achievement ($1,120,980). Mr. Cutt does not participate in the Company’s benefit plans except for the 401(k) plan and imputed income on Company -paid life insurance provided to all employees. We made no material assumptions, adjustments, or estimates to identify the median employee or to determine total compensation, and we did not annualize the compensation for any employees that were not employed by us the entire year (other than for Mr. Cutt, as described above). +We believe that the pay ratio is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S -K . In addition, because the Securities and Exchange Commission rules for identifying the median employee allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices, the pay ratio reported by other companies may not be comparable to our pay ratio, as other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios. +2023 PROXY STATEMENT 51 +Pay Versus Performance +As previously discussed in the CD&A above, our Compensation Committee has focused on implementing executive compensation plans with the goal of tying our NEOs’ realized compensation to the achievement of Gulfport’s financial, operational, and strategic objectives, and aligning executive pay with changes in the value of our shareholders’ returns. The following table sets forth additional compensation information for our NEOs, calculated in accordance with SEC regulations, for fiscal years 2022, 2021 and 2020. +Summary +Compensation +Table Total +for PEO1 (1) +(Tim Cutt) +(b) +Summary +Compensation +Table Total +for PEO2 (1) +(David Wood) +(b) +Compensation +Actually Paid +to PEO1 +(Tim Cutt) +(c) +Compensation +Actually Paid +to PEO2 +(David Wood) +(c) +Average +Summary +Compensation +Table Total +for non-PEO +NEOs +(d) +Average +Compensation +Actually Paid +to non-PEO +NEOs +(e) +Value of initial fixed $100 Investment based on: (2) +Net +Income +($mm) +(h) +Adj. Free +Cash +Flow (3) +(i) +Year +(a) +Total +Shareholder +Return +(f) +Peer Total +Shareholder +Return +(g) +2022 +$ 6,447,544 +n/a +$ 5,787,951 +n/a +$ 974,218 (4) +$ 1,232,477 (4) +$ 101 +$ 162 +$ 495 +$ 241 +2021 +$ 3,823,399 +$ 8,942,980 +$ 4,153,397 +$ 8,930,695 +$ 4,004,438 (5) +$ 4,214,026 (5) +$ 99 +$ 116 +($ 113 ) +$ 361 +2020 +n/a +$ 2,773,653 +n/a +$ 1,110,896 +$ 1,092,898 (6) +$ 261,907 (6) +n/a +n/a +($ 1,625 ) +$ 41 +(1) The Company had two CEOs during 2021. Effective May 17 th , 2021, Mr. Wood left his position of Chief Executive Officer and President of the Company and Mr. Cutt was appointed as Interim Chief Executive Officer and Chairman of the Board and assumed the role of Chief Executive Officer and Chairman of the Board on September 2, 2021. +(2) TSR is determined based on the value of an initial fixed investment of $100 on December 31, 2019. The peer group TSR represents TSR of the S&P Oil & Gas Exploration & Production Index. (add to TSR and Peer TSR). +(3) Adjusted Free Cash Flow is a non -GAAP measure defined as net cash provided by operating activities from the Company’s Consolidated Statement of Cash Flows less the sum of changes in operating assets and liabilities included in the operating activities section of the Consolidated Statement of Cash Flows less non -recurring general and administrative and other expenses from the Consolidated Statement of Operations less incurred capital expenditures and capitalized expenses. Adjusted Free Cash Flow was calculated assuming realized commodity pricing received throughout the year was consistent with the forward curve pricing used to set the approved Adjusted Free Cash Flow Metric in March of 2022. +(4) The non -PEO NEOs during 2022 were Messrs Buese, Craine, Sluiter and Zitkus. +(5) The non -PEO NEOs during 2021 were Messrs Buese, Craine, Sluiter, Robert J. Moses, Quentin Hicks and Donnie Moore. +(6) The non -PEO NEOs during 2020 were Messrs Craine, Sluiter, Hicks and Moore. +SEC rules require certain adjustments be made to the Summary Compensation Table totals to determine “compensation actually paid” (CAP) as reported in the Pay versus Performance Table. The following table details these adjustments: +Executive(s) +Summary +compensation +table total +($) +Pension Valuation Adjustments +Equity Award Adjustments +Year +Deduct +change in +pension +value +($) +Pension +service +cost +adjustment +($) +Prior +service +cost +adjustment +($) +Deduct +stock +awards +($) +Include +year-end +equity +value +($) +Change in +value of +prior +equity +awards +($) +Dividends +& Interest +Accrued +($) +2022 +PEO1 +6,447,544 +N/A +N/A +N/A +( 4,546,228 ) +3,684,198 +202,438 +N/A +PEO2 +N/A +N/A +N/A +N/A +N/A +N/A +N/A +N/A +Other NEOs +974,218 +N/A +N/A +N/A +( 82,636 ) +66,967 +273,928 +N/A +2021 +PEO1 +3,823,399 +N/A +N/A +N/A +( 2,788,998 ) +3,118,996 +0 +N/A +PEO2 +8,942,980 +N/A +N/A +N/A +0 +0 +( 12,285 ) +N/A +Other NEOs +4,004,438 +N/A +N/A +N/A +( 1,735,147 ) +1,949,967 +( 5,233 ) +N/A +2020 +PEO1 +N/A +N/A +N/A +N/A +N/A +N/A +N/A +N/A +PEO2 +2,773,653 +N/A +N/A +N/A +( 315,761 ) +33,600 +( 1,380,596 ) +N/A +Other NEOs +1,092,898 +N/A +N/A +N/A +( 86,361 ) +9,190 +( 753,819 ) +N/A +52 2023 PROXY STATEMENT +Pay Versus Performance +The Company believes that the three key financial performance measures most relevant to linking pay and performance over the long term are, in no particular order, Adjusted Free Cash Flow , Net Income and TSR . The following three tables describe the link between those metrics and “compensation actually paid” (CAP) to our CEO and other NEOs in 2022 to Company performance. +2023 PROXY STATEMENT 53 +Pay Versus Performance +2022 DIRECTOR COMPENSATION +Our policy is that members of our Board of Directors who are also our officers or employees do not receive compensation for their services as directors. The compensation of our non -employee directors for 2022 is described below. +Cash Compensation +The annual retainer for each non -employee director is $100,000. In addition, the Chairman of the Board receives an additional $25,000 annual retainer, however, since Mr. Cutt was both a director and an employee of the Company, he was not eligible to receive this retainer in 2022. The members and chairperson of each of our Board Committees receive an additional annual retainer as set forth in the table below. +2022 Director Fees +Program Component +2022 Program +Annual base cash retainer for Board service +$ 100,000 +Additional cash retainer to non-executive Chairman (1) +$ 25,000 +Additional cash retainer to Lead Director +$ 25,000 +Audit Committee Chair cash retainer +$ 25,000 +Compensation Committee Chair cash retainer +$ 15,000 +Nominating, Environmental, Social and Governance Committee Chair cash retainer +$ 10,000 +Audit Committee member cash retainer +$ 10,000 +Compensation Committee member cash retainer +$ 5,000 +Nominating, Environmental, Social and Governance Committee member cash retainer +$ 5,000 +Stock ownership guideline +5.0x annual +base retainer +(1) Mr. Cutt did not receive any compensation for serving as a director of the Company for 2022. +Equity Compensation +In 2022, non -employee directors did not receive grants of restricted stock units. The restricted stock unit grants made to Directors in 2021 were intended to cover a multi -year period. +Stock Ownership Guidelines for Directors +We believe it is important for members of our Board of Directors to align their financial interests with those of our stockholders. Accordingly, effective January 1, 2019, our Board of Directors adopted a formal stock ownership policy that requires our non -employee directors to achieve a stock ownership level equal to the value of common stock that is five times the value of their annual retainer within five years of the effective date of such stock ownership policy. +54 2023 PROXY STATEMENT +Pay Versus Performance +2022 Director Compensation Table +The following table contains information with respect to 2022 compensation of our non -employee directors who served in such capacity during 2022. Mr. Cutt, our Chief Executive Officer and Chairman in 2022, does not receive any compensation for serving as a director of the Company. +Current Board Compensation +Name +Fees Earned or +Paid in Cash +($) (1) +Stock +Awards +($) +Option +Awards +($) +Total +($) +David Wolf +$160,000 +— +— +$160,000 +Guillermo (Bill) Martinez +$125,000 +— +— +$125,000 +Jason Martinez +$130,000 +— +— +$130,000 +David Reganato +$120,000 +— +— +$120,000 +(1) For additional information regarding the fees earned or paid in cash to our non -employee directors in 2022, please see “Director Compensation – Cash Compensation.” +2023 PROXY STATEMENT 55 +BENEFICIAL OWNERSHIP +The following table sets forth certain information regarding the beneficial ownership as of March 31, 2023, of shares of our common stock by each of our directors, by each named executive officer and by all directors, executive officers and nominees as a group. None of the executive officers, directors or individuals listed below are holders of the Company's outstanding preferred stock. +Name of Beneficial Owner (1) +Amount and Nature of +Beneficial Ownership +Percent of Class +Timothy Cutt (2) +13,999 +* +David Wolf +2,127 +* +Guillermo (Bill) Martinez +2,127 +* +Jason Martinez +2,127 +* +David Reganato (assigned to SilverPoint) (3) +2,127 +* +Mary Shafer-Malicki +— +— +John Reinhart +— +— +William Buese (4) +4,685 +* +Patrick Craine +9,236 +* +Matthew Rucker +— +— +Michael Sluiter +1,972 +* +Lester Zitkus +1,541 +* +Directors and Executive Officers as a Group (10 persons) +39,941 +* +* Less than 1%. +(1) Beneficial ownership is determined in accordance with SEC rules. In computing percentage ownership of each person, shares of common stock subject to options held by that person that are exercisable as of March 31, 2023, or exercisable within 60 days of March 31, 2023, are deemed to be beneficially owned. These shares, however, are not deemed outstanding for the purpose of computing the percentage ownership of each other person. The percentage of shares beneficially owned is based on 18,581,373 shares of common stock outstanding as of March 31, 2023, excluding an aggregate of 428,133 shares of restricted stock units and performance -based restricted stock units awarded under our 2021 Stock Incentive Plan, but not yet vested. Unless otherwise indicated, all amounts exclude shares issuable upon the exercise of outstanding options and vesting of restricted stock units that that are not exercisable and/or vested as of March 31, 2023, or within 60 days of March 31, 2023. Except as otherwise noted, each stockholder has sole voting and investment power with respect to the shares beneficially owned. +(2) Includes 7,803 unvested restricted stock units that will vest within 60 days of March 31, 2023. +(3) Mr. Reganato has an understanding with Silver Point pursuant to which he holds such restricted shares for the benefit of Silver Point and certain of its affiliates. Accordingly, Mr. Reganato disclaims beneficial ownership of the restricted shares except to the extent of his pecuniary interest therein. +(4) Includes 567 unvested restricted stock units that will vest within 60 days of March 31, 2023. +56 2023 PROXY STATEMENT +BENEFICIAL OWNERSHIP +Holdings of Major Stockholders +The following table sets forth certain information regarding the beneficial ownership as of March 31, 2023 of shares of our common stock by each person or entity known to us to be a beneficial owner of 5% or more of our common stock. The following table does not include information regarding ownership of shares of our preferred stock due to the securities not being listed on a major U.S. national or regional securities exchange and requirements for ownership reporting. +MAJOR STOCKHOLDER TABLE +Name and Address of Beneficial Owner (1) +Amount and Nature of +Beneficial Ownership +Percent of +Class (1) +Silver Point Capital, L.P. +8,604,579 (2,3) +46.3% +2 Greenwich Plaza, First Floor +Greenwich, CT 06830 +MacKay Shields, LLC +2,145,488 (4) +11.5% +1345 Avenue of Americas +New York, NY 10105 +J.P. Morgan Chase & Co. +1,321,929 (5) +7.1% +383 Madison Avenue +New York, NY 10179 +(1) Beneficial ownership is determined in accordance with SEC rules. The percentage of shares beneficially owned is based on 18,581,373 shares of common stock outstanding as of March 31, 2023, excluding an aggregate of 428,133 shares of restricted stock units and performance -based restricted stock units awarded under our 2021 Stock Incentive Plan, but not yet vested. +(2) Based solely on Form 13F Holdings Report filed with the SEC on February 14, 2023, by Silver Point Capital, L.P. that reported amount of securities beneficially owned of 8,604,579 shares of common stock. Silver Point Capital, L.P. (“Silver Point”) or its wholly owned subsidiaries are the investment managers of Silver Point Capital Fund, L.P., Silver Point Capital Offshore Master Fund, L.P., Silver Point Distressed Opportunities Fund, L.P., Silver Point Distressed Opportunities Offshore Master Fund, L.P., Silver Point Distressed Opportunity Institutional Partners, L.P. and Silver Point Distressed Opportunity Institutional Partners Master Fund (Offshore), L.P. (the “Funds”) and, by reason of such status, may be deemed to be the beneficial owner of all of the reported securities held by the Funds. Silver Point Capital Management, LLC (“Management”) is the general partner of Silver Point and as a result may be deemed to be the beneficial owner of all securities held by the Funds. +(3) Messrs. Edward A. Mule and Robert J. O’Shea are each members of Management and as a result may be deemed to be the beneficial owner of all of the securities held by the Funds. Silver Point, Management and Messrs. Mule and O’Shea disclaim beneficial ownership of the reported securities held by Funds except to the extent of their pecuniary interests. +(4) Based solely on Schedule 13G filed with the SEC on January 6, 2023, by MacKay Shields LLC that reported ownership of 2,145,488 shares of common stock. MacKay Shields LLC, an investment adviser registered under Section 203 of the Investment Advisers Act of 1940, may be deemed to be a beneficial owner of reported securities held. The MainStay High Yield Corporate Bond Fund, a registered investment Company for which Mackay Shields acts as sub -investment adviser, may also be deemed to be a beneficial owner of the reported securities held. New York Life Investment Management LLC, an indirect wholly owned subsidiary of New York Life and an affiliate of Mackay Shields LLC, is the manager of MainStay High Yield Corporate Bond Fund. +(5) Based solely on Schedule 13G filed with the SEC on January 23, 2023, by JPMorgan Chase & Co. reported amount beneficially owned as 1,321,929 shares of common stock, sole voting power of 1,213,397 shares of common stock and sole dispositive power of 1,321,888 shares of common stock. +DELINQUENT SECTION 16(A) REPORTS +Section 16(a) of the Exchange Act and the rules of the SEC require our directors, executive officers, and persons who own more than 10% of our common stock to file reports of their ownership and changes in ownership of our common stock with the SEC. Based solely on our review of the reports filed during 2022 and questionnaires from our directors and executive officers, we determined that no director, executive officer, or beneficial owner of more than 10% of our common stock failed to file a report on a timely basis during 2022. +2023 PROXY STATEMENT 57 +Certain Relationships and Review and +Approval of Related Party Transactions +The Audit Committee, as provided in its charter, reviews and approves related party transactions. The Company does not have a formal set of standards to be substantively applied to each transaction reviewed by the Audit Committee. Instead of a formalized policy, related party transactions are reviewed and judgment is applied to determine whether transactions are in the best interests of the Company. Further, the Company’s Code of Business Conduct and Ethics governs various compliance areas, including conflicts of interest and fair dealings, which are considered in the process of the review and approval of related party transactions. +The Company’s policy is that all its employees and directors, as well as their family members, must avoid any activity that is or has the appearance of conflicting with the Company’s business interest. This policy is included in the Company’s Code of Business Conduct and Ethics posted on its website. Each director and executive officer is instructed to always inform the designated compliance officer when confronted with any situation that may be perceived as a conflict of interest. Only the Board of Directors or a committee consisting solely of independent directors may grant waivers of the provisions of the Code of Business Conduct and Ethics for the Company’s executive officers and directors. In addition, at least annually, each director and executive officer completes a detailed questionnaire specifying any business relationship that may give rise to a conflict of interest. +Further, under the Audit Committee charter, the Audit Committee is responsible for reviewing and monitoring compliance with our Code of Business Conduct and Ethics and recommending any warranted changes to the Board of Directors. In addition, the Board of Directors and, pursuant to its written charter, the Audit Committee, reviews and approves all relationships and transactions in which the Company and its directors, director nominees and executive officers and their immediate family members, as well as holders of more than 5% of any class of our voting securities and their family members, have a direct or indirect material interest. The Board of Directors and the Audit Committee approve only those transactions that, considering known circumstances, are consistent, or are not inconsistent with, the Company’s best interests, as they determine in the good faith exercise of their discretion. +58 2023 PROXY STATEMENT +Proposal to Ratify the Appointment of Our Independent Auditors +(Proposal 2) +The Company is asking its stockholders to vote to ratify the appointment of Grant Thornton LLP as our independent auditors for fiscal year ending December 31, 2023. The Audit Committee has appointed Grant Thornton LLP to serve as independent auditors. +What services do the independent auditors provide? +Audit services of Grant Thornton LLP for fiscal year 2022 included an audit of our consolidated financial statements and services related to periodic filings made with the SEC. Additionally, Grant Thornton LLP provided certain services related to the consolidated quarterly reports as described below. +How much were the independent auditors paid in 2022 and 2021? +Grant Thornton LLP’s fees for professional services totaled $942,966 for 2022 and $1,245,054 for 2021. Grant Thornton LLP’s fees for professional services included the following: +• Audit Fees – aggregate fees for audit services, which relate to the fiscal year consolidated audit, quarterly reviews and accounting consultations were $942,966 for 2022 and $1,245,054 for 2021. +• Audit -Related Fees – aggregate fees for audit -related services, consisting of audits in connection with proposed or consummated dispositions, benefit plan audits, other subsidiary audits, special reports, and accounting consultations, were $0 in 2022 and 2021. +• Tax and All Other Fees – there w ere no tax or other fees for products or services provided by Grant Thornton LLP in addition to the services described above in 2022 and 2021. +Does the Audit Committee approve the services provided by Grant Thornton LLP? +It is our Audit Committee’s policy to pre -approve all audit, audit -related and permissible non -audit services rendered to us by our independent auditor. Consistent with such policy, all fees listed above that we incurred for services rendered by Grant Thornton LLP in fiscal years 2022 and 2021 were pre -approved by our Audit Committee. No non -audit services were provided to us by Grant Thornton LLP in 2022 or 2021. +Will a representative of Grant Thornton LLP be present at the meeting? +Yes, one or more representatives of Grant Thornton LLP will be present at the meeting. The representatives will have an opportunity to make a statement if they desire and will be available to respond to appropriate questions from the stockholders. +Has Grant Thornton LLP always served as Gulfport’s independent auditors? +Grant Thornton LLP has served as our independent auditors since 2005. +Vote Required and Board Recommendation +Stockholder ratification of the appointment of our independent auditors is not required by the Bylaws or otherwise. However, we are submitting this proposal to the stockholders as a matter of good corporate practice. Approval of this proposal requires the affirmative vote “for” the proposal of a majority of the votes cast by the stockholders present in person or represented by proxy at the Annual Meeting and entitled to vote thereon. The persons named as proxies for the Company intend to vote the proxies “FOR” Proposal 2. Abstentions and broker non -votes , if any, will have no effect on the voting results for Proposal 2. +If the appointment of Grant Thornton LLP is not ratified, the Audit Committee will reconsider the appointment. Even if the appointment is ratified, the Audit Committee in its discretion may direct the appointment of a different independent audit firm at any time during the year if it is determined that such change would be in best interests of the Company and its stockholders. +THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF GRANT THORNTON LLP AS THE COMPANY’S INDEPENDENT AUDITORS FOR THE YEAR 2023. +2023 PROXY STATEMENT 59 +Proposal to Approve, on an Advisory, +NON -BINDING Basis, the Compensation Paid to +the Company’s Named Executive Officers +(Proposal 3) +Pursuant to Section 14A of the Exchange Act, the Company is asking its stockholders to vote to approve, on an advisory, non -binding basis, the compensation paid to the Company’s named executive officers as reported in this proxy statement. This is also known as a “Say -On-Pay ” vote. The Company’s stockholders are being asked to vote on the following resolution: +“RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S -K , including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby approved.” +This vote is advisory, which means that the vote on executive compensation is not binding on the Company, our Board of Directors or the Compensation Committee. While the vote on executive compensation is solely advisory in nature, our Board of Directors and the Compensation Committee will review and consider the “Say -On-Pay ” voting results when making future decisions regarding our executive compensation program. +Stockholders are encouraged to carefully review the “Compensation Discussion and Analysis” section of this proxy statement, which discusses in detail the Company’s compensation policy and compensation arrangements which the Company believes are appropriate and reasonably consistent with market practice and with the long -term interests of the Company and its stockholders. In furtherance of the Company’s goals and objectives, the Compensation Committee, among other things, emphasizes long -term equity awards and annual performance bonuses under the previously implemented Annual Incentive Plan to align our executives’ interests more closely with those of our stockholders and to link a larger portion of our executives’ compensation to the performance of our stock and our operational performance. +We have determined that our stockholders should cast an advisory vote on the compensation of our named executive officers on an annual basis. Unless this policy changes, the next advisory vote on the compensation of our named executive officers will be at the 2024 Annual Meeting. +Vote Required and Board Voting Recommendation +Proposal 3 requires an affirmative vote “for” the proposal by a majority of the votes cast by the stockholders present in person or represented by proxy at the Annual Meeting and entitled to vote thereon. The persons named as proxies for the Company intend to vote the proxies “ FOR ” Proposal 3. Abstentions and broker non -votes , if any, will have no effect on the voting results for Proposal 3. +THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THIS PROPOSAL 3. +60 2023 PROXY STATEMENT +PROPOSAL TO APPROVE, ON AN ADVISORY, +NON -BINDING BASIS, THE FREQUENCY OF ADVISORY +STOCKHOLDER VOTES ON THE COMPENSATION PAID +TO THE COMPANY’S NAMED EXECUTIVE OFFICERS +(Proposal 4) +In accordance with the Dodd Frank Act, our Board of Directors is also providing our stockholders with a non -binding advisory vote on whether future advisory votes on executive compensation of the nature reflected in Proposal 4 should be held every year, every two years or every three years. While this vote is non -binding and solely advisory in nature, our Board of Directors and the Compensation Committee will carefully review and consider the voting results when determining the frequency of future advisory votes on executive compensation. +Our Board of Directors believes that a frequency of “every year” for the advisory vote on executive compensation is the appropriate interval for conducting and responding to a Say -On-Pay vote. This approach provides for a frequent input by stockholders on our executive compensation programs and policies and allows our Board of Directors to consider and make any appropriate adjustments to our executive compensation structure on an annual basis. Our stockholders can also bring their specific concerns to the attention of our Board of Directors by communicating them to our Board of Directors following procedures described under “Corporate Governance Matters and Communications with the Board” elsewhere in this proxy statement. +Vote Required and Board Voting Requirements +The enclosed proxy card gives stockholders four choices for voting on this item. Stockholders can choose whether the advisory vote on executive compensation should be conducted every year, every two years or every three years. Stockholders may also abstain from voting on this item. Stockholders are not voting to approve or disapprove the Board of Directors’ recommendation on this item. +Proposal 4 requires the affirmative vote of a majority of the votes cast by the stockholders present in person or represented by proxy at the Annual Meeting and entitled to vote. If one of the voting options is not adopted on an advisory, non -binding basis by the required vote of the stockholders, our Board of Directors will evaluate the votes cast for each of the voting options and will deem the voting option receiving the greatest number of votes to be the voting option approved by stockholders. +THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE OPTION OF “EVERY YEAR” FOR FUTURE ADVISORY VOTES ON EXECUTIVE COMPENSATION. +2023 PROXY STATEMENT 61 +Audit Committee Report +The primary role of the Audit Committee is to assist the Board of Directors in its oversight of the Company’s accounting and financial reporting processes. In doing so, the Audit Committee is responsible for the appointment and compensation of the Company’s independent registered public accounting firm and has oversight for its qualification, independence and performance. The Audit Committee charter guides our duties and responsibilities. The Audit Committee charter, which was last amended during 2021, is available on the Company’s website at www.gulfportenergy.com . As set forth in the charter, management is responsible for the internal controls and accounting and financial reporting processes of Gulfport Energy Corporation. The independent registered public accounting firm is responsible for expressing opinions on the conformity of Gulfport Energy Corporation’s audited consolidated financial statements with generally accepted accounting principles and on the effectiveness of the Company’s internal control over financial reporting. Our responsibilities include monitoring and overseeing these processes. +Our Committee is comprised of four non -employee , independent members of the Board of Directors. No member serves on more than two other public company audit committees. The Board of Directors has determined that all of the members of the Audit Committee are financially literate, and that David Wolf, Jason Martinez and David Reganato are financial experts as that term is defined by the SEC. The members of our Committee are not professionally engaged in the practice of accounting or auditing. The Audit Committee’s considerations and discussions referred to below do not assure that the audit of the Company’s financial statements has been carried out in accordance with generally accepted auditing standards, that the financial statements are presented in accordance with generally accepted accounting principles or that the Company’s auditors are in fact “independent”. +In the performance of our oversight function, we have reviewed and discussed the audited financial statements of the Company for the fiscal year ended December 31, 2022, and management’s assessment of the effectiveness of the Company’s internal control over financial reporting with the management of Gulfport Energy Corporation. We have met with Grant Thornton LLP, the Company’s independent registered public accounting firm, with and without management present. We discussed with Grant Thornton LLP the matters required to be discussed under the applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”) and the SEC and such other matters as we have deemed to be appropriate, including the overall scope and plans for the audit. We also have received the written disclosures and the letter from Grant Thornton LLP required by the applicable PCAOB requirements regarding the independent accountant’s communications with the Audit Committee concerning independence, and we have discussed with Grant Thornton LLP that firm’s independence from management and the Company. We also reviewed the amount of fees paid to Grant Thornton LLP for both audit and non -audit services. In doing so, we considered whether the provision of non -audit services to the Company was compatible with maintaining the independence of Grant Thornton LLP. +Based on the reports and discussions above, we recommended to the Board of Directors that the audited financial statements be included in the Gulfport Energy Corporation 2022 Annual Report on Form 10K. +This report is not soliciting material, is not deemed to be filed with the SEC, and is not to be incorporated by reference in any filing of the Company under the Securities Act of 1933, as amended, whether made before or after the this date and irrespective of any general incorporation language in any filing. +This report has been furnished by the Audit Committee of the Board of Directors. +THE AUDIT COMMITTEE +David Wolf, Chairman +Guillermo (Bill) Martinez +Jason Martinez +David Reganato +62 2023 PROXY STATEMENT +ABOUT THE ANNUAL MEETING +Why am I receiving these materials? +The Board of Directors has sent you this proxy statement and the accompanying proxy card to ask for your vote, as a stockholder of the Company, on certain matters that will be voted on at the Annual Meeting. +Who is soliciting my vote? +The Board of Directors is soliciting your vote at the Annual Meeting. The proposals to be voted on by the Company’s stockholders at the Annual Meeting are described below. +What am I voting on? +You are voting on: +• The election of seven directors to serve until the 2024 Annual Meeting ( see Proposal 1 beginning on page 6 of this proxy statement ); +• The ratification of Grant Thornton LLP as our independent auditors for the year ended December 31, 2023 ( see Proposal 2 beginning on page 59 of this proxy statement ); +• The approval, on an advisory, non -binding basis, of the compensation paid to the Company’s named executive officers as described in this proxy statement ( see Proposal 3 beginning on page 60 of this proxy statement ); +• The approval, on an advisory, non -binding basis, of the frequency of holding an advisory stockholder vote on the compensation paid to the Company’s named executive officers at an interval of “every one year,” “every two years” or “every three years” ( see Proposal 4 beginning on page 61 of this proxy statement ); and +• Any other business properly coming before the meeting. +How does the Board of Directors recommend that I vote my shares? +Unless you give other instructions on your proxy card, the persons named as proxy holders on the proxy card will vote in accordance with the recommendations of our Board of Directors. The Board of Directors’ recommendations can be found with the description of each proposal in this proxy statement. In summary, the Board of Directors recommends a vote: +• “ FOR ” each of our director nominees; +• “ FOR ” the proposal to ratify Grant Thornton LLP as the Company’s independent auditors for the fiscal year ended December 31, 2023; and +• “ FOR ” the proposal to approve, on an advisory, non -binding basis, the compensation paid to the Company’s named executive officers as described in this proxy statement; and +• “ EVERY ONE YEAR ” for the advisory, non -binding vote on the frequency of the advisory, non -binding vote on the compensation paid to the Company’s named executive officers. +What is a proxy? +A proxy is your legal designation of another person to vote the shares of common stock that you own. That other person is also referred to as a “proxy.” If you designate someone as your proxy in a written document, that document is called a proxy or a proxy card. We have designated Timothy Cutt, our Chairman, and Patrick Craine, our Chief Legal and Administrative Officer and Corporate Secretary, as the Company’s proxies for the Annual Meeting. +Who is entitled to vote? +You may vote if you were the record owner of our common shares or preferred shares as of the close of business on the record date, which is March 30, 2023. Gulfport had 18,584,561 common shares outstanding as of the record date. Each share of common stock is entitled to one vote. In addition, Gulfport had 52,295 preferred shares outstanding as of the record date. The holders of +2023 PROXY STATEMENT 63 +about the annual meeting +Gulfport’s preferred stock are entitled to vote on all matters submitted to the stockholders for a vote, voting together with the holders of the common stock as a single class, on an as -converted basis. Gulfport’s 52,295 preferred shares outstanding as of the record date, on an as -converted basis, totaled approximately 3,735,357 common shares entitled to vote. +In aggregate, as of March 30, 2023, we had 22,319,918 shares entitled to vote, excluding an aggregate of 428,133 shares of restricted stock units and performance -based restricted stock units awarded under our 2021 Stock Incentive Plan, but not yet vested. There is no cumulative voting. +How many votes must be present to hold the Annual Meeting? +Your shares are counted as present at the Annual Meeting if you attend the meeting and vote in person or if you return a properly executed proxy by mail. For us to hold our meeting, holders of a majority of the voting power of our outstanding shares of common stock and preferred stock as of the close of business on March 30, 2023, must be present in person or by proxy at the Annual Meeting. This is referred to as a “quorum.” Votes withheld and abstentions will be counted for purposes of establishing a quorum at the Annual Meeting. Broker non -votes , if any, will not be counted for purposes of establishing a quorum at the Annual meeting (see “What is the effect of abstentions, withhold votes and broker non -votes ?” below) +What vote is required to elect directors (Proposal 1)? +The election of directors at the Annual Meeting will be conducted under a majority of the votes cast standard. This means that with respect to each director nominee, the number of votes cast “for” the director nominee must exceed the number of votes cast “against” the nominee. Abstentions will have no effect on the outcome of the election. +What vote is required to approve, on an advisory, non-binding basis, the ratification of the appointment of the Company’s independent auditor (Proposal 2)? +The proposal to approve, on an advisory, non -binding basis, the appointment of Grant Thornton LLP as Gulfport’s independent auditor for the year ending December 31, 2023, will be adopted if a majority of the votes present in person or by proxy and voting on this matter are cast “for” the proposal. You may vote “for,” “against” or “abstain” from approving the proposal. Abstentions will have no effect on the outcome of the proposal. +What vote is required to approve, on an advisory, non-binding basis, the compensation of the Company’s named executive officers (Proposal 3)? +The proposal to approve, on an advisory, non -binding basis, the compensation of the Company’s named executive officers will be adopted if a majority of the votes present in person or by proxy and voting on this matter are cast “for” the proposal. You may vote “for,” “against” or “abstain” from approving the proposal. Abstentions will have no effect on the outcome of the proposal. +What vote is required to approve, on an advisory, non-binding basis, the frequency of advisory stockholder votes on the compensation paid to the Company’s named executive officers (Proposal 4)? +With respect to the proposal to approve, on an advisory, non -binding basis, the frequency of advisory stockholder votes on the compensation paid to the Company’s named executive officers, stockholders will be able to choose among four options; namely, whether future stockholder votes to approve executive compensation should occur every year, every two years or every three years, or whether the stockholder abstains from voting. The affirmative vote of a majority of the votes cast by the stockholders present in person or represented by proxy at the Annual Meeting and entitled to vote in favor of one of the voting options contemplated by Proposal 4 is required to approve, on an advisory, non -binding basis, Proposal 4. If one of the voting options is not adopted by the required vote of the stockholders, our Board of Directors will evaluate the votes cast for each of the voting options and will deem the voting option receiving the greatest number of votes to be the voting option approved by the stockholders. +What is the effect of abstentions, withhold votes and broker non-votes? +If you specify that you wish to “abstain” or “withhold” from voting on an item, then your shares will not be voted on that item. +Because the votes cast in favor of each director nominee must exceed the votes cast against such nominee under Proposal 1 and because the votes cast in favor of the action must exceed the votes cast opposing the action in order to approve Proposals 2, 3 and 4 at the Annual Meeting, abstentions will not have an effect on the outcome of those proposals. +64 2023 PROXY STATEMENT +about the annual meeting +A “broker non -vote ” occurs when a beneficial holder does not provide instructions to a broker and such broker lacks discretionary voting power to vote shares with respect to a particular proposal. Under NYSE rules, brokers are permitted to exercise discretionary voting authority on “routine” matters, but beneficial owners of shares must provide voting instructions to their brokers with respect to “non -routine ” matters for their brokers to exercise voting authority with respect to such shares on such matters. Under NYSE rules, the proposal to approve the appointment of an independent auditor is considered a “routine” matter. This means that brokers may vote in their discretion on Proposal 2 on behalf of clients who have not furnished voting instructions with respect to such proposal. In contrast, Proposals 1, 3 and 4 are “non -routine ” matters. This means brokers that have not received voting instructions from their clients on these proposals may not vote on these proposals in their own discretion, which results in “broker non -votes .” +Who is a registered stockholder and who is a beneficial stockholder? +Registered Stockholders: A “registered stockholder” is a person or entity whose name appears in the Company’s registered list of stockholders as an owner of one or more shares of the Company’s common stock or preferred stock. If you are a registered stockholder, these proxy materials are being sent directly to you. +Beneficial Stockholders: A “beneficial stockholder” or “beneficial owner” is a person or entity whose shares of the Company’s common stock or preferred stock are held by a bank, broker or other nominee (a.k.a. in “street name”). Most holders of our common stock hold their shares beneficially through a bank, broker or other nominee rather than of record directly in their own name. If you are a beneficial stockholder, these proxy materials are being forwarded to you by your bank, broker or other nominee, who is considered the registered stockholder of those shares. As the beneficial stockholder, you have the right to direct your bank, broker or other nominee on how to vote your shares and you are also invited to attend the Annual Meeting. Your bank, broker or other nominee has provided a voting instruction form for you to use in directing your bank, broker or other nominee as to how to vote your shares. You must follow these instructions for your shares to be voted. Your nominee is required to vote those shares in accordance with your instructions. If you do not give instructions to your broker, your broker will be able to vote your shares at its discretion with regard to Proposal 2, but will not be able to vote your shares at its discretion with respect to Proposals 1, 3 and 4. +How do I vote? +Registered Stockholders : If you are a “registered stockholder,” you can vote your shares in the following four ways: +• By Internet : You may vote by submitting a proxy over the Internet. Go to the website listed on your proxy card or voting instruction form and follow the instructions. You should have your proxy card, including your control number, in hand when you access the website. +• By Telephone : Stockholders located in the United States who receive proxy materials by mail may vote by submitting a proxy by telephone by calling the toll -free telephone number on the proxy card or voting instruction form and following the instructions. +• By Mail : If you received proxy materials by mail, you may vote by submitting a proxy by mail by completing, signing and dating the proxy card and mailing it in the enclosed, postage pre -paid envelope. +• In Person : You may attend in person and vote at the Annual Meeting. +Beneficial Stockholders: If you are a “beneficial stockholder,” then you will receive instructions from your bank, broker or other nominee on how to vote your shares. If you are a “beneficial stockholder,” you will need proof of ownership to be admitted to the Annual Meeting. +Can I change my vote? +You may change your vote by revoking your proxy at any time before it is exercised, which can be done by voting during the meeting, by delivering a new proxy or by notifying the inspector of election in writing. If your shares are held for you in a brokerage, bank or other institutional account, you must contact that institution to revoke a previously authorized proxy. The address for the inspector of election is Computershare Trust Company, N.A, 250 Royall Street, Canton, MA 02021. +2023 PROXY STATEMENT 65 +about the annual meeting +Who counts the votes? +We have hired Computershare Trust Company, N.A., our transfer agent, to act as the tabulation agent and count the votes represented by proxies cast by mail or ballot. Employees of Computershare Trust Company, N.A. will act as inspectors of election. +Could other matters be decided at the Annual Meeting? +We have not received any stockholder proposals and are not aware of any other matters that are expected to come before the Annual Meeting other than those described in this proxy statement. If any other matter should be presented at the Annual Meeting upon which a vote may be properly taken, shares represented by all proxy cards received by the Board will be voted at the discretion of the person or persons named as proxies on the enclosed proxy card. +How can I attend the Annual Meeting in person? +Registered stockholders will be asked to present a valid government -issued photo identification. If your shares are held in the name of your broker, bank or other nominee, you must bring to the meeting a valid government -issued photo identification and an account statement or letter (and a legal proxy if you wish to vote your shares) from the nominee indicating that you beneficially owned the shares on the record date for voting. +How can I access the Company’s proxy materials and annual report? +We have elected, in accordance with the Securities and Exchange Commission’s “Notice and Access” rule, to deliver a Notice of Internet Availability of Proxy Materials (the “Notice”) to our stockholders and to post our proxy statement and the Company’s 2022 Annual Report on Form 10 -K (collectively, the “proxy materials”) electronically. The Notice is first being mailed to our stockholders on or about April 14, 2023. The proxy materials will first be made available to our stockholders on or about the same date. The Notice instructs you how to access and review the proxy materials and how to submit your proxy via the Internet. The Notice also instructs you how to request and receive a paper copy of the proxy materials, including a proxy card or voting instruction form, at no charge. We will not mail a paper copy of the proxy materials to you unless specifically requested to do so. Additionally, the Notice of the Annual Meeting, this proxy statement and the Company’s 2022 Annual Report on Form 10 -K to Stockholders are available electronically on the Company’s website at www.gulfportenergy.com/proxy . +Where can I find the results of the Annual Meeting? +We intend to announce preliminary voting results at the Annual Meeting and intend to publish final results in a Current Report on Form 8 -K , which we will file with the SEC within four business days after the Annual Meeting. +66 2023 PROXY STATEMENT +Availability of Form 10 -K and +Annual Report to Stockholders +SEC rules require us to provide an Annual Report to stockholders who receive this proxy statement. Additional copies of our Annual Report on Form 10 -K for the fiscal year ended December 31, 2022, including the financial statements and the financial statement schedules, are available without charge to stockholders upon written request to Director of Investor Relations, Gulfport Energy Corporation, 713 Market Drive, Oklahoma City, Oklahoma 73114 or via the Internet at www.gulfportenergy.com . We will furnish the exhibits to our Annual Report on Form 10 -K upon payment of our copying and mailing expenses. +2023 PROXY STATEMENT 67 +HOUSEHOLDING +The SEC permits a single Notice or set of annual reports and proxy statements to be sent to any household at which two or more stockholders reside if they appear to be members of the same family, unless instructions have been received to the contrary. Each stockholder continues to receive a separate proxy card. This procedure, referred to as householding, reduces the volume of duplicate information stockholders receive and reduces our mailing and printing expenses. +If you would like to receive your own Notice or set of the annual report and proxy statement this year or in future years, follow the instructions described below, and we will promptly deliver a separate copy to you. Similarly, if you share an address with another Gulfport stockholder and together both of you would like to receive in the future only a single Notice or annual report and proxy statement, follow the instructions below: +• If your shares of our common stock are registered in your own name, please contact our transfer agent, Computershare Trust Company, N.A., and inform them of your request by calling their toll -free number: (877) 373 -6374 or by mail: Computershare Trust Company, N.A., 150 Royall Street, Suite 101, Canton, MA 02021. +• If a broker or other nominee holds your shares, please contact your broker or nominee. +68 2023 PROXY STATEMENT +Other Matters +The Board of Directors does not intend to present any other items of business other than those stated in the Notice of Annual Meeting. If any other matter should be presented at the Annual Meeting upon which a vote may be properly taken, shares represented by all proxy cards received by the Board will be voted at the discretion of the person or persons named as proxies on the enclosed proxy card. +2023 PROXY STATEMENT 69 +Solicitation by THE Board OF DIRECTORS +Participants in the Solicitation +We are required by law to convene an annual meeting of our stockholders at which directors are elected. Because shares of our common stock are widely held, it would be impractical for our stockholders to meet physically in sufficient numbers to hold a meeting. Accordingly, the Company is soliciting proxies from our stockholders. Our directors, director nominees, officers and employees may solicit proxies in person, or via mail, telephone, facsimile or email. Those persons will receive no additional compensation for any solicitation activities. +Expenses of Solicitation +U.S. federal securities laws require us to send you this proxy statement and any amendments or supplements, and to specify the information required to be contained in it. The Company will bear the expenses of calling and holding the Annual Meeting and the solicitation of proxies. These expenses will include, among other things, the costs of preparing, assembling, printing and mailing the proxy materials to stockholders of record and beneficial owners, and reimbursement paid to brokerage firms, banks and other fiduciaries for their reasonable out -of-pocket expenses for forwarding proxy materials to stockholders and obtaining beneficial owners’ voting instructions. +70 2023 PROXY STATEMENT +FORWARD -LOOKING STATEMENTS +This proxy statement contains forward -looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Exchange Act and the Private Securities Litigation Reform Act of 1995. All statements relating to events or results that may occur in the future, including, but not limited to, the Company’s future prospects and performance, costs of solicitation, record or meeting dates, compensation arrangements, plans or amendments, Company policies, documents or amendments as well as capital and corporate structure (including major stockholders, Board structure and Board composition), are forward -looking statements. +Forward -looking statements are statements other than statements of historical fact. They include statements regarding Gulfport’s current expectations, management’s outlook guidance or forecasts of future events, projected cash flow and liquidity, share repurchases, its ability to enhance cash flow and financial flexibility, future production and commodity mix, plans and objectives for future operations, the ability of our employees, portfolio strength and operational leadership to create long -term value, the rejection of certain midstream contracts and the assumptions on which such statements are based. Gulfport believes the expectations and forecasts reflected in the forward -looking statements are reasonable, Gulfport can give no assurance they will prove to have been correct. They can be affected by inaccurate or changed assumptions or by known or unknown risks and uncertainties. Important risks, assumptions and other important factors that could cause future results to differ materially from those expressed in the forward -looking statements are described under “Risk Factors” in Item 1A of Gulfport’s annual report on Form 10 -K for the year ended December 31, 2022, and any updates to those factors set forth in Gulfport’s subsequent quarterly reports on Form 10 -Q or current reports on Form 8 -K (available at https://www.gulfportenergy.com/investors/sec -filings ). +Investors should note that Gulfport announces financial information in SEC filings, press releases and public conference calls. Gulfport may use the Investors section of its website ( www.gulfportenergy.com ) to communicate with investors. It is possible that the financial and other information posted there could be deemed to be material information. The information on Gulfport’s website is not incorporated into or a part of this filing. +Unless required by law, the Company does not intend, and undertakes no obligation, to update or publicly release any revision to any such forward -looking statements, whether as a result of the receipt of new information, the occurrence of subsequent events, a change in circumstances or otherwise. Each forward -looking statement contained in this proxy statement is specifically qualified in its entirety by the aforementioned factors. Readers are advised to carefully read this proxy statement in conjunction with the important disclaimers set forth above prior to reaching any conclusions or making any investment decisions, and not to place undue reliance on these forward -looking statements, which apply only as of the date of this proxy statement. +2023 PROXY STATEMENT 71 +Submission of Future Stockholder Proposals +Under Rule 14a -8 under the Exchange Act (“Rule 14a -8 ”), a stockholder who intends to present a proposal for business at the 2024 Annual Meeting and who wishes the proposal to be included in the proxy statement and form of proxy for that meeting must submit the proposal in writing to our Corporate Secretary no later than December 12, 2023. The proposal must comply with the requirements of Rule 14a -8 under the Exchange Act and our Bylaws to be eligible for inclusion in the Company’s proxy materials. +If a stockholder wishes to submit a proposal for business or nomination of directors at the 2024 Annual Meeting other than in reliance on Rule 14a -8 , in order for such proposal to be considered timely pursuant to our Charter and Bylaws, the stockholder’s notice must be delivered to or mailed and received by the Corporate Secretary at the principal executive offices of the Company not less than 60 days nor more than 90 days prior to May 24, 2024 (i.e., the first anniversary of the 2023 Annual Meeting). Accordingly, the stockholder’s notice must be delivered to or mailed and received by the Corporate Secretary not later than March 25, 2024 and not earlier than February 24, 2024. However, in the event that the date of the 2024 Annual Meeting is advanced by more than 30 days, or delayed by more than 70 days, from May 24, 2024, notice by the stockholder to be timely must be received not earlier than 120 days prior to the 2024 Annual Meeting, and not later than the close of business on the 10th day following the day on which public announcement of the date of the 2024 Annual Meeting was first made. At present, the Company has not announced a meeting date for the 2024 Annual Meeting. The Company expects to announce the date of the 2024 Annual Meeting and provide formal notice in 2024. +In addition to satisfying the requirements under our Bylaws, to comply with the universal proxy rules, stockholders who intend to solicit proxies in support of director nominees other than our nominees must provide a notice to our Company that sets forth the information required by Rule 14a -19 under the Exchange Act no later than March 25, 2024. +You can obtain a copy of the Charter and Bylaws by writing to the Corporate Secretary at the address below, or from the SEC website at www.sec.gov (the Charter and Bylaws are filed as exhibits to our latest report on Form 10 -K filed with the SEC on March 1, 2023). +All written proposals and inquiries for copies of the Charter and Bylaws should be directed to Patrick Craine, our Chief Legal and Administrative Officer and Corporate Secretary, at Gulfport Energy Corporation, 713 Market Drive, Oklahoma City, Oklahoma 73114. +72 2023 PROXY STATEMENT +C123456789 000004 ENDORSEMENT_LINE SACKPACK 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext MR A SAMPLE DESIGNATION (IF ANY) ADD 1 ADD 2 ADD 3 ADD 4 ADD 5 ADD 6 Your vote matters – here’s how to vote! You may vote online or by phone instead of mailing this card. Votes submitted electronically must be received by 11:59pm, Central Time, on May 23, 2023. Online Go to www.envisionreports.com/GPOR or scan the QR code — login details are located in the shaded bar below. Phone Call toll free 1-800-652-VOTE (8683) within the USA, US territories and Canada Save paper, time and money! Sign up for electronic delivery at www.envisionreports.com/GPOR Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. 2023 Annual Meeting Proxy Card 1234 5678 9012 345 IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. A Proposals — The Board of Directors recommends you vote FOR each of the director nominees listed in proposal 1, FOR proposals 2 and 3, and 1 YEAR for proposal 4. 1. To elect seven directors to serve until the Company’s 2024 Annual Meeting of Stockholders or until their respective successors have been duly elected and qualified (the Election of Directors Proposal or Proposal 1). For Against Abstain 01 - Timothy J. Cutt 04 - Jason Martinez 07 - Mary Shafer-Malicki 02 - David Wolf 05 - David Reganato 03 - Guillermo (Bill) Martinez 06 - John Reinhart For Against Abstain 2. To ratify the appointment of Grant Thornton LLP as the Company’s independent auditors for the fiscal year ending December 31, 2023 (the Auditors Ratification Proposal or Proposal 2). For Against Abstain 3. To approve, on an advisory, non-binding basis, the compensation paid to the Company’s named executive officers as described in this proxy statement (the Say-On-Pay Proposal or Proposal 3). For Against Abstain 4. To approve, on an advisory, non-binding basis, the frequency of advisory stockholder votes on the compensation paid to the Company’s named executive officers (the Say on Frequency Proposal or Proposal 4). 1 Year 2 Years 3 Years Abstain B Authorized Signatures — This section must be completed for your vote to count. Please date and sign below. Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title. Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box. C 1234567890 J N T MR A SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE 140 CHARACTERS) MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND 1 U P X 5 7 3 9 1 9 03SIZE +2023 Annual Meeting Admission Ticket 2023 Annual Meeting of Gulfport Energy Corporation shareholders May 24, 2023, 9:00 am CT at 713 Market Drive, Oklahoma City, OK 73114. Important notice regarding the Internet availability of proxy materials for the Annual Meeting of Stockholders. The material is available at: www.envisionreports.com/GPOR Small steps make an impact. Help the environment by consenting to receive electronic delivery, sign up at www.envisionreports.com/GPOR IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. Gulfport Energy Corporation Notice of 2023 Annual Meeting of Shareholders Proxy Solicited by Board of Directors for Annual Meeting — May 24, 2023 The undersigned hereby appoints Timothy J. Cutt and Patrick K. Craine (together, the “Proxies”), and each of them, with full power of substitution, as proxies to vote the shares that the undersigned is entitled to vote at the Annual Meeting of Shareholders of Gulfport Energy Corporation (the “Company”) to be held on May 24, 2023 at 9:00 a.m. Central Time and at any adjournments and postponements thereof. Such shares shall be voted as indicated with respect to the proposals listed on the reverse side hereof and in the Proxies’ discretion on such other matters as may properly come before the meeting or any adjournment or postponement thereof. The undersigned acknowledges receipt of the 2023 Notice of Annual Meeting and accompanying Proxy Statement and revokes all prior proxies for said meeting. THE SHARES REPRESENTED BY THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO SPECIFIC DIRECTION IS GIVEN AS TO THE PROPOSALS ON THE REVERSE SIDE, THIS PROXY WILL BE VOTED FOR EACH OF THE NOMINEES NAMED IN PROPOSAL 1, FOR EACH OF THE PROPOSALS 2 AND 3, 1 YEAR ON PROPOSAL 4, AND IN ACCORDANCE WITH THE BOARD OF DIRECTOR’S RECOMMENDATION. PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY. IMPORTANT – PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY. THANK YOU FOR VOTING. (Items to be voted appear on reverse side) C Non-Voting Items Change of Address — Please print new address below. 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The Company does not have a formal set of standards to be substantively applied to each transaction reviewed by the Audit Committee. Instead of a formalized policy, related party transactions are reviewed and judgment is applied to determine whether transactions are in the best interests of the Company. Further, the Company’s Code of Business Conduct and Ethics governs various compliance areas, including conflicts of interest and fair dealings, which are considered in the process of the review and approval of related party transactions. +The Company’s policy is that all its employees and directors, as well as their family members, must avoid any activity that is or has the appearance of conflicting with the Company’s business interest. This policy is included in the Company’s Code of Business Conduct and Ethics posted on its website. Each director and executive officer is instructed to always inform the designated compliance officer when confronted with any situation that may be perceived as a conflict of interest. Only the Board of Directors or a committee consisting solely of independent directors may grant waivers of the provisions of the Code of Business Conduct and Ethics for the Company’s executive officers and directors. In addition, at least annually, each director and executive officer completes a detailed questionnaire specifying any business relationship that may give rise to a conflict of interest. +Further, under the Audit Committee charter, the Audit Committee is responsible for reviewing and monitoring compliance with our Code of Business Conduct and Ethics and recommending any warranted changes to the Board of Directors. In addition, the Board of Directors and, pursuant to its written charter, the Audit Committee, reviews and approves all relationships and transactions in which the Company and its directors, director nominees and executive officers and their immediate family members, as well as holders of more than 5% of any class of our voting securities and their family members, have a direct or indirect material interest. The Board of Directors and the Audit Committee approve only those transactions that, considering known circumstances, are consistent, or are not inconsistent with, the Company’s best interests, as they determine in the good faith exercise of their discretion. \ No newline at end of file diff --git a/raw/proxies/0000874499/0001213900-24-030836/proxy.txt b/raw/proxies/0000874499/0001213900-24-030836/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..99a0e2ac6aef5e47bac3db560e50839693d9286a --- /dev/null +++ b/raw/proxies/0000874499/0001213900-24-030836/proxy.txt @@ -0,0 +1,2901 @@ +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +________________ +Schedule 14A +Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 +(Amendment No. ) +________________ +Filed by the Registrant +☒ +Filed by a party other than the Registrant +☐ +Check the appropriate box: +☐ +Preliminary Proxy Statement +☐ +Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +☒ +Definitive Proxy Statement +☐ +Definitive Additional Materials +☐ +Soliciting Material under §240.14a-12 +Gulfport Energy Corporation +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check all boxes that apply): +☒ +No fee required +☐ +Fee paid previously with preliminary materials. +☐ +Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a- 6(i)(1) and 0-11 +April 5, 2024 +Dear Stockholders, +On behalf of the Board of Directors (the “Board”), management, and employees of Gulfport Energy Corporation (“Gulfport”, “Gulfport Energy,” the “Company,” “we,” “our” and “us”), you are cordially invited to participate in the 2024 Annual Meeting of Stockholders (the “Annual Meeting”) to be held on May 22, 2024 at 9:00 a.m. Central Time. Our annual meeting will be held in person at 713 Market Drive, Oklahoma City, OK 73114. The attached Notice of 2024 Annual Meeting of Stockholders and this proxy statement will serve as your guide to the business conducted during the Annual Meeting. +We are mailing most of our stockholders a Notice of Internet Availability of Proxy Materials for the 2024 Annual Meeting (the “Notice”), which provides instructions regarding how stockholders can access and review proxy materials over the internet and submit their proxy electronically. We believe this “Notice and Access” process allows us to provide our stockholders with the information they desire in a timely manner, while reducing costs and the environmental impact of our Annual Meeting. If you received the Notice and would prefer to receive a paper copy of the proxy materials, please follow the instructions for requesting the materials that are provided in the Notice. +Your vote is very important to us. To assure your representation at the Annual Meeting, please vote your shares over the internet or through the toll -free telephone number as instructed in the Notice. +Thank you for your continued support and interest in Gulfport. +Sincerely, +Timothy Cutt +Board Chair +GULFPORT ENERGY CORPORATION +713 Market Drive +Oklahoma City, Oklahoma 73114 +NOTICE OF 2024 ANNUAL MEETING OF STOCKHOLDERS +April 5, 2024 +Notice is given that the 2024 Annual Meeting of Stockholders (including any adjournments or postponements, the “Annual Meeting”) of Gulfport Energy will be held on May 22, 2024 at 9:00 a.m., Central Time at Gulfport Headquarters located at 713 Market Drive, Oklahoma City, OK 73114 to vote on the proposals listed in the following table. +Date and Time +May 22, 2024 at 9:00 a.m., Central Time +Place +The Annual Meeting will be held in person at Gulfport Headquarters located at 713 Market Drive, Oklahoma City, OK 73114. +Proposals +1. To elect seven directors to serve until the Company’s 2025 Annual Meeting of Stockholders or until their respective successors have been duly elected and qualified (the Election of Directors Proposal or Proposal 1 ). +2. To ratify the appointment of Grant Thornton LLP as the Company’s independent auditors for the fiscal year ending December 31, 2024 (the Auditors Ratification Proposal or Proposal 2 ). +3. To approve, on an advisory, non-binding basis, the compensation paid to the Company’s named executive officers as described in this proxy statement (the Say -On-Pay Proposal or Proposal 3 ). +We will also transact any other business as may properly come before the Annual Meeting. +Record Date +March 28, 2024, at the close of business +Holders of record of our common stock, par value $0.0001 per share, and preferred stock, par value $0.0001 per share, in each case, outstanding as of March 28, 2024 at the close of business, the record date for the Annual Meeting, will be entitled to Notice of the Annual Meeting and to vote at the Annual Meeting or any adjournment or postponement. +PROXY VOTING +Stockholders of the Company as of the record date are entitled to vote by proxy in the following ways: +By calling the telephone number +on your proxy card or voting +instruction form +Online by visiting the website +provided on your proxy card or +voting instruction form +By returning by mail a properly +completed, signed and dated +proxy card or voting instruction +form +By attending in person and +submitting a ballot at the +Annual Meeting +IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON May 22, 2024: This proxy statement and additional information are available free of charge on the Company’s website at www.gulfportenergy.com/proxy . +By order of the Board of Directors, +Patrick Craine +Chief Legal and Administrative Officer and Corporate Secretary +The Notice of Internet Availability of Proxy Materials is first being mailed to stockholders on or about April 9, 2024, and the proxy materials relating to the Annual Meeting will be made available on or about the same date. +TABLE OF CONTENTS +GULFPORT ENERGY CORPORATION +713 Market Drive +Oklahoma City, Oklahoma 73114 +_____________________ +PROXY STATEMENT +_____________________ +Proxy Statement Summary +1 +Board Summary +2 +Corporate Responsibility and Sustainability Highlights +3 +Election of Directors and Director Biographies +8 +Corporate Governance Matters and Communications with the Board +17 +Nominating Process for Directors, Director Qualifications and Review of Director Nominees +19 +Director Leadership Structure +21 +Board of Directors’ Role in Risk Oversight +22 +Executive Officers +23 +Compensation Discussion and Analysis +25 +Executive Summary +27 +Compensation Committee Interlocks and Insider Participation +40 +Compensation Tables +41 +Benefit Plans +46 +401(k) Plan +46 +2021 Stock Incentive Plan +46 +Equity Compensation Plan Information +47 +Termination, Resignation or Change of Control +51 +CEO Pay Ratio Disclosure +54 +Pay Versus Performance +55 +Beneficial Ownership +59 +Who Are this Year’s Nominees? +Holdings of Major Stockholders +60 +Certain Relationships and Review and Approval of Related Party Transactions +61 +Proposal to Ratify the Appointment of Our Independent Auditors +62 +Proposal to Approve, on an Advisory, Non-Binding Basis, the Compensation Paid to the Company’s Named Executive Officers +63 +Audit Committee Report +64 +About the Annual Meeting +65 +Availability of Form 10-K and Annual Report to Stockholders +69 +Householding +70 +Other Matters +71 +Solicitation by the Board of Directors +72 +Forward-looking Statements +73 +Submission of Future Stockholder Proposals +74 +2024 PROXY STATEMENT i +PROXY STATEMENT SUMMARY +The summary below highlights information contained elsewhere in this proxy statement. It does not contain all the information that you should consider in connection with the matters before the Annual Meeting. Please read the entire proxy statement carefully before voting your shares. +ABOUT GULFPORT +Gulfport is an independent natural gas -weighted exploration and production company with assets primarily located in the Appalachia and Anadarko basins. Our principal properties are located in eastern Ohio targeting the Utica and Marcellus and in central Oklahoma targeting the SCOOP Woodford and Springer formations. Our corporate headquarters are located in Oklahoma City, Oklahoma and shares of Gulfport’s Common Stock trade on the New York Stock Exchange (NYSE) under the ticker symbol “GPOR”. +BUSINESS STRATEGY +Gulfport aims to create sustainable value through the economic development of our significant resource plays in the Utica and SCOOP operating areas. Our strategy is to develop our assets in a manner that generates sustainable cash flow, improves margins and operating efficiencies, while improving our ESG and safety performance. To accomplish these goals, we allocate capital to projects we believe offer the highest rate of return and deploy leading drilling and completion techniques and technologies in our development efforts. We believe our plan to generate free cash flow on an annual basis will allow us to return capital to shareholders and increase our resource depth through incremental leasehold opportunities that provide optionality to our future development plans. +Core Assets +Employees +2023 Production +2023 Production Mix +Utica Shale and SCOOP +226 people +as of Dec. 31, 2023 +1,054 MMcfe +per day +91% natural gas, 7% natural gas liquids and 2% oil +DIRECTORS +Our Board is comprised of seven directors, including the Company’s Chief Executive Officer, John Reinhart, and six non -employee directors, Timothy Cutt, David Wolf, Jason Martinez, Jeannie Powers, David Reganato, and Mary Shafer -Malicki . They are diverse, industry -leading experts with an average of approximately 25 years of industry leadership experience across multiple disciplines. Each of our directors will stand for election annually and must be elected by a majority of shares voted. +2024 PROXY STATEMENT 1 +Board Summary +The following table provides summary information about each director nominee who is standing for election at the Annual Meeting. For more information about the background and qualifications of each nominee, please see “Election of Directors and Director Biographies” on page 8 of this proxy statement. We ask you to vote “ FOR ” each of our director nominees. +Director +Board Positions +Dir. Since +Age +Ind. +Principal Occupation +Timothy Cutt +Chair +2021 +63 +Board Chair of Gulfport Energy +David Wolf +Lead Independent Director +2021 +53 +🗸 +Partner at Enduring Resources +Jason Martinez +Independent Director +2021 +50 +🗸 +Managing Director at Pickering Energy Partners +Jeannie Powers +Independent Director +2023 +39 +🗸 +Managing Director at EIG +David Reganato +Independent Director +2021 +44 +🗸 +Partner at Silver Point Capital +John Reinhart +Director +2023 +55 +President and Chief Executive Officer of Gulfport Energy +Mary Shafer -Malicki +Independent Director +2023 +63 +🗸 +Director at Callon Petroleum +2 2024 PROXY STATEMENT +Corporate Responsibility and +Sustainability Highlights +Gulfport is proud to play its part in the responsible and efficient development of domestic natural gas which is critical to our country’s economic success as it provides the primary fuel for efficient power generation in the United States. We strive to reduce our environmental impact, to invest in our people and communities and to prioritize our dedication to environmental stewardship in everything we do. +We have identified several key areas where our business could have an impact on the communities where we operate, including: greenhouse gas emissions, waste and spills, water usage, health, safety and environmental (“HSE”) protection, employee training and education, and community involvement. Our Board Nominating, Environmental, Social and Governance Committee oversees environmental, safety, social, sustainability and governance (“ESG”) matters. Continuously improving our HSE performance remains a top priority. Our HSE performance also directly impacts the compensation of all our employees as it is one of the performance goals included in our cash incentive compensation plan. We believe having measurable HSE metrics as part of our incentive compensation program leads to improved accountability and reinforces our cultural focus on operating safely and protecting employees, the environment and the communities in which we operate. +Environmental Stewardship. Environmental stewardship serves as the foundation for our climate risk strategy. We are dedicated to delivering cleaner, safer, more affordable and reliable energy while working to reduce our impact on the environment. Gulfport strives to minimize our environmental impact by: +• Certifying Appalachian gas with an independent auditor. +• Designing future pad sites with compressed air pneumatic devices. +• Employing air quality programs and operating practices to ensure that we comply with or exceed regulations. +• Investing in and implementing technology to reduce emissions, waste and our physical footprint on drilling locations. +• Selecting and designing our well sites to minimize impacts to sensitive habitats and surrounding areas. +• Reducing water disposal volumes and freshwater consumption through water re -use or water sharing agreements with other operators. +• Testing spill prevention and response programs to confirm equipment is maintained and operating practices are continually improved to prevent spills and minimize the impact of our operations to the soil, air and water. +Gulfport is a long -standing member of The Environmental Partnership. The organization is comprised of stakeholders in the oil and natural gas industry who are committed to continuous environmental improvement. The Environmental Partnership’s primary focus is reducing methane and volatile organic compound emissions. Gulfport also developed an Environmental Policy supporting its commitment to operational excellence, compliance and environmental awareness. Gulfport’s Environmental Policy fosters environmental awareness and serves as a guide for employee behavior. All employees are expected to act and make decisions within the guidelines of the policy to ensure our business complies with local, state and federal environmental laws and regulations. Gulfport employees and contractors are expected to protect the environment, limit spills and discharges, manage waste responsibly and reduce emissions. +Safety. Safety is the number one priority for all Gulfport employees and contractors. Gulfport provides comprehensive safety training to employees and contractors and is fully committed to a safe working environment. We utilize and apply performance metrics to drive and improve safe operations. Gulfport has designed and instituted emergency response and business continuity plans to address incidents involving operational disruptions, pandemics and natural disasters. These measures include prompt notification procedures enabling Gulfport personnel to quickly evaluate and mitigate risks. Limiting safety incidents is included as part of our incentive compensation programs to ensure we train and hold our employees accountable for operating safely. +2024 PROXY STATEMENT 3 +Corporate Responsibility and Sustainability Highlights +WORK SAFE +Gulfport’s Work Safe Program is behaviorally based and focuses on twelve rules derived from Company policies (critical tasks) and cultural conditions linked to serious safety incidents in our industry. Critical Task Rules require specific operating procedures to mitigate hazardous work site conditions and complete work safely. Cultural Condition Rules are defined as work site conditions or human behaviors that have been linked to the root cause of most incidents. Employees and contractors are expected to apply and follow the requirements that coincide with the twelve rules. We continue educating employees and contractors on this program through safety meetings and training programs. Our goal is to not only improve our safety performance but to proactively prevent incidents before they occur. +Stop Work is one of the Work Safe Program’s critical tasks. Our Chief Executive Officer, John Reinhart, signed and communicated a Stop Work Authority and Obligation letter to the Company’s employees and our contractors. This letter outlines Gulfport’s commitment to health, safety and the environment and provides the expectation and support to Gulfport employees and contract partners to stop work when conditions warrant. Every person on a Gulfport work site has the authority — and obligation — to stop any work that may cause an unsafe condition, create personal risk, or harm the environment. +Health, Safety & Environment Highlights for 2023: +• Achieved MIQ certification for Appalachian assets. +• Reduced combined total recordable incident rate by 17% in 2023 compared to 2022. +• Invested in and implemented technology to reduce emissions, waste and our physical footprint on drilling locations. +• Reduced water disposal volumes and freshwater consumption through water re -use or water sharing agreements with other operators. +Diversity. Diversity, equity and inclusion are paramount to our organization, our leadership team and our culture. Diversity and inclusion are also important at our Board level, where over 42% of our directors identify as gender or ethnically diverse. We continue to make efforts to attract and recruit diverse candidates, evaluate pay equity and offer our employees and managers development training and resources and ongoing training on our workplace policies. We also encourage employees to provide feedback and ideas on how Gulfport can continuously improve, and we ask our employees to sign a commitment indicating that they will speak up if they observe or become aware of any actions that are inconsistent with our core values, our Code of Business Conduct and Ethics, or other Company policies. We are also committed to supporting veterans through our recruiting and hiring efforts as well as supporting several causes that assist veterans and active -duty military. +As an affirmative action employer, we are driven to locate qualified diversity candidates and provide metrics on our diversity. In 2023, we either maintained or improved our diversity in key areas with approximately 43% of our employees identifying as gender or ethnically diverse, including 37% of our new hires. Through outreach and recruiting, we continue to make progress in 2024. +In 2023, all employees participated in multiple trainings that covered our Business Code of Conduct and Ethics, Company policies, and topics related to diversity, equity and inclusion. We understand that a workplace environment that embraces diversity and is inclusive of different ideas and perspectives is a healthy environment and one that provides the best solutions to complex challenges. +Board Diversity. Our Nominating, Environmental, Social and Governance Committee is dedicated to diversity and adopted a Board Diversity Policy. The policy requires that the Committee include diverse candidates in all director searches, taking into account diversity of gender, race, ethnicity, background, age, thought and tenure on our Board (in connection with the consideration of the renomination of an existing director), including by affirmatively instructing any search firm retained to assist the Committee in identifying director candidates to include diverse candidates from traditional and non -traditional candidate groups. These efforts have led to over 42% of our directors identifying as gender or ethnically diverse. +Human Rights Policy. Gulfport is committed to serve as a positive force in its communities, and the Company remains dedicated to upholding the highest standards of human rights, clearly defined in our Human Rights Policy. +Gulfport respects fundamental human rights and views them as an integral part of corporate ethics and social responsibility. The Company adheres to the highest ethical conduct as outlined in Gulfport’s Business Code of Conduct and Ethics and Supplier Code of Conduct. +4 2024 PROXY STATEMENT +Corporate Responsibility and Sustainability Highlights +Gulfport applies fair labor practices throughout its operations and adheres to applicable workplace, employment, privacy and human rights standards. Consistent with the United Nations Guiding Principles on Business and Human Rights, Gulfport recognizes the responsibility of governments to protect and fulfill human rights. As an operating rights owner, it is the Company’s obligation to respect human rights and comply with applicable laws. +Gulfport provides a diverse, equitable and inclusive workplace for all employees and job candidates, and it does not tolerate unlawful discrimination or workplace harassment in any form. +Gulfport is committed to maintaining and improving its strong and diverse supplier network which supports the Company’s goal of making a positive contribution in the communities where it does business. We regularly assess risk within Supply Chain and expect contractors and suppliers to comply with applicable laws and respect the Company’s voluntary commitments, the Supplier Code of Conduct, our Business Code of Conduct and Ethics and EHS policies. +Community Engagement. Gulfport strives to positively impact and improve the communities where we live and operate. We uphold our corporate responsibility and put our core values in action forming partnerships that give back to our operating areas and enhance lives in our communities. Gulfport recognizes that its operations can create a significant economic and social impact and actively engages with communities in which we operate. Gulfport supports programs that make a lasting and positive impact on education, health and community development. Gulfport is proud to support campaigns for nonprofit agencies in Oklahoma and Ohio through volunteer efforts as well as financial and in -kind contributions. Gulfport continues emphasizing volunteerism as an important part of our corporate culture. We center our giving efforts to support education, health and human services, environmental stewardship and our veterans. In 2022, Gulfport formed its Community Impact Committee consisting of employees from its headquarters and field offices in Oklahoma and Ohio. This committee is dedicated to seeking partnerships and volunteer opportunities all centered around these key focus areas. +In the last 12 months, Gulfport has partnered with over 30 organizations with missions centered around our key focus areas. Through monetary contributions and volunteering efforts, we have supported organizations dedicated to protecting and sustaining the environment, supplying life -sustaining formula and food for babies and toddlers in times of crisis, enhancing the lives of adults with developmental disabilities and supporting veterans and youth through community programs. +2024 PROXY STATEMENT 5 +Corporate Responsibility and Sustainability Highlights +Corporate Governance Highlights +We believe effective corporate governance requires regular constructive discussions with our stakeholders and we focus our sustainability priorities and disclosures on the issues that are most important to them. To identify these priorities, we engage internal and external stakeholders and weigh their views with respect to both Gulfport’s specific activities and the general business climate of our industry. In addition to these efforts, management engages with stockholders and potential stockholders through targeted outreach and participation in various conference and industry events. +Key Stakeholders include: +• Contractors and Suppliers +• Employees +• Government and Regulatory Agencies +• Industry Peers +• Investors +• Landowners +• Local Communities +• Service Providers +• Trade Associations +This feedback helps shape our corporate governance practices, and has specifically resulted in: +• Amendment of the Bylaws to change the supermajority vote requirement for stockholders to amend the Bylaws to a majority vote requirement; +• Adoption of stock ownership guidelines for our non -employee directors and executive officers to further align the long -term financial interests of our directors and executive officers with those of our stockholders; +• Adoption of Corporate Governance Guidelines to ensure best practices and reflect the Board’s commitment to monitor the effectiveness of policy and decision making at the Board and management levels; +• Separation of Chief Executive Officer and Board Chair roles on January 24, 2023; +• Lead Independent Director appointed; +• Advancement of Board diversity, emphasis on diversity in the Nominating, Environmental, Social and Governance Committee’s charter; and +• Adoption of a written executive compensation clawback policy. +• Majority voting to elect directors in uncontested elections and plurality voting to elect directors in contested elections; +• Creation of the Nominating, Environmental, Social and Governance Committee to further develop our commitment to HSE and corporate responsibility and sustainability matters and their impact on our business and operations; +• Active stockholder outreach, engaging in discussions with our stockholders at investor conferences and through direct calls and meetings with the Company’s management team that represent over 70% of the shares outstanding; +• Active Board oversight of risk and risk management; +• Periodic Board and Committee self -assessments reviewed by an outside law firm; +• Non -employee director meetings in executive sessions at regularly scheduled Board meetings; and +• 96% attendance at 2023 Board and Committee meetings. +6 2024 PROXY STATEMENT +Corporate Responsibility and Sustainability Highlights +COMPENSATION HIGHLIGHTS +Stockholder Engagement and Annual Say-On-Pay Advisory Vote +At the Annual Meeting, our stockholders will again have an opportunity to cast an advisory Say -On-Pay vote on the compensation paid to our named executive officers as described in this proxy statement. The details of the executive compensation program and its pay for performance alignment are discussed in the “Compensation Discussion & Analysis (CD&A)” on page 25 of this proxy statement. +Gulfport Energy engages in discussions with our stockholders at investor conferences and through direct calls and meetings with the Company’s management team that represented over 70% of the shares outstanding. Through these conversations our stockholders emphasized their expectation that our compensation programs should be designed to focus our executive team on driving results that ensure the financial health of the organization while also driving long -term stockholder value. Specifically, after carefully considering input from stockholders, the Company took the following actions in 2023: +• Utilized performance -based and time -based equity awards in the form of performance -based restricted stock units tied to relative total shareholder return (“TSR”) and absolute total shareholder return, vesting over a three -year performance period; 60% of all equity awards to NEOs were performance -based ; +• Adjusted performance incentive opportunities and long -term equity award targets to closely align our executives’ financial interests with those of our stockholders and to continue to link a large portion of executives’ compensation to the performance of our stock and our operational performance; +• Continued utilizing metrics in the annual incentive plan to include financial metrics directly tied to the financial health of the Company, including production per day, capital expenses, lease operating expenses, free cash flow generation, and specific and quantifiable health, safety, environmental and social metrics; and +• Provided robust disclosure of our performance metrics and targets for both performance -based cash and equity awards. +Stock Performance Graph +The following Performance Graph and related information shall not be deemed “soliciting material” or to be “filed” with the Securities and Exchange Commission, nor shall such information be incorporated by reference into any future filings under the Securities Act of 1933 or Securities Exchange Act of 1934, each as amended, except to the extent that the Company specifically incorporates it by reference into such filings. +The performance graph below illustrates changes over the period of December 31, 2022 through December 31, 2023, in cumulative total stockholder return on Gulfport Common Stock as measured against the cumulative total return of the S&P 500 Index, the S&P Oil & Gas Exploration and Production Index and the 2023 Peer Group. The graph tracks the performance of a $100 investment in our Common Stock, each peer company and in each index (with the reinvestment of all dividends for the index securities) from December 31, 2022 to December 31, 2023. +Note: 2023 Peer Group defined further on page 32. +2024 PROXY STATEMENT 7 +ELECTION OF DIRECTORS AND DIRECTOR BIOGRAPHIES +(Proposal 1) +The Company is asking its stockholders to vote to elect seven directors to serve on the Board of Directors until the 2025 Annual Meeting of Stockholders (the “2025 Annual Meeting”) or until their respective successors have been duly elected and qualified. +Our Board of Directors currently consists of seven members who are elected annually. Six of these seven directors are non -employee directors, and five of the seven directors are independent under the NYSE listing standards. +The directors standing for election this year are listed below. If any nominee should decline election or should become unable to serve as a director of our Company for any reason before election at the Annual Meeting, votes will be cast by the persons appointed as proxies for a substitute nominee, if any, designated by the Board of Directors. +There are no family relationships among any of the nominees, directors or any of the executive officers. +Vote Required and Board Voting Recommendation +Directors will be elected at the Annual Meeting by a majority of the votes cast. Abstentions and broker non -votes will have no effect on the voting results for Proposal 1. +8 2024 PROXY STATEMENT +ELECTION OF DIRECTORS AND DIRECTOR BIOGRAPHIES +Timothy Cutt +Age: 63 +Director since: May 2021 +Other Public Company Directorships Held in the Past Five Years: +QEP +(January 2019 – March 2021) +Business Experience: +Mr. Cutt has served as non-executive Board Chair since March 2023 and joined Gulfport as Board Chair and Chief Executive Officer in May 2021. Mr. Cutt is a Petroleum Engineer with over 40 years of energy experience. He served as Chief Executive Officer and as a director of QEP Resources from January 2019 to March 2021. Prior to joining QEP, Mr. Cutt was the Chief Executive Officer and a director of Cobalt International Energy from 2016 to 2018. Previously, Mr. Cutt held several executive positions with BHP Billiton before serving as President of the Petroleum Division from 2013 to 2016. During this time, he was also a member of BHP Billiton’s Corporate Executive Committee. Mr. Cutt began his career with Mobil and worked for ExxonMobil for 24 years and served in various management roles including President of ExxonMobil de Venezuela, President ExxonMobil Canada Energy and President Hibernia Management & Development Company. +Other Memberships and Positions: +Mr. Cutt is President of the Louisiana Tech Foundation Board, served on the board of the American Exploration and Production Council from 2021 to 2023, and previously served as a board member of the American Petroleum Institute from 2013 to 2018. +Educational Background: +Mr. Cutt received his Bachelor of Science Degree in Petroleum Engineering from Louisiana Tech University. +BOARD MEMBERSHIP QUALIFICATIONS: +Mr. Cutt’s extensive experience as a CEO and director of public exploration and production companies, executive management skills and extensive knowledge of the oil and natural gas sector and corporate governance qualify him to serve as a director. +David Wolf +Age: 53 +Director since: May 2021 +Other Public Company Directorships Held in the Past Five Years: +EP Energy Corporation +(Since October 2020) +Business Experience: +Mr. Wolf serves as Lead Independent Director and has an extensive financial background, with over 29 years of experience in the energy and oil and gas industries. Currently, Mr. Wolf serves as a partner at Enduring Resources. He previously served as Executive Vice President and Chief Financial Officer of Vantage Energy and President, Chief Executive Officer, and a Board Member of Fuse Energy LLC. Prior to joining Fuse Energy, Mr. Wolf served as Executive Vice President and Chief Financial Officer of Berry Petroleum Co and a Managing Director in the Global Oil & Gas Group at JP Morgan Chase & Co. +Educational Background: +Mr. Wolf received his Bachelor of Science degree in Economics from Rollins College and Master of Business Administration degree from Crummer School of Business, Rollins College. +BOARD QUALIFICATIONS: +Mr. Wolf’s prior experience as a Chief Financial Officer, strong oil and natural gas industry background and financial acumen qualify him to serve as a director. +2024 PROXY STATEMENT 9 +ELECTION OF DIRECTORS AND DIRECTOR BIOGRAPHIES +Jason Martinez +Age: 50 +Director since: May 2021 +BUSINESS EXPERIENCE: +Mr. Martinez has had a 28-year energy industry career, and over 20 years as an investment banker. Currently, Mr. Martinez serves as a Managing Director at Pickering Energy Partners, leading its Energy Transition Advisory practice. Over the course of his career, his client and deal work span a dozen-plus countries and over $100 billion of announced transactions, including mergers, acquisitions, divestitures, all forms of public and private capital raising, and commercial lending. Previously, he held positions at Bank of Montreal Capital Markets, Nomura Securities International, Deutsche Bank Securities, and JPMorgan Securities. At Bank of Montreal, he led the Acquisitions and Divestitures practice. He began his energy career in Andersen Consulting’s Natural Resources group. +EDUCATIONAL BACKGROUND: +Mr. Martinez received his Master of Business Administration degree from the Harvard Business School and a Bachelor of Arts degree from Rice University. +BOARD QUALIFICATIONS: +Mr. Martinez’s financial acumen and extensive private equity experience qualify him to serve as a director. +Jeannie Powers +Age: 39 +Director since: July 2023 +Business Experience: +Ms. Powers is a Managing Director and Co-Head of Domestic Upstream based in EIG’s Houston office. In her previous role at EIG, she led the North America Engineering team, which was focused on engineering support across all aspects of EIG’s North American existing portfolio as well as new business opportunities. Before joining EIG in 2017, Ms. Powers worked as a Sr. Technical Advisor at Wells Fargo Securities A&D where she spent three years evaluating and marketing upstream and midstream assets. Prior to Wells, Ms. Powers spent several years at Chevron, with increasing responsibility, working both asset development and operations across the lower 48. +EDUCATIONAL BACKGROUND: +Ms. Powers has a Master of Business Administration from Texas Tech University and a Bachelor of Science in Petroleum Engineering from the University of Texas. +BOARD QUALIFICATIONS: +Ms. Powers’ strong oil and natural gas industry background and financial acumen qualify her to serve as a director. +10 2024 PROXY STATEMENT +ELECTION OF DIRECTORS AND DIRECTOR BIOGRAPHIES +David Reganato +Age: 44 +Director since: May 2021 +Other Public Company Directorships Held in the Past Five Years: +Granite Broadcasting LLC +(since July 2011) +New Cotai, LLC +(since March 2014) +Rotech Healthcare Holdings, Inc. +(since September 2013) +Studio City International Holdings +(since March 2014) +Trident Holding Company, LLC, +(holding company of TridentCare) +(since September 2019) +Business Experience: +Mr. Reganato has over 20 years of experience in the investment industry, including significant knowledge of the oil and gas sector. Currently, Mr. Reganato serves as a Partner with Silver Point Capital, L.P., an investment advisor, which he joined in November 2002. Prior to Silver Point Capital, L.P., Mr. Reganato worked in the investment banking division of Morgan Stanley. +Educational Background: +Mr. Reganato received his Bachelor of Science degree in Finance and Accounting from the Stern School of Business at New York University. +BOARD QUALIFICATIONS: +Mr. Reganato’s financial acumen, knowledge of the oil and natural gas sector and previous board experience qualify him to serve as a director. +John Reinhart +Age: 55 +Director since: January 2023 +Other Public Company Directorships Held in the Past Five Years: +Montage Resources +(March 2019 – November 2020) +BUSINESS EXPERIENCE: +Mr. Reinhart has over 25 years of oil and gas industry leadership experience. Most recently, he served as President, Chief Executive Officer and member of the board of directors of Montage Resources Corporation where he led actions that positioned Montage as an attractive strategic partner with sufficient scale, low debt profile and achievement of top-quartile operational and financial metrics. Mr. Reinhart previously served as President, Chief Executive Officer and member of the board of directors of Blue Ridge Mountain Resources and as Chief Operating Officer at Ascent Resources. He started his oil and gas career at Schlumberger before joining Chesapeake Energy Corporation, where he held operations roles with increasing responsibility. Mr. Reinhart began his career in the United States Army, serving tours in Panama and Iraq. +Educational Background: +Mr. Reinhart graduated from West Virginia University with a Bachelor of Science degree in Mechanical Engineering. +BOARD QUALIFICATIONS: +Mr. Reinhart’s considerable operational, technical, cultural, and executive experience in the oil and natural gas industry, including his prior service as an executive and director of both Montage Resources and Blue Ridge Mountain Resources qualify him to serve as a director. +2024 PROXY STATEMENT 11 +ELECTION OF DIRECTORS AND DIRECTOR BIOGRAPHIES +Mary Shafer-Malicki +Age: 63 +Director since: May 2023 +Other Public Company Directorships Held in the Past Five Years: +Callon Petroleum +(January 2022 – April 2024) +Ag Growth International +(Since January 2024) +QEP Resources +(July 2017 – March 2021) +McDermott International Inc. +(November 2011 – May 2020) +Wood Plc +(May 2012 – May 2021) +BUSINESS EXPERIENCE: +Ms. Shafer-Malicki retired in 2009 after a 26-year career with BP Exploration Operating Company (BP) and Amoco Corporation, where she held domestic and international leadership roles across the energy value chain. She served as Senior Vice President/CEO and Chief Operating Officer/General Manager for BP’s operations in Angola from 2005 to 2009 and Director General for BP’s operations in Vietnam from 2003 to 2005. Prior to this, she served as the Business Unit Leader for BP’s Central North Sea gas business in Scotland from 2001 to 2003, General Manager for support services to all of BP’s Continental Shelf upstream operations in the United Kingdom from 2000 to 2001 and President and General Manager for Amoco/BP’s Dutch onshore and offshore production and gas storage operations in the Netherlands from 1998 to 2000. +Her significant board experience includes service as Chair of the Board for QEP Resources and as a board member for Callon Petroleum, Wood plc, McDermott International Inc., and Ausenco Limited. In addition, Ms. Shafer-Malicki currently serves as a director of Ag Growth International, the University of Wyoming Foundation, as well as a member of industry advisory boards for the Chemical Engineering departments at the University of Wyoming and Oklahoma State University. +Educational Background: +Ms. Shafer-Malicki graduated from Oklahoma State University with a Bachelor of Science degree in Chemical Engineering. +BOARD QUALIFICATIONS: +Ms. Shafer-Malicki’s extensive energy industry experience, including her serving in senior executive positions, and her experience as a director on multiple public company boards qualify her to serve as a director. +12 2024 PROXY STATEMENT +ELECTION OF DIRECTORS AND DIRECTOR BIOGRAPHIES +WHAT ARE THE COMMITTEES OF THE BOARD? +Our Board of Directors has an Audit Committee, a Compensation Committee, and a Nominating, Environmental, Social and Governance Committee. The table below summarizes committee membership as of the date of this proxy statement along with the functions each committee is responsible for performing. +AUDIT COMMITTEE +Members +David Wolf C+^ +Jason Martinez +^ +Jeannie Powers +^ +David Reganato +^ +Number of Meetings in 2023 +8 +Principal Functions +• Reviews and discusses with management and the independent auditors the integrity of our accounting policies, internal controls, financial statements, accounting and auditing processes and risk management compliance. +• Monitors and oversees our accounting, auditing and financial reporting processes generally, including the qualifications, independence and performance of the independent auditor. +• Monitors our compliance with legal and regulatory requirements. +• Monitors the Company’s cybersecurity risk and readiness. +• Monitors compliance with the Company’s Code of Business Conduct and Ethics. +• Establishes and oversees procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters, and the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters. +• Reviews and approves related party transactions. +• Appoints, determines compensation, evaluates and terminates our independent auditors. +• Pre -approves audit and permissible non -audit services to be performed by the independent auditors. +• Prepares the report required by the U.S. Securities and Exchange Commission (the “SEC”), for the inclusion in our annual proxy statement. +• Reviews and reassesses the adequacy of the Audit Committee charter on a periodic basis. +• Informs our independent auditors of the Audit Committee’s understanding of significant relationships and transactions with related parties and review and discuss with our independent auditors the auditors’ evaluation of our identification of, accounting for and disclosure of our relationships and transactions with related parties, including any significant matters arising from the audit regarding our relationships and transactions with related parties. +C Committee Chair. ++ Satisfies NYSE independence and other applicable independence rules for membership on such Committees. +^ Audit Committee financial expert. +2024 PROXY STATEMENT 13 +ELECTION OF DIRECTORS AND DIRECTOR BIOGRAPHIES +compensation committee +Members +Jason Martinez C+ +David Wolf + +David Reganato + +Mary Shafer-Malicki + +Number of Meetings in 2023 +5 +Principal Functions +• Oversees and administers our executive compensation policies, plans and practices, including our stock retention guidelines, and evaluates their impact on risk and risk management. +• Assists the Board of Directors in discharging its responsibilities relating to the compensation of our executives, including our Chief Executive Officer, and other key employees. +• Administers our equity -based compensation plans, including the grants of stock options, restricted stock awards and other equity awards under such plans. +• Develops, reviews and approves our cash -based incentive bonus plans, including the establishment of performance criteria, targets and awards under our 2023 Executive Annual Incentive Compensation Plan. +• Makes recommendations to the Board with respect to incentive compensation. +• Where appropriate or required, makes recommendations to our stockholders with respect to incentive compensation and equity -based plans. +• Conducts annual performance evaluation of the Committee. +• Reviews disclosure related to executive compensation in our proxy statement and prepares an annual Compensation Committee report. +• Reviews and considers the stockholders’ advisory vote on executive compensation and the frequency of holding such advisory vote. +• Reviews and reassesses the adequacy of the Compensation Committee charter. +C Committee Chair. ++ Satisfies NYSE independence and other applicable independence rules for membership on such Committees. +14 2024 PROXY STATEMENT +ELECTION OF DIRECTORS AND DIRECTOR BIOGRAPHIES +NOMINATING, ENVIRONMENTAL, SOCIAL AND GOVERNANCE COMMITTEE +Members +Mary Shafer-Malicki C+ +David Wolf + +Jeannie Powers + +David Reganato + +Number of Meetings in 2023 +4 +Principal Functions +• Assists the Board of Directors in developing criteria for identifying and evaluating individuals qualified to serve as members of our Board of Directors. +• Selects and recommends director candidates to the Board of Directors to be submitted for election at each annual meeting of stockholders and to fill any vacancies on the Board of Directors. +• Periodically reviews and makes recommendations regarding the composition and size of the Board of Directors and its Committees. +• Reviews and recommends to the Board of Directors appropriate corporate governance guidelines and procedures for the Company. +• Conducts an annual assessment of the qualifications and performance of the Board of Directors. +• Reviews and reports to the Board of Directors on the performance of management annually. +• Reviews the development and leadership capabilities of the executive officers and management’s succession process. +• Reviews and approves the Company’s Corporate Sustainability Report. +• Reviews and makes recommendations to our Board of Directors regarding the health, safety and environmental protection, and corporate responsibility matters, including governmental relations, political contributions and corporate philanthropy, which we refer to as HSE and corporate responsibility matters, and their impact on our business and operations. +• Monitors and evaluates management’s actions with respect to HSE and corporate responsibility matters. +• Reviews reports from our management, consultants or other advisors regarding (i) our performance with respect to HSE and corporate responsibility matters and compliance with any related laws and regulations applicable to us, (ii) any significant litigation relating to HSE and corporate responsibility matters involving our Company, and (iii) any significant legislation or regulations, judicial decisions, treaties, protocols, conventions or other agreements, public policies or other scientific, medical or technological developments involving HSE and corporate responsibility matters that will or may have a material effect on our business and operations. +• Reviews the risks and exposures relating to HSE and corporate responsibility matters, including mitigation and remedial actions. +• Reviews crisis management planning procedures relating to HSE and corporate responsibility matters. +• Conducts investigations or studies affecting Gulfport as they pertain to HSE and corporate responsibility matters. +• Reviews the effectiveness of internal systems and controls necessary to ensure our compliance with applicable health, safety and environmental laws, rules and regulations. +• Reviews our compliance with industry practices in the areas of health, safety and environmental protection. +• Reviews our political, charitable and educational contributions/programs and the administration of any political action or similar Committees of our employees. +• Oversees the policies and practices promoting diversity and inclusion within the Company and the Company’s human and workplace rights and policies. +• Reviews and provides guidance on public policy advocacy efforts to confirm alignment with Company policies and values. +• Reviews and reassesses the adequacy of the Nominating, Environmental, Social and Governance Committee charter. +C Committee Chair. ++ Satisfies NYSE independence and other applicable independence rules for membership on such Committees. +2024 PROXY STATEMENT 15 +ELECTION OF DIRECTORS AND DIRECTOR BIOGRAPHIES +DO THE COMMITTEES HAVE WRITTEN CHARTERS? +Yes. The charters for each Committee can be found on our website at https://www.gulfportenergy.com/investors/corporate -governance /governance -documents . You may also obtain copies of these charters, as well as our Code of Business Conduct and Ethics, which is described below, by writing to our Chief Legal and Administrative Officer and Corporate Secretary, Patrick Craine, at Gulfport Energy Corporation, 713 Market Drive, Oklahoma City, Oklahoma 73114. +16 2024 PROXY STATEMENT +CORPORATE GOVERNANCE MATTERS AND +COMMUNICATIONS WITH THE BOARD +WHO ARE OUR INDEPENDENT DIRECTORS? +Our Board of Directors has determined that five of our seven current Board members (David Wolf, Jason Martinez, Jeannie Powers, David Reganato, and Mary Shafer -Malicki ) meet the independence requirements in the NYSE listing standards and are free of any relationship that, in the opinion of our Board of Directors, would interfere with the exercise of independent judgment in carrying out their responsibilities as directors of the Company. Mr. Reinhart, our President, Chief Executive Officer and Director, is not considered by the Board of Directors to be an independent director because of his current employment with the Company. Mr. Cutt, our Board Chair, is not considered by the Board of Directors to be an independent director because of his previous employment as Chief Executive Officer of the Company. Our Board is currently over 42% diverse. +Annual Board Self -Assessment Process +Board and Committee Evaluations +Director Performance Evaluations +How often did the Board of Directors meet in 2023? +The Board of Directors met 12 times in 2023. In addition to these meetings, the Board of Directors adopted resolutions by unanimous written consent. Each director attended over 87% of the aggregate meetings of the Board of Directors and the meetings of the Committees on which they served. +Do our non -management directors meet separately without management? +Our non -management directors routinely meet in an executive session following regularly scheduled meetings of the Board of Directors. +2024 PROXY STATEMENT 17 +CORPORATE GOVERNANCE MATTERS AND COMMUNICATIONS WITH THE BOARD +How can I communicate with the Board of Directors? +Individuals may communicate with our Board of Directors or individual directors by writing to our Chief Legal and Administrative Officer and Corporate Secretary, Patrick Craine, at Gulfport Energy Corporation, 713 Market Drive, Oklahoma City, Oklahoma 73114. Our Chief Legal and Administrative Officer and Corporate Secretary will review all correspondence and forward our Board of Directors correspondence that, in the opinion of our Chief Legal and Administrative Officer and Corporate Secretary, relates to the function of our Board of Directors or a Board Committee or otherwise requires their attention. Directors may review a log of all correspondence received by us and request copies. Concerns relating to accounting, internal control over financial reporting or auditing matters will be immediately brought to the attention of the Chair of the Audit Committee and handled in accordance with our Audit Committee’s procedures. +WILL directors attend the Annual Meeting? +Recognizing that director attendance at our Annual Meeting can provide stockholders an opportunity to communicate with directors about issues affecting the Company, we actively encourage our directors to attend, either virtually or in person, the Annual Meeting of Stockholders. All Directors attended our 2023 Annual Meeting of Shareholders. +Code of Business Conduct and Ethics +We have adopted a Code of Business Conduct and Ethics designed to help directors and employees resolve ethical issues. Our Code of Business Conduct and Ethics applies to all directors and employees. Our Code of Business Conduct and Ethics covers various topics including, but not limited to, conflicts of interest, fair dealing, discrimination and harassment, confidentiality, compliance procedures and employee complaint procedures. Our Code of Business Conduct and Ethics, together with any amendments or waivers, are posted on our website at https://www.gulfportenergy.com/investors/corporate -governance /governance -documents . +Corporate Governance Guidelines +We have adopted Corporate Governance Guidelines to assist the Board in exercising its responsibilities. The Corporate Governance Guidelines reflect the Board’s commitment to monitor the effectiveness of policy and decision making at the Board and management levels, with a view to enhancing stockholder value over the long term. The Corporate Governance Guidelines also assure that the Board will have the necessary authority and practices in place to review and evaluate the Company’s business operations as needed and to make decisions that are independent of the Company’s management. Our Corporate Governance Guidelines, together with any amendments or waivers, are posted on our website at https://www.gulfportenergy.com/investors/corporate -governance /governance -documents . +Political Contribution Policy +Engagement in the political, legislative and regulatory process is important to the success of the Company. The Company has delegated compliance and oversight over this function to the Nominating, Environmental, Social and Governance Committee and has adopted a political contributions and activity policy that sets forth the ways by which the Company and its employees may participate in the political, legislative and regulatory process. All political contributions and activities are subject to compliance with applicable laws. +18 2024 PROXY STATEMENT +NOMINATING PROCESS FOR DIRECTORS, DIRECTOR +QUALIFICATIONS AND REVIEW OF DIRECTOR NOMINEES +Director Qualifications +As provided by the Nominating, Environmental, Social and Governance Committee’s charter, the Committee identifies, investigates, and recommends candidates to our Board of Directors with the goal of creating a balance of knowledge, experience, and diversity. The Committee identifies candidates using third -party search firms, as well as through the extensive networks of our directors and management team in the oil and natural gas industry. +It is our policy that potential directors should possess the highest personal and professional ethics, integrity and values and be committed to representing the interests of our stockholders. In addition to reviewing a candidate’s background and accomplishments, candidates are reviewed in the context of the current composition of our Board of Directors, the skills necessary to provide effective oversight in critical areas and the evolving needs of our business. It is the policy of our Board of Directors that, at all times, at least a majority of its members meet the standards of independence promulgated by the NYSE and the SEC and that its members reflect a range of talents, skills and expertise, particularly in the areas of accounting and finance, management, leadership and oil and gas -related industries sufficient to provide sound and prudent guidance with respect to our operations and the interests of our stockholders. +Board Diversity Policy +Our Nominating, Environmental, Social and Governance Committee is dedicated to diversity and adopted a Board Diversity Policy in April 2022. The policy requires that the Nominating, Environmental, Social and Governance Committee consider diversity in its evaluation of candidates for Board membership. Our Nominating, Environmental, Social and Governance Committee, in accordance with its charter, seeks to include diverse candidates in all director searches, taking into account diversity of gender, race, ethnicity, background, age, thought and tenure on our Board (in connection with the consideration of the renomination of an existing director), including by affirmatively instructing any search firm retained to assist the Nominating, Environmental, Social and Governance Committee in identifying director candidates to include diverse candidates from traditional and non -traditional candidate groups. In accordance with its charter, our Nominating, Environmental, Social and Governance Committee periodically reviews and makes recommendations regarding the composition of the Board and the size of the Board. These efforts have led to over 42% of our directors identifying as gender or ethnically diverse. +We also require that the members of our Board of Directors be able to dedicate the time and resources sufficient to ensure the diligent performance of their duties on our behalf, including attending meetings of the Board of Directors and applicable Committee meetings. In accordance with its charter, our Nominating, Environmental, Social and Governance Committee periodically reviews the criteria for the selection of directors to serve on our Board and recommends any proposed changes to our Board of Directors for approval. +Nomination Process +Our Board of Directors will consider stockholder nominations for director candidates upon written submission to our Chief Legal and Administrative Officer and Corporate Secretary along with, among other things, the nominee’s qualifications and certain biographical information regarding the nominee, the nominee’s written consent to serve as a director if elected and being named in the proxy or information statement and information regarding the status of the stockholder submitting the recommendation, all in the manner required by the Second Amended and Restated Bylaws of the Company (the “Bylaws”) and the applicable rules and regulations promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Following verification of the stockholder status of persons proposing candidates, recommendations will be aggregated and considered by our Board of Directors at a regularly scheduled or special Board meeting. If any materials are provided by a stockholder in connection with the nomination of a director candidate, materials will be forwarded to our Board of Directors. See “Submission of Future Stockholder Proposals” below for additional detail regarding submitting director nominees. +2024 PROXY STATEMENT 19 +NOMINATING PROCESS FOR DIRECTORS, DIRECTOR QUALIFICATIONS AND REVIEW OF DIRECTOR NOMINEES +Our Board of Directors may also review materials provided by professional search firms or other parties in connection with a nominee who is not proposed by a stockholder. In evaluating nominations, our Board of Directors will seek to achieve a balance of knowledge, experience and diversity on the Board. To be nominated to serve as a director, a nominee need not meet any specific minimum criteria. Our Board of Directors uses the same criteria for evaluating candidates nominated by stockholders as it does for those proposed by current Board members, professional search firms and other people. After completing its evaluation, our Board of Directors approves the final slate of director nominees. +Our Nominating, Environmental, Social and Governance Committee approved the director nominees submitted for election at the Annual Meeting. Each nominee brings a strong and unique background and set of skills to our Board of Directors, giving our Board of Directors competence and experience in a variety of areas, including corporate governance and Board service, executive management, the oil and natural gas industry, accounting and finance and risk assessment and management. +20 2024 PROXY STATEMENT +DIRECTOR LEADERSHIP STRUCTURE +Board Chair +Timothy Cutt served as Board Chair and CEO beginning on May 17, 2021. Effective January 24, 2023, the positions of Board Chair and Chief Executive Officer are held by two different individuals, and the Board Chair is a non -executive position elected from among the directors by the Board. Separating the positions of Board Chair and Chief Executive Officer allows our Chief Executive Officer to focus on business development strategies as well as our day -to-day business and operations, while permitting our Board Chair to lead the Board in its fundamental role of providing advice to and oversight of management. The Board Chair provides leadership to our Board of Directors and works with the Board of Directors to define its structure and activities in the fulfillment of its responsibilities. +The duties of the non -executive Board Chair include: +• Presiding at meetings of our Board of Directors and stockholders; +• Setting Board agendas with input from other members of the Board and our management; +• Facilitating communication among, and information flow to, directors; +• Calling special meetings of our Board of Directors and stockholders; and +• Advising and counseling our Chief Executive Officer and other officers. +Lead Independent Director +The Board has appointed Mr. Wolf to serve as Lead Independent Director with responsibilities typically performed by an independent Chair, including acting as Chair at meetings of the Board of Directors when the Board Chair is not present. The Lead Independent Director role is a highly versatile intermediary between the Board Chair and the Board’s stakeholders. In normal times they contribute to the good relationships and functions of the Board, and in periods of stress the Lead Independent Director is expected to assist in facilitating the resolution of any situation. Mr. Wolf also is a member of each of the Board’s Committees and acts as Chair at Committee meetings when the respective Committee Chair is not present. +Directors +We believe that our directors bring a broad range of leadership experience to the boardroom and regularly contribute to the thoughtful discussion involved in effectively overseeing the business and affairs of the Company. We believe that the atmosphere of our Board is collegial, that all Board members are well engaged in their responsibilities and that all Board members express their views and consider the opinions expressed by other directors. Five out of seven director nominees are independent under NYSE listing standards and SEC rules. We believe that our independent directors have demonstrated leadership in business enterprises and are familiar with Board processes. Our independent directors are involved in the leadership structure of our Board by serving on our Audit, Nominating, Environmental, Social and Governance and Compensation Committees, comprised entirely of independent directors and each having an independent chair. +Committee Chairs +Specifically, our Audit Committee Chair oversees the accounting and financial reporting processes and compliance with legal and regulatory requirements. Our Compensation Committee Chair oversees our compensation policies and practices and their impact on risk and risk management. The Chair of our Nominating, Environmental, Social and Governance Committee oversees our practices relating to health, safety and environmental protection, as well as social and governance matters. Our Nominating, Environmental, Social and Governance Committee Chair also monitors matters related to Board and Committee composition, Board performance and best practices in corporate governance. Each Committee Chair provides independent leadership for the purposes of many important functions delegated by our Board of Directors to such Committee. +2024 PROXY STATEMENT 21 +BOARD OF DIRECTORS’ ROLE IN RISK OVERSIGHT +While our management team is responsible for the day -to-day management of risks, the Board of Directors has primary responsibility for risk oversight. Boards typically exercise this oversight during regular Board meetings, but our Board of Directors also maintains constant and open dialogue with management and reviews and monitors key processes. As a result, they are better able to respond to emerging risks and to influence our strategy to address those risks. +While our Board of Directors is responsible for risk oversight at the Company, our three Committees assist the Board in fulfilling its oversight responsibilities in the areas of risk below: +Committee +Risk Areas of Focus +Audit +• Cybersecurity +• Financial Reporting +• Internal Controls +• Legal Compliance +• Regulatory Compliance +• Reserves Reporting +• Risk Management +Compensation +• Compensation Policies +• Executive Performance +Nominating, Environmental, Social and Governance +• Board Organization +• Climate +• Corporate Governance +• Environment +• Government Relations +• Membership +• Political Contributions +• Public Health +• Safety +• Structure +• Succession Planning +22 2024 PROXY STATEMENT +EXECUTIVE OFFICERS +The following table sets forth the name, age, positions, and business experience of each of our executive officers (other than John Reinhart, who also serves as a member of our Board and who is listed under “Election of Directors and Director Biographies”): +NAME +POSITIONS AND EXPERIENCE +Michael Hodges +Age: 45 +Executive Vice President, Chief Financial Officer since April 2023 +Prior to joining the Company, Mr. Hodges served as Senior Vice President, Finance and Accounting at Leon Capital Group. Prior to joining Leon Capital, he was the Executive Vice President and Chief Financial Officer for Montage Resources Corporation until its merger with Southwestern Energy Company in November 2020. From 2012 until joining Montage Resources in 2018, Mr. Hodges served as the Chief Financial Officer for three upstream energy companies focused on near-term value creation through the acquisition and early-stage development of oil and natural gas resources. Mr. Hodges received his Bachelor of Business Administration in Finance from the University of Oklahoma and a Master of Science in Energy Management from Oklahoma City University and is a Certified Public Accountant in the State of Oklahoma. +Patrick Craine +Age: 51 +Executive Vice President, Chief Legal and Administrative Officer since June 2021 +Mr. Craine joined Gulfport as Executive Vice President, General Counsel and Corporate Secretary in May 2019. Mr. Craine has over 25 years of extensive senior-level experience handling a broad range of securities, corporate, regulatory, governance, compliance and litigation matters, with particular expertise in the energy industry. He joined Gulfport from Chesapeake Energy Corporation (NYSE: CHK) (“Chesapeake”), a hydrocarbon exploration company, where he served as Deputy General Counsel – Chief Risk and Compliance Officer from 2013 until 2019. Prior to joining Chesapeake, Mr. Craine was a partner with Bracewell LLP, a global law firm, where his practice focused on securities and corporate regulatory matters and investigations. Before Mr. Craine entered private practice, he served as a lawyer with the SEC and the Financial Industry Regulatory Authority, where he held leadership positions in their Oil and Gas Task Forces. Mr. Craine received his Bachelor of Arts degree, summa cum laude, Phi Beta Kappa, from Wabash College, and his Juris Doctorate, cum laude, from the Southern Methodist University Dedman School of Law. +Matthew Rucker +Age: 38 +Senior Vice President, Operations since March 2023 +Prior to joining the Company, Mr. Rucker served as Vice President, Production Operations of Javelin Energy Partners since August 2022. He joined Javelin in July 2022 as the Vice President of Business Development. Prior to joining Javelin, Mr. Rucker served as the Executive Vice President, Chief Operating Officer of Montage Resources Corporation following Montage’s successful business combination transaction with Blue Ridge Mountain Resources in June 2020. Prior to Montage, Mr. Rucker served as Vice President, Resource Planning and Development of Blue Ridge from 2016 to 2020. Prior to joining Blue Ridge, Mr. Rucker served as a Production Superintendent for Chesapeake Energy Corporation from January 2014 to October 2016, overseeing Chesapeake’s Utica Shale production. As a member of Chesapeake’s Eastern Division leadership team, Mr. Rucker focused on the safe and efficient optimization of production in the Utica Shale and led an operating team of over 45 employees. During his service at Chesapeake, Mr. Rucker held several engineering positions in the Marcellus and Utica Shale Asset Teams within reservoir, primarily focused on strategic joint ventures, divestitures, acquisitions and resource development planning. Mr. Rucker graduated with a Bachelor of Science degree in Petroleum Engineering from Marietta College and with a Master’s in Business Administration from Texas Christian University. He serves on the Boards of the Ohio Oil and Gas Association and the Petroleum Alliance of Oklahoma and is a member of the Society of Petroleum Engineers. +2024 PROXY STATEMENT 23 +EXECUTIVE OFFICERS +NAME +POSITIONS AND EXPERIENCE +Michael Sluiter +Age: 51 +Senior Vice President, Reservoir Engineering since December 2018 +Mr. Sluiter joined Gulfport from Noble Energy, Inc., where he held various engineering positions from January 2012 to November 2018, including Business Development Engineering Advisor, Appalachian Reservoir Engineering Supervisor, and Permian Basin Business Unit Manager. Mr. Sluiter has over 18 years of experience in unconventional resource development, reservoir engineering, subsurface development, business development and acquisitions, as well as leadership skills, which he developed at Noble Energy, Santos Australia and Santos USA. Mr. Sluiter began his career as a wireline field services engineer for Schlumberger in Thailand. Mr. Sluiter received a Bachelor of Science degree in Chemical Engineering from the University of Sydney, Australia. +Lester Zitkus +Age: 58 +Senior Vice President, Land since January 2017 +Mr. Zitkus joined Gulfport as Vice President of Land in March 2014. Prior to joining the Company, Mr. Zitkus served as Vice President of Land for Chesapeake Energy Corporation from May 2007 to October 2013. During his 20-year tenure with Equitable Resources Inc. (now EQT Corp.), he held various positions, including Vice President of Operations and Senior Vice President of Land, between 1987 and 2007. He holds a degree in Mineral Land Management from the University of Evansville. Mr. Zitkus is a member and past president of the American Association of Professional Landmen and Past Regional Director of the Independent Petroleum Association of America. +24 2024 PROXY STATEMENT +COMPENSATION DISCUSSION AND ANALYSIS +Letter from the Compensation Committee +2023 was an exceptional year for Gulfport Energy. The Company delivered on all fronts, highlighted by our high quality resource base and the continued improvement of development efficiencies throughout the year. The Company delivered net production well above initial expectations while staying within its initial capital expenditures expectations. The 2023 development program led to meaningful adjusted free cash flow generation, and after adjusting for cash flow utilized for attractive discretionary acreage acquisitions, Gulfport allocated approximately 99% of adjusted free cash flow to repurchasing our common stock during 2023. All of this was achieved while maintaining our strong balance sheet, ample liquidity and financial leverage below one times. The Company’s accomplishments were realized by the investment community and Gulfport’s stock price appreciated over 80% during 2023, outperforming the S&P 500 which appreciated by 24% and Gulfport’s 2023 compensation peer group average appreciation of 0.2%. +From an executive compensation perspective, we were able to set realistic, challenging targets for our short and long -term incentive plans. We were pleased to see the financial and operational results exceed our expectations. We were able to deliver on our compensation strategy of providing compensation opportunities that were tied to Company performance. Our philosophy is to remain competitive within the oil and gas industry for similarly situated operations. +Please review the Compensation Discussion and Analysis, where we explain how we tie pay and performance together to reward our executives. We are confident our shareholders will once again agree with the compensation decisions we made regarding our executive team as they overwhelmingly did based on the 99.8% of votes we received on our 2023 Say -On-Pay vote. +Thank you for your confidence and investment in Gulfport Energy. +Respectfully submitted by the Compensation Committee, +Jason Martinez, Chair +David Reganato +Mary Shafer -Malicki +David Wolf +Dated: April 5, 2024 +2024 PROXY STATEMENT 25 +COMPENSATION DISCUSSION AND ANALYSIS +This Compensation Discussion and Analysis, or CD&A, explains the Compensation Committee’s compensation philosophy, summarizes our executive compensation programs, and describes compensation decisions for Gulfport’s current and former Chief Executive Officer, or CEO, current and former Chief Financial Officer, or CFO, and the next three highest paid executive officers for 2023. These executive officers, known as our NEOs, are as follows: +John Reinhart +President, Chief Executive Officer and Director +Michael Hodges +Executive Vice President, Chief Financial Officer +Patrick Craine +Executive Vice President, Chief Legal and Administrative Officer and Corporate Secretary +Matthew Rucker +Senior Vice President of Operations +Michael Sluiter +Senior Vice President of Reservoir Engineering +Timothy Cutt +Former Chief Executive Officer and Current Board Chair +William Buese +Former Executive Vice President Chief Financial Officer +26 2024 PROXY STATEMENT +EXECUTIVE SUMMARY +Gulfport 2023 Business Performance Highlights +During 2023, we had the following notable achievements: +Financial +• Generated $723.2 million of operating cash flows. +• Reduced total lease operating expenses, midstream costs and taxes other than income per Mcfe by 13%. +• Maintained a strong balance sheet and low financial leverage, with liquidity at December 31, 2023 totaling $720.1 million. +• Expanded our common stock repurchase authorization in February 2023 and October 2023 to a total of $650 million. +• Returned substantially all full year adjusted free cash flow, excluding discretionary acreage acquisitions, to shareholders by repurchasing 1.5 million shares of common stock for approximately $148.9 million. +• Reported year -end estimated net proved reserves of 4.2 Tcfe. +Health, Safety & Environmental +• Achieved MIQ certification for Appalachian assets. +• Reduced our combined total recordable incident rate by 17% in 2023 compared to 2022. +• Invested in and implemented technology to reduce emissions, waste and our physical footprint on drilling locations. +• Reduced water disposal volumes and freshwater consumption through water re -use or water sharing agreements with other operators. +• Employees completed over 2,600 hours of Health, Safety and Environmental training. +• Over 200 service companies completed Contractor Orientation covering topics such as: +• Gulfport’s Contractor expectations +• Work Safe; +• Stop Work; +• JSA’s; +• Incident Reporting; and +• Spill Prevention +• PPE requirements +• Gulfport Drug/Alcohol/Weapons Policy +• Business Conduct +• Other Applicable OSHA Regulations +• Hot Work Permits +• Confined Space Permits +• Lock Out Tag Out Requirements +2024 PROXY STATEMENT 27 +EXECUTIVE SUMMARY +Social +• Appointed two gender diverse directors, resulting in over 42% diversity of Directors. +• Completed Diversity Equity and Inclusion related training for all employees. +• Increased total number and total percentage of employees that identified as gender or ethnically diverse. +• Partnered with over 30 organizations that support Gulfport’s key focus areas in Oklahoma and Ohio through volunteering and monetary contributions. +Key 2023 Executive Compensation Actions +In consideration of our long -term strategy and stockholder feedback following a robust program of engagement (see “Stockholder Engagement and Annual Say -on-Pay Advisory Vote” below), the Company took the following actions in 2023: +• Continued to use absolute and relative TSR and time -based vesting in equity plan grants to maximize the link between performance -based pay of our executives and shareholder value over time. +• Established annual performance bonus opportunities and long -term equity award targets to closely align our NEOs’ financial interests with those of our stockholders and to continue to link a larger portion of NEOs’ compensation to the performance of our stock and operational performance. +• Selected metrics in our annual incentive plan to include financial metrics directly tied to the financial health of the Company and specific and quantifiable health, safety and environmental metrics. +• Continued to provide robust disclosure of our performance metrics and targets for both performance -based cash and equity awards. +• Utilized formal stock ownership guidelines to ensure our Board of Directors and executive officers own a stake in the Company that is sufficient to align their interests with their fellow stockholders. +28 2024 PROXY STATEMENT +EXECUTIVE SUMMARY +The Compensation Committee will continue to consider the feedback from our stockholders when making compensation decisions for our NEOs. +Practices We Follow +🗸 +Incentives Aligned with Stockholders. All long-term equity incentive awards granted in 2023 were in the form of either time-based or performance-based restricted stock units, and the performance-based restricted stock units vest based on absolute and relative TSR, providing strong alignment between management and stockholders. +🗸 +NEO pay is at -risk . A significant portion of executive compensation is conditioned on the achievement of pre-determined operational, capital efficiency and safety and environmental targets, as well as absolute TSR and TSR measured against a broad peer group of exploration and production companies. +🗸 +Performance -based awards are prevalent. 60% of the NEOs’ equity incentive awards consisted of performance-based equity awards that vest based on absolute and relative TSR metrics measured over a three-year performance period. +🗸 +Robust disclosure of our performance metrics and targets. We provide detailed disclosure of our performance metrics in our CD&A. +🗸 +Balanced approach to executive compensation. We view the combination of long-term equity and short-term cash compensation, prioritizing long-term equity compensation and focusing on performance-based equity and cash compensation when analyzing total compensation plans. +🗸 +Ownership guidelines. We have robust stock-ownership guidelines for directors and executive officers. +🗸 +Risk Management. We perform annual enterprise risk assessments to ensure our compensation programs does not create undue risk to the business. +🗸 +Clawback and recoupment processes. We maintain a clawback policy that allows us to recover incentive compensation in certain circumstances. +🗸 +Executive Compensation best practices. The Compensation Committee uses an independent compensation consulting firm to provide input into our executive compensation programs. +Practices We Prohibit +û +Minimum bonuses or guarantees. The Company does not guarantee minimum bonuses and relies on target achievement to determine annual bonus payments. +û +Single -trigger vesting of equity awards. The Company does not allow for single-trigger vesting of equity awards in connection with a change of control. +û +Providing tax gross -ups . No tax gross-up payments have been provided to our NEOs. +û +Hedging or pledging Gulfport Energy Stock. The Company does not allow hedging or pledging of Gulfport securities by our NEOs or directors. +û +Liberal share recycling. We do not allow liberal share recycling in our stock incentive plan. +û +Holding Gulfport Energy stock in a margin account. The Company does not allow securities to be held in a margin account by our NEOs or directors. +û +Excessive perquisites or executive benefits plans. No pension, supplemental executive retirement plan or excessive perquisite plans are made available to our NEOs. +û +Repricing of Stock Options. The Company did not grant stock options in 2023, currently has no plans to grant stock options in the future and would not reprice any outstanding stock options that might be outstanding. +2024 PROXY STATEMENT 29 +EXECUTIVE SUMMARY +Compensation Aligned with Performance +The Compensation Committee believes that executive compensation should be designed to deliver competitive pay when performance targets are achieved, and when business results exceed targets, executives should share in those rewards based on their efforts. If the Company does not achieve established performance goals, the executive team should receive pay that reflects that lower achievement. We believe this pay for performance alignment is working as realized pay for 2023 was above target levels due to exceeding pre -set , target -performance goals and strong shareholder returns. The Company delivered 2023 net production well above initial expectations while staying within its capital expenditures expectations. The 2023 development program led to meaningful adjusted free cash flow generation, and after adjusting for cash flow utilized for attractive discretionary acreage acquisitions, Gulfport allocated approximately 99% of adjusted free cash flow to repurchasing our common stock during 2023. All of this was achieved while maintaining our strong balance sheet, ample liquidity and financial leverage below one times. The Company’s accomplishments were realized by the investment community and Gulfport’s common stock appreciated over 80% during 2023, outperforming the S&P 500 which appreciated by 24% and Gulfport’s 2023 compensation peer group average appreciation of 0.2%. +The majority of our current NEO’s total compensation is dependent on the successful achievement of Company results as measured by either short -term incentive plan metric achievement or achievement of performance measures and stock price appreciation of the Company’s common stock. The target total direct compensation of our NEOs is largely influenced by pay -at-risk or variable compensation, tying the pay of the executive to the Company’s performance and share price of the Company’s common stock. Short -term incentive plan targets for 2023 were exceeded, resulting in actual awards to executives that were higher than target amounts and demonstrating the alignment between performance and pay. +Stockholder Engagement and Annual Say -On-Pay Advisory Vote +The Compensation Committee is committed to engaging with our stockholders to understand their expectations for executive compensation, corporate governance and safety, environmental and other social responsibility matters at Gulfport Energy. In 2023, 99.8% of shareholders voted to approve the Company’s executive compensation program and practices. The Company is pleased that shareholders continue to strongly support our executive pay program and remains committed to meeting with stockholders to solicit feedback on our executive compensation practices in the future. Based on the results of the Company’s last advisory vote on the frequency of future Say -On-Pay votes at the Company, also known as a say -on-frequency vote, the Company will continue to hold annual Say -On-Pay votes until the Company’s next say -on-frequency vote in 2029. +The Company held discussions with stockholders representing over 70% of shares outstanding. Through these conversations, our stockholders emphasized their expectation that management should be focused on driving results that deliver stockholder value. Our stockholders agree that executives should not be paid at target levels unless financial targets are achieved and expressed a desire to see specific and measurable targets for the year. Stockholders also expressed a desire for executives to have exposure to the absolute return of the Company’s common stock without regard to broader market fluctuation. The Company is confident that the metrics selected for both short -term and long -term incentives are appropriate and continue to align with shareholder preferences. Changes were made to metrics selected in the annual incentive plan to incorporate environmental, safety and other social practices for 2023. +After carefully considering input from stockholders, the Company took the following actions in 2023: +• Granted performance -based equity awards in the form of performance -based restricted stock units tied to absolute and relative TSR, vesting over a three -year performance period, comprising at least 60% of all the equity awards granted to our Named Executive Officers; +• Utilized short -term incentive opportunities and long -term equity award targets that closely align our NEOs’ financial interests with those of our stockholders and continue linking a larger portion of NEOs’ compensation to our operational and share price performance; +• Provided robust disclosure of our performance metrics and targets for both performance -based cash and equity awards; and +• Utilized metrics in the annual incentive plan to include financial metrics directly tied to the financial health of the Company including production per day, capital expenses, lease operating expenses, free cash flow generation, and specific and quantifiable health, safety, environmental and social metrics. +The Compensation Committee will continue to consider the feedback from our stockholders when making compensation decisions for our NEOs. +30 2024 PROXY STATEMENT +EXECUTIVE SUMMARY +EXECUTIVE COMPENSATION PHILOSOPHY AND COMPONENTS +Philosophy and Objectives +Our executive compensation philosophy is guided by the following objectives: +EXECUTIVE COMPENSATION +Alignment with +Stockholder Interests +By providing the majority of compensation in long-term equity awards, stressing pay for performance, managing dilution to our stockholders and encouraging an ownership culture, we aim to align the interests of our executives with those of our stockholders. +Pay for Performance +The Company is focused on rewarding performance by creating incentive awards based on achievement of clearly defined performance targets. A significant portion of our NEOs’ compensation is delivered in long-term incentives, making our NEOs’ realized total direct compensation heavily dependent upon Company performance and stock price. +Competitive +Compensation +The Company believes it is imperative to maintain compensation programs competitive with our peer group to attract, retain and motivate executives and our future leaders in a way that is in line with the compensation of executive positions at similar companies. +Our executive compensation programs play a key role in helping us achieve our business objectives and effectively reward executive officers for our Company’s annual and long -term performance and individual contributions to performance. +Total Direct Compensation Components for 2023 +Pay Element +Vehicle +Philosophy +Benefits +• Health, dental and vision insurance available to all employees. 401K program, vacation policy and disability plans to provide income replacement due to long-term or short-term illness +• Provide core health, welfare and retirement savings plans for executives. Provide substantially the same programs for all employees with minimal executive perquisites. +Base Pay +• Base pay rates that are reviewed annually and subject to Compensation Committee recommendations +• Provide compensation that is competitive with the median peer group practices. Base pay levels reflect the unique skills and abilities of our executives and accounting for the primary duties associated with the executive’s role. +Short-Term Incentive +• Annual incentive opportunity to earn a percentage of base pay based on annual operating objectives +• Provides incentive opportunities that approximate median peer group pay when performance targets are achieved. When targets are exceeded, the executive should be rewarded for their efforts with pay that exceeds the median of the peer group. When targets are not achieved, the executive should earn pay levels below the median of the peer group. +Long-Term Incentives +• Time-Based Restricted Stock Units +• Time-based restricted stock unit grants that vest in equal annual installments over 3 years. If the executive remains with the Company, the executive experiences either increased or decreased pay levels based on the performance of the stock price, fully aligning our executives with the return of the Company’s stock. +• Performance-Based Restricted Stock Units +• Performance-based restricted stock units that are tied to total shareholder return over a performance period that aligns stockholders and executive interests, providing an additional incentive opportunity for the executive when absolute and/or relative returns exceed those of our peer group. +2024 PROXY STATEMENT 31 +EXECUTIVE SUMMARY +Determining our Executive Compensation +Benchmarking Against Our Compensation Peer Group +Gulfport utilizes a peer group of companies, or the Compensation Peer Group, as a reference point when establishing both compensation levels for NEOs as well as program structures, to achieve competitiveness in the market. +2023 Compensation Peer Group +The Compensation Committee engaged its independent consultant, WTW, formerly Willis Towers Watson, to establish the appropriate peer group for executive compensation for 2023. Potential peers were identified using revenue, primary business, equity value/debt ratio, other relevant financial metrics (EBITDA, market capitalization, assets, net income, etc.), gas weighting and the number of operations/regions. Upon review and analysis of potential peers using these criteria, the peers below were identified as both suitable and relevant to comprise the Company’s 2023 peer group. The revision of the Compensation Peer Group resulted in relative alignment of Gulfport’s key metrics at the time the peer group was established. +2023 Compensation Peer Group +Berry Corporation +Comstock Resources, Inc. +Magnolia Oil & Gas Corporation* +PDC Energy, Inc. +Ranger Oil Corporation* +Callon Petroleum Company +Earthstone Energy, Inc.* +Matador Resources Company +Permian Resources Corporation*** +SM Energy Company +CNX Resources Corporation +Laredo Petroleum, Inc.** +Murphy Oil Corporation +Range Resources Corporation +Talos Energy Inc. +* Denotes a new peer added in 2023. +** Laredo Petroleum, Inc. changed its name to Vital Energy, Inc. in January 2023. +*** Centennial Resource Development, Inc. changed its name to Permian Resources Corporation in September 2022. +In general, and consistent with a performance -based compensation philosophy, the Compensation Committee seeks to establish executive base pay within a competitive range of the appropriate peer group median, with an opportunity to earn greater overall compensation in the event it is warranted by our performance. The exact level of targeted compensation for each NEO varies based on the individual’s role in Gulfport, experience, and contribution to our success. For benchmarking purposes, the Compensation Committee compares the total compensation for each NEO position to the compensation paid for similar positions by companies in our Peer Group, as set forth in those companies’ proxy statements for the prior year. WTW proposes companies to be included in the Compensation Peer Group and the methodology for selecting that peer group and may consult with management to confirm that the most appropriate companies are selected. The Compensation Committee then reviews and, as it may deem appropriate, approves the Compensation Peer Group for the applicable compensation year. The companies identified were at their time of selection, in the view of the Compensation Committee the best and most appropriate companies for benchmarking compensation within our industry. The Compensation Committee will continue to review and monitor the Compensation Peer Group annually and select peers based on appropriate screening criteria, metrics and competition for executive talent. The Compensation Committee also uses industry -specific survey data as an additional reference point to assist in the compensation decision -making process. +32 2024 PROXY STATEMENT +EXECUTIVE SUMMARY +PROCESS FOR DETERMINING EXECUTIVE COMPENSATION +The Compensation Committee of our Board of Directors oversees our compensation programs for executive officers and all employees. During 2023, the Compensation Committee was comprised of Jason Martinez (Chair), David Reganato, Mary Shafer -Malicki , David Wolf, and Guillermo (Bill) Martinez. All members of the Compensation Committee are independent directors. +The Role of Our Compensation Committee +The Compensation Committee generally reviews and typically makes its decisions regarding the annual compensation of our NEOs at its regular meetings in the first half of each year. These decisions include: +• Approving base salaries, target, annual cash incentive levels and long -term equity -based incentive levels; +• Establishing applicable performance objectives for performance -based awards; +• Granting long -term equity -based incentive awards and determining the types of awards for the current year; and +• Certifying annual performance -based cash incentive awards and performance -based long -term incentive award payouts. +The Compensation Committee may also adjust compensation as necessary at other times during the year, such as in the case of promotions, other changes in employment status and significant corporate events, as well as to reflect changing market conditions or for other competitive purposes. +In making its decisions, the Compensation Committee assesses each NEO’s impact during the year and overall value to Gulfport, specifically considering the NEO’s contribution to the growth of Gulfport’s value, operational and financial performance, performance in the NEO’s primary area of responsibility, impact on strategic initiatives, recommendations of our independent compensation consultant, the NEO’s role and trajectory in succession planning and development, recommendations from our CEO with respect to our other NEOs and other intangible qualities that contribute to corporate and individual success. +The Role of our CEO +The Compensation Committee evaluates our CEO based on the Company’s performance metrics, leadership roles as a member of the Board and our lead representative to the investment community and other criteria. The CEO’s total compensation package is determined by the Compensation Committee, based upon its evaluation and input from our independent compensation consultant. Our CEO’s compensation ultimately reflects Gulfport’s performance, personal performance, competitive industry practices and the terms of our employment arrangement with the CEO. +Our CEO evaluates each of the other NEOs and makes compensation recommendations to the Compensation Committee. In developing recommendations, the CEO considers the recommendations of the Compensation Committee’s independent compensation consultant, as well as each NEO’s performance against the Company performance metrics and contribution to Gulfport’s performance. The independent compensation consultant reviews and provides comments to the Compensation Committee based on our CEO’s recommendation with respect to our NEOs, other than our CEO. Our CEO does not participate in deliberations or decisions concerning his own compensation. +The Role of the Compensation Consultants +For 2023, the Compensation Committee retained the service of WTW to perform executive compensation advisory services, reporting directly to the Compensation Committee Chair. The Compensation Committee determined that the expertise that WTW had in the executive compensation consulting space with other similar Exploration and Production (“E&P”) companies, in addition to deep insights into compensation practices of other similar companies, was critical for Gulfport Energy. WTW provided contemporary best practices in base pay administration, short -term incentive plan design and long -term incentive plan design. This information, which included reviews of peers, a broader E&P group and general industry practices, was used by the Compensation Committee to determine base salary, short -term incentives and long -term incentives for our executives. +2024 PROXY STATEMENT 33 +EXECUTIVE SUMMARY +WTW also provided support with regulatory and other considerations that affect compensation programs generally, as requested by the Compensation Committee, as well as assistance in preparation of the CD&A. +WTW reported exclusively to the Compensation Committee, with respect to the services described above. During 2023, WTW provided other non -executive compensation consulting services to us, but the total fees for such services did not exceed $120,000. The Compensation Committee reviewed the independence of WTW and determined that there were no conflicts of interest because of the Compensation Committee’s engagement of WTW. +The Compensation Committee evaluates the independence of its compensation consultant(s) on an ongoing basis. +2023 COMPENSATION PROGRAM DESCRIPTION +Base Salary +The Compensation Committee engaged WTW to review the overall competitiveness of our executive compensation program for 2023, with a continued focus on ensuring the alignment of management compensation with performance and the achievement of Gulfport’s long -term goals. The Compensation Committee reviews NEO base salaries on an annual basis, with a goal of providing market competitive, fixed cash compensation. The Compensation Committee assesses comparable salary information provided by its independent compensation consultant as a factor when determining the base pay for NEOs. +Other factors the Compensation Committee considers in determining base pay for each of the NEOs include, but are not limited to: the NEO’s responsibilities, experience, leadership, potential future contribution and demonstrated individual performance. The relative weighting of these factors varies by NEO depending on their position and responsibilities. In March 2023, the base salaries of the executive team were reviewed and changes were made to certain executives’ base salaries after reviewing the current labor market for executive talent, performance and other job -related factors for each executive. A summary of the changes is reflected in the table below. +Name +Base Salary YE +2022 +Percent +Increase (%) +Base Salary YE +2023 +John Reinhart +— +— +$785,000 +Michael Hodges +— +— +$485,000 +Patrick Craine +$470,000 +3.2% +$485,000 +Mathew Rucker +— +— +$390,000 +Michael Sluiter +$378,000 +3.2% +$390,000 +Timothy Cutt +$785,000 +— +— +William Buese +$470,000 +— +— +Annual Incentive Awards +The Compensation Committee established a performance -based annual cash incentive program for 2023 that tied our NEOs’ compensation directly to pre -established performance metrics. Targeted annual incentive award levels were based on market information supplied by the independent compensation consultant. Individual awards may be decreased at the discretion of the Compensation Committee based on overall corporate performance for the year and other considerations. +2023 Annual Short-Term Incentive (“STI”) Bonus Metrics and Annual STI Payments +The Compensation Committee determined that the appropriate Key Performance Indicators (“KPIs”) for the 2023 STI plan should focus primarily on generating adjusted free cash flow and executing certain strategic objectives that were important to the continued success of the organization and were responsive to shareholder feedback. After reviewing the operating and financial targets for 2023 with the Board of Directors, the Gulfport Energy executive management team and the independent compensation advisor, the Compensation Committee approved performance targets accordingly. The KPIs included thresholds, targets and maximums that were based on predetermined financial and key performance metrics. +34 2024 PROXY STATEMENT +EXECUTIVE SUMMARY +The financial metrics chosen were generally common measures in the oil and gas industry and were viewed as measures of success by our shareholders. The Compensation Committee also believed it was critical to focus on other strategic initiatives that while not directly measured in financial terms, are key indicators of successful companies in the oil and gas industry. Total Recordable Incident Rate (“TRIR”) and spills are common measurements and targets that reflect either industry benchmark information (TRIR) or improvement over prior results (spills). The Compensation Committee also adopted a set of strategic initiatives that focused on environmental and corporate and social governance activities. Specifically, the organization would be measured on making substantial improvement in the areas of Appalachian gas certification with an “A” grade from MIQ, completing a successful organizational restructuring, and retrofitting natural gas pneumatics with air in the MidCon. +In April of 2023, after performance targets for the annual STI had been set in March of 2023, the Board of Directors made a strategic decision to increase the Company’s 2023 capital program after management’s operational efficiencies provided the opportunity to accelerate activity. Realizing that these additional expenditures were not included in the initial target setting process, the Board of Directors adjusted the 2023 performance metrics to account for the accelerated capital in the 2023 incentive payment results. +At the completion of the performance period ending December 31, 2023, the Compensation Committee reviewed financial and operating results and the attainment of key performance indicators and approved 2023 STI payout results based on those achievements. This achievement resulted in an overall payout of 165% of target awards. Below is a summary of KPIs and results for the 2023 plan year. +2023 STI Metrics +Weighting +Threshold +Target +Maximum +2023 +Actual (2) +2023 +Approved +Payout (2) +Production (MMcfe/day) +20% +1,000 +1,020 +1,060 +1,054 +37% +Capex ($MM) +20% +$475 +$448 +$410 +$423 +33% +LOE per Mcfe ($/Mcfe) +15% +$0.20 +$0.18 +$0.15 +$0.18 +16% +Adjusted Free Cash Flow ($MM) (1) +15% +$175 +$214 +$280 +$282 +30% +TRIR +10% +0.9 +0.7 +0.5 +0.5 +19% +Spills +10% +8 +6 +4 +3 +20% +Strategic Initiatives +10% +Qualitative +10% +Total Achievement Percentage +165% +(1) Adjusted Free Cash Flow is a non-GAAP measure defined as net cash provided by operating activities from the Company’s Consolidated Statement of Cash Flows less the sum of changes in operating assets and liabilities included in the operating activities section of the Consolidated Statement of Cash Flows less non-recurring general and administrative and other expenses from the Consolidated Statement of Operations less incurred capital expenditures and capitalized expenses. Adjusted Free Cash Flow was calculated assuming realized commodity pricing received throughout the year was consistent with the forward curve pricing used to set the approved Adjusted Free Cash Flow Metric in February of 2023. +(2) The impact of the changes to the Company’s 2023 capital program on the 2023 incentive payment results as described above consisted of increased capital expenditures of $23 million, which reduced the 2023 actual Capex metric and increased the 2023 Adjusted Free Cash Flow metric results. +2024 PROXY STATEMENT 35 +EXECUTIVE SUMMARY +2023 Target Annual STI Opportunities and Actual Annual STI Payments +The Compensation Committee established the target annual cash STI opportunity for each of the NEOs, taking into consideration the terms of any applicable employment agreement, and approved the following cash payments based on the Company’s 2023 results performance as described above. +2023 INCENTIVE COMPENSATION PLAN +Name +2023 +Incentive Compensation +Program Incentive +Target +Actual Annual +Incentive +Achievement +(as % of Target +Annual Incentive) +Actual +Incentive +Earned for +2023 +John Reinhart +$942,000 +165% +$1,554,300 +Michael Hodges +$485,000 +165% +$ 800,250 +Patrick Craine +$436,500 +165% +$ 720,225 +Matthew Rucker +$292,500 +165% +$ 482,625 +Michael Sluiter +$292,500 +165% +$ 482,625 +Timothy Cutt (1) +$785,000 +— +— +William Buese (2) +$423,000 +— +— +(1) Pursuant to his Transition and Services Agreement, Mr. Cutt received a prorated bonus at target for his service as Chief Executive Officer during 2023. +(2) Pursuant to the terms of his employment agreement and in connection with the termination of his employment, Mr. Buese received a pro -rata portion of his annual bonus for 2023. +Long-Term Incentive Awards +Each year we grant our NEOs long -term incentive awards, that have historically consisted of equity -based awards. The Compensation Committee determines the amount of these awards, as well as the mix of equity vehicles. The objectives of our long -term incentive plan are to: (i) create significant alignment between the interests of our NEOs and our stockholders; (ii) attract and retain the services of critical talent; and (iii) focus our executives on our sustained growth and financial success. +DETERMINING AWARD STRUCTURE AND SETTING THE TARGET AWARD OPPORTUNITY +The Compensation Committee considers the grant date fair value of the long -term incentive package, the package’s potential dilutive effect on our outstanding shares of common stock and the number of shares available for grant under the 2021 Incentive Plan (as defined below) in determining the aggregate number of shares to be awarded as individual long -term incentive awards for our NEOs. The Compensation Committee evaluates stockholder dilution based on equity compensation plans compared to the total amount of the Company’s outstanding common stock. In determining the appropriate long -term incentive awards to grant NEOs other than the CEO, the Compensation Committee considers the recommendations of the CEO. The Compensation Committee reviewed market values with respect to the annual long -term incentive awards granted to similarly situated executives at the Compensation Peer Group. In 2023, the Compensation Committee determined that the Named Executive Officers would receive equity grants consisting of 60% performance -based restricted stock units and 40% time -based restricted stock units. The time -based restricted stock units granted to our Named Executive Officers vest in equal annual installments over a three -year period. +36 2024 PROXY STATEMENT +EXECUTIVE SUMMARY +The performance based restricted stock units vest after a three -year performance period, based on the Company’s achievement of relative TSR as compared to a peer group of companies and absolute TSR, in each case, as described in the chart below. +Relative TSR +> 75 th percentile +of the Peer +Companies +50 th percentile – +< 75 th percentile +of the Peer +Companies +25 th percentile – +< 50 th percentile +of the Peer +Companies +< 25 th percentile +of the Peer +Companies +Annualized +Company +TSR +< 5.0% +0% +0% +0% +0% +> 5.0% – 7.5% +50% +25% +0% +0% +> 7.5% – 10.0% +125% +100% +75% +50% +> 10.0% – 15.0% +150% +125% +100% +75% +> 15.0% – 20.0% +175% +150% +125% +100% +> 20.0% +200% +175% +150% +125% +2023 Equity Awards +Named Executive Officer +2023 RSU +Award +Grant Award +Value ($) (1) +2023 PSU +Award +Grant Award +Value ($) (2) +John Reinhart +20,546 +$1,634,229 +30,819 +$1,602,280 +Michael Hodges +10,062 +$ 799,929 +15,094 +$1,006,166 +Patrick Craine +7,299 +$ 570,563 +12,098 +$ 729,509 +Matthew Rucker +6,569 +$ 513,499 +10,888 +$ 656,546 +Michael Sluiter +6,082 +$ 475,430 +10,082 +$ 607,945 +Timothy Cutt +— +— +— +— +Bill Buese +— +— +— +— +(1) The time-based restricted stock unit values are based on the closing price of the Company’s common stock on the grant date. +(2) The performance-based restricted stock unit awards are shown in this table based on the target number of shares subject to the awards and the closing price of the Company’s common stock on the grant date. The Company used a Monte Carlo simulation for purposes of determining the grant date fair value of these awards as reflected in the Summary Compensation Table. Please see note 2 to the Summary Compensation Table. +2024 PROXY STATEMENT 37 +EXECUTIVE SUMMARY +COMPENSATION POLICIES AND PRACTICES +Compensation Risk Management +The Compensation Committee continues to review the risks and rewards associated with our compensation policies and programs. We believe that our policies and programs encourage and reward prudent business judgment, encourage short -term stockholder value creation, and prioritize long -term growth by discouraging excessive risk taking. With respect to specific elements of compensation: +• Integrated Approach – Our programs balance short- and long -term incentives for our executive officers by providing an appropriate mix of fixed, performance -based , discretionary and equity compensation, with the goal of creating both short- and long -term stockholder value. +• Attract Top Talent – Annual base salaries for our NEOs do not encourage excessive risk -taking as they are fixed amounts that are subject to discretionary increases by our Compensation Committee that may be based on, among other factors, annual performance evaluations. We believe that annual base salaries are set at reasonable levels, as compared to the base salaries of similarly situated individuals at our peer group companies, and therefore do not negate the effect of other compensation elements that encourage long -term service, growth and performance that may increase stockholder value. +• Support Business Objectives and Strategic Goals – Our annual incentive awards are determined based on financial, operational and strategic Company performance measures, which mitigate excessive risk -taking that could produce unsustainable gains in one area of performance at the expense of our overall long -term interests. The Company’s goals are designed to ensure a proper balance between stock performance, operational measures, financial goals and strategic goals. In addition, the Compensation Committee sets performance goals that it believes are reasonable considering our past performance, then -current business projections and market conditions. +• Pay for Performance – The Compensation Committee believes that performance -based equity awards tied to the Company’s stock price and relative performance versus peers, and cash compensation, with meaningful performance targets, such as those under our Annual Incentive Plan (as defined below), will further align our NEOs’ interests with those of our stockholders, will motivate our NEOs to contribute to the Company’s growth and profitability and will link a larger portion of our NEOs’ compensation to the performance of the Company. +• Maximize Stockholder Value – Our annual incentive awards are subject to maximum payout caps that limit the amount an NEO may earn on any individual metric or operational measures. +• Create Ownership Culture – Performance -based and time -based restricted stock unit awards, in each case, vesting over time, as well as robust stock ownership guidelines for our NEOs and non -employee directors, promote stock ownership culture and ensure that our NEOs and directors have a continuing stake in the long -term success of the Company. We believe that our long-term equity awards granted to our NEOs discourage excessive risk taking, as there is a balance between performance-based and time-based awards that moderates the risk that may otherwise exist if equity awards were to vest based solely on achieving performance targets. +Based on the foregoing, the Compensation Committee believes that the Company utilizes compensation policies and programs such that there are no risks that are reasonably likely to have a material adverse impact on the Company. +Clawback Provisions +Under the Sarbanes -Oxley Act of 2002, incentive compensation received by our Chief Executive Officer and Chief Financial Officer may be subject to clawback in the event of a restatement of our financial statements. On July 31, 2023, the Board approved a written executive compensation clawback policy. The Board has adopted a compensation recovery policy, also known as a “clawback,” pursuant to which the Company may seek to recover from any current or former executive officer all cash and equity incentive -based compensation in the event of an accounting restatement resulting from the Company’s material non -compliance with financial reporting requirements under applicable securities laws. The amount of incentive -based compensation subject to such recovery would be the amount in excess of what the executive officer received over the amount the executive would have earned in accordance with the restatement as determined by the Compensation +38 2024 PROXY STATEMENT +EXECUTIVE SUMMARY +Committee. The compensation recovery policy also contains provisions related to the forfeiture of stock options, restricted shares, RSUs and PSUs. Under these forfeiture provisions, the company may cancel such long -term incentive awards, in whole or in part, whether or not vested, for no consideration, for executives who engage in serious breaches of conduct, including violations of employment agreements, confidential or other proprietary matters, or otherwise act in competition with the Business of the company. We believe these provisions serve to ensure that executives act in the best interest of the Company and its shareholders. +In addition, each award granted pursuant to the 2021 Incentive Plan (including awards granted to our NEOs) is conditioned on repayment or forfeiture in accordance with applicable laws, our Company policies and any relevant provisions in the related award agreements. Further, under the terms of our NEOs employment agreements, any equity awards granted, any proceeds of any equity awards that previously have been sold, transferred or otherwise disposed of, and any annual incentive award will be subject to clawback by us, now or in the future, under the Dodd -Frank Act and the Sarbanes -Oxley Act, each as amended, and their rules, regulations and binding, published guidance. +Stock Ownership Guidelines for Executive Officers +We believe it is important for our executive officers to align their financial interests with those of our stockholders. Accordingly, effective April 27, 2022, our Board of Directors adopted a formal stock ownership policy that requires our CEO to achieve a stock ownership level equal to the value of common stock that is five times the value of his annual base salary within five years of the effective date of such stock ownership policy. The Compensation Committee also designated our other executive officers that are subject to Section 16 reporting obligations under the Exchange Act, to be subject to the stock ownership policy. The stock ownership level for our other NEOs and Section 16 officers is three times the value of their respective annual base salaries to be achieved within five years of the effective date of our stock ownership policy. Messrs. Craine and Sluiter have met the company’s share ownership guidelines. Messrs. Reinhart, Hodges and Rucker have not been in their position long enough to be required to meet the minimum stock ownership reaffirmed guidelines; however, all are on track to do so within the prescribed timeframe through expected grants. +Our non -employee directors are also subject to the stock ownership policy discussed above under “Stock Ownership Guidelines for Directors.” +Anti-Hedging and Pledging Policies +We have a policy prohibiting directors, executive officers and certain other designated employees from speculative trading in our securities, including hedging transactions, short selling, and trading in put options, call options, swaps or collars, or holding our securities in margin accounts. We also have a policy prohibiting directors, executive officers and certain other designated employees from pledging Gulfport securities. To our knowledge, all individuals follow these policies. +Termination and Change of Control Benefits +As noted above, certain of our NEOs are (or were formerly) party to an employment agreement with the Company which provides (or provided) for certain payments and benefits in the event of a termination of such NEO under specific circumstances. The NEOs’ employment agreements are designed to avoid distraction potentially detrimental to stockholder value upon a change in control and to enhance protection for the NEOs in connection with such events. These agreements (and the severance payments referenced below) are described in more detail under “NEO Employment Agreements and Termination and Change of Control Benefits.” +Perquisites and Other Personal Benefits +We provide certain of our NEOs with a limited number of perquisites or other personal benefits, primarily consisting of life insurance premiums and Company -sponsored sporting events tickets. The Company does not offer any excessive perquisites to executives that are not generally provided to other non -executives . We believe these limited benefits help provide a competitive compensation package. The value of these benefits is disclosed in the “Summary Compensation Table.” +2024 PROXY STATEMENT 39 +EXECUTIVE SUMMARY +The Company does not have any private or chartered aircraft arrangements. We restrict personal use of Company -owned or chartered aircraft by our executive officers and other employees, as well as members of our Board of Directors. Our aircraft use policy requires that any personal use of a chartered aircraft by any NEO be reported as a perquisite, based on the aggregate incremental value of such personal use. There was no business or personal use of Company -owned or chartered aircraft in 2023. +Accounting Implications of Executive Compensation Policy +We are required to recognize compensation expense of all stock -based awards pursuant to the provisions of FASB ASC Topic 718, “Compensation -Stock Compensation.” Under U.S. generally accepted accounting principles, or GAAP, only vested shares are included in basic shares outstanding. Also, under GAAP, non -vested shares are included in diluted shares outstanding when the effect is dilutive. +The Compensation Committee believes that linking a large portion of our executive officers’ compensation to both performance -based long -term equity incentive awards and performance -based bonus arrangements, with meaningful performance metrics, appropriately aligns our executives’ interests with those of our stockholders and are consistent with market practices. The Compensation Committee also believes that our current compensation policies and practices enhance retention of executive talent through multi -year vesting of stock awards and discourage unnecessary and excessive risk taking. The Compensation Committee further believes that our other compensation policies and practices, such as our policy prohibiting pledging and hedging of our stock by our executive officers and directors, as well as the lack of significant perquisites and absence of pension or supplemental retirement benefits (aside from those afforded under our broad -based 401(k) plan) for our executive officers are consistent with prudent compensation philosophy and the interests of our stockholders. The Compensation Committee will continue to consider the outcome of our stockholders’ future “Say -On-Pay ” votes when making compensation decisions for our NEOs. +Compensation Committee Report +The Compensation Committee has reviewed and discussed the foregoing Compensation Discussion and Analysis with management. Based on its review and discussion with management, the Compensation Committee recommended that the Compensation Discussion and Analysis be included in this proxy statement. +Respectfully submitted by the Compensation Committee: +Jason Martinez +David Reganato +Mary Shafer -Malicki +David Wolf +Dated: April 5, 2024 +Compensation Committee Interlocks and Insider Participation +None of Messrs. J. Martinez (Chair), Reganato, B. Martinez, Ms. Shafer -Malicki , or Mr. Wolf, representing all the directors who served on the Compensation Committee during the past fiscal year, is or has ever been an officer or employee of ours or has engaged in any related party transaction in which our Company was a participant. None of our executive officers during the past fiscal year serves, or has served during the past fiscal year, as a member of the Board of Directors or Compensation Committee of any other company that has one or more executive officers serving, or that has served during the past fiscal year, as a member of our Board of Directors or Compensation Committee. +40 2024 PROXY STATEMENT +Compensation Tables +SUMMARY COMPENSATION TABLE +The following table provides information concerning compensation of our NEOs for the fiscal years ended December 31, 2023, December 31, 2022, and December 31, 2021. +Name and Principal Position +Year +Salary +($) +Bonus +($) (1) +Stock +Awards +($) (2) +Non-Equity +Incentive Plan +Compensation +($) (3) +All Other +Compensation +($) (4) +Total +($) +John Reinhart (5) +2023 +$706,133 +— +$3,236,509 +$1,554,300 +$ 25,267 +$5,522,209 +President and Chief Executive Officer +2022 +— +— +— +— +— +— +2021 +— +— +— +— +— +— +Michael Hodges (6) +2023 +$345,106 +— +$1,806,095 +$ 800,250 +$ 21,440 +$2,972,891 +Executive Vice President and +2022 +— +— +— +— +— +— +Chief Financial Officer +2021 +— +— +— +— +— +— +Patrick Craine (7) +2023 +$481,999 +— +$1,300,072 +$ 720,225 +$ 24,756 +$2,527,052 +Chief Legal and Administrative Officer +2022 +$462,744 +— +— +$ 503,370 +$ 26,406 +$ 992,520 +2021 +$438,911 +$435,000 +$5,732,655 +$1,698,590 +$ 24,426 +$8,329,582 +Matthew Rucker (8) +2023 +$309,938 +— +$1,170,045 +$ 482,625 +$ 3,746 +$1,966,354 +Senior Vice President of Operations +2022 +— +— +— +— +— +— +2021 +— +— +— +— +— +— +Michael Sluiter (9) +2023 +$387,592 +— +$1,083,375 +$ 482,625 +$ 24,787 +$1,978,379 +Senior Vice President of +2022 +$371,470 +— +— +$ 269,892 +$ 26,076 +$ 667,438 +Reservoir Engineering +2021 +$358,621 +$360,000 +$1,146,561 +$ 838,782 +$ 24,582 +$2,728,546 +Timothy Cutt (10) +2023 +$229,005 +— +— +— +$ 156,136 +$ 385,141 +Former Chief Executive Officer +2022 +$772,288 +— +$4,546,228 +$1,120,980 +$ 8,048 +$6,447,544 +and Current Board Chair +2021 +$447,119 +$ 75,000 +$2,788,998 +$ 509,279 +$ 3,003 +$3,823,399 +William Buese (11) +2023 +$229,323 +— +— +— +$1,137,244 +$1,366,567 +Former Chief Financial Officer +2022 +$462,744 +— +$ 330,545 +$ 559,300 +$ 29,649 +$1,382,238 +2021 +$266,327 +$ 75,000 +$2,385,104 +$ 275,011 +$ 15,036 +$3,016,478 +(1) The amounts in this column reflect (i) one -time cash inducement bonuses paid to Mr. Cutt ($75,000) and Mr. Buese ($75,000) upon joining the Company and (ii) the service -based cash “Standard Award” made to certain of our NEOs on March 27, 2020 that vested in 2021 as previously defined and reported in the Company’s Amended Annual Report on Form 10 -K /A, filed with the SEC on April 30, 2021 (the “2020 10 -K /A”). +(2) The amount reported in the Stock Awards column reflects the fair value of the applicable award of restricted stock, performance -based restricted stock units or time -based restricted stock units on the grant date. The amounts were calculated in accordance with FASB ASC Topic 718 using certain assumptions, as set forth in Note 1 and Note 8 to our consolidated financial statements for the fiscal year ended December 31, 2023 under the headings “Summary of Significant Accounting Policies — Accounting for Stock -based Compensation” and “Stock -Based Compensation,” respectively, included in our Annual Report on Form 10 -K , filed with the SEC on February 28, 2024. Restricted stock unit values are based on the closing price of the Company’s common stock on the grant date. In valuing the performance -based restricted stock unit awards, the Company used a Monte Carlo simulation. Performance -based restricted stock units vest based on performance and continued service over a three -year performance period. (The maximum award opportunity for each applicable NEO for the 2023 performance -based restricted stock unit awards as of the grant date is as follows: Mr. Reinhart $3,204,560, Mr. Hodges $2,012,332, Mr. Craine $1,459,018, Mr. Rucker $1,313,092 and Mr. Sluiter $1,215,890. +(3) The amounts in this column reflect performance -based annual incentive bonuses granted under our 2023, 2022, and 2021 STI Plans. +(4) The table below provides additional information on the amounts reported in the All Other Compensation column of the Summary Compensation column for 2023. +(5) Mr. Reinhart joined the Company as its President and Chief Executive Officer and Director on January 24, 2023. Mr. Reinhart does not receive compensation for his service as Director. +(6) Mr. Hodges joined the Company as its Executive Vice President and Chief Financial Officer on April 3, 2023. +(7) Mr. Craine was appointed as our General Counsel and Corporate Secretary on May 20, 2019, and assumed the role of Chief Legal and Administrative Officer on August 5, 2021. +(8) Mr. Rucker joined the Company as its Senior Vice President of Operations on March 1, 2023. +(9) Mr. Sluiter joined the Company as its Senior Vice President of Reservoir Engineering on December 3, 2018. +(10) Mr. Cutt was appointed as our Interim Chief Executive Officer and Board Chair effective May 17, 2021, and assumed the role of Chief Executive Officer and Board Chair on September 2, 2021. The Company’s Board of Directors appointed John Reinhart to succeed Mr. Cutt as the Company’s Chief Executive Officer, effective as of January 24, 2023. Mr. Cutt continued as an employee of the Company during a transition period until March 1, 2023. Mr. Cutt continued to serve as Board Chair and received a pro -rated retainer of $104,514 for his services as a non -employee Director. +(11) Mr. Buese was appointed as our Executive Vice President and Chief Financial Officer on May 17, 2021. He served as Chief Financial Officer until April 3, 2023, and then transitioned to his role as advisor until his last day of employment on May 3, 2023. +2024 PROXY STATEMENT 41 +Compensation Tables +ALL OTHER COMPENSATION TABLE +Name +Year +Severance/ +Termination +Payments +($) +Company +Contributions +to Retirement +Plans +($) (1) +Other +Perquisites +and Benefits +($) (2) +Total +John Reinhart +2023 +— +$16,500 +$8,767 +$ 25,267 +Michael Hodges +2023 +— +$16,500 +$4,940 +$ 21,440 +Patrick Craine +2023 +— +$16,500 +$8,256 +$ 24,756 +Matthew Rucker +2023 +— +— +$3,746 +$ 3,746 +Michael Sluiter +2023 +— +$16,681 +$8,106 +$ 24,787 +Timothy Cutt (3) +2023 +$ 154,849 +— +$1,287 +$ 156,136 +William Buese +2023 +$1,120,048 +$14,079 +$3,118 +$1,137,244 +(1) This column represents Company contributions to the 401(k) plan in 2023. +(2) This column represents the value of other benefits provided to the NEOs in 2023 and includes amounts for primarily group term life insurance premiums and long -term disability imputed income, as well as other de minimis perquisites and benefits. This also includes $750 for tickets to sporting events received by Mr. Reinhart. +(3) Amount in Severance/Termination payment column reflects the payment of Mr. Cutt’s pro -rata portion of his target annual bonus for fiscal year 2023 per the terms of his transition agreement. +42 2024 PROXY STATEMENT +Compensation Tables +2023 GRANTS OF PLAN -BASED AWARDS +The following table provides information concerning each grant of an award made to our NEOs in the fiscal year ended December 31, 2023 under any Company plan. +Estimated Future Payouts Under +Non-Equity Incentive Plan Awards +Estimated Future Payouts under +Equity Incentive Plan Awards (1) +All Other +Stock Awards: +Number of +Shares of +Stock or Units +(#) (2) +Grant Date +Fair Value of +Stock +Awards +($) (3) +Name +Grant +Date +Threshold +($) +Target +($) +Maximum +($) +Threshold +(#) +Target +(#) +Maximum +(#) +John Reinhart +— +$471,000 +$942,000 +$1,884,000 +— +— +— +— +— +Chief Executive +Officer +1/24/2023 +— +— +— +— +— +— +20,546 +$1,634,229 +1/24/2023 +— +— +— +7,705 +30,819 +61,638 +— +$1,602,280 +Michael Hodges +— +$242,500 +$485,000 +$ 970,000 +— +— +— +— +— +Chief Financial Officer +4/3/2023 +— +— +— +— +— +— +10,062 +$ 799.929 +4/3/2023 +— +— +— +3,774 +15,094 +30,188 +— +$1,006,166 +Patrick Craine +— +$218,250 +$436,500 +$ 873,000 +— +— +— +— +— +Chief Legal and Administrative Officer +3/3/2023 +— +— +— +— +— +— +7,299 +$ 570,563 +3/3/2023 +— +— +— +3,025 +12,098 +24,196 +— +$ 729,509 +Matthew Rucker +— +$146,250 +$292,500 +$ 585,000 +— +— +— +— +— +Senior Vice President of Operations +3/3/2023 +— +— +— +— +— +— +6,569 +$ 513,499 +3/3/2023 +— +— +— +2,722 +10,888 +21,776 +— +$ 656,546 +Michael Sluiter +— +$146,250 +$292,500 +$ 585,000 +— +— +— +— +— +Senior Vice President of Reservoir +3/3/2023 +— +— +— +— +— +— +6,082 +$ 475,430 +3/3/2023 +— +— +— +2,521 +10,082 +20,164 +— +$ 607,945 +Timmothy Cutt +— +— +— +— +— +— +— +— +— +Former Chief Executive Officer +Bill Buese +— +— +— +— +— +— +— +— +— +Former Chief Financial Officer +(1) Reflects awards of performance -based restricted stock units granted to certain of our NEOs in 2023 under the 2021 Stock Incentive Plan. +(2) Reflects awards of time -based restricted stock units granted to certain of our NEOs in 2023 under the 2021 Incentive Plan. +(3) The amounts reported for performance -based and time -based restricted stock units in this column reflect the fair value of the applicable awards on the grant date. The amounts were calculated in accordance with FASB ASC Topic 718 using certain assumptions, as set forth in Note 1 and Note 8 to our consolidated financial statements for the fiscal year ended December 31, 2023 under the headings “Summary of Significant Accounting Policies — Accounting for Stock -based Compensation” and “Stock -Based Compensation,” respectively, included in our Annual Report on Form 10 -K , filed with the SEC on February 28, 2024. +2024 PROXY STATEMENT 43 +Compensation Tables +OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR -END +The following table provides information concerning equity awards granted to our NEOs that were outstanding as of December 31, 2023. +Stock Awards +Name +Number of +Shares or +Units of Stock +That Have +Not Vested (1) +(#) +Market Value of +Shares or +Units of Stock +That Have +Not Vested (2) +($) +Equity Incentive +Plan Awards: +Number of +Unearned +Shares, Units +or Other Rights +That Have +Not Vested +(#) (3) +Equity Incentive +Plan Awards: +Market of +Payout Value of +Unearned Shares, +Units or Other +Rights That Have +Not Vested +($) (2) +John Reinhart +20,546 +$2,736,727 +30,819 +$4,105,091 +Michael Hodges +10,062 +$1,340,258 +15,094 +$2,010,521 +Patrick Craine +21,206 +$2,824,639 +74,809 +$9,964,559 +Matthew Rucker +6,569 +$ 874,991 +10,888 +$1,450,282 +Michael Sluiter +8,864 +$1,180,685 +22,624 +$3,013,517 +Timothy Cutt +27,901 +$3,716,413 +59,703 +$7,952,440 +Bill Buese +— +— +17,329 +$2,308,223 +(1) Represents awards of time -based restricted stock units granted to certain of our NEOs under the 2021 Incentive Plan, each of which vest annually in three equal installments over the three -year period commencing as of the grant date, subject to continued service through each applicable vesting date (except for Mr. Cutt’s July 21, 2021 grant, whose time -based restricted stock units vest bi -annually in eight equal installments over the four -year period commencing as of the grant date, subject to continued service through each applicable vesting date). +(2) The market value of restricted stock units that have not vested is based on the closing price of $133.20 per share of our common stock on the NYSE on December 29, 2023, the last trading day of 2023. +(3) Represents awards of performance -based restricted stock units granted to certain of our NEOs under the 2021 Incentive Plan, each of which vest based on the Company’s achievement of certain absolute and relative TSR metrics and the applicable NEOs’ continued service over a three -year performance period (except for Mr. Cutt’s July 21, 2021 grant, whose service -vesting date is May 17, 2022). Such performance -based restricted stock units are shown above at the target level. +44 2024 PROXY STATEMENT +Compensation Tables +2023 STOCK VESTED +The following table provides the number of shares acquired upon vesting of restricted stock awards for certain of our NEOs. +Stock Awards +Name +Number +of Shares +Acquired on +Vesting +(#) +Value +Realized on +Vesting (1) +($) +John Reinhart +— +— +Michael Hodges +— +— +Patrick Craine +13,908 +$1,479,950 +Matthew Rucker +— +— +Michael Sluiter +2,781 +$ 295,926 +Timothy Cutt +13,950 +$1,277,390 +William Buese (2) +13,287 +$1,175,866 +(1) The amounts reflected in this column represent the market value of the underlying Common Shares as of the vesting date. If the vesting date was not a trading day, the value is based on the closing price per share of our common stock on the last trading day prior to the vesting date. +(2) Reflects the accelerated vesting of all outstanding time -vesting restricted stock units at his termination date of May 3, 2023. See ‘Buese Termination’ paragraph in ‘Termination, Resignation or Change of Control’ section below for further details. +2024 PROXY STATEMENT 45 +Benefit Plans +401(k) Plan +We maintain a retirement savings plan, the 401(k) Plan, for the benefit of our eligible employees who have attained the age of 18. Currently, employees may elect to defer their compensation up to the statutorily prescribed limit. During the plan year, we make a safe -harbor contribution based on a formula that provides a Company match of 100% of the first 6% of eligible compensation. We also may make an additional, discretionary contribution based on each eligible employee’s eligible annual compensation for the prior calendar year. All contributions made by us on behalf of an employee are 100% vested when contributed. The 401(k) Plan is intended to qualify under Sections 401(a) and 501(a) of the Code. As such, contributions to the 401(k) Plan and earnings on those contributions are not taxable to the employees until distributed from the 401(k) Plan, and all contributions are deductible by us when made. +2021 STOCK INCENTIVE PLAN +On May 17, 2021, our Board adopted the Gulfport Energy Corporation 2021 Stock Incentive Plan (the “2021 Incentive Plan”) and authorized and reserved 2,828,123 shares of Gulfport’s common stock for issuance to Gulfport’s employees (including our NEOs), consultants and non -employee directors pursuant to equity incentive awards to be granted under the 2021 Incentive Plan, which may be in the form of incentive stock options, nonqualified stock options, restricted stock, restricted stock units, stock appreciation rights and performance awards or any combination of the foregoing. +The plan administrator may at any time amend or terminate the Annual Incentive Plan in whole or in part. +Our Board of Directors has delegated its authority to administer the Annual Incentive Plan to the Compensation Committee, to whom we refer as the plan administrator. The plan administrator has the authority to administer the Annual Incentive Plan and to exercise all the powers and authorities either specifically granted to it under the Annual Incentive Plan or necessary or advisable in the administration of the Annual Incentive Plan, including (but not limited to) the following: +• to interpret the Annual Incentive Plan and any award; +• to prescribe rules relating to the Annual Incentive Plan; +• to determine the persons to receive awards; +• to determine the terms, conditions, restrictions and performance criteria, including performance factors and performance targets, relating to any award; +• to accelerate an award that is designed not to be deferred compensation subject to Code Section 409A (after the attainment of the applicable performance target or targets); +• to adjust performance targets in recognition of specified events such as unusual or non -recurring events affecting us or our financial statements, including certain asset dispositions, cessation of operations resulting from a natural disaster, or in response to changes in applicable laws, regulations, or accounting principles as specified in the Annual Incentive Plan or in the performance targets established for any performance period; +• to waive restrictive conditions for an award (but not performance targets); and +• to make any other determinations that may be necessary or advisable for administration of the Annual Incentive Plan. +46 2024 PROXY STATEMENT +Benefit Plans +EQUITY COMPENSATION PLAN INFORMATION +The following table sets forth, as of December 31, 2023, certain information with respect to all compensation plans under which equity securities are authorized for issuance. +Plan Category +Number of +securities to +be issued upon +exercise of +outstanding +options, +warrants and +rights (a) (1)(2)(3) +Weighted +average +exercise price +of outstanding +options, +warrants and +rights (b) (3) +Number of +securities +remaining +available for +future issuance +under equity +compensation +plans excluding +securities +reflected in +column (a) +Equity compensation plans approved by security holders (1) +449,180 +$ — +2,381,271 +(1) Refers to the 2021 Stock Incentive Plan. +(2) Includes an aggregate of 449,180 unvested restricted stock units and shares of unvested restricted stock granted under the 2021 Stock Incentive Plan. +(3) No options were outstanding as of December 31, 2023, and neither restricted stock units nor shares of restricted common stock have an exercise price. +Former Chief Executive Officer Offer Letter and Employment Agreement +On April 29, 2022, we entered into an employment agreement with Mr. Cutt to serve as our Chief Executive Officer and Executive Chair of the Board of Directors. +Pursuant to the employment agreement, the term of Mr. Cutt’s service as Chief Executive Officer shall continue until such time as either Mr. Cutt or the Company gives notice of intent to terminate. Mr. Cutt will continue to serve as Board Chair following the termination of his employment as Chief Executive Officer (subject to the Board’s ability to remove him at any time). The employment agreement also provides for, among other things, (i) an annual base salary of $785,000, (ii) eligibility to receive an annual bonus with a target bonus opportunity of 120% of base salary; (iii) eligibility for annual grants of equity awards as determined in the sole discretion of the Compensation Committee pursuant to the Company’s equity compensation plans; and (iv) benefits that are customarily provided to similarly situated executives of the Company. +Mr. Cutt’s employment agreement also contains a one -year post -employment non -solicitation clause and standard confidentiality, trade secrets and cooperation provisions. +On January 24, 2023, we entered into a Transition and Services Agreement (“TSA”) with Mr. Cutt where he transitioned employment from Chief Executive Officer to Executive Chair of the Board. The transition period was from January 24, 2023, through March 1, 2023 (“Service Period”), during which time Mr. Cutt was employed by the Company as Executive Chair of the Board. +Pursuant to the terms of the PSA, Mr. Cutt received the same base salary he had as Chief Executive Officer, his annual bonus for fiscal year 2022 and a pro -rated portion of his target annual bonus for fiscal year 2023. +The TSA clarifies that Mr. Cutt’s outstanding equity awards granted during his tenure as Chief Executive Officer shall continue to be eligible to vest following the end of his service as Chief Executive Officer or Executive Chair of the Board in accordance with the vesting provisions contained in the applicable RSU Award Agreements and the PSU Award Agreements as long as Mr. Cutt continues to provide services to the Company as a member of the Board. +Former Chief Financial Officer Employment Agreement +On May 17, 2021, we entered into an employment agreement with Mr. Buese to serve as our Executive Vice President and Chief Financial Officer. +Pursuant to the employment agreement, the term of Mr. Buese’s service as Executive Vice President and Chief Financial Officer shall continue until such time as either Mr. Buese or the Company gives notice of intent to terminate. The employment agreement also provides for, among other things, (i) an annual base salary of $450,000 (increased to $470,000 in 2022), (ii) eligibility to +2024 PROXY STATEMENT 47 +Benefit Plans +receive an annual bonus with a target bonus opportunity of 90% of base salary; (iii) eligibility for annual grants of equity awards as determined in the sole discretion of the Compensation Committee pursuant to the Company’s equity compensation plans; and (iv) benefits that are customarily provided to similarly situated executives of the Company. +Mr. Buese’s employment agreement also contains a one -year post -employment non -solicitation clause and standard confidentiality, trade secrets and cooperation provisions. +On May 3, 2023, pursuant to the terms of Mr. Buese’s employment agreement, Mr. Buese received termination compensation consisting of the sum of his base salary, his target annual bonus, and the pro -rata portion of his annual bonus. Additionally, Mr. Buese received payment of any paid time off accrued but unused, payment equal to monthly COBRA premium for twelve months, an acceleration of all unvested RSUs and pro -rata vesting of PSUs at the end of the respective performance periods. +NEO Employment Agreements and Termination and Change of Control Benefits +Our NEOs are parties to an employment agreement with the Company. +Pursuant to the employment agreements with Messrs. Reinhart, Hodges, Craine, Rucker, and Sluiter (collectively, the “Employment Agreements”, and such individuals, the “Covered NEOs”), each current employment agreement provides for an initial term that extends through December 31, 2026; provided that the term will automatically renew for successive one -year terms unless the Company or the Covered NEO gives written notice not to renew at least 90 days before the end of the initial term or any renewal term. If a “change of control” (as described in the applicable Employment Agreement) occurs during the term thereof, the term will be extended to the later of the original expiration date of the term or the date that is 24 months after the effective date of the change of control. +The Employment Agreements provide each Covered NEO with, among other things: (i) an annual base salary, (ii) eligibility to earn a target annual bonus under the Company’s Annual Incentive Plan of base salary, (iii) eligibility for annual grants of equity awards as determined in the sole discretion of the Compensation Committee pursuant to the Company’s equity compensation plans, and (iv) benefits that are customarily provided to similarly situated executives of the Company. +In addition, our Covered NEOs will be entitled to receive (or have already received) specified payments and benefits upon certain termination events pursuant to the Employment Agreements, including termination following a change of control. The Compensation Committee believes that these provisions encourage our Covered NEOs to remain in our employment, as applicable, in the event of a change of control of the Company and during circumstances which indicate that a change of control might occur. The Compensation Committee believes termination and change of control benefits are important in maintaining strong leadership and in encouraging retention in these situations and encourages our Covered NEOs to act in the best interests of stockholders without distraction based on uncertainty regarding their employment status, as applicable. Under the Employment Agreements, if a Covered NEO’s employment is terminated without “cause” by the Company or by the applicable Covered NEO for “good reason” during such time that is not within the 24 -month period following a “change of control” (as such terms are defined in the Employment Agreements), such Covered NEO will be entitled to severance compensation equal to: +• 100% of annual base salary and target annual bonus; +• pro -rata target annual bonus; +• pro -rated vesting of the Covered NEO’s unvested equity awards (with performance award vesting based on performance through the termination date); however, see “RSU and PSU Grant Agreements” for terms applicable to equity awards; and +• a lump sum payment equal to the Covered NEO’s monthly COBRA premium for a 12 -month period. +If, however, such Covered NEO’s employment is terminated without cause by the Company or by the Covered NEO for good reason, in each case, within 24 months following a change of control, such Covered NEO will instead be entitled to severance compensation equal to: +• 200% of sum of annual base salary plus target annual bonus (300% for Mr. Reinhart); +• pro -rated target annual bonus; +48 2024 PROXY STATEMENT +Benefit Plans +• immediate vesting of the Covered NEO’s unvested equity awards (with performance award vesting based on performance through the termination date); however, see “RSU and PSU Grant Agreements” for terms applicable to equity awards; and +• a lump sum payment equal to the Covered NEO’s monthly COBRA premium for an 18 -month period. +Under the NEO Employment Agreements: +“Good reason” is generally defined as (i) the elimination of the Covered NEO’s position, a material reduction in the duties and/or reassignment of the Covered NEO to a new position of materially less authority; (ii) a material reduction in the Covered NEO’s base salary, in either case, subject to a cure period of 30 days; (iii) the relocation of the NEO’s principal place of employment by more than 50 miles. +“Cause” is generally defined as (i) the Covered NEO’s willful and continued failure to perform substantially such Covered NEO’s duties with the Company (other than any failure resulting from incapacity due to physical or mental illness) or (ii) the Covered NEO’s willful engaging in illegal conduct or gross misconduct which is materially and demonstrably injurious to the Company. +Severance benefits payable under the Employment Agreements are generally conditioned on timely execution of a waiver and release of claims. +Each Employment Agreement also contains a one -year post -employment non -solicitation clause and standard confidentiality, trade secrets and cooperation provisions. +RSU and PSU Grant Agreements: +Mr. Reinhart on January 24, 2023, Messrs. Craine, Rucker, and Sluiter on March 3, 2023, and Mr. Hodges on April 3, 2023, each received an award of time -based restricted stock units (“RSUs”) and performance -based restricted stock units (“PSUs”) under the 2021 Stock Incentive Plan. +Pursuant to the applicable award agreements, upon the applicable NEO’s termination of employment or service for cause, any unvested RSUs or PSUs will be immediately forfeited for no consideration. +Upon a termination of the applicable NEO’s employment or service due to death or “disability”, by the Company without “cause” (each as defined in the 2021 Incentive Plan) or due to a resignation by the applicable NEO for “good reason” (as defined in the applicable award agreement), (i) any unvested RSUs will accelerate and fully vest, and (ii) a prorated portion of the PSUs will vest based on the actual achievement of the performance conditions to be determined at the expiration of the performance period, and any remaining unvested PSUs will be forfeited (provided, that if the applicable NEO is terminated by the Company without cause or resigns for good reason within the first 18 months of the performance period, the Compensation Committee will have sole discretion whether the PSUs will accelerate and vest in such manner. +Upon the occurrence of a “change in control” (as defined in the 2021 Incentive Plan), to the extent the RSUs or PSUs, as applicable, are not assumed by the surviving entity, (i) any unvested RSUs will accelerate and fully vest, and (ii) the applicable NEO will become vested in 100% of the target award of PSUs or, if greater, the percentage of the target award of PSUs earned based on the actual achievement of the performance conditions to be determined as if the change in control was the last day of the performance period (except that the TSR for the Company and each of the peer companies will be determined using the closing price as of the closing date of the change in control compared to the reference value). +Upon the occurrence of a change in control, to the extent the RSUs or PSUs, as applicable, are assumed by the surviving entity, (i) upon the termination of the applicable NEO’s employment or service due to death or disability, by the Company without cause or by the applicable NEO for good reason within the 24 month period following such change in control, any unvested RSUs will accelerate and fully vest, and (ii) the PSUs will be converted, as of the date of such change in control, into time -based restricted stock units (the “Converted RSUs”), subject to the applicable NEO’s continuous employment or service through the date of such change in control, with the number of PSUs to be converted equal to 100% of the target award of PSUs or, if greater, the percentage of the target award of PSUs earned based on the actual achievement of the performance conditions to be determined as if the change in control was the last day of the performance period (except that the TSR for the Company and each of the peer companies will be determined using the closing price as of the closing date of the change in control compared to the reference value), and 100% of the Converted RSUs will vest, if at all, on the last day of the performance period, subject to the applicable +2024 PROXY STATEMENT 49 +Benefit Plans +NEO’s continuous employment or service through such date; provided, that if the applicable NEO’s employment or service is terminated due to death or disability, by the Company without cause or by the applicable for good reason following such change in control, 100% of the Converted RSUs will vest as of the date of such termination. +In the event of (i) a change in the composition of the Board such that, for a period of 30 days, the majority of the members of the Board are no longer considered “independent” (as described in the applicable award agreement) or (ii) any stockholder becomes the beneficial owner of more than 75% of the total combined voting power of all classes of stock of the Company (each such event, a “Special CiC Event”), (x) any unvested RSUs will accelerate and fully vest, and (y) the applicable NEO will become vested in 100% of the target award of PSUs or, if greater the percentage of the target award of PSUs earned based on the actual achievement of the performance conditions to be determined as of the Special CiC Event (determined as if the Special CiC Event was the last day of the performance period). +50 2024 PROXY STATEMENT +Benefit Plans +Termination, Resignation or Change of Control +The following tables provide information regarding potential payments to each of our NEOs as of December 31, 2023, in connection with certain termination events, including a termination related to a change of control of the Company. +Benefits and Payments Upon Termination (1) +Termination +Due to +Death or +Disability +Termination +by the Company +Without +Cause or by +the NEO for +Good Reason +(a “Qualifying +Termination”) +Termination +by the +Company +for Cause +Qualifying +Termination +Within +24 Months +Following +Change of +Control +Change in +Control with +no Qualifying +Termination (2) +John Reinhart +Cash Severance Payments (3) +— +$ 2,669,000 +— +$ 6,123,000 +— +Accelerated Vesting of Equity Awards: (4) +Unvested RSUs +$ 2,736,727 +$ 2,736,727 +— +$ 2,736,727 +$ 2,736,727 +Unvested PSUs +— +— +— +$ 4,105,091 +$ 4,105,091 +COBRA Payments (5) +— +$ 18,579 +— +$ 27,868 +— +Total +$ 2,736,727 +$ 5,424,306 +— +$12,992,686 +$ 6,841,818 +Michael Hodges +Cash Severance Payments (3) +— +$ 1,455,000 +— +$ 2,425,000 +— +Accelerated Vesting of Equity Awards: (4) +Unvested RSUs +$ 1,340,258 +$ 1,340,258 +— +$ 1,340,258 +$ 1,340,258 +Unvested PSUs +— +— +— +$ 2,010,521 +$ 2,010,521 +COBRA Payments (5) +— +$ 22,686 +— +$ 34,030 +— +Total +$ 1,340,258 +$ 2,817,945 +— +$ 5,809,809 +$ 3,350,779 +Patrick Craine +Cash Severance Payments (3) +— +$ 1,358,000 +— +$ 2,279,500 +— +Accelerated Vesting of Equity Awards: (4) +Unvested RSUs +$ 2,824,639 +$ 2,824,639 +— +$ 2,824,639 +$ 2,824,639 +Unvested PSUs +$ 7,302,304 +$ 7,302,304 +— +$ 9,964,559 +$ 9,964,559 +COBRA Payments (5) +— +$ 22,833 +— +$ 34,250 +— +Total +$10,126,944 +$11,507,777 +— +$15,102,948 +$12,789,198 +Matthew Rucker +Cash Severance Payments (3) +— +$ 975,000 +— +$ 1,657,500 +— +Accelerated Vesting of Equity Awards: (4) +Unvested RSUs +$ 874,991 +$ 874,991 +— +$ 874,991 +$ 874,991 +Unvested PSUs +— +— +— +$ 1,450,282 +$ 1,450,282 +COBRA Payments (5) +— +$ 22,732 +— +$ 34,098 +— +Total +$ 874,991 +$ 1,872,677 +— +$ 4,016,802 +$ 2,325,272 +2024 PROXY STATEMENT 51 +Benefit Plans +Benefits and Payments Upon Termination (1) +Termination +Due to +Death or +Disability +Termination +by the Company +Without +Cause or by +the NEO for +Good Reason +(a “Qualifying +Termination”) +Termination +by the +Company +for Cause +Qualifying +Termination +Within +24 Months +Following +Change of +Control +Change in +Control with +no Qualifying +Termination (2) +Michael Sluiter +Cash Severance Payments (3) +— +$ 975,000 +— +$1,657,500 +— +Accelerated Vesting of Equity Awards: (4) +Unvested RSUs +$1,180,685 +$ 1,180,685 +— +$1,180,685 +$1,180,685 +Unvested PSUs +$ 904,588 +$ 904,588 +— +$3,013,517 +$3,013,517 +COBRA Payments (5) +— +$ 22,732 +— +$ 34,098 +— +Total +$2,085,573 +$3,083,005 +— +$5,885,800 +$4,194,202 +(1) Information in this table assumes a termination date of December 31, 2023, and a price per share of our common stock of $133.20 (the closing market price per share on December 29, 2023, the last trading day of 2023), and applies the terms of the NEOs’ compensation arrangements as of December 31, 2023. Performance share units are pro -rated from the Company’s May 17, 2021, emergence date through December 31, 2023. Performance -based bonuses are calculated using 100% achievement for illustration, though payouts may vary based on actual results. +(2) Represents the aggregate value of the applicable NEO’s 2023 equity awards that will accelerate on a Special CiC Event. See “RSU and PSU Grant Agreements” above. +(3) Represents the aggregate cash severance payments payable to the NEO (calculated based on the base salary and target annual bonus in effect as of December 31, 2023) in accordance with the terms of the applicable agreement, assuming a termination date of December 31, 2023. +(4) Represents the aggregate value of the applicable NEO’s accelerated equity awards payable to the NEO in accordance with the terms of the applicable agreement, assuming a termination date of December 31, 2023. +(5) Represents the aggregate COBRA payments payable to the NEO in accordance with the terms of the applicable agreement, assuming a termination date of December 31, 2023. +Cutt Transition +On January 18, 2023, Timothy Cutt resigned as Chief Executive Officer of the Company and was appointed as Non -Executive Chair of the Company. Mr. Cutt remained as Non -Executive Chair of the Company until March 1, 2023. Mr. Cutt continues to serve as Board Chair following his separation on March 1, 2023. Per the terms of his transition agreement, Mr. Cutt received (i) payment of his base salary during the transition period, (ii) payment of his annual bonus for fiscal year 2022 in the amount of $1,120,980, and (iii) payment of the pro -rata portion of his target annual bonus for fiscal year 2023 in the amount of $154,849. Any outstanding RSUs and PSUs held by Mr. Cutt will continue to vest in accordance with the vesting provisions contained in the applicable award grant agreements while he continues to serve the Company as a member of the Board. +52 2024 PROXY STATEMENT +Benefit Plans +Buese Termination +William Buese was terminated as Executive Vice President and Chief Financial Officer of the Company on April 3, 2023. Mr. Buese remained with the Company as an adviser until his termination on May 3, 2023. The following table provides payments and benefits associated with Mr. Buese’s termination pursuant to his employment agreement. +Benefits and Payments ($) +Amount +($) +Base Salary/Annual Bonus/Pro-rata Annual Bonus (1) +$1,098,384 +Accelerated Vesting of Restricted Stock Units (2) +$1,175,866 +Performance-Based Restricted Stock Units (3) +$1,532,057 +COBRA Payment +$ 21,664 +Total +$3,827,971 +(1) Mr. Buese received a lump sum equivalent of his current base salary and annual bonus in an amount of $940,000 and a pro -rata portion of his annual bonus for 2023 in an amount of $158,384. +(2) Vesting of 13,287 shares of time -vesting restricted stock was accelerated at the time of Mr. Buese’s termination. The amount shown reflects a price of $88.41, which was the closing price of the Company’s common stock at May 3, 2023, Mr. Buese’s termination date. +(3) A portion of PSUs granted to Mr. Buese in 2021 and 2022 remained outstanding after his employment termination. Per the terms of the grant agreements, Mr. Buese earned 17,329 shares upon his termination, which represents a pro -rata portion of his PSUs outstanding based on the number of days he was employed during the performance periods. The amount shown is based on the target number of shares earned and a price of $88.41, which was the closing price of the Company’s common stock on May 3, 2023, Mr. Buese’s termination date. The number of shares that ultimately vest for the 2021 and 2022 PSU grants will be determined based on the Company’s TSR and RTSR for the three -year performance periods, which end on May 17, 2024 and April 29, 2025, respectively. +2024 PROXY STATEMENT 53 +CEO Pay Ratio Disclosure +Pursuant to Item 402(u) of Regulation S -K , we are disclosing the pay ratio and supporting information comparing the median of the annual total compensation of our employees (including full -time , part -time , seasonal and temporary employees) other than Mr. Reinhart, our President and Chief Executive Officer and Board Director, as of December 31, 2023 (the date selected to identify the ‘median employee’, as further described below), and the annual total annualized compensation of Mr. Reinhart. The pay ratio is calculated in a manner consistent with Item 402(u) of Regulation S -K . +For the year ended December 31, 2023, our last completed fiscal year: +• The annual total compensation of our median employee was approximately $112,932. +• The total annualized compensation of Mr. Reinhart was approximately $5,601,076. +Based on this information, for 2023 the ratio of the annual total compensation of Mr. Reinhart to the median of the annual total compensation of all other employees was approximately 50:1. +We selected December 31, 2023, as the date upon which we identified the median employee. We reviewed the Medicare Taxable Earnings as reported on IRS Form W -2 (Box 5) for 2023 for all individuals employed by us on December 31, 2023 (other than Mr. Reinhart) and identified the median employee based on Medicare Taxable Earnings. +Once we identified our median employee, we calculated that employee’s annual total compensation for 2023 in the same manner that we determined the total compensation of our named executive officers for purposes of the Summary Compensation Table set forth above. This resulted in an annual total compensation of $112,932 for the identified employee for the year ended December 31, 2023. The total compensation for Mr. Reinhart was calculated based on the values included in the Summary Compensation Table set forth above, and was then annualized for 2023, by assuming Mr. Reinhart earned a full year of base salary ($785,000) and was paid a STI payment at 165% of target achievement ($1,554,300). Mr. Reinhart participates in the Company’s benefit plans, including the 401(k) plan, has imputed income on Company -paid life insurance provided to all employees, and income for non -cash fringe benefits for Company -sponsored sporting event tickets. We made no material assumptions, adjustments, or estimates to identify the median employee or to determine total compensation, and we did not annualize the compensation for any employees that were not employed by us the entire year (other than for Mr. Reinhart, as described above). +We believe that the pay ratio is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S -K . In addition, because the Securities and Exchange Commission rules for identifying the median employee allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices, the pay ratio reported by other companies may not be comparable to our pay ratio, as other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios. +54 2024 PROXY STATEMENT +Pay Versus Performance +As previously discussed in the CD&A above, our Compensation Committee has focused on implementing executive compensation plans with the goal of tying our NEOs’ realized compensation to the achievement of Gulfport’s financial, operational, and strategic objectives, and aligning executive pay with changes in the value of our shareholders’ returns. The following table sets forth additional compensation information for our NEOs, calculated in accordance with SEC regulations, for fiscal years 2023, 2022, 2021 and 2020. +Summary +Compensation +Table Total +for PEO1 (1)(2) +(Cutt) +(b) +Summary +Compensation +Table Total +for PEO2 (1) +(Wood) +(b) +Summary +Compensation +Table Total +for PEO3 (2) +(Reinhart) +(b) +Compensation +Actually Paid +to PEO1 +(Cutt) +(c) +Compensation +Actually Paid +to PEO2 +(Wood) +(c) +Compensation +Actually Paid +to PEO3 +(Reinhart) +(c) +Average +Summary +Compensation +Table Total +for non-PEO +NEOs +(d) +Average +Compensation +Actually Paid +to non-PEO +NEOs +(e) +Value of initial fixed $100 Investment based on: +Net +Income +($mm) +(h) +Adjusted +Free +Cash +Flow (4) +($mm) +(i) +Year +(a) +Total +Shareholder +Return (3) +(f) +Peer Total +Shareholder +Return (3) +(g) +2023 (5) +$ 385,141 +n/a +$ 5,522,209 +$ 9,977,442 +n/a +$ 10,022,502 +$ 2,162,249 +$ 6,573,145 +$ 196 +$ 160 +$ 1,471 +$ 199 +2022 (6) +$ 6,447,544 +n/a +n/a +$ 5,787,952 +n/a +n/a +$ 974,218 +$ 1,232,477 +$ 108 +$ 159 +$ 495 +$ 241 +2021 (7) +$ 3,823,399 +$ 8,942,980 +n/a +$ 4,153,397 +$ 8,930,695 +n/a +$ 4,004,438 +$ 4,214,026 +$ 106 +$ 112 +($ 113 ) +$ 361 +2020 (8) +n/a +$ 2,773,653 +n/a +n/a +$ 1,110,896 +n/a +$ 1,092,898 +$ 261,907 +n/a +n/a +($ 1,625 ) +$ 41 +(1) The Company had two CEOs during 2021. Effective May 17 th , 2021, Mr. Wood left his position of Chief Executive Officer and President of the Company and Mr. Cutt was appointed as Interim Chief Executive Officer and Board Chair and assumed the role of Chief Executive Officer and Board Chair on September 2, 2021. +(2) The Company had two CEOs during 2023. On January 24th, 2023, Mr. Reinhart was appointed as President and Chief Executive Officer of the Company. Mr. Cutt continues to serve the Company as Board Chair. +(3) TSR is determined based on the value of an initial fixed investment of $100 on December 31, 2019. The peer group TSR represents TSR of the S&P Oil & Gas Exploration & Production Index. +(4) Adjusted Free Cash Flow is a non -GAAP measure defined as net cash provided by operating activities from the Company’s Consolidated Statement of Cash Flows less the sum of changes in operating assets and liabilities included in the operating activities section of the Consolidated Statement of Cash Flows less non -recurring general and administrative and other expenses from the Consolidated Statement of Operations less incurred capital expenditures and capitalized expenses. Adjusted Free Cash Flow was calculated assuming realized commodity pricing received throughout the year was consistent with the forward curve pricing used to set the approved Adjusted Free Cash Flow Metric in March of 2023. +(5) The non -PEO NEOs during 2023 were Messrs Hodges, Craine, Rucker, Sluiter, and Buese. +(6) The non -PEO NEOs during 2022 were Messrs Buese, Craine, and Sluiter. +(7) The non -PEO NEOs during 2021 were Messrs Buese, Craine, Sluiter, Robert J. Moses, Quentin Hicks and Donnie Moore. +(8) The non -PEO NEOs during 2020 were Messrs Craine, Sluiter, Hicks and Moore. +SEC rules require certain adjustments be made to the Summary Compensation Table totals to determine “compensation actually paid” (CAP) as reported in the Pay versus Performance Table. The following table details these adjustments: +Year +Executive(s) +Summary +compensation +table total +($) +Pension Valuation Adjustments +Equity Award Adjustments +Deduct +change in +pension +value +($) +Pension +service +cost +adjustment +($) +Prior +service +cost +adjustment +($) +Deduct +stock +awards +($) +Include +year-end +equity +value +($) +Change in +value of +prior +equity +awards +($) +Dividends +& Interest +Accrued +($) +2023 +PEO1 +385,141 +N/A +N/A +N/A +0 +0 +9,592,301 +N/A +PEO2 +N/A +N/A +N/A +N/A +N/A +N/A +N/A +N/A +PEO3 +5,522,209 +N/A +N/A +N/A +( 3,236,509 ) +7,736,802 +0 +N/A +Other NEOs +2,162,249 +N/A +N/A +N/A +( 1,071,917 ) +2,362,280 +3,120,534 +N/A +The Company believes that the three key financial performance measures most relevant to linking pay and performance over the long term are, in no particular order, Adjusted Free Cash Flow , Net Income and TSR . The following three tables describe the link between those metrics and “compensation actually paid” (CAP) to our CEO and other NEOs in 2023 to Company performance. +2024 PROXY STATEMENT 55 +Pay Versus Performance +56 2024 PROXY STATEMENT +Pay Versus Performance +2023 DIRECTOR COMPENSATION +Our policy is that members of our Board of Directors who are also our officers or employees do not receive compensation for their services as directors. The compensation of our non -employee directors for 2023 is described below. +Cash Compensation +The annual retainer for each non -employee director is $100,000. In addition, the Board Chair receives an additional $25,000 annual retainer, however, since Mr. Cutt transitioned from Chief Executive Officer to Non -Executive Chair in March 2023, he did not receive a retainer while serving as Chief Executive Officer. The members and chair of each of our Board Committees receive an additional annual retainer as set forth in the table below. +2023 Director Fees +Program Component +2023 Program +Annual base cash retainer for Board service +$ 100,000 +Additional cash retainer to non-executive Board Chair (1) +$ 25,000 +Additional cash retainer to Lead Director +$ 25,000 +Audit Committee Chair cash retainer +$ 25,000 +Compensation Committee Chair cash retainer +$ 15,000 +Nominating, Environmental, Social and Governance Committee Chair cash retainer +$ 10,000 +Audit Committee member cash retainer +$ 10,000 +Compensation Committee member cash retainer +$ 5,000 +Nominating, Environmental, Social and Governance Committee member cash retainer +$ 5,000 +Stock ownership guideline +5.0x annual +base retainer +(1) Mr. Cutt did not receive any compensation for serving as a director of the Company until March 2023. +Equity Compensation +In 2023, Mary Shafer -Malicki and Jeannie Powers joined the Board as non -employee directors and received grants of restricted stock units. The restricted stock unit grants made to all other non -employee directors in 2021 were intended to cover a multi -year period. +Stock Ownership Guidelines for Directors +We believe it is important for members of our Board of Directors to align their financial interests with those of our stockholders. Accordingly, effective April 27, 2022, our Board of Directors adopted a formal stock ownership policy that requires our non -employee directors to achieve a stock ownership level equal to the value of common stock that is five times the value of their annual retainer within five years of the effective date of such stock ownership policy. +2024 PROXY STATEMENT 57 +Pay Versus Performance +2023 Director Compensation Table +The following table contains information with respect to 2023 compensation of our non -employee directors who served in such capacity during 2023. +Board Compensation +Name +Fees Earned or +Paid in Cash +($) (1) +Stock +Awards +($) (2) +Option +Awards +($) +Total +($) +Timothy Cutt +$104,514 +— +— +$104,514 +David Wolf +$160,000 +— +— +$160,000 +Guillermo (Bill) Martinez (3) +$ 72,500 +— +— +$ 72,500 +Jason Martinez +$127,500 +— +— +$127,500 +Jeannie Powers +$ 47,917 +$140,000 +— +$187,917 +David Reganato +$120,000 +— +— +$120,000 +Mary Shafer-Malicki +$ 68,266 +$140,000 +— +$208,266 +(1) Reflects the annual cash compensation, as discussed above. Amounts shown include prorated amounts attributable to Committee reassignments, Director resignations and appointments, which occured during the year. +(2) The amounts shown reflect the grant date fair value of restricted stock unit awards granted, determined in accordance with FASB ASC Topic 718. See Note 1 and Note 8 to our consolidated financial statements for the fiscal year ended December 31, 2023, under the headings “Summary of Significant Accounting Policies” and “Stock -Based Compensation,” respectively, included in our Annual Report on Form 10 -K for the fiscal year ended December 31, 2023, filed with the SEC on February 28, 2024, regarding assumptions underlying valuations of equity awards for 2023. The grant date fair value for the restricted stock issued to Ms. Shafer -Malicki on May 26, 2023, was determined by using the May 25, 2023, closing stock price of the Company’s common stock on the NYSE of $99.88. The grant date fair value for the restricted stock issued to Ms. Powers on August 1, 2023, was determined by using the July 31, 2023, closing stock price of the Company’s common stock on the NYSE of $102.45. +(3) Guillermo (Bill) Martinez resigned from his role as director of the Company effective as of July 31, 2023. Upon his resignation the final vesting of his 2021 RSU Award Agreement was accelerated. +58 2024 PROXY STATEMENT +BENEFICIAL OWNERSHIP +The following table sets forth certain information regarding the beneficial ownership as of March 31, 2024, of shares of our common stock by each of our directors, by each named executive officer and by all directors, executive officers and nominees as a group. None of the executive officers, directors or individuals listed below are holders of the Company’s outstanding preferred stock. +Name of Beneficial Owner (1) +Amount and Nature of +Beneficial Ownership +Percent of Class +Timothy Cutt (2) +21,727 +* +David Wolf +4,254 +* +Jason Martinez +3,019 +* +Jeannie Powers +— +— +David Reganato (assigned to Silver Point) (3) +4,254 +* +Mary Shafer-Malicki (4) +1,402 +* +John Reinhart +3,786 +* +Michael Hodges (5) +3,354 +* +Patrick Craine +8,344 +* +Matthew Rucker +1,191 +* +Michael Sluiter +3,071 +* +Directors and Executive Officers as a Group (13 persons) +59,126 +* +* Less than 1%. +(1) Beneficial ownership is determined in accordance with SEC rules. In computing percentage ownership of each person, shares of common stock subject to options held by that person that are exercisable as of March 31, 2024, or exercisable within 60 days of March 31, 2024, are deemed to be beneficially owned. These shares, however, are not deemed outstanding for the purpose of computing the percentage ownership of each other person. The percentage of shares beneficially owned is based on 18,089,038 shares of common stock outstanding as of March 31, 2024, excluding an aggregate of 547,845 shares of restricted stock units and performance -based restricted stock units awarded under our 2021 Stock Incentive Plan, but not yet vested. Unless otherwise indicated, all amounts exclude shares issuable upon the exercise of outstanding options and vesting of restricted stock units that that are not exercisable and/or vested as of March 31, 2024, or within 60 days of March 31, 2024. Except as otherwise noted, each stockholder has sole voting and investment power with respect to the shares beneficially owned. +(2) Includes 7,803 unvested restricted stock units that will vest within 60 days of March 31, 2024. +(3) Mr. Reganato has an understanding with Silver Point pursuant to which he holds such restricted shares for the benefit of Silver Point and certain of its affiliates. Accordingly, Mr. Reganato disclaims beneficial ownership of the restricted shares except to the extent of his pecuniary interest therein. +(4) Includes 1,402 unvested restricted stock units that will vest within 60 days of March 31, 2024. +(5) Includes 3,354 unvested restricted stock units that will vest within 60 days of March 31, 2024. +2024 PROXY STATEMENT 59 +BENEFICIAL OWNERSHIP +Holdings of Major Stockholders +The following table sets forth certain information regarding the beneficial ownership as of March 31, 2024 of shares of our common stock by each person or entity known to us to be a beneficial owner of 5% or more of our common stock. The following table does not include information regarding ownership of shares of our preferred stock due to the securities not being listed on a major U.S. national or regional securities exchange and requirements for ownership reporting. +MAJOR STOCKHOLDER TABLE +Name and Address of Beneficial Owner (1) +Amount and Nature of +Beneficial Ownership +Percent of +Class (1) +Silver Point Capital, L.P. +5,197,848 (2,3) +28.7% +2 Greenwich Plaza, First Floor +Greenwich, CT 06830 +MacKay Shields, LLC +1,066,363 (4) +5.9% +1345 Avenue of Americas +New York, NY 10105 +Wellington Management Company, LLP +1,008,733 (5) +5.6% +280 Congress Street +Boston, MA 02210 +(1) Beneficial ownership is determined in accordance with SEC rules. The percentage of shares beneficially owned is based on 18,089,038 shares of common stock outstanding as of March 31, 2024, excluding an aggregate of 547,845 shares of restricted stock units and performance -based restricted stock units awarded under our 2021 Stock Incentive Plan, but not yet vested. +(2) Based solely on Schedule 13D filed with the SEC on March 21, 2024, by Silver Point Capital, L.P. that reported amount of securities beneficially owned of 5,197,848 shares of common stock. Silver Point Capital, L.P. (“Silver Point”) or its wholly owned subsidiaries are the investment managers of Silver Point Capital Fund, L.P., Silver Point Capital Offshore Master Fund, L.P., Silver Point Distressed Opportunities Fund, L.P., Silver Point Distressed Opportunities Offshore Master Fund, L.P., Silver Point Distressed Opportunity Institutional Partners, L.P. and Silver Point Distressed Opportunity Institutional Partners Master Fund (Offshore), L.P. (the “Funds”) and, by reason of such status, may be deemed to be the beneficial owner of all of the reported securities held by the Funds. Silver Point Capital Management, LLC is the general partner of Silver Point and as a result may be deemed to be the beneficial owner of all securities held by the Funds. +(3) Messrs. Edward A. Mule and Robert J. O’Shea are each members of Management and as a result may be deemed to be the beneficial owner of all of the securities held by the Funds. Silver Point, Management and Messrs. Mule and O’Shea disclaim beneficial ownership of the reported securities held by Funds except to the extent of their pecuniary interests. +(4) Based solely on Schedule 13G filed with the SEC on January 11, 2024, by MacKay Shields LLC that reported ownership of 1,066,363 shares of common stock. MacKay Shields LLC, an investment adviser registered under Section 203 of the Investment Advisers Act of 1940, may be deemed to be a beneficial owner of reported securities held. The MainStay High Yield Corporate Bond Fund, a registered investment Company for which Mackay Shields acts as sub -investment adviser, may also be deemed to be a beneficial owner of the reported securities held. New York Life Investment Management LLC, an indirect wholly owned subsidiary of New York Life and an affiliate of Mackay Shields LLC, is the manager of MainStay High Yield Corporate Bond Fund. +(5) Based solely on Schedule 13G filed with the SEC on February 8, 2024, by Wellington Management Group LLP, as parent holding company of certain holding companies and the Wellington Investment Advisers, are owned of record by clients of the Wellington Investment Advisers. Wellington Investment Advisors Holdings LLP controls directly, or indirectly through Wellington Management Global Holdings, Ltd., the Wellington Investment Advisers. Wellington Investment Advisors Holdings LLP is owned by Wellington Group Holdings LLP. Wellington Group Holdings LLP is owned by Wellington Management Group LLP. +60 2024 PROXY STATEMENT +Certain Relationships and Review and +Approval of Related Party Transactions +The Audit Committee, as provided in its charter, reviews and approves related party transactions. The Company does not have a formal set of standards to be substantively applied to each transaction reviewed by the Audit Committee. Instead of a formalized policy, related party transactions are reviewed and judgment is applied to determine whether transactions are in the best interests of the Company. Further, the Company’s Code of Business Conduct and Ethics governs various compliance areas, including conflicts of interest and fair dealings, which are considered in the process of the review and approval of related party transactions. +The Company’s policy is that all its employees and directors, as well as their family members, must avoid any activity that is or has the appearance of conflicting with the Company’s business interest. This policy is included in the Company’s Code of Business Conduct and Ethics posted on its website. Each director and executive officer is instructed to always inform the designated compliance officer when confronted with any situation that may be perceived as a conflict of interest. Only the Board of Directors or a committee consisting solely of independent directors may grant waivers of the provisions of the Code of Business Conduct and Ethics for the Company’s executive officers and directors. In addition, at least annually, each director and executive officer completes a detailed questionnaire specifying any business relationship that may give rise to a conflict of interest. +Further, under the Audit Committee charter, the Audit Committee is responsible for reviewing and monitoring compliance with our Code of Business Conduct and Ethics and recommending any warranted changes to the Board of Directors. In addition, the Board of Directors and, pursuant to its written charter, the Audit Committee, reviews and approves all relationships and transactions in which the Company and its directors, director nominees and executive officers and their immediate family members, as well as holders of more than 5% of any class of our voting securities and their family members, have a direct or indirect material interest. The Board of Directors and the Audit Committee approve only those transactions that, considering known circumstances, are consistent, or are not inconsistent with, the Company’s best interests, as they determine in the good faith exercise of their discretion. +2024 PROXY STATEMENT 61 +Proposal to Ratify the Appointment of Our Independent Auditors +(Proposal 2) +The Company is asking its stockholders to vote to ratify the appointment of Grant Thornton LLP as our independent auditors for fiscal year ending December 31, 2024. The Audit Committee has appointed Grant Thornton LLP to serve as independent auditors. +What services do the independent auditors provide? +Audit services of Grant Thornton LLP for fiscal year 2023 included an audit of our consolidated financial statements and services related to periodic filings made with the SEC. Additionally, Grant Thornton LLP provided certain services related to the consolidated quarterly reports as described below. +How much were the independent auditors paid in 2023 and 2022? +Grant Thornton LLP’s fees for professional services totaled $1,154,865 for 2023 and $942,966 for 2022. Grant Thornton LLP’s fees for professional services included the following: +• Audit Fees – aggregate fees for audit services, which relate to the fiscal year consolidated audit, quarterly reviews, accounting consultations and comfort letters were $1,154,865 for 2023 and $942,966 for 2022. +• Audit -Related Fees – aggregate fees for audit -related services, consisting of audits in connection with proposed or consummated dispositions, benefit plan audits, other subsidiary audits, special reports, and accounting consultations, were $0 in 2023 and 2022. +• Tax and All Other Fees – there w ere no tax or other fees for products or services provided by Grant Thornton LLP in addition to the services described above in 2023 and 2022. +Does the Audit Committee approve the services provided by Grant Thornton LLP? +It is our Audit Committee’s policy to pre -approve all audit, audit -related and permissible non -audit services rendered to us by our independent auditor. Consistent with such policy, all fees listed above that we incurred for services rendered by Grant Thornton LLP in fiscal years 2023 and 2022 were pre -approved by our Audit Committee. No non -audit services were provided to us by Grant Thornton LLP in 2023 or 2022. +Will a representative of Grant Thornton LLP be present at the meeting? +Yes, one or more representatives of Grant Thornton LLP will be present at the meeting. The representatives will have an opportunity to make a statement if they desire and will be available to respond to appropriate questions from the stockholders. +Has Grant Thornton LLP always served as Gulfport’s independent auditors? +Grant Thornton LLP has served as our independent auditors since 2005. +Vote Required and Board Recommendation +Stockholder ratification of the appointment of our independent auditors is not required by the Bylaws or otherwise. However, we are submitting this proposal to the stockholders as a matter of good corporate practice. Approval of this proposal requires the affirmative vote “for” the proposal of a majority of the votes cast by the stockholders present in person or represented by proxy at the Annual Meeting and entitled to vote thereon. The persons named as proxies for the Company intend to vote the proxies “FOR” Proposal 2. Abstentions and broker non -votes , if any, will have no effect on the voting results for Proposal 2. +If the appointment of Grant Thornton LLP is not ratified, the Audit Committee will reconsider the appointment. Even if the appointment is ratified, the Audit Committee in its discretion may direct the appointment of a different independent audit firm at any time during the year if it is determined that such change would be in best interests of the Company and its stockholders. +THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF GRANT THORNTON LLP AS THE COMPANY’S INDEPENDENT AUDITORS FOR THE YEAR 2024. +62 2024 PROXY STATEMENT +Proposal to Approve, on an Advisory, +NON -BINDING Basis, the Compensation Paid to +the Company’s Named Executive Officers +(Proposal 3) +Pursuant to Section 14A of the Exchange Act, the Company is asking its stockholders to vote to approve, on an advisory, non -binding basis, the compensation paid to the Company’s named executive officers as reported in this proxy statement. This is also known as a “Say -On-Pay ” vote. The Company’s stockholders are being asked to vote on the following resolution: +“RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S -K , including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby approved.” +This vote is advisory, which means that the vote on executive compensation is not binding on the Company, our Board of Directors or the Compensation Committee. While the vote on executive compensation is solely advisory in nature, our Board of Directors and the Compensation Committee will review and consider the “Say -On-Pay ” voting results when making future decisions regarding our executive compensation program. +Stockholders are encouraged to carefully review the “Compensation Discussion and Analysis” section of this proxy statement, which discusses in detail the Company’s compensation policy and compensation arrangements which the Company believes are appropriate and reasonably consistent with market practice and with the long -term interests of the Company and its stockholders. In furtherance of the Company’s goals and objectives, the Compensation Committee, among other things, emphasizes long -term equity awards and annual performance bonuses under the previously implemented Annual Incentive Plan to align our executives’ interests more closely with those of our stockholders and to link a larger portion of our executives’ compensation to the performance of our stock and our operational performance. +We have determined that our stockholders should cast an advisory vote on the compensation of our named executive officers on an annual basis. Unless this policy changes, the next advisory vote on the compensation of our named executive officers will be at the 2029 Annual Meeting. +Vote Required and Board Voting Recommendation +Proposal 3 requires an affirmative vote “for” the proposal by a majority of the votes cast by the stockholders present in person or represented by proxy at the Annual Meeting and entitled to vote thereon. The persons named as proxies for the Company intend to vote the proxies “ FOR ” Proposal 3. Abstentions and broker non -votes , if any, will have no effect on the voting results for Proposal 3. +THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THIS PROPOSAL 3. +2024 PROXY STATEMENT 63 +Audit Committee Report +The primary role of the Audit Committee is to assist the Board of Directors in its oversight of the Company’s accounting and financial reporting processes. In doing so, the Audit Committee is responsible for the appointment and compensation of the Company’s independent registered public accounting firm and has oversight for its qualification, independence and performance. The Audit Committee charter guides our duties and responsibilities. The Audit Committee charter, which was last amended during 2021, is available on the Company’s website at https://www.gulfportenergy.com/investors/corporate -governance /governance -documents . As set forth in the charter, management is responsible for the internal controls and accounting and financial reporting processes of Gulfport Energy Corporation. The independent registered public accounting firm is responsible for expressing opinions on the conformity of Gulfport Energy Corporation’s audited consolidated financial statements with generally accepted accounting principles and on the effectiveness of the Company’s internal control over financial reporting. Our responsibilities include monitoring and overseeing these processes. +Our Committee is comprised of four non -employee , independent members of the Board of Directors. No member serves on more than two other public company audit committees. The Board of Directors has determined that all of the members of the Audit Committee are financially literate, and that David Wolf, Jason Martinez, Jeannie Powers, and David Reganato are financial experts as that term is defined by the SEC. The members of our Committee are not professionally engaged in the practice of accounting or auditing. The Audit Committee’s considerations and discussions referred to below do not assure that the audit of the Company’s financial statements has been carried out in accordance with generally accepted auditing standards, that the financial statements are presented in accordance with generally accepted accounting principles or that the Company’s auditors are in fact “independent”. +In the performance of our oversight function, we have reviewed and discussed the audited financial statements of the Company for the fiscal year ended December 31, 2023, and management’s assessment of the effectiveness of the Company’s internal control over financial reporting with the management of Gulfport Energy Corporation. We have met with Grant Thornton LLP, the Company’s independent registered public accounting firm, with and without management present. We discussed with Grant Thornton LLP the matters required to be discussed under the applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”) and the SEC and such other matters as we have deemed to be appropriate, including the overall scope and plans for the audit. We also have received the written disclosures and the letter from Grant Thornton LLP required by the applicable PCAOB requirements regarding the independent accountant’s communications with the Audit Committee concerning independence, and we have discussed with Grant Thornton LLP that firm’s independence from management and the Company. We also reviewed the amount of fees paid to Grant Thornton LLP for both audit and non -audit services. In doing so, we considered whether the provision of non -audit services to the Company was compatible with maintaining the independence of Grant Thornton LLP. +Based on the reports and discussions above, we recommended to the Board of Directors that the audited financial statements be included in the Gulfport Energy Corporation 2023 Annual Report on Form 10K. +This report is not soliciting material, is not deemed to be filed with the SEC, and is not to be incorporated by reference in any filing of the Company under the Securities Act of 1933, as amended, whether made before or after this date and irrespective of any general incorporation language in any filing. +This report has been furnished by the Audit Committee of the Board of Directors. +THE AUDIT COMMITTEE +David Wolf, Chair +Jason Martinez +Jeannie Powers +David Reganato +64 2024 PROXY STATEMENT +ABOUT THE ANNUAL MEETING +Why am I receiving these materials? +The Board of Directors has sent you this proxy statement and the accompanying proxy card to ask for your vote, as a stockholder of the Company, on certain matters that will be voted on at the Annual Meeting. +Who is soliciting my vote? +The Board of Directors is soliciting your vote at the Annual Meeting. The proposals to be voted on by the Company’s stockholders at the Annual Meeting are described below. +What am I voting on? +You are voting on: +• The election of seven directors to serve until the 2025 Annual Meeting ( see Proposal 1 beginning on page 8 of this proxy statement ); +• The ratification of Grant Thornton LLP as our independent auditors for the year ended December 31, 2024 ( see Proposal 2 beginning on page 62 of this proxy statement ); +• The approval, on an advisory, non -binding basis, of the compensation paid to the Company’s named executive officers as described in this proxy statement ( see Proposal 3 beginning on page 63 of this proxy statement ); and +• Any other business properly coming before the meeting. +How does the Board of Directors recommend that I vote my shares? +Unless you give other instructions on your proxy card, the persons named as proxy holders on the proxy card will vote in accordance with the recommendations of our Board of Directors. The Board of Directors’ recommendations can be found with the description of each proposal in this proxy statement. In summary, the Board of Directors recommends a vote: +• “ FOR ” each of our director nominees; +• “ FOR ” the proposal to ratify Grant Thornton LLP as the Company’s independent auditors for the fiscal year ended December 31, 2024; and +• “ FOR ” the proposal to approve, on an advisory, non -binding basis, the compensation paid to the Company’s named executive officers as described in this proxy statement. +What is a proxy? +A proxy is your legal designation of another person to vote the shares of common stock that you own. That other person is also referred to as a “proxy.” If you designate someone as your proxy in a written document, that document is called a proxy or a proxy card. We have designated Timothy Cutt, our Board Chair, and Patrick Craine, our Chief Legal and Administrative Officer and Corporate Secretary, as the Company’s proxies for the Annual Meeting. +Who is entitled to vote? +You may vote if you were the record owner of our common shares or preferred shares as of the close of business on the record date, which is March 28, 2024. Gulfport had 18,089,038 common shares outstanding as of the record date. Each share of common stock is entitled to one vote. In addition, Gulfport had 44,203 preferred shares outstanding as of the record date. The holders of Gulfport’s preferred stock are entitled to vote on all matters submitted to the stockholders for a vote, voting together with the holders of the common stock as a single class, on an as -converted basis. Gulfport’s 44,203 preferred shares outstanding as of the record date, on an as -converted basis, totaled approximately 3,157,357 common shares entitled to vote. +2024 PROXY STATEMENT 65 +about the annual meeting +In aggregate, as of March 28, 2024, we had 547,845 shares of restricted stock units and performance -based restricted stock units awarded under our 2021 Stock Incentive Plan, but not yet vested. There is no cumulative voting. +How many votes must be present to hold the Annual Meeting? +Your shares are counted as present at the Annual Meeting if you attend the meeting and vote in person or if you return a properly executed proxy by mail. For us to hold our meeting, holders of a majority of the voting power of our outstanding shares of common stock and preferred stock as of the close of business on March 28, 2024, must be present in person or by proxy at the Annual Meeting. This is referred to as a “quorum.” Votes withheld and abstentions will be counted for purposes of establishing a quorum at the Annual Meeting. Broker non -votes , if any, will not be counted for purposes of establishing a quorum at the Annual meeting (see “What is the effect of abstentions, withhold votes and broker non -votes ?” below) +What vote is required to elect directors (Proposal 1)? +The election of directors at the Annual Meeting will be conducted under a majority of the votes cast standard. This means that with respect to each director nominee, the number of votes cast “for” the director nominee must exceed the number of votes cast “against” the nominee. Abstentions will have no effect on the outcome of the election. +What vote is required to approve, on an advisory, non-binding basis, the ratification of the appointment of the Company’s independent auditor (Proposal 2)? +The proposal to approve, on an advisory, non -binding basis, the appointment of Grant Thornton LLP as Gulfport’s independent auditor for the year ending December 31, 2024, will be adopted if a majority of the votes present in person or by proxy and voting on this matter are cast “for” the proposal. You may vote “for,” “against” or “abstain” from approving the proposal. Abstentions will have no effect on the outcome of the proposal. +What vote is required to approve, on an advisory, non-binding basis, the compensation of the Company’s named executive officers (Proposal 3)? +The proposal to approve, on an advisory, non -binding basis, the compensation of the Company’s named executive officers will be adopted if a majority of the votes present in person or by proxy and voting on this matter are cast “for” the proposal. You may vote “for,” “against” or “abstain” from approving the proposal. Abstentions will have no effect on the outcome of the proposal. +What is the effect of abstentions, withhold votes and broker non-votes? +If you specify that you wish to “abstain” or “withhold” from voting on an item, then your shares will not be voted on that item. +Because the votes cast in favor of each director nominee must exceed the votes cast against such nominee under Proposal 1 and because the votes cast in favor of the action must exceed the votes cast opposing the action in order to approve Proposals 2 and 3 at the Annual Meeting, abstentions will not have an effect on the outcome of those proposals. +A “broker non -vote ” occurs when a beneficial holder does not provide instructions to a broker and such broker lacks discretionary voting power to vote shares with respect to a particular proposal. Under NYSE rules, brokers are permitted to exercise discretionary voting authority on “routine” matters, but beneficial owners of shares must provide voting instructions to their brokers with respect to “non -routine ” matters for their brokers to exercise voting authority with respect to such shares on such matters. Under NYSE rules, the proposal to approve the appointment of an independent auditor is considered a “routine” matter. This means that brokers may vote in their discretion on Proposal 2 on behalf of clients who have not furnished voting instructions with respect to such proposal. In contrast, Proposals 1 and 3 are “non -routine ” matters. This means brokers that have not received voting instructions from their clients on these proposals may not vote on these proposals in their own discretion, which results in “broker non -votes .” +Who is a registered stockholder and who is a beneficial stockholder? +Registered Stockholders: A “registered stockholder” is a person or entity whose name appears in the Company’s registered list of stockholders as an owner of one or more shares of the Company’s common stock or preferred stock. If you are a registered stockholder, these proxy materials are being sent directly to you. +66 2024 PROXY STATEMENT +about the annual meeting +Beneficial Stockholders: A “beneficial stockholder” or “beneficial owner” is a person or entity whose shares of the Company’s common stock or preferred stock are held by a bank, broker or other nominee (a.k.a. in “street name”). Most holders of our common stock hold their shares beneficially through a bank, broker or other nominee rather than of record directly in their own name. If you are a beneficial stockholder, these proxy materials are being forwarded to you by your bank, broker or other nominee, who is considered the registered stockholder of those shares. As the beneficial stockholder, you have the right to direct your bank, broker or other nominee on how to vote your shares and you are also invited to attend the Annual Meeting. Your bank, broker or other nominee has provided a voting instruction form for you to use in directing your bank, broker or other nominee as to how to vote your shares. You must follow these instructions for your shares to be voted. Your nominee is required to vote those shares in accordance with your instructions. If you do not give instructions to your broker, your broker will be able to vote your shares at its discretion with regard to Proposal 2, but will not be able to vote your shares at its discretion with respect to Proposals 1 and 3. +How do I vote? +Registered Stockholders : If you are a “registered stockholder,” you can vote your shares in the following four ways: +• By Internet : You may vote by submitting a proxy over the Internet. Go to the website listed on your proxy card or voting instruction form and follow the instructions. You should have your proxy card, including your control number, in hand when you access the website. +• By Telephone : Stockholders located in the United States who receive proxy materials by mail may vote by submitting a proxy by telephone by calling the toll -free telephone number on the proxy card or voting instruction form and following the instructions. +• By Mail : If you received proxy materials by mail, you may vote by submitting a proxy by mail by completing, signing and dating the proxy card and mailing it in the enclosed, postage pre -paid envelope. +• In Person : You may attend in person and vote at the Annual Meeting. +Beneficial Stockholders: If you are a “beneficial stockholder,” then you will receive instructions from your bank, broker or other nominee on how to vote your shares. If you are a “beneficial stockholder,” you will need proof of ownership to be admitted to the Annual Meeting. +Can I change my vote? +You may change your vote by revoking your proxy at any time before it is exercised, which can be done by voting during the meeting, by delivering a new proxy or by notifying the inspector of election in writing. If your shares are held for you in a brokerage, bank or other institutional account, you must contact that institution to revoke a previously authorized proxy. The address for the inspector of election is Computershare Trust Company, N.A, 150 Royall Street, Canton, MA 02021. +Who counts the votes? +We have hired Computershare Trust Company, N.A., our transfer agent, to act as the tabulation agent and count the votes represented by proxies cast by mail or ballot. Employees of Computershare Trust Company, N.A. will act as inspectors of election. +Could other matters be decided at the Annual Meeting? +We have not received any stockholder proposals and are not aware of any other matters that are expected to come before the Annual Meeting other than those described in this proxy statement. If any other matter should be presented at the Annual Meeting upon which a vote may be properly taken, shares represented by all proxy cards received by the Board will be voted at the discretion of the person or persons named as proxies on the enclosed proxy card. +How can I attend the Annual Meeting in person? +Registered stockholders will be asked to present a valid government -issued photo identification. If your shares are held in the name of your broker, bank or other nominee, you must bring to the meeting a valid government -issued photo identification and an account statement or letter (and a legal proxy if you wish to vote your shares) from the nominee indicating that you beneficially owned the shares on the record date for voting. +2024 PROXY STATEMENT 67 +about the annual meeting +How can I access the Company’s proxy materials and annual report? +We have elected, in accordance with the Securities and Exchange Commission’s “Notice and Access” rule, to deliver a Notice of Internet Availability of Proxy Materials (the “Notice”) to our stockholders and to post our proxy statement and the Company’s 2023 Annual Report on Form 10 -K (collectively, the “proxy materials”) electronically. The Notice is first being mailed to our stockholders on or about April 9, 2024. The proxy materials will first be made available to our stockholders on or about the same date. The Notice instructs you how to access and review the proxy materials and how to submit your proxy via the Internet. The Notice also instructs you how to request and receive a paper copy of the proxy materials, including a proxy card or voting instruction form, at no charge. We will not mail a paper copy of the proxy materials to you unless specifically requested to do so. Additionally, the Notice of the Annual Meeting, this proxy statement and the Company’s 2023 Annual Report on Form 10 -K to Stockholders are available electronically on the Company’s website at www.gulfportenergy.com/proxy . +Where can I find the results of the Annual Meeting? +We intend to announce preliminary voting results at the Annual Meeting and intend to publish final results in a Current Report on Form 8 -K , which we will file with the SEC within four business days after the Annual Meeting. +68 2024 PROXY STATEMENT +Availability of Form 10 -K and +Annual Report to Stockholders +SEC rules require us to provide an Annual Report to stockholders who receive this proxy statement. Additional copies of our Annual Report on Form 10 -K for the fiscal year ended December 31, 2023, including the financial statements and the financial statement schedules, are available without charge to stockholders upon written request to Director of Investor Relations, Gulfport Energy Corporation, 713 Market Drive, Oklahoma City, Oklahoma 73114 or via the Internet at www.gulfportenergy.com . We will furnish the exhibits to our Annual Report on Form 10 -K upon payment of our copying and mailing expenses. +2024 PROXY STATEMENT 69 +HOUSEHOLDING +The SEC permits a single Notice or set of annual reports and proxy statements to be sent to any household at which two or more stockholders reside if they appear to be members of the same family, unless instructions have been received to the contrary. Each stockholder continues to receive a separate proxy card. This procedure, referred to as householding, reduces the volume of duplicate information stockholders receive and reduces our mailing and printing expenses. +If you would like to receive your own Notice or set of the annual report and proxy statement this year or in future years, follow the instructions described below, and we will promptly deliver a separate copy to you. Similarly, if you share an address with another Gulfport stockholder and together both of you would like to receive in the future only a single Notice or annual report and proxy statement, follow the instructions below: +• If your shares of our common stock are registered in your own name, please contact our transfer agent, Computershare Trust Company, N.A., and inform them of your request by calling their toll -free number: (877) 373 -6374 or by mail: Computershare Trust Company, N.A., 150 Royall Street, Suite 101, Canton, MA 02021. +• If a broker or other nominee holds your shares, please contact your broker or nominee. +70 2024 PROXY STATEMENT +Other Matters +The Board of Directors does not intend to present any other items of business other than those stated in the Notice of Annual Meeting. If any other matter should be presented at the Annual Meeting upon which a vote may be properly taken, shares represented by all proxy cards received by the Board will be voted at the discretion of the person or persons named as proxies on the enclosed proxy card. +2024 PROXY STATEMENT 71 +Solicitation by THE Board OF DIRECTORS +Participants in the Solicitation +We are required by law to convene an annual meeting of our stockholders at which directors are elected. Because shares of our common stock are widely held, it would be impractical for our stockholders to meet physically in sufficient numbers to hold a meeting. Accordingly, the Company is soliciting proxies from our stockholders. Our directors, director nominees, officers and employees may solicit proxies in person, or via mail, telephone, facsimile or email. Those persons will receive no additional compensation for any solicitation activities. +Expenses of Solicitation +U.S. federal securities laws require us to send you this proxy statement and any amendments or supplements, and to specify the information required to be contained in it. The Company will bear the expenses of calling and holding the Annual Meeting and the solicitation of proxies. These expenses will include, among other things, the costs of preparing, assembling, printing and mailing the proxy materials to stockholders of record and beneficial owners, and reimbursement paid to brokerage firms, banks and other fiduciaries for their reasonable out -of-pocket expenses for forwarding proxy materials to stockholders and obtaining beneficial owners’ voting instructions. +72 2024 PROXY STATEMENT +FORWARD -LOOKING STATEMENTS +This proxy statement contains forward -looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Exchange Act and the Private Securities Litigation Reform Act of 1995. All statements relating to events or results that may occur in the future, including, but not limited to, the Company’s future prospects and performance, costs of solicitation, record or meeting dates, compensation arrangements, plans or amendments, Company policies, documents or amendments as well as capital and corporate structure (including major stockholders, Board structure and Board composition), are forward -looking statements. +Forward -looking statements are statements other than statements of historical fact. They include statements regarding Gulfport’s current expectations, management’s outlook guidance or forecasts of future events, projected cash flow and liquidity, share repurchases, its ability to enhance cash flow and financial flexibility, future production and commodity mix, plans and objectives for future operations, the ability of our employees, portfolio strength and operational leadership to create long -term value, the rejection of certain midstream contracts and the assumptions on which such statements are based. Gulfport believes the expectations and forecasts reflected in the forward -looking statements are reasonable, Gulfport can give no assurance they will prove to have been correct. They can be affected by inaccurate or changed assumptions or by known or unknown risks and uncertainties. Important risks, assumptions and other important factors that could cause future results to differ materially from those expressed in the forward -looking statements are described under “Risk Factors” in Item 1A of Gulfport’s annual report on Form 10 -K for the year ended December 31, 2023, and any updates to those factors set forth in Gulfport’s subsequent quarterly reports on Form 10 -Q or current reports on Form 8 -K (available at https://www.gulfportenergy.com/investors/sec -filings ). +Investors should note that Gulfport announces financial information in SEC filings, press releases and public conference calls. Gulfport may use the Investors section of its website ( www.gulfportenergy.com ) to communicate with investors. It is possible that the financial and other information posted there could be deemed to be material information. The information on Gulfport’s website is not incorporated into or a part of this filing. +Unless required by law, the Company does not intend, and undertakes no obligation, to update or publicly release any revision to any such forward -looking statements, whether as a result of the receipt of new information, the occurrence of subsequent events, a change in circumstances or otherwise. Each forward -looking statement contained in this proxy statement is specifically qualified in its entirety by the aforementioned factors. Readers are advised to carefully read this proxy statement in conjunction with the important disclaimers set forth above prior to reaching any conclusions or making any investment decisions, and not to place undue reliance on these forward -looking statements, which apply only as of the date of this proxy statement. +2024 PROXY STATEMENT 73 +Submission of Future Stockholder Proposals +Under Rule 14a -8 under the Exchange Act (“Rule 14a -8 ”), a stockholder who intends to present a proposal for business at the 2025 Annual Meeting and who wishes the proposal to be included in the proxy statement and form of proxy for that meeting must submit the proposal in writing to our Corporate Secretary no later than December 12, 2025. The proposal must comply with the requirements of Rule 14a -8 under the Exchange Act and our Bylaws to be eligible for inclusion in the Company’s proxy materials. +If a stockholder wishes to submit a proposal for business or nomination of directors at the 2025 Annual Meeting other than in reliance on Rule 14a -8 , in order for such proposal to be considered timely pursuant to our Charter and Bylaws, the stockholder’s notice must be delivered to or mailed and received by the Corporate Secretary at the principal executive offices of the Company not less than 60 days nor more than 90 days prior to May 22, 2025 (i.e., the first anniversary of the 2024 Annual Meeting). Accordingly, the stockholder’s notice must be delivered to or mailed and received by the Corporate Secretary not later than March 23, 2025 and not earlier than February 21, 2025. However, in the event that the date of the 2025 Annual Meeting is advanced by more than 30 days, or delayed by more than 70 days, from May 22, 2025, notice by the stockholder to be timely must be received not earlier than 120 days prior to the 2025 Annual Meeting, and not later than the close of business on the later of the 90 th day prior to the 2025 Annual Meeting or the close of business on the 10 th day following the day on which public announcement of the date of the 2025 Annual Meeting was first made. At present, the Company has not announced a meeting date for the 2025 Annual Meeting. The Company expects to announce the date of the 2025 Annual Meeting and provide formal notice in 2025. +In addition to satisfying the requirements under our Bylaws, to comply with the universal proxy rules, stockholders who intend to solicit proxies in support of director nominees other than our nominees must provide a notice to our Company that sets forth the information required by Rule 14a -19 under the Exchange Act no later than March 25, 2025. +You can obtain a copy of the Charter and Bylaws by writing to the Corporate Secretary at the address below, or from the SEC website at www.sec.gov (the Charter and Bylaws are filed as exhibits to our latest report on Form 10 -K filed with the SEC on February 28, 2024). +All written proposals and inquiries for copies of the Charter and Bylaws should be directed to Patrick Craine, our Chief Legal and Administrative Officer and Corporate Secretary, at Gulfport Energy Corporation, 713 Market Drive, Oklahoma City, Oklahoma 73114. +74 2024 PROXY STATEMENT +C123456789 ENDORSEMENT_LINE SACKPACK 000000000.000000 ext 000000000.000000 extp 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000001 MR A SAMPLE DESIGNATION (IF ANY) ADD 1 ADD 2 ADD 3 ADD 4 ADD 5 ADD 6 Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. Your vote matters – here’s how to vote! You may vote online or by phone instead of mailing this card. Votes submitted electronically must be received by 11:59pm, Central Time, on May 21, 2024. If no electronic voting, delete QR code and control Online Go to www.envisionreports.com/GPOR or scan the QR code — login details are located in the shaded bar below. Phone Call toll free 1-800-652-VOTE (8683) within the USA, US territories and Canada Save paper, time and money! Sign up for electronic delivery at www.envisionreports.com/GPOR + IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. Proposals — The Board of Directors recommends you vote FOR each of the director nominees listed in proposal 1, FOR proposals 2 and 3. 1. To elect seven directors to serve until the Company’s 2025 Annual Meeting of Stockholders or until their respective successors have been duly elected and qualified (the Election of Directors Proposal or Proposal 1). For Against Abstain For Against Abstain For Against Abstain 01 - Timothy Cutt 04 - Jeannie Powers 02 - David Wolf 05 - David Reganato 03 - Jason Martinez 06 - John Reinhart 01 07 - Mary Shafer-Malicki 2. To ratify the appointment of Grant Thornton LLP as the Company’s independent auditors for the fiscal year ending December 31, 2024 (the Auditors Ratification Proposal or Proposal 2). For Against Abstain 3. To approve, on an advisory, non-binding basis, the compensation paid to the Company’s named executive officers as described in this proxy statement (the Say-On-Pay Proposal or Proposal 3). For Against Abstain Authorized Signatures — This section must be completed for your vote to count. Please date and sign below. B Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title. + Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box. C 1234567890 J N T 1 U P X 6 1 0 3 2 0 MR A SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE 140 CHARACTERS) MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND 2024 Annual Meeting Proxy Card 1234 5678 9012 345 03ZBTB +2024 Annual Meeting Admission Ticket 2024 Annual Meeting of Gulfport Energy Shareholders May 22, 2024, 9:00am CT at 713 Market Drive, Oklahoma City, OK 73114. Important notice regarding the Internet availability of proxy materials for the Annual Meeting of Stockholders. The material is available at: www.envisionreports.com/GPOR Small steps make an impact. Help the environment by consenting to receive electronic delivery, sign up at www.envisionreports.com/GPOR T IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. T Gulfport Energy Corporation + Notice of 2024 Annual Meeting of Shareholders Proxy Solicited by Board of Directors for Annual Meeting — May 22, 2024 The undersigned hereby appoints Timothy Cutt and Patrick Craine (together, the “Proxies”), and each of them, with full power of substitution, as proxies to vote the shares that the undersigned is entitled to vote at the Annual Meeting of Shareholders of Gulfport Energy Corporation (the “Company”) to be held on May 22, 2024 at 9:00 a.m. Central Time and at any adjournments and postponements thereof. Such shares shall be voted as indicated with respect to the proposals listed on the reverse side hereof and in the Proxies’ discretion on such other matters as may properly come before the meeting or any adjournment or postponement thereof. The undersigned acknowledges receipt of the 2024 Notice of Annual Meeting and accompanying Proxy Statement and revokes all prior proxies for said meeting. THE SHARES REPRESENTED BY THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO SPECIFIC DIRECTION IS GIVEN AS TO THE PROPOSALS ON THE REVERSE SIDE, THIS PROXY WILL BE VOTED FOR EACH OF THE NOMINEES NAMED IN PROPOSAL 1, FOR EACH OF THE PROPOSALS 2 AND 3, AND IN ACCORDANCE WITH THE BOARD OF DIRECTOR’S RECOMMENDATION. PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY. IMPORTANT – PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY. THANK YOU FOR VOTING. C (Items to be voted appear on reverse side) Non-Voting Items Change of Address — Please print new address below. 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The Company does not have a formal set of standards to be substantively applied to each transaction reviewed by the Audit Committee. Instead of a formalized policy, related party transactions are reviewed and judgment is applied to determine whether transactions are in the best interests of the Company. Further, the Company’s Code of Business Conduct and Ethics governs various compliance areas, including conflicts of interest and fair dealings, which are considered in the process of the review and approval of related party transactions. +The Company’s policy is that all its employees and directors, as well as their family members, must avoid any activity that is or has the appearance of conflicting with the Company’s business interest. This policy is included in the Company’s Code of Business Conduct and Ethics posted on its website. Each director and executive officer is instructed to always inform the designated compliance officer when confronted with any situation that may be perceived as a conflict of interest. Only the Board of Directors or a committee consisting solely of independent directors may grant waivers of the provisions of the Code of Business Conduct and Ethics for the Company’s executive officers and directors. In addition, at least annually, each director and executive officer completes a detailed questionnaire specifying any business relationship that may give rise to a conflict of interest. +Further, under the Audit Committee charter, the Audit Committee is responsible for reviewing and monitoring compliance with our Code of Business Conduct and Ethics and recommending any warranted changes to the Board of Directors. In addition, the Board of Directors and, pursuant to its written charter, the Audit Committee, reviews and approves all relationships and transactions in which the Company and its directors, director nominees and executive officers and their immediate family members, as well as holders of more than 5% of any class of our voting securities and their family members, have a direct or indirect material interest. The Board of Directors and the Audit Committee approve only those transactions that, considering known circumstances, are consistent, or are not inconsistent with, the Company’s best interests, as they determine in the good faith exercise of their discretion. \ No newline at end of file diff --git a/raw/proxies/0000874499/0001213900-25-028069/proxy.txt b/raw/proxies/0000874499/0001213900-25-028069/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..9f19a8552e5a60708449d75a944bdf0811517b6a --- /dev/null +++ b/raw/proxies/0000874499/0001213900-25-028069/proxy.txt @@ -0,0 +1,2924 @@ +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +________________ +Schedule 14A +Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 +(Amendment No. ) +________________ +Filed by the Registrant +☒ +Filed by a party other than the Registrant +☐ +Check the appropriate box: +☐ +Preliminary Proxy Statement +☐ +Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +☒ +Definitive Proxy Statement +☐ +Definitive Additional Materials +☐ +Soliciting Material under §240.14a-12 +Gulfport Energy Corporation +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check all boxes that apply): +☒ +No fee required +☐ +Fee paid previously with preliminary materials. +☐ +Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a- 6(i)(1) and 0-11 +April 2, 2025 +Dear Stockholders, +On behalf of the Board of Directors (the “Board”), management, and employees of Gulfport Energy Corporation (“Gulfport”, “Gulfport Energy,” the “Company,” “we,” “our” and “us”), you are cordially invited to participate in the 2025 Annual Meeting of Stockholders (the “Annual Meeting”) to be held on May 21, 2025 at 9:00 a.m. Central Time. Our annual meeting will be held in person at 713 Market Drive, Oklahoma City, OK 73114. The attached Notice of 2025 Annual Meeting of Stockholders and this proxy statement will serve as your guide to the business conducted during the Annual Meeting. +We are mailing most of our stockholders a Notice of Internet Availability of Proxy Materials for the 2025 Annual Meeting (the “Notice”), which provides instructions regarding how stockholders can access and review proxy materials over the internet and submit their proxy electronically. We believe this “Notice and Access” process allows us to provide our stockholders with the information they desire in a timely manner, while reducing costs and the environmental impact of our Annual Meeting. If you received the Notice and would prefer to receive a paper copy of the proxy materials, please follow the instructions for requesting the materials that are provided in the Notice. +Your vote is very important to us. To assure your representation at the Annual Meeting, please vote your shares over the internet or through the toll -free telephone number as instructed in the Notice. +Thank you for your continued support and interest in Gulfport. +Sincerely, +Timothy Cutt +Board Chair +GULFPORT ENERGY CORPORATION +713 Market Drive +Oklahoma City, Oklahoma 73114 +NOTICE OF 2025 ANNUAL MEETING OF STOCKHOLDERS +April 2, 2025 +Notice is given that the 2025 Annual Meeting of Stockholders (including any adjournments or postponements, the “Annual Meeting”) of Gulfport Energy will be held on May 21, 2025 at 9:00 a.m., Central Time at Gulfport Headquarters located at 713 Market Drive, Oklahoma City, OK 73114 to vote on the proposals listed in the following table. +Date and Time +May 21, 2025 at 9:00 a.m., Central Time +Place +The Annual Meeting will be held in person at Gulfport Headquarters located at 713 Market Drive, Oklahoma City, OK 73114. +Proposals +1. To elect seven directors to serve until the Company’s 2026 Annual Meeting of Stockholders or until their respective successors have been duly elected and qualified (the Election of Directors Proposal or Proposal 1 ). +2. To ratify the appointment of Grant Thornton LLP as the Company’s independent auditors for the fiscal year ending December 31, 2025 (the Auditors Ratification Proposal or Proposal 2 ). +3. To approve, on an advisory, non-binding basis, the compensation paid to the Company’s Named Executive Officers as described in this proxy statement (the Say -On-Pay Proposal or Proposal 3 ). +4. To approve an amendment to our Amended and Restated Certificate of Incorporation to provide for exculpation of certain officers of the Company as permitted by amendments to Delaware law (the Exculpation Proposal or Proposal 4 ). +We will also transact any other business as may properly come before the Annual Meeting. +Record Date +March 28, 2025, at the close of business +Holders of record of our common stock, par value $0.0001 per share, and preferred stock, par value $0.0001 per share, in each case, outstanding as of March 28, 2025 at the close of business, the record date for the Annual Meeting, will be entitled to Notice of the Annual Meeting and to vote at the Annual Meeting or any adjournment or postponement. +PROXY VOTING +Stockholders of the Company as of the record date are entitled to vote by proxy in the following ways: +By calling the telephone number +on your proxy card or voting +instruction form +Online by visiting the website +provided on your proxy card or +voting instruction form +By returning by mail a properly +completed, signed and dated +proxy card or voting instruction +form +By attending in person and +submitting a ballot at the +Annual Meeting +IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON May 21, 2025: This proxy statement and additional information are available free of charge on the Company’s website at www.gulfportenergy.com/proxy . +By order of the Board of Directors, +Patrick Craine +Chief Legal and Administrative Officer and Corporate Secretary +The Notice of Internet Availability of Proxy Materials is first being mailed to stockholders on or about April 9, 2025, and the proxy materials relating to the Annual Meeting will be made available on or about the same date. +TABLE OF CONTENTS +GULFPORT ENERGY CORPORATION +713 Market Drive +Oklahoma City, Oklahoma 73114 +_____________________ +PROXY STATEMENT +_____________________ +Proxy Statement Summary +1 +About Gulfport +1 +Business Strategy +1 +Directors +1 +Board Summary +2 +Corporate Responsibility and Sustainability Highlights +3 +Work Safe +4 +Corporate Governance Highlights +6 +Compensation Highlights +7 +Election of Directors and Director Biographies +8 +What are the Committees of the Board? +13 +Do the Committees have Written Charters? +16 +Corporate Governance Matters and Communications with the Board +17 +Who are our Independent Directors? +17 +Annual Board Self-Assessment Process +17 +How Often did the Board of Directors Meet in 2024? +17 +Do our Non-Management Directors Meet Separately without Management? +17 +How can i Communicate with the Board of Directors? +18 +Will Directors Attend the Annual Meeting? +18 +Nominating Process for Directors, Director Qualifications and Review of Director Nominees +19 +Director Leadership Structure +21 +Board of Directors’ Role in Risk Oversight +22 +Executive Officers +23 +Compensation Discussion and Analysis +25 +Letter from the Compensation Committee +25 +Executive Summary +27 +Gulfport 2024 Business Performance Highlights +27 +Key 2024 Executive Compensation Actions +28 +Compensation Aligned with Performance +30 +Stockholder Engagement and Annual Say-On-Pay Advisory Vote +30 +Executive Compensation Philosophy and Components +31 +Determining our Executive Compensation +32 +Process for Determining Executive Compensation +33 +2024 Compensation Program Description +34 +Determining Award Structure and Setting the Target Award Opportunity +37 +Compensation Policies and Practices +38 +Compensation Committee Interlocks and Insider Participation +40 +Compensation Tables +41 +Summary Compensation Table +41 +All Other Compensation Table +42 +2024 Grants of Plan-Based Awards +43 +Outstanding Equity Awards at 2024 Fiscal Year-End +44 +2024 Stock Vested +45 +Benefit Plans +46 +401(k) Plan +46 +2021 Stock Incentive Plan +46 +Equity Compensation Plan Information +47 +Termination, Resignation or Change of Control +50 +CEO Pay Ratio Disclosure +52 +Pay Versus Performance +53 +2024 Director Compensation +55 +Beneficial Ownership +57 +Holdings of Major Stockholders +58 +Certain Relationships and Review and Approval of Related Party Transactions +59 +Proposal to Ratify the Appointment of Our Independent Auditors +60 +Proposal to Approve, on an Advisory, Non-Binding Basis, the Compensation Paid to the Company’s Named Executive Officers +61 +Proposal to Amend our Amended and Restated Certificate of Incorporation to Provide for Officer Exculpation +62 +Audit Committee Report +63 +About the Annual Meeting +64 +Availability of Form 10-K and Annual Report to Stockholders +68 +Householding +69 +Other Matters +70 +Solicitation by the Board of Directors +71 +Forward-looking Statements +72 +Submission of Future Stockholder Proposals +73 +2025 PROXY STATEMENT i +PROXY STATEMENT SUMMARY +The summary below highlights information contained elsewhere in this proxy statement. It does not contain all the information that you should consider in connection with the matters before the Annual Meeting. Please read the entire proxy statement carefully before voting your shares. +ABOUT GULFPORT +Gulfport is an independent natural gas -weighted exploration and production company with assets primarily located in the Appalachia and Anadarko basins. Our principal properties are located in eastern Ohio targeting the Utica and Marcellus and in central Oklahoma targeting the SCOOP Woodford and Springer formations. Our corporate headquarters is located in Oklahoma City, Oklahoma and shares of Gulfport’s Common Stock trade on the New York Stock Exchange (NYSE) under the ticker symbol “GPOR”. +BUSINESS STRATEGY +Gulfport aims to create sustainable value through the economic development of our significant resource plays in the Utica and SCOOP operating areas. Our strategy is to develop our assets in a manner that generates sustainable cash flow, expands margins and enhances operating efficiencies, all while improving our environmental and safety performance. To accomplish these goals, we allocate capital to projects we believe offer the highest rate of return and deploy leading drilling and completion techniques and technologies in our development efforts. We believe our plan to generate adjusted free cash flow on an annual basis will allow us to return capital to shareholders and increase our resource depth through acquiring incremental leasehold opportunities that provide optionality for our future development plans. +Core Assets +Employees +2024 Production +2024 Production Mix +Utica/Marcellus and SCOOP +235 people +as of Dec. 31, 2024 +1,054 MMcfe +per day +92% natural gas, 6% natural gas liquids and 2% oil +DIRECTORS +Our Board is comprised of seven directors, including the Company’s Chief Executive Officer, John Reinhart, and six non -employee directors, Timothy Cutt, David Wolf, Jason Martinez, Jeannie Powers, David Reganato, and Mary Shafer -Malicki . They are diverse, industry -leading experts with an average of approximately 25 years of industry leadership experience across multiple disciplines. Each of our directors will stand for election annually and must be elected by a majority of shares voted. +2025 PROXY STATEMENT 1 +Board Summary +The following table provides summary information about each director nominee who is standing for election at the Annual Meeting. For more information about the background and qualifications of each nominee, please see “Election of Directors and Director Biographies” on page 8 of this proxy statement. We ask you to vote “ FOR ” each of our director nominees. +Director +Board Positions +Dir. Since +Age +Ind. +Principal Occupation +Timothy Cutt +Chair +2021 +64 +Board Chair of Gulfport Energy +David Wolf +Lead Independent Director +2021 +54 +🗸 +Partner at Enduring Resources +Jason Martinez +Independent Director +2021 +51 +🗸 +Managing Director at Pickering Energy Partners +Jeannie Powers +Independent Director +2023 +40 +🗸 +Managing Director at EIG +David Reganato +Independent Director +2021 +45 +🗸 +Partner at Silver Point Capital +John Reinhart +Director +2023 +56 +President and Chief Executive Officer of Gulfport Energy +Mary Shafer -Malicki +Independent Director +2023 +64 +🗸 +Director at Ag Growth International +2 2025 PROXY STATEMENT +Corporate Responsibility and +Sustainability Highlights +Gulfport is proud to play its part in the responsible and efficient development of domestic natural gas which is critical to our country’s economic success as it provides the primary fuel for efficient power generation in the United States. We strive to reduce our environmental impact, to invest in our people and communities and to prioritize our dedication to environmental stewardship in everything we do. +We have identified several key areas where our business could have an impact on the communities where we operate, including: greenhouse gas emissions, waste and spills, water usage, health, safety and environmental (“HSE”) protection, employee training and education, and community involvement. Our Board Nominating, Environmental, Social and Governance Committee oversees environmental, safety, social, sustainability and governance (“ESG”) matters. Continuously improving our HSE performance remains a top priority. Our HSE performance also directly impacts the compensation of all our employees as it is one of the performance goals included in our cash incentive compensation plan. We believe having measurable HSE metrics as part of our incentive compensation program leads to improved accountability and reinforces our cultural focus on operating safely and protecting employees, the environment and the communities in which we operate. +Environmental Stewardship. Environmental stewardship serves as the foundation for our climate risk strategy. We are dedicated to delivering cleaner, safer, more affordable and reliable energy while working to reduce our impact on the environment. Gulfport strives to minimize our environmental impact by: +• Conducting annual recertification of all Appalachian gas with an independent auditor. +• Retrofitting natural gas pneumatic devices with compressed air or other non -gas venting devices. +• Designing future pad sites with compressed air pneumatic devices. +• Employing air quality programs and operating practices to ensure that we comply with or exceed regulations. +• Investing in and implementing technology to reduce emissions, waste and our physical footprint on drilling locations. +• Selecting and designing our well sites to minimize impacts to sensitive habitats and surrounding areas. +• Returning to existing locations for new development, creating opportunities to utilize existing facilities and minimizing surface disturbances. +• Reducing water disposal volumes and freshwater consumption through water re -use or water sharing agreements with other operators. +• Testing spill prevention and response programs to confirm equipment is properly maintained. +Gulfport is a long -standing member of The Environmental Partnership. The organization is comprised of stakeholders in the oil and natural gas industry who are committed to continuous environmental improvement. The Environmental Partnership’s primary focus is reducing methane and volatile organic compound emissions. Gulfport also developed an Environmental Policy supporting its commitment to operational excellence, compliance and environmental awareness. Gulfport’s Environmental Policy fosters environmental awareness and serves as a guide for employee behavior. All employees are expected to act and make decisions within the guidelines of the policy to ensure our business complies with local, state and federal environmental laws and regulations. Gulfport employees and contractors are expected to protect the environment, limit spills and discharges, manage waste responsibly and reduce emissions. +Safety. Safety is the number one priority for all Gulfport employees and contractors. Gulfport provides comprehensive safety training to employees and contractors and is fully committed to a safe working environment. We utilize and apply performance metrics to drive and improve safe operations. Gulfport has designed and instituted emergency response and business continuity plans to address incidents involving operational disruptions, pandemics and natural disasters. These measures include prompt notification procedures enabling Gulfport personnel to quickly evaluate and mitigate risks. Limiting safety incidents is included as part of our incentive compensation programs to ensure we train and hold our employees accountable for operating safely. +2025 PROXY STATEMENT 3 +Corporate Responsibility and Sustainability Highlights +WORK SAFE +Gulfport’s Work Safe Program is behaviorally based and focuses on twelve rules derived from Company policies (critical tasks) and cultural conditions linked to serious safety incidents in our industry. Critical Task Rules require specific operating procedures to mitigate hazardous work site conditions and complete work safely. Cultural Condition Rules are defined as work site conditions or human behaviors that have been linked to the root cause of most incidents. Employees and contractors are expected to apply and follow the requirements that coincide with the twelve rules. We continue educating employees and contractors on this program through safety meetings and training programs. Our goal is to not only improve our safety performance but to proactively prevent incidents before they occur. +Stop Work is one of the Work Safe Program’s critical tasks. Our Chief Executive Officer, John Reinhart, signed and communicated a Stop Work Authority and Obligation letter to the Company’s employees and our contractors. This letter outlines Gulfport’s commitment to health, safety and the environment and provides the expectation and support to Gulfport employees and contract partners to stop work when conditions warrant. Every person on a Gulfport work site has the authority — and obligation — to stop any work that may cause an unsafe condition, create personal risk, or harm the environment. +Health, Safety & Environment Highlights for 2024: +• Achieved overall “A” rating for Appalachia assets from MiQ for second consecutive year. +• Conducted Company’s first climate risk assessment and integrated climate -related risk into Enterprise Risk Management program. +• Reduced combined total recordable incident rate by 74% compared to 2021. +• Invested in and implemented technology to reduce emissions, waste and our physical footprint on drilling locations. +• Reduced water disposal volumes and freshwater consumption through water re -use or water sharing agreements with other operators. +• Progressed in multi -year program to convert natural gas process controllers with compressed air or other non -gas venting devices across our operations to reduce methane emissions. +Human Capital. Gulfport’s employees are its most important asset. We believe the differences among our workforce make us stronger as a Company, and we prioritize attracting and recruiting highly qualified candidates with varied backgrounds and experiences. We remain committed to outreach efforts to keep our candidate pool as large as possible so that we continue to hire and retain the best, highly qualified, and experienced professionals in our industry. We regularly evaluate our pay practices and benefit offerings to ensure they remain fair and competitive. We also offer our employees and managers development training and provide access to the resources they need to execute at a high level. We also offer ongoing and continuous training on our workplace policies. We encourage all employees to provide feedback and ideas on how Gulfport can continuously improve as an organization. We require all employees to sign a commitment indicating they will speak up if they observe or become aware of any actions that are inconsistent with our core values, our Code of Business Conduct and Ethics, or other Company policies. We are also committed to supporting veterans through our recruiting and hiring efforts, and we support several causes that assist veterans and active -duty military personnel. +In 2024, all employees participated in multiple and varied training courses on our Business Code of Conduct and Ethics, Company policies, and topics specifically related to employees’ job performance, health, and safety. We understand that a workplace environment that embraces continuous improvement and incorporates different ideas and perspectives is a healthy environment and one that provides the best solutions to complex challenges. +Board Composition. Our Nominating, Environmental, Social and Governance Committee is dedicated to attracting and recruiting the most qualified candidates. The Committee values varied experiences and backgrounds and adopted a Board Diversity Policy. The policy requires that the Committee include a broad range of candidates in all director searches, taking into account gender, race, ethnicity, background, age, thought and tenure on our Board (in connection with the consideration of the renomination of an existing director). Gulfport’s current Board has over 40% of our directors identifying as gender or ethnically diverse. +Human Rights Policy. Gulfport is committed to serving as a positive force in its communities, and the Company remains dedicated to upholding the highest standards of human rights, clearly defined in our Human Rights Policy. +4 2025 PROXY STATEMENT +Corporate Responsibility and Sustainability Highlights +Gulfport respects fundamental human rights and views them as an integral part of corporate ethics and social responsibility. The Company adheres to the highest ethical conduct as outlined in Gulfport’s Business Code of Conduct and Ethics and Supplier Code of Conduct. +Gulfport applies fair labor practices throughout its operations and adheres to applicable workplace, employment, privacy and human rights standards. Consistent with the United Nations Guiding Principles on Business and Human Rights, Gulfport recognizes the responsibility of governments to protect and fulfill human rights. As an operating rights owner, it is the Company’s obligation to respect human rights and comply with applicable laws. +Gulfport does not tolerate unlawful discrimination or workplace harassment in any form. Gulfport is committed to maintaining and improving its strong and dynamic supplier network, which supports the Company’s goal of making a positive contribution in the communities where it does business. We regularly assess risk within Supply Chain and expect contractors and suppliers to comply with applicable laws and respect the Company’s voluntary commitments, the Supplier Code of Conduct, our Business Code of Conduct and Ethics and EHS policies. +Community Engagement. Gulfport strives to positively impact and improve the communities where we live and operate. We uphold our corporate responsibility and put our core values in action forming partnerships that give back to our operating areas and enhance lives in our communities. Gulfport recognizes that its operations can create a significant economic and social impact and actively engages with communities in which we operate. Gulfport supports programs that make a lasting and positive impact on education, health and community development. Gulfport is proud to support campaigns for nonprofit agencies in Oklahoma and Ohio through volunteer efforts as well as financial and in -kind contributions. Gulfport continues to emphasize volunteerism as an important part of our corporate culture. We center our giving efforts to support education, health and human services, environmental stewardship and our veterans. In 2022, Gulfport formed its Community Impact Committee consisting of employees from its headquarters and field offices in Oklahoma and Ohio. This committee is dedicated to seeking partnerships and volunteer opportunities all centered around these key focus areas. +In the last 12 months, Gulfport has partnered with over 40 organizations with missions centered around our key focus areas. Through monetary contributions and volunteering efforts, we have supported organizations dedicated to protecting and sustaining the environment, supplying life -sustaining formula and food for babies and toddlers in times of crisis, enhancing the lives of adults with developmental disabilities and supporting veterans and youth through community programs. +2025 PROXY STATEMENT 5 +Corporate Responsibility and Sustainability Highlights +Corporate Governance Highlights +We believe effective corporate governance requires regular constructive discussions with our stakeholders and we focus our sustainability priorities and disclosures on the issues that are most important to them. To identify these priorities, we engage internal and external stakeholders and weigh their views with respect to both Gulfport’s specific activities and the general business climate of our industry. In addition to these efforts, management engages with stockholders and potential stockholders through targeted outreach and participation in various conference and industry events. +Key Stakeholders include: +• Contractors and Suppliers +• Employees +• Government and Regulatory Agencies +• Industry Peers +• Investors +• Landowners +• Local Communities +• Service Providers +• Trade Associations +This feedback helps shape our corporate governance practices, and has specifically resulted in: +• Amendment of the Bylaws to change the supermajority vote requirement for stockholders to amend the Bylaws to a majority vote requirement; +• Adoption of stock ownership guidelines for our non -employee directors and executive officers to further align the long -term financial interests of our directors and executive officers with those of our stockholders; +• Adoption of Corporate Governance Guidelines to ensure best practices and reflect the Board’s commitment to monitor the effectiveness of policy and decision making at the Board and management levels; +• Separation of Chief Executive Officer and Board Chair roles on January 24, 2023; +• Lead Independent Director appointed; +• Advancement of Board resilience, emphasizing dynamic skills and backgrounds in the Nominating, Environmental, Social and Governance Committee’s charter; and +• Adoption of a written executive compensation clawback policy. +• Majority voting to elect directors in uncontested elections and plurality voting to elect directors in contested elections; +• Creation of the Nominating, Environmental, Social and Governance Committee to further develop our commitment to HSE and corporate responsibility and sustainability matters and their impact on our business and operations; +• Active stockholder outreach, engaging in discussions with our stockholders at investor conferences and through direct calls and meetings with the Company’s management team that represent over 60% of the shares outstanding; +• Active Board oversight of risk and risk management; +• Periodic Board and Committee self -assessments reviewed by an outside law firm; +• Non -employee director meetings in executive sessions at regularly scheduled Board meetings; and +• 99% attendance at 2024 Board and Committee meetings. +6 2025 PROXY STATEMENT +Corporate Responsibility and Sustainability Highlights +COMPENSATION HIGHLIGHTS +Stockholder Engagement and Annual Say-On-Pay Advisory Vote +At the Annual Meeting, our stockholders will again have an opportunity to cast an advisory Say -On-Pay vote on the compensation paid to our Named Executive Officers (NEOs) as described in this proxy statement. The details of the executive compensation program and its pay -for-performance alignment are discussed in the “Compensation Discussion & Analysis (CD&A)” on page 25 of this proxy statement. +Gulfport Energy engages in discussions with our stockholders at investor conferences and through direct calls and meetings with the Company’s management team that represented over 60% of the shares outstanding. Through these conversations our stockholders emphasized their expectation that our compensation programs should be designed to focus our executive team on driving results that ensure the financial health of the organization while also driving long -term stockholder value. Specifically, after carefully considering input from stockholders, the Company took the following actions in 2024: +• Utilized performance -based and time -based equity awards in the form of performance -based restricted stock units tied to relative total shareholder return (“TSR”) and absolute total shareholder return, vesting over a three -year performance period; 60% of all equity awards to NEOs were performance -based . +• Adjusted performance incentive opportunities and long -term equity award targets to closely align our executives’ financial interests with those of our stockholders and to continue to link a large portion of executives’ compensation to the performance of our stock and our operational performance. +• Continued utilizing metrics in the annual incentive plan to include measures directly tied to the financial health of the Company, including production per day, capital expenses, lease operating expenses, free cash flow generation, and specific and quantifiable health, safety, environmental and social metrics. +• Provided robust disclosure of our performance metrics and targets for both performance -based cash and equity awards. +Stock Performance Graph +The following Performance Graph and related information shall not be deemed “soliciting material” or to be “filed” with the Securities and Exchange Commission, nor shall such information be incorporated by reference into any future filings under the Securities Act of 1933 or Securities Exchange Act of 1934, each as amended, except to the extent that the Company specifically incorporates it by reference into such filings. +The performance graph below illustrates changes over the period of December 31, 2023 through December 31, 2024, in cumulative total stockholder return on Gulfport Common Stock as measured against the cumulative total return of the S&P 500 Index, the S&P Oil & Gas Exploration and Production Index and the 2024 Peer Group. The graph tracks the performance of a $100 investment in our Common Stock, each peer company and in each index (with the reinvestment of all dividends for the index securities) from December 31, 2023 to December 31, 2024. +Note: 2024 Peer Group defined further on page 32. +2025 PROXY STATEMENT 7 +ELECTION OF DIRECTORS AND DIRECTOR BIOGRAPHIES +(Proposal 1) +The Company is asking its stockholders to vote to elect seven directors to serve on the Board of Directors until the 2026 Annual Meeting of Stockholders (the “2026 Annual Meeting”) or until their respective successors have been duly elected and qualified. +Our Board of Directors currently consists of seven members who are elected annually. Six of these seven directors are non -employee directors, and five of the seven directors are independent under the NYSE listing standards. +The directors standing for election this year are listed below. If any nominee should decline election or should become unable to serve as a director of our Company for any reason before election at the Annual Meeting, votes will be cast by the persons appointed as proxies for a substitute nominee, if any, designated by the Board of Directors. +There are no family relationships among any of the nominees, directors or any of the executive officers. +Vote Required and Board Voting Recommendation +Directors will be elected at the Annual Meeting by a majority of the votes cast. Abstentions and broker non -votes will have no effect on the voting results for Proposal 1. +8 2025 PROXY STATEMENT +ELECTION OF DIRECTORS AND DIRECTOR BIOGRAPHIES +Timothy Cutt +Age: 64 +Director since: May 2021 +Other Public Company Directorships Held in the Past Five Years: +QEP +(January 2019 – March 2021) +Business Experience: +Mr. Cutt has served as non-executive Board Chair since March 2023 and joined Gulfport as Board Chair and Chief Executive Officer in May 2021. Mr. Cutt is a Petroleum Engineer with over 40 years of energy experience. He served as Chief Executive Officer and as a director of QEP Resources from January 2019 to March 2021. Prior to joining QEP, Mr. Cutt was the Chief Executive Officer and a director of Cobalt International Energy from 2016 to 2018. Previously, Mr. Cutt held several executive positions with BHP Billiton before serving as President of the Petroleum Division from 2013 to 2016. During this time, he was also a member of BHP Billiton’s Corporate Executive Committee. Mr. Cutt began his career with Mobil and worked for ExxonMobil for 24 years and served in various management roles including President of ExxonMobil de Venezuela, President ExxonMobil Canada Energy and President Hibernia Management & Development Company. +Other Memberships and Positions: +Mr. Cutt is President of the Louisiana Tech Foundation Board, served on the board of the American Exploration and Production Council from 2021 to 2023, and previously served as a board member of the American Petroleum Institute from 2013 to 2018. +Educational Background: +Mr. Cutt received his Bachelor of Science Degree in Petroleum Engineering from Louisiana Tech University. +BOARD MEMBERSHIP QUALIFICATIONS: +Mr. Cutt’s extensive experience as a CEO and director of public exploration and production companies, executive management skills and extensive knowledge of the oil and natural gas sector and corporate governance qualify him to serve as a director. +David Wolf +Age: 54 +Director since: May 2021 +Other Public Company Directorships Held in the Past Five Years: +EP Energy Corporation +(Since October 2020) +Business Experience: +Mr. Wolf serves as Lead Independent Director and has an extensive financial background, with over 30 years of experience in the energy and oil and gas industries. Currently, Mr. Wolf serves as a partner at Enduring Resources. He previously served as Executive Vice President and Chief Financial Officer of Vantage Energy and President, Chief Executive Officer, and a Board Member of Fuse Energy LLC. Prior to joining Fuse Energy, Mr. Wolf served as Executive Vice President and Chief Financial Officer of Berry Petroleum Co and a Managing Director in the Global Oil & Gas Group at JP Morgan Chase & Co. +Educational Background: +Mr. Wolf received his Bachelor of Science degree in Economics from Rollins College and Master of Business Administration degree from Crummer School of Business, Rollins College. +BOARD QUALIFICATIONS: +Mr. Wolf’s prior experience as a Chief Financial Officer, strong oil and natural gas industry background and financial acumen qualify him to serve as a director. +2025 PROXY STATEMENT 9 +ELECTION OF DIRECTORS AND DIRECTOR BIOGRAPHIES +Jason Martinez +Age: 51 +Director since: May 2021 +BUSINESS EXPERIENCE: +Mr. Martinez has had a 30-year energy industry career, and over 20 years as an investment banker. Currently, Mr. Martinez serves as a Managing Director at Pickering Energy Partners, leading its Energy Transition Advisory practice. Over the course of his career, his client and deal work span a dozen-plus countries and over $100 billion of announced transactions, including mergers, acquisitions, divestitures, all forms of public and private capital raising, and commercial lending. Previously, he held positions at Bank of Montreal Capital Markets, Nomura Securities International, Deutsche Bank Securities, and JPMorgan Securities. At Bank of Montreal, he led the Acquisitions and Divestitures practice. He began his energy career in Andersen Consulting’s Natural Resources group. +EDUCATIONAL BACKGROUND: +Mr. Martinez received his Master of Business Administration degree from the Harvard Business School and a Bachelor of Arts degree from Rice University. +BOARD QUALIFICATIONS: +Mr. Martinez’s financial acumen and extensive private equity experience qualify him to serve as a director. +Jeannie Powers +Age: 40 +Director since: July 2023 +Business Experience: +Ms. Powers is Managing Director and Head of North America Traditional Energy based in EIG’s Houston office. In her previous role at EIG, she led the North America Engineering team, which was focused on engineering support across all aspects of EIG’s North American existing portfolio as well as new business opportunities. Before joining EIG in 2017, Ms. Powers worked as a Sr. Technical Advisor at Wells Fargo Securities A&D where she spent three years evaluating and marketing upstream and midstream assets. Prior to Wells, Ms. Powers spent several years at Chevron, with increasing responsibility, working both asset development and operations across the lower 48. +EDUCATIONAL BACKGROUND: +Ms. Powers has a Master of Business Administration from Texas Tech University and a Bachelor of Science in Petroleum Engineering from the University of Texas. +BOARD QUALIFICATIONS: +Ms. Powers’ strong oil and natural gas industry background and financial acumen qualify her to serve as a director. +10 2025 PROXY STATEMENT +ELECTION OF DIRECTORS AND DIRECTOR BIOGRAPHIES +David Reganato +Age: 45 +Director since: May 2021 +Other Public Company Directorships Held in the Past Five Years: +Granite Broadcasting LLC +(since July 2011) +New Cotai, LLC +(since March 2014) +Rotech Healthcare Holdings, Inc. +(since September 2013) +Studio City International Holdings +(since March 2014) +Trident Holding Company, LLC, +(holding company of TridentCare) +(since September 2019) +Business Experience: +Mr. Reganato has over 20 years of experience in the investment industry, including significant knowledge of the oil and gas sector. Currently, Mr. Reganato serves as a Partner with Silver Point Capital, L.P., an investment advisor, which he joined in November 2002. Prior to Silver Point Capital, L.P., Mr. Reganato worked in the investment banking division of Morgan Stanley. +Educational Background: +Mr. Reganato received his Bachelor of Science degree in Finance and Accounting from the Stern School of Business at New York University. +BOARD QUALIFICATIONS: +Mr. Reganato’s financial acumen, knowledge of the oil and natural gas sector and previous board experience qualify him to serve as a director. +John Reinhart +Age: 56 +Director since: January 2023 +Other Public Company Directorships Held in the Past Five Years: +Montage Resources +(March 2019 – November 2020) +BUSINESS EXPERIENCE: +Mr. Reinhart has over 30 years of oil and gas industry leadership experience. Most recently, he served as President, Chief Executive Officer and member of the board of directors of Montage Resources Corporation where he led actions that positioned Montage as an attractive strategic partner with sufficient scale, low debt profile and achievement of top-quartile operational and financial metrics. Mr. Reinhart previously served as President, Chief Executive Officer and member of the board of directors of Blue Ridge Mountain Resources and as Chief Operating Officer at Ascent Resources. He started his oil and gas career at Schlumberger before joining Chesapeake Energy Corporation, where he held operations roles with increasing responsibility. Mr. Reinhart began his career in the United States Army, serving tours in Panama and Iraq. +Educational Background: +Mr. Reinhart graduated from West Virginia University with a Bachelor of Science degree in Mechanical Engineering. +BOARD QUALIFICATIONS: +Mr. Reinhart’s considerable operational, technical, cultural, and executive experience in the oil and natural gas industry, including his prior service as an executive and director of both Montage Resources and Blue Ridge Mountain Resources qualify him to serve as a director. +2025 PROXY STATEMENT 11 +ELECTION OF DIRECTORS AND DIRECTOR BIOGRAPHIES +Mary Shafer-Malicki +Age: 64 +Director since: May 2023 +Other Public Company Directorships Held in the Past Five Years: +Ag Growth International +(Since January 2024) +Callon Petroleum +(January 2022 – April 2024) +QEP Resources +(July 2017 – March 2021) +McDermott International Inc. +(November 2011 – May 2020) +Wood Plc +(May 2012 – May 2021) +BUSINESS EXPERIENCE: +Ms. Shafer-Malicki retired in 2009 after a 26-year career with BP Exploration Operating Company (BP) and Amoco Corporation, where she held domestic and international leadership roles across the energy value chain. She served as Senior Vice President/CEO and Chief Operating Officer/General Manager for BP’s operations in Angola from 2005 to 2009 and Director General for BP’s operations in Vietnam from 2003 to 2005. Prior to this, she served as the Business Unit Leader for BP’s Central North Sea gas business in Scotland from 2001 to 2003, General Manager for support services to all of BP’s Continental Shelf upstream operations in the United Kingdom from 2000 to 2001 and President and General Manager for Amoco/BP’s Dutch onshore and offshore production and gas storage operations in the Netherlands from 1998 to 2000. +Her significant board experience includes service as Chair of the Board for QEP Resources and as a board member for Callon Petroleum, Wood plc, McDermott International Inc., and Ausenco Limited. In addition, Ms. Shafer-Malicki currently serves as a director of Ag Growth International, the University of Wyoming Foundation, as well as a member of industry advisory boards for the Chemical Engineering departments at the University of Wyoming and Oklahoma State University. +Educational Background: +Ms. Shafer-Malicki graduated from Oklahoma State University with a Bachelor of Science degree in Chemical Engineering. +BOARD QUALIFICATIONS: +Ms. Shafer-Malicki’s extensive energy industry experience, including her serving in senior executive positions, and her experience as a director on multiple public company boards qualify her to serve as a director. +12 2025 PROXY STATEMENT +ELECTION OF DIRECTORS AND DIRECTOR BIOGRAPHIES +WHAT ARE THE COMMITTEES OF THE BOARD? +Our Board of Directors has an Audit Committee, a Compensation Committee, and a Nominating, Environmental, Social and Governance Committee. The table below summarizes committee membership as of the date of this proxy statement along with the functions each committee is responsible for performing. +AUDIT COMMITTEE +Members +David Wolf C+^ +Jason Martinez +^ +Jeannie Powers +^ +David Reganato +^ +Number of Meetings in 2024 +8 +Principal Functions +• Reviews and discusses with management and the independent auditors the integrity of our accounting policies, internal controls, financial statements, accounting and auditing processes and risk management compliance. +• Monitors and oversees our accounting, auditing and financial reporting processes generally, including the qualifications, independence and performance of the independent auditor. +• Monitors our compliance with legal and regulatory requirements. +• Monitors the Company’s cybersecurity risk and readiness. +• Monitors compliance with the Company’s Code of Business Conduct and Ethics. +• Establishes and oversees procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters, and the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters. +• Reviews and approves related party transactions. +• Appoints, determines compensation, evaluates and terminates our independent auditors. +• Pre -approves audit and permissible non -audit services to be performed by the independent auditors. +• Prepares the report required by the U.S. Securities and Exchange Commission (the “SEC”), for the inclusion in our annual proxy statement. +• Reviews and reassesses the adequacy of the Audit Committee charter on a periodic basis. +• Informs our independent auditors of the Audit Committee’s understanding of significant relationships and transactions with related parties and review and discuss with our independent auditors the auditors’ evaluation of our identification of, accounting for and disclosure of our relationships and transactions with related parties, including any significant matters arising from the audit regarding our relationships and transactions with related parties. +C Committee Chair. ++ Satisfies NYSE independence and other applicable independence rules for membership on such Committees. +^ Audit Committee financial expert. +2025 PROXY STATEMENT 13 +ELECTION OF DIRECTORS AND DIRECTOR BIOGRAPHIES +compensation committee +Members +Jason Martinez C+ +David Wolf + +David Reganato + +Mary Shafer-Malicki + +Number of Meetings in 2024 +5 +Principal Functions +• Oversees and administers our executive compensation policies, plans and practices, including our stock retention guidelines, and evaluates their impact on risk and risk management. +• Assists the Board of Directors in discharging its responsibilities relating to the compensation of our executives, including our Chief Executive Officer, and other key employees. +• Administers our equity -based compensation plans, including the grants of stock options, restricted stock awards and other equity awards under such plans. +• Develops, reviews and approves our cash -based incentive bonus plans, including the establishment of performance criteria, targets and awards under our 2024 Executive Annual Incentive Compensation Plan. +• Makes recommendations to the Board with respect to incentive compensation. +• Where appropriate or required, makes recommendations to our stockholders with respect to incentive compensation and equity -based plans. +• Conducts annual performance evaluation of the Committee. +• Reviews disclosure related to executive compensation in our proxy statement and prepares an annual Compensation Committee report. +• Reviews and considers the stockholders’ advisory vote on executive compensation and the frequency of holding such advisory vote. +• Reviews and reassesses the adequacy of the Compensation Committee charter. +C Committee Chair. ++ Satisfies NYSE independence and other applicable independence rules for membership on such Committees. +14 2025 PROXY STATEMENT +ELECTION OF DIRECTORS AND DIRECTOR BIOGRAPHIES +NOMINATING, ENVIRONMENTAL, SOCIAL AND GOVERNANCE COMMITTEE +Members +Mary Shafer-Malicki C+ +David Wolf + +Jeannie Powers + +David Reganato + +Number of Meetings in 2024 +5 +Principal Functions +• Assists the Board of Directors in developing criteria for identifying and evaluating individuals qualified to serve as members of our Board of Directors. +• Selects and recommends director candidates to the Board of Directors to be submitted for election at each annual meeting of stockholders and to fill any vacancies on the Board of Directors. +• Periodically reviews and makes recommendations regarding the composition and size of the Board of Directors and its Committees. +• Reviews and recommends to the Board of Directors appropriate corporate governance guidelines and procedures for the Company. +• Conducts an annual assessment of the qualifications and performance of the Board of Directors. +• Reviews and reports to the Board of Directors on the performance of management annually. +• Reviews the development and leadership capabilities of the executive officers and management’s succession process. +• Reviews and approves the Company’s Corporate Sustainability Report. +• Reviews and makes recommendations to our Board of Directors regarding the health, safety and environmental protection, and corporate responsibility matters, including governmental relations, political contributions and corporate philanthropy, which we refer to as HSE and corporate responsibility matters, and their impact on our business and operations. +• Monitors and evaluates management’s actions with respect to HSE and corporate responsibility matters. +• Reviews reports from our management, consultants or other advisors regarding (i) our performance with respect to HSE and corporate responsibility matters and compliance with any related laws and regulations applicable to us, (ii) any significant litigation relating to HSE and corporate responsibility matters involving our Company, and (iii) any significant legislation or regulations, judicial decisions, treaties, protocols, conventions or other agreements, public policies or other scientific, medical or technological developments involving HSE and corporate responsibility matters that will or may have a material effect on our business and operations. +• Reviews the risks and exposures relating to HSE and corporate responsibility matters, including mitigation and remedial actions. +• Reviews crisis management planning procedures relating to HSE and corporate responsibility matters. +• Conducts investigations or studies affecting Gulfport as they pertain to HSE and corporate responsibility matters. +• Reviews the effectiveness of internal systems and controls necessary to ensure our compliance with applicable health, safety and environmental laws, rules and regulations. +• Reviews our compliance with industry practices in the areas of health, safety and environmental protection. +• Reviews our political, charitable and educational contributions/programs and the administration of any political action or similar Committees of our employees. +• Oversees the policies and practices promoting resilient employment practices within the Company and the Company’s human and workplace rights and policies. +• Reviews and provides guidance on public policy advocacy efforts to confirm alignment with Company policies and values. +• Reviews and reassesses the adequacy of the Nominating, Environmental, Social and Governance Committee charter. +C Committee Chair. ++ Satisfies NYSE independence and other applicable independence rules for membership on such Committees. +2025 PROXY STATEMENT 15 +ELECTION OF DIRECTORS AND DIRECTOR BIOGRAPHIES +DO THE COMMITTEES HAVE WRITTEN CHARTERS? +Yes. The charters for each Committee can be found on our website at https://www.gulfportenergy.com/investors/corporate -governance /governance -documents . You may also obtain copies of these charters, as well as our Code of Business Conduct and Ethics, which is described below, by writing to our Chief Legal and Administrative Officer and Corporate Secretary, Patrick Craine, at Gulfport Energy Corporation, 713 Market Drive, Oklahoma City, Oklahoma 73114. +16 2025 PROXY STATEMENT +CORPORATE GOVERNANCE MATTERS AND +COMMUNICATIONS WITH THE BOARD +WHO ARE OUR INDEPENDENT DIRECTORS? +Our Board of Directors has determined that five of our seven current Board members (David Wolf, Jason Martinez, Jeannie Powers, David Reganato, and Mary Shafer -Malicki ) meet the independence requirements in the NYSE listing standards and are free of any relationship that, in the opinion of our Board of Directors, would interfere with the exercise of independent judgment in carrying out their responsibilities as directors of the Company. Mr. Reinhart, our President, Chief Executive Officer and Director, is not considered by the Board of Directors to be an independent director because of his current employment with the Company. Mr. Cutt, our Board Chair, is not considered by the Board of Directors to be an independent director because of his previous employment as Chief Executive Officer of the Company. +Annual Board Self -Assessment Process +Board and Committee Evaluations +Director Performance Evaluations +How often did the Board of Directors meet in 2024? +The Board of Directors met 9 times in 2024. In addition to these meetings, the Board of Directors adopted resolutions by unanimous written consent. Each director attended over 94% of the aggregate meetings of the Board of Directors and the meetings of the Committees on which they served. +Do our non -management directors meet separately without management? +Our non -management directors routinely meet in an executive session following regularly scheduled meetings of the Board of Directors. +2025 PROXY STATEMENT 17 +CORPORATE GOVERNANCE MATTERS AND COMMUNICATIONS WITH THE BOARD +How can I communicate with the Board of Directors? +Individuals may communicate with our Board of Directors or individual directors by writing to our Chief Legal and Administrative Officer and Corporate Secretary, Patrick Craine, at Gulfport Energy Corporation, 713 Market Drive, Oklahoma City, Oklahoma 73114. Our Chief Legal and Administrative Officer and Corporate Secretary will review all correspondence and forward our Board of Directors correspondence that, in the opinion of our Chief Legal and Administrative Officer and Corporate Secretary, relates to the function of our Board of Directors or a Board Committee or otherwise requires their attention. Directors may review a log of all correspondence received by us and request copies. Concerns relating to accounting, internal control over financial reporting or auditing matters will be immediately brought to the attention of the Chair of the Audit Committee and handled in accordance with our Audit Committee’s procedures. +WILL directors attend the Annual Meeting? +Recognizing that director attendance at our Annual Meeting can provide stockholders an opportunity to communicate with directors about issues affecting the Company, we actively encourage our directors to attend, either virtually or in person, the Annual Meeting of Stockholders. All Directors attended our 2024 Annual Meeting of Shareholders. +Code of Business Conduct and Ethics +We have adopted a Code of Business Conduct and Ethics designed to help directors and employees resolve ethical issues. Our Code of Business Conduct and Ethics applies to all directors and employees. Our Code of Business Conduct and Ethics covers various topics including, but not limited to, conflicts of interest, fair dealing, discrimination and harassment, confidentiality, compliance procedures and employee complaint procedures. Our Code of Business Conduct and Ethics, together with any amendments or waivers, are posted on our website at https://www.gulfportenergy.com/investors/corporate -governance /governance -documents . +Corporate Governance Guidelines +We have adopted Corporate Governance Guidelines to assist the Board in exercising its responsibilities. The Corporate Governance Guidelines reflect the Board’s commitment to monitor the effectiveness of policy and decision making at the Board and management levels, with a view to enhancing stockholder value over the long term. The Corporate Governance Guidelines also assure that the Board will have the necessary authority and practices in place to review and evaluate the Company’s business operations as needed and to make decisions that are independent of the Company’s management. Our Corporate Governance Guidelines, together with any amendments or waivers, are posted on our website at https://www.gulfportenergy.com/investors/corporate -governance /governance -documents . +Political Contribution Policy +Engagement in the political, legislative and regulatory process is important to the success of the Company. The Company has delegated compliance and oversight over this function to the Nominating, Environmental, Social and Governance Committee and has adopted a political contributions and activity policy that sets forth the ways by which the Company and its employees may participate in the political, legislative and regulatory process. All political contributions and activities are subject to compliance with applicable laws. +18 2025 PROXY STATEMENT +NOMINATING PROCESS FOR DIRECTORS, DIRECTOR +QUALIFICATIONS AND REVIEW OF DIRECTOR NOMINEES +Director Qualifications +As provided by the Nominating, Environmental, Social and Governance Committee’s charter, the Committee identifies, investigates, and recommends candidates to our Board of Directors with the goal of creating a balance of knowledge, experience, and backgrounds. The Committee identifies candidates using third -party search firms, as well as through the extensive networks of our directors and management team in the oil and natural gas industry. +It is our policy that potential directors should possess the highest personal and professional ethics, integrity and values and be committed to representing the interests of our stockholders. In addition to reviewing a candidate’s background and accomplishments, candidates are reviewed in the context of the current composition of our Board of Directors, the skills necessary to provide effective oversight in critical areas and the evolving needs of our business. It is the policy of our Board of Directors that, at all times, at least a majority of its members meet the standards of independence promulgated by the NYSE and the SEC and that its members reflect a range of talents, skills and expertise, particularly in the areas of accounting and finance, management, leadership and oil and gas -related industries sufficient to provide sound and prudent guidance with respect to our operations and the interests of our stockholders. +Nomination Process +Our Board of Directors will consider stockholder nominations for director candidates upon written submission to our Chief Legal and Administrative Officer and Corporate Secretary along with, among other things, the nominee’s qualifications and certain biographical information regarding the nominee, the nominee’s written consent to serve as a director if elected and being named in the proxy or information statement and information regarding the status of the stockholder submitting the recommendation, all in the manner required by the Second Amended and Restated Bylaws of the Company (the “Bylaws”) and the applicable rules and regulations promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Following verification of the stockholder status of the persons proposing candidates, recommendations will be aggregated and considered by our Board of Directors at a regularly scheduled or special Board meeting. If any materials are provided by a stockholder in connection with the nomination of a director candidate, materials will be forwarded to our Board of Directors. See “Submission of Future Stockholder Proposals” below for additional detail regarding submitting director nominees. +Our Board of Directors may also review materials provided by professional search firms or other parties in connection with a nominee who is not proposed by a stockholder. In evaluating nominations, our Board of Directors will seek to achieve a balance of knowledge, experience and backgrounds on the Board. To be nominated to serve as a director, a nominee need not meet any specific minimum criteria. Our Board of Directors uses the same criteria for evaluating candidates nominated by stockholders as it does for those proposed by current Board members, professional search firms and other people. After completing its evaluation, our Board of Directors approves the final slate of director nominees. +Our Nominating, Environmental, Social and Governance Committee approved the director nominees submitted for election at the Annual Meeting. Each nominee brings a strong and unique background and set of skills to our Board of Directors, giving our Board of Directors competence and experience in a variety of areas, including corporate governance and Board service, executive management, the oil and natural gas industry, accounting and finance and risk assessment and management. +2025 PROXY STATEMENT 19 +NOMINATING PROCESS FOR DIRECTORS, DIRECTOR QUALIFICATIONS AND REVIEW OF DIRECTOR NOMINEES +Summary of Director Qualifications and Experience +The chart below identifies the balance of skills and qualifications each director nominee brings to the Board. The fact that a particular skill or qualification is not designated does not mean the director nominee does not possess that particular attribute. We believe the combination of the skills and qualifications shown below demonstrates how our Board is well positioned to provide strategic advice and effective oversight to our management. +20 2025 PROXY STATEMENT +DIRECTOR LEADERSHIP STRUCTURE +Board Chair +Timothy Cutt served as Board Chair and CEO beginning on May 17, 2021. Effective January 24, 2023, the positions of Board Chair and Chief Executive Officer are held by two different individuals, and the Board Chair is a non -executive position elected from among the directors by the Board. Separating the positions of Board Chair and Chief Executive Officer allows our Chief Executive Officer to focus on business development strategies as well as our day -to-day business and operations, while permitting our Board Chair to lead the Board in its fundamental role of providing advice to and oversight of management. The Board Chair provides leadership to our Board of Directors and works with the Board of Directors to define its structure and activities in the fulfillment of its responsibilities. +The duties of the non -executive Board Chair include: +• Presiding at meetings of our Board of Directors and stockholders. +• Setting Board agendas with input from other members of the Board and our management. +• Facilitating communication among, and information flow to, directors. +• Calling special meetings of our Board of Directors and stockholders. +• Advising and counseling our Chief Executive Officer and other officers. +Lead Independent Director +The Board has appointed Mr. Wolf to serve as Lead Independent Director with responsibilities typically performed by an independent Chair, including acting as Chair at meetings of the Board of Directors when the Board Chair is not present. The Lead Independent Director role is a highly versatile intermediary between the Board Chair and the Board’s stakeholders. In normal times they contribute to the good relationships and functions of the Board, and in periods of stress the Lead Independent Director is expected to assist in facilitating the resolution of any situation. Mr. Wolf also is a member of each of the Board’s Committees and acts as Chair at Committee meetings when the respective Committee Chair is not present. +Directors +We believe that our directors bring a broad range of leadership experience to the boardroom and regularly contribute to the thoughtful discussion involved in effectively overseeing the business and affairs of the Company. We believe that the atmosphere of our Board is collegial, that all Board members are well engaged in their responsibilities and that all Board members express their views and consider the opinions expressed by other directors. Five out of seven director nominees are independent under NYSE listing standards and SEC rules. We believe that our independent directors have demonstrated leadership in business enterprises and are familiar with Board processes. Our independent directors are involved in the leadership structure of our Board by serving on our Audit, Nominating, Environmental, Social and Governance and Compensation Committees, comprised entirely of independent directors and each having an independent chair. +Committee Chairs +Specifically, our Audit Committee Chair oversees the accounting and financial reporting processes and compliance with legal and regulatory requirements. Our Compensation Committee Chair oversees our compensation policies and practices and their impact on risk and risk management. The Chair of our Nominating, Environmental, Social and Governance Committee oversees our practices relating to health, safety and environmental protection, as well as social and governance matters. Our Nominating, Environmental, Social and Governance Committee Chair also monitors matters related to Board and Committee composition, Board performance and best practices in corporate governance. Each Committee Chair provides independent leadership for the purposes of many important functions delegated by our Board of Directors to such Committee. +2025 PROXY STATEMENT 21 +BOARD OF DIRECTORS’ ROLE IN RISK OVERSIGHT +While our management team is responsible for the day -to-day management of risks, the Board of Directors has primary responsibility for risk oversight. Boards typically exercise this oversight during regular Board meetings, but our Board of Directors also maintains constant and open dialogue with management and reviews and monitors key processes. As a result, they are better able to respond to emerging risks and to influence our strategy to address those risks. +While our Board of Directors is responsible for risk oversight at the Company, our three Committees assist the Board in fulfilling its oversight responsibilities in the areas of risk below: +Committee +Risk Areas of Focus +Audit +• Cybersecurity +• Financial Reporting +• Internal Controls +• Legal Compliance +• Regulatory Compliance +• Reserves Reporting +• Risk Management +Compensation +• Compensation Policies +• Executive Performance +Nominating, Environmental, Social and Governance +• Board Organization +• Climate +• Corporate Governance +• Environment +• Government Relations +• Membership +• Political Contributions +• Public Health +• Safety +• Structure +• Succession Planning +22 2025 PROXY STATEMENT +EXECUTIVE OFFICERS +The following table sets forth the name, age, positions, and business experience of each of our executive officers (other than John Reinhart, who also serves as a member of our Board and who is listed under “Election of Directors and Director Biographies”): +NAME +POSITIONS AND EXPERIENCE +Michael Hodges +Age: 46 +Executive Vice President, Chief Financial Officer since April 2023 +Prior to joining the Company, Mr. Hodges served as Senior Vice President, Finance and Accounting at Leon Capital Group. Prior to joining Leon Capital, he was the Executive Vice President and Chief Financial Officer for Montage Resources Corporation until its merger with Southwestern Energy Company in November 2020. From 2012 until joining Montage Resources in 2018, Mr. Hodges served as the Chief Financial Officer for three upstream energy companies focused on near-term value creation through the acquisition and early-stage development of oil and natural gas resources. Mr. Hodges received his Bachelor of Business Administration in Finance from the University of Oklahoma and a Master of Science in Energy Management from Oklahoma City University and is a Certified Public Accountant in the State of Oklahoma. +Patrick Craine +Age: 52 +Executive Vice President, Chief Legal and Administrative Officer since June 2021 +Mr. Craine joined Gulfport as Executive Vice President, General Counsel and Corporate Secretary in May 2019. Mr. Craine has over 25 years of extensive senior-level experience handling a broad range of securities, corporate, regulatory, governance, compliance and litigation matters, with particular expertise in the energy industry. He joined Gulfport from Chesapeake Energy Corporation (NYSE: CHK) (“Chesapeake”), a hydrocarbon exploration company, where he served as Deputy General Counsel – Chief Risk and Compliance Officer from 2013 until 2019. Prior to joining Chesapeake, Mr. Craine was a partner with Bracewell LLP, a global law firm, where his practice focused on securities and corporate regulatory matters and investigations. Before Mr. Craine entered private practice, he served as an attorney with the SEC and the Financial Industry Regulatory Authority, where he held leadership positions in their Oil and Gas Task Forces. Mr. Craine received his Bachelor of Arts degree, summa cum laude , Phi Beta Kappa, from Wabash College, and his Juris Doctorate, cum laude , from the Southern Methodist University Dedman School of Law. +Matthew Rucker +Age: 39 +Executive Vice President, Chief Operating Officer since February 2025 +Mr. Rucker joined Gulfport as the Senior Vice President of Operations in March 2023. On February 24, 2025, he was promoted to Executive Vice President and Chief Operating Officer. He joined Gulfport from Javelin Energy Partners where he previously served as Vice President, Production Operations starting in July 2022. Prior to joining Javelin, Mr. Rucker served as the Executive Vice President, Chief Operating Officer of Montage Resources Corporation following Montage’s successful business combination transaction with Blue Ridge Mountain Resources in June 2020. Prior to Montage, Mr. Rucker served as Vice President, Resource Planning and Development of Blue Ridge from 2016 to 2020. Mr. Rucker started his career at Chesapeake Energy Corporation from 2007 to 2016, serving in a variety of leadership and engineering roles in field operations, reservoir engineering, and planning. Mr. Rucker graduated with a Bachelor of Science degree in Petroleum Engineering from Marietta College and with a Master of Business Administration from Texas Christian University. He serves on the Boards of the Ohio Oil and Gas Association and the Petroleum Alliance of Oklahoma. +2025 PROXY STATEMENT 23 +EXECUTIVE OFFICERS +NAME +POSITIONS AND EXPERIENCE +Michael Sluiter +Age: 52 +Senior Vice President, Reservoir Engineering since December 2018 +Mr. Sluiter joined Gulfport from Noble Energy, Inc., where he held various engineering positions from January 2012 to November 2018, including Business Development Engineering Advisor, Appalachian Reservoir Engineering Supervisor, and Permian Basin Business Unit Manager. Mr. Sluiter has over 18 years of experience in unconventional resource development, reservoir engineering, subsurface development, business development and acquisitions, as well as leadership skills, which he developed at Noble Energy, Santos Australia and Santos USA. Mr. Sluiter began his career as a wireline field services engineer for Schlumberger in Thailand. Mr. Sluiter received a Bachelor of Science degree in Chemical Engineering from the University of Sydney, Australia. +Lester Zitkus +Age: 59 +Senior Vice President, Land since January 2017 +Mr. Zitkus joined Gulfport as Vice President of Land in March 2014. Prior to joining the Company, Mr. Zitkus served as Vice President of Land for Chesapeake Energy Corporation from May 2007 to October 2013. During his 20-year tenure with Equitable Resources Inc. (now EQT Corp.), he held various positions, including Vice President of Operations and Senior Vice President of Land, between 1987 and 2007. He holds a degree in Mineral Land Management from the University of Evansville. Mr. Zitkus is a member and past president of the American Association of Professional Landmen and Past Regional Director of the Independent Petroleum Association of America. +24 2025 PROXY STATEMENT +COMPENSATION DISCUSSION AND ANALYSIS +Letter from the Compensation Committee +2024 was defined by execution, operational excellence and strong financial results for Gulfport Energy. The Company delivered on all fronts, highlighted by our high -quality resource base and the continued improvement of development efficiencies throughout the year. The Company delivered net production in line with initial expectations while executing at the low end of its initial capital expenditures expectations. The 2024 development program led to meaningful adjusted free cash flow generation, and after adjusting for cash flow utilized for attractive discretionary acreage acquisitions, Gulfport allocated approximately 96% of adjusted free cash flow to repurchasing our common stock during 2024. All of this was achieved while maintaining our strong balance sheet, ample liquidity and financial leverage below one times. The Company’s accomplishments were realized by the investment community and Gulfport’s stock price appreciated over 38% during 2024, outperforming the S&P 500 which appreciated by approximately 25% and Gulfport’s 2024 compensation peer group average appreciation of approximately 10%. +From an executive compensation perspective, we were able to set realistic, challenging targets for our short and long -term incentive plans. We were pleased to see the financial and operational results exceed our expectations. We were able to deliver on our compensation strategy of providing compensation opportunities that were tied to Company performance. Our philosophy is to remain competitive within the oil and gas industry for similarly situated operations. +Please review the Compensation Discussion and Analysis, where we explain how we tie pay and performance together to reward our executives. We are confident our shareholders will once again agree with the compensation decisions we made regarding our executive team as they overwhelmingly did based on the 97.8% of votes we received on our 2024 Say -On-Pay vote. +Thank you for your confidence and investment in Gulfport Energy. +Respectfully submitted by the Compensation Committee, +Jason Martinez, Chair +David Reganato +Mary Shafer -Malicki +David Wolf +Dated: April 2, 2025 +2025 PROXY STATEMENT 25 +COMPENSATION DISCUSSION AND ANALYSIS +This Compensation Discussion and Analysis, or CD&A, explains the Compensation Committee’s compensation philosophy, summarizes our executive compensation programs, and describes compensation decisions for Gulfport’s Chief Executive Officer, or CEO, Chief Financial Officer, or CFO, and the next three highest paid executive officers for 2024. These executive officers, known as our NEOs, are as follows: +John Reinhart +President, Chief Executive Officer and Director +Michael Hodges +Executive Vice President, Chief Financial Officer +Patrick Craine +Executive Vice President, Chief Legal and Administrative Officer and Corporate Secretary +Matthew Rucker +Executive Vice President, Chief Operating Officer +Michael Sluiter +Senior Vice President of Reservoir Engineering +26 2025 PROXY STATEMENT +EXECUTIVE SUMMARY +Gulfport 2024 Business Performance Highlights +During 2024, we had the following notable achievements: +Financial +• Generated $650.0 million of operating cash flows. +• Expanded our common stock repurchase authorization to $1.0 billion. +• Extended the maturity of substantially all long -term senior notes from 2026 to 2029. +• Extended the maturity of the Credit Facility to 2028 and increased the available commitments under the Credit Facility by $100 million. +• Maintained a strong balance sheet and low financial leverage, with liquidity at December 31, 2024 totaling $899.7 million. +• Returned substantially all full year adjusted free cash flow, excluding discretionary acreage acquisitions, to shareholders by repurchasing 1.2 million shares of common stock for approximately $184.5 million. +• Reported year -end estimated net proved reserves of 4.0 Tcfe. +Health, Safety & Environmental +• Achieved overall “A” rating for Appalachia assets from MiQ for second consecutive year. +• Conducted Company’s first climate risk assessment and integrated climate -related risk into Enterprise Risk Management program. +• Reduced our combined total recordable incident rate by 17% in 2024 compared to 2023. +• Achieved one -year without an employee OSHA recordable injury. +• Reduced water disposal volumes and freshwater consumption through water re -use or water sharing agreements with other operators. +• Progressed in multi -year program to convert natural gas process controllers with compressed air or other non -gas venting devices across our operations to reduce methane emissions +• Employees completed over 2,600 hours of Health, Safety and Environmental training. +• Over 200 service companies completed Contractor Orientation covering topics such as: +• Gulfport’s Contractor expectations +• Work Safe; +• Stop Work; +• JSA’s; +• Incident Reporting; and +• Spill Prevention +• PPE requirements +• Gulfport Drug/Alcohol/Weapons Policy +• Business Conduct +2025 PROXY STATEMENT 27 +EXECUTIVE SUMMARY +• Other Applicable OSHA Regulations +• Hot Work Permits +• Confined Space Permits +• Lock Out Tag Out Requirements +Social +• Reduced our combined total recordable incident rate by 74% compared to 2021. +• Consistent with our core values, strived to create an environment that prioritized attracting and recruiting highly qualified candidates with varied backgrounds and experiences. +• Paid over $235 million in royalties to local landowners and working interest owners. +• Paid approximately $30 million in production and other taxes across our asset base, helping to fund local economies. +• Partnered with over 30 organizations that support Gulfport’s key focus areas in Oklahoma and Ohio through volunteering and monetary contributions. +Corporate Governance +• Governed by a seven-member Board, which includes five independent directors. +• Active Audit, Compensation and NESG Committees ensure full and proper governance. +• Current Board has over 40% of our directors identifying as gender or ethnically diverse. +• Separated Chief Executive Officer and Chair roles while retaining Lead Independent Director. +• Increased short-term compensation incentive ESG metrics to a 30% weighting. +Key 2024 Executive Compensation Actions +In consideration of our long -term strategy and stockholder feedback following a robust program of engagement (see “Stockholder Engagement and Annual Say -on-Pay Advisory Vote” below), the Company took the following actions in 2024: +• Continued to use absolute and relative TSR and time -based vesting in equity plan grants to maximize the link between performance -based pay of our executives and shareholder value over time. +• Established annual performance bonus opportunities and long -term equity award targets to closely align our NEOs’ financial interests with those of our stockholders and to continue to link a larger portion of NEOs’ compensation to the performance of our stock and operational performance. +• Selected metrics in our annual incentive plan tied to the financial health of the Company and specific and quantifiable health, safety and environmental metrics. +• Continued to provide robust disclosure of our performance metrics and targets for both performance -based cash and equity awards. +• Utilized formal stock ownership guidelines to ensure our Board of Directors and executive officers own a stake in the Company that is sufficient to align their interests with their fellow stockholders. +28 2025 PROXY STATEMENT +EXECUTIVE SUMMARY +The Compensation Committee will continue to consider the feedback from our stockholders when making compensation decisions for our NEOs. +Practices We Follow +🗸 +Incentives Aligned with Stockholders. All long-term equity incentive awards granted in 2024 were in the form of either time-based or performance-based restricted stock units, and the performance-based restricted stock units vest based on absolute and relative TSR, providing strong alignment between management and stockholders. +🗸 +NEO pay is at -risk . A significant portion of executive compensation is conditioned on the achievement of pre-determined operational, capital efficiency and safety and environmental targets, as well as absolute TSR and TSR measured against a broad peer group of exploration and production companies. +🗸 +Performance -based awards are prevalent. 60% of the NEOs’ equity incentive awards consisted of performance-based equity awards that vest based on absolute and relative TSR metrics measured over a three-year performance period. +🗸 +Robust disclosure of our performance metrics and targets. We provide detailed disclosure of our performance metrics in our CD&A. +🗸 +Balanced approach to executive compensation. We view the combination of long-term equity and short-term cash compensation, prioritizing long-term equity compensation and focusing on performance-based equity and cash compensation when analyzing total compensation plans. +🗸 +Ownership guidelines. We have robust stock-ownership guidelines for directors and executive officers. +🗸 +Risk Management. We perform annual enterprise risk assessments to ensure our compensation programs do not create undue risk to the business. +🗸 +Clawback and recoupment processes. We maintain a clawback policy that allows us to recover incentive compensation in certain circumstances. +🗸 +Executive Compensation best practices. The Compensation Committee uses an independent compensation consulting firm to provide input into our executive compensation programs. +Practices We Prohibit +û +Minimum bonuses or guarantees. The Company does not guarantee minimum bonuses and relies on target achievement to determine annual bonus payments. +û +Single -trigger vesting of equity awards. The Company does not allow for single-trigger vesting of equity awards in connection with a change of control. +û +Providing tax gross -ups . No tax gross-up payments have been provided to our NEOs. +û +Hedging or pledging Gulfport Energy Stock. The Company does not allow hedging or pledging of Gulfport securities by our NEOs or directors. +û +Liberal share recycling. We do not allow liberal share recycling in our stock incentive plan. +û +Holding Gulfport Energy stock in a margin account. The Company does not allow securities to be held in a margin account by our NEOs or directors. +û +Excessive perquisites or executive benefits plans. No pension, supplemental executive retirement plan or excessive perquisite plans are made available to our NEOs. +û +Repricing of Stock Options. The Company did not grant stock options in 2024, currently has no plans to grant stock options in the future and would not reprice any outstanding stock options that might be outstanding. +2025 PROXY STATEMENT 29 +EXECUTIVE SUMMARY +Compensation Aligned with Performance +The Compensation Committee believes that executive compensation should be designed to deliver competitive pay when performance targets are achieved, and when business results exceed targets, executives should share in those rewards based on their efforts. If the Company does not achieve established performance goals, the executive team should receive pay that reflects that lower achievement. We believe this pay -for-performance alignment is working as realized pay for 2024 was above target levels due to exceeding pre -set performance goals and strong shareholder returns. The Company delivered 2024 net production in line with initial expectations while executing at the low end of its initial capital expenditures expectations. The 2024 development program led to meaningful adjusted free cash flow generation, and after adjusting for cash flow utilized for attractive discretionary acreage acquisitions, Gulfport allocated approximately 96% of adjusted free cash flow to repurchasing our common stock during 2024. All of this was achieved while maintaining our strong balance sheet, ample liquidity and financial leverage below one times. The Company’s accomplishments were realized by the investment community and Gulfport’s common stock appreciated over 38% during 2024, outperforming the S&P 500 which appreciated by approximately 25% and Gulfport’s 2024 compensation peer group average appreciation of approximately 10%. +The majority of our current NEO’s total compensation is dependent on the successful achievement of Company results as measured by either short -term incentive plan metric achievement or achievement of performance measures and stock price appreciation of the Company’s common stock. The target total direct compensation of our NEOs is largely influenced by pay -at-risk or variable compensation, tying the pay of the executive to the Company’s performance and share price of the Company’s common stock. Short -term incentive plan targets for 2024 were exceeded, resulting in actual awards to executives that were higher than target amounts and demonstrating the alignment between performance and pay. +Stockholder Engagement and Annual Say -On-Pay Advisory Vote +The Compensation Committee is committed to engaging with our stockholders to understand their expectations for executive compensation, corporate governance and safety, environmental and other social responsibility matters at Gulfport Energy. In 2024, 97.8% of shareholders voted to approve the Company’s executive compensation program and practices. The Company is pleased that shareholders continue to strongly support our executive pay program and remains committed to meeting with stockholders to solicit feedback on our executive compensation practices in the future. Based on the results of the Company’s last advisory vote on the frequency of future Say -On-Pay votes at the Company, also known as a say -on-frequency vote, the Company will continue to hold annual Say -On-Pay votes until the Company’s next say -on-frequency vote in 2029. +The Company held discussions with stockholders representing over 60% of shares outstanding. Through these conversations, our stockholders emphasized their expectation that management should be focused on driving results that deliver stockholder value. Our stockholders agree that executives should not be paid at target levels unless financial targets are achieved and expressed a desire to see specific and measurable targets for the year. Stockholders also expressed a desire for executives to have exposure to the absolute return of the Company’s common stock without regard to broader market fluctuation. The Company is confident that the metrics selected for both short -term and long -term incentives are appropriate and continue to align with shareholder preferences. Changes were made to metrics selected in the annual incentive plan to incorporate environmental, safety and other social practices for 2024. +After carefully considering input from stockholders, the Company took the following actions in 2024: +• Granted performance -based equity awards in the form of performance -based restricted stock units tied to absolute and relative TSR, vesting over a three -year performance period, comprising at least 60% of all the equity awards granted to our NEOs. +• Utilized short -term incentive opportunities and long -term equity award targets that closely align our NEOs’ financial interests with those of our stockholders and continue linking a larger portion of NEOs’ compensation to our operational and share price performance. +• Provided robust disclosure of our performance metrics and targets for both performance -based cash and equity awards. +• Continued utilizing metrics in the annual incentive plan to include measures directly tied to the financial health of the Company, including production per day, capital expenses, lease operating expenses, free cash flow generation, and specific and quantifiable health, safety, environmental and social metrics. +The Compensation Committee will continue to consider the feedback from our stockholders when making compensation decisions for our NEOs. +30 2025 PROXY STATEMENT +EXECUTIVE SUMMARY +EXECUTIVE COMPENSATION PHILOSOPHY AND COMPONENTS +Philosophy and Objectives +Our executive compensation philosophy is guided by the following objectives: +EXECUTIVE COMPENSATION +Alignment with +Stockholder Interests +By providing the majority of compensation in long-term equity awards, stressing pay for performance, managing dilution to our stockholders and encouraging an ownership culture, we aim to align the interests of our executives with those of our stockholders. +Pay for Performance +The Company is focused on rewarding performance by creating incentive awards based on achievement of clearly defined performance targets. A significant portion of our NEOs’ compensation is delivered in long-term incentives, making our NEOs’ realized total direct compensation heavily dependent upon Company performance and stock price. +Competitive +Compensation +The Company believes it is imperative to maintain compensation programs competitive with our peer group to attract, retain and motivate executives and our future leaders in a way that is in line with the compensation of executive positions at similar companies. +Our executive compensation programs play a key role in helping us achieve our business objectives and effectively reward executive officers for our Company’s annual and long -term performance and individual contributions to performance. +Total Direct Compensation Components for 2024 +Pay Element +Vehicle +Philosophy +Benefits +• Health, dental and vision insurance available to all employees. 401K program, vacation policy and disability plans to provide income replacement due to long-term or short-term illness +• Provide core health, welfare and retirement savings plans for executives. Provide substantially the same programs for all employees with minimal executive perquisites. +Base Pay +• Base pay rates that are reviewed annually and subject to Compensation Committee recommendations +• Provide compensation that is competitive with the median peer group practices. Base pay levels reflect the unique skills and abilities of our executives and accounting for the primary duties associated with the executive’s role. +Short-Term Incentive +• Annual incentive opportunity to earn a percentage of base pay based on annual operating objectives +• Provides incentive opportunities that approximate median peer group pay when performance targets are achieved. When targets are exceeded, the executive should be rewarded for their efforts with pay that exceeds the median of the peer group. When targets are not achieved, the executive should earn pay levels below the median of the peer group. +Long-Term Incentives +• Time-Based Restricted Stock Units +• Time-based restricted stock unit grants that vest in equal annual installments over 3 years. If the executive remains with the Company, the executive experiences either increased or decreased pay levels based on the performance of the stock price, fully aligning our executives with the return of the Company’s stock. +• Performance-Based Restricted Stock Units +• Performance-based restricted stock units that are tied to total shareholder return over a performance period that aligns stockholders and executive interests, providing an additional incentive opportunity for the executive when absolute and/or relative returns exceed those of our peer group. +2025 PROXY STATEMENT 31 +EXECUTIVE SUMMARY +Determining our Executive Compensation +Benchmarking Against Our Compensation Peer Group +Gulfport utilizes a peer group of companies, or the Compensation Peer Group, as a reference point when establishing both compensation levels for NEOs as well as program structures, to achieve competitiveness in the market. +2024 Compensation Peer Group +The Compensation Committee engaged its independent consultant, WTW, formerly Willis Towers Watson, to establish the appropriate peer group for executive compensation for 2024. Potential peers were identified using revenue, primary business, equity value/debt ratio, other relevant financial metrics (EBITDA, market capitalization, assets, net income, etc.), gas weighting and the number of operations/regions. Upon review and analysis of potential peers using these criteria, the peers below were identified as both suitable and relevant to comprise the Company’s 2024 peer group. The revision of the Compensation Peer Group resulted in relative alignment of Gulfport’s key metrics at the time the peer group was established. +2024 Compensation Peer Group +Berry Corporation +CNX Resources Corporation +Matador Resources Company +SilverBow Resources, Inc.* +Vital Energy, Inc. +Callon Petroleum Company +Comstock Resources, Inc. +Murphy Oil Corporation +SM Energy Company +Civitas Resources, Inc.* +Magnolia Oil & Gas Corporation +Range Resources Corporation +Talos Energy Inc. +* Denotes a new peer added in 2024. +In general, and consistent with a performance -based compensation philosophy, the Compensation Committee seeks to establish executive base pay within a competitive range of the appropriate peer group median, with an opportunity to earn greater overall compensation in the event it is warranted by our performance. The exact level of targeted compensation for each NEO varies based on the individual’s role in Gulfport, experience, and contribution to our success. For benchmarking purposes, the Compensation Committee compares the total compensation for each NEO position to the compensation paid for similar positions by companies in our Peer Group, as set forth in those companies’ proxy statements for the prior year. WTW proposes companies to be included in the Compensation Peer Group and the methodology for selecting that peer group and may consult with management to confirm that the most appropriate companies are selected. The Compensation Committee then reviews and, as it may deem appropriate, approves the Compensation Peer Group for the applicable compensation year. The companies identified were at their time of selection, in the view of the Compensation Committee the best and most appropriate companies for benchmarking compensation within our industry. The Compensation Committee will continue to review and monitor the Compensation Peer Group annually and select peers based on appropriate screening criteria, metrics and competition for executive talent. The Compensation Committee also uses industry -specific survey data as an additional reference point to assist in the compensation decision -making process. +32 2025 PROXY STATEMENT +EXECUTIVE SUMMARY +PROCESS FOR DETERMINING EXECUTIVE COMPENSATION +The Compensation Committee of our Board of Directors oversees our compensation programs for executive officers and all employees. During 2024, the Compensation Committee was comprised of Jason Martinez (Chair), David Reganato, Mary Shafer -Malicki and David Wolf. All members of the Compensation Committee are independent directors. +The Role of Our Compensation Committee +The Compensation Committee generally reviews and typically makes its decisions regarding the annual compensation of our NEOs at its regular meetings in the first half of each year. These decisions include: +• Approving base salaries, target, annual cash incentive levels and long -term equity -based incentive levels. +• Establishing applicable performance objectives for performance -based awards. +• Granting long -term equity -based incentive awards and determining the types of awards for the current year. +• Certifying annual performance -based cash incentive awards and performance -based long -term incentive award payouts. +The Compensation Committee may also adjust compensation as necessary at other times during the year, such as in the case of promotions, other changes in employment status and significant corporate events, as well as to reflect changing market conditions or for other competitive purposes. +In making its decisions, the Compensation Committee assesses each NEO’s impact during the year and overall value to Gulfport, specifically considering the NEO’s contribution to the growth of Gulfport’s value, operational and financial performance, performance in the NEO’s primary area of responsibility, impact on strategic initiatives, recommendations of our independent compensation consultant, the NEO’s role and trajectory in succession planning and development, recommendations from our CEO with respect to our other NEOs and other intangible qualities that contribute to corporate and individual success. +The Role of our CEO +The Compensation Committee evaluates our CEO based on the Company’s performance metrics, leadership roles as a member of the Board and our lead representative to the investment community and other criteria. The CEO’s total compensation package is determined by the Compensation Committee, based upon its evaluation and input from our independent compensation consultant. Our CEO’s compensation ultimately reflects Gulfport’s performance, personal performance, competitive industry practices and the terms of our employment arrangement with the CEO. +Our CEO evaluates each of the other NEOs and makes compensation recommendations to the Compensation Committee. In developing recommendations, the CEO considers the recommendations of the Compensation Committee’s independent compensation consultant, as well as each NEO’s performance against the Company performance metrics and contribution to Gulfport’s performance. The independent compensation consultant reviews and provides comments to the Compensation Committee based on our CEO’s recommendation with respect to our NEOs, other than our CEO. Our CEO does not participate in deliberations or decisions concerning his own compensation. +The Role of the Compensation Consultants +For 2024, the Compensation Committee retained the service of WTW to perform executive compensation advisory services, reporting directly to the Compensation Committee Chair. The Compensation Committee determined that the expertise that WTW had in the executive compensation consulting space with other similar Exploration and Production (“E&P”) companies, in addition to deep insights into compensation practices of other similar companies, was critical for Gulfport Energy. WTW provided contemporary best practices in base pay administration, short -term incentive plan design and long -term incentive plan design. This information, which included reviews of peers, a broader E&P group and general industry practices, was used by the Compensation Committee to determine base salary, short -term incentives and long -term incentives for our executives. +2025 PROXY STATEMENT 33 +EXECUTIVE SUMMARY +WTW also provided support with regulatory and other considerations that affect compensation programs generally, as requested by the Compensation Committee, as well as assistance in preparation of the CD&A. +WTW reported exclusively to the Compensation Committee, with respect to the services described above. During 2024, WTW provided other non -executive compensation consulting services to us, but the total fees for such services did not exceed $120,000. The Compensation Committee reviewed the independence of WTW and determined that there were no conflicts of interest because of the Compensation Committee’s engagement of WTW. +The Compensation Committee evaluates the independence of its compensation consultant(s) on an ongoing basis. +2024 COMPENSATION PROGRAM DESCRIPTION +Base Salary +The Compensation Committee engaged WTW to review the overall competitiveness of our executive compensation program for 2024, with a continued focus on ensuring the alignment of management compensation with performance and the achievement of Gulfport’s long -term goals. The Compensation Committee reviews NEO base salaries on an annual basis, with a goal of providing market -competitive , fixed cash compensation. The Compensation Committee assesses comparable salary information provided by its independent compensation consultant as a factor when determining the base pay for NEOs. +Other factors the Compensation Committee considers in determining base pay for each of the NEOs include, but are not limited to: the NEO’s responsibilities, experience, leadership, potential future contribution and demonstrated individual performance. The relative weighting of these factors varies by NEO depending on their position and responsibilities. In March 2024, the base salaries of the executive team were reviewed, and changes were made to certain executives’ base salaries after reviewing the current labor market for executive talent, performance and other job -related factors for each executive. A summary of the changes is reflected in the table below. +Name +Base Salary YE +2023 +Percent +Increase (%) +Base Salary YE +2024 +John Reinhart +$785,000 +14.6% +$900,000 +Michael Hodges +$485,000 +6.2% +$515,000 +Patrick Craine +$485,000 +3.1% +$500,000 +Matthew Rucker +$390,000 +12.8% +$440,000 +Michael Sluiter +$390,000 +6.4% +$415,000 +Annual Incentive Awards +The Compensation Committee established a performance -based annual cash incentive program for 2024 that tied our NEOs’ compensation directly to pre -established performance metrics. Targeted annual incentive award levels were based on market information supplied by the independent compensation consultant. Individual awards may be decreased at the discretion of the Compensation Committee based on overall corporate performance for the year and other considerations. +2024 Annual Short-Term Incentive (“STI”) Metrics and Annual STI Payments +The Compensation Committee determined that the appropriate Key Performance Indicators (“KPIs”) for the 2024 STI plan should focus primarily on generating adjusted free cash flow and executing certain strategic objectives that were important to the continued success of the organization and were responsive to shareholder feedback. After reviewing the operating and financial targets for 2024 with the Board of Directors, the Gulfport Energy executive management team and the independent compensation advisor, the Compensation Committee approved performance targets accordingly. The KPIs included thresholds, targets and maximums that were based on predetermined financial and key performance metrics. +34 2025 PROXY STATEMENT +EXECUTIVE SUMMARY +The financial metrics chosen were generally common measures in the oil and gas industry and were viewed as measures of success by our shareholders. The Compensation Committee also believed it was critical to focus on other strategic initiatives that while not directly measured in financial terms, are key indicators of successful companies in the oil and gas industry. Total Recordable Incident Rate (“TRIR”) and spills are common measurements and targets that reflect either industry benchmark information (TRIR) or improvement over prior results (spills). The Compensation Committee also adopted a set of strategic initiatives that focused on environmental and corporate and social governance activities. Specifically, the organization would be measured on making substantial improvement in the areas of Appalachian gas certification with an “A” grade from MIQ, completing a successful organizational restructuring, and retrofitting natural gas pneumatics with air in the SCOOP. +In July of 2024, after performance targets for the annual STI had been set in February of 2024, the Board of Directors made a strategic decision to both increase the Company’s 2024 capital program and defer targeted completions activity to later in the year after management’s operational efficiencies provided the opportunity to accelerate activity. Realizing that these additional expenditures and the deferred production were not included in the initial target setting process, the Board of Directors adjusted the 2024 performance metrics to account for these changes in the 2024 incentive payment results. +At the completion of the performance period ending December 31, 2024, the Compensation Committee reviewed financial and operating results and the attainment of key performance indicators and approved 2024 STI payout results based on those achievements. This achievement resulted in an overall payout of 150% of target awards. Below is a summary of KPIs and results for the 2024 plan year. +2024 STI Metrics +Weighting +Threshold +Target +Maximum +2024 +Actual (2) +2024 +Approved +Payout (2) +Production (MMcfe/day) +20% +1,035 +1,057 +1,090 +1,060 +22% +Capex ($MM) +20% +$435 +$408 +$375 +$385 +34% +LOE per Mcfe ($/Mcfe) +15% +$0.20 +$0.19 +$0.17 +$0.18 +22% +Adjusted Free Cash Flow ($MM) (1) +15% +$190 +$231 +$295 +$261 +22% +TRIR +10% +0.8 +0.6 +0.4 +0.3 +20% +Spills +10% +6 +4 +2 +1 +20% +Strategic Initiatives +10% +Qualitative +10% +Total Achievement Percentage +150% +(1) Adjusted Free Cash Flow is a non-GAAP measure defined as net cash provided by operating activities from the Company’s Consolidated Statement of Cash Flows less the sum of changes in operating assets and liabilities included in the operating activities section of the Consolidated Statement of Cash Flows less non-recurring general and administrative and other expenses from the Consolidated Statement of Operations less incurred capital expenditures and capitalized expenses. Adjusted Free Cash Flow was calculated assuming realized commodity pricing received throughout the year was consistent with the forward curve pricing used to set the approved Adjusted Free Cash Flow Metric in February of 2024. +(2) The impact of the changes to the Company’s 2024 capital program on the 2024 incentive payment results as described above consisted of increased capital expenditures of $5 million, which reduced the 2024 actual Capex metric and increased the 2024 Adjusted Free Cash Flow metric results, and decreased production of 6 MMcfe/day, which increased the 2024 actual production metric and the Adjusted Free Cash Flow metric results, and decreased the LOE per Mcfe metric. +2025 PROXY STATEMENT 35 +EXECUTIVE SUMMARY +2024 Target Annual STI Opportunities and Actual Annual STI Payments +The Compensation Committee established the target annual cash STI opportunity for each of the NEOs, taking into consideration the terms of any applicable employment agreement, and approved the following cash payments based on the Company’s 2024 results performance as described above. +2024 INCENTIVE COMPENSATION PLAN +Name +2024 +Incentive Compensation +Program Incentive +Target +Actual Annual +Incentive +Achievement +(as % of Target +Annual Incentive) +Actual +Incentive +Earned for +2024 +John Reinhart +$1,080,000 +150% +$1,620,000 +Michael Hodges +$ 515,000 +150% +$ 772,500 +Patrick Craine +$ 450,000 +150% +$ 675,000 +Matthew Rucker +$ 374,000 +150% +$ 561,000 +Michael Sluiter +$ 311,250 +150% +$ 466,875 +Long-Term Incentive Awards +Each year we grant our NEOs long -term incentive awards, that have historically consisted of equity -based awards. The Compensation Committee determines the amount of these awards, as well as the mix of equity vehicles. The objectives of our long -term incentive plan are to: (i) create significant alignment between the interests of our NEOs and our stockholders; (ii) attract and retain the services of critical talent; and (iii) focus our executives on our sustained growth and financial success. +2024 Performance Share Unit Certification +On May 17, 2024, the Compensation Committee certified performance share units issued on July 21, 2021. WTW presented the Committee with their findings of achievement of the performance conditions during the performance period. The Committee determined that based upon the 2021 PSUs performance results that the 2021 PSUs should be paid out at 195.7% of the target amount. +The performance -based restricted stock units vest after a three -year performance period, based on the Company’s achievement of relative TSR as compared to a peer group of companies and absolute TSR, in each case, as described in the chart below. +Relative TSR +> 75 th percentile +of the Peer +Companies +50 th percentile – +< 75 th percentile +of the Peer +Companies +25 th percentile – +< 50 th percentile +of the Peer +Companies +< 25 th percentile +of the Peer +Companies +Annualized +Company +TSR +< 5.0% +0% +0% +0% +0% +> 5.0% – 7.5% +50% +25% +0% +0% +> 7.5% – 10.0% +125% +100% +75% +50% +> 10.0% – 15.0% +150% +125% +100% +75% +> 15.0% – 20.0% +175% +150% +125% +100% +> 20.0% +200% +175% +150% +125% +36 2025 PROXY STATEMENT +EXECUTIVE SUMMARY +DETERMINING AWARD STRUCTURE AND SETTING THE TARGET AWARD OPPORTUNITY +The Compensation Committee considers the grant date fair value of the long -term incentive package, the package’s potential dilutive effect on our outstanding shares of common stock and the number of shares available for grant under the 2021 Incentive Plan (as defined below) in determining the aggregate number of shares to be awarded as individual long -term incentive awards for our NEOs. The Compensation Committee evaluates stockholder dilution based on equity compensation plans compared to the total amount of the Company’s outstanding common stock. In determining the appropriate long -term incentive awards to grant NEOs other than the CEO, the Compensation Committee considers the recommendations of the CEO. The Compensation Committee reviewed market values with respect to the annual long -term incentive awards granted to similarly situated executives at the Compensation Peer Group. In 2024, the Compensation Committee determined that the NEOs would receive equity grants consisting of 60% performance -based restricted stock units and 40% time -based restricted stock units. The time -based restricted stock units granted to our NEOs vest in equal annual installments over a three -year period. +The performance -based restricted stock units vest after a three -year performance period, based on the Company’s achievement of relative TSR as compared to a peer group of companies and absolute TSR, in each case, as described in the chart below. +Relative TSR +> 75 th percentile +of the Peer +Companies +50 th percentile – +< 75 th percentile +of the Peer +Companies +25 th percentile – +< 50 th percentile +of the Peer +Companies +< 25 th percentile +of the Peer +Companies +Annualized +Company +TSR +< 5.0% +50% +35% +25% +0% +> 5.0% – 10% +125% +100% +75% +50% +> 10% – 15.0% +150% +125% +100% +75% +> 15.0% – 20.0% +175% +150% +125% +100% +> 20.0% +200% +175% +150% +125% +2024 Equity Awards +Named Executive Officer (NEO) +2024 RSU +Award +Grant Award +Value ($) (1) +2024 PSU +Award +Grant Award +Value ($) (2) +John Reinhart +16,057 +$2,280,094 +26,820 +$4,183,920 +Michael Hodges +5,634 +$ 800,028 +9,411 +$1,468,116 +Patrick Craine +4,367 +$ 620,114 +7,293 +$1,137,708 +Matthew Rucker +4,226 +$ 600,092 +7,058 +$1,101,048 +Michael Sluiter +3,099 +$ 440,058 +5,176 +$ 807,456 +(1) The time-based restricted stock unit values are based on the closing price of the Company’s common stock on the grant date. +(2) The performance-based restricted stock unit awards are shown in this table based on the target number of shares subject to the awards and the closing price of the Company’s common stock on the grant date. The Company used a Monte Carlo simulation for purposes of determining the grant date fair value of these awards as reflected in the Summary Compensation Table. Please see note 2 to the Summary Compensation Table. +2025 PROXY STATEMENT 37 +EXECUTIVE SUMMARY +COMPENSATION POLICIES AND PRACTICES +Compensation Risk Management +The Compensation Committee continues to review the risks and rewards associated with our compensation policies and programs. We believe that our policies and programs encourage and reward prudent business judgment, encourage short -term stockholder value creation, and prioritize long -term growth by discouraging excessive risk taking. With respect to specific elements of compensation: +• Integrated Approach – Our programs balance short- and long -term incentives for our executive officers by providing an appropriate mix of fixed, performance -based , discretionary and equity compensation, with the goal of creating both short- and long -term stockholder value. +• Attract Top Talent – Annual base salaries for our NEOs do not encourage excessive risk -taking as they are fixed amounts that are subject to discretionary increases by our Compensation Committee that may be based on, among other factors, annual performance evaluations. We believe that annual base salaries are set at reasonable levels, as compared to the base salaries of similarly situated individuals at our peer group companies and therefore do not negate the effect of other compensation elements that encourage long -term service, growth and performance that may increase stockholder value. +• Support Business Objectives and Strategic Goals – Our annual incentive awards are determined based on financial, operational and strategic Company performance measures, which mitigate excessive risk -taking that could produce unsustainable gains in one area of performance at the expense of our overall long -term interests. The Company’s goals are designed to ensure a proper balance between stock performance, operational measures, financial goals and strategic goals. In addition, the Compensation Committee sets performance goals that it believes are reasonable considering our past performance, then -current business projections and market conditions. +• Pay for Performance – The Compensation Committee believes that performance -based equity awards tied to the Company’s stock price and relative performance versus peers, and cash compensation, with meaningful performance targets, such as those under our Annual Incentive Plan (as defined below), will further align our NEOs’ interests with those of our stockholders, will motivate our NEOs to contribute to the Company’s growth and profitability and will link a larger portion of our NEOs’ compensation to the performance of the Company. +• Maximize Stockholder Value – Our annual incentive awards are subject to maximum payout caps that limit the amount an NEO may earn on any individual metric or operational measures. +• Create Ownership Culture – Performance -based and time -based restricted stock unit awards, in each case, vesting over time, as well as robust stock ownership guidelines for our NEOs and non -employee directors, promote stock ownership culture and ensure that our NEOs and directors have a continuing stake in the long -term success of the Company. We believe that our long-term equity awards granted to our NEOs discourage excessive risk taking, as there is a balance between performance-based and time-based awards that moderates the risk that may otherwise exist if equity awards were to vest solely based upon achieving performance targets. +Based on the foregoing, the Compensation Committee believes that the Company utilizes compensation policies and programs so that there are no risks that are reasonably likely to have a material adverse impact on the Company. +Clawback Provisions +Under the Sarbanes -Oxley Act of 2002, incentive compensation received by our Chief Executive Officer and Chief Financial Officer may be subject to clawback in the event of a restatement of our financial statements. On July 31, 2023, the Board approved a written executive compensation clawback policy. The Board has adopted a compensation recovery policy, also known as a “clawback,” pursuant to which the Company may seek to recover from any current or former executive officer all cash and equity incentive -based compensation in the event of an accounting restatement resulting from the Company’s material non -compliance with financial reporting requirements under applicable securities laws. The amount of incentive -based compensation subject to recovery would be the amount in excess of what the executive officer received over the amount the executive would have earned in accordance with the restatement as determined by the Compensation +38 2025 PROXY STATEMENT +EXECUTIVE SUMMARY +Committee. The compensation recovery policy also contains provisions related to the forfeiture of stock options, restricted shares, RSUs and PSUs. Under these forfeiture provisions, the company may cancel such long -term incentive awards, in whole or in part, whether or not vested, for no consideration, for executives who engage in serious breaches of conduct, including violations of employment agreements, confidential or other proprietary matters, or otherwise act in competition with the Business of the company. We believe these provisions serve to ensure that executives act in the best interest of the Company and its shareholders. +In addition, each award granted pursuant to the 2021 Incentive Plan (including awards granted to our NEOs) is conditioned on repayment or forfeiture in accordance with applicable laws, our Company policies and any relevant provisions in the related award agreements. Further, under the terms of our NEOs employment agreements, any equity awards granted, any proceeds of any equity awards that previously have been sold, transferred or otherwise disposed of, and any annual incentive award will be subject to clawback by us, now or in the future, under the Dodd -Frank Act and the Sarbanes -Oxley Act, each as amended, and their rules, regulations and binding, published guidance. +Stock Ownership Guidelines for Executive Officers +We believe it is important for our executive officers to align their financial interests with those of our stockholders. Accordingly, effective April 27, 2022, our Board of Directors adopted a formal stock ownership policy that requires our CEO to achieve a stock ownership level equal to the value of common stock that is five times the value of his annual base salary within five years of the effective date of such stock ownership policy. The Compensation Committee also designated our other executive officers that are subject to Section 16 reporting obligations under the Exchange Act, to be subject to the stock ownership policy. On February 20, 2025, our Board of Directors amended the stock ownership guidelines to provide that once a participant has satisfied the stock ownership requirements subsequent declines in the stock price will not affect compliance if the participant retains the number of shares held when they achieved compliance. The stock ownership level for our other NEOs and applicable Section 16 officers is three times the value of their respective annual base salaries to be achieved within five years of the effective date of our stock ownership policy. Messrs. Craine and Sluiter have met the company’s share ownership guidelines. Messrs. Reinhart, Hodges and Rucker have not been in their position long enough to be required to meet the minimum stock ownership guidelines; however, all are on track to do so within the prescribed timeframe through expected grants. +Our non -employee directors are also subject to the stock ownership policy discussed above under “Stock Ownership Guidelines for Directors.” +Anti-Hedging, Pledging and Insider Trading Policies +We have a policy prohibiting directors, executive officers and certain other designated employees from speculative trading in our securities, including hedging transactions, short selling, and trading in put options, call options, swaps or collars, or holding our securities in margin accounts. We also have a policy prohibiting directors, executive officers and certain other designated employees from pledging Gulfport securities. To our knowledge, all individuals follow these policies. +We have an Insider Trading Policy governing the purchase, sale and other dispositions of our securities by directors, officers and employees that is reasonably designed to promote compliance with insider trading laws, rules and regulations, and listing standards. A copy of the policy was filed as Exhibit 19 to our Annual Report on Form 10 -K for the fiscal year ended December 31, 2024. +Termination and Change of Control Benefits +As noted above, certain of our NEOs are (or were formerly) party to an employment agreement with the Company which provides (or provided) for certain payments and benefits in the event of a termination of such NEO under specific circumstances. The NEOs’ employment agreements are designed to avoid distraction potentially detrimental to stockholder value upon a change in control and to enhance protection for the NEOs in connection with such events. These agreements (and the severance payments referenced below) are described in more detail under “NEO Employment Agreements and Termination and Change of Control Benefits.” +Perquisites and Other Personal Benefits +We provide certain of our NEOs with a limited number of perquisites or other personal benefits, primarily consisting of life insurance premiums, fitness reimbursement, and Company -sponsored sporting events tickets. The Company does not offer any excessive perquisites to executives that are not generally provided to other non -executives . We believe these limited benefits help provide a competitive compensation package. The value of these benefits is disclosed in the “Summary Compensation Table.” +2025 PROXY STATEMENT 39 +EXECUTIVE SUMMARY +The Company does not have any private or chartered aircraft arrangements. We restrict personal use of Company -owned or chartered aircraft by our executive officers and other employees, as well as members of our Board of Directors. Our aircraft use policy requires that any personal use of a chartered aircraft by any NEO be reported as a perquisite, based on the aggregate incremental value of such personal use. There was no business or personal use of Company -owned or chartered aircraft in 2024. +Accounting Implications of Executive Compensation Policy +We are required to recognize compensation expense of all stock -based awards pursuant to the provisions of FASB ASC Topic 718, “Compensation -Stock Compensation.” Under U.S. generally accepted accounting principles, or GAAP, only vested shares are included in basic shares outstanding. Also, under GAAP, non -vested shares are included in diluted shares outstanding when the effect is dilutive. +The Compensation Committee believes that linking a large portion of our executive officers’ compensation to both performance -based long -term equity incentive awards and performance -based bonus arrangements, with meaningful performance metrics, appropriately aligns our executives’ interests with those of our stockholders and are consistent with market practices. The Compensation Committee also believes that our current compensation policies and practices enhance retention of executive talent through multi -year vesting of stock awards and discourage unnecessary and excessive risk taking. The Compensation Committee further believes that our other compensation policies and practices, such as our policy prohibiting pledging and hedging of our stock by our executive officers and directors, as well as the lack of significant perquisites and absence of pension or supplemental retirement benefits (aside from those afforded under our broad -based 401(k) plan) for our executive officers are consistent with prudent compensation philosophy and the interests of our stockholders. The Compensation Committee will continue to consider the outcome of our stockholders’ future “Say -On-Pay ” votes when making compensation decisions for our NEOs. +Compensation Committee Report +The Compensation Committee has reviewed and discussed the foregoing Compensation Discussion and Analysis with management. Based on its review and discussion with management, the Compensation Committee recommended that the Compensation Discussion and Analysis be included in this proxy statement. +Respectfully submitted by the Compensation Committee: +Jason Martinez +David Reganato +Mary Shafer -Malicki +David Wolf +Dated: April 2, 2025 +Compensation Committee Interlocks and Insider Participation +None of Messrs. J. Martinez (Chair), Reganato, Ms. Shafer -Malicki , or Mr. Wolf, representing all the directors who served on the Compensation Committee during the past fiscal year, is or has ever been an officer or employee of ours or has engaged in any related party transaction in which our Company was a participant. None of our executive officers during the past fiscal year serves, or has served during the past fiscal year, as a member of the Board of Directors or Compensation Committee of any other company that has one or more executive officers serving, or that has served during the past fiscal year, as a member of our Board of Directors or Compensation Committee. +40 2025 PROXY STATEMENT +Compensation Tables +SUMMARY COMPENSATION TABLE +The following table provides information concerning compensation of our NEOs for the fiscal years ended December 31, 2024, December 31, 2023, and December 31, 2022. +Name and Principal Position +Year +Salary +($) +Stock +Awards +($) (1) +Non-Equity +Incentive Plan +Compensation +($) (2) +All Other +Compensation +($) (3) +Total +($) +John Reinhart (4) +2024 +$875,687 +$6,464,014 +$1,620,000 +$28,657 +$8,988,358 +President and Chief Executive Officer +2023 +$706,133 +$3,236,509 +$1,554,300 +$25,267 +$5,522,209 +2022 +— +— +— +— +— +Michael Hodges (5) +2024 +$508,662 +$2,268,144 +$ 772,500 +$24,547 +$3,573,853 +Executive Vice President and +2023 +$345,106 +$1,806,095 +$ 800,250 +$21,440 +$2,972,891 +Chief Financial Officer +2022 +— +— +— +— +— +Patrick Craine (6) +2024 +$496,837 +$1,757,822 +$ 675,000 +$23,271 +$2,952,930 +Chief Legal and Administrative Officer +2023 +$481,999 +$1,300,072 +$ 720,225 +$24,756 +$2,527,052 +2022 +$462,744 +— +$ 503,370 +$26,406 +$ 992,520 +Matthew Rucker (7) +2024 +$429,425 +$1,701,140 +$ 561,000 +$22,828 +$2,714,393 +Senior Vice President of Operations +2023 +$309,938 +$1,170,045 +$ 482,625 +$ 3,746 +$1,966,354 +2022 +— +— +— +— +— +Michael Sluiter (8) +2024 +$409,713 +$1,247,514 +$ 466,875 +$24,848 +$2,148,950 +Senior Vice President of +2023 +$387,592 +$1,083,375 +$ 482,625 +$24,787 +$1,978,379 +Reservoir Engineering +2022 +$371,470 +— +$ 269,892 +$26,076 +$ 667,438 +(1) The amount reported in the Stock Awards column reflects the fair value of the applicable award of restricted stock, performance -based restricted stock units or time -based restricted stock units on the grant date. The amounts were calculated in accordance with FASB ASC Topic 718 using certain assumptions, as set forth in Note 1 and Note 7 to our consolidated financial statements for the fiscal year ended December 31, 2024 under the headings “Summary of Significant Accounting Policies — Accounting for Stock -based Compensation” and “Stock -Based Compensation,” respectively, included in our Annual Report on Form 10 -K , filed with the SEC on February 26, 2025. Restricted stock unit values are based on the closing price of the Company’s common stock on the grant date. In valuing the performance -based restricted stock unit awards, the Company used a Monte Carlo simulation. Performance -based restricted stock units vest based on performance and continued service over a three -year performance period. (The maximum award opportunity for each applicable NEO for the 2024 performance -based restricted stock unit awards as of the grant date is as follows: Mr. Reinhart $8,367,840, Mr. Hodges $2,936,232, Mr. Craine $2,275,416, Mr. Rucker $2,202,096 and Mr. Sluiter $1,614,912. +(2) The amounts in this column reflect performance -based annual incentive bonuses granted under our 2024, 2023, and 2022 STI Plans. +(3) The table below provides additional information on the amounts reported in the All Other Compensation column of the Summary Compensation column for 2024. +(4) Mr. Reinhart joined the Company as its President and Chief Executive Officer and Director on January 24, 2023. Mr. Reinhart does not receive compensation for his service as Director. +(5) Mr. Hodges joined the Company as its Executive Vice President and Chief Financial Officer on April 3, 2023. +(6) Mr. Craine was appointed as our General Counsel and Corporate Secretary on May 20, 2019, and assumed the role of Chief Legal and Administrative Officer on August 5, 2021. +(7) Mr. Rucker joined the Company as its Senior Vice President of Operations on March 1, 2023, and he was promoted to Executive Vice President and Chief Operating Officer on February 24, 2025. +(8) Mr. Sluiter joined the Company as its Senior Vice President of Reservoir Engineering on December 3, 2018. +2025 PROXY STATEMENT 41 +Compensation Tables +ALL OTHER COMPENSATION TABLE +Name +Year +Company +Contributions +to Retirement +Plans +($) (1) +Other +Perquisites +and Benefits, +($) (2) +Total +John Reinhart +2024 +$17,250 +$11,407 (3) +$28,657 +Michael Hodges +2024 +$17,250 +$ 7,297 +$24,547 +Patrick Craine +2024 +$14,415 +$ 8,856 +$23,271 +Matthew Rucker +2024 +$17,250 +$ 5,578 +$22,828 +Michael Sluiter +2024 +$16,742 +$ 8,106 +$24,848 +(1) This column represents Company contributions to the 401(k) plan in 2024. +(2) This column represents the value of other benefits provided to the NEOs in 2024 and includes amounts for primarily group term life insurance premiums and long -term disability imputed income, as well as other de minimis perquisites and benefits. +(3) This includes $1,144.95 for spousal travel to attend a business -related trip. +42 2025 PROXY STATEMENT +Compensation Tables +2024 GRANTS OF PLAN -BASED AWARDS +The following table provides information concerning each grant of an award made to our NEOs in the fiscal year ended December 31, 2024 under any Company plan. +Estimated Future Payouts Under +Non-Equity Incentive Plan Awards +Estimated Future Payouts under +Equity Incentive Plan Awards (1) +All Other +Stock Awards: +Number of +Shares of +Stock or Units +(#) (2) +Grant Date +Fair Value of +Stock +Awards +($) (3) +Name +Grant +Date +Threshold +($) +Target +($) +Maximum +($) +Threshold +(#) +Target +(#) +Maximum +(#) +John Reinhart +— +$540,000 +$1,080,000 +$2,160,000 +— +— +— +— +— +Chief Executive +Officer +3/1/2024 +— +— +— +— +— +— +16,057 +$2,280,094 +3/1/2024 +— +— +— +6,705 +26,820 +53,640 +— +$4,183,920 +Michael Hodges +— +$257,500 +$ 515,000 +$1,030,000 +— +— +— +— +— +Chief Financial Officer +3/1/2024 +— +— +— +— +— +— +5,634 +$ 800,028 +3/1/2024 +— +— +— +2,353 +9,411 +18,822 +— +$1,468,116 +Patrick Craine +— +$225,000 +$ 450,000 +$ 900,000 +— +— +— +— +— +Chief Legal and Administrative Officer +3/1/2024 +— +— +— +— +— +— +4,367 +$ 620,114 +3/1/2024 +— +— +— +1,823 +7,293 +14,586 +— +$1,137,708 +Matthew Rucker +— +$187,000 +$ 374,000 +$ 748,000 +— +— +— +— +— +Senior Vice President of Operations +3/1/2024 +— +— +— +— +— +— +4,226 +$ 600,092 +3/1/2024 +— +— +— +1,765 +7,058 +14,116 +— +$1,101,048 +Michael Sluiter +— +$155,625 +$ 311,250 +$ 622,500 +— +— +— +— +— +Senior Vice President of Reservoir +3/1/2024 +— +— +— +— +— +— +3,099 +$ 440,058 +3/1/2024 +— +— +— +1,294 +5,176 +10,352 +— +$ 807,456 +(1) Reflects awards of performance -based restricted stock units granted to certain of our NEOs in 2024 under the 2021 Stock Incentive Plan. +(2) Reflects awards of time -based restricted stock units granted to certain of our NEOs in 2024 under the 2021 Incentive Plan. +(3) The amounts reported for performance -based and time -based restricted stock units in this column reflect the fair value of the applicable awards on the grant date. The amounts were calculated in accordance with FASB ASC Topic 718 using certain assumptions, as set forth in Note 1 and Note 7 to our consolidated financial statements for the fiscal year ended December 31, 2024 under the headings “Summary of Significant Accounting Policies — Accounting for Stock -based Compensation” and “Stock -Based Compensation,” respectively, included in our Annual Report on Form 10 -K , filed with the SEC on February 26, 2025. +2025 PROXY STATEMENT 43 +Compensation Tables +OUTSTANDING EQUITY AWARDS AT 2024 FISCAL YEAR -END +The following table provides information concerning equity awards granted to our NEOs that were outstanding as of December 31, 2024. +Stock Awards +Name +Number of +Shares or +Units of Stock +That Have +Not Vested (1) +(#) +Market Value of +Shares or +Units of Stock +That Have +Not Vested (2) +($) +Equity Incentive +Plan Awards: +Number of +Unearned +Shares, Units +or Other Rights +That Have +Not Vested +(#) (3) +Equity Incentive +Plan Awards: +Market of +Payout Value of +Unearned Shares, +Units or Other +Rights That Have +Not Vested +($) (2) +John Reinhart +29,754 +$5,480,687 +57,639 +$10,617,104 +Michael Hodges +12,342 +$2,273,396 +24,505 +$ 4,513,821 +Patrick Craine +9,233 +$1,700,719 +19,391 +$ 3,571,822 +Matthew Rucker +8,605 +$1,585,041 +17,946 +$ 3,305,653 +Michael Sluiter +7,154 +$1,317,767 +15,258 +$ 2,810,524 +(1) Represents awards of time -based restricted stock units granted to certain of our NEOs under the 2021 Incentive Plan, each of which vest annually in three equal installments over the three -year period commencing as of the grant date, subject to continued service through each applicable vesting date. +(2) The market value of restricted stock units that have not vested is based on the closing price of $184.20 per share of our common stock on the NYSE on December 31, 2024, the last trading day of 2024. +(3) Represents awards of performance -based restricted stock units granted to certain of our NEOs under the 2021 Incentive Plan, each of which vest based on the Company’s achievement of certain absolute and relative TSR metrics and the applicable NEOs’ continued service over a three -year performance period. Such performance -based restricted stock units are shown above at the target level. +44 2025 PROXY STATEMENT +Compensation Tables +2024 STOCK VESTED +The following table provides the number of shares acquired upon vesting of performance -based and restricted stock awards for certain of our NEOs. +Stock Awards +Name +Number +of Shares +Acquired on +Vesting +(#) +Value +Realized on +Vesting (1) +($) +John Reinhart +6,849 +$ 889,822 +Michael Hodges +3,354 +$ 543,449 +Patrick Craine +139,093 +$21,982,072 +Matthew Rucker +2,190 +$ 310,980 +Michael Sluiter +29,359 +$ 4,615,151 +(1) The amounts reflected in this column represent the market value of the underlying Common Shares as of the vesting date. If the vesting date was not a trading day, the value is based on the closing price per share of our common stock on the last trading day prior to the vesting date. +2025 PROXY STATEMENT 45 +Benefit Plans +401(k) Plan +We maintain a retirement savings plan, the safe harbor 401(k) Plan, with both traditional and Roth options, for the benefit of our eligible employees who have attained the age of 18. Currently, employees may elect to defer their compensation up to the statutorily prescribed limit. During the plan year, we provide a Company match of 100% up to 6% of eligible compensation. We also may make an additional, discretionary contribution based on each eligible employee’s eligible annual compensation for the prior calendar year. All contributions made by us on behalf of an employee are 100% vested when contributed. Employee contributions to the traditional 401(k) Plan and earnings on those contributions are not taxable to the employees until distributed from the 401(k) Plan, while participants in our Roth 401(k) may make Roth deferrals which are generally subject to taxation under rules applicable to Roth accounts. All contributions are deductible by us when made. +2021 STOCK INCENTIVE PLAN +On May 17, 2021, our Board adopted the Gulfport Energy Corporation 2021 Stock Incentive Plan (the “2021 Incentive Plan”) and authorized and reserved 2,828,123 shares of Gulfport’s common stock for issuance to Gulfport’s employees (including our NEOs), consultants and non -employee directors pursuant to equity incentive awards to be granted under the 2021 Incentive Plan, which may be in the form of incentive stock options, nonqualified stock options, restricted stock, restricted stock units, stock appreciation rights and performance awards or any combination of the foregoing. +The plan administrator may at any time amend or terminate the Annual Incentive Plan in whole or in part. +Our Board of Directors has delegated its authority to administer the Annual Incentive Plan to the Compensation Committee, to whom we refer as the plan administrator. The plan administrator has the authority to administer the Annual Incentive Plan and to exercise all the powers and authorities either specifically granted to it under the Annual Incentive Plan or necessary or advisable in the administration of the Annual Incentive Plan, including (but not limited to) the following: +• to interpret the Annual Incentive Plan and any award; +• to prescribe rules relating to the Annual Incentive Plan; +• to determine the persons to receive awards; +• to determine the terms, conditions, restrictions and performance criteria, including performance factors and performance targets, relating to any award; +• to accelerate an award that is designed not to be deferred compensation subject to Code Section 409A (after the attainment of the applicable performance target or targets); +• to adjust performance targets in recognition of specified events such as unusual or non -recurring events affecting us or our financial statements, including certain asset dispositions, cessation of operations resulting from a natural disaster, or in response to changes in applicable laws, regulations, or accounting principles as specified in the Annual Incentive Plan or in the performance targets established for any performance period; +• to waive restrictive conditions for an award (but not performance targets); and +• to make any other determinations that may be necessary or advisable for administration of the Annual Incentive Plan. +46 2025 PROXY STATEMENT +Benefit Plans +EQUITY COMPENSATION PLAN INFORMATION +The following table sets forth, as of December 31, 2024, certain information with respect to all compensation plans under which equity securities are authorized for issuance. +Plan Category +Number of +securities to +be issued upon +exercise of +outstanding +options, +warrants and +rights (a) (1)(2)(3) +Weighted +average +exercise price +of outstanding +options, +warrants and +rights (b) (3) +Number of +securities +remaining +available for +future issuance +under equity +compensation +plans excluding +securities +reflected in +column (a) +Equity compensation plans approved by security holders (1) +345,153 +$ — +1,945,863 +(1) Refers to the 2021 Stock Incentive Plan. +(2) Includes an aggregate of 167,014 unvested restricted stock units and 178,139 shares of unvested performance restricted stock granted under the 2021 Stock Incentive Plan. +(3) No options were outstanding as of December 31, 2024, and neither restricted stock units nor shares of restricted common stock have an exercise price. +Former Chief Executive Officer Offer Letter and Employment Agreement +On April 29, 2022, we entered into an employment agreement with Mr. Cutt to serve as our Chief Executive Officer and Executive Chair of the Board of Directors. +Pursuant to the employment agreement, the term of Mr. Cutt’s service as Chief Executive Officer shall continue until such time as either Mr. Cutt or the Company gives notice of intent to terminate. Mr. Cutt will continue to serve as Board Chair following the termination of his employment as Chief Executive Officer (subject to the Board’s ability to remove him at any time). The employment agreement also provides for, among other things, (i) an annual base salary of $785,000, (ii) eligibility to receive an annual bonus with a target bonus opportunity of 120% of base salary; (iii) eligibility for annual grants of equity awards as determined in the sole discretion of the Compensation Committee pursuant to the Company’s equity compensation plans; and (iv) benefits that are customarily provided to similarly situated executives of the Company. +Mr. Cutt’s employment agreement also contains a one -year post -employment non -solicitation clause and standard confidentiality, trade secrets and cooperation provisions. +On January 24, 2023, we entered into a Transition and Services Agreement (“TSA”) with Mr. Cutt where he transitioned employment from Chief Executive Officer to Executive Chair of the Board. The transition period was from January 24, 2023, through March 1, 2023 (“Service Period”), during which time Mr. Cutt was employed by the Company as Executive Chair of the Board. +Pursuant to the terms of the PSA, Mr. Cutt received the same base salary he had as Chief Executive Officer, his annual bonus for fiscal year 2022 and a pro -rated portion of his target annual bonus for fiscal year 2023. +The TSA clarifies that Mr. Cutt’s outstanding equity awards granted during his tenure as Chief Executive Officer shall continue to be eligible to vest following the end of his service as Chief Executive Officer or Executive Chair of the Board in accordance with the vesting provisions contained in the applicable RSU Award Agreements and the PSU Award Agreements as long as Mr. Cutt continues to provide services to the Company as a member of the Board. +NEO Employment Agreements and Termination and Change of Control Benefits +Our NEOs are parties to an employment agreement with the Company. +Pursuant to the employment agreements with Messrs. Reinhart, Hodges, Craine, Rucker, and Sluiter (collectively, the “Employment Agreements”, and such individuals, the “Covered NEOs”), each current employment agreement provides for an initial term that extends through December 31, 2026; provided that the term will automatically renew for successive one -year terms unless the Company or the Covered NEO gives written notice not to renew at least 90 days before the end of the initial term or any renewal +2025 PROXY STATEMENT 47 +Benefit Plans +term. If a “change of control” (as described in the applicable Employment Agreement) occurs during the term thereof, the term will be extended to the later of the original expiration date of the term or the date that is 24 months after the effective date of the change of control. +The Employment Agreements provide each Covered NEO with, among other things: (i) an annual base salary, (ii) eligibility to earn a target annual bonus under the Company’s Annual Incentive Plan of base salary, (iii) eligibility for annual grants of equity awards as determined in the sole discretion of the Compensation Committee pursuant to the Company’s equity compensation plans, and (iv) benefits that are customarily provided to similarly situated executives of the Company. +In addition, our Covered NEOs will be entitled to receive (or have already received) specified payments and benefits upon certain termination events pursuant to the Employment Agreements, including termination following a change of control. The Compensation Committee believes that these provisions encourage our Covered NEOs to remain in our employment, as applicable, in the event of a change of control of the Company and during circumstances which indicate that a change of control might occur. The Compensation Committee believes termination and change of control benefits are important in maintaining strong leadership and in encouraging retention in these situations and encourages our Covered NEOs to act in the best interests of stockholders without distraction based on uncertainty regarding their employment status, as applicable. Under the Employment Agreements, if a Covered NEO’s employment is terminated without “cause” by the Company or by the applicable Covered NEO for “good reason” during such time that is not within the 24 -month period following a “change of control” (as such terms are defined in the Employment Agreements), such Covered NEO will be entitled to severance compensation equal to: +• 100% of annual base salary and target annual bonus; +• pro -rata target annual bonus; +• pro -rated vesting of the Covered NEO’s unvested equity awards (with performance award vesting based on performance through the termination date); however, see “RSU and PSU Grant Agreements” for terms applicable to equity awards; and +• a lump sum payment equal to the Covered NEO’s monthly COBRA premium for a 12 -month period. +If, however, such Covered NEO’s employment is terminated without cause by the Company or by the Covered NEO for good reason, in each case, within 24 months following a change of control, such Covered NEO will instead be entitled to severance compensation equal to: +• 200% of sum of annual base salary plus target annual bonus (300% for Mr. Reinhart); +• pro -rated target annual bonus; +• immediate vesting of the Covered NEO’s unvested equity awards (with performance award vesting based on performance through the termination date); however, see “RSU and PSU Grant Agreements” for terms applicable to equity awards; and +• a lump sum payment equal to the Covered NEO’s monthly COBRA premium for an 18 -month period. +Under the NEO Employment Agreements: +“Good reason” is generally defined as (i) the elimination of the Covered NEO’s position, a material reduction in the duties and/or reassignment of the Covered NEO to a new position of materially less authority; (ii) a material reduction in the Covered NEO’s base salary, in either case, subject to a cure period of 30 days; (iii) the relocation of the NEO’s principal place of employment by more than 50 miles. +“Cause” is generally defined as (i) the Covered NEO’s willful and continued failure to perform substantially such Covered NEO’s duties with the Company (other than any failure resulting from incapacity due to physical or mental illness) or (ii) the Covered NEO’s willful engaging in illegal conduct or gross misconduct which is materially and demonstrably injurious to the Company. +Severance benefits payable under the Employment Agreements are generally conditioned on timely execution of a waiver and release of claims. +Each Employment Agreement also contains a one -year post -employment non -solicitation clause and standard confidentiality, trade secrets and cooperation provisions. +48 2025 PROXY STATEMENT +Benefit Plans +RSU and PSU Grant Agreements: +Messrs. Reinhart, Hodges, Craine, Rucker, and Sluiter each received an award of time -based restricted stock units (“RSUs”) and performance -based restricted stock units (“PSUs”) under the 2021 Stock Incentive Plan on March 1, 2024. +Pursuant to the applicable award agreements, upon the applicable NEO’s termination of employment or service for cause, any unvested RSUs or PSUs will be immediately forfeited for no consideration. +Upon a termination of the applicable NEO’s employment or service due to death or “disability”, by the Company without “cause” (each as defined in the 2021 Incentive Plan) or due to a resignation by the applicable NEO for “good reason” (as defined in the applicable award agreement), (i) any unvested RSUs will accelerate and fully vest, and (ii) a prorated portion of the PSUs will vest based on the actual achievement of the performance conditions to be determined at the expiration of the performance period, and any remaining unvested PSUs will be forfeited (provided, that if the applicable NEO is terminated by the Company without cause or resigns for good reason within the first 18 months of the performance period, the Compensation Committee will have sole discretion whether the PSUs will accelerate and vest in such manner. +Upon the occurrence of a “change in control” (as defined in the 2021 Incentive Plan), to the extent the RSUs or PSUs, as applicable, are not assumed by the surviving entity, (i) any unvested RSUs will accelerate and fully vest, and (ii) the applicable NEO will become vested in 100% of the target award of PSUs or, if greater, the percentage of the target award of PSUs earned based on the actual achievement of the performance conditions to be determined as if the change in control was the last day of the performance period (except that the TSR for the Company and each of the peer companies will be determined using the closing price as of the closing date of the change in control compared to the reference value). +Upon the occurrence of a change in control, to the extent the RSUs or PSUs, as applicable, are assumed by the surviving entity, (i) upon the termination of the applicable NEO’s employment or service due to death or disability, by the Company without cause or by the applicable NEO for good reason within the 24 month period following such change in control, any unvested RSUs will accelerate and fully vest, and (ii) the PSUs will be converted, as of the date of such change in control, into time -based restricted stock units (the “Converted RSUs”), subject to the applicable NEO’s continuous employment or service through the date of such change in control, with the number of PSUs to be converted equal to 100% of the target award of PSUs or, if greater, the percentage of the target award of PSUs earned based on the actual achievement of the performance conditions to be determined as if the change in control was the last day of the performance period (except that the TSR for the Company and each of the peer companies will be determined using the closing price as of the closing date of the change in control compared to the reference value), and 100% of the Converted RSUs will vest, if at all, on the last day of the performance period, subject to the applicable NEO’s continuous employment or service through such date; provided, that if the applicable NEO’s employment or service is terminated due to death or disability, by the Company without cause or by the applicable for good reason following such change in control, 100% of the Converted RSUs will vest as of the date of such termination. +In the event of (i) a change in the composition of the Board such that, for a period of 30 days, the majority of the members of the Board are no longer considered “independent” (as described in the applicable award agreement) or (ii) any stockholder becomes the beneficial owner of more than 75% of the total combined voting power of all classes of stock of the Company (each such event, a “Special CiC Event”), (x) any unvested RSUs will accelerate and fully vest, and (y) the applicable NEO will become vested in 100% of the target award of PSUs or, if greater the percentage of the target award of PSUs earned based on the actual achievement of the performance conditions to be determined as of the Special CiC Event (determined as if the Special CiC Event was the last day of the performance period). +2025 PROXY STATEMENT 49 +Benefit Plans +Termination, Resignation or Change of Control +The following tables provide information regarding potential payments to each of our NEOs as of December 31, 2024, in connection with certain termination events, including a termination related to a change of control of the Company. +Benefits and Payments Upon Termination (1) +Termination +Due to +Death or +Disability +Termination +by the Company +Without +Cause or by +the NEO for +Good Reason +(a “Qualifying +Termination”) +Termination +by the +Company +for Cause +Qualifying +Termination +Within +24 Months +Following +Change of +Control +Change in +Control with +no Qualifying +Termination (2) +John Reinhart +Cash Severance Payments (3) +— +$ 3,060,000 +— +$ 7,020,000 +— +Accelerated Vesting of Equity Awards: (4) +Unvested RSUs +$5,480,687 +$ 5,480,687 +— +$ 5,480,687 +$ 5,480,687 +Unvested PSUs +$3,786,300 +$ 3,786,300 +— +$10,617,104 +$10,617,104 +COBRA Payments (5) +— +$ 18,579 +— +$ 27,868 +— +Total +$9,266,987 +$12,345,565 +— +$23,145,658 +$16,097,791 +Michael Hodges +Cash Severance Payments (3) +— +$ 1,545,000 +— +$ 2,575,000 +— +Accelerated Vesting of Equity Awards: (4) +Unvested RSUs +$2,273,396 +$ 2,273,396 +— +$ 2,273,396 +$ 2,273,396 +Unvested PSUs +$1,854,389 +$ 1,854,389 +— +$ 4,513,821 +$ 4,513,821 +COBRA Payments (5) +— +$ 22,686 +— +$ 34,030 +— +Total +$4,127,785 +$ 5,695,472 +— +$ 9,396,247 +$ 6,787,217 +Patrick Craine +Cash Severance Payments (3) +— +$ 1,400,000 +— +$ 2,350,000 +— +Accelerated Vesting of Equity Awards: (4) +Unvested RSUs +$1,700,719 +$ 1,700,719 +— +$ 1,700,719 +$ 1,700,719 +Unvested PSUs +$1,486,312 +$ 1,486,312 +— +$ 3,571,822 +$ 3,571,822 +COBRA Payments (5) +— +$ 22,547 +— +$ 33,820 +— +Total +$3,187,031 +$ 4,609,577 +— +$ 7,656,361 +$ 5,272,541 +Matthew Rucker +Cash Severance Payments (3) +— +$ 1,188,000 +— +$ 2,002,000 +— +Accelerated Vesting of Equity Awards: (4) +Unvested RSUs +$1,585,041 +$ 1,585,041 +— +$ 1,585,041 +$ 1,585,041 +Unvested PSUs +$1,337,656 +$ 1,337,656 +— +$ 3,305,653 +$ 3,305,653 +COBRA Payments (5) +— +$ 22,686 +— +$ 34,030 +— +Total +$2,922,697 +$ 4,133,384 +— +$ 6,926,724 +$ 4,890,694 +50 2025 PROXY STATEMENT +Benefit Plans +Benefits and Payments Upon Termination (1) +Termination +Due to +Death or +Disability +Termination +by the Company +Without +Cause or by +the NEO for +Good Reason +(a “Qualifying +Termination”) +Termination +by the +Company +for Cause +Qualifying +Termination +Within +24 Months +Following +Change of +Control +Change in +Control with +no Qualifying +Termination (2) +Michael Sluiter +Cash Severance Payments (3) +— +$ 1,037,500 +— +$ 1,763,750 +— +Accelerated Vesting of Equity Awards: (4) +Unvested RSUs +$ 1,317,767 +$ 1,317,767 +— +$ 1,317,767 +$ 1,317,767 +Unvested PSUs +$ 1,238,634 +$ 1,238,634 +— +$ 2,810,524 +$ 2,810,524 +COBRA Payments (5) +— +$ 22,833 +— +$ 34,250 +— +Total +$ 2,556,401 +$ 3,616,734 +— +$ 5,926,290 +$ 4,128,290 +(1) Information in this table assumes a termination date of December 31, 2024, and a price per share of our common stock of $184.20 (the closing market price per share on December 31, 2024, the last trading day of 2024), and applies the terms of the NEOs’ compensation arrangements as of December 31, 2024. Performance -based bonuses are calculated using 100% achievement for illustration, though payouts may vary based on actual results. +(2) Represents the aggregate value of the applicable NEO’s 2024 equity awards that will accelerate on a Special CiC Event. See “RSU and PSU Grant Agreements” above. +(3) Represents the aggregate cash severance payments payable to the NEO (calculated based on the base salary and target annual bonus in effect as of December 31, 2024) in accordance with the terms of the applicable agreement, assuming a termination date of December 31, 2024. +(4) Represents the aggregate value of the applicable NEO’s accelerated equity awards payable to the NEO in accordance with the terms of the applicable agreement, assuming a termination date of December 31, 2024. +(5) Represents the aggregate COBRA payments payable to the NEO in accordance with the terms of the applicable agreement, assuming a termination date of December 31, 2024. +2025 PROXY STATEMENT 51 +CEO Pay Ratio Disclosure +Pursuant to Item 402(u) of Regulation S -K , we are disclosing the pay ratio and supporting information comparing the median of the annual total compensation of our employees (including full -time , part -time , seasonal and temporary employees) other than Mr. Reinhart, our President and Chief Executive Officer and Board Director, as of December 31, 2023 (the date selected to identify the ‘median employee’, as further described below), and the annual total annualized compensation of Mr. Reinhart. The pay ratio is calculated in a manner consistent with Item 402(u) of Regulation S -K . +For the year ended December 31, 2024, our last completed fiscal year: +• The annual total compensation of our median employee was approximately $124,161. +• The total annualized compensation of Mr. Reinhart was approximately $8,988,358. +Based on this information, for 2024 the ratio of the annual total compensation of Mr. Reinhart to the median of the annual total compensation of all other employees was approximately 72:1. +We selected December 31, 2024, as the date upon which we identified the median employee. We reviewed the Medicare Taxable Earnings as reported on IRS Form W -2 (Box 5) for 2024 for all individuals employed by us on December 31, 2024 (other than Mr. Reinhart) and identified the median employee based on Medicare Taxable Earnings. +Once we identified our median employee, we calculated that employee’s annual total compensation for 2024 in the same manner that we determined the total compensation of our NEOs for purposes of the Summary Compensation Table set forth above. This resulted in an annual total compensation of $124,161 for the identified employee for the year ended December 31, 2024. The total compensation for Mr. Reinhart was calculated based on the values included in the Summary Compensation Table set forth above, which totaled $8,988,358. Mr. Reinhart participates in the Company’s benefit plans, including the 401(k) plan, has imputed income on Company -paid life insurance provided to all employees, imputed income on company paid executive long -term disability insurance, $1,144.95 for spousal travel to attend a business -related trip, income for non -cash fringe benefits for Company -sponsored sporting event tickets, and receives a monthly gym reimbursement benefit available to all employees. We made no material assumptions, adjustments, or estimates to identify the median employee or to determine total compensation, and we did not annualize the compensation for any employees that were not employed by us the entire year. +We believe that the pay ratio is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S -K . In addition, because the Securities and Exchange Commission rules for identifying the median employee allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices, the pay ratio reported by other companies may not be comparable to our pay ratio, as other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios. +52 2025 PROXY STATEMENT +Pay Versus Performance +As previously discussed in the CD&A above, our Compensation Committee has focused on implementing executive compensation plans with the goal of tying our NEOs’ realized compensation to the achievement of Gulfport’s financial, operational, and strategic objectives, and aligning executive pay with changes in the value of our shareholders’ returns. The following table sets forth additional compensation information for our NEOs, calculated in accordance with SEC regulations, for fiscal years 2024, 2023, 2022, 2021 and 2020. +Summary +Compensation +Table Total +for PEO1 (1)(2) +(Cutt) +(b) +Summary +Compensation +Table Total +for PEO2 (1) +(Wood) +(b) +Summary +Compensation +Table Total +for PEO3 (2) +(Reinhart) +(b) +Compensation +Actually Paid +to PEO1 +(Cutt) +(c) +Compensation +Actually Paid +to PEO2 +(Wood) +(c) +Compensation +Actually Paid +to PEO3 +(Reinhart) +(c) +Average +Summary +Compensation +Table Total +for non-PEO +NEOs +(d) +Average +Compensation +Actually Paid +to non-PEO +NEOs +(e) +Value of initial fixed $100 +Investment based on: +Net +Income +($mm) +(h) +Adjusted +Free +Cash +Flow (4) +($mm) +(i) +Year +(a) +Total +Shareholder +Return (3) +(f) +Peer Total +Shareholder +Return (3) +(g) +2024 (5) +n/a +n/a +$ 8,988,358 +n/a +n/a +$ 16,551,431 +$ 2,847,532 +$ 7,442,197 +$ 271 +$ 155 +($ 261 ) +$ 257 +2023 (6) +$ 385,141 +n/a +$ 5,522,209 +$ 9,977,442 +n/a +$ 10,022,502 +$ 2,162,249 +$ 6,573,145 +$ 196 +$ 160 +$ 1,471 +$ 199 +2022 (7) +$ 6,447,544 +n/a +n/a +$ 5,787,952 +n/a +n/a +$ 974,218 +$ 1,232,477 +$ 108 +$ 159 +$ 495 +$ 241 +2021 (8) +$ 3,823,399 +$ 8,942,980 +n/a +$ 4,153,397 +$ 8,930,695 +n/a +$ 4,004,438 +$ 4,214,026 +$ 106 +$ 112 +($ 113 ) +$ 361 +2020 (9) +n/a +$ 2,773,653 +n/a +n/a +$ 1,110,896 +n/a +$ 1,092,898 +$ 261,907 +n/a +n/a +($ 1,625 ) +$ 41 +(1) The Company had two CEOs during 2021. Effective May 17 th , 2021, Mr. Wood left his position of Chief Executive Officer and President of the Company and Mr. Cutt was appointed as Interim Chief Executive Officer and Board Chair and assumed the role of Chief Executive Officer and Board Chair on September 2, 2021. +(2) The Company had two CEOs during 2023. On January 24th, 2023, Mr. Reinhart was appointed as President and Chief Executive Officer of the Company. Mr. Cutt continues to serve the Company as Board Chair. +(3) TSR is determined based on the value of an initial fixed investment of $100 on December 31, 2019. The peer group TSR represents TSR of the S&P Oil & Gas Exploration & Production Index. +(4) Adjusted Free Cash Flow is a non -GAAP measure defined as net cash provided by operating activities from the Company’s Consolidated Statement of Cash Flows less the sum of changes in operating assets and liabilities included in the operating activities section of the Consolidated Statement of Cash Flows less non -recurring general and administrative and other expenses from the Consolidated Statement of Operations less incurred capital expenditures and capitalized expenses. Adjusted Free Cash Flow was calculated assuming realized commodity pricing received throughout the year was consistent with the forward curve pricing used to set the approved Adjusted Free Cash Flow Metric in February of 2024. +(5) The non -PEO NEOs during 2023 and 2024 were Messrs Hodges, Craine, Rucker, and Sluiter. +(6) The non -PEO NEOs during 2023 and 2024 were Messrs Hodges, Craine, Rucker, Sluiter, and Buese. +(7) The non -PEO NEOs during 2022 were Messrs Buese, Craine, and Sluiter. +(8) The non -PEO NEOs during 2021 were Messrs Buese, Craine, Sluiter, Robert J. Moses, Quentin Hicks and Donnie Moore. +(9) The non -PEO NEOs during 2020 were Messrs Craine, Sluiter, Hicks and Moore. +SEC rules require certain adjustments be made to the Summary Compensation Table totals to determine “compensation actually paid” (CAP) as reported in the Pay versus Performance Table. The following table details these adjustments: +Year +Executive(s) +Summary +compensation +table total +($) +Pension Valuation Adjustments +Equity Award Adjustments +Deduct +change in +pension +value +($) +Pension +service +cost +adjustment +($) +Prior +service +cost +adjustment +($) +Deduct +stock +awards +($) +Include +year-end +equity +value +($) +Change in +value of +prior +equity +awards +($) +Dividends +& Interest +Accrued +($) +2024 +PEO1 +N/A +N/A +N/A +N/A +N/A +N/A +N/A +N/A +PEO2 +N/A +N/A +N/A +N/A +N/A +N/A +N/A +N/A +PEO3 +8,988,358 +N/A +N/A +N/A +( 6,464,014 ) +9,500,170 +4,526,916 +N/A +Other NEOs +2,847,532 +N/A +N/A +N/A +( 1,743,655 ) +2,562,646 +3,775,674 +N/A +2025 PROXY STATEMENT 53 +Pay Versus Performance +The Company believes that the three key financial performance measures most relevant to linking pay and performance over the long term are, in no particular order, Adjusted Free Cash Flow , Net Income and TSR . The following three tables describe the link between those metrics and “compensation actually paid” (CAP) to our CEO and other NEOs in 2024 to Company performance. +54 2025 PROXY STATEMENT +Pay Versus Performance +2024 DIRECTOR COMPENSATION +Our policy is that members of our Board of Directors who are also our officers or employees do not receive compensation for their services as directors. The compensation of our non -employee directors for 2024 is described below. +Cash Compensation +The annual retainer for each non -employee director is $100,000. In addition, the Board Chair receives an additional $25,000 annual retainer. The members and chair of each of our Board Committees receive an additional annual retainer as set forth in the table below. +2024 Director Fees +Program Component +2024 Program +Annual base cash retainer for Board service +$ 100,000 +Additional cash retainer to non-executive Board Chair +$ 25,000 +Additional cash retainer to Lead Director +$ 25,000 +Audit Committee Chair cash retainer +$ 25,000 +Compensation Committee Chair cash retainer +$ 15,000 +Nominating, Environmental, Social and Governance Committee Chair cash retainer +$ 10,000 +Audit Committee member cash retainer +$ 10,000 +Compensation Committee member cash retainer +$ 5,000 +Nominating, Environmental, Social and Governance Committee member cash retainer +$ 5,000 +Stock ownership guideline +5.0x annual +base retainer +2025 PROXY STATEMENT 55 +Pay Versus Performance +Equity Compensation +In 2024, all current non -employee directors received grants of restricted stock units valued at $150,000 with a 1 -year cliff vest on May 26, 2024. +Stock Ownership Guidelines for Directors +We believe it is important for members of our Board of Directors to align their financial interests with those of our stockholders. Accordingly, effective April 27, 2022, our Board of Directors adopted a formal stock ownership policy that requires our non -employee directors to achieve a stock ownership level equal to the value of common stock that is five times the value of their annual retainer within five years of the effective date of such stock ownership policy. On February 20, 2025, our Board of Directors amended the stock ownership guidelines to provide that once a participant has satisfied the stock ownership requirements subsequent declines in the stock price will not affect compliance if the participant retains the number of shares held when they achieved compliance. Messrs. Cutt, Wolf, Martinez, and Reganato have met their required stock ownership levels, and Ms. Powers, Mr. Reinhart, and Ms. Shafer -Malicki are all on track to meet their required stock ownership levels within the 5 -year requirement. +2024 Director Compensation Table +The following table contains information with respect to 2024 compensation of our non -employee directors who served in such capacity during 2024. +Board Compensation +Name +Fees Earned or +Paid in Cash +($) (1) +Stock +Awards +($) (2) +Option +Awards +($) +Total +($) +Timothy Cutt +$125,000 +$150,000 +— +$275,000 +David Wolf +$160,000 +$150,000 +— +$310,000 +Jason Martinez +$125,000 +$150,000 +— +$275,000 +Jeannie Powers +$115,000 +$150,000 +— +$265,000 +David Reganato +$120,000 +$150,000 +— +$270,000 +Mary Shafer-Malicki +$115,000 +$150,000 +— +$265,000 +(1) Reflects the annual cash compensation, as discussed above. +(2) The amounts shown reflect the grant date fair value of restricted stock unit awards granted, determined in accordance with FASB ASC Topic 718. See Note 1 and Note 7 to our consolidated financial statements for the fiscal year ended December 31, 2024 under the headings “Summary of Significant Accounting Policies” and “Stock -Based Compensation,” respectively, included in our Annual Report on Form 10 -K for the fiscal year ended December 31, 2024, filed with the SEC on February 26, 2025, regarding assumptions underlying valuations of equity awards for 2024. The grant date fair value for the restricted stock issued to each Director was determined by using the May 23, 2024, closing stock price of the Company’s common stock on the NYSE of $155.68. +56 2025 PROXY STATEMENT +BENEFICIAL OWNERSHIP +The following table sets forth certain information regarding the beneficial ownership as of March 7, 2025, of shares of our common stock by each of our directors, by each NEO and by all directors, executive officers and nominees as a group. None of the executive officers, directors or individuals listed below are holders of the Company’s outstanding preferred stock. +Name of Beneficial Owner (1) +Amount and Nature of +Beneficial Ownership +Percent of Class +Timothy Cutt (2) +46,790 +* +David Wolf (3) +5,017 +* +Jason Martinez (3) +2,691 +* +Jeannie Powers (3) +2,331 +* +David Reganato (assigned to Silver Point) (3,4) +7,344 +* +Mary Shafer-Malicki (3) +2,366 +* +John Reinhart +10,576 +* +Michael Hodges (5) +6,255 +* +Patrick Craine +8,344 +* +Matthew Rucker +3,174 +* +Michael Sluiter +6,307 +* +Directors and Executive Officers as a Group (13 persons) +110,185 +* +* Less than 1%. +(1) Beneficial ownership is determined in accordance with SEC rules. In computing percentage ownership of each person, shares of common stock subject to options held by that person that are exercisable as of March 7, 2025, or exercisable within 60 days of March 7, 2025, are deemed to be beneficially owned. These shares, however, are not deemed outstanding for the purpose of computing the percentage ownership of each other person. The percentage of shares beneficially owned is based on 17,883,113 shares of common stock outstanding as of March 7, 2025, excluding an aggregate of 408,069 shares of restricted stock units and performance -based restricted stock units awarded under our 2021 Stock Incentive Plan, but not yet vested. Unless otherwise indicated, all amounts exclude shares issuable upon the exercise of outstanding options and vesting of restricted stock units that that are not exercisable and/or vested as of March 7, 2025, or within 60 days of March 7, 2025. Except as otherwise noted, each stockholder has sole voting and investment power with respect to the shares beneficially owned. +(2) Includes 8,767 unvested restricted stock units that will vest within 60 days of March 7, 2025. +(3) Includes 964 unvested restricted stock units that will vest within 60 days of March 7, 2025. +(4) Mr. Reganato has an understanding with Silver Point pursuant to which he holds such restricted shares for the benefit of Silver Point and certain of its affiliates. Accordingly, Mr. Reganato disclaims beneficial ownership of the restricted shares except to the extent of his pecuniary interest therein. +(5) Includes 3,354 unvested restricted stock units that will vest within 60 days of March 7, 2025. +2025 PROXY STATEMENT 57 +BENEFICIAL OWNERSHIP +Holdings of Major Stockholders +The following table sets forth certain information regarding the beneficial ownership as of March 7, 2025 of shares of our common stock by each person or entity known to us to be a beneficial owner of 5% or more of our common stock. The following table does not include information regarding ownership of shares of our preferred stock due to the securities not being listed on a major U.S. national or regional securities exchange and requirements for ownership reporting. +MAJOR STOCKHOLDER TABLE +Name and Address of Beneficial Owner (1) +Amount and Nature of +Beneficial Ownership +Percent of +Class (1) +Silver Point Capital, L.P. +2,681,309 (2,3) +15.0% +2 Greenwich Plaza, First Floor +Greenwich, CT 06830 +Wellington Management Company, LLP +1,187,877 (4) +6.6% +280 Congress Street +Boston, MA 02210 +FMR LLC +1,069,786 (5) +6.0% +245 Summer Street +Boston, MA 02210 +(1) Beneficial ownership is determined in accordance with SEC rules. The percentage of shares beneficially owned is based on 17,883,113 shares of common stock outstanding as of March 7, 2025, excluding an aggregate of 408,069 shares of restricted stock units and performance -based restricted stock units awarded under our 2021 Stock Incentive Plan, but not yet vested. +(2) Information based on an amendment to Schedule 13D/A filed by Silver Point Capital, L.P. with the SEC on January 15, 2025, reporting that Silver Point Capital, L.P. has sole voting power and sole dispositive power over 0 shares and shared voting power and shared dipositive power over 2,681,309 common shares. Silver Point Capital, L.P. (“Silver Point”) or its wholly owned subsidiaries are the investment managers of Silver Point Capital Fund, L.P., Silver Point Capital Offshore Master Fund, L.P., Silver Point Distressed Opportunities Fund, L.P., Silver Point Distressed Opportunities Offshore Master Fund, L.P., Silver Point Distressed Opportunity Institutional Partners, L.P. and Silver Point Distressed Opportunity Institutional Partners Master Fund (Offshore), L.P. (the “Funds”) and, by reason of such status, may be deemed to be the beneficial owner of all of the reported securities held by the Funds. Silver Point Capital Management, LLC is the general partner of Silver Point and as a result may be deemed to be the beneficial owner of all securities held by the Funds. +(3) Messrs. Edward A. Mule and Robert J. O’Shea are each members of Management and as a result may be deemed to be the beneficial owner of all of the securities held by the Funds. Silver Point, Management and Messrs. Mule and O’Shea disclaim beneficial ownership of the reported securities held by Funds except to the extent of their pecuniary interests. +(4) Information based on an amendment to Schedule 13G/A filed by Wellington Management Group LLP, Wellington Group Holdings LLP, Wellington Investment Advisors Holdings LLP and Wellington Management Company LLP (“Wellington”) with the SEC on February 10, 2025, reporting that Wellington has sole voting power and sole dispositive power over 0 shares, shared voting power over 819,785 shares, and shared dipositive power over 1,187,877 shares. +(5) Information based on Schedule 13G filed by FMR LLC, FIAM LLC, Fidelity Institutional Asset Management Trust Company, Fidelity Management & Research Company LLC, Fidelity Management Trust Company and Strategic Advisers LLC (“FMR LLC”) with the SEC on February 12, 2025, reporting that FMR LLC has sole voting power over 1,069,118 shares, sole dispositive power over 1,069,785.86 shares and shared voting power and shared dipositive power over 0 shares. +58 2025 PROXY STATEMENT +Certain Relationships and Review and +Approval of Related Party Transactions +The Audit Committee, as provided in its charter, reviews and approves related party transactions. The Company does not have a formal set of standards to be substantively applied to each transaction reviewed by the Audit Committee. Instead of a formalized policy, related party transactions are reviewed and judgment is applied to determine whether transactions are in the best interests of the Company. Further, the Company’s Code of Business Conduct and Ethics governs various compliance areas, including conflicts of interest and fair dealings, which are considered in the process of the review and approval of related party transactions. +The Company’s policy is that all its employees and directors, as well as their family members, must avoid any activity that is or has the appearance of conflicting with the Company’s business interest. This policy is included in the Company’s Code of Business Conduct and Ethics posted on its website. Each director and executive officer is instructed to always inform the designated compliance officer when confronted with any situation that may be perceived as a conflict of interest. Only the Board of Directors or a committee consisting solely of independent directors may grant waivers of the provisions of the Code of Business Conduct and Ethics for the Company’s executive officers and directors. In addition, at least annually, each director and executive officer completes a detailed questionnaire specifying any business relationship that may give rise to a conflict of interest. +Further, under the Audit Committee charter, the Audit Committee is responsible for reviewing and monitoring compliance with our Code of Business Conduct and Ethics and recommending any warranted changes to the Board of Directors. In addition, the Board of Directors and, pursuant to its written charter, the Audit Committee, reviews and approves all relationships and transactions in which the Company and its directors, director nominees and executive officers and their immediate family members, as well as holders of more than 5% of any class of our voting securities and their family members, have a direct or indirect material interest. The Board of Directors and the Audit Committee approve only those transactions that, considering known circumstances, are consistent, or are not inconsistent with, the Company’s best interests, as they determine in the good faith exercise of their discretion. +During 2024, Gulfport employed Sara Disser who is the daughter of the Company’s Chief Executive Officer. She received total compensation of $153,753. +As part of Gulfport’s existing $1.0 billion share repurchase program, Gulfport purchased $79,134,000 in common stock from affiliates of Silver Point Capital, L.P. in 2024. +2025 PROXY STATEMENT 59 +Proposal to Ratify the Appointment of Our Independent Auditors +(Proposal 2) +The Company is asking its stockholders to vote to ratify the appointment of Grant Thornton LLP as our independent auditors for fiscal year ending December 31, 2025. The Audit Committee has appointed Grant Thornton LLP to serve as independent auditors. +What services do the independent auditors provide? +Audit services of Grant Thornton LLP for fiscal year 2024 included an audit of our consolidated financial statements and services related to periodic filings made with the SEC. Additionally, Grant Thornton LLP provided certain services related to the consolidated quarterly reports as described below. +How much were the independent auditors paid in 2024 and 2023? +Grant Thornton LLP’s fees for professional services totaled $1,151,750 for 2024 and $1,154,865 for 2023. Grant Thornton LLP’s fees for professional services included the following: +• Audit Fees – aggregate fees for audit services, which relate to the fiscal year consolidated audit, quarterly reviews, accounting consultations and comfort letters were $1,151,750 for 2024 and $1,154,865 for 2023. +• Audit -Related Fees – aggregate fees for audit -related services, consisting of audits in connection with proposed or consummated dispositions, benefit plan audits, other subsidiary audits, special reports, and accounting consultations, were $0 in 2024 and 2023. +• Tax and All Other Fees – there w ere no tax or other fees for products or services provided by Grant Thornton LLP in addition to the services described above in 2024 and 2023. +Does the Audit Committee approve the services provided by Grant Thornton LLP? +It is our Audit Committee’s policy to pre -approve all audit, audit -related and permissible non -audit services rendered to us by our independent auditor. Consistent with such policy, all fees listed above that we incurred for services rendered by Grant Thornton LLP in fiscal years 2024 and 2023 were pre -approved by our Audit Committee. No non -audit services were provided to us by Grant Thornton LLP in 2024 or 2023. +Will a representative of Grant Thornton LLP be present at the meeting? +Yes, one or more representatives of Grant Thornton LLP will be present at the meeting. The representatives will have an opportunity to make a statement if they desire and will be available to respond to appropriate questions from the stockholders. +Has Grant Thornton LLP always served as Gulfport’s independent auditors? +Grant Thornton LLP has served as our independent auditors since 2005. +Vote Required and Board Recommendation +Stockholder ratification of the appointment of our independent auditors is not required by the Bylaws or otherwise. However, we are submitting this proposal to the stockholders as a matter of good corporate practice. Approval of this proposal requires the affirmative vote “for” the proposal of a majority of the votes cast by the stockholders present in person or represented by proxy at the Annual Meeting and entitled to vote thereon. The persons named as proxies for the Company intend to vote the proxies “FOR” Proposal 2. Abstentions and broker non -votes , if any, will have no effect on the voting results for Proposal 2. +If the appointment of Grant Thornton LLP is not ratified, the Audit Committee will reconsider the appointment. Even if the appointment is ratified, the Audit Committee in its discretion may direct the appointment of a different independent audit firm at any time during the year if it is determined that such change would be in best interests of the Company and its stockholders. +THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF GRANT THORNTON LLP AS THE COMPANY’S INDEPENDENT AUDITORS FOR THE YEAR 2025. +60 2025 PROXY STATEMENT +Proposal to Approve, on an Advisory, +NON -BINDING Basis, the Compensation Paid to +the Company’s Named Executive Officers +(Proposal 3) +Pursuant to Section 14A of the Exchange Act, the Company is asking its stockholders to vote to approve, on an advisory, non -binding basis, the compensation paid to the Company’s NEOs as reported in this proxy statement. This is also known as a “Say -On-Pay ” vote. The Company’s stockholders are being asked to vote on the following resolution: +“RESOLVED, that the compensation paid to the Company’s NEOs, as disclosed pursuant to Item 402 of Regulation S -K , including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby approved.” +This vote is advisory, which means that the vote on executive compensation is not binding on the Company, our Board of Directors or the Compensation Committee. While the vote on executive compensation is solely advisory in nature, our Board of Directors and the Compensation Committee will review and consider the “Say -On-Pay ” voting results when making future decisions regarding our executive compensation program. +Stockholders are encouraged to carefully review the “Compensation Discussion and Analysis” section of this proxy statement, which discusses in detail the Company’s compensation policy and compensation arrangements which the Company believes are appropriate and reasonably consistent with market practice and with the long -term interests of the Company and its stockholders. In furtherance of the Company’s goals and objectives, the Compensation Committee, among other things, emphasizes long -term equity awards and annual performance bonuses under the previously implemented Annual Incentive Plan to align our executives’ interests more closely with those of our stockholders and to link a larger portion of our executives’ compensation to the performance of our stock and our operational performance. +We have determined that our stockholders should cast an advisory vote on the compensation of our NEOs on an annual basis. Unless this policy changes, the next advisory vote on the compensation of our NEOs will be at the 2026 Annual Meeting. +Vote Required and Board Voting Recommendation +Proposal 3 requires an affirmative vote “for” the proposal by a majority of the votes cast by the stockholders present in person or represented by proxy at the Annual Meeting and entitled to vote thereon. The persons named as proxies for the Company intend to vote the proxies “ FOR ” Proposal 3. Abstentions and broker non -votes , if any, will have no effect on the voting results for Proposal 3. +THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THIS PROPOSAL 3. +2025 PROXY STATEMENT 61 +PROPOSAL TO AMEND OUR AMENDED AND +RESTATED CERTIFICATE OF INCORPORATION TO +PROVIDE FOR OFFICER EXCULPATION +(Proposal 4) +The Board is asking stockholders to consider and vote upon a proposal to approve an amendment (the “Exculpation Amendment”) to the Amended and Restated Certificate of Incorporation of Gulfport Energy Corporation to reflect current Delaware corporate law provisions permitting the exculpation of certain officers. The Board approved, subject to stockholder approval, and declared advisable to recommend the stockholders approve the Exculpation Amendment. +The Company’s current Amended and Restated Certificate of Incorporation provides for the exculpation of directors but does not include a provision that allows for the exculpation of officers. Effective August 1, 2022, Section 102(b)(7) of the General Corporation Law of the State of Delaware (“DGCL”) was amended to enable a Delaware corporation to limit the liability of certain of its officers in limited circumstances. Section 102(b)(7) of the DGCL, as amended, only permits, and the Exculpation Amendment would only permit, the exculpation of certain officers in connection with direct claims brought by stockholders, including class actions, but would not eliminate officers’ monetary liability for breach of fiduciary duty claims brought by the Company itself or for derivative claims brought by stockholders in the name of the Company. In addition, as is currently the case with directors under the current Amended and Restated Certificate of Incorporation, the Exculpation Amendment would not limit the liability of officers for any breach of the duty of loyalty to the Company or its stockholders, any acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of the law and any transaction from which the officer derived an improper personal benefit. +This Proposal 4 requests that stockholders approve the Exculpation Amendment to extend the exculpation provision to certain of our officers as permitted by DGCL Section 102(b)(7), as amended, by adding a new paragraph to Article VII of the Amended and Restated Certificate of Incorporation as follows: +“The personal liability of the officers of the Corporation is hereby eliminated to the fullest extent permitted by the DGCL (including, without limitation, paragraph (7) of subsection (b) of Section 102 thereof), as the same may be amended and supplemented from time to time. If the DGCL hereafter is amended to authorize the further elimination or limitation of the liability of officers, then the liability of an officer of the Corporation, in addition to the limitation on personal liability provided herein, shall be limited to the fullest extent permitted by the amended DGCL. Any repeal or modification of this paragraph by the stockholders of the Corporation shall be prospective only, and shall not adversely affect any limitation on the personal liability of an officer of the Corporation existing at the time of such repeal or modification.” +The Board recognizes that the change to DGCL Section 102(b)(7) was intended to remedy potential inconsistent treatment between directors and officers and to address rising insurance costs and litigation costs for stockholders. The Board believes it is necessary to fully extend this exculpation protection to officers permitted by the DGCL and, that by including the officer exculpation provision as set forth above, the Company will be better able to attract and retain experienced and qualified corporate officers. The Board believes that in the absence of such protection, qualified officers might be deterred from serving as officers of the Company due to exposure to personal liability and the risk that substantial expense may be incurred in defending lawsuits, regardless of merit. Given such risks, the Board believes that the Exculpation Amendment will enable the covered officers to continue exercising their business judgment on the Company’s behalf without risking personal liability for unintentional outcomes. Further, the Board believes that this proposal would not have a negative impact on stockholder rights, particularly considering the narrow class and type of claims for which officers’ liability would be exculpated, thereby providing a reasonable and appropriate balance between stockholder and Company interests. Accordingly, the Board unanimously recommends that stockholders vote “FOR” this proposal. +Vote Required and Board Voting Recommendation +Proposal 4 requires an affirmative vote “for” the proposal by a majority of the outstanding shares of common stock and preferred stock voting on an as converted basis as a single class. The persons named as proxies for the Company intend to vote the proxies “FOR” Proposal 4. Abstentions and broker non -votes will have the effect of votes against this matter. +If Proposal 4 is approved, the Company intends to file the Exculpation Amendment, in the form attached to this Proxy Statement as Annex A, with the Secretary of State of the State of Delaware as soon as practicable following stockholder approval. The Exculpation Amendment will become effective at the time of that filing. +Attached to this Proxy Statement as Annex B is a copy of the current Article VII of the Amended and Restated Certificate of Incorporation reflecting the proposed additions to such language. +THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THIS PROPOSAL 4. +62 2025 PROXY STATEMENT +Audit Committee Report +The primary role of the Audit Committee is to assist the Board of Directors in its oversight of the Company’s accounting and financial reporting processes. In doing so, the Audit Committee is responsible for the appointment and compensation of the Company’s independent registered public accounting firm and has oversight for its qualification, independence and performance. The Audit Committee charter guides our duties and responsibilities. The Audit Committee charter, which was last amended during 2021, is available on the Company’s website at https://www.gulfportenergy.com/investors/corporate -governance /governance -documents . As set forth in the charter, management is responsible for the internal controls and accounting and financial reporting processes of Gulfport Energy Corporation. The independent registered public accounting firm is responsible for expressing opinions on the conformity of Gulfport Energy Corporation’s audited consolidated financial statements with generally accepted accounting principles and on the effectiveness of the Company’s internal control over financial reporting. Our responsibilities include monitoring and overseeing these processes. +Our Committee is comprised of four non -employee , independent members of the Board of Directors. No member serves on more than two other public company audit committees. The Board of Directors has determined that all of the members of the Audit Committee are financially literate, and that David Wolf, Jason Martinez, Jeannie Powers, and David Reganato are financial experts as that term is defined by the SEC. The members of our Committee are not professionally engaged in the practice of accounting or auditing. The Audit Committee’s considerations and discussions referred to below do not assure that the audit of the Company’s financial statements has been carried out in accordance with generally accepted auditing standards, that the financial statements are presented in accordance with generally accepted accounting principles or that the Company’s auditors are in fact “independent”. +In the performance of our oversight function, we have reviewed and discussed the audited financial statements of the Company for the fiscal year ended December 31, 2024, and management’s assessment of the effectiveness of the Company’s internal control over financial reporting with the management of Gulfport Energy Corporation. We have met with Grant Thornton LLP, the Company’s independent registered public accounting firm, with and without management present. We discussed with Grant Thornton LLP the matters required to be discussed under the applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”) and the SEC and such other matters as we have deemed to be appropriate, including the overall scope and plans for the audit. We also have received the written disclosures and the letter from Grant Thornton LLP required by the applicable PCAOB requirements regarding the independent accountant’s communications with the Audit Committee concerning independence, and we have discussed with Grant Thornton LLP that firm’s independence from management and the Company. We also reviewed the amount of fees paid to Grant Thornton LLP for both audit and non -audit services. In doing so, we considered whether the provision of non -audit services to the Company was compatible with maintaining the independence of Grant Thornton LLP. +Based on the reports and discussions above, we recommended to the Board of Directors that the audited financial statements be included in the Gulfport Energy Corporation 2024 Annual Report on Form 10K. +This report is not soliciting material, is not deemed to be filed with the SEC, and is not to be incorporated by reference in any filing of the Company under the Securities Act of 1933, as amended, whether made before or after this date and irrespective of any general incorporation language in any filing. +This report has been furnished by the Audit Committee of the Board of Directors. +THE AUDIT COMMITTEE +David Wolf, Chair +Jason Martinez +Jeannie Powers +David Reganato +2025 PROXY STATEMENT 63 +ABOUT THE ANNUAL MEETING +Why am I receiving these materials? +The Board of Directors has sent you this proxy statement and the accompanying proxy card to ask for your vote, as a stockholder of the Company, on certain matters that will be voted on at the Annual Meeting. +Who is soliciting my vote? +The Board of Directors is soliciting your vote at the Annual Meeting. The proposals to be voted on by the Company’s stockholders at the Annual Meeting are described below. +What am I voting on? +You are voting on: +• The election of seven directors to serve until the 2026 Annual Meeting ( see Proposal 1 beginning on page 8 of this proxy statement ). +• The ratification of Grant Thornton LLP as our independent auditors for the year ended December 31, 2025 ( see Proposal 2 beginning on page 60 of this proxy statement ). +• The approval, on an advisory, non -binding basis, of the compensation paid to the Company’s NEOs as described in this proxy statement ( see Proposal 3 beginning on page 61 of this proxy statement ). +• The approval of an amendment to the Company’s Amended and Restated Certificate of Incorporation to provide for exculpation of certain officers of the Company as permitted by amendments to Delaware law ( see Proposal 4 beginning on page 62 of this proxy statement ). +• Any other business properly coming before the meeting. +How does the Board of Directors recommend that I vote my shares? +Unless you give other instructions on your proxy card, the persons named as proxy holders on the proxy card will vote in accordance with the recommendations of our Board of Directors. The Board of Directors’ recommendations can be found with the description of each proposal in this proxy statement. In summary, the Board of Directors recommends a vote: +• “ FOR ” each of our director nominees. +• “ FOR ” the proposal to ratify Grant Thornton LLP as the Company’s independent auditors for the fiscal year ended December 31, 2025. +• “ FOR ” the proposal to approve, on an advisory, non -binding basis, the compensation paid to the Company’s NEOs as described in this proxy statement. +• “ FOR ” the proposal to amend the Company’s Amended and Restated Certificate of Incorporation to provide for officer exculpation. +What is a proxy? +A proxy is your legal designation of another person to vote the shares of common stock that you own. That other person is also referred to as a “proxy.” If you designate someone as your proxy in a written document, that document is called a proxy or a proxy card. We have designated Timothy Cutt, our Board Chair, and Patrick Craine, our Chief Legal and Administrative Officer and Corporate Secretary, as the Company’s proxies for the Annual Meeting. +Who is entitled to vote? +You may vote if you were the record owner of our common shares or preferred shares as of the close of business on the record date, which is March 28, 2025. Gulfport had 17,816,493 common shares outstanding as of the record date. Each share of common stock is entitled to one vote. In addition, Gulfport had 32,887 preferred shares outstanding as of the record date. The holders of +64 2025 PROXY STATEMENT +about the annual meeting +Gulfport’s preferred stock are entitled to vote on all matters submitted to the stockholders for a vote, voting together with the holders of the common stock as a single class, on an as -converted basis. Gulfport’s 32,887 preferred shares outstanding as of the record date, on an as -converted basis, totaled approximately 2,349,071 common shares entitled to vote. +In aggregate, as of March 28, 2025, we had 406,220 shares of restricted stock units and performance -based restricted stock units awarded under our 2021 Stock Incentive Plan, but not yet vested. There is no cumulative voting. +How many votes must be present to hold the Annual Meeting? +Your shares are counted as present at the Annual Meeting if you attend the meeting and vote in person or if you return a properly executed proxy by mail. For us to hold our meeting, holders of a majority of the voting power of our outstanding shares of common stock and preferred stock as of the close of business on March 28, 2025, must be present in person or by proxy at the Annual Meeting. This is referred to as a “quorum.” Votes withheld and abstentions will be counted for purposes of establishing a quorum at the Annual Meeting. Broker non -votes , if any, will not be counted for purposes of establishing a quorum at the Annual meeting (see “What is the effect of abstentions, withhold votes and broker non -votes ?” below) +What vote is required to elect directors (Proposal 1)? +The election of directors at the Annual Meeting will be conducted under a majority of the votes cast standard. This means that with respect to each director nominee, the number of votes cast “for” the director nominee must exceed the number of votes cast “against” the nominee. Abstentions will have no effect on the outcome of the election. +What vote is required to approve, on an advisory, non-binding basis, the ratification of the appointment of the Company’s independent auditor (Proposal 2)? +The proposal to approve, on an advisory, non -binding basis, the appointment of Grant Thornton LLP as Gulfport’s independent auditor for the year ending December 31, 2025, will be adopted if a majority of the votes present in person or by proxy and voting on this matter are cast “for” the proposal. You may vote “for,” “against” or “abstain” from approving the proposal. Abstentions will have no effect on the outcome of the proposal. +What vote is required to approve, on an advisory, non-binding basis, the compensation of the Company’s Named Executive Officers (Proposal 3)? +The proposal to approve, on an advisory, non -binding basis, the compensation of the Company’s NEOs will be adopted if a majority of the votes present in person or by proxy and voting on this matter are cast “for” the proposal. You may vote “for,” “against” or “abstain” from approving the proposal. Abstentions will have no effect on the outcome of the proposal. +What vote is required to approve an amendment to the Company’s Amended and Restated Certificate of Incorporation to provide for exculpation of certain officers of the Company as permitted by amendments to Delaware law (Proposal 4)? +The proposal to approve an amendment to the Company’s Amended and Restated Certificate of Incorporation to provide for exculpation of certain officers of the Company as permitted by amendments to Delaware law will be adopted if a majority of the outstanding shares of common stock and preferred stock voting on an as -converted basis as a single class present in person or by proxy and voting on this matter are cast “for” the proposal. You may vote “for,” “against” or “abstain” from approving the proposal. Abstentions and broker non -votes will have the effect of votes against this matter. +What is the effect of abstentions, withhold votes and broker non-votes? +If you specify that you wish to “abstain” or “withhold” from voting on an item, then your shares will not be voted on that item. +Because the votes cast in favor of each director nominee must exceed the votes cast against such nominee under Proposal 1 and because the votes cast in favor of the action must exceed the votes cast opposing the action in order to approve Proposals 2, 3 and 4 at the Annual Meeting. Abstentions will not have an effect on the outcome of Proposals 2 and 3 and will have the effect of votes against the matter on Proposal 4. +A “broker non -vote ” occurs when a beneficial holder does not provide instructions to a broker and such broker lacks discretionary voting power to vote shares with respect to a particular proposal. Under NYSE rules, brokers are permitted to exercise discretionary voting authority on “routine” matters, but beneficial owners of shares must provide voting instructions to their brokers with respect to “non -routine ” matters for their brokers to exercise voting authority with respect to such shares on such +2025 PROXY STATEMENT 65 +about the annual meeting +matters. Under NYSE rules, the proposal to approve the appointment of an independent auditor is considered a “routine” matter. This means that brokers may vote in their discretion on Proposal 2 on behalf of clients who have not furnished voting instructions with respect to such proposal. In contrast, Proposals 1, 3 and 4 are “non -routine ” matters. This means brokers that have not received voting instructions from their clients on these proposals may not vote on these proposals in their own discretion, which results in “broker non -votes .” +Who is a registered stockholder and who is a beneficial stockholder? +Registered Stockholders: A “registered stockholder” is a person or entity whose name appears in the Company’s registered list of stockholders as an owner of one or more shares of the Company’s common stock or preferred stock. If you are a registered stockholder, these proxy materials are being sent directly to you. +Beneficial Stockholders: A “beneficial stockholder” or “beneficial owner” is a person or entity whose shares of the Company’s common stock or preferred stock are held by a bank, broker or other nominee (a.k.a. in “street name”). Most holders of our common stock hold their shares beneficially through a bank, broker or other nominee rather than of record directly in their own name. If you are a beneficial stockholder, these proxy materials are being forwarded to you by your bank, broker or other nominee, who is considered the registered stockholder of those shares. As the beneficial stockholder, you have the right to direct your bank, broker or other nominee on how to vote your shares and you are also invited to attend the Annual Meeting. Your bank, broker or other nominee has provided a voting instruction form for you to use in directing your bank, broker or other nominee as to how to vote your shares. You must follow these instructions for your shares to be voted. Your nominee is required to vote those shares in accordance with your instructions. If you do not give instructions to your broker, your broker will be able to vote your shares at its discretion with regard to Proposal 2, but will not be able to vote your shares at its discretion with respect to Proposals 1, 3 and 4. +How do I vote? +Registered Stockholders : If you are a “registered stockholder,” you can vote your shares in the following four ways: +• By Internet : You may vote by submitting a proxy over the Internet. Go to the website listed on your proxy card or voting instruction form and follow the instructions. You should have your proxy card, including your control number, in hand when you access the website. +• By Telephone : Stockholders located in the United States who receive proxy materials by mail may vote by submitting a proxy by telephone by calling the toll -free telephone number on the proxy card or voting instruction form and following the instructions. +• By Mail : If you received proxy materials by mail, you may vote by submitting a proxy by mail by completing, signing and dating the proxy card and mailing it in the enclosed, postage pre -paid envelope. +• In Person : You may attend in person and vote at the Annual Meeting. +Beneficial Stockholders: If you are a “beneficial stockholder,” then you will receive instructions from your bank, broker or other nominee on how to vote your shares. If you are a “beneficial stockholder,” you will need proof of ownership to be admitted to the Annual Meeting. +Can I change my vote? +You may change your vote by revoking your proxy at any time before it is exercised, which can be done by voting during the meeting, by delivering a new proxy or by notifying the inspector of election in writing. If your shares are held for you in a brokerage, bank or other institutional account, you must contact that institution to revoke a previously authorized proxy. The address for the inspector of election is Computershare Investor Services, 150 Royall Street, Suite 101, Canton, MA 02021. +Who counts the votes? +We have hired Computershare Investor Services, our transfer agent, to act as the tabulation agent and count the votes represented by proxies cast by mail or ballot. Employees of Computershare Investor Services will act as inspectors of election. +66 2025 PROXY STATEMENT +about the annual meeting +Could other matters be decided at the Annual Meeting? +We have not received any stockholder proposals and are not aware of any other matters that are expected to come before the Annual Meeting other than those described in this proxy statement. If any other matter should be presented at the Annual Meeting upon which a vote may be properly taken, shares represented by all proxy cards received by the Board will be voted at the discretion of the person or persons named as proxies on the enclosed proxy card. +How can I attend the Annual Meeting in person? +Registered stockholders will be asked to present a valid government -issued photo identification. If your shares are held in the name of your broker, bank or other nominee, you must bring to the meeting a valid government -issued photo identification and an account statement or letter (and a legal proxy if you wish to vote your shares) from the nominee indicating that you beneficially owned the shares on the record date for voting. +How can I access the Company’s proxy materials and annual report? +We have elected, in accordance with the Securities and Exchange Commission’s “Notice and Access” rule, to deliver a Notice of Internet Availability of Proxy Materials (the “Notice”) to our stockholders and to post our proxy statement and the Company’s 2024 Annual Report on Form 10 -K (collectively, the “proxy materials”) electronically. The Notice is first being mailed to our stockholders on or about April 9, 2025. The proxy materials will first be made available to our stockholders on or about the same date. The Notice instructs you how to access and review the proxy materials and how to submit your proxy via the Internet. The Notice also instructs you how to request and receive a paper copy of the proxy materials, including a proxy card or voting instruction form, at no charge. We will not mail a paper copy of the proxy materials to you unless specifically requested to do so. Additionally, the Notice of the Annual Meeting, this proxy statement and the Company’s 2024 Annual Report on Form 10 -K to Stockholders are available electronically on the Company’s website at www.gulfportenergy.com/proxy . +Where can I find the results of the Annual Meeting? +We intend to announce preliminary voting results at the Annual Meeting and intend to publish final results in a Current Report on Form 8 -K , which we will file with the SEC within four business days after the Annual Meeting. +2025 PROXY STATEMENT 67 +Availability of Form 10 -K and +Annual Report to Stockholders +SEC rules require us to provide an Annual Report to stockholders who receive this proxy statement. Additional copies of our Annual Report on Form 10 -K for the fiscal year ended December 31, 2024, including the financial statements and the financial statement schedules, are available without charge to stockholders upon written request to Director of Investor Relations, Gulfport Energy Corporation, 713 Market Drive, Oklahoma City, Oklahoma 73114 or via the Internet at www.gulfportenergy.com . We will furnish the exhibits to our Annual Report on Form 10 -K upon payment of our copying and mailing expenses. +68 2025 PROXY STATEMENT +HOUSEHOLDING +The SEC permits a single Notice or set of annual reports and proxy statements to be sent to any household at which two or more stockholders reside if they appear to be members of the same family, unless instructions have been received to the contrary. Each stockholder continues to receive a separate proxy card. This procedure, referred to as householding, reduces the volume of duplicate information stockholders receive and reduces our mailing and printing expenses. +If you would like to receive your own Notice or set of the annual report and proxy statement this year or in future years, follow the instructions described below, and we will promptly deliver a separate copy to you. Similarly, if you share an address with another Gulfport stockholder and together both of you would like to receive in the future only a single Notice or annual report and proxy statement, follow the instructions below: +• If your shares of our common stock are registered in your own name, please contact our transfer agent, Computershare Investor Services and inform them of your request by calling their toll -free number: (877) 373 -6374 or by mail: Computershare Investor Services, 150 Royall Street, Suite 101, Canton, MA 02021. +• If a broker or other nominee holds your shares, please contact your broker or nominee. +2025 PROXY STATEMENT 69 +Other Matters +The Board of Directors does not intend to present any other items of business other than those stated in the Notice of Annual Meeting. If any other matter should be presented at the Annual Meeting upon which a vote may be properly taken, shares represented by all proxy cards received by the Board will be voted at the discretion of the person or persons named as proxies on the enclosed proxy card. +70 2025 PROXY STATEMENT +Solicitation by THE Board OF DIRECTORS +Participants in the Solicitation +We are required by law to convene an annual meeting of our stockholders at which directors are elected. Because shares of our common stock are widely held, it would be impractical for our stockholders to meet physically in sufficient numbers to hold a meeting. Accordingly, the Company is soliciting proxies from our stockholders. Our directors, director nominees, officers and employees may solicit proxies in person, or via mail, telephone, facsimile or email. Those persons will receive no additional compensation for any solicitation activities. +Expenses of Solicitation +U.S. federal securities laws require us to send you this proxy statement and any amendments or supplements, and to specify the information required to be contained in it. The Company will bear the expenses of calling and holding the Annual Meeting and the solicitation of proxies. These expenses will include, among other things, the costs of preparing, assembling, printing and mailing the proxy materials to stockholders of record and beneficial owners, and reimbursement paid to brokerage firms, banks and other fiduciaries for their reasonable out -of-pocket expenses for forwarding proxy materials to stockholders and obtaining beneficial owners’ voting instructions. +2025 PROXY STATEMENT 71 +FORWARD -LOOKING STATEMENTS +This proxy statement contains forward -looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Exchange Act and the Private Securities Litigation Reform Act of 1995. All statements relating to events or results that may occur in the future, including, but not limited to, the Company’s future prospects and performance, costs of solicitation, record or meeting dates, compensation arrangements, plans or amendments, Company policies, documents or amendments as well as capital and corporate structure (including major stockholders, Board structure and Board composition), are forward -looking statements. +Forward -looking statements are statements other than statements of historical fact. They include statements regarding Gulfport’s current expectations, management’s outlook guidance or forecasts of future events, projected cash flow and liquidity, share repurchases, its ability to enhance cash flow and financial flexibility, future production and commodity mix, plans and objectives for future operations, the ability of our employees, portfolio strength and operational leadership to create long -term value, the rejection of certain midstream contracts and the assumptions on which such statements are based. Gulfport believes the expectations and forecasts reflected in the forward -looking statements are reasonable, Gulfport can give no assurance they will prove to have been correct. They can be affected by inaccurate or changed assumptions or by known or unknown risks and uncertainties. Important risks, assumptions and other important factors that could cause future results to differ materially from those expressed in the forward -looking statements are described under “Risk Factors” in Item 1A of Gulfport’s annual report on Form 10 -K for the year ended December 31, 2024, and any updates to those factors set forth in Gulfport’s subsequent quarterly reports on Form 10 -Q or current reports on Form 8 -K (available at https://www.gulfportenergy.com/investors/sec -filings ). +Investors should note that Gulfport announces financial information in SEC filings, press releases and public conference calls. Gulfport may use the Investors section of its website ( www.gulfportenergy.com ) to communicate with investors. It is possible that the financial and other information posted there could be deemed to be material information. The information on Gulfport’s website is not incorporated into or a part of this filing. +Unless required by law, the Company does not intend, and undertakes no obligation, to update or publicly release any revision to any such forward -looking statements, whether as a result of the receipt of new information, the occurrence of subsequent events, a change in circumstances or otherwise. Each forward -looking statement contained in this proxy statement is specifically qualified in its entirety by the aforementioned factors. Readers are advised to carefully read this proxy statement in conjunction with the important disclaimers set forth above prior to reaching any conclusions or making any investment decisions, and not to place undue reliance on these forward -looking statements, which apply only as of the date of this proxy statement. +72 2025 PROXY STATEMENT +Submission of Future Stockholder Proposals +Under Rule 14a -8 under the Exchange Act (“Rule 14a -8 ”), a stockholder who intends to present a proposal for business at the 2026 Annual Meeting and who wishes the proposal to be included in the proxy statement and form of proxy for that meeting must submit the proposal in writing to our Corporate Secretary no later than December 10, 2025. The proposal must comply with the requirements of Rule 14a -8 under the Exchange Act and our Bylaws to be eligible for inclusion in the Company’s proxy materials. +If a stockholder wishes to submit a proposal for business or nomination of directors at the 2026 Annual Meeting other than in reliance on Rule 14a -8 , in order for such proposal to be considered timely pursuant to our Charter and Bylaws, the stockholder’s notice must be delivered to or mailed and received by the Corporate Secretary at the principal executive offices of the Company not less than 60 days nor more than 90 days prior to May 21, 2026 (i.e., the first anniversary of the 2025 Annual Meeting). Accordingly, the stockholder’s notice must be delivered to or mailed and received by the Corporate Secretary not later than March 22, 2026 and not earlier than February 20, 2026. However, in the event that the date of the 2026 Annual Meeting is advanced by more than 30 days, or delayed by more than 70 days, from May 21, 2026, notice by the stockholder to be timely must be received not earlier than 120 days prior to the 2026 Annual Meeting, and not later than the close of business on the later of the 90 th day prior to the 2026 Annual Meeting or the close of business on the 10 th day following the day on which public announcement of the date of the 2026 Annual Meeting was first made. At present, the Company has not announced a meeting date for the 2026 Annual Meeting. The Company expects to announce the date of the 2026 Annual Meeting and provide formal notice in 2026. +In addition to satisfying the requirements under our Bylaws, to comply with the universal proxy rules, stockholders who intend to solicit proxies in support of director nominees other than our nominees must provide a notice to our Company that sets forth the information required by Rule 14a -19 under the Exchange Act no later than March 23, 2026. +You can obtain a copy of the Charter and Bylaws by writing to the Corporate Secretary at the address below, or from the SEC website at www.sec.gov (the Charter and Bylaws are filed as exhibits to our latest report on Form 10 -K filed with the SEC on February 26, 2025). +All written proposals and inquiries for copies of the Charter and Bylaws should be directed to Patrick Craine, our Chief Legal and Administrative Officer and Corporate Secretary, at Gulfport Energy Corporation, 713 Market Drive, Oklahoma City, Oklahoma 73114. +2025 PROXY STATEMENT 73 +ANNEX A +CERTIFICATE OF AMENDMENT +OF +AMENDED AND RESTATED +CERTIFICATE OF INCORPORATION +OF +GULFPORT ENERGY CORPORATION +Gulfport Energy Corporation, a Delaware corporation (the “Corporation”), certifies as follows: +1. Article VII of the Amended and Restated Certificate of Incorporation of the Corporation is hereby amended by adding the following paragraph: +“4. The personal liability of the officers of the Corporation is hereby eliminated to the fullest extent permitted by the DGCL (including, without limitation, paragraph (7) of subsection (b) of Section 102 thereof), as the same may be amended and supplemented from time to time. If the DGCL hereafter is amended to authorize the further elimination or limitation of the liability of officers, then the liability of an officer of the Corporation, in addition to the limitation on personal liability provided herein, shall be limited to the fullest extent permitted by the amended DGCL. Any repeal or modification of this paragraph by the stockholders of the Corporation shall be prospective only, and shall not adversely affect any limitation on the personal liability of an officer of the Corporation existing at the time of such repeal or modification.” +2. The foregoing amendment to the Amended and Restated Certificate of Incorporation of the Corporation was duly adopted in accordance with provisions of Section 242 of the Delaware General Corporation Law. +[ Signature Page Follows ] +A-1 2025 PROXY STATEMENT +ANNEX A +IN WITNESS WHEREOF , the Corporation has caused this Certificate of Amendment to be signed by its duly authorized officer, this day of , 2025. +GULFPORT ENERGY CORPORATION +By: +Name: +Title: +2025 PROXY STATEMENT A-2 +ANNEX B +Additions to Article VII of the Amended and Restated Certificate of Incorporation pursuant to the Exculpation Amendment contemplated by Proposal 4 are indicated below by bold, underlined text. +ARTICLE VII +DIRECTORS +1. The business and affairs of the Corporation shall be conducted and managed by, or under the direction of, the Board of Directors. The exact number of directors of the Corporation shall be fixed by the Board of Directors as provided in the By -Laws . +2. The personal liability of the directors of the Corporation is hereby eliminated to the fullest extent permitted by the DGCL (including, without limitation, paragraph (7) of subsection (b) of Section 102 thereof), as the same may be amended and supplemented from time to time. If the DGCL hereafter is amended to authorize the further elimination or limitation of the liability of directors, then the liability of a director of the Corporation, in addition to the limitation on personal liability provided herein, shall be limited to the fullest extent permitted by the amended DGCL. Any repeal or modification of this paragraph by the stockholders of the Corporation shall be prospective only, and shall not adversely affect any limitation on the personal liability of a director of the Corporation existing at the time of such repeal or modification. +3. The election of directors of the Corporation need not be by written ballot, unless the By- Laws of the Corporation otherwise provide. +4. The personal liability of the officers of the Corporation is hereby eliminated to the fullest extent permitted by the DGCL (including, without limitation, paragraph (7) of subsection (b) of Section 102 thereof), as the same may be amended and supplemented from time to time. If the DGCL hereafter is amended to authorize the further elimination or limitation of the liability of officers, then the liability of an officer of the Corporation, in addition to the limitation on personal liability provided herein, shall be limited to the fullest extent permitted by the amended DGCL. Any repeal or modification of this paragraph by the stockholders of the Corporation shall be prospective only, and shall not adversely affect any limitation on the personal liability of an officer of the Corporation existing at the time of such repeal or modification. +B-1 2025 PROXY STATEMENT +Your vote matters – here’s how to vote ! You may vote online or by phone instead of mailing this card. Votes submitted electronically must be received by 11:59pm, Central Time, on May 20, 2025. Online Go to www.envisionreports.com/GPOR or scan the QR code — login details are located in the shaded bar below. Phone Call toll free 1-800-652-VOTE (8683) within the USA, US territories and Canada Save paper, time and money! Sign up for electronic delivery at www.envisionreports.com/GPOR Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. 2025 Annual Meeting Proxy Card IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. A Proposals — The Board of Directors recommends you vote FOR each of the director nominees listed in proposal 1 and FOR proposals 2, 3 and 4. 1. To elect seven directors to serve until the Company’s 2026 Annual Meeting of Shareholders or until their respective successors have been duly elected and qualified (the Election of Directors Proposal or Proposal 1). 01 - Timothy Cut 02 - David Wolf 03 - Jason Martinez 04 - Jeannie Powers 05 - David Reganato 06 - John Reinhart 07 - Mary Shafer-Malicki For Against Abstain 2. To ratify the appointment of Grant Thornton LLP as the Company’s independent auditors for the fiscal year ending December 31, 2025 (the Auditors Ratification Proposal or Proposal 2). 3. To approve, on an advisory, non-binding basis, the compensation paid to the Company’s named executive officers as described in this proxy statement (the Say-On-Pay Proposal or Proposal 3). 4. To approve an amendment to the Company’s Amended and Restated Certificate of Incorporation to provide for exculpation of certain officers of the Company as permitted by amendments to Delaware law (the Exculpation Proposal or Proposal 4). B Authorized Signatures — This section must be completed for your vote to count. Please date and sign below. Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title. Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box. 1 U P X 0448GC +2025 Annual Meeting Admission Ticket 2025 Annual Meeting of Gulfport Energy Shareholders May 21, 2025, 9:00am CT 713 Market Drive, Oklahoma City, OK 73114. Important notice regarding the Internet availability of proxy materials for the Annual Meeting of Shareholders. The material is available at: www.envisionreports.com/GPOR Small steps make an impact. Help the environment by consenting to receive electronic delivery, sign up at www.envisionreports.com/GPOR IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. Gulfport Energy Corporation Notice of 2025 Annual Meeting of Shareholders Proxy Solicited by Board of Directors for Annual Meeting — May 21, 2025 The undersigned hereby appoints Timothy Cutt and Patrick Craine (together, the “Proxies”), and each of them, with full power of substitution, as proxies to vote the shares that the undersigned is entitled to vote at the Annual Meeting of Shareholders of Gulfport Energy Corporation (the “Company”) to be held on May 21, 2025 at 9:00 a.m. Central Time and at any adjournments and postponements thereof. Such shares shall be voted as indicated with respect to the proposals listed on the reverse side hereof and in the Proxies’ discretion on such other matters as may properly come before the meeting or any adjournment or postponement thereof. The undersigned acknowledges receipt of the 2025 Notice of Annual Meeting and accompanying Proxy Statement and revokes all prior proxies for said meeting. THE SHARES REPRESENTED BY THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO SPECIFIC DIRECTION IS GIVEN AS TO THE PROPOSALS ON THE REVERSE SIDE, THIS PROXY WILL BE VOTED FOR EACH OF THE NOMINEES NAMED IN PROPOSAL 1, FOR EACH OF THE PROPOSALS 2, 3, and 4, AND IN ACCORDANCE WITH THE BOARD OF DIRECTOR’S RECOMMENDATION. PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY. IMPORTANT – PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY. THANK YOU FOR VOTING. (Items to be voted appear on reverse side) C Non-Voting Items Change of Address — Please print new address below. 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The Company does not have a formal set of standards to be substantively applied to each transaction reviewed by the Audit Committee. Instead of a formalized policy, related party transactions are reviewed and judgment is applied to determine whether transactions are in the best interests of the Company. Further, the Company’s Code of Business Conduct and Ethics governs various compliance areas, including conflicts of interest and fair dealings, which are considered in the process of the review and approval of related party transactions. +The Company’s policy is that all its employees and directors, as well as their family members, must avoid any activity that is or has the appearance of conflicting with the Company’s business interest. This policy is included in the Company’s Code of Business Conduct and Ethics posted on its website. Each director and executive officer is instructed to always inform the designated compliance officer when confronted with any situation that may be perceived as a conflict of interest. Only the Board of Directors or a committee consisting solely of independent directors may grant waivers of the provisions of the Code of Business Conduct and Ethics for the Company’s executive officers and directors. In addition, at least annually, each director and executive officer completes a detailed questionnaire specifying any business relationship that may give rise to a conflict of interest. +Further, under the Audit Committee charter, the Audit Committee is responsible for reviewing and monitoring compliance with our Code of Business Conduct and Ethics and recommending any warranted changes to the Board of Directors. In addition, the Board of Directors and, pursuant to its written charter, the Audit Committee, reviews and approves all relationships and transactions in which the Company and its directors, director nominees and executive officers and their immediate family members, as well as holders of more than 5% of any class of our voting securities and their family members, have a direct or indirect material interest. The Board of Directors and the Audit Committee approve only those transactions that, considering known circumstances, are consistent, or are not inconsistent with, the Company’s best interests, as they determine in the good faith exercise of their discretion. +During 2024, Gulfport employed Sara Disser who is the daughter of the Company’s Chief Executive Officer. She received total compensation of $153,753. +As part of Gulfport’s existing $1.0 billion share repurchase program, Gulfport purchased $79,134,000 in common stock from affiliates of Silver Point Capital, L.P. in 2024. \ No newline at end of file diff --git a/raw/proxies/0000874499/0001213900-26-041489/proxy.txt b/raw/proxies/0000874499/0001213900-26-041489/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..2292015bfb5dcf9c19706c6f4227057da01f369c --- /dev/null +++ b/raw/proxies/0000874499/0001213900-26-041489/proxy.txt @@ -0,0 +1,2911 @@ +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +________________ +Schedule 14A +Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 +(Amendment No. ) +________________ +Filed by the Registrant +☒ +Filed by a party other than the Registrant +☐ +Check the appropriate box: +☐ +Preliminary Proxy Statement +☐ +Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +☒ +Definitive Proxy Statement +☐ +Definitive Additional Materials +☐ +Soliciting Material under §240.14a-12 +Gulfport Energy Corporation +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check all boxes that apply): +☒ +No fee required +☐ +Fee paid previously with preliminary materials. +☐ +Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a- 6(i)(1) and 0-11 +April 8, 2026 +Dear Stockholders, +On behalf of the Board of Directors (the “Board”), management, and employees of Gulfport Energy Corporation (“Gulfport”, “Gulfport Energy,” the “Company,” “we,” “our” and “us”), you are cordially invited to participate in the 2026 Annual Meeting of Stockholders (the “Annual Meeting”) to be held on May 27, 2026 at 9:00 a.m. Central Time. Our annual meeting will be held in person at 713 Market Drive, Oklahoma City, OK 73114. The attached Notice of 2026 Annual Meeting of Stockholders and this proxy statement will serve as your guide to the business conducted during the Annual Meeting. +We are mailing most of our stockholders a Notice of Internet Availability of Proxy Materials for the 2026 Annual Meeting (the “Notice”), which provides instructions regarding how stockholders can access and review proxy materials over the internet and submit their proxy electronically. We believe this “Notice and Access” process allows us to provide our stockholders with the information they desire in a timely manner, while reducing costs and the environmental impact of our Annual Meeting. If you received the Notice and would prefer to receive a paper copy of the proxy materials, please follow the instructions for requesting the materials that are provided in the Notice. +Your vote is very important to us. To assure your representation at the Annual Meeting, please vote your shares over the internet or through the toll -free telephone number as instructed in the Notice. +Thank you for your continued support and interest in Gulfport. +Sincerely, +Timothy Cutt +Board Chair +GULFPORT ENERGY CORPORATION +713 Market Drive +Oklahoma City, Oklahoma 73114 +NOTICE OF 2026 ANNUAL MEETING OF STOCKHOLDERS +April 8, 2026 +Notice is given that the 2026 Annual Meeting of Stockholders (including any adjournments or postponements, the “Annual Meeting”) of Gulfport Energy will be held on May 27, 2026 at 9:00 a.m., Central Time at Gulfport Headquarters located at 713 Market Drive, Oklahoma City, OK 73114 to vote on the proposals listed in the following table. +Date and Time +May 27, 2026, at 9:00 a.m., Central Time +Place +The Annual Meeting will be held in person at Gulfport Headquarters located at 713 Market Drive, Oklahoma City, OK 73114. +Proposals +1. To elect six directors to serve until the Company’s 2027 Annual Meeting of Stockholders or until their respective successors have been duly elected and qualified (the Election of Directors Proposal or Proposal 1 ). +2. To ratify the appointment of Grant Thornton LLP as the Company’s independent auditors for the fiscal year ending December 31, 2026 (the Auditors Ratification Proposal or Proposal 2 ). +3. To approve, on an advisory, non-binding basis, the compensation paid to the Company’s Named Executive Officers as described in this proxy statement (the Say -On-Pay Proposal or Proposal 3 ). +We will also transact any other business as may properly come before the Annual Meeting. +Record Date +April 6, 2026, at the close of business +Holders of record of our common stock, par value $0.0001 per share, outstanding as of April 6, 2026 at the close of business, the record date for the Annual Meeting, will be entitled to Notice of the Annual Meeting and to vote at the Annual Meeting or any adjournment or postponement. +PROXY VOTING +Stockholders of the Company as of the record date are entitled to vote by proxy in the following ways: +By calling the telephone number +on your proxy card or voting +instruction form +Online by visiting the website +provided on your proxy card or +voting instruction form +By returning by mail a properly +completed, signed and dated +proxy card or voting instruction +form +By attending in person and +submitting a ballot at the +Annual Meeting +IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON May 27, 2026: This proxy statement and additional information are available free of charge on the Company’s website at www.gulfportenergy.com/proxy . +By order of the Board of Directors, +Patrick Craine +Chief Legal and Administrative Officer and Corporate Secretary +The Notice of Internet Availability of Proxy Materials is first being mailed to stockholders on or about April 14, 2026, and the proxy materials relating to the Annual Meeting will be made available on or about the same date. +TABLE OF CONTENTS +GULFPORT ENERGY CORPORATION +713 Market Drive +Oklahoma City, Oklahoma 73114 +_____________________ +PROXY STATEMENT +_____________________ +Proxy Statement Summary +1 +About Gulfport +1 +Business Strategy +1 +Directors +1 +Board Summary +2 +Corporate Responsibility and Sustainability Highlights +3 +Work Safe +4 +Corporate Governance Highlights +6 +Compensation Highlights +7 +Election of Directors and Director Biographies +8 +What are the Committees of the Board? +12 +Do the Committees have Written Charters? +15 +Corporate Governance Matters and Communications with the Board +16 +Who are our Independent Directors? +16 +Annual Board Self-Assessment Process +16 +How Often did the Board of Directors Meet in 2025? +16 +Do our Non-Management Directors Meet Separately without Management? +16 +How can I Communicate with the Board of Directors? +17 +Will Directors Attend the Annual Meeting? +17 +Nominating Process for Directors, Director Qualifications and Review of Director Nominees +18 +Director Leadership Structure +20 +Board of Directors’ Role in Risk Oversight +22 +Office of the Chairman +23 +Executive Officers +24 +Compensation Discussion and Analysis +26 +Letter from the Compensation Committee +26 +Executive Summary +28 +Gulfport 2025 Business Performance Highlights +28 +Key 2025 Executive Compensation Actions +29 +Compensation Aligned with Performance +31 +Stockholder Engagement and Annual Say-On-Pay Advisory Vote +31 +Executive Compensation Philosophy and Components +32 +Determining our Executive Compensation +33 +Process for Determining Executive Compensation +34 +2025 Compensation Program Description +35 +Determining Award Structure and Setting the Target Award Opportunity +37 +Compensation Policies and Practices +39 +Compensation Committee Interlocks and Insider Participation +41 +Compensation Tables +42 +Summary Compensation Table +42 +All Other Compensation Table +43 +2025 Grants of Plan-Based Awards +44 +Outstanding Equity Awards at 2025 Fiscal Year-End +45 +2025 Stock Vested +46 +Benefit Plans +47 +401(k) Plan +47 +2021 Stock Incentive Plan +47 +Equity Compensation Plan Information +48 +Termination, Resignation or Change of Control +51 +CEO Pay Ratio Disclosure +53 +Pay Versus Performance +54 +2025 Director Compensation +56 +Beneficial Ownership +58 +Holdings of Major Stockholders +59 +Certain Relationships and Review and Approval of Related Party Transactions +60 +Proposal to Ratify the Appointment of Our Independent Auditors +61 +Proposal to Approve, on an Advisory, Non-Binding Basis, the Compensation Paid to the Company’s Named Executive Officers +62 +Audit Committee Report +63 +About the Annual Meeting +64 +Availability of Form 10-K and Annual Report to Stockholders +68 +Householding +69 +Other Matters +70 +Solicitation by the Board of Directors +71 +Forward-looking Statements +72 +Submission of Future Stockholder Proposals +73 +2026 PROXY STATEMENT i +PROXY STATEMENT SUMMARY +The summary below highlights information contained elsewhere in this proxy statement. It does not contain all the information that you should consider in connection with the matters before the Annual Meeting. Please read the entire proxy statement carefully before voting your shares. +ABOUT GULFPORT +Gulfport is an independent natural gas -weighted exploration and production company with assets primarily located in the Appalachia and Anadarko basins. Our principal properties are located in eastern Ohio targeting the Utica and Marcellus and in central Oklahoma targeting the SCOOP Woodford and Springer formations. Our corporate headquarters is located in Oklahoma City, Oklahoma and shares of Gulfport’s Common Stock trade on the New York Stock Exchange (NYSE) under the ticker symbol “GPOR”. +BUSINESS STRATEGY +Gulfport aims to create sustainable value through the economic development of our significant resource plays in the Utica and SCOOP operating areas. Our strategy is to develop our assets in a manner that generates sustainable cash flow, expands margins and enhances operating efficiencies, all while improving our environmental and safety performance. To accomplish these goals, we allocate capital to projects we believe offer the highest risk -adjusted rate of return and deploy leading drilling and completion techniques and technologies in our development efforts. We believe our plan to generate adjusted free cash flow on an annual basis will allow us to return capital to shareholders and increase our resource depth through acquiring incremental leasehold opportunities that provide optionality for our future development plans. +Core Assets +Employees +2025 Production +2025 Production Mix +Utica/Marcellus and SCOOP +245 people +as of Dec. 31, 2025 +1.04 Bcfe +per day +89% natural gas, 7% natural gas liquids and 4% oil +DIRECTORS +Our Board is comprised of six non -employee directors, including Timothy Cutt who leads the Company’s Office of the Chairman, and five independent directors, David Wolf, Jason Martinez, Jeannie Powers, David Reganato, and Mary Shafer -Malicki . They are industry -leading experts with an average of approximately 25 years of industry leadership experience across multiple disciplines. Each of our directors will stand for election annually and must be elected by a majority of shares voted. +2026 PROXY STATEMENT 1 +Board Summary +The following table provides summary information about each director nominee who is standing for election at the Annual Meeting. For more information about the background and qualifications of each nominee, please see “Election of Directors and Director Biographies” on page 8 of this proxy statement. We ask you to vote “ FOR ” each of our director nominees. +Director +Board Positions +Dir. Since +Age +Ind. +Principal Occupation +Timothy Cutt +Chair +2021 +65 +Board Chair of Gulfport Energy +David Wolf +Lead Independent Director +2021 +55 +🗸 +Partner at Enduring Resources +Jason Martinez +Independent Director +2021 +52 +🗸 +Managing Director at Pickering Energy Partners +Jeannie Powers +Independent Director +2023 +41 +🗸 +Head of Business Development at bpx +David Reganato +Independent Director +2021 +46 +🗸 +Partner at Silver Point Capital +Mary Shafer -Malicki +Independent Director +2023 +65 +🗸 +Director at Gulfport Energy +2 2026 PROXY STATEMENT +Corporate Responsibility and +Sustainability Highlights +Gulfport is proud to play its part in the responsible and efficient development of domestic natural gas which is critical to our country’s economic success as it provides the primary fuel for efficient power generation in the United States. We strive to reduce our environmental impact, to invest in our people and communities and to prioritize our dedication to environmental stewardship in everything we do. +We have identified several key areas where our business could have an impact on the communities where we operate, including: greenhouse gas emissions, waste and spills, water usage, health, safety and environmental (“HSE”) protection, employee training and education, and community involvement. Our Board Nominating, Environmental, Social and Governance Committee oversees environmental, safety, social, sustainability and governance (“ESG”) matters. Continuously improving our HSE performance remains a top priority. Our HSE performance also directly impacts the compensation of all our employees as it is one of the performance goals included in our cash incentive compensation plan. We believe having measurable HSE metrics as part of our incentive compensation program leads to improved accountability and reinforces our cultural focus on operating safely and protecting employees, the environment and the communities in which we operate. +Environmental Stewardship. Environmental stewardship serves as the foundation for our climate risk strategy. We are dedicated to delivering cleaner, safer, more affordable and reliable energy while working to reduce our impact on the environment. Gulfport strives to minimize our environmental impact by: +• Conducting annual recertification of all Appalachian natural gas with an independent auditor. +• Applying key learnings from Appalachia operations to Mid -Continent assets. +• Retrofitting existing natural gas pneumatic devices and designing all future pad sites with compressed air or other non -natural gas venting devices. +• Continuously improving air quality programs and operating practices to ensure that we comply with or exceed regulations. +• Investing in and implementing technology to reduce emissions, waste and our physical footprint on drilling and completions locations. +• Selecting and designing our well sites to minimize impacts on sensitive habitats and surrounding areas. +• Returning to existing locations for new development, creating opportunities to utilize existing facilities and minimizing surface disturbances. +• Reducing water disposal volumes and freshwater consumption through water re -use or water sharing agreements with other operators. +• Testing spill prevention and response programs to confirm equipment is properly maintained. +Gulfport is a long -standing member of The Environmental Partnership. The organization is comprised of stakeholders in the oil and natural gas industry who are committed to continuous environmental improvement. The Environmental Partnership’s primary focus is reducing methane and volatile organic compound emissions. Gulfport also developed an Environmental Policy supporting its commitment to operational excellence, compliance and environmental awareness. Gulfport’s Environmental Policy fosters environmental awareness and serves as a guide for employee behavior. All employees are expected to act and make decisions within the guidelines of the policy to ensure our business complies with local, state and federal environmental laws and regulations. Gulfport employees and contractors are expected to protect the environment, limit spills and discharges, manage waste responsibly and reduce emissions. +Safety. Safety is the number one priority for all Gulfport employees and contractors. Gulfport provides comprehensive safety training for employees and contractors and is fully committed to a safe working environment. We utilize and apply performance metrics to drive and improve safe operations. Gulfport has designed and instituted emergency response and business continuity plans to address incidents involving operational disruptions and natural disasters. These measures include prompt notification procedures enabling Gulfport personnel to quickly evaluate and mitigate risks. Gulfport is also an active participant in industry peer -roundtables and a member of trade organizations that focus on improving workforce safety through education and collaboration. Limiting safety incidents is included as part of our incentive compensation programs to ensure we train and hold our employees accountable for operating safely. +2026 PROXY STATEMENT 3 +Corporate Responsibility and Sustainability Highlights +WORK SAFE +Gulfport’s Work Safe Program is behaviorally based and focuses on twelve rules derived from Company policies (critical tasks) and cultural conditions linked to serious safety incidents in our industry. Critical Task Rules require specific operating procedures to mitigate hazardous work site conditions and complete work safely. Cultural Condition Rules are defined as work site conditions or human behaviors that have been linked to the root cause of most incidents. Employees and contractors are expected to apply and follow the requirements that coincide with the twelve rules. We continue educating employees and contractors on this program through safety meetings and training programs. Our goal is to not only improve our safety performance but to proactively prevent incidents before they occur. +Stop Work is one of the Work Safe Program’s critical tasks and the Company has communicated a Stop Work Authority and Obligation letter to the Company’s employees and our contractors. This letter outlines Gulfport’s commitment to health, safety and the environment and provides the expectation and support to Gulfport employees and contract partners to stop work when conditions warrant. Every person on a Gulfport work site has the authority — and obligation — to stop any work that may cause an unsafe condition, create personal risk, or harm the environment. +Health, Safety & Environment Highlights for 2025: +• Certified Appalachia assets with MiQ receiving an overall ‘A’ grade for third consecutive year. +• Achieved MiQ certification for Mid-Continent assets, building on lessons learned from our Appalachia operations and reinforcing our commitment to emissions transparency and operational excellence. +• Lowered Scope 1 methane intensity in 2024 by 20% year -over-year and 33% since 2022. +• Progressed in multi -year program to convert natural gas process controllers with compressed air or other non -gas venting devices across our operations to reduce methane emissions. +• Maintained a strong, organization -wide focus on safety and culture, reinforcing core values, enhancing safety performance and promoting accountability at every level. +• Completed over 2,500 hours of Health, Safety and Environmental training. +Human Capital. Gulfport’s employees are our most important asset. We prioritize attracting and recruiting highly qualified candidates with varied backgrounds and experiences. We remain committed to outreach efforts to keep our candidate pool as large as possible so that we continue to hire and retain the best, highly qualified and experienced professionals in our industry. We regularly evaluate our pay practices and benefit offerings to ensure they remain fair and competitive. We also offer our employees and managers development training and provide access to the resources they need to execute at a high level. We also offer ongoing and continuous training on our workplace policies. We encourage all employees to provide feedback and ideas on how Gulfport can continuously improve as an organization. We require all employees to sign a commitment indicating they will speak up if they observe or become aware of any actions that are inconsistent with our core values, our Code of Business Conduct and Ethics, or other Company policies. We are also committed to supporting veterans through our recruiting and hiring efforts, and we support several causes that assist veterans and active -duty military personnel. +In 2025, all employees participated in multiple and varied training courses on our Business Code of Conduct and Ethics, Company policies, and topics specifically related to employees’ job performance, health, and safety. We understand that a workplace environment that embraces continuous improvement and incorporates different ideas and perspectives is a healthy environment and one that provides the best solutions to complex challenges. +Board Composition. Our Nominating, Environmental, Social and Governance Committee is dedicated to attracting and recruiting the most qualified candidates. The Committee values varied experiences and backgrounds and adopted a Board Diversity Policy. The policy requires that the Committee include a broad range of candidates in all director searches, taking into account gender, race, ethnicity, background, age, thought and tenure on our Board (in connection with the consideration of the renomination of an existing director). Gulfport’s current Board has 50% of our directors identifying as gender or ethnically diverse. +Human Rights Policy. Gulfport is committed to serving as a positive force in its communities, and the Company remains dedicated to upholding the highest standards of human rights, clearly defined in our Human Rights Policy. +4 2026 PROXY STATEMENT +Corporate Responsibility and Sustainability Highlights +Gulfport respects fundamental human rights and views them as an integral part of corporate ethics and social responsibility. The Company adheres to the highest ethical conduct as outlined in Gulfport’s Business Code of Conduct and Ethics and Supplier Code of Conduct. +Gulfport applies fair labor practices throughout its operations and adheres to applicable workplace, employment, privacy and human rights standards. Consistent with the United Nations Guiding Principles on Business and Human Rights, Gulfport recognizes the responsibility of governments to protect and fulfill human rights. As an operating rights owner, it is the Company’s obligation to respect human rights and comply with applicable laws. +Gulfport does not tolerate unlawful discrimination or workplace harassment in any form. Gulfport is committed to maintaining and improving its strong and dynamic supplier network, which supports the Company’s goal of making a positive contribution in the communities where it does business. We regularly assess risk within supply chain and expect contractors and suppliers to comply with applicable laws and respect the Company’s voluntary commitments, the Supplier Code of Conduct, our Business Code of Conduct and Ethics and EHS policies. +Community Engagement. Gulfport is committed to making a meaningful difference in the communities where we live and operate. Guided by our core values and sense of corporate responsibility, we build partnerships that strengthen our operating areas and enhance quality of life. Recognizing the close connection between our communities’ well -being and the success of our operations, Gulfport actively supports programs that promote sustainable social and economic progress. +Our community investment efforts focus on four key areas: education, health and human services, environmental stewardship and support for military personnel and veterans. These initiatives are led by Gulfport’s Community Impact Committee, a cross -section of employees from our three office locations who identify partnerships and volunteer opportunities aligned with these priorities to ensure our efforts are intentional, effective and impactful. +Over the last 12 months, Gulfport has partnered with more than 50 organizations whose missions align with our key focus areas. Through financial contributions and hands -on volunteering, we have supported organizations dedicated to environmental protection and sustainability, provided life -sustaining formula and food to infants and toddlers during times of crisis, enhanced the lives of adults with developmental disabilities, and supported veterans and youth through community -based programs. +2026 PROXY STATEMENT 5 +Corporate Responsibility and Sustainability Highlights +Corporate Governance Highlights +We believe effective corporate governance requires regular constructive discussions with our stakeholders and we focus our sustainability priorities and disclosures on the issues that are most important to them. To identify these priorities, we engage internal and external stakeholders and weigh their views with respect to both Gulfport’s specific activities and the general business climate of our industry. In addition to these efforts, management engages with stockholders and potential stockholders through targeted outreach and participation in various conference and industry events. +Key Stakeholders include: +• Contractors and Suppliers +• Employees +• Government and Regulatory Agencies +• Industry Peers +• Investors +• Landowners +• Local Communities +• Service Providers +• Trade Associations +This feedback helps shape our corporate governance practices, and has specifically resulted in: +• Amendment of the Bylaws to change the supermajority vote requirement for stockholders to amend the Bylaws to a majority vote requirement; +• Adoption of stock ownership guidelines for our non -employee directors and executive officers to further align the long -term financial interests of our directors and executive officers with those of our stockholders; +• Adoption of Corporate Governance Guidelines to ensure best practices and reflect the Board’s commitment to monitor the effectiveness of policy and decision making at the Board and management levels; +• Lead Independent Director appointed; +• Advancement of Board resilience, emphasizing dynamic skills and backgrounds in the Nominating, Environmental, Social and Governance Committee’s charter; and +• Adoption of a written executive compensation clawback policy. +• Majority voting to elect directors in uncontested elections and plurality voting to elect directors in contested elections; +• Creation of the Nominating, Environmental, Social and Governance Committee to further develop our commitment to HSE and corporate responsibility and sustainability matters and their impact on our business and operations; +• Active stockholder outreach, engaging in discussions with our stockholders at investor conferences and through direct calls and meetings with the Company’s management team that represent over 55% of the shares outstanding; +• Active Board oversight of risk and risk management; +• Periodic Board and Committee self -assessments reviewed by an outside law firm; +• Non -employee director meetings in executive sessions at regularly scheduled Board meetings; and +• 98% attendance at 2025 Board and Committee meetings. +6 2026 PROXY STATEMENT +Corporate Responsibility and Sustainability Highlights +COMPENSATION HIGHLIGHTS +Stockholder Engagement and Annual Say-On-Pay Advisory Vote +At the Annual Meeting, our stockholders will again have an opportunity to cast an advisory Say -On-Pay vote on the compensation paid to our Named Executive Officers (NEOs) as described in this proxy statement. The details of the executive compensation program and its pay -for-performance alignment are discussed in the “Compensation Discussion & Analysis (CD&A)” on page 26 of this proxy statement. +Gulfport Energy engages in discussions with our stockholders at investor conferences and through direct calls and meetings with the Company’s management team that represented over 55% of the shares outstanding. Through these conversations our stockholders emphasized their expectation that our compensation programs should be designed to focus our executive team on driving results that ensure the financial health of the organization while also driving long -term stockholder value. Specifically, after carefully considering input from stockholders, the Company took the following actions in 2025: +• Utilized performance -based and time -based equity awards in the form of performance -based restricted stock units tied to relative total shareholder return (“TSR”) and absolute total shareholder return, vesting over a three -year performance period; 60% of all equity awards to NEOs were performance -based . +• Adjusted performance incentive opportunities and long -term equity award targets to closely align our executives’ financial interests with those of our stockholders and to continue to link a large portion of executives’ compensation to the performance of our stock and our operational performance. +• Continued utilizing metrics in the annual incentive plan to include measures directly tied to the financial health of the Company, including production per day, capital expenditures, lease operating expenses, free cash flow generation, and specific and quantifiable health, safety, environmental and social metrics. +• Provided robust disclosure of our performance metrics and targets for both performance -based cash and equity awards. +Stock Performance Graph +The following Performance Graph and related information shall not be deemed “soliciting material” or to be “filed” with the Securities and Exchange Commission, nor shall such information be incorporated by reference into any future filings under the Securities Act of 1933 or Securities Exchange Act of 1934, each as amended, except to the extent that the Company specifically incorporates it by reference into such filings. +The performance graph below illustrates changes over the period of December 31, 2024 through December 31, 2025, in cumulative total stockholder return on Gulfport Common Stock as measured against the cumulative total return of the S&P 500 Index, the S&P Oil & Gas Exploration and Production Index and the 2025 Peer Group. The graph tracks the performance of a $100 investment in our Common Stock, each peer company and in each index (with the reinvestment of all dividends for the index securities) from December 31, 2024 to December 31, 2025. +Note: 2025 Peer Group defined further on page 33. 2024 peer group includes: BRY, CIVI, CNX, CPE, CRK, MGY, MTDR, MUR, RRC, SBOW, SM, TALO and VTLE. 2025 peer group includes: BRY, CIVI, CNX, CRK, HPK, MGY, MNR, MTDR, MUR, RRC, SBOW, SM, TALO and VTLE. +2026 PROXY STATEMENT 7 +ELECTION OF DIRECTORS AND DIRECTOR BIOGRAPHIES +(Proposal 1) +The Company is asking its stockholders to vote to elect six directors to serve on the Board of Directors until the 2027 Annual Meeting of Stockholders (the “2027 Annual Meeting”) or until their respective successors have been duly elected and qualified. +Our Board of Directors currently consists of six members who are elected annually. All six directors are non -employee directors, and five of the six directors are independent under the NYSE listing standards. +The directors standing for election this year are listed below. If any nominee should decline election or become unable to serve as a director of our Company for any reason before election at the Annual Meeting, votes will be cast by the persons appointed as proxies for a substitute nominee, if any, designated by the Board of Directors. +There are no family relationships among any of the nominees, directors or any of the executive officers. +Vote Required and Board Voting Recommendation +Directors will be elected at the Annual Meeting by a majority of the votes cast. Abstentions and broker non -votes will have no effect on the voting results for Proposal 1. +8 2026 PROXY STATEMENT +ELECTION OF DIRECTORS AND DIRECTOR BIOGRAPHIES +Timothy Cutt +Age: 65 +Director since: May 2021 +Other Public Company Directorships Held in the Past Five Years: +QEP +(January 2019 – March 2021) +Business Experience: +Mr. Cutt has served as non-executive Board Chair since March 2023 and joined Gulfport as Board Chair and Chief Executive Officer in May 2021. Since March 2026, he has led the Company’s Office of the Chairman. Mr. Cutt is a Petroleum Engineer with over 40 years of energy experience. He served as Chief Executive Officer and as a director of QEP Resources from January 2019 to March 2021. Prior to joining QEP, Mr. Cutt was the Chief Executive Officer and a director of Cobalt International Energy from 2016 to 2018. Previously, Mr. Cutt held several executive positions with BHP Billiton before serving as President of the Petroleum Division from 2013 to 2016. During this time, he was also a member of BHP Billiton’s Corporate Executive Committee. Mr. Cutt began his career with Mobil and worked for ExxonMobil for 24 years and served in various management roles including President of ExxonMobil de Venezuela, President ExxonMobil Canada Energy and President Hibernia Management & Development Company. +Other Memberships and Positions: +Mr. Cutt is President of the Louisiana Tech Foundation Board, on the board of the Audubon Institute, served on the board of the American Exploration and Production Council from 2021 to 2023, and previously served as a board member of the American Petroleum Institute from 2013 to 2018. +Educational Background: +Mr. Cutt received his Bachelor of Science Degree in Petroleum Engineering from Louisiana Tech University. +BOARD MEMBERSHIP QUALIFICATIONS: +Mr. Cutt’s extensive experience as a CEO and director of public exploration and production companies, executive management skills and extensive knowledge of the oil and natural gas sector and corporate governance qualify him to serve as a director. +David Wolf +Age: 55 +Director since: May 2021 +Other Public Company Directorships Held in the Past Five Years: +EP Energy Corporation +(Since October 2020) +Business Experience: +Mr. Wolf serves as Lead Independent Director and has an extensive financial background, with over 30 years of experience in the energy and oil and gas industries. Currently, Mr. Wolf serves as a partner at Enduring Resources. He previously served as Executive Vice President and Chief Financial Officer of Vantage Energy and President, Chief Executive Officer, and a Board Member of Fuse Energy LLC. Prior to joining Fuse Energy, Mr. Wolf served as Executive Vice President and Chief Financial Officer of Berry Petroleum Co and a Managing Director in the Global Oil & Gas Group at JP Morgan Chase & Co. +Educational Background: +Mr. Wolf received his Bachelor of Science degree in Economics from Rollins College and Master of Business Administration degree from Crummer School of Business, Rollins College. +BOARD QUALIFICATIONS: +Mr. Wolf’s prior experience as a Chief Financial Officer, strong oil and natural gas industry background and financial acumen qualify him to serve as a director. +2026 PROXY STATEMENT 9 +ELECTION OF DIRECTORS AND DIRECTOR BIOGRAPHIES +Jason Martinez +Age: 52 +Director since: May 2021 +BUSINESS EXPERIENCE: +Mr. Martinez has had a 30-year energy industry career, nearly 25 years as an investment banker. Currently, Mr. Martinez serves as a Managing Director at Pickering Energy Partners, leading its Energy Transition and Infrastructure Advisory practice. Over the course of his career, his client and deal work span a dozen-plus countries and over $100 billion of announced transactions, including mergers, acquisitions, divestitures, all forms of public and private capital raising, and commercial lending. Previously, he held positions at Bank of Montreal Capital Markets, Nomura Securities International, Deutsche Bank Securities, and JPMorgan Securities. At Bank of Montreal, he led the Acquisitions and Divestitures practice. He began his energy career in Andersen Consulting’s Natural Resources group. +EDUCATIONAL BACKGROUND: +Mr. Martinez received his Master of Business Administration degree from the Harvard Business School and a Bachelor of Arts degree from Rice University. +BOARD QUALIFICATIONS: +Mr. Martinez’s financial acumen and extensive private equity experience qualify him to serve as a director. +Jeannie Powers +Age: 41 +Director since: July 2023 +Business Experience: +Ms. Powers is Head of Business Development at bpx, bp’s onshore US business based in Houston, TX since late 2025. She was previously Managing Director and Head of North America Traditional Energy at EIG’s Investment Firm. Prior to leading Upstream Investments at EIG, she led the North America Engineering team, which was focused on engineering support across all aspects of EIG’s North American existing portfolio as well as new business opportunities. Before joining EIG in 2017, Ms. Powers worked as a Sr. Technical Advisor at Wells Fargo Securities A&D where she spent three years evaluating and marketing upstream and midstream assets. Prior to Wells, Ms. Powers spent several years at Chevron, with increasing responsibility, working both asset development and operations across the lower 48. +EDUCATIONAL BACKGROUND: +Ms. Powers has a Master of Business Administration from Texas Tech University and a Bachelor of Science in Petroleum Engineering from the University of Texas. +BOARD QUALIFICATIONS: +Ms. Powers’ strong oil and natural gas industry background and financial acumen qualify her to serve as a director. +10 2026 PROXY STATEMENT +ELECTION OF DIRECTORS AND DIRECTOR BIOGRAPHIES +David Reganato +Age: 46 +Director since: May 2021 +Other Public Company Directorships Held in the Past Five Years: +Granite Broadcasting LLC +(since July 2011) +New Cotai, LLC +(since March 2014) +Rotech Healthcare Holdings, Inc. +(since September 2013) +Studio City International Holdings +(since March 2014) +Trident Holding Company, LLC, +(holding company of TridentCare) +(since September 2019) +Business Experience: +Mr. Reganato has over 20 years of experience in the investment industry, including significant knowledge of the oil and gas sector. Currently, Mr. Reganato serves as a Partner with Silver Point Capital, L.P., an investment advisor, which he joined in November 2002. Prior to Silver Point Capital, L.P., Mr. Reganato worked in the investment banking division of Morgan Stanley. +Educational Background: +Mr. Reganato received his Bachelor of Science degree in Finance and Accounting from the Stern School of Business at New York University. +BOARD QUALIFICATIONS: +Mr. Reganato’s financial acumen, knowledge of the oil and natural gas sector and previous board experience qualify him to serve as a director. +Mary Shafer-Malicki +Age: 65 +Director since: May 2023 +Other Public Company Directorships Held in the Past Five Years: +Ag Growth International +(January 2024 – February 2026) +Callon Petroleum +(January 2022 – April 2024) +QEP Resources +(July 2017 – March 2021) +McDermott International Inc. +(November 2011 – May 2020) +Wood Plc +(May 2012 – May 2021) +BUSINESS EXPERIENCE: +Ms. Shafer-Malicki retired in 2009 after a 26-year career with BP Exploration Operating Company (BP) and Amoco Corporation, where she held domestic and international leadership roles across the energy value chain. She served as Senior Vice President/CEO and Chief Operating Officer/General Manager for BP’s operations in Angola from 2005 to 2009 and Director General for BP’s operations in Vietnam from 2003 to 2005. Prior to this, she served as the Business Unit Leader for BP’s Central North Sea gas business in Scotland from 2001 to 2003, General Manager for support services to all of BP’s Continental Shelf upstream operations in the United Kingdom from 2000 to 2001 and President and General Manager for Amoco/BP’s Dutch onshore and offshore production and gas storage operations in the Netherlands from 1998 to 2000. +Her significant board experience includes service as Chair of the Board for QEP Resources and as a board member for Callon Petroleum, Wood plc, McDermott International Inc., and Ausenco Limited and Ag Growth International. In addition, Ms. Shafer-Malicki currently serves as a director at the University of Wyoming Foundation, as well as a member of industry advisory boards for the Chemical Engineering department at the University of Wyoming and the Dean of Engineering at Oklahoma State University. +Educational Background: +Ms. Shafer-Malicki graduated from Oklahoma State University with a Bachelor of Science degree in Chemical Engineering. +BOARD QUALIFICATIONS: +Ms. Shafer-Malicki’s extensive energy industry experience, including her serving in senior executive positions, and her experience as a director on multiple public company boards qualify her to serve as a director. +2026 PROXY STATEMENT 11 +ELECTION OF DIRECTORS AND DIRECTOR BIOGRAPHIES +WHAT ARE THE COMMITTEES OF THE BOARD? +Our Board of Directors has an Audit Committee, a Compensation Committee, and a Nominating, Environmental, Social and Governance Committee. The table below summarizes committee membership as of the date of this proxy statement along with the functions each committee is responsible for performing. +AUDIT COMMITTEE +Members +Jason Martinez C+^ +Jeannie Powers +^ +David Reganato +^ +David Wolf +^ +Number of Meetings in 2025 +8 +Principal Functions +• Reviews and discusses with management and the independent auditors the integrity of our accounting policies, internal controls, financial statements, accounting and auditing processes and risk management compliance. +• Monitors and oversees our accounting, auditing and financial reporting processes generally, including the qualifications, independence and performance of the independent auditor. +• Monitors our compliance with legal and regulatory requirements. +• Monitors the Company’s cybersecurity risk and readiness. +• Monitors compliance with the Company’s Code of Business Conduct and Ethics. +• Establishes and oversees procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters, and the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters. +• Reviews and approves related party transactions. +• Appoints, determines compensation, evaluates and terminates our independent auditors. +• Pre -approves audit and permissible non -audit services to be performed by the independent auditors. +• Prepares the report required by the U.S. Securities and Exchange Commission (the “SEC”), for the inclusion in our annual proxy statement. +• Reviews and reassesses the adequacy of the Audit Committee charter on a periodic basis. +• Informs our independent auditors of the Audit Committee’s understanding of significant relationships and transactions with related parties and review and discuss with our independent auditors the auditors’ evaluation of our identification of, accounting for and disclosure of our relationships and transactions with related parties, including any significant matters arising from the audit regarding our relationships and transactions with related parties. +C Committee Chair. ++ Satisfies NYSE independence and other applicable independence rules for membership on such Committees. +^ Audit Committee financial expert. +12 2026 PROXY STATEMENT +ELECTION OF DIRECTORS AND DIRECTOR BIOGRAPHIES +compensation committee +Members +Mary Shafer-Malicki C+ +David Reganato + +Jason Martinez + +David Wolf + +Number of Meetings in 2025 +6 +Principal Functions +• Oversees and administers our executive compensation policies, plans and practices, including our stock retention guidelines, and evaluates their impact on risk and risk management. +• Assists the Board of Directors in discharging its responsibilities relating to the compensation of our executives, including our Chief Executive Officer, and other key employees. +• Administers our equity -based compensation plans, including the grants of stock options, restricted stock awards and other equity awards under such plans. +• Develops, reviews and approves our cash -based incentive bonus plans, including the establishment of performance criteria, targets and awards under our 2025 Executive Annual Incentive Compensation Plan. +• Makes recommendations to the Board with respect to incentive compensation. +• Where appropriate or required, makes recommendations to our stockholders with respect to incentive compensation and equity -based plans. +• Conducts annual performance evaluation of the Committee. +• Reviews disclosure related to executive compensation in our proxy statement and prepares an annual Compensation Committee report. +• Reviews and considers the stockholders’ advisory vote on executive compensation and the frequency of holding such advisory vote. +• Reviews and reassesses the adequacy of the Compensation Committee charter. +C Committee Chair. ++ Satisfies NYSE independence and other applicable independence rules for membership on such Committees. +2026 PROXY STATEMENT 13 +ELECTION OF DIRECTORS AND DIRECTOR BIOGRAPHIES +NOMINATING, ENVIRONMENTAL, SOCIAL AND GOVERNANCE COMMITTEE +Members +Jeannie Powers C+ +David Reganato + +Mary Shafer-Malicki + +David Wolf + +Number of Meetings in 2025 +4 +Principal Functions +• Assists the Board of Directors in developing criteria for identifying and evaluating individuals qualified to serve as members of our Board of Directors. +• Selects and recommends director candidates to the Board of Directors to be submitted for election at each annual meeting of stockholders and to fill any vacancies on the Board of Directors. +• Periodically reviews and makes recommendations regarding the composition and size of the Board of Directors and its Committees. +• Reviews and recommends to the Board of Directors appropriate corporate governance guidelines and procedures for the Company. +• Conducts an annual assessment of the qualifications and performance of the Board of Directors. +• Reviews and reports to the Board of Directors on the performance of management annually. +• Reviews the development and leadership capabilities of the executive officers and management’s succession process. +• Reviews and approves the Company’s Corporate Sustainability Report. +• Reviews and makes recommendations to our Board of Directors regarding the health, safety and environmental protection, and corporate responsibility matters, including governmental relations, political contributions and corporate philanthropy, which we refer to as HSE and corporate responsibility matters, and their impact on our business and operations. +• Monitors and evaluates management’s actions with respect to HSE and corporate responsibility matters. +• Reviews reports from our management, consultants or other advisors regarding (i) our performance with respect to HSE and corporate responsibility matters and compliance with any related laws and regulations applicable to us, (ii) any significant litigation relating to HSE and corporate responsibility matters involving our Company, and (iii) any significant legislation or regulations, judicial decisions, treaties, protocols, conventions or other agreements, public policies or other scientific, medical or technological developments involving HSE and corporate responsibility matters that will or may have a material effect on our business and operations. +• Reviews the risks and exposures relating to HSE and corporate responsibility matters, including mitigation and remedial actions. +• Reviews crisis management planning procedures relating to HSE and corporate responsibility matters. +• Conducts investigations or studies affecting Gulfport as they pertain to HSE and corporate responsibility matters. +• Reviews the effectiveness of internal systems and controls necessary to ensure our compliance with applicable health, safety and environmental laws, rules and regulations. +• Reviews our compliance with industry practices in the areas of health, safety and environmental protection. +• Reviews our political, charitable and educational contributions/programs and the administration of any political action or similar Committees of our employees. +• Oversees the policies and practices promoting resilient employment practices within the Company and the Company’s human and workplace rights and policies. +• Reviews and provides guidance on public policy advocacy efforts to confirm alignment with Company policies and values. +• Reviews and reassesses the adequacy of the Nominating, Environmental, Social and Governance Committee charter. +C Committee Chair. ++ Satisfies NYSE independence and other applicable independence rules for membership on such Committees. +14 2026 PROXY STATEMENT +ELECTION OF DIRECTORS AND DIRECTOR BIOGRAPHIES +DO THE COMMITTEES HAVE WRITTEN CHARTERS? +Yes. The charters for each Committee can be found on our website at https://www.gulfportenergy.com/investors/corporate -governance /governance -documents . You may also obtain copies of these charters, as well as our Code of Business Conduct and Ethics, which is described below, by writing to our Chief Legal and Administrative Officer and Corporate Secretary, Patrick Craine, at Gulfport Energy Corporation, 713 Market Drive, Oklahoma City, Oklahoma 73114. +2026 PROXY STATEMENT 15 +CORPORATE GOVERNANCE MATTERS AND +COMMUNICATIONS WITH THE BOARD +WHO ARE OUR INDEPENDENT DIRECTORS? +Our Board of Directors has determined that five of our six current Board members (David Wolf, Jason Martinez, Jeannie Powers, David Reganato, and Mary Shafer -Malicki ) meet the independence requirements in the NYSE listing standards and are free of any relationship that, in the opinion of our Board of Directors, would interfere with the exercise of independent judgment in carrying out their responsibilities as directors of the Company. Mr. Cutt, our Board Chair, is not considered by the Board of Directors to be an independent director because of his previous employment as Chief Executive Officer of the Company and current leadership of the Company’s Office of the Chairman. +Annual Board Self -Assessment Process +Board and Committee Evaluations +Director Performance Evaluations +How often did the Board of Directors meet in 2025? +The Board of Directors met 18 times in 2025. In addition to these meetings, the Board of Directors adopted resolutions by unanimous written consent. Each director attended over 88% of the aggregate meetings of the Board of Directors and the meetings of the Committees on which they served. +Do our non -management directors meet separately without management? +Our non -management directors routinely meet in an executive session following regularly scheduled meetings of the Board of Directors. +16 2026 PROXY STATEMENT +CORPORATE GOVERNANCE MATTERS AND COMMUNICATIONS WITH THE BOARD +How can I communicate with the Board of Directors? +Individuals may communicate with our Board of Directors or individual directors by writing to our Chief Legal and Administrative Officer and Corporate Secretary, Patrick Craine, at Gulfport Energy Corporation, 713 Market Drive, Oklahoma City, Oklahoma 73114. Our Chief Legal and Administrative Officer and Corporate Secretary will review all correspondence and forward our Board of Directors correspondence that, in the opinion of our Chief Legal and Administrative Officer and Corporate Secretary, relates to the function of our Board of Directors or a Board Committee or otherwise requires their attention. Directors may review a log of all correspondence received by us and request copies. Concerns relating to accounting, internal control over financial reporting or auditing matters will be immediately brought to the attention of the Chair of the Audit Committee and handled in accordance with our Audit Committee’s procedures. +WILL directors attend the Annual Meeting? +Recognizing that director attendance at our Annual Meeting can provide stockholders an opportunity to communicate with directors about issues affecting the Company, we actively encourage our directors to attend, either virtually or in person, the Annual Meeting of Stockholders. All Directors attended our 2025 Annual Meeting of Shareholders. +Code of Business Conduct and Ethics +We have adopted a Code of Business Conduct and Ethics designed to help directors and employees resolve ethical issues. Our Code of Business Conduct and Ethics applies to all directors and employees. Our Code of Business Conduct and Ethics covers various topics including, but not limited to, conflicts of interest, fair dealing, discrimination and harassment, confidentiality, compliance procedures and employee complaint procedures. Our Code of Business Conduct and Ethics, together with any amendments or waivers, are posted on our website at https://www.gulfportenergy.com/investors/corporate -governance /governance -documents . +Corporate Governance Guidelines +We have adopted Corporate Governance Guidelines to assist the Board in exercising its responsibilities. The Corporate Governance Guidelines reflect the Board’s commitment to monitor the effectiveness of policy and decision making at the Board and management levels, with a view to enhancing stockholder value over the long term. The Corporate Governance Guidelines also assure that the Board will have the necessary authority and practices in place to review and evaluate the Company’s business operations as needed and to make decisions that are independent of the Company’s management. Our Corporate Governance Guidelines, together with any amendments or waivers, are posted on our website at https://www.gulfportenergy.com/investors/corporate -governance /governance -documents . +Political Contribution Policy +Engagement in the political, legislative and regulatory process is important to the success of the Company. The Company has delegated compliance and oversight over this function to the Nominating, Environmental, Social and Governance Committee and has adopted a political contributions and activity policy that sets forth the ways by which the Company and its employees may participate in the political, legislative and regulatory process. All political contributions and activities are subject to compliance with applicable laws. +2026 PROXY STATEMENT 17 +NOMINATING PROCESS FOR DIRECTORS, DIRECTOR +QUALIFICATIONS AND REVIEW OF DIRECTOR NOMINEES +Director Qualifications +As provided by the Nominating, Environmental, Social and Governance Committee’s charter, the Committee identifies, investigates, and recommends candidates to our Board of Directors with the goal of creating a balance of knowledge, experience, and backgrounds. The Committee identifies candidates using third -party search firms, as well as through the extensive networks of our directors and management team in the oil and natural gas industry. +It is our policy that potential directors should possess the highest personal and professional ethics, integrity and values and be committed to representing the interests of our stockholders. In addition to reviewing a candidate’s background and accomplishments, candidates are reviewed in the context of the current composition of our Board of Directors, the skills necessary to provide effective oversight in critical areas and the evolving needs of our business. It is the policy of our Board of Directors that, at all times, at least a majority of its members meet the standards of independence promulgated by the NYSE and the SEC and that its members reflect a range of talents, skills and expertise, particularly in the areas of accounting and finance, management, leadership and oil and gas -related industries sufficient to provide sound and prudent guidance with respect to our operations and the interests of our stockholders. +Nomination Process +Our Board of Directors will consider stockholder nominations for director candidates upon written submission to our Chief Legal and Administrative Officer and Corporate Secretary along with, among other things, the nominee’s qualifications and certain biographical information regarding the nominee, the nominee’s written consent to serve as a director if elected and being named in the proxy or information statement and information regarding the status of the stockholder submitting the recommendation, all in the manner required by the Second Amended and Restated Bylaws of the Company (the “Bylaws”) and the applicable rules and regulations promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Following verification of the stockholder status of the persons proposing candidates, recommendations will be aggregated and considered by our Board of Directors at a regularly scheduled or special Board meeting. If any materials are provided by a stockholder in connection with the nomination of a director candidate, materials will be forwarded to our Board of Directors. See “Submission of Future Stockholder Proposals” below for additional detail regarding submitting director nominees. +Our Board of Directors may also review materials provided by professional search firms or other parties in connection with a nominee who is not proposed by a stockholder. In evaluating nominations, our Board of Directors will seek to achieve a balance of knowledge, experience and backgrounds on the Board. To be nominated to serve as a director, a nominee need not meet any specific minimum criteria. Our Board of Directors uses the same criteria for evaluating candidates nominated by stockholders as it does for those proposed by current Board members, professional search firms and other people. After completing its evaluation, our Board of Directors approves the final slate of director nominees. +Our Nominating, Environmental, Social and Governance Committee approved the director nominees submitted for election at the Annual Meeting. Each nominee brings a strong and unique background and set of skills to our Board of Directors, giving our Board of Directors competence and experience in a variety of areas, including corporate governance and Board service, executive management, the oil and natural gas industry, accounting and finance and risk assessment and management. +18 2026 PROXY STATEMENT +NOMINATING PROCESS FOR DIRECTORS, DIRECTOR QUALIFICATIONS AND REVIEW OF DIRECTOR NOMINEES +Summary of Director Qualifications and Experience +The chart below identifies the balance of skills and qualifications each director nominee brings to the Board. The fact that a particular skill or qualification is not designated does not mean the director nominee does not possess that particular attribute. We believe the combination of the skills and qualifications shown below demonstrates how our Board is well positioned to provide strategic advice and effective oversight to our management. +2026 PROXY STATEMENT 19 +DIRECTOR LEADERSHIP STRUCTURE +Board Chair +Timothy Cutt served as Board Chair and CEO beginning on May 17, 2021. Effective January 24, 2023, the positions of Board Chair and Chief Executive Officer were held by two different individuals, and the Board Chair is a non -executive position elected from among the directors by the Board. Separating the positions of Board Chair and Chief Executive Officer allows our Chief Executive Officer to focus on business development strategies as well as our day -to-day business and operations, while permitting our Board Chair to lead the Board in its fundamental role of providing advice to and oversight of management. The Board Chair provides leadership to our Board of Directors and works with the Board of Directors to define its structure and activities in the fulfillment of its responsibilities. +Following the resignation of John Reinhart, President, Chief Executive Officer and Director of the Company on March 6, 2026, the Board established an Office of the Chairman, led by Mr. Cutt, to provide executive leadership during the interim period pending the appointment of a new Chief Executive Officer. +The duties of the non -executive Board Chair include: +• Presiding at meetings of our Board of Directors and stockholders. +• Setting Board agendas with input from other members of the Board and our management. +• Facilitating communication among, and information flow to, directors. +• Calling special meetings of our Board of Directors and stockholders. +• Advising and counseling our Chief Executive Officer and other officers. +The duties of the Chair of the Office of the Chairman include: +• Presiding at meetings of the Office of the Chairman. +• Provide leadership and strategic direction of the Office of the Chairman. +• Serve as the primary liaison between the Office of the Chairman and the Board. +Lead Independent Director +The Board has appointed Mr. Wolf to serve as Lead Independent Director with responsibilities typically performed by an independent Chair, including acting as Chair at meetings of the Board of Directors when the Board Chair is not present. The Lead Independent Director role is a highly versatile intermediary between the Board Chair and the Board’s stakeholders. In normal times they contribute to the good relationships and functions of the Board, and in periods of stress the Lead Independent Director is expected to assist in facilitating the resolution of any situation. Mr. Wolf also is a member of each of the Board’s Committees and acts as Chair at Committee meetings when the respective Committee Chair is not present. +Directors +We believe that our directors bring a broad range of leadership experience to the boardroom and regularly contribute to the thoughtful discussion involved in effectively overseeing the business and affairs of the Company. We believe that the atmosphere of our Board is collegial, that all Board members are well engaged in their responsibilities and that all Board members express their views and consider the opinions expressed by other directors. Five out of six director nominees are independent under NYSE listing standards and SEC rules. We believe that our independent directors have demonstrated leadership in business enterprises and are familiar with Board processes. Our independent directors are involved in the leadership structure of our Board by serving on our Audit, Nominating, Environmental, Social and Governance and Compensation Committees, comprised entirely of independent directors and each having an independent chair. +20 2026 PROXY STATEMENT +DIRECTOR LEADERSHIP STRUCTURE +Committee Chairs +Specifically, our Audit Committee Chair oversees the accounting and financial reporting processes and compliance with legal and regulatory requirements. Our Compensation Committee Chair oversees our compensation policies and practices and their impact on risk and risk management. The Chair of our Nominating, Environmental, Social and Governance Committee oversees our practices relating to health, safety and environmental protection, as well as social and governance matters. Our Nominating, Environmental, Social and Governance Committee Chair also monitors matters related to Board and Committee composition, Board performance and best practices in corporate governance. Each Committee Chair provides independent leadership for the purposes of many important functions delegated by our Board of Directors to such Committee. +2026 PROXY STATEMENT 21 +BOARD OF DIRECTORS’ ROLE IN RISK OVERSIGHT +While our management team is responsible for the day -to-day management of risks, the Board of Directors has primary responsibility for risk oversight. Boards typically exercise this oversight during regular Board meetings, but our Board of Directors also maintains constant and open dialogue with management and reviews and monitors key processes. As a result, they are better able to respond to emerging risks and to influence our strategy to address those risks. +While our Board of Directors is responsible for risk oversight at the Company, our three Committees assist the Board in fulfilling its oversight responsibilities in the areas of risk below: +Committee +Risk Areas of Focus +Audit +• Cybersecurity +• Financial Reporting +• Internal Controls +• Legal Compliance +• Regulatory Compliance +• Reserves Reporting +• Risk Management +Compensation +• Compensation Policies +• Executive Performance +Nominating, Environmental, Social and Governance +• Board Organization +• Climate +• Corporate Governance +• Environment +• Government Relations +• Membership +• Political Contributions +• Public Health +• Safety +• Structure +• Succession Planning +22 2026 PROXY STATEMENT +OFFICE OF THE CHAIRMAN +On March 6, 2026, John Reinhart, President, Chief Executive Officer and Director of the Company notified the Board of Directors of his resignation as President, Chief Executive Officer and Director of the Company. +Following the receipt of Mr. Reinhart’s notice, the Board retained an executive search firm to help identify qualified candidates for the Chief Executive Officer role. In the interim, an Office of the Chairman was established to lead the Company. The Office of the Chairman is led by Timothy Cutt, Chairman of the Board. Other members of the Office of the Chairman include Michael Hodges, Executive Vice President and Chief Financial Officer; Patrick Craine, Executive Vice President and Chief Legal and Administrative Officer; and Matthew Rucker, Executive Vice President and Chief Operating Officer. +2026 PROXY STATEMENT 23 +EXECUTIVE OFFICERS +The following table sets forth the name, age, positions, and business experience of each of our executive officers (other than Mr. Cutt, who also serves as a member of our Board and who is listed under “Election of Directors and Director Biographies”): +NAME +POSITIONS AND EXPERIENCE +Michael Hodges +Age: 47 +Executive Vice President, Chief Financial Officer since April 2023 +Prior to joining the Company, Mr. Hodges served as Senior Vice President, Finance and Accounting at Leon Capital Group. Prior to joining Leon Capital, he was the Executive Vice President and Chief Financial Officer for Montage Resources Corporation until its merger with Southwestern Energy Company in November 2020. From 2012 until joining Montage Resources in 2018, Mr. Hodges served as the Chief Financial Officer for three upstream energy companies focused on near-term value creation through the acquisition and early-stage development of oil and natural gas resources. Mr. Hodges received his Bachelor of Business Administration in Finance from the University of Oklahoma and a Master of Science in Energy Management from Oklahoma City University and is a Certified Public Accountant in the State of Oklahoma. +Patrick Craine +Age: 53 +Executive Vice President, Chief Legal and Administrative Officer since June 2021 +Mr. Craine joined Gulfport as Executive Vice President, General Counsel and Corporate Secretary in May 2019. Mr. Craine has over 25 years of extensive senior-level experience handling a broad range of securities, corporate, regulatory, governance, compliance and litigation matters, with particular expertise in the energy industry. He joined Gulfport from Chesapeake Energy Corporation (“Chesapeake”) where he served as Deputy General Counsel – Chief Risk and Compliance Officer from 2013 until 2019. Prior to joining Chesapeake, Mr. Craine was a partner with Bracewell LLP, a global law firm, where his practice focused on securities and corporate regulatory matters and investigations. Before Mr. Craine entered private practice, he served as an attorney with the SEC and the Financial Industry Regulatory Authority, where he held leadership positions in their Oil and Gas Task Forces. Mr. Craine received his Bachelor of Arts degree, summa cum laude , Phi Beta Kappa, from Wabash College, and his Juris Doctorate, cum laude , from the Southern Methodist University Dedman School of Law. +Matthew Rucker +Age: 40 +Executive Vice President, Chief Operating Officer since February 2025 +Mr. Rucker joined Gulfport as the Senior Vice President of Operations in March 2023. On February 24, 2025, he was promoted to Executive Vice President and Chief Operating Officer. He joined Gulfport from Javelin Energy Partners where he previously served as Vice President, Production Operations starting in July 2022. Prior to joining Javelin, Mr. Rucker served as the Executive Vice President, Chief Operating Officer of Montage Resources Corporation following Montage’s successful business combination transaction with Blue Ridge Mountain Resources in June 2020. Prior to Montage, Mr. Rucker served as Vice President, Resource Planning and Development of Blue Ridge from 2016 to 2020. Mr. Rucker started his career at Chesapeake Energy Corporation from 2007 to 2016, serving in a variety of leadership and engineering roles in field operations, reservoir engineering, and planning. Mr. Rucker graduated with a Bachelor of Science degree in Petroleum Engineering from Marietta College and with a Master of Business Administration from Texas Christian University. He serves on the Boards of the Ohio Oil and Gas Association and the Petroleum Alliance of Oklahoma. +24 2026 PROXY STATEMENT +EXECUTIVE OFFICERS +NAME +POSITIONS AND EXPERIENCE +Michael Sluiter +Age: 53 +Senior Vice President, Reservoir Engineering since December 2018 +Mr. Sluiter joined Gulfport from Noble Energy, Inc., where he held various engineering and leadership positions from March 2007 to November 2018, including Permian Basin Unit Manager, Appalachian Reservoir Engineering Supervisor, and Business Development Engineering Advisor. Prior to Noble Energy, Mr. Sluiter worked for Santos Ltd., at the Australian headquarters in Adelaide and in Houston, primarily focused on petroleum engineering and planning functions. Mr. Sluiter began his career as a wireline field services engineer with Schlumberger Inc. and holds a Bachelor of Science degree in Chemical Engineering from the University of Sydney, Australia. +2026 PROXY STATEMENT 25 +COMPENSATION DISCUSSION AND ANALYSIS +Letter from the Compensation Committee +Gulfport delivered another year of strong operational and financial performance in 2025, while strategically expanding our high -quality resource base and maintaining our commitment to returning capital to stockholders. The continued expansion of our inventory is driven by our targeted discretionary acreage acquisitions and further bolstered by our development efforts in the Ohio Marcellus and the successful execution of U -development on our Utica position, unlocking substantial value across our core assets. After accounting for adjusted free cash flow utilized for discretionary acreage acquisitions, the Company returned more than 100% of our adjusted free cash flow to stockholders through common stock repurchases during 2025, all while maintaining a solid financial position with financial leverage below one times at year -end . The investment community recognized the Company’s accomplishments, and Gulfport’s stock price increased more than 12% during the year, outperforming the 2025 compensation peer group average, which declined by approximately 14%. +From an executive compensation perspective, we were able to set realistic, challenging targets for our short and long -term incentive plans. We were pleased to see the financial and operational results exceed our expectations. We were able to deliver on our compensation strategy of providing compensation opportunities that were tied to Company performance. Our philosophy is to remain competitive within the oil and gas industry for similarly situated operations. +Please review the Compensation Discussion and Analysis, where we explain how we tie pay and performance together to reward our executives. We are confident our shareholders will once again agree with the compensation decisions we made regarding our executive team as they overwhelmingly did based on the 97.63% of votes we received on our 2025 Say -On-Pay vote. +Thank you for your confidence and investment in Gulfport Energy. +Respectfully submitted by the Compensation Committee, +Mary Shafer -Malicki , Chair +Jason Martinez +David Reganato +David Wolf +Dated: April 8, 2026 +26 2026 PROXY STATEMENT +COMPENSATION DISCUSSION AND ANALYSIS +This Compensation Discussion and Analysis, or CD&A, explains the Compensation Committee’s compensation philosophy, summarizes our executive compensation programs, and describes compensation decisions for Gulfport’s former Chief Executive Officer, or CEO, Chief Financial Officer, or CFO, and the next three highest paid executive officers for 2025. These executive officers, known as our NEOs, are as follows: +Michael Hodges +Executive Vice President, Chief Financial Officer +Patrick Craine +Executive Vice President, Chief Legal and Administrative Officer and Corporate Secretary +Matthew Rucker +Executive Vice President, Chief Operating Officer +Michael Sluiter +Senior Vice President of Reservoir Engineering +John Reinhart +Former President, Chief Executive Officer and Director +2026 PROXY STATEMENT 27 +EXECUTIVE SUMMARY +Gulfport 2025 Business Performance Highlights +During 2025, we had the following notable achievements: +Financial +• Generated $803.2 million of operating cash flows. +• Redeemed outstanding preferred stock, simplifying our capital structure and eliminating future dividend obligations on the preferred stock. +• Expanded our common stock repurchase authorization to $1.5 billion and returned $336.3 million to stockholders through the repurchase of approximately 1.8 million shares (including the underlying shares of common stock into which the preferred stock was convertible) at a weighted average price of $188.65 per share. +• Maintained a strong balance sheet and low financial leverage, exiting the year with total liquidity of $806.1 million. +• Reported year -end estimated net proved reserves of 4.3 Tcfe. +Health, Safety & Environmental +• Certified Appalachia assets with MiQ receiving an overall ‘A’ grade for third consecutive year. +• Achieved MiQ certification for Mid-Continent assets, building on lessons learned from our Appalachia operations and reinforcing our commitment to emissions transparency and operational excellence. +• Achieved two -years without an employee OSHA recordable injury. +• Progressed in multi -year program to convert natural gas process controllers with compressed air or other non -gas venting devices across our operations to reduce methane emissions +• Employees completed over 2,500 hours of Health, Safety and Environmental training. +• Over 200 service companies completed Contractor Orientation covering topics such as: +• Gulfport’s Contractor expectations +• Work Safe; +• Stop Work; +• JSA’s; +• Incident Reporting; and +• Spill Prevention +• Personal Protective Equipment requirements +• Gulfport Drug/Alcohol/Weapons Policy +• Business Conduct +• Other Applicable OSHA Regulations +• Hot Work Permits +• Confined Space Permits +• Lock Out Tag Out Requirements +28 2026 PROXY STATEMENT +EXECUTIVE SUMMARY +Social +• Maintained a strong, organization-wide focus on safety and culture, reinforcing core values, enhancing safety performance and promoting accountability at every level. +• Consistent with our core values, strived to create an environment that prioritized attracting and recruiting highly qualified candidates with varied backgrounds and experiences. +• Paid over $314 million in royalties to local landowners and working interest owners. +• Paid approximately $30 million in production and other taxes across our asset base, helping to fund local economies. +• Partnered with over 50 organizations that support Gulfport’s key focus areas in Oklahoma and Ohio through volunteering and monetary contributions. +Corporate Governance +• Governed by a six-member Board, including five independent directors. +• Emphasized full and proper governance with active Audit, Compensation and NESG Committees. +• Current Board has 50% of our directors identifying as gender or ethnically diverse. +• Maintained separation of Chief Executive Officer and Chair roles while retaining Lead Independent Director. +• Continued short-term compensation incentive ESG metrics with a 30% weighting. +Key 2025 Executive Compensation Actions +In consideration of our long -term strategy and stockholder feedback following a robust program of engagement (see “Stockholder Engagement and Annual Say -on-Pay Advisory Vote” below), the Company took the following actions in 2025: +• Continued to use absolute and relative TSR and time -based vesting in equity plan grants to maximize the link between performance -based pay of our executives and shareholder value over time. +• Maintained annual performance bonus opportunities and long -term equity award targets to closely align our NEOs’ financial interests with those of our stockholders and to continue to link a larger portion of NEOs’ compensation to the performance of our stock and operational performance. +• Selected metrics in our annual incentive plan tied to the financial health of the Company and specific and quantifiable health, safety and environmental metrics. +• Continued to provide robust disclosure of our performance metrics and targets for both performance -based cash and equity awards. +• Utilized formal stock ownership guidelines to ensure our Board of Directors and executive officers own a stake in the Company that is sufficient to align their interests with their fellow stockholders. +2026 PROXY STATEMENT 29 +EXECUTIVE SUMMARY +The Compensation Committee will continue to consider the feedback from our stockholders when making compensation decisions for our NEOs. +Practices We Follow +🗸 +Incentives Aligned with Stockholders. All long-term equity incentive awards granted in 2025 were in the form of either time-based or performance-based restricted stock units, and the performance-based restricted stock units vest based on absolute and relative TSR, providing strong alignment between management and stockholders. +🗸 +NEO pay is at -risk . A significant portion of executive compensation is conditioned on the achievement of pre-determined operational, capital efficiency and safety and environmental targets, as well as absolute TSR and TSR measured against a broad peer group of exploration and production companies. +🗸 +Performance -based awards are prevalent. 60% of the NEOs’ equity incentive awards consisted of performance-based equity awards that vest based on absolute and relative TSR metrics measured over a three-year performance period. +🗸 +Robust disclosure of our performance metrics and targets. We provide detailed disclosure of our performance metrics in our CD&A. +🗸 +Balanced approach to executive compensation. We view the combination of long-term equity and short-term cash compensation, prioritizing long-term equity compensation and focusing on performance-based equity and cash compensation when analyzing total compensation plans. +🗸 +Ownership guidelines. We have robust stock-ownership guidelines for directors and executive officers. +🗸 +Risk Management. We perform annual enterprise risk assessments to ensure our compensation programs do not create undue risk to the business. +🗸 +Clawback and recoupment processes. We maintain a clawback policy that allows us to recover incentive compensation in certain circumstances. +🗸 +Executive Compensation best practices. The Compensation Committee uses an independent compensation consulting firm to provide input into our executive compensation programs. +Practices We Prohibit +û +Minimum bonuses or guarantees. The Company does not guarantee minimum bonuses and relies on target achievement to determine annual bonus payments. +û +Single -trigger vesting of equity awards. The Company does not allow for single-trigger vesting of equity awards in connection with a change of control. +û +Providing tax gross -ups . No tax gross-up payments have been provided to our NEOs. +û +Hedging or pledging Gulfport Energy Stock. The Company does not allow hedging or pledging of Gulfport securities by our NEOs or directors. +û +Liberal share recycling. We do not allow liberal share recycling in our stock incentive plan. +û +Holding Gulfport Energy stock in a margin account. The Company does not allow securities to be held in a margin account by our NEOs or directors. +û +Excessive perquisites or executive benefits plans. No pension, supplemental executive retirement plan or excessive perquisite plans are made available to our NEOs. +û +Repricing of Stock Options. The Company did not grant stock options in 2025, currently has no plans to grant stock options in the future and would not reprice any outstanding stock options that might be outstanding. +30 2026 PROXY STATEMENT +EXECUTIVE SUMMARY +Compensation Aligned with Performance +The Compensation Committee believes that executive compensation should be designed to deliver competitive pay when performance targets are achieved, and when business results exceed targets, executives should share in those rewards based on their efforts. If the Company does not achieve established performance goals, the executive team should receive pay that reflects that lower achievement. The Company delivered 2025 net production in line with expectations and operated within planned base capital expenditures expectations. The 2025 development program led to meaningful adjusted free cash flow generation, and after adjusting for cash flow utilized for attractive discretionary acreage acquisitions, the Company returned more than 100% of its remaining adjusted free cash flow to stockholders through common stock repurchases during 2025, all while maintaining a strong financial position with financial leverage below one times at year end. The Company’s accomplishments were realized by the investment community and Gulfport’s common stock appreciated over 12% during 2025, outperforming the 2025 compensation peer group average, which declined approximately 14%. +The majority of our current NEO’s total compensation is dependent on the successful achievement of Company results as measured by either achievement against short -term incentive plan metrics or stock price appreciation of the Company’s common stock resulting in NEO target total direct compensation that is influenced by pay -at-risk or variable compensation. +Stockholder Engagement and Annual Say -On-Pay Advisory Vote +The Compensation Committee is committed to engaging with our stockholders to understand their expectations for executive compensation, corporate governance and safety, environmental and other social responsibility matters at Gulfport Energy. In 2025, 97.63% of shareholders voted to approve the Company’s executive compensation program and practices. The Company is pleased that shareholders continue to strongly support our executive pay program and remains committed to meeting with stockholders to solicit feedback on our executive compensation practices. Based on the results of the Company’s last advisory vote on the frequency of future Say -On-Pay votes, also known as a say -on-frequency vote, the Company will continue to hold annual Say -On-Pay votes until the next say -on-frequency vote in 2029. +The Company held discussions with stockholders representing over 55% of shares outstanding. Through these conversations, our stockholders emphasized their expectation that management should be focused on driving results that deliver stockholder value. Our stockholders agree that executives should not be paid at target levels unless financial targets are achieved and wanted to see specific and measurable targets for the year. Stockholders also expressed a desire for executives to have exposure to the absolute return of the Company’s common stock without regard to broader market fluctuation. The Company is confident that the metrics selected for both short -term and long -term incentives are appropriate and aligned with shareholder preferences. Changes were made to metrics selected in the short -term incentive plan to incorporate environmental, safety and other social practices for 2025. +After carefully considering input from stockholders, the Company took the following actions in 2025: +• Granted performance -based equity awards in the form of performance -based restricted stock units tied to absolute and relative TSR, vesting over a three -year performance period, comprising at least 60% of all the equity awards granted to our NEOs. +• Utilized short -term incentive opportunities and long -term equity award targets that closely align our NEOs’ financial interests with those of our stockholders and continue linking a larger portion of NEOs’ compensation to our operational performance and share price performance. +• Provided robust disclosure of our performance metrics and targets for both performance -based cash and equity awards. +• Utilized metrics in the short -term incentive plan directly tied to the financial health of the Company, including production per day, capital expenses, lease operating expenses, free cash flow generation, and specific and quantifiable health, safety, environmental and social metrics. +The Compensation Committee will continue to consider the feedback from our stockholders when making compensation decisions for our NEOs. +2026 PROXY STATEMENT 31 +EXECUTIVE SUMMARY +EXECUTIVE COMPENSATION PHILOSOPHY AND COMPONENTS +Philosophy and Objectives +Our executive compensation philosophy is guided by the following objectives: +EXECUTIVE COMPENSATION +Alignment with +Stockholder Interests +By providing the majority of compensation in long-term equity awards, stressing pay for performance, managing dilution to our stockholders and encouraging an ownership culture, we aimed to align the interests of our executives with those of our stockholders. +Pay for Performance +The Company is focused on rewarding performance by creating incentive awards based on achievement of clearly defined performance targets. A significant portion of our NEOs’ compensation is delivered in long-term incentives, making our NEOs’ realized total direct compensation heavily dependent upon Company performance and stock price. +Competitive +Compensation +The Company believes it is imperative to maintain compensation programs competitive with our peer group to attract, retain and motivate executives and our future leaders in a way that is in line with the compensation of executive positions at similar companies. +Our executive compensation programs play a key role in helping us achieve our business objectives and effectively reward executive officers for our Company’s annual and long -term performance and individual contributions to performance. +Total Direct Compensation Components for 2025 +Pay Element +Vehicle +Philosophy +Benefits +• Health, dental and vision insurance available to all employees. 401K program, vacation policy and disability plans to provide income replacement due to long-term or short-term illness +• Provided core health, welfare and retirement savings plans for executives. Provided substantially the same programs for all employees with minimal executive perquisites. +Base Pay +• Base pay rates that are reviewed annually and subject to Compensation Committee recommendations +• Provided compensation that is competitive with the median peer group practices. Base pay levels reflected the unique skills and abilities of our executives and accounted for the primary duties associated with the executive’s role. +Short-Term Incentive +• Annual incentive opportunity to earn a percentage of base pay based on annual operating objectives +• Provided incentive opportunities that approximated median peer group pay when performance targets were achieved. When targets are exceeded, the executive should be rewarded for their efforts with pay that exceeded the median of the peer group. When targets are not achieved, the executive should have earned pay levels below the median of the peer group. +Long-Term Incentives +• Time-Based Restricted Stock Units +• Time-based restricted stock unit grants that vest in equal annual installments over 3 years. If the executive remains with the Company, the executive experiences either increased or decreased pay levels based on the performance of the stock price, fully aligning our executives with the return of the Company’s stock. +• Performance-Based Restricted Stock Units +• Performance-based restricted stock units that are tied to total shareholder return over a performance period that aligns stockholders and executive interests, providing an additional incentive opportunity for the executive when absolute and/or relative returns exceed those of our peer group. +32 2026 PROXY STATEMENT +EXECUTIVE SUMMARY +Determining our Executive Compensation +Benchmarking Against Our Compensation Peer Group +Gulfport utilized a peer group of companies, or the Compensation Peer Group, as a reference point for establishing compensation levels for NEOs as well as program structures, that achieved competitiveness in the market. +2025 Compensation Peer Group +The Compensation Committee engaged its independent consultant, WTW, formerly Willis Towers Watson, to establish the appropriate peer group for executive compensation for 2025. Potential peers were identified using revenue, primary business, equity value/debt ratio, other relevant financial metrics (EBITDA, market capitalization, assets, net income, etc.), gas weighting and the number of operations/regions. Upon review and analysis of potential peers identified by these criteria, the peers below were selected as both suitable and relevant to comprise the Company’s 2025 peer group. The Compensation Peer Group was aligned with Gulfport on key metrics at the time the peer group was approved. +2025 Compensation Peer Group +Berry Corporation +Comstock Resources, Inc. +Magnolia Oil & Gas Corporation +Range Resources Corporation +Talos Energy Inc. +Civitas Resources, Inc. +HighPeak Energy Inc.* +Matador Resources Company +SilverBow Resources, Inc. +Vital Energy, Inc. +CNX Resources Corporation +Mach Natural Resources LP* +Murphy Oil Corporation +SM Energy Company +* Denotes a new peer added in 2025. +In general, and consistent with a performance -based compensation philosophy, the Compensation Committee sought to establish executive base pay within a competitive range of the peer group median, with an opportunity to earn greater overall compensation in the event it was warranted by our performance. The exact level of targeted compensation for each NEO varied based on the individual’s role at Gulfport, experience, and contribution to our success. For benchmarking purposes, the Compensation Committee compared the total compensation for each NEO position to the compensation paid for similar positions by companies in our peer group, as set forth in those companies’ 2024 proxy statements. WTW proposed companies to be included in the Compensation Peer Group and the methodology for selecting that peer group and may consult with management to confirm that the most appropriate companies are selected. The Compensation Committee then reviewed and approved the Compensation Peer Group for the applicable compensation year. The Compensation Committee will continue to review and monitor the Compensation Peer Group annually and select peers based on appropriate screening criteria, metrics and competition for executive talent. The Compensation Committee also used industry -specific survey data as an additional reference point to assist in the compensation decision -making process. +2026 PROXY STATEMENT 33 +EXECUTIVE SUMMARY +PROCESS FOR DETERMINING EXECUTIVE COMPENSATION +The Compensation Committee of our Board of Directors oversees our compensation programs for executive officers and all employees. During 2025, the Compensation Committee was comprised of Mary Shafer -Malicki (Chair after May 21, 2025), Jason Martinez (Chair through May 21, 2025), David Reganato and David Wolf. All members of the Compensation Committee are independent directors. +The Role of Our Compensation Committee +The Compensation Committee reviewed and made its decisions regarding the annual compensation of our NEOs at its regular meetings in the first half of each year. These decisions included approval of: +• Base salaries, short -term incentive opportunities, and long -term incentive value. +• Performance objectives for performance -based incentives. +• Equity grant values and vehicles. +• Payouts for short -term incentive awards and performance -based long -term incentive award payouts. +The Compensation Committee may also adjust compensation as necessary at other times during the year, such as in the case of promotions, other changes in employment status and significant corporate events, as well as reflecting changing market conditions or for other competitive purposes. +In making its decisions, the Compensation Committee assessed each NEO’s impact during the year and overall value to Gulfport, specifically considering the NEO’s contribution to the growth of Gulfport’s value, operational and financial performance, performance in the NEO’s primary area of responsibility, impact on strategic initiatives, recommendations of our independent compensation consultant, the NEO’s role and trajectory in succession planning and development, recommendations from our CEO with respect to our other NEOs and other intangible qualities that contribute to corporate and individual success. +The Role of our CEO +The Compensation Committee evaluated our CEO based on the Company’s performance metrics, leadership roles as a member of the Board and our lead representative to the investment community and other criteria. The CEO’s total compensation package was determined by the Compensation Committee, based upon its evaluation and input from our independent compensation consultant. Our CEO’s compensation ultimately reflected Gulfport’s corporate performance, personal performance, competitive industry practices and the terms of our employment arrangement with the CEO. +Our CEO evaluates each of the other NEOs and makes compensation recommendations to the Compensation Committee. In developing recommendations, the CEO considers the input of the Compensation Committee’s independent compensation consultant, as well as each NEO’s performance against the Company performance metrics and contribution to Gulfport’s performance. The independent compensation consultant reviews and provides comments to the Compensation Committee based on our CEO’s recommendation with respect to our NEOs, other than our CEO. Our CEO did not participate in deliberations or decisions concerning his own compensation. +The Role of the Compensation Consultants +For 2025, the Compensation Committee retained the service of WTW to perform executive compensation advisory services, reporting directly to the Compensation Committee Chair. The Compensation Committee determined that the expertise that WTW had in the executive compensation consulting space with similar Exploration and Production (“E&P”) companies, in addition to deep insights into compensation practices across the oil and gas sector and the broader industry, was critical for Gulfport Energy. WTW provided contemporary best practices in base pay administration, short -term incentive plan design and long -term incentive plan design. This information, which included reviews of peers, a broader E&P group and general industry practices, was used by the Compensation Committee to determine base salary, short -term incentives and long -term incentives for our executives. +The Compensation Committee engaged WTW to review the overall competitiveness of our executive compensation program for 2025, with a continued focus on ensuring the alignment of management compensation with performance and the achievement of Gulfport’s long -term goals. +34 2026 PROXY STATEMENT +EXECUTIVE SUMMARY +WTW also provided support with regulatory and other considerations that affected compensation programs, as requested by the Compensation Committee, as well as assistance in preparation of the CD&A. +During 2025, WTW provided other non -executive compensation consulting services to us, but the total fees for such services did not exceed $120,000. The Compensation Committee reviewed the independence of WTW and determined that there were no conflicts of interest because of the Compensation Committee’s engagement of WTW. +The Compensation Committee evaluates the independence of its compensation consultant(s) on an ongoing basis. +2025 COMPENSATION PROGRAM DESCRIPTION +Base Salary +The Compensation Committee reviews NEO base salaries on an annual basis, with a goal of providing market -competitive , fixed cash compensation. The Compensation Committee assessed comparable salary information provided by its independent compensation consultant as a factor when determining the base pay for NEOs. +Other factors the Compensation Committee considers in determining base pay for each of the NEOs included, but was not limited to: the NEO’s responsibilities, experience, leadership, potential future contribution and demonstrated individual performance. The relative weighting of these factors varied by NEO depending on their position and responsibilities. In March 2025, the base salaries of the executive team were reviewed, and changes were made after a review of the current labor market for executive talent, performance and other job -related factors for each executive. A summary of the changes is reflected in the table below. +Name +Base Salary YE +2024 +Percent +Increase (%) +Base Salary YE +2025 +Michael Hodges +$515,000 +3.9% +$535,000 +Patrick Craine +$500,000 +3.0% +$515,000 +Matthew Rucker +$440,000 +13.6% +$500,000 +Michael Sluiter +$415,000 +3.6% +$430,000 +John Reinhart, former CEO +$900,000 +2.8% +$925,000 +Annual Incentive Awards +The Compensation Committee continued a performance -based annual cash incentive program for 2025 that tied our NEOs’ compensation directly to pre -established performance metrics. Targeted annual incentive award levels were based on market information supplied by the independent compensation consultant. Individual awards may be decreased at the discretion of the Compensation Committee based on overall corporate performance for the year and other considerations. +2025 Annual Short-Term Incentive (“STI”) Metrics and Payments +The Compensation Committee determined that the appropriate Key Performance Indicators (“KPIs”) for the 2025 STI plan would focus primarily on generating adjusted free cash flow, executing certain strategic objectives that were important to the continued success of the organization and were responsive to shareholder feedback. After a review of the operating and financial targets for 2025 with the Board of Directors, the Gulfport Energy executive management team and the independent compensation advisor, the Compensation Committee approved performance targets. The KPIs included thresholds, targets and maximums that were based on predetermined performance metrics. +The financial metrics chosen (production, capital expenditures, lease operating expenses, and adjusted free cash flow) were generally common measures in the oil and gas industry and were viewed as measures of success by our shareholders. The Compensation Committee also believed it was critical to focus on other strategic initiatives that, while not directly measured in financial terms, were key indicators of successful companies in the oil and gas industry. Non -financial measures included Total Recordable Incident Rate (“TRIR”) and spills, which are common measures within the industry that reflect industry benchmark information (TRIR) and improvement over prior results (spills). The Compensation Committee also adopted strategic initiatives that focused on environmental and corporate and social governance activities. Specifically, the organization was measured on preparing for MiQ certification of the Mid -Continent assets by applying key learnings from Appalachia and successfully attaining MiQ certification during 2025. +2026 PROXY STATEMENT 35 +EXECUTIVE SUMMARY +In May of 2025, after performance targets for the annual STI had been set in February of 2025, the Board of Directors evaluated potential strategic actions that would increase the Company’s 2025 capital expenditures to unlock additional value within the Company’s asset portfolio as well as optimize both the 2025 and 2026 development plan following unplanned midstream outages and constraints that impacted production volumes. In October 2025, in response to these known production impacts, the Board of Directors approved an increase to the Company’s 2025 capital expenditure program and acknowledged that these additional expenditures were not included in the initial target setting process; as a result, the Board of Directors adjusted the 2025 annual STI performance metrics to account for these changes. +At the completion of the performance period ending December 31, 2025, the Compensation Committee reviewed financial and operating results and the attainment of other KPI’s and approved 2025 STI payout results based on those achievements. This achievement resulted in an overall payout of 99% of target. Below is a summary of KPIs and results for the 2025 plan year. +2025 STI Metrics +Weighting +Threshold +Target +Maximum +2025 +Actual (2) +2025 +Approved +Payout (2) +Production (MMcfe/day) +20% +1,030 +1,050 +1,075 +1,039 +14% +Capex ($MM) +20% +$415 +$395 +$365 +$400 +18% +LOE per Mcfe ($/Mcfe) +15% +$0.232 +$0.217 +$0.190 +$0.22 +12% +Adjusted Free Cash Flow ($MM) (1) +15% +$400 +$490 +$600 +$490 +15% +TRIR +10% +0.55 +0.4 +0.2 +0.8 +0% +Spills +10% +3 +2 +1 +0 +20% +Strategic Initiatives +10% +Qualitative +20% +Total Achievement Percentage +99% +(1) Adjusted Free Cash Flow is a non-GAAP measure defined as net cash provided by operating activities from the Company’s Consolidated Statement of Cash Flows less the sum of changes in operating assets and liabilities included in the operating activities section of the Consolidated Statement of Cash Flows less non-recurring general and administrative and other expenses from the Consolidated Statement of Operations less incurred capital expenditures and capitalized expenses. Adjusted Free Cash Flow was calculated assuming realized commodity pricing received throughout the year was consistent with the forward curve pricing used to set the approved Adjusted Free Cash Flow Metric in February of 2025. +(2) The impact of the changes to the Company’s 2025 capital program on the 2025 incentive payment results as described above consisted of increased capital expenditures of approximately $74 million, which reduced the 2025 actual Capex metric and increased the 2025 Adjusted Free Cash Flow metric results. +2025 Target Annual STI Opportunities and Actual Annual STI Payments +The Compensation Committee established the target annual cash STI opportunity for each of the NEOs, taking into consideration the terms of any applicable employment agreement, and approved the following cash payments based on the Company’s 2025 results performance as described above. +2025 INCENTIVE COMPENSATION PLAN +Name +2025 +Incentive Compensation +Program Incentive +Target +Actual Annual +Incentive +Achievement +(as % of Target +Annual Incentive) +Actual +Incentive +Earned for +2025 +Michael Hodges +$535,000 +99% +$529,650 +Patrick Craine +$463,500 +99% +$458,865 +Matthew Rucker +$500,000 +99% +$495,000 +Michael Sluiter +$322,500 +99% +$319,275 +John Reinhart, former CEO +$1,110,000 +99% +$1,098,900 +36 2026 PROXY STATEMENT +EXECUTIVE SUMMARY +Long-Term Incentive Awards +Each year we grant our NEOs long -term incentive awards, that have historically consisted of equity -based grants. The Compensation Committee determines the amount of these awards, as well as the mix of equity vehicles. The objectives of our long -term incentive plan are to: (i) create significant alignment between the interests of our NEOs and our stockholders; (ii) attract and retain the services of critical talent; and (iii) focus our executives on our operational and financial success. +2025 Performance Share Unit Certification +On May 1, 2025, the Compensation Committee certified performance share units of the 2022 PSUs. WTW presented the Committee with their findings of Company achievement of an annualized TSR of 23% and a relative TSR at the 95.8 th percentile of the peer group. The Committee determined that based upon the 2022 PSUs performance results that the 2022 PSUs would be paid out at 200% of the target amount. +The performance -based restricted stock units vest after a three -year performance period, based on the Company’s achievement of relative TSR as compared to a peer group of companies and absolute TSR, in each case, as described in the chart below. +Relative TSR +> 75 th percentile +of the Peer +Companies +50 th percentile – +< 75 th percentile +of the Peer +Companies +25 th percentile – +< 50 th percentile +of the Peer +Companies +< 25 th percentile +of the Peer +Companies +Annualized +Company +TSR +< 5.0% +0% +0% +0% +0% +> 5.0% – 7.5% +50% +25% +0% +0% +> 7.5% – 10.0% +125% +100% +75% +50% +> 10.0% – 15.0% +150% +125% +100% +75% +> 15.0% – 20.0% +175% +150% +125% +100% +> 20.0% +200% +175% +150% +125% +DETERMINING AWARD STRUCTURE AND SETTING THE TARGET AWARD OPPORTUNITY +The Compensation Committee considered the grant date fair value of the long -term incentive package, the package’s potential dilutive effect on our outstanding shares of common stock and the number of shares available for grant under the 2021 Incentive Plan (as defined below) in determining the aggregate number of shares to be awarded as individual long -term incentive awards for our NEOs. The Compensation Committee evaluated stockholder dilution based on equity compensation plans compared to the total amount of the Company’s outstanding common stock. In determining the appropriate long -term incentive awards to grant NEOs other than the CEO, the Compensation Committee considered the recommendations of the CEO. The Compensation Committee reviewed market values with respect to the annual long -term incentive awards granted to similarly situated executives of the Compensation Peer Group. In 2025, the Compensation Committee determined that the NEOs would receive equity grants consisting of 60% performance -based restricted stock units and 40% time -based restricted stock units. The time -based restricted stock units granted to our NEOs vest in equal annual installments over a three -year period. +2026 PROXY STATEMENT 37 +EXECUTIVE SUMMARY +The performance -based restricted stock units vest after a three -year performance period, based on the Company’s achievement of relative TSR as compared to a peer group of companies and absolute TSR, in each case, as described in the chart below. +Relative TSR +> 75 th percentile +of the Peer +Companies +50 th percentile – +< 75 th percentile +of the Peer +Companies +25 th percentile – +< 50 th percentile +of the Peer +Companies +< 25 th percentile +of the Peer +Companies +Annualized +Company +TSR +< 5.0% +50% +35% +25% +0% +> 5.0% – 10% +125% +100% +75% +50% +> 10% – 15.0% +150% +125% +100% +75% +> 15.0% – 20.0% +175% +150% +125% +100% +> 20.0% +200% +175% +150% +125% +2025 Relative TSR Peer Group +Empire Petroleum Corporation +Riley Exploration Permian, Inc. +Ring Energy, Inc. +Range Resources Corporation +Sitio Royalties Corp. +Murphy Oil Corporation +Amplify Energy Corp. +HighPeak Energy, Inc. +Granite Ridge Resources, Inc. +Northern Oil and Gas, Inc. +California Resources Corporation +Vitesse Energy, Inc. +CNX Resources Corporation +SM Energy Company +Diversified Energy Company PLC +Comstock Resources, Inc. +Matador Resources Company +Kosmos Energy Ltd. +PrimeEnergy Resources Corporation +Mach Natural Resources LP +BKV Corporation +Prairie Operating Co. +SandRidge Energy, Inc. +Talos Energy Inc. +VAALCO Energy, Inc. +Magnolia Oil & Gas Corporation +Berry Corporation +W&T Offshore, Inc. +Evolution Petroleum Corporation +Sable Offshore Corp. +Civitas Resources, Inc. +Crescent Energy Corporation +Vital Energy, Inc. +2025 Equity Awards +Named Executive Officer (NEO) +2025 RSU +Award +RSU Grant +Award +Value ($) (1) +2025 PSU +Award (2) +PSU Grant +Award +Value ($) (3) +Total Grant +Award +Value +Michael Hodges +4,712 +$800,098 +6,359 +$1,051,715 +$1,851,813 +Patrick Craine +3,652 +$620,110 +4,928 +$815,042 +$1,435,152 +Matthew Rucker +4,712 +$800,098 +6,359 +$1,051,715 +$1,851,813 +Michael Sluiter +2,592 +$440,122 +3,498 +$578,534 +$1,018,656 +John Reinhart, former CEO +13,428 +$2,280,074 +18,123 +$2,997,363 +$5,277,437 +(1) The time-based restricted stock unit values are based on the closing price of the Company’s common stock on the grant date. +(2) The performance-based restricted stock unit awards are the target number of shares granted. +(3) The performance-based restricted stock unit values are based on the volume-weighted average price per share of the Company’s common stock for the first thirty (30) trading days of the 2026 performance period. The Company used a Monte Carlo simulation for purposes of determining the grant date fair value of these awards as reflected in the Summary Compensation Table. Please see note 2 to the Summary Compensation Table. +38 2026 PROXY STATEMENT +EXECUTIVE SUMMARY +COMPENSATION POLICIES AND PRACTICES +Compensation Risk Management +The Compensation Committee continues to review the risks and rewards associated with our compensation policies and programs. We believe that our policies and programs encourage and reward prudent business judgment, encourage short -term stockholder value creation, and prioritize long -term growth by discouraging excessive risk taking. With respect to specific elements of compensation: +• Integrated Approach – Our programs balance short- and long -term incentives for our executive officers by providing an appropriate mix of fixed, performance -based , discretionary and equity compensation, with the goal of creating both short- and long -term stockholder value. +• Attract Top Talent – Annual base salaries for our NEOs do not encourage excessive risk -taking as they are fixed amounts that are subject to discretionary increases by our Compensation Committee that may be based on, among other factors, annual performance evaluations. We believe that annual base salaries are set at reasonable levels, as compared to the base salaries of similarly situated individuals at our peer group companies and therefore do not negate the effect of other compensation elements that encourage long -term service, growth and performance that may increase stockholder value. +• Support Business Objectives and Strategic Goals – Our annual incentive awards are determined based on financial, operational and strategic Company performance measures, which mitigate excessive risk -taking that could produce unsustainable gains in one area of performance at the expense of our overall long -term interests. The Company’s goals are designed to ensure a proper balance between stock performance, operational measures, financial goals and strategic goals. In addition, the Compensation Committee sets performance goals that it believes are reasonable considering our past performance, then -current business projections and market conditions. +• Pay for Performance – The Compensation Committee believes that performance -based equity awards tied to the Company’s stock price and relative performance versus peers, and cash compensation, with meaningful performance targets, such as those under our Annual Incentive Plan (as defined below), will further align our NEOs’ interests with those of our stockholders, will motivate our NEOs to contribute to the Company’s growth and profitability and will link a larger portion of our NEOs’ compensation to the performance of the Company. +• Maximize Stockholder Value – Our annual incentive awards are subject to maximum payout caps that limit the amount any NEO may earn on any individual metric or operational measures. +• Create Ownership Culture – Performance -based and time -based restricted stock unit awards, in each case, vesting over time, as well as robust stock ownership guidelines for our NEOs and non -employee directors, promote stock ownership culture and ensure that our NEOs and directors have a continuing stake in the long -term success of the Company. We believe that our long-term equity awards granted to our NEOs discourage excessive risk taking, as there is a balance between performance-based and time-based awards that moderates the risk that may otherwise exist if equity awards were to vest solely based upon achieving performance targets. +Based on the foregoing, the Compensation Committee believes that the Company utilizes compensation policies and programs so that there are no risks that are reasonably likely to have a material adverse impact on the Company. +Clawback Provisions +Under the Sarbanes -Oxley Act of 2002, incentive compensation received by our Chief Executive Officer and Chief Financial Officer may be subject to clawback in the event of a restatement of our financial statements. On July 31, 2023, the Board approved a written executive compensation clawback policy. The Board has adopted a compensation recovery policy, also known as a “clawback,” pursuant to which the Company may seek to recover from any current or former executive +2026 PROXY STATEMENT 39 +EXECUTIVE SUMMARY +officer all cash and equity incentive -based compensation in the event of an accounting restatement resulting from the Company’s material non -compliance with financial reporting requirements under applicable securities laws. The amount of incentive -based compensation subject to recovery would be the amount in excess of what the executive officer received over the amount the executive would have earned in accordance with the restatement as determined by the Compensation Committee. The compensation recovery policy also contains provisions related to the forfeiture of stock options, restricted shares, RSUs and PSUs. Under these forfeiture provisions, the company may cancel such long -term incentive awards, in whole or in part, whether or not vested, for no consideration, for executives who engage in serious breaches of conduct, including violations of employment agreements, confidential or other proprietary matters, or otherwise act in competition with the Business of the company. We believe these provisions serve to ensure that executives act in the best interest of the Company and its shareholders. +In addition, each award granted pursuant to the 2021 Incentive Plan (including awards granted to our NEOs) is conditioned on repayment or forfeiture in accordance with applicable laws, our Company policies and any relevant provisions in the related award agreements. Further, under the terms of our NEOs employment agreements, any equity awards granted, any proceeds of any equity awards that previously have been sold, transferred or otherwise disposed of, and any annual incentive award will be subject to clawback by us, now or in the future, under the Dodd -Frank Act and the Sarbanes -Oxley Act, each as amended, and their rules, regulations and binding, published guidance. +Stock Ownership Guidelines for Executive Officers +We believe it is important for our executive officers to align their financial interests with those of our stockholders. Accordingly, effective April 27, 2022, our Board of Directors adopted a formal stock ownership policy that requires our CEO to achieve a stock ownership level equal to the value of common stock that is five times the value of their annual base salary within five years of the effective date of such stock ownership policy. The Compensation Committee also designated our other executive officers that are subject to Section 16 reporting obligations under the Exchange Act, to be subject to the stock ownership policy. On February 20, 2025, our Board of Directors amended the stock ownership guidelines to provide that once a participant has satisfied the stock ownership requirements subsequent declines in the stock price will not affect compliance if the participant retains the number of shares held when they achieved compliance. The stock ownership level for our other NEOs and applicable Section 16 officers is three times the value of their respective annual base salaries to be achieved within five years of the effective date of, or within five years after becoming subject to, our stock ownership policy. Messrs. Craine, Hodges, Rucker and Sluiter have met the company’s share ownership guidelines. +Our non -employee directors are also subject to the stock ownership policy discussed above under “Stock Ownership Guidelines for Directors.” +Anti-Hedging, Pledging and Insider Trading Policies +We have a policy prohibiting directors, executive officers and certain other designated employees from speculative trading in our securities, including hedging transactions, short selling, and trading in put options, call options, swaps or collars, or holding our securities in margin accounts. We also have a policy prohibiting directors, executive officers and certain other designated employees from pledging Gulfport securities. To our knowledge, all individuals follow these policies. +We have an Insider Trading Policy governing the purchase, sale and other dispositions of our securities by directors, officers and employees that is reasonably designed to promote compliance with insider trading laws, rules and regulations, and listing standards. A copy of the policy was filed as Exhibit 19 to our Annual Report on Form 10 -K for the fiscal year ended December 31, 2025. +Termination and Change of Control Benefits +As noted above, our NEOs are (or were formerly) party to an employment agreement with the Company which provides (or provided) for certain payments and benefits in the event of the termination of such NEO under specific circumstances. The NEOs’ employment agreements are designed to avoid distraction potentially detrimental to stockholder value upon a change in control and to enhance protection for the NEOs in connection with such events. These agreements (and the severance payments referenced below) are described in more detail under “NEO Employment Agreements and Termination and Change of Control Benefits.” +40 2026 PROXY STATEMENT +EXECUTIVE SUMMARY +Perquisites and Other Personal Benefits +We provided certain of our NEOs with a limited number of perquisites or other personal benefits, primarily consisting of life insurance premiums, fitness reimbursement, and occasional Company -sponsored sporting events tickets. The Company does not offer any excessive perquisites to executives that are not generally provided to other non -executives . We believe these limited benefits help provide a competitive compensation package. The value of these benefits is disclosed in the “Summary Compensation Table.” +The Company does not have any private or chartered aircraft arrangements. We restrict personal use of Company -owned or chartered aircraft by our executive officers and other employees, as well as members of our Board of Directors. Our aircraft use policy requires that any personal use of a chartered aircraft by any NEO be reported as a perquisite, based on the aggregate incremental value of such personal use. There was no business or personal use of Company -owned or chartered aircraft in 2025. +Accounting Implications of Executive Compensation Policy +We are required to recognize compensation expense of all stock -based awards pursuant to the provisions of FASB ASC Topic 718, “Compensation -Stock Compensation.” Under U.S. generally accepted accounting principles, or GAAP, only vested shares are included in basic shares outstanding. Also, under GAAP, non -vested shares are included in diluted shares outstanding when the effect is dilutive. +The Compensation Committee believes that linking a large portion of our executive officers’ compensation to both performance -based long -term equity incentive awards and performance -based bonus arrangements, with meaningful performance metrics, appropriately aligns our executives’ interests with those of our stockholders and are consistent with market practices. The Compensation Committee also believes that our current compensation policies and practices enhance retention of executive talent through multi -year vesting of stock awards and discourage unnecessary and excessive risk taking. The Compensation Committee further believes that our other compensation policies and practices, such as our policy prohibiting pledging and hedging of our stock by our executive officers and directors, as well as the lack of significant perquisites and absence of pension or supplemental retirement benefits (aside from those afforded under our broad -based 401(k) plan) for our executive officers are consistent with prudent compensation philosophy and the interests of our stockholders. The Compensation Committee will continue to consider the outcome of our stockholders’ future “Say -On-Pay ” votes when making compensation decisions for our NEOs. +Compensation Committee Report +The Compensation Committee has reviewed and discussed the foregoing Compensation Discussion and Analysis with management. Based on its review and discussion with management, the Compensation Committee recommended that the Compensation Discussion and Analysis be included in this proxy statement. +Respectfully submitted by the Compensation Committee: +Mary Shafer -Malicki , Chair +Jason Martinez +David Reganato +David Wolf +Dated: April 8, 2026 +Compensation Committee Interlocks and Insider Participation +None of Ms. Shafer -Malicki (Chair), or Messrs. Martinez, Reganato, or Mr. Wolf, representing all the directors who served on the Compensation Committee during the past fiscal year, is or has ever been an officer or employee of ours or has engaged in any related party transaction in which our Company was a participant. None of our executive officers during the past fiscal year serves, or has served during the past fiscal year, as a member of the Board of Directors or Compensation Committee of any other company that has one or more executive officers serving, or that has served during the past fiscal year, as a member of our Board of Directors or Compensation Committee. +2026 PROXY STATEMENT 41 +Compensation Tables +SUMMARY COMPENSATION TABLE +The following table provides information concerning compensation of our NEOs for the fiscal years ended December 31, 2025, December 31, 2024, and December 31, 2023. +Name and Principal Position +Year +Salary +($) +Stock +Awards +($) (1) +Non-Equity +Incentive Plan +Compensation +($) (2) +All Other +Compensation +($) (3) +Total +($) +Michael Hodges (4) +2025 +$ 530,783 +$1,851,813 +$529,650 +$ 22,507 +$ 2,934,753 +Executive Vice President and +2024 +$508,662 +$2,268,144 +$772,500 +$24,547 +$3,573,853 +Chief Financial Officer +2023 +$345,106 +$1,806,095 +$800,250 +$21,440 +$2,972,891 +Patrick Craine (5) +2025 +$511,835 +$1,453,152 +$458,865 +$36,042 +$2,441,894 +Executive Vice President and +2024 +$496,837 +$1,757,822 +$675,000 +$23,271 +$2,952,930 +Chief Legal and Administrative Officer +2023 +$481,999 +$1,300,072 +$720,225 +$24,756 +$2,527,052 +Matthew Rucker (6) +2025 +$ 487,316 +$1,851,813 +$495,000 +$ 22,115 +$2, 856,244 +Executive Vice President and +2024 +$429,425 +$1,701,140 +$561,000 +$22,828 +$2,714,393 +Chief Operating Officer +2023 +$309,938 +$1,170,045 +$482,625 +$3,746 +$1,966,354 +Michael Sluiter (7) +2025 +$426,840 +$1,018,656 +$319,275 +$30,175 +$1,794,946 +Senior Vice President of +2024 +$409,713 +$1,247,514 +$466,875 +$24,848 +$2,148,950 +Reservoir Engineering +2023 +$387,592 +$1,083,375 +$482,625 +$24,787 +$1,978,379 +John Reinhart (8) +2025 +$919,726 +$5,277,437 +$1,098,900 +$27,644 +$7,323,707 +Former President and +2024 +$875,687 +$6,464,014 +$1,620,000 +$28,657 +$8,988,358 +Chief Executive Officer +2023 +$706,133 +$3,236,509 +$1,554,300 +$25,267 +$5,522,209 +(1) The amount reported in the Stock Awards column reflects the fair value of the applicable award of restricted stock, performance -based restricted stock units or time -based restricted stock units on the grant date. The amounts were calculated in accordance with FASB ASC Topic 718 using certain assumptions, as set forth in Note 1 and Note 7 to our consolidated financial statements for the fiscal year ended December 31, 2025 under the headings “Summary of Significant Accounting Policies — Accounting for Stock -based Compensation” and “Stock -Based Compensation,” respectively, included in our Annual Report on Form 10 -K , filed with the SEC on February 25, 2026. Restricted stock unit values are based on the closing price of the Company’s common stock on the grant date. In valuing the performance -based restricted stock unit awards, the Company used a Monte Carlo simulation. Performance -based restricted stock units vest based on performance and continued service over a three -year performance period. (The maximum award opportunity for each applicable NEO for the 2025 performance -based restricted stock unit awards as of the grant date is as follows: Mr. Reinhart $5,994,726, Mr. Craine $1,630,084, Mr. Hodges $2,103,430, Mr. Rucker $2,103,430 and Mr. Sluiter $1,157,068. +(2) The amounts in this column reflect performance -based annual incentive bonuses granted under our 2025, 2024, and 2023 STI Plans. +(3) The table below provides additional information on the amounts reported in the All Other Compensation column of the Summary Compensation column for 2025. +(4) Mr. Hodges joined the Company as its Executive Vice President and Chief Financial Officer on April 3, 2023. +(5) Mr. Craine was appointed as our General Counsel and Corporate Secretary on May 20, 2019, and assumed the role of Chief Legal and Administrative Officer on August 5, 2021. +(6) Mr. Rucker joined the Company as its Senior Vice President of Operations on March 1, 2023, and he was promoted to Executive Vice President and Chief Operating Officer on February 24, 2025. +(7) Mr. Sluiter joined the Company as its Senior Vice President of Reservoir Engineering on December 3, 2018. +(8) Mr. Reinhart joined the Company as its President and Chief Executive Officer and Director on January 24, 2023. Mr. Reinhart elected to depart the Company and resigned from the Board of Directors on March 6, 2026. Mr. Reinhart did not receive compensation for his service as Director. +42 2026 PROXY STATEMENT +Compensation Tables +ALL OTHER COMPENSATION TABLE +Name +Year +Company +Contributions +to Retirement +Plans +($) (1) +Other +Perquisites +and Benefits, +($) (2) +Total +Michael Hodges +2025 +$ 15,096 +$ 7,411 +$ 22,507 +Patrick Craine +2025 +$27,285 +$8,75 7 +$36,042 +Matthew Rucker +2025 +$ 16,842 +$ 5,273 +$ 22,115 +Michael Sluiter +2025 +$22,069 +$8,106 +$30,175 +John Reinhart +2025 +$16,086 +$11,55 8 +$27,644 +(1) This column represents Company contributions to the 401(k) plan in 2025. The amount for Mr. Hodges includes $11,646 for our 401(k) contribution for 2025 and $3,450 attributable to a 401(k) true -up payment from previous year. The amount for Mr. Craine includes $21,000 for our 401(k) contribution for 2025 and $6,285 attributable to a 401(k) true -up payment from previous year. The amount for Mr. Rucker includes $13,392 for our 401(k) contribution for 2025 and $3,450 attributable to a 401(k) true -up payment from previous year. The amount for Mr. Sluiter includes $18,110 for our 401(k) contribution for 2025 and $3,958 attributable to a 401(k) true -up payment from previous year. The amount for Mr. Reinhart includes $12,636 for our 401(k) contribution for 2025 and $3,450 attributable to a 401(k) true -up payment from previous year. +(2) This column represents the value of other benefits provided to the NEOs in 2025 and includes amounts for primarily group term life insurance premiums and long -term disability imputed income, as well as other de minimis perquisites and benefits. +2026 PROXY STATEMENT 43 +Compensation Tables +2025 GRANTS OF PLAN -BASED AWARDS +The following table provides information concerning each grant of an award made to our NEOs in the fiscal year ended December 31, 2025 under any Company plan. +Name +Estimated Future Payouts Under +Non-Equity Incentive Plan Awards +Estimated Future Payouts under +Equity Incentive Plan Awards (1) +All Other +Stock Awards: +Number of +Shares of +Stock or Units +(#) (2) +Grant Date +Fair Value of +Stock +Awards +($) (3) +Grant +Date +Threshold +($) +Target +($) +Maximum +($) +Threshold +(#) +Target +(#) +Maximum +(#) +Michael Hodges +— +$267,500 +$535,000 +$1,070,000 +— +— +— +— +— +Chief Financial Officer +3/1/2025 +— +— +— +— +— +— +4,712 +$800,098 +3/1/2025 +— +— +— +1,590 +6,359 +12,718 +— +$1,051,715 +Patrick Craine +— +$231,750 +$463,500 +$927,000 +— +— +— +— +— +Chief Legal and Administrative Officer +3/1/2025 +— +— +— +— +— +— +3,652 +$620,110 +3/1/2025 +— +— +— +1,232 +4,928 +9,856 +— +$815,042 +Matthew Rucker +— +$250,000 +$500,000 +$1,000,000 +— +— +— +— +— +Senior Vice President of Operations +3/1/2025 +— +— +— +— +— +— +4,712 +$800,098 +3/1/2025 +— +— +— +1,590 +6,359 +12,718 +— +$1,051,715 +Michael Sluiter +— +$161,250 +$322,500 +$645,000 +— +— +— +— +— +Senior Vice President of Reservoir +3/1/2025 +— +— +— +— +— +— +2,592 +$440,122 +3/1/2025 +— +— +— +875 +3,498 +6,996 +— +$578,534 +John Reinhart +— +$550,000 +$1,110,000 +$2,220,000 +— +— +— +— +— +Former +Chief Executive +Officer +3/1/2025 +— +— +— +— +— +— +13,428 +$2,280,074 +3/1/2025 +— +— +— +4,531 +18,123 +36,246 +— +$2,997,363 +(1) Reflects awards of performance -based restricted stock units granted to our NEOs in 2025 under the 2021 Stock Incentive Plan. +(2) Reflects awards of time -based restricted stock units granted to our NEOs in 2025 under the 2021 Stock Incentive Plan. +(3) The amounts reported for performance -based and time -based restricted stock units in this column reflect the fair value of the applicable awards on the grant date. The amounts were calculated in accordance with FASB ASC Topic 718 using certain assumptions, as set forth in Note 1 and Note 7 to our consolidated financial statements for the fiscal year ended December 31, 2025 under the headings “Summary of Significant Accounting Policies — Accounting for Stock -based Compensation” and “Stock -Based Compensation,” respectively, included in our Annual Report on Form 10 -K , filed with the SEC on February 25, 2026. +44 2026 PROXY STATEMENT +Compensation Tables +OUTSTANDING EQUITY AWARDS AT 2025 FISCAL YEAR -END +The following table provides information concerning equity awards granted to our NEOs that were outstanding as of December 31, 2025. +Stock Awards +Name +Number of +Shares or +Units of Stock +That Have +Not Vested (1) +(#) +Market Value of +Shares or +Units of Stock +That Have +Not Vested (2) +($) +Equity Incentive +Plan Awards: +Number of +Unearned +Shares, Units +or Other Rights +That Have +Not Vested +(#) (3) +Equity Incentive +Plan Awards: +Market of +Payout Value of +Unearned Shares, +Units or Other +Rights That Have +Not Vested +($) (2) +Michael Hodges +11,822 +$2,458,858 +30,864 +$6,419,403 +Patrick Craine +8,996 +$1,871,078 +24,319 +$5,058,109 +Matthew Rucker +9,719 +$2,021,455 +24,305 +$5,055,197 +Michael Sluiter +6,685 +$1,390,413 +18,756 +$3,901,060 +John Reinhart, former CEO +30,982 +$6,443,946 +75,762 +$15,757,738 +(1) Represents awards of time -based restricted stock units granted to our NEOs under the 2021 Incentive Plan, each of which vest annually in three equal installments over the three -year period commencing as of the grant date, subject to continued service through each applicable vesting date. +(2) The market value of restricted stock units that have not vested is based on the closing price of $207.99 per share of our common stock on the NYSE on December 31, 2025, the last trading day of 2025. +(3) Represents awards of performance -based restricted stock units granted to our NEOs under the 2021 Incentive Plan, each of which vest based on the Company’s achievement of certain absolute and relative TSR metrics and the applicable NEOs’ continued service over a three -year performance period. Such performance -based restricted stock units are shown above at the target level. +2026 PROXY STATEMENT 45 +Compensation Tables +2025 STOCK VESTED +The following table provides the number of shares acquired upon vesting of performance -based and restricted stock awards for our NEOs. +Stock Awards +Name +Number +of Shares +Acquired on +Vesting +(#) +Value +Realized on +Vesting (1) +($) +Michael Hodges +5,232 +$958,425 +Patrick Craine +3,889 +$660,352 +Matthew Rucker +3,598 +$610,940 +Michael Sluiter +3,061 +$519,758 +John Reinhart, former CEO +12,200 +$2,229,817 +(1) The amounts reflected in this column represent the market value of the underlying Common Shares as of the vesting date. If the vesting date was not a trading day, the value is based on the closing price per share of our common stock on the last trading day prior to the vesting date. +46 2026 PROXY STATEMENT +Benefit Plans +401(k) Plan +We maintain a retirement savings plan, the safe harbor 401(k) Plan, with both traditional and Roth options, for the benefit of our eligible employees who have attained the age of 18. Currently, employees may elect to defer their compensation up to the statutorily prescribed limit. During the plan year, we provide a Company match of 100% up to 6% of eligible compensation. We also may make an additional, discretionary contribution based on each eligible employee’s eligible annual compensation for the prior calendar year. All contributions made by us on behalf of an employee are 100% vested when contributed. Employee contributions to the traditional 401(k) Plan and earnings on those contributions are not taxable to the employees until distributed from the 401(k) Plan, while participants in our Roth 401(k) may make Roth deferrals which are generally subject to taxation under rules applicable to Roth accounts. All contributions are deductible by us when made. +2021 STOCK INCENTIVE PLAN +On May 17, 2021, our Board adopted the Gulfport Energy Corporation 2021 Stock Incentive Plan (the “2021 Incentive Plan”) and authorized and reserved 2,828,123 shares of Gulfport’s common stock for issuance to Gulfport’s employees (including our NEOs), consultants and non -employee directors pursuant to equity incentive awards to be granted under the 2021 Incentive Plan, which may be in the form of incentive stock options, nonqualified stock options, restricted stock, restricted stock units, stock appreciation rights and performance awards or any combination of the foregoing. +The plan administrator may at any time amend or terminate the Annual Incentive Plan in whole or in part. +Our Board of Directors has delegated its authority to administer the Annual Incentive Plan to the Compensation Committee, to whom we refer as the plan administrator. The plan administrator has the authority to administer the Annual Incentive Plan and to exercise all the powers and authorities either specifically granted to it under the Annual Incentive Plan or necessary or advisable in the administration of the Annual Incentive Plan, including (but not limited to) the following: +• to interpret the Annual Incentive Plan and any award; +• to prescribe rules relating to the Annual Incentive Plan; +• to determine the persons to receive awards; +• to determine the terms, conditions, restrictions and performance criteria, including performance factors and performance targets, relating to any award; +• to accelerate an award that is designed not to be deferred compensation subject to Code Section 409A (after the attainment of the applicable performance target or targets); +• to adjust performance targets in recognition of specified events such as unusual or non -recurring events affecting us or our financial statements, including certain asset dispositions, cessation of operations resulting from a natural disaster, or in response to changes in applicable laws, regulations, or accounting principles as specified in the Annual Incentive Plan or in the performance targets established for any performance period; +• to waive restrictive conditions for an award (but not performance targets); and +• to make any other determinations that may be necessary or advisable for administration of the Annual Incentive Plan. +2026 PROXY STATEMENT 47 +Benefit Plans +EQUITY COMPENSATION PLAN INFORMATION +The following table sets forth, as of December 31, 2025, certain information with respect to all compensation plans under which equity securities are authorized for issuance. +Plan Category +Number of +securities to +be issued upon +exercise of +outstanding +options, +warrants and +rights (a) (1)(2)(3) +Weighted +average +exercise price +of outstanding +options, +warrants and +rights (b) (3) +Number of +securities +remaining +available for +future issuance +under equity +compensation +plans excluding +securities +reflected in +column (a) +Equity compensation plans approved by security holders (1) +326,847 +$— +1,801,501 +(1) Refers to the 2021 Stock Incentive Plan. +(2) Includes an aggregate of 143,666 unvested restricted stock units and 183,181 shares of unvested performance restricted stock granted under the 2021 Stock Incentive Plan. +(3) No options were outstanding as of December 31, 2025, and neither restricted stock units nor shares of restricted common stock have an exercise price. +Former Chief Executive Officer Timothy Cutt Offer Letter and Employment Agreement +On April 29, 2022, we entered into an employment agreement with Mr. Cutt to serve as our Chief Executive Officer and Executive Chair of the Board of Directors. +Pursuant to the employment agreement, the term for Mr. Cutt’s service as Chief Executive Officer continued until such time as either Mr. Cutt or the Company gave notice of intent to terminate. Mr. Cutt continued to serve as Board Chair following the termination of his employment as Chief Executive Officer (subject to the Board’s ability to remove him at any time). The employment agreement also provided for, among other things, (i) an annual base salary of $785,000, (ii) eligibility to receive an annual bonus with a target bonus opportunity of 120% of base salary; (iii) eligibility for annual grants of equity awards as determined in the sole discretion of the Compensation Committee pursuant to the Company’s equity compensation plans; and (iv) benefits that are customarily provided to similarly situated executives of the Company. +Mr. Cutt’s employment agreement also contained a one -year post -employment non -solicitation clause and standard confidentiality, trade secrets and cooperation provisions. +On January 24, 2023, the Company entered into a Transition and Services Agreement (“TSA”) with Mr. Cutt where he transitioned employment from Chief Executive Officer to Executive Chair of the Board. The transition period was from January 24, 2023, through March 1, 2023 (“Service Period”), during which time Mr. Cutt was employed by the Company as Executive Chair of the Board. +Pursuant to the terms of the TSA, Mr. Cutt received the same base salary he had as Chief Executive Officer, his annual bonus for fiscal year 2022 and a prorated portion of his target annual bonus for fiscal year 2023. +The TSA clarified that Mr. Cutt’s outstanding equity awards granted during his tenure as Chief Executive Officer continued to be eligible to vest following the end of his service as Chief Executive Officer or Executive Chair of the Board in accordance with the vesting provisions contained in the applicable RSU Award Agreements and the PSU Award Agreements as long as Mr. Cutt continued to provide services to the Company as a member of the Board. +NEO Employment Agreements and Termination and Change of Control Benefits +Our NEOs are parties to an employment agreement with the Company. On March 6, 2026, Mr. Reinhart notified the Board of his resignation, effective immediately. +Pursuant to the employment agreements with Messrs. Reinhart, Craine, Hodges, Rucker, and Sluiter (collectively, the “Employment Agreements”, and such individuals, the “Covered NEOs”), each current employment agreement provides for an initial term that extends through December 31, 2026; provided that the term will automatically renew for successive one -year terms unless the Company or the +48 2026 PROXY STATEMENT +Benefit Plans +Covered NEO gives written notice not to renew at least 90 days before the end of the initial term or any renewal term. If a “change of control” (as described in the applicable Employment Agreement) occurs during the term thereof, the term will be extended to the later of the original expiration date of the term or the date that is 24 months after the effective date of the change of control. +The Employment Agreements provide each Covered NEO with, among other things: (i) an annual base salary, (ii) eligibility to earn a target annual bonus under the Company’s Annual Incentive Plan of base salary, (iii) eligibility for annual grants of equity awards as determined in the sole discretion of the Compensation Committee pursuant to the Company’s equity compensation plans, and (iv) benefits that are customarily provided to similarly situated executives of the Company. +In addition, our Covered NEOs will be entitled to receive (or have already received) specified payments and benefits upon certain termination events pursuant to the Employment Agreements, including termination following a change of control. The Compensation Committee believes that these provisions encourage our Covered NEOs to remain in our employment, as applicable, in the event of a change of control of the Company and during circumstances which indicate that a change of control might occur. The Compensation Committee believes termination and change of control benefits are important in maintaining strong leadership and in encouraging retention in these situations and encourages our Covered NEOs to act in the best interests of stockholders without distraction based on uncertainty regarding their employment status, as applicable. Under the Employment Agreements, if a Covered NEO’s employment is terminated without “cause” by the Company or by the applicable Covered NEO for “good reason” during such time that is not within the 24 -month period following a “change of control” (as such terms are defined in the Employment Agreements), such Covered NEO will be entitled to severance compensation equal to: +• 100% of annual base salary and target annual bonus; +• pro -rata target annual bonus; +• pro -rata vesting of the Covered NEO’s unvested equity awards (with performance award vesting based on performance through the termination date); however, see “RSU and PSU Grant Agreements” for terms applicable to equity awards; and +• a lump sum payment equal to the Covered NEO’s monthly COBRA premium for a 12 -month period. +If, however, such Covered NEO’s employment is terminated without cause by the Company or by the Covered NEO for good reason, in each case, within 24 months following a change of control, such Covered NEO will instead be entitled to severance compensation equal to: +• 200% of sum of annual base salary plus target annual bonus (300% for Mr. Reinhart); +• pro -rata target annual bonus; +• immediate vesting of the Covered NEO’s unvested equity awards (with performance award vesting based on performance through the termination date); however, see “RSU and PSU Grant Agreements” for terms applicable to equity awards; and +• a lump sum payment equal to the Covered NEO’s monthly COBRA premium for an 18 -month period. +Under the NEO Employment Agreements: +“Good reason” is generally defined as (i) the elimination of the Covered NEO’s position, a material reduction in the duties and/or reassignment of the Covered NEO to a new position of materially less authority; (ii) a material reduction in the Covered NEO’s base salary, in either case, subject to a cure period of 30 days; (iii) the relocation of the NEO’s principal place of employment by more than 50 miles. +“Cause” is generally defined as (i) the Covered NEO’s willful and continued failure to perform substantially such Covered NEO’s duties with the Company (other than any failure resulting from incapacity due to physical or mental illness) or (ii) the Covered NEO’s willful engaging in illegal conduct or gross misconduct which is materially and demonstrably injurious to the Company. +Severance benefits payable under the Employment Agreements are generally conditioned on timely execution of a waiver and release of claims. +Each Employment Agreement also contains a one -year post -employment non -solicitation clause and standard confidentiality, trade secrets and cooperation provisions. +2026 PROXY STATEMENT 49 +Benefit Plans +RSU and PSU Grant Agreements: +Messrs. Reinhart, Craine, Hodges, Rucker, and Sluiter each received an award of time -based restricted stock units (“RSUs”) and performance -based restricted stock units (“PSUs”) under the 2021 Stock Incentive Plan on March 1, 2025. On March 6, 2026, Mr. Reinhart notified the Board of his resignation, effective immediately. +Pursuant to the applicable award agreements, upon the applicable NEO’s termination of employment or service for cause, any unvested RSUs or PSUs will be immediately forfeited for no consideration. +Upon a termination of the applicable NEO’s employment or service due to death or “disability”, by the Company without “cause” (each as defined in the 2021 Incentive Plan) or due to a resignation by the applicable NEO for “good reason” (as defined in the applicable award agreement), (i) any unvested RSUs will accelerate and fully vest, and (ii) a prorated portion of the PSUs will vest based on the actual achievement of the performance conditions to be determined at the expiration of the performance period, and any remaining unvested PSUs will be forfeited (provided, that if the applicable NEO is terminated by the Company without cause or resigns for good reason within the first 18 months of the performance period, the Compensation Committee will have sole discretion whether the PSUs will accelerate and vest in such manner. +Upon the occurrence of a “change in control” (as defined in the 2021 Incentive Plan), to the extent the RSUs or PSUs, as applicable, are not assumed by the surviving entity, (i) any unvested RSUs will accelerate and fully vest, and (ii) the applicable NEO will become vested in 100% of the target award of PSUs or, if greater, the percentage of the target award of PSUs earned based on the actual achievement of the performance conditions to be determined as if the change in control was the last day of the performance period (except that the TSR for the Company and each of the peer companies will be determined using the closing price as of the closing date of the change in control compared to the reference value). +Upon the occurrence of a change in control, to the extent the RSUs or PSUs, as applicable, are assumed by the surviving entity, (i) upon the termination of the applicable NEO’s employment or service due to death or disability, by the Company without cause or by the applicable NEO for good reason within the 24 month period following such change in control, any unvested RSUs will accelerate and fully vest, and (ii) the PSUs will be converted, as of the date of such change in control, into time -based restricted stock units (the “Converted RSUs”), subject to the applicable NEO’s continuous employment or service through the date of such change in control, with the number of PSUs to be converted equal to 100% of the target award of PSUs or, if greater, the percentage of the target award of PSUs earned based on the actual achievement of the performance conditions to be determined as if the change in control was the last day of the performance period (except that the TSR for the Company and each of the peer companies will be determined using the closing price as of the closing date of the change in control compared to the reference value), and 100% of the Converted RSUs will vest, if at all, on the last day of the performance period, subject to the applicable NEO’s continuous employment or service through such date; provided, that if the applicable NEO’s employment or service is terminated due to death or disability, by the Company without cause or by the applicable for good reason following such change in control, 100% of the Converted RSUs will vest as of the date of such termination. +In the event of (i) a change in the composition of the Board such that, for a period of 30 days, the majority of the members of the Board are no longer considered “independent” (as described in the applicable award agreement) or (ii) any stockholder becomes the beneficial owner of more than 75% of the total combined voting power of all classes of stock of the Company (each such event, a “Special CiC Event”), (x) any unvested RSUs will accelerate and fully vest, and (y) the applicable NEO will become vested in 100% of the target award of PSUs or, if greater the percentage of the target award of PSUs earned based on the actual achievement of the performance conditions to be determined as of the Special CiC Event (determined as if the Special CiC Event was the last day of the performance period). +50 2026 PROXY STATEMENT +Benefit Plans +Termination, Resignation or Change of Control +The following tables provide information regarding potential payments to each of our NEOs as of December 31, 2025, in connection with certain termination events, including a termination related to a change of control of the Company. +Benefits and Payments Upon Termination (1) +Termination +Due to +Death or +Disability +Termination +by the Company +Without +Cause or by +the NEO for +Good Reason +(a “Qualifying +Termination”) +Termination +by the +Company +for Cause +Qualifying +Termination +Within +24 Months +Following +Change of +Control +Change in +Control with +no Qualifying +Termination (2) +Michael Hodges +Cash Severance Payments (3) +— +$1,605,000 +— +$2,675,000 +— +Accelerated Vesting of Equity Awards: (4) +Unvested RSUs +$2,458,858 +$2,458,858 +— +$2,458,858 +$2,458,858 +Unvested PSUs +$4,444,926 +$4,444,926 +— +$6,419,403 +$6,419,403 +COBRA Payments (5) +— +$24,049 +— +$36,755 +— +Total +$6,903,783 +$8,532,833 +— +$11,590,016 +$8,878,261 +Patrick Craine +Cash Severance Payments (3) +— +$1,442,000 +— +$2,420,500 +— +Accelerated Vesting of Equity Awards: (4) +Unvested RSUs +$1,871,078 +$1,871,078 +— +$1,871,078 +$1,871,078 +Unvested PSUs +$3,527,972 +$3,527,972 +— +$5,058,109 +$5,058,109 +COBRA Payments (5) +— +$24,049 +— +$36,755 +— +Total +$5,399,050 +$6,865,102 +— +$9,386,519 +$6,929,187 +Matthew Rucker +Cash Severance Payments (3) +— +$1,500,000 +— +$2,500,000 +— +Accelerated Vesting of Equity Awards: (4) +Unvested RSUs +$2,021,455 +$2,021,455 +— +$2,021,455 +$2,021,455 +Unvested PSUs +$3,243,704 +$3,243,704 +— +$5,055,197 +$5,055,197 +COBRA Payments (5) +— +$24,049 +— +$36,755 +— +Total +$5,265,159 +$6,789,208 +— +$9,613,407 +$7,076,652 +Michael Sluiter +Cash Severance Payments (3) +— +$1,075,000 +— +$1,827,500 +— +Accelerated Vesting of Equity Awards: (4) +Unvested RSUs +$1,390,413 +$1,390,413 +— +$1,390,413 +$1,390,413 +Unvested PSUs +$2,814,987 +$2,814,987 +— +$3,901,060 +$3,901,060 +COBRA Payments (5) +— +$24,196 +— +$36,975 +— +Total +$4,205,400 +$5,304,596 +— +$7,155,949 +$5,291,474 +2026 PROXY STATEMENT 51 +Benefit Plans +Benefits and Payments Upon Termination (1) +Termination +Due to +Death or +Disability +Termination +by the Company +Without +Cause or by +the NEO for +Good Reason +(a “Qualifying +Termination”) +Termination +by the +Company +for Cause +Qualifying +Termination +Within +24 Months +Following +Change of +Control +Change in +Control with +no Qualifying +Termination (2) +John Reinhart, Former CEO +Cash Severance Payments (3) +— +$3,145,000 +— +$7,215,000 +— +Accelerated Vesting of Equity Awards: (4) +Unvested RSUs +$6,443,946 +$6,443,946 +— +$6,443,946 +$6,443,946 +Unvested PSUs +$10,130,602 +$10,130,602 +— +$15,757,738 +$15,757,738 +COBRA Payments (5) +— +$19,691 +— +$30,092 +— +Total +$16,574,548 +$19,739,238 +— +$29,446,776 +$22,201,685 +(1) Information in this table assumes a termination date of December 31, 2025, and a price per share of our common stock of $207.99 (the closing market price per share on December 31, 2025, the last trading day of 2025) and applies the terms of the NEOs’ compensation arrangements as of December 31, 2025. Performance -based bonuses are calculated using 100% achievement for illustration, though payouts may vary based on actual results. +(2) Represents the aggregate value of the applicable NEO’s 2025 equity awards that will accelerate on a Special CiC Event. See “RSU and PSU Grant Agreements” above. +(3) Represents the aggregate cash severance payments payable to the NEO (calculated based on the base salary and target annual bonus in effect as of December 31, 2025) in accordance with the terms of the applicable agreement, assuming a termination date of December 31, 2025. +(4) Represents the aggregate value of the applicable NEO’s accelerated equity awards payable to the NEO in accordance with the terms of the applicable agreement, assuming a termination date of December 31, 2025. +(5) Represents the aggregate COBRA payments payable to the NEO in accordance with the terms of the applicable agreement, assuming a termination date of December 31, 2025. +52 2026 PROXY STATEMENT +CEO Pay Ratio Disclosure +Pursuant to Item 402(u) of Regulation S -K , we are disclosing the pay ratio and supporting information comparing the median of the annual total compensation of our employees (including full -time , part -time , seasonal and temporary employees) other than Mr. Reinhart, our former President and Chief Executive Officer and Board Director, as of December 31, 2025 (the date selected to identify the ‘median employee’, as further described below), and the annual total annualized compensation of Mr. Reinhart. The pay ratio is calculated in a manner consistent with Item 402(u) of Regulation S -K . +For the year ended December 31, 2025, our last completed fiscal year: +• The annual total compensation of our median employee was approximately $127,515. +• The total annualized compensation of Mr. Reinhart was approximately $7,323,707. +Based on this information, for 2025 the ratio of the annual total compensation of Mr. Reinhart to the median of the annual total compensation of all other employees was approximately 57:1. +We selected December 31, 2025, as the date upon which we identified the median employee. We reviewed the Medicare Taxable Earnings as reported on IRS Form W -2 (Box 5) for 2025 for all individuals employed by us on December 31, 2025 (other than Mr. Reinhart) and identified the median employee based on Medicare Taxable Earnings. +Once we identified our median employee, we calculated that employee’s annual total compensation for 2025 in the same manner that we determined the total compensation of our NEOs for purposes of the Summary Compensation Table set forth above. This resulted in an annual total compensation of $125,515 for the identified employee for the year ended December 31, 2025. The total compensation for Mr. Reinhart was calculated based on the values included in the Summary Compensation Table set forth above, which totaled $7,323,707. Mr. Reinhart participated in the Company’s benefit plans, including the 401(k) plan, has imputed income on Company -paid life insurance provided to all employees, imputed income on company paid executive long -term disability insurance, and receives a monthly gym reimbursement benefit available to all employees. Mr. Reinhart’s spouse attended a business -related trip, previously disclosed in the Company’s 2024 Proxy and included in Mr. Reinhart’s 2024 imputed income. We made no material assumptions, adjustments, or estimates to identify the median employee or to determine total compensation, and we did not annualize the compensation for any employees that were not employed by us the entire year. +We believe that the pay ratio is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S -K . In addition, because the Securities and Exchange Commission rules for identifying the median employee allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices, the pay ratio reported by other companies may not be comparable to our pay ratio, as other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios. +2026 PROXY STATEMENT 53 +Pay Versus Performance +As previously discussed in the CD&A above, our Compensation Committee has focused on implementing executive compensation plans with the goal of tying our NEOs’ realized compensation to the achievement of Gulfport’s financial, operational, and strategic objectives, and aligning executive pay with changes in the value of our shareholders’ returns. The following table sets forth additional compensation information for our NEOs, calculated in accordance with SEC regulations, for fiscal years 2025, 2024, 2023, 2022, and 2021. +Year +(a) +Summary +Compensation +Table Total +for PEO1 (1)(2) +(Cutt) +(b) +Summary +Compensation +Table Total +for PEO2 (1) +(Wood) +(b) +Summary +Compensation +Table Total +for PEO3 (2) +(Reinhart) +(b) +Compensation +Actually Paid +to PEO1 +(Cutt) +(c) +Compensation +Actually Paid +to PEO2 +(Wood) +(c) +Compensation +Actually Paid +to PEO3 +(Reinhart) +(c) +Average +Summary +Compensation +Table Total +for non-PEO +NEOs +(d) +Average +Compensation +Actually Paid +to non-PEO +NEOs +(e) +Value of initial fixed $100 +Investment based on: +Net +Income +($mm) +(h) +Adjusted +Free +Cash +Flow (4) +($mm) +(i) +Total +Shareholder +Return (3) +(f) +Peer Total +Shareholder +Return (3) +(g) +2025 (5) +n/a +n/a +$ 7,320,257 +n/a +n/a +$ 14,436,146 +$ 2,502,673 +$ 4,736,004 +$ 306 +$ 148 +$ 428 +$ 325 +2024 (5) +n/a +n/a +$ 8,988,358 +n/a +n/a +$ 16,551,431 +$ 2,847,532 +$ 7,442,197 +$ 271 +$ 155 +$( 261 ) +$ 257 +2023 (5) +$ 385,141 +n/a +$ 5,522,209 +$ 9,977,442 +n/a +$ 10,022,502 +$ 2,162,249 +$ 6,573,145 +$ 196 +$ 160 +$ 1,471 +$ 199 +2022 (5) +$ 6,447,544 +n/a +n/a +$ 5,787,952 +n/a +n/a +$ 974,218 +$ 1,232,477 +$ 108 +$ 159 +$ 495 +$ 241 +2021 (5) +$ 3,823,399 +$ 8,942,980 +n/a +$ 4,153,397 +$ 8,930,695 +n/a +$ 4,004,438 +$ 4,214,026 +$ 106 +$ 112 +$( 113 ) +$ 361 +(1) The Company had two CEOs during 2021. Effective May 17 th , 2021, Mr. Wood left his position of Chief Executive Officer and President of the Company and Mr. Cutt was appointed as Interim Chief Executive Officer and Board Chair and assumed the role of Chief Executive Officer and Board Chair on September 2, 2021. +(2) The Company had two CEOs during 2023. On January 24th, 2023, Mr. Reinhart was appointed as President and Chief Executive Officer of the Company. Mr. Cutt continues to serve the Company as Board Chair. +(3) TSR is determined based on the value of an initial fixed investment of $100 on December 31, 2019. The peer group TSR represents TSR of the S&P Oil & Gas Exploration & Production Index. +(4) Adjusted Free Cash Flow is a non -GAAP measure defined as net cash provided by operating activities from the Company’s Consolidated Statement of Cash Flows less the sum of changes in operating assets and liabilities included in the operating activities section of the Consolidated Statement of Cash Flows less non -recurring general and administrative and other expenses from the Consolidated Statement of Operations less incurred capital expenditures and capitalized expenses. Adjusted Free Cash Flow was calculated assuming realized commodity pricing received throughout the year was consistent with the forward curve pricing used to set the approved Adjusted Free Cash Flow Metric. +(5) The non -PEO NEOs: +2025: Messrs Craine, Hodges, Rucker, and Sluiter; +2024: Messrs Craine, Hodges, Rucker, and Sluiter; +2023: Messrs Craine, Hodges, Rucker, and Sluiter; +2022: Messrs Buese, Craine, and Sluiter. +2021: Messrs Buese, Craine, Sluiter, Robert J. Moses, Quentin Hicks, and Donnie Moore. +SEC rules require certain adjustments be made to the Summary Compensation Table totals to determine “compensation actually paid” (CAP) as reported in the Pay versus Performance Table. The following table details these adjustments: +Year +Executive(s) +Summary +compensation +table total +($) +Pension Valuation Adjustments +Equity Award Adjustments +Deduct +change in +pension +value +($) +Pension +service +cost +adjustment +($) +Prior +service +cost +adjustment +($) +Deduct +stock +awards +($) +Include +year-end +equity +value +($) +Change in +value of +prior +equity +awards +($) +Dividends +& Interest +Accrued +($) +2025 +PEO1 +N/A +N/A +N/A +N/A +N/A +N/A +N/A +N/A +PEO2 +N/A +N/A +N/A +N/A +N/A +N/A +N/A +N/A +PEO3 +$ 7,320,257 +N/A +N/A +N/A +$( 5,277,437 ) +$ 7,116,313 +$ 5,277,013 +N/A +Other NEOs +$ 2,502,673 +N/A +N/A +N/A +$( 1,539,359 ) +$ 2,075,725 +$ 1,696,965 +N/A +54 2026 PROXY STATEMENT +Pay Versus Performance +The Company believes that the three key financial performance measures most relevant to linking pay and performance over the long term are, in no particular order, Adjusted Free Cash Flow , Net Income and TSR . The following three tables describe the link between those metrics and “compensation actually paid” (CAP) to our CEO and other NEOs in 2025 to Company performance. +2026 PROXY STATEMENT 55 +Pay Versus Performance +2025 DIRECTOR COMPENSATION +Our policy is that members of our Board of Directors who are also our officers or employees do not receive compensation for their services as directors. The compensation of our non -employee directors for 2025 is described below. +Cash Compensation +The annual retainer for each non -employee director is $100,000. In addition, the Board Chair receives an additional $25,000 annual retainer. The members and Chair of each of our Board Committees receive an additional annual retainer as set forth in the table below. +2025 Director Fees +Program Component +2025 Program +Annual base cash retainer for Board service +$100,000 +Additional cash retainer to non -executive Board Chair +$25,000 +Additional cash retainer to Lead Director +$25,000 +Audit Committee Chair cash retainer +$25,000 +Compensation Committee Chair cash retainer +$15,000 +Nominating, Environmental, Social and Governance Committee Chair cash retainer +$10,000 +Audit Committee member cash retainer +$10,000 +Compensation Committee member cash retainer +$5,000 +Nominating, Environmental, Social and Governance Committee member cash retainer +$5,000 +Stock ownership guideline +5.0x annual +base retainer +56 2026 PROXY STATEMENT +Pay Versus Performance +Equity Compensation +In 2025, all current non -employee directors received grants of restricted stock units valued at $150,000 with a 1 -year cliff vest on May 21, 2026. +Stock Ownership Guidelines for Directors +We believe it is important for members of our Board of Directors to align their financial interests with those of our stockholders. Accordingly, effective April 27, 2022, our Board of Directors adopted a formal stock ownership policy that requires our non -employee directors to achieve a stock ownership level equal to the value of common stock that is five times the value of their annual retainer within five years of, or within five years after becoming subject to, the effective date of such stock ownership policy. On February 20, 2025, our Board of Directors amended the stock ownership guidelines to provide that once a participant has satisfied the stock ownership requirements subsequent declines in the stock price will not affect compliance if the participant retains the number of shares held when they achieved compliance. Messrs. Cutt, Wolf, Martinez, and Reganato have met their required stock ownership levels, and Ms. Powers and Ms. Shafer -Malicki are all on track to meet their required stock ownership levels within the 5 -year requirement. +2025 Director Compensation Table +The following table contains information with respect to 2025 compensation of our non -employee directors who served in such capacity during 2025. +Board Compensation +Name +Fees Earned or +Paid in Cash +($) (1) +Stock +Awards +($) (2) +Option +Awards +($) +Total +($) +Timothy Cutt +$12,127,326 (3) +$150,000 +— +$12,277,326 +David Wolf +$150,852 +$150,000 +— +$300,852 +Jason Martinez +$128,049 +$150,000 +— +$278,049 +Jeannie Powers +$118,049 +$150,000 +— +$268,049 +David Reganato +$120,000 +$150,000 +— +$270,000 +Mary Shafer-Malicki +$118,049 +$150,000 +— +$268,049 +(1) Reflects the annual cash compensation, as discussed above. +(2) The amounts shown reflect the grant date fair value of restricted stock unit awards granted, determined in accordance with FASB ASC Topic 718. See Note 1 and Note 7 to our consolidated financial statements for the fiscal year ended December 31, 2025 under the headings “Summary of Significant Accounting Policies” and “Stock -Based Compensation,” respectively, included in our Annual Report on Form 10 -K for the fiscal year ended December 31, 2025, filed with the SEC on February 25, 2026, regarding assumptions underlying valuations of equity awards for 2025. The grant date fair value for the restricted stock issued to each Director was determined by using the May 20, 2025, closing stock price of the Company’s common stock on the NYSE of $194.92. +(3) Includes award of 70,226 units/shares at an award price of $170.91 totaling $12,002,326 in connection with his prior service as CEO. +2026 PROXY STATEMENT 57 +BENEFICIAL OWNERSHIP +The following table sets forth certain information regarding the beneficial ownership as of March 31, 2026, of shares of our common stock by each of our directors, by each NEO and by all directors, executive officers and nominees as a group. +Name of Beneficial Owner (1) +Amount and Nature of +Beneficial Ownership +Percent of Class +Timothy Cutt (2) +23,755 +* +David Wolf (2) +4,462 +* +Jason Martinez (2) +4,288 +* +Jeannie Powers (2) +3,101 +* +David Reganato (assigned to Silver Point) (2,3) +10,241 +* +Mary Shafer-Malicki (2) +3,136 +* +John Reinhart, former CEO (4) +50,358 +* +Michael Hodges (5) +8,182 +* +Patrick Craine +4,197 +* +Matthew Rucker +6,063 +* +Michael Sluiter +3,873 +* +Directors and Executive Officers as a Group (13 persons) +126,681 +* +* Less than 1%. +(1) Beneficial ownership is determined in accordance with SEC rules. In computing percentage ownership of each person, shares of common stock subject to options held by that person that are exercisable as of March 31, 2026, or exercisable within 60 days of March 31, 2026, are deemed to be beneficially owned. These shares, however, are not deemed outstanding for the purpose of computing the percentage ownership of each person. The percentage of shares beneficially owned is based on 18,061,036 shares of common stock outstanding as of March 31, 2026, excluding an aggregate of 199,979 shares of restricted stock units and performance -based restricted stock units awarded under our 2021 Stock Incentive Plan, but not yet vested. Unless otherwise indicated, all amounts exclude shares issuable upon the exercise of outstanding options and vesting of restricted stock units that that are not exercisable and/or vested as of March 31, 2026, or within 60 days of March 31, 2026. Except as otherwise noted, each stockholder has sole voting and investment power with respect to the shares beneficially owned. +(2) Includes 770 unvested restricted stock units that will vest within 60 days of March 31, 2026. +(3) Mr. Reganato has an understanding with Silver Point pursuant to which he holds such restricted shares for the benefit of Silver Point and certain of its affiliates. Accordingly, Mr. Reganato disclaims beneficial ownership of the restricted shares except to the extent of his pecuniary interest therein. +(4) Ownership shown as of March 6, 2026. Mr. Reinhart notified the Board of his resignation as President, Chief Executive Officer and Director of the Company, effective immediately, on March 6, 2026. +(5) Includes 3,354 unvested restricted stock units that will vest within 60 days of March 31, 2026. +58 2026 PROXY STATEMENT +BENEFICIAL OWNERSHIP +Holdings of Major Stockholders +The following table sets forth certain information regarding the beneficial ownership as of March 31, 2026 of shares of our common stock by each person or entity known to us to be a beneficial owner of 5% or more of our common stock. +MAJOR STOCKHOLDER TABLE +Name and Address of Beneficial Owner (1) +Amount and Nature of +Beneficial Ownership +Percent of +Class (1) +Silver Point Capital, L.P. +2,605,729 (2,3) +14.4% +2 Greenwich Plaza, First Floor +Greenwich, CT 06830 +BlackRock, Inc. +1,157,381 (4) +6.4% +50 Hudson Yards +New York, NY 10001 +Vanguard Group Inc. +1,047,130 (5) +5.8% +PO Box 2600, V26 +Valley Forge, PA 19482 +(1) Beneficial ownership is determined in accordance with SEC rules. The percentage of shares beneficially owned is based on 18,061,036 shares of common stock outstanding as of March 31, 2026, excluding an aggregate of 199,979 shares of restricted stock units and performance -based restricted stock units awarded under our 2021 Stock Incentive Plan, but not yet vested. +(2) Information based on an amendment to Schedule 13D/A filed by Silver Point Capital, L.P. with the SEC on March 4, 2026. +(3) Messrs. Edward A. Mule and Robert J. O’Shea are each members of Management and as a result may be deemed to be the beneficial owner of all the securities held by the Funds. Silver Point, Management and Messrs. Mule and O’Shea disclaim beneficial ownership of the reported securities held by Funds except to the extent of their pecuniary interests. +(4) Information based on Schedule 13F filed by BlackRock, Inc. with the SEC on February 12, 2026. +(5) Information based on Schedule 13F filed by Vanguard Group, Inc. with the SEC on January 29, 2026. +2026 PROXY STATEMENT 59 +Certain Relationships and Review and +Approval of Related Party Transactions +The Audit Committee, as provided in its charter, reviews and approves related party transactions. The Company does not have a formal set of standards to be substantively applied to each transaction reviewed by the Audit Committee. Instead of a formalized policy, related party transactions are reviewed, and judgment is applied to determine whether transactions are in the best interests of the Company. Further, the Company’s Code of Business Conduct and Ethics governs various compliance areas, including conflicts of interest and fair dealings, which are considered in the process of the review and approval of related party transactions. +The Company’s policy is that all its employees and directors, as well as their family members, must avoid any activity that is or has the appearance of conflicting with the Company’s business interest. This policy is included in the Company’s Code of Business Conduct and Ethics posted on its website. Each director and executive officer is instructed to always inform the designated compliance officer when confronted with any situation that may be perceived as a conflict of interest. Only the Board of Directors or a committee consisting solely of independent directors may grant waivers of the provisions of the Code of Business Conduct and Ethics for the Company’s executive officers and directors. In addition, at least annually, each director and executive officer completes a detailed questionnaire specifying any business relationship that may give rise to a conflict of interest. +Further, under the Audit Committee charter, the Audit Committee is responsible for reviewing and monitoring compliance with our Code of Business Conduct and Ethics and recommending any warranted changes to the Board of Directors. In addition, the Board of Directors and, pursuant to its written charter, the Audit Committee, reviews and approves all relationships and transactions in which the Company and its directors, director nominees and executive officers and their immediate family members, as well as holders of more than 5% of any class of our voting securities and their family members, have a direct or indirect material interest. The Board of Directors and the Audit Committee approve only those transactions that, considering known circumstances, are consistent, or are not inconsistent with, the Company’s best interests, as they determine in good faith exercise of their discretion. +During 2025, Gulfport employed Sara Disser who is the daughter of the Company’s former Chief Executive Officer. She received total compensation of approximately $193,677. +During 2025, Gulfport employed Matthew Holland who is the son -in-law of the Company’s former Chief Executive Officer. He received total compensation of approximately $275,370. +As part of Gulfport’s existing $1.5 billion share repurchase program, Gulfport purchased approximately $25.0 million in common stock from affiliates of Silver Point Capital, L.P. in 2025. +60 2026 PROXY STATEMENT +Proposal to Ratify the Appointment of Our Independent Auditors +(Proposal 2) +The Company is asking its stockholders to vote to ratify the appointment of Grant Thornton LLP as our independent auditors for fiscal year ending December 31, 2026. The Audit Committee has appointed Grant Thornton LLP to serve as independent auditors. +What services do the independent auditors provide? +Audit services of Grant Thornton LLP for fiscal year 2025 included an audit of our consolidated financial statements and services related to periodic filings made with the SEC. Additionally, Grant Thornton LLP provided certain services related to the consolidated quarterly reports as described below. +How much were the independent auditors paid in 2025 and 2024? +Grant Thornton LLP’s fees for professional services totaled $1,071,000 for 2025 and $1,151,750 for 2024. Grant Thornton LLP’s fees for professional services included the following: +• Audit Fees – aggregate fees for audit services, which relate to the fiscal year consolidated audit, quarterly reviews, accounting consultations and comfort letters were $1,071,000 for 2025 and $1,151,750 for 2024. +• Audit -Related Fees – aggregate fees for audit -related services, consisting of audits in connection with proposed or consummated dispositions, benefit plan audits, other subsidiary audits, special reports, and accounting consultations, were $0 in 2025 and 2024. +• Tax and All Other Fees – there w ere no tax or other fees for products or services provided by Grant Thornton LLP in addition to the services described above in 2025 and 2024. +Does the Audit Committee approve the services provided by Grant Thornton LLP? +It is our Audit Committee’s policy to pre -approve all audit, audit -related and permissible non -audit services rendered to us by our independent auditor. Consistent with such policy, all fees listed above that we incurred for services rendered by Grant Thornton LLP in fiscal years 2025 and 2024 were pre -approved by our Audit Committee. No non -audit services were provided to us by Grant Thornton LLP in 2025 or 2024. +Will a representative of Grant Thornton LLP be present at the meeting? +Yes, one or more representatives of Grant Thornton LLP will be present at the meeting. The representatives will have an opportunity to make a statement if they desire and will be available to respond to appropriate questions from the stockholders. +Has Grant Thornton LLP always served as Gulfport’s independent auditors? +Grant Thornton LLP has served as our independent auditors since 2005. +Vote Required and Board Recommendation +Stockholder ratification of the appointment of our independent auditors is not required by the Bylaws or otherwise. However, we are submitting this proposal to the stockholders as a matter of good corporate practice. Approval of this proposal requires the affirmative vote “for” the proposal of a majority of the votes cast by the stockholders present in person or represented by proxy at the Annual Meeting and entitled to vote thereon. The persons named as proxies for the Company intend to vote the proxies “FOR” Proposal 2. Abstentions and broker non -votes , if any, will have no effect on the voting results for Proposal 2. +If the appointment of Grant Thornton LLP is not ratified, the Audit Committee will reconsider the appointment. Even if the appointment is ratified, the Audit Committee in its discretion may direct the appointment of a different independent audit firm at any time during the year if it is determined that such change would be in best interests of the Company and its stockholders. +THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF GRANT THORNTON LLP AS THE COMPANY’S INDEPENDENT AUDITORS FOR THE YEAR 2026. +2026 PROXY STATEMENT 61 +Proposal to Approve, on an Advisory, +NON -BINDING Basis, the Compensation Paid to +the Company’s Named Executive Officers +(Proposal 3) +Pursuant to Section 14A of the Exchange Act, the Company is asking its stockholders to vote to approve, on an advisory, non -binding basis, the compensation paid to the Company’s NEOs as reported in this proxy statement. This is also known as a “Say -On-Pay ” vote. The Company’s stockholders are being asked to vote on the following resolution: +“RESOLVED, that the compensation paid to the Company’s NEOs, as disclosed pursuant to Item 402 of Regulation S -K , including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby approved.” +This vote is advisory, which means that the vote on executive compensation is not binding on the Company, our Board of Directors or the Compensation Committee. While the vote on executive compensation is solely advisory in nature, our Board of Directors and the Compensation Committee will review and consider the “Say -On-Pay ” voting results when making future decisions regarding our executive compensation program. +Stockholders are encouraged to carefully review the “Compensation Discussion and Analysis” section of this proxy statement, which discusses in detail the Company’s compensation policy and compensation arrangements which the Company believes are appropriate and reasonably consistent with market practice and with the long -term interests of the Company and its stockholders. In furtherance of the Company’s goals and objectives, the Compensation Committee, among other things, emphasizes long -term equity awards and annual performance bonuses under the previously implemented Annual Incentive Plan to align our executives’ interests more closely with those of our stockholders and to link a larger portion of our executives’ compensation to the performance of our stock and our operational performance. +We have determined that our stockholders should cast an advisory vote on compensation of our NEOs on an annual basis. Unless this policy changes, the next advisory vote on the compensation of our NEOs will be at the 2027 Annual Meeting. +Vote Required and Board Voting Recommendation +Proposal 3 requires an affirmative vote “for” the proposal by a majority of the votes cast by the stockholders present in person or represented by proxy at the Annual Meeting and entitled to vote thereon. The persons named as proxies for the Company intend to vote the proxies “ FOR ” Proposal 3. Abstentions and broker non -votes , if any, will have no effect on the voting results for Proposal 3. +THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THIS PROPOSAL 3. +62 2026 PROXY STATEMENT +Audit Committee Report +The primary role of the Audit Committee is to assist the Board of Directors in its oversight of the Company’s accounting and financial reporting processes. In doing so, the Audit Committee is responsible for the appointment and compensation of the Company’s independent registered public accounting firm and has oversight for its qualification, independence and performance. The Audit Committee charter guides our duties and responsibilities. The Audit Committee charter, which was last amended during 2025, is available on the Company’s website at https://www.gulfportenergy.com/investors/corporate -governance /governance -documents . As set forth in the charter, management is responsible for the internal controls and accounting and financial reporting processes of Gulfport Energy Corporation. The independent registered public accounting firm is responsible for expressing opinions on the conformity of Gulfport Energy Corporation’s audited consolidated financial statements with generally accepted accounting principles and on the effectiveness of the Company’s internal control over financial reporting. Our responsibilities include monitoring and overseeing these processes. +Our Committee is comprised of four non -employee , independent members of the Board of Directors. No member serves on more than two other public company audit committees. The Board of Directors has determined that all Audit Committee members are financially literate, and that Jason Martinez, Jeannie Powers, David Reganato, and David Wolf are financial experts as that term is defined by the SEC. The members of our Committee are not professionally engaged in the practice of accounting or auditing. The Audit Committee’s considerations and discussions referred to below do not assure that the audit of the Company’s financial statements has been carried out in accordance with generally accepted auditing standards, that the financial statements are presented in accordance with generally accepted accounting principles or that the Company’s auditors are in fact “independent”. +In the performance of our oversight function, we have reviewed and discussed the audited financial statements of the Company for the fiscal year ended December 31, 2025, and management’s assessment of the effectiveness of the Company’s internal control over financial reporting with the management of Gulfport Energy Corporation. We have met with Grant Thornton LLP, the Company’s independent registered public accounting firm, with and without management present. We discussed with Grant Thornton LLP the matters required to be discussed under the applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”) and the SEC and such other matters as we have deemed to be appropriate, including the overall scope and plans for the audit. We also have received the written disclosures and the letter from Grant Thornton LLP required by the applicable PCAOB requirements regarding the independent accountant’s communications with the Audit Committee concerning independence, and we have discussed with Grant Thornton LLP that firm’s independence from management and the Company. We also reviewed the amount of fees paid to Grant Thornton LLP for both audit and non -audit services. In doing so, we considered whether the provision of non -audit services to the Company was compatible with maintaining the independence of Grant Thornton LLP. +Based on the reports and discussions above, we recommended to the Board of Directors that the audited financial statements be included in the Gulfport Energy Corporation 2025 Annual Report on Form 10K. +This report is not soliciting material, is not deemed to be filed with the SEC, and is not to be incorporated by reference in any filing of the Company under the Securities Act of 1933, as amended, whether made before or after this date and irrespective of any general incorporation language in any filing. +This report has been furnished by the Audit Committee of the Board of Directors. +THE AUDIT COMMITTEE +Jason Martinez, Chair +Jeannie Powers +David Reganato +David Wolf +2026 PROXY STATEMENT 63 +ABOUT THE ANNUAL MEETING +Why am I receiving these materials? +The Board of Directors has sent you this proxy statement and the accompanying proxy card to ask for your vote, as a stockholder of the Company, on certain matters that will be voted on at the Annual Meeting. +Who is soliciting my vote? +The Board of Directors is soliciting your vote at the Annual Meeting. The proposals to be voted on by the Company’s stockholders at the Annual Meeting are described below. +What am I voting on? +You are voting on: +• The election of six directors to serve until the 2027 Annual Meeting ( see Proposal 1 beginning on page 8 of this proxy statement ). +• The ratification of Grant Thornton LLP as our independent auditors for the year ended December 31, 2026 ( see Proposal 2 beginning on page 61 of this proxy statement ). +• The approval, on an advisory, non -binding basis, of the compensation paid to the Company’s NEOs as described in this proxy statement ( see Proposal 3 beginning on page 62 of this proxy statement ). +• Any other business properly coming before the meeting. +How does the Board of Directors recommend that I vote my shares? +Unless you give other instructions on your proxy card, the people named as proxy holders on the proxy card will vote in accordance with the recommendations of our Board of Directors. The Board of Directors’ recommendations can be found with the description of each proposal in this proxy statement. In summary, the Board of Directors recommends a vote: +• “ FOR ” each of our director nominees. +• “ FOR ” the proposal to ratify Grant Thornton LLP as the Company’s independent auditors for the fiscal year ended December 31, 2026. +• “ FOR ” the proposal to approve, on an advisory, non -binding basis, the compensation paid to the Company’s NEOs as described in this proxy statement. +What is a proxy? +A proxy is your legal designation of another person to vote the shares of common stock that you own. That other person is also referred to as a “proxy.” If you designate someone as your proxy in a written document, that document is called a proxy or a proxy card. We have designated Timothy Cutt, our Board Chair, and Patrick Craine, our Chief Legal and Administrative Officer and Corporate Secretary, as the Company’s proxies for the Annual Meeting. +Who is entitled to vote? +You may vote if you were the record owner of our common shares as of the close of business on the record date, which is April 6, 2026. Gulfport had 18,050,914 common shares outstanding as of the record date. Each share of common stock is entitled to one vote. +In aggregate, as of April 6, 2026, we had 196,625 shares of restricted stock units and performance -based restricted stock units awarded under our 2021 Stock Incentive Plan but not yet vested. There is no cumulative voting. +64 2026 PROXY STATEMENT +about the annual meeting +How many votes must be present to hold the Annual Meeting? +Your shares are counted as present at the Annual Meeting if you attend the meeting and vote in person or if you return a properly executed proxy by mail. For us to hold our meeting, holders of a majority of the voting power of our outstanding shares of common stock as of the close of business on April 6, 2026, must be present in person or by proxy at the Annual Meeting. This is referred to as a “quorum.” Votes withheld and abstentions will be counted for purposes of establishing a quorum at the Annual Meeting. Broker non -votes , if any, will not be counted for purposes of establishing a quorum at the Annual meeting (see “What is the effect of abstentions, withhold votes and broker non -votes ?” below) +What vote is required to elect directors (Proposal 1)? +The election of directors at the Annual Meeting will be conducted under a majority of the votes cast standard. This means that with respect to each director nominee, the number of votes cast “for” the director nominee must exceed the number of votes cast “against” the nominee. Abstentions will have no effect on the outcome of the election. +What vote is required to approve, on an advisory, non-binding basis, the ratification of the appointment of the Company’s independent auditor (Proposal 2)? +The proposal to approve, on an advisory, non -binding basis, the appointment of Grant Thornton LLP as Gulfport’s independent auditor for the year ending December 31, 2026, will be adopted if a majority of the votes present in person or by proxy and voting on this matter are cast “for” the proposal. You may vote “for,” “against” or “abstain” from approving the proposal. Abstentions will have no effect on the outcome of the proposal. +What vote is required to approve, on an advisory, non-binding basis, the compensation of the Company’s Named Executive Officers (Proposal 3)? +The proposal to approve, on an advisory, non -binding basis, the compensation of the Company’s NEOs will be adopted if a majority of the votes present in person or by proxy and voting on this matter are cast “for” the proposal. You may vote “for,” “against” or “abstain” from approving the proposal. Abstentions will have no effect on the outcome of the proposal. +What is the effect of abstentions, withhold votes and broker non-votes? +If you specify that you wish to “abstain” or “withhold” from voting on an item, then your shares will not be voted on that item. +Because the votes cast in favor of each director nominee must exceed the votes cast against such nominee under Proposal 1 and because the votes cast in favor of the action must exceed the votes cast opposing the action in order to approve Proposals 2 and 3 at the Annual Meeting, abstentions will not have an effect on the outcome of those proposals. +A “broker non -vote ” occurs when a beneficial holder does not provide instructions to a broker and such broker lacks discretionary voting power to vote shares with respect to a particular proposal. Under NYSE rules, brokers are permitted to exercise discretionary voting authority on “routine” matters, but beneficial owners of shares must provide voting instructions to their brokers with respect to “non -routine ” matters for their brokers to exercise voting authority with respect to such shares on such matters. Under NYSE rules, the proposal to approve the appointment of an independent auditor is considered a “routine” matter. This means that brokers may vote in their discretion on Proposal 2 on behalf of clients who have not furnished voting instructions with respect to such proposal. In contrast, Proposals 1 and 3 are “non -routine ” matters. This means brokers that have not received voting instructions from their clients on these proposals may not vote on these proposals in their own discretion, which results in “broker non -votes .” +Who is a registered stockholder and who is a beneficial stockholder? +Registered Stockholders: A “registered stockholder” is a person or entity whose name appears in the Company’s registered list of stockholders as an owner of one or more shares of the Company’s common stock. If you are a registered stockholder, these proxy materials are being sent directly to you. +Beneficial Stockholders: A “beneficial stockholder” or “beneficial owner” is a person or entity whose shares of the Company’s common stock are held by a bank, broker or other nominee (a.k.a. in “street name”). Most holders of our common stock hold their shares beneficially through a bank, broker or other nominee rather than of record directly in their own name. If you are a beneficial stockholder, these proxy materials are being forwarded to you by your bank, broker or other nominee, who is considered the registered stockholder of those shares. As the beneficial stockholder, you have the right to direct your bank, broker +2026 PROXY STATEMENT 65 +about the annual meeting +or other nominee on how to vote your shares and you are also invited to attend the Annual Meeting. Your bank, broker or other nominee has provided a voting instruction form for you to use in directing your bank, broker or other nominee as to how to vote your shares. You must follow these instructions for your shares to be voted. Your nominee is required to vote those shares in accordance with your instructions. If you do not give instructions to your broker, your broker will be able to vote your shares at its discretion regarding Proposal 2, but will not be able to vote your shares at its discretion with respect to Proposals 1 and 3. +How do I vote? +Registered Stockholders : If you are a “registered stockholder,” you can vote your shares in the following four ways: +• By Internet : You may vote by submitting a proxy over the Internet. Go to the website listed on your proxy card or voting instruction form and follow the instructions. You should have your proxy card, including your control number, in hand when you access the website. +• By Telephone : Stockholders located in the United States who receive proxy materials by mail may vote by submitting a proxy by telephone by calling the toll -free telephone number on the proxy card or voting instruction form and following the instructions. +• By Mail : If you received proxy materials by mail, you may vote by submitting a proxy by mail by completing, signing and dating the proxy card and mailing it in the enclosed, postage pre -paid envelope. +• In Person : You may attend in person and vote at the Annual Meeting. +Beneficial Stockholders: If you are a “beneficial stockholder,” then you will receive instructions from your bank, broker or other nominee on how to vote your shares. If you are a “beneficial stockholder,” you will need proof of ownership to be admitted to the Annual Meeting. +Can I change my vote? +You may change your vote by revoking your proxy at any time before it is exercised, which can be done by voting during the meeting, by delivering a new proxy or by notifying the inspector of election in writing. If your shares are held for you in a brokerage, bank or other institutional account, you must contact that institution to revoke a previously authorized proxy. The address for the inspector of election is Computershare Investor Services, 150 Royall Street, Suite 101, Canton, MA 02021. +Who counts the votes? +We have hired Computershare Investor Services, our transfer agent, to act as the tabulation agent and count the votes represented by proxies cast by mail or ballot. Employees of Computershare Investor Services will act as inspectors of election. +Could other matters be decided at the Annual Meeting? +We have not received any stockholder proposals and are not aware of any other matters that are expected to come before the Annual Meeting other than those described in this proxy statement. If any other matter should be presented at the Annual Meeting upon which a vote may be properly taken, shares represented by all proxy cards received by the Board will be voted at the discretion of the person or persons named as proxies on the enclosed proxy card. +How can I attend the Annual Meeting in person? +Registered stockholders will be asked to present a valid government -issued photo identification. If your shares are held in the name of your broker, bank or other nominee, you must bring to the meeting a valid government -issued photo identification and an account statement or letter (and a legal proxy if you wish to vote your shares) from the nominee indicating that you beneficially owned the shares on the record date for voting. +66 2026 PROXY STATEMENT +about the annual meeting +How can I access the Company’s proxy materials and annual report? +We have elected, in accordance with the Securities and Exchange Commission’s “Notice and Access” rule, to deliver a Notice of Internet Availability of Proxy Materials (the “Notice”) to our stockholders and to post our proxy statement and the Company’s 2025 Annual Report on Form 10 -K (collectively, the “proxy materials”) electronically. The Notice is first being mailed to our stockholders on or about April 14, 2026. The proxy materials will first be made available to our stockholders on or about the same date. The Notice instructs you how to access and review the proxy materials and how to submit your proxy via the Internet. The Notice also instructs you how to request and receive a paper copy of the proxy materials, including a proxy card or voting instruction form, at no charge. We will not mail a paper copy of the proxy materials to you unless specifically requested to do so. Additionally, the Notice of the Annual Meeting, this proxy statement and the Company’s 2025 Annual Report on Form 10 -K to Stockholders are available electronically on the Company’s website at www.gulfportenergy.com/proxy . +Where can I find the results of the Annual Meeting? +We intend to announce preliminary voting results at the Annual Meeting and intend to publish final results in a Current Report on Form 8 -K , which we will file with the SEC within four business days after the Annual Meeting. +2026 PROXY STATEMENT 67 +Availability of Form 10 -K and +Annual Report to Stockholders +SEC rules require us to provide an Annual Report to stockholders who receive this proxy statement. Additional copies of our Annual Report on Form 10 -K for the fiscal year ended December 31, 2025, including the financial statements and the financial statement schedules, are available without charge to stockholders upon written request to Vice President of Investor Relations, Gulfport Energy Corporation, 713 Market Drive, Oklahoma City, Oklahoma 73114 or via the Internet at www.gulfportenergy.com . We will furnish the exhibits to our Annual Report on Form 10 -K upon payment of our copying and mailing expenses. +68 2026 PROXY STATEMENT +HOUSEHOLDING +The SEC permits a single Notice or set of annual reports and proxy statements to be sent to any household at which two or more stockholders reside if they appear to be members of the same family, unless instructions have been received to the contrary. Each stockholder continues to receive a separate proxy card. This procedure, referred to as householding, reduces the volume of duplicate information stockholders receive and reduces our mailing and printing expenses. +If you would like to receive your own Notice or set of the annual report and proxy statement this year or in future years, follow the instructions described below, and we will promptly deliver a separate copy to you. Similarly, if you share an address with another Gulfport stockholder and together both of you would like to receive in the future only a single Notice or annual report and proxy statement, follow the instructions below: +• If your shares of our common stock are registered in your own name, please contact our transfer agent, Computershare Investor Services and inform them of your request by calling their toll -free number: (877) 373 -6374 or by mail: Computershare Investor Services, 150 Royall Street, Suite 101, Canton, MA 02021. +• If a broker or other nominee holds your shares, please contact your broker or nominee. +2026 PROXY STATEMENT 69 +Other Matters +The Board of Directors does not intend to present any other items of business other than those stated in the Notice of Annual Meeting. If any other matter should be presented at the Annual Meeting upon which a vote may be properly taken, shares represented by all proxy cards received by the Board will be voted at the discretion of the person or persons named as proxies on the enclosed proxy card. +70 2026 PROXY STATEMENT +Solicitation by THE Board OF DIRECTORS +Participants in the Solicitation +We are required by law to convene an annual meeting of our stockholders at which directors are elected. Because shares of our common stock are widely held, it would be impractical for our stockholders to meet physically in sufficient numbers to hold a meeting. Accordingly, the Company is soliciting proxies from our stockholders. Our directors, director nominees, officers and employees may solicit proxies in person, or via mail, telephone, facsimile or email. Those persons will receive no additional compensation for any solicitation activities. +Expenses of Solicitation +U.S. federal securities laws require us to send you this proxy statement and any amendments or supplements, and to specify the information required to be contained in it. The Company will bear the expenses of calling and holding the Annual Meeting and the solicitation of proxies. These expenses will include, among other things, the costs of preparing, assembling, printing and mailing the proxy materials to stockholders of record and beneficial owners, and reimbursement paid to brokerage firms, banks and other fiduciaries for their reasonable out -of-pocket expenses for forwarding proxy materials to stockholders and obtaining beneficial owners’ voting instructions. +2026 PROXY STATEMENT 71 +FORWARD -LOOKING STATEMENTS +This proxy statement contains forward -looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Exchange Act and the Private Securities Litigation Reform Act of 1995. All statements relating to events or results that may occur in the future, including, but not limited to, the Company’s future prospects and performance, costs of solicitation, record or meeting dates, compensation arrangements, plans or amendments, Company policies, documents or amendments as well as capital and corporate structure (including major stockholders, Board structure and Board composition), are forward -looking statements. +Forward -looking statements are statements other than statements of historical fact. They include statements regarding Gulfport’s current expectations, management’s outlook guidance or forecasts of future events, projected cash flow and liquidity, share repurchases and other return of capital plans, its ability to enhance cash flow and financial flexibility, future production and commodity mix, plans and objectives for future operations, the ability of our employees, portfolio strength and operational leadership to create long -term value and the assumptions on which such statements are based. Gulfport believes the expectations and forecasts reflected in the forward -looking statements are reasonable, Gulfport can give no assurance they will prove to have been correct. They can be affected by inaccurate or changed assumptions or by known or unknown risks and uncertainties. Important risks, assumptions and other important factors that could cause future results to differ materially from those expressed in the forward -looking statements are described under “Risk Factors” in Item 1A of Gulfport’s annual report on Form 10 -K for the year ended December 31, 2025, and any updates to those factors set forth in Gulfport’s subsequent quarterly reports on Form 10 -Q or current reports on Form 8 -K (available at https://www.gulfportenergy.com/investors/sec -filings ). +Investors should note that Gulfport announces financial information in SEC filings, press releases and public conference calls. Gulfport may use the Investors section of its website ( www.gulfportenergy.com ) to communicate with investors. It is possible that the financial and other information posted there could be deemed to be material information. The information on Gulfport’s website is not incorporated into or a part of this filing. +Unless required by law, the Company does not intend, and undertakes no obligation, to update or publicly release any revision to any such forward -looking statements, whether as a result of the receipt of new information, the occurrence of subsequent events, a change in circumstances or otherwise. Each forward -looking statement contained in this proxy statement is specifically qualified in its entirety by the aforementioned factors. Readers are advised to carefully read this proxy statement in conjunction with the important disclaimers set forth above prior to reaching any conclusions or making any investment decisions, and not to place undue reliance on these forward -looking statements, which apply only as of the date of this proxy statement. +72 2026 PROXY STATEMENT +Submission of Future Stockholder Proposals +Under Rule 14a -8 under the Exchange Act (“Rule 14a -8 ”), a stockholder who intends to present a proposal for business at the 2027 Annual Meeting and who wishes the proposal to be included in the proxy statement and form of proxy for that meeting must submit the proposal in writing to our Corporate Secretary no later than December 5, 2026. The proposal must comply with the requirements of Rule 14a -8 under the Exchange Act and our Bylaws to be eligible for inclusion in the Company’s proxy materials. +If a stockholder wishes to submit a proposal for business or nomination of directors at the 2027 Annual Meeting other than in reliance on Rule 14a -8 , in order for such proposal to be considered timely pursuant to our Charter and Bylaws, the stockholder’s notice must be delivered to or mailed and received by the Corporate Secretary at the principal executive offices of the Company not less than 60 days nor more than 90 days prior to May 27, 2027 (i.e., the first anniversary of the 2026 Annual Meeting). Accordingly, the stockholder’s notice must be delivered to or mailed and received by the Corporate Secretary not later than March 28, 2027 and not earlier than February 26, 2027. However, in the event that the date of the 2027 Annual Meeting is advanced by more than 30 days, or delayed by more than 70 days, from May 27, 2027, notice by the stockholder to be timely must be received not earlier than 120 days prior to the 2027 Annual Meeting, and not later than the close of business on the later of the 90 th day prior to the 2027 Annual Meeting or the close of business on the 10 th day following the day on which public announcement of the date of the 2027 Annual Meeting was first made. At present, the Company has not announced a meeting date for the 2027 Annual Meeting. The Company expects to announce the date of the 2027 Annual Meeting and provide formal notice in 2027. +In addition to satisfying the requirements under our Bylaws, to comply with the universal proxy rules, stockholders who intend to solicit proxies in support of director nominees other than our nominees must provide a notice to our Company that sets forth the information required by Rule 14a -19 under the Exchange Act no later than March 28, 2027. +You can obtain a copy of the Charter and Bylaws by writing to the Corporate Secretary at the address below, or from the SEC website at www.sec.gov (the Charter and Bylaws are filed as exhibits to our latest report on Form 10 -K filed with the SEC on February 25, 2026). +All written proposals and inquiries for copies of the Charter and Bylaws should be directed to Patrick Craine, our Chief Legal and Administrative Officer and Corporate Secretary, at Gulfport Energy Corporation, 713 Market Drive, Oklahoma City, Oklahoma 73114. +2026 PROXY STATEMENT 73 +Your vote matters – here’s how to vote! You may vote online or by phone instead of mailing this card. Votes submitted electronically must be received by 11:59pm, Central Time, on May 26, 2026. Online Go to www.envisionreports.com/GPOR or scan the QR code — login details are located in the shaded bar below. Phone Call toll free 1-800-652-VOTE (8683) within the USA, US territories and Canada Save paper, time and money! Sign up for electronic delivery at www.envisionreports.com/GPOR Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. 2026 Annual Meeting Proxy Card IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. A Proposals — The Board of Directors recommends you vote FOR each of the director nominees listed in Proposal 1 and FOR A Proposals 2 and 3. 1. To elect six directors to serve until the Company’s 2027 Annual Meeting of Shareholders or until their respective successors have been duly elected and qualified (the Election of Directors Proposal or Proposal 1). For Against Abstain 01 - Timothy Cutt 02 - David Wolf 03 - Jason Martinez 04 - Jeannie Powers 05 - David Reganato 06 - Mary Shafer-Malicki 2. To ratify the appointment of Grant Thornton LLP as the Company’s independent auditors for the fiscal year ending December 31, 2026 (the Auditors Ratification Proposal or Proposal 2). For Against Abstain 3. To approve, on an advisory, non-binding basis, the compensation paid to the Company’s named executive officers as described in this proxy statement (the Say-On-Pay Proposal or Proposal 3). For Against Abstain B Authorized Signatures — This section must be completed for your vote to count. Please date and sign below. Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title. Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box. +2026 Annual Meeting Admission Ticket 2026 Annual Meeting of Gulfport Energy Shareholders May 27, 2026, 9:00am CT 713 Market Drive, Oklahoma City, OK 73114. Important notice regarding the Internet availability of proxy materials for the Annual Meeting of Shareholders. The material is available at: www.envisionreports.com/GPOR Small steps make an impact. Help the environment by consenting to receive electronic delivery, sign up at www.envisionreports.com/GPOR IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. Gulfport Energy Corporation Notice of 2026 Annual Meeting of Shareholders Proxy Solicited by Board of Directors for Annual Meeting — May 27, 2026 The undersigned hereby appoints Timothy Cutt and Patrick Craine (together, the “Proxies”), and each of them, with full power of substitution, as proxies to vote the shares that the undersigned is entitled to vote at the Annual Meeting of Shareholders of Gulfport Energy Corporation (the “Company”) to be held on May 27, 2026 at 9:00am Central Time and at any adjournments and postponements thereof. Such shares shall be voted as indicated with respect to the proposals listed on the reverse side hereof and in the Proxies’ discretion on such other matters as may properly come before the meeting or any adjournment or postponement thereof. The undersigned acknowledges receipt of the 2026 Notice of Annual Meeting and accompanying Proxy Statement and revokes all prior proxies for said meeting. THE SHARES REPRESENTED BY THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO SPECIFIC DIRECTION IS GIVEN AS TO THE PROPOSALS ON THE REVERSE SIDE, THIS PROXY WILL BE VOTED FOR EACH OF THE NOMINEES NAMED IN PROPOSAL 1, FOR EACH OF THE PROPOSALS 2 AND 3, AND IN ACCORDANCE WITH THE BOARD OF DIRECTOR’S RECOMMENDATION. PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY. IMPORTANT – PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY. THANK YOU FOR VOTING. (Items to be voted appear on reverse side) C Non-Voting Items Change of Address — Please print new address below. 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The Company does not have a formal set of standards to be substantively applied to each transaction reviewed by the Audit Committee. Instead of a formalized policy, related party transactions are reviewed, and judgment is applied to determine whether transactions are in the best interests of the Company. Further, the Company’s Code of Business Conduct and Ethics governs various compliance areas, including conflicts of interest and fair dealings, which are considered in the process of the review and approval of related party transactions. +The Company’s policy is that all its employees and directors, as well as their family members, must avoid any activity that is or has the appearance of conflicting with the Company’s business interest. This policy is included in the Company’s Code of Business Conduct and Ethics posted on its website. Each director and executive officer is instructed to always inform the designated compliance officer when confronted with any situation that may be perceived as a conflict of interest. Only the Board of Directors or a committee consisting solely of independent directors may grant waivers of the provisions of the Code of Business Conduct and Ethics for the Company’s executive officers and directors. In addition, at least annually, each director and executive officer completes a detailed questionnaire specifying any business relationship that may give rise to a conflict of interest. +Further, under the Audit Committee charter, the Audit Committee is responsible for reviewing and monitoring compliance with our Code of Business Conduct and Ethics and recommending any warranted changes to the Board of Directors. In addition, the Board of Directors and, pursuant to its written charter, the Audit Committee, reviews and approves all relationships and transactions in which the Company and its directors, director nominees and executive officers and their immediate family members, as well as holders of more than 5% of any class of our voting securities and their family members, have a direct or indirect material interest. The Board of Directors and the Audit Committee approve only those transactions that, considering known circumstances, are consistent, or are not inconsistent with, the Company’s best interests, as they determine in good faith exercise of their discretion. +During 2025, Gulfport employed Sara Disser who is the daughter of the Company’s former Chief Executive Officer. She received total compensation of approximately $193,677. +During 2025, Gulfport employed Matthew Holland who is the son -in-law of the Company’s former Chief Executive Officer. He received total compensation of approximately $275,370. +As part of Gulfport’s existing $1.5 billion share repurchase program, Gulfport purchased approximately $25.0 million in common stock from affiliates of Silver Point Capital, L.P. in 2025. \ No newline at end of file diff --git a/raw/proxies/0000910521/0000910521-15-000026/proxy.txt b/raw/proxies/0000910521/0000910521-15-000026/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..57c8869d12c306359ba604fea0fce0ecdf25acdb --- /dev/null +++ b/raw/proxies/0000910521/0000910521-15-000026/proxy.txt @@ -0,0 +1,3557 @@ +DEF 14A +1 +deck-def14ax2015.htm +DEF 14A +DECK - DEF 14A - 2015 +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Proxy Statement Pursuant to Section 14(a) of +the Securities Exchange Act of 1934 (Amendment No. ) +Filed by the Registrant x +Filed by a Party other than the Registrant ¨ +Check the appropriate box: +¨ +Preliminary Proxy Statement +¨ +Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +x +Definitive Proxy Statement +¨ +Definitive Additional Materials +¨ +Soliciting Material under §240.14a-12 +DECKERS OUTDOOR CORPORATION +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +x +No fee required. +¨ +Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. +(1) +Title of each class of securities to which transaction applies: +(2) +Aggregate number of securities to which transaction applies: +(3) +Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): +(4) +Proposed maximum aggregate value of transaction: +(5) +Total fee paid: +¨ +Fee paid previously with preliminary materials. +¨ +Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. +(1) +Amount Previously Paid: +(2) +Form, Schedule or Registration Statement No.: +(3) +Filing Party: +(4) +Date Filed: +2015 +PROXY STATEMENT SUMMARY +This summary highlights information contained elsewhere in this Proxy Statement. This summary does not contain all of the information that you should consider, and you should read the entire Proxy Statement carefully before voting. +SUMMARY INFORMATION +ANNUAL MEETING OF STOCKHOLDERS +DATE +September 10, 2015 +TIME +4:00 p.m. PST +LOCATION +Deckers Outdoor Corporation +Corporate Headquarters +250 Coromar Drive +Goleta, California 93117 +RECORD DATE +July 14, 2015 +VOTING +Stockholders as of the Record Date (as defined in this Proxy Statement) are entitled to vote +VOTING ITEMS +PROPOSALS +MATTER +BOARD VOTE RECOMMENDATION +PAGE REFERENCE +1 +Election of nine directors +FOR EACH DIRECTOR NOMINEE +9 +2 +Ratification of KPMG LLP as independent registered public accounting firm for the fiscal year 2016 +FOR +66 +3 +Advisory vote to approve Named Executive Officer compensation +FOR +68 +4 +Approve the Employee Stock Purchase Plan +FOR +70 +5 +Approve the 2015 Stock Incentive Plan +FOR +73 +We may also transact any other business that may properly come before the Annual Meeting. As of the date of this Proxy Statement, we are not aware of any other business to be presented for consideration at the Annual Meeting other than the matters described in this Proxy Statement. +HOW TO VOTE +Your vote is important to the future of Deckers Outdoor Corporation. You are eligible to vote if you were a stockholder of record at the close of business on July 14, 2015. Please refer to the section of this Proxy Statement titled "Questions and Answers about the 2015 Annual Meeting of Stockholders and Voting" for additional information on how to vote your shares. +PROPOSAL NO. 1 +DIRECTOR NOMINEES +The following table provides summary information about each director nominee. +Deckers Committees +Name, +Primary Occupation +Age +Director +Since +Independent +Other Public Company Boards +A +C +CG +Angel R. Martinez +Chair of the Board of Directors and +Chief Executive Officer +60 +2005 +NO +1 +John M. Gibbons +Corporate Director +66 +2000 +YES +None +l +Karyn O. Barsa +Corporate Director +54 +2008 +YES +1 +l +l +Nelson C. Chan +Corporate Director +54 +2014 +YES +3 +l +Michael F. Devine, III +Corporate Director +56 +2011 +YES +2 +ª +l +John G. Perenchio +Corporate Director +60 +2005 +YES +None +l +l +James Quinn +Corporate Director +63 +2011 +YES +2 +ª +Lauri M. Shanahan +Corporate Director, Independent Consultant +52 +2011 +YES +1 +ª +Bonita C. Stewart +Vice-President, Partner Business Solutions, Americas at Google, Inc. +58 +2014 +YES +None +l +___________________________ +ª Committee Chair +A: Audit +C: Compensation +CG: Corporate Governance +• +No director nominee attended fewer than 75% of the meetings of our Board of Directors or meetings of any Board committee on which he or she sits. +• +Each director nominee is elected annually by a majority of the votes cast at the Annual Meeting. +• +Our Board of Directors recommends that you vote FOR each of the director nominees named in this Proposal No. 1. +PROPOSAL NO. 2 +INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +• +As a matter of good corporate governance, we are asking our stockholders to ratify the selection of KPMG LLP as our independent registered public accounting firm for fiscal year 2016. +• +Ratification of the selection requires the vote of a majority of the shares present and entitled to vote at the Annual Meeting. +• +Our Board of Directors recommends that you vote FOR this Proposal No. 2. +PROPOSAL NO. 3 +NAMED EXECUTIVE OFFICER COMPENSATION ADVISORY VOTE +• +We are asking our stockholders to approve, on a non-binding advisory basis, the compensation of our Named Executive Officers, or NEOs, as disclosed in the section of this Proxy Statement titled "Compensation Discussion and Analysis" . Below is a summary of the key elements and other features of our executive compensation program. +• +Advisory approval of the proposal requires the vote of a majority of the shares present and entitled to vote at the Annual Meeting. +• +Our Board of Directors recommends that you vote FOR this Proposal No. 3 because it believes that our compensation policies and practices are effective in achieving our goals of appropriately incenting and paying for financial and operating performance, and aligning our executives' interests with those of our stockholders. +MAIN EXECUTIVE COMPENSATION ELEMENTS +ELEMENT +TYPE +TERMS +Base Salary +CASH +• Base salary increases must be approved by our Compensation Committee. +Annual Cash Incentive +CASH +• Performance-based cash awards are earned based on achievement of annual Company performance goals approved by our Compensation Committee. +2015 NSU Equity Incentive Plan Awards (Nonvested Stock Units, or "NSUs") +EQUITY +• Performance goals for NSUs were based on fiscal year 2015 EPS. Because 2015 EPS goals were achieved at the 97.9% level, 88.9% of the NSUs will vest over a period of approximately 3 years. +2015 Long-Term Equity Incentive Plan ("LTIP") Awards (Restricted Stock Units, or "RSUs") +EQUITY +• Performance goals for RSUs are based on Company performance goals achieved through fiscal year 2017. RSUs will be received, if earned according to plan metrics, 2.5 years after they were granted. +• The grant date fair value of these awards was deemed probable at the target level, which would pay out at 100%. +KEY COMPENSATION CHANGES IN FY 2015 +Target Pay Positioning +• Simplified target pay positioning by eliminating "core" and "aspirational" program delineations to drive our NEOs towards stretch budgets and to align with our reduced target pay positioning. +• Reduced overall target pay positioning to 60th to 75th percentile range. +Annual Equity Program +• Formalized grant mix between NSU and LTIP Equity Awards. +• NEOs total annual equity grant allocated 40% NSU and 60% LTIP to further align executive and shareholder interests. +• LTIP awards based on achievement of stretch budgets for two metrics - Revenue and EBITDA. +Annual Cash Incentive Plan +• Simplified Cash Incentive Plan design to eliminate the Individual Discretionary Portion for the NEOs and further align executive and shareholder interests. +Peer Group Size +• Re-evaluated Peer Group and increased Peer Group size to 20 companies. +PROPOSAL NO. 4 +EMPLOYEE STOCK PURCHASE PLAN +• +We are asking our stockholders to approve the adoption and implementation of the Employee Stock Purchase Plan, which will provide our eligible employees with an opportunity to invest in and accumulate share ownership in our Company through after-tax payroll deductions. +• +A review of our Peer Group indicates that 40% of our Peer Group offer an ESPP with similar plan provisions. +• +An authorization of 1,000,000 shares from the stockholders is needed to support the plan for approximately the next 5 years. +• +Approval of the proposal requires the vote of a majority of the shares present and entitled to vote at the Annual Meeting. +• +Our Board of Directors recommends that you vote FOR this Proposal No. 4 because it believes this plan will enhance our ability to attract and retain employees and provide employees with an opportunity to participate in ownership of our shares and thereby have an interest in our success and increased value. +PROPOSAL NO. 5 +2015 STOCK INCENTIVE PLAN +• +We are asking our stockholders to approve the adoption of the 2015 Stock Incentive Plan ("2015 SIP"). The 2015 SIP is intended to replace our Company's current 2006 Equity Incentive Plan ("2006 EIP"). +• +As with the 2006 EIP, the purpose of the 2015 SIP is to encourage ownership in the Company by key personnel whose long-term service is considered essential to the Company's continued success, which encourages recipients to act in the stockholders' interests and share in the Company's success. +• +Approval of 1,275,000 shares, less one share for every one share granted under the 2006 EIP after March 31, 2015 and prior to the effective date of the 2015 SIP. +• +Approval of the proposal requires the vote of a majority of the shares present and entitled to vote at the Annual Meeting. +• +Our Board of Directors recommends that you vote FOR this Proposal No. 5 because it believes this plan will provide incentives to attract and retain employees whose contributions are important to our success, by offering them an opportunity to participate in our future performances. +OTHER CORPORATE GOVERNANCE CHANGES +• +In February 2014, our Board of Directors approved a change in our fiscal year end from December 31 to March 31 to better align with industry and business. As a result of this change, our 2015 fiscal year ran from April 1, 2014 to March 31, 2015 ("FY 2015"), and our Company had a fiscal transition period from January 1, 2014 to March 31, 2014 ("transition period" or "2014T"). +• +In March 2014, our Board of Directors approved a change in the securities exchange on which our Company's shares were listed from the NASDAQ Global Select Market ("NASDAQ") to the New York Stock Exchange ("NYSE"). Our shares began trading on the NYSE in May 2014. +• +In September 2014 and December 2014, Bonita C. Stewart and Nelson C. Chan, respectively, were elected to our Board of Directors to further enhance board performance and diversity. +NOTICE OF THE ANNUAL MEETING OF STOCKHOLDERS +Date and Time +September 10, 2015, 4:00 p.m. PST +Place +Deckers Outdoor Corporation +Corporate Headquarters +250 Coromar Drive +Goleta, California 93117 +Items to be Voted: +• +Election of Directors . To elect nine directors to serve until the Annual Meeting of Stockholders to be held in 2016, or until their successors are elected and duly qualified. +• +Ratification of Appointment of Independent Registered Public Accounting Firm . To ratify the selection of KPMG LLP as our independent registered public accounting firm for fiscal year 2016, from April 1, 2015 to March 31, 2016. +• +Advisory Vote to Approve Named Executive Officer Compensation . To approve, on a non-binding advisory basis, the compensation of our Named Executive Officers, as disclosed in the section of this Proxy Statement titled "Compensation Discussion and Analysis" . +• +Approve the Employee Stock Purchase Plan . To approve the adoption and implementation of the Employee Stock Purchase Plan. +• +Approve the 2015 Stock Incentive Plan . To approve the adoption of the 2015 Stock Incentive Plan, which is intended to replace the 2006 Equity Incentive Plan. +• +Other Business . To consider and act upon such other business as may properly come before the Annual Meeting or any postponements or adjournments thereof. +Board Recommendation: Our Board of Directors recommends that you vote FOR each of the director nominees named in Proposal No. 1 and FOR Proposal Nos. 2, 3, 4 and 5. +Voting at the Annual Meeting: Our Board of Directors has fixed the close of business on July 14, 2015 as the record date for determining stockholders entitled to notice of and to vote at the Annual Meeting and any postponements or adjournments thereof. Only stockholders of record at the close of business on the record date are entitled to such notice and to vote, in person or by proxy, at the Annual Meeting. +BY ORDER OF THE BOARD OF DIRECTORS +/s/ ANGEL R. MARTINEZ +Angel R. Martinez +Chairman of the Board of Directors and Chief Executive Officer +Your vote is very important. +Whether or not you plan to attend the Annual Meeting, we encourage you to read this Proxy Statement and submit your proxy or voting instructions as soon as possible. For specific instructions on how to vote your shares, please refer to the instructions on the Notice of Internet Availability of Proxy Materials you received in the mail, the section of this Proxy Statement titled " Questions and Answers about the 2015 Annual Meeting of Stockholders and Voting" or, if you requested to receive printed proxy materials, your enclosed proxy card. +Approximate Date of Mailing of Notice of Internet Availability of Proxy Materials: July 29, 2015 +Table of Contents +TABLE OF CONTENTS +2015 Proxy Statement Summary +i +Notice of Annual Meeting of Stockholders +v +Proxy Statement +1 +Questions and Answers about the 2015 Annual Meeting of Stockholders and Voting +2 +Proposal No. 1 - Election of Directors +9 +2016 Nominees for Director +11 +Corporate Governance +18 +Executive Officers +23 +Compensation Discussion and Analysis +24 +Executive Summary +25 +Compensation Philosophy and Objectives +30 +Compensation Consultant and Peer Group +31 +Elements of 2015 Executive Compensation Plan +34 +Other Compensation Considerations +43 +Report of the Compensation Committee +45 +Summary Compensation Table +46 +Grants of Plan Based Awards in 2015 +48 +Outstanding Equity Awards at 2015 Fiscal Year End +49 +2015 SAR Exercises and Stock Vested +51 +Nonqualified Deferred Compensation +52 +Potential Payments Upon Termination or Change of Control +53 +Director Compensation +58 +Equity Compensation Plan Information +61 +Security Ownership of Certain Beneficial Owners and Management +62 +Report of the Audit Committee +64 +Proposal No. 2 - Ratification of the Appointment of Independent Registered Public Accounting Firm +66 +Proposal No. 3 - Advisory Vote NEO Compensation +68 +Proposal No. 4 - Approval of Employee Stock Purchase Plan +70 +Proposal No. 5 - Approval of Stock Incentive Plan +73 +Other Annual Meeting Business +82 +Appendix A - ESPP +84 +Appendix B - SIP +93 +Access to Annual Report +83 +Table of Contents +ANNUAL MEETING OF STOCKHOLDERS +Meeting Date: September 10, 2015 +PROXY STATEMENT +GENERAL INFORMATION +The enclosed Proxy Statement is solicited on behalf of the Board of Directors of Deckers Outdoor Corporation, which we refer to as "our Company", "we", "us", or "our", for use at our Company's Annual Meeting of Stockholders to be held on Thursday, September 10, 2015 at 4:00 p.m. PST, (the "Annual Meeting"), or at any postponements or adjournments thereof. The Annual Meeting is being held for the purposes described in this Proxy Statement and in the accompanying Notice of Annual Meeting of Stockholders. +1 +Table of Contents +QUESTIONS AND ANSWERS ABOUT THE 2015 ANNUAL MEETING OF STOCKHOLDERS AND VOTING +The following questions and answers are intended to briefly address potential questions that our stockholders may have regarding this Proxy Statement and the Annual Meeting. They are also intended to provide our stockholders with certain information that is required to be provided under the rules and regulations of the Securities and Exchange Commission ("SEC"). These questions and answers may not address all of the questions that are important to you as a stockholder. If you have additional questions about the Proxy Statement or the Annual Meeting, please see the question titled "Whom shall I contact with other questions?" below. +Q: What is the purpose of the Annual Meeting? +A: At the Annual Meeting, our stockholders will be asked to consider and vote upon the matters described in this Proxy Statement and in the accompanying Notice of Annual Meeting of Stockholders, and any other matters that properly come before the Annual Meeting. +Q: When and where will the Annual Meeting be held? +A: You are invited to attend the Annual Meeting on Thursday, September 10, 2015, beginning at 4:00 p.m. PST. The Annual Meeting will be held at our corporate headquarters, located at 250 Coromar Drive, Goleta, California 93117. +Q: What is our Company's fiscal year end? +A: In February 2014, our Board of Directors approved a change in our fiscal year end from December 31 to March 31. As a result of this change, our 2015 fiscal year ran from April 1, 2014 to March 31, 2015, and our Company had a fiscal transition period from January 1, 2014 to March 31, 2015. +Q: On what securities exchange are our Company's shares traded? +A: On March 19, 2014, our Board of Directors approved a change in the securities exchange on which our Company's shares were listed from NASDAQ to the NYSE. Our shares began trading on the NYSE in May 2014. +Q: Why did I receive these proxy materials? +A: We are providing these proxy materials in connection with the solicitation by our Board of Directors of proxies to be voted at the Annual Meeting, and at any postponements or adjournments thereof. This Proxy Statement contains important information for you to consider when deciding how to vote on the matters brought before the Annual Meeting. You are invited to attend the Annual Meeting in person to vote on the proposals described in this Proxy Statement. However, you do not need to attend the Annual Meeting to vote your shares. Instead, you may vote your shares using one of the other voting methods described in this Proxy Statement. Whether or not you expect to attend the Annual Meeting, please vote your shares as soon as possible in order to ensure your representation at the Annual Meeting and to minimize the cost to our Company of proxy solicitation. +Q: Why did I receive a notice in the mail regarding the Internet availability of proxy materials? +A: Instead of mailing printed copies to each of our stockholders, we have elected to provide access to our proxy materials over the Internet under the SEC's "notice and access" rules. These rules allow us to make our stockholders aware of the Annual Meeting and the availability of our proxy materials by sending the Notice of Internet Availability of Proxy Materials (the "Notice"), which provides instructions for how to access the full set of proxy materials through the Internet or make a request to have printed proxy materials delivered by mail. Accordingly, on or about July 31, 2015, we mailed a Notice to each of our stockholders. The Notice contains instructions on how to access our proxy materials, including our Proxy Statement and our Annual Report, each of which are available at www.proxyvote.com. The Notice also provides instructions on how to vote your shares through the Internet. +Q: What is the purpose of complying with the SEC's "notice and access" rules? +A: We believe compliance with the SEC's "notice and access" rules allows us to provide our stockholders with the materials they need to make informed decisions, while lowering the costs of printing and delivering those materials and reducing the environmental impact of our Annual Meeting. However, if you would prefer to receive printed proxy materials, please follow the +2 +Table of Contents +instructions included in the Notice. If you have previously elected to receive our proxy materials electronically, you will continue to receive these materials electronically unless you elect otherwise. +Q: What am I being asked to vote upon at the Annual Meeting? +A: At the Annual Meeting, you will be asked to: +• +Vote on the election of nine director nominees to serve until the Annual Meeting of Stockholders to be held in 2016, or until their successors are elected and duly qualified (Proposal No. 1) ; +• +Ratify the selection of KPMG LLP as our independent registered public accounting firm for fiscal year 2016 (Proposal No. 2) ; +• +Vote upon a proposal to approve, on a non-binding advisory basis, the compensation of our Named Executive Officers, as disclosed in the section of this Proxy Statement titled "Compensation Discussion and Analysis" (Proposal No. 3) ; +• +Vote to approve the Employee Stock Purchase Plan (Proposal No. 4) ; +• +Vote to approve the 2015 Stock Incentive Plan (Proposal No. 5) ; and +• +Act upon such other matters as may properly come before the Annual Meeting or any postponements or adjournments thereof. +Q: Does the Board of Directors recommend voting in favor of the proposals? +A: Yes. Our Board of Directors unanimously recommends that you vote "FOR" each of the nine director nominees, "FOR" the ratification of the selection of KPMG LLP as our independent registered public accounting firm for fiscal year 2016, "FOR" the approval, on a non-binding advisory basis, of the compensation of our Named Executive Officers, "FOR" the Employee Stock Purchase Plan, and "FOR" the 2015 Stock Incentive Plan. +Q: What are the voting requirements to approve the proposals? +A: The voting requirements to approve each of the proposals to be voted upon at the Annual Meeting are as follows: +• +Election of Directors (Proposal No. 1) - Our Board of Directors has adopted a majority voting standard for uncontested director elections. This means that each director nominee in an uncontested election will be elected by a majority of the votes cast by the shares entitled to vote on the election of directors (assuming that a quorum is present). An “uncontested election” is an election in which the number of nominees for director is not greater than the number of directors to be elected. A “contested election” is an election in which the number of nominees for director nominated by (i) the Board of Directors, (ii) any stockholder or (iii) a combination of the Board of Directors and any stockholder, exceeds the number of directors to be elected. A “majority of the votes cast” means that the number of votes “FOR” a nominee for director must exceed 50% of the total votes cast. Votes “AGAINST” a nominee for director will count as votes cast for purposes of this proposal, but a “WITHHOLD AUTHORITY” vote with respect to shares will not count as votes cast. In a contested election, directors shall be elected by a plurality of the votes cast by the shares entitled to vote on the election of directors. Under the rules applicable to brokers, brokers no longer possess discretionary authority to vote shares with respect to the election of directors. Accordingly, "broker non-votes" will result for this proposal if brokers do not receive instructions from beneficial owners of our shares. Broker non-votes will not count as votes cast for purposes of this proposal and will not be counted for any purpose in determining whether this proposal has been approved. Please see the question, titled " What happens if I do not vote? " below for a discussion of the effect of “withhold authority” votes and "broker non-votes." +• +Ratification of Selection of Accounting Firm (Proposal No. 2) - Ratification of the selection of KPMG LLP as our independent registered public accounting firm for fiscal year 2016 will require the affirmative vote of a majority of the shares present in person or represented by proxy at the Annual Meeting and entitled to vote on the matter (assuming that a quorum is present). Abstentions will have the same effect as votes against the proposal. Because the ratification of the independent registered public accounting firm is a matter on which brokers have the discretion to vote, "broker non-votes" will not result for this proposal. +• +Advisory Vote on Executive Compensation (Proposal No. 3) - Approval of the non-binding advisory resolution regarding the compensation of our NEOs will require the affirmative vote of a majority of the shares present in person or represented by proxy at the Annual Meeting and entitled to vote on the matter (assuming that a quorum is present). Abstentions will have the same effect as votes against the proposal. "Broker non-votes" will not count as shares present and entitled to vote on the proposal and will not be counted for any purpose in determining whether this proposal has been approved. +• +Approval of the Employee Stock Purchase Plan (Proposal No. 4) - Approval of the ESPP will require the affirmative vote of a majority of the shares present in person or represented by proxy at the Annual Meeting and entitled to vote on the matter (assuming that a quorum is present). Abstentions will have the same effect as votes against the proposal. "Broker non-votes" will not count as shares present and entitled to vote on the proposal and will not be counted for any purpose in determining whether this proposal has been approved. +3 +Table of Contents +• +Approval of the 2015 Stock Incentive Plan (Proposal No. 5) - Approval of the 2015 SIP will require the affirmative vote of a majority of the shares present in person or represented by proxy at the Annual Meeting and entitled to vote on the matter (assuming that a quorum is present). Abstentations will have the same effect as votes against the proposal. "Broker non-votes" will not count as shares present and entitled to vote on the proposal and will not be counted for any purpose in determining whether this proposal has been approved. +Q: What happens if a director nominee fails to receive a majority vote in an uncontested election at the Annual Meeting? +A: Each incumbent director standing for reelection at the Annual Meeting has tendered an irrevocable letter of resignation, effective upon such incumbent director not receiving a majority vote at the Annual Meeting and acceptance of such resignation by the Board of Directors. The Board of Directors must accept or reject such resignation within 90 days following certification of the stockholder vote in accordance with the procedures established by our Bylaws. If a director’s resignation offer is not accepted by the Board of Directors, that director will continue to serve until our Annual Meeting of Stockholders to be held in 2016 and his or her successor is duly elected and qualified or until the director’s earlier death, resignation, or removal. +Any director nominee who is not an incumbent director and who fails to receive a majority vote in an uncontested election will not be elected as a director, and a vacancy will be left on the Board of Directors. The Board of Directors, in its sole discretion, may either fill a vacancy resulting from a director nominee not receiving a majority vote pursuant to our Bylaws or decrease the size of the Board of Directors to eliminate the vacancy. There are no director nominees who are incumbent directors standing for reelection at the Annual Meeting. +Q: What happens if I do not vote? +A: The following is a brief explanation of the effect that a decision not to vote shares will have on the proposals to be voted upon at the Annual Meeting: +• +Abstentions - You may "WITHHOLD AUTHORITY" to vote for one or more nominees for director and may abstain from voting on one or more of the other matters to be voted on at the Annual Meeting. Shares for which authority is withheld or that a stockholder abstains from voting will be counted for purposes of determining whether a quorum is present at the Annual Meeting. With respect to Proposal No. 1, shares for which a stockholder elects to "WITHOLD AUTHORITY" will not be included in the total number of votes cast, and thus will have no effect on the outcome of the vote on this proposal. With respect to Proposal Nos. 2, 3, 4 and 5, shares that a stockholder abstains from voting will be included in the total number of shares present and entitled to vote on these proposals, and will have the same effect as a vote "AGAINST" these proposals. +• +Broker Non-Votes - "Broker non-votes" result from shares that are held by a bank, broker, dealer or other nominee that are represented at the Annual Meeting, but with respect to which the nominee holding those shares (i) has not received instructions from the beneficial owner of the shares to vote on the particular proposal, and (ii) does not have discretionary voting power with respect to the particular proposal. Please see the question, titled " Who can vote at the Annual Meeting " below for a discussion of beneficial ownership. Whether a nominee has authority to vote shares that it holds is determined by stock exchange rules. Nominees holding shares of record for beneficial owners generally are entitled to exercise their discretion to vote on Proposal No. 2, but do not have the discretion to vote on Proposal Nos. 1, 3, 4 and 5 unless they receive other instructions from the beneficial owners of the shares. Accordingly, broker non-votes will result for Proposal Nos. 1, 3, 4 and 5. Broker non-votes will not be counted for purposes of determining the number of votes cast or the number of shares present and entitled to vote with respect to these proposals, and will not be counted for any purpose in determining whether these proposals have been approved. Broker non-votes will be counted for purposes of determining the presence or absence of a quorum at the Annual Meeting. +Q: Who can vote at the Annual Meeting? +A: Only our stockholders of record at the close of business on July 14, 2015, the Record Date, will be entitled to vote at the Annual Meeting. On the Record Date, there were 32,677,890 shares of our Common Stock outstanding and entitled to vote. Each share of Common Stock issued and outstanding on the Record Date is entitled to one vote on any matter presented for consideration and action by our stockholders at the Annual Meeting. +• +Stockholders of Record - If, on the Record Date, your shares were registered directly in your name with our transfer agent, Computershare, then you are a "holder of record". As a holder of record, you may vote in person at the Annual Meeting or vote by proxy. Whether or not you plan to attend the Annual Meeting, we urge you to vote your shares using one of the voting methods described in this Proxy Statement and the Notice. +• +Beneficial Owners - If, on the Record Date, your shares were held in an account at a bank, broker, dealer, or other nominee, then you are the "beneficial owner" of shares held in "street name" and this Proxy Statement is being made available to you by that nominee. The nominee holding your account is considered the holder of record for purposes of voting at the Annual Meeting. As a beneficial owner, you have the right to direct your nominee on how to vote the shares in your account. You are also invited to attend the Annual Meeting. However, since you are not the holder of record, you may +4 +Table of Contents +not vote your shares in person at the Annual Meeting unless you request and obtain a valid proxy from your nominee. Please contact your nominee directly for additional information. +Q: What is the quorum requirement for the Annual Meeting? +A: The presence at the Annual Meeting, in person or by proxy, of holders of a majority of the shares of our Common Stock outstanding as of the Record Date, will constitute a quorum at the Annual Meeting. We will treat shares of Common Stock represented by a properly voted proxy, including abstentions and broker non-votes, as present at the Annual Meeting for the purposes of determining the existence of a quorum. If a quorum is not present, the Annual Meeting will be adjourned until a quorum is obtained. +Q: How can I vote my shares? +A: • Stockholders of Record - Stockholders of record can vote by proxy or by attending the Annual Meeting and voting in person. If you vote by proxy, you can vote by Internet, telephone or by mail as described below. Thomas Garcia and Thomas A. George, the designated proxyholders, are members of our Company's management. Whether or not you plan to attend the Annual Meeting, we urge you to vote by proxy to ensure your vote is counted. You may still attend the Annual Meeting and vote in person if you have already voted by proxy. +VOTE BY INTERNET +VOTE BY TELEPHONE +VOTE BY MAIL +VOTE AT THE +ANNUAL MEETING +You can vote by proxy over the Internet by following the instructions provided in the Notice, or to the extent you requested to receive printed proxy materials, by following the instructions provided on the proxy card. Internet voting is available 24 hours a day and will be accessible until 11:59 p.m. EST on September 9, 2015 by visiting www.proxyvote.com and following the instructions. Our Internet voting procedures are designed to authenticate stockholders by using individual control numbers, which are located on the Notice. +If you requested to receive printed proxy materials, you can vote by telephone pursuant to the instructions provided on the proxy card. Telephone voting is available 24 hours a day and will be accessible until 11:59 p.m. EST on September 9, 2015. +If you requested to receive printed proxy materials, you can vote by mail pursuant to the instructions provided on the proxy card. If you choose to vote by mail, simply mark, sign and date your proxy card and return it promptly in the postage-paid envelope provided. In order to be effective, completed proxy cards must be received by 11:59 p.m. EST on September 9, 2015. +The method you use to vote will not limit your right to vote at the Annual Meeting if you decide to attend in person. All shares that have been properly voted and not revoked will be voted at the Annual Meeting. If you sign and return your proxy card but do not give voting instructions, the shares represented by that proxy will be voted as recommended by the Board of Directors. +• Beneficial Owner - If you are the beneficial owner of your shares, you should have received the Notice or a proxy card with these proxy materials from your bank, broker, dealer or other nominee rather than from us. Simply follow the instructions received from your broker, bank, trustee or nominee to vote on the Internet or, if you received a proxy card, by utilizing the instructions set forth therein. To vote in person at the Annual Meeting, you must obtain a valid proxy from your broker, bank, trustee or nominee. Follow the instructions from your broker, bank, trustee or nominee or contact your broker, bank, trustee or nominee to request a proxy card. +Q: How may I attend the Annual Meeting? +A: You are entitled to attend the Annual Meeting only if you were a holder of record as of the Record Date or hold a valid proxy to vote shares at the Annual Meeting. Since seating is limited, admission to the Annual Meeting will be on a first-come, first-served basis. You should be prepared to present government-issued photo identification for admittance, such as a passport or driver's license. If you are the beneficial owner of your shares, you also will need proof of ownership as of the Record Date to be admitted to the Annual Meeting, such as your most recent account statement prior to the Record Date, a copy of the voting instruction card provided by your bank, broker, dealer or other nominee, or similar evidence of ownership. Please note that for security reasons, you and your bags may be subject to search prior to your admittance to the Annual Meeting. If you do not comply with each of the foregoing requirements, you will not be admitted to the Annual Meeting. +Q: What can I do if I change my mind after I vote my shares? +A: You may change your vote at any time before your proxy is voted at the Annual Meeting. If you are a holder of record, you may change your vote by (i) providing written notice of revocation to the Secretary of our Company at our corporate headquarters located at 250 Coromar Drive, Goleta, California 93117, (ii) executing a subsequent proxy using any of the voting methods discussed above, or (iii) attending the Annual Meeting and voting in person. However, simply attending the Annual Meeting will not, by itself, revoke your proxy. If you are a beneficial owner of your shares, and you have instructed your bank, broker, dealer or other nominee to vote your shares, you must follow directions received from your nominee to change those +5 +Table of Contents +instructions. Subject to any such revocation, all shares represented by properly executed proxies will be voted in accordance with the recommendations of the Board of Directors. +Q: Could other matters be decided at the Annual Meeting? +A: As of the date this Proxy Statement was made available to stockholders, we did not know of any matters to be raised at the Annual Meeting other than those referred to in this Proxy Statement. However, if any other matters are presented for consideration at the Annual Meeting including, among other things, consideration of a motion to adjourn the Annual Meeting to another time or place in order to solicit additional proxies in favor of one or more of the proposals, the persons named as proxyholders will have discretion to vote on these matters according to their best judgment to the same extent as the person delivering the proxy would be entitled to vote. +Q: Who is paying for the cost of this proxy solicitation? +A: The solicitation of proxies is made on behalf of our Company and all the expenses of soliciting proxies from stockholders will be borne by our Company. In addition to the solicitation of proxies by use of the mail, officers and regular employees may communicate with stockholders personally or by mail, telephone, or otherwise for the purpose of soliciting such proxies, but in such event no additional compensation will be paid to any such persons for such solicitation. We will reimburse banks, brokers, dealers and other nominees for their reasonable out-of-pocket expenses in forwarding solicitation material to beneficial owners of shares held of record by such persons. The total estimated cost of the solicitation of proxies is approximately $101,000. +Q: What is the deadline to submit stockholder proposals for the 2016 Annual Meeting? +A: We currently anticipate holding our Annual Meeting of Stockholders for fiscal year 2016 in September 2016. Accordingly, notice of any director nomination or other proposal that you intend to present for inclusion in the proxy materials to be distributed in connection with our Annual Meeting of Stockholders to be held in 2016 must be delivered to our corporate headquarters located at 250 Coromar Drive, Goleta, California 93117 no later than the close of business on April 2, 2016. In addition, your notice must satisfy the conditions for such proposals set forth in our Bylaws, which contain requirements with respect to advance notice of director nominations and other stockholder proposals. +Q: How can stockholders nominate a candidate for election as a director? +A: Our Company's Bylaws provide that a stockholder seeking to nominate a candidate for election as a director at an annual meeting of stockholders must provide timely advance written notice. To be timely, a stockholder's notice generally must be received at our corporate headquarters on or before the date 90 days prior to the scheduled date of the annual meeting or, if it is to be held on a later date, on or before the date seven days after we first publish notice of the annual meeting. +Under our Bylaws, a stockholder's notice of a proposed nomination for director to be made at an annual meeting of stockholders must include the following information: +• +The name and address of the stockholder and any Stockholder Affiliate proposing to make the nomination and of the person or persons to be nominated; +• +The class and number of shares of our Company that are, directly or indirectly, beneficially owned by the stockholder or any Stockholder Affiliate and any derivative positions held or beneficially held by the stockholder or any Stockholder Affiliate and whether and the extent to which any hedging or other transaction or series of transactions has been entered into by or on behalf of, or any other agreement, arrangement or understanding (including, but not limited to, any derivative position, short position, or any borrowing or lending of shares) has been made, the effect or intent of which is to mitigate loss to or manage risk or benefit of share price changes for, or to increase or decrease the voting power of, such stockholder or any Stockholder Affiliate; +• +A representation that the holder is a stockholder entitled to vote his or her shares at the annual meeting and intends to vote his or her shares in person or by proxy for the person nominated in the notice; +• +A description of all arrangements or understandings between the stockholder(s) or Stockholder Affiliate supporting the nomination and each nominee; +• +Any other information concerning the proposed nominee(s) that our Company would be required to include in the Proxy Statement if the Board of Directors made the nomination; +• +The consent and commitment of the nominee(s) to serve as a director; +• +For each nominee, a completed and signed questionnaire, in a form provided by our Company upon written request, with respect to the background and qualification of such person being nominated and the background of any other person or entity on whose behalf the nomination is being made; +• +For each nominee, a written representation and agreement, in the form provided by our Company upon written request, with regards to any voting commitments, compensatory arrangements with a third party and compliance requirements applicable to directors of our Company; +• +A description of all agreements, arrangements and understandings between the stockholder and Stockholder Affiliate and any other person, including their names, in connection with the nominee; and +• +Whether the stockholder or any Stockholder Affiliate intends to conduct a proxy solicitation. +6 +Table of Contents +For these purposes, "Stockholder Affiliate" means (i) any person controlling, directly or indirectly, or acting in concert with, any stockholder making the nomination, (ii) any beneficial owner of shares of stock of our Company owned of record or beneficially by the stockholder making the nomination, and (iii) any person controlling, controlled by or under common control with the Stockholder Affiliate. The presiding officer of the annual meeting may refuse to acknowledge the nomination of any person not made in compliance with the foregoing procedure. Stockholder nominations submitted in accordance with the requirements of our Company's Bylaws will be forwarded to the Corporate Governance Committee. +Q: How can stockholders propose other actions for consideration at an annual meeting of stockholders? +A: Our Company's Bylaws provide that a stockholder seeking to propose actions at an annual meeting of stockholders (other than nomination of directors) must provide timely advance written notice to our Company. To be timely, a stockholder's notice generally must be received at our principal executive office on or before the date 90 days prior to the scheduled date of the meeting or, if it is to be held on a later date, on or before the date seven days after we first publish notice of the meeting. +Under our Bylaws, a stockholder's notice of proposed action to be made at an annual meeting of stockholders must include the following information: +• +A brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the meeting; +• +The name and address of the stockholder and any Stockholder Affiliate proposing such business; +• +The class and number of shares of our Company that are, directly or indirectly, beneficially owned by the stockholder and any Stockholder Affiliate; +• +Any derivative positions held or beneficially held by the stockholder and any Stockholder Affiliate, and whether and the extent to which any hedging or other transaction or series of transactions has been entered into by or on behalf of, or any other agreement, arrangement or understanding (including, but not limited to, any derivative position, short position, or any borrowing or lending of shares) has been made, the effect or intent of which is to mitigate loss to or manage risk or benefit of share price changes for, or to increase or decrease the voting power of, such stockholder or any Stockholder Affiliate with respect to our Company's securities; +• +A description of all agreements, arrangements and understandings between such stockholder or any Stockholder Affiliate and any other person or persons (including their names) in connection with the proposal of such business by such stockholder; +• +Any material interest of the stockholder or any Stockholder Affiliate in such business; and +• +Whether the stockholder or any Stockholder Affiliate intends to conduct a proxy solicitation. +Any stockholder providing such notice shall promptly provide any other information that our Company may reasonably request. For these purposes, "Stockholder Affiliate" means (i) any person controlling, directly or indirectly, or acting in concert with, any stockholder making the proposal for action at an annual meeting, (ii) any beneficial owner of shares of stock of our Company owned of record or beneficially by the stockholder making the proposal for action at an annual meeting, and (iii) any person controlling, controlled by or under common control with the Stockholder Affiliate. The presiding officer of the annual meeting may refuse to acknowledge any business not brought before the meeting in compliance with the foregoing procedure. +Q: I share an address with another stockholder, and we received only one paper copy of the proxy materials. How may I obtain an additional copy of the proxy materials? +A: We have adopted a procedure called "householding", which the SEC has approved. Under this procedure, we are delivering a single copy of the Notice and, if applicable, this Proxy Statement and the Annual Report to multiple stockholders who share the same address unless we have received contrary instructions from one or more of the stockholders. This procedure reduces our printing costs, mailing costs and fees. Stockholders who participate in householding will continue to be able to access and receive separate proxy cards. Upon written or oral request, we will promptly deliver a separate copy of the Notice and, if applicable, this Proxy Statement and the Annual Report to any stockholder at a shared address to which we delivered a single copy of any of these documents. To receive a separate copy of the Notice and, if applicable, this Proxy Statement or the Annual Report, or if you wish to receive separate copies in the future, please write or call us at the following address and telephone number: +Deckers Outdoor Corporation +Attn: Corporate Secretary +250 Coromar Drive +Goleta, California 93117 +(805) 967-7611 +In addition, if you are currently a stockholder sharing an address with another stockholder and wish to receive only one copy of future proxy materials for your household, please contact us using the contact information set forth above. Stockholders who hold shares in "street name" may contact their bank, broker, dealer or other nominee to request information about householding. +7 +Table of Contents +Q: Where can I find voting results of the Annual Meeting? +A: We will announce preliminary voting results with respect to each proposal at the Annual Meeting. In accordance with SEC rules, final voting results will be published in a Current Report on Form 8-K within four business days following the Annual Meeting, unless final results are not known at that time, in which case preliminary voting results will be published within four business days of the Annual Meeting and final voting results will be published once they are known by our Company. +Q: Whom should I contact with other questions? +A: If you have additional questions about this Proxy Statement or the Annual Meeting, or if you would like additional copies of this Proxy Statement, please contact: Deckers Outdoor Corporation, 250 Coromar Drive, Goleta, California 93117, Attention: Corporate Secretary, Telephone: (805) 967-7611. +This Proxy Statement and our Annual Report are available at www.deckers.com/investors +8 +Table of Contents +PROPOSAL NO. 1 +ELECTION OF DIRECTORS +Overview +Our Company's Bylaws provide for the annual election of directors. Our Bylaws also provide that our Board of Directors will consist of not less than one nor more than nine members. The specific number of members of our Board of Directors within this range is established by our Board of Directors. There are currently nine members of our Board of Directors. Ms. Bonita C. Stewart and Mr. Nelson C. Chan were elected as Board Members in September 2014 and December 2014, respectively. +At the Annual Meeting, stockholders will be asked to elect nine directors to serve until the next Annual Meeting of Stockholders to be held in 2016, or until their successors are elected and duly qualified. Proxies cannot be voted for a greater number of persons than the number of nominees named. The names and certain information concerning the persons nominated by our Board of Directors to become directors at the Annual Meeting are set forth below. Each of the proposed nominees currently serves as a member of our Board of Directors. +If all nominees for director are elected, then following the Annual Meeting, our Board of Directors will consist of nine members, and a majority of our Board of Directors and all members of each of its standing committees will continue to be "independent directors" under applicable securities exchange listing rules, as described below. +Agreements with Directors +None of the directors or nominees for director was selected pursuant to any arrangement or understanding, other than with the directors of our Company acting within their capacity as such. There are no family relationships among directors, nominees for director or executive officers of our Company. +Director Nominations +The Corporate Governance Committee is responsible for identifying and evaluating nominees for election to our Board of Directors. In addition to the candidates proposed by our Board of Directors or identified by the Corporate Governance Committee, the Committee considers candidates for director proposed by stockholders, provided such recommendations are made in accordance with the procedures set forth in our Bylaws. Please refer to the question titled " How can stockholders nominate a candidate for election as a director? " above. Stockholder nominations that meet the criteria outlined below will receive the same consideration that the Committee's nominees receive. +Director Qualifications +Directors are responsible for overseeing and monitoring our business consistent with their fiduciary duties to our stockholders. This significant responsibility requires highly-skilled individuals with various qualities, attributes, and professional experience. As detailed in the section of this Proxy Statement titled " Nominating Procedures and Criteria " below, our Board of Directors believes that there are both general requirements for service as a member of our Board of Directors that are applicable to all directors, and other specialized characteristics that should be represented on the Board as a whole, but not necessarily by each director. +The names of the nominees for director and certain biographical information about each nominee, including any public company directorships held by such nominee over the last five years, are set forth below. In addition, information about the specific qualifications, attributes and skills of each nominee that led to our Board's conclusion that each nominee should serve as a director of our Company is set forth below. +No Legal Proceedings with Directors +There are no legal proceedings related to any of the directors or director nominees which must be disclosed pursuant to Items 103 and 401(f) of Regulation S-K. +Qualifications for All Directors +Essential criteria for candidates considered by the Corporate Governance Committee include the following: +• +Personal and professional integrity +• +Good business judgment +• +Relevant experience and skills +• +Ability to be an effective director in conjunction with the full Board of Directors in collectively serving the long-term interests of our Company's stockholders +• +Commitment to devoting sufficient time and energy to diligently performing duties as a director +9 +Table of Contents +Diversity Factors Considered for all Director Nominees +The Corporate Governance Committee considers many factors when identifying nominees for director, including diversity with respect to personal characteristics (including race and gender) as well as diversity in the experience and skills that contribute to our Board's performance of its responsibilities in the oversight of our Company's business. However, the Committee has not adopted a formal policy with respect to the consideration of diversity. +Specific Qualifications, Attributes, Skills and Experience to be Represented on the Board of Directors +The Corporate Governance Committee believes that the competencies we seek in our directors should support our Company's strategies for long-term success. Below we identify the key qualifications and skills our directors bring to our Board of Directors, that we believe are important in light of our business and strategic direction. The particular qualifications and skills that our Board of Directors considered in nominating each individual director nominee are included in the directors' individual biographies below. +OUR COMPANY'S STRATEGY +Build niche brands into global lifestyle leaders +Innovate based on our industry expertise +Grow our global business +Connect with consumers through sophisticated marketing +Evolve and grow our multi-channel distribution +Manage risk appropriately in light of our long-term +strategic goals +10 +Table of Contents +2016 NOMINEES FOR DIRECTOR +Our director nominees reflect diversity of skills, backgrounds, ethnicities, gender and qualifications valued by our Board. The range of tenure on our Board brings a variety of perspectives to strategic, financial and operational deliberations. +Our Board of Directors has nominated the following nine directors for election at the Annual Meeting: Angel R. Martinez, John M. Gibbons, Karyn O. Barsa, Nelson C. Chan, Michael F. Devine, III, John G. Perenchio, James Quinn, Lauri M. Shanahan, and Bonita C. Stewart. Each director nominee currently serves on our Board of Directors. +NAME +AGE +DIRECTOR +SINCE +OCCUPATION +Angel R. Martinez +60 +2005 +Chair of the Board of Directors and Chief Executive Officer +John M. Gibbons +66 +2000 +Corporate Director +Karyn O. Barsa +54 +2008 +Corporate Director +Nelson C. Chan +54 +2014 +Corporate Director +Michael F. Devine, III +56 +2011 +Corporate Director +John G. Perenchio +60 +2005 +Corporate Director +James Quinn +63 +2011 +Corporate Director +Lauri M. Shanahan +52 +2011 +Corporate Director, Independent Consultant +Bonita C. Stewart +58 +2014 +Vice-President, Partner Business Solutions, Americas at Google, Inc. +The biographies of the director nominees are listed below, along with the specific qualifications, attributes, skills and experience of each director that our Board of Directors considered in nominating the directors. +11 +Table of Contents +ANGEL R. MARTINEZ +Age: 60 +Director Since: 2005 +Chairman of the Board +and Chief Executive Officer +Other Directorships: +Tupperware Brands Corporation +Mr. Martinez has been Chief Executive Officer of our Company since April 2005. In September 2005, Mr. Martinez became a director of our Company and in May 2008, he became Chair of our Board of Directors. Subject to his re-election as a director at the Annual Meeting, Mr. Martinez will remain Chair of the Board of Directors. Mr. Martinez has also served as a director of Tupperware Brands Corporation (NYSE:TUP) since 1998. +Specific Qualifications, Attributes, Skills and Experience +• +Industry Experience - Extensive experience in the footwear industry, including serving as Chief Executive Officer and Vice Chair of Keen, LLC, an outdoor footwear manufacturer. Also served in a variety of positions at Reebok International Ltd. and as Chief Executive Officer and President of The Rockport Company, a subsidiary of Reebok. +• +Entrepreneurial - During his tenure at Keen, LLC, successfully established this incipient brand for future growth. +• +Sales and Marketing Experience - Served as Executive Vice President and Chief Marketing Officer of Reebok International Ltd., a global athletic brand that sells and markets sports and lifestyle products. +• +International Experience - Held key management roles at Reebok International Ltd., Keen LLC and the Company during periods of international expansion. +• +Luxury/Premium Branding Experience - 10 years of experience with the UGG brand, a premier brand in luxurious comfort footwear, handbags, apparel, and cold weather accessories. Participated in the acquisition of the Ralph Lauren Footwear brand, which is managed as a subsidiary of The Rockport Company. +• +Retail Experience and Distribution/Logistics Experience - Owned and operated his own retail stores. While President of The Rockport Company, oversaw retail evolution for the brand, including opening over 50 brand stores. Involved in management of supply chain and distribution channels during his many years of industry experience. +• +Public Company Management Experience - Has served as Chief Executive Officer of our Company for 10 years. +• +Risk Oversight Experience - 17 years of experience as a corporate director with risk oversight responsibilities. +JOHN M. GIBBONS +Age: 66 +Director Since: 2000 +Other Directorships: +The Learning Network, Inc. +Board Committees: +Audit +Mr. Gibbons is an independent consultant. He is a director of The Learning Network, Inc. He also served as a director and Chair of the Audit Committee of National Technical Systems, Corp., a provider of integrated testing, certification, quality registration and systems evaluation services, from September 2003 until its acquisition in November 2013. +Specific Qualifications, Attributes, Skills and Experience +• +High Level of Financial Literacy and Experience - Currently serves as a member of our Company's Audit Committee and previously served as Chair of the Audit Committee from 2012. In addition to the positions listed above, from June 2000 to April 2004, Mr. Gibbons was Vice Chair of TMC Communications, Inc., a long distance, data and internet services provider, and was its Chief Executive Officer from June 2001 to April 2003. Mr. Gibbons was also Vice Chair of Assisted Living Corporation, a national provider of assisted living services, from March 2000 to December 2001. +• +Risk Oversight Experience - Extensive experience in risk oversight as a member and the former Chair of our Company's Audit Committee and former Chair of the Audit Committee of National Technical Systems, Corp. +• +Industry Experience - 15-year directorship at our Company. +• +Public Company Management Experience - On the board, Chief Executive Officer and Chief Operating Officer of The Learning Network, Inc. Previously employed by The Sports Club Company, which was previously listed on the American Stock Exchange, where he was Chief Executive Officer and a director from July 1999 to February 2000 and was President and Chief Operating Officer from January 1995 to July 1999. +• +Entrepreneurial - Has served in a variety of leadership positions for several companies during periods of expansion. +• +Luxury/Premium Branding Experience - Involved in several different capacities at The Sports Club Company, a company which markets clubs to affluent, health conscious individuals. +12 +Table of Contents +KARYN O. BARSA +Age: 54 +Director Since: 2008 +Other Directorships: +The Directors' Organization Ltd. +Performance Sports Group, Ltd. +Board Committees: +Audit +Compensation +Ms. Barsa served as Chief Executive Officer of Coyuchi, Inc., a maker of organic cotton bedding, bath and baby products, from April 2009 to May 2013. From February 2008 to April 2009, she served as President and Chief Executive Officer of Investors' Circle, a network of individual and institutional investors focused on sustainable business practices. She serves on the boards of The Directors' Organization Ltd. and Performance Sports Group, Ltd., and the advisory boards of Embark Stores, Inc., the Winter Sports School and Newpark Capital. +Specific Qualifications, Attributes, Skills and Experience +• +High Level of Financial Literacy and Experience - In addition to the Chief Executive Officer and director positions discussed above, served as Chief Financial Officer of Patagonia, Inc., a specialty outdoor apparel and equipment manufacturer. Also holds a B.A. in Economics from Connecticut College and an MBA from the University of Southern California. +• +Risk Oversight Experience - Serves as a member of the Audit Committee and serves on the board of The Directors' Organization Ltd. and Performance Sports Group, Ltd. +• +Luxury/Premium Branding Experience - In addition to serving as Chief Executive Officer of Coyuchi, Inc., served as Chief Executive Officer of Smith & Hawken, Ltd., a specialty gardening retailer between 1999 and 2001. +• +Industry Experience - Served as Chief Operating Officer and Chief Financial Officer of Patagonia, Inc. when footwear was introduced as a product of the company. +• +Distribution/Logistics Experience - As Chief Executive Officer of Coyuchi, Inc., Chief Executive Officer of Smith & Hawken, Ltd, and Chief Operating Officer of Patagonia, Inc. gained extensive experience in management of supply chain and distribution issues. +• +Sales and Marketing Expertise - Sales teams reported directly to Ms. Barsa in her roles at Patagonia Inc., Smith & Hawken, Ltd and Coyuchi, Inc. Direct sales and marketing experience as Chief Executive Officer of Investors' Circle and founder of HeadStart Custom Helmets. +• +Retail Experience - Executive experience at Patagonia, Inc., Smith & Hawken, Ltd. and Coyuchi, Inc., all companies with an important retail component. +• +Entrepreneurial - Has served in a variety of leadership positions for several companies during periods of expansion, including serving as Chief Executive Officer of Embark Stores, Inc., a start-up pet supplies retailer between May 2007 and February 2008. +NELSON C. CHAN +Age: 54 +Director Since: 2014 +Other Directorships: +Outerwall Inc. +Affymetrix, Inc. +Synaptics, Inc. +Board Committees: +Audit +In December of 2014, Mr. Chan became a director of our Company. Mr. Chan is Chairman of the Board of Directors of Outerwall Inc. (NASDAQ: OUTR). He is also Lead Independent Director of Synaptics, Inc. (NASDAQ: SYNA) and serves as a member of the Board of Directors of Affymetrix, Inc. (NASDAQ: AFFX). Mr. Chan is also a director of several privately held companies. From 2006 to 2008, Mr. Chan served as Chief Executive Officer of Magellan Corporation and from 1992 to 2006, he served in various management positions with SanDisk Corporation. Mr. Chan held sales, marketing and engineering positions at several technology-based companies from 1983 to 1992. +Specific Qualifications, Attributes, Skills and Experience +• +Entrepreneurial - Expertise in building technology companies. +• +High Level of Financial Literacy and Experience - Has held numerous senior management positions with other leading companies, including Chief Executive Officer at Magellan Corporation. +• +Public Company Management Experience - Extensive experience with several leading public and private companies, both as an executive and as a board member. +• +Sales/Marketing Experience - Held key sales, marketing and engineering positions at SanDisk Corporation, Chips and Technologies, Signetics and Delco Electronics. +13 +Table of Contents +• +International Experience - Was the Executive Vice President and General Manager, Consumer Business, while at SanDisk Corporation, a global multi-billion dollar company. +• +Risk Oversight Experience - Currently serves as a member of our Company's Audit Committee and has over 8 years of experience as a corporate director with risk oversight responsibilities. +MICHAEL F. DEVINE, III +Age: 56 +Director Since: 2011 +Other Directorships: +Express, Inc. +FIVE Below, Inc. +The Talbots Inc. +Sur La Table, Inc. +Board Committees: +Audit +Compensation +Mr. Devine retired as Executive Vice President and Chief Financial Officer from Coach, Inc. (NYSE: COH) in 2011. He currently serves as a member of the Board of Directors and Chair of the Audit Committee of Express, Inc. (NYSE: EXPR) and FIVE Below, Inc. (NYSE: FIVE). He also serves as a member of the Board of Directors of The Talbots Inc. and Sur La Table, Inc. From 2004 to 2007, Mr. Devine served as a member of the Board of Directors and Chair of the Audit Committee of Educate (formerly NASDAQ: EEEE), a leading K-12 education service company with solutions such as Sylvan Learning Center. Mr. Devine also previously served as a member of the Board of Directors and of the Audit Committee of NutriSystem, Inc. (NASDAQ: NTRI). +Specific Qualifications, Attributes, Skills and Experience +• +High Level of Financial Literacy and Experience - In addition to Mr. Devine's experiences at Coach, Inc. and as a director, prior to joining Coach, Inc. served as Chief Financial Officer and Vice President-Finance of Mothers Work, Inc. from February 2000 until November 2001. From 1997 to 2000, was Chief Financial Officer of Strategic Distribution, Inc., a Nasdaq-listed industrial store operator. From 1995 to1997, was Chief Financial Officer at Industrial System Associates, Inc., and for the prior 6 years he was the Director of Finance and Distribution for McMaster-Carr Supply Co. Holds a Bachelor of Science degree in Finance and Marketing from Boston College and an MBA in Finance from the Wharton School of the University of Pennsylvania. +• +Public Company Management Experience - Experience at Coach, Inc. involved managing a public company during a period of high growth. +• +Risk Oversight Experience - 9 years of experience as a corporate director with risk oversight responsibilities. +• +Luxury/Premium Branding Experience - Coach, Inc. is a leading marketer of modern classic American accessories. +• +Industry Experience - In addition to experience at Coach, Inc., serves as a director of Express, Inc., a nationally recognized specialty apparel and accessory retailer offering both women's and men's merchandise. +• +Distribution/Logistics Experience and Retail Experience - Involved in supply chain and wholesale and retail distribution channels while at Coach, Inc. +• +International Experience - Involved in a global brand with worldwide operations while at Coach, Inc. +JOHN G. PERENCHIO +Age: 60 +Director Since: 2005 +Other: +Private Investor +Board Committees: +Compensation Corporate Governance +Mr. Perenchio is a private investor. From 1999 until May of 2015, he held controlling interests and was a principal in various music industry companies, involved in the production and sale of recorded music, music publishing and merchandise. Since late 2009, Mr. Perenchio has been involved in Club Ride Apparel, LLC, a start-up sports apparel company in which he owns a controlling interest. +Specific Qualifications, Attributes, Skills and Experience +• +Entrepreneurial - Involved in the formation of a myriad of different successful business enterprises, from music to apparel. From 1990 to 2003, served as an executive with Chartwell Partners, LLC, a family owned boutique investment and holding company specializing in the entertainment, media and real estate industries. +• +Industry Experience - Experience in apparel and has been a director of our Company for 10 years. +• +Sales and Marketing Experience - Experience with designing and implementing marketing and sales plans in the music industry, internet retail, real estate industry and the sports apparel industry. +14 +Table of Contents +• +Risk Oversight Experience - In addition to the director and management experiences discussed above, from 1984 to 1990, served as in-house counsel at Triad Artists, Inc., one of the then premier talent agencies in the world, and prior to that, from 1982 to 1984, he practiced law as an attorney in California. +• +Public Company Management Experience - 10-year directorship at our Company. From 1992 to 2007, Mr. Perenchio was a director of Univision Communications Inc., the leading Spanish-language media company in the United States. +JAMES QUINN +Age: 63 +Director Since: 2011 +Other Directorships: +Mutual of America Capital Management, Inc. +Prudential Retail Mutual Funds +Board Committees: +Corporate Governance +Mr. Quinn retired as President of Tiffany & Co. (NYSE: TIF) effective January 31, 2012. He was named to Tiffany & Co.'s board of directors in 1995 and served until 2008. Mr. Quinn also currently serves as a director of Mutual of America Capital Management, Inc. and Prudential Retail Mutual Funds. +Specific Qualifications, Attributes, Skills and Experience +• +Public Company Management Experience - As the former president of Tiffany & Co., oversaw retail sales in Tiffany stores in more than 50 countries, with responsibility for the company's global expansion strategy, including the significant Tiffany & Co. presence established throughout Asia. Joined Tiffany & Co. in 1986 and held a series of significant positions including Vice Chairman prior to his appointment as President in 2003. +• +Luxury/Premium Branding Experience - Tiffany & Co. is a jeweler and specialty retailer whose principal merchandise offering is fine jewelry. +• +Distribution/Logistics Experience and Retail Experience - At Tiffany & Co., involved in supply chain, retail and other distribution channels. +• +International Experience - While at Tiffany & Co., involved in a global brand with worldwide operations. +• +Risk Oversight Experience - 20 years of experience as a corporate director with risk oversight responsibilities. +LAURI M. SHANAHAN +Age: 52 +Director Since: 2011 +Other Directorships: +Charlotte Russe Holdings, Inc., +Cedar Fair Entertainment Company +Board Committees: +Compensation +Ms. Shanahan is a seasoned retail executive with over 20 years of senior level experience across global, multi-channel, multi-brand enterprises and other specialty retail and consumer service companies. Ms. Shanahan is also on the board of directors and is Chair of the Compensation Committee of Charlotte Russe Holdings, Inc., a specialty retailer of apparel and accessories with over 500 stores, and on the board of Cedar Fair Entertainment Company, a publicly traded partnership that owns and operates amusement parks and resorts in North America. In addition, Ms. Shanahan is a principal of Maroon Peak Advisors, which provides a broad range of advisory services in the retail and consumer products sector. +Specific Qualifications, Attributes, Skills and Experience +• +Public Company Management Experience - Joined The Gap Inc. (NYSE: GPS) in 1992 and served for 16 years in numerous leadership roles including Chief Administrative Officer, Chief Legal Officer and corporate secretary. +• +Distribution/Logistics Experience and Retail Experience - Involved in retail and other distribution channels and supply chain while at The Gap Inc. and as a consultant. +• +International Experience— Involved with global brands with worldwide operations while at The Gap Inc. and as a consultant. +• +Industry Experience and Luxury/Premium Branding Experience - Gained experience in footwear, apparel and accessories at The Gap Inc., Charlotte Russe Holdings, Inc. and through consulting business. The Gap Inc. is a leading global specialty retailer offering clothing, footwear, accessories, and personal care products for men, women, children, and babies under the Gap, Banana Republic, Old Navy, Piperlime, and Athleta brands. +• +Risk Oversight Experience - In addition to her other leadership roles at The Gap Inc., Ms. Shanahan served as Chief Compliance Officer and Chief Legal Officer where she oversaw the global corporate risk committee as well as the global governance and compliance organization. +15 +Table of Contents +BONITA C. STEWART +Age: 58 +Director Since: 2014 +Other: +Vice President, Partner Business Solutions, Americas at Google, Inc. +Board Committees: +Corporate Governance +In September of 2014, Ms. Stewart became a director of our Company. Ms. Stewart is currently the Vice President, Partner Business Solutions, Americas at Google, Inc. (NASDAQ:GOOG) and has been with Google, Inc. since 2006. At Google, Inc. she leads strategy, business development and revenue growth plans for large partners using Google, Inc. products. From 2002 to 2006, Ms. Stewart worked for DaimlerChrysler AG where she was Director, Chrysler Group, Interactive Communications and prior to that, Director, Chrysler Brand Communications. Ms. Stewart began her career in 1979 at IBM Corporation where she served in various financial and marketing management positions. Ms. Stewart has an MBA from Harvard Business School. +Specific Qualifications, Attributes, Skills and Experience +• +Industry Experience - Over 24 years of experience in brand management, digital strategy and execution. +• +Financial Literacy and Experience - Leads strategy, business development and revenue growth plans for large partners using Google, Inc. products. +• +Entrepreneurial - Served as President, Chief Operating Officer, and Co-Founder of Nia Enterprises, a web-based company. +• +Sales and Marketing Experience - Sales, marketing, global pricing and online advertising experience. +• +International Experience - Currently the Vice President, Partner Business Solutions, Americas at Google, Inc. and has worked for Chrysler Group and IBM Corporation, which are multi-billion dollar global companies. +• +Public Company Management Experience - Strategic planning, operational large scale (multi-billion). 10-year management career at IBM Corporation. +Summary of Qualifications of 2016 Director Nominees +The table below summarizes the specific qualifications, attributes, skills and experience of each director nominee that led our Board of Directors to conclude that the nominee is qualified to serve on our Board of Directors. While each director nominee is generally knowledgeable in each of these areas, an "X" in the chart below indicates that the item is a specific qualification, attribute, skill or experience that the nominee brings to our Board of Directors. The lack of an "X" for a particular item does not mean that the nominee does not possess that qualification, attribute, skill or experience. +16 +Table of Contents +SUMMARY OF DIRECTOR SKILLS AND QUALIFICATIONS +Angel R. +Martinez +John M. +Gibbons +Karyn O. +Barsa +Nelson C. +Chan +Michael F. +Devine, III +John G. +Perenchio +James +Quinn +Lauri M. +Shanahan +Bonita C. +Stewart +Luxury/Premium Branding Experience +X +X +X +X +X +X +Entrepreneurial +X +X +X +X +X +X +Distribution/Logistics Experience +X +X +X +X +X +Retail Experience +X +X +X +X +X +Sales and Marketing Experience +X +X +X +X +X +X +High Level of Financial Literacy and Experience +X +X +X +X +X +International Experience +X +X +X +X +X +X +Public Company Management Experience +X +X +X +X +X +X +X +X +Industry Experience (Footwear, Apparel and Accessories) +X +X +X +X +X +X +X +Risk Oversight Experience +X +X +X +X +X +X +X +X +Voting Requirements +Our Board of Directors has adopted a majority voting standard for uncontested director elections. Each director nominee will be elected by a majority of the votes cast at the Annual Meeting (assuming a quorum is present). A majority of the votes cast means that the number of votes "FOR" a nominee for director must exceed 50% of the total votes cast. Votes "AGAINST" a nominee for director will count as votes cast for purposes of this proposal, but a "WITHHOLD AUTHORITY" vote with respect to shares and broker non-votes will not count as votes cast. Our Board of Directors recommends that you vote "FOR" each of the director nominees. Accordingly, the persons named as proxyholders in the attached proxy will vote to elect all nine director nominees named below unless contrary instructions are given in the proxy. Please refer to the question titled " What are the voting requirements to approve the proposals?" above for additional information. +Although each of the persons named below has consented to serve as a director if elected, and our Board of Directors has no reason to believe that any of the nominees named below will be unable or unwilling to serve as a director, if any nominee withdraws or otherwise becomes unavailable to serve, our Board of Directors may reduce the number of directors fixed by our Bylaws, or the proxies may be voted for the election of such other person as a director as our Board of Directors may recommend in place of the nominee. +____________________________________________________________________ +BOARD RECOMMENDATION +OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE +"FOR" +THE ELECTION OF EACH OF THE ABOVE DIRECTOR NOMINEES. +____________________________________________________________________ +17 +Table of Contents +CORPORATE GOVERNANCE +Corporate Governance at Deckers +Corporate Governance at Deckers is managed under the direction of our Board of Directors. Our Board of Directors has a long-standing commitment to comprehensive and effective corporate governance practices. Our Board of Directors continues to evaluate our governance arrangements to ensure that the right mix of individuals are present in our boardroom and to best serve our stockholders by ensuring effective oversight of our strategy and management. Our Board of Directors has adopted Corporate Governance Guidelines that set forth the primary framework of governance principles applicable to our Company. The complete copy of our Company's current Corporate Governance Guidelines is available on our website at www.deckers.com/investors. +Corporate Governance Highlights +Our Board of Directors is committed to maintaining the highest standards of corporate governance and has established a strong framework by which our Company is governed. Highlights include: +OUR POLICY OR PRACTICE +DESCRIPTION AND BENEFIT TO OUR STOCKHOLDERS +STOCKHOLDER RIGHTS +Annual Election of Directors +• Our directors are elected annually, reinforcing their accountability to our stockholders. +Single Class of Outstanding Voting Stock +• Our common stockholders control our Company, with equal voting rights. +Majority Voting Standard +• We have a majority voting standard for uncontested director elections. +BOARD STRUCTURE +Director Independence +• Based on the director independence requirements set forth in our Corporate Governance Guidelines, as well as in the applicable NYSE and SEC rules, our Board of Directors has determined that each of our directors, other than Mr. Martinez, is an "independent director". +Lead Independent Director +• We have appointed a Lead Independent Director to perform defined duties, such as discussing and approving Board meeting agendas and communicating with major stockholders, as needed. +Committee Governance +• Our three Board Committees: Audit, Compensation and Corporate Governance, consist exclusively of independent directors and have written charters. Committee composition and charters are reviewed annually by our Board. +Board Leadership and Structure +• Effective leadership structure of a combined Chair of the Board of Directors and Chief Executive Officer, Mr. Martinez. Mr. Martinez partnered closely with our Lead Independent Director, Mr. Gibbons. This leadership structure facilitates communication between our Board and our management. +Annual Board Self-Evaluations +• Our Corporate Governance Committee conducts and oversees the annual self-evaluations of our Board to ensure that each director continues to serve the best interests of our stockholders. +Board Oversight of Risk +• Directors are responsible for supervision of risk management activities with our Audit Committee overseeing risk management. Our full Board of Directors regularly engages in discussions of the most significant risks we face and how these risks are managed. +EXECUTIVE COMPENSATION +Annual Say-on-Pay Vote +• Annually, our stockholders have the opportunity to cast an advisory vote on the compensation payable to our NEOs. +Corporate Governance Principles +Pursuant to Delaware law and our Company's Bylaws, our Company's business, property and affairs are managed under the direction of the Board of Directors. Thus, our Board of Directors is the ultimate decision-making body of our Company, except with respect to those matters reserved to the stockholders. +Our Board of Directors selects the senior management team, which is charged with the day-to-day operations of our Company's business. Members of our Board of Directors are kept informed of our Company's business through discussions with our Chief Executive Officer and other senior management personnel including informally between meetings, by attending brand sales meetings as well as industry events, by reviewing materials requested by them or otherwise provided to them and by +18 +Table of Contents +participating in periodic informal telephonic meetings, as well as formal meetings of the Board of Directors and its committees. Having selected the senior management team, our Board of Directors acts as an advisor and counselor to senior management, monitors its performance and proposes or makes changes to the senior management team when it deems necessary or appropriate. +Board of Directors Meetings +For the fiscal year ended March 31, 2015, each of the directors attended at least 75% of the meetings of our Board of Directors and the meetings of the committees of our Board on which he or she served. Time is scheduled for our independent directors to meet in an executive session at every Board meeting. As Lead Independent Director, Mr. Gibbons presided at these executive sessions. +Our Company's Corporate Governance Guidelines state that directors are expected to attend each of our Company's annual meetings of stockholders. The majority of the members of the then Board of Directors attended the 2014 Annual Meeting of Stockholders held in September 2014. +Director Independence +Our Corporate Governance Guidelines require that our Board be comprised of a majority of directors, who satisfy the criteria for independence under appropriate NYSE rules. These guidelines help ensure that the interests of our Board of Directors and management align with the interests of our stockholders, and that we are in compliance with applicable securities exchange rules and regulatory requirements. An independent director is one who meets the independence requirements of the NYSE and who our Board affirmatively determines has no material relationship with our Company, directly or indirectly as a partner, stockholder or officer of an entity with which our Company has a relationship. +Based on the director independence requirements set forth in our Company's Corporate Governance Guidelines, as well as in the applicable NYSE rules, our Board of Directors has determined that each of our directors, other than Mr. Martinez, is an "independent director". +Independent Directors +John M. Gibbons +Karyn O. Barsa +Nelson C. Chan +Michael F. Devine, III +John G. Perenchio +James Quinn +Lauri M. Shanahan +Bonita C. Stewart +Board Leadership Structure and Lead Independent Director +We have employed a leadership structure utilizing a combined Chair and Chief Executive Officer with a strong Lead Independent Director for many years and our Board of Directors believes that this leadership structure has been effective. The combined structure provides a single leader for our Company who is seen by our employees, customers, business partners and stockholders as providing clear direction and strong leadership. Furthermore, our Board of Directors believes this structure facilitates communication between our Board of Directors and our management. In light of this combined office, our Board of Directors has implemented various counterbalancing governance structures including a Lead Independent Director, an eight-ninths independent board, committees of the Board of Directors comprised solely of independent directors, and the Corporate Governance Guidelines discussed above. +Balancing our combined Chair of the Board of Directors and Chief Executive Officer is our Lead Independent Director who has important duties in and outside of the boardroom to ensure effective and independent oversight of Board decision making. Mr. Gibbons currently serves as our Lead Independent Director. Our Corporate Governance Guidelines describe these duties, which outline clear responsibilities to ensure independent oversight of our Board, as summarized below. +19 +Table of Contents +LEAD INDEPENDENT DIRECTOR +• Coordinates the scheduling and preparation of agendas for the executive sessions of our Board and other meetings of our Board in the absence of the Chair of the Board. +• Chairs executive sessions of our Board and other meetings of our Board, in the absence of the Chair of the Board. +• Approves information sent to our Board. +• Serves as a liaison between the Chair of our Board and the other independent directors. +• Approves meeting agendas and meeting schedules of the Board to assure that there is sufficient time for discussion of all agenda items. +• If requested by major stockholders, consults and directly communicates with stockholders. +• Has the authority to call meetings of the independent directors. +• Pursuant to the direction of Corporate Governance Committee for FY 2015, oversees evaluation of Chair of our Board/Chief Executive Officer. +Current Lead Independent Director: +John M. Gibbons +Executive Sessions Led in 2015: +8 +Lead Independent Director is selected by the independent directors to serve a two-year term. +Board Committees +Our Board of Directors has three committees: the Audit Committee, the Compensation Committee and the Corporate Governance Committee. Each member of each of the committees is an "independent director" for purposes of the applicable NYSE and SEC rules. Each of our committees has a written charter that describes its purpose, membership, meeting structure and responsibilities. A copy of each committee's charter is available on our website at www.deckers.com/investors. These charters are reviewed annually by each committee, with any recommended changes adopted upon approval by our Board. The charters were last amended in September 2014. +The primary responsibilities, membership and meeting information for the three committees of our Board are listed below. +AUDIT COMMITTEE +• Oversees management's conduct of, and the integrity of, our Company's financial reporting to any governmental or regulatory body, stockholders, other uses of Company financial reports and the public. +• Oversees the qualifications, engagement, compensation, independence and performance of the registered public accounting firm that audits the annual financial statements of our Company and reviews the quarterly reportings and any other registered public accounting firm engaged to prepare or issue an audit report or to perform other audit, review or attest services for our Company. +• Oversees our Company's legal and regulatory compliance. +• Oversees the performance of our Company's internal audit function. +• Oversees the application of our Company's related person transaction policy as established by our Board of Directors. +• Oversees our Company's systems of internal control over financial reporting and disclosure controls and procedures. +• Oversees the application of our Company's code of business conduct and ethics as established by our Board of Directors. +Members: +Michael F. Devine, III (Chair) +Karyn O. Barsa +Nelson C. Chan +John M. Gibbons +Meetings in 2015: 8 +All members of the Audit Committee meet the independence and experience standards required by the NYSE and the SEC. +Mr. Gibbons, Ms. Barsa, Mr. Chan and Mr. Devine have been determined by the Board to be "audit committee financial experts", per SEC regulations. +COMPENSATION COMMITTEE +• Oversees design of executive compensation program. +• Reviews and approves Company and individual goals and objectives relevant to compensation of our Executive Officers. +• Evaluates the performance of our Executive Officers in light of those goals and objectives. +• Determines and approves the compensation level of our Executive Officers based on this evaluation, including each element of compensation. +• Makes recommendations to our Board of Directors regarding any action that is required by law or regulation to be submitted to stockholders of our Company for approval with respect to incentive-compensation plans and equity-based plans. +• Administers the Company's equity-based plan, and approves or delegates authority to approve individual award grants under those plans or recommend award grants to the Board for approval. +• Produces an annual report on executive compensation for inclusion in our Company's annual report or proxy statement for our annual meeting of stockholders. +Members: +Lauri M. Shanahan (Chair) +Karyn O. Barsa +Michael F. Devine, III +John G. Perenchio +Meetings in 2015: 11 +All members of the Compensation Committee meet the independence standards required by the NYSE and SEC. +20 +Table of Contents +CORPORATE GOVERNANCE COMMITTEE +• Develops and recommends to our Board of Directors a set of Corporate Governance Guidelines applicable to our Company. +• Identifies individuals qualified to become directors, consistent with criteria specified in the Corporate Governance Guidelines. +• Recommends to our Board of Directors the qualified director nominees to be selected by our Board. +• Recommends to our Board of Directors membership of the Board committees. +• Ensures that our Company's Certificate of Incorporation and Bylaws are structured in a way that best serves our Company's practices and objectives and recommends to our Board of Directors amendments for consideration by the Board and/or the stockholders, as appropriate. +• Oversees the evaluation of management, our Board and Board committees. +• Oversees and approves the management continuity planning process. +• Reviews and evaluates the development and succession plan relating to the Chief Executive Officer and our Company's other executive officers. +Members: +James Quinn (Chair) +John G. Perenchio +Bonita C. Stewart +Meetings in 2015: 4 +All members of the Corporate Governance Committee meet the independence standards required by the NYSE and SEC. +Nominating Procedures and Criteria +Among its functions, the Corporate Governance Committee considers and approves nominees for election to our Board of Directors. In addition to the candidates proposed by our Board of Directors or identified by the Corporate Governence Committee, the Committee considers candidates for director proposed by our stockholders, provided such recommendations are made in accordance with the procedures set forth in our Bylaws and described in the question titled " How can stockholders nominate a candidate for election as a director? " above. Stockholder nominations that meet the criteria outlined below will receive the same consideration as the Corporate Governance Committee's nominees. +Essential criteria for all candidates considered by the Corporate Governance Committee are discussed in the section of this Proxy Statement titled "Qualifications for All Directors". In evaluating candidates for certain Board positions, the Committee also evaluates additional criteria, as reflected in the section of this Proxy Statement titled "Specific Qualifications, Attributes, Skills and Experience to be Represented on the Board of Directors." +In selecting nominees for our Board of Directors, the Corporate Governance Committee evaluates the general criteria set forth above, identifies the specialized criteria for which the Committee has determined there is a need, prior to commencement of the recruitment process, and considers the candidate's ability to contribute to the success of our Company. In evaluating an existing director for re-election, the Corporate Governance Committee considers a variety of factors, including attendance at Board of Directors and committee meetings, previous performance, length of service on our Board of Directors, experience, skills and contributions brought to our Board of Directors, and independence. +The Board of Directors' nominees for the Annual Meeting have been recommended by the Corporate Governance Committee, as well as our full Board of Directors. +As of the date on which this Proxy Statement was made available to our stockholders, the stockholders had not proposed any candidates for election at the Annual Meeting. +Management Succession +Pursuant to our Corporate Governance Guidelines, the Corporate Governance Committee provides an annual report to our Board of Directors on emergency and expected Chief Executive Officer succession planning. Our Board of Directors works with the Corporate Governance Committee to nominate and evaluate potential successors to the Chief Executive Officer. The Chief Executive Officer provides the Corporate Governance Committee with his input as to potential successors. +Board Role in Risk Oversight +While risk management is primarily the responsibility of our management, our Board of Directors is responsible for the overall supervision of our business, an important element of which is supervision of our risk management activities. Our Board of Directors delegates many of these functions to the Audit Committee. Under its charter, the Audit Committee is responsible for: (i) reviewing and discussing with management, the highest ranking manager of internal audit and the independent registered public accounting firm our Company's financial risk exposures and assessing the policies and processes management has implemented to monitor and control such exposure, (ii) assisting our Board in fulfilling its oversight responsibilities regarding our policies and processes with respect to risk assessment and risk management, including any significant non-financial risk exposures, and (iii) reviewing our annual disclosures concerning the role of our Board in the risk oversight of our Company, such as how our Board administers its oversight function. The Audit Committee also oversees our internal audit function. In addition to the Audit Committee's work in overseeing risk management, our full Board of Directors regularly engages in discussions of the most significant risks that we face and how these risks are being managed, and our Board receives reports on risk management from the Chair of the Audit Committee. +21 +Table of Contents +Our legal and internal audit executives report directly to the Audit Committee regarding material risks to our business, among other matters, and the Audit Committee meets in executive sessions with the internal audit executive and with representatives of our independent registered public accounting firm. The Chair of the Audit Committee reports to the full Board of Directors regarding material risks as deemed appropriate. Every Board meeting agenda also includes a time to discuss risk management updates. In addition to the responsibilities undertaken by the Audit Committee, the other Board committees have oversight of specific risk areas, consistent with the committees' charters and responsibilities. For example, the Compensation Committee oversees the design of our executive compensation program so as to mitigate compensation-related risk and our Corporate Governance Committee develops our Corporate Governance Guidelines to establish appropriate governance practices. +Compensation Committee Interlocks and Insider Participation +As of the date on which this Proxy Statement was made available to our stockholders, no member of the Compensation Committee is serving, and during the past year no member of the Compensation Committee has served, as an officer or employee of our Company or any of its subsidiaries. None of these members had any relationship with our Company during 2015 requiring disclosure under Item 404 of Regulation S-K. None of our executive officers currently serves, or in the past year has served, as a member of our Board of Directors, or compensation committee (or other committee serving a similar purpose) of any entity that has an executive officer serving on our Board of Directors or Compensation Committee. We have entered into an indemnification agreement with each of our directors, including each member of the Compensation Committee. +Communications with Directors +Stockholders and other interested parties may communicate with the Chair of the Audit Committee, Corporate Governance Committee, or Compensation Committee, or with our independent directors as a group, by writing to any such person or group. +Communications should be sent +c/o the Corporate Secretary, to our Company's corporate headquarters at: +250 Coromar Drive, Goleta, California 93117. +Communications are distributed to our Board of Directors, or to any individual director, depending on the facts and circumstances described in the communication. In that regard, our Board of Directors has requested that certain items that are unrelated to the duties and responsibilities of our Board of Directors should be excluded, including the following: junk mail and mass mailings, product complaints, product inquiries, new product suggestions, resumes and other forms of job inquiries, surveys, and business solicitations or advertisements. In addition, material that is unduly hostile, threatening, illegal or similarly unsuitable will not be distributed, except that any communication that is not distributed will be made available to any independent director upon request. +Code of Ethics and Accounting and Finance Code of Ethics +Our Company has adopted a Code of Ethics to help its officers, directors and other employees comply with the law and maintain the highest standards of ethical conduct. The Code of Ethics contains general guidelines for conducting the business of our Company consistent with the highest standards of business ethics. All of our Company's officers, directors and employees must carry out their duties in accordance with the policies set forth in the Code of Ethics and with applicable laws and regulations. The Code of Ethics complies with the requirements set forth in the NYSE Listed Company Manual. +Our Board has also adopted an Accounting and Finance Code of Ethics which focuses on the financial reporting process and applies to our Company's Chief Executive Officer, Chief Financial Officer and Corporate Controller (and other officers serving similar functions) and is intended to qualify as a "code of ethics" within the meaning of Section 406 of the Sarbanes-Oxley Act of 2002 and the rules promulgated thereunder. +To the extent required by law, any amendments to, or waivers from, any provision of the Code of Ethics or the Accounting and Finance Code of Ethics will be promptly disclosed publicly on our corporate website. +Both our Code of Ethics and our Accounting and Finance Code of Ethics are available on our website at www.deckers.com/investors . +22 +Table of Contents +EXECUTIVE OFFICERS +EXECUTIVE OFFICER +AGE +POSITION +Angel R. Martinez +60 +Chair of the Board of Directors and Chief Executive Officer +Thomas A. George +58 +Chief Financial Officer +David Powers +47 +President of Deckers Brands +David E. Lafitte +51 +Chief Operating Officer +Sergio Azzolari +46 +Senior Vice President, Europe, Middle East and Africa +Each executive officer of our Company serves at the discretion of our Board of Directors. Biographical information for our executive officers as of the date on which this Proxy Statement was made available to stockholders, is set forth below. There are no family relationships between any executive officer and any other executive officer or director. None of our executive officers were selected pursuant to any arrangement or understanding, other than with the executive officers of our Company acting within their capacities as such. There are no legal proceedings related to any of the executive officers which must be disclosed pursuant to Item 401(f) of Regulation S-K. +ANGEL R. MARTINEZ +The biographical summary for Mr. Martinez is presented in the section of this Proxy Statement titled "2016 Nominees for Director". +THOMAS A. GEORGE +Mr. George has been our Chief Financial Officer since September 2009. He has over 31 years of experience in corporate finance and accounting, having served in a number of senior level positions with both public and private companies. From February 2005 to September 2009, Mr. George was Chief Financial Officer of Ophthonix, Inc., a private technology company. Prior to Ophthonix, Inc. from October 1997 to February 2005, Mr. George was the Chief Financial Officer of Oakley, Inc., now a division of Luxottica Group S.p.A., a publicy held global consumer products brand with wholesale and retail distribution of multiple product categories including sunglasses and prescription eyewear, apparel, footwear, watches and electronics. Prior to Oakley, Inc from December 1987 to October 1997, Mr. George was the Senior Vice President and Chief Financial Officer of REMEC, Inc., a public technology company. Mr. George has also served as Corporate Controller and Manager of Financial Planning for other public technology firms. He began his career at Coopers & Lybrand, where he became a Certified Public Accountant. He received a B.S. in Business Administration from the University of Southern California. +DAVID POWERS +Mr. Powers joined our Company in 2012 as President of Direct-to-Consumer and was promoted to President of Deckers Brands in March 2015. Mr. Powers has over twenty years of experience in merchandising, concept development and leading global retail operations. Prior to joining our Company, Mr. Powers served 4 years as Vice President of Global Direct-to-Consumer at Converse Inc. Mr. Powers also held several executive leadership roles at The Timberland Company, including Worldwide General Merchandise Manager and Senior Director European Retail, where he led worldwide retail merchandising, marketing, visual and store design, and oversaw European Retail Operations. Prior to this, Mr. Powers spent 10 years at Gap Inc. where he held multiple senior management titles, including Global Divisional Merchandise Manager for the boy's division. Mr. Powers graduated Cum Laude from Northeastern University with a B.S. in Marketing. +DAVID E. LAFITTE +Mr. Lafitte was appointed Chief Operating Officer of our Company in February 2015. From 2012 to January 2015, he was outside General Counsel for our Company. Prior to joining our Company, Mr. Lafitte was a shareholder with the law firm Stradling Yocca Carlson & Rauth, P.C. where he was a member of the firm's board of directors and executive committee, and had been advising our Company since 2006. He received, a J.D. from Tulane University and a B.A. from the University of Colorado. +SERGIO AZZOLARI +Mr. Azzolari joined our Company as Senior Vice President of Europe, Middle East and Africa (EMEA) in February 2015. Most recently, Mr. Azzolari was with Luxottica Group S.p.A. prior to joining our Company. Mr. Azzolari has held a number of leadership roles at several international brands including Fornari S.p.A, Missoni S.p.A. and Benetton Group S.p.A. +23 +Table of Contents +COMPENSATION DISCUSSION AND ANALYSIS +The Compensation Committee, which we refer to as the Committee for purposes of this Compensation Discussion and Analysis, is responsible for the compensation of our Named Executive Officers (reflected in the table below). In this section we discuss and analyze the compensation of our principal executive and principal financial officer and our three other most highly compensated executive officers, which we refer to as the "Named Executive Officers" for the fiscal year ended March 31, 2015. This section is divided into the following five parts: +EXECUTIVE SUMMARY +COMPENSATION PHILOSOPHY AND OBJECTIVES +COMPENSATION CONSULTANT AND PEER GROUP +ELEMENTS OF FISCAL YEAR 2015 EXECUTIVE COMPENSATION PROGRAM +OTHER COMPENSATION CONSIDERATIONS +NAMED EXECUTIVE OFFICERS +NAME +TITLE +EMPLOYMENT HISTORY AT OUR COMPANY +Angel R. Martinez +Chair of the Board of Directors and Chief Executive Officer +Has been with our company as Chief Executive Officer since 2005 and Chair of of the Board of Directors since 2008. In March 2015, Mr. Powers assumed the role of President from Mr. Martinez. +Thomas A. George +Chief Financial Officer +Joined our Company in September 2009 and continues to lead as Chief Financial Officer. +David Powers +President of Deckers Brands +Appointed as President of Deckers Brands in March 2015. He joined our Company as President of Direct-to-Consumer in August 2012. +David E. Lafitte +Chief Operating Officer +Appointed in February 2015, after serving as our General Counsel via our outside law firm since September 2011. +Constance X. Rishwain +President of UGG Brand +Appointed as President of UGG in 2002, after serving in a number of capacities since she started with our Company in January 1995. +Ms. Rishwain will be stepping down at the end of July 2015. +24 +Table of Contents +EXECUTIVE SUMMARY +FISCAL YEAR 2015 +KEY COMPENSATION PROGRAM CHANGES +Reduced Overall Target Pay Positioning +• Reduced overall target pay positioning for entire program to 60th to 75th percentile range from 75th to 100th percentile for Aspirational elements and median to 75th percentile for Core elements +• Simplified target pay positioning by eliminating Core and Aspirational delineations +• Above median positioning is appropriate as 100% of all Cash Incentive Plan and Annual Equity Awards are performance-based and subject to higher risk of forfeiture than many Peer Group programs +Simplified Annual Cash Incentive Plan +• Simplified Cash Incentive Plan design by eliminating the Individual Discretionary Portion for the NEOs +• All elements of award are formulaic +• Committee retains negative discretion to decrease payouts under this Plan +• Reduced overall maximum payout range from 230% to 200% +Refined Annual Equity Program +• Formalized grant mix between NSU and LTIP Equity Awards +• Total annual equity grant for all NEOs allocated 40% NSU and 60% LTIP RSU to ensure alignment and increase portion tied to long-term performance. Only 47% of value granted through LTIP RSUs to NEOs in the prior fiscal year. +• NSU awards for all NEOs based on achievement of stretch budget goal for one-year diluted EPS with payout range from 0% to 100% +• LTIP awards for all NEOs based on achievement of stretch budget goals for two metrics - Revenue and EBITDA +• LTIP awards payout range from 0% to 200% of target. Maximum payout, however is earned only upon achievement of aspirational performance metrics. +Increased Peer Group Size +• Fully re-evaluated Peer Group and increased Peer Group size to 20 companies from 11 companies +The 2015 Fiscal Year in Review +We believe that our financial and operating results for FY 2015 as compared to the twelve month period ending March 31, 2014, are a reflection of our strong brands, exceptional team of executives, and a compensation program that pays for performance. +FISCAL YEAR 2015 HIGHLIGHTS +• Our Revenue increased 14.5% to a record $1.817 billion. +• We continued our efforts to increase and diversify our global presence, resulting in 35.9% of our business being conducted internationally. +• Our diluted EPS increased 14.5% to $4.66 compared to $4.18 last year. +• Our retail sales increased 12.0% to $384.3 million compared to $343.2 million last year, driven by the opening of 30 new stores. +• Our gross margin was 48.3% compared to 47.7% last year. +• Our E-Commerce sales increased 28.4% to $233.1 million compared to $181.5 million last year, driven by an increase in sales through our existing websites and the addition of new global e-commerce websites. +• Our 5-year total shareholder return (TSR) from December 31, 2009 to March 31, 2015 was 115%. +• We grew our Direct-to-Consumer platform and enhanced our OmniChannel capabilities to better engage and serve consumers in a more connected environment. +25 +Table of Contents +Our strong performance over the past three fiscal years is illustrated by the financial metrics in the graphs below. For fiscal years 2012 and 2013, this information is for the 12-month period ending December 31. For fiscal year 2015, this information is for the 12-month period ending March 31, reflecting the change in our fiscal year effected in 2014. The financial metrics below are also used as the performance metrics for our annual Cash Incentive Plan and our NSU and LTIP Equity Incentive Awards for our NEOs employed for the entire fiscal year. +26 +Table of Contents +We Pay for Performance +Our executive compensation program is designed to pay for performance and directly align leadership with our stockholders. Our Company performance for the operational measures listed above for FY 2015 were up over the prior fiscal year; however, we did not achieve our performance goals as established by the Committee at the beginning of the fiscal year and therefore the compensation paid to our NEOs reflects this, including as follows: +PROGRAM ELEMENT +PERFORMANCE CRITERIA +2015 PAY FOR PERFORMANCE RESULTS +Base Salary +• Set annually based on past performance, competitive pay data, and scope of responsibilities +• Only Mr. Powers and Ms. Rishwain received base salary increases. +Annual Cash Incentive +• Combination of fiscal year 2015 EBITDA and Revenue targets and other business unit financial performance goals +• Met 92.8% of EBITDA target and 100.3% of consolidated Revenue target. Other business unit financial performance goals paid out according to plan metrics. +• Resulting in CEO, CFO and President of Deckers Brands payout of 78.2% of target. +NSU Equity Incentive +• Fiscal year 2015 one-year diluted EPS targets +• Met 97.9% of fiscal year 2015 EPS target. NSUs therefore earned at 88.9% , which will begin to vest over period of 3 years. +LTIP Equity Incentive +• Fiscal year Revenue and EBITDA targets through 2017 +• These awards may be received, only if earned based on fiscal year performance through 2017, approximately 2.5 years after grant. +• The grant date fair value of the LTIP awards shown in the Summary Compensation Table reflects payout at the target 100% level based on the achievement probability at March 31, 2015 . +Time-Based RSUs +• Awards granted generally for select new hires and promotions as deemed necessary and appropriate +• Only Mr. Lafitte received this type of equity grant, at the time of hire. +CEO Realized Pay +Due to the strong pay-for-performance relationship that our compensation philosophy requires, the amount of pay realized by our Chief Executive Officer at payout is not necessarily equal to, and may be significantly less than, the pay opportunity targeted for our Chief Executive Officer. This is due to the high portion of his compensation that is at-risk and in particular due to the use of our Cash Incentive Plan awards and NSU and LTIP Equity Incentive Awards, which only pay out if our Company financial and operating performance goals are achieved. +The following graph illustrates the alignment between our CEO's realized pay and the Company's stock price as of fiscal year end over that same period. For example, in FY 2015 the 1-year decrease in stock price from December 31, 2013 to March 31, 2015 was 13.7%. Correspondingly, the CEO's FY 2015 realized pay was 15.6% less than his targeted pay. +Furthermore, our compensation structure is intentionally designed so that a large portion of our CEO's realized pay will be determined by our future long-term performance. Accordingly in the table below, a large portion of his realized pay is valued taking into account the probability and our stock price as of March 31, 2015; but this is only a starting point and is not necessarily indicative of the pay that he will actually realize. All of his equity-based compensation vests, if at all, over long periods, precluding its immediate realization at the grant date and correlating its realizable value to future stock performance. +27 +Table of Contents +____________ +(1) +For each year, Realized pay includes the following: Base salary actually paid, Cash Incentive Plan actually paid, All Other Compensation actually paid, and for the Equity Incentive Awards as follows: +The 2012 NSUs were not earned and therefore are not included above. As of March 31, 2015, the 2012 LTIP is not deemed probable to vest and therefore is not included above. +The 2013 NSUs are included above as follows: 9,333 shares vested on December 15, 2014 at a stock price of $95.49 plus 18,667 earned but unvested shares at a stock price equal to the market value as of March 31, 2015, or $72.87. As of March 31, 2015, the 2013 LTIP is not deemed probable to vest and therefore is not included above. +The 2015 NSUs, which were earned at 88.9% of target, and the 2015 LTIP, which are deemed probable to vest at the 100% level as of March 31, 2015, are included above at a stock price equal to the market value as of March 31, 2015, or $72.87. +The graph excludes Target Pay and Realized Pay in the amount of $302,333, for the 2014 transition period. +(2) +Stock Price at FYE is determined as of the last day of the fiscal year end for each year which was December 31, 2012, December 31, 2013 and March 31, 2015. +Specific examples over the last four fiscal years of how our pay-for-performance relationship resulted in less than target payouts for our CEO include: +FY 2015 +FY 2013 +• 2015 NSU Equity Incentive Awards earned at 88.9% of target. +• 2013 LTIP Equity Incentive Awards are not deemed probable as of the end of FY 2015. +• 2015 Annual Cash Incentive Plan award earned at 78.2% of target. +FY 2012 +FY 2011 +• 2012 NSU Equity Incentive Awards not earned. +• 2011 LTIP Equity Incentive Awards not earned. +• 2012 LTIP Equity Incentive Awards are not deemed probable as of the end of FY 2015. +• 2012 Annual Cash Incentive Plan award did not payout any amounts under the Company Profit or Financial-Performance Portion. +28 +Table of Contents +We Have Adopted Other Compensation Practices that Benefit our Stockholders +Our executive compensation programs also have strong governance components, including the following: +WHAT WE DO +WHAT WE DON'T DO +Independent Compensation Committee +þ +Our Compensation Committee consists entirely of independent directors who select and utilize an independent outside compensation consultant +ý +We do not make compensation decisions for our NEOs without oversight of independent directors +Risk Assessment +þ +Our Compensation Committee performs an annual review of the risks related to our compensation practices +ý +We do not ignore risks related to the design of our compensation program +Annual Cash Incentive +þ +Payment is calculated based on actual financial and operating achievement against pre-established measures for each executive officer +ý +Do not use qualitative performance measures for payment decisions +Annual Long-Term Equity Incentive +þ +40% of the annual target award is provided as NSUs with one year performance goal which, if earned, vests 1/3 over next three years; earn-out is capped at target value +60% of annual target award is provided as LTIP with 3 yr performance goals which, if earned, immediately vests upon meeting the performance criteria +ý +Generally, we do not grant Equity Incentive Awards without performance goals, except for new hire or promotional awards +Stock Ownership Guidelines +þ +We have formal stock ownership guidelines for our NEOs and directors +ý +We do not allow our NEOs and directors to sell all of their Company stock without complying with a formal policy +Clawback Policy +þ +We adopted a Clawback Policy related to our equity incentive awards granted after 2011 +ý +We do not allow our NEOs to retain any financial benefit which is a result of an accounting restatement +Equity Award Vesting Provisions +þ +Our equity awards are subject to double-trigger vesting upon a change-in-control +ý +We do not provide single trigger vesting of equity awards +Repricing +þ +Our 2006 Equity Incentive Plan explicitly prohibits repricing equity awards +If approved, our 2015 Stock Incentive Plan will also prohibit repricing +ý +We do not allow any repricing of equity awards +Gross Ups +þ +Our Change of Control and Severance Agreements do not contain excise tax gross up provisions +ý +We do not provide excise tax gross ups +Hedging and Pledging +þ +Our Insider Trading Policy specifically prohibits hedging and pledging of our shares +ý +We do not allow our executives to hedge or engage in any speculative transactions, buy on margin or use stock as collateral for a loan +Dividends on Unvested Equity Awards +þ +Our Equity Incentive Award agreements do not provide for payment of dividends on unvested awards +ý +We do not pay dividends on any unvested equity awards +29 +Table of Contents +COMPENSATION PHILOSOPHY AND OBJECTIVES +At the direction of our Board of Directors, the Committee endeavors to ensure that the compensation programs for our executive officers are competitive and consistent with market conditions in order to attract and retain key executives critical to our Company's long-term success. +The Committee also reviews the results of our annual stockholder advisory vote on executive compensation (our "Say on Pay Vote"). The results of our Say on Pay Vote at our 2014 Annual Stockholder Meeting were 21,428,626 "For" votes and 6,984,619 "Against" votes. The Committee considered these results as they evolved our FY 2015 compensation practices. +When reviewing and approving our executive compensation programs, the Committee is guided by the following four principles: +• Attract key executives with the proper background and experience required for the future growth of our Company. +• Provide a significant portion of target total compensation through variable, performance-based components that are at-risk, which can increase or decrease to reflect achievement of pre-established Company goals that the Committee believes are important to the Company's long-term success. +• Provide incentives for achieving both short-term and long-term Company financial and operating goals. +• Align the interests of our executives with our stockholders by tying a significant portion of total compensation to our overall financial and operating performance and the creation of long-term stockholder value. +Guaranteed Pay and At-Risk Pay +Our executive compensation mix is heavily weighted toward performance-based compensation, and limits guaranteed annual pay. We review annually the mix between guaranteed pay and at-risk pay and establish appropriate performance targets so as to mitigate our compensation-related risk. +For example, as illustrated in the charts below, the base salary for our Chief Executive Officer was approximately 18% of his potential FY 2015 compensation and approximately 82% was provided through variable pay elements that are dependent on Company performance. +30 +Table of Contents +COMPENSATION CONSULTANT AND PEER GROUP +Compensation Consultant +The Committee receives assessments and advice regarding our Company's compensation practices and philosophy from its independent compensation consultant, Frederic W. Cook & Co., Inc. (FWC). While our Company is not obligated to retain an independent compensation consultant, the Committee believes that the use of an independent consultant provides additional assurance that our executive compensation programs are competitive and consistent with market conditions, as well as consistent with our objectives. +In accordance with applicable SEC rules, the Committee took certain factors, which it believes may affect the independence of a compensation consultant, into consideration when selecting FWC. In particular, at a meeting of the Committee, the Committee discussed: (i) whether any other services had been or were being provided by FWC to the Company, (ii) the amount of fees paid by our Company to FWC as a percent of FWC's total revenues, (iii) FWC's policies and procedures designed to prevent conflicts, a copy of which was provided to the Committee prior to the meeting, (iv) FWC's ownership of Company stock, and (v) any business or personal relationships between FWC and any Committee members or our Company's executive officers. Following the consideration of these factors, and such additional factors as the Committee deemed appropriate under the circumstances, the Committee made an affirmative determination that FWC is independent and unanimously approved the engagement of FWC. +FWC was retained by and reports directly to the Committee. FWC provides information on competitive practices and trends in our industry and makes recommendations regarding the design of our compensation program. Our management did not engage FWC in any other capacity for FY 2015 and does not direct or oversee the retention or activities of FWC with respect to our executive compensation program. Furthermore, management did not recommend the engagement of FWC. +Peer Group +In making compensation decisions, the Committee compares each element of total compensation, as well as total direct compensation, against a peer group of publicly traded footwear and apparel companies that was recommended by FWC and approved by the Committee (collectively, the "Peer Group"). The Peer Group is comprised of companies against which the Committee believes our Company competes for executive talent and stockholder investment. Specifically, the Peer Group includes companies that are in related businesses and of similar size and market value. The Peer Group is reviewed and updated at least annually by the Committee. In June 2014, our Board completely re-evaluated the Peer Group and approved an increase to the size of our Peer Group by adding an additional 9 companies, that have similar business characteristics to those of our Company and removed Warnaco Group, Inc. The Peer Group used for FY 2015 consisted of the following 20 companies: +DECKERS PEER GROUP FOR FISCAL YEAR 2015 +• Kate Spade & Company +• Carters, Inc. +• DSW, Inc. +• Crocs, Inc. +• Fossil Group, Inc. +• Express, Inc. +• Skechers U.S.A., Inc. +• Lululemon Athletica, Inc. +• Finish Line, Inc. +• Steven Madden, Ltd. +• Guess, Inc. +• G-III Apparel Group, Ltd. +• Oxford Industries, Inc. +• Quiksilver, Inc. +• Columbia Sportwear Company +• Under Armour, Inc. +• Buckle, Inc. +• Restoration Hardware Holdings, Inc. +• Wolverine World Wide, Inc. +• Chico's FAS, Inc. +Peer Group Characteristics +The Committee considers a variety of characteristics when it selects the Peer Group companies, including the characteristics set forth in the table below. In particular, for FY 2015 the Committee placed emphasis on companies that it felt provided more reliable competitive comparisons and included a new group of retail companies to reflect our OmniChannel business strategy. +31 +Table of Contents +Performance vs. Peer Group Companies +In FY 2015, we ranked better than median among our Peer Group companies in one-year performance growth based on a number of significant metrics. The table below shows where we ranked among our 20 peers as of March 31, 2015. +2015 Ranking +(out of 20) +1-Year Performance Growth +3-Year Performance Growth (CAGR) +Revenue +7th +12th +EBITDA +9th +15th +EPS (diluted) +8th +13th +For comparison purposes, at the time FY 2015 target compensation was established, our Company's annual Revenues were slightly below the median of the Peer Group, our Company's net income was above the median of the Peer Group, and our Company's market capitalization was slightly above the median of the Peer Group. +The Committee utilizes compensation data gathered from the Peer Group as an initial starting point in making compensation decisions for our Named Executive Officers. The table below illustrates the Peer Group compensation percentile that is targeted by the Committee with respect to the various elements of our executive compensation programs (Base Salary, Annual Cash Incentive Plan, and Annual Equity Incentive Awards). For purposes of this analysis, note that we assume achievement at the target amount for the LTIP awards. +32 +Table of Contents +In June 2014, the Committee reduced overall target pay positioning for the entire program to the 60th to 75th percentile range, reflecting a shift from the median to 75th percentile for Core elements and 75th to 100th percentile for Aspirational elements. Simplifying our target pay positioning by eliminating Core and Aspirational delineations in FY 2015 supports our efforts of aligning performance and compensation. The Compensation Committee felt it was appropriate based on the expanded Peer Group and given that these levels provide the foundation for a competitive total pay package that is necessary to attract, retain and incentivize executives with the experience required to drive our future growth. Furthermore, the Committee determined that the positioning of target total compensation above the median is justified by the fact that all Cash Incentive Plan compensation and Equity Incentive Awards are "performance-based" and subject to a higher risk of forfeiture than the average programs of the Peer Group. +While the Committee fully evaluates compensation information from the Peer Group as a starting point in its executive compensation decision-making process, the Committee also continues to exercise its judgment and retains considerable discretion. In particular, the Committee considers a variety of additional factors when setting compensation levels, including recent and projected Company performance, recent individual performance, individual performance expectations, general industry practices and general economic conditions. +Actual Compensation Targets vs. Benchmark Targets +The Committee reviews where actual targeted compensation falls relative to targeted benchmark levels to ensure alignment with our Peer Group targets as well as our compensation philosophy and objectives, as set forth in the table below. +Comparison of NEO FY 2015 Actual Compensation Targets to Benchmark Targets +Total Cash Compensation +(Salary, Annual Cash Incentive Plan) +Total Compensation +(Salary, Annual Cash Incentive Plan, NSU and LTIP Awards) +CEO +• 5% above the 60th percentile +• 12% less than the 60th percentile +Other NEOs +• Between 5 and 24% less than the 60th percentile +• Between 0 and 15% less than the 60th percentile +33 +Table of Contents +ELEMENTS OF FISCAL YEAR 2015 +EXECUTIVE COMPENSATION PROGRAM +The table below outlines information regarding the key elements of our fiscal year 2015 executive compensation program: +ELEMENT +TYPE +OBJECTIVE +Base Salary +Cash +• Attract and retain high quality executives +• Pay competitively based on position, experience, scope of responsibility and past performance +Annual Cash Incentive +Cash +• Align and drive the interest of executive with Company and business unit performance/results +• Target bonus percent set as percent of base salary +• Actual bonus payout is entirely based on achievement of Company and business unit financial and operating performance +Equity Incentive Awards +Performance-Based RSUs +(NSU and LTIP) +• Drive Company financial and operational goals and align executive interests with those of stockholders +• Actual awards of annual NSU is based on individual and Company performance from prior year and prior years for LTIP +• Awards vest over time to encourage retention of key executives +Time-Based RSUs +• Attract executive talent; used for new hire and promotion into executive level positions +ELEMENT: +COMPENSATION ELEMENT +PURPOSE +CONSIDERATIONS +Base Salary +• To attract and retain key executives with necessary experience for our future growth. +• To balance the levels of fixed pay with at-risk, variable pay to properly maintain our Company's compensation-related risk. +• Individual performance, experience and responsibility level. +• Peer Group compensation data; Committee annually reviews and adjusts generally at its June meeting. +• Targeted between 60th and 75th percentile of our Peer Group. +The table below summarizes adjustments made to base salaries for our NEOs during FY 2015 compared to FY 2013. None of our NEOs received a base salary increase during 2014T. +FY 2015 NEO Base Salary Increase Over FY 2013 +NAME +BASE SALARY +BASE SALARY CHANGE +Angel R. Martinez +$ +1,200,000 +No Change +Thomas A. George +$ +510,000 +No Change +David Powers +$ +600,000 +Increased by 20.0% +David E. Lafitte +$ +600,000 +New Hire +Constance X. Rishwain +$ +550,000 +Increased by 10.0% +Only two of our Named Executive Officers received a salary increase in FY 2015. Mr. Power's salary increase was due to his promotion from President of Direct-to-Consumer to President of OmniChannel. The salary adjustments were made to align this compensation element with market comparables for the affected NEOs. +34 +Table of Contents +ELEMENT: +COMPENSATION ELEMENT +PURPOSE +CONSIDERATIONS +Annual Cash Incentive Compensation +• To reward achievement of our financial and operational goals. +• To align our executives' interests with those of our stockholders. +• To establish appropriate Company performance expectations that will drive future growth of our Company. +• To ensure that our executives are accountable for our continued growth and success. +• Committee reviews our annual strategic and financial goals at the beginning of the fiscal year. +• Financial performance goals based on board approved targets derived from our long-term strategic plan. +• Plan designed so that our the NEOs will only receive payment with respect to achievement of Company performance goals if our Company performs well for our stockholders. +• Committee balances the portion of incremental earnings paid as Cash Incentive Plan compensation at various achievement levels as compared to amounts to be returned to the stockholders. +• Use threshold, target and maximum award levels to strike appropriate balance between compensation incentives and risks. +• Committee may exercise negative discretion and reduce award payments under the plan. +For fiscal year 2015, the components of the Cash Incentive Plan compensation were established at the beginning of the fiscal year. Each component of the award for each executive officer is calculated separately by multiplying the full target bonus amount for each executive officer by the percentage of target earned for each component and then multiplying this amount by the weighting of each component in accordance with the terms of the Cash Incentive Plan. +The target amounts and relative weight of our Company Profit Portion and Financial-Performance Portion of each executive's Cash Incentive Plan compensation may be varied by the Committee from year to year. In general, those executives who are responsible for brands and have influence over brand decisions have their cash incentive opportunities less heavily weighted towards our Company profit portion than those executives whose efforts are not directly attributed to specific brands. This enabled the Committee to more specifically tailor the performance targets to the achievement of goals that each executive had the greatest power to influence. For threshold performance, 50% of each component would be earned. For target performance, 100% of each component would be earned. For maximum performance, up to 200% of each component may be earned. For performance at a level that is between the threshold and target amounts, or between the target and maximum amounts, the payout for that portion is determined by linear interpolation. +35 +Table of Contents +The target bonus, the percentages applicable to each portion, and the allocation of the 2015 Annual Cash Incentive Plan to each executive is set forth in the table below: +EARNED ($) +Name +Target +Percentage +of Salary +Company +Profit +Portion +Financial-Performance Portion +Total Earned (%) +Company +Profit +Portion +Financial-Performance Portion +Total +Final Payout +(Total x 1.25)(1) +Angel R. Martinez +125% +50% +50% +78.2% +$389,000 +$784,000 +$1,173,000 +$1,466,000 +Thomas A. George +75% +50% +50% +78.2% +$99,000 +$200,000 +$299,000 +$374,000 +David Powers +75% +50% +50% +78.2% +$117,000 +$235,000 +$352,000 +$440,000 +Constance X. Rishwain +75% +20% +80% +60.2% +$43,000 +$205,000 +$248,000 +$310,000 +____________ +(1) +For FY 2015, the final Cash Incentive Plan compensation was multiplied by 1.25 to address the change in fiscal year from December 31 to March 31. There was no separate Cash Incentive Plan compensation paid out in 2014T. +In FY 2015, for our NEOs employed for the entire fiscal year, the Committee did not reduce any awards under the plan nor +grant any discretionary amounts outside of the plan. +Mr. Lafitte was not eligible to participate in the 2015 Annual Cash Incentive Plan because he was hired during the fourth +quarter of the fiscal year. Mr. Lafitte received a one-time cash sign-on bonus of $300,000 at hire. +Performance Targets under the 2015 Annual Cash Incentive Plan +The performance targets under the 2015 Annual Cash Incentive Plan, each participating Named Executive Officer's performance in light of the targets and the resulting payout for each component, are summarized below. When establishing these performance targets, the Committee calculates the 2015 Annual Cash Incentive Plan objectives in accordance with our Company's 2015 audited financial statements, as adjusted for certain non-recurring items identified by the Committee at the beginning of the performance period. +36 +Table of Contents +Executive +Officer +Component +Threshold Performance (1) +Target Performance +Maximum Performance +Results for Each Component +All NEOs +Company Profit (50% for Messrs. Martinez, George and Powers. 20% for Ms. Rishwain and Mr. Worley) +• Annual EBITDA of $270 million +• Annual EBITDA of $292 million +• Annual EBITDA of $321.1 million +Annual EBITDA of $270.9 million, resulting in 51.9% payout . +Angel R. Martinez +Thomas A. George +David Powers +Financial-Performance Portion +• Revenue (50%) +• Annual consolidated Revenue of $1,764.6 million +• Annual consolidated Revenue of $1,811.4 million +• Annual consolidated Revenue of $1,941.8 million +Annual consolidated Revenue of $1,817.1 million, resulting in 104.5% payout +Constance X. Rishwain +Financial-Performance Portion +• UGG +OmniChannel Revenue (30%) +• UGG Americas Wholesale/Distributor Revenue (30%) +• UGG Americas Wholesale/Distributor Operating Income (20%) +• UGG OmniChannel Revenue of $861.9 million +• UGG Americas Wholesale/Distributor Revenue of $603.5 million +• UGG Americas Wholesale/Distributor Operating Income of $165.2 million +• UGG OmniChannel Revenue of $884.7 million +• UGG Americas Wholesale/Distributor Revenue of $619.5 million +• UGG Americas Wholesale/Distributor Operating Income of $173.6 million +• UGG OmniChannel Revenue of $948.4 million +• UGG Americas Wholesale/Distributor Revenue of $664.1 million +• UGG Americas Wholesale/Distributor Operating Income of $188.6 million +• UGG OmniChannel Revenue of $884.2 million, resulting in payout of 98.8% +• UGG Americas Wholesale/Distributor Revenue of $609 million, resulting in payout of 67.2% +• UGG Americas Wholesale/Distributor Operating Income of $163.67 million, resulting in payout of 0% +____________ +(1) +In addition to the Threshold Performance criteria, (i) in order to receive the Company Profit Portion of the award, a Revenue gate of at least $1.725 billion had to be met and (ii) in order to receive the Financial-Performance Portion of the award, an EBITDA gate of at least $250 million had to be met. These gates were selected by the Committee based on a number of factors, including our Company's long term strategic plan and our Company's performance during the previous fiscal year. +37 +Table of Contents +ELEMENT: +COMPENSATION ELEMENT +PURPOSE +CONSIDERATIONS +Equity Incentive Plan Compensation +Overall Equity Plan +• To align NEO's interests with long-term stockholder interests by linking a significant part of each NEO's compensation to Company performance. +• To retain key executives by utilizing long-term vesting provisions. +• To incentivize achievement of Company financial and operational goals. +• To reflect our pay-for-performance philosophy. +• Award amounts based on overall Company performance and each NEO's position and individual performance. +• In order to compare the annual cost of our equity program versus our Peer Group, the Committee evaluates aggregate equity awards based on an annual Stockholder Value Transfer (SVT) rate. +• The Committee set the SVT rate in FY 2015 so that it would be approximately 1%, which is in line with the Peer Group median. +• Other factors considered were the fair value of awards granted to each executive, total outstanding equity awards for each executive, Company-wide annual equity grant usage, and total potential dilution under all employee stock plans. +Performance-Based Non-vested Stock Units (NSU) +• Designed to reward achievement of annual performance goals (FY 2015 diluted EPS) with time-based vesting that occurs after achievement of performance goals. +• 40% of NEOs annual equity award is granted as NSUs. +• Performance metric is one year diluted EPS. +• EPS is an important indicator of profitability that aligns the interests of executive officers with those of stockholders. +• Executives can earn a maximum of 100% of the target award. +• Excludes the impact of share repurchases for purposes of determining achievement of EPS goals in order to reward actual business growth. +Performance-Based Long-Term Incentive (LTIP) +• Designed to reward achievement of long-term performance goals (EBITDA and Revenue in FY 2017). +• 60% of NEOs annual equity award is granted as LTIP RSUs. +• Performance metrics are consolidated EBITDA and Revenue. +• Must achieve a minimum threshold for both EBITDA and Revenue for any award to be earned. +Time-Based RSUs +• Not a standard part of our annual equity award program. +•To provide special equity awards on an as-needed basis. +• Primarily used for hiring and promotional needs and retention purposes. +• Only Mr. Lafitte received this type of award during FY 2015, at hire. +• Vest in equal installments over approximately a three-year period. +38 +Table of Contents +A summary of the equity awards used by our Company during FY 2015 and their respective vesting provisions are set forth below: +OVERVIEW OF +EQUITY INCENTIVE AWARDS GRANTED IN FISCAL YEAR 2015 +Compensation Element +Award +Type +Year Granted +Vesting Provisions +Performance-Based Equity Incentive Compensation +NSU +FY 2015 +• Once earned based on FY 2015 performance, vest based on continued employment after approximately 3 years following achievement of the performance criteria according to the following schedule: 33% per year at the end of year 2, 3, and 4. +LTIP RSU +FY 2015 +• Vest subject to (1) the achievement of Revenue and EBITDA goals through FY 2017, which are based on a high rate of growth for sales and aggressive profitability goals, and (2) satisfaction of long-term service conditions over a 2.5 year period. +Time-Based Equity Incentive Compensation +RSU +FY 2015 +• Vest subject to satisfaction of long-term service conditions over approximately a 3 year period. +NSU Equity Incentive Awards - Performance Metrics +During FY 2015, 40% of each participating NEO's Equity Incentive Plan compensation was issued as NSUs. NSUs are restricted stock units payable in Common Stock of our Company upon satisfying: +• Company performance goals achieved during year of grant; and +• Service related vesting conditions over 3 years following the achievement of the performance criteria. +As discussed in the section of this Proxy Statement titled " Potential Payments Upon Termination or Change of Control " below, this vesting schedule may be accelerated if the executive's employment is terminated for various reasons or upon a change in control followed by a termination. +In June 2014, NSUs were granted that were payable based on the achievement of a fiscal year 2015 diluted EPS goal listed below. When the EPS goal was established, the threshold level was higher than FY 2013 actual performance and above FY 2015 EPS forecasted in earnings guidance to investors. Because the actual FY 2015 diluted EPS did not meet the target amount, only 88.9% of the NSUs granted in FY 2015 were earned, subject to time-based vesting over 3 years. +FY2015 Annual Equity Award Performance Goal as of March 31, 2015 +Threshold Performance +Target and Maximum Performance +Actual FY2015 Results +(as adjusted) (1) +Diluted EPS goal +$4.28 +$4.73 +$4.63 +39 +Table of Contents +____________ +(1) +The FY 2015 diluted EPS goal for purposes of determining satisfaction of the NSU award achievement excluded the impact of share repurchases during the year, pursuant to the formula established by the Committee at the time the awards were granted. +LTIP Equity Incentive Awards - Performance Metrics +During FY 2015, 60% of each participating NEO's Equity Incentive Plan compensation was issued as LTIP Equity Incentive Awards. The LTIPs are restricted stock units payable in Common Stock of our Company upon satisfying: +• Company performance goals achieved during FY 2017; and +• Service related vesting conditions over approximately 2.5 years following the grant date. +For the FY 2015 LTIP awards, the Committee adopted a methodology that incorporated minimum performance qualifiers of $250 million EBITDA and $1,587.6 million in Revenue for the 12-month period ending March 31, 2017. So long as both of those qualifiers are achieved then the following metrics are used to calculate the LTIP awards earned by the NEOs. +2015 LTIP +Performance Goals +Weight of Award Allocated to Each Goal +Threshold Performance +Target Performance +Maximum Performance +Revenue +50% +$2,155.0 million +$2,225.0 million +$2,446.7 million +EBITDA +50% +$335.9 million +$350.8 million +$394.2 million +To the extent Company financial performance is achieved above the threshold level, the number of RSUs that will vest will increase up to the maximum number of units issued under the 2015 LTIP award as determined by linear interpolation. In addition, the recipient of the 2015 LTIP award must provide service to our Company through the end of March 31, 2017. +To understand the context of the FY 2015 LTIP Equity Incentive Awards, it is useful to understand the history of prior LTIP Equity Incentive Awards grants and their current payout expectations, as summarized below: +Prior LTIP Equity Awards +Current Payout Expectation +at 3/31/2015 +Held by Current NEOs +Listed Below +2007 Level 2 LTIP Awards (SARs and RSUs) (1) +Payout at 100%, to vest 80% on 12/31/2015 and 20% on 12/31/2016 +Angel R. Martinez +Constance X. Rishwain +2011 LTIP Awards +None +Angel R. Martinez +Thomas A. George +Constance X. Rishwain +2012 LTIP Awards +None +Angel R. Martinez +Thomas A. George +Constance X. Rishwain +2013 LTIP Awards +None +Angel R. Martinez +Thomas A. George +Constance X. Rishwain +David Powers +____________ +(1) +LTIP Awards - longer performance period (10 years) +40 +Table of Contents +CEO Target Pay and Realized Pay for FY 2015 Equity Incentive Plan Compensation +FY 2015 Equity Incentive Award +Performance Goal at Target +Actual Performance Goal Achievement Percentage +Payout Percentage +CEO Target Pay +CEO Realized Pay by Award (1) +NSU +Diluted EPS +of $4.73 +97.9% +88.9% +$1,599,986 +$1,204,687 +LTIP (2) +Revenue +of $2,225.0 million +— +— +$1,200,009 +— +LTIP (2) +EBITDA of +$350.8 million +— +— +$1,200,009 +— +____________ +(1) +The 2015 NSUs, which were earned at 88.9% of target are included above at a stock price equal to the market value as of March 31, 2015, or $72.87. +(2) +The 2015 LTIP performance goals are based on the financial performance as of the 12-month period ending March 31, 2017 and therefore the Actual Performance Goal Achievement Percentage, Payout Percentage and CEO Realized Pay by Award cannot be determined at this time. +Stock Ownership Guidelines +To further align their interests with those of our stockholders, our Company adopted Stock Ownership Guidelines for our NEOs in March 2011. The minimum ownership threshholds for our NEOs are determined as a multiple of the officer's base salary. The NEOs are required to achieve the applicable level of ownership within five years of the later of the date these guidelines were adopted or the date the person first became subject to these guidelines as an NEO. Our Directors are required to adhere to the stock ownership guidelines that are referenced in our Corporate Governance Guidelines. The minimum ownership threshold for our directors is determined as a multiple of the directors' annual board retainer fee and must be adhered to within five years of initial election. +POSITION +STOCK OWNERSHIP GUIDELINES +CEO +6x Annual Base Salary +Other NEOs +3x Annual Base Salary +Directors +5x Annual Board Retainer Fee +Clawback Policy +We have adopted a Clawback Policy which will seek reimbursement with respect to incentive compensation paid or awarded to our Company's Executive Officers when the following three factors exists: +• +The incentive compensation payment or award (or the vesting of such award) was based upon the achievement of financial results, as reported in a Form 10-Q, Form 10-K or other report filed with the Securities and Exchange Commission (“SEC”), that were subsequently the subject of a restatement to correct an accounting error due to material noncompliance with any financial reporting requirement under the federal securities laws; +• +A lower payment or award would have been made to such Executive Officer (or lesser or no vesting would have occurred with respect to such award) based upon the restated financial results; and +• +The need for the restatement was identified within three years after the date of the first public issuance or filing of the financial results that were subsequently restated. +The reimbursement to be sought by the Company will be the portion of any cash or equity-based incentive compensation paid to or received by such Executive Officer for or during each of the restated periods that is greater than the amount that would have been paid or received had the financial results been properly reported. +41 +Table of Contents +Benefits +PURPOSE +CONSIDERATIONS +Perquisites and other Executive Benefits +• Provide our US-based NEOs with competitive broad-based employee benefits structured to attract and retain key executives +• Generally reflect benefits provided to all of our US-based full-time employees +The benefits provided to our NEOs are as follows: +• +401(k) defined contribution plan; +• +401(k) plan Company match of 50% of each eligible participant's tax-deferred contributions on up to 6% of eligible compensation on a per payroll period basis, with a true-up contribution if such eligible participant is employed by our Company on the lst day of the calendar year; +• +Premiums for long-term disability insurance and life insurance; +• +Health and welfare benefit plans; +• +Standard employee product discounts; and +• +NEOs and certain other senior executives eligible to contribute to our Company's Nonqualified Deferred Compensation Plan (the "NQDC Plan"). During FY 2015, we did not provide a match on executive deferrals in the NQDC Plan. The plan is described in further detail in the section of this Proxy Statement titled "Nonqualified Deferred Compensation." +Severance Agreements +PURPOSE +CONSIDERATIONS +Severance Agreements +• Intended to ease a NEOs transition due to an unexpected employment termination by our Company due to on-going changes in our Company's employment needs. +• In exchange, Company receives a general release and non-solicitation provisions. +• Double trigger provisions preserve morale and productivity and encourage retention in the face of the potential disruptive impact of a change-in-control of our Company. +• Retain and encourage the NEOs to remain focused on our business and the interest of our stockholders when considering strategic alternatives. +• The terms of employment for US based NEOs with our Company is "at will", meaning we can terminate them at any time and they can terminate their employment with us at any time. +• Take into account the time it is expected to take a separated executive to find a similarly situated job. +• There are no benefits triggered solely based on the occurrence of a change in control as long as the change of control is approved by a majority of the directors and the successor entity provides for the continuance of the award. However, upon a change in control, the performance conditions of the SARs and RSUs are deemed satisfied, but the awards remain subject to the service based vesting conditions. +• Customary among Peer Group. +The Committee has adopted Change of Control and Severance Agreements for each of our NEOs. The Change of Control and Severance Agreements for our NEOs detail various provisions for benefits and cash payments to be paid in the event of a separation during the normal course of business and in the event a change in control is followed by a subsequent termination. Generally, these agreements specify conditions and benefits for separation of employment within the following categories: death, disability, termination by our Company for cause; termination by executive without good reason; termination by the executive with good reason; and termination by our Company without cause. +Please refer to the discussion in the section of this Proxy Statement titled " Potential Payments upon Termination or Change of Control " for a more detailed discussion of the severance and change in control arrangements. +42 +Table of Contents +OTHER COMPENSATION CONSIDERATIONS +Role of Executive Officers in Compensation Decisions +At the request of the Committee, our Chief Executive Officer, Chief Financial Officer and Chief Operating Officer or other senior executives at the request of the Committee may provide compensation and related data to the Committee to facilitate its compensation decisions. In addition, the Committee may consider our Chief Executive Officer's recommendations when making its compensation decisions. However, our Chief Executive Officer is not permitted to be present during deliberations and voting regarding his own compensation, or during other executive sessions of the Committee. The Committee uses the information provided by our Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, as well as information provided by our independent consultant FWC, to make compensation decisions for our Named Executive Officers as well as other management personnel. The Committee, which includes only independent members of our Board of Directors, approves all elements of compensation for our Named Executive Officers. The Committee also reviews and approves aggregate equity awards to all employees of the Company based on the recommendations of executive management. The Committee can exercise its discretion in modifying any recommended adjustments or awards to executives. +Risk Considerations +The Committee is responsible for reviewing the risks and rewards associated with our compensation programs for all employees, including our NEOs, to assess whether these programs encourage excessive or unnecessary risk-taking. In conducting this assessment, the Committee considered the following factors: +• +Our compensation program consists of both guaranteed pay (salary, benefits and perquisites) and at-risk pay (Cash Incentive Plan awards and Equity Incentive Awards) and the Committee reviews this mix annually. +• +The performance goals relating to our Cash Incentive Plan involve a mix of Company performance goals. +• +Amounts paid under our Cash Incentive Plan are capped at 200% of target. +• +Our compensation program encourages executive retention through the vesting provisions of awards. +• +We have adopted stock ownership guidelines for our NEOs, which ensures that the interests of our executive officers are aligned with our stockholders. +• +Our Equity Incentive Awards are subject to clawback provisions. +• +Our insider trading policy prohibits our NEOs and other key executives from hedging the economic interest in our Company securities that they hold. +• +The Committee retains ultimate oversight over the compensation of our NEOs and retains the ability to use discretion where appropriate. +The Committee believes that, although the majority of the compensation provided to our executive officers is at-risk pay and based upon the achievement of specified Company performance criteria, our executive compensation programs do not encourage excessive or unnecessary risk-taking. The Committee does not believe that our compensation programs are reasonably likely to have a material adverse effect on us. +Tax and Accounting Implications +To the extent readily determinable, and as one of the factors in its consideration of compensation matters, the Committee considers the anticipated tax treatment to our Company and to our executives of various payments and benefits. Some types of compensation payments and their deductibility depend upon the timing of an executive's vesting of previously granted awards. +Under Section 162(m) of the Code, a public company generally will not be entitled to a deduction for non-performance based compensation paid to certain executive officers to the extent such compensation exceeds $1.0 million. Special rules apply for performance-based compensation, including where the performance goals have been approved by the stockholders of our Company. Our Company has not adopted any formal policy with respect to Section 162(m) of the Code. However, the Committee generally structures compensation to be deductible and considers cost and value to the Company in making compensation decisions, which would result in non-deductibility. The Committee has on occasion made decisions resulting in non-deductible compensation. The Committee and our Board of Directors believe that these payments were appropriate and in the best interests of our Company and serve to retain key executives and reward past performance. +43 +Table of Contents +We believe that our Cash Incentive Plan and our grants of equity awards under our Equity Incentive Plans meet the exception for performance-based compensation described in the previous paragraph. +In accordance with applicable rules, our Company accounts for share-based awards in accordance with the requirements of Financial Accounting Standards Board Accounting Standards Codification Topic 718, Stock Compensation . +44 +Table of Contents +REPORT OF THE COMPENSATION COMMITTEE +The Compensation Committee of the Company has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussion, the Compensation Committee has recommended to our Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement. +THE COMPENSATION COMMITTEE +Lauri M. Shanahan, Chair +Karyn O. Barsa +John G. Perenchio +Michael F. Devine, III +The Report of the Compensation Committee shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act, or under the Exchange Act, except to the extent that our Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under such Acts. +45 +Table of Contents +SUMMARY COMPENSATION TABLE +The following table sets forth, all compensation paid or awarded to our Named Executive Officers during fiscal year 2015 (FY 2015), the three-month transition period ended March 31, 2014 (the "Transition Period" or "2014T"), fiscal year 2013 and fiscal year 2012. As noted below and under the heading "Annual Cash Incentive Compensation" above, for FY 2015, the final Annual Cash Incentive Plan Compensation was multiplied by 1.25 to address the change in fiscal year from December 31 to March 31. +Name and Principal Position +Year +Salary +($) +Bonus +($) +Stock +Awards +($)(1) +Cash +Incentive +Plan +Compensation +($)(2) +All Other +Compensation +($)(3) +Total +($) +Angel R. Martinez +2015 +1,200,000 +— +4,000,004 +1,466,042 +9,368 +6,675,414 +Chief Executive Officer +2014T +300,000 +— +— +— +2,333 +302,333 +2013 +1,200,000 +— +2,404,520 +1,256,000 +8,910 +4,869,430 +2012 +1,200,000 +— +3,715,372 +228,000 +8,760 +5,152,132 +Thomas A. George +2015 +510,000 +— +800,035 +373,841 +9,368 +1,693,244 +Chief Financial Officer +2014T +127,500 +— +— +— +2,333 +129,833 +2013 +510,000 +— +1,130,185 +458,000 +8,910 +2,107,095 +2012 +475,000 +— +1,609,362 +67,688 +8,760 +2,160,810 +David Powers (4) +2015 +600,000 +— +1,150,051 +439,813 +9,368 +2,199,232 +President of Deckers Brands +2014T +150,000 +— +— +— +2,333 +152,333 +2013 +500,000 +— +1,131,170 +276,000 +8,910 +1,916,080 +David Lafitte (5) +2015 +100,000 +300,000 +899,997 +— +1,580 +1,301,577 +Chief Operating Officer +Constance X. Rishwain (6) +2015 +550,000 +— +1,000,069 +310,279 +9,368 +1,869,716 +President of UGG +2014T +137,500 +— +— +— +2,333 +139,833 +2013 +500,000 +— +1,133,140 +387,000 +8,910 +2,029,050 +2012 +475,000 +— +1,452,112 +71,250 +8,753 +2,007,115 +____________ +(1) +The amounts in this column represent the aggregate grant date fair value of the respective awards computed in accordance with FASB ASC Topic 718. For information about the assumptions underlying these computations, please refer to Note 7 to our consolidated financial statements included in the Annual Report on Form 10-K for the fiscal year ended March 31, 2015. In accordance with Instruction 3 to Item 402(c)(2)(v) of Regulation S-K, for those awards that are subject to the satisfaction of performance conditions, the amounts reported reflect the fair value at the grant date based upon the probable outcome of such conditions. +The value of the awards at the grant date, assuming the highest level of performance conditions is achieved, the maximum compensation cost to be recognized, are as follows: +• +2012 LTIP Awards: $4,788,944 for Angel Martinez, $1,646,224 for Thomas George, and $1,646,224 for Constance Rishwain. The achievement of the performance conditions relating to the 2012 LTIP +46 +Table of Contents +awards was deemed probable at the date of grant in 2012 and therefore amounts with respect to these awards are included in the table above at grant date fair value. A s of March 31, 2015, the performance conditions related to the 2012 LTIP awards are not probable of being achieved and therefore the awards are not expected to be earned. +• +2012 NSU Awards: $1,320,900 for Angel Martinez, $786,250 for Thomas George, and $629,000 for Constance Rishwain. The achievement of the performance conditions relating to the 2012 NSU awards was deemed probable at the date of grant and therefore amounts with respect to these awards are included in the table above at grant date fair value. However, subsequent to the date of grant, it was determined that the performance conditions relating to the 2012 NSU awards were not met. +• +2013 LTIP Awards: $2,535,600 for Angel Martinez, $633,900 for Thomas George, $887,460 for David Powers, and $1,394,580 for Constance Rishwain. 2013 LTIP RSU awards were deemed probable to vest at 50% at the date of grant and therefore amounts with respect to these awards are included in the table above at grant date fair value. As of March 31, 2015, the performance conditions related to the 2013 LTIP awards are not probable of being achieved and therefore the awards are not expected to be earned. +• +2013 NSU Awards: $1,559,320 for Angel Martinez, $918,885 for Thomas George, $835,350 for David Powers, and $668,280 for Constance Rishwain. 2013 NSU awards were deemed probable at the date of grant and therefore amounts with respect to these awards are included in the table above at grant date fair value. +• +2015 NSU Awards: $1,599,986 for Angel Martinez, $320,032 for Thomas George, $460,002 for David Powers, and $400,040 for Constance Rishwain. 2015 NSU awards were deemed probable at the date of grant and therefore amounts with respect to these awards are included in the table above at grant date fair value. +• +2015 LTIP Awards: $4,800,037 for Angel Martinez, $960,007 for Thomas George, $1,380,097 for David Powers, and $1,200,058 for Constance Rishwain. The achievement of the performance conditions relating to the 2015 LTIP awards were deemed probable at the date of grant and therefore amounts with respect to these awards are included in the table above at grant date fair value. +• +Mr. Lafitte's stock award represents a time-based NSU award granted at hire. +(2) +The amounts in this column reflect the amount of the cash bonuses paid to the Named Executive Officers under the Annual Cash Incentive Plan, which is discussed in further detail under the heading "Annual Cash Incentive Compensation" above. For FY 2015, the final annual cash incentive plan compensation was multiplied by 1.25 to address the change in fiscal year from December 31 to March 31. There was no separate annual incentive plan compensation paid out in 2014T. +(3) +The amounts in this column reflect our Company's 401(k) matching contributions and life insurance premiums paid for the benefit of the Named Executive Officers. +(4) +Mr. Powers joined our Company in August 2012 and was not an NEO for fiscal year 2012. +(5) +Mr. Lafitte joined our Company in February 2015. The bonus amount reflects a one-time cash sign on bonus paid at hire. +(6) +On July 31, 2015, Ms. Rishwain stepped down from her position. Refer to the section of this Proxy Statement titled "Separation of Employment with Constance X. Rishwain" for additional information. +47 +Table of Contents +GRANTS OF PLAN BASED AWARDS IN +FISCAL YEAR 2015 +The following table sets forth all grants of plan-based awards made to our Named Executive Officers during the transition period and the fiscal year ended March 31, 2015. For further discussion regarding the grants, refer to the section of this Proxy Statement titled "Elements of 2015 Executive Compensation Plan" above. +Estimated Future Payouts Under +Non-Equity Incentive Plan Awards(2) +Estimated Future Payouts Under +Equity Incentive Plan Awards(3) +Grant Date +Fair Value +of Stock +Awards +($)(4) +Name +Grant Date(1) +Threshold +($) +Target +($) +Maximum +($) +Threshold +(#) +Target +(#) +Maximum +(#) +Angel R. Martinez +750,000 +1,500,000 +3,000,000 +6/27/2014 +9,299 +18,598 +18,598 +1,599,986 +9/18/2014 +12,238 +24,475 +48,950 +2,400,019 +Thomas A. George +191,250 +382,500 +765,000 +6/27/2014 +1,860 +3,720 +3,720 +320,032 +9/18/2014 +2,448 +4,895 +9,790 +480,004 +David Powers +225,000 +450,000 +900,000 +6/27/2014 +2,674 +5,347 +5,347 +460,002 +9/18/2014 +3,519 +7,037 +14,074 +690,048 +David E. Lafitte (5) +— +— +— +2/2/2015 +13,051 +13,051 +13,051 +899,997 +Constance X. Rishwain +206,250 +412,500 +825,000 +6/27/2014 +2,325 +4,650 +4,650 +400,040 +9/18/2014 +3,060 +6,119 +12,238 +600,029 +____________ +(1) +All awards granted on June 27, 2014 were performance-level NSU awards. All awards granted on September 18, 2014 were LTIP awards. The award granted on February 2, 2015 was a time-based NSU award granted upon hire. +(2) +Refer to the section of this Proxy Statement titled "Annual Cash Incentive Compensation" above for further discussion on actual amounts paid to NEOs pursuant to the 2015 Annual Cash Incentive Plan. +(3) +Refer to the section of this Proxy Statement titled "Equity Incentive Plan Compensation" above for further discussion on the awards that may be earned by our NEOs. All grants were made under the 2006 Plan. +(4) +Amounts reported reflect the grant date fair value based upon the probable outcome of the performance conditions. Assuming the highest level of performance condition will be met, the maximum compensation cost to be recognized for awards granted on 9/18/2014 is: $4,800,037 for Angel Martinez, $960,007 for Thomas George, $1,380,096 for David Powers, and $1,200,058 for Constance Rishwain. +(5) +Mr. Lafitte was not eligible to participate in the 2015 Annual Cash Incentive Plan because he was hired during the fourth quarter of the fiscal year. At hire, Mr. Lafitte received a one-time cash sign-on bonus of $300,000 and a time-based equity incentive award with a grant date fair value of $899,997. +48 +Table of Contents +OUTSTANDING EQUITY AWARDS AT +2015 FISCAL YEAR END +The following table sets forth equity awards granted to our Named Executive Officers that remained outstanding as of March 31, 2015. For further discussion regarding the outstanding equity awards, refer to the section of this Proxy Statement titled "Equity Incentive Plan Compensation." +Stock Appreciation Right Awards (SARs)(1) +Stock Awards (NSUs) +Name +Number of +securities +underlying +unexercised +SARs +exercisable +(#) +Number of +securities +underlying +unexercised +SARs +unexerciseable +(#) +Number of +securities +underlying +unexercised +unearned +SARs +(#) +SAR +exercise +price +($) +SAR +expiration +date +Number of +shares or +units of +stock that +have not +vested +(#) +Market +value of +shares or +units of +stock that +have not +vested +(3)($) +Number of +unearned +shares or +units that +have not +vested +(2)(#) +Market +value of +unearned +shares or +units that +have not +vested +(3)($) +Angel R. Martinez +160,000 +— +— +26.73 +5/9/2017 +35,199 +(4) +2,564,951 +201,784 +(9) +9,082,663 +— +— +300,000 +26.73 +5/9/2022 +Thomas A. George +— +— +— +— +— +14,307 +(5) +1,042,551 +46,624 +(10) +1,789,833 +— +— +— +— +— +David Powers +— +— +— +— +— +13,087 +(6) +953,650 +24,574 +(11) +1,022,876 +— +— +— +— +— +David E. Lafitte +— +— +— +— +— +13,051 +(7) +951,026 +— +— +— +— +— +— +— +Constance X. Rishwain +— +— +— +— +— +12,133 +(8) +884,132 +68,572 +(12) +3,081,381 +— +— +75,000 +26.73 +5/9/2022 +____________ +(1) +All SARs that remain outstanding were granted on May 9, 2007. 2007 LTIP SARs may vest subject to the satisfaction of long-term performance objectives and long-term service conditions. Provided the service conditions are met, the 2007 LTIP SAR awards will vest 80% on December 31, 2015 and 20% on December 31, 2016. +(2) +This column includes 2007 LTIP, 2012 LTIP (at the 200% maximum amount), 2013 LTIP (at the 150% maximum amount), and 2015 LTIP (at the 200% maximum amount) RSUs granted on May 9, 2007, May 24, 2012, December 13, 2013, and September 18, 2014, respectively, the vesting of which are subject to the satisfaction of long-term performance objectives and service conditions. Provided the conditions are met, the 2012 LTIP awards will vest on December 31, 2015, the 2007 LTIP RSU awards will vest 80% on December 31, 2015 and 20% on December 31, 2016, the 2013 LTIP awards will vest on March 31, 2016, and the 2015 LTIP awards will vest on March 31, 2017. Refer to the section of this Proxy Statement titled "Grants of Plan Based Awards in 2015" above for more detail). +(3) +The amounts in this column reflect the closing price of our Company's Common Stock on March 31, 2015, which was $72.87. +(4) +Consists of (i) 18,667 NSUs, which represents 66.7% of the NSUs granted on March 29, 2013, which shares vest 33.3% on December 15 of 2015 and 2016; and (ii) 16,534 NSUs granted on June 27, 2014, which shares vest 33.3% on March 31 of 2016, 2017, and 2018. +(5) +Consists of (i) 11,000 NSUs, which represents 66.7% of the NSUs granted on March 29, 2013, which shares vest 33.3% on December 15 of 2015 and 2016; and (ii) 3,307 NSUs granted on June 27, 2014 which shares vest 33.3% on March 31 of 2016, 2017, and 2018. +49 +Table of Contents +(6) +Consists of (i) 1,667 Time-based Equity Incentive awards, which represents 33.3% of the restricted stock units granted on March 29, 2013, which shares vest on December 15 of 2015; (ii) 6,667 NSUs, which represents 66.7% of the NSUs granted on March 29, 2013, which shares vest 33.3% on December 15 of 2015 and 2016; and (iii) 4,753 NSUs granted on June 27, 2014, which shares vest 33.3% on March 31 of 2016, 2017, and 2018. +(7) +Consists of (i) 13,051 Time-based Equity Incentive awards, which represents 100% of the restricted stock units granted on February 2, 2015, which shares vest 33.3% on February 2 of 2016, 2017, and 2018. +(8) +Consists of (i) 8,000 NSUs, which represents 66.7% of the NSUs granted on March 29, 2013, which shares vest 33.3% on December 15 of 2015 and 2016; and (ii) 4,134 NSUs granted on June 27, 2014, which shares vest 33.3% on March 31 of 2016, 2017, and 2018. +(9) +Consists of (i) 37,500 2007 LTIP RSUs; (ii) 85,334 2012 LTIP RSUs at the maximum level 200%; (iii) 30,000 2013 LTIP RSUs at the maximum level 150%; and (iv) 48,950 2015 LTIP RSUs at the maximum level 200%. +(10) +Consists of (i) 29,334 2012 LTIP RSUs at the maximum level 200%; (ii) 7,500 2013 LTIP RSUs at the maximum level 150%; and (iii) 9,790 2015 LTIP RSUs at the maximum level 200%. +(11) +Consists of (i) 10,500 2013 LTIP RSUs at the maximum level 150%; and (iii) 14,074 2015 LTIP RSUs at the maximum level 200%. +(12) +Consists of (i) 10,500 2007 LTIP RSUs; (ii) 29,334 2012 LTIP RSUs at 200%; (iii) 16,500 2013 LTIP RSUs at the maximum level 150%; and (iv) 12,238 2015 LTIP RSUs at the maximum level 200%. +50 +Table of Contents +2015 SAR EXERCISES AND STOCK VESTED +The following table provides information, for our Named Executive Officers, regarding SAR exercises and stock award vesting during the transition period and FY2015, including the number of shares acquired upon exercise or vesting and the value realized, before payment of any applicable withholding tax and broker commissions. +Option Awards (SARs) +Stock Awards (NSUs) +Number of +Shares +Acquired on +Exercise +(#) +Value Realized on +Exercise +($) +Number of +Shares +Acquired on +Vesting +(#)(1) +Value Realized +on Vesting +($)(2) +Angel R. Martinez +— +— +16,666 +1,558,804 +Thomas A. George +— +— +8,833 +828,631 +David Powers +— +— +4,999 +477,355 +David E. Lafitte +— +— +— +— +Constance X. Rishwain +— +— +7,333 +685,396 +____________ +(1) +Total shares received net of shares withheld for taxes were 9,002 by Angel R. Martinez; 4,017 by Thomas A. George; 3,121 by David Powers; and 3,937 by Constance X. Rishwain. +(2) +The amounts in this column reflect the closing price of our Company's Common Stock on the applicable vesting dates. +51 +Table of Contents +NONQUALIFIED DEFERRED COMPENSATION +In 2008, our Board of Directors adopted a Deferred Stock Unit Compensation Plan, a Sub Plan under the 2006 Equity Incentive Plan. A director or employee of our Company who holds unvested restricted stock awards, including NSUs and RSUs, may elect to defer settlement of up to 100% of his or her awards. For each unit of stock held pursuant to a restricted stock award that is deferred, the participant will receive one Deferred Stock Unit. Amounts deferred will be distributed, as described in the plan, at the time elected by the participant. A participant's Deferred Stock Units will be settled in shares of Common Stock, as more specifically described in the plan. In FY 2012, FY 2013, the transition period and FY 2015 none of our executive officers elected to participate in the plan. Our nonemployee Directors are eligible to participate in the plan and many elected to do so in FY 2015. +In 2009, the Compensation Committee adopted and approved a Nonqualified Deferred Compensation Plan. The plan is an unfunded, nonqualified deferred compensation program sponsored by our Company to provide certain of our management or highly compensated employees designated by our Board of Directors (or a committee appointed by our Board of Directors to administer the plan) the opportunity to defer compensation into the plan. The effective date for the plan for the first year was February 1, 2010, and thereafter the plan year is from January 1 to December 31. Participants may defer up to 50% of their annual base salary and up to 95% of any performance bonus under the plan. We have the option, but not the obligation, to make discretionary or matching cash contributions. Under the terms of the plan, our Company established a rabbi trust as a reserve for the benefits payable under the plan. Distributions from the plan are governed by the Code and the plan. Certain of our Named Executive Officers did elect to participate in this plan during FY 2013, the transition period and FY 2015 and, pursuant to such elections, amounts were contributed to this plan during the transition period and FY 2015. +Name +Angel R. Martinez +Thomas A. George +David Powers +Total +Executive contributions in transition period (1) ($) +— +16,477 +5,385 +21,862 +Executive contributions in last FY 2015 (1) ($) +— +61,200 +22,393 +83,593 +Registrant contributions in transition period ($) +— +— +— +— +Registrant contributions in last FY 2015 ($) +— +— +— +— +Aggregate earnings in transition period ($) +28,562 +634 +34 +29,230 +Aggregate earnings in last FY 2015 ($) +201,778 +11,263 +2,122 +215,163 +Aggregate withdrawals/distributions in transition period ($) +— +— +— +— +Aggregate withdrawals/distributions in last FY 2015 ($) +— +— +— +— +Aggregate balance at end of FY 2015 ($) +2,702,324 +149,234 +29,934 +2,881,492 +____________ +(1) +The amounts reported in this column reflect contributions made by our NEOs under the plan. Such amounts are separately reported in the " Summary Compensation Table " above, and do not reflect amounts in addition to those amounts. +52 +Table of Contents +POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL +Our Company entered into Change of Control and Severance Agreements (the "Severance Agreements") with each of our US-based Named Executive Officers effective as of January 1, 2010 to replace, in part, the expired employment agreements with such executives. The information below describes compensation and benefits that are payable or earned under the Severance Agreements with our Named Executive Officers upon the occurrence of different termination events: +Termination by our Company for Cause, or by Executive other than for Good Reason +Pursuant to the Severance Agreements with each of our US-based Named Executive Officers, if the executive is terminated by our Company for Cause, or the executive terminates his or her employment, other than for Good Reason, then the Named Executive Officer will receive the following from our Company: +• +payment of his or her accrued base salary, accrued vacation, reimbursement for reimbursable expenses, accrued and vested benefits under our Company's plans or programs and other benefits required to be paid by law, accrued but unpaid non-equity incentive bonus for the prior fiscal year (excluding any non-equity incentive bonus for the year of termination); and +• +right to exercise all vested unexercised SARs and awards outstanding as of the termination date. +Termination due to Death or Total Disability +Pursuant to the Severance Agreements with each of our US-based Named Executive Officers, if the executive is terminated due to his or her Death or Total Disability, then in addition to those benefits provided upon a termination for Cause, the Named Executive Officer will receive: +• +pro-rated portion of his or her non-equity incentive bonus for the current fiscal year based on actual length of service during the year of termination. +Termination by our Company without Cause or by Executive for Good Reason +Pursuant to the Severance Agreements with each of our US-based Named Executive Officers, if the executive is terminated by our Company without Cause or by Executive for Good Reason, then in addition to those benefits provided upon a termination due to Death or Total Disability, the Named Executive Officer will receive: +• +payment of his or her then effective base salary for one year following his or her termination, subject to such executive signing a release; and +• +receipt of health benefits for a period of one year following his or her termination or his or her attainment of alternative employment that provides health benefits, whichever is earlier. +Termination without Cause or by Executive for Good Reason within Two Years of a Change of Control +Pursuant to the Severance Agreements with each of our US-based Named Executive Officers, if the executive is terminated by our Company without Cause or by the executive for Good Reason within two years of a Change of Control, then in addition to those benefits provided upon a termination due to Death or Total Disability, the Named Executive Officer will receive: +• +subject to such executive signing a release, payment of one and one-half times his or her then effective annual base salary plus the greater of (i) one and one-half times the targeted non-equity incentive bonus immediately prior to the termination or (ii) one and one-half times the average actual non-equity incentive bonus for the previous three years. Mr. Martinez will receive two times his annual base salary plus the greater of (i) two times the targeted incentive bonus immediately prior to termination or (ii) two times the average actual non-equity incentive bonus for the previous three years, subject to signing a release. +• +receipt of health benefits for a period of eighteen months following his or her termination or his or her attainment of alternative employment that provides health benefits, whichever is earlier. Mr. Martinez will receive these benefits for two years. +53 +Table of Contents +For purposes of the Severance Agreements, "Cause" means (i) any willful breach of duty by the executive in the course of their employment or continued violation of written Company employment policies after written notice of such violation, (ii) violation of our Company's insider trading policies, (iii) conviction of a felony or any crime involving fraud, theft, embezzlement, dishonesty or moral turpitude, (iv) engaging in activities which materially defame our Company, engaging in conduct which is materially injurious to our Company or our affiliates, or any of our respective customer or supplier relationships, financially or otherwise, or (v) the executive's gross negligence or continued failure to perform duties or executive's continued incapacity to perform such duties. +"Good Reason" means without the consent of the Executive (i) the occurrence of material breach of this agreement by our Company, or (ii) if within two years of a change of control, there is a material reduction of the Executive's total compensation, benefits, and perquisites, our Company's relocation is greater than 50 miles from the location where the Executive performs services, or a material change in the Executive's position or duties; provided, however, no such event shall constitute Good Reason hereunder unless the Executive shall have given written notice to our Company of Executive's intent to resign for "Good Reason" within 30 days after the Executive first becomes aware of the occurrence of any such event (specifying the nature and scope of the event) and such event or occurrence shall not have been cured within 30 days of our Company's receipt of such notice. +"Change of Control" means the occurrence of a merger, consolidation, sale of all or a major portion of the assets of our Company (or a successor organization) or similar transaction or circumstance where any person or group acquires, in one or more transactions, beneficial ownership of more than 50% of the outstanding shares of any class of voting stock of our Company (or a successor organization). +"Constructive Termination" means a termination following the occurrence of any one or more of the following events without the executive's written consent: (i) any material reduction in position, title, overall responsibilities, level of authority, level of reporting, base compensation, annual incentive compensation opportunity, aggregate employee benefits or (ii) a change of the executive's location of employment by more than 50 miles. +Our Company determined to provide Mr. Martinez with a higher potential severance payment upon a termination following a Change of Control to reflect his key leadership role, his importance to our Company's management and the amount of time it would reasonably take him to find comparable employment. +No Named Executive Officers will be entitled to gross ups for excise tax penalty on "excess golden parachute payments" as a result of termination following a Change of Control. +Equity Awards Upon Termination or Change of Control +Pursuant to the terms of the equity awards under the 2006 Plan, the employees who receive such awards, including the Named Executive Officers, are entitled to certain benefits upon the occurrence of each of the following: (i) termination without cause or pursuant to a Constructive Termination (as such term is defined in the award agreements), (ii) a change of control that either is not approved by a majority of our Board of Directors or where the successor entity does not provide for the continuance of the award, and (iii) a change of control followed by termination. +For the NSU Equity Incentive Awards, if a change of control occurs that either is not approved by a majority of our Board of Directors or where the successor entity does not provide for the continuance of the NSUs, then the NSUs will fully vest if the threshold performance criteria has been satisfied. If an awardee is terminated without cause or pursuant to a Constructive Termination within twelve months of a change of control, he or she will be entitled to full acceleration of any unvested NSUs awarded. For NSU Equity Incentive Awards for periods prior to FY 2015, if an awardee is terminated by our Company without cause or pursuant to a Constructive Termination, if the threshold performance criteria of the NSUs awarded to such executive has been satisfied, the awardee will be entitled to accelerated vesting for only a pro rata portion of the NSU award representing the period of time such executive was employed from the award grant date to the termination date, which will be settled in shares of our Common Stock. For FY 2015, the NSU Equity Incentive Awards no longer provide for such pro rata vesting upon termination without cause or pursuant to a Constructive Termination. +For the 2007 LTIP SARs and RSUs, upon a change of control, the performance conditions of the SARs and RSUs will be deemed satisfied, but the awards will remain subject to service based vesting conditions. If a change of control occurs and either it is not approved by a majority of the directors or the successor entity does not provide for the continuance of the SARs and RSUs, then the SARs and RSUs will fully vest. Finally, if an awardee is terminated without cause or pursuant to a Constructive Termination within twelve months of a change of control, he or she will be entitled to full acceleration of any unvested SARs and RSUs. The RSUs will fully vest upon the awardee's death or disability. +For the 2011, 2012, 2013 and 2015 LTIP RSUs, upon a change of control the performance conditions of the RSUs will be deemed satisfied at the targeted performance level, but the awards will remain subject to service-based vesting conditions. If a change of control occurs that either is not approved by a majority of our Board of Directors or where the successor entity does not provide for the continuance of the RSUs, then the target number of RSUs will fully vest immediately, regardless of the performance conditions. Finally, if an awardee is terminated without cause or pursuant to a Constructive Termination within twelve months of a change of control, he or she will be entitled to acceleration of the target number of RSUs, regardless of the performance conditions. Upon the awardee's death, disability or retirement, a pro-rata portion of the RSUs, will vest subject to the achievement of the performance conditions. +54 +Table of Contents +For the Time-Based Equity Incentive Awards, which have no Company performance targets, if an awardee is terminated by our Company without cause or pursuant to a Constructive Termination, the awardee will be entitled to accelerated vesting for a pro rata portion of the award through the termination date. If a change of control occurs that either is not approved by a majority of our Board of Directors or where the successor entity does not provide for the continuance of the award, then the award shall immediately fully vest. Finally, if an awardee is terminated without cause or pursuant to a Constructive Termination within twelve months of a change of control, he or she will be entitled to full acceleration of any unvested Time-Based Equity Awards granted. +55 +Table of Contents +Termination or Change of Control Table +A summary of payments and benefits that would have been provided by our Company to our NEOs in addition to amounts accrued for unpaid base salary, vacation pay, non-equity incentive bonus and reimbursable expenses, if a termination or change of control had occurred on March 31, 2015 (based on the closing price of our Company's Common Stock on March 31, 2015 of $72.87), given the Named Executive Officers' compensation and service levels per their respective Severance Agreements and equity awards is as follows: +Upon Termination +Name +Type of Compensation or Benefit +For Death or +Total Disability ($) +By the Company +Without Cause +or by Executive +for Good Reason ($) +Upon Change +of Control ($) +Angel R. Martinez +cash payments +— +1,200,000 +5,400,000 +value of health benefits +— +25,598 +51,196 +value of NSUs +— +467,607 +2,564,951 +value of RSUs +3,327,123 +— +9,082,663 +value of SARs +— +— +4,437,783 +3,327,123 +1,693,205 +21,536,593 +Thomas A. George +cash payments +— +510,000 +1,338,750 +value of health benefits +— +18,129 +27,193 +value of NSUs +— +275,540 +1,042,551 +value of RSUs +118,900 +— +1,789,833 +118,900 +803,669 +4,198,327 +David Powers +cash payments +— +600,000 +1,575,000 +value of health benefits +— +25,598 +38,397 +value of NSUs +— +206,514 +953,650 +value of RSUs +170,929 +— +1,022,876 +170,929 +832,112 +3,589,923 +David E. Lafitte +cash payments +— +600,000 +1,350,000 +value of health benefits +— +25,598 +25,598 +value of NSUs +— +26,417 +951,026 +— +652,015 +2,326,624 +Constance X. Rishwain +cash payments +— +550,000 +1,443,750 +value of health benefits +— +25,598 +38,397 +value of NSUs +— +200,393 +884,132 +value of RSUs +913,766 +— +3,081,381 +value of SARs +— +— +1,109,446 +913,766 +775,991 +6,557,106 +No additional payments or benefits would be provided by our Company if the termination occurred by our Company for Cause or by the executive without Good Reason. +The value of RSU's to be paid upon death or disability is based on the number of RSU's that are considered probable of being earned based on our Company's forecasted performance for the twelve months ended December 31, 2015 and 2016 and March 31, 2016 and 2017. +56 +Table of Contents +Separation of Employment with Constance X. Rishwain +As previously announced, on July 31, 2015 ("Separation Date"), Constance X. Rishwain, the former President of UGG and Fashion and Lifestyle Brands, stepped down from her position. In connection with her departure and transition, we entered into a Consulting Agreement and General Release with Ms. Rishwain, which we refer to as the Rishwain Consulting Agreement, which replaces the Severance Agreement previously entered into with Ms. Rishwain. Under its terms, Ms. Rishwain agreed to provide consulting services to us to assist in the transition of her duties and responsibilities, given that at the time of her Separation Date, her successor had not yet been identified. She will provide these services from the Separation Date until the earliest of (i) December 31, 2016, (ii) 15 days following the delivery of written notice by Ms. Rishwain to us, (iii) the date on which we deliver written notice to Ms. Rishwain regarding an uncured material breach of her obligations, and (iv) the date on which Ms. Rishwain accepts employment or another professional relationship with one of our competitors, which we refer to as the Rishwain Consulting Period. +The Rishwain Consulting Agreement provides that the Company will pay Ms. Rishwain, among other things, (i) severance equal to 12 months of her base salary in effect on the Separation Date, which will be mitigated for income received during the 12 months following the Separation Date, (ii) a pro-rated portion of any cash incentive bonus earned with respect to the fiscal year ending March 31, 2016, based on her actual length of service through her Separation Date to us during the fiscal year, and (iii) COBRA group health insurance premiums for her and her eligible dependents until the first anniversary of the Separation Date. +During the Rishwain Consulting Period, Ms. Rishwain is deemed to provide “continuous service” to us under the previously granted 2007 LTIP Agreements, which will continue to vest consistent with the terms of the underlying award agreement. However, the previously granted 2012 LTIP Agreement, 2012 NSU Agreement, 2013 LTIP Agreement, 2013 NSU Award, 2014 LTIP Agreement and 2014 NSU Agreement, each terminated on the Separation Date, except that a pro rata portion of the NSUs underlying the 2013 NSU Award vested on the Separation Date in accordance with the terms of the underlying award agreement. +The Rishwain Consulting Agreement contains a general release of claims, and also includes standard non-competition, confidentiality, non-solicitation, non-disparagement and other covenants for our benefit. In particular, Ms. Rishwain agreed not to accept employment from any business that is competitive with us, and her failure to comply with this provision would result in the immediate termination of severance payments and forfeiture of the 2007 LTIP. +57 +Table of Contents +DIRECTOR COMPENSATION +For service during the transition period and fiscal year 2015, directors who are not our employees, which we refer to as "Nonemployee Directors", received an annual retainer of $50,000 in cash plus $15,000 for each committee assignment. Furthermore, the following positions were entitled to receive an additional annual retainer fee: $70,000 for Lead Independent Director, $40,000 for Chair of the Audit Committee, $25,000 for Chair of the Compensation Committee, and $20,000 for Chair of the Corporate Governance Committee. All or any portion of the cash fees paid to a director may, at the election of the director, be paid in stock, which historically was issued pursuant to the 2006 Equity Incentive Plan. Nonemployee Directors are also reimbursed for any reasonable board-related expenses. In December 2014, increases to the Board compensation package provided to Nonemployee Directors were approved to take effect during fiscal year 2016. The increases approved were the annual retainer fee, $65,000; Lead Independent Director, $100,000; and Chair of the Compensation Committee, $35,000. +Nonemployee Directors also receive Common Stock grants with a total value of approximately $125,000 annually, to be issued in quarterly installments with the number of shares to be determined using a rolling average of the closing price of our Common Stock during the last ten trading days leading up to and including the 15 th day of the last month of each quarter. These grants are immediately vested in the date of grant. +Nonemployee Directors also receive product discounts, which are generally available to our Company's employees and from time to time may receive products without charge in order to help expand the directors' knowledge of our Company's products. +In addition, in 2011, our Board of Directors adopted stock ownership guidelines for Nonemployee Directors. Nonemployee Directors are required to hold Common Stock in an amount equal to five times their annual cash retainer within five years of joining our Board of Directors and each director must hold Common Stock within one year of joining our Board of Directors. Any stock held by Nonemployee Directors in our Deferred Stock Unit Compensation Plan is counted as stock ownership under these guidelines. +The following table sets forth all compensation paid or awarded to our Board of Directors for the transition period ("2014T") and fiscal year ended March 31, 2015. +58 +Table of Contents +Name +Year +Fees +Earned +($) +Stock +Awards +($) +Total +($) +Angel R. Martinez (9) +2015 +N/A +N/A +N/A +Chair of the Board +2014T +N/A +N/A +N/A +John M. Gibbons +2015 +135,000 +123,981 +(1)(2) +258,981 +Director +2014T +33,750 +30,790 +(3)(4) +64,540 +James E. Quinn +2015 +85,000 +123,981 +(1) +208,981 +Director +2014T +21,250 +30,790 +(3) +52,040 +John G. Perenchio +2015 +80,000 +123,981 +(1) +203,981 +Director +2014T +20,000 +30,790 +(3) +50,790 +Karyn O. Barsa +2015 +80,000 +123,981 +(1) +203,981 +Director +2014T +20,000 +30,790 +(3) +50,790 +Lauri M. Shanahan +2015 +90,000 +123,981 +(1)(14) +213,981 +Director +2014T +22,500 +30,790 +(3)(15) +53,290 +Michael F. Devine, III +2015 +113,750 +123,981 +(1) +237,731 +Director +2014T +26,250 +30,790 +(3) +57,040 +Bonita C. Stewart (10) +2015 +37,916 +72,034 +(7) +109,950 +Director +2014T +— +— +— +Nelson C. Chan (11) +2015 +20,417 +40,551 +(8) +60,968 +Director +2014T +— +— +— +Rex A. Licklider (12) +2015 +16,250 +30,952 +(5) +47,202 +Director +2014T +16,250 +30,790 +(3) +47,040 +Maureen Conners (13) +2015 +48,750 +93,399 +(6) +142,149 +Director +2014T +16,250 +30,790 +(3) +47,040 +____________ +(1) +Represents grants of 391 shares of Common Stock at a per share price of $79.16 on June 16, 2014, 327 shares of Common Stock at a per share price of $96.65 on September 15, 2014, 323 shares of Common Stock at a per share price of $95.49 on December 15, 2014, and 430 shares of Common Stock at a per share price of $71.12 on March 16, 2015. +(2) +Amounts of compensation received on June 16, 2014, September 15, 2014 and December 15, 2014 were deferred until January 1, 2015. Amount of compensation received on March 16, 2015 is being deferred until January 4, 2016. All amounts were/are being deferred pursuant to such director's election under the Deferred Stock Unit Compensation Plan. +(3) +Represents grant of 418 shares of Common Stock at a per share price of $73.66 on March 17, 2014. +(4) +Entire amount of compensation was deferred until January 1, 2015 pursuant to such director's election under the Deferred Stock Unit Compensation Plan. +(5) +Represents grant of 391 shares of Common Stock at a per share price of $79.16 on June 16, 2014. +(6) +Represents grants of 391 shares of Common Stock at a per share price of $79.16 on June 16, 2014, 327 shares of Common Stock at a per share price of $96.65 on September 15, 2014, and 323 shares of Common Stock at a per share price of $95.49 on December 15, 2014. +(7) +Represents grants of 107 shares of Common Stock at a per share price of $99.15 on September 19, 2014, 323 shares of Common Stock at a per share price of $95.49 on December 15, 2014, and 430 shares of Common Stock at a per share price of $71.12 on March 16, 2015. +(8) +Represents grants of 108 shares of Common Stock at a per share price of $92.31 on December 16, 2014, and 430 shares of Common Stock at a per share price of $71.12 on March 16, 2015. +(9) +Mr. Martinez received compensation as President and Chief Executive Officer of our Company for the transition period and FY 2015 as set forth in the "Summary Compensation Table" . He did not receive any compensation as a director in the transition period or FY2015. +59 +Table of Contents +(10) +Ms. Stewart joined our Board of Directors on September 16, 2014. +(11) +Mr. Chan joined our Board of Directors on December 16, 2014. +(12) +Mr. Licklider resigned his position as a director of our Company, effective June 18, 2014. +(13) +Ms. Conners resigned her position as a director of our Company, effective December 16, 2014. +(14) +Amounts of compensation received on June 16, 2014, September 15, 2014 and December 15, 2014 were deferred until January 1, 2020. Amount of compensation received on March 16, 2015 was deferred until January 1, 2019. All amounts were deferred pursuant to the Deferred Stock Unit Compensation Plan. +(15) +Entire amount of compensation was deferred until January 1, 2020 pursuant to the Deferred Stock Unit Compensation Plan. +60 +Table of Contents +EQUITY COMPENSATION PLAN INFORMATION +The following table sets forth information regarding shares of our Common Stock that may be issued under our equity compensation plans as of March 31, 2015. +Number of securities +to be issued +upon exercise of +outstanding options, +warrants and rights(1) +Weighted-average +exercise price of +outstanding options, +warrants and rights(2) +Number of securities +remaining available +for future issuance(3) +Equity compensation plans approved by security holders +1,685,824 +$26.73 +3,136,282 +Equity compensation plans not approved by security holders +— +— +— +Total +1,685,824 +$26.73 +3,136,282 +____________ +(1) +This amount includes shares underlying SARs, RSUs and NSUs outstanding pursuant to the 2006 Equity Incentive Plan as of March 31, 2015. For awards subject to performance-based vesting criteria, the amount reported reflects the number of shares to be issued if the “maximum” performance level is achieved. However, we have determined that it is not probable that the “maximum” performance level will be achieved for certain awards. Assuming the “maximum” performance levels are not obtained for each of the outstanding awards, and assuming instead that the “target” performance levels are obtained, the amount reported would be decreased by 256,938 shares, and the amount shown in column (3) would be increased by an equal number of shares. Thus, the reported amount may significantly overstate the number of shares that are subject to outstanding awards under the 2006 Equity Incentive Plan. Refer to the section of this Proxy Statement titled “Equity Incentive Plan Compensation” for additional information. +(2) +This amount reflects the weighted-average exercise price of the outstanding SARs issued pursuant to the 2006 Equity Incentive Plan, based on the closing price of our Common Stock on the respective grant dates. This amount does not take into account shares issuable upon the vesting of outstanding RSUs or NSUs, which have no exercise price. +(3) +This amount reflects the 6,000,000 shares reserved for issuance under the 2006 Equity Incentive Plan less the number of shares reported in column (1). This amount is subject to increase depending on our achievement with respect to certain performance criteria as discussed in footnote 1 above. +61 +Table of Contents +SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT +The following table sets forth, as of May 31, 2015, certain information concerning the shares of Common Stock beneficially owned by (i) each person who is a Named Executive Officer, (ii) each director and director nominee, (iii) all executive officers and directors as a group (fourteen persons), and (iv) each person known by our Company to be the beneficial owner of more than 5% of our Common Stock. +Name and Address of Beneficial Owner(1) +Amount and +Nature of Beneficial +Ownership(2)(3) +Percent +of Common Stock(3) +Named Executive Officers +Angel R. Martinez (4) +220,186 +* +Thomas A. George +9,665 +* +David Powers +1,471 +* +David E. Lafitte +— +* +Constance X. Rishwain +6,796 +* +Directors and Director Nominees +Angel R. Martinez +220,186 +* +John M. Gibbons (5) +25,002 +* +James E. Quinn +11,144 +* +John G. Perenchio +49,116 +* +Karyn O. Barsa +11,147 +* +Lauri M. Shanahan (6) +107 +* +Michael F. Devine, III +7,713 +* +Bonita C. Stewart +1,805 +* +Nelson C. Chan +538 +* +All Directors and Executive Officers as a group (fourteen persons) +369,416 +1.1 +% +5% Stockholders +BlackRock, Inc. (7) +3,841,071 +11.1 +% +The London Company (8) +2,411,858 +7.0 +% +Vanguard Group Inc. (9) +2,052,253 +5.9 +% +FMR LLC (10) +1,961,156 +5.7 +% +____________ +* +Percentage of shares beneficially owned does not exceed 1% of our Company's total outstanding Common Stock. +(1) +The address of each beneficial owner is 250 Coromar Drive, Goleta, California 93117, unless otherwise noted. +(2) +Unless otherwise noted, our Company believes that each individual or entity named has sole investment and voting power with respect to the shares of Common Stock indicated as beneficially owned by them, subject to community property laws, where applicable. +(3) +Pursuant to Rule 13d-3(d)(1) of the Exchange Act, shares not outstanding which are subject to options, warrants, rights or conversion privileges exercisable on or before the date that is 60 days after May 31, 2015 are deemed outstanding for the purpose of calculating the number and percentage owned by such person, but not deemed outstanding for the purpose of calculating the percentage owned by any other person listed. +(4) +Includes exercisable SARs of 160,000. +62 +Table of Contents +(5) +All shares are held by the Gibbons Living Trust on behalf of Mr. Gibbons, who has joint voting and investment power. +(6) +Additional shares are deferred until future years pursuant to such director's election under the Deferred Stock Unit Compensation Plan and are not reflected above. +(7) +This information is based solely on a Schedule 13G filed by the party on May 8, 2015, whose business address is 55 East 52nd Street, New York, NY 10055. BlackRock, Inc., which identifies itself as a parent holding company, has sole voting power for 3,603,769 shares and sole dispositive power for 3,841,071 shares. +(8) +This information is based solely on a Schedule 13G filed by the party on February 13, 2015, whose business address is 1801 Bayberry Court, Suite 301, Richmond, VA 23226. The London Company has sole voting and dispositive power for 2,189,913 shares and shared dispositive power for 221,945 shares. +(9) +This information is based solely on a Schedule 13G filed by the party on February 10, 2015, whose business address is 100 Vanguard Blvd., Malvern, PA 19355. The Vanguard Group has sole voting power for 23,444 shares, sole dispositive power for 2,031,985 shares and shared dispositive power for 20,268 shares. +(10) +This information is based solely on a Schedule 13G/A filed by the party on February 13, 2015, whose business address is 245 Summer Street, Boston, MA 02210. FMR LLC, is the beneficial owner of 1,961,156 shares. Edward C. Johnson 3d, Abigail P. Johnson and FMR LLC, through its control of Fidelity Management & Research Company ("FMR"), a wholly-owned subsidiary of FMR LLC, and the Fidelity Funds each has sole power to dispose of 1,961,156 shares. FMR LLC has sole voting power for 3,054 shares. Edward C. Johnson 3d, and members of his family, including Abigail P. Johnson, collectively represent 49% of the voting power of FMR LLC and may constitute a controlling group with respect to FMR LLC. Neither Edward C. Johnson 3d nor Abigail P. Johnson nor FMR LLC has the sole power to vote or direct the voting of shares owned directly by the Fidelity Funds, which power resides with the board of trustees of the Fidelity Funds. +63 +Table of Contents +REPORT OF THE AUDIT COMMITTEE +The Audit Committee of our Board of Directors is responsible for providing independent, objective oversight of our Company's financial reporting, our Company's independent registered public accounting firm, the highest ranking manager of internal audit, legal and regulatory compliance, related party transactions, code of conduct and system of internal controls. The Audit Committee is currently composed of four directors, each of whom meets the independence and experience requirements under the NYSE Listed Company Manual, as well as the independence requirements applicable to Audit Committee members under the relevant SEC rules. +Management is responsible for the preparation of our Company's financial statements and financial reporting process including its system of internal controls. KPMG LLP, our Company's independent registered public accounting firm, is responsible for performing an independent audit of our Company's consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States) (the "PCAOB") and expressing (i) an opinion on whether our Company's consolidated financial statements present fairly, in all material respects, our Company's financial position and results of operations and cash flows for the periods presented in conformity with US generally accepted accounting principles, and (ii) an opinion on whether the Company maintained, in all material respects, effective internal control over financial reporting as of March 31, 2015, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Audit Committee's responsibility is to monitor and oversee these processes. Our Board of Directors has determined that Michael F. Devine, III, as the Chair of the Audit Committee, and John M. Gibbons, Karyn O. Barsa and Nelson C. Chan are all independent and are "audit committee financial experts" under applicable rules and regulations. +In connection with these responsibilities, the Audit Committee met with management and our Company's independent registered public accounting firm to review and discuss the March 31, 2015 consolidated financial statements and obtained from management their representation that our Company's financial statements have been prepared in accordance with US generally accepted accounting principles. Management determined that, as of March 31, 2015, our Company maintained effective internal control over financial reporting. +The Audit Committee also discussed with the independent registered public accounting firm the matters required by Auditing Standard No. 16, "Communication with Audit Committees" of the PCAOB, which includes, among other items, information regarding the conduct of the audit of our Company's consolidated financial statements. The Audit Committee also received written disclosures from KPMG LLP required by the PCAOB's Rule 3200T: "Communication with Audit Committees Concerning Independence", and the Audit Committee discussed with KPMG LLP its independence from our Company and our Company's management. The Audit Committee has further considered the compatibility of the services provided by KPMG LLP with KPMG LLP's independence. +The Audit Committee operates under a written charter, which was adopted by our Board of Directors and is assessed annually for adequacy by the Audit Committee. The Audit Committee held eight meetings during fiscal year 2015, including meetings with the independent registered public accounting firm and the highest ranking manager of internal audit, both with and without management present. In performing its functions, the Audit Committee acts only in an oversight capacity. It is not the responsibility of the Audit Committee to determine that our Company's financial statements are complete and accurate, are presented in accordance with US generally accepted accounting principles or present fairly the results of operations of our Company for the periods presented, or that our Company maintains appropriate internal controls. Furthermore, the Audit Committee's oversight responsibilities do not independently assure that the audit of our Company's financial statements has been carried out in accordance with the standards of the PCAOB or that our Company's registered public accounting firm is independent. +Based upon the Audit Committee's review and discussions with management and the independent registered public accounting firm, and subject to the limitations of the Audit Committee's role and responsibilities referred to above and in the Audit Committee charter, the Audit Committee recommended that our Board of Directors include the audited consolidated financial statements in our Company's Annual Report on Form 10-K for the year ended March 31, 2015, which was filed with the SEC on June 1, 2015. +THE AUDIT COMMITTEE +Michael F. Devine, III, Chair +Karyn O. Barsa +John M. Gibbons +Nelson C. Chan +The Report of the Audit Committee shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act, or under the Exchange Act of 1934, except to the extent that our Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under such Acts. +64 +Table of Contents +Certain Relationships and Related Person Transactions +Our Company's legal department is primarily responsible for identifying and reviewing relationships and transactions in which our Company and our directors, executive officers, certain of our stockholders or their immediate family members are participants, to determine whether any of these related persons had or will have a direct or indirect material interest in such transactions. In order to identify potential related person transactions, our Company's legal department annually prepares and distributes to all directors and executive officers a written questionnaire which includes questions intended to elicit information about any current or proposed related person transactions. In addition, our Company's Code of Ethics addresses conflicts of interest where an individual's private interests interfere or conflict with the interests of our Company, including relationships with suppliers, customers or competitors. Conflicts of interest which might impair or appear to impair the exercise of judgment solely for the benefit of our Company and our stockholders are prohibited. In general, such conflicts must be approved by the legal department, the employee's supervisor or, in the case of directors, the Audit Committee. Information regarding potential conflicts of interest in violation of our Company's Code of Ethics may be reported to our Company's anonymous reporting hotline and may be subsequently obtained by the Chair of the Audit Committee, the Chair of our Board of Directors and the highest ranking manager of internal audit. +If a related person transaction is identified by our legal department as one which must be reported in our Company's proxy statement pursuant to applicable SEC regulations, the Audit Committee is responsible for reviewing and approving or ratifying any such related person transaction. In evaluating related person transactions, the Audit Committee members apply the same standards of good faith and fiduciary duty that they apply to their general responsibilities as members of the Audit Committee and as individual directors. The Audit Committee may approve a related person transaction when, in its good faith judgment, the transaction is in the best interests of our Company and our stockholders. +There were no transactions with related persons requiring disclosure under Item 404 of Regulation S-K during the fiscal year ended March 31, 2015, nor are any such transactions currently proposed. +Limitation of Liability and Indemnification of Directors and Officers +Our Certificate of Incorporation and Bylaws provide that we will indemnify directors and executive officers to the fullest extent now or hereafter permitted by the Delaware General Corporation Law. In addition, we have entered into indemnification agreements with our directors and executive officers. +We maintain an insurance policy pursuant to which our directors and officers are insured, within the limits and subject to the limitations of the policy, against specified expenses in connection with the defense of claims, actions, suits or proceedings, and liabilities which might be imposed as a result of such claims, actions, suits or proceedings, that may be brought against them by reason of their being or having been directors or officers of our Company. This policy extends to, among other things, liability arising under the Securities Act. +Section 16(a) Beneficial Ownership Reporting Compliance +Section 16(a) of the Exchange Act requires the directors, executive officers and persons who own more than 10% of our Common Stock (collectively "Section 16 Persons") to file initial reports of ownership and reports of changes in ownership of Common Stock with the SEC as well as provide copies of the reports to our Company. +To our knowledge, based solely on a review of the copies of such reports furnished to our Company and representations from each Section 16 Person that no other reports were required, during the transition period and fiscal year ended March 31, 2015, all Section 16(a) filing requirements applicable to the Section 16 Persons were complied with except that: +• Nelson C. Chan filed a Form 4 on December 19, 2014, which reported one transaction related to the issuance by our Company of quarterly shares for director compensation, that was due to be reported on December 18, 2014; and +• David Powers filed a Form 4 on February 25, 2015, which reported one transaction related to the sale of our Common Stock, that was due to be reported on February 24, 2015. +65 +Table of Contents +PROPOSAL NO. 2 +RATIFICATION OF THE SELECTION OF KPMG LLP AS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +For the transition period and fiscal year 2015, KPMG LLP provided audit services, which included an examination of our Company's annual consolidated financial statements. A summary of the fees for these services provided by KPMG LLP is below. The Audit Committee has selected KPMG LLP to provide audit services to our Company for fiscal year 2016, which covers the period from April 1, 2015 to March 31, 2016. Our stockholders are being requested to ratify this selection at the Annual Meeting. A representative of KPMG LLP will attend the Annual Meeting to make any statements he or she may desire and to respond to appropriate stockholder questions. +Although this selection is not required to be submitted to a vote of our stockholders, the Audit Committee believes it is appropriate as a matter of good corporate governance to request that our stockholders ratify the selection. If our stockholders do not ratify the selection, the Audit Committee will consider the selection of another independent registered public accounting firm, but is not required to select a different firm. +Audit Fees and All Other Fees +Fees +2015 +2014T +2013 +Audit Fees ($) +2,421,000 +670,000 +2,097,000 +Audit-Related Fees ($) +- +- +- +Tax Fees ($) +15,000 +- +7,000 +All Other Fees ($) +- +- +- +Total Fees ($) +2,436,000 +670,000 +2,104,000 +Audit Fees +The audit fees include fees associated with the audit of our Company's consolidated balance sheets for fiscal year 2015, the transition period, and fiscal year 2013, and the related consolidated statements of comprehensive income, stockholders' equity, and cash flows, and the audit of internal control over financial reporting as of March 31, 2015, as well as the reviews of our Company's quarterly reports on Form 10-Q, and certain statutory audits required internationally. +Audit-Related Fees +Audit-related fees generally consist of fees for assurance and related services that are reasonably related to the performance of the audit of our Company's annual reports on Form 10-K and review of our Company's quarterly reports on Form 10-Q. There were no audit-related fees incurred during fiscal year 2015, the transition period, or fiscal year 2013. +Tax Fees +Fees incurred for tax services, including tax compliance, tax advice and tax planning for income taxes and customs matters. +Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm +The Audit Committee administers our Company's engagement of KPMG LLP and pre-approves all of KPMG LLP's audit and permissible non-audit services on a case-by-case basis. In approving non-audit services, the Audit Committee considers whether the engagement could compromise the independence of KPMG LLP, and whether for reasons of efficiency or convenience it is in the best interests of our Company to engage KPMG LLP as its independent registered public accounting firm to perform the services. The Audit Committee has determined that performance by KPMG LLP of the non-audit services listed above as "Tax Fees" did not affect their independence. +Prior to engagement, the Audit Committee pre-approves all independent registered public accounting firm services. During the year, circumstances may arise under which it may become necessary to engage the independent registered public accounting firm for additional services not contemplated in the original pre-approval categories. In those instances, the Audit Committee requires that those services be submitted to the Audit Committee Chair for specific pre-approval before our Company can engage the independent registered public accounting firm to provide such services. The Audit Committee Chair reports any pre-approval decisions to the Audit Committee at its next scheduled meeting for approval by the Audit Committee. +66 +Table of Contents +Required Vote +Approval of this proposal requires the vote of a majority of the shares present and entitled to vote at the Annual Meeting. +____________________________________________________________________ +BOARD RECOMMENDATION +OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE +"FOR" +THIS PROPOSAL NO. 2 TO RATIFY THE SELECTION OF +KPMG LLP AS OUR COMPANY'S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +FOR FISCAL YEAR 2016. +____________________________________________________________________ +67 +Table of Contents +PROPOSAL NO. 3 +ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION +We are asking our stockholders to approve, on a non-binding advisory basis, the compensation paid to our Named Executive Officers as described in detail in the section of this Proxy Statement titled "Compensation Discussion and Analysis" . The Compensation Committee has structured our executive compensation program to: +• +Attract, incent and retain key executives +• +Align executives' interests with those of our stockholders +• +Pay for performance +• +Reward achievement of short-term and long-term goals +We believe that our financial and operating results for FY 2015 as compared to the twelve month period ending March 31, 2014, are a reflection of our strong brands, exceptional team of executives, and a compensation program that pays for performance. +FISCAL YEAR 2015 HIGHLIGHTS +• Our Revenue increased 14.5% to a record $1.817 billion. +• We continued our efforts to increase and diversify our global presence, resulting in 35.9% of our business being conducted internationally. +• Our diluted EPS increased 14.5% to $4.66 compared to $4.18 last year. +• Our retail sales increased 12.0% to $384.3 million compared to $343.2 million last year, driven by the opening of 30 new stores. +• Our gross margin was 48.3% compared to 47.7% last year. +• Our E-Commerce sales increased 28.4% to $233.1 million compared to $181.5 million last year, driven by an increase in sales through our existing websites and the addition of new global e-commerce websites. +• Our 5-year total shareholder return (TSR) from December 31, 2009 to March 31, 2015 was 115%. +• We grew our Direct-to-Consumer platform and enhanced our OmniChannel capabilities to better engage and serve consumers in a more connected environment. +We believe that our executive compensation practices have fostered our success by: +• +Providing both cash and equity awards and an appropriate mix of these awards +• +Establishing performance goals to reflect Company-wide financial and operating performance +• +Requiring achievement of long and short-term Company goals before payment of certain compensation elements +• +Including reasonable vesting provisions for our equity awards +We urge stockholders to carefully read the section of this Proxy Statement titled " Compensation Discussion and Analysis " beginning on page 24, which describes in greater detail our executive compensation policies and philosophy as well as the "Summary Compensation Table" and related compensation tables that follow it. Our Board of Directors and the Compensation Committee believe that the compensation policies and procedures described in this Proxy Statement are effective in achieving our compensation objectives. +Therefore, in accordance with Section 14A of the Exchange Act, and as a matter of good corporate governance, we ask our stockholders to approve the following advisory resolution at the Annual Meeting: +"RESOLVED, that our Company's stockholders approve, on a non-binding advisory basis, the compensation of the Named Executive Officers, as described in the Compensation Discussion and Analysis, the Summary Compensation Table, and the related compensation tables, notes and narrative in the Proxy Statement for our Company's 2015 Annual Meeting of Stockholders." +68 +Table of Contents +Because this vote is advisory only, it will not be binding upon our Board of Directors or the Compensation Committee. However, the Compensation Committee will take the outcome of the vote into account when considering future executive compensation arrangements. +Required Vote +Approval of this proposal requires the vote of a majority of the shares present and entitled to vote at the Annual Meeting. +____________________________________________________________________ +BOARD RECOMMENDATION +OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE +"FOR" +THIS PROPOSAL NO. 3 TO APPROVE +THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS. +____________________________________________________________________ +69 +Table of Contents +PROPOSAL NO. 4 +EMPLOYEE STOCK PURCHASE PLAN +We are asking our stockholders to approve the adoption and implementation of the 2015 Employee Stock Purchase Plan (the “ESPP”), which will provide our eligible employees with an opportunity to accumulate share ownership through payroll deductions. If the ESPP is approved, 1,000,000 shares of our Common Stock will initially be authorized for issuance under the ESPP. +Our Board of Directors adopted the ESPP on June 26, 2015, subject to approval by our stockholders at the Annual Meeting. If approved by our stockholders, it is expected that the first offering period under the ESPP will begin on March 1, 2016. +We believe approval of the ESPP will allow us to enhance our ability to attract and retain the services of eligible employees upon whose judgment, initiative and efforts the successful conduct and development of our business largely depends. We also believe the ESPP will provide additional incentives to eligible employees to devote their effort and skill to our advancement, by providing them an opportunity to participate in ownership of our shares and thereby have an interest in our success and increased value. +The ESPP complements, and is an important part of, our overall compensation philosophy and strategy as discussed in the section of this Proxy Statement titled “Compensation Discussion and Analysis.” +Our Board of Directors believes it is in our best interest, and the best interests of our stockholders, to adopt the ESPP. Our Board of Directors recommends that you vote “FOR” this Proposal No. 4 to approve the adoption and implementation of the ESPP. +Summary of the 2015 Employee Stock Purchase Plan +The following summary highlights the significant terms of the ESPP. This summary does not contain all of the information contained in the ESPP, which is set forth in full as Attachment A to this Proxy Statement. To the extent there is a conflict between this summary and the terms of the ESPP, the terms of the ESPP will govern. +Purposes. The purposes of the ESPP are to enhance our ability to attract and retain the services of eligible employees, and provide additional incentives to eligible employees to devote their effort and skill to our advancement by providing them an opportunity to participate in the ownership of our shares. +Qualified Plan. The ESPP is intended to qualify as an “employee stock purchase plan” under Section 423(b) of the Code. +Authorized Shares. We have reserved an aggregate of 1,000,000 shares of our Common Stock for issuance under the ESPP. The number of shares of our Common Stock is subject to adjustment in the event of a stock split, stock dividend, combination or reclassification of shares, or other corporate event impacting our capitalization. If any right granted under the ESPP shall for any reason terminate without having been exercised, the Common Stock not purchased under such right shall again become available under the ESPP. +ESPP Administration . The authority to control and manage the operation and administration of the ESPP is vested in our Board of Directors. As provided in the ESPP, our Board of Directors has delegated this authority and control to our Compensation Committee, all of the members of which are independent directors under applicable NYSE listing standards. As such, the Compensation Committee is the administrator of the ESPP. Interpretations or determinations made in good faith by the administrator shall be final and binding on us and all participants. +Eligible Participants. Our employees, and the employees of certain of our subsidiaries, are generally eligible to participate in the ESPP. Employees who are 5% stockholders, or would become 5% stockholders as a result of their participation in the ESPP, are ineligible to participate. The administrator may, in its discretion, elect to exclude employees who work fewer than 20 hours per week or five months in a calendar year. The administrator may impose additional restrictions on eligibility in compliance with applicable law. Participation in the ESPP is voluntary by our employees. +Payroll Deductions. Under the ESPP, eligible employees will be able to acquire shares of our Common Stock by accumulating funds through payroll deductions. Eligible employees will initially be able to select a rate of payroll deduction between 1% and 10% of their base compensation, unless otherwise determined by the administrator. Base compensation shall generally exclude incentive payments, performance-based payments, bonuses, benefits, perquisites and other similar payments. Except as otherwise determined by the administrator, a participant may only participate in the ESPP through payroll deductions and may not make lump sum cash contributions for any offering period. +70 +Table of Contents +Offering Periods. The ESPP shall be implemented through a series of offering periods under which our employees who meet the eligibility requirements will automatically be granted, on the enrollment date of each offering period, a nontransferable option to purchase shares of our Common Stock in that offering period using their accumulated payroll deductions. The option shall provide the eligible employee the right to buy, on each purchase date during the offering period, a number of shares determined by dividing (x) the participant’s payroll deductions accumulated during the offering period prior to the purchase date, by (y) the applicable purchase price. The maximum number of shares that can be purchased by each eligible employee in each offering period is 125 shares, unless otherwise determined by the administrator. Once an employee is enrolled, participation will be automatic in subsequent offering periods. It is anticipated that each offering period will run for approximately six months, commencing each March 1st and September 1st, with purchases occurring on the last day of each offering period. The first offering period is expected to commence on March 1, 2016. The administrator has the discretion to change the commencement date of each offering period. In no event may an offering period exceed 27 months. An employee’s participation automatically ends upon termination of employment for any reason. +Purchase Price. The purchase price for shares of our Common Stock purchased under the ESPP will be 85% of the fair market value of our common stock on the last trading day of the applicable offering period. The fair market value of our Common Stock shall be determined by reference to the closing sale price on the NYSE on the purchase date. +Limitation on Purchase. No participant will have the right to purchase shares of our Common Stock in an amount that, when aggregated with the shares subject to purchase rights under any other employee stock purchase plans we have in effect in the same calendar year, have a fair market value of more than $25,000, determined as of the first day of the applicable offering period. +Withdrawal; Suspension. A participant may elect to withdraw from participation in the ESPP by giving written notice to the administrator. All of the payroll deductions credited to the participant’s account shall be paid to the participant after receipt of the notice of withdrawal. A participant’s withdrawal from an offering period shall not have any effect upon his or her eligibility to participate in any subsequent offering periods. A participant may also suspend payroll deductions during an offering period. If a participant elects to suspend his or her payroll deductions, the participant’s cumulative payroll deductions prior to the suspension shall remain in his or her account and shall be applied to the purchase of shares on the next purchase date, and shall not be paid to the participant unless he or she separately withdraws from participation in the ESPP. +Change in Control. If we experience a change in control transaction, or any other unusual or nonrecurring corporate transaction or event, our compensation committee has the discretion to provide for the termination of any offering period that commenced prior to the closing of the transaction or event, the replacement of outstanding purchase rights with other rights or property, the assumption of outstanding purchase rights by a successor or surviving corporation, adjustments in the number and type of shares subject to outstanding purchase rights, the shortening of an offering period and the early exercise of purchase rights, and the termination of all outstanding purchase rights without being exercised. +Restrictions upon Transfer. Any right granted under the ESPP shall not be transferable or assignable, subject to limited exceptions set forth in the ESPP. +Term . The ESPP will terminate 10 years from the date our Board of Directors approved it, unless it is earlier terminated. The effectiveness of the ESPP is subject to approval of the ESPP by our stockholders within twelve (12) months following the effective date. No right may be granted under the ESPP prior to obtaining stockholder approval. +Amendment; Termination . The administrator may amend, suspend or terminate the ESPP at any time, subject to limited exceptions set forth in the ESPP. +U.S. Federal Income Tax Consequences +The following is a general summary, as of the date of this proxy statement, of the United States federal income tax consequences to ESPP participants and us. The federal tax laws may change and the federal, state, and local tax consequences for any participant will depend upon his or her individual circumstances. +The ESPP, and the right of participants to make purchases thereunder, are intended to qualify under the provisions of Sections 421 and 423 of the Internal Revenue Code of 1986, as amended (the "Code"). Under these provisions, no income will be taxable to a participant at the time of grant of the option or the purchase of shares. However, a participant may become liable for tax upon disposition of the shares acquired as discussed below. +If the shares are sold or disposed, including by way of gift, at least two years after the offering date and more than one year after the date on which shares were transferred to the employee, then the lesser of (a) the excess of the amount actually received for the shares over the amount paid for the shares or (b) 15% of the fair market value of the shares on the purchase date, will be treated as ordinary income to the participant. The employee’s basis in the shares will be increased by the amount of the compensation income recognized. Any further gain or loss upon such disposition will be treated as long-term capital gain or loss. If the shares are sold and the sales price is less than the price paid for the shares, there is no ordinary income and the participant has a capital loss for the difference. +If the shares are sold or disposed of, including by way of gift or exchange, before the expiration of the holding periods described above, then the excess of the fair market value of the shares on the last date of the offering period in which the shares +71 +Table of Contents +were purchased over the purchase price of the shares will be treated as ordinary income to the participant. This excess will constitute ordinary income in the year of sale or other disposition even if no gain is realized on the sale or a gratuitous transfer of the shares is made. The basis in the shares will be increased by the amount of the compensation income recognized. Any further gain or loss recognized in connection with any such sale or exchange will be treated as capital gain or loss and will be treated as short-term capital gain or loss if the shares have been held less than one year. +If shares are sold or disposed of before the expiration of the statutory holding periods, we are generally entitled to a tax deduction in an amount equal to the ordinary income recognized by the participant in connection with such sale or disposition. +The foregoing summary of the effect of federal income taxation upon ESPP participants and us with respect to the shares purchased under the ESPP does not purport to be complete. Reference should be made to the applicable provisions of the Code. In addition, the summary does not discuss the provisions of the income tax laws of any municipality, state or foreign country in which the participant may reside. +Required Vote +Approval of this proposal requires the vote of a majority of the shares present and entitled to vote at the Annual Meeting. +____________________________________________________________________ +BOARD RECOMMENDATION +OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE +"FOR" +THIS PROPOSAL NO. 4 TO APPROVE THE ADOPTION +OF THE EMPLOYEE STOCK PURCHASE PLAN. +____________________________________________________________________ +72 +Table of Contents +PROPOSAL NO. 5 +STOCK INCENTIVE PLAN +We are asking our stockholders to approve the 2015 Stock Incentive Plan (the “2015 SIP”), which will replace our existing 2006 Equity Incentive Plan (the “2006 EIP”). We are asking our stockholders to approve the 2015 SIP because, among other things, the 2006 EIP will expire on May 19, 2016. We will not make any further awards under the 2006 EIP following the effective date of the 2015 SIP. Outstanding awards under the 2006 EIP will remain outstanding, unchanged and subject to the terms of the 2006 EIP and the respective award agreements, until the expiration of such awards in accordance with their terms. +We are requesting approval of 1,275,000 shares, for issuance pursuant to the 2015 SIP, less one share for every one share granted under the 2006 EIP after March 31, 2015 and prior to the effective date of the 2015 SIP. Any shares subject to awards that are forfeited, expire or are otherwise terminated without shares being issued, including shares subject to awards granted under the 2006 EIP that are outstanding after March 31, 2015, will be returned to the pool of shares available for grant and issuance under the 2015 SIP. In addition, any shares subject to awards that are tendered by holders or withheld by us to pay the exercise price of an award or shares withheld to satisfy tax withholding obligations in connection with the exercise or vesting of any awards, including shares subject to awards granted under the 2006 EIP that are outstanding after March 31, 2015, will also be returned to the pool of shares available for grant and issuance under the 2015 SIP. +Approval of the 2015 SIP will allow us to continue to provide incentives to attract, retain and motivate employees, directors, consultants, independent contractors and advisors whose present and potential contributions are important to our success, by offering them an opportunity to participate in our future performance. We believe that the adoption of the 2015 SIP is in our best interests because of the continuing need to provide equity-based incentives to attract and retain qualified personnel and to respond to relevant market changes in equity compensation practices. The use of equity compensation has historically been a significant part of our overall compensation philosophy and is a practice that we plan to continue. The 2015 SIP will serve as an important part of this practice and is a critical component of the overall compensation package that we offer to retain and motivate our service providers. In addition, awards under the 2015 SIP will provide our service providers an opportunity to acquire or increase their ownership stake in us, and we believe this aligns their interests with those of our stockholders, creating strong incentives for our employees, directors, consultants, independent contractors and advisors to work hard for our future growth and success. If Proposal No. 5 is not approved by our stockholders, we believe our ability to attract and retain the talent we need to compete in our industry would be seriously and negatively impacted, and this could affect our long-term success. +We firmly believe that a broad-based equity program is a necessary and powerful service providers' incentive and retention tool for our service providers that benefits all of our stockholders. Equity ownership programs put service providers’ interests directly into alignment with those of other stockholders, as they reward service providers' based upon stock price performance. Without a sizable but market-based equity incentive program, we believe we would be at a disadvantage against competitor companies to provide the total compensation package necessary to attract, retain and motivate the service providers' talent critical to our future success. +A broad-based stock incentive plan focuses our service providers' who receive grants on achieving strong Company performance. As described in detail in the section of this Proxy Statement titled “ Compensation Discussion and Analysis, ” our current equity award program emphasizes performance-based RSUs and NSUs, including performance-based awards that require continued employment after achievement of the applicable performance criteria. This is an important component of our long-term service providers' incentive and retention plan and has been very effective in enabling us to attract and retain the talent critical for an innovative and growth-focused company. To further align the interests of our executive officers with those of our stockholders, we have adopted Stock Ownership Guidelines as described in detail in the section of this Proxy Statement titled "Compensation Discussion and Analysis." We also have granted, and in the future may grant, options, SARs, shares of restricted stock, or RSUs to certain service providers on a targeted basis to incentivize retention and performance objectives. +In setting and recommending to our stockholders the number of shares to authorize under the 2015 SIP, our board of directors and compensation committee considered the historical number of equity awards granted under the 2006 EIP as well as the our three-year average burn rate for the preceding three fiscal years as follows: +Burn Rate +Fiscal Period Ending +SARs Granted +NSUs/RSUs Granted (1) +Total Granted +Weighted Average +# of Common Shares Outstanding +Burn/Rate +2015 +_ +288,849 +288,849 +34,432,917 +0.84% +2014T (2) +_ +3,628 +3,628 +34,621,404 +0.01% +2013 +_ +424,598 +424,598 +34,473,505 +1.23% +2012 +_ +407,013 +407,013 +36,879,115 +1.10% +73 +Table of Contents +3-year average burn rate (excluding 2014T) = 1.06% +____________ +(1) +Shares granted in period includes all awards at their "target" performance factor. +(2) +The transition period 2014T, is excluded from the 3-year average burn rate because annual grants were not issued. Shares granted in 2014T reflect quarterly shares issued pursuant to the Compensation Plan for our Board of Directors. +Our average burn rate for the preceding three fiscal years as set forth in the table above was 1.06%. The burn rate is the ratio of the number of shares underlying awards, including performance awards at 100% of target, granted under the 2006 EIP during a fiscal year to our weighted-average common shares of Common Stock outstanding at the corresponding fiscal year end. +As of March 31, 2015, we had 715,000 SARs under the 2006 EIP with a weighted-average per share exercise price of $26.73 and a weighted-average remaining contractual term of 5.78 years, and 970,824 NSUs/RSUs outstanding under the 2006 EIP, including restricted stock units and deferred stock awards, subject to time-based and performance-based vesting. The 1,685,824 awards outstanding under the 2006 EIP represent an overhang of approximately 4.8% based on our shares of Common Stock outstanding as of March 31, 2015. The 1,275,000 additional shares proposed to be available for future grant under our 2015 SIP would increase the overhang to approximately 8.2% based on our shares of Common Stock outstanding as of March 31, 2015. We calculate “overhang” as the total of (a) shares underlying outstanding awards plus shares available for issuance under future equity awards, divided by (b) the total number of shares outstanding, shares underlying outstanding awards and shares available for issuance under future equity awards. +Approval of the 2015 SIP is intended to enable us to achieve the following objectives: +The continued ability to offer stock-based incentive compensation to our eligible employees and non-employee directors. By its terms, the 2006 EIP will expire on May 19, 2016. Without equity incentives, we would be forced to consider cash replacement alternatives to provide a market-competitive total compensation package necessary to attract, retain and motivate the employee talent critical to our future successes. These cash replacement alternatives could, among other things, reduce the cash available for investment in growth and development of new and existing products, cause a loss of motivation by employees to achieve superior performance over the longer term and reduce the incentive of employees to remain employed with our Company during the vesting of the equity grant. Equity-based awards also directly align a portion of the compensation of our employees with the economic interests of our stockholders. +The ability to maintain an equity incentive plan that can attract and retain employee talent while keeping the rate of dilution low. We are requesting approval of 1,275,000 shares, for issuance pursuant to the 2015 SIP, less one share for every one share granted under the 2006 EIP after March 31, 2015 and prior to the effective date of the 2015 SIP. After carefully forecasting our anticipated growth rate for the next few years and considering our historical forfeiture rates, we currently believe that the share reserve under the 2015 SIP Plan will be sufficient for us to make anticipated grants of equity incentive awards under our current compensation program for the next four years. However, a change in business conditions, Company strategy or equity market performance could alter this projection. +The ability to offer a variety of stock compensation awards including stock options, restricted stock awards, stock bonus awards, SARs, RSUs, and performance awards. The variety of awards available under the 2015 SIP continues to give us flexibility to respond to market-competitive changes in equity compensation practices. +The ability to provide a new equity plan that reflects best current compensation practices. Given that the 2006 EIP will expire on May 19, 2016, we have revisited the terms of our equity plan to include provisions that we believe reflect the best current compensation practices and that implement strong governance-related protections for our stockholders including: +74 +Table of Contents +• Administration. The 2015 SIP will be administered by the Compensation Committee of our Board of Directors, which is comprised entirely of independent non-employee directors. +• Continued broad-based eligibility for equity awards. We grant equity awards to a broad range of our employees. By doing so, we align employee interests with stockholder interests throughout the organization and motivate our employees to act in the best interests of our stockholders. +• No evergreen provision; stockholder approval is required for additional shares . The 2015 SIP does not contain an annual “evergreen” provision, so stockholder approval is required to increase the maximum number of securities that may be issued under the 2015 SIP. +• Repricing is not allowed without stockholder approval. The 2015 SIP prohibits the repricing or exchange for cash of underwater stock options and SARs without prior stockholder approval. +• Equity-based clawback provision. The 2015 SIP provides that all awards will be subject to any compensation clawback or recoupment policy adopted by our board of directors or required by law. +• Plan does not contain single-trigger plan provision. The 2015 SIP does not provide for automatic “single trigger” vesting acceleration of plan awards in the event of our change of control. +• No discount stock options or stock appreciation rights. All stock options and SARs will have an exercise price equal to at least the fair market value of our common stock on the date the stock option or SAR is granted, except in certain situations in which we are assuming or replacing options granted by another company that we are acquiring. +• No tax gross-ups. The 2015 SIP does not provide for any tax gross-ups. +• Annual limits on non-employee director grants. The 2015 SIP includes fixed limits as to the maximum value of awards that may be granted in each calendar year to non-employee directors. +Summary of the 2015 Stock Incentive Plan +The following summary highlights the significant terms of the 2015 SIP. This summary does not contain all of the information contained in the 2015 SIP, which is set forth in full as Attachment B to this Proxy Statement. To the extent there is a conflict between this summary and the terms of the 2015 SIP, the terms of the 2015 SIP will govern. +Purposes . The purposes of the 2015 SIP are to enhance our ability to attract and retain the services of qualified employees, officers, directors, consultants and other services providers and provide additional incentives to such persons to devote their effort and skill to the advancement of the Company by providing them an opportunity to participate in the ownership of the Company. +Shares Authorized. 1,275,000 shares, less one share for every one share granted under the 2006 EIP after March 31, 2015 and prior to the effective date of the 2015 SIP, will be authorized under the 2015 SIP, subject to adjustment for stock splits and other similar changes in our capital structure. Any shares subject to awards that are forfeited, expire or are otherwise terminated without shares being issued, including shares subject to awards granted under the 2006 EIP that are outstanding after March 31, 2015, will be returned to the pool of shares available for grant and issuance under the 2015 SIP. In addition, any shares subject to awards that are tendered by holders or withheld by us to pay the exercise price of an award or shares withheld to satisfy tax withholding obligations in connection with the exercise or vesting of any awards, including shares subject to awards granted under the 2006 EIP that are outstanding after March 31, 2015, will also be returned to the pool of shares available for grant and issuance under the 2015 SIP. +Limitations on Awards . No more than 750,000 shares may be issued pursuant to the exercise of incentive stock options. Subject to adjustment for stock splits and other similar changes in our capital structure, no participant in the 2015 SIP may be granted (a) options or SARs during any 12-month period with respect to more than 400,000 shares (increased to 800,000 with respect to awards granted during the first calendar year of employment) and (b) restricted stock awards, RSUs, performance awards or stock bonus awards during any calendar year that are intended to comply with the performance-based exception under Section 162(m) of the U.S. Internal Revenue Code, if applicable, and are denominated in shares under which more than 200,000 shares may be earned for each 12 months in the vesting period or performance period (increased to 400,000 with respect to awards during the first calendar year of employment). These limits are intended to ensure that awards will qualify under Section 162(m) of the Code, if applicable. Failure to qualify under this section might result in our inability to take a tax deduction for part of our performance-based compensation to senior executives. In addition, during any calendar year no participant may be granted cash-based awards that are intended to comply with the performance-based exception under Section 162(m) of the Code and are denominated in cash under which more than $10,000,000 may be earned for each 12 months in the performance period (increased to $20,000,000 with respect to awards granted during the first calendar of employment). +75 +Table of Contents +Eligible Participants. Incentive stock options may be granted only to Company employees. All other awards may be granted to any of our employees, directors, consultants, independent contractors and advisors that render bona fide services not in connection with the offer and sale of securities in a capital-raising transaction. The Compensation Committee determines which individuals will participate in the 2015 SIP. As of March 31, 2015, there were approximately 110 employees and 8 non-employee directors eligible to participate in the 2015 SIP. +Adjustments. If the number of outstanding shares of the Company is changed by a stock dividend, extraordinary dividends or distributions (whether in cash, shares or other property, other than a regular cash dividend), recapitalization, stock split, reverse stock split, subdivision, combination, reclassification, spin-off or similar change in our capital structure, then (a) the number of shares reserved for issuance and future grant under the 2015 SIP, (b) the exercise prices of and number of shares subject to outstanding options and stock appreciation rights, (c) the number of shares subject to other outstanding awards, (d) the maximum number of shares that may be issued as incentive stock options or other awards and, (e) the maximum number of shares that may be issued to an individual or to a new employee in any one calendar year, will be proportionately adjusted, subject to any required action by our board of directors or our stockholders and in compliance with applicable securities laws. No fraction of shares may be issued following any adjustment. +Award Types . The 2015 SIP permits the issuance of the following types of awards: +• Options. Options may be non-qualified stock options or incentive stock options and may vest based on time or achievement of performance goals. Our Compensation Committee may provide for options to be exercised only as they vest or to be immediately exercisable with any shares issued on exercise being subject to our right of repurchase that lapses as the shares vest. +• Restricted Stock. A restricted stock award is an offer by us to sell shares of our Common Stock subject to restrictions, which may vest based on time or achievement of performance goals. The price, if any, of a restricted stock award will be determined by the Compensation Committee. +• Stock Bonuses. Stock bonus awards may be granted as additional compensation for past or future service or achievement of performance goals, and therefore, no payment will be required for any shares awarded under a stock bonus. +• Stock Appreciation Rights. SARs provide for a payment, or payments, in cash or shares of our Common Stock, to the holder based upon the difference between the fair market value of our Common Stock on the date of exercise and the stated exercise price at grant up to a maximum amount of cash or number of shares. +• Restricted Stock Units. RSUs represent the right to receive shares of our Common Stock at a specified date in the future, subject to forfeiture of that right because of termination of employment or failure to achieve certain performance goals. If an RSU has not been forfeited, then on the date specified in the applicable agreement, we will deliver to the holder of the RSU shares of our Common Stock (which may be subject to additional restrictions), cash or a combination of our Common Stock and cash. +• Performance Awards. Performance awards cover a number of shares of our Common Stock that may be settled upon achievement of the pre-established performance goals in cash or by issuance of the underlying shares. +Terms applicable to Stock Options and Stock Appreciation Rights. The exercise price of grants made under the 2015 SIP of stock options or SARs may not be less than the closing price of our Common Stock on the date of grant. The term of these awards may not be longer than ten years, except in the case of incentive stock options granted to holders of more than 10% of our voting power, which may have a term no longer than five years. The Compensation Committee determines at the time of grant the other terms and conditions applicable to such award, including vesting and exercisability. +Terms applicable to Restricted Stock Awards, Stock Bonus Awards, Restricted Stock Unit Awards, and Performance Awards . The Compensation Committee determines the terms and conditions applicable to the granting of restricted stock awards, stock bonus awards, RSUs and performance awards. The Compensation Committee may make the grant, issuance, retention and/or vesting of restricted stock awards, stock bonus awards, RSUs and performance awards contingent upon continued employment, the passage of time, or such performance criteria and the level of achievement versus such criteria as it deems appropriate. +Non-Employee Directors . Under the 2015 SIP, non-employee directors may be granted awards either on a discretionary basis or pursuant to policy adopted by our Board of Directors, except that no non-employee director may be granted awards in any calendar year with a grant date fair value of more than $1,000,000 (increased to $2,000,000 with respect to awards granted during the first calendar year of service). +Administration. The Compensation Committee will administer the 2015 SIP. Subject to the terms and limitations expressly set forth in the 2015 SIP, the Compensation Committee selects the persons who receive awards, determines the number of shares covered thereby, and, establishes the terms, conditions and other provisions of the grants. The Compensation Committee may construe and interpret the 2015 SIP and prescribe, amend and rescind any rules and regulations relating to the 2015 SIP. +Eligibility Under Section 162(m) of the Code and Section 16 of the Exchange Act. Section 162(m) of the Code generally disallows a federal income tax deduction to public companies for compensation paid the chief executive officer and three other +76 +Table of Contents +most highly compensated officers (excluding the chief financial officer) (“covered employees”) to the extent that any of them receive more than $1.0 million in compensation in any single year. However, if compensation qualifies as performance-based compensation for Section 162(m) purposes, a public company may deduct the compensation for federal income tax purposes, even if the compensation exceeds $1.0 million in a single year. +Our 2015 SIP permits the grant of performance-based stock and cash awards that may qualify as performance-based compensation that is not subject to the $1.0 million limitation on income tax deductibility imposed by Section 162(m) of the Code. In addition to the grant of options or SARs that are deemed to be performance-based if issued with an exercise price no less than the fair market value on the date of grant, our Compensation Committee may structure awards so that the stock or cash will be issued or paid only following the achievement of certain pre-established performance goals during a designated performance period. +The 2015 SIP is intended to comply with the requirements of Section 162(m) of the Code such that performance-based awards in excess of $1.0 million payable to our covered employees may be deductible by us. While our Compensation Committee is mindful of the benefit to us of the full deductibility of compensation and will consider deductibility when analyzing potential compensation alternatives, it believes that it should not be constrained by the requirements of Section 162(m) where those requirements would impair flexibility in compensating our executive officers in a manner that can best promote our corporate objectives. Awards may, but need not, include performance criteria that satisfy Section 162(m) of the Code. To the extent that awards are intended to qualify as “performance-based compensation” under Section 162(m), the performance criteria may include any of the factors selected by the Compensation Committee and specified in an award, from among the following objective measures, either individually, alternatively or in any combination, applied to us as a whole or any business unit or subsidiary, either individually, alternatively or in any combination, on a GAAP or non-GAAP basis, and measured, to the extent applicable on an absolute basis or relative to a pre-established target or index or group of comparator companies, to determine whether the performance goals established by the compensation committee with respect to applicable awards have been satisfied: +77 +Table of Contents +• profit before tax; +• billings; +• revenue; +• net revenue; +• earnings, which may include earnings before interest, earnings before interest and taxes, earnings before interest, taxes and depreciation, earnings before interest, taxes, depreciation and amortization, net earnings and other metrics based on or derived from earnings; +• operating income; +• operating margin; +• operating profit; +• controllable operating profit; +• net operating profit; +• net profit; +• gross margin; +• operating expenses or operating expenses as a percentage of revenue; +• net income; +• earnings per share; +• total stockholder return; +• market share; +• return on assets or net assets; +• our stock price; +• growth in stockholder value relative to a pre-determined index; +• return on equity; +• return on invested capital; +• cash flow, including free cash flow or operating cash flows; +• cash conversion cycle; +• economic value added; +• individual confidential business objectives; +• contract awards or backlog; +• overhead or other expense reduction; +• credit rating; +• strategic plan development and implementation; +• succession plan development and implementation; +• improvement in workforce diversity; +• customer indicators; +• new product invention or innovation; +• attainment of research and development milestones; +• improvements in productivity; +• bookings; and +• attainment of objective operating goals and employee metrics. +Performance goals (and any exclusions) will be set by the Compensation Committee prior to the earlier of 90 days after the commencement of the applicable performance period and the expiration of 25% of the performance period and will otherwise comply with the requirements of Section 162(m) of the Code and the regulations thereunder. When required by Section 162(m) of the Code, prior to settlement of any award at least two of the “outside directors” then serving on the Compensation Committee (or a majority if more than two “outside directors” then serve on the Compensation Committee) will determine and certify in writing the extent to which such performance goals have been timely achieved and the extent to which the award has been earned, and the compensation committee may adjust downwards, but not upwards, the amount payable pursuant to the award. Awards granted to participants who are subject to Section 16 of the Exchange Act must be approved by two or more “non-employee directors” (as defined in the regulations promulgated under Section 16 of the Exchange Act). With respect to participants whose compensation is subject to Section 162(m) of the Code, the Compensation Committee may specify at the time of the initial grant of the award, the manner of adjustment of any performance goals upon which vesting or settlement of any portion of the Award is to be subject to the extent necessary to prevent dilution or enlargement of any award as a result of extraordinary events or circumstances, as determined by the Compensation Committee, or to exclude the effects of an event or +78 +Table of Contents +occurrence which the Compensation Committee determines should appropriately be excluded, including extraordinary, unusual, infrequent, or non-recurring items, an event either not directly related to our operations or not within the reasonable control of our management, changes in applicable laws, regulations or accounting principles or standards, currency fluctuations, discontinued operations, non-cash items, such as amortization, depreciation or reserves, asset impairment or any recapitalization, restructuring, reorganization, merger, acquisition, divestiture, consolidation, spin-off, split-up, combination, liquidation, dissolution, sale of assets or other similar corporate transaction, but only to the extent such adjustments would be permitted under Section 162(m) of the Code. +Corporate Transactions. In the event of a change of control, merger, sale of all or substantially all of our assets or other similar corporate transaction, unless otherwise determined by the Compensation Committee, all outstanding awards may be assumed or replaced by the successor corporation. In the alternative, the successor corporation may substitute equivalent awards or provide substantially similar consideration to participants as was provided to stockholders (after taking into account the existing provisions of the awards). The successor corporation may also issue, in place of outstanding shares held by the participant, substantially similar shares or other property subject to repurchase restrictions no less favorable to the participant. In the event such successor or acquiring corporation (if any) refuses to assume, convert, replace or substitute awards, then the awards will have their vesting accelerate as to all shares subject to such award (and any applicable right of repurchase fully lapse) immediately prior to the consummation of the corporate transaction. In addition, in the event such successor or acquiring corporation (if any) refuses to assume, convert, replace or substitute awards, then the Compensation Committee will notify the participants that such award will be exercisable for a period of time determined by the Compensation Committee, and such awards will terminate upon the expiration of such period. Awards need not be treated similarly in a corporate transaction +Method of Payment. The exercise price of options and the purchase price, if any, of other stock awards may be paid in cash or by check or, where expressly approved by the Compensation Committee and permitted by law, cancellation of indebtedness, surrender of shares, waiver of compensation, a broker-assisted or other form of cashless exercise program, any combination of the foregoing or any other method permitted by applicable law. +Transferability. Except as otherwise determined by the Compensation Committee, awards granted under the 2015 SIP may not be sold, pledged, assigned, hypothecated, transferred or disposed of except by will or the laws of descent and distribution. +Repricing Prohibited . Repricing, or reducing the exercise price of outstanding options or SARs, or cancelling in exchange for cash outstanding options or SARs when the exercise price per share exceeds the fair market value of one share is prohibited without stockholder approval under the 2015 SIP. +Term. The 2015 SIP will terminate 10 years from the date our board of directors approved it, unless it is earlier terminated. The effectiveness of the 2015 SIP is subject to approval of the 2015 SIP by our stockholders within twelve (12) months following the date our board of directors approved it. +Amendments. Our Board of Directors may terminate or amend the 2015 SIP at any time, provided that no action may be taken by our Board of Directors (except for adjustment for stock splits and other similar changes in our capital structure described in “Adjustments” above) without the approval of our stockholders to: +• permit the repricing of outstanding stock options or SARs under the 2015 SIP; +• cancel in exchange for cash outstanding stock options or SARs under the 2015 SIP when the exercise price per share exceeds the fair market value of one share; or +• otherwise implement any amendment to the 2015 SIP required to be approved by stockholders. +Insider Trading Policy. Any participant that receives an award under the 2015 SIP must comply with our insider trading policy. +Clawback or Recoupment . Awards, including gains realized with respect to such awards, under the 2015 SIP will be subject to clawback or recoupment pursuant to any compensation clawback or recoupment policy adopted by our Board of Directors or required by law. +U.S. Federal Income Tax Consequences +The following is a general summary as of the date of this Proxy Statement of the United States federal income tax consequences to us and participants in the 2015 SIP. The federal tax laws may change and the federal, state and local tax consequences for any participant will depend upon his or her individual circumstances. Each participant has been, and is, encouraged to seek the advice of a qualified tax advisor regarding the tax consequences of participation in the 2015 SIP. +Non-Qualified Stock Options . A participant will realize no taxable income at the time a non-qualified stock option is granted under the 2015 SIP, but generally at the time such non-qualified stock option is exercised, the participant will realize ordinary income in an amount equal to the excess of the fair market value of the shares on the date of exercise over the stock option exercise price. Upon a disposition of such shares, the difference between the amount received and the fair market value on the date of exercise will generally be treated as a long-term or short-term capital gain or loss, depending on the holding period of the shares. We will generally be entitled to a deduction for federal income tax purposes at the same time and in the +79 +Table of Contents +same amount as the participant is considered to have realized ordinary income in connection with the exercise of the non-qualified stock option. +Incentive Stock Options . A participant will realize no taxable income, and we will not be entitled to any related deduction, at the time any incentive stock option is granted. If certain employment conditions are satisfied, then no taxable income will result upon the exercise of such option, and we will not be entitled to any deduction in connection with the exercise of such stock option. Upon disposition of the shares after expiration of the statutory holding periods, any gain realized by a participant will be taxed as long-term capital gain and any loss sustained will be long-term capital loss, and we will not be entitled to a deduction in respect to such disposition. While no ordinary taxable income is recognized at exercise (unless there is a “disqualifying disposition,” see below), the excess of the fair market value of the shares over the stock option exercise price is a preference item that is recognized for alternative minimum tax purposes. +Except in the event of death, if shares acquired by a participant upon the exercise of an incentive stock option are disposed of by such participant before the expiration of the statutory holding periods ( i.e. , a “disqualifying disposition”), such participant will be considered to have realized as compensation taxed as ordinary income in the year of such disposition an amount, not exceeding the gain realized on such disposition, equal to the difference between the stock option exercise price and the fair market value of such shares on the date of exercise of such stock option. Generally, any gain realized on the disposition in excess of the amount treated as compensation or any loss realized on the disposition will constitute capital gain or loss, respectively. If a participant makes a “disqualifying disposition,” generally in the fiscal year of such “disqualifying disposition” we will be allowed a deduction for federal income tax purposes in an amount equal to the compensation realized by such participant. +Restricted Stock . A participant receiving restricted stock may be taxed in one of two ways: the participant (i) pays tax when the restrictions lapse ( i.e. , with respect to the shares as they become vested) or (ii) makes an election under Section 83(b) of the Code to pay tax in the year the grant is made with respect to all of the shares subject to the grant. At either time the value of the award for tax purposes is the excess of the fair market value of the shares at that time over the amount (if any) paid for the shares. This value is taxed as ordinary income and if granted to an employee, is subject to income tax withholding. We receive a tax deduction at the same time and for the same amount taxable to the participant. If a participant makes an election under Section 83(b) of the Code to be taxed at grant, then, when the restrictions lapse, there will be no further tax consequences attributable to the awarded stock until the recipient disposes of the stock, at which point any gain or loss will be short-term or long-term capital gain or loss, depending on the holding period of the stock prior to such disposition. +Stock Bonuses . The participant will not realize income when a stock bonus (which can be settled in cash or our Common Stock) is granted, but will realize ordinary income when shares (or cash, if cash settled) are transferred to him or her. The amount of such income will be equal to the fair market value of such transferred shares (or cash, if cash settled) on the date of transfer. We generally will be entitled to a tax deduction at the time and in the amount that the participant recognizes ordinary income. +Stock Appreciation Rights . A grant of a SAR (which can be settled in cash or our Common Stock) has no federal income tax consequences at the time of grant. Upon the exercise of SARs, the value received is generally taxable to the recipient as ordinary income, and we generally will be entitled to a corresponding tax deduction. +Restricted Stock Units . In general, no taxable income is realized upon the grant of an RSU (which can be settled in cash or our common stock). The participant will generally include in ordinary income the fair market value of the award of stock (or cash, if cash settled) at the time shares of stock (or cash, if cash settled) are delivered to the participant or at the time the RSU. We generally will be entitled to a tax deduction at the time and in the amount that the participant recognizes ordinary income. +Performance Awards. The participant will not realize income when a performance award is granted (which can be settled in cash or our Common Stock), but will realize ordinary income when shares (or cash, if cash settled) are transferred to him or her. The amount of such income will be equal to the fair market value of such transferred shares (or cash, if cash settled) on the date of transfer. We generally will be entitled to a tax deduction at the time and in the amount that the participant recognizes ordinary income. +Withholding Tax Requirements . Whenever shares are to be issued in satisfaction of awards granted under the 2015 SIP or the applicable tax event occurs, we may require the participant to remit to us an amount sufficient to satisfy applicable withholding tax requirements. Whenever payments in satisfaction of an award are to be made in cash, such payment will be net of an amount sufficient to satisfy the applicable withholding tax requirements. The Compensation Committee may require or permit the participant to satisfy applicable withholding tax requirements, in whole or in part by paying cash, electing to have us withhold otherwise deliverable cash or shares having a fair market value equal to the minimum statutory amount required to be withheld (or such other amount that will not cause an adverse accounting consequence or cost), delivering to us already-owned shares having a fair market value equal to the minimum amount required to be withheld or withholding from the proceeds of the sale of otherwise deliverable shares acquired pursuant to an award either through a voluntary sale or through a mandatory sale arranged by us. +ERISA Information +The 2015 SIP is not subject to any of the provisions of the Employee Retirement Income Security Act of 1974, as amended. +80 +Table of Contents +Required Vote +Approval of this proposal requires a vote of the majority of the shares present and entitled to vote at the Annual Meeting. +____________________________________________________________________ +BOARD RECOMMENDATION +OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE +“FOR” +THIS PROPOSAL NO. 5 TO APPROVE THE ADOPTION OF THE 2015 STOCK INCENTIVE PLAN. +____________________________________________________________________ +81 +Table of Contents +OTHER BUSINESS OF THE ANNUAL MEETING +We do not know of any business other than that described in this Proxy Statement that will be presented for consideration or action by the stockholders at the Annual Meeting. If, however, any other business is properly brought before the Annual Meeting, shares represented by proxies will be voted in accordance with the best judgment of the persons named in such proxies or their substitutes. +82 +Table of Contents +ANNUAL REPORT ON FORM 10-K +A copy of our Company's Annual Report on Form 10-K has been posted on the Internet, along with this Proxy Statement, each of which is accessible by following the instructions in the Notice. The Annual Report on Form 10-K contains consolidated financial statements of our Company and its subsidiaries and the report thereon of KPMG LLP, our Company's independent registered public accounting firm. +Our Company will provide a copy of its Annual Report on Form 10-K without charge (except exhibits) upon the written request of any beneficial owner of our shares as of the Record Date. Exhibits are available from our Company upon reimbursement of our Company's reasonable expenses. Such requests should be addressed to the Corporate Secretary at our corporate offices located at 250 Coromar Drive, Goleta, California 93117. +BY ORDER OF THE BOARD OF DIRECTORS +/s/ ANGEL R. MARTINEZ +Angel R. Martinez +Chairman of the Board of Directors and +Chief Executive Officer +Goleta, California +July 29, 2015 +83 +Table of Contents +APPENDIX A +DECKERS OUTDOOR CORPORATION +2015 EMPLOYEE STOCK PURCHASE PLAN +As adopted by the Board of Directors on June 26, 2015 +ARTICLE 1 +PURPOSE +The purposes of the Plan are to (a) enhance the Company’s ability to attract and retain the services of Eligible Employees upon whose judgment, initiative and efforts the successful conduct and development of the Company’s business largely depends, and (b) provide additional incentives to Eligible Employees to devote their effort and skill to the advancement of the Company, by providing them an opportunity to participate in the ownership of the Company and thereby have an interest in the success and increased value of the Company. The Plan is intended to qualify as an “employee stock purchase plan” within the meaning of Section 423(b) of the Code. +ARTICLE 2 +DEFINITIONS AND CONSTRUCTION +For purposes of the Plan, terms not otherwise defined herein shall have the meanings indicated below: +2.1 “ Administrator ” means the Board or, if the Board delegates responsibility for any matter to the Committee, the term Administrator shall mean the Committee. +2.2 “ Agent ” means the brokerage firm, bank or other financial institution, entity or person(s), if any, engaged, retained, appointed or authorized to act as the agent of the Company or an Employee with regard to the Plan. +2.3 “ Board ” means the Board of Directors of the Company. +2.4 “ Change in Control ” means: +(a) The acquisition, directly or indirectly, in one transaction or a series of related transactions, by any person or group (within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended) of the beneficial ownership of securities of the Company possessing more than fifty percent (50%) of the total combined voting power of all outstanding securities of the Company; provided , however , that a Change in Control shall not result upon such acquisition of beneficial ownership if such acquisition occurs as a result of a public offering of the Company’s securities or any financing transaction (or series of financing transactions); +(b) A merger or consolidation in which the Company is not the surviving entity; provided , however , that a Change in Control shall not result from a transaction in which the holders of the outstanding voting securities of the Company immediately prior to such merger or consolidation hold, as a result of holding Company securities prior to such transaction, in the aggregate, securities possessing more than fifty percent (50%) of the total combined voting power of all outstanding voting securities of the surviving entity (or the parent of the surviving entity) immediately after such merger or consolidation; +(c) A reverse merger in which the Company is the surviving entity, but in which the holders of the outstanding voting securities of the Company immediately prior to such merger hold, in the aggregate, securities possessing less than fifty percent (50%) of the total combined voting power of all outstanding voting securities of the Company or of the acquiring entity immediately after such merger; or +(d) The sale, transfer or other disposition (in one transaction or a series of related transactions) of all or substantially all of the assets of the Company; provided , however , that a Change in Control shall not result from a transaction in which the holders of the outstanding voting securities of the Company immediately prior to such transaction(s) receive as a distribution with respect to securities of the Company, in the aggregate, securities possessing more than fifty percent (50%) of the total combined voting power of all outstanding voting securities of the acquiring entity immediately after such transaction(s). +The Administrator shall have full and final authority to determine conclusively whether a Change in Control of the Company has occurred in respect of a particular set of circumstances, and the date of the occurrence of such Change in Control and any incidental matters relating thereto. +84 +Table of Contents +2.5 “ Code ” means the Internal Revenue Code of 1986, as amended from time to time, together with the treasury regulations and official guidance promulgated thereunder. +2.6 “ Committee ” means a committee of two or more members of the Board appointed to administer the Plan as set forth in Section 11.1. +2.7 “ Common Stock ” means the Common Stock of the Company and such other securities of the Company that may be substituted for Common Stock pursuant to Article 8. +2.8 “ Company ” means Deckers Outdoor Corporation, a Delaware corporation. +2.9 “ Compensation ” of an Eligible Employee means the base compensation received by such Eligible Employee as compensation for services to the Company or any Related Corporation during the relevant period, excluding incentive or performance-based compensation (whether issued in the form of cash or equity), bonuses, overtime payments, sales commissions, travel and business expense reimbursements, fringe benefits, perquisites and other similar payments. Such Compensation shall be calculated before deduction of any income or employment tax withholdings, but shall be withheld from the Eligible Employee’s net income. +2.10 “ Effective Date ” means the date on which the Plan was originally adopted by the Board, as set forth on the first page hereof. +2.11 “ Eligible Employee ” means an Employee of the Company or any Related Corporation: (a) who would not, immediately after any rights under the Plan are granted, own (directly or through attribution) or be deemed to own for purposes of Section 423(b)(3) of the Code five percent (5%) or more of the total combined voting power or value of all classes of capital stock of the Company or any Related Corporation; (b) whose customary employment is for more than twenty hours per week; and (c) whose customary employment is for more than five months in any calendar year. For purposes of clause (a) of the preceding sentence, the rules of Section 424(d) of the Code with regard to the attribution of stock ownership shall apply in determining the stock ownership of an individual, and stock that an Employee may purchase under outstanding rights granted under the Plan shall be treated as stock owned by the Employee. Notwithstanding the foregoing, the Administrator may, in its sole discretion, determine that an Employee of the Company or any Related Corporation shall not be eligible to participate in an Offering Period if: (i) such Employee is a highly compensated employee within the meaning of Section 423(b)(4)(D) of the Code or is a “highly compensated employee” (A) with compensation above a specified level, (B) who is an officer of the Company or any Related Corporation thereof or (C) who is subject to the disclosure requirements of Section 16(a) of the Exchange Act; (ii) such Employee has not met a service requirement designated by the Administrator pursuant to Section 423(b)(4)(A) of the Code (which service requirement may not exceed two years), or (iii) such Employee is a citizen or resident of a foreign jurisdiction and the grant of a right to purchase stock under the Plan to such Employee would be prohibited under the laws of such foreign jurisdiction or the grant of a right under the Plan to such Employee in compliance with the laws of such foreign jurisdiction would cause the Plan to violate the requirements of Section 423 of the Code, as determined by the Administrator in its sole discretion; provided that any exclusion in clauses (i), (ii) or (iii) shall be applied in an identical manner under each Offering Period to all similarly situated employees of the Company or any Related Corporation, in accordance with Treasury Regulation Section 1.423-2(e). +2.12 “ Employee ” means any person who renders services to the Company or any Related Corporation as an employee within the meaning of Section 3401(c) of the Code. “Employee” shall not include any director of the Company or any Related Corporation who does not render services to the Company or any Related Corporation as an employee within the meaning of Section 3401(c) of the Code. For purposes of the Plan, the employment relationship shall be treated as continuing intact while the individual is on military leave, sick leave or other leave of absence approved by the Company and meeting the requirements of Treasury Regulation Section 1.421-1(h)(2). Where the period of leave exceeds three (3) months or such other period specified in Treasury Regulation Section 1.421-1(h)(2), and the individual’s right to reemployment is not guaranteed either by statute or by contract, the employment relationship shall be deemed to have terminated on the first day immediately following such three (3)-month period or such other period specified in Treasury Regulation Section 1.421-1(h)(2). +2.13 “ Enrollment Date ” means the first Trading Day of each Offering Period. +2.14 “ Exchange Act ” means the Securities Exchange Act of 1934, as amended from time to time. +2.15 “ Fair Market Value ” on any given date means the value of one share of Common Stock, determined as follows: +(a) If the Common Stock is then listed or admitted for trading on the New York Stock Exchange or another stock exchange which reports closing sale prices, the Fair Market Value shall be the closing sale price on the date of valuation on the New York Stock Exchange or such stock exchange on which the Common Stock is then listed or admitted for trading, or, if no closing sale price is quoted on such day, then the Fair Market Value shall be the closing sale price of the Common Stock on the New York Stock Exchange or such stock exchange on the next preceding day on which a closing sale price is reported. +(b) If the Common Stock is not then listed or admitted for trading on the New York Stock Exchange or another stock exchange which reports closing sale prices, the Fair Market Value shall be the average of the closing bid and asked prices of the Common Stock in the over‑the‑counter market on the date of valuation. +85 +Table of Contents +(c) If neither (a) nor (b) is applicable as of the date of valuation, then the Fair Market Value shall be determined by the Administrator in good faith using any reasonable method of evaluation in a manner consistent with the valuation principles under Section 409A of the Code, which determination shall be conclusive and binding on all interested parties. +2.16 “ Offering Period ” means the periods of approximately six months during which a right granted under to the Plan may be exercised, (i) commencing on the first Trading Day on or after March 1 st of each year and terminating on the first Trading Day on or following August 31 st , approximately six months later, and (ii) commencing on the first Trading Day on or after September 1 st of each year and terminating on the first Trading Day on or following the last day of the month of February, approximately six months later. The duration and timing of Offering Periods may be changed pursuant to Article 4 and Article 9. In no event may an Offering Period exceed twenty-seven (27) months. +2.17 “ Participant ” means any Eligible Employee who has executed a subscription agreement and been granted rights to purchase Common Stock pursuant to the Plan. +2.18 “ Plan ” means this 2015 Employee Stock Purchase Plan of the Company. +2.19 “ Purchase Date ” means the last Trading Day of each Offering Period. +2.20 “ Purchase Price ” means, with respect to a particular Offering Period, an amount equal to eighty-five percent (85%) of the Fair Market Value of a Share on the applicable Purchase Date; provided, however , that the Purchase Price for subsequent Offering Periods may be determined by the Administrator in its sole discretion subject to compliance with Section 423 of the Code (or any successor provision, or any other applicable law, regulation or stock exchange listing standard) or pursuant to Article 9. +2.21 “ Related Corporation ” means any “parent corporation” or “subsidiary corporation” of the Company (in either case, to the extent currently existing or established in the future), as those terms are defined in Section 424(e) and (f) respectively, of the Code. +2.22 “ Securities Act ” means the Securities Act of 1933, as amended from time to time. +2.23 “ Share ” means a share of Common Stock. +2.24 “ Trading Day ” means a day on which the New York Stock Exchange, or another stock exchange on which the Common Stock is then listed or admitted for trading, is open for trading. +ARTICLE 3 +SHARES SUBJECT TO THE PLAN +3.1 Shares Subject to the Plan . Subject to Article 8, the aggregate number of Shares that may be issued pursuant to rights granted under the Plan shall be 1,000,000 Shares. If any right granted under the Plan shall for any reason terminate without having been exercised, the Common Stock not purchased under such right shall again become available for the Plan. The Shares available for issuance under the Plan may be authorized but unissued Shares, Shares held in treasury, or Shares reacquired by the Company. +ARTICLE 4 +OFFERING PERIODS +4.1 Offering Periods . The Plan will be implemented by consecutive Offering Periods with a new Offering Period commencing on the first Trading Day on or after March 1 st and September 1 st each year, or on such other date as the Administrator will determine. The Administrator will have the authority to change the commencement date and duration of Offering Periods with respect to future offerings. +ARTICLE 5 +ELIGIBILITY AND PARTICIPATION +5.1 Eligibility . Any Eligible Employee who shall be employed by the Company or any Related Corporation on the day immediately preceding a given Enrollment Date for an Offering Period shall be eligible to participate in the Plan during such Offering Period, subject to the requirements of this Article 5 and the limitations imposed by Section 423(b) of the Code. +5.2 Enrollment in Plan . +(a) An Eligible Employee may become a Participant in the Plan for an Offering Period by delivering a subscription agreement to the Company in such form as the Administrator requires and by such time prior to the Enrollment Date for such Offering Period as is designated by the Administrator. +86 +Table of Contents +(b) Each such agreement shall designate a whole percentage of such Eligible Employee’s Compensation to be withheld by the Company and any Related Corporation on each payday during the Offering Period as payroll deductions under the Plan. An Eligible Employee may designate any whole percentage of Compensation that is not less than one percent (1%) and not more than the maximum percentage designated by the Administrator (which percentage shall be ten percent (10%) in the absence of any such designation) as payroll deductions. The payroll deductions made for each Participant shall be credited to an account for such Participant under the Plan and shall be deposited with the general funds of the Company in a manner consistent with Section 12.5. +(c) A Participant may increase or decrease the percentage of Compensation designated in his or her subscription agreement at any time during an Offering Period only to the extent specified or agreed to by the Administrator. In the absence of any such specification or agreement by the Administrator, a Participant shall be permitted during any Offering Period to decrease the percentage of Compensation no more than once and shall not be permitted to increase the percentage of Compensation until the next following Offering Period or for any subsequent Offering Period. Any change in payroll deductions permitted by the Administrator shall be effective with the first full payroll period commencing at least five (5) business days after the Company’s receipt of a new subscription agreement evidencing the new payroll deduction election (or such shorter or longer period as may be specified or agreed to by the Administrator). +(d) A Participant may suspend payroll deductions at any time during an Offering Period. Any such suspension of payroll deductions shall be effective with the first full payroll period commencing at least five (5) business days after the Company’s receipt of a written notice of suspension (or such shorter or longer period as may be specified or agreed to by the Administrator). In the event a Participant elects to suspend his or her payroll deductions with respect to an Offering Period, such Participant’s cumulative payroll deductions prior to the suspension shall remain in his or her account and shall be applied to the purchase of Shares on the next occurring Purchase Date and shall not be paid to such Participant unless he or she separately withdraws from participation in the Plan in accordance with Article 7. A Participant who suspends payroll deductions during an Offering Period shall not be permitted to resume contributions to the Plan during that Offering Period. +(e) Except as otherwise determined by the Administrator, in its sole discretion from time to time, a Participant may participate in the Plan only by means of payroll deductions and may not make contributions by lump sum payment for any Offering Period. +5.3 Payroll Deductions . Except as otherwise determined by the Administrator, in its sole discretion from time to time, payroll deductions for a Participant shall commence with the first payroll following the Enrollment Date, and shall end with the last payroll in the Offering Period to which his or her authorization is applicable, unless sooner terminated by the Participant in accordance with Article 7. +5.4 Effect of Enrollment . A Participant’s completion of a subscription agreement will enroll such Participant in the Plan for each subsequent Offering Period on the terms contained therein until the Participant submits a new subscription agreement, withdraws from participation under the Plan in accordance with Article 7, or otherwise becomes ineligible to participate in the Plan. +5.5 Limitation on Purchase of Common Stock . An Eligible Employee may be granted rights under the Plan only if such rights, together with any other rights granted to such Eligible Employee under “employee stock purchase plans” of the Company and any Related Corporations, do not permit such employee’s rights to purchase stock of the Company or any Related Corporation to accrue at a rate that exceeds $25,000 of Fair Market Value of such stock (determined as of the first day of the Offering Period during which such rights are granted) for each calendar year in which such rights are outstanding at any time. This limitation shall be applied in accordance with Section 423(b)(8) of the Code. +5.6 Decrease or Suspension of Payroll Deductions . Notwithstanding the foregoing, to the extent necessary to comply with Section 423(b)(8) of the Code and Section 5.5 (and any other limitations set forth in the Plan), a Participant’s payroll deductions may be suspended by the Administrator at any time during an Offering Period. +5.7 Unapplied Amounts . The balance of the amount credited to the account of each Participant that has not been applied to the purchase of Shares by reason of Section 423(b)(8) of the Code, Section 6.1 or Section 5.5 (or the other limitations set forth in the Plan) shall be credited to a Participant’s account and carried forward and applied toward the purchase of Shares for the next following Offering Period or for any subsequent Offering Period or paid to such Participant in one lump sum in cash as soon as reasonably practicable following the Purchase Date of the Offering Period after which there is a balance of the amount credited to the account of such Participant that has not been applied to the purchase of Shares, as determined by the Administrator in its sole discretion from time to time. +5.8 Leave of Absence . During leaves of absence approved by the Company meeting the requirements of Treasury Regulation Section 1.421-1(h)(2) under the Code, a Participant may continue participation in the Plan by making cash payments to the Company on his or her normal payday in an amount equal to his or her authorized payroll deduction. +5.9 Termination . Upon a Participant’s ceasing to be an Eligible Employee for any reason, including on account of his or her termination, he or she shall be withdrawn from the Plan, and the payroll deductions credited to such Participant’s account during the Offering Period shall be paid to such Participant or, in the case of his or her death, to the person or persons entitled thereto under Section 12.1, as soon as reasonably practicable, and such Participant’s rights for the Offering Period shall be automatically terminated. +87 +Table of Contents +ARTICLE 6 +GRANT AND EXERCISE OF RIGHTS +6.1 Grant of Rights . On the Enrollment Date of each Offering Period, each Eligible Employee participating in such Offering Period shall be granted a right to purchase the maximum number of Shares designated by the Administrator that an Eligible Employee may purchase during each Offering Period (which maximum number of Shares shall be one hundred twenty-five (125) Shares for each Eligible Employee during each Offering Period in the absence of any such designation), subject to the limits in Section 5.5, and shall have the right to buy, on each Purchase Date during such Offering Period, such number of Shares as is determined by dividing (a) such Participant’s payroll deductions accumulated prior to such Purchase Date and retained in the Participant’s account as of the Purchase Date, by (b) the applicable Purchase Price. The right shall expire on the last day of the Offering Period. +6.2 Exercise of Rights. On each Purchase Date, each Participant’s accumulated payroll deductions will be applied to the purchase of whole Shares of the Company, up to the maximum number of Shares permitted pursuant to the terms of the Plan or as determined by the Administrator in its sole discretion from time to time, at the Purchase Price. No fractional Shares shall be issued upon the exercise of rights granted under the Plan, unless the Administrator specifically provides otherwise. Any cash in lieu of fractional Shares remaining after the purchase of whole Shares upon exercise of a purchase right shall be credited to a Participant’s account and carried forward and applied toward the purchase of Shares for the next following Offering Period or for any subsequent Offering Period or paid to such Participant in one lump sum in cash as soon as reasonably practicable following the Purchase Date of the Offering Period after which there is a balance of the amount credited to the account of such Participant that has not been applied to the purchase of Shares, as determined by the Administrator in its sole discretion from time to time. +6.3 Purchase of Shares. As soon as practicable following the applicable Purchase Date, the number of shares of Common Stock purchased by a Participant pursuant to Section 6.2 shall be delivered (either as a share certificate or in book entry form), in the Company’s sole discretion, to either (i) the Participant or (ii) an account established in the Participant’s name at a stock brokerage or other financial services firm designated by the Company. +6.4 Pro Rata Allocation of Shares . If the Administrator determines that, on a given Purchase Date, the number of Shares with respect to which rights are to be exercised may exceed (a) the number of Shares that were available for issuance under the Plan on the Enrollment Date of the applicable Offering Period, or (b) the number of Shares available for issuance under the Plan on such Purchase Date, the Administrator may in its sole discretion provide that the Company shall make a pro rata allocation of the Shares available for purchase on such Enrollment Date or Purchase Date, as applicable, in as uniform a manner as shall be practicable and as it shall determine in its sole discretion to be equitable among all Participants for whom rights to purchase Common Stock are to be exercised pursuant to this Article 6 on such Purchase Date, and shall either (x) continue all Offering Periods then in effect, or (y) terminate any or all Offering Periods then in effect pursuant to Article 9. The Company may make a pro rata allocation of the Shares available on the Enrollment Date of any applicable Offering Period pursuant to the preceding sentence, notwithstanding any authorization of additional Shares for issuance under the Plan by the Company’s stockholders subsequent to such Enrollment Date. The balance of the amount credited to the account of each Participant that has not been applied to the purchase of Shares shall be paid to such Participant in one lump sum in cash as soon as reasonably practicable after the Purchase Date. +6.5 Withholding . At the time a Participant’s rights under the Plan are exercised, in whole or in part, or at the time some or all of the Common Stock issued under the Plan is disposed of, the Participant must make adequate provision in the manner determined by the Administrator, in its sole discretion from time to time, for the Company’s federal, state, or other tax withholding obligations, if any, that arise upon the exercise of the right or the disposition of the Common Stock. At any time, the Company may, but shall not be obligated to, withhold from the Participant’s compensation the amount necessary for the Company to meet applicable withholding obligations, including any withholding required to make available to the Company any tax deductions or benefits attributable to sale or early disposition of Common Stock by the Participant. +6.6 Conditions to Issuance of Common Stock . The Company shall not be required to issue or deliver any certificates for, or make any book entries evidencing, Shares purchased upon the exercise of rights under the Plan prior to fulfillment of all of the following conditions: +(a) The admission of such Shares to listing on the New York Stock Exchange or another stock exchange, if any, on which the Common Stock is then listed or admitted for trading; and +(b) The completion of any registration or other qualification of such Shares under any state or federal law, or under the rules or regulations of the Securities and Exchange Commission, or any other governmental regulatory body that the Administrator shall, in its sole discretion, deem necessary or advisable; and +(c) The obtaining of any approval, authorization or waiver from any state or federal governmental agency that the Administrator shall, in its sole discretion, determine to be necessary or advisable; and +(d) The payment to the Company of all amounts that it is required to withhold under federal, state or local law upon the exercise of rights granted under the Plan, if any. +88 +Table of Contents +ARTICLE 7 +WITHDRAWAL; CESSATION OF ELIGIBILITY +7.1 Withdrawal . A Participant may elect to withdraw from participation in the Plan at any time by giving written notice to the Company in a form acceptable to the Administrator no later than five (5) business days prior to the end of the Offering Period. All of the payroll deductions credited to the Participant’s account and not yet used to exercise his or her rights under the Plan shall be paid to the Participant as soon as reasonably practicable after receipt of the notice of withdrawal and such Participant’s rights for the Offering Period shall be automatically terminated, and no further payroll deductions for the purchase of Shares shall be made for such Offering Period. If a Participant withdraws from an Offering Period, payroll deductions shall not resume at the beginning of the next Offering Period unless the Participant delivers a new subscription agreement to the Company. +7.2 Suspension. A Participant may suspend payroll deductions at any time during an Offering Period in accordance with Section 5.2(d). In the event a Participant elects to suspend his or her payroll deductions with respect to an Offering Period, such Participant’s cumulative payroll deductions prior to the suspension shall remain in his or her account and shall be applied to the purchase of Shares on the next occurring Purchase Date and shall not be paid to such Participant unless he or she withdraws from participation in the Plan in accordance with Section 7.1. +7.3 Future Participation . A Participant’s withdrawal from an Offering Period shall not have any effect upon his or her eligibility to participate in any similar plan that may hereafter be adopted by the Company or in subsequent Offering Periods that commence after the termination of the Offering Period from which the Participant withdraws. +7.4 Cessation of Eligibility . Upon a Participant’s withdrawl from the Plan pursuant to this Article 7, the payroll deductions credited to such Participant’s account during the Offering Period shall be paid to such Participant as soon as reasonably practicable, and such Participant’s rights for the Offering Period shall be automatically terminated. +ARTICLE 8 +ADJUSTMENTS UPON CHANGES IN STOCK +8.1 Changes in Capital Structure . Subject to Section 8.3, in the event of any stock dividend, stock split, combination or reclassification of shares, merger, consolidation, spin-off, recapitalization, distribution of Company assets to stockholders (other than normal cash dividends), or any other similar corporate event affecting the Common Stock, the Administrator may make such proportionate adjustments, if any, as the Administrator in its sole discretion may deem appropriate to reflect such change with respect to (a) the aggregate number and type of Shares (or other securities or property) that may be issued under the Plan (including adjustments to the share reservation limit in Section 3.1), (b) the Purchase Price with respect to any outstanding rights, and (c) the class(es) and number of shares and price per Share subject to outstanding rights. +8.2 Other Adjustments . Subject to Section 8.3, in the event of any transaction or event described in Section 8.1, or any unusual or nonrecurring transactions or events affecting the Company or its outstanding capital stock (including, without limitation, any Change in Control), and whenever the Administrator determines that such action is appropriate in order to prevent the dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan or with respect to any right under the Plan, to facilitate such transactions or events, or to give effect to changes in laws, regulations or principles, the Administrator, in its sole discretion and on such terms and conditions as it deems appropriate, is hereby authorized to take any one or more of the following actions: +(a) To provide for either (i) termination of any outstanding right in exchange for an amount of cash, if any, equal to the amount that would have been obtained upon the exercise of such right had such right been currently exercisable or (ii) the replacement of such outstanding right with other rights or property selected by the Administrator; +(b) To provide that the outstanding rights under the Plan shall be assumed by the successor or survivor corporation, or a parent or subsidiary thereof, or shall be substituted for by similar rights covering the stock of the successor or survivor corporation, or a parent or subsidiary thereof, with appropriate adjustments as to the number and kind of shares and prices; +(c) To make adjustments in the number and type of Shares (or other securities or property) subject to outstanding rights under the Plan and/or in the terms and conditions of outstanding rights and rights that may be granted in the future; +(d) To provide that Participants’ accumulated payroll deductions may be used to purchase Common Stock prior to the next scheduled Purchase Date on such date as the Administrator determines and that Participants’ rights under the ongoing Offering Period(s) shall terminate; and +(e) To provide that all outstanding rights shall terminate without being exercised. +8.3 No Adjustment Under Certain Circumstances . No adjustment or action described in this Article 8 or in any other provision of the Plan shall be authorized to the extent that such adjustment or action would cause the Plan to fail to satisfy the requirements of Section 423 of the Code. +89 +Table of Contents +8.4 No Other Rights . Except as expressly provided in the Plan, no Participant shall have any rights by reason of any subdivision or consolidation of shares of stock of any class, the payment of any dividend, any increase or decrease in the number of shares of stock of any class or any dissolution, liquidation, merger, or consolidation of the Company or any Related Corporation. Except as expressly provided in the Plan or pursuant to action of the Administrator under the Plan, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number of Shares that a Participant shall have the right to buy in any Offering Period or that are available for issuance under the Plan. +ARTICLE 9 +AMENDMENT, MODIFICATION AND TERMINATION +9.1 Amendment, Modification and Termination . The Administrator may amend, suspend or terminate the Plan at any time and from time to time; provided , however , that approval by a vote of the holders of the outstanding shares of the Company’s capital stock entitled to vote shall be required to amend the Plan: (a) to increase the aggregate number, or change the type, of Shares that may be sold pursuant to rights under the Plan under Section 3.1 (other than an adjustment as provided by Article 8), (b) to change the Plan in any manner that would cause the Plan to no longer be an “employee stock purchase plan” within the meaning of Section 423(b) of the Code, or (c) if required by the applicable rules or continued listing requirements adopted by the New York Stock Exchange or another stock exchange on which the Shares are then listed or admitted for trading. +9.2 Certain Changes to Plan . Without obtaining stockholder consent, without regard to whether any Participant’s rights may be considered to have been adversely affected, and to the extent permitted by Section 423 of the Code, the Administrator may, in its sole discretion, (a) change the commencement date of Offering Periods, (b) change the duration of Offering Periods, (c) limit the number of changes in the amount withheld during an Offering Period, (d) calculate the Compensation amount for any Eligible Employee, (e) establish the maximum amount of Compensation for which payroll deductions can be made, (f) set the time for delivery of notices under the Plan, (g) determine how the balance of the amount credited to the account of each Participant that has not been applied to the purchase of Shares should be treated, (h) determine the manner in which any Participant must make adequate provision for the Company’s federal, state, or other tax withholding obligations, (i) determine the maximum number of Shares that an Eligible Employee may purchase during each Offering Period, (j) determine who shall be an Eligible Employee, (k) determine whether and how often a Participant may increase or decrease the percentage of Compensation designated in his or her subscription agreement during an Offering Period, ( l ) make any determination permitted under and consistent with the Code and the Plan and (m) establish such other limitations or procedures as the Administrator determines to be advisable, in its sole discretion, that are consistent with the Plan. +9.3 Unfavorable Financial or Accounting Consequences . Without obtaining stockholder consent, in the event the Administrator determines that the ongoing operation of the Plan may result in unfavorable financial or accounting consequences, the Administrator may, in its sole discretion, modify or amend the Plan to reduce or eliminate such accounting or financial consequence, including (a) altering the calculation of the Purchase Price for any Offering Period, including an Offering Period underway at the time of the change in Purchase Price and (b) modifying the duration of any Offering Period so that the Offering Period ends on a new Purchase Date, including an Offering Period underway at the time of the change in the Offering Period. +9.4 Payments Upon Termination of Plan . Upon termination of the Plan, the balance in each Participant’s account shall be refunded as soon as practicable after such termination. +ARTICLE 10 +TERM OF PLAN +The Plan shall be effective on the Effective Date. The effectiveness of the Plan shall be subject to approval of the Plan by the stockholders of the Company within twelve (12) months following the Effective Date. No right may be granted under the Plan prior to such stockholder approval. Unless the Plan shall theretofore have been terminated, the Plan shall terminate on the tenth (10 th ) anniversary of the Effective Date. No rights may be granted under the Plan during any period of suspension of the Plan or after termination of the Plan. +ARTICLE 11 +ADMINISTRATION +11.1 Administrator . Authority to control and manage the operation and administration of the Plan shall be vested in the Board, which may delegate such responsibilities in whole or in part to the Committee, which shall consist of two (2) or more members of the Board. For purposes of this Plan, the term “Administrator” means the Board or, with respect to any matter as to which responsibility has been delegated to the Committee, the term Administrator shall mean the Committee. Each of the members of the Committee shall meet the independence requirements under the then applicable rules or continued listing requirements adopted by the New York Stock Exchange or another stock exchange on which the Shares are then listed or admitted for trading. Members of the Committee may be appointed from time to time by, and shall serve at the pleasure of, the Board. The Committee +90 +Table of Contents +may delegate administrative tasks under the Plan to the services of an Agent and/or Employees to assist in the administration of the Plan, including establishing and maintaining an individual securities account under the Plan for each Participant. +11.2 Authority of Administrator . In addition to any other powers or authority conferred upon the Administrator elsewhere in the Plan (including, without limitation, in Article 9) or by law, the Administrator shall have full power and authority to: (a) determine the persons to whom, and the time or times at which, rights to purchase Common Stock shall be granted under the Plan and the provisions of each offering of such rights (which need not be identical), (b) interpret the Plan and the rights granted under it, (c) establish, amend and revoke rules and regulations for the administration of the Plan, (d) correct any defect or omission, or reconcile any inconsistency in the Plan, (e) amend the Plan as provided in Article 9, (f) exercise such powers and perform such acts as the Administrator deems necessary to carry out the intent that the Plan be treated as an “employee stock purchase plan” within the meaning of Section 423 of the Code, and (g) make all other determinations necessary or advisable for the administration of the Plan, but only to the extent not contrary to the express provisions of the Plan. Any action, decision, interpretation or determination made in good faith by the Administrator in the exercise of its authority conferred upon it under the Plan shall be final and binding on the Company and all Participants. +11.3 Expenses. All expenses and liabilities incurred by the Administrator in connection with the administration of the Plan shall be borne by the Company. The Administrator may, with the approval of the Committee, employ attorneys, consultants, accountants, brokerage firms, banks, financial institutions or other persons. The Administrator, the Company and its officers and directors shall be entitled to rely upon the advice, opinions or valuations of any such persons. All actions taken and all interpretations and determinations made by the Administrator in good faith shall be final and binding upon all Participants, the Company and all other interested persons. +11.4 Limitation on Liability. No employee of the Company or member of the Board or Committee shall be subject to any liability with respect to duties under the Plan unless the person acts fraudulently or in bad faith. To the extent permitted by law, the Company shall indemnify each member of the Board or Committee, and any employee of the Company to whom duties are delegated under the Plan, who was or is a party, or is threatened to be made a party, to any threatened, pending or completed proceeding, whether civil, criminal, administrative or investigative, by reason of such person’s conduct in the performance of duties under the Plan. +ARTICLE 12 +MISCELLANEOUS +12.1 Restriction upon Assignment . A right granted under the Plan shall not be transferable other than by will or the applicable laws of descent and distribution, and is exercisable during the Participant’s lifetime only by the Participant. The Company shall not recognize and shall be under no duty to recognize any assignment or alienation of the Participant’s interest in the Plan, the Participant’s rights under the Plan or any rights thereunder. +12.2 Rights as a Stockholder . Participant shall not be deemed to be a holder of, or to have any of the rights of a holder with respect to, Shares subject to a right granted under the Plan unless and until such Shares have been issued to the Participant in accordance with Section 6.3, the Company’s transfer agent shall have transferred the Shares to Participant, and Participant’s name shall have been entered as the stockholder of record on the books of the Company. Thereupon, Participant shall have full voting, dividend and other ownership rights with respect to such Shares. +12.3 Interest . In no event shall interest accrue on the payroll deductions of a Participant under the Plan. +12.4 Notices . All notices or other communications by a Participant to the Company under or in connection with the Plan shall be deemed to have been duly given when received in the form specified by the Company at the location, or by the person, designated by the Company for the receipt thereof. +12.5 Application of Funds . All payroll deductions received or held by the Company under the Plan may be used by the Company for any corporate purpose, and the Company shall not be obligated to segregate such payroll deductions. +12.6 Account Statements . Individual accounts shall be maintained for each Participant in the Plan. Statements of individual accounts shall be given to Participants at least annually, which statements shall set forth the amount of payroll deductions made, the Purchase Price paid, the number of Shares purchased, and the remaining cash balance, if any. The Committee may delegate responsibility to prepare and distribute the account statements to an Agent and/or Employees. +12.7 No Enlargement of Employee Rights. This Plan is strictly a voluntary undertaking on the part of the Company and shall not be deemed to constitute a contract between the Company and any Eligible Employee or Participant to be consideration for, or an inducement to, or a condition of, the employment of any Eligible Employee or Participant. Nothing contained in the Plan shall be deemed to give the right to any Participant to be retained as an employee of the Company or any Related Corporation or to interfere with the right of the Company or any Related Corporation to discharge any Eligible Employee or Participant at any time. +12.8 Effect Upon Other Plans . The adoption of the Plan shall not affect any other compensation or incentive plans in effect for the Company. Nothing in the Plan shall be construed to limit the right of the Company to establish any other forms of incentives or compensation for Employees of the Company or any Related Corporation. +91 +Table of Contents +12.9 Section 16 Persons . Notwithstanding any other provision of the Plan, the Plan and the participation in the Plan by any individual who is then subject to Section 16 of the Exchange Act shall be subject to any additional limitations set forth in any applicable exemption rule under Section 16 of the Exchange Act (including any amendment to Rule 16b-3 of the Exchange Act) that are requirements for the application of such exemptive rule. To the extent permitted by applicable law, the Plan shall be deemed amended to the extent necessary to conform to such applicable exemptive rule. +12.10 Notice of Disposition of Shares . Each Participant shall give prompt notice to the Company of any disposition or other transfer of any Shares purchased upon exercise of a right under the Plan if such disposition or transfer is made: (a) within two years from the Enrollment Date of the Offering Period in which the Shares were purchased or (b) within one year after the Purchase Date on which such Shares were purchased. Such notice shall specify the date of such disposition or other transfer, the amount and type of consideration realized (cash, other property, assumption of indebtedness or other consideration) by the Participant in such disposition or other transfer, and such additional information as may be requested by the Administrator. +12.11 Equal Rights and Privileges . All Eligible Employees of the Company and any Related Corporation shall have equal rights and privileges under this Plan to the extent required under Section 423 of the Code so that this Plan qualifies as an “employee stock purchase plan” within the meaning of Section 423 of the Code. Any provision of this Plan that is inconsistent with Section 423 of the Code shall, without further act or amendment by the Company or the Board, be reformed to comply with the equal rights and privileges requirement of Section 423 of the Code. +12.12 Governing Law . The Plan and any agreements hereunder shall be administered, interpreted and enforced under the internal laws of the State of Delaware without regard to conflicts of laws thereof or of any other jurisdiction. +12.13 Electronic Delivery. Any reference herein to a “written” agreement or document shall include any agreement or document delivered electronically. +92 +Table of Contents +APPENDIX B +DECKERS OUTDOOR CORPORATION +2015 STOCK INCENTIVE PLAN +As adopted by the Board of Directors on June 26, 2015 +ARTICLE 1 +PURPOSES OF THE PLAN +1.1 Purposes . The purposes of the Plan are (a) to enhance the Company’s ability to attract and retain the services of qualified employees, officers, directors, consultants and other service providers upon whose judgment, initiative and efforts the successful conduct and development of the Company’s business largely depends and (b) to provide additional incentives to such persons or entities to devote their utmost effort and skill to the advancement and betterment of the Company, by providing them an opportunity to participate in the ownership of the Company and thereby have an interest in the success and increased value of the Company. +ARTICLE 2 +DEFINITIONS +For purposes of this Plan, terms not otherwise defined herein will have the meanings indicated below: +2.1 “ Affiliate ” means (i) any entity that, directly or indirectly, is controlled by, controls or is under common control with, the Company and (ii) any entity in which the Company has a significant equity interest, in either case as determined by the Committee, whether now or hereafter existing. +2.2 “ Award ” means any award under the Plan, including any Option, Restricted Stock, Stock Bonus, Stock Appreciation Right, Restricted Stock Unit or Performance Awards. +2.3 “ Award Agreement ” means, with respect to each Award, the written or electronic agreement between the Company and the Participant setting forth the terms and conditions of the Award, and country-specific appendix thereto for grants to non-U.S. Participants, which will be in substantially a form (which need not be the same for each Participant) that the Committee (or in the case of Award agreements that are not used for Insiders, the Committee’s delegate(s)) has from time to time approved, and will comply with and be subject to the terms and conditions of this Plan. +2.4 “ Board ” means the Board of Directors of the Company. +2.5 “ Cause ” means termination of Service because of (a) any willful, material violation by the Participant of any law or regulation applicable to the business of the Company or a Parent, Subsidiary or Affiliate of the Company, the Participant’s conviction for or guilty plea to a felony or a crime involving moral turpitude or any willful perpetration by the Participant of a common law fraud; (b) the Participant’s commission of an act of personal dishonesty which involves personal profit in connection with the Company or any other entity having a business relationship with the Company; (c) any material breach by the Participant of any provision of any agreement or understanding between the Company or any Parent, Subsidiary or Affiliate of the Company and the Participant regarding the terms of the Participant’s Service, including the willful and continued failure or refusal of the Participant to perform the material duties required of such Participant as an Employee, Officer, Director, Non-Employee Director or Consultant of the Company or a Parent, Subsidiary or Affiliate of the Company, other than as a result of having a Disability or a breach of any applicable invention assignment and confidentiality agreement or similar agreement between the Company or a Parent, Subsidiary or Affiliate of the Company and the Participant; (d) Participant’s disregard of the policies of the Company or any Parent, Subsidiary or Affiliate of the Company so as to cause loss, damage or injury to the property, reputation or employees of the Company or a Parent, Subsidiary or Affiliate of the Company or (e) any other misconduct by the Participant which is materially injurious to the financial condition or business reputation of or is otherwise materially injurious to the Company or a Parent, Subsidiary or Affiliate of the Company. The determination as to whether a Participant is being terminated for Cause will be made in good faith by the Company and will be final and binding on the Participant. The foregoing definition does not in any way limit the Company’s ability to terminate a Participant’s employment or consulting relationship at any time as provided in Section 0, and the term “Company” will be interpreted to include any Affiliate, Subsidiary or Parent, as appropriate. Notwithstanding the foregoing, the foregoing definition of “Cause” may, in part or in whole, be modified or replaced in each individual employment agreement or Award Agreement with any Participant, provided that such document supersedes the definition provided in this Section 0. +2.6 “ Code ” means the United States Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder. +93 +Table of Contents +2.7 “ Committee ” means the Compensation Committee of the Board or those persons to whom administration of the Plan or part of the Plan has been delegated as permitted by law. +2.8 “ Common Stock ” means the Common Stock of the Company. +2.9 “ Company ” means Deckers Outdoor Corporation or any successor corporation. +2.10 “ Consultant ” means any natural person, including an advisor or independent contractor, engaged by the Company or a Parent, Subsidiary or Affiliate to render services to such entity. +2.11 “ Corporate Transaction ” means the occurrence of any of the following events: (a) any “Person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Company representing more than fifty percent (50%) of the total voting power represented by the Company’s then-outstanding voting securities; provided, however, that for purposes of this clause (a) the acquisition of additional securities by any one Person who is considered to own more than fifty percent (50%) of the total voting power of the securities of the Company will not be considered a Corporate Transaction; (b) the consummation of the sale or disposition by the Company of all or substantially all of the Company’s assets; (c) the consummation of a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity or its parent outstanding immediately after such merger or consolidation; (d) any other transaction which qualifies as a “corporate transaction” under Section 424(a) of the Code wherein the stockholders of the Company give up all of their equity interest in the Company (except for the acquisition, sale or transfer of all or substantially all of the outstanding shares of the Company) or (e) a change in the effective control of the Company that occurs on the date that a majority of members of the Board is replaced during any twelve (12) month period by member of the Board whose appointment or election is not endorsed by as majority of the members of the Board prior to the date of the appointment or election; provided, however, that for purposes of this clause (e), if any Person is considered to be in effective control of the Company, the acquisition of additional control of the Company by the same Person will not be considered a Corporate Transaction. For purposes of this definition, Persons will be considered to be acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock or similar business transaction with the Company. Notwithstanding the foregoing, to the extent that any amount constituting deferred compensation (as defined in Section 409A of the Code) would become payable under this Plan by reason of a Corporate Transaction, such amount will become payable only if the event constituting a Corporate Transaction would also qualify as a change in ownership or effective control of the Company or a change in the ownership of a substantial portion of the assets of the Company, each as defined within the meaning of Section 409A of the Code, as it has been and may be amended from time to time, and any proposed or final Treasury Regulations and IRS guidance that has been promulgated or may be promulgated thereunder from time to time. +2.12 “ Director ” means a member of the Board. +2.13 “ Disability ” means in the case of incentive stock options, total and permanent disability as defined in Section 22(e)(3) of the Code and in the case of other Awards, that the Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months. +2.14 “ Dividend Equivalent Right ” means the right of a Participant, granted at the discretion of the Committee or as otherwise provided by the Plan, to receive a credit for the account of such Participant in an amount equal to the cash, stock or other property dividends in amounts equal equivalent to cash, stock or other property dividends for each Share represented by an Award held by such Participant. +2.15 “ Effective Date ” means the date on which the Plan is approved by the affirmative vote of the holders of a majority of the Shares of Common Stock of the Company which are entitled to be voted and are voted on the proposal to approve this Plan (and for such purpose, any “broker non-votes” will not be counted as being entitled to be voted on that proposal, but will be counted for quorum purposes). +2.16 “ Employee ” means any person, including Officers and Directors, providing services as an employee to the Company or any Parent, Subsidiary or Affiliate. Neither service as a Director nor payment of a director’s fee by the Company will be sufficient to constitute “employment” by the Company. +2.17 “ Exchange Act ” means the United States Securities Exchange Act of 1934, as amended. +2.18 “ Exercise Price ” means, with respect to an Option, the price at which a holder may purchase the Shares issuable upon exercise of an Option and with respect to a SAR, the price at which the SAR is granted to the holder thereof. +2.19 “ Fair Market Value ” means, as of any date, the value of a share of the Company’s Common Stock determined as follows: (a) if such Common Stock is publicly traded and is then listed on a national securities exchange, its closing price on the date of determination on the principal national securities exchange on which the Common Stock is listed or admitted to trading as reported in The Wall Street Journal or such other source as the Committee deems reliable; (b) if such Common Stock is publicly traded but is neither listed nor admitted to trading on a national securities exchange, the average of the closing bid and asked prices +94 +Table of Contents +on the date of determination as reported in The Wall Street Journal or such other source as the Committee deems reliable or (c) if none of the foregoing is applicable, by the Board or the Committee in good faith using any reasonable method of evaluation in a manner consistent with the valuation principles under Section 409A of the Code. +2.20 “ Insider ” means an officer or director of the Company or any other person whose transactions in the Company’s Common Stock are subject to Section 16 of the Exchange Act. +2.21 “ IRS ” means the United States Internal Revenue Service. +2.22 “ Non-Employee Director ” means a Director who is not an Employee of the Company or any Parent or Subsidiary. +2.23 “ Option ” means an award of an option to purchase Shares pursuant to Article 4 or Article 10. +2.24 “ Parent ” means any corporation (other than the Company) in an unbroken chain of corporations ending with the Company if each of such corporations other than the Company owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. +2.25 “ Participant ” means a person who holds an Award under this Plan. +2.26 “ Performance Award ” means cash or stock granted pursuant to Article 9 or Article 10. +2.27 “ Performance Factors ” means any of the factors selected by the Committee and specified in an Award Agreement, from among the following objective measures, either individually, alternatively or in any combination, applied to the Company as a whole or any business unit or Subsidiary, either individually, alternatively or in any combination, on a GAAP or non-GAAP basis, and measured, to the extent applicable on an absolute basis or relative to a pre-established target or index or group of comparator companies, to determine whether the performance goals established by the Committee with respect to applicable Awards have been satisfied: (a) profit before tax; (b) billings; (c) revenue; (d) net revenue; (e) earnings (which may include earnings before interest; earnings before interest and taxes; earnings before interest, taxes and depreciation; earnings before interest, taxes, depreciation and amortization; net earnings and other metrics based on or derived from earnings); (f) operating income; (g) operating margin; (h) operating profit; (i) controllable operating profit; (j) net operating profit; (k) net profit; (l) gross margin; (m) operating expenses or operating expenses as a percentage of revenue; (n) net income; (o) earnings per share; (p) total stockholder return; (q) market share; (r) return on assets or net assets; (s) the Company’s stock price; (t) growth in stockholder value relative to a pre-determined index; (u) return on equity; (v) return on invested capital; (w) cash flow (including free cash flow or operating cash flows); (x) cash conversion cycle; (y) economic value added; (z) individual confidential business objectives; (aa) contract awards or backlog; (bb) overhead or other expense reduction; (cc) credit rating; (dd) strategic plan development and implementation; (ee) succession plan development and implementation; (ff) improvement in workforce diversity; (gg) customer indicators; (hh) new product invention or innovation; (ii) attainment of research and development milestones; (jj) improvements in productivity; (kk) bookings and (ll) attainment of objective operating goals and employee metrics. The Committee may provide for one or more adjustments to the Performance Factors in accordance with Section 11.3. +2.28 “ Performance Period ” means the period of service determined by the Committee, not to exceed seven (7) years, during which years of service or performance is to be measured for the Award. +2.29 “ Performance Share ” means an Award granted pursuant to Article 9 or Article 10. +2.30 “ Permitted Transferee ” means any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law (including adoptive relationships) of the Employee, any person sharing the Employee’s household (other than a tenant or employee), a trust in which these persons (or the Employee) have more than 50% of the beneficial interest, a foundation in which these persons (or the Employee) control the management of assets, and any other entity in which these persons (or the Employee) own more than 50% of the voting interests. +2.31 “ Plan ” means this Deckers Outdoor Corporation 2015 Stock Incentive Plan. +2.32 “ Purchase Price ” means the price to be paid for Shares acquired under the Plan, other than Shares acquired upon exercise of an Option or SAR. +2.33 “ Restricted Stock Award ” means an award of Shares pursuant to Article 5 or Article 10 or issued pursuant to the early exercise of an Option. +2.34 “ Restricted Stock Unit ” means an Award granted pursuant to Article 8 or Article 10. +2.35 “ SEC ” means the United States Securities and Exchange Commission. +2.36 “ Securities Act ” means the United States Securities Act of 1933, as amended. +2.37 “ Service ” means service as an Employee, Consultant, Director or Non-Employee Director, to the Company or a Parent, Subsidiary or Affiliate, subject to such further limitations as may be set forth in the Plan or the applicable Award Agreement. An Employee will not be deemed to have ceased to provide Service in the case of (a) sick leave; (b) military leave or (c) any other leave of absence approved by the Company; provided, that such leave is for a period of not more than 90 days (x) unless +95 +Table of Contents +reemployment upon the expiration of such leave is guaranteed by contract or statute or (y) unless provided otherwise pursuant to formal policy adopted from time to time by the Company and issued and promulgated to employees in writing. In the case of any Employee on an approved leave of absence or a reduction in hours worked (for illustrative purposes only, a change in schedule from that of full-time to part-time), the Committee may make such provisions respecting suspension of or modification of vesting of the Award while on leave from the employ of the Company or a Parent, Subsidiary or Affiliate or during such change in working hours as it may deem appropriate, except that in no event may an Award be exercised after the expiration of the term set forth in the applicable Award Agreement. In the event of military leave, if required by applicable laws, vesting will continue for the longest period that vesting continues under any other statutory or Company approved leave of absence and, upon a Participant’s returning from military leave (under conditions that would entitle him or her to protection upon such return under the Uniform Services Employment and Reemployment Rights Act), he or she will be given vesting credit with respect to Awards to the same extent as would have applied had the Participant continued to provide services to the Company throughout the leave on the same terms as he or she was providing services immediately prior to such leave. An employee will have terminated employment as of the date he or she ceases to provide services (regardless of whether the termination is in breach of local employment laws or is later found to be invalid) and employment will not be extended by any notice period or garden leave mandated by local law, provided however, that a change in status from an employee to a consultant or advisor will not terminate the service provider’s Service, unless determined by the Committee, in its discretion. The Committee will have sole discretion to determine whether a Participant has ceased to provide Services and the effective date on which the Participant ceased to provide Services. +2.38 “ Shares ” means shares of the Company’s Common Stock and the common stock of any successor entity. +2.39 “ Stock Appreciation Right ” means an Award granted pursuant to Article 7 or Article 10. +2.40 “ Stock Bonus ” means an Award granted pursuant to Article 6 or Article 10. +2.41 “ Subsidiary ” means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if each of the corporations other than the last corporation in the unbroken chain owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. +2.42 “ Treasury Regulations ” means regulations promulgated by the United States Treasury Department. +2.43 “ Unvested Shares ” means Shares that have not yet vested or are subject to a right of repurchase in favor of the Company (or any successor thereto). +ARTICLE 3 +PLAN SHARES +3.1 Number of Shares Available . Subject to adjustment as provided in Section 3.5, the total number of Shares reserved and available for grant and issuance pursuant to this Plan is 1,275,000 Shares, less one Share for every one Share granted under the Company’s 2006 Equity Incentive Plan (the “ Prior Plan ”) after March 31, 2015 and prior to the Effective Date. After the Effective Date, no awards may be granted under the Prior Plan. +3.2 Lapsed, Returned Awards . If (a) any Shares subject to an Award are forfeited, an Award expires or otherwise terminates without issuance of Shares or an Award is settled for cash (in whole or in part) or otherwise does not result in the issuance of all or a portion of the Shares subject to such Award (including on payment in Shares on exercise of a SAR), such Shares shall, to the extent of such forfeiture, expiration, termination, cash settlement or non-issuance, be added to the Shares available for grant under the Plan or (b) after March 31, 2015 any Shares subject to an award under the Prior Plan are forfeited, an award under the Prior Plan expires or otherwise terminates without issuance of such Shares or an award under the Prior Plan is settled for cash (in whole or in part) or otherwise does not result in the issuance of all or a portion of the Shares subject to such award (including on payment in Shares on exercise of a SAR), then in each such case the Shares subject to the Award or award under the Prior Plan shall, to the extent of such forfeiture, expiration, termination, cash settlement or non-issuance, be added to the Shares available for grant under the Plan on a one-for-one basis. If (i) any Award granted hereunder is exercised through the tendering of Shares (either actually or by attestation) or by the withholding of Shares by the Company or (ii) withholding tax liabilities arising from such Award are satisfied by the tendering of Shares (either actually or by attestation) or by the withholding of Shares by the Company, then in each such case the Shares so tendered or withheld shall be added to the Shares available for grant under the Plan on a one-for-one basis. If after March 31, 2015 (x) any option or award under the Prior Plan is exercised through the tendering of Shares (either actually or by attestation) or by the withholding of Shares by the Company or (y) withholding tax liabilities arising from such options or awards are satisfied by the tendering of Shares (either actually or by attestation) or by the withholding of Shares by the Company, then in each such case the Shares so tendered or withheld shall be added to the Shares available for grant under the Plan on a one-for-one basis. +3.3 Minimum Share Reserve . At all times the Company will reserve and keep available a sufficient number of Shares as will be required to satisfy the requirements of all outstanding Awards granted under this Plan. +3.4 Limitations; Eligibility . No more than 750,000 Shares will be issued pursuant to the exercise of ISOs. ISOs may be granted only to Employees. All other Awards may be granted to Employees, Consultants, Directors and Non-Employee Directors; provided such Consultants, Directors and Non-Employee Directors render bona fide services not in connection with the offer and sale of securities in a capital-raising transaction. Subject to adjustment as provided in Section 3.5, no Participant may +96 +Table of Contents +be granted (a) Options or SARs during any 12-month period with respect to more than 400,000 Shares and (b) Restricted Stock Awards, Restricted Stock Unit Awards, Performance Awards or Stock Bonus Awards during any calendar year that are intended to comply with the performance-based exception under Section 162(m) of the Code and are denominated in Shares under which more than 200,000 Shares may be earned for each twelve (12) months in the vesting period or Performance Period. Each of the limitations in the preceding sentence of this Section 3.4 shall be multiplied by two (2) with respect to Awards granted to a Participant during the first calendar year in which the Participant commences employment with the Company and its Subsidiaries. If an Award is cancelled, the cancelled Award shall continue to be counted toward the applicable limitation in this Section 3.4. +3.5 Adjustment of Shares . If the number of outstanding Shares is changed by a stock dividend, extraordinary dividends or distributions (whether in cash, shares or other property, other than a regular cash dividend), recapitalization, stock split, reverse stock split, subdivision, combination, reclassification, spin-off or similar change in the capital structure of the Company, then (a) the number of Shares reserved for issuance and future grant under the Plan set forth in Section 3.1; (b) the Exercise Prices of and number of Shares subject to outstanding Options and SARs; (c) the number of Shares subject to other outstanding Awards; (d) the maximum number of shares that may be issued as ISOs or other Awards set forth in Section 3.4 and (e) the maximum number of Shares that may be issued to an individual or to a new Employee in any one calendar year set forth in Section 3.4, will be proportionately adjusted, subject to any required action by the Board or the stockholders of the Company and in compliance with applicable securities laws, provided that fractions of a Share will not be issued. +ARTICLE 4 +OPTIONS +4.1 Options . An Option is the right but not the obligation to purchase a Share, subject to certain conditions, if applicable. The Committee may grant Options to eligible Employees, Consultants and Directors and will determine whether such Options will be Incentive Stock Options within the meaning of the Code (“ ISOs ”) or Nonqualified Stock Options (“ NSOs ”), the number of Shares subject to the Option, the Exercise Price of the Option, the period during which the Option may vest and be exercised, and all other terms and conditions of the Option, subject to the following terms of this Section 4.1. +4.2 Option Grant . Each Option granted under this Plan will identify the Option as an ISO or an NSO. An Option may be, but need not be, awarded upon satisfaction of such Performance Factors during any Performance Period as are set out in advance in the Participant’s individual Award Agreement. If the Option is being earned upon the satisfaction of Performance Factors, then the Committee will: (a) determine the nature, length and starting date of any Performance Period for each Option and (b) select from among the Performance Factors to be used to measure the performance, if any. Performance Periods may overlap and Participants may participate simultaneously with respect to Options that are subject to different performance goals and other criteria. +4.3 Date of Grant . The date of grant of an Option will be the date on which the Committee makes the determination to grant such Option or a specified future date. The Award Agreement and a copy of this Plan will be delivered to the Participant within a reasonable time after the granting of the Option. +4.4 Exercise Period . Options may be vested and exercisable within the times or upon the conditions as set forth in the Award Agreement governing such Option; provided, however, that no Option will be exercisable after the expiration of ten (10) years from the date the Option is granted; and provided further that no ISO granted to a person who, at the time the ISO is granted, directly or by attribution owns more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or of any Parent or Subsidiary of the Company (“ Ten Percent Stockholder ”) will be exercisable after the expiration of five (5) years from the date the ISO is granted. The Committee also may provide for Options to become exercisable at one time or from time to time, periodically or otherwise, in such number of Shares or percentage of Shares as the Committee determines. +4.5 Exercise Price . The Exercise Price of an Option will be determined by the Committee when the Option is granted, provided that (a) the Exercise Price of an Option will be not less than one hundred percent (100%) of the Fair Market Value of the Shares on the date of grant and (b) the Exercise Price of any ISO granted to a Ten Percent Stockholder will not be less than one hundred ten percent (110%) of the Fair Market Value of the Shares on the date of grant. Payment for the Shares purchased may be made in accordance with Section 13.1 and the Award Agreement and in accordance with any procedures established by the Company. +4.6 Method of Exercise . Any Option granted hereunder will be vested and exercisable according to the terms of the Plan and at such times and under such conditions as determined by the Committee and set forth in the Award Agreement. An Option may not be exercised for a fraction of a Share. An Option will be deemed exercised when the Company receives: (a) notice of exercise (in such form as the Committee may specify from time to time) from the person entitled to exercise the Option (and/or via electronic execution through the authorized third party administrator) and (b) full payment for the Shares with respect to which the Option is exercised (together with applicable withholding taxes). Full payment may consist of any consideration and method of payment authorized by the Committee and permitted by the Award Agreement and the Plan. Shares issued upon exercise of an Option will be issued in the name of the Participant. Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder will exist with respect to the Shares, notwithstanding the exercise of the Option. The Company will issue (or cause to be issued) such Shares promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 3.5. Exercising an Option +97 +Table of Contents +in any manner will decrease the number of Shares thereafter available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised. +4.7 Termination of Service . Unless otherwise provided in the Award Agreement, if the Participant’s Service terminates for any reason except for Cause or the Participant’s death or Disability, then the Participant may exercise such Participant’s Options only to the extent that such Options would have been exercisable by the Participant on the date Participant’s Service terminates no later than three (3) months after the date Participant’s Service terminates (or such shorter or longer time period as may be determined by the Committee, with any exercise beyond three (3) months after the date Participant’s Service terminates deemed to be the exercise of an NSO), but in any event no later than the expiration date of the Options. Unless otherwise provided in the Award Agreement, if the Participant’s Service terminates because of the Participant’s death (or the Participant dies within three (3) months after Participant’s Service terminates other than for Cause or because of the Participant’s Disability), then the Participant’s Options may be exercised only to the extent that such Options would have been exercisable by the Participant on the date Participant’s Service terminates and must be exercised by the Participant’s legal representative or authorized assignee no later than twelve (12) months after the date Participant’s Service terminates (or such shorter time period or longer time period as may be determined by the Committee), but in any event no later than the expiration date of the Options. Unless otherwise provided in the Award Agreement, if the Participant’s Service terminates because of the Participant’s Disability, then the Participant’s Options may be exercised only to the extent that such Options would have been exercisable by the Participant on the date Participant’s Service terminates and must be exercised by the Participant (or the Participant’s legal representative or authorized assignee) no later than twelve (12) months after the date Participant’s Service terminates (or such shorter or longer time period as may be determined by the Committee, with any exercise beyond (a) three (3) months after the date Participant’s Service terminates when the termination of Service is for a Disability that is not a “permanent and total disability” as defined in Section 22(e)(3) of the Code or (b) twelve (12) months after the date Participant’s Service terminates when the termination of Service is for a Disability that is a “permanent and total disability” as defined in Section 22(e)(3) of the Code, deemed to be exercise of an NSO), but in any event no later than the expiration date of the Options. Unless otherwise provided in the Award Agreement, if the Participant is terminated for Cause, then Participant’s Options will expire on such Participant’s date of termination of Service or at such later time and on such conditions as are determined by the Committee, but in any no event later than the expiration date of the Options. Unless otherwise provided in the Award Agreement, Cause will have the meaning set forth in the Plan. +4.8 Limitations on Exercise . The Committee may specify a minimum number of Shares that may be purchased on any exercise of an Option, provided that such minimum number will not prevent any Participant from exercising the Option for the full number of Shares for which it is then exercisable. +4.9 Limitations on ISOs . With respect to Awards granted as ISOs, to the extent that the aggregate Fair Market Value of the Shares with respect to which such ISOs are exercisable for the first time by the Participant during any calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds one hundred thousand dollars ($100,000), such Options will be treated as NSOs. For purposes of this Section 4.9, ISOs will be taken into account in the order in which they were granted. The Fair Market Value of the Shares will be determined as of the time the Option with respect to such Shares is granted. In the event that the Code or the regulations promulgated thereunder are amended after the Effective Date to provide for a different limit on the Fair Market Value of Shares permitted to be subject to ISOs, such different limit will be automatically incorporated herein and will apply to any Options granted after the effective date of such amendment. +4.10 Modification or Extension . Subject in all cases to Section 13.8, the Committee may modify or extend outstanding Options (but not beyond their original term) and authorize the grant of new Options in substitution therefor, provided that any such action may not, without the written consent of a Participant, impair any of such Participant’s rights under any Option previously granted. Any outstanding ISO that is modified, extended or otherwise altered will be treated in accordance with Section 424(h) of the Code. +4.11 No Disqualification . Notwithstanding any other provision in this Plan, no term of this Plan relating to ISOs will be interpreted, amended or altered, nor will any discretion or authority granted under this Plan be exercised, so as to disqualify this Plan under Section 422 of the Code or, without the consent of the Participant affected, to disqualify any ISO under Section 422 of the Code. +ARTICLE 5 +RESTRICTED STOCK AWARDS +5.1 Restricted Stock Awards . A Restricted Stock Award is an offer by the Company to sell to an eligible Employee, Consultant or Director Shares that are subject to restrictions (“ Restricted Stock ”). The Committee will determine to whom an offer will be made, the number of Shares the Participant may purchase, the Purchase Price (if any), the restrictions under which the Shares will be subject and all other terms and conditions of the Restricted Stock Award, subject to the Plan. +5.2 Award Agreement . All Restricted Stock Awards will be evidenced by an Award Agreement. Except as may otherwise be provided in an Award Agreement, a Participant accepts a Restricted Stock Award by signing and delivering to the Company an Award Agreement with full payment of the Purchase Price (if any), within thirty (30) days from the date the Award Agreement was delivered to the Participant. If the Participant does not accept such Award within thirty (30) days, then the offer of such Restricted Stock Award will terminate, unless the Committee determines otherwise. +98 +Table of Contents +5.3 Purchase Price . The Purchase Price (if any) for a Restricted Stock Award will be determined by the Committee and may be less than Fair Market Value on the date the Restricted Stock Award is granted. Payment of the Purchase Price (if any) must be made in accordance with Section 13.1, the Award Agreement and any procedures established by the Company. +5.4 Terms of Restricted Stock Awards . Restricted Stock Awards will be subject to such restrictions as the Committee may impose or are required by law. These restrictions may be based on completion of a specified number of years of service with the Company or upon completion of Performance Factors, if any, during any Performance Period as set out in advance in the Participant’s Award Agreement. Prior to the grant of a Restricted Stock Award, the Committee will: (a) determine the nature, length and starting date of any Performance Period for the Restricted Stock Award; (b) select from among the Performance Factors to be used to measure performance goals, if any and (c) determine the number of Shares that may be awarded to the Participant. Performance Periods may overlap and a Participant may participate simultaneously with respect to Restricted Stock Awards that are subject to different Performance Periods and having different performance goals and other criteria. +5.5 Termination of Service . Except as may be set forth in the Participant’s Award Agreement, vesting ceases on such date Participant’s Service terminates (unless determined otherwise by the Committee). +ARTICLE 6 +STOCK BONUS AWARDS +6.1 Stock Bonus Awards . A Stock Bonus Award is an award to an eligible Employee, Consultant or Director of Shares for Services to be rendered or for past Services already rendered to the Company or any Parent or Subsidiary. All Stock Bonus Awards will be made pursuant to an Award Agreement. No payment from the Participant will be required for Shares awarded pursuant to a Stock Bonus Award. +6.2 Terms of Stock Bonus Awards . The Committee will determine the number of Shares to be awarded to the Participant under a Stock Bonus Award and any restrictions thereon. These restrictions may be based upon completion of a specified number of years of service with the Company or upon satisfaction of performance goals based on Performance Factors during any Performance Period as set out in advance in the Participant’s Stock Bonus Agreement. Prior to the grant of any Stock Bonus Award the Committee will: (a) determine the nature, length and starting date of any Performance Period for the Stock Bonus Award; (b) select from among the Performance Factors to be used to measure performance goals (if any) and (c) determine the number of Shares that may be awarded to the Participant. Performance Periods may overlap and a Participant may participate simultaneously with respect to Stock Bonus Awards that are subject to different Performance Periods and different performance goals and other criteria. +6.3 Form of Payment to Participant . Payment may be made in the form of cash, whole Shares or a combination thereof, based on the Fair Market Value of the Shares earned under a Stock Bonus Award on the date of payment, as determined in the sole discretion of the Committee. +6.4 Termination of Service . Except as may be set forth in the Participant’s Award Agreement, vesting ceases on such date Participant’s Service terminates (unless determined otherwise by the Committee). +ARTICLE 7 +STOCK APPRECIATION RIGHTS +7.1 Stock Appreciation Rights . A Stock Appreciation Right (“ SAR ”) is an award to an eligible Employee, Consultant or Director that may be settled in cash or Shares (which may consist of Restricted Stock) having a value equal to (a) the difference between the Fair Market Value on the date of exercise over the Exercise Price multiplied by (b) the number of Shares with respect to which the SAR is being settled (subject to any maximum number of Shares that may be issuable as specified in an Award Agreement). All SARs will be made pursuant to an Award Agreement. +7.2 Terms of SARs . The Committee will determine the terms of each SAR, including: (a) the number of Shares subject to the SAR; (b) the Exercise Price and the time or times during which the SAR may be settled; (c) the consideration to be distributed on settlement of the SAR and (d) the effect of the Participant’s termination of Service on each SAR. The Exercise Price of the SAR will be determined by the Committee when the SAR is granted, and may not be less than Fair Market Value. A SAR may be awarded upon satisfaction of Performance Factors, if any, during any Performance Period as are set out in advance in the Participant’s individual Award Agreement. If the SAR is being earned upon the satisfaction of Performance Factors, then the Committee will: (x) determine the nature, length and starting date of any Performance Period for each SAR and (y) select from among the Performance Factors to be used to measure the performance, if any. Performance Periods may overlap and Participants may participate simultaneously with respect to SARs that are subject to different Performance Factors and other criteria. +7.3 Exercise Period and Expiration Date . A SAR will be exercisable within the times or upon the occurrence of events determined by the Committee and set forth in the Award Agreement governing such SAR. The SAR Agreement will set forth the expiration date; provided that no SAR will be exercisable after the expiration of ten (10) years from the date the SAR is granted. The Committee may also provide for SARs to become exercisable at one time or from time to time, periodically or otherwise (including upon the attainment during a Performance Period of performance goals based on Performance Factors), in such number of Shares +99 +Table of Contents +or percentage of the Shares subject to the SAR as the Committee determines. Except as may be set forth in the Participant’s Award Agreement, vesting ceases on the date Participant’s Service terminates (unless determined otherwise by the Committee). Notwithstanding the foregoing, the rules of Section 4.7 also will apply to SARs. +7.4 Form of Settlement . Upon exercise of a SAR, a Participant will be entitled to receive payment from the Company in an amount determined by multiplying (a) the difference between the Fair Market Value of a Share on the date of exercise over the Exercise Price; times (b) the number of Shares with respect to which the SAR is exercised. At the discretion of the Committee, the payment from the Company for the SAR exercise may be in cash, in Shares of equivalent value or in some combination thereof. The portion of a SAR being settled may be paid currently or on a deferred basis with such interest or dividend equivalent, if any, as the Committee determines, provided that the terms of the SAR and any deferral satisfy the requirements of Section 409A of the Code. +7.5 Termination of Service . Except as may be set forth in the Participant’s Award Agreement, vesting ceases on such date Participant’s Service terminates (unless determined otherwise by the Committee). +ARTICLE 8 +RESTRICTED STOCK UNITS +8.1 Restricted Stock Units . A Restricted Stock Unit (“ RSU ”) is an award to an eligible Employee, Consultant or Director covering a number of Shares that may be settled in cash and/or by issuance of Shares (which may consist of Restricted Stock). All RSUs will be made pursuant to an Award Agreement. +8.2 Terms of RSUs . The Committee will determine the terms of an RSU including: (a) the number of Shares subject to the RSU; (b) the time or times during which the RSU may be settled; (c) the amount (including any minimum amount), nature (which may include cash, Shares or a combination of both) and valuation of the consideration to be paid or distributed on settlement; (d) the effect of the Participant’s termination of Service on each RSU; and (e) such other terms as the Committee may determine. An RSU may be awarded upon satisfaction of such performance goals based on Performance Factors during any Performance Period as are set out in advance in the Participant’s Award Agreement. If the RSU is being earned upon satisfaction of Performance Factors, then the Committee will: (x) determine the nature, length and starting date of any Performance Period for the RSU; (y) select from among the Performance Factors to be used to measure the performance, if any and (z) determine the number of Shares deemed subject to the RSU. Performance Periods may overlap and participants may participate simultaneously with respect to RSUs that are subject to different Performance Periods and different performance goals and other criteria. +8.3 Timing of Settlement . Payment of earned RSUs will be made as soon as practicable after the date(s) determined by the Committee and set forth in the Award Agreement. The Committee may permit a Participant to defer payment under a RSU to a date or dates after the RSU is earned provided that the terms of the RSU and any deferral satisfy the requirements of Section 409A of the Code. +8.4 Termination of Service . Except as may be set forth in the Participant’s Award Agreement, vesting ceases on such date Participant’s Service terminates (unless determined otherwise by the Committee). +ARTICLE 9 +PERFORMANCE AWARDS +9.1 Performance Awards . A Performance Award is an award to an eligible Employee, Consultant or Director of a cash bonus or an award of Performance Shares denominated in Shares that may be settled in cash or by issuance of those Shares (which may consist of Restricted Stock). Grants of Performance Awards will be made pursuant to an Award Agreement. +9.2 Terms of Performance Shares . The Committee will determine, and each Award Agreement will set forth, the terms of each Performance Award including: (a) the amount of any cash bonus; (b) the number of Shares deemed subject to an award of Performance Shares; (c) the Performance Factors and Performance Period that will determine the time and extent to which each Performance Award will be settled; (d) the consideration to be distributed on settlement and (e) the effect of the Participant’s termination of Service on each Performance Award. In establishing Performance Factors and the Performance Period the Committee will: (x) determine the nature, length and starting date of any Performance Period; (y) select from among the Performance Factors to be used and (z) determine the number of Shares deemed subject to the award of Performance Shares. Prior to settlement the Committee will determine the extent to which Performance Awards have been earned. Performance Periods may overlap and Participants may participate simultaneously with respect to Performance Awards that are subject to different Performance Periods and different performance goals and other criteria. During any calendar year no Participant may be granted Performance Awards that are intended to comply with the performance-based exception under Section 162(m) of the Code and are denominated in cash under which more than $10,000,000 may be earned for each twelve (12) months in the Performance Period. This limitations shall be multiplied by two (2) with respect to Awards granted to a Participant during the first calendar year in which the Participant commences employment with the Company and its Subsidiaries. If an Award is cancelled, the cancelled Award shall continue to be counted toward the limitation in this Section 9.2. +100 +Table of Contents +9.3 Value, Earning and Timing of Performance Shares . Each Performance Share will have an initial value equal to the Fair Market Value of a Share on the date of grant. After the applicable Performance Period has ended, the holder of Performance Shares will be entitled to receive a payout of the number of Performance Shares earned by the Participant over the Performance Period, to be determined as a function of the extent to which the corresponding Performance Factors or other vesting provisions have been achieved. The Committee, in its sole discretion, may pay earned Performance Shares in the form of cash, in Shares (which have an aggregate Fair Market Value equal to the value of the earned Performance Shares at the close of the applicable Performance Period) or in a combination thereof. +9.4 Termination of Service . Except as may be set forth in the Participant’s Award Agreement, vesting ceases on the date Participant’s Service terminates (unless determined otherwise by the Committee). +ARTICLE 10 +GRANTS TO NON-EMPLOYEE DIRECTORS +10.1 Grants To Non-Employee Directors . Non-Employee Directors are eligible to receive any type of Award offered under this Plan except ISOs. Awards pursuant to this Article 10 may be automatically made pursuant to policy adopted by the Board or made from time to time as determined in the discretion of the Board. No Non-Employee Director may be granted Awards pursuant to this Article 10 in any calendar year with a grant date fair value (determined in accordance with U.S. generally accepted accounting principles) of more than $1,000,000. The limitation in the preceding sentence of this Section 10.1 shall be multiplied by two (2) with respect to Awards granted to a Non-Employee Director during the first calendar year in which the Non-Employee Director provides services as a Non-Employee Director. +10.2 Eligibility . Awards pursuant to this Article 10 will be granted only to Non-Employee Directors. A Non-Employee Director who is elected or re-elected as a member of the Board will be eligible to receive an Award under this Article 10. +10.3 Vesting, Exercisability and Settlement . Except as set forth in Article 12, Awards will vest, become exercisable and be settled as determined by the Board. With respect to Options and SARs, the exercise price granted to Non-Employee Directors will not be less than the Fair Market Value of the Shares at the time that such Option or SAR is granted. +10.4 Election to receive Awards in Lieu of Cash . A Non-Employee Director may elect to receive his or her annual retainer payments and/or meeting fees from the Company in the form of cash or Awards or a combination thereof, as determined by the Committee. Such Awards will be issued under the Plan. An election under this Section 10.4 will be filed with the Company on the form prescribed by the Company. +ARTICLE 11 +ADMINISTRATION OF THE PLAN +11.1 Committee Composition; Authority . This Plan will be administered by the Committee or by the Board acting as the Committee. Subject to the general purposes, terms and conditions of this Plan, and to the direction of the Board, the Committee will have full power to implement and carry out this Plan, except, however, the Board will establish the terms for the grant of an Award to Non-Employee Directors. The Committee will have the authority to: (a) construe and interpret this Plan, any Award Agreement and any other agreement or document executed pursuant to this Plan; (b) prescribe, amend and rescind rules and regulations relating to this Plan or any Award; (c) select persons to receive Awards; (d) determine the form and terms and conditions, not inconsistent with the terms of the Plan, of any Award granted hereunder, including the exercise price, the time or times when Awards may vest and be exercised (which may be based on performance criteria) or settled, any vesting acceleration or waiver of forfeiture restrictions, the method to satisfy tax withholding obligations or any other tax liability legally due and any restriction or limitation regarding any Award or the Shares relating thereto, based in each case on such factors as the Committee will determine; (e) determine the number of Shares or other consideration subject to Awards; (f) determine the Fair Market Value in good faith and interpret the applicable provisions of this Plan and the definition of Fair Market Value in connection with circumstances that impact the Fair Market Value, if necessary; (g) determine whether Awards will be granted singly, in combination with, in tandem with, in replacement of or as alternatives to other Awards under this Plan or any other incentive or compensation plan of the Company or any Parent or Subsidiary of the Company; (h) grant waivers of Plan or Award conditions; (i) determine the vesting, exercisability and payment of Awards; (j) correct any defect, supply any omission or reconcile any inconsistency in this Plan, any Award or any Award Agreement; (k) determine whether an Award has been earned; (l) reduce or waive any criteria with respect to Performance Factors (subject to any applicable requirements or limitations under Section 162(m) of the Code); (m) adjust Performance Factors in accordance with Section 11.3 with respect to persons whose compensation is subject to Section 162(m) of the Code; (n) adopt terms and conditions, rules and procedures (including the adoption of any sub-plan under this Plan) relating to the operation and administration of the Plan to accommodate requirements of local law and procedures outside of the United States; (o) make all other determinations necessary or advisable for the administration of this Plan and (p) delegate any of the foregoing to a subcommittee consisting of one or more executive officers pursuant to a specific delegation as permitted by applicable law, including Section 157(c) of the Delaware General Corporation Law. +11.2 Committee Interpretation and Discretion . Any determination made by the Committee with respect to any Award will be made in its sole discretion at the time of grant of the Award or, unless in contravention of any express term of the Plan or Award, at any later time, and such determination will be final and binding on the Company and all persons having an interest +101 +Table of Contents +in any Award under the Plan. Any dispute regarding the interpretation of the Plan or any Award Agreement will be submitted by the Participant or Company to the Committee for review. The resolution of such a dispute by the Committee will be final and binding on the Company and the Participant. The Committee may delegate to one or more executive officers the authority to review and resolve disputes with respect to Awards held by Participants who are not Insiders, and such resolution will be final and binding on the Company and the Participant. +11.3 Section 162(m) of the Code and Section 16 of the Exchange Act . When necessary or desirable for an Award to qualify as “performance-based compensation” under Section 162(m) of the Code the Committee will include at least two persons who are “outside directors” (as defined under Section 162(m) of the Code) and at least two of such “outside directors” (or a majority if more than two “outside directors” then serve on the Committee) will approve the grant of such Award and timely determine (as applicable) the Performance Period and any Performance Factors upon which vesting or settlement of any portion of such Award is to be subject. If the Committee determines that an Award (other than an Option or SAR) is intended to qualify as “performance-based compensation” under Section 162(m) of the Code, the lapsing of restrictions thereon and the distribution of cash, Shares or other property pursuant thereto, as applicable, shall be subject to the achievement of one or more objective performance goals established by the Committee, which shall be based on the attainment of specified levels of one or any combination of the Performance Factors. Such performance goals (and any exclusions) shall (a) be set by the Committee prior to the earlier of 90 days after the commencement of the applicable Performance Period and the expiration of 25% of the Performance Period and (b) otherwise comply with the requirements of Section 162(m) of the Code and the regulations thereunder. When required by Section 162(m) of the Code, prior to settlement of any such Award at least two (or a majority if more than two then serve on the Committee) of such “outside directors” then serving on the Committee will determine and certify in writing the extent to which such Performance Factors have been timely achieved and the extent to which the Award has thereby been earned, and the Committee may adjust downwards, but not upwards, the amount payable pursuant to such Award. Awards granted to Participants who are subject to Section 16 of the Exchange Act must be approved by two or more “non-employee directors” (as defined in the regulations promulgated under Section 16 of the Exchange Act). With respect to Participants whose compensation is subject to Section 162(m) of the Code, the Committee may specify, in its sole discretion, at the time of the initial grant of the Award, the manner of adjustment of any Performance Factors upon which vesting or settlement of any portion of such Award is to be subject to the extent necessary to prevent dilution or enlargement of any Award as a result of extraordinary events or circumstances, as determined by the Committee, or to exclude the effects of an event or occurrence which the Committee determines should appropriately be excluded, including: extraordinary, unusual, infrequent, or non-recurring items; an event either not directly related to the operations of the Company or not within the reasonable control of the Company’s management; changes in applicable laws, regulations or accounting principles or standards; currency fluctuations; discontinued operations; non-cash items, such as amortization, depreciation, or reserves; asset impairment; or any recapitalization, restructuring, reorganization, merger, acquisition, divestiture, consolidation, spin-off, split-up, combination, liquidation, dissolution, sale of assets, or other similar corporate transaction, but only to the extent such adjustments would be permitted under Section 162(m) of the Code. +11.4 Documentation . The Award Agreement for a given Award, the Plan and any other documents may be delivered to, and accepted by, a Participant or any other person in any manner (including electronic distribution or posting) that meets applicable legal requirements. +11.5 Foreign Award Recipients . Notwithstanding any provision of the Plan to the contrary, in order to comply with the laws and practices in other countries in which the Company and its Subsidiaries operate or have employees or other individuals eligible for Awards, the Committee, in its sole discretion, will have the power and authority to: (a) determine which Subsidiaries and Affiliates will be covered by the Plan; (b) determine which individuals outside the United States are eligible to participate in the Plan, which may include individuals who provide services to the Company, Subsidiary or Affiliate under an agreement with a foreign nation or agency; (c) modify the terms and conditions of any Award granted to individuals outside the United States or foreign nationals to comply with applicable foreign laws, policies, customs and practices; (d) establish sub-plans and modify exercise procedures and other terms and procedures, to the extent the Committee determines such actions to be necessary or advisable (and such sub-plans and/or modifications will be attached to this Plan as appendices); provided, however, that no such sub-plans and/or modifications will increase the share limitations contained in Section 3.4 hereof and (e) take any action, before or after an Award is made, that the Committee determines to be necessary or advisable to obtain approval or comply with any local governmental regulatory exemptions or approvals. Notwithstanding the foregoing, the Committee may not take any actions hereunder, and no Awards will be granted, that would violate the Exchange Act or any other applicable United States securities law, the Code or any other applicable United States governing statute or law. +ARTICLE 12 +CORPORATE TRANSACTIONS +12.1 Assumption or Replacement of Awards by Successor . In the event of a Corporate Transaction, any or all outstanding Awards may be assumed or replaced by the successor corporation, which assumption or replacement will be binding on all Participants. In the alternative, the successor corporation may substitute equivalent Awards or provide substantially similar consideration to Participants as was provided to stockholders (after taking into account the existing provisions of the Awards). The successor corporation may also issue, in place of outstanding Shares of the Company held by the Participant, substantially similar shares or other property subject to repurchase restrictions no less favorable to the Participant. In the event such successor or acquiring corporation (if any) refuses to assume, convert, replace or substitute Awards, as provided above, pursuant to a Corporate Transaction, then notwithstanding any other provision in this Plan to the contrary, such Awards will have their vesting accelerate +102 +Table of Contents +as to all shares subject to such Award (and any applicable right of repurchase fully lapse) immediately prior to the Corporate Transaction. In addition, in the event such successor or acquiring corporation (if any) refuses to assume, convert, replace or substitute Awards, as provided above, pursuant to a Corporate Transaction, the Committee will notify the Participants in writing or electronically that such Award will be exercisable for a period of time determined by the Committee in its sole discretion, and such Award will terminate upon the expiration of such period. Awards need not be treated similarly in a Corporate Transaction. +12.2 Assumption of Awards by the Company . The Company, from time to time, also may substitute or assume outstanding awards granted by another company, whether in connection with an acquisition of such other company or otherwise, by either; (a) granting an Award under this Plan in substitution of such other company’s award or (b) assuming such award as if it had been granted under this Plan if the terms of such assumed award could be applied to an Award granted under this Plan (“ Substitute Awards ”). Such substitution or assumption will be permissible if the holder of the substituted or assumed award would have been eligible to be granted an Award under this Plan if the other company had applied the rules of this Plan to such grant. In the event the Company assumes an award granted by another company, the terms and conditions of such award will remain unchanged (except that the Purchase Price or the Exercise Price, as the case may be, and the number and nature of Shares issuable upon exercise or settlement of any such Award will be adjusted appropriately pursuant to Section 424(a) of the Code). In the event the Company elects to grant a new Option in substitution rather than assuming an existing option, such new Option may be granted with a similarly adjusted Exercise Price. Substitute Awards shall not reduce the Shares authorized for grant under the Plan or the limitations on grants to a Participant under Section 3.4, nor shall Shares subject to a Substitute Award be added to the Shares available for Awards under the Plan. Additionally, in the event that a company acquired by the Company or any Subsidiary or with which the Company or any Subsidiary combines has shares available under a pre-existing plan approved by stockholders and not adopted in contemplation of such acquisition or combination, the shares available for grant pursuant to the terms of such pre-existing plan (as adjusted, to the extent appropriate, using the exchange ratio or other adjustment or valuation ratio or formula used in such acquisition or combination to determine the consideration payable to the holders of common stock of the entities party to such acquisition or combination) may be used for Awards under the Plan and shall not reduce the Shares authorized for grant under the Plan (and Shares subject to such Awards shall not be added to the Shares available for Awards under the Plan); provided that Awards using such available shares shall not be made after the date awards or grants could have been made under the terms of the pre-existing plan, absent the acquisition or combination, and shall only be made to individuals who were not Employees or Directors prior to such acquisition or combination. +ARTICLE 13 +MISCELLANEOUS +13.1 Payment For Share Purchases . Payment from a Participant for Shares purchased pursuant to this Plan may be made in cash or by check or, where expressly approved for the Participant by the Committee and where permitted by law (and to the extent not otherwise set forth in the applicable Award Agreement): (a) by cancellation of indebtedness of the Company to the Participant; (b) by surrender of shares of the Company held by the Participant that have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which said Award will be exercised or settled; (c) by waiver of compensation due or accrued to the Participant for services rendered or to be rendered to the Company or a Parent or Subsidiary of the Company; (d) by consideration received by the Company pursuant to a broker-assisted or other form of cashless exercise program implemented by the Company in connection with the Plan; (e) by any combination of the foregoing or (f) by any other method of payment as is permitted by applicable law. +13.2 Withholding Taxes . Whenever Shares are to be issued in satisfaction of Awards granted under this Plan or the applicable tax event occurs, the Company may require the Participant to remit to the Company or to the Parent or Subsidiary employing the Participant an amount sufficient to satisfy applicable U.S. federal, state, local and international withholding tax requirements or any other tax or social insurance liability legally due from the Participant prior to the delivery of Shares pursuant to exercise or settlement of any Award. Whenever payments in satisfaction of Awards granted under this Plan are to be made in cash, such payment will be net of an amount sufficient to satisfy applicable U.S. federal, state, local and international withholding tax or social insurance requirements or any other tax liability legally due from the Participant. The Fair Market Value of the Shares will be determined as of the date that the taxes are required to be withheld and such Shares will be valued based on the value of the actual trade or, if there is none, the Fair Market Value of the Shares as of the previous trading day. The Committee, or its delegate(s), as permitted by applicable law, in its sole discretion and pursuant to such procedures as it may specify from time to time and to limitations of local law, may require or permit a Participant to satisfy such tax withholding obligation or any other tax liability legally due from the Participant, in whole or in part by paying cash, electing to have the Company withhold otherwise deliverable cash or Shares having a Fair Market Value equal to the minimum statutory amount required to be withheld (or such other amount that will not cause an adverse accounting consequence or cost), delivering to the Company already-owned Shares having a Fair Market Value equal to the minimum amount required to be withheld or withholding from the proceeds of the sale of otherwise deliverable Shares acquired pursuant to an Award either through a voluntary sale or through a mandatory sale arranged by the Company. +13.3 Transferability . Unless determined otherwise by the Committee, an Award may not be sold, pledged, assigned, hypothecated, transferred or disposed of in any manner other than by will or by the laws of descent or distribution. If the Committee makes an Award transferable, including by instrument to an inter vivos or testamentary trust in which the Awards are to be passed to beneficiaries upon the death of the trustor (settlor) or by gift or by domestic relations order to a Permitted Transferee, such Award will contain such additional terms and conditions as the Committee deems appropriate. All Awards will be exercisable: (a) during +103 +Table of Contents +the Participant’s lifetime only by (i) the Participant or (ii) the Participant’s guardian or legal representative; (b) after the Participant’s death, by the legal representative of the Participant’s heirs or legatees and (c) in the case of all awards except ISOs, by a Permitted Transferee. +13.4 Voting and Dividends . No Participant will have any of the rights of a stockholder with respect to any Shares until the Shares are issued to the Participant, except for any Dividend Equivalent Rights permitted by an applicable Award Agreement. Any Dividend Equivalent Rights will be subject to the same vesting or performance conditions as the underlying Award. In addition, the Committee may provide that any Dividend Equivalent Rights permitted by an applicable Award Agreement will be deemed to have been reinvested in additional Shares or otherwise reinvested. After Shares are issued to the Participant, the Participant will be a stockholder and have all the rights of a stockholder with respect to such Shares, including the right to vote and receive all dividends or other distributions made or paid with respect to such Shares; provided, that if such Shares are Restricted Stock, then any new, additional or different securities the Participant may become entitled to receive with respect to such Shares by virtue of a stock dividend, stock split or any other change in the corporate or capital structure of the Company will be subject to the same restrictions as the Restricted Stock; provided, further, that the Participant will have no right to retain such stock dividends or stock distributions with respect to Shares that are repurchased at the Participant’s Purchase Price or Exercise Price, as the case may be, pursuant to Section 13.5. +13.5 Restrictions on Shares . At the discretion of the Committee, the Company may reserve to itself and/or its assignee(s) a right to repurchase (a “ Right of Repurchase ”) a portion of any or all Unvested Shares held by a Participant following such Participant’s termination of Service at any time within ninety (90) days (or such longer or shorter time determined by the Committee) after the later of the date Participant’s Service terminates and the date the Participant purchases Shares under this Plan, for cash and/or cancellation of purchase money indebtedness, at the Participant’s Purchase Price or Exercise Price, as the case may be. Dividend Equivalent Rights will not be granted in connection with any Options or SARs. +13.6 Certificates . All Shares or other securities whether or not certificated, delivered under this Plan will be subject to such stock transfer orders, legends and other restrictions as the Committee may deem necessary or advisable, including restrictions under any applicable U.S. federal, state or foreign securities law or any rules, regulations and other requirements of the SEC or any stock exchange or automated quotation system upon which the Shares may be listed or quoted and any non-U.S. exchange controls or securities law restrictions to which the Shares are subject. +13.7 Escrow; Pledge of Shares . To enforce any restrictions on a Participant’s Shares, the Committee may require the Participant to deposit all certificates representing Shares, together with stock powers or other instruments of transfer approved by the Committee, appropriately endorsed in blank, with the Company or an agent designated by the Company to hold in escrow until such restrictions have lapsed or terminated, and the Committee may cause a legend or legends referencing such restrictions to be placed on the certificates. Any Participant who is permitted to execute a promissory note as partial or full consideration for the purchase of Shares under this Plan will be required to pledge and deposit with the Company all or part of the Shares so purchased as collateral to secure the payment of the Participant’s obligation to the Company under the promissory note; provided, however, that the Committee may require or accept other or additional forms of collateral to secure the payment of such obligation and, in any event, the Company will have full recourse against the Participant under the promissory note notwithstanding any pledge of the Participant’s Shares or other collateral. In connection with any pledge of the Shares, the Participant will be required to execute and deliver a written pledge agreement in such form as the Committee will from time to time approve. The Shares purchased with the promissory note may be released from the pledge on a pro rata basis as the promissory note is paid. +13.8 Repricing Prohibited . Other than pursuant to Section 3.5, the Committee will not (a) amend the terms of outstanding Options or SARs to reduce the Exercise Price of outstanding Options or SARs; (b) cancel outstanding Options or SARs when the Exercise Price per Share exceeds the Fair Market Value of one Share in exchange for cash or another Award (other than in connection with a Corporate Transaction); or (c) take any other action with respect to an Option or SAR that would be treated as a repricing under the rules and regulations of the principal U.S. national securities exchange on which the Shares are listed, in any case without prior stockholder approval. +13.9 Deferrals . The Committee may determine that the delivery of Shares, payment of cash or a combination thereof upon the exercise, vesting or settlement of all or a portion of any Award may be deferred and may establish programs and procedures for deferral elections to be made by Participants. Deferrals by Participants will be made only in accordance with Section 409A of the Code. Consistent with Section 409A of the Code, the Committee may provide for distributions while a Participant is providing Services to the Company or any Parent or Subsidiary. +13.10 Securities Law and Other Regulatory Compliance . An Award will not be effective unless such Award is in compliance with all applicable U.S. and foreign federal and state securities and exchange control laws, rules and regulations of any governmental body, and the requirements of any stock exchange or automated quotation system upon which the Shares may then be listed or quoted, as they are in effect on the date of grant of the Award and also on the date of exercise or other issuance. Notwithstanding any other provision in this Plan, the Company will have no obligation to issue or deliver certificates for Shares under this Plan prior to: (a) obtaining any approvals from governmental agencies that the Company determines are necessary or advisable and (b) completion of any registration or other qualification of such Shares under any state or federal or foreign law or ruling of any governmental body that the Company determines to be necessary or advisable. The Company will be under no obligation to register the Shares with the SEC or to effect compliance with the registration, qualification or listing requirements of any foreign or state securities laws, exchange control laws, stock exchange or automated quotation system, and the Company will have no liability for any inability or failure to do so. +104 +Table of Contents +13.11 No Obligation To Employ . Nothing in this Plan or any Award granted under this Plan will confer or be deemed to confer on any Participant any right to continue in the employ of or to continue any other relationship with the Company or any Parent, Subsidiary or Affiliate or limit in any way the right of the Company or any Parent, Subsidiary or Affiliate to terminate Participant’s employment or other relationship at any time. +13.12 Adoption and Stockholder Approval . This Plan will be submitted for the approval of the Company’s stockholders, consistent with applicable laws, within twelve (12) months after the date this Plan is adopted by the Board. +13.13 Term of Plan; Governing Law . Unless earlier terminated as provided herein, this Plan will become effective on the Effective Date and will terminate ten (10) years from the date this Plan is adopted by the Board. This Plan and all Awards granted hereunder will be governed by and construed in accordance with the laws of the State of Delaware (excluding its conflict of law rules). +13.14 Amendment or Termination of Plan . The Board may at any time terminate or amend this Plan in any respect, including amendment of any form of Award Agreement or instrument to be executed pursuant to this Plan; provided, however, that the Board will not, without the approval of the stockholders of the Company, amend this Plan in any manner that requires such stockholder approval or amend Section 13.8; provided further, that a Participant’s Award will be governed by the version of this Plan then in effect at the time such Award was granted. +13.15 Nonexclusivity of the Plan . Neither the adoption of this Plan by the Board, the submission of this Plan to the stockholders of the Company for approval, nor any provision of this Plan will be construed as creating any limitations on the power of the Board to adopt such additional compensation arrangements as it may deem desirable, including the granting of stock awards and bonuses otherwise than under this Plan, and such arrangements may be either generally applicable or applicable only in specific cases. +13.16 Insider Trading Policy . Each Participant who receives an Award will comply with any policy adopted by the Company from time to time covering transactions in the Company’s securities by Employees, officers and/or directors of the Company. +13.17 All Awards Subject to Company Clawback or Recoupment Policy . All Awards, subject to applicable law, will be subject to clawback or recoupment pursuant to any compensation clawback or recoupment policy adopted by the Board or required by law during the term of Participant’s employment or other service with the Company that is applicable to executive officers, employees, directors or other service providers of the Company, and in addition to any other remedies available under such policy and applicable law, may require the cancellation of outstanding Awards and the recoupment of any gains realized with respect to Awards. +13.18 Compliance with Section 409A of the Code . This Plan is intended to comply and shall be administered in a manner that is intended to comply with Section 409A of the Code and shall be construed and interpreted in accordance with such intent. To the extent that an Award or the payment, settlement or deferral thereof is subject to Section 409A of the Code, the Award shall be granted, paid, settled or deferred in a manner that will comply with Section 409A of the Code, including regulations or other guidance issued with respect thereto, except as otherwise determined by the Committee. Any provision of this Plan that would cause the grant of an Award or the payment, settlement or deferral thereof to fail to satisfy Section 409A of the Code shall be amended to comply with Section 409A of the Code on a timely basis, which may be made on a retroactive basis, in accordance with regulations and other guidance issued under Section 409A of the Code. Notwithstanding any contrary provision in the Plan or any Award Agreement, any payment(s) of “nonqualified deferred compensation” (within the meaning of Section 409A) that are otherwise required to be made under the Plan or any Award Agreement to a “specified employee” (as defined under Section 409A) as a result of his or her “separation from service” (as defined below) (other than a payment that is not subject to Section 409A) shall be delayed for the first six (6) months following such “separation from service” and shall instead be paid (in a manner set forth in the Award Agreement) on the payment date that immediately follows the end of such six-month period (or, if earlier, within 10 business days following the date of death of the specified employee) or as soon as administratively practicable within 60 days thereafter, but in no event later than the end of the applicable taxable year. A termination of employment shall not be deemed to have occurred for purposes of any provision of the Plan or any Award Agreement providing for the payment of any amounts or benefits that are considered nonqualified deferred compensation under Section 409A upon or following a termination of employment, unless such termination is also a “separation from service” within the meaning of Section 409A and the payment thereof prior to a “separation from service” would violate Section 409A. For purposes of any such provision of the Plan or any Award Agreement relating to any such payments or benefits, references to a “termination,” “termination of employment,” “termination of continuous Service” or like terms shall mean “separation from service.” +105 \ No newline at end of file diff --git a/raw/proxies/0000910521/0000910521-15-000026/proxy_rpt.txt b/raw/proxies/0000910521/0000910521-15-000026/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..ae06feb76b093104011cf51d6eee55517e8437f2 --- /dev/null +++ b/raw/proxies/0000910521/0000910521-15-000026/proxy_rpt.txt @@ -0,0 +1,7 @@ +Certain Relationships and Related Person Transactions +Our Company's legal department is primarily responsible for identifying and reviewing relationships and transactions in which our Company and our directors, executive officers, certain of our stockholders or their immediate family members are participants, to determine whether any of these related persons had or will have a direct or indirect material interest in such transactions. In order to identify potential related person transactions, our Company's legal department annually prepares and distributes to all directors and executive officers a written questionnaire which includes questions intended to elicit information about any current or proposed related person transactions. In addition, our Company's Code of Ethics addresses conflicts of interest where an individual's private interests interfere or conflict with the interests of our Company, including relationships with suppliers, customers or competitors. Conflicts of interest which might impair or appear to impair the exercise of judgment solely for the benefit of our Company and our stockholders are prohibited. In general, such conflicts must be approved by the legal department, the employee's supervisor or, in the case of directors, the Audit Committee. Information regarding potential conflicts of interest in violation of our Company's Code of Ethics may be reported to our Company's anonymous reporting hotline and may be subsequently obtained by the Chair of the Audit Committee, the Chair of our Board of Directors and the highest ranking manager of internal audit. +If a related person transaction is identified by our legal department as one which must be reported in our Company's proxy statement pursuant to applicable SEC regulations, the Audit Committee is responsible for reviewing and approving or ratifying any such related person transaction. In evaluating related person transactions, the Audit Committee members apply the same standards of good faith and fiduciary duty that they apply to their general responsibilities as members of the Audit Committee and as individual directors. The Audit Committee may approve a related person transaction when, in its good faith judgment, the transaction is in the best interests of our Company and our stockholders. +There were no transactions with related persons requiring disclosure under Item 404 of Regulation S-K during the fiscal year ended March 31, 2015, nor are any such transactions currently proposed. +Limitation of Liability and Indemnification of Directors and Officers +Our Certificate of Incorporation and Bylaws provide that we will indemnify directors and executive officers to the fullest extent now or hereafter permitted by the Delaware General Corporation Law. In addition, we have entered into indemnification agreements with our directors and executive officers. +We maintain an insurance policy pursuant to which our directors and officers are insured, within the limits and subject to the limitations of the policy, against specified expenses in connection with the defense of claims, actions, suits or proceedings, and liabilities which might be imposed as a result of such claims, actions, suits or proceedings, that may be brought against them by reason of their being or having been directors or officers of our Company. This policy extends to, among other things, liability arising under the Securities Act. \ No newline at end of file diff --git a/raw/proxies/0000910521/0000910521-16-000066/proxy.txt b/raw/proxies/0000910521/0000910521-16-000066/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..6bcc361d6972d338d4a2997ced87c01cece6ba73 --- /dev/null +++ b/raw/proxies/0000910521/0000910521-16-000066/proxy.txt @@ -0,0 +1,2861 @@ +DEF 14A +1 +deck-def14ax2016.htm +DEF 14A 2016 +Document +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Proxy Statement Pursuant to Section 14(a) of +the Securities Exchange Act of 1934 (Amendment No. ) +Filed by the Registrant x +Filed by a Party other than the Registrant ¨ +Check the appropriate box: +¨ +Preliminary Proxy Statement +¨ +Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +x +Definitive Proxy Statement +¨ +Definitive Additional Materials +¨ +Soliciting Material under §240.14a-12 +DECKERS OUTDOOR CORPORATION +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +x +No fee required. +¨ +Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. +(1) +Title of each class of securities to which transaction applies: +(2) +Aggregate number of securities to which transaction applies: +(3) +Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): +(4) +Proposed maximum aggregate value of transaction: +(5) +Total fee paid: +¨ +Fee paid previously with preliminary materials. +¨ +Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. +(1) +Amount Previously Paid: +(2) +Form, Schedule or Registration Statement No.: +(3) +Filing Party: +(4) +Date Filed: +2016 +PROXY STATEMENT SUMMARY +This summary highlights information contained elsewhere in this Proxy Statement. This summary does not contain all of the information that you should consider, and you should read the entire Proxy Statement carefully before voting. +ANNUAL MEETING OF STOCKHOLDERS +DATE +September 12, 2016 +TIME +1:00 p.m. Pacific Time +PLACE +Online at www.virtualshareholdermeeting.com/DECK +RECORD DATE +July 14, 2016 +VOTING +Stockholders as of the Record Date are entitled to vote at the Annual Meeting +VIRTUAL MEETING +To participate in the Annual Meeting virtually via the Internet, please visit: www.virtualshareholdermeeting.com/DECK. +To access the Annual Meeting you will need the 16-digit control number included on your Notice of Internet Availability of Proxy Materials, included on your proxy card, or provided through your broker. Stockholders will be able to vote and submit questions during the Annual Meeting. +PROPOSALS TO BE VOTED ON +PROPOSALS +MATTER +BOARD VOTE RECOMMENDATION +PAGE REFERENCE +1 +Election of 10 directors +FOR EACH DIRECTOR NOMINEE +9 +2 +Ratification of selection of KPMG LLP as independent registered public accounting firm for fiscal year 2017 +FOR +68 +3 +Advisory vote to approve Named Executive Officer compensation +FOR +70 +We may also transact any other business that may properly come before the Annual Meeting, or at any postponements or adjournments thereof. As of the date of this Proxy Statement, we are not aware of any business to be presented for consideration at the Annual Meeting other than the matters described in this Proxy Statement. +HOW TO VOTE +Your vote is important to the future of Deckers Outdoor Corporation. You are eligible to vote if you were a stockholder at the close of business on July 14, 2016. Please refer to the section of this Proxy Statement titled "Questions and Answers about the 2016 Annual Meeting of Stockholders and Voting" for additional information on how to vote your shares. +PROPOSAL NO. 1 +ELECTION OF DIRECTOR NOMINEES +The following table provides summary information about each director nominee. +Deckers Committees +Name, +Primary Occupation +Age +Director +Since +Independent +Other Public Company Boards +A +C +CG +Angel R. Martinez +Non-Executive Chairman of our Board of Directors +61 +2005 +NO +1 +John M. Gibbons +Lead Independent Director +67 +2000 +YES +None +Karyn O. Barsa +Corporate Director +55 +2008 +YES +1 +l +l +Nelson C. Chan +Corporate Director +55 +2014 +YES +3 +l +Michael F. Devine, III +Corporate Director +57 +2011 +YES +2 +ª +l +John G. Perenchio +Corporate Director +61 +2005 +YES +None +l +l +David Powers +Chief Executive Officer and President +50 +2016 +NO +None +James Quinn +Corporate Director +64 +2011 +YES +None +ª +Lauri M. Shanahan +Corporate Director +53 +2011 +YES +1 +ª +Bonita C. Stewart +Vice-President, Global Partnerships, Americas at Google, Inc. +59 +2014 +YES +None +l +____________ +ª Committee Chair +A: +Audit +C: +Compensation +CG: +Corporate Governance +• +No director nominee attended fewer than 75% of the meetings of our Board of Directors, which we sometimes refer to as our Board, or meetings of any Board committee on which he or she sits. +• +Each director nominee is elected annually by a majority of the votes cast at the Annual Meeting. +• +Our Board of Directors recommends that you vote FOR each of the director nominees named in this Proposal No. 1. +PROPOSAL NO. 2 +RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +• +As a matter of good corporate governance, we are asking our stockholders to ratify the selection of KPMG LLP as our independent registered public accounting firm for fiscal year 2017. +• +Ratification of the selection requires the vote of a majority of the shares present and entitled to vote at the Annual Meeting. +• +Our Board of Directors recommends that you vote FOR this Proposal No. 2. +PROPOSAL NO. 3 +ADVISORY VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION +• +We are asking our stockholders to approve, on a non-binding advisory basis, the compensation of our Named Executive Officers, which we sometimes refer to as NEOs, as disclosed in the section of this Proxy Statement titled "Compensation Discussion and Analysis". +• +Below is a summary of the key elements and other features of our executive compensation program. +• +Advisory approval of the proposal requires the vote of a majority of the shares present and entitled to vote at the Annual Meeting. +• +Our Board of Directors recommends that you vote FOR this Proposal No. 3 because it believes that our compensation policies and practices are effective in achieving our goals of appropriately incentivizing and paying for financial and operating performance, and aligning our executives' interests with those of our stockholders. +MAIN EXECUTIVE COMPENSATION ELEMENTS +ELEMENT +TYPE +TERMS +Base Salary +CASH +• Base salary increases must be approved by our Compensation Committee, which is comprised solely of independent directors. +Annual Cash Incentive +CASH +• Performance-based cash incentive awards are earned based on achievement of annual Company performance goals approved by our Compensation Committee. Because the fiscal year 2016 performance goals were not achieved, no cash incentive awards were paid. +2016 NSU Equity Incentive Plan +(Nonvested Stock Units, or NSUs) +EQUITY +• Performance goals for NSUs were based on fiscal year 2016 EPS. Because 2016 EPS goals were not achieved, these NSUs were not earned. +2016 Long-Term Equity Incentive Plan, or LTIP +(Restricted Stock Units, or RSUs) +EQUITY +• Performance goals for LTIP RSUs are based on Company performance for fiscal year 2018. Based upon expectations as of March 31, 2016, the performance conditions related to these awards are not probable of being achieved; therefore, the awards are not expected to be earned. +KEY CORPORATE GOVERNANCE CHANGES +• +In February 2014, our Board of Directors approved a change in our fiscal year end from December 31 to March 31 to better align with our business and trends in our industry. As a result, our 2015 fiscal year ran from April 1, 2014 to March 31, 2015, or fiscal year 2015. In addition, we had a transition period from January 1, 2014 to March 31, 2014, which we sometimes refer to as the 2014 Transition Period or 2014T, and our 2016 fiscal year ran from April 1, 2015 to March 31, 2016, or fiscal year 2016. +• +In May 2016, Angel R. Martinez announced his retirement as Chief Executive Officer of our Company. He continues to serve as Chairman of our Board of Directors in a non-executive capacity. +• +David Powers, who previously served as our President, was appointed Chief Executive Officer effective June 1, 2016 and was selected to serve as a member of our Board. +NOTICE OF ANNUAL MEETING OF STOCKHOLDERS +TO OUR STOCKHOLDERS: +We are pleased to invite you to attend the Annual Meeting of Stockholders of Deckers Outdoor Corporation, to be held on Monday, September 12, 2016, beginning at 1:00 p.m. Pacific Time. +Proposals to be Voted Upon : +1 +Election of Directors . To elect 10 directors to serve until the Annual Meeting of Stockholders to be held in 2017, or until their successors are elected and duly qualified. +2 +Ratification of Appointment of Independent Registered Public Accounting Firm . To ratify the selection of KPMG LLP as our independent registered public accounting firm for fiscal year 2017, which covers the period from April 1, 2016 to March 31, 2017. +3 +Advisory Vote to Approve Named Executive Officer Compensation . To approve, on a non-binding advisory basis, the compensation of our Named Executive Officers, as disclosed in the section of this Proxy Statement titled "Compensation Discussion and Analysis" . +• +Other Business . To consider and act upon such other business as may properly come before the Annual Meeting, or at any postponements or adjournments thereof. +Virtual Meeting : +We are excited to embrace the latest technology to provide expanded access, improved communication, and cost savings for our stockholders and our Company. This year, the Annual Meeting will be a completely virtual meeting of stockholders, which will be conducted solely via a live webcast. We believe hosting a virtual meeting will enable increased stockholder attendance and participation from any location around the world while also reducing the cost of the Annual Meeting. You will be able to attend the Annual Meeting online and submit your questions during the meeting by visiting www.virtualshareholdermeeting.com/DECK . You will also be able to vote your shares electronically at the Annual Meeting. +Board Recommendations : +Our Board of Directors recommends that you vote FOR each of the director nominees named in Proposal No. 1 and FOR Proposal Nos. 2 and 3. +Voting at the Annual Meeting : +Our Board of Directors has fixed the close of business on July 14, 2016 as the record date for determining stockholders entitled to notice of and to vote at the Annual Meeting, or at any postponements or adjournments thereof. Only holders of record at the close of business on the record date are entitled to such notice and to vote, virtually or by proxy, at the Annual Meeting. +BY ORDER OF THE BOARD OF DIRECTORS +/s/ David Powers +David Powers +Chief Executive Officer and President +Your vote is very important. +Whether or not you plan to attend the virtual Annual Meeting, we encourage you to read this Proxy Statement and submit your proxy or voting instructions as soon as possible. For specific instructions on how to vote your shares, please refer to the instructions on the Notice of Internet Availability of Proxy Materials you received in the mail, the section of this Proxy Statement titled " Questions and Answers about the 2016 Annual Meeting of Stockholders and Voting " or, if you requested to receive printed proxy materials, your enclosed proxy card. +Approximate Date of Mailing of Notice of Internet Availability of Proxy Materials: July 29, 2016 +Table of Contents +TABLE OF CONTENTS +2016 Proxy Statement Summary +i +Notice of Annual Meeting of Stockholders +iv +Proxy Statement +1 +Questions and Answers about the 2016 Annual Meeting of Stockholders and Voting +2 +Proposal No. 1 - Election of Directors +9 +Director Nominees +11 +Corporate Governance +18 +Stockholder Engagement +24 +Executive Officers +25 +Compensation Discussion and Analysis +27 +Executive Summary +29 +Compensation Philosophy and Objectives +34 +Compensation Consultant and Peer Group +35 +Elements of Fiscal Year 2016 Executive Compensation Program +38 +Other Compensation Considerations +47 +Report of the Compensation Committee +48 +Summary Compensation Table +49 +Grants of Plan-Based Awards in Fiscal Year 2016 +51 +Outstanding Equity Award at 2016 Fiscal Year End +52 +2016 SAR Exercises and Stock Vested +54 +Nonqualified Deferred Compensation +55 +Potential Payments Upon Termination or Change of Control +56 +Director Compensation +60 +Equity Compensation Plan Information +62 +Security Ownership of Certain Beneficial Owners and Management +63 +Section 16 Reporting Compliance +65 +Report of the Audit Committee +66 +Related Person Transactions +67 +Proposal No. 2 - Ratification of the Appointment of KPMG LLP as Independent Registered Public Accounting Firm +68 +Proposal No. 3 - Advisory Vote to Approve Named Executive Officer Compensation +70 +Other Business of the Annual Meeting +72 +Annual Report on Form 10-K +73 +Table of Contents +ANNUAL MEETING OF STOCKHOLDERS +Meeting Date: September 12, 2016 +PROXY STATEMENT +GENERAL INFORMATION +The enclosed Proxy Statement is solicited on behalf of the Board of Directors of Deckers Outdoor Corporation, which we sometimes refer to as our Company, we, us, or our, for use at our Annual Meeting of Stockholders, or the Annual Meeting, to be held virtually on Monday, September 12, 2016 at 1:00 p.m. Pacific Time, or at any postponements or adjournments thereof. The virtual Annual Meeting can be accessed by visiting www.virtualshareholdermeeting.com/DECK, where you will be able to attend the meeting, submit questions and vote online. The Annual Meeting is being held for the purposes described in this Proxy Statement and in the accompanying Notice of Annual Meeting of Stockholders. +1 +Table of Contents +QUESTIONS AND ANSWERS ABOUT THE 2016 ANNUAL MEETING OF STOCKHOLDERS AND VOTING +The following questions and answers are intended to briefly address potential questions that our stockholders may have regarding this Proxy Statement and the Annual Meeting. They are also intended to provide our stockholders with certain information that is required to be provided under the rules and regulations of the Securities and Exchange Commission, or SEC. These questions and answers may not address all of the questions that are important to you as a stockholder. If you have additional questions about the Proxy Statement or the Annual Meeting, please see the question titled "Whom should I contact with other questions?" below. +Q: What is the purpose of the Annual Meeting? +A: At the Annual Meeting, our stockholders will be asked to consider and vote upon the matters described in this Proxy Statement and in the accompanying Notice of Annual Meeting of Stockholders, and any other matters that properly come before the Annual Meeting. +Q: When and where will the Annual Meeting be held? +A: You are invited to attend the Annual Meeting on Monday, September 12, 2016, beginning at 1:00 p.m. Pacific Time. The Annual Meeting will be conducted virtually via a live webcast. The virtual Annual Meeting can be accessed by visiting www.virtualshareholdermeeting.com/DECK . Please refer to the question titled " How can I vote my shares and participate in the Annual Meeting? " for additional information. +Q: What is our fiscal year end? +A: Our fiscal year end is March 31. +Q: On what securities exchange are our shares traded? +A: As of May 2014, our shares are traded on the New York Stock Exchange, or NYSE. +Q: Why did I receive these proxy materials? +A: We are providing this Proxy Statement in connection with the solicitation by our Board of Directors of proxies to be voted at the Annual Meeting, or at any postponements or adjournments thereof. This Proxy Statement contains important information for you to consider when deciding how to vote on the matters brought before the Annual Meeting. You are invited to attend the Annual Meeting virtually to vote on the proposals described in this Proxy Statement. However, you do not need to attend the Annual Meeting to vote your shares. Instead, you may vote your shares using one of the other voting methods described in this Proxy Statement. Whether or not you expect to attend the Annual Meeting virtually, please vote your shares as soon as possible in order to ensure your representation at the Annual Meeting and to minimize the cost to our Company of proxy solicitation. +Q: Why did I receive a notice in the mail regarding the Internet availability of proxy materials? +A: Instead of mailing printed copies to each of our stockholders, we have elected to provide access to our proxy materials over the Internet under the SEC's "notice and access" rules. These rules allow us to make our stockholders aware of the Annual Meeting and the availability of our proxy materials by sending the Notice of Internet Availability of Proxy Materials, or the Notice, which provides instructions for how to access the full set of proxy materials through the Internet or make a request to have printed proxy materials delivered by mail. Accordingly, on or about July 29, 2016, we mailed the Notice to each of our stockholders. The Notice contains instructions on how to access our proxy materials, including our Proxy Statement and our Annual Report on Form 10-K for the fiscal year ended March 31, 2016, or the Annual Report, each of which are available at www.proxyvote.com. The Notice also provides instructions on how to vote your shares through the Internet, by telephone, by mail or virtually at the Annual Meeting. +Q: What is the purpose of complying with the SEC's "notice and access" rules? +A: We believe compliance with the SEC's "notice and access" rules allows us to provide our stockholders with the materials they need to make informed decisions, while lowering the costs of printing and delivering those materials and reducing the environmental impact of our Annual Meeting. However, if you would prefer to receive printed proxy materials, please follow the instructions included in the Notice. If you have previously elected to receive our proxy materials electronically, you will continue to receive these materials electronically unless you elect otherwise. +2 +Table of Contents +Q: What proposals am I being asked to vote upon at the Annual Meeting? +A: At the Annual Meeting, you will be asked to: +• +Elect 10 director nominees to serve until the Annual Meeting of Stockholders to be held in 2017, or until their successors are elected and duly qualified (Proposal No. 1) ; +• +Ratify the selection of KPMG LLP as our independent registered public accounting firm for fiscal year 2017 (Proposal No. 2) ; and +• +Approve, on a non-binding advisory basis, the compensation of our Named Executive Officers, as disclosed in the section of this Proxy Statement titled "Compensation Discussion and Analysis" (Proposal No. 3). +Q: Does our Board of Directors recommend voting in favor of the proposals? +A: Yes. Our Board of Directors unanimously recommends that you vote "FOR" each of the 10 director nominees, "FOR" the ratification of the selection of KPMG LLP as our independent registered public accounting firm for fiscal year 2017, and "FOR" the approval, on a non-binding advisory basis, of the compensation of our Named Executive Officers. +Q: What are the voting requirements to approve the proposals? +A: The voting requirements to approve each of the proposals to be voted upon at the Annual Meeting are as follows: +• +Election of Directors (Proposal No. 1) - Our Board of Directors has adopted a majority voting standard for uncontested director elections. This means that each director nominee in an uncontested election will be elected by a majority of the votes cast by the shares present virtually or represented by proxy at the Annual Meeting and entitled to vote on the election of directors (assuming that a quorum is present). An "uncontested election" is an election in which the number of nominees for director is not greater than the number of directors to be elected. A "contested election" is an election in which the number of nominees for director nominated by (i) our Board of Directors, (ii) any stockholder, or (iii) a combination of our Board of Directors and any stockholder, exceeds the number of directors to be elected. A "majority of the votes cast" means that the number of votes "FOR" a nominee for director must exceed 50% of the total votes cast in the election of directors. A "WITHHOLD AUTHORITY" vote with respect to a director nominee will not count as votes cast for that nominee. In a contested election, directors shall be elected by a plurality of the votes cast by the shares present virtually or represented by proxy at the Annual Meeting and entitled to vote on the election of directors. +Under the rules applicable to brokers, brokers no longer possess discretionary authority to vote shares with respect to the election of directors. Accordingly, "broker non-votes" will result for this proposal if brokers do not receive instructions from beneficial owners of our shares. Broker non-votes will not count as votes cast for purposes of this proposal and will not be counted for any purpose in determining whether this proposal has been approved. Please see the question, titled "What happens if I do not vote? " below for a discussion of the effect of "withhold authority" votes, "abstentions" and "broker non-votes". +• +Ratification of Selection of Accounting Firm (Proposal No. 2) - Ratification of the selection of KPMG LLP as our independent registered public accounting firm for fiscal year 2017 will require the affirmative vote of a majority of the shares present virtually or represented by proxy at the Annual Meeting and entitled to vote on the matter (assuming that a quorum is present). +Abstentions will have the same effect as votes against the proposal. Because the ratification of the independent registered public accounting firm is a matter on which brokers have the discretion to vote, "broker non-votes" will not result for this proposal. +• +Advisory Vote on Executive Compensation (Proposal No. 3) - Approval, on a non-binding advisory basis, of the compensation of our Named Executive Officers will require the affirmative vote of a majority of the shares present virtually or represented by proxy at the Annual Meeting and entitled to vote on the matter (assuming that a quorum is present). +Abstentions will have the same effect as votes against the proposal. "Broker non-votes" will not count as shares present and entitled to vote on the proposal and will not be counted for any purpose in determining whether this proposal has been approved. +Q: What happens if a director nominee fails to receive a majority vote in an uncontested election at the Annual Meeting? +A: Each incumbent director standing for reelection at the Annual Meeting has tendered an irrevocable letter of resignation, effective upon such incumbent director not receiving a majority vote at the Annual Meeting and acceptance of such resignation by our Board of Directors. The Board of Directors must accept or reject such resignation within 90 days following certification of the stockholder vote in accordance with the procedures established by our Bylaws. If a director’s resignation offer is not +3 +Table of Contents +accepted by our Board of Directors, that director will continue to serve until our Annual Meeting of Stockholders to be held in 2017 and his or her successor is duly elected and qualified, or until the director’s earlier death, resignation, or removal. +Any director nominee who is not an incumbent director and who fails to receive a majority vote in an uncontested election will not be elected as a director, and a vacancy will be left on our Board of Directors. The Board of Directors, in its sole discretion, may either fill a vacancy resulting from a director nominee not receiving a majority vote pursuant to our Bylaws or decrease the size of our Board of Directors to eliminate the vacancy. All director nominees are incumbent directors standing for reelection at the Annual Meeting. +Q: What happens if I do not vote? +A: The following is a brief explanation of the effect that a decision not to vote shares will have on the proposals to be voted upon at the Annual Meeting: +• +Abstentions - You may "WITHHOLD AUTHORITY" to vote for one or more nominees for director and may "ABSTAIN" from voting on one or more of the other matters to be voted on at the Annual Meeting. Shares for which authority is withheld or that a stockholder abstains from voting will be counted for purposes of determining whether a quorum is present at the Annual Meeting. With respect to Proposal No. 1, shares for which authority is withheld will not be included in the total number of votes cast, and thus will have no effect on the outcome of the vote on this proposal. With respect to Proposal Nos. 2 and 3, shares that a stockholder abstains from voting will be included in the total number of shares present and entitled to vote on these proposals, and will have the same effect as a vote "AGAINST" these proposals. +• +Broker Non-Votes - "Broker non-votes" result from shares that are held by a bank, broker, dealer or other nominee that are represented at the Annual Meeting, but with respect to which the nominee holding those shares (i) has not received instructions from the beneficial owner of the shares to vote on the particular proposal, and (ii) does not have discretionary voting power with respect to the particular proposal. Please see the question, titled " Who can vote at the Annual Meeting? " below for a discussion of beneficial ownership. Whether a nominee has authority to vote shares that it holds is determined by stock exchange rules. Nominees holding shares of record for beneficial owners generally are entitled to exercise their discretion to vote on Proposal No. 2, but do not have the discretion to vote on Proposal Nos. 1 or 3, unless they receive voting instructions from the beneficial owners of the shares. Accordingly, broker non-votes may result for Proposal Nos. 1 and 3. Broker non-votes will not be counted for purposes of determining the number of votes cast or the number of shares present and entitled to vote with respect to these proposals, and will not be counted for any purpose in determining whether these proposals have been approved. Broker non-votes will be counted for purposes of determining the presence or absence of a quorum at the Annual Meeting. +Q: Who can vote at the Annual Meeting? +A: Only our stockholders at the close of business on July 14, 2016, the Record Date, will be entitled to vote at the Annual Meeting. On the Record Date, there were 32,034,511 shares of our Common Stock outstanding and entitled to vote. Each share of Common Stock issued and outstanding on the Record Date is entitled to one vote on any matter presented for consideration by our stockholders at the Annual Meeting. +• +Holders of Record - If, on the Record Date, your shares were registered directly in your name with our transfer agent, Computershare, then you are a "holder of record". As a holder of record, you may vote at the virtual Annual Meeting, or you may vote by proxy. Whether or not you plan to attend the Annual Meeting virtually, we urge you to vote your shares using one of the voting methods described in this Proxy Statement and the Notice. +• +Beneficial Owners - If, on the Record Date, your shares were held in an account at a bank, broker, dealer, or other nominee, then you are the "beneficial owner" of shares held in "street name" and this Proxy Statement is being made available to you by that nominee. The nominee holding your account is considered the holder of record for purposes of voting at the virtual Annual Meeting. As a beneficial owner, you have the right to direct your nominee on how to vote the shares in your account. You are also invited to attend the Annual Meeting virtually. However, since you are not the holder of record, you may not vote your shares virtually at the Annual Meeting unless you request and obtain a valid proxy or obtain a 16-digit control number from your nominee. Please contact your nominee directly for additional information. +Q: What is the quorum requirement for the Annual Meeting? +A: The presence at the Annual Meeting, virtually or by proxy, of holders of a majority of the shares of our Common Stock outstanding as of the Record Date, will constitute a quorum at the Annual Meeting. We will treat shares of Common Stock represented by a properly voted proxy, including abstentions and broker non-votes, as present at the Annual Meeting for the purposes of determining the existence of a quorum. If a quorum is not present, the Annual Meeting will be adjourned until a quorum is obtained. +4 +Table of Contents +Q: How can I vote my shares? +A: • Holders of Record - Holders of record can vote by proxy or by attending the Annual Meeting virtually by visiting www.virtualshareholdermeeting.com/DECK , where votes can be submitted via live webcast. If you vote by proxy, you can vote by Internet, telephone or by mail as described below. +VOTE BY INTERNET +VOTE BY TELEPHONE +VOTE BY MAIL +VOTE AT THE +ANNUAL MEETING +You can vote by proxy over the Internet by following the instructions provided in the Notice, or to the extent you requested to receive printed proxy materials, by following the instructions provided on the proxy card. Internet voting is available 24 hours a day and will be accessible until 11:59 p.m. EST on September 11, 2016 by visiting www.proxyvote.com and following the instructions. Our Internet voting procedures are designed to authenticate stockholders by using a 16-digit control number, which is located on the Notice. +If you requested to receive printed proxy materials, you can vote by telephone by following the instructions provided on the proxy card. Telephone voting is available 24 hours a day and will be accessible until 11:59 p.m. EST on September 11, 2016. +If you requested to receive printed proxy materials, you can vote by mail by following the instructions provided on the proxy card. If you choose to vote by mail, simply mark, sign and date your proxy card and return it promptly in the postage-paid envelope provided. In order to be effective, completed proxy cards must be received by 11:59 p.m. EST on September 11, 2016. +If you choose to vote at the Annual Meeting virtually, you will need the 16-digit control number included on your Notice or on your proxy card. If you are the beneficial owner of your shares, your 16-digit control number may be included in the voting instructions form that accompanied your proxy materials. If your nominee did not provide you with a 16-digit control number in the voting instructions form that accompanied your proxy materials, you may be able to log onto the website of your nominee prior to the start of the Annual Meeting, on which you will need to select the stockholder communications mailbox link through to the Annual Meeting, which will automatically populate your 16-digit control number in the virtual Annual Meeting interface . The method you use to vote will not limit your right to vote at the virtual Annual Meeting. All shares that have been properly voted and not revoked will be voted at the Annual Meeting. +Thomas Garcia and Thomas A. George, the designated proxyholders, are members of our management. Whether or not you plan to attend the virtual Annual Meeting, we urge you to vote by proxy to ensure your vote is counted. +• Beneficial Owner - If you are the beneficial owner of your shares, you should have received the Notice or a proxy card with these proxy materials from your bank, broker, dealer or other nominee rather than from us. Simply (i) use the 16-digit control number provided to you by your nominee to vote on the Internet before the Annual Meeting or virtually at the Annual Meeting, or (ii) if you requested to receive printed proxy materials, vote by following the instructions provided on the proxy card which you received from your nominee. +Q: How can I vote my shares and participate in the Annual Meeting? +A: This year's Annual Meeting will be held entirely online to allow greater participation. Our stockholders may participate in the Annual Meeting by visiting the following website: www.virtualshareholdermeeting.com/DECK . You will need the 16-digit control number included on your Notice or on your proxy card to attend and vote at the Annual Meeting. If you are the beneficial owner of your shares, your 16-digit control number may be included in the voting instructions form that accompanied your proxy materials. If your nominee did not provide you with a 16-digit control number in the voting instructions form that accompanied your proxy materials, you may be able to log onto the website of your nominee prior to the start of the Annual Meeting, on which you will need to select the stockholder communications mailbox link through to the Annual Meeting, which will automatically populate your 16-digit control number in the virtual Annual Meeting interface. Stockholders who have obtained a 16-digit control number as described above may vote or submit questions while participating in the live webcast of the Annual Meeting. However, even if you plan to attend the Annual Meeting virtually, the Company recommends that you vote your shares in advance, so that your vote will be counted if you later decide not to attend the virtual Annual Meeting. +5 +Table of Contents +Q: What can I do if I change my mind after I vote my shares? +A: You may change your vote at any time before the polls are closed at the Annual Meeting. If you are a holder of record, you may change your vote by (i) providing written notice of revocation to Deckers Outdoor Corporation, 250 Coromar Drive, Goleta, California 93117, Attention: Corporate Secretary, (ii) executing a subsequent proxy using any of the voting methods discussed above, or (iii) attending the virtual Annual Meeting and voting via live webcast. However, simply attending the virtual Annual Meeting will not, by itself, revoke your proxy. If you are a beneficial owner of your shares, and you have instructed your bank, broker, dealer or other nominee to vote your shares, you may change your vote by following directions received from your nominee to change those instructions, or by attending the virtual Annual meeting and voting via live webcast, which can accomplished as described above. Subject to any such revocation, all shares represented by properly executed proxies will be voted in accordance with the recommendations of our Board of Directors. +Q: Could other matters be decided at the Annual Meeting? +A: As of the date of this Proxy Statement, we did not know of any matters to be raised at the Annual Meeting other than those referred to in this Proxy Statement. However, if any other matters are presented for consideration at the Annual Meeting including, among other things, consideration of a motion to adjourn the Annual Meeting to another time or place in order to solicit additional proxies in favor of one or more of the proposals, the persons named as proxyholders will have discretion to vote on these matters according to their best judgment to the same extent as the person delivering the proxy would be entitled to vote. +Q: Who is paying for the cost of this proxy solicitation? +A: The solicitation of proxies is made on behalf of our Company and all the expenses of soliciting proxies from stockholders will be borne by our Company. In addition to the solicitation of proxies by use of the mail, officers and regular employees may communicate with stockholders personally or by mail, telephone, or otherwise for the purpose of soliciting such proxies, but in such event no additional compensation will be paid to any such persons for such solicitation. We will reimburse banks, brokers, dealers and other nominees for their reasonable out-of-pocket expenses in forwarding solicitation material to beneficial owners of shares held of record by such persons. The total estimated cost of the solicitation of proxies is approximately $92,000. +Q: What is the deadline to submit stockholder proposals for the 2017 Annual Meeting? +A: We currently anticipate holding our 2017 Annual Meeting of Stockholders in September 2017. Accordingly, notice of any director nomination or other proposal that you intend to present for inclusion in the proxy materials to be distributed in connection with our Annual Meeting of Stockholders to be held in 2017 must be delivered to our corporate headquarters located at 250 Coromar Drive, Goleta, California 93117 no later than the close of business on March 31, 2017. In addition, your notice must satisfy the conditions for such proposals set forth in our Bylaws, which contain requirements with respect to advance notice of director nominations and other stockholder proposals. +Q: How can stockholders nominate a candidate for election as a director? +A: Our Bylaws provide that a stockholder seeking to nominate a candidate for election as a director at an annual meeting of stockholders must provide timely advance written notice. To be timely, a stockholder's notice generally must be received at our corporate headquarters on or before the date 90 days prior to the scheduled date of the annual meeting or, if later, on or before the date seven days after we first publish notice of the annual meeting. +Under our Bylaws, a stockholder's notice of a proposed nomination for director to be made at an annual meeting of stockholders must include the following information: +• +The name and address of the stockholder and any Stockholder Affiliate (as defined in our Bylaws) proposing to make the nomination and of the person or persons to be nominated; +• +The class and number of shares of our Company that are, directly or indirectly, beneficially owned by the stockholder or any Stockholder Affiliate and any derivative positions held or beneficially held by the stockholder or any Stockholder Affiliate and whether and the extent to which any hedging or other transaction or series of transactions has been entered into by or on behalf of, or any other agreement, arrangement or understanding (including, but not limited to, any derivative position, short position, or any borrowing or lending of shares) has been made, the effect or intent of which is to mitigate loss to or manage risk or benefit of share price changes for, or to increase or decrease the voting power of, such stockholder or any Stockholder Affiliate; +• +A representation that the holder is a stockholder entitled to vote his or her shares at the annual meeting and intends to vote his or her shares virtually or by proxy for the person nominated in the notice; +• +A description of all arrangements or understandings between the stockholder(s) or Stockholder Affiliate supporting the nomination and each nominee; +• +Any other information concerning the proposed nominee(s) that our Company would be required to include in the Proxy Statement if our Board of Directors made the nomination; +• +The consent and commitment of the nominee(s) to serve as a director; +6 +Table of Contents +• +For each nominee, a completed and signed questionnaire, in a form provided by our Company upon written request, with respect to the background and qualification of such person being nominated and the background of any other person or entity on whose behalf the nomination is being made; +• +For each nominee, a written representation and agreement, in the form provided by our Company upon written request, with regards to any voting commitments, compensatory arrangements with a third party and compliance requirements applicable to directors of our Company; +• +A description of all agreements, arrangements and understandings between the stockholder and Stockholder Affiliate and any other person, including their names, in connection with the nominee; and +• +Whether the stockholder or any Stockholder Affiliate intends to conduct a proxy solicitation. +The presiding officer of the annual meeting may refuse to acknowledge the nomination of any person not made in compliance with the foregoing procedure. Stockholder nominations submitted in accordance with the requirements of our Bylaws will be forwarded to the Corporate Governance Committee. +Q: How can stockholders propose other actions for consideration? +A: Our Bylaws provide that a stockholder seeking to propose actions at an annual meeting of stockholders (other than nomination of directors) must provide timely advance written notice to our Company. To be timely, a stockholder's notice generally must be received at our principal executive office on or before the date 90 days prior to the scheduled date of the meeting or, if later, on or before the date seven days after we first publish notice of the meeting. +Under our Bylaws, a stockholder's notice of proposed action to be made at an annual meeting of stockholders must include the following information: +• +A brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the meeting; +• +The name and address of the stockholder and any Stockholder Affiliate proposing such business; +• +The class and number of shares of our Company that are, directly or indirectly, beneficially owned by the stockholder and any Stockholder Affiliate; +• +Any derivative positions held or beneficially held by the stockholder and any Stockholder Affiliate, and whether and the extent to which any hedging or other transaction or series of transactions has been entered into by or on behalf of, or any other agreement, arrangement or understanding (including, but not limited to, any derivative position, short position, or any borrowing or lending of shares) has been made, the effect or intent of which is to mitigate loss to or manage risk or benefit of share price changes for, or to increase or decrease the voting power of, such stockholder or any Stockholder Affiliate with respect to our securities; +• +A description of all agreements, arrangements and understandings between such stockholder or any Stockholder Affiliate and any other person or persons (including their names) in connection with the proposal of such business by such stockholder; +• +Any material interest of the stockholder or any Stockholder Affiliate in such business; and +• +Whether the stockholder or any Stockholder Affiliate intends to conduct a proxy solicitation. +Any stockholder providing such notice shall promptly provide any other information that our Company may reasonably request. The presiding officer of the annual meeting may refuse to acknowledge any business not brought before the meeting in compliance with the foregoing procedure. +Q: I share an address with another stockholder, and we received only one paper copy of the proxy materials. How may I obtain an additional copy of the proxy materials? +A: We have adopted a procedure called "householding", which the SEC has approved. Under this procedure, we are delivering a single copy of the Notice and, if applicable, this Proxy Statement and the Annual Report to multiple stockholders who share the same address unless we have received contrary instructions from one or more of the stockholders. This procedure reduces our printing costs, mailing costs and fees. Stockholders who participate in householding will continue to be able to access and receive separate proxy cards. Upon written or oral request, we will promptly deliver a separate copy of the Notice and, if applicable, this Proxy Statement and the Annual Report to any stockholder at a shared address to which we delivered a single copy of any of these documents. To receive a separate copy of the Notice and, if applicable, this Proxy Statement or the Annual Report, or if you wish to receive separate copies in the future, please contact: Deckers Outdoor Corporation, 250 Coromar Drive, Goleta, California 93117, Attention: Corporate Secretary, Telephone: (805) 967-7611. +In addition, if you are currently a stockholder sharing an address with another stockholder and wish to receive only one copy of future proxy materials for your household, please contact us using the contact information set forth above. Stockholders who hold shares in "street name" may contact their bank, broker, dealer or other nominee to request information about householding. +7 +Table of Contents +Q: Where can I find voting results of the Annual Meeting? +A: We will announce preliminary voting results with respect to each proposal at the Annual Meeting. In accordance with SEC rules, final voting results will be published in a Current Report on Form 8-K within four business days following the Annual Meeting, unless final results are not known at that time, in which case preliminary voting results will be published within four business days of the Annual Meeting and final voting results will be published once they are known by our Company. +Q: Whom should I contact with other questions? +A: If you have additional questions about this Proxy Statement or the Annual Meeting, or if you would like additional copies of this Proxy Statement, please contact: Deckers Outdoor Corporation, 250 Coromar Drive, Goleta, California 93117, Attention: Corporate Secretary, Telephone: (805) 967-7611. +Q : Where else can I find proxy materials? +A: This Proxy Statement and the Annual Report are available at www.deckers.com/investors . Information contained on or accessed through our website does not constitute part of this Proxy Statement. You should not consider information contained on or accessed through our website in deciding how to vote your shares. References to our website address in this Proxy Statement are inactive textual references only. +8 +Table of Contents +PROPOSAL NO. 1 +ELECTION OF DIRECTORS +Overview +Our Bylaws provide for the annual election of directors. Our Bylaws also provide that our Board of Directors will consist of not less than one nor more than 10 members. The specific number of members of our Board of Directors within this range is established by our Board of Directors. There are currently 10 members of our Board of Directors. Mr. Powers was appointed to serve as a member of our Board of Directors effective as of June 1, 2016. +At the Annual Meeting, stockholders will be asked to elect 10 directors to serve until the next Annual Meeting of Stockholders to be held in 2017, or until their successors are elected and duly qualified. Proxies cannot be voted for a greater number of persons than the number of nominees named. The names and certain information concerning the persons nominated by our Board of Directors to become directors at the Annual Meeting are set forth below. Each of the proposed nominees currently serves as a member of our Board of Directors. +If all nominees for director are elected then, following the Annual Meeting, our Board of Directors will consist of 10 members, and a majority of our Board of Directors, and all members of each of its standing committees, will continue to be "independent directors" under applicable securities exchange listing rules, as described below. +Agreements with Directors +None of the directors or nominees for director was selected pursuant to any arrangement or understanding, other than with the directors of our Company acting within their capacity as such. +Family Relationships +There are no family relationships among any of these directors, nominees for director or executive officers of our Company. +Director Nominations +The Corporate Governance Committee is responsible for identifying and evaluating nominees for election to our Board of Directors. In addition to the candidates proposed by our Board of Directors or identified by the Corporate Governance Committee, the Committee considers candidates for director proposed by stockholders, provided such recommendations are made in accordance with the procedures set forth in our Bylaws. Please refer to the question titled " How can stockholders nominate a candidate for election as a director? " above. Stockholder nominations that meet the criteria outlined below will receive the same consideration that the Committee's nominees receive. +Director Qualifications +Directors are responsible for overseeing and monitoring our business consistent with their fiduciary duties to our stockholders. This significant responsibility requires highly-skilled individuals with various qualities, attributes, and professional experience. As detailed in the section of this Proxy Statement titled " Nominating Procedures and Criteria " below, our Board of Directors believes that there are both general requirements for service as a member of our Board of Directors that are applicable to all directors, and other specialized characteristics that should be represented on our Board as a whole, but not necessarily by each director. +The names of the nominees for director and certain biographical information about each nominee, including any public company directorships held by such nominee over the last five years, are set forth below. In addition, information about the specific qualifications, attributes and skills of each nominee that led to our Board's conclusion that each nominee should serve as a director of our Company is set forth below. +No Legal Proceedings with Directors +There are no legal proceedings related to any of the directors or director nominees which must be disclosed pursuant to Items 103 and 401(f) of Regulation S-K. +Qualifications for All Directors +Essential criteria for candidates considered by the Corporate Governance Committee include the following: +• +Personal and professional integrity +• +Good business judgment +• +Relevant experience and skills +9 +Table of Contents +• +Ability to be an effective director in conjunction with the full Board of Directors in collectively serving the long-term interests of our stockholders +• +Commitment to devoting sufficient time and energy to diligently performing duties as a director +Diversity Factors Considered for all Director Nominees +The Corporate Governance Committee considers many factors when identifying nominees for director, including diversity with respect to personal characteristics (including race and gender) as well as diversity in the experience and skills that contribute to our Board's performance of its responsibilities in the oversight of our business. However, the Committee has not adopted a formal policy with respect to the consideration of diversity. +Specific Qualifications, Attributes, Skills and Experience to be Represented on our Board of Directors +The Corporate Governance Committee believes that the competencies we seek in our directors should support our strategies for long-term success. Below we identify the key qualifications and skills our directors collectively bring to our Board of Directors, that we believe are important in light of our business and strategic direction. The particular qualifications and skills that our Board of Directors considered in nominating each individual director nominee are included in the directors' individual biographies below. +OUR LONG TERM STRATEGIES +• Elevating product design, fueling innovation and speed to market. +• Connecting with consumers digitally through targeted marketing and robust E-Commerce capabilities. +• Capitalizing on growth opportunities by optimizing new distribution globally. +• Driving efficiencies to streamline the organization and improve operation. +10 +Table of Contents +DIRECTOR NOMINEES +Our director nominees reflect a diversity of skills, backgrounds, ethnicities, gender and qualifications valued by our Board. The range of tenure on our Board brings a variety of perspectives to strategic, financial and operational deliberations. +Our Board of Directors has nominated the following 10 directors for election at the Annual Meeting. Each director nominee currently serves on our Board of Directors. +NAME +AGE +DIRECTOR +SINCE +OCCUPATION +Angel R. Martinez +61 +2005 +Non-Executive Chairman of our Board of Directors +John M. Gibbons +67 +2000 +Lead Independent Director +Karyn O. Barsa +55 +2008 +Corporate Director +Nelson C. Chan +55 +2014 +Corporate Director +Michael F. Devine, III +57 +2011 +Corporate Director +John G. Perenchio +61 +2005 +Corporate Director +David Powers +50 +2016 +Chief Executive Officer and President +James Quinn +64 +2011 +Corporate Director +Lauri M. Shanahan +53 +2011 +Corporate Director +Bonita C. Stewart +59 +2014 +Vice-President, Global Partnerships, Americas at Google, Inc. +The biographies of the director nominees are listed below, along with the specific qualifications, attributes, skills and experience of each director that our Board of Directors considered in nominating the directors. +11 +Table of Contents +ANGEL R. MARTINEZ +Age: 61 +Director Since: 2005 +Non-Executive Chairman of our Board of Directors +Other Directorships: +Tupperware Brands Corporation (NYSE: TUP) +Mr. Martinez retired from his position as Chief Executive Officer, effective May 31, 2016. He had been Chief Executive Officer of our Company since April 2005. Beginning in May 2008, Mr. Martinez served as Chairman of our Board of Directors and continues to serve as our non-executive Chair. Subject to his re-election as a director at the Annual Meeting, Mr. Martinez will remain Chairman of our Board of Directors. He is also acting as a consultant to the Company until May 31, 2017. Mr. Martinez has also served as a director of Tupperware Brands Corporation (NYSE:TUP) since 1998. +Specific Qualifications, Attributes, Skills and Experience +• +Industry Experience - Extensive experience in the footwear industry, including serving as Chief Executive Officer of our Company, and Chief Executive Officer and Vice Chair of Keen, LLC, an outdoor footwear manufacturer. Also served in a variety of positions at Reebok International Ltd. and as Chief Executive Officer and President of The Rockport Company, a subsidiary of Reebok. +• +Entrepreneurial - During his tenure at Keen, LLC, successfully established this incipient brand for future growth. +• +Sales and Marketing Experience - Served as Executive Vice President and Chief Marketing Officer of Reebok International Ltd., a global athletic brand that sells and markets sports and lifestyle products. +• +International Experience - Held key management roles at Reebok International Ltd., Keen LLC and the Company during periods of international expansion. +• +Luxury/Premium Branding Experience - 11 years of experience with the UGG brand, a premier brand in luxurious comfort footwear, handbags, apparel, and cold weather accessories. Participated in the acquisition of the Ralph Lauren Footwear brand, which was managed as a subsidiary of The Rockport Company. +• +Retail Experience and Distribution/Logistics Experience - Owned and operated his own retail stores. While President of The Rockport Company, oversaw retail evolution for the brand, including opening over 50 brand stores. Involved in management of supply chain and distribution channels during his many years of industry experience. +• +Public Company Management Experience - Served as Chief Executive Officer of our Company for 11 years. +• +Risk Oversight Experience - 18 years of experience as a corporate director with risk oversight responsibilities. +JOHN M. GIBBONS +Age: 67 +Director Since: 2000 +Lead Independent Director +Other Directorships: +Other private company +Mr. Gibbons is an independent consultant. He is a director of The Learning Network, Inc. He also served as a director and Chair of the Audit Committee of National Technical Systems, Corp., a provider of integrated testing, certification, quality registration and systems evaluation services, from September 2003 until its acquisition in November 2013. +Specific Qualifications, Attributes, Skills and Experience +• +High Level of Financial Literacy and Experience - Currently serves as a member of The Learning Network, Inc.'s Compensation Committee. He previously served as a member and as Chairman of our Audit Committee. In addition to the positions listed above, from June 2000 to April 2004, Mr. Gibbons was Vice Chair of TMC Communications, Inc., a long distance, data and internet services provider, and was its Chief Executive Officer from June 2001 to April 2003. Mr. Gibbons was also Vice Chair of Assisted Living Corporation, a national provider of assisted living services, from March 2000 to December 2001. +• +Risk Oversight Experience - Extensive experience in risk oversight as a former member and the former Chairman of our Audit Committee and former Chair of the Audit Committee of National Technical Systems, Corp. +• +Industry Experience - 16-year directorship at our Company. +• +Public Company Management Experience - On the board, Chief Executive Officer and Chief Operating Officer of The Learning Network, Inc. Previously employed by The Sports Club Company, which was previously listed on the American Stock Exchange, where he was Chief Executive Officer and a director from July 1999 to February 2000 and was President and Chief Operating Officer from January 1995 to July 1999. +• +Entrepreneurial - Has served in a variety of leadership positions for several companies during periods of expansion. +• +Luxury/Premium Branding Experience - Involved in several different capacities at The Sports Club Company, a company which markets clubs to affluent, health conscious individuals. +12 +Table of Contents +KARYN O. BARSA +Age: 55 +Director Since: 2008 +Board Committees: +Audit +Compensation +Other Directorships: +Performance Sports Group, Ltd. (NYSE: PSG) +Other private company +Ms. Barsa served as Chief Executive Officer of Coyuchi, Inc., a maker of organic cotton bedding, bath and baby products, from April 2009 to May 2013. From February 2008 to April 2009, she served as President and Chief Executive Officer of Investors' Circle, a network of individual and institutional investors focused on sustainable business practices. She serves on the boards of The Directors' Organization Ltd. and Performance Sports Group, Ltd. (NYSE: PSG), and the advisory boards of Embark Stores, Inc., the Winter Sports School and Newpark Capital. +Specific Qualifications, Attributes, Skills and Experience +• +High Level of Financial Literacy and Experience - In addition to the Chief Executive Officer and director positions discussed above, served as Chief Financial Officer of Patagonia, Inc., a specialty outdoor apparel and equipment manufacturer. Also holds a B.A. in Economics from Connecticut College and an MBA from the University of Southern California. +• +Risk Oversight Experience - Serves as a member of the Audit Committee and serves on the board of The Directors' Organization Ltd. and Performance Sports Group, Ltd. +• +Luxury/Premium Branding Experience - In addition to serving as Chief Executive Officer of Coyuchi, Inc., served as Chief Executive Officer of Smith & Hawken, Ltd., a specialty gardening retailer between 1999 and 2001. +• +Industry Experience - Served as Chief Operating Officer and Chief Financial Officer of Patagonia, Inc. when footwear was introduced as a product of the company. +• +Distribution/Logistics Experience - As Chief Executive Officer of Coyuchi, Inc., Chief Executive Officer of Smith & Hawken, Ltd, and Chief Operating Officer of Patagonia, Inc. gained extensive experience in management of supply chain and distribution issues. +• +Sales and Marketing Expertise - Sales teams reported directly to Ms. Barsa in her roles at Patagonia Inc., Smith & Hawken, Ltd and Coyuchi, Inc. Direct sales and marketing experience as Chief Executive Officer of Investors' Circle and founder of HeadStart Custom Helmets. +• +Retail Experience - Executive experience at Patagonia, Inc., Smith & Hawken, Ltd. and Coyuchi, Inc., all companies with an important retail component. +• +Entrepreneurial - Has served in a variety of leadership positions for several companies during periods of expansion, including serving as Chief Executive Officer of Embark Stores, Inc., a start-up pet supplies retailer between May 2007 and February 2008. +NELSON C. CHAN +Age: 55 +Director Since: 2014 +Board Committees: +Audit +Other Directorships: +Outerwall Inc. (NASDAQ: OUTR) +Synaptics, Inc. (NASDAQ: SYNA) +Adesto Technologies (NASDAQ: IOTS) +Other private companies +In December of 2014, Mr. Chan became a director of our Company. Mr. Chan is Chairman of the Board of Directors of Outerwall Inc. (NASDAQ: OUTR). He is also Lead Independent Director of Synaptics, Inc. (NASDAQ: SYNA) and the Lead Independent Director of Adesto Technologies (NASDAQ: IOTS). Mr. Chan is also a director of several privately held companies. From 2006 to 2008, Mr. Chan served as Chief Executive Officer of Magellan Corporation and from 1992 to 2006, he served in various management positions with SanDisk Corporation. Mr. Chan held sales, marketing and engineering positions at several technology-based companies from 1983 to 1992. +Specific Qualifications, Attributes, Skills and Experience +• +Entrepreneurial - Expertise in building technology companies. +• +High Level of Financial Literacy and Experience - Has held numerous senior management positions with other leading companies, including Chief Executive Officer at Magellan Corporation. +• +Public Company Management Experience - Extensive experience with several leading public and private companies, both as an executive and as a board member. +• +Sales/Marketing Experience - Held key sales, marketing and engineering positions at SanDisk Corporation, Chips and Technologies, Signetics and Delco Electronics. +13 +Table of Contents +• +International Experience - Was the Executive Vice President and General Manager, Consumer Business, while at SanDisk Corporation, a global multi-billion dollar company. +• +Risk Oversight Experience - Currently serves as a member of our Audit Committee and has over 9 years of experience as a corporate director with risk oversight responsibilities. +• +Technology (Consumer, Cybersecurity, Big Data, Social) - Extensive experience in technology-based companies including sales, marketing, engineering and directorships. +MICHAEL F. DEVINE, III +Age: 57 +Director Since: 2011 +Board Committees: +Audit +Compensation +Other Directorships: +Express, Inc. (NYSE: EXPR) +FIVE Below, Inc. (NYSE: FIVE) +Other private companies +Mr. Devine retired as Executive Vice President and Chief Financial Officer of Coach, Inc. in 2011. He currently serves as a member of the Board of Directors and Chair of the Audit Committee of Express, Inc. (NYSE: EXPR) and FIVE Below, Inc. (NYSE: FIVE). He also serves as a member of the Board of Directors of two privately held companies, The Talbots Inc. and Sur La Table, Inc. From 2004 to 2007, Mr. Devine served as a member of the Board of Directors and Chair of the Audit Committee of Educate, a leading K-12 education service company with solutions such as Sylvan Learning Center. Mr. Devine also previously served as a member of the Board of Directors and of the Audit Committee of NutriSystem, Inc. +Specific Qualifications, Attributes, Skills and Experience +• +High Level of Financial Literacy and Experience - In addition to Mr. Devine's experiences at Coach, Inc. and as a director, prior to joining Coach, Inc. served as Chief Financial Officer and Vice President-Finance of Mothers Work, Inc. from February 2000 until November 2001. From 1997 to 2000, was Chief Financial Officer of Strategic Distribution, Inc., a Nasdaq-listed industrial store operator. From 1995 to1997, was Chief Financial Officer at Industrial System Associates, Inc., and for the prior 6 years was the Director of Finance and Distribution for McMaster-Carr Supply Co. Holds a Bachelor of Science degree in Finance and Marketing from Boston College and an MBA in Finance from the Wharton School of the University of Pennsylvania. +• +Public Company Management Experience - Experience at Coach, Inc. involved managing a public company during a period of high growth. +• +Risk Oversight Experience - 10 years of experience as a corporate director with risk oversight responsibilities. +• +Luxury/Premium Branding Experience - Coach, Inc. is a leading marketer of modern classic American accessories. +• +Industry Experience - In addition to experience at Coach, Inc., serves as a director of Express, Inc., a nationally recognized specialty apparel and accessory retailer offering both women's and men's merchandise. +• +Distribution/Logistics Experience and Retail Experience - Involved in supply chain and wholesale and retail distribution channels while at Coach, Inc. +• +International Experience - Involved in a global brand with worldwide operations while at Coach, Inc. +JOHN G. PERENCHIO +Age: 61 +Director Since: 2005 +Board Committees: +Compensation +Corporate Governance +Other Directorships: +Other private company +Mr. Perenchio is a private investor. From 1999 until May of 2015, he held controlling interests and was a principal in various music industry companies, involved in the production and sale of recorded music, music publishing and merchandise. Since late 2009, Mr. Perenchio has been involved in Club Ride Apparel, LLC, a privately held start-up sports apparel company in which he owns a controlling interest. +Specific Qualifications, Attributes, Skills and Experience +• +Entrepreneurial - Involved in the formation of a myriad of different successful business enterprises, from music to apparel. From 1990 to 2003, served as an executive with Chartwell Partners, LLC, a family owned boutique investment and holding company specializing in the entertainment, media and real estate industries. +• +Industry Experience - Experience in apparel and has been a director of our Company for 11 years. +• +Sales and Marketing Experience - Experience with designing and implementing marketing and sales plans in the music industry, internet retail, real estate industry and the sports apparel industry. +14 +Table of Contents +• +Risk Oversight Experience - In addition to the director and management experiences discussed above, from 1984 to 1990, served as in-house counsel at Triad Artists, Inc., one of the then premier talent agencies in the world, and prior to that, from 1982 to 1984, he practiced law as an attorney in California. +• +Public Company Management Experience - Member of our Board of Directors since 2005. From 1992 to 2007, Mr. Perenchio was a director of Univision Communications Inc., the leading Spanish-language media company in the United States. +DAVID POWERS +Age: 50 +Director Since: 2016 +Chief Executive Officer and President +Other Directorships: +None +Mr. Powers was appointed Chief Executive Officer of our Company in June 2016 and was also elected to serve as a member of our Board of Directors. Mr. Powers has served as President of Deckers Brands since May 2015. He joined the company in 2012 as President of Direct-to-Consumer. Prior to joining our company, Mr. Powers held several executive leadership roles at Converse Inc., The Timberland Company and Gap Inc. +Specific Qualifications, Attributes, Skills and Experience +• +Industry Experience - Extensive experience in the footwear and apparel industry through a variety of positions at three different footwear companies and a global apparel retailer. +• +Retail Experience and Distribution/Logistics Experience - At Converse Inc., was responsible for global owned and distributor Direct-to-Consumer operations as part of the Nike retail leadership team. During tenure at The Timberland Company and Gap Inc., had leadership roles with a variety of retail responsibilities from merchandising to store design. +• +Sales and Marketing Experience - Graduated cum laude from Northeastern University with a B.S. in Marketing. Throughout career has been responsible for the development of marketing strategy, with a focus on consumer engagement. +• +International Experience - While filling leadership roles at The Timberland Company, Mr. Powers led worldwide retail merchandising, marketing, visual and store design, and oversaw European Retail Operations. +• +Public Company Management Experience - Leadership roles have all been at public companies. During the last year, Mr. Powers served as the Company's President with global responsibilities and oversight. +JAMES QUINN +Age: 64 +Director Since: 2011 +Board Committees: +Corporate Governance +Other Directorships: +Other private company +Mr. Quinn retired as President of Tiffany & Co. (NYSE: TIF) effective January 31, 2012. He was named to Tiffany & Co.'s Board of Directors in 1995 and served until 2008. Mr. Quinn also currently serves as a director of Mutual of America Capital Management, Inc., a privately owned company. +Specific Qualifications, Attributes, Skills and Experience +• +Public Company Management Experience - As the former president of Tiffany & Co., oversaw retail sales in Tiffany stores in more than 50 countries, with responsibility for the company's global expansion strategy, including the significant Tiffany & Co. presence established throughout Asia. Joined Tiffany & Co. in 1986 and held a series of significant positions including Vice Chairman prior to his appointment as President in 2003. +• +Luxury/Premium Branding Experience - Tiffany & Co. is a jeweler and specialty retailer whose principal merchandise offering is fine jewelry. +• +Distribution/Logistics Experience and Retail Experience - At Tiffany & Co., involved in supply chain, retail and other distribution channels. +• +International Experience - While at Tiffany & Co., involved in a global brand with worldwide operations. +• +Risk Oversight Experience - 21 years of experience as a corporate director with risk oversight responsibilities. +15 +Table of Contents +LAURI M. SHANAHAN +Age: 53 +Director Since: 2011 +Board Committees: +Compensation +Other Directorships: +Cedar Fair Entertainment Company (NYSE: FUN) +Other private company +Ms. Shanahan is a seasoned retail executive with over 21 years of senior level experience across global, multi-channel, multi-brand enterprises and other specialty retail and consumer service companies. Ms. Shanahan is also Chairman of the Board and Chair of the Compensation and Management Development Committee of Charlotte Russe Holdings, Inc., a specialty retailer of apparel and accessories with over 500 stores, and is on the Board of Directors and the Nominating and Governance Committee of Cedar Fair Entertainment Company (NYSE: FUN), a publicly traded partnership that owns and operates amusement parks and resorts in North America. In addition, Ms. Shanahan is a principal of Maroon Peak Advisors. +Specific Qualifications, Attributes, Skills and Experience +• +Public Company Management Experience - Joined The Gap Inc. (NYSE: GPS) in 1992 and served for 16 years in numerous leadership roles including Chief Administrative Officer, Chief Legal Officer and corporate secretary. +• +Distribution/Logistics Experience and Retail Experience - Involved in retail and other distribution channels and supply chain while at The Gap Inc. and as a consultant. +• +International Experience— Involved with global brands with worldwide operations while at The Gap Inc. and as a consultant. +• +Industry Experience and Luxury/Premium Branding Experience - Gained experience in footwear, apparel and accessories at The Gap Inc., Charlotte Russe Holdings, Inc. and through consulting business. The Gap Inc. is a leading global specialty retailer offering clothing, footwear, accessories, and personal care products for men, women, children, and babies under the Gap, Banana Republic, Old Navy, Intermix, and Athleta brands. +• +Risk Oversight Experience - In addition to her other leadership roles at The Gap Inc., Ms. Shanahan served as Chief Compliance Officer and Chief Legal Officer where she oversaw the global corporate risk committee as well as the global governance and compliance organization. +BONITA C. STEWART +Age: 59 +Director Since: 2014 +Board Committees: +Corporate Governance +Other Position Held: +Vice President, Global Partnerships, Americas +at Google, Inc. (NASDAQ: GOOG) +In September of 2014, Ms. Stewart became a director of our Company. Ms. Stewart is currently the Vice President, Global Partnerships, Americas at Google, Inc. (NASDAQ: GOOG) and has been with Google, Inc. since 2006. At Google, Inc. she leads strategy, business development and revenue growth plans for large partners using Google, Inc. products. From 2002 to 2006, Ms. Stewart worked for DaimlerChrysler AG where she was Director, Chrysler Group, Interactive Communications and prior to that, Director, Chrysler Brand Communications. Ms. Stewart began her career in 1979 at IBM Corporation where she served in various financial and marketing management positions. Ms. Stewart has an MBA from Harvard Business School. +Specific Qualifications, Attributes, Skills and Experience +• +Industry Experience - Over 25 years of experience in brand management, digital strategy and execution. +• +Financial Literacy and Experience - Leads strategy, business development and revenue growth plans for large partners using Google, Inc. products. +• +Entrepreneurial - Served as President, Chief Operating Officer, and Co-Founder of Nia Enterprises, a web-based company. +• +Sales and Marketing Experience - Sales, marketing, global pricing and online advertising experience. +• +International Experience - Currently the Vice President, Partner Business Solutions, Americas at Google, Inc. and has worked for Chrysler Group and IBM Corporation, which are multi-billion dollar global companies. +• +Public Company Management Experience - Strategic planning, operational large scale (multi-billion). 10-year management career at IBM Corporation. +• +Technology (Consumer, Cybersecurity, Big Data, Social) - Extensive experience in technology-based companies including sales, marketing, digital strategy and execution, online advertising and global pricing. +16 +Table of Contents +Summary of Qualifications of Director Nominees +The table below summarizes the specific qualifications, attributes, skills and experience of each director nominee that led our Board of Directors to conclude that the nominee is qualified to serve on our Board of Directors. While each director nominee is generally knowledgeable in each of these areas, an "X" in the chart below indicates that the item is a specific qualification, attribute, skill or experience that the nominee brings to our Board of Directors. The lack of an "X" for a particular item does not mean that the nominee does not possess that qualification, attribute, skill or experience. +SUMMARY OF DIRECTOR SKILLS AND QUALIFICATIONS +Angel R. +Martinez +John M. +Gibbons +Karyn O. +Barsa +Nelson C. +Chan +Michael F. +Devine, III +John G. +Perenchio +David Powers +James +Quinn +Lauri M. +Shanahan +Bonita C. +Stewart +Luxury/Premium Branding Experience +X +X +X +X +X +X +X +Entrepreneurial +X +X +X +X +X +X +Distribution/Logistics Experience +X +X +X +X +X +X +Retail Experience +X +X +X +X +X +X +Sales and Marketing Experience +X +X +X +X +X +X +X +High Level of Financial Literacy and Experience +X +X +X +X +X +International Experience +X +X +X +X +X +X +X +Public Company Management Experience +X +X +X +X +X +X +X +X +X +Industry Experience (Footwear, Apparel and Accessories) +X +X +X +X +X +X +X +X +Risk Oversight Experience +X +X +X +X +X +X +X +X +Technology (Consumer, Cybersecurity, Big Data, Social) +X +X +Consent to Serve +Although each of the persons named above has consented to serve as a director if elected, and our Board of Directors has no reason to believe that any of the nominees will be unable or unwilling to serve as a director, if any nominee withdraws or otherwise becomes unavailable to serve, our Board of Directors may reduce the number of directors fixed by our Bylaws, or the proxies may be voted for the election of such other person as a director as our Board of Directors may recommend in place of the nominee. +Required Vote +Our Board of Directors has adopted a majority voting standard for uncontested director elections. Each director nominee will be elected by a majority of the votes cast at the Annual Meeting. +BOARD RECOMMENDATION +OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE +"FOR" +THE ELECTION OF EACH OF THE DIRECTOR NOMINEES. +17 +Table of Contents +CORPORATE GOVERNANCE +Corporate Governance at Deckers +Corporate governance is managed under the direction of our Board of Directors. Our Board of Directors has a long-standing commitment to comprehensive and effective corporate governance practices. Our Board of Directors continues to evaluate our governance policies and procedures to ensure that the right mix of individuals are present in our boardroom and to best serve our stockholders by ensuring effective oversight of our strategy and management. Our Board of Directors has adopted Corporate Governance Guidelines that set forth the primary framework of governance principles applicable to our Company. A copy of our Corporate Governance Guidelines is available on our website at www.deckers.com/investors . +Corporate Governance Highlights +Our Board of Directors is committed to maintaining the highest standards of corporate governance and has established a strong framework by which our Company is governed. Highlights include: +OUR POLICY OR PRACTICE +DESCRIPTION AND BENEFIT TO OUR STOCKHOLDERS +STOCKHOLDER RIGHTS +Annual Election of Directors +• Our directors are elected annually, reinforcing their accountability to our stockholders. +Single Class of Outstanding Voting Stock +• Our common stockholders control our Company, with equal voting rights. +Majority Voting Standard +• We have a majority voting standard for uncontested director elections. +BOARD STRUCTURE +Director Independence +• Based on the director independence requirements set forth in our Corporate Governance Guidelines, as well as in the applicable NYSE and SEC rules, our Board of Directors has determined that each of our directors, other than Mr. Martinez and Mr. Powers, is an "independent director". +Lead Independent Director +• We have appointed a Lead Independent Director to perform defined duties, such as discussing and approving Board meeting agendas and communicating with major stockholders, as needed. +Committee Governance +• Our three Board Committees: Audit, Compensation and Corporate Governance, consist exclusively of independent directors and have adopted written charters. Committee composition and charters are reviewed annually by our Board. +Board Leadership and Structure +• Our Company previously had one person serving as both our Chief Executive Officer and Chairman of our Board of Directors. The roles were recently separated when Mr. Powers was appointed Chief Executive Officer. Mr. Martinez, our former Chief Executive Officer, continues to serve as non-executive Chairman of our Board of Directors. We also have a Lead Independent Director, as discussed above. We believe this is the most appropriate structure at this time. +Annual Board Self-Evaluations +• Our Corporate Governance Committee conducts and oversees annual self-evaluations of our Board, and of each Board Committee, to ensure that they continue to serve the best interests of our stockholders. +Board Oversight of Risk +• Directors are generally responsible for risk management activities, but have delegated the oversight of risk management to our Audit Committee. Our full Board of Directors regularly engages in discussions of the most significant risks we face and how these risks are managed. +EXECUTIVE COMPENSATION +Annual Say-on-Pay Vote +• Annually, our stockholders have the opportunity to approve, on a non-binding advisory basis, the compensation of our Named Executive Officers, which we sometimes refer to as our Say-on-Pay Vote. +18 +Table of Contents +Corporate Governance Principles +Pursuant to Delaware law and our Bylaws, our business, property and affairs are managed under the direction of our Board of Directors. Thus, our Board of Directors is the ultimate decision-making body of our Company, except with respect to those matters reserved to the stockholders. +Our Board of Directors selects the senior management team, which is charged with the day-to-day operations of our business. Members of our Board of Directors are kept informed of our business through discussions with our Chief Executive Officer and other senior management personnel, including by attending brand sales meetings and industry events, by reviewing materials requested by them or otherwise provided to them, and by participating in periodic informal telephonic meetings, as well as formal meetings of our Board of Directors and its committees. Having selected the senior management team, our Board of Directors acts as an advisor and counselor to senior management, monitors its performance and proposes or makes changes to the senior management team when it deems necessary or appropriate. +Board of Directors Meetings +For fiscal year 2016, each of the directors attended at least 75% of the meetings of our Board of Directors and the meetings of the committees of our Board on which he or she served. Time is scheduled for our independent directors to meet in an executive session at every Board meeting. Our Lead Independent Director presided at these executive sessions. +Our Corporate Governance Guidelines state that directors are expected to attend each of our annual meetings of stockholders. The majority of the members of the then Board of Directors attended the 2015 Annual Meeting of Stockholders held in September 2015. +Director Independence +Our Corporate Governance Guidelines require that our Board of Directors be comprised of a majority of directors who satisfy the criteria for independence under NYSE rules. These guidelines help ensure that the interests of our Board of Directors and management are aligned with the interests of our stockholders, and that we are in compliance with applicable securities exchange rules and regulatory requirements. An independent director is one who meets the strict independence requirements of the NYSE and who our Board affirmatively determines has no material relationship with our Company, directly or indirectly, as a partner, stockholder or officer of an entity with which our Company has a relationship. +Based on the director independence requirements set forth in our Corporate Governance Guidelines, as well as in the applicable NYSE rules, our Board of Directors has determined that each of our directors, other than Mr. Martinez and Mr. Powers, is an "independent director". +Independent Directors +John M. Gibbons +Karyn O. Barsa +Nelson C. Chan +Michael F. Devine, III +John G. Perenchio +James Quinn +Lauri M. Shanahan +Bonita C. Stewart +Board Leadership Structure and Lead Independent Director +We employed a leadership structure utilizing a combined Chairman of the Board of Directors and Chief Executive Officer, together with a strong Lead Independent Director for many years. The Board believes it is important to maintain flexibility in its Board leadership structure, depending on the Company's needs at the time, but also firmly supports having an "independent director" in a Board leadership position at all times. Recently, we separated the Chairman of the Board of Directors and Chief Executive Officer roles due to the appointment of Mr. Powers as Chief Executive Officer and the retirement of Mr. Martinez, our former Chief Executive Officer. Mr. Martinez continues to serve as non-executive Chairman of our Board of Directors. This allows our Chief Executive Officer to focus on the day-to-day operation and management of our Company, while allowing our Chairman to focus on leading the Board in overseeing the interests of the Company and its stockholders. +Our Lead Independent Director has important duties in and outside of the boardroom to ensure effective and independent oversight of Board decision making. The Lead Independent Director serves in a lead capacity to coordinate the activities of the other non-employee directors, to help facilitate communication between the board and management and to perform other duties +19 +Table of Contents +and functions as directed by the board from time to time. Mr. Gibbons currently serves as our Lead Independent Director. Our Corporate Governance Guidelines describe these duties, which outline clear responsibilities to ensure independent oversight of our Board, as summarized below. +LEAD INDEPENDENT DIRECTOR +• Coordinates the scheduling and preparation of agendas for the executive sessions of our Board and other meetings of our Board in the absence of the Chairman of our Board. +• Chairs executive sessions of our Board and other meetings of our Board, in the absence of the Chairman of our Board. +• Approves information sent to our Board. +• Serves as a liaison between the Chairman of our Board and the other independent directors. +• Approves meeting agendas and meeting schedules of our Board to assure that there is sufficient time for discussion of all agenda items. +• If requested by major stockholders, consults and directly communicates with stockholders. +• Has the authority to call meetings of the independent directors. +• Pursuant to the direction of the Corporate Governance Committee, oversees evaluation of the Chairman of our Board. +Current Lead Independent Director: +John M. Gibbons +Executive Sessions Led in Fiscal Year 2016: 6 +The Lead Independent Director is selected by the independent directors to serve a two-year term. +Board Committees +Our Board of Directors has three committees: the Audit Committee, the Compensation Committee and the Corporate Governance Committee. Each member of each of the committees is an "independent director" for purposes of the applicable NYSE and SEC rules. Each of our committees has a written charter that describes its purpose, membership, meeting structure and responsibilities. A copy of each committee's charter is available on our website at www.deckers.com/investors. These charters are reviewed annually by each committee, with any recommended changes approved by our Board. The charters were last amended in September 2014. +The primary responsibilities, membership and meeting information for the three committees of our Board are listed below: +AUDIT COMMITTEE +• Oversees management's conduct of, and the integrity of, our financial reporting to any governmental or regulatory body, stockholders, other uses of Company financial reports and the public. +• Oversees the qualifications, engagement, compensation, independence and performance of the registered public accounting firm that audits the annual financial statements of our Company and reviews the quarterly reportings and any other registered public accounting firm engaged to prepare or issue an audit report or to perform other audit, review or attest services for our Company. +• Oversees our legal and regulatory compliance. +• Oversees the performance of our internal audit function. +• Oversees the application of our related person transaction policy as established by our Board of Directors. +• Oversees our systems of internal control over financial reporting and disclosure controls and procedures. +• Oversees the application of our code of business conduct and ethics as established by our Board of Directors. +Members: +Michael F. Devine, III (Chair) +Karyn O. Barsa +Nelson C. Chan +Meetings in Fiscal Year 2016 : 8 +All members of the Audit Committee meet the independence and experience standards required by the NYSE and the SEC. +Ms. Barsa, Mr. Chan and Mr. Devine have been determined by our Board to be "audit committee financial experts", per SEC regulations. +20 +Table of Contents +COMPENSATION COMMITTEE +• Oversees design of our executive compensation programs. +• Reviews and approves Company and individual goals and objectives relevant to compensation of our Executive Officers. +• Evaluates the performance of our Executive Officers in light of those goals and objectives. +• Determines and approves the compensation level of our Executive Officers based on this evaluation, including each element of compensation. +• Makes recommendations to our Board of Directors regarding any action that is required by law or regulation to be submitted to our stockholders for approval with respect to incentive-compensation plans and equity-based plans. +• Administers the Company's equity-based plan, and approves or delegates authority to approve individual award grants under those plans or recommends award grants to our Board for approval. +• Produces an annual report on executive compensation for inclusion in our Company's annual report or proxy statement for our annual meeting of stockholders. +Members: +Lauri M. Shanahan (Chair) +Karyn O. Barsa +Michael F. Devine, III +John G. Perenchio +Meetings in Fiscal Year 2016: 8 +All members of the Compensation Committee meet the independence standards required by the NYSE and the SEC. +CORPORATE GOVERNANCE COMMITTEE +• Develops and recommends to our Board of Directors a set of Corporate Governance Guidelines applicable to our Company. +• Identifies individuals qualified to become directors, consistent with criteria specified in the Corporate Governance Guidelines. +• Recommends to our Board of Directors the qualified director nominees to be selected by our Board. +• Recommends to our Board of Directors membership of our Board committees. +• Ensures that our Certificate of Incorporation and Bylaws are structured in a manner that best serves our practices and objectives and recommends to our Board of Directors amendments for consideration by our Board and/or our stockholders, as appropriate. +• Oversees the evaluation of management, our Board and Board committees. +• Oversees and approves the management continuity planning process. +• Reviews and evaluates the development and succession plan relating to the Chief Executive Officer and our Company's other executive officers. +Members: +James Quinn (Chair) +John G. Perenchio +Bonita C. Stewart +Meetings in Fiscal Year 2016: 4 +All members of the Corporate Governance Committee meet the independence standards required by the NYSE. +Nominating Procedures and Criteria +Among its functions, the Corporate Governance Committee considers and approves nominees for election to our Board of Directors. In addition to the candidates proposed by our Board of Directors or identified by the Corporate Governance Committee, the Committee considers candidates for director proposed by our stockholders, provided such recommendations are made in accordance with the procedures set forth in our Bylaws and described in the question titled " How can stockholders nominate a candidate for election as a director? " above. Stockholder nominations that meet the criteria outlined below will receive the same consideration as the Corporate Governance Committee's nominees. +Essential criteria for all candidates considered by the Corporate Governance Committee are discussed in the section of this Proxy Statement titled "Qualifications for All Directors". In evaluating candidates for certain Board positions, the Committee also evaluates additional criteria, as reflected in the section of this Proxy Statement titled "Specific Qualifications, Attributes, Skills and Experience to be Represented on our Board of Directors". +In selecting nominees for our Board of Directors, the Corporate Governance Committee evaluates the general criteria set forth above, identifies the specialized criteria for which the Committee has determined there is a need, and considers the candidate's ability to contribute to the success of our Company. In evaluating an existing director for re-election, the Corporate Governance Committee considers a variety of factors, including attendance at Board of Directors and committee meetings, previous performance, length of service on our Board of Directors, experience, skills and contributions brought to our Board of Directors, and independence. +The Board of Directors' nominees for the Annual Meeting have been recommended by the Corporate Governance Committee, as well as our full Board of Directors. +As of the date of this Proxy Statement, our stockholders had not proposed any candidates for election at the Annual Meeting. +21 +Table of Contents +Management Succession +Our Corporate Governance Committee, pursuant to its charter, is responsible for overseeing the management continuity planning process. As part of that responsibility, the Committee reviews and evaluates the development and succession plan relating to the Chief Executive Officer and our Company's other executive officers. +Pursuant to our Corporate Governance Guidelines, the Corporate Governance Committee provides an annual report to our Board of Directors on emergency and expected Chief Executive Officer succession planning. Through this process, our Board of Directors works with the Committee to nominate and evaluate potential successors to the Chief Executive Officer. The Chief Executive Officer provides the Corporate Governance Committee with recommendations and evaluations of potential successors, along with a review of any development plans recommended for such individuals. +The Corporate Governance Committee regularly considers the competencies necessary for our Chief Executive Officer to support our strategies for long-term success. In light of our required Chief Executive Officer competencies and the particular skills possessed by Mr. Powers as evaluated by the Committee, the Committee recommended to the Board of Directors that Mr. Powers be elevated to the role of Chief Executive Officer following the retirement of Mr. Martinez. +Board Role in Risk Oversight +While risk management is primarily the responsibility of our management, our Board of Directors is responsible for the overall supervision of our business, an important element of which is supervision of our risk management activities. Our Board of Directors delegates many of these functions to the Audit Committee. Under its charter, the Audit Committee is responsible for: +• +reviewing and discussing with management, the highest ranking manager of internal audit and the independent registered public accounting firm our financial risk exposures and assessing the policies and processes management has implemented to monitor and control such exposure; +• +assisting our Board in fulfilling its oversight responsibilities regarding our policies and processes with respect to risk assessment and risk management, including any significant non-financial risk exposures; +• +reviewing our annual disclosures concerning the role of our Board in the risk oversight of our Company, such as how our Board administers its oversight function; and +• +overseeing our internal audit function. +In addition to the Audit Committee's work in overseeing risk management, our full Board of Directors regularly engages in discussions of the most significant risks that we face and how these risks are being managed, and our Board receives reports on risk management from the Chairman of our Audit Committee. +Our legal and internal audit executives report directly to the Audit Committee regarding material risks to our business, among other matters, and the Audit Committee meets in executive sessions with the internal audit executive and with representatives of our independent registered public accounting firm. The Chairman of our Audit Committee reports to the full Board of Directors regarding material risks as deemed appropriate. Every Board meeting agenda provides for a discussion of risk management. In addition to the responsibilities undertaken by the Audit Committee, the other Board committees have oversight of specific risk areas, consistent with the committees' charters and responsibilities. For example, the Compensation Committee oversees the design of our executive compensation program so as to mitigate compensation-related risk and our Corporate Governance Committee develops our Corporate Governance Guidelines to establish appropriate governance practices. +Compensation Committee Interlocks and Insider Participation +As of the date of this Proxy Statement, no member of the Compensation Committee is serving, and during the past year no member of the Compensation Committee has served, as an officer or employee of our Company or any of its subsidiaries. None of these members had any relationship with our Company during 2016 requiring disclosure under Item 404 of Regulation S-K. None of our executive officers currently serves, or in the past year has served, as a member of our Board of Directors, or compensation committee (or other committee serving a similar purpose) of any entity that has an executive officer serving on our Board of Directors or Compensation Committee. We have entered into an indemnification agreement with each of our directors, including each member of the Compensation Committee. +Communications with Directors +Stockholders and other interested parties may communicate with the Chairman of our Board, the Chairman of any Board Committee, or with our independent directors as a group, by writing to any such person or group. Communications should be sent to the following address: +Deckers Outdoor Corporation +Attn: Corporate Secretary +250 Coromar Drive +Goleta, California 93117 +22 +Table of Contents +Communications are distributed to our Board of Directors, or to any individual director, depending on the facts and circumstances described in the communication. In that regard, our Board of Directors has requested that certain items that are unrelated to the duties and responsibilities of our Board of Directors should be excluded, including the following: junk mail and mass mailings, product complaints, product inquiries, new product suggestions, resumes and other forms of job inquiries, surveys, and business solicitations or advertisements. In addition, material that is unduly hostile, threatening, illegal or similarly unsuitable will not be distributed, except that any communication that is not distributed will be made available to any director upon request. +Code of Ethics and Accounting and Finance Code of Ethics +We have adopted a Code of Ethics to assist our officers, directors and other employees in complying with the law and maintaining the highest standards of ethical conduct. All of our officers, directors and employees must carry out their duties in accordance with the policies set forth in the Code of Ethics and with applicable laws and regulations. The Code of Ethics complies with the requirements set forth in applicable NYSE rules. +Our Board has also adopted an Accounting and Finance Code of Ethics which focuses on the financial reporting process and applies to our Chief Executive Officer, Chief Financial Officer and Corporate Controller (and other officers serving similar functions) and is intended to qualify as a "code of ethics" within the meaning of Section 406 of the Sarbanes-Oxley Act of 2002 and the rules promulgated thereunder. +To the extent required by law, any amendments to or waivers from, any provision of the Code of Ethics or the Accounting and Finance Code of Ethics will be promptly disclosed publicly on our corporate website. +Our Code of Ethics and our Accounting and Finance Code of Ethics are available on our website at www.deckers.com/investors . +23 +Table of Contents +STOCKHOLDER ENGAGEMENT +Our Company is committed to open and interactive dialogue with our stockholders. We believe that stockholders have important views and insights into Company operations, and we actively ensure stockholders' views are heard and considered by our Board of Directors. +While our Board of Directors has a fiduciary responsibility to our stockholders and represents their interests, our management team is primarily responsible for investor relations. During fiscal year 2016, management, including when appropriate the Board of Directors, met and engaged with many of our larger investors. The topics discussed with investors included our Company strategy and performance, capital allocation, corporate governance, executive compensation, stockholder performance, and social and environmental issues. Our management team provides regular updates to our Board of Directors regarding stockholder feedback on these topics. +24 +Table of Contents +EXECUTIVE OFFICERS +EXECUTIVE OFFICER +AGE +POSITION +David Powers +50 +Chief Executive Officer and President +Thomas A. George +60 +Chief Financial Officer +David E. Lafitte +52 +Chief Operating Officer +Stefano Caroti +53 +President of Omni-Channel +Andrea O'Donnell +47 +President of Fashion Lifestyle +Each of our executive officers serves at the discretion of our Board of Directors. Biographical information for our executive officers as of the date of this Proxy Statement is set forth below. There are no family relationships between any executive officer and any other executive officer, director or director nominee. None of our executive officers were selected pursuant to any arrangement or understanding, other than with the executive officers of our Company acting within their capacities as such. There are no legal proceedings related to any of the executive officers which must be disclosed pursuant to Items 103 and 401(f) of Regulation S-K. +DAVID POWERS +Mr. Powers was appointed Chief Executive Officer in June 2016. He has served as President of Deckers Brands since May 2015. He joined our Company in 2012 as President of Direct-to-Consumer. Mr. Powers has over 20 years of experience in merchandising, product and marketing development, and leading global Direct-to-Consumer operations and wholesale businesses. Prior to joining the Company, Mr. Powers served 4 years as Vice President of Global Direct-to-Consumer at Converse Inc. where he oversaw owned and distributor Direct-to-Consumer as part of the Nike retail leadership team. Mr. Powers also held several executive leadership roles at The Timberland Company, including Worldwide General Merchandising Manager and Senior Director European Retail, where he led worldwide retail merchandising, marketing, visual and store design, and oversaw European Retail Operations. Prior to this, Mr. Powers spent 10 years at Gap Inc. where he held multiple senior management titles, including Global Divisional Merchandise Manager for the boy's division. Mr. Powers graduated cum laude from Northeastern University with a B.S. in Marketing. +THOMAS A. GEORGE +Mr. George has been our Chief Financial Officer since September 2009. He has over 32 years of experience in corporate finance and accounting, having served in a number of senior level positions with both public and private companies. From February 2005 to September 2009, Mr. George was Chief Financial Officer of Ophthonix, Inc., a private technology company. Prior to Ophthonix, Inc., from October 1997 to February 2005, Mr. George was the Chief Financial Officer of Oakley, Inc., now a division of Luxottica Group S.p.A., a publicly held global consumer products brand with wholesale and retail distribution of multiple product categories including sunglasses and prescription eyewear, apparel, footwear, watches and electronics. Prior to Oakley, Inc., from December 1987 to October 1997, Mr. George was the Senior Vice President and Chief Financial Officer of REMEC, Inc., a public technology company. Mr. George has also served as Corporate Controller and Manager of Financial Planning for other public technology firms. He began his career at Coopers & Lybrand, where he became a Certified Public Accountant. He received a B.S. in Business Administration from the University of Southern California. +DAVID E. LAFITTE +Mr. Lafitte was appointed Chief Operating Officer in February 2015. From 2012 to January 2015, he was outside General Counsel for our Company. Prior to joining our Company, Mr. Lafitte was a shareholder with the law firm Stradling Yocca Carlson & Rauth, P.C. where he was a member of the firm's board of directors and executive committee, and had been advising our Company since 2006. He received, a J.D. from Tulane University and a B.A. from the University of Colorado. +STEFANO CAROTI +Mr. Caroti joined us in November 2015 as President of Omni-Channel. He has over 20 years of industry experience in sales, account management, product marketing, business strategy and brand management. Prior to joining our Company, Mr. Caroti was the Chief Commercial Officer at PUMA, from August 2008 to December 2014, where he was responsible for PUMA's wholesale and retail functions. He held a number of senior executive positions at Nike in sales, product, marketing and general management and during his term as Vice President of EMEA Commerce, he was responsible for the entire wholesale and retail business in the EMEA region. +25 +Table of Contents +ANDREA O'DONNELL +Ms. O'Donnell was appointed President of Fashion Lifestyle in April 2015. Ms. O'Donnell is an accomplished leader with over 20 years in the retail industry and well versed at operating in complex international markets. She has a background in strategic planning, merchandising, marketing, experience in emerging markets and customer relationship management. Over the course of her career, she has held leadership positions with prominent international retailers. Ms. O'Donnell was with DFS Group Limited prior to joining our Company, where she served as President of Global Merchandising. From 2012 to 2014 she was with Lane Crawford, where she was responsible for Merchandising, Marketing, CRM and store planning across the Asia Pacific Region. She was the Commercial Director at John Lewis from April 2004 to August 2012, responsible for online sales and strategy for Omni-Channel. She was the Merchandising Planning Director at Hacket London from September 2002 to April 2004 and prior to that was Head of Merchandising Planning at Jaeger and Debenhams. She holds an Executive MBA from the London School of Business. +26 +Table of Contents +COMPENSATION DISCUSSION AND ANALYSIS +In this section we discuss and analyze the compensation programs applicable to our principal executive officer, principal financial officer, and our three other most highly compensated executive officers, which we refer to as our Named Executive Officers, for fiscal year 2016. The Compensation Committee, which we refer to as the Committee for purposes of this Compensation Discussion and Analysis, is responsible for the compensation of our Named Executive Officers. This section is divided into the following five parts: +EXECUTIVE SUMMARY +COMPENSATION PHILOSOPHY AND OBJECTIVES +COMPENSATION CONSULTANT AND PEER GROUP +ELEMENTS OF FISCAL YEAR 2016 EXECUTIVE COMPENSATION PROGRAM +OTHER COMPENSATION CONSIDERATIONS +NAMED EXECUTIVE OFFICERS +Angel R. Martinez +Current Role : Non-Executive Chairman of our Board of Directors +Role During Fiscal Year 2016 : Chairman of our Board of Directors and Chief Executive Officer +Mr. Martinez was appointed Chief Executive Officer in 2005 and retired from that position in May 2016. Beginning in 2008, Mr. Martinez served as Chairman of our Board of Directors and continues to serve as non-executive Chair. +David Powers +Current Role : Chief Executive Officer and President +Role During Fiscal Year 2016 : President +Mr. Powers assumed the role of Chief Executive Officer in June 2016, in addition to his role as our President. In March 2015 he was appointed President. Mr. Powers joined us as President of Direct-to-Consumer in August 2012. +Thomas A. George +Chief Financial Officer +Mr. George joined our Company in September 2009 and continues to serve as Chief Financial Officer. +27 +Table of Contents +David E. Lafitte +Chief Operating Officer +Mr. Lafitte was appointed Chief Operating Officer in February 2015, after serving as our outside General Counsel since September 2011. +Stefano Caroti +President of Omni-Channel +Mr. Caroti joined us in November 2015 as President of Omni-Channel. +28 +Table of Contents +EXECUTIVE SUMMARY +The 2016 Fiscal Year in Review +Our results for fiscal year 2016 were challenged by record warm weather across the globe and store traffic declines across retail. While these issues have created lingering headwinds for the industry, our Company has responded by making several changes to drive long term value and improve our competitiveness. This included adding new leadership within our brands and to our Omni-Channel division, streamlining and restructuring our brands to create operating efficiencies and synergies, improving our retail store footprint, and aligning our Company to improve the consumer experience. Our aggressive response resulted in restructuring charges of $24.7 million and other charges of $8.9 million. In light of our fiscal year 2016 results and our strong pay-for-performance compensation program: +• +No amounts were earned by our Named Executive Officers under our Cash Incentive Award in fiscal year 2016; +• +2016 NSU Equity Incentive Plan Awards were not earned; and +• +2016 LTIP Equity Incentive Awards are not expected to be earned as of March 31, 2016. +FISCAL YEAR 2016 REVIEW +• Our net sales increased 3.2% to a record $1.8752 billion. Domestic net sales increased 4.7% to $1.2197 billion. International net sales increased 0.6% to $655.5 million. +• Our diluted EPS was $3.70 compared to $4.66 last year. Excluding restructuring and other charges incurred during the year, our non-GAAP EPS was $4.50. +• Our gross margin was 45.2% compared to 48.3% last year. +• Our Direct-to-Consumer sales increased 4.4% to $644.3 compared to $617.4 million last year. +• Our 5-year total shareholder return, or TSR, from December 31, 2010 to March 31, 2016 was negative 25%. +• Wholesale and distributor net sales increased 2.6% to $1.2309 billion compared to $1.1997 billion last year. +• To position our Company for the future, we streamlined and restructured our brands, brought in new brand and Omni-Channel leadership, and established new infrastructure. +• We incurred restructuring charges of $24.7 million related to retail store closures, office consolidations and software impairments, and other charges of $8.9 million from inventory write-downs, asset impairment charges and compensation related expenses. +Our performance over the past three fiscal years is illustrated by the financial metrics in the graphs below. For fiscal year 2013, this information is for the 12-month period ending December 31. For fiscal year 2015 and fiscal year 2016, this information is for the 12-month period ending March 31, reflecting the change in our fiscal year effected in 2014. The financial metrics below are used as the performance metrics for our annual Cash Incentive Plan and our NSU and LTIP Equity Incentive Awards. +___________ +* Annual Diluted Earnings Per Share, Non-GAAP - $4.50 +29 +Table of Contents +30 +Table of Contents +We Pay for Performance +Our executive compensation program is designed to pay for performance and directly align our leadership team with the best interests of our stockholders. For fiscal year 2016, we did not achieve our performance goals as established by the Compensation Committee and therefore, the compensation paid to our NEOs reflects this, including as follows: +PROGRAM ELEMENT +PERFORMANCE CRITERIA +2016 PAY FOR PERFORMANCE RESULTS +Base Salary +• Set annually based on past performance, competitive pay data, and scope of responsibilities. +• Mr. Powers received a base salary increase in connection with his promotion to President. +• Mr. George received a base salary increase to align with peers and market. +Annual Cash Incentive +• Combination of fiscal year 2016 EBITDA and Revenue targets and other business unit financial performance goals. +• EBITDA gate was not achieved and therefore no cash incentive payments made. +NSU Equity Incentive +• Diluted EPS performance measured for fiscal year 2016, followed by time-based vesting over three additional years. +• Performance target was not met, therefore NSUs were not earned. +LTIP Equity Incentive +• Revenue and EBITDA targets based on a three-year long-range plan. +• These long-term awards may be earned based on fiscal year 2018 performance. +• The grant date fair value of the 2016 LTIP Awards shown in the Summary Compensation Table reflects payout at the target 100% level based on the achievement probability determined at grant date. +• However, as of March 31, 2016 the performance conditions related to the 2016 LTIP Awards are not probable of being achieved and therefore the awards are not expected to be earned. +Time-Based RSUs +• Awards granted generally for select new hires and promotions as deemed necessary and appropriate. +• Only Mr. Caroti received a one time new hire award. No additional awards were granted. +Chief Executive Officer Realized Pay +Due to the strong pay-for-performance philosophy of our compensation program, the amount of pay realized by our Chief Executive Officer at payout is not necessarily equal to, and may be significantly less than, his targeted compensation. This is due to the large portion of his compensation that is "at-risk" and in particular due to the use of our Annual Cash Incentive, NSU Equity Incentives and LTIP Equity Incentives which only result in value to him if pre-established financial and operating performance goals are achieved. +The following graph illustrates the strong alignment between our Chief Executive Officer's realized pay and the Company's stock price during the last three fiscal years. For example, in fiscal year 2016 the one-year decrease in stock price from March 31, 2015 to March 31, 2016 was 17.8%. For the same period, the Chief Executive Officer's realized pay was 83.2% less than his targeted pay. +Furthermore, our compensation structure is intentionally designed so that a large portion of our Chief Executive Officer's realized pay will be determined by our future long-term performance. Accordingly in the table below, a large portion of his realized pay is valued taking into account the probability of achieving the relevant performance targets as of March 31, 2016; but this is only a starting point and is not necessarily indicative of the pay that he will actually realize. All of his equity-based compensation vests, if at all, over long periods, precluding its immediate realization at the grant date and correlating its realizable value to future stock performance. +31 +Table of Contents +____________ +(1) +For each year, Realized Pay includes the following: Base Salary actually paid, Annual Cash Incentive Award actually paid, All Other Compensation actually paid, and for the Equity Incentive Awards as follows: +• +2013 Equity Value: +• +2013 NSUs: (i) 9,333 shares vested on December 15, 2014 at a price of $95.49, (ii) 9,334 shares vested on December 15, 2015 at a price of $49.74, plus (iii) 9,333 earned but unvested shares at a price of $59.91. +• +2013 LTIP: As of March 31, 2016 the 2013 LTIP was not earned and therefore is not included above. +• +2015 Equity Value: +• +2015 NSUs, which were earned at 88.9% of target, are included above as follows: (i) 5,511 shares vested on March 31, 2016 at a price of $59.91, and (ii) 11,021 earned but unvested shares at a price of $59.91. +• +2015 LTIP, is not deemed probable to vest as of March 31, 2016 and therefore is not included above. +• +2016 Equity Value: +• +2016 NSUs, were not earned and therefore are not included above. +• +2016 LTIP, is not deemed probable to vest as of March 31, 2016 and therefore is not included above. +The graph excludes Target Pay and Realized Pay in the amount of $302,333, for the 2014 Transition Period. +(2) +Stock Price at fiscal year end is determined as of the last day of the fiscal year end for each year which was December 31, 2013, March 31, 2015 and March 31, 2016. +Specific examples over the last three fiscal years of how our pay-for-performance relationship resulted in less than target payouts for our Chief Executive Officer include: +FISCAL YEAR 2016 +FISCAL YEAR 2015 +FISCAL YEAR 2013 +• 2016 Annual Cash Incentive Plan did not payout any amounts. +• 2015 Annual Cash Incentive Plan earned at only 78.2% of target. +• 2013 LTIP Equity Incentive Awards are not expected to be earned. +• 2016 NSU Equity Incentive Awards were not earned. +• 2015 NSU Equity Incentive Awards earned at only 88.9% of target. +• 2016 LTIP Equity Incentive Awards are not expected to be earned. +32 +Table of Contents +We Have Adopted Other Compensation Practices that Benefit our Stockholders +Our executive compensation programs have strong governance components that further strengthen our executive compensation philosophy, including the following: +WHAT WE DO +Independent Compensation Committee +• Our Compensation Committee consists entirely of independent directors who select and utilize an independent outside compensation consultant +Risk Assessment +• Our Compensation Committee performs an annual review of its charter and the risks related to our compensation practices +Annual Cash Incentive +• Payment is calculated based on Company achievement against pre-established financial and operating measures +Annual Long-Term Equity Incentive +• 40% of annual target award is provided as NSUs with one-year performance goal which, if earned, vests over three years; earn-out is capped at target value +• 60% of annual target award is provided as LTIP with three-year performance goals +TSR Modifier on 2016 LTIP +• The vesting of each 2016 LTIP award will be subject to adjustment based upon the application of a TSR modifier. +Stock Ownership Guidelines +• We have formal stock ownership guidelines for our executive officers and directors +Clawback Policy +• We have adopted a Clawback Policy related to our cash and equity incentive awards granted after 2011 +Equity Award Vesting Provisions +• Our equity awards are subject to "double-trigger" vesting upon a change-in-control +No Repricing +• Our 2015 Stock Incentive Plan, or 2015 Plan, explicitly prohibits repricing equity awards +No Gross Ups +• Our Change of Control and Severance Agreements do not contain excise tax gross up provisions +No Hedging and Pledging +• Our Insider Trading Policy specifically prohibits hedging and pledging of our shares +No Dividends on Unvested Equity Awards +• Our Equity Incentive Award agreements do not provide for payment of dividends on unvested awards +33 +Table of Contents +COMPENSATION PHILOSOPHY AND OBJECTIVES +At the direction of our Board of Directors, the Committee endeavors to ensure that the compensation programs for our executive officers are competitive and consistent with market conditions in order to attract and retain key executives critical to our long-term success. +The Committee also reviews the results of our Say on Pay Vote. The results of our Say on Pay Vote at our 2015 Annual Stockholder Meeting reflected that 95% of the votes cast on the proposed were voted "FOR" our executive compensation programs. The Committee believes that this strong stockholder support confirms the appropriateness of our executive compensation philosophy, and of the resulting executive compensation programs . The Committee considered these results as they continue to evolve our fiscal year 2016 compensation practices. +When reviewing and approving our executive compensation programs, the Committee is guided by the following four principles: +Attract and Retain +Motivate Performance +• Attract key executives with the proper background and experience required for our future growth and profitability. +• Retain our top-caliber, knowledgeable and experienced executives by rewarding performance. +• Provide a significant portion of target compensation through variable, performance-based components that are at-risk, which can increase or decrease to reflect achievement of pre-established Company goals that the Committee believes are important to our long-term success. +Reward Achievement +Align Interests +• Provide incentives for achieving both short-term and long-term Company financial and operating goals. +• Align the interests of our executives with our stockholders by tying a significant portion of total compensation to our overall financial and operating performance and the creation of long-term stockholder value. +Guaranteed Pay and At-Risk Pay +Our executive compensation mix is heavily weighted toward performance-based compensation, and limits guaranteed annual pay. We review annually the mix between guaranteed pay and at-risk pay and establish appropriate performance targets so as to mitigate our compensation-related risk. +For example, as illustrated in the chart below, the base salary for our Chief Executive Officer was approximately 27% of his potential fiscal year 2016 compensation and approximately 73% was provided through variable pay elements that were dependent on Company performance. +34 +Table of Contents +COMPENSATION CONSULTANT AND PEER GROUP +Compensation Consultant +The Committee receives assessments and advice regarding our compensation practices and philosophy from its independent compensation consultant, Frederic W. Cook & Co., Inc., or FWC. FWC provides information on competitive pay practices and trends in our industry and makes recommendations regarding the design of our compensation program. While our Company is not obligated to retain an independent compensation consultant, the Committee believes that the use of an independent consultant provides additional assurance that our executive compensation programs are competitive and consistent with market conditions, as well as consistent with our objectives. +In accordance with applicable SEC rules, the Committee took certain factors, which it believes may affect the independence of a compensation consultant, into consideration when selecting FWC. In particular, at a meeting of the Committee, the Committee discussed: (i) whether any other services had been or were being provided by FWC to the Company, (ii) the amount of fees paid by our Company to FWC as a percent of FWC's total revenues, (iii) FWC's policies and procedures designed to prevent conflicts, a copy of which was provided to the Committee prior to the meeting, (iv) FWC's ownership of Company stock, and (v) any business or personal relationships between FWC and any Committee members or any of our executive officers. Following the consideration of these factors, and such additional factors as the Committee deemed appropriate under the circumstances, the Committee made an affirmative determination that FWC is independent and unanimously approved the engagement of FWC. +The decision to engage FWC was made by the Committee, and FWC reports directly to the Committee. Our management did not recommend the engagement of FWC in any capacity for fiscal year 2016 and does not direct or oversee the retention or activities of FWC with respect to our executive compensation program. +Peer Group +In making compensation decisions, the Committee compares each element of total compensation, as well as total direct compensation, against a peer group of publicly traded footwear and apparel companies that was recommended by FWC and approved by the Committee, which we collectively refer to as the Peer Group. The Peer Group is comprised of companies against which the Committee believes our Company competes for executive talent and stockholder investment, that are in related businesses, and are of similar size and market value. The Peer Group is reviewed and updated at least annually by the Committee. During fiscal year 2015, our Board completely re-evaluated the Peer Group and approved an increase to the size of our Peer Group by adding an additional nine companies that have similar business characteristics to those of our Company. The Peer Group used for fiscal year 2016 was unchanged from fiscal year 2015 and consisted of the following 20 companies: +DECKERS PEER GROUP FOR FISCAL YEAR 2016 +• Kate Spade & Company +• Carters, Inc. +• DSW, Inc. +• Crocs, Inc. +• Fossil Group, Inc. +• Express, Inc. +• Skechers U.S.A., Inc. +• Lululemon Athletica, Inc. +• Finish Line, Inc. +• Steven Madden, Ltd. +• Guess, Inc. +• G-III Apparel Group, Ltd. +• Oxford Industries, Inc. +• Quiksilver, Inc. +• Columbia Sportswear Company +• Under Armour, Inc. +• Buckle, Inc. +• Restoration Hardware Holdings, Inc. +• Wolverine World Wide, Inc. +• Chico's FAS, Inc. +____________ +The Peer Group used to make fiscal year 2017 compensation decisions did not include Quicksilver, Inc., but otherwise remained unchanged. +Peer Group Characteristics +The Committee considers a variety of characteristics when it selects the Peer Group companies, including the characteristics set forth in the table below. The Committee places additional emphasis on those companies that it believes provide the most reliable competitive comparisons. +35 +Table of Contents +Performance vs. Peer Group Companies +Our compensation for fiscal year 2016 appropriately reflected our performance as compared to the Peer Group due to our strong pay-for-performance philosophy. The table below shows where we ranked among our 20 peers as of March 31, 2016. The rankings were calculated based on data pulled from FactSet and compares our 20 peers' most recent full fiscal year performance. +2016 Ranking +(out of 20) +1-Year Performance Growth +3-Year Performance Growth (CAGR) +Revenue +13th +7th +EBITDA +16th +13th +EPS (diluted) +15th +13th +For comparison purposes, at the time fiscal year 2016 target total direct compensation was established, our Revenue was above the median of the Peer Group, our EBITDA was above the median of the Peer Group, and our EPS was above the median of the Peer Group. +Use of Peer Group in Setting Compensation +The Committee utilizes compensation data gathered from the Peer Group as an initial starting point in making compensation decisions for our Named Executive Officers. The Committee targets total direct compensation, consisting of Base Salary, Annual Cash Incentive, NSU Equity Incentive Awards and LTIP Equity Incentive Awards in the 60th to 75th percentile range. The compensation amount for a Named Executive Officer may be above or below this range, based on a variety of factors including tenure, experience, performance and responsibilities. +The Committee determined that the positioning of target total direct compensation above the median was justified by the fact that all Annual Cash Incentive compensation and Equity Incentive Awards, which comprise a majority of the target total direct compensation, are "performance-based" and subject to a higher risk of forfeiture than similar programs adopted by the Peer Group. +While the Committee fully evaluates compensation data from the Peer Group as a starting point in its executive compensation decision-making process, the Committee also continues to exercise its judgment and retains considerable discretion. In particular, the Committee considers a variety of additional factors when setting compensation levels, including recent and projected Company performance, recent individual performance, individual performance expectations, general industry practices and general economic conditions, tenure, experience and responsibilities. +36 +Table of Contents +Actual Compensation vs. Benchmark Targets +The Committee reviews where actual compensation falls relative to targeted benchmark levels to ensure alignment with our Peer Group targets as well as our compensation philosophy and objectives, as set forth in the table below. For purposes of this table, we have excluded the 2016 NSUs which were not earned as of March 31, 2016 and the 2016 LTIP RSUs which were not deemed probable of being achieved as of March 31, 2016. +Comparison of Actual Compensation to Benchmark Targets +Total Cash Compensation Actuals +(Salary, Annual Cash Incentive Plan) +Chief Executive Officer +• 48% less than the 60th percentile +Other NEOs +• Between 41 and 52% less than the 60th percentile +37 +Table of Contents +ELEMENTS OF FISCAL YEAR 2016 +EXECUTIVE COMPENSATION PROGRAM +The table below outlines information regarding the key elements of our fiscal year 2016 executive compensation program: +COMPENSATION ELEMENT +TYPE +PURPOSE +Base Salary +Cash +• Attract and retain key executives +• Pay competitively based on position, experience, scope of responsibility and performance +Annual Cash Incentive +Cash +• Align the interests of our executives with Company and business unit performance +• Target bonus set as percentage of base salary +• Actual bonus payout is entirely based on achievement of pre-established Company and business unit financial and operating performance +• Achievement below threshold levels results in no payout +Equity Incentive Awards +Performance-Based RSUs +(NSU and LTIP) +• Drive Company financial and operational goals and align executive interests with those of stockholders; vesting based on achievement of pre-established Company and business unit financial and operating performance +• For NSUs, once performance target met, awards vest over time to encourage retention of key executives +• For LTIP RSUs, once three-year performance conditions met, award subject to adjustment based upon the application of a TSR modifier +Time-Based RSUs +• Attract and retain key executives; used for new hires and promotions into executive level positions +38 +Table of Contents +ELEMENT +COMPENSATION ELEMENT +PURPOSE +CONSIDERATIONS +Base Salary +• To attract and retain key executives with proper background and necessary experience required for our future growth and profitability. +• To provide an appropriate base level of compensation. +• To balance the levels of guaranteed pay with at-risk pay to properly manage our compensation-related risk. +• Individual performance, experience and responsibility level. +• Peer Group compensation data; Committee annually reviews and adjusts generally at its June meeting. +• Targeted between the 60th and 75th percentile of our Peer Group. +The table below summarizes adjustments made to the base salaries paid to our NEOs during fiscal year 2016 compared to fiscal year 2015. +Base Salary Changes for Fiscal Year 2016 +NAME +BASE SALARY +BASE SALARY CHANGE +Angel R. Martinez +$1,200,000 +No Change +David Powers +$700,000 +Increased by 16.7% +Thomas A. George +$550,000 +Increased by 7.8% +David E. Lafitte +$600,000 +No Change +Stefano Caroti +$500,000 +New Hire +Only two of our Named Executive Officers received a salary increase in fiscal year 2016. Mr. Power's salary increase was due to his promotion from President of Omni-Channel to President. Both salary adjustments were approved by the Committee in order to better align this compensation element with market comparables. +ELEMENT +COMPENSATION ELEMENT +PURPOSE +CONSIDERATIONS +Annual Cash Incentive +• To reward achievement of our financial and operational goals. +• To align our executives' interests with those of our stockholders. +• To establish appropriate Company performance expectations that will drive our future growth and profitability. +• To ensure that our executives are accountable for our continued growth and profitability. +• Committee reviews our annual operational, financial and strategic goals at the beginning of the fiscal year. +• Financial and operational performance goals based on Board approved targets derived from our long-term strategic plan. +• NEOs only receive payment with respect to achievement of Company performance goals if our Company performs well for our stockholders. +• Use threshold, target and maximum award levels to strike appropriate balance between compensation incentives and risks. +• Committee may exercise negative discretion and reduce award payments under the Plan. +The Committee initially establishes a target amount of Annual Cash Incentive compensation for each named executive officer, which is expressed as a percentage of base salary. The percentage is determined by the Committee by reference to a number of factors, including the executive's title and responsibility, a review of Peer Group data, our recent and projected financial performance, as well as the other factors discussed above. +Cash incentive compensation may be earned under the Annual Cash Incentive Plan upon a determination that the Company has achieved pre-established performance goals. Consistent with our historical practice, the components of the 2016 Annual Cash Incentive Plan were established by the Committee at the beginning of the fiscal year based on a review of our annual financial, operational and strategic goals. For fiscal year 2016, the Committee established two components for the 2016 Annual Cash Incentive Plan: a "Company Profit Portion", which related to an Annual EBITDA target, and a "Financial- +39 +Table of Contents +Performance Portion", which related to an annual consolidated Revenue target (except for Mr. Caroti, whose Financial-Performance Portion related to annual Omni-Channel Global Revenue and Omni-Channel Global Operating Income). The Committee then assigned relative weighting to each component, which is expressed as a percentage of the targeted cash incentive amount. For threshold performance with respect to a component, 50% of the cash incentive relevant to that component would be earned. For target performance, 100% of the cash incentive relevant to that component would be earned. For maximum performance, 200% of the cash incentive relevant to that component would be earned. For performance at a level that is between the threshold and target amounts, or between the target and maximum amounts, the payout for that portion is determined by linear interpolation. When determining Company achievement relative to the performance targets, the Committee relies upon our fiscal year 2016 audited financial statements, as may be adjusted for certain non-recurring items identified by the Committee at the beginning of the performance period. +Performance Targets under the 2016 Annual Cash Incentive Plan +The performance targets under the 2016 Annual Cash Incentive Plan, the Company's performance in light of the targets and the resulting payout for each component, are summarized below. +Executive +Officer +Component +Threshold Performance (1) +Target Performance +Maximum Performance +Actual Performance and Payout +All NEOs +Company Profit Portion +• (50% for Messrs. Martinez, Powers, George and Lafitte. 25% for Mr. Caroti.) +• Annual EBITDA of $276 million +• Annual EBITDA of $298 million +• Annual EBITDA of $342 million +Annual EBITDA of $221.4 million, resulting in 0.0% payout . +Angel R. Martinez +David Powers +Thomas A. George +David Lafitte +Financial-Performance Portion +• (50% for Messrs. Martinez, Powers, George and Lafitte.) +• Annual consolidated Revenue of $1,927 million +• Annual consolidated Revenue of $1,980 million +• Annual consolidated Revenue of $2,102 million +Annual consolidated Revenue of $1,875.2 million, resulting in 0.0% payout +Stefano Caroti +• Omni Global Revenue (35% for Mr. Caroti.) +• Omni Global Operating Income (40% for Mr. Caroti) +• Omni Global Revenue of $1,029.2 million +• Omni Global Operating Income of $179.1 million +• Omni Global Revenue of $1,056.7 million +• Omni Global Operating Income of $193.7 million +• Omni Global Revenue of $1,132.7 million +• Omni Global Operating Income of $230.1 million +Annual Omni Global Revenue of $997.5 million, resulting in 0.0% payout +Annual Omni Global Operating Income of $162.1 million, resulting in 0.0% payout. +____________ +(1) +In order to receive any payments under the Annual Cash Incentive Plan, an EBITDA gate of at least $276 million was required to be achieved. In addition, in order to receive the Company Profit Portion of the award, a Revenue gate of at least $1,927 billion was required to be achieved. These gates were selected by the Committee based on a number of factors, including our long term strategic plan and our financial performance during the previous fiscal year. +The amount of cash incentive compensation actually earned under the 2016 Annual Cash Incentive Plan by each Named Executive Officer is then calculated by multiplying the target cash incentive amount by the percentage of target earned for each component, and then multiplying this amount by the relative weighting of each component in accordance with the terms of the Cash Incentive Plan. +40 +Table of Contents +The target bonus, the relative weightings assigned to each component, and the calculation of the amounts earned under the 2016 Annual Cash Incentive Plan by each Named Executive Officer, is set forth in the table below: +EARNED ($) +Name +Target +Percentage +of Salary +Company +Profit +Portion +Financial-Performance Portion +Total Earned (%) +Company +Profit +Portion +Financial-Performance Portion +Total +Angel R. Martinez +125% +50% +50% +—% +$— +$— +$— +David Powers +85% +50% +50% +—% +$— +$— +$— +Thomas A. George +75% +50% +50% +—% +$— +$— +$— +David Lafitte +75% +50% +50% +—% +$— +$— +$— +Name +Target Percentage of Salary +Company Profit +Portion +Financial Performance Portion +Total Earned (%) +Omni Global Revenue +Omni Global Operating Income +Total +Stefano Caroti +75% +25% +35% +Omni Global Revenue +— +40% +Omni Operating Income +—% +$— +$— +$— +41 +Table of Contents +ELEMENT +COMPENSATION ELEMENT +PURPOSE +CONSIDERATIONS +Equity Incentive Plan Compensation +Overall Equity Plan +• To align NEO's interests with long-term stockholder interests by linking a significant part of each NEO's compensation to Company performance. +• To retain key executives by utilizing long-term vesting provisions. +• To incentivize achievement of Company financial and operational goals. +• To reflect our pay-for-performance philosophy. +• In order to compare the annual cost of our equity program versus our Peer Group, the Committee evaluates aggregate equity awards based on an annual Stockholder Value Transfer, or SVT, rate guideline. +• The SVT rate guideline is between the median and 75th percentile of the Peer Group, which was approximately 1% for fiscal year 2016. +• Other factors considered were the fair value of awards granted to each executive, total outstanding equity awards for each executive, Company-wide annual equity grant usage, and total potential dilution under all employee stock plans. +Performance-Based NSUs +• Designed to reward achievement of performance goals, followed by time-based vesting over time once performance goals are achieved. +• 40% of NEOs annual equity award is granted as NSUs. +• Performance metric was diluted EPS for fiscal year 2016; once performance condition met, time-based vesting over three additional years. +• Diluted EPS is an important indicator of profitability that aligns the interests of executive officers with those of stockholders. +• Shares capped at 100% of the target amount. +• Excludes the impact of share repurchases for purposes of determining achievement of EPS goals in order to reward actual business growth. +Performance-Based LTIP RSUs +• Designed to reward achievement of performance goals based on a three-year long range plan. +• 60% of NEOs annual equity award is granted as LTIP RSUs. +• Performance metrics for 2016 LTIP RSUs are consolidated EBITDA and Revenue measured for fiscal year 2018, based upon targets set forth in a three-year long range plan. +• EBITDA and Revenue are important indicators of long-term growth and profitability that align the interests of executive officers with the execution of our long-term strategic plan. +• Following a determination that the performance metrics have been achieved, the vesting of the 2016 LTIP RSUs will be subject to adjustment based upon the application of a TSR modifier. +Time-Based RSUs +• Not a standard part of our annual equity award program. +• Designed to provide special equity awards on an as-needed basis. +• Primarily used for hiring and promotional needs and retention purposes. +• Only Mr. Caroti received this type of award during fiscal year 2016 at hire. +• Vest in equal installments over approximately a three-year period. +42 +Table of Contents +A summary of the equity awards that we granted during fiscal year 2016 and their respective vesting provisions is set forth below: +OVERVIEW OF +EQUITY INCENTIVE AWARDS GRANTED IN FISCAL YEAR 2016 +Compensation Element +Award +Type +Year Granted +Vesting Provisions +Performance-Based Equity Incentive Compensation +NSU +(40%) +Fiscal Year 2016 +• Based on fiscal year 2016 performance, the diluted EPS target was not met, therefore the 2016 NSU Awards were not earned. +• If performance condition had been met, the 2016 NSU Awards would have vested based on continued employment over 3 additional years. +LTIP RSU +(60%) +Fiscal Year 2016 +• Vest subject to the achievement of consolidated EBITDA and Revenue targets based on a three-year long-range plan. These targets are based on a high rate of sales growth and aggressive profitability goals and are measured for fiscal year 2018. +• Based upon expectations as of March 31, 2016, the performance conditions are not probable of being achieved; therefore, the awards are not expected to be earned. +• 2016 LTIP RSU awards earned subject to adjustment based on a TSR modifier. +Time-Based Equity Incentive Compensation +RSU +Fiscal Year 2016 +• Vest subject to satisfaction of long-term service conditions over approximately a three-year period. +NSU Equity Incentive Awards - Performance Metrics +During fiscal year 2016, each NEO employed for the entire fiscal year received 40% of their Equity Incentive Plan compensation in the form of NSUs. NSUs are restricted stock units payable in Common Stock upon satisfying: +• Company performance goals achieved during year of grant; and +• +Service related vesting conditions over three years following the achievement of the performance criteria. +As discussed in the section of this Proxy Statement titled " Potential Payments Upon Termination or Change of Control " below, this vesting schedule may be accelerated if the executive's employment is terminated for various reasons or upon a change in control followed by a termination. +In June 2015, NSUs were granted to the NEOs that were payable based on the achievement of a fiscal year 2016 diluted EPS goal listed below. Because the actual fiscal year 2016 diluted EPS did not meet the threshold amount for the EPS goal, NSUs were not earned. +Fiscal Year 2016 Annual Equity Award Performance Goal as of March 31, 2016 +Threshold Amount +Target Amount +Actual Fiscal Year 2016 Results +Diluted EPS goal +$4.66 +$5.15 +$3.70 +43 +Table of Contents +LTIP Equity Incentive Awards - Performance Metrics +During fiscal year 2016, each NEO employed for the entire fiscal year received 60% of his Equity Incentive Plan compensation in the form of 2016 LTIP Equity Incentive Awards. For the 2016 LTIP Awards, the Committee adopted two performance goals based on a three-year long-range plan, which relate to consolidated EBITDA and consolidated Revenue for fiscal year 2018. The Committee then established relative weights for each performance goal. The Committee adopted minimum performance qualifiers of $352 million of EBITDA and $2,352 million of Revenue for the 12-month period ending March 31, 2018. So long as both of those qualifiers are achieved, the following metrics are used to calculate the 2016 LTIP Awards earned by the NEOs: +2016 LTIP +Performance Goals +Weight of Award Allocated to Each Goal +Threshold Performance +Target Performance +Maximum Performance +Revenue +50% +$2,352 million +$2,556 million +$2,760 million +EBITDA +50% +$352 million +$409 million +$466 million +To the extent Company financial performance is achieved above the threshold level, the number of RSUs that will vest will increase up to the maximum number of units issued under the 2016 LTIP Award as determined by linear interpolation. In addition, the recipient of the 2016 LTIP Award must provide continued service through March 31, 2018. +Following the determination of the Company’s achievement with respect to the Revenue and EBITDA criteria, the vesting of each 2016 LTIP Award will be subject to adjustment based upon the application of a TSR modifier. The amount of the adjustment will be determined based upon a comparison of the Company TSR relative to the TSR of a pre-determined set of peer group companies, or TSR Peer Group, for the 36-month performance period commencing on April 1, 2015 and ending on March 31, 2018. For purposes of the 2016 LTIP Award, the TSR Peer Group used is different than the established fiscal year 2016 Peer Group that the Committee used for executive compensation benchmarking purposes. +Depending on the TSR of the Company relative to TSR Peer Group, the number of RSUs that will be subject to vesting pursuant to each 2016 LTIP Award will be modified as follows: +Company TSR Relative to TSR Peer Group +(Percentile) +TSR Modifier +(Multiplier) +≥ 75 th +125% +>25 th and <75 th +100% +(no modification) +≤ 25 th +75% +Notwithstanding the foregoing, in the event that Company TSR is greater than or equal to the 75th percentile relative to TSR Peer Group, but Company TSR is a negative amount, the TSR modifier will not be applied (the number of RSUs that will vest will not be increased as a result of the TSR multiplier). In addition, regardless of Company TSR relative to TSR Peer Group, the maximum number of RSUs that may vest pursuant to a particular 2016 LTIP Award will not exceed 200% of the targeted amount. +44 +Table of Contents +LTIP Equity Incentive Awards - Payout History +To provide greater context for the 2016 LTIP Equity Incentive Awards, we believe it is useful to understand the history of prior LTIP Equity Incentive Awards grants and their payout history or current payout expectations, as summarized below: +Prior LTIP Equity Awards +Current Payout Expectation +at 3/31/2016 +Held by NEOs +Listed Below +2007 Level 2 LTIP Awards (SARs and RSUs) +Payout at 100%, vested 80% on 12/31/2015 and to vest 20% on 12/31/2016 +Angel R. Martinez +2011 LTIP Awards +None +Angel R. Martinez +Thomas A. George +2012 LTIP Awards +None +Angel R. Martinez +Thomas A. George +2013 LTIP Awards +None +Angel R. Martinez +Thomas A. George +David Powers +2015 LTIP Awards +None +Angel R. Martinez +David Powers +Thomas A. George +David Lafitte +Stock Ownership Guidelines +To further align the interests of our directors and executive officers with those of our stockholders, we adopted Stock Ownership Guidelines for our NEOs in March 2011, which were amended in June 2016. The minimum ownership threshholds for our NEOs are determined as a multiple of the officer's base salary. The NEOs are required to achieve the applicable level of ownership within five years of the later of the date these guidelines were adopted or the date the person first became subject to these guidelines as an NEO, subject to exceptions or extensions as granted by the Committee. Our directors are required to adhere to the stock ownership guidelines that are referenced in our Corporate Governance Guidelines. The minimum ownership threshold for our directors is determined as a multiple of the directors' annual Board retainer fee and must be adhered to within five years of initial election. A summary of the stock ownership guidelines applicable to the NEOs and directors is set forth below. +POSITION +STOCK OWNERSHIP GUIDELINES +Chief Executive Officer +6x Annual Base Salary +Other NEOs +3x Annual Base Salary +Directors +5x Annual Board Retainer Fee +Clawback Policy +Consistent with our executive compensation philosophy, which seeks to reward executive for financial and operating performance that create value for our stockholders, we have adopted a Clawback Policy. Under this policy, we can seek reimbursement with respect to incentive-based compensation paid or awarded to our executive officers when the following three factors exists: +• +The incentive compensation payment or award (or the vesting of such award) was based upon the achievement of financial results, as reported in a Form 10-Q, Form 10-K or other report filed with the SEC, that were subsequently the subject of a restatement to correct an accounting error due to material noncompliance with any financial reporting requirement under the federal securities laws; +• +A lower payment or award would have been made to such executive officer (or lesser or no vesting would have occurred with respect to such award) based upon the restated financial results; and +• +The need for the restatement was identified within three years after the date of the first public issuance or filing of the financial results that were subsequently restated. +The reimbursement to be sought by the Company will be equal to the portion of any incentive-based compensation paid to or received by such executive officer for or during each of the restated periods that is greater than the amount that would have been paid or received had the financial results been properly reported. +45 +Table of Contents +Benefits +PURPOSE +CONSIDERATIONS +Perquisites and other Executive Benefits +• Provide our US-based NEOs with competitive broad-based employee benefits structured to attract and retain key executives +• Generally reflect benefits provided to all of our US-based full-time employees +The benefits provided to our NEOs are as follows: +• +401(k) defined contribution plan; +• +401(k) plan Company match of 50% of each eligible participant's tax-deferred contributions on up to 6% of eligible compensation on a per payroll period basis, with a true-up contribution if such eligible participant is employed by our Company on the lst day of the calendar year; +• +Premiums for long-term disability insurance and life insurance; +• +Health and welfare benefit plans; +• +Relocation expenses for new hires; +• +Standard employee product discounts; and +• +NEOs and certain other senior executives are eligible to contribute to our Nonqualified Deferred Compensation Plan, or NQDC Plan. The plan is described in further detail in the section of this Proxy Statement titled "Nonqualified Deferred Compensation". +Severance Agreements +PURPOSE +CONSIDERATIONS +Severance Agreements +• Intended to ease a NEOs transition due to an unexpected employment termination due to on-going changes in our employment needs. +• In exchange, Company receives a general release and non-solicitation provisions. +• Purposes related to Change of Control : +– "Double trigger" provisions preserve morale and productivity and encourage retention in the face of the potential disruptive impact of a change-in-control of our Company. +– Retain and encourage the NEOs to remain focused on our business and the interests of our stockholders when considering strategic alternatives. +• The employment of our US-based NEOs is "at will", meaning we can terminate them at any time and they can terminate their employment with us at any time. +• Take into account the time it is expected to take a separated executive to find a similarly situated job. +• There are no benefits triggered solely based on the occurrence of a Change of Control as long as the Change of Control is approved by a majority of the directors and the successor entity provides for the continuance of the award. However, upon a Change of Control, the performance conditions of the RSUs are deemed satisfied, but the awards remain subject to the service-based vesting conditions. +• Customary among Peer Group. +The Committee has adopted Change of Control and Severance Agreements for each of our NEOs. The Change of Control and Severance Agreements detail various provisions for benefits and cash payments to be paid in the event of a separation during the normal course of business and in the event a change in control is followed by a subsequent termination. Generally, these agreements specify conditions and benefits for separation of employment within the following categories: death, disability, termination of the executive for cause; termination by the executive without good reason; termination by the executive with good reason; and termination by us without cause. +Please refer to the discussion in the section of this Proxy Statement titled " Potential Payments upon Termination or Change of Control " for a more detailed discussion of the severance and change in control arrangements. +46 +Table of Contents +OTHER COMPENSATION CONSIDERATIONS +Role of Executive Officers in Compensation Decisions +At the request of the Committee, our Chief Executive Officer, Chief Financial Officer and Chief Operating Officer or other senior executives may provide compensation and related data to the Committee to facilitate its compensation decisions. In addition, the Committee may consider our Chief Executive Officer's recommendations when making its compensation decisions. However, our Chief Executive Officer is not permitted to be present during deliberations and voting regarding his own compensation, or during other executive sessions of the Committee. The Committee uses the information provided by our management, as well as information provided by our independent consultant FWC, to make compensation decisions for our Named Executive Officers, as well as other management personnel. The Committee, which includes only independent members of our Board of Directors, approves all elements of compensation for our Named Executive Officers. The Committee can exercise its discretion in modifying any recommended adjustments or awards to executives. +Risk Considerations +The Committee is responsible for reviewing the risks and rewards associated with our compensation programs for all employees, including our NEOs, to assess whether these programs encourage excessive or unnecessary risk-taking. In conducting this assessment, the Committee considers the following factors: +• +Our compensation program consists of both guaranteed pay (salary, benefits and perquisites) and at-risk pay (Annual Cash Incentive Plan and Equity Incentive Awards) and the Committee reviews this mix annually. +• +The performance goals relating to our Annual Cash Incentive Plan involve a mix of Company performance goals. +• +Amounts paid under our Annual Cash Incentive Plan are capped at 200% of target. +• +Our compensation program encourages executive retention through long-term time-based vesting provisions. +• +We have adopted stock ownership guidelines, which ensures that the interests of our executive officers and directors are aligned with our stockholders. +• +Our cash and equity incentive-based awards are subject to clawback provisions. +• +Our insider trading policy prohibits our NEOs and other key executives from hedging the economic interest in our securities, and from pledging our securities. +• +The Committee retains ultimate oversight over the compensation of our NEOs and retains the ability to use discretion where appropriate. +• +The Committee balances between corporate, business unit, and individual performance in our compensation program, as well as balancing between short-term and long-term goals. +The Committee believes that, although the majority of the compensation provided to our executive officers is at-risk pay and based upon the achievement of specified Company performance criteria, our executive compensation programs do not encourage excessive or unnecessary risk-taking. The Committee does not believe that our compensation programs are reasonably likely to have a material adverse effect on us. +Tax and Accounting Implications +To the extent readily determinable, and as one of the factors in its consideration of compensation matters, the Committee considers the anticipated tax treatment to our Company and to our executives of various payments and benefits. Some types of compensation payments and their deductibility depend upon the timing of an executive's vesting of previously granted awards. +Under Section 162(m) of the Code, a public company generally will not be entitled to a deduction for non-performance-based compensation paid to certain executive officers to the extent such compensation exceeds $1.0 million. Special rules apply for performance-based compensation, including where the performance goals have been approved by the stockholders of our Company. Our Company has not adopted any formal policy with respect to Section 162(m) of the Code. However, the Committee generally structures compensation to be deductible and considers cost and value to the Company in making compensation decisions, which would result in non-deductibility. The Committee has on occasion made decisions resulting in non-deductible compensation. The Committee and our Board of Directors believe that these payments were appropriate and in the best interests of our Company and serve to retain key executives and reward past performance. +We believe that our Cash Incentive Plan and our grants of equity awards under our Equity Incentive Plans meet the exception for performance-based compensation described in the previous paragraph. +In accordance with applicable rules, our Company accounts for share-based awards in accordance with the requirements of Financial Accounting Standards Board Accounting Standards Codification Topic 718, Stock Compensation . +47 +Table of Contents +REPORT OF THE COMPENSATION COMMITTEE +The Compensation Committee of the Company has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussion, the Compensation Committee has recommended to our Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement. +THE COMPENSATION COMMITTEE +Lauri M. Shanahan, Chairman +Karyn O. Barsa +John G. Perenchio +Michael F. Devine, III +The Report of the Compensation Committee shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act, or under the Exchange Act, except to the extent that our Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under such Acts. +48 +Table of Contents +SUMMARY COMPENSATION TABLE +The following table sets forth all compensation paid or awarded to our Named Executive Officers during fiscal year 2016, fiscal year 2015, the 2014 Transition Period and fiscal year 2013. The amounts represented below do not reflect amounts which are actually realized by our Named Executive Officers. The equity awards are reported at grant date fair value, not what is earned or probable of being earned as of March 31, 2016. For a more complete understanding of the information set forth in the table, it should be read together with the corresponding footnotes, as well as the section of this Proxy Statement titled " Compensation Discussion and Analysis ". +Name and Principal Position +Year +Salary +($) +Bonus +($) +Stock +Awards +($)(1) +Cash +Incentive +Plan +Compensation +($)(2) +All Other +Compensation +($)(3) +Total +($) +Angel R. Martinez (4) +2016 +1,200,000 +— +4,500,001 +— +9,480 +5,709,481 +Former Chief Executive Officer +2015 +1,200,000 +— +4,000,004 +1,466,042 +9,368 +6,675,414 +Non-Executive Chairman of our Board +2014T +300,000 +— +— +— +2,333 +302,333 +2013 +1,200,000 +— +2,404,520 +1,256,000 +8,910 +4,869,430 +David Powers +2016 +700,000 +— +2,500,025 +— +9,480 +3,209,505 +Chief Executive Officer and President +2015 +600,000 +— +1,150,051 +439,813 +9,368 +2,199,232 +2014T +150,000 +— +— +— +2,333 +152,333 +2013 +500,000 +— +1,131,170 +276,000 +8,910 +1,916,080 +Thomas A. George +2016 +550,000 +— +849,983 +— +9,480 +1,409,463 +Chief Financial Officer +2015 +510,000 +— +800,035 +373,841 +9,368 +1,693,244 +2014T +127,500 +— +— +— +2,333 +129,833 +2013 +510,000 +— +1,130,185 +458,000 +8,910 +2,107,095 +David Lafitte (5) +2016 +600,000 +— +749,963 +— +9,480 +1,359,443 +Chief Operating Officer +2015 +100,000 +300,000 +899,997 +— +1,580 +1,301,577 +Stefano Caroti (6) +2016 +208,333 +150,000 +699,990 +— +39,591 +(7) +1,097,914 +President of Omni Channel +____________ +(1) +The amounts in this column represent the aggregate grant date fair value of the respective awards computed in accordance with FASB ASC Topic 718. For information about the assumptions underlying these computations, please refer to Note 8 to our consolidated financial statements included in the Annual Report. In accordance with applicable SEC rules, for those awards that are subject to the satisfaction of performance conditions, the amounts reported reflect the fair value at the grant date based upon the probable outcome of such conditions. +If the performance conditions for the various awards are achieved at the maximum levels (instead of based on probable outcomes), the fair value of the awards, and therefore the compensation cost to be recognized for such awards, would be increased as follows: +49 +Table of Contents +Fiscal Year 2013 +• +2013 LTIP Awards: $2,535,600 for Angel Martinez, $887,460 for David Powers, and $633,900 for Thomas George. 2013 LTIP RSU awards were deemed probable to vest at 50% at the date of grant and therefore are included in the table above at grant date fair value. As of March 31, 2016, the performance conditions relating to the 2013 LTIP awards were not met and the awards were cancelled. +• +2013 NSU Awards: $1,559,320 for Angel Martinez, $835,350 for David Powers, and $918,885 for Thomas George. 2013 NSU awards were deemed probable to vest at 100% at the date of grant and therefore are included in the table above at grant date fair value. The 2013 NSU awards were actually earned at 100% of target. +2014 Transition Period +• +No equity awards were granted during the 2014 Transition Period. +Fiscal Year 2015 +• +2015 NSU Awards: $1,599,986 for Angel Martinez, $460,002 for David Powers, and $320,032 for Thomas George. 2015 NSU awards were deemed probable to vest at 100% at the date of grant and therefore are included in the table above at grant date fair value. The 2015 NSU awards were actually earned at 88.9% of target. +• +2015 LTIP Awards: $4,800,037 for Angel Martinez, $1,380,097 for David Powers, and $960,007 for Thomas George. The achievement of the performance conditions relating to the 2015 LTIP RSU awards was deemed probable at the date of grant and therefore are included in the table above at grant date fair value. As of March 31, 2016, the performance conditions related to the 2015 LTIP awards are not probable of being achieved and therefore the awards are not expected to be earned. +Fiscal Year 2016 +• +2016 NSU Awards: $1,800,003 for Angel Martinez, $1,000,027 for David Powers, $339,973 for Thomas George, and $299,963 for David Lafitte. The achievement of the performance condition relating to the 2016 NSU awards was deemed probable at the date of grant and therefore these awards are included in the table above at grant date fair value. As of March 31, 2016, it was determined that the performance conditions relating to the 2016 NSU awards were not met and the awards were cancelled. +• +2016 LTIP Awards: $5,399,995 for Angel Martinez, $2,999,997 for David Powers, $1,020,019 for Thomas George, $899,999 for David Lafitte, and $899,999 for Stefano Caroti. The achievement of the performance conditions relating to the 2016 LTIP RSU awards was deemed probable at the date of grant and therefore are included in the table above at grant date fair value. As of March 31, 2016, it is not probable that the performance conditions related to the 2016 LTIP awards will be achieved and therefore the awards are not expected to be earned. +(2) +The amounts in this column reflect the amount of the cash bonuses paid to the Named Executive Officers under the Annual Cash Incentive Plan, which is discussed in further detail under the heading "Annual Cash Incentive Compensation" above. For fiscal year 2015, the Annual Cash Incentive Plan compensation was multiplied by 1.25 to address the change in fiscal year from December 31 to March 31, and no separate Annual Cash Incentive Plan compensation was paid out with respect to the 2014 transition period. +(3) +The amounts in this column reflect 401(k) matching contributions and life insurance premiums paid for the benefit of the Named Executive Officers, except where otherwise noted. +(4) +On May 31, 2016, Mr. Martinez retired from his position as Chief Executive Officer, although he continues to serve as Chairman of our Board. Refer to the section of this Proxy Statement titled "Separation of Employment with Angel R. Martinez" for additional information. +(5) +Mr. Lafitte joined us in February 2015 as Chief Operating Officer. The bonus amount reflects a one-time cash sign on bonus paid at hire. +(6) +Mr. Caroti joined us in November 2015 as President of Omni Channel. The bonus amount reflects a one-time cash sign on bonus paid at hire. +(7) +Amount includes relocation expenses of $35,641. +50 +Table of Contents +GRANTS OF PLAN-BASED AWARDS IN +FISCAL YEAR 2016 +The following table sets forth all grants of plan-based awards made to our Named Executive Officers during the fiscal year ended March 31, 2016. The amounts set forth in the table do not necessarily reflect the value of the amounts paid or awards realized by our Named Executive Officers. For further discussion regarding the grants, refer to the section of this Proxy Statement titled "Elements of 2016 Executive Compensation Plan" . +Potential Payouts Under +Non-Equity Incentive Plan Awards(2) +Potential Payouts Under +Equity Incentive Plan Awards(3) +Grant Date +Fair Value +of Stock +Awards +($)(4) +Name +Grant Date(1) +Threshold +($) +Target +($) +Maximum +($) +Threshold +(#) +Target +(#) +Maximum +(#) +Angel R. Martinez +750,000 +1,500,000 +3,000,000 +6/26/2015 +12,125 +24,249 +24,249 +1,800,003 +11/18/2015 +26,973 +53,946 +107,892 +2,699,997 +David Powers +297,500 +595,000 +1,190,000 +6/26/2015 +6,736 +13,472 +13,472 +1,000,027 +11/18/2015 +14,985 +29,970 +59,940 +1,499,999 +Thomas A. George +206,250 +412,500 +825,000 +6/26/2015 +2,290 +4,580 +4,580 +339,973 +11/18/2015 +5,095 +10,190 +20,380 +510,010 +David E. Lafitte +225,000 +450,000 +900,000 +6/26/2015 +2,021 +4,041 +4,041 +299,963 +11/18/2015 +4,496 +8,991 +17,982 +450,000 +Stefano Caroti +187,500 +375,000 +750,000 +11/4/2015 +4,528 +4,528 +4,528 +249,991 +11/18/2015 +4,496 +8,991 +17,982 +450,000 +____________ +(1) +All awards granted on June 26, 2015 were NSU Awards. All awards granted on November 18, 2015 were LTIP Awards. The award granted on November 4, 2015 was a time-based RSU Award. +(2) +Refer to the section of this Proxy Statement titled "Annual Cash Incentive Compensation" for further discussion of the terms of the 2016 Annual Cash Incentive Plan. No cash incentive payments were earned by the Named Executive Officers under the 2016 Annual Cash Incentive Plan. +(3) +All grants awarded prior to September 2015 were made under the 2006 Stock Incentive Plan, or 2006 Plan. All grants awarded after September 2015 were made under the 2015 Plan. +(4) +Amounts reported reflect the fair value based upon the probable outcome of the performance conditions at grant date. +51 +Table of Contents +OUTSTANDING EQUITY AWARDS AT +2016 FISCAL YEAR END +The following table sets forth equity awards granted to our Named Executive Officers that remained outstanding as of March 31, 2016. The amounts set forth in the table do not necessarily reflect the value of the awards realized by our Named Executive Officers. For further discussion regarding the outstanding equity awards, refer to the section of this Proxy Statement titled "Equity Incentive Plan Compensation". +Stock Awards +Name +Number of +securities +underlying +unexercised +SARs +exercisable +(1)(#) +Number of +securities +underlying +unexercised +unearned +SARs +(1)(#) +SAR +exercise +price +($) +SAR +expiration +date +Number of +shares or +units of +stock that +have not +vested +(#) +Market +value of +shares or +units of +stock that +have not +vested +(2)($) +Number of +unearned +shares or +units that +have not +vested +(3)(#) +Market +value of +unearned +shares or +units that +have not +vested +(2)($) +Angel R. Martinez +160,000 +— +26.73 +5/9/2017 +20,354 +(4) +1,219,408 +164,342 +(9) +5,147,527 +240,000 +60,000 +26.73 +5/9/2022 +David Powers +— +— +— +— +6,502 +(5) +389,535 +74,014 +(10) +2,217,089 +— +— +— +— +Thomas A. George +— +— +— +— +7,705 +(6) +461,607 +30,170 +(11) +903,742 +— +— +— +— +David E. Lafitte +— +— +— +— +8,701 +(7) +521,277 +17,982 +(12) +538,651 +— +— +— +— +Stefano Caroti +— +— +— +— +4,528 +(8) +271,272 +— +— +— +— +— +— +____________ +(1) +All SARs that remain outstanding were granted on May 9, 2007. LTIP SARs may vest subject to the satisfaction of long-term performance objectives and long-term service conditions. Provided the service conditions are met, the remaining 20% of the unearned 2007 LTIP SAR awards will vest on December 31, 2016. +(2) +The amounts in this column reflect the closing price of our Common Stock on March 31, 2016, which was $59.91. +(3) +This column includes 2007 LTIP RSUs (at the 100% maximum amount), 2015 LTIP RSUs (at the 200% maximum amount) and 2016 LTIP RSUs (at the 200% maximum amount) granted on May 9, 2007, September 18, 2014 and November 18, 2015, respectively, the vesting of which are subject to the satisfaction of long-term performance and service conditions. Provided the performance and service conditions are met, the 2007 LTIP RSU awards will vest on December 31, 2016, the 2015 LTIP awards will vest on March 31, 2017, and the 2016 LTIP awards will vest on March 31, 2018. Refer to the section of this Proxy Statement titled "Grants of Plan Based Awards in 2016" for more information. +(4) +Consists of (i) 9,333 NSUs, which represents 33.3% of the NSUs granted on March 29, 2013, which shares vest on December 15, 2016; and (ii) 11,021 NSUs, which represents 66.7% of NSUs granted on June 27, 2014, which shares vest 33.3% on March 31 of 2017 and 2018. The NSUs granted on June 27, 2014 are included based on the amount actually earned. NSUs granted on June 26, 2015 are excluded because the performance conditions for those awards were not met. +52 +Table of Contents +(5) +Consists of (i) 3,333 NSUs, which represents 33.3% of the NSUs granted on March 29, 2013, which shares vest on December 15, 2016; and (ii) 3,169 NSUs, which represents 66.7% of the NSUs granted on June 27, 2014, which shares vest 33.3% on March 31 of 2017 and 2018. The NSUs granted on June 27, 2014 are included based on the amount actually earned. NSUs granted on June 26, 2015 are excluded because the performance conditions for those awards were not met. +(6) +Consists of (i) 5,500 NSUs, which represents 33.3% of the NSUs granted on March 29, 2013, which shares vest on December 15, 2016; and (ii) 2,205 NSUs, which represents 66.7% of the NSUs granted on June 27, 2014 which shares vest 33.3% on March 31 of 2017 and 2018. The NSUs granted on June 27, 2014 are included based on the amount actually earned. NSUs granted on June 26, 2015 are excluded because the performance conditions for those awards were not met. +(7) +Consists of 8,701 time-based RSUs, which represents 66.7% of the RSUs granted on February 2, 2015, which shares vest 33.3% on February 2, 2017 and 2018. NSUs granted on June 26, 2015 are excluded because the performance conditions for those awards were not met. +(8) +Consists of 4,528 time-based RSUs, which represents 100% of the RSUs granted on November 4, 2015, which shares vest 33.3% on November 15, 2016, 2017, and 2018. +(9) +Consists of (i) 7,500 2007 LTIP RSUs at the 100% maximum level; (ii) 48,950 2015 LTIP RSUs at the 200% maximum level; and (iii) 107,892 2016 LTIP RSUs at the 200% maximum level. +(10) +Consists of (i) 14,074 2015 LTIP RSUs at the 200% maximum level; and (ii) 59,940 2016 LTIP RSUs at the 200% maximum level. +(11) +Consists of (i) 9,790 2015 LTIP RSUs at the 200% maximum level; and (ii) 20,380 2016 LTIP RSUs at the 200% maximum level. +(12) +Consists of 17,982 2016 LTIP RSUs at the 200% maximum level. +53 +Table of Contents +2016 SAR EXERCISES AND STOCK VESTED +The following table provides information, for our Named Executive Officers, regarding SAR exercises and stock award vesting during fiscal year 2016, including the number of shares acquired upon exercise or vesting and the value realized, before payment of any applicable withholding tax and broker commissions. +Option Awards (SARs) +Stock Awards (NSUs and RSUs) +Number of +Shares +Acquired on +Exercise +(#) +Value Realized on +Exercise +($) +Number of +Shares +Acquired on +Vesting +(#)(1) +Value Realized +on Vesting +($)(2) +Angel R. Martinez +— +— +44,845 +2,263,837 +David Powers +— +— +6,585 +343,647 +Thomas A. George +— +— +6,602 +339,591 +David E. Lafitte +— +— +4,350 +216,326 +Stefano Caroti +— +— +— +— +____________ +(1) +Total shares received net of shares withheld for taxes were: 24,410 for Angel R. Martinez; 4,118 for David Powers; 6,198 for Thomas A. George; and 2,642 for David Lafitte. +(2) +The amounts in this column reflect the closing price of our Common Stock on the applicable vesting dates. +54 +Table of Contents +NONQUALIFIED DEFERRED COMPENSATION +Our Board of Directors has adopted a Deferred Stock Unit Compensation Plan, a Sub Plan under the 2015 Plan. A director or employee of our Company who holds unvested restricted stock awards, including NSUs and RSUs, may elect to defer settlement of up to 100% of his or her awards. For each unit of stock held pursuant to a restricted stock award that is deferred, the participant will receive one Deferred Stock Unit. Amounts deferred will be distributed, as described in the plan, at the time elected by the participant. A participant's Deferred Stock Units will be settled in shares of Common Stock, as more specifically described in the plan. None of our executive officers elected to participate in the plan during fiscal year 2016. +Our Compensation Committee has adopted a Nonqualified Deferred Compensation Plan. The plan is an unfunded, nonqualified deferred compensation program sponsored by our Company to provide certain of our management or highly compensated employees designated by our Board of Directors the opportunity to defer compensation into the plan. The effective date for the plan for the first year was February 1, 2010, and thereafter the plan year is from January 1 to December 31. Participants may defer up to 50% of their annual base salary and up to 85% of any cash incentive bonus under the plan. We have the option, but not the obligation, to make discretionary or matching cash contributions. Under the terms of the plan, we established a rabbi trust as a reserve for the benefits payable under the plan. Certain of our Named Executive Officers elected to participate in this plan during fiscal year 2016 and, pursuant to such elections, amounts were contributed to this plan during 2016. However, we did not make any matching contributions under the plan during fiscal year 2016. +Name +Angel R. Martinez +David Powers +Thomas A. George +David Lafitte +Stefano Caroti +Total +Executive contributions in fiscal year 2016 (1) ($) +733,021 +42,222 +65,077 +27,692 +39,744 +907,756 +Registrant contributions in fiscal year 2016 ($) +— +— +— +— +— +— +Aggregate (losses) earnings in fiscal year 2016 ($) +(93,410 +) +(2,291 +) +(4,076 +) +1,547 +2,404 +(95,826 +) +Aggregate withdrawals/distributions in fiscal year 2016 ($) +— +— +— +— +— +— +Aggregate balance at end of fiscal year 2016 ($) +3,341,935 +69,865 +210,235 +29,239 +42,148 +3,693,422 +____________ +(1) +The amounts reported in this column reflect contributions made by our NEOs under the plan. Such amounts are separately reported in the " Summary Compensation Table " above, and do not reflect amounts in addition to those amounts. +55 +Table of Contents +POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL +We have entered into Change of Control and Severance Agreements, or Severance Agreements, with each of our US-based Named Executive Officers effective as of January 1, 2010 to replace, in part, the expired employment agreements with such executives. The information below describes compensation and benefits that are payable or earned under the Severance Agreements with our Named Executive Officers upon the occurrence of different termination events: +Termination by our Company for Cause, or by Executive other than for Good Reason +Pursuant to the Severance Agreements with each of our US-based Named Executive Officers, if the executive is terminated by our Company for Cause, or the executive terminates his or her employment, other than for Good Reason, then the Named Executive Officer will receive the following from our Company: +• +payment of his or her accrued base salary, accrued vacation, reimbursement for reimbursable expenses, accrued and vested benefits under our plans or programs and other benefits required to be paid by law, accrued but unpaid non-equity incentive bonus for the prior fiscal year (excluding any non-equity incentive bonus for the year of termination); and +• +right to exercise all equity awards pursuant to the terms of the applicable award agreement. +Termination due to Death or Total Disability +Pursuant to the Severance Agreements with each of our US-based Named Executive Officers, if the executive is terminated due to his or her Death or Total Disability, then in addition to those benefits provided upon a termination for Cause, the Named Executive Officer will receive: +• +pro-rated portion of his or her non-equity incentive bonus for the current fiscal year based on actual length of service during the year of termination. +Termination by our Company without Cause or by Executive for Good Reason +Pursuant to the Severance Agreements with each of our US-based Named Executive Officers, if the executive is terminated by our Company without Cause or by Executive for Good Reason, then in addition to those benefits provided upon a termination due to Death or Total Disability, the Named Executive Officer will receive: +• +payment of his or her then effective base salary for one year following his or her termination, subject to such executive signing a release; and +• +receipt of health benefits for a period of one year following his or her termination or his or her attainment of alternative employment that provides health benefits, whichever is earlier. +Termination without Cause or by Executive for Good Reason within Two Years of a Change of Control +Pursuant to the Severance Agreements with each of our US-based Named Executive Officers, if the executive is terminated by our Company without Cause or by the executive for Good Reason within two years of a Change of Control, then in addition to those benefits provided upon a termination due to Death or Total Disability, the Named Executive Officer will receive: +• +subject to such executive signing a release, payment of one and one-half times his or her then effective annual base salary plus the greater of (i) one and one-half times the targeted non-equity incentive bonus immediately prior to the termination or (ii) one and one-half times the average actual non-equity incentive bonus for the previous three years; and +• +receipt of health benefits for a period of eighteen months following his or her termination or his or her attainment of alternative employment that provides health benefits, whichever is earlier. +For purposes of the Severance Agreements, "Cause" means (i) any willful breach of duty by the executive in the course of their employment or continued violation of written Company employment policies after written notice of such violation, (ii) violation of our insider trading policies, (iii) conviction of a felony or any crime involving fraud, theft, embezzlement, dishonesty or moral turpitude, (iv) engaging in activities which materially defame our Company, engaging in conduct which is materially injurious to our Company or our affiliates, or any of our respective customer or supplier relationships, financially or otherwise, or (v) the executive's gross negligence or continued failure to perform duties or executive's continued incapacity to perform such duties. +56 +Table of Contents +"Good Reason" means without the consent of the Executive (i) the occurrence of material breach of this agreement by our Company, or (ii) if within two years of a change of control, there is a material reduction of the Executive's total compensation, benefits, and perquisites, our relocation is greater than 50 miles from the location where the Executive performs services, or a material change in the Executive's position or duties; provided, however, no such event shall constitute Good Reason hereunder unless the Executive shall have given written notice to our Company of Executive's intent to resign for "Good Reason" within 30 days after the Executive first becomes aware of the occurrence of any such event (specifying the nature and scope of the event) and such event or occurrence shall not have been cured within 30 days of our receipt of such notice. +"Change of Control" means the occurrence of a merger, consolidation, sale of all or a major portion of the assets of our Company (or a successor organization) or similar transaction or circumstance where any person or group acquires, in one or more transactions, beneficial ownership of more than 50% of the outstanding shares of any class of voting stock of our Company (or a successor organization). +No Named Executive Officers will be entitled to gross ups for excise tax penalty on "excess golden parachute payments" as a result of termination following a Change of Control. +Equity Awards Upon Termination or Change of Control +Pursuant to the terms of the equity awards under the 2015 Plan, the employees who receive such awards, including the Named Executive Officers, are entitled to certain benefits upon the occurrence of each of the following: (i) termination without Cause or pursuant to a Constructive Termination, (ii) a Change of Control that either is not approved by a majority of our Board of Directors or where the successor entity does not provide for the continuance of the award, and (iii) a Change of Control followed by termination. +For the NSU Awards, if a Change of Control occurs that either is not approved by a majority of our Board of Directors or where the successor entity does not provide for the continuance of the NSUs, then the NSUs will fully vest if the threshold performance criteria has been satisfied. If an awardee is terminated without Cause or pursuant to a Constructive Termination within 12 months of a Change of Control, he or she will be entitled to full acceleration of any unvested NSUs. For NSU Awards issued prior to fiscal year 2016, if an awardee is terminated without Cause or pursuant to a Constructive Termination, if the threshold performance criteria of the NSUs has been satisfied, the awardee will be entitled to accelerated vesting for only a pro rata portion of the NSUs representing the period of time such awardee was employed from the award grant date to the termination date, which will be settled in shares of our Common Stock. For fiscal year 2016, the NSU Awards no longer provide for such pro rata vesting upon termination without Cause or pursuant to a Constructive Termination. +For the 2007 LTIP SARs and RSUs, upon a Change of Control, but the awards will remain subject to service-based vesting conditions. If a Change of Control occurs and either it is not approved by a majority of our Board of Directors or the successor entity does not provide for the continuance of the SARs and RSUs, then the SARs and RSUs will fully vest. Finally, if an awardee is terminated without Cause or pursuant to a Constructive Termination within 12 months of a Change of Control, he or she will be entitled to full acceleration of any unvested SARs and RSUs. The RSUs will fully vest upon the awardee's death or disability. +For the 2011, 2012, 2013 and 2015 LTIP RSUs, upon a Change of Control, the performance conditions of the SARs and RSUs will be deemed satisfied at the targeted performance level, but the awards will remain subject to service-based vesting conditions. If a Change of Control occurs that either is not approved by a majority of our Board of Directors or where the successor entity does not provide for the continuance of the RSUs, then the target number of RSUs will fully vest immediately, regardless of the performance conditions. Finally, if an awardee is terminated without Cause or pursuant to a Constructive Termination within 12 months of a Change of Control, he or she will be entitled to acceleration of the target number of RSUs, regardless of the performance conditions. Upon the awardee's death, disability or retirement, a pro-rata portion of the RSUs will vest subject to the achievement of the performance conditions. +For the time-based RSUs issued prior to fiscal year 2016, if an awardee is terminated without Cause or pursuant to a Constructive Termination, the awardee will be entitled to accelerated vesting for a pro rata portion of the award through the termination date. However, time-based RSUs issued during fiscal year 2016 do not provide for pro rata vesting upon termination without Cause or pursuant to a Constructive Termination. If a Change of Control occurs that either is not approved by a majority of our Board of Directors or where the successor entity does not provide for the continuance of the award, then the award shall immediately fully vest. Finally, if an awardee is terminated without Cause or pursuant to a Constructive Termination within 12 months of a Change of Control, he or she will be entitled to full acceleration of any unvested time-based RSUs. +57 +Table of Contents +Severance and Change of Control Payments +The following table provides information about the payments and benefits that would have been provided to our Named Executive Officers in the event that a termination of employment or Change of Control, as applicable, had occurred on March 31, 2016. The amounts reflected in the table are in addition to amounts that would have been payable for accrued but unpaid base salary, accrued paid time off, accrued but unpaid cash incentive compensation and reimbursement of expenses. The payments to be made, and the equity awards to be vested, upon different termination events and upon a Change of Control for each of the Named Executive Officer's have been determined by reference to the terms of the applicable Severance Agreements and equity awards. For purposes of the table, the value of the equity awards is determined based on the closing price of our Common Stock on March 31, 2016. Refer to the section of this Proxy Statement titled " Potential Payments upon Termination or Change of Control " for additional information. +Upon Termination +Name +Type of Compensation or Benefit +For Death or +Total Disability ($) +By the Company +Without Cause +or by Executive +for Good Reason ($) +Upon Change +of Control ($) +Angel R. Martinez +cash payments +— +1,200,000 +5,400,000 +value of health benefits +— +25,375 +50,750 +value of NSUs +— +244,613 +1,219,408 +value of RSUs +449,325 +— +5,147,527 +value of SARs +— +— +2,002,552 +449,325 +1,469,988 +13,820,237 +David Powers +cash payments +— +700,000 +1,942,500 +value of health benefits +— +25,375 +38,062 +value of NSUs +— +87,349 +389,535 +value of RSUs +— +— +2,217,089 +— +812,724 +4,587,186 +Thomas A. George +cash payments +— +550,000 +1,443,750 +value of health benefits +— +17,971 +26,956 +value of NSUs +— +144,158 +461,607 +value of RSUs +— +— +903,742 +— +712,129 +2,836,055 +David E. Lafitte +cash payments +— +600,000 +1,575,000 +value of health benefits +— +25,375 +25,375 +value of NSUs +— +21,739 +521,277 +value of RSUs +— +— +538,651 +647,114 +2,660,303 +Stefano Caroti +cash payments +— +500,000 +1,312,500 +value of health benefits +— +17,971 +26,956 +value of NSUs +— +— +271,272 +value of RSUs +— +— +538,651 +— +517,971 +2,149,379 +Except as discussed above, no payments or benefits would be provided to our Named Executive Officers in the event of a termination of employment for Cause or by the executive without Good Reason. +The value of RSU's to be paid upon death or disability is based on the number of RSU's that are considered probable of being earned based on our Company's forecasted performance for the twelve months ended March 31, 2017 and 2018. +58 +Table of Contents +Separation of Employment with Angel R. Martinez +On May 31, 2016, or the Separation Date, Angel R. Martinez, our former Chief Executive Officer stepped down from this position. However, Mr. Martinez continues to serve as non-executive Chairman of our Board. +In connection with his transition, we entered into a Consulting Agreement and General Release, or the Consulting Agreement, with Mr. Martinez, which replaced in full the Severance Agreement previously entered into with Mr. Martinez. Under the Consulting Agreement, Mr. Martinez agreed to provide consulting services from June 1, 2016 until the earliest to occur of (i) May 31, 2017, and (ii) fifteen days following the delivery of written notice to Mr. Martinez regarding an uncured material breach of any of his obligations under the Consulting Agreement, or an uncured material breach of any of his obligations under his confidentiality agreement with the Company, which we refer to as the Consulting Period. +The Consulting Agreement provides that we will pay Mr. Martinez aggregate consulting fees in the amount of $500,000, which will be paid in 12 equal monthly installments, less any legally required withholding and deductions. In addition, we agreed to pay Mr. Martinez certain amounts that were accrued and unpaid as of the Separation Date. In addition, any equity awards previously granted to Mr. Martinez, including any NSU Awards, LTIP Awards and SAR Awards, to the extent such awards were outstanding on the Separation Date, will remain outstanding subject to and consistent with the terms of the 2015 Plan and the 2006 Plan, as applicable, and the award agreements pursuant to which the equity awards were granted. During the Consulting Period, and during the period that Mr. Martinez continues to serve on our Board of Directors, Mr. Martinez will continue to perform "Continuous Service" for purposes of the outstanding equity awards. +Mr. Martinez’s receipt of these payments and other benefits is conditioned upon his continued compliance with the confidentiality, non-competition, non-solicitation and other standard covenants set forth in the Consulting Agreement. In particular, Mr. Martinez agreed not to accept employment from, or enter into another professional relationship with, any of our competitors, or to otherwise engage in any business activity that is competitive with our Company, until the later to occur of the termination of the Consulting Agreement or the termination of his service on our Board. +59 +Table of Contents +DIRECTOR COMPENSATION +In December 2014, changes to the Board compensation package provided to our directors who are not our employees, which we refer to as "Nonemployee Directors", were approved to take effect at the beginning of fiscal year 2016. Under the policy, for service during fiscal year 2016, Nonemployee Directors received an annual cash retainer of $65,000, plus an annual cash retainer of $15,000 for each Board committee assignment. Furthermore, the following positions were entitled to receive additional annual cash retainer fees: $100,000 for Lead Independent Director, $40,000 for Chairman of the Audit Committee, $35,000 for Chairman of the Compensation Committee, and $20,000 for Chairman of the Corporate Governance Committee. All or any portion of the cash retainer paid to any of our directors may, at the election of the director, be paid in stock pursuant to the 2015 Plan. +Nonemployee Directors also receive annual grants of our Common Stock with a total value of approximately $125,000, which are issued in equal quarterly installments with the number of shares to be determined using a rolling average of the closing price of our Common Stock during the last 10 trading days leading up to and including the 15 th day of the last month of each quarter. These grants are immediately vested on the date of grant. +Nonemployee Directors are reimbursed for any reasonable Board-related expenses. +Nonemployee Directors also receive product discounts, which are generally available to our employees and, from time to time, may receive products without charge in order to help expand the directors' knowledge of our products. +In 2011, our Board of Directors adopted stock ownership guidelines for Nonemployee Directors. Nonemployee Directors are required to hold our Common Stock with a value equal to five times their annual cash retainer within five years of joining our Board of Directors. In addition, each director must hold our Common Stock within one year of joining our Board of Directors. Any shares of Common Stock held by Nonemployee Directors in our Deferred Stock Unit Compensation Plan is counted as stock ownership under these guidelines. +Following his transition to non-executive Chairman of the Board, in addition to the standard Board compensation package provided to our Nonemployee Directors, Mr. Martinez will be entitled to receive an annual cash retainer fee of $160,000 for his service in that role. +The following table sets forth all compensation paid or awarded to our Board of Directors during fiscal year 2016. +Name +Year +Fees +Earned +($) +Stock +Awards +($) +Total +($) +Angel R. Martinez (4) +2016 +N/A +N/A +N/A +Chairman of our Board of Directors +John M. Gibbons +2016 +168,750 +124,731 +(1)(2) +293,481 +Lead Independent Director +Karyn O. Barsa +2016 +95,000 +124,731 +(1) +219,731 +Director +Nelson C. Chan +2016 +80,000 +124,731 +(1) +204,731 +Director +Michael F. Devine, III +2016 +135,000 +124,731 +(1) +259,731 +Director +John G. Perenchio +2016 +95,000 +124,731 +(1) +219,731 +Director +James E. Quinn +2016 +100,000 +124,731 +(1) +224,731 +Director +Lauri M. Shanahan +2016 +115,000 +124,731 +(1)(3) +239,731 +Director +Bonita C. Stewart +2016 +80,000 +124,731 +(1) +204,731 +Director +60 +Table of Contents +____________ +(1) +Represents grants of 426 shares of Common Stock at a per share price of $74.00 on June 15, 2015, 502 shares of Common Stock at a per share price of $62.80 on September 15, 2015, 619 shares of Common Stock at a per share price of $49.74 on December 15, 2015, and 546 shares of Common Stock at a per share price of $56.58 on March 15, 2016. +(2) +Amounts of compensation received on June 15, 2015, September 15, 2015 and December 15, 2015 were deferred until January 4, 2016. Amount of compensation received on March 15, 2016 is being deferred until January 2, 2017. All amounts were/are being deferred pursuant to such director's election under the Deferred Stock Unit Compensation Plan. +(3) +Amounts of compensation received on June 15, 2015, September 15, 2015 and December 15, 2015 were deferred until January 1, 2019. All amounts were/are being deferred pursuant to such director's election under the Deferred Stock Unit Compensation Plan. +(4) +Mr. Martinez received compensation as President and Chief Executive Officer of our Company for fiscal year 2016 as set forth in the "Summary Compensation Table" . He did not receive any compensation as a director in fiscal year 2016. Mr. Martinez will be entitled to receive an annual cash retainer fee of $160,000 for continued service as our non-executive Chairman of the Board. +61 +Table of Contents +EQUITY COMPENSATION PLAN INFORMATION +The following table sets forth information regarding shares of our Common Stock that may be issued under our equity compensation plans as of March 31, 2016. +Number of securities +to be issued +upon exercise of +outstanding options, +warrants and rights(1) +Weighted-average +exercise price of +outstanding options, +warrants and rights(2) +Number of securities +remaining available +for future issuance(3) +Equity compensation plans approved by security holders +1,220,391 +$26.73 +1,311,795 +Equity compensation plans not approved by security holders +— +— +— +Total +1,220,391 +$26.73 +1,311,795 +____________ +(1) +This amount includes shares underlying SARs, RSUs and NSUs outstanding pursuant to the 2015 Plan as of March 31, 2016. For awards subject to performance-based vesting criteria, the amount reported reflects the number of shares to be issued if the "maximum" performance level is achieved. However, we have determined that it is not probable that the "maximum" performance level will be achieved for certain awards. Assuming the "maximum" performance levels are not obtained for each of the outstanding awards, and assuming instead that the "target" performance levels are obtained, the amount reported would be decreased by 188,533 shares, and the amount shown in column (3) would be increased by an equal number of shares. Thus, the reported amount may significantly overstate the number of shares that are subject to outstanding awards under the 2015 Plan. Refer to the section of this Proxy Statement titled " Equity Incentive Plan Compensation" for additional information. +(2) +This amount reflects the weighted-average exercise price of the outstanding SARs, based on the closing price of our Common Stock on the respective grant dates. This amount does not take into account shares issuable upon the vesting of outstanding RSUs or NSUs, which have no exercise price. +(3) +This amount reflects the shares reserved for issuance under the 2015 Plan less the number of shares reported in column (1). This amount is subject to increase depending on our achievement with respect to certain performance criteria as discussed in footnote 1 above, and will increase to reflect any shares that are forfeited or otherwise terminated under the 2006 Plan. +62 +Table of Contents +SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT +The following table sets forth, as of May 31, 2016, certain information concerning the shares of Common Stock beneficially owned by (i) each person who is a Named Executive Officer, (ii) each director and director nominee, (iii) all executive officers and directors as a group (fourteen persons), and (iv) each person known by us to be the beneficial owner of more than 5% of our Common Stock. +Name and Address of Beneficial Owner(1) +Amount and +Nature of Beneficial +Ownership(2)(3) +Percent +of Common Stock(3) +Named Executive Officers +Angel R. Martinez (4) +484,596 +1.5 +% +David Powers +5,589 +* +Thomas A. George +15,863 +* +David E. Lafitte +2,642 +* +Stefano Caroti +— +* +Directors and Director Nominees +Angel R. Martinez +484,596 +* +John M. Gibbons (5) (6) +26,979 +* +Karyn O. Barsa +11,740 +* +Nelson C. Chan +2,631 +* +Michael F. Devine, III +9,806 +* +John G. Perenchio +51,209 +* +David Powers +5,589 +* +James E. Quinn +13,237 +* +Lauri M. Shanahan (6) +653 +* +Bonita C. Stewart +5,236 +* +All Directors and Executive Officers as a gr oup (fourteen persons) +631,328 +1.9 +% +5% Stockholders +FMR LLC (7) +3,448,162 +10.6 +% +BlackRock, Inc. (8) +3,081,532 +9.5 +% +Lazard Asset Management LLC (9) +2,667,502 +8.3 +% +The London Company (10) +2,372,902 +7.3 +% +Vanguard Group Inc. (11) +2,180,490 +6.7 +% +____________ +* +Percentage of shares beneficially owned does not exceed 1% of our total outstanding Common Stock. +(1) +The address of each beneficial owner is 250 Coromar Drive, Goleta, California 93117, unless otherwise noted. +(2) +Unless otherwise noted, our Company believes that each individual or entity named has sole investment and voting power with respect to the shares of Common Stock indicated as beneficially owned by them, subject to community property laws, where applicable. +(3) +Pursuant to Rule 13d-3(d)(1) of the Exchange Act, shares not outstanding which are subject to options, warrants, rights or conversion privileges exercisable on or before the date that is 60 days after May 31, 2016 are deemed outstanding for the purpose of calculating the number and percentage owned by such person, but not deemed outstanding for the purpose of calculating the number and percentage owned by any other person listed. +63 +Table of Contents +(4) +Includes exercisable SARs of 400,000. +(5) +These shares are held by the Gibbons Living Trust. Mr. Gibbons has joint voting and investment power over these shares. +(6) +The receipt of 8,445 and 546 additional shares has been deferred until future years by Ms. Shanahan and Mr. Gibbons, respectively, pursuant to such director's election under the Deferred Stock Unit Compensation Plan. +(7) +This information is based solely on a Schedule 13G/A filed by the party on March 10, 2016, whose business address is 245 Summer Street, Boston, MA 02210. FMR LLC, which identifies itself as a parent holding company, has sole voting power over 1,055,462 shares and sole dispositive power over 3,448,162 shares. +(8) +This information is based solely on a Schedule 13G/A filed by the party on January 26, 2016, whose business address is 55 East 52nd Street, New York, NY 10055. BlackRock, Inc., which identifies itself as a parent holding company, has sole voting power over 2,980,340 shares and sole dispositive power over 3,081,532 shares. +(9) +This information is based solely on a Schedule 13G filed by the party on February 5, 2016, whose business address is 30 Rockefeller Plaza, New York, NY 10112. Lazard Asset Management LLC has sole voting power over 1,067,549 shares and sole dispositive power over 2,667,502 shares. +(10) +This information is based solely on a Schedule 13G/A filed by the party on February 9, 2016, whose business address is 1800 Bayberry Court, Suite 301, Richmond, VA 23226. The London Company has sole voting and dispositive power over 2,186,937 shares and shared dispositive power over 185,965 shares. +(11) +This information is based solely on a Schedule 13G/A filed by the party on February 10, 2016, whose business address is 100 Vanguard Blvd., Malvern, PA 19355. The Vanguard Group has sole voting power over 58,993 shares, sole dispositive power over 2,121,673 shares and shared dispositive power over 58,817 shares. +64 +Table of Contents +SECTION 16 REPORTING COMPLIANCE +Section 16(a) of the Exchange Act requires our directors, executive officers and persons who own more than 10% of our Common Stock, which we collectively refer to as Section 16 Persons, to file initial reports of ownership and reports of changes in ownership of Common Stock with the SEC as well as provide copies of the reports to us. +To our knowledge, based solely on a review of the copies of such reports furnished to us from each Section 16 Person that no other reports were required, during fiscal year 2016, all Section 16(a) filing requirements applicable to the Section 16 Persons were complied with except that: +• +David E. Lafitte filed a Form 4 on February 5, 2016, which reported one transaction related to the sale of our Common Stock, that was due to be reported on February 4, 2016. +65 +Table of Contents +REPORT OF THE AUDIT COMMITTEE +The Audit Committee of our Board of Directors is responsible for providing independent, objective oversight of our financial reporting, our independent registered public accounting firm, the highest ranking manager within our internal audit function, legal and regulatory compliance, related party transactions, code of conduct and system of internal controls. The Audit Committee is currently composed of three directors, each of whom meets the independence and experience requirements under NYSE rules, as well as the independence requirements applicable to Audit Committee members under SEC rules. In addition, our Board of Directors has determined that each member of the Audit Committee qualifies as an "audit committee financial expert" under SEC rules. +Management is responsible for the preparation of our financial statements and financial reporting process including our system of internal controls. KPMG LLP, our independent registered public accounting firm, is responsible for performing an independent audit of our consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States), or the PCAOB, and expressing (i) an opinion on whether our consolidated financial statements present fairly, in all material respects, our financial position and results of operations and cash flows for the periods presented in conformity with US generally accepted accounting principles, and (ii) an opinion on whether we have maintained, in all material respects, effective internal control over financial reporting as of March 31, 2016, based on criteria established in the Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Audit Committee's responsibility is to monitor and oversee these processes. +In connection with these responsibilities, the Audit Committee met with management and KPMG LLP to review and discuss the March 31, 2016 consolidated financial statements and obtained from management their representation that our financial statements have been prepared in accordance with US generally accepted accounting principles. In addition, management represented that, as of March 31, 2016, our Company maintained effective internal control over financial reporting. +The Audit Committee also discussed with KPMG LLP the matters required by Auditing Standard No. 16, "Communication with Audit Committees" of the PCAOB, which includes, among other items, information regarding the conduct of the audit of our consolidated financial statements. The Audit Committee also received written disclosures from KPMG LLP required by the PCAOB's Rule 3200T: "Communication with Audit Committees Concerning Independence", and the Audit Committee discussed with KPMG LLP its independence from our Company and our management. The Audit Committee has further considered the compatibility of the services provided by KPMG LLP with KPMG LLP's independence. +The Audit Committee operates under a written charter, which was adopted by our Board of Directors and is assessed annually for adequacy by the Audit Committee. The Audit Committee held eight meetings during fiscal year 2016, including meetings with KPMG LLP and the highest ranking manager of internal audit, both with and without management present. In performing its functions, the Audit Committee acts only in an oversight capacity. It is not the responsibility of the Audit Committee to determine that our financial statements are complete and accurate, are presented in accordance with US generally accepted accounting principles or present fairly our results of operations for the periods presented, or that we maintain appropriate internal controls. Furthermore, the Audit Committee's oversight responsibilities do not independently assure that the audit of our financial statements has been carried out in accordance with the standards of the PCAOB or that our registered public accounting firm is independent. +Based upon the Audit Committee's review and discussions with management and KPMG LLP, and subject to the limitations of the Audit Committee's role and responsibilities referred to above and in the Audit Committee charter, the Audit Committee recommended that our Board of Directors include the audited consolidated financial statements in our Annual Report on Form 10-K for the year ended March 31, 2016, which was filed with the SEC on May 31, 2016. +THE AUDIT COMMITTEE +Michael F. Devine, III, Chair +Karyn O. Barsa +Nelson C. Chan +The Report of the Audit Committee shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act, or under the Exchange Act, except to the extent that our Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under such Acts. +66 +Table of Contents +RELATED PERSON TRANSACTIONS +Our legal department is primarily responsible for identifying and reviewing relationships and transactions in which our Company and our directors, executive officers, certain of our stockholders or their immediate family members are participants, to determine whether any of these related persons had or will have a direct or indirect material interest in such transactions. In order to identify potential related person transactions, our legal department annually prepares and distributes to all directors and executive officers a written questionnaire which includes questions intended to elicit information about any current or proposed related person transactions. In addition, our Code of Ethics addresses conflicts of interest where an individual's private interests interfere or conflict with the interests of our Company, including relationships with suppliers, customers or competitors. Conflicts of interest which might impair or appear to impair the exercise of judgment solely for the benefit of our Company and our stockholders are prohibited. In general, such conflicts must be approved by the legal department, the employee's supervisor or, in the case of directors, the Audit Committee. Information regarding potential conflicts of interest in violation of our Code of Ethics may be reported to our anonymous reporting hotline and may be subsequently obtained by the Chairman of our Audit Committee, the Chairman of our Board of Directors and the highest ranking manager of internal audit. +If a related person transaction is identified by our legal department as one which must be reported in our proxy statement pursuant to applicable SEC regulations, the Audit Committee is responsible for reviewing and approving or ratifying any such related person transaction. In evaluating related person transactions, the Audit Committee members apply the same standards of good faith and fiduciary duty that they apply to their general responsibilities as members of the Audit Committee and as individual directors. The Audit Committee may approve a related person transaction when, in its good faith judgment, it determines that the transaction is in the best interests of our Company and our stockholders. +There were no transactions with related persons that required disclosure under Item 404 of Regulation S-K during the fiscal year ended March 31, 2016, nor are any such transactions currently proposed. +67 +Table of Contents +PROPOSAL NO. 2 +RATIFICATION OF THE SELECTION OF KPMG LLP AS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +For fiscal year 2016, KPMG LLP provided audit services, which included an examination of our annual consolidated financial statements. A summary of the fees for these services provided by KPMG LLP is below. The Audit Committee has selected KPMG LLP to provide audit services to our Company for fiscal year 2017, which covers the period from April 1, 2016 to March 31, 2017. Our stockholders are being requested to ratify this selection at the Annual Meeting. A representative of KPMG LLP will attend the Annual Meeting and will have the opportunity to make a statement and/or respond to appropriate questions from stockholders present at the meeting. +Although this selection is not required to be submitted to a vote of our stockholders, the Audit Committee believes it is appropriate as a matter of good corporate governance to request that our stockholders ratify the selection. If our stockholders do not ratify the selection, the Audit Committee will consider the selection of another independent registered public accounting firm, but is not required to select a different firm. +Audit Fees and All Other Fees +Fees +2016 +2015 +Audit Fees ($) +2,534,000 +2,421,000 +Audit-Related Fees ($) +— +— +Tax Fees ($) +7,000 +15,000 +All Other Fees ($) +— +— +Total Fees ($) +2,541,000 +2,436,000 +Audit Fees +The audit fees presented above for fiscal years 2015 and 2016 include fees associated with the audit of our consolidated balance sheets, the related consolidated statements of comprehensive income, stockholders' equity, and cash flows, and the audit of internal control over financial reporting, as well as the reviews of our quarterly reports on Form 10-Q, and certain statutory audits required internationally. +Audit-Related Fees +Audit-related fees generally consist of fees for assurance and related services that are reasonably related to the performance of the audit of our annual reports on Form 10-K and review of our quarterly reports on Form 10-Q. There were no audit-related fees incurred during fiscal years 2016 or 2015. +Tax Fees +Tax fees include fees incurred for tax services, including tax compliance, tax advice and tax planning for income taxes and customs matters. +Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm +The Audit Committee administers our engagement of KPMG LLP and pre-approves all of KPMG LLP's audit and permissible non-audit services on a case-by-case basis. In approving non-audit services, the Audit Committee considers whether the engagement could compromise the independence of KPMG LLP, and whether for reasons of efficiency or convenience it is in the best interests of our Company to engage KPMG LLP as its independent registered public accounting firm to perform the services. The Audit Committee has determined that performance by KPMG LLP of the non-audit services listed above as "Tax Fees" did not affect their independence. +Prior to engagement, the Audit Committee pre-approves all independent registered public accounting firm services. During the year, circumstances may arise under which it may become necessary to engage the independent registered public accounting firm for additional services not contemplated in the original pre-approval categories. In those instances, the Audit Committee requires that those services be submitted to the Audit Committee Chairman for specific pre-approval before our Company can engage the independent registered public accounting firm to provide such services. The Audit Committee +68 +Table of Contents +Chairman reports any pre-approval decisions to the Audit Committee at its next scheduled meeting for approval by the Audit Committee. +Required Vote +Approval of this proposal requires the vote of a majority of the shares present and entitled to vote at the Annual Meeting. +BOARD RECOMMENDATION +OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE +"FOR" +THIS PROPOSAL NO. 2 TO RATIFY THE SELECTION OF +KPMG LLP AS OUR INDEPENDENT REGISTERED +PUBLIC ACCOUNTING FIRM +FOR FISCAL YEAR 2017. +69 +Table of Contents +PROPOSAL NO. 3 +ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION +We are asking our stockholders to approve, on a non-binding advisory basis, the compensation of our Named Executive Officers as described in detail in the section of this Proxy Statement titled "Compensation Discussion and Analysis" . +At our Annual Meeting of Stockholders held in 2011, a majority of our stockholders voted in favor of holding an advisory vote to approve executive compensation every year. Our Board of Directors considered these voting results and decided to adopt a policy providing for an annual advisory stockholder vote to approve our executive compensation. We are therefore holding this year’s advisory vote in accordance with that policy and pursuant to U.S. securities laws and regulations. +The Compensation Committee has structured our executive compensation program to: +• +Attract, incentivize and retain key executives; +• +Align executives' interests with those of our stockholders; +• +Pay for performance; and +• +Reward achievement of short-term and long-term goals. +Our results for fiscal year 2016 were challenged by record warm weather across the globe and store traffic declines across retail. While these issues have created lingering headwinds for the industry, our Company has responded aggressively which has resulted in restructuring charges of $24.7 million and other charges of $8.9 million. In light of our fiscal year 2016 results and our strong pay-for-performance compensation program: +• +No amounts were earned by our Named Executive Officers under our Cash Incentive Award in fiscal year 2016; +• +2016 NSU Equity Incentive Plan Awards were not earned; and +• +2016 LTIP Equity Incentive Awards are not expected to be earned as of March 31, 2016. +We believe that our executive compensation practices align pay with performance by: +• +Providing both cash and equity awards and an appropriate mix of these awards; +• +Establishing performance goals to reflect Company-wide financial and operating performance; +• +Requiring achievement of long and short-term Company goals before payment of certain compensation elements; and +• +Including reasonable vesting provisions for our equity awards. +We urge stockholders to carefully read the section of this Proxy Statement titled " Compensation Discussion and Analysis " beginning on page 27, which describes in greater detail our executive compensation policies and philosophy as well as the "Summary Compensation Table" and related compensation tables that follow it. Our Board of Directors and the Compensation Committee believe that the compensation policies and procedures described in this Proxy Statement are effective in achieving our compensation objectives. +Therefore, in accordance with Section 14A of the Exchange Act, and as a matter of good corporate governance, we ask our stockholders to approve the following advisory resolution at the Annual Meeting: +"RESOLVED, that our stockholders approve, on a non-binding advisory basis, the compensation of the Named Executive Officers, as described in the Compensation Discussion and Analysis, the Summary Compensation Table, and the related compensation tables, notes and narrative discussion in the Proxy Statement for our 2016 Annual Meeting of Stockholders." +70 +Table of Contents +Because this vote is advisory only, it will not be binding upon our Board of Directors or the Compensation Committee. However, the Compensation Committee will take the outcome of the vote into account when considering future executive compensation arrangements. +Required Vote +Approval of this proposal requires the vote of a majority of the shares present and entitled to vote at the Annual Meeting. +BOARD RECOMMENDATION +OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE +"FOR" +THIS PROPOSAL NO. 3 TO APPROVE, ON A NON-BINDING ADVISORY BASIS, +THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS. +71 +Table of Contents +OTHER BUSINESS OF THE ANNUAL MEETING +We do not know of any business other than that described in this Proxy Statement that will be presented for consideration by the stockholders at the Annual Meeting. If, however, any other business is properly brought before the Annual Meeting, shares represented by proxies will be voted in accordance with the best judgment of the persons named in such proxies or their substitutes. +72 +Table of Contents +ANNUAL REPORT ON FORM 10-K +A copy of the Annual Report has been posted on the Internet, along with this Proxy Statement, each of which is accessible by following the instructions in the Notice. The Annual Report contains consolidated financial statements of our Company and its subsidiaries and the report thereon of KPMG LLP, our independent registered public accounting firm. +We will provide a copy of the Annual Report without charge (except exhibits) upon the written request of any stockholder as of the Record Date. Exhibits are available from us upon reimbursement of our reasonable expenses. Such requests should be addressed to our corporate offices located at 250 Coromar Drive, Goleta, California 93117, Attention: Corporate Secretary. +BY ORDER OF THE BOARD OF DIRECTORS +/s/ David Powers +David Powers +Chief Executive Officer and President +Goleta, California +July 29, 2016 +73 \ No newline at end of file diff --git a/raw/proxies/0000910521/0000910521-16-000066/proxy_rpt.txt b/raw/proxies/0000910521/0000910521-16-000066/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..b358d2846c94538b4d62c6b5a4ae006b728396ba --- /dev/null +++ b/raw/proxies/0000910521/0000910521-16-000066/proxy_rpt.txt @@ -0,0 +1,6 @@ +RELATED PERSON TRANSACTIONS +Our legal department is primarily responsible for identifying and reviewing relationships and transactions in which our Company and our directors, executive officers, certain of our stockholders or their immediate family members are participants, to determine whether any of these related persons had or will have a direct or indirect material interest in such transactions. In order to identify potential related person transactions, our legal department annually prepares and distributes to all directors and executive officers a written questionnaire which includes questions intended to elicit information about any current or proposed related person transactions. In addition, our Code of Ethics addresses conflicts of interest where an individual's private interests interfere or conflict with the interests of our Company, including relationships with suppliers, customers or competitors. Conflicts of interest which might impair or appear to impair the exercise of judgment solely for the benefit of our Company and our stockholders are prohibited. In general, such conflicts must be approved by the legal department, the employee's supervisor or, in the case of directors, the Audit Committee. Information regarding potential conflicts of interest in violation of our Code of Ethics may be reported to our anonymous reporting hotline and may be subsequently obtained by the Chairman of our Audit Committee, the Chairman of our Board of Directors and the highest ranking manager of internal audit. +If a related person transaction is identified by our legal department as one which must be reported in our proxy statement pursuant to applicable SEC regulations, the Audit Committee is responsible for reviewing and approving or ratifying any such related person transaction. In evaluating related person transactions, the Audit Committee members apply the same standards of good faith and fiduciary duty that they apply to their general responsibilities as members of the Audit Committee and as individual directors. The Audit Committee may approve a related person transaction when, in its good faith judgment, it determines that the transaction is in the best interests of our Company and our stockholders. +There were no transactions with related persons that required disclosure under Item 404 of Regulation S-K during the fiscal year ended March 31, 2016, nor are any such transactions currently proposed. +67 +Table of Contents \ No newline at end of file diff --git a/raw/proxies/0000910521/0000910521-18-000025/proxy.txt b/raw/proxies/0000910521/0000910521-18-000025/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..6315825335eb1e9a20812069c2577487903f98b7 --- /dev/null +++ b/raw/proxies/0000910521/0000910521-18-000025/proxy.txt @@ -0,0 +1,3016 @@ +DEF 14A +1 +deck-def14ax2018.htm +DEF 14A 2018 PROXY STATEMENT +Document +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Proxy Statement Pursuant to Section 14(a) of +the Securities Exchange Act of 1934 (Amendment No. ) +Filed by the Registrant x +Filed by a Party other than the Registrant ¨ +Check the appropriate box: +¨ +Preliminary Proxy Statement +¨ +Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +x +Definitive Proxy Statement +¨ +Definitive Additional Materials +¨ +Soliciting Material under §240.14a-12 +DECKERS OUTDOOR CORPORATION +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +x +No fee required. +¨ +Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. +(1) +Title of each class of securities to which transaction applies: +(2) +Aggregate number of securities to which transaction applies: +(3) +Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): +(4) +Proposed maximum aggregate value of transaction: +(5) +Total fee paid: +¨ +Fee paid previously with preliminary materials. +¨ +Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. +(1) +Amount Previously Paid: +(2) +Form, Schedule or Registration Statement No.: +(3) +Filing Party: +(4) +Date Filed: +2018 +PROXY STATEMENT SUMMARY +This summary highlights information contained elsewhere in this Proxy Statement. This summary does not contain all of the information you should consider when making voting decisions. You should read this Proxy Statement carefully and completely before voting. +ANNUAL MEETING OF STOCKHOLDERS +DATE +September 14, 2018 +TIME +1:00 p.m. Pacific Time +VIRTUAL MEETING +The Annual Meeting will be held virtually via a live webcast, which can be accessed on the Internet by visiting www.virtualshareholdermeeting.com/DECK. +To access the Annual Meeting, you will need the 16-digit control number. The control number is provided on the Notice of Internet Availability of Proxy Materials you received in the mail, on your proxy card (if you requested to receive printed proxy materials), or through your broker or other nominee if you hold your shares in "street name". +Stockholders will be able to attend, vote and submit questions virtually during the Annual Meeting. +RECORD DATE +Stockholders as of the close of business on July 18, 2018 are entitled to attend and vote at the Annual Meeting. +PROPOSALS TO BE VOTED ON +PROPOSAL NUMBER +MATTER +BOARD VOTING RECOMMENDATION +PAGE REFERENCE +1 +Election of 10 directors +"FOR" EACH DIRECTOR NOMINEE +7 +2 +Ratification of selection of KPMG LLP as our independent registered public accounting firm for fiscal year 2019 +"FOR" +67 +3 +Approval, on a non-binding advisory basis, of the compensation of our Named Executive Officers as described in the Proxy Statement +"FOR" +69 +We may also consider and vote upon any other business that may properly come before the Annual Meeting, or at any postponements or adjournments thereof. As of the date of this Proxy Statement, we are not aware of any business to be presented for consideration at the Annual Meeting other than the matters described in this Proxy Statement. +HOW TO VOTE +Your vote is important to the future of Deckers Outdoor Corporation. You are eligible to vote if you were a stockholder at the close of business on July 18, 2018. Please refer to the section of this Proxy Statement titled "Questions and Answers about the 2018 Annual Meeting of Stockholders and Voting" for additional information on how to attend the virtual Annual Meeting and vote your shares. +i +PROPOSAL NO. 1 +ELECTION OF DIRECTORS +The following table provides summary information about each director nominee. +Board Committees +Name, +Primary Occupation +Age +Director +Since +Independent +Number of Other Public Company Boards +A +C +CG +John M. Gibbons +Private Investor, Entrepreneur and Chairman of our Board of Directors +69 +2000 +YES +None +Nelson C. Chan +Private Investor, Entrepreneur and Corporate Director +57 +2014 +YES +3 +l +Cynthia (Cindy) L. Davis +Corporate Director +56 +2018 +YES +1 +l +Michael F. Devine, III +Corporate Director +59 +2011 +YES +2 +ª +l +William L. McComb +Corporate Director +55 +2018 +YES +None +l +David Powers +Chief Executive Officer and President +52 +2016 +NO +None +James Quinn +Corporate Director +66 +2011 +YES +None +ª +Lauri M. Shanahan +Corporate Director +55 +2011 +YES +2 +ª +Brian A. Spaly +Private Investor, Entrepreneur and Corporate Director +41 +2018 +YES +None +l +Bonita C. Stewart +Vice-President, Global Partnerships at Google, Inc. +61 +2014 +YES +None +l +l +ª Committee Chair +A: +Audit Committee +C: +Compensation Committee +CG: +Corporate Governance Committee +• +In fiscal year 2018, no director nominee attended fewer than 75% of the meetings of our Board of Directors, which we sometimes refer to as our Board, or meetings of any Board committee on which he or she served. +• +Each director nominee is elected annually by a majority of the votes cast by the shares present virtually or represented by proxy and entitled to vote on the election of directors at the Annual Meeting. +• +Our Board of Directors recommends that you vote " FOR " each of the director nominees named in Proposal No. 1. +PROPOSAL NO. 2 +RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +• +As a matter of good corporate governance, we are asking our stockholders to ratify the selection of KPMG LLP as our independent registered public accounting firm for fiscal year 2019. +• +Ratification of the selection requires the affirmative vote of a majority of the outstanding shares present virtually or represented by proxy and entitled to vote on the proposal at the Annual Meeting. +• +Our Board of Directors recommends that you vote " FOR " Proposal No. 2. +ii +PROPOSAL NO. 3 +ADVISORY VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION +• +We are asking our stockholders to approve, on a non-binding advisory basis, the compensation of our Named Executive Officers, which we sometimes refer to as NEOs, as disclosed in the section of this Proxy Statement titled "Compensation Discussion and Analysis". +• +Advisory approval of the compensation of our Named Executive Officers requires the affirmative vote of a majority of the outstanding shares present virtually or represented by proxy and entitled to vote on the proposal at the Annual Meeting. +• +Our Board of Directors recommends that you vote " FOR " Proposal No. 3 because it believes our compensation program is effectively designed to achieve our business and strategic objectives as discussed in greater detail below. +OUR BUSINESS AND STRATEGIC OBJECTIVES +We have undertaken a strategic transformation of our business in order to effectively position ourselves to compete in a rapidly-evolving retail environment with the ultimate goal of continuing to drive stockholder value. The key components of our strategic plan are as follows: +• +Transform our organization to meet the challenges of a changing global marketplace +• +Position our brands for growth and omni-channel success +• +Deliver top tier operating profit margins and return on invested capital for stockholders +In particular, we have adopted a long-range strategic plan with a focus on achieving targets of $2 billion in revenue, operating margins of 13% and return on invested capital above 20% by the end of fiscal year 2020. +OUR COMPENSATION PROGRAM OBJECTIVES +The overarching objective of our executive compensation program is to effectively design our program to foster and encourage the achievement of our business and strategic objectives. In doing so, we routinely consider appropriate changes to our program to reflect our strategic direction and the evolving needs of our business. In addition, to ensure we have the talent necessary to achieve our strategic objectives, the Compensation Committee endeavors to develop a compensation program that is attractive and competitive in the marketplace. Our program also incorporates feedback from our stockholders, as detailed below under the section of this Proxy Statement titled " Stockholder Feedback on Executive Compensation ". +Consistent with our strategic objectives for the year, when designing our executive compensation program for fiscal year 2018, the Committee focused on continuing to build and retain our executive team, while providing them with incentives to focus on our key strategic initiatives including enhanced profitability, improved operating margins and the creation of long-term value for stockholders. These and other strategic considerations are clearly reflected in the design of our program, which demonstrates strong pay-for-performance alignment. Please see the section of this Proxy Statement titled “ Compensation Discussion and Analysis ” for additional information. +KEY CORPORATE GOVERNANCE CHANGES +In furtherance of our strategic objectives, we experienced a number of key changes to our Board and management team during fiscal year 2018. including the following: +• +In August 2017, Angel R. Martinez resigned as Chairman of our Board of Directors. He continued to serve as a member of our Board until his retirement from that role in October 2017, after serving as a director for 12 years. John M. Gibbons, an independent director, was appointed Chairman in September 2017. +• +Our Corporate Governance Guidelines were revised to remove the role of "Lead Director" and the duties and responsibilities of this role were assigned to the Chairman. The position of Chief Executive Officer and Chairman is currently separated as we believe this is the most appropriate governance structure for us at this time. +• +In April 2018, John G. Perenchio resigned as a member of our Board of Directors, after serving as a director for 12 years, and William L. McComb was appointed as a member of our Board. +iii +• +In June 2018, our Board amended our bylaws to increase the size of our Board to ten directors. +• +Also in June 2018, Karyn O. Barsa resigned as a member of our Board of Directors, after serving as a director for 10 years, and Cindy L. Davis and Brian A. Spaly were appointed as members of our Board. +• +At the Annual Meeting, stockholders are being asked to elect 10 directors to serve until the next annual meeting of stockholders to be held in 2019. If all nominees are elected, our Board will consist of 10 members, and nine out of 10 members of our Board, and all members of each of its standing committees, will continue to be “independent directors” under applicable SEC and NYSE rules. +iv +NOTICE OF ANNUAL MEETING OF STOCKHOLDERS +TO OUR STOCKHOLDERS: +We are pleased to invite you to attend the 2018 Annual Meeting of Stockholders of Deckers Outdoor Corporation, to be held on Friday, September 14, 2018, beginning at 1:00 p.m. Pacific Time. +Proposals to be Voted Upon : +1 +Election of Directors . To elect 10 directors to serve until the annual meeting of stockholders to be held in 2019, or until their successors are duly elected and qualified. +2 +Ratification of Selection of Accounting Firm . To ratify the selection of KPMG LLP as our independent registered public accounting firm for fiscal year 2019, which covers the period from April 1, 2018 to March 31, 2019. +3 +Advisory Vote on Executive Compensation . To approve, on a non-binding advisory basis, the compensation of our Named Executive Officers, as disclosed in the section of this Proxy Statement titled "Compensation Discussion and Analysis" . +Other Business . To consider and vote upon any other business that may properly come before the Annual Meeting, or at any postponements or adjournments thereof. +Virtual Annual Meeting : +We are excited to embrace the latest technology to provide expanded access, improved communication, and cost savings to our stockholders and our Company. The Annual Meeting will be a completely virtual meeting of stockholders, which will be conducted via a live webcast. We believe hosting a virtual meeting will enable increased stockholder attendance and participation while also reducing the cost of the Annual Meeting. You will be able to attend the Annual Meeting online and submit your questions during the meeting by visiting www.virtualshareholdermeeting.com/DECK . You will also be able to vote your shares electronically at the Annual Meeting. +Board Recommendations : +Our Board of Directors recommends that you vote " FOR " each of the director nominees named in Proposal No. 1 and " FOR " Proposal Nos. 2 and 3. +Voting at the Annual Meeting : +Our Board of Directors has fixed the close of business on July 18, 2018 as the record date for determining which stockholders are entitled to notice of and to vote at the Annual Meeting, or at any postponements or adjournments thereof. Only stockholders as of the close of business on the record date are entitled to notice of, and to vote virtually or by proxy at, the Annual Meeting. +BY ORDER OF THE BOARD OF DIRECTORS +David Powers +Chief Executive Officer and President +Your vote is very important. +Whether or not you plan to attend the virtual Annual Meeting, we encourage you to read this Proxy Statement and submit your proxy or voting instructions as soon as possible. For specific instructions on how to vote your shares, please refer to the instructions on the Notice of Internet Availability of Proxy Materials you received in the mail, the section of this Proxy Statement titled " Questions and Answers about the 2018 Annual Meeting of Stockholders and Voting " or, if you requested to receive printed proxy materials, your enclosed proxy card. +Approximate Date of Mailing of Notice of Internet Availability of Proxy Materials: July 27, 2018 +v +Table of Contents +TABLE OF CONTENTS +2018 Proxy Statement Summary +i +Notice of Annual Meeting of Stockholders +v +Proxy Statement +1 +Questions and Answers about the 2018 Annual Meeting of Stockholders and Voting +2 +Proposal No. 1 - Election of Directors +7 +Director Nominees +9 +Corporate Governance +18 +Executive Officers +23 +Compensation Discussion and Analysis +26 +Executive Summary +27 +Compensation Philosophy and Objectives +32 +Compensation Consultant and Peer Group +35 +Elements of Fiscal Year 2018 Executive Compensation Program +37 +Other Compensation Considerations +46 +Report of the Compensation Committee +49 +Summary Compensation Table +50 +Grants of Plan-Based Awards in Fiscal Year 2018 +52 +Outstanding Equity Awards at 2018 Fiscal Year End +53 +Fiscal Year 2018 Option Exercises and Stock Vested +54 +Nonqualified Deferred Compensation +55 +Potential Payments Upon Termination or Change of Control +56 +Director Compensation +60 +Equity Compensation Plan Information +61 +Security Ownership of Certain Beneficial Owners and Management +62 +Section 16 Reporting Compliance +64 +Report of the Audit Committee +65 +Related Person Transactions +66 +Proposal No. 2 - Ratification of the Selection of KPMG LLP as Independent Registered Public Accounting Firm +67 +Proposal No. 3 - Advisory Vote to Approve Named Executive Officer Compensation +69 +Other Business at the Annual Meeting +71 +Annual Report on Form 10-K +72 +vi +Table of Contents +ANNUAL MEETING OF STOCKHOLDERS +Meeting Date: September 14, 2018 +PROXY STATEMENT +GENERAL INFORMATION +The enclosed Proxy Statement is solicited on behalf of the Board of Directors of Deckers Outdoor Corporation, which we sometimes refer to as the Company, we, us, or our, for use at our 2018 Annual Meeting of Stockholders, or the Annual Meeting, to be held virtually via a live webcast on Friday, September 14, 2018 at 1:00 p.m. Pacific Time, or at any postponements or adjournments thereof. The virtual Annual Meeting can be accessed by visiting www.virtualshareholdermeeting.com/DECK, where you will be able to attend the Annual Meeting, submit questions and vote online. The Annual Meeting is being held for the purposes described in this Proxy Statement and in the accompanying Notice of Annual Meeting of Stockholders. +1 +Table of Contents +QUESTIONS AND ANSWERS ABOUT THE 2018 ANNUAL MEETING OF STOCKHOLDERS AND VOTING +The following questions and answers are intended to briefly address potential questions that our stockholders may have regarding this Proxy Statement and the Annual Meeting. They are also intended to provide our stockholders with certain information that is required to be provided under the rules and regulations of the Securities and Exchange Commission, or SEC. These questions and answers may not address all of the questions that are important to you as a stockholder. If you have additional questions about this Proxy Statement or the Annual Meeting, please refer to the question titled "Whom should I contact with other questions?" below. +Q: When and where will the Annual Meeting be held? +A: The Annual Meeting will be held on Friday, September 14, 2018, beginning at 1:00 p.m. Pacific Time. The Annual Meeting will be conducted entirely online via a live webcast. Our stockholders may participate in the Annual Meeting by visiting the following website: www.virtualshareholdermeeting.com/DECK . You will need a 16-digit control number to attend and participate in the live webcast of the Annual Meeting. Please refer to the question titled " How can I vote my shares? " for information on obtaining your 16-digit control number. +Q: Why did I receive these proxy materials? +A: We are providing this Proxy Statement in connection with the solicitation by our Board of Directors of proxies to be voted at the Annual Meeting, or at any postponements or adjournments thereof. This Proxy Statement contains important information for you to consider when deciding how to vote on the matters brought before the Annual Meeting. You are invited to attend the Annual Meeting virtually to vote on the proposals described in this Proxy Statement. However, you do not need to attend the Annual Meeting to vote your shares. Instead, you may vote your shares using one of the other voting methods described in this Proxy Statement. +Whether or not you expect to attend the virtual Annual Meeting, please vote your shares as soon as possible in order to ensure your representation at the Annual Meeting. +Q: Why did I receive a notice in the mail regarding the Internet availability of proxy materials? +A: Instead of mailing printed copies to each of our stockholders, we have elected to provide access to the proxy materials over the Internet under the SEC's "notice and access" rules. These rules allow us to make our stockholders aware of the Annual Meeting and the availability of the proxy materials by sending a Notice of Internet Availability of Proxy Materials, or the Notice, which provides instructions on how to access the full set of proxy materials through the Internet or make a request to have printed proxy materials delivered by mail. Accordingly, on or about July 27, 2018, we mailed the Notice to each of our stockholders. The Notice contains instructions on how to access the proxy materials, including this Proxy Statement and our Annual Report on Form 10-K, or the Annual Report, for the fiscal year ended March 31, 2018, or fiscal year 2018, each of which are available at www.proxyvote.com. The Notice also provides instructions on how to vote your shares through the Internet, by telephone, by mail or virtually at the Annual Meeting. +Q: What is the purpose of complying with the SEC's "notice and access" rules? +A: We believe compliance with the SEC's "notice and access" rules allows us to provide our stockholders with the materials they need to make informed decisions, while lowering the costs of printing and delivering those materials and reducing the environmental impact of the Annual Meeting. However, if you would prefer to receive printed proxy materials, please follow the instructions included in the Notice. If you have previously elected to receive the proxy materials electronically, you will continue to receive these materials electronically unless you elect otherwise. +Q: Who can vote at the Annual Meeting? +A: Only our stockholders at the close of business on July 18, 2018, or the Record Date, will be entitled to attend and vote at the Annual Meeting. On the Record Date, there were 30,368,803 shares of our common stock outstanding and entitled to vote. Each share of common stock issued and outstanding on the Record Date is entitled to one vote on any matter to be voted upon by our stockholders at the Annual Meeting. +• +Holders of Record - If, on the Record Date, your shares were registered directly in your name with our transfer agent, Computershare, then you are a "holder of record". As a holder of record, you may vote at the virtual Annual Meeting, or you may vote by proxy. Whether or not you plan to attend the Annual Meeting virtually, we urge you to vote your shares using one of the voting methods described in this Proxy Statement and the Notice. If you are a holder of record and you indicate when voting that you wish to vote as recommended by our Board, or if you submit a vote by proxy without giving specific voting +2 +Table of Contents +instructions, then the proxyholders will vote your shares as recommended by our Board on all matters described in this Proxy Statement. Thomas Garcia and Steven J. Fasching, the designated proxyholders, are members of our management. +• +Beneficial Owners - If, on the Record Date, your shares were held in an account at a bank, broker, dealer, or other nominee, then you are the "beneficial owner" of shares held in "street name" and this Proxy Statement is being made available to you by that nominee. The nominee holding your account is considered the holder of record for purposes of voting at the virtual Annual Meeting. As a beneficial owner, you have the right to direct your nominee on how to vote the shares in your account. You are also invited to attend the Annual Meeting virtually. However, since you are not the holder of record, you may not vote your shares at the Annual Meeting unless you request and obtain a valid "legal proxy" or obtain a 16-digit control number from your nominee. Please contact your nominee directly for additional information. +Q: What is the quorum requirement for the Annual Meeting? +A: The presence at the Annual Meeting, virtually (even if not voting) or by proxy, of the holders of a majority of the voting power of all the shares of our common stock entitled to be voted at the Annual Meeting, will constitute a quorum at the Annual Meeting. We will treat shares of common stock represented by a properly voted proxy, including shares for which authority is withheld or that a stockholder abstains from voting, as well as broker non-votes, as present at the Annual Meeting for the purposes of determining the existence of a quorum. If a quorum is not present, the Annual Meeting will be adjourned until a quorum is obtained. +Q: What proposals am I being asked to vote upon at the Annual Meeting? +A: The proposals to be voted on at the Annual Meeting, and our Board's recommendation with respect to each proposal, are as follows: +PROPOSAL +DESCRIPTION +BOARD VOTING RECOMMENDATION +Proposal No. 1 : +Election of Directors +Elect 10 director nominees to serve until the annual meeting of stockholders to be held in 2019, or until their successors are duly elected and qualified +" FOR " EACH DIRECTOR NOMINEE +Proposal No. 2 : +Ratification of Selection of Accounting Firm +Ratify the selection of KPMG LLP as our independent registered public accounting firm for fiscal year 2019 +" FOR " +Proposal No. 3 : +Advisory Vote on Executive Compensation +Approve, on a non-binding advisory basis, the compensation of our Named Executive Officers, as disclosed in the section of this Proxy Statement titled "Compensation Discussion and Analysis" +" FOR " +3 +Table of Contents +Q: W hat are the voting requirements to approve the proposals, and what happens if I do not vote? +A: The voting requirements to approve each of the proposals to be voted upon at the Annual Meeting, as well as the effects of abstentions and broker non-votes on each of the proposals are as follows: +PROPOSAL +VOTING REQUIREMENT +EFFECT OF ABSTENTIONS (2) +EFFECT OF BROKER NON-VOTES (3) +Proposal No. 1 : +Election of Directors +Each director nominee in an uncontested election (1) will be elected by a majority of the votes cast by the shares present virtually or represented by proxy and entitled to vote on the election of directors at the Annual Meeting (assuming that a quorum is present). +A "majority of the votes cast" means that the number of votes "FOR" a nominee for director must exceed 50% of the total votes cast in the election of directors. +A "WITHHOLD" vote with respect to a director nominee will not count as a vote cast for that nominee, will not be included in the total number of votes cast, and thus will have no effect on the outcome of the vote on this proposal. +Broker non-votes will not count as votes cast on this proposal and will have no effect on the outcome of the vote on this proposal. +Proposal No. 2 : +Ratification of Selection of Accounting Firm +Requires the affirmative vote of a majority of the outstanding shares present virtually or represented by proxy and entitled to vote on the proposal at the Annual Meeting (assuming that a quorum is present). +An "ABSTAIN" vote will be included in the total number of shares present and entitled to vote on this proposal, and will have the same effect as a vote "AGAINST" this proposal. +Because a bank, broker, dealer or other nominee may generally vote without instructions on this proposal, we do not expect any broker non-votes to result for this proposal. +Proposal No. 3 : +Advisory Vote on Executive Compensation +Requires the affirmative vote of a majority of the outstanding shares present virtually or represented by proxy and entitled to vote on the proposal at the Annual Meeting (assuming that a quorum is present). +An "ABSTAIN" vote will be included in the total number of shares present and entitled to vote on this proposal, and will have the same effect as a vote "AGAINST" this proposal. +Broker non-votes will not count as shares present and entitled to vote on this proposal and will have no effect on the outcome of the vote on this proposal. +(1) +An "uncontested election" is an election in which the number of nominees for director is not greater than the number of directors to be elected. A "contested election" is an election in which the number of nominees for director nominated by (i) our Board of Directors, (ii) any stockholder, or (iii) a combination of our Board of Directors and any stockholder, exceeds the number of directors to be elected. In a contested election, directors will be elected by a plurality of the votes cast by the shares present virtually or represented by proxy and entitled to vote on the election of directors at the Annual Meeting. +(2) +You may vote to "WITHHOLD" authority for one or more nominees for director and may "ABSTAIN" from voting on one or more of the other matters described in this Proxy Statement. Shares for which authority is withheld or that a stockholder abstains from voting will be counted for purposes of determining whether a quorum is present at the Annual Meeting. +(3) +Pursuant to applicable NYSE rules, if you are a beneficial owner of shares held in street name and do not provide the bank, broker, dealer or other nominee that holds your shares with specific voting instructions, the nominee may generally vote in its discretion on “routine” matters (such as Proposal No. 2). However, if the nominee that holds your shares does not receive instructions from you on how to vote your shares on a “non-routine” matter (such as Proposal Nos. 1 and 3), it will be unable to vote your shares on that matter. When this occurs, it is generally referred to as a “broker non-vote”. Broker non-votes will be counted for purposes of determining whether a quorum is present at the Annual Meeting. +Q: +What happens if a director nominee fails to receive a majority vote in an uncontested election at the Annual Meeting? +A: Each incumbent director standing for reelection at the Annual Meeting has tendered an irrevocable letter of resignation, effective upon such incumbent director not receiving a majority vote at the Annual Meeting and acceptance of such resignation by our Board of Directors. Our Board must accept or reject such resignation within 90 days following certification of the stockholder vote in accordance with the procedures established by our bylaws. If a director’s resignation offer is not accepted by our Board, that director will continue to serve until our annual meeting of stockholders to be held in 2019 and his or her successor is duly elected and qualified, or until the director’s earlier death, resignation, or removal. +Any director nominee who is not an incumbent director and who fails to receive a majority vote in an uncontested election will not be elected as a director, and a vacancy will be left on our Board of Directors. Our Board, in its sole discretion, may either fill a vacancy resulting from a director nominee not receiving a majority vote pursuant to our bylaws or decrease the size of our Board to eliminate the vacancy. All director nominees are incumbent directors standing for reelection at the Annual Meeting. +4 +Table of Contents +Q: Could other matters be decided at the Annual Meeting? +A: As of the date of this Proxy Statement, we are not aware of any business to be presented for consideration at the Annual Meeting other than the matters described in this Proxy Statement. If, however, other matters are properly presented at the Annual Meeting, the persons named as proxies will vote in accordance with their discretion with respect to those matters. +Q: How can I vote my shares? +A: Your shares can be voted as follows: +• +Holders of Record - Holders of record can vote by proxy or by attending the virtual Annual Meeting where votes can be submitted via live webcast. If you wish to vote by proxy, you can vote by Internet, telephone or by mail as described below. Whether or not you plan to attend the Annual Meeting virtually, we urge you to vote by proxy to ensure that your vote is counted. +To vote at the Annual Meeting virtually by live webcast you will need to visit the following website: www.virtualshareholdermeeting.com/DECK. Y ou will need the 16-digit control number included on the Notice or on your proxy card (if you requested to receive printed proxy materials). The method you use to vote by proxy will not limit your right to attend the Annual Meeting or vote at the Annual Meeting virtually. All shares that have been properly voted and not revoked will be voted at the Annual Meeting. However, even if you plan to attend the Annual Meeting virtually, we recommend that you vote your shares in advance, so that your vote will be counted if you later decide not to attend the Annual Meeting. +To vote by Internet , you will need the 16-digit control number included on the Notice or on your proxy card (if you requested to receive printed proxy materials). Internet voting is available 24 hours a day and will be accessible until 11:59 p.m. EST on September 13, 2018 by visiting www.proxyvote.com and following the instructions. +To vote by telephone , you will need the 16-digit control number included on the Notice or on your proxy card (if you requested to receive printed proxy materials). Telephone voting is available 24 hours a day and will be accessible until 11:59 p.m. EST on September 13, 2018 by calling 1-800-690-6903 and following the prompts. +To vote by mail , follow the instructions provided on your proxy card. Simply mark, sign and date your proxy card and return it promptly in the postage-paid envelope provided. In order to be effective, completed proxy cards must be received by 11:59 p.m. EST on September 13, 2018. This option is only available if you requested to receive printed proxy materials. +• +Beneficial Owners - If you are the beneficial owner of your shares, you should have received the Notice or a proxy card with this Proxy Statement from your bank, broker, dealer or other nominee rather than from us. Simply (i) use the 16-digit control number to vote on the Internet before the Annual Meeting or virtually at the Annual Meeting, or (ii) if you requested to receive printed proxy materials, vote by following the instructions provided on the proxy card which you received from your nominee. Your 16-digit control number may be included in the voting instructions form that accompanied the proxy materials. If your nominee did not provide you with a 16-digit control number in the voting instructions form that accompanied the proxy materials, you may be able to log onto the website of your nominee prior to the start of the Annual Meeting, on which you will need to select the stockholder communications mailbox link through to the Annual Meeting, which will automatically populate your 16-digit control number in the virtual Annual Meeting interface. To vote virtually at the Annual Meeting, you must first obtain a valid "legal proxy" from your bank, broker, dealer or other nominee. Follow the instructions from your bank, broker, dealer or other nominee to request a "legal proxy". +Q: What can I do if I change my mind after I vote my shares? +A: You may change your vote at any time before the polls are closed at the Annual Meeting. +• +Holders of Record - If you are a holder of record, you may change your vote by (i) providing written notice of revocation to Deckers Outdoor Corporation, 250 Coromar Drive, Goleta, California 93117, Attention: Corporate Secretary, (ii) executing a subsequent proxy using any of the voting methods discussed above (subject to the deadlines for voting with respect to each method), or (iii) attending the virtual Annual Meeting and voting via live webcast. However, simply attending the virtual Annual Meeting will not, by itself, revoke your proxy. +• +Beneficial Owners - If you are a beneficial owner of your shares and you have instructed your bank, broker, dealer or other nominee to vote your shares, you may change your vote by following the directions received from your nominee to change those voting instructions, or by attending the virtual Annual meeting and voting via live webcast, which can be accomplished as described above. +Subject to any revocation, all shares represented by properly executed proxies will be voted in accordance with the instructions on the applicable proxy, or, if no instructions are given, in accordance with the recommendations of our Board of Directors as described above. +5 +Table of Contents +Q: Who is paying for the cost of this proxy solicitation? +A: The solicitation of proxies is made on behalf of our Board of Directors and all the expenses of soliciting proxies from stockholders will be borne by our Company. In addition to the solicitation of proxies by use of the mail, our directors, officers and regular employees may communicate with stockholders personally or by email, telephone, or otherwise for the purpose of soliciting such proxies. No additional compensation will be paid to any such persons for such solicitation, although we may reimburse them for reasonable out-of-pocket expenses incurred in connection with such solicitation. We will reimburse banks, brokers, dealers and other nominees for their reasonable out-of-pocket expenses in forwarding solicitation material to beneficial owners of shares held of record by such persons. The total estimated cost of the solicitation of proxies is approximately $75,000. +Q: I share an address with another stockholder, and we received only one paper copy of the proxy materials. How may I obtain an additional copy of the proxy materials? +A: We have adopted a procedure called "householding", which the SEC has approved. Under this procedure, we are delivering a single copy of the Notice and, if applicable, this Proxy Statement and the Annual Report, to multiple stockholders who share the same address unless we have received contrary instructions from one or more of the stockholders. This procedure reduces our printing and mailing costs. Stockholders who participate in householding will continue to be able to access and receive separate proxy materials. Upon written or oral request, we will promptly deliver a separate copy of the Notice and, if applicable, this Proxy Statement and the Annual Report, to any stockholder at a shared address to which we delivered a single copy of any of these documents. To receive a separate copy of the Notice and, if applicable, this Proxy Statement or the Annual Report, or if you wish to receive separate copies in the future, please contact: Deckers Outdoor Corporation, 250 Coromar Drive, Goleta, California 93117, Attention: Corporate Secretary, Telephone: (805) 967-7611. +In addition, if you are currently a stockholder sharing an address with another stockholder and wish to receive only one copy of future proxy materials for your household, please contact us using the contact information set forth above. Stockholders who are beneficial owners of shares held in street name may contact their bank, broker, dealer or other nominee to request information about householding. +Q: Where can I find the voting results of the Annual Meeting? +A: We will announce preliminary voting results with respect to each proposal at the Annual Meeting. In accordance with SEC rules, final voting results will be published in a Current Report on Form 8-K within four business days following the Annual Meeting, unless final results are not known at that time, in which case preliminary voting results will be published within four business days of the Annual Meeting and final voting results will be published once we know them. +Q : Where else can I find these proxy materials? +A: This Proxy Statement and the Annual Report are available at www.deckers.com/investors . Other information contained on or accessed through our website does not constitute part of this Proxy Statement. You should not consider other information contained on or accessed through our website in deciding how to vote your shares. References to our website address in this Proxy Statement are inactive textual references only. +Q: Whom should I contact with other questions? +A: If you have additional questions about this Proxy Statement or the Annual Meeting, or if you would like additional copies of this Proxy Statement, please contact: Deckers Outdoor Corporation, 250 Coromar Drive, Goleta, California 93117, Attention: Corporate Secretary, Telephone: (805) 967-7611. +6 +Table of Contents +PROPOSAL NO. 1 +ELECTION OF DIRECTORS +Overview +Our bylaws provide for the annual election of directors. Our bylaws also provide that our Board of Directors will consist of not less than one nor more than 10 members. The specific number of members of our Board within this range is established by our Board, and has been fixed at 10. +At the Annual Meeting, stockholders will be asked to elect 10 directors to serve until the next annual meeting of stockholders to be held in 2019, or until their successors are duly elected and qualified. The names and certain information concerning the persons nominated by our Board of Directors to stand for election as directors at the Annual Meeting are set forth in the section of this Proxy Statement titled “ Director Nominees ” below. +If all nominees for director are elected, then, following the Annual Meeting, our Board will consist of 10 members, and nine out of 10 members of our Board, and all members of each of its standing committees, will continue to be “independent directors” under applicable SEC and NYSE rules. +Agreements and Relationships with Directors +No arrangement or understanding exists between any of our directors, nominees for director or executive officers and any other person pursuant to which any of them were selected as our director, nominee for director or executive officer. +There are no family relationships among any of our directors, nominees for director or executive officers. There are no legal proceedings related to any of our directors, nominees for director or executive officers which are required to be disclosed pursuant to applicable SEC rules. +Director Nominations +The Corporate Governance Committee is responsible for identifying and evaluating nominees for election to our Board of Directors. In addition to the candidates proposed by our Board or identified by the Corporate Governance Committee, the Committee considers candidates for director proposed by stockholders, provided such recommendations are made in accordance with the procedures set forth in our bylaws. Please refer to the question titled " How can stockholders nominate a candidate for election as a director? " above. Stockholder nominations that meet the criteria outlined below will receive the same consideration as nominations made by the Corporate Governance Committee. +Director Qualifications +Directors are responsible for overseeing and monitoring our business consistent with their fiduciary duties to our stockholders. This significant responsibility requires highly-skilled individuals with various qualities, attributes and professional experience. Our Board believes there are both general requirements for service as a member of our Board that are applicable to all directors, and other specialized characteristics that should be represented on our Board as a whole, but not necessarily by each director. +Qualifications for All Directors +Essential criteria for all director candidates considered by the Corporate Governance Committee include the following: +• +Personal and professional integrity +• +Good business judgment +• +Relevant experience and skills +• +Ability to effectively serve the long-term interests of our stockholders +• +Commitment to devoting sufficient time and energy to diligently performing duties as a director +Board Diversity +The Corporate Governance Committee considers many factors when identifying nominees for director, including diversity with respect to personal characteristics (including race and gender), as well as diversity in the experience and skills that contribute to our Board's performance of its responsibilities in the oversight of our business. However, the Committee has not adopted a formal policy with respect to the consideration of diversity. +7 +Table of Contents +Specific Qualifications and Skills Represented on our Board +The Corporate Governance Committee believes the competencies we seek in our directors should support our strategies for long-term success. Below we identify the key qualifications and skills our directors collectively bring to our Board that we believe are important in light of our business and strategic objectives. The particular qualifications and skills that our Board considered in nominating each individual director nominee are included in the directors’ individual biographies below, and are also summarized in a chart following the biographical section. +8 +Table of Contents +DIRECTOR NOMINEES +Our Board of Directors has nominated the following ten directors for election at the Annual Meeting. Important summary information about the nominees for director is set forth in the table below. Following the table is certain biographical information about each nominee for director, as well as selected information about the specific qualifications, attributes, skills and experience that led our Board to conclude that each nominee for director is qualified to serve on our Board. +On April 25, 2018, John G. Perenchio retired as a member of our Board. On June 4, 2018, Karyn O. Barsa retired as a member of our Board. We thank Mr. Perenchio and Ms. Barsa for their service. +Mr. McComb was appointed to serve as a member of our Board effective as of April 25, 2018. Ms. Davis and Mr. Spaly were appointed to serve as members of our Board effective as of June 5, 2018. +Board Committees +Name, +Primary Occupation +Age +Director +Since +Independent +Number of Other Public Company Boards +A +C +CG +John M. Gibbons +Private Investor, Entrepreneur and Chairman of our Board of Directors +69 +2000 +YES +None +Nelson C. Chan +Private Investor, Entrepreneur and Corporate Director +57 +2014 +YES +3 +l +Cynthia (Cindy) L. Davis +Corporate Director +56 +2018 +YES +1 +l +Michael F. Devine, III +Corporate Director +59 +2011 +YES +2 +ª +l +William L. McComb +Corporate Director +55 +2018 +YES +None +l +David Powers +Chief Executive Officer and President +52 +2016 +NO +None +James Quinn +Corporate Director +66 +2011 +YES +None +ª +Lauri M. Shanahan +Corporate Director +55 +2011 +YES +2 +ª +Brian A. Spaly +Private Investor, Entrepreneur and Corporate Director +41 +2018 +YES +None +l +Bonita C. Stewart +Vice-President, Global Partnerships at Google, Inc. +61 +2014 +YES +None +l +l +ª +Committee Chair +A: +Audit Committee +C: +Compensation Committee +CG: +Corporate Governance Committee +9 +Table of Contents +JOHN M. GIBBONS +Age: 69 +Director Since: 2000 +Chairman of our Board +Public Company Directorships: +None +Mr. Gibbons is a private investor, entrepreneur and the Chairman of our Board. He is a director and member of the compensation committee of The Learning Network, Inc. He also served as a director and chair of the audit committee of National Technical Systems, Inc. (NASDAQ: NTSC), a provider of integrated testing, certification, quality registration and systems evaluation services, from September 2003 until its acquisition in November 2013. +Selected Qualifications and Skills +• +High Level of Financial Literacy - Currently serves as a member of the compensation committee of The Learning Network, Inc. Previously served as Chair of our Audit Committee until 2011. From June 2000 to April 2004, Mr. Gibbons was vice chair of TMC Communications, Inc., a long distance, data and internet services provider, and was its chief executive officer from June 2001 to April 2003. Mr. Gibbons was also vice chair of Assisted Living Corporation, a national provider of assisted living services, from March 2000 to December 2001. +• +Risk Oversight - Extensive experience in risk oversight as the former Chair of our Audit Committee and former chairman of the audit committee of National Technical Systems, Inc. +• +Industry -18 years of experience as a director of our Company. +• +Public Company Management - Previously served as chief executive officer and chief operating officer, and currently serves as a director, of The Learning Network, Inc. Previously employed by The Sports Club Company, where he was chief executive officer and a director from July 1999 to February 2000, and president and chief operating officer from January 1995 to July 1999. +• +Entrepreneurial - Has served in a variety of leadership positions for several companies during periods of expansion. +• +Luxury/Premium Branding - Involved in several capacities at The Sports Club Company, Inc., a company which markets clubs to affluent, health-conscious individuals. +NELSON C. CHAN +Age: 57 +Director Since: 2014 +Board Committees: +Audit +Public Company Directorships: +Adesto Technologies Corporation (NASDAQ: IOTS) +Socket Mobile, Inc. (NASDAQ: SCKT) +Synaptics, Inc. (NASDAQ: SYNA) +Mr. Chan is a private investor and entrepreneur. Mr. Chan is the chairman of the board, chair of the compensation committee and member of the audit committee of Adesto Technologies Corporation (NASDAQ: IOTS). He is a director, chair of the compensation committee and member of the nominating and governance committee of Socket Mobile, Inc. (NASDAQ: SCKT) as well as a director, chair of the compensation committee and member of the audit committee of Synaptics, Inc. (NASDAQ: SYNA). Mr. Chan is also a director of several privately-held companies. From 2006 to 2008, Mr. Chan served as chief executive officer of Magellan Corporation and from 1992 to 2006, he served in various management positions with SanDisk Corporation. +Selected Qualifications and Skills +• +Entrepreneurial - Expertise in building technology companies. +• +High Level of Financial Literacy - Has held numerous senior management positions with leading companies, including chief executive officer at Magellan Corporation. +• +Public Company Management - Extensive experience with several leading public and private companies, both as an executive and as a director. +10 +Table of Contents +• +Sales/Marketing - Held key sales, marketing and engineering positions at SanDisk Corporation, Chips and Technologies, Signetics and Delco Electronics. +• +International - Was the executive vice president and general manager of consumer business, at SanDisk Corporation, a global multi-billion dollar company. +• +Risk Oversight - Currently serves as a member of our Audit Committee and has over ten years of experience as a corporate director with risk oversight responsibilities. +• +Technology - Extensive experience in technology-based companies including sales, marketing and engineering. +CYNTHIA (CINDY) L. DAVIS +Age: 56 +Director Since: 2018 +Board Committees: +Audit +Public Company Directorships: +Kennametal Inc. (NYSE: KMT) +Ms. Davis served as vice president of Nike, Inc. (NYSE: NKE) and president of Nike Golf at Nike, Inc. from September 2008 to October 2014, and as US general manager at Nike Golf from January 2005 to August 2008. Prior to Nike, Inc., Ms. Davis served as senior vice president of golf sponsorships, sports marketing and new media at Golf Channel, a subsidiary of Comcast Corporation (NASDAQ: CMCSA) from January 2001 to December 2004. Ms. Davis has served as a member of the board of directors and on the audit committee and nominating and governance committee of Kennametal Inc. (NYSE: KMT), a global supplier of tooling, engineering components and advanced materials, since 2012. She served as a member of the board of directors, as chair of the compensation committee and on the governance committee of Buffalo Wild Wings, Inc. (NASDAQ: BWLD), a casual dining restaurant and sports bar chain, from January 2015 to February 2018. +Selected Qualifications and Skills +• +Luxury/Premium Branding - Experience as vice president of Nike, Inc. and president of Nike Golf at Nike, Inc., a company engaged in the design, development, manufacturing, and worldwide marketing and sales of footwear, apparel, equipment, accessories and services. +• +Sales/Marketing and Retail - In addition to leading the division’s sales, marketing, and strategy while serving as senior vice president of golf sponsorships, sports marketing and new media at Golf Channel, led the $800 million global golf business for Nike, Inc. +• +High Level of Financial Literacy - Serves on the audit committee of Kennametal Inc. Holds an M.B.A. in marketing and finance from the University of Maryland College Park. +• +International - Involved in global brands with worldwide operations while at Nike, Inc. and Kennametal Inc. +• +Public Company Management - Held various management positions at Nike, Inc. and Golf Channel, currently serves as a director of Kennametal Inc. and previously served as a director of Buffalo Wild Wings, Inc. +• +Industry Specific - Extensive experience in the footwear, apparel and equipment industries through various positions at Nike, Inc. +• +Risk Oversight - In addition to leadership roles at Nike, Inc., served as a corporate director on the audit committee and nominating and corporate governance committee of Kennametal, Inc.,and previously served as chair of the compensation committee and on the governance committee of Buffalo Wild Wings. +• +Technology - Serves as a director and on the audit committee and nominating and governance committee of Kennametal Inc., a technology-based company. +11 +Table of Contents +MICHAEL F. DEVINE, III +Age: 59 +Director Since: 2011 +Board Committees: +Audit ( Chair ) +Compensation +Public Company Directorships: +Express, Inc. (NYSE: EXPR) +FIVE Below, Inc. (NYSE: FIVE) +Mr. Devine retired as executive vice president and chief financial officer of Coach, Inc. in 2011. He currently serves as a director and chair of the audit committees of Express, Inc. (NYSE: EXPR) and FIVE Below, Inc. (NASDAQ: FIVE). He also serves as a member of the board of Sur La Table, Inc. and was previously a member of the board of directors of The Talbots Inc. From 2004 to 2007, Mr. Devine served as a member of the board of directors and chair of the audit committee of Educate, Inc., a leading K-12 education service company with solutions such as Sylvan Learning Center. Mr. Devine also previously served as a director and member of the audit committee of NutriSystem, Inc. (NASDAQ: NTRI). +Selected Qualifications and Skills +• +High Level of Financial Literacy - In addition to Mr. Devine’s experience as the current and former member and chair of four audit committees, and his experience at Coach, Inc., he has served as chief financial officer and vice president-finance of Mothers Work, Inc. from February 2000 to November 2001. From 1997 to 2000, was chief financial officer of Strategic Distribution, Inc. (NASDAQ: STRD), a Nasdaq-listed industrial store operator. From 1995 to 1997, was chief financial officer at Industrial System Associates, Inc., and for the prior six years was the director of finance and distribution for McMaster-Carr Supply Company. Holds a B.S. in Finance and Marketing from Boston College and an M.B.A in Finance from the Wharton School of the University of Pennsylvania. +• +Public Company Management - Experience at Coach, Inc. involved managing a public company during a period of high growth. Serves as a corporate director and chair of the audit committees of Express, Inc. and FIVE Below, Inc. +• +Risk Oversight - 12 years of experience as a corporate director with risk oversight responsibilities. +• +Luxury/Premium Branding - Coach, Inc. is a leading marketer of modern classic American accessories. +• +International - Involved in a global brand with worldwide operations while at Coach, Inc. +• +Real Estate - Acquired real estate experience during his time at Coach, Inc. +• +Industry Specific - In addition to experience at Coach, Inc., serves as a director of Express, Inc., a nationally-recognized specialty apparel and accessory retailer offering both women’s and men’s merchandise. +• +Distribution/Logistics and Retail - Involved in supply chain and wholesale and retail distribution channels while at Coach, Inc. +WILLIAM L. MCCOMB +Age: 55 +Director Since: 2018 +Board Committees: +Compensation +Public Company Directorships: +None +Mr. McComb served as chief executive officer of Liz Claiborne, Inc. (renamed Fifth & Pacific Companies, Inc. in 2012, which was subsequently renamed Kate Spade & Company in 2014) and was a member of its board of directors from November 2006 to February 2014. He previously served in various management positions of Johnson & Johnson, Inc. (NYSE: JNJ) in the consumer, pharmaceutical and medical devices division, including as company group chairman. Mr. McComb is currently an advisor to Bain & Company's digital consulting practice. He serves on the boards of the Center for Business Analytics at the University of Virginia's McIntire School of Business, and The Marshall Project, a NYC based non-profit, where he chairs the nominating and governance committee. He formerly served on the boards of the American Apparel and Footwear Association and the National Retail Federation. +12 +Table of Contents +Selected Qualifications and Skills +• +Public Company Management - Joined Liz Claiborne, Inc. in 2006 and served as chief executive officer. During his tenure, helped transform the business, repositioning the company as Fifth & Pacific Companies, Inc. and then Kate Spade & Company. +• +Distribution/Logistics and Retail - Former chief executive officer of Liz Claiborne, Inc./ Fifth & Pacific Companies, Inc., a global fashion company that designs and markets a range of women's and men's apparel, accessories and fragrance products under the Kate Spade New York and Jack Spade labels . +• +Industry Specific - Ran a large portfolio of apparel, footwear and accessories/lifestyle fashion brands. +• +Sales and Marketing - Held various marketing management positions with Johnson & Johnson, Inc., and as chief executive officer, oversaw extensive sale and marketing investments at Liz Claiborne, Inc./ Fifth & Pacific Companies, Inc. +• +Luxury/Premium Branding - Chief executive officer of a portfolio of premium brands, including Kate Spade, from 2006 to 2014. +• +High Level of Financial Literacy - Holds an M.B.A. in marketing and finance from the University of Chicago Graduate School of Business. +• +International - Involved in a global brands with worldwide distribution, including Kate Spade, Juicy Couture, Lucky Brand Jeans, Mexx and Liz Claiborne, as well as well as a large global brand portfolio at Johnson & Johnson, Inc. that spanned all continents. +• +Technology - Experience managing large multi-national IT departments, and significant experience building e-commerce businesses through leadership roles with Liz Claiborne, Inc./ Fifth & Pacific Companies, Inc. +DAVID POWERS +Age: 52 +Director Since: 2016 +Chief Executive Officer and President +Public Company Directorships: +None +Mr. Powers became our Chief Executive Officer in June 2016 and joined our Board at that time. Mr. Powers joined our Company as President of Direct-to-Consumer in August 2012. He was appointed President of Omni-Channel in January 2014 and was appointed President in March 2015. Prior to joining our Company, Mr. Powers held several executive leadership roles at Converse Inc. (a subsidiary of Nike, Inc.), Timberland LLC and Gap Inc. (NYSE: GPS). +Selected Qualifications and Skills +• +Industry Specific - Extensive experience in the footwear and apparel industry through a variety of positions at three different footwear companies and a global apparel retailer. +• +Distribution/Logistics and Retail - While at Converse Inc., was responsible for global owned and distributor Direct-to-Consumer operations as part of the Nike, Inc. retail leadership team. During tenure at Timberland LLC and Gap Inc., held leadership roles with a variety of retail responsibilities from merchandising to store design. +• +Sales and Marketing - Graduated cum laude from Northeastern University with a B.S. in Marketing. Throughout his career, has been responsible for the development of marketing strategy, with a focus on consumer engagement and digital marketing. +• +International - While serving in leadership roles at Timberland LLC, led worldwide retail merchandising, marketing, visual and store design, and oversaw European retail operations. +• +Public Company Management - Serves as our Chief Executive Officer and President with global responsibilities and oversight. Other leadership roles have been with public companies. +• +Real Estate - Acquired real estate experience during his time at Timberland LLC, Converse Inc., Gap Inc. and with our Company. +13 +Table of Contents +JAMES QUINN +Age: 66 +Director Since: 2011 +Board Committees: +Corporate Governance ( Chair ) +Public Company Directorships: +None +Mr. Quinn retired as president of Tiffany & Co. (NYSE: TIF) in January 2012. He was named to Tiffany & Co.’s board in 1995 and served until 2008. Mr. Quinn also currently serves as a director of Mutual of America Capital Management, Inc., a privately-held company. +Selected Qualifications and Skills +• +Public Company Management - As the former president of Tiffany & Co., oversaw retail sales in stores in more than 50 countries, with responsibility for the company’s global expansion strategy, including the significant Tiffany & Co. presence established throughout Asia. Joined Tiffany & Co. in 1986 and held a series of significant positions including vice chairman prior to his appointment as president in 2003. +• +Luxury/Premium Branding - Tiffany & Co. is a jeweler and specialty retailer whose principal merchandise offering is fine jewelry. +• +Distribution/Logistics and Retail - While at Tiffany & Co., involved in management of supply chain and distribution channels. +• +International - While at Tiffany & Co., involved in management of a global brand with worldwide operations. +• +Risk Oversight - 23 years of experience as a corporate director with risk oversight responsibilities. +• +Real Estate - Acquired real estate experience during his time at Tiffany & Co. +LAURI M. SHANAHAN +Age: 55 +Director Since: 2011 +Board Committees: +Compensation ( Chair ) +Public Company Directorships: +Cedar Fair Entertainment Company (NYSE: FUN) +Treasury Wine Estates Limited (ASX: TWE) +Ms. Shanahan has over 26 years of senior level experience across global, multi-channel, multi-brand enterprises and other specialty retail and consumer service companies. Ms. Shanahan joined Gap Inc. in 1992 and served in numerous leadership roles, including chief administrative officer and chief legal officer, during her 16-year career with the company. Since then, she has served as a principal of Maroon Peak Advisors, a retail consulting and strategy firm. She currently serves as chairman of the board and chair of the compensation and management development committee of Charlotte Russe Holdings, Inc., a specialty retailer of apparel and accessories, on the board of directors and the nominating and governance committee of Cedar Fair Entertainment Company (NYSE: FUN), which owns and operates amusement parks and resorts in North America, and on the board of directors, compensation committee and human resources committee of Treasury Wine Estates Limited (ASX: TWE), a vertically-integrated, global wine business. +Selected Qualifications and Skills +• +Public Company Management - Joined Gap Inc. in 1992 and served for 16 years in numerous leadership roles including chief administrative officer, chief legal officer and corporate secretary. Gap Inc. is a leading global specialty retailer offering clothing, footwear, accessories, and personal care products for men, women, children, and babies under the Gap, Banana Republic, Old Navy, Intermix, and Athleta brands. +• +International - Involved in global brands with worldwide operations while at Gap Inc. and as a director and consultant. +• +Distribution/Logistics and Retail - Involved in retail, franchise, online licensing and other distribution channels, as well as sourcing and supply chain, while at Gap Inc. and as a consultant. +14 +Table of Contents +• +Industry Specific - Experience in footwear, apparel and accessories at Gap Inc., Charlotte Russe Holdings, Inc. and through consulting business. +• +Luxury/Premium Branding - Premium and luxury branding experience at Gap Inc., through participation on the board of Treasury Wine Estates Limited and through consulting business. +• +Risk Oversight - In addition to other leadership roles at Gap Inc., served as chief compliance officer and chief legal officer, overseeing the global corporate risk committee, as well as the global governance and compliance organization. +• +Real Estate - Led global real estate for all brands during time at Gap Inc. Also gained experience from Charlotte Russe Holdings, Inc. and consulting business. +BRIAN A. SPALY +Age: 41 +Director Since: 2018 +Board Committees: +Corporate Governance +Public Company Directorships: +None +Mr. Spaly is a private investor and entrepreneur. He currently serves as a corporate director for six early-stage companies: M1 Finance LLC, Veryable, Happy Returns, Inc., Tribe 9 Foods LLC, Luxury Garage Sale, LLC, and Tecovas, Inc., a direct-to-consumer Western boot brand based in Austin, TX, where he serves as executive chairman. Previously, Mr. Spaly was the founder and chief executive officer of Trunk Club, Inc., a personal styling startup, from 2009 to 2017. Prior to Trunk Club Inc., Mr. Spaly was the founder of Bonobos, Inc., a men’s clothing company, from 2006 to 2009. +Selected Qualifications and Skills +• +Entrepreneurial and Luxury/Premium Branding - Founded and served as chief executive officer of Trunk Club, Inc., where he focused on making it easy for men and women to discover and acquire stylish clothing without the hassles of the traditional shopping experience. Founded and served as chairman and as a designer of Bonobos, Inc., which started as a company focused on creating well-fitting pants. +• +Distribution/Logistics and Retail - Extensive experience with various distribution channels, including retail and e-commerce, through leadership roles at Trunk Club, Inc. and Bonobos, Inc. +• +Sales and Marketing - Acquired significant sales and marketing experience as founder of Trunk Club, Inc. and Bonobos, Inc., and through director positions at various consumer goods companies. +• +High Level of Financial Literacy - Led Trunk Club, Inc. during its acquisition by Nordstrom and serves as a private investor and adviser to entrepreneurs. Holds an M.B.A. from Stanford Graduate School of Business. +• +Industry Specific - In addition to experience with Trunk Club, Inc. and Bonobos, Inc., has significant experience as a private investor and adviser to entrepreneurs, with a portfolio of over 75 angel investments. +• +Technology - Experience as founder and chief executive officer of Trunk Club, Inc., an e-commerce company. Serves as corporate director for companies in various industries facing cybersecurity and consumer data issues. +• +Real Estate - A cquired real estate experience as founder and chief executive officer of Trunk Club, Inc. Selected showroom and office sites, and negotiated leases for Trunk Club, Inc. in major cities throughout the U.S. +15 +Table of Contents +BONITA C. STEWART +Age: 61 +Director Since: 2014 +Board Committees: +Compensation +Corporate Governance +Public Company Directorships: +None +Ms. Stewart is currently the vice president of Global Partnerships at Google Inc. (NASDAQ: GOOG, GOOGL), a subsidiary of Alphabet Inc. She has been driving digital transformation across multiple industries since joining Google Inc. in 2006. At Google Inc., she oversees strategy, revenue and partner management for the largest US publishers across search, mobile applications, commerce, news, broadcast, telecommunications and domains. From 2002 to 2006, Ms. Stewart worked for DaimlerChrysler AG (now Daimler AG) where she was director of Chrysler Group, Interactive Communications and prior to that, director of Chrysler Brand Communications. Ms. Stewart began her career in 1979 at IBM Corporation (NYSE: IBM) where she served in various financial and marketing management positions. Ms. Stewart has an M.B.A. from Harvard Business School. +Selected Qualifications and Skills +• +Industry Specific - Over 26 years of experience in brand management, digital strategy and execution. +• +High Level of Financial Literacy - Leads strategy, business development and revenue growth plans for Google Inc.'s largest publisher partnerships. +• +Entrepreneurial - Served as president, chief operating officer, and co-founder of Nia Enterprises, LLC, a web-based company, and founder and chief executive officer of One Moment in Time, a women's formal wear rental company. +• +Sales and Marketing - Acquired sales, marketing, product distribution and online advertising experience. +• +International - Led publisher partnerships for Latin America and Canada and has worked for Daimler AG and IBM Corporation, which are multi-billion dollar global companies. +• +Public Company Management - Strategic planning and large scale operations experience with Google Inc. and IBM Corporation. +• +Technology - Extensive experience in technology-based companies and fluency in digital transformation including digital strategy, mobile, video, programmatic, online advertising, cloud solutions, analytics and execution. +Summary of Qualifications and Skills of Directors +The table below summarizes the specific qualifications, attributes, skills and experience of each nominee for director that led our Board to conclude that the director is qualified to serve on our Board. While each director is generally knowledgeable in each of these areas, an “X” in the chart below indicates that the item is a specific qualification, attribute, skill or experience that the director brings to our Board. The lack of an “X” for a particular item does not mean that the director does not possess that qualification, attribute, skill or experience. +16 +Table of Contents +Specific Qualifications, Attributes, Skills and Experience +John M. +Gibbons +Nelson C. +Chan +Cynthia (Cindy) L. Davis +Michael F. +Devine, III +William L. McComb +David Powers +James +Quinn +Lauri M. +Shanahan +Brian A. Spaly +Bonita C. +Stewart +Luxury/Premium Branding +X +X +X +X +X +X +X +Entrepreneurial +X +X +X +X +Distribution/Logistics +X +X +X +X +X +X +Retail +X +X +X +X +X +X +X +Sales and Marketing +X +X +X +X +X +X +X +High Level of Financial Literacy +X +X +X +X +X +X +X +International +X +X +X +X +X +X +X +X +Public Company Management +X +X +X +X +X +X +X +X +X +Industry Specific (Footwear, Apparel and Accessories) +X +X +X +X +X +X +X +X +X +Risk Oversight +X +X +X +X +X +X +Technology (Consumer, Cybersecurity, Big Data, Social) +X +X +X +X +X +Real Estate +X +X +X +X +X +X +Consent to Serve +Although each of the persons named above has consented to being named in this Proxy Statement and to serve as a director if elected, and our Board of Directors has no reason to believe that any of the nominees will be unable or unwilling to serve as a director, if any nominee withdraws or otherwise becomes unavailable to serve, our Board of Directors may decrease the size of our Board, or the proxies may be voted for the election of such other person as a director as our Board may recommend in place of the nominee. +Required Vote +Because this is an uncontested election, each director nominee will be elected by a majority of the votes cast by the shares present virtually or represented by proxy and entitled to vote on the election of directors at the Annual Meeting (assuming that a quorum is present). A "majority of the votes cast" means that the number of votes "FOR" a nominee for director must exceed 50% of the total votes cast in the election of directors. +BOARD RECOMMENDATION +OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE +"FOR" +THE ELECTION OF EACH OF THE DIRECTOR NOMINEES. +17 +Table of Contents +CORPORATE GOVERNANCE +Corporate Governance at Deckers +Corporate governance is managed under the direction of our Board of Directors. Our Board has a long-standing commitment to comprehensive and effective corporate governance practices. Our Board continues to evaluate our governance policies and procedures to ensure that the right mix of individuals are present in our boardroom and to ensure effective oversight of our strategy and management in order to best serve our stockholders. Our Board has adopted Corporate Governance Guidelines that set forth the primary framework of governance principles applicable to our Company. A copy of our Corporate Governance Guidelines is available on our website at www.deckers.com/investors . +Corporate Governance Elements +Our Board of Directors is committed to maintaining the highest standards of corporate governance and has established a strong framework by which our Company is governed. Key elements of our corporate governance framework include: +OUR POLICY OR PRACTICE +DESCRIPTION AND BENEFIT TO OUR STOCKHOLDERS +STOCKHOLDER RIGHTS +Annual Election of Directors +• Our directors are elected annually, reinforcing their accountability to our stockholders. +Single Class of Outstanding Voting Stock +• Our common stockholders control our Company, with equal voting rights. +Majority Voting Standard +• We have a majority voting standard for uncontested director elections. +BOARD STRUCTURE +Director Independence +• Based on the director independence requirements set forth in our Corporate Governance Guidelines, as well as under applicable SEC and NYSE rules, our Board has determined that each of our directors, other than Mr. Powers, is an "independent director". +Committee Governance +• Our three standing Board Committees: Audit, Compensation and Corporate Governance, consist exclusively of independent directors and have adopted written charters. Committee composition and charters are reviewed annually by our Board. +Board Leadership and Structure +• Our Company previously had one person serving as both our Chief Executive Officer and Chairman of our Board. The roles were separated when Mr. Powers was appointed Chief Executive Officer. Mr. Gibbons is the Chairman of our Board of Directors. We believe this is the most appropriate leadership structure for our Company at this time. +Annual Board Self-Evaluations +• The Corporate Governance Committee conducts and oversees annual self-evaluations of our Board, and of each Board committee, to ensure they are effective and continue to serve the best interests of our stockholders. +Board Oversight of Risk +• Our Board is generally responsible for risk management activities, but has delegated the oversight of risk management to the Audit Committee. Our full Board regularly engages in discussions of the most significant risks we face and how these risks are managed. +EXECUTIVE COMPENSATION +Annual Say-on-Pay Vote +• Annually, our stockholders have the opportunity to approve, on a non-binding advisory basis, the compensation of our Named Executive Officers, which we sometimes refer to as our Say-on-Pay Vote. This affords our stockholders the ability to provide routine feedback on our compensation program. +Corporate Governance Principles +Pursuant to Delaware law and our bylaws, our business, property and affairs are managed under the direction of our Board of Directors. Thus, our Board is the ultimate decision-making body of our Company, except with respect to those matters reserved for our stockholders. +Our Board selects our Chief Executive Officer, and works together with our Chief Executive Officer to select our senior management team, which is charged with the day-to-day operation of our business. Members of our Board are kept informed about our business through discussions with our Chief Executive Officer and other senior management personnel, including by attending brand sales meetings and industry events, participating in periodic informal telephonic meetings, and reviewing materials provided to them, as well as by attending formal meetings of our Board and its committees. Having selected the senior management team, our Board acts as an adviser and counselor to senior management, monitors its performance and proposes or makes changes to the senior management team when it deems necessary or appropriate. +18 +Table of Contents +Board of Directors Meetings +In fiscal year 2018, each of the directors attended at least 75% of the meetings of our Board and the meetings of the Board committees on which he or she served. Time is scheduled for our independent directors to meet in an executive session at every Board meeting. +Our Corporate Governance Guidelines state that directors are expected to attend each of our annual meetings of stockholders. The majority of the members of the Board (as constituted at the time) attended the annual meeting of stockholders held in December 2017. +Director Independence +Our Corporate Governance Guidelines, as well as applicable NYSE rules, require that our Board be comprised of a majority of directors who satisfy the criteria for independence set forth in the NYSE rules. These guidelines help ensure that the interests of our Board and management are aligned with the interests of our stockholders, that conflicts of interest are avoided and that we are in compliance with applicable securities exchange rules and regulatory requirements. An independent director is one who our Board affirmatively determines has no material relationship with our Company (either directly or as a partner, stockholder or officer of an organization that has a relationship with our Company) and otherwise meets the requirements of the NYSE rules. +Based on the director independence requirements set forth in our Corporate Governance Guidelines, as well as in the applicable NYSE rules, our Board has determined that each of our directors, other than Mr. Powers, is an "independent director". In addition, all members of the Audit Committee, Compensation Committee and Corporate Governance Committee meet the independence standards set forth in applicable SEC and NYSE rules. +Independent Directors +John M. Gibbons +Nelson C. Chan +Cynthia (Cindy) L. Davis +Michael F. Devine, III +William L. McComb +James Quinn +Lauri M. Shanahan +Brian A. Spaly +Bonita C. Stewart +Board Leadership Structure +For many years, we employed a leadership structure that combined the positions of Chairman of the Board of Directors and Chief Executive Officer, while also appointing a strong Lead Independent Director. The Board believes it is important to maintain flexibility in the Board leadership structure, depending on the composition of our Board and our business and strategic needs at the time. However, the Board also firmly supports having an "independent director" serve in a Board leadership position at all times. +When David Powers was appointed Chief Executive Officer in 2016, we separated the Chairman of the Board of Directors and Chief Executive Officer roles. Our Board believes this change allows our Chief Executive Officer to focus on the day-to-day operation and management of our Company, while allowing our Chairman to focus on leading the Board in overseeing the interests of our Company and its stockholders. Until his appointment as our Chairman in September 2017, Mr. Gibbons served as our Lead Independent Director. +Board Committees +Our Board of Directors has three standing committees: the Audit Committee, the Compensation Committee and the Corporate Governance Committee. Each member of each of the committees is an "independent director" for purposes of applicable SEC and NYSE rules. Each of our committees has a written charter that describes its purpose, membership, meeting structure and responsibilities. A copy of each committee's charter is available on our website at www.deckers.com/investors. These charters are reviewed annually by each committee, with any recommended changes approved by our Board. The Audit Committee and Corporate Governance Committee charters were last amended in September 2014. The Compensation Committee charter was amended in June 2018. +19 +Table of Contents +Summary information regarding the membership, meetings and primary responsibilities of the three standing committees of our Board are listed below: +AUDIT COMMITTEE +• Oversees management's conduct of, and the integrity of, our financial reporting functions. +• Oversees the qualifications, engagement, compensation, independence and performance of the registered public accounting firm that audits our annual financial statements and reviews our quarterly financial reports. +• Oversees our legal and regulatory compliance. +• Oversees the performance of our internal audit function. +• Oversees the application of our related person transaction policy as established by our Board. +• Oversees our systems of internal control over financial reporting and disclosure controls and procedures. +• Oversees the application of our code of business conduct and ethics as established by our Board. +Members: +Michael F. Devine, III (Chair) +Nelson C. Chan +Cynthia L. Davis +Meetings in Fiscal Year 2018 : 7 +All members of the Audit Committee meet the independence and experience standards set forth in applicable SEC and NYSE rules. +The Chair of the Audit Committee has been determined by our Board to be an "audit committee financial expert" under applicable SEC rules. +COMPENSATION COMMITTEE +• Oversees the design of our executive compensation program, and responsible for oversight of our employment practices and policies. +• Reviews and approves goals and objectives relevant to compensation of our executives. +• Evaluates the performance of our executives in light of those goals and objectives. +• Determines and approves the compensation of our executives based, in part, on these evaluations, including each element of compensation. +• Makes recommendations to our Board regarding any action that is required to be submitted to our stockholders for approval with respect to incentive compensation plans and equity-based plans. +• Administers and approves our equity-based plans, and approves (or delegates authority to approve, below the executive level) individual award grants under those plans, or recommends award grants to our Board for approval. +• Produces an annual report on executive compensation for inclusion in our annual report or proxy statement for our annual meeting of stockholders. +Members: +Lauri M. Shanahan (Chair) +Michael F. Devine, III +William L. McComb +Bonita C. Stewart +Meetings in Fiscal Year 2018: 5 +All members of the Compensation Committee meet the independence standards set forth in applicable SEC and NYSE rules. +CORPORATE GOVERNANCE COMMITTEE +• Develops and recommends to our Board a set of Corporate Governance Guidelines applicable to us. +• Identifies individuals qualified to become directors, consistent with criteria specified in the Corporate Governance Guidelines. +• Recommends to our Board the qualified director nominees to be selected by our Board. +• Recommends to our Board membership of our Board committees. +• Ensures that our certificate of incorporation and bylaws are structured in a manner that best serves our objectives and recommends amendments as appropriate. +• Oversees the evaluation of management, our Board and Board committees. +• Oversees and approves the management continuity planning process. +• Reviews and evaluates the development and succession plan relating to our Chief Executive Officer and our other executive officers. +Members: +James Quinn (Chair) +Bonita C. Stewart +Brian A. Spaly +Meetings in Fiscal Year 2018: 3 +All members of the Corporate Governance Committee meet the independence standards set forth in applicable NYSE rules. +20 +Table of Contents +Nominating Procedures and Criteria +Among its functions, the Corporate Governance Committee considers and approves nominees for election to our Board. In addition to the candidates proposed by our Board or identified by the Corporate Governance Committee, the Committee considers candidates for director proposed by our stockholders, provided such recommendations are made in accordance with the procedures set forth in our bylaws. Stockholder nominations that meet the criteria referred to below will receive the same consideration as nominations made by the Corporate Governance Committee. +Essential criteria for all candidates considered by the Corporate Governance Committee are discussed in the section of this Proxy Statement titled "Qualifications for All Directors". In evaluating candidates for certain Board positions, the Committee also evaluates additional criteria, as reflected in the section of this Proxy Statement titled "Specific Qualifications and Skills Represented on our Board". +In selecting nominees for our Board, the Corporate Governance Committee evaluates the general criteria referred to above, identifies the specialized criteria for which the Committee has determined there is a need, and considers the candidate's ability to contribute to the success of our Company. In evaluating an existing director for re-election, in addition to assessing the criteria referred to above, the Corporate Governance Committee considers a variety of factors, including attendance at Board and committee meetings, independence, previous performance, length of service, and contributions made to our Company. +The director nominees for the Annual Meeting have been recommended by the Corporate Governance Committee, as well as by our Board of Directors. +Management Succession and Talent Development +The Corporate Governance Committee, pursuant to its charter, is responsible for overseeing the management continuity planning process. As part of that responsibility, the Corporate Governance Committee reviews and evaluates the development and succession plan relating to our Chief Executive Officer and our other executive officers, including considerations of career paths and attracting and retaining high quality talent. The Corporate Governance Committee works with the Board to assess whether we have the management talent needed to successfully pursue our business objectives. The Corporate Governance Committee also regularly considers the competencies necessary for our Chief Executive Officer to support our strategies for long-term success. +Pursuant to our Corporate Governance Guidelines, the Corporate Governance Committee provides an annual report to our Board of Directors on emergency and expected Chief Executive Officer succession planning. Through this process, the Corporate Governance Committee works with our full Board and management to identify recommendations and evaluations of potential successors, along with a review of any development plans recommended for such individuals. +Board Role in Risk Oversight +While risk management is primarily the responsibility of our management, our Board of Directors is responsible for the overall supervision of our business, an important element of which is supervision of our risk management activities. Our Board has delegated many of these functions to the Audit Committee. Under its charter, the Audit Committee is responsible for: +• +reviewing and discussing with management, our highest ranking manager of internal audit and the independent registered public accounting firm our financial risk exposures and assessing the policies and processes management has implemented to monitor and control such exposure; +• +assisting our Board in fulfilling its oversight responsibilities regarding our policies and processes with respect to risk assessment and risk management, including any significant non-financial risk exposures; +• +reviewing our annual disclosures concerning the role of our Board in the risk oversight of our Company, such as how our Board administers its oversight function; and +• +overseeing our internal audit function. +Our legal and internal audit executives report directly to the Audit Committee regarding material risks to our business, among other matters, and the Audit Committee meets in executive sessions with our highest ranking manager of internal audit and with representatives of our independent registered public accounting firm. In addition to the Audit Committee's work in overseeing risk management, our full Board of Directors regularly engages in discussions of the most significant risks we face and how these risks are being managed, and our Board receives reports on risk management from the Chair of the Audit Committee. Every Board meeting agenda provides for a discussion of risk management. In addition to the responsibilities undertaken by the Audit Committee, the other Board committees have oversight of specific risk areas, consistent with the committees' charters and responsibilities. For example, the Compensation Committee oversees the design of our executive compensation program so as to encourage achievement of our strategic objectives and mitigate compensation-related risk. In addition, the Corporate Governance Committee develops our Corporate Governance Guidelines to establish and oversee an appropriate governance framework. +21 +Table of Contents +Compensation Committee Interlocks and Insider Participation +As of the date of this Proxy Statement, no member of the Compensation Committee is serving, and during the past year no member of the Compensation Committee has served, as an officer or employee of our Company or any of its subsidiaries. None of our executive officers currently serves, or during the past year has served, as a member of the board of directors or compensation committee (or other committee serving a similar purpose) of any entity that has an executive officer serving on our Board or the Compensation Committee. In addition, none of the Compensation Committee members had any relationship, or participated in any transaction, with our Company during fiscal year 2018 that requires disclosure under SEC rules. +We have entered into indemnification agreements with each of our directors, including each member of the Compensation Committee. +Communications with Directors +Stockholders and other interested parties may communicate with the Chairman of our Board, the Chair of any Board committee, with our independent directors as a group, or with any individual director, by writing to any such person or group. Communications should be sent to the following address: +Deckers Outdoor Corporation +Attn: Corporate Secretary +250 Coromar Drive +Goleta, California 93117 +Communications are distributed to our Board of Directors, or to any individual director, depending on the facts and circumstances described in the communication. Our Board has requested that certain items that are unrelated to the duties and responsibilities of our Board should be excluded, including the following: junk mail and mass mailings, product inquiries or complaints, new product suggestions, resumes and other forms of job inquiries, surveys, and business solicitations or advertisements. In addition, material that is unduly hostile, threatening, illegal or similarly unsuitable will not be distributed, except that any communication that is not distributed will be made available to any director upon request. +Code of Ethics and Accounting and Finance Code of Ethics +Our Board has adopted a Code of Ethics to assist our officers, directors and other employees in complying with legal and regulatory requirements and maintaining the highest standards of ethical conduct. All of our officers, directors and employees must carry out their duties in accordance with the policies set forth in the Code of Ethics and with applicable laws and regulations. The Code of Ethics complies with the requirements set forth in applicable NYSE rules. +Our Board has also adopted a separate Accounting and Finance Code of Ethics which focuses on the financial reporting process and applies to our Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer and Corporate Controller (and other employees serving similar functions). The Accounting and Finance Code of Ethics is intended to qualify as a "code of ethics" under applicable SEC rules and to satisfy the standards of ethics and compliance programs under applicable NYSE rules. +Our Code of Ethics and our Accounting and Finance Code of Ethics are available on our website at www.deckers.com/investors . To the extent required by law, any amendments to or waivers of any provision of the Code of Ethics or the Accounting and Finance Code of Ethics will be promptly disclosed publicly on our website. +Stockholder Engagement +We have consistently demonstrated our commitment to open and interactive dialogue with our stockholders. We believe our stockholders, as the owners of our Company, have important views and insights into our business operations, and we routinely seek to engage with our stockholders to ensure their views are shared with our Board of Directors, and actively considered in discussions of our strategic direction. +While our Board of Directors has a fiduciary responsibility to our stockholders and represents their interests, our management team is primarily responsible for investor relations. In light of the proxy contest during fiscal year 2018, management, including when appropriate the Board of Directors, met and engaged with many of our larger investors. The topics discussed with investors included, among others, our business and strategic objectives, our financial and operational performance, our capital allocation strategy, our corporate governance philosophy, the performance of our stock, and our executive compensation structure and objectives. Our management team provides regular updates to our Board of Directors regarding stockholder feedback on these topics. Please refer to the section of this Proxy Statement titled “ Stockholder Feedback on Executive Compensation ” for more information on how our stockholders impacted the evolution of our executive compensation program for fiscal year 2018. +22 +Table of Contents +EXECUTIVE OFFICERS +Each of our executive officers serves at the discretion of our Board. Important summary information about our current executive officers is set forth in the table below, followed by certain biographical information about each officer. +EXECUTIVE OFFICER +AGE +POSITION +David Powers +52 +Chief Executive Officer, President and Director +Steven J. Fasching +50 +Chief Financial Officer ( Appointed in June 2018) +David E. Lafitte +54 +Chief Operating Officer +Stefano Caroti +55 +President of Omni-Channel +Andrea O'Donnell +49 +President of Fashion Lifestyle +Thomas A. George +62 +Former Chief Financial Officer ( Stepped down effective July 16, 2018 ) +DAVID POWERS +Age: 52 +Position: Chief Executive Officer, President and Director +Mr. Powers was appointed as our Chief Executive Officer in June 2016 and joined our Board at that time. Mr. Powers joined our Company as President of Direct-to-Consumer in August 2012. He was appointed President of Omni-Channel in January 2014 and was appointed President in March 2015. Mr. Powers has over 20 years of experience in merchandising, product and marketing development, and leading global direct-to-consumer operations and wholesale businesses. Prior to joining us, Mr. Powers served four years as vice president of global direct-to-consumer at Converse Inc., where he oversaw owned and distributor direct-to-consumer as part of the Nike, Inc. retail leadership team. Mr. Powers also held several executive leadership roles at The Timberland Company, including worldwide general merchandising manager and senior director European retail, where he led worldwide retail merchandising, marketing, visual and store design, and oversaw European retail operations. Prior to this, Mr. Powers spent ten years at Gap Inc., where he held multiple senior management titles, including global divisional merchandise manager for the boy’s division. Mr. Powers graduated cum laude from Northeastern University with a B.S. in Marketing. +STEVEN J. FASCHING +Age: 50 +Position: Chief Financial Officer +Mr. Fasching was appointed as Chief Financial Officer in June 2018 and has served as our Senior Vice President, Corporate Strategy, Planning & Investor Relations since February 2018. Mr. Fasching previously served as our Vice President, Strategy & Investor Relations from January 2016 to February 2018, and as Vice President, Strategic Financial Planning from August 2011 to January 2016. Mr. Fasching has over 27 years of experience in long-term financial and strategic planning and creating and leading the analytical engine of multi-billion dollar organizations. Immediately prior to joining our Company, Mr. Fasching served for five years as the director of finance and assistant controller of Princess Cruise Lines, Ltd., a cruise line owned by Carnival Corporation, where he had been promoted through a number of finance-related positions since September 1990, including director of financial planning, among others. Mr. Fasching holds a B.S. degree in Business Administration from Pepperdine University and an M.B.A. from The Anderson School of Management at UCLA. He also completed The Executive Program for Prospective CFOs through the University of Chicago Booth School of Business. +23 +Table of Contents +DAVID E. LAFITTE +Age: 54 +Position: Chief Operating Officer +Mr. Lafitte was appointed as our Chief Operating Officer in February 2015. From 2012 to January 2015, he was outside general counsel for our Company. Prior to joining our Company, Mr. Lafitte was a shareholder with the law firm Stradling Yocca Carlson & Rauth, P.C., where he was a member of the firm’s board of directors and executive committee, and had been advising our Company since 2006. He received a B.A. from the University of Colorado and a J.D. from Tulane University. +STEFANO CAROTI +Age: 55 +Position: President of Omni-Channel +Mr. Caroti was appointed as our President of Omni-Channel in November 2015. He has over 30 years of industry experience in general management, sales, retail, product, marketing, business strategy and brand management. Prior to joining our Company, Mr. Caroti was the chief commercial officer and managing director at PUMA, from August 2008 to December 2014, where he was responsible for PUMA’s global wholesale, retail and E-commerce divisions and PUMA’s geographic operating regions. He held a number of senior executive positions at Nike, Inc. in general management, sales, product and marketing, and during his term as vice president of EMEA commerce, he was responsible for the entire wholesale, retail and E-commerce business in the EMEA region. He received a B.A. with honors from Middlebury College. +ANDREA O'DONNELL +Age: 49 +Position: President of Fashion Lifestyle +Ms. O’Donnell was appointed as our President of Fashion Lifestyle in April 2016. Ms. O’Donnell has over 20 years of experience in the retail industry and is well versed in operating in complex international markets. She has a background in strategic planning, merchandising and marketing, as well as experience in emerging markets and customer relationship management. Over the course of her career, she has held leadership positions with prominent international retailers. Ms. O’Donnell was with DFS Group Limited prior to joining our Company, where she served as president of global merchandising. From 2012 to 2014, she was with Lane Crawford, where she was responsible for merchandising, marketing, CRM and store planning across the Asia Pacific Region. She was the commercial director at John Lewis from April 2004 to August 2012, responsible for online sales and strategy for Omni-Channel. She was the merchandising planning director at Hacket London from September 2002 to April 2004, and prior to that was head of merchandising planning at Jaeger and Debenhams. She received an Executive M.B.A from the London School of Business. +THOMAS A. GEORGE +Age: 62 +Position: Former Chief Financial Officer +24 +Table of Contents +Mr. George was appointed as our Chief Financial Officer in September 2009 and stepped down from that role in July 2018. He has over 39 years of experience in corporate finance and accounting, having served in a number of senior level positions at both public and private companies. From February 2005 to September 2009, Mr. George was chief financial officer of Ophthonix, Inc., a private technology company. Prior to Ophthonix, Inc., from October 1997 to February 2005, Mr. George was the chief financial officer of Oakley, Inc., now a division of Luxottica Group S.p.A., a publicly-held global consumer products brand with wholesale and retail distribution of multiple product categories including sunglasses and prescription eyewear, apparel, footwear, watches and electronics. Prior to Oakley, Inc., from December 1987 to October 1997, Mr. George was the senior vice president and chief financial officer of REMEC, Inc., a public technology company. Mr. George has also served as corporate controller and manager of financial planning for other public technology firms. He began his career at Coopers & Lybrand, where he was a Certified Public Accountant. He received a B.S. in Business Administration from the University of Southern California. +25 +Table of Contents +COMPENSATION DISCUSSION AND ANALYSIS +In this section we discuss the compensation program applicable to our Named Executive Officers, or NEOs. This discussion is divided into the following parts: +EXECUTIVE SUMMARY +COMPENSATION PHILOSOPHY AND OBJECTIVES +COMPENSATION CONSULTANT AND PEER GROUP +ELEMENTS OF FISCAL YEAR 2018 EXECUTIVE COMPENSATION PROGRAM +OTHER COMPENSATION CONSIDERATIONS +Please also review the Summary Compensation Table, and the additional compensation tables and related footnotes that follow this section, as they provide information critical to an understanding of our executive compensation program. +26 +Table of Contents +EXECUTIVE SUMMARY +Named Executive Officers +The following table sets forth our NEOs, the current positions they hold and the dates they were appointed to those positions: +NAMED EXECUTIVE OFFICER +CURRENT POSITION AND DATE APPOINTED +David Powers +• Chief Executive Officer and Director - June 2016 +• President - March 2015 +Thomas A. George +• Former Chief Financial Officer - September 2009 ( Stepped down in July 2018 ) +David E. Lafitte +• Chief Operating Officer - February 2015 +Stefano Caroti +• President of Omni-Channel - November 2015 +Andrea O'Donnell +• President of Fashion Lifestyle - April 2016 +Fiscal Year 2018 Highlights: +We delivered strong results in fiscal year 2018 from both financial and operational perspectives, as highlighted by the following: +• +Total revenue growth of 6.3% in a retail environment that remains turbulent and continues to undergo significant change, including revenue growth of 3.9% for our UGG brand, and 46.7% for our HOKA ONE ONE brand. +• +Increased non-GAAP operating margin by 320 basis points to 12.4% and grew non-GAAP diluted earnings per share by 50% to $5.74, highlighting our continued focus on improving margins, reducing costs and delivering improved levels of profitability. +• +As of March 31, 2018, we had repurchased $150 million of our shares thereby returning significant value to our stockholders. +Our Business and Strategic Objectives +We have undertaken a strategic transformation of our business in order to effectively position ourselves to compete in a rapidly-evolving retail environment with the ultimate goal of continuing to grow stockholder value. As we have publicly announced, the key components of our strategic plan are as follows: +• +Transform our organization to meet the challenging marketplace by consolidating operations, facilitating collaboration across brands, improving our supply chain and continuing to build our leadership team. +• +Position our brands in the marketplace by delivering a premium brand experience, elevating our brands and positioning them for sustained growth and implementing a multi-seasonal product diversification strategy. +• +Increase operating profits by improving supply chain processes, leveraging the investments we have made in our business, identifying efficiencies in our overhead and optimizing our retail store fleet. +In particular, we have adopted a long-range strategic plan with a focus on achieving targets of $2 billion in revenue, operating margins of 13% and return on invested capital above 20% by the end of fiscal year 2020. +Our Compensation Program Objectives +The overarching objective of our executive compensation program is to effectively design our program to foster and encourage the achievement of both our near term and long term business and strategic objectives. As a result, our Compensation Committee, which we refer to as the Committee for purposes of this section, seeks to design our executive compensation program in a manner that reflects direct alignment between the compensation opportunity provided to our executives and the achievement of our strategic objectives. In doing so, we routinely consider appropriate changes to our compensation program to reflect our strategic direction and the evolving needs of our business. In addition, in order to build and retain the talent necessary to achieve our strategic objectives, the Committee endeavors to develop a compensation program that is attractive and competitive in the marketplace, taking into consideration peer group data. +When establishing our executive compensation program each year, the Committee is generally guided by the following four principles that it believes align closely with our compensation objectives: +27 +Table of Contents +• +Pay for performance by ensuring that a significant portion of compensation is at-risk and aligns actual compensation with the achievement of specific Company financial goals. +• +Align interests of executives with stockholders by tying a significant portion of compensation to Company performance that creates long-term value for our stockholders and is correlated to increases in the value of our stock price. +• +Attract and retain executives with the background and experience necessary to lead the organization and achieve our strategic objectives. +• +Reward achievement by providing meaningful and appropriate incentives for achieving both short-term and long-term Company financial goals. +Consistent with our strategic objectives, when designing our executive compensation program for fiscal year 2018, the Committee focused on continuing to build and retain our executive team, while providing them with incentives to focus on our key strategic initiatives, including enhanced profitability, improved operating margins and the creation of long-term value for stockholders. These and other strategic considerations are clearly reflected in the design of our program, which demonstrates strong pay-for-performance alignment. In addition, these considerations resulted in a number of important changes to the program for fiscal year 2018, as described in further detail below. +Stockholder Feedback on Executive Compensation +We have consistently demonstrated our commitment to stockholder outreach efforts, which has resulted in meaningful, interactive dialogue with our stockholders on a number of significant topics, including our business and strategic objectives, our financial and operational performance, our capital allocation strategy, our corporate governance philosophy, and the performance of our stock. We have also routinely solicited and incorporated stockholder feedback on the design and effectiveness of our executive compensation program. We believe our proactive engagement and response to stockholder feedback, combined with strong pay-for-performance alignment, has resulted in overwhelming stockholder support for our executive compensation program. Indeed, these efforts resulted in 98.7% of the votes cast being voted "for" our executive compensation program at our annual meeting of stockholders held in 2017. +As part of our stockholder engagement efforts in 2017, we reached out to investors holding over 60% of our shares to discuss their views and any concerns regarding our compensation philosophy and program, and to preview potential changes to our executive compensation program that we were considering for fiscal year 2018. Members of our management team and, in most cases, the Chair of the Compensation Committee, conducted meetings and conference calls with those investors that responded to our outreach efforts, and with representatives of certain proxy advisory groups, in order to understand their perspectives regarding our current compensation practices and solicit specific feedback on current and potential design elements and practices. This process informed the evolution of our executive compensation program for fiscal year 2018, including our adoption of a median pay philosophy and our focus on profitability in selecting performance metrics that align with our strategic objectives. Our fiscal year 2018 executive compensation program, as described in this section, reflects the specific feedback that we received from our stockholders during those outreach efforts. +The Committee believes that ongoing, transparent communication with our stockholders is critical to our long-term success, and that the feedback received through our stockholder engagement efforts will continue to contribute to the evolution and enhancement of our executive compensation program. The Committee considers stockholder engagement to be an important part of its decision-making process and plans to continue proactive outreach efforts going forward. +Compensation Program Highlights +The following table sets forth the key components of our executive compensation program for fiscal year 2018, and the underlying philosophy and considerations that provide the basis for our compensation decisions: +COMPENSATION HIGHLIGHT +UNDERLYING PHILOSOPHY/ADDITIONAL CONSIDERATIONS +• Strong pay-for-performance alignment. +• We emphasized a strong pay-for-performance alignment by providing a significant portion of the overall compensation opportunity for our NEOs in the form of performance-based compensation that is at risk and directly tied to the achievement of specific Company financial performance objectives. +• Our performance-based compensation is designed to align the interests of our NEOs with those of our stockholders and encourage the achievement of strategic objectives that the Committee believes are critical to our short and long-term success. +• For fiscal year 2018, only 19% of the total compensation opportunity for our President and Chief Executive Officer was guaranteed, and 81% of his total compensation opportunity was directly tied to the achievement of specific performance conditions and therefore at risk. +28 +Table of Contents +• Clear alignment of performance metrics with strategic objectives. +• Selecting the appropriate performance metrics for our performance-based awards is critical for achieving our strategic objectives, motivating our executives and advancing our pay-for-performance philosophy. +• In light of our strategic focus on profitability, improved operating margins and creation of long-term stockholder value, the Committee selected (i) consolidated operating income for all NEOs (and business unit operating income and revenue targets for certain executives) as the performance metrics for our 2018 Annual Cash Incentive Awards, (ii) "earnings per share", or EPS, for fiscal year 2018 as the performance metric for our 2018 Annual PSUs, and (iii) “pre-tax income” for fiscal year 2020 as the performance metric for our 2018 LTIP NQSOs. +• Performance metrics for fiscal year 2018 reflect a focused shift away from revenue-based metrics to profitability-based metrics in line with our strategic focus, especially for those executives that have the ability to impact Company-wide results. +• No overlap in performance conditions. +• Our performance metrics involve multiple performance conditions over multiple time periods to ensure our compensation program is encouraging healthy and sustained growth across our business, while eliminating excessive overlap between the goals. +• This approach further reduces the risk associated with our compensation program as it de-emphasizes the impact of any one performance metric. +• Adoption of a "median" pay philosophy. +• Consistent with our prior disclosures, we have actively reformulated our executive compensation program to benchmark the target total compensation opportunity for our NEOs at the median compared to our peer group. +• In adopting this philosophy, the Committee carefully considered a number of factors, including specific feedback received from our stockholders during our stockholder engagement efforts. +• No increases in base salaries for our NEOs in fiscal year 2018. +• As part of its commitment to the adoption of a median pay philosophy, the Committee decided not to increase base salaries for our NEOs in fiscal year 2018 as compared to fiscal year 2017. +• The Committee focused on benchmarking compensation at the 50th percentile compared to our peer group, and did not increase base salaries despite increases in base salaries among our peer group. +• Use of performance-based stock options for long-term incentive plan, or LTIP, awards. +• LTIP awards were designed to align the interests of our executives with those of our stockholders, taking into account challenging industry dynamics and highly variable peer group performance. +• Options were granted with an exercise price equal to fair market value on the grant date and only have value to the extent the Company's pre-tax income target is met and the value of our stock increases. +• Vesting was based on the achievement of a long-term profitability metric that aligns closely with our strategic objectives. +• 100% of the equity awards granted during fiscal year 2018 were subject to long-term vesting in order to promote retention of our executives. +• Appropriate mix of equity awards with focus on performance-based vesting. +• We issued equity awards that vest as to 80% of the awards based on the achievement of Company performance conditions to ensure alignment with our pay-for-performance philosophy, and vest as to 20% of the awards based on the achievement of long-term, time-based vesting targets to attract and retain executives. +• While a portion of the performance-based equity awards incorporate a one-year performance metric, these awards vest over a three-year period assuming performance conditions are met, thereby ensuring the awards still maintain a long-range focus. +• Continued focus on executive hiring and retention. +• While we seek to develop our executive compensation program so that it closely aligns with our pay-for-performance philosophy and rewards achievement of performance goals, this objective must complement other important objectives, including the hiring and retention of executives. +• For fiscal year 2018, we again granted a small portion of equity awards (20%) that vest solely based on the achievement of time-based targets, which promote executive retention because they vest over a long-term service period and are not tied to Company performance conditions. +• Consistent with its historical practice, the Committee expects a majority of equity awards to continue to have performance-based vesting conditions. +29 +Table of Contents +• Consideration of peer group data and the advice of our independent compensation consultant in setting executive compensation. +• We generally use peer group compensation data as an initial starting point and guidepost in making compensation decisions for our executives, with respect to the aggregate compensation opportunity, as well as each element of compensation. +• We work closely with our independent compensation consultant, which provides us with information on competitive pay practices and trends in our industry and makes recommendations regarding the design and structure of our compensation program, as well as the formulation of our peer group, which we reassess annually. +30 +Table of Contents +Overview of our Compensation Elements +The following is an overview of the key elements of our executive compensation program for fiscal year 2018, including the underlying philosophy and considerations that provide the basis for incorporating the elements into our program and the factors that demonstrate our strong pay-for-performance alignment: +PHILOSOPHY +CONSIDERATIONS +PERFORMANCE CONDITIONS / +VESTING PROVISIONS +2018 PAY-FOR- PERFORMANCE RESULTS +BASE SALARY +Guaranteed ● Cash +• Attract and Retain Executives +• Balance the level of guaranteed pay with at-risk pay to properly manage our compensation-related risk. +• No specific vesting conditions associated with payment. +• Past contributions and performance are considered in evaluating any increase in base salary. +MANAGEMENT INCENTIVE PLAN (2018 Annual Cash Incentive Awards) +At-Risk ● Performance-Based (Short-Term) ● Cash +• Pay for Performance +• Reward Achievement +• Align Interests with Stockholders +• Attract and Retain Executives +• Pay based on achievement of threshold, target and maximum Company financial performance levels to reward achievement and strike appropriate balance between compensation incentives and risks. +• Performance metrics reflect a focused shift towards profitability-based metrics in line with our strategic focus, especially for those executives that have the ability to impact Company-wide results. +• Target bonus set as percentage of base salary. +• Actual bonus payout based on achievement of fiscal year 2018 consolidated operating income for all NEOs (and business unit operating income and revenue targets for certain executives) . +• Fiscal year 2018 consolidated operating income, business unit operating income and business unit revenue were achieved above the target level based on strong Company performance. Cash incentive payments were made above the target level (but below the maximum level) . +ANNUAL PERFORMANCE-BASED RESTRICTED STOCK UNITS (2018 Annual PSUs) +At-Risk ● Performance-Based (Short-Term) + Long-Term Vesting ● 20% of Equity Compensation +• Pay for Performance +• Reward Achievement +• Align Interests with Stockholders +• Attract and Retain Executives +• Awards vest based on achievement of threshold and target Company financial performance levels to reward achievement and strike appropriate balance between compensation incentives and risks. +• Vest subject to achievement of a pre-established EPS target for fiscal year 2018, the year in which they were granted. +• Performance metric supports our focus on creating value for our stockholders as a key strategic objective. +• If performance conditions are met, awards will then vest based on continued employment in three equal installments over three years commencing August 15, 2018. +• Fiscal year 2018 adjusted EPS was achieved above the target level based on strong Company performance, therefore the awards were earned as to 100% of the underlying shares. +• The value of these awards increases over time as the value of our stock price increases. +ANNUAL TIME-BASED RESTRICTED STOCK UNITS (2018 Time-Based RSUs) +At-Risk ● Time-Based (Long-Term) ● 20% of Equity Compensation +• Attract and Retain Executives +• Align Interests with Stockholders +• Balance the level of performance-based pay with time-based pay to more closely align with peer group practices and properly manage our compensation-related risk. +• Provide awards that vest solely based on continued employment to emphasize the retention of our executives. +• Awards vest based on continued employment in three equal installments over three years commencing August 15, 2018. +• The value of these awards increases over time as the value of our stock price increases. +LONG-TERM PERFORMANCE STOCK OPTIONS (2018 LTIP NQSOs) +At-Risk ● Performance-Based (Long-Term) ● 60% of Equity Compensation +• Align Interests with Stockholders +• Pay for Performance +• Reward Achievement +• Attract and Retain Executives +• Awards vest based on achievement of long-term Company financial performance level to ensure executives are focused on both short-term and long-term objectives. +• Granted with an exercise price equal to fair market value on the grant date, and only have value to the extent the price of our stock increases. +• Vesting occurs only if a pre-established "pre-tax income" hurdle for fiscal year 2020 is achieved. +• Performance metric supports our focus on profitability as a key strategic objective. +• We believe it is probable that the performance condition for the 2018 LTIP NQSOs will be achieved, and therefore we currently expect these awards will vest. +31 +Table of Contents +COMPENSATION PHILOSOPHY AND OBJECTIVES +Compensation Program Objectives +Pursuant to its charter, the Committee has overall responsibility for developing and approving the compensation philosophy and objectives applicable to our executive leadership team, and developing and approving our executive compensation program and policies. The overarching objective of our executive compensation program is to effectively design our program to foster and encourage the achievement of our business and strategic objectives. As a result, the Committee seeks to design our executive compensation program in a manner that achieves strong alignment between the compensation opportunity provided to our executives and the achievement of our strategic objectives, informed by peer group data. In so doing, we routinely consider appropriate changes to our compensation program to reflect changes in our strategic direction and the evolving needs of our business. In addition, in order to build and retain the leadership team necessary to achieve our strategic objectives, the Committee endeavors to develop a compensation program that is attractive and competitive in the marketplace. +Compensation Philosophy +When establishing our executive compensation program each year, the Committee is generally guided by the following four principles that it believes align closely with our compensation objectives: +PAY FOR PERFORMANCE +ALIGN INTERESTS WITH STOCKHOLDERS +• Offer a significant portion of the compensation opportunity made available to our executives in the form of performance-based compensation that is at-risk instead of guaranteed. +• Ensure performance-based compensation is directly tied to the achievement of Company financial goals that the Committee believes are important for our short and long-term success. +• Align the interests of our executives with those of our stockholders by tying a significant portion of the compensation opportunity to financial performance that the Committee believes will result in the creation of long-term stockholder value. +• Ensure that a significant portion of the compensation opportunity is directly tied to total stockholder return by issuing awards that increase in value only if and as our stock price increases. +REWARD ACHIEVEMENT +ATTRACT AND RETAIN EXECUTIVES +• Provide meaningful and appropriate incentives for achieving both short-term and long-term Company financial goals that have been established by the Committee. +• Ensure that the financial goals are appropriate for each executive given their respective titles, scope of responsibilities, and ability to impact results. +• Attract key executives with the proper background and experience necessary to lead our Company, and provide us the best opportunity to achieve our business and strategic objectives. +• Retain our key executives by offering compensation that is attractive and competitive in the marketplace, taking into consideration peer group data. +Pay-for-Performance Philosophy +Our pay-for-performance philosophy demands that we offer performance-based compensation that is directly linked to factors that the Committee believes will lead to the creation of long-term stockholder value. Specifically, we pay for performance by tying a significant portion of our executive compensation opportunity to the achievement of pre-established performance metrics that are reflective of our business and strategic objectives, as well as to increases in our stock price. The Committee believes that choosing the right performance metrics is critical to our ability to properly motivate our executives and advance our pay-for-performance philosophy. In particular, this requires that the performance metrics be reconsidered each year as our business and strategic objectives evolve to ensure they provide the appropriate barometer of our growth and success, and motivate the achievement of our objectives in line with how we currently view the business. The Committee also believes that providing a significant portion of the executive compensation opportunity in the form of equity awards that increase in value as the price of our common stock increases is critical to aligning the interests of our executives with those of our stockholders. +To this end, for our 2018 Annual Cash Incentive Awards, the Committee chose consolidated operating income for all NEOs (and business unit operating income and revenue targets for certain executives) as the performance metrics given our strategic focus on increased profitability and improved margins. For our 2018 Annual PSUs, the Committee selected EPS as the performance metric as it is an important indicator of both profitability and our ability to create long-term value for our stockholders. For our 2018 LTIP NQSOs, the Committee established "pre-tax income" for fiscal year 2020 as the performance metric, given our focus on long-term profitability, margin improvement and cost savings. The 2018 Annual PSUs and 2018 LTIP NQSOs both reflect equity-based awards the value of which are directly correlated to our stock price. +As a result of our strong commitment to our pay-for-performance philosophy, a substantial portion of our executives’ compensation opportunity is performance-based and it is not guaranteed that it will be earned. While we offer certain standard compensation elements that provide guaranteed payments, including base salary and limited employee benefits, our executive compensation mix is heavily weighted toward performance-based compensation, which significantly limits the amount of guaranteed +32 +Table of Contents +pay. In reviewing our adherence to our executive compensation philosophy, the Committee annually reviews both the amount of, and the mix between, guaranteed pay and at-risk pay and seeks to establish appropriate performance targets for the at-risk pay so as to ensure our performance targets align with our business and strategic objectives, are appropriately challenging to achieve, and mitigate our overall compensation-related risk. +As an example, for fiscal year 2018, guaranteed pay for our Chief Executive Officer (reflecting the value of base salary and employee benefits) represented only 19% of his targeted compensation opportunity for the year, while at-risk pay represented 81% of his targeted compensation for the year. Of the 81% that reflects at-risk pay, 70% was provided through performance-based awards (reflecting the value of the 2018 Annual Cash Incentive Awards, 2018 Annual PSUs and 2018 LTIP NQSOs) that only vest upon the achievement of pre-established Company performance metrics, while 11% was provided through time-based awards (reflecting the value of the 2018 Time-Based RSUs) that only vest upon the achievement of long-term time-based vesting targets. The Committee considers the 2018 Time-Based RSUs to be at-risk pay given that the vesting of the awards is conditioned upon continued employment over an extended period of time and the value of the awards is subject to fluctuation based on our stock price. We believe the significant focus on performance-based awards, including the relative weighting of the various compensation elements provided to our executives, reflects our strong pay-for-performance alignment. The elements of our executive compensation program are established taking into consideration the advice of our independent compensation consultant, which provides us with peer group data regarding competitive pay practices and trends in our industry. +The graphic below illustrates the amount of targeted at-risk pay vs. guaranteed pay for our Chief Executive Officer for fiscal year 2018 and the breakdown of the various components of the compensation program on a percentage basis. +33 +Table of Contents +Governance Practices that Support our Compensation Philosophy +Our executive compensation program has significant governance components that we believe support and strengthen our compensation philosophy and reduce compensation-related risk, including those summarized in the following table: +GOVERNANCE PRACTICE +WHAT WE DO +Independent Directors +• All of the members of our Board, other than our President and Chief Executive Officer, are independent directors under applicable SEC and NYSE rules. +Independent Compensation Committee +• The Committee consists entirely of independent directors who meet the independence standards set forth in applicable SEC and NYSE rules. +Independent Compensation Consultant +• The Committee has retained, and routinely consults with, an independent compensation consultant who assists the Committee in gathering competitive pay data, selecting our peer group, and structuring our executive compensation program. The decision to engage the consultant was made solely by the Committee and the consultant reports directly to the Committee. +Compensation Risk Assessment +• The Committee performs an annual review of its charter and the risks related to our compensation practices. See the section of this Proxy Statement titled "Compensation Risk Assessment" for additional information. +Frequency of "Say on Pay" Vote +• We ask our stockholders to provide an advisory vote on our pay practices on an annual basis, and the Committee considers the outcome of the vote when establishing our executive compensation program. +Stock Ownership Guidelines +• We have adopted stock ownership guidelines for our executive officers and directors, which are reviewed annually. See the section of this Proxy Statement titled "Stock Ownership Guidelines" for additional information. +Clawback Policy +• We have voluntarily adopted a Clawback Policy related to our cash and equity incentive awards, which we believe reinforces our pay-for performance philosophy and contributes to a Company culture that emphasizes integrity and accountability in financial reporting. See the section of this Proxy Statement titled "Clawback Policy" for additional information. +Equity Award Vesting Provisions +• Our equity awards are subject to "double-trigger" vesting upon a change of control. +No Tax Gross Ups +• Our Change of Control and Severance Agreements do not contain provisions allowing for excise tax gross up payments . +No Repricing of Awards +• Our 2015 Stock Incentive Plan, or 2015 Plan, explicitly prohibits the repricing of equity awards. +No Hedging and Pledging +• Our Insider Trading Policy specifically prohibits hedging or pledging our shares, and other similar practices. +No Dividends on Unvested Equity Awards +• Our equity award agreements do not provide for the payment of dividends on unvested equity awards. +34 +Table of Contents +COMPENSATION CONSULTANT AND PEER GROUP +Compensation Consultant +The Committee receives assessments and advice regarding our compensation practices and philosophy from its independent compensation consultant, Frederic W. Cook & Co., Inc., or FWC. FWC provides information on competitive pay practices and trends in our industry, and makes recommendations regarding the formulation of our Peer Group (as defined below), as well as the design and structure of our compensation program. The Committee meets regularly with FWC throughout the year, carefully reviews and assesses the materials provided by FWC, and engages in thorough deliberations with FWC and management regarding our executive compensation program and potential changes. +While our Company is not obligated to retain an independent compensation consultant, the Committee believes that the use of an independent consultant provides additional assurance that our executive compensation program is attractive and competitive in the marketplace, consistent with market conditions, aligned with our business and strategic objectives, and reflective of our compensation philosophy. +In accordance with applicable SEC rules, the Committee took certain factors into consideration when selecting FWC, which it believes may affect the independence of a compensation consultant. In particular, at a meeting of the Committee, the Committee discussed: +• +whether any other services had been or were being provided by FWC to our Company; +• +the amount of fees paid by our Company to FWC as a percent of FWC’s total revenues; +• +FWC’s policies and procedures designed to prevent conflicts, a copy of which was provided to the Committee prior to the meeting; +• +FWC’s ownership of our common stock (if any); and +• +any business or personal relationships between FWC and any Committee members or any of our executive officers. +Furthermore, FWC does not provide any additional services to us or our management, other than the services that are provided to the Committee in FWC’s capacity as our compensation consultant. Following the consideration of these factors, and such additional factors as the Committee deemed appropriate under the circumstances, the Committee made an affirmative determination that FWC is independent and unanimously approved the engagement of FWC. +The decision to engage FWC was made by the Committee, and FWC reports directly to the Committee. While members of our management regularly communicate with representatives of FWC, our management did not recommend the engagement of FWC in any capacity for fiscal year 2018 (or in any prior year) and does not direct or oversee the retention, termination or scope of services of FWC with respect to our executive compensation program. +Peer Group +In making compensation decisions, the Committee compares the aggregate compensation opportunity, as well as each element of compensation, against a peer group of publicly-traded footwear, apparel, accessories and lifestyle brand companies that is recommended by FWC and approved by the Committee. We collectively refer to these companies as our Peer Group. Our Peer Group is generally comprised of companies against which we compete for executive talent and stockholder investment, are in related businesses or industries, and are otherwise similar to us based on a number of characteristics as discussed below. Our Peer Group is reviewed at least annually by the Committee with support from FWC. While no single company in our Peer Group reflects all of our Company's characteristics, taken together the Committee believes that this list offers strong comparative analogs to our overall business model and brand portfolio. Our Peer Group for fiscal year 2018 was unchanged from fiscal year 2017 and consisted of the following 19 companies: +35 +Table of Contents +PEER GROUP FOR FISCAL YEAR 2018 +• Kate Spade & Company (subsequently acquired by Tapestry, Inc.) +• Carter's, Inc. +• Express, Inc. +• Crocs, Inc. +• Fossil Group, Inc. +• Finish Line, Inc. +• Skechers U.S.A., Inc. +• Lululemon Athletica, Inc. +• G-III Apparel Group, Ltd. +• Steven Madden, Ltd. +• Guess?, Inc. +• Columbia Sportswear Company +• Oxford Industries, Inc. +• The Buckle, Inc. +• RH (formerly Restoration Hardware Holdings, Inc.) +• Under Armour, Inc. +• Chico's FAS, Inc. +• Wolverine World Wide, Inc. +• DSW Inc. +Peer Group Characteristics +The Committee considers a variety of characteristics when it selects the companies which comprise our Peer Group, including the characteristics set forth in the chart below. +Use of Peer Group in Setting Executive Compensation +As part of its efforts to ensure that our executive compensation program is attractive and competitive in the marketplace, the Committee regularly reviews compensation data from our Peer Group provided by FWC. In addition, in order to gain a broader perspective on overall market trends and practices, the Committee regularly reviews data from broader-based compensation surveys. Our Peer Group compensation data is generally used as an initial starting point and guidepost in making compensation decisions for our executives, including with respect to both the target level of compensation and the overall structure of our executive compensation program. +For comparison purposes, FWC typically presents Peer Group data on both individual executive pay levels and program structure. With respect to individual pay levels, FWC provides data on the total compensation opportunity for each executive, as well as for each individual element of compensation. In setting the target compensation opportunity for fiscal year 2018, the Committee was committed to its adoption of a median pay philosophy, pursuant to which it was focused on benchmarking our executives’ target compensation opportunity to the 50th percentile compared to our Peer Group, subject to the discretion retained by the Committee to make adjustments as it deems appropriate. Notably, as a result of this change, the Committee decided not to increase base salaries for our NEOS in fiscal year 2018 from fiscal year 2017 levels, despite increases in base salaries among our Peer Group. +While our Peer Group compensation data is a significant factor in the Committee’s evaluation of compensation decisions, it also considers a variety of additional factors, including complexity and size of the business, officers’ tenure, experience, and level of responsibility, recent and projected Company performance, recent individual performance, and general industry practices and economic conditions. +36 +Table of Contents +ELEMENTS OF FISCAL YEAR 2018 +EXECUTIVE COMPENSATION PROGRAM +The following table provides summary information regarding the key elements of our fiscal year 2018 executive compensation program: +COMPENSATION +ELEMENT +GUARANTEED +V. +AT-RISK +PERFORMANCE-BASED V. +TIME-BASED +CASH +V. +EQUITY +Base Salary +Guaranteed +Not Applicable +Cash +2018 Annual Cash Incentive Awards +At-Risk +Performance-Based (Short-Term Criteria) +Cash +2018 Annual PSUs +At-Risk +Performance-Based (Short-Term Criteria) ++ +Long-Term Vesting +20% of Equity Compensation +2018 Time-Based RSUs +At-Risk +Time-Based +(Long-Term Vesting) +20% of Equity Compensation +2018 LTIP NQSOs +At-Risk +Performance-Based +(Long-Term Criteria and Vesting) +60% of Equity Compensation +Employee Benefits +Guaranteed +Not Applicable +Other +Severance and Change of Control +At-Risk +Not Applicable +Cash/Equity/Other +Base Salary +The following table provides information regarding the base salaries paid to our NEOs during fiscal year 2018: +BASE SALARY +Guaranteed ● Cash +Philosophy +Considerations +Performance Conditions +Attract and Retain Executives: +• Pay competitively to attract and retain executives that are critical to the achievement of our business and strategic objectives. +• Provides a minimum level of guaranteed cash compensation necessary to attract and retain executives. +• Balance the level of guaranteed pay with at-risk pay to properly manage our compensation-related risk. +• No specific vesting conditions associated with payment. +• Salary reviewed and set annually based on a number of factors, including title, scope of responsibilities, individual and Company performance, and our Peer Group data. +No Changes to Base Salary for Fiscal Year 2018 +Base salaries remaining unchanged from those paid in fiscal year 2017. The following table summarizes the base salaries paid to our NEOs during fiscal year 2018: +NAME +BASE SALARY +David Powers +$950,000 +Thomas A. George +$575,000 +David E. Lafitte +$620,000 +Stefano Caroti +$550,000 +Andrea O'Donnell +$500,000 +37 +Table of Contents +2018 Annual Cash Incentive Awards +The following table provides information regarding the 2018 Annual Cash Incentive Awards granted to our NEOs during fiscal year 2018: +2018 ANNUAL CASH INCENTIVE AWARDS +At-Risk ● Performance-Based (Short-Term) ● Cash +Philosophy +Considerations +Performance Conditions/ Vesting Provisions +2018 Pay for Performance +Pay for Performance: +• Establish appropriate short-term performance conditions that the Committee believes will drive our future growth and profitability. +Reward Achievement: +• Provide meaningful and appropriate incentives for achieving Company annual financial goals that the Committee believes are important for our short and long-term success. +Align Interests with Stockholders: +• Align the interests of executives with those of our stockholders by tying bonus payout to Company performance. +Attract and Retain Executives: +• A cash bonus opportunity is considered a typical component of a competitive executive pay package for executives among our Peer Group. +• Company performance conditions based on Committee-approved annual metrics derived from our annual and long-range business and strategic plan. +• Pay based on achievement of threshold, target and maximum Company financial performance levels to reward achievement and strike appropriate balance between compensation incentives and risks. +• The "target" performance condition level is typically in line with the level of Company performance projected for each metric. +• Performance metrics used for each NEO are based on respective titles, scope of responsibilities and ability to impact results. +• Performance metrics reflect a focused shift towards profitability-based metrics in line with our strategic focus, especially for those executives that have the ability to impact Company-wide results. +• Target bonus set as percentage of base salary. +• Actual bonus payout is based on achievement of fiscal year 2018 consolidated operating income for all NEOs (and business unit operating income and revenue targets for certain executives). +• The Committee assigned relative weighting to each of these three components, which is expressed as a percentage of the targeted cash incentive amount. +• For threshold performance, 50% of the cash incentive relevant to that component would be earned. For target performance, 100% of the cash incentive relevant to that component would be earned. For maximum performance, 200% of the cash incentive relevant to that component would be earned. +• When determining Company achievement relative to the performance targets, the Committee relied upon our fiscal year 2018 audited financial statements, as adjusted by the Committee for certain non-recurring items. +• Achievement below threshold levels results in no payout. +• Fiscal year 2018 consolidated operating income, business unit operating income and business unit revenue targets were achieved above the target level based on strong Company performance. Cash incentive payments were made above the target level (but below the maximum level) , as set forth in detail below. +38 +Table of Contents +Target Cash Incentive Amount +The Committee establishes a target amount of annual cash incentive compensation for each NEO, which is expressed as a percentage of base salary. The percentage is determined by the Committee by reference to a number of factors, including the executive's title and responsibilities, our recent and projected financial performance, and a review of our Peer Group data. +The following table provides the current base salary, target percentage of salary, and resulting target bonus for each NEO for fiscal year 2018: +NAME +BASE SALARY +TARGET PERCENTAGE OF SALARY +TARGET BONUS +David Powers +$950,000 +125% +$1,187,500 +Thomas A. George +$575,000 +75% +$431,250 +David E. Lafitte +$620,000 +75% +$465,000 +Stefano Caroti +$550,000 +75% +$412,500 +Andrea O'Donnell +$500,000 +75% +$375,000 +39 +Table of Contents +Performance Targets +The following table summarizes the performance conditions for the 2018 Annual Cash Incentive Awards, the relative weighting of each performance condition for each NEO, our Company's performance in light of the targets and the actual achieved payout percentage for each component: +COMPONENT +RELATIVE +WEIGHT FOR EACH NEO +THRESHOLD PERFORMANCE (1) +TARGET PERFORMANCE +MAXIMUM PERFORMANCE +PERFORMANCE AND PAYOUT (1) +Consolidated Operating Income +• 100% for Messrs. Powers, George and Lafitte +• 25% for Mr. Caroti and Ms. O’Donnell +• Consolidated operating income of $180.01 million +• Consolidated operating income of $200.01 million +• Consolidated operating income of $240.01 million +• Adjusted (2) consolidated operating income was $231.03 million, resulting in a payout of 177.55% +Business Unit Operating Income +• 40% for Mr. Caroti +• Global Omni-Channel operating income of $319.0 million +• Global Omni-Channel operating income of $354.44 million +• Global Omni-Channel operating income of $425.33 million +• Global Omni-Channel operating income was $386.47 million, resulting in a payout of 145.17% +• 40% for Ms. O’Donnell +• Fashion Lifestyle operating income of $380.52 million +• Fashion Lifestyle operating income of $422.80 million +• Fashion Lifestyle operating income of $507.36 million +• Fashion Lifestyle operating income was $442.15 million, resulting in a payout of 122.88% +Business Unit Revenue +• 35% for Mr. Caroti +• Global Omni-Channel revenue of $1,531.35 million +• Global Omni-Channel revenue of $1,595.15 million +• Global Omni-Channel revenue of $1,722.77 million +• Global Omni-Channel revenue was $1,673.99 million, resulting in a payout of 161.78% +• 35% for Ms. O’Donnell +• Fashion Lifestyle revenue of $1,399.17 million +• Fashion Lifestyle revenue of $1,457.47 million +• Fashion Lifestyle revenue of $1,574.07 million +• Fashion Lifestyle revenue was $1,525.36 million, resulting in a payout of 158.22% +(1) +Regardless of the level of performance with respect to the other performance metrics, in order to receive any payments for the 2018 Annual Cash Incentive Awards, a consolidated operating income threshold of at least $170.0 million was required to be achieved. This threshold was selected by the Committee based on a number of factors, including our long-range strategic plan and our financial performance during the previous fiscal year. The threshold operating income threshold amount was achieved. +(2) +Consistent with the terms of the Management Incentive Plan pursuant to which the 2018 Annual Cash Incentive Awards were granted, and in line with our historical practice, the Committee adjusted our fiscal year 2018 financial results for certain non-recurring items when determining Company achievement relative to the consolidated operating income performance target. For fiscal year 2018, this adjustment resulted in the exclusion of charges in the aggregate amount of $8.45 million related to (i) our consideration of strategic alternatives, and (ii) our proxy contest defense (including related litigation costs) in which each of our director nominees was selected by our stockholders. The Committee determined this adjustment was appropriate because these items were unanticipated one-time charges that were not (i) related to our core operating results, (ii) indicative of the performance of our ongoing business operations, or (iii) contemplated in the approved fiscal year 2018 budget. As a result, the 2018 consolidated operating income has been adjusted from $222.58 million to $231.03 million for purposes of calculating achievement of the 2018 Annual Cash Incentive Awards. +40 +Table of Contents +Calculation of Payout of 2018 Annual Cash Incentive Awards +The amount of cash incentive compensation actually earned by each NEO with respect to the 2018 Annual Cash Incentive Awards is calculated by multiplying the target cash incentive amount by the percentage of target earned for each relevant component, and then multiplying the amount by the relative weighting of each component, as illustrated in the table below: +NAME +TARGET PERCENTAGE OF SALARY +COMPONENT +TARGET CASH INCENTIVE AMOUNT +PERCENTAGE OF TARGET EARNED FOR COMPONENT +RELATIVE WEIGHT OF COMPONENT +PAYOUT FOR EACH COMPONENT +TOTAL PAYOUT +David Powers +125% +Consolidated Operating Income +$1,187,500 +177.55% +100% +$2,108,397 +$2,108,397 +Thomas A. George +75% +Consolidated Operating Income +$431,250 +177.55% +100% +$765,681 +$765,681 +David E. Lafitte +75% +Consolidated Operating Income +$465,000 +177.55% +100% +$825,604 +$825,604 +Stefano Caroti +75% +Consolidated Operating Income +$103,125 +177.55% +25% +$183,098 +$656,204 +Global Omni-Channel Operating Income +$165,000 +145.17% +40% +$239,535 +Global Omni-Channel Revenue +$144,375 +161.78% +35% +$233,572 +Andrea O'Donnell +75% +Consolidated Operating Income +$93,750 +177.55% +25% +$166,452 +$558,436 +Fashion Lifestyle Operating Income +$150,000 +122.88% +40% +$184,315 +Fashion Lifestyle Revenue +$131,250 +158.22% +35% +$207,669 +41 +Table of Contents +2018 Annual Performance Stock Units +The following table provides information regarding the 2018 Annual PSUs granted to our NEOs during fiscal year 2018: +2018 ANNUAL PSUs +At-Risk ● Performance-Based (Short-Term) + Long-Term Vesting +20% of Equity Compensation +Philosophy +Considerations +Performance Conditions/ Vesting Provisions +2018 Pay for Performance +Pay for Performance : +• Vesting of awards dependent on achievement of profitability target, which is consistent with one of our strategic objectives. +Reward Achievement : +• Provide incentives for achieving short-term Company financial goals. +Align Interests with Stockholders : +• Align the interests of executives with those of our stockholders by focusing performance conditions on profitability. +Attract and Retain Executives : +• Additional long-term vesting requirement once performance conditions are achieved to further encourage retention of our executives. +• Structured as RSUs that may be settled for our common stock. +• Company performance condition is based on a Committee-approved metric derived from our annual and long-range business and strategic plans. +• EPS is an important indicator of profitability, which is a strategic focus and aligns executives’ interests with those of our stockholders. +• Awards vest based on achievement of threshold and target Company financial performance levels to reward achievement and strike appropriate balance between compensation incentives and risks. +• The "target" performance condition level is typically in line with the level of Company performance projected for the metric. +• Vest subject to achievement of EPS target for fiscal year 2018, the year in which they were granted. +• If performance conditions are met above the threshold level for the EPS target, the number of 2018 Annual PSUs that will vest will increase up to a maximum of 100% of the underlying shares. No additional payouts for performance beyond 100% of target. +• If performance conditions are met, awards vest based on continued employment in three equal installments over three years commencing August 15, 2018. +• When determining Company achievement relative to the performance target, the Committee relied upon our fiscal year 2018 audited financial statements, as adjusted by the Committee for certain non-recurring items. +• Achievement below threshold level results in no vesting. +• The EPS threshold level for fiscal year 2018 was $3.90; the target level was $4.33. +• Fiscal year adjusted 2018 EPS was $5.55 (1) . +• Since the fiscal year 2018 EPS threshold level was achieved above the target level based on strong Company performance, the awards were earned as to 100% of the underlying shares. +• The value of these awards increases over time as the value of our stock price increases. +(1) +Consistent with the terms of the 2015 Plan pursuant to which the 2018 Annual PSUs were granted, and in line with our historical practice, the Committee adjusted our fiscal year 2018 financial results for certain non-recurring items when determining Company achievement relative to the EPS performance target. For fiscal year 2018, this adjustment resulted in the exclusion of charges related to (i) our consideration of strategic alternatives, (ii) our proxy contest defense (including related litigation costs) in which each of our director nominees was selected by our stockholders, and (iii) changes in tax laws and the repatriation of cash from international jurisdictions. The Committee determined this adjustment was appropriate because these items were unanticipated one-time charges that were not (i) related to our core operating results, (ii) indicative of the performance of our ongoing business operations, or (iii) contemplated in the approved fiscal year 2018 budget. As a result, the 2018 EPS has been adjusted from $3.58 to $5.55 for purposes of calculating achievement of the 2018 Annual PSUs. +42 +Table of Contents +Calculation of Payout of 2018 Annual PSUs +The amount of shares underlying the 2018 Annual PSUs actually earned by each NEO is set forth in the table below, which reflects 100% of the granted amounts: +NAME +NUMBER OF SHARES EARNED +David Powers +8,659 +Thomas A. George +2,453 +David E. Lafitte +2,598 +Stefano Caroti +2,381 +Andrea O'Donnell +1,804 +2018 Time-Based Restricted Stock Units +The following table provides information regarding the 2018 Time-Based RSUs granted to our NEOs during fiscal year 2018: +2018 TIME-BASED RSUs +At-Risk ● Time-Based (Long-Term) +20% of Equity Compensation +Philosophy +Considerations +Performance Criteria/ Vesting Provisions +2018 Grants +Attract and Retain Executives : +• Promote retention of our executives because awards vest over long-term service period. +Align Interests with Stockholders : +• Align the interests of executives with those of stockholders by issuing equity awards the value of which is correlated to our stock price. +• Balance the level of performance-based pay with time-based pay to properly manage our compensation-related risk. +• Primarily used for retention of our executives. +• Customary among our Peer Group. +• Awards vest based on continued employment in three equal installments over three years commencing August 15, 2018. +• Each of our NEOs (other than Mr. George) were granted 2018 Time-Based RSUs in an amount equal to 20% of their total equity compensation for fiscal year 2018. +• The value of these awards increases over time as the value of our stock price increases. +43 +Table of Contents +2018 Long-Term Incentive Plan Performance Non-Qualified Stock Options +The following table provides information regarding the 2018 LTIP NQSOs granted to our NEOs during fiscal year 2018: +2018 LTIP NQSOs +At-Risk ● Performance-Based (Long-Term) +60% of Equity Compensation +Philosophy +Considerations +Performance Conditions/ Vesting Provisions +2018 Pay for Performance +Align Interests with Stockholders : +• Align the interests of executives with those of our stockholders by focusing performance conditions on profitability and issuing awards that increase in value only if and as our stock price increases. +Pay-for-Performance : +• Vesting of awards dependent on achievement of profitability target, which is consistent with one of our strategic objectives. +Reward Achievement : +• Provide incentives for achieving long-term Company financial goals. +Attract and Retain Executives : +• Promote retention of our executives because options vest based on a performance target to be achieved in the future. +• Company performance condition is based on a Committee-approved metric derived from our long-range business and strategic plan. +• Pre-tax income supports our focus on profitability as a key strategic initiative and aligns executives’ interests with the execution of our long-range plan. +• Granted with an exercise price equal to fair market value on the grant date, and only have value to the extent the performance target is met and the price of our common stock goes up over time. +• Vest subject to the achievement of a pre-established pre-tax income target for fiscal year 2020. +• Consistent with our historical practice, we intend to disclose the pre-tax income target, as well as our performance relative to the target, following completion of the performance period. +• Awards will vest as to 100% of the underlying shares if we achieve the pre-tax income target. If the target is not achieved, no vesting will occur and the awards will expire immediately. +• The executive must provide continued service through March 31, 2020. +• When determining Company achievement relative to the performance target, the Committee will rely upon our fiscal year 2020 audited financial statements, as may be adjusted by the Committee for certain non-recurring items. +• We believe it is probable that the performance condition for the 2018 LTIP NQSOs will be achieved, and therefore we currently expect these awards will vest. +44 +Table of Contents +Employee Benefits +The following table provides information regarding the key employee benefits granted or paid to our NEOs during fiscal year 2018: +Philosophy +Considerations +Benefits +Attract and Retain Executives : +• Provide our NEOs with competitive broad-based employee benefits structured to attract and retain key executives. +• Generally reflect benefits provided to all of our US-based full-time employees. +• Provides a standard package of benefits necessary to attract and retain executives. +• 401(k) defined contribution plan. +• 401(k) plan Company match of 50% of each eligible participant's tax-deferred contributions on up to 6% of eligible compensation on a per payroll period basis, with a true-up contribution if such eligible participant is employed by our Company on the 1st day of the calendar year. +• Premiums for long-term disability insurance and life insurance for the benefit of the employees. +• Health and welfare benefit plans. +• Relocation expenses for new hires. +• Standard employee product discounts. +• NEOs and certain other senior executives are eligible to contribute to our Nonqualified Deferred Compensation Plan, or NQDC Plan, and our Company may choose to match any or all such contributions. The NQDC Plan is described in further detail in the section of this Proxy Statement titled " Nonqualified Deferred Compensation ". +Severance and Change of Control +The following table provides information regarding the severance and change of control provisions in our severance agreements and equity award agreements entered into with each of our NEOs: +Severance and Change of Control Provisions +Philosophy +Considerations +Terms +Attract and Retain Executives : +• Retain and encourage our NEOs to remain focused on our business and the interests of our stockholders when considering strategic alternatives. +• Intended to ease an NEO's transition due to an unexpected employment termination. +• Take into account the expected time it takes a separated executive to find a similarly situated job. +• The employment of our NEOs is "at will", meaning we can terminate them at any time and they can terminate their employment with us at any time. +• "Double-trigger" provisions preserve morale and productivity and encourage executive retention in the face of the potentially disruptive impact of a change of control. +• These provisions are considered a typical component of a competitive executive compensation program for executives among our Peer Group. +Change of Control and Severance Agreements : +• Provide for certain cash payments, and the vesting of certain equity awards, in the event there is a separation of employment under various circumstances. +Equity Award Agreements : +• Provide for accelerated vesting of awards upon a change of control if the recipient is terminated by the acquiring entity in connection with the change of control under specified circumstances. In addition, vesting of awards will be accelerated in full if the acquiring entity does not agree to provide for the assumption or substitution of the awards, and for certain outstanding historical awards if the transaction is not approved by a majority of the continuing directors. +For additional information about the severance and change of control provisions in our severance agreements and equity award agreements, please refer to the section of this Proxy Statement titled " Potential Payments upon Termination or Change of Control ". +45 +Table of Contents +OTHER COMPENSATION CONSIDERATIONS +Role of Executive Officers in Compensation Decisions +At the request of the Committee, our Chief Executive Officer or other senior management personnel may provide performance and compensation information to the Committee to inform its compensation decisions. However, our executives are not permitted to be present during any deliberations and voting regarding their own compensation, or during any executive sessions of the Committee. The Committee considers the information provided by our management, as well as information and advice provided by FWC, when making compensation decisions for our NEOs and other executives. The Committee, which is comprised solely of independent directors under applicable SEC and NYSE rules, thoroughly evaluates and approves all elements of compensation for our NEOs and other executives. +Compensation Risk Considerations +The Committee is responsible for reviewing the rewards that may be derived from our compensation program for all employees, including our NEOs, to assess whether the program encourages excessive or unnecessary risk-taking. The Committee conducts a thorough compensation risk analysis at least annually, but also takes into account compensation-related risks each time it grants compensation awards throughout the fiscal year. In conducting these assessments, the Committee considers a number of factors including the following: +• +Our compensation program consists of both guaranteed pay and at-risk pay, and the Committee reviews this mix annually. +• +Our Peer Group and industry compensation data is reviewed regularly to ensure that our compensation program is appropriate and competitive. +• +We have adopted a median pay philosophy whereby we remain focused on setting our executives’ target compensation at the median compared to our Peer Group. +• +Performance-based awards are earned based on the achievement of distinct Company and business unit performance goals over multiple time periods. We seek to eliminate overlap in our applicable performance conditions to ensure our compensation program is encouraging healthy and sustained growth across our business. +• +Our performance-based awards are subject to maximum award amounts to cap the potential compensation amount associated with an award. +• +Our executive compensation program encourages executive retention through long-term vesting provisions. For fiscal year 2018, all of the equity awards we granted were subject to long-term vesting. +• +We have adopted stock ownership guidelines, which encourage executives to have a significant, long-term equity position in our Company. +• +Our performance-based awards are subject to clawback provisions. +• +Our insider trading policy prohibits our NEOs and other executive officers from hedging the economic interest in our securities, and from pledging our securities. +• +Our severance and change of control benefits are designed to attract and retain executives without providing excessive benefits. +• +Our equity awards are intended to provide for “double-trigger” vesting upon a change of control. We adopted changes to our equity award agreements in fiscal year 2018 to ensure our awards continue to be viewed as “double-trigger” awards. +The Committee believes that, although the majority of the compensation opportunity provided to our executives is at-risk pay that is determined based upon the achievement of Company performance conditions, our executive compensation program does not encourage excessive or unnecessary risk-taking. The Committee does not believe that our compensation program is reasonably likely to have a material adverse effect on us. +CEO Pay Ratio +Pursuant to Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of Regulation S-K, we are required to disclose the ratio of the annual total compensation of our principal executive officer to the median of the annual total compensation of all of our employees (excluding our principal executive officer), or our median employee. During fiscal year 2018, our principal executive officer was David Powers, our President and Chief Executive Officer. +46 +Table of Contents +For fiscal year 2018, the annual total compensation of our median employee was $37,825. After identifying our median employee as described below, we calculated that individual’s 2018 total annual compensation in accordance with the requirements of the Summary Compensation Table. The annual total compensation of our President and Chief Executive Officer was $6,069,497, as reported in the Summary Compensation Table above. +Based on this information, the fiscal year 2018 ratio of the annual total compensation of our Chief Executive Officer to the annual total compensation of our median employee was approximately 160:1. +In accordance with Item 402(u) of Regulation S-K, we identified our median employee as of March 1, 2018 by (i) aggregating for each applicable employee (A) annual base salary for salaried employees (or hourly rate multiplied by estimated work schedule, for hourly, temporary and seasonal employees), (B) overtime paid during the year, and (C) target incentive compensation, and (ii) ranking this compensation measure for our employees from lowest to highest. For non-U.S. employees, we converted such employees’ pay to a U.S. dollar equivalent by applying an 11-month average trailing exchange rate methodology for each applicable currency. This calculation was performed for all of our employees, excluding Mr. Powers, except as described below. +Individuals (with corresponding number of employees, representing all employees in that jurisdiction) who were employed in Canada (101), Vietnam (37), Austria (12), and Belgium (12) were excluded from the employee population, for purposes of this disclosure, pursuant to the de minimis exemption set forth in Item 402(u) of Regulation S-K. After taking into consideration the foregoing exemption, on March 1, 2018, we had 1,948 U.S. employees and 1,304 non-U.S. employees. Irrespective of the use of the de minimis exemption, on the same date we had 1,948 U.S. employees and 1,466 non-U.S. employees. +The pay ratio we have reported above is a reasonable estimate calculated in a manner consistent with SEC rules based on our internal records and the methodology described above. The SEC rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices. Therefore, the pay ratio reported by other companies may not be comparable to the pay ratio we have reported above. +Clawback Policy +Consistent with our executive compensation philosophy, which seeks to reward executive officers for financial performance that creates value for our stockholders, we have adopted a Clawback Policy. Under this policy, we will seek reimbursement with respect to performance-based compensation paid or awarded to our executive officers when the following three factors exist: +• +the incentive compensation payment or award (or the vesting of such award) was based upon the achievement of financial results, as reported in a Form 10-Q, Form 10-K or other report filed with the SEC, that were subsequently the subject of a restatement to correct an accounting error due to material noncompliance with any financial reporting requirement under the federal securities laws; +• +a lower payment or award would have been made to such executive officer (or lesser or no vesting would have occurred with respect to such award) based upon the restated financial results; and +• +the need for the restatement was identified within three years after the date of the first public issuance or filing of the financial results that were subsequently restated. +The reimbursement to be sought by our Company will be equal to the portion of any performance-based compensation paid to or received by such executive officer for or during each of the restated periods that is greater than the amount that would have been paid or received had the financial results been properly reported. +Stock Ownership Guidelines +To further align the interests of our directors and executive officers with those of our stockholders, we have adopted Stock Ownership Guidelines. +The minimum ownership thresholds for our NEOs are determined as a multiple of the NEO's base salary as of the beginning of each calendar year. Absent extraordinary circumstances (e.g., unusual volatility in stock price) it is expected that our NEOs will strive to achieve the applicable level of ownership within five years of the later of the date the guidelines were adopted or the date the person first became subject to the guidelines as an NEO, subject to exceptions that may be granted by the Committee. Unless an NEO reaches the required ownership level, the NEO must retain at least 75% of the shares, after payment of any applicable exercise price and tax withholdings, and 75% of any exercisable options, that are granted or acquired through our equity compensation program. +47 +Table of Contents +Our directors are required to adhere to the stock ownership guidelines that are referenced in our Corporate Governance Guidelines. The minimum ownership threshold for our directors is determined as a multiple of the annual retainer fee and must be achieved within five years of the initial election of the director. +The following table provides a summary of the Stock Ownership Guidelines applicable to our NEOs and directors: +POSITION +STOCK OWNERSHIP GUIDELINES +Chief Executive Officer +6x Annual Base Salary +Other NEOs +3x Annual Base Salary +Directors +5x Annual Board Retainer Fee +Tax and Accounting Considerations +Among the factors it considers when making executive compensation decisions, the Committee considers the anticipated tax and accounting impact to us (and to our executive officers) of various payments, equity awards and other benefits. +The Committee considers the impact of the provisions of Section 162(m) of the Internal Revenue Code, or the Code, as amended by the Tax Cuts and Jobs Act, or TCJA. That section generally limits the deductibility of compensation paid by a publicly-held company to “covered employees” for a taxable year to $1.0 million. Effective for taxable years beginning on and after January 1, 2018, “covered employees” generally include our Chief Executive Officer, Chief Financial Officer and other highly compensated executive officers. Effective for taxable years beginning prior to January 1, 2018, an exception to this deduction limit applied to “performance-based compensation,” such as cash incentive and stock option awards, that satisfied certain criteria. This exception to the Section 162(m) deduction limit for “performance-based compensation” was repealed by the TCJA. Thus, except for certain “performance-based compensation” payable pursuant to written contracts that were in effect on November 2, 2017 and that are not modified in any material respect on or after that date, effective for taxable years beginning on and after January 1, 2018 our tax deduction with regard to compensation of “covered employees” is limited to $1.0 million per taxable year with respect to each executive officer. With respect to cash and equity awards that were in effect on November 2, 2017, and that are not modified in any material respect on or after that date, the Committee is mindful of the benefit to us and our stockholders of the full deductibility of compensation and have taken steps so that both the cash incentive and stock option awards that we granted may qualify for deductibility under Section 162(m) of the Code. However, awards that we granted that were intended to qualify as “performance-based compensation” may not necessarily qualify for such status under Section 162(m) of the Code. With respect to cash incentive and equity awards that we may grant in the future, we do not anticipate that the $1.0 million deduction limitation set forth in Section 162(m) of the Code will have a material impact on our results of operations. +The Committee also considers the impact of Section 409A of the Code, and in general, our executive plans and programs are designed to comply with the requirements of that section so as to avoid possible adverse tax consequences that may result from noncompliance. +We account for equity awards in accordance with the requirements of Financial Accounting Standards Board Accounting Standards Codification Topic 718, Stock Compensation. +Our Change of Control and Severance Agreements do not allow for excise tax gross up payments. +48 +Table of Contents +REPORT OF THE COMPENSATION COMMITTEE +The Compensation Committee of our Company has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussion, the Compensation Committee has recommended to our Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement. +THE COMPENSATION COMMITTEE +Lauri M. Shanahan ( Chair ) +Michael F. Devine, III +William L. McComb +Bonita C. Stewart +The Report of the Compensation Committee shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as amended, or the Acts, except to the extent that our Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under the Acts. +49 +Table of Contents +SUMMARY COMPENSATION TABLE +The following table sets forth all compensation awarded to our NEOs during fiscal years 2018, 2017 and 2016. The amounts set forth in the table have been calculated in accordance with the requirements of applicable SEC rules, and do not necessarily reflect the amounts that have actually been paid to, or which may be realized by, our NEOs. The table should be read together with the section of this Proxy Statement titled “Compensation Discussion and Analysis” . +Name and Principal Position +Year +Salary +($) +Bonus +($) +Stock +Awards +($) (1)(2) +Option +Awards +($) (1) +Non-Equity Incentive +Plan +Comp. +($) (3) +All Other +Comp. +($) (4) +Total +($) +David Powers +Chief Executive Officer +2018 +950,000 +— +1,199,964 +1,800,007 +2,108,397 +11,129 +6,069,497 +2017 +901,923 +— +1,200,043 +1,788,698 +— +10,325 +3,900,989 +2016 +700,000 +— +2,500,025 +— +— +9,480 +3,209,505 +Thomas A. George (5) +Former Chief Financial Officer +2018 +575,000 +— +339,937 +510,011 +765,681 +23,108 +2,213,737 +2017 +567,308 +— +339,953 +506,801 +— +22,592 +1,436,654 +2016 +550,000 +— +849,983 +— +— +9,480 +1,409,463 +David Lafitte +Chief Operating Officer +2018 +620,000 +— +360,031 +539,997 +825,604 +10,032 +2,355,664 +2017 +613,846 +— +360,024 +536,617 +— +20,371 +1,530,858 +2016 +600,000 +— +749,963 +— +— +9,480 +1,359,443 +Stefano Caroti +President of Omni-Channel +2018 +550,000 +— +329,959 +494,993 +558,436 +76,332 (6) +2,009,720 +2017 +534,615 +— +730,027 +491,906 +— +31,538 +1,788,086 +2016 +208,333 +150,000 (7) +699,990 +— +— +39,591 +1,097,914 +Andrea O'Donnell (8) +President of Fashion Lifestyle +2018 +500,000 +— +249,998 +374,999 +656,204 +27,655 (9) +1,808,856 +2017 +451,923 +250,000 (10) +799,991 +372,640 +— +185,326 (11) +2,059,880 +(1) +The amounts in this column represent the aggregate grant date fair value of the respective awards computed in accordance with FASB ASC Topic 718. For information about the assumptions underlying these computations, please refer to Note 8 to our consolidated financial statements included in our Annual Report on Form 10-K. In accordance with applicable SEC rules, for those awards that are subject to the satisfaction of performance conditions, the amounts reported reflect the value at the grant date based upon the probable outcome of such conditions. +(2) +These amounts reflect grants made to our NEOs of 2018 Annual PSUs and 2018 Time-Based RSUs. Refer to the sections of this Proxy Statement titled " 2018 Annual Performance Stock Units ” and “ 2018 Time-Based Restricted Stock Units ” for additional information. +(3) +These amounts reflect the cash incentive payments made to our NEOs under our Management Incentive Plan. Refer to the section of this Proxy Statement titled " 2018 Annual Cash Incentive Awards ” for additional information. +(4) +Except as otherwise specifically noted in the footnotes below, the amounts in this column reflect payments to certain NEOs of our matching contributions under the 401(k) plan and NQDC Plan, as well as life insurance premiums paid on policies that have been adopted for the benefit of our NEOs. +(5) +Mr. George stepped down from his position as Chief Financial Officer effective July 2018. +(6) +In addition to certain payments referred to in footnote 4 above, we paid Mr. Caroti relocation expenses in the amount of $55,858 in fiscal year 2018. +(7) +This amount reflects a one-time sign-on bonus paid to Mr. Caroti when he was hired as President of Omni-Channel. +(8) +Ms.O'Donnell joined us in April 2016 as President of Fashion Lifestyle, and initially became an NEO commencing in fiscal year 2017. +(9) +In addition to certain payments referred to in footnote 4 above, we paid Ms. O'Donnell relocation expenses in the amount of $18,140 in fiscal year 2018. +50 +Table of Contents +(10) +This amount reflects a one-time sign-on bonus paid to Ms. O'Donnell when she was hired as President of Fashion Lifestyle. +(11) +In addition to certain payments referred to in footnote 3 above, we paid Ms. O'Donnell relocation expenses in the amount of $177,673 in fiscal year 2017. +51 +Table of Contents +GRANTS OF PLAN-BASED AWARDS IN +FISCAL YEAR 2018 +The following table sets forth all grants of plan-based awards made to our NEOs during fiscal year 2018. The amounts set forth in the table do not necessarily reflect the amounts that have actually been paid to, or which may be realized by, our NEOs. The table should be read together with the section of this Proxy Statement titled “ Elements of Fiscal Year 2018 Executive Compensation Program ”. +Potential Payouts as of Grant Date Under Non-Equity Incentive Plan Awards (1) +Potential Payouts as of Grant Date Under Equity Incentive Plan Awards (2) +All Other Stock Awards: Number of Shares (#) (3) +All Other Option Awards: Number of Shares Underlying Options +(#) (4) +Exercise Price of Option Awards ($/Sh) +Grant Date +Fair Value +of Awards +($) (5) +Name +Grant Date +Threshold +($) +Target +($) +Max. +($) +Threshold +(#) +Target +(#) +Max. +(#) +David Powers +6/13/17 +593,750 +1,187,500 +2,375,000 +— +— +— +— +— +— +— +6/13/17 +— +— +— +4,330 +8,659 +8,659 +— +— +— +599,982 +6/13/17 +— +— +— +— +— +— +8,659 +— +— +599,982 +6/13/17 +— +— +— +— +— +— +— +71,914 +69.29 +1,800,007 +Thomas A. George +6/13/17 +215,625 +431,250 +862,500 +— +— +— +— +— +— +— +6/13/17 +— +— +— +1,227 +2,453 +2,453 +— +— +— +169,968 +6/13/17 +— +— +— +— +— +— +2,453 +— +— +169,968 +6/13/17 +— +— +— +— +— +— +— +20,376 +69.29 +510,011 +David E. Lafitte +6/13/17 +232,500 +465,000 +930,000 +— +— +— +— +— +— +— +6/13/17 +— +— +— +1,299 +2,598 +2,598 +— +— +— +180,015 +6/13/17 +— +— +— +— +— +— +2,598 +— +— +180,015 +6/13/17 +— +— +— +— +— +— +— +21,574 +69.29 +539,997 +Stefano Caroti +6/13/17 +206,250 +412,500 +825,000 +— +— +— +— +— +— +— +6/13/17 +— +— +— +1,191 +2,381 +2,381 +— +— +— +164,979 +6/13/17 +— +— +— +— +— +— +2,381 +— +— +164,979 +6/13/17 +— +— +— +— +— +— +— +19,776 +69.29 +494,993 +Andrea O'Donnell +6/13/17 +187,500 +375,000 +750,000 +— +— +— +— +— +— +— +6/13/17 +— +— +— +902 +1,804 +1,804 +— +— +— +124,999 +6/13/17 +— +— +— +— +— +— +1,804 +— +— +124,999 +6/13/17 +— +— +— +— +— +— +— +14,982 +69.29 +374,999 +(1) +The amounts in this column reflect the potential payouts under the 2018 Annual Cash Incentive Awards as of the grant date of such awards. Each of the performance conditions was achieved above the target levels in fiscal year 2018 and the cash incentive payments were made in July 2018. Refer to the section of this Proxy Statement titled " 2018 Annual Cash Incentive Awards ” for additional information. +(2) +The awards in this column reflect the grant of 2018 Annual PSUs. The performance condition was achieved above the target level in fiscal year 2018 and the awards were earned with respect to 100% of the underlying shares. Following achievement of the performance condition, these awards vest over three years in equal annual installments on August 15, 2018, 2019 and 2020. Refer to the section of this Proxy Statement titled " 2018 Annual Performance Stock Units " for additional information. +(3) +The awards in this column reflect the grant of 2018 Time-Based RSUs. These awards vest over three years in equal annual installments on August 15, 2018, 2019 and 2020. Refer to the section of this Proxy Statement titled " 2018 Time-Based Restricted Stock Units " for additional information. +(4) +The awards in this column reflect the grant of 2018 LTIP NQSOs. These awards may vest based upon our achievement of a performance target for fiscal year 2020. We believe it is probable that the performance condition for the 2018 LTIP NQSOs will be achieved, and therefore we currently expect these awards will vest. Refer to the section of this Proxy Statement titled " 2018 Long-Term Incentive Plan Performance Non-Qualified Stock Options " for additional information. +(5) +The amounts in this column represent the aggregate grant date fair value of the respective awards computed in accordance with FASB ASC Topic 718. For information about the assumptions underlying these computations, please refer to Note 8 to our consolidated financial statements included in our Annual Report on Form 10-K. In accordance with applicable SEC rules, for those awards that are subject to the satisfaction of performance conditions, the amounts reported reflect the value at the grant date based upon the probable outcome of such conditions. +52 +Table of Contents +OUTSTANDING EQUITY AWARDS AT +2018 FISCAL YEAR END +The following table sets forth equity awards granted to our NEOs that remained outstanding as of March 31, 2018. The market value of the awards set forth in the table have been calculated in accordance with the requirements of applicable SEC rules, and do not necessarily reflect the amounts that have actually been paid to, or which may be realized by, our NEOs. The table should be read together with the section of this Proxy Statement titled “ Elements of Fiscal Year 2018 Executive Compensation Program ”. +Stock Options +Stock Awards +Name +Number of +securities +underlying +unexercised +options +exercisable +(#) +Number of +securities +underlying +unexercised +unearned +options +(#) +Option +exercise +price +($) +Option +expiration +date +Number of +shares that +have not +vested +(#) +Market +value of +shares that +have not +vested +($) (3) +Number of +unearned +shares that +have not +vested +(#) +Market +value of +unearned +shares that +have not +vested +($) (3) +David Powers +— +68,089 (1) +61.86 +3/31/2026 +24,334 (4) +2,190,790 +— +— +71,914 (2) +69.29 +6/13/2024 +Thomas A. George +— +19,292 (1) +61.86 +3/31/2026 +6,894 (5) +620,667 +— +— +20,376 (2) +69.29 +6/13/2024 +David E. Lafitte +— +20,427 (1) +61.86 +3/31/2026 +7,301 (6) +657,309 +— +— +21,574 (2) +69.29 +6/13/2024 +Stefano Caroti +— +18,725 (1) +61.86 +3/31/2026 +12,879 (7) +1,159,496 +— +— +19,776 (2) +69.29 +6/13/2024 +Andrea O'Donnell +— +14,185 (1) +61.86 +3/31/2026 +10,721 (8) +965,212 +— +— +14,982 (2) +69.29 +6/13/2024 +(1) +This award reflects 2017 LTIP NQSOs that were granted in November 2016. The options vest as to 100% of the underlying shares on March 31, 2019, subject to the achievement of certain performance criteria. +(2) +This award reflects 2018 LTIP NQSOs that were granted in June 2017. The options vest as to 100% of the underlying shares on March 31, 2020, subject to achievement of certain performance criteria. +(3) +In accordance with applicable SEC rules, the market value of the shares has been determined based on the closing price of our common stock on March 29, 2018, which was $90.03. +(4) +This amount consists of (i) 8,659 2018 Annual PSUs granted in June 2017, which shares vest as to 33.3% on August 15, 2018, 2019 and 2020, (ii) 7,016 time-based RSUs granted in June 2016, which shares vest as to 50% on August 15, 2018 and 2019, and (iii) 8,659 2018 Time-Based RSUs granted in June 2017, which shares vest as to 33.3% on August 15, 2018, 2019 and 2020. +(5) +This amount consists of (i) 2,453 2018 Annual PSUs granted in June 2017, which shares vest as to 33.3% on August 15, 2018, 2019 and 2020, (ii) 1,988 time-based RSUs granted in June 2016, which shares vest as to 50% on August 15, 2018 and 2019, and (iii) 2,453 2018 Time-Based RSUs granted in June 2017, which shares vest as to 33.3% on August 15, 2018, 2019 and 2020. +(6) +This amount consists of (i) 2,598 2018 Annual PSUs granted in June 2017, which shares vest as to 33.3% on August 15, 2018, 2019 and 2020, (ii) 2,105 time-based RSUs granted in June 2016, which shares vest as to 50% on August 15, 2018 and 2019, and (iii) 2,598 2018 Time-Based RSUs granted in June 2017, which shares vest as to 33.3% on August 15, 2018, 2019 and 2020. +(7) +This amount consists of (i) 2,381 2018 Annual PSUs granted in June 2017, which shares vest as to 33.3% on August 15, 2018, 2019 and 2020, (ii) 1,510 time-based RSUs granted in November 2015, which shares vest as to 100% on November 15, 2018, (iii) 6,607 time-based RSUs granted in June 2016, which shares vest as to 50% on August 15, 2018 and 2019, and (iv) 2,381 2018 Time-Based RSUs granted in June 2017, which shares vest as to 33.3% on August 15, 2018, 2019 and 2020. +(8) +This amount consists of (i) 1,804 2018 Annual PSUs granted in June 2017, which shares vest as to 33.3% on August 15, 2018, 2019 and 2020, (ii) 4,190 time-based RSUs granted in June 2016, which shares vest as to 50% on June 15, 2018 and 2019, (iii) 2,923 time-based RSUs granted in June 2016, which shares vest as to 50% on August 15, 2018 and 2019, and (iv) 1,804 2018 Time-Based RSUs granted in June 2017, which shares vest as to 33.3% on August 15, 2018, 2019 and 2020. +53 +Table of Contents +FISCAL YEAR 2018 OPTION EXERCISES AND STOCK VESTED +The following table provides information for our NEOs regarding option exercises and stock award vesting during fiscal year 2018, including the number of shares acquired upon exercise or vesting and the value realized as determined based on applicable SEC rules. The value realized does not necessarily reflect the amount that will actually be received by our NEOs upon the sale of the shares. +Option Awards +Stock Awards +Number of +Shares +Acquired on +Exercise +(#) +Value Realized on +Exercise +($) +Number of +Shares +Acquired on +Vesting +(#) (1) +Value Realized +on Vesting +($) (2) +David Powers +— +— +5,091 +368,318 +Thomas A. George +— +— +2,095 +163,123 +David E. Lafitte +— +— +5,402 +474,997 +Stefano Caroti +— +— +4,811 +315,808 +Andrea O'Donnell +— +— +3,555 +238,013 +(1) +The total number of shares actually received by our NEOs, net of shares withheld for taxes, were as follows: 3,227 for Mr. Powers; 1,348 for Mr. George; 3,457 for Mr. Lafitte; 3,004 for Mr. Caroti; and 2,220 for Ms. O'Donnell. +(2) +Pursuant to applicable SEC rules, the amounts in this column reflect the value realized upon the vesting of the stock awards, which is based on the closing price of our common stock on the applicable vesting dates. +54 +Table of Contents +NONQUALIFIED DEFERRED COMPENSATION +Nonqualified Deferred Compensation Plan +The Compensation Committee has adopted the NQDC Plan, which is an unfunded, nonqualified deferred compensation program sponsored by our Company to provide certain members of our management the opportunity to defer compensation into the NQDC Plan. The NQDC Plan year is from January 1 st to December 31 st . Participants may defer up to 50% of their annual base salary and up to 85% of any cash incentive bonus under the NQDC Plan. We have the option, but not the obligation, to make discretionary or matching cash contributions to NQDC Plan participants. We have established a rabbi trust as a reserve for the benefits payable under the NQDC Plan. During fiscal year 2018, certain of our NEOs elected to make contributions to the NQDC Plan, and the Compensation Committee elected to match a portion of the contributions under the NQDC Plan. +Name +Executive contributions during fiscal year 2018 ($) (1) +Registrant contributions during fiscal year 2018 ($) (2) +Aggregate earnings during fiscal year 2018 ($) +Aggregate withdrawals/distributions during fiscal year 2018 ($) +Aggregate balance at end of fiscal year 2018 ($) +David Powers +— +— +17,372 +(68,686) +32,008 +Thomas A. George +86,250 +9,464 +47,290 +— +459,216 +David Lafitte +— +— +23,119 +— +172,591 +Stefano Caroti +110,000 +8,550 +43,529 +— +436,881 +Andrea O'Donnell +— +— +— +— +— +Total +196,250 +18,014 +131,310 +(68,686 +) +1,100,696 +(1) +The amounts reported in this column reflect contributions made by our NEOs under the NQDC Plan during fiscal year 2018. These amounts are separately included in the " Summary Compensation Table " above, and do not reflect amounts in addition to those amounts. +(2) +The amounts reported in this column reflect contributions made by us to our NEOs under the NQDC Plan during fiscal year 2018. These amounts are separately included in the " Summary Compensation Table " above, and do not reflect amounts in addition to those amounts. +Deferred Stock Unit Compensation Plan +The Compensation Committee has also adopted a Deferred Stock Unit Compensation Plan. Under the plan, a director or employee who holds unvested restricted stock units may elect to defer settlement of up to 100% of the awards. For each unit of our common stock held pursuant to an award of restricted stock units that is deferred, the participant will receive one Deferred Stock Unit. Amounts deferred will be distributed, as described in the plan, at the time elected by the participant. A participant’s Deferred Stock Units will be settled in shares of our common stock, as more specifically described in the plan. None of our NEOs elected to participate in the plan during fiscal year 2018. +55 +Table of Contents +POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL +Change of Control and Severance Agreements +We have entered into Change of Control and Severance Agreements, or Severance Agreements, with each of our NEOs. The information below describes compensation and benefits that are payable or earned under the Severance Agreements with our NEOs (which are each referred to therein as an “executive”) upon the occurrence of different termination events: +Termination by our Company for Cause, or by Executive other than for Good Reason +Pursuant to the Severance Agreements with each of our NEOs, if the executive is terminated by our Company for Cause, or the executive terminates his or her employment, other than for Good Reason, then the NEO will receive the following from our Company: +• +payment of his or her accrued base salary, accrued vacation, reimbursement for reimbursable expenses, accrued and vested benefits under our plans or programs and other benefits required to be paid by law, accrued but unpaid non-equity incentive bonus for the prior fiscal year (excluding any non-equity incentive bonus for the year of termination); and +• +right to exercise all vested equity awards pursuant to the terms of the applicable award agreement. +Termination due to Death or Total Disability +Pursuant to the Severance Agreements with each of our NEOs, if the executive is terminated due to his or her death or Total Disability, then in addition to those benefits provided upon a termination by our Company for Cause or by Executive other than for Good Reason, the NEO will receive: +• +pro-rated portion of his or her non-equity incentive bonus for the current fiscal year based on actual length of service during the year of termination and actual achievement by our Company of the performance conditions in respect of such bonus previously established by the Committee. +Termination by our Company without Cause or by Executive for Good Reason +Pursuant to the Severance Agreements with each of our NEOs, if the executive is terminated by our Company without Cause or by Executive for Good Reason, then in addition to those benefits provided upon a termination due to death or Total Disability, the NEO will receive: +• +payment of his or her then effective annual base salary for one year following his or her termination, subject to such executive signing a release; and +• +receipt of health benefits for a period of one year following his or her termination or his or her attainment of alternative employment that provides health benefits, whichever is earlier. +Termination without Cause or by Executive for Good Reason within Two Years of a Change of Control +Pursuant to the Severance Agreements with each of our NEOs, if the executive is terminated by our Company without Cause or by the executive for Good Reason within two years of a Change of Control, then in addition to those benefits provided upon a termination due to Death or Total Disability, the NEO will receive: +• +subject to such executive signing a release, payment of a specified proportion of his or her then effective annual base salary plus the greater of (i) one and one-half times the targeted non-equity incentive bonus immediately prior to the termination or (ii) one and one-half times the average actual non-equity incentive bonus for the previous three years; and; +• +receipt of health benefits for a specified period of months following his or her termination or his or her attainment of alternative employment that provides health benefits, whichever is earlier. +For purposes of the Severance Agreements, “Cause” means (i) any willful breach of duty by the executive in the course of his or her employment or continued violation of written Company employment policies after written notice of such violation, (ii) violation of our insider trading policies, (iii) conviction of a felony or any crime involving fraud, theft, embezzlement, dishonesty or moral turpitude, (iv) engaging in activities which materially defame our Company, engaging in conduct which is materially injurious +56 +Table of Contents +to our Company or our affiliates, or any of our respective customer or supplier relationships, financially or otherwise, or (v) the executive’s gross negligence or continued failure to perform duties or executive’s continued incapacity to perform such duties. +“Good Reason” means without the consent of the executive (i) the occurrence of material breach of this agreement by our Company, or (ii) if within two years of a change of control, there is a material reduction of the executive’s total compensation, benefits, and perquisites, our Company's relocation is greater than 50 miles from the location where the executive performs services, or a material change in the executive’s position or duties; provided, however, no such event shall constitute Good Reason unless the executive shall have given written notice to our Company of the executive’s intent to resign for “Good Reason” within 30 days after the executive first becomes aware of the occurrence of any such event (specifying the nature and scope of the event) and such event or occurrence shall not have been cured within 30 days of our receipt of such notice. +“Change of Control” means the occurrence of a merger, consolidation, sale of all or a major portion of the assets of our Company (or a successor organization) or similar transaction or circumstance where any person or group acquires, in one or more transactions, beneficial ownership of more than 50% of the outstanding shares of any class of voting stock of our Company (or a successor organization). +No NEOs will be entitled to gross ups for excise tax penalty on “excess golden parachute payments” as a result of termination following a Change of Control. +A change in a majority of the members of our Board would not constitute a Change of Control under the Severance Agreements. +Equity Award Agreements +Pursuant to the “double-trigger” vesting provisions of the awards outstanding as of the end of fiscal year 2018 under the 2006 Equity Incentive Plan, or 2006 Plan, and 2015 Plan, except as specifically noted below, the vesting of each award will be accelerated in full in the event of a change of control that is approved by a majority of the Continuing Directors (as defined in the award agreements) if the acquiring or successor entity in the change of control provides for the continuance or assumption of the award agreement, or the substitution for the award agreement of a new agreement of comparable value covering shares of a successor corporation, and (i) the recipient is terminated by the acquiring company without Cause or pursuant to a Constructive Termination (as such terms are defined in the relevant award agreements) within either 12 or 24 months of such change of control; or (ii) only in the case of the 2017 LTIP NQSOs and 2018 LTIP NQSOs, the recipient has provided Continuous Service (as defined in the award agreements) through the applicable performance vesting date. +Notwithstanding the foregoing summary, the award agreements governing the grants of the 2018 Annual PSUs only provide for acceleration as described above to the extent that the Committee determines that at least the “threshold” performance conditions associated with the awards have been met unless the change of control occurs prior to the end of the relevant performance period, in which case the unvested PSUs will accelerate in full, regardless of achievement of the performance condition. +In addition, the vesting of each equity award will be accelerated in full if: (i) for certain of the outstanding historical awards, a change of control occurs that has not been approved by a majority of the Continuing Directors; or (ii) the acquiring or successor entity in the change of control does not agree to continue or assume the award agreement, or substitute new awards of comparable value. In the case of the 2018 Annual PSUs, if the change in control occurs after the relevant performance period, only the 2018 Annual PSUs earned based upon the achievement of the relevant performance condition, as determined by the Committee, will accelerate. +Severance and Change of Control Payments +The following table provides information about the payments and benefits that would have been paid or provided to our NEOs in the event that a termination of employment had occurred on March 31, 2018. The amounts reflected in the table are in addition to amounts that would have been payable for accrued but unpaid base salary, accrued paid time off, accrued but unpaid cash incentive compensation, and reimbursement of expenses. +The payments to be made, and the stock and option awards to be vested, in connection with different termination events (including in connection with a change of control) for each of our NEOs have been determined by reference to the terms of the applicable Severance Agreements and equity award agreements. Except as described above, no payments or benefits would be provided to our NEOs in the event of a termination of employment for Cause or by the executive without Good Reason (as defined in the applicable Severance Agreement). Refer to the section of this Proxy Statement titled “Potential Payments upon Termination or Change of Control” for additional information. +For purposes of the table, the value of the stock and option awards has been determined based on the closing price of our common stock on March 31, 2018. In the event of an actual change of control transaction, the value of our common stock may be significantly different than this assumed value, in which case the value realized by our NEOs upon the vesting of the stock and option awards may be significantly different. +57 +Table of Contents +Upon Termination +Name +Type of Compensation +or Benefit +Due to Death or +Total Disability +($) +By our Company +Without Cause +or by Executive +for Good Reason ($) +In Connection with a Change +of Control +($) +David Powers +Cash payments +— +950,000 +3,206,250 +Value of health benefits +— +19,096 +28,643 +Value of stock awards (1) +— +— +2,190,790 +Value of option awards (2) +— +— +5,548,406 +Total +— +969,096 +10,974,089 +Thomas A. George +Cash payments +— +575,000 +1,509,375 +Value of health benefits +— +15,957 +23,936 +Value of stock awards (1) +— +— +620,667 +Value of option awards (2) +— +— +1,572,067 +Total +— +590,957 +3,726,045 +David E. Lafitte +Cash payments +— +620,000 +1,627,500 +Value of health benefits +— +18,134 +18,134 +Value of stock awards (1) +— +— +657,309 +Value of option awards (2) +— +— +1,664,527 +Total +— +638,134 +3,967,470 +Stefano Caroti +Cash payments +— +550,000 +1,443,750 +Value of health benefits +— +15,957 +15,957 +Value of stock awards (1) +— +— +1,159,497 +Value of option awards (2) +— +— +1,525,821 +Total +— +565,957 +4,145,025 +Andrea O'Donnell +Cash payments +— +500,000 +1,312,500 +Value of health benefits +— +19,096 +19,096 +Value of stock awards (1) +— +— +965,212 +Value of option awards (2) +— +— +1,155,906 +Total +— +969,096 +3,452,714 +(1) +The stock awards reflect all of the performance-based and time-based RSUs that remained outstanding as of March 31, 2018, including: (i) the time-based RSUs granted in fiscal year 2017, (ii) the 2018 Time-Based RSUs, (iii) the 2018 Annual PSUs, and (iv) certain additional time-based RSUs granted in fiscal years 2016 and 2017 as discretionary or new-hire awards. +(2) +The option awards reflect the 2017 LTIP NQSOs and 2018 LTIP NQSOs. +Separation of Employment and Consulting Agreement with Thomas A. George +On July 16, 2018, or the Separation Date, Thomas A. George stepped down as our Chief Financial Officer. +In connection with his departure, we entered into a Consulting Agreement and General Release, or the Consulting Agreement, which replaces in full the Severance Agreement previously entered into with Mr. George. Under the Consulting Agreement, Mr. George has agreed to provide consulting services to us from July 16, 2018 until March 31, 2019, or the Consulting Period, unless earlier terminated pursuant to the terms of the Consulting Agreement.. +The Consulting Agreement provides that we will, among other things, pay Mr. George (i) any base salary that has accrued but was not paid as of the Separation Date, (ii) for any accrued by unused vacation days as of the Separation Date, (iii) for expenses reasonably incurred in connection with his employment with us during the period prior to the Separation Date, (iv) any accrued and vested benefits required to be provided by the terms of any Company-sponsored benefit plans or any benefits required to be paid or provided under applicable law, (v) a pro-rated portion of the target amount of the cash incentive bonus payable with respect to the fiscal year ending March 31, 2019, in accordance with the executive compensation policies and programs in effect on the Separation Date, based on his actual length of service to our Company during the fiscal year, (vi) +58 +Table of Contents +severance equal to 12 months of his base salary (in effect on the Separation Date), which will be mitigated on a dollar-for-dollar basis for income received by him during the 12 months following the Separation Date (subject to certain exceptions as set forth in the Consulting Agreement), which payments will cease if Mr. George accepts employment or another professional relationship with any of our competitors or breaches a material term of the Consulting Agreement, and (vii) COBRA group health insurance premiums for Mr. George and his eligible dependents until the first anniversary of the Separation Date, unless sooner terminated in accordance with the terms of the Consulting Agreement. +In addition, any equity awards previously granted to Mr. George that were outstanding on the Separation Date, including any restricted stock unit awards or performance stock options, will remain outstanding subject to and consistent with the terms of the 2015 Plan and the agreements granting such awards. During the Consulting Period, Mr. George will continue to perform “Continuous Service” for purposes of the outstanding equity awards. +Mr. George’s receipt of these payments and other benefits is conditioned upon his continued compliance with the confidentiality, non-competition, non-solicitation, non-disparagement and other standard covenants set forth in the Consulting Agreement. In particular, Mr. George has agreed not to accept employment from, or engage in any professional relationship with, any of our competitors, or to otherwise engage in any business activity that is competitive with our Company, until the termination of the Consulting Agreement. +59 +Table of Contents +DIRECTOR COMPENSATION +For fiscal year 2018, directors who are not our employees, or our Nonemployee Directors, received an annual cash retainer fee of $65,000, plus an annual cash retainer of $15,000 for each Board committee assignment. Nonemployee Directors holding the following positions were entitled to receive additional annual cash retainer fees as follows: $160,000 for Chairman of our Board; $40,000 for Chair of the Audit Committee; $35,000 for Chair of the Compensation Committee; $20,000 for Chair of the Corporate Governance Committee; and $100,000 for Lead Independent Director (this role was eliminated in September 2017). All or any portion of the cash retainer fees paid to any of our Nonemployee Directors may, at the election of the director, be paid through the issuance of our common stock. +Each of our Nonemployee Directors is also entitled to receive common stock with a total value of approximately $125,000 for annual service on our Board. The shares are issued in equal quarterly installments with the number of shares being determined using the rolling average of the closing price of our common stock during the last 10 trading days leading up to, and including, the 15 th day of the last month of each quarterly period. Each of these shares is fully vested on the date of issuance. +Nonemployee Directors are reimbursed for any reasonable Board-related expenses. Nonemployee Directors also receive product discounts, which are generally available to our employees and, from time to time, may receive products without charge in order to help expand the directors’ knowledge of our products. +Director Compensation Table +The following table sets forth all compensation paid or awarded to our Nonemployee Directors during fiscal year 2018. The amounts set forth in the table have been calculated in accordance with applicable SEC rules, and do not necessarily reflect the amounts that have actually been paid to, or which may be realized by, our Nonemployee Directors. +Name +Fees +Earned +($) +Stock +Awards +($) (1) +Total +($) +John M. Gibbons +200,000 +123,002 +323,002 +Karyn O. Barsa +95,000 +123,002 +218,002 +Nelson C. Chan +80,000 +123,002 +203,002 +Michael F. Devine, III +135,000 +123,002 +258,002 +John G. Perenchio +95,000 +123,002 +218,002 +James E. Quinn +100,000 +123,002 +223,002 +Lauri M. Shanahan +115,000 +123,002 +238,002 +Bonita C. Stewart +80,000 +123,002 +203,002 +Angel R. Martinez (2) +187,917 +72,071 +259,988 +(1) +The amounts in this column represent the aggregate grant date fair value of the awards computed in accordance with FASB ASC Topic 718. +(2) +Mr. Martinez resigned as Chairman of our Board in September 2017, and as a member of our Board in October 2017. This amount includes $83,333 paid to Mr. Martinez for consulting services he provided to us through May 31, 2017. +Stock Ownership Guidelines +Our Board has adopted stock ownership guidelines applicable to our Nonemployee Directors. Nonemployee Directors are required to hold a number of shares of common stock with a value equal to five times the base annual cash retainer fee within five years of joining our Board, subject to exceptions that may be granted by the Compensation Committee. In addition, each director must hold our common stock within one year of joining our Board. Any shares of common stock held by Nonemployee Directors through our Deferred Stock Unit Compensation Plan is counted as stock ownership under these guidelines. +60 +Table of Contents +EQUITY COMPENSATION PLAN INFORMATION +The following table sets forth information regarding shares of our common stock that were eligible for issuance under our equity compensation plans as of March 31, 2018. +Plan category +Number of securities +to be issued +upon exercise of +outstanding options or settlement of outstanding RSUs (1)(2) +Weighted-average +exercise price of +outstanding options (3) +Number of securities +remaining available +for future issuance (4) +Equity compensation plans approved by security holders +693,175 +$ +65.70 +1,508,280 +Equity compensation plans not approved by security holders +— +— +— +Total +693,175 +$ +65.70 +1,508,280 +(1) +This amount includes shares underlying all equity awards outstanding pursuant to the 2006 Plan and 2015 Plan as of March 31, 2018. For awards subject to performance-based vesting conditions, the amount reported reflects the number of shares to be issued if the relevant performance conditions are achieved. +(2) +There are no stock appreciation rights outstanding pursuant to the 2006 Plan and the 2015 Plan. In addition, there are no outstanding warrants to purchase shares of our common stock. +(3) +This amount reflects the weighted-average exercise price of the outstanding 2017 LTIP NQSOs and 2018 LTIP NQSOs, based on the closing price of our common stock on the respective grant dates. This amount does not take into account shares issuable upon the vesting of outstanding time-based and performance-based RSUs, which have no exercise price. +(4) +This amount reflects the shares reserved for issuance under the 2015 Plan less the number of shares reported in the first column. This amount is subject to increase depending on our achievement with respect to certain performance conditions as discussed in footnote 1 above, and will increase to reflect any shares that are forfeited or otherwise terminated under the 2006 Plan. +61 +Table of Contents +SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT +The following table sets forth, as of June 30, 2018 (except as specified in the footnotes following the table), certain information concerning the shares of our common stock beneficially owned by (i) each person who is an NEO, (ii) each director or director nominee, (iii) all executive officers and directors as a group (14 persons), and (iv) each person known to us to be the beneficial owner of more than 5% of our common stock. There were 30,368,803 shares of our common stock outstanding on June 30, 2018. +Name and Address of Beneficial Owner (1) +Amount and +Nature of Beneficial +Ownership (2)(3) +Percent +of Common Stock (3) +Named Executive Officers +David Powers +17,042 +* +Thomas A. George +5,472 +* +David E. Lafitte +9,057 +* +Stefano Caroti +8,835 +* +Andrea O'Donnell +4,034 +* +Directors (4) +John M. Gibbons +31,044 (5) +* +Nelson C. Chan +6,743 +* +Michael F. Devine, III +13,918 +* +James E. Quinn +15,349 +* +Lauri M. Shanahan +7,075 (6) +* +Bonita C. Stewart +11,984 +* +William L. McComb +0 (7) +* +Brian A. Spaly +87 +* +Cynthia (Cindy) L. Davis +87 +* +All Directors and Executive Officers as a Group (14 persons) +130,727 +0.4 +% +5% Stockholders +Blackrock, Inc. (8) +3,360,502 +11.1 +% +The Vanguard Group Inc. (9) +3,196,339 +10.5 +% +Dimensional Fund Advisors LP (10) +2,351,542 +7.7 +% +Wellington Management Group LLP (11) +1,747,944 +5.8 +% +* +Percentage of shares beneficially owned does not exceed 1.0% of our outstanding shares of common stock. +(1) +Unless otherwise noted, the address of each beneficial owner is 250 Coromar Drive, Goleta, California 93117. +(2) +Unless otherwise noted, we believe each individual or entity named has sole investment and voting power with respect to the shares of our common stock reported as beneficially owned by them, subject to community property laws, where applicable. +(3) +Pursuant to applicable SEC rules, shares not outstanding which are subject to options, warrants, rights or conversion privileges exercisable on or before the date that is 60 days after June 30, 2018 are deemed outstanding for the purpose of calculating the number and percentage owned by a person, but are not deemed outstanding for the purpose of calculating the number and percentage owned by any other person. +(4) +The reported amounts include shares held by certain directors through one or more family trusts over which shares the respective directors may have shared voting and/or investment power. +(5) +An additional 593 shares previously earned by this director have been deferred pursuant to an election made under our Deferred Stock Unit Compensation Plan. These deferred shares have been excluded from the table. +(6) +An additional 6,135 shares previously earned by this director have been deferred pursuant to an election made under our Deferred Stock Unit Compensation Plan. These deferred shares have been excluded from the table. +(7) +An additional 313 shares previously earned by this director have been deferred pursuant to an election made under our Deferred Stock Unit Compensation Plan. These deferred shares have been excluded from the table. +62 +Table of Contents +(8) +This information is based solely on Amendment No. 10 to Schedule 13G filed on January 19, 2018. This stockholder's business address is 55 East 52nd Street, New York, NY 10055. This stockholder has reported sole voting power with respect to 3,292,660 of such shares and sole dispositive power over all 3,360,502 shares. +(9) +This information is based solely on Amendment No. 6 to Schedule 13G filed on February 12, 2018. This stockholder's business address is 100 Vanguard Boulevard, Malvern, PA 19355. This stockholder has reported sole voting power over 35,615 of such shares, shared voting power over 3,873 of such shares, sole dispositive power over 3,159,637 of such shares and shared dispositive power over 36,702 of such shares. +(10) +This information is based solely on Amendment No. 1 to Schedule 13G filed on February 9, 2018. This stockholder's business address is 6300 Bee Cave Road, Building One, Austin, TX 78746. This stockholder has reported sole voting power over 2,307,286 of such shares and sole dispositive power over 2,351,542 of such shares. +(11) +This information is based solely Schedule 13G filed on February 8, 2018. This stockholder's business address is 280 Congress Street, Boston, MA 02210. This stockholder has reported shared voting power over 976,434 of such shares and shared dispositive power over 1,747,944 of such shares. +63 +Table of Contents +SECTION 16 REPORTING COMPLIANCE +Section 16(a) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, requires our directors, executive officers and persons who beneficially own more than 10% of our common stock, which we collectively refer to as Section 16 Persons, to file initial reports of ownership and reports of changes in ownership of our common stock with the SEC, as well as to provide copies of those reports to us. +To our knowledge, based solely on a review of the copies of such reports furnished to us by each Section 16 Person, and written representations by each Section 16 Person that no additional reports were required to be filed with respect to fiscal year 2018, all Section 16 filing requirements applicable to the Section 16 Persons were complied with except that: +• +David Powers filed a Form 4 on April 3, 2018, which reported one transaction related to shares withheld for taxes in connection with the vesting of RSUs, that was due to be reported on April 2, 2018; and +• +Thomas A. George filed a Form 4 on April 3, 2018, which reported one transaction related to shares withheld for taxes in connection with the vesting of RSUs, that was due to be reported on April 2, 2018. +64 +Table of Contents +REPORT OF THE AUDIT COMMITTEE +The Audit Committee of our Board of Directors is responsible for providing independent, objective oversight of, among other things, our financial reporting functions, our independent registered public accounting firm, our highest ranking manager of internal audit, our system of internal controls, our legal and regulatory compliance, and compliance with our related person transaction policy and Code of Ethics. The Audit Committee is currently composed of three directors, each of whom meets the independence and experience requirements under applicable NYSE rules, as well as the independence requirements applicable to Audit Committee members under applicable SEC rules. In addition, our Board of Directors has determined that the Chair of the Audit Committee qualifies as an “audit committee financial expert” under applicable SEC rules. +Management is responsible for the preparation of our financial statements and financial reporting process, including our system of internal controls. KPMG LLP, our independent registered public accounting firm, is responsible for performing an independent audit of our consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States), or the PCAOB, and expressing (i) an opinion on whether our consolidated financial statements present fairly, in all material respects, our financial position and results of operations and cash flows for the periods presented in conformity with US generally accepted accounting principles, and (ii) an opinion on whether we have maintained, in all material respects, effective internal control over financial reporting as of March 31, 2018, based on criteria established in the Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Audit Committee’s responsibility is to monitor and oversee these processes. +In connection with these responsibilities, the Audit Committee met with management and KPMG LLP to review and discuss the March 31, 2018 consolidated financial statements and obtained from management their representation that our financial statements have been prepared in accordance with US generally accepted accounting principles. In addition, management represented that, as of March 31, 2018, our Company maintained effective internal control over financial reporting. +The Audit Committee also discussed with KPMG LLP the matters required by Auditing Standard No. 1301, “Communication with Audit Committees” of the PCAOB, which includes, among other items, information regarding the conduct of the audit of our consolidated financial statements. The Audit Committee also received written disclosures from KPMG LLP required by the PCAOB’s Rule 3200: “Auditing Standards”, and the Audit Committee discussed with KPMG LLP its independence from our Company and our management. The Audit Committee has further considered the compatibility of the services provided by KPMG LLP with KPMG LLP’s independence. +The Audit Committee operates under a written charter, which was adopted by our Board of Directors and is assessed annually for adequacy by the Audit Committee. The Audit Committee held seven meetings during fiscal year 2018, including meetings with KPMG LLP and our highest ranking manager of internal audit, both with and without management present. In performing its functions, the Audit Committee acts only in an oversight capacity. It is not the responsibility of the Audit Committee to determine that our financial statements are complete and accurate, are presented in accordance with US generally accepted accounting principles or present fairly our results of operations for the periods presented, or that we maintain appropriate internal controls. Furthermore, the Audit Committee’s oversight responsibilities do not independently assure that the audit of our financial statements has been carried out in accordance with the standards of the PCAOB or that our registered public accounting firm is independent. +Based upon the Audit Committee’s review and discussions with management and KPMG LLP, and subject to the limitations of the Audit Committee’s role and responsibilities referred to above and in the Audit Committee charter, the Audit Committee recommended that our Board of Directors include the audited consolidated financial statements in our Annual Report on Form 10-K for the year ended March 31, 2018, which was filed with the SEC on May 30, 2018. +THE AUDIT COMMITTEE +Michael F. Devine, III ( Chair ) +Nelson C. Chan +Cindy L. Davis +The Report of the Audit Committee shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as amended, or the Acts, except to the extent that our Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under the Acts. +65 +Table of Contents +RELATED PERSON TRANSACTIONS +Our legal department is primarily responsible for identifying and reviewing relationships and transactions in which our Company and our directors, director nominees. executive officers, principal stockholders, or their respective immediate family members, are participants to determine whether any of these related persons had or will have a direct or indirect material interest in such transactions. In order to identify potential related person transactions, our legal department annually prepares and distributes to all directors, director nominees and executive officers a written questionnaire which includes questions intended to elicit information about any current or proposed related person transactions. In addition, our Code of Ethics addresses conflicts of interest where an individual’s personal interests may interfere or conflict with the interests of our Company, including relationships with suppliers, customers or competitors. Conflicts of interest which might impair (or appear to impair) the exercise of judgment solely for the benefit of our Company and our stockholders are prohibited. In general, such conflicts must be approved by our legal department, the employee’s supervisor or, in the case of directors, the Audit Committee. Information regarding potential conflicts of interest in violation of our Code of Ethics may be reported to our anonymous reporting hotline, which may be accessed by the Chair of the Audit Committee, the Chairman of our Board and our highest ranking manager of internal audit. +If a related person transaction is identified by our legal department as one which would be required to be reported in our proxy statement pursuant to applicable SEC rules, the Audit Committee is responsible for reviewing and approving or ratifying any such transaction. The Audit Committee may approve a related person transaction when, in its good faith judgment, it determines that the transaction is in the best interests of our Company and our stockholders. +There were no transactions with related persons that required disclosure under applicable SEC rules during fiscal year 2018, and no such transactions are currently proposed. +66 +Table of Contents +PROPOSAL NO. 2 +RATIFICATION OF THE SELECTION OF KPMG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +For fiscal year 2018, KPMG LLP, or KPMG, provided audit services, which included an examination of the consolidated financial statements included in our Annual Report. A summary of the fees for these services provided by KPMG is below. The Audit Committee has selected KPMG to provide audit services to our Company for fiscal year 2019, which covers the period from April 1, 2018 to March 31, 2019. We are asking that our stockholders ratify this selection at the Annual Meeting. +Although this selection is not required to be submitted to a vote of our stockholders, the Audit Committee believes it is appropriate as a matter of good corporate governance to request that our stockholders ratify the selection. If our stockholders do not ratify the selection, the Audit Committee will consider the selection of another independent registered public accounting firm, but is not required to select a different firm. In addition, even if our stockholders ratify the selection, the Audit Committee will retain the discretion to select a different independent registered public accounting firm in the future if it believes doing so is in the best interests of our Company and stockholders. +A representative of KPMG will attend the virtual Annual Meeting and will have the opportunity to make a statement and/or respond to appropriate questions from stockholders present virtually at the Annual Meeting. +Fees for Services Rendered by Independent Registered Public Accounting Firm +The following table sets forth approximate fees for services rendered by KPMG for the fiscal years ended March 31, 2018 and 2017: +FEES ($) +FISCAL YEAR 2018 +FISCAL YEAR 2017 +Audit Fees +2,479,000 +2,738,000 +Audit-Related Fees +— +— +Tax Fees +11,000 +11,000 +All Other Fees +— +— +Total Fees +2,490,000 +2,749,000 +Audit Fees +The audit fees presented above for the fiscal years ended March 31, 2018 and 2017 include fees associated with the audit of our consolidated balance sheets, the related consolidated statements of comprehensive income, stockholders’ equity and cash flows, and the audit of internal control over financial reporting, as well as the reviews of our quarterly reports on Form 10-Q, and certain statutory audits required internationally. The higher audit fees for the fiscal year ended March 31, 2017 were primarily the result of fees related to the impairment assessment of the Sanuk brand and restructuring activities. +Audit-Related Fees +Audit-related fees generally consist of fees for assurance and related services that are reasonably related to the performance of the audit of our annual reports on Form 10-K and review of our quarterly reports on Form 10-Q. There were no audit-related fees incurred during the fiscal years ended March 31, 2018 and 2017. +Tax Fees +Tax fees include fees incurred for tax services, including tax compliance, tax advice and tax planning for income taxes and customs matters. +All Other Fees +There were no other fees for services rendered by KPMG incurred during the fiscal years ended March 31, 2018 and 2017 other than those disclosed above. +67 +Table of Contents +Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm +In accordance with its policies and procedures, prior to engagement, the Audit Committee pre-approves all independent registered public accounting firm services. Specifically, the Audit Committee administers our engagement of KPMG and pre-approves all of KPMG’s audit and permissible non-audit services on a case-by-case basis. In approving non-audit services, the Audit Committee considers whether the engagement could compromise the independence of KPMG, and whether for reasons of efficiency or convenience it is in our best interests to engage KPMG to perform the services. The Audit Committee has determined that the performance by KPMG of the non-audit services listed above as “Tax Fees” did not affect its independence. +During the year, circumstances may arise under which it may become necessary to engage the independent registered public accounting firm for additional services not contemplated in the original pre-approval categories. In those instances, the Audit Committee requires that those services be submitted to the Chair of the Audit Committee for specific pre-approval before we can engage the independent registered public accounting firm to provide such services. The Chair of the Audit Committee is then required to report any pre-approval decisions to the Audit Committee at its next scheduled meeting for its approval. +Required Vote +Approval of this proposal requires the affirmative vote of a majority of the outstanding shares present virtually or represented by proxy and entitled to vote on this proposal at the Annual Meeting (assuming that a quorum is present). +BOARD RECOMMENDATION +OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE +"FOR" +PROPOSAL NO. 2 TO RATIFY THE SELECTION OF KPMG LLP +AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +FOR FISCAL YEAR 2019. +68 +Table of Contents +PROPOSAL NO. 3 +ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION +Background +In accordance with applicable SEC rules, we are providing our stockholders with the opportunity to cast a non-binding advisory Say-on-Pay Vote on the compensation of our Named Executive Officers, as described below. We consider seeking the views of our stockholders on our executive compensation program to be an important part of our decision-making process. +For additional information about our executive compensation program, please refer to the section of this Proxy Statement titled "Compensation Discussion and Analysis" and the related compensation tables and footnotes. +Proposal +Therefore, in accordance with Section 14A of the Exchange Act, we are asking our stockholders to approve the following resolution at the Annual Meeting: +“RESOLVED, that our stockholders approve, on a non-binding advisory basis, the compensation of our Named Executive Officers, as described in the Compensation Discussion and Analysis, the Summary Compensation Table, and the related compensation tables, notes and narrative discussion in the Proxy Statement for our 2018 Annual Meeting of Stockholders.” +Because this vote is advisory only, it will not be binding upon our Board of Directors or the Compensation Committee. However, the Compensation Committee will take the outcome of the vote into account when considering future executive compensation arrangements. +Required Vote +Approval of this proposal requires the affirmative vote of a majority of the outstanding shares present virtually or represented by proxy and entitled to vote on this proposal at the Annual Meeting (assuming that a quorum is present). +BOARD RECOMMENDATION +OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE +"FOR" +PROPOSAL NO. 3 TO APPROVE, ON A NON-BINDING ADVISORY BASIS, +THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS. +69 +Table of Contents +STOCKHOLDER PROPOSALS +Proposals or director nominations of stockholders intended to be presented at our annual meeting of stockholders to be held in 2019 must be delivered to our corporate headquarters located at 250 Coromar Drive, Goleta, California 93117 no later than March 29, 2019 in order to be included in our proxy statement and form of proxy relating to that meeting. In order to be included in the proxy statement, these proposals must comply with the requirements as to form and substance established by the SEC for such proposals. +Under our bylaws, a stockholder who wishes to make a proposal or nominate a candidate as a director at the annual meeting of stockholders to be held in 2019 without including the proposal in our proxy statement and form of proxy relating to that meeting must notify us no earlier than the close of business on May 17, 2019 and no later than the close of business on June 16, 2019. Our bylaws specify certain requirements regarding the form and content of such a notice. +70 +Table of Contents +OTHER BUSINESS AT THE ANNUAL MEETING +As of the date of this Proxy Statement, we are not aware of any business to be presented for consideration at the Annual Meeting other than the matters described in this Proxy Statement. If, however, other matters are properly presented at the Annual Meeting, the persons named as proxies (or their substitutes) will vote in accordance with their discretion with respect to those matters. +71 +Table of Contents +ANNUAL REPORT +The Annual Report contains audited consolidated financial statements of our Company and its subsidiaries and the report thereon of KPMG LLP, our independent registered public accounting firm. A copy of the Annual Report is being provided with this Proxy Statement and has been posted on the Internet, along with this Proxy Statement, each of which is accessible by following the instructions in this Proxy Statement and the accompanying Notice. Any person who was our stockholder on the Record Date (including any beneficial owner holding shares in "street name" as of the Record Date) may request a copy of the Annual Report, and it will be furnished without charge upon receipt of a written request. Requests should be directed in writing to Deckers Outdoor Corporation, 250 Coromar Drive, Goleta, California 93117, Attention: Corporate Secretary, or by telephone to (805) 967-7611. +BY ORDER OF THE BOARD OF DIRECTORS +David Powers +Chief Executive Officer and President +Goleta, California +July 27, 2018 +72 \ No newline at end of file diff --git a/raw/proxies/0000910521/0000910521-18-000025/proxy_rpt.txt b/raw/proxies/0000910521/0000910521-18-000025/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..7ee2a28e79f4ff840e662399f765f11d1f24c8bd --- /dev/null +++ b/raw/proxies/0000910521/0000910521-18-000025/proxy_rpt.txt @@ -0,0 +1,6 @@ +RELATED PERSON TRANSACTIONS +Our legal department is primarily responsible for identifying and reviewing relationships and transactions in which our Company and our directors, director nominees. executive officers, principal stockholders, or their respective immediate family members, are participants to determine whether any of these related persons had or will have a direct or indirect material interest in such transactions. In order to identify potential related person transactions, our legal department annually prepares and distributes to all directors, director nominees and executive officers a written questionnaire which includes questions intended to elicit information about any current or proposed related person transactions. In addition, our Code of Ethics addresses conflicts of interest where an individual’s personal interests may interfere or conflict with the interests of our Company, including relationships with suppliers, customers or competitors. Conflicts of interest which might impair (or appear to impair) the exercise of judgment solely for the benefit of our Company and our stockholders are prohibited. In general, such conflicts must be approved by our legal department, the employee’s supervisor or, in the case of directors, the Audit Committee. Information regarding potential conflicts of interest in violation of our Code of Ethics may be reported to our anonymous reporting hotline, which may be accessed by the Chair of the Audit Committee, the Chairman of our Board and our highest ranking manager of internal audit. +If a related person transaction is identified by our legal department as one which would be required to be reported in our proxy statement pursuant to applicable SEC rules, the Audit Committee is responsible for reviewing and approving or ratifying any such transaction. The Audit Committee may approve a related person transaction when, in its good faith judgment, it determines that the transaction is in the best interests of our Company and our stockholders. +There were no transactions with related persons that required disclosure under applicable SEC rules during fiscal year 2018, and no such transactions are currently proposed. +66 +Table of Contents \ No newline at end of file diff --git a/raw/proxies/0000910521/0000910521-19-000017/proxy.txt b/raw/proxies/0000910521/0000910521-19-000017/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..3185d158b979216db4cadb87ea9015dc268c0374 --- /dev/null +++ b/raw/proxies/0000910521/0000910521-19-000017/proxy.txt @@ -0,0 +1,3095 @@ +DEF 14A +1 +deck-def14ax2019.htm +DEF 14A +Document +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Proxy Statement Pursuant to Section 14(a) of +the Securities Exchange Act of 1934 (Amendment No. ) +Filed by the Registrant x +Filed by a Party other than the Registrant ¨ +Check the appropriate box: +¨ +Preliminary Proxy Statement +¨ +Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +x +Definitive Proxy Statement +¨ +Definitive Additional Materials +¨ +Soliciting Material under §240.14a-12 +DECKERS OUTDOOR CORPORATION +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +x +No fee required. +¨ +Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. +(1) +Title of each class of securities to which transaction applies: +(2) +Aggregate number of securities to which transaction applies: +(3) +Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): +(4) +Proposed maximum aggregate value of transaction: +(5) +Total fee paid: +¨ +Fee paid previously with preliminary materials. +¨ +Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. +(1) +Amount Previously Paid: +(2) +Form, Schedule or Registration Statement No.: +(3) +Filing Party: +(4) +Date Filed: +2019 +PROXY STATEMENT SUMMARY +This summary highlights information contained elsewhere in this Proxy Statement. This summary does not contain all of the information you should consider when making voting decisions. You should read this Proxy Statement carefully and completely before voting. +ANNUAL MEETING OF STOCKHOLDERS +DATE +September 13, 2019 +TIME +1:00 p.m. Pacific Time +VIRTUAL MEETING +The 2019 Annual Meeting of Stockholders, or Annual Meeting, will be held virtually via a live webcast, which can be accessed on the Internet by visiting www.virtualshareholdermeeting.com/DECK2019. +To access the Annual Meeting, you will need a 16-digit control number. The control number is provided on the Notice of Internet Availability of Proxy Materials you received in the mail, on your proxy card (if you requested to receive printed proxy materials), or through your broker or other nominee if you hold your shares in "street name." +Stockholders will be able to attend, vote and submit questions virtually during the Annual Meeting. +RECORD DATE +July 17, 2019 +PROPOSALS TO BE VOTED ON +PROPOSAL NUMBER +MATTER +BOARD VOTING RECOMMENDATION +PAGE REFERENCE +1 +Election of nine directors +" FOR " EACH DIRECTOR NOMINEE +7 +2 +Ratification of the selection of KPMG LLP as +our independent registered public accounting +firm for fiscal year 2020 +" FOR " +70 +3 +Approval, on a non-binding advisory basis, +of the compensation of our Named Executive +Officers as described in the Proxy Statement +" FOR " +72 +We may also consider and vote upon any other business that may properly come before the Annual Meeting, or at any postponements or adjournments thereof. As of the date of this Proxy Statement, we are not aware of any business to be presented for consideration at the Annual Meeting other than the matters described in this Proxy Statement. +HOW TO VOTE +Your vote is important to the future of Deckers Outdoor Corporation. You are eligible to vote if you were a stockholder at the close of business on July 17, 2019. Please refer to the section of this Proxy Statement titled " Questions and Answers about the 2019 Annual Meeting of Stockholders and Voting " for additional information on how to attend the virtual Annual Meeting and vote your shares. +i +PROPOSAL NO. 1 +ELECTION OF DIRECTORS +The following table provides summary information about each director nominee. +Board Committees +Name, +Primary Occupation +Age +Director +Since +Independent +Number of Other Public Company Boards +A +C +CG +John M. Gibbons +Private Investor, Entrepreneur and Chairman of our Board of Directors +70 +2000 +YES +None +Nelson C. Chan +Private Investor, Entrepreneur and Corporate Director +58 +2014 +YES +3 +l +Cynthia (Cindy) L. Davis +Corporate Director +57 +2018 +YES +2 +l +Michael F. Devine, III +Corporate Director +60 +2011 +YES +2 +ª +l +Dave Powers +Chief Executive Officer and President +53 +2016 +NO +None +James Quinn +Corporate Director +67 +2011 +YES +None +ª +Lauri M. Shanahan +Corporate Director +56 +2011 +YES +2 +ª +Brian A. Spaly +Private Investor, Entrepreneur and Corporate Director +42 +2018 +YES +None +l +Bonita C. Stewart +Vice-President, Global Partnerships at Google, Inc. +62 +2014 +YES +1 +l +l +ª +Committee Chair +A: +Audit Committee +C: +Compensation Committee +CG: +Corporate Governance Committee +• +In fiscal year 2019, no director nominee attended fewer than 75% of the meetings of our Board of Directors, which we sometimes refer to as our Board, or meetings of any Board committee on which he or she served. +• +Each director nominee is elected annually by a majority of the votes cast by the shares present virtually or represented by proxy and entitled to vote on the election of directors at the Annual Meeting. +• +Our Board of Directors recommends that you vote " FOR " each of the director nominees named in Proposal No. 1. +PROPOSAL NO. 2 +RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +• +As a matter of good corporate governance, we are asking our stockholders to ratify the selection of KPMG LLP as our independent registered public accounting firm for fiscal year 2020. +• +Ratification of the selection requires the affirmative vote of a majority of the outstanding shares present virtually or represented by proxy and entitled to vote on the proposal at the Annual Meeting. +• +Our Board of Directors recommends that you vote " FOR " Proposal No. 2. +ii +PROPOSAL NO. 3 +ADVISORY VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION +• +We are asking our stockholders to approve, on a non-binding advisory basis, the compensation of our Named Executive Officers, which we sometimes refer to as our NEOs, as disclosed in the section of this Proxy Statement titled " Compensation Discussion and Analysis. " +• +Advisory approval of the compensation of our Named Executive Officers requires the affirmative vote of a majority of the outstanding shares present virtually or represented by proxy and entitled to vote on the proposal at the Annual Meeting. +• +Our Board of Directors recommends that you vote " FOR " Proposal No. 3 because it believes our compensation program reflects our strong "pay-for-performance" philosophy and is effectively designed to encourage achievement of our business and strategic objectives as discussed in greater detail below. +OUR BUSINESS AND STRATEGIC OBJECTIVES +Over the past few years we have executed a strategic transformation of our business in order to improve the overall distribution of our brands and achieve efficiencies within our expense structure, thereby creating an increased level of profitability, which has provided us with enhanced opportunities to invest in key areas of growth. Our strategic framework continues to include efforts to: +• +Transform our organization to meet the challenges of a changing global marketplace. +• +Focus investments in identified growth opportunities within our brand portfolio, as well as technology and analytical tools designed to support our evolving business. +• +Deliver top-tier operating profit margins and return on invested capital for stockholders, and continue to drive stockholder returns. +We remain committed to delivering stockholder value through the continued execution of our strategies. +OUR COMPENSATION PROGRAM OBJECTIVES +The overarching objectives of our executive compensation program are to (i) attract and retain high quality talent; (ii) align interests of executives with stockholders; (iii) provide a significant portion of total compensation through variable, performance-based components; and (iv) offer incentives for achieving both short and long-term goals that are directly tied to the achievement of strategic objectives. In doing so, we routinely consider appropriate changes to our program to reflect our strategic direction and the evolving needs of our business. In addition, to ensure we have the talent necessary to achieve our strategic objectives, the Compensation Committee endeavors to develop a compensation program that is attractive and competitive in the marketplace. Our program also incorporates feedback from our stockholders, as detailed below under the section of this Proxy Statement titled " Stockholder Feedback on Executive Compensation. " +Consistent with our strategic objectives for the year, when designing our executive compensation program for fiscal year 2019, the Committee focused on continuing to build and retain our executive team, while providing them with incentives to focus on our key strategic objectives including increased revenue, enhanced profitability, improved operating margins and the creation of long-term value for stockholders. These and other strategic considerations are clearly reflected in the design of our program, which demonstrates strong "pay-for-performance" alignment. Please see the section of this Proxy Statement titled “ Compensation Discussion and Analysis ” for additional information. +KEY CORPORATE GOVERNANCE CHANGES +In furtherance of our strategic objectives, we experienced a number of key changes to our Board and management team during fiscal year 2019. including the following: +• +In April 2018, John G. Perenchio resigned as a member of our Board, after serving as a director for 12 years. +• +In June 2018, Karyn O. Barsa resigned as a member of our Board, after serving as a director for 10 years, and Cindy L. Davis and Brian A. Spaly were appointed as members of our Board. +iii +• +In June 2018, we appointed Steven J. Fasching as Chief Financial Officer, effective July 2018. +• +In July 2018, Thomas A. George stepped down as Chief Financial Officer, after serving as an Executive Officer for over nine years. +At the Annual Meeting, stockholders are being asked to elect nine directors to serve until the next annual meeting of stockholders to be held in 2020. If all nominees are elected, our Board will consist of nine members, and eight out of nine members of our Board, and all members of each of its standing committees, will continue to be “independent directors” under applicable Securities and Exchange Commission, or SEC, and New York Stock Exchange, or NYSE, rules and regulations. +iv +NOTICE OF VIRTUAL ANNUAL MEETING OF STOCKHOLDERS +TO OUR STOCKHOLDERS: +We are pleased to invite you to attend the 2019 Annual Meeting of Stockholders of Deckers Outdoor Corporation, or our Company, to be held on Friday, September 13, 2019, beginning at 1:00 p.m. Pacific Time. +Proposals to be Voted Upon : +1 +Election of Directors . Elect nine directors to serve until the annual meeting of stockholders to be held in 2020, or until their successors are duly elected and qualified. +2 +Ratification of Selection of Accounting Firm . Ratify the selection of KPMG LLP as our independent registered public accounting firm for fiscal year 2019, which covers the period from April 1, 2019 to March 31, 2020. +3 +Advisory Vote on Executive Compensation . Approve, on a non-binding advisory basis, the compensation of our Named Executive Officers, as disclosed in the section of this Proxy Statement titled " Compensation Discussion and Analysis. " +Other Business . Consider and vote upon any other business that may properly come before the Annual Meeting, or at any postponements or adjournments thereof. +Virtual Annual Meeting : +We are excited to embrace the latest technology to provide expanded access, improved communication and cost savings to our stockholders and our Company. SImilar to the last couple years, the Annual Meeting will be a completely virtual meeting of stockholders, which will be conducted via a live webcast. We believe hosting a virtual annual meeting will continue to encourage increased stockholder attendance and participation while also reducing the cost of holding the Annual Meeting for our Company and the cost of attending the Annual Meeting for our stockholders. A virtual meeting allows our stockholders around the world to attend and listen to the Annual Meeting live, submit questions and vote their shares electronically. +You will be able to attend the Annual Meeting online and submit your questions during the meeting by visiting www.virtualshareholdermeeting.com/DECK2019 . You will also be able to vote your shares electronically at the Annual Meeting. +Record Date : +Our Board of Directors has fixed the close of business on July 17, 2019 as the record date for determining which stockholders are entitled to notice of and to vote virtually or by proxy at the Annual Meeting, or at any postponements or adjournments thereof. +Board Recommendations : +Our Board of Directors recommends that you vote " FOR " each of the director nominees named in Proposal No. 1 and " FOR " Proposal Nos. 2 and 3. +BY ORDER OF THE BOARD OF DIRECTORS +Dave Powers +Chief Executive Officer and President +Your vote is very important. +Whether or not you plan to attend the virtual Annual Meeting, we encourage you to read this Proxy Statement and submit your proxy or voting instructions as soon as possible. For specific instructions on how to vote your shares, please refer to the instructions on the Notice of Internet Availability of Proxy Materials you received in the mail, the section of this Proxy Statement titled " Questions and Answers about the 2019 Annual Meeting of Stockholders and Voting ," or, if you requested to receive printed proxy materials, your enclosed proxy card. +Approximate Date of Mailing of Notice of Internet Availability of Proxy Materials: July 26, 2019 +v +Table of Contents +TABLE OF CONTENTS +2019 Proxy Statement Summary +i +Notice of Annual Meeting of Stockholders +v +Proxy Statement +1 +Questions and Answers about the 2019 Annual Meeting of Stockholders and Voting +2 +Proposal No. 1 - Election of Directors +7 +Director Nominees +10 +Corporate Governance +18 +Executive Officers +25 +Compensation Discussion and Analysis +27 +Executive Summary +28 +Compensation Philosophy and Objectives +33 +Compensation Consultant and Peer Group +36 +Elements of Fiscal Year 2019 Executive Compensation Program +38 +Other Compensation Considerations +47 +Report of the Compensation Committee +50 +Summary Compensation Table +51 +Grants of Plan-Based Awards in Fiscal Year 2019 +53 +Outstanding Equity Awards at 2019 Fiscal Year End +55 +Fiscal Year 2019 Option Exercises and Stock Vested +57 +Nonqualified Deferred Compensation +58 +Potential Payments Upon Termination or Change of Control +59 +Director Compensation +63 +Equity Compensation Plan Information +64 +Security Ownership of Certain Beneficial Owners and Management +65 +Delinquent Section 16(A) Reports +67 +Report of the Audit Committee +68 +Related Person Transactions +69 +Proposal No. 2 - Ratification of the Selection of KPMG LLP as Independent Registered Public Accounting Firm +70 +Proposal No. 3 - Advisory Vote to Approve Named Executive Officer Compensation +72 +Stockholder Proposals +73 +Other Business at the Annual Meeting +74 +Annual Report on Form 10-K +75 +vi +Table of Contents +VIRTUAL ANNUAL MEETING OF STOCKHOLDERS +Meeting Date: September 13, 2019 +PROXY STATEMENT +GENERAL INFORMATION +The enclosed Proxy Statement is solicited on behalf of the Board of Directors of Deckers Outdoor Corporation, which we sometimes refer to as our Company, for use at our 2019 Annual Meeting of Stockholders, or the Annual Meeting, to be held virtually via a live webcast on Friday, September 13, 2019 at 1:00 p.m. Pacific Time, or at any postponements or adjournments thereof. The virtual Annual Meeting can be accessed by visiting www.virtualshareholdermeeting.com/DECK2019 , where you will be able to attend the Annual Meeting, submit questions and vote your shares electronically. The Annual Meeting is being held for the purposes described in this Proxy Statement and in the accompanying Notice of Annual Meeting of Stockholders. +1 +Table of Contents +QUESTIONS AND ANSWERS ABOUT THE 2019 ANNUAL MEETING OF STOCKHOLDERS AND VOTING +The following questions and answers are intended to briefly address potential questions that our stockholders may have regarding this Proxy Statement and the Annual Meeting. They are also intended to provide our stockholders with certain information that is required to be provided under the rules and regulations of the SEC. These questions and answers may not address all of the questions that are important to you as a stockholder. If you have additional questions about this Proxy Statement or the Annual Meeting, please refer to the question titled "Whom should I contact with other questions?" below. +Q: When and where will the Annual Meeting be held? +A: The Annual Meeting will be held on Friday, September 13, 2019, beginning at 1:00 p.m. Pacific Time. The Annual Meeting will be conducted entirely online via a live webcast. Our stockholders may participate in the Annual Meeting by visiting the following website: www.virtualshareholdermeeting.com/DECK2019 . You will need a 16-digit control number to attend and participate in the live webcast of the Annual Meeting. Please refer to the question titled " How can I vote my shares? " for information on obtaining your 16-digit control number. +Q: Why did I receive these proxy materials? +A: We are providing this Proxy Statement in connection with the solicitation by our Board of Directors of proxies to be voted at the Annual Meeting, or at any postponements or adjournments thereof. This Proxy Statement contains important information for you to consider when deciding how to vote on the matters brought before the Annual Meeting. You are invited to attend the Annual Meeting virtually to vote on the proposals described in this Proxy Statement. However, you do not need to attend the Annual Meeting to vote your shares. Instead, you may vote your shares using one of the other voting methods described in this Proxy Statement. +Whether or not you expect to attend the virtual Annual Meeting, please vote your shares as soon as possible in order to ensure your representation at the Annual Meeting. +Q: Why did I receive a notice in the mail regarding the Internet availability of proxy materials? +A: Instead of mailing printed copies to each of our stockholders, we have elected to provide access to the proxy materials over the Internet under the SEC's "notice and access" rules. These rules allow us to make our stockholders aware of the Annual Meeting and the availability of the proxy materials by sending a Notice of Internet Availability of Proxy Materials, or the Notice, which provides instructions on how to access the full set of proxy materials through the Internet or make a request to have printed proxy materials delivered by mail. Accordingly, on or about July 26, 2019, we mailed the Notice to each of our stockholders. The Notice contains instructions on how to access the proxy materials, including this Proxy Statement and our Annual Report on Form 10-K, or the Annual Report, for the fiscal year ended March 31, 2019, or fiscal year 2019, each of which are available at www.proxyvote.com. The Notice also provides instructions on how to vote your shares through the Internet, by telephone, by mail or virtually at the Annual Meeting. +Q: What is the purpose of complying with the "notice and access" rules? +A: We believe compliance with the SEC's "notice and access" rules allows us to provide our stockholders with the materials they need to make informed decisions, while lowering the costs of printing and delivering those materials and reducing the environmental impact of the Annual Meeting. However, if you would prefer to receive printed proxy materials, please follow the instructions included in the Notice. If you have previously elected to receive the proxy materials electronically, you will continue to receive these materials electronically unless you elect otherwise. +Q: Who can vote at the Annual Meeting? +A: Only our stockholders at the close of business on July 17, 2019, or the Record Date, will be entitled to attend and vote at the Annual Meeting. On the Record Date, there were 28,965,657 shares of our common stock outstanding and entitled to vote. Each share of common stock issued and outstanding on the Record Date is entitled to one vote on any matter to be voted upon by our stockholders at the Annual Meeting. +• +Holders of Record - If, on the Record Date, your shares were registered directly in your name with our transfer agent, Computershare, then you are a "holder of record." As a holder of record, you may vote at the virtual Annual Meeting, or you may vote by proxy. Whether or not you plan to attend the Annual Meeting virtually, we urge you to vote your shares using one of the voting methods described in this Proxy Statement and the Notice. If you are a holder of record and you indicate when voting that you wish to vote as recommended by our Board, or if you submit a vote by proxy without giving specific voting +2 +Table of Contents +instructions, then the proxyholders will vote your shares as recommended by our Board on all matters described in this Proxy Statement. Thomas Garcia and Steven J. Fasching, the designated proxyholders, are members of our management. +• +Beneficial Owners - If, on the Record Date, your shares were held in an account at a bank, broker, dealer, or other nominee, then you are the "beneficial owner" of shares held in "street name" and this Proxy Statement is being made available to you by that nominee. The nominee holding your account is considered the holder of record for purposes of voting at the virtual Annual Meeting. As a beneficial owner, you have the right to direct your nominee on how to vote the shares in your account. You are also invited to attend the Annual Meeting virtually. However, since you are not the holder of record, you may not vote your shares at the Annual Meeting unless you request and obtain a valid "legal proxy" or obtain a 16-digit control number from your nominee. Please contact your nominee directly for additional information. +Q: What is the quorum requirement for the Annual Meeting? +A: The presence at the Annual Meeting, virtually (even if not voting) or by proxy, of the holders of a majority of the voting power of all the shares of our common stock entitled to be voted at the Annual Meeting, will constitute a quorum at the Annual Meeting. We will treat shares of common stock represented by a properly voted proxy, including shares for which authority is withheld or that a stockholder abstains from voting, as well as broker non-votes, as present at the Annual Meeting for the purposes of determining the existence of a quorum. If a quorum is not present, the Annual Meeting will be adjourned until a quorum is obtained. +Q: What proposals am I being asked to vote upon at the Annual Meeting? +A: The proposals to be voted on at the Annual Meeting, and our Board's recommendation with respect to each proposal, are as follows: +PROPOSAL +DESCRIPTION +BOARD VOTING RECOMMENDATION +Proposal No. 1 : +Election of Directors +Elect nine director nominees to serve until the annual meeting of stockholders to be held in 2020, or until their successors are duly elected and qualified +" FOR " EACH DIRECTOR NOMINEE +Proposal No. 2 : +Ratification of Selection of Accounting Firm +Ratify the selection of KPMG LLP as our independent registered public accounting firm for fiscal year 2020 +" FOR " +Proposal No. 3 : +Advisory Vote on Executive Compensation +Approve, on a non-binding advisory basis, the compensation of our Named Executive Officers, as disclosed in the section of this Proxy Statement titled "Compensation Discussion and Analysis" +" FOR " +3 +Table of Contents +Q: What are the voting requirements to approve the proposals, and what happens if I do not vote? +A: The voting requirements to approve each of the proposals to be voted upon at the Annual Meeting, as well as the effects of abstentions and broker non-votes on each of the proposals are as follows: +PROPOSAL +VOTING REQUIREMENT +EFFECT OF ABSTENTIONS (2) +EFFECT OF BROKER NON-VOTES (3) +Proposal No. 1 : +Election of Directors +Each director nominee in an uncontested election (1) will be elected by a majority of the votes cast by the shares present virtually or represented by proxy and entitled to vote on the election of directors at the Annual Meeting (assuming that a quorum is present). +A "majority of the votes cast" means that the number of votes "FOR" a director nominee must exceed 50% of the total votes cast in the election of directors. +A "WITHHOLD" vote with respect to a director nominee will not count as a vote cast for that nominee, will not be included in the total number of votes cast, and thus will have no effect on the outcome of the vote on this proposal. +Broker non-votes will not count as votes cast on this proposal and will have no effect on the outcome of the vote on this proposal. +Proposal No. 2 : +Ratification of Selection of Accounting Firm +Requires the affirmative vote of a majority of the outstanding shares present virtually or represented by proxy and entitled to vote on the proposal at the Annual Meeting (assuming that a quorum is present). +An "ABSTAIN" vote will be included in the total number of shares present and entitled to vote on this proposal, and will have the same effect as a vote "AGAINST" this proposal. +Because a bank, broker, dealer or other nominee may generally vote without instructions on this proposal, we do not expect any broker non-votes to result for this proposal. +Proposal No. 3 : +Advisory Vote on Executive Compensation +Requires the affirmative vote of a majority of the outstanding shares present virtually or represented by proxy and entitled to vote on the proposal at the Annual Meeting (assuming that a quorum is present). +An "ABSTAIN" vote will be included in the total number of shares present and entitled to vote on this proposal, and will have the same effect as a vote "AGAINST" this proposal. +Broker non-votes will not count as shares present and entitled to vote on this proposal and will have no effect on the outcome of the vote on this proposal. +(1) +An "uncontested election" is an election in which the number of director nominees is not greater than the number of directors to be elected. A "contested election" is an election in which the number of director nominees nominated by (i) our Board of Directors, (ii) any stockholder, or (iii) a combination of our Board of Directors and any stockholder, exceeds the number of directors to be elected. In a contested election, directors will be elected by a plurality of the votes cast by the shares present virtually or represented by proxy and entitled to vote on the election of directors at the Annual Meeting. +(2) +You may vote to "WITHHOLD" authority for one or more director nominees and may "ABSTAIN" from voting on one or more of the other proposals described in this Proxy Statement. Shares for which authority is withheld or that a stockholder abstains from voting will be counted for purposes of determining whether a quorum is present at the Annual Meeting. +(3) +Pursuant to applicable NYSE rules, if you are a beneficial owner of shares held in street name and do not provide the nominee that holds your shares with specific voting instructions, the nominee may generally vote in its discretion on “routine” matters (such as Proposal No. 2). However, if the nominee that holds your shares does not receive instructions from you on how to vote your shares on a “non-routine” matter (such as Proposal Nos. 1 and 3), it will be unable to vote your shares on that matter. When this occurs, it is generally referred to as a “broker non-vote.” Broker non-votes will be counted for purposes of determining whether a quorum is present at the Annual Meeting. +Q: +What happens if a director nominee fails to receive a majority vote in an uncontested election at the Annual Meeting? +A: Each incumbent director standing for reelection at the Annual Meeting has tendered an irrevocable letter of resignation, effective upon such incumbent director not receiving a majority vote at the Annual Meeting and acceptance of such resignation by our Board. Our Board must accept or reject such resignation within 90 days following certification of the stockholder vote in accordance with the procedures established by our bylaws. If a director’s resignation offer is not accepted by our Board, that director will continue to serve until our annual meeting of stockholders to be held in 2020 and his or her successor is duly elected and qualified, or until the director’s earlier death, resignation, or removal. +Any director nominee who is not an incumbent director and who fails to receive a majority vote in an uncontested election will not be elected as a director, and a vacancy will be left on our Board. Our Board, in its sole discretion, may either fill a vacancy resulting from a director nominee not receiving a majority vote pursuant to our bylaws or decrease the size of our Board to eliminate the vacancy. All director nominees are incumbent directors standing for reelection at the Annual Meeting. +Q: Could other matters be decided at the Annual Meeting? +A: As of the date of this Proxy Statement, we are not aware of any business to be presented for consideration at the Annual Meeting other than the matters described in this Proxy Statement. If, however, other matters are properly presented at the Annual Meeting, the persons named as proxies will vote in accordance with their discretion with respect to those matters. +4 +Table of Contents +Q: How can I vote my shares? +A: Your shares can be voted as follows: +• +Holders of Record - Holders of record can vote by proxy or by attending the virtual Annual Meeting where votes can be submitted electronically via live webcast. If you wish to vote by proxy, you can vote by Internet, telephone or by mail as described below. Whether or not you plan to attend the Annual Meeting virtually, we urge you to vote by proxy to ensure that your vote is counted. +To vote at the Annual Meeting virtually by live webcast you must visit the following website: www.virtualshareholdermeeting.com/DECK2019. You will need the 16-digit control number included on the Notice or on your proxy card (if you requested to receive printed proxy materials). The method you use to vote by proxy will not limit your right to attend the Annual Meeting or vote at the Annual Meeting virtually. All shares that have been properly voted and not revoked will be voted at the Annual Meeting. However, even if you plan to attend the Annual Meeting virtually, we recommend that you vote your shares in advance, so that your vote will be counted if you later decide not to attend the Annual Meeting. +To vote by Internet , you will need the 16-digit control number included on the Notice or on your proxy card (if you requested to receive printed proxy materials). Internet voting is available 24 hours a day and will be accessible until 11:59 p.m. Eastern Time on September 12, 2019 by visiting www.proxyvote.com and following the instructions. +To vote by telephone , you will need the 16-digit control number included on the Notice or on your proxy card (if you requested to receive printed proxy materials). Telephone voting is available 24 hours a day and will be accessible until 11:59 p.m. Eastern Time on September 12, 2019 by calling 1-800-690-6903 and following the instructions. +To vote by mail , follow the instructions provided on your proxy card. Simply mark, sign and date your proxy card and return it promptly in the postage-paid envelope provided. In order to be effective, completed proxy cards must be received by 11:59 p.m. Eastern Time on September 12, 2019. This option is only available if you requested to receive printed proxy materials. +• +Beneficial Owners - If you are the beneficial owner of your shares, you should have received the Notice or a proxy card (if you requested to receive printed proxy materials) with this Proxy Statement from your nominee rather than from us. Simply (i) use the 16-digit control number to vote on the Internet before the Annual Meeting or virtually at the Annual Meeting, or (ii) if you requested to receive printed proxy materials, vote by following the instructions provided on the proxy card you received from your nominee. Your 16-digit control number may be included in the voting instructions form that accompanied the proxy materials. If your nominee did not provide you with a 16-digit control number , you may be able to log onto the website of your nominee prior to the start of the Annual Meeting, on which you will need to select the stockholder communications mailbox link through to the Annual Meeting, which will then automatically populate your 16-digit control number in the virtual Annual Meeting interface. To vote virtually at the Annual Meeting, you must first obtain a valid "legal proxy" from your nominee. Follow the instructions from your nominee to request a "legal proxy." +Q: What can I do if I change my mind after I vote my shares? +A: You may change your vote at any time before the polls are closed at the Annual Meeting. +• +Holders of Record - If you are a holder of record, you may change your vote by (i) providing written notice of revocation to Deckers Outdoor Corporation, 250 Coromar Drive, Goleta, California 93117, Attention: Corporate Secretary, (ii) executing a subsequent proxy using any of the voting methods discussed above (subject to the deadlines for voting with respect to each method), or (iii) attending the virtual Annual Meeting and voting electronically via live webcast. However, simply attending the virtual Annual Meeting will not, by itself, revoke your proxy. +• +Beneficial Owners - If you are a beneficial owner of your shares and you have instructed your nominee to vote your shares, you may change your vote by following the directions received from your nominee to change those voting instructions, or by attending the virtual Annual meeting and voting via live webcast, which can be accomplished as described above. +Subject to any revocation, all shares represented by properly executed proxies will be voted in accordance with the instructions on the applicable proxy, or, if no instructions are given, in accordance with the recommendations of our Board of Directors as described above. +Q: Who is paying for the cost of this proxy solicitation? +A: The solicitation of proxies is made on behalf of our Board and all the expenses of soliciting proxies from stockholders will be borne by us. In addition to the solicitation of proxies by use of the mail, our directors, officers and employees may communicate with stockholders personally or by email, telephone, or otherwise for the purpose of soliciting such proxies. No additional compensation will be paid to any such persons for such solicitation, although we may reimburse them for reasonable out-of-pocket +5 +Table of Contents +expenses incurred in connection with such solicitation. We will reimburse banks, brokers, dealers and other nominees for their reasonable out-of-pocket expenses in forwarding solicitation material to beneficial owners of shares held of record by such persons. The total estimated cost of the solicitation of proxies is approximately $65,000. +Q: I share an address with another stockholder, and we received only one paper copy of the proxy materials. How may I obtain an additional copy of the proxy materials? +A: We have adopted a procedure called "householding," which the SEC has approved. Under this procedure, we are delivering a single copy of the Notice and, if applicable, this Proxy Statement and the Annual Report, to multiple stockholders who share the same address unless we have received contrary instructions from one or more of the stockholders. This procedure reduces our printing and mailing costs. Stockholders who participate in householding will continue to be able to access and receive separate proxy materials. Upon written or oral request, we will promptly deliver a separate copy of the Notice and, if applicable, this Proxy Statement and the Annual Report, to any stockholder at a shared address to which we delivered a single copy of any of these documents. To receive a separate copy of the Notice and, if applicable, this Proxy Statement or the Annual Report, or if you wish to receive separate copies in the future, please contact: Deckers Outdoor Corporation, 250 Coromar Drive, Goleta, California 93117, Attention: Corporate Secretary, Telephone: (805) 967-7611. +In addition, if you are currently a stockholder sharing an address with another stockholder and wish to receive only one copy of future proxy materials for your household, please contact us using the contact information set forth above. Stockholders who are beneficial owners of shares held in street name may contact their bank, broker, dealer or other nominee to request information about householding. +Q: Where can I find the voting results of the Annual Meeting? +A: We will announce preliminary voting results with respect to each proposal at the Annual Meeting. In accordance with SEC rules, final voting results will be published in a Current Report on Form 8-K within four business days following the Annual Meeting, unless final results are not known at that time, in which case preliminary voting results will be published within four business days of the Annual Meeting and final voting results will be published once we know them. +Q : Where else can I find these proxy materials? +A: This Proxy Statement and the Annual Report are available at www.deckers.com/investors . Other information contained on or accessed through our website does not constitute part of this Proxy Statement. You should not consider other information contained on or accessed through our website in deciding how to vote your shares. References to our website address in this Proxy Statement are inactive textual references only. +Q: Whom should I contact with other questions? +A: If you have additional questions about this Proxy Statement or the Annual Meeting, or if you would like additional copies of this Proxy Statement, please contact: Deckers Outdoor Corporation, 250 Coromar Drive, Goleta, California 93117, Attention: Corporate Secretary, Telephone: (805) 967-7611. +6 +Table of Contents +PROPOSAL NO. 1 +ELECTION OF DIRECTORS +Director nominees by the numbers +(based upon 9 members) +BOARD TENURE AND DIVERSITY +DIRECTOR INDEPENDENCE +Overview +Our bylaws provide for the annual election of directors, and also provide that our Board will consist of not less than one nor more than ten members. The specific number of directors within this range is established by our Board, and will be fixed at nine immediately following the Annual Meeting. +At the Annual Meeting, our stockholders will be asked to elect nine directors to serve until the next annual meeting of stockholders to be held in 2020, or until their successors are duly elected and qualified. The names and certain information concerning the persons nominated by our Board to stand for election as directors at the Annual Meeting are set forth in the section of this Proxy Statement titled “ Director Nominees ” below. +If all director nominees are elected, then, immediately following the Annual Meeting, our Board will consist of nine members, and eight out of nine members of our Board, and all members of each of its standing committees, will continue to be “independent directors” under applicable SEC and NYSE rules. +7 +Table of Contents +Agreements and Relationships with Directors +No arrangement or understanding exists between any of our directors, director nominees or executive officers and any other person pursuant to which any of them were selected as our director, director nominee or executive officer. +There are no family relationships among any of our directors, director nominees or executive officers. There are no legal proceedings related to any of our directors, director nominees or executive officers which are required to be disclosed pursuant to applicable SEC rules. +Director Nominations +The Corporate Governance Committee is responsible for identifying and evaluating nominees for election to our Board. In addition to the candidates proposed by our Board or identified by the Corporate Governance Committee, the Committee considers candidates for director proposed by stockholders, provided such recommendations are made in accordance with the procedures set forth in our bylaws. Stockholder nominations that meet the criteria outlined below will receive the same consideration as nominations made by the Corporate Governance Committee. +Director Qualifications +Directors are responsible for overseeing and monitoring our business consistent with their fiduciary duties to our stockholders. This significant responsibility requires highly-skilled individuals with various qualities, attributes and professional experience. Our Board believes there are both general requirements for eligibility to serve as a member of our Board that are applicable to all directors, and other specialized characteristics that should be represented on our Board as a whole, but not necessarily by each director. +Qualifications for All Directors +Essential criteria for all director candidates considered by the Corporate Governance Committee include the following: +• +Personal and professional integrity +• +Good business judgment +• +Relevant experience and skills +• +Ability to effectively serve the long-term interests of our stockholders +• +Commitment to devoting sufficient time and energy to diligently performing duties as a director +Board Diversity +The Corporate Governance Committee considers many factors when identifying director nominees, including diversity with respect to personal characteristics (including race and gender), as well as diversity in the experience and skills that contribute to our Board's performance of its responsibilities in the oversight of our business. However, the Committee has not adopted a formal policy with respect to the consideration of diversity. +Additionally, because we have three female board members, we are in full compliance with California Senate Bill 826, which requires publicly held corporations with principal executive offices in California to meet certain gender diversity requirements. +8 +Table of Contents +Specific Qualifications and Skills Represented on our Board +The Corporate Governance Committee believes the competencies we seek in our directors should support our strategies for long-term success. Below we identify the key qualifications and skills our directors collectively bring to our Board that we believe are important in light of our business and strategic objectives. The particular qualifications and skills that our Board considered in nominating each individual director nominee are included in the directors’ individual biographies below, and are also summarized in a chart following the biographical section. +9 +Table of Contents +DIRECTOR NOMINEES +Our Board of Directors has nominated the following nine directors for election at the Annual Meeting. Important summary information about the director nominees is set forth in the table below. Following the table is certain biographical information about each director nominee, as well as selected information about the specific qualifications, attributes, skills and experience that led our Board to conclude that each director nominee is qualified to serve on our Board. +Board Committees +Name, +Primary Occupation +Age +Director +Since +Independent +Number of Other Public Company Boards +A +C +CG +John M. Gibbons +Private Investor, Entrepreneur and Chairman of our Board of Directors +70 +2000 +YES +None +Nelson C. Chan +Private Investor, Entrepreneur and Corporate Director +58 +2014 +YES +3 +l +Cynthia (Cindy) L. Davis +Corporate Director +57 +2018 +YES +2 +l +Michael F. Devine, III +Corporate Director +60 +2011 +YES +2 +ª +l +Dave Powers +Chief Executive Officer and President +53 +2016 +NO +None +James Quinn +Corporate Director +67 +2011 +YES +None +ª +Lauri M. Shanahan +Corporate Director +56 +2011 +YES +2 +ª +Brian A. Spaly +Private Investor, Entrepreneur and Corporate Director +42 +2018 +YES +None +l +Bonita C. Stewart +Vice President, Global Partnerships at Google Inc. +62 +2014 +YES +1 +l +l +ª +Committee Chair +A: +Audit Committee +C: +Compensation Committee +CG: +Corporate Governance Committee +Mr. McComb was appointed to serve as a member of our Board effective as of April 25, 2018, and will not be standing for re-election at the Annual Meeting. Ms. Davis and Mr. Spaly were appointed to serve as members of our Board effective as of June 5, 2018. +10 +Table of Contents +JOHN M. GIBBONS +Age: 70 +Director Since: 2000 +Chairman of our Board +Public Company Directorships: +None +Mr. Gibbons is a private investor, entrepreneur and the Chairman of our Board. He is a director and member of the compensation committee of The Learning Network, Inc. He also served as a director and chair of the audit committee of National Technical Systems, Inc. (NASDAQ: NTSC), a provider of integrated testing, certification, quality registration and systems evaluation services, from September 2003 until its acquisition in November 2013. +Selected Qualifications and Skills +• +High Level of Financial Literacy - Currently serves as a member of the compensation committee of The Learning Network, Inc. Previously served as Chair of our Audit Committee until 2011. From June 2000 to April 2004, was vice chair of TMC Communications, Inc., a long distance data and Internet services provider, and was its chief executive officer from June 2001 to April 2003. Was also vice chair of Assisted Living Corporation, a national provider of assisted living services, from March 2000 to December 2001. +• +Risk Oversight - Extensive experience in risk oversight as the former Chair of our Audit Committee and former chairman of the audit committee of National Technical Systems, Inc. +• +Industry -19 years of experience as a director of our Company. +• +Public Company Management - Previously served as chief executive officer and chief operating officer, and currently serves as a director, of The Learning Network, Inc. Previously employed by The Sports Club Company, where he was chief executive officer and a director from July 1999 to February 2000, and president and chief operating officer from January 1995 to July 1999. +• +Entrepreneurial - Has served in a variety of leadership positions for several companies during periods of expansion. +• +Luxury/Premium Branding - Involved in several capacities at The Sports Club Company, Inc., a company which markets clubs to affluent, health-conscious individuals. +NELSON C. CHAN +Age: 58 +Director Since: 2014 +Board Committees: +Audit +Public Company Directorships: +Adesto Technologies Corporation (NASDAQ: IOTS) +Synaptics, Inc. (NASDAQ: SYNA) +Twist Bioscience Corporation (NASDAQ: TWST) +Mr. Chan is a private investor and entrepreneur. Mr. Chan is the chairman of the board, chair of the compensation committee and member of the audit committee of Adesto Technologies Corporation (NASDAQ: IOTS). He is a director of Twist Bioscience Corporation (NASDAQ: TWST), as well as chairman of the board and member of the audit committee of Synaptics, Inc. (NASDAQ: SYNA). From 2016 to 2019, Mr. Chan served as a director and member of the compensation and nominating and governance committees of Socket Mobile, Inc. (NASDAQ: SCKT). Mr. Chan is also a director of several privately held companies. From 2006 to 2008, Mr. Chan served as chief executive officer of Magellan Corporation, and from 1992 to 2006, he served in various management positions with SanDisk Corporation. +Selected Qualifications and Skills +• +Entrepreneurial - Expertise in building technology companies. +• +High Level of Financial Literacy - Has held numerous senior management positions with leading companies, including chief executive officer at Magellan Corporation. +• +Public Company Management - Extensive experience with several leading public and private companies, both as an executive and as a director. +11 +Table of Contents +• +Sales/Marketing - Held key sales, marketing and engineering positions at SanDisk Corporation, Chips and Technologies, Signetics and Delco Electronics. +• +International - Was the executive vice president and general manager of consumer business, at SanDisk Corporation, a global multi-billion dollar company. +• +Risk Oversight - Currently serves as a member of our Audit Committee and has over 11 years of experience as a corporate director with risk oversight responsibilities. +• +Technology - Extensive experience in technology-based companies including sales, marketing and engineering. +CYNTHIA (CINDY) L. DAVIS +Age: 57 +Director Since: 2018 +Board Committees: +Audit +Public Company Directorships: +Kennametal Inc. (NYSE: KMT) +Brinker International, Inc. (NYSE: EAT) +Ms. Davis served as vice president of Nike, Inc. (NYSE: NKE) and president of Nike Golf at Nike, Inc. from September 2008 to October 2014, and as U.S. general manager at Nike Golf from January 2005 to August 2008. Prior to Nike, Inc., Ms. Davis served as senior vice president of golf sponsorships, sports marketing and new media at Golf Channel, a subsidiary of Comcast Corporation (NASDAQ: CMCSA), from January 2001 to December 2004. Ms. Davis has served as a member of the board of directors and on the audit committee and nominating and governance committee of Kennametal Inc. (NYSE: KMT), a global supplier of tooling, engineering components and advanced materials, since 2012. In January 2019, she joined the board of directors of Brinker International, Inc. (NYSE: EAT). Ms. Davis served as a member of the board of directors, as chair of the compensation committee and on the governance committee of Buffalo Wild Wings, Inc. (NASDAQ: BWLD), a casual dining restaurant and sports bar chain, from January 2015 to February 2018. +Selected Qualifications and Skills +• +Luxury/Premium Branding - Experience as vice president of Nike, Inc. and president of Nike Golf at Nike, Inc., a company engaged in the design, development, manufacturing, and worldwide marketing and sales of footwear, apparel, equipment, accessories and services. +• +Sales/Marketing and Retail - In addition to leading the division’s sales, marketing, and strategy while serving as senior vice president of golf sponsorships, sports marketing and new media at Golf Channel, led the $800 million global golf business for Nike, Inc. +• +High Level of Financial Literacy - Serves on the audit committee of Kennametal Inc. Holds an M.B.A. in Marketing and Finance from the University of Maryland College Park. +• +International - Involved in global brands with worldwide operations while at Nike, Inc. and Kennametal Inc. +• +Public Company Management - Held various management positions at Nike, Inc. and Golf Channel, currently serves as a director of Kennametal Inc. and Brinker International, Inc., and previously served as a director of Buffalo Wild Wings, Inc. +• +Industry Specific - Extensive experience in the footwear, apparel and equipment industries through various positions at Nike, Inc. +• +Risk Oversight - In addition to leadership roles at Nike, Inc., served as a corporate director on the audit committee and nominating and corporate governance committee of Kennametal, Inc., serves on the board of directors of Brinker International, Inc., and previously served as chair of the compensation committee and on the governance committee of Buffalo Wild Wings. +• +Technology - Serves as a director and on the audit committee and nominating and governance committee of Kennametal Inc., a technology-based company. +12 +Table of Contents +MICHAEL F. DEVINE, III +Age: 60 +Director Since: 2011 +Board Committees: +Audit ( Chair ) +Compensation +Public Company Directorships: +Express, Inc. (NYSE: EXPR) +FIVE Below, Inc. (NYSE: FIVE) +Mr. Devine retired as executive vice president and chief financial officer of Coach, Inc. in 2011. He currently serves as a director and member of the audit committees of Express, Inc. (NYSE: EXPR) and FIVE Below, Inc. (NASDAQ: FIVE). He served as a member of the board of Sur La Table, Inc. and was previously a member of the board of directors of The Talbots Inc. From 2004 to 2007, Mr. Devine served as a member of the board of directors and chair of the audit committee of Educate, Inc., a leading K-12 education service company with solutions such as Sylvan Learning Center. Mr. Devine also previously served as a director and member of the audit committee of NutriSystem, Inc. (NASDAQ: NTRI). +Selected Qualifications and Skills +• +High Level of Financial Literacy - In addition to experience as the current and former member and chair of four audit committees and experience at Coach, Inc., served as chief financial officer and vice president-finance of Mothers Work, Inc. from February 2000 to November 2001. From 1997 to 2000, was chief financial officer of Strategic Distribution, Inc. (NASDAQ: STRD), a Nasdaq-listed industrial store operator. From 1995 to 1997, was chief financial officer at Industrial System Associates, Inc., and for the prior six years was the director of finance and distribution for McMaster-Carr Supply Company. Holds a B.S. in Finance and Marketing from Boston College and an M.B.A. in Finance from the Wharton School of the University of Pennsylvania. +• +Public Company Management - Experience at Coach, Inc. involved managing a public company during a period of high growth. Serves as a corporate director and chair of the audit committees of Express, Inc. and FIVE Below, Inc. +• +Risk Oversight - 13 years of experience as a corporate director with risk oversight responsibilities. +• +Luxury/Premium Branding - Coach, Inc. is a leading marketer of modern classic American accessories. +• +International - Involved in a global brand with worldwide operations while at Coach, Inc. +• +Real Estate - Acquired real estate experience during his time at Coach, Inc. +• +Industry Specific - In addition to experience at Coach, Inc., serves as a director of Express, Inc., a nationally-recognized specialty apparel and accessory retailer offering both women’s and men’s merchandise. +• +Distribution/Logistics and Retail - Involved in supply chain and wholesale and retail distribution channels while at Coach, Inc. +DAVE POWERS +Age: 53 +Director Since: 2016 +Chief Executive Officer and President +Public Company Directorships: +None +Mr. Powers became our Chief Executive Officer in June 2016 and joined our Board at that time. Mr. Powers joined our Company as President of Direct-to-Consumer in August 2012. He was appointed President of Omni-Channel in January 2014 and was appointed President in March 2015. Prior to joining our Company, Mr. Powers held several executive leadership roles at Converse Inc. (a subsidiary of Nike, Inc.), Timberland LLC and Gap Inc. (NYSE: GPS). +Selected Qualifications and Skills +• +Industry Specific - Extensive experience in the footwear and apparel industry through a variety of positions at three different footwear companies and a global apparel retailer. +13 +Table of Contents +• +Distribution/Logistics and Retail - While at Converse Inc., was responsible for global owned and distributor Direct-to-Consumer operations as part of the Nike, Inc. retail leadership team. During tenure at Timberland LLC and Gap Inc., held leadership roles with a variety of retail responsibilities from merchandising to store design. +• +Sales and Marketing - Graduated cum laude from Northeastern University with a B.S. in Marketing. Throughout his career, has been responsible for the development of marketing strategy, with a focus on consumer engagement and digital marketing. While President of Brands of the Company, led the Omni-Channel organization, elevating and advancing the Omni-Channel platform. +• +International - While serving in leadership roles at Timberland LLC, led worldwide retail merchandising, marketing, visual and store design, and oversaw European retail operations. +• +Public Company Management - Serves as our Chief Executive Officer and President with global responsibilities and oversight. Other leadership roles have been with public companies. +• +Real Estate - Acquired real estate experience during his time at Timberland LLC, Converse Inc., Gap Inc. and with our Company. +JAMES QUINN +Age: 67 +Director Since: 2011 +Board Committees: +Corporate Governance ( Chair ) +Public Company Directorships: +None +Mr. Quinn retired as president of Tiffany & Co. (NYSE: TIF) in January 2012. He was named to Tiffany & Co.’s board in 1995 and served until 2008. Mr. Quinn also currently serves as a director of Mutual of America Capital Management, Inc., a privately held company. +Selected Qualifications and Skills +• +Public Company Management - As the former president of Tiffany & Co., oversaw retail sales in stores in more than 50 countries, with responsibility for the company’s global expansion strategy, including the significant Tiffany & Co. presence established throughout Asia. Joined Tiffany & Co. in 1986 and held a series of significant positions including vice chairman prior to his appointment as president in 2003. +• +Luxury/Premium Branding - Tiffany & Co. is a jeweler and specialty retailer whose principal merchandise offering is fine jewelry. +• +Distribution/Logistics and Retail - While at Tiffany & Co., involved in management of supply chain and distribution channels. +• +International - While at Tiffany & Co., involved in management of a global brand with worldwide operations. +• +Risk Oversight - 24 years of experience as a corporate director with risk oversight responsibilities. +• +Real Estate - Acquired real estate experience during his time at Tiffany & Co. +LAURI M. SHANAHAN +Age: 56 +Director Since: 2011 +Board Committees: +Compensation ( Chair ) +Public Company Directorships: +Cedar Fair Entertainment Company (NYSE: FUN) +Treasury Wine Estates Limited (ASX: TWE) +Ms. Shanahan has over 25 years of senior-level experience in retail, consumer products and hospitality, ranging from global, multi-channel, multi-brand enterprises to small and mid-cap growth companies. Ms. Shanahan joined Gap Inc. in 1992 and served in numerous leadership roles, including chief administrative officer and chief legal officer, during her 16-year career with the company. Since then, she has served as a principal of Maroon Peak Advisors, a consumer products and retail consulting firm. She currently serves as a strategic advisor and on the board of directors and as chair of the nominating and governance committee of Cedar Fair Entertainment Company (NYSE: FUN), which owns and operates resorts, amusement parks and other immersive sports and +14 +Table of Contents +entertainment venues, and on the board of directors, compensation committee and human resources committee of Treasury Wine Estates Limited (ASX: TWE), a vertically integrated, global wine business with over 70 brands. +Selected Qualifications and Skills +• +Public Company Management - Joined Gap Inc. in 1992 and served for 16 years in numerous leadership roles including chief administrative officer, chief legal officer and corporate secretary. Gap Inc. is a leading global specialty retailer offering clothing, footwear, accessories, and personal care products for men, women, children, and babies under the Gap, Banana Republic, Old Navy, Intermix, and Athleta brands. +• +International - Directly involved in global brands development, supply chain and worldwide operations while at Gap Inc. and as a director and consultant. +• +Distribution/Logistics and Retail - Involved in retail, franchise, online licensing and other distribution channels, as well as sourcing and supply chain, while at Gap Inc. and as a consultant. +• +Sales and Marketing - Acquired sales and marketing experience throughout her career at Gap Inc. +• +Industry Specific - Experience in footwear, apparel and accessories at Gap Inc., Charlotte Russe Holdings, Inc. and through consulting business. +• +Luxury/Premium Branding - Premium and luxury branding experience at Gap Inc., through serving on the board of Treasury Wine Estates Limited and through consulting business. +• +Risk Oversight - In addition to other leadership roles at Gap Inc., served as chief compliance officer and chief legal officer, overseeing the global corporate risk committee, as well as the global governance and compliance organization. +• +Real Estate - Led global real estate, including retail for all brands, corporate offices and distribution worldwide at Gap Inc. Also gained experience from Charlotte Russe Holdings, Inc. and consulting business. +BRIAN A. SPALY +Age: 42 +Director Since: 2018 +Board Committees: +Corporate Governance +Public Company Directorships: +None +Mr. Spaly is a private investor and entrepreneur. He currently serves as a corporate director for six early-stage companies: M1 Finance LLC, Veryable, Happy Returns, Inc., Tribe 9 Foods LLC, Made-In Cookware, and Tecovas, Inc., a direct-to-consumer Western boot brand based in Austin, TX, where he serves as executive chairman. Previously, Mr. Spaly was the founder and chief executive officer of Trunk Club, Inc., a personal styling startup, from 2009 to 2017. Prior to Trunk Club Inc., Mr. Spaly was the founder of Bonobos, Inc., a men’s clothing company, from 2006 to 2009. +Selected Qualifications and Skills +• +Entrepreneurial and Luxury/Premium Branding - Founded and served as chief executive officer of Trunk Club, Inc., where he focused on making it easy for men and women to discover and acquire stylish clothing without the hassles of the traditional shopping experience. Founded and served as chairman and as a designer of Bonobos, Inc., which started as a company focused on creating well-fitting pants. +• +Distribution/Logistics and Retail - Extensive experience with various distribution channels, including retail and e-commerce, through leadership roles at Trunk Club, Inc. and Bonobos, Inc. +• +Sales and Marketing - Acquired significant sales and marketing experience as founder of Trunk Club, Inc. and Bonobos, Inc., and through director positions at various consumer goods companies. +• +High Level of Financial Literacy - Led Trunk Club, Inc. during its acquisition by Nordstrom and serves as a private investor and adviser to entrepreneurs. Holds an M.B.A. from Stanford Graduate School of Business. +15 +Table of Contents +• +Industry Specific - In addition to experience with Trunk Club, Inc. and Bonobos, Inc., has significant experience as a private investor and adviser to entrepreneurs, with a portfolio of over 75 angel investments. +• +Technology - Experience as founder and chief executive officer of Trunk Club, Inc., an e-commerce company. Serves as corporate director for companies in various industries facing cybersecurity and consumer data issues. +• +Real Estate - A cquired real estate experience as founder and chief executive officer of Trunk Club, Inc. Selected showroom and office sites, and negotiated leases for Trunk Club, Inc. in major cities throughout the U.S. +BONITA C. STEWART +Age: 62 +Director Since: 2014 +Board Committees: +Compensation +Corporate Governance +Public Company Directorships: +Pluralsight, Inc. (NASDAQ: PS) +Ms. Stewart is currently the vice president of Global Partnerships at Google Inc. (NASDAQ: GOOG, GOOGL), a subsidiary of Alphabet Inc. She has been driving digital transformation across multiple industries since joining Google Inc. in 2006. At Google Inc., she oversees strategy, revenue and partner management for the largest U.S. publishers across search, mobile applications, commerce, news, broadcast, telecommunications and domains. From 2002 to 2006, Ms. Stewart worked for DaimlerChrysler AG (now Daimler AG) where she was director of Chrysler Group, Interactive Communications, and prior to that, director of Chrysler Brand Communications. In October 2018, she joined the board of directors of Pluralsight, Inc. (NASDAQ: PS). Ms. Stewart began her career in 1979 at IBM Corporation (NYSE: IBM) where she served in various financial and marketing management positions. +Selected Qualifications and Skills +• +Industry Specific - Over 27 years of experience in brand management, digital strategy and execution. +• +High Level of Financial Literacy - Leads strategy, business development and revenue growth plans for Google Inc.'s largest publisher partnerships. Holds an M.B.A. from Harvard Business School. +• +Entrepreneurial - Served as president, chief operating officer, and co-founder of Nia Enterprises, LLC, a web-based company, and founder and chief executive officer of One Moment in Time, a women's formal-wear rental company. +• +Sales and Marketing - Acquired sales, marketing, product distribution and online advertising experience. +• +International - Led publisher partnerships for Latin America and Canada and has worked for Daimler AG and IBM Corporation, which are multi-billion dollar global companies. +• +Public Company Management - Strategic planning and large-scale operations experience with Google Inc. and IBM Corporation. +• +Technology - Extensive experience in technology-based companies and fluency in digital transformation including digital strategy, mobile, video, programmatic, online advertising, cloud solutions, analytics and execution. +Summary of Qualifications and Skills of Directors +The table below summarizes the specific qualifications, attributes, skills and experience of each director nominee that led our Board to conclude that the nominee is qualified to serve on our Board. While each nominee is generally knowledgeable in each of these areas, an “X” in the chart below indicates that the item is a specific qualification, attribute, skill or experience that the director brings to our Board. The lack of an “X” for a particular item does not mean that the director does not possess that qualification, attribute, skill or experience. +16 +Table of Contents +Specific Qualifications, Attributes, Skills and Experience +John M. +Gibbons +Nelson C. +Chan +Cynthia (Cindy) L. Davis +Michael F. +Devine, III +Dave Powers +James +Quinn +Lauri M. +Shanahan +Brian A. Spaly +Bonita C. +Stewart +Luxury/Premium Branding +X +X +X +X +X +X +X +Entrepreneurial +X +X +X +X +Distribution/Logistics +X +X +X +X +X +Retail +X +X +X +X +X +X +Sales and Marketing +X +X +X +X +X +X +X +High Level of Financial Literacy +X +X +X +X +X +X +International +X +X +X +X +X +X +X +Public Company Management +X +X +X +X +X +X +X +X +Industry Specific (Footwear, Apparel and Accessories) +X +X +X +X +X +X +X +X +Risk Oversight +X +X +X +X +X +X +Technology (Consumer, Cybersecurity, Big Data, Social) +X +X +X +X +Real Estate +X +X +X +X +X +Consent to Serve +Although each of the persons named above has consented to being named in this Proxy Statement and to serve as a director if elected, and our Board has no reason to believe that any of the nominees will be unable or unwilling to serve as a director, if any nominee withdraws or otherwise becomes unavailable to serve, our Board may decrease the size of our Board, or the proxies may be voted for the election of such other person as a director as our Board may recommend in place of the nominee. +Required Vote +Because this is an uncontested election, each director nominee will be elected by a majority of the votes cast by the shares present virtually or represented by proxy and entitled to vote on the election of directors at the Annual Meeting (assuming that a quorum is present). A "majority of the votes cast" means that the number of votes "FOR" a director nominee must exceed 50% of the total votes cast in the election of directors. +BOARD RECOMMENDATION +OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE +" FOR " +THE ELECTION OF EACH OF THE DIRECTOR NOMINEES. +17 +Table of Contents +CORPORATE GOVERNANCE +Corporate Governance at Deckers +Corporate governance is managed under the direction of our Board of Directors. Our Board has a long-standing commitment to comprehensive and effective corporate governance practices. Our Board continues to evaluate our governance policies and procedures to ensure that the right mix of individuals is present in our boardroom and to ensure effective oversight of our strategy and management in order to best serve our stockholders. Our Board has adopted Corporate Governance Guidelines that set forth the primary framework of governance principles applicable to our Company, a copy of which is available on our website at www.deckers.com/investors . +Corporate Governance Elements +Our Board is committed to maintaining the highest standards of corporate governance and has established a strong framework by which our Company is governed. Key elements of our corporate governance framework include: +OUR POLICY OR PRACTICE +DESCRIPTION AND BENEFIT TO OUR STOCKHOLDERS +STOCKHOLDER RIGHTS +Annual Election of Directors +• Our directors are elected annually, reinforcing their accountability to our stockholders. We do not employ a classified board structure. +Single Class of Outstanding Voting Stock +• Our common stockholders control our Company, with equal voting rights. +Majority Voting Standard +• We have a majority voting standard for uncontested director elections. +BOARD STRUCTURE +Director Independence +• Based on the director independence requirements set forth in our Corporate Governance Guidelines, as well as under applicable SEC and NYSE rules, our Board has determined that each of our directors, other than Mr. Powers, is an "independent director." +Committee Governance +• Our three standing Board Committees: Audit, Compensation and Corporate Governance, consist exclusively of independent directors and have adopted written charters. Committee composition and charters are reviewed annually by our Board. +Board Leadership and Structure +• Our Company previously had one person serving as both our Chief Executive Officer and Chairman of our Board. The roles were separated when Mr. Powers was appointed Chief Executive Officer. Mr. Gibbons is the Chairman of our Board of Directors. We believe this is the most appropriate leadership structure for our Company at this time. +Annual Board Self-Evaluations +• The Corporate Governance Committee conducts and oversees annual self-evaluations of our Board, and of each Board committee, to ensure they are effective and continue to serve the best interests of our stockholders. +Board Oversight of Risk +• Our Board is generally responsible for risk management activities, but has delegated the oversight of risk management to our Audit Committee. Our full Board regularly engages in discussions of the most significant risks we face and how these risks are managed. +EXECUTIVE COMPENSATION +Annual Say-on-Pay Vote +• Annually, our stockholders have the opportunity to approve, on a non-binding advisory basis, the compensation of our Named Executive Officers, which we sometimes refer to as our Say-on-Pay Vote. This affords our stockholders the ability to provide routine feedback on our compensation program. +Corporate Governance Principles +Pursuant to Delaware law and our bylaws, our business, property and affairs are managed under the direction of our Board of Directors. Thus, our Board is the ultimate decision-making body of our Company, except with respect to those matters reserved for our stockholders. +Our Board selects our Chief Executive Officer, and works together with our Chief Executive Officer to select our senior management team, which is charged with the day-to-day operation of our business. Members of our Board are kept informed about our business through discussions with our Chief Executive Officer and other senior management personnel, including by attending brand sales meetings and industry events, participating in periodic informal telephonic meetings, and reviewing materials provided to them, as well as by attending formal meetings of our Board and its committees. Having selected the senior management team, our Board acts as an adviser and counselor to senior management, monitors its performance and proposes or makes changes to the senior management team when it deems necessary or appropriate. +18 +Table of Contents +Board of Directors Meetings +BOARD OF DIRECTORS +• Each of our Directors attended at least 75% of Board meetings and meetings of the Board committees on which he or she served. +• Time is scheduled for our independent directors to meet in an executive session at every Board meeting. +• Our Corporate Governance Guidelines state that directors are expected to attend each of our annual meetings of stockholders. 9 members of the Board (constituting a majority of the Board at the time) attended the annual meeting of stockholders held in September 2018. +Meetings in Fiscal Year 2019: 7 +Director Independence +Our Corporate Governance Guidelines, as well as applicable NYSE rules, require that our Board be comprised of a majority of directors who satisfy the criteria for independence set forth in the NYSE rules. These guidelines help ensure that the interests of our Board and management are aligned with those of our stockholders, that conflicts of interest are avoided, and that we are in compliance with applicable SEC and NYSE rules. An independent director is one who our Board affirmatively determines has no material relationship with our Company (either directly or as a partner, stockholder or officer of an organization that has a relationship with our Company) and otherwise meets the requirements of the NYSE rules. +Based on the director independence requirements set forth in our Corporate Governance Guidelines, as well as in the applicable NYSE rules, our Board has determined that each of our directors, other than Mr. Powers, is an "independent director." In addition, all members of the Audit Committee, Compensation Committee and Corporate Governance Committee meet the independence standards set forth in the applicable SEC and NYSE rules. +Board Leadership Structure +For many years, we employed a leadership structure that combined the positions of Chairman of the Board of Directors and Chief Executive Officer, while also appointing a strong Lead Independent Director. The Board believes it is important to maintain flexibility in the Board leadership structure, depending on the composition of our Board and our business and strategic needs at the time. However, the Board also firmly supports having an "independent director" serve in a Board leadership position at all times. +When Dave Powers was appointed Chief Executive Officer in 2016, we separated the Chairman of the Board of Directors and Chief Executive Officer roles. Our Board believes this change allows our Chief Executive Officer to focus on the day-to-day operation and management of our Company, while allowing our Chairman to focus on leading the Board in overseeing the interests of our Company and its stockholders. Until his appointment as our Chairman in September 2017, Mr. Gibbons served as our Lead Independent Director. +Board Committees +Our Board of Directors has three standing committees: the Audit Committee, the Compensation Committee and the Corporate Governance Committee. Each member of each of the committees is an "independent director" for purposes of applicable SEC and NYSE rules. Each of our committees has a written charter that describes its purpose, membership, meeting structure and responsibilities. A copy of each committee's charter is available on our website at www.deckers.com/investors. These charters are reviewed annually by each committee, with any recommended changes approved by our Board. The Compensation Committee charter was amended in June 2018. The Audit Committee and Corporate Governance Committee charters were amended in September 2018. +Summary information regarding the membership, meetings and primary responsibilities of the three standing committees of our Board are listed below: +19 +Table of Contents +AUDIT COMMITTEE +• Oversees management's conduct of, and the integrity of, our financial reporting functions. +• Oversees the qualifications, engagement, compensation, independence and performance of the registered public accounting firm that audits our annual financial statements and reviews our quarterly financial reports. +• Oversees our legal and regulatory compliance. +• Oversees the performance of our internal audit function. +• Oversees the application of our related person transaction policy as established by our Board. +• Oversees our systems of internal control over financial reporting and disclosure controls and procedures. +• Oversees the application of our code of business conduct and ethics as established by our Board. +Members: +Michael F. Devine, III (Chair) +Nelson C. Chan +Cynthia L. Davis +Meetings in Fiscal Year 2019 : 8 +All members of the Audit Committee meet the independence and experience standards set forth in applicable SEC and NYSE rules. +The Chair of the Audit Committee has been determined by our Board to be an "audit committee financial expert" under applicable SEC rules. +COMPENSATION COMMITTEE +• Oversees the design of our executive compensation program, and responsible for oversight of our employment practices and policies. +• Reviews and approves goals and objectives relevant to the compensation of our executives. +• Evaluates the performance of our executives in light of those goals and objectives. +• Determines and approves the compensation of our executives based, in part, on these evaluations, including each element of compensation. +• Makes recommendations to our Board regarding any action that is required to be submitted to our stockholders for approval with respect to incentive compensation plans and equity-based plans. +• Administers and approves our equity-based plans, and approves (or delegates authority to approve, below the executive level) individual award grants under those plans, or recommends award grants to our Board for approval. +• Produces report on executive compensation for inclusion in our proxy statement for our annual meeting of stockholders. +Members: +Lauri M. Shanahan (Chair) +Michael F. Devine, III +Bonita C. Stewart +William L. McComb (1) +Meetings in Fiscal Year 2019: 5 +All members of the Compensation Committee meet the independence standards set forth in applicable SEC and NYSE rules. +(1) +Mr. McComb will not be standing for re-election at the Annual Meeting. +CORPORATE GOVERNANCE COMMITTEE +• Develops and recommends to our Board a set of Corporate Governance Guidelines that establish a framework of governance principles applicable to us. +• Identifies individuals qualified to become directors, consistent with criteria specified in the Corporate Governance Guidelines. +• Recommends to our Board the qualified director nominees to be selected by our Board. +• Recommends membership of our Board committees. +• Ensures that our certificate of incorporation and bylaws are structured in a manner that best serves our objectives and recommends amendments as appropriate. +• Oversees the evaluation of management, our Board and Board committees. +• Oversees and approves the management continuity planning process. +• Reviews and evaluates the development and succession plan relating to our Chief Executive Officer and our other executive officers. +• Initiating oversight of our Corporate Responsibility initiatives. +Members: +James Quinn (Chair) +Bonita C. Stewart +Brian A. Spaly +Meetings in Fiscal Year 2019: 4 +Nominating Procedures and Criteria +Among its functions, the Corporate Governance Committee considers and approves nominees for election to our Board. We view board succession as an ongoing process and are regularly identifying, evaluating and pursuing prospective candidates. In addition to the candidates proposed by our Board or identified by the Corporate Governance Committee, the Committee considers candidates for director proposed by our stockholders, provided such recommendations are made in accordance with the procedures +20 +Table of Contents +set forth in our bylaws. Stockholder nominations that meet the criteria referred to below will receive the same consideration as nominations made by the Corporate Governance Committee. +Essential criteria for all candidates considered by the Corporate Governance Committee are discussed in the section of this Proxy Statement titled " Qualifications for All Directors. " In evaluating candidates for certain Board positions, the Committee also evaluates additional criteria, as reflected in the section of this Proxy Statement titled " Specific Qualifications and Skills Represented on our Board. " +In selecting nominees for our Board, the Corporate Governance Committee evaluates the general criteria referred to above, identifies the specialized criteria for which the Committee has determined there is a need, and considers the candidate's ability to meet the required criteria and contribute to the success of our Company. In evaluating an existing director for re-election, in addition to assessing the criteria referred to above, the Corporate Governance Committee considers a variety of factors, including attendance at Board and committee meetings, independence, length of service, previous performance, and overall contributions to our Company. +The director nominees for the Annual Meeting have been recommended by the Corporate Governance Committee, as well as by our Board of Directors. +Management Succession and Talent Development +The Corporate Governance Committee, pursuant to its charter, is responsible for overseeing the management continuity planning process. As part of that responsibility, the Corporate Governance Committee reviews and evaluates the development and succession plan relating to our Chief Executive Officer and our other executive officers, including considerations of career paths and attracting and retaining high quality talent. The Corporate Governance Committee works with the Board to assess whether we have the management talent needed to successfully pursue our business objectives. The Corporate Governance Committee also regularly considers the competencies necessary for our Chief Executive Officer to support our strategies for long-term success. +Pursuant to our Corporate Governance Guidelines, the Corporate Governance Committee provides an annual report to our Board of Directors on emergency and expected Chief Executive Officer succession planning. Through this process, the Corporate Governance Committee works with our full Board and management to identify recommendations and evaluations of potential successors, along with a review of any development plans recommended for such individuals. +Board Role in Risk Oversight +While risk management is primarily the responsibility of our management, our Board is responsible for the overall supervision of our business, an important element of which is supervision of our risk management activities. Our Board has delegated many of these functions to the Audit Committee. Under its charter, the Audit Committee is responsible for: +• +reviewing and discussing with management, our highest ranking manager of internal audit and the independent registered public accounting firm our financial risk exposures and assessing the policies and processes management has implemented to monitor and control such exposure; +• +assisting our Board in fulfilling its oversight responsibilities regarding our policies and processes with respect to risk assessment and risk management, including any significant non-financial risk exposures; +• +reviewing our annual disclosures concerning the role of our Board in the risk oversight of our Company, such as how our Board administers its oversight function; and +• +overseeing our internal audit function. +Our legal and internal audit executives report directly to the Audit Committee regarding material risks to our business, among other matters, and the Audit Committee meets in executive sessions with our highest ranking manager of internal audit and with representatives of our independent registered public accounting firm. In addition to the Audit Committee's work in overseeing risk management, our full Board regularly engages in discussions of the most significant risks we face and how these risks are being managed, and our Board receives reports on risk management from the Chair of the Audit Committee. Every Board meeting agenda provides for a discussion of risk management. In addition to the responsibilities undertaken by the Audit Committee, the other Board committees have oversight of specific risk areas, consistent with the committees' charters and responsibilities. For example, the Compensation Committee oversees the design of our executive compensation program so as to encourage achievement of our strategic objectives and mitigate compensation-related risk. In addition, the Corporate Governance Committee develops our Corporate Governance Guidelines to establish and oversee an appropriate governance framework. +Compensation Committee Interlocks and Insider Participation +As of the date of this Proxy Statement, no member of the Compensation Committee is serving, and during the past year no member of the Compensation Committee has served, as an officer or employee of our Company or any of its subsidiaries. None of our executive officers currently serves, or during the past year has served, as a member of the board of directors or compensation committee (or other committee serving a similar purpose) of any entity that has an executive officer serving on our Board or the Compensation Committee. In addition, none of the Compensation Committee members had any relationship, or participated in any transaction, with our Company during fiscal year 2019 that requires disclosure under SEC rules. +21 +Table of Contents +We have entered into indemnification agreements with each of our directors, including each member of the Compensation Committee. +Communications with Directors +Stockholders and other interested parties may communicate with the Chairman of our Board, the Chair of any Board committee, with our independent directors as a group, or with any individual director, by writing to any such person or group. Communications should be sent to the following address: +Deckers Outdoor Corporation +Attn: Corporate Secretary +250 Coromar Drive +Goleta, California 93117 +Communications are distributed to our Board of Directors, or to any individual director, depending on the facts and circumstances described in the communication. Our Board has requested that certain items that are unrelated to the duties and responsibilities of our Board should be excluded, including the following: junk mail and mass mailings, product inquiries or complaints, new product suggestions, resumes and other forms of job inquiries, surveys, and business solicitations or advertisements. In addition, material that is unduly hostile, threatening, illegal or similarly unsuitable will not be distributed, except that any communication that is not distributed will be made available to any director upon request. +Code of Ethics and Accounting and Finance Code of Ethics +Our Board has adopted a Code of Ethics to assist our officers, directors and other employees in complying with legal and regulatory requirements and maintaining the highest standards of ethical conduct. All of our officers, directors and employees must carry out their duties in accordance with the policies set forth in the Code of Ethics and with applicable laws and regulations. The Code of Ethics complies with the requirements set forth in applicable NYSE rules. +Our Board has also adopted a separate Accounting and Finance Code of Ethics which focuses on the financial reporting process and applies to our Chief Executive Officer, Chief Financial Officer and Corporate Controller (and other employees serving similar functions). The Accounting and Finance Code of Ethics is intended to qualify as a "code of ethics" under applicable SEC rules and to satisfy the standards of ethics and compliance programs under applicable NYSE rules. +Our Code of Ethics and our Accounting and Finance Code of Ethics are available on our website at www.deckers.com/investors . To the extent required by law, any amendments to or waivers of any provision of the Code of Ethics or the Accounting and Finance Code of Ethics will be promptly disclosed publicly on our website. +Stockholder Engagement +We have consistently demonstrated our commitment to open and interactive dialogue with our stockholders. We believe our stockholders, as the owners of our Company, have important views and insights into our business operations, and we routinely seek to engage with our stockholders to ensure their views are shared with our Board, and actively considered in discussions of our strategic direction. +While our Board has a fiduciary responsibility to our stockholders and represents their interests, our management team is primarily responsible for investor relations. Our management team provides regular updates to our Board of Directors regarding stockholder feedback on these topics. Please refer to the section of this Proxy Statement titled “ Stockholder Feedback on Executive Compensation ” for more information on how our stockholders impacted the evolution of our executive compensation program for fiscal year 2019. +Corporate Responsibility and Sustainability +Our Core Principles +As a global leader in designing, marketing and distributing innovative footwear, apparel and accessories, we believe in building great brands in a way that is mindful of our consumers, employees, stockholders and the communities we serve. We employ socially conscious operations and sustainable business practices, with the goal of continuing to deliver quality products to our consumers and sound financial performance for our stockholders, while minimizing our environmental footprint. +Corporate Responsibility and Sustainability Framework +The Corporate Governance Committee oversees our Corporate Responsibility and Sustainability program. We are members of the United Nations Global Compact (UNGC), which is the world’s largest corporate sustainability initiative. The Corporate Sustainability and Compliance Officer is tasked with identifying specific Sustainable Development Goals (SDGs) that align with the UNGC, and guide our efforts to address environmental and social challenges. +22 +Table of Contents +Our SDGs are currently focused on the following seven categories, which reflect areas where we believe we can make the most impact: +Materials +Our library of sustainable materials allows our developers to identify sustainable alternatives. We utilize repurposed wool and UNIFI recycled polyester. We source key materials such as leather, cotton, and down from suppliers who are certified by third party benchmarking organizations such as the Leather Working Group, Better Cotton Initiative and Responsible Down. We have an Ethical Sourcing and Animal Welfare Policy to guide our partners to act responsibly when sourcing materials on our behalf. +Waste +We strive to significantly reduce waste generation at our own headquarters, our distribution center locations, and our key factory partners. Our Moreno Valley Distribution Center is nearing its goal of being a zero-waste facility. We utilize 4IP design technology in-house to reduce waste generated through our sampling process. We study waste output among our key partners and work with them on waste diversion methodologies. We performed a life-cycle assessment of our packaging materials to significantly reduce waste. +Water +We seek to reduce our overall water consumption. In addition to sourcing 97% of our leathers and hides from Leather Working Group Certified Tanneries, in order to maintain protocols that promote sustainable and appropriate environmental business practices within the leather industry, we support tanneries and manufacturers with water treatment programs. We measure water output among key supply chain partners to help reduce overall water consumption. Our packaging materials life-cycle assessment has resulted in a significant year-over-year reduction in water consumption. +Climate and Clean Energy +The energy usage in the places we manufacture our products has an enormous impact on our environmental footprint. We transitioned the majority of our production from China to Vietnam. China relies heavily on coal whereas Vietnam relies on hydroelectricity, thus lowering our carbon and greenhouse gas footprint significantly. We monitor energy usage at our corporate offices, our retail stores, our distribution centers and our key supply chain partners. All of our California facilities have solar panels in order to offset our electric energy usage . +Chemicals +We monitor over 1500 chemicals in our supply chain for product compliance with legal and regulatory requirements and conduct regular audits. Our Restricted Substances Policy failure rate has continued to decrease year-over-year due to our ongoing monitoring and training efforts. We have succeeded in eliminating harmful chemicals from our supply chain including disperse dyes and carcinogenic dyes, cadmium, mercury, nickel, toluene and benzene. We consistently target elimination of harmful chemicals as part of our ongoing chemical management. +Human Rights +We are proud to be a leader in supply chain transparency. We champion human rights across our operations and supply chain and continue to positively impact the communities in which we operate. We have established robust ethical supply chain criteria based on International Labor Organization standards and audit our supply chain pursuant to such criteria on an ongoing basis. Audit results are included on performance scorecards for regular review by executive management. +Gender Equality and Quality Education +We promote diversity, gender equality, female empowerment, and inclusion through our annual Women’s Leadership Summit, our partnership with the HERproject, and have obtained EDGE (Economic Dividends for Gender Equality) Certification in the United States, the leading global assessment and business certification for gender equality. Our commitment to diversity starts from our leadership as demonstrated by our Chief Executive Officer's commitment to The Outdoor CEO Diversity Pledge, which pairs outdoor brands with inclusion advocates to advance representation for people of color across the industry. +23 +Table of Contents +Human Rights Key Indicators +Our Corporate Sustainability and Compliance Officer uses key indicators in each category to oversee our efforts. Below is an example of a key indicator used to monitor factory performance. While we do not own the factory or supply chain locations that manufacture products on our behalf, we ensure these locations are being managed in accordance with our expectations. We use OSHA standards to measure the total lost time injury rates (LTIR) and the total recordable incident rates (TRIR) are currently within industry standards. +In fiscal year 2019, 92% of our factory partners and 95% of our supplier partners were either premier or preferred partners pursuant to our ethical supply chain program. We benchmark our ethical supply chain program against other brands as well as third party standards and guidance including International Labor Organization Standards and Better Work. +Charitable Giving and Volunteering +Our charitable contributions, product donations, and employee volunteer efforts are an essential part of our culture. +$1.3 million +Amount donated to various non-profit organizations during fiscal year 2019 +Areas of Focus for Giving +53% Family & Children, +20% Environment, 18% Education, +9% Community +24 hours +Hours we compensate employees for volunteer time each year +900,000 pairs +Number of pairs of shoes donated to non-profit organizations to distribute to those in need since 2006 +Our fiscal year 2019 Corporate Responsibility Report will provide additional information regarding our significant achievements during the year. +24 +Table of Contents +EXECUTIVE OFFICERS +Each of our executive officers serves at the discretion of our Board. Important summary information about our current executive officers is set forth in the table below, followed by certain biographical information about each officer. +EXECUTIVE OFFICER +AGE +POSITION +Dave Powers +53 +Chief Executive Officer, President and Director +Steven J. Fasching +51 +Chief Financial Officer ( Appointed in July 2018) +David E. Lafitte +55 +Chief Operating Officer +Stefano Caroti +56 +President of Omni-Channel +Andrea O'Donnell +50 +President of Fashion Lifestyle +DAVE POWERS +Age: 53 +Position: Chief Executive Officer, President and Director +Mr. Powers was appointed as our Chief Executive Officer in June 2016 and joined our Board at that time. Mr. Powers joined our Company as President of Direct-to-Consumer in August 2012. He was appointed President of Omni-Channel in January 2014 and was appointed President in March 2015. Mr. Powers has over 20 years of experience in merchandising, product and marketing development, and leading global direct-to-consumer operations and wholesale businesses. Prior to joining us, Mr. Powers served four years as vice president of global direct-to-consumer at Converse Inc., where he oversaw owned and distributor direct-to-consumer as part of the Nike, Inc. retail leadership team. Mr. Powers also held several executive leadership roles at The Timberland Company, including worldwide general merchandising manager and senior director European retail, where he led worldwide retail merchandising, marketing, visual and store design, and oversaw European retail operations. Prior to this, Mr. Powers spent 10 years at Gap Inc., where he held multiple senior management titles, including global divisional merchandise manager for the boy’s division. Mr. Powers graduated cum laude from Northeastern University with a B.S. in Marketing. +STEVEN J. FASCHING +Age: 51 +Position: Chief Financial Officer +Mr. Fasching was appointed as our Chief Financial Officer in June 2018 and served as our Senior Vice President, Corporate Strategy, Planning & Investor Relations since February 2018. Mr. Fasching previously served as our Vice President, Strategy & Investor Relations from January 2016 to February 2018, and as Vice President, Strategic Financial Planning from August 2011 to January 2016. Mr. Fasching has over 27 years of experience in long-term financial and strategic planning and creating and leading the analytical engine of multi-billion dollar organizations. Immediately prior to joining our Company, Mr. Fasching served for five years as the director of finance and assistant controller of Princess Cruise Lines, Ltd., a cruise line owned by Carnival Corporation, where he had been promoted through a number of finance-related positions since September 1990, including director of financial planning, among others. Mr. Fasching received a B.S. degree in Business Administration from Pepperdine University and an M.B.A. from The Anderson School of Management at UCLA. He also completed The Executive Program for Prospective CFOs through the University of Chicago Booth School of Business. +25 +Table of Contents +DAVID E. LAFITTE +Age: 55 +Position: Chief Operating Officer +Mr. Lafitte was appointed as our Chief Operating Officer in February 2015. From 2012 to January 2015, he was outside general counsel for our Company. Prior to joining our Company, Mr. Lafitte was a shareholder with the law firm Stradling Yocca Carlson & Rauth, P.C., where he was a member of the firm’s board of directors and executive committee, and had been advising our Company since 2006. He received a B.A. from the University of Colorado and a J.D. from Tulane University. +STEFANO CAROTI +Age: 56 +Position: President of Omni-Channel +Mr. Caroti was appointed as our President of Omni-Channel in November 2015. He has over 30 years of industry experience in general management, sales, retail, product, marketing, business strategy and brand management. Prior to joining our Company, Mr. Caroti was the chief commercial officer and managing director at PUMA, from August 2008 to December 2014, where he was responsible for PUMA’s global wholesale, retail and e-commerce divisions and PUMA’s geographic operating regions. He held a number of senior executive positions at Nike, Inc. in general management, sales, product and marketing, and during his term as vice president of EMEA commerce, he was responsible for the entire wholesale, retail and e-commerce business in the EMEA region. He received a B.A. with honors from Middlebury College. +ANDREA O'DONNELL +Age: 50 +Position: President of Fashion Lifestyle +Ms. O’Donnell was appointed as our President of Fashion Lifestyle in April 2016. Ms. O’Donnell has over 20 years of experience in the retail industry and is well versed in operating in complex international markets. She has a background in strategic planning, merchandising and marketing, as well as experience in emerging markets and customer relationship management. Over the course of her career, she has held leadership positions with prominent international retailers. Ms. O’Donnell was with DFS Group Limited prior to joining our Company, where she served as president of global merchandising. From 2012 to 2014, she was with Lane Crawford, where she was responsible for merchandising, marketing, CRM and store planning across the Asia Pacific Region. She was the commercial director at John Lewis from April 2004 to August 2012, responsible for online sales and strategy for Omni-Channel. She was the merchandising planning director at Hacket London from September 2002 to April 2004, and prior to that was head of merchandising planning at Jaeger and Debenhams. She received an Executive M.B.A. from the London School of Business. +26 +Table of Contents +COMPENSATION DISCUSSION AND ANALYSIS +In this section we discuss the compensation program applicable to our Named Executive Officers, or NEOs. This discussion is divided into the following parts: +EXECUTIVE SUMMARY +COMPENSATION PHILOSOPHY AND OBJECTIVES +COMPENSATION CONSULTANT AND PEER GROUP +ELEMENTS OF FISCAL YEAR 2019 EXECUTIVE COMPENSATION PROGRAM +OTHER COMPENSATION CONSIDERATIONS +Please also review the Summary Compensation Table, and the additional compensation tables and related footnotes that follow this section, as they provide information critical to an understanding of our executive compensation program. +27 +Table of Contents +EXECUTIVE SUMMARY +Named Executive Officers +The following table sets forth our NEOs in fiscal year 2019, the current positions they hold and the dates they were appointed to those positions: +NAMED EXECUTIVE OFFICER +CURRENT POSITION AND DATE APPOINTED +Dave Powers +• Chief Executive Officer and Director - June 2016 +• President - March 2015 +Steven J. Fasching +• Chief Financial Officer - July 2018 +Thomas A. George +• Former Chief Financial Officer - September 2009 ( Stepped down in July 2018 ) +David E. Lafitte +• Chief Operating Officer - February 2015 +Stefano Caroti +• President of Omni-Channel - November 2015 +Andrea O'Donnell +• President of Fashion Lifestyle - April 2016 +Fiscal Year 2019 Financial and Operational Highlights: +We delivered strong results in fiscal year 2019 from both financial and operational perspectives, as highlighted by the following: +• +Total revenue growth of 6.2%, representing an increase of $117 million as compared to the prior year, with major contributions from various brands including $70 million from the HOKA ONE ONE brand, $26 million from the UGG brand and $26 million from the KOOLABURRA brand. +• +Increased non-GAAP operating margin by 380 basis points to 16.2% and grew non-GAAP diluted earnings per share by 54% to $8.84, demonstrating our ability to achieve margin improvements, effectively reduce costs and deliver improved levels of profitability. +• +We repurchased $161 million of our shares and we continue to view share repurchases as a key strategy for returning value to stockholders. +Our financial performance over the past three fiscal years is illustrated by the financial metrics in the graphs below. For each fiscal year, the information presented is for the 12-month period ended March 31. Our performance-based compensation for fiscal year 2019 relied on some of these performance metrics to directly tie executive compensation to Company performance in furtherance of our pay for performance philosophy. For example, our Annual Cash Incentive Awards used consolidated operating income, our Annual PSU Awards used earnings per share, and our LTIP PSU Awards used pre-tax income and revenue as the underlying performance metrics. +28 +Table of Contents +Our Business and Strategic Objectives +As we move beyond the successful execution of our operating profit improvement plan, we intend to reinvest strategically in key identified areas of growth within our brand portfolio. Specifically we will invest in the following: +• +The HOKA ONE ONE brand, building increased brand awareness and supporting the brand as it builds market share with core running styles as well as expands into incremental categories of performance footwear. +• +The UGG brand, focusing on growth within the Men's product offering as well as extensions of the brand within Women's non-core styles. +• +Technology and analytical tools that will enhance our capabilities as we look to support our evolving business, including opportunities to connect with consumers through digital avenues as well as expanding our ecommerce platform. +With the planned investments in our business, we expect to see mid-single-digit revenue growth again in fiscal year 2020, while remaining committed to top-tier levels of operating profitability by continuing to leverage the improvements that we have made in our organization. +Our Compensation Program Objectives +The overarching objectives of our executive compensation program are to (i) attract and retain high quality talent; (ii) align interests of executives with stockholders; (iii) provide a significant portion of total compensation through variable, performance-based components; and (iv) offer incentives for achieving both short and long-term goals that are directly tied to the achievement of strategic objectives. As a result, our Compensation Committee, which we refer to as the Committee for purposes of this section, seeks to design our executive compensation program in a manner that reflects direct alignment between the compensation opportunity provided to our executives and the achievement of our strategic objectives. In doing so, we routinely consider appropriate changes to our compensation program to reflect our strategic direction and the evolving needs of our business. In addition, in order to build and retain the talent necessary to achieve our strategic objectives, the Committee endeavors to develop a compensation program that is attractive and competitive in the marketplace, taking into consideration peer group and broader industry data. +When establishing our executive compensation program each year, the Committee is generally guided by the following four principles that it believes align closely with our compensation objectives: +• +Pay for performance by ensuring that a significant portion of compensation is made available to our executives in the form of variable, performance-based components. +• +Align interests of executives with stockholders by tying a significant portion of compensation to Company performance that creates long-term value for our stockholders and is correlated to increases in the value of our stock price. +• +Attract and retain executives with the background and experience necessary to lead the organization and achieve our strategic objectives. +• +Reward achievement by offering meaningful and appropriate incentives for achieving both short-term and long-term Company financial goals that have been established by the Committee that are directly tied to the achievement of strategic objectives. +Consistent with our strategic objectives, when designing our executive compensation program for fiscal year 2019, the Committee focused on continuing to build and retain our executive team, while providing them with incentives to focus on our key +29 +Table of Contents +strategic initiatives, including increased revenue, enhanced profitability, improved operating margins and the creation of long-term value for stockholders. These and other strategic considerations are clearly reflected in the design of our program, which demonstrates strong pay-for-performance alignment. In addition, these considerations resulted in a number of important changes to the program for fiscal year 2019, as described in further detail below. +Stockholder Feedback on Executive Compensation +We have consistently demonstrated our commitment to stockholder outreach efforts, which has resulted in meaningful, interactive dialogue with our stockholders on a number of significant topics, including our business and strategic objectives, our financial and operational performance, our capital allocation strategy, our corporate governance philosophy, and the performance of our stock. We have also routinely solicited and incorporated stockholder feedback on the design and effectiveness of our executive compensation program. We believe our proactive engagement and response to stockholder feedback, combined with strong pay-for-performance alignment, has resulted in overwhelming stockholder support for our executive compensation program. Indeed, these efforts resulted in 95.4% of the votes cast being voted "for" our executive compensation program at our annual meeting of stockholders held in 2018. This extremely favorable stockholder response is consistent with the prior year. +As part of our stockholder engagement efforts in 2017, we reached out to investors holding over 60% of our shares to discuss their views and any concerns regarding our compensation philosophy and program, and to preview potential changes to our executive compensation program that we were considering for fiscal year 2018. Members of our management team, not including our Chief Executive Officer and, in most cases, the Chair of the Compensation Committee, conducted meetings and conference calls with those investors that responded to our outreach efforts, and with representatives of certain proxy advisory groups, in order to understand their perspectives regarding our current compensation practices and solicit specific feedback on current and potential design elements and practices. This process informed the evolution of our executive compensation program for fiscal years 2018 and 2019, including our adoption of a median pay philosophy and our focus on profitability and revenue in selecting performance metrics that align with our strategic objectives. Our fiscal year 2019 executive compensation program, as described in this section, reflects the specific feedback that we received from our stockholders during those outreach efforts. In an effort to continue our dialogue with our stockholders in fiscal year 2019, we again reached out to key investors to solicit their feedback on our corporate governance framework, executive compensation practices, and corporate responsibility and sustainability efforts. +The Committee believes that ongoing, transparent communication with our stockholders is critical to our long-term success, and that the feedback received through our stockholder engagement efforts will continue to contribute to the evolution and enhancement of our executive compensation program. The Committee considers stockholder engagement to be an important part of its decision-making process and plans to continue proactive outreach efforts going forward. +Fiscal Year 2019 Executive Compensation Highlights +In fiscal year 2019, we implemented an executive compensation program that was designed to focus on our key strategic initiatives, including increased revenue, enhanced profitability, improved operating margins and the creation of long-term value for stockholders. Compensation awards under the program include the following: +• +Base salaries; +• +Cash incentive awards, or 2019 Cash Incentive Awards; +• +Annual performance-based restricted stock units, or 2019 Annual PSUs; +• +Time-based restricted stock units, or 2019 Time-Based RSUs; and +• +Long-term incentive plan performance-based restricted stock units, or 2019 LTIP PSUs. +Our fiscal year 2019 executive compensation program was similar to that of fiscal year 2018 with the exception of a few changes, including but not limited to the issuance of performance-based restricted stock units, or PSUs, instead of performance-based nonqualified stock options, or NQSOs, for long-term incentive plan, or LTIP, awards. In addition, certain of our NEOs earned a merit increase of approximately 3% to 5% to their base salaries based on consideration of the specific factors discussed below. +As a result of our strong financial and operational results in fiscal year 2019, the 2019 Cash Incentive Awards were paid out at the maximum level and all of the 2019 Annual PSUs were earned. +30 +Table of Contents +Compensation Program Highlights +The following table sets forth the key components of our executive compensation program for fiscal year 2019, and the underlying philosophy and considerations that provide the basis for our compensation decisions: +COMPENSATION HIGHLIGHTS +UNDERLYING PHILOSOPHY/ADDITIONAL CONSIDERATIONS +• Pay-for-performance alignment. +• We emphasized strong pay-for-performance alignment by providing a significant portion of the overall compensation opportunity for our NEOs in the form of performance-based compensation that is at risk and directly tied to the achievement of specific Company financial and operational performance objectives. +• Our performance-based compensation is designed to align the interests of our NEOs with those of our stockholders and encourage the achievement of strategic objectives that the Committee believes are critical to our short and long-term success. +• For fiscal year 2019, only 19% of the total compensation opportunity for our President and Chief Executive Officer was fixed, while 81% of his total compensation opportunity was directly tied to the achievement of specific performance conditions and therefore at risk. +• Alignment of performance metrics with strategic objectives. +• Selecting the appropriate performance metrics for our performance-based awards is critical for achieving our business and strategic objectives, motivating our executives and advancing our pay-for-performance philosophy. +• In light of our strategic focus on profitability, improved operating margins, long-term revenue growth and creation of long-term stockholder value, the Committee selected (i) consolidated operating income for all NEOs (and business unit operating income and revenue targets for certain executives with business unit oversight responsibilities) as the performance metrics for our 2019 Annual Cash Incentive Awards, (ii) "earnings per share," or EPS, for fiscal year 2019 as the performance metric for our 2019 Annual PSUs, and (iii) both “pre-tax income” and "revenue" for fiscal year 2020 as the performance metrics for our 2019 LTIP PSUs. +• No overlap in performance conditions. +• Our performance metrics involve multiple performance conditions over multiple time periods to ensure our compensation program encourages healthy and sustained growth across our business, while eliminating excessive overlap between the goals. For fiscal year 2019, these metrics focused on a combination of income, revenue and EPS. +• This approach further mitigates against risk associated with our compensation program as it de-emphasizes the impact of any one performance metric. +• Adoption of a "median" pay philosophy. +• Consistent with our prior disclosures, we have actively reformulated our executive compensation program to benchmark the target total compensation opportunity for our NEOs at the median compared to our peer group. +• In adopting this philosophy, the Committee carefully considered a number of factors, including specific feedback received from our stockholders during our stockholder engagement efforts. +• Use of PSUs for LTIP awards. +• LTIP awards were designed to align the interests of our executives with those of our stockholders by focusing performance conditions on both profitability and revenue and issuing awards that increase in value if and as our stock price increases. +• Vesting is based on the achievement of long-term profitability and revenue-based metrics that align closely with our strategic objectives. +• 100% of the equity awards granted during fiscal year 2019 were subject to long-term vesting in order to promote retention of our executives. +• The vesting of each LTIP award will be subject to adjustment based upon the application of a TSR modifier. +• Appropriate mix of equity awards with focus on performance-based vesting. +• We issued equity awards that vest as to 80% of the awards based on the achievement of Company performance conditions to ensure alignment with our pay-for-performance philosophy, and vest as to 20% of the awards based on the achievement of long-term, time-based vesting targets to attract and retain executives. +31 +Table of Contents +• Continued focus on executive retention. +• While we seek to develop our executive compensation program so that it closely aligns with our pay-for-performance philosophy and rewards achievement of performance goals, this objective must complement other critical objectives, including the retention of executives. +• For fiscal year 2019, we again granted a small portion of equity awards (20%) that vest solely based on the achievement of time-based targets, which promote executive retention because they vest over a long-term service period. +• Consistent with its historical practice, the Committee expects a majority of equity awards to continue to have performance-based vesting conditions. +• Consideration of peer group data and the advice of our independent compensation consultant in setting executive compensation. +• We generally use peer group compensation data as an initial starting point and guidepost in making compensation decisions for our executives, with respect to the aggregate compensation opportunity, as well as each element of compensation. We also evaluate and consider broader industry data. +• We work closely with our independent compensation consultant, which provides us with information on competitive pay practices and trends in our industry and makes recommendations regarding the design and structure of our compensation program, as well as the formulation of our peer group, which we reassess annually. The information and guidance provided by our independent compensation consultant is consistent with our median pay philosophy. +32 +Table of Contents +COMPENSATION PHILOSOPHY AND OBJECTIVES +Compensation Program Objectives +Pursuant to its charter, the Committee has overall responsibility for developing the compensation philosophy and objectives applicable to our executive leadership team, and approving our executive compensation program and policies. The overarching objectives of our executive compensation program are to (i) attract and retain high quality talent; (ii) align interests of executives with stockholders; (iii) provide a significant portion of total compensation through variable, performance-based components; and (iv) offer incentives for achieving both short and long-term goals that are directly tied to the achievement of strategic objectives. As a result, the Committee seeks to design our executive compensation program in a manner that achieves strong alignment between the compensation opportunity provided to our executives and the achievement of our strategic objectives. In so doing, we routinely consider appropriate changes to our compensation program to reflect changes in our strategic direction and the evolving needs of our business. In addition, in order to build and retain the leadership team necessary to achieve our strategic objectives, the Committee endeavors to develop a compensation program that is attractive and competitive in the marketplace, taking into consideration peer group data. +Compensation Philosophy +When establishing our executive compensation program each year, the Committee is generally guided by the following four principles that it believes align closely with our compensation objectives: +PAY FOR PERFORMANCE +ALIGN INTERESTS WITH STOCKHOLDERS +• Offer a significant portion of the compensation opportunity made available to our executives in the form of variable, performance-based components. +• Ensure performance-based compensation is directly tied to the achievement of Company financial, operational and strategic goals that the Committee believes are important for our short and long-term success. +• Align the interests of our executives with those of our stockholders by tying a significant portion of the compensation opportunity to financial and operational performance that the Committee believes will result in the creation of long-term stockholder value. +• Ensure that a significant portion of the compensation opportunity is directly tied to total stockholder return. +REWARD ACHIEVEMENT +ATTRACT AND RETAIN EXECUTIVES +• Offer meaningful and appropriate incentives for achieving both short-term and long-term Company financial and operational goals that have been established by the Committee that are directly tied to the achievement of strategic objectives. +• Ensure that the financial goals are appropriate for each executive given their respective titles, scope of responsibilities, and ability to impact results. +• Attract key executives with the proper background and experience necessary to lead our Company and provide us the best opportunity to achieve our business and strategic objectives. +• Retain our key executives by offering compensation that is attractive and competitive in the marketplace, taking into consideration peer group and broader industry data. +Pay-for-Performance Philosophy +Our pay-for-performance philosophy demands that we offer performance-based compensation that is directly linked to factors that the Committee believes will lead to the creation of stockholder value. Specifically, we pay for performance by tying a significant portion of our executive compensation opportunity to the achievement of pre-established performance metrics that are reflective of our business and strategic objectives, as well as to increases in our stock price. The Committee believes that choosing the right performance metrics is critical to our ability to properly motivate our executives and advance our pay-for-performance philosophy. In particular, this requires that the performance metrics be reconsidered each year as our business and strategic objectives evolve to ensure they provide the appropriate barometer of our growth and success, and motivate the achievement of our objectives in line with how we currently view the business. +To this end, for our 2019 Annual Cash Incentive Awards, the Committee chose consolidated operating income for all NEOs (and business unit operating income and revenue targets for certain executives with business unit oversight responsibilities) as the performance metrics given our strategic focus on increased profitability and improved margins. For our 2019 Annual PSUs, the Committee selected EPS as the performance metric as it is an important indicator of both profitability and our ability to create value for our stockholders. For our 2019 LTIP PSUs, the Committee established "pre-tax income" and "revenue" for fiscal year 2020 as the performance metrics, given our focus on long-term profitability and total revenue. In addition, the Committee will apply a total shareholder return, or TSR, modifier, to adjust the vesting of the 2019 LTIP PSUs following a determination that the performance metrics have been achieved to ensure we take into account our performance on both an absolute and relative basis. The 2019 Annual PSUs and 2019 LTIP PSUs are equity-based awards the value of which are directly correlated to our stock price. +As a result of our strong commitment to our pay-for-performance philosophy, a substantial portion of our executives’ compensation opportunity is performance-based and it is not guaranteed that it will be earned. While we offer certain standard compensation elements that provide guaranteed payments, including base salary and limited employee benefits, our executive +33 +Table of Contents +compensation mix is heavily weighted toward performance-based compensation, which significantly limits the amount of guaranteed pay. In reviewing our adherence to our executive compensation philosophy, the Committee annually reviews both the amount of, and the mix between, fixed pay and at-risk pay and seeks to establish appropriate performance targets for the at-risk pay so as to ensure our performance targets align with our business and strategic objectives, are appropriately challenging to achieve, and mitigate our overall compensation-related risk. +As an example, for fiscal year 2019, fixed pay for our Chief Executive Officer (reflecting the value of base salary and employee benefits) represented only 19% of his targeted compensation opportunity for the year, while at-risk pay represented 81% of his targeted compensation. Of the 81% that reflects at-risk pay, 70% was provided through performance-based awards (reflecting the value of the 2019 Annual Cash Incentive Awards, 2019 Annual PSUs and 2019 LTIP PSUs) that only vest upon the achievement of pre-established Company performance metrics, while 11% was provided through time-based awards (reflecting the value of the 2019 Time-Based RSUs) that only vest upon the achievement of long-term time-based vesting targets. The Committee considers the 2019 Time-Based RSUs to be at-risk pay given that the vesting of the awards is conditioned upon continued employment over an extended period of time and the value of the awards is subject to fluctuation based on our stock price. We believe the significant focus on performance-based awards, including the relative weighting of the various compensation elements provided to our executives, reflects our strong pay-for-performance alignment. The elements of our executive compensation program are established taking into consideration the advice of our independent compensation consultant, which provides us with peer group data regarding competitive pay practices and trends in our industry, as well as the views of the Committee, which is comprised solely of independent directors. +The graphic below illustrates the amount of targeted at-risk pay vs. fixed pay for our Chief Executive Officer for fiscal year 2019 and the breakdown of the various components of the compensation program on a percentage basis. +34 +Table of Contents +Governance Practices that Support our Compensation Philosophy +Our executive compensation program has significant governance components that we believe support and strengthen our compensation philosophy and reduce compensation-related risk, including those summarized in the following table: +GOVERNANCE PRACTICE +WHAT WE DO þ +Independent Directors +• All of the members of our Board, other than our President and Chief Executive Officer, are independent directors under applicable SEC and NYSE rules. +Independent Compensation Committee +• The Committee consists entirely of independent directors who meet the independence standards set forth in applicable SEC and NYSE rules. +Independent Compensation Consultant +• The Committee has retained, and routinely consults with, an independent compensation consultant who assists the Committee in gathering competitive pay data, selecting our peer group, and structuring our executive compensation program. The decision to engage the consultant was made solely by the Committee and the consultant reports directly to the Committee. +Compensation Risk Assessment +• The Committee performs an annual review of its charter and the risks related to our compensation practices. See the section of this Proxy Statement titled " Compensation Risk Assessment " for additional information. +Frequency of "Say-on-Pay" Vote +• We ask our stockholders to provide an advisory vote on our pay practices on an annual basis, and the Committee considers the outcome of the vote when establishing our executive compensation program. +Stock Ownership Guidelines +• We have adopted stock ownership guidelines for our executive officers and directors, which are reviewed annually. See the section of this Proxy Statement titled " Stock Ownership Guidelines " for additional information. +Clawback Policy +• We have voluntarily adopted a Clawback Policy related to our cash and equity incentive awards, which we believe reinforces our pay-for performance philosophy and contributes to a Company culture that emphasizes integrity and accountability in financial reporting. See the section of this Proxy Statement titled " Clawback Policy " for additional information. +Equity Award Vesting Provisions +• Our equity awards are subject to "double-trigger" vesting upon a change of control. +No Tax Gross Ups +• Our Change of Control and Severance Agreements do not contain provisions allowing for excise tax gross up payments . +No Repricing of Awards +• Our 2015 Stock Incentive Plan, or 2015 Plan, explicitly prohibits the repricing of equity awards. +No Hedging and Pledging +• Our Insider Trading Policy specifically prohibits hedging or pledging our shares, and other similar practices. +No Dividends on Unvested Equity Awards +• Our equity award agreements do not provide for the payment of dividends on unvested equity awards. +35 +Table of Contents +COMPENSATION CONSULTANT AND PEER GROUP +Compensation Consultant +The Committee receives assessments and advice regarding our compensation practices and philosophy from its independent compensation consultant, Frederic W. Cook & Co., Inc., or FWC. FWC provides information on competitive pay practices and trends in our industry, and makes recommendations regarding the formulation of our Peer Group (as defined below), as well as the design and structure of our compensation program. The Committee meets regularly with FWC throughout the year, carefully reviews and assesses the materials provided by FWC, and engages in thorough deliberations with FWC and management regarding our executive compensation program and potential changes. +While our Company is not obligated to retain an independent compensation consultant, the Committee believes that the use of an independent consultant provides additional assurance that our executive compensation program is attractive and competitive in the marketplace, consistent with market conditions, aligned with our business and strategic objectives, and reflective of our compensation philosophy. +In accordance with applicable SEC rules, the Committee took certain factors into consideration when selecting FWC, which it believes may affect the independence of a compensation consultant. In particular, at a meeting of the Committee, the Committee discussed: +• +whether any other services had been or were being provided by FWC to our Company; +• +the amount of fees paid by our Company to FWC as a percent of FWC’s total revenues; +• +FWC’s policies and procedures designed to prevent conflicts, a copy of which was provided to the Committee prior to the meeting; +• +FWC’s ownership of our common stock (if any); and +• +any business or personal relationships between FWC and any Committee members or any of our executive officers. +Furthermore, FWC does not provide any additional services to us or our management, other than the services that are provided to the Committee in FWC’s capacity as our compensation consultant. Following the consideration of these factors, and such additional factors as the Committee deemed appropriate under the circumstances, the Committee made an affirmative determination that FWC is independent and unanimously approved the engagement of FWC. +The decision to engage FWC was made by the Committee, and FWC reports directly to the Committee. While members of our management regularly communicate with representatives of FWC, our management did not recommend the engagement of FWC in any capacity for fiscal year 2019 (or in any prior year) and does not direct or oversee the retention, termination or scope of services of FWC with respect to our executive compensation program. +Peer Group +In making compensation decisions for fiscal year 2019, the Committee compares the aggregate compensation opportunity, as well as each element of compensation, against a peer group of publicly traded footwear, apparel, accessories and lifestyle brand companies that is recommended by FWC and approved by the Committee. We collectively refer to these companies as our Peer Group. Our Peer Group is generally comprised of companies against which we compete for executive talent and stockholder investment, are in related businesses or industries, and are otherwise similar to us based on a number of characteristics as discussed below. Our Peer Group is reviewed at least annually by the Committee with support from FWC. While no single company in our Peer Group reflects all of our Company's characteristics, taken together the Committee believes that this list offers strong comparative analogs to our overall business model and brand portfolio. Our Peer Group for fiscal year 2019 remained unchanged as compared to fiscal year 2018 and consisted of the following 19 companies: +36 +Table of Contents +PEER GROUP FOR FISCAL YEAR 2019 +• Kate Spade & Company (subsequently acquired by Tapestry, Inc) +• Carter's, Inc. +• Express, Inc. +• Crocs, Inc. +• Fossil Group, Inc. +• Finish Line, Inc. (subsequently acquired by JD Sports) +• Skechers U.S.A., Inc. +• Lululemon Athletica, Inc. +• G-III Apparel Group, Ltd. +• Steven Madden, Ltd. +• Guess?, Inc. +• Columbia Sportswear Company +• Oxford Industries, Inc. +• The Buckle, Inc. +• RH (formerly Restoration Hardware Holdings, Inc.) +• Under Armour, Inc. +• Chico's FAS, Inc. +• Wolverine World Wide, Inc. +• DSW Inc. +Peer Group Characteristics +The Committee considers a variety of characteristics when it selects the companies which comprise our Peer Group, including the characteristics set forth in the chart below. +Use of Peer Group in Setting Executive Compensation in Fiscal Year 2019 +As part of its efforts to ensure that our executive compensation program is attractive and competitive in the marketplace, the Committee regularly reviews compensation data from our Peer Group provided by FWC. In addition, in order to gain a broader perspective on overall market trends and practices, the Committee regularly reviews data from broader-based compensation surveys. Our Peer Group compensation data is generally used as an initial starting point and guidepost in making compensation decisions for our executives, including with respect to both the target level of compensation and the overall structure of our executive compensation program. +For comparison purposes, FWC typically presents Peer Group data on both individual executive pay levels and program structure. With respect to individual pay levels, FWC provides data on the total compensation opportunity for each executive, as well as for each individual element of compensation. In setting the target compensation opportunity for fiscal year 2019, the Committee was committed to its adoption of a median pay philosophy, pursuant to which it was focused on benchmarking our executives’ target compensation opportunity to the 50th percentile compared to our Peer Group, subject to the discretion retained by the Committee to make adjustments as it deems appropriate. Individual elements of compensation are generally targeted to the 50th percentile as a starting point, although the focus of the median pay philosophy is the total compensation opportunity. +While our Peer Group compensation data is a significant factor in the Committee’s evaluation of compensation decisions, it also considers a variety of additional factors, including complexity and size of the business, the tenure, experience, and level of responsibility of each executive, recent and projected Company performance, recent individual performance, and general industry practices and economic conditions. +37 +Table of Contents +ELEMENTS OF FISCAL YEAR 2019 +EXECUTIVE COMPENSATION PROGRAM +The following table provides summary information regarding the key elements of our fiscal year 2019 executive compensation program: +COMPENSATION +ELEMENT +FIXED +V. +AT-RISK +PERFORMANCE-BASED V. +TIME-BASED +CASH +V. +EQUITY +Base Salary +Fixed +Not Applicable +Cash +2019 Annual Cash Incentive Awards +At-Risk +Performance-Based (Short-Term Criteria) +Cash +2019 Annual PSUs +At-Risk +Performance-Based (Short-Term Criteria) ++ +Long-Term Vesting +20% of Equity Compensation +2019 Time-Based RSUs +At-Risk +Time-Based +(Long-Term Vesting) +20% of Equity Compensation +2019 LTIP PSUs +At-Risk +Performance-Based +(Long-Term Criteria and Vesting) +60% of Equity Compensation +Employee Benefits +Fixed +Not Applicable +Other +Severance and Change of Control +At-Risk +Not Applicable +Cash/Equity/Other +Base Salary +The following table provides information regarding the base salaries paid to our NEOs during fiscal year 2019: +Fixed ● Cash +Philosophy +Considerations +Performance Conditions +Attract and Retain Executives: +• Pay competitively to attract and retain executives that are critical to the achievement of our business and strategic objectives. +• Provides a minimum level of guaranteed cash compensation necessary to attract and retain executives. +• Balance the level of fixed pay with at-risk pay to properly manage our compensation-related risk. +• No specific vesting conditions associated with payment. +• Salary reviewed and set annually based on a number of factors, including tenure, experience, scope of responsibilities, individual and Company performance, and our Peer Group data. +Changes to Base Salary as of July 1, 2018 +The following table summarizes the base salaries established by the Committee for our NEOs as of July 1, 2018: +NAME +BASE SALARY +Dave Powers (1) +$1,000,000 +Steven J. Fasching (2) +$400,000 +Thomas A. George (3) +$575,000 +David E. Lafitte (4) +$650,000 +Stefano Caroti (5) +$570,000 +Andrea O'Donnell (6) +$515,000 +(1) +Prior to July 1, 2018, Mr. Powers base salary was $950,000. +38 +Table of Contents +(2) +Prior to July 1, 2018, Mr. Fasching's base salary was $350,000. Effective January 7, 2019, Mr. Fasching received a base salary increase to $500,000. +(3) +Mr. George stepped down as Chief Financial Officer in July 2018. +(4) +Prior to July 1, 2018, Mr. Lafitte's fiscal year 2018 base salary was $620,000. +(5) +Prior to July 1, 2018, Mr. Caroti's fiscal year 2018 base salary was $550,000. +(6) +Prior to July 1, 2018, Ms. O'Donnell's fiscal year 2018 base salary was $500,000. +2019 Annual Cash Incentive Awards +The following table provides information regarding the 2019 Annual Cash Incentive Awards granted to our NEOs during fiscal year 2019: +2019 ANNUAL CASH INCENTIVE AWARDS +At-Risk ● Performance-Based (Short-Term) ● Cash +Philosophy +Considerations +Performance Conditions/ Vesting Provisions +2019 Pay for Performance +Pay for Performance: +• Establish appropriate short-term performance conditions that the Committee believes will drive our future growth and profitability. +Reward Achievement: +• Offer meaningful and appropriate incentives for achieving Company annual financial and operational goals that the Committee believes are important for our short and long-term success. +Align Interests with Stockholders: +• Align the interests of executives with those of our stockholders by tying bonus payout to Company performance. +Attract and Retain Executives: +• A cash bonus opportunity is considered a typical component of a competitive executive pay package for executives among our Peer Group. +• Company performance conditions based on Committee-approved annual metrics derived from our annual and long-range business and strategic plan. +• Pay based on achievement of threshold, target and maximum Company financial performance levels to reward achievement and strike appropriate balance between compensation incentives and risks. +• The "target" performance condition level is typically in line with the level of Company performance projected for each metric. +• Performance metrics used for each NEO are based on respective tenure, experience, scope of responsibilities and ability to impact results. +• Performance metrics reflect a continued focus on profitability, with revenue based metrics for certain executives who have business unit oversight responsibilities. +• Target bonus set as percentage of base salary. +• Actual bonus payout is based on achievement of fiscal year 2019 consolidated operating income for all NEOs (and business unit operating income and revenue targets for certain executives with business unit oversight responsibilities). +• For those executives with multiple components, the Committee assigned relative weighting to each component, which is expressed as a percentage of the targeted cash incentive amount. +• For threshold performance, 50% of the cash incentive relevant to that component would be earned. For target performance, 100% of the cash incentive relevant to that component would be earned. For maximum performance, 200% of the cash incentive relevant to that component would be earned. +• When determining Company achievement relative to the performance targets, the Committee relied upon our fiscal year 2019 audited financial statements +• Achievement below threshold levels results in no payout. +• Fiscal year 2019 consolidated operating income, business unit operating income and business unit revenue targets were achieved above the target level based on strong Company performance. +• Cash incentive payments were made at the maximum level for certain NEOs and above the target level (but below the maximum level) for other NEOs, as set forth in detail below. +39 +Table of Contents +Target Cash Incentive Amount +The Committee establishes a target amount of annual cash incentive compensation for each NEO, which is expressed as a percentage of base salary. The percentage is determined by the Committee by reference to a number of factors, including tenure, experience, scope of responsibilities, our recent and projected financial performance, and a review of our Peer Group data. Further, the target cash incentive amount is prorated to reflect any base salary adjustments throughout the full fiscal year so that the target amount reflects actual base salary earnings. +Performance Targets +The following table summarizes the performance conditions for the 2019 Annual Cash Incentive Awards, the relative weighting of each performance condition for each NEO, our Company's performance in light of the targets and the actual payout percentage for each component: +COMPONENT +RELATIVE +WEIGHT FOR EACH NEO +THRESHOLD PERFORMANCE (1) +TARGET PERFORMANCE +MAXIMUM PERFORMANCE +PERFORMANCE AND PAYOUT (1) +Consolidated Operating Income +• 100% for Messrs. Powers, George and Lafitte +• 25% for Mr. Caroti and Ms. O’Donnell +• Consolidated operating income of $231.03 million +• Consolidated operating income of $255.77 million +• Consolidated operating income of $306.92 million +• Consolidated operating income was $327.3 million, resulting in a payout of 200.00% +Business Unit Operating Income +• 40% for Mr. Caroti +• Global Omni-Channel operating income of $386.47 million +• Global Omni-Channel operating income of $417.45 million +• Global Omni-Channel operating income of $500.94 million +• Global Omni-Channel operating income was $478.3 million, resulting in a payout of 172.89% +• 40% for Ms. O’Donnell +• Fashion Lifestyle operating income of $442.15 million +• Fashion Lifestyle operating income of $478.45 million +• Fashion Lifestyle operating income of $574.14 million +• Fashion Lifestyle operating income was $518.7 million, resulting in a payout of 142.12% +Business Unit Revenue +• 35% for Mr. Caroti +• Global Omni-Channel revenue of $1,673.99 million +• Global Omni-Channel revenue of $1,728.95 million +• Global Omni-Channel revenue of $1,867.26 million +• Global Omni-Channel revenue was $1,775.8 million, resulting in a payout of 133.87% +• 35% for Ms. O’Donnell +• Fashion Lifestyle revenue of $1,525.36 million +• Fashion Lifestyle revenue of $1,555.41 million +• Fashion Lifestyle revenue of $1,679.84 million +• Fashion Lifestyle revenue was $1,577.3 million, resulting in a payout of 117.56% +(1) +Regardless of the level of performance with respect to the other performance metrics, in order to receive any payments for the 2019 Annual Cash Incentive Awards, a consolidated operating income threshold of at least $217.40 million was required to be achieved. This threshold was selected by the Committee based on a number of factors, including our long-range strategic plan and our financial performance during the previous fiscal year. The operating income threshold amount was achieved. +40 +Table of Contents +Calculation of Payout of 2019 Annual Cash Incentive Awards +The amount of cash incentive compensation actually earned by each NEO with respect to the 2019 Annual Cash Incentive Awards is calculated by multiplying the target cash incentive amount by the percentage of target earned for each relevant component, and then multiplying the amount by the relative weighting of each component, as illustrated in the table below: +NAME +TARGET PERCENTAGE OF SALARY +COMPONENT +TARGET CASH INCENTIVE AMOUNT (1) +PERCENTAGE OF TARGET EARNED FOR COMPONENT +RELATIVE WEIGHT OF COMPONENT +PAYOUT FOR EACH COMPONENT (2) +TOTAL PAYOUT +Dave Powers +125% +Consolidated Operating Income +$1,234,418 +200.00% +100% +$2,468,836 +$2,468,836 +Steven J. Fasching +75% (3) +Consolidated Operating Income +$280,959 +200.00% +100% +$561,918 +$561,918 +Thomas A. George (4) +75% +Consolidated Operating Income +$431,250 +200.00% +100% +$125,240 +$125,240 +David E. Lafitte +75% +Consolidated Operating Income +$481,890 +200.00% +100% +$963,781 +$963,781 +Stefano Caroti +75% +Consolidated Operating Income +$105,940 +200.00% +25% +$211,880 +$703,498 +Global Omni-Channel Operating Income +$169,504 +172.89% +40% +$293,063 +_ +Global Omni-Channel Revenue +$148,316 +133.87% +35% +$198,555 +_ +Andrea O'Donnell +75% +Consolidated Operating Income +$95,861 +200.00% +25% +$191,723 +$567,471 +Fashion Lifestyle Operating Income +$153,378 +142.12% +40% +$217,977 +_ +Fashion Lifestyle Revenue +$134,206 +117.56% +35% +$157,771 +_ +(1) +Target cash incentive amount prorated to reflect any base salary adjustments throughout the fiscal year. +(2) +Actual target cash incentive payout prorated to reflect actual base salary earnings for the fiscal year. +(3) +Mr. Fasching's target percentage of salary was adjusted from 50% to 75% on July 1, 2018. Actual target cash incentive payout has been prorated to reflect this adjustment. +(4) +Mr. George stepped down as Chief Financial Officer in July 2018. +41 +Table of Contents +2019 Annual Performance Stock Units +The following table provides information regarding the 2019 Annual PSUs granted to our NEOs during fiscal year 2019: +2019 ANNUAL PSUs +At-Risk ● Performance-Based (Short-Term) + Long-Term Vesting +20% of Equity Compensation +Philosophy +Considerations +Performance Conditions/ Vesting Provisions +2019 Pay for Performance +Pay for Performance : +• Vesting of awards dependent on achievement of profitability target, which is consistent with one of our strategic objectives. +Reward Achievement : +• Offer incentives for achieving short-term Company financial goals. +Align Interests with Stockholders : +• Align the interests of executives with those of our stockholders by focusing performance conditions on profitability. +Attract and Retain Executives : +• Additional long-term three-year vesting requirement once performance conditions are achieved to further encourage retention of our executives. +• Structured as restricted stock units, or RSUs, that may be settled for our common stock. +• Company performance condition is based on a Committee-approved metric derived from our annual and long-range business and strategic plans. +• EPS is an important indicator of profitability, which is a strategic focus and aligns executives’ interests with those of our stockholders. +• Awards vest based on achievement of threshold and target Company financial performance levels to reward achievement and strike appropriate balance between compensation incentives and risks. +• The "target" performance condition level is typically in line with the level of Company performance projected for the metric. +• Vest subject to achievement of EPS target for fiscal year 2019, the year in which they were granted. +• If performance conditions are met above the threshold level for the EPS target, the number of 2019 Annual PSUs that will vest will increase up to a maximum of 100% of the underlying shares. No additional payouts for performance beyond 100% of target. +• If performance conditions are met, awards vest based on continued employment in three equal installments over three years commencing August 15, 2019. +• When determining Company achievement relative to the performance target, the Committee relied upon our fiscal year 2019 audited financial statements. +• Achievement below threshold level results in no vesting. +• The EPS threshold level for fiscal year 2019 was $5.89; the target level was $6.54. +• Fiscal year adjusted 2019 EPS was $8.61 (1) . +• Since the fiscal year 2019 EPS threshold level was achieved above the target level based on strong Company performance, the awards were earned as to 100% of the underlying shares. +• The value of these awards increases over time as the value of our stock price increases. +(1) +Consistent with the terms of the 2015 Plan pursuant to which the 2019 Annual PSUs were granted, and in line with our historical practice, the Committee adjusted our fiscal year 2019 financial results for certain non-recurring items when determining Company achievement relative to the EPS performance target. For fiscal year 2019, this adjustment resulted in the exclusion of certain shares of our common stock that were repurchased by us. The Committee determined this adjustment was appropriate because these share repurchases were not (i) related to our core operating results, or (ii) indicative of the performance of our ongoing business operations. The fiscal year 2019 EPS was achieved above the target level. +Calculation of Payout of 2019 Annual PSUs +The amount of shares underlying the 2019 Annual PSUs actually earned by each NEO is set forth in the table below, which reflects 100% of the granted amounts: +NAME +NUMBER OF SHARES EARNED +Dave Powers +5,055 +Steven J. Fasching +1,011 +David E. Lafitte +1,518 +Stefano Caroti +1,389 +Andrea O'Donnell +1,095 +42 +Table of Contents +2019 Time-Based Restricted Stock Units +The following table provides information regarding the 2019 Time-Based RSUs granted to our NEOs during fiscal year 2019: +2019 TIME-BASED RSUs +At-Risk ● Time-Based (Long-Term) +20% of Equity Compensation +Philosophy +Considerations +Performance Criteria/ Vesting Provisions +2019 Grants +Attract and Retain Executives : +• Promote retention of our executives because awards vest over three-year long-term service period. +Align Interests with Stockholders : +• Align the interests of executives with those of stockholders by issuing equity awards the value of which is correlated to our stock price. +• Balance the level of performance-based pay with time-based pay to properly manage our compensation-related risk. +• Primarily used for retention of our executives. +• Customary among our Peer Group. +• Awards vest based on continued employment in three equal installments over three years commencing August 15, 2019. +• Each of our NEOs (other than Mr. George) were granted 2019 Time-Based RSUs in an amount equal to 20% of their total equity compensation for fiscal year 2019. +• The value of these awards increases over time as the value of our stock price increases. +43 +Table of Contents +2019 Long-Term Incentive Plan Performance Stock Units +The following table provides information regarding the 2019 LTIP PSUs granted to our NEOs during fiscal year 2019: +2019 LTIP PSUs +At-Risk ● Performance-Based (Long-Term) +60% of Equity Compensation +Philosophy +Considerations +Performance Conditions/ Vesting Provisions +2019 Pay for Performance +Align Interests with Stockholders : +• Align the interests of executives with those of our stockholders by focusing performance conditions on profitability and revenue and issuing awards that increase in value as our stock price increases. +• Ensure that compensation is tied to total stockholder return. +Pay-for-Performance : +• Vesting of awards dependent on achievement of profitability and revenue targets, which are consistent with achievement of our strategic objectives. +Reward Achievement : +• Offer incentives for achieving long-term three year Company financial goals. +Attract and Retain Executives : +• Promote retention of our executives because PSUs vest based on performance targets to be achieved in the future. +• Company performance condition is based on Committee-approved metrics derived from our long-range business and strategic plan. +• Pre-tax income and revenue support our focus on profitability and revenue as key strategic initiatives and align executives’ interests with the execution of our long-range plan. +• 50% of each award will vest subject to the achievement of a pre-established pre-tax income target measured in fiscal year 2020, based on our three-year long range plan. +• 50% of each award will vest subject to the achievement of a pre-established revenue target measured in fiscal year 2020, based on our three-year long range plan. +• Consistent with our historical practice, we intend to disclose the performance targets, as well as our performance relative to those targets, following completion of the performance period. +• No vesting of any portion of the award will occur if the Company fails to achieve revenue and pre-tax income thresholds. To the extent Company financial performance is achieved above the threshold, the number of PSUs that will vest from the threshold to the target, and then from the target to the maximum, will increase as determined by linear interpolation. +• To the extent Company performance is achieved above the threshold level for each of the performance metrics (pre-tax income and revenue), the number of PSUs that will vest will be increased, provided that the maximum number of PSUs that may vest with respect to a particular award will not exceed 200% of the targeted amount for that award regardless of the level of Company performance. +• The executive must provide continued service through March 31, 2020. +• Following a determination that the performance metrics have been achieved, the vesting of the awards will be subject to adjustment based upon the application of a TSR modifier. +• When determining Company achievement relative to the performance target, the Committee will rely upon our fiscal year 2020 audited financial statements, as may be adjusted by the Committee for certain non-recurring items. +• We believe it is probable that the performance condition for the 2019 LTIP PSUs will be achieved, and therefore we currently expect these awards will vest. +• As further described below, the number of shares that are subject to vesting under the awards will be further adjusted based on the total stockholder return (TSR) generated by our Company relative to our peer group to ensure we take into account our performance on both an absolute and relative basis. +44 +Table of Contents +TSR Modifier +The 2019 LTIP PSU awards earned are subject to adjustment based on a TSR modifier. The amount of the adjustment will be determined based upon a comparison of Company TSR relative to the TSR of a pre-determined set of peer group companies, or TSR Peer Group, for the 36-month performance period commencing on April 1, 2018 and ending on March 31, 2021. For purposes of the 2019 LTIP PSUs, the TSR Peer Group used is different than the Peer Group the Committee used for executive compensation benchmarking purposes. Depending on Company TSR relative to the TSR of the TSR Peer Group, the number of RSUs that will be subject to vesting pursuant to each 2019 LTIP PSU will be modified as follows with straight line interpolation between the percentiles: +Company TSR Relative to Peer Group TSR (Percentile) +TSR Modifier +(Multiplier) +≥75th +125% +55th +100% +(no modification) +≤25th +75% +Notwithstanding the foregoing, in the event that Company TSR is greater than or equal to the 55th percentile relative to the TSR of the TSR Peer Group , but Company TSR is a negative amount, the TSR modifier will not be applied (the number of RSUs to be vested will not be increased as a result of the TSR multiplier). In addition, regardless of Company TSR relative to the TSR of the TSR Peer Group, the maximum number of RSUs that may vest pursuant to a particular 2019 LTIP PSU will not exceed 200% of the targeted amount. +Employee Benefits +The following table provides information regarding the key employee benefits granted or paid to our NEOs during fiscal year 2019: +Philosophy +Considerations +Benefits +Attract and Retain Executives : +• Provide our NEOs with competitive broad-based employee benefits structured to attract and retain key executives. +• Generally reflect benefits provided to all of our US-based full-time employees. +• Provides a standard package of benefits necessary to attract and retain executives. +• 401(k) defined contribution plan. +• 401(k) plan Company match of 50% of each eligible participant's tax-deferred contributions on up to 6% of eligible compensation on a per payroll period basis, with a true-up contribution if such eligible participant is employed by our Company on the 1st day of the calendar year. +• Premiums for long-term disability insurance and life insurance for the benefit of the employees. +• Health and welfare benefit plans. +• Relocation expenses for new hires. +• Standard employee product discounts. +• NEOs and certain other senior executives are eligible to contribute to our Nonqualified Deferred Compensation Plan, or NQDC Plan, and our Company may choose to match any or all such contributions. The NQDC Plan is described in further detail in the section of this Proxy Statement titled " Nonqualified Deferred Compensation. " +45 +Table of Contents +Severance and Change of Control +The following table provides information regarding the severance and change of control provisions in our severance agreements and equity award agreements entered into with each of our NEOs: +Severance and Change of Control Provisions +Philosophy +Considerations +Terms +Attract and Retain Executives : +• Retain and encourage our NEOs to remain focused on our business and the interests of our stockholders when considering strategic alternatives. +• Intended to ease an NEO's transition due to an unexpected employment termination. +• The employment of our NEOs is "at will," meaning we can terminate them at any time and they can terminate their employment with us at any time. +• "Double-trigger" provisions preserve morale and productivity and encourage executive retention in the face of the potentially disruptive impact of a change of control. +• These provisions are considered a typical component of a competitive executive compensation program for executives among our Peer Group. +• The provisions take into account the expected time it takes a separated executive to find a similarly situated job. +Change of Control and Severance Agreements : +• Provide for certain cash payments, and the vesting of certain equity awards, in the event there is a separation of employment under various circumstances. +Equity Award Agreements : +• Provide for accelerated vesting of awards upon a change of control if the recipient is terminated by the acquiring entity in connection with the change of control under specified circumstances. In addition, vesting of awards will be accelerated in full if the acquiring entity does not agree to provide for the assumption or substitution of the awards, and for certain outstanding historical awards if the transaction is not approved by a majority of the continuing directors. +For additional information about the severance and change of control provisions in our severance agreements and equity award agreements, please refer to the section of this Proxy Statement titled " Potential Payments upon Termination or Change of Control. " +46 +Table of Contents +OTHER COMPENSATION CONSIDERATIONS +Role of Executive Officers in Compensation Decisions +At the request of the Committee, our Chief Executive Officer or other senior management personnel may provide performance and compensation information to the Committee to inform its compensation decisions. However, our executives are not permitted to be present during any deliberations and voting regarding their own compensation, or during any executive sessions of the Committee. The Committee considers the information provided by our management, as well as information and advice provided by FWC, when making compensation decisions for our NEOs and other executives. The Committee, which is comprised solely of independent directors under applicable SEC and NYSE rules, thoroughly evaluates and approves all elements of compensation for our NEOs and other executives. +Compensation Risk Considerations +The Committee is responsible for reviewing the rewards that may be derived from our compensation program for all employees, including our NEOs, to assess whether the program encourages excessive or unnecessary risk-taking. The Committee conducts a thorough compensation risk analysis at least annually, but also takes into account compensation-related risks each time it grants compensation awards throughout the fiscal year. In conducting these assessments, the Committee considers a number of factors including the following: +• +Our compensation program consists of both fixed pay and at-risk pay, and the Committee reviews this mix annually. +• +Our Peer Group and industry compensation data is reviewed regularly to ensure that our compensation program is appropriate and competitive. +• +We have adopted a median pay philosophy whereby we remain focused on setting our executives’ target total compensation at the median compared to our Peer Group. +• +Performance-based awards are earned based on the achievement of distinct Company and business unit performance goals over multiple time periods. Separately, we seek to limit overlap between our applicable performance conditions to ensure our compensation program is encouraging healthy and sustained growth across our business. +• +Our performance-based awards are subject to maximum award amounts to cap the potential compensation amount associated with an award. +• +Our executive compensation program encourages executive retention through long-term vesting provisions. For fiscal year 2019, all of the equity awards we granted were subject to three-year long-term vesting. +• +We have adopted stock ownership guidelines, which encourage executives to have a significant, long-term equity position in our Company. +• +Our performance-based awards are subject to clawback provisions. +• +Our insider trading policy prohibits our NEOs and other executive officers from hedging the economic interest in our securities, and from pledging our securities. +• +Our severance and change of control benefits are designed to attract and retain executives without providing excessive benefits. +• +Our equity awards are intended to provide for “double-trigger” vesting upon a change of control. We adopted changes to our equity award agreements in fiscal year 2018 to ensure our awards continue to be viewed as “double-trigger” awards. +The Committee believes that, although the majority of the compensation opportunity provided to our executives is at-risk pay that is determined based upon the achievement of Company performance conditions, our executive compensation program does not encourage excessive or unnecessary risk-taking. The Committee does not believe that our compensation program is reasonably likely to have a material adverse effect on us. +CEO Pay Ratio +Pursuant to Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of Regulation S-K, we are required to disclose the ratio of the annual total compensation of our principal executive officer to the median of the annual total compensation of all of our employees (excluding our principal executive officer), or our median employee. During fiscal year 2019, our principal executive officer was Dave Powers, our President and Chief Executive Officer. +47 +Table of Contents +For fiscal year 2019, the annual total compensation of our median employee was $37,799. The annual total compensation of our President and Chief Executive Officer was $6,466,472, as reported in the Summary Compensation Table below. +Based on this information, the fiscal year 2019 ratio of the annual total compensation of our principal executive officer to the annual total compensation of our median employee was approximately 171:1. +Consistent with Item 402(u) of Regulation S-K, we identified our median employee as of March 1, 2019 by (i) aggregating for each applicable employee (A) annual base salary for salaried employees (or hourly rate multiplied by estimated work schedule, for hourly, temporary and seasonal employees), (B) overtime paid during the year, and (C) target incentive compensation, and (ii) ranking this compensation measure for our employees from lowest to highest. For non-U.S. employees, we converted such employees’ pay to a U.S. dollar equivalent by applying an 11-month average trailing exchange rate for each applicable currency. This calculation was performed for all of our employees, excluding Mr. Powers, except as described below. After identifying our median employee as described above, we calculated that individual’s 2019 total annual compensation in accordance with the requirements of the applicable SEC rules. +Individuals (with corresponding number of employees, representing all employees in that jurisdiction) who were employed in Canada (109), Vietnam (50) and Austria (13) were excluded from the employee population for purposes of this disclosure, pursuant to the de minimis exemption set forth in the applicable SEC rules. For fiscal year 2019 we did not exclude employees who were employed in Belgium because the exclusion of such employees, in addition to those identified above, would exceed the 5% threshold permitted by the de minimis exemption. We determined that this change did not materially impact the identification of the median employee. After taking into consideration the foregoing exemption, on March 1, 2019, we had 1,982 U.S. employees and 1,323 non-U.S. employees. Irrespective of the use of the exemption on the same date we had 1,982 U.S. employees and 1,495 non-U.S. employees. +The pay ratio we have reported above is a reasonable estimate calculated in a manner consistent with applicable SEC rules based on our internal records and the methodology described above. The SEC rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices. Therefore, the pay ratio reported by other companies may not be comparable to the pay ratio we have reported above. +Clawback Policy +Consistent with our executive compensation philosophy, which seeks to reward executive officers for financial performance that creates value for our stockholders, we have adopted a Clawback Policy. Under this policy, we will seek reimbursement with respect to performance-based compensation paid or awarded to our executive officers when the following three factors exist: +• +the incentive compensation payment or award (or the vesting of such award) was based upon the achievement of financial results, as reported in a Form 10-Q, Form 10-K or other report filed with the SEC, that were subsequently the subject of a restatement to correct an accounting error due to material noncompliance with any financial reporting requirement under the federal securities laws; +• +a lower payment or award would have been made to such executive officer (or lesser or no vesting would have occurred with respect to such award) based upon the restated financial results; and +• +the need for the restatement was identified within three years after the date of the first public issuance or filing of the financial results that were subsequently restated. +The reimbursement to be sought by our Company will be equal to the portion of any performance-based compensation paid to or received by such executive officer for or during each of the restated periods that is greater than the amount that would have been paid or received had the financial results been properly reported. +Stock Ownership Guidelines +To further align the interests of our directors and executive officers with those of our stockholders, we have adopted Stock Ownership Guidelines. The Committee periodically reviews our Stock Ownership Guidelines to ensure it continues to evolve to take into account changes to our executive compensation program. +The minimum ownership thresholds for our NEOs are determined as a multiple of the NEO's base salary as of the beginning of each calendar year. Absent extraordinary circumstances (e.g., unusual volatility in stock price) it is expected that our NEOs will strive to achieve the applicable level of ownership , subject to exceptions that may be granted by the Committee. Unless and until an NEO reaches the required ownership level, the NEO must retain at least 75% of the shares, after payment of any applicable exercise price and tax withholdings, and 75% of any exercisable options that are granted or acquired through our equity compensation program. +48 +Table of Contents +Our directors are required to adhere to the stock ownership guidelines that are referenced in our Corporate Governance Guidelines. The minimum ownership threshold (including deferred shares) for our directors is determined as a multiple of the annual retainer fee and must be achieved within five years of the initial election of the director. +The following table provides a summary of the Stock Ownership Guidelines applicable to our NEOs and directors: +POSITION +STOCK OWNERSHIP GUIDELINES +Chief Executive Officer +6x Annual Base Salary +Other NEOs +3x Annual Base Salary +Directors +5x Annual Board Retainer Fee +Tax and Accounting Considerations +Among the factors it considers when making executive compensation decisions, the Committee considers the anticipated tax and accounting impact to us (and to our executive officers) of various payments, equity awards and other benefits. +The Committee considers the impact of the provisions of Section 162(m) of the Internal Revenue Code, or the Code, as amended by the Tax Cuts and Jobs Act, or TCJA. That section generally limits the deductibility of compensation paid by a publicly-held company to “covered employees” for a taxable year to $1.0 million. Effective for taxable years beginning on and after January 1, 2018, “covered employees” generally include our Chief Executive Officer, Chief Financial Officer and other highly compensated executive officers. Effective for taxable years beginning prior to January 1, 2018, an exception to this deduction limit applied to “performance-based compensation,” such as cash incentive and stock option awards, that satisfied certain criteria. This exception to the Section 162(m) deduction limit for “performance-based compensation” was repealed by the TCJA. Thus, except for certain “performance-based compensation” payable pursuant to written contracts that were in effect on November 2, 2017 and that are not modified in any material respect on or after that date, effective for taxable years beginning on and after January 1, 2018 our tax deduction with regard to compensation of “covered employees” is limited to $1.0 million per taxable year with respect to each executive officer. With respect to cash and equity awards that were in effect on November 2, 2017, and that are not modified in any material respect on or after that date, the Committee is mindful of the benefit to us and our stockholders of the full deductibility of compensation and have taken steps so that both the cash incentive and stock option awards that we granted may qualify for deductibility under Section 162(m) of the Code. However, awards that we granted that were intended to qualify as “performance-based compensation” may not necessarily qualify for such status under Section 162(m) of the Code. With respect to cash incentive and equity awards that we may grant in the future, we do not anticipate that the $1.0 million deduction limitation set forth in Section 162(m) of the Code will have a material impact on our results of operations. +The Committee also considers the impact of Section 409A of the Code, and in general, our executive plans and programs are designed to comply with the requirements of that section so as to avoid possible adverse tax consequences that may result from noncompliance. +We account for equity awards in accordance with the requirements of Financial Accounting Standards Board Accounting Standards Codification, or FASB ASC, Topic 718, Stock Compensation. +Our Change of Control and Severance Agreements do not allow for excise tax gross up payments. +49 +Table of Contents +REPORT OF THE COMPENSATION COMMITTEE +The Compensation Committee of our Company has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussion, the Compensation Committee has recommended to our Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement. +THE COMPENSATION COMMITTEE +Lauri M. Shanahan ( Chair ) +Michael F. Devine, III +William L. McComb +Bonita C. Stewart +The Report of the Compensation Committee shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as amended, or the Acts, except to the extent that our Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under the Acts. +50 +Table of Contents +SUMMARY COMPENSATION TABLE +The following table sets forth all compensation paid or awarded to our NEOs during fiscal years 2019, 2018 and 2017. The amounts set forth in the table have been calculated in accordance with the requirements of applicable SEC rules, and do not necessarily reflect the amounts that have actually been paid to, or which may be realized by, our NEOs. The table should be read together with the section of this Proxy Statement titled “Compensation Discussion and Analysis.” +Name and Principal Position +Year +Salary +($) +Bonus +($) +Stock +Awards +($) (1)(2) +Option +Awards +($) (1) +Non-Equity Incentive +Plan +Comp. +($) (3) +All Other +Comp. +($) (4) +Total +($) +Dave Powers +Chief Executive Officer +2019 +987,534 +— +2,999,747 +— +2,468,836 +10,355 +6,466,472 +2018 +950,000 +— +1,199,964 +1,800,007 +2,108,397 +11,129 +6,069,497 +2017 +901,923 +— +1,200,043 +1,788,698 +— +10,325 +3,900,989 +Steven J. Fasching (5) +Chief Financial Officer +2019 +408,493 +— +649,989 +— +561,918 +18,857 +1,639,257 +Thomas A. George (6) +Former Chief Financial Officer +2019 +190,192 +— +— +— +125,240 +382,363 (7) +697,795 +2018 +575,000 +— +339,937 +510,011 +765,681 +23,108 +2,213,737 +2017 +567,308 +— +339,953 +506,801 +— +22,592 +1,436,654 +David Lafitte +Chief Operating Officer +2019 +642,521 +— +900,280 +— +963,781 +10,778 +2,517,360 +2018 +620,000 +— +360,031 +539,997 +825,604 +10,032 +2,355,664 +2017 +613,846 +— +360,024 +536,617 +— +20,371 +1,530,858 +Stefano Caroti +President of Omni-Channel +2019 +565,014 +— +824,693 +— +703,498 +57,650 (8) +2,150,855 +2018 +550,000 +— +329,959 +494,993 +656,204 +76,332 +2,107,488 +2017 +534,615 +— +730,027 +491,906 +— +31,538 +1,788,086 +Andrea O'Donnell (9) +President of Fashion Lifestyle +2019 +511,260 +— +649,946 +— +567,471 +10,251 +1,738,928 +2018 +500,000 +— +249,998 +374,999 +558,436 +27,655 +1,711,088 +2017 +451,923 +250,000 +799,991 +372,640 +— +185,326 +2,059,880 +(1) +The amounts in this column represent the aggregate grant date fair value of the respective awards computed in accordance with FASB ASC Topic 718. For information about the assumptions underlying these computations, please refer to Note 8 to our consolidated financial statements included in our Annual Report on Form 10-K. In accordance with applicable SEC rules, for those awards that are subject to the satisfaction of performance conditions, the amounts reported reflect the value at the grant date based upon the probable outcome of such conditions. +(2) +Amounts with respect to fiscal year 2019 reflect grants made to our NEOs of 2019 Annual PSUs, 2019 Time-Based RSUs and 2019 LTIP PSUs. Refer to the sections of this Proxy Statement titled " 2019 Annual Performance Stock Units, ” “ 2019 Time-Based Restricted Stock Units ” and " 2019 Long-Term Incentive Plan Performance Stock Units " for additional information. +(3) +These amounts reflect the cash incentive payments made to our NEOs under our 2019 Annual Cash Incentive Awards. Refer to the section of this Proxy Statement titled " 2019 Annual Cash Incentive Awards ” for additional information. +(4) +Except as otherwise specifically noted in the footnotes below, the amounts in this column reflect payments to certain NEOs of our matching contributions under the 401(k) plan and NQDC Plan, as well as life insurance premiums paid on policies that have been adopted for the benefit of our NEOs. +(5) +Mr. Fasching was appointed Chief Financial Officer in July 2018, and initially became an NEO in fiscal year 2019. +51 +Table of Contents +(6) +Mr. George stepped down as Chief Financial Officer effective July 2018. +(7) +In addition to certain payments referred to in footnote 4 above, we paid Mr. George severance payments in the amount of $375,961 in fiscal year 2019. +(8) +In addition to certain payments referred to in footnote 4 above, we paid Mr. Caroti relocation expenses in the amount of $16,355 in fiscal year 2019. +(9) +Ms. O'Donnell joined us in April 2016 as President of Fashion Lifestyle, and initially became an NEO commencing in fiscal year 2017. +52 +Table of Contents +GRANTS OF PLAN-BASED AWARDS IN +FISCAL YEAR 2019 +The following table sets forth all grants of plan-based awards made to our NEOs during fiscal year 2019. The amounts set forth in the table do not necessarily reflect the amounts that have actually been paid to, or which may be realized by, our NEOs. The table should be read together with the section of this Proxy Statement titled “ Elements of Fiscal Year 2019 Executive Compensation Program. ” +Potential Payouts as of Grant Date Under Non-Equity Incentive Plan Awards (1) +Potential Payouts as of Grant Date Under Equity Incentive Plan Awards +All Other Stock Awards: Number of Shares (#) (4) +All Other Option Awards: Number of Shares Underlying Options +(#) +Exercise Price of Option Awards ($/Sh) +Grant Date +Fair Value +of Awards +($) (5) +Name +Grant Date +Threshold +($) +Target +($) +Max. +($) +Threshold +(#) +Target +(#) +Max. +(#) +Dave Powers +617,209 +1,234,418 +2,468,836 +— +— +— +— +— +— +— +6/26/18 +— +— +— +2,528 (2) +5,055 (2) +5,055 (2) +— +— +— +599,877 +6/26/18 +— +— +— +— +— +— +5,055 +— +— +599,877 +9/19/18 +— +— +— +7,485 (3) +14,970 (3) +29,940 (3) +— +— +— +1,799,993 +Steven J. Fasching +140,480 +280,959 +561,918 +— +— +— +— +— +— +— +6/26/18 +— +— +— +506 (2) +1,011 (2) +1,011 (2) +— +— +— +119,975 +6/26/18 +— +— +— +— +— +— +1,011 +— +— +119,975 +9/19/18 +— +— +— +1,497 (3) +2,994 (3) +5,988 (3) +— +— +— +359,999 +1/7/19 +— +— +— +— +— +— +400 +— +— +50,040 +David E. Lafitte +240,945 +481,890 +963,781 +— +— +— +— +— +— +— +6/26/18 +— +— +— +759 (2) +1,518 (2) +1,518 (2) +— +— +— +180,141 +6/26/18 +— +— +— +— +— +— +1,518 +— +— +180,141 +9/19/18 +— +— +— +2,246 (3) +4,491 (3) +8,982 (3) +— +— +— +539,998 +Stefano Caroti +211,880 +423,760 +847,520 +— +— +— +— +— +— +— +6/26/18 +— +— +— +695 (2) +1,389 (2) +1,389 (2) +— +— +— +164,833 +6/26/18 +— +— +— +— +— +— +1,389 +— +— +164,833 +9/19/18 +— +— +— +2,059 (3) +4,117 (3) +8,234 (3) +— +— +— +495,028 +Andrea O'Donnell +191,723 +383,445 +766,890 +— +— +— +— +— +— +— +6/26/18 +— +— +— +548 (2) +1,095 (2) +1,095 (2) +— +— +— +129,944 +6/26/18 +— +— +— +— +— +— +1,095 +— +— +129,944 +9/19/18 +— +— +— +1,622 (3) +3,244 (3) +6,488 (3) +— +— +— +390,059 +(1) +The amounts in this column reflect the potential payouts under the 2019 Annual Cash Incentive Awards as of the grant date of such awards. Each of the performance conditions was achieved above the target level for all NEOs and at the maximum level for certain NEOs in fiscal year 2019. Cash incentive payments were made in July 2019. Refer to the section of this Proxy Statement titled " 2019 Annual Cash Incentive Awards " for additional information. +(2) +These awards reflect the grant of 2019 Annual PSUs. The performance condition was achieved above the target level in fiscal year 2019 and the awards were earned with respect to 100% of the underlying shares. Following achievement of the performance condition, these awards will vest over three years in equal annual installments on August 15, 2019, 2020 and 2021. Refer to the section of this Proxy Statement titled " 2019 Annual Performance Stock Units " for additional information. +(3) +These awards reflect the grant of 2019 LTIP PSUs. These awards may vest based upon our achievement of a performance target for fiscal year 2021. As of the date of this Proxy Statement, we believe it is probable that the performance condition for the 2019 LTIP PSUs will be achieved, and therefore we currently expect these awards will vest as to up to 200% of the underlying shares. Refer to the section of this Proxy Statement titled " 2019 Long-Term Incentive Plan Performance Stock Units " for additional information. +(4) +The awards in this column reflect the grant of 2019 Time-Based RSUs. These awards vest over three years in equal annual installments on August 15, 2019, 2020 and 2021. Refer to the section of this Proxy Statement titled " 2019 Time-Based Restricted Stock Units " for additional information. +(5) +The amounts in this column represent the aggregate grant date fair value of the respective awards computed in accordance with FASB ASC Topic 718. For information about the assumptions underlying these computations, please refer to Note 8 to our consolidated financial statements included in our Annual Report on Form 10-K. In accordance with applicable SEC rules, for those awards that are subject to +53 +Table of Contents +the satisfaction of performance conditions, the amounts reported reflect the value at the grant date based upon the probable outcome of such conditions. +54 +Table of Contents +OUTSTANDING EQUITY AWARDS AT +2019 FISCAL YEAR END +The following table sets forth equity awards granted to our NEOs that remained outstanding as of March 31, 2019. The market values of the awards set forth in the table have been calculated in accordance with the requirements of applicable SEC rules, and do not necessarily reflect the amounts that have actually been paid to, or which may be realized by, our NEOs. The table should be read together with the section of this Proxy Statement titled “ Elements of Fiscal Year 2019 Executive Compensation Program. ” +Stock Options +Stock Awards +Name +Number of +securities +underlying +unexercised +options +exercisable +(#) +Number of +securities +underlying +unexercised +unearned +options +(#) +Option +exercise +price +($) +Option +expiration +date +Number of +shares that +have not +vested +(#) +Market +value of +shares that +have not +vested +($) (3) +Number of +unearned +shares that +have not +vested +(#) (4) +Market +value of +unearned +shares that +have not +vested +($) (5) +Dave Powers +68,089 (1) +— +61.86 +3/31/2026 +25,164 (7) +3,698,856 +14,970 +2,200,440 +— +71,914 (2) +69.29 +6/13/2024 +— +— +— +— +Steven J. Fasching +— +— +— +— +5,559 (8) +817,117 +2,994 +440,088 +Thomas A. George +19,292 (1) +— +61.86 +3/31/2026 +— +— +— +— +— +20,376 (2)(6) +69.29 +6/13/2024 +— +— +— +— +David E. Lafitte +20,427 (1) +— +61.86 +3/31/2026 +7,553 (9) +1,110,215 +4,491 +660,132 +— +21,574 (2) +69.29 +6/13/2024 +— +— +— +— +Stefano Caroti +18,725 (1) +— +61.86 +3/31/2026 +9,258 (10) +1,360,833 +4,117 +605,158 +— +19,776 (2) +69.29 +6/13/2024 +— +— +— +— +Andrea O'Donnell +14,185 (1) +— +61.86 +3/31/2026 +8,153 (11) +1,198,409 +3,244 +476,836 +— +14,982 (2) +69.29 +6/13/2024 +— +— +— +— +(1) +These awards reflect 2017 LTIP NQSOs that were granted in November 2016. Our Compensation Committee has determined that the performance condition was achieved, and the options are fully vested and exercisable. +(2) +These awards reflect 2018 LTIP NQSOs that were granted in June 2017. The options vest as to 100% of the underlying shares on March 31, 2020, subject to achievement of certain performance criteria. +(3) +In accordance with applicable SEC rules, the market value of the shares has been determined based on the closing price of our common stock on March 29, 2019, which was $146.99. +(4) +Each of the stock awards are 2019 LTIP PSUs that were granted in September 2018 which remain outstanding and subject to long-term performance and service conditions. The shares included in this column reflect the number of PSUs that will vest upon achievement of the performance conditions at the target level of 100%. However, the maximum number of PSUs that may vest with respect to a particular award is 200% of the targeted amount, and the PSUs will vest on March 31, 2021, subject to achievement of the performance conditions. +(5) +In accordance with applicable SEC rules, the market value of the shares has been determined based on the closing price of our common stock on March 29, 2019, which was $146.99. The market value of the 2019 LTIP PSUs was calculated as to 100% of the shares underlying the awards. +(6) +These NQSO awards were forfeited upon Mr. George's retirement as Chief Financial Officer in July 2018. +(7) +This amount consists of (i) 3,508 time-based RSUs granted in June 2016, which shares vest as to 100% on August 15, 2019, (ii) 5,773 annual PSUs granted in June 2017, which shares vest as to 50% on August 15, 2019 and 2020,(iii) 5,773 time-based RSUs granted in June 2017, which shares vest as to 50% on August 15, 2019 and 2020, (iv) 5,055 2019 Annual PSUs granted in June 2018, which shares vest as to 33.3% on August 15, 2019, 2020, and 2021, and (v) 5,055 2019 Time-Based RSUs granted in June 2018, which shares vest as to 33.3% on August 15, 2019, 2020, and 2021. +(8) +This amount consists of (i) 558 time-based RSUs granted in July 2016, which shares vest as to 100% on August 15, 2019, (ii) 365 time-based RSUs granted in August 2016, which shares vest as to 100% on August 15, 2019, (iii) 738 annual PSUs granted in June 2017, which shares vest as to 50% on August 15, 2019 and 2020, (iv) 1,476 time-based RSUs granted in June 2017, which shares vest as to 50% on August 15, 2019 and 2020, (v) 1,011 2019 Annual PSUs granted in June 2018, which shares vest as to 33.3% on August 15, 2019, 2020, and 2021, (vi) 1,011 2019 Time-Based RSUs granted in June 2018, which shares vest as to 33.3% on August 15, 2019, 2020, and 2021, and (vii) 400 2019 Time-Based RSUs granted in January 2019, which shares vest as to 33.3% on January 7, 2020, 2021, and 2022. +(9) +This amount consists of (i) 1,053 time-based RSUs granted in June 2016, which shares vest as to 100% on August 15, 2019 , (ii) 1,732 annual PSUs granted in June 2017, which shares vest as to 50% on August 15, 2019 and 2020, (iii) 1,732 time-based RSUs granted in June 2017, which shares vest as to 50% on August 15, 2019 and 2020 , (iv) 1,518 2019 Annual PSUs granted in June 2018, which shares +55 +Table of Contents +vest as to 33.3% on August 15, 2019, 2020, and 2021, and (v) 1,518 2019 Time-Based RSUs granted in June 2018, which shares vest as to 33.3% on August 15, 2019, 2020, and 2021. +(10) +This amount consists of (i) 3,304 time-based RSUs granted in June 2016, which shares vest as to 100% on August 15, 2019, (ii) 1,588 annual PSUs granted in June 2017, which shares vest as to 50% on August 15, 2019 and 2020, (iii) 1,588 time-based RSUs granted in June 2017, which shares vest as to 50% on August 15, 2019 and 2020, (iv) 1,389 2019 Annual PSUs granted in June 2018, which shares vest as to 33.3% on August 15, 2019, 2020, and 2021, and (v) 1,389 2019 Time-Based RSUs granted in June 2018, which shares vest as to 33.3% on August 15, 2019, 2020, and 2021. +(11) +This amount consists of (i) 2,095 time-based RSUs granted in June 2016, which shares vest as to 100% on June 15, 2019, (ii) 1,462 time-based RSUs granted in June 2016, which shares vest as to 100% on August 15, 2019, (iii) 1,203 annual PSUs granted in June 2017, which shares vest as to 50% on August 15, 2019 and 2020, (iv) 1,203 time-based RSUs granted in June 2017, which shares vest as to 50% on August 15, 2019 and 2020, (v) 1,095 2019 Annual PSUs granted in June 2018, which shares vest as to 33.3% on August 15, 2019, 2020, and 2021, and (vi) 1,095 2019 Time-Based RSUs granted in June 2018, which shares vest as to 33.3% on August 15, 2019, 2020, and 2021. +56 +Table of Contents +FISCAL YEAR 2019 OPTION EXERCISES AND STOCK VESTED +The following table provides information for our NEOs regarding option exercises and stock award vesting during fiscal year 2019, including the number of shares acquired upon exercise or vesting and the value realized as determined based on applicable SEC rules. The value realized does not necessarily reflect the amount that will actually be received by our NEOs upon the sale of the shares. +Option Awards +Stock Awards +Number of +Shares +Acquired on +Exercise +(#) +Value Realized on +Exercise +($) +Number of +Shares +Acquired on +Vesting +(#) (1) +Value Realized +on Vesting +($) (2) +Dave Powers +— +— +9,280 +1,100,979 +Steven J. Fasching +— +— +2,030 +240,839 +Thomas A. George (3) +— +— +2,628 +311,786 +David E. Lafitte +— +— +2,784 +330,294 +Stefano Caroti +— +— +6,399 +772,798 +Andrea O'Donnell +— +— +4,758 +564,845 +(1) +The total number of shares actually received by our NEOs, net of shares withheld for taxes, were as follows: 4,681 for Mr. Powers, 1,331 for Mr. Fasching, 1,706 for Mr. George, 1,405 for Mr. Lafitte, 3,816 for Mr. Caroti, and 2,972 for Ms. O'Donnell. +(2) +Pursuant to applicable SEC rules, the amounts in this column reflect the value realized upon the vesting of the stock awards, which is based on the closing price of our common stock on the applicable vesting dates. +(3) +Mr. George stepped down as Chief Financial Officer in July 2018. +57 +Table of Contents +NONQUALIFIED DEFERRED COMPENSATION +Nonqualified Deferred Compensation Plan +The Committee has adopted the NQDC Plan, which is an unfunded, nonqualified deferred compensation program sponsored by our Company to provide certain members of our management the opportunity to defer compensation into the NQDC Plan. The NQDC Plan year is from January 1 st to December 31 st . Participants may defer up to 50% of their annual base salary and up to 85% of any cash incentive bonus under the NQDC Plan. We have the option, but not the obligation, to make discretionary or matching cash contributions to NQDC Plan participants. We have established a rabbi trust as a reserve for the benefits payable under the NQDC Plan. During fiscal year 2019, certain of our NEOs elected to make contributions to the NQDC Plan, and the Committee elected to match a portion of the contributions under the NQDC Plan. +Name +Executive contributions during fiscal year 2019 ($) (1) +Registrant contributions during fiscal year 2019 ($) (2) +Aggregate earnings during fiscal year 2019 ($) +Aggregate withdrawals/distributions during fiscal year 2019 ($) +Aggregate balance at end of fiscal year 2019 ($) +Dave Powers +— +— +3,801 +— +35,809 +Steven J. Fasching +— +— +— +— +— +Thomas A. George (3) +270,279 +(20,242 +) +10,574 +(503,713 +) +216,114 +David Lafitte +— +— +12,551 +— +185,142 +Stefano Caroti +217,856 +28,236 +31,748 +— +714,721 +Andrea O'Donnell +— +— +— +— +— +Total +488,135 +7,994 +58,674 +(503,713 +) +1,151,786 +(1) +The amounts reported in this column reflect contributions made by our NEOs under the NQDC Plan during fiscal year 2019. These amounts are separately included in the " Summary Compensation Table " above, and do not reflect amounts in addition to those amounts. +(2) +The amounts reported in this column reflect contributions made by us to our NEOs under the NQDC Plan during fiscal year 2019. These amounts are separately included in the " Summary Compensation Table " above, and do not reflect amounts in addition to those amounts. +(3) +Mr. George stepped down from his position as Chief Financial Officer in July 2018. +Deferred Stock Unit Compensation Plan +The Committee has also adopted a Deferred Stock Unit Compensation Plan. Under the plan, a director or employee who holds unvested RSUs may elect to defer settlement of up to 100% of the awards. For each unit of our common stock held pursuant to an award of RSUs that is deferred, the participant will receive one Deferred Stock Unit. Amounts deferred will be distributed, as described in the plan, at the time elected by the participant. A participant’s Deferred Stock Units will be settled in shares of our common stock, as more specifically described in the plan. None of our NEOs elected to participate in the plan during fiscal year 2019. +58 +Table of Contents +POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL +Change of Control and Severance Agreements +We have entered into Change of Control and Severance Agreements, or Severance Agreements, with each of our NEOs. The information below describes compensation and benefits that are payable or earned under the Severance Agreements with our NEOs (which are each referred to therein as an “executive”) upon the occurrence of different termination events: +Termination by our Company for Cause, or by Executive other than for Good Reason +Pursuant to the Severance Agreements with each of our NEOs, if the executive is terminated by our Company for Cause, or the executive terminates his or her employment, other than for Good Reason, then the NEO will receive the following from our Company: +• +payment of his or her accrued base salary, accrued vacation, reimbursement for reimbursable expenses, accrued and vested benefits under our plans or programs and other benefits required to be paid by law, accrued but unpaid non-equity incentive bonus for the prior fiscal year (excluding any non-equity incentive bonus for the year of termination); and +• +right to exercise all vested equity awards pursuant to the terms of the applicable award agreement. +Termination due to Death or Total Disability +Pursuant to the Severance Agreements with each of our NEOs, if the executive is terminated due to his or her death or Total Disability, then in addition to those benefits provided upon a termination by our Company for Cause or by Executive other than for Good Reason, the NEO will receive: +• +pro-rated portion of his or her non-equity incentive bonus for the current fiscal year based on actual length of service during the year of termination and actual achievement by our Company of the performance conditions in respect of such bonus previously established by the Committee. +Termination by our Company without Cause or by Executive for Good Reason +Pursuant to the Severance Agreements with each of our NEOs, if the executive is terminated by our Company without Cause or by Executive for Good Reason, then in addition to those benefits provided upon a termination due to death or Total Disability, the NEO will receive: +• +payment of his or her then effective annual base salary for one year following his or her termination, subject to such executive signing a release; and +• +receipt of health benefits for a period of one year following his or her termination or his or her attainment of alternative employment that provides health benefits, whichever is earlier. +Termination without Cause or by Executive for Good Reason within Two Years of a Change of Control +Pursuant to the Severance Agreements with each of our NEOs, if the executive is terminated by our Company without Cause or by the executive for Good Reason within two years of a Change of Control, then in addition to those benefits provided upon a termination due to Death or Total Disability, the NEO will receive: +• +subject to such executive signing a release, payment of a specified proportion of his or her then effective annual base salary plus the greater of (i) one and one-half times the targeted non-equity incentive bonus immediately prior to the termination or (ii) one and one-half times the average actual non-equity incentive bonus for the previous three years; and; +• +receipt of health benefits for a specified period of months following his or her termination or his or her attainment of alternative employment that provides health benefits, whichever is earlier. +For purposes of the Severance Agreements, “Cause” means (i) any willful breach of duty by the executive in the course of his or her employment or continued violation of written Company employment policies after written notice of such violation, (ii) violation of our insider trading policies, (iii) conviction of a felony or any crime involving fraud, theft, embezzlement, dishonesty or moral turpitude, (iv) engaging in activities which materially defame our Company, engaging in conduct which is materially injurious +59 +Table of Contents +to our Company or our affiliates, or any of our respective customer or supplier relationships, financially or otherwise, or (v) the executive’s gross negligence or continued failure to perform duties or executive’s continued incapacity to perform such duties. +“Good Reason” means without the consent of the executive (i) the occurrence of material breach of this agreement by our Company, or (ii) if within two years of a change of control, there is a material reduction of the executive’s total compensation, benefits, and perquisites, our Company's relocation is greater than 50 miles from the location where the executive performs services, or a material change in the executive’s position or duties; provided, however, no such event shall constitute Good Reason unless the executive shall have given written notice to our Company of the executive’s intent to resign for “Good Reason” within 30 days after the executive first becomes aware of the occurrence of any such event (specifying the nature and scope of the event) and such event or occurrence shall not have been cured within 30 days of our receipt of such notice. +“Change of Control” means the occurrence of a merger, consolidation, sale of all or a major portion of the assets of our Company (or a successor organization) or similar transaction or circumstance where any person or group acquires, in one or more transactions, beneficial ownership of more than 50% of the outstanding shares of any class of voting stock of our Company (or a successor organization). +No NEOs will be entitled to gross ups for excise tax penalty on “excess golden parachute payments” as a result of termination following a Change of Control. +A change in a majority of the members of our Board would not constitute a Change of Control under the Severance Agreements. +Equity Award Agreements +Pursuant to the “double-trigger” vesting provisions of the awards outstanding as of the end of fiscal year 2019 under the 2006 Equity Incentive Plan, or 2006 Plan, and 2015 Plan, except as specifically noted below, the vesting of each award will be accelerated in full in the event of a change of control that is approved by a majority of the Continuing Directors (as defined in the award agreements) if the acquiring or successor entity in the change of control provides for the continuance or assumption of the award agreement, or the substitution for the award agreement of a new agreement of comparable value covering shares of a successor corporation, and (i) the recipient is terminated by the acquiring company without Cause or pursuant to a Constructive Termination (as such terms are defined in the relevant award agreements) within either 12 or 24 months of such change of control; or (ii) only in the case of the 2017 LTIP NQSOs and 2018 LTIP NQSOs, the recipient has provided Continuous Service (as defined in the award agreements) through the applicable performance vesting date. +Notwithstanding the foregoing summary, the award agreements governing the grants of the 2019 Annual PSUs only provide for acceleration as described above to the extent that the Committee determines that at least the “threshold” performance conditions associated with the awards have been met unless the change of control occurs prior to the end of the relevant performance period, in which case the unvested PSUs will accelerate in full, regardless of achievement of the performance condition. +In addition, the vesting of each equity award will be accelerated in full if: (i) for certain of the outstanding historical awards, a change of control occurs that has not been approved by a majority of the Continuing Directors; or (ii) the acquiring or successor entity in the change of control does not agree to continue or assume the award agreement, or substitute new awards of comparable value. In the case of the 2019 Annual PSUs, if the change in control occurs after the relevant performance period, only the 2098 Annual PSUs earned based upon the achievement of the relevant performance condition, as determined by the Committee, will accelerate. +Severance and Change of Control Payments +The following table provides information about the payments and benefits that would have been paid or provided to our NEOs in the event that a termination of employment had occurred on March 31, 2019. The amounts reflected in the table are in addition to amounts that would have been payable for accrued but unpaid base salary, accrued paid time off, accrued but unpaid cash incentive compensation, and reimbursement of expenses. +The payments to be made, and the stock and option awards to be vested, in connection with different termination events (including in connection with a change of control) for each of our NEOs have been determined by reference to the terms of the applicable Severance Agreements and equity award agreements. Except as described above, no payments or benefits would be provided to our NEOs in the event of a termination of employment for Cause or by the executive without Good Reason (as defined in the applicable Severance Agreement). Refer to the section of this Proxy Statement titled “ Potential Payments upon Termination or Change of Control ” for additional information. +For purposes of the table, the value of the stock and option awards has been determined based on the closing price of our common stock on March 31, 2019. In the event of an actual change of control transaction, the value of our common stock may be significantly different than this assumed value, in which case the value realized by our NEOs upon the vesting of the stock and option awards may be significantly different. +60 +Table of Contents +Upon Termination +Name +Type of Compensation +or Benefit +Due to Death or +Total Disability +($) +By our Company +Without Cause +or by Executive +for Good Reason ($) +In Connection with a Change +of Control +($) +Dave Powers +Cash payments +— +1,000,000 +3,788,617 +Value of health benefits +— +19,096 +28,643 +Value of stock awards (1) +— +— +5,899,297 +Value of option awards (2) +— +— +6,379,892 +Total +— +1,019,096 +16,096,449 +Steven J. Fasching +Cash payments +— +500,000 +1,209,555 +Value of health benefits +— +22,539 +22,539 +Value of stock awards (1) +— +— +1,257,205 +Value of option awards (2) +— +— +— +Total +— +522,539 +2,489,299 +David E. Lafitte +Cash payments +— +650,000 +1,869,693 +Value of health benefits +— +19,096 +19,096 +Value of stock awards (1) +— +— +1,770,348 +Value of option awards (2) +— +— +1,913,950 +Total +— +669,096 +5,573,087 +Stefano Caroti +Cash payments +— +570,000 +1,534,851 +Value of health benefits +— +15,957 +15,957 +Value of stock awards (1) +— +— +1,965,991 +Value of option awards (2) +— +— +1,754,439 +Total +— +585,957 +5,271,238 +Andrea O'Donnell +Cash payments +— +515,000 +1,347,668 +Value of health benefits +— +19,096 +19,096 +Value of stock awards (1) +— +— +1,675,245 +Value of option awards (2) +— +— +1,329,137 +Total +— +534,096 +4,371,146 +(1) +The stock awards reflect all of the performance-based and time-based RSUs that remained outstanding as of March 31, 2019, including: (i) the 2017 time-based RSUs, (ii) the 2018 time-based RSUs, (iii) the 2018 performance-based RSUs, (iv) the 2019 Time-Based RSUs, (v) the 2019 Performance-Based RSUs, (vi) the 2019 LTIP PSUs, and (vii) certain additional time-based RSUs granted in fiscal years 2019 as discretionary or new-hire awards. +(2) +The option awards reflect the 2018 LTIP NQSOs. +Separation of Employment and Consulting Agreement with Thomas A. George +On July 16, 2018, or the Separation Date, Thomas A. George stepped down as our Chief Financial Officer. +In connection with his departure, we entered into a Consulting Agreement and General Release, or the Consulting Agreement, which replaces in full the Severance Agreement previously entered into with Mr. George. Under the Consulting Agreement, Mr. George agreed to provide consulting services to us from July 16, 2018 until March 31, 2019, or the Consulting Period, unless earlier terminated pursuant to the terms of the Consulting Agreement.. +Pursuant to the terms of the Consulting Agreement, we agreed to pay Mr. George (i) any base salary that had accrued but was not paid as of the Separation Date, (ii) for any accrued by unused vacation days as of the Separation Date, (iii) for expenses reasonably incurred in connection with his employment with us during the period prior to the Separation Date, (iv) any accrued and vested benefits required to be provided by the terms of any Company-sponsored benefit plans or any benefits required to be paid or provided under applicable law, (v) a pro-rated portion of the target amount of the cash incentive bonus payable with respect to the fiscal year ending March 31, 2019, in accordance with the executive compensation policies and programs in effect on the Separation Date, based on his actual length of service to our Company during the fiscal year, (vi) severance equal to 12 months of his base salary (in effect on the Separation Date), which will be mitigated on a dollar-for-dollar basis for income received by him +61 +Table of Contents +during the 12 months following the Separation Date (subject to certain exceptions as set forth in the Consulting Agreement), which payments will cease if Mr. George accepts employment or another professional relationship with any of our competitors or breaches a material term of the Consulting Agreement, and (vii) COBRA group health insurance premiums for Mr. George and his eligible dependents until the first anniversary of the Separation Date, unless sooner terminated in accordance with the terms of the Consulting Agreement. +In addition, any equity awards previously granted to Mr. George that were outstanding on the Separation Date, including any restricted stock unit awards or performance stock options, remain outstanding subject to and consistent with the terms of the 2015 Plan and the agreements granting such awards. During the Consulting Period, Mr. George continued to perform “Continuous Service” for purposes of the outstanding equity awards. +Mr. George’s receipt of these payments and other benefits is conditioned upon his continued compliance with the confidentiality, non-competition, non-solicitation, non-disparagement and other standard covenants set forth in the Consulting Agreement. In particular, Mr. George has agreed not to accept employment from, or engage in any professional relationship with, any of our competitors, or to otherwise engage in any business activity that is competitive with our Company, until the termination of the Consulting Agreement. +62 +Table of Contents +DIRECTOR COMPENSATION +For fiscal year 2019, directors who are not our employees, or our Nonemployee Directors, received an annual cash retainer fee of $65,000, plus an annual cash retainer of $15,000 for each Board committee assignment. Nonemployee Directors holding the following positions were entitled to receive additional annual cash retainer fees as follows: $160,000 for Chairman of our Board of Directors; $40,000 for Chair of the Audit Committee; $35,000 for Chair of the Compensation Committee; and $20,000 for Chair of the Corporate Governance Committee. All or any portion of the cash retainer fees paid to any of our Nonemployee Directors may, at the election of the director, be paid through the issuance of our common stock. +Each of our Nonemployee Directors is also entitled to receive common stock with a total value of approximately $125,000 for annual service on our Board. The shares are issued in equal quarterly installments with the number of shares being determined using the rolling average of the closing price of our common stock during the last 10 trading days leading up to, and including, the 15 th day of the last month of each quarterly period. Each of these shares is fully vested on the date of issuance. +Nonemployee Directors are reimbursed for any reasonable Board-related expenses. Nonemployee Directors also receive product discounts, which are generally available to our employees and, from time to time, may receive products without charge in order to help expand the directors’ knowledge of our products. +Director Compensation Table +The following table sets forth all compensation paid or awarded to our Nonemployee Directors during fiscal year 2019. The amounts set forth in the table have been calculated in accordance with applicable SEC rules, and do not necessarily reflect the amounts that have actually been paid to, or which may be realized by, our Nonemployee Directors. +Name +Fees +Earned +($) +Stock +Awards +($) (1) +Total +($) +John M. Gibbons +225,000 +121,463 +346,463 +Karyn O. Barsa (2) +23,750 +31,009 +54,759 +Nelson C. Chan +80,000 +121,463 +201,463 +Cynthia L. Davis (3) +66,667 +100,790 +167,457 +Michael F. Devine, III +135,000 +121,463 +256,463 +William L. McComb (4) +74,666 +113,146 +187,812 +John G. Perenchio (5) +7,917 +10,336 +18,253 +James E. Quinn +100,000 +121,463 +221,463 +Lauri M. Shanahan +115,000 +121,463 +236,463 +Brian A. Spaly (6) +66,667 +100,790 +167,457 +Bonita C. Stewart +92,500 +121,463 +213,963 +(1) +The amounts in this column represent the aggregate grant date fair value of the awards computed in accordance with FASB ASC Topic 718. +(2) +Ms. Barsa retired from the Board on June 4, 2018. +(3) +Ms. Davis was appointed to serve as a member of our Board effective as of June 5, 2018. +(4) +Mr. McComb was appointed to serve as a member of our Board effective as of April 25, 2018. Mr. McComb is not standing for reelection at the Annual Meeting. +(5) +Mr. Perenchio retired from the Board on April 25, 2018. +(6) +Mr. Spaly was appointed to serve as a member of our Board effective as of June 5, 2018. +Stock Ownership Guidelines +Our Board has adopted stock ownership guidelines applicable to our Nonemployee Directors. Nonemployee Directors are required to hold a number of shares of common stock with a value equal to five times the base annual cash retainer fee within five years of joining our Board, subject to exceptions that may be granted by the Compensation Committee. In addition, each director must hold shares of our common stock within one year of joining our Board. Any shares of common stock held by Nonemployee Directors through our Deferred Stock Unit Compensation Plan is counted as stock ownership for purposes of these guidelines. +63 +Table of Contents +EQUITY COMPENSATION PLAN INFORMATION +The following table sets forth information regarding shares of our common stock that were eligible for issuance under our equity compensation plans as of March 31, 2019. +Plan category +Number of securities +to be issued +upon exercise of +outstanding options or settlement of outstanding RSUs (1)(2) +Weighted-average +exercise price of +outstanding options (3) +Number of securities +remaining available +for future issuance (4) +Equity compensation plans approved by security holders +676,507 +$ +65.35 +1,435,765 +Equity compensation plans not approved by security holders +— +— +— +Total +676,507 +$ +65.35 +1,435,765 +(1) +This amount includes shares underlying all equity awards outstanding pursuant to the 2006 Plan and 2015 Plan as of March 31, 2019. For awards subject to performance-based vesting conditions, the amount reported reflects the number of shares to be issued if the relevant performance conditions are achieved. +(2) +There are no stock appreciation rights outstanding pursuant to the 2006 Plan and the 2015 Plan. In addition, there are no outstanding warrants to purchase shares of our common stock. +(3) +This amount reflects the weighted-average exercise price of the outstanding 2017 LTIP NQSOs and 2018 LTIP NQSOs, based on the closing price of our common stock on the respective grant dates. This amount does not take into account shares issuable upon the vesting of outstanding time-based and performance-based RSUs, which have no exercise price. +(4) +This amount reflects the shares reserved for issuance under the 2015 Plan less the number of shares reported in the first column. This amount is subject to increase depending on our achievement with respect to certain performance conditions as discussed in footnote 1 above, and will increase to reflect any shares that are forfeited or otherwise terminated under the 2015 Plan. +64 +Table of Contents +SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT +The following table sets forth, as of June 30, 2019 (except as specified in the footnotes following the table), certain information concerning the shares of our common stock beneficially owned by (i) each person who is an NEO, (ii) each director or director nominee, (iii) all executive officers and directors as a group (14 persons), and (iv) each person known to us to be the beneficial owner of more than 5% of our common stock. There were 28,964,657 shares of our common stock outstanding on June 30, 2019. +Name and Address of Beneficial Owner (1) +Amount and +Nature of Beneficial +Ownership (2)(3) +Percent +of Common Stock (3) +Named Executive Officers +Dave Powers +91,682 +* +Steven J. Fasching +7,456 +* +Thomas A. George +728 +* +David E. Lafitte +30,802 +* +Stefano Caroti +30,555 +* +Andrea O'Donnell +19,822 +* +Directors (4) +John M. Gibbons +27,912 (5) +* +Nelson C. Chan +7,666 +* +Cynthia L. Davis +1,010 +* +Michael F. Devine, III +14,841 +* +William L. McComb +__(6) +* +James E. Quinn +16,272 +* +Lauri M. Shanahan +7,239 (7) +* +Brian A. Spaly +2,010 +* +Bonita C. Stewart +13,297 +* +All Directors and Executive Officers as a Group (14 persons) +271,292 +0.9 +% +5% Stockholders +The Vanguard Group Inc. (8) +3,575,996 +12.3 +% +Blackrock, Inc. (9) +3,387,722 +11.7 +% +FMR LLC (10) +1,578,078 +5.4 +% +AQR Capital Management, LLC. (11) +1,511,385 +5.2 +% +Dimensional Fund Advisors LP (12) +1,494,780 +5.2 +% +* +Percentage of shares beneficially owned does not exceed 1.0% of our outstanding shares of common stock. +(1) +Unless otherwise noted, the address of each beneficial owner is 250 Coromar Drive, Goleta, California 93117. +(2) +Unless otherwise noted, we believe each individual or entity named has sole investment and voting power with respect to the shares of our common stock reported as beneficially owned by them, subject to community property laws, where applicable. +(3) +Pursuant to applicable SEC rules, shares not outstanding which are subject to options, warrants, rights or conversion privileges exercisable on or before the date that is 60 days after June 30, 2019 are deemed outstanding for the purpose of calculating the number and percentage owned by a person, but are not deemed outstanding for the purpose of calculating the number and percentage owned by any other person. +(4) +The reported amounts include shares held by certain directors through one or more family trusts over which shares the respective directors may have shared voting and/or investment power. +(5) +An additional 408 shares previously earned by this director have been deferred pursuant to an election made under our Deferred Stock Unit Compensation Plan. These deferred shares have been excluded from the table. +65 +Table of Contents +(6) +An additional 1,825 shares previously earned by this director have been deferred pursuant to an election made under our Deferred Stock Unit Compensation Plan. These deferred shares have been excluded from the table. +(7) +An additional 5,081 shares previously earned by this director have been deferred pursuant to an election made under our Deferred Stock Unit Compensation Plan. These deferred shares have been excluded from the table. +(8) +This information is based solely on Amendment No. 7 to Schedule 13G filed on February 11, 2019. This stockholder's business address is 100 Vanguard Boulevard, Malvern, PA 19355. This stockholder has sole voting power over 60,108 of such shares, shared voting power over 3,875 of such shares, sole dispositive power over 3,514,512 of such shares, and shared dispositive power over 61,484 of such shares. +(9) +This information is based solely on Amendment No. 11 to Schedule 13G filed on January 28, 2019. This stockholder's business address is 55 East 52nd Street, New York, NY 10055. This stockholder has sole voting power with respect to 3 , 316 , 898 of such shares and sole dispositive power over all 3,387,722 such shares. +(10) +This information is based solely on the Form 13F-HR filed on May 13, 2019. This stockholder’s business address is 245 Summer Street, Boston, MA 02210. +(11) +This information is based solely on the Schedule 13G filed on February 14, 2019. This stockholder's business address is Two Greenwich Plaza, Greenwich, CT 06830. This stockholder has shared voting power over 1,511,385 of such shares and shared dispositive power over all 1,511,385 shares. +(12) +This information is based solely on Amendment No. 2 to Schedule 13G filed on February 8, 2019. This stockholder’s business address is 6300 Bee Cave Road, Building One, Austin, TX 78746. This stockholder has sole voting power over 1,432,244 of such shares and sole dispositive power over 1,494,780 of such shares. +66 +Table of Contents +DELINQUENT SECTION 16(A) REPORTS +Section 16(a) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, requires our directors, executive officers and persons who beneficially own more than 10% of our common stock, which we collectively refer to as Section 16 Persons, to file initial reports of ownership and reports of changes in ownership of our common stock with the SEC, as well as to provide copies of those reports to us. +To our knowledge, based solely on a review of the copies of such reports furnished to us by each Section 16 Person, and written representations by each Section 16 Person that no additional reports were required to be filed with respect to fiscal year 2019, all Section 16 filing requirements applicable to the Section 16 Persons were complied with. +67 +Table of Contents +REPORT OF THE AUDIT COMMITTEE +The Audit Committee of our Board of Directors is responsible for providing independent, objective oversight of, among other things, our financial reporting functions, our independent registered public accounting firm, our highest ranking manager of internal audit, our system of internal controls, our legal and regulatory compliance, and compliance with our related person transaction policy and Code of Ethics. The Audit Committee is currently composed of three directors, each of whom meets the independence and experience requirements under applicable NYSE rules, as well as the independence requirements applicable to Audit Committee members under applicable SEC rules. In addition, our Board of Directors has determined that the Chair of the Audit Committee qualifies as an “audit committee financial expert” under applicable SEC rules. +Management is responsible for the preparation of our financial statements and financial reporting process, including our system of internal controls. KPMG LLP, our independent registered public accounting firm, is responsible for performing an independent audit of our consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States), or the PCAOB, and expressing (i) an opinion on whether our consolidated financial statements present fairly, in all material respects, our financial position and results of operations and cash flows for the periods presented in conformity with US generally accepted accounting principles, and (ii) an opinion on whether we have maintained, in all material respects, effective internal control over financial reporting as of March 31, 2019, based on criteria established in the Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Audit Committee’s responsibility is to monitor and oversee these processes. +In connection with these responsibilities, the Audit Committee met with management and KPMG LLP to review and discuss the March 31, 2019 consolidated financial statements and obtained from management their representation that our financial statements have been prepared in accordance with US generally accepted accounting principles. In addition, management represented that, as of March 31, 2019, our Company maintained effective internal control over financial reporting. +The Audit Committee also discussed with KPMG LLP the matters required by Auditing Standard No. 1301, “Communications with Audit Committees” of the PCAOB, which includes, among other items, information regarding the conduct of the audit of our consolidated financial statements. The Audit Committee also received written disclosures from KPMG LLP required by the PCAOB’s Rule 3200: “Auditing Standards,” and the Audit Committee discussed with KPMG LLP its independence from our Company and our management. The Audit Committee has further considered the compatibility of the services provided by KPMG LLP with KPMG LLP’s independence. +The Audit Committee operates under a written charter, which was adopted by our Board of Directors and is assessed annually for adequacy by the Audit Committee. The Audit Committee held seven meetings during fiscal year 2019, including meetings with KPMG LLP and our highest ranking manager of internal audit, both with and without management present. In performing its functions, the Audit Committee acts only in an oversight capacity. It is not the responsibility of the Audit Committee to determine that our financial statements are complete and accurate, are presented in accordance with US generally accepted accounting principles or present fairly our results of operations for the periods presented, or that we maintain appropriate internal controls. Furthermore, the Audit Committee’s oversight responsibilities do not independently assure that the audit of our financial statements has been carried out in accordance with the standards of the PCAOB or that our registered public accounting firm is independent. +Based upon the Audit Committee’s review and discussions with management and KPMG LLP, and subject to the limitations of the Audit Committee’s role and responsibilities referred to above and in the Audit Committee charter, the Audit Committee recommended that our Board of Directors include the audited consolidated financial statements in our Annual Report on Form 10-K for the year ended March 31, 2019, which was filed with the SEC on May 30, 2019. +THE AUDIT COMMITTEE +Michael F. Devine, III ( Chair ) +Nelson C. Chan +Cindy L. Davis +The Report of the Audit Committee shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as amended, or the Acts, except to the extent that our Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under the Acts. +68 +Table of Contents +RELATED PERSON TRANSACTIONS +Our legal department is primarily responsible for identifying and reviewing relationships and transactions in which our Company and our directors, director nominees. executive officers, principal stockholders, or their respective immediate family members, are participants to determine whether any of these related persons had or will have a direct or indirect material interest in such transactions. In order to assist in identifying potential related person transactions, our legal department annually prepares and distributes to all directors, director nominees and executive officers a detailed written questionnaire which includes questions intended to elicit information about any current or proposed related person transactions. In addition, our Code of Ethics addresses conflicts of interest where an individual’s personal interests may interfere or conflict with the interests of our Company, including relationships with suppliers, customers or competitors. Conflicts of interest which might impair (or appear to impair) the exercise of judgment solely for the benefit of our Company and our stockholders are prohibited. In general, such conflicts must be approved by our legal department, the employee’s supervisor or, in the case of directors, the Audit Committee. Information regarding potential conflicts of interest in violation of our Code of Ethics may be reported to our anonymous reporting hotline, which may be accessed by the Chair of the Audit Committee, the Chairman of our Board and our highest ranking manager of internal audit. +If a related person transaction is identified by our legal department as one which would be required to be publicly reported pursuant to applicable SEC rules, the Audit Committee is responsible for reviewing and approving or ratifying any such transaction. The Audit Committee may approve a related person transaction when, in its good faith judgment, it determines that the transaction is in the best interests of our Company and our stockholders. +There were no transactions with related persons that required disclosure under applicable SEC rules during fiscal year 2019, and no such transactions are currently proposed. +69 +Table of Contents +PROPOSAL NO. 2 +RATIFICATION OF THE SELECTION OF KPMG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +For fiscal year 2019, KPMG LLP, or KPMG, provided audit services, which included an examination of the consolidated financial statements included in our Annual Report. A summary of the fees for these services provided by KPMG is below. The Audit Committee has selected KPMG to provide audit services to our Company for fiscal year 2020, which covers the period from April 1, 2019 to March 31, 2020. We are asking that our stockholders ratify this selection at the Annual Meeting. +Although this selection is not required to be submitted to a vote of our stockholders, the Audit Committee believes it is appropriate as a matter of good corporate governance to request that our stockholders ratify the selection. If our stockholders do not ratify the selection, the Audit Committee will consider the selection of another independent registered public accounting firm, but is not required to select a different firm. In addition, even if our stockholders ratify the selection, the Audit Committee will retain the discretion to select a different independent registered public accounting firm in the future if it believes doing so is in the best interests of our Company and stockholders. +A representative of KPMG will attend the virtual Annual Meeting and will have the opportunity to make a statement and/or respond to appropriate questions from stockholders present virtually at the Annual Meeting. +Fees for Services Rendered by Independent Registered Public Accounting Firm +The following table sets forth approximate fees for services rendered by KPMG for the fiscal years ended March 31, 2019 and 2018: +FEES ($) +FISCAL YEAR 2019 +FISCAL YEAR 2018 +Audit Fees +2,587,000 +2,479,000 +Audit-Related Fees +— +— +Tax Fees +12,000 +11,000 +All Other Fees +— +— +Total Fees +2,599,000 +2,490,000 +Audit Fees +The audit fees presented above for the fiscal years ended March 31, 2019 and 2018 include fees associated with the audit of our consolidated balance sheets, the related consolidated statements of comprehensive income, stockholders’ equity and cash flows, and the audit of internal control over financial reporting, as well as the reviews of our quarterly reports on Form 10-Q, and certain statutory audits required internationally. +Audit-Related Fees +Audit-related fees generally consist of fees for assurance and related services that are reasonably related to the performance of the audit of our annual reports on Form 10-K and review of our quarterly reports on Form 10-Q. There were no audit-related fees incurred during the fiscal years ended March 31, 2019 and 2018. +Tax Fees +Tax fees include fees incurred for tax services, including tax compliance, tax advice and tax planning for income taxes and customs matters. +All Other Fees +There were no other fees for services rendered by KPMG incurred during the fiscal years ended March 31, 2019 and 2018 other than those disclosed above. +70 +Table of Contents +Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm +In accordance with its policies and procedures, prior to engagement, the Audit Committee pre-approves all independent registered public accounting firm services. Specifically, the Audit Committee administers our engagement of KPMG and pre-approves all of KPMG’s audit and permissible non-audit services on a case-by-case basis. In approving non-audit services, the Audit Committee considers whether the engagement could compromise the independence of KPMG, and whether for reasons of efficiency or convenience it is in our best interests to engage KPMG to perform the services. The Audit Committee has determined that the performance by KPMG of the non-audit services listed above as “Tax Fees” did not affect its independence. +During the year, circumstances may arise under which it may become necessary to engage the independent registered public accounting firm for additional services not contemplated in the original pre-approval categories. In those instances, the Audit Committee requires that those services be submitted to the Chair of the Audit Committee for specific pre-approval before we can engage the independent registered public accounting firm to provide such services. The Chair of the Audit Committee is then required to report any pre-approval decisions to the Audit Committee at its next scheduled meeting for its approval. +Required Vote +Approval of this proposal requires the affirmative vote of a majority of the outstanding shares present virtually or represented by proxy and entitled to vote on this proposal at the Annual Meeting (assuming that a quorum is present). +BOARD RECOMMENDATION +OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE +" FOR " +PROPOSAL NO. 2 TO RATIFY THE SELECTION OF KPMG LLP +AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +FOR FISCAL YEAR 2020. +71 +Table of Contents +PROPOSAL NO. 3 +ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION +Background +In accordance with applicable SEC rules, we are providing our stockholders with the opportunity to cast a non-binding advisory Say-on-Pay Vote on the compensation of our Named Executive Officers, as described below. We consider seeking the views of our stockholders on our executive compensation program to be an important part of our decision-making process. +For additional information about our executive compensation program, please refer to the section of this Proxy Statement titled " Compensation Discussion and Analysis " and the related compensation tables and footnotes. +Proposal +Therefore, in accordance with Section 14A of the Exchange Act, we are asking our stockholders to approve the following resolution at the Annual Meeting: +“ RESOLVED, that our stockholders approve, on a non-binding advisory basis, the compensation of our Named Executive Officers, as described in the Compensation Discussion and Analysis, the Summary Compensation Table, and the related compensation tables, notes and narrative discussion in the Proxy Statement for our 2019 Annual Meeting of Stockholders. ” +Because this vote is advisory only, it will not be binding upon our Board of Directors or the Compensation Committee. However, the Compensation Committee will take the outcome of the vote into account when considering future executive compensation arrangements. +Required Vote +Approval of this proposal requires the affirmative vote of a majority of the outstanding shares present virtually or represented by proxy and entitled to vote on this proposal at the Annual Meeting (assuming that a quorum is present). +BOARD RECOMMENDATION +OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE +" FOR " +PROPOSAL NO. 3 TO APPROVE, ON A NON-BINDING ADVISORY BASIS, +THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS. +72 +Table of Contents +STOCKHOLDER PROPOSALS +Proposals or director nominations of stockholders intended to be presented at our annual meeting of stockholders to be held in 2020 must be delivered to our corporate headquarters located at 250 Coromar Drive, Goleta, California 93117 no later than March 28, 2020 in order to be included in our proxy statement and form of proxy relating to that meeting. In order to be included in the proxy statement, these proposals must comply with the requirements as to form and substance established by the SEC for such proposals. +Under our bylaws, a stockholder who wishes to make a proposal or nominate a candidate as a director at the annual meeting of stockholders to be held in 2020 without including the proposal in our proxy statement and form of proxy relating to that meeting must notify us no earlier than the close of business on May 16, 2020 and no later than the close of business on June 15, 2020. Our bylaws specify certain requirements regarding the form and content of such a notice. +73 +Table of Contents +OTHER BUSINESS AT THE ANNUAL MEETING +As of the date of this Proxy Statement, we are not aware of any business to be presented for consideration at the Annual Meeting other than the matters described in this Proxy Statement. If, however, other matters are properly presented at the Annual Meeting, the persons named as proxies (or their substitutes) will vote in accordance with their discretion with respect to those matters. +74 +Table of Contents +ANNUAL REPORT +The Annual Report contains audited consolidated financial statements of our Company and its subsidiaries and the report thereon of KPMG LLP, our independent registered public accounting firm. A copy of the Annual Report is being provided with this Proxy Statement and has been posted on the Internet, along with this Proxy Statement, each of which is accessible by following the instructions in this Proxy Statement and the accompanying Notice. Any person who was our stockholder on the Record Date (including any beneficial owner holding shares in "street name" as of the Record Date) may request a copy of the Annual Report, and it will be furnished without charge upon receipt of a written request. Requests should be directed to Deckers Outdoor Corporation, 250 Coromar Drive, Goleta, California 93117, Attention: Corporate Secretary, or by telephone to (805) 967-7611. +BY ORDER OF THE BOARD OF DIRECTORS +Dave Powers +Chief Executive Officer and President +Goleta, California +July 26, 2019 +75 \ No newline at end of file diff --git a/raw/proxies/0000910521/0000910521-19-000017/proxy_rpt.txt b/raw/proxies/0000910521/0000910521-19-000017/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..2e6ce6111b1853909b0ebf2e82c4eccfc016c4c3 --- /dev/null +++ b/raw/proxies/0000910521/0000910521-19-000017/proxy_rpt.txt @@ -0,0 +1,6 @@ +RELATED PERSON TRANSACTIONS +Our legal department is primarily responsible for identifying and reviewing relationships and transactions in which our Company and our directors, director nominees. executive officers, principal stockholders, or their respective immediate family members, are participants to determine whether any of these related persons had or will have a direct or indirect material interest in such transactions. In order to assist in identifying potential related person transactions, our legal department annually prepares and distributes to all directors, director nominees and executive officers a detailed written questionnaire which includes questions intended to elicit information about any current or proposed related person transactions. In addition, our Code of Ethics addresses conflicts of interest where an individual’s personal interests may interfere or conflict with the interests of our Company, including relationships with suppliers, customers or competitors. Conflicts of interest which might impair (or appear to impair) the exercise of judgment solely for the benefit of our Company and our stockholders are prohibited. In general, such conflicts must be approved by our legal department, the employee’s supervisor or, in the case of directors, the Audit Committee. Information regarding potential conflicts of interest in violation of our Code of Ethics may be reported to our anonymous reporting hotline, which may be accessed by the Chair of the Audit Committee, the Chairman of our Board and our highest ranking manager of internal audit. +If a related person transaction is identified by our legal department as one which would be required to be publicly reported pursuant to applicable SEC rules, the Audit Committee is responsible for reviewing and approving or ratifying any such transaction. The Audit Committee may approve a related person transaction when, in its good faith judgment, it determines that the transaction is in the best interests of our Company and our stockholders. +There were no transactions with related persons that required disclosure under applicable SEC rules during fiscal year 2019, and no such transactions are currently proposed. +69 +Table of Contents \ No newline at end of file diff --git a/raw/proxies/0000910521/0000910521-20-000021/proxy.txt b/raw/proxies/0000910521/0000910521-20-000021/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..8b105e609e7d31dc32d41a7a3c6dbd1d9c626100 --- /dev/null +++ b/raw/proxies/0000910521/0000910521-20-000021/proxy.txt @@ -0,0 +1,3044 @@ +DEF 14A +1 +deck-def14ax2020.htm +DEF 14A +Document +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Proxy Statement Pursuant to Section 14(a) of +the Securities Exchange Act of 1934 (Amendment No. ) +Filed by the Registrant x +Filed by a Party other than the Registrant ¨ +Check the appropriate box: +¨ +Preliminary Proxy Statement +¨ +Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +x +Definitive Proxy Statement +¨ +Definitive Additional Materials +¨ +Soliciting Material under §240.14a-12 +DECKERS OUTDOOR CORPORATION +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +x +No fee required. +¨ +Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. +(1) +Title of each class of securities to which transaction applies: +(2) +Aggregate number of securities to which transaction applies: +(3) +Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): +(4) +Proposed maximum aggregate value of transaction: +(5) +Total fee paid: +¨ +Fee paid previously with preliminary materials. +¨ +Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. +(1) +Amount Previously Paid: +(2) +Form, Schedule or Registration Statement No.: +(3) +Filing Party: +(4) +Date Filed: +2020 +PROXY STATEMENT SUMMARY +This summary highlights information contained elsewhere in this Proxy Statement. This summary does not contain all of the information you should consider when making voting decisions. You should read this Proxy Statement carefully and completely before voting. +ANNUAL MEETING OF STOCKHOLDERS +DATE +September 11, 2020 +TIME +1:00 p.m. Pacific Time +VIRTUAL MEETING +The 2020 Annual Meeting of Stockholders, or Annual Meeting, will be held virtually via a live webcast, which can be accessed on the Internet by visiting www.virtualshareholdermeeting.com/DECK2020. +To access the Annual Meeting, you will need a 16-digit control number. The control number is provided on the Notice of Internet Availability of Proxy Materials you received in the mail, on your proxy card (if you requested to receive printed proxy materials), or through your broker or other nominee if you hold your shares in "street name." +Stockholders will be able to attend, vote and submit questions virtually during the Annual Meeting. +RECORD DATE +July 13, 2020 +PROPOSALS TO BE VOTED ON +PROPOSAL NUMBER +MATTER +BOARD VOTING RECOMMENDATION +PAGE REFERENCE +1 +Election of nine directors +" FOR " EACH DIRECTOR NOMINEE +7 +2 +Ratification of the selection of KPMG LLP as +our independent registered public accounting +firm for fiscal year 2021 +" FOR " +69 +3 +Approval, on a non-binding advisory basis, +of the compensation of our Named Executive +Officers as described in the Proxy Statement +" FOR " +71 +We may also consider and vote upon any other business that may properly come before the Annual Meeting, or at any postponements or adjournments thereof. As of the date of this Proxy Statement, we are not aware of any business to be presented for consideration at the Annual Meeting other than the matters described in this Proxy Statement. +HOW TO VOTE +Your vote is important to the future of Deckers Outdoor Corporation. You are eligible to vote if you were a stockholder at the close of business on July 13, 2020. Please refer to the section of this Proxy Statement titled " Questions and Answers about the 2020 Annual Meeting of Stockholders and Voting " for additional information on how to attend the virtual Annual Meeting and vote your shares. +i +PROPOSAL NO. 1 +ELECTION OF DIRECTORS +The following table provides summary information about each director nominee. +Board Committees +Name, +Primary Occupation +Age +Director +Since +Independent +Number of Other Public Company Boards +A (1) +C +CG +Michael F. Devine, III +Corporate Director +Chairman of our Board of Directors +61 +2011 +YES +2 +Nelson C. Chan +Private Investor, Entrepreneur and Corporate Director +59 +2014 +YES +2 +l +Cynthia (Cindy) L. Davis +Corporate Director +58 +2018 +YES +2 +ª +Juan R. Figuereo +Corporate Director +64 +2020 +YES +1 +ª +Victor Luis +Corporate Director +53 +2020 +YES +None +l +Dave Powers +Chief Executive Officer and President +54 +2016 +NO +None +Lauri M. Shanahan +Corporate Director +57 +2011 +YES +2 +ª +Brian A. Spaly +Private Investor, Entrepreneur and Corporate Director +43 +2018 +YES +None +l +Bonita C. Stewart +Vice President, Global Partnerships at Google Inc. +63 +2014 +YES +1 +l +l +ª +Committee Chair +A: +Audit Committee +C: +Compensation Committee +CG: +Corporate Governance Committee +(1) +Mr. Gibbons, who is a current member of our Audit Committee, will not be standing for re-election at the Annual Meeting. +• +During the fiscal year ended March 31, 2020, or fiscal year 2020, no director nominee attended fewer than 75% of the meetings of our Board of Directors, which we sometimes refer to as our Board, or meetings of any Board committee on which he or she served. +• +Each director nominee is elected annually by a majority of the votes cast by the shares present virtually or represented by proxy and entitled to vote on the election of directors at the Annual Meeting. +• +Our Board of Directors recommends that you vote " FOR " each of the director nominees named in Proposal No. 1. +PROPOSAL NO. 2 +RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +• +As a matter of good corporate governance, we are asking our stockholders to ratify the selection of KPMG LLP as our independent registered public accounting firm for fiscal year 2021. +• +Ratification of the selection requires the affirmative vote of a majority of the outstanding shares present virtually or represented by proxy and entitled to vote on the proposal at the Annual Meeting. +• +Our Board of Directors recommends that you vote " FOR " Proposal No. 2. +ii +PROPOSAL NO. 3 +ADVISORY VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION +• +We are asking our stockholders to approve, on a non-binding advisory basis, the compensation of our Named Executive Officers, which we sometimes refer to as our NEOs, as disclosed in the section of this Proxy Statement titled " Compensation Discussion and Analysis. " +• +Advisory approval of the compensation of our Named Executive Officers requires the affirmative vote of a majority of the outstanding shares present virtually or represented by proxy and entitled to vote on the proposal at the Annual Meeting. +• +Our Board of Directors recommends that you vote " FOR " Proposal No. 3 because it believes our compensation program reflects our strong "pay-for-performance" philosophy and is effectively designed to encourage achievement of our business and strategic objectives as discussed in greater detail below. +OUR BUSINESS AND STRATEGIC OBJECTIVES +Over the past few years we successfully executed a strategic transformation of our business that improved the overall distribution of our brands and achieved efficiencies within our expense structure, thereby creating an increased level of profitability, which has provided us with enhanced opportunities to invest in key areas of growth. Our strategic framework continues to include efforts to: +• +Transform our organization to meet the challenges of a changing global marketplace, with an enhanced focus on digital. +• +Focus investments in identified growth opportunities within our brand portfolio, as well as technology and analytical tools designed to support our evolving business. +• +Deliver top-tier operating profit margins and return on invested capital for stockholders. +We remain committed to delivering stockholder value through the continued execution of our strategies. +OUR COMPENSATION PROGRAM OBJECTIVES +The overarching objectives of our executive compensation program are to (i) attract and retain high quality talent; (ii) align interests of executives with stockholders; (iii) provide a significant portion of total compensation through variable, performance-based components; and (iv) offer incentives for achieving both short and long-term goals that are directly tied to the achievement of strategic objectives. In doing so, we routinely consider appropriate changes to our program to reflect our strategic direction and the evolving needs of our business. In addition, to ensure we have the talent necessary to achieve our strategic objectives, the Compensation Committee endeavors to develop a compensation program that is attractive and competitive in the marketplace. Our program also incorporates feedback from our stockholders, as detailed below under the section of this Proxy Statement titled " Stockholder Feedback on Executive Compensation. " +Consistent with our strategic objectives for the year, when designing our executive compensation program for fiscal year 2020, the Compensation Committee focused on continuing to build and retain our executive team, while providing them with incentives to focus on our key strategic objectives including increased revenue, enhanced profitability, improved operating margins and the creation of long-term value for stockholders. These and other strategic considerations are clearly reflected in the design of our program, which demonstrates strong "pay-for-performance" alignment. Please see the section of this Proxy Statement titled “ Compensation Discussion and Analysis ” for additional information. +KEY CORPORATE GOVERNANCE CHANGES +We are constantly seeking to ensure our Board composition is structured to allow us to achieve our long-term objectives by seeking out key qualifications and skills our directors collectively bring to our Board. As part of achieving these objectives, over the past few years, we have strategically focused on Board refreshment, both from the standpoint of Board composition, as well as from the standpoint of leadership on our Board and its committees. This focus is evident through a number of key changes that we have made to our Board and its committees over the past year, including the following: +• +In September 2019, William L. McComb resigned as a member of our Board. +• +In October 2019, Michael F. Devine, III was appointed Chairman of our Board. +iii +• +In October 2019, John M. Gibbons was appointed Chair of the Audit Committee, Cynthia L. Davis was appointed Chair of the Compensation Committee and Lauri M. Shanahan was appointed Chair of the Corporate Governance Committee. +• +In March 2020, Juan R. Figuereo was appointed as a member of our Board. +• +In June 2020, James Quinn resigned as a member of our Board and Victor Luis was appointed as a member of our Board. +• +In June 2020, Juan R. Figuereo was appointed Chair of the Audit Committee. +In addition, Mr. Gibbons will not be standing for re-election to our Board at the Annual Meeting. +At the Annual Meeting, stockholders are being asked to elect nine directors to serve until the next annual meeting of stockholders to be held in 2021. If all nominees are elected, our Board will consist of nine members, and eight out of nine members of our Board, and all members of each of its standing committees, will continue to be “independent directors” under applicable Securities and Exchange Commission, or SEC, and New York Stock Exchange, or NYSE, rules and regulations. +iv +NOTICE OF VIRTUAL ANNUAL MEETING OF STOCKHOLDERS +TO OUR STOCKHOLDERS: +We are pleased to invite you to attend the 2020 Annual Meeting of Stockholders of Deckers Outdoor Corporation, which we refer to as "we," "us," or "our," to be held on Friday, September 11, 2020, beginning at 1:00 p.m. Pacific Time. +Proposals to be Voted Upon : +1 +Election of Directors . Elect nine directors to serve until the annual meeting of stockholders to be held in 2021, or until their successors are duly elected and qualified. +2 +Ratification of Selection of Accounting Firm . Ratify the selection of KPMG LLP as our independent registered public accounting firm for fiscal year 2021, which covers the period from April 1, 2020 to March 31, 2021. +3 +Advisory Vote on Executive Compensation . Approve, on a non-binding advisory basis, the compensation of our Named Executive Officers, as disclosed in the section of this Proxy Statement titled " Compensation Discussion and Analysis. " +Other Business . Consider and vote upon any other business that may properly come before the Annual Meeting, or at any postponements or adjournments thereof. +Virtual Annual Meeting : +Similar to the last several years, the Annual Meeting will be a completely virtual meeting of stockholders, which will be conducted via a live webcast. We believe hosting a virtual annual meeting will continue to encourage increased stockholder attendance and participation while also reducing the cost of holding the Annual Meeting for our Company and the cost of attending the Annual Meeting for our stockholders. We also believe a virtual meeting to be the appropriate format in light of the travel restrictions and safety concerns resulting from the COVID-19 pandemic. A virtual meeting allows our stockholders around the world to attend and listen to the Annual Meeting live, submit questions and vote their shares electronically. +You will be able to attend the Annual Meeting online, submit your questions and vote your shares during the meeting by visiting www.virtualshareholdermeeting.com/DECK2020 . +Record Date : +Our Board of Directors has fixed the close of business on July 13, 2020 as the record date for determining which stockholders are entitled to notice of and to vote virtually or by proxy at the Annual Meeting, or at any postponements or adjournments thereof. +Board Recommendations : +Our Board of Directors recommends that you vote " FOR " each of the director nominees named in Proposal No. 1 and " FOR " Proposal Nos. 2 and 3. +BY ORDER OF THE BOARD OF DIRECTORS +Dave Powers +Chief Executive Officer and President +Your vote is very important. +Whether or not you plan to attend the virtual Annual Meeting, we encourage you to read this Proxy Statement and submit your proxy or voting instructions as soon as possible. For specific instructions on how to vote your shares, please refer to the instructions on the Notice of Internet Availability of Proxy Materials you received in the mail, the section of this Proxy Statement titled " Questions and Answers about the 2020 Annual Meeting of Stockholders and Voting ," or, if you requested to receive printed proxy materials, your enclosed proxy card. +Approximate Date of Mailing of Notice of Internet Availability of Proxy Materials: July 31, 2020 +v +Table of Contents +TABLE OF CONTENTS +2020 Proxy Statement Summary +i +Notice of Annual Meeting of Stockholders +v +Proxy Statement +1 +Questions and Answers about the 2020 Annual Meeting of Stockholders and Voting +2 +Proposal No. 1 - Election of Directors +7 +Director Nominees +10 +Corporate Governance +18 +Executive Officers +25 +Compensation Discussion and Analysis +28 +Executive Summary +29 +Compensation Philosophy and Objectives +34 +Compensation Consultant and Peer Group +37 +Elements of Fiscal Year 2020 Executive Compensation Program +39 +Other Compensation Considerations +48 +Compensation Committee Report +51 +Summary Compensation Table +52 +Grants of Plan-Based Awards in Fiscal Year 2020 +53 +Outstanding Equity Awards at 2020 Fiscal Year End +55 +Fiscal Year 2020 Option Exercises and Stock Vested +57 +Nonqualified Deferred Compensation +58 +Potential Payments Upon Termination or Change in Control +59 +Director Compensation +63 +Equity Compensation Plan Information +64 +Security Ownership of Certain Beneficial Owners and Management +65 +Audit Committee Report +67 +Related Person Transactions +68 +Proposal No. 2 - Ratification of the Selection of KPMG LLP as Independent Registered Public Accounting Firm +69 +Proposal No. 3 - Advisory Vote to Approve Named Executive Officer Compensation +71 +Stockholder Proposals +72 +Other Business at the Annual Meeting +73 +Annual Report on Form 10-K +74 +vi +Table of Contents +VIRTUAL ANNUAL MEETING OF STOCKHOLDERS +Meeting Date: September 11, 2020 +PROXY STATEMENT +GENERAL INFORMATION +The enclosed Proxy Statement is solicited on behalf of the Board of Directors of Deckers Outdoor Corporation, which we sometimes refer to as our Company, for use at our 2020 Annual Meeting of Stockholders, or the Annual Meeting, to be held virtually via a live webcast on Friday, September 11, 2020 at 1:00 p.m. Pacific Time, or at any postponements or adjournments thereof. +The virtual Annual Meeting can be accessed by visiting www.virtualshareholdermeeting.com/DECK2020 , where you will be able to attend the Annual Meeting, submit questions and vote your shares electronically. +The Annual Meeting is being held for the purposes described in this Proxy Statement and in the accompanying Notice of Annual Meeting of Stockholders. +1 +Table of Contents +QUESTIONS AND ANSWERS ABOUT THE 2020 ANNUAL MEETING OF STOCKHOLDERS AND VOTING +The following questions and answers are intended to briefly address potential questions that our stockholders may have regarding this Proxy Statement and the Annual Meeting. They are also intended to provide our stockholders with certain information that is required to be provided under the rules and regulations of the SEC. These questions and answers may not address all of the questions that are important to you as a stockholder. If you have additional questions about this Proxy Statement or the Annual Meeting, please refer to the question titled "Whom should I contact with other questions?" below. +Q: When and where will the Annual Meeting be held? +A: The Annual Meeting will be held on Friday, September 11, 2020, beginning at 1:00 p.m. Pacific Time. The Annual Meeting will be conducted entirely online via a live webcast. Our stockholders may participate in the Annual Meeting by visiting the following website: www.virtualshareholdermeeting.com/DECK2020 . You will need a 16-digit control number to attend and participate in the live webcast of the Annual Meeting. Please refer to the question titled " How can I vote my shares? " for information on obtaining your 16-digit control number. +Q: Why did I receive these proxy materials? +A: We are providing this Proxy Statement in connection with the solicitation by our Board of Directors of proxies to be voted at the Annual Meeting, or at any postponements or adjournments thereof. This Proxy Statement contains important information for you to consider when deciding how to vote on the matters brought before the Annual Meeting. You are invited to attend the Annual Meeting virtually to vote on the proposals described in this Proxy Statement. However, you do not need to attend the Annual Meeting to vote your shares. Instead, you may vote your shares using one of the other voting methods described in this Proxy Statement. +Whether or not you expect to attend the virtual Annual Meeting, please vote your shares as soon as possible in order to ensure your representation at the Annual Meeting. +Q: Why did I receive a notice in the mail regarding the Internet availability of proxy materials? +A: Instead of mailing printed copies to each of our stockholders, we have elected to provide access to the proxy materials over the Internet under the SEC's "notice and access" rules. These rules allow us to make our stockholders aware of the Annual Meeting and the availability of the proxy materials by sending a Notice of Internet Availability of Proxy Materials, or the Notice, which provides instructions on how to access the full set of proxy materials through the Internet or make a request to have printed proxy materials delivered by mail. Accordingly, on or about July 31, 2020, we mailed the Notice to each of our stockholders. The Notice contains instructions on how to access the proxy materials, including this Proxy Statement and our Annual Report on Form 10-K, or the Annual Report, for the fiscal year ended March 31, 2020, or fiscal year 2020, each of which are available at www.proxyvote.com. The Notice also provides instructions on how to vote your shares. +Q: What is the purpose of complying with the "notice and access" rules? +A: We believe compliance with the SEC's "notice and access" rules allows us to provide our stockholders with the materials they need to make informed decisions, while lowering the costs of printing and delivering those materials and reducing the environmental impact of the Annual Meeting. However, if you would prefer to receive printed proxy materials, please follow the instructions included in the Notice. If you have previously elected to receive the proxy materials electronically, you will continue to receive these materials electronically unless you elect otherwise. +Q: Who can vote at the Annual Meeting? +A: Only our stockholders at the close of business on July 13, 2020, or the Record Date, will be entitled to attend and vote at the Annual Meeting. On the Record Date, there were 28,005,993 shares of our common stock outstanding and entitled to vote. Each share of common stock issued and outstanding on the Record Date is entitled to one vote on any matter to be voted upon by our stockholders at the Annual Meeting. +• +Holders of Record - If, on the Record Date, your shares were registered directly in your name with our transfer agent, Computershare, then you are a "holder of record." As a holder of record, you may vote at the virtual Annual Meeting, or you may vote by proxy. Whether or not you plan to attend the Annual Meeting virtually, we urge you to vote your shares using one of the voting methods described in this Proxy Statement and the Notice. If you are a holder of record and you indicate when voting that you wish to vote as recommended by our Board, or if you submit a vote by proxy without giving specific voting +2 +Table of Contents +instructions, then the proxyholders will vote your shares as recommended by our Board on all matters described in this Proxy Statement. Thomas Garcia and Steven J. Fasching, the designated proxyholders, are members of our management. +• +Beneficial Owners - If, on the Record Date, your shares were held in an account at a bank, broker, dealer, or other nominee, then you are the "beneficial owner" of shares held in "street name" and this Proxy Statement is being made available to you by that nominee. The nominee holding your account is considered the holder of record for purposes of voting at the virtual Annual Meeting. As a beneficial owner, you have the right to direct your nominee on how to vote the shares in your account. You are also invited to attend the Annual Meeting virtually. However, since you are not the holder of record, you may not vote your shares at the Annual Meeting unless you request and obtain a valid "legal proxy" or obtain a 16-digit control number from your nominee. Please contact your nominee directly for additional information. +Q: What is the quorum requirement for the Annual Meeting? +A: The presence at the Annual Meeting, virtually (even if not voting) or by proxy, of the holders of a majority of the voting power of all the shares of our common stock entitled to be voted at the Annual Meeting, will constitute a quorum at the Annual Meeting. We will treat shares of common stock represented by a properly voted proxy, including shares for which authority is withheld or that a stockholder abstains from voting, as well as broker non-votes, as present at the Annual Meeting for the purposes of determining the existence of a quorum. If a quorum is not present, the Annual Meeting will be adjourned until a quorum is obtained. +Q: What proposals am I being asked to vote upon at the Annual Meeting? +A: The proposals to be voted on at the Annual Meeting, and our Board's recommendation with respect to each proposal, are as follows: +PROPOSAL +DESCRIPTION +BOARD VOTING RECOMMENDATION +Proposal No. 1 : +Election of Directors +Elect nine director nominees to serve until the annual meeting of stockholders to be held in 2021, or until their successors are duly elected and qualified +" FOR " EACH DIRECTOR NOMINEE +Proposal No. 2 : +Ratification of Selection of Accounting Firm +Ratify the selection of KPMG LLP as our independent registered public accounting firm for fiscal year 2021 +" FOR " +Proposal No. 3 : +Advisory Vote on Executive Compensation +Approve, on a non-binding advisory basis, the compensation of our Named Executive Officers, as disclosed in the section of this Proxy Statement titled "Compensation Discussion and Analysis" +" FOR " +3 +Table of Contents +Q: What are the voting requirements to approve the proposals, and what happens if I do not vote? +A: The voting requirements to approve each of the proposals to be voted upon at the Annual Meeting, as well as the effects of abstentions and broker non-votes on each of the proposals, are as follows: +PROPOSAL +VOTING REQUIREMENT +EFFECT OF ABSTENTIONS (2) +EFFECT OF BROKER NON-VOTES (3) +Proposal No. 1 : +Election of Directors +Each director nominee in an uncontested election (1) will be elected by a majority of the votes cast by the shares present virtually or represented by proxy and entitled to vote on the election of directors at the Annual Meeting (assuming that a quorum is present). +A "majority of the votes cast" means that the number of votes "FOR" a director nominee must exceed 50% of the total votes cast in the election of directors. +A "WITHHOLD" vote with respect to a director nominee will not count as a vote cast for that nominee, will not be included in the total number of votes cast, and thus will have no effect on the outcome of the vote on this proposal. +Broker non-votes will not count as votes cast on this proposal and will have no effect on the outcome of the vote on this proposal. +Proposal No. 2 : +Ratification of Selection of Accounting Firm +Requires the affirmative vote of a majority of the outstanding shares present virtually or represented by proxy and entitled to vote on the proposal at the Annual Meeting (assuming that a quorum is present). +An "ABSTAIN" vote will be included in the total number of shares present and entitled to vote on this proposal, and will have the same effect as a vote "AGAINST" this proposal. +Because a bank, broker, dealer or other nominee may generally vote without instructions on this proposal, we do not expect any broker non-votes to result for this proposal. +Proposal No. 3 : +Advisory Vote on Executive Compensation +Requires the affirmative vote of a majority of the outstanding shares present virtually or represented by proxy and entitled to vote on the proposal at the Annual Meeting (assuming that a quorum is present). +An "ABSTAIN" vote will be included in the total number of shares present and entitled to vote on this proposal, and will have the same effect as a vote "AGAINST" this proposal. +Broker non-votes will not count as shares present and entitled to vote on this proposal and will have no effect on the outcome of the vote on this proposal. +(1) +An "uncontested election" is an election in which the number of director nominees is not greater than the number of directors to be elected. A "contested election" is an election in which the number of director nominees nominated by (i) our Board of Directors, (ii) any stockholder, or (iii) a combination of our Board of Directors and any stockholder, exceeds the number of directors to be elected. In a contested election, directors will be elected by a plurality of the votes cast by the shares present virtually or represented by proxy and entitled to vote on the election of directors at the Annual Meeting. +(2) +You may vote to "WITHHOLD" authority for one or more director nominees and may "ABSTAIN" from voting on one or more of the other proposals described in this Proxy Statement. Shares for which authority is withheld or that a stockholder abstains from voting will be counted for purposes of determining whether a quorum is present at the Annual Meeting. +(3) +Pursuant to applicable NYSE rules, if you are a beneficial owner of shares held in street name and do not provide the nominee that holds your shares with specific voting instructions, the nominee may generally vote in its discretion on “routine” matters (such as Proposal No. 2). However, if the nominee that holds your shares does not receive instructions from you on how to vote your shares on a “non-routine” matter (such as Proposal Nos. 1 and 3), it will be unable to vote your shares on that matter. When this occurs, it is generally referred to as a “broker non-vote.” Broker non-votes will be counted for purposes of determining whether a quorum is present at the Annual Meeting. +Q: +What happens if a director nominee fails to receive a majority vote in an uncontested election at the Annual Meeting? +A: Each incumbent director standing for reelection at the Annual Meeting has tendered an irrevocable letter of resignation, effective upon such incumbent director not receiving a majority vote at the Annual Meeting and acceptance of such resignation by our Board. Our Board must accept or reject such resignation within 90 days following certification of the stockholder vote in accordance with the procedures established by our bylaws. If a director’s resignation offer is not accepted by our Board, that director will continue to serve until our annual meeting of stockholders to be held in 2021 and his or her successor is duly elected and qualified, or until the director’s earlier death, resignation, or removal. +Any director nominee who is not an incumbent director and who fails to receive a majority vote in an uncontested election will not be elected as a director, and a vacancy will be left on our Board. Our Board, in its sole discretion, may either fill a vacancy resulting from a director nominee not receiving a majority vote pursuant to our bylaws or decrease the size of our Board to eliminate the vacancy. All director nominees are incumbent directors standing for reelection at the Annual Meeting. +Q: Could other matters be decided at the Annual Meeting? +A: As of the date of this Proxy Statement, we are not aware of any business to be presented for consideration at the Annual Meeting other than the matters described in this Proxy Statement. If, however, other matters are properly presented at the Annual Meeting, the persons named as proxies will vote in accordance with their discretion with respect to those matters. +4 +Table of Contents +Q: How can I vote my shares? +A: Your shares can be voted as follows: +• +Holders of Record - Holders of record can vote by proxy or by attending the virtual Annual Meeting where votes can be submitted electronically via live webcast. If you wish to vote by proxy, you can vote by Internet, telephone or by mail as described below. Whether or not you plan to attend the Annual Meeting virtually, we urge you to vote by proxy to ensure that your vote is counted. +To vote at the Annual Meeting virtually by live webcast you must visit the following website: +www.virtualshareholdermeeting.com/DECK2020. You will need the 16-digit control number included on the Notice or on your proxy card (if you requested to receive printed proxy materials). The method you use to vote by proxy will not limit your right to attend the Annual Meeting or vote at the Annual Meeting virtually. All shares that have been properly voted and not revoked will be voted at the Annual Meeting. However, even if you plan to attend the Annual Meeting virtually, we recommend that you vote your shares in advance, so that your vote will be counted if you later decide not to attend the Annual Meeting. +To vote by Internet , you will need the 16-digit control number included on the Notice or on your proxy card (if you requested to receive printed proxy materials). Internet voting is available 24 hours a day and will be accessible until 11:59 p.m. Eastern Time on September 10, 2020 by visiting www.proxyvote.com and following the instructions. +To vote by telephone , you will need the 16-digit control number included on the Notice or on your proxy card (if you requested to receive printed proxy materials). Telephone voting is available 24 hours a day and will be accessible until 11:59 p.m. Eastern Time on September 10, 2020 by calling 1-800-690-6903 and following the instructions. +To vote by mail , follow the instructions provided on your proxy card. Simply mark, sign and date your proxy card and return it promptly in the postage-paid envelope provided. In order to be effective, completed proxy cards must be received by 11:59 p.m. Eastern Time on September 10, 2020. This option is only available if you requested to receive printed proxy materials. +• +Beneficial Owners - If you are the beneficial owner of your shares, you should have received the Notice or a proxy card (if you requested to receive printed proxy materials) with this Proxy Statement from your nominee rather than from us. Simply (i) use the 16-digit control number to vote on the Internet before the Annual Meeting or virtually at the Annual Meeting, or (ii) if you requested to receive printed proxy materials, vote by following the instructions provided on the proxy card you received from your nominee. Your 16-digit control number may be included in the voting instruction form that accompanied the proxy materials. If your nominee did not provide you with a 16-digit control number, you may be able to log onto the website of your nominee prior to the start of the Annual Meeting, on which you will need to select the stockholder communications mailbox link through to the Annual Meeting, which will then automatically populate your 16-digit control number in the virtual Annual Meeting interface. To vote virtually at the Annual Meeting, you must first obtain a valid "legal proxy" from your nominee. Follow the instructions from your nominee to request a "legal proxy." +Q: What can I do if I change my mind after I vote my shares? +A: You may change your vote at any time before the polls are closed at the Annual Meeting. +• +Holders of Record - If you are a holder of record, you may change your vote by (i) providing written notice of revocation to Deckers Outdoor Corporation, 250 Coromar Drive, Goleta, California 93117, Attention: Corporate Secretary, (ii) executing a subsequent proxy using any of the voting methods discussed above (subject to the deadlines for voting with respect to each method), or (iii) attending the virtual Annual Meeting and voting electronically via live webcast. However, simply attending the virtual Annual Meeting will not, by itself, revoke your proxy. +• +Beneficial Owners - If you are a beneficial owner of your shares and you have instructed your nominee to vote your shares, you may change your vote by following the directions received from your nominee to change those voting instructions, or by attending the virtual Annual meeting and voting via live webcast, which can be accomplished as described above. +Subject to any revocation, all shares represented by properly executed proxies will be voted in accordance with the instructions on the applicable proxy, or, if no instructions are given, in accordance with the recommendations of our Board of Directors as described above. +Q: Who is paying for the cost of this proxy solicitation? +A: The solicitation of proxies is made on behalf of our Board and all the expenses of soliciting proxies from stockholders will be borne by us. In addition to the solicitation of proxies by use of the mail, our directors, officers and employees may communicate with stockholders personally or by email, telephone, or otherwise for the purpose of soliciting such proxies. No additional compensation will be paid to any such persons for such solicitation, although we may reimburse them for reasonable out-of-pocket expenses incurred in connection with such solicitation. We will reimburse banks, brokers, dealers and other nominees for their +5 +Table of Contents +reasonable out-of-pocket expenses in forwarding solicitation material to beneficial owners of shares held of record by such persons. The total estimated cost of the solicitation of proxies is approximately $75,000. +Q: I share an address with another stockholder, and we received only one paper copy of the proxy materials. How may I obtain an additional copy of the proxy materials? +A: We have adopted a procedure called "householding," which the SEC has approved. Under this procedure, we are delivering a single copy of the Notice and, if applicable, this Proxy Statement and the Annual Report, to multiple stockholders who share the same address unless we have received contrary instructions from one or more of the stockholders. This procedure reduces our printing and mailing costs. Stockholders who participate in householding will continue to be able to access and receive separate proxy materials. Upon written or oral request, we will promptly deliver a separate copy of the Notice and, if applicable, this Proxy Statement and the Annual Report, to any stockholder at a shared address to which we delivered a single copy of any of these documents. To receive a separate copy of the Notice and, if applicable, this Proxy Statement or the Annual Report, or if you wish to receive separate copies in the future, please contact: Deckers Outdoor Corporation, 250 Coromar Drive, Goleta, California 93117, Attention: Corporate Secretary, Telephone: (805) 967-7611. +In addition, if you are currently a stockholder sharing an address with another stockholder and wish to receive only one copy of future proxy materials for your household, please contact us using the contact information set forth above. Stockholders who are beneficial owners of shares held in street name may contact their bank, broker, dealer or other nominee to request information about householding. +Q: Where can I find the voting results of the Annual Meeting? +A: We will announce preliminary voting results with respect to each proposal at the Annual Meeting. In accordance with SEC rules, final voting results will be published in a Current Report on Form 8-K within four business days following the Annual Meeting, unless final results are not known at that time, in which case preliminary voting results will be published within four business days of the Annual Meeting and final voting results will be published once we know them. +Q : Where else can I find these proxy materials? +A: This Proxy Statement and the Annual Report are available under "SEC Filings" at ir.deckers.com. Other information contained on or accessed through our website does not constitute part of this Proxy Statement. You should not consider other information contained on or accessed through our website in deciding how to vote your shares. References to our website address in this Proxy Statement are inactive textual references only. +Q: Whom should I contact with other questions? +A: If you have additional questions about this Proxy Statement or the Annual Meeting, or if you would like additional copies of this Proxy Statement, please contact: Deckers Outdoor Corporation, 250 Coromar Drive, Goleta, California 93117, Attention: Corporate Secretary, Telephone: (805) 967-7611. +6 +Table of Contents +PROPOSAL NO. 1 +ELECTION OF DIRECTORS +Director nominees by the numbers +(based upon 9 members) +BOARD TENURE AND DIVERSITY +DIRECTOR INDEPENDENCE +7 +Table of Contents +Board Refreshment and Succession +Four new Directors added to our +Board since 2018 +Cynthia L. Davis +June 2018 +Brian A. Spaly +June 2018 +Juan R. Figuereo +March 2020 +Victor Luis +June 2020 +Board Chairman Succession +Board Committee Succession +Michael F. Devine, III +Appointed Chairman of the Board, October 2019 +John M. Gibbons, +Appointed as new Audit Committee Chair +Cynthia L. Davis, +Appointed as new Compensation Committee Chair , +Lauri Shanahan, +Appointed as new Corporate Governance Chair, +October 2019 +Juan R. Figuereo, +Appointed as new Audit Committee Chair, +June 2020 +Overview +Our bylaws provide for the annual election of directors, and also provide that our Board will consist of not less than one nor more than ten members. The specific number of directors within this range is established by our Board. Our Board has adopted a resolution setting the number of members at nine. +At the Annual Meeting, our stockholders will be asked to elect nine directors to serve until the next annual meeting of stockholders to be held in 2021, or until their successors are duly elected and qualified. The names and certain information concerning the persons nominated by our Board to stand for election as directors at the Annual Meeting are set forth in the section of this Proxy Statement titled “ Director Nominees ” below. +If all director nominees are elected, then, immediately following the Annual Meeting, our Board will consist of nine members, and eight out of nine members of our Board, and all members of each of its standing committees, will continue to be “independent directors” under applicable SEC and NYSE rules. +No Agreements or Family Relationships with Directors +No arrangement or understanding exists between any of our directors, director nominees or executive officers and any other person pursuant to which any of them were selected as our director, director nominee or executive officer. +There are no family relationships among any of our directors, director nominees or executive officers. +No Legal Proceedings +There are no legal proceedings related to any of our directors, director nominees or executive officers which are required to be disclosed pursuant to applicable SEC rules. +Director Nominations +The Corporate Governance Committee is responsible for identifying and evaluating nominees for election to our Board. In addition to the candidates proposed by our Board or identified by the Corporate Governance Committee, the Committee considers candidates for director proposed by stockholders, provided such recommendations are made in accordance with the procedures set forth in our bylaws. Stockholder nominations that meet the criteria outlined below will receive the same consideration as nominations made by the Corporate Governance Committee. +Director Qualifications +Directors are responsible for overseeing and monitoring our business consistent with their fiduciary duties to our stockholders. This significant responsibility requires highly-skilled individuals with various qualities, attributes and professional experience. Our Board believes there are both general requirements for eligibility to serve as a member of our Board that are applicable to all directors, and other specialized characteristics that should be represented on our Board as a whole, but not necessarily by each director. +8 +Table of Contents +Qualifications for All Directors +Essential criteria for all director candidates considered by the Corporate Governance Committee include the following: +• +Personal and professional integrity +• +Good business judgment +• +Relevant experience and skills +• +Ability to effectively serve the long-term interests of our stockholders +• +Commitment to devoting sufficient time and energy to diligently performing duties as a director +Board Diversity +The Corporate Governance Committee considers many factors when identifying director nominees, including diversity with respect to personal characteristics (such as race, gender and sexual orientation), as well as diversity in the experience and skills that contribute to our Board's performance of its responsibilities in the oversight of our business. However, the Committee has not adopted a formal policy with respect to the consideration of diversity. +Additionally, because we have three female board members, we are in full compliance with California Senate Bill 826, which requires publicly held corporations with principal executive offices in California to meet certain gender diversity requirements. +Specific Qualifications and Skills Represented on our Board +The Corporate Governance Committee believes the competencies we seek in our directors should support our strategies for long-term success. Below we identify the key qualifications and skills our directors collectively bring to our Board that we believe are important in light of our business and strategic objectives. The particular qualifications and skills that our Board considered in nominating each individual director nominee are included in the directors’ individual biographies below, and are also summarized in a chart following the biographical section. +9 +Table of Contents +DIRECTOR NOMINEES +Our Board of Directors has nominated the following nine directors for election at the Annual Meeting. Important summary information about the director nominees is set forth in the table below. Following the table is certain biographical information about each director nominee, as well as selected information about the specific qualifications, attributes, skills and experience that led our Board to conclude that each director nominee is qualified to serve on our Board. +Board Committees +Name, +Primary Occupation +Age +Director +Since +Independent +Number of Other Public Company Boards +A (1) +C +CG +Michael F. Devine, III +Corporate Director +Chairman of our Board of Directors +61 +2011 +YES +2 +Nelson C. Chan +Private Investor, Entrepreneur and Corporate Director +59 +2014 +YES +2 +l +Cynthia (Cindy) L. Davis +Corporate Director +58 +2018 +YES +2 +ª +Juan R. Figuereo (2) +Corporate Director +64 +2020 +YES +1 +ª +Victor Luis (3) +Corporate Director +53 +2020 +YES +None +l +Dave Powers +Chief Executive Officer and President +54 +2016 +NO +None +Lauri M. Shanahan +Corporate Director +57 +2011 +YES +2 +ª +Brian A. Spaly +Private Investor, Entrepreneur and Corporate Director +43 +2018 +YES +None +l +Bonita C. Stewart +Vice President, Global Partnerships at Google Inc. +63 +2014 +YES +1 +l +l +ª +Committee Chair +A: +Audit Committee +C: +Compensation Committee +CG: +Corporate Governance Committee +(1) Mr. Gibbons, who is a current member of our Audit Committee, will not be standing for re-election at the Annual Meeting. +(2) Mr. Figuereo was appointed to serve as a member of our Board effective as of March 1, 2020. +(3) Mr. Luis was appointed to serve as a member of our Board effective as of June 25, 2020. +MICHAEL F. DEVINE, III +Age: 61 +Director Since: 2011 +Chairman of our Board +Public Company Directorships: +Express, Inc. (NYSE: EXPR) +FIVE Below, Inc. (NYSE: FIVE) +Mr. Devine retired as executive vice president and chief financial officer of Coach, Inc. in 2011. He currently serves as a director and member of the audit committee of Express, Inc. (NYSE: EXPR) and director and chair of the audit committee at FIVE Below, Inc. (NASDAQ: FIVE). He served as a member of the board of Sur La Table, Inc. and was previously a member of the board of directors of The Talbots Inc. From 2004 to 2007, Mr. Devine served as a member of the board of directors and chair of the audit +10 +Table of Contents +committee of Educate, Inc., a leading K-12 education service company with solutions such as Sylvan Learning Center. Mr. Devine also previously served as a director and member of the audit committee of NutriSystem, Inc. (NASDAQ: NTRI). +Selected Qualifications and Skills +• +High Level of Financial Literacy - In addition to experience as the current and former member and chair of four audit committees and experience at Coach, Inc., served as chief financial officer and vice president-finance of Mothers Work, Inc., a maternity apparel retailer that was previously listed on NASDAQ, from February 2000 to November 2001. From 1997 to 2000, was chief financial officer of Strategic Distribution, Inc. (NASDAQ: STRD), a Nasdaq-listed industrial store operator. From 1995 to 1997, was chief financial officer at Industrial System Associates, Inc., and for the prior six years was the director of finance and distribution for McMaster-Carr Supply Company. Holds a B.S. in Finance and Marketing from Boston College and an M.B.A. in Finance from the Wharton School of the University of Pennsylvania. +• +Public Company Executive - Experience at Coach, Inc. involved in managing a public company during a period of high growth. Serves as a corporate director and chair of the audit committees of Express, Inc. and FIVE Below, Inc. +• +Compliance and Risk Oversight - 14 years of experience as a corporate director with risk oversight responsibilities. +• +Premium Branding - Coach, Inc. is a leading marketer of modern classic American accessories. +• +International - Involved in a global brand with worldwide operations while at Coach, Inc. +• +Industry - In addition to experience at Coach, Inc., serves as a director of Express, Inc., a nationally-recognized specialty apparel and accessory retailer offering women’s and men’s merchandise. +• +Supply Chain Management and Retail - Involved in supply chain and wholesale and retail distribution channels while at Coach, Inc. +NELSON C. CHAN +Age: 59 +Director Since: 2014 +Board Committees: +Audit +Public Company Directorships: +Synaptics, Inc. (NASDAQ: SYNA) +Twist Bioscience Corporation (NASDAQ: TWST) +Mr. Chan is a private investor and entrepreneur. Mr. Chan is a director and member of the nominating and corporate governance committee of Twist Bioscience Corporation (NASDAQ: TWST), as well as chairman of the board and member of the audit committee and nominations and corporate governance committee of Synaptics, Inc. (NASDAQ: SYNA). He was chairman of the board, chair of the compensation committee, member of the audit committee and member of the nominating and corporate governance committee of Adesto Technologies Corporation (NASDAQ: IOTS). From 2016 to 2019, Mr. Chan served as a director and member of the compensation and nominating and governance committees of Socket Mobile, Inc. (NASDAQ: SCKT). Mr. Chan is also a director of several privately held companies. From 2006 to 2008, Mr. Chan served as chief executive officer of Magellan Corporation, and from 1992 to 2006, he served in various management positions with SanDisk Corporation. +Selected Qualifications and Skills +• +Entrepreneurial - Expertise in building technology companies. +• +High Level of Financial Literacy - Has held numerous senior management positions with leading companies, including chief executive officer at Magellan Corporation. +• +Public Company Executive - Extensive experience with several leading public and private companies, both as an executive and as a director. +• +Sales and Marketing - Held key sales, marketing and engineering positions at SanDisk Corporation, Chips and Technologies, Signetics and Delco Electronics. +• +International - Was the executive vice president and general manager of consumer business, at SanDisk Corporation, a global multi-billion dollar company. +• +Compliance and Risk Oversight - Currently serves as a member of our Audit Committee and has over 11 years of experience as a corporate director with risk oversight responsibilities. +11 +Table of Contents +• +Technology Infrastructure and Cybersecurity - Extensive experience in technology-based companies including sales, marketing and engineering. +CYNTHIA (CINDY) L. DAVIS +Age: 58 +Director Since: 2018 +Board Committees: +Compensation ( Chair ) +Public Company Directorships: +Kennametal Inc. (NYSE: KMT) +Brinker International, Inc. (NYSE: EAT) +Ms. Davis served as vice president of Nike, Inc. (NYSE: NKE) and president of Nike Golf at Nike, Inc. from 2008 to 2014, and as U.S. general manager at Nike Golf from 2005 to 2008. Prior to Nike, Inc., Ms. Davis served as senior vice president of golf sponsorships, sports marketing and new media at Golf Channel, a subsidiary of Comcast Corporation (NASDAQ: CMCSA), from 2001 to 2004. Ms. Davis has served as a member of the board of directors and on the compensation and nominating and governance committees of Kennametal Inc. (NYSE: KMT), a global supplier of tooling, engineering components and advanced materials, since 2012. In January 2019, she joined the board of directors and currently serves on the compensation and governance committees of Brinker International, Inc. (NYSE: EAT). Ms. Davis served as a member of the board of directors, as chair of the compensation committee and on the governance committee of Buffalo Wild Wings, Inc. (NASDAQ: BWLD), a casual dining restaurant and sports bar chain, from 2015 to 2018. +Selected Qualifications and Skills +• +Premium Branding - Experience as vice president of Nike, Inc. and president of Nike Golf at Nike, Inc., a company engaged in the design, development, manufacturing, and worldwide marketing and sales of footwear, apparel, equipment, accessories and services. +• +Sales and Marketing; Retail - In addition to leading the division’s sales, marketing, and strategy while serving as senior vice president of golf sponsorships, sports marketing and new media at Golf Channel, led the $800 million global golf business for Nike, Inc. +• +High Level of Financial Literacy - Served on the audit committee of Kennametal Inc. Holds an M.B.A. in Marketing and Finance from the University of Maryland College Park. Oversaw the profit and loss of a separate operating unit within Nike, Inc. +• +International - Involved in global brands with worldwide operations while at Nike, Inc. and Kennametal Inc. +• +Public Company Executive - Held various executive management positions at Nike, Inc. and Golf Channel, currently serves as a director of Kennametal Inc. and Brinker International, Inc., and previously served as a director and chair of the compensation committee of Buffalo Wild Wings, Inc. +• +Industry - Extensive experience in the footwear, apparel and equipment industries through various positions at Nike, Inc. +• +Compliance and Risk Oversight - In addition to leadership roles at Nike, Inc., served as a corporate director on the audit committee and serves on the compensation and nominating and corporate governance committees of Kennametal, Inc., and serves on the board of directors, as well as the compensation and corporate governance committees, of Brinker International, Inc. Previously served as chair of the compensation committee and on the governance committee of Buffalo Wild Wings. +• +Technology Infrastructure and Cybersecurity - Serves as a director and on the compensation and nominating and governance committees of Kennametal Inc., a technology-based company. +JUAN R. FIGUEREO +Age: 64 +Director Since: 2020 +Board Committees: +Audit (Chair) +Public Company Directorships: +Western Alliance Bancorporation (NYSE: WAL) +12 +Table of Contents +Mr. Figuereo served as the executive vice president and chief financial officer of Revlon (NYSE: REV), a manufacturer and marketer of beauty and personal care products, from 2016 to 2017. From 2012 to 2015, he served as executive vice president and chief financial officer of NII Holdings, Inc. (NASDAQ: NIHD), a wireless communication services provider under the Nextel brand. NII Holdings, Inc. filed for bankruptcy protection in New York, New York on September 15, 2014. From 2009 to 2012, Mr. Figuereo served as executive vice president and chief financial officer of Newell Brands (NYSE: NWL), a global marketer of consumer and commercial products, and from 2007 to 2009 he served as executive vice president and chief financial officer of Cott Corporation (NYSE: PRMW). Mr. Figuereo has also served in senior management positions at Walmart (NYSE: WMT) and PepsiCo (NASDAQ: PEP). Mr. Figuereo served as a director and chair of the audit committee at PVH Corp. (NYSE: PVH), a leading apparel company with iconic brands such as Calvin Klein and Tommy Hilfiger in its portfolio. In June 2020, he joined the board of directors of Western Alliance Bancorporation (NYSE: WAL). Mr. Figuereo is a venture partner with Ocean Azul Partners, LLC, an early-stage investments fund based in South Florida. He is a member of the National Association of Corporate Directors and of the Florida Institute of CPAs. +Selected Qualifications and Skills +• +Public Company Executive - Previously served as chief financial officer of several public companies with global footprints, including Revlon and Newell Brands, and held executive leadership roles at Walmart and PepsiCo. +• +High Level of Financial Literacy - Served as chief financial officer of several public companies and as chair of the audit committee of PVH Corp. In addition, he serves as a member of the Audit Committee of our Company. Holds a B.B.A. from Florida International University, and previously worked for eight years as a certified public accountant. +• +International - Significant executive leadership experience supporting global brands with worldwide operations. +• +Supply Chain Management - Extensive experience in worldwide supply chain operations while in management roles for global companies. +• +Sales and Marketing; Retail - Served as executive vice president of several global marketers, including Revlon and Newell Brands, and held senior management positions at Walmart and PepsiCo. +• +Mergers & Acquisitions - Previously served as the vice president in charge of Mergers & Acquisitions at Walmart. +VICTOR LUIS +Age: 53 +Director Since: 2020 +Board Committees: +Compensation +Public Company Directorships: +None +Mr. Luis served as the chief executive officer and on the board of directors of Tapestry, Inc. (formerly known as Coach, Inc.) (NYSE: TPR) from 2014 to 2019, where he led the company’s transformation into Tapestry Inc., a New York-based house of modern luxury brands including Coach, Kate Spade and Stuart Weitzman. Mr. Luis joined Coach, Inc. in 2006 as president and chief executive officer of Coach Japan. He rapidly assumed additional leadership responsibilities across Asia and Europe, becoming chief commercial officer of Coach, Inc. in 2013 and chief executive officer in 2014. Prior to joining Coach, Inc., from 2002 to 2006, Mr. Luis was president and chief executive officer of Baccarat, Inc., where he ran the North American operation of the French luxury brand. Mr. Luis joined the Moët-Hennessy Louis Vuitton Group in 1995, ultimately advancing to president and chief executive officer of its subsidiary, Givenchy, Japan Incorporated, before leaving in 2002. +Selected Qualifications and Skills +• +International - Significant experience in managing multi-national teams while at Coach, Inc. and Moët-Hennessy Louis Vuitton Group. +• +Retail - Previously served as chief executive officer of several global luxury retailers. +• +Premium Branding - Premium global branding experience spanning over two decades as chief executive officer of Tapestry, Inc., overseeing its modern luxury brands, and as chief executive officer of Baccarat, Inc. and Givenchy, Japan Incorporated. +• +Industry - Experience in footwear, apparel and accessories while on the board of Tapestry, Inc. with the brands Coach, Kate Spade and Stuart Weitzman. +13 +Table of Contents +• +Public Company Executive - Executive management experience, including service as chief executive officer of publicly traded companies. +DAVE POWERS +Age: 54 +Director Since: 2016 +Chief Executive Officer and President +Public Company Directorships: +None +Mr. Powers became our Chief Executive Officer in June 2016 and joined our Board at that time. Mr. Powers joined our Company as President of Direct-to-Consumer in August 2012. He was appointed President of Omni-Channel in January 2014 and was appointed President in March 2015. Prior to joining our Company, Mr. Powers held several executive leadership roles at Converse Inc. (a subsidiary of Nike, Inc.), Timberland LLC and Gap Inc. (NYSE: GPS). +Selected Qualifications and Skills +• +Industry - Extensive experience in the footwear and apparel industry through a variety of positions at three different footwear companies and a global apparel retailer. +• +Supply Chain Management; Retail - While at Converse Inc., was responsible for global owned and distributor Direct-to-Consumer operations as part of the Nike, Inc. retail leadership team. During tenure at Timberland LLC and Gap Inc., held leadership roles with a variety of retail responsibilities from merchandising to store design. +• +Sales and Marketing - Graduated cum laude from Northeastern University with a B.S. in Marketing. Throughout his career, has been responsible for the development of marketing strategy, with a focus on consumer engagement and digital marketing. While President of Brands of our Company, led the Omni-Channel organization, elevating and advancing the Omni-Channel platform. +• +International - While serving in leadership roles at Timberland LLC, led worldwide retail merchandising, marketing, visual and store design, and oversaw European retail operations. +• +Public Company Executive - Serves as our Chief Executive Officer and President with global responsibilities and oversight. Other leadership roles have been with public companies. +LAURI M. SHANAHAN +Age: 57 +Director Since: 2011 +Board Committees: +Corporate Governance ( Chair ) +Public Company Directorships: +Cedar Fair Entertainment Company (NYSE: FUN) +Treasury Wine Estates Limited (ASX: TWE) +Ms. Shanahan has over 25 years of senior-level experience in retail, consumer products and hospitality, ranging from global, multi-channel, multi-brand enterprises to small and mid-cap growth companies. Ms. Shanahan joined Gap Inc. in 1992 and served in numerous leadership roles, including chief administrative officer and chief legal officer, during her 16-year career with the company. Since then, she has served as a principal of Maroon Peak Advisors, a consumer products and retail consulting firm. She currently serves as a strategic advisor and on the board of directors and as chair of the compensation committee and member of the nominating and governance committee of Cedar Fair Entertainment Company (NYSE: FUN), which owns and operates resorts, amusement parks and other immersive sports and entertainment venues, and on the board of directors, compensation committee and human resources committee of Treasury Wine Estates Limited (ASX: TWE), a vertically integrated global wine business with over 70 brands. +Selected Qualifications and Skills +• +Public Company Executive - Joined Gap Inc. in 1992 and served for 16 years in numerous leadership roles including chief administrative officer, chief legal officer and corporate secretary and chairman of the foundation board. Gap Inc. is a leading global specialty retailer offering clothing, footwear, accessories, and personal care products for men, women, children, and babies under the Gap, Banana Republic, Old Navy, Intermix, and Athleta brands. +14 +Table of Contents +• +International - Directly involved in global brands development, supply chain and worldwide operations while at Gap Inc. and as a director and consultant. +• +Supply Chain Management and Retail - Involved in retail, franchise, online licensing and other distribution channels, as well as sourcing and supply chain, while at Gap Inc. and as a consultant. +• +Sales and Marketing - Acquired sales and marketing experience throughout her career at Gap Inc. +• +Industry - Experience in footwear, apparel and accessories at Gap Inc., Charlotte Russe Holdings, Inc. and through retail consulting firm. +• +Premium Branding - Premium and luxury branding experience at Gap Inc., through serving on the board of Treasury Wine Estates Limited and through retail consulting firm. +• +Compliance and Risk Oversight - In addition to other leadership roles at Gap Inc., served as chief compliance officer and chief legal officer, overseeing the global corporate risk committee, as well as the global governance and compliance organization. +BRIAN A. SPALY +Age: 43 +Director Since: 2018 +Board Committees: +Corporate Governance +Public Company Directorships: +None +Mr. Spaly is a private investor and entrepreneur. He currently serves as a corporate director for six early-stage companies: M1 Finance LLC, Veryable, Happy Returns, Inc., Tribe 9 Foods LLC, Made-In Cookware and Tecovas, Inc., a direct-to-consumer Western boot brand based in Austin, TX, where he serves as executive chairman. Previously, Mr. Spaly was the founder and chief executive officer of Trunk Club, Inc., a personal styling startup, from 2009 to 2017. Prior to Trunk Club, Inc., Mr. Spaly was the founder of Bonobos, Inc., a men’s clothing company, from 2006 to 2009. +Selected Qualifications and Skills +• +Premium Branding - Founded and served as chief executive officer of Trunk Club, Inc., where he focused on making it easy for men and women to discover and acquire stylish clothing without the hassles of the traditional shopping experience. Founded and served as chairman and as a designer of Bonobos, Inc., which started as a company focused on creating well-fitting pants. +• +Supply Chain Management and Retail - Extensive experience with various distribution channels, including retail and e-commerce, through leadership roles at Trunk Club, Inc. and Bonobos, Inc. +• +Sales and Marketing - Acquired significant sales and marketing experience as founder of Trunk Club, Inc. and Bonobos, Inc., and through director positions at various consumer goods companies. +• +High Level of Financial Literacy - Led Trunk Club, Inc. during its acquisition by Nordstrom and serves as a private investor and adviser to entrepreneurs. Holds an M.B.A. from Stanford Graduate School of Business. +• +Industry - In addition to experience with Trunk Club, Inc. and Bonobos, Inc., has significant experience as a private investor and adviser to entrepreneurs, with a portfolio of over 75 angel investments. +• +Technology Infrastructure and Cybersecurity - Experience as founder and chief executive officer of Trunk Club, Inc., an e-commerce company. Serves as corporate director for companies in various industries facing cybersecurity and consumer data issues. +15 +Table of Contents +BONITA C. STEWART +Age: 63 +Director Since: 2014 +Board Committees: +Compensation +Corporate Governance +Public Company Directorships: +Pluralsight, Inc. (NASDAQ: PS) +Ms. Stewart is currently the vice president of Global Partnerships at Google Inc. (NASDAQ: GOOG, GOOGL), a subsidiary of Alphabet Inc. She has been driving digital transformation across multiple industries since joining Google Inc. in 2006. At Google Inc., she oversees strategy, revenue and partner management for the largest U.S. publishers across search, mobile applications, commerce, news, broadcast, telecommunications and domains. From 2002 to 2006, Ms. Stewart worked for DaimlerChrysler AG (now Daimler AG) where she was director of Chrysler Group, Interactive Communications, and prior to that, director of Chrysler Brand Communications. In October 2018, she joined the board of directors and currently serves as a member of the compensation committee of Pluralsight, Inc. (NASDAQ: PS). Ms. Stewart began her career in 1979 at IBM Corporation (NYSE: IBM) where she served in various financial and marketing management positions. +Selected Qualifications and Skills +• +Industry - Over 27 years of experience in brand management, digital strategy and execution. +• +High Level of Financial Literacy - Leads strategy, business development and revenue growth plans for Google Inc.'s largest publisher partnerships. Holds an M.B.A. from Harvard Business School. +• +Consumer Technology/Big Data - Extensive experience in digital transformation, digital engagement data across multiple industries. +• +Entrepreneurial - Served as president, chief operating officer, and co-founder of Nia Enterprises, LLC, a web-based company, and founder and chief executive officer of One Moment in Time, a women's formal-wear rental company. +• +Sales and Marketing - Acquired sales, marketing, product distribution and online advertising experience. +• +International - Led publisher partnerships for Latin America and Canada and has worked for Daimler AG and IBM Corporation, which are multi-billion dollar global companies. +• +Public Company Executive - Strategic planning and large-scale operations experience with Google Inc. and IBM Corporation. +• +Technology Infrastructure and Cybersecurity - Extensive experience in technology-based companies and fluency in digital transformation including digital strategy, mobile, video, programmatic, online advertising, cloud solutions, analytics and execution. +Summary of Qualifications and Skills of Directors +As part of our Board evaluation and director selection processes, the Corporate Governance Committee maintains a Director Skills Matrix. When evaluating potential nominees, the Committee and the Board take into account the diversity of experiences and backgrounds represented on our Board. The Director Skills Matrix below summarizes the specific qualifications, attributes, skills and experience of each director nominee that led our Board to conclude that the nominee is qualified to serve on our Board. In fiscal year 2020 we refined the Director Skills Matrix to reflect the qualifications most relevant for our director nominees to support our Company's business and strategic objectives. While each nominee is generally knowledgeable in each of these areas, an “X” in the chart below indicates that the item is a specific qualification, attribute, skill or experience that the director brings to our Board. The lack of an “X” for a particular item does not mean that the director does not possess that qualification, attribute, skill or experience. +16 +Table of Contents +Specific Qualifications, Attributes, Skills and Experience +Michael F. +Devine, III +Nelson C. +Chan +Cynthia (Cindy) L. Davis +Juan R. Figuereo +Victor Luis +Dave Powers +Lauri M. +Shanahan +Brian A. Spaly +Bonita C. +Stewart +Industry +X +X +X +X +X +X +X +Premium Branding +X +X +X +X +X +X +X +X +International +X +X +X +X +X +X +X +X +High Level Financial Literacy +X +X +X +Retail +X +X +X +X +X +X +X +Consumer Technology/ Big Data +X +X +X +X +Sales and Marketing +X +X +X +X +X +X +X +Supply Chain Management +X +X +X +X +Technology Infrastructure and Cybersecurity +X +X +X +X +Compliance and Risk Oversight +X +X +X +X +X +Corporate Governance +X +X +X +X +X +Mergers and Acquisitions +X +X +X +X +X +Public Company Executive +X +X +X +X +X +X +X +X +Human Resources +X +X +X +X +X +X +X +Consent to Serve +Although each of the persons named above has consented to being named in this Proxy Statement and to serve as a director if elected, and our Board has no reason to believe that any of the nominees will be unable or unwilling to serve as a director, if any nominee withdraws or otherwise becomes unavailable to serve, our Board may decrease the size of our Board, or the proxies may be voted for the election of such other person as a director as our Board may recommend in place of the nominee. +Required Vote +Because this is an uncontested election, each director nominee will be elected by a majority of the votes cast by the shares present virtually or represented by proxy and entitled to vote on the election of directors at the Annual Meeting (assuming that a quorum is present). A "majority of the votes cast" means that the number of votes "FOR" a director nominee must exceed 50% of the total votes cast in the election of directors. +BOARD RECOMMENDATION +OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE +" FOR " +THE ELECTION OF EACH OF THE DIRECTOR NOMINEES. +17 +Table of Contents +CORPORATE GOVERNANCE +Corporate Governance at Deckers +Corporate governance is managed under the direction of our Board of Directors. Our Board has a long-standing commitment to comprehensive and effective corporate governance practices. Our Board continues to evaluate our governance policies and procedures to ensure that the right mix of individuals is present in our boardroom and to ensure effective oversight of our strategy and management in order to best serve our stockholders. Our Board has adopted Corporate Governance Guidelines that set forth the primary framework of governance principles applicable to our Company, a copy of which is available on our website at ir.deckers.com in the Overview section of the Governance tab. +Corporate Governance Elements +Our Board is committed to maintaining the highest standards of corporate governance and has established a strong framework by which our Company is governed. Key elements of our corporate governance framework include: +OUR POLICY OR PRACTICE +DESCRIPTION AND BENEFIT TO OUR STOCKHOLDERS +STOCKHOLDER RIGHTS +Annual Election of Directors +• Our directors are elected annually, reinforcing their accountability to our stockholders. We do not employ a classified board structure. +Single Class of Outstanding Voting Stock +• Our common stockholders control our Company, with equal voting rights. +Majority Voting Standard +• We have a majority voting standard for uncontested director elections. +BOARD STRUCTURE +Director Independence +• Based on the director independence requirements set forth in our Corporate Governance Guidelines, as well as under applicable SEC and NYSE rules, our Board has determined that each of our directors, other than Mr. Powers, is an "independent director." +Committee Governance +• Our three standing Board Committees: Audit, Compensation and Corporate Governance, consist exclusively of independent directors and have adopted written charters. Committee composition and charters are reviewed annually by our Board. +Board Leadership and Structure +• Our Corporate Governance Guidelines allow our Board to determine whether to separate or combine the roles of the Chairman and Chief Executive Officer. Currently, Mr. Devine, a member of our Board, serves as our Company's independent Chairman. We believe this is the most appropriate leadership structure for our Company at this time. +Annual Board Self-Evaluations +• The Corporate Governance Committee conducts and oversees annual self-evaluations of our Board, and of each Board committee, to ensure they are effective and continue to serve the best interests of our stockholders. +Board Oversight of Risk +• Our Board is generally responsible for risk management activities, but has delegated the oversight of risk management to our Audit Committee. Our full Board regularly engages in discussions of the most significant risks we face and how these risks are managed. +EXECUTIVE COMPENSATION +Annual Say-on-Pay Vote +• Annually, our stockholders have the opportunity to approve, on a non-binding advisory basis, the compensation of our Named Executive Officers, which we sometimes refer to as our Say-on-Pay Vote. This affords our stockholders the ability to provide routine feedback on our compensation program. +Corporate Governance Principles +Pursuant to Delaware law and our bylaws, our business, property and affairs are managed under the direction of our Board of Directors. Thus, our Board is the ultimate decision-making body of our Company, except with respect to those matters reserved for our stockholders. +Our Board selects our Chief Executive Officer, and works together with our Chief Executive Officer to select our senior management team, which is charged with the day-to-day operation of our business. Members of our Board are kept informed about our business through discussions with our Chief Executive Officer and other senior management personnel, including by attending brand sales meetings and industry events, participating in periodic informal telephonic meetings, and reviewing materials provided to them, as well as by attending formal meetings of our Board and its committees. Having selected the senior management team, our Board acts as an adviser and counselor to senior management, monitors its performance and proposes or makes changes to the senior management team when it deems necessary or appropriate. +18 +Table of Contents +Board of Directors Meetings +BOARD OF DIRECTORS +• Each of our Directors attended at least 75% of Board meetings and meetings of the Board committees on which he or she served. +• Time is scheduled for our independent directors to meet in an executive session at every Board meeting. +• Our Corporate Governance Guidelines state that directors are expected to attend each of our annual meetings of stockholders. Nine members of our Board attended the annual meeting of stockholders held in September 2019. +Meetings in Fiscal Year 2020: 10 +Director Independence +Our Corporate Governance Guidelines, as well as applicable NYSE rules, require that our Board be comprised of a majority of directors who satisfy the criteria for independence set forth in the NYSE rules. These guidelines help ensure that the interests of our Board and management are aligned with those of our stockholders, that conflicts of interest are avoided, and that we are in compliance with applicable SEC and NYSE rules. An independent director is one who our Board affirmatively determines has no material relationship with our Company (either directly or as a partner, stockholder or officer of an organization that has a relationship with our Company) and otherwise meets the requirements of the NYSE rules. +Based on the director independence requirements set forth in our Corporate Governance Guidelines, as well as in the applicable NYSE rules, our Board has determined that each of our directors, other than Mr. Powers, is an "independent director." In addition, all members of the Audit Committee, Compensation Committee and Corporate Governance Committee meet the independence standards set forth in applicable SEC and NYSE rules. +Board Leadership Structure +Our Corporate Governance Guidelines allow the Board to determine whether to separate or combine the roles of the chairman and chief executive officer. Our Board believes it is important to maintain flexibility in our Board leadership structure, depending on our Board's composition and our business and strategic needs at the time. However, our Board also firmly supports having an "independent director" serve in a Board leadership position at all times. +Since 2016, the roles of the chairman and chief executive officer have been separated. Our Board continues to believe that this leadership structure allows our Chief Executive Officer to focus on the day-to-day operation and management of our Company, while allowing our Chairman to focus on leading the Board in overseeing the interests of our Company and stockholders. +Board Committees +Our Board of Directors has three standing committees: the Audit Committee, the Compensation Committee and the Corporate Governance Committee. Each member of each of the committees is an "independent director" for purposes of applicable SEC and NYSE rules. Each of our committees has a written charter that describes its purpose, membership, meeting structure and responsibilities. A copy of each committee's charter is available on our website at ir.deckers.com in the Overview section of the Governance tab . These charters are reviewed annually by each committee, with any recommended changes approved by our Board. The Compensation Committee charter was amended in June 2018, the Audit Committee charter was amended in September 2018 and the Corporate Governance Committee charter was amended in September 2019. +Summary information regarding the membership, meetings and primary responsibilities of the three standing committees of our Board are listed below: +AUDIT COMMITTEE +• Oversees management's conduct of, and the integrity of, our financial reporting functions. +• Oversees the qualifications, engagement, compensation, independence and performance of the registered public accounting firm that audits our annual financial statements and reviews our quarterly financial reports. +• Oversees our legal and regulatory compliance. +• Oversees the performance of our internal audit function. +• Oversees the application of our related person transaction policy as established by our Board. +• Oversees our systems of internal control over financial reporting and disclosure controls and procedures. +• Oversees the application of our code of business conduct and ethics as established by our Board. +Members: +Juan R. Figuereo (Chair) +Nelson C. Chan +John M. Gibbons (1) +Meetings in Fiscal Year 2020 : 8 +All members of the Audit Committee meet the independence and experience standards set forth in applicable SEC and NYSE rules. +The Chair of the Audit Committee has been determined by our Board to be an "audit committee financial expert" under applicable SEC rules. +(1) +Mr. Gibbons will not be standing for re-election at the Annual Meeting. +19 +Table of Contents +COMPENSATION COMMITTEE +• Oversees the design of our executive compensation program, and responsible for oversight of our employment practices and policies. +• Reviews and approves goals and objectives relevant to the compensation of our executives. +• Evaluates the performance of our executives in light of those goals and objectives. +• Determines and approves the compensation of our executives based, in part, on these evaluations, including each element of compensation. +• Makes recommendations to our Board regarding any action that is required to be submitted to our stockholders for approval with respect to incentive compensation plans and equity-based plans. +• Administers and approves our equity-based plans, and approves (or delegates authority to approve, below the executive level) individual award grants under those plans, or recommends award grants to our Board for approval. +• Produces report on executive compensation for inclusion in our proxy statement for our annual meeting of stockholders. +Members: +Cynthia (Cindy) L. Davis (Chair) +Bonita C. Stewart +Victor Luis +Meetings in Fiscal Year 2020: 6 +All members of the Compensation Committee meet the independence standards set forth in applicable SEC and NYSE rules. +CORPORATE GOVERNANCE COMMITTEE +• Develops and recommends to our Board a set of Corporate Governance Guidelines that establish a framework of governance principles applicable to us. +• Identifies individuals qualified to become directors, consistent with criteria specified in the Corporate Governance Guidelines. +• Recommends to our Board the qualified director nominees to be selected by our Board. +• Recommends to our Board membership of our Board committees. +• Ensures that our certificate of incorporation and bylaws are structured in a manner that best serves our objectives and recommends amendments as appropriate. +• Oversees the evaluation of management, our Board and Board committees. +• Oversees and approves the management continuity planning process. +• Reviews and evaluates the development and succession plan relating to our Chief Executive Officer and our other executive officers. +• Reviews and discusses with management environmental, social and governance efforts that management has implemented to monitor and address the Company's impact on environmental and social issues. +Members: +Lauri M. Shanahan (Chair) +Bonita C. Stewart +Brian A. Spaly +Meetings in Fiscal Year 2020: 4 +All members of the Corporate Governance Committee meet the independence standards set forth in applicable NYSE rules. +Nominating Procedures and Criteria +Among its functions, the Corporate Governance Committee considers and approves nominees for election to our Board. We view board succession as an ongoing process and are regularly identifying, evaluating and pursuing prospective candidates. In addition to the candidates proposed by our Board or identified by the Corporate Governance Committee, the Committee considers candidates for director proposed by our stockholders, provided such recommendations are made in accordance with the procedures set forth in our bylaws. Stockholder nominations that meet the qualification criteria referred to below will receive the same consideration as nominations made by the Corporate Governance Committee. +Essential criteria for all candidates considered by the Corporate Governance Committee are discussed in the section of this Proxy Statement titled " Qualifications for All Directors. " In evaluating candidates for certain Board positions, the Committee also evaluates additional criteria, as reflected in the section of this Proxy Statement titled " Specific Qualifications and Skills Represented on our Board. " +In selecting nominees for our Board, the Corporate Governance Committee evaluates the general criteria referred to above, identifies the specialized criteria for which the Committee has determined there is a need, and considers the candidate's ability to meet the required criteria and contribute to the success of our Company. In evaluating an existing director for re-election, in addition to assessing the criteria referred to above, the Corporate Governance Committee considers a variety of factors, including attendance at Board and committee meetings, independence, length of service, previous performance, and overall contributions to our Company. +The director nominees for the Annual Meeting have been recommended by the Corporate Governance Committee, as well as by our Board of Directors. +20 +Table of Contents +Management Succession and Talent Development +The Corporate Governance Committee, pursuant to its charter, is responsible for overseeing the management continuity planning process. As part of that responsibility, the Corporate Governance Committee reviews and evaluates the development and succession plan relating to our Chief Executive Officer and our other executive officers, including considerations of career paths and attracting and retaining high quality talent. The Corporate Governance Committee works with the Board to assess whether we have the management talent needed to successfully pursue our business objectives. The Corporate Governance Committee also regularly considers the competencies necessary for our Chief Executive Officer to support our strategies for long-term success. +Pursuant to our Corporate Governance Guidelines, the Corporate Governance Committee provides an annual report to our Board of Directors on emergency and expected Chief Executive Officer succession planning. Through this process, the Corporate Governance Committee works with our full Board and management to identify recommendations and evaluations of potential successors, along with a review of any development plans recommended for such individuals. +Board Role in Risk Oversight +While risk management is primarily the responsibility of our management, our Board is responsible for the overall supervision of our business, an important element of which is supervision of our risk management activities. Our Board has delegated certain of these functions to the Audit Committee. Under its charter, the Audit Committee is responsible for: +• +reviewing and discussing with management, our highest ranking manager of internal audit and the independent registered public accounting firm our financial risk exposures and assessing the policies and processes management has implemented to monitor and control such exposure; +• +assisting our Board in fulfilling its oversight responsibilities regarding our policies and processes with respect to risk assessment and risk management, including any significant non-financial risk exposures; +• +reviewing our annual disclosures concerning the role of our Board in the risk oversight of our Company, such as how our Board administers its oversight function; and +• +overseeing our internal audit function. +Our legal and internal audit executives report directly to the Audit Committee regarding material risks to our business, among other matters, and the Audit Committee meets in executive sessions with our highest ranking manager of internal audit and with representatives of our independent registered public accounting firm. For example, the Audit Committee receives updates from our Senior Vice President of Information Technology concerning our cybersecurity and data privacy risks, as well as the mitigation of those risks. +In addition to the Audit Committee's work in overseeing risk management, our full Board regularly engages in discussions of the most significant risks we face and how these risks are being managed, and our Board receives reports on risk management from the Chair of the Audit Committee. Every Board meeting agenda provides for a discussion of risk management. In addition to the responsibilities undertaken by the Audit Committee, the other Board committees have oversight of specific risk areas, consistent with the committees' charters and responsibilities. For example, the Compensation Committee oversees the design of our executive compensation program so as to encourage achievement of our strategic objectives and mitigate compensation-related risk. In addition, the Corporate Governance Committee develops our Corporate Governance Guidelines to establish and oversee an appropriate governance framework. +Compensation Committee Interlocks and Insider Participation +As of the date of this Proxy Statement, no member of the Compensation Committee is serving, and during the past year no member of the Compensation Committee has served, as an officer or employee of our Company or any of its subsidiaries. None of our executive officers currently serves, or during the past year has served, as a member of the board of directors or compensation committee (or other committee serving a similar purpose) of any entity that has an executive officer serving on our Board or the Compensation Committee. In addition, none of the Compensation Committee members had any relationship, or participated in any transaction, with our Company during fiscal year 2020 that requires disclosure under SEC rules. +We have entered into indemnification agreements with each of our directors, including each member of the Compensation Committee. +Communications with Directors +Stockholders and other interested parties may communicate with the Chairman of our Board, the Chair of any Board committee, with our independent directors as a group, or with any individual director, by writing to any such person or group. Communications should be sent to the following address: +21 +Table of Contents +Deckers Outdoor Corporation +Attn: Corporate Secretary +250 Coromar Drive +Goleta, California 93117 +Communications are distributed to our Board, or to any individual director, depending on the facts and circumstances described in the communication. Our Board has requested that certain items that are unrelated to the duties and responsibilities of our Board should be excluded, including the following: junk mail and mass mailings, product inquiries or complaints, new product suggestions, resumes and other forms of job inquiries, surveys, and business solicitations or advertisements. In addition, material that is unduly hostile, threatening, illegal or similarly unsuitable will not be distributed, except that any communication that is not distributed will be made available to any director upon request. +Code of Ethics and Accounting and Finance Code of Ethics +Our Board has adopted a Code of Ethics to assist our officers, directors and other employees in complying with legal and regulatory requirements and maintaining the highest standards of ethical conduct. All of our officers, directors and employees must carry out their duties in accordance with the policies set forth in the Code of Ethics and with applicable laws and regulations. The Code of Ethics complies with the requirements set forth in applicable NYSE rules. +Our Board has also adopted a separate Accounting and Finance Code of Ethics which focuses on the financial reporting process and applies to our Chief Executive Officer, Chief Financial Officer and Corporate Controller (and other employees serving similar functions). The Accounting and Finance Code of Ethics is intended to qualify as a "code of ethics" under applicable SEC rules and to satisfy the standards of ethics and compliance programs under applicable NYSE rules. +Our Code of Ethics and our Accounting and Finance Code of Ethics are available on our website at ir.deckers.com in the Overview section of the Governance tab. To the extent required by law, any amendments to or waivers of any provision of the Code of Ethics or the Accounting and Finance Code of Ethics will be promptly disclosed publicly on our website. +Stockholder Engagement +We maintain an ongoing, proactive outreach effort with our stockholders. We believe our stockholders, as the owners of our Company, have important views and insights into our business operations, and we routinely seek to engage with our stockholders to ensure their views are shared with our Board, and actively considered in discussions of our strategic direction. We highly value stockholder input and have consistently demonstrated our commitment to open and interactive dialogue with our stockholders. +While our Board has a fiduciary responsibility to our stockholders and represents their interests, our management team is primarily responsible for investor relations. Throughout the year, our management team regularly meets with current stockholders, prospective investors, and investment analysts. These meetings serve to engage stockholders and solicit feedback on topics relevant to our Company's performance and strategy. Our management team provides regular updates to our Board of Directors regarding stockholder feedback on these topics. +Please refer to the section of this Proxy Statement titled “ Stockholder Feedback on Executive Compensation ” for more information on how our stockholders impacted the evolution of our executive compensation program for fiscal year 2020. +Corporate Responsibility and Sustainability +As a global leader in designing, marketing and distributing innovative footwear, apparel, and accessories, our worldwide scope and impact is significant. Equally significant is the responsibility we believe we have to our stakeholders, including our consumers, employees, stockholders, and the communities we serve. We believe consumers are increasingly buying brands that advance sustainable business practices and deliver quality products while striving for minimal environmental impact with socially conscious operations. We also believe institutional stockholders and other investors are increasingly focused on investing in companies that emphasize corporate responsibility and sustainability. +We employ socially conscious operations and sustainable business practices, with the goal of continuing to deliver quality products to our consumers and sound financial performance to our stockholders, while minimizing the environmental impact of our business footprint. Our sustainability policies and strategies are aligned with, and informed by, our ongoing efforts with multi-stakeholder initiatives, which involve our employees, suppliers, customers and stockholders, as well as other brands and non-governmental organizations. Through our Corporate Responsibility and Sustainability Program, we expect to continue to advance our sustainable business initiatives with the goal of consistently delivering brand promises that meet consumer expectations, while responsibly delivering the financial results required by our stockholders. As a result of our sustainability efforts, we have been recognized by Investor’s Business Daily as one of the “50 Best ESG Companies” during fiscal year 2020. +Environmental, Social and Governance Framework +Our Corporate Governance Committee oversees our corporate responsibility and sustainability efforts. Our Company's Environmental Social Governance (ESG) program is managed by several executive-level committees which meet on a quarterly +22 +Table of Contents +basis, including the Risk, Sustainability and Compliance Advisory Committee, the Environmental Sustainability Ethical Sourcing Committee, the Deckers Gives Committee, and two Regional Committees. +Our Corporate Sustainability and Compliance Officer is tasked with identifying specific sustainable development goals, or SDGs, that align with the United Nations Global Compact to guide our efforts to address environmental and social challenges. +We identified targets for our Company under each selected SDG below to help hold us accountable and better track progress in the areas of materials, waste, water, climate and clean energy, chemistry, human rights, and gender equality and quality education. +Incorporate 50% more certified responsible and sustainable materials into our products (including recycled, renewable, regenerated, and natural). +Sustainably reduce waste generated at our facilities and partner facilities through refuse, reduction, recycling, and reuse. +Reduce water usage and improve water quality throughout our operations and the communities we operate in. +Reduce energy consumption and carbon emissions throughout our operations. +Reduce or eliminate hazardous chemicals throughout our operations. +Positively impact the communities in which we operate, including championing industry leading human rights practices within our supply chain. +Promote diversity, gender equality, female empowerment, and inclusion for all. +Materials +In fiscal year 2020, as part of our ESG Program efforts, we increased our use of sustainable materials across our brands. We continued to incorporate additional certified-responsible and sustainable materials in our products, including preferred, recycled, renewable, regenerated, repurposed and natural materials. Understanding where our products are made, what they are made from and where they come from allows us to make thoughtful sourcing decisions and further incorporate sustainable materials into our products. +100% +Leather Working Group Certified Tanneries (in sheepskin category) +97.3% +Leather Working Group Certified Tanneries ( in leather and sheepskin categories ) +97.9% +Wool used by our brands was repurposed +20.87% +Polyester used by our brands was recycled +Diversity and Inclusion +At our Company, we believe equity, inclusion and diversity are of the highest priorities and are critical to creating an organization where all employees can come as they are. We strive to create a workplace that values all people - where we embrace differences and everyone feels empowered to bring their full, authentic perspectives to work. We believe that the more perspectives we share, the better we can be. To that end, during the current fiscal year, we (i) have appointed our first Director of Equity, Inclusion and Diversity, (ii) are in the process of implementing Company-wide mandatory trainings, (iii) have created a cross-functional, cross-regional Inclusion Council and regional working groups, and (iv) anticipate implementing a comprehensive global strategy for equity, inclusion and diversity. +23 +Table of Contents +Charitable Giving and Volunteering +Our charitable contributions, product donations, and employee volunteer efforts are an essential part of our culture. +$1.8 million +Amount donated to various non-profit organizations during fiscal year 2020 +Areas of Focus for Giving +41% Community, 25% At-Risk Youth, +13% Environment, 11% Education, +9% Diversity and Inclusion, +1% Family and Children +24 hours +Hours we compensate employees for volunteer time each year +Over 1 million pairs +Number of pairs of shoes donated to non-profit organizations to distribute to those in need since 2006 +Our fiscal year 2020 Corporate Responsibility Report will provide additional information regarding our significant achievements during the year. +24 +Table of Contents +EXECUTIVE OFFICERS +Each of our executive officers serves at the discretion of our Board. Important summary information about our current executive officers is set forth in the table below, followed by certain biographical information about each officer. +EXECUTIVE OFFICER +AGE +POSITION +Dave Powers +54 +Chief Executive Officer, President and Director +Steven J. Fasching +52 +Chief Financial Officer +David E. Lafitte +56 +Chief Operating Officer +Stefano Caroti +57 +President of Omni-Channel +Andrea O'Donnell +51 +President of Fashion Lifestyle +Wendy Yang +56 +President of Performance Lifestyle +Thomas Garcia +47 +Senior Vice President, General Counsel, Corporate Sustainability & Compliance Officer +DAVE POWERS +Age: 54 +Position: Chief Executive Officer, President and Director +Mr. Powers was appointed as our Chief Executive Officer in June 2016 and joined our Board at that time. Mr. Powers joined our Company as President of Direct-to-Consumer in August 2012. He was appointed President of Omni-Channel in January 2014 and was appointed President in March 2015. Mr. Powers has over 20 years of experience in merchandising, product and marketing development, and leading global direct-to-consumer operations and wholesale businesses. Prior to joining us, Mr. Powers served four years as vice president of global direct-to-consumer at Converse Inc., where he oversaw owned and distributor direct-to-consumer as part of the Nike, Inc. retail leadership team. Mr. Powers also held several executive leadership roles at The Timberland Company, including worldwide general merchandising manager and senior director European retail, where he led worldwide retail merchandising, marketing, visual and store design, and oversaw European retail operations. Prior to this, Mr. Powers spent 10 years at Gap Inc., where he held multiple senior management titles, including global divisional merchandise manager for the boy’s division. Mr. Powers graduated cum laude from Northeastern University with a B.S. in Marketing. +STEVEN J. FASCHING +Age: 52 +Position: Chief Financial Officer +Mr. Fasching was appointed as our Chief Financial Officer in June 2018 and served as our Senior Vice President, Corporate Strategy, Planning & Investor Relations since February 2018. Mr. Fasching previously served as our Vice President, Strategy & Investor Relations from January 2016 to February 2018, and as Vice President, Strategic Financial Planning from August 2011 to January 2016. Mr. Fasching has over 28 years of experience in long-term financial and strategic planning and creating and leading the analytical engine of multi-billion dollar organizations. Immediately prior to joining our Company, Mr. Fasching served for five years as the director of finance and assistant controller of Princess Cruise Lines, Ltd., a cruise line owned by Carnival Corporation, where he had been promoted through a number of finance-related positions since September 1990, including director of financial planning, among others. Mr. Fasching received a B.S. degree in Business Administration from Pepperdine University and an M.B.A. from The Anderson School of Management at UCLA. He also completed The Executive Program for Prospective CFOs through the University of Chicago Booth School of Business. +25 +Table of Contents +DAVID E. LAFITTE +Age: 56 +Position: Chief Operating Officer +Mr. Lafitte was appointed as our Chief Operating Officer in February 2015. From 2012 to January 2015, he was outside general counsel for our Company. Prior to joining our Company, Mr. Lafitte was a shareholder with the law firm Stradling Yocca Carlson & Rauth, P.C., where he was a member of the firm’s board of directors and executive committee, and had been advising our Company since 2006. He received a B.A. from the University of Colorado and a J.D. from Tulane University. +STEFANO CAROTI +Age: 57 +Position: President of Omni-Channel +Mr. Caroti was appointed as our President of Omni-Channel in November 2015. He has over 31 years of industry experience in general management, sales, retail, product, marketing, business strategy and brand management. Prior to joining our Company, Mr. Caroti was the chief commercial officer and managing director at PUMA, from August 2008 to December 2014, where he was responsible for PUMA’s global wholesale, retail and e-commerce divisions and PUMA’s geographic operating regions. He held a number of senior executive positions at Nike, Inc. in general management, sales, product and marketing, and during his term as vice president of EMEA commerce, he was responsible for the entire wholesale, retail and e-commerce business in the EMEA region. He received a B.A. with honors from Middlebury College. +ANDREA O'DONNELL +Age: 51 +Position: President of Fashion Lifestyle +Ms. O’Donnell was appointed as our President of Fashion Lifestyle in April 2016. Ms. O’Donnell has over 21 years of experience in the retail industry and is well versed in operating in complex international markets. She has a background in strategic planning, merchandising and marketing, as well as experience in emerging markets and customer relationship management. Over the course of her career, she has held leadership positions with prominent international retailers. Ms. O’Donnell was with DFS Group Limited prior to joining our Company, where she served as president of global merchandising. From 2012 to 2014, she was with Lane Crawford, where she was responsible for merchandising, marketing, CRM and store planning across the Asia Pacific Region. She was the commercial director at John Lewis from April 2004 to August 2012, responsible for online sales and strategy for Omni-Channel. She was the merchandising planning director at Hacket London from September 2002 to April 2004, and prior to that was head of merchandising planning at Jaeger and Debenhams. She received an Executive M.B.A. from the London School of Business. +26 +Table of Contents +WENDY YANG +AGE: 56 +Position: President of Performance Lifestyle +Ms. Yang was appointed as our President of Performance Lifestyle in February 2016. She joined our Company in April 2015. She has over 20 years of industry experience in building out footwear categories and brands, with a strong background in both Lifestyle and Active segments. Working in large, multi-brand companies, Ms. Yang fostered collaborations across brands. She has held product and marketing leadership positions at New Balance Athletic Shoe, Stride Rite Corporation, The Timberland Company, Tommy Hilfiger Footwear and Reebok International Limited. Ms. Yang earned her B.A. in Managerial Studies from Rice University and M.B.A. in Marketing from the Kellogg School of Management at Northwestern University. In addition, she was a professional tennis player for three years, achieving world ranking status through participation in tournaments, including Wimbledon, The French Open, and The Australian Open. +THOMAS GARCIA +AGE: 47 +Position: Senior Vice President, General Counsel, Corporate Sustainability & Compliance Officer +Mr. Garcia joined our Company in 2009. In his current position, he oversees our global legal, compliance, corporate sustainability, and human resource functions. From 2003 to 2009, he was assistant general counsel at Mentor Corporation, a medical device company acquired by Johnson & Johnson. Previously, Mr. Garcia was an associate attorney at the law firms of Hatch and Parent, as well as Buchanan Ingersoll. Mr. Garcia earned his B.S. in Biology from Lehigh University, Masters in Public Health from The University of Massachusetts at Amherst, and J.D. from The George Washington University Law School. +27 +Table of Contents +COMPENSATION DISCUSSION AND ANALYSIS +In this section we discuss the compensation program applicable to our Named Executive Officers, or NEOs. This discussion is divided into the following parts: +EXECUTIVE SUMMARY +COMPENSATION PHILOSOPHY AND OBJECTIVES +COMPENSATION CONSULTANT AND PEER GROUP +ELEMENTS OF FISCAL YEAR 2020 EXECUTIVE COMPENSATION PROGRAM +OTHER COMPENSATION CONSIDERATIONS +Please also review the Summary Compensation Table, and the additional compensation tables and related footnotes that follow this section, as they provide information critical to an understanding of our executive compensation program. +28 +Table of Contents +EXECUTIVE SUMMARY +Named Executive Officers +The following table sets forth our NEOs in fiscal year 2020, the current positions they hold and the dates they were appointed to those positions: +NAMED EXECUTIVE OFFICER +CURRENT POSITION AND DATE APPOINTED +Dave Powers +• Chief Executive Officer and Director - June 2016 +• President - March 2015 +Steven J. Fasching +• Chief Financial Officer - July 2018 +David E. Lafitte +• Chief Operating Officer - February 2015 +Stefano Caroti +• President of Omni-Channel - November 2015 +Andrea O'Donnell +• President of Fashion Lifestyle - April 2016 +Fiscal Year 2020 Financial and Operational Highlights: +We delivered strong results in fiscal year 2020 from both financial and operational perspectives, as highlighted by the following: +• +Total revenue growth of 5.6%, representing an increase of $112 million as compared to the prior year. +• +Major contributions from various brands including incremental growth of $129 million and $26 million from the HOKA ONE ONE brand and the KOOLABURRA brand, respectively. +• +Increased diluted earnings per share by 8.8% to $9.62, demonstrating our ability to deliver value while investing in key growth drivers to fuel the future organization. +Our strong financial performance over the past three fiscal years is illustrated by the financial metrics in the graphs below. For each fiscal year, the information presented is for the 12-month period ended March 31. +Our performance-based compensation for fiscal year 2020 relied on some of these performance metrics to directly tie executive compensation to Company performance in furtherance of our pay for performance philosophy. For example, our Annual Cash Incentive Awards used consolidated operating income and revenue (and business unit operating income and revenue for certain executives with business unit oversight responsibilities), our Annual PSU Awards used earnings per share, and our LTIP PSU Awards used pre-tax income and revenue as the underlying performance metrics. +29 +Table of Contents +(1) +Amounts presented for the fiscal years ended March 31, 2018 and March 31, 2019 are presented on a Non-GAAP basis. Amounts for the fiscal year 2020 have been presented on a GAAP basis as there were no Non-GAAP adjustments. +Our Business and Strategic Objectives +We intend to continue investing strategically in key identified areas of growth within our brand portfolio. Specifically we will invest in the following: +• +The HOKA ONE ONE brand, generating increased brand awareness and supporting the brand globally as it builds market share with core running styles and expands into incremental categories of performance footwear. +• +The UGG brand, focusing on growth within the Men's product offering as well as category extensions within its Women's product offering and through non-core styles. We also intend to re-ignite brand heat in the UGG brand's international markets through localized marketing initiatives paired with strategic distribution shifts. +• +Technology and analytical tools that will enhance our capabilities as we look to support our evolving business, including opportunities to connect with consumers through digital avenues as well as expanding our ecommerce platform. +We intend to closely monitor the planned investments in our business in the near term to enable the organization to weather the potential impacts from the COVID-19 pandemic and related economic pressures. +In light of these developments, our Compensation Committee, which we refer to as the Committee for purposes of this section, may re-evaluate the performance targets and/or metrics associated with executive compensation during fiscal year 2021 and exercise its discretion to effect adjustments to outstanding awards as appropriate to take into account the impact of the COVID-19 pandemic on our results of operations. Any adjustments made by the Committee would be consistent with our overall compensation philosophy, including ensuring pay-for-performance alignment and rewarding achievement of financial and strategic objectives that drive stockholder value. +Our Compensation Program Objectives +The overarching objectives of our executive compensation program are to (i) attract and retain high quality talent; (ii) align interests of executives with stockholders; (iii) provide a significant portion of total compensation through variable, performance-based components; and (iv) offer incentives for achieving both short and long-term goals that are directly tied to the achievement of strategic objectives. As a result, the Committee seeks to design our executive compensation program in a manner that reflects direct alignment between the compensation opportunity provided to our executives and the achievement of our strategic objectives. In doing so, we routinely consider appropriate changes to our compensation program to reflect our strategic direction and the evolving needs of our business. In addition, in order to build and retain the talent necessary to achieve our strategic objectives, the Committee endeavors to develop a compensation program that is attractive and competitive in the marketplace, taking into consideration peer group and broader industry data. +When establishing our executive compensation program each year, the Committee is generally guided by the following four principles that it believes align closely with our compensation objectives: +• +Pay for performance by ensuring that a significant portion of compensation is made available to our executives in the form of variable, performance-based components. +• +Align interests of executives with stockholders by tying a significant portion of compensation to Company performance that creates long-term value for our stockholders and is correlated to increases in the value of our stock price. +30 +Table of Contents +• +Attract and retain executives with the background and experience necessary to lead the organization and achieve our strategic objectives. +• +Reward achievement by offering meaningful and appropriate incentives for achieving both short-term and long-term Company financial goals that have been established by the Committee that are directly tied to the achievement of strategic objectives, while potentially adjusting the required performance objectives as a result of the impacts of COVID-19 pandemic. +Consistent with our strategic objectives, when designing our executive compensation program for fiscal year 2020, the Committee focused on continuing to build and retain our executive team, while providing them with incentives to focus on our key strategic initiatives, including increased revenue, enhanced profitability, improved operating margins and the creation of long-term value for stockholders. These and other strategic considerations are clearly reflected in the design of our program, which demonstrates strong pay-for-performance alignment. In addition, these considerations resulted in a number of important changes to the program for fiscal year 2020, as described in further detail below. +Fiscal Year 2020 Executive Compensation Highlights +In fiscal year 2020, we implemented an executive compensation program that was designed to focus on our key strategic initiatives, including increased revenue, enhanced profitability, improved operating margins and the creation of long-term value for stockholders. Compensation elements under the program include the following: +• +Base salaries; +• +Cash incentive awards, or 2020 Cash Incentive Awards; +• +Annual performance-based restricted stock units, or 2020 Annual PSUs; +• +Time-based restricted stock units, or 2020 Time-Based RSUs; and +• +Long-term incentive plan performance-based restricted stock units, or 2020 LTIP PSUs. +Our fiscal year 2020 executive compensation program was similar to that of fiscal year 2019 with the exception of a few changes, which included adding a consolidated revenue performance metric to the 2020 Cash Incentive Awards for NEOs without business unit responsibility. This metric was added to reflect our continued focus on top line growth. Also, both market adjustments and merit increases were made to the base salaries of certain NEOs, based on peer group analysis and consideration of the specific factors discussed below. +As a result of our strong financial and operational results in fiscal year 2020, the 2020 Cash Incentive Awards were paid out from 95.7% up to 124.1% of target, all of the 2020 Annual PSUs were earned, and all of the 2018 LTIP Performance Stock Options were earned. +Stockholder Feedback on Executive Compensation +We have consistently demonstrated our commitment to stockholder outreach efforts, which has resulted in meaningful, interactive dialogue with our stockholders on a number of significant topics, including our business and strategic objectives, our financial and operational performance, our capital allocation strategy, our corporate governance philosophy, and the performance of our stock. We have also routinely solicited and incorporated stockholder feedback on the design and effectiveness of our executive compensation program. We believe our proactive engagement and response to stockholder feedback, combined with strong pay-for-performance alignment, has resulted in overwhelming stockholder support for our executive compensation program. Indeed, these efforts resulted in 97.0% of the votes cast being voted "for" our executive compensation program at our annual meeting of stockholders held in 2019. This extremely favorable stockholder response is consistent with the prior year. +In an effort to continue our dialogue with our stockholders in fiscal year 2020, we again reached out to key investors to solicit their feedback, in particular with respect to topics such as our corporate governance framework, executive compensation practices, and corporate responsibility and sustainability efforts. As part of these stockholder engagement efforts, we reached out to investors holding over 40% of our shares offering to discuss their views and any concerns regarding our compensation philosophy and program, and to provide an overview of our executive compensation program. This process highlights our ongoing commitment to our stockholder engagement efforts, which has informed the evolution of our executive compensation program for fiscal years 2018, 2019, and 2020, including our adoption of a median pay philosophy and our focus on profitability and revenue in selecting performance metrics that align with our strategic objectives. Our fiscal year 2020 executive compensation program, as described in this section, reflects our ongoing dialogue with our stockholders. +The Committee believes that ongoing, transparent communication with our stockholders is critical to our long-term success, and that the feedback received through our stockholder engagement efforts will continue to contribute to the evolution and enhancement of our executive compensation program. The Committee considers stockholder engagement to be an important part of its decision-making process and plans to continue proactive outreach efforts going forward. +31 +Table of Contents +Compensation Program Highlights +The following table sets forth the key components of our executive compensation program for fiscal year 2020, and the underlying philosophy and considerations that provide the basis for our compensation decisions: +COMPENSATION HIGHLIGHTS +UNDERLYING PHILOSOPHY/ADDITIONAL CONSIDERATIONS +• Pay-for-performance alignment. +• We emphasized strong pay-for-performance alignment by providing a significant portion of the overall compensation opportunity for our NEOs in the form of performance-based compensation that is at risk and directly tied to the achievement of specific Company financial and operational performance objectives. +• Our performance-based compensation is designed to align the interests of our NEOs with those of our stockholders and encourage the achievement of strategic objectives that the Committee believes are critical to our short and long-term success. +• For fiscal year 2020, only 17% of the total compensation opportunity for our President and Chief Executive Officer was fixed, while 83% of his total compensation opportunity was directly tied to the achievement of specific performance conditions and therefore at risk. +• Alignment of performance metrics with strategic objectives. +• Selecting the appropriate performance metrics for our performance-based awards is critical to achieving our business and strategic objectives, motivating our executives and advancing our pay-for-performance philosophy. +• In light of our strategic focus on increased revenue, enhanced profitability, improved operating margins, and the creation of long-term stockholder value, the Committee selected (i) consolidated operating income and revenue for all NEOs (and business unit operating income and revenue targets for certain executives with business unit oversight responsibilities) as the performance metrics for our 2020 Annual Cash Incentive Awards, (ii) "earnings per share," or EPS, for fiscal year 2020 as the performance metric for our 2020 Annual PSUs, and (iii) both “pre-tax income” and consolidated revenue for fiscal year 2022 as the performance metrics for our 2020 LTIP PSUs. Consolidated revenue was added for fiscal year 2020 to reflect our focus on top line growth. +• Limited overlap in performance conditions. +• Our performance metrics involve multiple performance conditions over multiple time periods to ensure our compensation program encourages healthy and sustained growth across our business, while eliminating excessive overlap between the goals. For fiscal year 2020, these metrics focused on a combination of revenue, income, margins and EPS. +• This approach further mitigates against risk associated with our compensation program as it de-emphasizes the impact of any one performance metric. +• Adoption of a "median" pay philosophy. +• Consistent with our prior disclosures, we have actively reformulated our executive compensation program to benchmark the target total compensation opportunity for our NEOs at the median compared to our peer group. +• In adopting this philosophy, the Committee carefully considered a number of factors, including specific feedback received from our stockholders during our stockholder engagement efforts. +• Use of PSUs for LTIP awards. +• LTIP awards were designed to align the interests of our executives with those of our stockholders by focusing performance conditions on both profitability and revenue and issuing awards that increase in value if and as our stock price increases. +• Vesting is based on the achievement of long-term profitability and revenue-based metrics that align closely with our strategic objectives. +• 100% of the equity awards granted during fiscal year 2020 were subject to long-term vesting in order to promote retention of our executives. +• The vesting of each LTIP award is also subject to adjustment based upon the application of a TSR modifier, thereby correlating the vesting of the award to total and relative stockholder returns. +• Appropriate mix of equity awards with focus on performance-based vesting. +• We issued equity awards that vest as to 80% of the awards based on the achievement of Company performance conditions to ensure alignment with our pay-for-performance philosophy, and vest as to 20% of the awards based on the achievement of long-term, time-based vesting targets to attract and retain executives. +32 +Table of Contents +• Continued focus on executive retention. +• While we seek to develop our executive compensation program so that it closely aligns with our pay-for-performance philosophy and rewards achievement of performance goals, this objective must complement other critical objectives, including the retention of executives. +• For fiscal year 2020, we again granted a small portion of equity awards (20%) that vest solely based on the achievement of time-based targets, which promote executive retention because they vest over a long-term service period. +• Consistent with its historical practice, the Committee expects a majority of equity awards to continue to have performance-based vesting conditions. +• Consideration of peer group data and the advice of our independent compensation consultant in setting executive compensation. +• We generally use peer group compensation data as an initial starting point and guidepost in making compensation decisions for our executives, with respect to the aggregate compensation opportunity, as well as each element of compensation. We also evaluate and consider broader industry data. +• We work closely with our independent compensation consultant, which provides us with information on competitive pay practices and trends in our industry and makes recommendations regarding the design and structure of our compensation program, as well as the formulation of our peer group, which we reassess annually. The information and guidance provided by our independent compensation consultant is consistent with our median pay philosophy. +33 +Table of Contents +COMPENSATION PHILOSOPHY AND OBJECTIVES +Compensation Program Objectives +Pursuant to its charter, the Committee has overall responsibility for developing the compensation philosophy and objectives applicable to our executive leadership team, and approving our executive compensation program and policies. The overarching objectives of our executive compensation program are to (i) provide a significant portion of total compensation through variable, performance-based components; (ii) align interests of executives with stockholders; (iii) offer incentives for achieving both short and long-term goals that are directly tied to the achievement of strategic objectives; and (iv) attract and retain high quality talent. As a result, the Committee seeks to design our executive compensation program in a manner that achieves strong alignment between the compensation opportunity provided to our executives and the achievement of our strategic objectives. In so doing, we routinely consider appropriate changes to our compensation program to reflect changes in our strategic direction and the evolving needs of our business. In addition, in order to build and retain the leadership team necessary to achieve our strategic objectives, the Committee endeavors to develop a compensation program that is attractive and competitive in the marketplace, taking into consideration peer group data. +Compensation Philosophy +When establishing our executive compensation program each year, the Committee is generally guided by the following four principles that it believes align closely with our compensation objectives: +PAY FOR PERFORMANCE +ALIGN INTERESTS WITH STOCKHOLDERS +• Offer a significant portion of the compensation opportunity made available to our executives in the form of variable, performance-based components. +• Ensure performance-based compensation is directly tied to the achievement of Company financial, operational and strategic goals that the Committee believes are important for our short and long-term success. +• Align the interests of our executives with those of our stockholders by tying a significant portion of the compensation opportunity to financial and operational performance that the Committee believes will result in the creation of long-term stockholder value. +• Ensure that a significant portion of the compensation opportunity is directly tied to total and relative stockholder return. +REWARD ACHIEVEMENT +ATTRACT AND RETAIN EXECUTIVES +• Offer meaningful and appropriate incentives for achieving both short-term and long-term Company financial and operational goals that have been established by the Committee that are directly tied to the achievement of strategic objectives. +• Ensure that the financial goals are appropriate for each executive given their respective titles, scope of responsibilities, and ability to impact results. +• Attract key executives with the proper background and experience necessary to lead our Company and provide us the best opportunity to achieve our business and strategic objectives. +• Retain our key executives by offering compensation that is attractive and competitive in the marketplace, taking into consideration peer group and broader industry data. +Pay-for-Performance Philosophy +Our pay-for-performance philosophy demands that we offer performance-based compensation that is directly linked to factors that the Committee believes will lead to the creation of stockholder value. Specifically, we pay for performance by tying a significant portion of our executive compensation opportunity to the achievement of pre-established performance metrics that are reflective of our business and strategic objectives, as well as to increases in our stock price. The Committee believes that choosing the right performance metrics is critical to our ability to properly motivate our executives and advance our pay-for-performance philosophy. In particular, this requires that the performance metrics be reconsidered each year as our business and strategic objectives evolve to ensure they provide the appropriate barometer of our growth and success, and motivate the achievement of our objectives in line with how we currently view the business. +To this end, for our 2020 Annual Cash Incentive Awards, the Committee chose consolidated operating income and revenue for all NEOs (and business unit operating income and revenue targets for certain executives with business unit oversight responsibilities) as the performance metrics given our strategic focus on increased profitability and improved margins. For our 2020 Annual PSUs, the Committee selected EPS as the performance metric as it is an important indicator of both profitability and our ability to create value for our stockholders. For our 2020 LTIP PSUs, the Committee established "pre-tax income" and consolidated revenue as the performance metrics, given our focus on long-term profitability and total revenue. In addition, the Committee will apply a total shareholder return, or TSR, modifier, to adjust the vesting of the 2020 LTIP PSUs following a determination that the performance metrics have been achieved to ensure we take into account our stock performance on both an absolute and relative basis. Furthermore, the 2020 Annual PSUs and 2020 LTIP PSUs are equity-based awards the value of which are directly correlated to our stock price. +34 +Table of Contents +As a result of our strong commitment to our pay-for-performance philosophy, a substantial portion of our executives’ compensation opportunity is performance-based and it is not guaranteed that it will be earned. While we offer certain standard compensation elements that provide guaranteed payments, including base salary and limited employee benefits, our executive compensation mix is heavily weighted toward performance-based compensation, which significantly limits the amount of guaranteed pay. In reviewing our adherence to our executive compensation philosophy, the Committee annually reviews both the amount of, and the mix between, guaranteed pay and at-risk pay and seeks to establish appropriate performance targets for the at-risk pay so as to ensure our performance targets align with our business and strategic objectives, are appropriately challenging to achieve, and mitigate our overall compensation-related risk. +As an example, for fiscal year 2020, guaranteed pay for our Chief Executive Officer (reflecting the value of base salary and limited employee benefits) represented only 17% of his targeted compensation opportunity for the year, while at-risk pay represented 83% of his targeted compensation. Of the 83% that reflects at-risk pay, 71% was provided through performance-based awards (reflecting the value of the 2020 Annual Cash Incentive Awards, 2020 Annual PSUs and 2020 LTIP PSUs) that only vest upon the achievement of pre-established Company performance metrics, while 12% was provided through time-based awards (reflecting the value of the 2020 Time-Based RSUs) that only vest upon the achievement of long-term time-based vesting targets. The Committee considers the 2020 Time-Based RSUs to be at-risk pay given that the vesting of the awards is conditioned upon continued employment over an extended period of time and the value of the awards is subject to fluctuation based on our stock price. We believe the significant focus on performance-based awards, including the relative weighting of the various compensation elements provided to our executives, reflects our strong pay-for-performance alignment. The elements of our executive compensation program are established taking into consideration the advice of our independent compensation consultant, which provides us with peer group data regarding competitive pay practices and trends in our industry, as well as the views of the Committee, which is comprised solely of independent directors. +The graphic below illustrates the amount of targeted at-risk pay vs. guaranteed pay for our Chief Executive Officer for fiscal year 2020 and the breakdown of the various components of the compensation program on a percentage basis. +35 +Table of Contents +Governance Practices that Support our Compensation Philosophy +Our executive compensation program has significant governance components that we believe support and strengthen our compensation philosophy and reduce compensation-related risk, including those summarized in the following table: +GOVERNANCE PRACTICE +WHAT WE DO þ +Independent Directors +• All of the members of our Board, other than our President and Chief Executive Officer, are independent directors under applicable SEC and NYSE rules. +Independent Compensation Committee +• The Committee consists entirely of independent directors who meet the independence standards set forth in applicable SEC and NYSE rules. +Independent Compensation Consultant +• The Committee has retained, and routinely consults with, an independent compensation consultant who assists the Committee in gathering competitive pay data, selecting our peer group, and structuring our executive compensation program. The decision to engage the consultant was made solely by the Committee and the consultant reports directly to the Committee. +Compensation Risk Assessment +• The Committee performs an annual review of the risks related to our compensation practices. See the section of this Proxy Statement titled " Compensation Risk Assessment " for additional information. +Frequency of "Say-on-Pay" Vote +• We ask our stockholders to provide an advisory vote on our pay practices on an annual basis, and the Committee considers the outcome of the vote when establishing our executive compensation program. +Stock Ownership Guidelines +• We have adopted stock ownership guidelines for our executive officers and directors, which are reviewed annually. See the section of this Proxy Statement titled " Stock Ownership Guidelines " for additional information. +Clawback Policy +• We have voluntarily adopted a Clawback Policy related to our cash and equity incentive awards, which we believe reinforces our pay-for performance philosophy and contributes to a Company culture that emphasizes integrity and accountability in financial reporting. See the section of this Proxy Statement titled " Clawback Policy " for additional information. +Equity Award Vesting Provisions +• Our equity awards are subject to "double-trigger" vesting upon a change in control. +No Tax Gross Ups +• Our Change in Control and Severance Agreements do not contain provisions allowing for excise tax gross up payments . +No Repricing of Awards +• Our 2015 Stock Incentive Plan, or 2015 Plan, explicitly prohibits the repricing of equity awards. +No Hedging and Pledging +• Our Insider Trading Policy specifically prohibits hedging or pledging our shares, and other similar practices. +No Dividends on Unvested Equity Awards +• Our equity award agreements do not provide for the payment of dividends on unvested equity awards. +36 +Table of Contents +COMPENSATION CONSULTANT AND PEER GROUP +Compensation Consultant +The Committee receives assessments and advice regarding our compensation practices and philosophy from its independent compensation consultant, Frederic W. Cook & Co., Inc., or FWC. FWC provides information on competitive pay practices and trends in our industry, and makes recommendations regarding the formulation of our Peer Group (as defined below), as well as the design and structure of our compensation program. The Committee meets regularly with FWC throughout the year, carefully reviews and assesses the materials provided by FWC, and engages in thorough deliberations with FWC and management regarding our executive compensation program and potential changes. +While our Company is not obligated to retain an independent compensation consultant, the Committee believes that the use of an independent consultant provides additional assurance that our executive compensation program is attractive and competitive in the marketplace, consistent with market conditions, aligned with our business and strategic objectives, and reflective of our compensation philosophy. +In accordance with applicable SEC rules, the Committee took certain factors into consideration when selecting FWC, which it believes may affect the independence of a compensation consultant. In particular, at a meeting of the Committee, the Committee discussed: +• +whether any other services had been or were being provided by FWC to our Company; +• +the amount of fees paid by our Company to FWC as a percent of FWC’s total revenues; +• +FWC’s policies and procedures designed to prevent conflicts, a copy of which was provided to the Committee prior to the meeting; +• +FWC’s ownership of our common stock (if any); and +• +any business or personal relationships between FWC and any Committee members or any of our executive officers. +Furthermore, FWC does not provide any additional services to us or our management, other than the services that are provided to the Committee in FWC’s capacity as our compensation consultant. Following the consideration of these factors, and such additional factors as the Committee deemed appropriate under the circumstances, the Committee made an affirmative determination that FWC is independent and unanimously approved the engagement of FWC. +The decision to engage FWC was made by the Committee, and FWC reports directly to the Committee. While members of our management regularly communicate with representatives of FWC, our management did not recommend the engagement of FWC in any capacity for fiscal year 2020 (or in any prior year) and does not direct or oversee the retention, termination or scope of services of FWC with respect to our executive compensation program. +Peer Group +In making compensation decisions for fiscal year 2020, the Committee compared the aggregate compensation opportunity, as well as each element of compensation, against a peer group of publicly traded footwear, apparel, accessories and lifestyle brand companies that is recommended by FWC and approved by the Committee. We collectively refer to these companies as our Peer Group. Our Peer Group is generally comprised of companies against which we compete for executive talent and stockholder investment, are in related businesses or industries, and are otherwise similar to us based on a number of characteristics as discussed below. Our Peer Group is reviewed at least annually by the Committee with support from FWC. While no single company in our Peer Group reflects all of our Company's characteristics, taken together the Committee believes that this list offers strong comparative analogs to our overall business model and brand portfolio. For fiscal year 2020, our Board approved changes to our Peer Group, adding five companies that have similar business characteristics to those of our Company and removed Chico's FAS, Inc. +For fiscal year 2020, our Peer Group consisted of the following 19 companies: +PEER GROUP FOR FISCAL YEAR 2020 +• Carter's, Inc. +• G-III Apparel Group, Ltd. +• Steven Madden, Ltd. +• Caleres, Inc. +• Genesco, Inc. +• Tapestry, Inc. +• Columbia Sportswear Company +• Guess, Inc. +• The Children’s Place, Inc. +• Crocs, Inc. +• Lululemon Athletica, Inc. +• Under Armour Inc. +• DSW Inc. +• Oxford Industries, Inc. +• Wolverine World Wide, Inc. +• Express, Inc. +• RH +• Fossil Group, Inc. +• Skechers U.S.A., Inc. +37 +Table of Contents +Peer Group Characteristics +The Committee considers a variety of characteristics when it selects the companies which comprise our Peer Group, including the characteristics set forth in the chart below. +Use of Peer Group in Setting Executive Compensation in Fiscal Year 2020 +As part of its efforts to ensure that our executive compensation program is attractive and competitive in the marketplace, the Committee regularly reviews compensation data from our Peer Group provided by FWC. In addition, in order to gain a broader perspective on overall market trends and practices, the Committee regularly reviews data from broader-based compensation surveys. Our Peer Group compensation data is generally used as an initial starting point and guidepost in making compensation decisions for our executives, including with respect to both the target level of compensation and the overall structure of our executive compensation program. +For comparison purposes, FWC typically presents Peer Group data on both individual executive pay levels and program structure. With respect to individual pay levels, FWC provides data on the total compensation opportunity for each executive, as well as for each individual element of compensation. In setting the target compensation opportunity for fiscal year 2020, the Committee was committed to its adoption of a median pay philosophy, pursuant to which it was focused on benchmarking our executives’ target compensation opportunity to the 50th percentile compared to our Peer Group, subject to the discretion retained by the Committee to make adjustments as it deems appropriate. Individual elements of compensation are generally targeted to the 50th percentile as a starting point, although the focus of the median pay philosophy is the total compensation opportunity. +While our Peer Group compensation data is a significant factor in the Committee’s evaluation of compensation decisions, it also considers a variety of additional factors, including complexity and size of the business, the tenure, experience, and level of responsibility of each executive, recent and projected Company performance, recent individual performance, and general industry practices and economic conditions. +38 +Table of Contents +ELEMENTS OF FISCAL YEAR 2020 +EXECUTIVE COMPENSATION PROGRAM +The following table provides summary information regarding the key elements of our fiscal year 2020 executive compensation program: +COMPENSATION +ELEMENT +GUARANTEED +V. +AT-RISK +PERFORMANCE-BASED V. +TIME-BASED +CASH +V. +EQUITY +Base Salary +Guaranteed +Not Applicable +Cash +2020 Annual Cash Incentive Awards +At-Risk +Performance-Based (Short-Term Criteria) +Cash +2020 Annual PSUs +At-Risk +Performance-Based (Short-Term Criteria) ++ +Long-Term Vesting +20% of Equity Compensation +2020 Time-Based RSUs +At-Risk +Time-Based +(Long-Term Vesting) +20% of Equity Compensation +2020 LTIP PSUs +At-Risk +Performance-Based +(Long-Term Criteria and Vesting) +60% of Equity Compensation +Employee Benefits +Guaranteed +Not Applicable +Other +Severance and Change in Control +At-Risk +Not Applicable +Cash/Equity/Other +Base Salary +The following table provides information regarding the base salaries paid to our NEOs during fiscal year 2020: +COMPENSATION ELEMENT +BASE SALARY +Compensation +Considerations +Performance Conditions +• Guaranteed +• Cash +• Provides a minimum level of guaranteed cash compensation necessary to attract and retain executives. +• Balance the level of fixed pay with at-risk pay to properly manage our compensation-related risk. +• No specific vesting conditions associated with payment. +• Salary reviewed and set annually based on a number of factors, including tenure, experience, scope of responsibilities, individual and Company performance, and our Peer Group data. +NAME +BASE SALARY +Dave Powers (1) +$1,100,000 +Steven J. Fasching (2) +$600,000 +David E. Lafitte (3) +$700,000 +Stefano Caroti (4) +$650,000 +Andrea O'Donnell (5) +$625,000 +(1) +Prior to July 1, 2019, Mr. Powers base salary was $1,000,000. +(2) +Prior to July 1, 2019, Mr. Fasching's base salary was $500,000. +(3) +Prior to July 1, 2019, Mr. Lafitte's fiscal year 2019 base salary was $650,000. +(4) +Prior to July 1, 2019, Mr. Caroti's fiscal year 2019 base salary was $570,000. +(5) +Prior to July 1, 2019, Ms. O'Donnell's fiscal year 2019 base salary was $515,000. +39 +Table of Contents +2020 Annual Cash Incentive Awards +The following table provides information regarding the 2020 Annual Cash Incentive Awards granted to our NEOs during fiscal year 2020: +COMPENSATION ELEMENT +2020 ANNUAL CASH INCENTIVE AWARDS +Compensation +Description +Performance Conditions/ Vesting Provisions +Pay-for-Performance +• At-Risk +• Performance-Based ( Short-Term ) +• Cash +• Short-term Company performance conditions based on Committee-approved annual metrics derived from our annual and long-range business and strategic plan. +• Pay based on achievement of threshold, target and maximum Company financial performance levels to reward achievement and strike appropriate balance between compensation incentives and risks. +• The "target" performance condition level is typically in line with the level of Company performance projected for each metric. +• All NEOs have revenue based performance metrics to reflect a continued focus on profitability and top line growth. +• Target bonus set as percentage of base salary. +• Actual bonus payout is based on achievement of fiscal year 2020 consolidated operating income and consolidated revenue targets for all NEOs (and business unit operating income and revenue targets for certain executives with business unit oversight responsibilities). +• For those executives with multiple components, the Committee assigned relative weighting to each component, which is expressed as a percentage of the targeted cash incentive amount. +• For threshold performance, 50% of the cash incentive relevant to that component would be earned. For target performance, 100% of the cash incentive relevant to that component would be earned. For maximum performance, 200% of the cash incentive relevant to that component would be earned. +• Achievement below threshold levels results in no payout. +• When determining Company achievement relative to the performance targets, the Committee relied upon our fiscal year 2020 audited financial statements. +• Fiscal year 2020 consolidated operating income, Global Omni-Channel operating income and Global Omni-Channel revenue metrics were achieved above the threshold and target levels based on Company performance. +• Fiscal year 2020 consolidated revenue, Fashion Lifestyle operating income and Fashion Lifestyle revenue metrics were achieved above the threshold level based on Company performance. +• Cash incentive payments were made above threshold level for certain NEOs and above the target level (but below the maximum level) for other NEOs, as set forth in detail below. +40 +Table of Contents +Target Cash Incentive Amount +The Committee establishes a target amount of annual cash incentive compensation for each NEO, which is expressed as a percentage of base salary. The percentage is determined by the Committee by reference to a number of factors, scope of responsibilities, our recent and projected financial performance, and a review of our Peer Group data. Further, the target cash incentive amount is prorated to reflect any base salary adjustments throughout the full fiscal year so that the target amount reflects actual base salary earnings. +Performance Targets +The following table summarizes the performance conditions for the 2020 Annual Cash Incentive Awards, the relative weighting of each performance condition for each NEO, our Company's performance in light of the targets and the actual payout percentage for each component: +COMPONENT +RELATIVE +WEIGHT FOR EACH NEO +THRESHOLD PERFORMANCE (1) +TARGET PERFORMANCE +MAXIMUM PERFORMANCE +PERFORMANCE AND PAYOUT (1) +Consolidated Operating Income +• 70% for Messrs. Powers, Fasching and Lafitte +• 30% for Mr. Caroti and Ms. O’Donnell +• Consolidated operating income of $289.1 million +• Consolidated operating income of $321.2 million +• Consolidated operating income of $369.4 million +• Consolidated operating income was $338.1 million, resulting in a payout of 135.09% +Consolidated Revenue +• 30% for Messrs. Powers, Fasching and Lafitte +• Consolidated Revenue of $2,049.6 million +• Consolidated Revenue of $2,135 million +• Consolidated Revenue of $2,305.8 million +• Consolidated Revenue was $2,132.7 million, resulting in a payout of 98.64% +Business Unit Operating Income +• 40% for Mr. Caroti +• Global Omni-Channel operating income of $449.9 million +• Global Omni-Channel operating income of $489.1 million +• Global Omni-Channel operating income of $562.4 million +• Global Omni-Channel operating income was $501.1 million, resulting in a payout of 113.61% +• 40% for Ms. O’Donnell +• Fashion Lifestyle operating income of $475.54 million +• Fashion Lifestyle operating income of $516.9 million +• Fashion Lifestyle operating income of $594.4 million +• Fashion Lifestyle operating income was $508.1 million, resulting in a payout of 89.33% +Business Unit Revenue +• 30% for Mr. Caroti +• Global Omni-Channel revenue of $1,776.3 million +• Global Omni-Channel revenue of $1,850.4 million +• Global Omni-Channel revenue of $1,998.4 million +• Global Omni-Channel revenue was $1,864.9 million, resulting in a payout of 109.80% +• 30% for Ms. O’Donnell +• Fashion Lifestyle revenue of $1,577.3 million +• Fashion Lifestyle revenue of $1,622.9 million +• Fashion Lifestyle revenue of $1,752.7 million +• Fashion Lifestyle revenue was $1,590.9 million, resulting in a payout of 64.88% +(1) +Regardless of the level of performance with respect to the other performance metrics, in order to receive any payments for the 2020 Annual Cash Incentive Awards, a consolidated operating income threshold of at least $273.0 million and a consolidated revenue threshold of $1,921.5 million was required to be achieved. These thresholds were selected by the Committee based on a number of factors, including our long-range strategic plan and our financial performance during the previous fiscal year. The operating income and consolidated revenue thresholds were achieved. +41 +Table of Contents +Calculation of Payout of 2020 Annual Cash Incentive Awards +The amount of cash incentive compensation actually earned by each NEO with respect to the 2020 Annual Cash Incentive Awards is calculated by multiplying the target cash incentive amount by the percentage of target earned for each relevant component, and then multiplying the amount by the relative weighting of each component, as illustrated in the table below: +NAME +TARGET PERCENTAGE OF SALARY +COMPONENT +TARGET CASH INCENTIVE AMOUNT +PERCENTAGE OF TARGET EARNED FOR COMPONENT +RELATIVE WEIGHT OF COMPONENT +PAYOUT FOR EACH COMPONENT +TOTAL PAYOUT +Dave Powers +125% +Consolidated Operating Income +$940,745 +135.09% +70% +$1,270,852 +$1,668,545 +Consolidated Revenue +$403,176 +98.64% +30% +$397,693 +Steven J. Fasching +75% +Consolidated Operating Income +$301,947 +135.09% +70% +$407,900 +$535,546 +Consolidated Revenue +$129,406 +98.64% +30% +$127,646 +David E. Lafitte +75% +Consolidated Operating Income +$360,973 +135.09% +70% +$487,639 +$640,238 +Consolidated Revenue +$154,703 +98.64% +30% +$152,599 +Stefano Caroti +75% +Consolidated Operating Income +$141,775 +135.09% +30% +$191,523 +$561,952 +Global Omni-Channel Operating Income +$189,033 +113.61% +40% +$214,760 +Global Omni-Channel Revenue +$141,775 +109.80% +30% +$155,669 +Andrea O'Donnell +75% +Consolidated Operating Income +$134,471 +135.09% +30% +$181,657 +$429,067 +Fashion Lifestyle Operating Income +$179,295 +89.33% +40% +$160,164 +Fashion Lifestyle Revenue +$134,471 +64.88% +30% +$87,245 +42 +Table of Contents +2020 Annual Performance Stock Units +The following table provides information regarding the 2020 Annual PSUs granted to our NEOs during fiscal year 2020: +COMPENSATION ELEMENT +2020 ANNUAL PSUs +Compensation +Description +Performance Conditions/ Vesting Provisions +Pay-for-Performance +• At-Risk +• Performance-Based (Short-Term) and Long-Term Vesting +• 20% of Equity Compensation +• Structured as restricted stock units, or RSUs, that may be settled for our common stock. +• Company performance condition is based on a Committee-approved metric derived from our annual and long-range business and strategic plans. +• EPS is an important indicator of profitability, which is a strategic focus and aligns executives’ interests with those of our stockholders. +• Awards vest based on achievement of threshold and target Company financial performance levels to reward achievement and strike appropriate balance between compensation incentives and risks. +• The "target" performance condition level is typically in line with the level of Company performance projected for the metric. +• Vest subject to achievement of EPS target for fiscal year 2020, the year in which they were granted. +• If performance conditions are met above the threshold level for the EPS target, the number of 2020 Annual PSUs that will vest will increase up to a maximum of 100% of the underlying shares. No additional payouts for performance beyond 100% of target. +• Achievement below threshold level results in no vesting. +• If performance conditions are met, awards vest based on continued employment in three equal installments over three years commencing August 15, 2020. +• When determining Company achievement relative to the performance target, the Committee relied upon our fiscal year 2020 audited financial statements. +• The EPS threshold level for fiscal year 2020 was $7.93; the target level was $8.81. +• Fiscal year adjusted 2020 EPS was $9.36 (1) . +• Since the fiscal year 2020 EPS threshold level was achieved above the target level based on strong Company performance, the awards were earned as to 100% of the underlying shares. +• The value of these awards increases over time as the value of our stock price increases. +(1) +Consistent with the terms of the 2015 Plan pursuant to which the 2020 Annual PSUs were granted, and in line with our historical practice, the Committee adjusted our fiscal year 2020 financial results for certain non-recurring items when determining Company achievement relative to the EPS performance target. For fiscal year 2020, this adjustment primarily related to the exclusion of the impact of share repurchases made during the fiscal year. The Committee determined this adjustment was appropriate because the impact of share repurchases were not (i) related to our core operating results, or (ii) indicative of the performance of our ongoing business operations. The fiscal year 2020 EPS was achieved above the target level. +Calculation of Payout of 2020 Annual PSUs +The amount of shares underlying the 2020 Annual PSUs actually earned by each NEO is set forth in the table below, which reflects 100% of the granted amounts: +NAME +NUMBER OF SHARES EARNED +Dave Powers +4,605 +Steven J. Fasching +864 +David E. Lafitte +1,152 +Stefano Caroti +978 +Andrea O'Donnell +921 +43 +Table of Contents +2020 Time-Based Restricted Stock Units +The following table provides information regarding the 2020 Time-Based RSUs granted to our NEOs during fiscal year 2020: +COMPENSATION ELEMENT +2020 TIME-BASED RSUs +Compensation +Description +Performance Criteria/ Vesting Provisions +Pay-for-Performance +• At-Risk +• Time-Based (Long-Term) +• 20% of Equity Compensation +• Balance the level of performance-based pay with time-based pay to properly manage our compensation-related risk. +• Primarily used for retention of our executives. +• Customary among our Peer Group. +• Awards vest based on continued employment in three equal installments over three years commencing August 15, 2020. +• Each of our NEOs were granted 2020 Time-Based RSUs in an amount equal to 20% of their total equity compensation for fiscal year 2020. +• The value of these awards increases over time as the value of our stock price increases. +44 +Table of Contents +2020 Long-Term Incentive Plan Performance Stock Units +The following table provides information regarding the 2020 LTIP PSUs granted to our NEOs during fiscal year 2020: +COMPENSATION ELEMENT +2020 LTIP PSUs +Compensation +Description +Performance Conditions/ Vesting Provisions +Pay-for-Performance +• At-Risk +• Performance-Based (Long-Term) +• 60% of Equity Compensation +• Vesting of awards dependent on achievement of profitability and consolidated revenue targets, which are consistent with achievement of our strategic objectives. +• Company performance condition is based on Committee-approved metrics derived from our long-range business and strategic plan. +• Pre-tax income and revenue support our focus on profitability and consolidated revenue as key strategic initiatives and align executives’ interests with the execution of our long-range plan. +• 50% of each award will vest subject to the achievement of a pre-established pre-tax income target measured in fiscal year 2022, based on our three-year long range plan. +• 50% of each award will vest subject to the achievement of a pre-established consolidated revenue target measured in fiscal year 2022, based on our three-year long range plan. +• No vesting of any portion of the award will occur if the Company fails to achieve revenue and pre-tax income thresholds. To the extent Company financial performance is achieved above the threshold, the number of PSUs that will vest from the threshold to the target, and then from the target to the maximum, will increase as determined by linear interpolation. +• To the extent Company performance is achieved above the threshold level for each of the performance metrics (pre-tax income and consolidated revenue), the number of PSUs that will vest will be increased, provided that the maximum number of PSUs that may vest with respect to a particular award will not exceed 200% of the targeted amount for that award regardless of the level of Company performance. +• The executive must provide continued service through March 31, 2022. +• Following a determination that the performance metrics have been achieved, the vesting of the awards will be subject to adjustment based upon the application of a TSR modifier, thereby correlating the vesting of the awards to total and relative stockholder returns. +• When determining Company achievement relative to the performance target, the Committee will rely upon our fiscal year 2022 audited financial statements, as may be adjusted by the Committee for certain non-recurring items. +• We continue to assess the impact of COVID-19 on our ability to achieve the threshold and target levels of the performance metrics. +• We may reevaluate the performance targets and/or metrics and exercise discretion to effect adjustments as appropriate to take into account the impact of COVID-19. +• As further described below, the number of shares that are subject to vesting under the awards will be further adjusted based on the TSR generated by our Company relative to our peer group to ensure we take into account our performance on both an absolute and relative basis. +TSR Modifier +The 2020 LTIP PSU awards earned are subject to adjustment based on a TSR modifier. The amount of the adjustment will be determined based upon a comparison of Company TSR relative to the TSR of a pre-determined set of peer group companies, or TSR Peer Group, for the 36-month performance period commencing on April 1, 2019 and ending on March 31, 2022. For purposes of the 2020 LTIP PSUs, the TSR Peer Group used is the same as the Peer Group, but also includes three additional competitive +45 +Table of Contents +companies in similar industries. Depending on Company TSR relative to the TSR of the TSR Peer Group, the number of RSUs that will be subject to vesting pursuant to each 2020 LTIP PSU will be modified as follows with straight line interpolation between the percentiles: +Company TSR Relative to Peer Group TSR (Percentile) +TSR Modifier +(Multiplier) +≥75th +125% +55th +100% +(no modification) +≤25th +75% +Notwithstanding the foregoing, in the event that Company TSR is greater than or equal to the 55th percentile relative to the TSR of the TSR Peer Group, but Company TSR is a negative amount, the TSR modifier will not be applied (the number of RSUs to be vested will not be increased as a result of the TSR multiplier). In addition, regardless of Company TSR relative to the TSR of the TSR Peer Group, the maximum number of RSUs that may vest pursuant to a particular 2020 LTIP PSU will not exceed 200% of the targeted amount. +Employee Benefits +The following table provides information regarding the key employee benefits granted or paid to our NEOs during fiscal year 2020: +COMPENSATION ELEMENT +EMPLOYEE BENEFITS +Compensation +Considerations +Benefits +• Key employee benefits granted or paid +• Generally reflect benefits provided to all of our US-based full-time employees. +• Provides a standard package of benefits necessary to attract and retain executives. +• 401(k) defined contribution plan. +• 401(k) plan Company match of 50% of each eligible participant's tax-deferred contributions on up to 6% of eligible compensation on a per payroll period basis, with a true-up contribution if such eligible participant is employed by our Company on the 1st day of the calendar year. +• Premiums for long-term disability insurance and life insurance for the benefit of the employees. +• Health and welfare benefit plans. +• Relocation expenses for new hires. +• Standard employee product discounts. +• NEOs and certain other senior executives are eligible to contribute to our Nonqualified Deferred Compensation Plan, or NQDC Plan, and our Company may choose to match any or all such contributions. The NQDC Plan is described in further detail in the section of this Proxy Statement titled " Nonqualified Deferred Compensation. " +46 +Table of Contents +Severance and Change in Control +The following table provides information regarding the severance and change in control provisions in our severance agreements and equity award agreements entered into with each of our NEOs: +COMPENSATION ELEMENT +SEVERANCE AND CHANGE IN CONTROL PROVISIONS +Compensation +Considerations +Terms +• Certain cash payments to NEOs, and vesting of certain equity awards in the event of a separation of employment +• The employment of our NEOs is "at will," meaning we can terminate them at any time and they can terminate their employment with us at any time. +• "Double-trigger" provisions preserve morale and productivity and encourage executive retention in the face of the potentially disruptive impact of a change in control. +• These provisions are considered a typical component of a competitive executive compensation program for executives among our Peer Group. +• The provisions take into account the expected time it takes a separated executive to find a similarly situated job. +Change in Control and Severance Agreements : +• Provide for certain cash payments, and the vesting of certain equity awards, in the event there is a separation of employment under various circumstances. +Equity Award Agreements : +• Provide for accelerated vesting of awards upon a change in control if the recipient is terminated by the acquiring entity in connection with the change in control under specified circumstances. In addition, vesting of awards will be accelerated in full if the acquiring entity does not agree to provide for the assumption or substitution of the awards, and for certain outstanding historical awards if the transaction is not approved by a majority of the continuing directors. +For additional information about the severance and change in control provisions in our severance agreements and equity award agreements, please refer to the section of this Proxy Statement titled " Potential Payments upon Termination or Change in Control. " +47 +Table of Contents +OTHER COMPENSATION CONSIDERATIONS +Role of Executive Officers in Compensation Decisions +At the request of the Committee, our Chief Executive Officer or other senior management personnel may provide performance and compensation information to the Committee to inform its compensation decisions. However, our executives are not permitted to be present during any deliberations and voting regarding their own compensation, or during any executive sessions of the Committee. The Committee considers the information provided by our management, as well as information and advice provided by FWC, when making compensation decisions for our NEOs and other executives. The Committee, which is comprised solely of independent directors under applicable SEC and NYSE rules, thoroughly evaluates and approves all elements of compensation for our NEOs and other executives. +Compensation Risk Considerations +The Committee is responsible for reviewing the rewards that may be derived from our compensation program for all employees, including our NEOs, to assess whether the program encourages excessive or unnecessary risk-taking. The Committee conducts a thorough compensation risk analysis at least annually, but also takes into account compensation-related risks each time it grants compensation awards throughout the fiscal year. In conducting these assessments, the Committee considers a number of factors including the following: +• +Our compensation program consists of both guaranteed pay and at-risk pay, and the Committee reviews this mix annually. +• +Our Peer Group and industry compensation data is reviewed regularly to ensure that our compensation program is appropriate and competitive. +• +We have adopted a median pay philosophy whereby we remain focused on setting our executives’ target total compensation, as well as individual components of compensation, at the median compared to our Peer Group. +• +Performance-based awards are earned based on the achievement of pre-established Company and business unit performance goals covering multiple time periods. Separately, we seek to limit overlap between our applicable performance conditions to ensure our compensation program is encouraging healthy and sustained growth across our business. +• +Our performance-based awards are subject to maximum award amounts to cap the potential compensation amount associated with an award. +• +Our executive compensation program encourages executive retention through long-term vesting provisions. For fiscal year 2020, all of the equity awards we granted were subject to three-year long-term vesting. +• +We have adopted stock ownership guidelines, which encourage executives to have a significant, long-term equity position in our Company. +• +Our performance-based awards are subject to clawback provisions. +• +Our insider trading policy prohibits our NEOs and other executive officers from hedging the economic interest in our securities, and from pledging our securities. +• +Our severance and change in control benefits are designed to attract and retain executives without providing excessive benefits. +• +Our equity awards are intended to provide for “double-trigger” vesting upon a change in control. We adopted changes to our equity award agreements in fiscal year 2018 to ensure our awards continue to be viewed as “double-trigger” awards. +The Committee believes that, although the majority of the compensation opportunity provided to our executives is at-risk pay that is determined based upon the achievement of Company performance conditions, our executive compensation program does not encourage excessive or unnecessary risk-taking. The Committee does not believe that our compensation program is reasonably likely to have a material adverse effect on us. +CEO Pay Ratio +Pursuant to Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of Regulation S-K, we are required to disclose the ratio of the annual total compensation of our principal executive officer to the median of the annual total compensation of all of our employees (excluding our principal executive officer), or our median employee. During fiscal year 2019, our principal executive officer was Dave Powers, our President and Chief Executive Officer. +For fiscal year 2020, the annual total compensation of our median employee was $37,407. The annual total compensation of our President and Chief Executive Officer was $6,748,144, as reported in the Summary Compensation Table below. +48 +Table of Contents +Based on this information, the fiscal year 2020 ratio of the annual total compensation of our principal executive officer to the annual total compensation of our median employee was approximately 180:1. +Consistent with Item 402(u) of Regulation S-K, we identified our median employee as of March 1, 2020 by (i) aggregating for each applicable employee (A) annual base salary for salaried employees (or hourly rate multiplied by estimated work schedule, for hourly, temporary and seasonal employees), (B) overtime paid during the year, and (C) target incentive compensation, and (ii) ranking this compensation measure for our employees from lowest to highest. For non-U.S. employees, we converted such employees’ pay to a U.S. dollar equivalent by applying an 11-month average trailing exchange rate for each applicable currency. This calculation was performed for all of our employees, excluding Mr. Powers, except as described below. After identifying our median employee as described above, we calculated that individual’s 2020 total annual compensation in accordance with the requirements of the applicable SEC rules. +Individuals (with corresponding number of employees, representing all employees in that jurisdiction) who were employed in Canada (109), Vietnam (50) and Austria (13) were excluded from the employee population for purposes of this disclosure, pursuant to the de minimis exemption set forth in the applicable SEC rules. For fiscal year 2020 we did not exclude employees who were employed in Belgium because the exclusion of such employees, in addition to those identified above, would exceed the 5% threshold permitted by the de minimis exemption. We determined that this change did not materially impact the identification of the median employee. After taking into consideration the foregoing exemption, on March 1, 2020, we had 2,051 U.S. employees and 1,436 non-U.S. employees. Irrespective of the use of the exemption on the same date we had 2,051 U.S. employees and 1,611 non-U.S. employees. +The pay ratio we have reported above is a reasonable estimate calculated in a manner consistent with applicable SEC rules based on our internal records and the methodology described above. The SEC rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices. Therefore, the pay ratio reported by other companies may not be comparable to the pay ratio we have reported above. +Clawback Policy +Consistent with our executive compensation philosophy, which seeks to reward executive officers for financial performance that creates value for our stockholders, we have adopted a Clawback Policy. Under this policy, we will seek recoupment or reimbursement with respect to performance-based compensation paid or awarded to our executive officers when the following three factors exist: +• +the incentive compensation payment or award (or the vesting of such award) was based upon the achievement of financial results, as reported in a Form 10-Q, Form 10-K or other report filed with the SEC, that were subsequently the subject of a restatement to correct an accounting error due to material noncompliance with any financial reporting requirement under the federal securities laws; +• +a lower payment or award would have been made to such executive officer (or lesser or no vesting would have occurred with respect to such award) based upon the restated financial results; and +• +the need for the restatement was identified within three years after the date of the first public issuance or filing of the financial results that were subsequently restated. +Under the policy, the restatement does not need to be the result of misconduct by the executive officers for the recoupment to apply. +The recoupment or reimbursement to be sought by our Company will be equal to the portion of any performance-based compensation paid to or received by such executive officer for or during each of the restated periods that is greater than the amount that would have been paid or received had the financial results been properly reported. +In addition, under this policy, the Committee may seek to recoup or recover from an employee certain performance-based compensation previously paid or awarded to such employee if the Company determines that the employee has engaged in significant misconduct that causes financial or reputational harm to the Company (regardless of whether a restatement of financial results has occurred). +Stock Ownership Guidelines +To further align the interests of our directors and executive officers with those of our stockholders, we have adopted Stock Ownership Guidelines. The Committee periodically reviews our Stock Ownership Guidelines to ensure it continues to evolve to take into account changes to our executive compensation program. +49 +Table of Contents +The minimum ownership thresholds for our NEOs are determined as a multiple of the NEO's base salary as of the beginning of each calendar year. Absent extraordinary circumstances (e.g., unusual volatility in stock price) it is expected that our NEOs will strive to achieve the applicable level of ownership, subject to exceptions that may be granted by the Committee. Unless and until a NEO reaches the required ownership level, the NEO must retain at least 75% of the shares, after payment of any applicable exercise price and tax withholdings, and 75% of any exercisable options that are granted or acquired through our equity compensation program. +Our directors are required to adhere to the stock ownership guidelines that are referenced in our Corporate Governance Guidelines. The minimum ownership threshold (including deferred shares) for our directors is determined as a multiple of the annual retainer fee and must be achieved within five years of the initial election of the director. +The following table provides a summary of the Stock Ownership Guidelines applicable to our NEOs and directors: +POSITION +STOCK OWNERSHIP GUIDELINES +Chief Executive Officer +6x Annual Base Salary +Other NEOs +3x Annual Base Salary +Directors +5x Annual Board Retainer Fee +Tax and Accounting Considerations +Among the factors it considers when making executive compensation decisions, the Committee considers the anticipated tax and accounting impact to us (and to our executive officers) of various payments, equity awards and other benefits. +The Committee considers the impact of the provisions of Section 162(m) of the Internal Revenue Code, or the Code, as amended by the Tax Cuts and Jobs Act, or TCJA. That section generally limits the deductibility of compensation paid by a publicly-held company to “covered employees” for a taxable year to $1.0 million. Effective for taxable years beginning on and after January 1, 2018, “covered employees” generally include our Chief Executive Officer, Chief Financial Officer and other highly compensated executive officers. Effective for taxable years beginning prior to January 1, 2018, an exception to this deduction limit applied to “performance-based compensation,” such as cash incentive and stock option awards, that satisfied certain criteria. This exception to the Section 162(m) deduction limit for “performance-based compensation” was repealed by the TCJA. Thus, except for certain “performance-based compensation” payable pursuant to written contracts that were in effect on November 2, 2017 and that are not modified in any material respect on or after that date, effective for taxable years beginning on and after January 1, 2018 our tax deduction with regard to compensation of “covered employees” is limited to $1.0 million per taxable year with respect to each executive officer. With respect to cash and equity awards that were in effect on November 2, 2017, and that are not modified in any material respect on or after that date, the Committee is mindful of the benefit to us and our stockholders of the full deductibility of compensation and have taken steps so that both the cash incentive and stock option awards that we granted may qualify for deductibility under Section 162(m) of the Code. However, awards that we granted that were intended to qualify as “performance-based compensation” may not necessarily qualify for such status under Section 162(m) of the Code. With respect to cash incentive and equity awards that we may grant in the future, we do not anticipate that the $1.0 million deduction limitation set forth in Section 162(m) of the Code will have a material impact on our results of operations. +The Committee also considers the impact of Section 409A of the Code, and in general, our executive plans and programs are designed to comply with the requirements of that section so as to avoid possible adverse tax consequences that may result from noncompliance. +We account for equity awards in accordance with the requirements of Financial Accounting Standards Board Accounting Standards Codification, or FASB ASC, Topic 718, Stock Compensation. +Our Change in Control and Severance Agreements do not allow for excise tax gross up payments. +50 +Table of Contents +COMPENSATION COMMITTEE REPORT +The Compensation Committee of our Company has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussion, the Compensation Committee has recommended to our Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement. +THE COMPENSATION COMMITTEE +Cynthia (Cindy) L. Davis (Chair) +Bonita C. Stewart +Victor Luis +The Compensation Committee Report shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as amended, or the Acts, except to the extent that we specifically incorporate this information by reference, and shall not otherwise be deemed filed under the Acts. +51 +Table of Contents +SUMMARY COMPENSATION TABLE +The following table sets forth all compensation paid or awarded to our NEOs during fiscal years 2020, 2019 and 2018. The amounts set forth in the table have been calculated in accordance with the requirements of applicable SEC rules, and do not necessarily reflect the amounts that have actually been paid to, or which may be realized by, our NEOs. The table should be read together with the section of this Proxy Statement titled “Compensation Discussion and Analysis.” +Name and Principal Position +Year +Salary +($) +Bonus +($) +Stock +Awards +($) (1)(2) +Option +Awards +($) (1) +Non-Equity Incentive +Plan +Comp. +($) (3) +All Other Comp ($) (4) +Total +($) +Dave Powers +Chief Executive Officer +2020 +1,069,231 +— +3,999,689 +— +1,668,545 +10,679 +6,748,144 +2019 +987,534 +— +2,999,747 +— +2,468,836 +10,355 +6,466,472 +2018 +950,000 +— +1,199,964 +1,800,007 +2,108,397 +11,129 +6,069,497 +Steven J. Fasching (5) +Chief Financial Officer +2020 +569,231 +— +750,128 +— +535,546 +11,140 +1,866,045 +2019 +408,493 +— +649,989 +— +561,918 +18,857 +1,639,257 +David Lafitte +Chief Operating Officer +2020 +684,615 +— +1,000,220 +— +640,238 +11,551 +2,336,624 +2019 +642,521 +— +900,280 +— +963,781 +10,778 +2,517,360 +2018 +620,000 +— +360,031 +539,997 +825,604 +10,032 +2,355,664 +Stefano Caroti +President of Omni-Channel +2020 +625,385 +— +849,689 +— +561,952 +12,566 +2,049,592 +2019 +565,014 +— +824,693 +— +703,498 +57,650 +2,150,855 +2018 +550,000 +— +329,959 +494,993 +656,204 +76,332 +2,107,488 +Andrea O'Donnell +President of Fashion Lifestyle +2020 +591,154 +— +899,794 +— +429,067 +10,840 +1,930,855 +2019 +511,260 +— +649,946 +— +567,471 +10,251 +1,738,928 +2018 +500,000 +— +249,998 +374,999 +558,436 +27,655 +1,711,088 +(1) +The amounts in this column represent the aggregate grant date fair value of the respective awards computed in accordance with FASB ASC Topic 718. For information about the assumptions underlying these computations, please refer to Note 8 to our consolidated financial statements included in our Annual Report on Form 10-K. In accordance with applicable SEC rules, for those awards that are subject to the satisfaction of performance conditions, the amounts reported reflect the value at the grant date based upon the probable outcome of such conditions. +(2) +These amounts reflect grants made to our NEOs of 2020 Annual PSUs, 2020 Time-Based RSU and 2020 LTIP PSUs. Refer to the sections of this Proxy Statement titled "2020 Annual Performance Stock Units,” “2020 Time-Based Restricted Stock Units” and "2020 Long-Term Incentive Plan Performance Stock Units" for additional information. +(3) +These amounts reflect the cash incentive payments paid to our NEOs under our 2020 Annual Cash Incentive Awards. Refer to the section of this Proxy Statement titled "2020 Annual Cash Incentive Awards” for additional information. +(4) +Except as otherwise specifically noted in the footnotes below, the amounts in this column reflect payments to certain NEOs of our matching contributions under the 401(k) plan and NQDC Plan, as well as life insurance premiums paid on policies that have been adopted for the benefit of our NEOs. +(5) +Mr. Fasching was appointed Chief Financial Officer in July 2018, and initially became a NEO in fiscal year 2019. +52 +Table of Contents +GRANTS OF PLAN-BASED AWARDS IN +FISCAL YEAR 2020 +The following table sets forth all grants of plan-based awards made to our NEOs during fiscal year 2020. The amounts set forth in the table do not necessarily reflect the amounts that have actually been paid to, or which may be realized by, our NEOs. The table should be read together with the section of this Proxy Statement titled “ Elements of Fiscal Year 2020 Executive Compensation Program. ” +Potential Payouts as of Grant Date Under Non-Equity Incentive Plan Awards (1) +Potential Payouts as of Grant Date Under Equity Incentive Plan Awards +All Other Stock Awards: Number of Shares (#) (4) +All Other Option Awards: Number of Shares Underlying Options +(#) +Exercise Price of Option Awards ($/Sh) +Grant Date +Fair Value +of Awards +($) (5) +Name +Grant Date +Threshold +($) +Target +($) +Max. +($) +Threshold +(#) +Target +(#) +Max. +(#) +Dave Powers +671,961 +1,343,921 +2,687,842 +— +— +— +— +— +— +— +6/26/19 +— +— +— +2,303 (2) +4,605 (2) +4,605 (2) +— +— +— +799,842 +6/26/19 +— +— +— +— +— +— +4,605 +— +— +799,842 +9/19/19 +— +— +— +8,166 (3) +16,331 (3) +32,662 (3) +— +— +— +2,400,004 +Steven J. Fasching +215,677 +431,353 +862,706 +— +— +— +— +— +— +— +6/26/19 +— +— +— +432 (2) +864 (2) +864 (2) +— +— +— +150,068 +6/26/19 +— +— +— +— +— +— +864 +— +— +150,068 +9/19/19 +— +— +— +1,531 (3) +3,062 (3) +6,124 (3) +— +— +— +449,992 +David E. Lafitte +257,838 +515,676 +1,031,352 +— +— +— +— +— +— +— +6/26/19 +— +— +— +576 (2) +1,152 (2) +1,152 (2) +— +— +— +200,091 +6/26/19 +— +— +— +— +— +— +1,152 +— +— +200,091 +9/19/19 +— +— +— +2,042 (3) +4,083 (3) +8,166 (3) +— +— +— +600,038 +Stefano Caroti +236,292 +472,583 +945,166 +— +— +— +— +— +— +— +6/26/19 +— +— +— +489 (2) +978 (2) +978 (2) +— +— +— +169,869 +6/26/19 +— +— +— +— +— +— +978 +— +— +169,869 +9/19/19 +— +— +— +1,735 (3) +3,470 (3) +6,940 (3) +— +— +— +509,951 +Andrea O'Donnell +224,119 +448,237 +896,474 +— +— +— +— +— +— +— +6/26/19 +— +— +— +461 (2) +921 (2) +921 (2) +— +— +— +159,968 +6/26/19 +— +— +— +— +— +— +921 +— +— +159,968 +6/27/19 +— +— +— +— +— +— +570 +— +— +99,887 +9/19/19 +— +— +— +1,633 (3) +3,266 (3) +6,532 (3) +— +— +— +479,971 +(1) +The amounts in this column reflect the potential payouts under the 2020 Annual Cash Incentive Awards as of the grant date of such awards. Each of the performance conditions for fiscal year 2020 was achieved above target, with the exception of Fashion Lifestyle Group operating income and revenue. Fashion Lifestyle Group achievements were above threshold, but below target. Cash incentive payments were made in June 2020. Refer to the section of this Proxy Statement titled "2020 Annual Cash Incentive Awards" for additional information. +(2) +The awards in this row reflect the grant of 2020 Annual PSUs. The performance condition was achieved above the target level in fiscal year 2020 and the awards were earned with respect to 100% of the underlying shares. Following achievement of the performance condition, these awards vest over three years in equal annual installments on August 15, 2020, 2021 and 2022. Refer to the section of this Proxy Statement titled "2020 Annual Performance Stock Units" for additional information. +(3) +The awards in this row reflect the grant of 2020 LTIP PSUs. These awards may vest based upon our achievement of a performance target for fiscal year 2022. As of the date of this Proxy Statement, we consider the performance conditions to be probable of being achieved at target of 100% and the awards will vest up to a maximum of 200% of the target amount. Refer to the section of this Proxy Statement titled "2020 Long-Term Incentive Plan Performance Stock Units" for additional information. +(4) +The awards in this column reflect the grant of 2020 Time-Based RSUs. These awards vest over three years in equal annual installments on August 15, 2020, 2021 and 2022. Refer to the section of this Proxy Statement titled "2020 Time-Based Restricted Stock Units" for additional information. +(5) +The amounts in this column represent the aggregate grant date fair value of the respective awards computed in accordance with FASB ASC Topic 718. For information about the assumptions underlying these computations, please refer to Note 8 to our consolidated financial statements included in our Annual Report on Form 10-K. In accordance with applicable SEC rules, for those awards that are subject to +53 +Table of Contents +the satisfaction of performance conditions, the amounts reported reflect the value of the grant date based upon the probable outcome of such conditions. +54 +Table of Contents +OUTSTANDING EQUITY AWARDS AT +2020 FISCAL YEAR END +The following table sets forth equity awards granted to our NEOs that remained outstanding as of March 31, 2020. The market values of the awards set forth in the table have been calculated in accordance with the requirements of applicable SEC rules, and do not necessarily reflect the amounts that have actually been paid to, or which may be realized by, our NEOs. The table should be read together with the section of this Proxy Statement titled “ Elements of Fiscal Year 2020 Executive Compensation Program. ” +Stock Options +Stock Awards +Name +Number of +securities +underlying +unexercised +options +exercisable +(#) +Number of +securities +underlying +unexercised +unearned +options +(#) +Option +exercise +price +($) +Option +expiration +date +Number of +shares that +have not +vested +(#) +Market +value of +shares that +have not +vested +($) (3) +Number of +unearned +shares that +have not +vested +(#) (4) +Market +value of +unearned +shares that +have not +vested +($) (5) +Dave Powers +68,089 (1) +— +61.86 +3/31/2026 +21,724 (6) +2,911,016 +31,301 +4,194,334 +71,914 (2) +— +69.29 +6/13/2024 +— +— +— +— +Steven J. Fasching +— +— +— +— +4,450 (7) +596,300 +6,056 +811,504 +— +— +— +— +David E. Lafitte +20,427 (1) +— +61.86 +3/31/2026 +6,060 (8) +812,040 +8,574 +1,148,916 +21,574 (2) +— +69.29 +6/13/2024 +— +— +— +— +Stefano Caroti +18,725 (1) +— +61.86 +3/31/2026 +5,396 (9) +723,064 +7,587 +1,016,658 +19,776 (2) +— +69.29 +6/13/2024 +— +— +— +— +Andrea O'Donnell +14,185 (1) +— +61.86 +3/31/2026 +5,076 (10) +680,184 +6,510 +872,340 +14,982 (2) +— +69.29 +6/13/2024 +— +— +— +— +(1) +These awards reflect 2017 LTIP NQSOs that were granted in November 2016. Our Compensation Committee has determined that the performance condition was achieved, and the options are fully vested and exercisable. +(2) +These awards reflect 2018 LTIP NQSOs that were granted in June 2017. Our Compensation Committee has determined that the performance condition was achieved, and the options are fully vested and exercisable. +(3) +In accordance with applicable SEC regulations, the market value of the shares has been determined based on the closing price of our common stock on March 31, 2020, which was $134.00. +(4) +The stock awards are 2019 LTIP PSUs and 2020 LTIP PSUs that were granted in September 2018 and September 2019 respectively, which remain outstanding and subject to long-term performance and service conditions. The shares included reflect achievement of the performance conditions at the target level of 100%. However, the maximum performance level for these awards is 200%. The 2019 LTIP PSUs will vest on March 31, 2021, and the 2020 LTIP PSUs will vest on March 31, 2022, each subject to achievement of certain performance criteria. +(5) +In accordance with applicable SEC regulations, the market value of the shares has been determined based on the closing price of our common stock on March 31, 2020, which was $134.00. The market value of 2019 and 2020 LTIP PSUs was calculated as to 100% of the shares underlying the awards. +(6) +This amount consists of (i) 2,887 2018 Annual PSUs granted in June 2017, which shares vest as to 100% on August 15, 2020, (ii) 2,887 2018 time-based RSUs granted in June 2017, which shares vest as to 100% on August 15, 2020, (iii) 3,370 2019 Annual PSUs granted in June 2018, which shares vest as to 50% on August 15, 2020 and 2021, (iv) 3,370 2019 time-based RSUs granted in June 2018, which shares vest as to 50% on August 15, 2020 and 2021, (v) 4,605 2020 Annual PSUs granted in June 2019, which shares vest as to 33.33% on August 15 2020, 2021 and 2022, and (vi) 4,605 2020 time-based RSUs granted in June 2019, which shares vest as to 33.33% on August 15 2020, 2021 and 2022. +(7) +This amount consists of (i) 369 2018 Annual PSUs granted in June 2017, which shares vest as to 100% on August 15, 2020, (ii) 738 2018 time-based RSUs granted in June 2017, which shares vest as to 100% on August 15, 2020, (iii) 674 2019 Annual PSUs granted in June 2018, which shares vest as to 50% on August 15, 2020 and 2021, (iv) 674 2019 time-based RSUs granted in June 2018, which shares vest as to 50% on August 15, 2020 and 2021, (v) 267 2019 time-based RSUs granted in January 2019, which shares vest as to 50% on January 7, 2021 and 2022, (vi) 864 2020 Annual PSUs granted in June 2019, which shares vest as to 33.33% on August 15 2020, 2021 and 2022, and (vii) 864 2020 time-based RSUs granted in June 2019, which shares vest as to 33.33% on August 15 2020, 2021 and 2022. +(8) +This amount consists of (i) 866 2018 Annual PSUs granted in June 2017, which shares vest as to 100% on August 15, 2020, (ii) 866 2018 time-based RSUs granted in June 2017, which shares vest as to 100% on August 15, 2020, (iii) 1,012 2019 Annual PSUs granted in June 2018, which shares vest as to 50% on August 15, 2020 and 2021, (iv) 1,012 2019 time-based RSUs granted in June 2018, which shares vest as to 50% on August 15, 2020 and 2021, (v) 1,152 2020 Annual PSUs granted in June 2019, which shares vest as to 33.33% on +55 +Table of Contents +August 15 2020, 2021 and 2022, and (vi) 1,152 2020 time-based RSUs granted in June 2019, which shares vest as to 33.33% on August 15 2020, 2021 and 2022. +(9) +This amount consists of (i) 794 2018 Annual PSUs granted in June 2017, which shares vest as to 100% on August 15, 2020, (ii) 794 2018 time-based RSUs granted in June 2017, which shares vest as to 100% on August 15, 2020, (iii) 926 2019 Annual PSUs granted in June 2018, which shares vest as to 50% on August 15, 2020 and 2021, (iv) 926 2019 time-based RSUs granted in June 2018, which shares vest as to 50% on August 15, 2020 and 2021, (v) 978 2020 Annual PSUs granted in June 2019, which shares vest as to 33.33% on August 15 2020, 2021 and 2022, and (vi) 978 2020 time-based RSUs granted in June 2019, which shares vest as to 33.33% on August 15 2020, 2021 and 2022. +(10) +This amount consists of (i) 602 2018 Annual PSUs granted in June 2017, which shares vest as to 100% on August 15, 2020, (ii) 602 2018 time-based RSUs granted in June 2017, which shares vest as to 100% on August 15, 2020, (iii) 730 2019 Annual PSUs granted in June 2018, which shares vest as to 50% on August 15, 2020 and 2021, (iv) 730 2019 time-based RSUs granted in June 2018, which shares vest as to 50% on August 15, 2020 and 2021, (v) 921 2020 Annual PSUs granted in June 2019, which shares vest as to 33.33% on August 15 2020, 2021 and 2022, (vi) 921 2020 time-based RSUs granted in June 2019, which shares vest as to 33.33% on August 15 2020, 2021 and 2022, and (vii) 570 time-based RSUs granted in June 2019, which shares vest as to 33.33% on August 15, 2020, 2021 and 2022. +56 +Table of Contents +FISCAL YEAR 2020 OPTION EXERCISES AND STOCK VESTED +The following table provides information for our NEOs regarding option exercises and stock award vesting during fiscal year 2020, including the number of shares acquired upon exercise or vesting and the value realized as determined based on applicable SEC rules. The value realized does not necessarily reflect the amount that will actually be received by our NEOs upon the sale of the shares. +Option Awards +Stock Awards +Name +Number of +Shares +Acquired on +Exercise +(#) +Value Realized on +Exercise +($) +Number of +Shares +Acquired on +Vesting +(#) (1) +Value Realized +on Vesting +($) (2) +Dave Powers +— +— +12,650 +1,681,691 +Steven J. Fasching +— +— +2,837 +382,499 +David E. Lafitte +— +— +3,797 +504,773 +Stefano Caroti +— +— +5,818 +773,445 +Andrea O'Donnell +— +— +5,489 +816,504 +(1) +The total number of shares actually received by our NEOs, net of shares withheld for taxes, was as follows: 6,381 for Mr. Powers, 1,852 for Mr. Fasching, 1,970 for Mr. Lafitte, 3,275 for Mr. Caroti, and 3,587 for Ms. O'Donnell. +(2) +Pursuant to applicable SEC rules, the amounts in this column reflect the value realized upon the vesting of the stock awards, which is based on the closing price of our common stock on the applicable vesting dates. +57 +Table of Contents +NONQUALIFIED DEFERRED COMPENSATION +Nonqualified Deferred Compensation Plan +The Committee has adopted the NQDC Plan, which is an unfunded, nonqualified deferred compensation program sponsored by our Company to provide certain members of our management the opportunity to defer compensation into the NQDC Plan. The NQDC Plan year is from January 1 st to December 31 st . Participants may defer up to 50% of their annual base salary and up to 85% of any cash incentive bonus under the NQDC Plan. We have the option, but not the obligation, to make discretionary or matching cash contributions to NQDC Plan participants. We have established a rabbi trust as a reserve for the benefits payable under the NQDC Plan. During fiscal year 2020, certain of our NEOs elected to make contributions to the NQDC Plan, and the Committee elected to match a portion of the contributions under the NQDC Plan. +Name +Executive contributions during fiscal year 2020 ($) (1) +Registrant contributions during fiscal year 2020 ($) +Aggregate losses during fiscal year 2020 ($) +Aggregate withdrawals/distributions during fiscal year 2020 ($) +Aggregate balance at end of fiscal year 2020 ($) +Dave Powers +— +— +(663 +) +— +35,147 +Steven J. Fasching +— +— +— +— +— +David Lafitte +— +— +(17,740 +) +— +167,403 +Stefano Caroti +45,000 +— +(102,942 +) +— +656,779 +Andrea O'Donnell +— +— +— +— +— +Total +45,000 +— +(121,345 +) +— +859,329 +(1) +The amounts reported in this column reflect contributions made by our NEOs under the NQDC Plan during fiscal year 2020. These amounts are separately included in the " Summary Compensation Table " above, and do not reflect amounts in addition to those amounts. +Deferred Stock Unit Compensation Plan +The Committee has also adopted a Deferred Stock Unit Compensation Plan. Under the plan, a director or employee who holds unvested RSUs may elect to defer settlement of up to 100% of the awards. For each unit of our common stock held pursuant to an award of RSUs that is deferred, the participant will receive one Deferred Stock Unit. Amounts deferred will be distributed, as described in the plan, at the time elected by the participant. A participant’s Deferred Stock Units will be settled in shares of our common stock, as more specifically described in the plan. None of our NEOs elected to participate in the plan during fiscal year 2020. +58 +Table of Contents +POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL +Change in Control and Severance Agreements +We have entered into Change in Control and Severance Agreements, or Severance Agreements, with each of our NEOs. The information below describes compensation and benefits that are payable or earned under the Severance Agreements with our NEOs (which are each referred to therein as an “executive”) upon the occurrence of different termination events. +Termination by Our Company for Cause, or by Executive Other Than for Good Reason +Pursuant to the Severance Agreements with each of our NEOs, if the executive is terminated by our Company for Cause, or the executive terminates his or her employment, other than for Good Reason (in each case as defined below), then the NEO will receive the following from our Company: +• +payment of his or her accrued base salary, accrued vacation, reimbursement for reimbursable expenses, accrued and vested benefits under our plans or programs and other benefits required to be paid by law, accrued but unpaid non-equity incentive bonus for the prior fiscal year (excluding any non-equity incentive bonus for the year of termination); and +• +right to exercise all vested equity awards pursuant to the terms of the applicable award agreement. +Termination Due to Death or Total Disability +Pursuant to the Severance Agreements with each of our NEOs, if the executive is terminated due to his or her death or total disability, then in addition to those benefits provided upon a termination by our Company for Cause or by executive other than for Good Reason, the NEO will receive: +• +pro-rated portion of his or her non-equity incentive bonus for the current fiscal year based on actual length of service during the year of termination and actual achievement by our Company of the performance conditions in respect of such bonus previously established by the Committee. +Termination by Our Company Without Cause +Pursuant to the Severance Agreements with each of our NEOs, if the executive is terminated by our Company without Cause, then in addition to those benefits provided upon a termination due to death or total disability, the NEO will receive: +• +payment of his or her then effective annual base salary for one year following his or her termination, subject to such executive signing a release; and +• +receipt of health benefits for a period of one year following his or her termination or his or her attainment of alternative employment that provides health benefits, whichever is earlier. +Termination without Cause or by Executive for Good Reason within Two Years of a Change in Control +Pursuant to the Severance Agreements with each of our NEOs, if the executive is terminated by our Company without Cause or by the executive for Good Reason within two years of a Change in Control, then in addition to those benefits provided upon a termination due to death or total disability, the NEO will receive: +• +subject to such executive signing a release, payment of a specified proportion of his or her then effective annual base salary plus the greater of (i) one and one-half times the targeted non-equity incentive bonus immediately prior to the termination or (ii) one and one-half times the average actual non-equity incentive bonus for the previous three years; and; +• +receipt of health benefits for a specified period of months following his or her termination or his or her attainment of alternative employment that provides health benefits, whichever is earlier. +For purposes of the Severance Agreements, “Cause” means (i) any willful breach of duty by the executive in the course of his or her employment or continued violation of written Company employment policies after written notice of such violation, (ii) violation of our insider trading policies, (iii) conviction of a felony or any crime involving fraud, theft, embezzlement, dishonesty or moral turpitude, (iv) engaging in activities which materially defame our Company, engaging in conduct which is materially injurious to our Company or our affiliates, or any of our respective customer or supplier relationships, financially or otherwise, or (v) the executive’s gross negligence or continued failure to perform duties or executive’s continued incapacity to perform such duties. +“Good Reason” means without the consent of the executive, if within two years of a change in control, there is a material reduction of the executive’s total compensation, benefits, and perquisites, our Company's relocation is greater than 50 miles from the location where the executive performs services, or a material change in the executive’s authority, duties or responsibilities; +59 +Table of Contents +provided, however, no such event shall constitute Good Reason unless the executive shall have given written notice to our Company of the executive’s intent to resign for “Good Reason” within 30 days after the executive first becomes aware of the occurrence of any such event (specifying the nature and scope of the event) and such event or occurrence shall not have been cured within 30 days of our receipt of such notice , and the executive resigns no later than 90 days after the expiration of the 30-day cure period. +“Change in Control” means the occurrence of a merger, consolidation, sale of all or a major portion of the assets of our Company (or a successor organization) or similar transaction or circumstance where any person or group acquires, in one or more transactions, beneficial ownership of more than 50% of the outstanding shares of voting stock of our Company (or a successor organization). +No NEOs will be entitled to gross ups for excise tax penalty on “excess golden parachute payments” as a result of termination following a Change in Control. +Recent Amendments to Change in Control and Severance Agreements +Effective June 22, 2020, we entered into amended Change in Control and Severance Agreements with our NEOs, which were generally consistent with the Severance Agreement, but which included the following changes: +• +If the executive is terminated by our Company without Cause then, in addition to those benefits provided upon a termination due to death or total disability, the NEO will receive (i) payment of his or her then effective annual base salary for, in the case of the CEO, 18 months, or, in the case of any other NEO, 12 months following his or her termination, subject to such executive signing a release; and (ii) receipt of health benefits for a period of one year following his or her termination or his or her attainment of alternative employment that provides health benefits, whichever is earlier. +• +If the executive is terminated by our Company without Cause and upon a Change in Control, then, in addition to those benefits provided upon a termination due to death or total disability, the NEO will receive (i) payment of, in the case of the CEO, two times, or, in the case of any other NEO, 1.5 times his or her then effective annual base salary, subject to such executive signing a release; and (ii) receipt of health benefits for, in the case of the CEO, a period of two years, or, in the case of any other NEO, a period of 18 months following his or her termination or his or her attainment of alternative employment that provides health benefits, whichever is earlier. +• +The definition of “Good Reason” has been revised to mean, without the consent of the executive, if within two years of a change in control, there is a material reduction of the executive’s total compensation, benefits, and perquisites (excluding a material reduction resulting from a decrease in value of the Company’s stock), our Company's relocation is greater than 50 miles from the location where the executive performs services, or a material change in the executive’s authority, duties, or responsibilities; provided, however, no such event shall constitute Good Reason unless the executive shall have given written notice to our Company of the executive’s intent to resign for “Good Reason” within 30 days after the executive first becomes aware of the occurrence of any such event (specifying the nature and scope of the event) and such event or occurrence shall not have been cured within 30 days of our receipt of such notice, and the executive resigns no later than 90 days after the expiration of the 30-day cure period. +• +The definition of "Change in Control" has been revised to mean the occurrence of a merger, consolidation, sale of all or a major portion of the assets of our Company (or a successor organization) or similar transaction or circumstance where any person or group acquires, in one or more transactions, beneficial ownership of more than 50% of the outstanding shares of voting stock of our Company (or a successor organization), or a change in a majority of the members of our Board. +Equity Award Agreements +Pursuant to the “double-trigger” vesting provisions of the awards outstanding as of the end of fiscal year 2020 under the 2006 Equity Incentive Plan, or 2006 Plan, and 2015 Plan, except as specifically noted below, the vesting of each award will be accelerated in full in the event of a change in control that is approved by a majority of the Continuing Directors (as defined in the award agreements) if the acquiring or successor entity in the change in control provides for the continuance or assumption of the award agreement, or the substitution for the award agreement of a new agreement of comparable value covering shares of a successor corporation, and (i) the recipient is terminated by the acquiring company without Cause or pursuant to a Constructive Termination (as such terms are defined in the relevant award agreements) within either 12 or 24 months of such change in control; or (ii) only in the case of certain LTIP NQSOs and RSUs, the recipient has provided Continuous Service (as defined in the award agreements) through the applicable performance vesting date. +Notwithstanding the foregoing summary, the award agreements governing the grants of the 2020 Annual PSUs only provide for acceleration as described above to the extent that the Committee determines that at least the “threshold” performance conditions associated with the awards have been met unless the change in control occurs prior to the end of the relevant performance period, in which case the unvested PSUs will accelerate in full, regardless of achievement of the performance condition. +60 +Table of Contents +In addition, the vesting of each equity award will be accelerated in full if: (i) for certain of the outstanding historical awards, a change in control occurs that has not been approved by a majority of the Continuing Directors; or (ii) the acquiring or successor entity in the change in control does not agree to continue or assume the award agreement, or substitute new awards of comparable value. In the case of the 2020 Annual PSUs, if the change in control occurs after the relevant performance period, only the 2020 Annual PSUs earned based upon the achievement of the relevant performance condition, as determined by the Committee, will accelerate. +Severance and Change in Control Payments +The following table provides information about the payments and benefits that would have been paid or provided to our NEOs in the event that a termination of employment had occurred on March 31, 2020. The amounts reflected in the table are in addition to amounts that would have been payable for accrued but unpaid base salary, accrued paid time off, accrued but unpaid cash incentive compensation, and reimbursement of expenses. +The payments to be made, and the stock and option awards to be vested, in connection with different termination events (including in connection with a change in control) for each of our NEOs have been determined by reference to the terms of the applicable Severance Agreements and equity award agreements. Except as described above, no payments or benefits would be provided to our NEOs in the event of a termination of employment for Cause. Refer to the section of this Proxy Statement titled “ Potential Payments upon Termination or Change in Control ” for additional information. +For purposes of the table, the value of the stock and option awards has been determined based on the closing price of our common stock on March 31, 2020. In the event of an actual change in control transaction, the value of our common stock may be significantly different than this assumed value, in which case the value realized by our NEOs upon the vesting of the stock and option awards may be significantly different. +Upon Termination +Name +Type of Compensation +or Benefit +Due to Death or +Total Disability +($) +By our Company +Without Cause +($) +In Connection with a Change +in Control +($) +Dave Powers +Cash payments +— +1,100,000 +4,772,889 +Value of health benefits +— +18,593 +27,889 +Value of stock awards (1) +— +— +7,105,350 +Value of option awards +— +— +— +Total +— +1,118,593 +11,906,128 +Steven J. Fasching +Cash payments +— +600,000 +1,540,385 +Value of health benefits +— +21,815 +21,815 +Value of stock awards (1) +— +— +1,407,804 +Value of option awards +— +— +— +Total +— +621,815 +2,970,004 +David E. Lafitte +Cash payments +— +700,000 +2,264,811 +Value of health benefits +— +18,593 +18,593 +Value of stock awards (1) +— +— +1,960,956 +Value of option awards +— +— +— +Total +— +718,593 +4,244,360 +Stefano Caroti +Cash payments +— +650,000 +1,935,827 +Value of health benefits +— +15,444 +15,444 +Value of stock awards (1) +— +— +1,739,722 +Value of option awards +— +— +— +Total +— +665,444 +3,690,993 +Andrea O'Donnell +Cash payments +— +625,000 +1,714,987 +Value of health benefits +— +18,593 +18,593 +Value of stock awards (1) +— +— +1,552,524 +Value of option awards +— +— +— +Total +— +643,593 +3,286,104 +61 +Table of Contents +(1) +The stock awards reflect all of the performance-based and time-based RSUs that remained outstanding as of March 31, 2020, including: (i) the 2018 time-based RSUs, (ii) the 2018 performance-based RSUs, (iii) the 2019 time-based RSUs, (iv) the 2019 performance-based RSUs, (v) the 2020 time-based RSUs, (vi) the 2020 performance-based RSUs, (vii) the 2019 LTIP PSUs, (viii) the 2020 LTIP PSUs, and (ix) certain additional time-based RSUs granted in fiscal years 2020 as discretionary or new-hire awards. +62 +Table of Contents +DIRECTOR COMPENSATION +For fiscal year 2020, directors who are not our employees, or our Nonemployee Directors, received an annual cash retainer fee of $65,000, plus an annual cash retainer of $10,000 for each Board committee assignment. Nonemployee Directors holding the following positions were entitled to receive additional annual cash retainer fees as follows: $160,000 for Chairman of our Board of Directors; $40,000 for Chair of the Audit Committee; $35,000 for Chair of the Compensation Committee; and $20,000 for Chair of the Corporate Governance Committee. All or any portion of the cash retainer fees paid to any of our Nonemployee Directors may, at the election of the director, be paid through the issuance of our common stock. +Each of our Nonemployee Directors is also entitled to receive common stock with a total value of approximately $125,000 for annual service on our Board. The shares are issued in equal quarterly installments with the number of shares being determined using the rolling average of the closing price of our common stock during the last 10 trading days leading up to, and including, the 15 th day of the last month of each quarterly period. Each of these shares is fully vested on the date of issuance. +Nonemployee Directors are reimbursed for any reasonable Board-related expenses. Nonemployee Directors also receive product discounts, which are generally available to our employees and, from time to time, may receive products without charge in order to help expand the directors’ knowledge of our products. +Director Compensation Table +The following table sets forth all compensation paid or awarded to our Nonemployee Directors during fiscal year 2020. The amounts set forth in the table have been calculated in accordance with applicable SEC rules, and do not necessarily reflect the amounts that have actually been paid to, or which may be realized by, our Nonemployee Directors. +Name +Fees +Earned +($) +Stock +Awards +($) (1) +Total +($) +Michael F. Devine, III +172,500 +116,848 +289,348 +Nelson C. Chan +80,000 +116,848 +196,848 +Cynthia (Cindy) L. Davis +94,583 +116,848 +211,431 +Juan R. Figuereo (2) +6,666 +7,460 +14,126 +John M. Gibbons (3) +181,250 +116,848 +298,098 +William L. McComb (4) +40,000 +102,962 +142,962 +James E. Quinn +95,416 +116,848 +212,264 +Lauri M. Shanahan +108,750 +116,848 +225,598 +Brian A. Spaly +80,000 +116,848 +196,848 +Bonita C. Stewart +95,000 +116,848 +211,848 +(1) +The amounts in this column represent the aggregate grant date fair value of the awards computed in accordance with FASB ASC Topic 718. +(2) +Mr. Figuereo was appointed to serve as a member of our Board effective as of February 20, 2020. +(3) +Mr. Gibbons will not be standing for reelection at the Annual Meeting. +(4) +Mr. McComb resigned from the Board effective as of September 13, 2019. +Stock Ownership Guidelines +Our Board has adopted stock ownership guidelines applicable to our Nonemployee Directors. Nonemployee Directors are required to hold a number of shares of common stock with a value equal to five times the base annual cash retainer fee within five years of joining our Board, subject to exceptions that may be granted by the Compensation Committee. In addition, each director must hold shares of our common stock within one year of joining our Board. Any shares of common stock held by Nonemployee Directors through our Deferred Stock Unit Compensation Plan are counted as stock ownership for purposes of these guidelines. +63 +Table of Contents +EQUITY COMPENSATION PLAN INFORMATION +The following table sets forth information regarding shares of our common stock that were eligible for issuance under our equity compensation plans as of March 31, 2020. +Plan category +Number of securities +to be issued +upon exercise of +outstanding options or settlement of outstanding RSUs (1)(2) +Weighted-average +exercise price of +outstanding options (3) +Number of securities +remaining available +for future issuance (4) +Equity compensation plans approved by security holders +623,025 +$ +66.02 +1,348,520 +Equity compensation plans not approved by security holders +— +— +— +Total +623,025 +$ +66.02 +1,348,520 +(1) +This amount includes shares underlying all equity awards outstanding pursuant to the 2006 Plan and the 2015 Plan as of March 31, 2020. For awards subject to performance-based vesting conditions, the amount reported reflects the number of shares to be issued if the relevant performance conditions are achieved. +(2) +There are no stock appreciation rights outstanding pursuant to the 2006 Plan and the 2015 Plan. In addition, there are no outstanding warrants to purchase shares of our common stock. +(3) +This amount reflects the weighted-average exercise price of the outstanding 2017 LTIP NQSOs and 2018 LTIP NQSOs, based on the closing price of our common stock on the respective grant dates. This amount does not take into account shares issuable upon the vesting of outstanding time-based and performance-based RSUs, which have no exercise price. +(4) +This amount reflects the shares reserved for issuance under the 2015 Plan less the number of shares reported in the first column. This amount is subject to increase depending on our achievement with respect to certain performance conditions as discussed in footnote 1 above, and will increase to reflect any shares that are forfeited or otherwise terminated under the 2015 Plan. +64 +Table of Contents +SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT +The following table sets forth, as of June 30, 2020 (except as specified in the footnotes following the table), certain information concerning the shares of our common stock beneficially owned by (i) each person who is an NEO, (ii) each director or director nominee, (iii) all executive officers and directors as a group (14 persons), and (iv) each person known to us to be the beneficial owner of more than 5% of our common stock. There were 28,004,993 shares of our common stock outstanding on June 30, 2020. +Name and Address of Beneficial Owner (1) +Amount and +Nature of Beneficial +Ownership (2)(3) +Percent +of Common Stock (3) +Named Executive Officers +Dave Powers +159,381 +* +Steven J. Fasching +8,961 +* +David E. Lafitte +51,883 +* +Stefano Caroti +46,954 +* +Andrea O'Donnell +33,702 +* +Directors(4) +Michael F. Devine, III +15,599 +* +Nelson C. Chan +8,424 +* +Cynthia (Cindy) L. Davis +1,768 +* +Juan R. Figuereo +0 (5) +* +John M. Gibbons +21,721 (6) +* +Victor Luis +— +* +Lauri M. Shanahan +7,223 (7) +* +Brian A. Spaly +2,768 +* +Bonita C. Stewart +14,055 +* +All Directors and Executive Officers as a Group (14 persons) +372,439 +— +5% Stockholders +Blackrock, Inc. (8) +3,275,670 +11.7 +% +The Vanguard Group Inc. (9) +2,871,878 +10.3 +% +FMR LLC (10) +2,808,811 +10.0 +% +* +Percentage of shares beneficially owned does not exceed 1.0% of our outstanding shares of common stock. +(1) +Unless otherwise noted, the address of each beneficial owner is 250 Coromar Drive, Goleta, California 93117. +(2) +Unless otherwise noted, we believe each individual or entity named has sole investment and voting power with respect to the shares of our common stock reported as beneficially owned by them, subject to community property laws, where applicable. +(3) +Pursuant to applicable SEC rules, shares not outstanding which are subject to options, warrants, rights or conversion privileges exercisable on or before the date that is 60 days after June 30, 2020 are deemed outstanding for the purpose of calculating the number and percentage owned by a person, but are not deemed outstanding for the purpose of calculating the number and percentage owned by any other person. +(4) +The reported amounts include shares held by certain directors through one or more family trusts over which shares the respective directors may have shared voting and/or investment power. +(5) +An additional 223 shares previously earned by this director have been deferred pursuant to an election made under our Deferred Stock Unit Compensation Plan. These deferred shares have been excluded from the table. +(6) +An additional 357 shares previously earned by this director have been deferred pursuant to an election made under our Deferred Stock Unit Compensation Plan. These deferred shares have been excluded from the table. +(7) +An additional 4,023 shares previously earned by this director have been deferred pursuant to an election made under our Deferred Stock Unit Compensation Plan. These deferred shares have been excluded from the table. +65 +Table of Contents +(8) +This information is based solely on Amendment No. 12 to Schedule 13G filed on February 4, 2020. This stockholder's business address is 55 East 52nd Street, New York, NY 10055. This stockholder has sole voting power with respect to 3,220,647 of such shares and sole dispositive power over all 3,275,670 of such shares. +(9) +This information is based solely on Amendment No. 8 to Schedule 13G filed on February 12, 2020. This stockholder's business address is 100 Vanguard Boulevard, Malvern, PA 19355. This stockholder has sole voting power over 59,528 of such shares, shared voting power over 6,175 of such shares, sole dispositive power over 2,810,237 of such shares, and shared dispositive power over 61,641 of such shares. +(10) +This information is based solely on Amendment No. 1 to Schedule 13G filed on April 10, 2020. This stockholder's business address is 245 Summer Street, Boston, MA 02210. This stockholder has sole voting power with respect to 375,850 of such shares and sole dispositive power over all 2,808,811 of such shares. +66 +Table of Contents +AUDIT COMMITTEE REPORT +The Audit Committee of our Board of Directors is responsible for providing independent, objective oversight of, among other things, our financial reporting functions, our independent registered public accounting firm, our highest ranking manager of internal audit, our system of internal controls, our legal and regulatory compliance, and compliance with our related person transaction policy and Code of Ethics. The Audit Committee is currently composed of three directors, each of whom meets the independence and experience requirements under applicable NYSE rules, as well as the independence requirements applicable to Audit Committee members under applicable SEC rules. In addition, our Board of Directors has determined that the Chair of the Audit Committee qualifies as an “audit committee financial expert” under applicable SEC rules. +Management is responsible for the preparation of our financial statements and financial reporting process, including our system of internal controls. KPMG LLP, our independent registered public accounting firm, is responsible for performing an independent audit of our consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States), or the PCAOB, and expressing (i) an opinion on whether our consolidated financial statements present fairly, in all material respects, our financial position and results of operations and cash flows for the periods presented in conformity with US generally accepted accounting principles, and (ii) an opinion on whether we have maintained, in all material respects, effective internal control over financial reporting as of March 31, 2020, based on criteria established in the Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Audit Committee’s responsibility is to monitor and oversee these processes. +In connection with these responsibilities, the Audit Committee met with management and KPMG LLP to review and discuss the March 31, 2020 consolidated financial statements and obtained from management their representation that our financial statements have been prepared in accordance with US generally accepted accounting principles. In addition, management represented that, as of March 31, 2020, our Company maintained effective internal control over financial reporting. +The Audit Committee also discussed with KPMG LLP the matters required by Auditing Standard No. 1301, “Communications with Audit Committees” of the PCAOB, which includes, among other items, information regarding the conduct of the audit of our consolidated financial statements. The Audit Committee has further considered the compatibility of the services provided by KPMG LLP with KPMG LLP’s independence. +The Audit Committee operates under a written charter, which was adopted by our Board of Directors and is assessed annually for adequacy by the Audit Committee. The Audit Committee held eight meetings during fiscal year 2020, including meetings with KPMG LLP and our highest ranking manager of internal audit, both with and without management present. In performing its functions, the Audit Committee acts only in an oversight capacity. It is not the responsibility of the Audit Committee to determine that our financial statements are complete and accurate, are presented in accordance with US generally accepted accounting principles or present fairly our results of operations for the periods presented, or that we maintain appropriate internal controls. Furthermore, the Audit Committee’s oversight responsibilities do not independently assure that the audit of our financial statements has been carried out in accordance with the standards of the PCAOB or that our registered public accounting firm is independent. +Based upon the Audit Committee’s review and discussions with management and KPMG LLP, and subject to the limitations of the Audit Committee’s role and responsibilities referred to above and in the Audit Committee charter, the Audit Committee recommended that our Board of Directors include the audited consolidated financial statements in our Annual Report on Form 10-K for the year ended March 31, 2020, which was filed with the SEC on June 1, 2020. +THE AUDIT COMMITTEE +Juan R. Figuereo (Chair) +Nelson C. Chan +John M. Gibbons +The Audit Committee Report shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as amended, or the Acts, except to the extent that our Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under the Acts. +67 +Table of Contents +RELATED PERSON TRANSACTIONS +Our legal department is primarily responsible for identifying and reviewing relationships and transactions in which our Company and our directors, director nominees, executive officers, principal stockholders, or any of their respective immediate family members, are participants to determine whether any of these related persons had or will have a direct or indirect material interest in such transactions. In order to assist in identifying potential related person transactions, our legal department annually prepares and distributes to all directors, director nominees and executive officers a detailed written questionnaire which includes questions intended to elicit information about any current or proposed related person transactions. In addition, our Code of Ethics addresses conflicts of interest where an individual’s personal interests may interfere or conflict with the interests of our Company, including relationships with suppliers, customers or competitors. Conflicts of interest which might impair (or appear to impair) the exercise of judgment solely for the benefit of our Company and our stockholders are prohibited. In general, such conflicts must be approved by our legal department, the employee’s supervisor or, in the case of directors, the Audit Committee. Information regarding potential conflicts of interest in violation of our Code of Ethics may be reported to our anonymous reporting hotline, which may be accessed by the Chair of the Audit Committee, the Chairman of our Board and our highest ranking manager of internal audit. +If a related person transaction is identified by our legal department as one which would be required to be publicly reported pursuant to applicable SEC rules, the Audit Committee is responsible for reviewing and approving or ratifying any such transaction. The Audit Committee may approve a related person transaction when, in its good faith judgment, it determines that the transaction is in the best interests of our Company and our stockholders. +There were no transactions with related persons that required disclosure under applicable SEC rules during fiscal year 2020, and no such transactions are currently proposed. +68 +Table of Contents +PROPOSAL NO. 2 +RATIFICATION OF THE SELECTION OF KPMG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +For fiscal year 2020, KPMG LLP, or KPMG, provided audit services, which included an examination of the consolidated financial statements included in our Annual Report. A summary of the fees for these services provided by KPMG is below. The Audit Committee has selected KPMG to provide audit services to our Company for fiscal year 2021, which covers the period from April 1, 2020 to March 31, 2021. We are asking that our stockholders ratify this selection at the Annual Meeting. +Although this selection is not required to be submitted to a vote of our stockholders, the Audit Committee believes it is appropriate as a matter of good corporate governance to request that our stockholders ratify the selection. If our stockholders do not ratify the selection, the Audit Committee will consider the selection of another independent registered public accounting firm, but is not required to select a different firm. In addition, even if our stockholders ratify the selection, the Audit Committee will retain the discretion to select a different independent registered public accounting firm in the future if it believes doing so is in the best interests of our Company and stockholders. +A representative of KPMG will attend the virtual Annual Meeting and will have the opportunity to make a statement and/or respond to appropriate questions from stockholders present virtually at the Annual Meeting. +Fees for Services Rendered by Independent Registered Public Accounting Firm +The following table sets forth approximate fees for services rendered by KPMG for the fiscal years ended March 31, 2020 and 2019: +FEES ($) +FISCAL YEAR 2020 +FISCAL YEAR 2019 +Audit Fees +2,602,000 +2,587,000 +Audit-Related Fees +— +— +Tax Fees +10,000 +12,000 +All Other Fees +— +— +Total Fees +2,612,000 +2,599,000 +Audit Fees +The audit fees presented above for the fiscal years ended March 31, 2020 and 2019 include fees associated with the audit of our consolidated balance sheets, the related consolidated statements of comprehensive income, stockholders’ equity and cash flows, and the audit of internal control over financial reporting, as well as the reviews of our quarterly reports on Form 10-Q, and certain statutory audits required internationally. +Audit-Related Fees +Audit-related fees generally consist of fees for assurance and related services that are reasonably related to the performance of the audit of our annual reports on Form 10-K and review of our quarterly reports on Form 10-Q. There were no audit-related fees incurred during the fiscal years ended March 31, 2020 and 2019. +Tax Fees +Tax fees include fees incurred for tax services, including tax compliance, tax advice and tax planning for income taxes and customs matters. +All Other Fees +There were no other fees for services rendered by KPMG incurred during the fiscal years ended March 31, 2020 and 2019 other than those disclosed above. +69 +Table of Contents +Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm +In accordance with its policies and procedures, prior to engagement, the Audit Committee pre-approves all independent registered public accounting firm services. Specifically, the Audit Committee administers and oversees our engagement of KPMG and pre-approves all of KPMG’s audit and permissible non-audit services on a case-by-case basis. In approving non-audit services, the Audit Committee considers whether the engagement could compromise the independence of KPMG, and whether for reasons of efficiency or convenience it is in our best interests to engage KPMG to perform the services. The Audit Committee has determined that the performance by KPMG of the non-audit services listed above as “Tax Fees” did not affect its independence. +During the year, circumstances may arise under which it may become necessary to engage the independent registered public accounting firm for additional services not contemplated in the original pre-approval categories. In those instances, the Audit Committee requires that those services be submitted to the Chair of the Audit Committee for specific pre-approval before we can engage the independent registered public accounting firm to provide such services. The Chair of the Audit Committee is then required to report any pre-approval decisions to the Audit Committee at its next scheduled meeting for its approval. +Required Vote +Approval of this proposal requires the affirmative vote of a majority of the outstanding shares present virtually or represented by proxy and entitled to vote on this proposal at the Annual Meeting (assuming that a quorum is present). +BOARD RECOMMENDATION +OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE +" FOR " +PROPOSAL NO. 2 TO RATIFY THE SELECTION OF KPMG LLP +AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +FOR FISCAL YEAR 2021. +70 +Table of Contents +PROPOSAL NO. 3 +ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION +Background +In accordance with applicable SEC rules, we are providing our stockholders with the opportunity to cast a non-binding advisory Say-on-Pay Vote on the compensation of our Named Executive Officers, as described below. We consider seeking the views of our stockholders on our executive compensation program to be an important part of our decision-making process. +For additional information about our executive compensation program, please refer to the section of this Proxy Statement titled " Compensation Discussion and Analysis " and the related compensation tables and footnotes. +Proposal +Therefore, in accordance with Section 14A of the Exchange Act, we are asking our stockholders to approve the following resolution at the Annual Meeting: +“ RESOLVED, that our stockholders approve, on a non-binding advisory basis, the compensation of our Named Executive Officers, as described in the Compensation Discussion and Analysis, the Summary Compensation Table, and the related compensation tables, notes and narrative discussion in the Proxy Statement for our 2020 Annual Meeting of Stockholders. ” +Because this vote is advisory only, it will not be binding upon our Board of Directors or the Compensation Committee. However, the Compensation Committee will take the outcome of the vote into account when considering future executive compensation arrangements. +Required Vote +Approval of this proposal requires the affirmative vote of a majority of the outstanding shares present virtually or represented by proxy and entitled to vote on this proposal at the Annual Meeting (assuming that a quorum is present). +BOARD RECOMMENDATION +OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE +" FOR " +PROPOSAL NO. 3 TO APPROVE, ON A NON-BINDING ADVISORY BASIS, +THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS. +71 +Table of Contents +STOCKHOLDER PROPOSALS +Proposals or director nominations of stockholders intended to be presented at our annual meeting of stockholders to be held in 2021 must be delivered to our corporate headquarters located at 250 Coromar Drive, Goleta, California 93117 no later than April 2, 2021 in order to be included in our proxy statement and form of proxy relating to that meeting. In order to be included in the proxy statement, these proposals must comply with applicable SEC rules. +Under our bylaws, a stockholder who wishes to make a proposal or nominate a candidate as a director at the annual meeting of stockholders to be held in 2021 without including the proposal in our proxy statement and form of proxy relating to that meeting must notify us no earlier than the close of business on May 14, 2021 and no later than the close of business on June 13, 2021. These proposals must comply with the requirements set forth in our bylaws. +72 +Table of Contents +OTHER BUSINESS AT THE ANNUAL MEETING +As of the date of this Proxy Statement, we are not aware of any business to be presented for consideration at the Annual Meeting other than the matters described in this Proxy Statement. If, however, other matters are properly presented at the Annual Meeting, the persons named as proxies (or their substitutes) will vote in accordance with their discretion with respect to those matters. +73 +Table of Contents +ANNUAL REPORT +The Annual Report contains audited consolidated financial statements of our Company and its subsidiaries and the report thereon of KPMG LLP, our independent registered public accounting firm. A copy of the Annual Report is being provided with this Proxy Statement and has been posted on the Internet, along with this Proxy Statement, each of which is accessible by following the instructions in this Proxy Statement and the accompanying Notice. +Any person who was our stockholder on the Record Date (including any beneficial owner holding shares in "street name" as of the Record Date) may request a copy of the Annual Report, and it will be furnished without charge upon receipt of a written request. Requests should be directed to Deckers Outdoor Corporation, 250 Coromar Drive, Goleta, California 93117, Attention: Corporate Secretary, or by telephone to (805) 967-7611. +BY ORDER OF THE BOARD OF DIRECTORS +Dave Powers +Chief Executive Officer and President +Goleta, California +July 29, 2020 +74 \ No newline at end of file diff --git a/raw/proxies/0000910521/0000910521-20-000021/proxy_rpt.txt b/raw/proxies/0000910521/0000910521-20-000021/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..ac9121bb1de3629792a1d9e1f9d0e6ec979c9d87 --- /dev/null +++ b/raw/proxies/0000910521/0000910521-20-000021/proxy_rpt.txt @@ -0,0 +1,6 @@ +RELATED PERSON TRANSACTIONS +Our legal department is primarily responsible for identifying and reviewing relationships and transactions in which our Company and our directors, director nominees, executive officers, principal stockholders, or any of their respective immediate family members, are participants to determine whether any of these related persons had or will have a direct or indirect material interest in such transactions. In order to assist in identifying potential related person transactions, our legal department annually prepares and distributes to all directors, director nominees and executive officers a detailed written questionnaire which includes questions intended to elicit information about any current or proposed related person transactions. In addition, our Code of Ethics addresses conflicts of interest where an individual’s personal interests may interfere or conflict with the interests of our Company, including relationships with suppliers, customers or competitors. Conflicts of interest which might impair (or appear to impair) the exercise of judgment solely for the benefit of our Company and our stockholders are prohibited. In general, such conflicts must be approved by our legal department, the employee’s supervisor or, in the case of directors, the Audit Committee. Information regarding potential conflicts of interest in violation of our Code of Ethics may be reported to our anonymous reporting hotline, which may be accessed by the Chair of the Audit Committee, the Chairman of our Board and our highest ranking manager of internal audit. +If a related person transaction is identified by our legal department as one which would be required to be publicly reported pursuant to applicable SEC rules, the Audit Committee is responsible for reviewing and approving or ratifying any such transaction. The Audit Committee may approve a related person transaction when, in its good faith judgment, it determines that the transaction is in the best interests of our Company and our stockholders. +There were no transactions with related persons that required disclosure under applicable SEC rules during fiscal year 2020, and no such transactions are currently proposed. +68 +Table of Contents \ No newline at end of file diff --git a/raw/proxies/0000910521/0000910521-21-000020/proxy.txt b/raw/proxies/0000910521/0000910521-21-000020/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..b335bfe8c4d288970d77fc7ecf163f6ea59351bf --- /dev/null +++ b/raw/proxies/0000910521/0000910521-21-000020/proxy.txt @@ -0,0 +1,1898 @@ +DEF 14A +1 +deck-def14ax2021.htm +DEF 14A +Document +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Proxy Statement Pursuant to Section 14(a) of +the Securities Exchange Act of 1934 (Amendment No. ) +Filed by the Registrant x +Filed by a Party other than the Registrant ¨ +Check the appropriate box: +¨ Preliminary Proxy Statement +¨ Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +x Definitive Proxy Statement +¨ Definitive Additional Materials +¨ Soliciting Material under §240.14a-12 +DECKERS OUTDOOR CORPORATION +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +x No fee required. +¨ Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. +(1) Title of each class of securities to which transaction applies: +(2) Aggregate number of securities to which transaction applies: +(3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): +(4) Proposed maximum aggregate value of transaction: +(5) Total fee paid: +¨ Fee paid previously with preliminary materials. +¨ Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. +(1) Amount Previously Paid: +(2) Form, Schedule or Registration Statement No.: +(3) Filing Party: +(4) Date Filed: +2021 +PROXY STATEMENT SUMMARY +This summary highlights information contained elsewhere in this Proxy Statement. This summary does not contain all of the information you should consider when making voting decisions. You should read this Proxy Statement carefully and completely before voting. +ANNUAL MEETING OF STOCKHOLDERS +DATE September 15, 2021 +TIME 11:00 a.m. Pacific Time +VIRTUAL MEETING +The 2021 Annual Meeting of Stockholders, or Annual Meeting, will be held virtually via a live webcast, which can be accessed on the Internet by visiting www.virtualshareholdermeeting.com/DECK2021. +To access the Annual Meeting, you will need a 16-digit control number. The control number is provided on the Notice of Internet Availability of Proxy Materials you received in the mail, on your proxy card (if you requested to receive printed proxy materials), or through your broker or other nominee if you hold your shares in "street name." +Stockholders will be able to attend, vote and submit questions virtually during the Annual Meeting. +RECORD DATE July 19, 2021 +PROPOSALS TO BE VOTED UPON +PROPOSAL NUMBER MATTER BOARD VOTING RECOMMENDATION PAGE REFERENCE +1 Election of ten directors +" FOR " EACH DIRECTOR NOMINEE +7 +2 Ratification of the selection of KPMG LLP as +our independent registered public accounting +firm for fiscal year ending March 31, 2022 +" FOR " +69 +3 Approval, on a non-binding advisory basis, +of the compensation of our Named Executive +Officers as described in the Proxy Statement +" FOR " +71 +We may also consider and vote upon any other business that may properly come before the Annual Meeting, or at any postponements or adjournments thereof. As of the date of this Proxy Statement, we are not aware of any business to be presented for consideration at the Annual Meeting other than the matters described in this Proxy Statement. +HOW TO VOTE +Your vote is important to the future of Deckers Outdoor Corporation. You are eligible to vote if you were a stockholder at the close of business on July 19, 2021. Please refer to the section of this Proxy Statement titled " Questions and Answers about the 2021 Annual Meeting of Stockholders and Voting " for additional information on how to attend the virtual Annual Meeting and vote your shares. +i +PROPOSAL NO. 1 +ELECTION OF DIRECTORS +The following table provides summary information about each director nominee, including the committee composition that we anticipate will be effective as of the date of the Annual Meeting, subject to the election or reelection of each of the director nominees. +Board Committees Effective as of the Date of Our Annual Meeting +Name, +Primary Occupation Age Director +Since Independent Number of Other Public Company Directorships A C CG +Michael F. Devine, III +Corporate Director +Chairman of our Board of Directors +62 2011 YES 2 +David A. Burwick (1) +President, Chief Executive Officer, Board Member, Boston Beer Company +59 __ YES 1 l +Nelson C. Chan +Private Investor, Entrepreneur and Corporate Director +60 2014 YES 2 l l +Cynthia (Cindy) L. Davis +Corporate Director +59 2018 YES 2 ª +l +Juan R. Figuereo +Corporate Director +65 2020 YES 2 ª +Maha S. Ibrahim (2) +General Partner, Canaan Partners +50 2021 YES None l +Victor Luis +Corporate Director +54 2020 YES 1 l +Dave Powers +Chief Executive Officer and President +55 2016 NO None +Lauri M. Shanahan +Corporate Director +58 2011 YES 3 +l +l +Bonita C. Stewart +Board Partner, Gradient Ventures +64 2014 YES 1 ª +ª Committee Chair +A: Audit Committee, C: Compensation Committee, CG: Corporate Governance Committee +(1) Mr. Burwick will be standing for election at the Annual Meeting. +(2) Ms. Ibrahim was appointed to serve as a member of our Board of Directors effective as of February 1, 2021. +• During our fiscal year ended March 31, 2021, or fiscal year 2021, no director nominee attended fewer than 75% of the meetings of our Board of Directors, which we sometimes refer to as our Board, or meetings of any Board committee on which he or she served during his or her term. +• Each director nominee is elected annually by a majority of the votes cast by the shares present virtually or represented by proxy and entitled to vote on the election of directors at the Annual Meeting. +Our Board of Directors recommends that you vote " FOR " each of the director nominees named in Proposal No. 1. +ii +PROPOSAL NO. 2 +RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +• As a matter of good corporate governance, we are asking our stockholders to ratify the selection of KPMG LLP as our independent registered public accounting firm for our fiscal year ending March 31, 2022, or fiscal year 2022. +• Ratification of our selection requires the affirmative vote of a majority of the outstanding shares present virtually or represented by proxy and entitled to vote on the proposal at the Annual Meeting. +Our Board of Directors recommends that you vote " FOR " Proposal No. 2. +PROPOSAL NO. 3 +ADVISORY VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION +• We are asking our stockholders to approve, on a non-binding advisory basis, the compensation of our Named Executive Officers, which we sometimes refer to as our NEOs, as disclosed in the section of this Proxy Statement titled " Compensation Discussion and Analysis. " +• Advisory approval of the compensation of our Named Executive Officers requires the affirmative vote of a majority of the outstanding shares present virtually or represented by proxy and entitled to vote on the proposal at the Annual Meeting. +Our Board of Directors recommends that you vote " FOR " Proposal No. 3 because it believes our compensation program reflects our strong "pay-for-performance" philosophy and is effectively designed to encourage achievement of our business and strategic objectives as discussed in greater detail below. +OUR BUSINESS AND STRATEGIC OBJECTIVES +We remain committed to our long-term strategies, which have been the primary drivers of our success in recent years. Our strategic framework continues to include efforts to: +• Accelerate consumer adoption of the HOKA ONE ONE brand globally and growing the brand's market share; +• Build UGG as a year-round global lifestyle brand with a diverse product offering outside of the brand's core season, while maintaining strength domestically and reigniting the brand internationally; +• Tailor distribution strategies unique to each of our brands in order to properly balance brand health in conjunction with sustainable growth; +• Execute on our digital transformation initiatives, growing direct-to-consumer acquisition and retention online and enhancing our utilization of technology to support the evolving marketplace; and, +• Focus spend behind these key initiatives to drive optimal returns on investment while maintaining top-tier levels of profitability. +We intend to continue investing strategically in key identified areas of growth within our brand portfolio. We remain committed to delivering stockholder value through the continued execution of our strategies. +OUR COMPENSATION PROGRAM OBJECTIVES +Our executive compensation program is designed to (i) attract and retain high quality talent; (ii) align interests of executives with stockholders; (iii) provide a significant portion of total compensation through variable, performance-based components; and (iv) offer incentives for achieving both short and long-term goals that are directly tied to the achievement of strategic objectives. In doing so, we routinely consider appropriate changes to our program to reflect our strategic direction and the evolving needs of our business. In addition, to ensure we have the talent necessary to achieve our strategic objectives, the Compensation Committee endeavors to develop a compensation program that is attractive and competitive in the marketplace. Our program also incorporates feedback from our stockholders, as detailed below under the section of this Proxy Statement titled " Stockholder Feedback on Executive Compensation. " +Consistent with our strategic objectives for fiscal year 2021, when designing our executive compensation program for the year, the Compensation Committee focused on continuing to build and retain our executive team, while incentivizing our executive +iii +officers to focus on increasing revenue, enhancing profitability, improving operating margins and creating of long-term value for our stockholders. These and other strategic considerations are clearly reflected in the design of our program, which demonstrates strong "pay-for-performance" alignment. Please see the section of this Proxy Statement titled “ Compensation Discussion and Analysis ” for additional information. +KEY CORPORATE GOVERNANCE CHANGES +We are constantly evaluating our Board composition to ensure it is structured to allow us to achieve our long-term objectives by seeking out key qualifications and skills our directors collectively bring to our Board. As part of achieving these objectives, over the past few years, we have strategically focused on Board refreshment, both from the standpoint of Board composition, as well as from the standpoint of leadership on our Board and its committees. This focus is evident through a number of key changes that we have made to our Board and its committees over the past year, including the following: +• In June 2020 Victor Luis was appointed as a member of our Board. +• In June 2020, Juan R. Figuereo was appointed Chair of the Audit Committee. +• In February 2021, Maha S. Ibrahim was appointed as a member of our Board. +In addition, Brian A. Spaly will not be standing for reelection to our Board at the Annual Meeting, David A. Burwick is a new director nominee standing for election at the Annual Meeting, and we anticipate Bonita C. Stewart will be appointed as the Corporate Governance Chair, effective immediately subsequent to the Annual Meeting. +At the Annual Meeting, stockholders are being asked to elect ten directors to serve until the next annual meeting of stockholders to be held in 2022. If all nominees are elected, our Board will consist of ten members, and nine of those ten members, as well as each member of our Board's standing committees, will be “independent directors” under applicable Securities and Exchange Commission, or SEC, and New York Stock Exchange, or NYSE, rules and regulations. +iv +NOTICE OF VIRTUAL ANNUAL MEETING OF STOCKHOLDERS +TO OUR STOCKHOLDERS: +We are pleased to invite you to attend the 2021 Annual Meeting of Stockholders of Deckers Outdoor Corporation, which we refer to as "we," "us," "our," or "our Company," to be held on Wednesday, September 15, 2021, at 11:00 a.m. Pacific Time. +Proposals to be Voted Upon : +1 +Election of Directors . Elect ten directors to serve until the annual meeting of stockholders to be held in 2022, or until their successors are duly elected and qualified. +2 +Ratification of Selection of Accounting Firm . Ratify the selection of KPMG LLP as our independent registered public accounting firm for fiscal year 2022, which covers the period from April 1, 2021 to March 31, 2022. +3 +Advisory Vote on Executive Compensation . Approve, on a non-binding advisory basis, the compensation of our Named Executive Officers, as disclosed in the section of this Proxy Statement titled " Compensation Discussion and Analysis. " +Other Business . Consider and vote upon any other business that may properly come before the Annual Meeting, or at any postponements or adjournments thereof. +Virtual Annual Meeting : +Similar to the last several years, the Annual Meeting will be held virtually and conducted via a live webcast. We believe hosting a virtual annual meeting encourages increased stockholder attendance and participation and reduces the cost to our Company associated with holding the Annual Meeting, as well as the cost to our stockholders of attending the meeting. A virtual meeting allows our stockholders around the world to attend and listen to the Annual Meeting live, submit questions and vote their shares electronically. +You will be able to attend the Annual Meeting online, submit your questions and vote your shares during the meeting by visiting www.virtualshareholdermeeting.com/DECK2021. +Record Date : +Our Board of Directors has fixed the close of business on July 19, 2021 as the record date for determining which stockholders are entitled to notice of and to vote virtually or by proxy at the Annual Meeting, or at any postponements or adjournments thereof. +Board Recommendations : +Our Board of Directors recommends that you vote " FOR " each of the director nominees named in Proposal No. 1 and " FOR " Proposal Nos. 2 and 3. +BY ORDER OF THE BOARD OF DIRECTORS +Dave Powers +Chief Executive Officer and President +Your vote is very important. +Whether or not you plan to attend the virtual Annual Meeting, we encourage you to read this Proxy Statement and submit your proxy or voting instructions as soon as possible. For specific instructions on how to vote your shares, please refer to the instructions on the Notice of Internet Availability of Proxy Materials you received in the mail, the section of this Proxy Statement titled " Questions and Answers About the 2021 Annual Meeting of Stockholders and Voting ," or, if you requested to receive printed proxy materials, your enclosed proxy card. +Approximate Date of Mailing of Notice of Internet Availability of Proxy Materials: July 29, 2021 +v +Note Regarding Forward-Looking Statements +This Proxy Statement contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements may relate to our future financial performance, business operations, and executive compensation decisions, or other future events. You can identify forward-looking statements by the use of words such as “may,” “will,” “could,” “anticipate,” “expect,” “intend,” “believe,” “continue,” or the negative of such terms, or other comparable terminology. Forward-looking statements include the assumptions underlying or relating to such statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, results of operations and financial condition. +The outcomes of the events described in these forward-looking statements are subject to risks, uncertainties and other factors described in Item 1A, “Risk Factors,” and elsewhere, in our Annual Report on Form 10-K for fiscal year 2021, or the Annual Report. We cannot assure you that the events and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results could differ materially from those expressed or implied in the forward-looking statements. The forward-looking statements made in this Proxy Statement relate only to events as of the date of this Proxy Statement. We undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made. +vi +Table of Contents +TABLE OF CONTENTS +202 1 Proxy Statement Summary +i +Notice of Annual Meeting of Stockholders +v +Proxy Statement +1 +Questions and Answers About the 2021 Annual Meeting of Stockholders and Voting +2 +Proposal No. 1 - Election of Directors +7 +Director Nominees +10 +Corporate Governance +19 +Executive Officers +27 +Compensation Discussion and Analysis +30 +Executive Summary +31 +Compensation Philosophy and Objectives +36 +Compensation Consultant and Peer Group +39 +Elements of Fiscal Year 2021 Executive Compensation Program +41 +Other Compensation Considerations +49 +Compensation Committee Report +52 +Summary Compensation Table +53 +Grants of Plan-Based Awards in Fiscal Year 2021 +54 +Outstanding Equity Awards of 2021 Fiscal Year End +55 +Fiscal Year 2021 Option Exercises and Stock Vested +57 +Nonqualified Deferred Compensation +58 +Potential Payments Upon Termination or Change in Control +59 +Director Compensation +62 +Equity Compensation Plan Information +63 +Security Ownership of Certain Beneficial Owners and Management +64 +Delinquent Section 16(a) Reports +66 +Audit Committee Report +67 +Related-Person Transactions +68 +Proposal No. 2 - Ratification of the Selection of KPMG LLP as Independent Registered Public Accounting Firm +69 +Proposal No. 3 - Advisory Vote to Approve Named Executive Officer Compensation +71 +Stockholder Proposals +72 +Other Business at the Annual Meeting +73 +Annual Report on Form 10-K +74 +vii +Table of Contents +VIRTUAL ANNUAL MEETING OF STOCKHOLDERS +Meeting Date: Wednesday, September 15, 2021 +PROXY STATEMENT +GENERAL INFORMATION +The enclosed Proxy Statement is solicited on behalf of the Board of Directors of Deckers Outdoor Corporation for use at our 2021 Annual Meeting of Stockholders, or the Annual Meeting, to be held virtually via a live webcast on Wednesday, September 15, 2021 at 11:00 a.m. Pacific Time, or at any postponements or adjournments thereof. +The virtual Annual Meeting can be accessed by visiting www.virtualshareholdermeeting.com/DECK2021 , where you will be able to attend the Annual Meeting, submit questions and vote your shares electronically. +The Annual Meeting is being held for the purposes described in this Proxy Statement and in the accompanying Notice of Annual Meeting of Stockholders. +1 +Table of Contents +QUESTIONS AND ANSWERS ABOUT THE 2021 ANNUAL MEETING OF STOCKHOLDERS AND VOTING +The following questions and answers are intended to briefly address potential questions that our stockholders may have regarding this Proxy Statement and the Annual Meeting. They are also intended to provide our stockholders with certain information that is required to be provided under the rules and regulations of the SEC. These questions and answers may not address all of the questions that are important to you as a stockholder. If you have additional questions about this Proxy Statement or the Annual Meeting, please refer to the question titled "Whom should I contact with other questions?" below. +Q: When and where will the Annual Meeting be held? +A: The Annual Meeting will be held on Wednesday, September 15, 2021, at 11:00 a.m. Pacific Time. The Annual Meeting will be conducted entirely online via a live webcast. Our stockholders may participate in the Annual Meeting by visiting the following website: www.virtualshareholdermeeting.com/DECK2021 . You will need a 16-digit control number to attend and participate in the live webcast of the Annual Meeting. Please refer to the question titled " How can I vote my shares? " for information on obtaining your 16-digit control number. +Q: Why did I receive these proxy materials? +A: We are providing this Proxy Statement in connection with the solicitation by our Board of Directors of proxies to be voted at the Annual Meeting, or at any postponements or adjournments thereof. This Proxy Statement contains important information for you to consider when deciding how to vote on the matters brought before the Annual Meeting. You are invited to attend the Annual Meeting virtually to vote on the proposals described in this Proxy Statement. However, you do not need to attend the Annual Meeting to vote your shares. Instead, you may vote your shares using one of the other voting methods described in this Proxy Statement. +Whether or not you expect to attend the virtual Annual Meeting, please vote your shares as soon as possible in order to ensure your representation at the Annual Meeting. +Q: Why did I receive a notice in the mail regarding the Internet availability of proxy materials? +A: Instead of mailing printed copies to each of our stockholders, we have elected to provide access to the proxy materials over the Internet under the SEC's "notice and access" rules. These rules allow us to make our stockholders aware of the Annual Meeting and the availability of the proxy materials by sending a Notice of Internet Availability of Proxy Materials, or the Notice, which provides instructions on how to access the full set of proxy materials through the Internet or make a request to have printed proxy materials delivered by mail. Accordingly, on or about July 29, 2021, we mailed the Notice to each of our stockholders. The Notice contains instructions on how to access the proxy materials, including this Proxy Statement and our Annual Report, each of which are available at www.proxyvote.com. The Notice also provides instructions on how to vote your shares. +Q: What is the purpose of complying with the "notice and access" rules? +A: We believe compliance with the SEC's "notice and access" rules allows us to provide our stockholders with the materials they need to make informed decisions, while lowering the costs of printing and delivering those materials and reducing the environmental impact of the Annual Meeting. However, if you would prefer to receive printed proxy materials, please follow the instructions included in the Notice. If you have previously elected to receive the proxy materials electronically, you will continue to receive these materials electronically unless you elect otherwise. +Q: Who can vote at the Annual Meeting? +A: Only our stockholders at the close of business on July 19, 2021, or the Record Date, will be entitled to attend and vote at the Annual Meeting. On the Record Date, there were 27,662,787 shares of our common stock outstanding and entitled to vote. Each share of common stock issued and outstanding on the Record Date is entitled to one vote on any matter to be voted upon by our stockholders at the Annual Meeting. +• Holders of Record - If, on the Record Date, your shares were registered directly in your name with our transfer agent, Computershare, then you are a "holder of record." As a holder of record, you may vote at the virtual Annual Meeting, or you may vote by proxy. Whether or not you plan to attend the Annual Meeting virtually, we urge you to vote your shares using one of the voting methods described in this Proxy Statement and the Notice. If you are a holder of record and you indicate when voting that you wish to vote as recommended by our Board, or if you submit a vote by proxy without giving specific +2 +Table of Contents +voting instructions, then the proxyholders will vote your shares as recommended by our Board on all matters described in this Proxy Statement. Thomas Garcia and Steven J. Fasching, the designated proxyholders, are members of our management. +• Beneficial Owners - If, on the Record Date, your shares were held in an account at a bank, broker, dealer, or other nominee, then you are the "beneficial owner" of shares held in "street name" and this Proxy Statement is being made available to you by that nominee. The nominee holding your account is considered the holder of record for purposes of voting at the virtual Annual Meeting. As a beneficial owner, you have the right to direct your nominee on how to vote the shares in your account. You are also invited to attend the Annual Meeting virtually. However, since you are not the holder of record, you may not vote your shares at the Annual Meeting unless you request and obtain a valid "legal proxy" or obtain a 16-digit control number from your nominee. Please contact your nominee directly for additional information. +Q: What is the quorum requirement for the Annual Meeting? +A: The presence at the Annual Meeting, virtually (even if not voting) or by proxy, of the holders of a majority of the voting power of all the shares of our common stock entitled to be voted at the Annual Meeting, will constitute a quorum at the Annual Meeting. We will treat shares of common stock represented by a properly voted proxy, including shares for which authority is withheld or that a stockholder abstains from voting, as well as broker non-votes, as present at the Annual Meeting for the purposes of determining the existence of a quorum. If a quorum is not present, the Annual Meeting will be adjourned until a quorum is obtained. +Q: What proposals am I being asked to vote upon at the Annual Meeting? +A: The proposals to be voted on at the Annual Meeting, and our Board's recommendation with respect to each proposal, are as follows: +PROPOSAL DESCRIPTION BOARD VOTING RECOMMENDATION +Proposal No. 1 : +Election of Directors +Elect ten director nominees to serve until the annual meeting of stockholders to be held in 2022, or until their successors are duly elected and qualified +" FOR " EACH DIRECTOR NOMINEE +Proposal No. 2 : +Ratification of Selection of Accounting Firm +Ratify the selection of KPMG LLP as our independent registered public accounting firm for fiscal year 2022 +" FOR " +Proposal No. 3 : +Advisory Vote on Executive Compensation +Approve, on a non-binding advisory basis, the compensation of our Named Executive Officers, as disclosed in the section of this Proxy Statement titled " Compensation Discussion and Analysis " +" FOR " +3 +Table of Contents +Q: What are the voting requirements to approve each of the proposals, and what happens if I do not vote? +A: The voting requirements to approve each of the proposals to be voted upon at the Annual Meeting, as well as the effects of abstentions and broker non-votes on each of the proposals, are as follows: +PROPOSAL VOTING REQUIREMENT +EFFECT OF ABSTENTIONS (2) +EFFECT OF BROKER NON-VOTES (3) +Proposal No. 1 : +Election of Directors +Each director nominee in an uncontested election (1) will be elected by a majority of the votes cast by the shares present virtually or represented by proxy and entitled to vote on the election of directors at the Annual Meeting (assuming that a quorum is present). +A "majority of the votes cast" means that the number of votes "FOR" a director nominee must exceed 50% of the total votes cast in the election of directors. +A "WITHHOLD" vote with respect to a director nominee will not count as a vote cast for that nominee, will not be included in the total number of votes cast, and thus will have no effect on the outcome of the vote on this proposal. Broker non-votes will not count as votes cast on this proposal and will have no effect on the outcome of the vote on this proposal. +Proposal No. 2 : +Ratification of Selection of Accounting Firm +Requires the affirmative vote of a majority of the outstanding shares present virtually or represented by proxy and entitled to vote on the proposal at the Annual Meeting (assuming that a quorum is present). +An "ABSTAIN" vote will be included in the total number of shares present and entitled to vote on this proposal, and will have the same effect as a vote "AGAINST" this proposal. Because a bank, broker, dealer or other nominee may generally vote without instructions on this proposal, we do not expect any broker non-votes to result for this proposal. +Proposal No. 3 : +Advisory Vote on Executive Compensation +Requires the affirmative vote of a majority of the outstanding shares present virtually or represented by proxy and entitled to vote on the proposal at the Annual Meeting (assuming that a quorum is present). +An "ABSTAIN" vote will be included in the total number of shares present and entitled to vote on this proposal, and will have the same effect as a vote "AGAINST" this proposal. Broker non-votes will not count as shares present and entitled to vote on this proposal and will have no effect on the outcome of the vote on this proposal. +(1) An "uncontested election" is an election in which the number of director nominees is not greater than the number of directors to be elected. A "contested election" is an election in which the number of director nominees nominated by (i) our Board of Directors, (ii) any stockholder, or (iii) a combination of our Board of Directors and any stockholder, exceeds the number of directors to be elected. In a contested election, directors will be elected by a plurality of the votes cast by the shares present virtually or represented by proxy and entitled to vote on the election of directors at the Annual Meeting. +(2) You may vote to "WITHHOLD" authority for one or more director nominees and may "ABSTAIN" from voting on one or more of the other proposals described in this Proxy Statement. Shares for which authority is withheld or that a stockholder abstains from voting will be counted for purposes of determining whether a quorum is present at the Annual Meeting. +(3) Pursuant to applicable NYSE rules, if you are a beneficial owner of shares held in street name and do not provide the nominee that holds your shares with specific voting instructions, the nominee may generally vote in its discretion on “routine” matters (such as Proposal No. 2). However, if the nominee that holds your shares does not receive instructions from you on how to vote your shares on a “non-routine” matter (such as Proposal Nos. 1 and 3), it will be unable to vote your shares on that matter. When this occurs, it is generally referred to as a “broker non-vote.” Broker non-votes will be counted for purposes of determining whether a quorum is present at the Annual Meeting. +Q: What happens if a director nominee fails to receive a majority vote in an uncontested election at the Annual Meeting? +A: Each incumbent director standing for reelection at the Annual Meeting has tendered an irrevocable letter of resignation, effective upon such incumbent director not receiving a majority vote at the Annual Meeting and acceptance of such resignation by our Board. Our Board must accept or reject such resignation within 90 days following certification of the stockholder vote in accordance with the procedures established by our amended and restated bylaws, or bylaws. If a director’s resignation offer is not accepted by our Board, that director will continue to serve until our annual meeting of stockholders to be held in 2022 and his or her successor is duly elected and qualified, or until the director’s earlier death, resignation, or removal. +Any director nominee who is not an incumbent director and who fails to receive a majority vote in an uncontested election will not be elected as a director, and a vacancy will be left on our Board. Our Board, in its sole discretion, may either fill a vacancy resulting from a director nominee not receiving a majority vote pursuant to our bylaws or decrease the size of our Board to eliminate the vacancy. All director nominees are incumbent directors standing for reelection at the Annual Meeting. +4 +Table of Contents +Q: Could other matters be decided at the Annual Meeting? +A: As of the date of this Proxy Statement, we are not aware of any business to be presented for consideration at the Annual Meeting other than the matters described in this Proxy Statement. If, however, other matters are properly presented at the Annual Meeting, the persons named as proxies will vote in accordance with their discretion with respect to those matters. +Q: How can I vote my shares? +A: Your shares can be voted as follows: +• Holders of Record - Holders of record can vote by proxy or by attending the virtual Annual Meeting where votes can be submitted electronically via live webcast. If you wish to vote by proxy, you can vote by Internet, telephone or by mail as described below. Whether or not you plan to attend the Annual Meeting virtually, we urge you to vote by proxy to ensure that your vote is counted. +VOTING METHOD +To vote at the Annual Meeting virtually by live webcast you must visit the following website: +www.virtualshareholdermeeting.com/DECK2021. You will need the 16-digit control number included on the Notice or your proxy card (if you requested to receive printed proxy materials). The method you use to vote by proxy will not limit your right to attend the Annual Meeting or vote at the Annual Meeting virtually. All shares that have been properly voted and not revoked will be voted at the Annual Meeting. However, even if you plan to attend the Annual Meeting virtually, we recommend that you vote your shares in advance so that your vote will be counted if you later decide not to attend the Annual Meeting. +To vote by Internet , you will need the 16-digit control number included on the Notice or your proxy card (if you requested to receive printed proxy materials). Internet voting is available 24 hours a day and will be accessible until 11:59 p.m. Eastern Time on September 14, 2021 by visiting www.proxyvote.com and following the instructions. +To vote by telephone , you will need the 16-digit control number included on the Notice or on your proxy card (if you requested to receive printed proxy materials). Telephone voting is available 24 hours a day and will be accessible until 11:59 p.m. Eastern Time on September 14, 2021 by calling 1-800-690-6903 and following the instructions. +To vote by mail, follow the instructions provided on your proxy card. Simply mark, sign and date your proxy card and return it promptly in the postage-paid envelope provided. In order to be effective, completed proxy cards must be received by 11:59 p.m. Eastern Time on September 14, 2021. This option is only available if you requested to receive printed proxy materials. +• Beneficial Owners - If you are the beneficial owner of your shares, you should have received the Notice or a proxy card (if you requested to receive printed proxy materials) with this Proxy Statement from your nominee rather than from us. Simply (i) use the 16-digit control number to vote on the Internet before the Annual Meeting or virtually at the Annual Meeting, or (ii) if you requested to receive printed proxy materials, vote by following the instructions provided on the proxy card you received from your nominee. Your 16-digit control number may be included in the voting instruction form that accompanied the proxy materials. If your nominee did not provide you with a 16-digit control number, you may be able to log onto the website of your nominee prior to the start of the Annual Meeting, on which you will need to select the stockholder communications mailbox link through to the Annual Meeting, which will then automatically populate your 16-digit control number in the virtual Annual Meeting interface. To vote virtually at the Annual Meeting, you must first obtain a valid "legal proxy" from your nominee. Follow the instructions from your nominee to request a "legal proxy." +Q: What can I do if I change my mind after I vote my shares? +A: You may change your vote at any time before the polls are closed at the Annual Meeting. +• Holders of Record - If you are a holder of record, you may change your vote by (i) providing written notice of revocation to Deckers Outdoor Corporation, 250 Coromar Drive, Goleta, California 93117, Attention: Corporate Secretary, (ii) executing a subsequent proxy using any of the voting methods discussed above (subject to the deadlines for voting with respect to each method), or (iii) attending the virtual Annual Meeting and voting electronically via live webcast. However, simply attending the virtual Annual Meeting will not, by itself, revoke your proxy. +• Beneficial Owners - If you are a beneficial owner of your shares and you have instructed your nominee to vote your shares, you may change your vote by following the directions received from your nominee to change those voting instructions, or by attending the virtual Annual meeting and voting via live webcast, which can be accomplished as described above. +Subject to any revocation, all shares represented by properly executed proxies will be voted in accordance with the instructions on the applicable proxy, or, if no instructions are given, in accordance with the recommendations of our Board of Directors as described above. +5 +Table of Contents +Q: Who is paying for the cost of this proxy solicitation? +A: The solicitation of proxies is made on behalf of our Board and all the expenses of soliciting proxies from stockholders will be borne by us. In addition to the solicitation of proxies by use of the mail, our directors, officers and employees may communicate with stockholders personally or by email, telephone, or otherwise for the purpose of soliciting such proxies. No additional compensation will be paid to any such persons for such solicitation, although we may reimburse them for reasonable out-of-pocket expenses incurred in connection with such solicitation. We will reimburse banks, brokers, dealers and other nominees for their reasonable out-of-pocket expenses in forwarding solicitation material to beneficial owners of shares held of record by such persons. The total estimated cost of the solicitation of proxies is approximately $95,000. +Q: I share an address with another stockholder, and we received only one paper copy of the proxy materials. How may I obtain an additional copy of the proxy materials? +A: We have adopted a procedure called "householding," which the SEC has approved. Under this procedure, we are delivering a single copy of the Notice and, if applicable, this Proxy Statement and the Annual Report, to multiple stockholders who share the same address unless we have received contrary instructions from one or more of the stockholders. This procedure reduces our printing and mailing costs. Stockholders who participate in householding will continue to be able to access and receive separate proxy materials. Upon written or oral request, we will promptly deliver a separate copy of the Notice and, if applicable, this Proxy Statement and the Annual Report, to any stockholder at a shared address to which we delivered a single copy of any of these documents. To receive a separate copy of the Notice and, if applicable, this Proxy Statement or the Annual Report, or if you wish to receive separate copies in the future, please contact: Deckers Outdoor Corporation, 250 Coromar Drive, Goleta, California 93117, Attention: Corporate Secretary, Telephone: (805) 967-7611. +In addition, if you are currently a stockholder sharing an address with another stockholder and wish to receive only one copy of future proxy materials for your household, please contact us using the contact information set forth above. Stockholders who are beneficial owners of shares held in street name may contact their bank, broker, dealer or other nominee to request information about householding. +Q: Where can I find the voting results of the Annual Meeting? +A: We will announce preliminary voting results with respect to each proposal at the Annual Meeting. In accordance with SEC rules, final voting results will be published in a Current Report on Form 8-K within four business days following the Annual Meeting, unless final results are not known at that time, in which case preliminary voting results will be published within four business days of the Annual Meeting and final voting results will be published once we know them. +Q : Where else can I find these proxy materials? +A: This Proxy Statement and the Annual Report are available under "SEC Filings" at ir.deckers.com. Other information contained on or accessed through our website does not constitute part of this Proxy Statement. You should not consider other information contained on or accessed through our website in deciding how to vote your shares. References to our website address in this Proxy Statement are inactive textual references only. +Q: Whom should I contact with other questions? +A: If you have additional questions about this Proxy Statement or the Annual Meeting, or if you would like additional copies of this Proxy Statement, please contact: Deckers Outdoor Corporation, 250 Coromar Drive, Goleta, California 93117, Attention: Corporate Secretary, Telephone: (805) 967-7611. +6 +Table of Contents +PROPOSAL NO. 1 +ELECTION OF DIRECTORS +Certain Board Characteristics +The Corporate Governance Committee considers many factors when identifying director nominees, including diversity with respect to personal characteristics (such as race, gender and sexual orientation), as well as diversity in experience and skills. Our commitment to diversity and inclusion is reflected in our Board. Directors with diverse backgrounds and skills create a Board that best serves our Company, stockholders, employees and communities, by maximizing group dynamics in terms of range of professional experiences, education, thought and gender. We feel fortunate to have talented and skilled leaders on our Board to help guide us in our growth. We value the deep understanding of our business that certain directors have due to their tenure, but acknowledge that fresh viewpoints are essential in the boardroom. +A snapshot of certain characteristic of our ten director nominees is depicted in the charts below . +BOARD DIVERSITY AND TENURE +DIRECTOR INDEPENDENCE +7 +Table of Contents +Board Refreshment and Succession Since 2018 +Six New Directors Added or Nominated to Our Board +Cynthia (Cindy) L. Davis June 2018 +Brian A. Spaly (1) +June 2018 +Juan R. Figuereo March 2020 +Victor Luis June 2020 +Maha S. Ibrahim February 2021 +David A. Burwick Director Nominee at 2021 Annual Meeting +(1) Mr. Spaly will not be standing for reelection to our Board at the Annual Meeting. +Board Chairman Succession Committee Chair Succession +October 2019 +Michael F. Devine, III +Appointed Chairman of the Board +October 2019 +Cynthia (Cindy) L. Davis, +Appointed Compensation Committee Chair +Lauri M. Shanahan, +Appointed Corporate Governance Chair +June 2020 +Juan R. Figuereo, +Appointed Audit Committee Chair +September 2021 +Bonita C. Stewart, +To be appointed Corporate Governance Committee Chair, subject to Ms. Stewart's reelection at the Annual Meeting +Overview +Our bylaws provide for the annual election of directors, and also provide that our Board will consist of not less than one nor more than ten members. The specific number of directors within this range is established by our Board. Our Board has adopted a resolution setting the number of members at ten. +At the Annual Meeting, our stockholders will be asked to elect ten directors to serve until the next annual meeting of stockholders to be held in 2022, or until their successors are duly elected and qualified. The names and certain information concerning the persons nominated by our Board to stand for election as directors at the Annual Meeting are set forth in the section of this Proxy Statement titled “ Director Nominees ” below. +If all director nominees are elected, then, immediately following the Annual Meeting, our Board will consist of ten members, and nine out of ten members of our Board, as well as each member of the Board's standing committees, will be “independent directors” under applicable SEC and NYSE rules. +No Agreements or Family Relationships with Directors +No arrangement or understanding exists between any of our directors, director nominees or executive officers and any other person pursuant to which any of them were selected as our director, director nominee or executive officer. +There are no family relationships among any of our directors, director nominees or executive officers. +No Legal Proceedings +There are no legal proceedings related to any of our directors, director nominees or executive officers which are required to be disclosed pursuant to applicable SEC rules. +Director Nominations +The Corporate Governance Committee is responsible for identifying and evaluating nominees for election to our Board. In addition to the candidates proposed by our Board or identified by the Corporate Governance Committee, the Committee considers candidates for director proposed by stockholders, provided such recommendations are made in accordance with the +8 +Table of Contents +procedures set forth in our bylaws. Stockholder nominations that meet the criteria outlined below will receive the same consideration as nominations made by the Corporate Governance Committee. +Director Qualifications +Directors are responsible for overseeing and monitoring our business consistent with their fiduciary duties to our stockholders. This significant responsibility requires highly skilled individuals with various qualities, attributes and professional experience. Our Board believes there are both general requirements for eligibility to serve as a member of our Board that are applicable to all directors, and other specialized characteristics that should be represented on our Board as a whole, but not necessarily by each director. +Qualifications for All Directors +Essential criteria for all director candidates considered by the Corporate Governance Committee include the following: +• Personal and professional integrity; +• Good business judgment; +• Relevant experience and skills; +• Ability to effectively serve the long-term interests of our stockholders; and +• Commitment to devoting sufficient time and energy to diligently performing duties as a director. +Board Diversity +The Corporate Governance Committee considers many factors when identifying director nominees, including diversity with respect to personal characteristics (such as race, gender and sexual orientation), as well as diversity in the experience and skills that contribute to our Board's performance of its responsibilities in the oversight of our business. However, the Committee has not adopted a formal policy with respect to the consideration of diversity. +Additionally, because we have four female board members, we are in compliance with California Senate Bill 826, which requires publicly held corporations with principal executive offices in California to have a board of directors that satisfies certain gender diversity requirements. Further, we are in compliance with California Assembly Bill 979, which requires publicly held corporations with principal executive offices in California to meet certain requirements with respect to including directors from underrepresented communities on their board of directors. +Specific Qualifications and Skills Represented on Our Board +The Corporate Governance Committee believes the competencies we seek in our directors should support our strategies for long-term success. Below we identify the key qualifications and skills our directors collectively bring to our Board that we believe are important in light of our business and strategic objectives. The particular qualifications and skills that our Board considered in nominating each individual director nominee are included in the directors’ individual biographies below, and are also summarized in a chart following the biographical section. +9 +Table of Contents +DIRECTOR NOMINEES +Our Board of Directors has nominated the following ten directors for election at the Annual Meeting. Important summary information about the director nominees is set forth in the table below, including the committee composition that we anticipate will be effective as of the date of the Annual Meeting, subject to the election or reelection of each of the director nominees. Following the table is certain biographical information about each director nominee, as well as selected information about the specific qualifications, attributes, skills and experience that led our Board to conclude that each director nominee is qualified to serve on our Board. For information regarding committee composition as of the date of this Proxy Statement, please refer to the section entitled " Corporate Governance--Board Committees ." +Board Committees Effective as of the Date of Annual Meeting +Name, +Primary Occupation Age Director +Since Independent Number of Other Public Company Directorships A C CG +Michael F. Devine, III +Corporate Director +Chairman of our Board of Directors +62 2011 YES 2 +David A. Burwick (1) +President, Chief Executive Officer, Board Member, Boston Beer Company +59 __ YES 1 l +Nelson C. Chan +Private Investor, Entrepreneur and Corporate Director +60 2014 YES 2 l l +Cynthia (Cindy) L. Davis +Corporate Director +59 2018 YES 2 ª +l +Juan R. Figuereo +Corporate Director +65 2020 YES 2 ª +Maha S. Ibrahim (2) +General Partner, Canaan Partners +50 2021 YES None l +Victor Luis +Corporate Director +54 2020 YES 1 l +Dave Powers +Chief Executive Officer and President +55 2016 NO None +Lauri M. Shanahan +Corporate Director +57 2011 YES 3 l l +Bonita C. Stewart +Board Partner, Gradient Ventures +64 2014 YES 1 ª +ª Committee Chair +A: Audit Committee, C: Compensation Committee, CG: Corporate Governance Committee +(1) Mr. Burwick will be standing for election at the Annual Meeting. +(2) Ms. Ibrahim was appointed to serve as a member of our Board of Directors effective as of February 1, 2021. +10 +Table of Contents +MICHAEL F. DEVINE, III +Age: 62 +Director Since: 2011 +Chairman of our Board +Public Company Directorships: +Express, Inc. (NYSE: EXPR) +FIVE Below, Inc. (NYSE: FIVE) +Mr. Devine retired as executive vice president and chief financial officer of Coach, Inc. in 2011. He currently serves as a director and member of the audit committee of Express, Inc. (NYSE: EXPR) and director and chair of the audit committee at FIVE Below, Inc. (Nasdaq: FIVE). He served as a member of the board of Sur La Table, Inc. and was previously a member of the board of directors of The Talbots Inc. From 2004 to 2007, Mr. Devine served as a member of the board of directors and chair of the audit committee of Educate, Inc., a leading K-12 education service company with solutions such as Sylvan Learning Center. Mr. Devine also previously served as a director and member of the audit committee of NutriSystem, Inc. (Nasdaq: NTRI). +Selected Qualifications and Skills +• High Level of Financial Literacy - In addition to experience as the current and former member and chair of four audit committees and experience at Coach, Inc., served as chief financial officer and vice president-finance of Mothers Work, Inc., a maternity apparel retailer that was previously listed on Nasdaq, from February 2000 to November 2001. From 1997 to 2000, was chief financial officer of Strategic Distribution, Inc. (Nasdaq: STRD), a Nasdaq-listed industrial store operator. From 1995 to 1997, was chief financial officer at Industrial System Associates, Inc., and for the prior six years was the director of finance and distribution for McMaster-Carr Supply Company. Holds a B.S. in Finance and Marketing from Boston College and an M.B.A. in Finance from the Wharton School of the University of Pennsylvania. +• Public Company Executive - Experience at Coach, Inc. involved in managing a public company during a period of high growth. Serves as a corporate director and chair of the audit committees of Express, Inc. and FIVE Below, Inc. +• Compliance and Risk Oversight - 15 years of experience as a corporate director with risk oversight responsibilities. +• Premium Branding - Coach, Inc. is a leading marketer of modern classic American accessories. +• International - Involved in a global brand with worldwide operations while at Coach, Inc. +• Industry - In addition to experience at Coach, Inc., serves as a director of Express, Inc., a nationally recognized specialty apparel and accessory retailer offering women’s and men’s merchandise. +• Supply Chain Management and Retail - Involved in supply chain and wholesale and retail distribution channels while at Coach, Inc. +DAVID A. BURWICK +Age: 59 +Director Nominee Nominated in: 2021 +Board Committees: +None +Public Company Directorships : +The Boston Beer Company, Inc. (NYSE: SAM) +Mr. Burwick has served on the board of directors of The Boston Beer Company, Inc. (NYSE: SAM) since May 2005 and was appointed as its president and chief executive officer in April 2018. Prior to April 2018, Mr. Burwick served as president and chief executive officer of Peet's Coffee & Tea, Inc., since December 2012. From April 2010 to December 2012, Mr. Burwick served as president, North America of WW International, Inc., formerly Weight Watchers International, Inc. Prior to that, Mr. Burwick held numerous positions with PepsiCo, Inc., including chief marketing officer, PepsiCo Americas Beverages from August 2008 to August 2009; executive vice president, Marketing, Sales and R&D, PepsiCo International from April 2008 to July 2008; President, Pepsi-QTG Canada from January 2006 to March 2008; chief marketing officer, Pepsi-Cola North America from June 2002 to December 2005; and various marketing roles from 1989 to 2002. Mr. Burwick has extensive experience leading consumer products organizations. During Mr. Burwick's tenure as a director of The Boston Beer Company, Inc., he has served as a member of its compensation committee since May 2005, including as chair from May 2006 to May 2013, and as a member of the nominating/governance committee since May 2005, including as chair since May 2013. +11 +Table of Contents +• Premium Branding - Experience as an executive at Peet's Coffee & Tea, Inc., PepsiCo. Inc. and The Boston Beer Company, Inc. +• Public Company Executive - Extensive experience with several leading public and private companies, both as an executive and as a director. +• Sales and Marketing - Held key marketing and sales positions with PepsiCo. Inc., including chief marketing officer. +• Human Resources - Held executive positions with leading companies and is a member of the compensation committee and nominating/governance committee of The Boston Beer Company, Inc. +• Retail - Previously served as president and chief executive officer at Peet's Coffee & Tea, Inc., WW International, Inc. and PepsiCo, Inc. +NELSON C. CHAN +Age: 60 +Director Since: 2014 +Board Committees: +Audit +Public Company Directorships: +Synaptics, Inc. (Nasdaq: SYNA) +Twist Bioscience Corporation (Nasdaq: TWST) +Mr. Chan is a private investor and entrepreneur. Mr. Chan is a director and member of the nominating and corporate governance committee of Twist Bioscience Corporation (Nasdaq: TWST), as well as chairman of the board and member of the audit committee and nominations and corporate governance committee of Synaptics, Inc. (Nasdaq: SYNA). He was chairman of the board, chair of the compensation committee, member of the audit committee and member of the nominating and corporate governance committee of Adesto Technologies Corporation (Nasdaq: IOTS). From 2016 to 2019, Mr. Chan served as a director and member of the compensation and nominating and governance committees of Socket Mobile, Inc. (Nasdaq: SCKT). Mr. Chan is also a director of several privately held companies. From 2006 to 2008, Mr. Chan served as chief executive officer of Magellan Corporation, and from 1992 to 2006, he served in various management positions with SanDisk Corporation. +Selected Qualifications and Skills +• Entrepreneurial - Expertise in building technology companies. +• High Level of Financial Literacy - Has held numerous senior management positions with leading companies, including chief executive officer at Magellan Corporation. +• Public Company Executive - Extensive experience with several leading public and private companies, both as an executive and as a director. +• Sales and Marketing - Held key sales, marketing and engineering positions at SanDisk Corporation, Chips and Technologies, Signetics and Delco Electronics. +• International - Was the executive vice president and general manager of consumer business, at SanDisk Corporation, a global multi-billion dollar company. +• Compliance and Risk Oversight - Currently serves as a member of our Audit Committee and has over 12 years of experience as a corporate director with risk oversight responsibilities. +• Technology Infrastructure and Cybersecurity - Extensive experience in technology-based companies including sales, marketing and engineering. +CYNTHIA (CINDY) L. DAVIS +Age: 59 +Director Since: 2018 +Board Committees: +Compensation ( Chair ) +Public Company Directorships: +Kennametal Inc. (NYSE: KMT) +Brinker International, Inc. (NYSE: EAT) +12 +Table of Contents +Ms. Davis served as vice president of Nike, Inc. (NYSE: NKE) and president of Nike Golf at Nike, Inc. from 2008 to 2014, and as U.S. general manager at Nike Golf from 2005 to 2008. Prior to Nike, Inc., Ms. Davis served as senior vice president of golf sponsorships, sports marketing and new media at Golf Channel, a subsidiary of Comcast Corporation (Nasdaq: CMCSA), from 2001 to 2004. Ms. Davis serves as a member of the board of directors and is the chair of on the compensation and member of the nominating and governance committees of Kennametal Inc. (NYSE: KMT), a global supplier of tooling, engineering components and advanced materials, since 2012. In January 2019, she joined the board of directors and currently serves on the compensation and governance committees of Brinker International, Inc. (NYSE: EAT). Ms. Davis served as a member of the board of directors, as chair of the compensation committee and on the governance committee of Buffalo Wild Wings, Inc. (Nasdaq: BWLD), a casual dining restaurant and sports bar chain, from 2015 to 2018. She is a Trustee for the Board of Trustees at Furman University. +Selected Qualifications and Skills +• Premium Branding - Experience as vice president of Nike, Inc. and president of Nike Golf at Nike, Inc., a company engaged in the design, development, manufacturing, and worldwide marketing and sales of footwear, apparel, equipment, accessories and services. +• Sales and Marketing; Retail - In addition to leading the division’s sales, marketing, and strategy while serving as senior vice president of golf sponsorships, sports marketing and new media at Golf Channel, led the $800 million global golf business for Nike, Inc. +• High Level of Financial Literacy - Served on the audit committee of Kennametal Inc. Holds an M.B.A. in Marketing and Finance from the University of Maryland College Park. Oversaw the profit and loss of a separate operating unit within Nike, Inc. +• International - Involved in global brands with worldwide operations while at Nike, Inc. and Kennametal Inc. +• Public Company Executive - Held various executive management positions at Nike, Inc. and Golf Channel, currently serves as a director of Kennametal Inc. and Brinker International, Inc., and previously served as a director and chair of the compensation committee of Buffalo Wild Wings, Inc. +• Industry - Extensive experience in the footwear, apparel and equipment industries through various positions at Nike, Inc. +• Compliance and Risk Oversight - In addition to leadership roles at Nike, Inc., served as a corporate director on the audit committee and serves on the compensation and nominating and corporate governance committees of Kennametal, Inc., and serves on the board of directors, as well as the compensation and corporate governance committees, of Brinker International, Inc. Previously served as chair of the compensation committee and on the governance committee of Buffalo Wild Wings. +• Technology Infrastructure and Cybersecurity - Serves as a director and chair of the compensation and member of the nominating and governance committees of Kennametal Inc., a technology-based company. +JUAN R. FIGUEREO +Age: 65 +Director Since: 2020 +Board Committees: +Audit ( Chair ) +Public Company Directorships: +Western Alliance Bancorporation (NYSE: WAL) +Diversey, Inc. (Nasdaq: DSEY) +Mr. Figuereo served as the executive vice president and chief financial officer of Revlon (NYSE: REV), a manufacturer and marketer of beauty and personal care products, from 2016 to 2017. From 2012 to 2015, he served as executive vice president and chief financial officer of NII Holdings, Inc. (NASDAQ: NIHD), a wireless communication services provider under the Nextel brand. NII Holdings, Inc. filed for bankruptcy protection in New York, New York on September 15, 2014. From 2009 to 2012, Mr. Figuereo served as executive vice president and chief financial officer of Newell Brands (NYSE: NWL), a global marketer of consumer and commercial products, and from 2007 to 2009 he served as executive vice president and chief financial officer of Cott Corporation (NYSE: PRMW). Mr. Figuereo has also served in senior management positions at Walmart, Inc. (NYSE: WMT) and PepsiCo, Inc. (Nasdaq: PEP). Mr. Figuereo served as a director and chair of the audit committee at PVH Corp. +13 +Table of Contents +(NYSE: PVH), a leading apparel company with iconic brands such as Calvin Klein and Tommy Hilfiger in its portfolio. In June 2020, he joined the board of directors of Western Alliance Bancorporation (NYSE: WAL). In April 2021, he joined the board of directors and currently serves as chair of the audit committee and member of the nominating and corporate governance committee of Diversey, Inc. (Nasdaq: DSEY). Mr. Figuereo is a venture partner with Ocean Azul Partners, LLC, an early stage investments fund based in South Florida. He is a member of the National Association of Corporate Directors and of the Florida Institute of CPAs. +Selected Qualifications and Skills +• Public Company Executive - Previously served as chief financial officer of several public companies with global footprints, including Revlon and Newell Brands, and held executive leadership roles at Walmart, Inc. and PepsiCo, Inc. +• High Level of Financial Literacy - Served as chief financial officer of several public companies and as chair of the audit committee of PVH Corp. Serves as the chair of the audit committee of Western Alliance Bancorporation and Diversey Inc. In addition, he serves as a member of the Audit Committee of our Company. Holds a B.B.A. from Florida International University, and previously worked for eight years as a certified public accountant. +• International - Significant executive leadership experience supporting global brands with worldwide operations. +• Supply Chain Management - Extensive experience in worldwide supply chain operations while in management roles for global companies. +• Sales and Marketing; Retail - Served as executive vice president of several global marketers, including Revlon and Newell Brands, and held senior management positions at Walmart, Inc. and PepsiCo, Inc. +• Mergers and Acquisitions - Previously served as the vice president in charge of mergers and acquisitions at Walmart, Inc. +Maha S. Ibrahim +Age: 50 +Director Since: 2021 +Board Committees: +Audit +Public Company Directorships: +None +Ms. Ibrahim is currently a general partner of Canaan Partners, an early stage venture capital firm, where she has worked since March 2000. Prior to joining Canaan Partners, from 1998 to 2000 she served as vice president of e-business at Qwest Communications, where she architected the company’s e-business strategy and spearheaded the redesign of Qwest.com, and previously served as Qwest Communication’s vice president of business development. From 2012 through 2020, Ms. Ibrahim served as a member of the board of directors of RealReal, Inc. (Nasdaq: REAL), an online brick-and-mortar marketplace for authenticated luxury consignment, providing leadership to the company through its 2019 initial public offering. Ms. Ibrahim currently serves on the boards of directors of a number of private innovative enterprise and consumer companies. Further, she has served as a trustee for the Carnegie Endowment for International Peace, a foreign policy think tank, since 2017. +Selected Qualifications and Skills +• Industry - Extensive experience in the apparel industry through her experience on the board of RealReal, Inc. +• Premium Branding - Premium branding experience in the luxury consignment business during her time as a director of RealReal, Inc. +• Consumer Technology/Big Data - Served as vice president of e-business at Qwest Communications. +• Sales and Marketing; Retail - Served as vice president of business development at Qwest Communications. +• Technology Infrastructure and Cybersecurity - Extensive experience in wireless and telecommunications industries. +• Mergers and Acquisitions – Experience with mergers and acquisitions while serving as general partner of Canaan Partners. +14 +Table of Contents +VICTOR LUIS +Age: 54 +Director Since: 2020 +Board Committees: +Compensation +Public Company Directorships: +FarFetch (NYSE: FTCH) +Mr. Luis served as the chief executive officer and on the board of directors of Tapestry, Inc. (formerly known as Coach, Inc.) (NYSE: TPR) from 2014 to 2019, where he led the company’s transformation into Tapestry Inc., a New York-based house of modern luxury brands including Coach, Kate Spade and Stuart Weitzman. Mr. Luis joined Coach, Inc. in 2006 as president and chief executive officer of Coach Japan. He rapidly assumed additional leadership responsibilities across Asia and Europe, becoming chief commercial officer of Coach, Inc. in 2013 and chief executive officer in 2014. Prior to joining Coach, Inc., from 2002 to 2006, Mr. Luis was president and chief executive officer of Baccarat, Inc., where he ran the North American operation of the French luxury brand. Mr. Luis joined the Moët-Hennessy Louis Vuitton Group in 1995, ultimately advancing to president and chief executive officer of its subsidiary, Givenchy, Japan Incorporated, before leaving in 2002. In August 2020, he joined the board of directors and currently serves on the audit committee and is the chair of the nominating and corporate governance committee of FarFetch Limited (NYSE: FTCH). +Selected Qualifications and Skills +• International - Significant experience in managing multi-national teams while at Coach, Inc. and Moët-Hennessy Louis Vuitton Group. +• Retail - Previously served as chief executive officer of several global luxury retailers. +• Premium Branding - Premium global branding experience spanning over two decades as chief executive officer of Tapestry, Inc., overseeing its modern luxury brands, and as chief executive officer of Baccarat, Inc. and Givenchy, Japan Incorporated. +• Industry - Experience in footwear, apparel and accessories while on the board of Tapestry, Inc. with the brands Coach, Kate Spade and Stuart Weitzman. +• Public Company Executive - Executive management experience, including service as chief executive officer of publicly traded companies. +DAVE POWERS +Age: 55 +Director Since: 2016 +Chief Executive Officer and President +Public Company Directorships: +None +Mr. Powers became our Chief Executive Officer in June 2016 and joined our Board at that time. Mr. Powers joined our Company as President of Direct-to-Consumer in August 2012. He was appointed President of Omni-Channel in January 2014 and was appointed President in March 2015. Prior to joining our Company, Mr. Powers held several executive leadership roles at Converse Inc. (a subsidiary of Nike, Inc.), Timberland LLC and Gap Inc. (NYSE: GPS). +Selected Qualifications and Skills +• Industry - Extensive experience in the footwear and apparel industry through a variety of positions at three different footwear companies and a global apparel retailer. +• Supply Chain Management; Retail - While at Converse Inc., was responsible for global owned and distributor Direct-to-Consumer operations as part of the Nike, Inc. retail leadership team. During tenure at Timberland LLC and Gap Inc., held leadership roles with a variety of retail responsibilities from merchandising to store design. +• Sales and Marketing - Graduated cum laude from Northeastern University with a B.S. in Marketing. Throughout his career, has been responsible for the development of marketing strategy, with a focus on consumer engagement and +15 +Table of Contents +digital marketing. While President of Brands of our Company, led the Omni-Channel organization, elevating and advancing the Omni-Channel platform. +• International - While serving in leadership roles at Timberland LLC, led worldwide retail merchandising, marketing, visual and store design, and oversaw European retail operations. +• Public Company Executive - Serves as our Chief Executive Officer and President with global responsibilities and oversight. Other leadership roles have been with public companies. +LAURI M. SHANAHAN +Age: 58 +Director Since: 2011 +Board Committees: +Corporate Governance ( Chair ) +Audit +Public Company Directorships: +Cedar Fair Entertainment Company (NYSE: FUN) +Treasury Wine Estates Limited (ASX: TWE) +G Squared Ascend I Inc. (NYSE: GSQD.UT) +Ms. Shanahan has over 25 years of senior-level experience in retail, consumer products and hospitality, ranging from global, multi-channel, multi-brand enterprises to small and mid-cap growth companies. Ms. Shanahan joined Gap Inc. in 1992 and served in numerous leadership roles, including chief administrative officer and chief legal officer, during her 16-year career with the company. Since then, she has served as a principal of Maroon Peak Advisors, a consumer products and retail consulting firm. She currently serves as a strategic advisor and on the board of directors and as chair of the compensation committee and member of the nominating and governance committee of Cedar Fair Entertainment Company (NYSE: FUN), which owns and operates resorts, amusement parks and other immersive sports and entertainment venues, and on the board of directors, compensation committee and human resources committee of Treasury Wine Estates Limited (ASX: TWE), a vertically integrated global wine business with over 70 brands. In February 2021, Ms. Shanahan joined the board of directors of G Squared Ascend I Inc. (NYSE: GSQD.UT) a special purpose acquisition company focused within the technology sector. +Selected Qualifications and Skills +• Public Company Executive - Joined Gap Inc. in 1992 and served for 16 years in numerous leadership roles including chief administrative officer, chief legal officer and corporate secretary and chairman of the foundation board. Gap Inc. is a leading global specialty retailer offering clothing, footwear, accessories, and personal care products for men, women, children, and babies under the Gap, Banana Republic, Old Navy, Intermix, and Athleta brands. +• International - Directly involved in global brands development, supply chain and worldwide operations while at Gap Inc. and as a director and consultant. +• Supply Chain Management and Retail - Involved in retail, franchise, online licensing and other distribution channels, as well as sourcing and supply chain, while at Gap Inc. and as a consultant. +• Sales and Marketing - Acquired sales and marketing experience throughout her career at Gap Inc. +• Industry - Experience in footwear, apparel and accessories at Gap Inc., Charlotte Russe Holdings, Inc. and through retail consulting firm. +• Premium Branding - Premium and luxury branding experience at Gap Inc., through serving on the board of Treasury Wine Estates Limited and through retail consulting firm. +• Compliance and Risk Oversight - In addition to other leadership roles at Gap Inc., served as chief compliance officer and chief legal officer, overseeing the global corporate risk committee, as well as the global governance and compliance organization. +16 +Table of Contents +BONITA C. STEWART +Age: 64 +Director Since: 2014 +Board Committees: +Compensation +Corporate Governance +Public Company Directorships: +PagerDuty, Inc. (NYSE: PD) +Ms. Stewart is currently a Board Partner at Gradient Ventures, Google's early-stage venture fund focused on artificial intelligence. She has been driving digital transformation at scale across multiple industries throughout her career. Since 2006 Ms. Stewart has served in various executive roles at Google, Inc., (Nasdaq: GOOG, GOOGL), a subsidiary of Alphabet Inc., including her most recent role as Vice President, Global Partnerships where she led partner management for the largest U.S. publishers across search, news, commerce, media and entertainment, telecommunications and mobile applications. Ms. Stewart previously served as Vice President, U.S. Sales and Operations. From 2002 to 2006 she worked for DaimlerChrysler AG (now Daimler AG) as director of Chrysler Brand Advertising and the director of Chrysler Group’s first Interactive Communications team. Ms. Stewart served as a corporate director for Pluralsight, Inc. (Nasdaq: PS), from 2018 to 2021. In January 2021 she joined the board of directors and serves as a member of the audit and corporate governance committees for PagerDuty (NYSE: PD), a digital operations management company. Ms. Stewart began her career in 1979 at IBM Corporation (NYSE: IBM) where she served in various financial and marketing management positions. She is the co-author of A Blessing: Women of Color Teaming Up to Lead, Empower and Thrive and the 2020 Women of Color in Business Cross-Generational Survey. +Selected Qualifications and Skills +• Industry - Over 28 years of experience in brand management, digital strategy and execution. +• High Level of Financial Literacy - Leads strategy, business development and revenue growth plans for Google Inc.'s largest publisher partnerships. Holds an M.B.A. from Harvard Business School. +• Consumer Technology/Big Data - Extensive experience in digital transformation, digital engagement data across multiple industries. +• Entrepreneurial - Served as president, chief operating officer, and co-founder of Nia Enterprises, LLC, a web-based company, and founder and chief executive officer of One Moment in Time, a women's formal-wear rental company. +• Sales and Marketing - Acquired sales, marketing, product distribution and online advertising experience. +• International - Led publisher partnerships for Latin America and Canada and has worked for Daimler AG and IBM Corporation, which are multi-billion dollar global companies. +• Public Company Executive - Strategic planning and large-scale operations experience with Google Inc. and IBM Corporation. +• Technology Infrastructure and Cybersecurity - Extensive experience in technology-based companies and fluency in digital transformation including digital strategy, mobile, video, programmatic, online advertising, cloud solutions, analytics and execution. +Summary of Qualifications and Skills of Directors +As part of our Board evaluation and director selection processes, the Corporate Governance Committee maintains a director skills matrix. When evaluating potential nominees, the Committee and the Board take into account the diversity of experiences and backgrounds represented on our Board. The director skills matrix below summarizes the specific qualifications, attributes, skills and experience of each director nominee that led our Board to conclude that the nominee is qualified to serve on our Board. In fiscal year 2020 we refined the director skills matrix to reflect the qualifications most relevant for our director nominees to support our Company's business and strategic objectives. While each nominee is generally knowledgeable in each of these areas, an “X” in the chart below indicates that the item is a specific qualification, attribute, skill or experience that the director brings to our Board. The lack of an “X” for a particular item does not mean that the director does not possess that qualification, attribute, skill or experience. +17 +Table of Contents +Specific Qualifications, Attributes, Skills and Experience Michael F. +Devine, III David A. Burwick Nelson C. +Chan Cynthia (Cindy) L. Davis Juan R. Figuereo Maha S. Ibrahim Victor +Luis Dave Powers Lauri M. +Shanahan Bonita C. +Stewart +Industry X X X X X X X +Premium Branding X X X X X X X X X +International X X X X X X X X +High Level Financial Literacy X X X +Retail X X X X X X X X +Consumer Technology/ Big Data X X X X X +Sales and Marketing X X X X X X X X +Supply Chain Management X X X X +Technology Infrastructure and Cybersecurity X X X X X X +Compliance and Risk Oversight X X X X X X +Corporate Governance X X X X X X +Mergers and Acquisitions X X X X X X +Public Company Executive X X X X X X X X X +Human Resources X X X X X X X X +Consent to Serve +Although each of the persons named above has consented to being named in this Proxy Statement and to serve as a director if elected, and our Board has no reason to believe that any of the nominees will be unable or unwilling to serve as a director, if any nominee withdraws or otherwise becomes unavailable to serve, our Board may decrease the size of our Board, or the proxies may be voted for the election of such other person as a director as our Board may recommend in place of the nominee. +Required Vote +Because this is an uncontested election, each director nominee will be elected by a majority of the votes cast by the shares present virtually or represented by proxy and entitled to vote on the election of directors at the Annual Meeting (assuming that a quorum is present). A "majority of the votes cast" means that the number of votes "FOR" a director nominee must exceed 50% of the total votes cast in the election of directors. +BOARD RECOMMENDATION +OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE +" FOR " +THE ELECTION OF EACH OF THE DIRECTOR NOMINEES. +18 +CORPORATE GOVERNANCE +Corporate Governance at Deckers +Corporate governance is managed under the direction of our Board of Directors. Our Board has a long-standing commitment to comprehensive and effective corporate governance practices. Our Board continues to evaluate our governance policies and procedures to ensure that the right mix of individuals is present in our boardroom and to ensure effective oversight of our strategy and management in order to best serve our stockholders. Our Board has adopted Corporate Governance Guidelines that set forth the primary framework of governance principles applicable to our Company, a copy of which is available on our website at ir.deckers.com in the Overview section of the Governance tab. +Corporate Governance Elements +Our Board is committed to maintaining the highest standards of corporate governance and has established a strong framework by which our Company is governed. Key elements of our corporate governance framework include: +OUR POLICY OR PRACTICE DESCRIPTION AND BENEFIT TO OUR STOCKHOLDERS +STOCKHOLDER RIGHTS +Annual Election of Directors +• Our directors are elected annually, reinforcing their accountability to our stockholders. We do not employ a classified board structure. +Single Class of Outstanding Voting Stock • Our common stockholders control our Company, with equal voting rights. +Majority Voting Standard • We have a majority voting standard for uncontested director elections. +BOARD STRUCTURE +Director Independence +• Based on the director independence requirements set forth in our Corporate Governance Guidelines, as well as under applicable SEC and NYSE rules, our Board has determined that each of our directors, other than Mr. Powers, is an "independent director." +Committee Governance +• Our three standing Board Committees: Audit, Compensation and Corporate Governance, consist exclusively of independent directors and have adopted written charters. Committee composition and charters are reviewed annually by our Board. +Board Leadership and Structure +• Our Corporate Governance Guidelines allow our Board to determine whether to separate or combine the roles of the Chairman and Chief Executive Officer. Currently, Mr. Devine, a member of our Board, serves as our Company's independent Chairman. We believe this is the most appropriate leadership structure for our Company at this time. +Annual Board Self-Evaluations • The Corporate Governance Committee conducts and oversees annual evaluations of our Board, each Board committee and each individual director, to ensure they are effective and continue to serve the best interests of our stockholders. +Board Oversight of Risk +• Our Board is generally responsible for risk management activities, but has delegated the oversight of risk management to our Audit Committee. Our full Board regularly engages in discussions of the most significant risks we face and how these risks are managed. +EXECUTIVE COMPENSATION +Annual Say-on-Pay Vote +• Annually, our stockholders have the opportunity to approve, on a non-binding advisory basis, the compensation of our Named Executive Officers, which we sometimes refer to as our Say-on-Pay Vote. This affords our stockholders the ability to provide routine feedback on our compensation program. +Corporate Governance Principles +Pursuant to Delaware law and our bylaws, our business, property and affairs are managed under the direction of our Board of Directors. Thus, our Board is the ultimate decision-making body of our Company, except with respect to those matters reserved for our stockholders. +Our Board selects our Chief Executive Officer, and works together with our Chief Executive Officer to select our senior management team, which is charged with the day-to-day operation of our business. Members of our Board are kept informed about our business through discussions with our Chief Executive Officer and other senior management personnel, including by attending brand sales meetings and industry events, participating in periodic informal telephonic meetings, and reviewing materials provided to them, as well as by attending formal meetings of our Board and its committees. Having selected the senior management team, our Board acts as an adviser and counselor to senior management, monitors its performance and proposes or makes changes to the senior management team when it deems necessary or appropriate. +19 +Board of Directors Meetings +BOARD OF DIRECTORS Meetings in Fiscal Year 2021: 18 +• Each of our Directors attended at least 75% of Board meetings and meetings of the Board committees on which he or she served during his or her term. +• Time is scheduled for our independent directors to meet in an executive session at every Board meeting. +• Our Corporate Governance Guidelines state that directors are expected to attend each of our annual meetings of stockholders. Nine members of our Board attended the annual meeting of stockholders held in September 2020. +Director Independence +Our Corporate Governance Guidelines, as well as applicable NYSE rules, require that our Board be comprised of a majority of directors who satisfy the criteria for independence set forth in the NYSE rules. These guidelines help ensure that the interests of our Board and management are aligned with those of our stockholders, that conflicts of interest are avoided, and that we are in compliance with applicable SEC and NYSE rules. An independent director is one who our Board affirmatively determines has no material relationship with our Company (either directly or as a partner, stockholder or officer of an organization that has a relationship with our Company) and otherwise meets the requirements of the NYSE rules. +Based on the director independence requirements set forth in our Corporate Governance Guidelines, as well as in the applicable NYSE rules, our Board has determined that each of our directors, other than Mr. Powers, is an "independent director." In addition, all members of the Audit Committee, Compensation Committee and Corporate Governance Committee meet the independence standards set forth in applicable SEC and NYSE rules. +Board Leadership Structure +Our Corporate Governance Guidelines allow the Board to determine whether to separate or combine the roles of the chairman and chief executive officer. Our Board believes it is important to maintain flexibility in our Board leadership structure, depending on our Board's composition and our business and strategic needs at the time. However, our Board also firmly supports having an "independent director" serve in a Board leadership position at all times. +The roles of the chairman and chief executive officer are separate. Our Board continues to believe that this leadership structure allows our Chief Executive Officer to focus on the day-to-day operation and management of our Company, while allowing our Chairman to focus on leading the Board in overseeing the interests of our Company and stockholders. +Board Committees +Our Board of Directors has three standing committees: the Audit Committee, the Compensation Committee and the Corporate Governance Committee. Each member of each of the committees is an "independent director" for purposes of applicable SEC and NYSE rules. Each of our committees has a written charter that describes its purpose, membership, meeting structure and responsibilities. A copy of each committee's charter is available on our website at ir.deckers.com in the Overview section of the Governance tab . These charters are reviewed annually by each committee, with any recommended changes approved by our Board. The Compensation Committee charter was amended in January 2021, the Audit Committee charter was amended in September 2021 and the Corporate Governance Committee charter was amended in January 2021. +Summary information regarding the membership, meetings and primary responsibilities of the three standing committees for fiscal year 2021 of our Board are listed below: +AUDIT COMMITTEE Meetings in Fiscal Year 2021: 10 +Current Members: +Juan R. Figuereo ( Chair ) +All members of the Audit Committee meet the independence and experience standards set forth in applicable SEC and NYSE rules. The Chair of the Audit Committee has been determined by our Board to be an "audit committee financial expert" under applicable SEC rules. +Nelson C. Chan +Lauri M. Shanahan +Maha S. Ibrahim +• Oversees management's conduct of, and the integrity of, our financial reporting functions. +• Oversees the qualifications, engagement, compensation, independence and performance of the registered public accounting firm that audits our annual financial statements and reviews our quarterly financial reports. +• Oversees our legal and regulatory compliance. +• Oversees the performance of our internal audit function. +• Oversees the application of our related-person transaction policy as established by our Board. +• Oversees our systems of internal control over financial reporting disclosure controls and procedures and risk management. +• Oversees the application of our Code of Ethics as established by our Board. +20 +COMPENSATION COMMITTEE Meetings in Fiscal Year 2021: 7 +Current Members: +Cynthia (Cindy) L. Davis (Chair) +All members of the Compensation Committee meet the independence standards set forth in applicable SEC and NYSE rules. +Bonita C. Stewart +Victor Luis +• Oversees the design of our executive compensation program, and responsible for oversight of our employment practices and policies. +• Reviews and approves goals and objectives relevant to the compensation of our executives. +• Evaluates the performance of our executives in light of those goals and objectives. +• Determines and approves the compensation of our executives based, in part, on these evaluations, including each element of compensation. +• Makes recommendations to our Board regarding any action that is required to be submitted to our stockholders for approval with respect to incentive compensation plans and equity-based plans. +• Administers and approves our equity-based plans, and approves (or delegates authority to approve, below the executive level) individual award grants under those plans, or recommends award grants to our Board for approval. +• Produces report on executive compensation for inclusion in our proxy statement for our annual meeting of stockholders. +CORPORATE GOVERNANCE +COMMITTEE Meetings in Fiscal Year 2021: 4 +Current Members: +Lauri M. Shanahan (Chair) +All members of the Corporate Governance Committee meet the independence standards set forth in applicable NYSE rules. +Bonita C. Stewart +Brian A. Spaly (1) +• Develops and recommends to our Board a set of Corporate Governance Guidelines that establish a framework of governance principles applicable to us. +• Identifies individuals qualified to become directors, consistent with criteria specified in the Corporate Governance Guidelines. +• Recommends to our Board the qualified director nominees to be selected by our Board. +• Recommends to our Board membership of our Board committees. +• Ensures that our certificate of incorporation and bylaws are structured in a manner that best serves our objectives and recommends amendments as appropriate. +• Oversees the evaluation of management, our Board and Board committees. +• Oversees and approves the management continuity planning process. +• Reviews and evaluates the development and succession plan relating to our Chief Executive Officer and our other executive officers. +• Oversees the Company's Corporate Responsibility and Sustainability Program. +(1) Mr. Spaly will not be standing for re-election at the Annual Meeting. +Nominating Procedures and Criteria +Among its functions, the Corporate Governance Committee considers and approves nominees for election to our Board. We view board succession as an ongoing process and are regularly identifying, evaluating and pursuing prospective candidates. In addition to the candidates proposed by our Board or identified by the Corporate Governance Committee, the Committee considers candidates for director proposed by our stockholders, provided such recommendations are made in accordance with the procedures set forth in our bylaws. Stockholder nominations that meet the qualification criteria referred to below will receive the same consideration as nominations made by the Corporate Governance Committee. +Essential criteria for all candidates considered by the Corporate Governance Committee are discussed in the section of this Proxy Statement titled " Qualifications for All Directors. " In evaluating candidates for certain Board positions, the Committee also evaluates additional criteria, as reflected in the section of this Proxy Statement titled " Specific Qualifications and Skills Represented on Our Board. " +In selecting nominees for our Board, the Corporate Governance Committee evaluates the general criteria referred to above, identifies the specialized criteria for which the Committee has determined there is a need, and considers the candidate's ability to meet the required criteria and contribute to the success of our Company. In evaluating an existing director for re-election, in addition to assessing the criteria referred to above, the Corporate Governance Committee considers a variety of factors, +21 +including attendance at Board and committee meetings, independence, length of service, previous performance, and overall contributions to our Company. +The director nominees for the Annual Meeting have been recommended by the Corporate Governance Committee, as well as by our Board of Directors. +Management Succession and Talent Development +The Corporate Governance Committee, pursuant to its charter, is responsible for overseeing the management continuity planning process. As part of that responsibility, the Corporate Governance Committee reviews and evaluates the development and succession plan relating to our Chief Executive Officer and our other executive officers, including considerations of career paths and attracting and retaining high-quality talent. The Corporate Governance Committee works with the Board to assess whether we have the management talent needed to successfully pursue our business objectives. The Corporate Governance Committee also regularly considers the competencies necessary for our Chief Executive Officer to support our strategies for long-term success. +Pursuant to our Corporate Governance Guidelines, the Corporate Governance Committee provides an annual report to our Board of Directors on emergency and expected Chief Executive Officer succession planning. Through this process, the Corporate Governance Committee works with our full Board and management to identify recommendations and evaluations of potential successors, along with a review of any development plans recommended for such individuals. +Risk Governance Structure +Our Board has overall responsibility for risk oversight. The Board members provide objective, independent oversight of risk and focus on the most significant risks facing the Company. +Board Role in Risk Oversight +• Periodically reviews or assesses the effectiveness of our Company's enterprise risk management programs and framework, including the processes for identifying, assessing, prioritizing, and responding to our enterprise-wide risk exposures, to ensure that robust risk management strategies are in place. On an annual basis, under the direction of our Audit Committee, our Company undertakes an enterprise-level risk management review that is designed to bring to the Board's attention our most material risks for evaluation, including strategic, operational, regulatory, and compliance risks. +• Receives regular updates from management regarding our organization’s portfolio of risk and engages in discussions to understand and assess our overall risk management activities. Our Board further apprises itself of the most significant risks facing our Company, ensuring that robust risk response actions have been established and implemented, with an independent review by internal audit. +• Inquires of management to understand and assess the effectiveness of the mechanism in place for monitoring and responding to emerging risks. +• Engages in critical dialogue with our executive leadership and technology-focused personnel to ensure our organization has a robust plan to detect, stop, and mitigate the effects of cyberattack incidents, including resuming normal operations as quickly as possible. +• Engages in active discussion with management to understand our Company’s risk philosophy to ensure understanding of overall appetite for risks that aligns with ability to create stockholder value. +Below is a summary of key risk oversight responsibilities delegated to our three committees: +Audit Committee +• Oversees financial risks and monitoring of management’s policies and procedures. +• Plays a strategic role in assessing and monitoring our Company’s response to cyber threat trends, receiving periodic updates on cyber risk management initiatives, and obtaining independent confirmation of their efficacy through regular reviews by internal audit. Engages in regular dialogue with our Chief Technology Officer on technology risk related topics on every Audit Committee meeting agenda, ensuring adequacy of focus and resources to support cyber risk management activities. +• Receives regular updates from management on cybersecurity or information security incidents that may pose a significant threat to our Company, and assesses our Company’s key metrics for measuring our capabilities to manage cybersecurity and technology risk. Our Board also gets an independent view from internal audit. +• Provides oversight for compliance risk and regularly receives updates from management on compliance-related matters. +22 +Our legal and internal audit executives report directly to the Audit Committee regarding material risks to our business, among other matters, and the Audit Committee meets in executive sessions with our highest ranking manager of internal audit and with representatives of our independent registered public accounting firm. +Compensation Committee +• Oversees the design of our executive compensation program so as to encourage achievement of our strategic objectives and mitigate compensation-related risk. +Corporate Governance Committee +• Oversees risks related to our corporate responsibility and sustainability efforts, including risks related to environmental and social issues, such as climate change, as well as risks related to corporate governance issues. +• Receives quarterly updates on the status of our Sustainability Program and related risks. +• Evaluates succession planning risk regarding the Chief Executive Officer and our other executive officers. +In addition, the Corporate Governance Committee develops our Corporate Governance Guidelines to establish and oversee an appropriate governance framework. +Compensation Committee Interlocks and Insider Participation +As of the date of this Proxy Statement, no member of the Compensation Committee is serving, and during the past year no member of the Compensation Committee has served, as an officer or employee of our Company or any of its subsidiaries. None of our executive officers currently serves, or during the past year has served, as a member of the board of directors or compensation committee (or other committee serving a similar purpose) of any entity that has an executive officer serving on our Board or the Compensation Committee. In addition, none of the Compensation Committee members had any relationship, or participated in any transaction, with our Company during fiscal year 2021 that requires disclosure under SEC rules. +We have entered into indemnification agreements with each of our directors, including each member of the Compensation Committee. +Communications with Directors +Stockholders and other interested parties may communicate with the Chairman of our Board, the Chair of any Board committee, with our independent directors as a group, or with any individual director, by writing to any such person or group. Communications should be sent to the following address: +Deckers Outdoor Corporation +Attn.: Corporate Secretary +250 Coromar Drive +Goleta, California 93117 +Communications are distributed to our Board, or to any individual director, depending on the facts and circumstances described in the communication. Our Board has requested that certain items that are unrelated to the duties and responsibilities of our Board should be excluded, including the following: junk mail and mass mailings, product inquiries or complaints, new product suggestions, resumes and other forms of job inquiries, surveys, and business solicitations or advertisements. In addition, material that is unduly hostile, threatening, illegal or similarly unsuitable will not be distributed, except that any communication that is not distributed will be made available to any director upon request. +Code of Ethics and Accounting and Finance Code of Ethics +Our Board has adopted a Code of Ethics to assist our officers, directors and other employees in complying with legal and regulatory requirements and maintaining the highest standards of ethical conduct. All of our officers, directors and employees must carry out their duties in accordance with the policies set forth in the Code of Ethics and with applicable laws and regulations. The Code of Ethics complies with the requirements set forth in applicable NYSE rules. +Our Board has also adopted a separate Accounting and Finance Code of Ethics which focuses on the financial reporting process and applies to our Chief Executive Officer, Chief Financial Officer and Corporate Controller (and other employees serving similar functions). The Accounting and Finance Code of Ethics is intended to qualify as a "code of ethics" under applicable SEC rules and to satisfy the standards of ethics and compliance programs under applicable NYSE rules. +Our Code of Ethics and our Accounting and Finance Code of Ethics are available on our website at ir.deckers.com in the Overview section of the Governance tab. To the extent required by law, any amendments to or waivers of any provision of the Code of Ethics or the Accounting and Finance Code of Ethics will be promptly disclosed publicly on our website. +23 +Stockholder Engagement +We maintain an ongoing, proactive outreach effort with our stockholders. We believe our stockholders, as the owners of our Company, have important views and insights into our business operations, and we routinely seek to engage with our stockholders to ensure their views are shared with our Board, and actively considered in discussions of our strategic direction. We highly value stockholder input and have consistently demonstrated our commitment to open and interactive dialogue with our stockholders. Our stockholder outreach program is led by a cross-functional team that includes members of our Investor Relations, Compliance and Sustainability, Diversity, Equity, and Inclusion, or DEI, and Legal teams. +In fiscal year 2021, as part of our stockholder engagement efforts to solicit feedback and share perspectives we reached out to holders of approximately 52% of our shares. This year, we addressed the following topics: our corporate governance framework, executive compensation practices, and our Environmental, Social and Governance, or ESG, program, including highlights of our DEI initiatives. The investors we spoke with expressed appreciation and support for our current governance practices and our Company's ESG activities. The invaluable feedback and insights we received during our engagement were shared with the full Board. +While our Board has a fiduciary responsibility to our stockholders and represents their interests, our management team is primarily responsible for investor relations. Throughout the year, our management team regularly meets with current stockholders, prospective investors, and investment analysts. These meetings serve to engage stockholders and solicit feedback on topics relevant to our Company's performance and strategy. Our management team provides regular updates to our Board of Directors regarding stockholder feedback on these topics. +Please refer to the section of this Proxy Statement titled “ Stockholder Feedback on Executive Compensation ” for more information on how our stockholders impacted the evolution of our executive compensation program for fiscal year 2021. +Our People and Our Culture +At our Company, our purpose is to positively impact the world by uniting purposeful brands with diverse people driven to succeed and create change. Our five key values, which guide our journey onward together, help hold us accountable to deliver on this purpose: +Our values define our Company and serve as the driving force behind how we work together and with our customers, our consumers, our partners, our suppliers, and our communities. We also have detailed ethics and compliance policies that instill a commitment to ethical behavior and legal compliance across our organization. Through our open-door policy and culture, employees are encouraged to approach their managers if they believe violations of standards or policies have occurred, and are also able to make confidential and anonymous reports using an online or telephone hotline hosted by an independent third-party provider. +Diversity and Inclusion +We prioritize DEI at our Company and believe that it is critical to creating an organization where all employees can come as they are. We believe that the inclusion of underrepresented perspectives develops better outcomes and policies, and a diverse pool of leaders brings a unique set of experiences, opinions, and thoughts on critical issues that help enhance our business. +Our Code of Ethics, on which we train our employees bi-annually, as well as our annual Corporate Responsibility Report, codifies these values and our commitment to DEI. We have a robust collection of programs designed to support initiatives to create a more inclusive workplace, as well as policies and practices aimed at increasing diversity. We anticipate implementing a comprehensive, global strategy for DEI, and have deployed mandatory anti-racism and implicit bias training, as well as a suite of additional learning and development resources. In fiscal year 2021 we joined The Valuable 500, which is a business-to-business initiative comprised of companies committed to disability inclusion, and the Civic Alliance which is a nonpartisan business coalition that champions democracy and civic participation. +Our Board values DEI as we continue to enhance our Board's diversity and skill sets. In addition, our Board is regularly kept apprised of our Company's DEI employee engagement efforts, targets and commitments. +24 +Charitable Giving and Volunteering +At our Company, our charitable contributions, product donations, and employee volunteer efforts are an essential part of our culture. During fiscal year 2021, we donated to various non-profit organizations, and continued to provide monetary support and product donations to address the impacts of the pandemic on the communities in which we operate. Further, during this period we dedicated our strategic giving and community-engagement efforts to categories aligned with our sustainable development goals, or SDGs, including DEI, the environment, at-risk youth, education, and community suppo rt. +$2.1 Million +Amount donated to various non-profit organizations during fiscal year 2021 +Areas of Focus for Giving +Diversity and Inclusion, Environment, Community, At-Risk Youth, Education, COVID Relief Efforts +24 Hours +Hours we compensate employees for volunteer time each year +Over 1.1 Million Pairs +Number of pairs of shoes donated, since the inception of our partnerships with non-profit organizations who distribute shoes to those in need +Corporate Responsibility and Sustainability +As a global leader in designing, marketing and distributing innovative footwear, apparel, and accessories, our worldwide scope and impact is significant. Equally significant is the responsibility we believe we have to our stakeholders, including our consumers, employees, stockholders, and the communities we serve. We believe consumers are increasingly buying brands that advance sustainable business practices and deliver quality products while striving for minimal environmental impact with socially conscious operations. We also believe institutional stockholders and other investors are increasingly focused on investing in companies that emphasize corporate responsibility and sustainability. We employ socially conscious operations and sustainable business practices, with the goal of continuing to deliver quality products to our consumers and sound financial performance to our stockholders, while minimizing the environmental impact of our business footprint. Our sustainability policies and strategies are aligned with, and informed by, our ongoing efforts with multi-stakeholder initiatives, which involve our employees, suppliers, customers and stockholders, as well as other brands and non-governmental organizations. Through our Corporate Responsibility and Sustainability Program, which has been in existence since 2010, we are committed to advancing our sustainable business initiatives with the goal of consistently delivering brand promises that meet consumer expectations, while responsibly delivering the financial results required by our stockholders. As a result of our sustainability efforts, we have been recognized by as one of America’s Most Responsible Companies by Newsweek, "Company of the Year" by Footwear News, and ranked 15th of Investor's Business Daily's top “50 Best ESG Companies” during fiscal year 2021. +Environmental, Social and Governance Framework +Our Corporate Governance Committee oversees our corporate responsibility and sustainability efforts. Our Company's ESG program is managed by several executive-level committees which meet on a quarterly basis, including the Risk, Sustainability and Compliance Advisory Committee, the Environmental Sustainability Ethical Sourcing Committee, the Deckers Gives Committee, and two Regional Committees. +Our Corporate Sustainability and Compliance Officer is tasked with identifying specific sustainable development goals, or SDGs, that align with the United Nations Global Compact, or UNGC, to guide our efforts to address environmental and social challenges. +Sustainable Development Goals +Achieving measurable sustainability success is critical to our future economic and business growth, and we work to establish SDGs that we believe will make the most significant impact for our business, our stockholders, and the communities in which we operate. We are a member of the UNGC, which is the world’s largest voluntary corporate sustainability initiative. This membership requires an annual statement of progress, which is reflected in our Corporate Responsibility Report. Our Sustainability and Compliance Officer identifies specific SDGs established by the UNGC, which we adopt to guide our efforts to address environmental and social challenges. Our SDGs, which are described below, are currently focused on categories where we believe we can make substantial impacts. We identified targets for our Company under each selected SDG below to help hold us accountable and better track progress in the areas of materials, waste, water, climate and clean energy, chemistry, human rights, and gender equality and quality education. +25 +MATERIALS WASTE WATER +Incorporate 50% more certified responsible and sustainable materials into our products (including recycled, renewable, regenerated, and natural). +Sustainably reduce waste generated at our facilities and partner facilities through reduction, recycling, and reuse. Reduce water usage and improve water quality throughout our operations and the communities in which we operate. +CLIMATE AND CLEAN ENERGY CHEMISTRY AND CONSUMER SAFETY HUMAN RIGHTS +Reduce energy consumption and carbon emissions throughout our operations. Reduce or eliminate hazardous chemicals throughout our operations. Positively impact the communities where we operate, including assuring industry leading human rights practices within our supply chain. +GENDER EQUALITY AND QUALITY EDUCATION +Promote diversity, gender equality, female empowerment, and inclusion for all. +Climate and Clean Energy +In fiscal year 2021, as part of our ESG Program efforts, we made great progress toward each of our SDG goals but focused on the amplification of our climate and clean energy efforts. We partnered with climate experts to conduct carbon accounting of our environmental footprint in Scope 1 (emissions from owned or controlled sources), Scope 2 (emissions from leased offices, distribution center and retail stores) and Scope 3 (emissions from our other activities) and intend to file science-based targets to hold ourselves accountable. We also finalized our raw materials lifecycle assessment allowing our brands to use more preferred materials, ultimately leading to some exciting brand launches including UGG Plant Power, TEVA Strap into Freedom, and Sanuk Sustainasole. +Below are some climate and clean energy focuses and commitments: +Engaged climate experts to conduct carbon accounting of Scope 1, 2, and 3 and anticipate filing science-based targets in fiscal year 2022, ahead of target. +Committed to restoring 200,000 acres of land in fiscal year 2021 and 1,000,000 acres of land by 2025 through regenerative farming practices with the Savory Institute. +Finalized raw material lifecycle assessment of: footwear, footwear packaging raw material, apparel, accessories and home. +Committed to finding lasting solutions for product end-of-life. Partnered with Terracycle for Teva footwear sandal recycling and a refurbishment partner for UGG to extend the life Classic Boots. +Monitored Tier 1 and Tier 2 partners and saw reduced energy consumption among those monitored. +Corporate headquarters to use 100% renewable energy by fiscal year 2022. +Our fiscal year 2021 Corporate Responsibility Report, which will be published later on this year under the “Responsibility” tab of our website located at www.deckers.com , will provide more information regarding our ESG achievements during fiscal year 2021. We believe that the progress of our corporate responsibility efforts is served by disclosing goals and relevant metrics and, to that end, we have aligned the reporting standards included in our Corporate Responsibility Report with the Financial Stability Board’s Task Force on Climate-Related Financial Disclosures (commonly referred to as TCFD), Global Reporting Initiative’s (commonly referred to as GRI) Core Standards, and Sustainability Accounting Standards Board’s (commonly referred to as SASB) Consumer Goods Standards. The content of our Corporate Responsibility Report is not incorporated by reference into this Annual Report or in any other report or document we file with the SEC. +26 +EXECUTIVE OFFICERS +Each of our executive officers serves at the discretion of our Board. Important summary information about our current executive officers is set forth in the table below, followed by certain biographical information about each officer. +EXECUTIVE OFFICER AGE POSITION +Dave Powers 55 Chief Executive Officer, President and Director +Steven J. Fasching 53 Chief Financial Officer +David E. Lafitte 57 Chief Operating Officer +Stefano Caroti 58 President of Omni-Channel +Andrea O'Donnell 52 President of Fashion Lifestyle +Wendy Yang 57 President of Performance Lifestyle +Thomas Garcia 48 Chief Administrative Officer +DAVE POWERS +Age: 55 +Position: Chief Executive Officer, President and Director +Mr. Powers was appointed as our Chief Executive Officer in June 2016 and joined our Board at that time. Mr. Powers joined our Company as President of Direct-to-Consumer in August 2012. He was appointed President of Omni-Channel in January 2014 and was appointed President in March 2015. Mr. Powers has over 20 years of experience in merchandising, product and marketing development, and leading global direct-to-consumer operations and wholesale businesses. Prior to joining us, Mr. Powers served four years as vice president of global direct-to-consumer at Converse Inc., where he oversaw owned and distributor direct-to-consumer as part of the Nike, Inc. retail leadership team. Mr. Powers also held several executive leadership roles at The Timberland Company, including worldwide general merchandising manager and senior director European retail, where he led worldwide retail merchandising, marketing, visual and store design, and oversaw European retail operations. Prior to this, Mr. Powers spent 10 years at Gap Inc., where he held multiple senior management titles, including global divisional merchandise manager for the boy’s division. Mr. Powers graduated cum laude from Northeastern University with a B.S. in Marketing. +STEVEN J. FASCHING +Age: 53 +Position: Chief Financial Officer +Mr. Fasching was appointed as our Chief Financial Officer in June 2018 and served as our Senior Vice President, Corporate Strategy, Planning & Investor Relations since February 2018. Mr. Fasching previously served as our Vice President, Strategy & Investor Relations from January 2016 to February 2018, and as Vice President, Strategic Financial Planning from August 2011 to January 2016. Mr. Fasching has over 28 years of experience in long-term financial and strategic planning and creating and leading the analytical engine of multi-billion dollar organizations. Immediately prior to joining our Company, Mr. Fasching served for five years as the director of finance and assistant controller of Princess Cruise Lines, Ltd., a cruise line owned by Carnival Corporation, where he had been promoted through a number of finance-related positions since September 1990, including director of financial planning, among others. Mr. Fasching received a B.S. degree in Business Administration from Pepperdine University and an M.B.A. from The Anderson School of Management at UCLA. He also completed The Executive Program for Prospective CFOs through the University of Chicago Booth School of Business. +27 +DAVID E. LAFITTE +Age: 57 +Position: Chief Operating Officer +Mr. Lafitte was appointed as our Chief Operating Officer in February 2015. From 2012 to January 2015, he was outside general counsel for our Company. Prior to joining our Company, Mr. Lafitte was a shareholder with the law firm Stradling Yocca Carlson & Rauth, P.C., where he was a member of the firm’s board of directors and executive committee, and had been advising our Company since 2006. He received a B.A. from the University of Colorado and a J.D. from Tulane University. +STEFANO CAROTI +Age: 58 +Position: President of Omni-Channel +Mr. Caroti was appointed as our President of Omni-Channel in November 2015. He has over 31 years of industry experience in general management, sales, retail, product, marketing, business strategy and brand management. Prior to joining our Company, Mr. Caroti was the chief commercial officer and managing director at PUMA, from August 2008 to December 2014, where he was responsible for PUMA’s global wholesale, retail and e-commerce divisions and PUMA’s geographic operating regions. He held a number of senior executive positions at Nike, Inc. in general management, sales, product and marketing, and during his term as vice president of EMEA commerce, he was responsible for the entire wholesale, retail and e-commerce business in the EMEA region. He received a B.A. with honors from Middlebury College. +ANDREA O'DONNELL +Age: 52 +Position: President of Fashion Lifestyle +Ms. O’Donnell was appointed as our President of Fashion Lifestyle in April 2016. Ms. O’Donnell has over 21 years of experience in the retail industry and is well versed in operating in complex international markets. She has a background in strategic planning, merchandising and marketing, as well as experience in emerging markets and customer relationship management. Over the course of her career, she has held leadership positions with prominent international retailers. Ms. O’Donnell was with DFS Group Limited prior to joining our Company, where she served as president of global merchandising. From 2012 to 2014, she was with Lane Crawford, where she was responsible for merchandising, marketing, CRM and store planning across the Asia Pacific Region. She was the commercial director at John Lewis from April 2004 to August 2012, responsible for online sales and strategy for Omni-Channel. She was the merchandising planning director at Hacket London from September 2002 to April 2004, and prior to that was head of merchandising planning at Jaeger and Debenhams. She received an Executive M.B.A. from the London School of Business. +28 +WENDY YANG +Age: 57 +Position: President of Performance Lifestyle +Ms. Yang was appointed as our President of Performance Lifestyle in February 2016. She joined our Company in April 2015. She has over 20 years of industry experience in building out footwear categories and brands, with a strong background in both Lifestyle and Active segments. Working in large, multi-brand companies, Ms. Yang fostered collaborations across brands. She has held product and marketing leadership positions at New Balance Athletic Shoe, Stride Rite Corporation, The Timberland Company, Tommy Hilfiger Footwear and Reebok International Limited. Ms. Yang earned her B.A. in Managerial Studies from Rice University and M.B.A. in Marketing from the Kellogg School of Management at Northwestern University. In addition, she was a professional tennis player for three years, achieving world ranking status through participation in tournaments, including Wimbledon, The French Open, and The Australian Open. +THOMAS GARCIA +Age: 48 +Position: Chief Administrative Officer +Mr. Garcia joined our Company in 2009. In his current position as Chief Administrative Officer he oversees Legal, ESG, Strategy and Communications. He was promoted to his position in 2021 after spending more than 12 years in multiple roles including SVP, Senior Counsel, and Compliance Officer. From 2003 to 2009, Mr. Garcia was assistant general counsel at Mentor Corporation, a medical device company acquired by Johnson & Johnson. Previously, he was an associate attorney at the law firms of Hatch and Parent, as well as Buchanan Ingersoll. Mr. Garcia earned his B.S. in Biology from Lehigh University, Masters in Public Health from The University of Massachusetts at Amherst, and J.D. from The George Washington University Law School. +29 +COMPENSATION DISCUSSION AND ANALYSIS +In this section we discuss the compensation program applicable to our Named Executive Officers, or NEOs. This discussion is divided into the following parts: +EXECUTIVE SUMMARY +COMPENSATION PHILOSOPHY AND OBJECTIVES +COMPENSATION CONSULTANT AND PEER GROUP +ELEMENTS OF FISCAL YEAR 2021 EXECUTIVE COMPENSATION PROGRAM +OTHER COMPENSATION CONSIDERATIONS +Please also review the Summary Compensation Table, and the additional compensation tables and related footnotes that follow this section, as they provide information critical to an understanding of our executive compensation program. +30 +EXECUTIVE SUMMARY +Named Executive Officers +The following table sets forth our NEOs in fiscal year 2021, the current positions they hold and the dates they were appointed to those positions: +NAMED EXECUTIVE OFFICER CURRENT POSITION AND DATE APPOINTED +Dave Powers • Chief Executive Officer and Director - June 2016 +• President - March 2015 +Steven J. Fasching • Chief Financial Officer - July 2018 +David E. Lafitte • Chief Operating Officer - February 2015 +Stefano Caroti • President of Omni-Channel - November 2015 +Andrea O'Donnell • President of Fashion Lifestyle - April 2016 +Fiscal Year 2021 Financial and Operational Highlights: +We delivered strong results in fiscal year 2021 from both financial and operational perspectives, including the following: +• Total revenue growth of 19.4%, representing an increase of $413 million as compared to the prior year; +• Major contributions from various brands including incremental growth of $219 million and $196 million from the HOKA ONE ONE brand and the UGG brand, respectively; +• Global direct-to-consumer drove the majority of growth, adding $330 million of incremental volume as compared to the prior year; and +• Increased diluted earnings per share by 39.9% to $13.47. +Our strong financial performance over the past three fiscal years is illustrated by the financial metrics in the graphs below. For each fiscal year, the information presented is for the 12-month period ended March 31. +Our performance-based compensation for fiscal year 2021 relied on some of these performance metrics to directly tie executive compensation to Company performance in furtherance of our pay for performance philosophy. For example, our Annual Cash Incentive Awards used consolidated operating income and revenue (and business unit operating income and revenue for certain executives with business unit oversight responsibilities), and our long-term incentive plan performance-based stock units, or LTIP PSU, awards used pre-tax income and revenue as the underlying performance metrics. +(1) Amount presented for the fiscal year ended March 31, 2019 is presented on a Non-GAAP basis. Amounts for the fiscal years ended March 31, 2020 and March 31, 2021 are presented on a GAAP basis as there were no Non-GAAP adjustments. GAAP refers to generally accepted accounting principles within the United States. +31 +Our Business and Strategic Objectives +We intend to continue investing strategically in key identified areas of growth within our brand portfolio. Specifically we will invest in the following: +• The HOKA ONE ONE brand, generating increased brand awareness and supporting the brand globally as it builds market share with core running styles and expands into incremental categories of performance footwear. +• The UGG brand, focusing on growth within category extensions within its Women's product offering and through non-core styles as well as the Men's product offering. We also intend to reignite brand heat in the UGG brand's international markets through localized marketing initiatives paired with strategic distribution shifts. +• Technology and analytical tools that will enhance our capabilities as we look to support our evolving business, including opportunities to connect with consumers through digital avenues as well as expanding our e-commerce platform. +• Infrastructure required to support our key growth initiatives globally, including investment in talent to build new capabilities as well as distribution and logistical needs as our organization continues to scale in size. +We intend to closely monitor the planned investments in our business in the near term to enable the organization to weather the potential impacts from the ongoing COVID-19 pandemic and related economic pressures. +In light of these developments, our Compensation Committee, which we refer to as the Committee for purposes of this section, may re-evaluate the performance targets and/or metrics associated with executive compensation during fiscal year 2022 and exercise its discretion to effect adjustments to outstanding awards as appropriate to take into account the impact of the COVID-19 pandemic on our results of operations. Any adjustments made by the Committee would be consistent with our overall compensation philosophy, including ensuring pay-for-performance alignment and rewarding achievement of financial and strategic objectives that drive stockholder value. +Our Compensation Program Objectives +The overarching objectives of our executive compensation program are to (i) attract and retain high-quality talent; (ii) align interests of executives with stockholders; (iii) provide a significant portion of total compensation through variable, performance-based components; and (iv) offer incentives for achieving both short and long-term goals that are directly tied to the achievement of strategic objectives. As a result, the Committee seeks to design our executive compensation program in a manner that reflects direct alignment between the compensation opportunity provided to our executives and the achievement of our strategic objectives. In doing so, we routinely consider appropriate changes to our compensation program to reflect our strategic direction and the evolving needs of our business. In addition, in order to build and retain the talent necessary to achieve our strategic objectives, the Committee endeavors to develop a compensation program that is attractive and competitive in the marketplace, taking into consideration peer group and broader industry data. +When establishing our executive compensation program each year, the Committee is generally guided by the following four principles that it believes align closely with our compensation objectives: +• Pay for performance by ensuring that a significant portion of compensation is made available to our executives in the form of variable, performance-based components. +32 +• Align interests of executives with stockholders by tying a significant portion of compensation to Company performance that creates long-term value for our stockholders and is correlated to increases in the value of our stock price. +• Attract and retain executives with the background and experience necessary to lead the organization and achieve our strategic objectives. +• Reward achievement by offering meaningful and appropriate incentives for achieving both short-term and long-term Company financial goals that have been established by the Committee that are directly tied to the achievement of strategic objectives, while potentially adjusting the required performance objectives as a result of the impacts of COVID-19 pandemic. +Consistent with our strategic objectives, when designing our executive compensation program for fiscal year 2021, the Committee focused on continuing to build and retain our executive team, while providing them with incentives to focus on our key strategic initiatives, including increased revenue, enhanced profitability, improved operating margins and the creation of long-term value for stockholders. These and other strategic considerations are clearly reflected in the design of our program, which demonstrates strong pay-for-performance alignment. In addition, these considerations resulted in a number of important changes to the program for fiscal year 2021, as described in further detail below. +Fiscal Year 2021 Executive Compensation Highlights +In fiscal year 2021, we implemented an executive compensation program that was designed to focus on our key strategic initiatives, including increased revenue, enhanced profitability, improved operating margins and the creation of long-term value for stockholders. Compensation elements under the program include the following: +• Base salaries; +• Cash incentive awards, or 2021 Cash Incentive Awards; +• Time-based restricted stock units, or 2021 Time-Based RSUs; and +• 2021 LTIP PSUs. +Our fiscal year 2021 executive compensation program was similar to that of fiscal year 2020 with the exception of a few changes, which included discontinuing annual performance-based restricted stock units. This change was implemented to bring our executive compensation program closer to those of our peer group. In addition, no increases or adjustments were made to the base salaries of our NEOs during fiscal year 2021. The decision to not make adjustments to the base salaries was largely due to uncertainties related to the overall impacts of the COVID-19 pandemic on our business. These uncertainties also influenced our decision to delay the selection of performance metrics for the 2021 LTIP PSUs until February 2021, and to implement three one-year performance measurement periods for the 2021 LTIP PSUs rather than one three-year performance measurement period, which we used for LTIP awards in prior years. This change allows us to establish annual definitive targets up front for each one-year performance period, with higher targets for the following one-year performance period(s). +As a result of our strong financial and operational results in fiscal year 2021, the 2021 Cash Incentive Awards and 2019 LTIP PSUs were paid out at 200% of target. +Stockholder Feedback on Executive Compensation +We have consistently demonstrated our commitment to stockholder outreach efforts, which has resulted in meaningful, interactive dialogue with our stockholders on a number of significant topics, including our business and strategic objectives, our financial and operational performance, our capital allocation strategy, our corporate governance philosophy, and the performance of our stock. We have also routinely solicited and incorporated stockholder feedback on the design and effectiveness of our executive compensation program. We believe our proactive engagement and response to stockholder feedback, combined with strong pay-for-performance alignment, has resulted in overwhelming stockholder support for our executive compensation program. Indeed, these efforts resulted in 97.5% of the votes cast being voted "for" our executive compensation program at our annual meeting of stockholders held in 2020. This extremely favorable stockholder response is consistent with the prior year. +In an effort to continue our dialogue with our stockholders in fiscal year 2021, we again reached out to key investors to solicit their feedback, in particular with respect to topics such as our corporate governance framework, executive compensation practices, and corporate responsibility and sustainability efforts. As part of these stockholder engagement efforts, we reached out to key investors holding over 52% of our shares offering to discuss their views and any concerns regarding our compensation philosophy and program, and to provide an overview of our executive compensation program. This process highlights our ongoing commitment to our stockholder engagement efforts, which has informed the evolution of our executive compensation program, including our adoption of a median pay philosophy and our focus on profitability and revenue in selecting performance metrics that align with our strategic objectives. Our fiscal year 2021 executive compensation program, as described in this section, reflects our ongoing dialogue with our stockholders. +The Committee believes that ongoing, transparent communication with our stockholders is critical to our long-term success, and that the feedback received through our stockholder engagement efforts will continue to contribute to the evolution and +33 +enhancement of our executive compensation program. The Compensation Committee considers stockholder engagement to be an important part of its decision-making process and plans to continue proactive outreach efforts going forward. +Compensation Program Highlights +The following table sets forth the key components of our executive compensation program for fiscal year 2021, and the underlying philosophy and considerations that provide the basis for our compensation decisions: +COMPENSATION HIGHLIGHTS UNDERLYING PHILOSOPHY/ADDITIONAL CONSIDERATIONS +• Pay-for-performance alignment +• We emphasized strong pay-for-performance alignment by providing a significant portion of the overall compensation opportunity for our NEOs in the form of performance-based compensation that is at risk and directly tied to the achievement of specific Company financial and operational performance objectives. +• Our performance-based compensation is designed to align the interests of our NEOs with those of our stockholders and encourage the achievement of strategic objectives that the Committee believes are critical to our short and long-term success. +• For fiscal year 2021, only 17% of the total compensation opportunity for our President and Chief Executive Officer was fixed, while 83% of his total compensation opportunity was directly tied to the achievement of specific performance conditions and therefore at risk. +• Alignment of performance metrics with strategic objectives +• Selecting the appropriate performance metrics for our performance-based awards is critical to achieving our business and strategic objectives, motivating our executives and advancing our pay-for-performance philosophy. +• In light of our strategic focus on increased revenue, enhanced profitability, improved operating margins, and the creation of long-term stockholder value, the Committee selected (i) consolidated operating income and revenue for all NEOs (and business unit operating income and revenue targets for certain executives with business unit oversight responsibilities) as the performance metrics for our 2021 Annual Cash Incentive Awards, and (ii) both “pre-tax income” and consolidated revenue for each of fiscal years 2021, 2022 and 2023 as the annual performance metrics for our 2021 LTIP PSUs. The consolidated revenue metric used for both our 2021 Annual Cash Incentive Awards and our 2021 LTIP PSUs reflects our continued focus on top line growth. +• Limited overlap in performance conditions +• Our performance metrics involve multiple performance conditions over multiple time periods to ensure our compensation program encourages healthy and sustained growth across our business, while eliminating excessive overlap between the goals. For fiscal year 2021, these metrics focused on a combination of revenue, income and margins. +• This approach further mitigates against risk associated with our compensation program as it de-emphasizes the impact of any one performance metric. +• Adoption of a "median" pay philosophy +• Consistent with our prior disclosures, we have actively reformulated our executive compensation program to benchmark the target total compensation opportunity for our NEOs at the median compared to our peer group. +• In adopting this philosophy, the Committee carefully considered a number of factors, including specific feedback received from our stockholders during our stockholder engagement efforts in prior years. +• Use of PSUs for LTIP awards +• LTIP awards were designed to align the interests of our executives with those of our stockholders by focusing performance conditions on both profitability and revenue and issuing awards that increase in value if and as our stock price increases. +• Vesting is based on the achievement of profitability and revenue-based metrics, in each year during a three-year period, that align closely with our strategic objectives. +• 100% of the equity awards granted during fiscal year 2021 were subject to long-term vesting in order to promote retention of our executives. +• The vesting of each LTIP award is also subject to adjustment based upon the application of a TSR modifier, thereby correlating the vesting of the award to total and relative stockholder returns. +• Appropriate mix of equity awards with focus on performance-based vesting +• We issued equity awards with a target of 60% of such awards vesting based on the achievement of Company performance conditions to ensure alignment with our pay-for-performance philosophy, and a target of 40% of such awards vesting based on the achievement of long-term, time-based vesting targets to attract and retain executives. +34 +• Continued focus on executive retention +• While we seek to develop our executive compensation program so that it closely aligns with our pay-for-performance philosophy and rewards achievement of performance goals, this objective must complement other critical objectives, including the retention of executives. +• For fiscal year 2021, we again granted a portion of equity awards (targeted at 40%) that vest solely based on the achievement of time-based targets, which promote executive retention because they vest over a long-term service period. +• Consistent with its historical practice, the Committee expects a majority of equity awards to continue to have performance-based vesting conditions. +• Consideration of peer group data and the advice of our independent compensation consultant in setting executive compensation +• We generally use peer group compensation data as an initial starting point and guidepost in making compensation decisions for our executives, with respect to the aggregate compensation opportunity, as well as each element of compensation. We also evaluate and consider broader industry data. +• We work closely with our independent compensation consultant, which provides us with information on competitive pay practices and trends in our industry and makes recommendations regarding the design and structure of our compensation program, as well as the formulation of our peer group, which we reassess annually. The information and guidance provided by our independent compensation consultant is consistent with our median pay philosophy. +35 +COMPENSATION PHILOSOPHY AND OBJECTIVES +Compensation Program Objectives +Pursuant to its charter, the Committee has overall responsibility for developing the compensation philosophy and objectives applicable to our executive leadership team, and approving our executive compensation program and policies. The overarching objectives of our executive compensation program are to (i) provide a significant portion of total compensation through variable, performance-based components; (ii) align interests of executives with stockholders; (iii) offer incentives for achieving both short and long-term goals that are directly tied to the achievement of strategic objectives; and (iv) attract and retain high quality talent. As a result, the Committee seeks to design our executive compensation program in a manner that achieves strong alignment between the compensation opportunity provided to our executives and the achievement of our strategic objectives. In so doing, we routinely consider appropriate changes to our compensation program to reflect changes in our strategic direction and the evolving needs of our business. In addition, in order to build and retain the leadership team necessary to achieve our strategic objectives, the Committee endeavors to develop a compensation program that is attractive and competitive in the marketplace, taking into consideration peer group data. +Compensation Philosophy +When establishing our executive compensation program each year, the Committee is generally guided by the following four principles that it believes align closely with our compensation objectives: +PAY FOR PERFORMANCE ALIGN INTERESTS WITH STOCKHOLDERS +• Offer a significant portion of the compensation opportunity made available to our executives in the form of variable, performance-based components. +• Ensure performance-based compensation is directly tied to the achievement of Company financial, operational and strategic goals that the Committee believes are important for our short and long-term success. +• Align the interests of our executives with those of our stockholders by tying a significant portion of the compensation opportunity to financial and operational performance that the Committee believes will result in the creation of long-term stockholder value. +• Ensure that a significant portion of the compensation opportunity is directly tied to total and relative stockholder return. +REWARD ACHIEVEMENT ATTRACT AND RETAIN EXECUTIVES +• Offer meaningful and appropriate incentives for achieving both short-term and long-term Company financial and operational goals that have been established by the Committee that are directly tied to the achievement of strategic objectives. +• Ensure that the financial goals are appropriate for each executive given their respective titles, scope of responsibilities, and ability to impact results. +• Attract key executives with the proper background and experience necessary to lead our Company and provide us the best opportunity to achieve our business and strategic objectives. +• Retain our key executives by offering compensation that is attractive and competitive in the marketplace, taking into consideration peer group and broader industry data. +Pay-for-Performance Philosophy +Our pay-for-performance philosophy demands that we offer performance-based compensation that is directly linked to factors that the Committee believes will lead to the creation of stockholder value. Specifically, we pay for performance by tying a significant portion of our executive compensation opportunity to the achievement of pre-established performance metrics that are reflective of our business and strategic objectives, as well as to increases in our stock price. The Committee believes that choosing the right performance metrics is critical to our ability to properly motivate our executives and advance our pay-for-performance philosophy. In particular, this requires that the performance metrics be reconsidered each year as our business and strategic objectives evolve to ensure they provide the appropriate barometer of our growth and success, and motivate the achievement of our objectives in line with how we currently view the business. +To this end, for our 2021 Annual Cash Incentive Awards, the Committee chose consolidated operating income and revenue for all NEOs (and business unit operating income and revenue targets for certain executives with business unit oversight responsibilities) as the performance metrics given our strategic focus on increased profitability and improved margins. For our 2021 LTIP PSUs, the Committee established "pre-tax income" and consolidated revenue as the performance metrics for each of fiscal years 2021, 2022 and 2023, given our focus on long-term profitability and total revenue. In addition, the Committee will apply a total shareholder return, or TSR, modifier, to adjust the vesting of the 2021 LTIP PSUs following a determination that the performance metrics have been achieved to ensure we take into account our stock performance on both an absolute and relative basis. Furthermore, the 2021 LTIP PSUs are equity-based awards, the values of which are directly correlated to our stock price. +Performance targets and/or metrics associated with executive compensation during fiscal year 2022, may be reevaluated by our Committee, in light of the ongoing uncertainties related to the overall impact of the COVID-19 pandemic on our business. Our Committee may exercise its discretion to effect adjustments to outstanding awards as appropriate and any such adjustments +36 +made by the Committee would be consistent with our overall compensation philosophy, including ensuring pay-for-performance alignment and rewarding achievement of financial and strategic objectives that drive stockholder value. +As a result of our strong commitment to our pay-for-performance philosophy, a substantial portion of our executives’ compensation opportunity is performance-based and it is not guaranteed that it will be earned. While we offer certain standard compensation elements that provide guaranteed payments, including base salary and limited employee benefits, our executive compensation mix is heavily weighted toward performance-based compensation, which significantly limits the amount of guaranteed pay. In reviewing our adherence to our executive compensation philosophy, the Committee annually reviews both the amount of, and the mix between, guaranteed pay and at-risk pay and seeks to establish appropriate performance targets for the at-risk pay so as to ensure our performance targets align with our business and strategic objectives, are appropriately challenging to achieve, and mitigate our overall compensation-related risk. +As an example, for fiscal year 2021, guaranteed pay for our Chief Executive Officer (reflecting the value of base salary and limited employee benefits) represented only 17% of his targeted compensation opportunity for the year, while at-risk pay represented 83% of his targeted compensation. Of the 83% that reflects at-risk pay, 58% was provided through performance-based awards (reflecting the targeted value of the 2021 Annual Cash Incentive Awards and 2021 LTIP PSUs) that only vest upon the achievement of pre-established Company performance metrics, while 25% was provided through time-based awards (reflecting the targeted value of the 2021 Time-Based RSUs) that only vest upon the achievement of long-term time-based vesting targets. The Committee considers the 2021 Time-Based RSUs to be at-risk pay given that the vesting of the awards is conditioned upon continued employment over an extended period of time and the value of the awards is subject to fluctuation based on our stock price. We believe the significant focus on performance-based awards, including the relative weighting of the various compensation elements provided to our executives, reflects our strong pay-for-performance alignment. The elements of our executive compensation program are established taking into consideration the advice of our independent compensation consultant, which provides us with peer group data regarding competitive pay practices and trends in our industry, as well as the views of the Committee, which is comprised solely of independent directors. +The graphic below illustrates the amount of targeted at-risk pay vs. guaranteed pay for our Chief Executive Officer for fiscal year 2021 and the breakdown of the various components of the compensation program on a percentage basis. +37 +Governance Practices that Support our Compensation Philosophy +Our executive compensation program has significant governance components that we believe support and strengthen our compensation philosophy and reduce compensation-related risk, including those summarized in the following table: +GOVERNANCE PRACTICE +WHAT WE DO þ +Independent Directors +• All of the members of our Board, other than our President and Chief Executive Officer, are independent directors under applicable SEC and NYSE rules. +Independent Compensation Committee +• The Committee consists entirely of independent directors who meet the independence standards set forth in applicable SEC and NYSE rules. +Independent Compensation Consultant +• The Committee has retained, and routinely consults with, an independent compensation consultant who assists the Committee in gathering competitive pay data, selecting our peer group, and structuring our executive compensation program. The decision to engage the consultant was made solely by the Committee and the consultant reports directly to the Committee. +Compensation Risk Assessment +• The Committee performs an annual review of the risks related to our compensation practices. See the section of this Proxy Statement titled " Compensation Risk Assessment " for additional information. +Frequency of "Say-on-Pay" Vote +• We ask our stockholders to provide an advisory vote on our pay practices on an annual basis, and the Committee considers the outcome of the vote when establishing our executive compensation program. +Stock Ownership Guidelines +• We have adopted stock ownership guidelines for our executive officers and directors, which are reviewed annually. See the section of this Proxy Statement titled " Stock Ownership Guidelines " for additional information. +Clawback Policy +• We have voluntarily adopted a Clawback Policy related to our cash and equity incentive awards, which we believe reinforces our pay-for performance philosophy and contributes to a Company culture that emphasizes integrity and accountability in financial reporting. See the section of this Proxy Statement titled " Clawback Policy " for additional information. +Equity Award Vesting Provisions +• Our equity awards are subject to "double-trigger" vesting upon a change in control. +No Tax Gross Ups +• Our change in control and severance agreements do not contain provisions allowing for excise tax gross up payments . +No Repricing of Awards +• Our 2015 Stock Incentive Plan, or 2015 Plan, explicitly prohibits the repricing of equity awards. +No Hedging and Pledging • We have adopted governance policies that specifically prohibit hedging or pledging our shares, and other similar practices. +No Dividends on Unvested Equity Awards +• Our equity award agreements do not provide for the payment of dividends on unvested equity awards. +38 +COMPENSATION CONSULTANT AND PEER GROUP +Compensation Consultant +The Committee receives assessments and advice regarding our compensation practices and philosophy from its independent compensation consultant, FW Cook. FW Cook provides information on competitive pay practices and trends in our industry, and makes recommendations regarding the formulation of our Peer Group (as defined below), as well as the design and structure of our compensation program. The Committee meets regularly with FW Cook throughout the year, carefully reviews and assesses the materials provided by FW Cook, and engages in thorough deliberations with FW Cook and management regarding our executive compensation program and potential changes. +While our Company is not obligated to retain an independent compensation consultant, the Committee believes that the use of an independent consultant provides additional assurance that our executive compensation program is attractive and competitive in the marketplace, consistent with market conditions, aligned with our business and strategic objectives, and reflective of our compensation philosophy. +In accordance with applicable SEC rules, the Committee took certain factors into consideration when selecting FW Cook, which it believes may affect the independence of a compensation consultant. In particular, at a meeting of the Committee, the Committee discussed: +• whether any other services had been or were being provided by FW Cook to our Company; +• the amount of fees paid by our Company to FW Cook as a percent of FW Cook’s total revenues; +• FW Cook’s policies and procedures designed to prevent conflicts, a copy of which was provided to the Committee prior to the meeting; +• FW Cook’s ownership of our common stock (if any); and +• any business or personal relationships between FW Cook and any Committee members or any of our executive officers. +Furthermore, FW Cook does not provide any additional services to us or our management, other than the services that are provided to the Committee in FW Cook’s capacity as our compensation consultant. Following the consideration of these factors, and such additional factors as the Committee deemed appropriate under the circumstances, the Committee made an affirmative determination that FW Cook is independent and unanimously approved the engagement of FW Cook. +The decision to engage FW Cook was made by the Committee, and FW Cook reports directly to the Committee. While members of our management regularly communicate with representatives of FW Cook, our management did not recommend the engagement of FW Cook in any capacity for fiscal year 2021 (or in any prior year) and does not direct or oversee the retention, termination or scope of services of FW Cook with respect to our executive compensation program. +Peer Group +In making compensation decisions for fiscal year 2021, the Committee compared the aggregate compensation opportunity, as well as each element of compensation, against a peer group of publicly traded footwear, apparel, accessories and lifestyle brand companies that is recommended by FW Cook and approved by the Committee. We collectively refer to these companies as our Peer Group. Our Peer Group is generally comprised of companies against which we compete for executive talent and stockholder investment, are in related businesses or industries, and are otherwise similar to us based on a number of characteristics as discussed below. Our Peer Group is reviewed at least annually by the Committee with support from FW Cook. While no single company in our Peer Group reflects all of our Company's characteristics, taken together the Committee believes that this list offers strong comparative analogs to our overall business model and brand portfolio, at the time the compensation decisions were made. +For fiscal year 2021, our Board approved our Peer Group below. Our Peer Group consists of the following 19 companies: +PEER GROUP FOR FISCAL YEAR 2021 +• Carter's, Inc. • Express, Inc. • Lululemon Athletica, Inc. • Tapestry, Inc. +• Caleres, Inc. • Fossil Group, Inc. • Oxford Industries, Inc. • The Children's Place, Inc. +• Columbia Sportswear Company • G-III Apparel Group, Ltd. • Restoration Hardware Holdings, Inc. • Under Armour Inc. +• Crocs, Inc. • Genesco, Inc. • Skechers U.S.A., Inc. • Wolverine World Wide, Inc. +• DSW Inc. • Guess, Inc. • Steve Madden, Ltd. +39 +Peer Group Characteristics +The Committee considers a variety of characteristics when it selects the companies which comprise our Peer Group, including the characteristics set forth in the chart below. +Use of Peer Group in Setting Executive Compensation in Fiscal Year 2021 +As part of its efforts to ensure that our executive compensation program is attractive and competitive in the marketplace, the Committee regularly reviews compensation data from our Peer Group provided by FW Cook. In addition, in order to gain a broader perspective on overall market trends and practices, the Committee regularly reviews data from broader-based compensation surveys. Our Peer Group compensation data is generally used as an initial starting point and guidepost in making compensation decisions for our executives, including with respect to both the target level of compensation and the overall structure of our executive compensation program. +For comparison purposes, FW Cook typically presents Peer Group data on both individual executive pay levels and program structure. With respect to individual pay levels, FW Cook provides data on the total compensation opportunity for each executive, as well as for each individual element of compensation. In setting the target compensation opportunity for fiscal year 2021, the Committee was committed to its adoption of a median pay philosophy, pursuant to which it was focused on benchmarking our executives’ target compensation opportunity to the 50th percentile compared to our Peer Group, subject to the discretion retained by the Committee to make adjustments as it deems appropriate. Individual elements of compensation are generally targeted to the 50th percentile as a starting point, although the focus of the median pay philosophy is the total compensation opportunity. +While our Peer Group compensation data is a significant factor in the Committee’s evaluation of compensation decisions, it also considers a variety of additional factors, including complexity and size of the business, the tenure, experience, and level of responsibility of each executive, recent and projected Company performance, recent individual performance, and general industry practices and economic conditions. +40 +ELEMENTS OF FISCAL YEAR 2021 +EXECUTIVE COMPENSATION PROGRAM +The following table provides summary information regarding the key elements of our fiscal year 2021 executive compensation program: +COMPENSATION +ELEMENT GUARANTEED +V. +AT-RISK PERFORMANCE-BASED V. +TIME-BASED CASH +V. +EQUITY +Base Salary Guaranteed Not Applicable Cash +2021 Annual Cash Incentive Awards At-Risk Performance-Based (Short-Term Criteria) Cash +2021 Time-Based RSUs At-Risk Time-Based +(Long-Term Vesting) Target at 40% of Equity Compensation +2021 LTIP PSUs At-Risk Performance-Based +(Long-Term Criteria and Vesting) Target at 60% of Equity Compensation +Employee Benefits Guaranteed Not Applicable Other +Severance and Change in Control At-Risk Not Applicable Cash/Equity/Other +Base Salary +The following table provides information regarding the base salaries paid to our NEOs during fiscal year 2021: +COMPENSATION ELEMENT +BASE SALARY +Compensation Considerations Performance Conditions +• Guaranteed +• Cash +• Provides a minimum level of guaranteed cash compensation necessary to attract and retain executives. +• Balance the level of fixed pay with at-risk pay to properly manage our compensation-related risk. +• No specific vesting conditions associated with payment. +• Salary reviewed and set annually based on a number of factors, including tenure, experience, scope of responsibilities, individual and Company performance, and our Peer Group data. +NAME BASE SALARY +Dave Powers +$1,100,000 +Steven J. Fasching (1) +$600,000 +David E. Lafitte (2) +$700,000 +Stefano Caroti (3) +$650,000 +Andrea O'Donnell (4) +$625,000 +(1) As of July 1, 2021 Steve Fasching's base salary was $630,000. +(2) As of July 1, 2021 David E. Lafitte's base salary was $735,000. +(3) As of July 1, 2021 Stefano Caroti's base salary was $700,000. +(4) As of July 1, 2021 Andrea O'Donnell's base salary was $675,000. +41 +2021 Annual Cash Incentive Awards +The following table provides information regarding the 2021 Annual Cash Incentive Awards granted to our NEOs during fiscal year 2021: +COMPENSATION ELEMENT +2021 ANNUAL CASH INCENTIVE AWARDS +Compensation Description Performance Conditions/ Vesting Provisions Pay-for-Performance +• At-Risk +• Performance-Based ( Short-Term ) +• Cash +• Short-term Company performance conditions based on Committee-approved annual metrics derived from our annual and long-range business and strategic plan. +• Pay based on achievement of threshold, target and maximum Company financial performance levels to reward achievement and strike appropriate balance between compensation incentives and risks. +• The "target" performance condition level is typically in line with the level of Company performance projected for each metric. +• All NEOs have revenue based performance metrics to reflect a continued focus on profitability and top line growth. +• Target bonus set as percentage of base salary. +• Actual bonus payout is based on achievement of fiscal year 2021 consolidated operating income and consolidated revenue targets for all NEOs (and business unit operating income and revenue targets for certain executives with business unit oversight responsibilities). +• For those executives with multiple components, the Committee assigned relative weighting to each component, which is expressed as a percentage of the targeted cash incentive amount. +• For threshold performance, 50% of the cash incentive relevant to that component would be earned. For target performance, 100% of the cash incentive relevant to that component would be earned. For maximum performance, 200% of the cash incentive relevant to that component would be earned. +• Achievement below threshold levels results in no payout. +• When determining Company achievement relative to the performance targets, the Committee relied upon our fiscal year 2021 audited financial statements. +• Fiscal year 2021 consolidated operating income, consolidated revenue Global Omni-Channel operating income, Global Omni-Channel revenue metrics. Fashion Lifestyle operating income and Fashion Lifestyle revenue metrics were all achieved above the maximum levels based on Company performance. +• Cash incentive payments were made at the maximum for all NEOs, as set forth in detail below. +42 +Target Cash Incentive Amount +The Committee establishes a target amount of annual cash incentive compensation for each NEO, which is expressed as a percentage of base salary. The percentage is determined by the Committee by reference to a number of factors, scope of responsibilities, our recent and projected financial performance, and a review of our Peer Group data. Further, the target cash incentive amount is prorated to reflect any base salary adjustments throughout the full fiscal year so that the target amount reflects actual base salary earnings. +Performance Targets +The following table summarizes the performance conditions for the 2021 Annual Cash Incentive Awards, the relative weighting of each performance condition for each NEO, our Company's performance in light of the targets and the actual payout percentage for each component: +COMPONENT RELATIVE +WEIGHT FOR EACH NEO THRESHOLD PERFORMANCE TARGET PERFORMANCE MAXIMUM PERFORMANCE PERFORMANCE AND PAYOUT +Consolidated Operating Income +• 70% for Messrs. Powers, Fasching and Lafitte +• 30% for Mr. Caroti and Ms. O’Donnell +• $243.0 million +• $285.9 million +• $371.6 million +• $504.2 million, resulting in a payout of 200% +Consolidated Revenue +• 30% for Messrs. Powers, Fasching and Lafitte +• $1,932.0 million +• $2,100.0 million +• $2,310.0 million +• $2,545.6 million, resulting in a payout of 200% +Business Unit Operating Income +• 40% for Mr. Caroti +(Global Omni-Channel) +• $469.1 million +• $510.0 million +• $637.5 million +• $686.1 million, resulting in a payout of 200% +• 40% for Ms. O’Donnell +(Fashion Lifestyle) +• $406.7 million +• $451.9 million +• $542.3 million +• $636.4 million, resulting in a payout of 200% +Business Unit Revenue +• 30% for Mr. Caroti +(Global Omni-Channel) +• $1,740.2 million +• $1,851.3 million +• $2,129.0 million +• $2,242.3 million, resulting in a payout of 200% +• 30% for Ms. O’Donnell +(Fashion Lifestyle) +• $1,374.4 million +• $1,446.7 million +• $1,663.7 million +• $1,793.3 million, resulting in a payout of 200% +43 +Calculation of Payout of 2021 Annual Cash Incentive Awards +The amount of cash incentive compensation actually earned by each NEO with respect to the 2021 Annual Cash Incentive Awards is calculated by multiplying the target cash incentive amount by the percentage of target earned for each relevant component, and then multiplying the amount by the relative weighting of each component, as illustrated in the table below: +NAME TARGET PERCENTAGE OF SALARY COMPONENT TARGET CASH INCENTIVE AMOUNT PERCENTAGE OF TARGET EARNED FOR COMPONENT RELATIVE WEIGHT OF COMPONENT PAYOUT FOR EACH COMPONENT +TOTAL PAYOUT +Dave Powers 125% Consolidated Operating Income +$962,500 +200% +70% +$1,925,000 +$2,750,000 +Consolidated Revenue +$412,500 +200% +30% +$825,000 +Steven J. Fasching 75% Consolidated Operating Income +$315,000 +200% +70% +$630,000 +$900,000 +Consolidated Revenue +$135,000 +200% +30% +$270,000 +David E. Lafitte 75% Consolidated Operating Income +$367,500 +200% +70% +$735,000 +$1,050,000 +Consolidated Revenue +$157,500 +200% +30% +$315,000 +Stefano Caroti 75% Consolidated Operating Income +$146,250 +200% +30% +$292,500 +$975,000 +Global Omni-Channel Operating Income +$195,000 +200% +40% +$390,000 +Global Omni-Channel Revenue +$146,250 +200% +30% +$292,500 +Andrea O'Donnell 75% Consolidated Operating Income +$140,625 +200% +30% +$281,250 +$937,500 +Fashion Lifestyle Operating Income +$187,500 +200% +40% +$375,000 +Fashion Lifestyle Revenue +$140,625 +200% +30% +$281,250 +44 +2021 Time-Based Restricted Stock Units +The following table provides information regarding the 2021 Time-Based RSUs granted to our NEOs during fiscal year 2021: +COMPENSATION ELEMENT +2021 TIME-BASED RSUs +Compensation Description Performance Criteria/ Vesting Provisions Pay-for-Performance +• At-Risk +• Time-Based (Long-Term) +• Targeted at 40% of Equity Compensation +• Balance the level of performance-based pay with time-based pay to properly manage our compensation-related risk. +• Primarily used for retention of our executives. +• Customary among our Peer Group. +• Awards vest based on continued employment in three equal installments over three years commencing August 15, 2021. +• Each of our NEOs were granted 2021 Time-Based RSUs in an amount equal to a targeted value of 40% of their total equity compensation for fiscal year 2021. +• The value of these awards increases over time as the value of our stock price increases. +45 +2021 Long-Term Incentive Plan Performance-Based Stock Units +The following table provides information regarding the 2021 LTIP PSUs granted to our NEOs during fiscal year 2021: +COMPENSATION ELEMENT +2021 LTIP PSUs +Compensation Description Performance Conditions/ Vesting Provisions Pay-for-Performance +• At-Risk +• Performance-Based (Long-Term) +• Targeted at 60% of Equity Compensation +• Vesting of awards dependent on achievement of profitability and consolidated revenue targets, which are consistent with achievement of our strategic objectives. +• Company performance condition is based on Committee-approved metrics derived from our long-range business and strategic plan. +• Pre-tax income and revenue support our focus on profitability and consolidated revenue as key strategic initiatives and align executives’ interests with the execution of our long-range plan. +• 50% of each award will vest subject to the achievement of a pre-established annual pre-tax income targets measured in fiscal years 2021, 2022 and 2023, based on our three-year long range plan. While we measure performance annually over the three-year period, the goals for each fiscal year are established upfront on the grant date of the award. +• 50% of each award will vest subject to the achievement of a pre-established annual consolidated revenue target measured in fiscal years 2021, 2022 and 2023, based on our three-year long range plan. While we measure performance annually over the three-year period, the goals for each fiscal year are established upfront on the grant date of the award. +• No vesting of any portion of the award will occur if the Company fails to achieve revenue and pre-tax income thresholds. To the extent Company financial performance is achieved above the threshold, the number of PSUs that will vest from the threshold to the target, and then from the target to the maximum, will increase as determined by linear interpolation. +• To the extent Company performance is achieved above the threshold level for each of the performance metrics (pre-tax income and consolidated revenue), the number of PSUs that will vest will be increased, provided that the maximum number of PSUs that may vest with respect to a particular award will not exceed 200% of the targeted amount for that award regardless of the level of Company performance. +• The executive must provide continued service through March 31, 2023. +• Following a determination that the performance metrics have been achieved, the vesting of the awards will be subject to adjustment based upon the application of a TSR modifier, thereby correlating the vesting of the awards to total and relative stockholder returns over the full-three year performance period. +• When determining Company achievement relative to the annual performance targets, the Committee will rely upon our fiscal year 2021, 2022 and 2023 audited financial statements, as may be adjusted by the Committee for certain non-recurring items. +• We may reevaluate the performance targets and/or metrics and exercise reasonable discretion to effect objectively determinable adjustments as appropriate to take into account the impact of COVID-19. +• As further described below, the number of shares that are subject to vesting under the awards will be further adjusted based on the TSR generated by our Company relative to our peer group to ensure we take into account our performance on both an absolute and relative basis. +46 +TSR Modifier +The 2021 LTIP PSU awards earned are subject to adjustment based on a TSR modifier. The amount of the adjustment will be determined based upon a comparison of Company TSR relative to the TSR of a pre-determined set of peer group companies, or TSR Peer Group, for the 36-month performance period commencing on April 1, 2020 and ending on March 31, 2023. For purposes of the 2021 LTIP PSUs, the TSR Peer Group used is the same as the Peer Group, but also includes three additional competitive companies in similar industries. Depending on Company TSR relative to the TSR of the TSR Peer Group, the number of RSUs that will be subject to vesting pursuant to each 2021 LTIP PSU will be modified as follows with straight line interpolation between the percentiles: +Company TSR Relative to Peer Group TSR (Percentile) TSR Modifier +(Multiplier) +≥75th 125% +55th 100% +(no modification) +≤25th 75% +Notwithstanding the foregoing, in the event that Company TSR is greater than or equal to the 55th percentile relative to the TSR of the TSR Peer Group, but Company TSR is a negative amount, the TSR modifier will not be applied (the number of RSUs to be vested will not be increased as a result of the TSR multiplier). In addition, regardless of Company TSR relative to the TSR of the TSR Peer Group, the maximum number of RSUs that may vest pursuant to a particular 2020 LTIP PSU will not exceed 200% of the targeted amount. +The option exercises and stock award vesting for our NEOs during fiscal year 2021 for fiscal year 2017 and fiscal year 2018 long-term incentive plan non-qualified stock options, or LTIP NQSOs, and fiscal year 2019 LTIP PSUs are reflected in the table titled " Fiscal Year 2021 Option Exercises and Stock Vested. " +Employee Benefits +The following table provides information regarding the key employee benefits granted or paid to our NEOs during fiscal year 2021: +COMPENSATION ELEMENT +EMPLOYEE BENEFITS +Compensation Considerations Benefits +• Key employee benefits granted or paid +• Generally reflect benefits provided to all of our US-based full-time employees. +• Provides a standard package of benefits necessary to attract and retain executives. +• 401(k) defined contribution plan. +• 401(k) plan Company match of 50% of each eligible participant's tax-deferred contributions on up to 6% of eligible compensation on a per payroll period basis, with a true-up contribution if such eligible participant is employed by our Company on the first day of the calendar year. +• Premiums for long-term disability insurance and life insurance for the benefit of the employees. +• Health and welfare benefit plans. +• Relocation expenses for new hires. +• Standard employee product discounts. +• NEOs and certain other senior executives are eligible to contribute to our Nonqualified Deferred Compensation Plan, or NQDC Plan, and our Company may choose to match any or all such contributions. The NQDC Plan is described in further detail in the section of this Proxy Statement titled " Nonqualified Deferred Compensation. " +47 +Severance and Change in Control +The following table provides information regarding the severance and change in control provisions in our severance agreements and equity award agreements entered into with each of our NEOs: +COMPENSATION ELEMENT +SEVERANCE AND CHANGE IN CONTROL PROVISIONS +Compensation Considerations Terms +• Certain cash payments to NEOs, and vesting of certain equity awards in the event of a separation of employment +• The employment of our NEOs is "at will," meaning we can terminate them at any time and they can terminate their employment with us at any time. +• "Double-trigger" provisions preserve morale and productivity and encourage executive retention in the face of the potentially disruptive impact of a change in control. +• These provisions are considered a typical component of a competitive executive compensation program for executives among our Peer Group. +• The provisions take into account the expected time it takes a separated executive to find a similarly situated job. +Change in Control and Severance Agreements : +• Provide for certain cash payments, and the vesting of certain equity awards, in the event there is a separation of employment under various circumstances. +Equity Award Agreements : +• Provide for accelerated vesting of awards upon a change in control if the recipient is terminated by the acquiring entity in connection with the change in control under specified circumstances. In addition, vesting of awards will be accelerated in full if the acquiring entity does not agree to provide for the assumption or substitution of the awards, and for certain outstanding historical awards if the transaction is not approved by a majority of the continuing directors. +For additional information about the severance and change in control provisions in our severance agreements and equity award agreements, please refer to the section of this Proxy Statement titled " Potential Payments upon Termination or Change in Control. " +48 +OTHER COMPENSATION CONSIDERATIONS +Role of Executive Officers in Compensation Decisions +At the request of the Committee, our Chief Executive Officer or other senior management personnel may provide performance and compensation information to the Committee to inform its compensation decisions. However, our executives are not permitted to be present during any deliberations and voting regarding their own compensation, or during any executive sessions of the Committee. The Committee considers the information provided by our management, as well as information and advice provided by FWC, when making compensation decisions for our NEOs and other executives. The Committee, which is comprised solely of independent directors under applicable SEC and NYSE rules, thoroughly evaluates and approves all elements of compensation for our NEOs and other executives. +Compensation Risk Considerations +The Committee is responsible for reviewing the rewards that may be derived from our compensation program for all employees, including our NEOs, to assess whether the program encourages excessive or unnecessary risk-taking. The Committee conducts a thorough compensation risk analysis at least annually, but also takes into account compensation-related risks each time it grants compensation awards throughout the fiscal year. In conducting these assessments, the Committee considers a number of factors including the following: +• Our compensation program consists of both guaranteed pay and at-risk pay, and the Committee reviews this mix annually. +• Our Peer Group and industry compensation data is reviewed regularly to ensure that our compensation program is appropriate and competitive. +• We have adopted a median pay philosophy whereby we remain focused on setting our executives’ target total compensation, as well as individual components of compensation, at the median compared to our Peer Group. +• Performance-based awards are earned based on the achievement of pre-established Company and business unit performance goals covering multiple time periods. Separately, we seek to limit overlap between our applicable performance conditions to ensure our compensation program is encouraging healthy and sustained growth across our business. +• Our performance-based awards are subject to maximum award amounts to cap the potential compensation amount associated with an award. +• Our executive compensation program encourages executive retention through long-term vesting provisions. For fiscal year 2021, all of the equity awards we granted were subject to three-year long-term vesting. +• We have adopted stock ownership guidelines, which encourage executives to have a significant, long-term equity position in our Company. +• Our performance-based awards are subject to clawback provisions. +• Our governance policies prohibit our NEOs and other executive officers from hedging the economic interest in our securities, including short sales or trading in any derivatives involving our securities, and from pledging our securities. +• Our severance and change in control benefits are designed to attract and retain executives without providing excessive benefits. +• Our equity awards are intended to provide for “double-trigger” vesting upon a change in control. We adopted changes to our equity award agreements in fiscal year 2018 to ensure our awards continue to be viewed as “double-trigger” awards. +The Committee believes that, although the majority of the compensation opportunity provided to our executives is at-risk pay that is determined based upon the achievement of Company performance conditions, our executive compensation program does not encourage excessive or unnecessary risk-taking. The Committee does not believe that our compensation program is reasonably likely to have a material adverse effect on us. +CEO Pay Ratio +Pursuant to Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of Regulation S-K, we are required to disclose the ratio of the annual total compensation of our principal executive officer to the median of the annual total compensation of all of our employees (excluding our principal executive officer), or our median employee. During fiscal year 2021, our principal executive officer was Dave Powers, our President and Chief Executive Officer. +49 +For fiscal year 2021, the annual total compensation of our median employee was $57,968. The annual total compensation of our President and Chief Executive Officer was $6,778,608 as calculated in a manner consistent with the SEC's disclosure requirements under Item 402(u) of Regulation S-K. +Based on this information, the fiscal year 2021 ratio of the annual total compensation of our principal executive officer to the annual total compensation of our median employee was approximately 180:1. +Consistent with Item 402(u) of Regulation S-K, we identified our median employee as of March 1, 2021 by (i) aggregating for each applicable employee (A) annual base salary for salaried employees (or hourly rate multiplied by estimated work schedule, for hourly, temporary and seasonal employees), (B) overtime paid during the year, and (C) target incentive compensation, and (ii) ranking this compensation measure for our employees from lowest to highest. For non-U.S. employees, we converted such employees’ pay to a U.S. dollar equivalent by applying an 11-month average trailing exchange rate for each applicable currency. This calculation was performed for all of our employees, excluding Mr. Powers, except as described below. After identifying our median employee as described above, we calculated that individual’s fiscal year 2021 total annual compensation in accordance with the requirements of the applicable SEC rules. +Individuals (with corresponding number of employees, representing all employees in that jurisdiction) who were employed in Canada (75), Vietnam (60) and Austria (13) were excluded from the employee population for purposes of this disclosure, pursuant to the de minimis exemption set forth in the applicable SEC rules. For fiscal year 2021 we did not exclude employees who were employed in Belgium because the exclusion of such employees, in addition to those identified above, would exceed the 5% threshold permitted by the de minimis exemption. We determined that this change did not materially impact the identification of the median employee. After taking into consideration the foregoing exemption, on March 1, 2021, we had 1,981 U.S. employees and 1,224 non-U.S. employees. Irrespective of the use of the exemption on the same date we had 1,981 U.S. employees and 1,372 non-U.S. employees. +The pay ratio we have reported above is a reasonable estimate calculated in a manner consistent with applicable SEC rules based on our internal records and the methodology described above. The SEC rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices. Therefore, the pay ratio reported by other companies may not be comparable to the pay ratio we have reported above. +Clawback Policy +Consistent with our executive compensation philosophy, which seeks to reward executive officers for financial performance that creates value for our stockholders, we have adopted a Clawback Policy. Under this policy, we will seek recoupment or reimbursement with respect to performance-based compensation paid or awarded to our executive officers when the following three factors exist: +• the incentive compensation payment or award (or the vesting of such award) was based upon the achievement of financial results, as reported in a Form 10-Q, Form 10-K or other report filed with the SEC, that were subsequently the subject of a restatement to correct an accounting error due to material noncompliance with any financial reporting requirement under the federal securities laws; +• a lower payment or award would have been made to such executive officer (or lesser or no vesting would have occurred with respect to such award) based upon the restated financial results; and +• the need for the restatement was identified within three years after the date of the first public issuance or filing of the financial results that were subsequently restated. +Under the policy, the restatement does not need to be the result of misconduct by the executive officers for the recoupment to apply. +The recoupment or reimbursement to be sought by our Company will be equal to the portion of any performance-based compensation paid to or received by such executive officer for or during each of the restated periods that is greater than the amount that would have been paid or received had the financial results been properly reported. +In addition, under this policy, the Committee may seek to recoup or recover from an employee certain performance-based compensation previously paid or awarded to such employee if the Company determines that the employee has engaged in significant misconduct that causes financial or reputational harm to the Company (regardless of whether a restatement of financial results has occurred). +50 +Stock Ownership Guidelines +To further align the interests of our directors and executive officers with those of our stockholders, we have adopted Stock Ownership Guidelines. The Committee periodically reviews our Stock Ownership Guidelines to ensure it continues to evolve to take into account changes to our executive compensation program. +The minimum ownership thresholds for our NEOs are determined as a multiple of the NEO's base salary as of the beginning of each calendar year. Absent extraordinary circumstances (e.g., unusual volatility in stock price) it is expected that our NEOs will strive to achieve the applicable level of ownership, subject to exceptions that may be granted by the Committee. Unless and until a NEO reaches the required ownership level, the NEO must retain at least 75% of the shares, after payment of any applicable exercise price and tax withholdings, and 75% of any exercisable options that are granted or acquired through our equity compensation program. +Our directors are required to adhere to the stock ownership guidelines that are referenced in our Corporate Governance Guidelines. The minimum ownership threshold (including deferred shares) for our directors is determined as a multiple of the annual retainer fee and must be achieved within five years of the initial election of the director. +The following table provides a summary of the Stock Ownership Guidelines applicable to our NEOs and directors: +POSITION STOCK OWNERSHIP GUIDELINES +Chief Executive Officer 6x Annual Base Salary +Other NEOs 3x Annual Base Salary +Directors 5x Annual Board Retainer Fee +Tax and Accounting Considerations +Among the factors it considers when making executive compensation decisions, the Committee considers the anticipated tax and accounting impact to us (and to our executive officers) of various payments, equity awards and other benefits. +The Committee considers the impact of the provisions of Section 162(m) of the Internal Revenue Code. That section generally limits the deductibility of compensation paid by a publicly-held company to “covered employees” for a taxable year to $1.0 million. "Covered employees” generally include our Chief Executive Officer, Chief Financial Officer and other highly compensated executive officers. We do not anticipate that the $1.0 million deduction limitation set forth in Section 162(m) of the Code will have a material impact on our results of operations. +The Committee also considers the impact of Section 409A of the Code, and in general, our executive plans and programs are designed to comply with the requirements of that section so as to avoid possible adverse tax consequences that may result from noncompliance. +We account for equity awards in accordance with the requirements of Financial Accounting Standards Board Accounting Standards Codification, or FASB ASC, Topic 718, Stock Compensation . +Our change in control and severance agreements do not allow for excise tax gross up payments. +51 +COMPENSATION COMMITTEE REPORT +The Compensation Committee of our Company has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussion, the Compensation Committee has recommended to our Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement. +THE COMPENSATION COMMITTEE +Cynthia (Cindy) L. Davis ( Chair ) +Bonita C. Stewart +Victor Luis +The Compensation Committee Report shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as amended, or the Acts, except to the extent that we specifically incorporate this information by reference, and shall not otherwise be deemed filed under the Acts. +52 +SUMMARY COMPENSATION TABLE +The following table sets forth all compensation paid or awarded to our NEOs during fiscal years 2021, 2020 and 2019. The amounts set forth in the table have been calculated in accordance with the requirements of applicable SEC rules, and do not necessarily reflect the amounts that have actually been paid to, or which may be realized by, our NEOs. The table should be read together with the section of this Proxy Statement titled “Compensation Discussion and Analysis.” +Name and Principal Position Year Salary +($) Bonus +($) +Stock +Awards +($) (1)(2) +Option +Awards +($) (1) +Non-Equity Incentive +Plan +Comp. +($) (3) +All Other Comp ($) (4) +Total +($) +Dave Powers +Chief Executive Officer +and President +2021 1,100,000 — 3,999,580 — 2,750,000 10,870 7,860,450 +2020 1,069,231 — 3,999,689 — 1,668,545 10,679 6,748,144 +2019 987,534 — 2,999,747 — 2,468,836 10,355 6,466,472 +Steven J. Fasching +Chief Financial Officer +2021 600,000 — 749,537 — 900,000 10,482 2,260,019 +2020 569,231 — 750,128 — 535,546 11,140 1,866,045 +2019 408,493 — 649,989 — 561,918 18,857 1,639,257 +David E. Lafitte +Chief Operating Officer +2021 700,000 — 999,467 — 1,050,000 12,162 2,761,629 +2020 684,615 — 1,000,220 — 640,238 11,551 2,336,624 +2019 642,521 — 900,280 — 963,781 10,778 2,517,360 +Stefano Caroti +President of Omni-Channel +2021 650,000 — 849,615 — 975,000 48,521 2,523,136 +2020 625,385 — 849,689 — 561,952 12,566 2,049,592 +2019 565,014 — 824,693 — 703,498 57,650 2,150,855 +Andrea O'Donnell +President of Fashion Lifestyle +2021 625,000 — 799,639 — 937,500 10,482 2,372,621 +2020 591,154 — 899,794 — 429,067 10,840 1,930,855 +2019 511,260 — 649,946 — 567,471 10,251 1,738,928 +(1) The amounts in this column represent the aggregate grant date fair value of the respective awards computed in accordance with FASB ASC Topic 718. For information about the assumptions underlying these computations, please refer to Note 8 to our consolidated financial statements included in our Annual Report on Form 10-K filed May 28, 2021 with the SEC. In accordance with applicable SEC rules, for those awards that are subject to the satisfaction of performance conditions, the amounts reported reflect the value at the grant date based upon the probable outcome of such conditions. +(2) These amounts reflect grants made to our NEOs of 2021 Time-Based RSU and 2021 LTIP PSUs. Refer to the subsections of this Proxy Statement titled “2021 Time-Based Restricted Stock Units” and " 2021 Long-Term Incentive Plan Performance-Based Stock Units " under "Compensation Discussion and Analysis" for additional information. +(3) These amounts reflect the cash incentive payments paid to our NEOs under our 2021 Annual Cash Incentive Awards. Refer to the subsection of this Proxy Statement titled "2021 Annual Cash Incentive Awards” under "Compensation Discussion and Analysis" for additional information. +(4) Except as otherwise specifically noted in the footnotes below, the amounts in this column reflect payments to certain NEOs of our matching contributions under the 401(k) plan and NQDC Plan, as well as life insurance premiums paid on policies that have been adopted for the benefit of our NEOs. Refer to the section titled " Nonqualified Deferred Compensation " for additional information on our NQDC plan. +53 +GRANTS OF PLAN-BASED AWARDS IN +FISCAL YEAR 2021 +The following table sets forth all grants of plan-based awards made to our NEOs during fiscal year 2021. The amounts set forth in the table do not necessarily reflect the amounts that have actually been paid to, or which may be realized by, our NEOs. The table should be read together with the section of this Proxy Statement titled “ Elements of Fiscal Year 2021 Executive Compensation Program. ” +Potential Payouts as of Grant Date Under Non-Equity Incentive Plan Awards (1) +Potential Payouts as of Grant Date Under Equity Incentive Plan Awards +All Other Stock Awards: Number of Shares (#) (3) +Grant Date +Fair Value +of Awards +($) (4) +Name Grant Date Threshold +($) Target +($) Max. +($) Threshold +(#) Target +(#) Max. +(#) +Dave Powers 687,500 1,375,000 2,750,000 — — — — — +6/22/20 — — — — — — 3,985 799,909 +11/3/20 — — — — — — 3,179 799,804 +2/9/21 — — — +3,173 (2) +6,346 (2) +12,692 (2) +— 2,399,867 +Steven J. Fasching 225,000 450,000 900,000 — — — — — +6/22/20 — — — — — — 747 149,945 +11/3/20 — — — — — — 596 149,948 +2/9/21 — — — +595 (2) +1,189 (2) +2,378 (2) +— 449,644 +David E. Lafitte 262,500 525,000 1,050,000 — — — — — +6/22/20 — — — — — — 996 199,927 +11/3/20 — — — — — — 794 199,762 +2/9/21 — — — +793 (2) +1,586 (2) +3,172 (2) +— 599,778 +Stefano Caroti 243,750 487,500 975,000 — — — — — +6/22/20 — — — — — — 847 170,019 +11/3/20 — — — — — — 675 169,823 +2/9/21 — — — +674 (2) +1,348 (2) +2,696 (2) +— 509,773 +Andrea O'Donnell 234,375 468,750 937,500 — — — — — +6/22/20 — — — — — — 797 159,981 +11/3/20 — — — — — — 635 159,760 +2/9/21 — — — +635 (2) +1,269 (2) +2,538 (2) +— 479,898 +(1) The amounts in this column reflect the potential payouts under the 2021 Annual Cash Incentive Awards as of the grant date of such awards. Each of the performance conditions for fiscal year 2021 was achieved above target. Cash incentive payments were made in June 2021. Refer to the section of this Proxy Statement titled " 2021 Annual Cash Incentive Awards " under " Compensation Discussion and Analysis " for additional information. +(2) The awards in this row reflect the grant of 2021 LTIP PSUs. These awards may vest based upon continued service through March 31, 2023 and our achievement of an annual performance target for each of the fiscal years 2021, 2022, and 2023. As of the date of this Proxy Statement, we consider the performance conditions to be probable of being achieved at target of 100% and the awards will vest up to a maximum of 200% of the target amount. Refer to the section of this Proxy Statement titled " 2021 Long-Term Incentive Plan Performance-Based Stock Units " under " Compensation Discussion and Analysis " for additional information. +(3) The awards in this column reflect the grant of 2021 Time-Based RSUs. These awards vest over three years in equal annual installments on August 15, 2021, 2022, and 2023. Refer to the section of this Proxy Statement titled " 2021 Time-Based Restricted Stock Units " under " Compensation Discussion and Analysis " for additional information. +(4) The amounts in this column represent the aggregate grant date fair value of the respective awards computed in accordance with FASB ASC Topic 718. For information about the assumptions underlying these computations, please refer to Note 8 to our consolidated financial statements included in our Annual Report on Form 10-K filed May 28, 2021 with the SEC. In accordance with applicable SEC rules, for those awards that are subject to the satisfaction of performance conditions, the amounts reported reflect the value of the grant date based upon the probable outcome of such conditions. +54 +OUTSTANDING EQUITY AWARDS AT +2021 FISCAL YEAR END +The following table sets forth equity awards granted to our NEOs that remained outstanding as of March 31, 2021. The market values of the awards set forth in the table have been calculated in accordance with the requirements of applicable SEC rules, and do not necessarily reflect the amounts that have actually been paid to, or which may be realized by, our NEOs. The table should be read together with the section of this Proxy Statement titled “ Elements of Fiscal Year 2021 Executive Compensation Program. ” +Stock Options Stock Awards +Name Number of +securities +underlying +unexercised +options +exercisable +(#) Number of +securities +underlying +unexercised +unearned +options +(#) Option +exercise +price +($) Option +expiration +date Number of +shares that +have not +vested +(#) +Market +value of +shares that +have not +vested +($) (3) +Number of +unearned +shares that +have not +vested +(#) (4) +Market +value of +unearned +shares that +have not +vested +($) (5) +Dave Powers — — 61.86 3/31/2026 +16,674 (6) +5,509,423 22,677 7,492,934 +71,914 (2) +— 69.29 6/13/2024 — — — — +Steven J. Fasching — — — — +3,303 (7) +1,091,377 4,251 1,404,615 +— — — — — — — — +David E. Lafitte +5,427 (1) +— 61.86 3/31/2026 +4,338 (8) +1,433,362 5,669 1,873,151 +21,574 (2) +— 69.29 6/13/2024 — — — — +Stefano Caroti +14,725 (1) +— 61.86 3/31/2026 +3,752 (9) +1,239,736 4,818 1,591,964 +7,408 (2) +— 69.29 6/13/2024 — — — — +Andrea O'Donnell +13,445 (1) +— 61.86 3/31/2026 +3,770 (10) +1,245,683 4,535 1,498,455 +14,982 (2) +— 69.29 6/13/2024 — — — — +(1) These awards reflect 2017 LTIP NQSOs that were granted in November 2016. Our Compensation Committee has determined that the performance condition was achieved, and the options are fully vested and exercisable. +(2) These awards reflect 2018 LTIP NQSOs that were granted in June 2017. Our Compensation Committee has determined that the performance condition was achieved, and the options are fully vested and exercisable. +(3) In accordance with applicable SEC regulations, the market value of the shares has been determined based on the closing price of our common stock on March 31, 2021, which was $330.42. +(4) The stock awards are 2020 and 2021 LTIP PSUs that were granted in September 2019 and February 2021 respectively, which remain outstanding and subject to long-term performance and service conditions. The shares included reflect achievement of the performance conditions at the target level of 100%. However, the maximum performance level for these awards is 200%. The 2020 LTIP PSUs will vest on March 31, 2022, and the 2021 LTIP PSUs will vest on March 31, 2023, each subject to achievement of certain performance criteria. +(5) In accordance with applicable SEC regulations, the market value of the shares has been determined based on the closing price of our common stock on March 31, 2021, which was $330.42. The market value of 2020 and 2021 LTIP PSUs was calculated as to 100% of the shares underlying the awards. +(6) This amount consists of (i) 1,685 2019 Annual PSUs granted in June 2018, which shares vest as to 100% on August 15, 2021, (ii) 1,685 2019 time-based RSUs granted in June 2018, which shares vest as to 100% on August 15, 2021, (iii) 3,070 2020 Annual PSUs granted in June 2019, which shares vest as to 50% on August 15, 2021 and 2022, (iv) 3,070 2020 time-based RSUs granted in June 2019, which shares vest as to 50% on August 15, 2021 and 2022, (v) 3,985 2021 time-based RSUs granted in June 2020, which shares vest as to 33.33% on August 15, 2021, 2022, and 2023, and (vi) 3,179 2021 time-based RSUs granted in November 2020, which shares vest as to 33.33% on August 15, 2021, 2022, and 2023. +(7) This amount consists of (i) 337 2019 Annual PSUs granted in June 2018, which shares vest as to 100% on August 15, 2021, (ii) 337 2019 time-based RSUs granted in June 2018, which shares vest as to 100% on August 15, 2021, (iii) 134 2019 time-based RSUs granted in January 2019, which shares vest as to 100% on January 7, 2022, (iv) 576 2020 Annual PSUs granted in June 2019, which shares vest as to 50% on August 15, 2021 and 2022, (v) 576 2020 time-based RSUs granted in June 2019, which shares vest as to 50% on August 15, 2021, and 2022, (vi) 747 2021 time-based RSUs granted in June 2020, which shares vest as to 33.33% on August 15, 2021, 2022, and 2023, and (vii) 596 2021 time-based RSUs granted in November 2020, which shares vest as to 33.33% on August 15, 2021, 2022, and 2023. +55 +(8) This amount consists of (i) 506 2019 Annual PSUs granted in June 2018, which shares vest as to 100% on August 15, 2021 (ii) 506 2019 time-based RSUs granted in June 2018, which shares vest as to 100% on August 15, 2021 (iii) 768 2020 Annual PSUs granted in June 2019, which shares vest as to 50% on August 15, 2021 and 2022 (iv) 768 2020 time-based RSUs granted in June 2019, which shares vest as to 50% on August 15, 2021 and 2022 (v) 996 2021 time-based RSUs granted in June 2020, which shares vest as to 33.33% on August 15, 2021, 2022, and 2023 and (vi) 794 2021 time-based RSUs granted in November 2020, which shares vest as to 33.33% on August 15, 2021, 2022, and 2023. +(9) This amount consists of (i) 463 2019 Annual PSUs granted in June 2018, which shares vest as to 100% on August 15, 2021, (ii) 463 2019 time-based RSUs granted in June 2018, which shares vest as to 100% on August 15, 2021, (iii) 652 2020 Annual PSUs granted in June 2019, which shares vest as to 50% on August 15, 2021 and 2022, (iv) 652 2020 time-based RSUs granted in June 2019, which shares vest as to 50% on August 15, 2021 and 2022, (v) 847 2021 time-based RSUs granted in June 2020, which shares vest as to 33.33% on August 15, 2021, 2022, and 2023, and (vi) 675 2021 time-based RSUs granted in November 2020, which shares vest as to 33.33% on August 15, 2021, 2022, and 2023. +(10) This amount consists of (i) 365 2019 Annual PSUs granted in June 2018, which shares vest as to 100% on August 15, 2021, (ii) 365 2019 time-based RSUs granted in June 2018, which shares vest as to 100% on August 15, 2021, (iii) 614 2020 Annual PSUs granted in June 2019, which shares vest as to 50% on August 15, 2021 and 2022, (iv) 994 2020 time-based RSUs granted in June 2019, which shares vest as to 50% on August 15, 2021 and 2022, (v) 797 2021 time-based RSUs granted in June 2020, which shares vest as to 33.33% on August 15, 2021, 2022, and 2023, and (vi) 635 2021 time-based RSUs granted in November 2020, which shares vest as to 33.33% on August 15, 2021, 2022, and 2023. +56 +FISCAL YEAR 2021 OPTION EXERCISES AND STOCK VESTED +The following table provides information for our NEOs regarding option exercises and stock award vesting during fiscal year 2021, including the number of shares acquired upon exercise or vesting and the value realized as determined based on applicable SEC rules. The value realized does not necessarily reflect the amount that will actually be received by our NEOs upon the sale of the shares. +Option Awards Stock Awards +Name Number of +Shares +Acquired on +Exercise +(#) +Value Realized on +Exercise +($) (1) +Number of +Shares +Acquired on +Vesting +(#) (2)(3) +Value Realized +on Vesting +($) (4) +Dave Powers 68,089 15,424,702 42,154 12,527,457 +Steven J. Fasching — — 8,478 2,529,126 +David E. Lafitte 15,000 2,832,914 12,494 3,725,406 +Stefano Caroti 16,368 2,384,493 11,400 3,403,616 +Andrea O'Donnell 740 140,059 9,226 2,734,379 +(1) Options exercised were under the fiscal year 2017 and fiscal year 2018 LTIP NQSOs stock compensation plans. +(2) Values include shares acquired under the fiscal year 2019 LTIP PSUs stock compensation plans. +(3) The total number of shares actually received by the NEOs, net of shares withheld for taxes, were as follows: 21,256 for Mr. Powers, 5,034 for Mr. Fasching, 7,012 for Mr. Lafitte, 6,203 for Mr. Caroti, and 5,513 for Ms. O'Donnell. +(4) Pursuant to applicable SEC rules, the amounts in this column reflect the value realized upon the vesting of the stock awards, which is based on the closing price of our common stock on the applicable vesting dates. +57 +NONQUALIFIED DEFERRED COMPENSATION +Nonqualified Deferred Compensation Plan +The Committee has adopted the NQDC Plan, which is an unfunded, nonqualified deferred compensation program sponsored by our Company to provide certain members of our management the opportunity to defer compensation into the NQDC Plan. The NQDC Plan year is from January 1 st to December 31 st . Participants may defer up to 50% of their annual base salary and up to 85% of any cash incentive bonus under the NQDC Plan. We have the option, but not the obligation, to make discretionary or matching cash contributions to NQDC Plan participants. We have established a rabbi trust as a reserve for the benefits payable under the NQDC Plan. During fiscal year 2021, certain of our NEOs elected to make contributions to the NQDC Plan, and the Committee elected to match a portion of the contributions under the NQDC Plan. +Name +Executive contributions during fiscal year 2021 ($) (1) +Registrant contributions during fiscal year 2021 ($) Aggregate gains during fiscal year 2021 ($) Aggregate withdrawals/distributions during fiscal year 2021 ($) Aggregate balance at end of fiscal year 2021 ($) +Dave Powers — — 35,064 — 70,210 +Steven J. Fasching — — — — — +David E. Lafitte 8,077 — 103,781 — 279,260 +Stefano Caroti 363,586 36,359 437,617 — 1,494,340 +Andrea O'Donnell — — — — — +Total 371,663 36,359 576,462 — 1,843,810 +(1) The amounts reported in this column reflect contributions made by our NEOs under the NQDC Plan during fiscal year 2021. These amounts are separately included in the " Summary Compensation Table " above, and do not reflect amounts in addition to those amounts. +Deferred Stock Unit Compensation Plan +The Committee has also adopted a Deferred Stock Unit Compensation Plan. Under the plan, a director or employee who holds unvested RSUs may elect to defer settlement of up to 100% of the awards. For each unit of our common stock held pursuant to an award of RSUs that is deferred, the participant will receive one Deferred Stock Unit. Amounts deferred will be distributed, as described in the plan, at the time elected by the participant. A participant’s Deferred Stock Units will be settled in shares of our common stock, as more specifically described in the plan. None of our NEOs elected to participate in the plan during fiscal year 2021. +58 +POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL +Change in Control and Severance Agreements +We have entered into change in control and severance agreements, or Severance Agreements, as amended from time to time, with each of our NEOs. The information below describes compensation and benefits that are payable or earned under the Severance Agreements with our NEOs (which are each referred to in their respective Severance Agreement as an “executive”) upon the occurrence of certain termination events. +Termination by Our Company for Cause, or by Executive Other Than for Good Reason +Pursuant to the Severance Agreements with each of our NEOs, if the executive is terminated by our Company for Cause, or the executive terminates his or her employment, other than for Good Reason (in each case as defined below), then the NEO will receive the following from our Company: +• payment of his or her accrued base salary, accrued vacation, reimbursement for reimbursable expenses, accrued and vested benefits under our plans or programs and other benefits required to be paid by law, accrued but unpaid non-equity incentive bonus for the prior fiscal year (excluding any non-equity incentive bonus for the year of termination); and +• the right to exercise all vested equity awards pursuant to the terms of the applicable award agreement. +Termination Due to Death or Total Disability +Pursuant to the Severance Agreements with each of our NEOs, if the executive is terminated due to his or her death or total disability, then in addition to those benefits provided upon a termination by our Company for Cause or by executive other than for Good Reason, the NEO will receive: +• pro-rated portion of his or her non-equity incentive bonus for the current fiscal year based on actual length of service during the year of termination and actual achievement by our Company of the performance conditions in respect of such bonus previously established by the Committee. +Termination by Our Company Without Cause +Pursuant to the Severance Agreements with each of our NEOs, if the executive is terminated by our Company without Cause, then in addition to those benefits provided upon a termination due to death or total disability, the NEO will receive: +• payment of his or her then-effective annual base salary for, in the case of the CEO, 18 months, or, in the case of any other NEO, 12 months following his or her termination, subject to such executive signing a release; and +• receipt of health benefits for a period of one year following his or her termination or his or her attainment of alternative employment that provides health benefits, whichever is earlier. +Termination without Cause or by Executive for Good Reason within Two Years of a Change in Control +Pursuant to the Severance Agreements with each of our NEOs, if the executive is terminated by our Company without Cause or by the executive for Good Reason within two years of a Change in Control, then in addition to those benefits provided upon a termination due to death or total disability, the NEO will receive: +• payment of, in the case of the CEO, two times, or, in the case of any other NEO, one-and-one-half times his or her then-effective annual base salary, subject to such executive signing a release; and +• receipt of health benefits for, in the case of the CEO, a period of two years, or, in the case of any other NEO, a period of 18 months following his or her termination or his or her attainment of alternative employment that provides health benefits, whichever is earlier. +For purposes of the Severance Agreements, “Cause” means (i) any willful breach of duty by the executive in the course of his or her employment or continued violation of written Company employment policies after written notice of such violation, (ii) violation of our insider trading policies, (iii) conviction of a felony or any crime involving fraud, theft, embezzlement, dishonesty or moral turpitude, (iv) engaging in activities which materially defame our Company, engaging in conduct which is materially injurious to our Company or our affiliates, or any of our respective customer or supplier relationships, financially or otherwise, or (v) the executive’s gross negligence or continued failure to perform duties or executive’s continued incapacity to perform such duties. +59 +“Good Reason” means, without the consent of the executive, if within two years of a change in control, there is a material reduction of the executive’s total compensation, benefits, and perquisites (excluding a material reduction resulting from a decrease in value of the Company’s stock), our Company's relocation is greater than 50 miles from the location where the executive performs services, or a material change in the executive’s authority, duties, or responsibilities; provided, however, no such event shall constitute Good Reason unless the executive shall have given written notice to our Company of the executive’s intent to resign for “Good Reason” within 30 days after the executive first becomes aware of the occurrence of any such event (specifying the nature and scope of the event) and such event or occurrence shall not have been cured within 30 days of our receipt of such notice, and the executive resigns no later than 90 days after the expiration of the 30-day cure period. +“Change in Control” means the occurrence of a merger, consolidation, sale of all or a major portion of the assets of our Company (or a successor organization) or similar transaction or circumstance where any person or group acquires, in one or more transactions, beneficial ownership of more than 50% of the outstanding shares of voting stock of our Company (or a successor organization), or a change in a majority of the members of our Board. +No NEOs will be entitled to gross ups for excise tax penalty on “excess golden parachute payments” as a result of termination following a Change in Control. +Equity Award Agreements +Pursuant to the “double-trigger” vesting provisions of the awards outstanding as of the end of fiscal year 2021 under the 2006 Equity Incentive Plan, or 2006 Plan, and 2015 Plan, except as specifically noted below, the vesting of each award will be accelerated in full in the event of a change in control that is approved by a majority of the Continuing Directors (as defined in the award agreements) if the acquiring or successor entity in the change in control provides for the continuance or assumption of the award agreement, or the substitution for the award agreement of a new agreement of comparable value covering shares of a successor corporation, and (i) the recipient is terminated by the acquiring company without Cause or pursuant to a Constructive Termination (as such terms are defined in the relevant award agreements) within either 12 or 24 months of such change in control; or (ii) only in the case of certain LTIP NQSOs and RSUs, the recipient has provided Continuous Service (as defined in the award agreements) through the applicable performance vesting date. +Notwithstanding the foregoing summary, the award agreements governing the grants of the 2020 Annual PSUs only provide for acceleration as described above to the extent that the Committee determines that at least the “threshold” performance conditions associated with the awards have been met unless the change in control occurs prior to the end of the relevant performance period, in which case the unvested PSUs will accelerate in full, regardless of achievement of the performance condition. +In addition, the vesting of each equity award will be accelerated in full if: (i) for certain of the outstanding historical awards, a change in control occurs that has not been approved by a majority of the Continuing Directors; or (ii) the acquiring or successor entity in the change in control does not agree to continue or assume the award agreement, or substitute new awards of comparable value. +Severance and Change in Control Payments +The following table provides information about the payments and benefits that would have been paid or provided to our NEOs in the event that a termination of employment had occurred on March 31, 2021. The amounts reflected in the table are in addition to amounts that would have been payable for accrued but unpaid base salary, accrued paid time off, accrued but unpaid cash incentive compensation, and reimbursement of expenses. +The payments to be made, and the stock and option awards to be vested, in connection with different termination events (including in connection with a change in control) for each of our NEOs have been determined by reference to the terms of the applicable Severance Agreements and equity award agreements. Except as described above, no payments or benefits would be provided to our NEOs in the event of a termination of employment for Cause. Refer to the section of this Proxy Statement titled “ Potential Payments upon Termination or Change in Control ” for additional information. +For purposes of the table, the value of the stock and option awards has been determined based on the closing price of our common stock on March 31, 2021. In the event of an actual change in control transaction, the value of our common stock may be significantly different than this assumed value, in which case the value realized by our NEOs upon the vesting of the stock and option awards may be significantly different. +60 +Upon Termination +Name Type of Compensation +or Benefit Due to Death or +Total Disability +($) By our Company +Without Cause +($) In Connection with a Change +in Control +($) +Dave Powers Cash payments — 1,650,000 6,743,690 +Value of health benefits — 19,412 38,825 +Value of stock awards (1) +— — 13,002,357 +Value of option awards — — — +Total — 1,669,412 19,784,872 +Steven J. Fasching Cash payments — 600,000 1,898,732 +Value of health benefits — 22,711 34,067 +Value of stock awards (1) +— — 2,495,993 +Value of option awards — — — +Total — 622,711 4,428,792 +David E. Lafitte Cash payments — 700,000 2,377,009 +Value of health benefits — 19,412 29,119 +Value of stock awards (1) +— — 3,306,513 +Value of option awards — — — +Total — 719,412 5,712,641 +Stefano Caroti Cash payments — 650,000 2,095,225 +Value of health benefits — 16,079 24,119 +Value of stock awards (1) +— — 2,831,699 +Value of option awards — — — +Total — 666,079 4,951,043 +Andrea O'Donnell Cash payments — 625,000 1,904,519 +Value of health benefits — 19,412 29,119 +Value of stock awards (1) +— — 2,744,138 +Value of option awards — — — +Total — 644,412 4,677,776 +(1) The stock awards reflect all of the performance-based and time-based RSUs that remained outstanding as of March 31, 2021, including: (i) the 2019 Time-Based RSUs, (ii) the 2019 Performance-Based RSUs, (iii) the 2020 Time-Based RSUs, (iv) the 2020 Performance-Based RSUs, (v) the 2021 Time-Based RSUs, (vi) the 2020 LTIP PSUs, (vii) the 2021 LTIP PSUs, and (viii) certain additional time-based RSUs granted in fiscal years 2019 and 2020 as discretionary for certain NEOs. +61 +DIRECTOR COMPENSATION +For fiscal year 2021, directors who are not our employees, or our Nonemployee Directors, received an annual cash retainer fee of $65,000, plus an annual cash retainer of $15,000 for each Board committee assignment. Nonemployee Directors holding the following positions were entitled to receive additional annual cash retainer fees as follows: $160,000 for Chairman of our Board of Directors; $40,000 for Chair of the Audit Committee; $35,000 for Chair of the Compensation Committee; and $20,000 for Chair of the Corporate Governance Committee. All or any portion of the cash retainer fees paid to any of our Nonemployee Directors may, at the election of the director, be paid through the issuance of our common stock. +Each of our Nonemployee Directors is also entitled to receive common stock with a total value of approximately $125,000 for annual service on our Board. The shares are issued in equal quarterly installments with the number of shares being determined using the rolling average of the closing price of our common stock during the last 10 trading days leading up to, and including, the 15 th day of the last month of each quarterly period. Each of these shares is fully vested on the date of issuance. +Nonemployee Directors are reimbursed for any reasonable Board-related expenses. Nonemployee Directors also receive product discounts, which are generally available to our employees and, from time to time, may receive products without charge in order to help expand the directors’ knowledge of our products. +Director Compensation Table +The following table sets forth all compensation paid or awarded to our Nonemployee Directors during fiscal year 2021. The amounts set forth in the table have been calculated in accordance with applicable SEC rules, and do not necessarily reflect the amounts that have actually been paid to, or which may be realized by, our Nonemployee Directors. +Name Fees +Earned +($) +Stock +Awards +($) (1) +Total +($) +Michael F. Devine, III 225,000 129,098 354,098 +Nelson C. Chan 80,000 129,098 209,098 +Cynthia (Cindy) L. Davis 115,000 129,098 244,098 +Juan R. Figuereo 110,000 129,098 239,098 +John M. Gibbons (2) +60,000 62,931 122,931 +Maha S. Ibrahim (3) +13,333 33,305 46,638 +Victor Luis (4)(5) +715 165,054 165,769 +James E. Quinn (6) +20,000 30,124 50,124 +Lauri M. Shanahan 108,750 129,098 237,848 +Brian A. Spaly 80,000 129,098 209,098 +Bonita C. Stewart 95,000 129,098 224,098 +(1) The amounts in this column represent the aggregate grant date fair value of the awards computed in accordance with FASB ASC Topic 718. +(2) Mr. Gibbons retired from the Board effective as of September 11, 2020. +(3) Ms. Ibrahim was appointed to serve as a member of our Board effective as of February 1, 2021. +(4) Mr. Luis was appointed to serve as a member of our Board effective as of June 25, 2020. +(5) Mr. Luis has elected to receive his cash compensation in stock awards. Any residual compensation after the stock conversion is paid to Mr. Luis in cash. +(6) Mr. Quinn departed from the Board effective as of June 25, 2020. +Stock Ownership Guidelines +Our Board has adopted stock ownership guidelines applicable to our Nonemployee Directors. Nonemployee Directors are required to hold a number of shares of common stock with a value equal to five times the base annual cash retainer fee within five years of joining our Board, subject to exceptions that may be granted by the Compensation Committee. In addition, each director must hold shares of our common stock within one year of joining our Board. Any shares of common stock held by Nonemployee Directors through our Deferred Stock Unit Compensation Plan are counted as stock ownership for purposes of these guidelines. +62 +EQUITY COMPENSATION PLAN INFORMATION +The following table sets forth information regarding shares of our common stock that were eligible for issuance under our equity compensation plans as of March 31, 2021. +Plan category +Number of securities +to be issued +upon exercise of +outstanding options or settlement of outstanding RSUs (1)(2) +Weighted-average +exercise price of +outstanding options (3) +Number of securities +remaining available +for future issuance (4) +Equity compensation plans approved by security holders 432,364 $ 67.56 1,294,689 +Equity compensation plans not approved by security holders — — — +Total 432,364 $ 67.56 1,294,689 +(1) This amount includes shares underlying all equity awards outstanding pursuant to the 2006 Plan and the 2015 Plan as of March 31, 2021. For awards subject to performance-based vesting conditions, the amount reported reflects the number of shares to be issued if the relevant performance conditions are achieved. +(2) There are no stock appreciation rights outstanding pursuant to the 2006 Plan and the 2015 Plan. In addition, there are no outstanding warrants to purchase shares of our common stock. +(3) This amount reflects the weighted-average exercise price of the outstanding 2017 LTIP NQSOs and 2018 LTIP NQSOs, based on the closing price of our common stock on the respective grant dates. This amount does not take into account shares issuable upon the vesting of outstanding time-based and performance-based RSUs, which have no exercise price. +(4) This amount reflects the shares reserved for issuance under the 2015 Plan less the number of shares reported in the first column. This amount is subject to increase depending on our achievement with respect to certain performance conditions as discussed in footnote 1 above, and will increase to reflect any shares that are forfeited or otherwise terminated under the 2015 Plan. +63 +SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT +The following table sets forth, as of June 30, 2021 (except as specified in the footnotes following the table), certain information concerning the shares of our common stock beneficially owned by (i) each person who is an NEO, (ii) each director or director nominee, (iii) all executive officers and directors as a group (14 persons), and (iv) each person known to us to be the beneficial owner of more than 5% of our common stock. There were 27,662,787 shares of our common stock outstanding on June 30, 2021. +Name and Address of Beneficial Owner (1) +Amount and +Nature of Beneficial +Ownership (2)(3) +Percent +of Common Stock (3) +Named Executive Officers +Dave Powers 95,997 * +Steven J. Fasching 11,335 * +David E. Lafitte 36,883 * +Stefano Caroti 39,708 * +Andrea O'Donnell 34,162 * +Directors (4) +Michael F. Devine, III 11,071 * +Nelson C. Chan 8,896 * +Cynthia (Cindy) L. Davis 2,240 * +Juan R. Figuereo +0 (5) +* +Maha S. Ibrahim 176 * +Victor Luis +0 (6) +* +Lauri M. Shanahan +6,236 (7) +* +Brian A. Spaly 3,240 * +Bonita C. Stewart +14,316 (8) +* +All Directors and Executive Officers as a Group (14 persons) 264,260 0.9 % +5% Stockholders +FMR LLC (9) +4,212,597 15.2 % +Blackrock, Inc. (10) +3,316,809 12.0 % +The Vanguard Group Inc. (11) +2,824,288 10.2 % +* Percentage of shares beneficially owned does not exceed 1.0% of our outstanding shares of common stock. +(1) Unless otherwise noted, the address of each beneficial owner is 250 Coromar Drive, Goleta, California 93117. +(2) Unless otherwise noted, we believe each individual or entity named has sole investment and voting power with respect to the shares of our common stock reported as beneficially owned by them, subject to community property laws, where applicable. +(3) Pursuant to applicable SEC rules, shares not outstanding which are subject to options, warrants, rights or conversion privileges exercisable on or before the date that is 60 days after June 30, 2021 are deemed outstanding for the purpose of calculating the number and percentage owned by a person, but are not deemed outstanding for the purpose of calculating the number and percentage owned by any other person. +(4) The reported amounts include shares held by certain directors through one or more family trusts over which shares the respective directors may have shared voting and/or investment power. +(5) An additional 695 shares previously earned by this director have been deferred pursuant to an election made under our Deferred Stock Unit Compensation Plan. These deferred shares have been excluded from the table. +(6) An additional 772 shares previously earned by this director have been deferred pursuant to an election made under our Deferred Stock Unit Compensation Plan. These deferred shares have been excluded from the table. +(7) An additional 4,023 shares previously earned by this director have been deferred pursuant to an election made under our Deferred Stock Unit Compensation Plan. These deferred shares have been excluded from the table. +64 +(8) An additional 211 shares previously earned by this director have been deferred pursuant to an election made under our Deferred Stock Unit Compensation Plan. These deferred shares have been excluded from the table. +(9) This information is based solely on Amendment No. 2 to Schedule 13G filed by this stockholder on February 5, 2021. This stockholder’s business address is 245 Summer Street, Boston, MA 02210. This stockholder has sole voting power over 808,806 of such shares and sole dispositive power over 4,212,597 of such shares. +(10) This information is based solely on Amendment No. 13 to Schedule 13G filed by this stockholder on January 26, 2021. This stockholder’s business address is 55 East 52nd Street, New York, NY 10055. This stockholder has sole voting power over 3,252,892 of such shares and sole dispositive power over 3,316,809 of such shares. +(11) This information is based solely on Amendment No. 10 to Schedule 13G filed by this stockholder on April 12, 2021. This stockholder’s business address is 100 Vanguard Boulevard, Malvern, PA 19355. This stockholder has sole voting power over 65,374 of such shares, sole dispositive power over 2,735,238 of such shares, and shared dispositive power over 89,050 of such shares. +65 +DELINQUENT SECTION 16(a) REPORTS +Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our executive officers, directors, and persons who own more than 10% of a registered class of securities, to file initial reports of ownership of our stock and reports of changes in such ownership with the SEC. To our knowledge, all required filings pursuant to Section 16(a) were timely made during fiscal year 2021, except for the filings identified below. +Two statements of initial statements of beneficial ownership of securities on Form 3 for Thomas Garcia and Wendy Yang were inadvertently not filed on a timely basis. A Form 3 was filed for Mr. Garcia on July 9, 2020 and for Ms. Yang on July 10, 2020. +One statement of change of beneficial ownership of securities on Form 4 for James E. Quinn was inadvertently not filed on a timely basis. A Form 4 was filed for Mr. Quinn on July 6, 2020. +66 +AUDIT COMMITTEE REPORT +The Audit Committee of our Board of Directors is responsible for providing independent, objective oversight of, among other things, our financial reporting functions, our independent registered public accounting firm, our highest ranking manager of internal audit, our system of internal controls, our legal and regulatory compliance, and compliance with our related person transaction policy and Code of Ethics. The Audit Committee is currently composed of four directors, each of whom meets the independence and experience requirements under applicable NYSE rules, as well as the independence requirements applicable to Audit Committee members under applicable SEC rules. In addition, our Board of Directors has determined that the Chair of the Audit Committee qualifies as an “audit committee financial expert” under applicable SEC rules. +Management is responsible for the preparation of our financial statements and financial reporting process, including our system of internal controls. KPMG LLP, our independent registered public accounting firm, is responsible for performing an independent audit of our consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States), or the PCAOB, and expressing (i) an opinion on whether our consolidated financial statements present fairly, in all material respects, our financial position and results of operations and cash flows for the periods presented in conformity with US generally accepted accounting principles, and (ii) an opinion on whether we have maintained, in all material respects, effective internal control over financial reporting as of March 31, 2021, based on criteria established in the Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Audit Committee’s responsibility is to monitor and oversee these processes. +In connection with these responsibilities, the Audit Committee met with management and KPMG LLP to review and discuss the March 31, 2021 consolidated financial statements and obtained from management their representation that our financial statements have been prepared in accordance with US generally accepted accounting principles. In addition, management represented that, as of March 31, 2021, our Company maintained effective internal control over financial reporting. +The Audit Committee also discussed with KPMG LLP the matters required by Auditing Standard No. 1301, “Communications with Audit Committees” of the PCAOB, which includes, among other items, information regarding the conduct of the audit of our consolidated financial statements. The Audit Committee has further considered the compatibility of the services provided by KPMG LLP with KPMG LLP’s independence. +The Audit Committee operates under a written charter, which was adopted by our Board of Directors and is assessed annually for adequacy by the Audit Committee. The Audit Committee held ten meetings during fiscal year 2021, including meetings with KPMG LLP and our highest ranking manager of internal audit, both with and without management present. In performing its functions, the Audit Committee acts only in an oversight capacity. It is not the responsibility of the Audit Committee to determine that our financial statements are complete and accurate, are presented in accordance with US generally accepted accounting principles or present fairly our results of operations for the periods presented, or that we maintain appropriate internal controls. Furthermore, the Audit Committee’s oversight responsibilities do not independently assure that the audit of our financial statements has been carried out in accordance with the standards of the PCAOB or that our registered public accounting firm is independent. +Based upon the Audit Committee’s review and discussions with management and KPMG LLP, and subject to the limitations of the Audit Committee’s role and responsibilities referred to above and in the Audit Committee charter, the Audit Committee recommended that our Board of Directors include the audited consolidated financial statements in our Annual Report on Form 10-K for the year ended March 31, 2021, which was filed with the SEC on May 28, 2021. +THE AUDIT COMMITTEE +Juan R. Figuereo ( Chair ) +Nelson C. Chan +Lauri M. Shanahan +Maha S. Ibrahim +The Audit Committee Report shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as amended, or the Acts, except to the extent that our Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under the Acts. +67 +RELATED-PERSON TRANSACTIONS +Our legal department is primarily responsible for identifying and reviewing relationships and transactions in which our Company and our directors, director nominees, executive officers, principal stockholders, or any of their respective immediate family members, are participants to determine whether any of these related persons had or will have a direct or indirect material interest in such transactions. In order to assist in identifying potential related-person transactions, our legal department annually prepares and distributes to all directors, director nominees and executive officers a detailed written questionnaire which includes questions intended to elicit information about any current or proposed related-person transactions. In addition, our Code of Ethics addresses conflicts of interest where an individual’s personal interests may interfere or conflict with the interests of our Company, including relationships with suppliers, customers or competitors. Conflicts of interest which might impair (or appear to impair) the exercise of judgment solely for the benefit of our Company and our stockholders are prohibited. In general, such conflicts must be approved by our legal department, the employee’s supervisor or, in the case of directors, the Audit Committee. Information regarding potential conflicts of interest in violation of our Code of Ethics may be reported to our anonymous reporting hotline, which may be accessed by the Chair of the Audit Committee, the Chairman of our Board and our highest ranking manager of internal audit. +If a related-person transaction is identified by our legal department as one which would be required to be publicly reported pursuant to applicable SEC rules, the Audit Committee is responsible for reviewing and approving or ratifying any such transaction. The Audit Committee may approve a related person transaction when, in its good faith judgment, it determines that the transaction is in the best interests of our Company and our stockholders. +There were no transactions with related persons that required disclosure under applicable SEC rules during fiscal year 2021, and no such transactions are currently proposed. +68 +PROPOSAL NO. 2 +RATIFICATION OF THE SELECTION OF KPMG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +For fiscal year 2021, KPMG LLP, or KPMG, provided audit services, which included an examination of the consolidated financial statements included in our Annual Report. The Audit Committee has selected KPMG to provide audit services to our Company for fiscal year 2022, which covers the period from April 1, 2021 to March 31, 2022. We are asking that our stockholders ratify this selection at the Annual Meeting. +Ratification of the selection of our independent registered public accounting firm is not required to be submitted to a vote of our stockholders by our bylaws or applicable SEC rules, however the Audit Committee believes it is appropriate as a matter of good corporate governance practice. If our stockholders do not ratify the selection, the Audit Committee will consider the selection of another independent registered public accounting firm, but is not required to select a different firm. In addition, even if our stockholders ratify the selection, the Audit Committee will retain the discretion to select a different independent registered public accounting firm in the future if it believes doing so is in the best interests of our Company and stockholders. +A representative of KPMG will attend the virtual Annual Meeting and will have the opportunity to make a statement and/or respond to appropriate questions from stockholders present virtually at the Annual Meeting. +Fees for Services Rendered by Independent Registered Public Accounting Firm +The following table sets forth approximate fees for services rendered by KPMG for the fiscal years ended March 31, 2021 and 2020: +FEES ($) FISCAL YEAR 2021 FISCAL YEAR 2020 +Audit Fees 2,467,000 2,602,000 +Audit-Related Fees — — +Tax Fees 10,000 10,000 +All Other Fees — — +Total Fees 2,477,000 2,612,000 +Audit Fees +The audit fees presented above for the fiscal years ended March 31, 2021 and 2020 include fees associated with the audit of our consolidated balance sheets, the related consolidated statements of comprehensive income, stockholders’ equity and cash flows, and the audit of internal control over financial reporting, as well as the reviews of our quarterly reports on Form 10-Q, and certain statutory audits required internationally. +Audit-Related Fees +Audit-related fees generally consist of fees for assurance and related services that are reasonably related to the performance of the integrated audit of our annual reports on Form 10-K and review of our quarterly reports on Form 10-Q. +Tax Fees +Tax fees include fees incurred for tax services, including tax compliance, tax advice and tax planning for income taxes and customs matters. +All Other Fees +There were no other fees for services rendered by KPMG incurred during the fiscal years ended March 31, 2021 and 2020 other than those disclosed above. +69 +Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm +In accordance with its policies and procedures, prior to engagement, the Audit Committee pre-approves all independent registered public accounting firm services. Specifically, the Audit Committee administers and oversees our engagement of KPMG and pre-approves all of KPMG’s audit and permissible non-audit services on a case-by-case basis. In approving non-audit services, the Audit Committee considers whether the engagement could compromise the independence of KPMG, and whether for reasons of efficiency or convenience it is in our best interests to engage KPMG to perform the services. The Audit Committee has determined that the performance by KPMG of the non-audit services listed above as “Tax Fees” did not affect its independence. +During the year, circumstances may arise under which it may become necessary to engage the independent registered public accounting firm for additional services not contemplated in the original pre-approval categories. +Required Vote +Approval of this proposal requires the affirmative vote of a majority of the outstanding shares present virtually or represented by proxy and entitled to vote on this proposal at the Annual Meeting (assuming that a quorum is present). +BOARD RECOMMENDATION +OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE +" FOR " +PROPOSAL NO. 2 TO RATIFY THE SELECTION OF KPMG LLP +AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +FOR FISCAL YEAR 2022. +70 +PROPOSAL NO. 3 +ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION +Background +In accordance with applicable SEC rules, we are providing our stockholders with the opportunity to cast a non-binding advisory Say-on-Pay Vote on the compensation of our Named Executive Officers, as described below. We consider seeking the views of our stockholders on our executive compensation program to be an important part of our decision-making process. +For additional information about our executive compensation program, please refer to the section of this Proxy Statement titled " Compensation Discussion and Analysis " and the related compensation tables and footnotes. +Proposal +Therefore, in accordance with Section 14A of the Exchange Act, we are asking our stockholders to approve the following resolution at the Annual Meeting: +“ RESOLVED, that our stockholders approve, on a non-binding advisory basis, the compensation of our Named Executive Officers, as described in the Compensation Discussion and Analysis, the Summary Compensation Table, and the related compensation tables, notes and narrative discussion in the Proxy Statement for our 2021 Annual Meeting of Stockholders. ” +Because this vote is advisory only, it will not be binding upon our Board of Directors or the Compensation Committee. However, the Compensation Committee will take the outcome of the vote into account when considering future executive compensation arrangements. +Required Vote +Approval of this proposal requires the affirmative vote of a majority of the outstanding shares present virtually or represented by proxy and entitled to vote on this proposal at the Annual Meeting (assuming that a quorum is present). +BOARD RECOMMENDATION +OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE +" FOR " +PROPOSAL NO. 3 TO APPROVE, ON A NON-BINDING ADVISORY BASIS, +THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS. +71 +STOCKHOLDER PROPOSALS +Proposals or director nominations of stockholders intended to be presented at our annual meeting of stockholders to be held in 2022 must be delivered to our corporate headquarters located at 250 Coromar Drive, Goleta, California 93117 no later than March 31, 2022 in order to be included in our proxy statement and form of proxy relating to that meeting. In order to be included in the proxy statement, these proposals must comply with applicable SEC rules. +Under our bylaws, a stockholder who wishes to make a proposal or nominate a candidate as a director at the annual meeting of stockholders to be held in 2022 without including the proposal in our proxy statement and form of proxy relating to that meeting must notify us no earlier than the close of business on May 18, 2021 and no later than the close of business on June 17, 2021. These proposals must comply with the requirements set forth in our bylaws. +72 +OTHER BUSINESS AT THE ANNUAL MEETING +As of the date of this Proxy Statement, we are not aware of any business to be presented for consideration at the Annual Meeting other than the matters described in this Proxy Statement. If, however, other matters are properly presented at the Annual Meeting, the persons named as proxies (or their substitutes) will vote in accordance with their discretion with respect to those matters. +73 +ANNUAL REPORT +The Annual Report contains audited consolidated financial statements of our Company and its subsidiaries and the report thereon of KPMG LLP, our independent registered public accounting firm. A copy of the Annual Report is being provided with this Proxy Statement and has been posted on the Internet, along with this Proxy Statement, each of which is accessible by following the instructions in this Proxy Statement and the accompanying Notice. +Any person who was our stockholder on the Record Date (including any beneficial owner holding shares in "street name" as of the Record Date) may request a copy of the Annual Report, and it will be furnished without charge upon receipt of a written request. Requests should be directed to Deckers Outdoor Corporation, 250 Coromar Drive, Goleta, California 93117, Attention: Corporate Secretary, or by telephone to (805) 967-7611. +BY ORDER OF THE BOARD OF DIRECTORS +Dave Powers +Chief Executive Officer and President +Goleta, California +July 29, 2021 +74 \ No newline at end of file diff --git a/raw/proxies/0000910521/0000910521-21-000020/proxy_rpt.txt b/raw/proxies/0000910521/0000910521-21-000020/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..e1c76aaf06e54e3b5d90e873f829d30e10a344ad --- /dev/null +++ b/raw/proxies/0000910521/0000910521-21-000020/proxy_rpt.txt @@ -0,0 +1,5 @@ +RELATED-PERSON TRANSACTIONS +Our legal department is primarily responsible for identifying and reviewing relationships and transactions in which our Company and our directors, director nominees, executive officers, principal stockholders, or any of their respective immediate family members, are participants to determine whether any of these related persons had or will have a direct or indirect material interest in such transactions. In order to assist in identifying potential related-person transactions, our legal department annually prepares and distributes to all directors, director nominees and executive officers a detailed written questionnaire which includes questions intended to elicit information about any current or proposed related-person transactions. In addition, our Code of Ethics addresses conflicts of interest where an individual’s personal interests may interfere or conflict with the interests of our Company, including relationships with suppliers, customers or competitors. Conflicts of interest which might impair (or appear to impair) the exercise of judgment solely for the benefit of our Company and our stockholders are prohibited. In general, such conflicts must be approved by our legal department, the employee’s supervisor or, in the case of directors, the Audit Committee. Information regarding potential conflicts of interest in violation of our Code of Ethics may be reported to our anonymous reporting hotline, which may be accessed by the Chair of the Audit Committee, the Chairman of our Board and our highest ranking manager of internal audit. +If a related-person transaction is identified by our legal department as one which would be required to be publicly reported pursuant to applicable SEC rules, the Audit Committee is responsible for reviewing and approving or ratifying any such transaction. The Audit Committee may approve a related person transaction when, in its good faith judgment, it determines that the transaction is in the best interests of our Company and our stockholders. +There were no transactions with related persons that required disclosure under applicable SEC rules during fiscal year 2021, and no such transactions are currently proposed. +68 \ No newline at end of file diff --git a/raw/proxies/0000910521/0000910521-22-000024/proxy.txt b/raw/proxies/0000910521/0000910521-22-000024/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..eb46d816e02103139285b0ce6c6cd2e5dd5d7a70 --- /dev/null +++ b/raw/proxies/0000910521/0000910521-22-000024/proxy.txt @@ -0,0 +1,1975 @@ +DEF 14A +1 +deck-def14ax2022.htm +DEF 14A +Document +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Proxy Statement Pursuant to Section 14(a) of +the Securities Exchange Act of 1934 (Amendment No. ) +Filed by the Registrant x +Filed by a Party other than the Registrant ¨ +Check the appropriate box: +¨ Preliminary Proxy Statement +¨ Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +x Definitive Proxy Statement +¨ Definitive Additional Materials +¨ Soliciting Material under §240.14a-12 +DECKERS OUTDOOR CORPORATION +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +x No fee required. +¨ Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. +(1) Title of each class of securities to which transaction applies: +(2) Aggregate number of securities to which transaction applies: +(3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): +(4) Proposed maximum aggregate value of transaction: +(5) Total fee paid: +¨ Fee paid previously with preliminary materials. +¨ Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. +(1) Amount Previously Paid: +(2) Form, Schedule or Registration Statement No.: +(3) Filing Party: +(4) Date Filed: +2022 +PROXY STATEMENT SUMMARY +This Proxy Statement Summary highlights information contained elsewhere in this Proxy Statement. This summary does not contain all of the information you should consider when making voting decisions. You should read this Proxy Statement carefully and completely before voting. +ANNUAL MEETING OF STOCKHOLDERS +DATE Monday, September 12, 2022 +TIME 1:00 p.m. Pacific Time +VIRTUAL MEETING +The 2022 Annual Meeting of Stockholders, or Annual Meeting, will be held virtually via a live webcast, which can be accessed on the Internet by visiting www.virtualshareholdermeeting.com/DECK2022. +Stockholders will be able to vote and submit questions virtually during the Annual Meeting in accordance with the rules and procedures included on the meeting website. +To access the Annual Meeting you will need a 16-digit control number. Your control number is provided on the Notice of Internet Availability of Proxy Materials you received in the mail, on your proxy card (if you requested to receive printed proxy materials), or through your broker or other nominee if you hold your shares in "street name." +RECORD DATE Thursday, July 14, 2022 +PROPOSALS TO BE VOTED UPON +NUMBER PROPOSAL BOARD VOTING RECOMMENDATION PAGE REFERENCE +1 Elect ten directors to serve until the annual meeting of stockholders to be held in 2023, or until their successors are duly elected and qualified +" FOR " EACH DIRECTOR NOMINEE +7 +2 Ratify the selection of KPMG LLP as our independent registered public accounting firm for our fiscal year ending March 31, 2023 +" FOR " +70 +3 +Approve, on a non-binding advisory basis, the compensation of our Named Executive Officers as described in the section of this Proxy Statement titled " Compensation Discussion and Analysis " +" FOR " +72 +We may also consider and vote upon any other business that may properly come before the Annual Meeting, or at any postponements or adjournments thereof. As of the date of this Proxy Statement, we are not aware of any business to be presented for consideration at the Annual Meeting other than the matters described in this Proxy Statement. +HOW TO VOTE +Your vote is important to the future of Deckers Outdoor Corporation. You are eligible to vote if you were a stockholder at the close of business on Thursday, July 14, 2022. Please refer to the section of this Proxy Statement titled " Questions and Answers About the Annual Meeting and Voting " for additional information on how to attend the Annual Meeting and vote your shares. Whether or not you plan to attend the Annual Meeting, we encourage you to read this Proxy Statement and submit your proxy or voting instructions as soon as possible to ensure your representation at the Annual Meeting. +i +PROPOSAL NO. 1 +ELECTION OF DIRECTORS +Our Board of Directors has nominated the following ten directors for election at the Annual Meeting: +Director Nominees +Michael F. Devine, III David A. Burwick Nelson Chan Cynthia (Cindy) L. Davis Juan R. Figuereo +Maha S. Ibrahim Victor Luis Dave Powers Lauri M. Shanahan Bonita C. Stewart +Board Recommendation: +" FOR " each director nominee +We have an independent Board with extensive qualifications and skills. Our board is also comprised of individuals with diverse backgrounds and experiences. Each of our Board members is committed to representing the long-term interests of our stockholders. +QUALIFIED QUALIFICATIONS AND SKILLS +7/10 Industry 6/10 Technology Infrastructure and Cybersecurity +9/10 Premium Branding 6/10 Compliance and Risk Oversight +9/10 International 7/10 Corporate Governance +3/10 High Level of Financial Literacy 6/10 Mergers and Acquisitions +8/10 Retail 9/10 Public Company Executive +5/10 Consumer Technology/Big Data 8/10 Human Resources and Talent Management +8/10 Sales and Marketing 3/10 Corporate Responsibility +4/10 Supply Chain Management +DIVERSE OUR BOARD'S DEMOGRAPHICS +50% Ethnically Diverse +60% From Underrepresented +Communities +40% Female +INDEPENDENT 9/10 Directors are Independent +ENGAGED During our fiscal year ended March 31, 2022, or fiscal year 2022, no director nominee attended fewer than 75% of the meetings of our Board or meetings of any Board committee on which he or she served during his or her term. +Please refer to the section of this Proxy Statement titled " Proposal No. 1 - Election of Directors " for additional information. +PROPOSAL NO. 2 +RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +Board Recommendation: +" FOR " the ratification of the selection of KPMG LLP as our independent registered public accounting firm for our fiscal year ending March 31, 2023. +• The Audit & Risk Management Committee is involved in the annual review and engagement of KPMG LLP to ensure its continuing audit independence. +• The Audit & Risk Management Committee believes the continued retention of KPMG LLP is in the best interests of the Company and its stockholders. +Please refer to the section of this Proxy Statement titled "Proposal No. 2 - Ratification of KPMG " for additional information. +ii +PROPOSAL NO. 3 +ADVISORY VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION +Board Recommendation: +" FOR " the approval, on a non-binding advisory basis, of the compensation of our Named Executive Officers as described in the section of this Proxy Statement entitled " Compensation Discussion and Analysis. " +The primary objective of our executive compensation program is to compensate our executive officers in a manner that will attract, retain, and motivate talented executives with the skills needed to manage a complex and growing business in a competitive industry, while creating long-term value for our stockholders. The Talent & Compensation Committee seeks to design our executive compensation program in a manner that reflects direct alignment between the compensation opportunity provided to our executives and the achievement of our strategic objectives. +Consistent with our strategic objectives for fiscal year 2022, when designing our executive compensation program for the year, the Talent & Compensation Committee focused on continuing to build and retain our executive team, while incentivizing our executive officers to focus on increasing revenue, enhancing profitability and creating long-term value for our stockholders. +When establishing our executive compensation program, the Talent & Compensation Committee is guided by the following four principles: +• Pay for performance by having a significant portion of compensation earned based on the achievement of performance-based conditions. +• Align interests of executives with stockholders by tying a significant portion of compensation to performance that creates long-term value for our stockholders. +• Attract and retain executives with the background and experience necessary to lead the organization and achieve our strategic objectives. +• Reward achievement by offering incentives for achieving short-term and long-term financial goals that are directly tied to the achievement of strategic objectives. +Please refer to the section of this Proxy Statement titled “ Compensation Discussion and Analysis ” for additional information. +OUR BUSINESS AND STRATEGIC OBJECTIVES +Long-Term Strategy and Growth +We remain committed to our long-term strategies, which have been the primary drivers of our success in recent years. Our strategic framework includes efforts to: +• Accelerate global consumer adoption of the HOKA brand and increase its market share; +• Further diversify the UGG brand's product offerings, geographic and seasonal mix of business, and drive brand heat through marketing initiatives and strategic distribution; +• Adopt technology and analytical tools to further enhance our capabilities to support our evolving business, including expanding our digital marketing and e-commerce platforms; and +• Invest in infrastructure required to support our key growth initiatives globally, including investment in talent as well as distribution and logistical needs. +We intend to continue investing strategically in key identified areas of growth within our brand portfolio. We remain committed to delivering long-term stockholder value through the continued execution of our strategies. +iii +KEY CORPORATE GOVERNANCE CHANGES +Board Refreshment +We continuously evaluate our Board composition to ensure it is structured to best position us to achieve our long-term objectives and create stockholder value. Over the last several years we have strategically focused on refreshing our Board composition, enhancing Board and committee leadership and improving Board diversity. Our efforts have resulted in a number of key changes, including the following: +• In June 2020, Victor Luis was appointed as a member of our Board. +• In June 2020, Juan R. Figuereo was appointed Chair of the Audit & Risk Management Committee. +• In February 2021, Maha S. Ibrahim was appointed as a member of our Board. +• In September 2021, Bonita C. Stewart was appointed Chair of the Corporate Governance Committee. +• In September 2021, David A. Burwick was appointed as a member of our Board. +Please refer to the section of this Proxy Statement titled “ Corporate Governance ” for additional information. +ESG Highlights +The achievement of environmental, social and governance, or ESG, initiatives is a crucial part of our strategic objectives and corporate culture. We strive to do good and do great while minimizing our environmental impact and employing socially conscious operations. In the last year, we have continued to amplify our ESG program and are committed to maintaining open and interactive dialogue on ESG matters with our stakeholders to ensure their views are actively considered. The tables below reflect a select group of highlights from our ESG program during fiscal year 2022. +Environmental +• We filed science-based targets with the Science-Based Target Initiative. +• We sourced the vast majority of our leather supplies from Leather Working Group-certified tanneries, which promote sustainable and environmentally friendly business practices within the leather industry. +• We established a long-term grant with the Savory Institute to support regenerative farming practices on sheep farms in Australia, influencing over 200,000 acres and 40 farms. +Social +• We improved BIPOC (Black, Indigenous, and People of Color) representation among U.S. leaders (director and above) to 21%, up from 12% two years ago, as we make progress towards our target of 25% by fiscal year 2027. +• Our employees volunteered over 14,000 hours. +• We promoted gender quality and education with our supply chain partners through our partnership with the Business for Social Responsibility's HERproject, which positively impacts the well-being of women through workplace-based education. +Governance +• We continued to ensure diverse perspectives are reflected on our Board, which includes four female directors and six directors from underrepresented communities. +• We made governance changes to promote Board and committee oversight of corporate culture, human capital management, and ESG-related matters. +• We refreshed our Code of Ethics for directors and employees, as well as our Ethical Supply Chain Code of Conduct for our supply chain business partners, to ensure we continue to lead with our governance approach. +iv +For additional information, please read our forthcoming Corporate Sustainability and Responsibility Report, or our Creating Change Report, and visit our website at www.deckers.com/responsibility . The information contained in our Creating Change Report or accessed through our website does not constitute part of this Proxy Statement and you should not consider that information in deciding how to vote your shares. References to our website address in this Proxy Statement are inactive textual references only. +v +NOTICE OF VIRTUAL ANNUAL MEETING OF STOCKHOLDERS +TO OUR STOCKHOLDERS: +We are pleased to invite you to virtually attend the 2022 Annual Meeting of Stockholders of Deckers Outdoor Corporation, which we refer to as "we," "us," "our," or "our Company," to be held on Monday, September 12, 2022, at 1:00 p.m. Pacific Time. +Proposals to be Voted Upon : +1 +Election of Directors . Elect ten directors to serve until the annual meeting of stockholders to be held in 2023, or until their successors are duly elected and qualified. +2 +Ratification of Selection of Accounting Firm . Ratify the selection of KPMG LLP as our independent registered public accounting firm for fiscal year 2023, which covers the period from April 1, 2022 to March 31, 2023. +3 +Advisory Vote on Executive Compensation . Approve, on a non-binding advisory basis, the compensation of our Named Executive Officers, as described in the section of this Proxy Statement entitled " Compensation Discussion and Analysis. " +Other Business . Consider and vote upon any other business that may properly come before the Annual Meeting, or any postponements or adjournments thereof. +Virtual Annual Meeting : +The Annual Meeting will be held virtually and conducted via a live webcast. You will be able to attend the Annual Meeting online, submit your questions and vote your shares during the meeting by visiting www.virtualshareholdermeeting.com/DECK2022. We believe hosting a virtual annual meeting encourages increased stockholder attendance and participation and reduces the cost to our Company associated with holding the Annual Meeting, as well as the cost to our stockholders of attending the meeting. +Record Date : +Our Board of Directors has fixed the close of business on Thursday, July 14, 2022, or the Record Date, as the date for determining which stockholders are entitled to notice of and to vote at the Annual Meeting, or any postponements or adjournments thereof. +Board Recommendations : +Our Board of Directors recommends that you vote " FOR " each of the director nominees named in Proposal No. 1 and " FOR " Proposal Nos. 2 and 3. +BY ORDER OF THE BOARD OF DIRECTORS +Dave Powers +Chief Executive Officer and President +Your vote is very important. Whether or not you plan to attend the Annual Meeting, we encourage you to read this Proxy Statement and submit your proxy or voting instructions as soon as possible. For specific instructions on how to vote your shares, please refer to the instructions on the Notice of Internet Availability of Proxy Materials you received in the mail, the section of this Proxy Statement titled " Questions and Answers About the Annual Meeting and Voting ," or, if you requested to receive printed proxy materials, your enclosed proxy card. +Approximate Date of Mailing of Notice of Internet Availability of Proxy Materials: July 29, 2022 +vi +Note Regarding Forward-Looking Statements +This Proxy Statement contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements may relate to our future financial performance, business operations, and executive compensation decisions, or other future events. You can identify forward-looking statements by the use of words such as “may,” “will,” “could,” “anticipate,” “expect,” “intend,” “believe,” “continue,” or the negative of such terms, or other comparable terminology. Forward-looking statements also include the assumptions underlying or relating to such statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, results of operations and financial condition. +The outcomes of the events described in these forward-looking statements are subject to risks, uncertainties and other factors described in Item 1A, “Risk Factors,” and elsewhere, in our Annual Report on Form 10-K for fiscal year 2022, or the Annual Report, as well as the other reports we file with the Securities and Exchange Commission. We cannot assure you that the events and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results could differ materially from those expressed or implied in the forward-looking statements. The forward-looking statements made in this Proxy Statement relate only to events as of the date of this Proxy Statement. We undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made. +vii +Table of Contents +TABLE OF CONTENTS +202 2 Proxy Statement Summary +i +Notice Virtual Annual Meeting of Stockholders +v i +Proxy Statement +1 +Questions and Answers About the Annual Meeting and Voting +2 +Proposal No. 1 - Election of Directors +7 +Director Nominees +9 +Corporate Governance +10 +Executive Officers +27 +Compensation Discussion and Analysis +30 +Executive Summary +31 +Compensation Objective and Philosophy +36 +Compensation Consultant and Peer Group +39 +Elements of Fiscal Year 202 2 Executive Compensation Program +41 +Other Compensation Considerations +49 +Talent & Compensation Committee Report +52 +Summary Compensation Table +53 +Grants of Plan-Based Awards in Fiscal Year 202 2 +54 +Outstanding Equity Awards of 202 2 Fiscal Year End +56 +Fiscal Year 202 2 Option Exercises and Stock Vested +58 +Nonqualified Deferred Compensation +59 +Potential Payments Upon Termination or Change in Control +60 +Director Compensation +64 +Equity Compensation Plan Information +65 +Security Ownership of Certain Beneficial Owners and Management +66 +Audit & Risk Management Committee Report +68 +Related-Person Transactions +69 +Proposal No. 2 - Ratification of the Selection of KPMG LLP as Independent Registered Public Accounting Firm +70 +Proposal No. 3 - Advisory Vote to Approve Named Executive Officer Compensation +72 +Stockholder Proposals +73 +Other Business at the Annual Meeting +74 +Annual Report on Form 10-K +75 +viii +Table of Contents +VIRTUAL ANNUAL MEETING OF STOCKHOLDERS +Meeting Date: Monday, September 12, 2022 +PROXY STATEMENT +GENERAL INFORMATION +The enclosed Proxy Statement is solicited on behalf of the Board of Directors of Deckers Outdoor Corporation for use at our 2022 Annual Meeting of Stockholders, or the Annual Meeting, to be held virtually via a live webcast on Monday, September 12, 2022 at 1:00 p.m. Pacific Time, or at any postponements or adjournments thereof. +The Annual Meeting can be accessed by visiting www.virtualshareholdermeeting.com/DECK2022 , where you will be able to attend the Annual Meeting, submit questions and vote your shares electronically. +The Annual Meeting is being held for the purposes described in this Proxy Statement and in the accompanying Notice of Annual Meeting of Stockholders. +1 +Table of Contents +QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING +The following questions and answers are intended to briefly address potential questions that our stockholders may have regarding this Proxy Statement and the Annual Meeting. They are also intended to provide our stockholders with certain information that is required to be provided under the rules and regulations of the SEC. These questions and answers may not address all of the questions that are important to you as a stockholder. If you have additional questions about this Proxy Statement or the Annual Meeting, please refer to the question titled " Whom should I contact with other questions? " below. +Q: When and where will the Annual Meeting be held? +A: The Annual Meeting will be held on Monday, September 12, 2022, at 1:00 p.m. Pacific Time. The Annual Meeting will be conducted entirely online via a live webcast. Our stockholders may participate in the Annual Meeting by visiting: www.virtualshareholdermeeting.com/DECK2022 . You will need a 16-digit control number to attend and participate in the live webcast of the Annual Meeting. Please refer to the question titled " How can I vote my shares? " for information on obtaining your 16-digit control number. +Q: What proposals am I being asked to vote upon at the Annual Meeting? +A: The proposals to be voted on at the Annual Meeting, and our Board's recommendation with respect to each proposal, are as follows: +NUMBER PROPOSAL BOARD VOTING RECOMMENDATION +Proposal No. 1 : +Election of Directors +Elect ten director nominees to serve until the annual meeting of stockholders to be held in 2023, or until their successors are duly elected and qualified +" FOR " +EACH +DIRECTOR NOMINEE +Proposal No. 2 : +Ratification of Selection of Accounting Firm +Ratify the selection of KPMG LLP as our independent registered public accounting firm for fiscal year 2023 +" FOR " +Proposal No. 3 : +Advisory Vote on Executive Compensation +Approve, on a non-binding advisory basis, the compensation of our Named Executive Officers, as described in the section of this Proxy Statement titled " Compensation Discussion and Analysis " +" FOR " +Q: Why did I receive these proxy materials? +A: We are providing this Proxy Statement in connection with the solicitation by our Board of Directors of proxies to be voted at the Annual Meeting, or at any postponements or adjournments thereof. This Proxy Statement contains important information for you to consider when deciding how to vote on the matters brought before the Annual Meeting. You are invited to attend the Annual Meeting to vote on the proposals described in this Proxy Statement. However, you do not need to attend the Annual Meeting to vote your shares. Instead, you may vote your shares using one of the other voting methods described in this Proxy Statement. +Whether or not you plan to attend the Annual Meeting, we encourage you to read this Proxy Statement and submit your proxy or voting instructions as soon as possible to ensure your representation at the Annual Meeting. +Q: Why did I receive a notice in the mail regarding the Internet availability of proxy materials? +A: Instead of mailing printed copies to each of our stockholders, we have elected to provide access to the proxy materials over the Internet under the Securities and Exchange Commission's, or the SEC's, "notice and access" rules. These rules allow us to make our stockholders aware of the Annual Meeting and the availability of the proxy materials by sending a Notice of Internet Availability of Proxy Materials, or the Notice, which provides instructions on how to access the full set of proxy materials through the Internet or make a request to have printed proxy materials delivered by mail. Accordingly, on or about July 29, 2022, we mailed the Notice to each of our stockholders. The Notice contains instructions on how to access the proxy materials, including this Proxy Statement and our Annual Report, each of which are available at www.proxyvote.com. The Notice also provides instructions on how to vote your shares. +2 +Table of Contents +Q: Who can vote at the Annual Meeting? +A: Only our stockholders at the close of business on July 14, 2022, or the Record Date, will be entitled to attend and vote at the Annual Meeting. On the Record Date, there were 26,531,046 shares of our common stock outstanding and entitled to vote. Each share of common stock issued and outstanding on the Record Date is entitled to one vote on any matter to be voted upon by our stockholders at the Annual Meeting. +• Holders of Record - If, on the Record Date, your shares were registered directly in your name with our transfer agent, Computershare, then you are a "holder of record." As a holder of record, you may vote at the virtual Annual Meeting, or you may vote by proxy. If you are a holder of record and you indicate when voting that you wish to vote as recommended by our Board, or if you submit a vote by proxy without giving specific voting instructions, then the proxyholders will vote your shares as recommended by our Board on all matters described in this Proxy Statement. Thomas Garcia and Steven J. Fasching, the designated proxyholders, are members of our management. +• Beneficial Owners - If, on the Record Date, your shares were held in an account at a bank, broker, dealer, or other nominee, then you are the "beneficial owner" of shares held in "street name" and this Proxy Statement is being made available to you by that nominee. The nominee holding your account is considered the holder of record for purposes of voting at the Annual Meeting. As a beneficial owner, you have the right to direct your nominee on how to vote the shares in your account. You are also invited to attend the Annual Meeting. However, since you are not the holder of record, you may not vote your shares at the Annual Meeting unless you request and obtain a valid "legal proxy" or obtain a 16-digit control number from your nominee. Please contact your nominee directly for additional information. +Q: What is the quorum requirement for the Annual Meeting? +A: The presence at the Annual Meeting, virtually (even if not voting) or by proxy, of the holders of a majority of the voting power of all the shares of our common stock entitled to be voted at the Annual Meeting, will constitute a quorum at the Annual Meeting. We will treat shares of common stock represented by a properly voted proxy, including shares for which authority is withheld or that a stockholder abstains from voting, as well as broker non-votes, as present at the Annual Meeting for the purposes of determining the existence of a quorum. If a quorum is not present, the Annual Meeting will be adjourned until a quorum is obtained. +Q: What are the voting requirements to approve each of the proposals, and what happens if I do not vote? +A: The voting requirements to approve each of the proposals to be voted upon at the Annual Meeting, as well as the effects of abstentions and broker non-votes on each of the proposals, are as follows: +PROPOSAL VOTING REQUIREMENT +EFFECT OF ABSTENTIONS (2) +EFFECT OF BROKER NON-VOTES (3) +Proposal No. 1 : +Election of Directors +Each director nominee in an uncontested election (1) will be elected by a majority of the votes cast by the shares present virtually or represented by proxy and entitled to vote on the election of directors at the Annual Meeting (assuming that a quorum is present). +A "majority of the votes cast" means that the number of votes "FOR" a director nominee must exceed 50% of the total votes cast in the election of directors. +A "WITHHOLD" vote with respect to a director nominee will not count as a vote cast for that nominee, will not be included in the total number of votes cast, and thus will have no effect on the outcome of the vote on this proposal. Broker non-votes will not count as votes cast on this proposal and will have no effect on the outcome of the vote on this proposal. +Proposal No. 2 : +Ratification of Selection of Accounting Firm +Requires the affirmative vote of a majority of the outstanding shares present virtually or represented by proxy and entitled to vote on the proposal at the Annual Meeting (assuming that a quorum is present). +An "ABSTAIN" vote will be included in the total number of shares present and entitled to vote on this proposal, and will have the same effect as a vote "AGAINST" this proposal. Because a bank, broker, dealer or other nominee may generally vote without instructions on this proposal, we do not expect any broker non-votes to result for this proposal. +Proposal No. 3 : +Advisory Vote on Executive Compensation +Requires the affirmative vote of a majority of the outstanding shares present virtually or represented by proxy and entitled to vote on the proposal at the Annual Meeting (assuming that a quorum is present). +An "ABSTAIN" vote will be included in the total number of shares present and entitled to vote on this proposal, and will have the same effect as a vote "AGAINST" this proposal. Broker non-votes will not count as shares present and entitled to vote on this proposal and will have no effect on the outcome of the vote on this proposal. +(1) An "uncontested election" is an election in which the number of director nominees is not greater than the number of directors to be elected. A "contested election" is an election in which the number of director nominees nominated by (i) our Board, (ii) any stockholder, +3 +Table of Contents +or (iii) a combination of our Board and any stockholder, exceeds the number of directors to be elected. In a contested election, directors will be elected by a plurality of the votes cast by the shares present virtually or represented by proxy and entitled to vote on the election of directors at the Annual Meeting. +(2) You may vote to "WITHHOLD" authority for one or more director nominees and may "ABSTAIN" from voting on one or more of the other proposals described in this Proxy Statement. Shares for which authority is withheld or that a stockholder abstains from voting will be counted for purposes of determining whether a quorum is present at the Annual Meeting. +(3) Pursuant to applicable NYSE rules, if you are a beneficial owner of shares held in street name and do not provide the nominee that holds your shares with specific voting instructions, the nominee may generally vote in its discretion on “routine” matters (such as Proposal No. 2). However, if the nominee that holds your shares does not receive instructions from you on how to vote your shares on a “non-routine” matter (such as Proposal Nos. 1 and 3), it will be unable to vote your shares on that matter. When this occurs, it is generally referred to as a “broker non-vote.” Broker non-votes will be counted for purposes of determining whether a quorum is present at the Annual Meeting. +Q: What happens if a director nominee fails to receive a majority vote in an uncontested election at the Annual Meeting? +A: Each incumbent director standing for reelection at the Annual Meeting has tendered an irrevocable letter of resignation, effective upon such incumbent director not receiving a majority vote at the Annual Meeting and acceptance of such resignation by our Board. Our Board must accept or reject such resignation within 90 days following certification of the stockholder vote in accordance with the procedures established by our Amended and Restated Bylaws, or our Bylaws. If a director’s resignation offer is not accepted by our Board, that director will continue to serve until our annual meeting of stockholders to be held in 2023 or his or her successor is duly elected and qualified, or until such director’s earlier death, resignation, or removal. +Any director nominee who is not an incumbent director and who fails to receive a majority vote in an uncontested election will not be elected as a director, and a vacancy will be left on our Board. Our Board, in its sole discretion, may either fill a vacancy resulting from a director nominee not receiving a majority vote pursuant to our Bylaws or decrease the size of our Board to eliminate the vacancy. All director nominees are incumbent directors standing for reelection at the Annual Meeting. +Q: Could other matters be decided at the Annual Meeting? +A: As of the date of this Proxy Statement, we are not aware of any business to be presented for consideration at the Annual Meeting other than the matters described in this Proxy Statement. If, however, other matters are properly presented at the Annual Meeting, the persons named as proxies will vote in accordance with their discretion with respect to those matters. +Q: How can I vote my shares? +A: Your shares can be voted as follows: +• Holders of Record - Holders of record can vote by proxy or by attending the Annual Meeting where votes can be submitted electronically via live webcast. If you wish to vote by proxy, you can vote by Internet, telephone, or mail as described below. Whether or not you plan to attend the Annual Meeting, we encourage you to submit your proxy or voting instruction as soon as possible to ensure your representation at the Annual Meeting. +VOTING METHOD +To vote at the Annual Meeting by live webcast you must visit the following website: +www.virtualshareholdermeeting.com/DECK2022. You will need the 16-digit control number included on the Notice or your proxy card (if you requested to receive printed proxy materials). The method you use to vote by proxy will not limit your right to attend or vote at the Annual Meeting. All shares that have been properly voted and not revoked will be voted at the Annual Meeting. However, even if you plan to attend the Annual Meeting, we recommend that you vote your shares in advance so that your vote will be counted if you later decide not to attend the Annual Meeting. +To vote by Internet , you will need the 16-digit control number included on the Notice or your proxy card (if you requested to receive printed proxy materials). Internet voting is available 24 hours a day and will be accessible until 11:59 p.m. Eastern Time on Sunday, September 11, 2022 by visiting www.proxyvote.com and following the instructions. +To vote by telephone , you will need the 16-digit control number included on the Notice or on your proxy card (if you requested to receive printed proxy materials). Telephone voting is available 24 hours a day and will be accessible until 11:59 p.m. Eastern Time on Sunday, September 11, 2022 by calling 1-800-690-6903 and following the instructions. +To vote by mail, follow the instructions provided on your proxy card (if you requested to receive printed proxy materials). Simply mark, sign and date your proxy card and return it promptly in the postage-paid envelope provided. In order to be effective, completed proxy cards must be received by 11:59 p.m. Eastern Time on Sunday, September 11, 2022. This option is only available if you requested to receive printed proxy materials. +4 +Table of Contents +• Beneficial Owners - If you are the beneficial owner of your shares, you should have received the Notice or a proxy card (if you requested to receive printed proxy materials) with this Proxy Statement from your nominee rather than from us. Simply (i) use the 16-digit control number to vote on the Internet or by telephone before the Annual Meeting, or vote at the Annual Meeting, or (ii) if you requested to receive printed proxy materials, vote by following the instructions provided on the proxy card you received from your nominee's website. Your 16-digit control number may be included in the voting instruction form that accompanied the proxy materials. If your nominee did not provide you with a 16-digit control number, you may be able to log onto your nominee prior to the start of the Annual Meeting to access the Annual Meeting link and obtain your 16-digit control number. To vote at the Annual Meeting, you must first obtain a valid "legal proxy" from your nominee. Follow the instructions from your nominee to request a "legal proxy." +Q: What can I do if I change my mind after I vote my shares? +A: You may change your vote at any time before the polls are closed at the Annual Meeting. +• Holders of Record - If you are a holder of record, you may change your vote by (i) providing written notice of revocation to Deckers Outdoor Corporation, 250 Coromar Drive, Goleta, California 93117, Attention: Corporate Secretary, (ii) executing a subsequent proxy using any of the voting methods discussed above (subject to the deadlines for voting with respect to each method), or (iii) attending the Annual Meeting and voting electronically via live webcast. However, simply attending the Annual Meeting will not, by itself, revoke your proxy. +• Beneficial Owners - If you are a beneficial owner of your shares and you have instructed your nominee to vote your shares, you may change your vote by following the directions received from your nominee to change those voting instructions, or by attending the Annual meeting and voting via live webcast, which can be accomplished as described above. +Subject to any revocation, all shares represented by properly executed proxies will be voted in accordance with the instructions on the applicable proxy, or, if no instructions are given, in accordance with the recommendations of our Board of Directors as described above. +Q: Who is paying for the cost of this proxy solicitation? +A: The solicitation of proxies is made on behalf of our Board and all the expenses of soliciting proxies from stockholders will be borne by us. In addition to the solicitation of proxies by use of the mail, our directors, officers, and employees may communicate with stockholders personally or by email, telephone, or otherwise for the purpose of soliciting such proxies. No additional compensation will be paid to any such persons for such solicitation, although we may reimburse them for reasonable out-of-pocket expenses incurred in connection with such solicitation. We will reimburse banks, brokers, dealers and other nominees for their reasonable out-of-pocket expenses in forwarding solicitation material to beneficial owners of shares held of record by such persons. The total estimated cost of the solicitation of proxies is approximately $140,000. +Q: How may I obtain an additional copy of the proxy materials? How may I reduce the number of copies our household receives? +A: We have adopted a procedure called "householding," which the SEC has approved. Under this procedure, we are delivering a single copy of the Notice and, if applicable, this Proxy Statement and the Annual Report, to multiple stockholders who share the same address unless we have received contrary instructions from one or more of the stockholders. This procedure reduces our printing and mailing costs. Stockholders who participate in householding will continue to be able to access and receive separate proxy materials. Upon written or oral request, we will promptly deliver a separate copy of the Notice and, if applicable, this Proxy Statement and the Annual Report, to any stockholder at a shared address to which we delivered a single copy of any of these documents. To receive a separate copy of the Notice and, if applicable, this Proxy Statement or the Annual Report, or if you wish to receive separate copies in the future, please contact: Deckers Outdoor Corporation, 250 Coromar Drive, Goleta, California 93117, Attention: Corporate Secretary, Telephone: (805) 967-7611. +In addition, if you are currently a stockholder sharing an address with another stockholder and wish to receive only one copy of future proxy materials for your household, please contact us using the contact information set forth above. Stockholders who are beneficial owners of shares held in street name may contact their bank, broker, dealer or other nominee to request information about householding. +Q: Where can I find the voting results of the Annual Meeting? +A: We will announce preliminary voting results with respect to each proposal at the Annual Meeting. In accordance with SEC rules, final voting results will be published in a Current Report on Form 8-K within four business days following the Annual Meeting, unless final results are not known at that time, in which case preliminary voting results will be published within four business days of the Annual Meeting and final voting results will be published once we know them. +5 +Table of Contents +Q : Where else can I find these proxy materials? +A: This Proxy Statement and the Annual Report are available under "SEC Filings" at ir.deckers.com. Other information contained on or accessed through our website does not constitute part of this Proxy Statement and you should not consider this other information in deciding how to vote your shares. References to our website address in this Proxy Statement are inactive textual references only. +Q: Whom should I contact with other questions? +A: If you have additional questions about this Proxy Statement or the Annual Meeting, or if you would like additional copies of this Proxy Statement, please contact: Deckers Outdoor Corporation, 250 Coromar Drive, Goleta, California 93117, Attention: Corporate Secretary, Telephone: (805) 967-7611. +6 +Table of Contents +PROPOSAL NO. 1 +ELECTION OF DIRECTORS +Board Characteristics +The Corporate Governance Committee considers many factors when identifying director nominees, including diversity with respect to personal characteristics (such as race, gender, and sexual orientation), as well as diversity in experience and skills. Our commitment to diversity and inclusion is reflected in our Board. Directors with diverse backgrounds and skills create a Board that best serves our Company, stockholders, employees, and communities by maximizing group dynamics in terms of range of professional experiences, education, thought, and personal characteristics. We value the mix of viewpoints provided by our directors with various levels of tenure, from those with a deep understanding of our business to those with fresh perspectives. +A snapshot of certain characteristic of our ten director nominees is depicted in the charts below . +BOARD DIVERSITY AND TENURE +Board Committees Chaired by Women Age Distribution Significant Board Refreshment +67% +51-66 +60 +(Average Age of Director Nominees) +5 +(New Directors Over Past 5 years) +Board Chairman Succession Committee Chair Succession +October 2019 +Michael F. Devine, III +Appointed Chairman of the Board +October 2019 +Cynthia (Cindy) L. Davis, +Appointed Talent & Compensation Committee Chair +Lauri M. Shanahan, +Appointed Corporate Governance Committee Chair +June 2020 +Juan R. Figuereo, +Appointed Audit & Risk Management Committee Chair +September 2021 +Bonita C. Stewart, +Appointed Corporate Governance Committee Chair +Board Structure +Our Amended and Restated Bylaws, or our Bylaws, provide for the annual election of directors, and also provide that our Board will consist of not less than one nor more than ten members. The specific number of directors within this range is established by our Board. Our Board has adopted a resolution setting the number of members at ten. +7 +Table of Contents +At the Annual Meeting, our stockholders will be asked to elect ten directors to serve until the next annual meeting of stockholders to be held in 2023, or until their successors are duly elected and qualified. The names and certain information concerning the persons nominated by our Board to stand for election as directors at the Annual Meeting are set forth in the section of this Proxy Statement titled “ Director Nominees ” below. +If all director nominees are elected, then, immediately following the Annual Meeting, our Board will consist of ten members, and nine out of ten members of our Board, as well as each member of the Board's standing committees, will be “independent directors” under applicable SEC and New York Stock Exchange, or NYSE, rules. +No Agreements or Family Relationships with Directors +No arrangement or understanding exists between any of our directors, director nominees, or executive officers and any other person pursuant to which any of them were selected as our director, director nominee, or executive officer. +There are no family relationships among any of our directors, director nominees or executive officers. +No Legal Proceedings +There are no legal proceedings related to any of our directors, director nominees, or executive officers which are required to be disclosed pursuant to applicable SEC rules. +Director Nominations +The Corporate Governance Committee is responsible for identifying and evaluating nominees for election to our Board. In addition to the candidates proposed by our Board or identified by the Corporate Governance Committee, the Committee considers candidates for director proposed by stockholders, provided such recommendations are made in accordance with the procedures set forth in our Bylaws. Stockholder nominations that meet the criteria outlined below will receive the same consideration as nominations made by the Corporate Governance Committee. +Director Qualifications +Directors are responsible for overseeing and monitoring our business consistent with their fiduciary duties to our stockholders. This significant responsibility requires highly skilled individuals with various qualities, attributes, and professional experience. Our Board believes there are both general requirements for eligibility to serve as a member of our Board that are applicable to all directors, and other specialized characteristics that should be represented on our Board as a whole, but not necessarily by each director. +Qualifications for All Directors +Essential criteria for all director candidates considered by the Corporate Governance Committee include the following: +• Personal and professional integrity; +• Good business judgment; +• Relevant experience and skills; +• Ability to effectively serve the long-term interests of our stockholders; and +• Commitment to devoting sufficient time and energy to diligently performing duties as a director. +Board Diversity +Per its charter, the Corporate Governance Committee considers many factors when identifying director nominees, including diversity with respect to personal characteristics (such as race, gender, and sexual orientation), as well as diversity in the experience and skills that contribute to our Board's performance of its responsibilities in the oversight of our business. +Specific Qualifications and Skills Represented on Our Board +The Corporate Governance Committee believes the competencies we seek in our directors should support our strategies for long-term success. Below we identify the key qualifications and skills our directors collectively bring to our Board that we believe are important in light of our business and strategic objectives. The particular qualifications and skills that our Board considered in nominating each individual director nominee are included in the directors’ individual biographies below, and are also summarized in a chart following the biographical section. +8 +Table of Contents +DIRECTOR NOMINEES +Our Board of Directors has nominated the following ten directors for election at the Annual Meeting. Important summary information about the director nominees is set forth in the table below, including the committee composition that we anticipate will be effective as of the date of the Annual Meeting, subject to the reelection of each of the director nominees. Following the table is certain biographical information about each director nominee, as well as selected information about the specific qualifications, attributes, skills, and experience that led our Board to conclude that each director nominee is qualified to serve on our Board. For information regarding committee composition as of the date of this Proxy Statement, please refer to the section titled " Corporate Governance--Board Committees ." +Committees as of the Date of the Annual Meeting +Name, +Primary Occupation Age Director +Since Independent Number of Other Public Company Directorships AR TC CG +Michael F. Devine, III +Corporate Director +Chairman of our Board of Directors +63 2011 YES 2 +David A. Burwick +President, Chief Executive Officer, Board Member, Boston Beer Company +60 2021 YES 1 l +Nelson C. Chan +Private Investor, Entrepreneur and Corporate Director +61 2014 YES 2 l l +Cynthia (Cindy) L. Davis +Corporate Director +60 2018 YES 2 ª +l +Juan R. Figuereo +Corporate Director +66 2020 YES 2 ª +Maha S. Ibrahim +General Partner, Canaan Partners +51 2021 YES None l +Victor Luis +Corporate Director +55 2020 YES 1 l +Dave Powers +Chief Executive Officer and President +56 2016 NO 1 +Lauri M. Shanahan +Corporate Director +59 2011 YES 3 l l +Bonita C. Stewart +Board Partner, Gradient Ventures +65 2014 YES 1 l ª +ª Committee Chair +AR: Audit & Risk Management Committee, TC: Talent & Compensation Committee, CG: Corporate Governance Committee +MICHAEL F. DEVINE, III +Age: 63 +Director Since: 2011 +Chairman of our Board +Public Company Directorships: +Express, Inc. (NYSE: EXPR) +FIVE Below, Inc. (NYSE: FIVE) +Mr. Devine currently serves as a director and member of the audit committee of Express, Inc. (NYSE: EXPR) and director and member of the audit committee and chair of the compensation committee at FIVE Below, Inc. (Nasdaq: FIVE). Mr. Devine retired as executive vice president and chief financial officer of Coach, Inc. in 2011. He served as a member of the board of Sur La Table, Inc. and was previously a member of the board of directors of The Talbots Inc. From 2004 to 2007, Mr. Devine served as a member of the board of directors and chair of the audit committee of Educate, Inc., a leading K-12 education service company with solutions such as Sylvan Learning Center. Mr. Devine also previously served as a director and member of the audit committee of NutriSystem, Inc. (Nasdaq: NTRI). +9 +Table of Contents +Selected Qualifications and Skills +• High Level of Financial Literacy - In addition to experience as the current and former member and chair of four audit committees and experience at Coach, Inc., served as chief financial officer and vice president-finance of Mothers Work, Inc., a maternity apparel retailer that was previously listed on Nasdaq, from February 2000 to November 2001. From 1997 to 2000, was chief financial officer of Strategic Distribution, Inc. (Nasdaq: STRD), a Nasdaq-listed industrial store operator. From 1995 to 1997, was chief financial officer at Industrial System Associates, Inc., and for the prior six years was the director of finance and distribution for McMaster-Carr Supply Company. Holds a B.S. in Finance and Marketing from Boston College and an M.B.A. in Finance from the Wharton School of the University of Pennsylvania. +• Public Company Executive - Experience at Coach, Inc. involved in managing a public company during a period of high growth. Serves as a corporate director and chair of the audit committees of Express, Inc. and FIVE Below, Inc. +• Compliance and Risk Oversight - 16 years of experience as a corporate director with risk oversight responsibilities. +• Premium Branding - Coach, Inc. is a leading marketer of modern classic American accessories. +• International - Involved in a global brand with worldwide operations while at Coach, Inc. +• Industry - In addition to experience at Coach, Inc., serves as a director of Express, Inc., a nationally recognized specialty apparel and accessory retailer offering women’s and men’s merchandise. +• Supply Chain Management and Retail - Involved in supply chain and wholesale and retail distribution channels while at Coach, Inc. +DAVID A. BURWICK +Age: 60 +Director Since: 2021 +Board Committees: +Talent & Compensation +Public Company Directorships : +The Boston Beer Company, Inc. (NYSE: SAM) +Mr. Burwick has served on the board of directors of The Boston Beer Company, Inc. (NYSE: SAM) since May 2005 and was appointed as its president and chief executive officer in April 2018. Prior to April 2018, Mr. Burwick served as president and chief executive officer of Peet's Coffee & Tea, Inc., since December 2012. From April 2010 to December 2012, Mr. Burwick served as president, North America of WW International, Inc., formerly Weight Watchers International, Inc. Prior to that, Mr. Burwick held numerous positions with PepsiCo, Inc., including chief marketing officer, PepsiCo Americas Beverages from August 2008 to August 2009; executive vice president, Marketing, Sales and R&D, PepsiCo International from April 2008 to July 2008; President, Pepsi-QTG Canada from January 2006 to March 2008; chief marketing officer, Pepsi-Cola North America from June 2002 to December 2005; and various marketing roles from 1989 to 2002. Mr. Burwick has extensive experience leading consumer products organizations. During Mr. Burwick's tenure as a director of The Boston Beer Company, Inc., he has served as chair and as a member of its compensation committee, and as chair and as a member of the nominating/governance committee. +• Premium Branding - Experience as an executive at Peet's Coffee & Tea, Inc., PepsiCo. Inc. and The Boston Beer Company, Inc. +• Public Company Executive - Extensive experience with several leading public and private companies, both as an executive and as a director. +• Sales and Marketing - Held key marketing and sales positions with PepsiCo. Inc., including chief marketing officer. +• Human Resources - Held executive positions with leading companies and is a member of the compensation committee and nominating/governance committee of The Boston Beer Company, Inc. +• Retail - Previously served as president and chief executive officer at Peet's Coffee & Tea, Inc., WW International, Inc. and PepsiCo, Inc. +10 +Table of Contents +NELSON C. CHAN +Age: 61 +Director Since: 2014 +Board Committees: +Audit & Risk Management +Public Company Directorships: +Synaptics, Inc. (Nasdaq: SYNA) +Twist Bioscience Corporation (Nasdaq: TWST) +Mr. Chan is a private investor and entrepreneur. Mr. Chan is a director and member of the nominating and corporate governance committee of Twist Bioscience Corporation (Nasdaq: TWST), as well as chairman of the board and member of the audit committee and nominations and corporate governance committee of Synaptics, Inc. (Nasdaq: SYNA). He was chairman of the board, chair of the compensation committee, member of the audit committee and member of the nominating and corporate governance committee of Adesto Technologies Corporation (Nasdaq: IOTS).. From 2016 to 2019, Mr. Chan served as a director and member of the compensation and nominating and governance committees of Socket Mobile, Inc. (Nasdaq: SCKT). From 2006 to 2008, he served as chief executive officer of Magellan Corporation, and from 1992 to 2006, he served in various management positions with SanDisk Corporation. Mr. Chan is also a director of several privately held companies. +Selected Qualifications and Skills +• Entrepreneurial - Expertise in building technology companies. +• High Level of Financial Literacy - Has held numerous senior management positions with leading companies, including chief executive officer at Magellan Corporation. +• Public Company Executive - Extensive experience with several leading public and private companies, both as an executive and as a director. +• Sales and Marketing - Held key sales, marketing and engineering positions at SanDisk Corporation, Chips and Technologies, Signetics and Delco Electronics. +• International - Was the executive vice president and general manager of consumer business at SanDisk Corporation, a global multi-billion dollar company. +• Compliance and Risk Oversight - Currently serves as a member of our Audit & Risk Management Committee and has over 13 years of experience as a corporate director with risk oversight responsibilities. +• Technology Infrastructure and Cybersecurity - Extensive experience in technology-based companies including sales, marketing and engineering. +CYNTHIA (CINDY) L. DAVIS +Age: 60 +Director Since: 2018 +Board Committees: +Talent & Compensation ( Chair ) +Corporate Governance +Public Company Directorships: +Kennametal Inc. (NYSE: KMT) +Brinker International, Inc. (NYSE: EAT) +Ms. Davis currently serves as a member of the board of directors and is the chair of the compensation and human capital committee and member of the nominating and governance committee of Kennametal Inc. (NYSE: KMT), a global supplier of tooling, engineering components. In January 2019, she joined the board of directors and currently chairs the governance committee and is a member of the compensation committee of Brinker International, Inc. (NYSE: EAT). Prior to 2019, Ms. Davis served as a member of the board of directors, as chair of the compensation committee and on the governance committee of Buffalo Wild Wings, Inc. (Nasdaq: BWLD), a casual dining restaurant and sports bar chain, from 2015 to 2018. Ms. Davis served as vice president of Nike, Inc. (NYSE: NKE) and president of Nike Golf at Nike, Inc. from 2008 to 2014, and as U.S. general manager at Nike Golf from 2005 to 2008. Prior to Nike, Inc., Ms. Davis served as senior vice president of golf sponsorships, sports marketing and new media at Golf Channel, a subsidiary of Comcast Corporation (Nasdaq: CMCSA), from 2001 to 2004. She is a Trustee for the Board of Trustees at Furman University. +11 +Table of Contents +Selected Qualifications and Skills +• Premium Branding - Experience as vice president of Nike, Inc. and president of Nike Golf at Nike, Inc., a company engaged in the design, development, manufacturing, and worldwide marketing and sales of footwear, apparel, equipment, accessories, and services. +• Sales and Marketing; Retail - In addition to leading the division’s sales, marketing, and strategy while serving as senior vice president of golf sponsorships, sports marketing and new media at Golf Channel, led the $800 million global golf business for Nike, Inc. +• High Level of Financial Literacy - Served on the audit committee of Kennametal Inc. Holds an M.B.A. in Marketing and Finance from the University of Maryland College Park. Oversaw the profit and loss of a separate operating unit within Nike, Inc. +• International - Involved in global brands with worldwide operations while at Nike, Inc. and Kennametal Inc. +• Public Company Executive - Held various executive management positions at Nike, Inc. and Golf Channel, currently serves as a director of Kennametal Inc. and Brinker International, Inc., and previously served as a director and chair of the compensation committee of Buffalo Wild Wings, Inc. +• Industry - Extensive experience in the footwear, apparel and equipment industries through various positions at Nike, Inc. +• Compliance and Risk Oversight - In addition to leadership roles at Nike, Inc., served as a corporate director on the audit committee and serves on the compensation and nominating and corporate governance committees of Kennametal, Inc., and serves on the board of directors, as well as the compensation and corporate governance committees, of Brinker International, Inc. Previously served as chair of the compensation committee and on the governance committee of Buffalo Wild Wings. +• Technology Infrastructure and Cybersecurity - Serves as a director and chair of the compensation and human capital committee and member of the nominating and governance committee of Kennametal Inc., a technology-based company. +JUAN R. FIGUEREO +Age: 66 +Director Since: 2020 +Board Committees: +Audit & Risk Management ( Chair ) +Public Company Directorships: +Western Alliance Bancorporation (NYSE: WAL) +Diversey, Inc. (Nasdaq: DSEY) +Mr. Figuereo currently serves as a director and member of the finance and investment committee and chair of the audit committee of Western Alliance Bancorporation (NYSE: WAL). In April 2021, he joined the board of directors and currently serves as chair of the audit committee and member of the nominating and corporate governance committee of Diversey, Inc. (Nasdaq: DSEY). Mr. Figuereo served as the executive vice president and chief financial officer of Revlon (NYSE: REV), a manufacturer and marketer of beauty and personal care products, from 2016 to 2017. From 2012 to 2015, he served as executive vice president and chief financial officer of NII Holdings, Inc. (NASDAQ: NIHD), a wireless communication services provider under the Nextel brand. NII Holdings, Inc. filed for bankruptcy protection in New York, New York on September 15, 2014. From 2009 to 2012, Mr. Figuereo served as executive vice president and chief financial officer of Newell Brands (NYSE: NWL), a global marketer of consumer and commercial products, and from 2007 to 2009 he served as executive vice president and chief financial officer of Cott Corporation (NYSE: PRMW). Mr. Figuereo has also served in senior management positions at Walmart, Inc. (NYSE: WMT) and PepsiCo, Inc. (Nasdaq: PEP). Mr. Figuereo served as a director and chair of the audit committee at PVH Corp. (NYSE: PVH), a leading apparel company with iconic brands such as Calvin Klein and Tommy Hilfiger in its portfolio. Mr. Figuereo is a venture partner with Ocean Azul Partners, LLC, an early stage investments fund based in South Florida. He is a member of the National Association of Corporate Directors and of the Florida Institute of CPAs. +Selected Qualifications and Skills +• Public Company Executive - Previously served as chief financial officer of several public companies with global footprints, including Revlon and Newell Brands, and held executive leadership roles at Walmart, Inc. and PepsiCo, Inc. +12 +Table of Contents +• High Level of Financial Literacy - Served as chief financial officer of several public companies and as chair of the audit committee of PVH Corp. Serves as the chair of the audit committee of Western Alliance Bancorporation and Diversey Inc. In addition, he serves as a member of the Audit & Risk Management Committee of our Company. Holds a B.B.A. from Florida International University, and previously worked for eight years as a certified public accountant. +• International - Significant executive leadership experience supporting global brands with worldwide operations. +• Supply Chain Management - Extensive experience in worldwide supply chain operations while in management roles for global companies. +• Sales and Marketing; Retail - Served as executive vice president of several global marketers, including Revlon and Newell Brands, and held senior management positions at Walmart, Inc. and PepsiCo, Inc. +• Mergers and Acquisitions - Previously served as the vice president in charge of mergers and acquisitions at Walmart, Inc. +MAHA S. IBRAHIM +Age: 51 +Director Since: 2021 +Board Committees: +Audit & Risk Management +Public Company Directorships: +None +Ms. Ibrahim is currently a general partner of Canaan Partners, an early stage venture capital firm, where she has worked since March 2000. Prior to joining Canaan Partners, from 1998 to 2000 she served as vice president of e-business at Qwest Communications, where she architected the company’s e-business strategy and spearheaded the redesign of Qwest.com, and previously served as Qwest Communication’s vice president of business development. From 2012 through 2020, Ms. Ibrahim served as a member of the board of directors of The RealReal, Inc. (Nasdaq: REAL), an online brick-and-mortar marketplace for authenticated luxury consignment, providing leadership to the company through its 2019 initial public offering. Ms. Ibrahim currently serves on the boards of directors of a number of private innovative enterprise and consumer companies. Further, she has served as a trustee for the Carnegie Endowment for International Peace, a foreign policy think tank, since 2017. +Selected Qualifications and Skills +• Industry - Extensive experience in the apparel industry through her experience on the board of The RealReal, Inc. +• Premium Branding - Premium branding experience in the luxury consignment business during her time as a director of RealReal, Inc. +• Consumer Technology/Big Data - Served as vice president of e-business at Qwest Communications. +• Sales and Marketing; Retail - Served as vice president of business development at Qwest Communications. +• Technology Infrastructure and Cybersecurity - Extensive experience in wireless and telecommunications industries. +• Mergers and Acquisitions – Experience with mergers and acquisitions while serving as general partner of Canaan Partners. +• Corporate Responsibility - Served on the board of The RealReal, Inc. a sustainable luxury company that promotes the re-circulation of products across the multi-billion dollar fashion industry and experience serving on the board of a private luxury brand company that has implemented a sustainability program and related initiatives. +VICTOR LUIS +Age: 55 +Director Since: 2020 +Board Committees: +Talent & Compensation +Public Company Directorships: +FarFetch (NYSE: FTCH) +13 +Table of Contents +Mr. Luis joined the board of directors of FarFetch Limited (NYSE: FTCH) in August 2020 and currently serves on the audit committee and as chair of the nominating and corporate governance committee. He served as the chief executive officer and on the board of directors of Tapestry, Inc. (formerly known as Coach, Inc.) (NYSE: TPR) from 2014 to 2019, where he led the company’s transformation into Tapestry Inc., a New York-based house of modern luxury brands including Coach, Kate Spade and Stuart Weitzman. Mr. Luis joined Coach, Inc. in 2006 as president and chief executive officer of Coach Japan. He rapidly assumed additional leadership responsibilities across Asia and Europe, becoming chief commercial officer of Coach, Inc. in 2013 and chief executive officer in 2014. Prior to joining Coach, Inc., from 2002 to 2006, Mr. Luis was president and chief executive officer of Baccarat, Inc., where he ran the North American operation of the French luxury brand. Mr. Luis joined the Moët-Hennessy Louis Vuitton Group in 1995, ultimately advancing to president and chief executive officer of its subsidiary, Givenchy, Japan Incorporated, before leaving in 2002. +Selected Qualifications and Skills +• International - Significant experience in managing multi-national teams while at Coach, Inc. and Moët-Hennessy Louis Vuitton Group. +• Retail - Previously served as chief executive officer of several global luxury retailers. +• Premium Branding - Premium global branding experience spanning over two decades as chief executive officer of Tapestry, Inc., overseeing its modern luxury brands, and as chief executive officer of Baccarat, Inc. and Givenchy, Japan Incorporated. +• Industry - Experience in footwear, apparel and accessories while on the board of Tapestry, Inc. with the brands Coach, Kate Spade and Stuart Weitzman. +• Public Company Executive - Executive management experience, including service as chief executive officer of publicly traded companies. +DAVE POWERS +Age: 56 +Director Since: 2016 +Chief Executive Officer and President +Public Company Directorships: +Solo Brands, Inc. (NYSE: DTC) +Mr. Powers became our Chief Executive Officer in June 2016 and joined our Board at that time. Mr. Powers joined our Company as President of Direct-to-Consumer in August 2012. He was appointed President of Omni-Channel in January 2014 and was appointed President in March 2015. Prior to joining our Company, Mr. Powers held several executive leadership roles at Converse Inc. (a subsidiary of Nike, Inc.), Timberland LLC and Gap Inc. (NYSE: GPS). In May 2022, he joined the board of directors and currently serves on the audit committee of Solo Brands, Inc. (NYSE: DTC). +Selected Qualifications and Skills +• Industry - Extensive experience in the footwear and apparel industry through a variety of positions at three different footwear companies and a global apparel retailer. +• Supply Chain Management; Retail - While at Converse Inc., was responsible for global owned and distributor Direct-to-Consumer operations as part of the Nike, Inc. retail leadership team. During tenure at Timberland LLC and Gap Inc., held leadership roles with a variety of retail responsibilities from merchandising to store design. +• Sales and Marketing - Graduated cum laude from Northeastern University with a B.S. in Marketing. Throughout his career, has been responsible for the development of marketing strategy, with a focus on consumer engagement and digital marketing. While President of Brands of our Company, led the Omni-Channel organization, elevating and advancing the Omni-Channel platform. +• International - While serving in leadership roles at Timberland LLC, led worldwide retail merchandising, marketing, visual and store design, and oversaw European retail operations. +• Public Company Executive - Serves as our Chief Executive Officer and President with global responsibilities and oversight. Other leadership roles have been with public companies. +14 +Table of Contents +LAURI M. SHANAHAN +Age: 59 +Director Since: 2011 +Board Committees: +Corporate Governance +Audit & Risk Management +Public Company Directorships: +Cedar Fair Entertainment Company (NYSE: FUN) +Treasury Wine Estates Limited (ASX: TWE) +G Squared Ascend I Inc. (NYSE: GSQD.UT) +Ms. Shanahan has over 25 years of senior-level experience in retail, consumer products and hospitality, ranging from global, multi-channel, multi-brand enterprises to small and mid-cap growth companies. She currently serves on the board of directors and as a member of the nominating and governance committee of Cedar Fair Entertainment Company (NYSE: FUN), which owns and operates resorts, amusement parks and other immersive sports and entertainment venues, and on the board of directors, and chair of the human resources committee of Treasury Wine Estates Limited (ASX: TWE), a vertically integrated global wine business with over 70 brands. Ms. Shanahan currently serves as a director and chair of the audit committee, compensation committee, and nominating and corporate governance committees of G Squared Ascend I Inc. (NYSE: GSQD.UT), a special purpose acquisition company focused within the technology sector. Ms. Shanahan joined Gap Inc. in 1992 and served in numerous leadership roles, including chief administrative officer and chief legal officer, during her 16-year career with the company. Since then, she has served as a principal of Maroon Peak Advisors, a consumer products and retail consulting firm. +Selected Qualifications and Skills +• Public Company Executive - Joined Gap Inc. in 1992 and served for 16 years in numerous leadership roles including chief administrative officer, chief legal officer and corporate secretary and chairman of the foundation board. Gap Inc. is a leading global specialty retailer offering clothing, footwear, accessories, and personal care products for men, women, children, and babies under the Gap, Banana Republic, Old Navy, and Athleta brands. +• International - Directly involved in global brand development, supply chain and worldwide operations while at Gap Inc. and as a director and consultant. +• Supply Chain Management and Retail - Involved in retail, franchise, online licensing and other distribution channels, as well as sourcing and supply chain, while at Gap Inc. and as a consultant. +• Sales and Marketing - Acquired sales and marketing experience throughout her career at Gap Inc. and as director and consultant. +• Industry - Experience in footwear, apparel and accessories at Gap Inc., Charlotte Russe Holdings, Inc. and through consulting firm. +• Premium Branding - Premium and luxury branding experience at Gap Inc., through serving on the board of Treasury Wine Estates Limited and through retail consulting firm. +• Compliance and Risk Oversight - In addition to other leadership roles at Gap Inc., served as chief compliance officer and chief legal officer, overseeing the global corporate risk committee, as well as the global governance and compliance organization. +• Corporate Responsibility - While at Gap Inc., led development and oversight of global strategy, organization and execution of comprehensive social and environmental programs involving product development, supply chain, stakeholder engagement and employee and consumer-facing initiatives. Was president of Gap Inc. Foundation and also led government affairs and public policy. +BONITA C. STEWART +Age: 65 +Director Since: 2014 +Board Committees: +Corporate Governance (Chair) +Talent & Compensation +Public Company Directorships: +PagerDuty, Inc. (NYSE: PD) +Volta Charging (NYSE: VLTA) +15 +Table of Contents +Ms. Stewart is currently a Board Partner at Gradient Ventures, Google's early-stage venture fund focused on artificial intelligence. She has been driving digital transformation at scale across multiple industries throughout her career. Prior to Gradient Ventures, Ms. Stewart served in various executive roles at Google, Inc. (Nasdaq: GOOG, GOOGL), a subsidiary of Alphabet Inc., including as Vice President, Global Partnerships where she led partner management for the largest U.S. publishers across search, news, commerce, media and entertainment, telecommunications and mobile applications. In January 2021 she joined the board of directors and serves as a member of the audit committee and nominating and corporate governance committees for PagerDuty (NYSE: PD), a digital operations management company. In February 2021, Ms. Stewart joined the board of directors and serves as a member of the compensation committee and nominating and corporate governance committee for Volta Industries, Inc. (NYSE: VLTA). Ms. Stewart served as a corporate director for Pluralsight, Inc. (Nasdaq: PS), from 2018 to 2021. From 2002 to 2006 she worked for DaimlerChrysler AG (now Daimler AG) as director of Chrysler Brand Advertising and the director of Chrysler Group’s first Interactive Communications team. Ms. Stewart began her career in 1979 at IBM Corporation (NYSE: IBM) where she served in various financial and marketing management positions. She is the co-author of A Blessing: Women of Color Teaming Up to Lead, Empower and Thrive and the 2019-2020 Women of Color in Business Cross-Generational Survey. +Selected Qualifications and Skills +• Industry - Over 29 years of experience in brand management, digital strategy, and execution. +• High Level of Financial Literacy - Lead strategy, business development and revenue growth plans for Google Inc.'s largest publisher partnerships. Holds an M.B.A. from Harvard Business School. +• Consumer Technology/Big Data - Extensive experience in digital transformation, and data driven digital strategies across multiple industries. +• Entrepreneurial - Served as president, chief operating officer, and co-founder of Nia Enterprises, LLC, a web-based company, and founder and chief executive officer of One Moment in Time, a women's formal-wear rental company. +• Sales and Marketing - Acquired sales, marketing, product distribution and online advertising experience. +• International - Led publisher partnerships for Latin America and Canada and has worked for Daimler AG and IBM Corporation, which are multi-billion dollar global companies. +• Public Company Executive - Strategic planning and large-scale operations experience with Google Inc. and IBM Corporation. +• Technology Infrastructure and Cybersecurity - Extensive experience in technology-based companies and fluency in digital transformation including digital strategy, mobile, video, programmatic, online advertising, cloud solutions, analytics and data privacy. +• Corporate Responsibility - Experience with employee resource group executive sponsorship, global hiring and retention processes and racial equity compliance oversight. +Summary of Qualifications and Skills of Directors +As part of our Board evaluation and director selection processes, the Corporate Governance Committee maintains a director skills matrix. When evaluating potential nominees, the Committee and the Board take into account the diversity of experiences and backgrounds represented on our Board. The director skills matrix below summarizes the specific qualifications, attributes, skills and experience of each director nominee that led our Board to conclude that the nominee is qualified to serve on our Board. In fiscal year 2020 we refined the director skills matrix to reflect the qualifications most relevant for our director nominees to support our Company's business and strategic objectives. While each nominee is generally knowledgeable in each of these areas, an “X” in the chart below indicates that the item is a specific qualification, attribute, skill or experience that the director brings to our Board. The lack of an “X” for a particular item does not mean that the director does not possess that qualification, attribute, skill or experience. +16 +Table of Contents +Specific Qualifications, Attributes, Skills and Experience Michael F. +Devine, III David A. Burwick Nelson C. +Chan Cynthia (Cindy) L. Davis Juan R. Figuereo Maha S. Ibrahim Victor +Luis Dave Powers Lauri M. +Shanahan Bonita C. +Stewart +Industry X X X X X X X +Premium Branding X X X X X X X X X +International X X X X X X X X X +High Level of Financial Literacy X X X +Retail X X X X X X X X +Consumer Technology/ Big Data X X X X X +Sales and Marketing X X X X X X X X +Supply Chain Management X X X X +Technology Infrastructure and Cybersecurity X X X X X X +Compliance and Risk Oversight X X X X X X +Corporate Governance X X X X X X X +Mergers and Acquisitions X X X X X X +Public Company Executive X X X X X X X X X +Human Resources and Talent Management X X X X X X X X +Corporate Responsibility X X X +Consent to Serve +Each of the persons named above has consented to being named in this Proxy Statement and to serve as a director if elected, and our Board has no reason to believe that any of the nominees will be unable or unwilling to serve as a director. If, however, any nominee withdraws or otherwise becomes unavailable to serve, our Board may decrease the size of our Board, or the proxies may be voted for the election of such other person as a director as our Board may recommend in place of the nominee. +Required Vote +Because this is an uncontested election, the election of our director nominees at the Annual Meeting requires the affirmative vote of a majority of the votes cast by the shares present virtually or represented by proxy and entitled to vote on the election of directors at the Annual Meeting (assuming that a quorum is present). A "majority of the votes cast" means the number of shares voted "FOR" a director nominee's election exceeds 50% of the number of votes cast with respect to that director's election. +This proposal is considered a "non-routine" matter under NYSE rules. As a result, a bank, broker, dealer, or other nominee may not vote without instructions on this matter, so there may be broker non-votes in connection with this proposal. Abstentions and broker non-votes are not counted as votes "FOR" or "AGAINST" a director nominee and will have no effect on the election of directors. If no contrary indication is made, returned proxies will be voted "FOR" each of the director nominees, or in the event that any nominee is unable to serve as a director at the time of the election, returned proxies will be voted "FOR" any nominee who is designated by our Board to fill the vacancy. +BOARD RECOMMENDATION +OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE +" FOR " +THE ELECTION OF EACH OF THE TEN DIRECTOR NOMINEES. +17 +Table of Contents +CORPORATE GOVERNANCE +Corporate Governance at Deckers +Corporate governance is managed under the direction of our Board of Directors. Our Board has a long-standing commitment to comprehensive and effective corporate governance practices. Our Board continues to evaluate our governance policies and procedures to ensure that the right mix of individuals is present in our boardroom and to ensure effective oversight of our strategy and management in order to best serve our stockholders. Our Board has adopted Corporate Governance Guidelines that set forth the primary framework of governance principles applicable to our Company, a copy of which is available on our website at ir.deckers.com in the Overview section of the Governance tab. +Corporate Governance Elements +Our Board is committed to maintaining the highest standards of corporate governance and has established a strong framework by which our Company is governed. Key elements of our corporate governance framework include: +OUR POLICY OR PRACTICE DESCRIPTION AND BENEFIT TO OUR STOCKHOLDERS +STOCKHOLDER RIGHTS +Annual Election of Directors • Our directors are elected annually, reinforcing their accountability to our stockholders. We do not employ a classified board structure. +Single Class of Outstanding Voting Stock • Our common stockholders control our Company with equal voting rights. +Majority Voting Standard • We have a majority voting standard for uncontested director elections. +BOARD STRUCTURE +Director Independence +• Based on the director independence requirements set forth in our Corporate Governance Guidelines, as well as under applicable SEC and NYSE rules, our Board has determined that each of our directors, other than Mr. Powers, is an "independent director." +Committee Governance • Our three standing Board Committees: Audit & Risk Management, Talent & Compensation and Corporate Governance, consist exclusively of independent directors and have adopted written charters. Committee composition and charters are reviewed annually by our Board. +Board Leadership and Structure +• Our Corporate Governance Guidelines allow our Board to determine whether to separate or combine the roles of the Chairman and Chief Executive Officer. Currently, Mr. Devine, a member of our Board, serves as our Company's independent Chairman. We believe this is the most appropriate leadership structure for our Company at this time. +Annual Board Self-Evaluations • The Corporate Governance Committee conducts and oversees annual evaluations of our Board, each Board committee and each individual director, to ensure they are effective and continue to serve the best interests of our stockholders. +Board Oversight of Risk • Our Board is generally responsible for risk management activities, but has delegated the oversight of risk management to our Audit & Risk Management Committee. Our full Board regularly engages in discussions of the most significant risks we face and how these risks are managed. +EXECUTIVE COMPENSATION +Annual Say-on-Pay Vote +• Annually, our stockholders have the opportunity to approve, on a non-binding advisory basis, the compensation of our Named Executive Officers, which we sometimes refer to as our Say-on-Pay Vote. This affords our stockholders the ability to provide routine feedback on our compensation program. +Corporate Governance Principles +Pursuant to Delaware law and our Bylaws, our business, property and affairs are managed under the direction of our Board of Directors. Thus, our Board is the ultimate decision-making body of our Company, except with respect to those matters reserved for our stockholders. +Our Board selects our Chief Executive Officer, and works together with our Chief Executive Officer to select our senior management team, which is charged with the day-to-day operation of our business. Members of our Board are kept informed about our business through discussions with our Chief Executive Officer and other senior management personnel, including by attending brand sales meetings and industry events, participating in periodic informal telephonic meetings, and reviewing materials provided to them, as well as by attending formal meetings of our Board and its committees. Having selected the senior +18 +Table of Contents +management team, our Board acts as an adviser and counselor to senior management, monitors its performance and proposes or makes changes to the senior management team when it deems necessary or appropriate. +Board of Directors Meetings +BOARD OF DIRECTORS Meetings in Fiscal Year 2022: 8 +• Each of our directors attended at least 75% of Board meetings and meetings of the Board committees on which he or she served during his or her term. +• Time is scheduled for our independent directors to meet in an executive session at every Board meeting. +• Our Corporate Governance Guidelines state that directors are expected to attend each of our annual meetings of stockholders. All ten members of our Board attended the annual meeting of stockholders held in September 2021. +Director Independence +Our Corporate Governance Guidelines, as well as applicable NYSE rules, require that our Board be comprised of a majority of directors who satisfy the criteria for independence set forth in the NYSE rules. These guidelines help ensure that the interests of our Board and management are aligned with those of our stockholders, that conflicts of interest are avoided, and that we are in compliance with applicable SEC and NYSE rules. An independent director is one who our Board affirmatively determines has no material relationship with our Company (either directly or as a partner, stockholder, or officer of an organization that has a relationship with our Company) and otherwise meets the requirements of the NYSE rules. +Based on the director independence requirements set forth in our Corporate Governance Guidelines, as well as in the applicable NYSE rules, our Board has determined that each of our directors, other than Mr. Powers, is an "independent director." In addition, all members of the Audit & Risk Management Committee, Talent & Compensation Committee, and Corporate Governance Committee meet the independence standards set forth in applicable SEC and NYSE rules. +Board Leadership Structure +Our Corporate Governance Guidelines allow the Board to determine whether to separate or combine the roles of the chairman and chief executive officer. Our Board believes it is important to maintain flexibility in our Board leadership structure, depending on our Board's composition and our business and strategic needs at the time. However, our Board also firmly supports having an "independent director" serve in a Board leadership position at all times. +The roles of the chairman and chief executive officer are separate. Our Board continues to believe that this leadership structure allows our Chief Executive Officer to focus on the day-to-day operation and management of our Company, while allowing our Chairman to focus on leading the Board in overseeing the interests of our Company and stockholders. +Board Committees +Our Board of Directors has three standing committees: the Audit & Risk Management Committee, the Talent & Compensation Committee, and the Corporate Governance Committee. Each member of each of the committees is an "independent director" for purposes of applicable SEC and NYSE rules. Each of our committees has a written charter that describes its purpose, membership, meeting structure, and responsibilities. A copy of each committee's charter is available on our website at ir.deckers.com in the Overview section of the Governance tab . These charters are reviewed annually by each committee, with any recommended changes approved by our Board. The Audit & Risk Management Committee charter was amended in September 2021, and both the Talent & Compensation Committee charter and the Corporate Governance Committee charter were amended in January 2022. +Summary information regarding the membership, meetings, and primary responsibilities of each of the three standing committees of our Board for fiscal year 2022 are listed below: +19 +Table of Contents +AUDIT & RISK MANAGEMENT COMMITTEE Meetings in Fiscal Year 2022: 11 +Current Members: +Juan R. Figuereo ( Chair ) +All members of the Audit & Risk Management Committee meet the independence and experience standards set forth in applicable SEC and NYSE rules. The Chair of the Audit & Risk Management Committee has been determined by our Board to be an "audit committee financial expert" under applicable SEC rules. +Nelson C. Chan +Maha S. Ibrahim +Lauri M. Shanahan +• Oversees management's conduct of, and the integrity of, our financial reporting functions. +• Oversees the qualifications, engagement, compensation, independence and performance of the registered public accounting firm that audits our annual financial statements and reviews our quarterly financial reports. +• Oversees our legal and regulatory compliance. +• Oversees the performance of our internal audit function. +• Oversees the application of our related-person transaction policy as established by our Board. +• Oversees our systems of internal control over financial reporting disclosure controls and procedures.. +• Oversees our risk management policies. +• Oversees the application of our Code of Ethics as established by our Board. +TALENT & COMPENSATION COMMITTEE Meetings in Fiscal Year 2022: 4 +Current Members: +Cynthia (Cindy) L. Davis (Chair) +All members of the Talent & Compensation Committee meet the independence standards set forth in applicable SEC and NYSE rules. +David A. Burwick +Victor Luis +Bonita C. Stewart +• Oversees the design of our executive compensation program, and responsible for oversight of our employment practices and policies. +• Reviews and approves goals and objectives relevant to the compensation of our executives and evaluates performance in light of those goals and objectives. +• Oversees our key human capital management strategies and programs. +• Reviews our overall talent management strategy, including development and succession plans for our executives and management. +• Reviews management succession planning and talent management of our executives, including overall management, development, and succession programs of our employees. +• Determines and approves the compensation of our executives based, in part, on these evaluations, including each element of compensation. +• Makes recommendations to our Board regarding any action that is required to be submitted to our stockholders for approval with respect to incentive compensation plans and equity-based plans. +• Administers and approves our equity-based plans, and approves (or delegates authority to approve, below the executive level) individual award grants under those plans, or recommends award grants to our Board for approval. +• Produces report on executive compensation for inclusion in our proxy statement for our annual meeting of stockholders. +20 +Table of Contents +CORPORATE GOVERNANCE +COMMITTEE Meetings in Fiscal Year 2022: 4 +Current Members: +Bonita C. Stewart (Chair) +All members of the Corporate Governance Committee meet the independence standards set forth in applicable NYSE rules. +Nelson Chan +Cynthia (Cindy) L. Davis +Lauri M. Shanahan +• Develops and recommends to our Board a set of Corporate Governance Guidelines that establish a framework of governance principles applicable to us. +• Identifies individuals qualified to become directors, consistent with criteria specified in the Corporate Governance Guidelines. +• Recommends to our Board the qualified director nominees to be selected by our Board. +• Recommends to our Board membership of our Board committees. +• Oversees the Company's ESG Program and periodically reviews with management our policies and practices with respect to diversity, equity, and inclusion. +• Ensures that our certificate of incorporation and Bylaws are structured in a manner that best serves our objectives and recommends amendments as appropriate. +• Oversees the evaluation of management, our Board and Board committees. +• Oversees and approves the management continuity planning process. +Nominating Procedures and Criteria +Among its functions, the Corporate Governance Committee considers and approves nominees for election to our Board. We view board succession as an ongoing process and are regularly identifying, evaluating and pursuing prospective candidates. In addition to the candidates proposed by our Board or identified by the Committee, the Committee considers candidates for director proposed by our stockholders, provided such recommendations are made in accordance with the procedures set forth in our Bylaws. Stockholder nominations that meet the qualification criteria referred to below will receive the same consideration as nominations made by the Committee. +Essential criteria for all candidates considered by the Corporate Governance Committee are discussed in the section of this Proxy Statement titled " Qualifications for All Directors. " In evaluating candidates for certain Board positions, the Committee also evaluates additional criteria, as reflected in the section of this Proxy Statement titled " Specific Qualifications and Skills Represented on Our Board. " +In selecting nominees for our Board, the Corporate Governance Committee evaluates the general criteria referred to above, identifies the specialized criteria for which the Committee has determined there is a need, and considers the candidate's ability to meet the required criteria and contribute to the success of our Company. In evaluating an existing director for reelection, in addition to assessing the criteria referred to above, the Committee considers a variety of factors, including attendance at Board and committee meetings, independence, length of service, previous performance, and overall contributions to our Company. +The director nominees for the Annual Meeting have been recommended by the Corporate Governance Committee, as well as by our Board of Directors. +Management Succession and Talent Development +The Talent & Compensation Committee, pursuant to its charter, is responsible for overseeing the management continuity planning process. As part of that responsibility, the Committee reviews and evaluates the development and succession plan relating to our and our executive officers, including considerations of career paths and attracting and retaining high-quality talent. The Board is responsible for these actions with respect to our CEO. The Committee works with the Board to assess whether we have the management talent needed to successfully pursue our business objectives. The Board also regularly considers the competencies necessary for our Chief Executive Officer to support our strategies for long-term success. +Risk Governance Structure +Our Board has overall responsibility for risk oversight. The Board members provide objective, independent oversight of risk and focus on the most significant risks facing the Company. +Board Role in Risk Oversight +• Periodically reviews or assesses the effectiveness of our Company’s enterprise risk management programs and framework, including the processes for identifying, assessing, prioritizing, and responding to our enterprise-wide risk exposures, to ensure that robust risk management strategies are in place. On an annual basis, under the direction of our Audit & Risk Management Committee, our Company undertakes an enterprise-level risk management review that is +21 +Table of Contents +designed to bring to the Board’s attention our most material risks for evaluation, including strategic, operational, regulatory, and compliance risks. +• Receives regular updates from management regarding our organization’s portfolio of risk and engages in discussions to understand and assess our overall risk management activities. Our Board further apprises itself of the most significant risks facing our Company, ensuring that robust risk response actions have been established and implemented, with an independent review by internal audit. +• Inquires of management to understand and assess the effectiveness of the mechanism in place for monitoring and responding to emerging risks. +• Engages in critical dialogue with our executive leadership and technology-focused personnel to ensure our organization has a robust plan to detect, stop, and mitigate the effects of cyberattack incidents, including resuming normal operations as quickly as possible. +• Engages in active discussion with management to understand our Company’s risk philosophy to ensure understanding of overall appetite for risks that aligns with ability to create stockholder value. +Below is a summary of key risk oversight responsibilities delegated to our three committees: +Audit & Risk Management Committee +• Oversees financial risks and monitoring of management’s policies and procedures. +• Plays a strategic role in assessing and monitoring our Company’s response to cyber threat trends, receiving periodic updates on cyber risk management initiatives, and obtaining independent confirmation of their efficacy through regular reviews by internal audit. Engages in regular dialogue with our Chief Technology Officer on technology risk related topics on every Audit & Risk Management Committee meeting agenda, ensuring adequacy of focus and resources to support cyber risk management activities. +• Receives regular updates from management on cybersecurity or information security incidents that may pose a significant threat to our Company, and assesses our Company’s key metrics for measuring our capabilities to manage cybersecurity and technology risk. Our Board also gets an independent view from internal audit. +• Provides oversight for compliance risk and regularly receives updates from management on compliance-related matters. +Our legal and internal audit executives report directly to the Audit & Risk Management Committee regarding material risks to our business, among other matters, and the Audit & Risk Management Committee meets in executive sessions with our highest ranking manager of internal audit and with representatives of our independent registered public accounting firm. +Talent & Compensation Committee +• Oversees the design of our executive compensation program so as to encourage achievement of our strategic objectives and mitigate compensation-related risk. +• Oversees key human capital management strategies and programs. +• Evaluates succession planning risk regarding the executive officers. +Corporate Governance Committee +• Oversees risks related to our corporate responsibility and sustainability efforts, including risks related to environmental and social issues, such as climate change, as well as risks related to corporate governance issues. +• Receives quarterly updates on the status of our ESG Program and related risks. Evaluates succession planning risk regarding the Chief Executive Officer +In addition, the Corporate Governance Committee develops our Corporate Governance Guidelines to establish and oversee an appropriate governance framework. +Compensation Committee Interlocks and Insider Participation +As of the date of this Proxy Statement, no member of the Talent & Compensation Committee is serving, and during the past year no member of the Talent & Compensation Committee has served, as an officer or employee of our Company or any of its subsidiaries. None of our executive officers currently serves, or during the past year has served, as a member of the board of directors or compensation committee (or other committee serving a similar purpose) of any entity that has an executive officer serving on our Board or the Talent & Compensation Committee. In addition, none of the Talent & Compensation Committee members had any relationship, or participated in any transaction, with our Company during fiscal year 2022 that requires disclosure under SEC rules. +22 +Table of Contents +We have entered into indemnification agreements with each of our directors, including each member of the Talent & Compensation Committee. +Communications with Directors +Stockholders and other interested parties may communicate with the Chairman of our Board, the Chair of any Board committee, with our independent directors as a group, or with any individual director, by writing to any such person or group. Communications should be sent to the following address: +Deckers Outdoor Corporation +Attn.: Corporate Secretary +250 Coromar Drive +Goleta, California 93117 +Communications are distributed to our Board, or to any individual director, depending on the facts and circumstances described in the communication. Our Board has requested that certain items that are unrelated to the duties and responsibilities of our Board should be excluded, including the following: junk mail and mass mailings, product inquiries or complaints, new product suggestions, resumes and other forms of job inquiries, surveys, and business solicitations or advertisements. In addition, material that is unduly hostile, threatening, illegal or similarly unsuitable will not be distributed, except that any communication that is not distributed will be made available to any director upon request. +Code of Ethics and Accounting and Finance Code of Ethics +Our Board has adopted a Code of Ethics to assist our officers, directors and other employees in complying with legal and regulatory requirements and maintaining the highest standards of ethical conduct. All of our officers, directors and employees must carry out their duties in accordance with the policies set forth in the Code of Ethics and with applicable laws and regulations. The Code of Ethics complies with the requirements set forth in applicable NYSE rules. +Our Board has also adopted a separate Accounting and Finance Code of Ethics which focuses on the financial reporting process and applies to our Chief Executive Officer, Chief Financial Officer and Corporate Controller (and other employees serving similar functions). The Accounting and Finance Code of Ethics is intended to qualify as a "code of ethics" under applicable SEC rules and to satisfy the standards of ethics and compliance programs under applicable NYSE rules. +Our Code of Ethics and our Accounting and Finance Code of Ethics are available on our website at ir.deckers.com in the Overview section of the Governance tab. To the extent required by law, any amendments to or waivers of any provision of the Code of Ethics or the Accounting and Finance Code of Ethics will be promptly disclosed publicly on our website. +Stockholder Engagement +We maintain an ongoing, proactive outreach effort with our stockholders. We believe our stockholders, as the owners of our Company, have important views and insights into our business operations, and we routinely seek to engage with our stockholders to ensure their views are shared with our Board, and actively considered in discussions of our strategic direction. We highly value stockholder input and have consistently demonstrated our commitment to open and interactive dialogue with our stockholders. Our stockholder outreach program is led by a cross-functional team that includes members of our Investor Relations, ESG, and Legal teams. +In fiscal year 2022, as part of our stockholder engagement efforts to solicit feedback and share perspectives we reached out to holders of approximately 48% of our shares. This year, we addressed the following topics: our corporate governance framework, executive compensation practices, and our ESG program, including highlights of our DEI initiatives. The investors we spoke with were largely supportive of our current governance practices and our ESG activities. The invaluable feedback and insights we received during our engagement were shared with the full Board. +While our Board has a fiduciary responsibility to our stockholders and represents their interests, our management team is primarily responsible for investor relations. Throughout the year, our management team regularly meets with current stockholders, prospective investors, and investment analysts. These meetings serve to engage stockholders and solicit feedback on topics relevant to our Company's performance and strategy. Our management team provides regular updates to our Board regarding stockholder feedback on these topics. +Please refer to the section of this Proxy Statement titled “ Stockholder Feedback on Executive Compensation ” for more information on how our stockholders impacted the evolution of our executive compensation program for fiscal year 2022. +Our People and Our Culture +At our Company, our purpose is to positively impact the world by uniting purposeful brands with diverse people driven to succeed and create change. Our five key values, which guide our journey onward together, to improve our business and create a better world around it, help hold us accountable to deliver on this purpose: +23 +Table of Contents +Our values define our Company and serve as the driving force behind how we work together and with our customers, our consumers, our partners, our suppliers, and our communities. We also have detailed ethics and compliance policies that instill a commitment to ethical behavior and legal compliance across our organization. Through our open-door policy and culture, employees are encouraged to approach their managers if they believe violations of standards or policies have occurred, and are also able to make confidential and anonymous reports using an online or telephone hotline hosted by an independent third-party provider. +Diversity, Equity and Inclusion +We prioritize diversity, equity, and inclusion, or DEI, at our Company and believe that creating a diverse and inclusive workplace is critical to creating an organization where all employees can come as they are. We believe that the inclusion of diverse perspectives, and amplifying the voices of underrepresented communities brings a unique set of experiences, opinions, and thoughts on critical issues that helps enhance our business and drives better outcomes. +Our Code of Ethics, on which we train our employees biennially, as well as our annual Creating Change Report, codifies these values and our commitment to DEI. We have a robust collection of programs designed to create a more inclusive workplace, as well as policies and practices aimed at increasing diversity. We have implemented a comprehensive, global strategy for DEI, including the following: +Our brands have committed to representing at least 60% BIPOC (Black, Indigenous and People of Color) and LGBTQIA+, and diverse body types and abilities in their marketing campaigns. +We have created a framework for the creation of Employee Resource Groups, or ERGs, which are formed around common interests, background or characteristics including gender, race, ethnicity, and other affinities. We have nine ERGs with approximately 300 employee members as of March 31, 2022. +We improved BIPOC representation among U.S. leaders (director and above) to 21%, up from 12% two years ago, as we make progress towards our target of 25% by fiscal year 2027. +We are continuing to utilize software that optimizes job descriptions to help ensure a more diverse applicant pool, as well as redacting certain resume information that may lead to unconscious bias. +We are expanding the pool from which we source our talent, including partnering with Historically Black Colleges and Universities, as well as local and national professional organizations. +We have joined The Valuable 500, an initiative comprised of companies committed to disability inclusion, the Civic Alliance, a nonpartisan business coalition that champions civic participation, and we are part of the Bloomberg Gender-Equality Index which helps bring transparency to gender-related policies and practices at publicly listed companies around the world. +All director-level and above positions are interviewed by a panel that includes individuals from underrepresented communities. +We have deployed mandatory anti-racism and implicit bias training, as well as a suite of additional learning and development resources available to employees, including Inclusive Interviewing and Selection for managers, Disability Awareness & Inclusion , and Applying DEI Practices to Product Lifecycle , among others aimed at increasing employee acumen about DEI-focused topics. +We have launched a global mentorship program designed to provide our existing talent with opportunities to build deeper connections, empower skill and career development, and foster a greater sense of belonging by connecting employees across the globe. +Our Board values DEI as we continue to enhance our Board's diversity and skill sets. In addition, our Board is regularly kept apprised of our Company's DEI employee engagement efforts, targets and commitments. +24 +Table of Contents +Charitable Giving and Volunteering +At our Company, our charitable contributions, product donations, and employee volunteer efforts are an essential part of our culture. Each fiscal year, we contribute to our local communities through monetary donations, volunteer efforts and in-kind donations. During fiscal year 2022, we donated to various non-profit organizations, primarily to organizations focused on DEI initiatives, environmental impact mitigation, and community support. We also continued our 'Art of Kindness' events, where employees volunteer during a week-long event in our local communities multiple times during the fiscal year. Further, our supply chain partners followed our lead and volunteered in their local communities during fiscal year 2022. Our strategic giving and community-engagement efforts continue to be aligned with our sustainable development goals, or SDGs, and DEI strategy, with a focus on social and racial justice, the environment, uplifting youth, education, and community support. +$3.41 Million +Amount donated to various non-profit organizations during fiscal year 2022 +Areas of Focus for Giving +DEI, the environment, uplifting youth, education, and community support +Over 14,000 +Hours our employees volunteered in fiscal year 2022 +1.285 Million +Number of pairs of shoes donated, since the inception of our partnerships with non-profit organizations who distribute shoes to those in need +Environmental, Social, and Governance +As a global leader in designing, marketing, and distributing innovative footwear, apparel, and accessories, our worldwide reach and impact is significant. We believe consumers are increasingly buying brands that advance sustainable business practices and deliver quality products while striving for minimal environmental impact by employing socially conscious operations. Our sustainability policies and strategies are aligned with, and informed by, our ongoing efforts with multi-stakeholder initiatives, which involve our stockholders, employees, suppliers, and our customers, as well as other brands and non-governmental organizations. Through our holistic environmental, social and governance program, which has been in existence since 2010, we are committed to advancing our sustainable business initiatives. As a result of our efforts, we have been recognized by Newsweek as one of America’s Most Responsible Companies and included on the Bloomberg Gender Equality Index during fiscal year 2022. +ESG Oversight +Our Board of Directors, through its Corporate Governance Committee, which is comprised of four independent directors, oversees our ESG efforts. Our Corporate Governance Committee and Board of Directors regularly receive updates on the status of our ESG program. Our Chief Administrative Officer, or CAO, is responsible for the day-to-day management of our ESG program. The program’s execution is driven by our leadership team and various cross-functional teams including our ethical sourcing, facilities, DCs, brands, innovation, materials, and supply chain teams. +Our ESG program aligns our internal teams with our SDGs and establishes policies to encourage our partners and suppliers to employ sustainable business practices. We annually assess risks related to ESG issues as part of our overall enterprise risk management approach. In addition, our internal audit team provides periodic targeted reviews of our ESG-related policies and procedures to the Audit & Risk Management Committee. +Sustainable Development Goals +Achieving measurable sustainability success is critical to our future economic and business growth, and we work to establish SDGs that we believe will make the most significant impact for our business, our stockholders, and the communities in which we operate. We are a member of the United Nations Global Compact, or UNGC, the world’s largest voluntary corporate sustainability initiative. This membership requires an annual statement of progress, which is reflected in our Creating Change Report. Our CAO identifies specific SDGs established by the UNGC, which we adopt to guide our efforts to address environmental and social challenges. Our SDGs are currently focused on categories where we believe we can make substantial impacts. +25 +Table of Contents +TOPIC DECKERS SDG UNGC SDG +MATERIALS +Maximize the amount of preferred materials in our products +WASTE +Sustainably reduce waste generated at our facilities and partner facilities through refuse, reduction, recycling, and reuse. +WATER +Reduce water consumption and improve water quality throughout our operations and the communities in which we operate. +CLIMATE AND CLEAN ENERGY +Reduce energy consumption and carbon emissions throughout our operations. +CHEMISTRY AND CONSUMER SAFETY +Reduce or eliminate hazardous chemicals throughout our operations. +HUMAN RIGHTS +Positively impact the communities where we operate in, including assuring industry leading human rights practices without our supply chain. +GENDER EQUALITY, QUALITY EDUCATION, AND REDUCED INEQUALITIES +Promote diversity, gender equality, female empowerment, and inclusion for all. +Climate and Clean Energy +In fiscal year 2022, as part of our ESG program efforts, we made great progress toward each of our SDG goals but focused on the amplification of our climate and clean energy efforts. Below are some climate and clean energy focuses and commitments: +CLIMATE AND CLEAN ENERGY +Set ambitious Scope 1, 2 and 3 carbon reduction targets with the Science-Based Targets Initiative. +Engaged a third-party expert, Carbon Trust, to oversee our carbon accounting, and have collaborated with them to establish our carbon reduction targets. +Continued utilization of our third-party, science-based Lifecycle Assessment (LCA Tool) to guide our brands toward levering preferred materials. +Amplified our requirements for leathers sourced from South America by implementing detailed traceability standards to address deforestation +Established a long-term grant with Savory Institute to support regenerative farming practices on sheep farms in Australia, influencing over 200,000 acres and 40 farms in one year. +Corporate headquarters utilizes 100% renewable energy (a combination of solar and Goleta Green Grid) +Our Creating Change Report will provide more information regarding our fiscal year 2022 ESG achievements with a focus on the above SDGs. We believe that the progress of our corporate responsibility efforts is served by disclosing goals and relevant metrics and, to that end, we have aligned the reporting standards included in our Creating Change Report with the Financial Stability Board’s Task Force on Climate-Related Financial Disclosures (commonly referred to as TCFD), Global Reporting Initiative’s (commonly referred to as GRI) Core Standards, and Sustainability Accounting Standards Board’s (commonly referred to as SASB, and now part of the Value Reporting Foundation) Consumer Goods Sector Apparel, Accessories and Footwear Index. +26 +Table of Contents +EXECUTIVE OFFICERS +Each of our executive officers serves at the discretion of our Board. Important summary information about our fiscal year 2022 executive officers is set forth in the table below, followed by certain biographical information about each officer. +EXECUTIVE OFFICER AGE POSITION +Dave Powers 56 Chief Executive Officer, President and Director +Steven J. Fasching 54 Chief Financial Officer +Angela Ogbechie 44 +Chief Supply Chain Officer (Appointed in June 2022) +Thomas Garcia 49 Chief Administrative Officer +Stefano Caroti 59 President of Omni-Channel +David E. Lafitte 57 +Former Chief Operating Officer (Transitioned effective June 2022) +Andrea O'Donnell 53 +Former President of Fashion Lifestyle (Transitioned effective October 2021) +Wendy Yang 58 +Former President of Performance Lifestyle (Transitioned effective May 2022) +DAVE POWERS +Age: 56 +Position: Chief Executive Officer, President and Director +Mr. Powers was appointed as our Chief Executive Officer in June 2016 and joined our Board at that time. Mr. Powers joined our Company as President of Direct-to-Consumer in August 2012. He was appointed President of Omni-Channel in January 2014 and was appointed President in March 2015. Mr. Powers has over 25 years of experience in merchandising, product and marketing development, and leading global direct-to-consumer operations and wholesale businesses. Prior to joining us, Mr. Powers served four years as vice president of global direct-to-consumer at Converse Inc., where he oversaw owned and distributor direct-to-consumer as part of the Nike, Inc. retail leadership team. Mr. Powers also held several executive leadership roles at The Timberland Company, including worldwide general merchandising manager and senior director European retail, where he led worldwide retail merchandising, marketing, visual and store design, and oversaw European retail operations. Prior to this, Mr. Powers spent 10 years at Gap Inc., where he held multiple senior management titles, including global divisional merchandise manager for the boy’s division. He was recently appointed to the board of Solo Brands, Inc. Mr. Powers graduated cum laude from Northeastern University with a B.S. in Marketing. +STEVEN J. FASCHING +Age: 54 +Position: Chief Financial Officer +Mr. Fasching was appointed as our Chief Financial Officer in June 2018 and served as our Senior Vice President, Corporate Strategy, Planning & Investor Relations since February 2018. Mr. Fasching previously served as our Vice President, Strategy & Investor Relations from January 2016 to February 2018, and as Vice President, Strategic Financial Planning from August 2011 to January 2016. Mr. Fasching has over 31 years of experience in long-term financial and strategic planning and creating and leading the analytical engine of multi-billion dollar organizations. Immediately prior to joining our Company, Mr. Fasching served for five years as the director of finance and assistant controller of Princess Cruise Lines, Ltd., a cruise line owned by Carnival Corporation, where he had been promoted through a number of finance-related positions since September 1990, including director of financial planning, among others. Mr. Fasching received a B.S. degree in Business Administration from Pepperdine +27 +Table of Contents +University and an M.B.A. from The Anderson School of Management at UCLA. He also completed The Executive Program for Prospective Chief Financial Officers through the University of Chicago Booth School of Business. +ANGELA OGBECHIE +Age: 44 +Position: Chief Supply Chain Officer +Ms. Ogbechie was appointed as our Chief Supply Chain Officer in June 2022. Prior to that, she was Senior Vice President, Global Operations and Supply Chain Strategy since November 2021. Since 2008, Ms. Ogbechie has held a number of senior supply chain positions at our Company and has experience in global demand planning, logistics, distribution and fulfillment. Ms. Ogbechie received a B.A. in Economics from Stanford University and an M.B.A. from Columbia University Business School. +THOMAS GARCIA +Age: 49 +Position: Chief Administrative Officer +Mr. Garcia joined our Company in 2009. In his current position as Chief Administrative Officer he oversees Legal, ESG, Strategy and Communications. He was promoted to his position in 2021 after spending more than 12 years in multiple roles including Senior Vice President, Senior Counsel, and Compliance Officer. From 2003 to 2009, Mr. Garcia was assistant general counsel at Mentor Corporation, a medical device company acquired by Johnson & Johnson. Previously, he was an associate attorney at the law firms of Hatch and Parent, as well as Buchanan Ingersoll. Mr. Garcia earned his B.S. in Biology from Lehigh University, Masters in Public Health from The University of Massachusetts at Amherst, and J.D. from The George Washington University Law School. +STEFANO CAROTI +Age: 59 +Position: President of Omni-Channel +Mr. Caroti was appointed as our President of Omni-Channel in November 2015. He has over 31 years of industry experience in general management, sales, retail, product, marketing, business strategy and brand management. Prior to joining our Company, Mr. Caroti was the chief commercial officer and managing director at PUMA, from August 2008 to December 2014, where he was responsible for PUMA’s global wholesale, retail and e-commerce divisions and PUMA’s geographic operating regions. He held a number of senior executive positions at Nike, Inc. in general management, sales, product and marketing, and during his term as vice president of EMEA commerce, he was responsible for the entire wholesale, retail and e-commerce business in the EMEA region. He received a B.A. with honors from Middlebury College. +28 +Table of Contents +DAVID E. LAFITTE +Age: 57 +Position: Former Chief Operating Officer +Mr. Lafitte was appointed as our Chief Operating Officer in February 2015 and transitioned from the role in June 2022. From 2012 to January 2015, he was outside general counsel for our Company. Prior to joining our Company, Mr. Lafitte was a shareholder with the law firm Stradling Yocca Carlson & Rauth, P.C., where he was a member of the firm’s board of directors and executive committee, and had been advising our Company since 2006. He received a B.A. from the University of Colorado and a J.D. from Tulane University. +ANDREA O'DONNELL +Age: 52 +Position: Former President of Fashion Lifestyle +Ms. O’Donnell was appointed as our President of Fashion Lifestyle in April 2016 and transitioned from the role in October 2021. Ms. O’Donnell has over 21 years of experience in the retail industry and is well versed in operating in complex international markets. She has a background in strategic planning, merchandising and marketing, as well as experience in emerging markets and customer relationship management. Over the course of her career, she has held leadership positions with prominent international retailers. Ms. O’Donnell was with DFS Group Limited prior to joining our Company, where she served as president of global merchandising. From 2012 to 2014, she was with Lane Crawford, where she was responsible for merchandising, marketing, customer relationship management and store planning across the Asia Pacific Region. She was the commercial director at John Lewis from April 2004 to August 2012, responsible for online sales and strategy for Omni-Channel. She was the merchandising planning director at Hacket London from September 2002 to April 2004, and prior to that was head of merchandising planning at Jaeger and Debenhams. She received an Executive M.B.A. from the London School of Business. +WENDY YANG +Age: 58 +Position: Former President of Performance Lifestyle +Ms. Yang was appointed as our President of Performance Lifestyle in February 2016 and transitioned from the role in May 2022. She joined our Company in April 2015. She has over 20 years of industry experience in building out footwear categories and brands, with a strong background in both Lifestyle and Active segments. Working in large, multi-brand companies, Ms. Yang fostered collaborations across brands. She has held product and marketing leadership positions at New Balance Athletic Shoe, Stride Rite Corporation, The Timberland Company, Tommy Hilfiger Footwear and Reebok International Limited. Ms. Yang earned her B.A. in Managerial Studies from Rice University and M.B.A. in Marketing from the Kellogg School of Management at Northwestern University. In addition, she was a professional tennis player for three years, achieving world ranking status through participation in tournaments, including Wimbledon, The French Open, and The Australian Open. +29 +Table of Contents +COMPENSATION DISCUSSION AND ANALYSIS +In this section we discuss the compensation program applicable to our Named Executive Officers, or NEOs. This discussion is divided into the following parts: +EXECUTIVE SUMMARY +COMPENSATION OBJECTIVE AND PHILOSOPHY +COMPENSATION CONSULTANT AND PEER GROUP +ELEMENTS OF FISCAL YEAR 2022 EXECUTIVE COMPENSATION PROGRAM +OTHER COMPENSATION CONSIDERATIONS +Please also review the Summary Compensation Table, and the additional compensation tables and related footnotes that follow this section, as they provide information critical to an understanding of our executive compensation program. +30 +Table of Contents +EXECUTIVE SUMMARY +Named Executive Officers +The following table sets forth our NEOs in fiscal year 2022, the current positions they hold and the dates they were appointed to those positions: +NAMED EXECUTIVE OFFICER CURRENT POSITION AND DATE APPOINTED +Dave Powers +• Chief Executive Officer and Director - June 2016 +• President - March 2015 +• Principal Executive Officer +Steven J. Fasching +• Chief Financial Officer - July 2018 +• Principal Financial and Accounting Officer +David E. Lafitte +• Former Chief Operating Officer - February 2015 (Transitioned in June 2022) +Stefano Caroti • President of Omni-Channel - November 2015 +Wendy Yang +• Former President of Fashion Lifestyle - February 2016 (Transitioned in May 2022) +Fiscal Year 2022 Financial and Operational Highlights: +We delivered strong results in fiscal year 2022 from both financial and operational perspectives, including the following: +• Total revenue growth of 23.8%, representing an increase of $605 million as compared to the prior year. +• Major contributions from multiple brands including growth of $320 million and $265 million from the HOKA and UGG brands, respectively. +• Global wholesale drove the majority of growth, adding $458 million of incremental volume as compared to the prior year. +• Global direct-to-consumer also drove strong growth, increasing 13.8% over the prior year and 64.7% above two years ago. +• Increased diluted earnings per share by 20.7% to $16.26. +Our strong financial performance over the past three fiscal years is illustrated by the financial metrics in the graphs below. For each fiscal year, the information presented is for the 12-month period ended March 31. +Our performance-based compensation for fiscal year 2022 relied on these performance metrics to directly tie executive compensation to Company performance in furtherance of our pay-for-performance philosophy. For example, our annual cash incentive awards used consolidated operating income and revenue (and business unit operating income and revenue for certain executives with business unit oversight responsibilities), and our long-term incentive plan awards used pre-tax income and revenue as the underlying performance metrics. +31 +Table of Contents +Our Business and Strategic Objectives +We intend to continue investing strategically in key identified areas of growth within our brand portfolio. Specifically we will invest in the following: +• The HOKA brand, generating increased awareness and supporting the brand globally as it builds market share with core running styles and expands into incremental categories of performance footwear. +• The UGG brand, continuing to focus on growth outside of Women's core classic boots, including Women's footwear categories that are less seasonally dependent, Men's footwear, and apparel. We also intend to drive brand heat in the UGG brand's international markets through localized marketing initiatives paired with strategic distribution. +• Technology and analytical tools that will further enhance our capabilities as we look to support our evolving business, including opportunities to connect with consumers through digital avenues as well as expanding our e-commerce platform. +• Infrastructure required to support our key growth initiatives globally, including investment in talent to build new capabilities as well as distribution and logistical needs as our organization continues to scale in size. +We intend to closely monitor the planned investments in our business in the near term to enable the organization to weather the impacts from ongoing supply chain disruptions, the residual impacts of the COVID-19 pandemic, and an increasingly challenging macroeconomic environment characterized by volatility in the global financial markets, inflationary pressures, rising interest rates and recessionary concerns. We also intend to continue to focus on the achievement of ESG initiatives by ensuring our ESG program is overseen by our Board and leadership team, minimizing our environmental impact and employing socially conscious operations, and maintaining open and interactive dialogue on ESG matters with our stakeholders. +Our Compensation Program Objective and Philosophy +The primary objective of our executive compensation program is to compensate our executive officers in a manner that will attract, retain and motivate talented executives with the skills needed to manage a complex and growing business in a competitive industry, while creating long-term value for our stockholders. In furtherance of this objective, the Talent & Compensation Committee, which we refer to as the Committee for purposes of this section, seeks to design our executive compensation program in a manner that reflects direct alignment between the compensation opportunity provided to our executives and the achievement of our strategic objectives. +When establishing our executive compensation program each year, the Committee is generally guided by the following four principles that it believes align closely with our compensation objectives: +• Pay for performance by ensuring that a significant portion of compensation is made available to our executives in the form of variable, performance-based components. +• Align interests of executives with stockholders by tying a significant portion of compensation to Company performance that creates long-term value for our stockholders and is correlated to increases in the value of our stock price. +• Reward achievement by offering meaningful and appropriate incentives for achieving both short-term and long-term Company financial goals that have been established by the Committee that are directly tied to the achievement of strategic objectives. +• Attract and retain executives with the background and experience necessary to lead the organization and achieve our strategic objectives. +When designing our executive compensation program for fiscal year 2022, the Committee focused on continuing to build and retain our executive team, while providing them with incentives to focus on our key strategic initiatives, including increased revenue, enhanced profitability and the creation of long-term value for stockholders. These and other strategic considerations are clearly reflected in the design of our program, which demonstrates strong pay-for-performance alignment. +Fiscal Year 2022 Executive Compensation Highlights +In fiscal year 2022, we implemented an executive compensation program that was designed to focus on our key strategic initiatives. The primary compensation elements under the program include the following: +• Base salaries; +• Annual cash incentive awards, or 2022 Annual Cash Incentive Awards; +• Time-based restricted stock units, or 2022 Time-Based RSUs; and +• Long-term incentive plan performance-based stock units, or 2022 LTIP PSUs. +32 +Table of Contents +Our fiscal year 2022 executive compensation program was generally similar to that of fiscal year 2021 in terms of compensation objective, philosophy and key elements. +As a result of our strong financial and operational results in fiscal year 2022, the 2022 Annual Cash Incentive Awards, which covered the one-year performance period ended March 31, 2022, were paid out between 106% and 124% of target, and the 2020 LTIP PSUs, which covered the three-year performance period ended March 31, 2022, were paid out at 200% of target, in each case based on Company performance relative to targets established at the beginning of the respective performance measurement periods. +Following a review of compensation data from our new fiscal year 2023 peer group, which reflected the increased size and complexity of our organization, we selectively granted special equity awards. The Committee also deemed these special equity awards to be appropriate to retain key executives in a highly competitive environment and to reward exceptional individual performance. The special equity awards consisted 60% of LTIP PSUs, which vest based on the achievement of pre-tax income and consolidated revenue targets over a three-year period, and 40% of time-vested RSUs, which vest in three equal installments over three years following the grant date, to align the terms with other equity grants made during the fiscal year. +In granting the special equity awards to certain NEOs during fiscal year 2022, the Committee specifically considered the aggregate grant date fair value of all equity awards received by these executives throughout the fiscal year, particularly in light of the new fiscal year 2023 peer group, and concluded that the values were in line with peer group practices. It was also important to the Committee to ensure that a significant portion of the special equity awards were granted in the form of performance-based awards. The Committee expects these types of special awards to be used infrequently. Our Chief Executive Officer was not granted a special equity award. +Stockholder Outreach +We have consistently demonstrated our commitment to stockholder outreach efforts, which has resulted in meaningful, interactive dialogue with our stockholders on a number of significant topics, including our business and strategic objectives, capital allocation strategy, ESG initiatives and corporate governance philosophy, and the performance of our stock. We have also routinely solicited and incorporated stockholder feedback on the design and effectiveness of our executive compensation program. We believe our proactive engagement and response to stockholder feedback, combined with strong pay-for-performance alignment, has resulted in overwhelming stockholder support for our executive compensation program. Indeed, these efforts resulted in 96.7% and 97.5% of the votes cast being voted "FOR" our executive compensation program at our annual meetings of stockholders held in 2021 and 2020, respectively. +In an effort to continue our dialogue with our stockholders in fiscal year 2022, we reached out to investors holding 48% of our shares to solicit their feedback, in particular with respect to topics such as our corporate governance framework, ESG efforts and executive compensation practices. This process highlights our ongoing commitment to our stockholder engagement efforts, which has informed the evolution of our executive compensation program. Our fiscal year 2022 executive compensation program, as described in this section, reflects our ongoing dialogue with our stockholders. +The Committee believes that ongoing, transparent communication with our stockholders is critical to our long-term success, and that the feedback received through our stockholder engagement efforts will continue to contribute to the evolution and enhancement of our executive compensation program. The Committee considers stockholder engagement to be an important part of its decision-making process and plans to continue proactive outreach efforts going forward. +Compensation Program Highlights +The following table sets forth the key components of our executive compensation program for fiscal year 2022, and the underlying philosophy and considerations that provide the basis for our compensation decisions: +COMPENSATION HIGHLIGHTS PHILOSOPHY AND CONSIDERATIONS +• Pay-for-performance alignment +• We emphasized strong pay-for-performance alignment by providing a significant portion of the overall compensation opportunity for our NEOs in the form of performance-based compensation that is directly tied to the achievement of specific Company financial and operational performance objectives. +• Our performance-based compensation is designed to align the interests of our NEOs with those of our stockholders and encourage the achievement of strategic objectives that the Committee believes are critical to our short and long-term success. +• For fiscal year 2022, only 11% of the total compensation opportunity for our President and Chief Executive Officer was fixed, while 89% of his total compensation opportunity was directly tied to the achievement of specific performance conditions or otherwise at risk. +33 +Table of Contents +• Alignment of performance metrics with strategic objectives +• Selecting the appropriate performance metrics for our performance-based awards is critical to achieving our business and strategic objectives, motivating our executives and advancing our pay-for-performance philosophy. +• In light of our strategic focus on increased revenue, enhanced profitability and the creation of long-term stockholder value, the Committee selected +(i) consolidated operating income and revenue for all NEOs (and business unit operating income and revenue targets for certain executives with business unit oversight responsibilities) as the performance metrics for our 2022 Annual Cash Incentive Awards, and +(ii) both “pre-tax income” and consolidated revenue for each of fiscal years 2022, 2023 and 2024 as the annual performance metrics for our 2022 LTIP PSUs. +• The decision by the Committee to use the consolidated revenue metric for both our 2022 Annual Cash Incentive Awards and our 2022 LTIP PSUs reflects our continued focus on top-line growth. +• Limited overlap in performance conditions +• Our performance metrics involve multiple performance conditions over multiple time periods to ensure our compensation program encourages healthy and sustained growth across our business, while eliminating excessive overlap between the goals. +• This approach mitigates against risk associated with our compensation program as it de-emphasizes the impact of any one performance metric or performance period. +• Reference to a "median" pay philosophy +• We have actively and consistently reformulated our executive compensation program to benchmark the target total compensation opportunity for our NEOs at the median compared to our peer group. +• In adopting this philosophy, the Committee carefully considered a number of factors, including specific feedback received from our stockholders during our stockholder engagement efforts in prior years. +• Use of PSUs for LTIP awards +• LTIP awards are designed to align the interests of our executives with those of our stockholders through the adoption of performance-based vesting conditions. +• Vesting is based on the achievement of profitability and revenue metrics, in each year during a three-year period, that align closely with our strategic objectives. +• 100% of the LTIP awards granted during fiscal year 2022 were subject to long-term vesting in order to promote retention of our executives. +• The vesting of each LTIP award is also subject to adjustment based upon the application of a total stockholder return, or TSR, modifier, thereby correlating the vesting of the award to total and relative stockholder returns. +• Appropriate mix of equity awards with focus on performance-based vesting +• Approximately 60% of the value of the equity awards granted during fiscal year 2022 vest based on the achievement of Company performance conditions to ensure pay-for-performance alignment, while the remainder of the awards vest based on the achievement of long-term, time-based vesting conditions. +• This mix strikes the appropriate balance between compensation incentives and risks. +• Continued focus on executive retention +• While we seek to develop our executive compensation program so that it closely aligns with our pay-for-performance philosophy and rewards achievement of performance goals, this objective must complement other critical objectives, including the retention of key executives. +• For fiscal year 2022, approximately 40% of the value of the equity awards granted vest based on the achievement of time-based vesting conditions, which promote executive retention because they vest over a long-term service period. +• Consistent with its historical practice, the Committee expects a majority of future equity awards to continue to have performance-based vesting conditions. The Committee also expects to grant special equity awards infrequently. +34 +Table of Contents +• Consideration of peer group data and advice of our independent compensation consultant +• We use peer group compensation data as an initial starting point in making compensation decisions for our executives, including with respect to both the target level of compensation and the overall structure of our executive compensation program. +• Our independent compensation consultant provides us with information on competitive pay practices and trends in our industry and makes recommendations regarding the design and structure of our compensation program, as well as the formulation of our peer group. +• The information and guidance provided by our independent compensation consultant is consistent with our median pay philosophy. +• For fiscal year 2022, special equity awards were made to the following key executives: Stefano Caroti, Steven J. Fasching, David E. Lafitte and Wendy Yang. These special equity awards were granted to ensure our executive compensation program aligns with peer group practices, to retain key executives in a highly competitive environment and to reward exceptional individual performance. Our Chief Executive Officer was not granted a special equity award. Please refer to the section of this Proxy Statement titled " Grants of Plan-Based Awards in Fiscal Year 2022 " for additional information. +35 +COMPENSATION OBJECTIVE AND PHILOSOPHY +Compensation Program Objective +Pursuant to its charter, the Committee has overall responsibility for developing the compensation philosophy and objectives applicable to our executive leadership team, and approving our executive compensation program and policies. +The primary objective of our executive compensation program, as established by the Committee is to compensate our executive officers in a manner that will attract, retain and motivate talented executives with the skills needed to manage a complex and growing business in a competitive industry, while creating long-term value for our stockholders. In furtherance of this objective, the Committee seeks to design our executive compensation program in a manner that reflects direct alignment between the compensation opportunity provided to our executives and the achievement of our strategic objectives. In doing so, we routinely consider appropriate changes to our compensation program to reflect our strategic direction and the evolving needs of our business. In addition, in order to build and retain the talent necessary to achieve our strategic objectives, the Committee endeavors to develop a compensation program that is attractive and competitive in the marketplace, taking into consideration peer group and broader industry data. +Compensation Philosophy +When establishing our executive compensation program each year, the Committee is generally guided by the following four principles that it believes align closely with our compensation objectives: +PAY-FOR-PERFORMANCE ALIGN INTERESTS WITH STOCKHOLDERS +• Offer a significant portion of the compensation opportunity made available to our executives in the form of variable, performance-based components. +• Ensure performance-based compensation is directly tied to the achievement of Company financial, operational and strategic goals that the Committee believes are important for our short and long-term success. +• Align the interests of our executives with those of our stockholders by tying a significant portion of the compensation opportunity to financial and operational performance that the Committee believes will result in the creation of long-term stockholder value. +• Ensure that a significant portion of the compensation opportunity is directly tied to total and relative stockholder return. +REWARD ACHIEVEMENT ATTRACT AND RETAIN EXECUTIVES +• Offer meaningful and appropriate incentives for achieving both short-term and long-term Company financial and operational goals that have been established by the Committee that are directly tied to the achievement of strategic objectives. +• Ensure that the financial goals are appropriate for each executive given their respective titles, scope of responsibilities, and ability to impact results. +• Attract key executives with the proper background and experience necessary to lead our Company and provide us the best opportunity to achieve our business and strategic objectives. +• Retain our key executives by offering compensation that is attractive and competitive in the marketplace, taking into consideration the competition for key executives and peer group and broader industry data. +Pay-for-Performance +Our pay-for-performance philosophy demands that we offer performance-based compensation that is directly linked to factors that the Committee believes will lead to the creation of stockholder value. Specifically, we pay for performance by tying a significant portion of our executive compensation opportunity to the achievement of pre-established performance metrics that are reflective of our business and strategic objectives, as well as to increases in our stock price. The Committee believes that choosing the right performance metrics is critical to our ability to properly motivate our executives and advance our pay-for-performance philosophy. In particular, this requires that the performance metrics be reconsidered each year as our business and strategic objectives evolve to ensure they provide the appropriate barometer of our growth and success, and motivate the achievement of our objectives in line with how we currently view the business. As an example of this evolution, during fiscal year 2023, the Committee will assess our performance against certain ESG initiatives as a factor in determining performance-based compensation for our executives to ensure our executive compensation program more closely reflects our Company's focus on advancing our ESG program. +Consistent with our philosophy, for our 2022 Annual Cash Incentive Awards, the Committee chose consolidated operating income and revenue for all NEOs (and business unit operating income and revenue targets for certain executives with business unit oversight responsibilities) as the performance metrics. For our 2022 LTIP PSUs, the Committee established pre-tax income and consolidated revenue for fiscal years 2022, 2023 and 2024 as the performance metrics. The performance metrics for these two key compensation elements reflect our strategic focus on increasing revenue and enhancing long-term profitability. In addition, the Committee will apply a total stockholder return, or TSR, modifier, to adjust the vesting of the 2022 LTIP PSUs following a determination that the performance metrics have been achieved to ensure we take into account our stock performance on both an absolute and relative basis. +36 +As a result of our strong commitment to our pay-for-performance philosophy, a substantial portion of our executives’ compensation opportunity is performance-based and not guaranteed. While we offer certain standard compensation elements that provide fixed payments or benefits, our executive compensation mix is heavily weighted toward compensation that is performance-based or otherwise at risk, which we refer to as "performance-based." In applying our executive compensation philosophy, the Committee annually reviews both the amount of, and the mix between, fixed pay and performance-based pay. The Committee seeks to establish appropriate performance targets for the performance-based pay so as to ensure our performance targets align with our business and strategic objectives, are appropriately challenging to achieve, and mitigate our overall compensation-related risk. +As an example, for fiscal year 2022, fixed pay for our Chief Executive Officer represented only 11% of his targeted compensation opportunity for the year, while performance-based pay represented 89% of his targeted compensation. The fixed pay reflects the value of base salary and limited employee benefits. The performance-based pay reflects a combination of the target value of the 2022 Annual Cash Incentive Awards and the value of the target number of 2022 LTIP PSUs, each of which are earned or vest only upon the achievement of pre-established Company performance metrics. In addition, the performance-based pay reflects the value of the 2022 Time-Based RSUs, which the Committee believes is appropriate to include because our Chief Executive Officer is at risk of not receiving the full value of these awards since vesting is conditioned upon continued employment over an extended period of time, and their value is subject to fluctuation based on our stock price. Our Chief Executive Officer was not granted a special equity award during fiscal year 2022. +The graphic below illustrates the amount of target performance-based pay vs. fixed pay for our Chief Executive Officer for fiscal year 2022 and the breakdown of the various components of the compensation program on a percentage basis. +The elements of our executive compensation program are established taking into consideration the advice of our independent compensation consultant, which provides us with peer group data regarding competitive pay practices and trends in our industry. We believe the significant focus on performance-based awards reflected in the graphic above, including the relative weighting of the various compensation elements provided to our Chief Executive Officer, reflects our strong pay-for-performance alignment. +37 +Governance Practices that Support Our Compensation Philosophy +Our executive compensation program has significant governance components that we believe support and strengthen our compensation philosophy and reduce compensation-related risk, including those summarized in the following table: +GOVERNANCE PRACTICE +WHAT WE DO þ +Independent Directors +• All of the members of our Board, other than our President and Chief Executive Officer, are independent directors under applicable SEC and NYSE rules. +Independent Compensation Committee +• The Committee consists entirely of independent directors who meet the independence standards set forth in applicable SEC and NYSE rules. +Independent Compensation Consultant +• The Committee has retained, and routinely consults with, an independent compensation consultant who assists the Committee in gathering competitive pay data, selecting our peer group, and structuring our executive compensation program. The decision to engage the consultant was made solely by the Committee and the consultant reports directly to the Committee. +Compensation Risk Assessment +• The Committee performs an annual review of the risks related to our compensation practices. See the section of this Proxy Statement titled " Compensation Risk Assessment " for additional information. +Frequency of "Say-on-Pay" Vote +• We ask our stockholders to provide an advisory vote on our pay practices on an annual basis, and the Committee considers the outcome of the vote when establishing our executive compensation program. +Stock Ownership Guidelines +• We have voluntarily adopted stock ownership guidelines for our executive officers and directors, which aligns the incentives of these persons with those of our stockholders and reflects a sound governance practice. See the section of this Proxy Statement titled " Stock Ownership Guidelines " for additional information. +Clawback and Forfeiture Policy +• We have voluntarily adopted a Clawback and Forfeiture Policy related to our cash and equity incentive awards, which reinforces our pay-for performance philosophy and contributes to a Company culture that emphasizes integrity and accountability in financial reporting. See the section of this Proxy Statement titled " Clawback and Forfeiture Policy " for additional information. +Equity Award Vesting Provisions +• Our equity awards are subject to "double-trigger" vesting upon a change in control. +No Tax Gross Ups +• Our change-in-control and severance agreements do not contain provisions allowing for excise tax gross up payments . +No Repricing of Awards • Our 2015 Stock Incentive Plan, or 2015 Plan, explicitly prohibits the repricing of equity awards. No repricing of awards will occur without the approval of our stockholders. +No Hedging and Pledging +• We have adopted governance policies that specifically prohibit hedging or pledging our shares, and other similar practices. See the section of this Proxy Statement titled " Compensation Risk Considerations " for additional information. +No Dividends on Unvested Equity Awards +• Our equity award agreements do not provide for the payment of dividends on unvested equity awards. +38 +COMPENSATION CONSULTANT AND PEER GROUP +Compensation Consultant +The Committee receives assessments and advice regarding our compensation practices and philosophy from its independent compensation consultant, Frederic W. Cook & Co., or FW Cook. FW Cook provides information on competitive pay practices and trends in our industry, and makes recommendations regarding the formulation of our Peer Group (as defined below), as well as the design and structure of our compensation program. The Committee meets regularly with FW Cook throughout the year, carefully reviews and assesses the materials provided by FW Cook, and engages in thorough deliberations with FW Cook and management regarding our executive compensation program and potential changes. +While our Company is not obligated to retain an independent compensation consultant, the Committee believes that the use of an independent consultant provides additional assurance that our executive compensation program is attractive and competitive in the marketplace, consistent with market conditions, aligned with our business and strategic objectives, and reflective of our executive compensation philosophy. +In accordance with applicable SEC rules, the Committee took certain factors into consideration when selecting FW Cook, which it believes may affect the independence of a compensation consultant. In particular, the Committee considered: +• whether any other services had been or were being provided by FW Cook to our Company; +• the amount of fees paid by our Company to FW Cook as a percent of FW Cook’s total revenues; +• FW Cook’s policies and procedures designed to prevent conflicts, a copy of which was provided to the Committee prior to the meeting; +• FW Cook’s ownership of our common stock (if any); and +• any business or personal relationships between FW Cook and any Committee members or any of our executive officers. +Furthermore, FW Cook does not provide any additional services to us or our management, other than those provided to the Committee. Following the consideration of these factors, and such additional factors as the Committee deemed appropriate under the circumstances, the Committee made an affirmative determination that FW Cook is independent and unanimously approved the engagement of FW Cook. +The decision to engage FW Cook was made by the Committee, and FW Cook reports directly to the Committee. While members of our management regularly communicate with representatives of FW Cook, our management did not recommend the engagement of FW Cook in any capacity for fiscal year 2022 (or in any prior year) and does not direct or oversee the retention, termination or scope of services of FW Cook with respect to our executive compensation program. +Peer Group +In making compensation decisions for fiscal year 2022, the Committee compared the aggregate compensation opportunity, as well as each element of compensation, against a peer group of publicly traded footwear, apparel, accessories and lifestyle brand companies that is recommended by FW Cook and approved by the Committee. Our peer group is generally comprised of companies against which we compete for executive talent and stockholder investment, are in related businesses or industries, and are otherwise similar to us based on a number of characteristics. Our peer group is reviewed at least annually by the Committee with support from FW Cook. In particular, when selecting our peer group, the Committee considers the characteristics set forth in the chart below. +39 +For fiscal year 2022, based on the factors discussed above, the Committee approved the peer group set forth in the table below, which we refer to as our Peer Group. +FISCAL YEAR 2022 PEER GROUP +• Carter's, Inc. • Express, Inc. • Lululemon Athletica, Inc. • Tapestry, Inc. +• Caleres, Inc. • Fossil Group, Inc. • Oxford Industries, Inc. • The Children's Place, Inc. +• Columbia Sportswear Company • G-III Apparel Group, Ltd. • Restoration Hardware Holdings, Inc. • Under Armour Inc. +• Crocs, Inc. • Genesco, Inc. • Skechers U.S.A., Inc. • Wolverine World Wide, Inc. +• DSW Inc. • Guess, Inc. • Steve Madden, Ltd. +While no single company in our peer group reflected all of our Company's characteristics, taken together the Committee believed that these companies provided strong comparative analogs to our overall business model at the time the peer group was selected. +For fiscal year 2023, the Committee approved an updated peer group based on consideration of the various factors and characteristics discussed above. In particular, changes were made to the peer group to reflect the relatively greater complexity of our organization taking into account metrics such as revenue and market capitalization. Our peer group for fiscal year 2023 consists of the following 20 companies, ten of which were part of our fiscal year 2022 Peer Group: +FISCAL YEAR 2023 PEER GROUP +• Capri Holdings Limited +• Hanesbrands Inc. +• RH +• Under Armour Inc. +• Carter's, Inc. • Levi Strauss & Co. • Skechers U.S.A., Inc. • Urban Outfitters Inc +• Columbia Sportswear Company • Lululemon Athletica, Inc. • Steve Madden, Ltd. • VF Corporation +• Crocs, Inc. • PVH Corp. • Tapestry, Inc. • Williams-Sonoma, Inc. +• Foot Locker, Inc. +• Ralph Lauren Corp +• Ulta Beauty, Inc. +• Wolverine World Wide, Inc. +Use of Peer Group in Setting Executive Compensation +As part of its effort to ensure that our executive compensation program is attractive and competitive in the marketplace, the Committee regularly reviews compensation data from our Peer Group provided by FW Cook. In addition, in order to gain perspective on overall market trends and practices, the Committee regularly reviews data from broader-based compensation surveys. Our Peer Group compensation data is generally used as an initial starting point in making compensation decisions for our executives, including with respect to both the target level of compensation and the overall structure of our executive compensation program. +For comparison purposes, FW Cook typically presents Peer Group data on individual executive pay levels, both with respect to the total compensation opportunity and individual elements of compensation for each executive. In setting the target compensation opportunity for each individual executive for fiscal year 2022, the Committee focused on benchmarking our executives’ target compensation opportunity to the 50th percentile compared to our Peer Group, subject to the discretion retained by the Committee to make adjustments as it deems appropriate. While the focus of the median pay philosophy is on the total compensation opportunity available to our executives, the individual elements of compensation are also generally targeted to the 50th percentile as a starting point. +While an assessment of our Peer Group compensation data, and broader-based compensation surveys, is a significant factor in the Committee’s evaluation of compensation decisions, it also considers a variety of additional factors, including the tenure, experience, and level of responsibility of each executive, recent and projected Company performance, recent individual performance, retention considerations, general industry practices and economic conditions. +As discussed above, the Committee selectively granted special equity awards during fiscal year 2022 following a review of compensation data from our fiscal year 2023 peer group to ensure our compensation program aligns with peer group practices. +40 +ELEMENTS OF FISCAL YEAR 2022 +EXECUTIVE COMPENSATION PROGRAM +The following table provides summary information regarding the key elements of our fiscal year 2022 executive compensation program: +COMPENSATION +ELEMENT FIXED +V. +PERFORMANCE-BASED / AT RISK CASH +V. +EQUITY +Base Salary Fixed Cash +2022 Annual Cash Incentive Awards Performance-Based / At Risk +(Short-Term Company Performance Criteria) Cash +2022 Time-Based RSUs Performance-Based / At Risk +(Long-Term Time-Based Vesting) Approximately 40% of total equity compensation +2022 LTIP PSUs Performance-Based / At Risk +(Long-Term Company Performance Criteria and Vesting) Approximately 60% of total equity compensation +Employee Benefits Fixed Other +Severance and Change in Control Fixed Cash/Equity/Other +Base Salary +The following table provides information regarding the base salaries paid to our NEOs during fiscal year 2022: +COMPENSATION ELEMENT +BASE SALARY +Compensation Considerations Performance Conditions +• Fixed +• Cash +• Provides a minimum level of fixed cash compensation necessary to attract and retain executives. +• Balance the level of fixed pay with performance-based pay to properly manage our compensation-related risk. +• No specific vesting conditions associated with payment. +• Salary reviewed and set annually based on a number of factors, including tenure, experience, scope of responsibilities, individual performance, Company performance, and our Peer Group data. +NAME BASE SALARY +Dave Powers (1) +$1,100,000 +Steven J. Fasching (2) +$735,000 +David E. Lafitte $735,000 +Stefano Caroti (3) +$700,000 +Wendy Yang $600,000 +(1) As of July 1, 2022, Mr. Powers' base salary was $1,200,000. +(2) As of July 1, 2022, Mr. Fasching's base salary was $765,000. +(3) As of July 1, 2022, Mr. Caroti's base salary was $740,000. +41 +2022 Annual Cash Incentive Awards +The following table provides information regarding the 2022 Annual Cash Incentive Awards granted to our NEOs during fiscal year 2022: +COMPENSATION ELEMENT +2022 ANNUAL CASH INCENTIVE AWARDS +Compensation Description Performance Conditions/ Vesting Provisions Pay-for-Performance +• Performance-Based ( Short-Term Company Performance Criteria ) +• Cash +• Short-term Company performance conditions based on Committee-approved annual metrics derived from our annual and long-range business and strategic plan. +• Pay based on achievement of threshold, target and maximum Company financial performance levels to reward achievement and strike appropriate balance between compensation incentives and risks. +• The "target" performance condition level is typically in line with the level of Company performance projected for each metric based on the annual budget. +• All NEOs have operating income and revenue-based performance metrics to reflect a continued focus on profitability and top line growth, and to ensure our compensation program encourages healthy and sustained growth across our business. +• Target bonus set as percentage of base salary. +• Actual bonus payout is based on achievement of fiscal year 2022 consolidated operating income and consolidated revenue targets for all NEOs (and business unit operating income and revenue targets for certain executives with business unit oversight responsibilities). +• The Committee assigned relative weighting to each component, which is expressed as a percentage of the targeted cash incentive amount. +• For threshold performance, 50% of the cash incentive related to that component would be earned. For target performance, 100% would be earned. For maximum performance, 200% would be earned. +• Achievement below threshold levels results in no payout. To the extent Company financial performance is achieved above the threshold levels, the bonus payout that will be earned from the threshold to the target, and then from the target to the maximum, will increase as determined by linear interpolation. +• When determining Company achievement relative to the performance targets, the Committee relied upon our fiscal year 2022 audited financial statements. +• Fiscal year 2022 consolidated operating income, consolidated revenue, Global Omni-Channel revenue, Performance Lifestyle operating income and Performance Lifestyle revenue metrics were all achieved above the target levels based on Company performance. Global Omni-Channel operating income was achieved above the threshold level and below the target level. +• As a result of this performance, 2022 Annual Cash Incentive Award payments ranging from 106% to 124% of base salary were earned by each of the NEOs, as described in detail below. +42 +Target Cash Incentive Amount +The Committee establishes a target amount of annual cash incentive compensation for each NEO, which is expressed as a percentage of base salary. The percentage is determined by the Committee by reference to a number of factors, scope of responsibilities, our recent and projected financial performance, and a review of our Peer Group data. Further, the target cash incentive amount is prorated to reflect any base salary adjustments throughout the full fiscal year so that the target amount reflects actual base salary earnings. +Performance Targets +The following table summarizes the performance conditions for the 2022 Annual Cash Incentive Awards, the relative weighting of each performance condition for each NEO, our Company's performance in light of the targets and the actual payout percentage for each component: +COMPONENT RELATIVE +WEIGHT FOR EACH NEO THRESHOLD PERFORMANCE TARGET PERFORMANCE MAXIMUM PERFORMANCE +PERFORMANCE AND PAYOUT (1) +Consolidated Operating Income +• 70% for Messrs. Powers, Fasching and Lafitte +• 30% for Mr. Caroti and Ms. Yang +• $493.0 million +• $547.8 million +• $657.4 million +• $564.7 million, resulting in a payout of 115% +Consolidated Revenue +• 30% for Messrs. Powers, Fasching and Lafitte +• $2,778.5 million +• $3,020.1 million +• $3,322.1 million +• $3,150.3 million, resulting in a payout of 143% +Business Unit Operating Income +• 40% for Mr. Caroti +(Global Omni-Channel) +• $692.4 million +• $769.4 million +• $923.2 million +• $757.2 million, resulting in a payout of 92% +• 40% for Ms. Yang +(Performance Lifestyle) +• $296.8 million +• $329.8 million +• $395.8 million +• $340.2 million, resulting in a payout of 116% +Business Unit Revenue +• 30% for Mr. Caroti +(Global Omni-Channel) +• $2,417.3 million +• $2,627.5 million +• $2,890.2 million +• $2,663.6 million, resulting in a payout of 114% +• 30% for Ms. Yang +(Performance Lifestyle) +• $909.8 million +• $988.9 million +• $1,137.3 million +• $1,054.3 million, resulting in a payout of 144% +(1) Payout percentages reflect the level of payout achieved for each component of the 2022 Annual Cash Incentive Award. +43 +Calculation of Payout +The amount of cash incentive compensation actually earned by each NEO with respect to the 2022 Annual Cash Incentive Awards, or Total Payout, is calculated by multiplying the target cash incentive amount by the percentage of target earned for each component, and then multiplying the amount by the relative weighting of each component, as illustrated in the table below: +NAME TARGET PERCENTAGE OF SALARY COMPONENT TARGET CASH INCENTIVE AMOUNT PERCENTAGE OF TARGET EARNED FOR COMPONENT RELATIVE WEIGHT OF COMPONENT PAYOUT FOR EACH COMPONENT +TOTAL PAYOUT +Dave Powers 125% Consolidated Operating Income +$962,500 +115% +70% +$1,191,065 +$1,701,521 +Consolidated Revenue +$412,500 +143% +30% +$510,456 +Steven J. Fasching 75% Consolidated Operating Income +$363,803 +115% +70% +$450,196 +$643,137 +Consolidated Revenue +$155,916 +143% +30% +$192,941 +David E. Lafitte 75% Consolidated Operating Income +$381,798 +115% +70% +$472,463 +$674,947 +Consolidated Revenue +$163,627 +143% +30% +$202,484 +Stefano Caroti 75% Consolidated Operating Income +$155,004 +115% +30% +$163,656 +$545,519 +Global Omni-Channel Operating Income +$206,671 +92% +40% +$218,208 +Global Omni-Channel Revenue +$155,003 +114% +30% +$163,655 +Wendy Yang 75% Consolidated Operating Income +$132,503 +115% +30% +$164,525 +$548,418 +Performance Lifestyle Operating Income +$176,671 +116% +40% +$219,367 +Performance Lifestyle Revenue +$132,504 +144% +30% +$164,526 +44 +2022 Time-Based Restricted Stock Units +The following table provides information regarding the 2022 Time-Based RSUs granted to our NEOs during fiscal year 2022: +COMPENSATION ELEMENT +2022 TIME-BASED RSUs +Compensation Description Performance Criteria/ Vesting Provisions Pay-for-Performance +• Fixed +• Long-Term Time-Based Vesting +• Approximately 40% of total equity compensation +• Balance the level of performance-based pay with time-based pay to properly manage our compensation-related risk. +• Primarily used for retention of our executives. +• Customary among our Peer Group. +• For fiscal year 2022, special equity awards were made to the following key executives: Stefano Caroti, Steven J. Fasching, David E. Lafitte, and Wendy Yang. These special equity awards were granted to ensure our compensation program aligns with peer group practices, to retain key executives in a highly competitive environment and to reward exceptional individual performance. The special equity awards consisted 40% of time-based RSUs (and the remaining 60% consisted of performance-based LTIP RSUs). +• 2022 Time-Based awards vest in three equal installments over three years commencing August 15, 2022. +• Special equity awards vest in three equal installments over approximately three years following the grant date. +• While the 2022 Time-Based RSUs and special equity awards are not subject to a performance-based vesting condition, our NEOs are at risk of not receiving the full value of these awards because vesting is conditioned upon continued employment over an extended period of time and their value is subject to fluctuation based on our stock price. +• The Committee expects a majority of equity awards to continue to have performance-based vesting conditions. +• The Committee expects special equity awards to be used infrequently. +45 +2022 Long-Term Incentive Plan Performance-Based Stock Units +The following table provides information regarding the 2022 LTIP PSUs granted to our NEOs during fiscal year 2022: +COMPENSATION ELEMENT +2022 LTIP PSUs +Compensation Description Performance Conditions/ Vesting Provisions Pay-for-Performance +• Performance-Based (Long-Term Company Performance Criteria and Vesting) +• Approximately 60% of total equity compensation +• Company performance criteria are based on Committee-approved metrics derived from our three-year long-range business and strategic plan that are approved at the beginning of the performance measurement period. +• Pre-tax income and revenue support our focus on profitability and consolidated revenue as key strategic initiatives and align executives’ interests with the execution of our long-range plan. +• Reliance on multiple performance-based vesting conditions strikes appropriate balance between compensation incentives and risks. +• For fiscal year 2022, special equity awards were made to Stefano Caroti, Steve Fasching, David Lafitte, and Wendy Yang. These special equity awards were granted to ensure our compensation program aligns with peer group practices, to retain key executives in a highly competitive environment and to reward exceptional individual performance. The special equity awards consisted 60% of performance-based LTIP RSUs, which vest based on the achievement of performance criteria over a three-year period. +• 50% of each award will vest subject to the achievement of annual pre-tax income targets measured in fiscal years 2022, 2023 and 2024, based on our three-year long range plan. +• 50% of each award will vest subject to the achievement of an annual consolidated revenue target measured in fiscal years 2022, 2023 and 2024, based on our long range plan. +• While we measure performance annually over the three-year period, the goals for each fiscal year are established at the beginning of the performance measurement period. +• No vesting of any portion of the award will occur if the Company fails to achieve the pre-established minimum revenue and pre-tax income thresholds. To the extent Company financial performance is achieved above the threshold amounts, the number of PSUs that will vest from the threshold to the target, and then from the target to the maximum, will increase as determined by linear interpolation, provided that the maximum number of PSUs that may vest with respect to a particular award will not exceed 200% of the targeted amount for that award regardless of the level of Company performance. +• The executive must provide continued service through March 31, 2024. +• When determining Company achievement relative to the annual performance targets, the Committee will rely upon our fiscal year 2022, 2023 and 2024 audited financial statements, as may be adjusted by the Committee for certain non-recurring items. +• Vesting of awards dependent on achievement of profitability and consolidated revenue targets that are established by the Committee on the grant date, which are consistent with achievement of our strategic objectives. +• Same Company performance criteria used for the 2022 LTIP PSUs and the portion of the special equity awards comprising performance-based LTIP RSUs to ensure alignment. +• As further described below, the vesting of the awards will subject to adjustment based upon the application of a TSR modifier, thereby correlating the vesting of the awards to total and relative stockholder returns over the full three-year performance period. +• The Committee expects special equity awards to be used infrequently. +TSR Modifier +The 2022 LTIP PSU awards earned are subject to adjustment based on a TSR modifier. The amount of the adjustment will be determined based upon a comparison of Company TSR relative to the TSR of a pre-determined set of peer group companies, or TSR Peer Group, for the 36-month performance period commencing on April 1, 2021 and ending on March 31, 2024. For purposes of the 2022 LTIP PSUs, the TSR Peer Group used is the same as the Peer Group, but also includes three additional competitive companies in similar industries. Depending on Company TSR relative to the TSR of the TSR Peer Group, the number of RSUs that will be subject to vesting pursuant to each 2022 LTIP PSU will be modified as follows with linear interpolation between the percentiles: +46 +Company TSR Relative to +Peer Group TSR (Percentile) TSR Modifier +(Multiplier) +≥75th 125% +55th 100% +(no modification) +≤25th 75% +Notwithstanding the foregoing, in the event that Company TSR is greater than or equal to the 55th percentile relative to the TSR of the TSR Peer Group, but Company TSR is a negative amount, the TSR modifier will not be applied (the number of RSUs to be vested will not be increased as a result of the TSR multiplier), which further aligns the interests of our executives with those of our stockholders. In addition, regardless of Company TSR relative to the TSR of the TSR Peer Group, the maximum number of RSUs that may vest pursuant to a particular 2022 LTIP PSU will not exceed 200% of the targeted amount, thereby mitigating compensation-related risk. +Option Exercises and Stock Award Vesting +The option exercises and stock award vesting for our NEOs that occurred during fiscal year 2022 for (i) fiscal year 2017 long-term incentive plan non-qualified stock options, or 2017 LTIP NQSOs, (ii) fiscal year 2018 long-term incentive plan non-qualified stock options, or 2018 LTIP NQSOs, and (iii) fiscal year 2020 long-term incentive plan performance-based stock units, or 2020 LTIP PSUs, are reflected in the table titled " Fiscal Year 2022 Option Exercises and Stock Vested. " +Employee Benefits +The following table provides information regarding the key employee benefits granted or paid to our NEOs during fiscal year 2022: +COMPENSATION ELEMENT +EMPLOYEE BENEFITS +Compensation Considerations Benefits +• Key employee benefits granted or paid +• Generally reflect benefits provided to all of our US-based full-time employees. +• Provides a standard package of benefits necessary to attract and retain executives. +• 401(k) defined contribution plan. +• 401(k) plan Company match of 50% of each eligible participant's tax-deferred contributions on up to 6% of eligible compensation on a per payroll period basis, with a true-up contribution if such eligible participant is employed by our Company on the first day of the calendar year. +• Premiums for long-term disability insurance and life insurance for the benefit of the employees. +• Health and welfare benefit plans. +• Relocation expenses for new hires. +• Standard employee product discounts. +• Eligibility to contribute to our Nonqualified Deferred Compensation Plan, or NQDC Plan. See the section of this Proxy Statement titled " Nonqualified Deferred Compensation. " +47 +Severance and Change-in-Control Provisions +The following table provides information regarding the severance and change in control provisions in our severance agreements and equity award agreements entered into with each of our NEOs: +COMPENSATION ELEMENT +SEVERANCE AND CHANGE IN CONTROL PROVISIONS +Compensation Considerations Terms +• Certain cash payments to NEOs, and vesting of certain equity awards in the event of a separation of employment +• The employment of our NEOs is "at will," meaning we can terminate them at any time and they can terminate their employment with us at any time. +• "Double-trigger" provisions preserve morale and productivity and encourage executive retention in the face of the potentially disruptive impact of a change in control. +• Considered a typical component of a competitive executive compensation program for executives among our Peer Group. +• Provisions take into account the expected time it takes a separated executive to find a similarly situated job. +Change-in-Control and Severance Agreements : +• Provide for certain cash payments, and the vesting of certain equity awards, in the event there is a separation of employment under various circumstances. +Equity Award Agreements : +• Provide for accelerated vesting of awards upon a change in control if the recipient is terminated by the acquiring entity in connection with the change in control under specified circumstances. In addition, vesting of awards will be accelerated in full if the acquiring entity does not agree to provide for the assumption or substitution of the awards, and for certain outstanding historical awards if the transaction is not approved by a majority of the continuing directors. +For additional information about the severance and change in control provisions in our severance agreements and equity award agreements, please refer to the section of this Proxy Statement titled " Potential Payments upon Termination or Change in Control. " +48 +OTHER COMPENSATION CONSIDERATIONS +Role of Executive Officers in Compensation Decisions +At the request of the Committee, our Chief Executive Officer or other senior management personnel may provide performance and compensation information to the Committee to inform its compensation decisions. However, our executives are not permitted to be present during any deliberations and voting regarding their own compensation, or during any executive sessions of the Committee. The Committee considers the information provided by our management, as well as information and advice provided by FW Cook, when making compensation decisions for our NEOs and other executives. The Committee, which is comprised solely of independent directors, thoroughly evaluates and approves all elements of compensation for our NEOs and other executives. +Compensation Risk Considerations +The Committee is responsible for reviewing the payments that may be made and the value that may be achieved from our compensation program for all employees, including our NEOs, to assess whether the program encourages excessive or unnecessary risk-taking or otherwise is likely to have a material adverse effect on us. The Committee conducts a compensation risk analysis at least annually, but also takes into account compensation-related risks each time it grants compensation awards throughout the fiscal year. In conducting these assessments, the Committee considers a number of factors including the following: +• Our compensation program consists of elements that provide both fixed and performance-based compensation, and the Committee reviews these elements and the relative mix annually. +• Our Peer Group and industry compensation data is reviewed regularly to ensure that our compensation program is appropriate and competitive. +• We have adopted a median pay philosophy whereby we remain focused on benchmarking our executives’ target total compensation at the median compared to our Peer Group. +• The Committee expects a majority of equity awards to continue to have performance-based vesting conditions. +• Performance-based awards are earned based on the achievement of pre-established Company and business unit performance goals covering multiple time periods. +• We seek to limit overlap between our performance conditions to ensure our compensation program is encouraging healthy and sustained growth across our business. +• Our performance-based awards are subject to maximum award amounts to cap the potential compensation amount associated with an award. +• Our executive compensation program encourages executive retention through long-term vesting provisions. For fiscal year 2022, all of the equity awards we granted were subject to three-year vesting. +• We have voluntarily adopted Stock Ownership Guidelines, which encourage executives to have a significant, long-term equity position in our Company, thereby aligning the interests of our executives with our stockholders. +• We have voluntarily adopted a Clawback and Forfeiture Policy related to our cash and equity incentive awards, which emphasizes integrity and accountability in financial reporting. +• Our governance policies, including our insider trading policy, prohibit our executive officers from hedging the economic interest in our securities, including short sales or trading in any derivatives involving our securities, and from pledging our securities. +• Our severance and change in control benefits are designed to attract and retain executives without providing excessive benefits such as excise tax gross up payments. +• Our equity awards are intended to provide for “double-trigger” vesting upon a change in control. +The Committee believes that, although the majority of the compensation opportunity provided to our executives is performance-based pay that is determined based upon the achievement of Company performance conditions, our executive compensation program does not encourage excessive or unnecessary risk-taking. The Committee does not believe that our compensation program is reasonably likely to have a material adverse effect on us. +49 +CEO Pay Ratio +Pursuant to Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of Regulation S-K, we are required to disclose the ratio of the annual total compensation of our principal executive officer to the median of the annual total compensation of all of our employees (excluding our principal executive officer), or our median employee. During fiscal year 2022, our principal executive officer was Dave Powers, our President and Chief Executive Officer. +For fiscal year 2022, the annual total compensation of our President and Chief Executive Officer was $10,854,934, and the annual total compensation of our median employee was $43,501, each as calculated in a manner consistent with Item 402(u) of Regulation S-K. +Based on this information, the fiscal year 2022 ratio of the annual total compensation of our principal executive officer to the annual total compensation of our median employee was approximately 250:1. +Consistent with Item 402(u) of Regulation S-K, we identified our median employee as of March 1, 2022 by (i) aggregating for each applicable employee (A) annual base salary for salaried employees (or hourly rate multiplied by estimated work schedule, for hourly, temporary and seasonal employees), (B) overtime paid during the year, and (C) target incentive compensation, and (ii) ranking this compensation measure for our employees from lowest to highest. For non-U.S. employees, we converted such employees’ pay to a U.S. dollar equivalent by applying an 11-month average trailing exchange rate for each applicable currency. This calculation was performed for all of our employees, excluding Mr. Powers, except as described below. After identifying our median employee, we calculated that individual’s fiscal year 2022 total annual compensation in accordance with the requirements of the applicable SEC rules. +Individuals (with corresponding number of employees, representing all employees in that jurisdiction) who were employed in Canada (76), Vietnam (81), Austria (15), and Italy (3) were excluded from the employee population for purposes of this disclosure, pursuant to the de minimis exemption set forth in the applicable SEC rules. After taking into consideration the foregoing exemption, on March 1, 2022, we had 2,325 U.S. employees and 1,429 non-U.S. employees. Without taking into account the impact of this exemption, we had 2,325 U.S. employees and 1,604 non-U.S. employees. +The pay ratio we have reported above is a reasonable estimate calculated in a manner consistent with applicable SEC rules based on our internal records and the methodology described above. The SEC rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices. Therefore, the pay ratio reported by other companies may not be comparable to the pay ratio we have reported above. +Clawback and Forfeiture Policy +Consistent with our executive compensation philosophy, which seeks to reward executive officers for financial performance that creates value for our stockholders, we have voluntarily adopted a Clawback and Forfeiture Policy. Under this policy, we will seek recoupment or reimbursement with respect to performance-based compensation paid or awarded to our executive officers when the following three factors exist: +• the incentive compensation payment or award (or the vesting of such award) was based upon the achievement of financial results, as reported in a Form 10-Q, Form 10-K or other report filed with the SEC, that were subsequently the subject of a restatement to correct an accounting error due to material noncompliance with any financial reporting requirement under the federal securities laws; +• a lower payment or award would have been made to such executive officer (or lesser or no vesting would have occurred with respect to such award) based upon the restated financial results; and +• the requirement to file the restatement was identified within three years after the date of the first public filing of the financial results that were subsequently the subject of the accounting restatement. +Under the policy, the restatement does not need to be the result of misconduct by the executive officers for the recoupment to apply. +The recoupment or reimbursement to be sought by our Company will be equal to the portion of any performance-based compensation paid to or received by such executive officer for or during each of the restated periods that is greater than the amount that would have been paid or received had the financial results been properly reported. +In addition, under this policy, the Committee may seek to recoup or recover from an employee certain performance-based compensation previously paid or awarded to such employee if the Company determines that the employee has engaged in significant misconduct that causes financial or reputational harm to the Company (regardless of whether a restatement of financial results has occurred). +50 +Stock Ownership Guidelines +To further align the interests of our directors and executive officers with those of our stockholders, we have voluntarily adopted Stock Ownership Guidelines. The Committee periodically reviews our Stock Ownership Guidelines to ensure it continues to evolve to take into account changes to our executive compensation program. +The minimum ownership thresholds for our NEOs are determined as a multiple of the NEO's base salary as of the beginning of each calendar year. Unless and until a NEO reaches the required ownership level, the NEO must retain at least 75% of the shares, after payment of any applicable exercise price and tax withholdings, that are acquired through our equity compensation program. The Committee periodically reviews our NEOs' compliance with the Stock Ownership Guidelines and, as of the end of fiscal year 2022, determined that each NEO complied with the minimum ownership thresholds determined thereunder. +Directors are required to hold a number of shares of common stock with a value equal to five times the base annual cash retainer fee within five years of joining our Board, subject to exceptions that may be granted by the Committee. In addition, each director must hold shares of our common stock within one year of joining our Board. +The following table provides a summary of the Stock Ownership Guidelines applicable to our NEOs and directors: +POSITION STOCK OWNERSHIP GUIDELINES +Chief Executive Officer 6x Annual Base Salary +Other NEOs 3x Annual Base Salary +Directors 5x Annual Board Retainer Fee +Tax and Accounting Considerations +Among the factors it considers when making executive compensation decisions, the Committee considers the anticipated tax and accounting impact to us (and to our executive officers) of various payments, equity awards and other benefits. +Section 162(m) of the Internal Revenue Code of 1986, as amended, or the Code, limits the amount we may deduct for compensation paid to “covered employees” to $1.0 million per person in any taxable year. "Covered employees” generally include our Chief Executive Officer, Chief Financial Officer and other highly compensated executive officers. The Committee considers the impact of the provisions of Section 162(m) of the Code when determining the compensation of the Company's executive officers, but we maintain the discretion to approve compensation that is not deductible so as to attract, retain and motivate our executives. We do not anticipate that the $1.0 million deduction limitation set forth in Section 162(m) of the Code will have a material impact on our results of operations. +The Committee also considers the impact of Section 409A of the Code, and in general, our executive plans and programs are designed to comply with the requirements of that section so as to avoid possible adverse tax consequences that may result from noncompliance. +We account for equity awards in accordance with the requirements of Financial Accounting Standards Board Accounting Standards Codification, or FASB ASC, Topic 718, Stock Compensation . +Our change-in-control and severance agreements do not allow for excise tax gross up payments. +51 +TALENT & COMPENSATION COMMITTEE REPORT +The Talent & Compensation Committee of our Company has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussion, the Talent & Compensation Committee has recommended to our Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement. +THE TALENT & COMPENSATION COMMITTEE +Cynthia (Cindy) L. Davis ( Chair ) +David A. Burwick +Victor Luis +Bonita C. Stewart +The Talent & Compensation Committee Report shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as amended, or the Acts, except to the extent that we specifically incorporate this information by reference, and shall not otherwise be deemed filed under the Acts. +52 +SUMMARY COMPENSATION TABLE +The following table sets forth all compensation paid or awarded to our NEOs during fiscal years 2022, 2021, and 2020. The amounts set forth in the table have been calculated in accordance with the requirements of applicable SEC rules, and do not necessarily reflect the amounts that have actually been paid to, or which may be realized by, our NEOs. The table should be read together with the section of this Proxy Statement titled “Compensation Discussion and Analysis.” +Name and Principal Position Year Salary +($) Bonus +($) +Stock +Awards +($) (1)(2) +Non-Equity Incentive +Plan +Comp. +($) (3) +All Other Comp. +($) (4) +Total +($) +Dave Powers +Chief Executive Officer +and President +2022 1,100,000 — 7,999,651 1,701,521 53,762 10,854,934 +2021 1,100,000 — 3,999,580 2,750,000 10,870 7,860,450 +2020 1,069,231 — 3,999,689 1,668,545 10,679 6,748,144 +Steven J. Fasching +Chief Financial Officer +2022 735,000 — 2,499,639 643,137 10,632 3,888,408 +2021 600,000 — 749,537 900,000 10,482 2,260,019 +2020 569,231 — 750,128 535,546 11,140 1,866,045 +David E. Lafitte (5) +Former Chief Operating Officer +2022 735,000 — 2,799,543 674,947 53,762 4,263,252 +2021 700,000 — 999,467 1,050,000 12,162 2,761,629 +2020 684,615 — 1,000,220 640,238 11,551 2,336,624 +Stefano Caroti +President of Omni-Channel +2022 700,000 — 2,499,684 545,519 53,458 3,798,661 +2021 650,000 — 849,615 975,000 48,521 2,523,136 +2020 625,385 — 849,689 561,952 12,566 2,049,592 +Wendy Yang (6) +Former President of Performance Lifestyle +2022 600,000 — 2,399,456 548,418 52,750 3,600,624 +(1) The amounts in this column represent the aggregate grant date fair value of the respective awards computed in accordance with FASB ASC Topic 718. For information about the assumptions underlying these computations, please refer to Note 8 to our consolidated financial statements included in our Annual Report on Form 10-K filed May 27, 2022 with the SEC. In accordance with applicable SEC rules, for those awards that are subject to the satisfaction of performance conditions, the amounts reported reflect the value at the grant date based upon the probable outcome of such conditions. +(2) These amounts reflect the aggregate value of 2022 Time-Based RSUs and 2022 LTIP PSUs granted to our NEOs, including the special equity awards granted to select NEOs. In granting the special equity awards during fiscal year 2022, the Committee specifically considered the aggregate value of all equity awards received by the NEOs throughout the fiscal year and concluded that the values were in line with peer group practices. Refer to the subsections of this Proxy Statement titled “2022 Time-Based Restricted Stock Units” and " 2022 Long-Term Incentive Plan Performance-Based Stock Units " under " Compensation Discussion and Analysis " for additional information. +(3) These amounts reflect the cash incentive payments paid to our NEOs under our 2022 Annual Cash Incentive Awards. Refer to the subsection of this Proxy Statement titled "2022 Annual Cash Incentive Awards” under "Compensation Discussion and Analysis" for additional information. +(4) The amounts in this column reflect matching contributions made to our NEOs under the NQDC Plan and 401(k) plan, as well as life insurance premiums paid on policies that have been adopted for the benefit of our NEOs. Refer to the section titled " Nonqualified Deferred Compensation " for additional information on our NQDC plan, including the value of matching contributions made to our NEOs. +. +(5) Mr. Lafitte, who was formerly our Chief Operating Officer, transitioned out of the role in June 2022. +(6) Ms. Yang, who was formerly our President of Performance Lifestyle, transitioned out of the role in May 2022. Ms. Yang did not qualify as an NEO prior to fiscal year 2022. +53 +GRANTS OF PLAN-BASED AWARDS IN +FISCAL YEAR 2022 +The following table sets forth all grants of plan-based awards made to our NEOs during fiscal year 2022. The amounts set forth in the table do not necessarily reflect the amounts that have actually been paid to, or which may be realized by, our NEOs. The table should be read together with the section of this Proxy Statement titled “ Elements of Fiscal Year 2022 Executive Compensation Program. ” +Potential Payouts as of Grant Date Under Non-Equity Incentive Plan Awards (1) +Potential Payouts as of Grant Date Under Equity Incentive Plan Awards All Other Stock Awards: Number of Shares (#) +Grant Date +Fair Value +of Awards +($) (4) +Name Grant Date Threshold +($) Target +($) Max. +($) Threshold +(#) Target +(#) Max. +(#) +Dave Powers 687,500 1,375,000 2,750,000 — — — — — +7/1/21 — — — 5,553 +11,106 (2) +22,212 — 4,799,680 +7/1/21 — — — — — — +8,208 (3) +3,199,971 +Steven J. Fasching (5) +259,860 519,719 1,039,438 — — — — — +7/1/21 — — — 694 +1,388 (2) +2,776 — 599,852 +7/1/21 — — — — — — +1,026 (3) +399,996 +8/3/21 — — — 926 1,852 3,704 899,758 +8/3/21 1,394 600,033 +David E. Lafitte (5)(6) +272,712 545,425 1,090,849 — — — — — +7/1/21 — — — 902 +1,804 (2) +3,608 — 779,634 +7/1/21 — — — — — — +1,334 (3) +520,073 +2/8/22 — — — 1,413 2,825 5,650 — 899,876 +2/8/22 — — — — — — 1,999 599,960 +Stefano Caroti (5) +258,339 516,678 1,033,356 — — — — — +7/1/21 — — — 694 +1,388 (2) +2,776 — 599,852 +7/1/21 — — — — — — +1,026 (3) +399,996 +2/8/22 — — — 1,413 2,825 5,650 — 899,876 +2/8/22 — — — — — — 1,999 599,960 +Wendy +Yang (5)(6) +220,839 441,678 883,356 — — — — — +7/1/21 — — — 625 +1,249 (2) +2,498 — 539,779 +7/1/21 — — — — — — +923 (3) +359,841 +2/8/22 — — — 1,413 2,825 5,650 — 899,876 +2/8/22 — — — — — — 1,999 599,960 +(1) The amounts in this column reflect the potential payouts under the 2022 Annual Cash Incentive Awards, which were paid out between 106% and 124% of target. Cash incentive payments were made in June 2021. Refer to the section of this Proxy Statement titled " 2022 Annual Cash Incentive Awards " under " Compensation Discussion and Analysis " for additional information. +(2) The awards in this row reflect the grant of 2022 LTIP PSUs. These awards may vest based upon continued service through March 31, 2024 and our achievement of our annual performance target for each of the fiscal years 2022, 2023, and 2024. As of the date of this Proxy Statement, we consider the performance conditions to be probable of being achieved at 100% of the target amount and the awards can vest up to a maximum of 200% of the target amount. Refer to the section of this Proxy Statement titled " 2022 Long-Term Incentive Plan Performance Stock Units " under " Compensation Discussion and Analysis " for additional information. +(3) The awards in this column reflect the grant of 2022 Time-Based RSUs. These awards vest over three years in equal annual installments on August 15, 2022, 2023 and 2024. Refer to the section of this Proxy Statement titled " 2022 Time-Based Restricted Stock Units " under " Compensation Discussion and Analysis " for additional information. +54 +(4) The amounts in this column represent the aggregate grant date fair value of the respective awards computed in accordance with FASB ASC Topic 718. For information about the assumptions underlying these computations, please refer to Note 8 to our consolidated financial statements included in our Annual Report on Form 10-K filed May 27, 2022 with the SEC. In accordance with applicable SEC rules, for those awards that are subject to the satisfaction of performance conditions, the amounts reported reflect the value of the grant date based upon the probable outcome of such conditions. +(5) Following a review of compensation data from our new fiscal year 2023 peer group, which reflected the increased size and complexity of our organization, we selectively granted special equity awards to Mr. Fasching, Mr. Caroti, Mr. Lafitte and Ms. Yang. The Committee also deemed these special equity awards to be appropriate to retain key executives in a highly competitive environment and to reward exceptional individual performance. The special equity awards consisted 60% of LTIP PSUs, which vest based on the achievement of pre-tax income and consolidated revenue targets over a three-year period, and 40% of time-vested RSUs, which vest in three equal installments over three years following the grant date, to align the terms with other equity grants made during the fiscal year. Our Chief Executive Officer was not granted a special equity award. As of the date of this Proxy Statement, we consider the performance conditions for the LTIP PSUs to be probable of being achieved at 100% of the target amount and the awards can vest up to a maximum of 200% of the target amount . +(6) The special equity awards issued to Mr. Lafitte and Ms. Yang have been forfeited. +55 +OUTSTANDING EQUITY AWARDS AT +2022 FISCAL YEAR END +The following table sets forth equity awards granted to our NEOs that remained outstanding as of March 31, 2022. The market values of the awards set forth in the table have been calculated in accordance with the requirements of applicable SEC rules, and do not necessarily reflect the amounts that have actually been paid to, or which may be realized by, our NEOs. The table should be read together with the section of this Proxy Statement titled “ Elements of Fiscal Year 2022 Executive Compensation Program. ” +Stock Options Stock Awards +Name Number of +securities +underlying +unexercised +options +exercisable +(#) Number of +securities +underlying +unexercised +unearned +options +(#) Option +exercise +price +($) Option +expiration +date Number of +shares that +have not +vested +(#) +Market +value of +shares that +have not +vested +($) (3) +Number of +unearned +shares that +have not +vested +(#) (4) +Market +value of +unearned +shares that +have not +vested +($) (5) +Dave Powers — — 61.86 3/31/2026 +16,055 (6) +4,395,377 17,452 4,777,834 +71,914 (2) +— 69.29 6/13/2024 — — — — +Steven J. Fasching — — — — +3,892 (7) +1,065,513 4,429 1,212,527 +— — — — — — — — +David E. Lafitte +5,427 (1) +— 61.86 3/31/2026 +5,295 (8) +1,449,612 6,215 1,701,481 +21,574 (2) +— 69.29 6/13/2024 — — — — +Stefano Caroti +14,725 (1) +— 61.86 3/31/2026 +4,692 (9) +1,284,529 5,561 1,522,435 +7,408 (2) +— 69.29 6/13/2024 — — — — +Wendy Yang — — 61.86 3/31/2026 +4,394 (10) +1,202,945 5,263 1,440,852 +— — 69.29 6/13/2024 — — — — +(1) These awards reflect 2017 LTIP NQSOs that were granted in November 2016. The Talent & Compensation Committee determined that the performance condition was achieved, and the options are fully vested and exercisable. +(2) These awards reflect 2018 LTIP NQSOs that were granted in June 2017. The Talent & Compensation Committee determined that the performance condition was achieved, and the options are fully vested and exercisable. +(3) In accordance with applicable SEC regulations, the market value of the shares has been determined based on the closing price of our common stock on March 31, 2022, which was $273.77. +(4) The stock awards are 2021 and 2022 LTIP PSUs that were granted in February 2021, July 2021, August 2021, and February 2022 respectively, which remain outstanding and subject to long-term performance and service conditions. The shares included reflect achievement of the performance conditions at the target level of 100%. However, the maximum performance level for these awards is 200%. The 2021 LTIP PSUs will vest on March 31, 2023, and 2022 LTIP PSUs will vest on March 31, 2024, each subject to achievement of certain performance criteria. +(5) In accordance with applicable SEC regulations, the market value of the shares has been determined based on the closing price of our common stock on March 31, 2022, which was $273.77. The market value of 2021 and 2022 LTIP PSUs was calculated as to 100% of the shares underlying the awards. +(6) This amount consists of (i) 1,535 2020 Annual PSUs granted in June 2019, which shares vest as to 100% on August 15, 2022 (ii) 1,535 2020 time-based RSUs granted in June 2019, which shares vest as to 100% on August 15, 2022 (iii) 2,657 2021 time-based RSUs granted in June 2020, which shares vest as to 50% on August 15, 2022, and 2023 (iv) 2,120 2021 time-based RSUs granted in November 2020, which shares vest as to 50% on August 15, 2022, and 2023 (v) 8,208 2022 time-based RSUs granted in July 2021, which shares vest as to 33.33% on August 15, 2022, 2023, and 2024. +(7) This amount consists of (i) 288 2020 Annual PSUs granted in June 2019, which shares vest as to 100% on August 15, 2022 (ii) 288 2020 time-based RSUs granted in June 2019, which shares vest as to 100% on August 15, 2022 (iii) 498 2021 time-based RSUs granted in June 2020, which shares vest as to 50% on August 15, 2022, and 2023 (iv) 398 2021 time-based RSUs granted in November 2020, which shares vest as to 50% on August 15, 2022, and 2023 (v) 1,026 2022 time-based RSUs granted in July 2021, which shares vest as to 33.33% on August 15, 2022, 2023, and 2024 and (vi) 1,394 2022 time-based RSUs granted in August 2021, which shares vest as to 33.33% on August 15, 2022, 2023, and 2024. +56 +(8) This amount consists of (i) 384 2020 Annual PSUs granted in June 2019, which shares vest as to 100% on August 15, 2022 (ii) 384 2020 time-based RSUs granted in June 2019, which shares vest as to 100% on August 15, 2022 (iii) 664 2021 time-based RSUs granted in June 2020, which shares vest as to 50% on August 15, 2022, and 2023 (iv) 530 2021 time-based RSUs granted in November 2020, which shares vest as to 50% on August 15, 2022, and 2023 (v) 1,334 2022 time-based RSUs granted in July 2021, which shares vest as to 33.33% on August 15, 2022, 2023, and 2024 and (vi) 1,999 2022 time-based RSUs granted in February 2022, which shares vest as to 33.33% on August 15, 2022, 2023, and 2024. +(9) This amount consists of (i) 326 2020 Annual PSUs granted in June 2019, which shares vest as to 100% on August 15, 2022 (ii) 326 2020 time-based RSUs granted in June 2019, which shares vest as to 100% on August 15, 2022 (iii) 565 2021 time-based RSUs granted in June 2020, which shares vest as to 50% on August 15, 2022, and 2023 (iv) 450 2021 time-based RSUs granted in November 2020, which shares vest as to 50% on August 15, 2022, and 2023 (v) 1,026 2022 time-based RSUs granted in July 2021, which shares vest as to 33.33% on August 15, 2022, 2023, and 2024 and (vi) 1,999 2022 time-based RSUs granted in February 2022, which shares vest as to 33.33% on August 15, 2022, 2023, and 2024. +(10) This amount consists of (i) 288 2020 Annual PSUs granted in June 2019, which shares vest as to 100% on August 15, 2022 (ii) 288 2020 time-based RSUs granted in June 2019, which shares vest as to 100% on August 15, 2022 (iii) 498 2021 time-based RSUs granted in June 2020, which shares vest as to 50% on August 15, 2022, and 2023 (iv) 398 2021 time-based RSUs granted in November 2020, which shares vest as to 50% on August 15, 2022, and 2023 (v) 923 2022 time-based RSUs granted in July 2021, which shares vest as to 33.33% on August 15, 2022, 2023, and 2024 and (vi) 1,999 2022 time-based RSUs granted in February 2022, which shares vest as to 33.33% on August 15, 2022, 2023, and 2024. +57 +FISCAL YEAR 2022 OPTION EXERCISES AND STOCK VESTED +The following table provides information for our NEOs regarding option exercises and stock award vesting during fiscal year 2022, including the number of shares acquired upon exercise or vesting and the value realized as determined based on applicable SEC rules. The value realized does not necessarily reflect the amount that will actually be received by our NEOs upon the sale of the shares. +Option Awards Stock Awards +Name Number of +Shares +Acquired on +Exercise +(#) +Value Realized on Exercise +($) (1)(2) +Number of +Shares +Acquired on +Vesting +(#) (3)(4) +Value Realized +on Vesting +($) (5) +Dave Powers — — 41,489 12,776,766 +Steven J. Fasching — — 7,955 2,459,135 +David E. Lafitte — — 10,542 3,267,859 +Stefano Caroti — — 9,025 2,805,792 +Wendy Yang 14,383 5,057,821 7,849 2,425,994 +(1) Options exercised were under the 2017 LTIP NQSOs and 2018 LTIP NQSOs. +(2) Pursuant to applicable SEC rules, the amounts in this column reflect the value realized upon the exercise of the option awards, which is based on the closing price of our common stock on the applicable exercise dates less the exercise price of the relevant option awards. +(3) These amounts consist of shares acquired upon vesting of the fiscal year 2020 LTIP PSUs, fiscal years 2019 and 2020 RSUs and PSUs, and fiscal year 2022 RSU stock compensation plans. +(4) The total number of shares actually received by the NEOs, net of shares withheld for taxes, were as follows: 21,468 for Mr. Powers, 4,549 for Mr. Fasching, 5,867 for Mr. Lafitte, 5,101 for Mr. Caroti, and 4,507 for Ms. Yang. +(5) Pursuant to applicable SEC rules, the amounts in this column reflect the value realized upon the vesting of the stock awards, which is based on the closing price of our common stock on the applicable vesting dates. +58 +NONQUALIFIED DEFERRED COMPENSATION +Nonqualified Deferred Compensation Plan +The Committee has adopted the NQDC Plan, which is an unfunded, nonqualified deferred compensation program sponsored by our Company to provide certain members of our management the opportunity to defer compensation into the NQDC Plan. The NQDC Plan year is from January 1 st to December 31 st . Participants may defer up to 50% of their annual base salary and up to 85% of any cash incentive bonus under the NQDC Plan. We have the option, but not the obligation, to make discretionary or matching cash contributions to NQDC Plan participants. We have established a rabbi trust as a reserve for the benefits payable under the NQDC Plan. During fiscal year 2022, certain of our NEOs elected to make contributions to the NQDC Plan, and the Committee elected to match a portion of the contributions under the NQDC Plan. +Name +Executive contributions during fiscal year 2022 ($) (1) +Registrant contributions during fiscal year 2022 ($) (2) +Aggregate loss during fiscal year 2022 ($) Aggregate withdrawals/distributions during fiscal year 2022 ($) Aggregate balance at end of fiscal year 2022 ($) +Dave Powers 687,500 41,450 (55,148) — 744,012 +Steven J. Fasching — — — — — +David E. Lafitte 149,760 41,450 (37,491) — 432,979 +Stefano Caroti 498,461 40,700 (173,803) — 1,859,699 +Wendy Yang 87,981 40,437 (6,252) — 292,988 +Total 1,423,702 164,037 (272,694) — 3,329,678 +(1) The amounts reported in this column reflect contributions made by our NEOs under the NQDC Plan during fiscal year 2022. These amounts are separately reported as compensation within the " Summary Compensation Table " above, and do not reflect amounts in addition to those amounts. +(2) The amounts reported in this column reflect discretionary matching contributions made by us to our NEOs under the NQDC Plan during fiscal year 2022. These amounts are included in the " All Other Compensation " column of the " Summary Compensation Table " above, and do not reflect amounts in addition to those amounts. +Deferred Stock Unit Compensation Plan +The Committee has also adopted a Deferred Stock Unit Compensation Plan. Under the plan, a director or employee who holds unvested RSUs may elect to defer settlement of up to 100% of the awards. For each unit of our common stock held pursuant to an award of RSUs that is deferred, the participant will receive one Deferred Stock Unit. Amounts deferred will be distributed, as described in the plan, at the time elected by the participant. A participant’s Deferred Stock Units will be settled in shares of our common stock, as more specifically described in the plan. None of our NEOs elected to participate in the plan during fiscal year 2022. +59 +POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL +Change-in-Control and Severance Agreements +We have entered into change in control and severance agreements, or Severance Agreements, as amended from time to time, with each of our NEOs. The information below describes compensation and benefits that are payable or earned under the Severance Agreements with our NEOs (which are each referred to in their respective Severance Agreement as an “executive”) upon the occurrence of certain termination events. +Termination by Our Company for Cause, or by Executive Without Good Reason +Pursuant to the Severance Agreements with each of our NEOs, if the executive is terminated by our Company for Cause, or the executive terminates his or her employment without Good Reason (in each case as defined below), then the NEO will receive the following from our Company: +• payment of his or her accrued base salary, accrued vacation, reimbursement for reimbursable expenses, accrued and vested benefits under our plans or programs and other benefits required to be paid by law, accrued but unpaid non-equity incentive bonus for the prior fiscal year (excluding any non-equity incentive bonus for the year of termination); and +• the right to exercise all vested equity awards pursuant to the terms of the applicable award agreement. +Termination Due to Death or Total Disability +Pursuant to the Severance Agreements with each of our NEOs, if the executive is terminated due to his or her death or total disability, then in addition to those benefits provided upon a termination by our Company for Cause or by executive other than for Good Reason, the NEO will receive: +• pro-rated portion of his or her non-equity incentive bonus for the current fiscal year based on actual length of service during the year of termination and actual achievement by our Company of the performance conditions in respect of such bonus previously established by the Committee. +Termination by Our Company Without Cause +Pursuant to the Severance Agreements with each of our NEOs, if the executive is terminated by our Company without Cause, then in addition to those benefits provided upon a termination due to death or total disability, the NEO will receive: +• payment of his or her then-effective annual base salary for, in the case of the CEO, 18 months, or, in the case of any other NEO, 12 months following his or her termination, subject to such executive signing a release; and +• receipt of health benefits for a period of 18 months in the case of the CEO, and one year in the case of any other NEO following his or her termination or his or her attainment of alternative employment that provides health benefits, whichever is earlier. +Termination Without Cause or by Executive for Good Reason within Two Years of a Change in Control +Pursuant to the Severance Agreements with each of our NEOs, if the executive is terminated by our Company without Cause or by the executive for Good Reason within two years of a Change in Control, then in addition to those benefits provided upon a termination due to death or total disability, the NEO will receive: +• payment of, in the case of the CEO, two times, or, in the case of any other NEO, one-and-one-half times his or her then-effective annual base salary, plus the greater of one-and-one-half times the targeted incentive bonus immediately prior to the time such termination occurs or one-and-one-half times the average actual incentive bonus for the previous three years, subject to such executive signing a release; and +• receipt of health benefits for, in the case of the CEO, a period of two years, or, in the case of any other NEO, a period of 18 months following his or her termination or his or her attainment of alternative employment that provides health benefits, whichever is earlier. +For purposes of the Severance Agreements, “Cause” means, in part, (i) any willful breach of duty by the executive in the course of his or her employment or continued violation of written Company employment policies after written notice of such violation, (ii) violation of our insider trading policies, (iii) conviction of a felony or any crime involving fraud, theft, embezzlement, dishonesty or moral turpitude, (iv) engaging in activities which materially defame our Company, engaging in conduct which is materially injurious to our Company or our affiliates, or any of our respective customer or supplier relationships, financially or otherwise, or +60 +(v) the executive’s gross negligence or continued failure to perform duties or executive’s continued incapacity to perform such duties. +“Good Reason” means, without the consent of the executive, if within two years of a change in control, there is a material reduction of the executive’s total compensation, benefits, and perquisites (excluding a material reduction resulting from a decrease in value of the Company’s stock), our Company's relocation is greater than 50 miles from the location where the executive performs services, or a material change in the executive’s authority, duties, or responsibilities; provided, however, no such event shall constitute Good Reason unless the executive shall have given written notice to our Company of the executive’s intent to resign for “Good Reason” within 30 days after the executive first becomes aware of the occurrence of any such event (specifying the nature and scope of the event) and such event or occurrence shall not have been cured within 30 days of our receipt of such notice, and the executive resigns no later than 90 days after the expiration of the 30-day cure period. +“Change in Control” means the occurrence of a merger, consolidation, sale of all or a major portion of the assets of our Company (or a successor organization) or similar transaction or circumstance where any person or group acquires, in one or more transactions, beneficial ownership of more than 50% of the outstanding shares of voting stock of our Company (or a successor organization), or a change in a majority of the members of our Board. +No NEOs will be entitled to gross ups for excise tax penalty on “excess golden parachute payments” as a result of termination following a Change in Control. +Equity Award Agreements +Pursuant to the “double-trigger” vesting provisions of the awards outstanding as of the end of fiscal year 2021 under the 2006 Equity Incentive Plan, or 2006 Plan, and 2015 Plan, except as specifically noted below, the vesting of each award will be accelerated in full in the event of a change in control that is approved by a majority of the Continuing Directors (as defined in the award agreements) if the acquiring or successor entity in the change in control provides for the continuance or assumption of the award agreement, or the substitution for the award agreement of a new agreement of comparable value covering shares of a successor corporation, and (i) the recipient is terminated by the acquiring company without Cause or pursuant to a Constructive Termination (as such terms are defined in the relevant award agreements) within either 12 or 24 months of such change in control; or (ii) only in the case of certain LTIP NQSOs and RSUs, the recipient has provided Continuous Service (as defined in the award agreements) through the applicable performance vesting date. +Notwithstanding the foregoing summary, the award agreements governing the grants of the 2020 Annual PSUs only provide for acceleration as described above to the extent that the Committee determines that at least the “threshold” performance conditions associated with the awards have been met unless the change in control occurs prior to the end of the relevant performance period, in which case the unvested PSUs will accelerate in full, regardless of achievement of the performance condition. +In addition, the vesting of each equity award will be accelerated in full if: (i) for certain of the outstanding historical awards, a change in control occurs that has not been approved by a majority of the Continuing Directors; or (ii) the acquiring or successor entity in the change in control does not agree to continue or assume the award agreement, or substitute new awards of comparable value. +Severance and Change-in-Control Payments +The following table provides information about the payments and benefits that would have been paid or provided to our NEOs in the event that a termination of employment had occurred on March 31, 2022. The amounts reflected in the table are in addition to amounts that would have been payable for accrued but unpaid base salary, accrued paid time off, accrued but unpaid cash incentive compensation, and reimbursement of expenses. +The payments to be made, and the stock and option awards to be vested, in connection with different termination events (including in connection with a change in control) for each of our NEOs have been determined by reference to the terms of the applicable Severance Agreements and equity award agreements. Except as described above, no payments or benefits would be provided to our NEOs in the event of a termination of employment for Cause. Refer to the section of this Proxy Statement titled “ Potential Payments upon Termination or Change in Control ” for additional information. +For purposes of the table, the value of the stock and option awards has been determined based on the closing price of our common stock on March 31, 2022. In the event of an actual change in control transaction, the value of our common stock may be significantly different than this assumed value, in which case the value realized by our NEOs upon the vesting of the stock and option awards may be significantly different. +61 +Upon Termination +Name Type of Compensation +or Benefit Due to Death or +Total Disability +($) By Our Company +Without Cause +($) In Connection with a Change +in Control +($) +Dave Powers Cash payments — 1,650,000 5,260,033 +Value of health benefits — 31,310 41,747 +Value of stock awards (1) +— — 9,173,211 +Total — 1,681,310 14,474,991 +Steven J. Fasching Cash payments — 735,000 2,141,841 +Value of health benefits — 23,959 35,939 +Value of stock awards (1) +— — 2,278,040 +Total — 758,959 4,455,820 +David E. Lafitte Cash payments — 735,000 2,285,092 +Value of health benefits — 20,874 31,310 +Value of stock awards (1) +— — 3,151,093 +Total — 755,874 5,467,495 +Stefano Caroti Cash payments — 700,000 2,091,235 +Value of health benefits — 16,970 25,455 +Value of stock awards (1) +— — 2,806,964 +Total — 716,970 4,923,654 +Wendy Yang Cash payments — 600,000 1,577,751 +Value of health benefits — 20,874 31,310 +Value of stock awards (1) +— — 2,643,797 +Total — 620,874 4,252,858 +(1) The amount in this row reflects the value of all of the performance-based and time-based RSUs that remained outstanding as of March 31, 2022, based on the closing price of our common stock on that date, including: (i) the 2020 Time-Based RSUs, (ii) the 2020 Performance-Based RSUs, (iii) the 2021 Time-Based RSUs, (iv) the 2022 Time-Based RSUs, (v) the 2021 LTIP PSUs, (vi) the 2022 LTIP PSUs, and (vii) certain additional time-based RSUs granted in fiscal years 2021 and 2022. +Consulting Agreement with Wendy Yang +On May 31, 2022, or the Separation Date, we entered into a Consulting Agreement and General Release, or the Consulting Agreement, with Wendy Yang, our former President of Performance Lifestyle. Under the Consulting Agreement, Ms. Yang has agreed to provide consulting services to us from June 1, 2022 until August 15, 2022, or the Consulting Period, unless earlier terminated pursuant to the terms of the Consulting Agreement, to ensure a smooth transition of services following the Separation Date. The effectiveness of the Consulting Agreement was conditioned upon and subject to Ms. Yang entering into a general release of claims for the benefit of the Company and certain other parties. +The Consulting Agreement provides that we will, among other things, pay Ms. Yang (i) a pro-rated portion of the target amount of the cash incentive bonus payable with respect to fiscal year 2023 based on her actual length of service during the fiscal year, (ii) payments equal to 24 months of her base salary (in effect on the Separation Date), which will be mitigated on a dollar-for-dollar basis for income received by her during the 12 months following the Separation Date (subject to certain exceptions as set forth in the Consulting Agreement), (iii) COBRA group health insurance premiums for Ms. Yang and her eligible dependents until 18 months following the Separation Date, unless sooner terminated in accordance with the terms of the Consulting Agreement, and (iv) any accrued and vested benefits required to be provided by the terms of any Company-sponsored benefit plans or any benefits required to be paid or provided under applicable law. In addition, any equity awards previously granted to Ms. Yang that were outstanding on the Separation Date, and that vest on or before August 15, 2022, will remain outstanding subject to and consistent with the terms of the 2015 Plan and the agreements granting such awards. However, no further vesting of Ms. Yang's awards shall occur following the end of the Consulting Period. +Ms. Yang’s receipt of the payments and other benefits under the Consulting Agreement is conditioned upon her continued compliance with the confidentiality, non-competition, non-solicitation, non-disparagement and other covenants set forth in the Consulting Agreement. In particular, Ms. Yang has agreed not to accept employment from, or engage in any professional relationship with, any of our competitors, or to otherwise engage in any business activity that is competitive with our Company, until the termination of the Consulting Agreement. In the event of a breach of these obligations, we may demand Ms. Yang repay +62 +the amounts paid pursuant to the Consulting Agreement prior to the breach of such obligations, and Ms. Yang will forfeit any further payments or benefits that would have otherwise been payable pursuant to the agreement. +63 +DIRECTOR COMPENSATION +For fiscal year 2022, directors who are not our employees, or our Nonemployee Directors, received an annual cash retainer fee of $65,000, plus an annual cash retainer of $10,000 for each Board committee assignment. Nonemployee Directors holding the following positions received additional annual cash retainer fees as follows: $160,000 for Chairman of our Board of Directors; $40,000 for Chair of the Audit & Risk Management Committee; $35,000 for Chair of the Talent & Compensation Committee; and $20,000 for Chair of the Corporate Governance Committee. All or any portion of the cash retainer fees paid to any of our Nonemployee Directors may, at the election of the director, be paid through the issuance of our common stock. +Each of our Nonemployee Directors is also entitled to receive common stock with a total value of approximately $150,000 for annual service on our Board. The shares are issued in equal quarterly installments with the number of shares being determined using the rolling average of the closing price of our common stock during the last 10 trading days leading up to, and including, the 15 th day of the last month of each quarterly period. Each of these shares is fully vested on the date of issuance. Where our Nonemployee Directors elect to be paid their annual cash retainer fees in shares of our common stock, the number of shares to be issued is calculated using the same valuation methodology. +Nonemployee Directors are reimbursed for any reasonable Board-related expenses. Nonemployee Directors also receive product discounts, which are generally available to our employees and, from time to time, may receive products without charge in order to help expand the directors’ knowledge of our products. +Director Compensation Table +The following table sets forth all compensation paid or awarded to our Nonemployee Directors during fiscal year 2022. The amounts set forth in the table have been calculated in accordance with applicable SEC rules, and do not necessarily reflect the amounts that have actually been paid to, or which may be realized by, our Nonemployee Directors. +Name Fees +Earned +($) +Stock +Awards +($) (1) +Total +($) +Michael F. Devine, III 225,000 151,895 376,895 +Nelson C. Chan 80,833 151,895 232,728 +Cynthia (Cindy) L. Davis 115,833 151,895 267,728 +Juan R. Figuereo 115,000 151,895 266,895 +Maha S. Ibrahim (2) +56,378 159,185 215,563 +Victor Luis (3) +200 227,712 227,912 +Lauri M. Shanahan 95,000 151,895 246,895 +Brian A. Spaly (4) +37,500 77,331 114,831 +Bonita C. Stewart 96,667 151,895 248,562 +David Burwick (5)(6) +151 130,729 130,880 +(1) The amounts in this column represent the aggregate grant date fair value of the awards computed in accordance with FASB ASC Topic 718. +(2) Ms. Ibrahim has elected to receive her annual cash retainer fees through the issuance of our common stock. +(3) Mr. Luis has elected to receive his annual cash retainer fees through the issuance of our common stock. +(4) Mr. Spaly departed from the Board effective as of September 15, 2021. +(5) Mr. Burwick was appointed to serve as a member of our Board effective as of September 15, 2021. +(6) Mr. Burwick has elected to receive his annual cash retainer fees through the issuance of our common stock. +Stock Ownership Guidelines +Our Board has adopted Stock Ownership Guidelines applicable to our Nonemployee Directors. Nonemployee Directors are required to hold a number of shares of common stock with a value equal to five times the base annual cash retainer fee within five years of joining our Board, subject to exceptions that may be granted by the Talent & Compensation Committee. In addition, each director must hold shares of our common stock within one year of joining our Board. Any shares of common stock held by Nonemployee Directors through our Deferred Stock Unit Compensation Plan are counted as stock ownership for purposes of these guidelines. +The Committee periodically reviews our directors' compliance with the Stock Ownership Guidelines. +64 +EQUITY COMPENSATION PLAN INFORMATION +The following table sets forth information regarding shares of our common stock that were eligible for issuance under our equity compensation plans as of March 31, 2022. +Plan category +Number of securities +to be issued +upon exercise of +outstanding options or settlement of outstanding RSUs (1)(2) +(#) +Weighted-average +exercise price of +outstanding options (3) +($) +Number of securities +remaining available +for future issuance (4) +(#) +Equity compensation plans approved by security holders 351,116 67.70 1,263,724 +Equity compensation plans not approved by security holders — — — +Total 351,116 67.70 1,263,724 +(1) This amount includes shares underlying all equity awards outstanding pursuant to the 2006 Plan and the 2015 Plan as of March 31, 2022. For awards subject to performance-based vesting conditions, the amount reported reflects the number of shares to be issued assuming the relevant performance conditions are achieved up to the maximum of 200% of the target amount. +(2) There are no stock appreciation rights outstanding pursuant to the 2006 Plan and the 2015 Plan. In addition, there are no outstanding warrants to purchase shares of our common stock. +(3) This amount reflects the weighted-average exercise price of the outstanding 2017 LTIP NQSOs and 2018 LTIP NQSOs, based on the closing price of our common stock on the respective grant dates. This amount does not take into account shares issuable upon the vesting or settlement of outstanding time-based and performance-based RSUs, which have no exercise price. +(4) This amount reflects the shares reserved for issuance under the 2015 Plan less the number of shares reported in the first column. This amount is subject to increase depending on our achievement with respect to certain performance conditions as discussed in footnote 1 above, and will increase to the extent any awards are forfeited or otherwise terminated under the 2015 Plan. +65 +SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT +The following table sets forth, as of June 30, 2022 (except as specified in the footnotes following the table), certain information concerning the shares of our common stock beneficially owned by (i) each person who is an NEO, (ii) each director or director nominee, (iii) all executive officers and directors as a group (12 persons), and (iv) each person known to us to be the beneficial owner of more than 5% of our common stock. There were 26,599,720 shares of our common stock outstanding on June 30, 2022. +Name and Address of Beneficial Owner (1) +Amount and +Nature of Beneficial +Ownership (2)(3) +(#) +Percent +of Common Stock (3) +Named Executive Officers +Dave Powers 103,481 * +Steven J. Fasching 13,516 * +Stefano Caroti 44,891 * +Directors (4) +Michael F. Devine, III 11,563 * +Nelson C. Chan 9,388 * +Cynthia (Cindy) L. Davis 2,732 * +Juan R. Figuereo +306 (5) +* +Maha S. Ibrahim 825 * +Victor Luis +0 (6) +* +Lauri M. Shanahan +6,909 (7) +* +David A. Burwick 773 * +Bonita C. Stewart +14,316 (8) +* +All Directors and Executive Officers as a Group (12 persons) 208,700 0.8 % +5% Stockholders +FMR LLC (9) +4,117,160 15.0 % +The Vanguard Group (10) +2,677,565 9.8 % +BlackRock, Inc. (11) +2,230,019 8.1 % +* Percentage of shares beneficially owned does not exceed 1.0% of our outstanding shares of common stock. +(1) Unless otherwise noted, the address of each beneficial owner is 250 Coromar Drive, Goleta, California 93117. +(2) Unless otherwise noted, we believe each individual or entity named has sole investment and voting power with respect to the shares of our common stock reported as beneficially owned by them, subject to community property laws, where applicable. +(3) Pursuant to applicable SEC rules, shares not outstanding which are subject to options, warrants, rights or conversion privileges exercisable on or before the date that is 60 days after June 30, 2022 are deemed outstanding for the purpose of calculating the number and percentage owned by a person, but are not deemed outstanding for the purpose of calculating the number and percentage owned by any other person. +(4) The reported amounts include shares held by certain directors through one or more family trusts over which shares the respective directors may have shared voting and/or investment power. +(5) An additional 881 shares previously earned by this director have been deferred pursuant to an election made under our Deferred Stock Unit Compensation Plan. These deferred shares have been excluded from the table. +(6) An additional 1,514 shares previously earned by this director have been deferred pursuant to an election made under our Deferred Stock Unit Compensation Plan. These deferred shares have been excluded from the table. +(7) An additional 3,214 shares previously earned by this director have been deferred pursuant to an election made under our Deferred Stock Unit Compensation Plan. These deferred shares have been excluded from the table. +(8) An additional 703 shares previously earned by this director have been deferred pursuant to an election made under our Deferred Stock Unit Compensation Plan. These deferred shares have been excluded from the table. +66 +(9) This information is based solely on Amendment No. 3 to Schedule 13G filed by this stockholder on February 8, 2022. This stockholder’s business address is 245 Summer Street, Boston, MA 02210. This stockholder has sole voting power over 1,002,279 of such shares and sole dispositive power over 4,117,160 of such shares. +(10) This information is based solely on Amendment No. 11 to Schedule 13G filed by this stockholder on February 9, 2022. This stockholder’s business address is 100 Vanguard Boulevard, Malvern, PA 19355. This stockholder has shared voting power over 13,697 of such shares, sole dispositive power over 2,639,441 of such shares, and shared dispositive power over 38,124 of such shares. +(11) This information is based solely on Amendment No. 14 to Schedule 13G filed by this stockholder on February 1, 2022. This stockholder’s business address is 55 East 52nd Street, New York, NY 10055. This stockholder has sole voting power over 2,151,307 of such shares and sole dispositive power over 2,230,019 of such shares. +67 +AUDIT & RISK MANAGEMENT COMMITTEE REPORT +The Audit & Risk Management Committee of our Board of Directors is responsible for providing independent, objective oversight of, among other things, our financial reporting functions, our independent registered public accounting firm, our highest ranking manager of internal audit, our system of internal controls, our legal and regulatory compliance, and compliance with our related person transaction policy and Code of Ethics. The Audit & Risk Management Committee is currently composed of four directors, each of whom meets the independence and experience requirements under applicable NYSE rules, as well as the independence requirements applicable to Audit & Risk Management Committee members under applicable SEC rules. In addition, our Board of Directors has determined that the Chair of the Audit & Risk Management Committee qualifies as an “audit committee financial expert” under applicable SEC rules. +Management is responsible for the preparation of our financial statements and financial reporting process, including our system of internal controls. KPMG LLP, our independent registered public accounting firm, is responsible for performing an independent audit of our consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States), or the PCAOB, and expressing (i) an opinion on whether our consolidated financial statements present fairly, in all material respects, our financial position and results of operations and cash flows for the periods presented in conformity with US generally accepted accounting principles, and (ii) an opinion on whether we have maintained, in all material respects, effective internal control over financial reporting as of March 31, 2022, based on criteria established in the Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Audit & Risk Management Committee’s responsibility is to monitor and oversee these processes. +In connection with these responsibilities, the Audit & Risk Management Committee met with management and KPMG LLP to review and discuss the March 31, 2022 consolidated financial statements and obtained from management their representation that our financial statements have been prepared in accordance with US generally accepted accounting principles. In addition, management represented that, as of March 31, 2022, our Company maintained effective internal control over financial reporting. +The Audit & Risk Management Committee also discussed with KPMG LLP the matters required by Auditing Standard No. 1301, “Communications with Audit Committees” of the PCAOB, which includes, among other items, information regarding the conduct of the integrated audit of our consolidated financial statements. The Audit & Risk Management Committee has further considered the compatibility of the services provided by KPMG LLP with KPMG LLP’s independence. +The Audit & Risk Management Committee operates under a written charter, which was adopted by our Board of Directors and is assessed annually for adequacy by the Audit & Risk Management Committee. The Audit & Risk Management Committee held eleven meetings during fiscal year 2022, including meetings with KPMG LLP and our highest ranking manager of internal audit, both with and without management present. In performing its functions, the Audit & Risk Management Committee acts only in an oversight capacity. It is not the responsibility of the Audit & Risk Management Committee to determine that our financial statements are complete and accurate, are presented in accordance with US generally accepted accounting principles or present fairly our results of operations for the periods presented, or that we maintain appropriate internal controls. Furthermore, the Audit & Risk Management Committee’s oversight responsibilities do not independently assure that the audit of our financial statements has been carried out in accordance with the standards of the PCAOB or that our registered public accounting firm is independent. +Based upon the Audit & Risk Management Committee’s review and discussions with management and KPMG LLP, and subject to the limitations of the Audit & Risk Management Committee’s role and responsibilities referred to above and in the Audit & Risk Management Committee charter, the Audit & Risk Management Committee recommended that our Board of Directors include the audited consolidated financial statements in our Annual Report on Form 10-K for the year ended March 31, 2022, which was filed with the SEC on May 27, 2022. +THE AUDIT & RISK MANAGEMENT COMMITTEE +Juan R. Figuereo ( Chair ) +Nelson C. Chan +Maha S. Ibrahim +Lauri M. Shanahan +The Audit & Risk Management Committee Report shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as amended, or the Acts, except to the extent that our Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under the Acts. +68 +RELATED-PERSON TRANSACTIONS +Our legal department is primarily responsible for identifying and reviewing relationships and transactions in which our Company and our directors, director nominees, executive officers, principal stockholders, or any of their respective immediate family members, are participants to determine whether any of these related persons had or will have a direct or indirect material interest in such transactions. In order to assist in identifying potential related-person transactions, our legal department annually prepares and distributes to all directors, director nominees and executive officers a detailed written questionnaire which includes questions intended to elicit information about any current or proposed related-person transactions. In addition, our Code of Ethics addresses conflicts of interest where an individual’s personal interests may interfere or conflict with the interests of our Company, including relationships with suppliers, customers or competitors. Conflicts of interest which might impair (or appear to impair) the exercise of judgment solely for the benefit of our Company and our stockholders are prohibited. In general, such conflicts must be approved by our legal department, the employee’s supervisor or, in the case of directors, the Audit & Risk Management Committee. Information regarding potential conflicts of interest in violation of our Code of Ethics may be reported to our anonymous reporting hotline, which may be accessed by the Chair of the Audit & Risk Management Committee, the Chairman of our Board and our highest ranking manager of internal audit. +If a related-person transaction is identified by our legal department as one which would be required to be publicly reported pursuant to applicable SEC rules, the Audit & Risk Management Committee is responsible for reviewing and approving or ratifying any such transaction. The Audit & Risk Management Committee may approve a related person transaction when, in its good faith judgment, it determines that the transaction is in the best interests of our Company and our stockholders. +There were no transactions with related persons that required disclosure under applicable SEC rules during fiscal year 2022, and no such transactions are currently proposed. +69 +PROPOSAL NO. 2 +RATIFICATION OF THE SELECTION OF KPMG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +For fiscal year 2022, KPMG LLP, or KPMG, provided audit services, which included an examination of the consolidated financial statements included in our Annual Report. The Audit & Risk Management Committee has selected KPMG to provide audit services to our Company for fiscal year 2023, which covers the period from April 1, 2022 to March 31, 2023. We are asking that our stockholders ratify this selection at the Annual Meeting. +Ratification of the selection of our independent registered public accounting firm is not required to be submitted to a vote of our stockholders by our Bylaws or applicable SEC rules, however the Audit & Risk Management Committee believes it is appropriate as a matter of good corporate governance practice. If our stockholders do not ratify the selection, the Audit & Risk Management Committee will consider the selection of another independent registered public accounting firm, but is not required to select a different firm. In addition, even if our stockholders ratify the selection, the Audit & Risk Management Committee will retain the discretion to select a different independent registered public accounting firm in the future if it believes doing so is in the best interests of our Company and stockholders. +A representative of KPMG will attend the Annual Meeting and will have the opportunity to make a statement and/or respond to appropriate questions from stockholders present at the Annual Meeting. +Fees for Services Rendered by Independent Registered Public Accounting Firm +The following table sets forth approximate fees for services rendered by KPMG for the fiscal years ended March 31, 2022 and 2021: +FEES ($) FISCAL YEAR 2022 FISCAL YEAR 2021 +Audit Fees 2,388,000 2,467,000 +Audit-Related Fees 38,000 — +Tax Fees 20,000 10,000 +All Other Fees — — +Total Fees 2,446,000 2,477,000 +Audit Fees +The audit fees presented above for the fiscal years ended March 31, 2022 and 2021 include fees associated with the audit of our consolidated balance sheets, the related consolidated statements of comprehensive income, stockholders’ equity and cash flows, and the audit of internal control over financial reporting, as well as the reviews of our quarterly reports on Form 10-Q, and certain statutory audits required internationally. +Audit-Related Fees +Audit-related fees generally consist of fees for assurance and related services that are reasonably related to the performance of the integrated audit of our annual reports on Form 10-K and review of our quarterly reports on Form 10-Q. +Tax Fees +Tax fees include fees incurred for tax services, including tax compliance, tax advice and tax planning for income taxes and customs matters. +All Other Fees +There were no fees for services rendered by KPMG incurred during the fiscal years ended March 31, 2022 and 2021 other than those disclosed above. +70 +Audit & Risk Management Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm +In accordance with its policies and procedures, prior to engagement, the Audit & Risk Management Committee pre-approves all independent registered public accounting firm services. Specifically, the Audit & Risk Management Committee administers and oversees our engagement of KPMG and pre-approves all of KPMG’s audit and permissible non-audit services on a case-by-case basis. In approving non-audit services, the Audit & Risk Management Committee considers whether the engagement could compromise the independence of KPMG, and whether for reasons of efficiency or convenience it is in our best interests to engage KPMG to perform the services. The Audit & Risk Management Committee has determined that the performance by KPMG of the non-audit services listed above as “Tax Fees” did not affect its independence. +During the year, circumstances may arise under which it may become necessary to engage the independent registered public accounting firm for additional services not contemplated in the original pre-approval categories. +Required Vote +The ratification of the selection of KPMG as our independent registered public accounting firm for fiscal year 2023 requires the affirmative vote of a majority of the outstanding shares present virtually or represented by proxy and entitled to vote on this proposal at the Annual Meeting (assuming that a quorum is present). +This proposal is considered a "routine" matter under NYSE rules. As a result, a bank, broker, dealer or other nominee may generally vote without instructions on this matter, so we do not expect any broker non-votes in connection with this proposal. Abstentions on this proposal will have the same effect as a vote against this proposal. If no contrary indication is made, returned proxies will be voted "FOR" this proposal. +BOARD RECOMMENDATION +OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE +" FOR " +PROPOSAL NO. 2 TO RATIFY THE SELECTION OF KPMG LLP +AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +FOR FISCAL YEAR 2023. +71 +PROPOSAL NO. 3 +ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION +Background +In accordance with applicable SEC rules, we are providing our stockholders with the opportunity to cast a non-binding advisory Say-on-Pay Vote on the compensation of our Named Executive Officers, as described below. We consider seeking the views of our stockholders on our executive compensation program to be an important part of our decision-making process. +For additional information about our executive compensation program, please refer to the section of this Proxy Statement titled " Compensation Discussion and Analysis " and the related compensation tables and footnotes. +Proposal +In accordance with Section 14A of the Exchange Act, we are asking our stockholders to approve the following resolution at the Annual Meeting: +“ RESOLVED, that our stockholders approve, on a non-binding advisory basis, the compensation of our Named Executive Officers, as described in the Compensation Discussion and Analysis, the Summary Compensation Table, and the related compensation tables, notes and narrative discussion in the Proxy Statement for our 2022 Annual Meeting of Stockholders. ” +Because this vote is advisory only, it will not be binding upon our Board of Directors or the Talent & Compensation Committee. However, the Talent & Compensation Committee will take the outcome of the vote into account when considering future executive compensation arrangements. +Required Vote +The approval, on a non-binding, advisory basis, of the compensation of our Named Executive Officers as described in the " Compensation Discussion and Analysis " section of this Proxy Statement requires the affirmative vote of a majority of the outstanding shares present virtually or represented by proxy and entitled to vote on this proposal at the Annual Meeting (assuming that a quorum is present). +This proposal is considered a "non-routine" matter under NYSE rules. As a result, a bank, broker, dealer or other nominee may not vote without instructions on this matter, so there may be broker non-votes in connection with this proposal. Broker non-votes will have no effect on the outcome of this proposal. Abstentions will have the same effect as a vote against this proposal. If no contrary indication is made, returned proxies will be voted "FOR" this proposal. +BOARD RECOMMENDATION +OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE +" FOR " +PROPOSAL NO. 3 TO APPROVE, ON A NON-BINDING ADVISORY BASIS, +THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS. +72 +STOCKHOLDER PROPOSALS +Proposals or director nominations of stockholders intended to be presented at our annual meeting of stockholders to be held in 2023 must comply with applicable SEC rules and be delivered to our corporate headquarters located at 250 Coromar Drive, Goleta, California 93117 no later than March 31, 2023 i n order to be included in our proxy statement and form of proxy relating to that meeting. In order to be included in the proxy statement, these proposals must comply with applicable SEC rules. +Under our Bylaws, a stockholder who wishes to make a proposal or nominate a candidate as a director at the annual meeting of stockholders to be held in 2023 without including the proposal in our proxy statement and form of proxy relating to that meeting must notify us no earlier than the close of business on May 15, 2023 and no later than the close of business on June 14, 2023. +73 +OTHER BUSINESS AT THE ANNUAL MEETING +As of the date of this Proxy Statement, we are not aware of any business to be presented for consideration at the Annual Meeting other than the matters described in this Proxy Statement. If, however, other matters are properly presented at the Annual Meeting, the persons named as proxies (or their substitutes) will vote in accordance with their discretion with respect to those matters. +74 +ANNUAL REPORT +The Annual Report contains audited consolidated financial statements of our Company and its subsidiaries and the report thereon of KPMG LLP, our independent registered public accounting firm. A copy of the Annual Report is being provided with this Proxy Statement and has been posted on the Internet, along with this Proxy Statement, each of which is accessible by following the instructions in this Proxy Statement and the accompanying Notice. +Any person who was our stockholder on the Record Date (including any beneficial owner holding shares in "street name" as of the Record Date) may request a copy of the Annual Report, and it will be furnished without charge upon receipt of a written request. Requests should be directed to Deckers Outdoor Corporation, 250 Coromar Drive, Goleta, California 93117, Attention: Corporate Secretary, or by telephone to (805) 967-7611. +BY ORDER OF THE BOARD OF DIRECTORS +Dave Powers +Chief Executive Officer and President +Goleta, California +July 29, 2022 +75 \ No newline at end of file diff --git a/raw/proxies/0000910521/0000910521-22-000024/proxy_rpt.txt b/raw/proxies/0000910521/0000910521-22-000024/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..dbde290add74842540db95f8ee9013bc2b8a5354 --- /dev/null +++ b/raw/proxies/0000910521/0000910521-22-000024/proxy_rpt.txt @@ -0,0 +1,5 @@ +RELATED-PERSON TRANSACTIONS +Our legal department is primarily responsible for identifying and reviewing relationships and transactions in which our Company and our directors, director nominees, executive officers, principal stockholders, or any of their respective immediate family members, are participants to determine whether any of these related persons had or will have a direct or indirect material interest in such transactions. In order to assist in identifying potential related-person transactions, our legal department annually prepares and distributes to all directors, director nominees and executive officers a detailed written questionnaire which includes questions intended to elicit information about any current or proposed related-person transactions. In addition, our Code of Ethics addresses conflicts of interest where an individual’s personal interests may interfere or conflict with the interests of our Company, including relationships with suppliers, customers or competitors. Conflicts of interest which might impair (or appear to impair) the exercise of judgment solely for the benefit of our Company and our stockholders are prohibited. In general, such conflicts must be approved by our legal department, the employee’s supervisor or, in the case of directors, the Audit & Risk Management Committee. Information regarding potential conflicts of interest in violation of our Code of Ethics may be reported to our anonymous reporting hotline, which may be accessed by the Chair of the Audit & Risk Management Committee, the Chairman of our Board and our highest ranking manager of internal audit. +If a related-person transaction is identified by our legal department as one which would be required to be publicly reported pursuant to applicable SEC rules, the Audit & Risk Management Committee is responsible for reviewing and approving or ratifying any such transaction. 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Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. +(1) Amount Previously Paid: +(2) Form, Schedule or Registration Statement No.: +(3) Filing Party: +(4) Date Filed: +2023 +PROXY STATEMENT SUMMARY +This Proxy Statement Summary highlights information contained elsewhere in this Proxy Statement. This summary does not contain all of the information you should consider when making voting decisions. You should read this Proxy Statement carefully and completely before voting. +ABOUT DECKERS +Deckers Outdoor Corporation, doing business as Deckers Brands, is a global leader in designing, marketing and distributing innovative footwear, apparel, and accessories developed for both everyday casual lifestyle use and high-performance activities through our portfolio of brands. +Our products are sold in more than 50 countries and territories through select department and specialty stores, Company-owned and -operated retail stores, and select online stores, including Company-owned websites. This year we are celebrating 50 years of history building niche footwear brands into lifestyle market leaders attracting millions of loyal customers globally. +ANNUAL MEETING OF STOCKHOLDERS +DATE +Monday, September 11, 2023 +TIME +1:00 p.m. Pacific Time +VIRTUAL MEETING +The 2023 Annual Meeting of Stockholders, or Annual Meeting, will be held virtually via a live webcast, which can be accessed on the Internet by visiting www.virtualshareholdermeeting.com/DECK2023. +Stockholders will be able to vote and submit questions virtually during the Annual Meeting in accordance with the rules and procedures included on the meeting website. +To access the Annual Meeting you will need a 16-digit control number. Your control number is provided on the Notice of Internet Availability of Proxy Materials you received in the mail, on your proxy card (if you requested to receive printed proxy materials), or through your broker or other nominee if you hold your shares in "street name." +RECORD DATE +Thursday, July 13, 2023 +PROPOSALS TO BE VOTED UPON +NUMBER PROPOSAL BOARD VOTING RECOMMENDATION PAGE REFERENCE +1 +Elect ten directors to serve until the annual meeting of stockholders to be held in 2024, or until their successors are duly elected and qualified +" FOR " +EACH DIRECTOR NOMINEE +7 +2 +Ratify the selection of KPMG LLP as our independent registered public accounting firm for our fiscal year ending March 31, 2024 +" FOR " +76 +3 +Approve, on a non-binding advisory basis, the compensation of our Named Executive Officers as described in the section of this Proxy Statement titled " Compensation Discussion and Analysis " +" FOR " +78 +4 Approve, on a non-binding advisory basis, the frequency of future advisory votes on Named Executive Officer compensation. +FOR EVERY +" ONE YEAR " +79 +We may also consider and vote upon any other business that may properly come before the Annual Meeting, or at any postponements or adjournments thereof. As of the date of this Proxy Statement, we are not aware of any business to be presented for consideration at the Annual Meeting other than the matters described in this Proxy Statement. +HOW TO VOTE +Your vote is important to the future of Deckers Outdoor Corporation. You are eligible to vote if you were a stockholder at the close of business on Thursday, July 13, 2023. Please refer to the section of this Proxy Statement titled " Questions and Answers About the Annual Meeting and Voting " for additional information on how to attend the Annual Meeting and vote your shares. Whether or not you plan to attend the Annual Meeting, we encourage you to read this Proxy Statement and submit your proxy or voting instructions as soon as possible to ensure your representation at the Annual Meeting. +PROPOSAL NO. 1 +ELECTION OF DIRECTORS +Our Board of Directors has nominated the following ten directors for election at the Annual Meeting: +DIRECTOR NOMINEES +Michael F. Devine, III David A. Burwick Nelson C. Chan Cynthia (Cindy) L. Davis Juan R. Figuereo +Maha S. Ibrahim Victor Luis Dave Powers Lauri M. Shanahan Bonita C. Stewart +BOARD RECOMMENDATION: +" FOR " each director nominee +We have an independent Board with extensive qualifications and skills. Our Board is also comprised of individuals with diverse backgrounds and experience. Each of our Board members is committed to representing the long-term interests of our stockholders. +QUALIFIED QUALIFICATIONS AND SKILLS +7/10 Industry +6/10 Technology Infrastructure/Cybersecurity +9/10 Premium Branding +6/10 Compliance and Risk Oversight +9/10 International +7/10 Corporate Governance +3/10 High Level of Financial Literacy +6/10 Mergers and Acquisitions +8/10 Retail +9/10 Public Company Executive +5/10 Consumer Technology/Big Data +8/10 Human Resources/Talent Management +8/10 Sales and Marketing +3/10 Corporate Responsibility +4/10 Supply Chain Management +DIVERSE DEMOGRAPHICS +50% Ethnically Diverse +60% from Underrepresented +Communities +40% Female +INDEPENDENT +9/10 Directors are Independent +ENGAGED +During our fiscal year ended March 31, 2023, or fiscal year 2023, no director nominee attended fewer than 80% of the meetings of our Board or meetings of any Board committee on which he or she served during his or her term. +Please refer to the section of this Proxy Statement titled " Proposal No. 1 - Election of Directors " for additional information. +PROPOSAL NO. 2 +RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +BOARD RECOMMENDATION +" FOR " the ratification of the selection of KPMG LLP as our independent registered public accounting firm for our fiscal year ending March 31, 2024. +• The Audit & Risk Management Committee is involved in the annual review and engagement of KPMG LLP to ensure its continuing audit independence. +• The Audit & Risk Management Committee believes the continued retention of KPMG LLP is in the best interests of the Company and our stockholders. +Please refer to the section of this Proxy Statement titled "Proposal No. 2 - Ratification of the Selection of KPMG LLP as Independent Registered Public Accounting Firm " for additional information. +PROPOSAL NO. 3 +ADVISORY VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION +BOARD RECOMMENDATION: +" FOR " the approval, on a non-binding advisory basis, of the compensation of our Named Executive Officers as described in the section of this Proxy Statement entitled " Compensation Discussion and Analysis. " +The primary objective of our executive compensation program is to compensate our executive officers in a manner that will attract, retain, and motivate talented executives with the skills needed to manage a complex and growing business in a competitive industry, while creating long-term value for our stockholders. The Talent & Compensation Committee seeks to design our executive compensation program in a manner that reflects direct alignment between the compensation opportunity provided to our executives and the achievement of our strategic objectives. +Consistent with our strategic objectives for fiscal year 2023, when designing our executive compensation program for the year, the Talent & Compensation Committee focused on continuing to build and retain our executive team, while incentivizing our executive officers to focus on increasing revenue, enhancing profitability, achieving ESG objectives, and creating long-term value for our stockholders. +When establishing our executive compensation program, the Talent & Compensation Committee is guided by the following four principles: +• Pay for performance by having a significant portion of compensation earned based on the achievement of performance-based conditions. +• Align interests of executives with stockholders by tying a significant portion of compensation to performance that creates long-term value for our stockholders. +• Attract and retain executives with the background and experience necessary to lead the organization and achieve our strategic objectives. +• Reward achievement by offering incentives for achieving short-term and long-term financial goals that are directly tied to the achievement of strategic objectives. +Please refer to the sections of this Proxy Statement titled “ Compensation Discussion and Analysis ” and " Proposal No. 3, Advisory Vote to Approve Named Executive Officer Compensation " for additional information. +PROPOSAL NO. 4 +ADVISORY VOTE ON FREQUENCY OF FUTURE ADVISORY VOTES ON EXECUTIVE COMPENSATION +BOARD RECOMMENDATION: +For the approval, on a non-binding advisory basis, that the frequency of future advisory votes on the compensation of our Named Executive Officers shall occur every " ONE YEAR ." +• Non-binding advisory vote on whether the Company should hold an advisory vote to approve the compensation of our Named Executive Officers every "one year," "two years" or "three years." +• Our Board of Directors believes submitting the advisory vote on executive compensation on an annual basis is appropriate as it affords our stockholders the ability to provide routine feedback on our compensation program. +Please refer to the section of this Proxy Statement titled " Proposal No. 4, Frequency of Future Advisory Vote on Named Executive Officer Compensation " for additional information. +OUR BUSINESS AND STRATEGIC OBJECTIVES +LONG-TERM STRATEGY AND GROWTH +We remain committed to our long-term strategies, which have been the primary drivers of our success in recent years. Our strategic framework includes efforts to: +• Expand global consumer adoption of the HOKA brand and increase its market share within the performance athletic space; +• Enhance the UGG brand's global positioning through elevated consumer experiences and segmented products that feature recognizable brand heritage; +• Adopt technology and analytical tools to further enhance our capabilities to support our evolving business, including expanding our digital marketing and e-commerce platforms; and +• Invest in enterprise infrastructure to support the increased scale of our organization and key global growth initiatives, including investment in talent as well as distribution and logistics needs. +We intend to closely monitor the planned investments in our business as we remain mindful of a challenging macroeconomic environment. We also intend to continue to focus on the achievement of ESG initiatives. We remain committed to delivering long-term stockholder value through the continued execution of our strategies. +ESG Highlights +The achievement of ESG initiatives is a crucial part of our strategic objectives and corporate culture. We strive to do good and do great while minimizing our environmental impact and employing socially conscious operations. In the last year, we have continued to amplify our ESG program and are committed to maintaining open and interactive dialogue on ESG matters with our stakeholders to ensure their views are actively considered. The tables below reflect a select group of highlights from our ESG program during fiscal year 2023. +ENVIRONMENTAL +• We began utilizing the HIGG Facility Environmental Module, a sustainability tool used by our factory partners to collect detailed and standardized information about a partner's waste, water, and energy consumption, and to identify and prioritize opportunities for sustainability performance improvements. +• We sourced all of our leather supplies from Leather Working Group-certified tanneries, which promote sustainable and environmentally friendly business practices within the leather industry. +• We continued our long-term grant with the Savory Institute to support regenerative farming practices on sheep farms in Australia, influencing over 300,000 acres and 80 farms. +SOCIAL +• We improved Black, Indigenous, and People of Color, or BIPOC, representation among U.S. leaders (director and above) to 24%, up from 12% three years ago, as we continue to make progress towards our target of 25% by the end of fiscal year 2027. +• Our employees volunteered over 15,000 hours. +• We continued to focus on our employees' growth, creating experiences that align with our strategic priorities and promote inclusion, performance, connection, and development across the globe through various employee engagement activities and programs. +GOVERNANCE +• We continued to ensure diverse perspectives are reflected on our Board, which includes four female directors and six directors from underrepresented communities. +• We made governance changes to further promote Board involvement and oversight of Chief Executive Officer succession planning. +• The Corporate Governance Committee's duties were expanded to specifically address ESG initiatives and the committee was renamed the Corporate Responsibility, Sustainability and Governance Committee. +For additional information, please read our forthcoming corporate responsibility and sustainability report, or our Creating Change Report, and visit our website at www.deckers.com/responsibility . The information contained in our Creating Change Report or accessed through our website does not constitute part of this Proxy Statement and you should not consider that information in deciding how to vote your shares. References to our website address in this Proxy Statement are inactive textual references only. +NOTICE OF VIRTUAL ANNUAL MEETING OF STOCKHOLDERS +TO OUR STOCKHOLDERS: +We are pleased to invite you to virtually attend the 2023 Annual Meeting of Stockholders of Deckers Outdoor Corporation to be held on Monday, September 11, 2023, at 1:00 p.m. Pacific Time. +Proposals to be Voted Upon : +1 +Election of Directors . Elect ten directors to serve until the annual meeting of stockholders to be held in 2024, or until their successors are duly elected and qualified. +2 +Ratification of Selection of Accounting Firm . Ratify the selection of KPMG LLP as our independent registered public accounting firm for fiscal year 2024, which covers the period from April 1, 2023 to March 31, 2024. +3 +Advisory Vote on Executive Compensation . Approve, on a non-binding advisory basis, the compensation of our Named Executive Officers, as described in the section of this Proxy Statement entitled " Compensation Discussion and Analysis. " +4 +Advisory Vote on the Frequency of Future Advisory Votes on Executive Compensation. Approve, on a non-binding advisory basis, that the frequency of future votes on the compensation of our Named Executive Officers shall occur every one year. +Other Business . Consider and vote upon any other business that may properly come before the Annual Meeting, or any postponements or adjournments thereof. +Virtual Annual Meeting : +The Annual Meeting will be held virtually and conducted via a live webcast. You will be able to attend the Annual Meeting online, submit your questions and vote your shares during the meeting by visiting www.virtualshareholdermeeting.com/DECK2023. We believe hosting a virtual annual meeting encourages increased stockholder attendance and participation, and reduces the costs associated with holding and attending the meeting. +Record Date : +Our Board of Directors has fixed the close of business on Thursday, July 13, 2023, or the Record Date, as the date for determining which stockholders are entitled to notice of and to vote at the Annual Meeting, or any postponements or adjournments thereof. +Board Recommendations : +Our Board of Directors recommends that you vote " FOR " each of the director nominees named in Proposal No. 1, " FOR " Proposal Nos. 2 and 3, and for every " ONE YEAR " for Proposal No. 4. +BY ORDER OF THE BOARD OF DIRECTORS +Dave Powers +Chief Executive Officer and President +Your vote is very important. Whether or not you plan to attend the Annual Meeting, we encourage you to read this Proxy Statement and submit your proxy or voting instructions as soon as possible. For specific instructions on how to vote your shares, please refer to the instructions on the Notice of Internet Availability of Proxy Materials you received in the mail, the section of this Proxy Statement titled " Questions and Answers About the Annual Meeting and Voting ," or, if you requested to receive printed proxy materials, your enclosed proxy card. +Approximate Date of Mailing of Notice of Internet Availability of Proxy Materials: August 2, 2023 +Cautionary Note Regarding Forward-Looking Statements +This Proxy Statement contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements may relate to our future financial performance, business operations, and executive compensation decisions, or other future events. You can identify forward-looking statements by the use of words such as “may,” “will,” “could,” “anticipate,” “expect,” “intend,” “believe,” “continue,” or the negative of such terms, or other comparable terminology. Forward-looking statements also include the assumptions underlying or relating to such statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, results of operations and financial condition. +The outcomes of the events described in these forward-looking statements are subject to risks, uncertainties and other factors described in Item 1A, “Risk Factors,” and elsewhere, in our Annual Report on Form 10-K for fiscal year 2023, or the Annual Report, as well as the other reports we file with the Securities and Exchange Commission, or the SEC. We cannot assure you that the events and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results could differ materially from those expressed or implied in the forward-looking statements. The forward-looking statements made in this Proxy Statement relate only to events as of the date of this Proxy Statement. We undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made. +TABLE OF CONTENTS +202 3 Proxy Statement Summary +i +Audit & Risk Management Committee Report +74 +Notice of Virtual Annual Meeting of Stockholders +vii +Related-Person Transactions +75 +Proxy Statement +1 +Proposal No. 2 - Ratification of the Selection of KPMG LLP as Independent Registered Public Accounting Firm +76 +Questions and Answers About the Annual Meeting and Voting +2 +Proposal No. 3 - Advisory Vote to Approve Named Executive Officer Compensation +78 +Proposal No. 1 - Election of Directors +7 +Proposal No. 4 - Advisory Vote on the Frequency of Future Advisory Votes on Executive Compensation +79 +Director Nominees +9 +Additional Information +80 +Corporate Governance +19 +Annual Report on Form 10-K +81 +Executive Officers +30 +Compensation Discussion and Analysis +33 +Executive Summary +34 +Compensation Objective and Philosophy +39 +Compensation Consultant and Peer Group +42 +Elements of Fiscal Year 2023 +Executive Compensation Program +44 +Other Compensation Considerations +51 +Talent & Compensation Committee Report +54 +Summary Compensation Table +55 +Grants of Plan-Based Awards in Fiscal Year 202 3 +56 +Outstanding Equity Awards of 202 3 Fiscal Year End +57 +Fiscal Year 202 3 Option Exercises and Stock Vested +59 +Nonqualified Deferred Compensation +60 +Potential Payments Upon Termination or Change in Control +61 +Director Compensation +64 +Equity Compensation Plan Information +65 +CEO Pay Ratio +66 +Pay Versus Performance +67 +Security Ownership of Certain Beneficial Owners and Management +71 +Delinquent Section 16(a) Filings +73 +VIRTUAL ANNUAL MEETING OF STOCKHOLDERS +Meeting Date: Monday, September 11, 2023 +PROXY STATEMENT +GENERAL INFORMATION +The enclosed Proxy Statement is solicited on behalf of the Board of Directors of Deckers Outdoor Corporation for use at our 2023 Annual Meeting of Stockholders, or the Annual Meeting, to be held virtually via a live webcast on Monday, September 11, 2023 at 1:00 p.m. Pacific Time, or at any postponements or adjournments thereof. +The Annual Meeting can be accessed by visiting www.virtualshareholdermeeting.com/DECK2023 , where you will be able to attend the Annual Meeting, submit questions and vote your shares electronically. +The Annual Meeting is being held for the purposes described in this Proxy Statement and in the accompanying Notice of Annual Meeting of Stockholders. +1 +QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING +The following questions and answers are intended to briefly address potential questions that our stockholders may have regarding this Proxy Statement and the Annual Meeting. They are also intended to provide our stockholders with certain information that is required to be provided under the Securities and Exchange Commission, or SEC, rules. These questions and answers may not address all of the questions that are important to you as a stockholder. If you have additional questions about this Proxy Statement or the Annual Meeting, please refer to the question titled " Whom should I contact with other questions? " below. +Q: When and where will the Annual Meeting be held? +A: The Annual Meeting will be held on Monday, September 11, 2023, at 1:00 p.m. Pacific Time. The Annual Meeting will be conducted entirely online via a live webcast. Our stockholders may participate in the Annual Meeting by visiting: www.virtualshareholdermeeting.com/DECK2023 . You will need a 16-digit control number to attend and participate in the live webcast of the Annual Meeting. Please refer to the question titled " How can I vote my shares? " for information on obtaining your 16-digit control number. +Q: What proposals am I being asked to vote upon at the Annual Meeting? +A: The proposals to be voted on at the Annual Meeting, and our Board's recommendation with respect to each proposal, are as follows: +NUMBER PROPOSAL BOARD VOTING RECOMMENDATION +Proposal No. 1 : +Election of Directors +Elect ten director nominees to serve until the annual meeting of stockholders to be held in 2024, or until their successors are duly elected and qualified +" FOR " +EACH +DIRECTOR NOMINEE +Proposal No. 2 : +Ratification of Selection of Accounting Firm +Ratify the selection of KPMG LLP as our independent registered public accounting firm for fiscal year 2024 +" FOR " +Proposal No. 3 : +Advisory Vote on Executive Compensation +Approve, on a non-binding advisory basis, the compensation of our Named Executive Officers, as described in the section of this Proxy Statement titled " Compensation Discussion and Analysis " +" FOR " +Proposal No. 4: +Advisory Vote on Frequency of Future Advisory Votes on Executive Compensation +Approve, on a non-binding advisory basis, that the frequency of future votes on the compensation of our Named Executive Officers shall occur every one year. +FOR EVERY " ONE YEAR " +Q: Why did I receive these proxy materials? +A: We are providing this Proxy Statement in connection with the solicitation by our Board of Directors of proxies to be voted at the Annual Meeting, or at any postponements or adjournments thereof. This Proxy Statement contains important information for you to consider when deciding how to vote on the matters brought before the Annual Meeting. You are invited to attend the Annual Meeting to vote on the proposals described in this Proxy Statement. However, you do not need to attend the Annual Meeting to vote your shares. Instead, you may vote your shares using one of the other voting methods described in this Proxy Statement. +Whether or not you plan to attend the Annual Meeting, we encourage you to read this Proxy Statement and submit your proxy or voting instructions as soon as possible to ensure your representation at the Annual Meeting. +Q: Why did I receive a notice in the mail regarding the Internet availability of proxy materials? +A: Instead of mailing printed copies to each of our stockholders, we have elected to provide access to the proxy materials over the Internet under SEC's "notice and access" rules. These rules allow us to make our stockholders aware of the Annual Meeting and the availability of the proxy materials by sending a Notice of Internet Availability of Proxy Materials, or the Notice, which provides instructions on how to access the full set of proxy materials through the Internet or make a request to have printed proxy materials delivered by mail. Accordingly, on or about August 2, 2023, we mailed the Notice to each of our stockholders. The Notice contains instructions on how to access the proxy materials, including this Proxy Statement and our +2 +Annual Report, each of which are available at www.proxyvote.com. The Notice also provides instructions on how to vote your shares. +Q: Who can vote at the Annual Meeting? +A: Only our stockholders at the close of business on July 13, 2023, or the Record Date, will be entitled to attend and vote at the Annual Meeting. On the Record Date, there were 26,134,458 shares of our common stock outstanding and entitled to vote. Each share of common stock issued and outstanding on the Record Date is entitled to one vote on any matter to be voted upon by our stockholders at the Annual Meeting. +• Holders of Record - If, on the Record Date, your shares were registered directly in your name with our transfer agent, Computershare, then you are a "holder of record." As a holder of record, you may vote at the virtual Annual Meeting, or you may vote by proxy. If you are a holder of record and you indicate when voting that you wish to vote as recommended by our Board, or if you submit a vote by proxy without giving specific voting instructions, then the proxyholders will vote your shares as recommended by our Board on all matters described in this Proxy Statement. Thomas Garcia and Steven J. Fasching, the designated proxyholders, are members of our management. +• Beneficial Owners - If, on the Record Date, your shares were held in an account at a bank, broker, dealer, or other nominee, then you are the "beneficial owner" of shares held in "street name" and this Proxy Statement is being made available to you by that nominee. The nominee holding your account is considered the holder of record for purposes of voting at the Annual Meeting. As a beneficial owner, you have the right to direct your nominee on how to vote the shares in your account. You are also invited to attend the Annual Meeting. However, since you are not the holder of record, you may not vote your shares at the Annual Meeting unless you request and obtain a valid "legal proxy" or obtain a 16-digit control number from your nominee. Please contact your nominee directly for additional information. +Q: What is the quorum requirement for the Annual Meeting? +A: The presence at the Annual Meeting, virtually (even if not voting) or by proxy, of the holders of a majority of the voting power of all the shares of our common stock entitled to be voted at the Annual Meeting, will constitute a quorum at the Annual Meeting. We will treat shares of common stock represented by a properly voted proxy, including shares for which authority is withheld or that a stockholder abstains from voting, as well as broker non-votes, as present at the Annual Meeting for the purposes of determining the existence of a quorum. If a quorum is not present, the Annual Meeting will be adjourned until a quorum is obtained. +Q: What are the voting requirements to approve each of the proposals, and what happens if I do not vote? +A: The voting requirements to approve each of the proposals to be voted upon at the Annual Meeting, as well as the effects of abstentions and broker non-votes on each of the proposals, are as follows: +3 +PROPOSAL VOTING REQUIREMENT +EFFECT OF ABSTENTIONS (1) +EFFECT OF BROKER NON-VOTES (2) +Proposal No. 1 : +Election of Directors +Each director nominee in an uncontested election (3) will be elected by a majority of the votes cast by the shares present virtually or represented by proxy and entitled to vote on the election of directors at the Annual Meeting (assuming that a quorum is present). +A "majority of the votes cast" means that the number of votes "FOR" a director nominee must exceed 50% of the total votes cast in the election of directors. +A "WITHHOLD" vote with respect to a director nominee will not count as a vote cast for that nominee, will not be included in the total number of votes cast, and will have no effect on the outcome of the vote on this proposal. Broker non-votes will not count as votes cast on this proposal, and will have no effect on the outcome of the vote on this proposal. +Proposal No. 2 : +Ratification of Selection of Accounting Firm +Requires the affirmative vote of a majority of the outstanding shares present virtually or represented by proxy and entitled to vote on the proposal at the Annual Meeting (assuming that a quorum is present). +An "ABSTAIN" vote will be included in the total number of shares present and entitled to vote on this proposal, and will have the same effect as a vote "AGAINST" this proposal. Because a bank, broker, dealer or other nominee may generally vote without instructions on this proposal, we do not expect any broker non-votes to result for this proposal. +Proposal No. 3 : +Advisory Vote on Executive Compensation +Requires the affirmative vote of a majority of the outstanding shares present virtually or represented by proxy and entitled to vote on the proposal at the Annual Meeting (assuming that a quorum is present). +An "ABSTAIN" vote will be included in the total number of shares present and entitled to vote on this proposal, and will have the same effect as a vote "AGAINST" this proposal. Broker non-votes will not count as votes cast on this proposal and will have no effect on the outcome of the vote on this proposal. +Proposal No. 4 : +Advisory Vote on the Frequency of Future Advisory Votes on Executive Compensation +Stockholders may select every "one year," "two years" or "three years" with respect to this proposal. The option that receives the greatest number of votes will be considered the frequency selected by our stockholders. An "ABSTAIN" vote will have no effect on the outcome of this proposal. Broker non-votes will not count as votes cast on this proposal and will have no effect on the outcome of the vote on this proposal. +(1) You may vote to "WITHHOLD" authority for one or more director nominees and may "ABSTAIN" from voting on one or more of the other proposals described in this Proxy Statement. Shares for which authority is withheld or that a stockholder abstains from voting will be counted for purposes of determining whether a quorum is present at the Annual Meeting. +(2) Pursuant to applicable New York Stock Exchange, or NYSE, rules, if you are a beneficial owner of shares held in street name and do not provide the nominee that holds your shares with specific voting instructions, the nominee may generally vote in its discretion on “routine” matters (such as Proposal No. 2). However, if the nominee that holds your shares does not receive instructions from you on how to vote your shares on a “non-routine” matter (such as Proposal Nos. 1, 3, and 4), it will be unable to vote your shares on that matter. When this occurs, it is generally referred to as a “broker non-vote.” Broker non-votes will be counted for purposes of determining whether a quorum is present at the Annual Meeting. +(3) An "uncontested election" is an election in which the number of director nominees is not greater than the number of directors to be elected. A "contested election" is an election in which the number of director nominees nominated by (i) our Board, (ii) any stockholder, or (iii) a combination of our Board and any stockholder, exceeds the number of directors to be elected. In a contested election, directors will be elected by a plurality of the votes cast by the shares present virtually or represented by proxy and entitled to vote on the election of directors at the Annual Meeting. +Q: What happens if a director nominee fails to receive a majority vote in an uncontested election at the Annual Meeting? +A: Each incumbent director standing for reelection at the Annual Meeting has tendered an irrevocable letter of resignation, effective upon such incumbent director not receiving a majority vote at the Annual Meeting and acceptance of such resignation by our Board. Our Board must accept or reject such resignation within 90 days following certification of the stockholder vote in accordance with the procedures established by our Amended and Restated Bylaws, or our Bylaws. If a director’s resignation offer is not accepted by our Board, that director will continue to serve until our annual meeting of stockholders to be held in 2024 or his or her successor is duly elected and qualified, or until such director’s earlier death, resignation, or removal. +Any director nominee who is not an incumbent director and who fails to receive a majority vote in an uncontested election will not be elected as a director, and a vacancy will be left on our Board. Our Board, in its sole discretion, may either fill a vacancy resulting from a director nominee not receiving a majority vote pursuant to our Bylaws or decrease the size of our Board to eliminate the vacancy. All director nominees are incumbent directors standing for reelection at the Annual Meeting. +4 +Q: Could other matters be decided at the Annual Meeting? +A: As of the date of this Proxy Statement, we are not aware of any business to be presented for consideration at the Annual Meeting other than the matters described in this Proxy Statement. If, however, other matters are properly presented at the Annual Meeting, the persons named as proxies will vote in accordance with their discretion with respect to those matters. +Q: How can I vote my shares? +A: Your shares can be voted as follows: +• Holders of Record - Holders of record can vote by proxy or by attending the Annual Meeting where votes can be submitted electronically via live webcast. If you wish to vote by proxy, you can vote by Internet, telephone, or mail as described below. Whether or not you plan to attend the Annual Meeting, we encourage you to submit your proxy or voting instruction as soon as possible to ensure your representation at the Annual Meeting. +VOTING METHOD +To vote at the Annual Meeting by live webcast, you must visit the following website: +www.virtualshareholdermeeting.com/DECK2023. You will need the 16-digit control number included on the Notice or your proxy card (if you requested to receive printed proxy materials). The method you use to vote by proxy will not limit your right to attend or vote at the Annual Meeting. All shares that have been properly voted and not revoked will be voted at the Annual Meeting. However, even if you plan to attend the Annual Meeting, we recommend that you vote your shares in advance so that your vote will be counted if you later decide not to attend the Annual Meeting. +To vote by Internet , you will need the 16-digit control number included on the Notice or your proxy card (if you requested to receive printed proxy materials). Internet voting is available 24 hours a day and will be accessible until 11:59 p.m. Eastern Time on Sunday, September 10, 2023 by visiting www.proxyvote.com and following the instructions. +To vote by telephone , you will need the 16-digit control number included on the Notice or on your proxy card (if you requested to receive printed proxy materials). Telephone voting is available 24 hours a day and will be accessible until 11:59 p.m. Eastern Time on Sunday, September 10, 2023 by calling 1-800-690-6903 and following the instructions. +To vote by mail, follow the instructions provided on your proxy card (if you requested to receive printed proxy materials). Simply mark, sign and date your proxy card and return it promptly in the postage-paid envelope provided. In order to be effective, completed proxy cards must be received by 11:59 p.m. Eastern Time on Sunday, September 10, 2023. This option is only available if you requested to receive printed proxy materials. +• Beneficial Owners - If you are the beneficial owner of your shares, you should have received the Notice or a proxy card (if you requested to receive printed proxy materials) with this Proxy Statement from your nominee rather than from us. Simply (i) use the 16-digit control number to vote on the Internet or by telephone before the Annual Meeting, or vote at the Annual Meeting, or (ii) if you requested to receive printed proxy materials, vote by following the instructions provided on the proxy card you received from your nominee's website. Your 16-digit control number may be included in the voting instruction form that accompanied the proxy materials. If your nominee did not provide you with a 16-digit control number, you should contact your nominee to obtain your control number and access the Annual Meeting link. To vote at the Annual Meeting, you must first obtain a valid "legal proxy" from your nominee. Follow the instructions from your nominee to request a "legal proxy." +Q: What can I do if I change my mind after I vote my shares? +A: You may change your vote at any time before the polls are closed at the Annual Meeting. +• Holders of Record - If you are a holder of record, you may change your vote by (i) providing written notice of revocation to Deckers Outdoor Corporation, 250 Coromar Drive, Goleta, California 93117, Attention: Corporate Secretary, (ii) executing a subsequent proxy using any of the voting methods discussed above (subject to the deadlines for voting with respect to each method), or (iii) attending the Annual Meeting and voting electronically via live webcast. However, simply attending the Annual Meeting will not, by itself, revoke your proxy. +• Beneficial Owners - If you are a beneficial owner of your shares and you have instructed your nominee to vote your shares, you may change your vote by following the directions received from your nominee to change those voting instructions, or by attending the Annual Meeting and voting via live webcast, which can be accomplished as described above. +Subject to any revocation, all shares represented by properly executed proxies will be voted in accordance with the instructions on the applicable proxy, or, if no instructions are given, in accordance with the recommendations of our Board of Directors as described above. +5 +Q: Who is paying for the cost of this proxy solicitation? +A: The solicitation of proxies is made on behalf of our Board and all the expenses of soliciting proxies from stockholders will be borne by us. In addition to the solicitation of proxies by use of the mail, our directors, officers, and employees may communicate with stockholders personally or by email, telephone, or otherwise for the purpose of soliciting such proxies. No additional compensation will be paid to any such persons for such solicitation, although we may reimburse them for reasonable out-of-pocket expenses incurred in connection with such solicitation. We will reimburse banks, brokers, dealers and other nominees for their reasonable out-of-pocket expenses in forwarding solicitation material to beneficial owners of shares held of record by such persons. The total estimated cost of the solicitation of proxies is approximately $125,000. +Q: How may I obtain an additional copy of the proxy materials? How may I reduce the number of copies our household receives? +A: We have adopted a procedure called "householding," which the SEC has approved. Under this procedure, we are delivering a single copy of the Notice and, if applicable, this Proxy Statement and the Annual Report, to multiple stockholders who share the same address unless we have received contrary instructions from one or more of the stockholders. This procedure reduces our printing and mailing costs. Stockholders who participate in householding will continue to be able to access and receive separate proxy materials. Upon written or oral request, we will promptly deliver a separate copy of the Notice and, if applicable, this Proxy Statement and the Annual Report, to any stockholder at a shared address to which we delivered a single copy of any of these documents. To receive a separate copy of the Notice and, if applicable, this Proxy Statement or the Annual Report, or if you wish to receive separate copies in the future, please contact: Deckers Outdoor Corporation, 250 Coromar Drive, Goleta, California 93117, Attention: Corporate Secretary, Telephone: (805) 967-7611. +In addition, if you are currently a stockholder sharing an address with another stockholder and wish to receive only one copy of future proxy materials for your household, please contact us using the contact information set forth above. Stockholders who are beneficial owners of shares held in street name may contact their bank, broker, dealer or other nominee to request information about householding. +Q: Where can I find the voting results of the Annual Meeting? +A: We will announce preliminary voting results with respect to each proposal at the Annual Meeting. In accordance with SEC rules, final voting results will be published in a Current Report on Form 8-K within four business days following the Annual Meeting, unless final results are not known at that time, in which case preliminary voting results will be published within four business days of the Annual Meeting and final voting results will be published once we know them. +Q : Where else can I find these proxy materials? +A: This Proxy Statement and the Annual Report are available under "SEC Filings" at ir.deckers.com. Other information contained on or accessed through our website does not constitute part of this Proxy Statement and you should not consider this other information in deciding how to vote your shares. References to our website address in this Proxy Statement are inactive textual references only. +Q: Whom should I contact with other questions? +A: If you have additional questions about this Proxy Statement or the Annual Meeting, or if you would like additional copies of this Proxy Statement, please contact: Deckers Outdoor Corporation, 250 Coromar Drive, Goleta, California 93117, Attention: Corporate Secretary, Telephone: (805) 967-7611. +6 +PROPOSAL NO. 1 +ELECTION OF DIRECTORS +Board Characteristics +The Corporate Responsibility, Sustainability & Governance Committee considers many factors when identifying director nominees, including diversity with respect to personal characteristics (such as race, ethnicity, age, gender, and sexual orientation), as well as diversity with respect to experience and skills. We believe directors with diverse backgrounds create a Board that is positioned to best serve our Company, stockholders, employees, and communities by maximizing group dynamics in terms of range of professional experience, education, thought, and personal characteristics. We also value the mix of viewpoints provided by our directors with various levels of tenure, from those with a deep understanding of our business to those with fresh perspectives. Our strong commitment to diversity and inclusion is reflected within the composition of our Board. +A snapshot of certain characteristic of our ten director nominees is depicted in the charts below . +BOARD COMMITTEES CHAIRED BY WOMEN AGE DISTRIBUTION BOARD REFRESHMENT +67% +52-67 +61 +(Average Age of Director Nominees) +4 +(New Directors Over Past 5 Years) +BOARD CHAIRMAN SUCCESSION COMMITTEE CHAIR SUCCESSION +October 2019 +Michael F. Devine, III +Appointed Chairman of the Board +October 2019 +Cynthia (Cindy) L. Davis, +Appointed Talent & Compensation Committee Chair +Lauri M. Shanahan, +Appointed Corporate Responsibility, Sustainability & Governance Committee Chair +June 2020 +Juan R. Figuereo, +Appointed Audit & Risk Management Committee Chair +September 2021 +Bonita C. Stewart, +Appointed Corporate Responsibility, Sustainability & Governance Committee Chair +Board Structure +Our Bylaws provide for the annual election of directors, and also provide that our Board will consist of not less than one nor more than ten members. The specific number of directors within this range is established by our Board. Our Board has adopted a resolution setting the current number of directors at ten. +7 +At the Annual Meeting, our stockholders will be asked to elect ten directors to serve until the next annual meeting of stockholders to be held in 2024, or until their successors are duly elected and qualified. The names and certain information concerning the persons nominated by our Board to stand for election as directors at the Annual Meeting are set forth in the section of this Proxy Statement titled “ Director Nominees ” below. +If all director nominees are elected, then, immediately following the Annual Meeting, our Board will consist of ten members, and nine out of ten members of our Board, as well as each member of the Board's three standing committees, will be “independent directors” under applicable SEC and NYSE rules. +No Agreements or Family Relationships with Directors +No arrangement or understanding exists between any of our directors, director nominees, or executive officers and any other person pursuant to which any of them were selected as our director, director nominee, or executive officer. +There are no family relationships among any of our directors, director nominees or executive officers. +No Legal Proceedings +There are no legal proceedings related to any of our directors, director nominees, or executive officers which are required to be disclosed pursuant to applicable SEC rules. +Director Nominations +The Corporate Responsibility, Sustainability & Governance Committee is responsible for identifying and evaluating nominees for election to our Board. In addition to the candidates proposed by our Board or identified by the Corporate Responsibility, Sustainability & Governance Committee, the committee considers candidates for director proposed by stockholders, provided such recommendations are made in accordance with the procedures set forth in our Bylaws. Stockholder nominations that meet the criteria outlined below will receive the same consideration as nominations made by the Corporate Responsibility, Sustainability & Governance Committee. +Director Qualifications +Directors are responsible for overseeing and monitoring our business consistent with their fiduciary duties to our stockholders. This significant responsibility requires highly skilled individuals with various qualities, attributes, skills and professional experience. Our Board believes there are both general requirements for eligibility to serve as a member of our Board that are applicable to all directors, and other specialized characteristics that should be represented on our Board as a whole, but not necessarily by each director. +Qualifications for All Directors +Essential criteria for all director candidates considered by the Corporate Responsibility, Sustainability & Governance Committee include the following: +• Personal and professional integrity; +• Good business judgment; +• Relevant experience and skills; +• Ability to effectively serve the long-term interests of our stockholders; and +• Commitment to devoting sufficient time and energy to diligently performing duties as a director. +8 +DIRECTOR NOMINEES +Our Board of Directors has nominated the following ten directors for reelection at the Annual Meeting. Important summary information about the director nominees is set forth in the table below, including the committee composition that we anticipate will be effective as of the date of the Annual Meeting. Following the table is certain biographical information about each director nominee, as well as selected information about the specific qualifications, attributes, skills, and experience that led our Board to conclude that each director nominee is qualified to serve on our Board. For information regarding committee composition as of the date of this Proxy Statement, please refer to the section titled " Corporate Governance--Board Committees ." +Committee Membership Following the Annual Meeting (1) +Name, +Primary Occupation Age Director +Since Independent Number of Other Public Company Directorships +AR (2) +TC (2) +CG (2) +Michael F. Devine, III 64 2011 YES 1 +Corporate Director +Chairman of our Board of Directors +David A. Burwick 61 2021 YES 1 l +President, Chief Executive Officer, Board Member, Boston Beer Company +Nelson C. Chan 62 2014 YES 2 l l +Private Investor, Entrepreneur and Corporate Director +Cynthia (Cindy) L. Davis 61 2018 YES 2 +ª +l +Corporate Director +Juan R. Figuereo 67 2020 YES 2 +ª +Corporate Director +Maha S. Ibrahim 52 2021 YES None l +General Partner, Canaan Partners +Victor Luis 56 2020 YES 1 l +Corporate Director +Dave Powers 57 2016 NO 1 +Chief Executive Officer and President +Lauri M. Shanahan 60 2011 YES 2 l l +Corporate Director +Bonita C. Stewart 66 2014 YES 1 l ª +Board Partner, Gradient Ventures +ª Committee Chair +(1) Subject to the reelection of each director nominee at the Annual Meeting. +(2) AR: Audit & Risk Management Committee, TC: Talent & Compensation Committee, CG: Corporate Responsibility, Sustainability & Governance Committee +MICHAEL F. DEVINE, III +Age: 64 +Director Since: 2011 +Chairman of our Board +Public Company Directorships: +FIVE Below, Inc. (NYSE: FIVE) +Mr. Devine previously served as a director and member of the audit committee of Express, Inc. (NYSE: EXPR) and currently serves as director and member of the audit committee and chair of the compensation committee at FIVE Below, Inc. (Nasdaq: FIVE). Mr. Devine retired as executive vice president and chief financial officer of Coach, Inc. in 2011. He served as a member of +9 +the board of Sur La Table, Inc. and was previously a member of the board of directors of The Talbots Inc. From 2004 to 2007, Mr. Devine served as a member of the board of directors and chair of the audit committee of Educate, Inc., a leading K-12 education service company with solutions such as Sylvan Learning Center. Mr. Devine also previously served as a director and member of the audit committee of NutriSystem, Inc. (Nasdaq: NTRI). +Selected Qualifications and Skills +• High Level of Financial Literacy - In addition to experience as the current and former member and chair of four audit committees and experience at Coach, Inc., served as chief financial officer and vice president-finance of Mothers Work, Inc., a maternity apparel retailer that was previously listed on Nasdaq, from February 2000 to November 2001. From 1997 to 2000, was chief financial officer of Strategic Distribution, Inc. (Nasdaq: STRD), a Nasdaq-listed industrial store operator. From 1995 to 1997, was chief financial officer at Industrial System Associates, Inc., and for the prior six years was the director of finance and distribution for McMaster-Carr Supply Company. Holds a B.S. in Finance and Marketing from Boston College and an M.B.A. in Finance from the Wharton School of the University of Pennsylvania. +• Public Company Executive - Experience at Coach, Inc. involved in managing a public company during a period of high growth. Serves as a corporate director and chair of the audit committees of Express, Inc. and FIVE Below, Inc. +• Compliance and Risk Oversight - 17 years of experience as a corporate director with risk oversight responsibilities. +• Premium Branding - Coach, Inc. is a leading marketer of modern classic American accessories. +• International - Involved in a global brand with worldwide operations while at Coach, Inc. +• Industry - In addition to experience at Coach, Inc., serves as a director of Express, Inc., a nationally recognized specialty apparel and accessory retailer offering women’s and men’s merchandise. +• Supply Chain Management and Retail - Involved in supply chain and wholesale and retail distribution channels while at Coach, Inc. +DAVID A. BURWICK +Age: 61 +Director Since: 2021 +Board Committees: +Talent & Compensation +Public Company Directorships: +The Boston Beer Company, Inc. (NYSE: SAM) +Mr. Burwick has served on the board of directors of The Boston Beer Company, Inc. (NYSE: SAM) since May 2005 and was appointed as its president and chief executive officer in April 2018. Prior to April 2018, Mr. Burwick served as president and chief executive officer of Peet's Coffee & Tea, Inc., since December 2012. From April 2010 to December 2012, Mr. Burwick served as president, North America of WW International, Inc., formerly Weight Watchers International, Inc. Prior to that, Mr. Burwick held numerous positions with PepsiCo, Inc., including chief marketing officer, PepsiCo Americas Beverages from August 2008 to August 2009; executive vice president, Marketing, Sales and R&D, PepsiCo International from April 2008 to July 2008; President, Pepsi-QTG Canada from January 2006 to March 2008; chief marketing officer, Pepsi-Cola North America from June 2002 to December 2005; and various marketing roles from 1989 to 2002. Mr. Burwick has extensive experience leading consumer products organizations. During Mr. Burwick's tenure as a director of The Boston Beer Company, Inc., he has served as chair and as a member of its compensation committee, and as chair and as a member of the nominating/governance committee. +Selected Qualifications and Skills +• Premium Branding - Experience as an executive at Peet's Coffee & Tea, Inc., PepsiCo. Inc. and The Boston Beer Company, Inc. +• Public Company Executive - Extensive experience with several leading public and private companies, both as an executive and as a director. +• Sales and Marketing - Held key marketing and sales positions with PepsiCo. Inc., including chief marketing officer. +• Human Resources - Held executive positions with leading companies and is a member of the compensation committee and nominating/governance committee of The Boston Beer Company, Inc. +• Retail - Previously served as president and chief executive officer at Peet's Coffee & Tea, Inc., WW International, Inc. and PepsiCo, Inc. +10 +NELSON C. CHAN +Age: 62 +Director Since: 2014 +Board Committees : +Audit & Risk Management +Corporate Responsibility, Sustainability & Governance +Public Company Directorships: +Synaptics, Inc. (Nasdaq: SYNA) +Twist Bioscience Corporation (Nasdaq: TWST) +Mr. Chan is a private investor and entrepreneur. Mr. Chan is a director and member of the nominating and corporate governance and audit committee of Twist Bioscience Corporation (Nasdaq: TWST), as well as chairman of the board and member of the audit committee and nominations and corporate governance committee of Synaptics, Inc. (Nasdaq: SYNA). He was chairman of the board, chair of the compensation committee, member of the audit committee and member of the nominating and corporate governance committee of Adesto Technologies Corporation (Nasdaq: IOTS). From 2016 to 2019, Mr. Chan served as a director and member of the compensation and nominating and governance committees of Socket Mobile, Inc. (Nasdaq: SCKT). From 2006 to 2008, he served as chief executive officer of Magellan Corporation, and from 1992 to 2006, he served in various management positions with SanDisk Corporation. Mr. Chan is also a director of several privately held companies. +Selected Qualifications and Skills +• Entrepreneurial - Expertise in building technology companies. +• High Level of Financial Literacy - Has held numerous senior management positions with leading companies, including chief executive officer at Magellan Corporation. +• Public Company Executive - Extensive experience with several leading public and private companies, both as an executive and as a director. +• Sales and Marketing - Held key sales, marketing and engineering positions at SanDisk Corporation, Chips and Technologies, Signetics and Delco Electronics. +• International - Served as the executive vice president and general manager of consumer business at SanDisk Corporation, a global multi-billion dollar company. +• Compliance and Risk Oversight - Currently serves as a member of our Audit & Risk Management Committee and has over 14 years of experience as a corporate director with risk oversight responsibilities. +• Technology Infrastructure and Cybersecurity - Extensive experience in technology-based companies including sales, marketing and engineering. +CYNTHIA (CINDY) L. DAVIS +Age: 61 +Director Since: 2018 +Board Committees: +Talent & Compensation ( Chair ) +Corporate Responsibility, Sustainability & Governance +Public Company Directorships: +Kennametal Inc. (NYSE: KMT) +Brinker International, Inc. (NYSE: EAT) +Ms. Davis currently serves as a member of the board of directors and is the chair of the compensation and human capital committee and member of the nominating and governance committee of Kennametal Inc. (NYSE: KMT), a global supplier of tooling, engineering components. In January 2019, she joined the board of directors and currently chairs the governance committee and is a member of the compensation committee of Brinker International, Inc. (NYSE: EAT). Prior to 2019, Ms. Davis served as a member of the board of directors, as chair of the compensation committee and on the governance committee of Buffalo Wild Wings, Inc. (Nasdaq: BWLD), a casual dining restaurant and sports bar chain, from 2015 to 2018. Ms. Davis served as vice president of NIKE, Inc. (NYSE: NKE) and president of Nike Golf at NIKE, Inc. from 2008 to 2014, and as U.S. general manager at Nike Golf from 2005 to 2008. Prior to NIKE, Inc., Ms. Davis served as senior vice president of golf sponsorships, sports marketing and new media at Golf Channel, a subsidiary of Comcast Corporation (Nasdaq: CMCSA), from 2001 to 2004. She is a Trustee for the Board of Trustees at Furman University. +11 +Selected Qualifications and Skills +• Premium Branding - Experience as vice president of NIKE, Inc. and president of Nike Golf at NIKE, Inc., a company engaged in the design, development, manufacturing, and worldwide marketing and sales of footwear, apparel, equipment, accessories, and services. +• Sales and Marketing; Retail - In addition to leading the division’s sales, marketing, and strategy while serving as senior vice president of golf sponsorships, sports marketing and new media at Golf Channel, led the $800 million global golf business for NIKE, Inc. +• High Level of Financial Literacy - Served on the audit committee of Kennametal Inc. Holds an M.B.A. in Marketing and Finance from the University of Maryland College Park. Oversaw the profit and loss of a separate operating unit within NIKE, Inc. +• International - Involved in global brands with worldwide operations while at NIKE, Inc. and Kennametal Inc. +• Public Company Executive - Held various executive management positions at NIKE, Inc. and Golf Channel, currently serves as a director of Kennametal Inc. and Brinker International, Inc., and previously served as a director and chair of the compensation committee of Buffalo Wild Wings, Inc. +• Industry - Extensive experience in the footwear, apparel and equipment industries through various positions at NIKE, Inc. +• Compliance and Risk Oversight - In addition to leadership roles at NIKE, Inc., served as a corporate director on the audit committee and serves on the compensation and nominating and corporate governance committees of Kennametal, Inc., and serves on the board of directors, as well as the compensation and corporate governance committees, of Brinker International, Inc. Previously served as chair of the compensation committee and on the governance committee of Buffalo Wild Wings. +• Technology Infrastructure and Cybersecurity - Serves as a director and chair of the compensation and human capital committee and member of the nominating and governance committee of Kennametal Inc., a technology-based company. +JUAN R. FIGUEREO +Age: 67 +Director Since: 2020 +Board Committees: +Audit & Risk Management ( Chair ) +Public Company Directorships: +Western Alliance Bancorporation (NYSE: WAL) +Diversey, Inc. (Nasdaq: DSEY) +Mr. Figuereo currently serves as a director and member of the finance and investment committee and chair of the audit committee of Western Alliance Bancorporation (NYSE: WAL). In April 2021, he joined the board of directors and currently serves as chair of the audit committee and member of the nominating and corporate governance committee of Diversey, Inc. (Nasdaq: DSEY). Mr. Figuereo served as the executive vice president and chief financial officer of Revlon (NYSE: REV), a manufacturer and marketer of beauty and personal care products, from 2016 to 2017. From 2012 to 2015, he served as executive vice president and chief financial officer of NII Holdings, Inc. (NASDAQ: NIHD), a wireless communication services provider under the Nextel brand. NII Holdings, Inc. filed for bankruptcy protection in New York, New York on September 15, 2014. From 2009 to 2012, Mr. Figuereo served as executive vice president and chief financial officer of Newell Brands (NYSE: NWL), a global marketer of consumer and commercial products, and from 2007 to 2009 he served as executive vice president and chief financial officer of Cott Corporation (NYSE: PRMW). Mr. Figuereo has also served in senior management positions at Walmart, Inc. (NYSE: WMT) and PepsiCo, Inc. (Nasdaq: PEP). Mr. Figuereo served as a director and chair of the audit committee at PVH Corp. (NYSE: PVH), a leading apparel company with iconic brands such as Calvin Klein and Tommy Hilfiger in its portfolio. Mr. Figuereo is a venture partner with Ocean Azul Partners, LLC, an early stage investments fund based in South Florida. He is a member of the National Association of Corporate Directors and of the Florida Institute of CPAs. +Selected Qualifications and Skills +• Public Company Executive - Previously served as chief financial officer of several public companies with global footprints, including Revlon and Newell Brands, and held executive leadership roles at Walmart, Inc. and PepsiCo, Inc. +12 +• High Level of Financial Literacy - Served as chief financial officer of several public companies and as chair of the audit committee of PVH Corp. Serves as the chair of the audit committee of Western Alliance Bancorporation and Diversey Inc. In addition, he serves as a member of the Audit & Risk Management Committee of our Company. Holds a B.B.A. from Florida International University, and previously worked for eight years as a certified public accountant. +• International - Significant executive leadership experience supporting global brands with worldwide operations. +• Supply Chain Management - Extensive experience in worldwide supply chain operations while in management roles for global companies. +• Sales and Marketing; Retail - Served as executive vice president of several global marketers, including Revlon and Newell Brands, and held senior management positions at Walmart, Inc. and PepsiCo, Inc. +• Mergers and Acquisitions - Previously served as the vice president in charge of mergers and acquisitions at Walmart, Inc. +MAHA S. IBRAHIM +Age: 52 +Director Since: 2021 +Board Committees: +Audit & Risk Management +Public Company Directorships: +None +Ms. Ibrahim is currently a general partner of Canaan Partners, an early stage venture capital firm, where she has worked since March 2000. Prior to joining Canaan Partners, from 1998 to 2000 she served as vice president of e-business at Qwest Communications, where she architected the company’s e-business strategy and spearheaded the redesign of Qwest.com, and previously served as Qwest Communication’s vice president of business development. From 2012 through 2020, Ms. Ibrahim served as a member of the board of directors of The RealReal, Inc. (Nasdaq: REAL), an online brick-and-mortar marketplace for authenticated luxury consignment, providing leadership to the company through its 2019 initial public offering. Ms. Ibrahim currently serves on the boards of directors of a number of private innovative enterprise and consumer companies. Further, she has served as a trustee for the Carnegie Endowment for International Peace, a foreign policy think tank, since 2017. +Selected Qualifications and Skills +• Industry - Extensive experience in the apparel industry through her experience on the board of The RealReal, Inc. +• Premium Branding - Premium branding experience in the luxury consignment business during her time as a director of RealReal, Inc. +• Consumer Technology/Big Data - Served as vice president of e-business at Qwest Communications. +• Sales and Marketing; Retail - Served as vice president of business development at Qwest Communications. +• Technology Infrastructure and Cybersecurity - Extensive experience in wireless and telecommunications industries. +• Mergers and Acquisitions – Experience with mergers and acquisitions while serving as general partner of Canaan Partners. +• Corporate Responsibility - Served on the board of The RealReal, Inc. a sustainable luxury company that promotes the re-circulation of products across the multi-billion dollar fashion industry and experience serving on the board of a private luxury brand company that has implemented a sustainability program and related initiatives. +13 +VICTOR LUIS +Age: 56 +Director Since: 2020 +Board Committees: +Talent & Compensation +Public Company Directorships: +FarFetch (NYSE: FTCH) +Mr. Luis joined the board of directors of FarFetch Limited (NYSE: FTCH) in August 2020 and currently serves on the audit committee and as chair of the nominating and corporate governance committee. He served as the chief executive officer and on the board of directors of Tapestry, Inc. (formerly known as Coach, Inc.) (NYSE: TPR) from 2014 to 2019, where he led the company’s transformation into Tapestry Inc., a New York-based house of modern luxury brands including Coach, Kate Spade and Stuart Weitzman. Mr. Luis joined Coach, Inc. in 2006 as president and chief executive officer of Coach Japan. He rapidly assumed additional leadership responsibilities across Asia and Europe, becoming chief commercial officer of Coach, Inc. in 2013 and chief executive officer in 2014. Prior to joining Coach, Inc., from 2002 to 2006, Mr. Luis was president and chief executive officer of Baccarat, Inc., where he ran the North American operation of the French luxury brand. Mr. Luis joined the Moët-Hennessy Louis Vuitton Group in 1995, ultimately advancing to president and chief executive officer of its subsidiary, Givenchy, Japan Incorporated, before leaving in 2002. +Selected Qualifications and Skills +• International - Significant experience in managing multi-national teams while at Coach, Inc. and Moët-Hennessy Louis Vuitton Group. +• Retail - Previously served as chief executive officer of several global luxury retailers. +• Premium Branding - Premium global branding experience spanning over two decades as chief executive officer of Tapestry, Inc., overseeing its modern luxury brands, and as chief executive officer of Baccarat, Inc. and Givenchy, Japan Incorporated. +• Industry - Experience in footwear, apparel and accessories while on the board of Tapestry, Inc. with the brands Coach, Kate Spade and Stuart Weitzman. +• Public Company Executive - Executive management experience, including service as chief executive officer of publicly traded companies. +DAVE POWERS +Age: 57 +Director Since: 2016 +Executive Positions: +Chief Executive Officer and President +Public Company Directorships: +Solo Brands, Inc. (NYSE: DTC) +Mr. Powers became our Chief Executive Officer in June 2016 and joined our Board at that time. Mr. Powers joined our Company as President of Direct-to-Consumer in August 2012. He was appointed President of Omni-Channel in January 2014 and was appointed President in March 2015. Prior to joining our Company, Mr. Powers held several executive leadership roles at Converse Inc. (a subsidiary of NIKE, Inc.), Timberland LLC and Gap Inc. (NYSE: GPS). In May 2022, he joined the board of directors and currently serves on the audit committee of Solo Brands, Inc. (NYSE: DTC). +Selected Qualifications and Skills +• Industry - Extensive experience in the footwear and apparel industry through a variety of positions at three different footwear companies and a global apparel retailer. +• Supply Chain Management; Retail - As part of the NIKE, Inc. retail leadership team, was responsible for Converse Inc.'s global owned and distributor Direct-to-Consumer operations. During tenure at Timberland LLC and Gap Inc., held leadership roles with a variety of retail responsibilities from merchandising to store design. +• Sales and Marketing - Graduated cum laude from Northeastern University with a B.S. in Marketing. Throughout his career, has been responsible for the development of marketing strategy, with a focus on consumer engagement and +14 +digital marketing. While President of Brands of our Company, led the Omni-Channel organization, elevating and advancing the Omni-Channel platform. +• International - While serving in leadership roles at Timberland LLC, led worldwide retail merchandising, marketing, visual and store design, and oversaw European retail operations. +• Public Company Executive - Serves as our Chief Executive Officer and President with global responsibilities and oversight. Other leadership roles have been with public companies. +LAURI M. SHANAHAN +Age: 60 +Director Since: 2011 +Board Committees: +Audit & Risk Management +Corporate Responsibility, Sustainability & Governance +Public Company Directorships: +Treasury Wine Estates Limited (ASX: TWE) +CAVA Group, Inc. (NYSE: CAVA) +Ms. Shanahan has over 25 years of senior-level experience in retail, consumer products and hospitality, ranging from global, multi-channel, multi-brand enterprises to small and mid-cap growth companies. In June 2023, she joined the board of directors and is the chair of the people, culture and compensation committee of CAVA Group Inc. (NYSE: CAVA). She serves on the board of directors, and chair of the human resources committee of Treasury Wine Estates Limited (ASX: TWE), a vertically integrated global wine business with over 70 brands. She joined Gap Inc. in 1992 and served in numerous leadership roles, including chief administrative officer and chief legal officer, during her 16-year career with the company. Since then, she has served as a principal of Maroon Peak Advisors, a consumer products and retail consulting firm. +Selected Qualifications and Skills +• Public Company Executive - Joined Gap Inc. in 1992 and served for 16 years in numerous leadership roles including chief administrative officer, chief legal officer and corporate secretary and chairman of the foundation board. Gap Inc. is a leading global specialty retailer offering clothing, footwear, accessories, and personal care products for men, women, children, and babies under the Gap, Banana Republic, Old Navy, and Athleta brands. +• International - Directly involved in global brand development, supply chain and worldwide operations while at Gap Inc. and as a director and consultant. +• Supply Chain Management and Retail - Involved in retail, franchise, online licensing and other distribution channels, as well as sourcing and supply chain, while at Gap Inc. and as a consultant. +• Sales and Marketing - Acquired sales and marketing experience throughout her career at Gap Inc. and as director and consultant. +• Industry - Experience in footwear, apparel and accessories at Gap Inc., Charlotte Russe Holdings, Inc. and through consulting firm. +• Premium Branding - Premium and luxury branding experience at Gap Inc., through serving on the board of Treasury Wine Estates Limited and through retail consulting firm. +• Compliance and Risk Oversight - In addition to other leadership roles at Gap Inc., served as chief compliance officer and chief legal officer, overseeing the global corporate risk committee, as well as the global governance and compliance organization. +• Corporate Responsibility - While at Gap Inc., led development and oversight of global strategy, organization and execution of comprehensive social and environmental programs involving product development, supply chain, stakeholder engagement and employee and consumer-facing initiatives. Was president of Gap Inc. Foundation and also led government affairs and public policy. +15 +BONITA C. STEWART +Age: 66 +Director Since: 2014 +Board Committees: +Corporate Responsibility, Sustainability & Governance (Chair) +Talent & Compensation +Public Company Directorships: +PagerDuty, Inc. (NYSE: PD) +Ms. Stewart is currently a Board Partner at Gradient Ventures, Google's early-stage venture fund focused on artificial intelligence. She has been driving digital transformation at scale across multiple industries throughout her career. Prior to Gradient Ventures, Ms. Stewart served in various executive roles at Google, Inc. (Nasdaq: GOOG, GOOGL), a subsidiary of Alphabet Inc., including as Vice President, Global Partnerships where she led partner management for the largest U.S. publishers across search, news, commerce, media and entertainment, telecommunications and mobile applications. In January 2021 she joined the board of directors and serves as a member of the audit committee and nominating and corporate governance committees for PagerDuty (NYSE: PD), a digital operations management company. Ms. Stewart previously served on the board of directors and as a member of the compensation committee and nominating and corporate governance committee for Volta Industries, Inc. (NYSE: VLTA). Ms. Stewart served as a corporate director for Pluralsight, Inc. (Nasdaq: PS), from 2018 to 2021. From 2002 to 2006 she worked for DaimlerChrysler AG (now Daimler AG) as director of Chrysler Brand Advertising and the director of Chrysler Group’s first Interactive Communications team. Ms. Stewart began her career in 1979 at IBM Corporation (NYSE: IBM) where she served in various financial and marketing management positions. She is the co-author of A Blessing: Women of Color Teaming Up to Lead, Empower and Thrive and the 2019-2020 Women of Color in Business Cross-Generational Survey. +Selected Qualifications and Skills +• Industry - Over 30 years of experience in brand management, digital strategy, and execution. +• High Level of Financial Literacy - Lead strategy, business development and revenue growth plans for Google Inc.'s largest publisher partnerships. Holds an M.B.A. from Harvard Business School. +• Consumer Technology/Big Data - Extensive experience in digital transformation, and data driven digital strategies across multiple industries. +• Entrepreneurial - Served as president, chief operating officer, and co-founder of Nia Enterprises, LLC, a web-based company, and founder and chief executive officer of One Moment in Time, a women's formal-wear rental company. +• Sales and Marketing - Acquired sales, marketing, product distribution and online advertising experience. +• International - Led publisher partnerships for Latin America and Canada and has worked for Daimler AG and IBM Corporation, which are multi-billion dollar global companies. +• Public Company Executive - Strategic planning and large-scale operations experience with Google Inc. and IBM Corporation. +• Technology Infrastructure and Cybersecurity - Extensive experience in technology-based companies and fluency in digital transformation including digital strategy, mobile, video, programmatic, online advertising, cloud solutions, analytics and data privacy. +• Corporate Responsibility - Experience with employee resource group executive sponsorship, global hiring and retention processes and racial equity compliance oversight. +Summary of Qualifications and Skills of Directors +As part of our Board evaluation and director selection processes, the Corporate Responsibility, Sustainability & Governance Committee maintains a director skills matrix. When evaluating potential nominees, the Committee and the Board take into account the diversity of experience and backgrounds represented on our Board. The director skills matrix below summarizes the specific qualifications, attributes, skills and experience of each director nominee that led our Board to conclude that the nominee is qualified to serve on our Board. Set forth below is a matrix identifying the skills possessed by each individual director. +16 +Specific Qualifications, Attributes, Skills and Experience Michael F. +Devine, III David A. Burwick Nelson C. +Chan Cynthia (Cindy) L. Davis Juan R. Figuereo Maha S. Ibrahim Victor +Luis Dave Powers Lauri M. +Shanahan Bonita C. +Stewart +Industry u u u u u u u +Premium Branding u u u u u u u u u +International u u u u u u u u u +High Level of Financial Literacy u u u +Retail u u u u u u u u +Consumer Technology/ Big Data u u u u u +Sales and Marketing u u u u u u u u +Supply Chain Management u u u u +Technology Infrastructure and Cybersecurity u u u u u u +Compliance and Risk Oversight u u u u u u +Corporate Governance u u u u u u u +Mergers and Acquisitions u u u u u u +Public Company Executive u u u u u u u u u +Human Resources and Talent Management u u u u u u u u +Corporate Responsibility u u u +Consent to Serve +Each of the persons named above has consented to being named in this Proxy Statement and to serve as a director if elected, and our Board has no reason to believe any of the nominees will be unable or unwilling to serve as a director. If, however, any nominee withdraws or otherwise becomes unavailable to serve, our Board may decrease the size of our Board, or the proxies may be voted for the election of such other person as a director as our Board may recommend in place of the nominee. +17 +Required Vote +Because this is an uncontested election, the election of our director nominees at the Annual Meeting requires the affirmative vote of a majority of the votes cast by the shares present virtually or represented by proxy and entitled to vote on the election of directors at the Annual Meeting (assuming that a quorum is present). A "majority of the votes cast" means the number of shares voted "FOR" a director nominee's election exceeds 50% of the number of votes cast with respect to that director's election. +This proposal is considered a "non-routine" matter under NYSE rules. As a result, a bank, broker, dealer, or other nominee may not vote without instructions on this matter, so there may be broker non-votes in connection with this proposal. Abstentions and broker non-votes are not counted as votes "FOR" or "AGAINST" a director nominee and will have no effect on the election of directors. If no contrary indication is made, returned proxies will be voted "FOR" each of the director nominees, or in the event any nominee is unable to serve as a director at the time of the election, returned proxies will be voted "FOR" any nominee designated by our Board to fill the vacancy. +BOARD RECOMMENDATION +OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE +" FOR " +THE ELECTION OF EACH OF THE TEN DIRECTOR NOMINEES. +18 +CORPORATE GOVERNANCE +Corporate Governance at Deckers +Corporate governance is managed under the direction of our Board. Our Board has a long-standing commitment to comprehensive and effective corporate governance practices. Our Board continues to evaluate our governance policies and procedures to ensure that the right mix of individuals is present in our boardroom and to ensure effective oversight of our strategy and management in order to best serve our stockholders. Our Board has adopted Corporate Governance Guidelines that set forth the primary framework of governance principles applicable to our Company, a copy of which is available on our website at ir.deckers.com in the Overview section of the Governance tab. +Corporate Governance Elements +Our Board is committed to maintaining the highest standards of corporate governance and has established a strong framework by which our Company is governed. Key elements of our corporate governance framework include: +OUR POLICY OR PRACTICE DESCRIPTION AND BENEFIT TO OUR STOCKHOLDERS +STOCKHOLDER RIGHTS +Annual Election of Directors • Our directors are elected annually, reinforcing their accountability to our stockholders. We do not employ a classified board structure. +Single Class of Outstanding Voting Stock • Our common stockholders control our Company with equal voting rights. +Majority Voting Standard • We have a majority voting standard for uncontested director elections. +BOARD STRUCTURE +Director Independence • Based on the director independence requirements set forth in our Corporate Governance Guidelines, as well as under applicable SEC and NYSE rules, our Board has determined that each of our directors, other than Mr. Powers, is an "independent director." +• Our three standing Board committees: the Audit & Risk Management Committee, the Talent & Compensation Committee and the Corporate Responsibility, Sustainability & Governance Committee, consist exclusively of independent directors and have adopted written charters. Committee composition and charters are reviewed annually by our Board. +Committee Governance • Our Corporate Governance Guidelines allow our Board to determine whether to separate or combine the roles of the Chairman and Chief Executive Officer. Currently, Mr. Devine, who is an independent director, serves as Chairman of the Board. We believe this is the most appropriate leadership structure for our Company at this time. +Annual Board Self-Evaluations • The Corporate Responsibility, Sustainability & Governance Committee conducts and oversees annual evaluations of our Board, each Board committee and each individual director, to ensure they are effective and continue to serve the best interests of our stockholders. +Board Oversight of Risk • Our Board is generally responsible for risk management activities, but has delegated the oversight of risk management to our Audit & Risk Management Committee. Our full Board regularly engages in discussions of the most significant risks we face and how these risks are managed. +EXECUTIVE COMPENSATION +Annual Say-on-Pay Vote • Historically, we have provided our stockholders the opportunity to approve, on a non-binding advisory basis, the compensation of our Named Executive Officers on an annual basis as this affords our stockholders the ability to provide routine feedback on our compensation program. At the Annual Meeting, we are again asking our stockholders to approve the compensation of our Named Executive Officers every "ONE YEAR." +Corporate Governance Principles +Pursuant to Delaware law and our Bylaws, our business, property and affairs are managed under the direction of our Board of Directors. Thus, our Board is the ultimate decision-making body of our Company, except with respect to those matters reserved for our stockholders. +Our Board selects our Chief Executive Officer, and works together with our Chief Executive Officer to select our senior management team, which is charged with the day-to-day operation of our business. Members of our Board are kept informed about our business through discussions with our Chief Executive Officer and other senior management personnel, including by +19 +attending brand sales meetings and industry events, participating in periodic informal telephonic meetings, and reviewing materials provided to them, as well as by attending formal meetings of our Board and its committees. Having selected the senior management team, our Board acts as an adviser and counselor to senior management, monitors its performance and proposes or makes changes to the senior management team when it deems necessary or appropriate. +Board of Directors Meetings +BOARD OF DIRECTORS +Meetings in Fiscal Year 2023: 6 +• Each of our directors attended at least 80% of Board meetings and meetings of the Board committees on which he or she served during his or her term. +• Time is scheduled for our independent directors to meet in an executive session at every Board meeting. +• Our Corporate Governance Guidelines state that directors are expected to attend each of our annual meetings of stockholders. All ten members of our Board attended the annual meeting of stockholders held in September 2022. +Director Independence +Our Corporate Governance Guidelines, as well as applicable NYSE rules, require that our Board be comprised of a majority of directors who satisfy the criteria for independence set forth in the NYSE rules. These guidelines help ensure that the interests of our Board and management are aligned with those of our stockholders, that conflicts of interest are avoided, and that we are in compliance with applicable SEC and NYSE rules. An independent director is one who our Board affirmatively determines has no material relationship with our Company (either directly or as a partner, stockholder, or officer of an organization that has a relationship with our Company) and otherwise meets the requirements of the NYSE rules. +Based on the director independence requirements set forth in our Corporate Governance Guidelines, as well as in the applicable NYSE rules, our Board has determined that each of our directors, other than Mr. Powers, is an "independent director." In addition, all members of the Audit & Risk Management Committee, Talent & Compensation Committee, and Corporate Responsibility, Sustainability & Governance Committee meet the independence standards set forth in applicable SEC and NYSE rules. +Board Leadership Structure +Our Corporate Governance Guidelines allow the Board to determine whether to separate or combine the roles of chairman and chief executive officer. Our Board believes it is important to maintain flexibility in our Board leadership structure to best serve the interests of the Company and its stockholders at any particular time. However, our Board firmly supports having an "independent director" serve in a Board leadership position at all times. +In determining the appropriate structure, our Board considers multiple factors, including our business and strategic needs at the time and the composition of our Board. The roles of chairman and chief executive officer are currently separated. Our Board believes this leadership structure allows our Chief Executive Officer to focus on the day-to-day operation and management of our Company, while allowing our Chairman to focus on leading the Board in overseeing the interests of our Company and stockholders. Our Chairman, Mr. Devine, leverages his extensive experience in matters related to risk management, oversight of systems of internal control, and legal and regulatory compliance to advise the Company on identified and anticipated risks, as well as to drive strategy and agenda setting at the Board level. Our Chief Executive Officer, Mr. Powers, utilizes his extensive leadership experience in the footwear and apparel industry to drive the Company's strategic vision, oversee its long-term growth, and provide general oversight of the business and affairs of the Company. +While the Board believes the current structure is appropriate at this time, it regularly assesses the advantages and disadvantages of various structures taking into account the evolving needs of the business. +Board Committees +Our Board of Directors has three standing committees: the Audit & Risk Management Committee, the Talent & Compensation Committee, and the Corporate Responsibility, Sustainability & Governance Committee. Each member of each of the committees is an "independent director" for purposes of applicable SEC and NYSE rules. Each of our committees has a written charter that describes its purpose, membership, meeting structure, and responsibilities. A copy of each committee's charter is available on our website at ir.deckers.com in the Overview section of the Governance tab . These charters are reviewed annually by each committee, with any recommended changes approved by our Board. The Audit & Risk Management Committee charter and the Corporate Responsibility, Sustainability & Governance charter were amended in September 2022, and the Talent & Compensation Committee charter was amended in January 2023. +Summary information regarding the membership, meetings, and primary responsibilities of each of the three standing committees of our Board for fiscal year 2023 is provided below: +20 +AUDIT & RISK MANAGEMENT COMMITTEE +Meetings in Fiscal Year 2023: 10 +Current Members: +Juan R. Figuereo ( Chair ) +All members of the Audit & Risk Management Committee meet the independence and experience standards set forth in applicable SEC and NYSE rules. The Chair of the Audit & Risk Management Committee has been determined by our Board to be an "audit committee financial expert" under applicable SEC rules. +Nelson C. Chan +Maha S. Ibrahim +Lauri M. Shanahan +• Oversees management's conduct of, and the integrity of, our financial reporting functions. +• Oversees the qualifications, engagement, compensation, independence and performance of the registered public accounting firm that audits our annual financial statements and reviews our quarterly financial reports. +• Oversees our legal and regulatory compliance. +• Oversees the performance of our internal audit function. +• Oversees the application of our related-person transaction policy as established by our Board. +• Oversees our systems of internal control over financial reporting disclosure controls and procedures. +• Oversees our risk management policies. +• Oversees the application of our Code of Ethics as established by our Board. +TALENT & COMPENSATION COMMITTEE +Meetings in Fiscal Year 2023: 4 +Current Members: +Cynthia (Cindy) L. Davis (Chair) +All members of the Talent & Compensation Committee meet the independence standards set forth in applicable SEC and NYSE rules. +David A. Burwick +Victor Luis +Bonita C. Stewart +• Oversees the design of our executive compensation program, and responsible for oversight of our employment practices and policies. +• Reviews and approves goals and objectives relevant to the compensation of our executives and evaluates performance in light of those goals and objectives. +• Oversees our key human capital management strategies and programs. +• Reviews our overall talent management strategy, including development and succession plans for our executives and management. +• Determines and approves the compensation of our executives based, in part, on these evaluations, including each element of compensation. +• Makes recommendations to our Board regarding any action that is required to be submitted to our stockholders for approval with respect to incentive compensation plans and equity-based plans. +• Administers and approves our equity-based plans, and approves (or delegates authority to approve, below the executive level) individual award grants under those plans, or recommends award grants to our Board for approval. +• Produces report on executive compensation for inclusion in our proxy statement for our annual meeting of stockholders. +21 +CORPORATE RESPONSIBILITY, SUSTAINABILITY & GOVERNANCE +COMMITTEE +Meetings in Fiscal Year 2023: 5 +Current Members: +Bonita C. Stewart (Chair) +All members of the Corporate Responsibility, Sustainability & Governance Committee meet the independence standards set forth in applicable NYSE rules. +Nelson C. Chan +Cynthia (Cindy) L. Davis +Lauri M. Shanahan +• Develops and recommends to our Board a set of Corporate Governance Guidelines that establish a framework of governance principles applicable to us. +• Identifies individuals qualified to become directors, consistent with criteria specified in the Corporate Governance Guidelines. +• Recommends to our Board the qualified director nominees to be selected by our Board. +• Recommends to our Board membership of our Board committees. +• Oversees the Company's ESG Program, and periodically reviews with management our policies and practices with respect to diversity, equity, and inclusion (DEI) and our specific sustainable development goals. +• Ensures that our certificate of incorporation and Bylaws are structured in a manner that best serves our objectives and recommends amendments as appropriate. +• Oversees the evaluation of management, our Board and Board committees. +Nominating Procedures and Criteria +Among its functions, the Corporate Responsibility, Sustainability & Governance Committee considers and approves nominees for election to our Board. We view board succession as an ongoing process and regularly identify, evaluate and pursue prospective candidates. In addition to the candidates identified by the Committee, the Committee considers candidates for director proposed by our stockholders, provided such recommendations are made in accordance with the procedures set forth in our Bylaws. Stockholder nominations that meet the qualification criteria referred to below will receive the same consideration as nominations made by the Committee. +Essential criteria for all candidates considered by the Corporate Responsibility, Sustainability & Governance Committee are discussed in the section of this Proxy Statement titled " Qualifications for All Directors. " In evaluating candidates for certain Board positions, the Committee also evaluates additional criteria, as reflected in the section of this Proxy Statement titled " Specific Qualifications and Skills Represented on Our Board. " +In selecting nominees for our Board, the Corporate Responsibility, Sustainability & Governance Committee evaluates the general criteria referred to above, identifies the specialized criteria for which the Committee has determined there is a need, and considers the candidate's ability to meet the required criteria and contribute to the success of our Company. In evaluating an existing director for reelection, in addition to assessing the criteria referred to above, the Committee considers a variety of factors, including attendance at Board and committee meetings, independence, length of service, previous performance, and overall contributions to our Company. +The director nominees have been recommended by the Corporate Responsibility, Sustainability & Governance Committee and approved by our Board of Directors. +Management Succession and Talent Development +The Talent & Compensation Committee, pursuant to its charter, is responsible for overseeing the management succession planning process. As part of that responsibility, the Committee reviews and evaluates the development and succession plan relating to our executive officers, including considerations of career paths and attracting and retaining high-quality talent. The Board is responsible for these actions with respect to our Chief Executive Officer. The Committee works with the Board to assess whether we have the management talent needed to successfully pursue our business objectives. The Board also regularly considers the competencies necessary for our Chief Executive Officer to support our strategies for long-term success. +Risk Governance Structure +Our Board has overall responsibility for the oversight of our Company's risk management process, which is designed to support the achievement of organizational objectives, including strategic objectives, improve long-term organization performance and enhance shareholder value. It has developed processes to identify, evaluate and manage short-, medium- and long-term risks to ensure they are prioritized on a timely basis. Risks are typically categorized based on the severity and probability of the risk and addressed or escalated as appropriate. The Board members provide objective, independent oversight of risk and focus on the most significant risks facing the Company. Our legal and internal audit executives report directly to the Audit & Risk Management Committee regarding material risks to our business, among other matters, and facilitate the identification, assessment and development of controls and procedures that address identified risks. The highest-ranking manager of our +22 +internal audit function periodically meets with the Audit & Risk Management Committee and the Board to discuss identified risks, the status of management’s risk mitigation actions, and, if applicable, any emerging risks. Separately, our Risk and Compliance Advisory Committee, an independent committee overseen by our internal audit team, evaluates organizational risks and discusses opportunities for compliance and risk mitigation. +Board Role in Risk Oversight +• Annually reviews or assesses the effectiveness of our Company’s enterprise risk management programs and framework, including the processes for identifying, assessing, prioritizing, and responding to our enterprise-wide risk exposures, to ensure that robust risk management strategies are in place. On an annual basis, under the direction of our Audit & Risk Management Committee, our Company undertakes an enterprise-level risk management review that is designed to bring to the Board’s attention our most material risks for evaluation, including strategic, operational, regulatory, and compliance risks. +• Receives regular updates from management regarding our organization’s portfolio of risk and engages in discussions to understand and assess our overall risk management activities. Our Board further apprises itself of the most significant risks facing our Company, ensuring that robust risk response actions have been established and implemented, with an independent review by internal audit. Management and our Board assess the Company's risk environment on a quarterly basis to ensure the Company is adequately anticipating future exposure to liability. +• On an annual basis, under the direction of our Corporate Responsibility, Sustainability & Governance Committee , our Board reviews and assesses our corporate responsibility and sustainability efforts, including risks related to environmental and social issues, as well as risks related to corporate governance issues. +• Inquires of management to understand and assess the effectiveness of the mechanisms in place for monitoring and responding to emerging risks. +• Engages in critical dialogue with our executive leadership and technology-focused personnel to ensure our organization has a robust plan to detect, stop, and mitigate the effects of cyberattack incidents, including resuming normal operations as quickly as possible. +• Engages in active discussion with management to understand our Company’s risk philosophy to ensure understanding of overall appetite for risks that aligns with ability to create stockholder value. +• Engages actively with management on Chief Executive Officer succession and works to nominate and evaluate potential successors for this role. +• Reviews identified risks with management at regular committee meetings and provides input on these risks and mitigation steps. +Below is a summary of key risk oversight responsibilities delegated to our three committees: +Audit & Risk Management Committee +• Oversees financial risks and monitoring of management’s policies and procedures. +• Plays a strategic role in assessing and monitoring our Company’s response to cyber threat trends, receiving periodic updates on cyber risk management initiatives, and obtaining independent confirmation of their efficacy through regular reviews by internal audit. Engages in regular dialogue with our Chief Technology Officer on technology risk related topics on every Audit & Risk Management Committee meeting agenda, ensuring adequacy of focus and resources to support cyber risk management activities. +• Receives regular updates from management on cybersecurity or information security incidents that may pose a significant threat to our Company, and assesses our Company’s key metrics for measuring our capabilities to manage cybersecurity and technology risk. Our Board also receives an independent perspective from our internal audit function. +• Provides oversight for compliance risk and regularly receives updates from management on compliance-related matters. +Our legal and internal audit executives report directly to the Audit & Risk Management Committee regarding material risks to our business, among other matters, and the Audit & Risk Management Committee meets in executive sessions with our highest ranking manager of internal audit and with representatives of our independent registered public accounting firm. +Talent & Compensation Committee +• Oversees the design of our executive compensation program so as to encourage achievement of our strategic objectives and mitigate compensation-related risk. +• Oversees key human capital management strategies and programs. +• Evaluates succession planning risk regarding the executive officers. +23 +Corporate Responsibility, Sustainability & Governance Committee +• Oversees risks related to our corporate responsibility and sustainability efforts, including risks related to environmental and social issues, such as climate change, as well as risks related to corporate governance issues. +• Receives quarterly updates on the status of our ESG Program and related risks. +• Develops and recommends to the Board our Corporate Governance Guidelines to establish and oversee an appropriate governance framework. +Information Security Risk Oversight +The Board has delegated oversight of the Company's information security program to the Audit & Risk Management Committee. Our information security initiatives are led internally by our Chief Technology Officer and Chief Information Security Officer. They are responsible for the operation of our information security program and communicate quarterly with the Audit & Risk Management Committee on the program, and annually with the full Board with respect to the state of the program, assessments of the cyber risk landscape, including discussion on emerging risks and trends, and compliance with data privacy regulatory requirements. Our information security program also includes a cybersecurity incident response plan that is designed to provide a management framework across our Company. We engage external firms to assist our Company in the independent evaluation of our information security processes and capabilities. Our employees receive annual trainings on responsible information security, data security and cybersecurity practices including appropriate action to take against cyber threats. We also maintain a cybersecurity and information security risk insurance policy, which insures for data incidents or breaches and other technology related exposures. +Talent & Compensation Committee Interlocks and Insider Participation +As of the date of this Proxy Statement, no member of the Talent & Compensation Committee is serving, and during the past year no member of the Talent & Compensation Committee has served, as an officer or employee of our Company or any of its subsidiaries. None of our executive officers currently serves, or during the past year has served, as a member of the board of directors or compensation committee (or other committee serving a similar purpose) of any entity that has an executive officer serving on our Board or the Talent & Compensation Committee. In addition, none of the Talent & Compensation Committee members had any relationship, or participated in any transaction, with our Company during fiscal year 2023 that requires disclosure under SEC rules. +We have entered into indemnification agreements with each of our directors, including each member of the Talent & Compensation Committee. +Communications with Directors +Stockholders and other interested parties may communicate with the Chairman of our Board, the Chair of any Board committee, with our independent directors as a group, or with any individual director, by writing to any such person or group. Communications should be sent to the following address: +Deckers Outdoor Corporation +Attn.: Corporate Secretary +250 Coromar Drive +Goleta, California 93117 +Communications are distributed to our Board, or to any individual director, depending on the facts and circumstances described in the communication. Our Board has requested that certain items that are unrelated to the duties and responsibilities of our Board should be excluded, including the following: junk mail and mass mailings, product inquiries or complaints, new product suggestions, resumes and other forms of job inquiries, surveys, and business solicitations or advertisements. In addition, material that is unduly hostile, threatening, illegal or similarly unsuitable will not be distributed, except that any communication that is not distributed will be made available to any director upon request. +Code of Ethics and Accounting and Finance Code of Ethics +Our Board has adopted a Code of Ethics to assist our officers, directors and other employees in complying with legal and regulatory requirements and maintaining the highest standards of ethical conduct. All of our directors, officers, and employees receive an annual training on the Code of Ethics and must carry out their duties in accordance with the policies set forth in the Code of Ethics and with applicable laws and regulations. The Code of Ethics complies with the requirements set forth in applicable NYSE rules. +Our Board has also adopted a separate Accounting and Finance Code of Ethics which focuses on the financial reporting process and applies to our Chief Executive Officer, Chief Financial Officer and Corporate Controller (and other employees serving similar functions). The Accounting and Finance Code of Ethics is intended to qualify as a "code of ethics" under applicable SEC rules and to satisfy the standards of ethics and compliance programs under applicable NYSE rules. +24 +Our Code of Ethics and our Accounting and Finance Code of Ethics are available on our website at ir.deckers.com in the Overview section of the Governance tab. To the extent required by law, any amendments to or waivers of any provision of the Code of Ethics or the Accounting and Finance Code of Ethics will be promptly disclosed publicly on our website. +Stockholder Engagement +We maintain an ongoing, proactive outreach effort with our stockholders. We believe our stockholders, as the owners of our Company, have important views and insights into our business operations, and we routinely seek to engage with our stockholders to ensure their views are shared with our Board and management, and actively considered in discussions of our strategic direction. We highly value stockholder input and have consistently demonstrated our commitment to open and interactive dialogue with our stockholders. Our stockholder outreach program is led by a cross-functional team that includes members of our Investor Relations, ESG, and Legal teams. +In fiscal year 2023, as part of our stockholder engagement efforts to solicit feedback and share perspectives we reached out to holders of approximately 48% of our shares. This year, investors were largely supportive of the topics we addressed, including our corporate governance framework, executive compensation practices, and ESG program, including highlights of our diversity, equity, and inclusion, or DEI, initiatives. The feedback and insights we received during our engagement efforts were shared with the Board and management. +While our Board has a fiduciary responsibility to our stockholders and represents their interests, our management team is primarily responsible for investor relations. Throughout the year, our management team regularly meets with current stockholders, prospective investors, and investment analysts. These meetings serve to engage stockholders and solicit feedback on topics relevant to our Company's performance and strategy. Our management team provides regular updates to our Board regarding stockholder feedback on these topics. +Please refer to the section of this Proxy Statement titled “ Stockholder Feedback on Executive Compensation ” for more information on how our stockholders impacted the evolution of our executive compensation program for fiscal year 2023. +Our People and Our Culture +At our Company, our purpose is to positively impact the world by uniting purposeful brands with diverse people driven to succeed and create change. Our five key values, which guide our journey onward together, to improve our business and create a better world around it, help hold us accountable to deliver on this purpose: +Our values define our Company and serve as the driving force behind how we work together and with our customers, our consumers, our partners, our suppliers, and our communities. We also have detailed ethics and compliance policies that instill a commitment to ethical behavior and legal compliance across our organization. Through our open-door policy and culture, employees are encouraged to approach their managers if they believe violations of standards or policies have occurred, and are also able to make confidential and anonymous reports using an online or telephone hotline hosted by an independent third-party provider. +We believe our culture makes us unique. We regularly conduct employee surveys to understand our employees' experiences on a variety of topics focused on employee engagement. Our latest survey completed in February 2023 had a participation rate of 88%. Of those employees who completed the survey, 87% noted they were proud to work for Deckers. +Diversity, Equity and Inclusion +We prioritize DEI at our Company and believe creating a diverse and inclusive workplace is critical to creating an organization where all employees can come as they are. We believe the inclusion of diverse perspectives, and the amplification of the voices of underrepresented communities brings a unique set of experience, opinions, and thoughts on critical issues that helps enhance our business and drives better outcomes. +Our Code of Ethics, on which we train our employees biennially, as well as our annual Creating Change Report, codifies these values and our commitment to DEI. We have a robust collection of programs designed to create a more inclusive workplace, as well as policies and practices aimed at increasing diversity. We have implemented a comprehensive, global strategy for DEI, including the following: +25 +Ø +We improved BIPOC representation among U.S. leaders (director and above) to 24%, up from 12% three years ago, as we make progress towards our target of 25% by the end of fiscal year 2027. +Ø +Our brands have committed to representing BIPOC and LGBTQIA+, and diverse body types and abilities in their marketing campaigns. +Ø +We have joined The Valuable 500, an initiative comprised of companies committed to disability inclusion, and the Civic Alliance, a nonpartisan business coalition that champions civic participation, and we are also part of the Bloomberg Gender-Equality Index which helps bring transparency to gender-related policies and practices at publicly listed companies around the world. +Our Board values DEI as we continue to enhance our Board's diversity and skill sets. In addition, our Board is regularly kept apprised of our Company's DEI employee engagement efforts, targets and commitments. +Charitable Giving and Volunteering +At our Company, our charitable contributions, product donations, and employee volunteer efforts are an essential part of our culture. Each fiscal year, we contribute to our local communities through monetary donations, volunteer efforts and in-kind donations. During fiscal year 2023, we donated to various non-profit organizations. We also continued our 'Art of Kindness' events, where employees volunteer during a week-long event in our local communities multiple times during the fiscal year. Further, many of our supply chain partners followed our lead and volunteered in their local communities during fiscal year 2023. Our strategic giving and community-engagement efforts continue to be aligned with our sustainable development goals, or SDGs, and DEI strategy, with a focus on social and racial justice, the environment, uplifting youth, education, and community support. +$4.2 MILLION Ø +Amount donated to various non-profit organizations around the globe during fiscal year 2023 +AREAS OF FOCUS FOR GIVING Ø +DEI, the environment, uplifting youth, education, and community support +OVER 15,000 Ø +Hours our employees volunteered in fiscal year 2023 +1.7 MILLION Ø +Number of pairs of shoes donated, since the inception of our partnerships with non-profit organizations who distribute shoes to those in need +Environmental, Social, and Governance +As a global leader in designing, marketing, and distributing innovative footwear, apparel, and accessories, our worldwide reach and impact is significant. We believe consumers are increasingly buying brands that advance sustainable business practices and deliver quality products while striving for minimal environmental impact by employing socially conscious operations. Our sustainability policies and strategies are aligned with, and informed by, our ongoing efforts with multi-stakeholder initiatives, which involve our stockholders, employees, suppliers, and customers, as well as other brands and non-governmental organizations. Through our holistic environmental, social and governance program, which has been in existence since 2010, we are committed to advancing our sustainable business initiatives. As a result of our efforts, we have been recognized by Investor’s +Business Daily as one of the Best ESG Companies, by Sustainalytics as one of the Top-Rated ESG Companies, and by Newsweek as one of America’s Most Responsible Companies. We have also been included on the Bloomberg Gender Equality Index during fiscal year 2023. +ESG Oversight +Our Board oversees our ESG strategy and has ultimate oversight over all sustainability initiatives, strategies, and programs, including economic, social, and environmental risks. The Board has delegated its authority to oversee our ESG efforts to our Corporate Responsibility, Sustainability & Governance Committee. Our Chief Administrative Officer, or CAO, is responsible for the day-to-day management of our ESG program and regularly reports to our Corporate Responsibility, Sustainability & Governance Committee and the Board on the status of the program. The ESG program’s execution is driven by our leadership team and various cross-functional teams including our ethical sourcing, facilities, distribution centers, brands, innovation, materials, and supply chain teams. +The Corporate Responsibility, Sustainability & Governance Committee’s oversight of our ESG program is complemented by the Audit & Risk Management Committee’s periodic assessment of risk management, including climate-related risks and policies, to ensure the consistent application of our corporate strategy. Our internal audit team provides periodic targeted reviews of our ESG-related policies and procedures to the Audit & Risk Management Committee to support the committee’s efforts. +26 +We believe integrating ESG initiatives into our strategic objectives will create long-term value for our stockholders by ensuring collaboration across our portfolio of brands to drive sustainable business practices and help us continue to do good and do great. Our ESG program aligns our internal teams with our SDGs (detailed below) and establishes policies to encourage our partners and suppliers to employ sustainable business practices. +ESG Education +During fiscal year 2023, each member of our Corporate Responsibility, Sustainability & Governance Committee, together with our CAO, enrolled in the Diligent ESG and Climate Leadership Certificate Programs. All participants have now completed the certificate programs in which they enrolled. In addition, as set forth in our Corporate Governance Guidelines, our Board is required to complete annual training on our Code of Ethics. Together, we believe these efforts further evidence our ongoing commitment to sustainable business practices and strong ESG performance. +ESG Performance Metrics +Our pay-for-performance philosophy demands that we offer performance-based compensation that is directly linked to factors that the Talent & Compensation Committee of our Board believes will lead to the creation of stockholder value. During fiscal year 2023, for our executive leadership team, our annual cash incentive award program included a 10% modifier that was correlated directly to the achievement of specific ESG initiatives. +Sustainable Development Goals +Achieving measurable sustainability success is critical to our future economic and business growth, and we work to establish SDGs that we believe will make the most significant impact on our business, our stockholders, and the communities in which we operate. We are a member of the United Nations Global Compact, or UNGC, the world’s largest voluntary corporate sustainability initiative. This membership requires an annual statement of progress, which is reflected in our Creating Change Report. Our CAO identifies specific SDGs established by the UNGC, which we adopt to guide our efforts to address environmental and social challenges. Our SDGs are currently focused on categories where we believe we can make substantial impacts. +27 +TOPIC DECKERS SDG UNGC SDG +MATERIALS +Maximize the amount of preferred materials in our products. +WASTE +Sustainably reduce waste generated at our facilities and partner facilities through refuse, reduction, recycling, and reuse. +WATER +Reduce water consumption and improve water quality throughout our operations and the communities in which we operate. +CLIMATE AND CLEAN ENERGY +Reduce energy consumption and greenhouse gas emissions throughout our operations. +CHEMISTRY AND CONSUMER SAFETY +Reduce or eliminate hazardous chemicals throughout our operations. +HUMAN RIGHTS +Positively impact the communities where we operate in, including assuring industry leading human rights practices within our supply chain. +GENDER EQUALITY, QUALITY EDUCATION, AND REDUCED INEQUALITIES +Promote diversity, gender equality, female empowerment, and inclusion for all. +Environment Indicators +Many of our facilities were designed with sustainability in mind. Our corporate headquarters and our Moreno Valley, California, distribution center, or DC, are Leadership in Energy and Environmental Design-, or LEED-, certified silver and our first Mooresville, Indiana, DC is LEED-certified gold. To further our commitment to monitoring the environmental performance of our supply chain partners, in fiscal year 2023 we began utilizing the HIGG Facility Environmental Module, a sustainability assessment tool used by our factory partners to collect detailed and standardized information about a partner’s waste, water, and energy consumption and identify and prioritize opportunities for sustainability performance improvements. +28 +Below are some of our environmental-related focuses and commitments: +ENVIRONMENTAL EFFORTS +We have set ambitious Scope 1, 2 and 3 carbon reduction targets filed with and approved by the Science-Based Targets Initiative. To progress toward our goals we continue working closely with our brands to maximize the amount of environmentally preferred materials (which we define as recycled, renewable, regenerated, and natural materials) in our products. +We are founders of the Savory Institute’s Land to Market program, working to protect and reverse environmental degradation through regenerative farming practices and, to date, have influenced over 300,000 acres and 80 farms. As an extension of this commitment UGG introduced its Classic Mini Regenerate and Tasman Regenerate crafted with raw materials sourced from producers that practice regenerative agriculture. +We utilize third-party certifications to assess our environmentally preferred materials, such as the Leather Working Group, Forest Stewardship Council, Responsible Wool Standard, and the Global Recycling Standard. During fiscal year 2023, we sourced all of our leather supplies used in our footwear from Leather Working Group-certified tanneries, which promote sustainable and environmentally friendly business practices within the leather industry. +During fiscal year 2023, all wool used in our footwear products was sourced from preferred sources, including Responsible Wool Standard certified or upcycled from certain sheepskin product. +We require our supply chain partners to comply with our Ethical Sourcing and Animal Welfare Policy and have amplified our requirements for leathers sourced from South America by implementing detailed traceability standards to address deforestation. +We do not believe in the exploitation or killing of animals solely for the use of their fur. Our policy requires that we only use hides that are the byproduct of the meat industry and, in fiscal year 2023, we continued our evolution moving away from virgin wool by transitioning from UGGpure in support of UGGplush which utilizes TENCEL™ Lyocell rather than virgin wool. +Our brands continue to seek more preferred sources of EVA (either recycled or sugarcane), and, during fiscal year 2023, we saw a significant increase in the use of preferred sources of EVA, largely influenced by the UGG brand’s decision to transition away from petroleum-based ethylene to sugarcane-based ethylene in certain high volume, classic silhouette styles. +We utilize a third-party, science-based Lifecycle Assessment (LCA) toll to guide our brands toward leveraging preferred materials. +Our annual Creating Change Report will provide more information regarding our fiscal year 2023 ESG achievements with a focus on the above SDGs. We believe the progress of our corporate responsibility efforts is served by disclosing goals and relevant metrics and, to that end, we have aligned the reporting standards included in our Creating Change Report with the Financial Stability Board’s Task Force on Climate-Related Financial Disclosures (commonly referred to as TCFD), Global Reporting Initiative’s (commonly referred to as GRI) Core Standards, and Sustainability Accounting Standards Board’s (commonly referred to as SASB), and now part of the International Finance Reporting Standard (or IFRS) Foundation Consumer Goods Sector Apparel, Accessories and Footwear Index. Our Creating Change Report, published annually, can be found at www.deckers.com/responsibility. +29 +EXECUTIVE OFFICERS +Each of our executive officers serves at the discretion of our Board. Important summary information about our fiscal year 2023 executive officers is set forth in the table below, followed by certain biographical information about each officer. +EXECUTIVE OFFICER AGE POSITION +Dave Powers 57 Chief Executive Officer, President and Director +Steven J. Fasching 55 Chief Financial Officer +Stefano Caroti 60 +Chief Commercial Officer (Appointed in April 2023, previously served as President of Omni Channel) +Angela Ogbechie 45 +Chief Supply Chain Officer (Appointed in June 2022) +Thomas Garcia 50 Chief Administrative Officer +Anne Spangenberg 55 +President of Fashion Lifestyle (Appointed in July 2022) +DAVE POWERS +Age: 57 +Position: Chief Executive Officer, President and Director +Mr. Powers was appointed as our Chief Executive Officer in June 2016 and joined our Board at that time. Mr. Powers joined our Company as President of Direct-to-Consumer in August 2012. He was appointed President of Omni-Channel in January 2014 and was appointed President in March 2015. Mr. Powers has over 25 years of experience in merchandising, product and marketing development, and leading global direct-to-consumer operations and wholesale businesses. Prior to joining us, Mr. Powers served four years as vice president of global direct-to-consumer at Converse Inc., where he oversaw owned and distributor direct-to-consumer as part of the NIKE, Inc. retail leadership team. Mr. Powers also held several executive leadership roles at The Timberland Company, including worldwide general merchandising manager and senior director European retail, where he led worldwide retail merchandising, marketing, visual and store design, and oversaw European retail operations. Prior to this, Mr. Powers spent 10 years at Gap Inc., where he held multiple senior management titles, including global divisional merchandise manager for the boy’s division. In May 2022, he was appointed to the board of Solo Brands, Inc. Mr. Powers graduated cum laude from Northeastern University with a B.S. in Marketing. +STEVEN J. FASCHING +Age: 55 +Position: Chief Financial Officer +Mr. Fasching was appointed as our Chief Financial Officer in June 2018 and served as our Senior Vice President, Corporate Strategy, Planning & Investor Relations since February 2018. Mr. Fasching previously served as our Vice President, Strategy & Investor Relations from January 2016 to February 2018, and as Vice President, Strategic Financial Planning from August 2011 to January 2016. Mr. Fasching has over 31 years of experience in long-term financial and strategic planning and creating and leading the analytical engine of multi-billion dollar organizations. Immediately prior to joining our Company, Mr. Fasching served for five years as the director of finance and assistant controller of Princess Cruise Lines, Ltd., a cruise line owned by Carnival Corporation, where he had been promoted through a number of finance-related positions since September 1990, including director of financial planning, among others. Mr. Fasching received a B.S. degree in Business Administration from Pepperdine University and an M.B.A. from The Anderson School of Management at UCLA. He also completed The Executive Program for Prospective Chief Financial Officers through the University of Chicago Booth School of Business. +30 +STEFANO CAROTI +Age: 60 +Position: Chief Commercial Officer +Mr. Caroti was appointed as our Chief Commercial Officer in April 2023. Prior to this he was our President of Omni-Channel since November 2015. He has over 32 years of industry experience in general management, sales, retail, product, marketing, business strategy and brand management. Prior to joining our Company, Mr. Caroti was the chief commercial officer and managing director at PUMA, from August 2008 to December 2014, where he was responsible for PUMA’s global wholesale, retail and e-commerce divisions and PUMA’s geographic operating regions. Prior to that, he held a number of senior executive positions at NIKE, Inc. in general management, sales, product and marketing, and during his term as vice president of EMEA commerce, he was responsible for the entire wholesale, retail and e-commerce business in the EMEA region. He received a B.A. with honors from Middlebury College. +ANGELA OGBECHIE +Age: 44 +Position: Chief Supply Chain Officer +Ms. Ogbechie was appointed as our Chief Supply Chain Officer in June 2022. Prior to that, she was Senior Vice President, Global Operations and Supply Chain Strategy since November 2021. Since 2008, Ms. Ogbechie has held a number of senior supply chain positions at our Company and has experience in global demand planning, logistics, distribution and fulfillment. Ms. Ogbechie received a B.A. in Economics from Stanford University and an M.B.A. from Columbia University Business School. +THOMAS GARCIA +Age: 50 +Position: Chief Administrative Officer +Mr. Garcia joined our Company in 2009. In his current position as Chief Administrative Officer he oversees Legal, ESG, Strategy and Communications. He was promoted to his position in 2021 after spending more than 12 years in multiple roles including Senior Vice President, Senior Counsel, and Compliance Officer. From 2003 to 2009, Mr. Garcia was assistant general counsel at Mentor Corporation, a medical device company acquired by Johnson & Johnson. Previously, he was an associate attorney at the law firms of Hatch and Parent, as well as Buchanan Ingersoll. Mr. Garcia earned his B.S. in Biology from Lehigh University, Masters in Public Health from The University of Massachusetts at Amherst, and J.D. from The George Washington University Law School. +31 +ANNE SPANGENBERG +Age: 55 +Position: President of Fashion Lifestyle +Ms. Spangenberg was appointed as our President of Fashion Lifestyle Group in July 2022. She joined Deckers after 13 years at NIKE, Inc. where she served as the company’s Chief Merchant, and previously held leadership positions at Gap, Inc. and Macy’s West. Ms. Spangenberg is an industry leader with over 25 years of experience in Global consumer-focused omni-channel retail, including product creation, merchandising, buying, analytics, stores, digital, wholesale and vertical. Ms. Spangenberg earned her B.A. in International Relations from the University of California, Davis. +32 +COMPENSATION DISCUSSION AND ANALYSIS +In this section we discuss the compensation program applicable to our Named Executive Officers, or NEOs. This discussion is divided into the following parts: +EXECUTIVE SUMMARY +COMPENSATION OBJECTIVE AND PHILOSOPHY +COMPENSATION CONSULTANT AND PEER GROUP +ELEMENTS OF FISCAL YEAR 2023 EXECUTIVE COMPENSATION PROGRAM +OTHER COMPENSATION CONSIDERATIONS +Please also review the Summary Compensation Table, and the additional compensation tables and related footnotes that follow this section, as they provide information critical to an understanding of our executive compensation program. +33 +EXECUTIVE SUMMARY +Named Executive Officers +The following table sets forth our NEOs for fiscal year 2023, the current positions they hold and the dates they were appointed to those positions: +NAMED EXECUTIVE OFFICER POSITION AND DATE APPOINTED +Dave Powers +• Chief Executive Officer and Director - June 2016 +• President - March 2015 +• Principal Executive Officer +Steven J. Fasching +• Chief Financial Officer - July 2018 +• Principal Financial and Accounting Officer +Stefano Caroti +• Chief Commercial Officer - April 2023 +• President of Omni Channel - November 2015 +Anne Spangenberg • President of Fashion Lifestyle - July 2022 +Thomas Garcia • Chief Administrative Officer - February 2021 +Fiscal Year 2023 Financial and Operational Highlights: +We delivered strong results in fiscal year 2023 from both financial and operational perspectives, including the following: +• Total revenue growth of 15.1%, representing an increase of $477 million as compared to the prior year. +• The HOKA brand drove significant global revenue growth, increasing $521 million, or 58.5%, over the prior year. +• Global direct-to-consumer across all brands drove robust growth, increasing 20.8% over the prior year, adding more than a quarter billion dollars of incremental revenue. +• Global wholesale across all brands drove compelling growth, adding $224 million of incremental revenue as compared to the prior year. +• Increased diluted earnings per share by 19.1% to $19.37. +Our strong financial performance over the past three fiscal years is illustrated by the financial metrics in the graphs below. For each fiscal year, the information presented is for the 12-month period ended March 31. +Our performance-based compensation for fiscal year 2023 primarily relied on these performance metrics to directly tie executive compensation to Company performance in furtherance of our pay-for-performance philosophy. For example, our annual cash incentive awards used consolidated operating income and revenue (and business unit operating income and revenue for certain executives with business unit oversight responsibilities), and our long-term incentive plan awards used pre-tax income and revenue as the underlying performance metrics. +34 +Our Business and Strategic Objectives +We intend to continue investing strategically in key identified areas of growth within our brand portfolio. Specifically we will invest in the following: +• The HOKA brand, generating increased awareness and expanding global market share within performance footwear, including through an enhanced globally integrated marketing campaign and premier event sponsorships. +• The UGG brand, maintaining high levels of global brand heat and driving greater consumer connections in international regions through localized marketing activations and collaborations. +• Technology and analytical tools that will further enhance our capabilities as we look to support our evolving business, including opportunities to connect with consumers through digital avenues as well as expanding our e-commerce platform. +• Infrastructure required to support our key growth initiatives globally, including investment in talent to scale enterprise functions and support distribution and logistics. +We intend to closely monitor the planned investments in our business as we remain mindful of a challenging macroeconomic environment characterized by volatility in global financial markets, inflationary pressures, high interest rates and recessionary concerns. We also intend to continue to focus on the achievement of ESG initiatives by ensuring our ESG program is overseen by our Board and leadership team, employing socially conscious operations, minimizing our environmental impact and maintaining open and interactive dialogue on ESG matters with our stakeholders. We remain committed to delivering long-term stockholder value through the continued execution of our strategies. +Our Compensation Program Objective and Philosophy +The primary objective of our executive compensation program is to compensate our executive officers in a manner that will attract, retain and motivate talented executives with the skills needed to manage a complex and growing business in a competitive industry, while creating long-term value for our stockholders. In furtherance of this objective, the Talent & Compensation Committee, which we refer to as the Committee for purposes of this section, seeks to design our executive compensation program in a manner that reflects direct alignment between the compensation opportunity provided to our executives and the achievement of our strategic objectives. +When establishing our executive compensation program each year, the Committee is generally guided by the following four principles that it believes align closely with our compensation objectives: +• Pay for performance by ensuring that a significant portion of compensation is made available to our executives in the form of variable, performance-based components. +• Align interests of executives with stockholders by tying a significant portion of compensation to Company performance that creates long-term value for our stockholders and is correlated to increases in the value of our stock price. +• Reward achievement by offering meaningful and appropriate incentives for achieving both short-term and long-term Company financial goals that have been established by the Committee that are directly tied to the achievement of strategic objectives. +• Attract and retain executives with the background and experience necessary to lead the organization and achieve our strategic objectives. +When designing our executive compensation program for fiscal year 2023, the Committee focused on continuing to build and retain our executive team, while incentivizing them to focus on increasing revenue, enhancing profitability and creating long-term value for our stockholders. In fiscal year 2023, for our executive leadership team, we also incorporated an ESG modifier into our annual cash incentive award program to further encourage the achievement of our ESG initiatives. These and other strategic considerations are clearly reflected in the design of our program, which demonstrates strong pay-for-performance alignment. +Fiscal Year 2023 Executive Compensation Highlights +In fiscal year 2023, we implemented an executive compensation program that was designed to focus on our key strategic initiatives. The compensation program was generally similar to that of fiscal year 2022 in terms of compensation objective, philosophy and key elements. The primary compensation elements under the program included the following: +• Base salaries; +• Annual cash incentive awards, or 2023 Annual Cash Incentive Awards; +• Time-based restricted stock units, or 2023 Time-Based RSUs; and +• Long-term incentive plan performance-based stock units, or 2023 LTIP PSUs. +35 +The following reflect highlights of the fiscal year 2023 executive compensation program: +• As a result of our strong financial and operational results in fiscal year 2023, the 2023 Annual Cash Incentive Awards, which covered the one-year performance period ended March 31, 2023, were paid out between 58% and 114% of target, reflecting payouts based on Company performance relative to targets established at the beginning of the fiscal year and highlighting our pay-for-performance alignment. +• To further strengthen our pay-for-performance alignment, and reinforce the importance of achieving our ESG initiatives, the Committee incorporated an ESG modifier for the 2023 Annual Cash Incentive Awards, which was designed to impact the payout of cash incentive awards, within the range of +10% to -10%. The ESG modifier was aligned with three key pillars: culture and employee engagement (40% weight); DEI, including BIPOC and gender representation in leadership (40% weight); and the environment, including progress towards our science-based targets (20% weight). +• The 2021 LTIP PSUs, which covered the three-year performance period ended March 31, 2023, were paid out at 200% of target. Again, this outcome reflected awards being earned based on Company performance relative to targets established at the beginning of the performance period, further confirming our pay-for-performance alignment. +• In granting equity awards to the NEOs during fiscal year 2023, the Committee specifically considered peer group practices within the new peer group that was selected by the Committee with the assistance of its independent compensation consultant. In addition, consistent with prior years, it was important to the Committee to ensure that a significant portion of the equity awards granted to the NEOs were in the form of performance-based awards. +• During fiscal year 2023, Mr. Caroti assumed an interim leadership role within the Performance Lifestyle Group in addition to continuing to manage the responsibilities associated with his regular position. During this time, Mr. Caroti drove successful engagement across the organization, as well as outstanding financial and operational results. The Committee specifically considered these additional responsibilities and results in electing to pay a one-time cash bonus to Mr. Caroti. Mr. Caroti was the only NEO to receive a cash bonus in addition to a 2023 Annual Cash Incentive Award. +Stockholder Outreach +We have consistently demonstrated our commitment to stockholder outreach efforts, which has resulted in meaningful, interactive dialogue with our stockholders on a number of significant topics, including our business and strategic objectives, capital allocation strategy, ESG initiatives and corporate governance philosophy. We have also routinely solicited and incorporated stockholder feedback on the design and effectiveness of our executive compensation program. We believe our proactive engagement with and response to stockholder feedback, combined with our strong pay-for-performance alignment, has resulted in overwhelming stockholder support for our executive compensation program. Indeed, these efforts resulted in 98.0% and 98.3% of the votes cast being voted "FOR" our executive compensation program at our annual meetings of stockholders held in 2022 and 2021, respectively. +In an effort to continue our dialogue with our stockholders in fiscal year 2023, we reached out to investors holding an aggregate of 48% of our shares and solicited their feedback, which highlights our ongoing commitment to our stockholder engagement efforts. Our fiscal year 2023 executive compensation program, as described in this section, reflects our ongoing dialogue with our stockholders. +The Committee believes that transparent communication with our stockholders is critical to our long-term success, and that the feedback received through our stockholder engagement efforts will continue to contribute to the evolution of our business, including the enhancement of our executive compensation program. The Committee considers stockholder engagement to be an important part of its decision-making process and plans to continue proactive outreach efforts going forward. +36 +Compensation Program Highlights +The following table sets forth the key components of our executive compensation program for fiscal year 2023, and the underlying philosophy and considerations that provide the basis for our compensation decisions: +COMPENSATION HIGHLIGHTS PHILOSOPHY AND CONSIDERATIONS +Pay-for-performance alignment +• We emphasized strong pay-for-performance alignment by providing a significant portion of the overall compensation opportunity for our NEOs in the form of performance-based compensation that is directly tied to the achievement of specific Company financial and operational performance objectives. +• Our performance-based compensation is designed to align the interests of our NEOs with those of our stockholders and encourage the achievement of strategic objectives that the Committee believes are critical to our short and long-term success. +• For fiscal year 2023, only 11% of the total compensation opportunity for our Chief Executive Officer and President was fixed, while 89% of his total compensation opportunity was directly tied to the achievement of specific performance conditions or otherwise at risk. +Alignment of performance metrics with strategic objectives +• Selecting the appropriate performance metrics for our performance-based awards is critical to achieving our business and strategic objectives, motivating our executives and advancing our pay-for-performance philosophy. +• In light of our strategic focus on increased revenue, enhanced profitability and the creation of long-term stockholder value, the Committee selected +(i) consolidated operating income and revenue for all NEOs (and business unit operating income and revenue targets for certain executives with business unit oversight responsibilities) as the primary performance metrics for our 2023 Annual Cash Incentive Awards, and +(ii) both “pre-tax income” and consolidated revenue for each of fiscal years 2023, 2024 and 2025 as the primary performance metrics for our 2023 LTIP PSUs. +• The decision by the Committee to use the consolidated revenue metric for both our 2023 Annual Cash Incentive Awards and our 2023 LTIP PSUs reflects our continued focus on top-line growth. +• To further reinforce the importance of achieving ESG initiatives, the Committee incorporated an ESG modifier into the 2023 Annual Cash Incentive Awards. The payment of the cash incentive awards is subject to adjustment based upon the application of the ESG modifier, thereby further correlating the payments with the achievement of our strategic objectives. +Limited overlap in performance conditions and measurement periods +• Our performance metrics involve multiple performance conditions over multiple time periods to ensure our compensation program encourages healthy and sustained growth across our business, while eliminating excessive overlap between both performance conditions and measurement periods. +• This approach mitigates against risk associated with our compensation program as it de-emphasizes the impact of any one performance metric or performance period. +Reference to a "median" pay philosophy +• We have actively and consistently reformulated our executive compensation program to benchmark the target total compensation opportunity for our NEOs at the median compared to our peer group. +• In adopting this philosophy, the Committee carefully considered a number of factors, including specific feedback received from our stockholders during our stockholder engagement efforts in prior years. +Use of PSUs for LTIP awards +• LTIP awards are designed to align the interests of our executives with those of our stockholders by utilizing performance-based vesting conditions. +• Vesting is based on the achievement of profitability and revenue metrics, in each year during a three-year period, that align closely with our strategic objectives. +• 100% of the LTIP awards granted during fiscal year 2023 were subject to long-term vesting in order to promote retention of our executives. +• The vesting of each LTIP award is also subject to adjustment based upon the application of a total stockholder return, or TSR, modifier thereby correlating the vesting of the award to both total and relative stockholder returns. +37 +Appropriate mix of equity awards with focus on performance-based vesting +• Approximately 60% of the value of the equity awards granted during fiscal year 2023 vest based on the achievement of Company performance conditions to ensure pay-for-performance alignment, while the remainder of the awards vest based on the achievement of long-term, time-based vesting conditions. +• The Committee believes this mix strikes the appropriate balance between compensation incentives and risks. +Continued focus on executive retention +• While we seek to develop our executive compensation program so it closely aligns with our pay-for-performance philosophy and rewards achievement of performance goals, this objective must complement other critical objectives, including the retention of key executives. +• For fiscal year 2023, approximately 40% of the value of the equity awards granted vest based on the achievement of time-based vesting conditions, which promote executive retention because they vest over a long-term service period. +• Consistent with its historical practice, the Committee expects a majority of future equity awards to continue to have performance-based vesting conditions. +Consideration of peer group data and advice of our independent compensation consultant +• We use peer group compensation data as an initial starting point in making compensation decisions for our executives, including with respect to both the target level of compensation and the overall structure of our executive compensation program. +• Our independent compensation consultant provides us with information on competitive pay practices and trends in our industry and makes recommendations regarding the design and structure of our compensation program, as well as the formulation of our peer group. +• The information and guidance provided by our independent compensation consultant is consistent with our median pay philosophy. +38 +COMPENSATION OBJECTIVE AND PHILOSOPHY +Compensation Program Objective +Pursuant to its charter, the Committee has overall responsibility for developing the compensation objective and philosophy applicable to our executive leadership team, and approving our executive compensation program and policies. +The primary objective of our executive compensation program, as established by the Committee, is to compensate our executive officers in a manner that will attract, retain and motivate talented executives with the skills needed to manage a complex and growing business in a competitive industry, while creating long-term value for our stockholders. The Committee seeks to design our executive compensation program in a manner that reflects direct alignment between the compensation opportunity provided to our executives and the achievement of our strategic objectives. In addition, in order to retain the talent necessary to achieve our strategic objectives, the Committee endeavors to develop a compensation program that is attractive and competitive in the marketplace. +Compensation Program Philosophy +When establishing our executive compensation program each year, the Committee is generally guided by the following four principles that it believes align closely with our compensation objectives: +PAY-FOR-PERFORMANCE ALIGN INTERESTS WITH STOCKHOLDERS +• Offer a significant portion of the compensation opportunity made available to our executives in the form of variable, performance-based components. +• Ensure performance-based compensation is directly tied to the achievement of Company financial, operational and strategic goals that the Committee believes are important for our short and long-term success. +• Align the interests of our executives with those of our stockholders by tying a significant portion of the compensation opportunity to financial and operational performance that the Committee believes will result in the creation of long-term stockholder value. +• Ensure that a significant portion of the compensation opportunity is directly tied to total and relative stockholder return. +REWARD ACHIEVEMENT ATTRACT AND RETAIN EXECUTIVES +• Offer meaningful and appropriate incentives for achieving both short-term and long-term Company financial and operational goals that have been established by the Committee that are directly tied to the achievement of strategic objectives. +• Ensure that the financial goals are appropriate for each executive given their respective titles, scope of responsibilities, and ability to impact results. +• Attract key executives with the proper background and experience necessary to lead our Company and provide us the best opportunity to achieve our business and strategic objectives. +• Retain our key executives by offering compensation that is attractive and competitive in the marketplace, taking into consideration the competition for key executives and peer group and broader industry data. +Pay-for-Performance +Our pay-for-performance philosophy demands that we offer performance-based compensation that is directly linked to factors that the Committee believes will lead to the creation of stockholder value. Specifically, we pay for performance by tying a significant portion of our executive compensation opportunity to the achievement of pre-established performance metrics that are reflective of our business and strategic objectives, as well as to increases in our stock price. The Committee believes choosing the right performance metrics is critical to our ability to properly motivate our executives and advance our pay-for-performance philosophy. In particular, this requires that the performance metrics be reconsidered each year as our business and strategic objectives evolve to ensure they provide the appropriate barometer of our growth and success, and motivate the achievement of our objectives in line with how we currently view the business. +As a result of our strong commitment to our pay-for-performance philosophy, a substantial portion of our executives’ compensation opportunity is performance-based and not guaranteed. While we offer certain standard compensation elements that provide fixed payments or benefits, our executive compensation mix is heavily weighted toward compensation that is performance-based or otherwise at risk, which we refer to as "performance-based." The Committee seeks to establish appropriate performance targets for the performance-based pay so as to ensure they align with our business and strategic objectives, are appropriately challenging to achieve, and mitigate our overall compensation-related risk. +As an example, for fiscal year 2023, fixed pay for our Chief Executive Officer represented only 11% of his targeted compensation opportunity for the year, while performance-based pay represented 89% of his targeted compensation. The fixed pay reflects the value of base salary and limited employee benefits. The performance-based pay reflects a combination of the target value of the 2023 Annual Cash Incentive Awards and the value of the target number of 2023 LTIP PSUs, each of which are earned or vest only upon the achievement of pre-established Company performance metrics. In addition, the performance-based pay reflects the value of the 2023 Time-Based RSUs, which the Committee believes is appropriate to include because our Chief Executive +39 +Officer is at risk of not receiving the full value of these awards since vesting is conditioned upon continued employment over an extended period of time, and their value is subject to fluctuation based on our stock price. +The graphic below illustrates the amount of target performance-based pay vs. fixed pay for our Chief Executive Officer for fiscal year 2023 and the breakdown of the various components of the compensation program on a percentage basis. "All Other Compensation" includes premiums for long-term disability insurance and life insurance, as well as Company matching contributions under our 401(k) plan. +We believe the significant focus on performance-based awards reflected in the graphic above, including the relative weighting of the various compensation elements, reflects our strong pay-for-performance alignment. +ESG Modifier +As discussed above, to further strengthen our pay-for-performance alignment, and reinforce the importance of achieving ESG initiatives, in fiscal year 2023, the Committee incorporated an ESG modifier for the 2023 Annual Cash Incentive Awards. The ESG modifier was aligned with three key pillars: culture and employee engagement (40% weight); DEI, including BIPOC and gender representation in leadership (40% weight); and the environment, including progress towards our science-based targets (20% weight). The Committee determined that the ESG modifier was achieved at the +8% level, which was applied to the final payout of the 2023 Annual Cash Incentive Awards (which is reflected in the graphic above). Please refer to the section of this Proxy Statement titled “ 2023 Annual Cash Incentive Awards ” for additional information. +40 +Governance Practices that Support Our Compensation Philosophy +Our executive compensation program has significant governance components that we believe support and strengthen our compensation objective and philosophy, while also reducing compensation-related risk, including those summarized in the following table: +GOVERNANCE PRACTICE WHAT WE DO +Independent Directors ☑ All of the members of our Board, other than our Chief Executive Officer and President, are independent directors under applicable SEC and NYSE rules. +Independent Compensation Committee ☑ The Committee consists entirely of independent directors who meet the independence standards set forth in applicable SEC and NYSE rules. +Independent Compensation Consultant ☑ The Committee has retained, and routinely consults with, an independent compensation consultant who assists the Committee in gathering competitive pay data, selecting our peer group, and structuring our executive compensation program. The decision to engage the consultant was made solely by the Committee and the consultant reports directly to the Committee. +ESG Modifier ☑ In fiscal year 2023, the Committee incorporated an ESG modifier for the 2023 Annual Cash Incentive Awards in order to further strengthen our pay-for-performance alignment and encourage the achievement of our ESG initiatives. +Compensation Risk Assessment ☑ +The Committee performs an annual review of the risks related to our compensation practices. See the section of this Proxy Statement titled " Compensation Risk Assessment " for additional information. +Frequency of "Say-on-Pay" Vote ☑ Historically, we have provided our stockholders the opportunity to approve, on a non-binding advisory basis, the compensation of our NEOs on an annual basis as this affords our stockholders the ability to provide routine feedback on our compensation program. At the Annual Meeting, we are again asking our stockholders to approve the compensation of our NEOs every year. +Clawback and Forfeiture Policy ☑ We maintain a Clawback and Forfeiture Policy that applies to our cash and equity incentive awards, which reinforces our pay-for performance philosophy and contributes to a Company culture that emphasizes integrity and accountability in financial reporting. +Stock Ownership Guidelines ☑ We have voluntarily adopted stock ownership guidelines for our executive officers and directors, which aligns the incentives of these persons with those of our stockholders. +No Hedging and Pledging ☑ We have adopted an Insider Trading Policy that specifically prohibits directors, executive offices or employees from hedging or pledging Company securities, or adopting similar practices. +Equity Award Vesting Provisions ☑ Our equity awards are subject to "double-trigger" vesting upon a change in control. +No Tax Gross Ups ☑ Our change-in-control and severance agreements do not contain provisions allowing for excise tax gross up payments. +No Repricing of Awards ☑ Our 2015 Stock Incentive Plan, or 2015 Plan, explicitly prohibits the repricing of equity awards. No repricing of awards will occur without the approval of our stockholders. +No Dividends on Unvested Equity Awards ☑ Our equity award agreements do not provide for the payment of dividends on unvested equity awards. +41 +COMPENSATION CONSULTANT AND PEER GROUP +Compensation Consultant +The Committee receives assessments and advice regarding our compensation practices and philosophy from its independent compensation consultant, Frederic W. Cook & Co.Inc., or FW Cook. FW Cook provides information on competitive pay practices and trends in our industry, and makes recommendations regarding the formulation of our Peer Group (as defined below), as well as the design and structure of our compensation program. The Committee meets regularly with FW Cook throughout the year, carefully reviews and assesses the materials provided by FW Cook, and engages in thorough deliberations with FW Cook and management regarding our executive compensation program and potential changes. +While our Company is not obligated to retain an independent compensation consultant, the Committee believes that the use of an independent consultant provides additional assurance that our executive compensation program is attractive and competitive in the marketplace, consistent with market conditions, aligned with our business and strategic objectives, and reflective of our executive compensation philosophy. During fiscal year 2023, the Committee conducted a request for proposal process and sought proposals from several prominent compensation consultants. Four agencies submitted proposals and, after a thorough review process, the Committee reengaged FW Cook as our independent compensation consultant. +In accordance with applicable SEC rules, the Committee took certain factors into consideration when selecting FW Cook, which it believes may affect the independence of a compensation consultant. In particular, the Committee considered: +• whether any other services had been or were being provided by FW Cook to our Company; +• the amount of fees paid by our Company to FW Cook as a percent of FW Cook’s total revenues; +• FW Cook’s policies and procedures designed to prevent conflicts, a copy of which was provided to the Committee prior to the meeting; +• FW Cook’s ownership of our common stock (if any); and +• any business or personal relationships between FW Cook and any Committee members or any of our executive officers. +Furthermore, FW Cook does not provide any additional services to us or our management, other than those provided to the Committee. Following the consideration of these factors, and such additional factors as the Committee deemed appropriate under the circumstances, the Committee made an affirmative determination that FW Cook is independent and unanimously approved the engagement of FW Cook. +The decision to engage FW Cook was made by the Committee, and FW Cook reports directly to the Committee. While members of our management regularly communicate with representatives of FW Cook, our management did not recommend the engagement of FW Cook in any capacity for fiscal year 2023 (or any prior year) and does not direct or oversee the retention, termination or scope of services of FW Cook with respect to our executive compensation program. +Peer Group +In making compensation decisions for fiscal year 2023, the Committee compared the aggregate compensation opportunity, as well as each element of compensation, against a peer group of publicly traded footwear, apparel, accessories and lifestyle brand companies that is recommended by FW Cook and approved by the Committee. Our peer group is generally comprised of companies against which we compete for executive talent and stockholder investment, are in related businesses or industries, and are otherwise similar to us based on a number of characteristics. Our peer group is reviewed at least annually by the Committee with support from FW Cook. In particular, when selecting our peer group, the Committee considers the characteristics set forth in the chart below. +42 +For fiscal year 2023, the Committee approved an updated peer group based on consideration of the various factors and characteristics discussed above. In particular, changes were made to the peer group to reflect the relatively greater size and complexity of our organization taking into account metrics such as revenue and market capitalization. While no single company in our peer group reflected all of our Company's characteristics, taken together the Committee believed that these companies provided strong comparative analogs to our overall business model at the time the peer group was selected. Our peer group for fiscal year 2023, which we refer to as our Peer Group, consisted of the following 20 companies: +FISCAL YEAR 2023 PEER GROUP +• Capri Holdings Limited +• Hanesbrands Inc. +• RH +• Under Armour Inc. +• Carter's, Inc. • Levi Strauss & Co. • Skechers U.S.A., Inc. • Urban Outfitters Inc. +• Columbia Sportswear Company • Lululemon Athletica, Inc. • Steve Madden, Ltd. • VF Corporation +• Crocs, Inc. • PVH Corp. • Tapestry, Inc. • Williams-Sonoma, Inc. +• Foot Locker, Inc. +• Ralph Lauren Corp +• Ulta Beauty, Inc. +• Wolverine World Wide, Inc. +Use of Peer Group in Setting Executive Compensation +As part of its effort to ensure that our executive compensation program is attractive and competitive in the marketplace, the Committee regularly reviews compensation data from our Peer Group provided by FW Cook. In addition, in order to gain perspective on overall market trends and practices, the Committee regularly reviews data from broader-based compensation surveys. Our Peer Group compensation data is generally used as an initial starting point in making compensation decisions for our executives, including with respect to both the target level of compensation and the overall structure of our executive compensation program. +For comparison purposes, FW Cook typically presents Peer Group data on individual executive pay levels, both with respect to the total compensation opportunity and individual elements of compensation for each executive. In setting the target compensation opportunity for each individual executive for fiscal year 2023, the Committee focused on benchmarking our executives’ target total compensation opportunity to the 50th percentile compared to our Peer Group, subject to the discretion retained by the Committee to make adjustments as it deems appropriate. While the focus of the median pay philosophy is on the total compensation opportunity available to our executives, the individual elements of compensation are also generally targeted to the 50th percentile as a starting point. +While an assessment of our Peer Group compensation data, and broader-based compensation surveys, is a significant factor in the Committee’s evaluation of compensation decisions, it also considers a variety of additional factors, including the tenure, experience, and level of responsibility of each executive, recent and projected Company performance, recent individual performance, retention considerations, general industry practices and economic conditions. +43 +ELEMENTS OF FISCAL YEAR 2023 +EXECUTIVE COMPENSATION PROGRAM +The following table provides summary information regarding the key elements of our fiscal year 2023 executive compensation program: +COMPENSATION +ELEMENT FIXED +V. +PERFORMANCE-BASED / AT RISK CASH +V. +EQUITY +Base Salary Fixed Cash +2023 Annual Cash Incentive Awards +Performance-Based / At Risk +(Short-Term Company Performance Criteria) +(ESG Modifier) Cash +2023 Time-Based RSUs +Performance-Based / At Risk +(Long-Term Time-Based Vesting) Approximately 40% of total equity compensation +2023 LTIP PSUs +Performance-Based / At Risk +(Long-Term Company Performance Criteria and Vesting) +(TSR Modifier) Approximately 60% of total equity compensation +Employee Benefits Fixed Other +Severance and Change in Control Fixed Cash/Equity/Other +Base Salary +The following tables provide information regarding the base salaries paid to our NEOs: +COMPENSATION ELEMENT +BASE SALARY +Compensation Considerations Performance Conditions +• Fixed +• Cash +• Provides a minimum level of fixed cash compensation necessary to attract and retain executives. +• Balance the level of fixed pay with performance-based pay to properly manage our compensation-related risk. +• No specific vesting conditions associated with payment. +• Salary reviewed and set annually based on a number of factors, including tenure, experience, scope of responsibilities, individual performance, Company performance, and Peer Group data. +NAME FY22 +BASE SALARY FY23 +BASE SALARY +FY24 +BASE SALARY (1) +Dave Powers $1,100,000 $1,200,000 $1,300,000 +Steven J. Fasching $735,000 $765,000 $810,000 +Stefano Caroti $700,000 $740,000 $800,000 +Anne Spangenberg (2) +_ $700,000 $750,000 +Thomas Garcia (3) +_ $550,000 $650,000 +(1) The Committee approved the fiscal year 2024 base salaries effective as of July 1, 2023. +(2) Ms. Spangenberg's employment with the Company began in fiscal year 2023. +(3) Mr. Garcia became an NEO of the Company for the first time with respect to fiscal year 2023. +44 +2023 Annual Cash Incentive Awards +The following table provides information regarding the 2023 Annual Cash Incentive Awards granted to our NEOs during fiscal year 2023: +COMPENSATION ELEMENT +2023 ANNUAL CASH INCENTIVE AWARDS +Compensation Description Performance Conditions/ Vesting Provisions Pay-for-Performance +• Performance-Based ( Short-Term Company Performance Criteria ) +• Cash +• Short-term Company performance conditions based on Committee-approved annual metrics derived from our annual and long-range business and strategic plan. +• Pay based on achievement of threshold, target and maximum Company financial performance levels to reward achievement and strike appropriate balance between compensation incentives and risks. +• The "target" performance condition level is typically in line with the level of Company performance projected for each metric based on the annual budget. +• All NEOs have operating income and revenue-based performance metrics to reflect a continued focus on profitability and top line growth, and to ensure our compensation program encourages healthy and sustained growth across our business. +• The Committee incorporated an ESG modifier for fiscal year 2023. +• Target bonus set as percentage of base salary. +• Actual bonus payout is based on achievement of fiscal year 2023 consolidated operating income and consolidated revenue targets for all NEOs (and business unit operating income and revenue targets for certain executives with business unit oversight responsibilities). +• The Committee assigned relative weighting to each component, which is expressed as a percentage of the targeted cash incentive amount. +• For threshold performance, 50% of the cash incentive related to that component would be earned. For target performance, 100% would be earned. For maximum performance, 200% would be earned. +• Achievement below threshold levels results in no payout. To the extent Company financial performance is achieved above the threshold levels, the bonus payout that will be earned from the threshold to the target, and then from the target to the maximum, will increase as determined by linear interpolation. +• The ESG modifier was designed to impact payouts within the range of +10% to -10%, and highlights our efforts to drive accountability for achievement of our ESG initiatives. +• Fiscal year 2023 consolidated operating income, consolidated revenue, and Global Omni-Channel revenue, metrics were all achieved above the target levels based on Company performance. Global Omni-Channel operating income and Global Fashion Lifestyle revenue were each achieved above the threshold level and below the target level. Global Fashion Lifestyle operating income was not achieved at the threshold level. +• The Committee determined that the ESG modifier was achieved at the +8% level. +• As a result of this performance, 2023 Annual Cash Incentive Award payments ranging from 58% to 114% of base salary were earned by each of the NEOs (inclusive of the impact of the ESG modifier). +• The calculation of the 2023 Annual Cash Incentive Awards is described in detail below. +45 +Target Cash Incentive Amount +The Committee establishes a target amount of annual cash incentive compensation for each NEO, which is expressed as a percentage of base salary. The percentage is determined by the Committee by reference to a number of factors, including title and scope of responsibilities, our recent and projected financial performance, and a review of Peer Group data. Further, the target cash incentive amount is prorated to reflect any base salary adjustments throughout the full fiscal year so that the target amount reflects actual base salary earned. +Performance Targets +The following table summarizes the performance conditions for the 2023 Annual Cash Incentive Awards, the relative weighting of each performance condition for each NEO, our performance in light of the targets, and the actual payout percentage for each component: +COMPONENT RELATIVE +WEIGHT FOR EACH NEO THRESHOLD PERFORMANCE TARGET PERFORMANCE MAXIMUM PERFORMANCE +PERFORMANCE AND PAYOUT (1) +Consolidated Operating Income • 70% for Messrs. Powers, Fasching and Garcia +• 30% for Mr. Caroti and Ms. Spangenberg $584.4 million $649.4 million $779.2 million $652.8 million, resulting in a payout of 103% +Consolidated Revenue • 30% for Messrs. Powers, Fasching and Garcia $3,289.4 million $3,575.4 million $3,933.0 million $3,627.3 million, resulting in a payout of 115% +Business Unit Operating Income • 40% for Mr. Caroti +(Global Omni-Channel) +$752.8 million $836.5 million $1,003.8 million $802.2 million, resulting in a payout of 80% +• 40% for Ms. Spangenberg +(Fashion Lifestyle) +$655.8 million $728.7 million $874.4 million $611.3 million, resulting in no payout +Business Unit Revenue • 30% for Mr. Caroti +(Global Omni-Channel) +$2,658.6 million $2,889.8 million $3,178.8 million $2,957.6 million, resulting in a payout of 123% +• 30% for Ms. Spangenberg +(Fashion Lifestyle) +$1,939.4 million $2,108.1 million $2,318.9 million $1,991.8 million, resulting in a payout of 66% +(1) Payout percentages reflect the level of payout achieved for each component of the 2023 Annual Cash Incentive Award. Payout amounts based on achievement between threshold and target levels, or between target and maximum levels, are determined by linear interpolation. Achievement below threshold levels results in no payout. +46 +Calculation of Total Payout +The amount of cash incentive compensation actually earned by each NEO with respect to the 2023 Annual Cash Incentive Awards, or total payout, is calculated by multiplying each NEO's relative weight for each component by the percentage of target earned for each component (using linear interpolation), resulting in an overall weighted achievement, and multiplying the target cash incentive amount by the overall weighted achievement percentage, resulting in the payout amount for each component. The payout for each component is then added and multiplied by the percentage of ESG modifier earned. Each of these steps is illustrated by the table below: +NAME TARGET +% +OF SALARY COMPONENT RELATIVE WEIGHT +OF COMPONENT % +OF TARGET EARNED FOR COMPONENT OVERALL WEIGHTED ACHIEVEMENT +TARGET CASH INCENTIVE AMOUNT (1) +PAYOUT +FOR EACH COMPONENT +% +OF ESG +MODIFIER +EARNED TOTAL PAYOUT +Dave +Powers 175% Consolidated Operating Income 70% 103% 106% $1,343,473 $1,426,459 8% $2,200,821 +Consolidated Revenue 30% 115% $575,774 $611,340 +Steven J. Fasching 75% Consolidated Operating Income 70% 103% 106% $397,698 $422,264 8% $651,493 +Consolidated Revenue 30% 115% $170,442 $180,970 +Stefano Caroti 75% Consolidated Operating Income 30% 103% 100% $164,256 $163,634 8% $589,081 +Global Omni-Channel Operating Income 40% 80% $219,008 $218,178 +Global Omni-Channel Revenue 30% 123% $164,256 $163,634 +Anne Spangenberg 75% Consolidated Operating Income 30% 103% 50% $189,863 $95,776 8% $206,877 +Fashion Lifestyle Operating Income 40% — — — +Fashion Lifestyle Revenue 30% 66% $189,863 $95,776 +Thomas Garcia 75% Consolidated Operating Income 70% 103% 106% $283,514 $301,027 8% $464,442 +Consolidated Revenue 30% 115% $121,506 $129,012 +(1) Target cash incentive amounts are based on actual base salary amounts earned during the year multiplied by the target bonus percentage for the year, each of which are subject to change during the year. +One-Time Cash Bonus +As discussed above, during fiscal year 2023, Mr. Caroti assumed an interim leadership role within the Performance Lifestyle Group in addition to continuing to manage the responsibilities associated with his regular position. During this time, Mr. Caroti drove successful engagement across the organization, as well as outstanding financial and operational results. The Committee specifically considered these additional responsibilities and results in electing to pay a one-time cash bonus of $400,000 to Mr. Caroti, which was paid in addition to the 2023 Annual Cash Incentive Award referenced above. Mr. Caroti was the only NEO to receive a cash bonus in addition to a 2023 Annual Cash Incentive Award. Please see the section of this Proxy Statement titled "Summary Compensation Table" for additional information. +47 +2023 Time-Based Restricted Stock Units +The following table provides information regarding the 2023 Time-Based RSUs granted to our NEOs during fiscal year 2023: +COMPENSATION ELEMENT +2023 TIME-BASED RSUs +Compensation Description Performance Criteria/ Vesting Provisions Pay-for-Performance +• Fixed +• Long-Term Time-Based Vesting +• Approximately 40% of total equity compensation +• Balance the level of performance-based pay with time-based pay to properly manage our compensation-related risk. +• Primarily used for retention of our executives. +• Customary among our Peer Group. +• 2023 Time-Based awards vest in three equal installments over three years commencing August 15, 2023. +• While the 2023 Time-Based RSUs are not subject to a performance-based vesting condition, our NEOs are at risk of not receiving the full value of these awards because vesting is conditioned upon continued employment over an extended period of time and their value is subject to fluctuation based on our stock price. +• The Committee expects a majority of equity awards to continue to have performance-based vesting conditions. +48 +2023 Long-Term Incentive Plan Performance-Based Stock Units +The following table provides information regarding the 2023 LTIP PSUs granted to our NEOs during fiscal year 2023: +COMPENSATION ELEMENT +2023 LTIP PSUs +Compensation Description Performance Conditions/ Vesting Provisions Pay-for-Performance +• Performance-Based (Long-Term Company Performance Criteria and Vesting) +• Approximately 60% of total equity compensation +• Company performance criteria are based on Committee-approved metrics derived from our three-year long-range business and strategic plan that are approved at the beginning of the performance measurement period. +• Pre-tax income and revenue support our focus on profitability and consolidated revenue as key strategic initiatives and align executives’ interests with the execution of our long-range plan. +• Reliance on multiple performance-based vesting conditions strikes appropriate balance between compensation incentives and risks. +• 50% of each award will vest subject to the achievement of annual pre-tax income targets measured in fiscal years 2023, 2024 and 2025, based on our three-year long range plan. +• 50% of each award will vest subject to the achievement of an annual consolidated revenue target measured in fiscal years 2023, 2024 and 2025, based on our three-year long range plan. +• While we measure performance annually over the three-year period, the goals for each fiscal year are established at the beginning of the performance measurement period. +• No vesting of any portion of the award will occur if the Company fails to achieve the pre-established minimum revenue and pre-tax income thresholds. To the extent Company financial performance is achieved above the threshold amounts, the number of PSUs that will vest from the threshold to the target, and then from the target to the maximum, will increase as determined by linear interpolation, provided that the maximum number of PSUs that may vest with respect to a particular award will not exceed 200% of the targeted amount for that award regardless of the level of Company performance. +• The executive must provide continued service through March 31, 2025. +• Vesting of awards dependent on achievement of profitability and consolidated revenue targets that are established by the Committee on the grant date, which are consistent with achievement of our strategic objectives. +•The vesting of the awards is subject to adjustment based upon the application of a TSR modifier, thereby correlating the vesting of the awards to both total and relative stockholder returns over the full three-year performance period. +TSR Modifier +The 2023 LTIP PSU awards earned are subject to adjustment based on a TSR modifier. The amount of the adjustment will be determined based upon a comparison of Company TSR relative to the TSR of a pre-determined set of peer group companies, or TSR Peer Group, for the 36-month performance period commencing on April 1, 2022 and ending on March 31, 2025. For purposes of the 2023 LTIP PSUs, the TSR Peer Group used is the same as the Peer Group, but also includes two additional companies deemed appropriate by the Committee. Depending on Company TSR relative to the TSR of the TSR Peer Group, the number of RSUs that will be subject to vesting pursuant to each 2023 LTIP PSU will be modified as follows (with linear interpolation applied between the percentiles): +Company TSR Relative to +Peer Group TSR (Percentile) TSR Modifier +(Multiplier) +≥75th 125% +55th 100% +(no modification) +≤25th 75% +Notwithstanding the foregoing, in the event that Company TSR is greater than or equal to the 55th percentile relative to the TSR of the TSR Peer Group, but Company TSR is a negative amount, the TSR modifier will not be applied (the number of RSUs to be vested will not be increased as a result of the TSR multiplier), which further aligns the interests of our executives with those of our stockholders. In addition, regardless of Company TSR relative to the TSR of the TSR Peer Group, the maximum number of +49 +RSUs that may vest pursuant to a particular 2023 LTIP PSU will not exceed 200% of the targeted amount, thereby mitigating compensation-related risk. +Employee Benefits +The following table provides information regarding the key employee benefits granted or paid to our NEOs during fiscal year 2023: +COMPENSATION ELEMENT +EMPLOYEE BENEFITS +Compensation Considerations Benefits +• Key employee benefits granted or paid +• Generally reflect benefits provided to all of our US-based full-time employees. +• Provides a standard package of benefits necessary to attract and retain executives. +• 401(k) defined contribution plan. +• 401(k) plan Company match of 50% of each eligible participant's tax-deferred contributions on up to 6% of eligible compensation on a per payroll period basis, with a true-up contribution if such eligible participant is employed by our Company on the first day of the calendar year. +• Premiums for long-term disability insurance and life insurance for the benefit of the employees. +• Health and welfare benefit plans. +• Relocation expenses for new hires. +• Standard employee product discounts. +• Eligibility to contribute to our Nonqualified Deferred Compensation Plan, or NQDC Plan. See the section of this Proxy Statement titled " Nonqualified Deferred Compensation. " +Severance and Change-in-Control Provisions +The following table provides information regarding the severance and change in control provisions in our severance agreements and equity award agreements entered into with each of our NEOs: +COMPENSATION ELEMENT +SEVERANCE AND CHANGE IN CONTROL PROVISIONS +Compensation Considerations Terms +• Certain cash payments to NEOs, and vesting of certain equity awards in the event of a separation of employment +• The employment of our NEOs is "at will," meaning we can terminate them at any time and they can terminate their employment with us at any time. +• "Double-trigger" provisions preserve morale and productivity and encourage executive retention in the face of the potentially disruptive impact of a change in control. +• Considered a typical component of a competitive executive compensation program for executives among our Peer Group. +• Provisions take into account the expected time it takes a separated executive to find a similarly situated job. +Change-in-Control and Severance Agreements : +• Provide for certain cash payments, and the vesting of certain equity awards, in the event there is a separation of employment under various circumstances. +Equity Award Agreements : +• Provide for accelerated vesting of awards upon a change in control if the recipient is terminated by the acquiring entity in connection with the change in control under specified circumstances. In addition, vesting of awards will be accelerated in full if the acquiring entity does not agree to provide for the assumption or substitution of the awards, and for certain outstanding historical awards if the transaction is not approved by a majority of the continuing directors. +For additional information about the severance and change in control provisions in our severance agreements and equity award agreements, please refer to the section of this Proxy Statement titled " Potential Payments upon Termination or Change in Control. " +50 +OTHER COMPENSATION CONSIDERATIONS +Role of Executive Officers in Compensation Decisions +At the request of the Committee, our Chief Executive Officer and President, or other senior management personnel may provide performance and compensation information to the Committee to inform its compensation decisions. However, our executives are not permitted to be present during any deliberations and voting regarding their own compensation, or during any executive sessions of the Committee. The Committee considers the information provided by our management, as well as information and advice provided by FW Cook, when making compensation decisions for our NEOs and other executives. However, the Committee, which is comprised solely of independent directors, thoroughly evaluates and approves all elements of compensation for our NEOs and other executives. +Compensation Risk Considerations +The Committee is responsible for reviewing the payments that may be made and the value that may be achieved from our compensation program for all employees, including our NEOs, to assess whether the program encourages excessive or unnecessary risk-taking or otherwise is likely to have a material adverse effect on us. The Committee conducts a compensation risk analysis at least annually, but also takes into account compensation-related risks each time it grants compensation awards throughout the fiscal year. In conducting these assessments, the Committee considers a number of factors including the following: +• Our compensation program consists of elements that provide both fixed and performance-based compensation, and the Committee reviews these elements and the relative mix annually. +• Our Peer Group and industry compensation data is reviewed regularly to ensure that our compensation program is appropriate and competitive. +• We have adopted a median pay philosophy whereby we remain focused on benchmarking our executives’ target total compensation at the median compared to our Peer Group. +• The Committee expects a majority of equity awards to continue to have performance-based vesting conditions. +• Performance-based awards are earned based on the achievement of pre-established Company and business unit performance goals, and are subject to modification based on the application of an ESG modifier and TSR modifier, as applicable. +• We seek to limit overlap between our performance conditions and measurement periods to ensure our compensation program encourages healthy and sustained growth across our business, as well as over time. +• Our performance-based awards are subject to maximum award amounts to cap the potential compensation amount associated with an award. +• Our executive compensation program encourages executive retention through long-term vesting provisions. For fiscal year 2023, all of the equity awards we granted were subject to three-year vesting. +• We have voluntarily adopted Stock Ownership Guidelines, which encourage executives to have a significant, long-term equity position in our Company, thereby aligning the interests of our executives with our stockholders. +• We maintain a Clawback and Forfeiture Policy related to our cash and equity incentive awards, which emphasizes integrity and accountability in financial reporting. +• Our governance policies, including our Insider Trading Policy, prohibit our directors, executive officers and employees from conducting speculative trading in Company securities, hedging Company securities, or pledging Company securities as collateral for a loan. +• Our severance and change in control benefits are designed to attract and retain executives without providing excessive benefits such as excise tax gross up payments. +• Our equity awards are intended to provide for “double-trigger” vesting upon a change in control. +The Committee believes that, although the majority of the compensation opportunity provided to our executives is performance-based pay that is determined based upon the achievement of Company performance conditions, our executive compensation program does not encourage excessive or unnecessary risk-taking. The Committee does not believe that our compensation program is reasonably likely to have a material adverse effect on us. +51 +Clawback and Forfeiture Policy +Consistent with our executive compensation philosophy, which seeks to reward executive officers for financial performance that creates value for our stockholders, we have voluntarily adopted a Clawback and Forfeiture Policy. Under this policy, we will seek recoupment or reimbursement with respect to performance-based compensation paid or awarded to our executive officers when the following three factors exist: +• the incentive compensation payment or award (or the vesting of such award) was based upon the achievement of financial results, as reported in a Form 10-Q, Form 10-K or other report filed with the SEC, that were subsequently the subject of a restatement to correct an accounting error due to material noncompliance with any financial reporting requirement under the federal securities laws; +• a lower payment or award would have been made to such executive officer (or lesser or no vesting would have occurred with respect to such award) based upon the restated financial results; and +• the requirement to file the restatement was identified within three years after the date of the first public filing of the financial results that were subsequently the subject of the accounting restatement. +Under the policy, the restatement does not need to be the result of misconduct by the executive officers for the recoupment to apply. +The recoupment or reimbursement to be sought by our Company will be equal to the portion of any performance-based compensation paid to or received by such executive officer for or during each of the restated periods that is greater than the amount that would have been paid or received had the financial results been properly reported. +In addition, under this policy, the Committee may seek to recoup or recover from an employee certain performance-based compensation previously paid or awarded to such employee if the Company determines the employee has engaged in significant misconduct that causes financial or reputational harm to the Company (regardless of whether a restatement of financial results has occurred), as determined in the discretion of the Committee. +We anticipate our Board of Directors will adopt an updated Clawback and Forfeiture Policy during fiscal year 2024 that will be compliant with recently adopted SEC and NYSE rules. +Stock Ownership Guidelines +To further align the interests of our directors and executive officers with those of our stockholders, we have voluntarily adopted Stock Ownership Guidelines. The Committee periodically reviews these guidelines to ensure it continues to evolve to take into account changes to our executive compensation program. +The minimum ownership thresholds for our NEOs are determined as a multiple of the NEO's base salary as of the beginning of each calendar year. Unless and until a NEO reaches the required ownership level, the NEO must retain at least 75% of the shares, after payment of any applicable exercise price and tax withholdings, that are acquired through our equity compensation program, subject to exceptions that may be granted by the Committee. The Committee periodically reviews our NEOs' compliance with the Stock Ownership Guidelines and, as of the end of fiscal year 2023, determined that each NEO complied with the minimum ownership thresholds. +Directors are required to hold a number of shares of common stock with a value equal to five times the base annual cash retainer fee within five years of joining our Board, subject to exceptions that may be granted by the Committee. In addition, each director must hold shares of our common stock within one year of joining our Board. The Committee periodically reviews our directors' compliance with the Stock Ownership Guidelines, and, as of the end of fiscal year 2023, determined that each director is in compliance with the guidelines. +The following table provides a summary of the Stock Ownership Guidelines applicable to our NEOs and directors: +POSITION STOCK OWNERSHIP GUIDELINES +Chief Executive Officer 6x Annual Base Salary +Other NEOs 3x Annual Base Salary +Directors 5x Annual Board Retainer Fee +52 +No Hedging and Pledging Policy +Pursuant to our Insider Trading Policy, our directors, executive officers and employees are prohibited from conducting any short-term or speculative trading in Company securities, hedging Company securities or entering into derivative transactions involving Company securities, pledging Company securities as collateral for a loan, or adopting similar practices. +Tax and Accounting Considerations +Among the factors it considers when making executive compensation decisions, the Committee considers the anticipated tax and accounting impact to us (and to our executive officers) of various payments, equity awards and other benefits. +The Committee considers the impact of the provisions of Section 162(m) of the Code when determining the compensation of the Company's executive officers, but maintains the discretion to approve compensation that is not deductible. We do not anticipate the deduction limitation set forth in Section 162(m) of the Code will have a material impact on our results of operations. +The Committee also considers the impact of Section 409A of the Code. In general, our executive plans and programs are designed to comply with the requirements of that section so as to avoid possible adverse tax consequences that may result from noncompliance. +We account for equity awards in accordance with the requirements of Financial Accounting Standards Board Accounting Standards Codification, or FASB ASC, Topic 718, Stock Compensation . +Our change-in-control and severance agreements do not allow for excise tax gross up payments. +53 +TALENT & COMPENSATION COMMITTEE REPORT +The Talent & Compensation Committee of our Company has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussion, the Talent & Compensation Committee has recommended to our Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement. +THE TALENT & COMPENSATION COMMITTEE +Cynthia (Cindy) L. Davis ( Chair ) +David A. Burwick +Victor Luis +Bonita C. Stewart +The Talent & Compensation Committee Report shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as amended, or the Acts, except to the extent that we specifically incorporate this information by reference, and shall not otherwise be deemed filed under the Acts. +54 +SUMMARY COMPENSATION TABLE +The following table sets forth all compensation paid or awarded to our NEOs during fiscal years 2023, 2022, and 2021. The amounts set forth in the table have been calculated in accordance with the requirements of applicable SEC rules, and do not necessarily reflect the amounts that have actually been paid to, or which may be realized by, our NEOs. The table should be read together with the section of this Proxy Statement titled “ Compensation Discussion and Analysis .” +Name and Principal Position Year Salary +($) Bonus +($) +Stock +Awards +($) (1)(2) +Non-Equity Incentive +Plan +Comp. +($) (3) +All Other Comp. +($) (4) +Total +($) +Dave Powers 2023 1,173,077 — 7,999,562 2,200,822 18,015 11,391,476 +Chief Executive Officer +President 2022 1,100,000 — 7,999,651 1,701,521 53,762 10,854,934 +2021 1,100,000 — 3,999,580 2,750,000 10,870 7,860,450 +Steven J. Fasching 2023 756,923 — 1,699,907 651,493 18,003 3,126,326 +Chief Financial Officer 2022 686,538 — 2,499,639 643,137 10,632 3,839,946 +2021 600,000 — 749,537 900,000 10,482 2,260,019 +Stefano Caroti (5) +2023 729,231 400,000 2,999,273 589,081 57,438 4,775,023 +Chief Commercial Officer 2022 686,539 — 2,499,684 545,519 53,458 3,785,200 +2021 650,000 — 849,615 975,000 48,521 2,523,136 +Anne Spangenberg (6) +2023 471,472 — 1,199,466 206,877 9,611 1,887,426 +President of Fashion Lifestyle +Thomas Garcia (7) +2023 546,182 — 999,612 464,442 46,595 2,056,831 +Chief Administrative Officer +(1) The amounts in this column represent the aggregate grant date fair value of the respective awards computed in accordance with FASB ASC Topic 718. For information about the assumptions underlying these computations, please refer to Note 8 to our consolidated financial statements included in our Annual Report on Form 10-K, filed with the SEC on May 26, 2023. In accordance with applicable SEC rules, for those awards that are subject to the satisfaction of performance conditions, the amounts reported reflect the grant date fair value of the awards based upon the probable outcome of such conditions as of the grant date. For fiscal year 2023, the maximum value of the awards assuming the maximum level of achievement relative to the performance conditions is as follows; $12.8 million for Mr. Powers; $2.7 million for Mr. Fasching' $4.8 million for Mr. Caroti' $1.9 million for Ms. Spangenberg; and $1.6 million for Mr. Garcia. +(2) These amounts reflect the aggregate value of 2023 Time-Based RSUs and 2023 LTIP PSUs granted to our NEOs. Refer to the sections of this Proxy Statement titled “2023 Time-Based Restricted Stock Units” and " 2023 Long-Term Incentive Plan Performance-Based Stock Units " for additional information. +(3) These amounts reflect the cash incentive payments paid to our NEOs under our 2023 Annual Cash Incentive Awards. Refer to the section of this Proxy Statement titled "2023 Annual Cash Incentive Awards” for additional information. +(4) These amounts reflect matching contributions made to our NEOs under the NQDC Plan and 401(k) plan, long-term care premiums, and life insurance premiums paid on policies adopted for the benefit of our NEOs. Refer to the section of this Proxy Statement titled " Nonqualified Deferred Compensation " for additional information on the NQDC plan, including the value of matching contributions made to our NEOs. +. +(5) Mr. Caroti was appointed Chief Commercial Officer in April 2023, and previously served as President of Omni-Channel. The Committee elected to pay a one-time cash bonus to Mr. Caroti in connection with assuming an interim leadership role within the Performance Lifestyle Group in addition to continuing to manage the responsibilities associated with his regular position. Refer to the section of this Proxy Statement titled " 2023 Annual Cash Incentive Awards " for additional information. +(6) Ms. Spangenberg's employment with the Company began on July 11, 2022. Her annualized salary for fiscal year 2023 was $700,000. +(7) Mr. Garcia qualified as an NEO for the first time with respect to fiscal year 2023. +55 +GRANTS OF PLAN-BASED AWARDS IN +FISCAL YEAR 2023 +The following table sets forth all grants of plan-based awards made to our NEOs during fiscal year 2023. The value of the payouts and awards set forth in the table have been calculated in accordance with the requirements of applicable SEC rules, and do not necessarily reflect the amounts that have actually been paid to, or which may be realized by, our NEOs. The table should be read together with the section of this Proxy Statement titled “ Elements of Fiscal Year 2023 Executive Compensation Program. ” +Potential Payouts as of Grant Date Under Non-Equity Incentive Plan Awards (1) +Potential Payouts as of Grant Date Under Equity Incentive Plan Awards All Other Stock Awards: Number of Shares (#) +Grant Date +Fair Value +of Awards +($) (4) +Name Grant Date Threshold +($) Target +($) Max. +($) Threshold +(#) Target +(#) Max. +(#) +Dave Powers 959,624 1,919,247 3,838,494 — — — — — +8/15/22 — — — 6,179 12,358 (2) 24,716 — 4,799,847 +8/15/22 — — — — — — 9,449 (3) 3,199,715 +Steven J. Fasching 284,070 568,140 1,136,280 — — — — — +8/15/22 — — — 1,313 2,626 (2) 5,252 — 1,019,938 +8/15/22 — — — — — — 2,008 (3) 679,969 +Stefano Caroti 273,761 547,521 1,095,042 — — — — — +8/15/22 — — — 2,317 4,634 (2) 9,268 — 1,799,846 +8/15/22 — — — — — — 3,542 (3) 1,199,427 +Anne Spangenberg +189,863 379,726 759,452 — — — — — +9/1/22 — — — 977 1,953 (2) 3,906 — 719,661 +9/1/22 — — — — — — 1,500 (3) 479,805 +Thomas Garcia 202,511 405,021 810,042 — — — — — +8/15/22 — — — 772 1,544 (2) 3,088 — 599,690 +8/15/22 — — — — — — 1,181 (3) 399,922 +(1) The amounts in this column reflect the potential payouts under the 2023 Annual Cash Incentive Awards. The cash incentive award payments were ultimately paid out between 58% and 114% of target in June 2023. Refer to the section of this Proxy Statement titled " 2023 Annual Cash Incentive Awards " for additional information. +(2) The awards in this row reflect the grant of 2023 LTIP PSUs. These awards may vest based upon continued service through March 31, 2025 and our achievement of annual performance targets for each of fiscal years 2023, 2024, and 2025. As of the date of this Proxy Statement, we consider the performance conditions to be probable of being achieved at 100% of the target amount, although the awards can vest up to a maximum of 200% of the target amount. The grant date fair value of the awards assuming the maximum level of achievement relative to the performance conditions is as follows: $9.6 million for Mr. Powers; $2.0 million for Mr. Fasching; $3.6 million for Mr. Caroti; $1.4 million for Ms. Spangenberg; and $1.2 million for Mr. Garcia. Refer to the section of this Proxy Statement titled " 2023 Long-Term Incentive Plan Performance-Based Stock Units " for additional information. +(3) The awards in this column reflect the grant of 2023 Time-Based RSUs. These awards vest over three years in equal annual installments on August 15, 2023, 2024 and 2025. Refer to the section of this Proxy Statement titled " 2023 Time-Based Restricted Stock Units " for additional information. +(4) The amounts in this column represent the aggregate grant date fair value of the respective awards computed in accordance with FASB ASC Topic 718. For information about the assumptions underlying these computations, please refer to Note 8 to our consolidated financial statements included in our Annual Report on Form 10-K filed May 26, 2023 with the SEC. In accordance with applicable SEC rules, for those awards that are subject to the satisfaction of performance conditions, the amounts reported reflect the value of the grant date based upon the probable outcome of such conditions. +56 +OUTSTANDING EQUITY AWARDS AT +2023 FISCAL YEAR END +The following table sets forth equity awards granted to our NEOs that remained outstanding as of March 31, 2023. The market values of the awards set forth in the table have been calculated in accordance with the requirements of applicable SEC rules, and do not necessarily reflect the amounts that have actually been paid to, or which may be realized by, our NEOs. The table should be read together with the section of this Proxy Statement titled “ Elements of Fiscal Year 2023 Executive Compensation Program. ” +Stock Options Stock Awards +Name Number of +securities +underlying +unexercised +options +exercisable +(#) Option +exercise +price +($) Option +expiration +date Number of +shares that +have not +vested +(#) +Market +value of +shares that +have not +vested +($) (3) +Number of +unearned +shares that +have not +vested +(#) (4) +Market +value of +unearned +shares that +have not +vested +($) (5) +Dave Powers — — — 17,311 (6) 7,782,160 23,464 10,548,241 +35,957 (2) 69.29 6/13/2024 — — — — +Steven J. Fasching — — — 4,071 (7) 1,830,118 5,866 2,637,060 +Stefano Caroti 14,725 (1) 61.86 3/31/2026 6,067 (8) 2,727,420 8,847 3,977,169 +7,408 (2) 69.29 6/13/2024 — — — — +Anne Spangenberg — — — 1,500 (9) 674,325 1,953 877,971 +Thomas Garcia 14,383 (2) 69.29 6/13/2024 2,020 (10) 908,091 2,515 1,130,618 +(1) These awards reflect 2017 LTIP Non-Qualified Stock Options, or NQSOs, that were granted in November 2016. The Talent & Compensation Committee determined that the performance condition was achieved, and the options are fully vested and exercisable. +(2) These awards reflect 2018 LTIP NQSOs that were granted in June 2017. The Talent & Compensation Committee determined that the performance condition was achieved, and the options are fully vested and exercisable. +(3) In accordance with applicable SEC rules, the market value of the shares has been determined based on the closing price of our common stock on March 31, 2023, which was $449.55. +(4) The stock awards are 2022 LTIP PSUs that were granted in July 2021, August 2021, and February 2022, and 2023 LTIP PSUs that were granted in August 2022, and September 2022 respectively, which remain outstanding and subject to long-term performance and service conditions. The shares included reflect achievement of the performance conditions at the target level of 100%. However, the maximum performance level for these awards is 200%. The 2022 LTIP PSUs will vest on March 31, 2024, and 2023 LTIP PSUs will vest on March 31, 2025, each subject to achievement of certain performance criteria. +(5) In accordance with applicable SEC rules, the market value of the shares has been determined based on the closing price of our common stock on March 31, 2023, which was $449.55. The market value of 2022 and 2023 LTIP PSUs was calculated as to 100% of the shares underlying the awards. +(6) This amount consists of (i) 1,329 2021 time-based RSUs granted in June 2020, which shares vest as to 100% on August 15, 2023 (ii) 1,061 2021 time-based RSUs granted November 2020, which shares vest 100% on August 15, 2023, (iii) 5,472 2022 time-based RSUs granted in July 2021, which shares vest as to 50% on August 15, 2023, and 2024, and (iv) 9,449 2023 time-based RSUs granted in August 2022, which shares vest as to 33.33% on August 15, 2023, 2024, and 2025. +(7) This amount consists of (i) 249 2021 time-based RSUs granted in June 2020, which shares vest as to 100% on August 15, 2023 (ii) 200 2021 time-based RSUs granted in November 2020, which shares vest as to 100% on August 15, 2023 (iii) 684 2022 time-based RSUs granted in July 2021, which shares vest as to 50% on August 15, 2023, and 2024 (iv) 930 2022 time-based RSUs granted in August 2021, which shares vest as to 50% on August 15, 2023, and 2024, and (v) 2,008 2023 time-based RSUs granted in August 2022, which shares vest as to 33.33% on August 15, 2023, 2024, and 2025. +(8) This amount consists of (i) 283 2021 time-based RSUs granted in June 2020, which shares vest as to 100% on August 15, 2023 (ii) 225 2021 time-based RSUs granted in November 2020, which shares vest as to 100% on August 15, 2023 (iii) 684 2022 time-based RSUs granted in July 2021, which shares vest as to 50% on August 15, 2023, and 2024, (iv) 1,333 2022 time-based RSUs granted in February 2022, which shares vest as to 50% on August 15, 2023, and 2024, and (v) 3,542 2023 time-based RSUs granted in August 2022, which shares vest as to 33.33% on August 15, 2023, 2024, and 2025. +(9) This amount consists of 1,500 2023 time-based RSUs granted in September 2022, which shares vest as to 33.33% on September 15, 2023, 2024, and 2025. +57 +(10) This amount consists of (i) 200 2021 time-based RSUs granted in June 2020, which shares vest as to 100% on August 15, 2023 (ii) 160 2021 time-based RSUs granted in November 2020, which shares vest as to 100% on August 15, 2023 (iii) 479 2022 time-based RSUs granted in July 2021, which shares vest as to 50% on August 15, 2023, and 2024, and (iv) 1,181 2023 time-based RSUs granted in August 2022, which shares vest as to 33.33% on August 15, 2023, 2024, and 2025. +58 +FISCAL YEAR 2023 OPTION EXERCISES AND STOCK VESTED +The following table provides information for our NEOs regarding option exercises and stock award vesting during fiscal year 2023. The values realized upon exercise or vesting of the awards set forth in the table have been calculated in accordance with the requirements of applicable SEC rules, and do not necessarily reflect the amount that will actually be received by our NEOs upon the sale of the shares. +Option Awards Stock Awards +Name +Number of +Shares +Acquired on +Exercise +(#) (1) +Value Realized on Exercise +($) (2) +Number of +Shares +Acquired on +Vesting +(#) (3)(4) +Value Realized +on Vesting +($) (5) +Dave Powers 35,957 11,922,668 20,885 8,480,084 +Steven J. Fasching — — 4,207 1,688,384 +Stefano Caroti — — 4,863 1,945,798 +Anne Spangenberg — — — — +Thomas Garcia — — 2,958 1,212,637 +(1) Options exercised were initially issued pursuant to the 2018 LTIP NQSOs. +(2) Pursuant to applicable SEC rules, the amounts in this column reflect the value realized upon the exercise of the option awards, which is based on the closing price of our common stock on the applicable exercise dates less the exercise price of the relevant option awards. +(3) These amounts consist of shares acquired upon vesting of fiscal year 2021 LTIP PSUs, fiscal year 2020 RSUs and PSUs, and fiscal year 2021 and 2022 RSU stock compensation plans. +(4) The total number of shares actually received by the NEOs, net of shares withheld for taxes, were as follows: 10,532 for Mr. Powers, 2,458 for Mr. Fasching, 2,789 for Mr. Caroti, and 1,779 for Mr. Garcia. +(5) Pursuant to applicable SEC rules, the amounts in this column reflect the value realized upon the vesting of the stock awards, which is based on the closing price of our common stock on the applicable vesting dates. +59 +NONQUALIFIED DEFERRED COMPENSATION +Nonqualified Deferred Compensation Plan +The Committee has adopted the Nonqualified Deferred Compensation Plan, or the NQDC Plan, which is an unfunded, nonqualified deferred compensation program sponsored by our Company to provide certain members of our management the opportunity to defer compensation into the NQDC Plan. The NQDC Plan year is from January 1 st to December 31 st . Participants may defer up to 50% of their annual base salary and up to 85% of any cash incentive bonus under the NQDC Plan. We have the option, but not the obligation, to make discretionary or matching cash contributions to NQDC Plan participants. We have established a rabbi trust as a reserve for the benefits payable under the NQDC Plan. During fiscal year 2023, certain of our NEOs elected to make contributions to the NQDC Plan, and the Committee elected to match a portion of the contributions under the NQDC Plan. +Name +Executive contributions during fiscal year 2023 +($) (1) +Registrant contributions during fiscal year 2023 +($) (2) +Aggregate gain (loss) during fiscal year 2023 +($) Aggregate withdrawals/distributions during fiscal year 2023 +($) Aggregate balance at end of fiscal year 2023 +($) +Dave Powers — — (115,194) — 628,818 +Steven J. Fasching — — — — — +Stefano Caroti 490,106 37,966 (205,341) — 2,182,429 +Anne Spangenberg 129,231 — 5,955 — 135,186 +Thomas Garcia 305,762 30,100 (161,025) — 1,643,189 +Total 925,099 68,066 (475,605) — 4,589,622 +(1) The amounts reported in this column reflect contributions made by our NEOs under the NQDC Plan during fiscal year 2023. These amounts are separately reported as compensation within the " Summary Compensation Table " above, and do not reflect amounts in addition to those amounts. +(2) The amounts reported in this column reflect discretionary matching contributions made by us to our NEOs under the NQDC Plan during fiscal year 2023. These amounts are included in the " All Other Compensation " column of the " Summary Compensation Table " above, and do not reflect amounts in addition to those amounts. +Deferred Stock Unit Compensation Plan +The Committee has also adopted a Deferred Stock Unit Compensation Plan. Under the plan, a director or employee who holds unvested RSUs may elect to defer settlement of up to 100% of the awards. For each unit of our common stock held pursuant to an award of RSUs that is deferred, the participant will receive one Deferred Stock Unit. Amounts deferred will be distributed, as described in the plan, at the time elected by the participant. A participant’s Deferred Stock Units will be settled in shares of our common stock, as more specifically described in the plan. None of our NEOs elected to participate in the plan during fiscal year 2023. +60 +POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL +Change-in-Control and Severance Agreements +We have entered into change in control and severance agreements, or Severance Agreements, as amended from time to time, with each of our NEOs. The information below describes compensation and benefits that are payable or earned under the Severance Agreements with our NEOs (which are each referred to in their respective Severance Agreement as an “executive”) upon the occurrence of certain termination events. +Termination by Our Company for Cause, or by Executive Without Good Reason +Pursuant to the Severance Agreements with each of our NEOs, if the executive is terminated by our Company for Cause, or the executive terminates his or her employment without Good Reason (in each case as defined below), then the NEO will receive the following from our Company: +• payment of his or her accrued base salary, accrued vacation, reimbursement for reimbursable expenses, accrued and vested benefits under our plans or programs and other benefits required to be paid by law, accrued but unpaid non-equity incentive bonus for the prior fiscal year (excluding any non-equity incentive bonus for the year of termination); and +• the right to exercise all vested equity awards pursuant to the terms of the applicable award agreement. +Termination Due to Death or Total Disability +Pursuant to the Severance Agreements with each of our NEOs, if the executive is terminated due to his or her death or total disability, then in addition to those benefits provided upon a termination by our Company for Cause or by executive other than for Good Reason, the NEO will receive: +• pro-rated portion of his or her non-equity incentive bonus for the current fiscal year based on actual length of service during the year of termination and actual achievement by our Company of the performance conditions in respect of such bonus previously established by the Committee. +Termination by Our Company Without Cause +Pursuant to the Severance Agreements with each of our NEOs, if the executive is terminated by our Company without Cause, then in addition to those benefits provided upon a termination due to death or total disability, the NEO will receive: +• payment of his or her then-effective annual base salary for, in the case of the Chief Executive Officer, 18 months, or, in the case of any other NEO, 12 months following his or her termination, subject to such executive signing a release; and +• receipt of health benefits for a period of 18 months in the case of the Chief Executive Officer, and one year in the case of any other NEO following his or her termination or his or her attainment of alternative employment that provides health benefits, whichever is earlier. +Termination Without Cause or by Executive for Good Reason within Two Years of a Change in Control +Pursuant to the Severance Agreements with each of our NEOs, if the executive is terminated by our Company without Cause or by the executive for Good Reason within two years of a Change in Control, then in addition to those benefits provided upon a termination due to death or total disability, the NEO will receive: +• payment of, in the case of the Chief Executive Officer, two times, or, in the case of any other NEO, one-and-one-half times his or her then-effective annual base salary, plus the greater of one-and-one-half times the targeted incentive bonus immediately prior to the time such termination occurs or one-and-one-half times the average actual incentive bonus for the previous three years, subject to such executive signing a release; and +• receipt of health benefits for, in the case of the Chief Executive Officer, a period of two years, or, in the case of any other NEO, a period of 18 months following his or her termination or his or her attainment of alternative employment that provides health benefits, whichever is earlier. +For purposes of the Severance Agreements: +• “Cause” means, in part, (i) any willful breach of duty by the executive in the course of his or her employment or continued violation of written Company employment policies after written notice of such violation, (ii) violation of our insider trading policies, (iii) conviction of a felony or any crime involving fraud, theft, embezzlement, dishonesty or moral +61 +turpitude, (iv) engaging in activities which materially defame our Company, engaging in conduct which is materially injurious to our Company or our affiliates, or any of our respective customer or supplier relationships, financially or otherwise, or (v) the executive’s gross negligence or continued failure to perform duties or executive’s continued incapacity to perform such duties. +• “Good Reason” means, without the consent of the executive, if within two years of a change in control, there is a material reduction of the executive’s total compensation, benefits, and perquisites (excluding a material reduction resulting from a decrease in value of the Company’s stock), our Company's relocation is greater than 50 miles from the location where the executive performs services, or a material change in the executive’s authority, duties, or responsibilities; provided, however, no such event shall constitute Good Reason unless the executive shall have given written notice to our Company of the executive’s intent to resign for “Good Reason” within 30 days after the executive first becomes aware of the occurrence of any such event (specifying the nature and scope of the event) and such event or occurrence shall not have been cured within 30 days of our receipt of such notice, and the executive resigns no later than 90 days after the expiration of the 30-day cure period. +• “Change in Control” means the occurrence of a merger, consolidation, sale of all or a major portion of the assets of our Company (or a successor organization) or similar transaction or circumstance where any person or group acquires, in one or more transactions, beneficial ownership of more than 50% of the outstanding shares of voting stock of our Company (or a successor organization), or a change in a majority of the members of our Board. +No NEOs will be entitled to gross ups for excise tax penalty on “excess golden parachute payments” as a result of termination following a Change in Control. +Equity Award Agreements +Pursuant to the “double-trigger” vesting provisions of the awards outstanding as of the end of fiscal year 2021 under the 2006 Equity Incentive Plan, or 2006 Plan, and 2015 Plan, except as specifically noted below, the vesting of each award will be accelerated in full in the event of a change in control that is approved by a majority of the Continuing Directors (as defined in the award agreements) if the acquiring or successor entity in the change in control provides for the continuance or assumption of the award agreement, or the substitution for the award agreement of a new agreement of comparable value covering shares of a successor corporation, and (i) the recipient is terminated by the acquiring company without Cause or pursuant to a Constructive Termination (as such terms are defined in the relevant award agreements) within either 12 or 24 months of such change in control; or (ii) only in the case of certain long-term incentive plan non-qualified stock options, or LTIP NQSOs and RSUs, the recipient has provided Continuous Service (as defined in the award agreements) through the applicable performance vesting date. +Notwithstanding the foregoing summary, the award agreements governing the grants of the 2020 Annual PSUs only provide for acceleration as described above to the extent that the Committee determines that at least the “threshold” performance conditions associated with the awards have been met unless the change in control occurs prior to the end of the relevant performance period, in which case the unvested PSUs will accelerate in full, regardless of achievement of the performance condition. +In addition, the vesting of each equity award will be accelerated in full if: (i) for certain of the outstanding historical awards, a change in control occurs that has not been approved by a majority of the Continuing Directors; or (ii) the acquiring or successor entity in the change in control does not agree to continue or assume the award agreement, or substitute new awards of comparable value. +Severance and Change-in-Control Payments +The following table provides information about the payments and benefits that would have been paid or provided to our NEOs in the event a termination of employment had occurred on March 31, 2023. The amounts reflected in the table are in addition to amounts that would have been payable for accrued but unpaid base salary, accrued paid time off, accrued but unpaid cash incentive compensation, and reimbursement of expenses. +The payments to be made, and the stock and option awards to be vested, in connection with different termination events (including in connection with a change in control) for each of our NEOs have been determined by reference to the terms of the applicable Severance Agreements and equity award agreements. Except as described above, no payments or benefits would be provided to our NEOs in the event of a termination of employment for Cause. Refer to the section of this Proxy Statement titled “ Potential Payments upon Termination or Change in Control ” for additional information. +For purposes of the table, the value of the stock and option awards has been determined based on the closing price of our common stock on March 31, 2023. In the event of an actual change in control transaction, the value of our common stock may be significantly different than this assumed value, in which case the value realized by our NEOs upon the vesting of the stock and option awards may be significantly different. +62 +Upon Termination +Name Type of Compensation +or Benefit Due to Death or +Total Disability +($) By Our Company +Without Cause +($) In Connection with a Change +in Control +($) +Dave Powers Cash payments — 1,800,000 5,726,172 +Value of health benefits — 33,166 44,221 +Value of stock awards (1) +— — 18,330,401 +Total — 1,833,166 24,100,794 +Steven J. Fasching Cash payments — 765,000 2,244,815 +Value of health benefits — 25,401 38,102 +Value of stock awards (1) +— — 4,467,178 +Total — 790,401 6,750,095 +Stefano Caroti Cash payments — 740,000 2,164,800 +Value of health benefits — 17,995 26,992 +Value of stock awards (1) +— — 6,704,589 +Total — 757,995 8,896,381 +Anne Spangenberg Cash payments — 700,000 1,837,500 +Value of health benefits — 7,105 10,657 +Value of stock awards (1) +— — 1,552,296 +Total — 707,105 3,400,453 +Thomas Garcia Cash payments — 550,000 1,636,935 +Value of health benefits — 22,111 33,166 +Value of stock awards (1) +— — 2,038,709 +Total — 572,111 3,708,810 +(1) The amount in this row reflects the value of all of the LTIP PSUs and time-based RSUs that remained outstanding as of March 31, 2023, based on the closing price of our common stock on that date, including: (i) 2021 Time-Based RSUs, (ii) 2022 Time-Based RSUs, (iii) 2022 LTIP PSUs; (iv) 2023 Time-Based RSUs, (v) 2023 LTIP PSUs, and (vi) certain additional time-based RSUs and LTIP PSUs granted in prior years. +63 +DIRECTOR COMPENSATION +For fiscal year 2023, directors who are not our employees, or our Nonemployee Directors, received an annual cash retainer fee of $80,000, plus an annual cash retainer of $10,000 for each Board committee assignment. Nonemployee Directors holding the following positions received additional annual cash retainer fees as follows: $200,000 for Chairman of our Board of Directors; $40,000 for Chair of the Audit & Risk Management Committee; $35,000 for Chair of the Talent & Compensation Committee; and $20,000 for Chair of the Corporate Responsibility, Sustainability & Governance Committee. All or any portion of the cash retainer fees paid to any of our Nonemployee Directors may, at the election of the director, be paid through the issuance of our common stock. +Each of our Nonemployee Directors is also entitled to receive common stock with a total value of approximately $170,000 for annual service on our Board. The shares are issued in equal quarterly installments with the number of shares being determined using the rolling average of the closing price of our common stock during the last 10 trading days leading up to, and including, the grant date, which is in alignment with the Company's Equity Grant Guidelines. Each of these shares is fully vested on the date of issuance. Where our Nonemployee Directors elect to be paid their annual cash retainer fees in shares of our common stock, the number of shares to be issued is calculated using the same valuation methodology. +Nonemployee Directors are reimbursed for any reasonable Board-related expenses. Nonemployee Directors also receive product discounts, which are generally available to our employees and, from time to time, may receive products without charge in order to help expand the directors’ knowledge of our products. +Director Compensation Table +The following table sets forth all compensation paid or awarded to our Nonemployee Directors during fiscal year 2023. The amounts set forth in the table have been calculated in accordance with applicable SEC rules, and do not necessarily reflect the amounts that have actually been paid to, or which may be realized by, our Nonemployee Directors. +Name Fees +Earned +($) +Stock +Awards +($) (1) +Total +($) +Michael F. Devine, III 280,000 173,149 453,149 +David A. Burwick (2) +526 264,462 264,988 +Nelson C. Chan 100,000 173,149 273,149 +Cynthia (Cindy) L. Davis 135,000 173,149 308,149 +Juan R. Figuereo 130,000 173,149 303,149 +Maha S. Ibrahim (2) +526 264,462 264,988 +Victor Luis (2) +526 264,462 264,988 +Lauri M. Shanahan 100,000 173,149 273,149 +Bonita C. Stewart (2) +90,271 203,487 293,758 +(1) The amounts in this column represent the aggregate grant date fair value of the awards computed in accordance with FASB ASC Topic 718. For information about the assumptions underlying these computations, please refer to Note 8 to our consolidated financial statements included in our Annual Report. +(2) This director has elected to receive some or all of his or her annual cash retainer fees through the issuance of our common stock. +Stock Ownership Guidelines +Our Board has adopted Stock Ownership Guidelines applicable to our Nonemployee Directors. Nonemployee Directors are required to hold a number of shares of common stock with a value equal to five times the base annual cash retainer fee within five years of joining our Board, subject to exceptions that may be granted by the Committee. In addition, each director must hold shares of our common stock within one year of joining our Board. Any shares of common stock held by Nonemployee Directors through our Deferred Stock Unit Compensation Plan are counted as stock ownership for purposes of these guidelines. +The Committee periodically reviews our directors' compliance with the Stock Ownership Guidelines, and, as of the end of fiscal year 2023, determined that each director is in compliance with the guidelines. +64 +EQUITY COMPENSATION PLAN INFORMATION +The following table sets forth information regarding shares of our common stock that were eligible for issuance under our equity compensation plans as of March 31, 2023. +Plan category +Number of securities +to be issued +upon exercise of +outstanding options or settlement of outstanding RSUs (1)(2) +(#) +Weighted-average +exercise price of +outstanding options (3) +($) +Number of securities +remaining available +for future issuance (4) +(#) +Equity compensation plans approved by security holders 290,789 66.99 1,231,505 +Equity compensation plans not approved by security holders — — — +Total 290,789 66.99 1,231,505 +(1) This amount includes shares underlying all equity awards outstanding pursuant to the 2006 Plan and the 2015 Plan as of March 31, 2023. For awards subject to performance-based vesting conditions, the amount reported reflects the number of shares to be issued assuming the relevant performance conditions are achieved at the maximum level, which is equal to 200% of the target amount. +(2) There are no stock appreciation rights outstanding pursuant to the 2006 Plan or the 2015 Plan. In addition, there are no outstanding warrants to purchase shares of our common stock. +(3) This amount reflects the weighted-average exercise price of the outstanding 2017 LTIP NQSOs and 2018 LTIP NQSOs, based on the closing price of our common stock on the respective grant dates. This amount does not take into account shares issuable upon the vesting or settlement of outstanding time-based and performance-based RSUs, which have no exercise price. +(4) This amount reflects the shares reserved for issuance under the 2015 Plan less the number of shares reported in the first column. This amount is potentially subject to increase depending on our achievement with respect to certain performance conditions as discussed in footnote 1 above, and will also increase to the extent any awards are forfeited or otherwise terminated under the 2015 Plan. No shares are available for issuance under the 2006 Plan. +65 +CEO PAY RATIO +Pursuant to Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of Regulation S-K, we are required to disclose the ratio of the annual total compensation of our principal executive officer to the median of the annual total compensation of all of our employees (excluding our principal executive officer), or our median employee. During fiscal year 2023, our principal executive officer was Dave Powers, our Chief Executive Officer and President. +For fiscal year 2023, the annual total compensation of our Chief Executive Officer and President was $11,391,476, and the annual total compensation of our median employee was $51,320, each as calculated in a manner consistent with Item 402(u) of Regulation S-K. +Based on this information, the fiscal year 2023 ratio of the annual total compensation of our principal executive officer to the annual total compensation of our median employee was approximately 222:1. +We most recently calculated the median employee for purposes of providing such pay ratio disclosure in fiscal year 2022. In calculating our fiscal year 2023 CEO pay ratio, we reviewed the changes in our employee population and employee compensation and determined there was no change in such population or compensation that would significantly impact the fiscal year 2023 pay ratio and require us to identify a new median employee. However, our fiscal year 2022 median employee's employment was terminated in fiscal year 2023, so we selected a substitute employee, adjacent to the initial median employee, whose compensation was representative of our median employee, to serve as our fiscal year 2023 median employee. A description of the methodology we used to identify the median employee can be found in our 2022 proxy statement. +The pay ratio we have reported above is a reasonable estimate calculated in a manner consistent with applicable SEC rules based on our internal records and the methodology described above. The SEC rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices. Therefore, the pay ratio reported by other companies may not be comparable to the pay ratio we have reported above. +66 +PAY VERSUS PERFORMANCE +Provided below is our pay-versus-performance disclosure as required by Item 402(v) of Regulation S-K under the Exchange Act, or Item 402(v), including information regarding the relationship between “compensation actually paid,” or CAP, to our named executive officers, or NEOs, and certain of our financial performance metrics. Specifically, set forth below is the following: +• A tabular list of the three most important financial measures our Talent & Compensation Committee used in FY 2023 to link CAP to our performance; +• A table that compares our NEOs’ total compensation, as presented in the Summary Compensation Table, to CAP and certain other financial measures; and +• Graphs reflecting the relationship between CAP and our TSR and peer group TSR, CAP and our net income, and CAP and our consolidated operating income . +Amounts included as CAP do not represent the value of cash compensation and equity awards actually received by our NEOs, but rather amounts calculated pursuant to Item 402(v) and include, among other things, the year-over-year changes in “fair value” of unvested equity-based awards. Further, the Talent & Compensation Committee does not use CAP as a basis for making compensation decisions, so such amounts may not be indicative of how the committee evaluates NEO compensation. Please refer to the section of this Proxy Statement titled “Compensation Discussion and Analysis” for a discussion of our pay-for-performance philosophy, executive compensation program objectives and the way we design our program to align executive compensation with Company performance. +Tabular List of Company Financial Performance Measures +The list below represents the financial performance measures that the Company considers to have been the most important in linking CAP to our principal executive officer, or PEO, and Non-PEO NEOs for FY 2023 to Company performance. The measures are not ranked. Please refer to the section of this Proxy Statement titled " Compensation Discussions and Analysi s" for a description of these measures, and the manner in which these measures are used to determine incentive compensation paid to our NEOs. +Most Important Performance Measures +Consolidated Operating Income +Consolidated Revenue +Consolidated Pre-Tax Income +Pay Versus Performance +The following pay-versus-performance table sets forth information regarding the CAP to our Chief Executive Officer and President, who is our PEO, and our other NEOs, or our Non-PEO NEOs, for each of our fiscal years ended March 31, 2023, 2022 and 2021, or fiscal year 2023, 2022 or 2021, respectively, as calculated in accordance with Item 402(v), and our financial performance for each such fiscal year: +PAY VERSUS PERFORMANCE TABLE +Summary Compensation Table Total for PEO ($) (1)(2) +Compensation Actually Paid to PEO ($) (1)(3) +Average Summary Compensation Table Total for Non-PEO NEOs ($) (1)(2) +Average Compensation Actually Paid to Non-PEO NEOs ($) (1)(3) +Value of Initial Fixed $100 Investment Based on: +Fiscal Year TSR +Peer Group TSR (4) +Net Income ($,000) Consolidated Operating Income +($,000) +(a) (b) (c) (d) (e) (f) (g) (h) (i) +2023 11,391,476 21,415,165 2,961,401 4,799,279 335.5 103.9 516,822 652,751 +2022 10,854,934 6,190,970 3,867,018 2,845,438 204.3 155.6 451,949 564,707 +2021 7,860,450 19,464,880 2,479,351 5,207,671 246.6 200.6 382,575 504,205 +67 +(1) The table below includes the name of each individual serving as an NEO during our last three fiscal years, including our PEO: +Fiscal Year PEO Non-PEO NEOs +2023 Dave Powers Steven J. Fasching, Stefano Caroti, Anne Spangenberg and Thomas Garcia +2022 Dave Powers Steven J. Fasching, David Lafitte, Stefano Caroti and Wendy Yang +2021 Dave Powers Steven J. Fasching, David Lafitte, Stefano Caroti and Andrea O'Donnell +(2) The dollar amounts included in this column reflect the total compensation of our PEO and the average total compensation of our Non-PEO NEOs reported in the Summary Compensation Table for each fiscal year presented. +(3) The table below provides the adjustments to the Summary Compensation Table total compensation made to arrive at our PEO’s CAP and our Non-PEO NEOs’ average CAP: +CALCULATION OF COMPENSATION ACTUALLY PAID (a) +Fiscal +Year Executives +Summary Compensation Table Total ($) (b) +Minus - Amount Reported in the "Stock Awards" Column in the Summary Compensation Table ($) +Plus - Fair Value of Fiscal Year End of Outstanding and Unvested Stock Awards Granted in the Fiscal Year ($) (c) +Plus / Minus - Change in Fair Value of Outstanding and Unvested Stock Awards Granted in Prior Fiscal Years ($) (d) +Plus / Minus - Change in Fair Value at Vesting of Stock Awards Granted in Prior Fiscal Years ($) (e) +Compensation Actually Paid ($) +2023 PEO 11,391,476 ( 7,999,562 ) 10,951,395 4,242,444 2,829,412 21,415,165 +Average for Non-PEO NEOs 2,961,401 ( 1,724,565 ) 2,383,845 780,911 397,687 4,799,279 +2022 PEO 10,854,934 ( 7,999,651 ) 5,398,210 ( 1,160,869 ) ( 901,654 ) 6,190,970 +Average for Non-PEO NEOs 3,867,018 ( 2,549,581 ) 1,946,763 ( 242,995 ) ( 175,767 ) 2,845,438 +2021 PEO 7,860,450 ( 3,999,580 ) 4,787,303 4,760,338 6,056,369 19,464,880 +Average for Non-PEO NEOs 2,479,351 ( 849,565 ) 1,016,903 1,060,293 1,500,689 5,207,671 +(a) This table excludes adjustments for awards granted that vest in the same year, awards that failed to achieve their vesting conditions, and dividends, in each case because there is no applicable adjustment for the covered fiscal years. +(b) Represents amounts from the Summary Compensation Table for the indicated fiscal year. +(c) The fair value amounts are calculated in accordance with ASC Topic 718 Compensation - Stock Compensation (ASC 718), determined as of the covered fiscal year. Represents the fair value as of the indicated fiscal year end of the outstanding and unvested awards granted during such fiscal year, calculated in accordance with the methodology used for financial reporting purposes, in accordance with ASC Topic 718 and described further in our Annual Reports on Form 10-K. +(d) The fair value amounts are determined based on the change in the fair value from the prior fiscal year end to the covered fiscal year end calculated in accordance with ASC 718. Represents the fair value as of the indicated fiscal year end of the outstanding and unvested awards that were granted in previous fiscal years, calculated in accordance with the methodology used for financial reporting purposes, in accordance with ASC Topic 718 and described further in our Annual Reports on Form 10-K. +(e) The fair value amounts are determined based on the change in the fair value from the prior fiscal year end to the vesting date calculated in accordance with ASC 718. Represents the change in fair value, measured from the prior fiscal year end to the vesting date, of each stock award that was granted in previous fiscal year and which vested during the indicated,fiscal year, calculated in accordance with the methodology used for financial reporting purposes, in accordance with ASC Topic 718 and described further in our Annual Reports on Form 10-K. +(4) The TSR Peer Group consist of the S&P 500 Apparel, Accessories & Luxury Goods Index. +Relationship Between Pay and Performance +The relationship between the CAP to our NEOs against our TSR, peer group TSR, net income and consolidated operating income is illustrated as follows: +68 +Compensation Actually Paid Versus Total Stockholder Return +The chart below illustrates the relationship between the CAP to our PEO and the average CAP to our Non-PEO NEOs in relation to our TSR, and the TSR of our peer group, the NYSE Composite Index, over the last three fiscal years. +Compensation Actually Paid Versus Net Income +The chart below illustrates the CAP to our PEO and the average CAP to our Non-PEO NEOs in relation to our net income over the last three fiscal years. We do not use net income as a performance measure in our executive compensation program. +69 +Compensation Actually Paid Versus Consolidated Operating Income +The chart below illustrates the CAP to our PEO and the average CAP to our Non-PEO NEOs in relation to our consolidated operating income over the last three fiscal years. Consolidated operating income is the financial performance measure that, in our assessment, represents the most important financial performance measure to link CAP to our performance. +70 +SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT +The following table sets forth, as of June 30, 2023 (except as specified in the footnotes following the table), certain information concerning the shares of our common stock beneficially owned by (i) each person who is an NEO, (ii) each director or director nominee, (iii) all executive officers and directors as a group (14 persons), and (iv) each person known to us to be the beneficial owner of more than 5% of our common stock. There were 26,134,458 shares of our common stock outstanding on June 30, 2023. +Name and Address of Beneficial Owner (1) +Amount and +Nature of Beneficial +Ownership (#) (2)(3) +Percent +of Common Stock (3) +Named Executive Officers +Dave Powers 60,093 * +Steven J. Fasching 11,069 * +Stefano Caroti 40,801 * +Anne Spangenberg 98 * +Thomas Garcia 22,628 * +Directors (4) +Michael F. Devine, III 12,008 * +David A. Burwick 1,452 * +Nelson C. Chan 9,833 * +Cynthia (Cindy) L. Davis 3,177 * +Juan R. Figuereo 555 (5) * +Maha S. Ibrahim 1,504 * +Victor Luis — (6) * +Lauri M. Shanahan 5,933 (7) * +Bonita C. Stewart 11,713 (8) * +All Directors and Executive Officers as a Group (14 persons) 180,864 0.7 % +5% Stockholders +FMR, LLC (9) +3,969,940 15.0 % +BlackRock, Inc. (10) +3,024,347 11.6 % +The Vanguard Group, Inc. (11) +2,460,265 9.3 % +* Percentage of shares beneficially owned does not exceed 1.0% of our outstanding shares of common stock. +(1) Unless otherwise noted, the address of each beneficial owner is 250 Coromar Drive, Goleta, California 93117. +(2) Unless otherwise noted, we believe each individual or entity named has sole investment and voting power with respect to the shares of our common stock reported as beneficially owned by them, subject to community property laws, where applicable. +(3) Pursuant to applicable SEC rules, shares not outstanding which are subject to options, warrants, rights or conversion privileges exercisable on or before the date that is 60 days after June 30, 2023 are deemed outstanding for the purpose of calculating the number and percentage owned by a person, but are not deemed outstanding for the purpose of calculating the number and percentage owned by any other person. +(4) The reported amounts include shares held by certain directors through one or more family trusts over which shares the respective directors may have shared voting and/or investment power. +(5) An additional 1,077 shares previously earned by this director have been deferred pursuant to an election made under our Deferred Stock Unit Compensation Plan. These deferred shares have been excluded from the table. +(6) An additional 2,193 shares previously earned by this director have been deferred pursuant to an election made under our Deferred Stock Unit Compensation Plan. These deferred shares have been excluded from the table. +(7) An additional 2,106 shares previously earned by this director have been deferred pursuant to an election made under our Deferred Stock Unit Compensation Plan. These deferred shares have been excluded from the table. +71 +(8) An additional 893 shares previously earned by this director have been deferred pursuant to an election made under our Deferred Stock Unit Compensation Plan. These deferred shares have been excluded from the table. +(9) This information is based solely on Amendment No. 4 to Schedule 13G filed by this stockholder on February 9, 2023. This stockholder’s business address is 245 Summer Street, Boston, MA 02210. This stockholder has sole voting power over 3,964,335 of such shares and sole dispositive power over 3,969,940 of such shares. +(10) This information is based solely on Amendment No. 1 to Schedule 13G filed by this stockholder on June 6, 2023. This stockholder’s business address is 50 Hudson Yards, New York, NY 10001. This stockholder has sole voting power over 2,882,066 such shares and sole dispositive power over 3,024,347 of such shares. +(11) This information is based solely on Amendment No. 12 to Schedule 13G filed by this stockholder on February 9, 2023. This stockholder’s business address is 100 Vanguard Boulevard, Malvern, PA 19355. This stockholder has shared voting power over 11,729 of such shares, sole dispositive power over 2,422,442 of such shares, and shared dispositive power over 37,823 of such shares. +72 +DELINQUENT SECTION 16(a) FILINGS +Section 16(a) of the Exchange Act requires our officers, directors and persons who own more than ten percent of a registered class of our securities, to file with the SEC reports of initial ownership (Form 3) and reports of changes in ownership (Form 4 and Form 5) of our securities. Officers, directors, and greater than ten percent stockholders are required by SEC rules to furnish us with copies of all Section 16(a) forms they file. +Based on our review of copies of Form 3, Form 4 and Form 5 furnished to us, as well as communications with our officers, directors, and greater than ten percent stockholders, we believe all of them complied with the filing requirements of Section 16(a) and we are not aware of any late or missed filings of such reports for fiscal year 2023. +73 +AUDIT & RISK MANAGEMENT COMMITTEE REPORT +The Audit & Risk Management Committee of our Board of Directors is responsible for providing independent, objective oversight of, among other things, our financial reporting functions, our independent registered public accounting firm, our highest ranking manager of internal audit, our system of internal controls, our legal and regulatory compliance, and compliance with our related person transaction policy and Code of Ethics. The Audit & Risk Management Committee is currently composed of four directors, each of whom meets the independence and experience requirements under applicable NYSE rules, as well as the independence requirements applicable to Audit & Risk Management Committee members under applicable SEC rules. In addition, our Board of Directors has determined that the Chair of the Audit & Risk Management Committee qualifies as an “audit committee financial expert” under applicable SEC rules. +Management is responsible for the preparation of our financial statements and financial reporting process, including our system of internal controls. KPMG LLP, our independent registered public accounting firm, is responsible for performing an independent audit of our consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States), or the PCAOB, and expressing (i) an opinion on whether our consolidated financial statements present fairly, in all material respects, our financial position and results of operations and cash flows for the periods presented in conformity with US generally accepted accounting principles, and (ii) an opinion on whether we have maintained, in all material respects, effective internal control over financial reporting as of March 31, 2023, based on criteria established in the Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Audit & Risk Management Committee’s responsibility is to monitor and oversee these processes. +In connection with these responsibilities, the Audit & Risk Management Committee met with management and KPMG LLP to review and discuss the March 31, 2023 consolidated financial statements and obtained from management their representation that our financial statements have been prepared in accordance with US generally accepted accounting principles. In addition, management represented that, as of March 31, 2023, our Company maintained effective internal control over financial reporting. +The Audit & Risk Management Committee also discussed with KPMG LLP the matters required by Auditing Standard No. 1301, “Communications with Audit Committees” of the PCAOB, which includes, among other items, information regarding the conduct of the integrated audit of our consolidated financial statements. The Audit & Risk Management Committee has received the written communications from KPMG LLP required by applicable requirements of the PCAOB regarding KPMG LLP's communication with the Audit & Risk Management Committee concerning independence and has discussed with them their independence. +The Audit & Risk Management Committee operates under a written charter, which was adopted by our Board of Directors and is assessed annually for adequacy by the Audit & Risk Management Committee. The Audit & Risk Management Committee held ten meetings during fiscal year 2023, including meetings with KPMG LLP and our highest ranking manager of internal audit, both with and without management present. In performing its functions, the Audit & Risk Management Committee acts only in an oversight capacity. It is not the responsibility of the Audit & Risk Management Committee to determine that our financial statements are complete and accurate, are presented in accordance with US generally accepted accounting principles or present fairly our results of operations for the periods presented, or that we maintain appropriate internal controls. Furthermore, the Audit & Risk Management Committee’s oversight responsibilities do not independently assure that the audit of our financial statements has been carried out in accordance with the standards of the PCAOB or that our registered public accounting firm is independent. +Based upon the Audit & Risk Management Committee’s review and discussions with management and KPMG LLP, and subject to the limitations of the Audit & Risk Management Committee’s role and responsibilities referred to above and in the Audit & Risk Management Committee charter, the Audit & Risk Management Committee recommended that our Board of Directors include the audited consolidated financial statements in our Annual Report on Form 10-K for the year ended March 31, 2023, which was filed with the SEC on May 26, 2023. +THE AUDIT & RISK MANAGEMENT COMMITTEE +Juan R. Figuereo ( Chair ) +Nelson C. Chan +Maha S. Ibrahim +Lauri M. Shanahan +The Audit & Risk Management Committee Report shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as amended, or the Acts, except to the extent that our Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under the Acts. +74 +RELATED-PERSON TRANSACTIONS +Our legal department is primarily responsible for identifying and reviewing relationships and transactions in which our Company and our directors, director nominees, executive officers, principal stockholders, or any of their respective immediate family members, are participants to determine whether any of these related persons had or will have a direct or indirect material interest in such transactions. In order to assist in identifying potential related-person transactions, our legal department annually prepares and distributes to all directors, director nominees and executive officers a detailed written questionnaire which includes questions intended to elicit information about any current or proposed related-person transactions. In addition, our Code of Ethics addresses conflicts of interest where an individual’s personal interests may interfere or conflict with the interests of our Company, including relationships with suppliers, customers or competitors. Conflicts of interest which might impair (or appear to impair) the exercise of judgment solely for the benefit of our Company and our stockholders are prohibited. In general, such conflicts must be approved by our legal department, the employee’s supervisor or, in the case of directors, the Audit & Risk Management Committee. Information regarding potential conflicts of interest in violation of our Code of Ethics may be reported to our anonymous reporting hotline, which may be accessed by the Chair of the Audit & Risk Management Committee, the Chairman of our Board and our highest ranking manager of internal audit. +If a related-person transaction is identified by our legal department as one which would be required to be publicly reported pursuant to applicable SEC rules, the Audit & Risk Management Committee is responsible for reviewing and approving or ratifying any such transaction. The Audit & Risk Management Committee may approve a related person transaction when, in its good faith judgment, it determines that the transaction is in the best interests of our Company and our stockholders. +There were no transactions with related persons that required disclosure under applicable SEC rules during fiscal year 2023, and no such transactions are currently proposed. +75 +PROPOSAL NO. 2 +RATIFICATION OF THE SELECTION OF KPMG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +For fiscal year 2023, KPMG LLP, or KPMG, provided audit services, which included an examination of the consolidated financial statements included in our Annual Report. The Audit & Risk Management Committee has selected KPMG to provide audit services to our Company for fiscal year 2024, which covers the period from April 1, 2023 to March 31, 2024. We are asking our stockholders to ratify this selection at the Annual Meeting. +Ratification of the selection of our independent registered public accounting firm is not required to be submitted to a vote of our stockholders by our Bylaws or applicable SEC rules, however the Audit & Risk Management Committee believes it is appropriate as a matter of good corporate governance practice. If our stockholders do not ratify the selection, the Audit & Risk Management Committee will consider the selection of another independent registered public accounting firm, but is not required to select a different firm. In addition, even if our stockholders ratify the selection, the Audit & Risk Management Committee will retain the discretion to select a different independent registered public accounting firm in the future if it believes doing so is in the best interests of our Company and stockholders. +A representative of KPMG will attend the Annual Meeting and will have the opportunity to make a statement and/or respond to appropriate questions from stockholders present at the Annual Meeting. +Fees for Services Rendered by Independent Registered Public Accounting Firm +The following table sets forth approximate fees for services rendered by KPMG for the fiscal years ended March 31, 2023 and 2022: +FEES ($) +FISCAL YEAR 2023 +FISCAL YEAR 2022 +Audit Fees 2,571,000 2,388,000 +Audit-Related Fees — 38,000 +Tax Fees 11,000 20,000 +All Other Fees — — +Total Fees 2,582,000 2,446,000 +Audit Fees +The audit fees presented above for the fiscal years ended March 31, 2023 and 2022 include fees associated with the audit of our consolidated balance sheets, the related consolidated statements of comprehensive income, stockholders’ equity and cash flows, and the audit of internal control over financial reporting, as well as the reviews of our quarterly reports on Form 10-Q, and certain statutory audits required internationally. +Audit-Related Fees +Audit-related fees generally consist of fees for assurance and related services that are reasonably related to the performance of the integrated audit of our annual reports on Form 10-K and review of our quarterly reports on Form 10-Q. +Tax Fees +Tax fees include fees incurred for tax services, including tax compliance, tax advice and tax planning for income taxes and customs matters. +All Other Fees +There were no fees for services rendered by KPMG incurred during the fiscal years ended March 31, 2023 and 2022 other than those disclosed above. +76 +Audit & Risk Management Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm +In accordance with its policies and procedures, prior to engagement, the Audit & Risk Management Committee pre-approves all independent registered public accounting firm services. Specifically, the Audit & Risk Management Committee administers and oversees our engagement of KPMG and pre-approves all of KPMG’s audit and permissible non-audit services on a case-by-case basis. In approving non-audit services, the Audit & Risk Management Committee considers whether the engagement could compromise the independence of KPMG, and whether for reasons of efficiency or convenience it is in our best interests to engage KPMG to perform the services. The Audit & Risk Management Committee has determined that the performance by KPMG of the non-audit services listed above as “Tax Fees” did not affect its independence. +During the year, circumstances may arise under which it may become necessary to engage the independent registered public accounting firm for additional services not contemplated in the original pre-approval categories. +Required Vote +The ratification of the selection of KPMG as our independent registered public accounting firm for fiscal year 2024 requires the affirmative vote of a majority of the outstanding shares present virtually or represented by proxy and entitled to vote on this proposal at the Annual Meeting (assuming that a quorum is present). +This proposal is considered a "routine" matter under NYSE rules. As a result, a bank, broker, dealer or other nominee may generally vote without instructions on this matter, so we do not expect any broker non-votes in connection with this proposal. Abstentions on this proposal will have the same effect as a vote against this proposal. If no contrary indication is made, returned proxies will be voted "FOR" this proposal. +BOARD RECOMMENDATION +OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE +" FOR " +PROPOSAL NO. 2 TO RATIFY THE SELECTION OF KPMG LLP +AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +FOR FISCAL YEAR 2024. +77 +PROPOSAL NO. 3 +ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION +Background +In accordance with applicable SEC rules, we are providing our stockholders with the opportunity to cast a non-binding advisory Say-on-Pay Vote on the compensation of our Named Executive Officers, as described below. We consider seeking the views of our stockholders on our executive compensation program to be an important part of our decision-making process. +For additional information about our executive compensation program, please refer to the section of this Proxy Statement titled " Compensation Discussion and Analysis " and the related compensation tables and footnotes. +Proposal +In accordance with Section 14A of the Exchange Act, we are asking our stockholders to approve the following resolution at the Annual Meeting: +“ RESOLVED, that our stockholders approve, on a non-binding advisory basis, the compensation of our Named Executive Officers, as described in the Compensation Discussion and Analysis, the Summary Compensation Table, and the related compensation tables, notes and narrative discussion in the Proxy Statement for our 2023 Annual Meeting of Stockholders. ” +Because this vote is advisory only, it will not be binding upon our Board of Directors or the Talent & Compensation Committee. However, the Talent & Compensation Committee will take the outcome of the vote into account when considering future executive compensation arrangements. +Required Vote +The approval, on a non-binding, advisory basis, of the compensation of our Named Executive Officers requires the affirmative vote of a majority of the outstanding shares present virtually or represented by proxy and entitled to vote on this proposal at the Annual Meeting (assuming that a quorum is present). +This proposal is considered a "non-routine" matter under NYSE rules. As a result, a bank, broker, dealer or other nominee may not vote without instructions on this matter, so there may be broker non-votes in connection with this proposal. Broker non-votes will have no effect on the outcome of this proposal. Abstentions will have the same effect as a vote against this proposal. If no contrary indication is made, returned proxies will be voted "FOR" this proposal. +BOARD RECOMMENDATION +OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE +" FOR " +PROPOSAL NO. 3 TO APPROVE, ON A NON-BINDING ADVISORY BASIS, +THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS. +78 +PROPOSAL NO. 4 +ADVISORY VOTE ON FREQUENCY OF ADVISORY VOTE ON EXECUTIVE COMPENSATION +Background +In accordance with applicable SEC rules, we are providing our stockholders with the opportunity to cast a non-binding advisory vote on the frequency with which stockholders would have an opportunity to cast a Say-on-Pay Vote on the compensation of our Named Executive Officers, as described above. Stockholders may select every "one year," "two years" or "three years" with respect to this vote or may abstain from voting. +Proposal +After careful consideration, and consistent with our historical practice, our Board of Directors believes that submitting the advisory vote on executive compensation on an annual basis is appropriate for our Company and our stockholders at this time. We view the advisory vote on the compensation of our Named Executive Officers to be an important, but not the only, opportunity for our stockholders to communicate with us regarding their views on our executive compensation program. +In accordance with Section 14A of the Exchange Act, we are asking our stockholders to approve the following resolution at the Annual Meeting: +"RESOLVED, that the stockholders of the Company approve, on an advisory basis, that the frequency of future advisory votes on the compensation of our Named Executive Officers shall occur every one year." +This vote is advisory and not binding on our Company or our Board of Directors. Our Board of Directors and Talent & Compensation Committee will take into account the outcome of the vote, however, when considering the frequency of future advisory votes on executive compensation. Notwithstanding our Board’s recommendation and the outcome of the stockholder vote, our Board may in the future decide to conduct advisory votes on a more or less frequent basis and may vary its practice based on factors such as discussions with stockholders and the adoption of material changes to our compensation programs. +Required Vote +Stockholders may select every “one year,” “two years” or “three years” with respect to this proposal, or may abstain from voting. The option that receives the greatest number of votes will be considered the frequency selected by our stockholders. +This proposal is considered a "non-routine" matter under NYSE rules. As a result, a bank, broker, dealer or other nominee may not vote without instructions on this matter, so there may be broker non-votes in connection with this proposal. Broker non-votes will have no effect on the outcome of this proposal. Similarly, abstentions will have no effect on the outcome of the proposal. If no contrary indication is made, returned proxies will be voted for every "ONE YEAR." +BOARD RECOMMENDATION +OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE +FOR EVERY " ONE YEAR " +WITH RESPECT TO PROPOSAL NO. 4 TO APPROVE, ON A NON-BINDING ADVISORY BASIS, THE +FREQUENCY OF FUTURE ADVISORY VOTES ON EXECUTIVE COMPENSATION +79 +ADDITIONAL INFORMATION +Stockholder Proposals +Proposals or director nominations by stockholders intended to be presented at our annual meeting of stockholders to be held in 2024, and included in our proxy statement and form of proxy relating to that meeting, must be delivered to our corporate headquarters located at 250 Coromar Drive, Goleta, California 93117 no later than March 31, 2024. In order to be included in the proxy statement, these proposals must comply with applicable SEC rules. +Proposals or director nominations by stockholders intended to be considered at the annual meeting of stockholders to be held in 2024, without including the proposal in our proxy statement and form of proxy relating to that meeting, must notify us no earlier than the close of business on May 15, 2024, and no later than the close of business on June 14, 2024. In order to make a proposal at such meeting, these proposals must comply with our Bylaws. +Other Business +As of the date of this Proxy Statement, we are not aware of any business to be presented for consideration at the Annual Meeting other than the matters described in this Proxy Statement. If, however, other matters are properly presented at the Annual Meeting, the persons named as proxies (or their substitutes) will vote in accordance with their discretion with respect to those matters. +80 +ANNUAL REPORT +The Annual Report contains audited consolidated financial statements of our Company and its subsidiaries and the report thereon of KPMG LLP, our independent registered public accounting firm. A copy of the Annual Report is being provided with this Proxy Statement and has been posted on the Internet, along with this Proxy Statement, each of which is accessible by following the instructions in this Proxy Statement and the accompanying Notice. +Any person who was our stockholder on the Record Date (including any beneficial owner holding shares in "street name" as of the Record Date) may request a copy of the Annual Report, and it will be furnished without charge upon request. Requests should be directed to Deckers Outdoor Corporation, 250 Coromar Drive, Goleta, California 93117, Attention: Corporate Secretary, or by telephone to (805) 967-7611. +BY ORDER OF THE BOARD OF DIRECTORS +Dave Powers +Chief Executive Officer and President +Goleta, California +August 2, 2023 +81 \ No newline at end of file diff --git a/raw/proxies/0000910521/0000910521-23-000025/proxy_rpt.txt b/raw/proxies/0000910521/0000910521-23-000025/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..7146728643a655d0ed3b7578b416bd9552508878 --- /dev/null +++ b/raw/proxies/0000910521/0000910521-23-000025/proxy_rpt.txt @@ -0,0 +1,5 @@ +RELATED-PERSON TRANSACTIONS +Our legal department is primarily responsible for identifying and reviewing relationships and transactions in which our Company and our directors, director nominees, executive officers, principal stockholders, or any of their respective immediate family members, are participants to determine whether any of these related persons had or will have a direct or indirect material interest in such transactions. In order to assist in identifying potential related-person transactions, our legal department annually prepares and distributes to all directors, director nominees and executive officers a detailed written questionnaire which includes questions intended to elicit information about any current or proposed related-person transactions. In addition, our Code of Ethics addresses conflicts of interest where an individual’s personal interests may interfere or conflict with the interests of our Company, including relationships with suppliers, customers or competitors. Conflicts of interest which might impair (or appear to impair) the exercise of judgment solely for the benefit of our Company and our stockholders are prohibited. In general, such conflicts must be approved by our legal department, the employee’s supervisor or, in the case of directors, the Audit & Risk Management Committee. Information regarding potential conflicts of interest in violation of our Code of Ethics may be reported to our anonymous reporting hotline, which may be accessed by the Chair of the Audit & Risk Management Committee, the Chairman of our Board and our highest ranking manager of internal audit. +If a related-person transaction is identified by our legal department as one which would be required to be publicly reported pursuant to applicable SEC rules, the Audit & Risk Management Committee is responsible for reviewing and approving or ratifying any such transaction. 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ecd:ChngInFrValAsOfVstngDtOfPrrYrEqtyAwrdsVstdInCvrdYrMember 2020-04-01 2021-03-31 0000910521 ecd:NonPeoNeoMember ecd:EqtyAwrdsInSummryCompstnTblForAplblYrMember 2020-04-01 2021-03-31 0000910521 ecd:NonPeoNeoMember ecd:YrEndFrValOfEqtyAwrdsGrntdInCvrdYrOutsdngAndUnvstdMember 2020-04-01 2021-03-31 0000910521 ecd:ChngInFrValOfOutsdngAndUnvstdEqtyAwrdsGrntdInPrrYrsMember ecd:NonPeoNeoMember 2020-04-01 2021-03-31 0000910521 ecd:NonPeoNeoMember ecd:ChngInFrValAsOfVstngDtOfPrrYrEqtyAwrdsVstdInCvrdYrMember 2020-04-01 2021-03-31 +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Proxy Statement Pursuant to Section 14(a) of +the Securities Exchange Act of 1934 (Amendment No. ) +Filed by the Registrant x +Filed by a Party other than the Registrant ¨ +Check the appropriate box: +¨ Preliminary Proxy Statement +¨ Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +x Definitive Proxy Statement +¨ Definitive Additional Materials +¨ Soliciting Material under §240.14a-12 +DECKERS OUTDOOR CORPORATION +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check all boxes that apply): +x No fee required. +¨ Fee paid previously with preliminary materials. +¨ +Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11. +2024 +PROXY STATEMENT SUMMARY +This summary highlights information contained elsewhere in this Proxy Statement. This summary does not contain all of the information you should consider when making voting decisions. You should read this Proxy Statement carefully and completely before voting. +ABOUT DECKERS +Deckers Outdoor Corporation, doing business as Deckers Brands, is a global leader in designing, marketing and distributing innovative footwear, apparel, and accessories developed for both everyday casual lifestyle use and high-performance activities through our portfolio of brands. Our brands compete across the fashion and casual lifestyle, performance, running, and outdoor markets. We believe our products are distinctive and appeal to a broad demographic. We sell our products through quality domestic and international retailers, international distributors, and directly to our global consumers through our direct-to-consumer business, which is comprised of our Company-owned e-commerce websites and retail stores. We seek to differentiate our brands and products by offering diverse lines that emphasize fashion, performance, authenticity, functionality, quality, and comfort, and products tailored to a variety of activities, seasons, and demographic groups. +CEO SUCCESSION +On February 1, 2024, Dave Powers announced his intention to retire as Chief Executive Officer and President of our Company, effective August 1, 2024. Following August 1, 2024, we expect Mr. Powers to continue to serve as a member of our Board if elected at the Annual Meeting. Following a planned succession process, our Board appointed our Chief Commercial Officer, Stefano Caroti, to succeed Mr. Powers as Chief Executive Officer and President, effective August 1, 2024. The promotion of Mr. Caroti represents the culmination of our Board’s active engagement in a planned multi-year succession process. Mr. Caroti will also serve as a member of our Board if elected at the Annual Meeting. +BUSINESS HIGHLIGHT +In March 2024, our Company was added to the S&P 500 Index, which is widely recognized as one of the premier benchmarks of the equities markets. The inclusion of our Company in this index demonstrates our consistently strong financial and operational performance, and our increased market capitalization. +OUR BUSINESS AND STRATEGIC OBJECTIVES +LONG-TERM STRATEGY AND GROWTH +We remain committed to our long-term strategies, which have been the primary drivers of our success in recent years. Our strategic framework includes efforts to: +• Expand global consumer adoption of the HOKA brand and increase its market share within the performance athletic space; +• Enhance the UGG brand's global positioning through elevated consumer experiences and segmented products that feature recognizable brand codes; +• Adopt technology and analytical tools to further enhance our capabilities to support our evolving business, including expanding our digital marketing and e-commerce platforms; and +• Invest in enterprise infrastructure to support the increased scale of our organization and key global growth initiatives, including investment in talent as well as distribution and logistics needs. +We intend to closely monitor planned investments in our business as we remain mindful of a dynamic macroeconomic environment. We remain committed to delivering long-term stockholder value through the continued execution of our strategies, including progress on our Environmental, Social and Governance (ESG) initiatives. +i +ESG HIGHLIGHTS +The achievement of ESG initiatives is a crucial part of our strategic objectives and corporate culture. We strive to do good and do great while working toward minimal environmental impact by employing sustainable business practices. In the last year, we have continued to amplify our ESG program and are committed to maintaining open and interactive dialogue on ESG matters with our stakeholders to ensure their views are actively considered. As a result of our efforts, during our fiscal year ended March 31, 2024 (fiscal year 2024), we were recognized as one of Barron’s 100 Most Sustainable Companies, by Investor’s Business Daily as one of the Best ESG Companies, by U.S. News and World Report as one of the Best Companies to Work For, and by Newsweek as one of America’s Most Responsible Companies and as one of America’s Greenest Companies . The tables below reflect a select group of highlights from our ESG program during fiscal year 2024. +ENVIRONMENTAL +• Supply Chain Environmental Efforts . We collect detailed and standardized information about our factory partners' and strategic supplier partners’ waste, water, chemistry, and energy consumption to identify and prioritize opportunities for sustainability performance improvements. +• Materials . We strive to maximize the amount of recycled, renewable, regenerated, and certified/natural materials (preferred materials) in our products. +• Climate and Clean Energy . We set ambitious Scope 1, 2, and 3 carbon reduction targets filed with and approved by the Science-Based Targets initiative, which provides guidance to companies to set targets in line with the latest climate science. Specifically, we strive to reduce absolute GHG emissions (Scope 1 and 2) and Scope 3 emissions per million dollars of gross profit. +SOCIAL +• More than 27% of our U.S. leaders (director and above) are from the Black, Indigenous, and People of Color (BIPOC) community, which represents an increase of nearly 16 percentage points from fiscal year 2020. +• Our employees volunteered approximately 19,000 hours. +• We continued to focus on our employees' growth, creating experiences that align with our strategic priorities and promote inclusion, performance, connection, and development across the globe through various employee engagement activities and programs. +GOVERNANCE +• We continued to ensure diverse perspectives are reflected on our Board, which includes four female directors and six directors from underrepresented communities. +• Dave Powers will retire as Chief Executive Officer and President of the Company effective August 1, 2024. Stefano Caroti, the Company's Chief Commercial Officer, will succeed Mr. Powers as Chief Executive Officer and President, as part of a planned multi-year succession process. +• We expect Mr. Powers to continue to serve as a director, and Mr. Caroti to be appointed as a director, following the 2024 Annual Meeting of Stockholders assuming they are elected by our stockholders. +• As of the date of our 2024 Annual Meeting of Stockholders, the authorized number of directors will be increased from ten to eleven. +For additional ESG related information, please read our forthcoming corporate responsibility and sustainability report (Creating Change Report) and visit our website at www.deckers.com/responsibility . The information contained in our Creating Change Report or accessed through our website does not constitute part of this Proxy Statement and you should not consider that information in deciding how to vote your shares. References to our website address in this Proxy Statement are inactive textual references only. +ii +ANNUAL MEETING OF STOCKHOLDERS +DATE +Monday, September 9, 2024 +TIME +1:00 p.m. Pacific Time +VIRTUAL MEETING +The 2024 Annual Meeting of Stockholders (Annual Meeting) will be held virtually via a live webcast, which can be accessed on the Internet by visiting www.virtualshareholdermeeting.com/DECK2024. +Stockholders will be able to vote and submit questions virtually during the Annual Meeting in accordance with the rules and procedures included on the meeting website. +To access the Annual Meeting you will need a 16-digit control number. Your control number is provided on the Notice of Internet Availability of Proxy Materials you received in the mail, on your proxy card (if you requested to receive printed proxy materials), or through your broker or other nominee if you hold your shares in "street name." +RECORD DATE +Thursday, July 11, 2024 +PROPOSALS TO BE VOTED UPON +NUMBER PROPOSAL BOARD VOTING RECOMMENDATION PAGE REFERENCE +1 +Elect eleven directors to serve until the annual meeting of stockholders to be held in 2025, until their successors are duly elected and qualified, or until such director’s earlier death, resignation, or removal +" FOR " +EACH DIRECTOR NOMINEE +7 +2 +Ratify the selection of KPMG LLP as our independent registered public accounting firm for our fiscal year ending March 31, 2025 +" FOR " +76 +3 +Approve, on a non-binding advisory basis, the compensation of our Named Executive Officers as described in the section of this Proxy Statement titled " Compensation Discussion and Analysis " +" FOR " +78 +4 +Approve the 2024 Employee Stock Purchase Plan +" FOR " +79 +5 +Approve the 2024 Stock Incentive Plan +" FOR " +82 +6 +Approve the amendment of certificate of incorporation to effect a six-for-one stock split with a proportionate increase in authorized capital stock +" FOR " +89 +We may also consider and vote upon any other business that may properly come before the Annual Meeting, or at any postponements or adjournments thereof. As of the date of this Proxy Statement, we are not aware of any business to be presented for consideration at the Annual Meeting other than the matters described in this Proxy Statement. +HOW TO VOTE +Your vote is important to the future of Deckers Outdoor Corporation. You are eligible to vote if you were a stockholder at the close of business on Thursday, July 11, 2024. Please refer to the section of this Proxy Statement titled " Questions and Answers About the Annual Meeting and Voting " for additional information on how to attend the Annual Meeting and vote your shares. Whether or not you plan to attend the Annual Meeting, we encourage you to read this Proxy Statement and submit your proxy or voting instructions as soon as possible to ensure your representation at the Annual Meeting. +iii +PROPOSAL NO. 1 +ELECTION OF DIRECTORS +Our Board has nominated the following eleven directors for election at the Annual Meeting: +DIRECTOR NOMINEES +Michael F. Devine, III David A. Burwick Stefano Caroti +Nelson C. Chan Cynthia (Cindy) L. Davis Juan R. Figuereo +Maha S. Ibrahim Victor Luis Dave Powers +Lauri M. Shanahan Bonita C. Stewart +BOARD RECOMMENDATION: +" FOR " each director nominee +We have an independent Board with extensive qualifications and skills. Our Board is also comprised of individuals with diverse backgrounds and experience. Each of our Board members is committed to representing the long-term interests of our stockholders. +QUALIFIED QUALIFICATIONS AND SKILLS +8/11 Industry +6/11 Technology Infrastructure/Cybersecurity +10/11 Premium Branding +6/11 Compliance and Risk Oversight +10/11 International +8/11 Corporate Governance +4/11 High Level of Financial Literacy +6/11 Mergers and Acquisitions +9/11 Retail +10/11 Public Company Executive +5/11 Consumer Technology/Big Data +9/11 Human Resources/Talent Management +9/11 Sales and Marketing +5/11 Corporate Responsibility +4/11 Supply Chain Management +DIVERSE DEMOGRAPHICS +45% Ethnically Diverse +55% from Underrepresented +Communities +36% Female +INDEPENDENT +9/11 Directors are Independent +ENGAGED +During fiscal year 2024, no director nominee attended fewer than 80% of the meetings of our Board or meetings of any Board committee on which he or she served during his or her term. +Please refer to the section of this Proxy Statement titled " Proposal No. 1 - Election of Directors " for additional information. +iv +PROPOSAL NO. 2 +RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +BOARD RECOMMENDATION +" FOR " the ratification of the selection of KPMG LLP as our independent registered public accounting firm for our fiscal year ending March 31, 2025. +• The Audit & Risk Management Committee is involved in the annual review and engagement of KPMG LLP to ensure its continuing audit independence. +• The Audit & Risk Management Committee believes the continued retention of KPMG LLP is in the best interests of the Company and our stockholders. +Please refer to the section of this Proxy Statement titled "Proposal No. 2 - Ratification of the Selection of KPMG LLP as Independent Registered Public Accounting Firm " for additional information. +PROPOSAL NO. 3 +ADVISORY VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION +BOARD RECOMMENDATION: +" FOR " the approval, on a non-binding advisory basis, of the compensation of our Named Executive Officers as described in the section of this Proxy Statement entitled " Compensation Discussion and Analysis. " +The primary objective of our executive compensation program is to compensate our executive officers in a manner that will attract, retain, and motivate talented executives with the skills needed to manage a complex and growing business in a competitive industry, while creating long-term value for our stockholders. The Talent & Compensation Committee seeks to design our executive compensation program in a manner that reflects direct alignment between the compensation opportunity provided to our executives and the achievement of our strategic objectives. +Consistent with our strategic objectives for fiscal year 2024, when designing our executive compensation program for the year, the Talent & Compensation Committee focused on continuing to build and retain our executive team, while incentivizing our executive officers to focus on increasing revenue, enhancing profitability, achieving ESG objectives, and creating long-term value for our stockholders. +When establishing our executive compensation program, the Talent & Compensation Committee is guided by the following four principles: +• Pay for performance by ensuring that a significant portion of compensation is made available to our executive team based on the achievement of pre-determined performance-based objectives. +• Align interests of executives with stockholders by tying a significant portion of compensation to performance that creates long-term value for our stockholders. +• Reward achievement by offering incentives for achieving short-term and long-term financial goals that are directly tied to the achievement of strategic objectives. +• Attract and retain executives with the background and experience necessary to lead the organization and achieve our strategic objectives. +Please refer to the sections of this Proxy Statement titled “ Compensation Discussion and Analysis ” and " Proposal No. 3 - Advisory Vote to Approve Named Executive Officer Compensation " for additional information. +v +PROPOSAL NO. 4 +EMPLOYEE STOCK PURCHASE PLAN +BOARD RECOMMENDATION: +" FOR " the approval of the 2024 Employee Stock Purchase Plan. +• The 2024 Employee Stock Purchase Plan (2024 ESPP) is intended to replace our 2015 Employee Stock Purchase Plan (2015 ESPP). +• The 2024 ESPP will provide our eligible employees with an opportunity to invest in and accumulate share ownership in our Company through after-tax payroll deductions. +Please refer to the section of this Proxy Statement titled " Proposal No. 4 - Employee Stock Purchase Plan " for additional information. +PROPOSAL NO. 5 +STOCK INCENTIVE PLAN +BOARD RECOMMENDATION: +" FOR " the approval of the 2024 Stock Incentive Plan. +• The 2024 Stock Incentive Plan (2024 SIP) is intended to replace our 2015 Stock Incentive Plan (2015 SIP). +• As with the 2015 SIP, the purpose of the 2024 SIP is to encourage ownership in the Company by key personnel whose long-term service is considered essential to our continued success, which encourages recipients to act in the best interests of stockholders and allows them to share in increases in the value of our Company. +• Approval of 1,300,000 shares, less one share for every one share granted under the 2015 SIP after March 31, 2024 and prior to the effective date of the 2024 SIP. +Please refer to the section of this Proxy Statement titled " Proposal No. 5 - Stock Incentive Plan " for additional information. +PROPOSAL NO. 6 +AMENDMENT OF CERTIFICATE OF INCORPORATION TO EFFECT A SIX-FOR-ONE STOCK SPLIT WITH A PROPORTIONATE INCREASE IN AUTHORIZED CAPITAL STOCK +BOARD RECOMMENDATION: +" FOR " the approval of the Amendment to the Certificate of Incorporation. +• The trading price of our common stock has increased significantly in recent years, and our Board regularly evaluates the impact of these increases on the liquidity and marketability of our common stock. +• Our Board believes effecting a six-for-one forward stock split would make our shares more affordable and attractive to a broader group of potential investors and increase liquidity in the trading of our common stock, which could have a positive impact on the aggregate value of our shares. +• Our Board unanimously recommends to our stockholders the approval of an amendment to our certificate of incorporation to effect a six-for-one forward stock split of our outstanding capital stock, including the common stock and preferred stock, as well as a proportional increase in the authorized shares of capital stock. +Please refer to the section of this Proxy Statement titled " Proposal No. 6 - Amendment of Certificate of Incorporation to Effect a Six-For-One Stock Split with a Proportionate Increase in Authorized Capital Stock " for additional information. +vi +NOTICE OF VIRTUAL ANNUAL MEETING OF STOCKHOLDERS +TO OUR STOCKHOLDERS: +We are pleased to invite you to virtually attend the 2024 Annual Meeting of Stockholders of Deckers Outdoor Corporation to be held on Monday, September 9, 2024, at 1:00 p.m. Pacific Time. +Proposals to be Voted Upon : +1 +Election of Directors . Elect eleven directors to serve until the annual meeting of stockholders to be held in 2025, until their successors are duly elected and qualified, or until such director’s earlier death, resignation, or removal. +2 +Ratification of Selection of Accounting Firm . Ratify the selection of KPMG LLP as our independent registered public accounting firm for our fiscal year ending March 31, 2025. +3 +Advisory Vote on Executive Compensation . Approve, on a non-binding advisory basis, the compensation of our Named Executive Officers, as described in the section of this Proxy Statement entitled " Compensation Discussion and Analysis. " +4 +2024 Employee Stock Purchase Plan . Approve the adoption of the 2024 Employee Stock Purchase Plan. +5 +2024 Stock Incentive Plan . Approve the adoption of the 2024 Stock Incentive Plan. +6 +Amendment of Certificate of Incorporation . Approve the amendment of certificate of incorporation to effect a six-for-one stock split with a proportionate increase in authorized capital stock. +Other Business . Consider and vote upon any other business that may properly come before the Annual Meeting, or any postponements or adjournments thereof. +Virtual Annual Meeting : +The Annual Meeting will be held virtually and conducted via a live webcast. You will be able to attend the Annual Meeting online, submit your questions and vote your shares during the meeting by visiting www.virtualshareholdermeeting.com/DECK2024. We believe hosting a virtual annual meeting encourages increased stockholder attendance and participation, and reduces the costs associated with holding and attending the meeting. +Record Date : +Our Board has fixed the close of business on Thursday, July 11, 2024 (Record Date) as the date for determining which stockholders are entitled to notice of and to vote at the Annual Meeting, or any postponements or adjournments thereof. +Board Recommendations : +Our Board recommends that you vote " FOR " each of the director nominees named in Proposal No. 1 and " FOR " Proposal Nos. 2, 3, 4, 5 and 6. +BY ORDER OF THE BOARD OF DIRECTORS +Dave Powers +Chief Executive Officer and President +Your vote is very important. Whether or not you plan to attend the Annual Meeting, we encourage you to read this Proxy Statement and submit your proxy or voting instructions as soon as possible. For specific instructions on how to vote your shares, please refer to the instructions on the Notice of Internet Availability of Proxy Materials you received in the mail, the section of this Proxy Statement titled " Questions and Answers About the Annual Meeting and Voting ," or, if you requested to receive printed proxy materials, your enclosed proxy card. +Approximate Date of Mailing of Notice of Internet Availability of Proxy Materials: July 24, 2024 +vii +Cautionary Note Regarding Forward-Looking Statements +This Proxy Statement contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements may relate to our future financial performance, business operations, and executive compensation decisions, or other future events. You can identify forward-looking statements by the use of words such as “may,” “will,” “could,” “anticipate,” “expect,” “intend,” “believe,” “continue,” or the negative of such terms, or other comparable terminology. Forward-looking statements also include the assumptions underlying or relating to such statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, results of operations and financial condition. +The outcomes of the events described in these forward-looking statements are subject to risks, uncertainties and other factors described in Item 1A, “Risk Factors,” and elsewhere, in our Annual Report on Form 10-K for fiscal year 2024 (Annual Report), as well as the other reports we file with the Securities and Exchange Commission (SEC). We cannot assure you that the events and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results could differ materially from those expressed or implied in the forward-looking statements. The forward-looking statements made in this Proxy Statement relate only to events as of the date of this Proxy Statement. We undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made. +viii +TABLE OF CONTENTS +2024 Proxy Statement Summary +i +Proposal No. 2 - Ratification of the Selection of KPMG LLP as Independent Registered Public Accounting Firm +76 +Notice of Virtual Annual Meeting of Stockholders +vii +Proposal No. 3 - Advisory Vote to Approve Named Executive Officer Compensation +78 +Proxy Statement +1 +Proposal No. 4 - Employee Stock Purchase Plan +79 +Questions and Answers About the Annual Meeting and Voting +2 +Proposal No. 5 - Stock Incentive Plan +82 +Proposal No. 1 - Election of Directors +7 +Proposal No. 6 - Amendment of Certificate of Incorporation to Effect a Six-For-One Stock Split with a Proportionate Increase in Authorized Capital Stock +89 +Director Nominees +9 +Additional Information +92 +Corporate Governance +20 +Annual Report on Form 10-K +93 +Executive Officers +30 +Appendix A - 2024 Employee Stock Purchase Plan +94 +Compensation Discussion and Analysis +33 +Appendix B - 2024 Stock Incentive Plan +103 +Executive Summary +34 +Appendix C - Certificate of Amendment of Amended and Restated Certificate of Incorporation +116 +Compensation Objective and Philosophy +39 +Compensation Consultant and Peer Group +42 +Elements of Fiscal Year 2024 +Executive Compensation Program +44 +Other Compensation Considerations +52 +Talent & Compensation Committee Report +55 +Summary Compensation Table +56 +Grants of Plan-Based Awards in Fiscal Year 2024 +57 +Outstanding Equity Awards at 2024 Fiscal Year End +58 +Fiscal Year 2024 Option Exercises and Stock Vested +59 +Nonqualified Deferred Compensation +60 +Potential Payments Upon Termination or Change in Control +61 +Director Compensation +64 +Equity Compensation Plan Information +65 +CEO Pay Ratio +66 +Pay Versus Performance +67 +Security Ownership of Certain Beneficial Owners and Management +71 +Delinquent Section 16(a) Reports +73 +Audit & Risk Management Committee Report +74 +Related-Person Transactions +75 +ix +VIRTUAL ANNUAL MEETING OF STOCKHOLDERS +Meeting Date: Monday, September 9, 2024 +PROXY STATEMENT +GENERAL INFORMATION +The enclosed Proxy Statement is solicited on behalf of the Board of Directors (Board) of Deckers Outdoor Corporation for use at our 2024 Annual Meeting of Stockholders (Annual Meeting), to be held virtually via a live webcast on Monday, September 9, 2024 at 1:00 p.m. Pacific Time, or at any postponements or adjournments thereof. +The Annual Meeting can be accessed by visiting www.virtualshareholdermeeting.com/DECK2024 , where you will be able to attend the Annual Meeting, submit questions and vote your shares electronically. +The Annual Meeting is being held for the purposes described in this Proxy Statement and in the accompanying Notice of Annual Meeting of Stockholders. +1 +QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING +The following questions and answers are intended to briefly address potential questions that our stockholders may have regarding this Proxy Statement and the Annual Meeting. They are also intended to provide our stockholders with certain information that is required to be provided under the Securities and Exchange Commission (SEC) rules. These questions and answers may not address all of the questions that are important to you as a stockholder. If you have additional questions about this Proxy Statement or the Annual Meeting, please refer to the question titled " Whom should I contact with other questions? " below. +Q: When and where will the Annual Meeting be held? +A: The Annual Meeting will be held on Monday, September 9, 2024, at 1:00 p.m. Pacific Time. The Annual Meeting will be conducted entirely online via a live webcast. Our stockholders may participate in the Annual Meeting by visiting: www.virtualshareholdermeeting.com/DECK2024 . You will need a 16-digit control number to attend and participate in the live webcast of the Annual Meeting. Please refer to the question titled " How can I vote my shares? " for information on obtaining your 16-digit control number. +Q: What proposals am I being asked to vote upon at the Annual Meeting? +A: The proposals to be voted on at the Annual Meeting, and our Board's recommendation with respect to each proposal, are as follows: +NUMBER PROPOSAL BOARD VOTING RECOMMENDATION +Proposal No. 1 : +Election of Directors +Elect eleven director nominees to serve until the annual meeting of stockholders to be held in 2025, until their successors are duly elected and qualified, or until such director’s earlier death, resignation, or removal. +" FOR " +EACH +DIRECTOR NOMINEE +Proposal No. 2 : +Ratification of Selection of Accounting Firm +Ratify the selection of KPMG LLP as our independent registered public accounting firm for our fiscal year ending March 31, 2025. +" FOR " +Proposal No. 3 : +Advisory Vote on Executive Compensation +Approve, on a non-binding advisory basis, the compensation of our Named Executive Officers, as described in the section of this Proxy Statement titled " Compensation Discussion and Analysis. " +" FOR " +Proposal No. 4: +Employee Stock Purchase Plan +Approve the 2024 Employee Stock Purchase Plan. +" FOR " +Proposal No. 5: +Stock Incentive Plan +Approve the 2024 Stock Incentive Plan. +" FOR " +Proposal No. 6: +Amendment of Certificate of Incorporation +Approve the amendment of certificate of incorporation to effect a six-for-one stock split with a proportionate increase in authorized capital stock. +" FOR " +Q: Why did I receive these proxy materials? +A: We are providing this Proxy Statement in connection with the solicitation by our Board of proxies to be voted at the Annual Meeting, or at any postponements or adjournments thereof. This Proxy Statement contains important information for you to consider when deciding how to vote on the matters brought before the Annual Meeting. You are invited to virtually attend the Annual Meeting to vote on the proposals described in this Proxy Statement. However, you do not need to attend the Annual Meeting to vote your shares. Instead, you may vote your shares using one of the other voting methods described in this Proxy Statement. +Whether or not you plan to attend the Annual Meeting, we encourage you to read this Proxy Statement and submit your proxy or voting instructions as soon as possible to ensure your representation at the Annual Meeting. +Q: Why did I receive a notice in the mail regarding the Internet availability of proxy materials? +A: Instead of mailing printed copies to each of our stockholders, we have elected to provide access to the proxy materials over the Internet under SEC's "notice and access" rules. These rules allow us to make our stockholders aware of the Annual +2 +Meeting and the availability of the proxy materials by sending a Notice of Internet Availability of Proxy Materials (Notice), which provides instructions on how to access the full set of proxy materials through the Internet or make a request to have printed proxy materials delivered by mail. Accordingly, on or about July 24, 2024, we mailed the Notice to each of our stockholders. The Notice contains instructions on how to access the proxy materials, including this Proxy Statement and our Annual Report, each of which are available at www.proxyvote.com. The Notice also provides instructions on how to vote your shares. +Q: Who can vote at the Annual Meeting? +A: Only our stockholders at the close of business on July 11, 2024 (Record Date), will be entitled to attend and vote at the Annual Meeting. On the Record Date, there were 25,410,572 shares of our common stock outstanding and entitled to vote. Each share of common stock issued and outstanding on the Record Date is entitled to one vote on any matter to be voted upon by our stockholders at the Annual Meeting. +• Holders of Record - If, on the Record Date, your shares were registered directly in your name with our transfer agent, Computershare, then you are a "holder of record." As a holder of record, you may vote at the virtual Annual Meeting, or you may vote by proxy. If you are a holder of record and you indicate when voting that you wish to vote as recommended by our Board, or if you submit a vote by proxy without giving specific voting instructions, then the proxyholders will vote your shares as recommended by our Board on all matters described in this Proxy Statement. Thomas Garcia and Steven J. Fasching, the designated proxyholders, are members of our management. +• Beneficial Owners - If, on the Record Date, your shares were held in an account at a bank, broker, dealer, or other nominee, then you are the "beneficial owner" of shares held in "street name" and this Proxy Statement is being made available to you by that nominee. The nominee holding your account is considered the holder of record for purposes of voting at the Annual Meeting. As a beneficial owner, you have the right to direct your nominee on how to vote the shares in your account. You are also invited to attend the Annual Meeting. However, since you are not the holder of record, you may not vote your shares at the Annual Meeting unless you request and obtain a valid "legal proxy" or obtain a 16-digit control number from your nominee. Please contact your nominee directly for additional information. +Q: What is the quorum requirement for the Annual Meeting? +A: The presence at the Annual Meeting, virtually (even if not voting) or by proxy, of the holders of a majority of the voting power of all shares of our common stock entitled to be voted at the Annual Meeting, will constitute a quorum at the Annual Meeting. We will treat shares of common stock represented by a properly voted proxy, including shares for which authority is withheld or that a stockholder abstains from voting, as well as broker non-votes, as present at the Annual Meeting for the purposes of determining the existence of a quorum. If a quorum is not present, the Annual Meeting will be adjourned until a quorum is obtained. +Q: What are the voting requirements to approve each of the proposals, and what happens if I do not vote? +A: The voting requirements to approve each of the proposals to be voted upon at the Annual Meeting, as well as the effects of abstentions and broker non-votes on each of the proposals, are as follows: +3 +PROPOSAL VOTING REQUIREMENT +EFFECT OF ABSTENTIONS (1) +EFFECT OF BROKER NON-VOTES (2) +Proposal No. 1 : +Election of Directors +Each director nominee in an uncontested election (3) will be elected by a majority of the votes cast by the shares present virtually or represented by proxy and entitled to vote on the election of directors at the Annual Meeting (assuming that a quorum is present). +A "majority of the votes cast" means that the number of votes "FOR" a director nominee must exceed the number of votes "AGAINST" a director nominee. +An "ABSTAIN" vote with respect to a director nominee will not count as a vote cast for that nominee, will not be included in the total number of votes cast, and will have no effect on the outcome of the vote on this proposal. +Broker non-votes will not count as votes cast on this proposal, and will have no effect on the outcome of the vote on this proposal. +Proposal No. 2 : +Ratification of Selection of Accounting Firm +Requires the affirmative vote of a majority of the outstanding shares present virtually or represented by proxy and entitled to vote on the proposal at the Annual Meeting (assuming that a quorum is present). +An "ABSTAIN" vote will be included in the total number of shares present and entitled to vote on this proposal, and will have the same effect as a vote "AGAINST" this proposal. +Because a bank, broker, dealer or other nominee may generally vote without instructions on this proposal, we do not expect any broker non-votes in connection with this proposal. +Proposal No. 3 : +Advisory Vote on Executive Compensation +Requires the affirmative vote of a majority of the outstanding shares present virtually or represented by proxy and entitled to vote on the proposal at the Annual Meeting (assuming that a quorum is present). +An "ABSTAIN" vote will be included in the total number of shares present and entitled to vote on this proposal, and will have the same effect as a vote "AGAINST" this proposal. Broker non-votes will not count as votes cast on this proposal and will have no effect on the outcome of the vote on this proposal. +Proposal No. 4 : +Employee Stock Purchase Plan +Requires the affirmative vote of a majority of the shares present virtually or represented by proxy and entitled to vote on the proposal at the Annual Meeting (assuming that a quorum is present). +An "ABSTAIN" vote will be included in the total number of shares present and entitled to vote on this proposal, and will have the same effect as a vote "AGAINST" this proposal. +Broker non-votes will not count as votes cast on this proposal and will have no effect on the outcome of the vote on this proposal. +Proposal No. 5 : +Stock Incentive Plan +Requires the affirmative vote of a majority of the shares present virtually or represented by proxy and entitled to vote on the proposal at the Annual Meeting (assuming that a quorum is present). An "ABSTAIN" vote will be included in the total number of shares present and entitled to vote on this proposal, and will have the same effect as a vote "AGAINST" this proposal. +Broker non-votes will not count as votes cast on this proposal and will have no effect on the outcome of the vote on this proposal. +Proposal No. 6 : +Amendment of Certificate of Incorporation +Requires the affirmative vote of a majority of the outstanding shares entitled to vote at the Annual Meeting. +An "ABSTAIN" vote will be included in the total number of shares present and entitled to vote on this proposal, and will have the same effect as a vote "AGAINST" this proposal. +Because a bank, broker, dealer or other nominee may generally vote without instructions on this proposal, we do not expect any broker non-votes in connection with this proposal. +(1) You may "ABSTAIN" from voting on one or more director nominees and from voting on one or more of the other proposals described in this Proxy Statement. Shares for which a stockholder abstains from voting will be counted for purposes of determining whether a quorum is present at the Annual Meeting. +(2) Pursuant to applicable New York Stock Exchange (NYSE) rules, if you are a beneficial owner of shares held in street name and do not provide the nominee that holds your shares with specific voting instructions, the nominee may generally vote in its discretion on “routine” matters (such as Proposal Nos. 2 and 6). However, if the nominee that holds your shares does not receive instructions from you on how to vote your shares on a “non-routine” matter (such as Proposal Nos. 1, 3, 4 and 5), it will be unable to vote your shares on that matter. When this occurs, it is generally referred to as a “broker non-vote.” Broker non-votes will be counted for purposes of determining whether a quorum is present at the Annual Meeting. +(3) An "uncontested election" is an election in which the number of director nominees is not greater than the number of directors to be elected. A "contested election" is an election in which the number of director nominees nominated by (i) our Board, (ii) any stockholder, or (iii) a combination of our Board and any stockholder, exceeds the number of directors to be elected. In a contested election, directors will be elected by a plurality of the votes cast by the shares present virtually or represented by proxy and entitled to vote on the election of directors at the Annual Meeting. +Q: What happens if a director nominee fails to receive a majority vote in an uncontested election at the Annual Meeting? +A: Each incumbent director standing for reelection at the Annual Meeting has tendered an irrevocable letter of resignation, which will become effective upon such incumbent director not receiving a majority vote at the Annual Meeting and acceptance of such resignation by our Board. Our Board must accept or reject such resignation within 90 days following certification of the +4 +stockholder vote in accordance with the procedures established by our Amended and Restated Bylaws (Bylaws). If a director’s resignation offer is not accepted by our Board, that director will continue to serve until our annual meeting of stockholders to be held in 2025, until his or her successor is duly elected and qualified, or until such director’s earlier death, resignation, or removal. +Any director nominee who is not an incumbent director and who fails to receive a majority vote in an uncontested election will not be elected as a director, and a vacancy will remain on our Board. Our Board, in its sole discretion, may either fill a vacancy resulting from a director nominee not receiving a majority vote, or decrease the size of our Board to eliminate the vacancy, each in accordance with our Bylaws. +Q: Could other matters be decided at the Annual Meeting? +A: As of the date of this Proxy Statement, we are not aware of any business to be presented for consideration at the Annual Meeting other than the matters described in this Proxy Statement. If, however, other matters are properly presented at the Annual Meeting, the persons named as proxies will vote in accordance with their discretion with respect to those matters. +Q: How can I vote my shares? +A: Your shares can be voted as follows: +• Holders of Record - Holders of record can vote by proxy or by attending the Annual Meeting where votes can be submitted electronically via live webcast. If you wish to vote by proxy, you can vote by Internet, telephone, or mail as described below. Whether or not you plan to attend the Annual Meeting, we encourage you to submit your proxy or voting instruction as soon as possible to ensure your representation at the Annual Meeting. +VOTING METHOD +To vote at the Annual Meeting by live webcast, you must visit the following website: +www.virtualshareholdermeeting.com/DECK2024. You will need the 16-digit control number included on the Notice or your proxy card (if you requested to receive printed proxy materials). The method you use to vote by proxy will not limit your right to attend or vote at the Annual Meeting. All shares that have been properly voted and not revoked will be voted at the Annual Meeting. However, even if you plan to attend the Annual Meeting, we recommend that you vote your shares in advance so that your vote will be counted if you later decide not to attend the Annual Meeting. +To vote by Internet , you will need the 16-digit control number included on the Notice or your proxy card (if you requested to receive printed proxy materials). Internet voting is available 24 hours a day and will be accessible until 11:59 p.m. Eastern Time on Sunday, September 8, 2024 by visiting www.proxyvote.com and following the instructions. +To vote by telephone , you will need the 16-digit control number included on the Notice or on your proxy card (if you requested to receive printed proxy materials). Telephone voting is available 24 hours a day and will be accessible until 11:59 p.m. Eastern Time on Sunday, September 8, 2024 by calling 1-800-690-6903 and following the instructions. +To vote by mail, follow the instructions provided on your proxy card (if you requested to receive printed proxy materials). Simply mark, sign and date your proxy card and return it promptly in the postage-paid envelope provided. In order to be effective, completed proxy cards must be received by 11:59 p.m. Eastern Time on Sunday, September 8, 2024. This option is only available if you requested to receive printed proxy materials. +• Beneficial Owners - If you are the beneficial owner of your shares, you should have received the Notice or a proxy card (if you requested to receive printed proxy materials) with this Proxy Statement from your nominee rather than from us. Simply (i) use the 16-digit control number to vote on the Internet or by telephone before the Annual Meeting, or vote at the Annual Meeting, or (ii) if you requested to receive printed proxy materials, vote by following the instructions provided on the proxy card you received from your nominee's website. Your 16-digit control number may be included in the voting instruction form that accompanied the proxy materials. If your nominee did not provide you with a 16-digit control number, you should contact your nominee to obtain your control number and access the Annual Meeting link. To vote at the Annual Meeting, you must first obtain a valid "legal proxy" from your nominee. Follow the instructions from your nominee to request a "legal proxy." +Q: What can I do if I change my mind after I vote my shares? +A: You may change your vote at any time before the polls are closed at the Annual Meeting. +• Holders of Record - If you are a holder of record, you may change your vote by (i) providing written notice of revocation to Deckers Outdoor Corporation, 250 Coromar Drive, Goleta, California 93117, Attention: Corporate Secretary, (ii) executing a subsequent proxy using any of the voting methods discussed above (subject to the deadlines for voting with respect to each method), or (iii) attending the Annual Meeting and voting electronically via live webcast. However, simply attending the Annual Meeting will not, by itself, revoke your proxy. +5 +• Beneficial Owners - If you are a beneficial owner of your shares and you have instructed your nominee to vote your shares, you may change your vote by following the directions received from your nominee to change those voting instructions, or by attending the Annual Meeting and voting via live webcast, which can be accomplished as described above. +Subject to any revocation, all shares represented by properly executed proxies will be voted in accordance with the instructions on the applicable proxy, or, if no instructions are given, in accordance with the recommendations of our Board as described above. +Q: Who is paying for the cost of this proxy solicitation? +A: The solicitation of proxies is made on behalf of our Board and all the expenses of soliciting proxies from stockholders will be borne by us. In addition to the solicitation of proxies by use of the mail, our directors, officers, and employees may communicate with stockholders personally or by email, telephone, or otherwise for the purpose of soliciting such proxies. No additional compensation will be paid to any such persons for such solicitation, although we may reimburse them for reasonable out-of-pocket expenses incurred in connection with such solicitation. We will reimburse banks, brokers, dealers and other nominees for their reasonable out-of-pocket expenses in forwarding solicitation material to beneficial owners of shares held of record by such persons. The total estimated cost of the solicitation of proxies is approximately $185,000. +Q: How may I obtain an additional copy of the proxy materials? How may I reduce the number of copies our household receives? +A: We have adopted a procedure called "householding," which the SEC has approved. Under this procedure, we are delivering a single copy of the Notice and, if applicable, this Proxy Statement and the Annual Report, to multiple stockholders who share the same address unless we have received contrary instructions from one or more of the stockholders. This procedure reduces our printing and mailing costs. Stockholders who participate in householding will continue to be able to access and receive separate proxy materials. Upon written or oral request, we will promptly deliver a separate copy of the Notice and, if applicable, this Proxy Statement and the Annual Report, to any stockholder at a shared address to which we delivered a single copy of any of these documents. To receive a separate copy of the Notice and, if applicable, this Proxy Statement or the Annual Report, or if you wish to receive separate copies in the future, please contact: Deckers Outdoor Corporation, 250 Coromar Drive, Goleta, California 93117, Attention: Corporate Secretary, Telephone: (805) 967-7611. +In addition, if you are currently a stockholder sharing an address with another stockholder and wish to receive only one copy of future proxy materials for your household, please contact us using the contact information set forth above. Stockholders who are beneficial owners of shares held in street name may contact their bank, broker, dealer or other nominee to request information about householding. +Q: Where can I find the voting results of the Annual Meeting? +A: We will announce preliminary voting results with respect to each proposal at the Annual Meeting. In accordance with SEC rules, final voting results will be published in a Current Report on Form 8-K within four business days following the Annual Meeting, unless final results are not known at that time, in which case preliminary voting results will be published within four business days of the Annual Meeting and final voting results will be published once we know them. +Q : Where else can I find these proxy materials? +A: This Proxy Statement and the Annual Report are available under "SEC Filings" at ir.deckers.com. Other information contained on or accessed through our website does not constitute part of this Proxy Statement and you should not consider this other information in deciding how to vote your shares. References to our website address in this Proxy Statement are inactive textual references only. +Q: Whom should I contact with other questions? +A: If you have additional questions about this Proxy Statement or the Annual Meeting, or if you would like additional copies of this Proxy Statement, please contact: Deckers Outdoor Corporation, 250 Coromar Drive, Goleta, California 93117, Attention: Corporate Secretary, Telephone: (805) 967-7611. +6 +PROPOSAL NO. 1 +ELECTION OF DIRECTORS +Board Characteristics +The Corporate Responsibility, Sustainability & Governance Committee considers many factors when identifying director nominees, including diversity with respect to experience and skills, as well as diversity with respect to personal characteristics (such as race, ethnicity, age, gender, and sexual orientation). We believe directors with diverse backgrounds create a Board that is positioned to best serve our Company, stockholders, employees, and communities by maximizing group dynamics in terms of range of professional experience, education, critical thinking, and personal characteristics. We also value the mix of viewpoints provided by our directors with various levels of tenure, from those with a deep understanding of our business to those with fresh perspectives. Our strong commitment to diversity and inclusion is reflected within the composition of our Board. +A snapshot of certain characteristic of our eleven director nominees is depicted in the charts below . +(1) The tenure of Mr. Caroti is not calculated in this graph, as he is a new director nominee. +BOARD COMMITTEES CHAIRED BY WOMEN +AGE DISTRIBUTION OF NOMINEES +BOARD REFRESHMENT +67% +53-68 +62 +(Average Age) +4 +(New Directors Over Past 4 Years) +BOARD CHAIR SUCCESSION +COMMITTEE CHAIR SUCCESSION +October 2019 +Michael F. Devine, III +Appointed Chair of the Board +October 2019 +Cynthia (Cindy) L. Davis, +Appointed Talent & Compensation Committee Chair +June 2020 +Juan R. Figuereo, +Appointed Audit & Risk Management Committee Chair +September 2021 +Bonita C. Stewart, +Appointed Corporate Responsibility, Sustainability & Governance Committee Chair +Board Structure +Our Bylaws provide for the annual election of directors. Currently, our Bylaws provide that our Board will consist of not less than one nor more than ten members, and the Board previously set the number of directors at ten. However, our Board has approved an amendment to our Bylaws such that, effective as of the Annual Meeting, our Board will consist of not less than one nor more than eleven members. In addition, our Board has adopted a resolution setting the number of directors at eleven, effective as of the Annual Meeting. +7 +At the Annual Meeting, our stockholders will be asked to elect eleven directors to serve until the next annual meeting of stockholders to be held in 2025, until their successors are duly elected and qualified , or until such director’s earlier death, resignation, or removal . The names and certain information concerning the persons nominated by our Board to stand for election as directors at the Annual Meeting are set forth in the section of this Proxy Statement titled “ Director Nominees ” below. +If all director nominees are elected, then, immediately following the Annual Meeting, our Board will consist of eleven members, and nine out of the eleven members will be "independent directors" under applicable NYSE rules. In addition, each member of our Board's three standing committees will be “independent directors” under applicable SEC and NYSE rules. +No Agreements or Family Relationships +No arrangement or understanding exists between any of our directors, director nominees, or executive officers and any other person pursuant to which any of them were selected as our director, director nominee, or executive officer. +There are no family relationships among any of our directors, director nominees, or executive officers. +No Legal Proceedings +There are no legal proceedings related to any of our directors, director nominees, or executive officers which are required to be disclosed pursuant to applicable SEC rules. +Director Nominations +The Corporate Responsibility, Sustainability & Governance Committee is responsible for identifying and evaluating nominees for election to our Board. In addition to the candidates proposed by our Board or identified by the Corporate Responsibility, Sustainability & Governance Committee, the committee considers candidates for director proposed by stockholders, provided such recommendations are made in accordance with the procedures set forth in our Bylaws. Stockholder nominations that meet the criteria outlined below will receive the same consideration as nominations made by the Corporate Responsibility, Sustainability & Governance Committee. +Director Qualifications +Directors are responsible for overseeing and monitoring our business consistent with their fiduciary duties to our stockholders. This significant responsibility requires highly skilled individuals with various qualities, attributes, skills and professional experience. Our Board believes there are both general requirements for eligibility to serve as a member of our Board that are applicable to all directors, and other specialized characteristics that should be represented on our Board as a whole, but not necessarily by each director. +Qualifications for All Directors +Essential criteria for all director candidates considered by the Corporate Responsibility, Sustainability & Governance Committee include the following: +• Personal and professional integrity; +• Good business judgment; +• Relevant experience and skills; +• Ability to effectively serve the long-term interests of our stockholders; and +• Commitment to devoting sufficient time and energy to diligently performing duties as a director. +8 +DIRECTOR NOMINEES +Our Board has nominated the following eleven directors for election at the Annual Meeting. Important summary information about the director nominees is set forth in the table below, including the Board committee composition that we anticipate will be effective as of the date of the Annual Meeting. Following the table is certain biographical information about each director nominee, as well as selected information about the specific qualifications, attributes, skills, and experience that led our Board to conclude that each director nominee is qualified to serve on our Board. For information regarding Board committee composition as of the date of this Proxy Statement, please refer to the section titled " Corporate Governance--Board Committees ." +Board Committee Membership Following the Annual Meeting (1) +Name, +Primary Occupation Age Director +Since Independent Number of Other Public Company Directorships +AR (2) +TC (2) +CG (2) +Michael F. Devine, III 65 2011 YES 1 +Corporate Director Chair of our Board +David A. Burwick 62 2021 YES 2 l +Corporate Director +Stefano Caroti (3) +61 — NO 0 +Chief Commercial Officer +Nelson C. Chan 63 2014 YES 3 l l +Private Investor, Entrepreneur and Corporate Director +Cynthia (Cindy) L. Davis 62 2018 YES 2 ª l +Corporate Director +Juan R. Figuereo 68 2020 YES 1 ª +Corporate Director +Maha S. Ibrahim 53 2021 YES 0 l +General Partner, Canaan Partners +Victor Luis 57 2020 YES 0 l +Corporate Director +Dave Powers 58 2016 NO 1 +Chief Executive Officer and President (4) +Lauri M. Shanahan 61 2011 YES 2 l l +Corporate Director +Bonita C. Stewart 67 2014 YES 1 l ª +Corporate Director +ª Committee Chair +(1) Subject to the election of each director nominee at the Annual Meeting. +(2) AR: Audit & Risk Management Committee, TC: Talent & Compensation Committee, CG: Corporate Responsibility, Sustainability & Governance Committee +(3) Mr. Caroti is included as a new director nominee. Effective August 1, 2024, in a planned succession process, Mr. Caroti will serve as our Chief Executive Officer and President. +(4) Effective August 1, 2024, in a planned succession process, Mr. Powers will retire as our Chief Executive Officer and President. +9 +MICHAEL F. DEVINE, III +Age: 65 +Director Since: 2011 +Chair of our Board +Public Company Directorships: +FIVE Below, Inc. (NYSE: FIVE) +Mr. Devine previously served as a director and member of the audit committee of Express, Inc. (NYSE: EXPR) and currently serves as director and member of the investment committee and chair of the compensation committee at FIVE Below, Inc. (Nasdaq: FIVE). Mr. Devine retired as executive vice president and chief financial officer of Coach, Inc. in 2011. He served as a member of the board of Sur La Table, Inc. and was previously a member of the board of directors of The Talbots Inc. From 2004 to 2007, Mr. Devine served as a member of the board of directors and chair of the audit committee of Educate, Inc., a leading K-12 education service company with solutions such as Sylvan Learning Center. Mr. Devine also previously served as a director and member of the audit committee of NutriSystem, Inc. (Nasdaq: NTRI). +Selected Qualifications and Skills +• High Level of Financial Literacy - In addition to experience as the current and former member and chair of four audit committees and experience at Coach, Inc., served as chief financial officer and vice president-finance of Mothers Work, Inc., a maternity apparel retailer that was previously listed on Nasdaq, from February 2000 to November 2001. From 1997 to 2000, was chief financial officer of Strategic Distribution, Inc. (Nasdaq: STRD), a Nasdaq-listed industrial store operator. From 1995 to 1997, was chief financial officer at Industrial System Associates, Inc., and for the prior six years was the director of finance and distribution for McMaster-Carr Supply Company. Holds a B.S. in Finance and Marketing from Boston College and an M.B.A. in Finance from the Wharton School of the University of Pennsylvania. +• Public Company Executive - Experience at Coach, Inc. involved in managing a public company during a period of high growth. Serves as a corporate director and chair of the audit committees of Express, Inc. and FIVE Below, Inc. +• Compliance and Risk Oversight - 18 years of experience as a corporate director with risk oversight responsibilities. +• Premium Branding - Coach, Inc. is a leading marketer of modern classic American accessories. +• International - Involved in a global brand with worldwide operations while at Coach, Inc. +• Industry - In addition to experience at Coach, Inc., serves as a director of Express, Inc., a nationally recognized specialty apparel and accessory retailer offering women’s and men’s merchandise. +• Supply Chain Management and Retail - Involved in supply chain and wholesale and retail distribution channels while at Coach, Inc. +DAVID A. BURWICK +Age: 62 +Director Since: 2021 +Board Committees: +Talent & Compensation +Public Company Directorships: +The Duckhorn Portfolio, Inc. (NYSE: NAPA) +BJ's Wholesale Club Holdings, Inc. (NYSE: BJ) +Mr. Burwick is a corporate director. In June 2024, he was appointed as a director of BJ's Wholesale Club Holdings, Inc. (NYSE: BJ) and serves as a member of the nominating and corporate governance committee. In May 2024, he was appointed as a director of The Duckhorn Portfolio, Inc. (NYSE: NAPA) and serves as chairperson of the nominating and corporate governance committee and as a member of the audit committee. He previously served as a director of The Boston Beer Company, Inc. (NYSE: SAM) and served as its president and chief executive officer from April 2018 to April 2024. Prior to April 2018, Mr. Burwick served as president and chief executive officer of Peet's Coffee & Tea, Inc., since December 2012. From April 2010 to December 2012, Mr. Burwick served as president, North America of WW International, Inc., formerly Weight Watchers International, Inc. Prior to that, Mr. Burwick held numerous positions with PepsiCo, Inc., including chief marketing officer, PepsiCo Americas Beverages from August 2008 to August 2009; executive vice president, Marketing, Sales and R&D, PepsiCo International from April 2008 to July 2008; President, Pepsi-QTG Canada from January 2006 to March 2008; chief marketing officer, Pepsi-Cola North America from June 2002 to December 2005; and various marketing roles from 1989 to 2002. Mr. Burwick has extensive experience leading consumer products organizations. During Mr. Burwick's tenure as a director of The +10 +Boston Beer Company, Inc., he has served as chair and as a member of its compensation committee, and as chair and as a member of the nominating/governance committee. +Selected Qualifications and Skills +• Premium Branding - Experience as an executive at Peet's Coffee & Tea, Inc., PepsiCo. Inc. and The Boston Beer Company, Inc. +• Public Company Executive - Extensive experience with several leading public and private companies, both as an executive and as a director. +• Sales and Marketing - Held key marketing and sales positions with PepsiCo. Inc., including chief marketing officer. +• Human Resources - Held executive positions with leading companies and was a member of the compensation committee and nominating/governance committee of The Boston Beer Company, Inc. +• Retail - Previously served as president and chief executive officer at Peet's Coffee & Tea, Inc., WW International, Inc. and PepsiCo, Inc. +STEFANO CAROTI +Age: 61 +Director Nominee Nominated in: +2024 +Board Committees: +None +Public Company Directorships: +None +Mr. Caroti is a director nominee. Effective August 1, 2024, Mr. Caroti will be appointed Chief Executive Officer and President of our Company. He was appointed as our Chief Commercial Officer in April 2023. He previously served as our President of Omni-Channel since November 2015. He has over 32 years of industry experience in general management, sales, retail, product, marketing, business strategy and brand management. Prior to joining our Company, Mr. Caroti was the chief commercial officer and managing director at PUMA, from August 2008 to December 2014, where he was responsible for PUMA’s global wholesale, retail and e-commerce divisions and PUMA’s geographic operating regions. Prior to that, he held a number of senior executive positions at NIKE, Inc. in general management, sales, product and marketing, and during his term as vice president of EMEA commerce, he was responsible for the entire wholesale, retail and e-commerce business in the EMEA region. +Selected Qualifications and Skills +• Industry - Over 32 years of experience in the footwear and apparel industries through various positions at PUMA, NIKE Inc., and our Company. +• Premium Branding - Premium branding experience through several senior executive positions at PUMA, NIKE Inc., and our Company. +• International - While serving in executive leadership roles at PUMA, NIKE Inc., and our Company, led wholesale, retail, and e-commerce business worldwide. +• Supply Chain Management and Retail - Oversaw PUMA's global wholesale, retail and e-commerce divisions and operating regions, and prior to that, was responsible for the entire wholesale, retail, and e-commerce business in the EMEA region while at NIKE, Inc. +• Sales and Marketing - Served in several executive marketing positions in leading public companies. +• Public Company Executive - Serves as our Company's Chief Commercial Officer, and previously served as President of Omni-Channel. Extensive experience as chief commercial officer and managing director at PUMA, as well as several senior executive positions at NIKE, Inc. +11 +NELSON C. CHAN +Age: 63 +Director Since: 2014 +Board Committees : +Audit & Risk Management +Corporate Responsibility, Sustainability & Governance +Public Company Directorships: +Synaptics, Inc. (Nasdaq: SYNA) +Twist Bioscience Corporation (Nasdaq: TWST) +GCT Semiconductor Holding Inc. (NYSE: GCTS) +Mr. Chan is a private investor and entrepreneur. In March 2024, he was appointed as a director of GCT Semiconductor Holding Inc. (NYSE: GCTS). Mr. Chan is a director and member of the nominating and corporate governance and audit committee of Twist Bioscience Corporation (Nasdaq: TWST), as well as chair of the board and member of the audit committee and nominations and corporate governance committee of Synaptics, Inc. (Nasdaq: SYNA). He was chair of the board, chair of the compensation committee, member of the audit committee and member of the nominating and corporate governance committee of Adesto Technologies Corporation (Nasdaq: IOTS). From 2016 to 2019, Mr. Chan served as a director and member of the compensation and nominating and governance committees of Socket Mobile, Inc. (Nasdaq: SCKT). From 2006 to 2008, he served as chief executive officer of Magellan Corporation, and from 1992 to 2006, he served in various management positions with SanDisk Corporation. Mr. Chan is also a director of several privately held companies. +Selected Qualifications and Skills +• Entrepreneurial - Expertise in building technology companies. +• High Level of Financial Literacy - Has held numerous senior management positions with leading companies, including chief executive officer at Magellan Corporation. +• Public Company Executive - Extensive experience with several leading public and private companies, both as an executive and as a director. +• Sales and Marketing - Held key sales, marketing and engineering positions at SanDisk Corporation, Chips and Technologies, Signetics and Delco Electronics. +• International - Served as the executive vice president and general manager of consumer business at SanDisk Corporation, a global multi-billion dollar company. +• Compliance and Risk Oversight - Currently serves as a member of our Audit & Risk Management Committee and has over 15 years of experience as a corporate director with risk oversight responsibilities. +• Technology Infrastructure and Cybersecurity - Extensive experience in technology-based companies including sales, marketing and engineering. +CYNTHIA (CINDY) L. DAVIS +Age: 62 +Director Since: 2018 +Board Committees: +Talent & Compensation ( Chair ) +Corporate Responsibility, Sustainability & Governance +Public Company Directorships: +Kennametal Inc. (NYSE: KMT) +Brinker International, Inc. (NYSE: EAT) +Ms. Davis currently serves as a member of the board of directors and is the chair of the compensation and human capital committee and member of the nominating/governance committee of Kennametal Inc. (NYSE: KMT), a global supplier of tooling, engineering components. In January 2019, she joined the board of directors and currently chairs the governance and nominating committee and is a member of the talent and compensation committee of Brinker International, Inc. (NYSE: EAT). Prior to 2019, Ms. Davis served as a member of the board of directors, as chair of the compensation committee and on the governance committee of Buffalo Wild Wings, Inc. (Nasdaq: BWLD), a casual dining restaurant and sports bar chain, from 2015 to 2018. Ms. Davis served as vice president of NIKE, Inc. (NYSE: NKE) and president of Nike Golf at NIKE, Inc. from 2008 to 2014, and as U.S. general manager at Nike Golf from 2005 to 2008. Prior to NIKE, Inc., Ms. Davis served as senior vice president of golf sponsorships, sports marketing and new media at Golf Channel, a subsidiary of Comcast Corporation (Nasdaq: CMCSA), from 2001 to 2004. She is Vice Chair for the Board of Trustees for Furman University. +12 +Selected Qualifications and Skills +• Premium Branding - Experience as vice president of NIKE, Inc. and president of Nike Golf at NIKE, Inc., a company engaged in the design, development, manufacturing, and worldwide marketing and sales of footwear, apparel, equipment, accessories, and services. +• Sales and Marketing; Retail - In addition to leading the division’s sales, marketing, and strategy while serving as senior vice president of golf sponsorships, sports marketing and new media at Golf Channel, led the $800 million global golf business for NIKE, Inc. +• High Level of Financial Literacy - Served on the audit committee of Kennametal Inc. Holds an M.B.A. in Marketing and Finance from the University of Maryland College Park. Oversaw the profit and loss of a separate operating unit within NIKE, Inc. +• International - Involved in global brands with worldwide operations while at NIKE, Inc. and Kennametal Inc. +• Public Company Executive - Held various executive management positions at NIKE, Inc. and Golf Channel, currently serves as a director of Kennametal Inc. and Brinker International, Inc., and previously served as a director and chair of the compensation committee of Buffalo Wild Wings, Inc. +• Industry - Extensive experience in the footwear, apparel and equipment industries through various positions at NIKE, Inc. +• Compliance and Risk Oversight - In addition to leadership roles at NIKE, Inc., served as a corporate director on the audit committee and serves on the compensation and nominating and corporate governance committees of Kennametal, Inc., and serves on the board of directors, as well as the compensation and corporate governance committees, of Brinker International, Inc. Previously served as chair of the compensation committee and on the governance committee of Buffalo Wild Wings. +• Technology Infrastructure and Cybersecurity - Serves as a director and chair of the compensation and human capital committee and member of the nominating and governance committee of Kennametal Inc., a technology-based company. +JUAN R. FIGUEREO +Age: 68 +Director Since: 2020 +Board Committees: +Audit & Risk Management ( Chair ) +Public Company Directorships: +Western Alliance Bancorporation (NYSE: WAL) +Mr. Figuereo currently serves as a director and member of the finance and investment committee and chair of the audit committee of Western Alliance Bancorporation (NYSE: WAL). From April 2021 to July 2023, he served as a director and chair of the audit committee and member of the nominating and corporate governance committee of Diversey, Inc. (Nasdaq: DSEY). Mr. Figuereo served as the executive vice president and chief financial officer of Revlon (NYSE: REV), a manufacturer and marketer of beauty and personal care products, from 2016 to 2017. From 2012 to 2015, he served as executive vice president and chief financial officer of NII Holdings, Inc. (NASDAQ: NIHD), a wireless communication services provider under the Nextel brand. NII Holdings, Inc. filed for bankruptcy protection in New York, New York on September 15, 2014. From 2009 to 2012, Mr. Figuereo served as executive vice president and chief financial officer of Newell Brands (NYSE: NWL), a global marketer of consumer and commercial products, and from 2007 to 2009 he served as executive vice president and chief financial officer of Cott Corporation (NYSE: PRMW). Mr. Figuereo has also served in senior management positions at Walmart, Inc. (NYSE: WMT) and PepsiCo, Inc. (Nasdaq: PEP). Mr. Figuereo served as a director and chair of the audit committee at PVH Corp. (NYSE: PVH), a leading apparel company with iconic brands such as Calvin Klein and Tommy Hilfiger in its portfolio. Mr. Figuereo is a venture partner with Ocean Azul Partners, LLC, an early stage investments fund based in South Florida. He is a member of the National Association of Corporate Directors and of the Florida Institute of CPAs. +Selected Qualifications and Skills +• Public Company Executive - Previously served as chief financial officer of several public companies with global footprints, including Revlon and Newell Brands, and held executive leadership roles at Walmart, Inc. and PepsiCo, Inc. +13 +• High Level of Financial Literacy - Served as chief financial officer of several public companies and as chair of the audit committee of PVH Corp. Serves as the chair of the audit committee of Western Alliance Bancorporation and previously served as the chair of the audit committee of Diversey Inc. In addition, he serves as a member of the Audit & Risk Management Committee of our Company. Holds a B.B.A. from Florida International University, and previously worked for eight years as a certified public accountant. +• International - Significant executive leadership experience supporting global brands with worldwide operations. +• Supply Chain Management - Extensive experience in worldwide supply chain operations while in management roles for global companies. +• Sales and Marketing; Retail - Served as executive vice president of several global marketers, including Revlon and Newell Brands, and held senior management positions at Walmart, Inc. and PepsiCo, Inc. +• Mergers and Acquisitions - Previously served as the vice president in charge of mergers and acquisitions at Walmart, Inc. +MAHA S. IBRAHIM +Age: 53 +Director Since: 2021 +Board Committees: +Audit & Risk Management +Public Company Directorships: +None +Ms. Ibrahim is currently a general partner of Canaan Partners, an early stage venture capital firm, where she has worked since March 2000. Prior to joining Canaan Partners, from 1998 to 2000 she served as vice president of e-business at Qwest Communications, where she architected the company’s e-business strategy and spearheaded the redesign of Qwest.com, and previously served as Qwest Communication’s vice president of business development. From 2012 through 2020, Ms. Ibrahim served as a member of the board of directors of The RealReal, Inc. (Nasdaq: REAL), an online brick-and-mortar marketplace for authenticated luxury consignment, providing leadership to the company through its 2019 initial public offering. Ms. Ibrahim currently serves on the boards of directors of a number of private innovative enterprise and consumer companies. Further, she has served as a trustee for the Carnegie Endowment for International Peace, a foreign policy think tank, since 2017. +Selected Qualifications and Skills +• Industry - Extensive experience in the apparel industry through her experience on the board of The RealReal, Inc., a sustainable luxury company that promotes the re-circulation of products across the multi-billion dollar fashion industry. +• Premium Branding - Premium branding experience in the luxury consignment business during her time as a director of RealReal, Inc. +• Consumer Technology/Big Data - Served as vice president of e-business at Qwest Communications. +• Sales and Marketing; Retail - Served as vice president of business development at Qwest Communications. +• Technology Infrastructure and Cybersecurity - Extensive experience in wireless and telecommunications industries. +• Mergers and Acquisitions - Experience with mergers and acquisitions while serving as general partner of Canaan Partners. +• Corporate Responsibility - Served on the board of The RealReal, Inc. and experience serving on the board of a private luxury brand company that has implemented a sustainability program and related initiatives. +14 +VICTOR LUIS +Age: 57 +Director Since: 2020 +Board Committees: +Talent & Compensation +Public Company Directorships: +None +Mr. Luis previously served as a director and member of the audit committee and chair of the nominating and corporate governance committee of FarFetch Limited (NYSE: FTCH). He served as the chief executive officer and on the board of directors of Tapestry, Inc. (formerly known as Coach, Inc.) (NYSE: TPR) from 2014 to 2019, where he led the company’s transformation into Tapestry Inc., a New York-based house of modern luxury brands including Coach, Kate Spade and Stuart Weitzman. Mr. Luis joined Coach, Inc. in 2006 as president and chief executive officer of Coach Japan. He rapidly assumed additional leadership responsibilities across Asia and Europe, becoming chief commercial officer of Coach, Inc. in 2013 and chief executive officer in 2014. Prior to joining Coach, Inc., from 2002 to 2006, Mr. Luis was president and chief executive officer of Baccarat, Inc., where he ran the North American operation of the French luxury brand. Mr. Luis joined the Moët-Hennessy Louis Vuitton Group in 1995, ultimately advancing to president and chief executive officer of its subsidiary, Givenchy, Japan Incorporated, before leaving in 2002. +Selected Qualifications and Skills +• International - Significant experience in managing multi-national teams while at Coach, Inc. and Moët-Hennessy Louis Vuitton Group. +• Retail - Previously served as chief executive officer of several global luxury retailers. +• Premium Branding - Premium global branding experience spanning over two decades as chief executive officer of Tapestry, Inc., overseeing its modern luxury brands, and as chief executive officer of Baccarat, Inc. and Givenchy, Japan Incorporated. +• Industry - Experience in footwear, apparel and accessories while serving on the board of Tapestry, Inc. with the brands Coach, Kate Spade and Stuart Weitzman. +• Public Company Executive - Executive management experience, including service as chief executive officer of publicly traded companies. +DAVE POWERS +Age: 58 +Director Since: 2016 +Executive Positions: +Chief Executive Officer and President +Public Company Directorships: +Solo Brands, Inc. (NYSE: DTC) +Mr. Powers will retire as Chief Executive Officer and President effective August 1, 2024. In June 2016, Mr. Powers was appointed Chief Executive Officer of our Company and joined our Board at that time. In March 2015, he was appointed President of our Company. Mr. Powers joined our Company as President of Direct-to-Consumer in August 2012 and was appointed President of Omni-Channel in January 2014. Prior to joining our Company, Mr. Powers held several executive leadership roles at Converse Inc. (a subsidiary of NIKE, Inc.), Timberland LLC and Gap Inc. (NYSE: GPS). In May 2022, he joined the board of directors and currently serves as the chair of the compensation committee and a member of the audit committee of Solo Brands, Inc. (NYSE: DTC). +Selected Qualifications and Skills +• Industry - Extensive experience in the footwear and apparel industry through a variety of positions at three different footwear companies and a global apparel retailer. +• Supply Chain Management; Retail - As part of the NIKE, Inc. retail leadership team, was responsible for Converse Inc.'s global owned and distributor direct-to-consumer operations. During tenure at Timberland LLC and Gap Inc., held leadership roles with a variety of retail responsibilities from merchandising to store design. +15 +• Sales and Marketing - Graduated cum laude from Northeastern University with a B.S. in Marketing. Throughout his career, has been responsible for the development of marketing strategy, with a focus on consumer engagement and digital marketing. While President of Brands of our Company, led the Omni-Channel organization, elevating and advancing the Omni-Channel platform. +• International - While serving in leadership roles at Timberland LLC, led worldwide retail merchandising, marketing, visual and store design, and oversaw European retail operations. +• Public Company Executive - Serves as our Chief Executive Officer and President with global responsibilities and oversight. Other leadership roles have been with public companies. +LAURI M. SHANAHAN +Age: 61 +Director Since: 2011 +Board Committees: +Audit & Risk Management +Corporate Responsibility, Sustainability & Governance +Public Company Directorships: +Treasury Wine Estates Limited (ASX: TWE) +CAVA Group, Inc. (NYSE: CAVA) +Ms. Shanahan has over 25 years of senior-level experience in retail, consumer products and hospitality, ranging from global, multi-channel, multi-brand enterprises to small and mid-cap growth companies. In June 2023, she joined the board of directors and is the chair of the people, culture and compensation committee and a member of the nominating, governance and sustainability committee of CAVA Group Inc. (NYSE: CAVA). She serves on the board of directors, and is the chair of the human resources committee and a member of the nominations committee of Treasury Wine Estates Limited (ASX: TWE), a vertically integrated global wine business with over 70 brands. She joined Gap Inc. in 1992 and served in numerous leadership roles, including chief administrative officer and chief legal officer, during her 16-year career with the company. Since then, she has served as a principal of Maroon Peak Advisors, a consumer products and retail consulting firm. +Selected Qualifications and Skills +• Public Company Executive - Joined Gap Inc. in 1992 and served for 16 years in numerous leadership roles including chief administrative officer, chief legal officer and corporate secretary and chair of the foundation board. Gap Inc. is a leading global specialty retailer offering clothing, footwear, accessories, and personal care products for men, women, children, and babies under the Gap, Banana Republic, Old Navy, and Athleta brands. +• International - Directly involved in global brand development, supply chain and worldwide operations while at Gap Inc. and as a director and consultant. +• Supply Chain Management and Retail - Involved in retail, franchise, online licensing and other distribution channels, as well as sourcing and supply chain, while at Gap Inc. and as a consultant. +• Sales and Marketing - Acquired sales and marketing experience throughout her career at Gap Inc. and as director and consultant. +• Industry - Experience in footwear, apparel and accessories at Gap Inc., Charlotte Russe Holdings, Inc. and through consulting firm. +• Premium Branding - Premium and luxury branding experience at Gap Inc., through serving on the board of Treasury Wine Estates Limited and through retail consulting firm. +• Compliance and Risk Oversight - In addition to other leadership roles at Gap Inc., served as chief compliance officer and chief legal officer, overseeing the global corporate risk committee, as well as the global governance and compliance organization. +• Corporate Responsibility - While at Gap Inc., led development and oversight of global strategy, organization and execution of comprehensive social and environmental programs involving product development, supply chain, stakeholder engagement and employee and consumer-facing initiatives. Was president of Gap Inc. Foundation and also led government affairs and public policy. +16 +BONITA C. STEWART +Age: 67 +Director Since: 2014 +Board Committees: +Corporate Responsibility, Sustainability & Governance (Chair) +Talent & Compensation +Public Company Directorships: +PagerDuty, Inc. (NYSE: PD) +Ms. Stewart previously served as an advisor and Board Partner at Gradient Ventures, Google's early-stage venture fund focused on artificial intelligence. Throughout her career she has helped drive digital transformation at scale across multiple industries. Ms. Stewart served in various executive roles at Google, Inc. (Nasdaq: GOOG, GOOGL), a subsidiary of Alphabet Inc., including as Vice President, Global Partnerships where she led partner management for the largest U.S. publishers across search, news, commerce, media and entertainment, telecommunications and mobile applications. In January 2021 she joined the board of directors and serves as the chair of the nominating and corporate governance committee and a member of the audit committee for PagerDuty (NYSE: PD), a digital operations management company. Ms. Stewart previously served on the board of directors and as a member of the compensation committee and nominating and corporate governance committee for Volta Industries, Inc. (NYSE: VLTA). Ms. Stewart served as a corporate director for Pluralsight, Inc. (Nasdaq: PS), from 2018 to 2021. From 2002 to 2006 she worked for DaimlerChrysler AG (now Daimler AG) as director of Chrysler Brand Advertising and the director of Chrysler Group’s first Interactive Communications team. Ms. Stewart began her career in 1979 at IBM Corporation (NYSE: IBM) where she served in various financial and marketing management positions. She is the co-author of A Blessing: Women of Color Teaming Up to Lead, Empower and Thrive and the 2019-2020 Women of Color in Business Cross-Generational Survey. +Selected Qualifications and Skills +• Industry - Over 30 years of experience in brand management, digital strategy, and execution. +• High Level of Financial Literacy - Lead strategy, business development and revenue growth plans for Google Inc.'s largest publisher partnerships. Holds an M.B.A. from Harvard Business School. +• Consumer Technology/Big Data - Extensive experience in digital transformation, and data driven digital strategies across multiple industries. +• Entrepreneurial - Served as president, chief operating officer, and co-founder of Nia Enterprises, LLC, a web-based company, and founder and chief executive officer of One Moment in Time, a women's formal-wear rental company. +• Sales and Marketing - Acquired sales, marketing, product distribution and online advertising experience. +• International - Led publisher partnerships for Latin America and Canada and has worked for Daimler AG and IBM Corporation, which are multi-billion dollar global companies. +• Public Company Executive - Strategic planning and large-scale operations experience with Google Inc. and IBM Corporation. +• Technology Infrastructure and Cybersecurity - Extensive experience in technology-based companies and fluency in digital transformation including digital strategy, mobile, video, programmatic, online advertising, cloud solutions, analytics and data privacy. +• Corporate Responsibility - Experience with employee resource group executive sponsorship, global hiring and retention processes and racial equity compliance oversight. +Summary of Qualifications and Skills of Directors +As part of our Board evaluation and director selection processes, the Corporate Responsibility, Sustainability & Governance Committee maintains a director skills matrix. When evaluating potential nominees, the Committee and the Board take into account the diversity of experience and backgrounds represented on our Board. The director skills matrix below summarizes the specific qualifications, attributes, skills and experience of each director nominee that led our Board to conclude that the nominee is qualified to serve on our Board. +17 +Devine +Burwick +Caroti Chan +Davis +Figuereo +Ibrahim Luis +Powers +Shanahan Stewart +Industry. Important to have knowledge and experience in footwear, apparel, accessories or related industries . +u u u u u u u u +Premium Branding. Valuable to our business to have experience in developing brand strategies, building brand equity and growing premium brands. +u u u u u u u u u u +International. Important to have operational or management experience with global or multi-national teams and businesses. +u u u u u u u u u u +High Level of Financial Literacy. Financial accounting, corporate finance and related skills are instrumental to our operations . +u u u u +Retail. Valuable to our business to have retail strategy, portfolio management and store operations experience. +u u u u u u u u u +Consumer Technology/ Big Data. Relevant to have experience in developing and implementing technology related to consumer acquisition and digital engagement. +u u u u u +Sales and Marketing. Important to provide oversight to our sales and marketing strategies across our multi-channels. +u u u u u u u u u +Supply Chain Management. Relevant to our business to have an understanding of product development, sourcing, inventory management, distribution and logistics. +u u u u +Technology Infrastructure and Cybersecurity. Valuable to have experience related to technology governance, including privacy, data management and security. +u u u u u u +Compliance and Risk Oversight. Important to provide oversight to our compliance and risk management programs. +u u u u u u +Corporate Governance. Important to provide oversight of our corporate governance practices to ensure they reflect industry best practices . +u u u u u u u u +Mergers and Acquisitions. Helpful to have experience in strategic planning and execution of large scale strategic alternatives. +u u u u u u +Public Company Executive. Valuable to have experience in managing a public company at the executive officer/C-suite level. +u u u u u u u u u u +Human Resources and Talent Management. Important to have experience in management strategies, diversity, equity, and inclusion (DEI) initiatives, succession planning and organizational design initiatives. +u u u u u u u u u +Corporate Responsibility. Relevant to have experience in developing, implementing or overseeing ESG programs. +u u u u u +18 +Consent to Serve +Each of the persons named above has consented to being named in this Proxy Statement and to serve as a director if elected, and our Board has no reason to believe any of the nominees will be unable or unwilling to serve as a director. If, however, any nominee withdraws or otherwise becomes unavailable to serve, our Board may decrease the size of our Board, or the proxies may be voted for the election of such other person as a director as our Board may recommend in place of the nominee. +Required Vote +Because this is an uncontested election, the election of our director nominees at the Annual Meeting requires the affirmative vote of a majority of the votes cast by the shares present virtually or represented by proxy and entitled to vote on the election of directors at the Annual Meeting (assuming that a quorum is present). A "majority of the votes cast" means the number of shares voted "FOR" a director nominee must exceed the number of shares voted “AGAINST” a director nominee. +This proposal is considered a "non-routine" matter under NYSE rules. As a result, a bank, broker, dealer, or other nominee may not vote without instructions on this matter, so there may be broker non-votes in connection with this proposal. Abstentions and broker non-votes are not counted as votes "FOR" or "AGAINST" a director nominee and will have no effect on the election of directors. If no contrary indication is made, returned proxies will be voted "FOR" each of the director nominees, or in the event any nominee is unable to serve as a director at the time of the election, returned proxies will be voted "FOR" any nominee designated by our Board to fill the vacancy. +BOARD RECOMMENDATION +OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE +" FOR " +THE ELECTION OF EACH OF THE ELEVEN DIRECTOR NOMINEES. +19 +CORPORATE GOVERNANCE +Corporate Governance at Deckers +Corporate governance is managed under the direction of our Board. Our Board has a long-standing commitment to comprehensive and effective corporate governance practices. Our Board continues to evaluate our governance policies and procedures to ensure that the right mix of individuals is present in our boardroom and to ensure effective oversight of our strategy and management in order to best serve our stockholders. Our Board has adopted Corporate Governance Guidelines that set forth the primary framework of governance principles applicable to our Company, a copy of which is available on our website at ir.deckers.com in the Overview section of the Governance tab. +Corporate Governance Elements +Our Board is committed to maintaining the highest standards of corporate governance and has established a strong framework by which our Company is governed. Key elements of our corporate governance framework include: +OUR POLICY OR PRACTICE DESCRIPTION AND BENEFIT TO OUR STOCKHOLDERS +STOCKHOLDER RIGHTS +Annual Election of Directors • Our directors are elected annually, reinforcing their accountability to our stockholders. We do not employ a classified board structure. +Single Class of Outstanding Voting Stock • Our common stockholders control our Company with equal voting rights. +Majority Voting Standard • We have a majority voting standard for uncontested director elections. +BOARD STRUCTURE +Director Independence • Based on the director independence requirements set forth in our Corporate Governance Guidelines, as well as under applicable SEC and NYSE rules, our Board has determined that each of our director nominees, other than Mr. Powers and Mr. Caroti, is an "independent director." Accordingly, if all director nominees are elected at the Annual Meeting, nine out of eleven members of the Board will be "independent directors." +• Our three standing Board committees: the Audit & Risk Management Committee, the Talent & Compensation Committee and the Corporate Responsibility, Sustainability & Governance Committee, consist exclusively of independent directors and have adopted written charters. Committee composition and charters are reviewed annually by our Board. +Committee Governance • Our Corporate Governance Guidelines allow our Board to determine whether to separate or combine the roles of the Chair and Chief Executive Officer. Currently, Mr. Devine, who is an independent director, serves as Chair of the Board. We believe this is the most appropriate leadership structure for our Company at this time. +Annual Board Self-Evaluations • The Corporate Responsibility, Sustainability & Governance Committee conducts and oversees annual evaluations of our Board, each Board committee and each individual director, to ensure they are effective and continue to serve the best interests of our stockholders. We periodically engage an independent third party to facilitate these evaluations. +Board Oversight of Risk • Our Board is generally responsible for risk management activities, but has delegated the oversight of risk management to our Audit & Risk Management Committee. Our full Board regularly engages in discussions of the most significant risks we face and how these risks are managed. +EXECUTIVE COMPENSATION +Annual Say-on-Pay Vote • Historically, we have provided our stockholders the opportunity to approve, on a non-binding advisory basis, the compensation of our Named Executive Officers on an annual basis as this affords our stockholders the ability to provide routine feedback on our executive compensation program. +Corporate Governance Principles +Pursuant to Delaware law and our Bylaws, our business, property and affairs are managed under the direction of our Board. Thus, our Board is the ultimate decision-making body of our Company, except with respect to those matters reserved for our stockholders. +Our Board selects our Chief Executive Officer, and works together with our Chief Executive Officer to select our senior management team, which is charged with the day-to-day operation of our business. Members of our Board are kept informed +20 +about our business through discussions with our Chief Executive Officer and other senior management personnel, including by attending brand sales meetings and industry events, participating in periodic informal telephonic meetings, and reviewing materials provided to them, as well as by attending formal meetings of our Board and its committees. Having selected the senior management team, our Board acts as an adviser and counselor to senior management, monitors its performance, and proposes or makes changes to the senior management team when it deems necessary or appropriate. +Board of Directors Meetings +BOARD OF DIRECTORS +Meetings in Fiscal Year 2024: 6 +• Each of our directors attended at least 80% of Board meetings and meetings of the Board committees on which he or she served during his or her term. +• Time is scheduled for our independent directors to meet in an executive session at every Board meeting. Mr. Devine presides over each executive session. +• Our Corporate Governance Guidelines state that directors are expected to attend each of our annual meetings of stockholders. Eight members of our Board attended the annual meeting of stockholders held in September 2023. +Director Independence +Our Corporate Governance Guidelines, as well as applicable NYSE rules, require that our Board be comprised of a majority of directors who satisfy the criteria for independence set forth in the NYSE rules. These guidelines help ensure that the interests of our Board and management are aligned with those of our stockholders, that conflicts of interest are avoided, and that we are in compliance with applicable SEC and NYSE rules. An "independent director" is one who our Board affirmatively determines has no material relationship with our Company (either directly or as a partner, stockholder, or officer of an organization that has a relationship with our Company) and otherwise meets the requirements of the NYSE rules. +Based on the director independence requirements set forth in our Corporate Governance Guidelines, as well as in the applicable NYSE rules, our Board has determined that each of our directors, other than Mr. Powers, is an "independent director." In addition, all members of the Audit & Risk Management Committee, Talent & Compensation Committee, and Corporate Responsibility, Sustainability & Governance Committee meet the independence standards set forth in applicable SEC and NYSE rules. +Board Leadership Structure +Our Corporate Governance Guidelines allow the Board to determine whether to separate or combine the roles of chair and chief executive officer. Our Board believes it is important to maintain flexibility in our Board leadership structure to best serve the interests of the Company and its stockholders at any particular time. However, our Board firmly supports having an "independent director" serve in a Board leadership position at all times. +In determining the appropriate structure, our Board considers multiple factors, including our business and strategic needs at the time and the composition of our Board. The roles of chair and chief executive officer are currently separated. Our Board believes this leadership structure allows our Chief Executive Officer to focus on the day-to-day operation and management of our Company, while allowing our Chair to focus on leading the Board in overseeing the interests of our Company and stockholders. Our Chair, Mr. Devine, leverages his extensive experience in matters related to risk management, oversight of systems of internal control, and legal and regulatory compliance to advise the Company on identified and anticipated risks, as well as to drive strategy and agenda setting at the Board level. Our Chief Executive Officer, Mr. Powers, together with our Chief Commercial Officer, Mr. Caroti, utilize their extensive leadership experiences in the footwear and apparel industry to drive the Company's strategic vision, oversee its long-term growth, and provide general oversight of the business and affairs of the Company. +While the Board believes the current structure is appropriate at this time, it regularly assesses the advantages and disadvantages of various structures taking into account the evolving needs of the business. +Board Committees +Our Board has three standing committees: the Audit & Risk Management Committee, the Talent & Compensation Committee, and the Corporate Responsibility, Sustainability & Governance Committee. Each member of each of the committees is an "independent director" for purposes of applicable SEC and NYSE rules. Each of our committees has a written charter that describes its purpose, membership, meeting structure, and responsibilities. A copy of each committee's charter is available on our website at ir.deckers.com in the Overview section of the Governance tab . These charters are reviewed annually by each committee, with any recommended changes approved by our Board. The Audit & Risk Management Committee charter and the Corporate Responsibility, Sustainability & Governance charter were amended in September 2023, and the Talent & Compensation Committee charter was amended in January 2024. +Summary information regarding the membership, meetings, and primary responsibilities of each of the three standing committees of our Board for fiscal year 2024 is provided below: +21 +AUDIT & RISK MANAGEMENT COMMITTEE +Meetings in Fiscal Year 2024: 10 +Current Members: +Juan R. Figuereo ( Chair ) +All members of the Audit & Risk Management Committee meet the independence and experience standards set forth in applicable SEC and NYSE rules. +Mr. Figuereo, and Mr.Chan have been determined by our Board to be "audit committee financial experts" under applicable SEC rules. +Nelson C. Chan +Maha S. Ibrahim +Lauri M. Shanahan +• Oversees management's conduct with respect to, and the integrity of, our financial reporting functions. +• Oversees the engagement, independence and performance of the registered public accounting firm that audits our annual financial statements and reviews our quarterly financial reports. +• Oversees our legal, regulatory and ethical obligations. +• Oversees the performance of our internal audit function. +• Oversees the application of our related-person transaction policy as established by our Board. +• Oversees our systems of internal control over financial reporting disclosure controls and procedures. +• Oversees our enterprise risk assessment and management policies, practices and procedures, including matters related to data protection, cybersecurity and risk management initiatives related to information technology. +• Oversees the application of our Code of Ethics as established by our Board. +TALENT & COMPENSATION COMMITTEE +Meetings in Fiscal Year 2024: 4 +Current Members: +Cynthia (Cindy) L. Davis (Chair) +All members of the Talent & Compensation Committee meet the independence standards set forth in applicable SEC and NYSE rules. +David A. Burwick +Victor Luis +Bonita C. Stewart +• Oversees the design of our executive compensation program, and responsible for oversight of our employment practices and policies. +• Reviews and approves goals and objectives relevant to the compensation of our executives and evaluates performance in light of those goals and objectives. +• Oversees our key human capital management strategies and programs. +• Reviews our overall talent management strategy, including development and succession plans for our executives and management. +• Determines and approves the compensation of our executives based, in part, on these evaluations, including each element of compensation. +• Makes recommendations to our Board regarding any action that is required to be submitted to our stockholders for approval with respect to incentive compensation plans and equity-based plans. +• Administers and approves our equity-based plans, and approves (or delegates authority to approve, below the executive level) individual award grants under those plans, or recommends award grants to our Board for approval. +• Produces report on executive compensation for inclusion in our proxy statement for our annual meeting of stockholders. +22 +CORPORATE RESPONSIBILITY, SUSTAINABILITY & GOVERNANCE +COMMITTEE +Meetings in Fiscal Year 2024: 3 +Current Members: +Bonita C. Stewart (Chair) +All members of the Corporate Responsibility, Sustainability & Governance Committee meet the independence standards set forth in applicable NYSE rules. +Nelson C. Chan +Cynthia (Cindy) L. Davis +Lauri M. Shanahan +• Develops and recommends to our Board a set of Corporate Governance Guidelines that establish a framework of governance principles applicable to us. +• Identifies and actively seeks individuals qualified to become directors, consistent with criteria specified in the Corporate Governance Guidelines. +• Recommends to our Board the qualified director nominees to be selected by our Board. +• Recommends to our Board membership of our Board committees. +• Oversees the Company's ESG Program, and periodically reviews with management our policies and practices with respect to DEI and our specific sustainable development goals. +• Ensures that our certificate of incorporation and Bylaws are structured in a manner that best serves our objectives and recommends amendments as appropriate. +• Oversees the evaluation of management, our Board and Board committees. +Nominating Procedures and Criteria +Among its functions, the Corporate Responsibility, Sustainability & Governance Committee considers and approves nominees for election to our Board. We view board succession as an ongoing process and regularly identify, evaluate and pursue prospective candidates. In addition to the candidates identified by the Committee, the Committee considers candidates for director proposed by our stockholders, provided such recommendations are made in accordance with the procedures set forth in our Bylaws. Stockholder nominations that meet the qualification criteria referred to below will receive the same consideration as nominations made by the Committee. +Essential criteria for all candidates considered by the Corporate Responsibility, Sustainability & Governance Committee are discussed in the section of this Proxy Statement titled " Qualifications for All Directors. " In considering individual candidates, the Committee also evaluates additional criteria, as reflected in the section of this Proxy Statement titled " Specific Qualifications and Skills Represented on Our Board. " +In selecting nominees for our Board, the Corporate Responsibility, Sustainability & Governance Committee evaluates the general criteria referred to above, identifies any specialized criteria for which the Committee has determined there is a need, and considers the candidate's ability to meet the required criteria and contribute to the success of our Company. In evaluating an existing director for reelection, in addition to assessing the criteria referred to above, the Committee considers a variety of factors, including attendance at Board and committee meetings, independence, length of service, previous Board and committee performance, and overall contributions to our Company. From time to time, the Committee retains independent third-party search firms, consultants, and other advisors, as appropriate, to help identify, screen, and evaluate candidates and to enhance our Board’s preparedness in the event of an unplanned director departure. +The director nominees have been recommended by the Corporate Responsibility, Sustainability & Governance Committee and approved by our Board. +Management Succession and Talent Development +The Talent & Compensation Committee, pursuant to its charter, is responsible for overseeing the management succession planning process. As part of that responsibility, the Committee reviews and evaluates the development and succession plan relating to our executive officers, including considerations of career paths and attracting and retaining high-quality talent. The Board is responsible for these actions with respect to our Chief Executive Officer. The Committee works with the Board to assess whether we have the management talent needed to successfully pursue our business objectives. The Board also regularly considers the competencies necessary for our Chief Executive Officer to support our strategies for long-term success. +Risk Governance Structure +Our Board has overall responsibility for the oversight of our Company's risk management process, which is designed to support the achievement of organizational objectives, including strategic objectives, improve long-term organization performance and enhance stockholder value. It has developed processes to identify, evaluate and manage short-, medium- and long-term risks to ensure they are prioritized on a timely basis. Risks are typically categorized based on the severity and probability of the risk and +23 +addressed or escalated as appropriate. The Board members provide objective, independent oversight of risk and focus on the most significant risks facing the Company. Our legal and internal audit executives report directly to the Audit & Risk Management Committee regarding material risks to our business, among other matters, and facilitate the identification, assessment and development of controls and procedures that address identified risks. The highest-ranking manager of our internal audit function periodically meets with the Audit & Risk Management Committee and the Board to discuss identified risks, the status of management’s risk mitigation actions, and, if applicable, any emerging risks. Separately, our Risk & Compliance Advisory Committee, an independent committee overseen by our internal audit team, evaluates organizational risks and discusses opportunities for compliance and risk mitigation. +Board Role in Risk Oversight +• Annually reviews or assesses the effectiveness of our Company’s enterprise risk management programs and framework, including the processes for identifying, assessing, prioritizing, and responding to our enterprise-wide risk exposures, to ensure that robust risk management strategies are in place. On an annual basis, under the direction of our Audit & Risk Management Committee, our Company undertakes an enterprise-level risk management review that is designed to bring to the Board’s attention our most material risks for evaluation, including strategic, operational, regulatory, and compliance risks. +• Receives regular updates from management regarding our organization’s portfolio of risk and engages in discussions to understand and assess our overall risk management activities. Our Board further apprises itself of the most significant risks facing our Company, ensuring that robust risk response actions have been established and implemented, with an independent review by internal audit. Management and our Board assess the Company's risk environment on a quarterly basis to ensure the Company is adequately anticipating future exposure to liability. +• On an annual basis, under the direction of our Corporate Responsibility, Sustainability & Governance Committee, our Board reviews and assesses our corporate responsibility and sustainability efforts, including risks related to environmental and social issues, as well as risks related to corporate governance issues. +• Inquires of management to understand and assess the effectiveness of the mechanisms in place for monitoring and responding to emerging risks. +• Engages in critical dialogue with our executive leadership and technology-focused personnel to ensure our organization has a robust plan to detect, stop, and mitigate the effects of cyberattack incidents, including resuming normal operations as quickly as possible. +• Engages in active discussion with management to understand our Company’s risk philosophy to ensure understanding of overall appetite for risks that aligns with ability to create stockholder value. +• Engages actively with management on Chief Executive Officer succession and works to nominate and evaluate potential successors for this role. +• Reviews identified risks with management at regular committee meetings and provides input on these risks and mitigation steps. +Below is a summary of key risk oversight responsibilities delegated to our three committees: +Audit & Risk Management Committee +• Oversees financial risks and monitoring of management’s policies and procedures. +• Plays a strategic role in assessing and monitoring our Company’s response to cyber threat trends, receiving periodic updates on cyber risk management initiatives, and obtaining independent confirmation of their efficacy through regular reviews by internal audit. Engages in regular dialogue with our Chief Digital & Data Officer, Chief Technology Officer and Chief Information Security Officer on technology risk related topics on every Audit & Risk Management Committee meeting agenda, ensuring adequacy of focus and resources to support cyber risk management activities. +• Receives regular updates from management on cybersecurity or information security incidents that may pose a significant threat to our Company, and assesses our Company’s key metrics for measuring our capabilities to manage cybersecurity and technology risk. +• Our Board also receives an independent perspective from our internal audit function. +• Provides oversight for compliance risk and regularly receives updates from management on compliance-related matters. +Our legal and internal audit executives report directly to the Audit & Risk Management Committee regarding material risks to our business, among other matters, and the Audit & Risk Management Committee meets in executive sessions with our highest ranking manager of internal audit and with representatives of our independent registered public accounting firm. +24 +Talent & Compensation Committee +• Oversees the design of our executive compensation program so as to encourage achievement of our strategic objectives and mitigate compensation-related risk. +• Oversees key human capital management strategies and programs. +• Evaluates succession planning risk regarding the executive officers. +Corporate Responsibility, Sustainability & Governance Committee +• Oversees risks related to our corporate responsibility and sustainability efforts, including risks related to environmental and social issues, such as climate change, as well as risks related to corporate governance issues. +• Receives quarterly updates on the status of our ESG Program and related risks. +• Develops and recommends to the Board our Corporate Governance Guidelines to establish and oversee an appropriate governance framework. +Information Security Risk Oversight +Our Board has delegated oversight of the Company's information security program to the Audit & Risk Management Committee. Our information security initiatives are led internally by our Chief Digital & Data Officer, Chief Technology Officer and Chief Information Security Officer. These executives are responsible for the operation of our information security program and communicate quarterly with the Audit & Risk Management Committee on the program, and annually with the full Board with respect to the state of the program, assessments of the cyber risk landscape, including discussion on emerging risks and trends, and compliance with data privacy regulatory requirements. Our information security program also includes a cybersecurity incident response plan that is designed to provide a management framework across our Company. We engage external firms to assist us in the independent evaluation of our information security processes and capabilities. Our employees receive annual trainings on responsible information security, data security and cybersecurity practices including appropriate action to take against cyber threats. We also maintain a cybersecurity and information security risk insurance policy, which insures for data incidents or breaches and other technology related exposures. +Talent & Compensation Committee Interlocks and Insider Participation +As of the date of this Proxy Statement, no member of the Talent & Compensation Committee is serving, and during the past year no member of the Talent & Compensation Committee has served, as an officer or employee of our Company or any of its subsidiaries. None of our executive officers currently serves, or during the past year has served, as a member of the board of directors or compensation committee (or other committee serving a similar purpose) of any entity that has an executive officer serving on our Board or the Talent & Compensation Committee. In addition, none of the Talent & Compensation Committee members had any relationship, or participated in any transaction, with our Company during fiscal year 2024 that requires disclosure under SEC rules. +We have entered into indemnification agreements with each of our directors, including each member of the Talent & Compensation Committee. +Communications with Directors +Stockholders and other interested parties may communicate with the Chair of our Board, the Chair of any Board committee, with our independent directors as a group, or with any individual director, by writing to any such person or group. Communications should be sent to the following address: +Deckers Outdoor Corporation +Attn.: Corporate Secretary +250 Coromar Drive +Goleta, California 93117 +Communications are distributed to our Board, or to any individual director, depending on the facts and circumstances described in the communication. Our Board has requested that certain items that are unrelated to the duties and responsibilities of our Board should be excluded, including the following: junk mail and mass mailings, product inquiries or complaints, new product suggestions, resumes and other forms of job inquiries, surveys, and business solicitations or advertisements. In addition, material that is unduly hostile, threatening, illegal or similarly unsuitable will not be distributed, except that any communication that is not distributed will be made available to any director upon request. +Code of Ethics and Accounting and Finance Code of Ethics +Our Board has adopted a Code of Ethics to assist our officers, directors and other employees in complying with legal and regulatory requirements and maintaining the highest standards of ethical conduct. All of our directors, officers, and employees +25 +receive an annual training on the Code of Ethics and must carry out their duties in accordance with the policies set forth in the Code of Ethics and with applicable laws and regulations. The Code of Ethics complies with the requirements set forth in applicable NYSE rules. +Our Board has also adopted a separate Accounting and Finance Code of Ethics which focuses on the financial reporting process and applies to our Chief Executive Officer, Chief Financial Officer and Corporate Controller (and other employees serving similar functions). The Accounting and Finance Code of Ethics is intended to qualify as a "code of ethics" under applicable SEC rules and to satisfy the standards of ethics and compliance programs under applicable NYSE rules. +Our Code of Ethics and our Accounting and Finance Code of Ethics are available on our website at ir.deckers.com in the Overview section of the Governance tab. To the extent required by law, any amendments to or waivers of any provision of the Code of Ethics or the Accounting and Finance Code of Ethics will be promptly disclosed publicly on our website. +Stockholder Engagement +We maintain an ongoing, proactive outreach effort with our stockholders. We believe our stockholders, as the owners of our Company, have important views and insights into our business operations, and we routinely seek to engage with our stockholders to ensure their views are shared with our Board and management, and actively considered in discussions of our strategic direction. We highly value stockholder input and have consistently demonstrated our commitment to open and interactive dialogue with our stockholders. Our stockholder outreach program is led by a cross-functional team that includes members of our Investor Relations, ESG, and Legal teams. +In fiscal year 2024, as part of our stockholder engagement efforts to solicit feedback and share perspectives we reached out to holders of approximately 49% of our shares. Investors were largely supportive of the topics we addressed, including our corporate governance framework, executive compensation practices, and highlights of our ESG program. The feedback and insights we received during our engagement efforts were shared with the Board and management. +Please refer to the section of this Proxy Statement titled “ Compensation Discussion and Analysis - Stockholder Outreach" ” for more information regarding our stockholder outreach efforts relating to our executive compensation program. +Our People and Our Culture +At our Company, our purpose is to positively impact the world by uniting purposeful brands with diverse people driven to succeed and create change. Our five key values, which guide our journey onward together, to improve our business and create a better world around it, help hold us accountable to deliver on this purpose: +Our values define our Company and serve as the driving force behind how we work together and with our customers, our consumers, our partners, our suppliers, and our communities. We also have detailed ethics and compliance policies that instill a commitment to ethical behavior and legal compliance across our organization. Through our open-door policy and culture, employees are encouraged to approach their managers if they believe violations of standards or policies have occurred, and are also able to make confidential and anonymous reports using an online or telephone hotline hosted by an independent third-party provider. +We believe our culture makes us unique. We regularly conduct employee surveys to understand our employees' experiences on a variety of topics focused on employee engagement. Our latest survey completed in February 2024 had a participation rate of 89%. Of those employees who completed the survey, 88% noted they were proud to work for Deckers. +Diversity, Equity and Inclusion +We prioritize DEI at our Company and believe creating a diverse and inclusive workplace is critical to creating an organization where all employees can come as they are. We believe the inclusion of diverse perspectives, and the amplification of the voices of underrepresented communities brings a unique set of experience, opinions, and thoughts on critical issues that helps enhance our business and drives better outcomes. +Our Code of Ethics, on which we train our employees biennially, as well as our annual Creating Change Report, codifies these values and our commitment to DEI. We have a robust collection of programs designed to create a more inclusive workplace, as +26 +well as policies and practices aimed at increasing diversity. We have implemented a comprehensive, global strategy for DEI, including the following: +Ø +More than 27% of our U.S. leaders (director and above) are from the BIPOC community, which represents an increase of nearly 16 percentage points since fiscal year 2020. +Ø +Our brands have committed to representing BIPOC and LGBTQIA+, and diverse body types and abilities in their marketing campaigns. +Ø +We have joined The Valuable 500, an initiative comprised of companies committed to disability inclusion, and the Civic Alliance, a nonpartisan business coalition that champions civic participation, and we are also part of the Bloomberg Gender-Equality Index which helps bring transparency to gender-related policies and practices at publicly listed companies around the world. +Our Board values DEI as we continue to enhance the diversity and skill sets of our directors. In addition, our Board is regularly kept apprised of our DEI employee engagement efforts, targets and commitments. +Charitable Giving and Volunteering +At our Company, our charitable contributions, product donations, and employee volunteer efforts are an essential part of our culture. Each fiscal year, we contribute to our local communities through monetary donations, volunteer efforts and in-kind donations. During fiscal year 2024, we donated to various non-profit organizations around the globe. We also continued our 'Art of Kindness' events, where employees volunteer during a week-long event in our local communities multiple times during the fiscal year. Further, many of our supply chain partners followed our lead and volunteered in their local communities during fiscal year 2024. Our strategic giving and community-engagement efforts continue to be aligned with our sustainable development goals (SDGs) and DEI strategy, with a focus on social and racial justice, the environment, uplifting youth, education, and community support. +$4.6 MILLION +Ø +Amount donated to various non-profit organizations around the globe during fiscal year 2024 +AREAS OF FOCUS FOR GIVING Ø +DEI, the environment, uplifting youth, education, and community support +19,000 +Ø +Hours our employees volunteered in fiscal year 2024 +2.3 MILLION +Ø +Number of pairs of shoes donated, since the inception of our partnerships with non-profit organizations who distribute shoes to those in need +Environmental, Social, and Governance +As a global leader in designing, marketing, and distributing innovative footwear, apparel, and accessories, our worldwide reach and impact is significant. We believe consumers are increasingly buying brands that deliver quality products while striving for minimal environmental impact by employing sustainable business practices. Our sustainability policies and strategies are informed by our ongoing efforts with multi-stakeholder initiatives, which involve our stockholders, employees, suppliers, and customers, as well as other brands and non-governmental organizations. Through our holistic ESG program, which has been in existence since 2010, we are committed to advancing our sustainable business initiatives. +ESG Oversight +Our Board oversees our ESG strategy and has ultimate oversight over all sustainability initiatives, strategies, and programs, including economic, social, and environmental risks. The Board has delegated its authority to oversee our ESG efforts to our Corporate Responsibility, Sustainability & Governance Committee. Our Chief Administrative Officer (CAO) is responsible for the day-to-day management of our ESG program and regularly reports to our Corporate Responsibility, Sustainability & Governance Committee and the Board on the status of the program. The ESG program’s execution is driven by our leadership team and various cross-functional teams including our ethical sourcing, facilities, distribution centers, brands, innovation, materials, and supply chain teams. +The Corporate Responsibility, Sustainability & Governance Committee’s oversight of our ESG program is complemented by the Audit & Risk Management Committee’s periodic assessment of risk management, including climate-related risks and policies, to ensure the consistent application of our corporate strategy. Our internal audit team provides periodic targeted reviews of our ESG-related policies and procedures to the Audit & Risk Management Committee to support the committee’s efforts. +27 +We believe integrating ESG initiatives into our strategic objectives will create long-term value for our stockholders by ensuring collaboration across our portfolio of brands to drive sustainable business practices and help us continue to do good and do great. Our ESG program aligns our internal teams with our SDGs (detailed below) and establishes policies to encourage our partners and suppliers to employ sustainable business practices. +ESG Education +Each member of our Corporate Responsibility, Sustainability & Governance Committee, together with our CAO and certain other members of the Board, previously completed the Diligent ESG and Climate Leadership Certificate Program. In addition, as set forth in our Corporate Governance Guidelines, our Board is required to complete annual training on our Code of Ethics. Together, we believe these efforts further evidence our ongoing commitment to sustainable business practices and strong ESG performance. +ESG Performance Metrics +Our pay-for-performance philosophy demands that we offer performance-based compensation that is directly linked to factors that our Talent & Compensation Committee believes will lead to the creation of stockholder value. During fiscal year 2024 , for our executive leadership team, our annual cash incentive award program included a 10% modifier that was correlated directly to the achievement of specific ESG initiatives. +Sustainable Development Goals +Achieving measurable sustainability success is critical to our future economic and business growth, and we work to establish SDGs that we believe will make the most significant impact on our business, our stockholders, and the communities in which we operate. We are a member of the United Nations Global Compact (UNGC), the world’s largest voluntary corporate sustainability initiative. This membership requires an annual statement of progress, which is reflected in our Creating Change Report. Our CAO identifies specific SDGs established by the UNGC, which we adopt to guide our ESG strategy. Our SDGs are currently focused on categories where we believe we can make substantial impacts. +TOPIC DECKERS SDG UNGC SDG +MATERIALS +Maximize the amount of preferred materials in our products. +WASTE +Sustainably reduce waste generated at our facilities and partner facilities through refuse, reduction, recycling, and reuse. +WATER +Reduce water consumption and improve water quality throughout our operations and the communities in which we operate. +CLIMATE AND CLEAN ENERGY +Reduce energy consumption and greenhouse gas emissions throughout our operations. +CHEMISTRY AND CONSUMER SAFETY +Reduce or eliminate hazardous chemicals throughout our operations. +HUMAN RIGHTS +Positively impact the communities in which we operate, including assuring industry leading human rights practices within our supply chain. +GENDER EQUALITY, QUALITY EDUCATION, AND REDUCED INEQUALITIES +Promote diversity, gender equality, female empowerment, and inclusion for all. +28 +Our annual Creating Change Report will provide more information regarding our fiscal year 2024 ESG achievements with a focus on these SDGs. We believe the progress of our corporate responsibility efforts is served by disclosing goals and relevant metrics and, to that end, we have aligned the reporting standards included in our Creating Change Report with the Financial Stability Board’s Task Force on Climate-Related Financial Disclosures (TCFD), Global Reporting Initiative’s (GRI) Core Standards, and Sustainability Accounting Standards Board’s (SASB), and now part of the International Finance Reporting Standard (IFRS), Foundation Consumer Goods Sector Apparel, Accessories and Footwear Index. Our Creating Change Report, published annually, can be found at www.deckers.com/responsibility. References to our website address in this Proxy Statement are inactive textual references only. +29 +EXECUTIVE OFFICERS +Each of our executive officers serves at the discretion of our Board. Important summary information about our executive officers is set forth in the table below, followed by certain biographical information about each officer. +EXECUTIVE OFFICER AGE POSITION +Dave Powers 58 +Chief Executive Officer, President and Director (1) +Steven J. Fasching 56 Chief Financial Officer +Stefano Caroti 61 +Chief Commercial Officer (2) +Angela Ogbechie 46 +Chief Supply Chain Officer +Thomas Garcia 51 Chief Administrative Officer +Anne Spangenberg 56 +President of Fashion Lifestyle +Robin Green +48 +President of HOKA ( Appointed in February 2024) +(1) Effective August 1, 2024, in a planned succession process, Mr. Powers will retire as our Chief Executive Officer and President. We expect Mr. Powers will continue to serve as a member of our Board if elected at the Annual Meeting. +(2) Effective August 1, 2024, in a planned succession process, Mr. Caroti will serve as our Chief Executive Officer and President. We also expect Mr. Caroti will serve as a member of our Board if elected at the Annual Meeting. +DAVE POWERS +Age: 58 +Position: Chief Executive Officer, President and Director +Mr. Powers will retire as Chief Executive Officer and President effective August 1, 2024, but we expect Mr. Powers to continue to serve as a member of our Board if elected at the Annual Meeting. In June 2016, Mr. Powers was appointed Chief Executive Officer of our Company and joined our Board at that time. In March 2015, he was appointed President of our Company. Mr. Powers joined our Company as President of Direct-to-Consumer in August 2012. He was appointed President of Omni-Channel in January 2014. Mr. Powers has over 25 years of experience in merchandising, product and marketing development, and leading global direct-to-consumer operations and wholesale businesses. Prior to joining us, Mr. Powers served four years as vice president of global direct-to-consumer at Converse Inc., where he oversaw owned and distributor direct-to-consumer as part of the NIKE, Inc. retail leadership team. Mr. Powers also held several executive leadership roles at The Timberland Company, including worldwide general merchandising manager and senior director European retail, where he led worldwide retail merchandising, marketing, visual and store design, and oversaw European retail operations. Prior to this, Mr. Powers spent 10 years at Gap Inc., where he held multiple senior management titles, including global divisional merchandise manager for the boy’s division. In May 2022, he was appointed to the board of Solo Brands, Inc. Mr. Powers graduated cum laude from Northeastern University with a B.S. in Marketing. +Please refer to the section of this Proxy Statement titled “ Director Nominees ” for additional biographical information about Mr. Powers, as well as information about the specific qualifications, attributes, skills, and experience that led our Board to conclude that Mr. Powers is qualified to serve on our Board. +30 +STEVEN J. FASCHING +Age: 56 +Position: Chief Financial Officer +Mr. Fasching was appointed as our Chief Financial Officer in June 2018 and served as our Senior Vice President, Corporate Strategy, Planning & Investor Relations since February 2018. Mr. Fasching previously served as our Vice President, Strategy & Investor Relations from January 2016 to February 2018, and as Vice President, Strategic Financial Planning from August 2011 to January 2016. Mr. Fasching has over 30 years of experience in long-term financial and strategic planning and creating and leading the analytical engine of multi-billion dollar organizations. Immediately prior to joining our Company, Mr. Fasching served for five years as the director of finance and assistant controller of Princess Cruise Lines, Ltd., a cruise line owned by Carnival Corporation, where he had been promoted through a number of finance-related positions since September 1990, including director of financial planning, among others. Mr. Fasching received a B.S. degree in Business Administration from Pepperdine University and an M.B.A. from The Anderson School of Management at UCLA. He also completed The Executive Program for Prospective Chief Financial Officers through the University of Chicago Booth School of Business. +STEFANO CAROTI +Age: 61 +Position: Chief Commercial Officer +Mr. Caroti is a director nominee and will be appointed Chief Executive Officer and President of our Company effective August 1, 2024. He was appointed as our Chief Commercial Officer in April 2023. He previously served as our President of Omni-Channel since November 2015. He has over 30 years of industry experience in general management, sales, retail, product, marketing, business strategy and brand management. Prior to joining our Company, Mr. Caroti was the chief commercial officer and managing director at PUMA, from August 2008 to December 2014, where he was responsible for PUMA’s global wholesale, retail and e-commerce divisions and PUMA’s geographic operating regions. Prior to that, he held a number of senior executive positions at NIKE, Inc. in general management, sales, product and marketing, and during his term as vice president of EMEA commerce, he was responsible for the entire wholesale, retail and e-commerce business in the EMEA region. He received a B.A. with honors from Middlebury College. +Please refer to the section of this Proxy Statement titled “ Director Nominees ” for additional biographical information about Mr. Caroti, as well as information about the specific qualifications, attributes, skills, and experience that led our Board to conclude that Mr. Caroti is qualified to serve on our Board. +ANGELA OGBECHIE +Age: 46 +Position: Chief Supply Chain Officer +Ms. Ogbechie was appointed as our Chief Supply Chain Officer in June 2022. Prior to that, she was Senior Vice President, Global Operations and Supply Chain Strategy since November 2021. Since 2008, Ms. Ogbechie has held a number of senior supply chain positions at our Company and has experience in global demand planning, logistics, distribution and fulfillment. Ms. Ogbechie received a B.A. in Economics from Stanford University and an M.B.A. from Columbia University Business School. +31 +THOMAS GARCIA +Age: 51 +Position: Chief Administrative Officer +Mr. Garcia joined our Company in 2009. In his current position as Chief Administrative Officer he oversees Legal, ESG, Strategy and Communications. He was promoted to his position in 2021 after spending more than 12 years in multiple roles including Senior Vice President, Senior Counsel, and Compliance Officer. From 2003 to 2009, Mr. Garcia was assistant general counsel at Mentor Corporation, a medical device company acquired by Johnson & Johnson. Previously, he was an associate attorney at the law firms of Hatch and Parent, as well as Buchanan Ingersoll. Mr. Garcia earned his B.S. in Biology from Lehigh University, Masters in Public Health from The University of Massachusetts at Amherst, and J.D. from The George Washington University Law School. +ANNE SPANGENBERG +Age: 56 +Position: President of Fashion Lifestyle +Ms. Spangenberg was appointed as our President of Fashion Lifestyle Group in July 2022. She joined Deckers after 13 years at NIKE, Inc. where she served as the company’s Chief Merchant, and previously held leadership positions at Gap, Inc. and Macy’s West. Ms. Spangenberg is an industry leader with over 25 years of experience in Global consumer-focused omni-channel retail, including product creation, merchandising, buying, analytics, stores, digital, wholesale and vertical. Ms. Spangenberg earned her B.A. in International Relations from the University of California, Davis. +ROBIN GREEN +Age: 48 +Position: President of HOKA +Ms. Green was appointed as our President of HOKA in February 2024. She joined Deckers following 17 years at NIKE, Inc., where she held roles of increasing responsibility culminating with her position as Global Vice President of Men’s Running and Fitness. Ms. Green is a passionate runner and industry leader with over 20 years of experience across the global consumer products landscape and strong expertise leading and operating complex businesses to maximize their potential and deliver growth. Ms. Green earned a B.A. in Economics from the University of California, Davis. +32 +COMPENSATION DISCUSSION AND ANALYSIS +This Compensation Discussion and Analysis section addresses the compensation philosophy, objectives, policies and arrangements that apply to our Named Executive Officers (NEOs). The purpose of this section is to provide our stockholders with a thorough understanding of our executive compensation program for fiscal year 2024. This narrative discussion is intended to be read together with the Summary Compensation Table and the related tables, footnotes and disclosures set forth below. References throughout this section to the “Committee” refer to the Talent & Compensation Committee. +This discussion is divided into the following parts: +EXECUTIVE SUMMARY +COMPENSATION OBJECTIVE AND PHILOSOPHY +COMPENSATION CONSULTANT AND PEER GROUP +ELEMENTS OF FISCAL YEAR 2024 EXECUTIVE COMPENSATION PROGRAM +OTHER COMPENSATION CONSIDERATIONS +This section contains forward-looking statements within the meaning of the federal securities laws. These forward-looking statements relate to our current plans and expectations regarding our executive compensation programs, policies and arrangements. Actual compensation programs, policies and arrangements that we adopt in the future may differ materially from those discussed in this section. Please refer to the section of this Proxy Statement titled “ Cautionary Note Regarding Forward-Looking Statements ” for additional information. +33 +EXECUTIVE SUMMARY +Named Executive Officers +The following table sets forth our NEOs for fiscal year 2024, the current positions they hold and the dates they were appointed to those positions: +NAMED EXECUTIVE OFFICER POSITION AND DATE APPOINTED +Dave Powers (1) +• Chief Executive Officer and Director - June 2016 +• President - March 2015 +• Principal Executive Officer +Steven J. Fasching +• Chief Financial Officer - July 2018 +• Principal Financial and Accounting Officer +Stefano Caroti (2) +• Chief Commercial Officer - April 2023 +• President of Omni Channel - November 2015 +Anne Spangenberg • President of Fashion Lifestyle - July 2022 +Thomas Garcia • Chief Administrative Officer - February 2021 +(1) Effective August 1, 2024, in a planned succession process, Mr. Powers will retire as our Chief Executive Officer and President. We expect Mr. Powers will continue to serve as a member of our Board if elected by our stockholders at the Annual Meeting. +(2) Effective August 1, 2024, in a planned succession process, Mr. Caroti will serve as our Chief Executive Officer and President. We also expect Mr. Caroti will serve as a member of our Board if elected by our stockholders at the Annual Meeting. +Fiscal Year 2024 Financial and Operational Highlights: +We delivered strong results in fiscal year 2024 from both financial and operational perspectives, which are highlighted by the following: +• Total revenue growth of 18.2%, representing an increase of $660 million as compared to the prior year. +• HOKA brand revenue increased $394 million, or 27.9%, over the prior year. +• UGG brand revenue increased $310 million, or 16.1%, over the prior year. +• Global direct-to-consumer revenue across all brands increased 26.5% over the prior year, representing 43.3% of total company revenue, up from 40.4% in the prior year. +• International revenue across all brands increased 21.1% over the prior year, representing 33.2% of global revenue, up from 32.4% in the prior year. +• Diluted earnings per share increased 50.5%, or $9.79, over the prior year to $29.16. +• We were added to the S&P 500 Index, which is recognized as one of the premier benchmarks of the equities markets. +Our exceptionally strong performance over the past three fiscal years is illustrated by the financial metrics in the graphs below. For each fiscal year, the information presented is for the 12-month period ended March 31. +34 +The performance-based compensation that was earned during fiscal year 2024 was primarily the result of exceptional performance relative to these performance metrics to directly tie executive compensation to Company performance. For example, our annual cash incentive awards used consolidated operating income and revenue (and business unit operating income and revenue for certain executives with business unit oversight responsibilities), and our long-term incentive plan awards used consolidated pre-tax income and revenue as the underlying performance metrics. We believe the direct correlation between Company achievement and executive compensation highlights our pay-for-performance philosophy. +Our Business and Strategic Objectives +Our dedicated team has been able to successfully execute on our business strategy and achieve exceptional results over the past several fiscal years. We intend to continue investing strategically in key identified areas of growth within our brand portfolio. Specifically we will invest in the following: +• The HOKA brand, generating increased awareness and expanding global market share within performance footwear, including through an enhanced globally integrated marketing campaign and premier event sponsorships. +• The UGG brand, maintaining high levels of global brand heat and driving greater consumer connections in international regions through localized marketing activations and collaborations. +• Technology and analytical tools that will further enhance our capabilities as we look to support our evolving business, including opportunities to connect with consumers through digital avenues as well as expanding our e-commerce platform. +• Infrastructure required to support our key growth initiatives globally, including investment in talent to scale enterprise functions and support distribution and logistics. +We intend to closely monitor planned investments in our business as we remain mindful of a dynamic macroeconomic environment characterized by inflationary pressures, high interest rates, recessionary concerns and geopolitical uncertainty. We also intend to continue to focus on the achievement of ESG initiatives, employing socially conscious operations, minimizing our environmental impact and maintaining open and interactive dialogue on ESG matters with our stakeholders. We remain committed to delivering long-term stockholder value through the continued execution of our strategies. +Our Compensation Program Objective and Philosophy +The primary objective of our executive compensation program is to compensate our executive officers in a manner that will attract, retain and motivate talented executives with the skills needed to manage a complex and growing business in a competitive industry, while creating long-term value for our stockholders. In furtherance of this objective, the Committee seeks to design our executive compensation program in a manner that reflects direct alignment between the compensation opportunity provided to our executives and the achievement of our strategic objectives. +When establishing our executive compensation program each year, the Committee is generally guided by the following four principles that it believes align closely with our compensation objectives: +• Pay-for-performance by ensuring that a significant portion of compensation is made available to our executives based on the achievement of pre-determined performance objectives deemed important to our long-term success. +• Align interests of executives with stockholders by tying a significant portion of compensation to Company performance that creates long-term value for our stockholders and is correlated to increases in the value of our stock price. +35 +• Reward achievement by offering meaningful and appropriate incentives for achieving both short-term and long-term Company financial and operational goals that have been established by the Committee, and which are directly tied to and designed to further the achievement of the Company’s strategic objectives. +• Attract and retain executives with the background and experience necessary to lead the organization and achieve the Company's strategic objectives. +When designing our executive compensation program for fiscal year 2024, the Committee focused on continuing to build and retain our executive team, while incentivizing them to focus on increasing revenue, enhancing profitability and creating long-term value for our stockholders. In fiscal year 2024, for our executive leadership team, we continued to incorporate an ESG modifier into our annual cash incentive award program to further encourage the achievement of our ESG initiatives. We also continued to incorporate a total stockholder return (TSR) modifier in our long-term incentive award program to ensure alignment between compensation paid to our executives and the value achieved by our stockholders. These and other strategic considerations are clearly reflected in the design of our program, which demonstrates strong pay-for-performance alignment. +Fiscal Year 2024 Executive Compensation Highlights +In fiscal year 2024, we implemented an executive compensation program that was designed to focus on motivating the achievement of our key strategic initiatives. The compensation program was generally similar to prior years in terms of its primary objective, overarching philosophy and core compensation elements. We also continued to emphasize pay-for-performance alignment as a key pillar of our compensation program. +The primary compensation elements of the fiscal year 2024 executive compensation program included the following: +• Base salaries; +• Annual cash incentive awards (2024 Annual Cash Incentive Awards); +• Time-based restricted stock units (2024 Time-Based RSUs); and +• Long-term incentive plan performance-based stock units (2024 LTIP PSUs). +The following reflect highlights of the fiscal year 2024 compensation program: +• As a result of our strong financial and operational results in fiscal year 2024, the 2024 Annual Cash Incentive Awards, which covered the one-year performance period ended March 31, 2024, were paid out at 200% of target, reflecting payouts based on Company performance relative to targets established by the Committee at the beginning of the fiscal year. The direct correlation between Company performance and the amount of these cash payouts highlights our pay-for-performance alignment. +• To reinforce the importance of achieving our ESG initiatives, and consistent with fiscal year 2023, the Committee continued to incorporate an ESG modifier for the 2024 Annual Cash Incentive Awards, which was designed to impact the payouts within the range of +10% to -10%. The ESG modifier was aligned with three key pillars: culture and employee engagement (40% weight); DEI, including BIPOC and gender representation in leadership (40% weight); and the environment, including progress towards our science-based targets (20% weight). +• The 2022 LTIP PSUs, which covered the three-year performance period ended March 31, 2024, were paid out at 200% of target. This outcome reflected awards being earned at the maximum level based on exceptional Company performance relative to targets established by the Committee at the beginning of the three-year performance period. The payouts under these awards further confirms our pay-for-performance alignment and also highlights our emphasis on tying compensation to the achievement of both short-term and long-term performance objectives. +• In establishing pay elements for fiscal year 2024, and determining the threshold, target and maximum amounts for the pay elements, the Committee specifically considered pay practices within the peer group that was selected by the Committee with the assistance of its independent compensation consultant. In addition, consistent with prior years, it was important to the Committee to ensure that a significant portion of the total equity awards granted to the NEOs were performance-based awards. +• During fiscal year 2024, the Committee selectively granted a special cash bonus award to Mr. Caroti, which was in addition to his 2024 Annual Cash Incentive Award. Mr. Caroti was the only NEO to receive a special cash bonus award during fiscal year 2024. In approving this award, the Committee recognized Mr. Caroti's continued interim leadership role within the HOKA Group in addition to continuing to manage the responsibilities associated with his regular position. During this time, Mr. Caroti drove successful engagement across the organization, as well as outstanding financial and operational results. Please see the section of this Proxy Statement titled "— 2024 Annual Cash Incentive Award—Special Cash Bonus " for additional information. +• During fiscal year 2024, the Committee also selectively granted a special equity award to Mr. Fasching, which was in addition to his annual equity award. In approving this award, the Committee recognized the Company's exceptional financial performance and achievements, individual executive performance and retention considerations in light of the planned CEO succession. This equity award was provided as a combination of 2024 Time-Based RSUs and 2024 LTIP +36 +PSUs, which is consistent with the relative mix of equity awards granted to the NEOs for fiscal year 2024 and reflective of our emphasis on performance-based awards. Mr. Fasching was the only NEO to receive a special equity award during fiscal year 2024. Please see the section of this Proxy Statement titled "— 2024 Long-Term Incentive Plan Performance-Based Stock Units Special Equity Award " for additional information." +Stockholder Outreach +We have consistently demonstrated our commitment to stockholder outreach efforts, which has resulted in meaningful, interactive dialogue with our stockholders on a number of significant topics, including our business and strategic objectives, capital allocation strategy, ESG initiatives and corporate governance philosophy. We have also routinely solicited and incorporated stockholder feedback on the design and effectiveness of our executive compensation program. +We believe our proactive engagement with and response to stockholder feedback, combined with our strong pay-for-performance alignment and compensation governance practices, has resulted in overwhelming stockholder support for our executive compensation program. Indeed, we believe these efforts were instrumental in helping us to achieve 95.7% and 98.2% of the votes cast being voted "FOR" our executive compensation program at our annual meetings of stockholders held in 2023 and 2022, respectively. +In an effort to continue our dialogue with our stockholders in fiscal year 2024, we reached out to investors holding an aggregate of approximately 50% of our shares and solicited their feedback, which highlights our ongoing commitment to stockholder engagement efforts. Our fiscal year 2024 executive compensation program, as described in this section, reflects feedback from ongoing dialogue with our stockholders. +The Committee believes transparent communication with our stockholders is critical to our long-term success, and that the feedback received through our stockholder engagement efforts will continue to contribute to the evolution and success of our business, including the enhancement of our executive compensation program. The Committee considers stockholder engagement to be an important part of its decision-making process and plans to continue proactive outreach efforts going forward. +Compensation Program Highlights +The following table sets forth the key components of our executive compensation program for fiscal year 2024, and the underlying philosophy and considerations that provide the basis for our compensation decisions: +COMPENSATION HIGHLIGHTS PHILOSOPHY AND CONSIDERATIONS +Pay-for-performance alignment +• We emphasized strong pay-for-performance alignment by providing a significant portion of the overall compensation opportunity for our NEOs in the form of performance-based compensation that is directly tied to the achievement of specific Company financial and operational performance objectives established by the Committee. +• Our performance-based compensation is designed to align the interests of our NEOs with those of our stockholders and encourage the achievement of strategic objectives that the Committee believes are critical to our short-term and long-term success. +• For fiscal year 2024, onl y 11% of the total compensation opportunity for our Chief Executive Officer and President was fixed, while 89% of his total compensation opportunity was directly tied to the achievement of specific performance conditions or otherwise at risk. +Alignment of performance metrics with strategic objectives +• Selecting the appropriate performance metrics for our performance-based awards is critical to achieving our business and strategic objectives, motivating our executives and advancing our pay-for-performance philosophy. +• In light of our strategic focus on increased revenue, enhanced profitability and the creation of long-term stockholder value, the Committee selected: +(i) consolidated operating income and revenue for all NEOs (and business unit operating income and revenue targets for certain executives with business unit oversight responsibilities) as the primary performance metrics for our 2024 Annual Cash Incentive Awards, and +(ii) “pre-tax income” and consolidated revenue for each of fiscal years 2024, 2025 and 2026 (three-year performance period) as the primary performance metrics for our 2024 LTIP PSUs. +• To further reinforce the importance of achieving ESG initiatives, the Committee continued to incorporate an ESG modifier into the 2024 Annual Cash Incentive Awards, which are subject to positive or negative adjustment based upon the achievement of our ESG initiatives. +37 +Limited overlap in performance conditions and measurement periods +• The compensation performance metrics established by the Committee involve a combination of revenue and profitability metrics over multiple time periods to ensure our compensation program encourages healthy and sustained growth across our business, while eliminating excessive overlap between performance conditions and measurement periods. +• This approach mitigates against risk associated with our compensation program as it de-emphasizes the impact of any one performance metric or performance period. +Reference to a "median" pay philosophy +• We generally benchmark the target total compensation opportunity for our NEOs at the median compared to our peer group to ensure our compensation program remains competitive in the market while also mitigating compensation-related risks. +• In adopting this philosophy, the Committee carefully considered specific feedback received from our stockholders during our stockholder engagement efforts in prior years. +Use of performance-based vesting for LTIP awards +• LTIP awards are designed to align the interests of our executives with those of our stockholders by incorporating performance-based vesting conditions over a long-term performance period. +• Vesting is based on the achievement of pre-determined profitability and revenue metrics, in each year during a three-year performance period, that align closely with our strategic objectives. +• 100% of the LTIP awards granted to NEOs during fiscal year 2024 were subject to long-term vesting in order to promote retention of our executives. +• The vesting of each LTIP award is also subject to positive or negative adjustment based upon the application of a TSR modifier, thereby correlating the vesting of the award to both total and relative stockholder returns. +• Consistent with its historical practice, the Committee expects a majority of future equity awards to continue to have performance-based vesting conditions. +Appropriate mix of equity awards with focus on performance-based vesting +• For fiscal year 2024, approximately 60% of the value of the equity awards granted are eligible to vest based on the achievement of Company performance conditions to ensure pay-for-performance alignment, while the remainder of the awards vest based on long-term, time-based vesting conditions that are subject to continued employment and where the resulting value is also tied to the value and performance of our stock. +• The Committee believes this mix strikes the appropriate balance between compensation incentives and risks. +No special severance benefits • We are not providing any special severance benefits or payments to Mr. Powers in connection with his retirement. +Continued focus on executive retention +• While we seek to develop our executive compensation program so it closely aligns with our pay-for-performance philosophy and rewards achievement of performance goals, this objective must complement other critical objectives, including the retention of key executives. +• For fiscal year 2024, approximately 40% of the value of the equity awards granted vest based on the achievement of time-based vesting conditions, which promote executive retention because they vest over a long-term service period and support maintaining a balanced overall compensation program. +Consideration of peer group data and advice of our independent compensation consultant +• We use peer group compensation data as an initial starting point in making compensation decisions for our executives, including with respect to both the target level of compensation and the overall structure of our executive compensation program. +• Our independent compensation consultant provides us with information on competitive pay practices and trends in our industry and makes recommendations regarding the design and structure of our compensation program, as well as the formulation of our peer group. +• The information and guidance provided by our independent compensation consultant is consistent with our median pay philosophy. +38 +COMPENSATION OBJECTIVE AND PHILOSOPHY +Compensation Program Objective +Pursuant to its charter, the Committee has overall responsibility for developing the compensation objective and philosophy applicable to our executive leadership team, and approving our executive compensation program and policies. +The primary objective of our executive compensation program, as established by the Committee, is to compensate our executive officers in a manner that will attract, retain and motivate talented executives with the skills needed to manage a complex and growing business in a competitive industry, while creating long-term value for our stockholders. The Committee seeks to design our executive compensation program in a manner that reflects direct alignment between the compensation opportunity provided to our executives and the achievement of our strategic objectives. In addition, in order to retain the talent necessary to achieve our strategic objectives, the Committee endeavors to develop a compensation program that is attractive and competitive in the marketplace. +Compensation Program Philosophy +When establishing our executive compensation program each year, the Committee is generally guided by the following four principles that it believes align closely with our compensation objectives: +PAY-FOR-PERFORMANCE ALIGN INTERESTS WITH STOCKHOLDERS +• Offer a significant portion of the compensation opportunity made available to our executives based on the achievement of pre-determined performance objectives. +• Ensure performance-based compensation is directly tied to the achievement of Company financial, operational and strategic goals that the Committee believes are important for our short-term and long-term success. +• Align the interests of our executives with those of our stockholders by tying a significant portion of the compensation opportunity to financial and operational performance that the Committee believes will result in the creation of long-term stockholder value. +• Ensure that a significant portion of the compensation opportunity is directly tied to total and relative stockholder return. +REWARD ACHIEVEMENT ATTRACT AND RETAIN EXECUTIVES +• Offer meaningful and appropriate incentives for achieving both short-term and long-term Company financial and operational goals that have been established by the Committee, and which are directly tied to and designed to further the achievement of the Company's strategic objectives. +• Ensure that the financial and operational goals are appropriate for each executive given their respective titles, scope of responsibilities, and ability to impact results. +• Attract key executives with the background and experience necessary to lead our Company and provide us the best opportunity to achieve our business and strategic objectives. +• Retain our key executives by offering compensation that is attractive and competitive in the marketplace, taking into consideration the competition for key executives and peer group pay practices. +Pay-for-Performance Alignment +Our pay-for-performance philosophy demands that we offer performance-based compensation that is directly linked to factors that the Committee believes will lead to the creation of stockholder value. Specifically, we pay for performance by tying a significant portion of our executive compensation opportunity to the achievement of pre-established performance metrics that are reflective of our business and strategic objectives, as well as to increases in our stock price. +The Committee believes choosing the right performance metrics is critical to our ability to properly motivate our executives and advance our pay-for-performance philosophy. In particular, this requires that the performance metrics be reconsidered each year as our business and strategic objectives evolve to ensure they provide the appropriate barometer of our growth and success, and motivate the achievement of our objectives in line with our current strategic areas of focus and the trajectory of the business. +As a result of our strong commitment to our pay-for-performance philosophy, a substantial portion of our executives’ compensation opportunity is performance-based and not guaranteed. While we offer certain standard compensation elements that provide fixed payments or benefits, our executive compensation mix is heavily weighted toward compensation that is performance-based, variable or otherwise at risk, which we refer to as "performance-based." The Committee seeks to establish appropriate performance targets for the performance-based pay so as to ensure they align with our business and strategic objectives, are appropriately challenging to achieve, and mitigate our overall compensation-related risk. +As an example, for fiscal year 2024, fixed pay for our Chief Executive Officer represented only 11% of his target direct compensation opportunity for the year, while performance-based pay represented 89% of his target compensation. The fixed pay reflects the value of base salary and limited employee benefits. The performance-based pay opportunities reflect a combination of the target value of the 2024 Annual Cash Incentive Awards and the value of the target number of 2024 LTIP PSUs, each of which are earned or vest only upon the achievement of pre-established Company performance metrics. In addition, the +39 +performance-based pay reflects the value of the 2024 Time-Based RSUs, which the Committee believes is appropriate to designate as such because our Chief Executive Officer is at risk of not receiving the full value of these awards since vesting is conditioned upon continued employment over an extended period of time, and the final value of the awards is subject to fluctuation based on our stock price. +The graphic below illustrates the amount of target performance-based pay opportunity versus fixed pay for our Chief Executive Officer for fiscal year 2024 and the breakdown of the various components of the compensation program on a percentage basis. "All Other Compensation" includes premiums for long-term disability insurance and life insurance, as well as Company matching contributions under our 401(k) plan. +We believe the significant focus on performance-based awards reflected in the graphic above, including the relative weighting of the various compensation elements, reflects our strong pay-for-performance alignment. In addition, while the graphic addresses the relative mix of compensation paid to our Chief Executive Officer, the compensation paid to each of our other NEOs reflects a similarly strong weighting of performance-based compensation to fixed compensation, further confirming pay-for-performance alignment across our executive leadership team. +ESG Modifier +As discussed above, to further strengthen our pay-for-performance alignment, and reinforce the importance of achieving ESG initiatives, in fiscal year 2024, the Committee continued to incorporate an ESG modifier for the 2024 Annual Cash Incentive Awards, which can result in an increase or decrease in the amount of the awards. The ESG modifier was aligned with three key pillars: culture and employee engagement (40% weight); DEI, including BIPOC and gender representation in leadership (40% weight); and the environment, including progress towards our science-based targets (20% weight). The Committee determined that the ESG modifier was achieved at the +8% level, which was applied to the final payout of the 2024 Annual Cash Incentive Awards. Please refer to the section of this Proxy Statement titled “ —2024 Annual Cash Incentive Awards ” for additional information. +40 +Governance Practices that Support Our Compensation Philosophy +Our executive compensation program has significant governance components that we believe support and strengthen our compensation objective and philosophy, while also reducing compensation-related risk, including those summarized in the following table: +GOVERNANCE PRACTICE WHAT WE DO +Independent Directors ☑ Assuming Messrs. Powers and Caroti are each elected by our stockholders at the Annual Meeting, nine out of eleven members of our Board will be considered independent directors under applicable NYSE rules. +Independent Talent & Compensation Committee +☑ The Committee consists entirely of independent directors who meet the independence standards set forth in applicable SEC and NYSE rules. +Independent Compensation Consultant ☑ The Committee has retained, and routinely consults with, an independent compensation consultant who assists the Committee in gathering competitive pay data, selecting our peer group, and structuring our executive compensation program. The decision to engage the consultant was made solely by the Committee and the consultant reports directly to the Committee. +ESG Modifier ☑ +In fiscal year 2024, the Committee continued to incorporate an ESG modifier for the 2024 Annual Cash Incentive Awards in order to strengthen our pay-for-performance alignment and reinforce the achievement of our ESG initiatives. +Compensation Risk Assessment ☑ +The Committee performs an annual review of the risks related to our compensation practices. Please see the section of this Proxy Statement titled "— Compensation Risk Assessment " for additional information. +Frequency of "Say-on-Pay" Vote ☑ +We provide our stockholders the opportunity to approve, on a non-binding advisory basis, the compensation of our NEOs on an annual basis as this affords our stockholders the ability to provide routine feedback, which we actively consider in formulating our compensation program. +Clawback and Forfeiture Policy ☑ +We maintain a Clawback and Forfeiture Policy that applies to our cash and equity incentive awards, which reinforces our pay-for-performance philosophy and contributes to a Company culture that emphasizes integrity and accountability in financial reporting. +Stock Ownership Guidelines ☑ +We have voluntarily adopted stock ownership guidelines for our executive officers and directors, which aligns the incentives of these persons with those of our stockholders, and we regularly monitor compliance with the guidelines. +No Insider Trading, Hedging and Pledging +☑ We have adopted an Insider Trading Policy that specifically prohibits directors, executive officers and employees from insider trading, hedging or pledging Company securities, or adopting similar practices. The Insider Trading Policy also places certain additional restrictions on and requirements for trading by insiders. +Timing of Grant of Option Awards +☑ +If we grant stock options or similar awards, our policy is to not grant such awards at a time when we are in possession of material nonpublic information, such as prior to the release of earnings or news regarding a significant transaction. +Equity Award Vesting Provisions ☑ Our equity awards are subject to "double-trigger" vesting upon a change in control. +No Tax Gross Ups ☑ +Our change in control and severance agreements do not contain provisions allowing for excise tax gross up payments. +No Repricing of Awards ☑ +Our equity incentive plan explicitly prohibits the repricing of equity awards. No repricing of awards will occur without the approval of our stockholders. +No Dividends on Unvested Equity Awards ☑ +Our equity incentive plan does not provide for the payment of dividends or dividend equivalents on unvested equity awards. +41 +COMPENSATION CONSULTANT AND PEER GROUP +Compensation Consultant +The Committee receives assessments and advice regarding our compensation practices and philosophy from its independent compensation consultant, Frederic W. Cook & Co., Inc. (FW Cook). FW Cook provides information on competitive pay practices and trends in our industry, and makes recommendations regarding the formulation of our Peer Group (as defined below), as well as the design and structure of our compensation program. The Committee meets regularly with FW Cook throughout the year, carefully reviews and assesses the materials provided by FW Cook, and engages in thorough deliberations with FW Cook and management regarding our executive compensation program and potential changes. +While our Company is not obligated to retain an independent compensation consultant, the Committee believes the use of an independent consultant provides additional assurance that our executive compensation program is attractive and competitive in the marketplace, consistent with Peer Group practices and broader market conditions, aligned with our business and strategic objectives, and reflective of our executive compensation philosophy. +In accordance with applicable SEC rules, the Committee took certain factors into consideration when selecting FW Cook, which it believes are relevant to its independence as a compensation consultant. In particular, the Committee considered: +• whether any other services had been or were being provided by FW Cook to our Company; +• the amount of fees paid by our Company to FW Cook as a percent of FW Cook’s total revenues; +• FW Cook’s policies and procedures designed to prevent conflicts, a copy of which was provided to the Committee prior to the meeting; +• FW Cook’s ownership of our common stock (if any); and +• any business or personal relationships between FW Cook and any Committee members or any of our executive officers. +Furthermore, FW Cook does not provide any services to us or our management, other than those provided to the Committee. Following the consideration of these factors, and such additional factors as the Committee deemed appropriate under the circumstances, the Committee made an affirmative determination that FW Cook is independent and unanimously approved the engagement of FW Cook. +The decision to engage FW Cook was made by the Committee, and FW Cook reports directly to the Committee. While members of our management regularly communicate with representatives of FW Cook, our management did not recommend the engagement of FW Cook in any capacity for fiscal year 2024 (or any prior year) and does not direct or oversee the retention or termination of, or scope of the services provided by FW Cook with respect to our executive compensation program. +Peer Group +In making compensation decisions for fiscal year 2024, the Committee compared the aggregate compensation opportunity, as well as each element of compensation, against a peer group of publicly traded footwear, apparel, accessories and lifestyle brand companies that was recommended by FW Cook and approved by the Committee. Our peer group is generally comprised of companies against which we compete for executive talent and stockholder investment, are in related businesses or industries, and are otherwise similar to us based on a number of characteristics. Our peer group is reviewed at least annually by the Committee with support from FW Cook. +In particular, when selecting our peer group, the Committee considers the characteristics set forth in the chart below. +42 +Our Peer Group is reviewed at least annually by the Committee with support from FW Cook. For fiscal year 2024, the Committee approved the same Peer Group used in fiscal year 2023 based on consideration of the various characteristics discussed above. While no single company in our peer group reflected all of our Company's characteristics, taken together the Committee believed that these companies provided strong comparative analogs to our overall business model at the time the peer group was reviewed and approved. +Our peer group for fiscal year 2024, which we refer to as our Peer Group, consisted of the following 20 companies: +FISCAL YEAR 2024 PEER GROUP +• Capri Holdings Limited +• Hanesbrands Inc. +• RH +• Under Armour, Inc. +• Carter's, Inc. • Levi Strauss & Co. • Skechers U.S.A., Inc. +• Urban Outfitters, Inc. +• Columbia Sportswear Company +• Lululemon Athletica Inc. +• Steve Madden, Ltd. +• V.F. Corporation +• Crocs, Inc. • PVH Corp. • Tapestry, Inc. • Williams-Sonoma, Inc. +• Foot Locker, Inc. +• Ralph Lauren Corporation +• Ulta Beauty, Inc. +• Wolverine World Wide, Inc. +Use of Peer Group in Setting Executive Compensation +As part of its effort to ensure our executive compensation program is attractive and competitive in the marketplace, the Committee regularly reviews compensation data from our Peer Group provided by FW Cook. Peer Group compensation data is generally used as an initial starting point in making compensation decisions for our executives, including with respect to both the target level of compensation and the overall structure of our executive compensation program. In addition, in order to gain perspective on overall market trends and practices, the Committee regularly reviews data from broad-based compensation surveys. +For comparison purposes, FW Cook typically presents Peer Group compensation data for executives with different titles (e.g., Chief Executive Officer, Chief Financial Officer, etc.), both with respect to the total compensation opportunity for each executive and the individual elements of compensation. Consistent with prior years, in setting the target compensation opportunity for each individual executive for fiscal year 2024, the Committee focused on benchmarking our executives’ target total compensation opportunity to the 50th percentile compared to our Peer Group. While the focus of the median pay philosophy is on the total compensation opportunity available to our executives, the individual elements of compensation are also generally targeted to the 50th percentile as a starting point. +Although an assessment of Peer Group compensation data is a significant factor in the Committee’s evaluation of compensation decisions, it also considers a variety of additional factors, including the tenure, experience, and level of responsibility of each executive, recent and projected Company performance, recent individual performance, retention considerations, general industry practices and economic conditions. Accordingly, the Committee retains discretion to set both the total compensation opportunity and individual elements of compensation as it deems appropriate. +43 +ELEMENTS OF FISCAL YEAR 2024 +EXECUTIVE COMPENSATION PROGRAM +The following table provides summary information regarding the key elements of our fiscal year 2024 executive compensation program: +COMPENSATION +ELEMENT FIXED +V. +PERFORMANCE-BASED / AT RISK CASH +V. +EQUITY +Base Salary Fixed Cash +2024 Annual Cash Incentive Awards +Performance-Based / At Risk +(Short-Term Company Performance Conditions) +(ESG Modifier) Cash +2024 Time-Based RSUs +Performance-Based / At Risk +(Long-Term Time-Based Vesting) +Equity +(Approximately 40% of total equity compensation) +2024 LTIP PSUs +Performance-Based / At Risk +(Long-Term Company Performance Conditions and Vesting) +(TSR Modifier) +Equity +(Approximately 60% of total equity compensation) +Employee Benefits Fixed Other +Severance and Change in Control Fixed Cash/Equity/Other +Base Salary +The following tables provide information regarding the base salaries paid to our NEOs: +COMPENSATION ELEMENT +BASE SALARY +Compensation Considerations Performance Conditions +• Fixed +. +• Cash +• Provides a minimum level of fixed cash compensation necessary to attract and retain executives and to compensate for ongoing and expected duties. +• Balance the level of fixed pay with performance-based pay to properly manage our compensation-related risk. +• Salary reviewed and set annually based on a number of factors, including tenure, experience and level of responsibility, Peer Group benchmarking data, individual performance, Company performance, retention considerations, and general industry practices. +• No specific vesting conditions associated with payment. +NAME +FY 2023 +BASE SALARY +FY 2024 +BASE SALARY +FY 2025 +BASE SALARY (1) +Dave Powers $1,200,000 $1,300,000 $1,300,000 +Steven J. Fasching $765,000 $810,000 $850,000 +Stefano Caroti (2) +$740,000 $800,000 $1,200,000 +Anne Spangenberg +$700,000 $750,000 $785,000 +Thomas Garcia +$550,000 $650,000 $680,000 +(1) The Committee approved the fiscal year 2025 base salaries effective as of July 1, 2024, with the exception of Mr. Caroti's base salary, which will go into effect on August 1, 2024. +(2) Mr. Caroti will receive a meaningful increase in fiscal year 2025 base salary in connection with his appointment as Chief Executive Officer and President, effective August 1, 2024. +44 +2024 Annual Cash Incentive Awards +The following table provides summary information regarding the 2024 Annual Cash Incentive Awards granted to our NEOs during fiscal year 2024: +COMPENSATION ELEMENT +2024 ANNUAL CASH INCENTIVE AWARDS +Compensation Description Performance Conditions/ Vesting Provisions Pay-for-Performance +• Performance-Based ( Short-Term Company Performance Conditions ) +• Cash +• Short-term Company performance conditions based on Committee-approved annual metrics derived from our annual business and strategic plan. +• Pay based on achievement of threshold, target and maximum Company financial performance levels to reward achievement and strike appropriate balance between compensation incentives and risks. +• The "target" performance condition level is typically in line with the level of Company performance projected for each metric based on the annual budget. +• The "target" performance levels reflect a significant increase to actual performance for the prior fiscal year. +• All NEOs have operating income and revenue-based performance metrics to reflect a continued focus on profitability and top line growth, and to ensure our compensation program encourages healthy and sustained growth across our business. +• The Committee continued to incorporate an ESG modifier for fiscal year 2024. +• Target bonus set as percentage of base salary. +• Actual bonus payout is based on achievement of fiscal year 2024 consolidated operating income and consolidated revenue targets for all NEOs (and business unit operating income and revenue targets for certain executives with business unit oversight responsibilities). +• The Committee assigned relative weighting to each component, which is expressed as a percentage of the target cash incentive amount. +• For threshold performance, 50% of the cash incentive related to that component would be earned. For target performance, 100% would be earned. For maximum performance, 200% would be earned. +• Achievement below threshold levels results in no payout. To the extent Company financial performance is achieved above the threshold levels, the bonus payout that will be earned from the threshold to the target, and from the target to the maximum, will increase as determined by linear interpolation. +• The ESG modifier was designed to impact payouts within the range of +10% to -10%, and highlights our efforts to drive accountability for achievement of our ESG initiatives. +• Total payout opportunity is capped at 200%, regardless of the impact of the ESG modifier. +• Fiscal year 2024 consolidated operating income, Fashion Lifestyle operating income, and Fashion Lifestyle revenue metrics were all achieved at the maximum level based on Company performance. Fiscal year consolidated revenue was achieved above the target level and slightly below the maximum level based on Company performance. +• The Committee determined that the ESG modifier was achieved at the +8% level. +• As a result of this performance, 2024 Annual Cash Incentive Award payments of 200% of base salary were earned by each of the NEOs (inclusive of the impact of the ESG modifier). +• Additional information regarding the determination of the target cash incentive amount and the calculation of the actual 2024 Annual Cash Incentive Awards for each NEO is provided below. +45 +Target Cash Incentive Amount +The Committee establishes a target amount of annual cash incentive compensation for each NEO, which is expressed as a percentage of base salary. The percentage is determined by the Committee by reference to a number of factors, including tenure, experience and level of responsibility, Peer Group benchmarking data, individual performance, our recent and projected financial performance, retention considerations and general industry practices. Further, the target cash incentive amount is prorated to reflect any base salary adjustments throughout the full fiscal year so that the target amount reflects actual base salary earned. +Performance Relative to Targets +The following table summarizes the performance conditions for the 2024 Annual Cash Incentive Awards, the relative weighting of each performance condition for each NEO; the threshold, target and maximum performance levels established by the Committee; our performance in light of the targets; and the actual payout percentage for each component: +COMPONENT RELATIVE +WEIGHT FOR EACH NEO THRESHOLD PERFORMANCE +TARGET PERFORMANCE (1) +MAXIMUM PERFORMANCE +PERFORMANCE AND PAYOUT (2) +Consolidated Operating Income • 70% for Messrs. Powers, Fasching, Caroti and Garcia +• 30% for Ms. Spangenberg $644.7 million $716.4 million $859.7 million $927.5 million, resulting in a payout of 200% +Consolidated Revenue • 30% for Messrs. Powers, Fasching, Caroti and Garcia $3,634.0 million $3,950.0 million $4,345.0 million $4,287.8 million, resulting in a payout of 185.5% +Business Unit Operating Income • 40% for Ms. Spangenberg +(Fashion Lifestyle) $582.0 million $646.7 million $776.0 million $854.9 million, resulting in a payout of 200% +Business Unit Revenue • 30% for Ms. Spangenberg +(Fashion Lifestyle) $1,876.6 million $2,039.8 million $2,243.7 million $2,306.9 million, resulting in a payout of 200% +(1) The target performance level established by the Committee is higher than the actual financial performance with respect to each condition for fiscal year 2023. +(2) Payout percentages reflect the level of payout achieved for each component of the 2024 Annual Cash Incentive Award. Payout amounts based on achievement between threshold and target levels, or between target and maximum levels, are determined by linear interpolation. Achievement below threshold levels results in no payout. +46 +ESG Modifier +To further strengthen our pay-for-performance alignment, and reinforce the importance of achieving ESG initiatives, in fiscal year 2024, the Committee continued to incorporate an ESG modifier for the 2024 Annual Cash Incentive Awards, which could result in an increase or decrease in the amount of the awards. The ESG modifier was aligned with three key pillars: culture and employee engagement (40% weight); DEI, including BIPOC and gender representation in leadership (40% weight); and the environment, including progress towards our science-based targets (20% weight). The Committee determined that the ESG modifier was achieved at the +8% level, which was applied to the final payout of the 2024 Annual Cash Incentive Awards. +Calculation of Total Payout +The amount of cash incentive compensation actually earned by each NEO with respect to the 2024 Annual Cash Incentive Awards (total payout) is calculated by multiplying each NEO's relative weight for each component by the percentage of target earned for each component (using linear interpolation), resulting in an overall weighted achievement percentage, and multiplying the target cash incentive amount by the achievement percentage, resulting in the payout amount for each component. The payout for each component is then added and the sum is then adjusted based on the percentage of ESG modifier earned (if any). The total payout is capped at 200% for each NEO regardless of the impact of the ESG modifier. Each NEO for fiscal year 2024 earned a bonus payout at 200% of target based on the combined results and as described herein. +The calculation of total payout for each NEO is illustrated by the table below: +NAME TARGET +% +OF SALARY COMPONENT RELATIVE WEIGHT +OF COMPONENT % +OF TARGET EARNED FOR COMPONENT +OVERALL WEIGHTED ACHIEVEMENT (BEFORE ESG MODIFIER) +TARGET CASH INCENTIVE AMOUNT +PAYOUT +FOR EACH COMPONENT +% +OF ESG +MODIFIER +EARNED TOTAL PAYOUT +Dave Powers 175% Consolidated Operating Income 70% 200% 196% $1,562,042 $3,056,183 8% $4,462,978 +Consolidated Revenue 30% 186% $669,447 $1,309,793 +Steven J. Fasching 100% Consolidated Operating Income 70% 200% 196% $525,882 $1,028,904 8% $1,502,520 +Consolidated Revenue 30% 186% $225,378 $440,959 +Stefano Caroti 100% Consolidated Operating Income 70% 200% 196% $517,359 $1,012,229 8% $1,478,169 +Consolidated Revenue 30% 186% $221,725 $433,812 +Anne Spangenberg 100% Consolidated Operating Income 30% 200% 200% $208,217 $416,434 8% $1,388,115 +Fashion Lifestyle Operating Income 40% 200% 277,623 555,246 +Fashion Lifestyle Revenue 30% 200% $208,217 $416,434 +Thomas Garcia 75% Consolidated Operating Income 70% 200% 196% $328,197 $642,127 8% $937,705 +Consolidated Revenue 30% 186% $140,656 $275,197 +Special Cash Bonus +As discussed above, during fiscal year 2024, the Committee selectively granted a special cash bonus award to Mr. Caroti in the amount of $400,000, which was in addition to his 2024 Annual Cash Incentive Award. In approving this award, the Committee recognized Mr. Caroti's continued interim leadership role within the HOKA Group in addition to continuing to manage the responsibilities associated with his regular position. During this time, Mr. Caroti drove successful engagement across the organization, as well as outstanding financial and operational results. Mr. Caroti was the only NEO to receive a special cash bonus during fiscal year 2024. Please see the section of this Proxy Statement titled " —Summary Compensation Table " for additional information. +47 +2024 Time-Based Restricted Stock Units +The following table provides summary information regarding the 2024 Time-Based RSUs granted to our NEOs during fiscal year 2024: +COMPENSATION ELEMENT +2024 TIME-BASED RSUs +Compensation Description Performance Conditions/ Vesting Provisions Pay-for-Performance +• Performance-Based (Long-Term Time-Based Vesting) +. +• Approximately 40% of total equity compensation +• Balance the level of compensation with performance-based vesting with compensation with time-based vesting to properly manage our compensation-related risk. +• Primarily used for retention of our executives based on long-term vesting condition. +• Equity awards with time-based vesting are customary among our Peer Group based on benchmarking data. +• 2024 Time-Based awards vest in three equal installments over three years commencing August 15, 2024. +• With respect to the 2024 Time-Based RSUs, our NEOs are at risk of not receiving the full value of these awards because vesting is generally conditioned upon continued employment over an extended period of time and their value is subject to fluctuation based on our stock price. +• The Committee expects a majority of equity awards to continue to have performance-based vesting conditions. +48 +2024 Long-Term Incentive Plan Performance-Based Stock Units +The following table provides summary information regarding the 2024 LTIP PSUs granted to our NEOs during fiscal year 2024: +COMPENSATION ELEMENT +2024 LTIP PSUs +Compensation Description Performance Conditions/ Vesting Provisions Pay-for-Performance +• Performance-Based (Long-Term Company Performance Conditions and Vesting) +• Approximately 60% of total equity compensation to ensure a majority of the total equity compensation opportunity is based on achievement of performance-based vesting conditions +• Company performance conditions are based on Committee-approved metrics derived from our three-year long-range business and strategic plan that are approved at the beginning of the performance measurement period. +• Pre-tax income and consolidated revenue were selected as the performance conditions because they support our focus on profitability and revenue growth as key strategic initiatives and align executives’ interests with the execution of our long-range plan. +• Reliance on multiple performance-based vesting conditions strikes appropriate balance between compensation incentives and risks. +• 50% of each award will vest subject to the achievement of annual pre-tax income targets measured in fiscal years 2024, 2025 and 2026. +• 50% of each award will vest subject to the achievement of an annual consolidated revenue target measured in fiscal years 2024, 2025 and 2026. +• While we measure performance annually over the three-year period, the goals for each fiscal year are established at the beginning of the performance measurement period. We believe that this approach creates appropriate alignment with stockholders while also helping address the challenges with goal-setting for a high-growth organization. +• No vesting of any portion of the award will occur if we fail to achieve the pre-established minimum revenue and pre-tax income thresholds. To the extent our financial performance is achieved above the threshold amounts, the number of LTIP PSUs that will vest from the threshold to the target, and from the target to the maximum, will increase as determined by linear interpolation. +• The maximum number of LTIP PSUs that may vest with respect to a particular award will not exceed 200% of the target amount for that award (regardless of the level of Company performance or the application of the TSR modifier.) +• The executive must provide continued service through the vesting date. +• Vesting of these awards is dependent on achievement of profitability and consolidated revenue targets that are established by the Committee at the beginning of the measurement period and are consistent with achievement of our strategic objectives. +• The vesting of the awards is subject to adjustment upward or downward based upon the application of a TSR modifier, thereby correlating the vesting of the awards to both total and relative stockholder returns over the full three-year performance period. +• Additional information regarding the application of the TSR modifier is provided below. +Total Stockholder Return Modifier +The 2024 LTIP PSU awards earned are subject to upward or downward adjustment based on the application of a TSR modifier. The amount of the adjustment will be determined based upon a comparison of Company TSR relative to the TSR of a pre-determined set of peer group companies (TSR Peer Group) for the 36-month performance period commencing on April 1, 2023 and ending on March 31, 2026. For purposes of the 2024 LTIP PSUs, the TSR Peer Group used is the same as the Peer Group, but also includes two additional companies deemed appropriate by the Committee. +Company TSR relative to the TSR of the TSR Peer Group (Peer Group TSR) is calculated and expressed as a percentile. The number of 2024 LTIP PSUs that are subject to vesting will be adjusted based on this percentile as set forth in the table: +Company TSR Relative to +Peer Group TSR (Percentile) TSR Modifier +(Multiplier) +≥75th 125% +55th 100% +(no modification) +≤25th 75% +49 +The number of LTIP PSUs that will vest from the 25th percentile to the 55th percentile, and from the 55th percentile to the 75th percentile, will increase as determined by linear interpolation. The TSR modifier may not exceed 125% regardless of the Company's absolute or relative TSR performance. +Notwithstanding the foregoing, in the event that Company TSR is greater than or equal to the 55th percentile relative to the Peer Group TSR, but Company TSR is a negative amount, the TSR modifier will not be applied (the number of RSUs to be vested will not be increased as a result of the TSR multiplier). In addition, regardless of Company TSR relative to the Peer Group TSR, the maximum number of 2024 LTIP PSUs that will vest will not exceed 200% of the target amount. The Committee believes these guardrails are appropriate for balancing the desire to use the TSR modifier to align the interests of executives with those of our stockholders while also mitigating compensation-related risk. +Special Equity Award +During fiscal year 2024, Mr. Fasching was granted a special equity award in recognition of his significant contributions to the Company's exceptional financial performance and achievements. In approving the award, the Committee also recognized Mr. Fasching's individual performance and contributions, Peer Group benchmarking data and importance of retaining the executive in light of the planned CEO transition. This award had a grant date fair value of $3,000,000 and was comprised 60% of 2024 LTIP PSUs and 40% of 2024 Time-Based RSUs, which is consistent with the relative mix of equity awards granted to the NEOs for fiscal year 2024, and reflective of our emphasis on performance-based awards. +Mr. Fasching was the only NEO to receive a special equity award during fiscal year 2024. The Committee generally expects these types of awards to be reserved for unique circumstances and to be made infrequently. Please see the section of this Proxy Statement titled " —Summary Compensation Table " for additional information. +Employee Benefits +The following table provides summary information regarding the key employee benefits granted or paid to our NEOs during fiscal year 2024: +COMPENSATION ELEMENT +EMPLOYEE BENEFITS +Compensation Considerations Benefits +• Key employee benefits granted or paid +• Generally reflect benefits provided to all of our US-based full-time employees. +• NEOs do not receive benefits that are materially greater than those of other full-time employees. +• Provides a standard package of benefits necessary to attract and retain executives. +• 401(k) defined contribution plan. +• 401(k) plan Company match of 50% of each eligible participant's tax-deferred contributions on up to 6% of eligible compensation on a per payroll period basis, with a true-up contribution if such eligible participant is employed by our Company on the first day of the calendar year. +• Premiums for long-term disability insurance and life insurance for the benefit of the employees. +• Health and welfare benefit plans. +• Relocation expenses for new hires. +• Standard employee product discounts. +• Eligibility to contribute to our Nonqualified Deferred Compensation Plan, or NQDC Plan. See the section of this Proxy Statement titled "— Nonqualified Deferred Compensation. " +50 +Severance and Change-in-Control Provisions +The following table provides summary information regarding the severance and change in control provisions in our severance agreements and equity award agreements entered into with each of our NEOs: +COMPENSATION ELEMENT +SEVERANCE AND CHANGE IN CONTROL PROVISIONS +Compensation Considerations Terms +• Certain cash payments, vesting of certain equity awards and benefits reimbursement, in the event of a qualifying separation of employment, including in connection with a change in control transaction. +• The employment of our NEOs is "at will," meaning we can terminate them at any time and they can terminate their employment with us at any time. +• "Double-trigger" provisions preserve morale and productivity and encourage executive retention in the face of the potentially disruptive impact of a change in control transaction. +• Value of potential payments takes into account the expected time it takes a separated executive to find a similar position. +• Considered a typical component of a competitive executive compensation program for executives among our Peer Group. +• We are not providing any special severance benefits or payments to Mr. Powers in connection with his retirement. +Change in Control and Severance Agreements : +• Provide for certain cash payments, vesting of certain equity awards and benefit reimbursement, in the event there is a separation of employment under various circumstances, including upon a change in control transaction. +Equity Award Agreements : +• Provide for accelerated vesting of awards upon a change in control transaction if the recipient is terminated by the acquiring entity in connection with the change in control transaction under specified circumstances. In addition, vesting of awards will be accelerated in full if the acquiring entity does not agree to provide for the assumption or substitution of the awards. +For additional information about the severance and change in control provisions in our severance agreements and equity award agreements, please refer to the section of this Proxy Statement titled " —Potential Payments upon Termination or Change in Control. " +51 +OTHER COMPENSATION CONSIDERATIONS +Role of Executive Officers in Compensation Decisions +At the request of the Committee, our Chief Executive Officer and President, or other senior management personnel may provide performance and compensation information to the Committee to inform its compensation decisions. However, our executives are not permitted to be present during any deliberations and voting regarding their own compensation, or during any executive sessions of the Committee when compensation decisions are taking place. The Committee considers the information provided by our management, as well as information and advice provided by FW Cook, when making compensation decisions for our NEOs and other executives. However, the Committee, which is comprised solely of independent directors, thoroughly evaluates and approves all elements of compensation for our NEOs and other executives. +Compensation Risk Assessment +The Committee is responsible for reviewing the payments that may be made and the value that may be achieved from our compensation program for all employees, including our NEOs, to assess whether the program encourages excessive or unnecessary risk-taking or otherwise is likely to have a material adverse effect on us. The Committee conducts a compensation risk analysis at least annually, but also takes into account compensation-related risks each time it grants compensation awards throughout the fiscal year. In conducting these assessments, the Committee considers a number of factors including the following: +• Our compensation program consists of elements that provide both fixed and performance-based compensation, and the Committee reviews these elements and the relative mix annually. +• Our Peer Group and industry compensation data is reviewed regularly to ensure our compensation program is appropriate and competitive. +• We have adopted a median pay philosophy whereby we benchmark our executives’ target total compensation opportunity and individual elements of compensation at the median compared to our Peer Group. +• A majority of the equity awards granted by the Committee have performance-based vesting conditions and we expect to continue to incorporate this equity grant philosophy. +• Performance-based awards are earned based on the achievement of pre-established Company and business unit performance goals, and for fiscal year 2024, are subject to upward or downward modification based on the application of an ESG modifier and TSR modifier, as applicable. +• We seek to limit overlap between our performance conditions and measurement periods to ensure our compensation program encourages healthy and sustained growth across our business, as well as over multiple time periods. +• Our performance-based awards are subject to maximum award amounts to cap the potential compensation amount associated with an award, even after taking into account potential adjustments based on the application of the applicable modifier. +• Our executive compensation program encourages executive retention through long-term vesting provisions. For fiscal year 2024, all of the equity awards we granted were subject to three-year vesting. +• We maintain a Clawback and Forfeiture Policy related to our cash and equity incentive awards, which emphasizes integrity and accountability in financial reporting. +• We voluntarily maintain Stock Ownership Guidelines, which encourage executives to have a significant, long-term equity position in our Company, thereby aligning the interests of our executives with our stockholders. We routinely monitor compliance with these guidelines. +• Our governance policies, including our Insider Trading Policy, prohibit our directors, executive officers and employees from insider trading, conducting speculative trading in our securities, hedging our securities, or pledging our securities as collateral for a loan. +• We maintain a policy to ensure we do not grant stock options or similar awards at a time when we are in possession of material nonpublic information, such as prior to the release of earnings or news regarding a significant transaction. +• Our severance and change in control benefits are designed to attract and retain executives without providing excessive benefits such as excise tax gross up payments. +• Our equity awards are intended to provide for “double-trigger” vesting upon a change in control. +52 +The Committee believes our executive compensation program is appropriately balanced and does not encourage excessive or unnecessary risk-taking. The Committee does not believe our compensation program is reasonably likely to have a material adverse effect on us. +Clawback and Forfeiture Policy +During fiscal year 2024, our Board adopted an updated Clawback and Forfeiture Policy that is compliant with recently adopted SEC and NYSE rules. The policy is consistent with our executive compensation philosophy, which seeks to reward executive officers for financial performance that creates value for our stockholders. Under this policy, we will seek recoupment or reimbursement with respect to incentive-based compensation received by our executive officers when the following three factors exist: +• the restatement of any Company financial statements has occurred, which was required as a result of, or necessitated by, any material noncompliance by the Company with any financial reporting requirement under the federal securities laws (accounting restatement); +• incentive-based compensation was received by the executive officer during the three completed fiscal years immediately preceding the earlier of the date (1) the Board concludes, or reasonably should have concluded, that the Company is required to prepare an accounting restatement, or (2) a court, regulator or other legally authorized body directs the Company to prepare an accounting restatement (recovery period), after beginning service as an executive officer, provided such executive officer served as an executive officer at any time during the performance period from which such incentive-based compensation was derived; and +• a lower amount of incentive-based compensation would have been received by the executive officer based upon the financial results as restated in the accounting restatement. +Under the policy, the accounting restatement does not need to be the result of misconduct by the executive officers for the recoupment to apply. +The recoupment or recovery to be sought by our Company will be equal to the portion of any incentive-based compensation received by such executive officer for or during the recovery period that is greater than the amount that would have been received had the financial results been properly reported. +In addition, under this policy, the Committee may seek to recoup or recover from an employee certain incentive-based compensation previously paid or awarded to such employee if the Audit & Risk Management Committee determines the employee has engaged in significant misconduct that causes financial or reputational harm to the Company (regardless of whether an accounting restatement has occurred), as determined in the discretion of the Audit & Risk Management Committee. +Stock Ownership Guidelines +To further align the interests of our executive officers and directors with those of our stockholders, we have voluntarily adopted Stock Ownership Guidelines. The Committee periodically reviews these guidelines to ensure they continue to evolve to take into account changes to our executive compensation program, as well as governance best practices. +NEOs are required to hold a number of shares of common stock determined as a multiple of the NEO's base salary as of the beginning of each calendar year, subject to exceptions that may be granted by the Committee. Unless and until an NEO reaches the required ownership level, the NEO must retain at least 75% of the equity awards, after payment of any applicable exercise price and tax withholdings, that are acquired through our equity compensation program. The Committee periodically reviews our NEOs' compliance with the Stock Ownership Guidelines and, as of the end of fiscal year 2024, determined that each NEO complied with the minimum ownership thresholds. +Directors are required to hold a number of shares of common stock with a value equal to five times the base annual board retainer fee (not taking into account committee fees) within five years of joining our Board, subject to exceptions that may be granted by the Committee. In addition, each director must hold shares of common stock within one year of joining our Board. The Committee periodically reviews our directors' compliance with the Stock Ownership Guidelines, and, as of the end of fiscal year 2024, determined that each director complies with the guidelines. +The following table provides a summary of the Stock Ownership Guidelines applicable to our NEOs and directors: +POSITION STOCK OWNERSHIP GUIDELINES +Chief Executive Officer 6x Annual Base Salary +Other NEOs 3x Annual Base Salary +Directors 5x Annual Board Retainer Fee +53 +No Insider Trading +Our Insider Trading Policy, which was most recently amended in September 2023, governs purchases, sales and other dispositions of our securities by our directors, executive officers, employees and consultants. We believe our Insider Trading Policy is reasonably designed to promote compliance with insider trading laws, rules and regulations, and the NYSE listing standards applicable to us. Our Insider Trading Policy prohibits purchases, sales and other dispositions of our securities while in possession of material nonpublic information about us and from disclosing such information to others, and it prohibits trading on material nonpublic information of other companies obtained during the course of providing service to us. It also imposes additional restrictions on and trading requirements for trading in our securities by our insiders. A copy of our Insider Trading Policy was filed as Exhibit 19.1 to our Annual Report on Form 10-K filed with the SEC on May 24, 2024. +No Hedging and Pledging +Pursuant to our Insider Trading Policy, our directors, executive officers, employees and consultants are prohibited from conducting any short-term or speculative trading in our securities, hedging or entering into derivative transactions involving our securities, pledging our securities as collateral for a loan, or adopting similar practices. +Grant Practices Specific to Stock Option Awards +Beginning in fiscal year 2019, the Committee ceased granting stock options or similar awards as part of our equity compensation programs. If stock options or similar awards are granted in the future, our policy is to not grant any such awards at a time when we are in possession of material nonpublic information, such as the release of earnings or news regarding a significant transaction. In addition, we generally do not grant stock options or similar awards (i) during trading blackout periods established under our Insider Trading Policy or (ii) at any time during the four business days prior to or the one business day following the filing of our periodic reports or the filing or furnishing of a Form 8-K that discloses material nonpublic information. Our executive officers are not permitted to choose the grant date for their individual stock option grants. +During fiscal year 2024, (i) none of our NEOs were awarded stock options or similar awards, with an effective grant date during any period beginning four business days before the filing or furnishing of a Form 10-Q, Form 10-K, or Form 8-K that disclosed material nonpublic information, and ending one business day after the filing or furnishing of such reports, and (ii) we did not time the disclosure of material nonpublic information for the purpose of affecting the value of executive compensation. +Tax and Accounting Considerations +Among the factors it considers when making executive compensation decisions, the Committee considers the anticipated tax and accounting impact to us (and to our executive officers) of various payments, equity awards, and other benefits. +The Committee has historically considered the impact of the provisions of Section 162(m) of the Internal Revenue Code of 1986, as amended (Code), when determining the compensation of the Company's executive officers, but maintains the discretion to approve compensation that is not deductible. We do not anticipate the deduction limitation set forth in Section 162(m) of the Code will have a material impact on our results of operations. +The Committee also considers the impact of Section 409A of the Code. In general, our executive plans and programs are designed to comply with the requirements of that section so as to avoid possible adverse tax consequences that may result from noncompliance. +We account for equity awards in accordance with the requirements of Financial Accounting Standards Board Accounting Standards Codification (FASB ASC) Topic 718, Stock Compensation . +Our change-in-control and severance agreements do not provide for excise tax gross up payments or similar benefits. +54 +TALENT & COMPENSATION COMMITTEE REPORT +The Talent & Compensation Committee of our Company has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussion, the Talent & Compensation Committee has recommended to our Board that the Compensation Discussion and Analysis be included in this Proxy Statement. +THE TALENT & COMPENSATION COMMITTEE +Cynthia (Cindy) L. Davis ( Chair ) +David A. Burwick +Victor Luis +Bonita C. Stewart +The Talent & Compensation Committee Report shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as amended, or the Acts, except to the extent that we specifically incorporate this information by reference, and shall not otherwise be deemed filed under the Acts. +55 +SUMMARY COMPENSATION TABLE +The following table sets forth all compensation paid or awarded to our NEOs during fiscal years 2024, 2023, and 2022. The amounts set forth in the table have been calculated in accordance with the requirements of applicable SEC rules, and do not necessarily reflect the amounts that have actually been paid to, or which may be realized by, our NEOs. The table should be read together with the section of this Proxy Statement titled “ Compensation Discussion and Analysis .” +Name and Principal Position Year Salary +($) Bonus +($) +Stock +Awards +($) (1)(2) +Non-Equity Incentive +Plan +Comp. +($) (3) +All Other Comp. +($) (4) +Total +($) +Dave Powers 2024 1,276,923 — 8,499,746 4,462,978 18,765 14,258,412 +Chief Executive Officer +President 2023 1,173,077 — 7,999,562 2,200,822 18,015 11,391,476 +2022 1,100,000 — 7,999,651 1,701,521 53,762 10,854,934 +Steven J. Fasching 2024 799,615 — 4,999,117 1,502,520 18,753 7,320,005 +Chief Financial Officer 2023 756,923 — 1,699,907 651,493 18,003 3,126,326 +2022 686,538 — 2,499,639 643,137 10,632 3,839,946 +Stefano Caroti (5) +2024 786,154 400,000 1,999,912 1,478,169 60,319 4,724,554 +Chief Commercial Officer 2023 729,231 400,000 2,999,273 589,081 57,438 4,775,023 +2022 686,539 — 2,499,684 545,519 53,458 3,785,200 +Anne Spangenberg (6) +2024 756,164 — 1,499,181 1,388,115 44,844 3,688,304 +President of Fashion Lifestyle 2023 471,472 — 1,199,466 206,877 9,611 1,887,426 +Thomas Garcia (7) +2024 627,764 — 999,639 937,705 49,179 2,614,287 +Chief Administrative Officer 2023 546,182 — 999,612 464,442 46,595 2,056,831 +(1) The amounts in this column represent the aggregate grant date fair value of the respective awards computed in accordance with FASB ASC Topic 718. For information about the assumptions underlying these computations, please refer to Note 8 to our consolidated financial statements included in our Annual Report on Form 10-K, filed with the SEC on May 24, 2024. In accordance with applicable SEC rules, for those awards that are subject to the satisfaction of performance conditions, the amounts reported reflect the grant date fair value of the awards based upon the probable outcome of such conditions as of the grant date. For fiscal year 2024, the maximum value of the awards assuming the maximum level of achievement relative to the performance conditions is as follows: $13.6 million for Mr. Powers, $8.0 million for Mr. Fasching, $3.2 million for Mr. Caroti, $2.4 million for Ms. Spangenberg, and $1.6 million for Mr. Garcia. +(2) These amounts reflect the aggregate value of 2024 Time-Based RSUs and 2024 LTIP PSUs granted to our NEOs. In addition, for Mr. Fasching, the amount reflects the value of a special equity award granted in recognition of his significant contributions to the Company's financial performance and achievements, which was provided as a combination of 2024 Time-Based RSUs and 2024 LTIP PSUs. Refer to the sections of this Proxy Statement titled “—2024 Time-Based Restricted Stock Units” and "— 2024 Long-Term Incentive Plan Performance-Based Stock Units " for additional information. +(3) These amounts reflect the cash incentive payments paid to our NEOs under our 2024 Annual Cash Incentive Awards. Refer to the section of this Proxy Statement titled "—2024 Annual Cash Incentive Awards” for additional information. +(4) These amounts reflect matching contributions made to our NEOs under the NQDC Plan and 401(k) plan, as well as long-term care premiums and life insurance premiums paid on policies adopted for the benefit of our NEOs. Refer to the section of this Proxy Statement titled "— Nonqualified Deferred Compensation " for additional information. +. +(5) Mr. Caroti was appointed Chief Commercial Officer in April 2023, and previously served as President of Omni-Channel. The Committee selectively granted a special cash bonus award to Mr. Caroti for fiscal year 2024 in connection with his continued interim leadership role within the HOKA Group in addition to continuing to manage the responsibilities associated with his regular position. Refer to the section of this Proxy Statement titled "— 2024 Annual Cash Incentive Awards—Special Cash Bonus " for additional information. +(6) Ms. Spangenberg's employment with the Company began in July 2022. Her annualized salary for fiscal year 2023 was $700,000. +(7) Mr. Garcia qualified as an NEO for the first time with respect to fiscal year 2023. +56 +GRANTS OF PLAN-BASED AWARDS IN +FISCAL YEAR 2024 +The following table sets forth all grants of plan-based awards made to our NEOs during fiscal year 2024. The value of the payouts and awards set forth in the table have been calculated in accordance with the requirements of applicable SEC rules, and do not necessarily reflect the amounts that have actually been paid to, or which may be realized by, our NEOs. The table should be read together with the section of this Proxy Statement titled “— Elements of Fiscal Year 2024 Executive Compensation Program. ” +Potential Payouts as of Grant Date Under Non-Equity Incentive Plan Awards (1) +Potential Payouts as of Grant Date Under Equity Incentive Plan Awards All Other Stock Awards: Number of Shares (#) +Grant Date +Fair Value +of Awards +($) (4) +Name Grant Date Threshold +($) Target +($) Max. +($) Threshold +(#) Target +(#) Max. +(#) +Dave Powers 1,115,745 2,231,489 4,462,978 — — — — — +8/15/23 0 — — 4,023 8,045 (2) 16,090 — 5,099,806 +8/15/23 0 — — — — — 6,129 (3) 3,399,940 +Steven J. Fasching 375631 751,260 1,502,521 — — — — — +8/15/23 — — — 947 1,893 (2) 3,786 — 1,199,991 +8/15/23 — — — — — — 1,442 (3) 799,921 +2/6/24 — — — 904 1,807 (2) 3,614 — 1,799,971 +2/6/24 — — — — — — 1,453 (3) 1,199,234 +Stefano Caroti 369,542 739,085 1,478,169 — — — — — +8/15/23 — — — 947 1,893 (2) 3,786 — 1,199,991 +8/15/23 — — — — — — 1,442 (3) 799,921 +Anne Spangenberg +347,029 694,057 1,388,115 — — — — — +8/15/23 — — — 710 1,419 (2) 2,838 899,518 +8/15/23 — — — — — — 1,081 (3) 599,663 +Thomas Garcia 234,426 468,852 937,705 — — — — — +8/15/23 — — — 473 946 (2) 1,892 — 599,679 +8/15/23 — — — — — — 721 (3) 399,960 +(1) The amounts in this column reflect the potential payouts under the 2024 Annual Cash Incentive Awards. The cash incentive award payments were ulti mately paid out at 200% of ta rget in June 2024. Refer to the section of this Proxy Statement titled "— 2024 Annual Cash Incentive Awards " for additional information. +(2) The awards in this row reflect the grant of 2024 LTIP PSUs. These awards may vest based upon our achievement of annual performance targets for each of fiscal years 2024, 2025, and 2026 and continued service through March 31, 2026. As of the date of this Proxy Statement, we consider the performance conditions to be probable of being achieved at 100% of the target amount, although the awards can vest up to a maximum of 200% of the target amount. The grant date fair value of the awards assuming the maximum level of achievement relative to the performance conditions is as follows: $10.2 million for Mr. Powers; $6.0 million for Mr. Fasching; $2.4 million for Mr. Caroti; $1.8 million for Ms. Spangenberg; and $1.2 million for Mr. Garcia. Refer to the section of this Proxy Statement titled "— 2024 Long-Term Incentive Plan Performance-Based Stock Units " for additional information. +(3) The awards in this column reflect the grant of 2024 Time-Based RSUs. These awards vest over three years in equal annual installments on August 15, 2024, 2025 and 2026. Refer to the section of this Proxy Statement titled "— 2024 Time-Based Restricted Stock Units " for additional information. +(4) The amounts in this column represent the aggregate grant date fair value of the respective awards computed in accordance with FASB ASC Topic 718. For information about the assumptions underlying these computations, please refer to Note 8 to our consolidated financial statements included in our Annual Report on Form 10-K filed May 24, 2024 with the SEC. In accordance with applicable SEC rules, for those awards that are subject to the satisfaction of performance conditions, the amounts reported reflect the value of the grant date based upon the probable outcome of such conditions. +57 +OUTSTANDING EQUITY AWARDS AT +2024 FISCAL YEAR END +The following table sets forth equity awards granted to our NEOs that remained outstanding as of March 31, 2024. The market values of the awards set forth in the table have been calculated in accordance with the requirements of applicable SEC rules, and do not necessarily reflect the amounts that have actually been paid to, or which may be realized by, our NEOs. The table should be read together with the section of this Proxy Statement titled “— Elements of Fiscal Year 2024 Executive Compensation Program. ” +Stock Options Stock Awards +Name Number of +securities +underlying +unexercised +options +exercisable +(#) Option +exercise +price +($) Option +expiration +date Number of +shares that +have not +vested +(#) +Market +value of +shares that +have not +vested +($) (2) +Number of +unearned +shares that +have not +vested +(#) (3) +Market +value of +unearned +shares that +have not +vested +($) (4) +Dave Powers 5,993 (1) 69.29 6/13/2024 13,122 (5) 12,351,214 12,358 11,632,091 +Steven J. Fasching — — — 5,042 (6) 4,745,833 6,326 5,954,411 +Stefano Caroti — — — 4,813 (7) 4,530,284 6,527 6,143,604 +Anne Spangenberg — — — 2,081 (8) 1,958,762 3,372 3,173,929 +Thomas Garcia — — — 1,749 (9) 1,646,264 2,490 2,343,737 +(1) These awards reflect 2018 LTIP Non-Qualified Stock Options (NQSOs) that were granted in June 2017. The Talent & Compensation Committee determined that the performance condition was achieved, and the options are fully vested and exercisable. +(2) In accordance with applicable SEC rules, the market value of the shares has been determined based on the closing price of our common stock on March 31, 2024, which was $941.26. +(3) The stock awards are 2023 LTIP PSUs that were granted in August 2022 and September 2022, and 2024 LTIP PSUs that were granted in August 2023 and February 2024, respectively, which remain outstanding and subject to long-term performance-based and service-based conditions. The shares included reflect achievement of the performance conditions at the target level of 100%. However, the maximum performance level for these awards is 200%. The 2023 LTIP PSUs will vest on March 31, 2025, and the 2024 LTIP PSUs will vest on March 31, 2026, each subject to achievement of the applicable performance conditions. +(4) In accordance with applicable SEC rules, the market value of the shares has been determined based on the closing price of our common stock on March 31, 2024, which was $941.26. The market value of 2023 and 2024 LTIP PSUs was calculated as to 100% of the shares underlying the awards. +(5) This amount consists of (i) 2,736 2022 time-based RSUs granted in July 2021, which shares vest as to 100% on August 15, 2024 (ii) 6,300 2023 time-based RSUs granted in August 2022, which shares vest as to 50% on August 15, 2024, and 2025 and (iii) 4,086 2024 time-based RSUs granted in August 2023, which shares vest as to 50% on August 15, 2024 and 2025. In connection with his retirement, 2,043 time-based RSUs granted to Mr. Powers in August 2023 were terminated effective March 31, 2024, and are excluded from the stock awards reported. +(6) This amount consists of (i) 342 2022 time-based RSUs granted in July 2021, which shares vest as to 100% on August 15, 2024 (ii) 466 2022 time-based RSUs granted in August 2021, which shares vest as to 100% on August 15, 2024 (iii) 1,339 2023 time-based RSUs granted in August 2022, which shares vest as to 50% on August 15, 2024, and 2025 (iv) 1,442 2024 time-based RSUs granted in August 2023, which shares vest as to 33.33% on August 15, 2024, 2025 and 2026 and (v) 1,453 2024 time-based RSUs granted in February 2024, which shares vest as to 33.33% on February 6, 2025, 2026, and 2027. +(7) This amount consists of (i) 342 2022 time-based RSUs granted in July 2021, which shares vest as to 100% on August 15, 2024 (ii) 667 2022 time-based RSUs granted in February 2022, which shares vest as to 100% on August 15, 2024 (iii) 2,362 2023 time-based RSUs granted in August 2022, which shares vest as to 50% on August 15, 2024, and 2025 and (iv) 1,442 2024 time-based RSUs granted in August 2023, which shares vest as to 33.33% on August 15, 2024, 2025, and 2026. +(8) This amount consists of (i) 1,000 2023 time-based RSUs granted in September 2022, which shares vest as to 50% on September 15, 2024, and 2025 and (ii) 1,081 2024 time-based RSUs granted in August 2023, which shares vest as to 33.33% on August 15, 2024, 2025, and 2026. +(9) This amount consists of (i) 240 2022 time-based RSUs granted in July 2021, which shares vest as to 100% on August 15, 2024 (ii) 788 2023 time-based RSUs granted in August 2022, which shares vest as to 50% on August 15, 2024, and 2025 and (iii) 721 2024 time-based RSUs granted in August 2023, which shares vest as to 33.33% on August 15, 2024, 2025, and 2026. +58 +FISCAL YEAR 2024 OPTION EXERCISES AND STOCK VESTED +The following table provides information for our NEOs regarding option exercises and stock award vesting during fiscal year 2024. The values realized upon exercise or vesting of the awards set forth in the table have been calculated in accordance with the requirements of applicable SEC rules, and do not necessarily reflect the amount that will actually be received by our NEOs upon the sale of the shares. +Option Awards Stock Awards +Name +Number of +Shares +Acquired on +Exercise +(#) (1) +Value Realized on Exercise +($) (2) +Number of +Shares +Acquired on +Vesting +(#) (3)(4) +Value Realized +on Vesting +($) (5) +Dave Powers 29,964 21,505,228 30,487 25,497,658 +Steven J. Fasching — — 8,404 7,166,665 +Stefano Caroti 22,133 12,328,515 11,122 9,426,609 +Anne Spangenberg — — 500 261,440 +Thomas Garcia 14,383 6,794,462 2,934 2,378,219 +(1) Options exercised were initially issued pursuant to the 2017 LTIP NQSOs and 2018 LTIP NQSOs. +(2) Pursuant to applicable SEC rules, the amounts in this column reflect the value realized upon the exercise of the option awards, which is based on the closing price of our common stock on the applicable exercise dates less the exercise price of the relevant option awards. +(3) These amounts consist of shares acquired upon vesting of fiscal year 2022 LTIP PSUs, and fiscal year 2021, 2022 and 2023 RSU stock compensation plans. +(4) The total number of shares actually received by the NEOs, net of shares withheld for taxes, were as follows: 15,129 for Mr. Powers, 4,328 for Mr. Fasching, 5,678 for Mr. Caroti, 328 for Ms. Spangenberg, and 1,620 for Mr. Garcia. +(5) Pursuant to applicable SEC rules, the amounts in this column reflect the value realized upon the vesting of the stock awards, which is based on the closing price of our common stock on the applicable vesting dates. +59 +NONQUALIFIED DEFERRED COMPENSATION +Nonqualified Deferred Compensation Plan +The Committee has adopted the Nonqualified Deferred Compensation Plan (NQDC Plan), which is an unfunded, nonqualified deferred compensation program sponsored by our Company to provide certain members of our management the opportunity to defer compensation into the NQDC Plan. The NQDC Plan year is from January 1 st to December 31 st . Participants may defer up to 50% of their annual base salary and up to 85% of any cash incentive bonus under the NQDC Plan. We have the option, but not the obligation, to make discretionary or matching cash contributions to NQDC Plan participants. We have established a rabbi trust as a reserve for the benefits payable under the NQDC Plan. During fiscal year 2024, certain of our NEOs elected to make contributions to the NQDC Plan, and the Committee elected to match a portion of the contributions under the NQDC Plan. +Name +Executive contributions during fiscal year 2024 +($) (1) +Registrant contributions during fiscal year 2024 +($) (2) +Aggregate gains during fiscal year 2024 +($) +Aggregate withdrawals/distributions during fiscal year 2024 +($) +Aggregate balance at end of fiscal year 2024 +($) +Dave Powers — — 188,019 — 816,837 +Steven J. Fasching — — — — — +Stefano Caroti 373,263 40,100 564,992 — 3,160,784 +Anne Spangenberg 160,961 27,956 57,543 — 381,647 +Thomas Garcia 319,285 31,933 391,161 — 2,385,568 +Total 853,509 99,989 1,201,715 — 6,744,836 +(1) The amounts reported in this column reflect contributions made by our NEOs under the NQDC Plan during fiscal year 2024. These amounts are separately reported as compensation within the " Summary Compensation Table " above, and do not reflect amounts in addition to those amounts. +(2) The amounts reported in this column reflect discretionary matching contributions made by us to our NEOs under the NQDC Plan during fiscal year 2024. These amounts are included in the " All Other Compensation " column of the " Summary Compensation Table " above, and do not reflect amounts in addition to those amounts. +Deferred Stock Unit Compensation Plan +The Committee has also adopted a Deferred Stock Unit Compensation Plan. Under the plan, a director or employee who holds unvested RSUs may elect to defer settlement of up to 100% of the awards. For each unit of our common stock held pursuant to an award of RSUs that is deferred, the participant will receive one Deferred Stock Unit. Amounts deferred will be distributed, as described in the plan, at the time elected by the participant. A participant’s Deferred Stock Units will be settled in shares of our common stock, as more specifically described in the plan. None of our NEOs elected to participate in the plan during fiscal year 2024. +60 +POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL +Change in Control and Severance Agreements +We have entered into change in control and severance agreements (as amended from time to time, the Severance Agreements) with each of our NEOs. The information below describes compensation and benefits that are payable or earned under the Severance Agreements with our NEOs (which are each referred to in their respective Severance Agreement as an “executive”) upon the occurrence of certain termination events. +Termination by Our Company for Cause, or by Executive Without Good Reason +Pursuant to the Severance Agreements with each of our NEOs, if the executive is terminated by our Company for Cause, or the executive terminates his or her employment without Good Reason (in each case as defined below), then the NEO will receive the following from our Company: +• payment of his or her accrued base salary, accrued vacation, reimbursement for reimbursable expenses, accrued and vested benefits under our plans or programs and other benefits required to be paid by law, accrued but unpaid non-equity incentive bonus for the prior fiscal year (excluding any non-equity incentive bonus for the year of termination); and +• the right to exercise all vested equity awards pursuant to the terms of the applicable award agreement. +Termination Due to Death or Total Disability +Pursuant to the Severance Agreements with each of our NEOs, if the executive is terminated due to his or her death or total disability, then in addition to those benefits provided upon a termination by our Company for Cause or by executive other than for Good Reason, the NEO will receive: +• pro-rated portion of his or her non-equity incentive bonus for the current fiscal year based on actual length of service during the year of termination and actual achievement by our Company of the performance conditions in respect of such bonus previously established by the Committee. +Termination by Our Company Without Cause +Pursuant to the Severance Agreements with each of our NEOs, if the executive is terminated by our Company without Cause, then in addition to those benefits provided upon a termination due to death or total disability, the NEO will receive: +• payment of his or her then-effective annual base salary for, in the case of the Chief Executive Officer, 24 months, or, in the case of any other NEO, 12 months following his or her termination, subject to such executive signing a release; and +• receipt of health benefits for a period of 24 months in the case of the Chief Executive Officer, and 12 months in the case of any other NEO following his or her termination or his or her attainment of alternative employment that provides health benefits, whichever is earlier. +Termination Without Cause or by Executive for Good Reason within Two Years of a Change in Control +Pursuant to the Severance Agreements with each of our NEOs, if the executive is terminated by our Company without Cause or by the executive for Good Reason within two years of a Change in Control, then in addition to those benefits provided upon a termination due to death or total disability, the NEO will receive: +• payment of, in the case of the Chief Executive Officer, two and one-half times, or, in the case of any other NEO, two times the sum of his or her then-effective annual base salary and the greater of one and one-half times the target incentive bonus immediately prior to the time such termination occurs or one and one-half times the average actual incentive bonus for the previous three years, subject to such executive signing a release; and +• receipt of health benefits for, in the case of the Chief Executive Officer, a period of 30 months, or, in the case of any other NEO, a period of 24 months following his or her termination or his or her attainment of alternative employment that provides health benefits, whichever is earlier. +For purposes of the Severance Agreements: +• “Cause” means, in part, (i) any willful breach of duty by the executive in the course of his or her employment or continued violation of written Company employment policies after written notice of such violation, (ii) violation of our insider trading policies, (iii) conviction of a felony or any crime involving fraud, theft, embezzlement, dishonesty or moral +61 +turpitude, (iv) engaging in activities which materially defame our Company, engaging in conduct which is materially injurious to our Company or our affiliates, or any of our respective customer or supplier relationships, financially or otherwise, or (v) the executive’s gross negligence or continued failure to perform duties or executive’s continued incapacity to perform such duties. +• “Good Reason” means, without the consent of the executive, if within two years of a change in control, there is a material reduction of the executive’s total compensation, benefits, and perquisites (excluding a material reduction resulting from a decrease in value of the Company’s stock), our Company's relocation is greater than 50 miles from the location where the executive performs services, or a material change in the executive’s authority, duties, or responsibilities; provided, however, no such event shall constitute Good Reason unless the executive shall have given written notice to our Company of the executive’s intent to resign for “Good Reason” within 30 days after the executive first becomes aware of the occurrence of any such event (specifying the nature and scope of the event) and such event or occurrence shall not have been cured within 30 days of our receipt of such notice, and the executive resigns no later than 90 days after the expiration of the 30-day cure period. +• “Change in Control” means the occurrence of a merger, consolidation, sale of all or a major portion of the assets of our Company (or a successor organization) or similar transaction or circumstance where any person or group acquires, in one or more transactions, beneficial ownership of more than 50% of the outstanding shares of voting stock of our Company (or a successor organization), or a change in a majority of the members of our Board. +No NEOs will be entitled to gross ups for excise tax penalty on “excess golden parachute payments” as a result of termination following a Change in Control. +Equity Award Agreements +Pursuant to the “double-trigger” vesting provisions of the awards outstanding as of the end of fiscal year 2024 under the 2015 SIP, except as specifically noted below, the vesting of each award will be accelerated in full in the event of a Corporate Transaction (as defined in the 2015 SIP) if the acquiring or successor entity in the Corporate Transaction provides for the continuance or assumption of the award agreement, or the substitution for the award agreement of a new agreement of comparable value covering shares of a successor corporation, and the recipient is terminated by the acquiring company without Cause or pursuant to a Constructive Termination (as such terms are defined in the relevant award agreements) within either 12 or 24 months of such Corporate Transaction. +In addition, the vesting of each equity award will be accelerated in full if the acquiring or successor entity in the Corporate Transaction does not agree to continue or assume the award agreement, or substitute new awards of comparable value. +62 +Severance and Change in Control Payments +The following table provides information about the payments and benefits that would have been paid or provided to our NEOs in the event a termination of employment had occurred on March 31, 2024. The amounts reflected in the table are in addition to amounts that would have been payable for accrued but unpaid base salary, accrued paid time off, accrued but unpaid cash incentive compensation, and reimbursement of expenses. +The payments to be made, and the stock and option awards to be vested, in connection with different termination events (including in connection with a change in control) for each of our NEOs have been determined by reference to the terms of the applicable Severance Agreements and equity award agreements. Except as described above, no payments or benefits would be provided to our NEOs in the event of a termination of employment for Cause. Refer to the section of this Proxy Statement titled “— Potential Payments upon Termination or Change in Control ” for additional information. +For purposes of the table, the value of the stock and option awards has been determined based on the closing price of our common stock on March 31, 2024. In the event of an actual change in control transaction, the value of our common stock may be significantly different than this assumed value, in which case the value realized by our NEOs upon the vesting of the stock and option awards may be significantly higher or lower. +Upon Termination +Name Type of Compensation +or Benefit Due to Death or +Total Disability +($) By Our Company +Without Cause +($) In Connection with a Change +in Control +($) +Dave Powers Cash payments — 1,950,000 8,176,881 +Value of health benefits — 34,459 45,946 +Value of stock awards (1) +— — 23,983,305 +Total — 1,984,459 32,206,132 +Steven J. Fasching Cash payments — 810,000 2,613,575 +Value of health benefits — 26,373 39,559 +Value of stock awards (1) +— — 10,700,244 +Total — 836,373 13,353,378 +Stefano Caroti Cash payments — 800,000 2,506,385 +Value of health benefits — 18,689 28,033 +Value of stock awards (1) +— — 10,673,888 +Total — 818,689 13,208,306 +Anne Spangenberg Cash payments — 750,000 2,250,000 +Value of health benefits — 7,371 11,057 +Value of stock awards (1) +— — 5,132,691 +Total — 757,371 7,393,748 +Thomas Garcia Cash payments — 650,000 1,912,739 +Value of health benefits — 22,973 34,459 +Value of stock awards (1) +— — 3,990,001 +Total — 672,973 5,937,199 +(1) The amount in this row reflects the value of all of the LTIP PSUs and time-based RSUs that remained outstanding as of March 31, 2024, based on the closing price of our common stock on that date, including: (i) 2022 Time-Based RSUs, (ii) 2023 Time-Based RSUs, (iii) 2023 LTIP PSUs; (iv) 2024 Time-Based RSUs, (v) 2024 LTIP PSUs, and (vi) certain additional Time-Based RSUs and LTIP PSUs granted in prior years. +63 +DIRECTOR COMPENSATION +For fiscal year 2024, directors who are not our employees (Nonemployee Directors) received an annual cash retainer fee of $80,000, plus an annual cash retainer of $10,000 for each Board committee assignment. Nonemployee Directors holding the following positions received additional annual cash retainer fees as follows: $200,000 for Chair of our Board; $40,000 for Chair of the Audit & Risk Management Committee; $35,000 for Chair of the Talent & Compensation Committee; and $27,500 for Chair of the Corporate Responsibility, Sustainability & Governance Committee. All or any portion of the cash retainer fees paid to any of our Nonemployee Directors may, at the election of the director, be paid through the issuance of our common stock. +Each of our Nonemployee Directors is also entitled to receive common stock with a total value of approximately $170,000 for annual service on our Board. The shares are issued in equal quarterly installments in alignment with the Company's share-based grant policy with the number of shares being determined using the rolling average of the closing price of our common stock during the last 10 trading days leading up to, and including, the grant date. Each of these shares is fully vested on the date of issuance. Where our Nonemployee Directors elect to be paid their annual cash retainer fees in shares of our common stock, the number of shares to be issued is calculated using the same valuation methodology. +Nonemployee Directors are reimbursed for any reasonable Board-related expenses. Nonemployee Directors also receive product discounts, which are generally available to our employees and, from time to time, may receive products without charge in order to help expand the directors’ knowledge of our products. +Director Compensation Table +The following table sets forth all compensation paid or awarded to our Nonemployee Directors during fiscal year 2024. The amounts set forth in the table have been calculated in accordance with applicable SEC rules, and do not necessarily reflect the amounts that have actually been paid to, or which may be realized by, our Nonemployee Directors. +Name Fees +Earned +($) +Stock +Awards +($) (1) +Total +($) +Michael F. Devine, III 280,000 171,563 451,563 +David A. Burwick (2) 1,543 260,874 262,417 +Nelson C. Chan 100,000 171,563 271,563 +Cynthia (Cindy) L. Davis 135,000 171,563 306,563 +Juan R. Figuereo 130,000 171,563 301,563 +Maha S. Ibrahim (2) 1,543 260,874 262,417 +Victor Luis (2) 1,543 260,874 262,417 +Lauri M. Shanahan 100,000 171,563 271,563 +Bonita C. Stewart (2) 32,797 266,555 299,352 +(1) The amounts in this column represent the aggregate grant date fair value of the awards computed in accordance with FASB ASC Topic 718. For information about the assumptions underlying these computations, please refer to Note 8 to our consolidated financial statements included in our Annual Report. +(2) This director has elected to receive a portion of his or her annual cash retainer fees through the issuance of our common stock. +Director Stock Ownership Guidelines +Our Board has adopted Stock Ownership Guidelines applicable to our Nonemployee Directors. +The Committee periodically reviews our directors' compliance with the Stock Ownership Guidelines, and, as of the end of fiscal year 2024, determined that each director is in compliance with the guidelines. +Please see the section of this Proxy Statement titled “ Stock Ownership Guidelines ” for additional information. +64 +EQUITY COMPENSATION PLAN INFORMATION +The following table sets forth information regarding shares of our common stock that were eligible for issuance under our equity compensation plans as of March 31, 2024. +Plan category +Number of securities +to be issued +upon exercise of +outstanding options or settlement of outstanding RSUs (1)(2) +(#) +Weighted-average +exercise price of +outstanding options (3) +($) +Number of securities +remaining available +for future issuance (4) +(#) +Equity compensation plans approved by security holders 188,298 64.85 1,197,408 +Equity compensation plans not approved by security holders — — — +Total 188,298 64.85 1,197,408 +(1) This amount includes shares underlying all equity awards outstanding pursuant to the 2006 EIP and the 2015 SIP. For awards subject to performance-based vesting conditions, the amount reported reflects the number of shares to be issued assuming the relevant performance conditions are achieved at the maximum level, which is equal to 200% of the target amount. In the event the performance conditions for any applicable award are achieved below the maximum level, the number of shares reflected in this column will decrease. +(2) There are no stock appreciation rights outstanding pursuant to the 2006 EIP or the 2015 SIP. In addition, there are no outstanding warrants to purchase shares of our common stock. +(3) This amount reflects the weighted-average exercise price of the outstanding 2017 LTIP NQSOs and 2018 LTIP NQSOs, which is determined based on the closing price of our common stock on the respective grant dates. This amount does not take into account shares issuable upon the vesting or settlement of outstanding time-based and performance-based RSUs, which have no exercise price. +(4) This amount reflects the shares reserved for issuance under the 2015 SIP less the number of shares reported in the first column. This amount is potentially subject to increase depending on our achievement with respect to certain performance conditions as discussed in footnote 1 above, and will also increase to the extent any awards are forfeited or otherwise terminated under the 2015 SIP. No shares are available for issuance under the 2006 EIP. +65 +CEO PAY RATIO +General +Pursuant to Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of Regulation S-K, we are required to disclose the ratio of the annual total compensation of our principal executive officer to the median of the annual total compensation of all of our employees (excluding our principal executive officer), or our median employee. During fiscal year 2024, our principal executive officer was Dave Powers, our Chief Executive Officer and President. +Annual Total Compensation +For fiscal year 2024, the annual total compensation of our Chief Executive Officer and President was $14,258,412, and the annual total compensation of our median employee was $54,496, each as calculated in a manner consistent with Item 402(u) of Regulation S-K. The annual total compensation for our Chief Executive Officer and President is consistent with the amount reflected in the Summary Compensation Table. +Pay Ratio +Based on this information, the fiscal year 2024 ratio of the annual total compensation of our principal executive officer to the annual total compensation of our median employee was approximately 262:1. +Determination of Median Employee; Applicable Exemptions +Consistent with Item 402(u) of Regulation S-K, we identified our median employee as of March 1, 2024 by (i) aggregating for each applicable employee (A) annual base salary for salaried employees (or hourly rate multiplied by estimated work schedule, for hourly, temporary and seasonal employees), (B) overtime paid during the year, and (C) target incentive compensation, and (ii) ranking this compensation measure for our employees from lowest to highest. For non-U.S. employees, we converted such employees’ pay to a U.S. dollar equivalent by applying an 11-month average trailing exchange rate for each applicable currency. This calculation was performed for all of our employees, excluding Mr. Powers, except as described below. After identifying our median employee, we calculated that individual’s fiscal year 2024 total annual compensation in accordance with the requirements of the applicable SEC rules. +Individuals (with corresponding number of employees, representing all employees in that jurisdiction) who were employed in Vietnam (96), Indonesia (4), France (111) Austria (17), and Macao (12) were excluded from the employee population for purposes of this disclosure, pursuant to the de minimis exemption set forth in the applicable SEC rules. After taking into consideration the foregoing exemption, on March 1, 2024, we had 2,881 U.S. employees and 1,774 non-U.S. employees. Without taking into account the impact of this exemption, we had 2,881 U.S. employees and 2,014 non-U.S. employees. +Other Information +The pay ratio we have reported above is a reasonable estimate calculated in a manner consistent with applicable SEC rules based on our internal records and the methodology described above. The SEC rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices. Therefore, the pay ratio reported by other companies may not be comparable to the pay ratio we have reported above. +66 +PAY VERSUS PERFORMANCE +Provided below is our pay-versus-performance disclosure as required by Item 402(v) of Regulation S-K under the Exchange Act including information regarding the relationship between “compensation actually paid” (CAP) to our NEOs, and certain of our financial performance metrics. Specifically, set forth below is the following: +• A tabular list of the three most important financial measures our Talent & Compensation Committee used in fiscal year 2024 to link CAP to our performance; +• A table that compares our NEOs’ total compensation, as presented in the Summary Compensation Table, to CAP and certain other financial measures; and +• Graphs reflecting the relationship between CAP and our TSR and peer group TSR, CAP and our net income, and CAP and our consolidated operating income . +Amounts included as CAP do not represent the value of cash compensation and equity awards actually received by our NEOs, but rather include amounts calculated pursuant to Item 402(v) and include, among other things, the year-over-year changes in “fair value” of unvested equity-based awards. Further, the Talent & Compensation Committee does not use CAP as a basis for making compensation decisions, so such amounts may not be indicative of how the committee evaluates NEO compensation. Please refer to the section of this Proxy Statement titled “Compensation Discussion and Analysis” for a discussion of our pay-for-performance philosophy, executive compensation program objectives, and the way we design our program to align executive compensation with Company performance. +Tabular List of Company Financial Performance Measures +The list below represents the financial performance measures that the Company considers to have been the most important in linking CAP to our principal executive officer (PEO), and non-PEO NEOs (Non-PEO NEOs) for fiscal year 2024 to Company performance. The measures are not ranked in order of importance. Please refer to the section of this Proxy Statement titled " Compensation Discussions and Analysi s" for a description of these measures, and the manner in which these measures are used to determine incentive compensation paid to our NEOs. +Most Important Performance Measures +Consolidated Operating Income +Consolidated Revenue +Consolidated Pre-Tax Income +Pay Versus Performance +The following pay-versus-performance table sets forth information regarding the CAP to our Chief Executive Officer and President, who is our PEO, and our Non-PEO NEOs, for each of our fiscal years ended March 31, 2024, 2023, 2022 and 2021, or fiscal year 2024, 2023, 2022 or 2021, respectively, as calculated in accordance with Item 402(v), and our financial performance for each such fiscal year: +PAY VERSUS PERFORMANCE TABLE +Summary Compensation Table Total for PEO ($) (1)(2) +Compensation Actually Paid to PEO ($) (1)(3) +Average Summary Compensation Table Total for Non-PEO NEOs ($) (1)(2) +Average Compensation Actually Paid to Non-PEO NEOs ($) (1)(3) +Value of Initial Fixed $100 Investment Based on: +Fiscal Year TSR +Peer Group TSR (4) +Net Income ($,000) Consolidated Operating Income +($,000) +(a) (b) (c) (d) (e) (f) (g) (h) (i) +2024 14,258,412 30,785,255 4,586,787 10,222,055 702.4 86.2 759,563 927,514 +2023 11,391,476 21,415,165 2,961,401 4,799,279 335.5 103.9 516,822 652,751 +2022 10,854,934 6,190,970 3,867,018 2,845,438 204.3 155.6 451,949 564,707 +2021 7,860,450 19,464,880 2,479,351 5,207,671 246.6 200.6 382,575 504,205 +67 +(1) The table below includes the name of each individual serving as an NEO during our last four fiscal years, including our PEO: +Fiscal Year PEO Non-PEO NEOs +2024 +Dave Powers Steven J. Fasching, Stefano Caroti, Anne Spangenberg and Thomas Garcia +2023 +Dave Powers Steven J. Fasching, Stefano Caroti, Anne Spangenberg and Thomas Garcia +2022 +Dave Powers Steven J. Fasching, David Lafitte, Stefano Caroti and Wendy Yang +2021 +Dave Powers +Steven J. Fasching, David Lafitte, Stefano Caroti and Andrea O'Donnell +(2) The dollar amounts included in this column reflect the total compensation of our PEO and the average total compensation of our Non-PEO NEOs reported in the Summary Compensation Table for each fiscal year presented. +(3) The table below provides the adjustments to the Summary Compensation Table total compensation made to arrive at our PEO’s CAP and our Non-PEO NEOs’ average CAP: +CALCULATION OF COMPENSATION ACTUALLY PAID (a) +Fiscal +Year Executives +Summary Compensation Table Total ($) (b) +Minus - Amount Reported in the "Stock Awards" Column in the Summary Compensation Table ($) +Plus - Fair Value of Fiscal Year End of Outstanding and Unvested Stock Awards Granted in the Fiscal Year ($) (c) +Plus / Minus - Change in Fair Value of Outstanding and Unvested Stock Awards Granted in Prior Fiscal Years ($) (d) +Plus / Minus - Change in Fair Value at Vesting of Stock Awards Granted in Prior Fiscal Years ($) (e) +Compensation Actually Paid ($) +2024 PEO 14,258,412 ( 8,499,746 ) 3,845,988 11,426,103 9,754,498 30,785,255 +Average for Non-PEO NEOs 4,586,787 ( 2,374,462 ) 3,721,124 2,447,199 1,841,407 10,222,055 +2023 PEO 11,391,476 ( 7,999,562 ) 10,951,395 4,242,444 2,829,412 21,415,165 +Average for Non-PEO NEOs 2,961,401 ( 1,724,565 ) 2,383,845 780,911 397,687 4,799,279 +2022 PEO 10,854,934 ( 7,999,651 ) 5,398,210 ( 1,160,869 ) ( 901,654 ) 6,190,970 +Average for Non-PEO NEOs 3,867,018 ( 2,549,581 ) 1,946,763 ( 242,995 ) ( 175,767 ) 2,845,438 +2021 PEO 7,860,450 ( 3,999,580 ) 4,787,303 4,760,338 6,056,369 19,464,880 +Average for Non-PEO NEOs 2,479,351 ( 849,565 ) 1,016,903 1,060,293 1,500,689 5,207,671 +(a) This table excludes adjustments for awards granted that vest in the same year, awards that failed to achieve their vesting conditions, and dividends, in each case because there is no applicable adjustment for the covered fiscal years. +(b) Represents amounts from the Summary Compensation Table for the indicated fiscal year. +(c) The fair value amounts are calculated in accordance with ASC Topic 718 Compensation - Stock Compensation (ASC 718), determined as of the covered fiscal year. Represents the fair value as of the indicated fiscal year end of the outstanding and unvested awards granted during such fiscal year, calculated in accordance with the methodology used for financial reporting purposes, in accordance with ASC Topic 718 and described further in our Annual Reports on Form 10-K. +(d) The fair value amounts are determined based on the change in the fair value from the prior fiscal year end to the covered fiscal year end calculated in accordance with ASC 718. Represents the fair value as of the indicated fiscal year end of the outstanding and unvested awards that were granted in previous fiscal years, calculated in accordance with the methodology used for financial reporting purposes, in accordance with ASC Topic 718 and described further in our Annual Reports on Form 10-K. +(e) The fair value amounts are determined based on the change in the fair value from the prior fiscal year end to the vesting date calculated in accordance with ASC 718. Represents the change in fair value, measured from the prior fiscal year end to the vesting date, of each stock award that was granted in previous fiscal year and which vested during the indicated fiscal year, calculated in accordance with the methodology used for financial reporting purposes, in accordance with ASC Topic 718 and described further in our Annual Reports on Form 10-K. +(4) The TSR Peer Group consists of the S&P 500 Apparel, Accessories & Luxury Goods Index. +68 +Relationship Between Pay and Performance +The relationship between the CAP to our NEOs against our TSR, peer group TSR, net income and consolidated operating income is illustrated as follows: +Compensation Actually Paid Versus Total Stockholder Return +The chart below illustrates the relationship between the CAP to our PEO and the average CAP to our Non-PEO NEOs in relation to our TSR, and the TSR of our peer group, the NYSE Composite Index, over the last four fiscal years. +Compensation Actually Paid Versus Net Income +The chart below illustrates the CAP to our PEO and the average CAP to our Non-PEO NEOs in relation to our net income over the last four fiscal years. We do not use net income as a performance measure in our executive compensation program. +69 +Compensation Actually Paid Versus Consolidated Operating Income +The chart below illustrates the CAP to our PEO and the average CAP to our Non-PEO NEOs in relation to our consolidated operating income over the last four fiscal years. Consolidated operating income is the financial performance measure that, in our assessment, represents the most important financial performance measure to link CAP to our performance. +70 +SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT +The following table sets forth, as of June 30, 2024 (except as specified in the footnotes following the table), certain information concerning the shares of our common stock beneficially owned by (i) each person who is an NEO, (ii) each director or director nominee, (iii) all executive officers and directors as a group (16 p ersons), and (iv) each person known to us to be the beneficial owner of more than 5% of our common stock. There were 25,425,626 shares of our common stock outstanding on June 30, 2024. +Name and Address of Beneficial Owner (1) +Amount and +Nature of Beneficial +Ownership (#) (2)(3) +Percent +of Common Stock (3) +Named Executive Officers +Dave Powers 27,963 * +Steven J. Fasching 10,430 * +Stefano Caroti 26,727 * +Anne Spangenberg 877 * +Thomas Garcia 5,798 * +Directors (4) +Michael F. Devine, III 6,246 * +David A. Burwick 1,816 * +Nelson C. Chan 10,071 * +Cynthia (Cindy) L. Davis 1,753 * +Juan R. Figuereo 555 (5) * +Maha S. Ibrahim 1,668 * +Victor Luis — (6) * +Lauri M. Shanahan 2,499 (7) * +Bonita C. Stewart 7,713 (8) * +All Directors and Executive Officers as a Group ( 16 persons ) +104,589 0.4 % +5% Stockholders +FMR, LLC (9) +3,859,627 15.0 % +BlackRock, Inc. (10) +3,145,387 12.2 % +The Vanguard Group, Inc. (11) +2,923,094 11.4 % +* Percentage of shares beneficially owned does not exceed 1.0% of our outstanding shares of common stock. +(1) Unless otherwise noted, the address of each beneficial owner is 250 Coromar Drive, Goleta, California 93117. +(2) Unless otherwise noted, we believe each individual or entity named has sole investment and voting power with respect to the shares of our common stock reported as beneficially owned by them, subject to community property laws, where applicable. +(3) Pursuant to applicable SEC rules, shares not outstanding which are subject to options, warrants, rights or conversion privileges exercisable on or before the date that is 60 days after June 30, 2024 are deemed outstanding for the purpose of calculating the number and percentage owned by a person, but are not deemed outstanding for the purpose of calculating the number and percentage owned by any other person. +(4) The reported amounts include shares held by certain directors through one or more family trusts over which shares the respective directors may have shared voting and/or investment power. +(5) An additional 1,315 shares previously earned by this director have been deferred pursuant to an election made under our Deferred Stock Unit Compensation Plan. These deferred shares have been excluded from the table. +(6) An additional 2,557 shares previously earned by this director have been deferred pursuant to an election made under our Deferred Stock Unit Compensation Plan. These deferred shares have been excluded from the table. +(7) An additional 2,106 shares previously earned by this director have been deferred pursuant to an election made under our Deferred Stock Unit Compensation Plan. These deferred shares have been excluded from the table. +71 +(8) An additional 1,240 shares previously earned by this director have been deferred pursuant to an election made under our Deferred Stock Unit Compensation Plan. These deferred shares have been excluded from the table. +(9) This information is based solely on Amendment No. 5 to Schedule 13G filed by this stockholder on February 8, 2024. This stockholder’s business address is 245 Summer Street, Boston, MA 02210. This stockholder has sole voting power over 3,854,138 of such shares and sole dispositive power over 3,859,627 of such shares. +(10) This information is based solely on Amendment No. 2 to Schedule 13G filed by this stockholder on January 23, 2024. This stockholder’s business address is 50 Hudson Yards, New York, NY 10001. This stockholder has sole voting power over 3,011,408 such shares and sole dispositive power over 3,145,387 of such shares. +(11) This information is based solely on Amendment No. 14 to Schedule 13G filed by this stockholder on April 10, 2024. This stockholder’s business address is 100 Vanguard Boulevard, Malvern, PA 19355. This stockholder has shared voting power over 30,993 of such shares, sole dispositive power over 2,833,797 of such shares, and shared dispositive power over 89,297 of such shares. +72 +DELINQUENT SECTION 16(a) REPORTS +Section 16(a) of the Exchange Act requires our officers, directors and persons who own more than ten percent of a registered class of our securities, to file with the SEC reports of initial ownership (Form 3) and reports of changes in ownership (Form 4 and Form 5) of our securities. Officers, directors, and greater than ten percent stockholders are required by SEC rules to furnish us with copies of all Section 16(a) forms they file. +Based solely on our review of the Section 16(a) reports that have been filed by or on behalf of our officers, directors, and persons who own more than ten percent of a registered class of our securities, as well as written representations from our officers and directors, we believe all such persons complied on a timely basis with the filing requirements of Section 16(a) during fiscal year 2024, except for the following Section 16(a) reports, which were inadvertently not filed on a timely basis: one Form 4 report covering multiple transactions on February 6, 2024 by Cynthia (Cindy) L. Davis, one Form 4 report covering one transaction by Lauri M. Shanahan, and one Form 4 report covering multiple transactions on February 6, 2024 and February 22, 2024 by Bonita C. Stewart. Form 4s were filed for Ms. Davis, Ms. Shanahan and Ms. Stewart on February 23, 2024. +73 +AUDIT & RISK MANAGEMENT COMMITTEE REPORT +The Audit & Risk Management Committee of our Board is responsible for providing independent, objective oversight of, among other things, our financial reporting functions, our independent registered public accounting firm, our highest ranking manager of internal audit, our system of internal controls, our legal and regulatory compliance, and compliance with our related person transaction policy and Code of Ethics. The Audit & Risk Management Committee is currently composed of four directors, each of whom meets the independence and experience requirements under applicable NYSE rules, as well as the independence requirements applicable to Audit & Risk Management Committee members under applicable SEC rules. In addition, our Board has determined that the Chair of the Audit & Risk Management Committee qualifies as an “audit committee financial expert” under applicable SEC rules. +Management is responsible for the preparation of our financial statements and financial reporting process, including our system of internal controls. KPMG LLP, our independent registered public accounting firm, is responsible for performing an independent audit of our consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (PCAOB), and expressing (i) an opinion on whether our consolidated financial statements present fairly, in all material respects, our financial position and results of operations and cash flows for the periods presented in conformity with US generally accepted accounting principles, and (ii) an opinion on whether we have maintained, in all material respects, effective internal control over financial reporting as of March 31, 2024, based on criteria established in the Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Audit & Risk Management Committee’s responsibility is to monitor and oversee these processes. +In connection with these responsibilities, the Audit & Risk Management Committee met with management and KPMG LLP to review and discuss the March 31, 2024 consolidated financial statements and obtained from management their representation that our financial statements have been prepared in accordance with US generally accepted accounting principles. In addition, management represented that, as of March 31, 2024, our Company maintained effective internal control over financial reporting. +The Audit & Risk Management Committee also discussed with KPMG LLP the matters required by Auditing Standard No. 1301, “Communications with Audit Committees” of the PCAOB, which includes, among other items, information regarding the conduct of the integrated audit of our consolidated financial statements. The Audit & Risk Management Committee has received the written communications from KPMG LLP required by applicable requirements of the PCAOB regarding KPMG LLP's communication with the Audit & Risk Management Committee concerning independence and has discussed with them their independence. +The Audit & Risk Management Committee operates under a written charter, which was adopted by our Board and is assessed annually for adequacy by the Audit & Risk Management Committee. The Audit & Risk Management Committee held ten meetings during fiscal year 2024, including meetings with KPMG LLP and our highest ranking manager of internal audit, both with and without management present. In performing its functions, the Audit & Risk Management Committee acts only in an oversight capacity. It is not the responsibility of the Audit & Risk Management Committee to determine that our financial statements are complete and accurate, are presented in accordance with US generally accepted accounting principles or present fairly our results of operations for the periods presented, or that we maintain appropriate internal controls. Furthermore, the Audit & Risk Management Committee’s oversight responsibilities do not independently assure that the audit of our financial statements has been carried out in accordance with the standards of the PCAOB or that our registered public accounting firm is independent. +Based upon the Audit & Risk Management Committee’s review and discussions with management and KPMG LLP, and subject to the limitations of the Audit & Risk Management Committee’s role and responsibilities referred to above and in the Audit & Risk Management Committee charter, the Audit & Risk Management Committee recommended that our Board include the audited consolidated financial statements in our Annual Report on Form 10-K for the year ended March 31, 2024, which was filed with the SEC on May 24, 2024. +THE AUDIT & RISK MANAGEMENT COMMITTEE +Juan R. Figuereo ( Chair ) +Nelson C. Chan +Maha S. Ibrahim +Lauri M. Shanahan +The Audit & Risk Management Committee Report shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as amended, or the Acts, except to the extent that our Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under the Acts. +74 +RELATED-PERSON TRANSACTIONS +Our legal department is primarily responsible for identifying and reviewing relationships and transactions in which our Company and our directors, director nominees, executive officers, principal stockholders, or any of their respective immediate family members, are participants to determine whether any of these related persons had or will have a direct or indirect material interest in such transactions. In order to assist in identifying potential related-person transactions, our legal department annually prepares and distributes to all directors, director nominees and executive officers a detailed written questionnaire which includes questions intended to elicit information about any current or proposed related-person transactions. In addition, our Code of Ethics addresses conflicts of interest where an individual’s personal interests may interfere or conflict with the interests of our Company, including relationships with suppliers, customers or competitors. Conflicts of interest which might impair (or appear to impair) the exercise of judgment solely for the benefit of our Company and our stockholders are prohibited. In general, such conflicts must be approved by our legal department, the employee’s supervisor or, in the case of directors, the Audit & Risk Management Committee. Information regarding potential conflicts of interest in violation of our Code of Ethics may be reported to our anonymous reporting hotline, which may be accessed by the Chair of the Audit & Risk Management Committee, the Chair of our Board and our highest ranking manager of internal audit. +If a related-person transaction is identified by our legal department as one which would be required to be publicly reported pursuant to applicable SEC rules, the Audit & Risk Management Committee is responsible for reviewing and approving or ratifying any such transaction. The Audit & Risk Management Committee may approve a related person transaction when, in its good faith judgment, it determines that the transaction is in the best interests of our Company and our stockholders. +There were no transactions with related persons that required disclosure under applicable SEC rules since the beginning of fiscal year 2024, and no such transactions are currently proposed. +75 +PROPOSAL NO. 2 +RATIFICATION OF THE SELECTION OF KPMG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +For fiscal year 2024, KPMG LLP (KPMG) provided audit services, which included an examination of the consolidated financial statements included in our Annual Report. The Audit & Risk Management Committee has selected KPMG to provide audit services to our Company for fiscal year 2025, which covers the period from April 1, 2024 to March 31, 2025. We are asking our stockholders to ratify this selection at the Annual Meeting. +Although ratification is not required by our Bylaws or applicable SEC rules, the Audit & Risk Management Committee is submitting the selection of our independent registered public accounting firm to a vote of our stockholders because it believes it is appropriate as a matter of good corporate governance practice. If our stockholders do not ratify the selection, the Audit & Risk Management Committee will consider the selection of another independent registered public accounting firm, but is not required to select a different firm. In addition, even if our stockholders ratify the selection, the Audit & Risk Management Committee will retain the discretion to select a different independent registered public accounting firm in the future if it believes doing so is in the best interests of our Company and stockholders. +A representative of KPMG will attend the Annual Meeting and will have the opportunity to make a statement and/or respond to appropriate questions from stockholders present at the Annual Meeting. +Fees for Services Rendered by Independent Registered Public Accounting Firm +The following table sets forth approximate fees for services rendered by KPMG for the fiscal years ended March 31, 2024 and 2023: +FEES ($) +FISCAL YEAR 2024 +FISCAL YEAR 2023 +Audit Fees 2,678,000 2,571,000 +Audit-Related Fees — — +Tax Fees 12,000 11,000 +All Other Fees — — +Total Fees 2,690,000 2,582,000 +Audit Fees +The audit fees presented above for the fiscal years ended March 31, 2024 and 2023 include fees associated with the audit of our consolidated balance sheets and the related consolidated statements of comprehensive income, stockholders’ equity and cash flows included in our annual reports on Form 10-K, the audit of internal control over financial reporting, as well as the reviews of our quarterly reports on Form 10-Q, and certain statutory audits required internationally. +Audit-Related Fees +Audit-related fees generally consist of fees for assurance and related services that are reasonably related to the performance of the integrated audit of our annual reports on Form 10-K and review of our quarterly reports on Form 10-Q. There were no audit-related fees incurred during the fiscal years ended March 31, 2024 and 2023. +Tax Fees +Tax fees include fees incurred for tax services, including tax compliance, tax advice and tax planning for income taxes and customs matters. +All Other Fees +There were no fees for services rendered by KPMG incurred during the fiscal years ended March 31, 2024 and 2023 other than those disclosed above. +76 +Audit & Risk Management Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm +In accordance with its policies and procedures, prior to engagement, the Audit & Risk Management Committee pre-approves all independent registered public accounting firm services. Specifically, the Audit & Risk Management Committee administers and oversees our engagement of KPMG and pre-approves all of KPMG’s audit and permissible non-audit services on a case-by-case basis. In approving non-audit services, the Audit & Risk Management Committee considers whether the engagement could compromise the independence of KPMG, and whether, for reasons of efficiency or convenience, it is in our best interests to engage KPMG to perform the services. The Audit & Risk Management Committee has determined that the performance by KPMG of the non-audit services listed above as “Tax Fees” did not affect its independence. +During the year, circumstances may arise under which it may become necessary to engage the independent registered public accounting firm for additional services not contemplated in the original pre-approval categories. +Required Vote +The ratification of the selection of KPMG as our independent registered public accounting firm for fiscal year 2025 requires the affirmative vote of a majority of the outstanding shares present virtually or represented by proxy and entitled to vote on this proposal at the Annual Meeting (assuming that a quorum is present). +This proposal is considered a "routine" matter under NYSE rules. As a result, a bank, broker, dealer or other nominee may generally vote without instructions on this matter, so we do not expect any broker non-votes in connection with this proposal. Abstentions on this proposal will have the same effect as a vote against this proposal. If no contrary indication is made, returned proxies will be voted "FOR" this proposal. +BOARD RECOMMENDATION +OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE +" FOR " +PROPOSAL NO. 2 TO RATIFY THE SELECTION OF KPMG LLP +AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +FOR FISCAL YEAR 2025. +77 +PROPOSAL NO. 3 +ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION +Background +In accordance with applicable SEC rules, we are providing our stockholders with the opportunity to cast a non-binding advisory "Say-on-Pay" Vote on the compensation of our Named Executive Officers, as described below. We consider seeking the views of our stockholders on our executive compensation program to be an important part of our decision-making process. +For additional information about our executive compensation program, please refer to the section of this Proxy Statement titled " Compensation Discussion and Analysis " and the related compensation tables and footnotes. +Proposal +In accordance with Section 14A of the Exchange Act, we are asking our stockholders to approve the following resolution at the Annual Meeting: +“ RESOLVED, that our stockholders approve, on a non-binding advisory basis, the compensation of our Named Executive Officers, as described in the Compensation Discussion and Analysis, the Summary Compensation Table, and the related compensation tables, notes and narrative discussion in the Proxy Statement for our 2024 Annual Meeting of Stockholders. ” +Because this vote is advisory only, it will not be binding upon our Board or the Talent & Compensation Committee. However, the Talent & Compensation Committee will take the outcome of the vote into account when considering future executive compensation arrangements. +Required Vote +The approval, on a non-binding advisory basis, of the compensation of our Named Executive Officers requires the affirmative vote of a majority of the outstanding shares present virtually or represented by proxy and entitled to vote on this proposal at the Annual Meeting (assuming that a quorum is present). +This proposal is considered a "non-routine" matter under NYSE rules. As a result, a bank, broker, dealer or other nominee may not vote without instructions on this matter, so there may be broker non-votes in connection with this proposal. Broker non-votes will have no effect on the outcome of this proposal. Abstentions will have the same effect as a vote against this proposal. If no contrary indication is made, returned proxies will be voted "FOR" this proposal. +BOARD RECOMMENDATION +OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE +" FOR " +PROPOSAL NO. 3 TO APPROVE, ON A NON-BINDING ADVISORY BASIS, +THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS. +78 +PROPOSAL NO. 4 +EMPLOYEE STOCK PURCHASE PLAN +We are asking our stockholders to approve the 2024 Employee Stock Purchase Plan (2024 ESPP), which will replace our existing 2015 Employee Stock Purchase Plan (2015 ESPP). We are primarily asking our stockholders to approve the 2024 ESPP because the 2015 ESPP will expire on June 26, 2025, and we believe it is important that we continue to provide our eligible employees the opportunity to accumulate share ownership through payroll deductions consistent with our historical practice. Assuming the 2024 ESPP is approved by our stockholders, the 2015 ESPP will be terminated immediately following the issuance of shares under the 2015 ESPP to employees who participated in the offering period ending February 28, 2025. The terms of the 2024 ESPP are substantially the same as the terms of the 2015 ESPP. +We are requesting approval of 1,000,000 shares (subject to adjustment as described below) for issuance pursuant to the 2024 ESPP. We determined this amount after carefully forecasting our anticipated growth rate for the next few years, and considering our historical employee participation rates and stock price. +The 2024 ESPP allows eligible employees to acquire shares of our common stock at a discount through payroll deductions. We believe approval of the 2024 ESPP will allow us to enhance our ability to attract and retain the services of eligible employees upon whose judgment, initiative and efforts the successful conduct and development of our business largely depends. We also believe the 2024 ESPP will provide additional incentives to eligible employees to devote their effort and skill to our advancement, by providing them an opportunity to participate in ownership of our shares and thereby have an interest in our success and increased value. Further, we believe participation in the 2024 ESPP will align the interests of employees with those of our stockholders. +The use of equity compensation has historically been a significant part of our overall compensation philosophy and allowing participation in an employee stock purchase program advances this philosophy. In addition, we believe allowing participation in an employee stock purchase program is a common pay practice in our industry and within the market generally. If this proposal is not approved by our stockholders, we believe it would adversely impact our ability to offer a competitive compensation opportunity. +1,000,000 shares of our common stock were reserved for issuance under the 2015 ESPP. As of March 31, 2024, approximately 928,901 shares remain available for future purchase under the 2015 ESPP. If the 2024 ESPP is approved by our stockholders, the 2015 ESPP will be terminated immediately following the issuance of shares under the 2015 ESPP to employees who participated in the offering period ending February 28, 2025, and no new offering periods under the 2015 ESPP will commence thereafter. Following the termination of the 2015 ESPP, any shares reserved for issuance under the 2015 ESPP that have not been issued thereunder will be returned to our general pool of authorized and unissued shares. +Our Board adopted the 2024 ESPP on June 13, 2024, subject to approval by our stockholders within twelve (12) months following such date. If approved by our stockholders, the effective date of the 2024 ESPP will be the date on which the 2024 ESPP was originally adopted by our Board. +Our Talent & Compensation Committee has recommended to our Board the approval of the 2024 ESPP, and our Board unanimou sly recommends to our stockholders the approval of the 2024 ESPP. +Summary of the 2024 Employee Stock Purchase Plan +The following summary highlights the significant terms of the 2024 ESPP. This summary does not contain all of the information contained in the 2024 ESPP, which is set forth in full as Appendix A to this Proxy Statement. To the extent there is a conflict between this summary and the terms of the 2024 ESPP, the terms of the 2024 ESPP will govern. +Purposes. The purposes of the 2024 ESPP are to enhance our ability to attract and retain the services of eligible employees, to provide additional incentives to eligible employees to devote their effort and skill to our advancement by providing them an opportunity to participate in the ownership of our shares, and to align their interests with those of our stockholders. +Qualified Plan . The 2024 ESPP is intended to qualify as an “employee stock purchase plan” under Section 423(b) of the Code. +Authorized Shares . We have reserved an aggregate of 1,000,000 shares of our common stock for issuance under the 2024 ESPP. The number of shares of our common stock is subject to adjustment in the event of a stock split, stock dividend, combination or reclassification of shares, or other corporate event impacting our capitalization. Additionally, if any right granted under the 2024 ESPP shall for any reason terminate without having been exercised, the common stock not purchased under such right shall again become available under the 2024 ESPP. Such number of authorized shares does not reflect the effectiveness of the amendment of our certificate of incorporation and forward stock split of our common stock, which is subject to and conditioned upon approval by our stockholders and our Board. See the section of this Proxy Statement titled “Proposal +79 +No. 6. - Amendment of Certificate of Incorporation to Effect a Six-For-One Stock Split with a Proportionate Increase in Authorized Capital Stock” for additional information. +2024 ESPP Administration . The authority to control and manage the operation and administration of the 2024 ESPP is vested in our Board. As provided in the 2024 ESPP, our Board has delegated this authority and control to our Talent & Compensation Committee, all of the members of which are independent directors under applicable NYSE listing standards. As such, the Talent & Compensation Committee is the administrator of the 2024 ESPP. Interpretations or determinations made in good faith by the administrator shall be final and binding on us and all participants. +Eligible Participants . Our employees, and the employees of certain of our subsidiaries, are generally eligible to participate in the 2024 ESPP. Employees who are 5% stockholders, or would become 5% stockholders as a result of their participation in the 2024 ESPP, are ineligible to participate. The administrator may, in its discretion, elect to exclude employees who work fewer than 20 hours per week or five months in a calendar year. The administrator may impose additional restrictions on eligibility in compliance with applicable law. Participation in the 2024 ESPP is voluntary by our employees. As of March 31, 2024, approximately 2,011 employees, including our executive officers, would have eligibility to participate in the 2024 ESPP. +Payroll Deductions. Under the 2024 ESPP, eligible employees will be able to acquire shares of our common stock by accumulating funds through payroll deductions. Eligible employees will initially be able to select a rate of payroll deduction between 1% and 10% of their base compensation, unless otherwise determined by the administrator. Base compensation shall generally exclude incentive payments, performance-based payments, bonuses, benefits, perquisites and other similar payments. Except as otherwise determined by the administrator, a participant may only participate in the 2024 ESPP through payroll deductions and may not make lump sum cash contributions for any offering period. +Offering Periods. The 2024 ESPP shall be implemented through a series of offering periods under which our employees who meet the eligibility requirements will automatically be granted, on the enrollment date of each offering period, a nontransferable option to purchase shares of our common stock in that offering period using their accumulated payroll deductions. The option shall provide the eligible employee the right to buy, on each purchase date during the offering period, a number of shares determined by dividing (x) the participant’s payroll deductions accumulated during the offering period prior to the purchase date, by (y) the applicable purchase price. The maximum number of shares that can be purchased by each eligible employee in each offering period is 125 shares (subject to adjustment), unless otherwise determined by the administrator. Once an employee is enrolled, participation will be automatic in subsequent offering periods. It is anticipated that each offering period will run for approximately six months with purchases occurring on the last day of each offering period. The first offering period is expected to commence on March 1, 2025. The administrator has the discretion to change the commencement date of each offering period. In no event may an offering period exceed 27 months. An employee’s participation automatically ends upon termination of employment for any reason. +Purchase Price . The purchase price for shares of our common stock purchased under the 2024 ESPP will be 85% of the fair market value of our common stock on the last trading day of the applicable offering period. The fair market value of our common stock shall be determined by reference to the closing sale price on the NYSE on the purchase date. +Limitation on Purchase. No participant will have the right to purchase shares of our common stock in an amount that, when aggregated with the shares subject to purchase rights under any other employee stock purchase plans we have in effect in the same calendar year, have a fair market value of more than $25,000, determined as of the first day of the applicable offering period. +Withdrawal; Suspension. A participant may elect to withdraw from participation in the 2024 ESPP by giving written notice to the administrator. All of the payroll deductions credited to the participant’s account shall be paid to the participant after receipt of the notice of withdrawal. A participant’s withdrawal from an offering period shall not have any effect upon his or her eligibility to participate in any subsequent offering periods. A participant may also suspend payroll deductions during an offering period. If a participant elects to suspend his or her payroll deductions, the participant’s cumulative payroll deductions prior to the suspension shall remain in his or her account and shall be applied to the purchase of shares on the next purchase date, and shall not be paid to the participant unless he or she separately withdraws from participation in the 2024 ESPP. +Change in Control. If we experience a change in control transaction, or any other unusual or nonrecurring corporate transaction or event, our Talent & Compensation Committee has the discretion to provide for the termination of any offering period that commenced prior to the closing of the transaction or event, the replacement of outstanding purchase rights with other rights or property, the assumption of outstanding purchase rights by a successor or surviving corporation, adjustments in the number and type of shares subject to outstanding purchase rights, the shortening of an offering period and the early exercise of purchase rights, and the termination of all outstanding purchase rights without being exercised. +Restrictions upon Transfer. Any right granted under the 2024 ESPP shall not be transferable or assignable, subject to limited exceptions set forth in the 2024 ESPP. +Term. The 2024 ESPP will terminate 10 years from the date our Board approved it, unless it is earlier terminated. The effectiveness of the 2024 ESPP is subject to approval of the 2024 ESPP by our stockholders within twelve (12) months following +80 +the effective date. our Board approved the 2024 ESPP on June 13, 2024. No right may be granted under the 2024 ESPP prior to obtaining stockholder approval. +Amendment; Termination. The administrator may amend, suspend or terminate the 2024 ESPP at any time, subject to limited exceptions set forth in the 2024 ESPP. +New Plan Benefits. The future benefits or amounts that would be received under the 2024 ESPP are not determinable at this time as both participation in the 2024 ESPP and the amounts that participants elect to contribute are voluntary. +U.S. Federal Income Tax Consequences +The following is a general summary, as of the date of this Proxy Statement, of the United States federal income tax consequences to the 2024 ESPP participants and us. The federal tax laws may change and the federal, state, and local tax consequences for any participant will depend upon his or her individual circumstances. +The 2024 ESPP, and the right of participants to make purchases thereunder, are intended to qualify under the provisions of Sections 421 and 423 of the Code. Under these provisions, no income will be taxable to a participant at the time of grant of the option or the purchase of shares. However, a participant may become liable for tax upon disposition of the shares acquired as discussed below. +If the shares are sold or disposed of, including by way of gift, at least two years after the offering date and more than one year after the date on which shares were transferred to the employee, then the lesser of (a) the excess of the amount actually received for the shares over the amount paid for the shares or (b) 15% of the fair market value of the shares on the purchase date, will be treated as ordinary income to the participant. The employee’s basis in the shares will be increased by the amount of the compensation income recognized. Any further gain or loss upon such disposition will be treated as long-term capital gain or loss. If the shares are sold and the sales price is less than the price paid for the shares, there is no ordinary income and the participant has a capital loss for the difference. +If the shares are sold or disposed of, including by way of gift, before the expiration of the holding periods described above, then the excess of the fair market value of the shares on the last date of the offering period in which the shares were purchased over the purchase price of the shares will be treated as ordinary income to the participant. This excess will constitute ordinary income in the year of sale or other disposition even if no gain is realized on the sale or a gratuitous transfer of the shares is made. The basis in the shares will be increased by the amount of the compensation income recognized. Any further gain or loss recognized in connection with any such sale or exchange will be treated as capital gain or loss and will be treated as short-term capital gain or loss if the shares have been held less than one year. +If shares are sold or disposed of before the expiration of the statutory holding periods, we are generally entitled to a tax deduction in an amount equal to the ordinary income recognized by the participant in connection with such sale or disposition. +The foregoing summary of the effect of federal income taxation upon 2024 ESPP participants and us with respect to the shares purchased under the 2024 ESPP does not purport to be complete. Reference should be made to the applicable provisions of the Code. In addition, the summary does not discuss the provisions of the income tax laws of any municipality, state or foreign country in which the participant may reside. +Required Vote +The approval of the adoption of the 2024 ESPP requires the affirmative vote of a majority of the outstanding shares present virtually or represented by proxy and entitled to vote on this proposal at the Annual Meeting (assuming that a quorum is present). +This proposal is considered a "non-routine" matter under NYSE rules. As a result, a bank, broker, dealer or other nominee may not vote without instructions on this matter, so there may be broker non-votes in connection with this proposal. Broker non-votes will have no effect on the outcome of this proposal. Abstentions will have the same effect as a vote against this proposal. If no contrary indication is made, returned proxies will be voted "FOR" this proposal. +BOARD RECOMMENDATION +OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE +" FOR " +PROPOSAL NO. 4 TO APPROVE THE +2024 EMPLOYEE STOCK +PURCHASE PLAN. +81 +PROPOSAL NO. 5 +STOCK INCENTIVE PLAN +We are asking our stockholders to approve the 2024 Stock Incentive Plan (2024 SIP), which will replace our existing 2015 Stock Incentive Plan (2015 SIP). We are primarily asking our stockholders to approve the 2024 SIP because the 2015 SIP will expire on June 26, 2025 and we believe it is critical that we continue to have a stock incentive plan in place to provide appropriate equity incentives awards to our employees, directors and other service providers. We will not make any further equity awards under the 2015 SIP following the effective date of the 2024 SIP. Outstanding awards under the 2015 SIP will remain outstanding, unchanged and subject to the terms of the 2015 SIP and their respective award agreements, until the expiration of such awards in accordance with their terms. +We are requesting approval of 1 ,300,000 shares (subject to adjustment as described below) for issuance pursuant to the 2024 SIP, less one share for every one share granted under the 2015 SIP after March 31, 2024 and prior to the effective date of the 2024 SIP. Any shares subject to awards that are forfeited, expire or are otherwise terminated without shares being issued, including shares subject to awards granted under the 2015 SIP that are outstanding after March 31, 2024, will be returned to the pool of shares available for grant and issuance under the 2024 SIP. In addition, any shares subject to awards that are tendered by holders or withheld by us to pay the exercise price of an award or shares withheld to satisfy tax withholding obligations in connection with the exercise or vesting of any awards, including shares subject to awards granted under the 2015 SIP that are outstanding after March 31, 2024, will also be returned to the pool of shares available for grant and issuance under the 2024 SIP. +Approval of the 2024 SIP will allow us to continue to provide equity incentive awards to attract, retain and motivate employees, directors, consultants, independent contractors and advisors whose present and potential contributions are important to our success, by offering them an opportunity to participate in our future success and stock price performance. We believe the adoption of the 2024 SIP is in our best interests because of the continuing need to provide equity-based incentives to attract and retain qualified personnel, provide a total compensation opportunity that is competitive in the marketplace, and respond to market changes in equity compensation practices. +The use of equity compensation has historically been a significant part of our overall compensation philosophy and is a practice we plan to continue. The 2024 SIP will serve as an important part of this practice and is a critical component of the overall compensation package we offer to retain and motivate our service providers. In addition, awards under the 2024 SIP will provide our service providers an opportunity to acquire or increase their ownership stake in us, and we believe this aligns their interests with those of our stockholders, creating strong incentives for them to work hard for our future growth and success. If this proposal is not approved by our stockholders, we believe our ability to attract and retain the talent we need to compete in our industry would be seriously and negatively impacted, and this could affect our long-term success. +We firmly believe that a broad-based equity incentive program is a necessary and powerful incentive and retention tool for our service providers that benefits our stockholders. Equity incentive awards align the interests of service providers with those of our stockholders, as they reward service providers based upon stock price performance. Without an equity incentive program, we believe we would be at a disadvantage against competitor companies to provide the total compensation package necessary to attract, retain and motivate the service providers whose talent is critical to our future success. +A broad-based stock incentive plan also focuses our service providers on the achievement of Company performance objectives that are deemed to be critical to our long-term success. As described in detail in the section of this Proxy Statement titled “ Compensation Discussion and Analysis ,” our current equity award program emphasizes Company performance-based equity awards, including those that require continued employment after achievement of the applicable performance conditions. These awards are an important component of our executive compensation program and has been very effective in helping us to achieve our strategic objective and enabling us to attract and retain the talent critical for an innovative and growth-focused company. We expect to continue to emphasize the grant of Company performance-based equity awards from the 2024 SIP upon its adoption by our stockholders. +To further align the interests of our executive officers with those of our stockholders, we have adopted Stock Ownership Guidelines as described in detail in the section of this Proxy Statement titled " Compensation Discussion and Analysis ." +Our Talent & Compensation Committee has recommended to our Board the approval of the 2024 SIP, and our Board unanimously recommends to our stockholders the approval of the 2024 SIP. +Burn Rate +In setting and recommending to our stockholders the number of shares to authorize under the 2024 SIP, our Board and Talent & Compensation Committee considered a number of factors, including the historical price of our common stock, the historical number of equity awards granted under the 2015 SIP, as well as our three-year average burn rate, which is reflected in the following table: +82 +Fiscal Year # of Shares Underlying Equity Incentive Awards Granted Weighted-Average # of Common Shares Outstanding Burn Rate +2024 65,659 25,870,713 0.25 % +2023 92,047 26,503,765 0.35 % +2022 92,429 27,508,000 0.34 % +3-Year Average +Burn Rate 0.31 % +We calculate “burn rate” as the ratio of the number of shares underlying equity incentive awards, including performance awards based on 100% of target, granted under the 2015 SIP during a fiscal year, to the weighted-average number of shares of our common stock outstanding at the corresponding fiscal year end. +As of March 31, 2024, we had (i) 2,106 shares underlying outstanding awards issued under the 2006 EIP (which have been deferred until January 1, 2030 under our Deferred Stock Unit Plan), (ii) 14,909 shares issuable upon exercise of outstanding stock options issued under the 2015 SIP (with a weighted-average per share exercise price of $64.85 and weighted-average remaining contractual term of 1.3 years), and (iii) an aggregate of 171,283 RSUs outstanding under the 2015 SIP (assuming achievement of 200% of target for the performance-based RSUs). These 188,298 shares reflect approximately 0.74% of the total number of outstanding shares of our common stock as of March 31, 2024. If the 2024 SIP is approved by our stockholders, and 1,300,000 additional shares are made available for future grant, it would result in a “fully diluted overhang” of approximately 5.50% based on the number of shares of our common stock outstanding as of March 31, 2024. We calculate “fully diluted overhang” as (x) the sum of (1) the total number of options outstanding, (2) the total number of RSUs outstanding and (3) the total number of awards available for future issuance (assuming the 2024 SIP is approved), divided by (y) the sum of (1) the total number of options outstanding, (2) the total number of RSUs outstanding, (3) the total number of awards available for future issuance (assuming the 2024 SIP is approved) and (4) the total number of shares outstanding as of March 31, 2024. +Approval of the 2024 SIP is intended to enable us to achieve the following objectives: +The continued ability to offer stock-based incentive compensation to our eligible service providers . By its terms, the 2015 SIP will expire on June 26, 2025. Without equity incentives, we would be forced to consider cash replacement alternatives to provide a market-competitive total compensation package necessary to attract, retain and motivate the employee talent critical to our future successes. These cash replacement alternatives could, among other things, reduce the cash available for investment in growth and development of new and existing products, cause a loss of motivation by employees to achieve superior Company performance, and reduce the incentive of employees to remain employed with us during the vesting of the equity grant. Equity-based awards also directly align a portion of the compensation of our employees with the economic interests of our stockholders. Further, equity-based awards are a standard compensation element offered within our industry and the market generally, and the failure to be able to offer these awards would adversely impact our ability to offer a competitive compensation opportunity. +The ability to maintain a market competitive equity incentive plan while being prudent about the rate of dilution. We are requesting approval of 1,300,000 shares for issuance pursuant to the 2024 SIP, less one share for every one share granted under the 2015 SIP after March 31, 2024 and prior to the effective date of the 2024 SIP. After carefully forecasting our anticipated growth rate for the next few years and considering our historical forfeiture rates and stock price, we currently believe the requested share reserve under the 2024 SIP will be sufficient for us to make anticipated grants of equity incentive awards under our current compensation program for at least the next four years. However, factors such as changes in the performance of our business, Company strategy, the price of our common stock, or macroeconomic conditions could alter this projection. +The ability to offer a variety of stock compensation awards including stock options, restricted stock awards, stock bonus awards, SARs, RSUs, and performance awards. The variety of awards available under the 2024 SIP is customary in the marketplace and will continue to give us flexibility to respond to changes in business conditions and equity compensation practices. +The ability to provide an equity plan that reflects best current compensation practices. The terms of the 2024 SIP are substantially similar to the terms of the 2015 SIP. As such, the 2024 SIP includes provisions that we believe reflect the best current compensation practices and that implement strong governance-related protections for our stockholders including: +• Administration . The 2024 SIP will be administered by the Talent & Compensation Committee of our Board, which will consist solely of two or more independent non-employee directors. +• Continued broad-based eligibility for equity awards . We grant equity awards to a broad range of our employees, directors, consultants, independent contractors and advisors. By doing so, we align the interests of service providers throughout the organization and motivate our service providers to act in the best interests of our stockholders. +83 +• No evergreen provision; stockholder approval is required for additional shares . The 2024 SIP does not contain an annual “evergreen” provision, so stockholder approval is required to increase the number of shares that may be issued under the 2024 SIP in most circumstances. +• Dividend Equivalent Rights . All dividend equivalent rights will be subject to the same vesting or performance conditions as the underlying award. Dividend equivalent rights will not be granted in connection with any options or stock appreciation rights. +• Repricing is not allowed without stockholder approval . The 2024 SIP prohibits the repricing or exchange for cash of underwater stock options and SARs without prior stockholder approval. +• Equity-based clawback provision . Our Board has adopted a Clawback and Forfeiture Policy that applies to all incentive-based compensation awards. The 2024 SIP provides that all awards granted under the plan will be subject to the policy. +• Does not contain single-trigger plan provision . The 2024 SIP does not provide for automatic “single trigger” vesting acceleration of plan awards in the event of our change of control. +• No tax gross-ups . The 2024 SIP does not provide for any tax gross-ups. +• Annual limits on non-employee director grants . The 2024 SIP includes a fixed limit on the maximum value of awards that may be granted in each calendar year to non-employee directors. +Summary of the 2024 Stock Incentive Plan +The following summary highlights the significant terms of the 2024 SIP. This summary does not contain all of the information contained in the 2024 SIP, which is set forth in full as Appendix B to this Proxy Statement. To the extent there is a conflict between this summary and the terms of the 2024 SIP, the terms of the 2024 SIP will govern. +Purposes. The purposes of the 2024 SIP are to enhance our ability to attract and retain the services of qualified employees, officers, directors, consultants and other services providers, to provide additional incentives to such persons to devote their effort and skill to the advancement of the Company and the achievement of Company performance conditions deemed critical to our success, and to align their interests with those of our stockholders. +Shares Authori zed. 1,300,000 shares, less one share for every one share granted under the 2015 SIP after March 31, 2024 and prior to the effective date of the 2024 SIP, will be authorized under the 2024 SIP, subject to adjustment for stock splits and other similar changes in our capital structure and certain other adjustments for share counting purposes, as described in the 2024 SIP and below. Such number of authorized shares does not reflect the effectiveness of the amendment of our certificate of incorporation and forward stock split of our common stock, which is subject to and conditioned upon approval by our stockholders and our Board. See the section of this Proxy Statement titled “ Proposal No. 6. - Amendment of Certificate of Incorporation to Effect a Six-For-One Stock Split with a Proportionate Increase in Authorized Capital Stock ” for additional information. +Additionally, any shares subject to awards that are forfeited, expire or are otherwise terminated without shares being issued, including shares subject to awards granted under the 2015 SIP that are outstanding after March 31, 2024, will be returned to the pool of shares available for grant and issuance under the 2024 SIP. In addition, any shares subject to awards that are tendered by holders or withheld by us to pay the exercise price of an award or shares withheld to satisfy tax withholding obligations in connection with the exercise or vesting of any awards, including shares subject to awards granted under the 2015 SIP that are outstanding after March 31, 2024, will also be returned to the pool of shares available for grant and issuance under the 2024 SIP. +Limitations on Awards. No more than 750,000 shares may be issued pursuant to the exercise of incentive stock options. Subject to adjustment for stock splits and other similar changes in our capital structure, no participant in the 2024 SIP may be granted options or SARs during any 12-month period with respect to more than 400,000 shares (increased to 800,000 with respect to awards granted during the first calendar year of employment). +Eligible Participants. Incentive stock options may be granted only to Company employees. All other awards may be granted to any of our employees, directors, consultants, independent contractors and advisors that render bona fide services not in connection with the offer and sale of securities in a capital-raising transaction. The Talent & Compensation Committee determines which individuals will participate in the 2024 SIP. As of March 31, 2024, there were approximately 4,237 employees and 9 non-employee directors eligible to participate in the 2024 SIP. +Adjustments. If the number of outstanding shares of the Company is changed by a stock dividend, extraordinary dividends or distributions (whether in cash, shares or other property, other than a regular cash dividend), recapitalization, stock split, reverse stock split, subdivision, combination, reclassification, spin-off or similar change in our capital structure, then (a) the number of shares reserved for issuance and future grant under the 2024 SIP, (b) the exercise prices of and number of shares subject to +84 +outstanding options and stock appreciation rights, (c) the number of shares subject to other outstanding awards, (d) the maximum number of shares that may be issued as incentive stock options or other awards and, (e) the maximum number of shares that may be issued to an individual or to a new employee in any one calendar year, will be proportionately adjusted, subject to any required action by our Board or our stockholders and in compliance with applicable securities laws. No fraction of shares may be issued following any adjustment. See the section of this Proxy Statement titled “ Proposal No. 6. - Amendment of Certificate of Incorporation to Effect a Six-For-One Stock Split with a Proportionate Increase in Authorized Capital Stock ” for additional information. +Award Types. The 2024 SIP permits the issuance of the following types of awards: +• Options . Options may be non-qualified stock options or incentive stock options and may vest based on time, or achievement of performance goals, or a combination of both. Our Talent & Compensation Committee may provide for options to be exercised only as they vest or to be immediately exercisable with any shares issued on exercise being subject to our right of repurchase that lapses as the shares vest. +• Restricted Stock . A restricted stock award is an offer by us to sell shares of our common stock subject to restrictions, which may vest based on time, achievement of performance goals, or a combination of both. The price, if any, of a restricted stock award will be determined by the Talent & Compensation Committee. +• Stock Bonuses . Stock bonus awards may be granted as additional compensation for past or future service or achievement of performance goals, and therefore, no payment will be required for any shares awarded under a stock bonus. +• Stock Appreciation Rights . SARs provide for a payment, or payments, in cash or shares of our common stock, to the holder based upon the difference between the fair market value of our common stock on the date of exercise and the stated exercise price at grant up to a maximum amount of cash or number of shares. SARs may vest based on time, achievement of performance goals, or a combination of both. +• Restricted Stock Units . RSUs represent the right to receive shares of our common stock at a specified date in the future, subject to forfeiture of that right because of termination of employment or failure to achieve certain performance goals. If an RSU has not been forfeited, then on the date specified in the applicable agreement, we will deliver to the holder of the RSU shares of our common stock (which may be subject to additional restrictions), cash or a combination of our common stock and cash. +• Performance Awards . Performance awards cover a number of shares of our common stock that may be settled upon achievement of the pre-established performance goals in cash or by issuance of the underlying shares. +Terms applicable to Stock Options and Stock Appreciation Rights . The exercise price of grants made under the 2024 SIP of stock options or SARs may not be less than the closing price of our common stock on the date of grant. The term of these awards may not be longer than ten years, except in the case of incentive stock options granted to holders of more than 10% of our voting power, which may have a term no longer than five years. The Talent & Compensation Committee determines at the time of grant the other terms and conditions applicable to such award, including vesting and exercisability. +Terms applicable to Restricted Stock Awards, Stock Bonus Awards, Restricted Stock Unit Awards, and Performance Awards . The Talent & Compensation Committee determines the terms and conditions applicable to the granting of restricted stock awards, stock bonus awards, RSUs and performance awards. The Talent & Compensation Committee may make the grant, issuance, retention and/or vesting of restricted stock awards, stock bonus awards, RSUs and performance awards contingent upon continued employment, the passage of time, or such performance conditions as it deems appropriate (or a combination of these factors). +Non-Employee Directors . Under the 2024 SIP, non-employee directors may be granted awards either on a discretionary basis or pursuant to a policy adopted by our Board, except that no non-employee director may be granted awards in any calendar year with a grant date fair value of more than $1,000,000 (increased to $2,000,000 with respect to awards granted during the first calendar year of service). +Administration . The Talent & Compensation Committee will administer the 2024 SIP. Subject to the terms and limitations expressly set forth in the 2024 SIP, the Talent & Compensation Committee selects the persons who receive awards, determines the number of shares covered thereby, and establishes the terms, conditions and other provisions of the grants. The Talent & Compensation Committee may construe and interpret the 2024 SIP and prescribe, amend and rescind any rules and regulations relating to the 2024 SIP. +Section 16 of the Exchange Act . Awards granted to participants who are subject to Section 16 of the Exchange Act must be approved by two or more “non-employee directors” (as defined in the regulations promulgated under Section 16 of the Exchange +85 +Act). Each of the members of the Talent & Compensation Committee are considered to be “non-employee” directors so any grants approved by the Committee will meet this requirement. +Corporate Transactions . In the event of a change of control, merger, sale of all or substantially all of our assets or other similar corporate transaction, unless otherwise determined by the Talent & Compensation Committee, all outstanding awards may be assumed or replaced by the successor corporation. In the alternative, the successor corporation may substitute equivalent awards or provide substantially similar consideration to participants as was provided to stockholders (after taking into account the existing provisions of the awards). The successor corporation may also issue, in place of outstanding shares held by the participant, substantially similar shares or other property subject to repurchase restrictions no less favorable to the participant. In the event such successor or acquiring corporation (if any) refuses to assume, convert, replace or substitute awards, then the awards will have their vesting accelerate as to all shares subject to such award (and any applicable right of repurchase fully lapse) immediately prior to the consummation of the corporate transaction. In addition, in the event such successor or acquiring corporation (if any) refuses to assume, convert, replace or substitute awards, then the Talent & Compensation Committee will notify the participants that such award will be exercisable for a period of time determined by the Talent & Compensation Committee, and such awards will terminate upon the expiration of such period. Awards need not be treated similarly in a corporate transaction. +Method of Payment. The exercise price of options and the purchase price, if any, of other stock awards may be paid in cash or by check or, where expressly approved by the Talent & Compensation Committee and permitted by law, cancellation of indebtedness, surrender of shares, waiver of compensation, a broker-assisted or other form of cashless exercise program, any combination of the foregoing, or any other method permitted by applicable law. +Transferability. Except as otherwise determined by the Talent & Compensation Committee, awards granted under the 2024 SIP may not be sold, pledged, assigned, hypothecated, transferred or disposed of except by will or the laws of descent and distribution. In no event shall such awards be transferred for value. +Repricing Prohibited. Repricing, or reducing the exercise price of outstanding options or SARs, or cancelling in exchange for cash outstanding options or SARs when the exercise price per share exceeds the fair market value of one share is prohibited without stockholder approval under the 2024 SIP. +Term. The 2024 SIP will terminate 10 years from the date our Board approved it, unless it is earlier terminated. The effectiveness of the 2024 SIP is subject to approval of the 2024 SIP by our stockholders within twelve (12) months following the date our Board approved it. our Board approved the 2024 SIP on June 13, 2024 . No award may be granted under the 2024 SIP prior to obtaining stockholder approval. +Amendments. our Board may terminate or amend the 2024 SIP at any time, provided that no action may be taken by our Board (except for adjustment for stock splits and other similar changes in our capital structure described in “Adjustments” and "Shares Authorized" above) without the approval of our stockholders to: +• increase the number of shares reserved for issuance under the 2024 SIP; +• permit the repricing of outstanding stock options or SARs under the 2024 SIP; +• cancel in exchange for cash outstanding stock options or SARs under the 2024 SIP when the exercise price per share exceeds the fair market value of one share; or +• otherwise implement any amendment to the 2024 SIP required by applicable law or NYSE listing standards to be approved by stockholders. +Insider Trading Policy. Any participant that receives an award under the 2024 SIP must comply with our Insider Trading Policy. +Clawback or Recoupment . Awards, including gains realized with respect to such awards, under the 2024 SIP will be subject to clawback or recoupment pursuant to the Clawback and Forfeiture Policy adopted by our Board. +New Plan Benefits . Awards under the 2024 SIP will be granted in amounts and to individuals as determined by the Talent & Compensation Committee in its sole discretion. Therefore, the future benefits or amounts that would be received under the 2024 SIP are not determinable at this time +U.S. Federal Income Tax Consequences +The following is a general summary as of the date of this Proxy Statement of the United States federal income tax consequences to us and participants in the 2024 SIP. The federal tax laws may change and the federal, state and local tax consequences for any participant will depend upon his or her individual circumstances. Each participant has been, and is, encouraged to seek the advice of a qualified tax advisor regarding the tax consequences of participation in the 2024 SIP. +86 +Non-Qualified Stock Options . A participant will realize no taxable income at the time a non-qualified stock option is granted under the 2024 SIP, but generally at the time such non-qualified stock option is exercised, the participant will realize ordinary income in an amount equal to the excess of the fair market value of the shares on the date of exercise over the stock option exercise price. Upon a disposition of such shares, the difference between the amount received and the fair market value on the date of exercise will generally be treated as a long-term or short-term capital gain or loss, depending on the holding period of the shares. We will generally be entitled to a deduction for federal income tax purposes at the same time and in the same amount as the participant is considered to have realized ordinary income in connection with the exercise of the non-qualified stock option. +Incentive Stock Options. A participant will realize no taxable income, and we will not be entitled to any related deduction, at the time any incentive stock option is granted. If certain employment conditions are satisfied, then no taxable income will result upon the exercise of such option, and we will not be entitled to any deduction in connection with the exercise of such stock option. Upon disposition of the shares after expiration of the statutory holding periods, any gain realized by a participant will be taxed as long-term capital gain and any loss sustained will be long-term capital loss, and we will not be entitled to a deduction in respect to such disposition. While no ordinary taxable income is recognized at exercise (unless there is a “disqualifying disposition,” see below), the excess of the fair market value of the shares over the stock option exercise price is a preference item that is recognized for alternative minimum tax purposes. Except in the event of death, if shares acquired by a participant upon the exercise of an incentive stock option are disposed of by such participant before the expiration of the statutory holding periods (i.e., a “disqualifying disposition”), such participant will be considered to have realized as compensation taxed as ordinary income in the year of such disposition an amount, not exceeding the gain realized on such disposition, equal to the difference between the stock option exercise price and the fair market value of such shares on the date of exercise of such stock option. Generally, any gain realized on the disposition in excess of the amount treated as compensation or any loss realized on the disposition will constitute capital gain or loss, respectively. If a participant makes a “disqualifying disposition,” generally in the fiscal year of such “disqualifying disposition” we will be allowed a deduction for federal income tax purposes in an amount equal to the compensation realized by such participant. +Restricted Stock. A participant receiving restricted stock may be taxed in one of two ways: the participant (i) pays tax when the restrictions lapse (i.e., with respect to the shares as they become vested) or (ii) makes an election under Section 83(b) of the Code to pay tax in the year the grant is made with respect to all of the shares subject to the grant. At either time the value of the award for tax purposes is the excess of the fair market value of the shares at that time over the amount (if any) paid for the shares. This value is taxed as ordinary income and if granted to an employee, is subject to income tax withholding. We receive a tax deduction at the same time and for the same amount taxable to the participant. If a participant makes an election under Section 83(b) of the Code to be taxed at grant, then, when the restrictions lapse, there will be no further tax consequences attributable to the awarded stock until the recipient disposes of the stock, at which point any gain or loss will be short-term or long-term capital gain or loss, depending on the holding period of the stock prior to such disposition. +Stock Bonuses. The participant will not realize income when a stock bonus (which can be settled in cash or our common stock) is granted, but will realize ordinary income when shares (or cash, if cash settled) are transferred to him or her. The amount of such income will be equal to the fair market value of such transferred shares (or cash, if cash settled) on the date of transfer. We generally will be entitled to a tax deduction at the time and in the amount that the participant recognizes ordinary income. +Stock Appreciation Rights. A grant of a SAR (which can be settled in cash or our common stock) has no federal income tax consequences at the time of grant. Upon the exercise of SARs, the value received is generally taxable to the recipient as ordinary income, and we generally will be entitled to a corresponding tax deduction. +Restricted Stock Units. In general, no taxable income is realized upon the grant of an RSU (which can be settled in cash or our common stock). The participant will generally include in ordinary income the fair market value of the award of stock (or cash, if cash settled) at the time shares of stock (or cash, if cash settled) are delivered to the participant or at the time the RSU. We generally will be entitled to a tax deduction at the time and in the amount that the participant recognizes ordinary income. +Performance Awards. The participant will not realize income when a performance award is granted (which can be settled in cash or our common stock), but will realize ordinary income when shares (or cash, if cash settled) are transferred to him or her. The amount of such income will be equal to the fair market value of such transferred shares (or cash, if cash settled) on the date of transfer. We generally will be entitled to a tax deduction at the time and in the amount that the participant recognizes ordinary income. +Withholding Tax Requirements. Whenever shares are to be issued in satisfaction of awards granted under the 2024 SIP or the applicable tax event occurs, we may require the participant to remit to us an amount sufficient to satisfy applicable withholding tax requirements. Whenever payments in satisfaction of an award are to be made in cash, such payment will be net of an amount sufficient to satisfy the applicable withholding tax requirements. The Talent & Compensation Committee may require or permit the participant to satisfy applicable withholding tax requirements, in whole or in part by paying cash, electing to have us withhold otherwise deliverable cash or shares having a fair market value equal to the minimum statutory amount required to be withheld (or such other amount that will not cause an adverse accounting consequence or cost), delivering to us already-owned shares having a fair market value equal to the minimum amount required to be withheld or withholding from the proceeds of the +87 +sale of otherwise deliverable shares acquired pursuant to an award either through a voluntary sale or through a mandatory sale arranged by us. +ERISA Information +The 2024 SIP is not subject to any of the provisions of the Employee Retirement Income Security Act of 1974, as amended. +Required Vote +The approval of the 2024 SIP requires the affirmative vote of a majority of the outstanding shares present virtually or represented by proxy and entitled to vote on this proposal at the Annual Meeting (assuming that a quorum is present). +This proposal is considered a "non-routine" matter under NYSE rules. As a result, a bank, broker, dealer or other nominee may not vote without instructions on this matter, so there may be broker non-votes in connection with this proposal. Broker non-votes will have no effect on the outcome of this proposal. Abstentions will have the same effect as a vote against this proposal. If no contrary indication is made, returned proxies will be voted "FOR" this proposal. +BOARD RECOMMENDATION +OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE +" FOR " +PROPOSAL NO. 5 TO APPROVE THE 2024 STOCK INCENTIVE PLAN. +88 +PROPOSAL NO. 6 +AMENDMENT OF CERTIFICATE OF INCORPORATION TO EFFECT A SIX-FOR-ONE STOCK SPLIT WITH A PROPORTIONATE INCREASE IN AUTHORIZED CAPITAL STOCK +Our Board has deemed it advisable and in the best interests of our stockholders to effect a six -for-one forward split of our outstanding capital stock, including our common stock and preferred stock. The trading price of our common stock has risen significantly over the past couple of years and our common stock currently trades higher than many other public companies. Our Board regularly evaluates the effect of such growth on the liquidity and marketability of our common stock and believes the considerable appreciation in the trading price of our common stock makes our common stock less affordable and attractive to fewer investors. The closing price of our common stock on June 28 , 2024 was $967.95 as reported on NYSE. Our Board believes effecting a six -for-one stock split would make our shares more affordable and attractive to a broader group of potential investors and increase liquidity in the trading of our common stock, which could have a positive impact on the aggregate value of our shares. +At present, our Amended and Restated Certificate of Incorporation (Restated Certificate) authorizes the issuance of up to 125,000,000 shares of common stock, par value $0.01 per share and 5,000,000 shares of preferred stock, par value $0.01 per share. As of March 31, 2024, 25,592,318 shares of common stock were issued and outstanding. Of the unissued shares, (i) 2,106 were subject to outstanding awards issued under the 2006 EIP (which have been deferred until January 1, 2030 under our Deferred Stock Unit Plan), (ii) 186,192 were subject to outstanding stock options and RSUs issued under the 2015 SIP, (iii) 1,197,408 were reserved for issuance of new equity awards under our 2015 SIP, and (iv) 928,901 were reserved for issuance under our 2015 ESPP. No shares of preferred stock have been issued and no such issuances are currently contemplated. Please see the section titled “Effects of the Amendment, if Approved by Stockholders and Implemented by our Board” for additional information. +On July 9, 2024, subject to approval by our stockholders, our Board approved an Amendment to the Restated Certificate (Amendment), which (i) effects a six-for-one forward stock split of our common stock and preferred stock, and (ii) increases the number of authorized shares of our common stock from 125,000,000 to 750,000,000, and number of shares of our preferred stock from 5,000,000 to 30,000,000. The additional shares of common stock and preferred stock would have rights identical to the currently outstanding common stock and preferred stock, respectively. +Our Board unanimously recommends to our stockholders the approval of the Amendment in order to effect the six-for-one forward stock split of our outstanding capital stock, including the common stock and preferred stock, as well as the proportional increase in the authorized shares of capital stock. +The above summary is qualified in its entirety by reference to the full text of the Amendment, which is attached as Appendix C to this Proxy Statement. To the extent there is a conflict between this summary and the terms of the Amendment, the terms of the Amendment will govern. +Forward Stock Split Implementation +If our stockholders approve the Amendment, the forward stock split would become effective upon the filing and effectiveness of the Amendment with the Secretary of State of the State of Delaware. Assuming our stockholders approve the Amendment, it is expected this filing will take place on or about September 13, 2024, promptly following a determination by our Board, in its discretion, to proceed with effecting the stock split and authorized share increase. However, the exact timing of the filing of the Amendment will be determined by our Board based on its evaluation as to when and if such action will be the most advantageous to us and our stockholders. If our Board fails to implement the stock split and authorized share increase by the next Annual Meeting of Stockholders, stockholder approval would be required again prior to implementing the stock split. Our Board reserves the right, notwithstanding stockholder approval and without further action by our stockholders, to elect not to proceed with the stock split if, at any time prior to filing the Amendment, our Board, in its sole discretion, determines that it is no longer in our best interests and the best interests of our stockholders to proceed. +Upon filing and effectiveness of the Amendment with the Secretary of State of the State of Delaware effecting the forward stock split, the stock split shall occur without any further action on the part of us or our stockholders. Book-entries dated as of a date prior to the effective time of the stock split representing outstanding shares of common stock shall, immediately after the effective time of the stock split, represent a number of shares equal to the same number of shares of common stock as is reflected on the book-entries, multiplied by six . +Effects of the Amendment, if Approved by Stockholders and Implemented by our Board +Following the forward stock split of our outstanding capital stock, including our common stock and preferred stock, and based on the number of shares outstanding as of March 31, 2024, we will have approximately 153,553 ,908 shares of common stock and +89 +no shares of preferred stock outstanding. In addition, based on the number of equity awards outstanding as of March 31, 2024, (i) approximately 12,636 shares will be subject to outstanding awards issued under the 2006 EIP (which have been deferred until January 1, 2030 under our Deferred Stock Unit Plan), (ii) approximately 1,117,152 shares will be subjec t to outstanding stock options and RSUs issued under the 2015 SIP, (iii) approximately 7,184,448 shares will be reserved for issuance of new equity awards under our 2015 SIP, and (iv) approximately 5,573,406 shares will be reserved for issuance under our 2015 ESPP. In the event the 2024 SIP is approved by our stockholders, 7,800,000 shares will be reserved for issuance under the 2024 SIP and we will not issue any new awards under the 2015 SIP. Similarly, in the event the 2024 ESPP is approved by our stockholders, 6,000,000 shares will be reserved for issuance under the 2024 ESPP and no additional shares will be issued under the 2015 ESPP once the offering period under that plan expires on February 28 , 2025. The terms of the 2024 SIP, 2015 SIP, 2024 ESPP and 2015 ESPP each provide that the number of shares of common stock reserved for issuance, as well as the number of shares that are the subject of outstanding equity awards, shall be appropriately adjusted in the event of a stock split. Except for equity awards outstanding pursuant to the 2006 EIP and 2015 SIP, we do not have securities outstanding that are convertible into, or exercisable or exchangeable for, shares of our common stock or preferred stock. +Our Board believes it is in our and our stockholders best interest to proportionately increase the number of authorized shares of capital stock, including common stock and preferred stock, so as to accommodate the forward stock split, and so as to have additional authorized but unissued shares available for issuance by our Board in connection with any future stock dividends or stock splits, grants under the 2015 SIP and 2015 ESPP, grants under the 2024 SIP and 2024 ESPP (in each case if approved by our stockholders), financings, mergers or acquisitions, and for other general corporate purposes, without the delay and expense associated with convening a special stockholder meeting. Aside from the shares currently reserved for issuance under our 2006 EIP, 2015 SIP and 2015 ESPP, and to be reserved for issuance under the 2024 SIP and 2024 ESPP (in each case if approved by our stockholders), our Board has not authorized the issuance of any additional shares of capital stock, and there are no current agreements or commitments for the issuance of any such additional shares. +Stockholders’ current ownership of common stock will not give them automatic rights to purchase any of the additional authorized shares of common stock. If the Amendment is adopted, the additional authorized shares of capital stock will be available for issuance from time to time at the discretion of our Board without further action by our stockholders, except where stockholder approval is required by NYSE or to obtain favorable tax treatment for certain employee benefit plans. +In addition, our Restated Certificate authorizes our Board, without further stockholder approval, to issue preferred stock having such designations, powers, preferences and rights as may be determined by our Board. Any future issuance of additional authorized shares of common stock may, among other things, dilute the earnings per share of our common stock and the equity and voting rights of those holding common stock at the time the additional shares are issued. Our Restated Certificate does not authorize cumulative voting for directors. Issuance of shares of preferred stock would dilute the earnings per share and book value per share of existing shares of common stock. Holders of preferred stock would have such voting rights as may be provided for by law and as determined by our Board. +Anti-Takeover Considerations +Although an increase in the authorized shares of common stock and preferred stock could, under certain circumstances, be construed as having an anti-takeover effect (for example, by diluting the stock ownership of a person seeking to effect a change in the composition of our Board or contemplating a tender offer or other transaction for the combination of our Company with another company), our Board is not proposing to adopt the Amendment in response to any effort to accumulate our stock or obtain control of us by means of a merger, tender offer, or solicitation in opposition of management. Also, while we have no present intention to issue shares of preferred stock in a manner which would have an anti-takeover effect or otherwise, the issuance of preferred stock could have certain other anti-takeover effects under certain circumstances. Since the voting rights to be accorded to any series of preferred stock remain to be fixed by our Board, the holders of preferred stock may be authorized by our Board to vote separately as a class in connection with approval of certain extraordinary corporate transactions or be given a large number of votes per share. Such preferred stock could also be convertible into a large number of shares of common stock under certain circumstances or have other terms which might render the acquisition of a controlling interest in us more difficult or more costly. Shares of preferred stock could be privately placed with purchasers who might side with our management in opposing a hostile tender offer or other attempt to obtain control. The issuance of preferred stock as an anti-takeover device might preclude stockholders from taking advantage of a situation which might be favorable to their interests. +U.S. Federal Income Tax Consequences +The following is a general summary as of the date of this Proxy Statement of the United States federal income tax consequences to us and our stockholders. The federal tax laws may change and the federal, state and local tax consequences of the effectiveness of the forward stock split will depend upon his or her individual circumstances. +We have been advised that the proposed forward stock split will result in no gain or loss or realization of taxable income to owners of our common stock under existing United States federal income tax laws. The tax basis of each share of common stock held immediately before the forward stock split will be allocated pro rata between this original share and the new shares of common stock distributed with respect to the original share. Each new share will be deemed to have been acquired at the same time as the original share with respect to which the new share was issued. The laws of jurisdictions other than the United States may impose income taxes on the issuance of the additional shares, and stockholders are urged to consult their own tax advisers. +90 +Required Vote +The approval of the Amendment requires the affirmative vote of a majority of the outstanding shares entitled to vote at the Annual Meeting. +This proposal is considered a "routine" matter under NYSE rules. As a result, a bank, broker, dealer or other nominee may generally vote without instructions on this matter, so we do not expect any broker non-votes in connection with this proposal. Abstentions on this proposal will have the same effect as a vote against this proposal. If no contrary indication is made, returned proxies will be voted "FOR" this proposal. +BOARD RECOMMENDATION +OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE +" FOR " +PROPOSAL NO. 6 TO APPROVE THE AMENDMENT OF +CERTIFICATE OF INCORPORATION TO EFFECT A SIX-FOR-ONE STOCK SPLIT +WITH A PROPORTIONATE INCREASE IN AUTHORIZED CAPITAL STOCK. +91 +ADDITIONAL INFORMATION +Stockholder Proposals +Proposals or director nominations by stockholders intended to be presented at our annual meeting of stockholders to be held in 2025, and included in our proxy statement and form of proxy relating to that meeting, must be delivered to our corporate headquarters located at 250 Coromar Drive, Goleta, California 93117 no later than March 26, 2025. In order to be included in the proxy statement, these proposals must comply with applicable SEC rules. +Proposals or director nominations by stockholders intended to be considered at the annual meeting of stockholders to be held in 2025, without including the proposal in our proxy statement and form of proxy relating to that meeting, must notify us no earlier than the close of business on May 12, 2025, and no later than the close of business on June 11, 2025. In order to make a proposal at such meeting, these proposals must comply with our Bylaws. +In addition to satisfying the foregoing requirements of our Bylaws, to comply with the universal proxy rules under the Exchange Act, stockholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act no later than July 11, 2025. +Other Business +As of the date of this Proxy Statement, we are not aware of any business to be presented for consideration at the Annual Meeting other than the matters described in this Proxy Statement. If, however, other matters are properly presented at the Annual Meeting, the persons named as proxies (or their substitutes) will vote in accordance with their discretion with respect to those matters. +92 +ANNUAL REPORT +The Annual Report contains audited consolidated financial statements of our Company and its subsidiaries and the report thereon of KPMG LLP, our independent registered public accounting firm. A copy of the Annual Report is being provided with this Proxy Statement and has been posted on the Internet, along with this Proxy Statement, each of which is accessible by following the instructions in this Proxy Statement and the accompanying Notice. +Any person who was our stockholder on the Record Date (including any beneficial owner holding shares in "street name" as of the Record Date) may request a copy of the Annual Report, and it will be furnished without charge upon request. Requests should be directed to Deckers Outdoor Corporation, 250 Coromar Drive, Goleta, California 93117, Attention: Corporate Secretary, or by telephone to (805) 967-7611. +BY ORDER OF THE BOARD OF DIRECTORS +Dave Powers +Chief Executive Officer and President +Goleta, California +July 24, 2024 +93 +APPENDIX A +DECKERS OUTDOOR CORPORATION +2024 EMPLOYEE STOCK PURCHASE PLAN +As adopted by the Board of Directors on June 13, 2024 +ARTICLE 1 +PURPOSE +The purposes of the Plan are to (a) enhance the Company’s ability to attract and retain the services of Eligible Employees upon whose judgment, initiative and efforts the successful conduct and development of the Company’s business largely depends, and (b) provide additional incentives to Eligible Employees to devote their effort and skill to the advancement of the Company, by providing them an opportunity to participate in the ownership of the Company and thereby have an interest in the success and increased value of the Company. The Plan is intended to qualify as an “employee stock purchase plan” within the meaning of Section 423(b) of the Code. +ARTICLE 2 +DEFINITIONS AND CONSTRUCTION +For purposes of the Plan, terms not otherwise defined herein shall have the meanings indicated below: +2.1 “Administrator” means the Board or, if the Board delegates responsibility for any matter to the Committee, the term Administrator shall mean the Committee. +2.2 “Agent” means the brokerage firm, bank or other financial institution, entity or person(s), if any, engaged, retained, appointed or authorized to act as the agent of the Company or an Employee with regard to the Plan. +2.3 “Board” means the Board of Directors of the Company. +2.4 “Change in Control” means: +(a) The acquisition, directly or indirectly, in one transaction or a series of related transactions, by any person or group (within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended) of the beneficial ownership of securities of the Company possessing more than fifty percent (50%) of the total combined voting power of all outstanding securities of the Company; provided , however , that a Change in Control shall not result upon such acquisition of beneficial ownership if such acquisition occurs as a result of a public offering of the Company’s securities or any financing transaction (or series of financing transactions); +(b) A merger or consolidation in which the Company is not the surviving entity; provided , however , that a Change in Control shall not result from a transaction in which the holders of the outstanding voting securities of the Company immediately prior to such merger or consolidation hold, as a result of holding Company securities prior to such transaction, in the aggregate, securities possessing more than fifty percent (50%) of the total combined voting power of all outstanding voting securities of the surviving entity (or the parent of the surviving entity) immediately after such merger or consolidation; +(c) A reverse merger in which the Company is the surviving entity, but in which the holders of the outstanding voting securities of the Company immediately prior to such merger hold, in the aggregate, securities possessing less than fifty percent (50%) of the total combined voting power of all outstanding voting securities of the Company or of the acquiring entity immediately after such merger; or +(d) The sale, transfer or other disposition (in one transaction or a series of related transactions) of all or substantially all of the assets of the Company; provided , however , that a Change in Control shall not result from a transaction in which the holders of the outstanding voting securities of the Company immediately prior to such transaction(s) receive as a distribution with respect to securities of the Company, in the aggregate, securities possessing more than fifty percent (50%) of the total combined voting power of all outstanding voting securities of the acquiring entity immediately after such transaction(s). +The Administrator shall have full and final authority to determine conclusively whether a Change in Control of the Company has occurred in respect of a particular set of circumstances, and the date of the occurrence of such Change in Control and any incidental matters relating thereto. +2.5 “Code” means the Internal Revenue Code of 1986, as amended from time to time, together with the treasury regulations and official guidance promulgated thereunder. +2.6 “Committee” means a committee of two or more members of the Board appointed to administer the Plan as set forth in Section 11.1. +94 +2.7 “Common Stock” means the Common Stock of the Company and such other securities of the Company that may be substituted for Common Stock pursuant to Article 8. +2.8 “Company” means Deckers Outdoor Corporation, a Delaware corporation, and any successor thereto. +2.9 “Compensation” of an Eligible Employee means the base compensation received by such Eligible Employee as compensation for services to the Company or any Related Corporation during the relevant period, excluding incentive or performance-based compensation (whether issued in the form of cash or equity), bonuses, overtime payments, sales commissions, travel and business expense reimbursements, fringe benefits, perquisites and other similar payments. Such Compensation shall be calculated before deduction of any income or employment tax withholdings, but shall be withheld from the Eligible Employee’s net income. +2.10 “Effective Date” means the date on which the Plan was originally adopted by the Board, as set forth on the first page hereof. +2.11 “Eligible Employee” means an Employee of the Company or any Related Corporation: (a) who would not, immediately after any rights under the Plan are granted, own (directly or through attribution) or be deemed to own for purposes of Section 423(b)(3) of the Code five percent (5%) or more of the total combined voting power or value of all classes of capital stock of the Company or any Related Corporation; (b) whose customary employment is for more than twenty hours per week; and (c) whose customary employment is for more than five months in any calendar year. For purposes of clause (a) of the preceding sentence, the rules of Section 424(d) of the Code with regard to the attribution of stock ownership shall apply in determining the stock ownership of an individual, and stock that an Employee may purchase under outstanding rights granted under the Plan shall be treated as stock owned by the Employee. +Notwithstanding the foregoing, the Administrator may, in its sole discretion, determine that an Employee of the Company or any Related Corporation shall not be eligible to participate in an Offering Period if: (i) such Employee is a highly compensated employee within the meaning of Section 423(b)(4)(D) of the Code or is a “highly compensated employee” (A) with compensation above a specified level, (B) who is an officer of the Company or any Related Corporation thereof or (C) who is subject to the disclosure requirements of Section 16(a) of the Exchange Act; (ii) such Employee has not met a service requirement designated by the Administrator pursuant to Section 423(b)(4)(A) of the Code (which service requirement may not exceed two years), or (iii) such Employee is a citizen or resident of a foreign jurisdiction and the grant of a right to purchase stock under the Plan to such Employee would be prohibited under the laws of such foreign jurisdiction or the grant of a right under the Plan to such Employee in compliance with the laws of such foreign jurisdiction would cause the Plan to violate the requirements of Section 423 of the Code, as determined by the Administrator in its sole discretion; provided that any exclusion in clauses (i), (ii) or (iii) shall be applied in an identical manner under each Offering Period to all similarly situated employees of the Company or any Related Corporation, in accordance with Treasury Regulation Section 1.423-2(e). +2.12 “Employee” means any person who renders services to the Company or any Related Corporation as an employee within the meaning of Section 3401(c) of the Code. “Employee” shall not include any director of the Company or any Related Corporation who does not render services to the Company or any Related Corporation as an employee within the meaning of Section 3401(c) of the Code. For purposes of the Plan, the employment relationship shall be treated as continuing intact while the individual is on military leave, sick leave or other leave of absence approved by the Company and meeting the requirements of Treasury Regulation Section 1.421-1(h)(2). Where the period of leave exceeds three (3) months or such other period specified in Treasury Regulation Section 1.421-1(h)(2), and the individual’s right to reemployment is not guaranteed either by statute or by contract, the employment relationship shall be deemed to have terminated on the first day immediately following such three (3)-month period or such other period specified in Treasury Regulation Section 1.421-1(h)(2). +2.13 “Enrollment Date” means the first Trading Day of each Offering Period. +2.14 “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time. +2.15 “Fair Market Value” on any given date means the value of one share of Common Stock, determined as follows: +(a) If the Common Stock is then listed or admitted for trading on the New York Stock Exchange or another stock exchange which reports closing sale prices, the Fair Market Value shall be the closing sale price on the date of valuation on the New York Stock Exchange or such stock exchange on which the Common Stock is then listed or admitted for trading, or, if no closing sale price is quoted on such day, then the Fair Market Value shall be the closing sale price of the Common Stock on the New York Stock Exchange or such stock exchange on the next preceding day on which a closing sale price is reported. +(b) If the Common Stock is not then listed or admitted for trading on the New York Stock Exchange or another stock exchange which reports closing sale prices, the Fair Market Value shall be the average of the closing bid and asked prices of the Common Stock in the over-the-counter market on the date of valuation. +(c) If neither (a) nor (b) is applicable as of the date of valuation, then the Fair Market Value shall be determined by the Administrator in good faith using any reasonable method of evaluation in a manner consistent with the valuation principles under Section 409A of the Code, which determination shall be conclusive and binding on all interested parties. +2.16 “Offering Period” means the periods of approximately six months during which a right granted under to the Plan may be exercised, (i) commencing on the first Trading Day on or after March 1st of each year and terminating on the first +95 +Trading Day on or following August 31st, approximately six months later, and (ii) commencing on the first Trading Day on or after September 1st of each year and terminating on the first Trading Day on or following the last day of the month of February, approximately six months later. The duration and timing of Offering Periods may be changed pursuant to Article 4 and Article 9. In no event may an Offering Period exceed twenty-seven (27) months. +2.17 “Participant” means any Eligible Employee who has executed a subscription agreement and been granted rights to purchase Common Stock pursuant to the Plan. +2.18 “Plan” means this 2024 Employee Stock Purchase Plan of the Company. +2.19 “Purchase Date” means the last Trading Day of each Offering Period. +2.20 “Purchase Price” means, with respect to a particular Offering Period, an amount equal to eighty-five percent (85%) of the Fair Market Value of a Share on the applicable Purchase Date; provided , however , that the Purchase Price for subsequent Offering Periods may be determined by the Administrator in its sole discretion, but no less than eighty-five percent (85%) of the Fair Market Value of a Share on the Applicable Purchase Date, subject to compliance with Section 423 of the Code (or any successor provision, or any other applicable law, regulation or stock exchange listing standard) or pursuant to Article 9. +2.21 “Related Corporation” means any “parent corporation” or “subsidiary corporation” of the Company (in either case, to the extent currently existing or established in the future), as those terms are defined in Section 424(e) and (f) respectively, of the Code. +2.22 “Securities Act” means the Securities Act of 1933, as amended from time to time. +2.23 “Share” means a share of Common Stock. +2.24 “Trading Day” means a day on which the New York Stock Exchange, or another stock exchange on which the Common Stock is then listed or admitted for trading, is open for trading. +ARTICLE 3 +SHARES SUBJECT TO THE PLAN +3.1 Shares Subject to the Plan . Subject to Article 8, the aggregate number of Shares that may be issued pursuant to rights granted under the Plan shall be 1,000,000 Shares. If any right granted under the Plan shall for any reason terminate without having been exercised, the Common Stock not purchased under such right shall again become available for the Plan. The Shares available for issuance under the Plan may be authorized but unissued Shares, Shares held in treasury, or Shares reacquired by the Company. +ARTICLE 4 +OFFERING PERIODS +4.1 Offering Periods . The Plan will be implemented by consecutive Offering Periods with a new Offering Period commencing on the first Trading Day on or after March 1st and September 1st each year, or on such other date as the Administrator will determine. The Administrator will have the authority to change the commencement date and duration of Offering Periods with respect to future offerings. +ARTICLE 5 +ELIGIBILITY AND PARTICIPATION +5.1 Eligibility . Any Eligible Employee who shall be employed by the Company or any Related Corporation on the day immediately preceding a given Enrollment Date for an Offering Period shall be eligible to participate in the Plan during such Offering Period, subject to the requirements of this Article 5 and the limitations imposed by Section 423(b) of the Code. +5.2 Enrollment in Plan . +(a) An Eligible Employee may become a Participant in the Plan for an Offering Period by delivering a subscription agreement to the Company in such form as the Administrator requires and by such time prior to the Enrollment Date for such Offering Period as is designated by the Administrator. +(b) Each such agreement shall designate a whole percentage of such Eligible Employee’s Compensation to be withheld by the Company and any Related Corporation on each payday during the Offering Period as payroll deductions under the Plan. An Eligible Employee may designate any whole percentage of Compensation that is not less than one percent (1%) and not more than the maximum percentage designated by the Administrator (which percentage shall be ten percent (10%) in the absence of any such designation) as payroll deductions. The payroll deductions made for each Participant shall be credited to an account for such Participant under the Plan and shall be deposited with the general funds of the Company in a manner consistent with Section 12.5. +96 +(c) A Participant may increase or decrease the percentage of Compensation designated in his or her subscription agreement at any time during an Offering Period only to the extent specified or agreed to by the Administrator. In the absence of any such specification or agreement by the Administrator, a Participant shall be permitted during any Offering Period to decrease the percentage of Compensation no more than once and shall not be permitted to increase the percentage of Compensation until the next following Offering Period or for any subsequent Offering Period. Any change in payroll deductions permitted by the Administrator shall be effective with the first full payroll period commencing at least five (5) business days after the Company’s receipt of a new subscription agreement evidencing the new payroll deduction election (or such shorter or longer period as may be specified or agreed to by the Administrator). +(d) A Participant may suspend payroll deductions at any time during an Offering Period. Any such suspension of payroll deductions shall be effective with the first full payroll period commencing at least five (5) business days after the Company’s receipt of a written notice of suspension (or such shorter or longer period as may be specified or agreed to by the Administrator). In the event a Participant elects to suspend his or her payroll deductions with respect to an Offering Period, such Participant’s cumulative payroll deductions prior to the suspension shall remain in his or her account and shall be applied to the purchase of Shares on the next occurring Purchase Date and shall not be paid to such Participant unless he or she separately withdraws from participation in the Plan in accordance with Article 7. A Participant who suspends payroll deductions during an Offering Period shall not be permitted to resume contributions to the Plan during that Offering Period. +(e) Except as otherwise determined by the Administrator, in its sole discretion from time to time, a Participant may participate in the Plan only by means of payroll deductions and may not make contributions by lump sum payment for any Offering Period. +5.3 Payroll Deductions . Except as otherwise determined by the Administrator, in its sole discretion from time to time, payroll deductions for a Participant shall commence with the first payroll following the Enrollment Date, and shall end with the last payroll in the Offering Period to which his or her authorization is applicable, unless sooner terminated by the Participant in accordance with Article 7. +5.4 Effect of Enrollment . A Participant’s completion of a subscription agreement will enroll such Participant in the Plan for each subsequent Offering Period on the terms contained therein until the Participant submits a new subscription agreement, withdraws from participation under the Plan in accordance with Article 7, or otherwise becomes ineligible to participate in the Plan. +5.5 Limitation on Purchase of Common Stock . An Eligible Employee may be granted rights under the Plan only if such rights, together with any other rights granted to such Eligible Employee under “employee stock purchase plans” of the Company and any Related Corporations, do not permit such employee’s rights to purchase stock of the Company or any Related Corporation to accrue at a rate that exceeds $25,000 of Fair Market Value of such stock (determined as of the first day of the Offering Period during which such rights are granted) for each calendar year in which such rights are outstanding at any time. This limitation shall be applied in accordance with Section 423(b)(8) of the Code. +5.6 Decrease or Suspension of Payroll Deductions . Notwithstanding the foregoing, to the extent necessary to comply with Section 423(b)(8) of the Code and Section 5.5 (and any other limitations set forth in the Plan), a Participant’s payroll deductions may be suspended by the Administrator at any time during an Offering Period. +5.7 Unapplied Amounts . The balance of the amount credited to the account of each Participant that has not been applied to the purchase of Shares by reason of Section 423(b)(8) of the Code, Section 6.1 or Section 5.5 (or the other limitations set forth in the Plan) shall be credited to a Participant’s account and carried forward and applied toward the purchase of Shares for the next following Offering Period or for any subsequent Offering Period or paid to such Participant in one lump sum in cash as soon as reasonably practicable following the Purchase Date of the Offering Period after which there is a balance of the amount credited to the account of such Participant that has not been applied to the purchase of Shares, as determined by the Administrator in its sole discretion from time to time. +5.8 Leave of Absence . During leaves of absence approved by the Company meeting the requirements of Treasury Regulation Section 1.421-1(h)(2) under the Code, a Participant may continue participation in the Plan by making cash payments to the Company on his or her normal payday in an amount equal to his or her authorized payroll deduction. +5.9 Termination . Upon a Participant’s ceasing to be an Eligible Employee for any reason, including on account of his or her termination, he or she shall be withdrawn from the Plan, and the payroll deductions credited to such Participant’s account during the Offering Period shall be paid to such Participant or, in the case of his or her death, to the person or persons entitled thereto under Section 12.1, as soon as reasonably practicable, and such Participant’s rights for the Offering Period shall be automatically terminated. +ARTICLE 6 +GRANT AND EXERCISE OF RIGHTS +6.1 Grant of Rights . On the Enrollment Date of each Offering Period, each Eligible Employee participating in such Offering Period shall be granted a right to purchase the maximum number of Shares designated by the Administrator that an Eligible Employee may purchase during each Offering Period (which maximum number of Shares shall be one hundred twenty-five (125) Shares for each Eligible Employee during each Offering Period in the absence of any such designation), subject to the limits in Section 5.5, and shall have the right to buy, on each Purchase Date during such Offering Period, such number of Shares as is determined by dividing (a) such Participant’s payroll deductions accumulated prior to such Purchase Date and retained in +97 +the Participant’s account as of the Purchase Date, by (b) the applicable Purchase Price. The right shall expire on the last day of the Offering Period. +6.2 Exercise of Rights . On each Purchase Date, each Participant’s accumulated payroll deductions will be applied to the purchase of whole Shares of the Company, up to the maximum number of Shares permitted pursuant to the terms of the Plan or as determined by the Administrator in its sole discretion from time to time, at the Purchase Price. No fractional Shares shall be issued upon the exercise of rights granted under the Plan, unless the Administrator specifically provides otherwise. Any cash in lieu of fractional Shares remaining after the purchase of whole Shares upon exercise of a purchase right shall be credited to a Participant’s account and carried forward and applied toward the purchase of Shares for the next following Offering Period or for any subsequent Offering Period or paid to such Participant in one lump sum in cash as soon as reasonably practicable following the Purchase Date of the Offering Period after which there is a balance of the amount credited to the account of such Participant that has not been applied to the purchase of Shares, as determined by the Administrator in its sole discretion from time to time. +6.3 Purchase of Shares . As soon as practicable following the applicable Purchase Date, the number of shares of Common Stock purchased by a Participant pursuant to Section 6.2 shall be delivered (either as a share certificate or in book entry form), in the Company’s sole discretion, to either (i) the Participant or (ii) an account established in the Participant’s name at a stock brokerage or other financial services firm designated by the Company. +6.4 Pro Rata Allocation of Shares . If the Administrator determines that, on a given Purchase Date, the number of Shares with respect to which rights are to be exercised may exceed (a) the number of Shares that were available for issuance under the Plan on the Enrollment Date of the applicable Offering Period, or (b) the number of Shares available for issuance under the Plan on such Purchase Date, the Administrator may in its sole discretion provide that the Company shall make a pro rata allocation of the Shares available for purchase on such Enrollment Date or Purchase Date, as applicable, in as uniform a manner as shall be practicable and as it shall determine in its sole discretion to be equitable among all Participants for whom rights to purchase Common Stock are to be exercised pursuant to this Article 6 on such Purchase Date, and shall either (x) continue all Offering Periods then in effect, or (y) terminate any or all Offering Periods then in effect pursuant to Article 9. The Company may make a pro rata allocation of the Shares available on the Enrollment Date of any applicable Offering Period pursuant to the preceding sentence, notwithstanding any authorization of additional Shares for issuance under the Plan by the Company’s stockholders subsequent to such Enrollment Date. The balance of the amount credited to the account of each Participant that has not been applied to the purchase of Shares shall be paid to such Participant in one lump sum in cash as soon as reasonably practicable after the Purchase Date. +6.5 Withholding . At the time a Participant’s rights under the Plan are exercised, in whole or in part, or at the time some or all of the Common Stock issued under the Plan is disposed of, the Participant must make adequate provision in the manner determined by the Administrator, in its sole discretion from time to time, for the Company’s federal, state, or other tax withholding obligations, if any, that arise upon the exercise of the right or the disposition of the Common Stock. At any time, the Company may, but shall not be obligated to, withhold from the Participant’s compensation the amount necessary for the Company to meet applicable withholding obligations, including any withholding required to make available to the Company any tax deductions or benefits attributable to sale or early disposition of Common Stock by the Participant. +6.6 Conditions to Issuance of Common Stock . The Company shall not be required to issue or deliver any certificates for, or make any book entries evidencing, Shares purchased upon the exercise of rights under the Plan prior to fulfillment of all of the following conditions: +(a) The admission of such Shares to listing on the New York Stock Exchange or another stock exchange, if any, on which the Common Stock is then listed or admitted for trading; and +(b) The completion of any registration or other qualification of such Shares under any state or federal law, or under the rules or regulations of the Securities and Exchange Commission, or any other governmental regulatory body that the Administrator shall, in its sole discretion, deem necessary or advisable; and +(c) The obtaining of any approval, authorization or waiver from any state or federal governmental agency that the Administrator shall, in its sole discretion, determine to be necessary or advisable; and +(d) The payment to the Company of all amounts that it is required to withhold under federal, state or local law upon the exercise of rights granted under the Plan, if any. +ARTICLE 7 +WITHDRAWAL; CESSATION OF ELIGIBILITY +7.1 Withdrawal . A Participant may elect to withdraw from participation in the Plan at any time by giving written notice to the Company in a form acceptable to the Administrator no later than five (5) business days prior to the end of the Offering Period. All of the payroll deductions credited to the Participant’s account and not yet used to exercise his or her rights under the Plan shall be paid to the Participant as soon as reasonably practicable after receipt of the notice of withdrawal and such Participant’s rights for the Offering Period shall be automatically terminated, and no further payroll deductions for the purchase of Shares shall be made for such Offering Period. If a Participant withdraws from an Offering Period, payroll deductions shall not resume at the beginning of the next Offering Period unless the Participant delivers a new subscription agreement to the Company. +98 +7.2 Suspension . A Participant may suspend payroll deductions at any time during an Offering Period in accordance with Section 5.2(d). In the event a Participant elects to suspend his or her payroll deductions with respect to an Offering Period, such Participant’s cumulative payroll deductions prior to the suspension shall remain in his or her account and shall be applied to the purchase of Shares on the next occurring Purchase Date and shall not be paid to such Participant unless he or she withdraws from participation in the Plan in accordance with Section 7.1. +7.3 Future Participation . A Participant’s withdrawal from an Offering Period shall not have any effect upon his or her eligibility to participate in any similar plan that may hereafter be adopted by the Company or in subsequent Offering Periods that commence after the termination of the Offering Period from which the Participant withdraws. +7.4 Cessation of Eligibility . Upon a Participant’s withdraw from the Plan pursuant to this Article 7, the payroll deductions credited to such Participant’s account during the Offering Period shall be paid to such Participant as soon as reasonably practicable, and such Participant’s rights for the Offering Period shall be automatically terminated. +ARTICLE 8 +ADJUSTMENTS UPON CHANGES IN STOCK +8.1 Changes in Capital Structure . Subject to Section 8.3, in the event of any stock dividend, stock split, combination or reclassification of shares, merger, consolidation, spin-off, recapitalization, distribution of Company assets to stockholders (other than normal cash dividends), or any other similar corporate event affecting the Common Stock, the Administrator may make such proportionate adjustments, if any, as the Administrator in its sole discretion may deem appropriate to reflect such change with respect to (a) the aggregate number and type of Shares (or other securities or property) that may be issued under the Plan (including adjustments to the share reservation limit in Section 3.1), (b) the Purchase Price with respect to any outstanding rights, and (c) the class(es) and number of shares and price per Share subject to outstanding rights. +8.2 Other Adjustments . Subject to Section 8.3, in the event of any transaction or event described in Section 8.1, or any unusual or nonrecurring transactions or events affecting the Company or its outstanding capital stock (including, without limitation, any Change in Control), and whenever the Administrator determines that such action is appropriate in order to prevent the dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan or with respect to any right under the Plan, to facilitate such transactions or events, or to give effect to changes in laws, regulations or principles, the Administrator, in its sole discretion and on such terms and conditions as it deems appropriate, is hereby authorized to take any one or more of the following actions: +(a) To provide for either (i) termination of any outstanding right in exchange for an amount of cash, if any, equal to the amount that would have been obtained upon the exercise of such right had such right been currently exercisable or (ii) the replacement of such outstanding right with other rights or property selected by the Administrator; +(b) To provide that the outstanding rights under the Plan shall be assumed by the successor or survivor corporation, or a parent or subsidiary thereof, or shall be substituted for by similar rights covering the stock of the successor or survivor corporation, or a parent or subsidiary thereof, with appropriate adjustments as to the number and kind of shares and prices; +(c) To make adjustments in the number and type of Shares (or other securities or property) subject to outstanding rights under the Plan and/or in the terms and conditions of outstanding rights and rights that may be granted in the future; +(d) To provide that Participants’ accumulated payroll deductions may be used to purchase Common Stock prior to the next scheduled Purchase Date on such date as the Administrator determines and that Participants’ rights under the ongoing Offering Period(s) shall terminate; and +(e) To provide that all outstanding rights shall terminate without being exercised. +8.3 No Adjustment Under Certain Circumstances . No adjustment or action described in this Article 8 or in any other provision of the Plan shall be authorized to the extent that such adjustment or action would cause the Plan to fail to satisfy the requirements of Section 423 of the Code. +8.4 No Other Rights . Except as expressly provided in the Plan, no Participant shall have any rights by reason of any subdivision or consolidation of shares of stock of any class, the payment of any dividend, any increase or decrease in the number of shares of stock of any class or any dissolution, liquidation, merger, or consolidation of the Company or any Related Corporation. Except as expressly provided in the Plan or pursuant to action of the Administrator under the Plan, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number of Shares that a Participant shall have the right to buy in any Offering Period or that are available for issuance under the Plan. +99 +ARTICLE 9 +AMENDMENT, MODIFICATION AND TERMINATION +9.1 Amendment, Modification and Termination . The Administrator may amend, suspend or terminate the Plan at any time and from time to time; provided , however , that approval by a vote of the holders of the outstanding shares of the Company’s capital stock entitled to vote shall be required to amend the Plan: (a) to increase the aggregate number, or change the type, of Shares that may be sold pursuant to rights under the Plan under Section 3.1 (other than an adjustment as provided by Article 8), (b) to change the Plan in any manner that would cause the Plan to no longer be an “employee stock purchase plan” within the meaning of Section 423(b) of the Code, or (c) if required by the applicable rules or continued listing requirements adopted by the New York Stock Exchange or another stock exchange on which the Shares are then listed or admitted for trading. +9.2 Certain Changes to Plan . Without obtaining stockholder consent, without regard to whether any Participant’s rights may be considered to have been adversely affected, and to the extent permitted by Section 423 of the Code, the Administrator may, in its sole discretion, (a) change the commencement date of Offering Periods, (b) change the duration of Offering Periods, (c) limit the number of changes in the amount withheld during an Offering Period, (d) calculate the Compensation amount for any Eligible Employee, (e) establish the maximum amount of Compensation for which payroll deductions can be made, (f) set the time for delivery of notices under the Plan, (g) determine how the balance of the amount credited to the account of each Participant that has not been applied to the purchase of Shares should be treated, (h) determine the manner in which any Participant must make adequate provision for the Company’s federal, state, or other tax withholding obligations, (i) determine the maximum number of Shares that an Eligible Employee may purchase during each Offering Period, (j) determine who shall be an Eligible Employee, (k) determine whether and how often a Participant may increase or decrease the percentage of Compensation designated in his or her subscription agreement during an Offering Period, (l) make any determination permitted under and consistent with the Code and the Plan and (m) establish such other limitations or procedures as the Administrator determines to be advisable, in its sole discretion, that are consistent with the Plan. +9.3 Unfavorable Financial or Accounting Consequences . Without obtaining stockholder consent, in the event the Administrator determines that the ongoing operation of the Plan may result in unfavorable financial or accounting consequences, the Administrator may, in its sole discretion, modify or amend the Plan to reduce or eliminate such accounting or financial consequence, including (a) altering the calculation of the Purchase Price for any Offering Period, including an Offering Period underway at the time of the change in Purchase Price and (b) modifying the duration of any Offering Period so that the Offering Period ends on a new Purchase Date, including an Offering Period underway at the time of the change in the Offering Period. +9.4 Payments Upon Termination of Plan . Upon termination of the Plan, the balance in each Participant’s account shall be refunded as soon as practicable after such termination. +ARTICLE 10 +TERM OF PLAN +The Plan shall be effective on the Effective Date. The effectiveness of the Plan shall be subject to approval of the Plan by the stockholders of the Company within twelve (12) months following the Effective Date. No right may be granted under the Plan prior to such stockholder approval. Unless the Plan shall theretofore have been terminated, the Plan shall terminate on the tenth (10th) anniversary of the Effective Date. No rights may be granted under the Plan during any period of suspension of the Plan or after termination of the Plan. +ARTICLE 11 +ADMINISTRATION +11.1 Administrator . Authority to control and manage the operation and administration of the Plan shall be vested in the Board, which may delegate such responsibilities in whole or in part to the Committee, which shall consist of two (2) or more members of the Board. For purposes of this Plan, the term “Administrator” means the Board or, with respect to any matter as to which responsibility has been delegated to the Committee, the term Administrator shall mean the Committee. Each of the members of the Committee shall meet the independence requirements under the then applicable rules or continued listing requirements adopted by the New York Stock Exchange or another stock exchange on which the Shares are then listed or admitted for trading. Members of the Committee may be appointed from time to time by, and shall serve at the pleasure of, the Board. The Committee may delegate administrative tasks under the Plan to the services of an Agent and/or Employees to assist in the administration of the Plan, including establishing and maintaining an individual securities account under the Plan for each Participant. +11.2 Authority of Administrator . In addition to any other powers or authority conferred upon the Administrator elsewhere in the Plan (including, without limitation, in Article 9) or by law, the Administrator shall have full power and authority to: (a) determine the persons to whom, and the time or times at which, rights to purchase Common Stock shall be granted under the Plan and the provisions of each offering of such rights (which need not be identical), (b) interpret the Plan and the rights granted under it, (c) establish, amend and revoke rules and regulations for the administration of the Plan, (d) correct any defect or omission, or reconcile any inconsistency in the Plan, (e) amend the Plan as provided in Article 9, (f) exercise such powers and perform such acts as the Administrator deems necessary to carry out the intent that the Plan be treated as an “employee stock purchase plan” within the meaning of Section 423 of the Code, and (g) make all other determinations necessary or advisable for +100 +the administration of the Plan, but only to the extent not contrary to the express provisions of the Plan. Any action, decision, interpretation or determination made in good faith by the Administrator in the exercise of its authority conferred upon it under the Plan shall be final and binding on the Company and all Participants. +11.3 Expenses . All expenses and liabilities incurred by the Administrator in connection with the administration of the Plan shall be borne by the Company. The Administrator may, with the approval of the Committee, employ attorneys, consultants, accountants, brokerage firms, banks, financial institutions or other persons. The Administrator, the Company and its officers and directors shall be entitled to rely upon the advice, opinions or valuations of any such persons. All actions taken and all interpretations and determinations made by the Administrator in good faith shall be final and binding upon all Participants, the Company and all other interested persons. +11.4 Limitation on Liability . No employee of the Company or member of the Board or Committee shall be subject to any liability with respect to duties under the Plan unless the person acts fraudulently or in bad faith. To the extent permitted by law, the Company shall indemnify each member of the Board or Committee, and any employee of the Company to whom duties are delegated under the Plan, who was or is a party, or is threatened to be made a party, to any threatened, pending or completed proceeding, whether civil, criminal, administrative or investigative, by reason of such person’s conduct in the performance of duties under the Plan. +ARTICLE 12 +MISCELLANEOUS +12.1 Restriction upon Assignment . A right granted under the Plan shall not be transferable other than by will or the applicable laws of descent and distribution, and is exercisable during the Participant’s lifetime only by the Participant. The Company shall not recognize and shall be under no duty to recognize any assignment or alienation of the Participant’s interest in the Plan, the Participant’s rights under the Plan or any rights thereunder. +12.2 Rights as a Stockholder . Participant shall not be deemed to be a holder of, or to have any of the rights of a holder with respect to, Shares subject to a right granted under the Plan unless and until such Shares have been issued to the Participant in accordance with Section 6.3, the Company’s transfer agent shall have transferred the Shares to Participant, and Participant’s name shall have been entered as the stockholder of record on the books of the Company. Thereupon, Participant shall have full voting, dividend and other ownership rights with respect to such Shares. +12.3 Interest . In no event shall interest accrue on the payroll deductions of a Participant under the Plan. +12.4 Notices . All notices or other communications by a Participant to the Company under or in connection with the Plan shall be deemed to have been duly given when received in the form specified by the Company at the location, or by the person, designated by the Company for the receipt thereof. +12.5 Application of Funds . All payroll deductions received or held by the Company under the Plan may be used by the Company for any corporate purpose, and the Company shall not be obligated to segregate such payroll deductions. +12.6 Account Statements . Individual accounts shall be maintained for each Participant in the Plan. Statements of individual accounts shall be given to Participants at least annually, which statements shall set forth the amount of payroll deductions made, the Purchase Price paid, the number of Shares purchased, and the remaining cash balance, if any. The Committee may delegate responsibility to prepare and distribute the account statements to an Agent and/or Employees. +12.7 No Enlargement of Employee Rights . This Plan is strictly a voluntary undertaking on the part of the Company and shall not be deemed to constitute a contract between the Company and any Eligible Employee or Participant to be consideration for, or an inducement to, or a condition of, the employment of any Eligible Employee or Participant. Nothing contained in the Plan shall be deemed to give the right to any Participant to be retained as an employee of the Company or any Related Corporation or to interfere with the right of the Company or any Related Corporation to discharge any Eligible Employee or Participant at any time. +12.8 Effect Upon Other Plans . The adoption of the Plan shall not affect any other compensation or incentive plans in effect for the Company. Nothing in the Plan shall be construed to limit the right of the Company to establish any other forms of incentives or compensation for Employees of the Company or any Related Corporation. +12.9 Section 16 Persons . Notwithstanding any other provision of the Plan, the Plan and the participation in the Plan by any individual who is then subject to Section 16 of the Exchange Act shall be subject to any additional limitations set forth in any applicable exemption rule under Section 16 of the Exchange Act (including any amendment to Rule 16b-3 of the Exchange Act) that are requirements for the application of such exemptive rule. To the extent permitted by applicable law, the Plan shall be deemed amended to the extent necessary to conform to such applicable exemptive rule. +12.10 Notice of Disposition of Shares . Each Participant shall give prompt notice to the Company of any disposition or other transfer of any Shares purchased upon exercise of a right under the Plan if such disposition or transfer is made: (a) within two years from the Enrollment Date of the Offering Period in which the Shares were purchased or (b) within one year after the Purchase Date on which such Shares were purchased. Such notice shall specify the date of such disposition or other transfer, the amount and type of consideration realized (cash, other property, assumption of indebtedness or other consideration) by the Participant in such disposition or other transfer, and such additional information as may be requested by the Administrator. +101 +12.11 Equal Rights and Privileges . All Eligible Employees of the Company and any Related Corporation shall have equal rights and privileges under this Plan to the extent required under Section 423 of the Code so that this Plan qualifies as an “employee stock purchase plan” within the meaning of Section 423 of the Code. Any provision of this Plan that is inconsistent with Section 423 of the Code shall, without further act or amendment by the Company or the Board, be reformed to comply with the equal rights and privileges requirement of Section 423 of the Code. +12.12 Governing Law . The Plan and any agreements hereunder shall be administered, interpreted and enforced under the internal laws of the State of Delaware without regard to conflicts of laws thereof or of any other jurisdiction. +12.13 Electronic Delivery . Any reference herein to a “written” agreement or document shall include any agreement or document delivered electronically. +102 +APPENDIX B +DECKERS OUTDOOR CORPORATION +2024 STOCK INCENTIVE PLAN +As adopted by the Board of Directors on June 13, 2024 +ARTICLE 1 +PURPOSES OF THE PLAN +1.1 Purposes . The purposes of the Plan are (a) to enhance the Company’s ability to attract and retain the services of qualified employees, officers, directors, consultants and other service providers upon whose judgment, initiative and efforts the successful conduct and development of the Company’s business largely depends and (b) to provide additional incentives to such persons or entities to devote their utmost effort and skill to the advancement and betterment of the Company, by providing them an opportunity to participate in the ownership of the Company and thereby have an interest in the success and increased value of the Company. +ARTICLE 2 +DEFINITIONS +For purposes of this Plan, terms not otherwise defined herein will have the meanings indicated below: +2.1 “Affiliate” means (i) any entity that, directly or indirectly, is controlled by, controls or is under common control with, the Company and (ii) any entity in which the Company has a significant equity interest, in either case as determined by the Committee, whether now or hereafter existing. +2.2 “Award” means any award under the Plan, including any Option, Restricted Stock, Stock Bonus, Stock Appreciation Right, Restricted Stock Unit or Performance Awards. +2.3 “Award Agreement” means, with respect to each Award, the written or electronic agreement between the Company and the Participant setting forth the terms and conditions of the Award, and country-specific appendix thereto for grants to non-U.S. Participants, which will be in substantially a form (which need not be the same for each Participant) that the Committee (or in the case of Award agreements that are not used for Insiders, the Committee’s delegate(s)) has from time to time approved, and will comply with and be subject to the terms and conditions of this Plan. +2.4 “Board” means the Board of Directors of the Company. +2.5 “Cause” means termination of Service because of (a) any willful, material violation by the Participant of any law or regulation applicable to the business of the Company or a Parent, Subsidiary or Affiliate of the Company, the Participant’s conviction for or guilty plea to a felony or a crime involving moral turpitude or any willful perpetration by the Participant of a common law fraud; (b) the Participant’s commission of an act of personal dishonesty which involves personal profit in connection with the Company or any other entity having a business relationship with the Company; (c) any material breach by the Participant of any provision of any agreement or understanding between the Company or any Parent, Subsidiary or Affiliate of the Company and the Participant regarding the terms of the Participant’s Service, including the willful and continued failure or refusal of the Participant to perform the material duties required of such Participant as an Employee, Officer, Director, Non-Employee Director or Consultant of the Company or a Parent, Subsidiary or Affiliate of the Company, other than as a result of having a Disability or a breach of any applicable invention assignment and confidentiality agreement or similar agreement between the Company or a Parent, Subsidiary or Affiliate of the Company and the Participant; (d) Participant’s disregard of the policies of the Company or any Parent, Subsidiary or Affiliate of the Company, such as discrimination, harassment, performance of illegal or unethical activities or ethical misconduct, so as to cause, or is reasonably likely to cause, loss, damage or injury to the property, reputation or employees of the Company or a Parent, Subsidiary or Affiliate of the Company; or (e) any other misconduct by the Participant which is materially injurious to the financial condition or business reputation of or is otherwise materially injurious to the Company or a Parent, Subsidiary or Affiliate of the Company. The determination as to whether a Participant is being terminated for Cause will be made in good faith by the Company and will be final and binding on the Participant. The foregoing definition does not in any way limit the Company’s ability to terminate a Participant’s employment or consulting relationship at any time as provided in Section 13.11, and the term “Company” will be interpreted to include any Affiliate, Subsidiary or Parent, as appropriate. Notwithstanding the foregoing, the foregoing definition of “Cause” may, in part or in whole, be modified or replaced in each individual employment agreement or Award Agreement with any Participant, provided that such document supersedes the definition provided in this Section 2.5. +2.6 “Code” means the United States Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder. +2.7 “Committee” means the Talent & Compensation Committee of the Board or those persons to whom administration of the Plan or part of the Plan has been delegated as permitted by law. +103 +2.8 “Common Stock” means the Common Stock of the Company. +2.9 “Company” means Deckers Outdoor Corporation, a Delaware corporation, and any successor thereto. +2.10 “Consultant” means any natural person, including an advisor or independent contractor, engaged by the Company or a Parent, Subsidiary or Affiliate to render services to such entity. +2.11 “Corporate Transaction” means the occurrence of any of the following events: (a) any “Person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Company representing more than fifty percent (50%) of the total voting power represented by the Company’s then-outstanding voting securities; provided, however, that for purposes of this clause (a) the acquisition of additional securities by any one Person who is considered to own more than fifty percent (50%) of the total voting power of the securities of the Company will not be considered a Corporate Transaction; (b) the consummation of the sale or disposition by the Company of all or substantially all of the Company’s assets; (c) the consummation of a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity or its parent outstanding immediately after such merger or consolidation; (d) any other transaction which qualifies as a “corporate transaction” under Section 424(a) of the Code wherein the stockholders of the Company give up all of their equity interest in the Company (except for the acquisition, sale or transfer of all or substantially all of the outstanding shares of the Company) or (e) a change in the effective control of the Company that occurs on the date that a majority of members of the Board is replaced during any twelve (12) month period by member of the Board whose appointment or election is not endorsed by as majority of the members of the Board prior to the date of the appointment or election; provided, however, that for purposes of this clause (e), if any Person is considered to be in effective control of the Company, the acquisition of additional control of the Company by the same Person will not be considered a Corporate Transaction. For purposes of this definition, Persons will be considered to be acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock or similar business transaction with the Company. Notwithstanding the foregoing, to the extent that any amount constituting deferred compensation (as defined in Section 409A of the Code) would become payable under this Plan by reason of a Corporate Transaction, such amount will become payable only if the event constituting a Corporate Transaction would also qualify as a change in ownership or effective control of the Company or a change in the ownership of a substantial portion of the assets of the Company, each as defined within the meaning of Section 409A of the Code, as it has been and may be amended from time to time, and any proposed or final Treasury Regulations and IRS guidance that has been promulgated or may be promulgated thereunder from time to time. +2.12 “Director” means a member of the Board. +2.13 “Disability” means in the case of incentive stock options, total and permanent disability as defined in Section 22(e)(3) of the Code and in the case of other Awards, that the Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months. +2.14 “Dividend Equivalent Right” means the right of a Participant, granted at the discretion of the Committee or as otherwise provided by the Plan, to receive a credit for the account of such Participant in an amount equal to the cash, stock or other property dividends in amounts equal equivalent to cash, stock or other property dividends for each Share represented by an Award held by such Participant. +2.15 “Effective Date” means the date on which the Plan is approved by the affirmative vote of the holders of a majority of the Shares of Common Stock of the Company which are entitled to be voted and are voted on the proposal to approve this Plan (and for such purpose, any “broker non-votes” will not be counted as being entitled to be voted on that proposal, but will be counted for quorum purposes). +2.16 “Employee” means any person, including Officers and Directors, providing services as an employee to the Company or any Parent, Subsidiary or Affiliate. Neither service as a Director nor payment of a director’s fee by the Company will be sufficient to constitute “employment” by the Company. +2.17 “Exchange Act” means the United States Securities Exchange Act of 1934, as amended. +2.18 “Exercise Price” means, with respect to an Option, the price at which a holder may purchase the Shares issuable upon exercise of an Option and with respect to a SAR, the price at which the SAR is granted to the holder thereof. +2.19 “Fair Market Value” means, as of any date, the value of a share of the Company’s Common Stock determined as follows: (a) if such Common Stock is publicly traded and is then listed on a national securities exchange, its closing price on the date of determination on the principal national securities exchange on which the Common Stock is listed or admitted to trading as reported in The Wall Street Journal or such other source as the Committee deems reliable; (b) if such Common Stock is publicly traded but is neither listed nor admitted to trading on a national securities exchange, the average of the closing bid and asked prices on the date of determination as reported in The Wall Street Journal or such other source as the Committee deems reliable or (c) if none of the foregoing is applicable, by the Board or the Committee in good faith using any reasonable method of evaluation in a manner consistent with the valuation principles under Section 409A of the Code. +104 +2.20 “Insider” means an officer or director of the Company or any other person whose transactions in the Company’s Common Stock are subject to Section 16 of the Exchange Act. +2.21 “IRS” means the United States Internal Revenue Service. +2.22 “Non-Employee Director” means a Director who is not an Employee of the Company or any Parent or Subsidiary. +2.23 “Option” means an award of an option to purchase Shares pursuant to Article 4 or Article 10. +2.24 “Parent” means any corporation (other than the Company) in an unbroken chain of corporations ending with the Company if each of such corporations other than the Company owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. +2.25 “Participant” means a person who holds an Award under this Plan. +2.26 “Performance Award” means cash or stock granted pursuant to Article 9 or Article 10. +2.27 “Performance Factors” means any of the factors selected by the Committee and specified in an Award Agreement, from among the following objective measures, either individually, alternatively or in any combination, applied to the Company as a whole or any business unit or Subsidiary, either individually, alternatively or in any combination, on a GAAP or non-GAAP basis, and measured, to the extent applicable on an absolute basis or relative to a pre-established target or index or group of comparator companies, to determine whether the performance goals established by the Committee with respect to applicable Awards have been satisfied: (a) profit before tax; (b) billings; (c) revenue; (d) net revenue; (e) earnings (which may include earnings before interest; earnings before interest and taxes; earnings before interest, taxes and depreciation; earnings before interest, taxes, depreciation and amortization; net earnings and other metrics based on or derived from earnings); (f) operating income; (g) operating margin; (h) operating profit; (i) controllable operating profit; (j) net operating profit; (k) net profit; (l) gross margin; (m) operating expenses or operating expenses as a percentage of revenue; (n) net income; (o) earnings per share; (p) total stockholder return; (q) market share; (r) return on assets or net assets; (s) the Company’s stock price; (t) growth in stockholder value relative to a pre-determined index; (u) return on equity; (v) return on invested capital; (w) cash flow (including free cash flow or operating cash flows); (x) cash conversion cycle; (y) economic value added; (z) individual confidential business objectives; (aa) contract awards or backlog; (bb) overhead or other expense reduction; (cc) credit rating; (dd) strategic plan development and implementation; (ee) succession plan development and implementation; (ff) improvement in workforce diversity; (gg) customer indicators; (hh) new product invention or innovation; (ii) attainment of research and development milestones; (jj) improvements in productivity; (kk) bookings and (ll) attainment of objective operating goals and employee metrics. +2.28 “Performance Period” means the period of service determined by the Committee, not to exceed seven (7) years, during which years of service or performance is to be measured for the Award. +2.29 “Performance Share” means an Award granted pursuant to Article 9 or Article 10. +2.30 “Permitted Transferee” means any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law (including adoptive relationships) of the Employee, any person sharing the Employee’s household (other than a tenant or employee), a trust in which these persons (or the Employee) have more than 50% of the beneficial interest, a foundation in which these persons (or the Employee) control the management of assets, and any other entity in which these persons (or the Employee) own more than 50% of the voting interests. +2.31 “Plan” means this Deckers Outdoor Corporation 2024 Stock Incentive Plan. +2.32 “Purchase Price” means the price to be paid for Shares acquired under the Plan, other than Shares acquired upon exercise of an Option or SAR. +2.33 “Restricted Stock Award” means an award of Shares pursuant to Article 5 or Article 10 or issued pursuant to the early exercise of an Option. +2.34 “Restricted Stock Unit” means an Award granted pursuant to Article 8 or Article 10. +2.35 " Rule 16b-3 " means Rule 16b-3 promulgated under the Exchange Act or any successor to Rule 16b-3, as in effect from time to time. +2.36 “SEC” means the United States Securities and Exchange Commission. +2.37 “Securities Act” means the United States Securities Act of 1933, as amended. +2.38 “Service” means service as an Employee, Consultant, Director or Non-Employee Director, to the Company or a Parent, Subsidiary or Affiliate, subject to such further limitations as may be set forth in the Plan or the applicable Award Agreement. An Employee will not be deemed to have ceased to provide Service in the case of (a) sick leave; (b) military leave or (c) any other leave of absence approved by the Company; provided, that such leave is for a period of not more than 90 days (x) unless reemployment upon the expiration of such leave is guaranteed by contract or statute or (y) unless provided otherwise +105 +pursuant to formal policy adopted from time to time by the Company and issued and promulgated to employees in writing. In the case of any Employee on an approved leave of absence or a reduction in hours worked (for illustrative purposes only, a change in schedule from that of full-time to part-time), the Committee may make such provisions respecting suspension of or modification of vesting of the Award while on leave from the employ of the Company or a Parent, Subsidiary or Affiliate or during such change in working hours as it may deem appropriate, except that in no event may an Award be exercised after the expiration of the term set forth in the applicable Award Agreement. In the event of military leave, if required by applicable laws, vesting will continue for the longest period that vesting continues under any other statutory or Company approved leave of absence and, upon a Participant’s returning from military leave (under conditions that would entitle him or her to protection upon such return under the Uniform Services Employment and Reemployment Rights Act), he or she will be given vesting credit with respect to Awards to the same extent as would have applied had the Participant continued to provide services to the Company throughout the leave on the same terms as he or she was providing services immediately prior to such leave. An employee will have terminated employment as of the date he or she ceases to provide services (regardless of whether the termination is in breach of local employment laws or is later found to be invalid) and employment will not be extended by any notice period or garden leave mandated by local law, provided however, that a change in status from an employee to a consultant or advisor will not terminate the service provider’s Service, unless determined by the Committee, in its discretion. The Committee will have sole discretion to determine whether a Participant has ceased to provide Services and the effective date on which the Participant ceased to provide Services. +2.39 “Shares” means shares of the Company’s Common Stock and the common stock of any successor entity. +2.40 “Stock Appreciation Right” means an Award granted pursuant to Article 7 or Article 10. +2.41 “Stock Bonus” means an Award granted pursuant to Article 6 or Article 10. +2.42 “Subsidiary” means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if each of the corporations other than the last corporation in the unbroken chain owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. +2.43 “Treasury Regulations” means regulations promulgated by the United States Treasury Department. +2.44 “Unvested Shares” means Shares that have not yet vested or are subject to a right of repurchase in favor of the Company (or any successor thereto). +ARTICLE 3 +PLAN SHARES +3.1 Number of Shares Available . Subject to adjustment as provided in Sections 3.2 and 3.5, the total number of Shares reserved and available for grant and issuance pursuant to this Plan is 1,300,000 Shares, less one Share for every one Share granted under the Company’s 2015 Equity Incentive Plan (the “ Prior Plan ”) after March 31, 2024 and prior to the Effective Date. After the Effective Date, no awards may be granted under the Prior Plan. +3.2 Lapsed, Returned Awards . If (a) any Shares subject to an Award are forfeited, an Award expires or otherwise terminates without issuance of Shares or an Award is settled for cash (in whole or in part) or otherwise does not result in the issuance of all or a portion of the Shares subject to such Award (including on payment in Shares on exercise of a SAR), such Shares shall, to the extent of such forfeiture, expiration, termination, cash settlement or non-issuance, be added to the Shares available for grant under the Plan or (b) after March 31, 2024 any Shares subject to an award under the Prior Plan are forfeited, an award under the Prior Plan expires or otherwise terminates without issuance of such Shares or an award under the Prior Plan is settled for cash (in whole or in part) or otherwise does not result in the issuance of all or a portion of the Shares subject to such award (including on payment in Shares on exercise of a SAR), then in each such case the Shares subject to the Award or award under the Prior Plan shall, to the extent of such forfeiture, expiration, termination, cash settlement or non-issuance, be added to the Shares available for grant under the Plan on a one-for-one basis. If (i) any Award granted hereunder is exercised through the tendering of Shares (either actually or by attestation) or by the withholding of Shares by the Company or (ii) withholding tax liabilities arising from such Award are satisfied by the tendering of Shares (either actually or by attestation) or by the withholding of Shares by the Company, then in each such case the Shares so tendered or withheld shall be added to the Shares available for grant under the Plan on a one-for-one basis. If after March 31, 2024 (x) any option or award under the Prior Plan is exercised through the tendering of Shares (either actually or by attestation) or by the withholding of Shares by the Company or (y) withholding tax liabilities arising from such options or awards are satisfied by the tendering of Shares (either actually or by attestation) or by the withholding of Shares by the Company, then in each such case the Shares so tendered or withheld shall be added to the Shares available for grant under the Plan on a one-for-one basis. +3.3 Minimum Share Reserve . At all times the Company will reserve and keep available a sufficient number of Shares as will be required to satisfy the requirements of all outstanding Awards granted under this Plan. +3.4 Limitations; Eligibility . No more th an 750,000 Shares will be issued pursuant to the exercise of ISOs. ISOs may be granted only to Employees. All other Awards may be granted to Employees, Consultants, Directors and Non-Employee Directors; provided such Consultants, Directors and Non-Employee Directors render bona fide services not in connection with the offer and sale of securities in a capital-raising transaction. Subject to adjustment as provided in Section 3.5, no Participant may be granted Options or SARs during any twelve (12)-month period with respect to more than 400,000 Shar es. Such limitation in the preceding sentence of this Section 3.4 shall be multiplied by two (2) with respect to Awards granted to a Participant during +106 +the first calendar year in which the Participant commences employment with the Company and its Subsidiaries. If an Award is cancelled, the cancelled Award shall continue to be counted toward the applicable limitation in this Section 3.4. +3.5 Adjustment of Shares . If the number of outstanding Shares is changed by a stock dividend, extraordinary dividends or distributions (whether in cash, shares or other property, other than a regular cash dividend), recapitalization, stock split, reverse stock split, subdivision, combination, reclassification, spin-off or similar change in the capital structure of the Company, then (a) the number of Shares reserved for issuance and future grant under the Plan set forth in Section 3.1; (b) the Exercise Prices of and number of Shares subject to outstanding Options and SARs; (c) the number of Shares subject to other outstanding Awards; (d) the maximum number of shares that may be issued as ISOs or other Awards set forth in Section 3.4; and (e) the maximum number of Shares that may be issued to an individual or to a new Employee in any one calendar year set forth in Section 3.4, will be proportionately adjusted, subject to any required action by the Board or the stockholders of the Company and in compliance with applicable securities laws, provided that fractions of a Share will not be issued. +ARTICLE 4 +OPTIONS +4.1 Options . An Option is the right but not the obligation to purchase a Share, subject to certain conditions, if applicable. The Committee may grant Options to eligible Employees, Consultants and Directors and will determine whether such Options will be Incentive Stock Options within the meaning of the Code (“ ISOs ”) or Nonqualified Stock Options (“ NSOs ”), the number of Shares subject to the Option, the Exercise Price of the Option, the period during which the Option may vest and be exercised, and all other terms and conditions of the Option, subject to the following terms of this Section 4.1. +4.2 Option Grant . Each Option granted under this Plan will identify the Option as an ISO or an NSO. An Option may be, but need not be, awarded upon satisfaction of such Performance Factors during any Performance Period as are set out in advance in the Participant’s individual Award Agreement. If the Option is being earned upon the satisfaction of Performance Factors, then the Committee will: (a) determine the nature, length and starting date of any Performance Period for each Option and (b) select from among the Performance Factors to be used to measure the performance, if any. Performance Periods may overlap and Participants may participate simultaneously with respect to Options that are subject to different performance goals and other criteria. +4.3 Date of Grant . The date of grant of an Option will be the date on which the Committee makes the determination to grant such Option or a specified future date. The Award Agreement and a copy of this Plan will be delivered to the Participant within a reasonable time after the granting of the Option. +4.4 Exercise Period . Options may be vested and exercisable within the times or upon the conditions as set forth in the Award Agreement governing such Option; provided, however, that no Option will be exercisable after the expiration of ten (10) years from the date the Option is granted; and provided further that no ISO granted to a person who, at the time the ISO is granted, directly or by attribution owns more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or of any Parent or Subsidiary of the Company (“ Ten Percent Stockholder ”) will be exercisable after the expiration of five (5) years from the date the ISO is granted. The Committee also may provide for Options to become exercisable at one time or from time to time, periodically or otherwise, in such number of Shares or percentage of Shares as the Committee determines. +4.5 Exercise Price . The Exercise Price of an Option will be determined by the Committee when the Option is granted, provided that (a) the Exercise Price of an Option will be not less than one hundred percent (100%) of the Fair Market Value of the Shares on the date of grant and (b) the Exercise Price of any ISO granted to a Ten Percent Stockholder will not be less than one hundred ten percent (110%) of the Fair Market Value of the Shares on the date of grant. Payment for the Shares purchased may be made in accordance with Section 13.1 and the Award Agreement and in accordance with any procedures established by the Company. +4.6 Method of Exercise . Any Option granted hereunder will be vested and exercisable according to the terms of the Plan and at such times and under such conditions as determined by the Committee and set forth in the Award Agreement. An Option may not be exercised for a fraction of a Share. An Option will be deemed exercised when the Company receives: (a) notice of exercise (in such form as the Committee may specify from time to time) from the person entitled to exercise the Option (and/or via electronic execution through the authorized third party administrator) and (b) full payment for the Shares with respect to which the Option is exercised (together with applicable withholding taxes). Full payment may consist of any consideration and method of payment authorized by the Committee and permitted by the Award Agreement and the Plan. Shares issued upon exercise of an Option will be issued in the name of the Participant. Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder will exist with respect to the Shares, notwithstanding the exercise of the Option. The Company will issue (or cause to be issued) such Shares promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 3.5. Exercising an Option in any manner will decrease the number of Shares thereafter available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised. +4.7 Termination of Service . Unless otherwise provided in the Award Agreement, if the Participant’s Service terminates for any reason except for Cause or the Participant’s death or Disability, then the Participant may exercise such Participant’s Options only to the extent that such Options would have been exercisable by the Participant on the date Participant’s Service terminates no later than three (3) months after the date Participant’s Service terminates (or such shorter or +107 +longer time period as may be determined by the Committee, with any exercise beyond three (3) months after the date Participant’s Service terminates deemed to be the exercise of an NSO), but in any event no later than the expiration date of the Options. Unless otherwise provided in the Award Agreement, if the Participant’s Service terminates because of the Participant’s death (or the Participant dies within three (3) months after Participant’s Service terminates other than for Cause or because of the Participant’s Disability), then the Participant’s Options may be exercised only to the extent that such Options would have been exercisable by the Participant on the date Participant’s Service terminates and must be exercised by the Participant’s legal representative or authorized assignee no later than twelve (12) months after the date Participant’s Service terminates (or such shorter time period or longer time period as may be determined by the Committee), but in any event no later than the expiration date of the Options. Unless otherwise provided in the Award Agreement, if the Participant’s Service terminates because of the Participant’s Disability, then the Participant’s Options may be exercised only to the extent that such Options would have been exercisable by the Participant on the date Participant’s Service terminates and must be exercised by the Participant (or the Participant’s legal representative or authorized assignee) no later than twelve (12) months after the date Participant’s Service terminates (or such shorter or longer time period as may be determined by the Committee, with any exercise beyond (a) three (3) months after the date Participant’s Service terminates when the termination of Service is for a Disability that is not a “permanent and total disability” as defined in Section 22(e)(3) of the Code or (b) twelve (12) months after the date Participant’s Service terminates when the termination of Service is for a Disability that is a “permanent and total disability” as defined in Section 22(e)(3) of the Code, deemed to be exercise of an NSO), but in any event no later than the expiration date of the Options. Unless otherwise provided in the Award Agreement, if the Participant is terminated for Cause, then Participant’s Options will expire on such Participant’s date of termination of Service or at such later time and on such conditions as are determined by the Committee, but in any no event later than the expiration date of the Options. Unless otherwise provided in the Award Agreement, Cause will have the meaning set forth in the Plan. +4.8 Limitations on Exercise . The Committee may specify a minimum number of Shares that may be purchased on any exercise of an Option, provided that such minimum number will not prevent any Participant from exercising the Option for the full number of Shares for which it is then exercisable. +4.9 Limitations on ISOs . With respect to Awards granted as ISOs, to the extent that the aggregate Fair Market Value of the Shares with respect to which such ISOs are exercisable for the first time by the Participant during any calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds one hundred thousand dollars ($100,000), such Options will be treated as NSOs. For purposes of this Section 4.9, ISOs will be taken into account in the order in which they were granted. The Fair Market Value of the Shares will be determined as of the time the Option with respect to such Shares is granted. In the event that the Code or the regulations promulgated thereunder are amended after the Effective Date to provide for a different limit on the Fair Market Value of Shares permitted to be subject to ISOs, such different limit will be automatically incorporated herein and will apply to any Options granted after the effective date of such amendment. +4.10 Modification or Extension . Subject in all cases to Section 13.8, the Committee may modify or extend outstanding Options (but not beyond their original term) and authorize the grant of new Options in substitution therefor, provided that any such action may not, without the written consent of a Participant, impair any of such Participant’s rights under any Option previously granted. Any outstanding ISO that is modified, extended or otherwise altered will be treated in accordance with Section 424(h) of the Code. +4.11 No Disqualification . Notwithstanding any other provision in this Plan, no term of this Plan relating to ISOs will be interpreted, amended or altered, nor will any discretion or authority granted under this Plan be exercised, so as to disqualify this Plan under Section 422 of the Code or, without the consent of the Participant affected, to disqualify any ISO under Section 422 of the Code. +ARTICLE 5 +RESTRICTED STOCK AWARDS +5.1 Restricted Stock Awards . A Restricted Stock Award is an offer by the Company to sell to an eligible Employee, Consultant or Director Shares that are subject to restrictions (“ Restricted Stock ”). The Committee will determine to whom an offer will be made, the number of Shares the Participant may purchase, the Purchase Price (if any), the restrictions under which the Shares will be subject and all other terms and conditions of the Restricted Stock Award, subject to the Plan. +5.2 Award Agreement . All Restricted Stock Awards will be evidenced by an Award Agreement. Except as may otherwise be provided in an Award Agreement, a Participant accepts a Restricted Stock Award by signing and delivering to the Company an Award Agreement with full payment of the Purchase Price (if any), within thirty (30) days from the date the Award Agreement was delivered to the Participant. If the Participant does not accept such Award within thirty (30) days, then the offer of such Restricted Stock Award will terminate, unless the Committee determines otherwise. +5.3 Purchase Price . The Purchase Price (if any) for a Restricted Stock Award will be determined by the Committee and may be less than Fair Market Value on the date the Restricted Stock Award is granted. Payment of the Purchase Price (if any) must be made in accordance with Section 13.1, the Award Agreement and any procedures established by the Company. +5.4 Terms of Restricted Stock Awards . Restricted Stock Awards will be subject to such restrictions as the Committee may impose or are required by law. These restrictions may be based on completion of a specified number of years of service with the Company or upon completion of Performance Factors, if any, during any Performance Period as set out in advance in the Participant’s Award Agreement. Prior to the grant of a Restricted Stock Award, the Committee will: (a) determine the nature, length and starting date of any Performance Period for the Restricted Stock Award; (b) select from among the +108 +Performance Factors to be used to measure performance goals, if any and (c) determine the number of Shares that may be awarded to the Participant. Performance Periods may overlap and a Participant may participate simultaneously with respect to Restricted Stock Awards that are subject to different Performance Periods and having different performance goals and other criteria. +5.5 Termination of Service . Except as may be set forth in the Participant’s Award Agreement, vesting ceases on such date Participant’s Service terminates (unless determined otherwise by the Committee). +ARTICLE 6 +STOCK BONUS AWARDS +6.1 Stock Bonus Awards . A Stock Bonus Award is an award to an eligible Employee, Consultant or Director of Shares for Services to be rendered or for past Services already rendered to the Company or any Parent or Subsidiary. All Stock Bonus Awards will be made pursuant to an Award Agreement. No payment from the Participant will be required for Shares awarded pursuant to a Stock Bonus Award. +6.2 Terms of Stock Bonus Awards . The Committee will determine the number of Shares to be awarded to the Participant under a Stock Bonus Award and any restrictions thereon. These restrictions may be based upon completion of a specified number of years of service with the Company or upon satisfaction of performance goals based on Performance Factors during any Performance Period as set out in advance in the Participant’s Stock Bonus Agreement. Prior to the grant of any Stock Bonus Award the Committee will: (a) determine the nature, length and starting date of any Performance Period for the Stock Bonus Award; (b) select from among the Performance Factors to be used to measure performance goals (if any) and (c) determine the number of Shares that may be awarded to the Participant. Performance Periods may overlap and a Participant may participate simultaneously with respect to Stock Bonus Awards that are subject to different Performance Periods and different performance goals and other criteria. +6.3 Form of Payment to Participant . Payment may be made in the form of cash, whole Shares or a combination thereof, based on the Fair Market Value of the Shares earned under a Stock Bonus Award on the date of payment, as determined in the sole discretion of the Committee. +6.4 Termination of Service . Except as may be set forth in the Participant’s Award Agreement, vesting ceases on such date Participant’s Service terminates (unless determined otherwise by the Committee). +ARTICLE 7 +STOCK APPRECIATION RIGHTS +7.1 Stock Appreciation Rights . A Stock Appreciation Right (“ SAR ”) is an award to an eligible Employee, Consultant or Director that may be settled in cash or Shares (which may consist of Restricted Stock) having a value equal to (a) the difference between the Fair Market Value on the date of exercise over the Exercise Price multiplied by (b) the number of Shares with respect to which the SAR is being settled (subject to any maximum number of Shares that may be issuable as specified in an Award Agreement). All SARs will be made pursuant to an Award Agreement. +7.2 Terms of SARs . The Committee will determine the terms of each SAR, including: (a) the number of Shares subject to the SAR; (b) the Exercise Price and the time or times during which the SAR may be settled; (c) the consideration to be distributed on settlement of the SAR and (d) the effect of the Participant’s termination of Service on each SAR. The Exercise Price of the SAR will be determined by the Committee when the SAR is granted, and may not be less than Fair Market Value. A SAR may be awarded upon satisfaction of Performance Factors, if any, during any Performance Period as are set out in advance in the Participant’s individual Award Agreement. If the SAR is being earned upon the satisfaction of Performance Factors, then the Committee will: (x) determine the nature, length and starting date of any Performance Period for each SAR and (y) select from among the Performance Factors to be used to measure the performance, if any. Performance Periods may overlap and Participants may participate simultaneously with respect to SARs that are subject to different Performance Factors and other criteria. +7.3 Exercise Period and Expiration Date . A SAR will be exercisable within the times or upon the occurrence of events determined by the Committee and set forth in the Award Agreement governing such SAR. The SAR Agreement will set forth the expiration date; provided that no SAR will be exercisable after the expiration of ten (10) years from the date the SAR is granted. The Committee may also provide for SARs to become exercisable at one time or from time to time, periodically or otherwise (including upon the attainment during a Performance Period of performance goals based on Performance Factors), in such number of Shares or percentage of the Shares subject to the SAR as the Committee determines. Except as may be set forth in the Participant’s Award Agreement, vesting ceases on the date Participant’s Service terminates (unless determined otherwise by the Committee). Notwithstanding the foregoing, the rules of Section 4.7 also will apply to SARs. +7.4 Form of Settlement . Upon exercise of a SAR, a Participant will be entitled to receive payment from the Company in an amount determined by multiplying (a) the difference between the Fair Market Value of a Share on the date of exercise over the Exercise Price; times (b) the number of Shares with respect to which the SAR is exercised. At the discretion of the Committee, the payment from the Company for the SAR exercise may be in cash, in Shares of equivalent value or in some combination thereof. The portion of a SAR being settled may be paid currently or on a deferred basis with such interest or +109 +dividend equivalent, if any, as the Committee determines, provided that the terms of the SAR and any deferral satisfy the requirements of Section 409A of the Code. +7.5 Termination of Service . Except as may be set forth in the Participant’s Award Agreement, vesting ceases on such date Participant’s Service terminates (unless determined otherwise by the Committee). +ARTICLE 8 +RESTRICTED STOCK UNITS +8.1 Restricted Stock Units . A Restricted Stock Unit (“ RSU ”) is an award to an eligible Employee, Consultant or Director covering a number of Shares that may be settled in cash and/or by issuance of Shares (which may consist of Restricted Stock). All RSUs will be made pursuant to an Award Agreement. +8.2 Terms of RSUs . The Committee will determine the terms of an RSU including: (a) the number of Shares subject to the RSU; (b) the time or times during which the RSU may be settled; (c) the amount (including any minimum amount), nature (which may include cash, Shares or a combination of both) and valuation of the consideration to be paid or distributed on settlement; (d) the effect of the Participant’s termination of Service on each RSU; and (e) such other terms as the Committee may determine. An RSU may be awarded upon satisfaction of such performance goals based on Performance Factors during any Performance Period as are set out in advance in the Participant’s Award Agreement. If the RSU is being earned upon satisfaction of Performance Factors, then the Committee will: (x) determine the nature, length and starting date of any Performance Period for the RSU; (y) select from among the Performance Factors to be used to measure the performance, if any and (z) determine the number of Shares deemed subject to the RSU. Performance Periods may overlap and participants may participate simultaneously with respect to RSUs that are subject to different Performance Periods and different performance goals and other criteria. +8.3 Timing of Settlement . Payment of earned RSUs will be made as soon as practicable after the date(s) determined by the Committee and set forth in the Award Agreement. The Committee may permit a Participant to defer payment under a RSU to a date or dates after the RSU is earned provided that the terms of the RSU and any deferral satisfy the requirements of Section 409A of the Code. +8.4 Termination of Service . Except as may be set forth in the Participant’s Award Agreement, vesting ceases on such date Participant’s Service terminates (unless determined otherwise by the Committee). +ARTICLE 9 +PERFORMANCE AWARDS +9.1 Performance Awards . A Performance Award is an award to an eligible Employee, Consultant or Director of a cash bonus or an award of Performance Shares denominated in Shares that may be settled in cash or by issuance of those Shares (which may consist of Restricted Stock). Grants of Performance Awards will be made pursuant to an Award Agreement. +9.2 Terms of Performance Shares . The Committee will determine, and each Award Agreement will set forth, the terms of each Performance Award including: (a) the amount of any cash bonus; (b) the number of Shares deemed subject to an award of Performance Shares; (c) the Performance Factors and Performance Period that will determine the time and extent to which each Performance Award will be settled; (d) the consideration to be distributed on settlement and (e) the effect of the Participant’s termination of Service on each Performance Award. In establishing Performance Factors and the Performance Period the Committee will: (x) determine the nature, length and starting date of any Performance Period; (y) select from among the Performance Factors to be used and (z) determine the number of Shares deemed subject to the award of Performance Shares. Prior to settlement the Committee will determine the extent to which Performance Awards have been earned. Performance Periods may overlap and Participants may participate simultaneously with respect to Performance Awards that are subject to different Performance Periods and different performance goals and other criteria. +9.3 Value, Earning and Timing of Performance Shares . Each Performance Share will have an initial value equal to the Fair Market Value of a Share on the date of grant. After the applicable Performance Period has ended, the holder of Performance Shares will be entitled to receive a payout of the number of Performance Shares earned by the Participant over the Performance Period, to be determined as a function of the extent to which the corresponding Performance Factors or other vesting provisions have been achieved. The Committee, in its sole discretion, may pay earned Performance Shares in the form of cash, in Shares (which have an aggregate Fair Market Value equal to the value of the earned Performance Shares at the close of the applicable Performance Period) or in a combination thereof. +9.4 Termination of Service . Except as may be set forth in the Participant’s Award Agreement, vesting ceases on the date Participant’s Service terminates (unless determined otherwise by the Committee). +ARTICLE 10 +GRANTS TO NON-EMPLOYEE DIRECTORS +10.1 Grants To Non-Employee Directors . Non-Employee Directors are eligible to receive any type of Award offered under this Plan except ISOs. Awards pursuant to this Article 10 may be automatically made pursuant to policy adopted by the +110 +Board or made from time to time as determined in the discretion of the Board. No Non-Employee Director may be granted Awards pursuant to this Article 10 in any calendar year with a grant date fair value (determined in accordance with U.S. generally accepted accounting principles) of more than $1,000,000. The limitation in the preceding sentence of this Section 10.1 shall be multiplied by two (2) with respect to Awards granted to a Non-Employee Director during the first calendar year in which the Non-Employee Director provides services as a Non-Employee Director. +10.2 Eligibility . Awards pursuant to this Article 10 will be granted only to Non-Employee Directors. A Non-Employee Director who is elected or re-elected as a member of the Board will be eligible to receive an Award under this Article 10. +10.3 Vesting, Exercisability and Settlement . Except as set forth in Article 12, Awards will vest, become exercisable and be settled as determined by the Board. With respect to Options and SARs, the exercise price granted to Non-Employee Directors will not be less than the Fair Market Value of the Shares at the time that such Option or SAR is granted. +10.4 Election to receive Awards in Lieu of Cash . A Non-Employee Director may elect to receive his or her annual retainer payments and/or meeting fees from the Company in the form of cash or Awards or a combination thereof, as determined by the Committee. Such Awards will be issued under the Plan. An election under this Section 10.4 will be filed with the Company on the form prescribed by the Company. +ARTICLE 11 +ADMINISTRATION OF THE PLAN +11.1 Committee Composition; Authority . +(a) Except as otherwise determined by the Board, the Committee shall consist solely of two or more Non-Employee Directors. The Board shall have discretion to determine whether or not it intends to comply with the exemption requirements of Rule 16b-3. However, if the Board intends to satisfy such exemption requirements, with respect to any insider subject to Section 16 of the Exchange Act, the Committee shall at all times consists solely of two or more Non-Employee Directors. Within the scope of such authority, the Board or the Committee may delegate to a committee of one or more members of the Board who are not Non-Employee Directors the authority to grant Awards to eligible persons who are not then subject to Section 16 of the Exchange Act. Nothing herein shall create an inference that an Award is not validly granted under the Plan in the event Awards are granted under the Plan by a compensation committee of the Board that does not at all times consist solely of two or more Non-Employee Directors. +(b) The Committee will have the authority to: (i) construe and interpret this Plan, any Award Agreement and any other agreement or document executed pursuant to this Plan; (ii) prescribe, amend and rescind rules and regulations relating to this Plan or any Award; (iii) select persons to receive Awards; (iv) determine the form and terms and conditions, not inconsistent with the terms of the Plan, of any Award granted hereunder, including the exercise price, the time or times when Awards may vest and be exercised (which may be based on performance criteria) or settled, any vesting acceleration or waiver of forfeiture restrictions, the method to satisfy tax withholding obligations or any other tax liability legally due and any restriction or limitation regarding any Award or the Shares relating thereto, based in each case on such factors as the Committee will determine; (v) determine the number of Shares or other consideration subject to Awards; (vi) determine the Fair Market Value in good faith and interpret the applicable provisions of this Plan and the definition of Fair Market Value in connection with circumstances that impact the Fair Market Value, if necessary; (vii) determine whether Awards will be granted singly, in combination with, in tandem with, in replacement of or as alternatives to other Awards under this Plan or any other incentive or compensation plan of the Company or any Parent or Subsidiary of the Company; (viii) grant waivers of Plan or Award conditions; (ix) determine the vesting, exercisability and payment of Awards; (x) correct any defect, supply any omission or reconcile any inconsistency in this Plan, any Award or any Award Agreement; (xi) determine whether an Award has been earned; (xii) reduce or waive any criteria with respect to Performance Factors; (xiii) adopt terms and conditions, rules and procedures (including the adoption of any sub-plan under this Plan) relating to the operation and administration of the Plan to accommodate requirements of local law and procedures outside of the United States; (xiv) make all other determinations necessary or advisable for the administration of this Plan; and (xv) delegate any of the foregoing to a subcommittee consisting of one or more executive officers pursuant to a specific delegation as permitted by applicable law, including Section 157(c) of the Delaware General Corporation Law. +11.2 Committee Interpretation and Discretion . Any determination made by the Committee with respect to any Award will be made in its sole discretion at the time of grant of the Award or, unless in contravention of any express term of the Plan or Award, at any later time, and such determination will be final and binding on the Company and all persons having an interest in any Award under the Plan. Any dispute regarding the interpretation of the Plan or any Award Agreement will be submitted by the Participant or Company to the Committee for review. The resolution of such a dispute by the Committee will be final and binding on the Company and the Participant. The Committee may delegate to one or more executive officers the authority to review and resolve disputes with respect to Awards held by Participants who are not Insiders, and such resolution will be final and binding on the Company and the Participant. +11.3 Section 16 of the Exchange Act . It is the intent of the Company that the Plan satisfy, and be interpreted in a manner that satisfies, the applicable requirements of Rule 16b-3 as promulgated under Section 16 of the Exchange Act so that Participants will be entitled to the benefit of Rule 16b-3, or any other rule promulgated under Section 16 of the Exchange Act, and will not be subject to short-swing liability under Section 16 of the Exchange Act. Accordingly, if the operation of any provision of the Plan would conflict with the intent expressed in this Section 11.3, such provision to the extent possible shall be interpreted and/or deemed amended so as to avoid such conflict. +111 +11.4 Documentation . The Award Agreement for a given Award, the Plan and any other documents may be delivered to, and accepted by, a Participant or any other person in any manner (including electronic distribution or posting) that meets applicable legal requirements. +11.5 Foreign Award Recipients . Notwithstanding any provision of the Plan to the contrary, in order to comply with the laws and practices in other countries in which the Company and its Subsidiaries operate or have employees or other individuals eligible for Awards, the Committee, in its sole discretion, will have the power and authority to: (a) determine which Subsidiaries and Affiliates will be covered by the Plan; (b) determine which individuals outside the United States are eligible to participate in the Plan, which may include individuals who provide services to the Company, Subsidiary or Affiliate under an agreement with a foreign nation or agency; (c) modify the terms and conditions of any Award granted to individuals outside the United States or foreign nationals to comply with applicable foreign laws, policies, customs and practices; (d) establish sub-plans and modify exercise procedures and other terms and procedures, to the extent the Committee determines such actions to be necessary or advisable (and such sub-plans and/or modifications will be attached to this Plan as appendices); provided, however, that no such sub-plans and/or modifications will increase the share limitations contained in Section 3.4 hereof and (e) take any action, before or after an Award is made, that the Committee determines to be necessary or advisable to obtain approval or comply with any local governmental regulatory exemptions or approvals. Notwithstanding the foregoing, the Committee may not take any actions hereunder, and no Awards will be granted, that would violate the Exchange Act or any other applicable United States securities law, the Code or any other applicable United States governing statute or law. +ARTICLE 12 +CORPORATE TRANSACTIONS +12.1 Assumption or Replacement of Awards by Successor . In the event of a Corporate Transaction, any or all outstanding Awards may be assumed or replaced by the successor corporation, which assumption or replacement will be binding on all Participants. In the alternative, the successor corporation may substitute equivalent Awards or provide substantially similar consideration to Participants as was provided to stockholders (after taking into account the existing provisions of the Awards). The successor corporation may also issue, in place of outstanding Shares of the Company held by the Participant, substantially similar shares or other property subject to repurchase restrictions no less favorable to the Participant. In the event such successor or acquiring corporation (if any) refuses to assume, convert, replace or substitute Awards, as provided above, pursuant to a Corporate Transaction, then notwithstanding any other provision in this Plan to the contrary, such Awards will have their vesting accelerate as to all shares subject to such Award (and any applicable right of repurchase fully lapse) immediately prior to the Corporate Transaction. In addition, in the event such successor or acquiring corporation (if any) refuses to assume, convert, replace or substitute Awards, as provided above, pursuant to a Corporate Transaction, the Committee will notify the Participants in writing or electronically that such Award will be exercisable for a period of time determined by the Committee in its sole discretion, and such Award will terminate upon the expiration of such period. Awards need not be treated similarly in a Corporate Transaction. +12.2 Assumption of Awards by the Company . The Company, from time to time, also may substitute or assume outstanding awards granted by another company, whether in connection with an acquisition of such other company or otherwise, by either; (a) granting an Award under this Plan in substitution of such other company’s award or (b) assuming such award as if it had been granted under this Plan if the terms of such assumed award could be applied to an Award granted under this Plan (“ Substitute Awards ”). Such substitution or assumption will be permissible if the holder of the substituted or assumed award would have been eligible to be granted an Award under this Plan if the other company had applied the rules of this Plan to such grant. In the event the Company assumes an award granted by another company, the terms and conditions of such award will remain unchanged (except that the Purchase Price or the Exercise Price, as the case may be, and the number and nature of Shares issuable upon exercise or settlement of any such Award will be adjusted appropriately pursuant to Section 424(a) of the Code). In the event the Company elects to grant a new Option in substitution rather than assuming an existing option, such new Option may be granted with a similarly adjusted Exercise Price. Substitute Awards shall not reduce the Shares authorized for grant under the Plan or the limitations on grants to a Participant under Section 3.4, nor shall Shares subject to a Substitute Award be added to the Shares available for Awards under the Plan. Additionally, in the event that a company acquired by the Company or any Subsidiary or with which the Company or any Subsidiary combines has shares available under a pre-existing plan approved by stockholders and not adopted in contemplation of such acquisition or combination, the shares available for grant pursuant to the terms of such pre-existing plan (as adjusted, to the extent appropriate, using the exchange ratio or other adjustment or valuation ratio or formula used in such acquisition or combination to determine the consideration payable to the holders of common stock of the entities party to such acquisition or combination) may be used for Awards under the Plan and shall not reduce the Shares authorized for grant under the Plan (and Shares subject to such Awards shall not be added to the Shares available for Awards under the Plan); provided that Awards using such available shares shall not be made after the date awards or grants could have been made under the terms of the pre-existing plan, absent the acquisition or combination, and shall only be made to individuals who were not Employees or Directors prior to such acquisition or combination. +ARTICLE 13 +MISCELLANEOUS +13.1 Payment For Share Purchases . Payment from a Participant for Shares purchased pursuant to this Plan may be made in cash or by check or, where expressly approved for the Participant by the Committee and where permitted by law (and to the extent not otherwise set forth in the applicable Award Agreement): (a) by cancellation of indebtedness of the Company to the Participant; (b) by surrender of shares of the Company held by the Participant that have a Fair Market Value on +112 +the date of surrender equal to the aggregate exercise price of the Shares as to which said Award will be exercised or settled; (c) by waiver of compensation due or accrued to the Participant for services rendered or to be rendered to the Company or a Parent or Subsidiary of the Company; (d) by consideration received by the Company pursuant to a broker-assisted or other form of cashless exercise program implemented by the Company in connection with the Plan; (e) by any combination of the foregoing or (f) by any other method of payment as is permitted by applicable law. +13.2 Withholding Taxes . Whenever Shares are to be issued in satisfaction of Awards granted under this Plan or the applicable tax event occurs, the Company may require the Participant to remit to the Company or to the Parent or Subsidiary employing the Participant an amount sufficient to satisfy applicable U.S. federal, state, local and international withholding tax requirements or any other tax or social insurance liability legally due from the Participant prior to the delivery of Shares pursuant to exercise or settlement of any Award. Whenever payments in satisfaction of Awards granted under this Plan are to be made in cash, such payment will be net of an amount sufficient to satisfy applicable U.S. federal, state, local and international withholding tax or social insurance requirements or any other tax liability legally due from the Participant. The Fair Market Value of the Shares will be determined as of the date that the taxes are required to be withheld and such Shares will be valued based on the value of the actual trade or, if there is none, the Fair Market Value of the Shares as of the previous trading day. The Committee, or its delegate(s), as permitted by applicable law, in its sole discretion and pursuant to such procedures as it may specify from time to time and to limitations of local law, may require or permit a Participant to satisfy such tax withholding obligation or any other tax liability legally due from the Participant, in whole or in part by paying cash, electing to have the Company withhold otherwise deliverable cash or Shares having a Fair Market Value equal to the minimum statutory amount required to be withheld (or such other amount that will not cause an adverse accounting consequence or cost), delivering to the Company already-owned Shares having a Fair Market Value equal to the minimum amount required to be withheld or withholding from the proceeds of the sale of otherwise deliverable Shares acquired pursuant to an Award either through a voluntary sale or through a mandatory sale arranged by the Company. +13.3 Transferability . Unless determined otherwise by the Committee, an Award may not be sold, pledged, assigned, hypothecated, transferred or disposed of in any manner other than by will or by the laws of descent or distribution. If the Committee makes an Award transferable, including by instrument to an inter vivos or testamentary trust in which the Awards are to be passed to beneficiaries upon the death of the trustor (settlor) or by gift or by domestic relations order to a Permitted Transferee, such Award will contain such additional terms and conditions as the Committee deems appropriate. All Awards will be exercisable: (a) during the Participant’s lifetime only by (i) the Participant or (ii) the Participant’s guardian or legal representative; (b) after the Participant’s death, by the legal representative of the Participant’s heirs or legatees and (c) in the case of all awards except ISOs, by a Permitted Transferee. Notwithstanding the foregoing, in no event may an Award be transferred for value. +13.4 Voting and Dividends . No Participant will have any of the rights of a stockholder with respect to any Shares until the Shares are issued to the Participant, except for any Dividend Equivalent Rights permitted by an applicable Award Agreement. Any Dividend Equivalent Rights will be subject to the same vesting or performance conditions as the underlying Award. In addition, the Committee may provide that any Dividend Equivalent Rights permitted by an applicable Award Agreement will be deemed to have been reinvested in additional Shares or otherwise reinvested. After Shares are issued to the Participant, the Participant will be a stockholder and have all the rights of a stockholder with respect to such Shares, including the right to vote and receive all dividends or other distributions made or paid with respect to such Shares; provided, that if such Shares are Restricted Stock, then any new, additional or different securities the Participant may become entitled to receive with respect to such Shares by virtue of a stock dividend, stock split or any other change in the corporate or capital structure of the Company will be subject to the same restrictions as the Restricted Stock; provided, further, that the Participant will have no right to retain such stock dividends or stock distributions with respect to Shares that are repurchased at the Participant’s Purchase Price or Exercise Price, as the case may be, pursuant to Section 13.5. Dividend Equivalent Rights will not be granted in connection with any Options or SARs. +13.5 Restrictions on Shares . At the discretion of the Committee, the Company may reserve to itself and/or its assignee(s) a right to repurchase (a “ Right of Repurchase ”) a portion of any or all Unvested Shares held by a Participant following such Participant’s termination of Service at any time within ninety (90) days (or such longer or shorter time determined by the Committee) after the later of the date Participant’s Service terminates and the date the Participant purchases Shares under this Plan, for cash and/or cancellation of purchase money indebtedness, at the Participant’s Purchase Price or Exercise Price, as the case may be. +13.6 Certificates . All Shares or other securities whether or not certificated, delivered under this Plan will be subject to such stock transfer orders, legends and other restrictions as the Committee may deem necessary or advisable, including restrictions under any applicable U.S. federal, state or foreign securities law or any rules, regulations and other requirements of the SEC or any stock exchange or automated quotation system upon which the Shares may be listed or quoted and any non-U.S. exchange controls or securities law restrictions to which the Shares are subject. +13.7 Escrow; Pledge of Shares . To enforce any restrictions on a Participant’s Shares, the Committee may require the Participant to deposit all certificates representing Shares, together with stock powers or other instruments of transfer approved by the Committee, appropriately endorsed in blank, with the Company or an agent designated by the Company to hold in escrow until such restrictions have lapsed or terminated, and the Committee may cause a legend or legends referencing such restrictions to be placed on the certificates. Any Participant who is permitted to execute a promissory note as partial or full consideration for the purchase of Shares under this Plan will be required to pledge and deposit with the Company all or part of the Shares so purchased as collateral to secure the payment of the Participant’s obligation to the Company under the promissory note; provided, however, that the Committee may require or accept other or additional forms of collateral to secure the payment of such obligation and, in any event, the Company will have full recourse against the Participant under the promissory note +113 +notwithstanding any pledge of the Participant’s Shares or other collateral. In connection with any pledge of the Shares, the Participant will be required to execute and deliver a written pledge agreement in such form as the Committee will from time to time approve. The Shares purchased with the promissory note may be released from the pledge on a pro rata basis as the promissory note is paid. +13.8 Repricing Prohibited . Other than pursuant to Section 3.5, the Committee will not (a) amend the terms of outstanding Options or SARs to reduce the Exercise Price of outstanding Options or SARs; (b) cancel outstanding Options or SARs when the Exercise Price per Share exceeds the Fair Market Value of one Share in exchange for cash or another Award (other than in connection with a Corporate Transaction); or (c) take any other action with respect to an Option or SAR that would be treated as a repricing under the rules and regulations of the principal U.S. national securities exchange on which the Shares are listed, in any case without prior stockholder approval. +13.9 Deferrals . The Committee may determine that the delivery of Shares, payment of cash or a combination thereof upon the exercise, vesting or settlement of all or a portion of any Award may be deferred and may establish programs and procedures for deferral elections to be made by Participants. Deferrals by Participants will be made only in accordance with Section 409A of the Code. Consistent with Section 409A of the Code, the Committee may provide for distributions while a Participant is providing Services to the Company or any Parent or Subsidiary. +13.10 Securities Law and Other Regulatory Compliance . An Award will not be effective unless such Award is in compliance with all applicable U.S. and foreign federal and state securities and exchange control laws, rules and regulations of any governmental body, and the requirements of any stock exchange or automated quotation system upon which the Shares may then be listed or quoted, as they are in effect on the date of grant of the Award and also on the date of exercise or other issuance. Notwithstanding any other provision in this Plan, the Company will have no obligation to issue or deliver certificates for Shares under this Plan prior to: (a) obtaining any approvals from governmental agencies that the Company determines are necessary or advisable and (b) completion of any registration or other qualification of such Shares under any state or federal or foreign law or ruling of any governmental body that the Company determines to be necessary or advisable. The Company will be under no obligation to register the Shares with the SEC or to effect compliance with the registration, qualification or listing requirements of any foreign or state securities laws, exchange control laws, stock exchange or automated quotation system, and the Company will have no liability for any inability or failure to do so. +13.11 No Obligation To Employ . Nothing in this Plan or any Award granted under this Plan will confer or be deemed to confer on any Participant any right to continue in the employ of or to continue any other relationship with the Company or any Parent, Subsidiary or Affiliate or limit in any way the right of the Company or any Parent, Subsidiary or Affiliate to terminate Participant’s employment or other relationship at any time. +13.12 Adoption and Stockholder Approval . This Plan will be submitted for the approval of the Company’s stockholders, consistent with applicable laws, within twelve (12) months after the date this Plan is adopted by the Board. +13.13 Term of Plan; Governing Law . Unless earlier terminated as provided herein, this Plan will become effective on the Effective Date and will terminate ten (10) years from the date this Plan is adopted by the Board. This Plan and all Awards granted hereunder will be governed by and construed in accordance with the laws of the State of Delaware (excluding its conflict of law rules). +13.14 Amendment or Termination of Plan . The Board may at any time terminate or amend this Plan in any respect, including amendment of any form of Award Agreement or instrument to be executed pursuant to this Plan; provided, however, that the Board will not, without the approval of the stockholders of the Company, amend this Plan in any manner that requires such stockholder approval or amend Section 13.8; provided further, that a Participant’s Award will be governed by the version of this Plan then in effect at the time such Award was granted. +13.15 Nonexclusivity of the Plan . Neither the adoption of this Plan by the Board, the submission of this Plan to the stockholders of the Company for approval, nor any provision of this Plan will be construed as creating any limitations on the power of the Board to adopt such additional compensation arrangements as it may deem desirable, including the granting of stock awards and bonuses otherwise than under this Plan, and such arrangements may be either generally applicable or applicable only in specific cases. +13.16 Insider Trading Policy . Each Participant who receives an Award will comply with any policy adopted by the Company from time to time covering transactions in the Company’s securities by Employees, officers and/or directors of the Company. +13.17 All Awards Subject to Company Clawback or Recoupment Policy . All Awards, subject to applicable law, will be subject to clawback or recoupment pursuant to any compensation clawback or recoupment policy adopted by the Board or required by law during the term of Participant’s employment or other service with the Company that is applicable to executive officers, employees, directors or other service providers of the Company, and in addition to any other remedies available under such policy and applicable law, may require the cancellation of outstanding Awards and the recoupment of any gains realized with respect to Awards. +13.18 Compliance with Section 409A of the Code . This Plan is intended to comply and shall be administered in a manner that is intended to comply with Section 409A of the Code and shall be construed and interpreted in accordance with such intent. To the extent that an Award or the payment, settlement or deferral thereof is subject to Section 409A of the Code, the Award shall be granted, paid, settled or deferred in a manner that will comply with Section 409A of the Code, including +114 +regulations or other guidance issued with respect thereto, except as otherwise determined by the Committee. Any provision of this Plan that would cause the grant of an Award or the payment, settlement or deferral thereof to fail to satisfy Section 409A of the Code shall be amended to comply with Section 409A of the Code on a timely basis, which may be made on a retroactive basis, in accordance with regulations and other guidance issued under Section 409A of the Code. Notwithstanding any contrary provision in the Plan or any Award Agreement, any payment(s) of “nonqualified deferred compensation” (within the meaning of Section 409A) that are otherwise required to be made under the Plan or any Award Agreement to a “specified employee” (as defined under Section 409A) as a result of his or her “separation from service” (as defined below) (other than a payment that is not subject to Section 409A) shall be delayed for the first six (6) months following such “separation from service” and shall instead be paid (in a manner set forth in the Award Agreement) on the payment date that immediately follows the end of such six-month period (or, if earlier, within 10 business days following the date of death of the specified employee) or as soon as administratively practicable within 60 days thereafter, but in no event later than the end of the applicable taxable year. A termination of employment shall not be deemed to have occurred for purposes of any provision of the Plan or any Award Agreement providing for the payment of any amounts or benefits that are considered nonqualified deferred compensation under Section 409A upon or following a termination of employment, unless such termination is also a “separation from service” within the meaning of Section 409A and the payment thereof prior to a “separation from service” would violate Section 409A. For purposes of any such provision of the Plan or any Award Agreement relating to any such payments or benefits, references to a “termination,” “termination of employment,” “termination of continuous Service” or like terms shall mean “separation from service.” +115 +APPENDIX C +CERTIFICATE OF AMENDMENT OF +AMENDED AND RESTATED +CERTIFICATE OF INCORPORATION +OF +DECKERS OUTDOOR CORPORATION +Deckers Outdoor Corporation, a corporation organized and existing under and by virtue of the Delaware General Corporation Law (the “ Corporation ”), does hereby certify: +FIRST: The name of the Corporation is Deckers Outdoor Corporation. +SECOND: The Corporation’s original Certificate of Incorporation was filed with the Secretary of State of the State of Delaware on August 3, 1993 under the name Deckers Footwear Corporation. +THIRD: The Board of Directors of the Corporation, acting in accordance with Section 141(f) and Section 242 of the Delaware General Corporation Law, duly adopted resolutions proposing and declaring advisable the following amendment to the Amended and Restated Certificate of Incorporation of the Corporation (the “ Certificate of Incorporation ”), directing that said amendment be submitted to the stockholders of the Corporation for consideration thereof, and authorizing the Corporation to execute and file with the Secretary of State of the State of Delaware this Certificate of Amendment of Certificate of Incorporation (this “ Certificate of Amendment ”). +FOURTH: Upon the effectiveness of this Certificate of Amendment, Section 1 of Article IV of the Certificate of Incorporation is hereby amended to read in its entirety as follows: +“SECTION 1. Authorized Shares . The Corporation shall be authorized to issue two classes of shares of stock to be designated, respectively, “ Preferred Stock ” and “ Common Stock ;” the total number of shares that the Corporation shall have authority to issue is Seven Hundred Eighty Million (780,000,000); the total number of shares of Preferred Stock shall be Thirty Million (30,000,000) and all such shares shall have a par value of one cent ($0.01); and the total number of shares of Common Stock shall be Seven Hundred Fifty Million (750,000,000), and all such shares shall have a par value of one cent ($0.01). +Effective immediately upon the filing and effectiveness of this Certificate of Amendment of Amended and Restated Certificate of Incorporation (this “ Certificate of Amendment ”) with the Secretary of State of the State of Delaware, every one (1) share of Common Stock outstanding, or held in treasury, shall automatically, without any further action by the Corporation or the stockholders thereof, be automatically subdivided and reclassified into six (6) shares of Common Stock outstanding, or held in treasury, as the case may be, and every one (1) share of Preferred Stock outstanding, or held in treasury, shall automatically, without any further action by the Corporation or the stockholders thereof, be automatically subdivided and reclassified into six (6) shares of Preferred Stock outstanding, or held in treasury, as the case may be (the “ Forward Stock Split ”). Each certificate that immediately prior to the filing and effectiveness of this Certificate of Amendment represented shares of Common Stock or Preferred Stock shall thereafter represent that number of shares of Common Stock or Preferred Stock, as the case may be, represented by such certificate after adjusting for the effectiveness of the Forward Stock Split. The par value of the Common Stock and Preferred Stock shall remain $0.01 per share. The Forward Stock Split shall apply to all shares of Common Stock and Preferred Stock.” +FIFTH: The holders of the necessary number of shares of capital stock of the Corporation voted in favor of this Certificate of Amendment at the Corporation’s 2024 Annual Meeting of Stockholders held on September 9, 2024 in accordance with the applicable provisions of Section 222 of the Delaware General Corporation Law. +SIXTH: This Certificate of Amendment was duly adopted in accordance with the applicable provisions of Section 141(f) and Section 242 of the Delaware General Corporation Law. +SEVENTH: All other provisions of the Certificate of Incorporation shall remain in full force and effect. +IN WITNESS WHEREOF , the Corporation has caused this Certificate of Amendment to be signed by its duly authorized officer on this [__] day of September, 2024. +By: +Stefano Caroti +Chief Executive Officer and President +116 \ No newline at end of file diff --git a/raw/proxies/0000910521/0000910521-24-000031/proxy_rpt.txt b/raw/proxies/0000910521/0000910521-24-000031/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..4d7c696743f3ad4289a3bba6aae03ef283e79c3b --- /dev/null +++ b/raw/proxies/0000910521/0000910521-24-000031/proxy_rpt.txt @@ -0,0 +1,5 @@ +RELATED-PERSON TRANSACTIONS +Our legal department is primarily responsible for identifying and reviewing relationships and transactions in which our Company and our directors, director nominees, executive officers, principal stockholders, or any of their respective immediate family members, are participants to determine whether any of these related persons had or will have a direct or indirect material interest in such transactions. In order to assist in identifying potential related-person transactions, our legal department annually prepares and distributes to all directors, director nominees and executive officers a detailed written questionnaire which includes questions intended to elicit information about any current or proposed related-person transactions. In addition, our Code of Ethics addresses conflicts of interest where an individual’s personal interests may interfere or conflict with the interests of our Company, including relationships with suppliers, customers or competitors. Conflicts of interest which might impair (or appear to impair) the exercise of judgment solely for the benefit of our Company and our stockholders are prohibited. In general, such conflicts must be approved by our legal department, the employee’s supervisor or, in the case of directors, the Audit & Risk Management Committee. Information regarding potential conflicts of interest in violation of our Code of Ethics may be reported to our anonymous reporting hotline, which may be accessed by the Chair of the Audit & Risk Management Committee, the Chair of our Board and our highest ranking manager of internal audit. +If a related-person transaction is identified by our legal department as one which would be required to be publicly reported pursuant to applicable SEC rules, the Audit & Risk Management Committee is responsible for reviewing and approving or ratifying any such transaction. 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ecd:YrEndFrValOfEqtyAwrdsGrntdInCvrdYrOutsdngAndUnvstdMember ecd:NonPeoNeoMember 2020-04-01 2021-03-31 0000910521 ecd:ChngInFrValOfOutsdngAndUnvstdEqtyAwrdsGrntdInPrrYrsMember ecd:NonPeoNeoMember 2020-04-01 2021-03-31 0000910521 ecd:ChngInFrValAsOfVstngDtOfPrrYrEqtyAwrdsVstdInCvrdYrMember ecd:NonPeoNeoMember 2020-04-01 2021-03-31 +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Proxy Statement Pursuant to Section 14(a) of +the Securities Exchange Act of 1934 (Amendment No. ) +Filed by the Registrant x +Filed by a Party other than the Registrant ¨ +Check the appropriate box: +¨ Preliminary Proxy Statement +¨ Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +x Definitive Proxy Statement +¨ Definitive Additional Materials +¨ Soliciting Material under §240.14a-12 +DECKERS OUTDOOR CORPORATION +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check all boxes that apply): +x No fee required. +¨ Fee paid previously with preliminary materials. +¨ +Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11. +2025 +PROXY STATEMENT SUMMARY +This summary highlights information contained elsewhere in this Proxy Statement. This summary does not contain all of the information you should consider when making voting decisions. You should read this Proxy Statement carefully and completely before voting. +ABOUT DECKERS +Deckers Outdoor Corporation, doing business as Deckers Brands, is a global leader in designing, marketing, and distributing innovative footwear, apparel, and accessories developed for both everyday casual lifestyle use and high-performance activities through our portfolio of brands. Our brands compete across the fashion and casual lifestyle, performance, running, and outdoor markets. We believe our products are distinctive and appeal to a broad demographic. We sell our products through quality domestic and international retailers, international distributors, and directly to global consumers through our direct-to-consumer (DTC) channel, which is comprised of an e-commerce and retail store presence. We seek to differentiate our brands and products by offering diverse lines that emphasize fashion, authenticity, functionality, quality, and comfort, and products tailored to a variety of activities, seasons, and demographic groups. +STRATEGIC OBJECTIVES AND FINANCIAL HIGHLIGHTS +i +GOVERNANCE HIGHLIGHTS +A continued focus on Board refreshment led to the appointment of a new Chair and realignment of Board and committee composition. +• Cynthia (Cindy) L. Davis was appointed as Chair of the Board on May 22, 2025 following the retirement of Michael (Mike) F. Devine, III from the Board after over 14 years of service, including six years as Chair. In connection with Ms. Davis' appointment as Chair, she stepped down as a member of the Corporate Responsibility, Sustainability & Governance Committee and as Chair of the Talent & Compensation Committee. Victor Luis, who has served as a member of the Board and as a member of the Talent & Compensation Committee since 2020, was named Chair of the Talent & Compensation Committee. +• At the Annual Meeting, stockholders will be asked to elect ten directors to serve until the next annual meeting of stockholders to be held in 2026. If all nominees are elected, our Board will consist of ten members. Nine of the ten members of our Board, as well as all members of each of the Board's standing committees, will continue to be “independent directors” under applicable SEC and NYSE rules. +• At the Annual Meeting, Dave Powers will not stand for reelection, after serving as a director and as our previous Chief Executive Officer and President for over 9 years. Mr. Powers' retirement from our Board follows our successful transition to our current Chief Executive Officer, President and director, Stefano Caroti in August 2024. Patrick J. Grismer has been nominated to serve as a director and, if elected, it is anticipated that he will serve as a member of the Audit & Risk Management Committee. Maha S. Ibrahim will join the Corporate Responsibility, Sustainability & Governance Committee and step down as a member of the Audit & Risk Management Committee. +• As of the date of our 2025 Annual Meeting of Stockholders, the authorized number of directors will be ten. +ANNUAL MEETING OF STOCKHOLDERS +DATE +Monday, September 8, 2025 +TIME +1:00 p.m. Pacific Time +VIRTUAL MEETING +The 2025 Annual Meeting of Stockholders (Annual Meeting) will be held virtually via a live webcast, which can be accessed on the Internet by visiting www.virtualshareholdermeeting.com/DECK2025. +Stockholders will be able to vote and submit questions virtually during the Annual Meeting in accordance with the rules and procedures included on the meeting website. +To access the Annual Meeting you will need a 16-digit control number. Your control number is provided on the Notice of Internet Availability of Proxy Materials you received in the mail, on your proxy card (if you requested to receive printed proxy materials), or through your broker or other nominee if you hold your shares in "street name." +RECORD DATE +Thursday, July 10, 2025 +PROPOSALS TO BE VOTED UPON +NUMBER PROPOSAL BOARD VOTING RECOMMENDATION PAGE REFERENCE +1 +Elect ten directors to serve until the annual meeting of stockholders to be held in 2026, until their successors are duly elected and qualified, or until their earlier death, resignation, or removal +" FOR " +EACH DIRECTOR NOMINEE +7 +2 +Ratify the selection of KPMG LLP as our independent registered public accounting firm for our fiscal year ending March 31, 2026 +" FOR " +79 +3 +Approve, on a non-binding advisory basis, the compensation of our Named Executive Officers as described in the section of this Proxy Statement titled " Compensation Discussion and Analysis " +" FOR " +81 +We may also consider and vote upon any other business that may properly come before the Annual Meeting, or at any postponements or adjournments thereof. As of the date of this Proxy Statement, we are not aware of any business to be presented for consideration at the Annual Meeting other than the matters described in this Proxy Statement. +ii +HOW TO VOTE +Your vote is important to the future of Deckers Outdoor Corporation. You are eligible to vote if you were a stockholder at the close of business on Thursday, July 10, 2025. Please refer to the section of this Proxy Statement titled " Questions and Answers About the Annual Meeting and Voting " for additional information on how to attend the Annual Meeting and vote your shares. Whether or not you plan to attend the Annual Meeting, we encourage you to read this Proxy Statement and submit your proxy or voting instructions as soon as possible to ensure your representation at the Annual Meeting. +iii +PROPOSAL NO. 1 +ELECTION OF DIRECTORS +Our Board has nominated the following ten directors for election at the Annual Meeting: +DIRECTOR NOMINEES +Cynthia (Cindy) L. Davis David A. Burwick Stefano Caroti +Nelson C. Chan Juan R. Figuereo Patrick J. Grismer +Maha S. Ibrahim Victor Luis +Lauri M. Shanahan Bonita C. Stewart +BOARD RECOMMENDATION: +" FOR " each director nominee +We have an independent Board with extensive qualifications and skills. Our Board is also comprised of individuals with a variety of backgrounds and experiences. Each of our Board members is committed to representing the long-term interests of our stockholders. +QUALIFIED QUALIFICATIONS AND SKILLS +6/10 Industry +6/10 Technology Infrastructure/Cybersecurity +9/10 Premium Branding +6/10 Compliance and Risk Oversight +9/10 International +8/10 Corporate Governance +4/10 High Level of Financial Literacy +7/10 Mergers and Acquisitions +8/10 Retail +9/10 Public Company Executive +4/10 Consumer Technology/Big Data +8/10 Human Resources/Talent Management +8/10 Sales and Marketing +4/10 Corporate Responsibility +3/10 Supply Chain Management +DIVERSE DEMOGRAPHICS +50% Racially/Ethnically Diverse +40% Female +INDEPENDENT +9/10 Directors are Independent +ENGAGED +During fiscal year 2025, no director nominee attended fewer than 80% of the meetings of our Board or meetings of any Board committee on which he or she served during his or her term. +Please refer to the section of this Proxy Statement titled " Proposal No. 1 - Election of Directors " for additional information. +iv +PROPOSAL NO. 2 +RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +BOARD RECOMMENDATION +" FOR " the ratification of the selection of KPMG LLP as our independent registered public accounting firm for our fiscal year ending March 31, 2026. +• The Audit & Risk Management Committee is involved in the annual review and engagement of KPMG LLP to ensure its continuing audit independence. +• The Audit & Risk Management Committee believes the continued retention of KPMG LLP is in the best interests of the Company and our stockholders. +Please refer to the section of this Proxy Statement titled "Proposal No. 2 - Ratification of the Selection of KPMG LLP as Independent Registered Public Accounting Firm " for additional information. +PROPOSAL NO. 3 +ADVISORY VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION +BOARD RECOMMENDATION +" FOR " the approval, on a non-binding advisory basis, of the compensation of our Named Executive Officers as described in the section of this Proxy Statement entitled " Compensation Discussion and Analysis. " +The primary objective of our executive compensation program is to compensate our executive officers in a manner that will attract, retain, and motivate talented executives with the skills needed to manage a complex and growing business in a competitive industry, while creating long-term value for our stockholders. The Talent & Compensation Committee seeks to design our executive compensation program in a manner that reflects direct alignment between the compensation opportunity provided to our executives and the achievement of our strategic objectives. +Consistent with our strategic objectives for fiscal year 2025, when designing our executive compensation program for the year, the Talent & Compensation Committee focused on continuing to build and retain our executive team, while incentivizing our executive officers to focus on increasing revenue, enhancing profitability, and creating long-term value for our stockholders. +When establishing our executive compensation program, the Talent & Compensation Committee is guided by the following four principles: +• Pay for performance by ensuring that a significant portion of compensation is made available to our executive team based on the achievement of pre-determined performance-based objectives. +• Align interests of executives with stockholders by tying a significant portion of compensation to performance that creates long-term value for our stockholders. +• Reward achievement by offering incentives for achieving short-term and long-term financial goals that are directly tied to the achievement of strategic objectives. +• Attract and retain executives with the background and experience necessary to lead the organization and achieve our strategic objectives. +Please refer to the sections of this Proxy Statement titled “ Compensation Discussion and Analysis ” and " Proposal No. 3 - Advisory Vote to Approve Named Executive Officer Compensation " for additional information. +v +NOTICE OF VIRTUAL ANNUAL MEETING OF STOCKHOLDERS +TO OUR STOCKHOLDERS: +We are pleased to invite you to virtually attend the 2025 Annual Meeting of Stockholders of Deckers Outdoor Corporation to be held on Monday, September 8, 2025, at 1:00 p.m. Pacific Time. +Proposals to be Voted Upon : +1 +Election of Directors . Elect ten directors to serve until the annual meeting of stockholders to be held in 2026, until their successors are duly elected and qualified, or until their earlier death, resignation, or removal. +2 +Ratification of Selection of Accounting Firm . Ratify the selection of KPMG LLP as our independent registered public accounting firm for our fiscal year ending March 31, 2026. +3 +Advisory Vote on Executive Compensation . Approve, on a non-binding advisory basis, the compensation of our Named Executive Officers, as described in the section of this Proxy Statement entitled " Compensation Discussion and Analysis. " +Other Business . Consider and vote upon any other business that may properly come before the Annual Meeting, or any postponements or adjournments thereof. +Virtual Annual Meeting : +The Annual Meeting will be held virtually and conducted via a live webcast. You will be able to attend the Annual Meeting online, submit your questions and vote your shares during the meeting by visiting www.virtualshareholdermeeting.com/DECK2025. We believe hosting a virtual annual meeting encourages increased stockholder attendance and participation, and reduces the costs associated with holding and attending the meeting. +Record Date : +Our Board has fixed the close of business on Thursday, July 10, 2025 (Record Date) as the date for determining which stockholders are entitled to notice of and to vote at the Annual Meeting, or any postponements or adjournments thereof. +Board Recommendations : +Our Board recommends that you vote " FOR " each of the director nominees named in Proposal No. 1 and " FOR " Proposal Nos. 2 and 3. +BY ORDER OF THE BOARD OF DIRECTORS +Stefano Caroti +Chief Executive Officer and President +Your vote is very important. Whether or not you plan to attend the Annual Meeting, we encourage you to read this Proxy Statement and submit your proxy or voting instructions as soon as possible. For specific instructions on how to vote your shares, please refer to the instructions on the Notice of Internet Availability of Proxy Materials you received in the mail, the section of this Proxy Statement titled " Questions and Answers About the Annual Meeting and Voting ," or, if you requested to receive printed proxy materials, your enclosed proxy card. +Approximate Date of Mailing of Notice of Internet Availability of Proxy Materials: July 25, 2025 +vi +Cautionary Note Regarding Forward-Looking Statements: +This Proxy Statement contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements may relate to our future financial performance, business operations, and executive compensation decisions, or other future events. You can identify forward-looking statements by the use of words such as “may,” “will,” “could,” “anticipate,” “expect,” “intend,” “believe,” “continue,” or the negative of such terms, or other comparable terminology. Forward-looking statements also include the assumptions underlying or relating to such statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, results of operations and financial condition. +The outcomes of the events described in these forward-looking statements are subject to risks, uncertainties and other factors described in Item 1A, “Risk Factors,” and elsewhere, in our Annual Report on Form 10-K for fiscal year 2025 (Annual Report), as well as the other reports we file with the Securities and Exchange Commission (SEC). We cannot assure you that the events and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results could differ materially from those expressed or implied in the forward-looking statements. The forward-looking statements made in this Proxy Statement relate only to events as of the date of this Proxy Statement. We undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made. +vii +TABLE OF CONTENTS +2025 Proxy Statement Summary.............................. +i +Proposal No. 2 - Ratification of the Selection of KPMG LLP as Independent Registered Public Accounting Firm ..................................................... +79 +Notice of Virtual Annual Meeting of Stockholders.... +vi +Proposal No. 3 - Advisory Vote to Approve Named Executive Officer +Compensation ........................................................ +81 +Proxy Statement....................................................... +1 +Additional Information............................................... +82 +Questions and Answers About the Annual Meeting and Voting................................................................ +2 +Annual Report on Form 10-K................................... +83 +Proposal No. 1 - Election of Directors .................. +7 +Director Nominees.............................................. +10 +Corporate Governance............................................. +21 +Executive Officers.................................................... +30 +Compensation Discussion and Analysis................... +33 +Executive Summary............................................ +34 +Compensation Objective and Philosophy .......... +38 +Compensation Consultant and Peer Group........ +41 +Elements of Fiscal Year 2025 +Executive Compensation Program..................... +43 +Other Compensation Considerations.................. +51 +Talent & Compensation Committee Report.............. +54 +Summary Compensation Table................................ +55 +Grants of Plan-Based Awards in Fiscal Year 2025... +57 +Outstanding Equity Awards at 2025 Fiscal +Year End.................................................................. +59 +Fiscal Year 2025 Option Exercises and +Stock Vested............................................................ +60 +Nonqualified Deferred Compensation...................... +61 +Potential Payments Upon Termination or Change in Control...................................................................... +62 +Director Compensation............................................. +65 +Equity Compensation Plan Information.................... +67 +CEO Pay Ratio......................................................... +68 +Pay Versus Performance.......................................... +69 +Security Ownership of Certain Beneficial Owners and Management..................................................... +74 +Delinquent Section 16(a) Reports............................ +76 +Audit & Risk Management Committee Report.......... +77 +Related-Person Transactions................................... +78 +viii +VIRTUAL ANNUAL MEETING OF STOCKHOLDERS +Meeting Date: Monday, September 8, 2025 +PROXY STATEMENT +GENERAL INFORMATION +The enclosed Proxy Statement is solicited on behalf of the Board of Directors (Board) of Deckers Outdoor Corporation for use at our 2025 Annual Meeting of Stockholders (Annual Meeting), to be held virtually via a live webcast on Monday, September 8, 2025 at 1:00 p.m. Pacific Time, or at any postponements or adjournments thereof. +The Annual Meeting can be accessed by visiting www.virtualshareholdermeeting.com/DECK2025 , where you will be able to attend the Annual Meeting, submit questions and vote your shares electronically. +The Annual Meeting is being held for the purposes described in this Proxy Statement and in the accompanying Notice of Annual Meeting of Stockholders. +1 +QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING +The following questions and answers are intended to briefly address potential questions that our stockholders may have regarding this Proxy Statement and the Annual Meeting. They are also intended to provide our stockholders with certain information that is required to be provided under the Securities and Exchange Commission (SEC) rules. These questions and answers may not address all of the questions that are important to you as a stockholder. If you have additional questions about this Proxy Statement or the Annual Meeting, please refer to the question titled " Whom should I contact with other questions? " below. +Q: When and where will the Annual Meeting be held? +A: The Annual Meeting will be held on Monday, September 8, 2025, at 1:00 p.m. Pacific Time. The Annual Meeting will be conducted entirely online via a live webcast. Our stockholders may participate in the Annual Meeting by visiting: www.virtualshareholdermeeting.com/DECK2025 . You will need a 16-digit control number to attend and participate in the live webcast of the Annual Meeting. Please refer to the question titled " How can I vote my shares? " for information on obtaining your 16-digit control number. +Q: What proposals am I being asked to vote upon at the Annual Meeting? +A: The proposals to be voted on at the Annual Meeting, and our Board's recommendation with respect to each proposal, are as follows: +NUMBER PROPOSAL BOARD VOTING RECOMMENDATION +Proposal No. 1 : +Election of Directors +Elect ten director nominees to serve until the annual meeting of stockholders to be held in 2026, until their successors are duly elected and qualified, or until their earlier death, resignation, or removal. +" FOR " +EACH +DIRECTOR NOMINEE +Proposal No. 2 : +Ratification of Selection of Accounting Firm +Ratify the selection of KPMG LLP as our independent registered public accounting firm for our fiscal year ending March 31, 2026. +" FOR " +Proposal No. 3 : +Advisory Vote on Executive Compensation +Approve, on a non-binding advisory basis, the compensation of our Named Executive Officers, as described in the section of this Proxy Statement titled " Compensation Discussion and Analysis. " +" FOR " +Q: Why did I receive these proxy materials? +A: We are providing this Proxy Statement in connection with the solicitation by our Board of proxies to be voted at the Annual Meeting, or at any postponements or adjournments thereof. This Proxy Statement contains important information for you to consider when deciding how to vote on the matters brought before the Annual Meeting. You are invited to virtually attend the Annual Meeting to vote on the proposals described in this Proxy Statement. However, you do not need to attend the Annual Meeting to vote your shares. Instead, you may vote your shares using one of the other voting methods described in this Proxy Statement. +Whether or not you plan to attend the Annual Meeting, we encourage you to read this Proxy Statement and submit your proxy or voting instructions as soon as possible to ensure your representation at the Annual Meeting. +Q: Why did I receive a notice in the mail regarding the Internet availability of proxy materials? +A: Instead of mailing printed copies to each of our stockholders, we have elected to provide access to the proxy materials over the Internet under SEC's "notice and access" rules. These rules allow us to make our stockholders aware of the Annual Meeting and the availability of the proxy materials by sending a Notice of Internet Availability of Proxy Materials (Notice), which provides instructions on how to access the full set of proxy materials through the Internet or make a request to have printed proxy materials delivered by mail. Accordingly, we will mail the Notice to each of our stockholders on or about July 25, 2025. The Notice contains instructions on how to access the proxy materials, including this Proxy Statement and our Annual Report, each of which are available at www.proxyvote.com. The Notice also provides instructions on how to vote your shares. +2 +Q: Who can vote at the Annual Meeting? +A: Only our stockholders at the close of business on July 10, 2025 (Record Date), will be entitled to attend and vote at the Annual Meeting. On the Record Date, there were 148,343,362 shares of our common stock outstanding and entitled to vote. Each share of common stock issued and outstanding on the Record Date is entitled to one vote on any matter to be voted upon by our stockholders at the Annual Meeting. +• Holders of Record - If, on the Record Date, your shares were registered directly in your name with our transfer agent, Computershare, then you are a "holder of record." As a holder of record, you may vote at the virtual Annual Meeting, or you may vote by proxy. If you are a holder of record and you indicate when voting that you wish to vote as recommended by our Board, or if you submit a vote by proxy without giving specific voting instructions, then the proxyholders will vote your shares as recommended by our Board on all matters described in this Proxy Statement. Thomas Garcia and Steven J. Fasching, the designated proxyholders, are members of our management. +• Beneficial Owners - If, on the Record Date, your shares were held in an account at a bank, broker, dealer, or other nominee, then you are the "beneficial owner" of shares held in "street name" and this Proxy Statement is being made available to you by that nominee. The nominee holding your account is considered the holder of record for purposes of voting at the Annual Meeting. As a beneficial owner, you have the right to direct your nominee on how to vote the shares in your account. You are also invited to attend the Annual Meeting. However, since you are not the holder of record, you may not vote your shares at the Annual Meeting unless you request and obtain a valid "legal proxy" or obtain a 16-digit control number from your nominee. Please contact your nominee directly for additional information. +Q: What is the quorum requirement for the Annual Meeting? +A: The presence at the Annual Meeting, virtually (even if not voting) or by proxy, of the holders of a majority of the voting power of all shares of our common stock entitled to be voted at the Annual Meeting, will constitute a quorum at the Annual Meeting. We will treat shares of common stock represented by a properly voted proxy, including shares for which authority is withheld or that a stockholder abstains from voting, as well as broker non-votes, as present at the Annual Meeting for the purposes of determining the existence of a quorum. If a quorum is not present, the Annual Meeting will be adjourned until a quorum is obtained. +Q: What are the voting requirements to approve each of the proposals, and what happens if I do not vote? +A: The voting requirements to approve each of the proposals to be voted upon at the Annual Meeting, as well as the effects of abstentions and broker non-votes on each of the proposals, are as follows: +PROPOSAL VOTING REQUIREMENT +EFFECT OF ABSTENTIONS (1) +EFFECT OF BROKER NON-VOTES (2) +Proposal No. 1 : +Election of Directors +Each director nominee in an uncontested election (3) will be elected by a majority of the votes cast by the shares present virtually or represented by proxy and entitled to vote on the election of directors at the Annual Meeting (assuming that a quorum is present). +A "majority of the votes cast" means that the number of votes "FOR" a director nominee must exceed the number of votes "AGAINST" a director nominee. +An "ABSTAIN" vote with respect to a director nominee will not count as a vote cast for that nominee, will not be included in the total number of votes cast, and will have no effect on the outcome of the vote on this proposal. +Broker non-votes will not count as votes cast on this proposal, and will have no effect on the outcome of the vote on this proposal. +Proposal No. 2 : +Ratification of Selection of Accounting Firm +Requires the affirmative vote of a majority of the outstanding shares present virtually or represented by proxy and entitled to vote on the proposal at the Annual Meeting (assuming that a quorum is present). +An "ABSTAIN" vote will be included in the total number of shares present and entitled to vote on this proposal, and will have the same effect as a vote "AGAINST" this proposal. +Because a bank, broker, dealer or other nominee may generally vote without instructions on this proposal, we do not expect any broker non-votes in connection with this proposal. +Proposal No. 3 : +Advisory Vote on Executive Compensation +Requires the affirmative vote of a majority of the outstanding shares present virtually or represented by proxy and entitled to vote on the proposal at the Annual Meeting (assuming that a quorum is present). +An "ABSTAIN" vote will be included in the total number of shares present and entitled to vote on this proposal, and will have the same effect as a vote "AGAINST" this proposal. Broker non-votes will not count as votes cast on this proposal and will have no effect on the outcome of the vote on this proposal. +3 +(1) You may "ABSTAIN" from voting on one or more director nominees and from voting on one or more of the other proposals described in this Proxy Statement. Shares for which a stockholder abstains from voting will be counted for purposes of determining whether a quorum is present at the Annual Meeting. +(2) Pursuant to applicable New York Stock Exchange (NYSE) rules, if you are a beneficial owner of shares held in street name and do not provide the nominee that holds your shares with specific voting instructions, the nominee may generally vote in its discretion on “routine” matters (such as Proposal No. 2). However, if the nominee that holds your shares does not receive instructions from you on how to vote your shares on a “non-routine” matter (such as Proposal Nos. 1 and 3, ), it will be unable to vote your shares on that matter. When this occurs, it is generally referred to as a “broker non-vote.” Broker non-votes will be counted for purposes of determining whether a quorum is present at the Annual Meeting. +(3) An "uncontested election" is an election in which the number of director nominees is not greater than the number of directors to be elected. A "contested election" is an election in which the number of director nominees nominated by (i) our Board, (ii) any stockholder, or (iii) a combination of our Board and any stockholder, exceeds the number of directors to be elected. In a contested election, directors will be elected by a plurality of the votes cast by the shares present virtually or represented by proxy and entitled to vote on the election of directors at the Annual Meeting. +Q: What happens if a director nominee fails to receive a majority vote in an uncontested election at the Annual Meeting? +A: Each incumbent director standing for reelection at the Annual Meeting has tendered an irrevocable letter of resignation, which will become effective upon such incumbent director not receiving a majority vote at the Annual Meeting and acceptance of such resignation by our Board. Our Board must accept or reject such resignation within 90 days following certification of the stockholder vote in accordance with the procedures established by our Amended and Restated Bylaws (Bylaws). If a director’s resignation offer is not accepted by our Board, that director will continue to serve until our annual meeting of stockholders to be held in 2026, until his or her successor is duly elected and qualified, or until such director’s earlier death, resignation, or removal. +Any director nominee who is not an incumbent director and who fails to receive a majority vote in an uncontested election will not be elected as a director, and a vacancy will remain on our Board. Our Board, in its sole discretion, may either fill a vacancy resulting from a director nominee not receiving a majority vote, or decrease the size of our Board to eliminate the vacancy, each in accordance with our Bylaws. +Q: Could other matters be decided at the Annual Meeting? +A: As of the date of this Proxy Statement, we are not aware of any business to be presented for consideration at the Annual Meeting other than the matters described in this Proxy Statement. If, however, other matters are properly presented at the Annual Meeting, the persons named as proxies will vote in accordance with their discretion with respect to those matters. +Q: How can I vote my shares? +A: Your shares can be voted as follows: +• Holders of Record - Holders of record can vote by proxy or by attending the Annual Meeting where votes can be submitted electronically via live webcast. If you wish to vote by proxy, you can vote by Internet, telephone, or mail as described below. Whether or not you plan to attend the Annual Meeting, we encourage you to submit your proxy or voting instruction as soon as possible to ensure your representation at the Annual Meeting. +VOTING METHOD +To vote at the Annual Meeting by live webcast, you must visit the following website: +www.virtualshareholdermeeting.com/DECK2025. You will need the 16-digit control number included on the Notice or your proxy card (if you requested to receive printed proxy materials). The method you use to vote by proxy will not limit your right to attend or vote at the Annual Meeting. All shares that have been properly voted and not revoked will be voted at the Annual Meeting. However, even if you plan to attend the Annual Meeting, we recommend that you vote your shares in advance so that your vote will be counted if you later decide not to attend the Annual Meeting. +To vote by Internet , you will need the 16-digit control number included on the Notice or your proxy card (if you requested to receive printed proxy materials). Internet voting is available 24 hours a day and will be accessible until 11:59 p.m. Eastern Time on Sunday, September 7, 2025 by visiting www.proxyvote.com and following the instructions. +To vote by telephone , you will need the 16-digit control number included on the Notice or on your proxy card (if you requested to receive printed proxy materials). Telephone voting is available 24 hours a day and will be accessible until 11:59 p.m. Eastern Time on Sunday, September 7, 2025 by calling 1-800-690-6903 and following the instructions. +To vote by mail, follow the instructions provided on your proxy card (if you requested to receive printed proxy materials). Simply mark, sign and date your proxy card and return it promptly in the postage-paid envelope provided. In order to be effective, completed proxy cards must be received by 11:59 p.m. Eastern Time on Sunday, September 7, 2025. This option is only available if you requested to receive printed proxy materials. +4 +• Beneficial Owners - If you are the beneficial owner of your shares, you should have received the Notice or a proxy card (if you requested to receive printed proxy materials) with this Proxy Statement from your nominee rather than from us. Simply (i) use the 16-digit control number to vote on the Internet or by telephone before the Annual Meeting, or vote at the Annual Meeting, or (ii) if you requested to receive printed proxy materials, vote by following the instructions provided on the proxy card you received from your nominee's website. Your 16-digit control number may be included in the voting instruction form that accompanied the proxy materials. If your nominee did not provide you with a 16-digit control number, you should contact your nominee to obtain your control number and access the Annual Meeting link. To vote at the Annual Meeting, you must first obtain a valid "legal proxy" from your nominee. Follow the instructions from your nominee to request a "legal proxy." +Q: What can I do if I change my mind after I vote my shares? +A: You may change your vote at any time before the polls are closed at the Annual Meeting. +• Holders of Record - If you are a holder of record, you may change your vote by (i) providing written notice of revocation to Deckers Outdoor Corporation, 250 Coromar Drive, Goleta, California 93117, Attention: Corporate Secretary, (ii) executing a subsequent proxy using any of the voting methods discussed above (subject to the deadlines for voting with respect to each method), or (iii) attending the Annual Meeting and voting electronically via live webcast. However, simply attending the Annual Meeting will not, by itself, revoke your proxy. +• Beneficial Owners - If you are a beneficial owner of your shares and you have instructed your nominee to vote your shares, you may change your vote by following the directions received from your nominee to change those voting instructions, or by attending the Annual Meeting and voting via live webcast, which can be accomplished as described above. +Subject to any revocation, all shares represented by properly executed proxies will be voted in accordance with the instructions on the applicable proxy, or, if no instructions are given, in accordance with the recommendations of our Board as described above. +Q: Who is paying for the cost of this proxy solicitation? +A: The solicitation of proxies is made on behalf of our Board and all the expenses of soliciting proxies from stockholders will be borne by us. In addition to the solicitation of proxies by use of the mail, our directors, officers, and employees may communicate with stockholders personally or by email, telephone, or otherwise for the purpose of soliciting such proxies. No additional compensation will be paid to any such persons for such solicitation, although we may reimburse them for reasonable out-of-pocket expenses incurred in connection with such solicitation. We will reimburse banks, brokers, dealers and other nominees for their reasonable out-of-pocket expenses in forwarding solicitation material to beneficial owners of shares held of record by such persons. The total estimated cost of the solicitation of proxies is approximately $227,000. +Q: How may I obtain an additional copy of the proxy materials? How may I reduce the number of copies our household receives? +A: We have adopted a procedure called "householding," which the SEC has approved. Under this procedure, we are delivering a single copy of the Notice and, if applicable, this Proxy Statement and the Annual Report, to multiple stockholders who share the same address unless we have received contrary instructions from one or more of the stockholders. This procedure reduces our printing and mailing costs. Stockholders who participate in householding will continue to be able to access and receive separate proxy materials. Upon written or oral request, we will promptly deliver a separate copy of the Notice and, if applicable, this Proxy Statement and the Annual Report, to any stockholder at a shared address to which we delivered a single copy of any of these documents. To receive a separate copy of the Notice and, if applicable, this Proxy Statement or the Annual Report, or if you wish to receive separate copies in the future, please contact: Deckers Outdoor Corporation, 250 Coromar Drive, Goleta, California 93117, Attention: Corporate Secretary, Telephone: (805) 967-7611. +In addition, if you are currently a stockholder sharing an address with another stockholder and wish to receive only one copy of future proxy materials for your household, please contact us using the contact information set forth above. Stockholders who are beneficial owners of shares held in street name may contact their bank, broker, dealer or other nominee to request information about householding. +Q: Where can I find the voting results of the Annual Meeting? +A: We will announce preliminary voting results with respect to each proposal at the Annual Meeting. In accordance with SEC rules, final voting results will be published in a Current Report on Form 8-K within four business days following the Annual Meeting, unless final results are not known at that time, in which case preliminary voting results will be published within four business days of the Annual Meeting and final voting results will be published once we know them. +5 +Q : Where else can I find these proxy materials? +A: This Proxy Statement and the Annual Report are available under "SEC Filings" at ir.deckers.com. Other information contained on or accessed through our website does not constitute part of this Proxy Statement and you should not consider this other information in deciding how to vote your shares. References to our website address in this Proxy Statement are inactive textual references only. +Q: Whom should I contact with other questions? +A: If you have additional questions about this Proxy Statement or the Annual Meeting, or if you would like additional copies of this Proxy Statement, please contact: Deckers Outdoor Corporation, 250 Coromar Drive, Goleta, California 93117, Attention: Corporate Secretary, Telephone: (805) 967-7611. +6 +PROPOSAL NO. 1 +ELECTION OF DIRECTORS +Board Characteristics +The Corporate Responsibility, Sustainability & Governance Committee considers many factors when identifying director nominees, including a range of experiences and skills, as well as backgrounds. We believe directors with varied backgrounds create a Board that is positioned to best serve our Company, stockholders, employees, and communities by maximizing group dynamics in terms of range of professional experience, education, critical thinking, and personal characteristics. We also value the mix of viewpoints provided by our directors with various levels of tenure, from those with a deep understanding of our business to those with fresh perspectives. Our strong commitment to an inclusive workplace that promotes belonging is reflected within the composition of our Board. +A snapshot of our ten director nominees is depicted in the charts below . +Board Composition and Refreshment +The Corporate Corporate Responsibility, Sustainability & Governance Committee has the primary oversight of Board succession planning and Board refreshment process. We are continuously evaluating the overall balance of our Board, including the balance between longer-tenured directors who bring great institutional knowledge and new directors who offer fresh external viewpoints. Our board is committed to annually reviewing its overall composition, the composition of its committees, and the chair of each of the committees to align with the Company's long-term strategic needs. +In September 2024, Mr. Caroti, our Chief Executive Officer and President was elected to our Board. +In May 2025, Ms. Davis was appointed as Chair of the Board, following the retirement of Mr. Devine from the Board after over 14 years of service, including six years as Chair. In connection with Ms. Davis' appointment as Chair, she stepped down as a member of the Corporate Responsibility, Sustainability & Governance Committee and as Chair of the Talent & Compensation Committee. Victor Luis, who has served as a member of the Board and as a member of the Talent & Compensation Committee since 2020, was named Chair of the Talent & Compensation Committee. +At the Annual Meeting, Mr. Powers will not stand for re-election as previously planned, after serving as a director and as our previous Chief Executive Officer and President for over 9 years. Mr. Grismer has been nominated to serve as a director and, if +7 +elected, it is anticipated that he will serve as a member of our Audit & Risk Management Committee. Ms. Ibrahim will join our Corporate Responsibility, Sustainability & Governance Committee and step down as a member of our Audit & Risk Management Committee. +BOARD REFRESHMENT +3 +(New Directors Over Past 5 Years) +BOARD CHAIR SUCCESSION COMMITTEE CHAIR SUCCESSION +May 2025 +Cynthia (Cindy) L. Davis +Appointed Chair of the Board +May 2025 +Victor Luis, +Appointed Talent & Compensation Committee Chair +June 2020 +Juan R. Figuereo, +Appointed Audit & Risk Management Committee Chair +September 2021 +Bonita C. Stewart, +Appointed Corporate Responsibility, Sustainability & Governance Committee Chair +Board Structure +Our Bylaws provide for the annual election of directors. Currently, our Bylaws provide that our Board will consist of not less than one nor more than eleven members, and the Board set the number of directors at ten. +At the Annual Meeting, our stockholders will be asked to elect ten directors to serve until the next annual meeting of stockholders to be held in 2026, until their successors are duly elected and qualified , or until their earlier death, resignation, or removal . The names and certain information concerning the persons nominated by our Board to stand for election as directors at the Annual Meeting are set forth in the section of this Proxy Statement titled “ Director Nominees ” below. +If all director nominees are elected, then, immediately following the Annual Meeting, our Board will consist of ten membe rs, and nine out of the ten members will be "independent directors" u nder applicable NYSE rules. In addition, each member of our Board's three standing committees will be “independent directors” under applicable SEC and NYSE rules. +No Agreements or Family Relationships +No arrangement or understanding exists between any of our directors, director nominees, or executive officers and any other person pursuant to which any of them were selected as our director, director nominee, or executive officer. +There are no family relationships among any of our directors, director nominees, or executive officers. +No Legal Proceedings +There are no legal proceedings related to any of our directors, director nominees, or executive officers which are required to be disclosed pursuant to applicable SEC rules. +Director Nominations +The Corporate Responsibility, Sustainability & Governance Committee is responsible for identifying and evaluating nominees for election to our Board. In addition to the candidates proposed by our Board or identified by the Corporate Responsibility, Sustainability & Governance Committee, the committee considers candidates for director proposed by stockholders, provided such recommendations are made in accordance with the procedures set forth in our Bylaws. Stockholder nominations that meet the criteria outlined below will receive the same consideration as nominations made by the Corporate Responsibility, Sustainability & Governance Committee. +Director Qualifications +Directors are responsible for overseeing and monitoring our business consistent with their fiduciary duties to our stockholders. This significant responsibility requires highly skilled individuals with various qualities, attributes, skills and professional experience. Our Board believes there are both general requirements for eligibility to serve as a member of our Board that are applicable to all directors, and other specialized characteristics that should be represented on our Board as a whole, but not necessarily by each director. +8 +Qualifications for All Directors +Essential criteria for all director candidates considered by the Corporate Responsibility, Sustainability & Governance Committee include the following: +• Personal and professional integrity; +• Good business judgment; +• Relevant experience and skills; +• Ability to effectively serve the long-term interests of our stockholders; and +• Commitment to devoting sufficient time and energy to diligently performing duties as a director. +9 +DIRECTOR NOMINEES +Our Board has nominated the following ten directors for election at the Annual Meeting. Important summary information about the director nominees is set forth in the table below, including the Board committee composition that we anticipate will be effective as of the date of the Annual Meeting. Following the table is certain biographical information about each director nominee, as well as selected information about the specific qualifications, attributes, skills, and experience as of the date of this Proxy Statement that led our Board to conclude that each director nominee is qualified to serve on our Board. For information regarding Board committee composition as of the date of this Proxy Statement, please refer to the section of this Proxy Statement titled " Corporate Governance—Board Committees ." +Board Committee Membership Following the Annual Meeting (1) +Name, +Primary Occupation Age Director +Since Independent Number of Other Public Company Directorships +AR (2) +TC (2) +CG (2) +Cynthia (Cindy) L. Davis 63 2018 YES 2 +Corporate Director Chair of our Board +David A. Burwick 63 2021 YES 1 l +Corporate Director +Stefano Caroti 62 2024 NO 0 +Chief Executive Officer and President +Nelson C. Chan 64 2014 YES 3 l l +Private Investor, Entrepreneur and Corporate Director +Juan R. Figuereo 69 2020 YES 1 ª +Corporate Director +Patrick J. Grismer (3) +63 — YES 1 l +Corporate Director +Maha S. Ibrahim 54 2021 YES 0 l +General Partner, Canaan Partners +Victor Luis 58 2020 YES 0 ª +Corporate Director +Lauri M. Shanahan 62 2011 YES 2 l l +Corporate Director +Bonita C. Stewart 68 2014 YES 1 l ª +Corporate Director +ª Committee Chair +(1) Subject to the election of each director nominee at the Annual Meeting. +(2) AR: Audit & Risk Management Committee, TC: Talent & Compensation Committee, CG: Corporate Responsibility, Sustainability & Governance Committee +(3) Mr. Grismer is included as a new director nominee. +10 +CYNTHIA (CINDY) L. DAVIS +Age: 63 +Director Since: 2018 +Chair of our Board +Public Company Directorships: +Kennametal Inc. (NYSE: KMT) +Brinker International, Inc. (NYSE: EAT) +Biographical Information +Ms. Davis currently serves as a member of the board of directors and is the chair of the compensation and human capital committee and member of the nominating/governance committee of Kennametal Inc. (NYSE: KMT), a global supplier of tooling, engineering components. In January 2019, she joined the board of directors and currently chairs the governance and nominating committee and is a member of the talent and compensation committee of Brinker International, Inc. (NYSE: EAT). Prior to 2019, Ms. Davis served as a member of the board of directors, as chair of the compensation committee and on the governance committee of Buffalo Wild Wings, Inc. (Nasdaq: BWLD), a casual dining restaurant and sports bar chain, from 2015 to 2018. Ms. Davis served as vice president of NIKE, Inc. (NYSE: NKE) and president of Nike Golf at NIKE, Inc. from 2008 to 2014, and as U.S. general manager at Nike Golf from 2005 to 2008. Prior to NIKE, Inc., Ms. Davis served as senior vice president of golf sponsorships, sports marketing and new media at Golf Channel, a subsidiary of Comcast Corporation (Nasdaq: CMCSA), from 2001 to 2004. She is Chair for the Board of Trustees for Furman University. +Selected Qualifications and Skills +• Premium Branding - Experience as vice president of NIKE, Inc. and president of Nike Golf at NIKE, Inc., a company engaged in the design, development, manufacturing, and worldwide marketing and sales of footwear, apparel, equipment, accessories, and services. +• Sales and Marketing; Retail - In addition to leading the division’s sales, marketing, and strategy while serving as senior vice president of golf sponsorships, sports marketing and new media at Golf Channel, led the $800 million global golf business for NIKE, Inc. +• High Level of Financial Literacy - Served on the audit committee of Kennametal Inc. Holds an M.B.A. in Marketing and Finance from the University of Maryland College Park. Oversaw the profit and loss of a separate operating unit within NIKE, Inc. +• International - Involved in global brands with worldwide operations while at NIKE, Inc. and Kennametal Inc. +• Public Company Executive - Held various executive management positions at NIKE, Inc. and Golf Channel, currently serves as a director of Kennametal Inc. and Brinker International, Inc., and previously served as a director and chair of the compensation committee of Buffalo Wild Wings, Inc. +• Industry - Extensive experience in the footwear, apparel and equipment industries through various positions at NIKE, Inc. +• Compliance and Risk Oversight - In addition to leadership roles at NIKE, Inc., served as a corporate director on the audit committee and serves on the compensation and nominating and corporate governance committees of Kennametal, Inc., and serves on the board of directors, as well as the compensation and corporate governance committees, of Brinker International, Inc. Previously served as chair of the compensation committee and on the governance committee of Buffalo Wild Wings. +• Technology Infrastructure and Cybersecurity - Serves as a director and chair of the compensation and human capital committee and member of the nominating and governance committee of Kennametal Inc., a technology-based company. +11 +DAVID A. BURWICK +Age: 63 +Director Since: 2021 +Board Committees: +Talent & Compensation +Public Company Directorships: +BJ's Wholesale Club Holdings, Inc. (NYSE: BJ) +Biographical Information +In February 2025, Mr. Burwick was appointed chief executive officer of Spindrift Beverage Co., a privately-held company. In June 2024, he was appointed as a director of BJ's Wholesale Club Holdings, Inc. (NYSE: BJ) and serves as a member of the nominating and corporate governance committee. From May 2024 to December 2024, he served as a member of the board of directors, chair of the nominating and corporate governance committee and member of the audit committee of The Duckhorn Portfolio, Inc. which was acquired by Butterfly Equity, a private equity firm specializing in the food and beverage sector. He previously served as a director of The Boston Beer Company, Inc. (NYSE: SAM) and served as its president and chief executive officer from April 2018 to April 2024. Prior to April 2018, Mr. Burwick served as president and chief executive officer of Peet's Coffee & Tea, Inc., since December 2012. From April 2010 to December 2012, Mr. Burwick served as president, North America of WW International, Inc., formerly Weight Watchers International, Inc. Prior to that, Mr. Burwick held numerous positions with PepsiCo, Inc., including chief marketing officer, PepsiCo Americas Beverages from August 2008 to August 2009; executive vice president, Marketing, Sales and R&D, PepsiCo International from April 2008 to July 2008; President, Pepsi-QTG Canada from January 2006 to March 2008; chief marketing officer, Pepsi-Cola North America from June 2002 to December 2005; and various marketing roles from 1989 to 2002. Mr. Burwick has extensive experience leading consumer products organizations. During Mr. Burwick's tenure as a director of The Boston Beer Company, Inc., he has served as chair and as a member of its compensation committee, and as chair and as a member of the nominating/governance committee. +Selected Qualifications and Skills +• Premium Branding - Experience as an executive at Peet's Coffee & Tea, Inc., PepsiCo. Inc., The Boston Beer Company, Inc. and Spindrift Beverages Co. +• Public Company Executive - Extensive experience with several leading public and private companies, both as an executive and as a director. +• Sales and Marketing - Held key marketing and sales positions with PepsiCo. Inc., including chief marketing officer. +• Human Resources - Held executive positions with leading companies and was a member of the compensation committee and nominating/governance committee of The Boston Beer Company, Inc. +• Retail - Serves as chief executive officer of Spindrift Beverage Co. Previously served as president and chief executive officer at Peet's Coffee & Tea, Inc., WW International, Inc. and PepsiCo, Inc. +STEFANO CAROTI +Age: 62 +Director Since: 2024 +Executive Positions: +Chief Executive Officer and President +Public Company Directorships: +None +Biographical Information +Mr. Caroti serves as our Chief Executive Officer and President. In September 2024, he was elected to serve as a member of our Board. From April 2023 to July 2024, he served as our Chief Commercial Officer. He was also interim President of HOKA and President of Omni-Channel. Mr. Caroti has over 32 years of industry experience in general management, sales, retail, product, marketing, business strategy and brand management. Prior to joining our Company, Mr. Caroti was the chief commercial officer and managing director at PUMA, from August 2008 to December 2014, where he was responsible for PUMA’s global wholesale, retail and e-commerce divisions and PUMA’s geographic operating regions. Prior to that, he held a number of senior executive positions at NIKE, Inc. in general management, sales, product and marketing, and during his term as vice president of EMEA commerce, he was responsible for the entire wholesale, retail and e-commerce business in the EMEA region. +12 +Selected Qualifications and Skills +• Industry - Over 33 years of experience in the footwear and apparel industries through various positions at PUMA, NIKE Inc., and our Company. +• Premium Branding - Premium branding experience through several senior executive positions at PUMA, NIKE Inc., and our Company. +• International - While serving in executive leadership roles at PUMA, NIKE Inc., and our Company, led wholesale, retail, and e-commerce business worldwide. +• Supply Chain Management and Retail - Oversaw PUMA's global wholesale, retail and e-commerce divisions and operating regions, and prior to that, was responsible for the entire wholesale, retail, and e-commerce business in the EMEA region while at NIKE, Inc. +• Sales and Marketing - Served in several executive marketing positions in leading public companies. +• Public Company Executive - Serves as our Chief Executive Officer, and previously served as our Company's Chief Commercial Officer and President of Omni-Channel. Extensive experience as chief commercial officer and managing director at PUMA, as well as several senior executive positions at NIKE, Inc. +NELSON C. CHAN +Age: 64 +Director Since: 2014 +Board Committees : +Audit & Risk Management +Corporate Responsibility, Sustainability & Governance +Public Company Directorships: +Synaptics, Inc. (Nasdaq: SYNA) +Twist Bioscience Corporation (Nasdaq: TWST) +GCT Semiconductor Holding Inc. (NYSE: GCTS) +Biographical Information +Mr. Chan is a private investor and entrepreneur. In March 2024, he was appointed as a director of GCT Semiconductor Holding Inc. (NYSE: GCTS) and serves as a member of the nominating and corporate governance committee. Mr. Chan is a director and member of the nominating and corporate governance and audit committee of Twist Bioscience Corporation (Nasdaq: TWST). He is chair of the board of Synaptics, Inc. (Nasdaq: SYNA) and previously served as a member of the audit committee and nominations and corporate governance committee. He was chair of the board, chair of the compensation committee, member of the audit committee and member of the nominating and corporate governance committee of Adesto Technologies Corporation (Nasdaq: IOTS). From 2016 to 2019, Mr. Chan served as a director and member of the compensation and nominating and governance committees of Socket Mobile, Inc. (Nasdaq: SCKT). From 2006 to 2008, he served as chief executive officer of Magellan Corporation, and from 1992 to 2006, he served in various management positions with SanDisk Corporation. Mr. Chan is also a director of several privately held companies. +Selected Qualifications and Skills +• Entrepreneurial - Expertise in building technology companies. +• High Level of Financial Literacy - Has held numerous senior management positions with leading companies, including chief executive officer at Magellan Corporation. +• Public Company Executive - Extensive experience with several leading public and private companies, both as an executive and as a director. +• Sales and Marketing - Held key sales, marketing and engineering positions at SanDisk Corporation, Chips and Technologies, Signetics and Delco Electronics. +• International - Served as the executive vice president and general manager of consumer business at SanDisk Corporation, a global multi-billion dollar company. +• Compliance and Risk Oversight - Currently serves as a member of our Audit & Risk Management Committee and has over 16 years of experience as a corporate director with risk oversight responsibilities. +• Technology Infrastructure and Cybersecurity - Extensive experience in technology-based companies including sales, marketing and engineering. +13 +JUAN R. FIGUEREO +Age: 69 +Director Since: 2020 +Board Committees: +Audit & Risk Management ( Chair ) +Public Company Directorships: +Western Alliance Bancorporation (NYSE: WAL) +Biographical Information +Mr. Figuereo currently serves as a director and is a member of the finance and investment committee and the nominating, corporate governance, and social responsibility committee and is the chair of the audit committee of Western Alliance Bancorporation (NYSE: WAL). From April 2021 to July 2023, he served as a director and chair of the audit committee and member of the nominating and corporate governance committee of Diversey, Inc. (Nasdaq: DSEY). Mr. Figuereo served as the executive vice president and chief financial officer of Revlon (NYSE: REV), a manufacturer and marketer of beauty and personal care products, from 2016 to 2017. From 2012 to 2015, he served as executive vice president and chief financial officer of NII Holdings, Inc. (NASDAQ: NIHD), a wireless communication services provider under the Nextel brand. NII Holdings, Inc. filed for bankruptcy protection in New York, New York on September 15, 2014. From 2009 to 2012, Mr. Figuereo served as executive vice president and chief financial officer of Newell Brands (NYSE: NWL), a global marketer of consumer and commercial products, and from 2007 to 2009 he served as executive vice president and chief financial officer of Cott Corporation (NYSE: PRMW). Mr. Figuereo has also served in senior management positions at Walmart, Inc. (NYSE: WMT) and PepsiCo, Inc. (Nasdaq: PEP). Mr. Figuereo served as a director and chair of the audit committee at PVH Corp. (NYSE: PVH), a leading apparel company with iconic brands such as Calvin Klein and Tommy Hilfiger in its portfolio. Mr. Figuereo is a venture partner with Ocean Azul Partners, LLC, an early stage investments fund based in South Florida. He is a member of the National Association of Corporate Directors and of the Florida Institute of CPAs. +Selected Qualifications and Skills +• Public Company Executive - Previously served as chief financial officer of several public companies with global footprints, including Revlon and Newell Brands, and held executive leadership roles at Walmart, Inc. and PepsiCo, Inc. +• High Level of Financial Literacy - Served as chief financial officer of several public companies and as chair of the audit committee of PVH Corp. Serves as the chair of the audit committee of Western Alliance Bancorporation and previously served as the chair of the audit committee of Diversey Inc. In addition, he serves as a member of the Audit & Risk Management Committee of our Company. Holds a B.B.A. from Florida International University, and previously worked for eight years as a certified public accountant. +• International - Significant executive leadership experience supporting global brands with worldwide operations. +• Supply Chain Management - Extensive experience in worldwide supply chain operations while in management roles for global companies. +• Sales and Marketing; Retail - Served as executive vice president of several global marketers, including Revlon and Newell Brands, and held senior management positions at Walmart, Inc. and PepsiCo, Inc. +• Mergers and Acquisitions - Previously served as the vice president in charge of mergers and acquisitions at Walmart, Inc. +PATRICK J. GRISMER +Age: 63 +Director Nominee Nominated in: 2025 +Board Committees: +Audit & Risk Management Committee ( Upon election ) +Public Company Directorships: +Krispy Kreme, Inc. (NASDAQ: DNUT) +Biographical Information +Mr. Grismer is a director nominee. He is a retired corporate executive following a 36-year career in corporate finance. In June 2025, he was appointed as a director of Krispy Kreme, Inc. (NASDAQ: DNUT) and serves as a member of the audit committee. From September 2022 to May 2025, Mr. Grismer served as a member of the board of Panera Brands (parent company to Panera Bread, Einstein Bros. Bagels and Caribou Coffee) and served as chair of the audit committee during a portion of that time. From November 2018 to February 2021, Mr. Grismer served as the executive vice president and chief financial officer of Starbucks Coffee Company (NASDAQ: SBUX). From March 2016 to November 2018, he served as the executive vice president and chief +14 +financial officer of Hyatt Hotels Corporation (NYSE: H). Prior to that, Mr. Grismer spent nearly 14 years at Yum! Brands, Inc. (NYSE: YUM, parent company to KFC, Pizza Hut and Taco Bell) in a number of executive roles, including as chief financial officer. Mr. Grismer also served in various leadership positions at The Walt Disney Company, including chief financial officer at Disney Vacation Club and Vice President of Strategic Planning at The Disneyland Resort. He started his career as a management consultant at PricewaterhouseCoopers. +• Premium Branding - Premium branding experience with global consumer-oriented companies, including Starbucks Coffee Company, Hyatt Hotels Corporations and The Walt Disney Company. +• International - Significant executive leadership experience supporting global brands with worldwide operations. +• High Level of Financial Literacy - Served as chief financial officer of several public companies and as chair of the audit committee of Panera Brands and member of the audit committee of Krispy Kreme, Inc. Holds an MBA in Finance and Marketing from Northwestern University's Kellogg Graduate School of Management and previously worked at PricewaterhouseCoopers. +• Supply Chain Management - Extensive experience in worldwide supply chain operations while in executive roles for global companies. +• Compliance and Risk Oversight - In addition to leadership roles at several public companies, serves on the board of directors and audit committee of Krispy Kreme, Inc. and has served on the board of directors and chair of the audit committee of Panera Brands, Inc. +• Mergers and Acquisitions - Experience in strategic planning and evaluation while at Starbucks Coffee Company, Hyatt Hotels Corporation and Yum! Brands, Inc. +• Public Company Executive - Extensive experience with several leading public and private companies as an executive. +MAHA S. IBRAHIM +Age: 54 +Director Since: 2021 +Board Committees: +Corporate Responsibility, Sustainability & Governance Committee +(Following Annual Meeting) +Public Company Directorships: +None +Biographical Information +Ms. Ibrahim is currently a general partner of Canaan Partners, an early stage venture capital firm, where she has worked since March 2000. Prior to joining Canaan Partners, from 1998 to 2000 she served as vice president of e-business at Qwest Communications, where she architected the company’s e-business strategy and spearheaded the redesign of Qwest.com, and previously served as Qwest Communication’s vice president of business development. From 2012 through 2020, Ms. Ibrahim served as a member of the board of directors of The RealReal, Inc. (Nasdaq: REAL), an online brick-and-mortar marketplace for authenticated luxury consignment, providing leadership to the company through its 2019 initial public offering. Ms. Ibrahim currently serves on the boards of directors of a number of private innovative enterprise and consumer companies. Further, she has served as a trustee for the Carnegie Endowment for International Peace, a foreign policy think tank, since 2017. +Selected Qualifications and Skills +• Industry - Extensive experience in the apparel industry through her experience on the board of The RealReal, Inc., a sustainable luxury company that promotes the re-circulation of products across the multi-billion dollar fashion industry. +• Premium Branding - Premium branding experience in the luxury consignment business during her time as a director of RealReal, Inc. +• Consumer Technology/Big Data - Served as vice president of e-business at Qwest Communications. +• Sales and Marketing; Retail - Served as vice president of business development at Qwest Communications. +• Technology Infrastructure and Cybersecurity - Extensive experience in wireless and telecommunications industries. +15 +• Mergers and Acquisitions - Experience with mergers and acquisitions while serving as general partner of Canaan Partners. +• Corporate Responsibility - Served on the board of The RealReal, Inc. and experience serving on the board of a private luxury brand company that has implemented a sustainability program and related initiatives. +VICTOR LUIS +Age: 58 +Director Since: 2020 +Board Committees: +Talent & Compensation (Chair) +Public Company Directorships: +None +Biographical Information +Mr. Luis previously served as a director and member of the audit committee and chair of the nominating and corporate governance committee of FarFetch Limited (NYSE: FTCH). He served as the chief executive officer and on the board of directors of Tapestry, Inc. (formerly known as Coach, Inc.) (NYSE: TPR) from 2014 to 2019, where he led the company’s transformation into Tapestry Inc., a New York-based house of modern luxury brands including Coach, Kate Spade and Stuart Weitzman. Mr. Luis joined Coach, Inc. in 2006 as president and chief executive officer of Coach Japan. He rapidly assumed additional leadership responsibilities across Asia and Europe, becoming chief commercial officer of Coach, Inc. in 2013 and chief executive officer in 2014. Prior to joining Coach, Inc., from 2002 to 2006, Mr. Luis was president and chief executive officer of Baccarat, Inc., where he ran the North American operation of the French luxury brand. Mr. Luis joined the Moët-Hennessy Louis Vuitton Group in 1995, ultimately advancing to president and chief executive officer of its subsidiary, Givenchy, Japan Incorporated, before leaving in 2002. +Selected Qualifications and Skills +• International - Significant experience in managing multi-national teams while at Coach, Inc. and Moët-Hennessy Louis Vuitton Group. +• Retail - Previously served as chief executive officer of several global luxury retailers. +• Premium Branding - Premium global branding experience spanning over two decades as chief executive officer of Tapestry, Inc., overseeing its modern luxury brands, and as chief executive officer of Baccarat, Inc. and Givenchy, Japan Incorporated. +• Industry - Experience in footwear, apparel and accessories while serving on the board of Tapestry, Inc. with the brands Coach, Kate Spade and Stuart Weitzman. +• Public Company Executive - Executive management experience, including service as chief executive officer of publicly traded companies. +LAURI M. SHANAHAN +Age: 62 +Director Since: 2011 +Board Committees: +Audit & Risk Management +Corporate Responsibility, Sustainability & Governance +Public Company Directorships: +Treasury Wine Estates Limited (ASX: TWE) +CAVA Group, Inc. (NYSE: CAVA) +Biographical Information +Ms. Shanahan has over 26 years of senior-level experience in retail, consumer products and hospitality, ranging from global, multi-channel, multi-brand enterprises to small and mid-cap growth companies. In June 2023, she joined the board of directors and is the chair of the people, culture and compensation committee and a member of the nominating, governance and sustainability committee of CAVA Group Inc. (NYSE: CAVA), a national, Mediterranean fast casual restaurant chain and consumer products brand. She serves on the board of directors, and is the chair of the human resources committee and a member of the nominations committee of Treasury Wine Estates Limited (ASX: TWE), a vertically integrated global wine business with over 70 brands. She joined Gap Inc. in 1992 and served in numerous leadership roles, including chief +16 +administrative officer and chief legal officer, during her 16-year career with the company. Since then, she has served as a principal of Maroon Peak Advisors, a consumer products and retail consulting firm. +Selected Qualifications and Skills +• Public Company Executive - Joined Gap Inc. in 1992 and served for 16 years in numerous leadership roles including chief administrative officer, chief legal officer and corporate secretary and chair of the foundation board. Gap Inc. is a leading global specialty retailer offering clothing, footwear, accessories, and personal care products for men, women, children, and babies under the Gap, Banana Republic, Old Navy, and Athleta brands. +• International - Directly involved in global brand development, supply chain and worldwide operations while at Gap Inc. and as a director and consultant. +• Supply Chain Management and Retail - Involved in retail, franchise, online licensing and other distribution channels, as well as sourcing and supply chain, while at Gap Inc. and as a consultant. +• Sales and Marketing - Acquired sales and marketing experience throughout her career at Gap Inc. and as director and consultant. +• Industry - Experience in footwear, apparel and accessories at Gap Inc., Charlotte Russe Holdings, Inc. and through consulting firm. +• Premium Branding - Premium and luxury branding experience at Gap Inc., through serving on the board of Treasury Wine Estates Limited and through retail consulting firm. +• Compliance and Risk Oversight - In addition to other leadership roles at Gap Inc., served as chief compliance officer and chief legal officer, overseeing the global corporate risk committee, as well as the global governance and compliance organization. +• Corporate Responsibility - While at Gap Inc., led development and oversight of global strategy, organization and execution of comprehensive social and environmental programs involving product development, supply chain, stakeholder engagement and employee and consumer-facing initiatives. Was president of Gap Inc. Foundation and also led government affairs and public policy. +BONITA C. STEWART +Age: 68 +Director Since: 2014 +Board Committees: +Corporate Responsibility, Sustainability & Governance (Chair) +Talent & Compensation +Public Company Directorships: +PagerDuty, Inc. (NYSE: PD) +Biographical Information +Ms. Stewart is currently a Founder/Managing Partner at BAG Ventures, a venture capital investment firm. She was previously a Board Partner at Gradient Ventures, Google's early-stage venture fund focused on artificial intelligence. Throughout her career she has helped drive digital transformation at scale across multiple industries. Ms. Stewart served in various executive roles at Google, Inc. (Nasdaq: GOOG, GOOGL), a subsidiary of Alphabet Inc., including as Vice President, Global Partnerships where she led partner management for the largest U.S. publishers across search, news, commerce, media and entertainment, telecommunications and mobile applications. In January 2021 she joined the board of directors and serves as the chair of the nominating and corporate governance committee and a member of the compensation committee for PagerDuty (NYSE: PD), a digital operations management company. Ms. Stewart previously served on the board of directors and as a member of the compensation committee and nominating and corporate governance committee for Volta Industries, Inc. (NYSE: VLTA). Ms. Stewart served as a corporate director for Pluralsight, Inc. (Nasdaq: PS), from 2018 to 2021. From 2002 to 2006 she worked for DaimlerChrysler AG (now Daimler AG) as director of Chrysler Brand Advertising and the director of Chrysler Group’s first Interactive Communications team. Ms. Stewart began her career in 1979 at IBM Corporation (NYSE: IBM) where she served in various financial and marketing management positions. She is the co-author of A Blessing: Women of Color Teaming Up to Lead, Empower and Thrive and the 2019-2020 Women of Color in Business Cross-Generational Survey. +Selected Qualifications and Skills +• Industry - Over 31 years of experience in brand management, digital strategy, and execution. +17 +• High Level of Financial Literacy - Lead strategy, business development and revenue growth plans for Google Inc.'s largest publisher partnerships. Holds an M.B.A. from Harvard Business School. +• Consumer Technology/Big Data - Extensive experience in digital transformation, and data driven digital strategies across multiple industries. +• Entrepreneurial - Served as president, chief operating officer, and co-founder of Nia Enterprises, LLC, a web-based company, and founder and chief executive officer of One Moment in Time, a women's formal-wear rental company. +• Sales and Marketing - Acquired sales, marketing, product distribution and online advertising experience. +• International - Led publisher partnerships for Latin America and Canada and has worked for Daimler AG and IBM Corporation, which are multi-billion dollar global companies. +• Public Company Executive - Strategic planning and large-scale operations experience with Google Inc. and IBM Corporation. +• Technology Infrastructure and Cybersecurity - Extensive experience in technology-based companies and fluency in digital transformation including digital strategy, mobile, video, programmatic, online advertising, cloud solutions, analytics and data privacy. +• Corporate Responsibility - Experience with employee resource group executive sponsorship, global hiring and retention processes and racial equity compliance oversight. +Summary of Qualifications and Skills of Directors +As part of our Board evaluation and director selection processes, the Corporate Responsibility, Sustainability & Governance Committee maintains a director skills matrix. When evaluating potential nominees, the Committee and the Board take into account the experiences and backgrounds represented on our Board. The director skills matrix below summarizes the specific qualifications, attributes, skills and experience of each director nominee that led our Board to conclude that the nominee is qualified to serve on our Board. +18 +Davis Burwick Caroti Chan Figuereo +Grismer +Ibrahim Luis Shanahan Stewart +Industry. Important to have knowledge and experience in footwear, apparel, accessories or related industries . +u u u u u u +Premium Branding. Valuable to our business to have experience in developing brand strategies, building brand equity and growing premium brands. +u u u u u u u u u +International. Important to have operational or management experience with global or multi-national teams and businesses. +u u u u u u u u u +High Level of Financial Literacy. Financial accounting, corporate finance and related skills are instrumental to our operations . +u u u u +Retail. Valuable to our business to have retail strategy, portfolio management and store operations experience. +u u u u u u u u +Consumer Technology/ Big Data. Relevant to have experience in developing and implementing technology related to consumer acquisition, relationship management, artificial intelligence (AI) and digital engagement. +u u u u +Sales and Marketing. Important to provide oversight to our sales and marketing strategies across our multi-channels. +u u u u u u u u +Supply Chain Management. Relevant to our business to have an understanding of product development, sourcing, inventory management, distribution and logistics. +u u u +Technology Infrastructure and Cybersecurity. Valuable to have experience related to technology governance, including privacy, data management and security. +u u u u u u +Compliance and Risk Oversight. Important to provide oversight to our compliance and risk management programs. +u u u u u u +Corporate Governance. Important to provide oversight of our corporate governance practices to ensure they reflect industry best practices . +u u u u u u u u +Mergers and Acquisitions. Helpful to have experience in strategic planning and execution of large scale strategic alternatives. +u u u u u u u +Public Company Executive. Valuable to have experience in managing a public company at the executive officer/C-suite level. +u u u u u u u u u +Human Resources and Talent Management. Important to have experience in management strategies, belonging & inclusion initiatives, succession planning and organizational design initiatives. +u u u u u u u u +Corporate Responsibility. Relevant to have experience in developing, implementing or overseeing ESG programs. +u u u u +19 +Consent to Serve +Each of the persons named above has consented to being named in this Proxy Statement and to serve as a director if elected, and our Board has no reason to believe any of the nominees will be unable or unwilling to serve as a director. If, however, any nominee withdraws or otherwise becomes unavailable to serve, our Board may decrease the size of our Board, or the proxies may be voted for the election of such other person as a director as our Board may recommend in place of the nominee. +Required Vote +Because this is an uncontested election, the election of our director nominees at the Annual Meeting requires the affirmative vote of a majority of the votes cast by the shares present virtually or represented by proxy and entitled to vote on the election of directors at the Annual Meeting (assuming that a quorum is present). A "majority of the votes cast" means the number of shares voted "FOR" a director nominee must exceed the number of shares voted “AGAINST” a director nominee. +This proposal is considered a "non-routine" matter under NYSE rules. As a result, a bank, broker, dealer, or other nominee may not vote without instructions on this matter, so there may be broker non-votes in connection with this proposal. Abstentions and broker non-votes are not counted as votes "FOR" or "AGAINST" a director nominee and will have no effect on the election of directors. If no contrary indication is made, returned proxies will be voted "FOR" each of the director nominees, or in the event any nominee is unable to serve as a director at the time of the election, returned proxies will be voted "FOR" any nominee designated by our Board to fill the vacancy. +BOARD +RECOMMENDATION +OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE +" FOR " +THE ELECTION OF EACH OF THE TEN +DIRECTOR NOMINEES. +20 +CORPORATE GOVERNANCE +Corporate Governance at Deckers +Corporate governance is managed under the direction of our Board. Our Board has a long-standing commitment to comprehensive and effective corporate governance practices. Our Board continues to evaluate our governance policies and procedures to ensure that the right mix of individuals is present in our boardroom and to ensure effective oversight of our strategy and management in order to best serve our stockholders. Our Board has adopted Corporate Governance Guidelines that set forth the primary framework of governance principles applicable to our Company, a copy of which is available on our website at ir.deckers.com in the Overview section of the Governance tab. +Corporate Governance Elements +Our Board is committed to maintaining the highest standards of corporate governance and has established a strong framework by which our Company is governed. Key elements of our corporate governance framework include: +OUR POLICY OR PRACTICE DESCRIPTION AND BENEFIT TO OUR STOCKHOLDERS +STOCKHOLDER RIGHTS +Annual Election of Directors +• Our directors are elected annually, reinforcing their accountability to our stockholders. We do not employ a classified board structure. +Single Class of Outstanding Voting Stock +• Our common stockholders control our Company with equal voting rights. +Majority Voting Standard +• We have a majority voting standard for uncontested director elections. +BOARD STRUCTURE +Director Independence +• Based on the director independence requirements set forth in our Corporate Governance Guidelines, as well as under applicable SEC and NYSE rules, our Board has determined that each of our director nominees, other than Mr. Caroti, is an "independent director." Accordingly, if all director nominees are elected at the Annual Meeting, nine out of ten members of the Board will be "independent directors." +• Our three standing Board committees: the Audit & Risk Management Committee, the Talent & Compensation Committee and the Corporate Responsibility, Sustainability & Governance Committee, consist exclusively of independent directors and have adopted written charters. Committee composition and charters are reviewed annually by our Board. +Committee Governance +• Our Corporate Governance Guidelines allow our Board to determine whether to separate or combine the roles of the Chair and Chief Executive Officer. Currently, Ms. Davis, who is an independent director, serves as Chair of the Board. We believe this is the most appropriate leadership structure for our Company at this time. +Annual Board Self-Evaluations +• The Corporate Responsibility, Sustainability & Governance Committee conducts and oversees annual evaluations of our Board, each Board committee and each individual director, to ensure they are effective and continue to serve the best interests of our stockholders. We periodically engage an independent third party to facilitate these evaluations. +Board Oversight of Risk +• Our Board is generally responsible for risk management activities, but has delegated the oversight of risk management to our Audit & Risk Management Committee. Our full Board regularly engages in discussions of the most significant risks we face and how these risks are managed. +EXECUTIVE COMPENSATION +Annual Say-on-Pay Vote +• Historically, we have provided our stockholders the opportunity to approve, on a non-binding advisory basis, the compensation of our Named Executive Officers on an annual basis as this affords our stockholders the ability to provide routine feedback on our executive compensation program. +Corporate Governance Principles +Pursuant to Delaware law and our Bylaws, our business, property and affairs are managed under the direction of our Board. Thus, our Board is the ultimate decision-making body of our Company, except with respect to those matters reserved for our stockholders. +Our Board selects our Chief Executive Officer, and works together with our Chief Executive Officer to select our senior management team, which is charged with the day-to-day operation of our business. Members of our Board are kept informed +21 +about our business through discussions with our Chief Executive Officer and other senior management personnel, including by attending brand sales meetings and industry events, participating in periodic informal telephonic meetings, and reviewing materials provided to them, as well as by attending formal meetings of our Board and its committees. Having selected the senior management team, our Board acts as an adviser and counselor to senior management, monitors its performance, and proposes or makes changes to the senior management team when it deems necessary or appropriate. +Board of Directors Meetings +BOARD OF DIRECTORS +Meetings in Fiscal Year 2025: 6 +• Each of our directors attended at least 80% of Board meetings and meetings of the Board committees on which he or she served during his or her term. +• Time is scheduled for our independent directors to meet in an executive session at every Board meeting. Ms. Davis presides over each executive session. +• Our Corporate Governance Guidelines state that directors are expected to attend each of our annual meetings of stockholders. All members of our Board in fiscal year 2025 attended the annual meeting of stockholders held in September 2024. +Director Independence +Our Corporate Governance Guidelines, as well as applicable NYSE rules, require that our Board be comprised of a majority of directors who satisfy the criteria for independence set forth in the NYSE rules. These guidelines help ensure that the interests of our Board and management are aligned with those of our stockholders, that conflicts of interest are avoided, and that we are in compliance with applicable SEC and NYSE rules. An "independent director" is one who our Board affirmatively determines has no material relationship with our Company (either directly or as a partner, stockholder, or officer of an organization that has a relationship with our Company) and otherwise meets the requirements of the NYSE rules. +Based on the director independence requirements set forth in our Corporate Governance Guidelines, as well as in the applicable NYSE rules, our Board has determined that each of our directors, other than Mr. Powers and Mr. Caroti, as well as each of our director nominees, is an "independent director." In addition, all members of the Audit & Risk Management Committee, Talent & Compensation Committee, and Corporate Responsibility, Sustainability & Governance Committee meet the independence standards set forth in applicable SEC and NYSE rules. +Board Leadership Structure +Our Corporate Governance Guidelines allow the Board to determine whether to separate or combine the roles of chair and chief executive officer. Our Board believes it is important to maintain flexibility in our Board leadership structure to best serve the interests of the Company and its stockholders at any particular time. However, our Board firmly supports having an "independent director" serve in a Board leadership position at all times. +In determining the appropriate structure, our Board considers multiple factors, including our business and strategic needs at the time and the composition of our Board. The roles of Chair and Chief Executive Officer are currently separated. Our Board believes this leadership structure allows our Chief Executive Officer to focus on the day-to-day operation and management of our Company, while allowing our Chair to focus on leading the Board in overseeing the interests of our Company and stockholders. Our Chair, Ms. Davis, leverages her extensive experience in matters related to premium branding, retail, and risk oversight to advise the Company on identified and anticipated risks, as well as to drive strategy and agenda setting at the Board leve l. Our Chief Executive Officer, Mr. Caroti, utilizes his extensive leadership experiences in the footwear and apparel industry to drive the Company's strategic vision, oversee its long-term growth, and provide general oversight of the business and affairs of the Company. +While the Board believes the current structure is appropriate at this time, it regularly assesses the advantages and disadvantages of various structures taking into account the evolving needs of the business. +Board Committees +Our Board has three standing committees: the Audit & Risk Management Committee, the Talent & Compensation Committee, and the Corporate Responsibility, Sustainability & Governance Committee. Each member of each of the committees is an "independent director" for purposes of applicable SEC and NYSE rules. Each of our committees has a written charter that describes its purpose, membership, meeting structure, and responsibilities. A copy of each committee's charter is available on our website at ir.deckers.com in the Overview section of the Governance tab . These charters are reviewed annually by each committee, with any recommended changes approved by our Board. The Audit & Risk Management Committee charter was amended in September 2024, the Corporate Responsibility, Sustainability & Governance charter was amended in September 2023, and the Talent & Compensation Committee charter was amended in January 2025. +Summary information regarding the membership, meetings, and primary responsibilities of each of the three standing committees of our Board for fiscal year 2025 is provided below: +22 +AUDIT & RISK MANAGEMENT COMMITTEE +Meetings in Fiscal Year 2025: 10 +Current Members: +Juan R. Figuereo ( Chair ) +All members of the Audit & Risk Management Committee meet the independence and experience standards set forth in applicable SEC and NYSE rules. +Mr. Figuereo, and Mr. Chan have been determined by our Board to be "audit committee financial experts" under applicable SEC rules. +Nelson C. Chan +Maha S. Ibrahim +Lauri M. Shanahan +• Oversees management's conduct with respect to, and the integrity of, our financial reporting functions. +• Oversees the engagement, independence and performance of the registered public accounting firm that audits our annual financial statements and reviews our quarterly financial reports. +• Oversees our legal, regulatory and ethical obligations. +• Oversees the performance of our internal audit function. +• Oversees the application of our related-person transaction policy as established by our Board. +• Oversees our systems of internal control over financial reporting disclosure controls and procedures. +• Oversees our enterprise risk assessment and management policies, practices and procedures, including matters related to data protection, cybersecurity and risk management initiatives related to information technology. +• Oversees the application of our Code of Ethics as established by our Board. +TALENT & COMPENSATION COMMITTEE +Meetings in Fiscal Year 2025: 4 +Current Members: +Victor Luis (Chair) +All members of the Talent & Compensation Committee meet the independence standards set forth in applicable SEC and NYSE rules. +David A. Burwick +Bonita C. Stewart +• Oversees the design of our executive compensation program, and responsible for oversight of our employment practices and policies. +• Reviews and approves goals and objectives relevant to the compensation of our executives and evaluates performance in light of those goals and objectives. +• Oversees our key human capital management strategies and programs. +• Reviews our overall talent management strategy, including development and succession plans for our executives and management. +• Determines and approves the compensation of our executives based, in part, on these evaluations, including each element of compensation. +• Makes recommendations to our Board regarding any action that is required to be submitted to our stockholders for approval with respect to incentive compensation plans and equity-based plans. +• Administers and approves our equity-based plans, and approves (or delegates authority to approve, below the executive level) individual award grants under those plans, or recommends award grants to our Board for approval. +• Produces report on executive compensation for inclusion in our proxy statement for our annual meeting of stockholders. +23 +CORPORATE RESPONSIBILITY, SUSTAINABILITY & GOVERNANCE +COMMITTEE +Meetings in Fiscal Year 2025: 4 +Current Members: +Bonita C. Stewart (Chair) +All members of the Corporate Responsibility, Sustainability & Governance Committee meet the independence standards set forth in applicable NYSE rules. +Nelson C. Chan +Lauri M. Shanahan +• Develops and recommends to our Board a set of Corporate Governance Guidelines that establish a framework of governance principles applicable to us. +• Identifies and actively seeks individuals qualified to become directors, consistent with criteria specified in the Corporate Governance Guidelines. +• Recommends to our Board the qualified director nominees to be selected by our Board. +• Recommends to our Board membership of our Board committees. +• Oversees the Company's ESG Program, and periodically reviews with management our policies and practices with respect to belonging & inclusion and our specific sustainable development goals. +• Ensures that our certificate of incorporation and Bylaws are structured in a manner that best serves our objectives and recommends amendments as appropriate. +• Oversees the evaluation of management, our Board and Board committees. +Nominating Procedures and Criteria +Among its functions, the Corporate Responsibility, Sustainability & Governance Committee considers and approves nominees for election to our Board. We view board succession as an ongoing process and regularly identify, evaluate and pursue prospective candidates. In addition to the candidates identified by the Committee, the Committee considers candidates for director proposed by our stockholders, provided such recommendations are made in accordance with the procedures set forth in our Bylaws. Stockholder nominations that meet the qualification criteria referred to below will receive the same consideration as nominations made by the Committee. +Essential criteria for all candidates considered by the Corporate Responsibility, Sustainability & Governance Committee are discussed in the section of this Proxy Statement titled " Qualifications for All Directors. " In considering individual candidates, the Committee also evaluates additional criteria, as reflected in the section of this Proxy Statement titled " Summary of Qualifications and Skills of Directors. " +In selecting nominees for our Board, the Corporate Responsibility, Sustainability & Governance Committee evaluates the general criteria referred to above, identifies any specialized criteria for which the Committee has determined there is a need, and considers the candidate's ability to meet the required criteria and contribute to the success of our Company. In evaluating an existing director for reelection, in addition to assessing the criteria referred to above, the Committee considers a variety of factors, including attendance at Board and committee meetings, independence, length of service, previous Board and committee performance, and overall contributions to our Company. From time to time, the Committee retains independent third-party search firms, consultants, and other advisors, as appropriate, to help identify, screen, and evaluate candidates and to enhance our Board’s preparedness in the event of an unplanned director departure. +The Company paid a fee to a third party search firm who identified Mr. Grismer as a potential director nominee. The director nominees have been recommended by the Corporate Responsibility, Sustainability & Governance Committee and approved by our Board. +Management Succession and Talent Development +The Talent & Compensation Committee, pursuant to its charter, is responsible for overseeing the management succession planning process. As part of that responsibility, the Committee reviews and evaluates the development and succession plan relating to our executive officers, including considerations of career paths and attracting and retaining high-quality talent. The Board is responsible for these actions with respect to our Chief Executive Officer. The Committee works with the Board to assess whether we have the management talent needed to successfully pursue our business objectives. The Board also regularly considers the competencies necessary for our Chief Executive Officer to support our strategies for long-term success. +Risk Governance Structure +Our Board has overall responsibility for the oversight of our Company's risk management process, which is designed to support the achievement of organizational objectives, including strategic objectives, improve long-term organization performance and enhance stockholder value. It has developed processes to identify, evaluate and manage short-, medium- and long-term risks to ensure they are prioritized on a timely basis. Risks are typically categorized based on the severity and probability of the risk and +24 +addressed or escalated as appropriate. The Board members provide objective, independent oversight of risk and focus on the most significant risks facing the Company. Our legal and internal audit executives report directly to the Audit & Risk Management Committee regarding material risks to our business, among other matters, and facilitate the identification, assessment and development of controls and procedures that address identified risks. The highest-ranking manager of our internal audit function periodically meets with the Audit & Risk Management Committee and the Board to discuss identified risks, the status of management’s risk mitigation actions, and, if applicable, any emerging risks. Separately, our Risk & Compliance Advisory Committee, an independent committee overseen by our internal audit team, evaluates organizational risks and discusses opportunities for compliance and risk mitigation. +Board Role in Risk Oversight +• Annually reviews or assesses the effectiveness of our Company’s enterprise risk management programs and framework, including the processes for identifying, assessing, prioritizing, and responding to our enterprise-wide risk exposures, to ensure that robust risk management strategies are in place. On an annual basis, under the direction of our Audit & Risk Management Committee, our Company undertakes an enterprise-level risk management review that is designed to bring to the Board’s attention our most material risks for evaluation, including strategic, operational, regulatory, and compliance risks. +• Receives regular updates from management regarding our organization’s portfolio of risk and engages in discussions to understand and assess our overall risk management activities. Our Board further apprises itself of the most significant risks facing our Company, ensuring that robust risk response actions have been established and implemented, with an independent review by internal audit. Management and our Board assess the Company's risk environment on a quarterly basis to ensure the Company is adequately anticipating future exposure to liability. +• On an annual basis, under the direction of our Corporate Responsibility, Sustainability & Governance Committee, our Board reviews and assesses our corporate responsibility and sustainability efforts, including risks related to environmental and social issues, as well as risks related to corporate governance issues. +• Inquires of management to understand and assess the effectiveness of the mechanisms in place for monitoring and responding to emerging risks. +• Engages in critical dialogue with our executive leadership and technology-focused personnel to ensure our organization has a robust plan to detect, stop, and mitigate the effects of cyberattack incidents, including resuming normal operations as quickly as possible. +• Engages in active discussion with management to understand our Company’s risk philosophy to ensure understanding of overall appetite for risks that aligns with ability to create stockholder value. +• Engages actively with management on Chief Executive Officer succession and works to nominate and evaluate potential successors for this role. +• Reviews identified risks with management at regular committee meetings and provides input on these risks and mitigation steps. +Below is a summary of key risk oversight responsibilities delegated to our three committees: +Audit & Risk Management Committee +• Oversees financial risks and monitoring of management’s policies and procedures. +• Plays a strategic role in assessing and monitoring our Company’s response to cyber threat trends, receiving periodic updates on cyber risk management initiatives, and obtaining independent confirmation of their efficacy through regular reviews by internal audit. Engages in regular dialogue with our Chief Digital & Data Officer and Chief Information Security Officer on technology risk related topics on every Audit & Risk Management Committee meeting agenda, ensuring adequacy of focus and resources to support cyber risk management activities. +• Receives regular updates from management on cybersecurity or information security incidents that may pose a significant threat to our Company, and assesses our Company’s key metrics for measuring our capabilities to manage cybersecurity and technology risk. +• Our Board also receives an independent perspective from our internal audit function. +• Provides oversight for compliance risk and regularly receives updates from management on compliance-related matters. +Our legal and internal audit executives report directly to the Audit & Risk Management Committee regarding material risks to our business, among other matters, and the Audit & Risk Management Committee meets in executive sessions with our highest ranking manager of internal audit and with representatives of our independent registered public accounting firm. +25 +Talent & Compensation Committee +• Oversees the design of our executive compensation program so as to encourage achievement of our strategic objectives and mitigate compensation-related risk. +• Oversees key human capital management strategies and programs. +• Evaluates succession planning risk regarding the executive officers. +Corporate Responsibility, Sustainability & Governance Committee +• Oversees risks related to our corporate responsibility and sustainability efforts, including risks related to environmental and social issues, such as climate change, as well as risks related to corporate governance issues. +• Receives quarterly updates on the status of our ESG Program and related risks. +• Develops and recommends to the Board our Corporate Governance Guidelines to establish and oversee an appropriate governance framework. +Information Security Risk Oversight +Our Board has delegated oversight of the Company's information security program to the Audit & Risk Management Committee. Our information security initiatives are led internally by our Chief Digital & Data Officer, and Chief Information Security Officer. These executives are responsible for the operation of our information security program and communicate quarterly with the Audit & Risk Management Committee on the program, and annually with the full Board with respect to the state of the program, assessments of the cyber risk landscape, including discussion on emerging risks and trends, and compliance with data privacy regulatory requirements. As part of this program, we also proactively identify, assess and mitigate risks associated with artificial intelligence to promote safe, ethical and responsible use. Our information security program also includes a cybersecurity incident response plan that is designed to provide a management framework across our Company. We engage external firms to assist us in the independent evaluation of our information security processes and capabilities. Our employees receive annual trainings on responsible information security, data security and cybersecurity practices including appropriate action to take against cyber threats. We also maintain a cybersecurity and information security risk insurance policy, which insures for data incidents or breaches and other technology related exposures. +Talent & Compensation Committee Interlocks and Insider Participation +As of the date of this Proxy Statement, no member of the Talent & Compensation Committee is serving, and during the past year no member of the Talent & Compensation Committee has served, as an officer or employee of our Company or any of its subsidiaries. None of our executive officers currently serves, or during the past year has served, as a member of the board of directors or compensation committee (or other committee serving a similar purpose) of any entity that has an executive officer serving on our Board or the Talent & Compensation Committee. In addition, none of the Talent & Compensation Committee members had any relationship, or participated in any transaction, with our Company during fiscal year 2025 that requires disclosure under SEC rules. +We have entered into indemnification agreements with each of our directors, including each member of the Talent & Compensation Committee. +Communications with Directors +Stockholders and other interested parties may communicate with the Chair of our Board, the Chair of any Board committee, with our independent directors as a group, or with any individual director, by writing to any such person or group. Communications should be sent to the following address: +Deckers Outdoor Corporation +Attn.: Corporate Secretary +250 Coromar Drive +Goleta, California 93117 +Communications are distributed to our Board, or to any individual director, depending on the facts and circumstances described in the communication. Our Board has requested that certain items that are unrelated to the duties and responsibilities of our Board should be excluded, including the following: junk mail and mass mailings, product inquiries or complaints, new product suggestions, resumes and other forms of job inquiries, surveys, and business solicitations or advertisements. In addition, material that is unduly hostile, threatening, illegal or similarly unsuitable will not be distributed, except that any communication that is not distributed will be made available to any director upon request. +26 +Code of Ethics and Accounting and Finance Code of Ethics +Our Board has adopted a Code of Ethics to assist our officers, directors and other employees in complying with legal and regulatory requirements and maintaining the highest standards of ethical conduct. All of our directors, officers, and employees receive an annual training on the Code of Ethics and must carry out their duties in accordance with the policies set forth in the Code of Ethics and with applicable laws and regulations. The Code of Ethics complies with the requirements set forth in applicable NYSE rules. +Our Board has also adopted a separate Accounting and Finance Code of Ethics which focuses on the financial reporting process and applies to our Chief Executive Officer, Chief Financial Officer and Corporate Controller (and other employees serving similar functions). The Accounting and Finance Code of Ethics is intended to qualify as a "code of ethics" under applicable SEC rules and to satisfy the standards of ethics and compliance programs under applicable NYSE rules. +Our Code of Ethics and our Accounting and Finance Code of Ethics are available on our website at ir.deckers.com in the Overview section of the Governance tab. To the extent required by law, any amendments to or waivers of any provision of the Code of Ethics or the Accounting and Finance Code of Ethics will be promptly disclosed publicly on our website. +Stockholder Engagement +We are committed to ongoing, proactive engagement with our stockholders on a number of significant topics, including our business and strategic objectives, capital allocation strategy, corporate governance framework, and executive compensation program. We value our stockholders' perspectives and believe their input contributes meaningfully to our long-term success. To that end, we routinely engage with our investors to understand their views and ensure they are considered in Board and management discussions about our strategic direction. +Our stockholder outreach program is led by a cross-functional team that includes members of our Investor Relations, ESG, and Legal teams. +In fiscal year 2025, we contacted stockholders representing approximately 46% of our outstanding shares to solicit feedback and share updates on various matters, including our corporate governance framework, executive compensation practices, and ESG priorities. Investors were generally supportive of our approach across these areas. The feedback we received was shared with our Board and members of management and taken into account in our decision-making processes. +We believe transparent communication with our stockholders is critical to our long-term success, and that the feedback received through our stockholder engagement efforts contributes to the evolution and success of our business. We plan to continue proactive outreach efforts going forward. +Please refer to the section of this Proxy Statement titled “ Compensation Discussion and Analysis - Stockholder Outreach" ” for more information regarding stockholder engagement specific to executive compensation. +Our People and Our Culture +Our key values, which guide our journey onward together, to improve our business and create a better world around it, help hold us accountable to deliver on our purpose: +Our values define our Company and serve as the driving force behind how we work together and with our customers, consumers, partners, suppliers, and communities. We also have detailed policies that support our commitment to ethical behavior and legal compliance across our organization. Through our open-door policy and culture, employees are encouraged to approach their managers if they believe violations of standards or policies have occurred, and are able to make confidential and anonymous reports using an online or telephone hotline hosted by an independent third-party provider. +We believe our culture makes us unique. We regularly conduct employee surveys to understand our employees' experiences on a variety of topics focused on employee engagement. Our latest survey completed in February 2025 had a participation rate of 91.5%. Of those employees who completed the survey, 89% noted they were proud to work for Deckers. +27 +We believe an inclusive workplace that promotes belonging for everyone brings together those with a unique set of experiences, opinions, and thoughts on critical issues. In turn, these varied perspectives enhance our business and drive better outcomes. Our people are at the center of everything we do. Their perspectives and passion for innovation enable us to build brands and create products that people around the world love. We strive to create an environment where employees can come as they are and are free to bring their authentic selves to work every day. +We publish workforce metrics in our annual Equal Employment Opportunity filing (EEO-1) which is publicly available at deckers.com/responsibility/policies. The content of our website, including our annual EEO-1 filing, is not incorporated by reference into this Proxy Statement or in any other report or document we file with the SEC. +Charitable Giving and Volunteering +At our Company, our charitable contributions, product donations, and employee volunteer efforts are an essential part of our culture. Each fiscal year, we contribute to our local communities through monetary donations, volunteer efforts and in-kind donations. During fiscal year 2025, we donated to various non-profit organizations around the globe. We also continued our 'Art of Kindness' events, where employees volunteer during a week-long event in our local communities multiple times during the fiscal year. Further, many of our supply chain partners followed our lead and volunteered in their local communities during fiscal year 2025. Our employees volunteered approximately 24,000 hours during fiscal year 2025. Our strategic giving and community-engagement efforts continued to be aligned with our sustainable development goals (SDGs). +Environmental, Social, and Governance +As a global leader in designing, marketing, and distributing innovative footwear, apparel, and accessories, our worldwide reach and impact is significant. We believe consumers are increasingly buying brands that deliver quality products while striving for minimal environmental impact by employing sustainable business practices. Our sustainability policies and strategies are informed by our ongoing efforts with multi-stakeholder initiatives, which involve our stockholders, employees, suppliers, and customers, as well as other brands and non-governmental organizations. Through our holistic ESG program, which has been in existence since 2010, we are committed to advancing our sustainable business initiatives. +ESG Oversight +Our Board oversees our ESG strategy and has ultimate oversight over all sustainability initiatives, strategies, and programs, including economic, social, and environmental risks. The Board has delegated its authority to oversee our ESG efforts to our Corporate Responsibility, Sustainability & Governance Committee. Our Chief Administrative Officer (CAO) is responsible for the day-to-day management of our ESG program and regularly reports to our Corporate Responsibility, Sustainability & Governance Committee and the Board on the status of the program. The ESG program’s execution is driven by our leadership team and various cross-functional teams including our ethical sourcing, facilities, distribution centers, brands, innovation, materials, and supply chain teams. +The Corporate Responsibility, Sustainability & Governance Committee’s oversight of our ESG program is complemented by the Audit & Risk Management Committee’s periodic assessment of risk management, including climate-related risks and policies, to ensure the consistent application of our corporate strategy. Our internal audit team provides periodic targeted reviews of our ESG-related policies and procedures to the Audit & Risk Management Committee to support the committee’s efforts. +We believe integrating ESG initiatives into our strategic objectives will create long-term value for our stockholders by ensuring collaboration across our portfolio of brands to drive sustainable business practices and help us continue to do good and do great. Our ESG program aligns our internal teams with our SDGs (detailed below) and establishes policies to encourage our partners and suppliers to employ sustainable business practices. +Sustainable Development Goals +We work to establish SDGs that we believe are the most relevant to our business, our operations, our stockholders, and the communities in which we operate. We are a member of the United Nations Global Compact (UNGC), the world’s largest voluntary corporate sustainability initiative. This membership requires an annual statement of progress, which is reflected in our Creating Change Report. Our CAO identifies specific SDGs established by the UNGC, which we adopt to guide our ESG strategy. Our SDGs are currently focused on categories where we believe we can make substantial impacts. +28 +TOPIC DECKERS SDG UNGC SDG +MATERIALS +Maximize the amount of preferred materials in our products. +WASTE +Sustainably reduce waste generated at our facilities and partner facilities through refuse, reduction, recycling, and reuse. +WATER +Reduce water consumption and improve water quality throughout our operations and the communities in which we operate. +CLIMATE AND CLEAN ENERGY +Reduce energy consumption and greenhouse gas emissions throughout our operations. +CHEMISTRY AND CONSUMER SAFETY +Reduce or eliminate hazardous chemicals throughout our operations. +HUMAN RIGHTS +Positively impact the communities in which we operate, including assuring industry leading human rights practices within our supply chain. +GENDER EQUALITY, QUALITY EDUCATION, AND REDUCED INEQUALITIES +Promote belonging, gender equality, female empowerment, and inclusion for all. +Our annual Creating Change Report will provide more information regarding our fiscal year 2025 ESG achievements with a focus on these SDGs. We believe the progress of our corporate responsibility efforts is served by disclosing goals and relevant metrics and, to that end, we have aligned the reporting standards included in our Creating Change Report with the Financial Stability Board’s Task Force on Climate-Related Financial Disclosures (TCFD), Global Reporting Initiative’s (GRI) Core Standards, and Sustainability Accounting Standards Board’s (SASB), and now part of the International Finance Reporting Standard (IFRS), Foundation Consumer Goods Sector Apparel, Accessories and Footwear Index. Our Creating Change Report, published annually, can be found at www.deckers.com/responsibility. References to our website address in this Proxy Statement are inactive textual references only. +29 +EXECUTIVE OFFICERS +Each of our executive officers serves at the discretion of our Board. Important summary information about our executive officers is set forth in the table below, followed by certain biographical information about each officer. +EXECUTIVE OFFICER AGE POSITION +Stefano Caroti 62 +Chief Executive Officer, President and Director +Steven J. Fasching 57 Chief Financial Officer +Angela Ogbechie 47 +Chief Supply Chain Officer +Thomas Garcia 52 +Chief Administrative and Legal Officer +Marco Ellerker +58 +President of Global Marketplace +Anne Spangenberg 57 +President of Fashion Lifestyle +Robin Spring-Green +49 +President of HOKA +STEFANO CAROTI +Age: 62 +Position: Chief Executive Officer, President and Director +Mr. Caroti was appointed as our Chief Executive Officer and President in August 2024 and joined our Board at that time. He was appointed as our Chief Commercial Officer in April 2023. He previously served as our President of Omni-Channel since November 2015. He has over 30 years of industry experience in general management, sales, retail, product, marketing, business strategy and brand management. Prior to joining our Company, Mr. Caroti was the chief commercial officer and managing director at PUMA, from August 2008 to December 2014, where he was responsible for PUMA’s global wholesale, retail and e-commerce divisions and PUMA’s geographic operating regions. Prior to that, he held a number of senior executive positions at NIKE, Inc. in general management, sales, product and marketing, and during his term as vice president of EMEA commerce, he was responsible for the entire wholesale, retail and e-commerce business in the EMEA region. He received a B.A. with honors from Middlebury College. +Please refer to the section of this Proxy Statement titled “Director Nominees” for additional biographical information about Mr. +Caroti, as well as information about the specific qualifications, attributes, skills, and experience that led our Board to conclude +that Mr. Caroti is qualified to serve on our Board. +STEVEN J. FASCHING +Age: 57 +Position: Chief Financial Officer +Mr. Fasching was appointed as our Chief Financial Officer in June 2018 and served as our Senior Vice President, Corporate Strategy, Planning & Investor Relations since February 2018. Mr. Fasching previously served as our Vice President, Strategy & +30 +Investor Relations from January 2016 to February 2018, and as Vice President, Strategic Financial Planning from August 2011 to January 2016. Mr. Fasching has over 30 years of experience in long-term financial and strategic planning and creating and leading the analytical engine of multi-billion dollar organizations. Immediately prior to joining our Company, Mr. Fasching served for five years as the director of finance and assistant controller of Princess Cruise Lines, Ltd., a cruise line owned by Carnival Corporation, where he had been promoted through a number of finance-related positions since September 1990, including director of financial planning, among others. Mr. Fasching received a B.S. degree in Business Administration from Pepperdine University and an M.B.A. from The Anderson School of Management at UCLA. He also completed The Executive Program for Prospective Chief Financial Officers through the University of Chicago Booth School of Business. +ANGELA OGBECHIE +Age: 47 +Position: Chief Supply Chain Officer +Ms. Ogbechie was appointed as our Chief Supply Chain Officer in June 2022. Prior to that, she was Senior Vice President, Global Operations and Supply Chain Strategy since November 2021. Since 2008, Ms. Ogbechie has held a number of senior supply chain positions at our Company and has experience in global demand planning, logistics, distribution and fulfillment. Ms. Ogbechie received a B.A. in Economics from Stanford University and an M.B.A. from Columbia University Business School. +THOMAS GARCIA +Age: 52 +Position: Chief Administrative and Legal Officer +Mr. Garcia joined our Company in 2009. In his current position as Chief Administrative and Legal Officer he oversees Legal, ESG, Strategy and Communications. He was promoted to his position in 2021 after spending more than 12 years in multiple roles including Senior Vice President, Senior Counsel, and Compliance Officer. From 2003 to 2009, Mr. Garcia was assistant general counsel at Mentor Corporation, a medical device company acquired by Johnson & Johnson. Previously, he was an associate attorney at the law firms of Hatch and Parent, as well as Buchanan Ingersoll. Mr. Garcia earned his B.S. in Biology from Lehigh University, Masters in Public Health from The University of Massachusetts at Amherst, and J.D. from The George Washington University Law School. +MARCO ELLERKER +Age: 58 +Position: President of Global Marketplace +Mr. Ellerker was appointed as our President of Global Marketplace in August 2024 and prior to that he served as Senior Vice President & General Manager Deckers EMEA, Japan and Asia Pacific markets, where he was instrumental in re-positioning the UGG brand, as well as the strategic development of HOKA in these regions. Mr. Ellerker has over 25 years of industry experience and was previously Global President of the Lifestyle Division at Pentland Brands and a member of the global Executive Team, where he held leadership roles covering the US, EMEA and Asia on the Lacoste, Ted Baker & Ellesse brands. He received a B.A. with honors in Business Studies from South Bank University in London. +31 +ANNE SPANGENBERG +Age: 57 +Position: President of Fashion Lifestyle +Ms. Spangenberg was appointed as our President of Fashion Lifestyle Group in July 2022. She joined Deckers after 13 years at NIKE, Inc. where she served as the company’s Chief Merchant, and previously held leadership positions at Gap, Inc. and Macy’s West. Ms. Spangenberg is an industry leader with over 25 years of experience in Global consumer-focused omni-channel retail, including product creation, merchandising, buying, analytics, stores, digital, wholesale and vertical. Ms. Spangenberg earned her B.A. in International Relations from the University of California, Davis. +ROBIN SPRING-GREEN +Age: 49 +Position: President of HOKA +Ms. Spring-Green was appointed as our President of HOKA in February 2024. She joined Deckers following 17 years at NIKE, Inc., where she held roles of increasing responsibility culminating with her position as Global Vice President of Men’s Running and Fitness. Ms. Spring-Green is a passionate runner and industry leader with over 20 years of experience across the global consumer products landscape and strong expertise leading and operating complex businesses to maximize their potential and deliver growth. Ms. Spring-Green earned a B.A. in Economics from the University of California, Davis. +32 +COMPENSATION DISCUSSION AND ANALYSIS +This Compensation Discussion and Analysis section addresses the compensation philosophy, objective, policies and arrangements that apply to our Named Executive Officers (NEOs). The purpose of this section is to provide our stockholders with a thorough understanding of our executive compensation program for fiscal year 2025. This narrative discussion is intended to be read together with the Summary Compensation Table and the related tables, footnotes and disclosures set forth below. References throughout this section to the “Committee” refer to the Talent & Compensation Committee. +This discussion is divided into the following parts: +EXECUTIVE SUMMARY +COMPENSATION OBJECTIVE AND PHILOSOPHY +COMPENSATION CONSULTANT AND PEER GROUP +ELEMENTS OF FISCAL YEAR 2025 EXECUTIVE COMPENSATION PROGRAM +OTHER COMPENSATION CONSIDERATIONS +This section contains forward-looking statements within the meaning of the federal securities laws. These forward-looking statements relate to our current plans and expectations regarding our executive compensation programs, policies and arrangements. Actual compensation programs, policies and arrangements that we adopt in the future may differ materially from those discussed in this section. Please refer to the section of this Proxy Statement titled “ Cautionary Note Regarding Forward-Looking Statements ” for additional information. +33 +EXECUTIVE SUMMARY +Named Executive Officers +The following table sets forth our NEOs for fiscal year 2025, the current positions they hold and the dates they were appointed to those positions: +NAMED EXECUTIVE OFFICER POSITION(S) DATE APPOINTED +Stefano Caroti +• Chief Executive Officer and President +• Principal Executive Officer +August 2024 +• Director September 2024 +Steven J. Fasching +• Chief Financial Officer +• Principal Financial and Accounting Officer +July 2018 +Anne Spangenberg +• President of Fashion Lifestyle +July 2022 +Thomas Garcia +• Chief Administrative and Legal Officer +February 2021 +Robin Spring-Green +• President of HOKA +February 2024 +Dave Powers +• Former Chief Executive Officer and +President +Appointed June 2016 +( Retired August 2024 ) +Leadership Transition +In fiscal years 2025 and 2026, we successfully executed our planned leadership transition, which we believe positions us for continued operational and financial excellence that will allow us to continue to create stockholder value. +• Mr. Caroti was promoted to Chief Executive Officer and President, effective August 1, 2024 and was elected to our Board at our 2024 Annual Meeting. +• Mr. Powers transitioned from Chief Executive Officer and President to non-executive director on August 1, 2024. After serving as a member of our Board for over 9 years, Mr. Powers will not be standing for reelection at our 2025 Annual Meeting. +Fiscal Year 2025 Financial and Operational Highlights: +We delivered strong financial and operational results in fiscal year 2025, which are highlighted by the following: +• Total revenue growth of 16.3%, representing an increase of $698 million as compared to the prior year. +• HOKA brand revenue increased $426 million, or 23.6%, over the prior year. +• UGG brand revenue increased $292 million, or 13.1%, over the prior year. +• Gross margin expanded 230 basis points versus last year to 57.9%. +• Operating margin expanded 200 basis points versus last year to 23.6%. +• Diluted earnings per share increased 30.2%, or $1.47, over the prior year to $6.33. +Our exceptionally strong performance over the past three fiscal years is illustrated by the financial and operational metrics in the graphs below. For each fiscal year, the information presented is for the 12-month period ended March 31. +34 +(1) For reference, this financial metric is referred to as 'total net sales' in our Annual Report. +The performance-based compensation that was earned during fiscal year 2025 was primarily the result of our exceptional performance relative to these metrics to directly tie a significant portion of executive compensation to our performance. For example, our annual cash incentive awards used consolidated operating income and revenue (and business unit operating income and revenue for certain executives with business unit oversight responsibilities), and our long-term incentive plan awards used consolidated pre-tax income and revenue as the underlying performance metrics. In addition, our total stockholder return during the applicable performance period was outstanding, both on an absolute basis and relative to our peers, reflecting significant value delivered to our stockholders. +We believe the direct correlation between our achievement of pre-determined financial metrics, and the actual compensation paid to our executives, highlights our pay-for-performance philosophy. +Our Business and Strategic Objectives +Our dedicated team has been able to successfully execute on our business strategy and achieve exceptional results over the past several fiscal years. We intend to continue investing strategically in key identified areas of growth within our brand portfolio, including the following: +• The HOKA brand, generating increased awareness and gaining global market share with performance footwear that resonates beyond performance applications, including through expanded global marketing campaigns and premier event sponsorships. +• The UGG brand, delivering elevated consumer experiences around the world to maintain and build demand for year-round versatile products that increasingly resonate with consumers. +• Technology and analytical tools that will further enhance our capabilities, particularly in support of our DTC business to connect with consumers through digital avenues. +• Infrastructure, talent, and marketing to support our key brand growth initiatives across international regions. +We intend to closely monitor planned investments in our business as we remain mindful of the challenging macroeconomic environment characterized by dynamic global trade policy, increased tariffs, inflationary pressures, high interest rates, recessionary concerns and geopolitical uncertainty. We also intend to continue to focus on the achievement of ESG initiatives by employing socially conscious operations, minimizing our environmental impact and maintaining open and interactive dialogue on ESG matters with our stakeholders. We remain committed to delivering long-term stockholder value through the continued execution of our strategies. +Fiscal Year 2025 Executive Compensation Highlights +The compensation program for fiscal year 2025 was generally similar to prior years in terms of its primary objective, overarching philosophy, core compensation elements, and key governance features. +The primary elements of our fiscal year 2025 executive compensation program were: +• Base salaries; +• Annual cash incentive awards (2025 Annual Cash Incentive Awards); +• Time-based restricted stock units (2025 Time-Based RSUs); and +• Long-term incentive plan performance-based stock units (2025 LTIP PSUs). +35 +The following table sets forth the key components of our executive compensation program for fiscal year 2025, and the underlying philosophy and considerations that provide the basis for our compensation decisions: +COMPENSATION HIGHLIGHTS PHILOSOPHY AND CONSIDERATIONS +Successful leadership succession with no special compensation awards +• As part of a multi-year succession process, Mr. Powers retired as Chief Executive Officer and President in August 2024. Mr. Caroti succeeded Mr. Powers in both roles, and in September 2024, was elected to our Board. The succession was executed without paying special onboarding or severance awards, or providing for any accelerated vesting of equity awards, underscoring our disciplined pay-for-performance philosophy. +Strong pay-for-performance alignment +• A significant portion of the overall compensation opportunity for our NEOs was structured as performance-based compensation tied directly to the achievement of Company financial and operational performance objectives established by the Committee. +• Our compensation opportunity is designed to align the interests of our NEOs with those of our stockholders and encourage the achievement of strategic objectives that the Committee believes are critical to our long-term success. +Performance metrics closely aligned with strategic objectives +• In light of our strategic focus on increasing revenue, enhancing profitability and creating long-term stockholder value, consistent with prior years, the Committee selected: +(i) consolidated operating income and revenue for all NEOs (and business unit operating income and revenue targets for certain executives with business unit oversight responsibilities) as the performance metrics to determine the level of achievement with respect to the 2025 Annual Cash Incentive Awards, and +(ii) “pre-tax income” and consolidated revenue for each of fiscal years 2025, 2026 and 2027 (three-year performance period) as the performance metrics to determine the level of achievement with respect to the 2025 LTIP PSUs. +Balanced mix of performance metrics and measurement periods with focus on long-term performance-based vesting +• By establishing a combination of performance metrics over one- and three-year periods, our compensation program encourages healthy and sustained growth across our business, and mitigates an undue focus on any single metric or timeframe. +• For fiscal year 2025, approximately 60% of the value of the equity awards granted vest based on the achievement of Company performance conditions and the remainder vest over a long-term service period to encourage executive retention. +Reference to a "median" pay philosophy +• In establishing fiscal year 2025 total compensation opportunities for our NEOs, the Committee considered pay practices within our peer group selected with the assistance of our independent compensation consultant. The Committee generally assesses target total compensation opportunity with reference to the peer-group median to ensure our compensation program remains competitive in the marketplace while mitigating compensation-related risks. +Use of long-term performance-based vesting for LTIP awards +• The 2025 LTIP PSU vesting is based on the achievement of pre-determined profitability and revenue metrics assessed each year over the three-year performance period. +• The vesting of each LTIP award is also subject to positive or negative adjustment based upon the application of a TSR modifier, thereby correlating the vesting of the award to both total and relative stockholder returns. +2025 Annual +Cash Incentive Award +payout results based on strong financial and operational results +• As a result of our strong financial and operational results, the 2025 Annual Cash Incentive Awards, which covered the one-year performance period ended March 31, 2025, were paid out at 147%, 200%, and 200% of target for HOKA, Fashion Lifestyle, and corporate components, respectively. +• The Committee incorporated an ESG modifier into the 2025 Annual Cash Incentive Awards, which are subject to positive or negative adjustment based upon the achievement of our ESG initiatives. +2023 LTIP PSU vesting results based on exceptional performance +• The 2023 LTIP PSUs, which covered the three-year performance period ended March 31, 2025, were paid out at 200% of target. This outcome reflected awards being earned at the maximum level based on exceptional financial and operational performance, taking into account our outstanding total stockholder return on an absolute and relative basis. +36 +Continued focus on executive retention +• While we seek to develop our executive compensation program so it closely aligns with our pay-for-performance philosophy and rewards achievement of performance goals, this objective must complement other critical objectives, including the retention of key executives. +Consideration of peer group data and advice of our independent compensation consultant +• We consider peer group compensation data in making executive compensation decisions, including with respect to both the target level of compensation and the overall structure of our executive compensation program. +• Our independent compensation consultant provides us with information on competitive pay practices and trends in our industry and makes recommendations regarding the design and structure of our compensation program, as well as the formulation of our peer group. +Stockholder Engagement on Compensation Matters +The Committee believes transparent communication with our stockholders is critical to our long-term success. We solicit feedback from our stockholders on various topics, including the design and effectiveness of our executive compensation program. +We believe our proactive engagement with stockholders, combined with our strong pay-for-performance alignment and compensation governance practices, has contributed to consistent, overwhelming stockholder support for our executive compensation program. Specifically, 92.3% and 95.7% of the votes cast supported our executive compensation program at our 2024 and 2023 annual meetings of stockholders, respectively. Our fiscal year 2025 program reflects feedback received through our ongoing dialogue with stockholders. +37 +COMPENSATION OBJECTIVE AND PHILOSOPHY +Compensation Program Objective +Pursuant to its charter, the Committee has overall responsibility for developing the compensation objective and philosophy applicable to our executive leadership team, and approving our executive compensation program and policies. +The primary objective of our executive compensation program, as established by the Committee, is to provide a compensation opportunity that will attract, retain and motivate talented executives with the skills needed to manage a complex and growing business in a competitive industry, while creating long-term value for our stockholders. In furtherance of this objective, the Committee seeks to design our executive compensation program in a manner that reflects direct alignment between the compensation opportunity provided to our executives and the achievement of our strategic objectives. In addition, in order to attract and retain the talent necessary to achieve our strategic objectives, the Committee endeavors to develop a compensation program that is competitive in the marketplace. +Compensation Program Philosophy +When establishing our executive compensation program each year, the Committee is generally guided by the following four principles that it believes align closely with our compensation objective: +PAY-FOR-PERFORMANCE ALIGN INTERESTS WITH STOCKHOLDERS +• Offer a significant portion of the compensation opportunity based on the achievement of pre-determined financial and operational performance objectives. +• Ensure performance-based compensation earned by our executives is directly tied to the achievement of financial and operational objectives deemed by the Committee to be important for our long-term success. +• Align the interests of our executives with those of our stockholders by tying a significant portion of the compensation opportunity to performance that creates long-term stockholder value. +• Ensure that a significant portion of the compensation opportunity is directly tied to total and relative stockholder return. +REWARD ACHIEVEMENT ATTRACT AND RETAIN EXECUTIVES +• Offer meaningful and appropriate incentives for achieving both short-term and long-term financial and operational goals that have been established by the Committee to reach our strategic objectives. +• Ensure that the financial and operational goals are appropriate for each executive given their respective titles, scope of responsibilities, and ability to impact results. +• Attract key executives with the background and experience necessary to lead us and provide the best opportunity to achieve our strategic objectives. +• Retain our key executives by offering compensation that is attractive and competitive in the marketplace, taking into consideration the competition for key executives and peer group pay practices. +Pay-for-Performance Alignment +For fiscal year 2025, fixed pay for our Chief Executive Officer (comprised of base salary) represented only 13% of his total target compensation opportunity for the year, while performance-based pay represented 87% of his total target compensation. The performance-based pay opportunities reflect a combination of the target value of the 2025 Annual Cash Incentive Awards, the target value of the 2025 LTIP PSUs, and the value of the 2025 Time-Based RSUs, which the Committee believes is appropriate to designate as such because receipt of the full value of the RSUs is at risk since vesting is conditioned upon continued employment over an extended period of time, and the final value is subject to fluctuation based on the value of our stock. +The graphic below illustrates the amount of performance-based pay opportunity (calculated based on target value) versus fixed pay for our Chief Executive Officer for fiscal year 2025, as well as the breakdown of our various components of the compensation program on a percentage basis. +38 +While the graphic addresses the relative mix of compensation for our Chief Executive Officer, the compensation opportunities for our other NEOs reflect a similarly strong weighting of performance-based compensation to fixed compensation, further confirming pay-for-performance alignment across our executive leadership team. +39 +Governance Practices that Support Our Compensation Philosophy +We maintain the following governance components in our executive compensation program that we believe support our compensation objectives and philosophy, while also reducing compensation-related risk: +GOVERNANCE PRACTICE WHAT WE DO +Independent Directors ☑ +All of the members of our Board, other than our President and Chief Executive Officer, are independent directors under applicable NYSE rules. +Independent Talent & Compensation Committee +☑ The Committee consists entirely of independent directors who meet the independence standards set forth in applicable SEC and NYSE rules. +Independent Compensation Consultant ☑ The Committee has retained, and routinely consults with, an independent compensation consultant who assists the Committee in gathering competitive pay data, selecting our peer group, and structuring our executive compensation program. The decision to engage the consultant was made solely by the Committee and the consultant reports directly to the Committee. +Compensation Risk Assessment ☑ +The Committee performs an annual review of the risks related to our compensation practices. +Frequency of "Say-on-Pay" Vote ☑ +We provide our stockholders the opportunity to approve, on a non-binding advisory basis, the compensation of our NEOs on an annual basis as this affords our stockholders the ability to provide routine feedback, which we actively consider in formulating our compensation program. +Clawback and Forfeiture Policy ☑ +We maintain a Clawback and Forfeiture Policy that applies to our cash and equity incentive awards, contributing to a Company culture that emphasizes integrity and accountability in financial reporting. +Stock Ownership Guidelines ☑ +We maintain stock ownership guidelines for our executive officers and directors. Each of our officers and directors is in compliance with the guidelines. +No Insider Trading, Hedging and Pledging +☑ +We maintain an Insider Trading Policy that specifically prohibits directors, executive officers and employees from insider trading, hedging or pledging Company securities, or adopting similar practices. The Insider Trading Policy also places certain additional restrictions on and requirements for trading by insiders. +Equity Grant Practices +☑ +We have adopted a Share-Based Grant Policy, which establishes guidelines for our equity award grant practices. The guidelines provide that we will seek to issue all grants during open trading windows, and regardless we will only make grants at a time when we are not in possession of material nonpublic information. +"Double Trigger" Vesting Provisions +☑ +Our equity awards include "double-trigger" vesting provisions under which the awards will only vest in the event of a change in control followed by a qualifying termination of employment. +No Tax Gross Ups ☑ +Our change in control and severance agreements do not provide for excise tax gross up payments. +No Repricing of Awards ☑ +Our equity incentive plan explicitly prohibits the repricing of equity awards. No repricing of awards will occur without the approval of our stockholders. +No Dividends on Unvested Equity Awards ☑ +Our equity incentive plan does not provide for the payment of dividends or dividend equivalents on unvested equity awards. +No Excessive Benefits or Perquisites +☑ +We limit executive benefits and perquisites to those with a clear business rationale and we regularly review for market alignment. +40 +COMPENSATION CONSULTANT AND PEER GROUP +Compensation Consultant +The Committee receives assessments and advice regarding our compensation practices and philosophy from its independent compensation consultant, Frederic W. Cook & Co., Inc. (FW Cook). FW Cook provides information on competitive pay practices and trends in our industry, and makes recommendations regarding the formulation of our peer group, as well as the design and structure of our compensation program. The Committee meets regularly with FW Cook throughout the year, carefully reviews and assesses the materials provided by FW Cook, and engages in thorough deliberations with FW Cook and management regarding our executive compensation program. +While we are not obligated to retain an independent compensation consultant, the Committee believes the use of an independent consultant provides additional assurance that our executive compensation program is attractive and competitive in the marketplace, consistent with peer group practices and broader market conditions, aligned with our strategic objectives, and reflective of our executive compensation philosophy. +In accordance with applicable SEC rules, the Committee took various factors into consideration when selecting FW Cook, which it believes are relevant to its independence as a compensation consultant, including those required by regulation. +Furthermore, FW Cook does not provide any services to us or our management, other than those provided to the Committee. Following the consideration of these factors, and such additional factors as the Committee deemed appropriate under the circumstances, the Committee made an affirmative determination that FW Cook is independent and unanimously approved the engagement of FW Cook. +The decision to engage FW Cook was made by the Committee, and FW Cook reports directly to the Committee. While members of our management regularly communicate with representatives of FW Cook, our management did not recommend the engagement of FW Cook in any capacity for fiscal year 2025 (or any prior year) and does not direct or oversee the retention or termination of, or scope of the services provided by, FW Cook with respect to our executive compensation program. +Peer Group +In making compensation decisions for fiscal year 2025, the Committee compared the aggregate compensation opportunity, as well as each element of compensation, against a peer group of publicly traded footwear, apparel, accessories and lifestyle brand companies that was recommended by FW Cook and approved by the Committee. Our peer group is generally comprised of companies against which we compete for executive talent and stockholder investment, are in related businesses or industries, and are otherwise similar to us based on a number of characteristics identified by the Committee. Our peer group is reviewed at least annually by the Committee with support from FW Cook. +In particular, when selecting our peer group, the Committee considers the characteristics set forth in the chart below. +For fiscal year 2025, the Committee approved the same peer group used in fiscal year 2024 based on consideration of the various characteristics discussed above. While no single company in our Peer Group is necessarily similar to us with respect to all of the identified characteristics, taken together the Committee believed that these companies provided strong comparative analogs to our overall size and business model at the time the Peer Group was reviewed and approved. +Our peer group for fiscal year 2025, which we refer to as our Peer Group, consisted of the following 20 companies: +41 +FISCAL YEAR 2025 PEER GROUP +• Capri Holdings Limited • Hanesbrands Inc. • RH • Under Armour, Inc. +• Carter's, Inc. • Levi Strauss & Co. • Skechers U.S.A., Inc. • Urban Outfitters, Inc. +• Columbia Sportswear Company • Lululemon Athletica Inc. • Steve Madden, Ltd. • V.F. Corporation +• Crocs, Inc. • PVH Corp. • Tapestry, Inc. • Williams-Sonoma, Inc. +• Foot Locker, Inc. • Ralph Lauren Corporation • Ulta Beauty, Inc. +• Wolverine World Wide, +Inc. +For fiscal year 2026, the Committee approved an updated peer group based on consideration of the various factors and characteristics discussed above. In particular, changes were made to the peer group to reflect the relatively greater size and complexity of our organization compared to the prior year taking into account metrics such as revenue and market capitalization. Our peer group for fiscal year 2026 consists of the following 20 companies: +FISCAL YEAR 2026 PEER GROUP +• Abercrombie & Fitch Management Co. (1) +• Estee Lauder Companies, +Inc. (1) +• Ralph Lauren Corporation • Ulta Beauty, Inc. +• Capri Holdings Limited • Foot Locker, Inc. • RH • Under Armour, Inc. +• Columbia Sportswear Company • Levi Strauss & Co. • Skechers U.S.A., Inc. • Urban Outfitters, Inc. +• Crocs, Inc. • Lululemon Athletica Inc. • Steve Madden, Ltd. • V.F. Corporation +• Dick's Sporting Goods, Inc. (1) +• PVH Corp. • Tapestry, Inc. • Williams-Sonoma, Inc. +(1) For reference, the fiscal year 2026 peer group was updated to include these companies. The companies Carter's Inc., Hanesbrands Inc. and Wolverine World Wide, Inc. were removed due to changes in industry relevance. +Use of Peer Group in Setting Executive Compensation +As part of its effort to ensure our executive compensation program is attractive and competitive in the marketplace, the Committee regularly reviews compensation data from our Peer Group provided by FW Cook. Peer Group compensation data is generally used as an initial starting point in making compensation decisions for our executives, including with respect to both the target level of compensation for each individual executive and the overall structure of our executive compensation program. In addition, in order to gain perspective on overall market trends and practices, the Committee regularly reviews data from broad-based compensation surveys. +Consistent with prior years, in setting the target compensation opportunity for each executive for fiscal year 2025, as well as reviewing individual elements of compensation, the Committee focused on assessing the median pay of our Peer Group. +Although an assessment of Peer Group compensation data is a significant factor in the Committee’s evaluation of compensation decisions, the Committee also considers a variety of additional factors, including the tenure, experience, level of responsibility and individual performance of each executive, recent and projected Company performance, retention considerations, general industry practices and economic conditions. Accordingly, the Committee retains discretion to set both the total compensation opportunity and individual elements of compensation as it deems appropriate. +42 +ELEMENTS OF FISCAL YEAR 2025 +EXECUTIVE COMPENSATION PROGRAM +The following table provides summary information regarding the key elements of our fiscal year 2025 executive compensation program: +COMPENSATION +ELEMENT FIXED +V. +PERFORMANCE-BASED / AT RISK CASH +V. +EQUITY +Base Salary Fixed Cash +2025 Annual Cash Incentive Awards +Performance-Based / At Risk +(Short-Term Company Performance Conditions) +(ESG Modifier) Cash +2025 Time-Based RSUs +Performance-Based / At Risk +(Long-Term Time-Based Vesting) +Equity +(40% of total equity compensation) +2025 LTIP PSUs +Performance-Based / At Risk +(Long-Term Performance-Based Vesting) +(TSR Modifier) +Equity +(60% of total equity compensation) +Employee Benefits Fixed Other +Base Salary +The following tables provide information regarding the base salaries paid to our NEOs: +COMPENSATION ELEMENT +BASE SALARY +Compensation Considerations Performance Conditions +• Fixed +. +• Cash +• Provides a minimum level of fixed cash compensation necessary to attract and retain executives and to compensate them for the execution of their day-to-day duties and responsibilities. +• Balance the level of fixed pay with performance-based pay to properly manage our compensation-related risk. +• Salary reviewed and set annually based on a number of factors. +• No specific service or vesting conditions associated with payment. +NAME FY 2024 +BASE SALARY FY 2025 +BASE SALARY +Stefano Caroti (1) +$800,000 $1,200,000 +Steve J. Fasching $810,000 $850,000 +Anne Spangenberg $750,000 $785,000 +Thomas Garcia $650,000 $680,000 +Robin Spring-Green (2) +- $612,000 +(1) Mr. Caroti received a significant increase in fiscal year 2025 base salary in connection with his appointment as Chief Executive Officer and President, effective August 1, 2024. +(2) Ms. Spring-Green qualified as an NEO for the first time with respect to fiscal year 2025. +43 +2025 Annual Cash Incentive Awards +The following table provides summary information regarding the 2025 Annual Cash Incentive Awards granted to our NEOs during fiscal year 2025: +COMPENSATION ELEMENT +2025 ANNUAL CASH INCENTIVE AWARDS +Compensation Description Performance Conditions/ Vesting Provisions Pay-for-Performance +• Performance-Based ( Short-Term Company Performance Conditions ) +• Cash +• Short-term Company performance conditions based on Committee-approved annual metrics derived from our annual strategic plan. +• Pay based on achievement of threshold, target and maximum Company financial performance levels to reward achievement and strike appropriate balance between compensation incentives and risks. +• The "target" performance condition level is typically in line with the level of Company performance projected for each metric based on the annual budget. +• The "target" performance levels typically reflect an increase to actual performance for the prior fiscal year. +• All NEOs have operating income and revenue-based performance metrics to reflect a continued focus on profitability and top line growth, and to ensure our compensation program encourages healthy and sustained growth across our business. +• The Committee incorporated an ESG modifier for fiscal year 2025. +• Target bonus set as percentage of base salary. +• Actual bonus payout is based on achievement of fiscal year 2025 consolidated operating income and consolidated revenue targets for all NEOs (and business unit operating income and revenue targets for certain executives with business unit oversight responsibilities). +• The Committee assigned relative weighting to each component, which is expressed as a percentage of the target cash incentive amount. +• For threshold performance, 50% of the cash incentive related to that component would be earned. For target performance, 100% would be earned. For maximum performance, 200% would be earned. +• Achievement below threshold levels results in no payout. To the extent Company financial performance is achieved above the threshold levels, the bonus payout that will be earned from the threshold to the target, and from the target to the maximum, will increase as determined by linear interpolation. +• The ESG modifier was designed to impact payouts within the range of +10% to -10%, and highlights our efforts to drive accountability for achievement of our ESG initiatives. +• Total payout opportunity is capped at 200%, regardless of the impact of the ESG modifier. +• The achievement of operating income targets for fiscal year 2025 for our HOKA, Fashion Lifestyle, and consolidated operating income components was 103%, 200%, and 200%, respectively. +• The achievement of revenue targets for fiscal year 2025 for our HOKA, Fashion Lifestyle, and consolidated revenue components was 118%, 181%, and 150%, respectively. +• The Committee determined that the ESG modifier was achieved at the +8% level. +• As a result of this performance, 2025 Annual Cash Incentive Award payments of 147%, 200%, and 200% of base salary were earned by the NEOs for our HOKA, Fashion Lifestyle and consolidated components, respectively (inclusive of the impact of the ESG modifier). +• Additional information regarding the determination of the target cash incentive amount and the calculation of the actual 2025 Annual Cash Incentive Awards for each NEO is provided below. +44 +Target Cash Incentive Amount +The Committee establishes a target amount of annual cash incentive compensation for each NEO, which is expressed as a percentage of base salary. The percentage is determined by the Committee by reference to a number of factors, including tenure, experience and level of responsibility, Peer Group benchmarking data, recent individual performance, our recent and projected financial performance, retention considerations and general industry practices. Further, the target cash incentive amount is prorated to reflect any base salary adjustments throughout the full fiscal year so that the target amount reflects actual base salary earned. +Performance Relative to Targets +The following table summarizes the performance conditions for the 2025 Annual Cash Incentive Awards (components), the relative weighting of each component for each NEO; the threshold, target and maximum performance levels established by the Committee for each component; and the actual payout percentage for each component: +COMPONENT RELATIVE +WEIGHT FOR EACH NEO THRESHOLD PERFORMANCE TARGET PERFORMANCE MAXIMUM PERFORMANCE +PAYOUT (1) +Consolidated Operating Income • 70% for Messrs. Caroti, Fasching and Garcia +• 30% for Ms. Spangenberg and Spring-Green $845.9 million $939.8 million $1,127.8 million 200% +Consolidated Revenue • 30% for Messrs. Caroti, Fasching and Garcia $4,369.6 million $4,749.5 million $5,224.5 million 150% +Business Unit Operating Income +• 40% for Ms. Spangenberg +(Fashion Lifestyle) +$769.4 million $854.9 million $1,025.9 million 200% +• 40% for Ms. Spring-Green +(HOKA) +$790.1 million $877.8 million $1,053.4 million 103% +Business Unit Revenue +• 30% for Ms. Spangenberg +(Fashion Lifestyle) +$2,208.8 million $2,400.9 million $2,641 million 181% +• 30% for Ms. Spring-Green +(HOKA) +$2,001.1 million $2,175.1 million $2,501.3 million 118% +(1) Payout percentages reflect the level of payout achieved for each component of the 2025 Annual Cash Incentive Award. Payout amounts based on achievement between threshold and target levels, or between target and maximum levels, are determined by linear interpolation. Achievement below threshold levels results in no payout. Payouts calculated based on our reportable operating segments at the time such targets were approved by the Committee. +45 +ESG Modifier +In fiscal year 2025, the Committee incorporated an ESG modifier for the 2025 Annual Cash Incentive Awards, which was designed to result in an increase or decrease in the amount of the awards based on the level of achievement. The ESG modifier was aligned with three key pillars: culture and employee engagement (40% weight); belonging and inclusion (40% weight); and the environment (20% weight). The Committee determined that the ESG modifier was achieved at the +8% level, which was applied to the final payout of the 2025 Annual Cash Incentive Awards. +Calculation of Total Payout +The amount of cash incentive compensation actually earned by each NEO with respect to the 2025 Annual Cash Incentive Awards (total payout) is calculated by multiplying each NEO's relative weight for each component by the percentage of target earned for each component (using linear interpolation), resulting in an overall weighted achievement percentage, and multiplying the target cash incentive amount by the weighted achievement percentage, resulting in the payout amount for each component. The payout for each component is added and the sum is then adjusted based on the ESG modifier percentage. The total payout is capped at 200% for each NEO regardless of the level of achievement with respect to each component or the impact of the ESG modifier. For fiscal year 2025, each NEO earned a bonus payout equal to 200% of target based on the combined results. +The calculation of total payout for each NEO is illustrated by the table below: +NAME TARGET +% +OF SALARY COMPONENT RELATIVE WEIGHT +OF COMPONENT % +OF TARGET EARNED FOR COMPONENT OVERALL WEIGHTED ACHIEVEMENT (BEFORE ESG MODIFIER) TARGET CASH INCENTIVE AMOUNT PAYOUT +FOR EACH COMPONENT +% +OF ESG +MODIFIER +EARNED TOTAL PAYOUT +Stefano Caroti 100% Consolidated Operating Income 70% 200% 185% $1,119,616 $2,052,055 8% $2,927,198 +Consolidated Revenue 30% 150% $479,836 $658,314 +Steven J. Fasching 100% Consolidated Operating Income 70% 200% 185% $588,282 $1,176,564 8% $1,678,335 +Consolidated Revenue 30% 150% $252,121 $377,450 +Anne +Spangenberg 100% Consolidated Operating Income 30% 200% 194% $232,882 $465,764 8% $1,552,548 +Fashion Lifestyle Operating Income 40% 200% $310,510 $621,019 +Fashion Lifestyle Revenue 30% 181% $232,882 $422,472 +Thomas Garcia 75% Consolidated Operating Income 70% 200% 185% $353,073 $706,147 8% $1,007,298 +Consolidated Revenue 30% 150% $151,317 $226,537 +Robin Spring-Green 75% Consolidated Operating Income 30% 200% 137% $137,027 $274,054 8% $673,597 +HOKA Operating Income 40% 103% 182,702 188,257 +HOKA Revenue 30% 118% $137,027 $161,390 +46 +2025 Time-Based Restricted Stock Units +The following table provides summary information regarding the 2025 Time-Based RSUs granted to our NEOs during fiscal year 2025: +COMPENSATION ELEMENT +2025 TIME-BASED RSUs +Compensation Description Performance Conditions/ Vesting Provisions Pay-for-Performance +• Performance-Based (Long-Term Time-Based Vesting) +. +• Approximately 40% of total equity compensation to encourage executive retention +• Balance performance-based vesting compensation with time-based vesting compensation to properly manage our compensation-related risk. +• Primarily used for retention of our executives based on long-term service-based vesting condition. +• Equity awards with time-based vesting are customary based on a review of pay practices among our Peer Group and within the marketplace generally. +• 2025 Time-Based awards vest in three equal installments over three years commencing August 15, 2025. +• Our NEOs are at risk of not receiving the full value of these awards because vesting is conditioned upon continued employment over an extended period of time and their value is subject to fluctuation based on the value of our stock. +• The Committee expects a majority of equity awards to continue to have performance-based vesting conditions. +47 +2025 Long-Term Incentive Plan Performance-Based Stock Units +The following table provides summary information regarding the 2025 LTIP PSUs granted to our NEOs during fiscal year 2025: +COMPENSATION ELEMENT +2025 LTIP PSUs +Compensation Description Performance Conditions/ Vesting Provisions Pay-for-Performance +• Performance-Based (Long-Term Performance-Based Vesting) +• Approximately 60% of total equity compensation to ensure a majority of our compensation opportunity is based on achievement of performance-based vesting conditions +• Company performance conditions based on Committee-approved metrics derived from our three-year long-range strategic plan approved at the beginning of the performance measurement period. +• Pre-tax income and consolidated revenue were selected as the performance conditions because they support our focus on profitability and revenue growth as key strategic initiatives and align executives’ interests with the execution of our long-range plan. +• Reliance on multiple performance-based vesting conditions strikes appropriate balance between compensation incentives and risks. +• 50% of each award will vest subject to the achievement of annual pre-tax income targets measured in fiscal years 2025, 2026 and 2027. +• 50% of each award will vest subject to the achievement of an annual consolidated revenue target measured in fiscal years 2025, 2026 and 2027. +• While we measure performance annually over the three-year period, the goals for each fiscal year are established at the beginning of the performance measurement period. We believe this approach creates appropriate alignment with stockholders while also helping to address challenges with goal-setting inherent within a high-growth organization. +• No vesting of any portion of the award will occur if we fail to achieve the pre-established minimum revenue and pre-tax income thresholds. To the extent our financial performance is achieved above the threshold amounts, the number of LTIP PSUs that will vest from the threshold to the target, and from the target to the maximum, will increase as determined by linear interpolation. +• The TSR modifier was designed to impact payouts within the range of +25% to -25% based on our TSR relative to the TSR of a predetermined set of peer group companies. +• The executive must provide continued service through the vesting date. +• Vesting of these awards is dependent on achievement of profitability and consolidated revenue targets that are established by the Committee at the beginning of the measurement period and are consistent with achievement of our strategic objectives. +• Vesting is subject to adjustment based upon the application of a TSR modifier, thereby correlating the vesting of the awards to both total and relative stockholder returns. +Total Stockholder Return (TSR) Modifier +The 2025 LTIP PSU awards earned are subject to upward or downward adjustment based on the application of a TSR modifier. The amount of the adjustment will be determined based upon a comparison of Company TSR relative to the TSR of a pre-determined set of peer group companies for the 36-month performance period commencing on April 1, 2024 and ending on March 31, 2027. For purposes of this modifier, the peers consist of the same companies included in the compensation Peer Group, plus two additional companies, Nike, Inc. and Adidas AG, as deemed appropriate by the Committee. +Company TSR relative to that of the TSR peer group (Peer Group TSR) is calculated and expressed as a percentile. The number of 2025 LTIP PSUs that are subject to vesting will be adjusted based on this percentile as set forth in the table: +Company TSR Relative to +Peer Group TSR (Percentile) TSR Modifier +(Multiplier) +≥75th 125% +55th 100% +(no modification) +≤25th 75% +48 +The number of LTIP PSUs that will vest from the 25th percentile to the 55th percentile, and from the 55th percentile to the 75th percentile, will increase as determined by linear interpolation. The TSR modifier may not exceed 125% regardless of the Company's absolute or relative TSR performance. +Notwithstanding the foregoing, in the event that Company TSR is greater than or equal to the 55th percentile relative to the Peer Group TSR, but Company TSR is a negative amount, the TSR modifier will not be applied (the number of RSUs to be vested will not be increased as a result of the TSR multiplier). In addition, regardless of Company TSR relative to the Peer Group TSR, the maximum number of 2025 LTIP PSUs that will vest will not exceed 200% of the target amount. The Committee believes these guardrails are appropriate for balancing the desire to use the TSR modifier to align the interests of executives with those of our stockholders while also mitigating compensation-related risk. +Employee Benefits +The following table provides summary information regarding the employee benefits provided to our NEOs during fiscal year 2025: +COMPENSATION ELEMENT +EMPLOYEE BENEFITS +Compensation Considerations Benefits +• Standard employee benefits +• Generally reflect benefits provided to all of our US-based full-time employees. +• NEOs generally do not receive benefits that are materially greater than those provided to other full-time employees. +• Provides a package of benefits that are considered standard in the marketplace and necessary to attract and retain executives. +• 401(k) defined contribution plan with a Company match of 50% of each eligible participant's tax-deferred contributions on up to 6% of eligible compensation on a per payroll period basis. +• Premiums for long-term disability insurance and life insurance for the benefit of the employees. +• Health and welfare benefit plans. +• Relocation expenses for new hires. +• Standard employee product discounts. +• Eligibility to contribute to our Nonqualified Deferred Compensation Plan, or NQDC Plan. Please refer to the section of this Proxy Statement titled "— Nonqualified Deferred Compensation " for additional information about the terms of the NQDC Plan. +49 +Severance and Change-in-Control Provisions +The following table provides summary information regarding the severance and change in control provisions in our severance agreements and equity award agreements: +COMPENSATION ELEMENT +SEVERANCE AND CHANGE IN CONTROL PROVISIONS +Compensation Considerations Terms +• Standard severance benefits in the event of a termination of employment upon the occurrence of certain events. +• "Double-trigger" provisions in equity award agreements preserve morale and productivity, encourage executive retention in the face of the potentially disruptive impact of a change in control transaction, and reflect a sound governance practice. +• Value of potential payments takes into account the expected time it takes a separated executive to find a similar position. +• Typical component of a competitive executive compensation program for executives based on a review of pay practices among our Peer Group and within the marketplace generally. +Change in Control and Severance Agreements : +• Provide for certain cash payments, vesting of certain equity awards and benefit reimbursement, in the event there is a termination of employment upon the occurrence of certain events, including upon a change in control transaction. +Equity Award Agreements : +• Provide for accelerated vesting of awards upon a corporate transaction if the executive is terminated by the acquiring or successor entity in connection with the transaction under specified circumstances. In addition, vesting of awards will be accelerated in full if the acquiring entity does not agree to provide for the assumption or substitution of the awards. LTIP PSUs only subject to accelerated vesting at target level. +• Certain awards provide for continued or pro rata vesting in connection with a termination of employment upon death or disability, or retirement, subject to certain conditions. +Please refer to the section of this Proxy Statement titled " —Potential Payments upon Termination or Change in Control " for additional information about the severance and change in control provisions applicable to our NEOs. +50 +OTHER COMPENSATION CONSIDERATIONS +Role of Executive Officers in Compensation Decisions +At the request of the Committee, our Chief Executive Officer and President, or other senior management personnel, may provide performance and compensation information to the Committee to inform its compensation decisions. However, our executives are not permitted to be present during any deliberations and voting regarding their own compensation, or during any executive sessions of the Committee when compensation decisions are taking place. The Committee considers the information provided by our management, as well as information and advice provided by FW Cook, when making compensation decisions for our NEOs and other executives. However, the Committee, which is comprised solely of independent directors, thoroughly evaluates and approves all elements of compensation for our NEOs and other executives. +Compensation Risk Assessment +The Committee is responsible for reviewing the payments that may be made and the value that may be received from our compensation program for all employees, including our NEOs, to assess whether the program encourages excessive or unnecessary risk-taking or otherwise is likely to have a material adverse effect on us. The Committee conducts a compensation risk analysis at least annually, but also takes into account compensation-related risks each time it grants compensation awards throughout the fiscal year. In conducting these assessments, the Committee considers a number of factors including the following: +• Our compensation program consists of elements that provide both fixed and performance-based compensation, and the Committee reviews these elements and the relative mix annually. +• Our Peer Group and industry compensation data is reviewed regularly to ensure our compensation program is appropriate and competitive. +• We use comparative Peer Group Data in order to assess our executives’ target total compensation opportunities. +• A majority of the equity awards granted by the Committee have performance-based vesting conditions and we expect to continue to incorporate this equity grant philosophy. +• Performance-based awards are earned based on the achievement of pre-established corporate and business unit performance goals, and for fiscal year 2025, were subject to upward or downward modification based on the application of an ESG modifier and TSR modifier, as applicable. +• We seek to limit overlap between our performance conditions and measurement periods to ensure our compensation program encourages healthy and sustained growth across our business, as well as over multiple time periods. +• Our performance-based awards are subject to maximum award amounts to cap the potential compensation amount associated with an award, even after taking into account potential adjustments based on the application of the ESG modifier and TSR modifier. +• Our executive compensation program encourages executive retention through long-term vesting provisions. For fiscal year 2025, all of the equity awards we granted were subject to three-year vesting. +• We maintain a Clawback and Forfeiture Policy related to our cash and equity incentive awards, which emphasizes integrity and accountability in financial reporting. +• We have voluntarily adopted Stock Ownership Guidelines, which encourage executives to have a significant, long-term equity position in our Company, thereby aligning the interests of our executives with our stockholders. Each of our officers and directors is in compliance with these guidelines. +• Our governance policies, including our Insider Trading Policy, prohibit our directors, executive officers, employees, and consultants from insider trading, engaging in short-term or speculative trading in our securities, entering into hedging transactions or derivative instruments, or pledging our securities as collateral for a loan. +• We have voluntarily adopted a Share-Based Grant Policy, which establishes guidelines for our equity award grant practices. The guidelines provide that we will seek to issue all grants during open trading windows, and regardless we will only make grants at a time when we are not in possession of material nonpublic information. +• Our severance and change in control benefits are designed to attract and retain executives without providing excessive benefits such as excise tax gross up payments. +• Our equity awards are intended to provide for “double-trigger” vesting upon a change in control. +51 +The Committee believes our executive compensation program is appropriately balanced and does not encourage excessive or unnecessary risk-taking. The Committee does not believe our compensation program is reasonably likely to have a material adverse effect on us. +Clawback and Forfeiture Policy +During fiscal year 2024, our Board adopted an updated Clawback and Forfeiture Policy (Clawback Policy) that is compliant with SEC and NYSE rules. The Clawback Policy is consistent with our executive compensation philosophy, which seeks to reward executive officers for financial and operational performance that creates value for our stockholders. Under the Clawback Policy, we will seek recoupment or reimbursement with respect to incentive-based compensation received by our executive officers when the following three factors exist: +• the restatement of our financial statements has occurred, which was required as a result of, or necessitated by, any material noncompliance by us with any financial reporting requirement under the federal securities laws (accounting restatement); +• incentive-based compensation was received by the executive officer during the three completed fiscal years immediately preceding the earlier of the date (1) the Board concludes, or reasonably should have concluded, that we are required to prepare an accounting restatement, or (2) a court, regulator or other legally authorized body directs us to prepare an accounting restatement (recovery period), after beginning service as an executive officer, provided such executive officer served as an executive officer at any time during the performance period from which such incentive-based compensation was derived; and +• a lower amount of incentive-based compensation would have been received by the executive officer based upon the financial results as restated in the accounting restatement. +Under the Clawback Policy, the accounting restatement does not need to be the result of misconduct by the executive officers for the recoupment to apply. +The recoupment or recovery to be sought by us will be equal to the portion of any incentive-based compensation received by such executive officer for or during the recovery period that is greater than the amount that would have been received had the financial results been properly reported. +In addition, under the Clawback Policy, the Committee may seek to recoup or recover from an employee certain incentive-based compensation previously paid or awarded if the Audit & Risk Management Committee determines the employee has engaged in significant misconduct that causes financial or reputational harm to us (regardless of whether an accounting restatement has occurred), as determined in the discretion of the Audit & Risk Management Committee. +Stock Ownership Guidelines +To further align the interests of our executive officers and directors with those of our stockholders, we have voluntarily adopted Stock Ownership Guidelines. The Committee periodically reviews these guidelines to ensure they continue to reflect governance best practices, as well as any recent changes to our executive compensation program. +NEOs are required to hold a number of shares of our common stock determined as a multiple of the NEO's base salary as of the beginning of each calendar year, subject to such exceptions as may be granted by the Committee. Unless and until an NEO reaches the required ownership level, the NEO must retain at least 75% of the equity awards, after payment of any applicable exercise price and tax withholdings, that are acquired through our equity compensation program. +Directors are required to hold a number of shares of our common stock determined as a multiple of the base annual board cash retainer (not taking into account fees for committee or Chair roles) within five years of joining our Board, subject to such exceptions as may be granted by the Committee. In addition, each director must hold shares of our common stock within one year of joining our Board. +The following table provides a summary of the Stock Ownership Guidelines applicable to our NEOs and directors: +POSITION STOCK OWNERSHIP GUIDELINES +Chief Executive Officer 6x Annual Base Salary +Other NEOs 3x Annual Base Salary +Directors +5x Annual Board Cash Retainer +The Committee periodically reviews compliance with the Stock Ownership Guidelines applicable to our NEOs and directors and, as of the end of fiscal year 2025, determined that each NEO and director complied with the minimum ownership thresholds. +52 +No Insider Trading +Our Insider Trading Policy, which was most recently amended in September 2023, governs purchases, sales, and other dispositions of our securities by our directors, executive officers, employees and consultants. We believe our Insider Trading Policy is reasonably designed to promote compliance with insider trading laws, rules and regulations, and NYSE listing standards. Our Insider Trading Policy prohibits purchases, sales, and other dispositions of our securities while in possession of material nonpublic information about us and from disclosing such information to others, and it prohibits trading on material nonpublic information of other companies obtained during the course of providing service to us. It also imposes additional restrictions on and trading requirements for trading in our securities by our insiders. A copy of our Insider Trading Policy was filed as Exhibit 19.1 to our Annual Report. +In addition, with regard to repurchases of our shares, it is our policy to comply with applicable federal securities laws and the NYSE listing standards. +No Hedging and Pledging +Pursuant to our Insider Trading Policy, our directors, executive officers, employees and consultants are prohibited from engaging in short-term or speculative trading in our securities, including entering into hedging transactions or derivative instruments designed to offset or reduce the risk of a decline in the market value of our securities. This includes the use of put or call options, prepaid variable forward contracts, equity swaps, collars, exchange funds, and short sales. +Our policy also prohibits pledging our securities as collateral for a loan, including holding such securities in margin accounts. +These restrictions are designed to avoid even the appearance of impropriety and reduce the risk of inadvertent insider trading violations. +Equity Grant Practices +We maintain disciplined equity grant practices designed to maintain transparency and align with stockholder interests. We have voluntarily adopted a Share-Based Grant Policy, which establishes guidelines for our equity award grant practices. The guidelines provide that we will only make grants at a time when we are not in possession of material nonpublic information, such as pending earnings results or information regarding significant transactions. In addition, we generally do not make equity grants during (i) trading blackout periods under our Insider Trading Policy, or (ii) the period beginning four business days before and ending one business day after the filing of our periodic reports or the filing or furnishing of a Form 8-K that discloses material nonpublic information. +Equity awards are typically granted on pre-established dates each year, subject to limited exceptions approved by the Committee . Our executive officers and directors are not permitted to select individual grant dates for awards issued to them. +During fiscal year 2025, no equity awards were granted to our NEOs during any period surrounding the disclosure of material nonpublic information as described above, and we did not time the release of such information to impact the value of equity compensation. +Tax and Accounting Considerations +Among the factors it considers when making executive compensation decisions, the Committee considers the anticipated tax and accounting impact to us (and to our executive officers) of various payments, equity awards, and other benefits. +The Committee also considers the impact of Section 409A of the Code. In general, our executive plans and programs are designed to comply with the requirements of that section so as to avoid possible adverse tax consequences that may result from noncompliance. +We account for equity awards in accordance with the requirements of Financial Accounting Standards Board Accounting Standards Codification (FASB ASC) Topic 718, Stock Compensation . +Our change-in-control and severance agreements do not provide for excise tax gross up payments or similar benefits. +53 +TALENT & COMPENSATION COMMITTEE REPORT +The Talent & Compensation Committee has reviewed and discussed the "Compensation Discussion and Analysis" section of this Proxy Statement with management and, based on such review and discussion, the Talent & Compensation Committee has recommended to our Board that the Compensation Discussion and Analysis be included in this Proxy Statement. +TALENT & COMPENSATION COMMITTEE +Victor Luis ( Chair ) +David A. Burwick +Bonita C. Stewart +The Talent & Compensation Committee Report shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as amended, or the Acts, except to the extent that we specifically incorporate this information by reference, and shall not otherwise be deemed filed under the Acts. +54 +SUMMARY COMPENSATION TABLE +The following table sets forth all compensation paid or awarded to our NEOs during fiscal years 2025, 2024, and 2023. The amounts set forth in the table have been calculated in accordance with the requirements of applicable SEC rules, and do not necessarily reflect the amounts that have actually been paid to, or which may be realized by, our NEOs. The table should be read together with the section of this Proxy Statement titled “ Compensation Discussion and Analysis .” +Name and Principal Position Year Salary +($) Bonus +($) +Stock +Awards +($) (1)(2) +Non-Equity Incentive +Plan +Comp. +($) (3) +All Other Comp. +($) (4) +Total +($) +Stefano Caroti (5) +2025 1,061,539 — 5,999,093 2,927,198 63,599 10,051,429 +Chief Executive Officer +2024 786,154 400,000 1,999,912 1,478,169 60,319 4,724,554 +and President 2023 729,231 400,000 2,999,273 589,081 57,438 4,775,023 +Steven J. Fasching 2025 839,596 — 2,099,287 1,678,335 21,645 4,638,863 +Chief Financial Officer 2024 799,615 — 4,999,117 1,502,520 18,753 7,320,005 +2023 756,923 — 1,699,907 651,493 18,003 3,126,326 +Anne Spangenberg 2025 775,577 — 1,798,541 1,552,548 92,163 4,218,829 +President of Fashion Lifestyle 2024 756,164 — 1,499,181 1,388,115 44,844 3,688,304 +2023 471,472 — 1,199,466 206,877 9,611 1,887,426 +Thomas Garcia 2025 671,923 — 1,499,773 1,007,298 62,552 3,241,546 +Chief Administrative and Legal Officer 2024 627,764 — 999,639 937,705 49,179 2,614,287 +2023 546,182 — 999,612 464,442 46,595 2,056,831 +Robin Spring-Green (6) +2025 608,769 — 1,248,822 673,597 15,795 2,546,984 +President of HOKA +Dave Powers (7) +2025 470,000 — +83,579 (8) +— 60,934 614,513 +Former Chief Executive Officer 2024 1,276,923 — 8,499,746 4,462,978 18,765 14,258,412 +and President 2023 1,173,077 — 7,999,562 2,200,822 18,015 11,391,476 +(1) The amounts in this column represent the aggregate grant date fair value of the respective awards computed in accordance with FASB ASC Topic 718. For information about the assumptions underlying these computations, please refer to Note 8 to our consolidated financial statements included in our Annual Report. In accordance with applicable SEC rules, for those awards that are subject to the satisfaction of performance conditions, the amounts reported reflect the grant date fair value of the awards based upon the probable outcome of such conditions as of the grant date. For fiscal year 2025, the maximum value of the awards assuming the maximum level of achievement relative to the performance conditions is as follows: $9.6 million for Mr. Caroti, $3.4 million for Mr. Fasching, $2.9 million for Ms. Spangenberg, $2.4 million for Mr. Garcia and $2.0 million for Ms. Spring-Green. +(2) These amounts reflect the aggregate grant date fair value of 2025 Time-Based RSUs and 2025 LTIP PSUs granted to our NEOs. Please refer to the sections of this Proxy Statement titled “—2025 Time-Based Restricted Stock Units” and "— 2025 Long-Term Incentive Plan Performance-Based Stock Units " for additional information. +(3) These amounts reflect the cash incentive payments paid to our NEOs under our 2025 Annual Cash Incentive Awards. Please refer to the section of this Proxy Statement titled "—2025 Annual Cash Incentive Awards” for additional information. +(4) These amounts reflect the following: (i) Company-matching contributions under the NQDC Plan in the amount of $39,500 for Messrs. Caroti and Garcia and Ms. Spangenberg, (ii) Company-matching contributions under our 401(k) plan for each NEO, (iii) relocation payments in the amount of $29,551 for Ms. Spangenberg, (iv) prorated annual cash retainer earned by Mr. Powers for service as a director following his retirement as Chief Executive Officer and President in the amount of $45,000, (v) long-term care and disability premiums for each NEO, (vi) executive physical costs for Mr. Garcia, (vii) HSA employer contributions for Messrs. Powers and Garcia and Ms. Spangenberg, (viii) life insurance premiums paid on policies adopted for the benefit of each of our NEOs. Please refer to the section of this Proxy Statement titled "Nonqualified Deferred Compensation" for additional information on the NQDC plan. +. +(5) Mr. Caroti was appointed Chief Executive Officer and President effective August 1, 2024, and previously served as Chief Commercial Officer. +(6) Ms. Spring-Green's employment with the Company began in February 2024. Ms. Spring-Green qualified as an NEO for the first time with respect to fiscal year 2025. +55 +(7) Mr. Powers retired as Chief Executive Officer and President effective August 1, 2024. The amounts reported for fiscal year 2025 reflect cumulative amounts paid for service as an officer and director. We did not pay any special severance awards, or provide for any accelerated vesting of equity awards, in connection with Mr. Powers' retirement. +(8) This amount reflects the grant date fair value of prorated annual RSUs granted to Mr. Powers for service as a director following his retirement as Chief Executive Officer and President. Please refer to the section of this Proxy Statement titled " Director Compensation " for additional information. +56 +GRANTS OF PLAN-BASED AWARDS IN +FISCAL YEAR 2025 +The following table sets forth all grants of plan-based awards made to our NEOs during fiscal year 2025. The value of the payouts and awards set forth in the table have been calculated in accordance with the requirements of applicable SEC rules, and do not necessarily reflect the amounts that have actually been paid to, or which may be realized by, our NEOs. The table should be read together with the section of this Proxy Statement titled “— Compensation Discussion and Analysis. ” +Potential Payouts as of Grant Date Under Non-Equity Incentive Plan Awards (1) +Potential Payouts as of Grant Date Under Equity Incentive Plan Awards +All Other Stock Awards: Number of Shares (#) (3) +Grant Date +Fair Value +of Awards +($) (4) +Name Grant Date Threshold +($) Target +($) Max. +($) Threshold +(#) +Target +(#) (2) +Max. +(#) +Stefano Caroti 900,000 1,800,000 3,600,000 — — — — — +8/15/24 — — — 10,476 20,952 41,904 — 3,599,973 +8/15/24 — — — — — — 15,192 2,399,121 +Steven J. Fasching 425,000 850,000 1,700,000 — — — — — +8/15/24 — — — 3,666 7,332 14,664 — 1,259,784 +8/15/24 — — — — — — 5,316 839,503 +Anne Spangenberg 392,500 785,000 1,570,000 — — — — — +8/15/24 — — — 3,141 6,282 12,564 — 1,079,373 +8/15/24 — — — — — — 4,554 719,168 +Thomas Garcia 255,000 510,000 1,020,000 — — — — — +8/15/24 — — — 2,619 5,238 10,476 899,993 +8/15/24 — — — — — — 3,798 599,780 +Robin Spring-Green 229,500 459,000 918,000 — — — — — +8/15/24 — — — 2,181 4,362 8,724 — 749,479 +8/15/24 — — — — — — 3,162 499,343 +Dave Powers (5) +— — — — — — — — +11/18/24 — — — — — — 245 43,230 +3/3/25 — — — — — — 294 40,349 +(1) The amounts in these columns reflect the potential payouts under the 2025 Annual Cash Incentive Awards as of the grant date. The actual cash incentive award payments were made in June 2025. Please refer to the section of this Proxy Statement titled "— 2025 Annual Cash Incentive Awards " for additional information. +(2) The awards in these columns reflect the grant of 2025 LTIP PSUs. These awards were granted in August 2024 and may vest based upon our achievement of annual performance targets for each of fiscal years 2025, 2026, and 2027, and continued service through March 31, 2027. We consider the performance conditions for the 2025 LTIP PSUs to be probable of being achieved at 100% of the target amount, although the awards can vest up to a maximum of 200% of the target amount. The grant date fair value of the awards assuming achievement at 100% of the target amount relative to the performance conditions is set forth in the last column. The grant date fair value of the awards assuming the maximum level of achievement relative to the performance conditions is as follows: $7.2 million for Mr. Caroti; $2.5 million for Mr. Fasching; $2.2 million for Ms. Spangenberg; $1.8 million for Mr. Garcia; and $1.5 million for Ms. Spring-Green. Please refer to the section of this Proxy Statement titled "— 2025 Long-Term Incentive Plan Performance-Based Stock Units " for additional information. +(3) The awards in this column reflect the grant of 2025 Time-Based RSUs. These awards vest over three years in equal annual installments on August 15, 2025, 2026 and 2027. Please refer to the section of this Proxy Statement titled "— 2025 Time-Based Restricted Stock Units " for additional information. +(4) The amounts in this column represent the aggregate grant date fair value of the respective awards computed in accordance with FASB ASC Topic 718. For information about the assumptions underlying these computations, please refer to Note 8 to our consolidated financial statements included in our Annual Report on Form 10-K filed May 23, 2025 with the SEC. In accordance with applicable SEC rules, for those awards that are subject to the satisfaction of performance conditions, the amounts reported reflect the value of the grant date based upon the probable outcome of such conditions. +57 +(5) Mr. Powers retired as Chief Executive Officer and President effective August 1, 2024. These amounts reflect prorated annual RSUs granted to Mr. Powers for service as a director following his retirement. The grant date fair value of these awards has been reported in the " Summary Compensation Table " and the " Director Compensation Table " and does not reflect an amount earned in addition to those amounts. +58 +OUTSTANDING EQUITY AWARDS AT +2025 FISCAL YEAR END +The following table provides information with respect to RSUs previously granted to our NEOs that remained outstanding as of March 31, 2025. No stock options previously granted to our NEOs remain outstanding. The market values of the RSUs set forth in the table have been calculated in accordance with the requirements of applicable SEC rules, and do not necessarily reflect the amounts that have actually been paid to, or which may be realized by, our NEOs. +Stock Options Stock Awards +Name Number of +securities +underlying +unexercised +options +exercisable +(#) Option +exercise +price +($) Option +expiration +date Number of +shares that +have not +vested +(#) +Market +value of +shares that +have not +vested +($) (1) +Number of +unearned +shares that +have not +vested +(#) (2) +Market +value of +unearned +shares that +have not +vested +($) (3) +Stefano Caroti — — — 28,056 (4) 3,136,941 32,310 3,612,581 +Steven J. Fasching — — — 20,922 (5) 2,339,289 29,532 3,301,973 +Anne Spangenberg — — — 11,880 (6) 1,328,303 14,796 1,654,341 +Thomas Garcia — — — 9,054 (7) 1,012,328 10,914 1,220,294 +Robin Spring-Green — — — 4,740 (8) 529,979 7,290 815,095 +Dave Powers — — — 31,164 (9) 3,484,447 — — +(1) In accordance with applicable SEC rules, the market value of the shares has been determined based on the closing price of our common stock on March 31, 2025, which was $111.81. +(2) The stock awards reflected in this column include 2024 LTIP PSUs and 2025 LTIP PSUs, which remain outstanding and subject to long-term performance and service conditions. The number of shares reflected assumes achievement of the performance conditions at the target level of 100% for each of the awards. However, the maximum level of achievement of the performance conditions for each of these awards is 200%, meaning that up to 200% of the number of shares reflected in this column could be earned. The 2024 LTIP PSUs will vest on March 31, 2026, and the 2025 LTIP PSUs will vest on March 31, 2027, in each case subject to our achievement relative to the performance conditions. +(3) In accordance with applicable SEC rules, the market value of the shares has been determined based on the closing price of our common stock on March 31, 2025, which was $111.81. +(4) This amount consists of (i) 7,092 2023 Time-Based RSUs granted in August 2022, which vest as to 100% of the shares on August 15, 2025, (ii) 5,772 2024 Time-Based RSUs granted in August 2023, which vest as to 50% of the shares on August 15, 2025 and 2026, and (iii) 15,192 2025 Time-Based RSUs granted in August 2024, which vest as to 33.3% of the shares on August 15, 2025, 2026 and 2027. +(5) This amount consists of (i) 4,020 2023 Time-Based RSUs granted in August 2022, which vest as to 100% of the shares on August 15, 2025, (ii) 5,772 2024 Time-Based RSUs granted in August 2023, which vest as to 50% of the shares on August 15, 2025, and 2026, (iii) 5,814 2024 Time-Based RSUs granted in February 2024, which vest as to 50% of the shares on February 6, 2026, and 2027, and (iv) 5,316 2025 Time-Based RSUs granted in August 2024, which vest as to 33.3% of the shares on August 15, 2025, 2026 and 2027. +(6) This amount consists of (i) 3,000 2023 Time-Based RSUs granted in September 2022, which vest as to 100% of the shares on September 15, 2025, (ii) 4,326 2024 Time-Based RSUs granted in August 2023, which vest as to 50% of the shares on August 15, 2025, and 2026, and (iii) 4,554 2025 Time-Based RSUs granted in August 2024, which vest as to 33.3% of the shares on August 15, 2025, 2026 and 2027. +(7) This amount consists of (i) 2,370 2023 Time-Based RSUs granted in August 2022, which vest as to 100% of the shares on August 15, 2025, (ii) 2,886 2024 Time-Based RSUs granted in August 2023, which vest as to 50% of the shares on August 15, 2025, and 2026, and (iii) 3,798 2025 Time-Based RSUs granted in August 2024, which vest as to 33.3% of the shares on August 15, 2025, 2026, and 2027. +(8) This amount consists of (i) 1,578 2024 Time-Based RSUs granted in March 2024, which vest as to 50% of the shares on March 15, 2026, and 2027, and (ii) 3,162 2025 Time-Based RSUs granted in August 2024, which vest as to 33.3% of the shares on August 15, 2025, 2026, and 2027. +(9) This amount consists of (i) 18,906 2023 Time-Based RSUs granted in August 2022, which vest as to 100% of the shares on August 15, 2025, and (ii) 12,258 2024 Time-Based RSUs granted in August 2023, which vest as to 100% of the shares on August 15, 2025. +59 +FISCAL YEAR 2025 OPTION EXERCISES AND STOCK VESTED +The following table provides information with respect to our NEOs regarding options exercised and RSUs vested during fiscal year 2025. The values realized upon the exercise of options or vesting of RSUs set forth in the table have been calculated in accordance with the requirements of applicable SEC rules, and do not necessarily reflect the amount that will actually be received by our NEOs upon the sale of the shares. +Option Awards Stock Awards +Name Number of +Shares +Acquired on +Exercise +(#) +Value Realized on Exercise +($) (1)(2) +Number of +Shares +Acquired on +Vesting +(#) (3)(4) +Value Realized +on Vesting +($) (5) +Stefano Caroti — — 71,622 8,746,461 +Steven J. Fasching — — 46,158 5,877,693 +Anne Spangenberg — — 28,596 3,409,146 +Thomas Garcia — — 23,766 2,898,801 +Robin Spring-Green — — 786 93,282 +Dave Powers 35,958 4,523,654 195,864 24,092,914 +(1) Options exercised were initially issued pursuant to the 2018 LTIP NQSOs. +(2) Pursuant to applicable SEC rules, the amounts in this column reflect the value realized upon the exercise of the option awards, which is based on the closing price of our common stock on the applicable exercise dates, less the exercise price of the relevant option awards. +(3) These amounts consist of shares acquired upon vesting of 2023 LTIP PSUs, and 2022 Time-Based RSUs, 2023 Time-Based RSUs and 2024 Time-Based RSUs. +(4) The total number of shares actually received by the NEOs, net of shares withheld for taxes, were as follows: 36,615 for Mr. Caroti, 23,819 for Mr. Fasching, 16,183 for Ms. Spangenberg, 13,054 for Mr. Garcia, 508 for Ms. Spring-Green, and 96,734 for Mr. Powers. +(5) Pursuant to applicable SEC rules, the amounts in this column reflect the value realized upon the vesting of the stock awards, which is based on the closing price of our common stock on the applicable vesting dates. +60 +NONQUALIFIED DEFERRED COMPENSATION +Nonqualified Deferred Compensation Plan +The Committee has adopted the Nonqualified Deferred Compensation Plan (NQDC Plan), which is an unfunded, nonqualified deferred compensation program sponsored by us to provide certain members of our management the opportunity to defer a portion of their compensation. Participants may defer up to 50% of their annual base salary and up to 85% of any cash incentive award under the NQDC Plan. We have the option, but not the obligation, to make discretionary or matching cash contributions to NQDC Plan participants. We have established a rabbi trust as a reserve for the benefits payable under the NQDC Plan. The NQDC Plan year is from January 1 st to December 31 st . +During fiscal year 2025, certain of our NEOs elected to make contributions to the NQDC Plan, and the Committee elected to match a portion of the contributions. +The following table provides information regarding activity pursuant to the NQDC Plan during fiscal year 2025, including executive contributions and matching contributions made during the fiscal year, as well as the balance held by each NEO as of the end of the fiscal year. +Name +Executive contributions during fiscal year 2025 +($) (1) +Registrant contributions during fiscal year 2025 +($) (2) +Aggregate gains (losses) during fiscal year 2025 +($) +Aggregate withdrawals/distributions during fiscal year 2025 +($) +Aggregate balance at end of fiscal year 2025 +($) +Stefano Caroti 724,989 39,650 158,779 — 4,084,202 +Steven J. Fasching 22,898 — (497) — 22,401 +Anne Spangenberg 1,179,898 39,650 71,893 — 1,673,088 +Thomas Garcia 496,177 39,650 129,332 — 3,050,728 +Robin Spring-Green — — — — — +Dave Powers 2,231,489 — 139,947 (737,619) 2,450,654 +Total 4,655,451 118,950 499,454 (737,619) 11,281,073 +(1) The amounts reported in this column reflect contributions made by our NEOs under the NQDC Plan during fiscal year 2025. These amounts are included in the " Summary Compensation Table " and do not reflect amounts earned in addition to those amounts. +(2) The amounts reported in this column reflect discretionary matching contributions made by us to our NEOs under the NQDC Plan during fiscal year 2025. These amounts are included in the " Summary Compensation Table " and do not reflect amounts earned in addition to those amounts. +Deferred Stock Unit Compensation Plan +The Committee has also adopted a Deferred Stock Unit Compensation Plan (Deferral Plan). Under the Deferral Plan, a director or employee who holds unvested RSUs may elect to defer settlement of up to 100% of the shares underlying the RSUs upon vesting. For each share of our common stock underlying RSUs that is deferred, the participant will receive one Deferred Stock Unit. Amounts deferred will be settled and distributed, at the time elected by the participant, subject to the terms of the Deferral Plan. None of our NEOs elected to participate in the Deferral Plan during fiscal year 2025. +61 +POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL +Change in Control and Severance Agreements +We have entered into change in control and severance agreements (as amended from time to time, the Severance Agreements) with each of our NEOs. The information below describes the compensation and benefits that will become payable to or earned by our NEOs under the Severance Agreements upon the occurrence of certain termination events. For purposes of the Severance Agreements, we refer to each NEO as an “executive.” +Termination by Us for Cause, or by the Executive Without Good Reason +If the executive is terminated by us for Cause, or the executive terminates his or her employment without Good Reason (in each case, as defined in the Severance Agreement), the executive will receive: +• payment of his or her accrued base salary; +• accrued vacation; +• reimbursement for certain expenses; +• accrued and vested benefits payable under our compensation plans or programs and any other benefits required to be paid or provided by applicable law; +• accrued but unpaid cash incentive award for the prior fiscal year (excluding any cash incentive award for the year of termination); and +• the right to exercise all vested equity awards pursuant to the terms of the applicable award agreement (without any accelerated vesting of such awards or extension of any relevant exercise period). +Termination Due to Death or Total Disability +If the executive is terminated due to his or her death or Total Disability (as defined in the Severance Agreement), then in addition to those benefits provided upon a termination by us for Cause or by executive other than for Good Reason, the executive will receive: +• a pro-rated portion of his or her cash incentive award for the current fiscal year based on actual length of service during the year of termination and the target amount of such cash incentive award as previously established by the Committee; and +• continued vesting of certain outstanding equity awards as described under the section of this Proxy Statement titled “ — Equity Award Agreements” below. +Termination by Us Without Cause +If the executive is terminated by us without Cause, then in addition to those benefits provided upon a termination due to death or Total Disability, the executive will receive: +• payment of his or her then-effective annual base salary for, in the case of the Chief Executive Officer, 24 months, or, in the case of any other executive, 12 months following his or her termination, commencing within 60 days of the termination date, subject to such executive signing a release; and +• receipt of health benefits for, in the case of the Chief Executive Officer, up to 24 months, or, in the case of any other executive, up to 12 months following his or her termination, or his or her attainment of alternative employment that provides health benefits, whichever occurs earlier. +Termination Without Cause or by Executive for Good Reason in Connection With a Change in Control +If the executive is terminated by us without Cause or by the executive for Good Reason within two years of a Change in Control (as defined in the Severance Agreement), then in addition to those benefits provided upon a termination due to death or Total Disability, the executive will receive: +• payment of, in the case of the Chief Executive Officer, two and one-half times, or, in the case of any other executive, two times the sum of (x) his or her then-effective annual base salary and (y) the greater of (1) one and one-half times the target cash incentive award immediately prior to the time such termination occurs, and (2) one and one-half times the average actual cash incentive award for the previous three years, subject to such executive signing a release; +• receipt of health benefits for, in the case of the Chief Executive Officer, up to 30 months, or, in the case of any other executive, up to 24 months following his or her termination, or his or her attainment of alternative employment that provides health benefits, whichever occurs earlier; and +62 +• accelerated vesting of certain outstanding equity awards as described under the section of this Proxy Statement titled “ —Equity Award Agreements ” below. +No NEOs will be entitled to gross ups for excise tax penalties on “excess golden parachute payments” as a result of termination following a Change in Control. +Equity Award Agreements +We enter into award agreements with our NEOs each time awards are issued to them pursuant to our equity incentive plans (Equity Award Agreements). The Equity Award Agreements include the award agreements governing our Time-Based RSUs (RSU Award Agreements) and the awards agreements governing our LTIP PSUs (PSU Award Agreements). The information below summarizes the vesting provisions applicable to our equity awards upon the occurrence of certain employment termination events. Except as described below, when an executive’s employment is terminated, all awards that have not vested as of the termination date will automatically expire pursuant to the Equity Award Agreements. +Termination in Connection with a Corporate Transaction +Pursuant to the Equity Award Agreements if, in connection with a Corporate Transaction (as defined in the Equity Award Agreements), an acquiring or successor entity provides for the continuance or assumption of the award (Assumed Awards), or the substitution of the award for a comparable value covering new incentives (Substitute Awards), then vesting of the unvested portion of the award shall not accelerate. +However, pursuant to the “double-trigger” vesting provisions of the Equity Award Agreements, if the acquiring or successor entity in the Corporate Transaction provides for Assumed Awards or Substitute Awards, and the executive is terminated by the acquiring or successor entity company without Cause or pursuant to a Constructive Termination (in each case, as defined in the applicable Equity Award Agreements) within 24 months following such Corporate Transaction, then the vesting of such award will be accelerated in full upon termination. For purposes of the PSU Award Agreements, the award will be accelerated with respect to the target number of shares subject to the agreement regardless of the level of achievement relative to the performance conditions. In addition, if executive continues to provide service to the acquiring or successor entity through the end of the performance period (regardless of whether a termination of employment has occurred), the target number of shares subject to the agreement shall vest regardless of the level of achievement relative to the performance conditions. +Notwithstanding the foregoing, the vesting of each equity award will be accelerated in full if the acquiring or successor entity in the Corporate Transaction does not agree to provide for Assumed Awards or Substitute Awards. For purposes of the PSU Award Agreements, the award will be accelerated as to the target number of shares subject to the agreement regardless of the level of achievement relative to the applicable performance conditions. +Termination Due to Death or Disability +Pursuant to the Equity Award Agreements, if there is termination of employment due to death or Disability (as defined in the 2015 SIP and the 2024 SIP), then a pro-rata portion of the awards that remain unvested shall become vested effective upon the date of termination. The pro-rata portion of the awards is calculated based on the number of months of continuous service provided by the executive prior to the termination date relative to the number of months in the applicable vesting period, in the case of the RSU Award Agreements, or the applicable performance period, in the case of the PSU Award Agreements. For purposes of the PSU Award Agreements, the awards do not provide for acceleration, but a pro-rata portion of the awards will vest on the scheduled vesting date if the applicable performance metrics are satisfied for such performance based equity awards by the end of the applicable performance period stated in the agreement. +Termination Upon Retirement +Pursuant to the RSU Award Agreements, if, following the initial vesting date under the agreement, an executive both attains the age of 62 and completes 10 years of continuous service to us (Retirement), then all unvested awards shall remain outstanding and continue to vest on the vesting dates set forth in the agreement, subject to meeting certain conditions. Pursuant to the PSU Award Agreements, in connection with a Retirement, a pro-rata portion of the awards that remain unvested shall become vested effective upon the date of termination. The pro-rata portion of the awards is calculated based on the number of months of continuous service provided by the executive prior to the termination date relative to the number of months in the applicable performance period. +63 +Severance and Change in Control Payments +The following table provides information about the compensation and benefits that would have been paid or provided to our NEOs in the event a termination of employment had occurred on March 31, 2025 upon the occurrence of the various termination events described in the table. The value of the compensation and benefits have been determined by reference to the terms of the applicable Severance Agreements and Equity Award Agreements. +The amounts reflected in the table are in addition to amounts that would have been paid for accrued but unpaid base salary, accrued vacation, accrued and vested benefits under our compensation plans or programs, accrued but unpaid cash incentive awards, and reimbursement of expenses. Except as described above, no payments or benefits would be provided to our NEOs in the event of a termination of employment for Cause. +For purposes of the table, the value of the equity awards has been determined based on the closing price of our common stock on March 31, 2025 based on the assumption the termination of employment had occurred on that date. In the event of an actual termination of employment, including in connection with a change in control transaction, the value of our common stock may be significantly different than this assumed value, in which case the value realized by our NEOs upon the vesting of the equity awards may be significantly higher or lower. +Upon Termination +Name Type of Compensation +or Benefit Due to Death or +Disability +($) By Us +Without Cause +($) In Connection with a Change +in Control +($) +Stefano Caroti Cash payments — 2,400,000 5,700,000 +Value of health benefits — 39,831 49,789 +Value of equity awards +1,713,935 +(1) +— 6,749,522 +(2) +Total 1,713,935 2,439,831 12,499,311 +Steven J. Fasching Cash payments — 850,000 3,616,174 +Value of health benefits — 28,101 56,202 +Value of equity awards +1,317,783 +(1) +— 5,641,262 +(2) +Total 1,317,783 878,101 9,313,638 +Anne Spangenberg Cash payments — 785,000 3,143,770 +Value of health benefits — 7,871 15,743 +Value of equity awards +780,052 +(1) +— 2,982,644 +(2) +Total 780,052 792,871 6,142,157 +Thomas Garcia Cash payments — 680,000 2,564,722 +Value of health benefits — 24,522 49,044 +Value of equity awards +592,360 +(1) +— 2,232,622 +(2) +Total 592,360 704,522 4,846,388 +Robin Spring-Green Cash payments — 612,000 1,912,500 +Value of health benefits — 9,243 18,485 +Value of equity awards +199,273 +(1) +— 1,345,074 +(2) +Total 199,273 621,243 3,276,059 +(1) This amount reflects the value of a pro-rata portion of the Time-Based RSUs that remained outstanding as of March 31, 2025, based on the closing price of our common stock on that date. The pro-rata portion of the awards was calculated based on the number of months of continuous service provided by the NEO through the assumed termination date relative to the number of months in the applicable vesting period or performance period. +(2) This amount reflects the value of all of the LTIP PSUs and Time-Based RSUs that remained outstanding as of March 31, 2025, based on the closing price of our common stock on that date . With respect to the LTIP PSUs, the reported value reflects the target number of shares subject to each award. +64 +DIRECTOR COMPENSATION +The Committee is responsible for approving the compensation program applicable to our directors who are not our employees (Nonemployee Directors). The primary objective of the Nonemployee Director compensation program is to provide a compensation opportunity that is competitive in the marketplace, and will attract and retain directors with the skills and experience necessary to assist us in achieving our strategic objectives. +For fiscal year 2025, Nonemployee Directors received an annual cash retainer of $90,000 for service on the Board, plus an annual cash retainer of $10,000 for each Board committee assignment. Nonemployee Directors holding the following positions received additional annual cash retainers: $200,000 for Chair of our Board; $40,000 for Chair of our Audit & Risk Management Committee; $35,000 for Chair of our Talent & Compensation Committee; and $27,500 for Chair of our Corporate Responsibility, Sustainability & Governance Committee. All or any portion of the cash retainers paid to any of our Nonemployee Directors may, at the election of the director, be paid through the issuance of our common stock. +Each of our Nonemployee Directors is also entitled to receive common stock with a total value of approximately $170,000 for annual service on our Board. The shares are issued in equal quarterly installments with the number of shares determined using the rolling average of the closing price of our common stock during the last 10 trading days leading up to, and including, the grant date. Each of these shares is fully vested on the date of issuance. Where our Nonemployee Directors elect to be paid their annual cash retainer fees in shares of our common stock, the number of shares to be issued is calculated using the same valuation methodology. +Nonemployee Directors are reimbursed for reasonable Board-related expenses. Nonemployee Directors also receive product discounts on terms similar to those offered to our employees and, from time to time, may receive products without charge in order to help expand their knowledge of our products. +Director Compensation Table +The following table sets forth all compensation paid or awarded to our Nonemployee Directors during fiscal year 2025. The amounts set forth in the table have been calculated in accordance with applicable SEC rules, and do not necessarily reflect the amounts that have actually been paid to, or which may be realized by, our Nonemployee Directors. +Name Fees Earned +($) +Stock Awards +($) (1) +Total +($) +Cynthia (Cindy) L. Davis 145,000 169,670 314,670 +David A. Burwick (2) +26,403 244,355 270,758 +Nelson C. Chan 110,000 169,670 279,670 +Michael F. Devine, III (3) +290,000 169,670 459,670 +Juan R. Figuereo 140,000 169,670 309,670 +Maha S. Ibrahim (2) +1,499 267,960 269,459 +Victor Luis (2) +26,403 244,355 270,758 +Dave Powers (4) +45,000 83,579 128,579 +Lauri M. Shanahan 110,000 169,670 279,670 +Bonita C. Stewart 137,500 169,670 307,170 +(1) The amounts in this column represent the aggregate grant date fair value of the awards computed in accordance with FASB ASC Topic 718. For information about the assumptions underlying these computations, please refer to Note 8 to our consolidated financial statements included in our Annual Report. +(2) This director has elected to receive some or all of his or her annual cash retainer through the issuance of our common stock. +(3) Mr. Devine retired from the Board effective May 22, 2025. +(4) Mr. Powers retired as Chief Executive Officer and President effective August 1, 2024. The amounts included in this table reflect compensation earned by Mr. Powers for service as a director following his retirement. The amounts are included in the " Summary Compensation Table " and do not reflect amounts earned in addition to those amounts. +65 +Director Stock Ownership Guidelines +Our Board has adopted Stock Ownership Guidelines applicable to our Nonemployee Directors. +The Committee periodically reviews our directors' compliance with the Stock Ownership Guidelines. As of the end of fiscal year 2025, the Committee determined that each director is in compliance with the guidelines. +Please refer to the section of this Proxy Statement titled “ Stock Ownership Guidelines ” for additional information. +66 +EQUITY COMPENSATION PLAN INFORMATION +The following table sets forth information regarding our equity compensation plans as of March 31, 2025. +Plan category +Number of securities +to be issued +upon exercise of +outstanding options or settlement of LTIP PSUs and RSUs (1)(2) +(#) +Weighted-average +exercise price of +outstanding options (3) +($) +Number of securities +remaining available +for future issuance (4) +(#) +Equity compensation plans approved by security holders 708,914 — 13,793,719 +Equity compensation plans not approved by security holders — — — +Total 708,914 — 13,793,719 +(1) This amount reflects the aggregate number of shares underlying all equity awards outstanding pursuant to the 2006 EIP, 2015 SIP and 2024 SIP. For awards subject to performance-based vesting conditions, the amount reported reflects the number of shares to be issued assuming the relevant performance conditions are achieved at the maximum level, which is equal to 200% of the target amount. In the event the performance conditions for any applicable award are achieved below the maximum level, the number of shares reflected in this column will decrease and the number of shares in the last column will increase by a corresponding amount. +(2) There are no outstanding stock appreciation rights or warrants to purchase shares of our common stock. +(3) There are no stock options outstanding. This column does not take into account shares issuable upon vesting or settlement of outstanding RSUs, which have no exercise price. +(4) This column reflects (i) the number of shares reserved for issuance under the 2024 SIP less the number of shares to be issued upon vesting and settlement of Time-Based RSUs and LTIP PSUs as reported in the first column, plus (ii) the number of shares reserved for issuance under the 2024 ESPP. This amount is subject to increase depending on our achievement with respect to certain performance conditions as discussed in footnote 1 above, and will also increase to the extent any awards are forfeited or otherwise terminated under the 2015 SIP or for shares withheld for taxes pursuant to the recycling features set forth in the 2024 SIP. No new equity awards may be issued under the 2006 EIP or the 2015 SIP. +67 +CEO PAY RATIO +General +Pursuant to Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of Regulation S-K, we are required to disclose the ratio of the annual total compensation of our principal executive officer to the median of the annual total compensation of all of our employees (excluding our principal executive officer), or our median employee. As of the end of fiscal year 2025, our principal executive officer was Stefano Caroti, our Chief Executive Officer and President. +Annual Total Compensation +For fiscal year 2025, the annual total compensation of our Chief Executive Officer and President was $10,051,429, and the annual total compensation of our median employee was $50,714. The annual total compensation for Mr. Caroti is consistent with the amount reflected in the Summary Compensation Table. Although we had two different principal executive officers during fiscal year 2025, we believe using the annual total compensation for Mr. Caroti is the appropriate amount to use for this purpose since it reflects compensation for serving as an executive officer for the full fiscal year. +Pay Ratio +Based on this information, the fiscal year 2025 ratio of the annual total compensation of our principal executive officer to the annual total compensation of our median employee was approximately 198:1. +Determination of Median Employee; Applicable Exemptions +Consistent with Item 402(u) of Regulation S-K, we identified our median employee as of March 31, 2025 by (i) aggregating for each applicable employee (A) annual base salary for salaried employees (or hourly rate multiplied by estimated work schedule, for hourly, temporary and seasonal employees), (B) overtime paid during the year, and (C) target incentive compensation, and (ii) ranking this compensation measure for our employees from lowest to highest. For non-U.S. employees, we converted such employees’ pay to a U.S. dollar equivalent by applying corporate accounting exchange rates for each applicable foreign currency as of the determination date of March 1, 2025. This calculation was performed for all of our employees, excluding Mr. Caroti, except as described below. After identifying our median employee, we calculated that individual’s fiscal year 2025 total annual compensation. +Individuals who were employed in Vietnam (133), Canada (112), Austria (21),and Indonesia (16) were excluded from the employee population for purposes of this disclosure, pursuant to the de minimis exemption set forth in the applicable SEC rules. In each case, the number of employees listed represented all employees in that jurisdiction as of the determination date. After taking into consideration the foregoing exemption, we had 3,385 U.S. employees and 1,971 non-U.S. employees. Without taking into account the impact of this exemption, we had 3,385 U.S. employees and 2,253 non-U.S. employees. +Other Information +We believe the pay ratio we have reported above is a reasonable estimate calculated in a manner consistent with applicable SEC rules based on our internal records and the methodology described above. In identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation, SEC rules allow companies to make reasonable estimates and assumptions that reflect their employee populations and compensation practices, adopt a variety of calculation methodologies, and apply certain exemptions. Therefore, the pay ratio reported by other companies may not be comparable to the pay ratio we have reported above. +68 +PAY VERSUS PERFORMANCE +Provided below is our pay-versus-performance disclosure as required by Item 402(v) of Regulation S-K, including information regarding the relationship between “compensation actually paid” (CAP) to our NEOs, and our performance with respect to certain performance metrics. Specifically, set forth below is the following: +• A tabular list of the three most important financial measures our Talent & Compensation Committee used in fiscal year 2025 to link CAP to our performance; +• A table that compares the total compensation paid to our NEOs, as presented in the "Summary Compensation Table," to CAP and certain other financial measures; and +• Graphs reflecting the relationship between (i) CAP and our TSR and peer group TSR, (ii) CAP and our net income, and (iii) CAP and our consolidated operating income . +CAP has been calculated in the manner required by Item 402(v) of Regulation S-K and does not represent the value of cash compensation and equity awards actually earned or received by our NEOs. The Talent & Compensation Committee does not use CAP as a basis for evaluating or determining NEO compensation. +Please refer to the section of this Proxy Statement titled “Compensation Discussion and Analysis” for a discussion of our pay-for-performance philosophy, executive compensation program objective, and the key elements of our executive compensation program. +Tabular List of Company Financial Performance Measures +The list below represents the financial performance measures that the Talent & Compensation Committee considers to have been the most important in linking CAP to our principal executive officer (PEO), and non-PEO NEOs (Non-PEO NEOs), for fiscal year 2025 to our performance for the same time period. The measures are not ranked in order of importance. +Financial Performance Measures +Consolidated Operating Income +Consolidated Revenue +Consolidated Pre-Tax Income +Please refer to the section of this Proxy Statement titled " Compensation Discussion and Analysi s" for a description of these measures, and the manner in which these measures are used to determine incentive compensation paid to our NEOs. +Pay Versus Performance +Pursuant to Item 402(v) of Regulation S-K, the following pay-versus-performance table sets forth information regarding CAP to our PEOs and average CAP to our Non-PEO NEOs, as well as certain performance measures and results for each of our last five fiscal years: +69 +PAY-VERSUS-PERFORMANCE TABLE +Value of Initial Fixed $100 Investment Based on: +Fiscal Year +Summary Compensation Table Total for First PEO ($) (1)(2) +Summary Compensation Table Total for Second PEO ($) (2) +Compensation Actually Paid to First PEO ($) (1)(3) +Compensation Actually Paid to Second PEO ($) (1)(3) +Average Summary Compensation Table Total for Non-PEO NEOs ($) (1)(2) +Average Compensation Actually Paid to Non-PEO NEOs ($) (1)(3) +TSR +Peer Group TSR (4) +Net Income ($,000) Consolidated Operating Income +($,000) +(a) (b) (c) (d) (e) (f) (g) (h) (i) +2025 10,051,429 614,513 2,465,345 ( 11,941,432 ) 3,661,555 635,661 500.7 78.3 966,091 1,179,092 +2024 — 14,258,412 — 30,785,255 4,586,787 10,222,055 702.4 86.2 759,563 927,514 +2023 — 11,391,476 — 21,415,165 2,961,401 4,799,279 335.5 103.9 516,822 652,751 +2022 — 10,854,934 — 6,190,970 3,867,018 2,845,438 204.3 155.6 451,949 564,707 +2021 — 7,860,450 — 19,464,880 2,479,351 5,207,671 246.6 200.6 382,575 504,205 +(1) The table below includes the name of each individual serving as an NEO during our last five fiscal years, including our PEOs: +Fiscal Year PEO Non-PEO NEOs +2025 +Stefano Caroti - First PEO +Dave Powers - Second PEO +Steven J. Fasching, Anne Spangenberg, Thomas Garcia, and Robin Spring-Green +2024 +Dave Powers Steven J. Fasching, Stefano Caroti, Anne Spangenberg and Thomas Garcia +2023 +Dave Powers Steven J. Fasching, Stefano Caroti, Anne Spangenberg and Thomas Garcia +2022 +Dave Powers Steven J. Fasching, David Lafitte, Stefano Caroti and Wendy Yang +2021 +Dave Powers Steven J. Fasching, David Lafitte, Stefano Caroti and Andrea O'Donnell +(2) The dollar amounts included in this column reflect the total compensation of our PEOs and the average total compensation of our Non-PEO NEOs reported in the " Summary Compensation Table " for each fiscal year presented. +(3) The table below provides the adjustments to the " Summary Compensation Table " total compensation made to arrive at the CAP to our PEOs, and the average CAP to our Non-PEO NEOs. +(4) The TSR Peer Group consists of the S&P 500 Apparel, Accessories & Luxury Goods Index. +70 +CALCULATION OF COMPENSATION ACTUALLY PAID (a) +Fiscal +Year Executives +Summary Compensation Table Total ($) (b) +Minus - Amount Reported in the "Stock Awards" Column in the Summary Compensation Table ($) +Plus - Fair Value of Fiscal Year End of Outstanding and Unvested Stock Awards Granted in the Fiscal Year ($) (c) +Plus / Minus - Change in Fair Value of Outstanding and Unvested Stock Awards Granted in Prior Fiscal Years ($) (d) +Plus / Minus - Change in Fair Value at Vesting of Stock Awards Granted in Prior Fiscal Years ($) (e) +Compensation Actually Paid ($) +2025 First PEO 10,051,429 ( 5,999,093 ) 4,038,327 ( 1,473,201 ) ( 4,152,117 ) 2,465,345 +Second PEO 614,513 ( 83,579 ) — ( 1,404,561 ) ( 11,067,805 ) ( 11,941,432 ) +Average for Non-PEO NEOs 3,661,555 ( 1,661,606 ) 1,118,517 ( 1,108,577 ) ( 1,374,228 ) 635,661 +2024 PEO 14,258,412 ( 8,499,746 ) 3,845,988 11,426,103 9,754,498 30,785,255 +Average for Non-PEO NEOs 4,586,787 ( 2,374,462 ) 3,721,124 2,447,199 1,841,407 10,222,055 +2023 PEO 11,391,476 ( 7,999,562 ) 10,951,395 4,242,444 2,829,412 21,415,165 +Average for Non-PEO NEOs 2,961,401 ( 1,724,565 ) 2,383,845 780,911 397,687 4,799,279 +2022 PEO 10,854,934 ( 7,999,651 ) 5,398,210 ( 1,160,869 ) ( 901,654 ) 6,190,970 +Average for Non-PEO NEOs 3,867,018 ( 2,549,581 ) 1,946,763 ( 242,995 ) ( 175,767 ) 2,845,438 +2021 PEO 7,860,450 ( 3,999,580 ) 4,787,303 4,760,338 6,056,369 19,464,880 +Average for Non-PEO NEOs 2,479,351 ( 849,565 ) 1,016,903 1,060,293 1,500,689 5,207,671 +(a) This table excludes adjustments for awards granted that vest in the same year, awards that failed to achieve their vesting conditions, and dividends, in each case because there is no applicable adjustment for the covered fiscal years. +(b) Represents amounts included in the "Total" column of the " Summary Compensation Table " for the applicable fiscal year. +(c) The fair value amounts are calculated in accordance with FASB ASC Topic 718 determined as of the covered fiscal year. Represents the fair value as of the applicable fiscal year end of the outstanding and unvested awards granted during such fiscal year, calculated in accordance with FASB ASC Topic 718 and described further in our Annual Reports on Form 10-K. +(d) The fair value amounts are determined based on the change in the fair value from the prior fiscal year end to the covered fiscal year end calculated in accordance with FASB ASC Topic 718. Represents the fair value as of the applicable fiscal year end of the outstanding and unvested awards that were granted in previous fiscal years, calculated in accordance with FASB ASC Topic 718 and described further in our Annual Reports on Form 10-K. +(e) The fair value amounts are determined based on the change in the fair value from the prior fiscal year end to the vesting date calculated in accordance with FASB ASC Topic 718. Represents the change in fair value, measured from the prior fiscal year end to the vesting date, of each equity award that was granted in previous fiscal year and which vested during the applicable fiscal year, calculated in accordance with FASB ASC Topic 718 and described further in our Annual Reports on Form 10-K. +Relationship Between Pay and Performance +The relationship between the CAP to our NEOs against (i) our TSR and peer group TSR, (ii) net income, and (iii) consolidated operating income, is illustrated as follows: +Compensation Actually Paid Versus Total Stockholder Return +The chart below illustrates the relationship between the CAP to our PEOs, and the average CAP to our Non-PEO NEOs in relation to our TSR, and the TSR of our peer group, the S&P 500 Apparel, Accessories & Luxury Goods Index, over the last five fiscal years. +71 +Compensation Actually Paid Versus Net Income +The chart below illustrates the CAP to our PEOs, and the average CAP to our Non-PEO NEOs, in relation to our net income over the last five fiscal years. We do not use net income as a performance measure for purposes of determining executive compensation. +72 +Compensation Actually Paid Versus Consolidated Operating Income +The chart below illustrates the CAP to our PEOs and the average CAP to our Non-PEO NEOs in relation to our consolidated operating income over the last five fiscal years. Consolidated operating income is the financial performance measure that, in our assessment, represents the most important financial performance measure to link CAP to our performance. +73 +SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT +The following table sets forth, as of June 30, 2025 (except as specified in the footnotes following the table), certain information concerning the shares of our common stock beneficially owned by (i) each person who is an NEO, (ii) each director or director nominee, (iii) all executive officers and directors as a group (16 persons), and (iv) each person known to us to be the beneficial owner of more than 5% of our common stock. There were 148,542,225 shares of our common stock outstanding on June 30, 2025. +Name and Address of Beneficial Owner (1) +Amount and +Nature of Beneficial +Ownership (#) (2)(3) +Percent +of Common Stock (3) +Named Executive Officers +Stefano Caroti 166,725 * +Steven J. Fasching 65,327 * +Anne Spangenberg 19,239 * +Thomas Garcia 31,005 * +Robin Spring-Green 1,738 * +Dave Powers 167,411 * +Directors and Director Nominees (4) +Cynthia (Cindy) L. Davis 13,340 * +David A. Burwick 12,378 * +Nelson C. Chan 61,609 * +Juan R. Figuereo 3,330 (5) * +Patrick J. Grismer — +Maha S. Ibrahim 10,681 * +Victor Luis — (6) * +Lauri M. Shanahan 16,177 (7) * +Bonita C. Stewart 36,108 (8) * +All Directors and Executive Officers as a Group (16 persons) +624,280 0.4 % +5% Stockholders +FMR, LLC (9) +23,157,762 15.0 % +The Vanguard Group, Inc. (10) +17,538,564 11.4 % +BlackRock, Inc. (11) +14,360,492 9.5 % +* Percentage of shares beneficially owned does not exceed 1.0% of our outstanding shares of common stock. +(1) Unless otherwise noted, the address of each beneficial owner is 250 Coromar Drive, Goleta, California 93117. +(2) Unless otherwise noted, we believe each individual or entity named has sole investment and voting power with respect to the shares of our common stock reported as beneficially owned by them, subject to community property laws, where applicable. +(3) Pursuant to applicable SEC rules, shares not outstanding which are subject to options, warrants, rights or conversion privileges exercisable on or before the date that is 60 days after June 30, 2025 are deemed outstanding for the purpose of calculating the number and percentage owned by a person, but are not deemed outstanding for the purpose of calculating the number and percentage owned by any other person. +(4) The reported amounts include shares held by certain directors through one or more family trusts over which shares the respective directors may have shared voting and/or investment power. +(5) An additional 9,073 shares previously earned by this director have been deferred pursuant to an election made under our Deferred Stock Unit Compensation Plan. These deferred shares have been excluded from the table. +(6) An additional 16,824 shares previously earned by this director have been deferred pursuant to an election made under our Deferred Stock Unit Compensation Plan. These deferred shares have been excluded from the table. +(7) An additional 12,636 shares previously earned by this director have been deferred pursuant to an election made under our Deferred Stock Unit Compensation Plan. These deferred shares have been excluded from the table. +74 +(8) An additional 5,293 shares previously earned by this director have been deferred pursuant to an election made under our Deferred Stock Unit Compensation Plan. These deferred shares have been excluded from the table. +(9) This information is based solely on Amendment No. 5 to Schedule 13G filed by this stockholder on February 8, 2024, and has been adjusted to reflect the six-for-one forward stock split of our common stock we effected on September 13, 2024. This stockholder’s business address is 245 Summer Street, Boston, MA 02210. This stockholder has sole voting power over 23,124,828 of such shares and sole dispositive power over 23,157,762 of such shares. +(10) This information is based solely on Amendment No. 14 to Schedule 13G filed by this stockholder on April 10, 2024, and has been adjusted to reflect the six-for-one forward stock split of our common stock we effected on September 13, 2024. This stockholder’s business address is 100 Vanguard Boulevard, Malvern, PA 19355. This stockholder has shared voting power over 185,958 of such shares, sole dispositive power over 17,002,782 of such shares, and shared dispositive power over 535,782 of such shares. +(11) This information is based solely on Amendment No. 4 to Schedule 13G filed by this stockholder on April 17, 2025. This stockholder’s business address is 50 Hudson Yards, New York, NY 10001. This stockholder has sole voting power over 13,382,772 such shares and sole dispositive power over 14,360,492 of such shares. +75 +DELINQUENT SECTION 16(a) REPORTS +Section 16(a) of the Exchange Act requires our officers, directors and persons who own more than ten percent of a registered class of our securities, to file with the SEC reports of initial ownership (Form 3) and reports of changes in ownership (Form 4 and Form 5) of our securities. +Based solely on our review of the Section 16(a) reports that have been filed by or on behalf of our officers, directors, and persons who own more than ten percent of a registered class of our securities, as well as written representations from our officers and directors, we believe all such persons complied on a timely basis with the filing requirements of Section 16(a) during fiscal year 2025. We are not aware of any late or missed filings of such reports for fiscal year 2025. +76 +AUDIT & RISK MANAGEMENT COMMITTEE REPORT +The Audit & Risk Management Committee is responsible for providing independent, objective oversight of, among other things, our financial reporting functions, our independent registered public accounting firm, our highest ranking manager of internal audit, our system of internal controls, our legal and regulatory compliance, and compliance with our related person transaction policy and Code of Ethics. The Audit & Risk Management Committee is currently composed of four directors, each of whom meets the independence and experience requirements under applicable NYSE rules, as well as the independence requirements applicable to Audit & Risk Management Committee members under applicable SEC rules. In addition, our Board has determined that the Chair of the Audit & Risk Management Committee qualifies as an “audit committee financial expert” under applicable SEC rules. +Management is responsible for the preparation of our financial statements and financial reporting process, including our system of internal controls. KPMG LLP, our independent registered public accounting firm, is responsible for performing an independent audit of our consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (PCAOB), and expressing (i) an opinion on whether our consolidated financial statements present fairly, in all material respects, our financial position and results of operations and cash flows for the periods presented in conformity with US generally accepted accounting principles, and (ii) an opinion on whether we have maintained, in all material respects, effective internal control over financial reporting as of March 31, 2025, based on criteria established in the Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Audit & Risk Management Committee’s responsibility is to monitor and oversee these processes. +In connection with these responsibilities, the Audit & Risk Management Committee met with management and KPMG LLP to review and discuss the March 31, 2025 consolidated financial statements and obtained from management their representation that our financial statements have been prepared in accordance with US generally accepted accounting principles. In addition, management represented that, as of March 31, 2025, our Company maintained effective internal control over financial reporting. +The Audit & Risk Management Committee also discussed with KPMG LLP the matters required by Auditing Standard No. 1301, “Communications with Audit Committees” of the PCAOB, which includes, among other items, information regarding the conduct of the integrated audit of our consolidated financial statements. The Audit & Risk Management Committee has received the written communications from KPMG LLP required by applicable requirements of the PCAOB regarding KPMG LLP's communication with the Audit & Risk Management Committee concerning independence and has discussed with them their independence. +The Audit & Risk Management Committee operates under a written charter, which was adopted by our Board and is assessed annually for adequacy by the Audit & Risk Management Committee. The Audit & Risk Management Committee held ten meetings during fiscal year 2025, including meetings with KPMG LLP and our highest ranking manager of internal audit, both with and without management present. In performing its functions, the Audit & Risk Management Committee acts only in an oversight capacity. It is not the responsibility of the Audit & Risk Management Committee to determine that our financial statements are complete and accurate, are presented in accordance with US generally accepted accounting principles or present fairly our results of operations for the periods presented, or that we maintain appropriate internal controls. Furthermore, the Audit & Risk Management Committee’s oversight responsibilities do not independently assure that the audit of our financial statements has been carried out in accordance with the standards of the PCAOB or that our registered public accounting firm is independent. +Based upon the Audit & Risk Management Committee’s review and discussions with management and KPMG LLP, and subject to the limitations of the Audit & Risk Management Committee’s role and responsibilities referred to above and in the Audit & Risk Management Committee charter, the Audit & Risk Management Committee recommended that our Board include the audited consolidated financial statements in our Annual Report on Form 10-K for the year ended March 31, 2025, which was filed with the SEC on May 23, 2025. +AUDIT & RISK MANAGEMENT COMMITTEE +Juan R. Figuereo ( Chair ) +Nelson C. Chan +Maha S. Ibrahim +Lauri M. Shanahan +The Audit & Risk Management Committee Report shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as amended, or the Acts, except to the extent that our Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under the Acts. +77 +RELATED-PERSON TRANSACTIONS +Our legal department is primarily responsible for identifying and reviewing relationships and transactions in which our Company and our directors, director nominees, executive officers, principal stockholders, or any of their respective immediate family members, are participants to determine whether any of these related persons had or will have a direct or indirect material interest in such transactions. In order to assist in identifying potential related-person transactions, our legal department annually prepares and distributes to all directors, director nominees and executive officers a detailed written questionnaire which includes questions intended to elicit information about any current or proposed related-person transactions. In addition, our Code of Ethics addresses conflicts of interest where an individual’s personal interests may interfere or conflict with the interests of our Company, including relationships with suppliers, customers or competitors. Conflicts of interest which might impair (or appear to impair) the exercise of judgment solely for the benefit of our Company and our stockholders are prohibited. In general, such conflicts must be approved by our legal department, the employee’s supervisor or, in the case of directors, the Audit & Risk Management Committee. Information regarding potential conflicts of interest in violation of our Code of Ethics may be reported to our anonymous reporting hotline, which may be accessed by the Chair of the Audit & Risk Management Committee, the Chair of our Board and our highest ranking manager of internal audit. +If a related-person transaction is identified by our legal department as one which would be required to be publicly reported pursuant to applicable SEC rules, the Audit & Risk Management Committee is responsible for reviewing and approving or ratifying any such transaction. The Audit & Risk Management Committee may approve a related person transaction when, in its good faith judgment, it determines that the transaction is in the best interests of our Company and our stockholders. +Except as set forth below, there are no family relationships between any director, director nominee, or executive officer, and there were no transactions or series of similar transactions since the beginning of fiscal year 2025, and there are no currently proposed transactions, to which we were or are a party that are required to be reported in accordance with applicable SEC rules in which: +• the amount involved exceeds $120,000; and +• any of our directors, director nominees, executive officers, any holder of more than 5% of our common stock, or any member of the immediate family of any of the foregoing, had or will have a direct or indirect material interest. +Ms. Shanahan, a member of our Board, Audit & Risk Management Committee, and Corporate Responsibility, Sustainability & Governance Committee, is the mother of one of our employees whom we have employed since March 2025. Ms. Shanahan does not serve on our Talent & Compensation Committee and is not involved in decision-making regarding this employee’s compensation. For fiscal year 2026, the estimated aggregate amount of this employee’s annual compensation is expected to be in excess of $120,000, and is commensurate with our other employees with similar titles, skills, and levels of experience. +78 +PROPOSAL NO. 2 +RATIFICATION OF THE SELECTION OF KPMG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +For fiscal year 2025, KPMG LLP (KPMG) provided audit services, which included an examination of the consolidated financial statements included in our Annual Report. The Audit & Risk Management Committee has selected KPMG to provide audit services to our Company for fiscal year 2026, which covers the period from April 1, 2025 to March 31, 2026. We are asking our stockholders to ratify this selection at the Annual Meeting. +Although ratification is not required by our Bylaws or applicable SEC rules, the Audit & Risk Management Committee is submitting the selection of our independent registered public accounting firm to a vote of our stockholders because it believes it is appropriate as a matter of good corporate governance practice. If our stockholders do not ratify the selection, the Audit & Risk Management Committee will consider the selection of another independent registered public accounting firm, but is not required to select a different firm. In addition, even if our stockholders ratify the selection, the Audit & Risk Management Committee will retain the discretion to select a different independent registered public accounting firm in the future if it believes doing so is in the best interests of our Company and stockholders. +A representative of KPMG will attend the Annual Meeting and will have the opportunity to make a statement and/or respond to appropriate questions from stockholders present at the Annual Meeting. +Fees for Services Rendered by Independent Registered Public Accounting Firm +The following table sets forth approximate fees for services rendered by KPMG for the fiscal years ended March 31, 2025 and 2024: +FEES ($) +FISCAL YEAR 2025 +FISCAL YEAR 2024 +Audit Fees $2,892,000 $2,678,000 +Audit-Related Fees 25,000 — +Tax Fees 12,000 12,000 +All Other Fees — — +Total Fees 2,929,000 2,690,000 +Audit Fees +The audit fees presented above for the fiscal years ended March 31, 2025 and 2024 include fees associated with the audit of our consolidated balance sheets and the related consolidated statements of comprehensive income, stockholders’ equity and cash flows included in our annual reports on Form 10-K, the audit of internal control over financial reporting, as well as the reviews of our quarterly reports on Form 10-Q, certain statutory audits required internationally, and consents, as well as assistance with and review of registration statement filed with the SEC. +Audit-Related Fees +The audit-related fees presented above for the fiscal year ended March 31, 2025 include professional services rendered for ESG limited assurance services. There were no audit-related fees incurred during the fiscal year ended March 31, 2024. +Tax Fees +Tax fees include fees incurred for tax services, including tax compliance, tax advice and tax planning for income taxes and customs matters. +All Other Fees +There were no fees for services rendered by KPMG incurred during the fiscal years ended March 31, 2025 and 2024 other than those disclosed above. +79 +Audit & Risk Management Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm +In accordance with its policies and procedures, prior to engagement, the Audit & Risk Management Committee pre-approves all independent registered public accounting firm services. Specifically, the Audit & Risk Management Committee administers and oversees our engagement of KPMG and pre-approves all of KPMG’s audit and permissible non-audit services on a case-by-case basis. In approving non-audit services, the Audit & Risk Management Committee considers whether the engagement could compromise the independence of KPMG, and whether, for reasons of efficiency or convenience, it is in our best interests to engage KPMG to perform the services. The Audit & Risk Management Committee has determined that the performance by KPMG of the non-audit services listed above as "Audit-Related Fees" and “Tax Fees” did not affect its independence. +During the year, circumstances may arise under which it may become necessary to engage the independent registered public accounting firm for additional services not contemplated in the original pre-approvals obtained . +Required Vote +The ratification of the selection of KPMG as our independent registered public accounting firm for fiscal year 2026 requires the affirmative vote of a majority of the outstanding shares present virtually or represented by proxy and entitled to vote on this proposal at the Annual Meeting (assuming that a quorum is present). +This proposal is considered a "routine" matter under NYSE rules. As a result, a bank, broker, dealer or other nominee may generally vote without instructions on this matter, so we do not expect any broker non-votes in connection with this proposal. Abstentions on this proposal will have the same effect as a vote against this proposal. If no contrary indication is made, returned proxies will be voted "FOR" this proposal. +BOARD +RECOMMENDATION +OUR BOARD OF DIRECTORS RECOMMENDS +THAT YOU VOTE +" FOR " +PROPOSAL NO. 2 TO RATIFY THE SELECTION OF KPMG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL YEAR 2026. +80 +PROPOSAL NO. 3 +ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION +Background +In accordance with applicable SEC rules, we are providing our stockholders with the opportunity to cast a non-binding advisory "Say-on-Pay" Vote on the compensation of our Named Executive Officers, as described below. We consider seeking the views of our stockholders on our executive compensation program to be an important part of our decision-making process. +For additional information about our executive compensation program, please refer to the section of this Proxy Statement titled " Compensation Discussion and Analysis " and the related compensation tables and footnotes. +Proposal +In accordance with Section 14A of the Exchange Act, we are asking our stockholders to approve the following resolution at the Annual Meeting: +“ RESOLVED, that our stockholders approve, on a non-binding advisory basis, the compensation of our Named Executive Officers, as described in the Compensation Discussion and Analysis, the Summary Compensation Table, and the related compensation tables, notes and narrative discussion in the Proxy Statement for our 2025 Annual Meeting of Stockholders. ” +Because this vote is advisory only, it will not be binding upon our Board or the Talent & Compensation Committee. However, the Talent & Compensation Committee will take the outcome of the vote into account when considering future executive compensation arrangements. +Required Vote +The approval, on a non-binding advisory basis, of the compensation of our Named Executive Officers requires the affirmative vote of a majority of the outstanding shares present virtually or represented by proxy and entitled to vote on this proposal at the Annual Meeting (assuming that a quorum is present). +This proposal is considered a "non-routine" matter under NYSE rules. As a result, a bank, broker, dealer or other nominee may not vote without instructions on this matter, so there may be broker non-votes in connection with this proposal. Broker non-votes will have no effect on the outcome of this proposal. Abstentions will have the same effect as a vote against this proposal. If no contrary indication is made, returned proxies will be voted "FOR" this proposal. +BOARD RECOMMENDATION +OUR BOARD OF DIRECTORS RECOMMENDS +THAT YOU VOTE +" FOR " +PROPOSAL NO. 3 TO APPROVE, ON A NON-BINDING ADVISORY BASIS, THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS. +81 +ADDITIONAL INFORMATION +Stockholder Proposals +Proposals or director nominations by stockholders intended to be presented at our annual meeting of stockholders to be held in 2026, and included in our proxy statement and form of proxy relating to that meeting, must be delivered to our corporate headquarters located at 250 Coromar Drive, Goleta, California 93117 no later than March 27, 2026. In order to be included in the proxy statement, these proposals must comply with applicable SEC rules. +Proposals or director nominations by stockholders intended to be considered at the annual meeting of stockholders to be held in 2026, without including the proposal in our proxy statement and form of proxy relating to that meeting, must notify us no earlier than the close of business on May 11, 2026, and no later than the close of business on June 10, 2026. In order to make a proposal at such meeting, these proposals must comply with our Bylaws. +In addition to satisfying the foregoing requirements of our Bylaws, to comply with the universal proxy rules under the Exchange Act, stockholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act no later than July 10, 2026. +Other Business +As of the date of this Proxy Statement, we are not aware of any business to be presented for consideration at the Annual Meeting other than the matters described in this Proxy Statement. If, however, other matters are properly presented at the Annual Meeting, the persons named as proxies (or their substitutes) will vote in accordance with their discretion with respect to those matters. +82 +ANNUAL REPORT +The Annual Report contains audited consolidated financial statements of our Company and its subsidiaries and the report thereon of KPMG LLP, our independent registered public accounting firm. A copy of the Annual Report is being provided with this Proxy Statement and has been posted on the Internet, along with this Proxy Statement, each of which is accessible by following the instructions in this Proxy Statement and the accompanying Notice. +Any person who was our stockholder on the Record Date (including any beneficial owner holding shares in "street name" as of the Record Date) may request a copy of the Annual Report, and it will be furnished without charge upon request. Requests should be directed to Deckers Outdoor Corporation, 250 Coromar Drive, Goleta, California 93117, Attention: Corporate Secretary, or by telephone to (805) 967-7611. +BY ORDER OF THE BOARD OF DIRECTORS +Stefano Caroti +Chief Executive Officer and President +Goleta, California +July 25, 2025 +83 \ No newline at end of file diff --git a/raw/proxies/0000910521/0000910521-25-000030/proxy_rpt.txt b/raw/proxies/0000910521/0000910521-25-000030/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..b70e24c2de4b5ba4f8e4f67b2ed7a51cc3b930d0 --- /dev/null +++ b/raw/proxies/0000910521/0000910521-25-000030/proxy_rpt.txt @@ -0,0 +1,8 @@ +RELATED-PERSON TRANSACTIONS +Our legal department is primarily responsible for identifying and reviewing relationships and transactions in which our Company and our directors, director nominees, executive officers, principal stockholders, or any of their respective immediate family members, are participants to determine whether any of these related persons had or will have a direct or indirect material interest in such transactions. In order to assist in identifying potential related-person transactions, our legal department annually prepares and distributes to all directors, director nominees and executive officers a detailed written questionnaire which includes questions intended to elicit information about any current or proposed related-person transactions. In addition, our Code of Ethics addresses conflicts of interest where an individual’s personal interests may interfere or conflict with the interests of our Company, including relationships with suppliers, customers or competitors. Conflicts of interest which might impair (or appear to impair) the exercise of judgment solely for the benefit of our Company and our stockholders are prohibited. In general, such conflicts must be approved by our legal department, the employee’s supervisor or, in the case of directors, the Audit & Risk Management Committee. Information regarding potential conflicts of interest in violation of our Code of Ethics may be reported to our anonymous reporting hotline, which may be accessed by the Chair of the Audit & Risk Management Committee, the Chair of our Board and our highest ranking manager of internal audit. +If a related-person transaction is identified by our legal department as one which would be required to be publicly reported pursuant to applicable SEC rules, the Audit & Risk Management Committee is responsible for reviewing and approving or ratifying any such transaction. The Audit & Risk Management Committee may approve a related person transaction when, in its good faith judgment, it determines that the transaction is in the best interests of our Company and our stockholders. +Except as set forth below, there are no family relationships between any director, director nominee, or executive officer, and there were no transactions or series of similar transactions since the beginning of fiscal year 2025, and there are no currently proposed transactions, to which we were or are a party that are required to be reported in accordance with applicable SEC rules in which: +• the amount involved exceeds $120,000; and +• any of our directors, director nominees, executive officers, any holder of more than 5% of our common stock, or any member of the immediate family of any of the foregoing, had or will have a direct or indirect material interest. +Ms. Shanahan, a member of our Board, Audit & Risk Management Committee, and Corporate Responsibility, Sustainability & Governance Committee, is the mother of one of our employees whom we have employed since March 2025. 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ecd:EqtyAwrdsInSummryCompstnTblForAplblYrMember ecd:NonPeoNeoMember 2021-04-01 2022-03-31 0000910521 ecd:YrEndFrValOfEqtyAwrdsGrntdInCvrdYrOutsdngAndUnvstdMember ecd:NonPeoNeoMember 2021-04-01 2022-03-31 0000910521 ecd:ChngInFrValOfOutsdngAndUnvstdEqtyAwrdsGrntdInPrrYrsMember ecd:NonPeoNeoMember 2021-04-01 2022-03-31 0000910521 ecd:ChngInFrValAsOfVstngDtOfPrrYrEqtyAwrdsVstdInCvrdYrMember ecd:NonPeoNeoMember 2021-04-01 2022-03-31 +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Proxy Statement Pursuant to Section 14(a) of +the Securities Exchange Act of 1934 (Amendment No. ) +Filed by the Registrant x +Filed by a Party other than the Registrant ¨ +Check the appropriate box: +¨ Preliminary Proxy Statement +¨ Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +x Definitive Proxy Statement +¨ Definitive Additional Materials +¨ Soliciting Material under §240.14a-12 +DECKERS OUTDOOR CORPORATION +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check all boxes that apply): +x No fee required. +¨ Fee paid previously with preliminary materials. +¨ +Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11. +2026 +PROXY STATEMENT +SUMMARY +This summary highlights information contained elsewhere in this Proxy Statement. This summary does not contain all of the information you should consider when making voting decisions. You should read this Proxy Statement carefully and completely before voting. +ABOUT DECKERS +Deckers Outdoor Corporation, doing business as Deckers Brands, is a global leader in designing, marketing, and distributing innovative footwear, apparel, and accessories developed for both everyday casual lifestyle use and high-performance activities. We market our products primarily under three proprietary brands: HOKA, UGG, and Teva. +Our brands compete across the fashion and casual lifestyle, performance, running, and outdoor markets. We believe our products are distinctive and appeal to a broad demographic. Our brands sell our products through quality domestic and international retailers and international distributors in our wholesale channel, and directly to global consumers through our direct-to-consumer (DTC) channel, which is comprised of an e-commerce and retail store presence. We seek to differentiate our brands and products by offering diverse lines that emphasize fashion, performance, authenticity, functionality, quality, and comfort, and products tailored to a variety of activities, seasons, and demographic groups. Independent third-party contractors manufacture all of our products. +STRATEGIC OBJECTIVES AND FINANCIAL HIGHLIGHTS +Long-Term Strategic Objectives +Expand Consumer Adoption of the HOKA Brand +Increase global market share with innovative performance footwear and enhanced lifestyle product appeal. +Enhance the UGG Brand's Global Positioning +Evolve iconic franchises across categories and elevate consumer experiences. +Elevate our Capabilities Through Technology +Drive productivity, efficiency, and consumer connection through advanced tools and analytics. +Increase the DTC Business +Invest in direct-to-consumer capabilities and maintain meaningful connections with our consumers. +FY 2026 Financial Highlights +$5.47B 9.8% 23.1% $7.02 +Revenue Revenue Growth Operating Margin Diluted Earnings per Share (EPS) +i +GOVERNANCE HIGHLIGHTS +Our continued focus on refreshment of our Board of Directors (Board) led to the appointment of a new Board Chair, the election of a new independent director, and the realignment of Board and committee composition. +• Cynthia (Cindy) L. Davis was appointed as Chair of the Board on May 22, 2025 and stepped down as a member of the Corporate Responsibility, Sustainability & Governance Committee and as Chair of the Talent & Compensation Committee. Victor Luis was named Chair of the Talent & Compensation Committee. +• Patrick J. Grismer was elected as a director on September 8, 2025 and was appointed as a member of the Audit & Risk Management Committee. Maha S. Ibrahim was appointed as a member of the Corporate Responsibility, Sustainability & Governance Committee and stepped down as a member of the Audit & Risk Management Committee. +• At the Annual Meeting, stockholders will be asked to elect ten directors to serve until the next annual meeting of stockholders to be held in 2027. If all nominees are elected, our Board will consist of ten members. Nine of the ten members of our Board, as well as all members of each of the Board's standing committees, will continue to be “independent directors” under applicable SEC and NYSE rules. +• As of the date of our 2026 Annual Meeting of Stockholders, the authorized number of directors will be ten. +ANNUAL MEETING OF STOCKHOLDERS +DATE +Monday, September 14, 2026 +TIME +1:00 p.m. Pacific Time +VIRTUAL MEETING +The 2026 Annual Meeting of Stockholders (Annual Meeting) will be held virtually via a live webcast, which can be accessed on the Internet by visiting www.virtualshareholdermeeting.com/DECK2026. +Stockholders will be able to vote and submit questions virtually during the Annual Meeting in accordance with the rules and procedures included on the meeting website. +To access the Annual Meeting you will need a 16-digit control number. Your control number is provided on the Notice of Internet Availability of Proxy Materials you received in the mail, on your proxy card (if you requested to receive printed proxy materials), or through your broker or other nominee if you hold your shares in "street name." +RECORD DATE +Thursday, July 16, 2026 +PROPOSALS TO BE VOTED UPON +NUMBER PROPOSAL BOARD VOTING RECOMMENDATION PAGE REFERENCE +1 +Elect ten directors to serve until the annual meeting of stockholders to be held in 2027, until their successors are duly elected and qualified, or until their earlier death, resignation, or removal +" FOR " +EACH DIRECTOR NOMINEE +7 +2 +Ratify the selection of KPMG LLP as our independent registered public accounting firm for our fiscal year ending March 31, 2027 +" FOR " +76 +3 +Approve, on a non-binding advisory basis, the compensation of our Named Executive Officers as described in the section of this Proxy Statement titled " Compensation Discussion and Analysis " +" FOR " +78 +We may also consider and vote upon any other business that may properly come before the Annual Meeting, or at any postponements or adjournments thereof. As of the date of this Proxy Statement, we are not aware of any business to be presented for consideration at the Annual Meeting other than the matters described in this Proxy Statement. +ii +HOW TO VOTE +Your vote is important to the future of Deckers Outdoor Corporation. You are eligible to vote if you were a stockholder at the close of business on Thursday, July 16, 2026. Please refer to the section of this Proxy Statement titled " Questions and Answers About the Annual Meeting and Voting " for additional information on how to attend the Annual Meeting and vote your shares. Whether or not you plan to attend the Annual Meeting, we encourage you to read this Proxy Statement and submit your proxy or voting instructions as soon as possible to ensure your representation at the Annual Meeting. +iii +PROPOSAL NO. 1 +ELECTION OF DIRECTORS +Our Board has nominated the following ten directors for election at the Annual Meeting: +DIRECTOR NOMINEES +Cynthia (Cindy) L. Davis Patrick J. Grismer +David A. Burwick Maha S. Ibrahim +Stefano Caroti Victor Luis +Nelson C. Chan Lauri M. Shanahan +Juan R. Figuereo Bonita C. Stewart +BOARD RECOMMENDATION: +" FOR " each director nominee +Our Board is comprised of a majority of independent directors with a variety of backgrounds and experiences and extensive qualifications and skills. Each of our Board members is committed to representing the long-term interests of our stockholders. +QUALIFIED SKILLS +6/10 Industry +6/10 Technology Infrastructure/Cybersecurity +9/10 Premium Branding and Innovation +4/10 Consumer and Emerging Technology +8/10 Retail +8/10 Corporate Governance +8/10 Sales and Marketing +6/10 Compliance and Risk Oversight +3/10 Supply Chain Management +4/10 Corporate Responsibility +9/10 International +9/10 Public Company Executive +4/10 High Level of Financial Literacy +9/10 Human Resources/Talent Management +7/10 Mergers and Acquisitions +DIVERSE DEMOGRAPHICS +50% Ethnically Diverse +40% Female +INDEPENDENT +9/10 Directors are Independent +ENGAGED During our fiscal year ended March 31, 2026 (fiscal year 2026), each director nominee attended at least 80% of the aggregate of all meetings of the Board and any Board committee on which he or she served during the period in which he or she served. +Please refer to the section of this Proxy Statement titled " Proposal No. 1 - Election of Directors " for additional information. +iv +PROPOSAL NO. 2 +RATIFICATION OF SELECTION OF OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +BOARD RECOMMENDATION: +" FOR " the ratification of the selection of KPMG LLP as our independent registered public accounting firm for our fiscal year ending March 31, 2027. +• The Audit & Risk Management Committee annually reviews the engagement of KPMG LLP to ensure the continuing audit independence of our independent registered public accounting firm. +• The Audit & Risk Management Committee has determined that the continued retention of KPMG LLP is in the best interests of the Company and our stockholders. +Please refer to the section of this Proxy Statement titled "Proposal No. 2 - Ratification of the Selection of KPMG LLP as Independent Registered Public Accounting Firm " for additional information. +PROPOSAL NO. 3 +ADVISORY VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION +BOARD RECOMMENDATION: +" FOR " the approval, on a non-binding advisory basis, of the compensation of our Named Executive Officers as described in the section of this Proxy Statement titled " Compensation Discussion and Analysis. " +The primary objective of our executive compensation program is to compensate our executive officers in a manner that will attract, retain, and motivate talented executives with the skills needed to manage a complex and growing business in a competitive industry, while creating long-term value for our stockholders. The Talent & Compensation Committee seeks to design our executive compensation program in a manner that reflects direct alignment between the compensation opportunity provided to our executives and the achievement of our strategic objectives. +Consistent with our strategic objectives for fiscal year 2026, when designing our executive compensation program for the year, the Talent & Compensation Committee focused on continuing to build and retain our executive team, while incentivizing our executive officers to focus on increasing revenue, enhancing profitability, and creating long-term value for our stockholders. +When establishing our executive compensation program, the Talent & Compensation Committee is guided by the following four principles: +• Pay for performance by ensuring that a significant portion of compensation is made available to our executive team based on the achievement of pre-determined performance-based objectives. +• Align interests of executives with stockholders by tying a significant portion of compensation to performance that creates long-term value for our stockholders. +• Reward achievement by offering incentives for achieving short-term and long-term financial goals that are directly tied to the achievement of strategic objectives. +• Attract and retain executives with the background and experience necessary to lead the organization and achieve our strategic objectives. +Please refer to the sections of this Proxy Statement titled “ Compensation Discussion and Analysis ” and " Proposal No. 3 - Advisory Vote to Approve Named Executive Officer Compensation " for additional information. +v +NOTICE OF VIRTUAL ANNUAL MEETING OF STOCKHOLDERS +TO OUR STOCKHOLDERS: +We are pleased to invite you to virtually attend the 2026 Annual Meeting of Stockholders of Deckers Outdoor Corporation to be held on Monday, September 14, 2026, at 1:00 p.m. Pacific Time. +Proposals to be Voted Upon : +1 +Election of Directors . Elect ten directors to serve until the annual meeting of stockholders to be held in 2027, until their successors are duly elected and qualified, or until their earlier death, resignation, or removal. +2 +Ratification of Selection of Accounting Firm . Ratify the selection of KPMG LLP as our independent registered public accounting firm for our fiscal year ending March 31, 2027. +3 +Advisory Vote on Named Executive Officer Compensation . Approve, on a non-binding advisory basis, the compensation of our Named Executive Officers, as described in the section of this Proxy Statement titled " Compensation Discussion and Analysis. " +Other Business . Consider and vote upon any other business that may properly come before the Annual Meeting, or any postponements or adjournments thereof. +Virtual Annual Meeting : +The Annual Meeting will be held virtually and conducted via a live webcast. You will be able to attend the Annual Meeting online, submit your questions and vote your shares during the meeting by visiting www.virtualshareholdermeeting.com/DECK2026. We believe hosting a virtual annual meeting encourages increased stockholder attendance and participation, and reduces the costs associated with holding and attending the meeting. +Record Date : +Our Board has fixed the close of business on Thursday, July 16, 2026 (Record Date) as the date for determining which stockholders are entitled to notice of and to vote at the Annual Meeting, or any postponements or adjournments thereof. +Board Recommendations : +Our Board recommends that you vote " FOR " each of the director nominees named in Proposal No. 1 and " FOR " Proposal Nos. 2 and 3. +BY ORDER OF THE BOARD OF DIRECTORS +Stefano Caroti +Chief Executive Officer and President +Your vote is very important. Whether or not you plan to attend the Annual Meeting, we encourage you to read this Proxy Statement and submit your proxy or voting instructions as soon as possible. For specific instructions on how to vote your shares, please refer to the instructions on the Notice of Internet Availability of Proxy Materials you received in the mail, the section of this Proxy Statement titled " Questions and Answers About the Annual Meeting and Voting ," or, if you requested to receive printed proxy materials, your enclosed proxy card. +Approximate Date of Mailing of the Notice of Internet Availability of Proxy Materials: July 24, 2026 +vi +Cautionary Note Regarding Forward-Looking Statements: +This Proxy Statement contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements may relate to our future financial performance, business operations, and executive compensation decisions, or other future events. You can identify forward-looking statements by the use of words such as “may,” “will,” “could,” “anticipate,” “expect,” “intend,” “believe,” “continue,” or the negative of such terms, or other comparable terminology. Forward-looking statements also include the assumptions underlying or relating to such statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, results of operations and financial condition. +The outcomes of the events described in these forward-looking statements are subject to risks, uncertainties and other factors described in Item 1A, “Risk Factors,” and elsewhere, in our Annual Report on Form 10-K for fiscal year 2026 (Annual Report), as well as the other reports we file with the Securities and Exchange Commission (SEC). We cannot assure you that the events and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results could differ materially from those expressed or implied in the forward-looking statements. The forward-looking statements made in this Proxy Statement relate only to events as of the date of this Proxy Statement. We undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made. +vii +TABLE OF CONTENTS +2026 Proxy Statement Summary.............................. +i +Proposal No. 2 - Ratification of the Selection of KPMG LLP as Our Independent Registered Public Accounting Firm ......................................... +76 +Notice of Virtual Annual Meeting of Stockholders.... +vi +Proposal No. 3 - Advisory Vote to Approve Named Executive Officer +Compensation ........................................................ +78 +Proxy Statement....................................................... +1 +Additional Information.............................................. +79 +Questions and Answers About the Annual Meeting and Voting................................................................ +2 +Annual Report.......................................................... +80 +Proposal No. 1 - Election of Directors .................. +7 +Director Nominees.............................................. +9 +Corporate Governance............................................. +20 +Executive Officers.................................................... +29 +Compensation Discussion and Analysis................... +32 +Executive Summary............................................ +33 +Compensation Objective and Philosophy .......... +36 +Compensation Consultant and Peer Group........ +39 +Elements of Fiscal Year 2026 +Executive Compensation Program..................... +41 +Other Compensation Considerations.................. +49 +Talent & Compensation Committee Report.............. +52 +Summary Compensation Table................................ +53 +Grants of Plan-Based Awards in Fiscal Year 2026... +54 +Outstanding Equity Awards at 2026 Fiscal +Year End.................................................................. +55 +Fiscal Year 2026 Stock Vested............................... +56 +Non-qualified Deferred Compensation..................... +57 +Potential Payments Upon Termination or Change in Control...................................................................... +58 +Director Compensation............................................. +62 +Equity Compensation Plan Information.................... +64 +CEO Pay Ratio......................................................... +65 +Pay Versus Performance.......................................... +66 +Security Ownership of Certain Beneficial Owners and Management..................................................... +71 +Section 16 Reports.............................................. +73 +Audit & Risk Management Committee Report.......... +74 +Related-Person Transactions................................... +75 +viii +PROXY STATEMENT +VIRTUAL ANNUAL MEETING OF STOCKHOLDERS +Meeting Date: Monday, September 14, 2026 +GENERAL INFORMATION +The enclosed Proxy Statement is solicited on behalf of the Board of Directors (Board) of Deckers Outdoor Corporation for use at our 2026 Annual Meeting of Stockholders (Annual Meeting), to be held virtually via a live webcast on Monday, September 14, 2026 at 1:00 p.m. Pacific Time, or at any postponements or adjournments thereof. +The Annual Meeting can be accessed by visiting www.virtualshareholdermeeting.com/DECK2026 , where you will be able to attend the Annual Meeting, submit questions and vote your shares electronically. +The Annual Meeting is being held for the purposes described in this Proxy Statement and in the accompanying Notice of Annual Meeting of Stockholders. +1 +QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING +The following questions and answers are intended to briefly address potential questions that our stockholders may have regarding this Proxy Statement and the Annual Meeting. They are also intended to provide our stockholders with certain information that is required to be provided under the Securities and Exchange Commission (SEC) rules. These questions and answers may not address all of the questions that are important to you as a stockholder. If you have additional questions about this Proxy Statement or the Annual Meeting, please refer to the question titled " Whom should I contact with other questions? " below. +Q: When and where will the Annual Meeting be held? +A: The Annual Meeting will be held on Monday, September 14, 2026, at 1:00 p.m. Pacific Time. The Annual Meeting will be conducted entirely online via a live webcast. Our stockholders may participate in the Annual Meeting by visiting www.virtualshareholdermeeting.com/DECK2026 . You will need a 16-digit control number to attend and participate in the live webcast of the Annual Meeting. Please refer to the question titled " How can I vote my shares? " for information on obtaining your 16-digit control number. +Q: What proposals am I being asked to vote upon at the Annual Meeting? +A: The proposals to be voted on at the Annual Meeting, and our Board's recommendation with respect to each proposal, are as follows: +NUMBER PROPOSAL BOARD VOTING RECOMMENDATION +Proposal No. 1 : +Election of Directors +Elect ten directors to serve until the annual meeting of stockholders to be held in 2027, until their successors are duly elected and qualified, or until their earlier death, resignation, or removal. +" FOR " +EACH +DIRECTOR NOMINEE +Proposal No. 2 : +Ratification of Selection of Accounting Firm +Ratify the selection of KPMG LLP as our independent registered public accounting firm for our fiscal year ending March 31, 2027. +" FOR " +Proposal No. 3 : +Advisory Vote on Named Executive Officer Compensation +Approve, on a non-binding advisory basis, the compensation of our Named Executive Officers, as described in the section of this Proxy Statement titled " Compensation Discussion and Analysis. " +" FOR " +Q: Why did I receive these proxy materials? +A: We are providing this Proxy Statement in connection with the solicitation by our Board of proxies to be voted at the Annual Meeting, or at any postponements or adjournments thereof. This Proxy Statement contains important information for you to consider when deciding how to vote on the matters brought before the Annual Meeting. You are invited to virtually attend the Annual Meeting to vote on the proposals described in this Proxy Statement. However, you do not need to attend the Annual Meeting to vote your shares. Instead, you may vote your shares using one of the other voting methods described in this Proxy Statement. +Whether or not you plan to attend the Annual Meeting, we encourage you to read this Proxy Statement and submit your proxy or voting instructions as soon as possible to ensure your representation at the Annual Meeting. +Q: Why did I receive a notice in the mail regarding the Internet availability of proxy materials? +A: Instead of mailing printed copies to each of our stockholders, we have elected to provide access to the proxy materials over the Internet under SEC's "notice and access" rules. These rules allow us to make our stockholders aware of the Annual Meeting and the availability of the proxy materials by sending a Notice of Internet Availability of Proxy Materials (Notice), which provides instructions on how to access the full set of proxy materials through the Internet or make a request to have printed proxy materials delivered by mail. Accordingly, we will mail the Notice to each of our stockholders on or about July 24, 2026. The Notice contains instructions on how to access the proxy materials, including this Proxy Statement and our Annual Report, both of which are available at www.proxyvote.com. The Notice also provides instructions on how to vote your shares. +2 +Q: Who can vote at the Annual Meeting? +A: Only our stockholders at the close of business on July 16, 2026 (Record Date), will be entitled to attend and vote at the Annual Meeting. On the Record Date, there were 136,181,857 of our common stock outstanding and entitled to vote. Each share of common stock issued and outstanding on the Record Date is entitled to one vote on any matter to be voted upon by our stockholders at the Annual Meeting. +• Holders of Record - If, on the Record Date, your shares were registered directly in your name with our transfer agent, Computershare, then you are a "holder of record." As a holder of record, you may vote at the virtual Annual Meeting, or you may vote by proxy. If you are a holder of record and you indicate when voting that you wish to vote as recommended by our Board, or if you submit a vote by proxy without giving specific voting instructions, then the proxyholders will vote your shares as recommended by our Board on all matters described in this Proxy Statement. Thomas Garcia and Steven J. Fasching, the designated proxyholders, are members of our management. +• Beneficial Owners - If, on the Record Date, your shares were held in an account at a bank, broker, dealer, or other nominee, then you are the "beneficial owner" of shares held in "street name" and this Proxy Statement is being made available to you by that nominee. The nominee holding your account is considered the holder of record for purposes of voting at the Annual Meeting. As a beneficial owner, you have the right to direct your nominee on how to vote the shares in your account. You are also invited to attend the Annual Meeting. However, since you are not the holder of record, you may not vote your shares at the Annual Meeting unless you request and obtain a valid "legal proxy" or obtain a 16-digit control number from your nominee. Please contact your nominee directly for additional information. +Q: What is the quorum requirement for the Annual Meeting? +A: The presence at the Annual Meeting, virtually (even if not voting) or by proxy, of the holders of a majority of the voting power of all shares of our common stock entitled to be voted at the Annual Meeting, will constitute a quorum at the Annual Meeting. We will treat shares of common stock represented by a properly voted proxy, including shares for which authority is withheld or that a stockholder abstains from voting, as well as broker non-votes, as present at the Annual Meeting for the purposes of determining the existence of a quorum. If a quorum is not present, the Annual Meeting will be adjourned until a quorum is obtained. +Q: What are the voting requirements to approve each of the proposals, and what happens if I do not vote? +A: The voting requirements to approve each of the proposals to be voted upon at the Annual Meeting, as well as the effects of abstentions and broker non-votes on each of the proposals, are as follows: +PROPOSAL VOTING REQUIREMENT +EFFECT OF ABSTENTIONS (1) +EFFECT OF BROKER NON-VOTES (2) +Proposal No. 1 : +Election of Directors +Each director nominee in an uncontested election (3) will be elected by a majority of the votes cast by the shares present virtually or represented by proxy and entitled to vote on the election of directors at the Annual Meeting (assuming that a quorum is present). +A "majority of the votes cast" means that the number of votes "FOR" a director nominee must exceed the number of votes "AGAINST" a director nominee. +An "ABSTAIN" vote with respect to a director nominee will not count as a vote cast for that nominee, will not be included in the total number of votes cast, and will have no effect on the outcome of the vote on this proposal. +Broker non-votes will not count as votes cast on this proposal, and will have no effect on the outcome of the vote on this proposal. +Proposal No. 2 : +Ratification of Selection of Accounting Firm +Requires the affirmative vote of a majority of the outstanding shares present virtually or represented by proxy and entitled to vote on the proposal at the Annual Meeting (assuming that a quorum is present). +An "ABSTAIN" vote will be included in the total number of shares present and entitled to vote on this proposal, and will have the same effect as a vote "AGAINST" this proposal. +Because a bank, broker, dealer or other nominee may generally vote without instructions on this proposal, we do not expect any broker non-votes in connection with this proposal. +Proposal No. 3 : +Advisory Vote on Named Executive Officer Compensation +Requires the affirmative vote of a majority of the outstanding shares present virtually or represented by proxy and entitled to vote on the proposal at the Annual Meeting (assuming that a quorum is present). +An "ABSTAIN" vote will be included in the total number of shares present and entitled to vote on this proposal, and will have the same effect as a vote "AGAINST" this proposal. Broker non-votes will not count as votes cast on this proposal and will have no effect on the outcome of the vote on this proposal. +3 +(1) You may "ABSTAIN" from voting on one or more director nominees and from voting on one or more of the other proposals described in this Proxy Statement. Shares for which a stockholder abstains from voting will be counted for purposes of determining whether a quorum is present at the Annual Meeting. +(2) Pursuant to applicable New York Stock Exchange (NYSE) rules, if you are a beneficial owner of shares held in street name and do not provide the nominee that holds your shares with specific voting instructions, the nominee may generally vote in its discretion on “routine” matters (such as Proposal No. 2). However, if the nominee that holds your shares does not receive instructions from you on how to vote your shares on a “non-routine” matter (such as Proposal Nos. 1 and 3), it will be unable to vote your shares on that matter. When this occurs, it is generally referred to as a “broker non-vote.” Broker non-votes will be counted for purposes of determining whether a quorum is present at the Annual Meeting. +(3) An "uncontested election" is an election in which the number of director nominees is not greater than the number of directors to be elected. A "contested election" is an election in which the number of director nominees nominated by (i) our Board, (ii) any stockholder, or (iii) a combination of our Board and any stockholder, exceeds the number of directors to be elected. In a contested election, directors will be elected by a plurality of the votes cast by the shares present virtually or represented by proxy and entitled to vote on the election of directors at the Annual Meeting. +Q: What happens if a director nominee fails to receive a majority vote in an uncontested election at the Annual Meeting? +A: Each incumbent director standing for reelection at the Annual Meeting has tendered an irrevocable letter of resignation that will become effective only if the director fails to receive a majority vote at the Annual Meeting and our Board accepts the resignation. Our Board must accept or reject such resignation within 90 days following certification of the stockholder vote in accordance with the procedures established by our Amended and Restated Bylaws (Bylaws). If a director’s resignation offer is not accepted by our Board, that director will continue to serve until our annual meeting of stockholders to be held in 2027, until his or her successor is duly elected and qualified, or until such director’s earlier death, resignation, or removal. +Any director nominee who is not an incumbent director and who fails to receive a majority vote in an uncontested election will not be elected as a director, and a vacancy will remain on our Board. Our Board, in its sole discretion, may either fill a vacancy resulting from a director nominee not receiving a majority vote, or decrease the size of our Board to eliminate the vacancy, each in accordance with our Bylaws. +Q: Could other matters be decided at the Annual Meeting? +A: As of the date of this Proxy Statement, we are not aware of any business to be presented for consideration at the Annual Meeting other than the matters described in this Proxy Statement. If, however, other matters are properly presented at the Annual Meeting, the persons named as proxies will vote in accordance with their discretion with respect to those matters. +Q: How can I vote my shares? +A: Your shares can be voted as follows: +• Holders of Record - Holders of record can vote by proxy or by attending the Annual Meeting where votes can be submitted electronically via live webcast. If you wish to vote by proxy, you can vote by Internet, telephone, or mail as described below. Whether or not you plan to attend the Annual Meeting, we encourage you to submit your proxy or voting instruction as soon as possible to ensure your representation at the Annual Meeting. +VOTING METHOD +To vote at the Annual Meeting by live webcast, you must visit the following website: +www.virtualshareholdermeeting.com/DECK2026. You will need the 16-digit control number included on the Notice or your proxy card (if you requested to receive printed proxy materials). The method you use to vote by proxy will not limit your right to attend or vote at the Annual Meeting. All shares that have been properly voted and not revoked will be voted at the Annual Meeting. However, even if you plan to attend the Annual Meeting, we recommend that you vote your shares in advance so that your vote will be counted if you later decide not to attend the Annual Meeting. +To vote by Internet , you will need the 16-digit control number included on the Notice or your proxy card (if you requested to receive printed proxy materials). Internet voting is available 24 hours a day and will be accessible until 11:59 p.m. Eastern Time on Sunday, September 13, 2026 by visiting www.proxyvote.com and following the instructions. +To vote by telephone , you will need the 16-digit control number included on the Notice or on your proxy card (if you requested to receive printed proxy materials). Telephone voting is available 24 hours a day and will be accessible until 11:59 p.m. Eastern Time on Sunday, September 13, 2026 by calling 1-800-690-6903 and following the instructions. +To vote by mail, follow the instructions provided on your proxy card (if you requested to receive printed proxy materials). Simply mark, sign and date your proxy card and return it promptly in the postage-paid envelope provided. In order to be effective, completed proxy cards must be received by 11:59 p.m. Eastern Time on Sunday, September 13, 2026. This option is only available if you requested to receive printed proxy materials. +4 +• Beneficial Owners - If you are the beneficial owner of your shares, you should have received the Notice or a proxy card (if you requested to receive printed proxy materials) with this Proxy Statement from your nominee rather than from us. Simply (i) use the 16-digit control number to vote on the Internet or by telephone before the Annual Meeting, or vote at the Annual Meeting, or (ii) if you requested to receive printed proxy materials, vote by following the instructions provided on the proxy card you received from your nominee's website. Your 16-digit control number may be included in the voting instruction form that accompanied the proxy materials. If your nominee did not provide you with a 16-digit control number, you should contact your nominee to obtain your control number and access the Annual Meeting link. To vote at the Annual Meeting, you must first obtain a valid "legal proxy" from your nominee. Follow the instructions from your nominee to request a "legal proxy." +Q: What can I do if I change my mind after I vote my shares? +A: You may change your vote at any time before the polls are closed at the Annual Meeting. +• Holders of Record - If you are a holder of record, you may change your vote by (i) providing written notice of revocation to Deckers Outdoor Corporation, 250 Coromar Drive, Goleta, California 93117, Attention: Corporate Secretary, (ii) executing a subsequent proxy using any of the voting methods discussed above (subject to the deadlines for voting with respect to each method), or (iii) attending the Annual Meeting and voting electronically via live webcast. However, simply attending the Annual Meeting will not, by itself, revoke your proxy. +• Beneficial Owners - If you are a beneficial owner of your shares and you have instructed your nominee to vote your shares, you may change your vote by following the directions received from your nominee to change those voting instructions, or by attending the Annual Meeting and voting via live webcast, which can be accomplished as described above. +Subject to any revocation, all shares represented by properly executed proxies will be voted in accordance with the instructions on the applicable proxy, or, if no instructions are given, the proxyholders will vote the shares in accordance with the recommendations of our Board as described above. +Q: Who is paying for the cost of this proxy solicitation? +A: The solicitation of proxies is made on behalf of our Board and all the expenses of soliciting proxies from stockholders will be borne by us. In addition to the solicitation of proxies by use of the mail, our directors, officers, and employees may communicate with stockholders in person or by email, telephone, or otherwise for the purpose of soliciting such proxies. No additional compensation will be paid to any such persons for such solicitation, although we may reimburse them for reasonable out-of-pocket expenses incurred in connection with such solicitation. We will reimburse banks, brokers, dealers and other nominees for their reasonable out-of-pocket expenses in forwarding proxy materials to beneficial owners of shares held of record by such persons. The total estimated cost of the solicitation of proxies is approximately $358,000. +Q: How may I obtain an additional copy of the proxy materials? How may I reduce the number of copies our household receives? +A: We have adopted a procedure called "householding," which the SEC has approved. Under this procedure, we are delivering a single copy of the Notice and, if applicable, this Proxy Statement and the Annual Report, to multiple stockholders who share the same address unless we have received contrary instructions from one or more of the stockholders. This procedure reduces our printing and mailing costs. Stockholders who participate in householding will continue to be able to access and receive separate proxy materials. Upon written or oral request, we will promptly deliver a separate copy of the Notice and, if applicable, this Proxy Statement and the Annual Report, to any stockholder at a shared address to which we delivered a single copy of any of these documents. To receive a separate copy of the Notice and, if applicable, this Proxy Statement or the Annual Report, or if you wish to receive separate copies in the future, please contact: Deckers Outdoor Corporation, 250 Coromar Drive, Goleta, California 93117, Attention: Corporate Secretary, Telephone: (805) 967-7611. +In addition, if you are currently a stockholder sharing an address with another stockholder and wish to receive only one copy of future proxy materials for your household, please contact us using the contact information set forth above. Stockholders who are beneficial owners of shares held in street name may contact their bank, broker, dealer or other nominee to request information about householding. +Q: Where can I find the voting results of the Annual Meeting? +A: We will announce preliminary voting results with respect to each proposal at the Annual Meeting. In accordance with SEC rules, final voting results will be published in a Current Report on Form 8-K within four business days following the Annual Meeting, unless final results are not known at that time, in which case preliminary voting results will be published within four business days of the Annual Meeting and final voting results will be published once we know them. +5 +Q : Where else can I find these proxy materials? +A: This Proxy Statement and the Annual Report are available under "SEC Filings" at ir.deckers.com. Other information contained on or accessed through our website does not constitute part of this Proxy Statement and you should not consider this other information in deciding how to vote your shares. References to our website address in this Proxy Statement are inactive textual references only. +Q: Whom should I contact with other questions? +A: If you have additional questions about this Proxy Statement or the Annual Meeting, or if you would like additional copies of this Proxy Statement, please contact: Deckers Outdoor Corporation, 250 Coromar Drive, Goleta, California 93117, Attention: Corporate Secretary, Telephone: (805) 967-7611. +6 +PROPOSAL NO. 1 +ELECTION OF DIRECTORS +Board Characteristics +The Corporate Responsibility, Sustainability & Governance Committee considers many factors when identifying director nominees, including a range of experiences and skills, as well as backgrounds. We believe directors with varied backgrounds, spanning relevant substantive expertise, professional experiences, educational backgrounds, and personal characteristics, create a Board that is positioned to best serve our Company, stockholders, employees, and communities. We also value the mix of viewpoints provided by our directors with various levels of tenure, from those with a deep understanding of our business to those with fresh perspectives. Our strong commitment to an inclusive workplace that promotes belonging is reflected within the composition of our Board. +A snapshot of our ten director nominees as of the date of this Proxy Statement is depicted in the charts below . +Board Composition and Refreshment +The Corporate Responsibility, Sustainability & Governance Committee has the primary oversight of Board succession planning and Board refreshment process. We are continuously evaluating the overall balance of our Board, including the balance between longer-tenured directors who bring great institutional knowledge and new directors who offer fresh external viewpoints. Our Board annually reviews its overall composition, the composition of its committees, and the Chair of each committee to align with the Company's long-term strategic needs. +In May 2025, Ms. Davis was appointed as Chair of the Board. In connection with Ms. Davis' appointment as Chair, she stepped down as a member of the Corporate Responsibility, Sustainability & Governance Committee and as Chair of the Talent & Compensation Committee. Victor Luis, who has served as a member of the Board and as a member of the Talent & Compensation Committee since 2020, was named Chair of the Talent & Compensation Committee. +In September 2025, Mr. Grismer was elected as a director and was appointed as a member of the Audit & Risk Management Committee. Ms. Ibrahim was appointed as a member of the Corporate Responsibility, Sustainability & Governance Committee and stepped down as a member of the Audit & Risk Management Committee. +7 +BOARD REFRESHMENT +4 +New Directors Over Past 5 Years +BOARD CHAIR SUCCESSION COMMITTEE CHAIR SUCCESSION +May 2025 +Cynthia (Cindy) L. Davis +Appointed Chair of the Board +May 2025 +Victor Luis +Appointed Talent & Compensation Committee Chair +September 2021 +Bonita C. Stewart +Appointed Corporate Responsibility, Sustainability & Governance Committee Chair +June 2020 +Juan R. Figuereo +Appointed Audit & Risk Management Committee Chair +Board Structure +Our Bylaws provide for the annual election of directors. Our Bylaws provide that our Board will consist of not less than one nor more than 11 members, and the Board has fixed the number of directors at ten. Accordingly, if all ten nominees are elected at the Annual Meeting, there will be no vacancies on the Board. +At the Annual Meeting, our stockholders will be asked to elect ten directors to serve until the annual meeting of stockholders to be held in 2027, until their successors are duly elected and qualified , or until their earlier death, resignation, or removal . The names and certain information concerning the persons nominated by our Board to stand for election as directors at the Annual Meeting are set forth in the section of this Proxy Statement titled “ Director Nominees ” below. +If all ten director nominees are elected, then nine of the ten members will be "independent directors" u nder applicable NYSE rules. In addition, each member of our Board's three standing committees will be an “independent director” under applicable SEC and NYSE rules. +No Agreements or Family Relationships +No agreement or understanding exists between any of our directors, director nominees, or executive officers and any other person pursuant to which any of them were selected as our director, director nominee, or executive officer. +There are no family relationships among any of our directors, director nominees, or executive officers. +No Legal Proceedings +There are no legal proceedings related to any of our directors, director nominees, or executive officers which are required to be disclosed pursuant to applicable SEC rules. +Director Nominations +The Corporate Responsibility, Sustainability & Governance Committee is responsible for identifying and evaluating nominees for election to our Board. In addition to the candidates proposed by our Board or identified by the Corporate Responsibility, Sustainability & Governance Committee, the committee considers candidates for director proposed by stockholders, provided such recommendations are made in accordance with the procedures set forth in our Bylaws. Stockholder nominations that meet the criteria outlined below will receive the same consideration as nominations made by the Corporate Responsibility, Sustainability & Governance Committee. +Director Qualifications +Directors are responsible for overseeing and monitoring our business consistent with their fiduciary duties to our stockholders. This significant responsibility requires highly skilled individuals with various qualities, attributes, skills and professional experience. Our Board believes there are both general requirements for eligibility to serve as a member of our Board that are applicable to all directors, and other specialized characteristics that should be represented on our Board as a whole, but not necessarily by each director. +Qualifications for All Directors +Essential criteria for all director candidates considered by the Corporate Responsibility, Sustainability & Governance Committee include the following: +• Personal and professional integrity; +• Good business judgment; +• Relevant experience and skills; +• Ability to effectively serve the long-term interests of our stockholders; and +• Commitment to devoting sufficient time and energy to diligently performing duties as a director. +8 +DIRECTOR NOMINEES +Our Board has nominated the following ten directors for election at the Annual Meeting. Important summary information about the director nominees is set forth in the table below, including the Board committee composition that we anticipate will be effective as of the date of the Annual Meeting. Following the table is certain biographical information about each director nominee, as well as selected information about the specific qualifications, attributes, skills, and experience as of the date of this Proxy Statement that led our Board to conclude that each director nominee is qualified to serve on our Board. For information regarding Board committee composition as of the date of this Proxy Statement, please refer to the section of this Proxy Statement titled " Corporate Governance—Board Committees ." +Board Committee Membership Following the Annual Meeting (1) +Name, +Primary Occupation Age Director +Since Independent Number of Other Public Company Directorships +AR (2) +TC (2) +CG (2) +Cynthia (Cindy) L. Davis 64 2018 YES 1 +Corporate Director and Chair of our Board +David A. Burwick 64 2021 YES 1 l +Corporate Director +Stefano Caroti 63 2024 NO 0 +Chief Executive Officer and President +Nelson C. Chan 65 2014 YES 3 l l +Private Investor, Entrepreneur and Corporate Director +Juan R. Figuereo 70 2020 YES 1 ª +Corporate Director +Patrick J. Grismer 64 2025 YES 1 l +Corporate Director +Maha S. Ibrahim 55 2021 YES 0 l +General Partner, Canaan Partners +Victor Luis 59 2020 YES 0 ª +Corporate Director +Lauri M. Shanahan 63 2011 YES 1 l l +Corporate Director +Bonita C. Stewart 69 2014 YES 1 l ª +Corporate Director +ª Committee Chair +(1) Subject to the election of each director nominee at the Annual Meeting. +(2) AR: Audit & Risk Management Committee, TC: Talent & Compensation Committee, CG: Corporate Responsibility, Sustainability & Governance Committee +9 +CYNTHIA (CINDY) L. DAVIS +Age: 64 +Director Since: 2018 +Chair of our Board +Public Company Directorships: +Brinker International, Inc. (NYSE: EAT) +Biographical Information +Ms. Davis currently serves as a member of the board of directors and is the chair of the governance and nominating committee and member of the talent and compensation committee of Brinker International, Inc. (NYSE: EAT), a global leader of casual dining restaurant companies. She is also a Trustee and Chair of the Governance Committee for the Arthur M. Blank Family of Businesses, which includes sports and hospitality ventures such as the Atlanta Falcons, Atlanta United, Mercedes Benz Stadium and PGA TOUR Superstores. From 2012 to 2025, Ms. Davis served on the board of directors of Kennametal Inc. (NYSE: KMT), and during her tenure she was a member of the audit committee and nominating and governance committee and chaired the compensation and human capital committee. From 2015 to 2018, she served as a member of the board of directors, as chair of the compensation committee and on the governance committee of Buffalo Wild Wings, Inc., a casual dining restaurant and sports bar chain previously listed on Nasdaq. Ms. Davis served as vice president of NIKE, Inc. (NYSE: NKE) and president of Nike Golf at NIKE, Inc. from 2008 to 2014, and as U.S. general manager at Nike Golf from 2005 to 2008. Prior to NIKE, Inc., Ms. Davis served as senior vice president of golf sponsorships, sports marketing and new media at Golf Channel, a subsidiary of Comcast Corporation (Nasdaq: CMCSA), from 2001 to 2004. She is Chair of the Board of Trustees for Furman University. +Selected Qualifications and Skills +• Premium Branding and Innovation - Experience as vice president of NIKE, Inc. and president of Nike Golf at NIKE, Inc., a company engaged in the design, development, manufacturing, and worldwide marketing and sales of footwear, apparel, equipment, accessories, and services. +• Sales and Marketing; Retail - In addition to leading the division’s sales, marketing, and strategy while serving as senior vice president of golf sponsorships, sports marketing and new media at Golf Channel, led the $800 million global golf business for NIKE, Inc. +• High Level of Financial Literacy - Served on the audit committee of Kennametal Inc. Holds an M.B.A. in Marketing and Finance from the University of Maryland College Park. Oversaw the profit and loss of a separate operating unit within NIKE, Inc. +• International - Involved in global brands with worldwide operations while at NIKE, Inc. and Kennametal Inc. +• Public Company Executive - Held various executive management positions at NIKE, Inc. and Golf Channel, previously served as a director and chair of the compensation and human capital committee of Kennametal Inc., and as a director and chair of the compensation committee of Buffalo Wild Wings, Inc., and currently serves as a director and chair on the governance and nominating committee of Brinker International, Inc. +• Industry - Extensive experience in the footwear, apparel and equipment industries through various positions at NIKE, Inc. +• Compliance and Risk Oversight - In addition to leadership roles at NIKE, Inc., served on the board of directors of Kennametal, Inc., and during her tenure she was a member of the audit and nominating and governance committees and chaired the compensation and and human capital committee and served as chair of the the compensation committee and as a member of the governance committee of Buffalo Wild Wings Inc. Currently, serves on the board of directors, as well as the talent and compensation committee and chair of the governance and nominating committee of Brinker International, Inc. +• Technology Infrastructure and Cybersecurity - Served on the board of directors of Kennametal, Inc., a technology-based company, and during her tenure she was a member of the audit and nominating and governance committees and chaired the compensation and human capital committee. +10 +DAVID A. BURWICK +Age: 64 +Director Since: 2021 +Board Committees: +Talent & Compensation +Public Company Directorships: +BJ's Wholesale Club Holdings, Inc. (NYSE: BJ) +Biographical Information +In February 2025, Mr. Burwick was appointed chief executive officer of Spindrift Beverage Co., a privately-held company. In June 2024, he was appointed as a director of BJ's Wholesale Club Holdings, Inc. (NYSE: BJ) and serves as a member of the nominating and corporate governance committee. From May 2024 to December 2024, he served as a member of the board of directors, chair of the nominating and corporate governance committee and member of the audit committee of The Duckhorn Portfolio, Inc., which was acquired by Butterfly Equity, a private equity firm specializing in the food and beverage sector. He previously served as a director of The Boston Beer Company, Inc. (NYSE: SAM) and served as its president and chief executive officer from April 2018 to April 2024. Prior to April 2018, Mr. Burwick served as president and chief executive officer of Peet's Coffee & Tea, Inc., since December 2012. From April 2010 to December 2012, Mr. Burwick served as president, North America of WW International, Inc., formerly Weight Watchers International, Inc. Prior to that, Mr. Burwick held numerous positions with PepsiCo, Inc., including chief marketing officer, PepsiCo Americas Beverages from August 2008 to August 2009; executive vice president, Marketing, Sales and R&D, PepsiCo International from April 2008 to July 2008; President, Pepsi-QTG Canada from January 2006 to March 2008; chief marketing officer, Pepsi-Cola North America from June 2002 to December 2005; and various marketing roles from 1989 to 2002. Mr. Burwick has extensive experience leading consumer products organizations. During Mr. Burwick's tenure as a director of The Boston Beer Company, Inc., he has served as chair and as a member of its compensation committee, and as chair and as a member of the nominating/governance committee. +Selected Qualifications and Skills +• Premium Branding and Innovation - Experience as an executive at Peet's Coffee & Tea, Inc., PepsiCo, Inc., The Boston Beer Company, Inc. and Spindrift Beverage Co. +• Public Company Executive - Extensive experience with several leading public and private companies, both as an executive and as a director. +• Sales and Marketing - Held key marketing and sales positions with PepsiCo. Inc., including chief marketing officer. +• Human Resources and Talent Management - Held executive positions with leading companies and was a member of the compensation committee and nominating/governance committee of The Boston Beer Company, Inc. +• Retail - Serves as chief executive officer of Spindrift Beverage Co. Previously served as president and chief executive officer at Peet's Coffee & Tea, Inc., WW International, Inc. and PepsiCo, Inc. +STEFANO CAROTI +Age: 63 +Director Since: 2024 +Executive Positions: +Chief Executive Officer and President +Public Company Directorships: +None +Biographical Information +Mr. Caroti has served as our Chief Executive Officer and President since August 2024 and was elected to our Board in September 2024. He previously acted as Chief Commercial Officer from April 2023 to July 2024, during which time he also oversaw HOKA as Interim President from June 2022 to February 2024. Before that, he was President of Omni-Channel division from November 2015 to April 2023. Mr. Caroti has over 30 years of industry experience in general management, sales, retail, product, marketing, business strategy and brand management. Prior to joining our Company, Mr. Caroti was the chief commercial officer and managing director at PUMA, from August 2008 to December 2014, where he was responsible for PUMA’s global wholesale, retail and e-commerce divisions and PUMA’s geographic operating regions. Prior to that, he held a number of +11 +senior executive positions at NIKE, Inc. in general management, sales, product and marketing, and during his term as vice president of EMEA commerce, he was responsible for the entire wholesale, retail and e-commerce business in the EMEA region. +Selected Qualifications and Skills +• Industry - Over 30 years of experience in the footwear and apparel industries through various positions at PUMA, NIKE Inc., and our Company. +• Premium Branding and Innovation - Experience through several senior executive positions at PUMA, NIKE Inc., and our Company. +• International - While serving in executive leadership roles at PUMA, NIKE Inc., and our Company, led wholesale, retail, and e-commerce businesses worldwide. +• Supply Chain Management and Retail - Oversaw PUMA's global wholesale, retail and e-commerce divisions and operating regions, and prior to that, was responsible for the entire wholesale, retail, and e-commerce business in the EMEA region while at NIKE, Inc. +• Sales and Marketing - Served in several executive marketing positions in leading public companies. +• Public Company Executive - Serves as our Chief Executive Officer and previously served as our Company's Chief Commercial Officer and President of Omni-Channel. Extensive experience as chief commercial officer and managing director at PUMA, as well as several senior executive positions at NIKE, Inc. +NELSON C. CHAN +Age: 65 +Director Since: 2014 +Board Committees : +Audit & Risk Management +Corporate Responsibility, Sustainability & Governance +Public Company Directorships: +GCT Semiconductor Holding Inc. (NYSE: GCTS) Synaptics, Inc. (Nasdaq: SYNA) +Twist Bioscience Corporation (NASDAQ: TWST) +Biographical Information +Mr. Chan is a private investor and entrepreneur. In March 2024, he was appointed as a director of GCT Semiconductor Holding Inc. (NYSE: GCTS) and serves as a member of the nominating and corporate governance committee. Mr. Chan is a director and member of the nominating and corporate governance committee and audit committee of Twist Bioscience Corporation (Nasdaq: TWST). He is chair of the board of Synaptics, Inc. (Nasdaq: SYNA) and serves as a member of the audit committee and nominations and corporate governance committee. From 2010 to 2020, Mr. Chan was chair of the board, chair of the compensation committee, member of the audit committee and member of the nominating and corporate governance committee of Adesto Technologies Corporation, a company previously listed on Nasdaq. From 2016 to 2019, Mr. Chan served as a director and member of the compensation and nominating and governance committees of Socket Mobile, Inc. (Nasdaq: SCKT). From 2006 to 2008, he served as chief executive officer of Magellan Corporation, and from 1992 to 2006, he served in various management positions with SanDisk Corporation. Mr. Chan is also a director of several privately held companies. +Selected Qualifications and Skills +• Entrepreneurial - Expertise in building technology companies. +• High Level of Financial Literacy - Has held numerous senior management positions with leading companies, including chief executive officer at Magellan Corporation. +• Public Company Executive - Extensive experience with several leading public and private companies, both as an executive and as a director. +• Sales and Marketing - Held key sales, marketing and engineering positions at SanDisk Corporation, Chips and Technologies, Signetics and Delco Electronics. +• International - Served as the executive vice president and general manager of consumer business at SanDisk Corporation, a global multi-billion dollar company. +• Compliance and Risk Oversight - Currently serves as a member of our Audit & Risk Management Committee and has over 17 years of experience as a corporate director with risk oversight responsibilities. +12 +• Technology Infrastructure and Cybersecurity - Extensive experience in technology-based companies including sales, marketing and engineering. +JUAN R. FIGUEREO +Age: 70 +Director Since: 2020 +Board Committees: +Audit & Risk Management ( Chair ) +Public Company Directorships: +Western Alliance Bancorporation (NYSE: WAL) +Biographical Information +Mr. Figuereo currently serves as a director and is a member of the finance and investment committee and the nominating and corporate governance committee and is the chair of the audit committee of Western Alliance Bancorporation (NYSE: WAL). From April 2021 to July 2023, he served as a director and chair of the audit committee and member of the nominating and corporate governance committee of Diversey, Inc., a company previously listed on Nasdaq. Mr. Figuereo served as the executive vice president and chief financial officer of Revlon, a manufacturer and marketer of beauty and personal care products, from 2016 to 2017. From 2012 to 2015, he served as executive vice president and chief financial officer of NII Holdings, Inc., a wireless communication services provider under the Nextel brand and a company previously listed on Nasdaq. From 2009 to 2012, Mr. Figuereo served as executive vice president and chief financial officer of Newell Brands (NYSE: NWL), a global marketer of consumer and commercial products, and from 2007 to 2009 he served as executive vice president and chief financial officer of Cott Corporation (NYSE: PRMB). Mr. Figuereo has also served in senior management positions at Walmart, Inc. (Nasdaq: WMT) and PepsiCo, Inc. (Nasdaq: PEP). Mr. Figuereo served as a director and chair of the audit committee at PVH Corp. (NYSE: PVH), a leading apparel company with iconic brands such as Calvin Klein and Tommy Hilfiger in its portfolio. Mr. Figuereo is a venture partner with Ocean Azul Partners, LLC, an early-stage investments fund based in South Florida. He is a member of the National Association of Corporate Directors and of the Florida Institute of CPAs. +Selected Qualifications and Skills +• Public Company Executive - Previously served as chief financial officer of several public companies with global footprints, including Revlon and Newell Brands, and held executive leadership roles at Walmart, Inc. and PepsiCo, Inc. +• High Level of Financial Literacy - Served as chief financial officer of several public companies and as chair of the audit committee of PVH Corp. Serves as the chair of the audit committee of Western Alliance Bancorporation and previously served as the chair of the audit committee of Diversey Inc. In addition, he serves as the chair of our Audit & Risk Management Committee. Holds a B.B.A. from Florida International University, and previously worked for eight years as a certified public accountant. +• International - Significant executive leadership experience supporting global brands with worldwide operations. +• Supply Chain Management - Extensive experience in worldwide supply chain operations while in management roles for global companies. +• Sales and Marketing; Retail - Served as executive vice president of several global marketers, including Revlon and Newell Brands, and held senior management positions at Walmart, Inc. and PepsiCo, Inc. +• Mergers and Acquisitions - Previously served as the vice president in charge of mergers and acquisitions at Walmart, Inc. +13 +PATRICK J. GRISMER +Age: 64 +Director Since: 2025 +Board Committees: +Audit & Risk Management Committee +Public Company Directorships: +Krispy Kreme, Inc. (Nasdaq: DNUT) +Biographical Information +Mr. Grismer is a retired corporate executive following a 36-year career in corporate finance. In June 2025, he was appointed as a director of Krispy Kreme, Inc. (Nasdaq: DNUT) and serves as a member of the audit and finance committee. From September 2022 to May 2025, Mr. Grismer served as a member of the board of Panera Brands (parent company to Panera Bread, Einstein Bros. Bagels and Caribou Coffee) and served as chair of the audit committee during a portion of that time. From November 2018 to February 2021, Mr. Grismer served as the executive vice president and chief financial officer of Starbucks Coffee Company (Nasdaq: SBUX). From March 2016 to November 2018, he served as the executive vice president and chief financial officer of Hyatt Hotels Corporation (NYSE: H). Prior to that, Mr. Grismer spent nearly 14 years at Yum! Brands, Inc. (NYSE: YUM, parent company to KFC, Pizza Hut and Taco Bell) in a number of executive roles, including as chief financial officer. Mr. Grismer also served in various leadership positions at The Walt Disney Company, including chief financial officer at Disney Vacation Club and vice president of strategic planning at The Disneyland Resort. He started his career as a management consultant at PricewaterhouseCoopers. +Selected Qualifications and Skills +• Premium Branding and Innovation - Experience with global consumer-oriented companies, including Starbucks Coffee Company, Hyatt Hotels Corporation and The Walt Disney Company. +• International - Significant executive leadership experience supporting global brands with worldwide operations. +• High Level of Financial Literacy - Served as chief financial officer of several public companies and as chair of the audit committee of Panera Brands and currently serves as a member of the audit and finance committee of Krispy Kreme, Inc. Holds an MBA in Finance and Marketing from Northwestern University's Kellogg Graduate School of Management and previously worked at PricewaterhouseCoopers. +• Supply Chain Management - Extensive experience in worldwide supply chain operations while in executive roles for global companies. +• Compliance and Risk Oversight - In addition to leadership roles at several public companies, serves on the board of directors and audit and finance committee of Krispy Kreme, Inc. and served on the board of directors and chair of the audit committee of Panera Brands, Inc. +• Mergers and Acquisitions - Experience in strategic planning and evaluation while at Starbucks Coffee Company, Hyatt Hotels Corporation and Yum! Brands, Inc. +• Public Company Executive - Extensive experience with several leading public and private companies as an executive. +MAHA S. IBRAHIM +Age: 55 +Director Since: 2021 +Board Committees: +Corporate Responsibility, Sustainability & Governance Committee +Public Company Directorships: +None +Biographical Information +Ms. Ibrahim is currently a general partner of Canaan Partners, an early-stage venture capital firm, where she has worked since March 2000. Prior to joining Canaan Partners, from 1998 to 2000 she served as vice president of e-business at Qwest Communications, where she architected the company’s e-business strategy and spearheaded the redesign of Qwest.com, and previously served as Qwest Communications' vice president of business development. From 2012 through 2020, Ms. Ibrahim +14 +served as a member of the board of directors of The RealReal, Inc. (Nasdaq: REAL), an online brick-and-mortar marketplace for authenticated luxury consignment, providing leadership to the company through its 2019 initial public offering. Ms. Ibrahim currently serves on the boards of directors of a number of private innovative enterprise and consumer companies. Further, she has served as a trustee for the Carnegie Endowment for International Peace, a foreign policy think tank, since 2017. +Selected Qualifications and Skills +• Industry - Extensive experience in the apparel industry through her experience on the board of The RealReal, Inc., a sustainable luxury company that promotes the re-circulation of products across the multi-billion dollar fashion industry. +• Premium Branding and Innovation - Experience in the luxury consignment business during her time as a director of The RealReal, Inc. +• Consumer and Emerging Technology - Served as vice president of e-business at Qwest Communications. +• Sales and Marketing; Retail - Served as vice president of business development at Qwest Communications. +• Technology Infrastructure and Cybersecurity - Extensive experience in wireless and telecommunications industries. +• Mergers and Acquisitions - Experience with mergers and acquisitions while serving as general partner of Canaan Partners. +• Corporate Responsibility - Served on the board of The RealReal, Inc. and experience serving on the board of a private luxury brand company that has implemented a sustainability program and related initiatives. +VICTOR LUIS +Age: 59 +Director Since: 2020 +Board Committees: +Talent & Compensation (Chair) +Public Company Directorships: +None +Biographical Information +Mr. Luis is an accomplished global executive with decades of leadership experience driving growth and transformation within the premium luxury consumer sector. From 2020 to 2023, he served as a director and member of the audit committee and chair of the nominating and corporate governance committee of FarFetch Limited (OTCMKTS: FTCHQ). He served as the chief executive officer and on the board of directors of Tapestry, Inc. (formerly known as Coach, Inc.) (NYSE: TPR) from 2014 to 2019, where he led the company’s transformation into Tapestry Inc., a New York-based house of modern luxury brands including Coach, Kate Spade and Stuart Weitzman. Mr. Luis joined Coach, Inc. in 2006 as president and chief executive officer of Coach Japan. He rapidly assumed additional leadership responsibilities across Asia and Europe, becoming chief commercial officer of Coach, Inc. in 2013 and chief executive officer in 2014. Prior to joining Coach, Inc., from 2002 to 2006, Mr. Luis was president and chief executive officer of Baccarat, Inc., where he ran the North American operation of the French luxury brand. Mr. Luis joined the Moët-Hennessy Louis Vuitton Group in 1995, ultimately advancing to president and chief executive officer of its subsidiary, Givenchy, Japan Incorporated, before leaving in 2002. +Selected Qualifications and Skills +• International - Significant experience in managing multi-national teams while at Coach, Inc. and Moët-Hennessy Louis Vuitton Group. +• Retail - Previously served as chief executive officer of several global luxury retailers. +• Premium Branding and Innovation - Experience spanning over two decades as chief executive officer of Tapestry, Inc., overseeing its modern luxury brands, and as chief executive officer of Baccarat, Inc. and Givenchy, Japan Incorporated. +• Industry - Experience in footwear, apparel and accessories while serving on the board of Tapestry, Inc. with the brands Coach, Kate Spade and Stuart Weitzman. +• Public Company Executive - Executive management experience, including service as chief executive officer of publicly traded companies. +15 +LAURI M. SHANAHAN +Age: 63 +Director Since: 2011 +Board Committees: +Audit & Risk Management +Corporate Responsibility, Sustainability & Governance +Public Company Directorships: +CAVA Group, Inc. (NYSE: CAVA) +Biographical Information +Ms. Shanahan has over 27 years of senior-level experience in retail, consumer products and hospitality, ranging from global, multi-channel, multi-brand enterprises to small and mid-cap growth companies. In June 2023, she joined the board of directors and is the chair of the people, culture and compensation committee and a member of the nominating, governance and sustainability committee of CAVA Group Inc. (NYSE: CAVA), a national, Mediterranean fast casual restaurant chain and consumer products brand. From 2016 to 2025, she served on the board of directors of Treasury Wine Estates Limited, a vertically integrated global wine business with over 70 brands. Throughout her tenure, she held the roles of chair of the human resources committee and member of the nominations committee. She joined Gap Inc. in 1992 and served in numerous leadership roles, including chief administrative officer, chief legal officer and corporate secretary and chair of the foundation board, during her 16-year career with the company. Since then, she has served as a principal of Maroon Peak Advisors, a consumer products and retail consulting firm. +Selected Qualifications and Skills +• Public Company Executive - Joined Gap Inc. in 1992 and served for 16 years in numerous leadership roles including chief administrative officer, chief legal officer and corporate secretary and chair of the foundation board. Gap Inc. is a leading global specialty retailer offering clothing, footwear, accessories, and personal care products for men, women, children, and babies under the Gap, Banana Republic, Old Navy, and Athleta brands. +• International - Directly involved in global brand development, supply chain and worldwide operations while at Gap Inc. and as a director and consultant. +• Supply Chain Management and Retail - Involved in retail, franchise, online licensing and other distribution channels, as well as sourcing and supply chain, while at Gap Inc. and as a consultant. +• Sales and Marketing - Acquired sales and marketing experience throughout her career at Gap Inc. and as director and consultant. +• Industry - Experience in footwear, apparel and accessories at Gap Inc., Charlotte Russe Holdings, Inc. and through a retail consulting firm. +• Premium Branding and Innovation - Experience at Gap Inc., through service on the board of Treasury Wine Estates Limited and through a retail consulting firm. +• Compliance and Risk Oversight - In addition to other leadership roles at Gap Inc., served as chief compliance officer and chief legal officer, overseeing the global corporate risk committee, as well as the global governance and compliance organization. +• Corporate Responsibility - While at Gap Inc., led development and oversight of global strategy, organization and execution of comprehensive social and environmental programs involving product development, supply chain, stakeholder engagement and employee and consumer-facing initiatives. Served as president of Gap Inc. Foundation and also led government affairs and public policy. +16 +BONITA C. STEWART +Age: 69 +Director Since: 2014 +Board Committees: +Corporate Responsibility, Sustainability & Governance (Chair) +Talent & Compensation +Public Company Directorships: +PagerDuty, Inc. (NYSE: PD) +Biographical Information +Ms. Stewart is currently a Founder/Managing Partner at BAG Ventures, a venture capital firm investing in enterprise artificial intelligence. She was previously a Board Partner at Gradient Ventures, Google's early-stage venture fund focused on artificial intelligence. Throughout her career she has helped drive digital transformation at scale across multiple industries. Ms. Stewart served in various executive roles at Google, Inc. (Nasdaq: GOOG, GOOGL), a subsidiary of Alphabet Inc., including as Vice President, Global Partnerships where she led partner management for the largest U.S. publishers across search, news, commerce, media and entertainment, telecommunications and mobile applications. In January 2021 she joined the board of directors and serves as the chair of the nominating and corporate governance committee and a member of the compensation committee for PagerDuty (NYSE: PD), a digital operations management company. Ms. Stewart previously served on the board of directors and as a member of the compensation committee and nominating and corporate governance committee for Volta Industries, Inc., which was an NYSE-listed company. Ms. Stewart served as a corporate director for Pluralsight, Inc., a company previously listed on Nasdaq, from 2018 to 2021. From 2002 to 2006 she worked for DaimlerChrysler AG (now Daimler AG) as director of Chrysler Brand Advertising and the director of Chrysler Group’s first Interactive Communications team. Ms. Stewart began her career in 1979 at IBM Corporation (NYSE: IBM) where she served in various financial and marketing management positions. She is the co-author of A Blessing: Women of Color Teaming Up to Lead, Empower and Thrive and the 2019-2020 Women of Color in Business Cross-Generational Survey. +Selected Qualifications and Skills +• Industry - Over 32 years of experience in brand management, digital strategy, and execution. +• High Level of Financial Literacy - Led strategy, business development and revenue growth plans for Google Inc.'s largest publisher partnerships. Holds an M.B.A. from Harvard Business School. +• Consumer and Emerging Technology - Extensive experience in digital transformation, enterprise AI solutions, and data driven digital strategies across multiple industries. +• Entrepreneurial - Served as president, chief operating officer, and co-founder of Nia Enterprises, LLC, a web-based company, and founder and chief executive officer of One Moment in Time, a women's formal-wear rental company. +• Sales and Marketing - Acquired sales, marketing, product distribution and online advertising experience. +• International - Led publisher partnerships for Latin America and Canada and has worked for Daimler AG and IBM Corporation, which are multi-billion dollar global companies. +• Public Company Executive - Strategic planning and large-scale operations experience with Google Inc. and IBM Corporation. +• Technology Infrastructure and Cybersecurity - Extensive experience in technology-based companies and fluency in digital transformation including digital strategy, mobile, video, programmatic, online advertising, cloud solutions, analytics and data privacy. +• Corporate Responsibility - Experience with employee resource group executive sponsorship, global hiring and retention processes and racial equity compliance oversight. +17 +Summary of Qualifications and Skills of Directors +As part of our Board evaluation and director selection processes, the Corporate Responsibility, Sustainability & Governance Committee maintains a director skills matrix. When evaluating potential nominees, the Committee and the Board take into account the experiences and backgrounds represented on our Board. The director skills matrix below summarizes the specific qualifications, attributes, skills and experience of each director nominee that led our Board to conclude that such director nominee is qualified to serve on our Board. +Davis Burwick Caroti Chan Figuereo Grismer Ibrahim Luis Shanahan Stewart +Industry. Important to have knowledge and experience in footwear, apparel, accessories related industries or multi-brand portfolios . +u u u u u u +Premium Branding and Innovation. Valuable to our business to have experience in developing brand strategies, building brand equity, performance and lifestyle, innovation and growing premium brands. +u u u u u u u u u +Retail. Valuable to our business to have retail strategy, portfolio management and store operations experience. +u u u u u u u u +Sales and Marketing. Important to provide oversight to our sales and marketing strategies across our multi-channels. +u u u u u u u u +Supply Chain Management. Relevant to our business to have an understanding of product development, sourcing, inventory management, distribution and logistics. +u u u +International. Important to have operational or management experience with global or multi-national teams and businesses. +u u u u u u u u u +High Level of Financial Literacy. Financial accounting, corporate finance and related skills are instrumental to our operations . +u u u u +Mergers and Acquisitions. Helpful to have experience in strategic planning and execution of mergers, acquisitions and other large-scale strategic alternatives. +u u u u u u u +Technology Infrastructure and Cybersecurity. Valuable to have experience related to technology governance, including privacy, data management and security. +u u u u u u +Consumer and Emerging Technology. Relevant to have experience in developing and implementing technology related to consumer acquisition, relationship management, data analytics, artificial intelligence (AI) and digital engagement. +u u u u +Corporate Governance. Important to provide oversight of our corporate governance practices to ensure they reflect industry best practices . +u u u u u u u u +Compliance and Risk Oversight. Important to provide oversight to our compliance and risk management programs. +u u u u u u +18 +Corporate Responsibility. Relevant to have experience in developing, implementing or overseeing ESG programs. +u u u u +Public Company Executive. Valuable to have experience in managing a public company at the executive officer/C-suite level. +u u u u u u u u u +Human Resources and Talent Management. Important to have experience in management strategies, belonging & inclusion initiatives, succession planning and organizational design initiatives. +u u u u u u u u u +Consent to Serve +Each of the persons named above has consented to being named in this Proxy Statement and to serve as a director if elected, and our Board has no reason to believe any of the nominees will be unable or unwilling to serve as a director. If, however, any nominee withdraws or otherwise becomes unavailable to serve, our Board may decrease the size of our Board, or the proxies may be voted for the election of such other person as a director as our Board may recommend in place of the nominee. +Required Vote +Because this is an uncontested election, the election of our director nominees at the Annual Meeting requires the affirmative vote of a majority of the votes cast by the shares present virtually or represented by proxy and entitled to vote on the election of directors at the Annual Meeting (assuming that a quorum is present). A "majority of the votes cast" means the number of shares voted "FOR" a director nominee must exceed the number of shares voted “AGAINST” a director nominee. +This proposal is considered a "non-routine" matter under NYSE rules. As a result, a bank, broker, dealer, or other nominee may not vote without instructions on this matter, so there may be broker non-votes in connection with this proposal. Abstentions and broker non-votes are not counted as votes "FOR" or "AGAINST" a director nominee and will have no effect on the election of directors. If no contrary indication is made, returned proxies will be voted "FOR" each of the director nominees, or in the event any nominee is unable to serve as a director at the time of the election, returned proxies will be voted "FOR" any nominee designated by our Board to fill the vacancy. +BOARD +RECOMMENDATION +OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE +" FOR " +THE ELECTION OF EACH OF THE TEN +DIRECTOR NOMINEES. +19 +CORPORATE GOVERNANCE +Corporate Governance at Deckers +Corporate governance is managed under the direction of our Board. Our Board has a long-standing commitment to comprehensive and effective corporate governance practices. Our Board continues to evaluate our governance policies and procedures to ensure that the right mix of individuals is present in our boardroom and to ensure effective oversight of our strategy and management in order to best serve our stockholders. Our Board has adopted Corporate Governance Guidelines that set forth the primary framework of governance principles applicable to our Company, a copy of which is available on our website at ir.deckers.com in the Governance Overview section of the Governance tab. +Corporate Governance Elements +Our Board is committed to maintaining the highest standards of corporate governance and has established a strong framework by which our Company is governed. Key elements of our corporate governance framework include: +OUR POLICY OR +PRACTICE DESCRIPTION AND BENEFIT TO OUR STOCKHOLDERS +STOCKHOLDER RIGHTS +Annual Election of Directors +• Our directors are elected annually, reinforcing their accountability to our stockholders. We do not employ a classified board structure. +Single Class of Outstanding Voting Stock +• Our common stockholders control our Company with equal voting rights. +Majority Voting Standard +• We have a majority voting standard for uncontested director elections. +BOARD STRUCTURE +Director Independence +• Based on the director independence requirements set forth in our Corporate Governance Guidelines, as well as under applicable SEC and NYSE rules, our Board has determined that each of our director nominees, other than Mr. Caroti, is an "independent director." Accordingly, if all director nominees are elected at the Annual Meeting, nine out of ten members of the Board will be "independent directors." +• Our three standing Board committees: the Audit & Risk Management Committee, the Talent & Compensation Committee and the Corporate Responsibility, Sustainability & Governance Committee, consist exclusively of independent directors and have adopted written charters. Committee composition and charters are reviewed annually by our Board. +Board Leadership Structure +• Our Corporate Governance Guidelines allow our Board to determine whether to separate or combine the roles of the Chair and Chief Executive Officer. Currently, Ms. Davis, who is an independent director, serves as Chair of the Board. We believe this is the most appropriate leadership structure for our Company at this time. +Annual Board Self-Evaluations +• The Corporate Responsibility, Sustainability & Governance Committee conducts and oversees annual evaluations of our Board, each Board committee and each individual director, to ensure they are effective and continue to serve the best interests of our stockholders. We periodically engage an independent third party to facilitate these evaluations. +Board Oversight of Risk +• Our Board is generally responsible for oversight and has delegated the oversight of specified risk areas to its standing committees, including primary oversight of our risk-management framework to our Audit & Risk Management Committee. Our full Board regularly engages in discussions about the most significant risks we face and how these risks are managed. +EXECUTIVE COMPENSATION +Annual Say-on-Pay Vote +• Historically, we have provided our stockholders the opportunity to approve, on a non-binding advisory basis, the compensation of our Named Executive Officers on an annual basis as this affords our stockholders the ability to provide routine feedback on our executive compensation program. +Corporate Governance Principles +Pursuant to Delaware law and our Bylaws, our business, property and affairs are managed under the direction of our Board. Thus, our Board is the ultimate decision-making body of our Company, except with respect to those matters reserved for our stockholders. +20 +Our Board selects our Chief Executive Officer and works together with our Chief Executive Officer to select our senior management team, which is charged with the day-to-day operation of our business. Members of our Board are kept informed about our business through discussions with our Chief Executive Officer and other senior management personnel, including by attending brand sales meetings and industry events, participating in periodic informal telephonic meetings, and reviewing materials provided to them, as well as by attending formal meetings of our Board and its committees. Having selected the senior management team, our Board acts as an adviser and counselor to senior management, monitors its performance, and proposes or makes changes to the senior management team when it deems necessary or appropriate. +Board of Directors Meetings +BOARD OF DIRECTORS +Meetings in Fiscal Year 2026: 5 +• Each of our directors attended at least 80% of Board meetings and meetings of the Board committees on which he or she served during the period in which he or she served on the Board or on any Board committee. +• Time is scheduled for our independent directors to meet in an executive session at every Board meeting. Ms. Davis presides over each executive session. +• Our Corporate Governance Guidelines state that directors are expected to attend each of our annual meetings of stockholders. In fiscal year 2026, the majority of our Board members attended the annual meeting of stockholders held in September 2025. +Director Independence +Our Corporate Governance Guidelines, as well as applicable NYSE rules, require that our Board be comprised of a majority of directors who satisfy the criteria for independence set forth in the NYSE rules. These guidelines help ensure that the interests of our Board and management are aligned with those of our stockholders, that conflicts of interest are avoided, and that we are in compliance with applicable SEC and NYSE rules. An "independent director" is one who our Board affirmatively determines has no material relationship with our Company (either directly or as a partner, stockholder, or officer of an organization that has a relationship with our Company) and otherwise meets the requirements of the NYSE rules. +Based on the director independence requirements set forth in our Corporate Governance Guidelines, as well as in the applicable NYSE rules, our Board has determined that each of our directors, other than Mr. Caroti, , is an "independent director." In addition, all members of the Audit & Risk Management Committee, Talent & Compensation Committee, and Corporate Responsibility, Sustainability & Governance Committee meet the independence standards set forth in applicable SEC and NYSE rules. +Board Leadership Structure +Our Corporate Governance Guidelines allow the Board to determine whether to separate or combine the roles of chair and chief executive officer. Our Board believes it is important to maintain flexibility in our Board leadership structure to best serve the interests of the Company and its stockholders at any particular time. However, our Board firmly supports having an "independent director" serve in a Board leadership position at all times. +In determining the appropriate structure, our Board considers multiple factors, including our business and strategic needs at the time and the composition of our Board. The roles of Chair and Chief Executive Officer are currently separated. Our Board believes this leadership structure allows our Chief Executive Officer to focus on the day-to-day operation and management of our Company, while allowing our Chair to focus on leading the Board in overseeing the interests of our Company and stockholders. Our Chair, Ms. Davis, leverages her extensive experience in matters related to premium branding, retail, and risk oversight to advise the Company on identified and anticipated risks, as well as to drive strategy and agenda setting at the Board leve l. Our Chief Executive Officer, Mr. Caroti, utilizes his extensive leadership experience in the footwear and apparel industry to drive the Company's strategic vision, oversee its long-term growth, and provide general oversight of the business and affairs of the Company. +While the Board believes the current structure is appropriate at this time, it regularly assesses the advantages and disadvantages of various structures taking into account the evolving needs of the business. +Board Committees +Our Board has three standing committees: the Audit & Risk Management Committee, the Talent & Compensation Committee, and the Corporate Responsibility, Sustainability & Governance Committee. Each member of each of the committees is an "independent director" for purposes of applicable SEC and NYSE rules. Each of our committees has a written charter that describes its purpose, membership, meeting structure, and responsibilities. A copy of each committee's charter is available on our website at ir.deckers.com in the Governance Documents section of the Governance tab . These charters are reviewed annually by each committee, with any recommended changes approved by our Board. The Audit & Risk Management Committee charter was amended in September 2025, the Corporate Responsibility, Sustainability & Governance Committee charter was amended in September 2025, and the Talent & Compensation Committee charter was amended in January 2026. +21 +Summary information regarding the membership, meetings, and primary responsibilities of each of the three standing committees of our Board for fiscal year 2026 is provided below: +AUDIT & RISK MANAGEMENT COMMITTEE +Meetings in Fiscal Year 2026: 10 +Current Members: +Juan R. Figuereo ( Chair ) +All members of the Audit & Risk Management Committee meet the independence and experience standards set forth in applicable SEC and NYSE rules. Mr. Figuereo, Mr. Chan, and Mr. Grismer have been determined by our Board to be "audit committee financial experts" under applicable SEC rules. +Nelson C. Chan +Patrick J. Grismer +Lauri M. Shanahan +• Oversees management's conduct with respect to, and the integrity of, our financial reporting functions. +• Oversees the engagement, independence and performance of the registered public accounting firm that audits our annual financial statements and reviews our quarterly financial reports. +• Oversees our legal, regulatory and ethical obligations. +• Oversees the performance of our internal audit function. +• Oversees the application of our related-person transaction policy as established by our Board. +• Oversees our systems of internal control over financial reporting disclosure controls and procedures. +• Oversees our enterprise risk identification, assessment and management policies, procedures, and practices, including matters related to data protection, cybersecurity, artificial intelligence, and risk management initiatives related to information technology. +• Oversees the application of our Code of Ethics as established by our Board. +TALENT & COMPENSATION COMMITTEE +Meetings in Fiscal Year 2026: 4 +Current Members: +Victor Luis (Chair) +All members of the Talent & Compensation Committee meet the independence standards set forth in applicable SEC and NYSE rules. +David A. Burwick +Bonita C. Stewart +• Oversees the design of our executive compensation program, and is responsible for oversight of our employment practices and policies. +• Reviews and approves goals and objectives relevant to the compensation of our executives and evaluates performance in light of those goals and objectives. +• Oversees our key human capital management strategies and programs. +• Reviews our overall talent management strategy, including development and succession plans for our executives and management. +• Determines and approves the compensation of our executives based, in part, on these evaluations, including each element of compensation. +• Makes recommendations to our Board regarding any action that is required to be submitted to our stockholders for approval with respect to incentive compensation plans and equity-based plans. +• Administers and approves our equity-based plans, and approves (or delegates authority to approve, below the executive level) individual award grants under those plans, or recommends award grants to our Board for approval. +• Produces our report on executive compensation for inclusion in our proxy statement for our annual meeting of stockholders. +22 +CORPORATE RESPONSIBILITY, SUSTAINABILITY & GOVERNANCE COMMITTEE +Meetings in Fiscal Year 2026: 4 +Current Members: +Bonita C. Stewart (Chair) +All members of the Corporate Responsibility, Sustainability & Governance Committee meet the independence standards set forth in applicable NYSE rules. +Nelson C. Chan +Maha S. Ibrahim +Lauri M. Shanahan +• Develops and recommends to our Board a set of Corporate Governance Guidelines that establish a framework of governance principles applicable to us. +• Identifies and actively seeks individuals qualified to become directors, consistent with criteria specified in the Corporate Governance Guidelines. +• Recommends to our Board the qualified director nominees to be selected by our Board. +• Recommends to our Board membership of our Board committees. +• Oversees the Company's ESG Program, and periodically reviews with management our policies and practices with respect to belonging & inclusion and our specific sustainable development goals. +• Reviews our certificate of incorporation and Bylaws to determine whether they are structured in a manner that best serves our practices and objectives and recommends amendments to our Board as appropriate. +• Oversees the evaluation of management, our Board and Board committees. +Nominating Procedures and Criteria +Among its functions, the Corporate Responsibility, Sustainability & Governance Committee considers and approves nominees for election to our Board. We view board succession as an ongoing process and regularly identify, evaluate and pursue prospective candidates. In addition to the candidates identified by the Committee, the Committee considers candidates for director proposed by our stockholders, provided such recommendations are made in accordance with the procedures set forth in our Bylaws. Stockholder nominations that meet the qualification criteria referred to below will receive the same consideration as nominations made by the Committee. +Essential criteria for all candidates considered by the Corporate Responsibility, Sustainability & Governance Committee are discussed in the section of this Proxy Statement titled "Director Qualifications. " In considering individual candidates, the Committee also evaluates additional criteria, as reflected in the section of this Proxy Statement titled " Summary of Qualifications and Skills of Directors. " +In selecting nominees for our Board, the Corporate Responsibility, Sustainability & Governance Committee evaluates the general criteria referred to above, identifies any specialized criteria for which the Committee has determined there is a need, and considers the candidate's ability to meet the required criteria and contribute to the success of our Company. In evaluating an existing director for reelection, in addition to assessing the criteria referred to above, the Committee considers a variety of factors, including attendance at Board and committee meetings, independence, length of service, previous Board and committee performance, and overall contributions to our Company. From time to time, the Committee retains independent third-party search firms, consultants, and other advisors, as appropriate, to help identify, screen, and evaluate candidates and to enhance our Board’s preparedness in the event of an unplanned director departure. +Management Succession and Talent Development +The Talent & Compensation Committee, pursuant to its charter, is responsible for overseeing the management succession planning process. As part of that responsibility, the Committee reviews and evaluates the development and succession plan relating to our executive officers, including considerations of career paths and attracting and retaining high-quality talent. The Board is responsible for these actions with respect to our Chief Executive Officer. The Committee works with the Board to assess whether we have the management talent needed to successfully pursue our business objectives. The Board also regularly considers the competencies necessary for our Chief Executive Officer to support our strategies for long-term success. +Risk Governance Structure +Our Board has overall responsibility for the oversight of our Company's risk management process, which is designed to support the achievement of organizational objectives, including strategic objectives, improve long-term organizational performance and enhance stockholder value. It has developed processes to identify, evaluate and manage short-, medium- and long-term risks to ensure they are prioritized on a timely basis. Risks are typically categorized based on the severity and probability of the risk and addressed or escalated as appropriate. The Board members provide objective, independent oversight of risk and focus on the most significant risks facing the Company. Our legal and internal audit executives report directly to the Audit & Risk Management Committee regarding material risks to our business, among other matters, and facilitate the identification, assessment and +23 +development of controls and procedures that address identified risks. The highest-ranking manager of our internal audit function periodically meets with the Audit & Risk Management Committee and the Board to discuss identified risks, the status of management’s risk mitigation actions, and, if applicable, any emerging risks. Separately, our Risk & Compliance Advisory Committee, an independent committee overseen by our internal audit team, evaluates organizational risks and discusses opportunities for compliance and risk mitigation. +Board Role in Risk Oversight +• Annually reviews or assesses the effectiveness of our Company’s enterprise risk management programs and framework, including the processes for identifying, assessing, prioritizing, and responding to our enterprise-wide risk exposures, to ensure that robust risk management strategies are in place. On an annual basis, under the direction of our Audit & Risk Management Committee, our Company undertakes an enterprise-level risk management review that is designed to bring to the Board’s attention our most material risks for evaluation, including strategic, operational, regulatory, and compliance risks. +• Receives regular updates from management regarding our organization’s portfolio of risk and engages in discussions to understand and assess our overall risk management activities. Our Board further apprises itself of the most significant risks facing our Company, ensuring that robust risk response actions have been established and implemented, with an independent review by internal audit. Management and our Board assess the Company's risk environment on a quarterly basis to ensure the Company is adequately anticipating future exposure to liability. +• On an annual basis, under the direction of our Corporate Responsibility, Sustainability & Governance Committee, our Board reviews and assesses our corporate responsibility and sustainability efforts, including risks related to environmental and social issues, as well as risks related to corporate governance issues. +• Inquires of management to understand and assess the effectiveness of the mechanisms in place for monitoring and responding to emerging risks. +• Engages in critical dialogue with our executive leadership and technology-focused personnel to ensure our organization has a robust plan to detect, stop, and mitigate the effects of cyberattack incidents, including resuming normal operations as quickly as possible, and to oversee the responsible use of artificial intelligence and the management of associated risks across the enterprise. +• Engages in active discussion with management to understand our Company’s risk philosophy to ensure understanding of overall appetite for risks that align with ability to create stockholder value. +• Engages actively with management on Chief Executive Officer succession and works to nominate and evaluate potential successors for this role. +• Reviews identified risks with management at regular committee meetings and provides input on these risks and mitigation steps. +Below is a summary of key risk oversight responsibilities delegated to our three committees: +Audit & Risk Management Committee +• Oversees financial risks and monitors related management policies and procedures. +• Plays a strategic role in assessing and monitoring our Company’s response to cyber threat trends, receiving periodic updates on cyber risk management initiatives, and obtaining independent confirmation of their efficacy through regular reviews by internal audit. Engages in regular dialogue with management, our Chief Digital & Data Officer and Chief Information Security Officer on technology risk related topics on every Audit & Risk Management Committee meeting agenda, ensuring that the Company's cybersecurity and artificial intelligence efforts align with its business objectives and operational needs. +• Receives regular updates from management on cybersecurity or information security incidents that may pose a significant threat to our Company, and assesses our Company’s key metrics for measuring our capabilities to manage cybersecurity and technology risk. +• Oversees management's efforts to proactively identify, assess and mitigate risks associated with the Company's use of artificial intelligence, including initiatives to promote safe, ethical and responsible use of artificial intelligence. +• Our Board also receives an independent perspective from our internal audit function. +• Provides oversight for compliance risk and regularly receives updates from management on compliance-related matters. +Our legal and internal audit executives report directly to the Audit & Risk Management Committee regarding material risks to our business, among other matters, and the Audit & Risk Management Committee meets in executive sessions with our highest-ranking manager of internal audit and with representatives of our independent registered public accounting firm. +24 +Talent & Compensation Committee +• Oversees the design of our executive compensation program so as to encourage achievement of our strategic objectives and mitigate compensation-related risk. +• Oversees key human capital management strategies and programs. +• Evaluates succession planning risk regarding the executive officers. +Corporate Responsibility, Sustainability & Governance Committee +• Oversees risks related to our corporate responsibility and sustainability efforts, including risks related to environmental and social issues, such as climate change, as well as risks related to corporate governance issues. +• Receives quarterly updates on the status of our ESG Program and related risks. +• Develops and recommends to the Board our Corporate Governance Guidelines to establish and oversee an appropriate governance framework. +Information Security Risk Oversight +Our Board has delegated oversight of the Company's information security program to the Audit & Risk Management Committee. Our information security initiatives are led by management, with primary accountability held by our Chief Digital & Data Officer, and Chief Information Security Officer. These executives are responsible for the operation of our information security program and provide quarterly updates to the Audit & Risk Management Committee on the program, and annual updates to the full Board with respect to the state of the program, assessments of the cyber risk landscape, including discussion on emerging risks and trends, and compliance with data privacy regulatory requirements. As part of this program, we also proactively identify, assess and mitigate risks associated with artificial intelligence to promote safe, ethical and responsible use. Our information security program also includes a cybersecurity incident response plan that is designed to provide a management framework across our Company. We engage external firms to assist us in the independent evaluation of our information security processes and capabilities. Our employees receive annual trainings on responsible information security, data security and cybersecurity practices including appropriate action to take against cyber threats. We also maintain a cybersecurity and information security risk insurance policy, which insures for data incidents or breaches and other technology-related exposures. +Talent & Compensation Committee Interlocks and Insider Participation +As of the date of this Proxy Statement, no member of the Talent & Compensation Committee is, and or during fiscal year 2026 was, an officer or employee of our Company or any of its subsidiaries. None of our executive officers currently serves, or during the past year has served, as a member of the board of directors or compensation committee (or other committee serving a similar purpose) of any entity that has an executive officer serving on our Board or the Talent & Compensation Committee. In addition, none of the Talent & Compensation Committee members had any relationship, or participated in any transaction, with our Company during fiscal year 2026 that requires disclosure under SEC rules. +We have entered into indemnification agreements with each of our directors, including each member of the Talent & Compensation Committee. +Communications with Directors +Stockholders and other interested parties may communicate with the Chair of our Board, the Chair of any Board committee, with our independent directors as a group, or with any individual director, by writing to any such person or group. Communications should be sent to the following address: +Deckers Outdoor Corporation +Attn.: Corporate Secretary +250 Coromar Drive +Goleta, California 93117 +Communications are distributed to our Board, or to any individual director, depending on the facts and circumstances described in the communication. Our Board has requested that certain items that are unrelated to the duties and responsibilities of our Board should be excluded, including the following: junk mail and mass mailings, product inquiries or complaints, new product suggestions, resumes and other forms of job inquiries, surveys, and business solicitations or advertisements. In addition, material that is unduly hostile, threatening, illegal or similarly unsuitable will not be distributed, except that any communication that is not distributed will be made available to any director upon request. +Code of Ethics and Accounting and Finance Code of Ethics +Our Board has adopted a Code of Ethics to assist our officers, directors and other employees in complying with legal and regulatory requirements and maintaining the highest standards of ethical conduct. All of our directors, officers, and employees receive annual training on the Code of Ethics and must carry out their duties in accordance with the policies set forth in the Code +25 +of Ethics and with applicable laws and regulations. The Code of Ethics complies with the requirements set forth in applicable NYSE rules. +Our Board has also adopted a separate Accounting and Finance Code of Ethics which focuses on the financial reporting process and applies to our Chief Executive Officer, Chief Financial Officer and Corporate Controller (and other employees serving similar functions). The Accounting and Finance Code of Ethics is intended to qualify as a "code of ethics" under applicable SEC rules and to satisfy the standards of ethics and compliance programs under applicable NYSE rules. +Our Code of Ethics and our Accounting and Finance Code of Ethics are available on our website at ir.deckers.com in the Governance Documents section of the Governance tab. To the extent required by law, any amendments to or waivers of any provision of the Code of Ethics or the Accounting and Finance Code of Ethics will be promptly disclosed publicly on our website. +Stockholder Engagement +We are committed to ongoing, proactive engagement with our stockholders on a number of significant topics, including our business and strategic objectives, capital allocation strategy, corporate governance framework, and executive compensation program. We value our stockholders' perspectives and believe their input contributes meaningfully to our long-term success. To that end, we routinely engage with our investors to understand their views and ensure they are considered in Board and management discussions about our strategic direction. +Our stockholder outreach program is led by a cross-functional team that includes members of our Investor Relations, ESG, and Legal teams. +In fiscal year 2026, we contacted stockholders representing approximately 41% of our outstanding shares to solicit feedback and share updates on various matters, including our corporate governance framework, executive compensation practices, and ESG priorities. Investors were generally supportive of our approach across these areas. The feedback we received was shared with our Board and members of management and taken into account in our decision-making processes. +We believe transparent communication with our stockholders is critical to our long-term success, and that the feedback received through our stockholder engagement efforts contributes to the evolution and success of our business. We plan to continue proactive outreach efforts going forward. +Please refer to the section of this Proxy Statement titled “ Compensation Discussion and Analysis - Stockholder Outreach" for more information regarding stockholder engagement specific to executive compensation. +Our People and Our Culture +Our key values, which guide our journey onward together to improve our business and create a better world around us, and help hold us accountable to deliver on this purpose, are as follows: +Our values define our Company and serve as the driving force behind how we work together and with our customers, consumers, partners, suppliers, and communities. We also have detailed policies that support our commitment to ethical behavior and legal compliance across our Company. Through our open-door policy and culture, employees are encouraged to approach their managers if they believe violations of standards or policies have occurred and are able to make confidential and anonymous reports using a 24/7 online or telephone hotline hosted by an independent third-party provider. +We believe our culture makes us unique. We regularly conduct employee surveys to understand our employees' experiences on a variety of topics focused on employee engagement. Our latest survey completed in August 2025 had a participation rate of 92.3%. Of those employees who completed the survey, 88.4% noted they were proud to work for Deckers. +We believe an inclusive workplace that promotes belonging for everyone brings together those with a unique set of experiences, opinions, and thoughts on critical issues. In turn, these varied perspectives enhance our business and drive better outcomes. Our people are at the center of everything we do. Their perspectives and passion for innovation enable us to build brands and +26 +create products that people around the world love. We strive to create an environment where employees can come as they are and are free to bring their authentic selves to work every day. +We publish workforce metrics in our annual Equal Employment Opportunity filing (EEO-1) which is publicly available at deckers.com/responsibility/policies . The content of our website, including our annual EEO-1 filing, is not incorporated by reference into this Proxy Statement or in any other report or document we file with the SEC. +Charitable Giving and Volunteering +Our charitable contributions, product donations, and employee volunteer efforts are an essential part of our culture. We annually contribute to our local communities through monetary donations, volunteer efforts and in-kind donations. During fiscal year 2026, we donated over $5.4 million to various non-profit organizations around the globe, primarily to organizations focused on uplifting youth, community, belonging, education, and the environment. We also continued our Art of Kindness events, where employees volunteer during a week-long event in our local communities. Despite having only one event during fiscal year 2026, our employees collectively volunteered approximately 10,500 hours. Our strategic giving and community-engagement efforts continued to be aligned with our sustainable development goals (SDGs). +Environmental, Social, and Governance +As a global leader in designing, marketing, and distributing innovative footwear, apparel, and accessories, our worldwide reach and impact is significant. We believe consumers are increasingly buying brands that deliver quality products while striving for minimal environmental impact by employing sustainable business practices. Our sustainability policies and strategies are informed by our ongoing efforts with multi-stakeholder initiatives, which involve our stockholders, employees, suppliers, and customers, as well as other brands and non-governmental organizations. +ESG Oversight +Our Corporate Responsibility, Sustainability & Governance Committee oversees our ESG strategy and has oversight over all sustainability initiatives, strategies, and programs, including those related to climate change, human rights, community engagement, charitable giving, and belonging. The Corporate Responsibility, Sustainability & Governance Committee and Board regularly receive updates on the status of our ESG program. In addition, the Audit & Risk Management Committee periodically assesses risk management, including climate-related risks and policies, to ensure a consistent corporate strategy. The Board considers whether the ESG program adequately identifies material risks in a timely fashion, implements appropriate responsive risk management strategies, and ensures that management transmits necessary information with respect to material risks within the organization. Our Chief Administrative and Legal Officer is responsible for the day-to-day management of our ESG program. The program’s execution is driven by our leadership team and various cross-functional teams including our ethical sourcing, facilities, warehouses and distribution centers, brands, innovation, materials, and supply chain teams. +Our ESG program aligns our internal teams with our SDGs, which we adopt to guide our ESG strategy, and establishes policies to encourage our partners and suppliers to employ sustainable business practices. We annually assess risks related to ESG issues as part of our overall enterprise risk management approach. In addition, our internal audit team provides periodic targeted reviews of our ESG-related policies and procedures to the Audit & Risk Management Committee. +Sustainable Development Goals +We work to establish SDGs that we believe are the most relevant to our business, our operations, our stockholders, and the communities in which we operate. We are a member of the United Nations Global Compact (UNGC), the world’s largest voluntary corporate sustainability initiative. This membership requires an annual statement of progress, which is reflected in our Corporate Responsibility and Sustainability Report (Creating Change Report). Our Chief Administrative and Legal Officer identifies specific SDGs established by the UNGC, which we adopt to guide our ESG strategy. +27 +TOPIC DECKERS SDG UNGC SDG +Materials Maximize the amount of preferred materials in our products +Waste Sustainably reduce waste generated at our facilities and partner facilities through refuse, reduction, recycling, and reuse +Water Reduce water consumption and improve water quality throughout our operations and the communities in which we operate +Climate and Clean Energy Reduce energy consumption and carbon emissions throughout our operations +Chemistry and Consumer Safety Reduce or eliminate hazardous chemicals throughout our operations +Human Rights Positively impact the communities in which we operate, including assuring industry-leading human rights practices within our supply chain +Gender Equality, Quality Education and Reduced Inequalities Promote belonging, gender equality, female empowerment, and inclusion for all +Our annual Creating Change Report for fiscal year 2026, which will be published in calendar year 2026, will provide more information regarding our fiscal year 2026 ESG achievements with a focus on the SDGs. In addition, during fiscal year 2026, we adopted a comprehensive Climate Transition Plan, reflecting our commitment to proactive environmental stewardship. +We recognize that agility and continuous improvement are essential to advancing our global ESG strategy, enabling us to respond effectively to evolving challenges and opportunities in sustainability. To that end, we have aligned the reporting standards included in our Climate Transition Plan to the Transition Plan Taskforce and our Creating Change Report with various frameworks including the Financial Stability Board’s Task Force on Climate-Related Financial Disclosures (commonly referred to as TCFD), Global Reporting Initiative’s (commonly referred to as GRI) Core Standards, and Sustainability Accounting Standards Board’s (commonly referred to as SASB), and now part of the International Financial Reporting Standards (or IFRS) Foundation Consumer Goods Sector Apparel, Accessories and Footwear Index. +28 +EXECUTIVE OFFICERS +Each of our executive officers serves at the discretion of our Board. Important summary information about our executive officers is set forth in the table below, followed by certain biographical information about each officer. +EXECUTIVE OFFICER AGE POSITION +Stefano Caroti 63 +Chief Executive Officer, President and Director +Steven J. Fasching 58 Chief Financial Officer +Angela Ogbechie 48 +Chief Supply Chain Officer +Thomas Garcia 53 +Chief Administrative and Legal Officer +Marco Ellerker +59 President, Global Marketplace +Anne Spangenberg 58 President, UGG +Robin Spring-Green +50 President, HOKA +STEFANO CAROTI +Age: 63 +Position: Chief Executive Officer, President and Director +Mr. Caroti was appointed as our Chief Executive Officer and President in August 2024 and joined our Board in September 2024. He was appointed as our Chief Commercial Officer in April 2023 and served in that role until July 2024. Mr. Caroti previously served as our President of Omni-Channel from November 2015 to April 2023. He has over 30 years of industry experience in general management, sales, retail, product, marketing, business strategy and brand management. Prior to joining our Company, Mr. Caroti was the chief commercial officer and managing director at PUMA, from August 2008 to December 2014, where he was responsible for PUMA’s global wholesale, retail and e-commerce divisions and PUMA’s geographic operating regions. Prior to that, he held a number of senior executive positions at NIKE, Inc. in general management, sales, product and marketing, and during his term as vice president of EMEA commerce, he was responsible for the entire wholesale, retail and e-commerce business in the EMEA region. He received a B.A. with honors from Middlebury College. +Please refer to the section of this Proxy Statement titled “ Director Nominees ” for additional biographical information about Mr. +Caroti, as well as information about the specific qualifications, attributes, skills, and experience that led our Board to conclude +that Mr. Caroti is qualified to serve on our Board. +STEVEN J. FASCHING +Age: 58 +Position: Chief Financial Officer +Mr. Fasching was appointed as our Chief Financial Officer in June 2018 and served as our Senior Vice President, Corporate Strategy, Planning & Investor Relations from February 2018 until his appointment to Chief Financial Officer. Mr. Fasching previously served as our Vice President, Strategy & Investor Relations from January 2016 to February 2018, and as Vice President, Strategic Financial Planning from August 2011 to January 2016. Mr. Fasching has over 30 years of experience in long-term financial and strategic planning and creating and leading the analytical engine of multi-billion dollar organizations. +29 +Immediately prior to joining our Company, Mr. Fasching served for five years as the director of finance and assistant controller of Princess Cruise Lines, Ltd., a cruise line owned by Carnival Corporation, where he had been promoted through a number of finance-related positions since September 1990, including director of financial planning, among others. Mr. Fasching received a B.S. degree in Business Administration from Pepperdine University and an M.B.A. from The Anderson School of Management at UCLA. He also completed The Executive Program for Prospective Chief Financial Officers through the University of Chicago Booth School of Business. +ANGELA OGBECHIE +Age: 48 +Position: Chief Supply Chain Officer +Ms. Ogbechie was appointed as our Chief Supply Chain Officer in June 2022. Prior to that, she served asSenior Vice President, Global Operations and Supply Chain Strategy from November 2021 to June 2022. Since 2008, Ms. Ogbechie has held a number of senior supply chain positions at our Company and has experience in global demand planning, logistics, distribution and fulfillment. Ms. Ogbechie received a B.A. in Economics from Stanford University and an M.B.A. from Columbia University Business School. +THOMAS GARCIA +Age: 53 +Position: Chief Administrative and Legal Officer +Mr. Garcia joined our Company in 2009. In his current position as Chief Administrative and Legal Officer he oversees Legal, ESG, Strategy and Communications. He was appointed to his position in 2021 after spending more than 12 years in multiple roles including Senior Vice President, Senior Counsel, and Compliance Officer. From 2003 to 2009, Mr. Garcia was assistant general counsel at Mentor Corporation, a medical device company acquired by Johnson & Johnson. Previously, he was an associate attorney at the law firms of Hatch and Parent, as well as Buchanan Ingersoll. Mr. Garcia earned his B.S. in Biology from Lehigh University, Master's in Public Health from The University of Massachusetts at Amherst, and J.D. from The George Washington University Law School. +MARCO ELLERKER +Age: 59 +Position: President, Global Marketplace +Mr. Ellerker was appointed as our President, Global Marketplace in August 2024 and prior to that he served as Senior Vice President & General Manager Deckers EMEA, Japan and Asia Pacific markets, where he was instrumental in repositioning the UGG brand, as well as the strategic development of HOKA in these regions. Mr. Ellerker has over 25 years of industry experience and was previously Global President of the Lifestyle Division at Pentland Brands and a member of the global executive team, where he held leadership roles covering the US, EMEA and Asia on the Lacoste, Ted Baker & Ellesse brands. He received a B.A. with honors in Business Studies from South Bank University in London. +30 +ANNE SPANGENBERG +Age: 58 +Position: President, UGG +Ms. Spangenberg was appointed as our President, UGG in July 2022. She joined Deckers after 13 years at NIKE, Inc. where she served as the company’s Chief Merchant, and previously held leadership positions at Gap, Inc. and Macy’s West. Ms. Spangenberg is an industry leader with over 25 years of experience in Global consumer-focused omni-channel retail, including product creation, merchandising, buying, analytics, stores, digital, wholesale and vertical. Ms. Spangenberg earned her B.A. in International Relations from the University of California, Davis. +ROBIN SPRING-GREEN +Age: 50 +Position: President, HOKA +Ms. Spring-Green was appointed as our President, HOKA in February 2024. She joined Deckers following 17 years at NIKE, Inc., where she held roles of increasing responsibility culminating with her position as Global Vice President of Men’s Running and Fitness. Ms. Spring-Green is a passionate runner and industry leader with over 20 years of experience across the global consumer products landscape and strong expertise leading and operating complex businesses to maximize their potential and deliver growth. Ms. Spring-Green earned a B.A. in Economics from the University of California, Davis. +31 +COMPENSATION DISCUSSION AND ANALYSIS +This Compensation Discussion and Analysis section addresses the compensation philosophy, objective, policies and arrangements that apply to our Named Executive Officers (NEOs). The purpose of this section is to provide our stockholders with a thorough understanding of our executive compensation program for fiscal year 2026. This narrative discussion is intended to be read together with the Summary Compensation Table and the related tables, footnotes and disclosures set forth below. References throughout this section to the “Committee” refer to the Talent & Compensation Committee. +This discussion is divided into the following parts: +EXECUTIVE SUMMARY +COMPENSATION OBJECTIVE AND PHILOSOPHY +COMPENSATION CONSULTANT AND PEER GROUP +ELEMENTS OF FISCAL YEAR 2026 EXECUTIVE COMPENSATION PROGRAM +OTHER COMPENSATION CONSIDERATIONS +This section contains forward-looking statements within the meaning of the federal securities laws. These forward-looking statements relate to our current plans and expectations regarding our executive compensation programs, policies and arrangements. Actual compensation programs, policies and arrangements that we adopt in the future may differ materially from those discussed in this section. Please refer to the section of this Proxy Statement titled “ Cautionary Note Regarding Forward-Looking Statements ” for additional information. +32 +EXECUTIVE SUMMARY +Named Executive Officers +The following table sets forth our NEOs for fiscal year 2026, the current positions they hold and the dates they were appointed to those positions: +NAMED EXECUTIVE OFFICER POSITION(S) DATE APPOINTED +Stefano Caroti +• Chief Executive Officer and President +• Principal Executive Officer +August 2024 +• Director September 2024 +Steven J. Fasching +• Chief Financial Officer +• Principal Financial and Accounting Officer +July 2018 +Anne Spangenberg • President, UGG +July 2022 +Robin Spring-Green • President, HOKA February 2024 +Thomas Garcia • Chief Administrative and Legal Officer February 2021 +Fiscal Year 2026 Financial and Operational Highlights +We delivered strong financial and operational results in fiscal year 2026, which are highlighted by the following: +• Total revenue growth of 9.8%, representing an increase of $487 million as compared to the prior year. +• HOKA brand revenue increased $354 million, or 15.9%, over the prior year. +• UGG brand revenue increased $207 million, or 8.2%, over the prior year. +• Diluted earnings per share increased 10.9%, or $0.69, over the prior year to $7.02. +Our strong performance over the past three fiscal years is illustrated by the financial and operational metrics in the graphs below. For each fiscal year, the information presented is for the 12-month period ended March 31. +(1) For reference, this financial metric is referred to as 'income from operations' in our Annual Report. +(2) For reference, this financial metric is referred to as 'total net sales' in our Annual Report. +The performance-based compensation earned during fiscal year 2026 was primarily a reflection of these results. Our annual cash incentive awards were based on consolidated operating income and revenue for certain executives (and consolidated operating income, business unit operating income, and business unit revenue for certain other executives with business unit oversight responsibilities), and our long-term incentive plan awards were based on consolidated pre-tax income and revenue. Our performance results produced annual cash incentive payouts of 152%, 166%, and 173% of the target for the HOKA, UGG and consolidated components, respectively, and our 2024 LTIP PSUs vested at 200% of the target. In addition, our total +33 +stockholder return during the performance period remained above our peers, reflecting our ability to deliver consistent value to our stockholders. +We believe the direct correlation between our achievement of pre-determined financial metrics, and the actual compensation paid to our executives, highlights our consistent adherence to a strong pay-for-performance philosophy. +Our Business and Strategic Objectives +Our dedicated team has been able to successfully execute on our business strategy and achieve strong financial results over the past several fiscal years. We intend to continue investing strategically in key identified areas of growth within our brand portfolio, including the following: +• The HOKA brand, generating increased awareness and gaining global market share with innovative performance footwear and enhanced lifestyle product appeal, supported by greater localization of global marketing campaigns. +• The UGG brand, maintaining and building demand through the evolution of iconic product franchises across categories, with elevated consumer experiences and versatile products that increasingly resonate year-round. +• DTC capabilities, driving lifetime value by remaining closely connected to consumers. +• Technology and analytical tools, including the responsible use of AI, intended to support gains in productivity, efficiency, and consumer acquisition. +We intend to closely monitor planned investments in our business as we remain mindful of the dynamic macroeconomic environment. We remain committed to delivering long-term stockholder value through the continued execution of our strategies. +Fiscal Year 2026 Executive Compensation Highlights +The compensation program for fiscal year 2026 remained broadly consistent with prior years in its core objectives, overarching philosophy, compensation elements, and governance features. +The primary elements of our fiscal year 2026 executive compensation program were: +• Base salaries; +• Annual cash incentive awards (2026 Annual Cash Incentive Awards); and +• Long-term equity incentive plan awards in the form of time-based restricted stock units (2026 Time-Based RSUs) and performance-based stock units (2026 LTIP PSUs). +The following table sets forth the key components of our executive compensation program for fiscal year 2026, and the underlying philosophy and considerations that provide the basis for our compensation decisions: +COMPENSATION COMPONENTS PHILOSOPHY AND CONSIDERATIONS +Strong pay-for-performance alignment • A significant portion of the overall compensation opportunity is structured as performance-based compensation tied directly to the achievement of Company financial and operational performance objectives established by the Committee. +• Our compensation program is designed to align the interests of our NEOs with those of our stockholders and encourage the achievement of financial and strategic objectives aligned with creating long-term stockholder value. +Performance metrics closely aligned with strategic objectives +• In light of our continued strategic focus on increasing revenue and enhancing profitability, the Committee selected: +(i) consolidated operating income and revenue for certain NEOs (and consolidated operating income, business unit operating income, and business unit revenue for certain other NEOs with business unit oversight responsibilities) as the performance metrics for the 2026 Annual Cash Incentive Awards, and +(ii) consolidated pre-tax income and revenue for each of fiscal years 2026, 2027, and 2028 (three-year performance period) as the performance metrics for the 2026 LTIP PSUs. +Consideration of peer group data and advice of our independent compensation consultant • We consider peer group compensation data in making executive compensation decisions, including with respect to both the target level of compensation and the overall structure of our executive compensation program. +• Our independent compensation consultant provides information on competitive pay practices and makes recommendations regarding the design and structure of our compensation program, as well as the formulation of our peer group. +34 +Balanced mix of performance metrics and measurement periods with focus on long-term performance-based vesting +• By establishing a combination of performance metrics assessed over one- and three-year periods, our compensation program encourages healthy and sustained growth across our business, and mitigates an undue focus on any single metric or timeframe. +• For fiscal year 2026, approximately 60% of the value of the equity awards granted vest based on the achievement of Company performance conditions and the remainder vest over a long-term service period to encourage executive retention. +Reference to a "median" pay philosophy • The Committee assesses target total compensation opportunity with reference to the peer-group median to ensure our compensation program remains competitive in the marketplace while mitigating compensation-related risks. +Use of long-term performance-based vesting for LTIP awards +• The 2026 LTIP PSU vesting is based on the achievement of pre-determined profitability and revenue metrics assessed each year over the three-year performance period. +• The vesting of each LTIP award is also subject to positive or negative adjustment based upon the application of a TSR modifier, thereby correlating the vesting of the award to both total and relative stockholder returns. +2026 Annual Cash Incentive Award payout based on strong financial and operational results +• The 2026 Annual Cash Incentive Awards, which covered the one-year performance period ended March 31, 2026, were paid out at 152%, 166%, and 173% of target for HOKA, UGG, and consolidated components, respectively, reflecting strong financial and operational results. +2024 LTIP PSU vesting based on strong financial and operating results, and TSR +• The 2024 LTIP PSUs, which covered the three-year performance period ended March 31, 2026, were paid out at 200% of target, reflecting strong financial and operational results, as well as strong total stockholder return compared to peers. +Continued focus on executive retention • While we seek to develop our executive compensation program so it closely aligns with our pay-for-performance philosophy, this objective must complement other critical objectives, including the retention of key executives. +Stockholder Engagement on Compensation Matters +The Committee believes transparent communication with our stockholders is critical to our long-term success. We solicit feedback from our stockholders throughout the year on various topics, including the design and effectiveness of our executive compensation program. +We believe our proactive engagement with stockholders, combined with our strong pay-for-performance alignment and compensation governance practices, has contributed to consistent, overwhelming stockholder support for our executive compensation program. Specifically, 92.7% and 92.3% of the votes cast supported our executive compensation program at our 2025 and 2024 annual meetings of stockholders, respectively. Our fiscal year 2026 executive compensation program reflects feedback received through our ongoing dialogue with stockholders. +35 +COMPENSATION OBJECTIVE AND PHILOSOPHY +Compensation Program Objective +Pursuant to its charter, the Committee has overall responsibility for developing the compensation objective and philosophy applicable to our executive leadership team, and approving our executive compensation program and policies. +The primary objective of our executive compensation program, as established by the Committee, is to provide a compensation opportunity that will attract, retain and motivate talented executives with the skills needed to manage a complex and growing business in a competitive industry, while creating long-term value for our stockholders. In furtherance of this objective, the Committee seeks to design our executive compensation program in a manner that reflects direct alignment between the compensation opportunity provided to our executives and the achievement of our financial and strategic objectives. In addition, in order to attract and retain talented executives, the Committee endeavors to develop a compensation program that is competitive in the marketplace. +Compensation Program Philosophy +When establishing our executive compensation program each year, the Committee is generally guided by the following four principles that it believes align closely with our compensation objective: +PAY-FOR-PERFORMANCE ALIGN INTERESTS WITH STOCKHOLDERS +• Offer a significant portion of the compensation opportunity based on the achievement of pre-determined financial and operational performance objectives deemed by the Committee to be important for our long-term success. +• Align the interests of our executives with those of our stockholders by tying a significant portion of the compensation opportunity to performance that creates long-term stockholder value. +• Ensure that a significant portion of the compensation opportunity is correlated with total and relative stockholder return. +REWARD ACHIEVEMENT ATTRACT AND RETAIN EXECUTIVES +• Offer meaningful and appropriate incentives for achieving both short-term and long-term financial and operational goals that have been established by the Committee to reach our strategic objectives. +• Ensure that the financial and operational goals are appropriate for each executive given their respective titles, scope of responsibilities, and ability to impact results. +• Attract key executives with the background and experience necessary to lead us and provide the best opportunity to achieve our strategic objectives. +• Retain our key executives by offering compensation that is attractive and competitive in the marketplace, taking into consideration the competition for key executives and peer group pay practices. +Pay-for-Performance Alignment +For fiscal year 2026, fixed pay for our Chief Executive Officer (comprised of base salary) represented only 12% of his total target compensation opportunity for the year, while performance-based pay represented 88% of his total target compensation. The performance-based pay opportunities reflect a combination of the target value of the 2026 Annual Cash Incentive Awards, the target value of the 2026 LTIP PSUs, and the value of the 2026 Time-Based RSUs. The Committee believes it is appropriate to include the 2026 Time-Based RSUs because receipt of the full value is at risk since vesting is conditioned upon continued employment over an extended period of time, and the final value is subject to fluctuation based on the value of our stock. +36 +The graphic below illustrates the amount of performance-based pay opportunity (calculated based on target value) versus fixed pay for our Chief Executive Officer for fiscal year 2026, as well as the breakdown of our various components of the compensation program on a percentage basis. +While the graphic addresses the relative mix of compensation for our Chief Executive Officer, the compensation opportunities for our other NEOs reflect a similarly strong weighting of performance-based compensation to fixed compensation, further confirming pay-for-performance alignment across our executive leadership team. +37 +Governance Practices that Support Our Compensation Philosophy +We maintain the following governance components in our executive compensation program that we believe support our compensation objectives and philosophy, while also reducing compensation-related risk: +GOVERNANCE PRACTICE WHAT WE DO +Independent Directors ☑ +All of the members of our Board, other than our President and Chief Executive Officer, are independent directors under applicable NYSE rules. +Independent Talent & Compensation Committee +☑ The Committee consists entirely of independent directors who meet the independence standards set forth in applicable SEC and NYSE rules. +Independent Compensation Consultant ☑ The Committee has retained, and routinely consults with, an independent compensation consultant who assists the Committee in gathering competitive pay data, formulating our peer group, and structuring our executive compensation program. +Compensation Risk Assessment ☑ The Committee conducts a compensation risk analysis at least annually, but also takes into account compensation-related risks each time it grants compensation awards throughout the fiscal year. +Frequency of "Say-on-Pay" Vote ☑ We provide our stockholders the opportunity to provide feedback on our executive compensation program on an annual basis, which we then actively consider in formulating our compensation program. +Clawback and Forfeiture Policy ☑ +We maintain a Clawback and Forfeiture Policy that applies to our cash and equity incentive awards, contributing to a Company culture that emphasizes integrity and accountability in financial reporting. +Stock Ownership Guidelines ☑ We maintain stock ownership guidelines for our NEOs and directors and routinely assess ongoing compliance. +No Insider Trading, Hedging and Pledging +☑ We maintain an Insider Trading Policy that prohibits directors, executive officers and employees from insider trading, entering into derivative transactions, hedging or pledging Company securities, or adopting similar practices. +Equity Grant Practices +☑ We have voluntarily adopted a Share-Based Grant Policy, which provides that we will seek to issue all grants during open trading windows, and only at a time when we are not in possession of material nonpublic information. +"Double Trigger" Payment and Vesting Provisions ☑ "Double-trigger" vesting provisions in change in control and severance agreements and equity award agreements only result in payments and vesting in the event of a change in control followed by a qualifying termination of employment. +No Tax Gross Ups ☑ +Our change in control and severance agreements do not provide for excise tax gross up payments. +No Repricing of Awards ☑ Our equity incentive plan explicitly prohibits the repricing of equity awards without stockholder approval. +No Dividends on Unvested Equity Awards ☑ +Our equity incentive plan does not provide for the payment of dividends or dividend equivalents on unvested equity awards. +No Excessive Benefits or Perquisites +☑ +We limit executive benefits and perquisites to those with a clear business rationale and we regularly review for market alignment. +38 +COMPENSATION CONSULTANT AND PEER GROUP +Compensation Consultant +The Committee receives assessments and advice regarding our compensation practices and philosophy from its independent compensation consultant, Frederic W. Cook & Co., Inc. (FW Cook). FW Cook provides information on competitive pay practices and trends in our industry, and makes recommendations regarding the formulation of our peer group, as well as the design and structure of our compensation program. The Committee meets regularly with FW Cook throughout the year, carefully reviews and assesses the materials provided by FW Cook, and engages in thorough deliberations with FW Cook and management regarding our executive compensation program. +While we are not obligated to retain an independent compensation consultant, the Committee believes the use of an independent consultant provides additional assurance that our executive compensation program is attractive and competitive in the marketplace, consistent with peer group practices and broader market conditions, aligned with our strategic objectives, and reflective of our executive compensation philosophy. +In accordance with applicable SEC rules, the Committee took various factors into consideration when selecting FW Cook, which it believes are relevant to its independence as a compensation consultant. +Furthermore, FW Cook does not provide any services to us or our management, other than those provided to the Committee. Following the consideration of these factors, and such additional factors as the Committee deemed appropriate under the circumstances, the Committee made an affirmative determination that FW Cook is independent and unanimously approved the engagement of FW Cook. +The decision to engage FW Cook was made by the Committee, and FW Cook reports directly to the Committee. While members of our management regularly communicate with representatives of FW Cook, our management did not recommend the engagement of FW Cook in any capacity for fiscal year 2026 (or any prior year) and does not direct or oversee the retention or termination of, or scope of the services provided by, FW Cook with respect to our executive compensation program. +Peer Group +In making compensation decisions for fiscal year 2026, the Committee compared the aggregate compensation opportunity, as well as each element of compensation, against a peer group of publicly traded footwear, apparel, accessories and lifestyle brand companies that was recommended by FW Cook and approved by the Committee. Our peer group is generally comprised of companies against which we compete for executive talent and stockholder investment, are in related businesses or industries, and are otherwise similar to us based on a number of characteristics identified by the Committee. Our peer group is reviewed at least annually by the Committee with support from FW Cook. +In particular, when selecting our peer group, the Committee considers the characteristics set forth in the chart below: +For fiscal year 2026, the Committee approved an updated peer group based on consideration of the various characteristics discussed above. In particular, changes were made to the peer group to reflect the relatively greater size and complexity of our organization compared to the prior year taking into account metrics such as revenue and market capitalization. While no single company in our peer group is necessarily similar to us with respect to all of the identified characteristics, taken together the Committee believed that these companies provided strong comparative analogs to our overall size and business model at the time the peer group was reviewed and approved. +39 +Our peer group for fiscal year 2026, which we refer to as our Peer Group, consisted of the following 20 companies: +FISCAL YEAR 2026 PEER GROUP +• Abercrombie & Fitch Management Co. +• Estee Lauder Companies, +Inc. +• Ralph Lauren Corporation • Ulta Beauty, Inc. +• Capri Holdings Limited +• Foot Locker, Inc. (1) +• RH • Under Armour, Inc. +• Columbia Sportswear Company • Levi Strauss & Co. +• Skechers U.S.A., Inc. (1) +• Urban Outfitters, Inc. +• Crocs, Inc. • Lululemon Athletica Inc. • Steve Madden, Ltd. • V.F. Corporation +• Dick's Sporting Goods, Inc. • PVH Corp. • Tapestry, Inc. • Williams-Sonoma, Inc. +(1) Skechers U.S.A., Inc. completed a going private transaction in September 2025. Foot Locker, Inc. was acquired in September 2025. In light of these transactions, these companies were removed from our peer group companies for fiscal year 2027. Our peer group companies for fiscal year 2027 are otherwise the same as our peer group companies for fiscal year 2026. +Use of Peer Group in Setting Executive Compensation +As part of its effort to ensure our executive compensation program is attractive and competitive in the marketplace, the Committee regularly reviews compensation data from our Peer Group provided by FW Cook. Peer Group compensation data is generally used as an initial starting point in making compensation decisions for our executives, including with respect to both the target level of total compensation for each individual executive and the overall structure of our executive compensation program. In addition, in order to gain perspective on overall market trends and practices, the Committee regularly reviews data from broad-based compensation surveys. +Consistent with prior years, in setting the target compensation opportunity for each executive for fiscal year 2026, as well as reviewing individual elements of compensation, the Committee used the median pay of our Peer Group as an important reference point. +Although an assessment of Peer Group compensation data is a significant factor in the Committee’s evaluation, the Committee also considers a variety of additional factors, including the tenure, experience, level of responsibility and individual performance of each executive, recent and projected Company performance, retention considerations, general industry practices and economic conditions. Accordingly, the Committee retains discretion to set both the total compensation opportunity and individual elements of compensation as it deems appropriate. +40 +ELEMENTS OF FISCAL YEAR 2026 +EXECUTIVE COMPENSATION PROGRAM +The following table provides summary information regarding the key elements of our fiscal year 2026 executive compensation program: +COMPENSATION +ELEMENT FIXED +V. +PERFORMANCE-BASED CASH +V. +EQUITY +Base Salary Fixed Cash +2026 Annual Cash Incentive Awards +Performance-Based +(Short-Term Company Performance Conditions) +Cash +2026 Time-Based RSUs +Performance-Based +(Long-Term Time-Based Vesting) +Equity +(40% of total equity compensation) +2026 LTIP PSUs +Performance-Based +(Long-Term Performance-Based Vesting) +(TSR Modifier) +Equity +(60% of total equity compensation) +Employee Benefits Fixed Other +Base Salary +The following tables provide information regarding the base salaries paid to our NEOs: +COMPENSATION ELEMENT +BASE SALARY +Compensation Considerations Performance Conditions +• Fixed +. +• Cash +• Provides a minimum level of fixed cash compensation necessary to attract and retain executives and to compensate them for the execution of their day-to-day duties and responsibilities. +• Balance the level of fixed pay with performance-based pay to properly manage our compensation-related risk. +• Salary reviewed and set annually based on a number of factors. +• No specific service or vesting conditions associated with payment. +NAME FY 2025 +BASE SALARY FY 2026 +BASE SALARY +Stefano Caroti $1,200,000 $1,250,000 +Steven J. Fasching $850,000 $890,000 +Anne Spangenberg $785,000 $825,000 +Robin Spring-Green $612,000 $700,000 +Thomas Garcia $680,000 $700,000 +41 +2026 Annual Cash Incentive Awards +The following table provides summary information regarding the 2026 Annual Cash Incentive Awards granted to our NEOs during fiscal year 2026: +COMPENSATION ELEMENT +2026 ANNUAL CASH INCENTIVE AWARDS +Compensation Type Description Performance Conditions Pay-for-Performance Alignment +• Performance-Based ( Short-Term Company Performance Conditions ) +• Cash +• Based on performance relative to short-term Company performance conditions based on annual metrics derived from our strategic plan. +• Actual payout based on achievement relative to the threshold, target and maximum Company financial performance levels established by the Committee to reward achievement and strike appropriate balance between compensation incentives and risks. +• The "target" performance level is typically in line with the level of Company performance projected for each metric based on our annual budget. +• The "target" performance levels typically reflect an increase to actual performance relative to the prior fiscal year. +• All NEOs have operating income and revenue-based performance metrics to reflect a continued focus on profitability and top line growth as key strategic initiatives, and ensure our compensation program encourages healthy and sustained growth across our business. +• Reliance on multiple performance-based vesting conditions strikes appropriate balance between compensation incentives and risks. +• Target bonus set as percentage of base salary. +• Actual bonus payout is based on achievement of fiscal year 2026 consolidated operating income and revenue targets for certain NEOs (and consolidated operating income, business unit operating income, and business unit revenue targets for certain other NEOs with business unit oversight responsibilities). +• The Committee assigned relative weighting to each component, which is expressed as a percentage of the target cash incentive amount. +• No component of the payout will be made unless the pre-established minimums for both consolidated operating income and consolidated revenue have been achieved. +• For threshold performance, 50% of the cash incentive related to that component would be earned. For target performance, 100% would be earned. For maximum performance, 200% would be earned. +• Achievement below threshold level results in no payout for that component. To the extent Company financial performance is achieved above the threshold levels, the bonus payout that will be earned from the threshold to the target, and from the target to the maximum, will increase as determined by linear interpolation. +• The achievement of operating income targets for fiscal year 2026 for our HOKA, UGG, and consolidated operating income components was 146%, 168%, and 192%, respectively. +• The achievement of revenue targets for fiscal year 2026 for our HOKA, UGG, and consolidated revenue components was 119%, 135%, and 127%, respectively. +• As a result of this performance, 2026 Annual Cash Incentive Award payments of 152%, 166%, and 173% of base salary were earned by our NEOs for our HOKA, UGG and consolidated components, respectively. +• Additional information regarding the determination of the target cash incentive amount and the calculation of the actual 2026 Annual Cash Incentive Awards for each NEO is provided below. +42 +Target Cash Incentive Amount +The Committee establishes a target amount of annual cash incentive compensation for each NEO, which is expressed as a percentage of base salary. The percentage is determined by the Committee by reference to a number of factors, including tenure, experience and level of responsibility, Peer Group benchmarking data, recent individual performance, our recent and projected financial performance, retention considerations and general industry practices. Further, the target cash incentive amount is pro-rated to reflect any base salary and annual cash incentive percentage adjustments, if applicable, throughout the full fiscal year so that the target amount reflects actual base salary earned. +Performance Relative to Targets +The following table summarizes the performance conditions for the 2026 Annual Cash Incentive Awards (components), the relative weighting of each component for each NEO; the threshold, target and maximum performance levels established by the Committee for each component; and the actual payout percentage for each component: +COMPONENT RELATIVE +WEIGHTING FOR EACH NEO THRESHOLD PERFORMANCE TARGET PERFORMANCE MAXIMUM PERFORMANCE +PERFORMANCE & PAYOUT (1) +Consolidated Operating Income • 70% for Messrs. Caroti, Fasching and Garcia +• 30% for Mses. Spangenberg and Spring-Green +$959.59 million $1,066.21 million $1,279.45 million $1,262.90 million, resulting in a payout of 192% +Consolidated Revenue • 30% for Messrs. Caroti, Fasching and Garcia $4,903.97 million $5,330.40 million $5,863.44 million $5,472.30 million, resulting in a payout of 127% +Business Unit Operating Income +• 40% for Ms. Spangenberg (UGG) +$827.57 million $919.52 million $1,103.42 million $1,045.33 million, resulting in a payout of 168% +• 40% for Ms. Spring-Green (HOKA) +$750.90 million $834.33 million $1,001.20 million $910.98 million, resulting in a payout of 146% +Business Unit Revenue +• 30% for Ms. Spangenberg (UGG) +$2,434.47 million $2,646.16 million $2,910.77 million $2,738.76 million, resulting in a payout of 135% +• 30% for Ms. Spring-Green (HOKA) +$2,312.81 million $2,513.92 million $2,891.01 million $2,587.33 million, resulting in a payout of 119% +(1) Payout percentages reflect the level of payout achieved for each component of the 2026 Annual Cash Incentive Award. Payout amounts based on achievement between threshold and target levels, or between target and maximum levels, are determined by linear interpolation. Achievement below threshold levels results in no payout for that component. +43 +Calculation of Total Payout +The amount of cash incentive compensation actually earned by each NEO with respect to the 2026 Annual Cash Incentive Awards (total payout) is calculated by multiplying each NEO's relative weighting for each component by the percentage of target earned for each component (using linear interpolation), resulting in an overall weighted achievement percentage, and multiplying the target cash incentive amount by the weighted achievement percentage, resulting in the payout amount for each component. The payout for each component is then added together to determine the total payout. The total payout is capped at 200% for each NEO. +The calculation of total payout for each NEO is illustrated by the table below: +NAME +TARGET +% +OF SALARY (1) +COMPONENT RELATIVE WEIGHTING +OF COMPONENT % +OF TARGET EARNED FOR COMPONENT OVERALL WEIGHTED ACHIEVEMENT TARGET CASH INCENTIVE AMOUNT PAYOUT +FOR EACH COMPONENT TOTAL PAYOUT +Stefano Caroti 175% Consolidated Operating Income 70% 192% 173% $1,463,623 $2,813,669 $3,607,915 +Consolidated Revenue 30% 127% $627,267 $794,246 +Steven J. Fasching 100% Consolidated Operating Income 70% 192% 173% $616,106 $1,184,403 $1,518,738 +Consolidated Revenue 30% 127% $264,046 $334,335 +Anne +Spangenberg 100% Consolidated Operating Income 30% 192% 166% $244,508 $470,042 $1,349,139 +UGG Operating Income 40% 168% $326,011 $549,035 +UGG Revenue 30% 135% $244,508 $330,062 +Robin Spring-Green 100% Consolidated Operating Income 30% 192% 152% $191,974 $369,052 $971,961 +HOKA Operating Income 40% 146% $255,966 $373,557 +HOKA Revenue 30% 119% $191,975 $229,352 +Thomas Garcia 75% Consolidated Operating Income 70% 192% 173% $364,882 $701,450 $899,455 +Consolidated Revenue 30% 127% $156,378 $198,006 +(1) In July 2025, the target cash incentive amount, which is reflected as a percentage of base salary, increased from 150% to 175% for Mr. Caroti, and from 75% to 100% for Ms. Spring-Green. For these executives, the total payout amount reflects the achievement of a pro-rated target cash incentive amount for the fiscal year. +44 +2026 Time-Based Restricted Stock Units +The following table provides summary information regarding the 2026 Time-Based RSUs granted to our NEOs during fiscal year 2026: +COMPENSATION ELEMENT +2026 TIME-BASED RSUs +Compensation Type Description Vesting Provisions Pay-for-Performance Alignment +• Performance-Based (Long-Term Time-Based Vesting) +. +• Approximately 40% of total equity compensation to encourage executive retention +• Balance mix of equity awards with performance-based vesting and time-based vesting to properly manage our compensation-related risk. +• Primarily used for retention of our executives based on long-term service-based vesting condition. +• Equity awards with three-year vesting are customary among our Peer Group and within the marketplace generally. +• 2026 Time-Based RSUs vest in three equal annual installments over three years commencing August 15, 2026 conditioned upon continued employment through the relevant vesting dates. +• Our NEOs are at risk of not receiving the full value of these awards because vesting is conditioned upon continued employment over an extended period of time and their value is subject to fluctuation based on the value of our stock. +• The Committee expects a majority of equity awards to continue to have performance-based vesting conditions. +45 +2026 Long-Term Incentive Plan Performance-Based Stock Units +The following table provides summary information regarding the 2026 LTIP PSUs granted to our NEOs during fiscal year 2026: +COMPENSATION ELEMENT +2026 LTIP PSUs +Compensation Type Description Performance Conditions/ Vesting Provisions Pay-for-Performance Alignment +• Performance-Based (Long-Term Performance-Based Vesting) +• Approximately 60% of total equity compensation to ensure a majority of our compensation opportunity is based on achievement of performance-based vesting conditions +• Vesting based on performance relative to long-term Company performance conditions based on metrics derived from our three-year long-range strategic plan approved at the beginning of the performance measurement period. +• Consolidated pre-tax income and revenue were selected as the performance conditions because they support our focus on profitability and top line growth as key strategic initiatives and align executives’ interests with the execution of our long-range plan. +• Reliance on multiple performance-based vesting conditions strikes appropriate balance between compensation incentives and risks. +• 50% of each award will vest subject to the achievement of annual pre-tax income targets measured in fiscal years 2026, 2027 and 2028. +• 50% of each award will vest subject to the achievement of annual consolidated revenue targets measured in fiscal years 2026, 2027 and 2028. +• While we measure performance annually over the three-year period, the goals for each fiscal year are established at the beginning of the performance measurement period. We believe this approach encourages value creation for stockholders over a multi-year period, as the annual goals are set progressively higher each year. +• No vesting of any portion of the award will occur if we fail to achieve the pre-established minimum pre-tax income and revenue targets. To the extent our financial performance is achieved above the threshold amounts, the number of LTIP PSUs that will vest from the threshold to the target, and from the target to the maximum, will increase as determined by linear interpolation. +• Vesting is subject to adjustment based upon the application of a TSR modifier. The TSR modifier was designed to impact payouts within the range of +25% to -25% based on our TSR relative to the TSR of a predetermined set of peer group companies. +• The executive must provide continued service through the vesting date. +• Vesting of these awards is dependent on achievement of profitability and consolidated revenue targets that are established by the Committee at the beginning of the measurement period and are consistent with achievement of our strategic objectives. +• TSR modifier correlates the vesting of the awards to both total and relative stockholder returns. +• Commencing with the LTIP PSUs to be issued during fiscal year 2027, the Committee intends to shift to measuring cumulative performance over the full three-year period rather than interim measurement on an annual basis. We believe this approach further enhances our philosophy of encouraging long-term value creation. +Total Stockholder Return (TSR) Modifier +The 2026 LTIP PSU awards earned are subject to upward or downward adjustment based on the application of a TSR modifier. The amount of the adjustment will be determined based upon a comparison of Company TSR relative to the TSR of a pre-determined set of peer group companies for the three-year performance period commencing on April 1, 2025 and ending on March 31, 2028. For purposes of this modifier, the peers consist of the same companies included in the Peer Group, plus two additional companies, Nike, Inc. and Adidas AG. The Committee selected these additional companies because it believes we compete with them for stockholder investment and that our TSR should be measured relative to them. +46 +Company TSR relative to that of the TSR peer group (Peer Group TSR) is calculated and expressed as a percentile. The number of 2026 LTIP PSUs that are subject to vesting will be adjusted based on this percentile as set forth in the table: +Company TSR Relative to +Peer Group TSR (Percentile) TSR Modifier +(Multiplier) +≥75th 125% +55th 100% +(no modification) +≤25th 75% +The number of LTIP PSUs that will vest from the 25th percentile to the 55th percentile, and from the 55th percentile to the 75th percentile, will increase as determined by linear interpolation. The TSR modifier may not exceed 125% regardless of the Company's absolute or relative TSR performance. +Notwithstanding the foregoing, in the event that Company TSR is greater than or equal to the 55th percentile relative to the Peer Group TSR, but Company TSR is a negative amount, the TSR modifier will not be applied (the number of 2026 LTIP PSUs to be vested will not be increased as a result of the TSR multiplier). In addition, regardless of Company TSR relative to the Peer Group TSR, the maximum number of 2026 LTIP PSUs that will vest will not exceed 200% of the target amount. The Committee believes these guardrails are appropriate to balance the desire to use the TSR modifier to align the interests of executives with those of our stockholders while also mitigating compensation-related risk. +Employee Benefits +The following table provides summary information regarding the employee benefits provided to our NEOs during fiscal year 2026: +COMPENSATION ELEMENT +EMPLOYEE BENEFITS +Compensation Type Benefits Considerations +• Standard employee benefits +• 401(k) defined contribution plan with a Company match of 50% of each eligible participant's tax-deferred contributions on up to 6% of eligible compensation on a per payroll period basis. +• Premiums for disability and life insurance for the benefit of the employees. +• Health and welfare benefit plans. +• Relocation expenses for new hires. +• Standard employee product discounts. +• Eligibility to contribute to our Non-qualified Deferred Compensation Plan, or NQDC Plan. Please refer to the section of this Proxy Statement titled "— Nonqualified Deferred Compensation " for additional information about the terms of the NQDC Plan. +• Generally reflect benefits provided to all of our US-based full-time employees. +• NEOs generally do not receive benefits that are materially greater than those provided to other full-time employees to limit compensation-related costs and encourage internal pay equity. +• Provides a package of benefits that are considered standard in the marketplace and necessary to attract and retain executives. +47 +Change in Control and Severance Provisions +The following table provides summary information regarding the severance payments and benefits we provide: +COMPENSATION ELEMENT +CHANGE IN CONTROL AND SEVERANCE PROVISIONS +Compensation Type Considerations Summary of Terms +• Standard severance payments and benefits in the event of a termination of employment upon the occurrence of certain events. +• Value of potential payments and benefits takes into account the expected time it takes a separated executive to find a similar position. +• "Double-trigger" provisions in change in control and severance agreements and equity award agreements preserve morale and productivity, encourage executive retention in the face of the potentially disruptive impact of a change in control transaction, and reflect a sound governance practice. +• Typical component of a competitive executive compensation program for executives among our Peer Group and within the marketplace generally. +Change in Control and Severance Agreements: +• Provide for certain cash payments, vesting of certain equity awards and benefit reimbursement, in the event of a termination of employment upon the occurrence of certain events, including a change in control transaction. +Equity Award Agreements: +• Provide for accelerated vesting of awards upon a change in control transaction if the executive is terminated in connection with the transaction under specified circumstances. In addition, vesting of awards will be accelerated if the acquiring entity does not agree to provide for the assumption or substitution of the awards. +• LTIP PSUs are only subject to accelerated vesting at "target" level to avoid excessive payouts that could be an impediment to a favorable transaction. +• Certain awards provide for continued or pro rata vesting in connection with a termination of employment upon death or disability, or retirement, subject to certain conditions. +• Please refer to the section of this Proxy Statement titled " —Potential Payments upon Termination or Change in Control " for additional information about the change in control and severance provisions applicable to our NEOs. +48 +OTHER COMPENSATION CONSIDERATIONS +Role of Executive Officers in Compensation Decisions +At the request of the Committee, our Chief Executive Officer and President, or other senior management personnel, may provide performance and compensation information to the Committee to inform its compensation decisions. However, our executives are not permitted to be present during any deliberations and voting regarding their own compensation, or during any executive sessions of the Committee when compensation decisions are taking place. The Committee considers the information provided by our management, as well as information and advice provided by FW Cook, when making compensation decisions for our NEOs and other executives. However, the Committee, which is comprised solely of independent directors, thoroughly evaluates and approves all elements of compensation for our NEOs and other executives. +Compensation Risk Assessment +The Committee is responsible for reviewing the payments that may be made and the value that may be received from our compensation program to assess whether the program encourages excessive or unnecessary risk-taking. The Committee conducts a compensation risk analysis at least annually, but also takes into account compensation-related risks each time it grants compensation awards throughout the fiscal year. In conducting these assessments, the Committee considers a number of factors including the following: +• Our compensation program consists of elements that provide both fixed and performance-based compensation, and the Committee reviews these elements and the relative mix annually. +• We review our Peer Group compensation data regularly to assess our executives' total compensation opportunities, and ensure our compensation program is appropriate and competitive. +• A majority of the equity awards granted by the Committee have performance-based vesting conditions and we expect to continue to incorporate this equity grant philosophy.. +• All of our performance-based awards are earned based on the achievement of pre-established consolidated and business unit performance goals, and the 2026 LTIP PSUs are subject to upward or downward modification based on the application of a TSR modifier. +• We seek to limit overlap between our performance conditions and measurement periods to ensure our compensation program encourages healthy and sustained growth across our business, as well as over multiple time periods. +• Our performance-based awards are subject to maximum award amounts to cap the potential compensation amount associated with an award. +• Our executive compensation program encourages executive retention through long-term vesting provisions. +• Our change in control and severance benefits are designed to attract and retain executives without providing excessive benefits such as excise tax gross up payments. +The Committee believes our executive compensation program is appropriately balanced and does not encourage excessive or unnecessary risk-taking. The Committee does not believe our compensation program is reasonably likely to have a material adverse effect on us. +Clawback and Forfeiture Policy +We have adopted a Clawback and Forfeiture Policy (Clawback Policy) that is compliant with SEC and NYSE rules. The Clawback Policy is consistent with our executive compensation philosophy, which seeks to reward executive officers for financial and operational performance that creates value for our stockholders. Under the Clawback Policy, we will seek recoupment or reimbursement with respect to incentive-based compensation received by our executive officers when the following three factors exist: +• the restatement of our financial statements has occurred, which was required as a result of, or necessitated by, any material noncompliance by us with any financial reporting requirement under the federal securities laws (accounting restatement); +• incentive-based compensation was received by the executive officer during the three completed fiscal years immediately preceding the earlier of the date (1) the Board concludes, or reasonably should have concluded, that we are required to prepare an accounting restatement, or (2) a court, regulator or other legally authorized body directs us to prepare an accounting restatement (recovery period), after beginning service as an executive officer, provided such +49 +executive officer served as an executive officer at any time during the performance period from which such incentive-based compensation was derived; and +• a lower amount of incentive-based compensation would have been received by the executive officer based upon the financial results as restated in the accounting restatement. +Under the Clawback Policy, the accounting restatement does not need to be the result of misconduct by the executive officers for the recoupment to apply. +The recoupment or recovery to be sought by us will be equal to the portion of any incentive-based compensation received by such executive officer for or during the recovery period that is greater than the amount that would have been received had the financial results been properly reported. +In addition, the Committee may seek to recoup or recover from an employee certain incentive-based compensation previously paid or awarded if the Audit & Risk Management Committee determines the employee has engaged in significant misconduct that causes financial or reputational harm to us (regardless of whether an accounting restatement has occurred). +Stock Ownership Guidelines +To further align the interests of our NEOs and directors with those of our stockholders, we have voluntarily adopted stock ownership guidelines. The Committee periodically reviews these guidelines to ensure they continue to reflect governance best practices, as well as any recent changes to our executive compensation program. +NEOs are required to hold a number of shares of our common stock determined as a multiple of the NEO's base salary as of the beginning of each calendar year, subject to such exceptions as may be granted by the Committee. Unless and until an NEO reaches the required ownership level, the NEO must retain at least 75% of the equity awards, after payment of any applicable exercise price and tax withholdings, that are acquired through our equity compensation program. +Directors are required to hold a number of shares of our common stock determined as a multiple of the base annual board cash retainer (not taking into account fees for committee or Chair roles) within five years of joining our Board, subject to such exceptions as may be granted by the Committee. In addition, each director must hold shares of our common stock within one year of joining our Board. +The following table provides a summary of the stock ownership guidelines applicable to our NEOs and directors: +POSITION STOCK OWNERSHIP GUIDELINES +Chief Executive Officer 6x Annual Base Salary +Other NEOs 3x Annual Base Salary +Directors +5x Annual Board Cash Retainer +The Committee periodically reviews compliance with the stock ownership guidelines applicable to our NEOs and directors and, as of the end of fiscal year 2026, determined that each NEO and director complied with the minimum ownership thresholds. +No Insider Trading +Our Insider Trading Policy governs purchases, sales, and other dispositions of our securities by our directors, executive officers, employees and consultants. Our Insider Trading Policy prohibits purchases, sales, and other dispositions of our securities while in possession of material nonpublic information about us and from disclosing such information to others, and it prohibits trading on material nonpublic information of other companies, industries, or sectors obtained during the course of providing service to us. It also imposes additional restrictions on and requirements for trading in our securities by our insiders. We believe our Insider Trading Policy is reasonably designed to promote compliance with insider trading laws, rules and regulations, and NYSE listing standards. A copy of our Insider Trading Policy was filed as Exhibit 19.1 to our Annual Report. +In addition, with regard to repurchases of our shares, it is our policy to comply with applicable federal securities laws and NYSE listing standards. +No Hedging and Pledging +Pursuant to our Insider Trading Policy, our directors, executive officers, employees and consultants are prohibited from engaging in short-term or speculative trading in our securities, including entering into hedging transactions or derivative instruments designed to offset or reduce the risk of a decline in the market value of our securities. This includes the use of put or call options, prepaid variable forward contracts, equity swaps, collars, exchange funds, and short sales. +50 +Our policy also prohibits pledging our securities as collateral for a loan, including holding such securities in margin accounts. +These restrictions are designed to avoid even the appearance of impropriety and reduce the risk of inadvertent insider trading violations. +Equity Grant Practices +We maintain disciplined equity grant practices designed to maintain transparency and align with stockholder interests. We have voluntarily adopted a Share-Based Grant Policy, which establishes guidelines for our equity award grant practices. The guidelines provide that we will only make grants at a time when we are not in possession of material nonpublic information, such as pending earnings results or information regarding significant transactions or events. In addition, we generally do not make equity grants during (i) trading blackout periods under our Insider Trading Policy, or (ii) the period beginning four business days before and ending one business day after the filing of our periodic reports or the filing or furnishing of a Form 8-K that discloses material nonpublic information. +Equity awards are typically granted on pre-established dates each year, subject to limited exceptions approved by the Committee . Our executive officers and directors are not permitted to select individual grant dates for awards issued to them. +During fiscal year 2026, no equity awards were granted to our NEOs during any period surrounding the disclosure of material nonpublic information as described above, and we did not time the release of such information to impact the value of equity compensation. +Tax and Accounting Considerations +Among the factors it considers when making executive compensation decisions, the Committee considers the anticipated tax and accounting impact to us (and to our executive officers) of various payments, equity awards, and other benefits. In particular, it considers the deductibility of compensation as a factor in assessing whether a particular compensation arrangement is appropriate, considering our objectives to motivate executives to achieve Company performance conditions, increase stockholder value and maintain a competitive executive compensation program. +The Committee also considers the impact of Section 409A of the Code. In general, our executive plans and programs are designed to comply with the requirements of that section so as to avoid possible adverse tax consequences that may result from noncompliance. +We account for equity awards in accordance with the requirements of Financial Accounting Standards Board Accounting Standards Codification (FASB ASC) Topic 718, Stock Compensation . +Our change in control and severance agreements do not provide for excise tax gross up payments or similar benefits. +51 +TALENT & COMPENSATION COMMITTEE REPORT +The Talent & Compensation Committee has reviewed and discussed the "Compensation Discussion and Analysis" section of this Proxy Statement with management and, based on such review and discussion, the Talent & Compensation Committee has recommended to our Board that the section be included in this Proxy Statement. +TALENT & COMPENSATION COMMITTEE +Victor Luis ( Chair ) +David A. Burwick +Bonita C. Stewart +This Talent & Compensation Committee Report shall not be deemed "soliciting material" or to be "filed" with the SEC. In addition, this Talent & Compensation Committee Report shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as amended, except to the extent that we specifically incorporate this information by reference. +52 +SUMMARY COMPENSATION TABLE +The following table sets forth all compensation paid or awarded to our NEOs during fiscal years 2026, 2025, and 2024. The amounts set forth in the table have been calculated in accordance with the requirements of applicable SEC rules, and do not necessarily reflect the amounts that have actually been paid to, or which may be realized by, our NEOs. The table should be read together with the section of this Proxy Statement titled “ Compensation Discussion and Analysis .” +Name and Principal Position Year Salary +($) Bonus +($) +Stock +Awards +($) (1) +Non-Equity Incentive +Plan +Comp. +($) (2) +All Other Comp. +($) (3) +Total +($) +Stefano Caroti (4) +2026 1,236,538 — 6,999,947 3,607,915 60,592 11,904,992 +Chief Executive Officer +and President 2025 1,061,539 — 5,999,093 2,927,198 63,599 10,051,429 +2024 786,154 400,000 1,999,912 1,478,169 60,319 4,724,554 +Steven J. Fasching 2026 879,365 — 2,299,947 1,518,738 59,123 4,757,173 +Chief Financial Officer 2025 839,596 — 2,099,287 1,678,335 21,645 4,638,863 +2024 799,615 — 4,999,117 1,502,520 18,753 7,320,005 +Anne Spangenberg 2026 814,231 — 1,999,940 1,349,139 60,340 4,223,650 +President, UGG 2025 775,577 — 1,798,541 1,552,548 92,163 4,218,829 +2024 756,164 — 1,499,181 1,388,115 44,844 3,688,304 +Robin Spring-Green (5) +2026 676,308 — 1,499,930 971,961 16,846 3,165,045 +President, HOKA +2025 608,769 — 1,248,822 673,597 15,795 2,546,984 +Thomas Garcia 2026 694,615 — 1,499,930 899,455 58,615 3,152,615 +Chief Administrative +and Legal Officer 2025 671,923 — 1,499,773 1,007,298 62,552 3,241,546 +2024 627,764 — 999,639 937,705 49,179 2,614,287 +(1) For fiscal year 2026, these amounts reflect the aggregate grant date fair value of 2026 Time-Based RSUs and 2026 LTIP PSUs computed in accordance with FASB ASC Topic 718. For information about the assumptions underlying these computations, please refer to Note 9 to our consolidated financial statements included in our Annual Report. In accordance with applicable SEC rules, for those awards that are subject to the satisfaction of performance conditions, the amounts reported reflect the grant date fair value of the awards based upon the probable outcome of such conditions as of the grant date. For fiscal year 2026, the maximum value of the awards assuming the maximum level of achievement relative to the performance conditions is as follows: $11.2 million for Mr. Caroti, $3.7 million for Mr. Fasching, $3.2 million for Ms. Spangenberg, $2.4 million for Ms. Spring-Green, and $2.4 million for Mr. Garcia. Please refer to the sections of this Proxy Statement titled “—2026 Time-Based Restricted Stock Units” and “ — 2026 Long-Term Incentive Plan Performance-Based Stock Units " for additional information. +(2) For fiscal year 2026, these amounts reflect the cash incentive awards paid to our NEOs under our 2026 Annual Cash Incentive Awards. Please refer to the section of this Proxy Statement titled "—2026 Annual Cash Incentive Awards” for additional information. +(3) For fiscal year 2026, these amounts reflect the following: (i) Company-matching contributions under the NQDC Plan in the amount of $39,500 for Messrs. Caroti, Fasching and Garcia and Ms. Spangenberg, (ii) Company-matching contributions under our 401(k) plan in the amount of $10,500 for each NEO, (iii) long-term care and disability premiums for each NEO, (iv) HSA employer contributions for Ms. Spangenberg and Mr. Garcia, and (v) life insurance premiums paid on policies adopted for the benefit of each of our NEOs. +(4) Mr. Caroti was appointed Chief Executive Officer and President effective August 1, 2024, and previously served as Chief Commercial Officer. +(5) Ms. Spring-Green's employment with the Company began in February 2024. Ms. Spring-Green qualified as an NEO for the first time with respect to fiscal year 2025. +53 +GRANTS OF PLAN-BASED AWARDS IN +FISCAL YEAR 2026 +The following table sets forth all grants of plan-based awards made to our NEOs during fiscal year 2026. The value of the payouts and awards set forth in the table have been calculated in accordance with the requirements of applicable SEC rules, and do not necessarily reflect the amounts that have actually been paid to, or which may be realized by, our NEOs. The table should be read together with the section of this Proxy Statement titled “— Compensation Discussion and Analysis. ” +Potential Payouts as of Grant Date Under Non-Equity Incentive Plan Awards (1) +Potential Payouts as of Grant Date Under Equity Incentive Plan Awards (2) +All Other Stock Awards: Number of Shares (#) (3) +Grant Date +Fair Value +of Awards +($) (4) +Name Grant Date Threshold +($) Target +($) Max. +($) Threshold +(#) Target +(#) Max. +(#) +Stefano Caroti 1,093,750 2,187,500 4,375,000 — — — — — +8/15/25 — — — 20,212 40,423 80,846 — 4,199,950 +8/15/25 — — — — — — 27,195 2,799,997 +Steven J. Fasching 445,000 890,000 1,780,000 — — — — — +8/15/25 — — — 6,641 13,282 26,564 — 1,380,000 +8/15/25 — — — — — — 8,935 919,948 +Anne Spangenberg 412,500 825,000 1,650,000 — — — — — +8/15/25 — — — 5,775 11,549 23,098 — 1,199,941 +8/15/25 — — — — — — 7,770 799,999 +Robin Spring-Green 350,000 700,000 1,400,000 — — — — — +8/15/25 — — — 4,331 8,662 17,324 — 899,982 +8/15/25 — — — — — — 5,827 599,948 +Thomas Garcia 262,500 525,000 1,050,000 — — — — — +8/15/25 — — — 4,331 8,662 17,324 899,982 +8/15/25 — — — — — — 5,827 599,948 +(1) The amounts in these columns reflect the potential payouts under the 2026 Annual Cash Incentive Awards as of the grant date. The actual cash incentive award payments were made in June 2026. Please refer to the section of this Proxy Statement titled "— 2026 Annual Cash Incentive Awards " for additional information. +(2) The awards in these columns reflect the 2026 LTIP PSUs. These awards were granted in August 2025 and may vest based upon our achievement of annual Company performance targets for each of fiscal years 2026, 2027, and 2028, and continued service through March 31, 2028. We consider the performance conditions for the 2026 LTIP PSUs to be probable of being achieved at 100% of the target amount, although the awards can vest up to a maximum of 200% of the target amount. The grant date fair value of the awards assuming achievement at 100% of the target amount relative to the performance conditions is set forth in the last column. The grant date fair value of the awards assuming the maximum level of achievement relative to the performance conditions is as follows: $8.4 million for Mr. Caroti; $2.8 million for Mr. Fasching; $2.4 million for Ms. Spangenberg; $1.8 million for Ms. Spring-Green; and $1.8 million for Mr. Garcia. Please refer to the section of this Proxy Statement titled "— 2026 Long-Term Incentive Plan Performance-Based Stock Units " for additional information. +(3) The awards in this column reflect the 2026 Time-Based RSUs. These awards were granted in August 2025 and vest over three years in equal annual installments on August 15, 2026, 2027 and 2028. Please refer to the section of this Proxy Statement titled "— 2026 Time-Based Restricted Stock Units " for additional information. +(4) The amounts in this column represent the aggregate grant date fair value of the respective awards computed in accordance with FASB ASC Topic 718. For information about the assumptions underlying these computations, please refer to Note 9 to our consolidated financial statements included in our Annual Report. In accordance with applicable SEC rules, for those awards that are subject to the satisfaction of performance conditions, the amounts reported reflect the grant date fair value of the awards based upon the probable outcome of such conditions as of the grant date. +54 +OUTSTANDING EQUITY AWARDS AT +2026 FISCAL YEAR END +The following table provides information with respect to equity awards previously granted to our NEOs that remained outstanding as of March 31, 2026. The market values of the awards set forth in the table have been calculated in accordance with the requirements of applicable SEC rules, and do not necessarily reflect the amounts that have actually been paid to, or which may be realized by, our NEOs. +Equity Awards +Name Number of +shares that +have not +vested +(#) +Market value of +shares that +have not +vested +($) (1) +Number of +unearned +shares that +have not +vested +(#) (2) +Market value of +unearned +shares that +have not +vested +($) (1) +Stefano Caroti 40,215 (3) 4,025,119 61,375 6,143,024 +Steven J. Fasching 18,283 (4) 1,829,945 20,614 2,063,255 +Anne Spangenberg 12,972 (5) 1,298,367 17,831 1,784,705 +Robin Spring-Green 8,731 (6) 873,886 13,024 1,303,572 +Thomas Garcia 9,805 (7) 981,382 13,900 1,391,251 +(1) In accordance with applicable SEC rules, the market value of the shares has been determined based on the closing price of our common stock on March 31, 2026, which was $100.09. +(2) The awards in this column include the 2025 LTIP PSUs and 2026 LTIP PSUs, which remain outstanding and subject to long-term performance and service conditions. The number of LTIP PSUs reflected assumes achievement of the performance conditions at 100% of the target amount for each of the awards, although the awards can vest up to a maximum of 200% of the target amount, meaning that up to 200% of the number of shares reflected in this column could be earned. The 2025 LTIP PSUs are eligible to vest on March 31, 2027, and the 2026 LTIP PSUs are eligible to vest on March 31, 2028, in each case subject to our achievement relative to the performance conditions. +(3) This amount consists of (i) 2,892 2024 Time-Based RSUs granted in August 2023, which shares vest as to 100% on August 15, 2026, (ii) 10,128 2025 Time-Based RSUs granted in August 2024, which shares vest as to 50% on August 15, 2026 and 2027, and (iii) 27,195 2026 Time-Based RSUs granted in August 2025, which shares vest as to 33.3% on August 15, 2026, 2027 and 2028. +(4) This amount consists of (i) 2,892 2024 Time-Based RSUs granted in August 2023, which shares vest as to 100% on August 15, 2026, (ii) 2,910 2024 Time-Based RSUs granted in February 2024, which shares vest as to 100% on February 6, 2027, (iii) 3,546 2025 Time-Based RSUs granted in August 2024, which shares vest as to 50% on August 15, 2026, and 2027, and (iv) 8,935 2026 Time-Based RSUs granted in August 2025, which shares vest as to 33.3% on August 15, 2026, 2027 and 2028. +(5) This amount consists of (i) 2,166 2024 Time-Based RSUs granted in August 2023, which shares vest as to 100% on August 15, 2026, (ii) 3,036 2025 Time-Based RSUs granted in August 2024, which shares vest as to 50% on August 15, 2026 and 2027, and (iii) 7,770 2026 Time-Based RSUs granted in August 2025, which shares vest as to 33.3% on August 15, 2026, 2027, and 2028. +(6) This amount consists of (i) 792 2024 Time-Based RSUs granted in March 2024, which shares vest as to 100% on March 15, 2027, (ii) 2,112 2025 Time-Based RSUs granted in August 2024, which shares vest as to 50% on August 15, 2026, and 2027, and (iii) 5,827 2026 Time-Based RSUs granted in August 2025, which shares vest as to 33.3% on August 15, 2026, 2027, and 2028. +(7) This amount consists of (i) 1,446 2024 Time-Based RSUs granted in August 2023, which shares vest as to 100% on August 15, 2026, (ii) 2,532 2025 Time-Based RSUs granted in August 2024, which shares vest as to 50% on August 15, 2026, and 2027, and (iii) 5,827 2026 Time-Based RSUs granted in August 2025, which shares vest as to 33.3% on August 15, 2026, 2027, and 2028. +55 +FISCAL YEAR 2026 STOCK VESTED +The following table provides information with respect to our NEOs regarding equity awards vested during fiscal year 2026. The values realized upon the vesting of equity awards set forth in the table have been calculated in accordance with the requirements of applicable SEC rules, and do not necessarily reflect the amount that will actually be received by our NEOs upon the sale of the shares. +Equity Awards +Name +Number of +Shares +Acquired on +Vesting +(#) (1)(2) +Value Realized +on Vesting +($) (3) +Stefano Caroti 37,752 3,821,751 +Steven J. Fasching 55,974 5,671,926 +Anne Spangenberg 23,706 2,438,999 +Robin Spring-Green 7,692 773,448 +Thomas Garcia 16,428 1,658,847 +(1) These amounts consist of shares acquired upon vesting of 2024 LTIP PSUs, 2023 Time-Based RSUs, 2024 Time-Based RSUs, and 2025 Time-Based RSUs. +(2) The total number of shares actually received by the NEOs, net of shares withheld for taxes, were as follows: 19,274 for Mr. Caroti, 28,550 for Mr. Fasching, 12,694 for Ms. Spangenberg, 5,106 for Ms. Spring-Green, and 9,271 for Mr. Garcia. +(3) Pursuant to applicable SEC rules, the amounts in this column reflect the value realized upon the vesting of the equity awards, which is based on the closing price of our common stock on the applicable vesting dates (prior to taking into account shares withheld for taxes). +56 +NON-QUALIFIED DEFERRED COMPENSATION +Non-qualified Deferred Compensation Plan +The Committee has adopted the Non-qualified Deferred Compensation Plan (NQDC Plan), which is an unfunded, non-qualified deferred compensation program sponsored by us to provide certain members of our management the opportunity to defer a portion of their compensation. Participants may defer up to 50% of their annual base salary and up to 95% of any cash incentive award under the NQDC Plan. We have the option, but not the obligation, to make discretionary or matching cash contributions to NQDC Plan participants. The NQDC Plan year is from January 1 to December 31. +During fiscal year 2026, certain of our NEOs elected to make contributions to the NQDC Plan, and the Committee elected to match a portion of the contributions. +The following table provides information regarding activity pursuant to the NQDC Plan during fiscal year 2026, including executive contributions and matching contributions made during the fiscal year, aggregate gains made during the fiscal year, and the balance held by each NEO as of the end of the fiscal year. +Name +Executive contributions during fiscal year 2026 +($) (1) +Registrant contributions during fiscal year 2026 +($) (2) +Aggregate gains during fiscal year 2026 +($) +Aggregate withdrawals/distributions during fiscal year 2026 +($) +Aggregate balance at end of fiscal year 2026 +($) +Stefano Caroti 1,249,121 39,500 561,346 — 5,934,170 +Steven J. Fasching 351,668 39,500 19,404 — 432,973 +Anne Spangenberg 1,319,666 39,500 385,965 — 3,418,219 +Robin Spring-Green — — — — — +Thomas Garcia 526,208 39,500 443,881 — 4,060,317 +Total 3,446,663 158,000 1,410,596 — 13,845,679 +(1) The amounts reported in this column reflect contributions made by our NEOs under the NQDC Plan during fiscal year 2026. These amounts are included in the "Summary Compensation Table" and do not reflect amounts earned in addition to those amounts. +(2) The amounts reported in this column reflect discretionary matching contributions made by us to our NEOs under the NQDC Plan during fiscal year 2026. These amounts are included in the "Summary Compensation Table" and do not reflect amounts earned in addition to those amounts. +Deferred Stock Unit Compensation Plan +The Committee has also adopted a Deferred Stock Unit Compensation Plan (Deferral Plan). Under the Deferral Plan, a director or employee who holds unvested stock units may elect to defer settlement of up to 100% of the shares underlying the stock units upon vesting. For each share underlying a stock unit that is deferred, the participant will receive one deferred stock unit. Amounts deferred will be settled and distributed, at the time elected by the participant, subject to the terms of the Deferral Plan. None of our NEOs elected to participate in the Deferral Plan during fiscal year 2026. +57 +POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL +Change in Control and Severance Agreements +We have entered into change in control and severance agreements (as amended from time to time, the Severance Agreements) with each of our NEOs. The information below describes the compensation and benefits, as of March 31, 2026 (unless otherwise noted), that will become payable to or earned by our NEOs under the Severance Agreements upon the occurrence of certain termination events. For purposes of the Severance Agreements, we refer to each NEO as an “executive.” +Termination by Us for Cause, or by the Executive Without Good Reason +If the executive is terminated by us for Cause, or the executive terminates his or her employment without Good Reason (in each case, as defined in the Severance Agreement), the executive will receive: +• payment of his or her accrued base salary; +• accrued vacation; +• reimbursement for certain expenses; +• accrued and vested benefits payable under our compensation plans or programs and any other benefits required to be paid or provided by applicable law; +• accrued but unpaid cash incentive award for the prior fiscal year (excluding any cash incentive award for the year of termination); and +• the right to exercise all vested equity awards pursuant to the terms of the applicable award agreement (without any accelerated vesting of such awards or extension of any relevant exercise period). +Termination Due to Death or Total Disability +If the executive is terminated due to his or her death or Total Disability (as defined in the Severance Agreement), then in addition to those benefits provided upon a termination by us for Cause or by the executive other than for Good Reason, the executive will receive: +• a pro-rated portion of his or her cash incentive award for the current fiscal year based on actual length of service during the year of termination and the target amount of such cash incentive award as previously established by the Committee; and +• continued vesting of certain outstanding equity awards as described under the section of this Proxy Statement titled “ — Equity Award Agreements” below. +Termination by Us Without Cause +If the executive is terminated by us without Cause, then in addition to those benefits provided upon a termination due to death or Total Disability, the executive will receive: +• payment of his or her then-effective annual base salary for, in the case of the Chief Executive Officer, 24 months, or, in the case of any other executive, 12 months following his or her termination, commencing within 60 days of the termination date, subject to such executive signing a release; and +• receipt of health benefits for, in the case of the Chief Executive Officer, up to 24 months, or, in the case of any other executive, up to 12 months following his or her termination, or his or her attainment of alternative employment that provides health benefits, whichever occurs earlier. +Termination Without Cause or by the Executive for Good Reason in Connection With a Change in Control +If the executive is terminated by us without Cause or by the executive for Good Reason within two years of a Change in Control (as defined in the Severance Agreement), then in addition to those benefits provided upon a termination due to death or Total Disability, the executive will receive: +• payment of, in the case of the Chief Executive Officer, two and one-half times, or, in the case of any other executive, two times his or her then-effective annual base salary plus the greater of (x) one and one-half times the target cash incentive award immediately prior to the time such termination occurs or (y) one and one-half times the average actual cash incentive award for the previous three years, subject to such executive signing a release; +• receipt of health benefits for, in the case of the Chief Executive Officer, up to 30 months, or, in the case of any other executive, up to 24 months following his or her termination, or his or her attainment of alternative employment that provides health benefits, whichever occurs earlier; and +58 +• accelerated vesting of certain outstanding equity awards as described under the section of this Proxy Statement titled “ —Equity Award Agreements ” below. +No NEOs will be entitled to gross ups for excise tax penalties on “excess golden parachute payments” as a result of termination following a Change in Control. +Recent Amendments to Change in Control and Severance Agreements +Effective June 2026, following a review of Peer Group practices and to ensure continued market competitiveness, we entered into amended Severance Agreements with our NEOs. The amended Severance Agreements are generally consistent with the terms of the prior Severance Agreements, but included the following changes: +• If the executive is terminated by us without Cause or by the executive for Good Reason within two years of a Change in Control (as defined in the Severance Agreement), then in addition to those benefits provided upon a termination due to death or Total Disability and the health benefits and accelerated vesting of equity awards summarized above, the executive will receive payment of, in the case of the Chief Executive Officer, two and one-half times, or, in the case of any other executive, two times his or her then-effective annual base salary plus the greater of (x) in the case of the Chief Executive Officer, two and one-half times, or, in the case of any other executive, two times the target cash incentive award immediately prior to the time such termination occurs or (y) in the case of the Chief Executive Officer, two and one-half times, or, in the case of any other executive, two times the average actual cash incentive award for the previous three years, subject to such executive signing a release. +Equity Award Agreements +We enter into award agreements with our NEOs each time awards are issued to them pursuant to our equity incentive plans (Equity Award Agreements). The Equity Award Agreements include the award agreements governing our Time-Based RSUs (RSU Award Agreements) and the award agreements governing our LTIP PSUs (PSU Award Agreements). The information below summarizes the vesting provisions applicable to our equity awards upon the occurrence of certain employment termination events. Except as described below, when an executive’s employment is terminated, all awards that have not vested as of the termination date will automatically expire pursuant to the Equity Award Agreements. +Termination in Connection with a Corporate Transaction +Pursuant to the Equity Award Agreements if, in connection with a Corporate Transaction (as defined in the Equity Award Agreements), an acquiring or successor entity provides for the continuance or assumption of the award (Assumed Awards), or the substitution of the award for a comparable value covering new incentives (Substitute Awards), then vesting of the unvested portion of the award shall not accelerate. +However, pursuant to the “double-trigger” vesting provisions of the Equity Award Agreements, if the acquiring or successor entity in the Corporate Transaction provides for Assumed Awards or Substitute Awards, and the executive is terminated by the acquiring or successor entity company without Cause or pursuant to a Constructive Termination (in each case, as defined in the applicable Equity Award Agreements) within 24 months following such Corporate Transaction, then the vesting of such award will be accelerated in full upon termination. For purposes of the PSU Award Agreements, the award will be accelerated with respect to the target number of shares subject to the agreement regardless of the level of achievement relative to the performance conditions. In addition, if the executive continues to provide service to the acquiring or successor entity through the end of the performance period (regardless of whether a termination of employment has occurred), the target number of shares subject to the agreement shall vest regardless of the level of achievement relative to the performance conditions. +Notwithstanding the foregoing, the vesting of each equity award will be accelerated in full if the acquiring or successor entity in the Corporate Transaction does not agree to provide for Assumed Awards or Substitute Awards. For purposes of the PSU Award Agreements, the award will be accelerated as to the target number of shares subject to the agreement regardless of the level of achievement relative to the applicable performance conditions. +Termination Due to Death or Disability +Pursuant to the Equity Award Agreements, if there is termination of employment due to death or Disability, (as defined in the Company's 2015 Stock Incentive Plan (the "2015 SIP") and the Company's 2024 Stock Incentive Plan (the "2024 SIP"), then a pro-rata portion of the awards that remain unvested shall become vested effective upon the date of termination. The pro-rata portion of the awards is calculated based on the number of months of continuous service provided by the executive prior to the termination date relative to the number of months in the applicable vesting period, in the case of the RSU Award Agreements, or the applicable performance period, in the case of the PSU Award Agreements. For purposes of the PSU Award Agreements, the awards do not provide for acceleration, but a pro-rata portion of the awards will vest on the scheduled vesting date if the applicable performance metrics are satisfied for such performance-based equity awards by the end of the applicable performance period stated in the agreement. +59 +Termination Upon Retirement +Pursuant to the RSU Award Agreements, if, following the initial vesting date under the agreement, an executive both attains the age of 62 and completes 10 years of continuous service to us (Retirement), then all unvested awards shall remain outstanding and continue to vest on the vesting dates set forth in the agreement, subject to meeting certain conditions. Pursuant to the PSU Award Agreements, in connection with a Retirement, a pro-rata portion of the awards shall vest on the scheduled vesting date if the applicable performance metrics are satisfied for such awards by the end of the applicable performance period stated in the agreement, subject to meeting certain conditions. The pro-rata portion of the awards is calculated based on the number of months of continuous service provided by the executive prior to the termination date relative to the number of months in the applicable performance period. +60 +Change in Control and Severance Payments +The following table provides information about the compensation and benefits that would have been paid or provided to our NEOs in the event a termination of employment had occurred on March 31, 2026 upon the occurrence of the various termination events described in the table. The value of the compensation and benefits has been determined by reference to the terms of the applicable Severance Agreements and Equity Award Agreements. +The amounts reflected in the table are in addition to amounts that would have been paid for accrued but unpaid base salary, accrued vacation, accrued and vested benefits under our compensation plans or programs, accrued but unpaid cash incentive awards, and reimbursement of expenses. Except as described above, no payments or benefits would be provided to our NEOs in the event of a termination of employment for Cause or termination by our NEOs without Good Reason. +For purposes of the table, the value of the equity awards has been determined based on the closing price of our common stock on March 31, 2026 based on the assumption the termination of employment had occurred on that date. In the event of an actual termination of employment, including in connection with a Change in Control, the value of our common stock may be significantly different than this assumed value, in which case the value realized by our NEOs upon the vesting of the equity awards may be significantly higher or lower. +Upon Termination +Name Type of Compensation +or Benefit Due to Death or +Disability +($) By Us +Without Cause +($) In Connection with a Change +in Control +($) +Stefano Caroti Cash payments — 2,500,000 7,131,641 +Value of health benefits — 46,955 58,694 +Value of equity awards 4,087,259 +(1) +— 10,168,143 +(2) +Total 4,087,259 2,546,955 17,358,478 +Steven J. Fasching Cash payments — 890,000 4,129,797 +Value of health benefits — 33,125 66,250 +Value of equity awards 1,754,349 +(1) +— 3,893,201 +(2) +Total 1,754,349 923,125 8,089,248 +Anne Spangenberg Cash payments — 825,000 3,794,901 +Value of health benefits — 9,358 18,717 +Value of equity awards 1,310,783 +(1) +— 3,083,072 +(2) +Total 1,310,783 834,358 6,896,690 +Robin Spring-Green Cash payments — 700,000 2,450,000 +Value of health benefits — 23,477 46,955 +Value of equity awards 863,399 +(1) +— 2,177,458 +(2) +Total 863,399 723,477 4,674,413 +Thomas Garcia Cash payments — 700,000 2,822,229 +Value of health benefits — 29,008 58,017 +Value of equity awards 1,016,810 +(1) +— 2,372,633 +(2) +Total 1,016,810 729,008 5,252,879 +(1) This amount reflects the value of a pro-rata portion of the LTIP PSUs and Time-Based RSUs that remained outstanding as of March 31, 2026, based on the closing price of our common stock on that date. The pro-rata portion of the awards was calculated based on the number of months of continuous service provided by the NEO through the assumed termination date relative to the number of months in the applicable vesting period or performance period, as applicable. With respect to the LTIP PSUs, the reported value reflects the target number of shares subject to each award. +(2) This amount reflects the value of all of the LTIP PSUs and Time-Based RSUs that remained outstanding as of March 31, 2026, based on the closing price of our common stock on that date. With respect to the LTIP PSUs, the reported value reflects the target number of shares subject to each award. +61 +DIRECTOR COMPENSATION +The Committee is responsible for approving the compensation program applicable to our directors who are not our employees (Nonemployee Directors). The primary objective of the Nonemployee Director compensation program is to provide a compensation opportunity that is competitive in the marketplace, and will attract and retain directors with the skills and experience necessary to assist us in achieving our strategic objectives. +For fiscal year 2026, Nonemployee Directors received an annual cash retainer of $90,000 for service on the Board, plus an annual cash retainer of $10,000 for each Board committee assignment. Nonemployee Directors holding the following positions received additional annual cash retainers: $200,000 for Chair of our Board; $40,000 for Chair of our Audit & Risk Management Committee; $35,000 for Chair of our Talent & Compensation Committee; and $27,500 for Chair of our Corporate Responsibility, Sustainability & Governance Committee. All or any portion of the cash retainers paid to any of our Nonemployee Directors may, at the election of the director, be paid through the issuance of our common stock. +Each of our Nonemployee Directors is also entitled to receive common stock with a total value of approximately $170,000 for annual service on our Board. The shares are issued in equal quarterly installments with the number of shares determined using the rolling average of the closing price of our common stock during the last 10 trading days leading up to, and including, the grant date. Each of these shares is fully vested on the date of issuance. Where our Nonemployee Directors elect to be paid their annual cash retainer fees in shares of our common stock, the number of shares to be issued is calculated using the same valuation methodology. +In January 2026, following a review of Peer Group practices and to ensure continued market competitiveness, the Board approved an increase in the annual equity grant from approximately $170,000 to approximately $190,000, effective as of April 1, 2026. The number of shares will be determined using the same valuation methodology described above. +Nonemployee Directors are reimbursed for reasonable Board-related expenses. Nonemployee Directors also receive product discounts on terms similar to those offered to our employees and, from time to time, may receive products without charge in order to help expand their knowledge of our products. +Director Compensation Table +The following table sets forth all compensation paid or awarded to our Nonemployee Directors during fiscal year 2026. The amounts set forth in the table have been calculated in accordance with applicable SEC rules, and do not necessarily reflect the amounts that have actually been paid to, or which may be realized by, our Nonemployee Directors. +Name Fees Earned +($) +Stock Awards +($) (1) +Total +($) +Cynthia (Cindy) L. Davis 265,833 170,101 435,934 +David A. Burwick 100,000 170,101 270,101 +Nelson C. Chan 110,000 170,101 280,101 +Michael F. Devine, III (2) +48,333 26,147 74,480 +Juan R. Figuereo 140,000 170,101 310,101 +Patrick J. Grismer (3) +58,333 98,994 157,327 +Maha S. Ibrahim (4) +260 269,883 270,143 +Victor Luis (4) +95,460 202,737 298,197 +Dave A. Powers (5) +45,000 85,600 130,600 +Lauri M. Shanahan 110,000 170,101 280,101 +Bonita C. Stewart 137,500 170,101 307,601 +(1) The amounts in this column represent the aggregate grant date fair value of the awards computed in accordance with FASB ASC Topic 718. For information about the assumptions underlying these computations, please refer to Note 9 to our consolidated financial statements included in our Annual Report. +(2) Mr. Devine retired from the Board effective May 22, 2025. The compensation amounts for Mr. Devine reflect a pro-rated amount based on the portion of the fiscal year during which he served as a director prior to his retirement. +(3) Mr. Grismer was elected to the Board on September 8, 2025. The compensation amounts for Mr. Grismer reflect a pro-rated amount based on the portion of the fiscal year during which he served as a director following his election. +(4) This director has elected to receive some or all of his or her annual cash retainer through the issuance of our common stock. +62 +(5) Mr. Powers retired from the Board effective September 8, 2025. The compensation amounts for Mr. Powers reflect a pro-rated amount based on the portion of the fiscal year during which he served as a director prior to his retirement. +Director Stock Ownership Guidelines +Our Board has adopted stock ownership guidelines applicable to our Nonemployee Directors. +The Committee periodically reviews our directors' compliance with the stock ownership guidelines. As of the end of fiscal year 2026, the Committee determined that each director is in compliance with the guidelines. +Please refer to the section of this Proxy Statement titled “ Stock Ownership Guidelines ” for additional information. +63 +EQUITY COMPENSATION PLAN INFORMATION +The following table sets forth information regarding our existing equity compensation plans as of March 31, 2026. +Plan category +Number of securities +to be issued upon settlement of LTIP PSUs and Time-Based RSUs (1)(2) +(#) +Number of securities +remaining available +for future issuance (3) +(#) +Equity compensation plans approved by security holders 915,896 13,401,182 +Equity compensation plans not approved by security holders — — +Total 915,896 13,401,182 +(1) This column reflects the aggregate number of shares underlying all equity awards outstanding pursuant to the 2006 Equity Incentive Plan (2006 EIP), 2015 SIP and 2024 SIP. For awards subject to performance-based vesting conditions, the amount reported reflects the number of shares to be issued assuming the relevant performance conditions are achieved at the maximum level, which is equal to 200% of the target amount. In the event the performance conditions for any applicable award are achieved below the maximum level, the number of shares reflected in this column will decrease and the number of shares in the last column will increase by a corresponding amount. +(2) There are no outstanding stock appreciation rights or warrants to purchase shares of our common stock. +(3) This column reflects (i) the number of shares reserved for issuance under the 2024 SIP less the number of shares to be issued upon vesting and settlement of LTIP PSUs and Time-Based RSUs as reported in the first column, plus (ii) the number of shares reserved for issuance under the 2024 Employee Stock Purchase Plan. This amount is subject to increase depending on our achievement with respect to certain performance conditions as discussed in footnote 1 above, and will also increase to the extent any awards are forfeited or otherwise terminated under the 2015 SIP or for shares withheld for taxes pursuant to the recycling features set forth in the 2024 SIP. No new equity awards may be issued under the 2006 EIP or the 2015 SIP. +64 +CEO PAY RATIO +General +Pursuant to Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of Regulation S-K, we are required to disclose the ratio of the annual total compensation of our principal executive officer to the median of the annual total compensation of all of our employees (excluding our principal executive officer), or our median employee. For fiscal year 2026, our principal executive officer was Stefano Caroti, our Chief Executive Officer and President. +Annual Total Compensation +For fiscal year 2026, the annual total compensation of our principal executive officer was $11,904,992, and the annual total compensation of our median employee was $51,638. The annual total compensation for our principal executive officer is consistent with the amount reflected in the Summary Compensation Table. +Pay Ratio +Based on this information, the fiscal year 2026 ratio of the annual total compensation of our principal executive officer to the annual total compensation of our median employee was approximately 231:1. +Determination of Median Employee; Applicable Exemptions +Consistent with Item 402(u) of Regulation S-K, we identified our median employee as of March 31, 2026 by (i) aggregating for each applicable employee (A) annual base salary for salaried employees (or hourly rate multiplied by estimated work schedule, for hourly, temporary and seasonal employees), (B) overtime paid during the year, and (C) target incentive compensation, and (ii) ranking this compensation measure for our employees from lowest to highest. For non-U.S. employees, we converted such employees’ pay to a U.S. dollar equivalent by applying corporate accounting exchange rates for each applicable foreign currency as of the determination date of March 1, 2026. This calculation was performed for all of our employees, excluding our principal executive officer, except as described below. After identifying our median employee, we calculated that individual’s fiscal year 2026 total annual compensation. +Individuals who were employed in Vietnam (169), Canada (115), and Indonesia (26) were excluded from the employee population for purposes of this disclosure, pursuant to the de minimis exemption set forth in the applicable SEC rules. In each case, the number of employees listed represented all employees in that jurisdiction as of the determination date. After taking into consideration the foregoing exemption, on March 1, 2026, we had 3,517 U.S. employees and 2,385 non-U.S. employees. Without taking into account the impact of this exemption, we had 3,517 U.S. employees and 2,695 non-U.S. employees. +Other Information +We believe the pay ratio we have reported above is a reasonable estimate calculated in a manner consistent with applicable SEC rules based on our internal records and the methodology described above. In identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation, SEC rules allow companies to make reasonable estimates and assumptions that reflect their employee populations and compensation practices, adopt a variety of calculation methodologies, and apply certain exemptions. Therefore, the pay ratio reported by other companies may not be comparable to the pay ratio we have reported above. +65 +PAY VERSUS PERFORMANCE +Provided below is our pay-versus-performance disclosure as required by Item 402(v) of Regulation S-K, including information regarding the relationship between “compensation actually paid” (CAP) to our NEOs, and our performance with respect to certain performance metrics. Specifically, set forth below is the following: +• A tabular list of the three most important financial measures our Talent & Compensation Committee used in fiscal year 2026 to link CAP to our performance; +• A table that compares the total compensation paid to our NEOs, as presented in the "Summary Compensation Table," to CAP and certain other financial measures; and +• Graphs reflecting the relationship between (i) CAP and our TSR, and the TSR of our peer group, (ii) CAP and our net income, and (iii) CAP and our consolidated operating income . +CAP has been calculated in the manner required by Item 402(v) of Regulation S-K and does not necessarily represent the compensation that has been paid to, or which may be realized, by our NEOs. The Talent & Compensation Committee does not use CAP as a basis for evaluating or determining NEO compensation, and the methodology required by the SEC to calculate CAP differs significantly from the manner in which we calculate or evaluate compensation. +Please refer to the section of this Proxy Statement titled “Compensation Discussion and Analysis” for a discussion of our pay-for-performance philosophy, and the objective and key elements of our executive compensation program. +Tabular List of Company Financial Performance Measures +The list below represents the financial performance measures that the Talent & Compensation Committee considered to have been the most important in linking CAP to our principal executive officer (PEO) and non-PEO NEOs (Non-PEO NEOs) for fiscal year 2026 to our performance for the same time period. The measures are not necessarily ranked in order of importance. +Financial Performance Measures +Consolidated Operating Income +Consolidated Revenue +Consolidated Pre-Tax Income +Please refer to the section of this Proxy Statement titled " Elements of Fiscal Year 2026 Executive Compensation Program " for a description of these measures, and the manner in which these measures are used to determine incentive compensation paid to, or earned by, our NEOs. +66 +Pay Versus Performance +Pursuant to Item 402(v) of Regulation S-K, the following table sets forth information regarding CAP to our PEOs and average CAP to our Non-PEO NEOs, as well as certain performance measures, and our results with respect to each of them, for each of our last five fiscal years: +PAY-VERSUS-PERFORMANCE TABLE +Value of Initial Fixed $100 Investment Based on: +Fiscal Year +Summary Compensation Table Total for First PEO ($) (1)(2) +Summary Compensation Table Total for Second PEO ($) (1)(2) +Compensation Actually Paid to First PEO ($) (1)(3) +Compensation Actually Paid to Second PEO ($) (1)(3) +Average Summary Compensation Table Total for Non-PEO NEOs ($) (1)(2) +Average Compensation Actually Paid to Non-PEO NEOs ($) (1)(3) +TSR +Peer Group TSR (4) +Net Income ($,000) Consolidated Operating Income +($,000) +(a) (b) (c) (d) (e) (f) (g) (h) (i) +2026 11,904,992 — 10,883,281 — 3,824,621 3,446,056 181.8 42.6 1,024,071 1,262,903 +2025 10,051,429 614,513 2,465,345 ( 11,941,432 ) 3,661,555 635,661 203.0 39.0 966,091 1,179,092 +2024 — 14,258,412 — 30,785,255 4,586,787 10,222,055 284.9 43.0 759,563 927,514 +2023 — 11,391,476 — 21,415,165 2,961,401 4,799,279 136.1 51.8 516,822 652,751 +2022 — 10,854,934 — 6,190,970 3,867,018 2,845,438 82.9 77.6 451,949 564,707 +(1) Mr. Caroti (referred to in the table above as our “First PEO”) served as PEO beginning August 1, 2024. Mr. Powers (referred to in the table above as our “Second PEO”) served as PEO for each of the covered fiscal years through July 31, 2024. Accordingly, separate columns are presented for our PEO only for fiscal 2025, the year in which we had two PEOs. The table below includes the name of each individual serving as an NEO during each of our last five fiscal years, including any person who served as our PEO during any portion of such fiscal years: +Fiscal Year PEO Non-PEO NEOs +2026 +Stefano Caroti Steven J. Fasching, Anne Spangenberg, Robin Spring-Green and Thomas Garcia +2025 +Stefano Caroti (First PEO) +Dave Powers (Second PEO) +Steven J. Fasching, Anne Spangenberg, Thomas Garcia, and Robin Spring-Green +2024 +Dave Powers Steven J. Fasching, Stefano Caroti, Anne Spangenberg and Thomas Garcia +2023 +Dave Powers Steven J. Fasching, Stefano Caroti, Anne Spangenberg and Thomas Garcia +2022 +Dave Powers Steven J. Fasching, David E. Lafitte, Stefano Caroti and Wendy Yang +(2) The dollar amounts included in this column reflect the total compensation of our PEOs and the average total compensation of our Non-PEO NEOs included in the "Total" column of the " Summary Compensation Table " for the applicable fiscal year. +(3) The table below provides the adjustments made to the " Summary Compensation Table " total compensation to arrive at the CAP to our PEOs, and the average CAP to our Non-PEO NEOs. +(4) The TSR peer group consists of the S&P 500 Apparel, Accessories & Luxury Goods Index. +67 +CALCULATION OF COMPENSATION ACTUALLY PAID (a) +Fiscal +Year NEOs +Summary Compensation Table Total ($) (b) +Minus - Amount Reported in the "Stock Awards" Column in the Summary Compensation Table ($) +Plus - Fair Value at Fiscal Year End of Outstanding and Unvested Stock Awards Granted in the Fiscal Year ($) (c) +Plus / Minus - Change in Fair Value of Outstanding and Unvested Stock Awards Granted in Prior Fiscal Years ($) (d) +Plus / Minus - Change in Fair Value at Vesting of Stock Awards Granted in Prior Fiscal Years ($) (e) +Compensation Actually Paid ($) +2026 PEO 11,904,992 ( 6,999,947 ) 6,796,990 ( 549,844 ) ( 268,910 ) 10,883,281 +Average for Non-PEO NEOs 3,824,621 ( 1,824,937 ) 1,772,024 ( 172,830 ) ( 152,822 ) 3,446,056 +2025 First PEO 10,051,429 ( 5,999,093 ) 4,038,327 ( 1,473,201 ) ( 4,152,117 ) 2,465,345 +Second PEO 614,513 ( 83,579 ) — ( 1,404,561 ) ( 11,067,805 ) ( 11,941,432 ) +Average for Non-PEO NEOs 3,661,555 ( 1,661,606 ) 1,118,517 ( 1,108,577 ) ( 1,374,228 ) 635,661 +2024 PEO 14,258,412 ( 8,499,746 ) 3,845,988 11,426,103 9,754,498 30,785,255 +Average for Non-PEO NEOs 4,586,787 ( 2,374,462 ) 3,721,124 2,447,199 1,841,407 10,222,055 +2023 +PEO 11,391,476 ( 7,999,562 ) 10,951,395 4,242,444 2,829,412 21,415,165 +Average for Non-PEO NEOs 2,961,401 ( 1,724,565 ) 2,383,845 780,911 397,687 4,799,279 +2022 +PEO 10,854,934 ( 7,999,651 ) 5,398,210 ( 1,160,869 ) ( 901,654 ) 6,190,970 +Average for Non-PEO NEOs 3,867,018 ( 2,549,581 ) 1,946,763 ( 242,995 ) ( 175,767 ) 2,845,438 +(a) This table excludes adjustments for awards granted that vest in the same year, awards that failed to achieve their performance vesting conditions, and the payment of dividends, in each case because there is no applicable adjustment for any of the covered fiscal years. +(b) Represents amounts included in the "Total" column of the " Summary Compensation Table " for the applicable fiscal year. +(c) Represents the fair value, as of the end of the applicable fiscal year, of the outstanding and unvested awards granted during such fiscal year, calculated in accordance with FASB ASC Topic 718. For information about the assumptions underlying these computations, please refer to our consolidated financial statements included in our annual reports on Form 10-K for the applicable fiscal years. +(d) Represents the change in fair value, measured from the end of the prior fiscal year to the end of the covered fiscal year, of the outstanding and unvested awards that were granted in previous fiscal years, calculated in accordance with FASB ASC Topic 718. For information about the assumptions underlying these computations, please refer to our consolidated financial statements included in our annual reports on Form 10-K for the applicable fiscal years. +(e) Represents the change in fair value, measured from the end of the prior fiscal year to the applicable vesting date, of the equity awards that were granted in previous fiscal years and which vested during the applicable fiscal years, calculated in accordance with FASB ASC Topic 718. For information about the assumptions underlying these computations, please refer to our consolidated financial statements included in our annual reports on Form 10-K for the applicable fiscal years. +68 +Relationship Between Pay and Performance +The relationship between the CAP to our NEOs against (i) our TSR, and the TSR of our peer group, (ii) net income, and (iii) consolidated operating income, is illustrated as follows: +Compensation Actually Paid Versus Total Stockholder Return +The chart below illustrates the relationship between the CAP to our PEOs, and the average CAP to our Non-PEO NEOs in relation to our TSR, and the TSR of our peer group over each of our last five fiscal years. For this purpose, our peer group is the S&P 500 Apparel, Accessories & Luxury Goods Index. We do not use TSR as a direct performance measure for purposes of determining executive compensation, although we have adopted a TSR modifier that may impact the vesting amount of LTIP PSUs under certain circumstances. +Compensation Actually Paid Versus Net Income +The chart below illustrates the CAP to our PEOs, and the average CAP to our Non-PEO NEOs, in relation to our net income over each of our last five fiscal years. We do not use net income as a performance measure for purposes of determining executive compensation. +69 +Compensation Actually Paid Versus Consolidated Operating Income +The chart below illustrates the CAP to our PEOs and the average CAP to our Non-PEO NEOs in relation to our consolidated operating income over each of our last five fiscal years. Consolidated operating income is the financial performance measure that, in our assessment, represents the most important financial performance measure to link CAP to our performance. +70 +SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT +The following table sets forth, as of June 30, 2026 (except as specified in the footnotes following the table), certain information concerning the shares of our common stock beneficially owned by (i) each person who is an NEO, (ii) each director or director nominee, (iii) all executive officers and directors as a group (16 persons), and (iv) each person known to us to be the beneficial owner of more than 5% of our common stock. There were 136,725,491 shares of our common stock outstanding on June 30, 2026. +Name and Address of Beneficial Owner (1) +Amount and +Nature of Beneficial +Ownership (#) (2)(3) +Percent +of Common Stock (3) +Named Executive Officers +Stefano Caroti 187,984 * +Steven J. Fasching 92,847 * +Anne Spangenberg 30,593 * +Robin Spring-Green 8,474 * +Thomas Garcia 40,001 * +Directors and Director Nominees (4) +Cynthia (Cindy) L. Davis 15,042 * +David A. Burwick 14,080 * +Nelson C. Chan 63,311 * +Juan R. Figuereo 4,137 (5) * +Patrick J. Grismer 1,498 * +Maha S. Ibrahim 13,054 * +Victor Luis 1,410 (6) * +Lauri M. Shanahan 13,197 (7) * +Bonita C. Stewart 36,108 (8) * +All Directors and Executive Officers as a Group (16 persons) +549,704 0.4 % +5% Stockholders +BlackRock, Inc. (9) +14,360,492 10.5 % +Vanguard Capital Management (10) +10,649,383 7.8 % +* Percentage of shares beneficially owned does not exceed 1.0% of our outstanding shares of common stock. +(1) Unless otherwise noted, the address of each beneficial owner is 250 Coromar Drive, Goleta, California 93117. +(2) Unless otherwise noted, we believe each individual or entity named has sole investment and voting power with respect to the shares of our common stock reported as beneficially owned by them, subject to community property laws, where applicable. +(3) Pursuant to applicable SEC rules, shares not outstanding which are subject to options, warrants, rights or conversion privileges exercisable on or before the date that is 60 days after June 30, 2026 are deemed outstanding for the purpose of calculating the number and percentage owned by a person, but are not deemed outstanding for the purpose of calculating the number and percentage owned by any other person. +(4) The reported amounts include shares held by certain directors through one or more family trusts over which shares the respective directors may have shared voting and/or investment power. +(5) An additional 9,968 shares previously earned by this director have been deferred pursuant to an election made under our Deferred Stock Unit Compensation Plan. These deferred shares have been excluded from the table. +(6) An additional 17,719 shares previously earned by this director have been deferred pursuant to an election made under our Deferred Stock Unit Compensation Plan. These deferred shares have been excluded from the table. +(7) An additional 12,636 shares previously earned by this director have been deferred pursuant to an election made under our Deferred Stock Unit Compensation Plan. These deferred shares have been excluded from the table. +(8) An additional 6,995 shares previously earned by this director have been deferred pursuant to an election made under our Deferred Stock Unit Compensation Plan. These deferred shares have been excluded from the table. +71 +(9) This information is based solely on Amendment No. 4 to Schedule 13G filed by this stockholder on April 17, 2025. This stockholder’s business address is 50 Hudson Yards, New York, NY 10001. This stockholder has sole voting power over 13,382,772 of such shares and sole dispositive power over 14,360,492 of such shares. +(10) This information is based solely on Schedule 13G filed by this stockholder on April 29, 2026. This stockholder’s business address is 100 Vanguard Boulevard, Malvern, PA 19355. This stockholder has sole voting power over 1,416,496 of such shares and sole dispositive power over 10,649,383 of such shares. +72 +SECTION 16 REPORTS +Section 16(a) of the Exchange Act requires our officers, directors and persons who own more than ten percent of a registered class of our securities, to file with the SEC reports of initial ownership (Form 3) and reports of changes in ownership (Form 4 and Form 5) of our securities. +Based solely on our review of the Section 16(a) reports that have been filed by or on behalf of our officers, directors, and persons who own more than ten percent of a registered class of our securities, as well as written representations from our officers and directors, we believe all such persons complied on a timely basis with the filing requirements of Section 16(a) during fiscal year 2026. We are not aware of any late or missed filings of such reports for fiscal year 2026. +73 +AUDIT & RISK MANAGEMENT COMMITTEE REPORT +The Audit & Risk Management Committee is responsible for providing independent, objective oversight of, among other things, our financial reporting functions, our independent registered public accounting firm, our highest-ranking manager of internal audit, our system of internal controls, our legal and regulatory compliance, and compliance with our related person transaction policy and Code of Ethics. The Audit & Risk Management Committee is currently composed of four directors, each of whom meets the independence and experience requirements under applicable NYSE rules, as well as the independence requirements applicable to Audit & Risk Management Committee members under applicable SEC rules. In addition, our Board has determined that the Chair of the Audit & Risk Management Committee qualifies as an “audit committee financial expert” under applicable SEC rules. +Management is responsible for the preparation of our financial statements and financial reporting process, including our system of internal controls. KPMG LLP, our independent registered public accounting firm, is responsible for performing an independent audit of our consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (PCAOB), and expressing (i) an opinion on whether our consolidated financial statements present fairly, in all material respects, our financial position and results of operations and cash flows for the periods presented in conformity with US generally accepted accounting principles, and (ii) an opinion on whether we have maintained, in all material respects, effective internal control over financial reporting as of March 31, 2026, based on criteria established in the Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Audit & Risk Management Committee’s responsibility is to monitor and oversee these processes. +In connection with these responsibilities, the Audit & Risk Management Committee met with management and KPMG LLP to review and discuss the March 31, 2026 consolidated financial statements and obtained from management their representation that our financial statements have been prepared in accordance with US generally accepted accounting principles. In addition, management represented that, as of March 31, 2026, our Company maintained effective internal control over financial reporting. +The Audit & Risk Management Committee also discussed with KPMG LLP the matters required by Auditing Standard No. 1301, “Communications with Audit Committees” of the PCAOB, which includes, among other items, information regarding the conduct of the integrated audit of our consolidated financial statements. The Audit & Risk Management Committee has received the written communications from KPMG LLP required by applicable requirements of the PCAOB regarding KPMG LLP's communication with the Audit & Risk Management Committee concerning independence and has discussed with them their independence. +The Audit & Risk Management Committee operates under a written charter, which was adopted by our Board and is assessed annually for adequacy by the Audit & Risk Management Committee. The Audit & Risk Management Committee held ten meetings during fiscal year 2026, including meetings with KPMG LLP and our highest-ranking manager of internal audit, both with and without management present. In performing its functions, the Audit & Risk Management Committee acts only in an oversight capacity. It is not the responsibility of the Audit & Risk Management Committee to determine that our financial statements are complete and accurate, are presented in accordance with US generally accepted accounting principles or present fairly our results of operations for the periods presented, or that we maintain appropriate internal controls. Furthermore, the Audit & Risk Management Committee’s oversight responsibilities do not independently assure that the audit of our financial statements has been carried out in accordance with the standards of the PCAOB or that our registered public accounting firm is independent. +Based upon the Audit & Risk Management Committee’s review and discussions with management and KPMG LLP, and subject to the limitations of the Audit & Risk Management Committee’s role and responsibilities referred to above and in the Audit & Risk Management Committee charter, the Audit & Risk Management Committee recommended that our Board include the audited consolidated financial statements in our Annual Report. +AUDIT & RISK MANAGEMENT COMMITTEE +Juan R. Figuereo ( Chair ) +Nelson C. Chan +Patrick J. Grismer +Lauri M. Shanahan +The Audit & Risk Management Committee Report shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as amended, or the Acts, except to the extent that our Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under the Acts. +74 +RELATED-PERSON TRANSACTIONS +Our legal department is primarily responsible for identifying and reviewing relationships and transactions in which our Company and our directors, director nominees, executive officers, principal stockholders, or any of their respective immediate family members, are participants to determine whether any of these related persons had or will have a direct or indirect material interest in such transactions. In order to assist in identifying potential related-person transactions, our legal department annually prepares and distributes to all directors, director nominees and executive officers a detailed written questionnaire which includes questions intended to elicit information about any current or proposed related-person transactions. In addition, our Code of Ethics addresses conflicts of interest where an individual’s personal interests may interfere or conflict with the interests of our Company, including relationships with suppliers, customers or competitors. Conflicts of interest which might impair (or appear to impair) the exercise of judgment solely for the benefit of our Company and our stockholders are prohibited. In general, such conflicts must be approved by our legal department, the employee’s supervisor or, in the case of directors, the Audit & Risk Management Committee. Information regarding potential conflicts of interest in violation of our Code of Ethics may be reported to our anonymous reporting hotline, which may be accessed by the Chair of the Audit & Risk Management Committee, the Chair of our Board and our highest ranking manager of internal audit. +If a related-person transaction is identified by our legal department as one which would be required to be publicly reported pursuant to applicable SEC rules, the Audit & Risk Management Committee is responsible for reviewing and approving or ratifying any such transaction. The Audit & Risk Management Committee may approve a related person transaction when, in its good faith judgment, it determines that the transaction is in the best interests of our Company and our stockholders. +Except as set forth below, there are no family relationships between any director, director nominee, or executive officer, and there were no transactions or series of similar transactions since the beginning of fiscal year 2026, and there are no currently proposed transactions, to which we were or are a party that are required to be reported in accordance with applicable SEC rules in which: +• the amount involved exceeds $120,000; and +• any of our directors, director nominees, executive officers, any holder of more than 5% of our common stock, or any member of the immediate family of any of the foregoing, had or will have a direct or indirect material interest. +Ms. Shanahan, a member of our Board, Audit & Risk Management Committee, and Corporate Responsibility, Sustainability & Governance Committee, is the mother of one of our employees whom we have employed since March 2025. Ms. Shanahan does not serve on our Talent & Compensation Committee and is not involved in decision-making regarding this employee’s compensation. For fiscal year 2026, the aggregate amount of this employee’s annual compensation was in excess of $120,000, and is commensurate with our other employees with similar titles, skills, and levels of experience. +75 +PROPOSAL NO. 2 +RATIFICATION OF THE SELECTION OF KPMG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +For fiscal year 2026, KPMG LLP (KPMG) provided audit services, which included an examination of the consolidated financial statements included in our Annual Report. The Audit & Risk Management Committee has selected KPMG to provide audit services to our Company for fiscal year 2027, which covers the period from April 1, 2026 to March 31, 2027. We are asking our stockholders to ratify this selection at the Annual Meeting. +Although ratification is not required by our Bylaws or applicable SEC rules, the Audit & Risk Management Committee is submitting the selection of our independent registered public accounting firm to a vote of our stockholders because it believes it is appropriate as a matter of good corporate governance practice. If our stockholders do not ratify the selection, the Audit & Risk Management Committee will consider the selection of another independent registered public accounting firm, but is not required to select a different firm. In addition, even if our stockholders ratify the selection, the Audit & Risk Management Committee will retain the discretion to select a different independent registered public accounting firm in the future if it believes doing so is in the best interests of our Company and stockholders. +A representative of KPMG will attend the Annual Meeting and will have the opportunity to make a statement and/or respond to appropriate questions from stockholders present at the Annual Meeting. +Fees for Services Rendered by Independent Registered Public Accounting Firm +The following table sets forth approximate fees for services rendered by KPMG for the fiscal years ended March 31, 2026 and 2025: +FEES ($) +FISCAL YEAR 2026 +FISCAL YEAR 2025 +Audit Fees $ 2,961,000 $ 2,892,000 +Audit-Related Fees — 25,000 +Tax Fees 13,000 12,000 +All Other Fees — — +Total Fees 2,974,000 2,929,000 +Audit Fees +The audit fees presented above for the fiscal years ended March 31, 2026 and 2025 include fees associated with the audit of our consolidated balance sheets and the related consolidated statements of comprehensive income, stockholders’ equity and cash flows included in our annual reports on Form 10-K, the audit of internal control over financial reporting, as well as the reviews of our quarterly reports on Form 10-Q, certain statutory audits required internationally, and consents, as well as assistance with and review of registration statement filed with the SEC. +Audit-Related Fees +There were no audit-related fees incurred during the fiscal year ended March 31, 2026. The audit-related fees presented above for the fiscal year ended March 31, 2025 include professional services rendered for ESG limited assurance services. +Tax Fees +Tax fees include fees incurred for tax services, including tax compliance, tax advice and tax planning for income taxes and customs matters. +All Other Fees +There were no fees for services rendered by KPMG incurred during the fiscal years ended March 31, 2026 and 2025 other than those disclosed above. +76 +Audit & Risk Management Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm +In accordance with its policies and procedures, prior to engagement, the Audit & Risk Management Committee pre-approves all independent registered public accounting firm services. Specifically, the Audit & Risk Management Committee administers and oversees our engagement of KPMG and pre-approves all of KPMG’s audit and permissible non-audit services on a case-by-case basis. In approving non-audit services, the Audit & Risk Management Committee considers whether the engagement could compromise the independence of KPMG, and whether, for reasons of efficiency or convenience, it is in our best interests to engage KPMG to perform the services. The Audit & Risk Management Committee has determined that the performance by KPMG of the non-audit services listed above as "Audit-Related Fees" and “Tax Fees” did not affect its independence. +During the year, circumstances may arise under which it may become necessary to engage the independent registered public accounting firm for additional services not contemplated in the original pre-approvals obtained. +Required Vote +The ratification of the selection of KPMG as our independent registered public accounting firm for fiscal year 2027 requires the affirmative vote of a majority of the outstanding shares present virtually or represented by proxy and entitled to vote on this proposal at the Annual Meeting (assuming that a quorum is present). +This proposal is considered a "routine" matter under NYSE rules. As a result, a bank, broker, dealer or other nominee may generally vote without instructions on this matter, so we do not expect any broker non-votes in connection with this proposal. Abstentions on this proposal will have the same effect as a vote against this proposal. If no contrary indication is made, returned proxies will be voted "FOR" this proposal. +BOARD +RECOMMENDATION +OUR BOARD OF DIRECTORS RECOMMENDS +THAT YOU VOTE +" FOR " +PROPOSAL NO. 2 TO RATIFY THE SELECTION OF KPMG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL YEAR 2027. +77 +PROPOSAL NO. 3 +ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION +Background +In accordance with applicable SEC rules, we are providing our stockholders with the opportunity to cast a non-binding advisory "Say-on-Pay" Vote on the compensation of our Named Executive Officers, as described below. We consider seeking the views of our stockholders on our executive compensation program to be an important part of our decision-making process. +For additional information about our executive compensation program, please refer to the section of this Proxy Statement titled " Compensation Discussion and Analysis " and the related compensation tables and footnotes. +Proposal +In accordance with Section 14A of the Exchange Act, we are asking our stockholders to approve the following resolution at the Annual Meeting: +“ RESOLVED, that our stockholders approve, on a non-binding advisory basis, the compensation of our Named Executive Officers, as described in the Compensation Discussion and Analysis, the Summary Compensation Table, and the related compensation tables, notes and narrative discussion in the Proxy Statement for our 2026 Annual Meeting of Stockholders. ” +Because this vote is advisory only, it will not be binding upon our Board or the Talent & Compensation Committee. However, the Talent & Compensation Committee will take the outcome of the vote into account when considering future executive compensation arrangements. +Required Vote +The approval, on a non-binding advisory basis, of the compensation of our Named Executive Officers requires the affirmative vote of a majority of the outstanding shares present virtually or represented by proxy and entitled to vote on this proposal at the Annual Meeting (assuming that a quorum is present). +This proposal is considered a "non-routine" matter under NYSE rules. As a result, a bank, broker, dealer or other nominee may not vote without instructions on this matter, so there may be broker non-votes in connection with this proposal. Broker non-votes will have no effect on the outcome of this proposal. Abstentions will have the same effect as a vote against this proposal. If no contrary indication is made, returned proxies will be voted "FOR" this proposal. +BOARD RECOMMENDATION +OUR BOARD OF DIRECTORS RECOMMENDS +THAT YOU VOTE +" FOR " +PROPOSAL NO. 3 TO APPROVE, ON A NON-BINDING ADVISORY BASIS, THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS. +78 +ADDITIONAL INFORMATION +Stockholder Proposals +Proposals or director nominations by stockholders intended to be presented at our annual meeting of stockholders to be held in 2027, and included in our proxy statement and form of proxy relating to that meeting, must be delivered to our corporate headquarters located at 250 Coromar Drive, Goleta, California 93117 no later than March 26, 2027. In order to be included in the proxy statement, these proposals must comply with applicable SEC rules. +Proposals or director nominations by stockholders intended to be considered at the annual meeting of stockholders to be held in 2027, without including the proposal in our proxy statement and form of proxy relating to that meeting, must notify us no earlier than the close of business on May 17, 2027, and no later than the close of business on June 16, 2027. In order to make a proposal at such meeting, these proposals must comply with our Bylaws. +In addition to satisfying the foregoing requirements of our Bylaws, to comply with the universal proxy rules under the Exchange Act, stockholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act no later than July 16, 2027. +Other Business +As of the date of this Proxy Statement, we are not aware of any business to be presented for consideration at the Annual Meeting other than the matters described in this Proxy Statement. If, however, other matters are properly presented at the Annual Meeting, the persons named as proxies (or their substitutes) will vote in accordance with their discretion with respect to those matters. +79 +ANNUAL REPORT +The Annual Report contains audited consolidated financial statements of our Company and its subsidiaries and the report thereon of KPMG LLP, our independent registered public accounting firm. A copy of the Annual Report is being provided with this Proxy Statement and has been posted on the Internet, along with this Proxy Statement, each of which is accessible by following the instructions in this Proxy Statement and the accompanying Notice. +Any person who was our stockholder on the Record Date (including any beneficial owner holding shares in "street name" as of the Record Date) may request a copy of the Annual Report, and it will be furnished without charge upon request. Requests should be directed to Deckers Outdoor Corporation, 250 Coromar Drive, Goleta, California 93117, Attention: Corporate Secretary, or by telephone to (805) 967-7611. +BY ORDER OF THE BOARD OF DIRECTORS +Stefano Caroti +Chief Executive Officer and President +Goleta, California +July 24, 2026 +80 \ No newline at end of file diff --git a/raw/proxies/0000910521/0000910521-26-000018/proxy_rpt.txt b/raw/proxies/0000910521/0000910521-26-000018/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..faeca9b53353eba399bebda5052d4f691ef86691 --- /dev/null +++ b/raw/proxies/0000910521/0000910521-26-000018/proxy_rpt.txt @@ -0,0 +1,8 @@ +RELATED-PERSON TRANSACTIONS +Our legal department is primarily responsible for identifying and reviewing relationships and transactions in which our Company and our directors, director nominees, executive officers, principal stockholders, or any of their respective immediate family members, are participants to determine whether any of these related persons had or will have a direct or indirect material interest in such transactions. In order to assist in identifying potential related-person transactions, our legal department annually prepares and distributes to all directors, director nominees and executive officers a detailed written questionnaire which includes questions intended to elicit information about any current or proposed related-person transactions. In addition, our Code of Ethics addresses conflicts of interest where an individual’s personal interests may interfere or conflict with the interests of our Company, including relationships with suppliers, customers or competitors. Conflicts of interest which might impair (or appear to impair) the exercise of judgment solely for the benefit of our Company and our stockholders are prohibited. In general, such conflicts must be approved by our legal department, the employee’s supervisor or, in the case of directors, the Audit & Risk Management Committee. Information regarding potential conflicts of interest in violation of our Code of Ethics may be reported to our anonymous reporting hotline, which may be accessed by the Chair of the Audit & Risk Management Committee, the Chair of our Board and our highest ranking manager of internal audit. +If a related-person transaction is identified by our legal department as one which would be required to be publicly reported pursuant to applicable SEC rules, the Audit & Risk Management Committee is responsible for reviewing and approving or ratifying any such transaction. The Audit & Risk Management Committee may approve a related person transaction when, in its good faith judgment, it determines that the transaction is in the best interests of our Company and our stockholders. +Except as set forth below, there are no family relationships between any director, director nominee, or executive officer, and there were no transactions or series of similar transactions since the beginning of fiscal year 2026, and there are no currently proposed transactions, to which we were or are a party that are required to be reported in accordance with applicable SEC rules in which: +• the amount involved exceeds $120,000; and +• any of our directors, director nominees, executive officers, any holder of more than 5% of our common stock, or any member of the immediate family of any of the foregoing, had or will have a direct or indirect material interest. +Ms. Shanahan, a member of our Board, Audit & Risk Management Committee, and Corporate Responsibility, Sustainability & Governance Committee, is the mother of one of our employees whom we have employed since March 2025. Ms. Shanahan does not serve on our Talent & Compensation Committee and is not involved in decision-making regarding this employee’s compensation. For fiscal year 2026, the aggregate amount of this employee’s annual compensation was in excess of $120,000, and is commensurate with our other employees with similar titles, skills, and levels of experience. +75 \ No newline at end of file diff --git a/raw/proxies/0000928022/0000928022-16-000140/proxy.txt b/raw/proxies/0000928022/0000928022-16-000140/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..3f1d6846f8f5a64dc7b8e64dc58d40fb668638b6 --- /dev/null +++ b/raw/proxies/0000928022/0000928022-16-000140/proxy.txt @@ -0,0 +1,2337 @@ +DEF 14A +1 +cpe-20160512xdef14a.htm +DEF 14A +2016 DEF 14 A +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Rule 14a-101 +Schedule 14A Information +Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 +Filed by the Registrant ☑ +Filed by a Party other than the Registrant ☐ +Check the appropriate box: +☐ +Preliminary Proxy Statement +☐ +Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +☑ +Definitive Proxy Statement +☐ +Definitive Additional Materials +☐ +Soliciting Material Pursuant to §240.14a-12 +Callon Petroleum Company +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +☑ +No fee required. +☐ +Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. +(1) +Title of each class of securities to which transaction applies: +(2) +Aggregate number of securities to which transaction applies: +(3) +Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): +(4) +Proposed maximum aggregate value of transaction: +(5) +Total fee paid: +☐ +Fee paid previously with preliminary materials. +☐ +Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. +(1) +Amount Previously Paid: +(2) +Form, Schedule or Registration Statement No.: +(3) +Filing Party: +(4) +Date Filed: +CALLON PETROLEUM COMPANY +200 NORTH CANAL STREET +NATCHEZ, MISSISSIPPI 39120 +NOTICE OF THE 2016 ANNUAL MEETING OF STOCKHOLDERS +TO BE HELD THURSDAY, MAY 12, 2016 +To Our Stockholders: +Notice is hereby given and you are cordially invited to attend the 2016 Annual Meeting of Stockholders (the “ Annual Meeting ” ) of Callon Petroleum Company ( “ Callon, ” the “ Company, ” “ us, ” “ we, ” “ our ” or like terms), a Delaware corporation, which will be held in Natchez, Mississippi, on Thursday, May 12, 2016, at 9:00 a.m. Central Daylight Time ( “ CDT ” ), in the Grand Ballroom of the Natchez Grand Hotel, 111 Broadway Street, Natchez, Mississippi 39120, to consider and vote on the following proposals: +· +The election of three Class I Directors, Messrs. Larry D. McVay, John C. Wallace and Michael L. Finch, for a three-year term; +· +The approval, by non-binding advisory vote, of the compensation of our named executive officers (“NEOs”); +· +The approval of an amendment to Article Four of the Company’s Certificate of Incorporation increasing the number of authorized shares of Common Stock of the Company ( “ Common Stock ” ) from 150 million shares to 300 million shares; +· +The ratification of the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2016; and +· +The transaction of other business as may properly come before the Annual Meeting or any adjournment(s) thereof. +We describe these proposals in detail within the accompanying proxy materials. Only holders of record of our common stock at the close of business on March 18, 2016 (the “ Record Date ” ) , are entitled to notice of and to attend the Annual Meeting and to vote on the above listed matters. Beginning on or about April 1, 2016, we mailed a Notice Regarding the Internet Availability of Proxy Materials (the “ Notice ” ) to our stockholders. The Notice contained instructions on how to access the proxy statement and related materials online and how to vote your shares. Instructions for requesting a paper copy of the proxy materials are contained in the Notice. A list of stockholders entitled to vote at the Annual Meeting will be available at our office at 200 North Canal Street, Natchez, MS 39120 during normal business hours for a period of ten days prior to the meeting and will also be available for inspection at the Annual Meeting . +Whether or not you plan to attend the meeting, please vote electronically via the Internet or by telephone, or please complete, sign, date and return the accompanying proxy card in the enclosed postage-paid envelope as soon as possible. See “ Information About Voting and The Meeting ” in the proxy statement for more details. +We look forward to seeing you at the meeting. +By Order of the Board of Directors +By: /s/ B.F. Weatherly +Natchez, Mississippi +B.F. Weatherly +April 1, 2016 +Corporate Secretary +1 +YOUR VOTE IS IMPORTANT! +Important Notice Regarding the Availability of Proxy Materials for the +Annual Meeting of Stockholders to be held on May 12, 2016: +This proxy statement and our 2015 Annual Report on Form 10-K are available at +https://www.iproxydirect.com/CPE and www.callon.com +If you have any questions or need assistance voting your shares, please call our proxy solicitor: +Morrow & Co., LLC +470 West Avenue - 3rd Floor +Stamford, CT 06902 +Banks and Brokerage Firms, please call (203) 658-9400. +Stockholders, please call toll free (800) 414-4313. +2 +PROXY SUMMARY +This summary is included to provide an introduction and overview of the information contained in the Proxy Statement. This is a summary only and highlights information contained elsewhere in this Proxy Statement. This summary does not contain all of the information you should consider and is not a form for voting. You should read the entire Proxy Statement carefully before voting. +2016 Annual Meeting of Stockholders +Date and Time: +May 12, 2016, at 9:00 a.m., Central Daylight Time +Location: +Natchez Grand Hotel, 111 Broadway Street, Natchez, Mississippi 39120 +Record Date: +March 18, 2016 +Proxy Voting: +Stockholders as of the close of business on the Record Date are entitled to vote. Each share of Common Stock is entitled to one vote at the Annual Meeting +Voting Matters and Board Recommendation +Proposal +Board +Recommendation +No. 1: Election of Three Director Nominees to Serve for a Three-Year Term Expiring in 2019 +FOR +No. 2: Advisory Vote to Approve Named Executive Officer Compensation +FOR +No. 3: Amendment to the Certificate of Incorporation to Increase Authorized Sh ares of Common Stock from 150 million to 300 million +FOR +No. 4: Ratification of the Appointment of Grant Thornton, LLC as the Company’s Independent registered Public Accounting Firm for 2016 +FOR +Executive Compensation Highlights +Our Board has a “pay-for-performance” philosophy and recognizes the leadership of Mr. Fred L. Callon, our Chairman, President and Chief Executive Officer, and our other executive officers in contributing to the Company’s success in 2015. Our compensation program is designed to reward, in both the short-term and the long-term, performance that contributes to the implementation of our business strategies, maintenance of our culture and values and the achievement of our objectives. In addition, we reward qualities that we believe help achieve our business strategies, such as teamwork, individual performance in light of general economic and industry-specific conditions, relationships with shareholders and vendors, the ability to manage and enhance production from our existing assets, the ability to explore new opportunities to increase oil and natural gas production, the ability to identify and acquire additional acreage, the ability to increase year-over-year proved reserves, the ability to control unit production costs, level of job responsibility, industry experience and general professional growth. +· +As a result of the achievements detailed herein in the compensation discussion and analysis section , the Committee awarded bonuses above target for our NEOs for 2015 performance; +· +In May 2015, the Committee granted long-term incentives to our NEOs, 60% of which were tied to to tal stockholder return, or TSR; +· +The Committee certified the results of the 2013 grants of TSR phantom shares, which measured Callon’s TSR against its peers for the 2013-2015 time period. Callon ranked first out of 13 peers, resulting in 200% of the targeted number of phantom shares vesting ; and +· +No changes were made to NEO base salaries in 2015. +In 2015, approximately 96% of the shares voted at last year’s annual meeting approved our 2014 executive compensation by supporting our “Say-on-Pay” proposal. +3 +Key Elements of our Executive Compensation +· +“Pay-for-Performance” philosophy linking compensation directly to performance, with a significant portion of total annual compensation placed “at risk” +· +Competitive base salary +· +Annual cash bonus incentive tied to the achievement of specified Company performance targets +· +Long-term equity or equity-based incentive awards and performance share program based on relative TSR +· +Other benefit plans and programs, such as retirement, health benefits and severance protection +Governance Highlights +· +Board meetings in 2015: 5 +· +Committee meetings: Audit – 9; Compensation – 5; Nominating and Corporate Governance – 3; Strategic Planning and Reserves – 3 +· +7 out of 8 Directors are independent and committees are comprised entirely of independent Directors +· +Majority vote standard in election of Directors +· +Classified Board of Directors with staggered terms +· +Director and Officer stock ownership guidelines +· +Elimination of tax gross-ups +· +“Double Trigger” severance agreements with fixed term +· +Policy prohibiting hedging transactions [related to stock ownership positions] +· +Recently updated governance documents, such as the Corporate Governance Guidelines, Code of Business Conduct and Ethics, and Board Committee Charters. +4 +PROXY STATEMENT +________________________ +CALLON PETROLEUM COMPANY +200 North Canal Street +Natchez, Mississippi 39120 +(601) 442-1601 +2016 ANNUAL MEETING OF STOCKHOLDERS +THURSDAY, MAY 12, 2016 +INFORMATION CONCERNING SOLICITATION AND VOTING +We are providing you this proxy statement in connection with the solicitation of proxies by our board of directors (the “Board” or individually “Director” and collectively “Directors”) to be voted at the 2016 annual meeting (the “Annual Meeting”) of stockholders of Callon Petroleum Company (“Callon,” the “Company,” “us,” “we,” “our” or like terms). The Annual Meeting will be held on Thursday, May 12, 2016 at 9:00 a.m. CDT in the Grand Ballroom of the Natchez Grand Hotel, 111 Broadway Street, Natchez, Mississippi 39120. This proxy statement contains important information for you to consider when deciding how to vote on the matters brought before the meeting. Please read it carefully. +The Board will primarily solicit proxies by mail, and we will bear all costs incurred in the solicitation of proxies, including the preparation, printing and mailing of these proxy materials. In addition to solicitation by mail, our Directors, officers and employees may solicit proxies personally or by telephone, email, facsimile or other means, without additional compensation. We may also make arrangements with brokerage houses and other custodians, nominees and fiduciaries for the forwarding of solicitation material to the beneficial owners of the common stock held by such persons, and we may reimburse those brokerage houses and other custodians, nominees and fiduciaries for reasonable expenses incurred in connection therewith. In addition, to assist us with our solicitation efforts, we have retained the services of Morrow & Co., LLC for a fee of approximately $7,500, plus out-of-pocket expenses. +INFORMATION ABOUT VOTING AND THE MEETING +Who may vote +You may vote if you are the record holder of our common stock as of the close of business on March 18, 2016, the “Record Date.” On that date, 96,122,341 shares of our common stock were outstanding and are entitled to vote at the Annual Meeting. Each share of common stock is entitled to one vote on each matter considered at this meeting. +Attending the Meeting +If you meet the above criteria to vote at our Annual Meeting, you may attend the Annual Meeting. If you wish to attend the Annual Meeting in person, you must present valid, government-issued picture identification. If your shares are held in the name of a bank, broker or other nominee and you plan to attend the Annual Meeting, in order to be admitted you must present proof of your beneficial ownership of the common stock, such as a bank or brokerage account statement, indicating that you owned shares of our common stock at the close of business on the Record Date. +For safety and security reasons, no cameras, recording equipment, cellular telephones, electronic devices, large bags, briefcases or packages will be permitted in the Annual Meeting. No banners, signs, firearms or weapons will be allowed in the meeting room. We reserve the right to inspect all items entering the meeting room. +5 +Proposals +Qualifying stockholders will vote on the following four proposals at the meeting: +1) +The election of Directors; +2) +Advisory approval of our executive compensation; +3) +The approval of an amendment to the Company’s Certificate of Incorporation to increase the number of authorized shares of Common Stock from 150 million to 300 million; and +4) +The ratification of the appointment of Grant Thornton LLP. +Notice and Access +Rules adopted by the Securities and Exchange Commission (the "SEC") allow companies to send stockholders a notice of internet availability of proxy materials (the “Notice”), rather than mail stockholders full sets of proxy materials, often referred to as “notice and access.” Consistent with the past few years, we have elected to send a separate Notice to our stockholders instead of a paper copy of the proxy materials. This approach conserves natural resources and reduces the costs of printing and distributing our proxy materials, while providing stockholders with a convenient way to access our proxy materials. This Notice includes instructions on how to access the proxy materials over the Internet or to request a paper copy of proxy materials, including a proxy card or voting instruction form. In addition and as described in the Notice, stockholders may request to receive future proxy materials in printed form by mail or electronically by email. A stockholder’s election to receive proxy materials by mail or email will remain in effect until terminated by the stockholder. +Our Board has made these proxy materials available to you on the Internet on or about April 1, 2016 at https://www.iproxydirect.com/CPE, which is the cookies-free website described in the Notice. Accordingly, we are sending the Notice to our stockholders of record and beneficial owners of our stock, and filing the Notice with the SEC, on or about April 1, 2016. Please note that the Notice identifies the items on which stockholders will vote at the meeting, but stockholders cannot vote by marking the Notice and returning it. The Notice provides instructions on how to vote via the Internet, by telephone or by requesting and returning a paper proxy card, or by submitting a ballot in person at the meeting. +In addition to the proxy materials being available for review at https://www.iproxydirect.com/CPE, the site contains instructions on how to access the proxy materials on a website or to request free of charge printed materials, including a copy of our Form 10-K for the year ended December 31, 2015 as filed with the SEC. On an ongoing basis, stockholders may contact our Corporate Secretary at our principal offices in Natchez, Mississippi to request proxy materials by mail or by e-mail. +Casting your vote +There are three methods for registered stockholders to vote by proxy without attending the Annual Meeting: +1) +By Internet . You can vote online via the Internet by going to the website address for Internet voting provided on your Notice or proxy card. You will need to use the control and request ID appearing on your proxy card to vote via the Internet. You can use the Internet to transmit your voting instructions up until 11:59 p.m. CDT on May 11, 2016. If you vote via the Internet, you do NOT need to vote by telephone or return a proxy card. Internet voting is available 24 hours a day. +2) +By Telephone . You can also vote by telephone by calling the toll-free telephone number provided on your proxy card. You will need to use the control and request ID appearing on your proxy card to vote by telephone. You may transmit your voting instructions from any touch-tone telephone up until 11:59 p.m. CDT on May 11, 2016. Voting by telephone is available 24 hours a day. +3) +By Mail. If you received a printed copy of the proxy card, you can vote by marking, dating and signing it, and returning it in the reply envelope provided. Please promptly mail your proxy card to ensure that we receive it prior to the closing of the polls at the Annual Meeting. +6 +If you get more than one Notice and/or proxy statement then it means that your shares are likely registered in more than one account. Please provide voting instructions for all Notices, proxy and voting instruction cards you receive. If you send us a signed proxy card without marking your voting selections, your shares will be voted on each proposal as recommended by our Board, and in the discretion of the proxy holders as to any other matters that may properly come before the meeting or any postponement or adjournment of the meeting. The Board is not presently aware of any other proposals or any other business to be considered at the Annual Meeting. +If your shares are registered in the name of a broker, bank or other nominee (typically referred to as being held in “Street Name”), you will receive instructions from your broker, bank or other nominee that you must follow in order for your broker, bank or other nominee to vote your shares per your instructions. Many brokerage firms and banks have a process for their beneficial holders to provide instructions via the Internet or over the telephone. If Internet or telephone voting is unavailable from your broker, bank or other nominee, please complete and return the enclosed voting instruction card in the addressed, postage paid envelope provided. +In the event you do not provide instructions on how to vote shares held in Street Name, your broker may have authority to vote your shares. Under the rules that govern brokers who are voting with respect to shares that are held in Street Name, brokers have the discretion to vote such shares on routine matters, but they are not permitted to vote (a “broker non-vote”) on non-routine or non-discretionary items absent instructions from the beneficial owner. With respect to the Annual Meeting, brokers are prohibited from exercising discretionary authority in the election of Directors and the non-binding advisory proposal on executive compensation, but such brokers may exercise discretionary authority with respect to the amendment of our certificate of incorporation to increase the number of authorized shares and the ratification of the appointment of our independent registered public accounting firm. Your vote is especially important. Therefore, please promptly instruct your broker regarding how to vote your shares on these matters. +If you hold shares through a broker, bank or other nominee and wish to be able to vote in person at the meeting, you must obtain a legal proxy from your broker, bank or other nominee and present it to the inspector of election with your ballot at the meeting. If you need assistance in obtaining a legal proxy, please call Morrow & Co., LLC toll-free at (800) 414-4313. Submitting your proxy by mail will not affect your right to vote in person if you decide to attend the Annual Meeting. +Revoking a proxy +You may revoke or change a previously delivered proxy at any time before the meeting by delivering another proxy with a later date, by voting again via the Internet or by telephone, or by delivering written notice of revocation of your proxy to our Corporate Secretary at our principal offices in Natchez, Mississippi before the beginning of the meeting. You may also revoke your proxy by attending the meeting and voting in person, although attendance at the meeting will not necessarily revoke a valid proxy that was previously delivered. If you hold shares through a broker, bank or other nominee, you must contact that nominee to revoke any prior voting instructions. You also may revoke any prior voting instructions by voting in person at the meeting if you obtain a legal proxy as described above. +Recommendation of the Board +The Board unanimously recommends you vote “FOR” each of the proposals. A proxy that is properly completed and submitted will be voted at the Annual Meeting in accordance with the instructions on the proxy. If you properly complete and submit a proxy, but do not indicate any contrary voting instructions, your shares will be voted as follows: +· +“ FOR ” the election of each of the nominees named in this Proxy Statement to our Board of Directors; +· +“ FOR ” the approval, on an advisory basis, of our executive compensation; +· +“ FOR ” the approval of an amendment to the Company’s Certificate of Incorporation to increase the number of authorized shares of Common Stock from 150 million to 300 million; and +· +“ FOR ” the ratification of the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fisc al year ending December 31, 2016 +7 +Counting the Vote +We have appointed Issuer Direct to serve as the inspector of election and to tabulate and certify the vote. +Quorum +A quorum is the number of shares that must be present to hold the meeting. The quorum requirement for the meeting is a majority of the outstanding shares as of the Record Date, present in person or represented by proxy. We will count your shares for purposes of determining if there is a quorum if either you are present and vote in person at the meeting or have voted on the Internet, by telephone or by properly submitting a proxy card or voting instruction card by mail. Abstentions and broker non-votes also count toward the quorum. +Required Vote +Proposal 1. Election of Directors +The nominees for election as directors at the Annual Meeting who each receive a majority of the votes cast shall be elected, provided that if the number of director nominees at such meeting exceeds the number of directors to be elected, the directors shall be elected by a plurality of the votes cast. Because the number of director nominees equals the number of directors to be elected at this Annual Meeting, to be elected, each director must receive a majority of the votes cast. A majority of the votes cast means that the number of shares voted “for” a director must exceed the number of shares voted “against” that director. Abstentions and broker non-votes will not be included in determining the number of votes cast in the election of directors and will not have any effect on the outcome. +Proposal 2. Advisory Vote to Approve Named Executive Officer Compensation +The advisory vote on our executive compensation is non-binding , so no specific vote is required. Abstentions will have the same effect as a vote against this proposal, and broker non-votes will not be counted as shares present and entitled to vote, and, accordingly, will not affect the outcome of the vote on this proposal. While the law requires this advisory vote, the vote will neither be binding on us or our Board, nor will it create or imply any change in the fiduciary duties of, or impose any additional fiduciary duty on, us or our Board. However, the views of our stockholders are important to us, and our Compensation Committee will take into account the outcome of the vote when considering future executive compensation decisions. We urge you to read the section entitled “Compensation Discussion and Analysis” (“CD&A”), which discusses in detail how our executive compensation program implements our compensation philosophy. +Proposal 3. Approval of the Amendment to the Certificate of Incorporation +Approval of the amendment to the Company’s Certificate of Incorporation requires the affirmative vote of the holders of a majority of the outstanding shares of our Common Stock. We believe that the amendment to our certificate of incorporation to increase the number of authorized shares is a “routine matter” under the rules of the NYSE, so brokers will be permitted to vote shares for which they do not receive instructions from the beneficial owners. An abstention and any broker non-votes will have the effect of a vote against this proposal. +Proposal 4. Ratification of the Appointment of the Independent Registered Public Accounting Firm +Ratification of the appointment of Grant Thornton LLP as our independent registered public accounting firm for the 2016 fiscal year requires the affirmative vote of a majority of the shares of common stock entitled to vote and present in person or by proxy at the Annual Meeting. Abstentions and broker non-votes will have the same effect as a vote against this proposal. +Voting Results +We will announce the preliminary voting results at the Annual Meeting and will publish the final voting results in a current report on Form 8-K to be filed with the SEC within four business days of the meeting. +8 +PROPOSAL 1 +ELECTION OF DIRECTORS +The Board currently consists of eight directors, and our Certificate of Incorporation provides for a classified Board. The current Board is divided into three classes designated as Class I, Class II and Class III, with staggered, three-year terms. The following table provides information with respect to the nominees and all current directors whose terms will continue after the 2016 Annual Meeting until the election and qualification of their respective successors or until their earlier death, retirement, resignation or removal. +Name +Age +Director Since +Position (Committee Memberships) +Class I Directors (term expires in 2016) +Larry D. McVay +68 +2007 +Director, Nominee (1,2,3,4) +John C. Wallace +77 +1994 +Director, Nominee (1,2,3,4) +Michael L. Finch +60 +2015 +Director, Nominee (3) +Class II Directors (term expires in 2017) +Anthony J. Nocchiero +64 +2011 +Director (1,2,3,4) +Matthew Regis Bob +58 +2014 +Director (3,4) +James M. Trimble +67 +2014 +Director ( 2 ,4) +Class III Directors (term expires in 2018) +Fred L. Callon +66 +1994 +Director, Ch airman of the Board, President and Chief Executive Officer (“CEO”) +L. Richard Flury +68 +2004 +Director (1,2,3,4) +(1) Audit Committee +(2) Compensation Committee +(3) Nominating and Corporate Governance Committee +(4) Strategic Planning and Reserves Committee +Based on the recommendations from the Nominating and Corporate Governance Committee, our Board has nominated its current Class I Directors, Messrs. Larry D. McVay, John C. Wallace and Michael L. Finch, for election to our Board as Class I Directors, with a term of office expiring at our 2019 Annual Meeting, or, in each case, until the election and qualification of their respective successors or until their earlier death, retirement, resignation or removal. Mr. Wallace has expressed his intent to resign upon completion of the first two years of such three-year term. +Nominees +Larry D. McVay was appointed to the Board in October 2007. Mr. McVay has been a Managing Director of Edgewater Energy, LLC, a privately held oil and gas investment company , since 2007. From 2003 until 2006, he served as Chief Operating Officer of TNK-BP Holding, one of the largest oil producing companies in Russia. From 2000 to 2003, he served as Technology Vice President and Vice President of Health, Safety and Environment for BP. He also led the global E&P Operations Excellence effort for improving the operating efficiency of BP’s upstream operations. Mr. McVay earned a mechanical engineering degree from Texas Tech University, where he was recognized as a Distinguished Engineer in 1995. In January 2008, Mr. McVay became a member of the board of directors of Praxair, Inc., an industrial gases company in North and South America, where he serves on the Audit Committee , the Technology, Safety and Sustainability Committee and is chairman of the Finance & Pension Committee. Mr. McVay is also a member of the board of directors of Chicago Bridge and Iron, N.V., a publicly traded engineering, procurement, and construction company, where he serves on the Audit Committee, the Strategic Initiatives Committee and is the chairman of the Corporate Governance Committee. Mr. McVay has been directly involved in nearly all aspects of the oil and gas industry, including drilling, production, finance, environmental risk, and safety. We believe that this experience and his knowledge of the oil and gas exploration and production (“E&P”) industry, particularly in the Permian Basin, provides invaluable insight in the development of our long-term strategies. +9 +John C. Wallace has been a member of our Board since 1994. Mr. Wallace has been retired since 2010. Mr. Wallace is a Chartered Accountant having qualified with PricewaterhouseCoopers in Canada in 1963, after which he joined Baring Brothers & Co., Limited in London, England. Prior to his retirement in December 2010, Mr. Wallace served for over twenty-five years as Chairman of Fred. Olsen Ltd., a London-based corporation that he joined in 1968 and which specializes in the business of shipping, renewable energy and property development. He received his B. Comm degree majoring in Accounting and Economics from McGill University in 1959. In November 2004, he successfully completed the International Uniform Certified Public Accountant Qualification Examination and has received a CPA Certificate from the State of Illinois. Mr. Wallace is also retired from the board of directors of Ganger Rolf ASA and Bonheur ASA, Oslo, both publicly-traded shipping companies with interests in offshore energy services and renewable energy. In May 2012, Mr. Wallace was appointed as a non-executive director to the board of directors of Siem Offshore Inc., a publicly traded shipping company in Norway with a fleet of vessels active in the offshore energy sector, and for which he is a member of the Audit Committee. In addition, Mr. Wallace serves as a Director of Secunda Holdings LP, a Canadian company, which is 50% owned by Siem Offshore Inc. As a result of his association with Fred Olsen, Ltd. and various associated or related companies, Mr. Wallace has extensive financial and accounting experience in not only the oil and gas industry, but in a number of other related industries qualifying him as “financial expert.” We believe that this experience and his unique perspective of the risks and rewards in the oil and gas industry will continue to be beneficial to us. +Michael L. Finch was elected to the Board at the 2015 Annual Meeting. He served as Chief Financial Officer and a member of the Board of Directors of Stone Energy Corporation from its initial public offering in 1993 until his resignation in 1999. He was affiliated with Stone in a variety of capacities for nineteen years. Prior to his service with Stone, he was employed by Arthur Andersen & Co. in New Orleans, Louisiana from 1976 to 1980. Mr. Finch has been a private investor since 1999. He was licensed as a Certified Public Accountant in 1978 (inactive status at present), and received a Bachelor of Science in Accounting from the University of South Alabama in 1976. Currently, Mr. Finch is an independent director of Petroquest Energy, Inc., a publicly traded oil and gas company. Since his election to Petroquest’s Board in 2003, he has served as chairman of the Audit Committee, as a member of the Compensation Committee, and as a member of the Nominating and Corporate Governance Committee. Mr. Finch has extensive financial and operating experience within our industry, and his background, prior experiences, professional credentials and expertise qualify him as a director and “ financial expert ” . Mr. Finch was initially appointed to our Board pursuant to a settlement agreement with Lone Star Value Management. +In February 2016, pursuant to an agreement with Lone Star Value Management LLC and certain of its related entities to, we agreed to nominate Michael L. Finch, Larry D. McVay and John C. Wallace as Class I nominees to the Board at the 2016 Annual Meeting, each to serve for a three (3) year term expiring in 2019; provided, however, that Mr. Wallace has expressed his intent to resign upon completion of the first two years of such three year term. The Company agreed that Mr. Finch would remain as a member of the Nominating and Corporate Governance Committee and shall also be considered along with all other Board members for Board committee appointments in connection with the Board’s annual review of committee composition. Lone Star Value Management agreed to vote the shares it owns for the election of our director nominees. +In 2015, the Board amended our Corporate Governance Guidelines to adopt a majority voting policy in uncontested director elections. At any stockholder meeting for the election of directors at which a quorum is present, any nominee for director who receives a greater number of votes “withheld” from his or her election than votes “for” such election (“Majority Withheld Vote”) shall tender his or her resignation for consideration by the Nominating and Corporate Governance Committee following certification of the stockholder vote, unless the number of nominees exceeds the number of directors to be elected as of the record date for such meeting, in which event the directors shall be elected by a plurality of the votes cast. Such resignation will only be effective upon Board acceptance of such resignation after receiving the recommendation of the Nominating and Corporate Governance Committee. +If a director nominee receives a Majority Withheld Vote, then, promptly following certification of the election results, the Nominating and Corporate Governance Committee will consider any factors it deems relevant to the best interests of the Company and our stockholders in det ermining whether to accept the director’s resignation and recommend to the Board the action to be taken with respect to the tendered resignation. Within 120 days following certification of the stockholder vote, the Board shall consider the recommendation and make a determination as to whether to accept or reject such director’s resignation and shall notify the director concerned of its decision. We will also promptly publicly disclose the +10 +Board's decision and process in a periodic or current report filed with or furnished to the Securities and Exchange Commission. +If you hold your shares through a broker and you do not instruct the broker how to vote, your broker will not have the authority to vote your shares. Abstentions and broker non-votes will each be counted as present for purposes of determining the presence of a quorum, but will have no effect upon the outcome of the vote. All shares of common stock represented by the proxies will be voted “FOR” the election of the above director nominees, except where authority to vote in the election of directors has been withheld. Should the nominees become unable or unwilling to serve as a director at the time of the 2016 Annual Meeting, the person or persons exercising the proxies will vote for the election of substitute nominees designated by the Board, or the Board may choose to reduce the number of members of the Board to be elected at the 2016 Annual Meeting in order to eliminate the vacancy. Your proxy cannot be otherwise voted for a person who is not named in this Proxy as a candidate for director or for a greater number of persons than the number of director nominees named. The Board has no reason to believe that the nominees will be unable or unwilling to serve if elected. +THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “ FOR ” THE THREE NOMINEES. +11 +Directors Continuing in Office +Biographical information for our other directors continuing in office is as follows: +Fred L. Callon has been Chairman of our Board since May 2004 and our President and Chief Executive Officer since January 1997. Prior to January 1997, he was our President and Chief Operating Officer, positions he had held with us or our predecessors since 1984. He has been employed by us or our predecessors since 1976. Mr. Callon graduated from Millsaps College in 1972 and received his M.B.A. degree from the Wharton School of Finance in 1974. Following graduation and until his employment by Callon Petroleum Operating Company, he was employed by Peat, Marwick, Mitchell & Co., certified public accountants. He is son of the late Sim C. Callon, one of our co-founders, and the nephew of the late John S. Callon, the other co-founder. We believe that Mr. Callon’s strong financial background, combined with his longevity with us and many years of operational experience in the E&P industry throughout changing conditions in the market, provide him with the ability to successfully lead us forward. +L. Richard Flury was appointed to the Board in 2004. Mr. Flury has been retired since 2001. Prior to 2001, he spent over 30 years with Amoco Corporation, and later, BP p . l . c . , most recently as Chief Executive, Gas and Power and Renewables. Prior to Amoco's merger with BP in 1998, he served in various executive positions, including Chief Executive for Worldwide Exploration and Production and Executive Vice President of Amoco Corporation. Mr. Flury was a member of the Board of QEP Resources, Inc., a publicly traded oil and gas exploration company, from 2010 until 2015, and is also a director and the non-executive Chairman of Chicago Bridge and Iron Company, N.V., a publicly-traded engineering, procurement and construction company. He is a graduate of the University of Victoria (Canada). Mr. Flury has many years of prior experience with a major oil and gas company, as well as continued involvement in the industry through his other directorship positions. Mr. Flury’s vast experience and extensive knowledge of the E&P industry, together with his executive-level perspective and strategy-making abilities, strengthen the Board’s collective qualifications, skills and experience, and will continue to prove very beneficial to us. +Anthony J. Nocchiero, was first elected to the Board in March 2011. Since 2010, Mr. Nocchiero has been retired. From April 2007 until September 2010, Mr. Nocchiero held the position of senior vice president and Chief Financial Officer for CF Industries, Inc. From July 2005 until March 2007, he was the vice president and Chief Financial Officer for Merisant Worldwide, Inc. From January 2002 to July 2005, Mr. Nocchiero was self-employed as an advisor and private consultant. From January 1999 until December 2001, Mr. Nocchiero served as vice president and Chief Financial Officer of BP Chemicals, the global petrochemical business of BP p.l.c. Prior to that, he spent twenty-four years with Amoco Corporation in various financial and management positions, including service as Amoco’s vice president and controller from April 1998 to January 1999. Mr. Nocchiero holds a B.S. degree in chemical engineering from Washington University in St. Louis and an M.B.A. degree from the Kellogg Graduate School of Management at Northwestern University. Mr. Nocchiero has previous experience serving as a member of the board of directors of various public and private companies, including Terra Nitrogen LP, Keytrade AG, Vysis Corporation and the Chicago Chamber of Commerce. He brings to Callon a broad knowledge of the oil and gas industry, as well as extensive experience with finance and M&A related transactions, which we believe benefits the Board. In addition, Mr. Nocchiero has the accounting or financial management expertise to be considered a “financial expert” as defined and required by the NYSE rules and the Securities Exchange Act of 1934, as amended (the “Exchange Act”). +Matthew Regis Bob was elected to the Board at the 2014 Annual Meeting. Mr. Bob has been the founder and Managing Member of MB Exploration and affiliated companies since 1994. MB Exploration is engaged in the oil and gas exploration, development and consulting business. Effective August 1, 2014, Mr. Bob was appointed President of Eagle Oil and Gas. Mr. Bob also served as President of Hall Phoenix Energy LLC, a privately held oil and gas company, from 2009 to 2011. Prior to forming MB Exploration in 1994, Mr. Bob was Chief Geophysicist at Pitts Oil Company. He began his career at Union Oil Company of California where he held various geological positions. He is a member of the American Association of Petroleum Geologists, the Society of Exploration Geophysicists and the Dallas Petroleum Club, and is a registered Geoscientist in the States of Texas, Mississippi and Louisiana. He holds a B.A. in Geology from St. Louis University, an M.S. in Geology from Memphis University, and is a graduate of Harvard University's Executive Management Program. We believe Mr. Bob’s extensive experience in the oil and gas business and his technical expertise are a benefit to the Board of Directors. Mr. Bob was initially appointed to our Board pursuant to a settlement agreement with Lone Star Value Management. +12 +James M. Trimble was elected to our Board at the 2014 Annual Meeting. Mr. Trimble was Chief Executive Officer and President of PDC Energy, Inc. from 2011 until his resignation effective January 1, 2015, and has served on the board of PDC since 2009. Mr. Trimble was an officer of PDC in September 2013 when twelve partnerships for which PDC was the managing general partner each filed for bankruptcy in the federal bankruptcy court, Northern District of Texas, Dallas Division. From 2005 until 2010, Mr. Trimble was Managing Director of Grand Gulf Energy, Limited, a public company traded on the Australian Securities Exchange, and President and Chief Executive Officer of Grand Gulf’s U.S. subsidiary Grand Gulf Energy Company LLC, an exploration and development company focused primarily on drilling in mature basins in Texas, Louisiana and Oklahoma. From 2000 through 2004, Mr. Trimble was Chief Executive Officer of Elysium Energy and then TexCal Energy LLC, both of which were privately held oil and gas companies that he managed through workouts. Prior to this, he was Senior Vice President of Exploration and Production for Cabot Oil and Gas, a publicly traded independent energy company. Mr. Trimble was hired in July 2002 as CEO of TexCal (formerly Tri-Union Development) to manage a distressed oil and gas company through bankruptcy, and that company filed for Chapter 11 reorganization within 45 days after the date that Mr. Trimble accepted such employment. He successfully managed the company through its exit from bankruptcy in 2004. From November 2002 until May 2006 he also served as a director of Blue Dolphin Energy, an independent oil and gas company with operations in the Gulf of Mexico. Mr. Trimble currently serves on the Board of Directors of Seisgen Exploration LLC, a small private exploration and production company operating in southern Texas. Mr. Trimble is a Registered Professional Engineer who brings many years of oil and gas industry executive management experience to the Board, including experience as a chief executive officer, and knowledge of current developments and best practices in the industry. Mr. Trimble was initially appointed to our Board pursuant to a settlement agreement with Lone Star Value Management. +All of our Directors are United States citizens, except Mr. Wallace, who is a citizen of Canada, and Mr. Flury, who holds both U.S. and Canadian citizenship . +CORPORATE GOVERNANCE +Board of Director Structure and Responsibilities +General. Our Board is responsible for determining the ultimate direction of our business, determining the principles of our business strategy and policies, and promoting the long-term interests of the Company. The Board of Directors possesses and exercises oversight authority over our business but, subject to our governing documents and applicable law, delegates day-to-day management of the Company to our Chief Executive Officer and our executive management . The Board generally fulfills its responsibilities through regular quarterly meetings to review significant developments affecting us and to act on matters requiring Board approval. Between regularly scheduled meetings, the Board may also hold special meetings, execute unanimous written consents, and participate in telephone conference calls when an important matter requires Board action. During 2015, our Board met formally five times and transacted business on twelve occasions during the year by unanimous written consent . All of our directors attended each of the Board meetings either in person or by telephone. In addition, to promote open discussion, the non-employee directors meet in executive session without management following each quarterly board meeting. The chairperson of such executive sessions is the chairperson of the Nominating and Corporate Governance Committee unless, at the first executive session held in each fiscal year, the independent directors select a different independent director to serve as the chairperson for all executive sessions held during that fiscal year. L. Richard Flury, Chairman of the Compensation Committee, was selected to preside over all executive sessions during 2015. It is the policy of the Board that, to the extent possible, all directors attend the annual meeting. All then current directors attended the 2015 annual meeting. +The Board, in consultation with the Nominating and Governance Committee, has determined that a classified board structure continues to be appropriate for us, particularly in an industry where long-term strategic planning is critical for the successful exploration, development and production of oil and natural gas resources. Our future success depends in significant part on the in-depth knowledge of our business and operations by our directors. We believe that a classified board promotes stability, continuity and experience among our directors, which is essential to developing and implementing long-term strategies, while resisting the pressure to focus on short-term results at the expense of enhancing long-term value and success. +13 +Director Independence. It is a policy of the Board that a majority of the non-employee members of the Board be independent. Currently the only member of our Board who is not independent is our Chairman, President and Chief Executive Officer. In accordance with the standards for companies listed on the New York Stock Exchange (“NYSE”) and the rules and regulations promulgated by the SEC, as well as our Corporate Governance Guidelines, the Board considers a director to be independent if it has affirmatively determined that the director has no material relationship with the Company that could compromise his ability to exercise independent judgment in carrying out his responsibilities. The Board makes independence determinations when it approves director nominees for election at the annual meeting and also whenever a new director joins the Board between annual meetings. The Board reviewed the independence of its directors and nominees in accordance with the standards described above, and affirmatively determined that each of its directors and nominees (other than Mr. Callon) is independent. The Board will evaluate the independence of each non-employee director on an ongoing basis. +Board Leadership Structure. One of the Board’s key responsibilities is determining the appropriate leadership structure for the Board, which helps ensure its effective and independent oversight of management on behalf of the our stockholders. Our Board understands that there is no one generally accepted approach to providing board leadership and that given the dynamic and competitive environment in which we operate, the optimal board leadership structure may vary as circumstances warrant. To this end, our Board has no policy mandating the combination or separation of the roles of Chairman and Chief Executive Officer, but periodically discusses and considers the structure as circumstances change. Mr. Fred L. Callon serves as our Chairman, President and Chief Executive Officer. The Board believes its current structure, including the combined CEO and Chairman role, best serves the interests of our stockholders and is efficient and cost effective for the size of our company and the independent E&P industry. The CEO is uniquely positioned to provide the greatest insight into our performance, opportunities and challenges and is most capable of effectively identifying and executing the business strategy adopted by our Board. The Board believes that combining the Chairman and CEO roles fosters accountability, effective decision-making and alignment on the execution of the long-term corporate strategy. +The Board is currently comprised of eight directors, of which seven are independent. Independent directors and management generally have different perspectives and roles in strategy development. Our independent directors have backgrounds in the oil and gas industry allowing them to uniquely contribute their relevant experience, oversight, objectivity and expertise to Callon, which compliments the CEO’s comprehensive, company-specific perspective, experience and expertise. As the director having primary responsibility for managing our daily operations and identifying strategic priorities, the CEO is best positioned to lead the Board through reviews of key business and strategy decisions. This dynamic effectively promotes the opportunity for a successful blend of our independent directors’ perspectives and oversight responsibilities and facilitates information flow and communication between senior management and the Board, which are both essential to effective governance. The Board’s structure does not currently provide for an independent lead director. The Board has four standing committees, each of which is comprised entirely of independent directors. Accordingly, the Compensation Committee maintains its independence to both objectively and subjectively evaluate Mr. Callon’s performance when reviewing or modifying his compensation. The Board believes that this commitment to committee independence counterbalances any perceived risk posed by having Mr. Callon serve as the Chairman, President and CEO. +The role of our Chairman is to oversee and ensure Board effectiveness, and in his capacity as Chairman, Mr. Callon has the following responsibilities: +· +schedules all meetings of the Board; +· +establishes Board meeting agendas and ensure critical issues are included; +· +chairs meetings of the Board and the Annual Meeting of Stockholders; +· +ensures that the flow of information provided to the Board is timely, complete, and accurate; +· +communicates with all directors on key issues and concerns outside of Board meetings; +· +represents us to and interacts with external stockholders; and +· +assists the Board and executive officers in assuring compliance with and implementation of our governance principles. +14 +Standing Committees of the Board of Directors +In order to facilitate the various functions of the Board, the Board currently has four standing committees, each of which is comprised solely of independent directors, including the: +· +Audit Committee; +· +Compensation Committee; +· +Nominating and Corporate Governance Committee; and +· +Strategic Planning and Reserves Committee. +Each committee, discussed below in greater detail, has a written charter that has been adopted by the Board, which sets forth guidance on the role of the chairman of such committee and the roles and responsibilities of the committee as a whole. +Audit Committee Functions and Responsibilities +Purpose : The principal function of the Audit Committee is to assist the Board in overseeing the areas of financial reporting and accounting integrity. +Members : The Audit Committee is currently comprised of the following independent Directors, with two Directors deemed by the Board to be financial experts, as defined and required by the NYSE rules and the Exchange Act (“Financial Expert”): +· +John C. Wallace (Chairman and Financial Expert) +· +L. Richard Flury +· +Larry D. McVay +· +Anthony J. Nocchiero (Financial Expert) +The Board has determined that all members meet the independence requirements of the SEC and NYSE rules and the financial literacy requirements of the NYSE. Members of the Audit Committee may not simultaneously serve on the audit committee of more than three other public companies. +Meetings : The committee met nine times during 2015. All members of the Audit Committee attended each meeting. +Responsibilities : Pursuant to its charter, our Audit Committee functions in an oversight role and has the following purposes: +· +overseeing the quality, integrity and reliability of the financial statements and other financial information we provide to any governmental body or the public; +· +overseeing our compliance with legal and regulatory requirements; +· +selecting and hiring (subject to ratification by our stockholders) the independent public accounting firm; +· +overseeing the qualifications, independence and performance of the independent auditor; +· +overseeing the effectiveness and performance of our internal audit function; +· +overseeing our internal control function regarding finance, accounting, legal compliance and ethics; +· +establishing and overseeing procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls or audit matters, including the confidential, anonymous submission of concerns regarding such matters; +· +producing the Audit Committee Report for inclusion in our annual proxy statement; and +· +performing such other functions our Board may assign to the Audit Committee from time to time. +The Audit Committee oversees our accounting and auditing procedures and financial reporting practices, and is responsible for the engagement of and oversight of all audit work conducted by our independent registered public +15 +accounting firm. The Audit Committee meets periodically, generally quarterly, with our executive and financial management teams, internal auditor and our independent registered public accounting firm to review our financial information and systems of internal controls. The independent registered public accounting firm reports directly to the Audit Committee and, if requested, meets with the Audit Committee in executive session without management representatives present. The Audit Committee has the authority to investigate any matters brought to its attention and to retain outside legal, accounting or other consultants if deemed necessary. +The Audit Committee is required to pre-approve all audit, audit-related and non-audit services provided by the independent registered public accounting firm. These services may include audit services, audit-related services, tax services and other services. The Audit Committee approved all of the fees described in Proposal 4 . +Relationship with Independent Registered Public Accounting Firm +Management is responsible for establishing and maintaining internal controls over financial reporting and for assessing the effectiveness of those controls. The independent registered public accounting firm is responsible for performing independent audits of our consolidated financial statements and internal controls over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (“PCAOB”) (United States) and issuing reports thereon. The Audit Committee’s responsibility is to monitor and oversee these processes. +Ernst & Young LLP, an independent registered public accounting firm, served as our independent registered public accounting firm during 2013, 2014 and 2015. Following the shift in our asset base and operational focus stemming from our 2013 exit from the Gulf of Mexico, the Audit Committee evaluated other independent accounting firms, including Ernst & Young LLP, with the ability and expertise to serve as our independent registered public accounting firm. Following this review, the Committee appointed Grant Thornton LLP to serve as our independent registered public accounting firm. +Compensation Committee Functions and Responsibilities +Purpose : The purpose of the Compensation Committee is to establish our compensation policies and oversee the administration of our compensation program. +Members : Consistent with the listing requirements of the NYSE, the Compensation Committee is composed entirely of independent members of our Board, as each member meets the independence requirements set by the NYSE and applicable federal securities laws. The Compensation Committee is currently comprised of the following independent Directors: +· +L. Richard Flury (Chairman) +· +Larry. D. McVay +· +John C. Wallace +· +Anthony J. Nocchiero +· +James M. Trimble +Meetings : The Compensation Committee met five times during 2015. All members of the Compensation Committee attended each meeting. +Responsibilities : Pursuant to its charter, our Compensation Committee’s duties include the responsibility to: +· +evaluate the performance of and establish the compensation of the CEO; +· +review with the CEO the compensation for our other executive officers; +· +review incentive compensation arrangements to confirm that executive compensation does not encourage unnecessary risk taking; +· +review matters relating to management succession; +· +administer our long-term incentive plans; +· +review and discuss with management, the CD&A; +· +review and recommend to the Board compensation for non-employee Directors; +16 +· +retain and oversee compensation consultants, including the independence of the consultants; +· +review and approve performance criteria and results for bonus and performance-based equity awards for senior executive officers and approve awards to those officers; and +· +perform such other functions as our Board may assign to the Compensation Committee from time to time. +The Committee retained the services of Meridian Compensation Partners LLC, an independent compensation consulting firm, to assist in the annual review of market and industry data to assess our competitive position with respect to each element of total compensation and to ensure the attraction, retention and appropriate reward to our CEO and other executive officers. +Compensation Committee Interlocks and Insider Participation : We have never employed, as an officer or otherwise, a member of the Compensation Committee. Additionally, none of our executive officers served as a member of the board or compensation committee (or other board committee performing similar functions or, in the absence of any such committee, the entire board) of any other entity that has one or more of its executive officers serving on the Company’s Compensation Committee. +Nominating and Corporate Governance Committee Functions and Responsibilities +Purpose: The purpose of the Nominating and Corporate Governance Committee is to identify and recommend qualified candidates to the Board for nomination as members of the Board, assess Director, Board and committee effectiveness, and develop and implement our Corporate Governance Guidelines and otherwise taking a leadership role in shaping the corporate governance of our Company. +Members: Each member of the Committee meets the independence requirements of the NYSE and applicable federal securities laws. The Nominating and Corporate Governance Committee is currently comprised of the following independent Directors: +· +Anthony J. Nocchiero (Chairman) +· +L. Richard Flury +· +Larry D. McVay +· +John C. Wallace +· +Matthew R. Bob +· +Michael L. Finch +Meetings: The Nominating and Corporate Governance Committee met three times during 2015. All members of the Committee attended each meeting. +Responsibilities: Pursuant to its charter, the Nominating and Corporate Governance Committee’s duties include the responsibility to assist the Board in: +· +evaluating a set of specific criteria for Board membership and identifying individuals qualified to become Board members, recommending nominees for election at the next annual meeting of stockholders, reviewing the suitability for continued service as a Director of each Board member, or otherwise filling any vacancies; +· +assessing the size and composition of the Board and its committees and recommending to the Board the members and chair for each Board committee; +· +advising the Board and making recommendations regarding appropriate corporate governance practices and assist the Board in implementing those practices, including periodically reviewing the adequacy of our C orporate Governance Guidelines, our Code of Business Conduct and Ethics, and the various Board committee charters, and making recommendations for changes thereto to the Board; +· +overseeing the annual self-evaluation of the performance of the Board and its committees; +· +overseeing and approving plans for management continuity and succession; +· +recommending to the Board a successor to the CEO when a vacancy occurs; and +17 +· +performing other such functions as the Board may assign to the Nominating and Corporate Governance Committee from time to time. +Director Identification and Selection +The Nominating and Corporate Governance Committee has established criteria it considers as guidelines in considering nominations to our Board and evaluates potential nominees based on the contribution such nominee’s background and skills could have upon the overall functioning and chemistry of the Board. While not an exhaustive list, key criteria include: +· +level and diversity of experience and knowledge (specifically within the industry and relevant industries in which we operate, as well as his or her overall experience and knowledge), and an understanding and general acceptance of our current corporate strategy; +· +personal characteristics, including such matters as integrity, education, absence of potential conflicts of interest with us or our operations, and the availability and willingness to devote sufficient time to the duties required of our Directors; +· +experience in corporate management, such as serving as an officer or former officer of a publicly held company, particularly within the industry and relevant industries in which we operate; +· +experience as a board member of another publicly held company, particularly within the industry and relevant industries in which we operate; +· +a candidate’s ability to work with our other Directors and executives in accomplishing our objectives and representing stockholders, and the contribution such nominee’s competence, background and skills could have upon the overall functioning, collaborative spirit and chemistry of the current Board; and +· +practical and mature business judgment. +The Nominating and Corporate Governance Committee and the Board may also consider other qualifications and attributes that they believe are appropriate in evaluating the ability of an individual to serve as a member of the Board. The Nominating and Corporate Governance Committee’s goal is to assemble a Board that brings to us a variety of perspectives and skills derived from high quality business and professional experience, while also having the requisite business and oil and gas industry experience to perform its oversight role satisfactorily for our stockholders. In making its determinations, the Committee evaluates each individual in the context of the Board as a whole, with the objective of assembling a group that can best represent stockholder interests through the active, objective and constructive participation in meetings and the strategic decision-making processes. Although the Nominating and Corporate Governance Committee has no formal diversity policy, the Board believes that diversity with respect to viewpoint, skills and experience should be considered as part of the overall assessment of the Board’s functioning and needs and the Director nomination process specifically includes disclosure of the diversity provided by each candidate. In addition to qualities of intellect, integrity and judgment, it takes into consideration diversity of personal and professional background, executive management experience, breadth of experience in the oil and natural gas E&P industry, finance, accounting, technology or law. The Nominating and Corporate Governance Committee makes its determination in the context of an assessment of the perceived needs of the Board at that point in time. +In accordance with our Certificate of Incorporation, any stockholder may nominate a person for election to the Board upon delivery of written notice to us of such nomination. Such notice must be sent as provided in our Certificate on or before the deadline set forth in our Certificate, and must otherwise comply with the procedures set forth in our Certificate of Incorporation. For nominations at the 2016 Annual Meeting, the Board will consider individuals identified by stockholders on the same basis as nominees identified from other sources. A submission recommending a nominee should include: +· +sufficient biographical information to allow the Nominating and Corporate Governance Committee to evaluate the qualifications of a potential nominee in light of the Director nomination procedures and criteria and any other information that would be required to be disclosed in solicitations of proxies for the election of directors; +· +an indication as to whether the proposed nominee will meet the requirements for independence under NYSE and SEC guidelines; +18 +· +information concerning any relationships between the potential nominee and the stockholder recommending the potential nominee; and +· +the proposed nominee’s written consent to serve if nominated and elected. +In making its nominations, the Nominating and Corporate Governance Committee identifies nominees by first evaluating the current members of the Board willing to continue their service and any potential need to expand the Board to include additional expertise. Current members with proven service and a record of quality contribution to the Board and the qualifications and skills that are consistent with the Committee’s criteria for Board service are re-nominated. As to vacancies, the Committee will generally poll the Board members and members of management for recommendations. The Committee may also review the composition and qualification of the boards of directors of our competitors, and may seek input from industry experts or analysts. The Committee may in the future choose to engage third-party search firms in situations where particular qualifications are required or where existing contacts are not sufficient to identify an appropriate candidate for membership in the Board. +Strategic Planning and Reserves Committee Functions and Responsibilities +Purpose : The purpose of the Strategic Planning and Reserves Committee is to manage and oversee the Board’s participation in the development of the Company’s strategic plan, and assist management and the Board with its oversight of the integrity of the determination of our oil and natural gas reserve estimates. +Members : The Strategic Planning and Reserves Committee shall consist of no fewer than three members of the Board, and is currently comprised of the following independent Directors: +· +Larry D. McVay (Chairman) +· +L. Richard Flury +· +John C. Wallace +· +Anthony J. Nocchiero +· +Matthew Regis Bob +· +James M. Trimble +Meetings : The Strategic Planning and Reserves Committee met three times during 2015. All members of the Committee attended each meeting during 2015. This Committee meets periodically during the year, generally prior to the scheduled quarterly Board meetings, to review the progress of our capital expenditure budget and to evaluate recent trends in the independent oil and gas industry that may have an impact on our current business strategy for the remainder of the year. +Responsibilities : The Strategic Planning and Reserves Committee was created to oversee the responsibilities of the Board relating to strategic planning, including: +· +organizing and overseeing the Board’s participation in the development of a strategic plan, including, but not limited to, the risk assessment and management process; +· +monitoring the progress of the implementation of the strategic plan, and advising the Board if additional Board action appears to be needed; +· +assuring that management is addressing the personnel requirements for the successful implementation of the strategic plan; +· +assisting management and the Board with its oversight of the integrity of the determination of the Company’s oil and natural gas reserves and the work of the Company’s independent petroleum reservoir and reserve engineering firm; and +· +performing other such functions as the Board may assign to the Strategic Planning and Reserves Committee from time to time. +19 +Corporate Governance Matters +Corporate Governance Principles +The Board believes that sound corporate governance practices and policies provide an important framework to assist it in fulfilling its duty to stockholders. The framework for our corporate governance can be found in our governance documents, which include: +· +Corporate Governance Guidelines; +· +a Code of Business Conduct and Ethics; and +· +Charters for the Audit, Compensation, Nominating and Corporate Governance, and Strategic Planning and Reserves Committees. +Each of these documents is available on our website www.callon.com, under the “ About Callon – Governance ” menu. Stockholders may obtain a printed copy, free of charge, by sending a written request to our Corporate Secretary at our principal offices in Natchez, Mississippi. We also promptly post on our website any amendments to these documents and any waivers from the Code of Business Conduct and Ethics for our Directors and principal executive, financial and accounting officers. +Ethics +Our Code of Business Conduct and Ethics sets forth the policies and expectations applicable to every Director, officer and employee. The Code addresses a number of topics, including conflicts of interest, relationships with others, corporate payments, disclosure policy, compliance with laws, corporate opportunities and the protection and proper use of our assets. The Code meets the NYSE’s requirements for a code of business conduct and ethics, as well as the SEC’s definition of a code of ethics applicable to our senior officers. Neither the Board nor any Board committee has eve r granted a waiver of the Code. +Board Risk Oversight +As an independent E&P company, we face a number of risks. Assessing and managing material risk is the responsibility of our management team , while our Board, as a whole and through its committees, generally oversees risk management and our long-term strategic direction, ensuring that risks undertaken by the Company are consistent with the Board’s risk tolerance. Our Board leadership structure and our practice of a high degree of interaction between our directors and members of senior management facilitate this oversight function. Our executive officers regularly attend the Board meetings and are available to address any questions or concerns raised by the Board on risk management-related and any other matters. Other members of our management team periodically attend the Board meetings or are otherwise available to confer with the Board to the extent their expertise is required to address risk management matters. The information flow and communication throughout the year between our Board and senior management regarding long-term strategic planning and short-term operational reporting includes matters of material risk inherent in our business of exploring for and producing oil and natural gas. The Board realizes, however, that it is not possible or prudent to eliminate all risk and that appropriate risk-taking is essential in order to achieve our near and longer-term objectives. +While the Board is ultimately responsible for risk oversight, the Board exercises additional risk oversight responsibilities through its committees, which are comprised solely of independent directors. Each such committee has primary risk oversight responsibility with respect to all matters within the scope of its duties as contemplated by its charter and as described below. +· +The Audit Committee, among other duties, is charged with overseeing material financial risk exposures in the areas of financial reporting, internal controls and compliance with legal and regulatory requirements. This Committee also oversees responses to any alleged violations of our policies made by whistleblowers. +· +The Compensation Committee reviews and attempts to mitigate associated risks that may result from our compensation policies in order that they do not encourage unnecessary and excessive risk taking by management. +20 +· +The Nominating and Corporate Governance Committee focuses on issues relating to Board and Board committee composition and assists the Board in fulfilling its oversight responsibilities with respect to the management of risks associated with board organization, membership and structure, succession planning for our Directors and executive officers, and our corporate governance principals. +· +The Strategic Planning and Reserves Committee organizes and oversees the Board’s participation in the risk assessment and management process as it relates to the development and implementation of our strategic plan and the integrity of our reserve estimation reporting process and related disclosures. +Communication with Directors +Stockholders may communicate with the full Board, independent Directors as a group, or individual Directors, by sending a letter in care of the Corporate Secretary at our principal office, P. O. Box 1287, Natchez, MS 39121. Our Corporate Secretary has the authority to discard any solicitations, advertisements, or other inappropriate communications, but will forward any other mail to the named Director or group of Directors. Our Corporate Secretary will forward approved mail addressed to the full Board to Mr. Callon as Chairman of the Board who, if appropriate, will share the item with the full Board. +21 +Executive Officers +The following table sets forth the names, ages and positions of our current executive officers: +Name +Age +Positions Held +Fred L. Callon +66 +Director, Chairman of the Board, President and Chief Executive Officer +Gary A. Newberry +61 +Senior Vice President, Operations +Joseph C. Gatto, Jr. +45 +Senior Vice President, Chief Financial Officer and Treasurer +Jerry A. Weant +57 +Vice President, Land +Mitzi P. Conn +46 +Corporate Controller and Principal Accounting Officer +The following is a brief description of the background and principal occupation of each executive officer: +Fred L. Callon , Chairman of the Board of Directors, President and Chief Executive Officer. Please see above for the biography of Mr. Callon. +Gary A. Newberry joined us in April 2010 as Vice President – Production and Development. In September 2010, Mr. Newberry was promoted to Senior Vice President – Operations. After graduation, he joined Marathon Oil Company as a Production and Drilling Engineer working in Alaska, the Gulf of Mexico, and the Rockies. He held various supervisory and management roles of increasing responsibility over production and drilling operations in the Mid-Continent, Alaska and the Permian Basin. As a Business Unit Leader, Mr. Newberry was responsible for all upstream business activity in Oklahoma, Alaska, and the Rockies and served as Marathon’s Worldwide Operations Manager. Mr. Newberry retired from Marathon Oil Company after 33 years of service. Mr. Newberry graduated from Marietta College in 1977 with a B.S. degree in Petroleum Engineering. +Joseph C. Gatto, Jr. joined us in April 2012 as Senior Vice President, Corporate Finance, with responsibility for our capital markets and strategic planning functions, in addition to investor relations activities. Effective March 31, 2014, the Board appointed Mr. Gatto as Senior Vice President, Chief Financial Officer and Treasurer. Prior to joining Callon, Mr. Gatto was a Managing Director in the energy investment banking groups of Merrill Lynch & Co. and Barclays Capital from July 1997 until February 2009, with involvement in all phases of M&A and capital raising transactions for his clients. In February 2009, he founded MarchWire Capital, LLC, a financial advisory and strategic consulting firm, and subsequently served as Head of Structuring and Execution with Merrill Lynch Commodities, Inc. from January 2010 until November 2011. Mr. Gatto graduated from Cornell University with a BS degree in 1992 and The Wharton School of the University of Pennsylvania with an MBA in 1997. +Jerry A. Weant joined us in September 2013, as Vice President, Land. Mr. Weant joined Callon from Pioneer Natural Resources, an independent oil and gas company, where he was focused on Midland Basin operations, acting as a liaison with Permian Basin asset teams and coordinating internal efforts for the assessment of horizontal drilling programs. Mr. Weant spent the first 27 years of his career working as a landman in Midland, Texas, including working for Texaco, Inc. Pogo Producing, Inc., as well as other independents. He holds a Bachelor of Business Administration/Petroleum Land Management from the University of Texas and is a Certified Professional Landman and a member of the American Association of Professional Landmen and the Permian Basin Landman's Association. +Mitzi P. Conn joined us in June 1993 and has been our Corporate Controller since May 2007. Effective March 31, 2014, the Board also appointed Mrs. Conn as our Principal Accounting Officer. Prior to May 2007, she served as Assistant Controller since May 2004 and has held various other positions in our finance and accounting departments. Prior thereto, she was a general accountant for Graham Resources, Inc. Mrs. Conn received her B.S. degree in accounting from Southeastern Louisiana University in 1990 and is a member of the American Institute of Certified Public Accountants and the Mississippi Society of Certified Public Accountants . +22 +PROPOSAL 2 +APPROVE, ON AN ADVISORY BASIS, THE COMPENSATION +OF THE COMPANY’S NAMED EXECUTIVE OFFICERS +We seek a non-binding advisory vote from our stockholders to approve the compensation of our NEOs, as described in this proxy statement. The Board recognizes that executive compensation is an important matter for our stockholders. The Compensation Committee is tasked with the implementation of our executive compensation philosophy and, as described in detail under the heading “Compensation Discussion and Analysis” below, the design of our executive compensation programs to align the interests of our executive officers with the interests of our stockholders. Under these programs, our executive officers are rewarded for the achievement of specific annual, long-term corporate and strategic goals tied to long-term value for stockholders. +As described in the CD&A, we believe our compensation program is effective, appropriate and strongly aligned with the long-term interests of our stockholders and that the total compensation package provided to the NEOs is reasonable and not excessive. As you consider this Proposal 2, we urge you to read the CD&A section of this proxy statement for additional details on executive compensation. Further, in determining whether to approve this proposal, we believe that stockholders should also consider the following: +· +Independent Compensation Committee . Executive compensation is reviewed and established by a Compensation Committee of the Board consisting solely of independent Directors. The Compensation Committee meets in executive session, without executive officers present, in determining annual compensation. The Compensation Committee receives data, analysis and input from a compensation consultant that is independent of management and free of conflicts of interest with us. +· +Performance-Based Incentive Compensation . Our executive compensation program is designed to attract, motivate and retain individuals with the skills required to formulate and drive our strategic direction and achieve the annual and long-term performance necessary to create stockholder value. The program also seeks to align executive compensation with stockholder value on an annual and long-term basis through a combination of base pay, annual incentives and long-term incentives. +· +Elimination of Tax Gross-ups . Started in 2011, executive officers are not eligible for a tax related gross-up on any element of current and future compensation. +· +“Double Trigger” Severance Agreements with Fixed Term . Callon’s change in control severance agreements with executive officers require an actual or constructive termination of employment before benefits are paid following any change in control. +· +Long-Term Incentive Plans . Our long-term incentive plans generally include three-year minimum vesting periods for time-based awards, and prohibit repricing or exchange of outstanding option awards. +· +Stock Ownership Guidelines . Each of the NEOs has been granted equity to provide a stake in our long-term success. The purpose of the ownership requirements is to further our goal of increasing stockholder value by further aligning the interests of our NEOs with the interests of our stockholders. We believe that this “tone at the top” guides our other officers and management personnel to obtain and maintain meaningful ownership stakes Callon. +· +Hedging Policy . Our directors and executive officers are prohibited from entering into transactions in puts, calls and other derivative securities with respect to our securities on an exchange or in any other organized market as well as short sales of our securities. These types of transactions can hedge against decreases in our stock price and encourage risky behavior. We believe these activities are often perceived as involving insider trading and may focus the holder’s attention on our short-term performance rather than our long-term objectives. +In light of the above, we believe that the compensation of our NEOs for 2015 was appropriate and reasonable, and that our compensation programs and practices are sound and in the best interests of us and our stockholders. We therefore respectfully request that Stockholders vote on the following resolution: +23 +“RESOLVED, that the compensation paid to Callon’s Named Executive Officers, as disclosed in Callon’s 2016 proxy statement (including the Compensation Discussion and Analysis, the compensation tables and related footnotes and narrative disclosures), is hereby approved.” +The vote on this resolution is not intended to address any specific element of compensation; rather the vote relates to the compensation of the NEOs, as described in this proxy statement in accordance with the compensation disclosure rules of the SEC. Although this vote is advisory and is not binding on the Board, the Compensation Committee of the Board values the input and views of our stockholders and will take into account the outcome of the vote in connection with their evaluation of future executive compensation policies and decisions. For a review of the results of the previous years’ vote, which reflects overwhelming validation from our stockholders of our pay philosophy and approach, please see the Role of Stockholder Say-on-Pay Advisory Vote summary in the CD&A section. +Notwithstanding the advisory nature of this vote, the foregoing resolution will be deemed approved, on an advisory basis, with the affirmative vote of the majority of the votes cast on the proposal at the Annual Meeting. If you hold your shares through a broker and you do not instruct the broker how to vote, your broker will not have the authority to vote your shares. Abstentions will have the effect as a vote cast against the proposal. Broker non-votes will not be counted as shares present and entitled to vote, and so will have no effect upon the outcome of the vote. Lone Star Value Management has agreed to vote its shares as recommended by Institutional Shareholder Services with respect to the forgoing “Say-on-Pay” resolution. +THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “ FOR ” APPROVAL OF THIS RESOLUTION . +24 +PROPOSAL 3 +AMENDMENT TO ARTICLE FOUR OF THE COMPANY’S CERTIFICATE OF INCORPORATION +INCREASING THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK +OF THE COMPANY FROM 150 MILLION SHARES TO 300 MILLION SHARES +Proposed Amendment to Certificate of Incorporation +The Board has adopted a resolution approving and recommending to the stockholders for their approval a proposal to amend Article Four of the Company’s Certificate of Incorporation to increase the number of authorized shares of Common Stock from 150 million shares to 300 million shares (the “Article Four Amendment”). +The form of the Article Four Amendment is as follows: +The first sentence of Article Four is hereby amended and restated to be read in its entirety as follows: +“The Corporation shall have authority to issue two classes of stock, and the total number authorized shall be 300,000,000 shares of Common Stock, par value $.01 per share, and 2,500,000 shares of Preferred Stock, par value $.01 per share.” +Background and Reasons for Increasing the Authorized Shares of Common Stock +We have significantly grown our onshore asset base over the past five years and are seeking the approval of additional authorized shares of Common Stock in order to provide flexibility to meet the demands of future growth and other corporate obligations. We have a successful track record of funding acquisitions using the proceeds from equity offerings. +For example, during 2015, we raised approximately $183.7 million in gross proceeds from two common equity offerings to support recent acquisitions and our ongoing development efforts in the Midland Basin. In 2015, we acquired nearly 628 net acres located in our existing Carpe Diem and CaBo area (Cassleman-Bohannon fields) located primarily in Midland and Andrews counties for approximately $29.8 million and 305 net acres in our CaBo area for approximately $9.3 million. These acquisitions contributed significantly to a 70% increase in our net daily production for calendar year 2015 as compared to calendar year 2014. In addition, our net proved reserves at December 31, 2015 increased 65% as compared to year-end 2014. Our market capitalization increased by 122% in 2015 as compared to 2014. +As part of a prudent capital management program in this depressed commodity price environment, we expect to continue to fund possible future strategic acquisitions with the proceeds from equity offerings. As the current capitalization table below indicates, there are only 13,230,793 shares currently available for issuance to accommodate possible equity demands in the future. By not having a sufficient amount of authorized but unissued Common Stock available, our ability to take advantage of potential growth opportunities that might arise is limited. +The Board concurs with this assessment and believes that the recommended increase in the number of authorized shares of Common Stock is warranted and will give us the financial flexibility to satisfy the future equity capital requirements of our business and to capitalize on potential acquisition opportunities in a timely manner. If the Certificate of Incorporation is amended, the additional shares would be available for possible acquisitions, equity issuances in capital markets transactions, stock incentive plans, the reservation related to the Series A Preferred Stock (as described below), and for any other proper general corporate purpose. There will be no increase to the number of authorized shares of preferred stock. +Except as described below, we have no present plans, agreements or understandings for the issuance of any of the additional shares to be authorized by the proposed amendment. We are actively pursuing several acquisition opportunities with a primary focus on the Permian Basin, including current negotiations and discussions relating to more than one acquisition, which include both producing and non-producing properties (the “Possible Acquisitions”). However, as of the date of the proxy we have not entered into definitive agreements in connection with the Possible Acquisitions. If definitive agreements are ultimately reached, we may, depending on the size of any such Possible Acquisitions, fund all or a portion of any such Possible Acquisitions with net proceeds from the issuance of our Common Stock. There can be no assurances +25 +that an agreement for any of the Possible Acquisitions will be reached or that any Possible Acquisition or any other acquisition will be consummated. +Capitalization Tables +We have outstanding 1,458,948 shares of Series A Cumulative Preferred Stock (“Series A Preferred Stock”) with a total liquidation value of $73 million. The Series A Preferred Stock provides that upon a change of control, generally defined as the acquisition of 50% of the Company’s Common Stock by a person or group of persons and following the acquisition, neither the Company nor the surviving entity has a class of common securities listed on a national securities exchange) (“Change of Control”), we may make a cash offer to purchase the Series A Preferred Stock within 120 days following the Change of Control for the liquidation value plus accrued dividends. The Series A Preferred Stock further provides that if we do not elect (or are unable) to purchase the Series A Preferred Stock for cash, the holders of the Series A Preferred Stock may convert the liquidation value of their holdings into shares of Common Stock at the then current market price of Common Stock, but in no event more, in the aggregate, than 39,113,887 shares of Common Stock. Based on our Common Stock price as of March 18, 2016, the Series A Preferred Stock would theoretically be able to convert into 8,452,769 Common Shares if all of the events described above occurred. +Currently, our authorized capital stock consists of 150,000,000 shares of Common Stock and 2,500,000 shares of Preferred Stock. We have 96,122,341 shares of Common Stock outstanding and an additional 40,646,866 shares reserved for issuance upon vesting or exercise of restricted stock, stock options and the limited conversion rights of the Series A Preferred Stock. The following table depicts our authorized capital stock as of the Record Date prior to the amendment of the Certificate of Incorporation and assuming the proposed amendment to the Certificate of Incorporation is adopted by the stockholders: +Current: +Total authorized +150,000,000 +Less: +Total shares outstanding +96,122,341 +Reserved for issuance upon exercise of outstanding stock options +15,000 +Reserved for issuance upon vesting of outstanding equity awards & 401(k) Plan +1,517,979 +Reserved for issuance for limited conversion feature of Series A Preferred Stock (“Share Cap”) (1) +39,113,887 +Total outstanding and reserved +136,769,207 +Total available +13,230,793 +Post-Amendment: +Total authorized +300,000,000 +Less: +Total shares outstanding +96,122,341 +Reserved for issuance upon exercise of outstanding stock options +15,000 +Reserved for issuance upon vesting of outstanding equity awards & 401(k) Plan +1,517,979 +Reserved for issuance for limited conversion feature of Series A Preferred Stock (“Share Cap”) (1) +39,113,887 +Total outstanding and reserved +136,769,207 +Total available +163,230,793 +(1) +Pending stockholder approval of the amendment to increase the authorized Common Stock, we reserve the right to allocate amounts, not to exceed 22,313,887 shares of Common Stock, reserved under the Share Cap for other corporate purposes in accordance with Delaware law. +If the stockholders approve the amendment to our Certificate of Incorporation to increase our authorized Common Stock, we will have 163,230,793 shares of authorized Common Stock available for future issuance. The additional shares of Common Stock authorized by the amendment that are not reserved for other purposes may be issued periodically on authorization by the Board, without further approval by the stockholders, unless such authorization is required by applicable law or the rules of the NYSE. Shares of Common Stock may be issued for such consideration as the Board may determine, and as may be permitted by applicable law. +26 +The proposed amendment to the Certificate of Incorporation does not change the terms of the Common Stock. The additional shares of Common Stock to be authorized by adoption of the amendment would have rights identical to the currently outstanding Common Stock of the Company. Any future issuance of additional shares of Common Stock would not affect the rights of the holders of currently outstanding Common Stock of the Company, except for effects incidental to increasing the number of shares of our Common Stock outstanding, such as a dilutive effect on the Company’s earnings per share. If our stockholders do not approve the proposal, we will have only 13,230,793 shares of authorized Common Stock for general corporate purposes and, as a result, may not be able to access the capital markets, complete acquisition transactions or partnerships, attract, retain and motivate employees, or pursue other business opportunities integral to its growth and success. However, non-approval will not have any impact on the existing terms and conditions of the Series A Preferred Stock, including the current Share Cap. +The existence of certain provisions contained in the Company’s Certificate of Incorporation and By-laws may be to render more difficult the accomplishment of any attempted merger, takeover or other change in control affecting the Company and/or the removal of the Company’s incumbent Board and management. However, this proposal is not in response to any effort of which the Company is aware to accumulate its stock or to obtain control of the Company and it is not part of a plan by management to recommend a series of similar amendments to the Board and the stockholders. +Effective Date +If approved by the stockholders, it is anticipated that the amendment to the Certificate of Incorporation will become effective as soon as practicable after the Annual Meeting. Upon approval of this proposal at the Annual Meeting, we will file the Article Four Amendment with the Secretary of State of the State of Delaware, and the number of authorized shares of Common Stock will be increased from 150 million shares to 300 million shares (without affecting par value). +If stockholders do not approve this proposal at the Annual Meeting, then we may seek to obtain stockholder approval of an increase in authorized shares at future stockholder meetings. Approval of the amendment to the Certificate of Incorporation requires the affirmative vote of the holders of a majority of our outstanding shares of Common Stock. We believe that this is a “routine matter” for purposes of the NYSE rules, and so brokers will be entitled to vote shares with respect to which they do not receive voting instructions from the beneficial owners. Abstentions and any broker non-votes will have the same effect as a vote against the proposal to amend the Certificate of Incorporation. Lone Star Value Management has agreed to vote its shares in accordance with the recommendation of Institutional Shareholder Services with respect to the approval of the amendment to the Certificate of Incorporation to increase the number of shares. +“ RESOLVED, that the amendment to Article Four of the Company’s Certificate of Incorporation increasing the total number of authorized shares of Common Stock is hereby approved. ” +THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE INCREASE IN AUTHORIZED SHARES OF COMMON STOCK FROM 150 MILLION SHARES TO 300 MILLION SHARES +27 +PROPOSAL 4 +RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT REGISTERED +PUBLIC ACCOUNTING FIRM, GRANT THORNTON LLP, FOR 2016 +The Audit Committee has appointed Grant Thornton LLP, as the independent registered public accounting firm, to audit our consolidated financial statements for the year ending December 31, 2016. We are asking stockholders to ratify this appointment. +The Audit Committee conducted a competitive process to review the appointment of our independent registered public accounting firm for the year ending December 31, 2016. The process included consideration of audit firms, in addition to Ernst & Young LLP, which was the Company’s independent registered public accounting firm for the year ended December 31, 2015. The decision to evaluate more than one potential audit firm was made in connection with the Audit Committee’s annual review of the independent registered public accounting firm. Upon completion of this process, the Audit Committee informed Ernst & Young LLP that they would no longer serve as the Company’s independent registered public accounting firm no later than the date of the filing of the Company’s Form 10-K for the 2015 fiscal year. The Audit Committee appointed Grant Thornton LLP, effective as of March 3, 2016, as the Company’s registered public accounting firm for the year ending December 31, 2016. +Ernst & Young LLP’s audit report on the Company’s consolidated financial statements for the year ended December 31, 2015 did not contain an adverse opinion or disclaimer of opinion, nor was it qualified or modified as to uncertainty, audit scope or accounting principles. During the years ended December 31, 2014 and 2015 and through March 2, 2016, there were no (i) disagreements (as defined in Item 304(a)(1)(iv) of Regulation S-K) between the Company and Ernst & Young LLP on any matter of accounting principle or practice, financial statement disclosure, or auditing scope or procedure which, if not resolved to Ernst & Young’s satisfaction, would have caused it to make reference to the matter in its report on the Company’s consolidated financial statements for the relevant year. +Fees +The following table sets forth the fee incurred by us in fiscal years 2014 and 2015 for services performed by Ernst & Young LLP : +Fee Category +2014 +2015 +Audit (1) +$ +749,664 +$ +765,117 +Tax (2) +17,150 +32,700 +Total +$ +766,814 +$ +797,817 +(1) +Audit fees consist of the aggregate fees billed for professional services related to the audit and quarterly reviews of our financial statements and for services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements. +(2) +Tax fees consist of the aggregate fees billed for professional services rendered for tax compliance (including filing state and federal tax returns), tax advice and tax planning. Tax fees do not include fees for services rendered in connection with the audit. +Pre-Approval Policy . The Audit Committee pre-approves all audit and permissible non-audit services (including the fees and terms thereof) to be performed for us by our independent registered public accounting firm, as required by applicable law or listing standards and subject to the terms of the audit and non-audit services pre-approval policy in accordance with the Audit Committee charter. The Committee may delegate authority to one or more of its members when appropriate, including the authority to grant pre-approvals of audit and permitted non-audit services, provided that decisions of any such member to grant pre-approvals are consistent with the terms of the Pre-Approval Policy and are presented to the full Committee at its next scheduled meeting. +Audit Committee Report +Acting pursuant to its Charter, the Audit Committee reviewed and discussed our audited financial statements for the year ended December 31, 2015, with management and Ernst & Young LLP, and recommended to our Board that our audited +28 +consolidated financial statements be included in our Annual Report on Form 10-K for the year ended December 31, 2015, for filing with the SEC. This recommendation was based on: +· +the Audit Committee’s review of the audited financial statements; +· +discussion of the financial statements with management; +· +discussion with our independent registered public accounting firm, Ernst & Young LLP, of the matters required to be discussed by auditing standards generally accepted in the United States of America, including the communication matters required to be discussed by Auditing Standard No. 1301, Communications with Audit Committees, issued by the Public Company Accounting Oversight Board; +· +receipt from Ernst & Young LLP of the written disclosures and letter required by Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees); +· +discussions with Ernst & Young LLP regarding its independence from Callon, its Board and management; +· +Ernst & Young LLP’s confirmation that it would issue its opinion that the consolidated financial statements present fairly, in all material respects, our financial position and the results of our operations and cash flows for the periods presented in conformity with accounting principles generally accepted in the United States of America; and +· +other matters the Audit Committee deemed relevant and appropriate. +Management is responsible for the preparation, presentation and integrity of our consolidated financial statements in accordance with generally accepted accounting principles, the establishment and maintenance of our disclosure controls and procedures, and the establishment, maintenance and evaluation of the effectiveness of our internal controls over financial reporting. The independent registered public accounting firm is responsible for performing an independent audit of our consolidated financial statements and internal control over financial reporting in accordance with the standards of the PCAOB and issuing reports thereon. The Audit Committee’s responsibilities include monitoring and overseeing these processes. +Members of the Audit Committee rely, without independent verification, on the information provided to them and on the representations made by management and our independent registered public accounting firm. The Audit Committee’s considerations and discussions referred to above do not assure that the audit of our financial statements and internal control over financial reporting have been carried out according to the standards of the PCAOB, that the financial statements are presented according to GAAP, or that Ernst & Young LLP is in fact independent. +Respectfully submitted by the Audit Committee of the Board of Directors, +John C. Wallace, Chairman +L. Richard Flury +Larry D. McVay +Anthony J. Nocchiero +The submission of this matter for approval by stockholders is not legally required; however, the Board and Audit Committee believe that this submission is consistent with best practices in corporate governance and is an opportunity for stockholders to provide direct feedback to the Board and Audit Committee on an important issue of corporate governance. Although the results of the vote are not binding on the Audit Committee, if the appointment is not ratified the Audit Committee will consider whether it should select another independent registered public accounting firm. A representative of both Ernst & Young LLP and Grant Thornton LLP will be present at the 2016 Annual Meeting and will have the opportunity to make a statement, if they desire, and to respond to appropriate questions from stockholders. +This proposal will be approved if it receives the affirmative vote of a majority of shares of our common stock cast at the Annual Meeting and entitled to vote on this proposal. Broker non-votes and abstentions will not affect the outcome of this proposal. Lone Star Value Management has agreed to vote its shares for approval of Grant Thornton LLP as our auditors. +THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “ FOR ” THE RATIFICATION OF THE APPOINTMENT OF GRANT THORNTON LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2016. +29 +BENEFICIAL OWNERSHIP OF SECURITIES +Management and Principal Stockholders +The following table sets forth, as of the Record Date, certain information with respect to the beneficial ownership of shares of common stock held by: (i) all persons known by us to be the beneficial owners of 5% or more of the outstanding common stock; (ii) each Director; (iii) the nominees for Director; (iv) each current executive officer named in the Summary Compensation Table; and (v) all of our executive officers and Directors as a group. Information set forth in the table with respect to beneficial ownership of common stock has been obtained from filings made by the named beneficial owners with the SEC as of the Record Date or, in the case of our executive officers and Directors, has been provided to us by such individuals. As of March 18, 2016, the Company had 96,122,341 shares of Common Stock issued, outstanding, and eligible to vote. +Common Stock +Name and Address of Beneficial Owner +Beneficial Ownership +Notes +% +Directors +Fred L. Callon +620,322 +(a)(b) +<1% +L. Richard Flury +167,999 +(a)(c) +<1% +Larry D. McVay +112,169 +(a)(d) +<1% +Anthony J. Nocchiero +99,033 +(a)(e) +<1% +John C. Wallace +5,000 +(a)(f) +<1% +Matthew R. Bob +23,184 +(a)(g) +<1% +James M. Trimble +4,184 +(a)(h) +<1% +Michael L. Finch +- +(a)(i) +<1% +Officers +Gary A. Newberry +276,560 +(a)(j) +<1% +Joseph C. Gatto, Jr. +151,030 +(a)(k) +<1% +Jerry A. Weant +36,961 +(a)(l) +<1% +Mitzi P. Conn +61,294 +(a)(m) +<1% +Directors and Executive Officers (12 persons, as a group) +1,557,736 +(n) +1.61% +Certain Beneficial Owners +Wellington Management Group, LLP +7,112,875 +(o) +7.40% +Dimensional Fund Advisors LP +5,443,862 +(p) +5.66% +(a) +Unless otherwise indicated, each of the persons listed in the table may be deemed to have sole voting and dispositive power with respect to such shares. Beneficial ownership does not include the unvested portion of stock awards due to lack of voting and disposition power, unless such award will vest within sixty days of March 18, 2016. Percentage ownership of a holder or class of holders is calculated by dividing (i) the number of shares of common stock beneficially owned by such holder or class of holders plus the total number of shares of common stock underlying options exercisable or stock awards vesting within sixty days of March 18, 2016, by (ii) the total number of shares of common stock outstanding plus the total number of shares of common stock underlying options exercisable and stock awards vesting within sixty days of March 18, 2016, but not common stock underlying such securities held by any other person. +(b) +Of the 620,322 shares beneficially owned by Fred L. Callon, 352,640 shares are owned directly by him; 25,215 shares are held by him as custodian for certain minor Callon family members; 160,378 shares represent unvested restricted stock units payable in stock and 28,302 restricted stock units payable in cash, which will vest within sixty days of March 18, 201 6 ; and 53,787 shares are owned within the Company’s Employee Savings and Protection Plan. Shares indicated as beneficially owned by Mr. Callon do not include 24,904 shares of common stock owned by his wife over which he disclaims beneficial ownership, 184,052 unvested restricted stock units payable in stock, 21,892 unvested restricted stock units payable in cash, and 158,916 unvested phantom shares payable in cash. +(c) +Of the 167,999 shares beneficially owned by L. Richard Flury, 121,328 shares are owned directly by him; 30,000 shares are held in joint tenancy with his wife; 5,000 shares in stock options, exercisable within 60 days; and 11,671 shares of unvested restricted stock, which will vest within sixty days of March 18, 201 6 . Shares indicated as beneficially owned by Mr. Flury do not include 23,336 restricted stock units awarded pursuant to his election under the Deferred Compensation Plan for Outside Directors, payable in cash upon his separation of service as a Director. +(d) +Of the 112,169 shares beneficially owned by Larry D. McVay, all are owned directly by him. Shares indicated as beneficially owned by Mr. McVay do not include 23,336 unvested restricted stock units payable in stock, and 11,671 restricted stock units awarded pursuant to his election under the Deferred Compensation Plan for Outside Directors, payable in cash upon his separation of service as a Director. +30 +(e) +Of the 99,033 shares beneficially owned by Anthony J. Nocchiero, 87,362 shares are owned directly by him and 11,671 shares of unvested restricted stock that will vest within sixty days of March 18, 201 6 . Shares indicated as beneficially owned by Mr. Nocchiero do not include 23,336 unvested restricted stock units payable in stock. +(f) +Mr. John C. Wallace has 5,000 stock options exercisable within 60 days. Mr. Wallace transferred his equity ownership in the Company to The Wallace Family Trust in April 2008. All equity ownership in the Company acquired by Mr. Wallace since April 2008 has also been transferred to the Wallace Family Trust, with the exception of the 18,968 restricted stock units awarded in May 2011, 22,768 restricted stock units awarded in May 2012, 35,014 restricted stock units awarded in May 2013, 12,550 restricted stock units awarded in May 2014 and 14,970 restricted stock units awarded in May 2015 pursuant to his election under the Deferred Compensation Plan for Outside Directors, all of which are payable in cash upon his separation of service as a Director. Mr. Wallace has no voting and dispositive power over the shares owned by the Trust. +(g) +Of the 23 ,184 shares beneficially owned by Matthew R. Bob, all are owned directly by him. Shares indicated as beneficially owned by Mr. Bob do not include 23,336 unvested restricted stock units payable in stock. +(h) +Of the 4,184 shares beneficially owned by James M. Trimble, all are owned directly by him. Shares indicated as beneficially owned by Mr. Trimble do not include 23,336 unvested restricted stock units payable in stock. +(i) +Michael L. Finch is a new Director who currently does not own any shares of the Company’s stock. Shares indicated as beneficially owned by Mr. Finch do not include 14,970 unvested restricted stock units payable in stock. +(j) +Of the 276,560 shares beneficially owned by Gary A. Newberry, 181,898 shares are owned directly by him; 47,492 shares are owned within the Company’s Employee Savings and Protection Plan; and 40,095 shares represent unvested restricted stock units payable in stock and 7,075 restricted stock units payable in cash that will vest within sixty days of March 18, 201 6 . Shares indicated as beneficially owned by Mr. Newberry do not include 67,554 unvested restricted stock units payable in stock, 7,999 unvested restricted stock units payable in cash, and 58,069 unvested phantom shares payable in cash. +(k) +Of the 151,030 shares beneficially owned by Joseph C. Gatto, Jr., 85,482 shares are owned directly by him; 16,878 shares are owned within the Company’s Employee Savings and Protection Plan; 1,500 shares are Series A Preferred Stock and 40,095 shares represent unvested restricted stock units payable in stock and 7,075 restricted stock units payable in cash that will vest within sixty days of March 18, 201 6 . Shares indicated as beneficially owned by Mr. Gatto do not include 1,600 shares of common stock owned by his mother over which he disclaims beneficial ownership, 67,554 unvested restricted stock units payable in stock, 7,999 unvested restricted stock units payable in cash, and 58,069 unvested phantom shares payable in cash. +(l) +Of the 3 6 ,961 shares beneficially owned by Jerry A. Weant, 30,000 shares are owned directly by him; 4 ,000 are held in a family trust and 2,961 shares are owned within the Company’s Employee Savings and Protection Plan. Shares indicated as beneficially owned by Mr. Weant do not include 28,984 unvested restricted stock units payable in stock, 3,180 unvested restricted stock units payable in cash, and 20,842 unvested phantom shares payable in cash. +(m) +Of the 61,294 shares beneficially owned by Mitzi P. Conn, 20,548 shares are owned directly by her; 21,878 shares are owned within the Company’s Employee Savings and Protection Plan; and 16,038 shares represent unvested restricted stock units payable in stock and 2,830 restricted stock units payable in cash that will vest within sixty days of March 18, 201 6. Shares indicated as beneficially owned by Ms. Conn do not include 28,984 unvested restricted stock units payable in stock, 3,180 unvested restricted stock units payable in cash, and 20,842 unvested phantom shares payable in cash. +(n) +Includes 10,000 stock options, exercisable within 60 days; 325,230 shares of unvested restricted stock which will vest within sixty days of March 18, 2016; and 142,996 shares are owned within the Company’s Employee Savings and Protection Plan. +(o) +Information is based upon a Schedule 13G/A filed with the SEC on February 11, 2016 by Wellington Management Group, LLP, Wellington Group Holdings LLP, Wellington Investment Advisors Holdings LLP and Wellington Management Company LLP (collectively “Wellington”). In this Schedule 13G, Wellington represents that it has shared voting power with respect to 7,112,875 shares of common stock and shared dispositive power with respect to 8,147,867 shares of common stock. The address of the principal business office of Wellington Management Group, LLP is 280 Congress St., Boston, MA 02210 . +(p) +Information is based upon a Schedule 13G filed with the SEC on December 31, 2015 by Dimensional Advisors LP (“Dimensional”). In this Schedule 13G, Dimensional represents that it has sole voting power with respect to 5,443,862 shares of common stock and sole dispositive power with respect to 5,615,116 shares of common stock. The address of the principal business office of Dimensional Advisors LP is 6300 Bee Cave Road, Austin, TX 78746. +With respect to shares issuable upon exercise of stock options, the holders or class of holders acquire investment power for these shares immediately upon a “change of control,” as defined in the applicable plan. +Section 16(a) Beneficial Ownership Reporting Compliance. Our executive officers and Directors are required to file reports with the SEC, disclosing the amount and nature of their beneficial ownership in our common stock, as well as changes in that ownership. To our knowledge, based solely on its review of these reports and written representations from these individuals that no other reports were required, all required reports were timely filed during 2015 . +31 +COMPENSATION DISCUSSION AND ANALYSIS +Oversight of Executive Compensation Program +The Compensation Committee (the “Committee”), appointed by our Board, assists the Board in performing its fiduciary responsibilities relating to the compensation of our CEO and other NEOs. The Committee is responsible for the incentive compensation programs, which include programs designed for our executive management team, including the NEOs listed below. +The following compensation discussion and analysis (“CD&A”) is intended to cover all elements of compensation paid to our NEOs and to describe the Committee’s rationale in structuring our executive compensation program designed primarily to incentivize our NEOs to achieve both short-term and long-term corporate goals that enhance stockholder value . Specifically, we design policies to support the achievement of our strategic objectives by aligning the interests of our NEOs with those of our stockholders, with operational and financial performance goals linked to long-term equity and equity-based compensation. +Our NEOs for 2015 were: +NEO +Title +Fred L. Callon +Chairman of the Board, Chief Executive Officer and President (“CEO”) +Gary A. Newberry +Senior Vice President, Operations (“SVP Ops”) +Joseph C. Gatto, Jr. +Senior Vice President, Chief Financial Officer and Treasurer (“CFO”) +Jerry A. Weant +Vice President, Land +Mitzi P. Conn +Corporate Controller and Principal Accounting Officer +Executive Summary and 2015 Highlights +The Committee believes that our executive compensation program has played a significant role in our ability to deliver stockholder value built upon strong financial and operational results. Our industry has experienced a decline in commodity prices since the fourth quarter of 2014 stemming from the global oversupply of crude oil. While we have no control over commodity prices, we believe we have positioned the Company to better manage this challenging commodity price environment than many of our industry peers. Leveraging our operational momentum since becoming a pure-play, Permian Basin operator in late 2013, we have demonstrated our ongoing ability to consistently create stockholder value, even in this lower commodity price environment. Specifically, we focused on preserving our operating margin by working closely with our service partners to reduce our drilling, completion and operating costs, while also working internally to reduce our overhead costs, allowing us to align our cost structure with current commodity prices. These quick responses in a challenging environment, coupled with two successful equity raises, strengthened our balance sheet and overall financial flexibility and liquidity. Collectively, our dramatic year-over-year production and proved reserves base growth demonstrate our success. +After entering 2015 with a three-drilling-rig development program, we responded to a challenging commodity price environment by quickly moderating our pace, returning to a two-drilling rig program during the first quarter of 2015. By the third quarter of 2015, we once again demonstrated our operational flexibility and commitment to maintaining a strong balance sheet by quickly modifying our development plans to focus almost exclusively on developing the Lower Spraberry zone across our Central Area – a zone that offers compelling returns even in a low commodity price environment. Ever mindful of the environment in which we operate and our stated goal of achieving cash flow neutrality during 2016, we further modified our development program during the first quarter of 2016 by slowing our development pace from two drilling rigs to one. The moderated activity level positions us to achieve cash flow neutrality in 2016 while simultaneously growing production, maintain operational momentum and healthy vendor relationship, and pursue inorganic growth opportunities on which we could utilize our second horizontal drilling rig. +32 +Key accomplishments in 2015 include: +Accomplishment +Production growth +● Grew production 70% year-over-year to 9,610 BOE/d (80% oil) in 2015 vs. 5,649 BOE/d in 2014. +Reserve growth +● Increased proved reserves year-over-year by 65% to 54.3 MMBOE from 32.8 MMBOE at year-end 2014. +● Increased PDPs by 57% to 28.6 MMBOE from 18.2 MMBOE. +Operational efficiency +● Drilled 36 gross (27.1 net) Horizontal (Hz) wells equating to 16 wells per drilling-rig, a 33% increase over the 12 Hz wells per drilling-rig in 2014. +● Completed 34 gross (26.2 net) Hz wells, a 10% increase over the 31 gross Hz completions in 2014. +● Continued to improve drilling and completion efficiency, achieving an average horizontal well cost of under $5.5 million for 7,500’ lateral wells vs $7.4 million in 2014, with line-of-sight to further reductions to achieve target of $5.0 - $5.2 million, among the lowest cost operators in the Permian Basin. +Financial strength +● Enhanced financial flexibility by completing two strategic equity offerings, raising over $175 million in net proceeds, funding growth and reducing leverage. +● Built a strong derivatives position with more than 60% of our estimated 2016 production hedged with downside protection. +● Increased the senior secured revolving credit facility’s borrowing base to $300 million, relative to $250 million in 2014 and $83 million in 2013. +Cost reductions +● Significantly reduced our operating and administrative cost structures delivering consistent operating margins each quarter throughout 2015 and positioning us for similar margins in 2016 despite lower commodity prices, achieving an LOE per BOE of $7.71, down 29% from $10.85 in 2014 and 45% from $14.00 in 2013. +Acreage and well inventory growth - Acquisition +● Acquired nearly 630 net acres at competitive prices in our core Central Area fields (Carpe Diem and Cassleman-Bohannon fields (“CaBo”), located primarily in Midland and Andrews Counties, adding production of 360 BOE/d (84% oil) and added 34 net potential horizontal drilling locations. +● Total acreage position is 100% HBP allowing for complete operational flexibility. +Well inventory growth: Delineation +● Successfully developed our first Middle Spraberry well during 2015, effectively de-risking 100 additional well locations across our Central Area fields. +● Increased our horizontal drilling inventory to approximately 504 gross locations based solely on five currently producing zones. With the addition of drilling locations from other prospective zones, this drilling inventory increases to over 1,000 drilling locations. +Well inventory growth: Down-spacing +● Successfully tested tighter spacing in the Lower Spraberry zone, effectively adding approximately 50 de-risked horizontal well locations across our acreage. +Safety & Training +● Achieved an OSHA Recordable Incident Rate (“ORIR”) in the field of 0.73, attributable to enhanced employee safety through near-miss reporting, with a focus on quality engagements. +● Had only one lost-time accident associated with our work activities in 2015. +Staging future efficiencies +● Ended 2015 with over 80% of our production tied into gathering systems after converting nearly 60% of our production gathering system during 2015, improving operating margins by reducing transportation expenses, while also improving operational reliability associated with trucking production. +● Built on the efficient, pad-development strategy we began in 2012 by investing in additional water handling infrastructure across our acreage to increase operational control by significantly reducing 3 rd party service providers and reduce expenses associated with water off-take. +33 +Role of Stockholder Say-on-Pay Advisory Vote +At the 2015 annual meeting of stockholders, our stockholders voted approximately 96% in favor of the compensation of the NEOs as described in our 2015 proxy statement. In consideration of the results, the Committee acknowledged the support received from our shareholders and viewed the results as a confirmation of the Company’s existing executive compensation policies and decisions. Accordingly, the Committee substantially maintained our prior executive compensation policies for 2016. The Committee will continue to review stockholder votes on our executive compensation and determine whether to make any changes to the program as a result of these votes. +Role of Independent Compensation Consultant +As previously discussed, for 2015 the Committee retained Meridian Compensation Partners, LLC (“Meridian” or the “Consultant”) as its independent consultant, which provided information and objective advice regarding NEO and Director compensation. The Committee retained Meridian, because of its extensive experience and familiarity with our NEO compensation program and the compensation programs of our Peer Group and sector. Importantly, the Committee makes all of the decisions with respect to our executive compensation, and as such, in setting compensation for our NEOs, considers the Consultant’s advice as only one factor among many other factors discussed within this CD&A. Other factors include our overall performance, individual NEO’s performance, experience, skills and tenure with Callon, industry trends and similar factors. +The Committee did not direct Meridian to perform its services in any particular manner or under any particular method. The Committee has the final authority to hire and terminate the Consultant, and the Committee evaluates the Consultant annually. Meridian provides no other services to Callon aside from its role as advisor to the Committee, and pursuant to applicable SEC and NYSE rules, the Committee has determined that no conflicts of interest exist because of Meridian’s engagement by the Committee. The Committee has retained Meridian as its Consultant on NEO and Director compensation for 2016. +From time to time, Meridian contacts our NEOs for information needed to fulfill the objectives established by the Committee, and makes reports and presentations to both the Committee and our NEOs. However, the Committee established procedures that it considers adequate to ensure that the Consultant’s advice to the Committee remains objective and is not influenced by our NEOs or other management. +The Committee considered the advice of the Consultant as only one factor in setting compensation of our NEOs, as actual compensation decisions are the result of the Committee’s subjective analysis of a number of factors. To help ensure that our NEO compensation programs are competitive and consistent with our compensation philosophy, the Consultant assisted the Committee with the following: +· +consult on executive compensation matters to align the Committee’s actions with stockholder interests, our business strategy and pay philosophy, prevailing market practices and relevant legal and regulatory requirements; +· +identify and assess potential peer groups against which to compare; +· +provide, as needed, input into the design and level of outside Director compensation and executive compensation; +· +provide comprehensive, competitive market data to consider in determining executive base salary and short- and long-term incentive plans and awards; +· +review and provide feedback on the compensation-related disclosures in this Proxy Statement; and +· +inform the Committee about marketplace compensation trends in the industry, best practices and generally other developments affecting executive compensation. +Compensation Assessment +In order to attract, motivate and retain talented executive officers, the Committee must ensure that our executive compensation program remains competitive with the types and ranges of compensation paid by our peer companies who compete for the same executive talent. On an annual basis, the Committee reviews and discusses compensation data for +34 +our CEO and other NEOs as compared with compensation data for similarly situated executive officers at peer companies selected by the Consultant and approved by the Committee. +The Committee engages Meridian to conduct annual assessments of our industry peer group (“Peer Group”) in order to ensure each peer remains appropriate year-over-year. Meridian provides the Committee with market data from a group of peer companies in the independent E&P industry based on multiple metrics , such as operational and capital investment profiles, including enterprise value, market cap, asset size, and revenues. Our 2015 Peer Group consists of public companies with operational similarity in terms of size, scope and nature of business operations, and competitors, including geographic footprint and operational focus, particularly in the Permian Basin, with some larger and some smaller in size and scope, comparability of asset portfolio and availability of compensation data. The Committee believes this Peer Group provides a reasonable point of reference for comparing the compensation of our NEOs to others holding similar positions and having similar responsibilities. +The Committee does not target a specific percentile of the Peer Group, as the market data is just one of many factors considered by the Committee in determining compensation. The Committee and Meridian review the Peer Group each year and make changes based on changes in the Peer Group companies’ and our assets and operations in order to ensure the continued relevance to the market data and that the Peer Group provides the most appropriate comparison to the Company as part of the Committee’s competitiveness evaluation. The Committee considers Peer Group data relevant to, but not determinative of, the Committee’s consideration of overall executive compensation matters. +For the 2015 compensation decisions, the Committee’s selected Peer Group included the 12 companies listed below : +2015 Peer Group +Abraxas Petroleum Corp. +Approach Resources Inc. +Diamondback Energy Inc. +Gastar Exploration LTD +Goodrich Petroleum Corp. +Matador Resources Co +PDC Energy Inc. +Penn Virginia Corp. +Petroquest Energy Inc. +Resolute Energy Corp. +Rex Energy Corp. +Triangle Petroleum Corp. +The Committee also uses other proprietary benchmarking surveys from a broader sample of comparably sized oil and gas companies for additional market perspective , including : +· +Meridian’s 2015 Oil & Gas E&P Survey ( “ Meridian Survey ” ), which outlines data from similarly sized E&P companies; and +· +Survey data provided by Effective Compensation, Inc. ( “ ECI ” ), which provides data for over 300 jobs found in E&P firms in the United States. +The Committee understands the inherent limitations in using any peer group or data set, including fluctuations in survey participation from year to year and competition for executive talent by companies potentially much larger than Callon. Accordingly, the Committee does not consider data collected from any of these sources to be prescriptive. Rather, the Committee relies upon this and similar data as reference points around which to make informed decisions about the appropriate level and form of compensation for each NEO. +35 +Risk Assessment Related to our Compensation Structure +The Committee believes our compensation plans are appropriately structured to encourage long-term value creation and are not reasonable likely to have a material adverse effect on the Company . The Committee, with assistance of the Consultant, reviewed the elements of executive compensation during 2015 to determine whether any portion of executive compensation encouraged excessive risk taking. Our management conducted a similar risk assessment with respect to other employees. Upon evaluation of those assessments, the Committee and management concluded that our compensation policies and practices for the NEOs and other employees do not present risks that are reasonable likely to have a material adverse effect on the Company. The Committee’s risk review identified the following risk mitigating features designed into our executive compensation program: +· +A balance of short-term and long-term programs to focus management on both elements of Callon’s performance; +· +Annual long-term equity and equity-based incentives designed to be the largest component of each NEOs compensation package , with typical vesting periods of three years that are based on the value of our common stock and not on any particular metric that could encourage risk-taking; +· +The use by the Committee of its discretion to assess annual performance in the bonus plan; +· +Performance targets measured at the corporate level, rather than at the individual or business unit level; +· +Committee discretion to decrease bonus payouts if it believed management exercised excessive risk taking; +· +Reasonable change-in-control severance protections; and +· +Significant executive stock ownership requirements. +Executive Compensation Components and Philosophy +The Committee designs our compensation program to maintain a balance between rewarding the achievement of short-term or annual results and Callon’s long-term growth and success, thereby aligning our NEOs’ interests with those of our stockholders. Our executive compensation program is designed to do the following: +· +Emphasize pay for performance, in which Company and individual performance substantially influence an NEOs total compensation opportunity; +· +Attract and retain a highly qualified and motivated management team by offering industry competitive opportunities; +· +Hold NEOs accountable and appropriately reward them for their contributions to the achievement of our key short-term and long-term strategic objectives through the use of variable compensation; and +· +Align the compensation of our NEOs with the long-term interests of our stockholders by adjusting our compensation programs to be more weighted toward at-risk, performance-based compensation, consisting of a goal-driven annual incentive program and total shareholder return (“TSR”) contingent equity awards. +The Committee believes that this approach awards and compensates our NEOs in a manner that fairly and reasonably provides incentives for the enhancement of stockholder value, for the successful implementation of our business plan, and the continuous improvement in corporate and personal performance. In order to compete in our industry, the Committee believes that our NEOs’ compensation should include the following components : +36 +Component +Purpose +Philosophy Statement +Base Salary + +Pay for expertise and experience + +Competitive relative to similarly-sized peers + +Attract and retain talented executives + +Reflective of individual skills, experience tenure and expertise necessary to execute our business strategy + +Provide compensation stability + +Compete with comparable companies +Annual Cash Bonus Incentive + +Motivate our executive officers to achieve our short-term business objectives that drive long-term performance while providing flexibility to respond to opportunities and changing market conditions + +Modest or no reward for performance below expectations and potential for increased reward for exceptional performance + +Provide annual recognition of performance based on achievement of individual and corporate strategic objectives + +Goals aligned with our annual performance targets + +Promote and encourage pay-for-performance + +Provide balance in compensation programs and avoid encouraging u ndue risk-taking + +Competitive relative to similarly-sized peers + +Reflective of internal equity considerations +Long-Term Equity / Equity-Based Incentives Awards + +Motivates NEOs to achieve our business objectives by tying incentives to the performance of our stock over the long term + +Ensures that realized value to the executive aligns with value delivered to stockholders +(60% TSR Phantom Units; 40% RUSs) + +Match competitive practices to attract and retain employees + +Recognizes and rewards share price performance relative to industry peers + +Provide a mix of equity awards that focuses the NEO on creating long- term value while avoiding undue risk-taking + +Provides a strong performance-based equity component + +Aligns compensation with sustained long-term value creation + +Allows NEOs to acquire a meaningful and sustained ownership stake in the Company +Other (Retirement; Benefits; Health Severance) + +Provide financial security for the NEOs and their families + +Helps attract and retain NEO talent and remain competitive among our peers by o ffering a comprehensive benefits package + +Ensure NEOs consider all possible transactions to increase stockholder value related to changes in control of +the Company + +Provides financial security in the event of various individual risks and maximizes the efficiency of tax-advantaged compensation vehicles + +Provide competitive level of benefits + +Benefits levels based on peer group practices while considering stockholder value + +Match competitive practices to attract and retain NEOs + +Attracts and retains NEOs in a competitive and changing industry, ensures NEOs act in the best interests of the stockholders in a change in control, and settles up front any potential dispute regarding an NEOs termination + +Ensure a financial safety net +37 +Determination of Each Element of Compensation +Base Salaries +We provide all of our employees, including the NEOs, with an annual base salary to compensate them for their services throughout the year. Our Committee recognizes that a substantial amount of competition exists in the oil and gas industry for attracting and retaining qualified management teams, particularly in the Permian Basin. Accordingly, the Committee evaluates our NEOs’ salaries together with other components of their compensation to ensure that the NEOs’ total compensation is competitive relative to market practices in our Peer Group or our industry in general, and is consistent with the previously discussed Committee’s compensation philosophy. However, the Committee, while being mindful that the overall mix remains competitive, designs the components of our compensation programs so that as a NEOs responsibility increases, the compensation mix is weighted more heavily toward performance-based, at-risk cash and non-cash compensation and less heavily toward base salary. +Annually, generally in March of each year, the Committee reviews the base salary of our NEOs. Individual salary amounts reflect the Committee’s subjective analysis of a number of factors, including: +· +Individual officer’s experience, skills, contributions and tenure with Callon; +· +Changes to the individual’s position within Callon; +· +Trends in compensation practices within our Peer Group and industry ; and +· +The NEO’s roles, responsibilities and expected future contribution to Callon’s success. +In addition, the Committee also considers the input and recommendations of Meridian regarding base salaries, as well as the input of the CEO when evaluating base salary for the other NEOs. Upon review of these various factors and noting that the base salary of our NEOs were generally in line with our Peer Group , t he Committee decided to provide no increases to base salaries in 2015 for any of the NEOs. +Annual Cash Bonus Incentive +A core component of our NEO compensation philosophy is to tie compensation to performance by structuring a significant portion of total annual compensation as “ at risk. ” To motivate employees to pursue our annual business goals in a way most beneficial to our stockholders, NEOs, senior management and other non-management technical personnel have the potential to receive a significant portion of their annual cash compensation as a bonus. The Committee set 2015 annual bonus award opportunities for each NEO as a percentage of the NEO’s annual base salary, and ultimately awarded a cash bonus to the NEOs based on the achievement of specified Company performance targets and the NEO’s individual performance, as determined at the Committee’s discretion. +For 2015, the Committee made no changes to the target bonus opportunities, summarized in the table below: +NEO +Target Bonus Opportunity +(% of Base Salary) +Fred L. Callon +100% +Gary A. Newberry +90% +Joseph C. Gatto, Jr. +90% +Other NEOs +60% – 70% +The target bonus opportunity is a guideline whereby actual bonus amounts may be greater or less than such target, in the Committee’s discretion. +38 +Assessing Performance +For purposes of evaluating performance, the Committee, in collaboration with management and the Consultant, annually reviews and establishes corporate goals and objectives relevant to NEO compensation, that include financial, operational and strategic performance goals. The Committee believes that these quantitative factors and performance expectations, taken together, are objective indicators of overall successful performance. At regular meetings, the Committee periodically reviews the Company’s progress toward meeting the bonus objectives for the year. The Committee prefers not to rely solely on a formulaic approach that results in automatic payouts, so the Committee retains the flexibility to exercise its discretion and take into account special or unusual factors that may have contributed to the achievement of these objectives, such as acquisitions, commodity prices, or other factors considered appropriate by the Committee at the time of the award. +The Compensation Committee then assessed management’s performance against the 2015 operational, financial and strategic goals, and noted the following: +Performance Goal +Rationale +Comments +Operate in a Safe and Environmentally Friendly Manner +Strong correlation exists between positive operational, safety and environmentally-friendly performance +Achieved an OSHA Recordable Incident Rate (ORIR) , well below the reported range by other similar sized operators in the Permian Basin and below our average ORIRs reported for the past two years. +Increase Daily Production (1) +Adding production directly contributes to our cash flow and operational growth +Increased both daily and annual Permian production by 70%, from 5,649 BOE/d in 2014 (82% oil) to 9,610 BOE/d in 2015 (80% oil), and from 2,062 MBOE in 2014 to 3,508 MBOE in 2015. +Increase Proved Reserves (1) +Reserves growth positions the organization for future success with resources to develop +Grew estimated net proved reserves by 65% to 54.3 MMBOE vs. year-end 2014 of 32.8 MMBOE, for an increase of 21.4 MMBOE. Importantly, our year-end 2015 reserves were 53% PDP and replaced more than 7x our 2015 production of 3,508 MBOE. +Increase Financial Flexibility +Financial flexibility positions us to successfully execute our operating strategy and lowers our risk profile +Successfully executed two strategic equity offerings, raising over $175 million in net proceeds , funding growth and reducing leverage; achieved 20% growth in our Credit Facility borrowing base from $250MM to $300MM. +Maintain appropriate DEBT/EBITDA level +A healthy balance sheet and leverage profile are vital to future growth +Maintained DEBT/EBITDA level below 3.0x. See comments related to "Increase Financial Flexibility" goal above for factors driving this outperformance. +Reduce Lease Operating Expense (“LOE”) +Improves operating margins +Reduced LOE by 29% to $7.71/BOE vs. $10.85/BOE in 2014. +Reduce Cash G&A Expense +Improves operating margins +Reduced per-BOE Adjusted cash G&A by 41% from $7.04/BOE to $4.16/BOE in 2014 and 2015, respectively. +Reduce Drill-bit Finding & Development ("F&D") Costs +Improves operating margins +Significantly reduced F&D costs by 42% to $8.98/BOE vs. $15.51/BOE in 2014. +(1) +Successful acquisitions added daily production and proved reserve growth of approximately 530 Boe/d and 3.4 MMBOE, respectively. +In addition to performance criteria above, the Committee considers other strategic achievements and management performance in response to external conditions. For 2015, the Committee took into account the following in setting bonus compensation: +· +Management’s ability to position the Company for success during a challenging commodity pricing environment ; +· +Management’s ability to promptly redirect our strategy to reflect the decline in oil prices, including reducing costs and capital spending and high-grading our drilling operations; +39 +· +Management’s continued progress in building a strong technical team and promoting and enhancing communication and teamwork throughout Callon; and +· +Management’s ability to protect margins through well-managed oil and gas derivative positions. +At the Committee meeting held in March 2016, the Committee evaluated the NEOs performance against the 2015 performance criteria described above and determined that the management team executed beyond the targets and significantly exceeded expectations on most of the financial and operational goals, along with other strategic achievements as noted above, despite a challenging commodity price environment. Thus, the Committee determined actual bonus amounts paid for 2015 performance above target as follows: +Named Officer +2015 Annual Bonus ($) +Fred L. Callon +$ +800,000 +Gary A. Newberry +600,000 +Joseph C. Gatto, Jr. +600,000 +Jerry A. Weant +225,000 +Mitzi P. Conn +225,000 +Annual Award of Long-term Equity and Equity-Based Incentives +The Committee believes that granting long-term equity and equity-based incentive awards are the most effective means to provide a substantial forward-looking incentive to our NEOs that emphasizes: +· +Long-term value creation by linking compensation provided to our NEOs with long-term operational success ; +· +Aligns the long-term interests of our NEOs with those of our stockholders by directly linking rewards to stockholder return; and +· +Fosters meaningful equity participation by our executive officers. +The Committee administers our long-term incentive plans, including approving award recipients, determining the total number of awards, vesting of awards and performance criteria, including TSR. The vesting period incorporated into stock-based compensation fosters a longer-term perspective necessary for executive retention, stability and continuity. For the grant of equity compensation to NEOs, the Committee will typically consider information provided by the Consultant related to the overall competitive environment associated with long-term compensation. We have no program, plan or obligation that requires us to grant equity compensation on specified dates. However, the Committee adheres to our policy of only granting stock-based compensation grants during open trading windows. +For 2015 long term incentive grants, the Committee approved a mix for our NEOs of time-based awards and performance-based awards tied to relative TSR, with a portion of each award paid in cash. The following table sets forth the number of restricted stock units, phantom units and TSR Performance Units Awarded to the NEOs in 2015: +Named Officer +Total Value +Restricted Stock Units Payable in +Common Stock (1) +Phantom Units Payable in Cash (2) +TSR Phantom Units Payable in Stock (3) +TS R Phantom Units Payable in Cash (3) +Fred L. Callon +$ +1,642,000 +68,000 +12,000 +60,000 +60,000 +Gary A. Newberry +600,000 +24,848 +4,385 +21,924 +21,924 +Joseph C. Gatto, Jr. +600,000 +24,848 +4,385 +21,924 +21,924 +Jerry A. Weant +300,000 +12,424 +2,192 +10,962 +10,962 +Mitzi P. Conn +300,000 +12,424 +2,192 +10,962 +10,962 +(1) +Amount represents restricted stock units vesting on May 14, 2018 and payable in Company common stock on the vesting date. +(2) +Amount represents phantom shares vesting on May 14, 2018 and payable in cash based on closing NYSE market price of the Common Stock on the date of vesting. +(3) +The 2015 TSR Phantom Unit Award is payable in 50% in cash and 50% in common stock, and will vest on December 31, 2017 between 0% and 200% based on our TSR when compared to the pre-determined Peer Group. +40 +Performance Unit Program. Under this program, the Committee determined that performance should be measured objectively rather than subjectively and should be based on relative TSR (as defined in the award agreements) over a long-term performance period. NEOs receive a combination of cash payment and common shares based on our share price and relative TSR against the Peer Group over the specified performance period. The Committee believes relative TSR is an appropriate long-term performance metric because it generally reflects all elements of a company’s performance and provides the best alignment of the interests of management and the company’s stockholders. The Committee also believes that the performance unit program provides a good balance to the restricted stock program. On the grant date, an employee is awarded a number of “ TSR Performance Units. ” The TSR Performance Units are eligible for vesting if the employee continues to be employed until the vesting date specified in the award agreement. When the TSR Performance Units vest, the executive is entitled to a cash payment equal to the fair market value of the “ adjusted ” TSR Performance Units and a related number of common shares. TSR is the change in the common stock price plus dividends using a 20-day average at the beginning and end of the performance period. The scale of payout ranges between maximum, or 200% of target, and a minimum, or 0% of target, as set forth below, to incentivize our NEOs. +The number of adjusted TSR Performance Units is calculated by comparing Callon’s TSR to the TSR of the Peer Group specified in the award agreement, according to the following schedule for awards made in May, 2015. +Callon’s TSR Rank among the Peer Group +TSR Phantom Shares Vesting +as a Percentage of Target +1 – 2 +200% +3 +183% +4 +163% +5 +142% +6 +121% +7 +100% +8 +75% +9 +50% +10 +25% +11 – 13 +0% +TSR Phantom Units – Results for Performance Period Ending December 31, 2015. In May 2013, our Compensation Committee granted TSR Phantom Units to the NEOs, which vested on December 31, 2015. Under the provisions of these awards, the targeted performance shares were subject to our relative TSR performance compared with the TSR of the Peer Group specified in the award grant. As detailed in the table below, Callon ranked first relative to the 10 companies in the agreed upon Peer Group, resulting in 200% of the number of awarded TSR Phantom Units being paid in cash. +The table below summarizes the TSR Phantom Units earned by the NEOs for the 2013-2015 performance periods: +Named Officer +Target Payout +of TSR Units in Cash +Payout % +of Target +Actual Payout +of TSR Units in Cash +Fred L. Callon +271,091 +200% +542,182 +Gary A. Newberry +67,773 +200% +135,546 +Joseph C. Gatto, Jr. +67,773 +200% +135,546 +Jerry A. Weant (1) +- +- +- +Mitzi P. Conn +27,109 +200% +54,218 +(1) +Mr. Weant joined Callon subsequent to the 2013 Annual long-term equity and equity-based award. +41 +Other Compensation +Perquisites and Other Benefits +Benefits represent a relatively small part of our overall compensation package, comprising only 2% and 4% of our CEO and the average of our other NEO’s total compensation. However, these benefits help attract and retain senior level executives, and we review these benefits annually to ensure that they are competitive with industry norms. We provide benefits to all of our employees commonly offered in the oil and gas E&P industry. These benefits consist of: +· +Group medical and dental insurance program for employees and their qualified dependents; +· +Group life insurance for employees and their spouses; +· +Accidental death and dismemberment coverage for employees; +· +Long-term disability coverage +· +Callon sponsored cafeteria plan; and a +· +401(k) employee savings and protection plan. +We pay the full costs of these benefits , including the 401(k) plan administration for all employees. Employee life insurance amounts surpassing the Internal Revenue Service maximum are treated as additional compensation to all employees. Our 401(k) contribution to each qualified participant, including the NEOs, is calculated based on 5% of the employee’s IRS eligible salary, excluding annual cash bonuses, and is paid one-half in cash and one-half in our common stock, limited to IRS regulation dollar limits. We also match employee deferral amounts, including amounts deferred by NEO, up to a maximum of 5% of IRS eligible compensation. +Each year, we purchase a certain number of hours of flight time through a fractional aircraft ownership arrangement. These hours are made available for business use to the NEOs and our other employees in connection with their business travel requirements in an effort to reduce travel time and related disruptions and to provide additional security. We believe these flight hours are a cost-effective way to increase the NEOs availability, efficiency, and productivity. The Committee disallows employees, including NEOs, from using these hours for personal use, though the Committee recognizes occasions will arise when a personal guest (including a family member) will accompany an employee on a business-related flight at no, or immaterial, incremental cost to Callon. +Our NEOs are entitled to certain benefits, or perquisites, that are not otherwise available to all of our employees. We provide the CEO, CFO and other executive officers with use of a Company automobile. We purchase the automobile and pay for all maintenance, repairs, insurance and fuel. The employee is required to recognize taxable income using the Internal Revenue Service’s annual lease value method for personal use of the vehicle. We also pay a portion of the annual premium for our CEO’s term life insurance policy, for which he is the sole beneficiary. The costs associated with these benefits for the NEOs are reported as “ Other Compensation ” in the Summary Compensation Table. The Committee believes these perquisites are modest yet competitive with the perquisites provided to similarly situated oil and gas industry executives, and include the value of such benefits in determining total compensation of our NEOs. +Severance Protection +We have no employment agreements with our NEOs, though we believe that providing consistent, competitive levels of severance protection to senior executives helps minimize distraction during times of uncertainty and encourage retention in these situations. To align with market practices, facilitate our ability to attract and retain executives, and ensure all NEOs are motivated to consider transactions that could increase stockholder value, we have entered into change-in-control severance compensation agreements with our NEOs, which include continued salary, benefits and accelerated vesting of equity awards. We believe that these provisions create important retention tools, and provide our NEOs with value in the event of a termination of employment that was beyond management’s control. In addition, the Committee believes that it is important to provide the NEOs with a sense of stability, both in the midst of transactions that may create uncertainty regarding their future employment and post-termination as they seek future employment. We believe post-termination payments allow management to focus their attention and energy on making objective business decisions that are in our best interest, without allowing personal considerations to overshadow the decision-making process. +42 +These agreements include non-competition, non-solicitation, and non-disclosure provisions. In addition, in order to protect us if the benefits are triggered, the agreements contain a “ claw back ” provision that will apply in the event the NEO violates any of these provisions. None of the agreements includes an excise tax gross-up provision, and the Committee chose not to provide guaranteed severance benefits outside of a change-in-control. +Stock Ownership Policy +Consistent with its goal of driving long-term value creation for our stockholders and in order to discourage undue risk-taking, the Committee’s stock ownership guidelines require significant stock ownership by the NEOs and directors . The Committee believes that meaningful stock ownership by our NEOs and directors is critical in aligning the NEOs interests with the interests of our stockholders. In March 2008, the Committee adopted a stock ownership policy, which applies to the CEO and the other NEOs. The provisions of the policy provide for the investment position, computed on December 31 of each year as follows: +NEO/Directors +Required Common Stock Ownership as Multiple of Annual Base Salary / Annual Retainer +CEO +6x +Other NEOs +2x +Directors +5x +Investment position is defined as calculated value of shares owned, shares owned indirectly, equivalent shares invested in the NEO’s 401(k) plan, and unvested portion of time-based restricted shares. Value attributable to shares represented by both vested and unvested stock options and the value of unvested performance-based shares is excluded. +Each NEO has a period of five years from the date of adoption to attain the required investment position. If a NEO becomes subject to a greater investment position due to a promotion or an increase in salary, the NEO will be expected to attain the increased investment position within three years of the change. The Committee reserves the right to approve an alternate stock ownership guideline for NEOs who can demonstrate a severe hardship in meeting the general guidelines. +In 2012, the Committee established ownership requirements for our outside directors. Each outside director is required to achieve a minimum value of common stock equal to at least five times the annual retainer within the next five years following adoption of the policy or election as a director. +Internal Revenue Service Limitations +When establishing our compensation programs, the Committee considers the effects of relevant tax laws. Our programs are designed to comply with Section 409A of the tax code, which applies to nonqualified deferred compensation, in order to prevent negative tax consequences for our NEOs. Under Section 162(m) of the Internal Revenue Code, a limitation is placed on tax deductions of any publicly held corporation for individual compensation to certain “ covered employees ” of such corporation exceeding $1,000,000 in any taxable year, unless the compensation is performance-based. However, the Committee, after taking into consideration changing business conditions or the executive’s individual performance and/or changes in specific job duties and responsibilities, reserves the right to use its judgment to authorize compensation payments that do not comply with the exemptions in Section 162(m) when it believes that such payments are appropriate. +Insider Trading Policy +We have an Insider Trading Policy under which all employees, including our NEOs and members of our Board, are prohibited from engaging in short-term or speculative transactions in our securities, including short sales, options and other derivatives, and from holding Company securities in a margin account or pledging securities as collateral for a loan during periodic “ trading blackout ” periods. When material non-public information about us may exist and may have an influence on the marketplace, a trading blackout period is placed in effect by management. +43 +Certain Relationships and Related Party Transactions +The Board’s Audit Committee charter provides that the Audit Committee shall review and approve all related party transactions. A transaction will be considered a “related party transaction” if the transaction would be required to be disclosed under Item 404 of Regulation S-K. In addition, our Code of Business Conduct and Ethics provides that an officer’s or a Director’s conflict of interest with Callon may only be waived if the Nominating and Corporate Governance Committee approves the waiver and the full Board ratifies the waiver. As of December 31, 2015, we are not aware of any related party transactions with our executive officers that may cause a conflict of interest with us. +Recoupment Policy +We have no recoupment policy applicable to annual incentive bonuses or equity awards other than those required under Sarbanes-Oxley legislation, though the Committee continuously evaluates the need to adopt such a policy. +Compensation Committee Report +The Compensation Committee has reviewed and discussed with management the CD&A required by Item 402(b) of Regulation S-K promulgated under the Securities Exchange Act of 1934, as amended, and based on such review and discussions, the Committee has recommended to the Board that the CD&A be included in this proxy statement relating to the 2016 Annual Meeting of Stockholders. +Respectfully submitted by the Compensation Committee of the Board, +L. Richard Flury, Chairman +Larry D. McVay +Anthony J. Nocchiero +John C. Wallace +James M. Trimble +44 +EXECUTIVE COMPENSATION TABLES +The following table summarizes the total compensation for 2015, 2014 and 2013 awarded to, earned by or paid to the NEOs. +Summary Compensation Table +Name +Year +Annual Salary +Cash Bonus +Stock Awards +Other (7) +Total +Fred L. Callon +2015 +$ +525,000 +$ +800,000 +(2) +$ +1,642,000 +(3) +$ +53,347 +$ +3,020,347 +Chairman, President and +2014 +525,000 +787,500 +1,642,000 +(4) +53,263 +3,007,763 +Chief Executive Officer +2013 +525,000 +656,250 +1,641,382 +(5) +52,769 +2,875,401 +Gary A. Newberry +2015 +$ +350,000 +$ +600,000 +(2) +$ +600,000 +(3) +$ +40,522 +$ +1,590,522 +SVP, Operations +2014 +350,000 +500,000 +600,000 +(4) +40,524 +1,490,524 +2013 +350,000 +394,000 +410,347 +(5) +35,448 +1,189,795 +Joseph C. Gatto, Jr. +2015 +$ +350,000 +(1) +$ +600,000 +(2) +$ +600,000 +(3) +$ +35,281 +$ +1,585,281 +SVP, Chief Financial Officer +2014 +330,769 +(1) +500,000 +600,000 +(4) +33,983 +1,464,752 +and Treasurer +2013 +300,000 +(1) +375,000 +410,347 +(5) +33,779 +1,119,126 +Jerry A. Weant +2015 +$ +250,000 +$ +225,000 +(2) +$ +300,000 +(3) +$ +36,661 +$ +811,661 +VP, Land +2014 +250,000 +200,000 +164,000 +(4) +34,167 +648,167 +2013 +72,115 +140,000 +490,000 +(6) +8,180 +710,295 +Mitzi P. Conn +2015 +$ +190,000 +$ +225,000 +(2) +$ +300,000 +(3) +$ +30,194 +$ +745,194 +Controller, Principal Accounting Officer +2014 +180,385 +200,000 +164,000 +(4) +28,026 +572,411 +2013 +165,000 +135,000 +164,139 +(5) +24,887 +489,026 +(1) +Mr. Gatto’s employment date was April 5, 2012 and his annual salary was $300,000. During March 2014, Mr. Gatto was promoted to CFO, Senior Vice President and Treasurer, which increased his annual salary to $350,000. +(2) +Cash bonus awarded in March 2016 in recognition of 2015 performance. +(3) +Represents the grant date fair value of the restricted stock units and TSR phantom shares granted to the NEOs on May 15, 2015 computed in accordance with FASB ASC Topic 718. The assumptions utilized in the calculation of these amounts are set forth in footnotes 8 and 9 to our consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2015 filed with the SEC on March 5, 2016. +(4) +Represents the grant date fair value of the restricted stock units and TSR phantom shares granted to the NEOs on May 14, 2014 computed in accordance with FASB ASC Topic 718. The assumptions utilized in the calculation of these amounts are set forth in footnotes 7 and 8 to our consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2014 filed with the SEC on March 5, 2015. +(5) +Represents the grant date fair value of the restricted stock units and TSR phantom shares granted to the NEOs on May 15, 2013 computed in accordance with FASB ASC Topic 718. The assumptions utilized in the calculation of these amounts are set forth in footnotes 9 and 10 to our consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2012 filed with the SEC on March 12, 2014. +(6) +Represents 100,000 restricted stock units awarded September 16, 2013 and are settleable in stock. Units vest one-third on each subsequent July 1 st anniversary date following the award date. +(7) +See the Table of All Other Compensation and related footnotes below for reconciliation of All Other Compensation. +45 +Table of All Other Compensation +Name +Year +Company Contributed Cash to 401(k) +Company Contributed Common Stock to 401(k) (1) +Company Provided Auto ( 2 ) +Company Paid Other (3) +Total +Fred L. Callon +2015 +$ +19,875 +$ +6,625 +$ +12,158 +$ +14,689 +$ +53,347 +2014 +19,500 +6,500 +12,574 +14,689 +53,263 +2013 +19,125 +6,375 +12,580 +14,689 +52,769 +Gary A. Newberry +2015 +19,875 +6,625 +14,022 +- +40,522 +2014 +19,500 +6,500 +14,524 +- +40,524 +2013 +19,125 +6,375 +9,948 +- +35,448 +Joseph C. Gatto, Jr. +2015 +19,875 +6,625 +8,781 +- +35,281 +2014 +19,500 +6,500 +7,983 +- +33,983 +2013 +19,125 +6,375 +8,279 +- +33,779 +Jerry A. Weant +2015 +18,750 +6,250 +11,661 +- +36,661 +2014 +18,750 +6,250 +9,167 +- +34,167 +2013 +3,846 +1,683 +2,651 +- +8,180 +Mitzi P. Conn +2015 +14,250 +4,750 +11,194 +- +30,194 +2014 +13,529 +4,510 +9,987 +- +28,026 +2013 +12,375 +4,125 +8,387 +- +24,887 +(1) +Subject to IRS limits, Company contributions to each person’s 401(k) account consist of a basic contribution equal to five percent (5%) of eligible annual base salary (funded one-half in cash and one-half in equivalent-valued common stock) plus a matching amount (limited to five percent (5%) of eligible annual base salary if such employee individually contributed at least eight percent (8%) of their eligible annual base salary). The number of shares contributed is determined on a monthly basis by dividing one-half of the total basic cash contribution by the closing market price on the last trading day of the month. +(2) +Represents annual depreciation based on a three-year life, plus insurance, fuel, maintenance and repairs, pursuant to IRS Reg §1.61-21, Taxation of Fringe Benefits. +(3) +Represents premiums paid by us on a personal life insurance policy for which Mr. Callon is the sole beneficiary. +46 +Grant of Plan-Based Awards During 2015 +The following table presents grants of equity awards during the fiscal year ending December 31, 2015: +Estimated Future Payouts Under +Equity Incentive Plan Awards (1) +Name +Grant Date +Threshold +Target +Maximum +Other Awards (Shares or Units) +Grant Date Fair Value (4) +Fred L. Callon +05/15/2015 +- +- +- +68,000 +(2) +$ +558,280 +05/15/2015 +- +- +- +12,000 +(3) +98,520 +05/15/2015 +- +120,000 +240,000 +- +985,200 +Gary A. Newberry +05/15/2015 +- +- +- +24,848 +(2) +$ +204,000 +05/15/2015 +- +- +- +4,385 +(3) +36,000 +05/15/2015 +- +43,849 +87,698 +- +360,000 +Joseph C. Gatto, Jr. +05/15/2015 +- +- +- +24,848 +(2) +$ +204,000 +05/15/2015 +- +- +- +4,385 +(3) +36,000 +05/15/2015 +- +43,849 +87,698 +- +360,000 +Jerry A. Weant +05/15/2015 +- +- +- +12,424 +(2) +$ +102,000 +05/15/2015 +- +- +- +2,192 +(3) +18,000 +05/15/2015 +- +21,924 +43,848 +- +180,000 +Mitzi P. Conn +05/15/2015 +- +- +- +12,424 +(2) +$ +102,001 +05/15/2015 +- +- +- +2,192 +(3) +17,996 +05/15/2015 +- +21,924 +43,848 +- +180,000 +(1) +Amount represents TSR phantom shares payable in 50% cash and 50% common stock on the vesting date, which will be adjusted between 0% and 200% based on our TSR compared with the TSR of our Peer Group. The adjusted performance-based phantom shares will vest on December 31, 2017. +(2) +Amount represents restricted stock units vesting on May 15, 2018 and will be settled in common stock. +(3) +Amount represents phantom shares vesting on May 15, 2018 and will be settled in cash based on the closing NYSE market price of the Common Stock on the vesting date. +(4) +This column shows the grant date fair value of the awards granted to the NEOs on the date indicated computed in accordance with FASB ASC Topic 718. The assumptions utilized in the calculation of these amounts are set forth in footnotes 8 and 9 to our consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2015 filed with the SEC on March 5, 2016. The value ultimately realized by the executive upon the actual vesting of the awards may be more or less than the grant date fair value. +Stock-Based Incentive Compensation Plans +The 2011 Plan was approved by stockholders on May 12, 2011 and amended on May 14, 2015. Awards available under the 2011 Plan include grants of stock options, stock appreciation rights or units, restricted stock, restricted stock units, phantom stock or performance shares or units. As of March 15, 2016, 2,817,021 shares remain unissued within the 2011 Plan. +47 +Outstanding Equity Awards at Fiscal Year-End +The following table contains information concerning all unexercised and unvested stock awards that were held as of December 31, 2015 for the NEOs: +Option Awards +Stock Awards +Unvested Shares or +Units of Stock +Equity Incentive +Plan Awards +Name +Number of Securities Underlying Exercisable Options +Option Exercise Price +Option Expiration Date +Number of Unvested shares or Units of Stock +Market Value of Unvested Shares or Units of +Stock (7) +Number of Unearned Shares, Units or Other Unvested Rights +Market of Payout Value of Unearned Shares, Units or Other Unvested Rights (7) +Fred L. Callon +- +- +- +160,378 +(3) +$ +1,337,553 +28,302 +(8) +$ +236,039 +- +- +- +56,052 +(4) +467,474 +9,892 +(9) +82,499 +- +- +- +68,000 +(5) +567,120 +12,000 +(10) +100,080 +98,916 +(1) +- +- +- +- +- +824,959 +60,000 +(2) +- +- +- +- +- +500,400 +60,000 +(2) +- +- +- +500,400 +- +- +Gary A. Newberry +- +- +- +40,095 +(3) +$ +334,392 +7,075 +(8) +$ +59,006 +- +- +- +20,482 +(4) +170,820 +3,614 +(9) +30,141 +- +- +- +24,848 +(5) +207,232 +4,385 +(10) +36,571 +36,145 +(1) +- +- +- +- +- +301,449 +21,924 +(2) +- +- +- +- +- +182,846 +21,924 +(2) +- +- +- +182,846 +- +- +Joseph C. Gatto, Jr. +- +- +- +40,095 +(3) +$ +334,392 +7,075 +(8) +$ +59,006 +- +- +- +20,482 +(4) +170,820 +3,614 +(9) +30,141 +- +- +- +24,848 +(5) +207,232 +4,385 +(10) +36,571 +36,145 +(1) +- +- +- +- +301,449 +21,924 +(2) +- +- +- +- +- +182,846 +21,924 +(2) +- +- +- +182,846 +- +- +Jerry A. Weant +- +- +- +33,333 +(6) +$ +277,997 +- +$ +- +- +- +- +5,598 +(4) +46,687 +988 +(9) +8,240 +- +- +- +12,424 +(5) +103,616 +2,192 +(10) +18,281 +9,880 +(1) +- +- +- +- +- +82,399 +10,962 +(2) +- +- +- +- +- +91,423 +10,962 +(2) +- +- +- +91,423 +- +- +Mitzi P. Conn +- +- +- +16,038 +(3) +$ +133,757 +2,830 +(8) +$ +23,602 +- +- +- +5,598 +(4) +46,687 +988 +(9) +8,240 +- +- +- +12,424 +(5) +103,616 +2,192 +(10) +18,281 +9,880 +(1) +- +- +- +- +- +82,399 +10,962 +(2) +- +- +- +- +- +91,423 +10,962 +(2) +- +- +- +91,423 +- +- +(1) +Amount represents performance-based phantom shares settleable in cash on the vesting date and which will be adjusted between 0% and 200% based on our TSR compared to our specified peer group. The adjusted performance-based phantom shares will vest on December 31, 2016. +(2) +Amount represents performance-based phantom shares settleable in 50% cash and 50% common stock on the vesting date and which will be adjusted between 0% and 200% based on our TSR compared to our specified peer group. The adjusted performance-based phantom shares will vest on December 31, 2017. +(3) +Represents restricted stock units awarded May 15, 2013 and are settleable in stock on the May 15, 2016 vesting date. +(4) +Represents restricted stock units awarded May 14, 2014 and are settleable in stock on the May 14, 2017 vesting date. +(5) +Represents restricted stock units awarded May 15, 20154 and are settleable in stock on the May 15, 2018 vesting date. +48 +(6) +Represents restricted stock units awarded September 16, 2013 and are settleable in stock. Units ratably vest one-third on each July 1 beginning 2014. +(7) +Amounts calculated based on the December 31, 2015 our common stock closing price as quoted on the NYSE of $8.34 per share. +(8) +Represents phantom stock shares awarded May 15, 2013 and are settleable in cash on the May 10, 2016 vesting date. +(9) +Represents phantom stock shares awarded May 14, 2014 and are settleable in cash on the May 14, 2017 vesting date. +(10) +Represents phantom stock shares awarded May 15, 2015 and are settleable in cash on the May 14, 2018 vesting date. +Option Exercises and Stock Vested +The following table provides information about the value realized by the NEOs on option exercises, vesting of restricted stock units, phantom shares, and TSR phantom share award payouts during 2015: +Exercise +Vesting +Name +Number of Shares Acquired (1) +Value Realized $ +Number of Shares Acquired +Value Realized $ (7) +Fred L. Callon +— +$ +4,521,798 +(2) +151,246 +(4) +$ +1,211,480 +— +210,718 +(3) +Gary A. Newberry +— +$ +1,130,454 +(2) +41,592 +(4) +$ +333,152 +— +57,949 +(3) +Joseph C. Gatto, Jr. +— +$ +1,130,454 +(2) +17,850 +(4) +$ +142,979 +— +24,869 +(3) +33,333 +(5) +253,331 +Jerry A. Weant +— +$ +— +33,333 +(6) +$ +253,331 +— +— +Mitzi P. Conn +__ +$ +452,178 +(2) +23,375 +(4) +$ +187,234 +— +32,567 +(3) +(1) +There were no options exercised by any NEO in 2015. +(2) +Includes the value of the vesting of performance-based phantom shares on December 31, 2015 and settled in cash. The value realized reflects the taxable value to the NEO as of the date of the vesting of performance-based phantom share awards. +(3) +Represents restricted stock units awarded May 10, 2012 and were settleable in cash on the May 10, 2015 vesting date. +(4) +Represents restricted stock awarded May 10, 2012 and were settleable in stock on the May 10, 2015 vesting date. +(5) +Represents 100,000 restricted stock units awarded April 5, 2012 and are settleable in stock. Units vest one-third on each subsequent July 1st anniversary date following the award date. +(6) +Represents 100,000 restricted stock units awarded September 16, 2013 and are settleable in stock. Units vest one-third on each subsequent July 1st anniversary date following the award date. +(7) +Represents the aggregate dollar amount realized on the date of the vesting of the restricted stock based on the market price of a share of Company stock on the NYSE on the vesting date. +49 +Potential Payments Upon Termination or Change-in-Control +The following table shows the estimated gross taxable compensation payable upon termination following a change in control or upon death, disability or retirement. No amounts would be payable upon termination for other causes. The information assumes, in each case, that the officer’s termination was effective as of December 31, 2015. In presenting this disclosure, we describe amounts earned through December 31, 2015 and, in those cases where the actual amounts to be paid out can only be determined at the time of such executive’s separation from us, the estimates are of the amounts which would be paid out to the executives upon their termination. +Name / Reason for Termination +Base Salary (3) +Cash Bonus (3) +Accelerated Stock Award Vesting (4) +Continued Employee Benefits (5) +Total +Fred L. Callon - CIC (1) +$ +1,575,000 +$ +2,243,750 +$ +4,616,524 +$ +109,620 +(6) +$ +8,544,894 +Death, Disability or Retirement ( 2 ) +— +— +4,616,524 +— +4,616,524 +Gary A. Newberry - CIC (1) +$ +700,000 +$ +996,000 +$ +1,505,303 +$ +43,710 +$ +3,245,013 +Death, Disability or Retirement ( 2 ) +— +— +1,505,303 +— +1,505,303 +Joseph C. Gatto, Jr. - CIC (1) +$ +700,000 +$ +983,333 +$ +1,505,303 +$ +58,507 +$ +3,247,143 +Death, Disability or Retirement ( 2 ) +— +— +1,505,303 +— +1,505,303 +Jerry A. Weant - CIC (1) +$ +500,000 +$ +376,667 +$ +720,067 +$ +43,710 +$ +1,640,444 +Death, Disability or Retirement ( 2 ) +— +— +720,067 +— +720,067 +Mitzi P. Conn - CIC (1) +$ +380,000 +$ +373,333 +$ +599,429 +$ +58,507 +$ +1,411,269 +Death, Disability or Retirement ( 2 ) +— +— +599,429 +— +599,429 +(1) +We entered into a Severance Compensation Agreement with each of the NEOs listed in the table above. See “ Employment Agreements, Termination of Employment and Change ‑in ‑Control ( “ CIC ” ) Arrangements. ” +(2) +“ Disability ” is generally defined as the employee’s inability to carry out the normal and usual duties of his employment on a full-time basis for an entire period of six continuous months together with the reasonable likelihood, as determined by the Board after consultation of a qualified physician, he will be unable to carry out his normal and usual duties of employment. “ Retirement ” is generally defined as the employee’s attainment of an age which the Board determines to be consistent with normal retirement age. +(3) +In accordance with Mr. Callon’s Severance Compensation Agreement, the computation uses a three-year multiple with respect to the severance amount relating to salary and target bonus, while a two-year multiple is used for the other NEOs. See “ Employment Agreements, Termination of Employment and Change ‑in ‑Control Arrangements. ” +(4) +The amounts are computed based on unvested stock awards at December 31, 2015 using the closing price of our common stock on the NYSE on the last trading day of 2015, at $8.34 per share. +(5) +Benefits consist of thirty-six months of employer provided family medical and dental insurance, life insurance, dependent life insurance, accidental death coverage and disability coverage for Mr. Callon and twenty-four months for the other NEOs in the table. +(6) +Mr. Callon’s amount includes an additional allotment for each of the three years representing premiums paid on a life insurance policy for which we have no have any beneficial interest. +50 +Employment Agreements, Termination of Employment and Change ‑in ‑Control Arrangements +Employment Agreements. We do not have employment agreements with any of our executive officers. +Severance Compensation Agreements. We entered into Severance Compensation Agreements ( “ SCA ” ) with each of our NEOs. The SCA will terminate, except to the extent that any obligation of Callon thereunder remains unpaid as of such time, upon the earliest of (i) December 31, 2016, provided, however, that, on each anniversary date thereafter, the expiration date shall automatically be extended for one additional year unless, immediately prior to such anniversary date, either party shall have given written notice that it does not wish to extend this SCA, but in no event shall the expiration date be earlier than the second anniversary of the effective date of a change of control; (ii) the termination of the NEOs employment with Callon based on death, disability (as defined in the SCA), or cause (as defined in the SCA); and (iii) the voluntary resignation of the NEOs for any reason other than good reason (as defined in the SCA). +Pursuant to the SCA, if the executive incurs a “ separation from service ” from Callon (as such term is defined in final Treasury Regulations issued under Code Section 409A and other authoritative guidance issued thereunder) without cause by Callon or for good reason by him within two years following a change of control of Callon (or in certain cases, prior to a change of control), then the executive is entitled to a single lump-sum cash payment (payable on the date that is six months following the triggering event) in an amount equal to three times the sum (with respect to Mr. Callon) of (i) the annual base salary in effect immediately prior to the change of control or, if higher, in effect immediately prior to the separation from service, and (ii) the greater of the average bonus earned with respect to the three most recently completed full fiscal years or the target bonus for the fiscal year in which the change of control occurs, based on a forecast that has been approved by the Board of the results for the fiscal year in which the change of control occurs. For the other NEOs, the salary and bonus multiple is two times. In addition, we must maintain at our expense until thirty-six months after a separation from service all life, disability, medical, dental, accident, and health insurance coverage for Mr. Callon. For the other NEOs, the continued benefit period is twenty-four months. If the executive’s employment is terminated because of his death or disability, we are only required to make such payments if the termination occurred within six months after a change of control. “ Good reason ” is generally defined in the SCA as a change in the executive’s compensation, benefits, position, responsibilities, or location. A change of control is generally defined in the SCA as (i) any person or group of persons acting in concert shall have become the beneficial owner of more than 50% of our outstanding common stock; (ii) our stockholders shall cause a change in the majority of the members of the Board within a twelve-month period; or (iii) we or our stockholders shall enter into an agreement to dispose of all or substantially all of our assets or outstanding capital stock. +The SCAs also provide that, upon a change of control, all stock options shall automatically become fully exercisable and all performance shares, restricted stock, stock appreciation rights and other similar rights held by the executive shall become fully vested, provided, however, that such acceleration of vesting shall not occur if it would be an impermissible acceleration under Section 409A of the Code. If we cannot provide for acceleration of vesting as a result of provisions in existence prior to a change of control, any plan or agreement, or Section 409A, we must provide in lieu thereof a lump-sum cash payment equal to the total value of the outstanding and unvested stock rights as of the date of separation from service. +The SCAs incorporate a provision to provide for the possible impact of the federal excise tax on excess parachute payments. The so-called “ golden parachute ” tax rules subject “ excess parachute payments ” to a dual penalty: the imposition of a 20 percent excise tax upon the recipient and non-deductibility of such payments by the paying corporation. While the excise tax is seemingly evenhanded, the excise tax can discriminate against long-serving employees in favor of new hires, against individuals who do not exercise stock options in favor of those who do and against those who elect to defer compensation in favor of those who do not. For these reasons, we believe that the “ net-best ” provision included in the SCA is appropriate. If any payment is subject to any excise tax under Section 4999 of the Internal Revenue Code of 1986, as amended, the payment will be reduced so that no portion of the payment is subject to such excise tax if the net benefit payable would be at least as much as it would have been if no reduction was made. +51 +Director Compensation +The compensation of our non-employee Directors is reviewed annually by the Compensation Committee and is approved by the Board. We use a combination of cash and stock-based incentive compensation to attract and retain qualified candidates to serve on our Board. In determining Director compensation, we consider the significant amount of time the Directors spend fulfilling their duties, as well as the competitive market for skilled directors. In 2015, the Compensation Committee directly engaged Meridian to review executive compensation and to conduct an annual review of the total compensation of our non-employee Directors. Specifically, Meridian evaluated retainer fees, potential meeting fees and stock-based long-term incentives using total compensation paid to the directors of our Peer Group used in determining 2015 executive compensation. Based on this review, no changes were made to our Directors’ compensation for 2015. +Each non-employee Director receives compensation consisting of only an annual retainer of $40,000 per year, with an additional $20,000 per year for the chairman of the Audit Committee, an additional $15,000 per year to the chairman of the Compensation Committee, an additional $10,000 per year to the chairman of the Nominating and Corporate Governance Committee, and an additional $10,000 to the chairman of the Strategic Planning and Reserves Committee. Each non-employee Director is reimbursed for reasonable out-of-pocket costs incurred to attend Board meetings. In addition to cash compensation, w e also grant to our non-employee directors restricted common shares under our stock-based compensation plan. These grants are, in part, to compensate our directors for the strict regulatory role in which they have to operate and to provide them with incentives to remain as a director by offering them a long-term stake in our potential future value. During 2015, the Compensation Committee awarded shares of restricted stock with equivalent value equal to $125,000 each to Messrs. Flury, McVay, Wallace, Nocchiero, Bob, Trimble and Finch. The restricted stock will vest ratably over three years or the Compensation Committee may determine in its sole discretion that the restricted stock shall vest on a “qualified separation from service.” Members of our Board who are also officers or employees of us do not receive compensation for their services as Directors. The table below indicates the total compensation earned and paid during 2015 for each non-employee Director: +Non-Employee Director Compensation for 2015 +Name +Fees Earned or Paid in Cash (1) +Stock Awards (6) +Option Awards +All Other Compensation +Total +L. Richard Flury +$ +55,000 +(2) +$ +125,000 +(7) +— +— +$ +180,000 +Larry D. McVay +50,000 +(3) +125,000 +— +— +175,000 +John C. Wallace +60,000 +(4) +125,000 +(7) +— +— +185,000 +Anthony J. Nocchiero +50,000 +(5) +125,000 +— +— +175,000 +Matthew R. Bob +40,000 +125,000 +— +— +165,000 +James M. Trimble +40,000 +125,000 +— +— +165,000 +Michael L. Finch +40,000 +125,000 +— +— +165,000 +(1) +Does not include reimbursement of expenses associated with attending the Board meetings. +(2) +Represents annual retainer of $40,000 and an additional $15,000 for acting as chairman of the Compensation Committee. Mr. Flury elected to have his annual retainer deferred pursuant to the terms of a Deferred Compensation Plan for non-employee Directors, under which participants may elect to convert the cash fees to phantom shares and defer the receipt of the proceeds in cash until separation of service as a Director. +(3) +Represents annual retainer of $40,000 and an additional $10,000 for acting as chairman of the Strategic Planning and Reserves Committee. +(4) +Represents annual retainer of $40,000 and an additional $20,000 per year for acting as chairman of the Audit Committee. +(5) +Represents annual retainer of $40,000 and an additional $10,000 for acting as chairman of the Nominating and Corporate Governance Committee. +(6) +Amounts calculated utilizing the provisions of FASB ASC Topic 718. See notes 7 and 8 of the consolidated financial statements in our Annual Report for the year ended December 31, 2015 regarding assumptions underlying valuation of equity awards. +(7) +Represents a Director who elected to have his restricted stock award deferred pursuant to the terms of a Deferred Compensation Plan for non-employee Directors, under which participants may elect to defer the receipt of the proceeds in cash until separation of service as a Director. +52 +STOCKHOLDERS’ PROPOSALS AND DIRECTOR NOMINATIONS +FOR THE 2016 ANNUAL MEETING +Stockholders who desire to present proposals at the 2017 Annual Meeting of Stockholders and to have such proposals included in our proxy materials, must submit their proposals to us at our principal executive offices not later than December 5, 2016. If the date of the 2017 Annual Meeting of Stockholders is changed by more than 30 days from the date of the 2016 Annual Meeting of Stockholders, the deadline for submitting proposals is a reasonable time before we begin to print and mail our proxy materials for our 2017 Annual Meeting of Stockholders. +If the date of the 2017 Annual Meeting of Stockholders is advanced or delayed by more than 30 calendar days from the date of the 2016 Annual Meeting of Stockholders, we shall, in a timely manner, inform our stockholders of such change, by including a notice, under Item 5, in our earliest possible quarterly report on Form 10-Q. The notice will include the new deadline for submitting proposals to be included in our proxy statement and the new date for determining whether we may exercise discretionary voting authority because we have not received timely notice of a matter. +In order to avoid controversy as to the date on which we receive any such proposal, we suggest that stockholders submit their proposals by certified mail, return receipt requested, or other means that permit them to prove the date of delivery. We reserve the right to reject, rule out of order or take other appropriate action with respect to any proposal that does not comply with the requirements described above or other applicable requirements. +Our Certificate of Incorporation requires that any person intending to nominate a person to serve as a Director of Callon must provide notice to us of the intent to nominate at least 120 days prior to the scheduled date of the 2017 annual meeting. +53 +HOUSEHOLDING INFORMATION +The SEC permits companies and intermediaries (such as brokers and banks) to satisfy delivery requirements for proxy statements and annual reports with respect to two or more stockholders sharing the same address by delivering a single proxy statement and annual report to those stockholders. This process, which is commonly referred to as “ householding, ” is intended to reduce the volume of duplicate information stockholders receive and reduce expenses for companies. Both we and some of our intermediaries may be householding our proxy materials and annual report. Once you have received notice from your broker or another intermediary that they will be householding materials sent to your address, householding will continue until you are notified otherwise or until you revoke your consent. Should you wish to receive separate copies of our Annual Report and proxy statement in the future, we will promptly deliver a separate copy of each of these documents to you if you send a written request to us at our address appearing on the cover of this proxy statement, to the attention of the Corporate Secretary. If you hold your shares through an intermediary that is householding and you want to receive separate copies of our Annual Report and proxy statement in the future, you should contact your bank, broker or other nominee record holder. +FINANCIAL STATEMENTS AND OTHER AVAILABLE DOCUMENTS +Financial statements for our most recent fiscal year are contained in the 2015 Annual Report to Stockholders and our Report on Form 10-K for the fiscal year ended December 31, 2015 filed with the SEC on March 2, 2016. Our Annual Report, our Annual Report on Form 10-K, Corporate Governance Guidelines , Code of Business Conduct and Ethics, and Charters of Board Committees may be accessed by stockholders on our website at www.callon.com or printed copies are available upon written request to the B.F. Weatherly, Corporate Secretary at our principal offices in Natchez, Mississippi. +OTHER BUSINESS +The Board is not aware of any matter to be acted upon at the 2016 Annual Meeting other than those described above. If other business properly comes before the 2016 Annual Meeting, the persons named on the proxy will vote the proxy in accordance with what they consider to be in the best interests of us and our stockholders. Please sign, date, and return your proxy promptly to avoid unnecessary expense. All stockholders are urged, regardless of the number of shares owned, to participate in the 2016 Annual Meeting by voting their shares. +By Order of the Board of Directors +Fred L. Callon +Natchez, Mississippi Chairman, President and Chief Executive Officer +April 1, 2016 +54 +Callon Petroleum Company +CONTROL ID: +REQUEST ID: +IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS +for the Annual Meeting of Stockholders +DATE: +Thursday, May 12, 2016 +TIME: +9:00 am central daylight time +LOCATION: +Grand Ballroom of the Natchez Grand Hotel, +111 Broadway Street, Natchez, Mississippi 39120 +HOW TO REQUEST PAPER COPIES OF OUR MATERIALS +PHONE: +Call toll free +1-866-752-8683 +FAX: +Send this card to +202-521-3464 +INTERNET: +https://www.iproxydirect.com/CPE +and follow the on-screen instructions. +EMAIL: +proxy@iproxydirect.com +Include your Control ID in your email. +This communication represents a notice to access a more complete set of proxy materials available to you on the Internet. We encourage you to access and review all of the important information contained in the proxy materials before voting. The proxy statement is available at: https://www.iproxydirect.com/ CPE +If you want to receive a paper copy of the proxy materials you must request one. There is no charge to you for requesting a copy. To facilitate timely delivery please make the request, as instructed above, before April 28, 2016. +you may enter your voting instructions at https://www.iproxydirect.com / CPE +until 11:59 pm eastern time May 11, 2016. +The purposes of this meeting are as follows: +1. +1. +The election of three Class I Directors, Messrs. Larry D. McVay, John C. Wallace and Michael L. Finch, for a three-year term; +2. +The approval, by non-binding advisory vote, of the compensation of our named executive officers; +3. +The approval of an amendment to Article Four of the Company’s Certificate of Incorporation increasing the number of authorized shares of Common Stock of the Company (“Common Stock”) from 150 million shares to 300 million shares; +4. +The ratification of the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2016; and +5. +The transaction of such other business as may properly come before the Annual Meeting or any adjournment(s) thereof. +Pursuant to Securities and Exchange Commission rules, you are receiving this Notice that the proxy materials for the Annual meeting are available on the Internet. Follow the instructions above to view the materials and vote or request printed copies. +The board of directors has fixed the close of business on March 18, 2016 as the record date for the determination of stockholders entitled to receive notice of the Annual Meeting and to vote the shares of our common stock, par value $.001 per share, they held on that date at the meeting or any postponement or adjournment of the meeting. +The Board of Directors recommends that you vote ‘for’ all proposals above. +Please note – This is not a Proxy Card - you cannot vote by returning this card +Callon Petroleum Company +SHAREHOLDER SERVICES +500 Perimeter Park Drive Suite D +Morrisville NC 27560 +Time Sensitive shareholder information enclosed +IMPORTANT SHAREHOLDER INFORMATION +your vote is important +55 +56 +57 \ No newline at end of file diff --git a/raw/proxies/0000928022/0000928022-16-000140/proxy_rpt.txt b/raw/proxies/0000928022/0000928022-16-000140/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..ac2a47d652c5f0d3c5750bc35f4c31257c1b9c10 --- /dev/null +++ b/raw/proxies/0000928022/0000928022-16-000140/proxy_rpt.txt @@ -0,0 +1,13 @@ +Certain Relationships and Related Party Transactions +The Board’s Audit Committee charter provides that the Audit Committee shall review and approve all related party transactions. A transaction will be considered a “related party transaction” if the transaction would be required to be disclosed under Item 404 of Regulation S-K. In addition, our Code of Business Conduct and Ethics provides that an officer’s or a Director’s conflict of interest with Callon may only be waived if the Nominating and Corporate Governance Committee approves the waiver and the full Board ratifies the waiver. As of December 31, 2015, we are not aware of any related party transactions with our executive officers that may cause a conflict of interest with us. +Recoupment Policy +We have no recoupment policy applicable to annual incentive bonuses or equity awards other than those required under Sarbanes-Oxley legislation, though the Committee continuously evaluates the need to adopt such a policy. +Compensation Committee Report +The Compensation Committee has reviewed and discussed with management the CD&A required by Item 402(b) of Regulation S-K promulgated under the Securities Exchange Act of 1934, as amended, and based on such review and discussions, the Committee has recommended to the Board that the CD&A be included in this proxy statement relating to the 2016 Annual Meeting of Stockholders. +Respectfully submitted by the Compensation Committee of the Board, +L. Richard Flury, Chairman +Larry D. McVay +Anthony J. Nocchiero +John C. Wallace +James M. Trimble +44 \ No newline at end of file diff --git a/raw/proxies/0000928022/0000928022-17-000026/proxy.txt b/raw/proxies/0000928022/0000928022-17-000026/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..a8091a6a6662fba66fec73a5ab9bee73f68f0f55 --- /dev/null +++ b/raw/proxies/0000928022/0000928022-17-000026/proxy.txt @@ -0,0 +1,3227 @@ +DEF 14A +1 +cpe-20170511xdef14a.htm +DEF 14A +2017 DEF 14A +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Rule 14a-101 +Schedule 14A Information +Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 + +Filed by the Registrant ☑ +Filed by a Party other than the Registrant ☐ +Check the appropriate box: +☐ +Preliminary Proxy Statement +☐ +Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +☑ +Definitive Proxy Statement +☐ +Definitive Additional Materials +☐ +Soliciting Material Pursuant to §240.14a-12 + + + +Callon Petroleum Company +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) + + + +Payment of Filing Fee (Check the appropriate box): +☑ +No fee required. +☐ +Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. +(1) +Title of each class of securities to which transaction applies: +(2) +Aggregate number of securities to which transaction applies: +(3) +Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): +(4) +Proposed maximum aggregate value of transaction: +(5) +Total fee paid: +☐ +Fee paid previously with preliminary materials. +☐ +Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. +(1) +Amount Previously Paid: +(2) +Form, Schedule or Registration Statement No.: +(3) +Filing Party: +(4) +Date Filed: + + + + +CALLON PETROLEUM COMPANY +200 NORTH CANAL STREET +NATCHEZ, MISSISSIPPI 39120 + +NOTICE OF TH E A NNUAL MEETING OF STOCKHOLDERS + + +Dear fellow Stockholders: + +Notice is hereby given and you are cordially invited to attend the 201 7 Annual Meeting of Stockholders (the “Annual Meeting”) of Callon Petroleum Company (“Callon,” the “Company,” “us,” “we,” “our” or like terms), a Delaware corporation, which will be held in Natchez, Mississippi, on Thursday, May 1 1 , 201 7 , at 9:00 a.m. Central Daylight Time (“CDT”), in the Grand Ballroom of the Natchez Grand Hotel, 111 Broadway Street, Natchez, Mississippi 39120, for the following purposes: + +1. +To elect three Class II Directors to serve on our board of directors, each for three years; +2. +To approve, on a non-binding advisory basis, the compensation of our named executive officers (“NEOs”); +3. +To approve, on a non-binding advisory basis, the frequency of our future advisory votes on the compensation of our NEOs; +4. +To ratify the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2017; and +5. +To transact such other business as may properly come before the Annual Meeting or any adjournment(s) thereof. + +The Notice of Meeting and Proxy Statement herein provide further information on the Company’s performance and corporate governance and describe the matters to be presented at the A nnual Meeting. Only holders of record of our common stock at the close of business on March 1 7 , 201 7 (the “Record Date”) , are entitled to notice of and to attend the Annual Meeting and to vote on the above listed matters. Beginning on or about March 29, 2017 , we mailed a Notice Regarding the Availability of Proxy Materials (the “ Notice ” ) to our stockholders. The Notice contained instructions on how to access the Proxy Statement and related materials online and how to vote your shares. Instructions for requesting a paper copy of the proxy materials are contained in the Notice. A list of stockholders entitled to vote at the Annual Meeting will be available at our office at 200 North Canal Street, Natchez, MS 39120 during normal business hours for a period of ten days prior to the meeting and will also be available for inspection at the Annual Meeting . + +Whether or not you plan to attend the meeting, please vote electronically via the Internet or by telephone, or please complete, sign, date and return the accompanying proxy card in the enclosed postage-paid envelope as soon as possible. See “ Annual Meeting Information” towards the end of this Proxy Statement for more details . + +We thank you for your continued support and look forward to seeing you at the Annual M eeting. + + + +By Order of the Board of Directors + + +By: /s/ B.F. Weatherly +Natchez, Mississippi +B.F. Weatherly +March 29, 2017 +Corporate Secretary + + + + +1 +YOUR VOTE IS IMPORTANT! + +Important Notice Regarding the Availability of Proxy Materials for the +Annual Meeting of Stockholders to be held on May 1 1 , 201 7 : + +This Proxy Statement and our 201 6 Annual Report on Form 10-K are available at +https://www.iproxydirect.com/CPE and www.callon.com + +If you have any questions or need assistance voting your shares, please call our proxy solicitor: + +Morrow Sodali LLC +470 West Avenue - 3rd Floor +Stamford, CT 06902 + +Banks and Brokerage Firms, please call (203) 658-9400. + +Stockholders, please call toll free (8 77 ) 787 - 9239 . +2 +PROXY STATEMENT SUMMARY + +This summary is included to provide an introduction and overview of the information contained in the Proxy Statement. This is a summary only and highlights information contained elsewhere in this Proxy Statement. This summary does not contain all of the information you should consider and is not a form for voting. You should read the entire Proxy Statement carefully before voting. Additional information regarding our 2016 performance can be found in our Annual Report on Form 10-K. + + + +2017 ANNUAL MEETING OF STOCKHOLDERS + +DATE AND TIME: +May 11, 2017, at 9:00 a.m., Central Daylight Time +LOCATION: +Natchez Grand Hotel, 111 Broadway Street, Natchez, Mississippi 39120 +RECORD DATE: +March 17, 2017 +PROXY VOTING: +Stockholders as of the close of business on the Record Date are entitled to vote. Each share of Common Stock is entitled to one vote at the Annual Meeting + + + +PROPOSALS AND BOARD RECOMMENDATION + +Board +Proposal +Recommendation +NO. 1: +Election of Three Director Nominees to Serve for a Three-Year Term +FOR each nominee +NO. 2: +Advisory Vote to Approve Named Executive Officer Compensation +FOR +NO. 3: +Advisory Vote on Frequency of Advisory Votes on Executive Compensation +ONE YEAR +NO. 4: +Ratification of the Appointment of Grant Thornton, LL P as the Company’s Independent Registered Public Accounting Firm for 2017 +FOR + + + + + + +2016 PERFORMANCE HIGHLIGHTS + +2016 was a transformative year for the Company. We moderated our level of drilling activity and high-graded our investments to the highest returning projects to preserve our financial flexibility, while also maintaining operational momentum. Our ability to pivot our operations and maintain a solid financial position allowed us to selectively pursue attractive acquisition opportunities, ultimately putting us in the position to significantly grow our net surface acreage position. Highlights of our 2016 operating and financial performance include: + +· +Completed multiple strategic acquisitions, growing our net surface acreage position by approximately 122%, creating two new core operating areas and increasing our total acreage footprint by 56,975 gross (38,583 net) acres. These transactions included 29,423 gross (21,895 net) acres in our legacy Midland Basin area and 27,552 gross (16,688 net) acres in the Delaware Basin, representing our initial entry into that Permian sub-basin. +· +Significant year-over-year production growth, increasing total production 59% from 3,508 MBOE in 2015 to 5,573 MBOE in 2016, and increasing daily production 59% to 15,227 BOE/d in 2016 (77% oil) vs. 9,610 BOE/d in 2015. +· +Significant growth in proved reserves, increasing reserves by 69% to 91.6 MMBOE in 2016 (78% oil) vs. 54.3 MMBOE at year-end 2015, including reserve extensions and discoveries replacement in 2016 of 17.3 MMBOE. +· +Drilled and completed our 100 th horizontal well in the Midland Basin. +· +Continued our strong safety performance in 2016, achieving an exceptional OSHA Recordable Incident Rate (“ORIR”) in the field of 0.58, below our average ORIRs reported for the past three years. +· +Increased PUDs by 88% from 25.7 MMBOE in 2015 to 48.3 MMBOE in 2016. +· +Increased total revenue by 46%, or $63.4 million, from $137.5 million in 2015 to $200.9 million in 2016. +· +Further strengthened our balance sheet and financial flexibility through the completion of four strategic equity offerings for $1.358 million in net proceeds, funding acquisition growth, increasing liquidity and reducing leverage. +3 +· +Achieved an indication to increase our Credit Facility borrowing base from $385 million to $500 million, electing to maintain at $385 million. +· +Added significant new net resource potential and more than 950 delineated horizontal drilling locations in the Permian and Delaware Basins, bringing our total inventory of potential locations targeting currently producing zones to over 1,550. +· +Continued to enhance operating efficiencies by driving sustainable cost reductions across all areas, reducing LOE by 11% to $6.88/BOE vs. $7.71/BOE in 2015 and reducing G&A by 42% to $4.72/BOE vs. $8.08/BOE in 2015. + +E XECUTIVE COMPENSATION HIGHLIGHTS + +Our compensation policies and practices promote a performance-based culture and align our executives’ interests with those of our stockholders through a strong emphasis on at-risk compensation tied to the achievement of performance objectives and the creation of stockholder value. In this Proxy Statement, you will find a discussion of our pay-for-performance compensation program structured to align executive pay with Company performance, stockholder expectations and prevailing market practices. Key actions in 2016 included the following: + +· +As a result of the achievements detailed above and in the Compensation Discussion and Analysis (“CD&A”) section, the Compensation Committee awarded bonuses above target for our NEOs for 201 6 performance; +· +In May 201 6 , the Compensation Committee granted long-term incentives to our NEOs, 60% of which were tied to our “Total Stockholder Return,” or “TSR”; +· +The Compensation Committee certified the results of the 201 4 grants of TSR phantom shares, which measured our TSR against certain of our peers for the 2014-2016 time period. We ranked first out of 10 peers, resulting in 200% of the targeted number of phantom shares vesting ; and +· +The Compensation Committee a pproved the first increase in our C hief Executive Officer’s (“CE O ’s ”) base salary in four years and increased the salaries of three NEOs and granted restricted stock unit awards commensurate with their promotions . + +APPROXIMATELY 97 % OF THE SHARES VOTED AT OUR 2016 ANNUAL MEETING APPROVED OUR 201 5 EXECUTIVE COMPENSATION BY SUPPORTING OUR “SAY-ON-PAY” PROPOSAL. + +KEY ELEMENTS OF OUR EXECUTIVE COMPENSATION + +· +“Pay-for-Performance” philosophy linking compensation directly to performance, with a significant portion of total annual compensation placed “at risk” +· +Competitive base salary +· +Annual cash bonus incentive tied to the achievement of specified Company performance goal s +· +Long-term equity or equity-based incentive awards and performance share program based on relative TSR +· +Do not set performance metrics that would encourage excessive risk-taking +· +Aligning internal pay parity and consistency while generally considering peer compensation metrics for individual roles and executive officers +· +Do not provide significant perquisites to our executive officers, but provide other benefit plans and programs, such as retirement, health benefits and severance protection + +GOVERNANCE HIGHLIGHTS + +We are committed to effective and sustainable corporate governance, which we believe strengthens Board and management accountability, promotes the long-term interests of our stockholders and helps build public trust in our Company. We continually assess our core values and governance principles to ensure that we operate our business responsibly, ethically and in a manner aligned with the interests of our stockholders. Highlights of our commitment to strong corporate governance include the following: + +· +Board meetings in 201 6 : 9 +· +Committee meetings: Audit – 5 ; Compensation – 4 ; Nominating and Corporate Governance – 2 ; Strategic Planning and Reserves – 3 +· +7 out of 8 Directors are independent and committees are comprised entirely of independent Directors +· +Board recently refreshed with three new independent Directors (two in 2014 and one in 2015) +· +Board includes a balance of experience, tenure and qualifications in areas important to our business +4 +· +Overboarding policy in place for Directors +· +Regular executive sessions of independent Directors +· +Conduct annual Board and committee self-evaluations +· +Annual Say-On-Pay voting +· +Majority vote standard for uncontested Director elections +· +Classified Board of Directors with staggered terms to align with the long-term nature of business +· +Significant Director and executive officer stock ownership guidelines +· +Regular succession planning +· +I ndependent executive compensation consultant reporting to the Compensation Committee +· +No employment agreements with NEOs +· +No excise or other tax gross-ups in our compensation plans +· +Double-trigger change-in-control provisions in our change-in-control plan with fixed term +· +No Poison Pill (Stockholder Rights Plan) +· +Anti-hedging and pledging policies +· +Active stockholder engagement practices + + + + +5 +PROPOSAL 1 + +ELECTION OF DIRECTORS + +The Board currently consists of eight directors, and our Certificate of Incorporation provides for a classified Board. The current Board is divided into three classes designated as Class I, Class II and Class III, with staggered, three-year terms. The following table provides information with respect to the nominees and all current directors whose terms will continue after the 201 7 Annual Meeting until the election and qualification of their respective successors or until their earlier death, retirement, resignation or removal. + + + +Director +Name +Age +Since +Position (Committee Memberships) +Class I Directors (term expires in 2019) +Larry D. McVay +69 +2007 +Director (a,b,c,d) +John C. Wallace +78 +1994 +Director (a,b,c,d) +Michael L. Finch +61 +2015 +Director (c) +Class II Directors (term expires in 2017) +Anthony J. Nocchiero +65 +2011 +Director, Nominee (a,b,c,d) +Matthew R. Bob +59 +2014 +Director, Nominee (c,d) +James M. Trimble +68 +2014 +Director, Nominee (b,d) +Class III Directors (term expires in 2018) +Fred L. Callon +67 +1994 +Director, Chairman of the Board and CEO +L. Richard Flury +69 +2004 +Director (a,b,c,d) + +(a) +Audit Committee +(b) +Compensation Committee +(c) +Nominating and Corporate Governance Committee +(d) +Strategic Planning and Reserves Committee + +Based on the recommendations from the Nominating and Corporate Governance Committee, our Board has nominated three continuing Class II Directors, Anthony J. Nocchiero, Matthew R . Bob and James M. Trimble, to stand for re-election to the Board for a three-year term expiring at our 2020 Annual Meeting, or, in each case, until the election and qualification of their respective successors or until their earlier death, retirement, resignation or removal. + +Director Nominees + +The biographies below reflect the particular experience, qualifications, attributes and skills that led the Board to conclude that each nominee should serve on the Board. + +Anthony J. Nocchiero was first elected to the Board in March 2011. Since 2010, Mr. Nocchiero has been retired. From April 2007 until September 2010, Mr. Nocchiero held the position of senior vice president and Chief Financial Officer for CF Industries, Inc. From July 2005 until March 2007, he was the Vice President and CFO for Merisant Worldwide, Inc. From January 2002 to July 2005, Mr. Nocchiero was self-employed as an advisor and private consultant. From January 1999 until December 2001, Mr. Nocchiero served as Vice President and CFO of BP Chemicals, the global petrochemical business of BP p.l.c. Prior to that, he spent twenty-four years with Amoco Corporation in various financial and management positions, including service as Amoco’s Vice President and controller from April 1998 to January 1999. Mr. Nocchiero holds a B.S. degree in chemical engineering from Washington University in St. Louis and an M.B.A. degree from the Kellogg Graduate School of Management at Northwestern University. Mr. Nocchiero has previous experience serving as a member of the board of directors of various public and private companies, including Terra Nitrogen LP, Keytrade AG, Vysis Corporation and the Chicago Chamber of Commerce. He brings to Callon a broad knowledge of the oil and gas industry, as well as extensive experience with finance and M&A related transactions, which we believe benefits the Board. In addition, Mr. Nocchiero has the accounting or financial management expertise to be considered a “financial expert” as defined and required by New York Stock Exchange (“NYSE”) rules and the Securities Exchange Act of 1934, as amended (the “Exchange Act”). + +Matthew R. Bob was elected to the Board at the 2014 Annual Meeting. Mr. Bob has been the founder and Managing Member of MB Exploration and affiliated companies since 1994. MB Exploration is engaged in the oil and gas exploration, development and consulting business. Effective August 1, 2014, Mr. Bob was appointed +6 +President of Eagle Oil and Gas. Mr. Bob also served as President of Hall Phoenix Energy LLC, a privately held oil and gas company, from 2009 to 2011. Prior to forming MB Exploration in 1994, Mr. Bob was Chief Geophysicist at Pitts Oil Company. He began his career at Union Oil Company of California where he held various geological positions. He is a member of the American Association of Petroleum Geologists, the Society of Exploration Geophysicists and the Dallas Petroleum Club, and is a registered Geoscientist in the States of Texas, Mississippi and Louisiana. He holds a B.A. in Geology from St. Louis University, an M.S. in Geology from Memphis University, and is a graduate of Harvard University's Executive Management Program. We believe Mr. Bob’s extensive experience in the oil and gas business and his technical expertise are a ben efit to the Board of Directors. + +James M. Trimble was elected to our Board at the 2014 Annual Meeting. Mr. Trimble served as CEO and President of PDC Energy, Inc. from 2011 until his resignation effective January 1, 2015, and has served on the board of PDC since 2009. Mr. Trimble was an officer of PDC in September 2013 when twelve partnerships for which PDC was the managing general partner each filed for bankruptcy in the federal bankruptcy court, Northern District of Texas, Dallas Division. From 2005 until 2010, Mr. Trimble was Managing Director of Grand Gulf Energy, Limited, a public company traded on the Australian Securities Exchange, and President and CEO of Grand Gulf’s U.S. subsidiary Grand Gulf Energy Company LLC, an exploration and development company focused primarily on drilling in mature basins in Texas, Louisiana and Oklahoma. From 2000 through 2004, Mr. Trimble was CEO of Elysium Energy and then TexCal Energy LLC, both of which were privately held oil and gas companies that he managed through workouts. Prior to this, he was Senior Vice President of Exploration and Production for Cabot Oil and Gas, a publicly traded independent energy company. Mr. Trimble was hired in July 2002 as CEO of TexCal (formerly Tri-Union Development) to manage a distressed oil and gas company through bankruptcy, and that company filed for Chapter 11 reorganization within 45 days after the date that Mr. Trimble accepted such employment. He successfully managed the company through its exit from bankruptcy in 2004. Mr. Trimble currently serves on the Board of Directors of Crestone Peak Resources LLC (a private company operation in the DJ Basin of Colorado) since December 2016 and Stone Energy Resources (NYSE:SGY) since March 2017. Mr . Trimble previously served on the boards of PDC Energy from 2009 until June 2016, C&J Energy Services LTD from March of 2016 to January 2017 to assist with it Chapter 11 process, Seisgen Exploration LLC, a small private exploration and production company operating in southern Texas, from 2008 to 2015, Grand Gulf Energy LTD from 2009 to 2012, and Blue Dolphin Energy, an independent oil and gas company with operations in the Gulf of Mexico from November 2002 until May 2006. Mr. Trimble is a Registered Professional Engineer who brings many years of oil and gas industry executive management experience to the Board, including experience as a CEO, and knowledge of current developments and best practices in the industry. + +Majority Vote Standard + +In 2015, the Board amended our Corporate Governance Guidelines to adopt a majority voting policy in uncontested director elections. The Company believes that this majority vote standard ensures accountability and the opportunity for a positive mandate from the Company’s stockholders. At any stockholder meeting for the election of directors at which a quorum is present, any nominee for director who receives a greater number of votes “withheld” from his or her election than votes “for” such election (“Majority Withheld Vote”) shall tender his or her resignation for consideration by the Nominating and Corporate Governance Committee following certification of the stockholder vote, unless the number of nominees exceeds the number of directors to be elected as of the record date for such meeting, in which event the directors shall be elected by a plurality of the votes cast. Such resignation will only be effective upon Board acceptance of such resignation after receiving the recommendation of the Nominating and Corporate Governance Committee. + +If a director nominee receives a Majority Withheld Vote, then, promptly following certification of the election results, the Nominating and Corporate Governance Committee will consider any factors it deems relevant to the best interests of the Company and our stockholders in det ermining whether to accept the director’s resignation and recommend to the Board the action to be taken with respect to the tendered resignation. Within 120 days following certification of the stockholder vote, the Board shall consider the recommendation and make a determination as to whether to accept or reject such director’s resignation and shall notify the director concerned of its decision. We will also promptly publicly disclose the Board's decision and process in a periodic or current report filed with or furnished to the SEC. + +If you hold your shares through a broker and you do not instruct the broker how to vote, your broker will not have the authority to vote your shares. Abstentions and broker non-votes will each be counted as present for purposes of determining the presence of a quorum, but will have no effect upon the outcome of the vote. All shares of common stock represented by the proxies will be voted “FOR” the election of the above director nominees, except where authority to vote in the election of directors has been withheld. Should the nominees become unable or unwilling to serve as a director at the time of the 2017 Annual Meeting, the person or persons exercising the +7 +proxies will vote for the election of substitute nominees designated by the Board, or the Board may choose to reduce the number of members of the Board to be elected at the 2017 Annual Meeting in order to eliminate the vacancy. Your proxy cannot be otherwise voted for a person who is not named in this Proxy as a candidate for director or for a greater number of persons than the number of director nominees named. The Board has no reason to believe that the nominees will be unable or unwilling to serve if elected. + +THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “ FOR ” THE THREE NOMINEES . + +8 +Directors Continuing in Office + +Biographical information for our other directors continuing in office is as follows: + +Fred L. Callon has been Chairman of our Board since May 2004 and President and C EO since January 1997. In August 2016, Joseph C. Gatto, Jr. was promoted to President, CFO and Treasurer, with Mr. Callon continuing as Chairman of the Board and CEO . Prior to January 1997, he was our President and Chief Operating Officer (“COO”) , positions he had held with us or our predecessors since 1984. He has been employed by us or our predecessors since 1976. Mr. Callon graduated from Millsaps College in 1972 and received his M.B.A. degree from the Wharton School of Finance in 1974. Following graduation and until his employment by Callon Petroleum Operating Company, he was employed by Peat, Marwick, Mitchell & Co., certified public accountants. He is son of the late Sim C. Callon, one of our co-founders, and the nephew of the late John S. Callon, the other co-founder. We believe that Mr. Callon’s strong financial background, combined with his longevity with us and many years of operational experience in the E&P industry throughout changing conditions in the market, provide him with the ability to successfully lead us forward. + +L. Richard Flury was appointed to the Board in 2004. Mr. Flury has been retired since 2001. Prior to 2001, he spent over 30 years with Amoco Corporation, and later, BP p.l.c., most recently as Chief Executive, Gas and Power and Renewables. Prior to Amoco's merger with BP in 1998, he served in various executive positions, including Chief Executive for Worldwide Exploration and Production and Executive Vice President of Amoco Corporation. Mr. Flury was a member of the Board of QEP Resources, Inc., a publicly traded oil and gas exploration company, from 2010 until 2015, and is also a director and the non-executive Chairman of Chicago Bridge and Iron Company, N.V., a publicly-traded engineering, procurement and construction company. He is a graduate of the University of Victoria (Canada). Mr. Flury has many years of prior experience with a major oil and gas company, as well as continued involvement in the industry through his other directorship positions. Mr. Flury’s vast experience and extensive knowledge of the E&P industry, together with his executive-level perspective and strategy-making abilities, strengthen the Board’s collective qualifications, skills and experience, and will continue to prove very beneficial to us. + +Larry D. McVay was appointed to the Board in October 2007. Mr. McVay has been a Managing Director of Edgewater Energy, LLC, a privately held oil and gas investment company, since 2007. From 2003 until 2006, he served as COO of TNK-BP Holding, one of the largest oil producing companies in Russia. From 2000 to 2003, he served as Technology Vice President and Vice President of Health, Safety and Environment for BP. He also led the global E&P Operations Excellence effort for improving the operating efficiency of BP’s upstream operations. Mr. McVay earned a mechanical engineering degree from Texas Tech University, where he was recognized as a Distinguished Engineer in 1995. In January 2008, Mr. McVay became a member of the board of directors of Praxair, Inc., an industrial gases company in North and South America, where he serves on the Audit Committee, the Technology, Safety and Sustainability Committee and is chairman of the Finance & Pension Committee. Mr. McVay is also a member of the board of directors of Chicago Bridge and Iron, N.V., a publicly traded engineering, procurement, and construction company, where he serves on the Audit Committee, the Strategic Initiatives Committee and is the chairman of the Corporate Governance Committee. Mr. McVay has been directly involved in nearly all aspects of the oil and gas industry, including drilling, production, finance, environmental risk, and safety. We believe that this experience and his knowledge of the oil and gas exploration and production (“E&P”) industry, particularly in the Permian Basin, provides invaluable insight in the development of our long-term strategies. + +John C. Wallace has been a member of our Board since 1994. Mr. Wallace has been retired since 2010. Mr. Wallace is a Chartered Accountant having qualified with PricewaterhouseCoopers in Canada in 1963, after which he joined Baring Brothers & Co., Limited in London, England. Prior to his retirement in December 2010, Mr. Wallace served for over twenty-five years as Chairman of Fred. Olsen Ltd., a London-based corporation that he joined in 1968 and which specializes in the business of shipping, renewable energy and property development. He received his B. Comm degree majoring in Accounting and Economics from McGill University in 1959. In November 2004, he successfully completed the International Uniform Certified Public Accountant Qualification Examination and has received a CPA Certificate from the State of Illinois. Mr. Wallace is also retired from the board of directors of Ganger Rolf ASA and Bonheur ASA, Oslo, both publicly-traded shipping companies with interests in offshore energy services and renewable energy. In May 2012, Mr. Wallace was appointed as a non-executive director to the board of directors of Siem Offshore Inc., a publicly traded shipping company in Norway with a fleet of vessels active in the offshore energy sector, and for which he is a member of the Audit Committee. As a result of his association with Fred Olsen, Ltd. and various associated or related companies, Mr. Wallace has extensive financial and accounting experience in not only the oil and gas industry, but in a number of other related +9 +industries qualifying him as “financial expert.” We believe that this experience and his unique perspective of the risks and rewards in the oil and gas industry will continue to be beneficial to us. + +Michael L. Finch was elected to the Board at the 2015 Annual Meeting. He served as CFO and a member of the Board of Directors of Stone Energy Corporation from its initial public offering in 1993 until his resignation in 1999. He was affiliated with Stone in a variety of capacities for nineteen years. Prior to his service with Stone, he was employed by Arthur Andersen & Co. in New Orleans, Louisiana from 1976 to 1980. Mr. Finch has been a private investor since 1999. He was licensed as a Certified Public Accountant in 1978 (inactive status at present), and received a Bachelor of Science in Accounting from the University of South Alabama in 1976. Mr. Finch was an independent director of Petroquest Energy, Inc. from 2003 to 2016, where he served as chairman of the Audit Committee, as a member of the Compensation Committee, and as a member of the Nominating and Corporate Governance Committee. Mr. Finch has extensive financial and operating experience within our industry, and his background, prior experiences, professional credentials and expertise qualify him as a director and “financial expert.” + +All of our Directors are United States citizens, except Mr. Wallace, who is a citizen of Canada, and Mr. Flury, who holds both U.S. and Canadian citizenship. + + +10 +CORPORATE GOVERNANCE + +Board of Director Structure and Responsibilities + +General. Our Board is responsible for determining the ultimate direction of our business, determining the principles of our business strategy and policies, and promoting the long-term interests of the Company. The Board of Directors possesses and exercises oversight authority over our business but, subject to our governing documents and applicable law, delegates day-to-day management of the Company to our CEO and our executive management . The Board generally fulfills its responsibilities through regular quarterly meetings to review significant developments affecting us and to act on matters requiring Board approval. Between regularly scheduled meetings, the Board may also hold special meetings, execute unanimous written consents, and participate in telephone conference calls when an important matter requires Board action. During 2016 , our Board met formally nine times and transacted business on twenty-four occasions during the year by unanimous written consent . All of our directors attended each of the Board meetings either in person or by telephone. In addition, to promote open discussion, the non-employee directors meet in executive session without management following each quarterly board meeting. The chairperson of such executive sessions is the chairperson of the Nominating and Corporate Governance Committee unless, at the first executive session held in each fiscal year, the independent directors select a different independent director to serve as the chairperson for all executive sessions held during that fiscal year. L. Richard Flury, Chairman of the Compensation Committee, was selected to preside over all executive sessions during 2016 . It is the policy of the Board that, to the extent possible, all directors attend the annual meeting. All then current directors attended the 2016 annual meeting. + +The Board, in consultation with the Nominating and Governance Committee, has determined that a classified board structure continues to be appropriate for us, particularly in an industry where long-term strategic planning is critical for the successful exploration, development and production of oil and natural gas resources. Our future success depends in significant part on the in-depth knowledge of our business and operations by our directors. We believe that a classified board promotes stability, continuity and experience among our directors, which is essential to developing and implementing long-term strategies, while resisting the pressure to focus on short-term results at the expense of enhancing long-term value and success. + +Director Independence. To minimize potential conflicts, it is a policy of the Board that a majority of the non-employee members of the Board be independent. Currently the only member of our Board who is not independent is our Chairman and CEO . In accordance with the standards for companies listed on the NYSE and the rules and regulations promulgated by the SEC, as well as our Corporate Governance Guidelines, the Board considers a director to be independent if it has affirmatively determined that the director has no material relationship with the Company that could compromise his ability to exercise independent judgment in carrying out his responsibilities. The Board makes independence determinations when it approves director nominees for election at the annual meeting and also whenever a new director joins the Board between annual meetings. The Board reviewed the independence of its directors and nominees in accordance with the standards described above, and affirmatively determined that each of its directors and nominees (other than Mr. Callon) is independent. The Board will evaluate the independence of each non-employee director on an ongoing basis. + +Board Leadership Structure. One of the Board’s key responsibilities is determining the appropriate leadership structure for the Board, which helps ensure its effective and independent oversight of management on behalf of our stockholders. Our Board believes that there is no one generally accepted approach to providing board leadership and that given the dynamic and competitive environment in which we operate, the optimal board leadership structure may vary as circumstances warrant. Accordingly, the Board has no policy mandating the separation or combination of the roles of Chairman of the Board and CEO, but periodically discusses and considers the structure as circumstances change. As such, the Board believes that it is in the best position to evaluate the needs of the Company and to determine how best to organize the Company’s leadership structure to meet those needs. + +At the present time, the Board believes that the most effective leadership structure for the Company is for Mr. Fred L. Callon to serve as both Chairman of the Board and CEO. The Board believes this current structure best serves the interests of our stockholders and is efficient and cost effective for the size of our Company within the independent E&P industry. The Board believes this model promotes the execution of our long-term corporate strategy, more effective implementation of strategic initiatives, and fosters clearer accountability for the Company’s success or failure. + +The Board is currently comprised of eight directors, of which seven are independent. Independent directors and management generally have different perspectives and roles in strategy development. Our independent directors +11 +have backgrounds in the oil and gas industry which complement the CEO’s comprehensive, company-specific perspective. As the director having primary responsibility for managing our daily operations and identifying strategic priorities, the CEO is best positioned to lead the Board through reviews of key business and strategy decisions. This dynamic effectively promotes the opportunity for a successful blend of our independent directors’ perspectives and oversight responsibilities and facilitates information flow and communication between senior management and the Board, which are both essential to effective governance. The Board’s structure does not currently provide for a lead independent director. The Board has four standing committees, each of which is comprised entirely of independent directors. Accordingly, the Compensation Committee maintains its independence to both objectively and subjectively evaluate Mr. Callon’s performance when reviewing or modifying his compensation. The Board believes that this commitment to committee independence counterbalances any perceived risk posed by having Mr. Callon serve as the Chairman and CEO. + +The role of our Chairman is to oversee and ensure Board effectiveness, and in his capacity as Chairman, Mr. Callon has the following responsibilities: + +· +schedules all meetings of the Board; +· +establishes Board meeting agendas and ensure critical issues are included; +· +chairs meetings of the Board and the Annual Meeting of Stockholders; +· +ensures that the flow of information provided to the Board is timely, complete, and accurate; +· +communicates with all directors on key issues and concerns outside of Board meetings; +· +represents us to and interacts with external stockholders; and +· +assists the Board and executive officers in assuring compliance with and implementation of our governance principles. + +Standing Committees of the Board of Directors + +In order to facilitate the various functions of the Board, the Board currently has four standing committees, each of which is comprised solely of independent directors, including the: + +· +Audit Committee; +· +Compensation Committee; +· +Nominating and Corporate Governance Committee; and +· +Strategic Planning and Reserves Committee. + +Each committee, discussed below in greater detail, has a written charter that has been adopted by the Board, which sets forth guidance on the role of the chairman of such committee and the roles and responsibilities of the committee as a whole. + +Audit Committee Functions and Responsibilities + +Purpose: The principal function of the Audit Committee is to assist the Board in overseeing the areas of financial reporting and accounting integrity. + +Members: The Audit Committee is currently comprised of the following independent Directors, with two Directors deemed by the Board to be financial experts, as defined and required by the NYSE rules and the Exchange Act (“Financial Expert”): + +· +John C. Wallace (Chairman and Financial Expert) +· +L. Richard Flury +· +Larry D. McVay +· +Anthony J. Nocchiero (Financial Expert) + +The Board has determined that all members meet the independence requirements of the SEC and NYSE rules and the financial literacy requirements of the NYSE. Members of the Audit Committee may not simultaneously serve on the audit committee of more than three other public companies. + +Meetings: The committee met five times during 201 6 . All members of the Audit Committee attended each meeting. + +Responsibilities: Pursuant to its charter, our Audit Committee functions in an oversight role and has the following purposes: + +12 +· +overseeing the quality, integrity and reliability of the financial statements and other financial information we provide to any governmental body or the public; +· +overseeing our compliance with legal and regulatory requirements; +· +selecting and hiring (subject to ratification by our stockholders) the independent public accounting firm; +· +overseeing the qualifications, independence and performance of the independent auditor; +· +overseeing the effectiveness and performance of our internal audit function; +· +overseeing our internal control function regarding finance, accounting, legal compliance and ethics; +· +establishing and overseeing procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls or audit matters, including the confidential, anonymous submission of concerns regarding such matters; +· +discussing matters related to risk, risk controls and compliance, including the security of information technology systems and procedures ; +· +producing the Audit Committee Report for inclusion in our annual proxy s tatement ; and +· +performing such other functions our Board may assign to the Audit Committee from time to time. + +The Audit Committee oversees our accounting and auditing procedures and financial reporting practices, and is responsible for the engagement of and oversight of all audit work conducted by our independent registered public accounting firm. The Audit Committee meets periodically, generally quarterly, with our executive and financial management teams, internal auditor and our independent registered public accounting firm to review our financial information and systems of internal controls. The independent registered public accounting firm reports directly to the Audit Committee and, if requested, meets with the Audit Committee in executive session without management representatives present. The Audit Committee has the authority to investigate any matters brought to its attention and to retain outside legal, accounting or other consultants if deemed necessary. + +The Audit Committee is required to pre-approve all audit, audit-related and non-audit services provided by the independent registered public accounting firm exceeding $25,000 . These services may include audit services, audit-related services, tax services and other services. The Audit Committee approved all of the fees described in Proposal 4 . + +Relationship with Independent Registered Public Accounting Firm + +Management is responsible for establishing and maintaining internal controls over financial reporting and for assessing the effectiveness of those controls. The independent registered public accounting firm is responsible for performing independent audits of our consolidated financial statements and internal controls over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (“PCAOB”) (United States) and issuing reports thereon. The Audit Committee’s responsibility is to monitor and oversee these processes. + +Ernst & Young LLP, an independent registered public accounting firm, served as our independent registered public accounting firm during 2014 and 2015. Following the shift in our asset base and operational focus stemming from our 2013 exit from the Gulf of Mexico, the Audit Committee evaluated other independent accounting firms, including Ernst & Young LLP, with the ability and expertise to serve as our independent registered public accounting firm. Following this review, the Committee appointed Grant Thornton LLP to serve as our independent registered public accounting firm for the year ended December 31, 2016 . + +Compensation Committee Functions and Responsibilities + +Purpose: The purpose of the Compensation Committee is to establish our compensation policies and oversee the administration of our compensation program. + +Members: Consistent with the listing requirements of the NYSE, the Compensation Committee is composed entirely of independent members of our Board, as each member meets the independence requirements set by the NYSE and applicable federal securities laws. The Compensation Committee is currently comprised of the following independent Directors: + +· +L. Richard Flury (Chairman) +· +Larry. D. McVay +· +John C. Wallace +· +Anthony J. Nocchiero +· +James M. Trimble +13 + +Meetings: The Compensation Committee met four times during 201 6 . All members of the Compensation Committee attended each meeting. + +Responsibilities: Pursuant to its charter, our Compensation Committee’s duties include the responsibility to: + +· +evaluate the performance of and establish the compensation of the CEO; +· +review with the CEO the compensation for our other executive officers; +· +establish and review our overall executive compensation philosophy and approve changes to our compensation program; +· +review incentive compensation arrangements to confirm that executive compensation does not encourage unnecessary risk taking; +· +review matters relating to management succession; +· +administer our long-term incentive plans; +· +review and discuss the CD&A with management; +· +review and recommend to the Board compensation for non-employee Directors; +· +retain and oversee compensation consultants, including the independence of the consultants; +· +review and approve performance criteria and results for bonus and performance-based equity awards for senior executive officers and approve awards to those officers; and +· +perform such other functions as our Board may assign to the Compensation Committee from time to time. + +The Committee retained the services of Meridian Compensation Partners LLC, an independent compensation consulting firm, to assist in the annual review of market and industry data to assess our competitive position with respect to each element of total compensation and to ensure the attraction, retention and appropriate reward to our CEO and other executive officers. + +Compensation Committee Interlocks and Insider Participation: None of the members of our Compensation Committee is or has been an officer or employee of Callon. In addition, during the last fiscal year, none of our executive officers served as a member of the board or the compensation committee (or other board committee performing similar functions or, in the absence of any such committee, the entire board) of any entity in which a Callon Board or Compensation Committee member is an executive officer . + +Nominating and Corporate Governance Committee Functions and Responsibilities + +Purpose: The purpose of the Nominating and Corporate Governance Committee is to identify and recommend qualified candidates to the Board for nomination as members of the Board, assess Director, Board and committee effectiveness, develop and implement our Corporate Governance Guidelines and otherwise take a leadership role in shaping the corporate governance of our Company. + +Members: Each member of the Committee meets the independence requirements of the NYSE and applicable federal securities laws. The Nominating and Corporate Governance Committee is currently comprised of the following independent Directors: + +· +Anthony J. Nocchiero (Chairman) +· +L. Richard Flury +· +Larry D. McVay +· +John C. Wallace +· +Matthew R. Bob +· +Michael L. Finch + +Meetings: The Nominating and Corporate Governance Committee met two times during 2016. All members of the Committee attended each meeting. + +Responsibilities: Pursuant to its charter, the Nominating and Corporate Governance Committee’s duties include the responsibility to assist the Board in: + +· +evaluating a set of specific criteria for Board membership and identifying individuals qualified to become Board members, recommending nominees for election at the next annual meeting of stockholders, reviewing the suitability for continued service as a Director of each Board member, or otherwise filling any vacancies; +14 +· +assessing the size and composition of the Board and its committees and recommending to the Board the members and chair for each Board committee; +· +advising the Board and making recommendations regarding appropriate corporate governance practices and assisting the Board in implementing those practices, including periodically reviewing the adequacy of our C orporate Governance Guidelines, our Code of Business Conduct and Ethics, and the various Board committee charters, and making recommendations for changes thereto to the Board; +· +overseeing the annual self-evaluation of the performance of the Board and its committees; +· +overseeing and approving plans for management continuity and succession; +· +recommending to the Board a successor to the CEO when a vacancy occurs; and +· +performing other such functions as the Board may assign to the Nominating and Corporate Governance Committee from time to time. + +Director Identification and Selection + +The Nominating and Corporate Governance Committee has established criteria it considers as guidelines in considering nominations to our Board and evaluates potential nominees based on the contribution such nominee’s background and skills could have upon achieving the goal of a well-rounded, diverse Board that functions collegially as a unit. While not an exhaustive list, key criteria include: + +· +level and diversity of experience and knowledge with experience in areas relevant to the strategy and operations of the Company, particularly in the oil and gas industry and complex business and financial dealings ; +· +personal characteristics, including such matters as integrity, education, absence of potential conflicts of interest with us or our operations, and the availability and willingness to devote sufficient time to the duties required of our Directors; +· +experience in corporate management, such as serving as an officer or former officer of a publicly held company, particularly within the industry and relevant industries in which we operate; +· +experience as a board member of another publicly held company, particularly within the industry and relevant industries in which we operate; +· +a candidate’s ability to work with our other Directors and executives in accomplishing our objectives and representing stockholders, and the contribution such nominee’s competence, background and skills could have upon the overall functioning, collaborative spirit and chemistry of the current Board; and +· +practical and mature business judgment. + +The Nominating and Corporate Governance Committee and the Board may also consider other qualifications and attributes that they believe are appropriate in evaluating the ability of an individual to serve as a member of the Board. The Nominating and Corporate Governance Committee’s goal is to assemble a Board that brings to us a variety of perspectives and skills derived from high quality business and professional experience, while also having the requisite business and relevant oil and gas industry experience to perform its oversight role satisfactorily for our stockholders. In making its determinations, the Committee evaluates each individual in the context of the Board as a whole, with the objective of assembling a group that can best represent stockholder interests through the active, objective and constructive participation in meetings and the strategic decision-making processes. Although the Nominating and Corporate Governance Committee has no formal diversity policy, the Board believes that diversity with respect to viewpoint, skills and experience should be considered as part of the overall assessment of the Board’s functioning and needs, and the Director nomination process specifically includes disclosure of the diversity provided by each candidate. In addition to qualities of intellect, integrity and judgment, it takes into consideration diversity of personal and professional background, executive management experience, breadth of experience in the oil and natural gas E&P industry, finance, accounting, technology or law. The Nominating and Corporate Governance Committee makes its determination in the context of an assessment of the perceived needs of the Board at that point in time. + +In accordance with our Certificate of Incorporation, any stockholder may nominate a person for election to the Board upon delivery of written notice to us of such nomination. Such notice must be sent as provided in our Certificate on or before the deadline set forth in our Certificate, and must otherwise comply with the procedures set forth in our Certificate of Incorporation. For nominations at the 2017 Annual Meeting, the Board will consider individuals identified by stockholders on the same basis as nominees identified from other sources. A submission recommending a nominee should include: + +· +sufficient biographical information to allow the Nominating and Corporate Governance Committee to evaluate the qualifications of a potential nominee in light of the Director nomination procedures and criteria +15 +and any other information that would be required to be disclosed in solicitations of proxies for the election of directors; +· +an indication as to whether the proposed nominee will meet the requirements for independence under NYSE and SEC guidelines; +· +a description of all direct and indirect compensation and other material monetary agreements, arrangements and understandings during the past three years, and any other material relationships, between or among the nominating stockholder or beneficial owner and each proposed nominee; +· +a completed and signed questionnaire, representation and agreement, pursuant to the Company’s Bylaws, with respect to each nominee for election or re-election to the Board ; and +· +the proposed nominee’s written consent to serve if nominated and elected. + +In making its nominations, the Nominating and Corporate Governance Committee identifies nominees by first evaluating the current members of the Board willing to continue their service and any potential need to expand the Board to include additional expertise. Current members with proven service and a record of quality contribution to the Board and the qualifications and skills that are consistent with the Committee’s criteria for Board service are re-nominated. As to vacancies, the Committee will generally poll the Board members and members of management for recommendations. The Committee may also review the composition and qualification of the boards of directors of our competitors, and may seek input from industry experts or analysts. The Committee may in the future choose to engage third-party search firms in situations where particular qualifications are required or where existing contacts are not sufficient to identify an appropriate candidate for membership in the Board. + +Strategic Planning and Reserves Committee Functions and Responsibilities + +Purpose: The purpose of the Strategic Planning and Reserves Committee is to manage and oversee the Board’s participation in the development of the Company’s strategic plan, and assist management and the Board with its oversight of the integrity of the determination of our oil and natural gas reserve estimates. + +Members: The Strategic Planning and Reserves Committee shall consist of no fewer than three members of the Board, and is currently comprised of the following independent Directors: + +· +Larry D. McVay (Chairman) +· +L. Richard Flury +· +John C. Wallace +· +Anthony J. Nocchiero +· +Matthew R. Bob +· +James M. Trimble + +Meetings: The Strategic Planning and Reserves Committee met three times during 2016. All members of the Committee attended each meeting during 2016. This Committee meets periodically during the year, generally prior to the scheduled quarterly Board meetings, to review the progress of our capital expenditure budget and to evaluate recent trends in the independent oil and gas industry that may have an impact on our current business strategy for the remainder of the year. + +Responsibilities: The Strategic Planning and Reserves Committee was created to oversee the responsibilities of the Board relating to strategic planning, including: + +· +organizing and overseeing the Board’s participation in the development of a strategic plan, including, but not limited to, the risk assessment and management process; +· +monitoring the progress of the implementation of the strategic plan, and advising the Board if additional Board action appears to be needed; +· +assuring that management is addressing the personnel requirements for the successful implementation of the strategic plan; +· +assisting management and the Board with its oversight of matters regarding our reserve engineering reports and reserve engineers, including: (i) the integrity of our reserve reports, (ii) determinations regarding the qualifications and independence of our independent reserve engineers, (iii) the performance of our independent reserve engineers, and (iv) our compliance with certain legal and regulatory requirements relating to reserve reporting ; and +· +performing other such functions as the Board may assign to the Strategic Planning and Reserves Committee from time to time. + + +16 +Corporate Governance Matters + +Corporate Governance Principles + +The Board believes that sound corporate governance practices and policies provide an important framework to assist it in fulfilling its duty to stockholders. The framework for our corporate governance can be found in our governance documents, which include: + +· +Corporate Governance Guidelines; +· +a Code of Business Conduct and Ethics; and +· +Charters for the Audit, Compensation, Nominating and Corporate Governance, and Strategic Planning and Reserves Committees. + +Each of these documents is available on our website www.callon.com, under the “ About Callon – Governance ” menu. Stockholders may obtain a printed copy, free of charge, by sending a written request to our Corporate Secretary at our principal executive office in Natchez, Mississippi. We also promptly post on our website any amendments to these documents and any waivers from the Code of Business Conduct and Ethics for our Directors and principal executive, financial and accounting officers. + +Ethics + +Our Code of Business Conduct and Ethics sets forth the policies and expectations applicable to every Director, officer and employee. The Code addresses a number of topics, including conflicts of interest, relationships with others, corporate payments, disclosure policy, compliance with laws, corporate opportunities and the protection and proper use of our assets. The Code meets the NYSE’s requirements for a code of business conduct and ethics, as well as the SEC’s definition of a code of ethics applicable to our senior officers. Neither the Board nor any Board committee has eve r granted a waiver of the Code. + +Board Risk Oversight + +As an independent E&P company, we face a number of risks. Assessing and managing material risk is the responsibility of our management team , while our Board, as a whole and through its committees, generally oversees risk management and our long-term strategic direction, ensuring that risks undertaken by the Company are consistent with the Board’s risk tolerance. Our Board leadership structure and our practice of a high degree of interaction between our directors and members of senior management facilitate this oversight function. As indicated above, we believe that combining the roles of Chairman of the Board and CEO also enhances the Board’s administration of its risk oversight function because, through his role as Chairman of the Board, and based on his experiences with the daily management of our business as our CEO and previously as our President, Mr. Callon provides the Board with valuable insight into our risk profile and the options to mitigate and address those risks. In addition, our executive officers regularly attend the Board meetings and are available to address any questions or concerns raised by the Board on risk management-related and any other matters. Other members of our management team periodically attend the Board meetings or are otherwise available to confer with the Board to the extent their expertise is required to address risk management matters. The information flow and communication throughout the year between our Board and senior management regarding long-term strategic planning and short-term operational reporting includes matters of material risk inherent in our business of exploring for and producing oil and natural gas. The Board realizes, however, that it is not possible or prudent to eliminate all risk and that appropriate risk-taking is essential in order to achieve our near and longer-term objectives. + +While the Board is ultimately responsible for risk oversight, the Board exercises additional risk oversight responsibilities through its committees, which are comprised solely of independent directors. Each such committee has primary risk oversight responsibility with respect to all matters within the scope of its duties as contemplated by its charter and as described below. + +· +The Audit Committee, among other duties, is charged with overseeing material financial risk exposures in the areas of financial reporting, internal controls , compliance with legal and regulatory requirements and cybersecurity risks . This Committee also oversees responses to any alleged violations of our policies made by whistleblowers. + +17 +· +The Compensation Committee reviews and attempts to mitigate associated risks that may result from our compensation policies in order that they do not encourage unnecessary or excessive risk taking by management. + +· +The Nominating and Corporate Governance Committee focuses on issues relating to Board and Board committee composition and assists the Board in fulfilling its oversight responsibilities with respect to the management of risks associated with board organization, membership , independence and structure, succession planning for our Directors and executive officers, and our corporate governance principles . + +· +The Strategic Planning and Reserves Committee organizes and oversees the Board’s participation in the risk assessment and management process as it relates to the development and implementation of our strategic plan and the integrity of our reserve estimation reporting process and related disclosures. + +Communication with Directors + +Stockholders or other interested parties may communicate with the full Board, independent Directors as a group, or individual Directors, by sending a letter in care of the Corporate Secretary at our principal executive office, P.O. Box 1287, Natchez, MS 39121. Our Corporate Secretary has the authority to discard any solicitations, job inquiries, advertisements, surveys or other inappropriate communications, but will forward any other mail to the named Director or group of Directors. Our Corporate Secretary will forward approved mail addressed to the full Board to Mr. Callon as Chairman of the Board who, if appropriate, will share the item with the full Board. + +18 +Executive Officers + +The following table sets forth the names, ages and positions of our current executive officers: + + +Name +Age +Positions Held +Fred L. Callon +67 +Director, Chairman of the Board and CEO +Gary A. Newberry +62 +Senior Vice President and COO +Joseph C. Gatto, Jr. +46 +President, CFO and Treasurer +Jerry A. Weant +58 +Vice President, Land +Mitzi P. Conn +47 +Vice President and Chief Accounting Officer (“CAO”) + +The following is a brief description of the background and principal occupation of each executive officer: + +Fred L. Callon , Chairman of the Board of Directors and CEO . Please see above for the biography of Mr. Callon. + +Gary A. Newberry joined us in April 2010 as Vice President – Production and Development. In September 2010, Mr. Newberry was promoted to Senior Vice President – Operations , and in August 2016 he was promoted to COO . After graduation, he joined Marathon Oil Company as a Production and Drilling Engineer working in Alaska, the Gulf of Mexico, and the Rockies. He held various supervisory and management roles of increasing responsibility over production and drilling operations in the Mid-Continent, Alaska and the Permian Basin. As a Business Unit Leader, Mr. Newberry was responsible for all upstream business activity in Oklahoma, Alaska, and the Rockies and served as Marathon’s Worldwide Operations Manager. Mr. Newberry retired from Marathon Oil Company after 33 years of service. Mr. Newberry graduated from Marietta College in 1977 with a B.S. degree in Petroleum Engineering. + +Joseph C. Gatto, Jr. joined us in April 2012 as Senior Vice President, Corporate Finance, with responsibility for our capital markets and strategic planning functions, in addition to investor relations activities. Effective March 31, 2014, the Board appointed Mr. Gatto as Senior Vice President, CFO and Treasurer , and in August 2016 he was promoted to President, while retaining the roles of CFO and Treasurer. Prior to joining Callon, Mr. Gatto was a Managing Director in the energy investment banking groups of Merrill Lynch & Co. and Barclays Capital from July 1997 until February 2009, with involvement in all phases of M&A and capital raising transactions for his clients. In February 2009, he founded MarchWire Capital, LLC, a financial advisory and strategic consulting firm, and subsequently served as Head of Structuring and Execution with Merrill Lynch Commodities, Inc. from January 2010 until November 2011. Mr. Gatto graduated from Cornell University with a BS degree in 1992 and The Wharton School of the University of Pennsylvania with an MBA in 1997. + +Jerry A. Weant joined us in September 2013 as Vice President, Land. Mr. Weant joined Callon from Pioneer Natural Resources, an independent oil and gas company, where he was focused on Midland Basin operations, acting as a liaison with Permian Basin asset teams and coordinating internal efforts for the assessment of horizontal drilling programs. Mr. Weant spent the first 27 years of his career working as a landman in Midland, Texas, including working for Texaco, Inc. Pogo Producing, Inc., as well as other independents. He holds a Bachelor of Business Administration/Petroleum Land Management from the University of Texas and is a Certified Professional Landman and a member of the American Association of Professional Landmen and the Permian Basin Landman's Association. + +Mitzi P. Conn joined us in June 1993 and has been our Corporate Controller since May 2007. Effective March 31, 2014, the Board also appointed Mrs. Conn as our Principal Accounting Officer , and in August 2016 she was promoted to Vice President and CAO . Prior to May 2007, she served as Assistant Controller since May 2004 and has held various other positions in our finance and accounting departments. Prior thereto, she was a general accountant for Graham Resources, Inc. Mrs. Conn received her B.S. degree in accounting from Southeastern Louisiana University in 1990 and is a member of the American Institute of Certified Public Accountants and the Mississippi Society of Certified Public Accountants. +19 +PROPOSAL 2 + +APPROVE, ON AN ADVISORY BASIS, THE COMPE NSATION +OF THE COMPANY’S NAMED EXECUTIVE OFFICERS +In accordance with the requirements of Section 14A of the Exchange Act and the related rules of the SEC, we are including in this Proxy Statement a separate proposal, which gives our stockholders the opportunity to approve or not approve the compensation of our NEOs by voting “FOR” or “AGAINST” the resolution below (commonly referred to as “Say-on-Pay”). While our Board and Compensation Committee intend to carefully consider the stockholder vote resulting from the proposal, the final vote will not be binding on us and is advisory in nature. + +The Board recognizes that executive compensation is an important matter for our stockholders. The Compensation Committee is tasked with the implementation of our executive compensation philosophy and, as described in detail in the CD&A below, the design of our executive compensation programs. Our executive compensation program is designed to attract, motivate and retain a highly qualified executive management team and to appropriately reward our executive officers for their contribution to the achievement of our short-term and long-term business goals and the creation and enhancement of stockholder value. + +As described in the CD&A, we believe our compensation program is effective, appropriate and strongly aligned with the long-term interests of our stockholders and that the total compensation package provided to the NEOs is reasonable and not excessive. As you consider this Proposal 2, we urge you to read the CD&A for additional details on executive compensation. Further, in determining whether to approve this proposal, we believe that stockholders should also consider the following: + +· +Independent Compensation Committee . Executive compensation is reviewed and established by a Compensation Committee of the Board consisting solely of independent Directors. The Compensation Committee meets in executive session, without executive officers present, in determining annual compensation. The Compensation Committee receives data, analysis and input from a compensation consultant that is independent of management and free of conflicts of interest with us. +· +Performance-Based Incentive Compensation . Our executive compensation program is designed to attract, motivate and retain individuals with the skills required to formulate and drive our strategic direction and achieve the annual and long-term performance necessary to create stockholder value. The program also seeks to align executive compensation with stockholder value on an annual and long-term basis through a combination of base pay, annual incentives and long-term incentives. +· +No Tax Gross-ups . Executive officers are not eligible for a tax related gross-up on any element of current and future compensation. +· +“Double Trigger” Severance Agreements with Fixed Term . Change in control severance agreements with our executive officers require an actual or constructive termination of employment before benefits are paid following any change in control. +· +Long-Term Incentive Plans . Our long-term incentive plans generally include three-year minimum vesting periods for time-based awards, and prohibit repricing or exchange of outstanding option awards. +· +Stock Ownership Guidelines . Each of the NEOs has been granted equity to provide a stake in our long-term success. The purpose of the ownership requirements is to further our goal of increasing stockholder value by further aligning the interests of our NEOs with the interests of our stockholders. We believe that this “tone at the top” guides our other officers and management personnel to obtain and maintain meaningful ownership stakes in Callon. +· +Hedging Policy . Our directors and executive officers are prohibited from entering into transactions in puts, calls and other derivative securities with respect to our securities on an exchange or in any other organized market as well as short sales of our securities. These types of transactions can hedge against decreases in our stock price and encourage risky behavior. We believe these activities are often perceived as involving insider trading and may focus the holder’s attention on our short-term performance rather than our long-term objectives. + +In light of the above, we believe that the compensation of our NEOs for 201 6 was appropriate and reasonable, and that our compensation programs and practices are sound and in the best interests of us and our stockholders. We therefore respectfully request that stockholders vote on the following resolution: + +20 +“RESOLVED, that the compensation paid to Callon’s Named Executive Officers, as disclosed in Callon’s 201 7 Proxy Statement (including the Compensation Discussion and Analysis, the compensation tables and related footnotes and narrative disclosures), is hereby approved.” + +The vote on this resolution is not intended to address any specific element of compensation, but rather the overall compensation of our NEOs and our compensation-related policies and practices as described in this Proxy Statement . As noted above, the vote solicited by this proposal is advisory in nature and its outcome will not be binding on the Company, the Board or the Compensation Committee, nor will the outcome of the vote require the Board or the Compensation Committee to take any action. Moreover, the outcome of the vote will not be construed as overruling any decision of the Board or the Compensation Committee, or creating or implying any additional fiduciary duty of the Board or the Compensation Committee. However, the Board and the Compensation Committee will carefully consider the outcome of the vote when considering future executive compensation arrangements. For a review of the results of the previous years’ vote, which reflects overwhelming validation from our stockholders of our pay philosophy and approach, please see the Role of Stockholder Say-on-Pay Advisory Vote summary in the CD&A section. + +Notwithstanding the advisory nature of this vote, the foregoing resolution will be deemed approved, on an advisory basis, with the affirmative vote of the majority of the votes cast on the proposal at the Annual Meeting. If you hold your shares through a broker and you do not instruct the broker how to vote, your broker will not have the authority to vote your shares. Abstentions will have the effect as a vote cast against the proposal. Broker non-votes will not be counted as shares present and entitled to vote, and so will have no effect upon the outcome of the vote. + +THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “ FOR ” APPROVAL OF THIS RESOLUTION . + + +21 +PROPOSAL 3 + +APPROVE, ON AN ADVISORY BASIS, THE FREQUENCY OF FUTURE ADVISORY VOTES ON EXECUTIVE COMPENSATION + +This proposal gives stockholders the opportunity to indicate how frequently we should seek an advisory vote on our executive compensation (commonly referred to as “Say-on-Frequency”), such as Proposal 2 above. By voting on this Proposal 3, stockholders can indicate whether they would prefer an advisory vote on executive compensation every year, every two years or every three years, or abstain on this matter. In 2011, stockholders voted to include the say-on-pay proposal at every annual meeting. As a result, we have submitted our say-on-pay proposal to our stockholders at every subsequent annual meeting since 2011. As required by SEC rules, this year we are resubmitting a proposal on the Say-on-Frequency. + +After careful consideration, the Board has determined that continuing to hold an advisory vote on executive compensation every year remains the most appropriate policy for us at this time. An annual, non-binding advisory vote on executive compensation will allow our stockholders to provide input on our executive compensation philosophy, policies and practices, as disclosed in the proxy statement every year. Our Board of Directors believes that an annual vote enables our Compensation Committee to evaluate any changes in stockholders sentiment as it conducts its regular compensation review. + +Although the advisory vote is non-binding, our Board will review the results of the vote and, consistent with our record of stockholder engagement, will consider stockholder preference as expressed through the vote. + +THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE OPTION “ONE YEAR” AS THE FREQUENCY FOR FUTURE ADVISORY VOTES ON THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS. + +22 +PROPOSAL 4 + +RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM, GRANT THORNTON LLP, FOR 201 7 + +The Audit Committee has appointed Grant Thornton LLP, as the independent registered public accounting firm, to audit our consolidated financial statements for the year ending December 31, 2017 . We are asking stockholders to ratify this appointment. Grant Thornton LLP has served as the Company’s independent registered public accounting firm since being ap pointed effective as of March 3, 2016. + +In 2015, t he Audit Committee conducted a competitive process to review the appointment of our independent registered public accounting firm for the year ending December 31, 201 6 . The process included consideration of audit firms, in addition to Ernst & Young LLP, which was the Company’s independent registered public accounting firm for the year ended December 31, 2015. The decision to evaluate more than one potential audit firm was made in connection with the Audit Committee’s annual review of the independent registered public accounting firm. Upon completion of this process, the Audit Committee informed Ernst & Young LLP that they would no longer serve as the Company’s independent registered public accounting firm no later than the date of the filing of the Company’s Form 10-K for the 2015 fiscal yea r and appointed Grant Thornton LLP as the Company’s registered public accounting firm for the year ending December 31, 201 6 . + +Ernst & Young LLP’s audit report on the Company’s consolidated financial statements for the year ended December 31, 2015 did not contain an adverse opinion or disclaimer of opinion, nor was it qualified or modified as to uncertainty, audit scope or accounting principles. During the years ended December 31, 2014 and 2015 and through March 2, 2016, there were no (i) disagreements (as defined in Item 304(a)(1)(iv) of Regulation S-K) between the Company and Ernst & Young LLP on any matter of accounting principle or practice, financial statement disclosure, or auditing scope or procedure which, if not resolved to Ernst & Young’s satisfaction, would have caused it to make reference to the matter in its report on the Company’s consolidated financial statements for the relevant year. + +Fees + +The following table sets forth the fee s incurred by us for services performed by Ernst & Young LLP in the fiscal year 2015 a nd for services performed by Grant Thornton LLP in the fiscal year 2016 : + + +Fee Category +2015 +2016 +Audit (a) +$ +765,117 +$ +904,687 +Tax (b) +32,700 +- +Total +$ +797,817 +$ +904,687 + +(a) +Audit fees consist of the aggregate fees billed for professional services related to the audit and quarterly reviews of our financial statements and for services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements. +(b) +Tax fees consist of the aggregate fees billed for professional services rendered for tax compliance (including filing state and federal tax returns), tax advice and tax planning. Tax fees do not include fees for services rendered in connection with the audit. + +Pre-Approval Policy . The Audit Committee pre-approves all audit and permissible non-audit services (including the fees and terms thereof) to be performed for us by our independent registered public accounting firm, as required by applicable law or listing standards and subject to the terms of the audit and non-audit services pre-approval policy in accordance with the Audit Committee charter. The Committee may delegate authority to one or more of its members when appropriate, including the authority to grant pre-approvals of audit and permitted non-audit services, provided that decisions of any such member to grant pre-approvals are consistent with the terms of the Pre-Approval Policy and are presented to the full Committee at its next scheduled meeting. + +Audit Committee Report + +Acting pursuant to its Charter, the Audit Committee reviewed and discussed our audited financial statements for the year ended December 31, 2016 , with management and Grant Thornton LLP, and recommended to our Board +23 +that our audited consolidated financial statements be included in our Annual Report on Form 10-K for the year ended December 31, 2016 , for filing with the SEC. This recommendation was based on: + +· +the Audit Committee’s review of the audited financial statements; +· +discussion of the financial statements with management; +· +discussion with our independent registered public accounting firm, Grant Thornton LLP, of the matters required to be discussed by auditing standards generally accepted in the United States of America, including the communication matters required to be discussed by Auditing Standard No. 1301, Communications with Audit Committees, issued by the Public Company Accounting Oversight Board; +· +receipt from Grant Thornton LLP of the written disclosures and letter required by Public Company Accounting Standards Board Rule 3526 ( Communications with Audit Committees Concerning Independence ); +· +discussions with Grant Thornton LLP regarding its independence from Callon, our Board and our management; +· +Grant Thornton LLP’s confirmation that it would issue its opinion that the consolidated financial statements present fairly, in all material respects, our financial position and the results of our operations and cash flows for the periods presented in conformity with accounting principles generally accepted in the United States of America; and +· +other matters the Audit Committee deemed relevant and appropriate. + +Management is responsible for the preparation, presentation and integrity of our consolidated financial statements in accordance with generally accepted accounting principles, the establishment and maintenance of our disclosure controls and procedures, and the establishment, maintenance and evaluation of the effectiveness of our internal controls over financial reporting. The independent registered public accounting firm is responsible for performing an independent audit of our consolidated financial statements and internal control over financial reporting in accordance with the standards of the PCAOB and issuing reports thereon. The Audit Committee’s responsibilities include monitoring and overseeing these processes. + +Members of the Audit Committee rely, without independent verification, on the information provided to them and on the representations made by management and our independent registered public accounting firm. The Audit Committee’s considerations and discussions referred to above do not assure that the audit of our financial statements and internal control over financial reporting have been carried out according to the standards of the PCAOB, that the financial statements are presented according to GAAP, or that Grant Thornton LLP is in fact independent. + +Respectfully submitted by the Audit Committee of the Board of Directors, +John C. Wallace, Chairman +L. Richard Flury +Larry D. McVay +Anthony J. Nocchiero + +The submission of this matter for approval by stockholders is not legally required; however, the Board and Audit Committee believe that this submission is consistent with best practices in corporate governance and is an opportunity for stockholders to provide direct feedback to the Board and Audit Committee on an important issue of corporate governance. Although the results of the vote are not binding on the Audit Committee, if the appointment is not ratified the Audit Committee will consider whether it should select another independent registered public accounting firm. A representative of Grant Thornton LLP will be present at the 2017 Annual Meeting and will have the opportunity to make a statement, if they desire, and to respond to appropriate questions from stockholders. + +This proposal will be approved if it receives the affirmative vote of a majority of shares of our common stock cast at the Annual Meeting and entitled to vote on this proposal. Broker non-votes and abstentions will not affect the outcome of this proposal. + +THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “ FOR ” THE RATIFICATION OF THE APPOINTMENT OF GRANT THORNTON LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2017 . + +24 +BENEFICIAL OWNERSHIP OF SECURITIES + +Management and Principal Stockholders + +The following table sets forth, as of the Record Date, certain information with respect to the beneficial ownership of shares of common stock held by: (i) all persons known by us to be the beneficial owners of 5% or more of the outstanding common stock; (ii) each Director; (iii) the nominees for Director; (iv) each current executive officer named in the Summary Compensation Table; and (v) all of our executive officers and Directors as a group. Information set forth in the table with respect to beneficial ownership of common stock has been obtained from filings made by the named beneficial owners with the SEC as of the Record Date or, in the case of our executive officers a nd Directors, has been provided to us by such individuals. As of March 17, 2017 , the Company had 201,054,884 sh ares of Common Stock issued, outstanding, and eligible to vote. + + +Common Stock +Name and Address of Beneficial Owner +Beneficial Ownership +Notes +% +Directors +Fred L. Callon +582,603 +(a)(b) +<1% +L. Richard Flury +167,999 +(a)(c) +<1% +Larry D. McVay +134,625 +(a)(d) +<1% +Anthony J. Nocchiero +121,489 +(a)(e) +<1% +John C. Wallace +5,000 +(a)(f) +<1% +Matthew R. Bob +45,640 +(a)(g) +<1% +James M. Trimble +26,640 +(a)(h) +<1% +Michael L. Finch +14,090 +(a)(i) +<1% + +Officers +Gary A. Newberry +281,208 +(a)(j) +<1% +Joseph C. Gatto, Jr. +152,076 +(a)(k) +<1% +Jerry A. Weant +64,378 +(a)(l) +<1% +Mitzi P. Conn +61,522 +(a)(m) +<1% + +Directors and Executive Officers (12 persons, as a group) +1,657,270 +(n) +<1% + +Certain Beneficial Owners +Wellington Management Group, LLP +16,367,196 +(o) +8.14% +The Vanguard Group +15,491,029 +(p) +7.70% +FMR LLC +13,130,250 +(q) +6.53% + +(a) +Unless otherwise indicated, each of the persons listed in the table may be deemed to have sole voting and dispositive power with respect to such shares. Beneficial ownership does not include the unvested portion of stock awards due to lack of voting and disposition power, unless such award will vest within sixty days of March 17, 2017 . Percentage ownership of a holder or class of holders is calculated by dividing (i) the number of shares of common stock beneficially owned by such holder or class of holders plus the total number of shares of common stock underlying options exercisable or stock awards vesting within sixty days of March 17, 2017 , by (ii) the total number of shares of common stock outstanding plus the total number of shares of common stock underlying options exercisable and stock awards vesting within sixty days of March 17, 2017 , but not common stock underlying such securities held by any other person. +(b) +Of the 582,603 shares beneficially owned by Fred L. Callon, 437,720 shares are owned directly by him; 25,215 shares are held by him as custodian for certain minor Callon family members; 56,052 shares represent unvested restricted stock units payable in stock and 9,892 restricted stock units payable in cash, which will vest within sixty days of March 17, 2017 ; and 53,724 shares are owned within the Company’s Employee Savings and Protection Plan. Shares indicated as beneficially owned by Mr. Callon do not include 24,904 shares of common stock owned by his wife over which he disclaims beneficial ownership, 255,306 unvested restricted stock units payable in stock, 23,935 unvested restricted stock units payable in cash, and 119,675 unvested phantom shares payable in cash. +(c) +Of the 167,999 shares beneficially owned by L. Richard Flury, 132,999 shares are owned directly by him; 30,000 shares are held in joint tenancy with his wife; and 5,000 shares in stock options, exercisable within 60 days. Shares indicated as beneficially owned by Mr. Flury do not include 62,617 restricted stock units awarded pursuant to his election under the Deferred Compensation Plan for Outside Directors, payable in cash upon his separation of service as a Director. Of the 62,617 restricted stock units deferred and payable in cash upon retirement, 36,125 shares represent vested restricted stock units and 26,492 represent unvested restricted stock units. +(d) +Of the 134,625 shares beneficially owned by Larry D. McVay, 121,342 shares are owned directly by him and 13,283 shares represent unvested restricted stock units payable in stock that will vest within sixty days of March 17, 2017 . Shares indicated as beneficially owned do not include 13,209 unvested restricted stock units payable in stock. +(e) +Of the 121,489 shares beneficially owned by Anthony J. Nocchiero, 108,206 shares are owned directly by him and 13,283 shares represent unvested restricted stock units payable in stock that will vest within sixty days of March 17, 2017 . Shares indicated as beneficially owned do not include 13,209 unvested restricted stock units payable in stock. +25 +(f) +Mr. John C. Wallace has 5,000 stock options exercisable within 60 days. Mr. Wallace transferred his equity ownership in the Company to The Wallace Family Trust in April 2008. All equity ownership in the Company acquired by Mr. Wallace since April 2008 has also been transferred to the Wallace Family Trust, with the exception of 116,599 restricted stock units awarded in May 2011 through May 2016, pursuant to his election under the Deferred Compensation Plan for Outside Directors, all of which are payable in cash upon his separation of service as a Director. Of the 116,599 restricted stock units deferred and payable in cash upon retirement, 90,107 shares represent vested restricted stock units and 26,492 represent unvested restricted stock units. Mr. Wallace has no voting and dispositive power over the shares owned by the Trust. +(g) +Of the 45,640 shares beneficially owned by Matthew R. Bob, 32,357 are owned directly by him and 13,283 shares represent unvested restricted stock units that will vest within sixty days of March 17, 2017 . Shares indicated as beneficially owned do not include 13,209 unvested restricted stock units payable in stock. +(h) +Of the 26,640 shares beneficially owned by James M. Trimble, 13,357 are owned directly by him and 13,283 shares represent unvested restricted stock units that will vest within sixty days of March 17, 2017 . Shares indicated as beneficially owned do not include 13,209 unvested restricted stock units payable in stock. +(i) +Of the 14,090 shares beneficially owned by Michael L. Finch, 4,990 are owned directly by him and 9,100 shares represent unvested restricted stock units that will vest within sixty days of March 17, 2017 . Shares indicated as beneficially owned do not include 13,209 unvested restricted stock units payable in stock. +(j) +Of the 281,208 shares beneficially owned by Gary A. Newberry, 205,173 shares are owned directly by him; 51,939 shares are owned within the Company’s Employee Savings and Protection Plan; and 20,482 shares represent unvested restricted stock units payable in stock and 3,614 restricted stock units payable in cash that will vest within sixty days of March 17, 2017 . Shares indicated as beneficially owned by Mr. Newberry do not include 116,212 unvested restricted stock units payable in stock, 10,895 unvested restricted stock units payable in cash, and 54,474 unvested phantom shares payable in cash. +(k) +Of the 152,076 shares beneficially owned by Joseph C. Gatto, Jr., 108,757 shares are owned directly by him; 17,723 shares are owned within the Company’s Employee Savings and Protection Plan; 1,500 shares are Series A Preferred Stock; and 20,482 shares represent unvested restricted stock units payable in stock and 3,614 restricted stock units payable in cash that will vest within sixty days of March 17, 2017 . Shares indicated as beneficially owned by Mr. Gatto do not include 1,600 shares of common stock owned by his mother over which he disclaims beneficial ownership, 116,212 unvested restricted stock units payable in stock, 10,895 unvested restricted stock units payable in cash, and 54,474 unvested phantom shares payable in cash. +(l) +Of the 64,378 shares beneficially owned by Jerry A. Weant, 54,216 shares are owned directly by him; 3,576 shares are owned within the Company’s Employee Savings and Protection Plan; and 5,598 shares represent unvested restricted stock units payable in stock and 988 restricted stock units payable in cash that will vest within sixty days of March 17, 2017 . Shares indicated as beneficially owned do not include 42,482 unvested restricted stock units payable in stock, 3,982 unvested restricted stock units payable in cash, and 19,913 unvested phantom shares payable in cash. +(m) +Of the 61,522 shares beneficially owned by Mitzi P. Conn, 31,397 shares are owned directly by her; 23,539 shares are owned within the Company’s Employee Savings and Protection Plan; and 5,598 shares represent unvested restricted stock units payable in stock and 988 restricted stock units payable in cash that will vest within sixty days of March 17, 2017 . Shares indicated as beneficially owned do not include 42,482 unvested restricted stock units payable in stock, 3,982 unvested restricted stock units payable in cash, and 19,913 unvested phantom shares payable in cash. +(n) +Includes 10,000 stock options, exercisable within 60 days; 189,540 shares of unvested restricted stock units payable in stock and cash that will vest within sixty days of March 17, 2017 ; and 150,501 shares are owned within the Company’s Employee Savings and Protection Plan. +(o) +Information is based upon a Schedule 13G/A filed with the SEC on February 9, 2017 by Wellington Management Group, LLP, Wellington Group Holdings LLP, Wellington Investment Advisors Holdings LLP and Wellington Management Company LLP (collectively “Wellington”). In this Schedule 13G, Wellington represents that it has shared voting power with respect to 10,626,716 shares of common stock and shared dispositive power with respect to 16,367,196 shares of common stock. The address of the principal business office of Wellington Management Group, LLP is 280 Congress St., Boston, MA 02210. +(p) +Information is based upon a Schedule 13G filed with the SEC on February 2 4, 2017 by The Vanguard Group – 23-1945930 (“Vanguard”). In this Schedule 13G, Vanguard represents that it has sole ad shared voting power with respect to 346,958 shares of common stock and sole and shared dispositive power with respect to 15,491,029 shares of common stock. The address of the principal business office of The Vanguard Group – 23-1945930, 100 Vanguard Blvd., Malvern, PA 19355. +(q) +Information is based upon a Schedule 13G filed with the SEC on February 14, 2017 by FMR LLC (“FMR”). In this Schedule 13G, FMR represents that it has sole voting power with respect to 5,262,795 shares of common stock and sole dispositive power with respect to 13,130,250 shares of common stock. The address of the principal business office of FMR LLC is 245 Summer St., Boston, MA 02210. + +With respect to shares issuable upon exercise of stock options, the holders or class of holders acquire investment power for these shares immediately upon a “change of control,” as defined in the applicable plan. + +Section 16(a) Beneficial Ownership Reporting Compliance. Our executive officers and Directors are required to file reports with the SEC, disclosing the amount and nature of their beneficial ownership in our common stock, as well as changes in that ownership. To our knowledge, based solely on its review of these reports and written representations from these individuals that no other reports were required, all required reports were timely filed during 2016 . + + +26 +COMPENSATION DISCUSSION AND ANALYSIS + +Oversight of Executive Compensation Program + +The Compensation Committee ( referred to in this section as the “Committee”), appointed by our Board, assists the Board in performing its fiduciary responsibilities relating to the compensation of our CEO and other NEOs. The Committee is responsible for the incentive compensation programs, which include programs designed for our executive management team, including the NEOs listed below. + +The following compensation discussion and analysis (“CD&A”) is intended to cover all elements of compensation paid to our NEOs and to describe the Committee’s rationale in structuring our executive compensation program , which is designed primarily to incentivize our NEOs to achieve both short-term and long-term corporate goals that enhance stockholder value . Specifically, we design policies to support the achievement of our strategic objectives by aligning the interests of our NEOs with those of our stockholders, with operational and financial performance goals linked to long-term equity and equity-based compensation. The following table presents our NEOs for 2016 : + + +NEO +Title +Fred L. Callon +Chairman of the Board and CEO +Gary A. Newberry +Senior Vice President and COO +Joseph C. Gatto, Jr. +President, CFO and Treasurer +Jerry A. Weant +Vice President, Land +Mitzi P. Conn +Vice President and CAO + +Executive Summary and 201 6 Highlights + +The Committee believes that our executive compensation program has played a significant role in our ability to deliver stockholder value built upon strong financial and operational results, in addition to a commitment to safe operations and responsible corporate citizenship. In sum, we maintained a solid financial position, allowing us the liquidity and access to capital to selectively pursue attractive acquisition opportunities, ultimately putting us in the position to grow our net surface acreage position by approximately 122%. Callon delivered exceptional growth in our producing assets in 2016, with a 59% increase in daily production and 69% increase in proved reserves despite a relatively challenging commodity price environment that entered its second year. We quickly pivoted our business to focus on our highest returning assets, with a goal of living within our internal cash flows, while still maintaining operational momentum for the future. + +Key accomplishments in 201 6 : + + +Production growth + +Grew production year-over-year by 59% in 2016 to 5,573 MBOE (15,227 BOE/d) compared to 3,508 MBOE (9,610 BOE/d) in 2015, of which acquisitions added daily production of approximately 2,671 BOE/d. + + +Sequential quarterly growth throughout the year despite a reduction in capital expenditures from 2015. +Reserve growth + +Increased proved reserves year-over-year by 69% in 2016 to 91.6 MMBOE from 54.3 MMBOE at year-end 2015, of which acquisitions added proved reserve growth of approximately 31.1 MMBOE. + + +Replaced over 300% of our 2016 annual production volumes through organic reserve additions. +Operational efficiency + +Drilled 29 gross (20.9 net) horizontal wells, completed 32 gross (23.7 net) horizontal wells and had six gross (4.2 net) horizontal wells awaiting completion at December 31, 2016. + + +Continue to achieve reductions in drilling days over time. + + +Significant investment in saltwater disposal and electricity infrastructure are expected to create operational efficiencies in 2017. +Financial strength + +Enhanced financial flexibility by completing four strategic equity offerings, raising over $1.4 billion in net proceeds, funding acquisition growth, increasing liquidity and reducing leverage, as compared to two offerings in 2015 that raised $175 million. + + +Increased total revenue by 46%, or $63.4 million, from $137.5 million in 2015 to $200.9 million in 2016. +27 + + +Achieved an indication to increase our Credit Facility borrowing base from $385 million to $500 million, electing to maintain at $385 million, relative to $300 million in 2015 and $250 million in 2014. + + +Optimized debt capitalization with issuance of $400 million in unsecured senior notes in a Rule 144A private offering, reducing our cost of term debt. +Cost reductions + +Reduced LOE by 11% to $6.88/BOE vs. $7.71/BOE in 2015. + + +Reduced G&A by 42% to $4.72/BOE vs. $8.08/BOE in 2015. +Growth through acquisition + +Completed four strategic acquisitions funded with $1.4 billion in cash and stock, significantly increasing our footprint in the core of the Midland Basin, including establishing a new operating area in the Delaware Basin. + + +Increased our total acreage position by 56,975 gross (38,583 net) acres . +Organic inventory expansion + +Successfully drilled two additional flow units, the Upper Lower Spraberry and Wolfcamp A, in Monarch, increasing our producing flow intervals in that operating area to six. + + +Completed successful well density tests in the Lower Spraberry which are yielding encouraging results from 13-well spacing. +Safety & Training + +Achieved an OSHA Recordable Incident Rate (“ORIR”) in the field of 0.58, compared to 0.73 in 2015, below our average ORIRs reported for the past three years. + + +Had only one lost-time accident associated with our work activities in 2016. + +Role of Stockholder Say-on-Pay Advisory Vote + +We have historically received very strong support for our executive compensation practices. In the advisory vote held at the 201 6 Annual Meeting, over 97 % of the votes cast were in favor of our 2015 executive compensation programs. In consideration of the results, the Committee acknowledged the support received from our stockholders and viewed the results as an affirmation of our existing executive compensation policies and continued efforts to enhance our pay-for-performance practices . The “say-on-pay” vote serves as an additional tool to guide the Board and the Committee in ensuring alignment of our executive compensation programs with stockholder interests. Accordingly, based on the Committee’s analysis of this support, it maintained our prior executive compensation policies for 201 7 . The Committee will continue to review stockholder votes on our executive compensation and determine whether to make any changes to the program as a result of these votes. + +Role of Independent Compensation Consultant + +As previously discussed, for 201 6 the Committee continued its engagement of Meridian Compensation Partners, LLC (“Meridian” or the “Consultant”) as its independent compensation consultant, which provided information and objective advice regarding NEO and Director compensation. The Committee retained Meridian because of its extensive experience and familiarity with our NEO compensation program and the compensation programs of our Peer Group, including specific experience in the oil and gas industry. Importantly, the Committee makes all of the decisions with respect to our executive compensation, and in setting compensation for our NEOs, considers the Consultant’s advice as only one factor among many other factors discussed within this CD&A. Other factors include our overall performance, individual NEO performance, experience, skills and tenure with Callon, industry trends and similar factors. + +Meridian reports solely to the Committee, and the Committee determines the scope of Meridian’s engagement. To help ensure that our NEO compensation programs are competitive and consistent with our compensation philosophy, the Consultant assisted the Committee as follows: + +· +Regularly attending meetings of the Compensation Committee and meeting privately in executive session with the Compensation Committee to discuss its recommendations; +· +Consulting on executive compensation matters to align the Committee’s actions with stockholder interests, our business strategy and pay philosophy, prevailing market practices and relevant legal and regulatory requirements; +· +Providing peer company data on executive compensation for the Committee to use in its decision-making process, identifying and assessing potential peer groups, including an assessment of our pay and performance relative to peers; +· +Providing comprehensive, competitive market data to consider in evaluating the competitiveness of the executive base salary and short- and long-term incentive plans and awards; +28 +· +Providing input into compensation program and incentive plan design discussions and individual compensation actions; +· +Advising and providing peer group data regarding the Company’s compensation arrangements for its non-employee directors; +· +Reviewing and providing feedback on our SEC filings relating to executive compensation disclosures, including our CD&A disclosures; +· +Reviewing data in connection with the Compensation Committee’s determination of annual cash incentive, performance goals and performance-based incentive vesting levels for completed performance periods; and +· +Informing the Committee about marketplace compensation trends in the industry, best practices and other general trends and developments affecting executive compensation. + +The Committee did not direct Meridian to perform its services in any particular manner or under any particular method. The Committee has the final authority to hire and terminate the Consultant, and the Committee evaluates the Consultant annually. Meridian provides no other services to Callon aside from its role as advisor to the Committee, and pursuant to applicable SEC and NYSE rules, the Committee has determined that no conflicts of interest exist because of Meridian’s engagement by the Committee. The Committee has retained Meridian as its Consultant on NEO and Director compensation for 201 7 . + +From time to time, Meridian contacts our NEOs for information needed to fulfill the objectives established by the Committee, and makes reports and presentations to both the Committee and our NEOs. However, the Committee established procedures that it considers adequate to ensure that the Consultant’s advice to the Committee remains objective and is not influenced by our NEOs or other management. The Committee considered the advice of the Consultant as only one factor in setting compensation of our NEOs, as actual compensation decisions are the result of the Committee’s subjective analysis of a number of factors. + +Compensation Assessment + +The Compensation Committee of the Board strives to ensure that our executives are compensated in a manner that is fair, equitable, +performance-based and guided by the long-term interests of investors. In order to attract, motivate and retain talented executive officers, the Committee must ensure that our executive compensation program remains competitive with the types and ranges of compensation paid by our peer companies who compete for the same executive talent. On an annual basis, the Committee reviews and discusses compensation data for our CEO and other NEOs as compared with compensation data for similarly situated executive officers at peer companies selected by the Consultant and approved by the Committee. + +The Committee engages Meridian to conduct annual assessments of our industry peer group (“Peer Group”) in order to ensure each peer remains appropriate year-over-year. Meridian provides the Committee with market data from a group of peer companies in the independent E&P industry based on multiple metrics, such as operational and capital investment profiles, including size, scope and nature of business operations, similar enterprise value, market capitalization, asset size, and revenues. The Committee selects the Peer Group consisting of public companies with operational similarity in terms of geographic footprint and operational focus, particularly in the Permian and Delaware Basins, with some larger and some smaller in size and scope, comparability of asset portfolio and availability of compensation data. Each year, the Committee reviews and re-determines the composition of the Company’s Peer Group, to ensure its continued appropriateness and relevance to the market data as part of the Committee’s competitiveness evaluation. + +The Committee does not target a specific percentile of the Peer Group, as the market data is just one of many factors considered by the Committee in determining compensation. The Committee believes this Peer Group provides a reasonable point of reference for comparing the compensation of our NEOs to others holding similar positions and having similar responsibilities. The Committee considers Peer Group data relevant to, but not determinative of, the Committee’s consideration of overall executive compensation matters. + +29 +The Peer Group used by the Committee in making 201 6 compensation decisions consisted of the following public independent exploration and production companies: + + +2016 Peer Group +Abraxas Petroleum Corp. +Bill Barrett Corp. +Bonanza Creek Energy, Inc. +Carrizo Oil & Gas, Inc. +EXCO Resources, Inc. +Jones Energy, Inc. +Laredo Petroleum, Inc. +Matador Resources, Inc. +Parsley Energy, Inc. +PDC Energy, Inc. +RSP Permian, Inc. +Sanchez Energy Corp. + +The Committee also reviewed data from other proprietary benchmarking surveys for additional market perspective and to validate the peer group data. + +The Committee understands the inherent limitations in using any peer group or data set, including fluctuations in survey participation from year to year and competition for executive talent by companies potentially much larger than Callon. Accordingly, the Committee does not consider data collected from any of these sources to be prescriptive. Rather, the Committee relies upon this and similar data as reference points around which to make informed decisions about the appropriate level and form of compensation for each NEO. +Risk Assessment Related to our Compensation Structure + +The Committee believes our compensation plans and policies are appropriately structured to encourage and reward prudent business judgment and avoid encouraging excessive risk-taking over the long term . The Committee, with the assistance of the Consultant, reviewed the elements of executive compensation during 201 6 to determine whether any portion of executive compensation encouraged excessive risk taking. Our management conducted a similar risk assessment with respect to other employees. Upon evaluation of those assessments, the Committee and management concluded that our compensation policies and practices for the NEOs and other employees do not present risks that are reasonably likely to have a material adverse effect on the Company. The Committee’s risk review identified the following risk mitigating features designed into our executive compensation program: + +· +A balance of short-term and long-term programs to focus management on both elements of Callon’s performance; +· +Annual long-term equity and equity-based incentives designed to be the largest component of each NEOs compensation package, with typical vesting periods of three years that are based on the value of our common stock and not on any particular metric that could encourage excessive risk-taking; +· +Performance criteria and targets designed to encourage performance, but not excessive risk taking ; +· +The use by the Committee of its discretion to assess annual performance in the bonus plan; +· +Performance targets measured at the corporate level, rather than at the individual or business unit level; +· +Committee discretion to decrease bonus payouts if it believed management exercised excessive risk taking; +· +Reasonable change-in-control severance protections; and +· +Significant executive stock ownership requirements. + +Executive Compensation Components and Philosophy + +Our pay-for-performance philosophy is demonstrated in the mix of compensation that we provide to our named executive officers. The Committee designs our compensation program to maintain a balance between rewarding the achievement of short-term or annual predetermined performance objectives and long-term objectives to align +30 +the interests of our executives with those of our stockholders. Accordingly, a significant portion of our named executive officers' compensation in 2016 was in the form of annual cash incentives and long-term equity-based incentives. Our executive compensation program is designed to do the following: + +· +Reward the management team for delivering results against its long-term objectives, thereby creating value for the stockholders; +· +Emphasize pay for performance, in which Company and individual performance substantially influence an NEO’s total compensation opportunity ; +· +Attract and retain a highly qualified and motivated management team by offering industry competitive opportunities; +· +Hold NEOs accountable and appropriately reward them for their contributions to the achievement of our key short-term and long-term strategic objectives through the use of variable compensation; and +· +Align the compensation of our NEOs with the long-term interests of our stockholders by adjusting our compensation programs to be more weighted toward at-risk, performance-based compensation, consisting of a goal-driven annual incentive program and total stockholder return (“TSR”) contingent equity awards . + +The Committee believes that this approach awards and compensates our NEOs in a manner that fairly and reasonably provides incentives for the enhancement of stockholder value, for the successful implementation of our business plan, and the continuous improvement in corporate and personal performance. In order to compete in our industry, the Committee believes that our NEOs’ compensation should include the following components : + + +Component +Purpose +Philosophy Statement +Base Salary + Pay for expertise and experience + Attract and retain talented executives + Provide compensation stability + Compete with comparable companies + Fixed component of compensation r eflective of individual skills, experience tenure and expertise necessary to execute our business strategy + Competitive relative to similarly-sized peers +Annual Cash Bonus Incentive + Motivate our executive officers to achieve our short-term business objectives that drive long-term performance while providing flexibility to respond to opportunities and changing market conditions + Reward achievement of financial, operating, safety and strategic goals for which NEOs are held accountable + Promote and encourage pay-for-performance + Reflective of internal equity considerations + Goals aligned with our annual performance targets + At-risk component of compensation, with modest or no reward for performance below expectations and potential for increased reward for exceptional performance + Provide balance in compensation programs and avoid encouraging undue risk-taking + Competitive relative to similarly-sized peers +Long-Term Equity / Equity-Based Incentive Awards (60% TSR Units; 40% RSUs) + Motivate and reward long-term achievement of business objectives, aligning the interests of our NEOs with stockholders + Match competitive practices to attract and retain employees + Provide a mix of equity awards that focuses the NEO on creating long-term value while avoiding undue risk-taking + Ensures that realized value to the executive aligns with value delivered to stockholders + Recognizes and rewards share price performance relative to industry peers + At-risk component of compensation, p rovid ing a strong performance-based equity component + Aligns compensation with sustained long-term value creation + Allows NEOs to acquire a meaningful and sustained ownership stake in the Company +31 +Other (Retirement; Health Benefits; Severance) + Provide financial security for the NEOs and their families + Ensure a financial safety net + Provide compet it i ve level of benefits + Match competitive practices to attract and retain NEOs + Ensure NEOs consider all possible transactions to increase stockholder value related to changes in control of the Company + Helps attract and retain NEO talent and remain competitive among our peers by offering a comprehensive benefits package + Provides financial security in the event of various individual risks and maximizes the efficiency of tax-advantaged compensation vehicles + Benefits levels based on peer group practices while considering stockholder value + Attracts and retains NEOs in a competitive and changing industry, ensures NEOs act in the best interests of the stockholders in a change in control, and settles up front an y potential dispute regarding a NEOs termination + +Determination of Each Element of Compensation + +Base Salaries + +We provide all of our employees, including the NEOs, with an annual base salary to compensate them for their services throughout the year. Our Committee recognizes that a substantial amount of competition exists in the oil and gas industry for attracting and retaining qualified management teams, particularly in the Permian Basin. Accordingly, the Committee evaluates our NEOs’ salaries together with other components of their compensation to ensure that the NEOs’ total compensation is competitive relative to market practices in our Peer Group or our industry in general, and is consistent with the previously discussed Committee’s compensation philosophy. + +Annually, generally in March of each year, the Committee reviews the base salary of our NEOs. Individual salary amounts reflect the Committee’s subjective analysis of a number of factors, including: + +· +Individual officer’s experience, skills, contributions and tenure with Callon; +· +Changes to the individual’s position within Callon; +· +Trends in compensation practices within our Peer Group and industry ; and +· +The NEO’s roles, responsibilities and expected future contribution to Callon’s success. + +In addition, the Committee also considers the input and recommendations of Meridian regarding base salaries, as well as the input of the CEO when evaluating base salary for the other NEOs. After considering the market analysis and advice of its Consultant, the Committee determined to keep base salaries at 2015 levels for our NEOs. Then, after taking into account the above factors and the fact that there had been no increase in NEO base salaries since 2014, and in light of the significant growth of the Company during 2016, in August 2016 the Committee approved the promotion of three of our NEOs and the increase in their base salaries commensurate with their new titles, as follows: Mr. Gatto, President – from $350,000 to $400,000; Mr. Newberry, COO – from $350,000 to $400,000; and Ms. Conn, CAO – from $190,000 to $225,000. In November 2016, the Committee elected to approve an increase in Mr. Callon’s base salary from $525,000 to $625,000, effective January 1, 2017, the first increase in his salary in four years. With guidance from Meridian, the Compensation Committee noted that these increases will ensure that the base salaries of the CEO and these NEOs will be more competitive with the Peer Group and will facilitate our ability to attract and retain the top talent. + +Performance-Based Annual Cash Bonus Incentive + +A core component of our NEO compensation philosophy is to emphasize pay-for-performance by structuring a significant portion of total annual compensation as “at risk.” Each year, the Compensation Committee establishes an annual performance bonus program, which is designed to promote the achievement of annual corporate goals including key financial, operating, safety and strategic goals that are aligned with the creation of stockholder value. Performance is judged at the end of the year based on successful execution of the Company’s annual business plan objectives and on a retrospective evaluation of performance against specified goals, although the Committee retains discretion to determine the ultimate bonus amount to be paid. To motivate employees to pursue our annual business goals in a way most beneficial to our stockholders, NEOs, senior management and other +32 +non-management technical personnel have the potential to receive a significant portion of their annual cash compensation as a bonus. The Committee set 2016 annual bonus award opportunities for each NEO as a percentage of the NEO’s annual base salary, and ultimately awarded a cash bonus to the NEOs based on the achievement of specified Company performance goals and the NEO’s individual performance, as determined at the Committee’s discretion. + +For 2016 , the Committee made no changes to the target bonus opportunities, summarized in the table below: + + +NEO +Target Bonus Opportunity +(% of Base Salary) +Fred L. Callon +100% +Gary A. Newberry +90% +Joseph C. Gatto, Jr. +90% +Other NEOs +60% – 70% + +The target bonus opportunity is a guideline whereby actual bonus amounts may be greater or less than such target, in the Committee’s discretion. + +Assessing Performance + +For purposes of evaluating performance, the Committee, in collaboration with management and the Consultant, oversees a rigorous process to set performance goals, evaluate progress toward such goals, monitor external trends, measure competitiveness and determine compensation outcomes. During the first quarter of each year, the Committee approves our operational, financial and strategic goals for that year based on recommendations and input from management. These approved company performance goals become the individual performance goals for our CEO. The Committee believes that these quantitative factors and performance expectations, taken together, are objective indicators of overall successful performance. The Committee prefers not to rely solely on a formulaic approach that results in automatic payouts, so the Committee retains the flexibility to exercise its judgment and discretion as appropriate and take into account special or unusual factors that may have contributed to the achievement of these objectives, such as acquisitions, commodity prices, or other factors considered appropriate by the Committee at the time of the award. + +The Committee meets at least once per calendar quarter and our CEO provides the Committee a detailed update on the Company’s progress toward meeting the performance goals and bonus objectives for the year. The Consultant also provides updates on governance trends, regulatory changes and industry compensation matters at the meetings. The Committee reviews industry compensation data and relevant external trends, along with an assessment of our progress toward our operational, financial and strategic goals and each NEOs contributions toward our achievement of such goals, to determine the appropriate compensation actions. + +33 +Below are the 201 6 operations, financial and strategic goals, the rationale behind these goals, and 2016 results. + + +Performance Goal +Assessment +Result +Operate in a Safe and Environmentally Friendly Manner +Achieved an OSHA Recordable Incident Rate (ORIR), of 0. 58, below our average ORIRs reported for the past three years. +Exceeded Expectations +Increase Daily Production (a) +Increased both daily and annual Permian production by 5 9 %, from 9,610 BOE/d in 2015 (80% oil) to 15,227 BOE/d in 2016 (77% oil). +Exceeded Expectations +Increase Proved Reserves (a) +Grew estimated net proved reserves by 69% to 91.6 MMBOE in 2016 (78% oil) vs. 54.3 MMBOE at year-end 2015, for an increase of 37.3 MMBOE. Importantly, our year-end 2016 reserves were 47.2% PDP and replaced more than 300% of our 2016 production o f 5,573 M BOE. +Exceeded Expectations +Increase Financial Flexibility +Successfully executed four strategic equity offerings, raising over $1. 4 billion in net proceeds, funding growth and reducing leverage. Achieved an indication to increase our Credit Facility borrowing base from $385 million to $500 million, electing to maintain at $385 million. +Exceeded Expectations +Maintain appropriate DEBT/EBITDA level +Maintained DEBT/EBITDA level below 2. 27 x. See comments related to “Increase Financial Flexibility” goal above for other factors driving this outperformance. +Exceeded Expectations +Reduce Lease Operating Expense (“LOE”) +Reduced LOE by 11% to $6.88/BOE vs. $7.71/BOE in 2015. +Exceeded Expectations +Reduce Cash G&A Expense +Reduced per-BOE Adjusted cash G&A by 31 % to $ 2.88 /BOE vs. $ 4.16 /BOE in 2015. +Exceeded Expectations +Reduce Drill- B it Finding & Development ("F&D") Costs +Maintained F&D costs with $8.99/BOE in 2016 vs. $8.98/BOE in 2015. +Met Expectations + +(a) +Successful acquisitions added daily production and proved reserve growth of approximately 2,671 B OE /d and 31.1 MMBOE, respectively. + +In addition to performance criteria above, the Committee considers the economic environment, commodity price fluctuations and other unforeseen influences (adverse or beneficial) in its evaluation. For 201 6 , the Committee took into account the following in setting bonus compensation: + +· +Management’s ability to position the Company for success during a challenging commodity pricing environment ; +· +Management’s ability to selectively identify and successfully pursue acquisitions in a challenging market, using creative structures to bridge valuation gaps, more than doubling the Company’s acreage position; +· +Management’s ability to promptly redirect our strategy to reflect the decline in oil prices, managing spending levels by reducing capital expenditures as a result of lower activity, efficiencies and service cost reductions, and high-grading our drilling operations; +· +Management’s continued progress in building a strong technical team and promoting and enhancing communication and teamwork throughout Callon; and +· +Management’s ability to protect margins through well-managed oil and gas derivative positions . + +The Committee evaluated the NEOs performance against the 201 6 performance criteria described above and determined that overall the management team significantly exceeded expectations on most of the financial and operational goals, along with other strategic achievements as noted above, ending the year with a very strong balance sheet and an increased stock price during a time of low and volatile commodity prices. Based on the results of the Committee’s assessment set forth above, the Committee determined actual bonus amounts paid for 201 6 performance above target as follows: + +Named Officer +2016 Annual Bonus ($) +Fred L. Callon +$ +918,750 +Gary A. Newberry +630,000 +Joseph C. Gatto, Jr. +630,000 +Jerry A. Weant +250,000 +Mitzi P. Conn +250,000 + +34 +Annual Award of Long-term Equity and Equity-Based Incentives + +We believe restricted stock awards and performance stock units have retentive attributes and effectively align our executive officers' interests with the interests of our stockholders on a long-term basis. Performance stock units also have an additional performance-based component that compares our performance with that of our peer companies. We believe this combination of long-term equity awards appropriately provides incentives that capture absolute total return performance of our common stock as well as awards that also capture variable performance relative to the performance of other oil and gas companies. The Committee believes that granting long-term equity and equity-based incentive awards are the most effective means to provide a substantial forward-looking incentive to our NEOs that emphasizes: + +· +Long-term value creation by linking compensation provided to our NEOs with long-term operational success ; +· +Aligns the long-term interests of our NEOs with those of our stockholders by directly linking rewards to stockholder return and our pay-for-performance philosophy; and +· +Fosters meaningful equity participation by our executive officers . + +The Committee administers our long-term incentive plans, including approving award recipients, determining the total number of awards, vesting of awards and performance criteria, including TSR. The vesting period incorporated into stock-based compensation fosters a longer-term perspective necessary for executive retention, stability and continuity. For the grant of equity compensation to NEOs, the Committee will typically consider information provided by the Consultant related to the overall competitive environment associated with long-term compensation. We have no program, plan or obligation that requires us to grant equity compensation on specified dates. However, the Committee adheres to our policy of only granting stock-based compensation grants during open trading windows. + +For 201 6 long term incentive grants, the Committee approved a 40%/60% mix for our NEOs of time-based awards and performance-based awards tied to relative TSR, with a portion of each award paid in cash. The following table sets forth the number of restricted stock units, phantom units and TSR phantom units awarded to the NEOs in 201 6 : + + +Named Officer +Total Value +Restricted Stock Units Payable in +Common Stock (a) +Phantom Units Payable in Cash (d) +TSR Phantom Units Payable in Stock (e) +TSR Phantom Units Payable in Cash (e) +Fred L. Callon +$ +2,200,000 +67,631 +11,935 +59,675 +59,675 +Gary A. Newberry +1,907,000 +86,890 +(b) +6,510 +32,550 +32,550 +Joseph C. Gatto, Jr. +1,907,000 +86,890 +(b) +6,510 +32,550 +32,550 +Jerry A. Weant +330,000 +10,145 +1,790 +8,951 +8,951 +Mitzi P. Conn +471,400 +20,145 +(c) +1,790 +8,951 +8,951 + +(a) +Amount represents restricted stock units vesting on May 1 3 , 201 9 and payable in Company common stock on the vesting date. +(b) +Amounts include 50,000 restricted stock units awarded in conjunction with the promotion, vesting on August 24, 2019. +(c) +Amount includes 10,000 restricted stock units awarded in conjunction with the promotion, vesting on August 24, 2019. +(d) +Amount represents phantom shares vesting on May 1 3 , 2019 and payable in cash based on closing NYSE market price of the Common Stock on the date of vesting. +(e) +The 201 6 TS R Phantom Unit Award is payable 50% in cash and 50% in common stock, and will vest on December 31, 201 8 between 0% and 200% based on our TSR when compared to pre-determined p eer companies . + +Performance Unit Program. Under this program, the Committee determined that performance should be measured objectively rather than subjectively and should be based on relative TSR (as defined in the award agreements) over a long-term performance period. NEOs receive a combination of cash payment and common shares based on our share price and relative TSR against the peer companies over the specified performance period. The Committee believes relative TSR is an appropriate long-term performance metric because it generally reflects all elements of a company’s performance and provides the best alignment of the interests of management and the company’s stockholders. The Committee also believes that the performance unit program provides a good balance to the restricted stock program. On the grant date, an employee is awarded a number of “ TSR Performance Units. ” The TSR Performance Units are eligible for vesting if the employee continues to be employed until the vesting date specified in the award agreement. When the TSR Performance Units vest, the executive is entitled to a cash payment equal to the fair market value of the “ adjusted ” TSR Performance Units and a related number of common shares. TSR is the change in the common stock price plus dividends using a 20-day average at the beginning +35 +and end of the performance period. The scale of payout ranges between maximum, or 200% of target, and a minimum, or 0% of target, as set forth below, to incentivize our NEOs. + +The number of adjusted TSR Performance Units is calculated by comparing Callon’s TSR to the TSR of the peer companies specified in the award agreement, according to the following schedule for awards made in May 201 6 . + + +Callon’s TSR Rank among the Peer Companies +TSR Phantom Shares Vesting +as a Percentage of Target +1 – 2 +200% +3 +183% +4 +163% +5 +142% +6 +121% +7 +100% +8 +75% +9 +50% +10 +25% +11 – 13 +0% + +TSR Phantom Units – Results for Performance Period Ending December 31, 201 6 . In May 201 4 , our Compensation Committee granted TSR Phantom Units to the NEOs, which vested on December 31, 201 6 . Under the provisions of these awards, the targeted performance shares were subject to our relative TSR performance compared with the TSR of the peer companies specified in the award grant. As detailed in the table below, Callon ranked first relative to the 10 companies in the agreed upon peer companies , resulting in 200% of the number of awarded TSR Phantom Units being paid in cash. + +The table below summarizes the TSR Phantom Units earned by the NEOs for the 2014/2016 per formance periods: + + +Named Officer +Target Number +of TSR Units (Payable in Cash) +Payout % +of Target +Actual Vested TSR Units (Payable in Cash) +Fred L. Callon +98,916 +200% +197,832 +Gary A. Newberry +36,145 +200% +72,290 +Joseph C. Gatto, Jr. +36,145 +200% +72,290 +Jerry A. Weant +9,880 +200% +19,760 +Mitzi P. Conn +9,880 +200% +19,760 + +Other Compensation + +Perquisites and Other Benefits + +Benefits represent a relatively small part of our overall compensation package, however, these benefits help attract and retain senior level executives, and we review these benefits annually to ensure that they are competitive with industry norms. We provide benefits to all of our employees commonly offered in the oil and gas E&P industry. These benefits consist of: + +· +Group medical and dental insurance program for employees and their qualified dependents; +· +Group life insurance for employees and their spouses; +· +Accidental death and dismemberment coverage for employees; +· +Long-term disability coverage +· +Callo n sponsored cafeteria plan; and +· +401(k) employee savings and protection plan. + +We pay the full costs of these benefits , including the 401(k) plan administration for all employees. Employee life insurance amounts surpassing the Internal Revenue Service maximum are treated as additional compensation to all employees. Our 401(k) contribution to each qualified participant, including the NEOs, is calculated based on 5% of the employee’s IRS eligible salary, excluding annual cash bonuses, and is paid one-half in cash and one- +36 +half in our common stock, limited to IRS regulation dollar limits. We also match employee deferral amounts, including amounts deferred by NEOs , up to a maximum of 5% of IRS eligible compensation. + +Each year, we purchase a certain number of hours of flight time through a fractional aircraft ownership arrangement. These hours are made available for business use to the NEOs and our other employees in connection with their business travel requirements in an effort to reduce travel time and related disruptions and to provide additional security. We believe these flight hours are a cost-effective way to increase the NEOs availability, efficiency, and productivity. The Committee disallows employees, including NEOs, from using these hours for personal use, though the Committee recognizes occasions will arise when a personal guest (including a family member) will accompany an employee on a business-related flight at no, or immaterial, incremental cost to Callon. + +Our NEOs are entitled to certain benefits, or perquisites, that are not otherwise available to all of our employees. We provide the CEO, President, COO and other executive officers with use of a Company automobile. We purchase the automobile and pay for all maintenance, repairs, insurance and fuel. The employee is required to recognize taxable income using the Internal Revenue Service’s annual lease value method for personal use of the vehicle. We also pay a portion of the annual premium for our CEO’s term life insurance policy, for which he is the sole beneficiary. The costs associated with these benefits for the NEOs are reported as “Other Compensation” in the Summary Compensation Table. The Committee believes these perquisites are modest yet competitive with the perquisites provided to similarly situated oil and gas industry executives, and include the value of such benefits in determining total compensation of our NEOs. + +Severance Protection + +We have no employment agreements with our NEOs, though the Compensation Committee believes that change-in-control severance arrangements serve stockholders’ best interests by diminishing the potential distraction created by the personal uncertainties and risks that may affect our executives’ focus in the context of a potential corporate restructuring or change-in-control transaction. These protections also help ensure continuity of management in the event of certain corporate transactions. However, the Committee believes that executives should not be unduly enriched if change-in-control severance arrangements are triggered. Accordingly, each NEO has entered into an agreement with the Company that defines the circumstances under which severance benefits would be paid. We believe that these provisions create important retention tools, provide our NEOs with value in the event of a termination of employment that was beyond management’s control and allow them to focus their attention and energy on making objective business decisions that are in the stockholders’ best interest, without allowing personal considerations to overshadow the decision-making process. + +These agreements include certain non-competition and non-solicitation provisions and are triggered only if there is both a change in control of the Company and a qualifying termination of employment (commonly called a “double trigger”). In addition, in order to protect us if the benefits are triggered, the agreements contain a “claw back” provision that will apply in the event the NEO violates any of these provisions. None of the agreements includes an excise tax gross-up provision, and the Committee chose not to provide guaranteed severance benefits outside of a change-in-control. + +Stock Ownership Policy + +Consistent with its goal of driving long-term value creation for our stockholders and in order to discourage undue risk-taking, the Committee’s stock ownership guidelines require significant stock ownership by the NEOs and D irectors. The Committee believes that requiring meaningful s tock ownership by our NEOs and D irectors is critical in aligning their interests with the interests of our stockholders. In March 2008, the Committee adopted a stock ownership policy, which applies to the CEO and the other NEOs. In 2012, the Committee established ownership requirements for our outside directors described below. The provisions of the policies provide for the investment position, computed on December 31 of each year as follows : + + +NEO/Directors +Required Common Stock Ownership as Multiple of Annual Base Salary / Annual Retainer +CEO +6x +Other NEOs +2x +Directors +5x + +Investment position is defined as calculated value of shares owned, shares owned indirectly, equivalent shares invested in the NEO’s 401(k) plan, and unvested portion of time-based restricted shares. Value attributable to +37 +shares represented by both vested and unvested stock options and the value of unvested performance-based shares is excluded. + +Each NEO has a period of five years from the date of adoption to attain the required investment position. If a NEO becomes subject to a greater investment position due to a promotion or an increase in salary, the NEO will be expected to attain the increased investment position within three years of the change. The Committee reserves the right to approve an alternate stock ownership guideline for NEOs who can demonstrate a severe hardship in meeting the general guidelines. + +Each outside director is required to achieve a minimum value of common stock equal to at least five times the annual retainer within the next five years following adoption of the policy or election as a director. + +Internal Revenue Service Limitations + +When establishing our compensation programs, the Committee considers the effects of relevant tax laws. The Committee reviewed and considered the deductibility of executive compensation under Section 162(m) of the Internal Revenue Code, which provides that the Company generally may not deduct for federal income tax purposes annual compensation in excess of $1 million paid to any “covered employee.” However, the $1 million limit does not apply to qualifying performance-based compensation that is paid pursuant to stockholder- approved plans and is approved by directors who qualify as “outside directors” within the meaning of Section 162(m) of the Internal Revenue Code. The Committee generally structures and administers executive compensation plans and arrangements so that they will not be subject to the 162(m) deduction limit, where appropriate. However, to maintain flexibility in structuring appropriate compensation programs, the Committee reserves the right to use its judgment to authorize compensation payments that do not comply with the exemptions in Section 162(m) when it believes that such payments are appropriate. + +Insider Trading Policy + +We have an Insider Trading Policy under which all employees, including our NEOs and members of our Board, are prohibited from engaging in short-term or speculative transactions in our securities, including short sales, options and other derivatives, and from holding Company securities in a margin account or pledging securities as collateral for a loan during periodic “ trading blackout ” periods. When material non-public information about us may exist and may have an influence on the marketplace, a trading blackout period is placed in effect by management. + +Certain Relationships and Related Party Transactions + +The Board’s Audit Committee charter provides that the Audit Committee shall review and approve all related party transactions. A transaction will be considered a “related party transaction” if the transaction would be required to be disclosed under Item 404 of Regulation S-K. In addition, our Code of Business Conduct and Ethics provides that an officer’s or a Director’s conflict of interest with Callon may only be waived if the Nominating and Corporate Governance Committee approves the waiver and the full Board ratifies the waiver. As of December 31, 201 6 , we are not aware of any related party transactions with our executive officers that may cause a conflict of interest with us. + +Recoupment Policy + +We have no recoupment policy applicable to annual incentive bonuses or equity awards other than those required under Sarbanes-Oxley legislation, though the Committee continuously evaluates the need to adopt such a policy. + + +38 +Compensation Committee Report + +The Compensation Committee has reviewed and discussed with management the CD&A required by Item 402(b) of Regulation S-K promulgated under the Securities Exchange Act of 1934, as amended, and based on such review and discussions, the Committee has recommended to the Board that the CD&A be included in this Proxy Statement relating to the 201 7 Annual Meeting of Stockholders. + +Respectfully submitted by the Compensation Committee of the Board, + +L. Richard Flury, Chairman +Larry D. McVay +Anthony J. Nocchiero +John C. Wallace +James M. Trimble + + + +39 +EXECUTIVE COMPENSATION TABLES + +Summary Compensation Table + +The compensation paid to the Company’s executive officers generally consists of base salaries, annual cash incentive payments, awards under the 2011 Omnibus Incentive Plan, contributions to the Company’s defined contribution 401(k) retirement plan and miscellaneous perquisites. The table below sets forth information regarding fiscal years 2014, 2015 and 2016 compensation awarded to, earned by or paid to the Company’s named executive officers, which includes the Company’s Chief Executive Officer, President and Chief Financial Officer, Chief O perating Officer and two other most highly compensated NEOs + + +Name +Year +Annual Salary +Cash Bonus +Stock Awards +Other (h) +Total +Fred L. Callon +2016 +$ +525,000 +$ +918,750 +(d) +$ +2,200,000 +(e) +$ +53,633 +$ +3,697,383 +Chairman and CEO +2015 +$ +525,000 +$ +800,000 +$ +1,642,000 +(f) +53,347 +3,020,347 +2014 +$ +525,000 +$ +787,500 +$ +1,642,000 +(g) +53,263 +3,007,763 + +Gary A. Newberry +2016 +$ +367,308 +(a) +$ +630,000 +(d) +$ +1,907,000 +(e) +$ +40,613 +$ +2,944,921 +Senior Vice President and COO +2015 +$ +350,000 +$ +600,000 +$ +600,000 +(f) +40,522 +1,590,522 + +2014 +$ +350,000 +$ +500,000 +$ +600,000 +(g) +40,524 +1,490,524 + +Joseph C. Gatto, Jr. +2016 +$ +367,308 +(b) +$ +630,000 +(d) +$ +1,907,000 +(e) +$ +35,948 +$ +2,940,256 +President, CFO and Treasurer +2015 +$ +350,000 +$ +600,000 +$ +600,000 +(f) +35,281 +1,585,281 + +2014 +$ +330,769 +$ +500,000 +$ +600,000 +(g) +33,983 +1,464,752 + +Jerry A. Weant +2016 +$ +250,000 +$ +250,000 +(d) +$ +330,000 +(e) +$ +36,740 +$ +866,740 +Vice President of Land +2015 +$ +250,000 +$ +225,000 +$ +300,000 +(f) +36,661 +811,661 + +2014 +$ +250,000 +$ +200,000 +$ +164,000 +(g) +34,167 +648,167 + +Mitzi P. Conn +2016 +$ +198,370 +(c) +$ +250,000 +(d) +$ +471,400 +(e) +$ +28,811 +$ +948,581 +Vice President and CAO +2015 +$ +190,000 +$ +225,000 +$ +300,000 +(f) +30,194 +745,194 + +2014 +$ +180,385 +$ +200,000 +$ +164,000 +(g) +28,026 +572,411 + +(a) +During August 2016 , Mr. Newberry was promoted to COO , which increased his salary to $ 4 00 ,000 . +(b) +During August 2016 , Mr. Gatto was promoted to President, which increased his salary to $ 4 00 ,000 . +(c) +During August 2016 , Mrs. Conn was promoted to Vice President and CAO, which increased her salary to $ 225,0 00. +(d) +Cash bonus awarded in March 201 7 in recognition of 201 6 performance. +(e) +Represents the grant date fair value of the restricted stock units and TSR phantom shares granted to the NEOs on May 1 3 , 201 6 computed in accordance with FASB ASC Topic 718. The assumptions utilized in the calculation of these amounts are set forth in footnote s 8 and 9 t o our consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 201 6 filed with the SEC on February 27 , 201 7 . +(f) +Represents the grant date fair value of the restricted stock units and TSR phantom shares granted to the NEOs on May 15, 2015 computed in accordance with FASB ASC Topic 718. The assumptions utilized in the calculation of these amounts are set forth in footnotes 8 and 9 to our consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2015 filed with the SEC on March 5, 2016. +(g) +Represents the grant date fair value of the restricted stock units and TSR phantom shares granted to the NEOs on May 14, 2014 computed in accordance with FASB ASC Topic 718. The assumptions utilized in the calculation of these amounts are set forth in footnotes 7 and 8 to our consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2014 filed with the SEC on March 5, 2015. +(h) +See the Table of All Other Compensation and related footnotes below for reconciliation of Other. +40 +Table of All Other Compensation + + +Name +Year +Company Contributed Cash to 401(k) +Company Contributed Common Stock to 401(k) (a) +Company Provided Auto (b) +Company Paid Other (c) +Total +Fred L. Callon +2016 +$ +19,875 +$ +6,625 +$ +12,444 +$ +14,689 +$ +53,633 + +2015 +19,875 +6,625 +12,158 +14,689 +53,347 + +2014 +19,500 +6,500 +12,574 +14,689 +53,263 + +Gary A. Newberry +2016 +$ +19,875 +$ +6,625 +$ +14,113 +$ +- +$ +40,613 + +2015 +19,875 +6,625 +14,022 +- +40,522 + +2014 +19,500 +6,500 +14,524 +- +40,524 + +Joseph C. Gatto, Jr. +2016 +$ +19,875 +$ +6,625 +$ +9,448 +$ +- +$ +35,948 + +2015 +19,875 +6,625 +8,781 +- +35,281 + +2014 +19,500 +6,500 +7,983 +- +33,983 + +Jerry A. Weant +2016 +$ +18,750 +$ +6,250 +$ +11,740 +$ +- +$ +36,740 + +2015 +18,750 +6,250 +11,661 +- +36,661 + +2014 +18,750 +6,250 +9,167 +- +34,167 + +Mitzi P. Conn +2016 +$ +15,159 +$ +5,053 +$ +8,599 +$ +- +$ +28,811 + +2015 +14,250 +4,750 +11,194 +- +30,194 + +2014 +13,529 +4,510 +9,987 +- +28,026 + +(a) +Subject to IRS limits, Company contributions to each person’s 401(k) account consist of a basic contribution equal to five percent (5%) of eligible annual base salary (funded one-half in cash and one-half in equivalent-valued common stock) plus a matching amount (limited to five percent (5%) of eligible annual base salary if such employee individually contributed at least eight percent (8%) of their eligible annual base salary). The number of shares contributed is determined on a monthly basis by dividing one-half of the total basic cash contribution by the closing market price on the last trading day of the month. +(b) +Represents annual depreciation based on a three-year life, plus insurance, fuel, maintenance and repairs, pursuant to IRS Reg §1.61-21, Taxation of Fringe Benefits. +(c) +Represents premiums paid by us on a personal life insurance policy for which Mr. Callon is the sole beneficiary. + + +41 +Grant s of Plan-Based Awards During 201 6 + +The following table presents grants of equity awards during the fiscal year ending December 31, 201 6 : + + + +Estimated Future Payouts Under +Equity Incentive Plan Awards (a) +Name +Grant Date +Threshold +Target +Maximum +Other Awards (Shares or Units) +Grant Date Fair Value (e) +Fred L. Callon +05/13/2016 +- +- +- +67,631 +(b) +$ +747,999 + +05/13/2016 +- +- +- +11,935 +(c) +132,001 + +05/13/2016 +- +119,350 +238,700 +- +1,320,011 + +Gary A. Newberry +05/13/2016 +- +- +- +36,890 +(b) +$ +408,003 + +05/13/2016 +- +- +- +6,510 +(c) +72,001 + +05/13/2016 +- +65,100 +130,200 +- +720,006 + +08/24/2016 +- +- +- +50,000 +(d) +707,000 + +Joseph C. Gatto, Jr. +05/13/2016 +- +- +- +36,890 +(b) +$ +408,003 + +05/13/2016 +- +- +- +6,510 +(c) +72,001 + +05/13/2016 +- +65,100 +130,200 +- +720,006 + +08/24/2016 +- +- +- +50,000 +(d) +707,000 + +Jerry A. Weant +05/13/2016 +- +- +- +10,145 +(b) +$ +112,204 + +05/13/2016 +- +- +- +1,790 +(c) +19,797 + +05/13/2016 +- +17,902 +35,804 +- +197,996 + +Mitzi P. Conn +05/13/2016 +- +- +- +10,145 +(b) +$ +112,204 + +05/13/2016 +- +- +- +1,790 +(c) +19,797 + +05/13/2016 +- +17,902 +35,804 +- +197,996 + +08/24/2016 +- +- +- +10,000 +(d) +141,400 + +(a) +Amount s represent TSR phantom shares payable in 50% cash and 50% common stock on the vesting date, which will be adjusted between 0% and 200% based on our TSR compared with the TSR of the peer companies . The adjusted performance-based phantom shares will vest on December 31, 201 8 . +(b) +Amount s represent restricted stock units vesting on May 1 3 , 201 9 and will be settled in common stock. +(c) +Amount s represent phantom shares vesting on May 1 3 , 2019 and will be settled in cash based on the closing NYSE market price of the Company’s Common Stock on the vesting date. +(d) +Amount s represent restricted stock units vesting on August 24, 2019 and will be settled in common stock. +(e) +This column shows the grant date fair value of the awards granted to the NEOs on the date indicated computed in accordance with FASB ASC Topic 718. The assumptions utilized in the calculation of these amounts are set forth in footnotes 8 and 9 to our consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 201 6 , filed with the SEC on February 27 , 201 7 . The value ultimately realized by the executive upon the actual vesting of the awards may be more or less than the grant date fair value. + +Stock-Based Incentive Compensation Plans + +The 2011 Plan was approved by stockholders on May 12, 2011 and amended on May 14, 2015. Awards available under the 2011 Plan include grants of stock options, stock appreciation rights or units, restricted stock, restricted stock units, phantom stock or performance shares or units. As of March 1 7 , 201 7 , 2,270,448 sh ares remain unissued within the 2011 Plan. + +Outstanding Equity Awards at Fiscal Year-End + +The following table contains information concerning all unexercised and unvested stock awards that were held as of December 31, 201 6 for the NEOs: + +42 + +Option Awards +Stock Awards + +Unvested Shares or +Units of Stock +Equity Incentive +Plan Awards +Name +Number of Securities Underlying Exercisable Options +Option Exercise Price +Option Expiration Date +Number of Unvested shares or Units of Stock +Market Value of Unvested Shares or Units of +Stock (g) +Number of Unearned Shares, Units or Other Unvested Rights +Market of Payout Value of Unearned Shares, Units or Other Unvested Rights (g ) +Fred L. Callon +- +- +- +56,052 +(c) +$ +861,519 +9,892 +(h) +$ +152,040 + +- +- +- +68,000 +(d) +1,045,160 +12,000 +(i) +184,440 + +- +- +- +67,631 +(e) +1,039,488 +11,935 +(j) +183,441 + +60,000 +(a) +- +- +- +- +- +922,200 + +60,000 +(a) +- +- +- +922,200 +- +- + +59,675 +(b) +- +- +- +- +- +917,205 + +59,675 +(b) +- +- +- +917,205 +- +- + +Gary A. Newberry +- +- +- +20,482 +(c) +$ +314,808 +3,614 +(h) +$ +55,547 + +- +- +- +24,848 +(d) +381,914 +4,385 +(i) +67,397 + +- +- +- +36,890 +(e) +566,999 +6,510 +(j) +100,059 + +- +- +- +50,000 +(f) +768,500 +- +- + +21,924 +(a) +- +- +- +- +- +336,972 + +21,924 +(a) +- +- +- +336,972 +- +- + +32,550 +(b) +- +- +- +- +- +500,294 + +32,550 +(b) +- +- +- +500,294 +- +- + +Joseph C. Gatto, Jr. +- +- +- +20,482 +(c) +$ +314,808 +3,614 +(h) +$ +55,547 + +- +- +- +24,848 +(d) +381,914 +4,385 +(i) +67,397 + +- +- +- +36,890 +(e) +566,999 +6,510 +(j) +100,059 + +- +- +- +50,000 +(f) +768,500 +- +- + +21,924 +(a) +- +- +- +- +336,972 + +21,924 +(a) +- +- +- +336,972 +- +- + +32,550 +(b) +- +- +- +- +- +500,294 + +32,550 +(b) +- +- +- +500,294 +- +- + +Jerry A. Weant +- +- +- +5,598 +(c) +$ +86,041 +988 +(h) +$ +15,186 + +- +- +- +12,424 +(d) +190,957 +2,192 +(i) +33,691 + +- +- +- +10,145 +(e) +155,929 +1,790 +(j) +27,512 + +10,962 +(a) +- +- +- +- +- +168,486 + +10,962 +(a) +- +- +- +168,486 +- +- + +8,951 +(b) +- +- +- +- +- +137,577 + +8,951 +(b) +- +- +- +137,577 +- +- + +Mitzi P. Conn +- +- +- +5,598 +(c) +$ +86,041 +988 +(h) +$ +15,186 + +- +- +- +12,424 +(d) +190,957 +2,192 +(i) +33,691 + +- +- +- +10,145 +(e) +155,929 +1,790 +(j) +27,512 + +- +- +- +10,000 +(f) +153,700 +- +- + +10,962 +(a) +- +- +- +- +- +168,486 + +10,962 +(a) +- +- +- +168,486 +- +- + +8,951 +(b) +- +- +- +- +- +137,577 + +8,951 +(b) +- +- +- +137,577 +- +- + +43 +(a) +Amount s represent performance-based phantom shares settleable in 50% cash and 50% common stock on the vesting date and which will be adjusted between 0% and 200% based on our TSR compared to our specified peer companies . The adjusted performance-based phantom shares will vest on December 31, 2017. +(b) +Amount represents performance-based phantom shares settleable in 50% cash and 50% common stock on the vesting date and which will be adjusted between 0% and 200% based on our TSR compared to our specified peer companies . The adjusted performance-based phantom shares will vest on December 31, 201 8 . +(c) +Represents restricted stock units awarded May 14, 2014 and are settleable in stock on the May 14, 2017 vesting date. +(d) +Represents restricted stock units awarded May 1 5 , 2015 and are settleable in stock on the May 15, 2018 vesting date. +(e) +Represents restricted stock units awarded May 1 3 , 201 6 and are settleable in stock on the May 1 3 , 201 9 vesting date. +(f) +Amounts calculated using the closing price of $15.37 per share of our common stock on the NYSE on the last trading day of 2016 . +(g) +Represents restricted stock units awarded August 24, 2016 and are settleable in stock on the August 24, 2019 vesting date. +(h) +Represents phantom stock shares awarded May 14, 2014 and are settleable in cash on the May 14, 2017 vesting date . +(i) +Represents phantom stock shares awarded May 1 5 , 2015 and are settleable in cash on the May 1 5 , 2018 vesting date . +(j) +Represents phantom stock shares awarded May 1 3 , 201 6 and are settleable in cash on the May 1 3 , 201 9 vesting date. + +Option Exercises and Stock Vested + +The following table provides information about the value realized by the NEOs on option exercises, vesting of restricted stock units, phantom shares, and TSR phantom share award payouts during 201 6 : + + + +Exercise +Vesting +Name +Number of Shares Acquired (a) +Value Realized $ +Number of Shares Acquired +Value Realized $ (f) +Fred L. Callon +— +$ +3,040,678 +(b) +160,378 +(d) +$ +1,733,686 + +— +308,350 +(c) + +Gary A. Newberry +— +$ +1,111,097 +(b) +40,095 +(d) +$ +433,427 + +— +77,082 +(c) + +Joseph C. Gatto, Jr. +— +$ +1,111,097 +(b) +40,095 +(d) +$ +433,427 + +— +77,082 +(c) +. + +Jerry A. Weant +— +$ +303,711 +(b) +33,333 +(e) +$ +388,663 + +Mitzi P. Conn +— +$ +303,711 +(b) +16,038 +(d) +$ +173,371 + +— +30,833 +(c) + +(a) +There were no options exercised by any NEO in 201 6 . +(b) +Includes the value of the vesting of performance-based phantom shares on December 31, 201 6 that were settled in cash. The value realized reflects the taxable value to the NEO as of the date of the vesting of performance-based phantom share awards. +(c) +Represents restricted stock units awarded May 1 5 , 201 3 that were settle d in cash on the May 1 5 , 201 6 vesting date. +(d) +Represents restricted stock awarded May 15, 2013 that were settle d in stock on the May 15, 2016 vesting date. +(e) +Represents 100,000 restricted stock units awarded September 16, 2013 that were settle d in stock. Units vested one-third on each subsequent July 1 st anniversary date following the award date. +(f) +Represents the aggregate dollar amount realized on the date of the vesting of the restricted stock based on the market price of a share of Company common stock on the NYSE on the vesting date. + +Employment Agreements, Termination of Employment and Change ‑in ‑Control Arrangements + +Employment Agreements. We do not have employment agreements with any of our executive officers. + +Severance Compensation Agreements. We entered into Severance Compensation Agreements ( “ SCA ” ) with each of our NEOs. The SCA will terminate, except to the extent that any obligation of Callon thereunder remains unpaid as of such time, upon the earliest of (i) December 31, 201 7 , provided, however, that, on each anniversary date thereafter, the expiration date shall automatically be extended for one additional year unless, immediately prior to such anniversary date, either party shall have given written notice that it does not wish to extend this SCA, but in no event shall the expiration date be earlier than the second anniversary of the effective date of a change of control; (ii) the termination of the NEOs employment with Callon based on death, disability (as defined in the SCA), or cause (as defined in the SCA); and (iii) the voluntary resignation of the NEOs for any reason other than good reason (as defined in the SCA). + +Pursuant to the SCA, if the executive incurs a “ separation from service ” from Callon (as such term is defined in final Treasury Regulations issued under Code Section 409A and other authoritative guidance issued thereunder) +44 +without cause by Callon or for good reason by him within two years following a change of control of Callon (or in certain cases, prior to a change of control), then the executive is entitled to a single lump-sum cash payment (payable on the date that is six months following the triggering event) in an amount equal to three times the sum (with respect to Mr. Callon) of (i) the annual base salary in effect immediately prior to the change of control or, if higher, in effect immediately prior to the separation from service, and (ii) the greater of the average bonus earned with respect to the three most recently completed full fiscal years or the target bonus for the fiscal year in which the change of control occurs, based on a forecast that has been approved by the Board of the results for the fiscal year in which the change of control occurs. For the other NEOs, the salary and bonus multiple is two times. In addition, we must maintain at our expense until thirty-six months after a separation from service all life, disability, medical, dental, accident, and health insurance coverage for Mr. Callon. For the other NEOs, the continued benefit period is twenty-four months. If the executive’s employment is terminated because of his death or disability, we are only required to make such payments if the termination occurred within six months after a change of control. “ Good reason ” is generally defined in the SCA as a change in the executive’s compensation, benefits, position, responsibilities, or location. A change of control is generally defined in the SCA as (i) any person or group of persons acting in concert shall have become the beneficial owner of more than 50% of our outstanding common stock; (ii) our stockholders shall cause a change in the majority of the members of the Board within a twelve-month period; or (iii) we or our stockholders shall enter into an agreement to dispose of all or substantially all of our assets or outstanding capital stock. + +The SCAs also provide that, upon a change of control, all stock options shall automatically become fully exercisable and all performance shares, restricted stock, stock appreciation rights and other similar rights held by the executive shall become fully vested, provided, however, that such acceleration of vesting shall not occur if it would be an impermissible acceleration under Section 409A of the Code. If we cannot provide for acceleration of vesting as a result of provisions in existence prior to a change of control, any plan or agreement, or Section 409A, we must provide in lieu thereof a lump-sum cash payment equal to the total value of the outstanding and unvested stock rights as of the date of separation from service. + +The SCAs incorporate a provision to provide for the possible impact of the federal excise tax on excess parachute payments. The so-called “ golden parachute ” tax rules subject “ excess parachute payments ” to a dual penalty: the imposition of a 20 percent excise tax upon the recipient and non-deductibility of such payments by the paying corporation. While the excise tax is seemingly evenhanded, the excise tax can discriminate against long-serving employees in favor of new hires, against individuals who do not exercise stock options in favor of those who do and against those who elect to defer compensation in favor of those who do not. For these reasons, we believe that the “ net-best ” provision included in the SCA is appropriate. If any payment is subject to any excise tax under Section 4999 of the Internal Revenue Code of 1986, as amended, the payment will be reduced so that no portion of the payment is subject to such excise tax if the net benefit payable would be at least as much as it would have been if no reduction was made. + + +45 +Potential Payments Upon Termination or Change-in-Control + +The following table shows the estimated gross taxable compensation payable upon termination following a change in control or upon death, disability or retirement. No amounts would be payable upon termination for other causes. The information assumes, in each case, that the officer’s termination was effective as of December 31, 2016 . In presenting this disclosure, we describe amounts earned through December 31, 2016 and, in those cases where the actual amounts to be paid out can only be determined at the time of such executive’s separation from us, the estimates are of the amounts which would be paid out to the executives upon their termination. + + +Name / Reason for Termination +Base Salary (c) +Cash Bonus (c) +Accelerated Stock Award Vesting (d) +Continued +Employee +Benefits (e) +Total +Fred L. Callon - CIC (a) +$ +1,575,000 +$ +2,506,250 +$ +7,144,898 +$ +93,276 +(f) +$ +11,319,424 +Death, Disability or Retirement (b) +— +— +7,144,898 +— +7,144,898 + +Gary A. Newberry - CIC (a) +$ +800,000 +$ +1,153,333 +$ +3,929,755 +$ +32,806 +$ +5,915,894 +Death, Disability or Retirement (b) +— +— +3,929,755 +— +3,929,755 + +Joseph C. Gatto, Jr. - CIC (a) +$ +800,000 +$ +1,153,333 +$ +3,929,755 +$ +48,912 +$ +5,932,000 +Death, Disability or Retirement (b) +— +— +3,929,755 +— +3,929,755 + +Jerry A. Weant - CIC (a) +$ +500,000 +$ +450,000 +$ +1,121,441 +$ +32,806 +$ +2,104,247 +Death, Disability or Retirement (b) +— +— +1,121,441 +— +1,121,441 + +Mitzi P. Conn - CIC (a) +$ +450,000 +$ +450,000 +$ +1,275,141 +$ +48,912 +$ +2,224,053 +Death, Disability or Retirement (b) +— +— +1,275,141 +— +1,275,141 + +(a) +We entered into a Severance Compensation Agreement with each of the NEOs listed in the table above. See “Employment Agreements, Termination of Employment and Change ‑in ‑Control (“CIC”) Arrangements.” +(b) +“Disability” is generally defined as the employee’s inability to carry out the normal and usual duties of his employment on a full-time basis for an entire period of six continuous months together with the reasonable likelihood, as determined by the Board after consultation of a qualified physician, he will be unable to carry out his normal and usual duties of employment. “Retirement” is generally defined as the employee’s attainment of an age which the Board determines to be consistent with normal retirement age. +(c) +In accordance with Mr. Callon’s Severance Compensation Agreement, the computation uses a three-year multiple with respect to the severance amount relating to salary and target bonus, while a two-year multiple is used for the other NEOs. See “Employment Agreements, Termination of Employment and Change ‑in ‑Control Arrangements.” +(d) +The amounts are computed based on unvested stock awards at December 31, 2016 using the closing price of $15.37 per share of our common stock on the NYSE on the last trading day of 2016 . +(e) +Benefits consist of thirty-six months of employer provided family medical and dental insurance, life insurance, dependent life insurance, accidental death coverage and disability coverage for Mr. Callon and twenty-four months for the other NEOs in the table. +(f) +Mr. Callon’s amount includes an additional allotment for each of the three years representing premiums paid on a life insurance policy for which we have no beneficial interest. + +Director Compensation + +The compensation of our non-employee Directors is reviewed annually by the Compensation Committee and is approved by the Board. We use a combination of cash and stock-based incentive compensation to attract and retain qualified candidates to serve on our Board. In determining Director compensation, we consider the significant amount of time the Directors spend fulfilling their duties, as well as the competitive market for skilled directors. In 201 6 , the Compensation Committee directly engaged Meridian to conduct an analysis of director compensation. Specifically, Meridian evaluated competitive market data, utilizing peer and general industry data for comparison. After consideration of the recommendations and competitive market data provided by Meridian, the Compensation Committee recommended an increase beginning in 2016 of $30,000 in total annual compensation, resulting in a $20,000 increase in cash compensation from $40,000 to $60,000 and a $10,000 increase in equity award value from $125,000 to $135,000 . + +46 +Accordingly, in 2016 , e ach non-employee Director receive d compensation consisting of an annual retainer of $60,000 per year, with an additional $20,000 per year for the chairman of the Audit Committee, an additional $15,000 per year to the chairman of the Compensation Committee, an additional $10,000 per year to the chairman of the Nominating and Corporate Governance Committee, and an additional $10,000 to the chairman of the Strategic Planning and Reserves Committee. Each non-employee Director is reimbursed for reasonable out-of-pocket costs incurred to attend Board meetings. In addition to cash compensation, w e also grant to our non-employee directors restricted common shares under our stock-based compensation plan. These grants are to compensate our directors and to provide them with incentives to remain as a director by offering them a long-term stake in our potential future value. During 2016 , the Compensation Committee awarded restricted stock units with equivalent value equal to $1 3 5,000 each to Messrs. Flury, McVay, Wallace, Nocchiero, Bob, Trimble and Finch. The restricted stock units will vest ratably over three years or the Compensation Committee may determine in its sole discretion that the restricted stock units shall vest on a “qualified separation from service.” Members of our Board who are also officers or employees of us do not receive compensation for their services as Directors. The table below indicates the total compensation earned and paid during 2016 for each non-employee Director: + +Non-Employee Director Compensation for 201 6 + +Name +Fees Earned or Paid in Cash (a) +Stock Awards (f) +Option Awards +All Other Compensation +Total +Matthew R. Bob +$ +60,000 +$ +135,000 +$ +— +$ +— +$ +195,000 + +Michael L. Finch +$ +60,000 +$ +135,000 +$ +— +$ +— +$ +195,000 + +L. Richard Flury +$ +75,000 +(b) +$ +135,000 +(g) +$ +— +$ +— +$ +210,000 + +Larry D. McVay +$ +70,000 +(c) +$ +135,000 +$ +— +$ +— +$ +205,000 + +Anthony J. Nocchiero +$ +70,000 +(d) +$ +135,000 +$ +— +$ +— +$ +205,000 + +James M. Trimble +$ +60,000 +$ +135,000 +$ +— +$ +— +$ +195,000 + +John C. Wallace +$ +80,000 +(e) +$ +135,000 +(g) +$ +— +$ +— +$ +215,000 + +(a) +Does not include reimbursement of expenses associated with attending the Board meetings. +(b) +Represents annual retainer of $ 6 0,000 and an additional $15,000 for acting as chairman of the Compensation Committee. Mr. Flury elected to have his annual retainer deferred pursuant to the terms of a Deferred Compensation Plan for non-employee Directors, under which participants may elect to convert the cash fees to phantom shares and defer the receipt of the proceeds in cash until separation of service as a Director. +(c) +Represents annual retainer of $60,000 and an additional $10,000 for acting as chairman of the Strategic Planning and Reserves Committee. +(d) +Represents annual retainer of $60,000 and an additional $10,000 for acting as chairman of the Nominating and Corporate Governance Committee. +(e) +Represents annual retainer of $60,000 and an additional $20,000 per year for acting as chairman of the Audit Committee. +(f) +Amounts calculated utilizing the provisions of FASB ASC Topic 718. See notes 7 and 8 of the consolidated financial statements in our Annual Report for the year ended December 31, 201 6 regarding assumptions underlying valuation of equity awards. +(g) +Represents a Director who elected to have his restricted stock award deferred pursuant to the terms of a Deferred Compensation Plan for non-employee Directors, under which participants may elect to defer the receipt of the proceeds in cash until separation of service as a Director. +47 +STOCKHOLDERS’ PROPOSALS AND DIRECTOR NOMINATIONS +FOR THE 201 8 ANNUAL MEETING + +Stockholders who desire to present proposals at the 201 8 Annual Meeting of Stockholders and to have such proposals included in our proxy materials, must submit their proposals to us at our principal executive o ffices not later than December 3 , 201 7 . If the date of the 2018 Annual Meeting of Stockholders is changed by more than 30 days from the date of the 201 7 Annual Meeting of Stockholders, the deadline for submitting proposals is a reasonable time before we begin to print and mail our proxy materials for our 2018 Annual Meeting of Stockholders. + +If the date of the 2018 Annual Meeting of Stockholders is advanced or delayed by more than 30 calendar days from the date of the 2017 Annual Meeting of Stockholders, we shall, in a timely manner, inform our stockholders of such change, by including a notice, under Item 5, in our earliest possible quarterly report on Form 10-Q. The notice will include the new deadline for submitting proposals to be included in our Proxy Statement and the new date for determining whether we may exercise discretionary voting authority because we have not received timely notice of a matter. + +In order to avoid controversy as to the date on which we receive any such proposal, we suggest that stockholders submit their proposals by certified mail, return receipt requested, or other means that permit them to prove the date of delivery. We reserve the right to reject, rule out of order or take other appropriate action with respect to any proposal that does not comply with the requirements described above or other applicable requirements. + +Our Certificate of Incorporation requires that any person intending to nominate a person to serve as a Director of Callon must provide written notice to us of the intent to nominate at least 120 days prior to the scheduled date of the 2018 annual meeting. + +48 +ANNUAL MEETING INFORMATION + +INFORMATION CONCERNING SOLICITATION AND VOTING + +We are providing you this Proxy Statement in connection with the solicitation of proxies by our Board of Directors to be voted at the 2017 Annual Meeting of stockholders of Callon Petroleum Company. The Annual Meeting will be held on Thursday, May 11, 2017 at 9:00 a.m. CDT in the Grand Ballroom of the Natchez Grand Hotel, 111 Broadway Street, Natchez, Mississippi 39120. This Proxy Statement contains important information for you to consider when deciding how to vote on the matters brought before the meeting. Please read it carefully. + +The Board will primarily solicit proxies by mail, and we will bear all costs incurred in the solicitation of proxies, including the preparation, printing and mailing of these proxy materials. In addition to solicitation by mail, our Directors, officers and employees may solicit proxies personally or by telephone, email, facsimile or other means, without additional compensation. We may also make arrangements with brokerage houses and other custodians, nominees and fiduciaries for the forwarding of solicitation material to the beneficial owners of the common stock held by such persons, and we may reimburse those brokerage houses and other custodians, nominees and fiduciaries for reasonable expenses incurred in connection therewith. In addition, to assist us with our solicitation efforts, we have r etained the services of Morrow Sodali LLC for a fee of approximately $7,500, plus out-of-pocket expenses . + +INFORMATION ABOUT VOTING AND THE MEETING + +Who may vote + +You may vote if you are the record holder of our common stock as of the close of business on March 17, 2017 , the “Record Date.” On that date, 201,054,884 shares of our common stock were outstanding and are entitled to vote at the Annual Meeting. Each share of common stock is entitled to one vote on each matter considered at this meeting. + +Attending the Meeting + +If you meet the above criteria to vote at our Annual Meeting, you may attend the Annual Meeting. If you wish to attend the Annual Meeting in person, you must present valid, government-issued picture identification. If your shares are held in the name of a bank, broker or other nominee and you plan to attend the Annual Meeting, in order to be admitted you must present proof of your beneficial ownership of the common stock, such as a bank or brokerage account statement, indicating that you owned shares of our common stock at the close of business on the Record Date. + +For safety and security reasons, no cameras, recording equipment, cellular telephones, electronic devices, large bags, briefcases or packages will be permitted in the Annual Meeting. No banners, signs, firearms or weapons will be allowed in the meeting room. We reserve the right to inspect all items entering the meeting room. + +Proposals + +Qualifying stockholders will vote on the following four proposals at the meeting: + +1) +The election of Directors; +2) +Advisory approval of our executive compensation; +3) +Advisory approval of the frequency of our future advisory votes on executive compensation; and +4) +The ratification of the appointment of Grant Thornton LLP. + +Notice and Access + +The Company is furnishing proxy materials to its stockholders through the Internet as permitted under the rules of the Securities and Exchange Commission (the "SEC"). Under these rules, the Company’s stockholders will receive a Notice Regarding the Availability of Proxy Materials instead of a paper copy of the Notice of 2017 Annual Meeting of Stockholders and Proxy Statement, our proxy card, and our Annual Report on Form 10-K, often referred to as “notice and access.” We believe this process gives us the opportunity to serve you more efficiently by making the proxy materials available quickly online and reducing costs associated with printing and distributing our proxy materials. This Notice includes instructions on how to access the proxy materials over the Internet or to request +49 +a paper copy of proxy materials, including a proxy card or voting instruction form. In addition and as described in the Notice, stockholders may request to receive future proxy materials in printed form by mail or electronically by email. A stockholder’s election to receive proxy materials by mail or email will remain in effect until terminated by the stockholder. + +Our Board has made these proxy materials available to you on the Internet on or about March 29, 2017 at https://www.iproxydirect.com/CPE, which is the cookies-free website described in the Notice. Accordingly, we are sending the Notice to our stockholders of record and beneficial owners of our stock, and filing the Notice with the SEC, on or about March 29, 2017 . Please note that the Notice identifies the items on which stockholders will vote at the meeting, but stockholders cannot vote by marking the Notice and returning it. The Notice provides instructions on how to vote via the Internet, by telephone or by requesting and returning a paper proxy card, or by submitting a ballot in person at the meeting. + +In addition to the proxy materials being available for review at https://www.iproxydirect.com/CPE, the site contains instructions on how to access the proxy materials on a website or to request free of charge printed materials, including a copy of our Form 10-K for the year ended December 31, 2016 as filed with the SEC. On an ongoing basis, stockholders may contact our Corporate Secretary at our principal offices in Natchez, Mississippi to request proxy materials by mail or by e-mail. + +Casting your vote + +There are three methods for registered stockholders to vote by proxy without attending the Annual Meeting: + +1) +By Internet . You can vote online via the Internet by going to the website address for Internet voting provided on your Notice or proxy card. You will need to use the control and request ID appearing on your proxy card to vote via the Internet. You can use the Internet to transmit your voting instructions up until 11:59 p.m. CDT on May 10, 2017 . If you vote via the Internet, you do NOT need to vote by telephone or return a proxy card. Internet voting is available 24 hours a day. +2) +By Telephone . You can also vote by telephone by calling the toll-free telephone number provided on your proxy card. You will need to use the control and request ID appearing on your proxy card to vote by telephone. You may transmit your voting instructions from any touch-tone telephone up until 11:59 p.m. CDT on May 10, 2017 . Voting by telephone is available 24 hours a day. +3) +By Mail. If you received a printed copy of the proxy card, you can vote by marking, dating and signing it, and returning it in the reply envelope provided. Please promptly mail your proxy card to ensure that we receive it prior to the closing of the polls at the Annual Meeting. + +If you get more than one Notice and/or Proxy Statement then it means that your shares are likely registered in more than one account. Please provide voting instructions for all Notices, proxy and voting instruction cards you receive. If you send us a signed proxy card without marking your voting selections, your shares will be voted on each proposal as recommended by our Board, and in the discretion of the proxy holders as to any other matters that may properly come before the meeting or any postponement or adjournment of the meeting. The Board is not presently aware of any other proposals or any other business to be considered at the Annual Meeting. + +Difference Between a “Stockholder of Record” and a “Street Name” Holder + +If your shares are registered directly in your name, you are considered the stockholder of record with respect to those shares. If your shares are held in a stock brokerage account or by a bank, trust or other nominee, then the broker, bank, trust or other nominee is considered to be the stockholder of record with respect to those shares. However, you are still considered to be the beneficial owner of those shares, and your shares are said to be held in “street name.” Street name holders generally cannot submit a proxy or vote their shares directly and must instead instruct the broker, bank, trust or other nominee how to vote their shares. You will receive instructions from your broker, bank or other nominee that you must follow in order for your broker, bank or other nominee to vote your shares per your instructions. Many brokerage firms and banks have a process for their beneficial holders to provide instructions via the Internet or over the telephone. If Internet or telephone voting is unavailable from your broker, bank or other nominee, please complete and return the enclosed voting instruction card in the addressed, postage paid envelope provided. + +In the event you do not provide instructions on how to vote shares held in street name , your broker may have authority to vote your shares. Under the rules that govern brokers who are voting with respect to shares that are held in street name , brokers have the discretion to vote such shares on routine matters, but they are not permitted to vote (a “broker non-vote”) on non-routine or non-discretionary items absent instructions from the beneficial +50 +owner. With respect to the Annual Meeting, brokers are prohibited from exercising discretionary authority in the election of Directors and the non-binding advisory proposal on executive compensation, but such brokers may exercise discretionary authority with respect to the ratification of the appointment of our independent registered public accounting firm. Your vote is especially important. Therefore, please promptly instruct your broker regarding how to vote your shares on these matters. + +If you hold shares through a broker, bank or other nominee and wish to be able to vote in person at the meeting, you must obtain a legal proxy from your broker, bank or other nominee and present it to the inspector of election with your ballot at the meeting. If you need assistance in obtaining a legal proxy, please call Morrow Sodali LLC toll-free at (877) 787-9239 . Submitting your proxy by mail will not affect your right to vote in person if you decide to attend the Annual Meeting. + +Revoking a proxy + +You may revoke or change a previously delivered proxy at any time before the meeting by delivering another proxy with a later date, by voting again via the Internet or by telephone, or by delivering written notice of revocation of your proxy to our Corporate Secretary at our principal offices in Natchez, Mississippi before the beginning of the meeting. You may also revoke your proxy by attending the meeting and voting in person, although attendance at the meeting will not necessarily revoke a valid proxy that was previously delivered. If you hold shares through a broker, bank or other nominee, you must contact that nominee to revoke any prior voting instructions. You also may revoke any prior voting instructions by voting in person at the meeting if you obtain a legal proxy as described above. +Recommendation of the Board + +The Board unanimously recommends you vote “FOR” each of the proposals. A proxy that is properly completed and submitted will be voted at the Annual Meeting in accordance with the instructions on the proxy. If you properly complete and submit a proxy, but do not indicate any contrary voting instructions, your shares will be voted as follows: +· +“ FOR ” the election of each of the nominees named in this Proxy Statement to our Board of Directors; +· +“ FOR ” the approval, on an advisory basis, of our executive compensation; +· +“ FOR ” “One Year” as the frequency of our future advisory votes on the compensation of our executive officers; and +· +“ FOR ” the ratification of the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2017 + +Counting the Vote + +We have appointed Issuer Direct to serve as the inspector of election and to tabulate and certify the vote. + +Quorum + +A quorum is the number of shares that must be present to hold the meeting. The quorum requirement for the meeting is a majority of the outstanding shares as of the Record Date, present in person or represented by proxy. We will count your shares for purposes of determining if there is a quorum if either you are present and vote in person at the meeting or have voted on the Internet, by telephone or by properly submitting a proxy card or voting instruction card by mail. Abstentions and broker non-votes also count toward the quorum. + +Required Vote + +Proposal 1. Election of Directors + +The nominees for election as directors will be elected by a plurality of all votes cast, subject to the Company’s majority voting policy. Because the number of director nominees equals the number of directors to be elected at this Annual Meeting, to be elected, each director must receive a majority of the votes cast. A majority of the votes cast means that the number of shares voted “for” a director must exceed the number of shares voted “against” that director. Abstentions and broker non-votes will not be included in determining the number of votes cast in the election of directors and will not have any effect on the outcome. This majority voting standard is discussed further under “Proposal 1 – Election of Directors – Majority Vote Standard”. + +51 +Proposal 2. Advisory Vote to Approve Named Executive Officer Compensation + +The advisory vote on our executive compensation is non-binding, so no specific vote is required. Abstentions will have the same effect as a vote against this proposal, and broker non-votes will not be counted as shares present and entitled to vote, and, accordingly, will not affect the outcome of the vote on this proposal. While the law requires this advisory vote, the vote will neither be binding on us or our Board, nor will it create or imply any change in the fiduciary duties of, or impose any additional fiduciary duty on, us or our Board. However, the views of our stockholders are important to us, and our Compensation Committee will take into account the outcome of the vote when considering future executive compensation decisions. We urge you to read the section entitled “Compensation Discussion and Analysis”, which discusses in detail how our executive compensation program implements our compensation philosophy. + +Proposal 3. Advisory Vote to Approve Frequency of Future Advisory Votes on Named Executive Officer Compensation + +The advisory vote on the frequency of future advisory votes on the compensation of our executive officers receiving the greatest number of votes cast (i.e., one year, two years or three years) will be deemed by us as the frequency that has been selected by our stockholders. Abstentions and broker non-votes are not treated as votes cast, and therefore will have no effect on the advisory vote. Because your vote is advisory, it will not be binding on the Board or the Company. However, the Board and the Executive Compensation Committee will consider the outcome of the vote in determining how often to hold future advisory votes on executive compensation. + +Proposal 4. Ratification of the Appointment of the Independent Registered Public Accounting Firm + +Ratification of the appointment of Grant Thornton LLP as our independent registered public accounting firm for the 2017 fiscal year requires the affirmative vote of a majority of the shares of common stock entitled to vote and present in person or by proxy at the Annual Meeting. Abstentions and broker non-votes will have the same effect as a vote against this proposal. + +Voting Results + +We will announce the preliminary voting results at the Annual Meeting and will publish the final voting results in a current report on Form 8-K to be filed with the SEC within four business days of the meeting. + +HOUSEHOLDING INFORMATION + +The SEC permits companies and intermediaries (such as brokers and banks) to satisfy delivery requirements for proxy statement s and annual reports with respect to two or more stockholders sharing the same address by delivering a single proxy statement and annual report to those stockholders. This process, which is commonly referred to as “ householding, ” is intended to reduce the volume of duplicate information stockholders receive and reduce expenses for companies. Both we and some of our intermediaries may be householding our proxy materials and annual report. Once you have received notice from your broker or another intermediary that they will be householding materials sent to your address, householding will continue until you are notified otherwise or until you revoke your consent. Should you wish to receive separate copies of our Annual Report and Proxy Statement in the future, we will promptly deliver a separate copy of each of these documents to you if you send a written request to us at our address appearing on the cover of this proxy statement, to the attention of the Corporate Secretary. If you hold your shares through an intermediary that is householding and you want to receive separate copies of our Annual Report and Proxy Statement in the future, you should contact your bank, broker or other nominee record holder. + +FINANCIAL STATEMENTS AND OTHER AVAILABLE DOCUMENTS + +Financial statements for our most recent fiscal year are contained in the 201 6 Annual Report to Stockholders and our Report on Form 10-K for the fiscal year ended December 31, 201 6 filed with the SEC on February 27 , 201 7 . Our Annual Report, our Annual Report on Form 10-K, Corporate Governance Guidelines , Code of Business Conduct and Ethics, and Charters of Board Committees may be accessed by stockholders on our website at www.callon.com or printed copies are available upon written request to the B.F. Weatherly, Corporate Secretary at our principal executive office in Natchez, Mississippi. + +52 +OTHER BUSINESS + +The Board is not aware of any matter to be acted upon at the 201 7 Annual Meeting other than those described above. If other business properly comes before the 201 7 Annual Meeting, the persons named on the proxy will vote the proxy in accordance with what they consider to be in the best interests of us and our stockholders. Please sign, date, and return your proxy promptly to avoid unnecessary expense. All stockholders are urged, regardless of the number of shares owned, to participate in the 201 7 Annual Meeting by voting their shares. + + +By Order of the Board of Directors + + + + +March 29, 2017 +Fred L. Callon +Natchez, Mississippi +Chairman and CEO + + +53 + + + +CALLON PETROLEUM COMPANY +THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS +annual meeting OF STOCKHOLDERS – MAY 11, 2017 at 9:00 AM CDT +CONTROL ID: +REQUEST ID: + + +The undersigned hereby appoints Fred L. Callon and B.F. Weatherly and each of them, as proxies of the undersigned, each with full power to act without the other and with full power of substitution and re-substitution, to vote all the shares of Common Stock of Callon Petroleum Company that the undersigned is entitled to vote at the Annual Meeting of Stockholders to be held on May 11, 2017 in the Grand Ballroom of the Natchez Grand Hotel, 111 Broadway Street, Natchez, Mississippi 39120, and at any adjournments or postponements thereof, with all the powers the undersigned would have if personally present as follows: +IF NO DIRECTION AS TO THE MANNER OF VOTING THIS PROXY IS MADE, THIS PROXY WILL BE VOTED “FOR” PROPOSALS 1, 2 AND 4, +AND FOR “ONE YEAR” ON PROPOSAL 3 AS INDICATED ON THE REVERSE SIDE HEREOF. +You are encouraged to specify your choice by marking the appropriate box (SEE REVERSE SIDE), but you need not mark any box if you wish to vote in favor. + +(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.) + + +VOTING INSTRUCTIONS +If you vote by phone, fax or internet, please DO NOT mail your proxy card. + + +MAIL: +Please mark, sign, date, and return this Proxy Card promptly using the enclosed envelope. +FAX: +Complete the reverse portion of this Proxy Card and Fax to 202-521-3464. +INTERNET: +https://www.iproxydirect.com/CPE +PHONE: +1-866-752-VOTE(8683) + +54 +ANNUAL MEETING OF THE STOCKHOLDERS OF +CALLON PETROLEUM COMPANY +PLEASE COMPLETE, DATE, SIGN AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. +PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE: ☒ + +PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS + +Proposal 1 +FOR +ALL +WITHHOLD +ALL +FOR ALL +EXCEPT + +Election of Directors: +☐ +☐ + +Anthony J. Nocchiero (Class II Director, three-year term) +☐ + +Matthew Regis Bob (Class II Director, three-year term) +☐ +Control ID: + +James M. Trimble (Class II Director, three-year term) +☐ +REQUEST ID: + +Proposal 2 +FOR +AGAINST +ABSTAIN + +The approval, by non-binding advisory vote, of the compensation of our named executive officers. +☐ +☐ +☐ + +Proposal 3 +ONE +YEAR +TWO +YEARS +THREE +YEARS +ABSTAIN + +Advisory vote on the frequency of future advisory votes on the compensation of our executive officers. +☐ +☐ +☐ +☐ +Proposal 4 +FOR +AGAINST +ABSTAIN + +The ratification of the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2017. +☐ +☐ +☐ + +Proposal 5 + +The transaction of such other business as may properly come before the Annual Meeting or any adjournment(s) thereof. + + +MARK “X” HERE IF YOU PLAN TO ATTEND THE MEETING: ☐ +The Board recommends you vote “ FOR ” on proposals 1, 2 and 4 and “ ONE YEAR ” on proposal 3. +In the event that you return a signed proxy card on which no directions are specified, your shares will be voted as recommended by the Company’s Board on the proposal, and in the discretion of the proxy holders as to any other matters that may properly come before the meeting or any adjournments or postponements of the meeting. The Board is not presently aware of any other proposals or any other business to be considered at the Annual Meeting. +MARK HERE FOR ADDRESS CHANGE ☐ New Address (if applicable): +____________________________ +____________________________ +____________________________ +IMPORTANT: Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person. +Dated: ________________________, 2017 + +(Print Name of Stockholder and/or Joint Tenant) +(Signature of Stockholder) +(Second Signature if held jointly) + +55 + + + + + + + +Callon Petroleum Company +CONTROL ID: +REQUEST ID: + +IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS +for the Annual Meeting of Stockholders + +DATE: +Thursday, May 1 1 , 201 7 + +TIME: +9:00 am central daylight time + +LOCATION: +Grand Ballr oom of the Natchez Grand Hotel, 111 Broadway Street, Natchez, Mississippi 39120 +HOW TO REQUEST PAPER COPIES OF OUR MATERIALS +PHONE: +Call toll free +1-866-752-8683 +FAX: +Send this card to +202-521-3464 +INTERNET: +https://www.iproxydirect.com/CPE +and follow the on-screen instructions. +EMAIL: +proxy@iproxydirect.com +Include your Control ID in your email. +This communication represents a notice to access a more complete set of proxy materials available to you on the Internet. We encourage you to access and review all of the important information contained in the proxy materials before voting. The proxy statement is available at: https://www.iproxydirect.com/CPE +If you want to receive a paper copy of the proxy materials you must request one. There is no charge to you for requesting a copy. To facilitate timely delivery please make the request, as instructed above, before April 28, 2017. +you may enter your voting instructions at https://www.iproxydirect.com/CPE +until 11:59 pm eastern time May 10, 2017. + +The purposes of this meeting are as follows: + +1. to elect three Class II directors to serve on our board of directors for three years; +2. advisory vote to approve named executive officer compensation; +3 . advisory vote on the future of frequency advisory votes on the compensation of our executive officers; +4. ratification of the appointment of grant thornton, ll p as the company’s independent registered public accounting firm for 2017; and +5. to transact such other business as may properly come before the annual meeting or any adjustment thereof. +Pursuant to Securities and Exchange Commission rules, you are receiving this Notice that the proxy materials for the Annual Meeting are available on the Internet. Follow the instructions above to view the materials and vote or request printed copies. +The board of directors has fixed the close of business on March 17, 2017 as the record date for the determination of stockholders entitled to receive notice of the Annual Meeting and to vote the shares of our common stock, par value $.001 per share, they held on that date at the meeting or any postponement or adjournment of the meeting. +The Board of Directors recommends that you vote ‘for’ proposals 1, 2 and 4 and ‘one year’ on proposal 3 above. +Please note - This is not a Proxy Card - you cannot vote by returning this card + +56 + + + + + + + + + + + + + + + + + +CALLON PETROLEUM COMPANY +SHAREHOLDER SERVICES +500 Perimeter Park Drive Suite D +Morrisville NC 27560 +FIRST-CLASS MAIL +US POSTAGE +PAID +CARY NC +PERMIT # 869 + + + + + + +Time Sensitive shareholder information enclosed + + + + + + + + + + + + + +IMPORTANT SHAREHOLDER INFORMATION + +your vote is important + +57 \ No newline at end of file diff --git a/raw/proxies/0000928022/0000928022-17-000026/proxy_rpt.txt b/raw/proxies/0000928022/0000928022-17-000026/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..65408483963bc8183b5f77ba812eab8190c28909 --- /dev/null +++ b/raw/proxies/0000928022/0000928022-17-000026/proxy_rpt.txt @@ -0,0 +1,25 @@ +Certain Relationships and Related Party Transactions + +The Board’s Audit Committee charter provides that the Audit Committee shall review and approve all related party transactions. A transaction will be considered a “related party transaction” if the transaction would be required to be disclosed under Item 404 of Regulation S-K. In addition, our Code of Business Conduct and Ethics provides that an officer’s or a Director’s conflict of interest with Callon may only be waived if the Nominating and Corporate Governance Committee approves the waiver and the full Board ratifies the waiver. As of December 31, 201 6 , we are not aware of any related party transactions with our executive officers that may cause a conflict of interest with us. + +Recoupment Policy + +We have no recoupment policy applicable to annual incentive bonuses or equity awards other than those required under Sarbanes-Oxley legislation, though the Committee continuously evaluates the need to adopt such a policy. + + +38 +Compensation Committee Report + +The Compensation Committee has reviewed and discussed with management the CD&A required by Item 402(b) of Regulation S-K promulgated under the Securities Exchange Act of 1934, as amended, and based on such review and discussions, the Committee has recommended to the Board that the CD&A be included in this Proxy Statement relating to the 201 7 Annual Meeting of Stockholders. + +Respectfully submitted by the Compensation Committee of the Board, + +L. Richard Flury, Chairman +Larry D. McVay +Anthony J. Nocchiero +John C. Wallace +James M. Trimble + + + +39 \ No newline at end of file diff --git a/raw/proxies/0000928022/0000928022-18-000022/proxy.txt b/raw/proxies/0000928022/0000928022-18-000022/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..d0621b14ba2d2754ee5a9b7a2c32a0d315afae50 --- /dev/null +++ b/raw/proxies/0000928022/0000928022-18-000022/proxy.txt @@ -0,0 +1,3044 @@ +DEF 14A +1 +a2018proxy.htm +DEF 14A +Document +UNITED STATES SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +________________________________________________ +SCHEDULE 14A +________________________________________________ +Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 +Filed by the Registrant þ +Filed by a Party other than the Registrant ¨ +Check the appropriate box: +¨ +Preliminary Proxy Statement +¨ +Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +þ +Definitive Proxy Statement +¨ +Definitive Additional Materials +¨ +Soliciting Material Pursuant to §240.14a-12 +________________________________________________ +Callon Petroleum Company +(Name of Registrant as Specified in Its Charter) +________________________________________________ +(Name of of Person(s) Filing Proxy Statement if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +þ +No fee required. +¨ +Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. +(1) +Title of each class of securities to which transaction applies: +(2) +Aggregate number of securities to which transaction applies: +(3) +Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): +(4) +Proposed maximum aggregate value of transaction: +(5) +Total fee paid: +¨ +Fee paid previously with preliminary materials. +¨ +Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. +(1) +Amount Previously Paid: +(2) +Form, Schedule or Registration Statement No.: +(3) +Filing Party: +(4) +Date Filed: +NOTICE OF ANNUAL MEETING OF STOCKHOLDERS +To our Stockholders: +The 2018 Annual Meeting of Stockholders (the “Annual Meeting”) of Callon Petroleum Company. (“Callon,” the “Company,” “us,” “we,” “our” or like terms), a Delaware corporation, will be held in Natchez, Mississippi, on Thursday, May 10, 2018, at 9:00 a.m. Central Daylight Time (“CDT”), in the Grand Ballroom of the Natchez Grand Hotel, 111 Broadway Street, Natchez, Mississippi 39120, for the following purposes: +1. +To elect three Class III directors to serve on our Board of Directors (the “Board”), each for three years; +2. +To approve, on a non-binding advisory basis, the compensation of our named executive officers (“NEOs”); +3. +To approve the Company’s 2018 Omnibus Incentive Plan (the “2018 Plan”); +4. +To ratify the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2018; and +5. +To transact such other business as may properly come before the Annual Meeting or any adjournment(s) thereof. +This Notice of Annual Meeting of Stockholders and the Proxy Statement herein provide further information on the Company’s performance and corporate governance and describe the matters to be presented at the Annual Meeting. The Board set March 16, 2018 as the record date (the “Record Date”) for the Annual Meeting. Holders of record of our common stock at the close of business on the Record Date are entitled to receive this notice of, and vote at the Annual Meeting. +Beginning on or about March 23, 2018, we mailed an Important Notice Regarding the Availability of Proxy Materials (the “Notice”) to our holders of record. The Notice contained instructions on how to access the Proxy Statement and related materials on the Internet and how to enter your voting instructions. Instructions for requesting a paper copy of the proxy materials are contained in the Notice. A list of stockholders entitled to vote at the Annual Meeting will be available at our office at 200 North Canal Street, Natchez, MS 39120 during normal business hours for a period of ten days prior to the meeting and will also be available for inspection at the Annual Meeting. +Whether or not you plan to attend the Annual Meeting, please vote electronically via the Internet or by telephone, or please complete, sign, date and return the accompanying proxy card as soon as possible. See “Annual Meeting Information” towards the end of this Proxy Statement for more details. +We thank you for your continued support and look forward to seeing you at the Annual Meeting. +Natchez, Mississippi +By Order of the Board of Directors +March 23, 2018 +B.F. Weatherly +Corporate Secretary +YOUR VOTE IS IMPORTANT! +Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be held on +May 10, 2018, at 9:00 a.m., Central Daylight Time : +This Proxy Statement and our 2017 Annual Report on Form 10-K are available at: +https://www.viewproxy.com/CallonPetroleum/2018 and www.callon.com +If you have any questions or need assistance voting your shares, please call our proxy solicitor: +Alliance Advisors +200 Broadacres Drive, 3rd Fl. +Bloomfield, NJ 07003 +Banks and Brokerage Firms, please call: (973) 873-7700 +Stockholders, please call toll free: (833) 786-5511 +2 +PROXY STATEMENT SUMMARY +This summary is included to provide an introduction and overview of the information contained in this Proxy Statement. This is a summary only and highlights information contained elsewhere in this Proxy Statement. This summary does not contain all of the information you should consider and is not a form for voting. You should read the entire Proxy Statement carefully before voting. Additional information regarding our 2017 performance can be found in our Annual Report on Form 10-K. +Annual Meeting of Stockholders +Date and Time +May 10, 2018, at 9:00 a.m., Central Daylight Time +Location +Natchez Grand Hotel, 111 Broadway Street, Natchez, Mississippi 39120 +Record Date +March 16, 2018 +Proxy Voting +Shareholders as of the close of business on the record date are entitled to vote. Each share of common stock is entitled to one vote by proxy or at the annual meeting +Items to be Voted on at the Annual Meeting +Proposals +Board Recommendations +1. +Election of directors +FOR each nominee +2. +Advisory vote to approve NEO compensation +FOR +3. +Approval of the 2018 Plan +FOR +4. +Ratification of the appointment of independent registered public accounting firm +FOR +2017 Performance Highlights +2017 was a year of transition, growth and solid results for Callon. In May 2017, we unexpectedly lost our long-time Board Chairman and Chief Executive Officer (“CEO”), Fred Callon, which led to several changes on our leadership team. Even with these transitions, the company achieved strong results as we continued to grow production, reserves, and cash margins against the backdrop of an improving, but tenuous commodity environment. Importantly, we successfully integrated over 40,000 net acres in the Midland and Delaware Basins that were acquired over the last two years, ensuring that these investments had a near-term impact on stockholder value in 2017. Other key accomplishments included the following: +• +Increased daily production approximately 50% year over year to 22,940 barrels of oil equivalent per day (“Boepd”), with a sustained oil content of nearly 80%; +• +Achieved three-year compounded annual production growth rate of 60%; +• +Increased estimated net proved reserves nearly 50% year over year to 137 million barrels of oil equivalent (“MMBoe”), with 51% classified as proved developed producing; +• +Replaced 2017 production by 642%; +• +Increased corporate cash margins by 34% to $25.05 per barrels of oil equivalent (“Boe”) despite an inflationary service cost environment and substantial growth in employee count to execute our growth strategy; +• +Decreased lease operating expense (“LOE”) per Boe by 13% and general and administrative expense (“G&A”) per Boe by 32% year over year; +• +Improved our “drill bit” finding and development (“F&D”) costs to $8.21 per Boe despite an inflationary service cost environment; +• +EBITDA margins continued to be amongst highest within our Permian peer group; +• +Closed on our acquisition of over 16,000 net acres in the Delaware Basin, establishing our new Spur operating area as a beachhead for future growth; +• +Subsequently acquired 2,488 contiguous net acres within our footprint during the year; +• +Achieved a 65% decrease in water spills and 50% decrease in oil spills per MMBO vs 2016; +• +Nearly doubled participation in our proactive safety observation card program (Callon and contractors) compared to 2016, with ~4,500 cards submitted; +• +Reduced our Debt/Last Three Quarters Annualized (“LTQA”) EBITDA ratio (i) to 2.2x (1.8x on a Debt/Last Quarter Annualized (“LQA”) basis (i) ); +• +Issued Senior Notes at an effective yield of 5.2%, contributing to a improved cost of capital; +• +Increased liquidity by increasing the borrowing base to $700 million and also added four lending institutions to our bank group. +(i) See Appendix B for a reconciliation of Non-GAAP financial measures. +3 +Executive Compensation Highlights +Our compensation policies and practices promote a performance-based culture and align our executives’ interests with those of our stockholders through a strong emphasis on at-risk compensation tied to the achievement of performance objectives and the creation of stockholder value. In this Proxy Statement, you will find a discussion of our pay-for-performance compensation program structured to align executive pay with Company performance, stockholder expectations and prevailing market practices. Key actions in 2017 included the following: +• +With the sudden passing of our long-time CEO and Chairman of the Board Fred L. Callon in May 2017, the Board approved the promotion of Joseph C. Gatto, Jr., previously President and Chief Financial Officer (“CFO”), to CEO, and the Compensation Committee increased salaries and granted restricted stock unit (“RSUs”) awards for Mr. Gatto and Chief Operating Officer (“COO”) Gary Newberry commensurate with their expanded responsibilities; +• +As a result of the achievements detailed above and in the Compensation Discussion and Analysis (“CD&A”) section, the Compensation Committee awarded bonuses above target for our NEOs for 2017 performance; +• +The Compensation Committee granted long-term incentives to our NEOs, 60% of which were tied to our Total Stockholder Return (“TSR”); and +• +The Compensation Committee certified the results of the 2015 grants of performance-based stock units (“PSUs”), which measured our TSR against certain of our peers for the 2015 to 2017 time period, ranking third out of 13 peers, resulting in 183% of the targeted number of PSUs vesting. +Approximately 96% of the shares voted at our 2017 Annual Meeting approved our 2016 executive compensation by supporting our “say-on-pay” proposal. +Key Elements of Our Executive Compensation +• +“Pay-for-Performance” philosophy linking incentive compensation directly to performance, with a significant portion of total annual compensation placed “at risk” +• +Competitive base salary +• +Annual cash bonus incentive tied to the achievement of Company performance objectives +• +Long-term equity-based incentive awards, including time-based RSUs and a PSU program based on relative TSR +• +Carefully considered performance metrics that do not encourage excessive risk-taking +• +Balanced consideration of internal pay parity, external competitiveness and performance results +• +Competitive benefit plans and programs in line with our overall employee population, including retirement and health benefits, and change in control severance protection, but no significant perquisites. +Governance Highlights +We are committed to effective and sustainable corporate governance, which we believe strengthens Board and management accountability, promotes the long-term interests of our stockholders and helps build public trust in our Company. We continually assess our core values and governance principles to ensure that we operate our business responsibly, ethically and in a manner aligned with the interests of our stockholders. Highlights of our commitment to strong corporate governance include the following: +• +Board: Six meetings in 2017 +◦ +Committee meetings: +▪ +Audit: Five meetings +▪ +Compensation: Five meetings +▪ +Nominating and Corporate Governance: Six meetings +▪ +Strategic Planning and Reserves: Three meetings +• +All seven of the current directors are independent, and if the nominated directors are elected, then seven out of eight directors will be independent +• +All committees are comprised entirely of independent directors +• +Appointed an independent, non-executive director as Chairman of the Board +• +Paced refreshment of the Board; following the 2018 Annual Meeting, if the nominated directors are elected, five of the eight directors will have joined within the last five years +• +Board includes a balance of experience, tenure and qualifications in areas important to our business +• +Overboarding policy in place for directors +• +Regular executive sessions of independent directors +4 +• +Updated all governance documents, including all committee charters, the Code of Business Conduct and Ethics, and the Corporate Governance Guidelines, which increased focus on the composition of the Board and the director selection process, including emphasis on diversity, as reflected in the nominees for this Annual Meeting +• +Conduct annual Board and committee self-evaluations +• +Annual Say-On-Pay voting +• +Majority vote standard for uncontested director elections +• +Significant director and executive officer stock ownership guidelines +• +Regular succession planning +• +Independent executive compensation consultant reporting to the Compensation Committee +• +No employment agreements with NEOs +• +No excise or other tax gross-ups in our compensation plans +• +Double-trigger change-in-control provisions in our severance agreements and equity awards +• +No Poison Pill (Stockholder Rights Plan) +• +Stringent insider trading, anti-hedging and anti-pledging policies +• +Active stockholder engagement practices +5 +PROPOSAL 1 - ELECTION OF DIRECTORS +The Board currently consists of seven directors, and our Certificate of Incorporation provides for a classified Board. The current Board is divided into three classes designated as Class I, Class II and Class III, with staggered, three-year terms. The following table provides information with respect to all current directors and the nominees for Class III terms who have been nominated for election at the 2018 Annual Meeting. +Position (Committee Memberships) +Name +Age +Director Since +Audit +Compensation +Nominating and Corporate Governance +Strategic Planning and Reserves +Class I Directors (a) +Michael L. Finch +62 +2015 +ü +ü +ü +Larry D. McVay +70 +2007 +ü +ü +Chair +John C. Wallace (b) +79 +1994 +Chair +ü +ü +Class II Directors (c) +Matthew R. Bob +60 +2014 +Chair +ü +ü +Anthony J. Nocchiero +66 +2011 +ü +ü +Chair +ü +James M. Trimble +69 +2014 +ü +ü +ü +Class III Directors (d) +Barbara J. Faulkenberry (e) +58 +L. Richard Flury (e)(f) +70 +2004 +ü +ü +ü +Joseph C. Gatto, Jr. (e) +47 +(a) +Term expires in 2019. +(b) +Retiring in 2018. +(c) +Term expires in 2020. +(d) +If elected, term will expire in 2021. +(e) +Nominee. +(f) +Chairman of the Board. +Based on the recommendations from the Nominating and Corporate Governance Committee, our Board has nominated one continuing Class III Director, L. Richard Flury, to stand for re-election, and two new nominees, Barbara J. Faulkenberry, a retired two-star Air Force General, and Joseph C. Gatto, Jr., the Company’s President and CEO, to stand for election to the Board for a three-year term expiring at our 2021 Annual Meeting, or, in each case, until the election and qualification of their respective successors or until their earlier death, retirement, resignation or removal. Mr. Wallace has informed the Board of his intent to retire upon the close of 2018 Annual Meeting. Following this retirement, Class I will be made up of two directors. +Director Nominees +The following biographies reflect the particular experience, qualifications, attributes and skills that led the Board to conclude that each nominee should serve on the Board: +Barbara J. Faulkenberry +Class III Director Nominee +Major General (Ret.) Faulkenberry is a first-time nominee for the Board. General Faulkenberry retired from the U.S. Air Force in 2014 as a Major General (2-stars) after a 32-year career, finishing in the top 150 leaders of a 320,000-person global organization. Her last assignment was as Vice Commander (COO) and interim Commander (CEO) of a 37,000-person organization conducting all global Department of Defense air cargo, passenger, and medical patient movements with 1,100 military aircraft plus contracted commercial aircraft. General Faulkenberry is currently an independent director for USA Truck, a publicly-traded provider of logistics and trucking services across North America, where she serves as chair of the Technology Committee and as a member of the Nominating and Corporate Governance Committee. She is a National Association of Corporate Directors (“NACD”) Board Leadership Fellow and is highly involved with their director-focused education in cyber security to complement her military experience in cyber defenses, both of which contribute to best practices in corporate governance and cyber security. She received a BS degree from the Air Force Academy in 1982, an MBA from Georgia College in 1986, and a Master of National Security from the National Defense University in 1999. She’s also attended strategic-level leadership courses at Harvard, Cambridge, and Syracuse Universities. General Faulkenberry brings to the Company senior leadership experience in the areas of logistics, strategic planning, risk management, technology, cyber security, and leadership development, which we believe qualifies her to serve as a member of our Board. +6 +L. Richard Flury +Class III Director Nominee, Chairman of the Board +Mr. Flury was appointed to the Board in 2004. In May 2017, with the passing of our then Chairman of the Board, Fred L. Callon, Mr. Flury was selected as the Chairman of the Board. Mr. Flury has been retired since 2001. Prior to 2001, he spent over 30 years with Amoco Corporation, and later, BP p.l.c., most recently as Chief Executive, Gas and Power and Renewables. Prior to Amoco’s merger with BP in 1998, he served in various executive positions, including Chief Executive for Worldwide Exploration and Production and Executive Vice President of Amoco Corporation. Mr. Flury was a member of the Board of QEP Resources, Inc., a publicly traded oil and gas exploration company, from 2010 until 2015, and is also a director and the non-executive Chairman of Chicago Bridge and Iron Company, N.V., a publicly-traded engineering, procurement and construction company. He is a graduate of the University of Victoria (Canada). Mr. Flury has many years of prior experience with a major oil and gas company, as well as continued involvement in the industry through his other directorship positions. Mr. Flury’s vast experience and extensive knowledge of the oil and gas exploration and production (“E&P”) industry and service on other boards of directors, together with his executive-level perspective and strategy-making abilities, strengthen the Board’s collective qualifications, skills and experience, and will continue to prove very beneficial to us. +Joseph C. Gatto, Jr. +Class III Director Nominee, President and CEO +Mr. Gatto joined the Company in April 2012 as Senior Vice President, Corporate Finance, with responsibility for our capital markets and strategic planning functions, in addition to investor relations activities. Effective March 31, 2014, Mr. Gatto was appointed Chief Financial Officer and Treasurer of the Company and in August, 2016 was promoted to President, while retaining the roles of Chief Financial Officer and Treasurer. In May, 2017 he was promoted to Chief Executive Officer and retained the role as President. Prior to joining Callon, Mr. Gatto was a Managing Director in the energy investment banking groups of Merrill Lynch & Co. and Barclays Capital from July 1997 until February 2009, with involvement in all phases of M&A and capital raising transactions for his clients. In February 2009, he founded MarchWire Capital, LLC, a financial advisory and strategic consulting firm, and subsequently served as Head of Structuring and Execution with Merrill Lynch Commodities, Inc. from January 2010 until November 2011. Mr. Gatto graduated from Cornell University with a BS degree in 1992 and The Wharton School of the University of Pennsylvania with an MBA in 1997. Mr. Gatto’s experience advising energy companies on strategic and financial matters and leading transactions, as well as his tenure with the Company and knowledge and insight of Callon’s assets, operations, and people, will provide valuable contributions to the Board. +Majority Vote Standard +Our Corporate Governance Guidelines provide for a majority voting policy in uncontested director elections. The Company believes that this majority vote standard ensures accountability and the opportunity for a positive mandate from the Company’s stockholders. At any stockholder meeting for the election of directors at which a quorum is present, any nominee for director who receives a greater number of votes “withheld” from his or her election than votes “for” such election (“Majority Withheld Vote”) shall tender his or her resignation for consideration by the Nominating and Corporate Governance Committee following certification of the stockholder vote, unless the number of nominees exceeds the number of directors to be elected as of the Record Date for such meeting, in which event the directors shall be elected by a plurality of the votes cast. Such resignation will only be effective upon Board acceptance of such resignation after receiving the recommendation of the Nominating and Corporate Governance Committee. +If a director nominee receives a Majority Withheld Vote, then, promptly following certification of the election results, the Nominating and Corporate Governance Committee will consider any factors it deems relevant to the best interests of the Company and our stockholders in determining whether to accept the director’s resignation and recommend to the Board the action to be taken with respect to the tendered resignation. Within 120 days following certification of the stockholder vote, the Board shall consider the recommendation and make a determination as to whether to accept or reject such director’s resignation and shall notify the director concerned of its decision. We will also promptly publicly disclose the Board’s decision and process in a periodic or current report filed with or furnished to the SEC. +If you hold your shares through a broker and you do not instruct the broker how to vote, your broker will not have the authority to vote your shares. Abstentions and broker non-votes will each be counted as present for purposes of determining the presence of a quorum, but will have no effect upon the outcome of the vote. All shares of common stock represented by the proxies will be voted “FOR” the election of the above director nominees, except where authority to vote in the election of directors has been withheld. Should the nominees become unable or unwilling to serve as a director at the time of the 2018 Annual Meeting, the person or persons exercising the proxies will vote for the election of substitute nominees designated by the Board, or the Board may choose to reduce the number of members of the Board to be elected at the 2018 Annual Meeting in order to eliminate the vacancy. Your proxy cannot be otherwise voted for a person who is not named in this Proxy as a candidate for director or for a greater number of persons than the number of director nominees named. The Board has no reason to believe that the nominees will be unable or unwilling to serve if elected. +The Board recommends that you vote “FOR” the three nominees. +7 +Directors Continuing in Office +Biographical information for our other directors continuing in office is as follows: +Matthew R. Bob +Class II Director +Mr. Bob was elected to the Board at the 2014 Annual Meeting. Mr. Bob has been the founder and Managing Member of MB Exploration and affiliated companies since 1994. MB Exploration is engaged in the oil and gas exploration, development and consulting business. Mr. Bob currently serves as President of Eagle Oil and Gas. Mr. Bob also served as President of Hall Phoenix Energy LLC, a privately held oil and gas company, from 2009 to 2011. Prior to forming MB Exploration in 1994, Mr. Bob was Chief Geophysicist at Pitts Oil Company. He began his career at Union Oil Company of California where he held various geological positions. He is a member of the American Association of Petroleum Geologists, the Society of Exploration Geophysicists and the Dallas Petroleum Club, and is a registered Geoscientist in the States of Texas, Mississippi and Louisiana. He holds a B.A. in Geology from St. Louis University, an M.S. in Geology from Memphis University, and is a graduate of Harvard University’s Executive Management Program. Mr. Bob’s extensive knowledge of the oil and gas exploration and production business and technical expertise are an asset to the Board and qualify him as a director. +Michael L. Finch +Class I Director +Mr. Finch was elected to the Board at the 2015 Annual Meeting. He served as CFO and a member of the Board of Directors of Stone Energy Corporation (“Stone”) from its initial public offering in 1993 until his resignation in 1999. He was affiliated with Stone in a variety of capacities for nineteen years. Prior to his service with Stone, he was employed by Arthur Andersen & Co. in New Orleans, Louisiana from 1976 to 1980. Mr. Finch has been a private investor and a financial consultant in the energy industry since 1999. He was licensed as a Certified Public Accountant in 1978 (inactive status at present), and received a Bachelor of Science in Accounting from the University of South Alabama in 1976. Mr. Finch was an independent director of Petroquest Energy, Inc. from 2003 to 2016, where he served as chairman of the Audit Committee, as a member of the Compensation Committee, and as a member of the Nominating and Corporate Governance Committee. Mr. Finch has extensive financial, accounting and operating experience within our industry, and his background, prior experiences, professional credentials and expertise qualify him as a director and “financial expert.” +Larry D. McVay +Class I Director +Mr. McVay was appointed to the Board in October 2007. Mr. McVay has been a Managing Director of Edgewater Energy, LLC, a privately held oil and gas investment company, since 2007. From 2003 until 2006, he served as COO of TNK-BP Holding, one of the largest oil producing companies in Russia. From 2000 to 2003, he served as Technology Vice President and Vice President of Health, Safety and Environment for BP. He also led the global E&P Operations Excellence effort for improving the operating efficiency of BP’s upstream operations. Mr. McVay earned a mechanical engineering degree from Texas Tech University, where he was recognized as a Distinguished Engineer in 1995. In January 2008, Mr. McVay became a member of the Board of Directors of Praxair, Inc., an industrial gases company in North and South America, where he serves on the Audit Committee, the Technology, Safety and Sustainability Committee and is chairman of the Finance & Pension Committee. Mr. McVay is also a member of the Board of Directors of Chicago Bridge and Iron, N.V., a publicly traded engineering, procurement, and construction company, where he serves on the Audit Committee, the Strategic Initiatives Committee and is the chairman of the Corporate Governance Committee. Mr. McVay has been directly involved in nearly all aspects of the oil and gas industry, including drilling, production, finance, environmental risk, and safety. We believe that this experience and his knowledge of the E&P industry, particularly in the Permian Basin, as well as service on other boards of directors, provides invaluable insight in the development of our long-term strategies, qualifying him for service on our Board. +Anthony J. Nocchiero +Class II Director +Mr. Nocchiero was first elected to the Board in March 2011. Since 2010, Mr. Nocchiero has been retired. From April 2007 until September 2010, Mr. Nocchiero held the position of senior vice president and Chief Financial Officer for CF Industries, Inc. From July 2005 until March 2007, he was the Vice President and CFO for Merisant Worldwide, Inc. From January 2002 to July 2005, Mr. Nocchiero was self-employed as an advisor and private consultant. From January 1999 until December 2001, Mr. Nocchiero served as Vice President and CFO of BP Chemicals, the global petrochemical business of BP p.l.c. Prior to that, he spent twenty-four years with Amoco Corporation in various financial and management positions, including service as Amoco’s Vice President and controller from April 1998 to January 1999. Mr. Nocchiero holds a B.S. degree in chemical engineering from Washington University in St. Louis and an M.B.A. degree from the Kellogg Graduate School of Management at Northwestern University. Mr. Nocchiero has previous experience serving as a member of the Board of Directors of various public and private companies, including Terra Nitrogen LP, Keytrade AG, Vysis Corporation and the Chicago Chamber of Commerce. Mr. Nocchiero brings to Callon a broad knowledge of the oil and gas industry, extensive experience with finance and M&A transactions, and accounting and financial management background that qualify him as a “financial expert,” all which make him a meaningful contributor to our Board. +8 +James M. Trimble +Class II Director +Mr. Trimble was elected to our Board at the 2014 Annual Meeting. Mr. Trimble was appointed to the Board of Directors of Stone Energy Corporation (NYSE: SGY) in March 2017 and then appointed interim Chief Executive Officer and President effective April 28, 2017. Mr. Trimble served as CEO and President of PDC Energy, Inc. from 2011 until his retirement effective January 1, 2015. Mr. Trimble was an officer of PDC in September 2013 when twelve partnerships for which PDC was the managing general partner each filed for bankruptcy in the federal bankruptcy court, Northern District of Texas, Dallas Division. From 2005 until 2010, Mr. Trimble was Managing Director of Grand Gulf Energy, Limited, a public company traded on the Australian Securities Exchange, and President and CEO of Grand Gulf’s U.S. subsidiary Grand Gulf Energy Company LLC, an exploration and development company focused primarily on drilling in mature basins in Texas, Louisiana and Oklahoma. From 2000 through 2002, Mr. Trimble was CEO of Elysium Energy, a privately held oil and gas company. Prior to this, he was Senior Vice President of Exploration and Production for Cabot Oil and Gas, a publicly traded independent energy company. Mr. Trimble was hired in July 2002 as CEO of TexCal (formerly Tri-Union Development) to manage a distressed oil and gas company through bankruptcy, and that company filed for Chapter 11 reorganization within 45 days after the date that Mr. Trimble accepted such employment. He successfully managed the company through its exit from bankruptcy in 2004. Mr. Trimble currently serves on the Board of Directors of Crestone Peak Resources LLC (a private company operation in the DJ Basin of Colorado) since December 2016. Mr. Trimble previously served on the boards of PDC Energy from 2009 until June 2016, C&J Energy Services LTD from March of 2016 to January 2017 to assist with it Chapter 11 process, Seisgen Exploration LLC, a small private exploration and production company operating in southern Texas, from 2008 to 2015, Grand Gulf Energy LTD from 2009 to 2012, and Blue Dolphin Energy, an independent oil and gas company with operations in the Gulf of Mexico from November 2002 until May 2006. Mr. Trimble is a Registered Professional Engineer who provides the Board a valuable source of engineering, drilling and oil and gas operations management expertise, and his experience as a CEO and board member enhances the Board’s knowledge of current developments and best practices in the industry. +Retiring Director +John C. Wallace +Class I Director +Mr. Wallace has been a member of our Board since 1994. He is a Chartered Accountant having qualified with PricewaterhouseCoopers in Canada in 1963, after which he joined Baring Brothers & Co., Limited in London, England. Prior to his retirement in December 2010, Mr. Wallace served for over twenty-five years as Chairman of Fred. Olsen Ltd., a London-based corporation that he joined in 1968 and which specializes in the business of shipping, renewable energy and property development. He received his B. Comm degree majoring in Accounting and Economics from McGill University in 1959. In November 2004, he successfully completed the International Uniform Certified Public Accountant Qualification Examination and has received a CPA Certificate from the State of Illinois. Mr. Wallace is also retired from the Board of Directors of Bonheur ASA, Oslo, a publicly-traded shipping company, with interests in offshore energy services and renewable energy. In May 2012, Mr. Wallace was appointed as a non-executive director to the Board of Directors of Siem Offshore Inc., a publicly traded shipping company in Norway with a fleet of vessels active in the offshore energy sector, and for which he is a member of the Audit Committee. As a result of his association with Fred Olsen, Ltd. and various associated or related companies, Mr. Wallace has extensive financial and accounting experience in not only the oil and gas industry, but in a number of other related industries, qualifying him as “financial expert.” +All of our directors are United States citizens, except Mr. Wallace, who is a citizen of Canada, and Mr. Flury, who holds both U.S. and Canadian citizenship. +9 +CORPORATE GOVERNANCE +Board Structure and Responsibilities +General information +Our Board is responsible for determining the ultimate direction of our business, determining the principles of our business strategy and policies, and promoting the long-term interests of the Company. The Board possesses and exercises oversight authority over our business but, subject to our governing documents and applicable law, delegates day-to-day management of the Company to our CEO and our executive management. The Board generally fulfills its responsibilities through regular meetings to review significant developments affecting us and to act on matters requiring Board approval. Between regularly scheduled meetings, the Board may also hold special meetings, execute unanimous written consents, and participate in telephone conference calls when an important matter requires Board action. During 2017, our Board met formally six times and transacted business on nine occasions during the year by unanimous written consent. All of our directors attended each of the Board meetings either in person or by telephone. In addition, to promote open discussion, the non-employee directors meet in executive session without management following each quarterly board meeting. L. Richard Flury, initially the Chairman of the Compensation Committee and then appointed as Chairman of the Board, was selected to preside over all executive sessions during 2017. It is the policy of the Board that, to the extent possible, all directors attend the annual meeting. All then current directors attended the 2017 annual meeting. +The Board, in consultation with the Nominating and Governance Committee, has determined that a classified board structure continues to be appropriate for us, particularly in an industry where long-term strategic planning is critical for the successful exploration, development and production of oil and natural gas resources. Our future success depends in significant part on the in-depth knowledge of our business and operations by our directors. We believe that a classified board promotes stability, continuity and experience among our directors, which is essential to developing and implementing long-term strategies, while resisting the pressure to focus on short-term results at the expense of enhancing long-term value and success. +Director independence +To minimize potential conflicts, it is a policy of the Board that a majority of the non-employee members of the Board be independent. In accordance with the standards for companies listed on the NYSE and the rules and regulations promulgated by the SEC, as well as our Corporate Governance Guidelines, the Board considers a director to be independent if it has affirmatively determined that the director has no material relationship with the Company that could compromise his ability to exercise independent judgment in carrying out his responsibilities. The Board makes independence determinations when it approves director nominees for election at the annual meeting and also whenever a new director joins the Board between annual meetings. The Board reviewed the independence of its directors and nominees in accordance with the standards described above and affirmatively determined that each of its directors and nominees (other than Mr. Gatto) is independent. The Board will evaluate the independence of each non-employee director on an ongoing basis. +Board leadership structure +One of the Board’s key responsibilities is determining the appropriate leadership structure for the Board, which helps ensure its effective and independent oversight of management on behalf of our stockholders. Our Board believes that there is no one generally accepted approach to providing board leadership and that given the dynamic and competitive environment in which we operate, the optimal board leadership structure may vary as circumstances warrant. Accordingly, the Board has no policy mandating the separation or combination of the roles of Chairman of the Board and CEO, but periodically discusses and considers the structure as circumstances change. As such, the Board believes that it is in the best position to evaluate the needs of the Company and to determine how best to organize the Company’s leadership structure to meet those needs. +Mr. Fred L. Callon served as both Chairman of the Board and CEO until his sudden passing in May 2017. Prior to this event, because of Mr. Callon’s tenure and experience with the Company, the Board believed that the most effective leadership structure for the Company was for Mr. Callon serve as both Chairman of the Board and CEO. After Mr. Callon’s passing, the Nominating and Corporate Governance Committee recommended separating the roles of CEO and Chairman, and the Board approved the appointment of independent director Mr. Flury as Chairman of the Board and Mr. Gatto as CEO. +The Board is currently comprised of seven directors, all of which are independent. Independent directors and management generally have different perspectives and roles in strategy development. Our independent directors have backgrounds in the oil and gas industry or other relevant experiences which complement the CEO’s comprehensive, company-specific perspective. As the officer having primary responsibility for managing our daily operations and identifying strategic priorities, the CEO is best positioned to lead the Board through reviews of key business and strategy decisions. The Board therefore believes that it is prudent to have the CEO on the Board and thus +10 +has included and recommended the nomination of Mr. Gatto as a director in this year’s proxy. This dynamic effectively promotes the opportunity for a successful blend of our independent directors’ perspectives and oversight responsibilities and facilitates information flow and communication between senior management and the Board, which are both essential to effective governance. The Board’s structure does not currently provide for a lead independent director. The Board has four standing committees, each of which is comprised entirely of independent directors. Accordingly, the Compensation Committee maintains its independence to both objectively and subjectively evaluate Mr. Gatto’s performance when reviewing or modifying his compensation. +The role of our Chairman is to oversee and ensure Board effectiveness, and in his capacity as Chairman, Mr. Flury has the following responsibilities: +• +schedules all meetings of the Board; +• +establishes Board meeting agendas and ensures critical issues are included; +• +chairs meetings of the Board and the Annual Meeting of Stockholders; +• +ensures that the flow of information provided to the Board is timely, complete, and accurate; +• +communicates with all directors on key issues and concerns outside of Board meetings; +• +represents us to and interacts with external stockholders; and +• +assists the Board and executive officers in assuring compliance with and implementation of our governance principles. +Standing Committees of the Board of Directors +In order to facilitate the various functions of the Board, the Board currently has four standing committees, each of which is comprised solely of independent directors, including the: +• +Audit Committee; +• +Compensation Committee; +• +Nominating and Corporate Governance Committee; and +• +Strategic Planning and Reserves Committee. +Each committee, discussed below in greater detail, has a written charter that was recently updated and adopted by the Board in November 2017, which sets forth guidance on the role of the chairman of such committee and the roles and responsibilities of the committee as a whole. +Audit Committee functions and responsibilities +Purpose. The principal function of the Audit Committee is to assist the Board in overseeing the areas of financial reporting and accounting integrity. +Members. The Audit Committee is currently comprised of the following independent directors, with three directors deemed by the Board to be financial experts, as defined and required by the NYSE rules and the Exchange Act (“Financial Expert”): +• +John C. Wallace (Chairman and Financial Expert) +• +Michael L. Finch (Financial Expert) +• +L. Richard Flury +• +Larry D. McVay +• +Anthony J. Nocchiero (Financial Expert) +The Board has determined that all members meet the independence requirements of the SEC and NYSE rules and the financial literacy requirements of the NYSE. Members of the Audit Committee may not simultaneously serve on the audit committee of more than two other public companies. +Meetings. The committee met five times during 2017. All members of the Audit Committee attended each meeting. +Responsibilities. Pursuant to its charter, our Audit Committee functions in an oversight role and has the following purposes: +• +overseeing the quality, integrity and reliability of the financial statements and other financial information we provide to any governmental body or the public; +• +overseeing our compliance with legal and regulatory requirements; +• +selecting and hiring (subject to ratification by our stockholders) the independent public accounting firm; +• +overseeing the qualifications, independence and performance of the independent auditor; +11 +• +overseeing the effectiveness and performance of our internal audit function; +• +overseeing our internal control function regarding finance, accounting, legal compliance and ethics; +• +establishing and overseeing procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls or audit matters, including the confidential, anonymous submission of concerns regarding such matters; +• +assess matters related to risk, risk controls and compliance, including review and approval of hedging practices and policies and matters related to cybersecurity and the security of information technology systems; +• +producing the Audit Committee Report for inclusion in our annual proxy statement; and +• +performing such other functions our Board may assign to the Audit Committee from time to time. +The Audit Committee oversees our accounting and auditing procedures and financial reporting practices, and is responsible for the engagement of and oversight of all audit work conducted by our independent registered public accounting firm. The Audit Committee meets periodically, generally quarterly, with our executive and financial management teams, internal auditor and our independent registered public accounting firm to review our financial information and systems of internal controls. The independent registered public accounting firm reports directly to the Audit Committee and, if requested, meets with the Audit Committee in executive session without management representatives present. The Audit Committee has the authority to investigate any matters brought to its attention and to retain outside legal, accounting or other consultants if deemed necessary. +The Audit Committee is required to pre-approve all audit, audit-related and non-audit services provided by the independent registered public accounting firm exceeding $25,000. These services may include audit services, audit-related services, tax services and other services. The Audit Committee approved all of the fees described in Proposal 4. +Relationship with independent registered public accounting firm +Management is responsible for establishing and maintaining internal controls over financial reporting and for assessing the effectiveness of those controls. The independent registered public accounting firm is responsible for performing independent audits of our consolidated financial statements and internal controls over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (“PCAOB”) (United States) and issuing reports thereon. The Audit Committee’s responsibility is to monitor and oversee these processes. Grant Thornton LLP, an independent registered public accounting firm, has served as our independent registered public accounting firm since 2016. +Compensation Committee functions and responsibilities +Purpose. The purpose of the Compensation Committee is to establish our compensation policies and oversee the administration of our compensation program. +Members. Consistent with the listing requirements of the NYSE, the Compensation Committee is composed entirely of independent members of our Board, as each member meets the independence requirements set by the NYSE and applicable federal securities laws. Mr. Flury was initially appointed as Chairman of the Compensation Committee, but upon the passing of Mr. Callon, then Chairman of the Board, Mr. Flury was appointed Chairman of the Board and Mr. Bob was appointed Chairman of the Compensation Committee. The Compensation Committee is currently comprised of the following independent directors: +• +Matthew R. Bob (Chairman) +• +L. Richard Flury +• +Anthony J. Nocchiero +• +James M. Trimble +• +John C. Wallace +Meetings. The Compensation Committee met five times during 2017. All members of the Compensation Committee attended each meeting. +Responsibilities. Pursuant to its charter, our Compensation Committee’s duties include the responsibility to: +• +evaluate the performance of and establish the compensation of the CEO; +• +establish, with input from the CEO, the compensation for our other executive officers; +• +establish and review our overall executive compensation philosophy and approve changes to our compensation program; +• +review incentive compensation arrangements to confirm that executive compensation does not encourage unnecessary risk taking; +• +review matters relating to management succession; +• +administer our long-term incentive plans; +• +review and approve the CD&A for inclusion in the annual proxy statement; +12 +• +review and recommend to the Board compensation for non-employee directors; +• +retain and oversee compensation consultants, including the independence of the consultants; +• +review and approve performance criteria and results for bonus and performance-based equity awards for senior executive officers and approve awards to those officers; and +• +perform such other functions as our Board may assign to the Compensation Committee from time to time. +The Committee retained the services of Meridian Compensation Partners LLC, an independent compensation consulting firm, to assist in the annual review of market and industry data to assess our competitive position with respect to each element of total compensation and to ensure the attraction, retention and appropriate reward to our CEO and other executive officers. +Compensation Committee interlocks and insider participation +None of the members of our Compensation Committee is or has been an officer or employee of Callon. In addition, during the last fiscal year, none of our executive officers served as a member of the board or the compensation committee (or other board committee performing similar functions or, in the absence of any such committee, the entire board) of any entity in which a Callon Board or Compensation Committee member is an executive officer. +Nominating and Corporate Governance Committee functions and responsibilities +Purpose. The purpose of the Nominating and Corporate Governance Committee is to identify and recommend qualified candidates to the Board for nomination as members of the Board; assess director, Board and committee effectiveness; develop and implement our Corporate Governance Guidelines; and otherwise take a leadership role in shaping the corporate governance of our Company. +Members. Each member of the Committee meets the independence requirements of the NYSE and applicable federal securities laws. The Nominating and Corporate Governance Committee is currently comprised of the following independent directors: +• +Anthony J. Nocchiero (Chairman) +• +Matthew R. Bob +• +Michael L. Finch +• +Larry D. McVay +• +James M. Trimble +Meetings. The Nominating and Corporate Governance Committee met six times during 2017. All members of the Committee attended each meeting. +Responsibilities. Pursuant to its charter, the Nominating and Corporate Governance Committee’s duties include the responsibility to assist the Board in: +• +evaluating a set of specific criteria for Board membership and identifying individuals qualified to become Board members, recommending nominees for election at the next annual meeting of stockholders, reviewing the suitability for continued service as a director of each Board member, or otherwise filling any vacancies; +• +assessing the size and composition of the Board and its committees and recommending to the Board the members and chair for each Board committee; +• +advising the Board and making recommendations regarding appropriate corporate governance practices and assisting the Board in implementing those practices, including periodically reviewing the adequacy of our Corporate Governance Guidelines, our Code of Business Conduct and Ethics, and the various Board committee charters, and making recommendations for changes thereto to the Board; +• +overseeing the annual self-evaluation of the performance of the Board and its committees; +• +overseeing and approving plans for management continuity and succession; +• +recommending to the Board a successor to the CEO when a vacancy occurs; +• +review directorships in other public companies held by or offered to directors or executive officers of the Company; +• +oversee continuing education for the Board; and +• +performing other such functions as the Board may assign to the Nominating and Corporate Governance Committee from time to time. +13 +Director identification and selection +The Nominating and Corporate Governance Committee has established criteria it considers as guidelines in considering nominations to our Board and evaluates potential nominees based on the contribution such nominee’s background and skills could have upon achieving the goal of a well-rounded, diverse Board that functions collegially as a unit. While not an exhaustive list, key criteria include: +• +relevant oil and gas exploration and production industry knowledge and experience; +• +diversity of background and experience in areas including business, finance, accounting, technology, marketing, and government; +• +personal qualities of leadership, character, judgment and personal and professional integrity and high ethical standards; +• +the candidate’s ability to exercise independent and informed business judgment; +• +whether the candidate is free of conflicts and has the time required for preparation, participation and attendance at meetings; +• +diversity, including differences in viewpoints, background, education, gender, race or ethnicity, age, and other individual qualifications and attributes; +• +the ability to work with other members of the Board, the CEO and senior officers of the Company in a constructive and collaborative fashion to achieve the Company’s goals and implement its strategy; and +• +in the case of an incumbent director, such director’s past performance on the Board. +The Nominating and Corporate Governance Committee and the Board may also consider other qualifications and attributes that they believe are appropriate in evaluating the ability of an individual to serve as a member of the Board. The Nominating and Corporate Governance Committee’s goal is to assemble a Board that brings to us a variety of perspectives and skills derived from high quality business and professional experience, while also having the requisite business and relevant oil and gas industry experience to perform its oversight role satisfactorily for our stockholders. In making its determinations, the Committee evaluates each individual in the context of the Board as a whole, with the objective of assembling a group that can best represent stockholder interests through the active, objective and constructive participation in meetings and the strategic decision-making processes. The Board believes that diversity with respect to viewpoint, skills and experience should be considered as part of the overall assessment of the Board’s functioning and needs. +Our Corporate Governance Guidelines set forth our policy with respect to Board diversity. We are committed to building a diverse Board comprising individuals from different backgrounds, including differences in viewpoints, experience, education, gender, race or ethnicity, age and other individual qualifications and attributes. To accomplish this, the Nominating and Corporate Governance Committee will continue to require that search firms engaged by Callon seek to present a robust selection of women and ethnically diverse candidates in all prospective director candidate pools. +In accordance with our Certificate of Incorporation, any stockholder may nominate a person for election to the Board upon delivery of written notice to us of such nomination. Such notice must be sent as provided in our Certificate on or before the deadline set forth in our Certificate, and must otherwise comply with the procedures set forth in our Certificate of Incorporation. For nominations at the 2018 Annual Meeting, the Board will consider individuals identified by stockholders on the same basis as nominees identified from other sources. A submission recommending a nominee should include: +• +sufficient biographical information to allow the Nominating and Corporate Governance Committee to evaluate the qualifications of a potential nominee in light of the director nomination procedures and criteria and any other information that would be required to be disclosed in solicitations of proxies for the election of directors; +• +an indication as to whether the proposed nominee will meet the requirements for independence under NYSE and SEC guidelines; +• +a description of all direct and indirect compensation and other material monetary agreements, arrangements and understandings during the past three years, and any other material relationships, between or among the nominating stockholder or beneficial owner and each proposed nominee; +• +a completed and signed questionnaire, representation and agreement, pursuant to the Company’s Bylaws, with respect to each nominee for election or re-election to the Board; and +• +the proposed nominee’s written consent to serve if nominated and elected. +In making its nominations, the Nominating and Corporate Governance Committee identifies nominees by first evaluating the current members of the Board willing to continue their service and any potential need to expand the Board to include additional expertise. Current members with proven service and a record of quality contribution to the Board and the qualifications and skills that are consistent with the Committee’s criteria for Board service are re-nominated. As to vacancies, the Committee will generally poll the Board members and members of management for recommendations. The Committee may also review the composition and qualification of the Boards of Directors of our competitors, and may seek input from industry experts or analysts. The Committee may also choose to engage third-party search firms in situations where particular qualifications are desired for membership in the Board. +Over time, the Board refreshes its membership through a combination of adding or replacing directors to achieve the appropriate balance between maintaining longer-term directors with deep institutional knowledge of the Company and adding directors who bring a diversity +14 +of perspectives and experience. As a reflection of this philosophy, if all of the nominees are elected to the Board, following the Annual Meeting: +• +Five out of eight directors will have tenures of less than five years. +• +Seven of the eight directors will be independent. +• +Composition of Board committees will continue to be refreshed. +• +The new directors, including the current nominees, will bolster the Board’s diversity, experience and knowledge in the areas of strategic planning, risk management, oil and gas exploration and production, accounting and financial expertise, and best practices in the industry. +Strategic Planning and Reserves Committee functions and responsibilities +Purpose. The purpose of the Strategic Planning and Reserves Committee is to manage and oversee the Board’s participation in the development of the Company’s strategic plan, and assist management and the Board with its oversight of the integrity of the determination of our oil and natural gas reserve estimates. +Members. The Strategic Planning and Reserves Committee shall consist of no fewer than three members of the Board, and is currently comprised of the following independent directors: +• +Larry D. McVay (Chairman) +• +Matthew R. Bob +• +Michael L. Finch +• +L. Richard Flury +• +Anthony J. Nocchiero +• +James M. Trimble +• +John C. Wallace +Meetings. The Strategic Planning and Reserves Committee met three times during 2017. All members of the Committee attended each meeting during 2017. This Committee meets periodically during the year, generally prior to the scheduled quarterly Board meetings, to review the progress of our capital expenditure budget and to evaluate recent trends in the independent oil and gas industry that may have an impact on our current business strategy for the remainder of the year. +Responsibilities. The Strategic Planning and Reserves Committee was created to oversee the responsibilities of the Board relating to strategic planning, including: +• +organizing and overseeing the Board’s participation in the development of a strategic plan, including, but not limited to, the risk assessment and management process; +• +monitoring the progress of the implementation of the strategic plan, and advising the Board if additional Board action appears to be needed; +• +assuring that management is addressing the personnel requirements for the successful implementation of the strategic plan; +• +assisting management and the Board with its oversight of matters regarding our reserve engineering reports and reserve engineering firm, including: (i) the integrity of our reserve reports, (ii) determinations regarding the qualifications and independence of our independent reserve engineering firm, (iii) the performance of our independent reserve engineering firm, and (iv) our compliance with certain legal and regulatory requirements relating to reserve reporting; and +• +performing other such functions as the Board may assign to the Strategic Planning and Reserves Committee from time to time. +Corporate Governance Matters +Corporate governance principles +The Board believes that sound corporate governance practices and policies provide an important framework to assist it in fulfilling its duty to stockholders. The framework for our corporate governance can be found in our governance documents, which include: +• +Corporate Governance Guidelines; +• +a Code of Business Conduct and Ethics; and +• +Charters for the Audit, Compensation, Nominating and Corporate Governance, and Strategic Planning and Reserves Committees. +In keeping with sound corporate governance practices, each of these documents are reviewed annually. Based on that review, they were each updated and adopted by the Board in November 2017 and are available on our website www.callon.com, under the “About Callon +15 +- Governance” menu. Stockholders may obtain a printed copy, free of charge, by sending a written request to our Corporate Secretary at our principal executive office in Natchez, Mississippi. We also promptly post on our website any amendments to these documents and any waivers from the Code of Business Conduct and Ethics for our directors and principal executive, financial and accounting officers. +Ethics +Our Code of Business Conduct and Ethics (the “Code”) sets forth the policies and expectations applicable to every director, officer and employee, as well as the Company’s contractors, agents and representatives, including consultants. Callon operates in accordance with the highest ethical standards and relevant laws. The Company places the highest value on the integrity of each of its employees and representatives. The Company’s culture demands not only legal compliance, but also responsible and ethical behavior. Callon is committed to being a responsible corporate citizen. The Code addresses a number of topics, including conflicts of interest, relationships with others, corporate payments, disclosure policy, compliance with laws, corporate opportunities, insider trading, discrimination or harassment of any kind, workplace safety and a healthy work environment, protection of the environment, and the protection and proper use of our assets. The Code meets the NYSE’s requirements for a code of business conduct and ethics, as well as the SEC’s definition of a code of ethics applicable to our senior officers. Neither the Board nor any Board committee has ever granted a waiver of the Code. +Board risk oversight +As an independent E&P company, we face a number of risks. Assessing and managing material risk is the responsibility of our management team, while our Board, as a whole and through its committees, generally oversees risk management and our long-term strategic direction, ensuring that risks undertaken by the Company are consistent with the Board’s risk tolerance. Our Board leadership structure and our practice of a high degree of interaction between our directors and members of senior management facilitate this oversight function. Our executive officers regularly attend the Board meetings and are available to address any questions or concerns raised by the Board on risk management-related and any other matters. Other members of our management team periodically attend the Board meetings or are otherwise available to confer with the Board to the extent their expertise is required to address risk management matters. The information flow and communication throughout the year between our Board and senior management regarding long-term strategic planning and short-term operational reporting includes matters of material risk inherent in our business of exploring for and producing oil and natural gas. The Board realizes, however, that it is not possible or prudent to eliminate all risk and that appropriate risk-taking is essential in order to achieve our near and longer-term objectives. +While the Board is ultimately responsible for risk oversight, the Board exercises additional risk oversight responsibilities through its committees, which are comprised solely of independent directors. Each such committee has primary risk oversight responsibility with respect to all matters within the scope of its duties as contemplated by its charter and as described below. +• +The Audit Committee, among other duties, is charged with overseeing material financial risk exposures in the areas of financial reporting, internal controls, compliance with legal and regulatory requirements, hedging oversight and cybersecurity risk management. This Committee also oversees responses to any alleged violations of our policies made by whistleblowers. +• +The Compensation Committee reviews and attempts to mitigate associated risks that may result from our compensation policies in order that they do not encourage unnecessary or excessive risk taking by management. +• +The Nominating and Corporate Governance Committee focuses on issues relating to Board and Board committee composition and assists the Board in fulfilling its oversight responsibilities with respect to the management of risks associated with board organization, membership, independence and structure, succession planning for our directors and executive officers, and our corporate governance principles. +• +The Strategic Planning and Reserves Committee organizes and oversees the Board’s participation in the risk assessment and management process as it relates to the development and implementation of our strategic plan and the integrity of our reserve estimation reporting process and related disclosures. +Communication with directors +Stockholders or other interested parties may communicate with the full Board, independent directors as a group, or individual directors, by sending a letter in care of the Corporate Secretary at our principal executive office, P.O. Box 1287, Natchez, MS 39121. Our Corporate Secretary has the authority to discard any solicitations, job inquiries, advertisements, surveys or other inappropriate communications, but will forward any other mail to the named director or group of directors. Our Corporate Secretary will forward approved mail addressed to the full Board to the Chairman of the Board who, if appropriate, will share the item with the full Board. +16 +Executive Officers +The following table sets forth the names, ages and positions of our current executive officers, followed by brief descriptions of the background and principal occupation of each: +Name +Age +Positions Held +Joseph C. Gatto, Jr. +47 +Current President and CEO; Former CFO +James P. Ulm II +55 +Senior Vice President and CFO +Gary A. Newberry +63 +Senior Vice President and COO +Jerry A. Weant +59 +Vice President, Land +Mitzi P. Conn +49 +Vice President and Chief Accounting Officer (“CAO”) +Michol L. Ecklund +43 +Vice President and General Counsel +Correne S. Loeffler +41 +Treasurer and Former Interim CFO +Joseph C. Gatto, Jr. +President and CEO +Please see “Proposal 1 - Election of directors” above for the biography of Mr. Gatto. +James P. Ulm II +Senior Vice President and CFO +Mr. Ulm joined us in December 2017 as the Senior Vice President and Chief Financial Officer. Mr. Ulm has more than 30 years of experience in the energy industry with responsibilities including finance, accounting, strategic planning, M&A, business development and risk management. His most recent position has been as founder and managing partner of New Vista Energy Partners, a private E&P company focused on emerging resource plays in the Permian and Anadarko Basins, from 2015 to 2017. Previously, he served as Senior Vice President and Chief Financial Officer for three private companies from 2008 to 2015 where he was responsible for financial and accounting management, capital formation, and corporate strategy. Prior to these roles, Mr. Ulm served from 1999-2008 as Senior Vice President and Chief Financial Officer for Pogo Producing Company, a publicly-traded oil and gas company which had meaningful operations in the Permian Basin. From 1995-1999, he was the Treasurer for Newfield Exploration Company. Earlier in his career, he held finance and accounting leadership roles with American Exploration Company and Tenneco Oil Company. Mr. Ulm holds an M.B.A. and an undergraduate degree in Accounting, both from the University of Texas. +Gary A. Newberry +Senior Vice President and COO +Mr. Newberry joined us in April 2010 as Vice President - Production and Development. In September 2010, Mr. Newberry was promoted to Senior Vice President - Operations, and in August 2016 he was promoted to COO. After graduation, he joined Marathon Oil Company as a Production and Drilling Engineer working in Alaska, the Gulf of Mexico, and the Rockies. He held various supervisory and management roles of increasing responsibility over production and drilling operations in the Mid-Continent, Alaska and the Permian Basin. As a Business Unit Leader, Mr. Newberry was responsible for all upstream business activity in Oklahoma, Alaska, and the Rockies and served as Marathon’s Worldwide Operations Manager. Mr. Newberry retired from Marathon Oil Company after 33 years of service. Mr. Newberry graduated from Marietta College in 1977 with a B.S. degree in Petroleum Engineering. +Jerry A. Weant +Vice President, Land +Mr. Weant joined us in September 2013 as Vice President, Land. Mr. Weant joined Callon from Pioneer Natural Resources, an independent oil and gas company, where he was focused on Midland Basin operations, acting as a liaison with Permian Basin asset teams and coordinating internal efforts for the assessment of horizontal drilling programs. Mr. Weant spent the first 27 years of his career working as a landman in Midland, Texas, including working for Texaco, Inc. Pogo Producing, Inc., as well as other independents. He holds a Bachelor of Business Administration/Petroleum Land Management from the University of Texas and is a Certified Professional Landman and a member of the American Association of Professional Landmen and the Permian Basin Landman’s Association. +Mitzi P. Conn +Vice President and CAO +Ms. Conn joined us in June 1993 and has been our Corporate Controller since May 2007. Effective March 31, 2014, the Board also appointed Ms. Conn as our Principal Accounting Officer, and in August 2016 she was promoted to Vice President and CAO. Prior to May 2007, she served as Assistant Controller since May 2004 and has held various other positions in our finance and accounting departments. Prior thereto, she was a general accountant for Graham Resources, Inc. Ms. Conn received her B.S. degree in accounting from Southeastern Louisiana University in 1990 and is a member of the American Institute of Certified Public Accountants and the Mississippi Society of Certified Public Accountants. +17 +Michol L. Ecklund +Vice President and General Counsel +Ms. Ecklund joined us in November 2017 as Vice President and General Counsel for the Company. Prior to joining Callon in November 2017, Ms. Ecklund was Deputy General Counsel for Operations & Commercial Law at Marathon Oil Company where she was responsible for global operations, acquisitions and dispositions, and government relations. Ms. Ecklund spent 15 years at Marathon Oil where she held progressive positions within and outside the Law Organization. Prior to Marathon Oil, she practiced law at Baker Botts LLP in Houston. Ms. Ecklund received a B.A. degree from Rice University and J.D. from Harvard Law School. +Correne S. Loeffler +Treasurer and Former Interim CFO +Ms. Loeffler joined us in April 2017 as the Treasurer. In May 2017 she was appointed as the Interim Chief Financial Officer, where she served until December 2017. Prior to joining she served as an Executive Director with JPMorgan Securities, LLC where she spent ten years in the Corporate Client Banking Group. During her time at JPMorgan, she served as Callon’s Relationship Manager beginning in 2013. Ms. Loeffler graduated with a B.A. degree from Indiana University and received her M.B.A. from The University of Texas. +18 +PROPOSAL 2 - APPROVE, ON AN ADVISORY BASIS, THE COMPENSATION OF THE COMPANY’S NEOS +In accordance with the requirements of Section 14A of the Exchange Act and the related rules of the SEC, we are including in this Proxy Statement a separate proposal, which gives our stockholders the opportunity to approve or not approve the compensation of our NEOs by voting “FOR” or “AGAINST” the resolution below (commonly referred to as “Say-on-Pay”). While our Board and Compensation Committee intend to carefully consider the stockholder vote resulting from the proposal, the final vote will not be binding on us and is advisory in nature. +The Board recognizes that executive compensation is an important matter for our stockholders. The Compensation Committee is tasked with the implementation of our executive compensation philosophy and, as described in detail in the CD&A below, the design of our executive compensation programs. Our executive compensation program is designed to attract, motivate and retain a highly qualified executive management team and to appropriately reward our executive officers for their contribution to the achievement of our short-term and long-term business goals and the creation and enhancement of stockholder value. +As described in the CD&A, we believe our compensation program is effective, appropriate and strongly aligned with the long-term interests of our stockholders and that the total compensation package provided to the NEOs is reasonable and not excessive. As you consider this Proposal 2, we urge you to read the CD&A for additional details on executive compensation. Further, in determining whether to approve this proposal, we believe that stockholders should also consider the following: +• +Independent compensation committee . Executive compensation is reviewed and established by a Compensation Committee of the Board consisting solely of independent directors. The Compensation Committee meets in executive session, without executive officers present, in determining annual compensation. The Compensation Committee receives data, analysis and input from a compensation consultant that is independent of management and free of conflicts of interest with us. +• +Performance-based incentive compensation . Our executive compensation program is designed to attract, motivate and retain individuals with the skills required to formulate and drive our strategic direction and achieve the annual and long-term performance necessary to create stockholder value. The program also seeks to align executive compensation with stockholder value on an annual and long-term basis through a combination of base pay, annual incentives and long-term incentives. +• +No tax gross-ups . Executive officers are not eligible for a tax related gross-up on any element of current and future compensation. +• +“Double trigger” severance agreements with fixed term . Change in control severance agreements with our executive officers require an actual or constructive termination of employment before benefits are paid following any change in control. +• +Long-term incentive plans . Our long-term incentive plans generally include three-year minimum vesting periods for time-based awards, and prohibit repricing or exchange of outstanding option awards. +• +Stock ownership guidelines . Each of the NEOs has been granted equity to provide a stake in our long-term success. The purpose of the ownership requirements is to further our goal of increasing stockholder value by further aligning the interests of our NEOs with the interests of our stockholders. We believe that this “tone at the top” guides our other officers and management personnel to obtain and maintain meaningful ownership stakes in Callon. +• +Hedging policy. Our directors and executive officers are prohibited from entering into transactions in puts, calls and other derivative securities with respect to our securities on an exchange or in any other organized market as well as short sales of our securities. These types of transactions can hedge against decreases in our stock price and encourage risky behavior. We believe these activities are often perceived as involving insider trading and may focus the holder’s attention on our short-term performance rather than our long-term objectives. +In light of the above, we believe that the compensation of our NEOs for 2017 was appropriate and reasonable, and that our compensation programs and practices are sound and in the best interests of us and our stockholders. We therefore respectfully request that stockholders vote on the following resolution: +“RESOLVED, that the compensation paid to Callon’s NEOs, as disclosed in Callon’s 2018 Proxy Statement (including the Compensation Discussion and Analysis, the compensation tables and related footnotes and narrative disclosures), is hereby approved.” +The vote on this resolution is not intended to address any specific element of compensation, but rather the overall compensation of our NEOs and our compensation-related policies and practices as described in this Proxy Statement. As noted above, the vote solicited by this proposal is advisory in nature and its outcome will not be binding on the Company, the Board or the Compensation Committee, nor will the outcome of the vote require the Board or the Compensation Committee to take any action. Moreover, the outcome of the vote will not be construed as overruling any decision of the Board or the Compensation Committee, or creating or implying any additional fiduciary duty of the Board or the Compensation Committee. However, the Board and the Compensation Committee will carefully consider the outcome of the vote when considering future executive compensation arrangements. For a review of the results of the previous years’ +19 +vote, which reflects overwhelming validation from our stockholders of our pay philosophy and approach, please see the Role of Stockholder Say-on-Pay Advisory Vote summary in the CD&A section. +Notwithstanding the advisory nature of this vote, the foregoing resolution will be deemed approved, on an advisory basis, with the affirmative vote of the majority of the votes present and entitled to vote on the proposal at the Annual Meeting. If you hold your shares through a broker and you do not instruct the broker how to vote, your broker will not have the authority to vote your shares. Abstentions will have the effect as a vote cast against the proposal. Broker non-votes will not be counted as shares present and entitled to vote, and so will have no effect upon the outcome of the vote. +The Board recommends that you vote “ FOR ” approval of this resolution. +20 +PROPOSAL 3 - APPROVAL OF THE CALLON PETROLEUM COMPANY 2018 OMNIBUS INCENTIVE PLAN +The Board has unanimously approved the 2018 Plan to replace the Callon Petroleum Company 2011 Omnibus Incentive Plan (the “Prior Incentive Plan”), subject to stockholder approval at the Annual Meeting, and recommends that the Company’s stockholders approve and adopt the 2018 Plan. We intend to reserve 9,400,000 shares for issuance pursuant to awards under the 2018 Plan, which is in addition to approximately 1,300,000 shares (as of February 28, 2018) which remain available for grant pursuant to the Prior Incentive Plan. If our stockholders approve the 2018 Plan, these remaining shares from the Prior Incentive Plan, plus any shares that would otherwise become available for issuance under the Prior Incentive Plan as a result of forfeitures, expiration or cancellation of previously made awards, will become available for issuance under the 2018 Plan, and no additional grants will be made pursuant to the Prior Incentive Plan. +The 2018 Plan is intended to replace the Prior Incentive Plan and is needed to continue our equity compensation program. The successful growth of the Company’s asset base and operations activity in recent years has resulted in a commensurate increase in the number of employees. Our equity compensation program is an important element to remain competitive in our industry in attracting and retaining experienced talent. +In considering the appropriate number of shares to request under the 2018 Plan, Callon has carefully considered its anticipated equity needs in light of the recent growth in our employee population, which reflects growth in asset base and operations as described in more detail below. In light of this significant growth, Callon does not believe that historical “burn rates” under the Prior Incentive Plan are indicative of the future needs of the company to continue to attract and retain top talent in the competitive onshore U.S. oil and gas industry, particularly in the Permian Basin. +Recent Callon Growth Trends - 2015 to Current +Reserves +l +Three-year compounded annual growth rate of 59% +l +Estimated net proved reserves as of December 31, 2017: 137 MMBoe +Production +l +Three-year compounded annual growth rate of 55% +l +2017 daily production of 22,940 Boepd +Operations +l +Grew net acreage position by over 300% to 57,481 net acres as of December 31, 2017 +l +Increased net producing horizontal wells by ~240% to 172 net wells as of December 31, 2017 +l +Increased from a one rig program in the first quarter of 2015 to a five rig program by the first quarter of 2018 +Employees +l +Grew employee base by approximately 75%, including the addition of three new officer positions +While prior growth rates are not necessarily indicative of future growth, and it is difficult to project with certainty the future growth rate of our employee base and related equity “burn rates,” Callon projects that the 9,400,000 shares requested under the 2018 Plan will meet the needs of the Company for approximately five years. The actual life of the 2018 Plan will depend on numerous variables, including changes in our future share price, actual employee population growth, and changes in the size and mix of equity compensation necessary to respond to changes in the competitive landscape for our employees. +As of December 31, 2017, there were approximately 1,300,000 shares of common stock remaining available for grant under the Prior Incentive Plan. Any previously granted awards that are outstanding under the Prior Incentive Plan will remain outstanding in accordance with their terms. As of February 28, 2018, an aggregate of 1,760,284 shares are subject to unvested restricted stock, restricted stock unit, performance share or performance unit awards under the Prior Incentive Plan. See also “Compensation Discussion and Analysis- Annual Award of Long-term Incentives” for additional information concerning our equity compensation plans. +If the 2018 Plan is not approved by the stockholders, we will not be able to continue our equity- based long-term incentive program, and we may be required to increase significantly the cash component of our executive compensation program in order to remain competitive and adequately compensate our employees. +The Company considers the 2018 Plan an essential element of total compensation and believes the 2018 Plan promotes its interests and the interests of its stockholders by: (i) attracting and retaining the services of key employees, Directors and independent contractors; and (ii) encouraging the active interest of those persons in the development and financial success of the Company by granting awards designed to provide participants in the 2018 Plan with proprietary interest in the growth and performance of the Company. +Stockholder approval of the 2018 Plan will also constitute approval for purposes of satisfying the stockholder approval requirements under Section 422 of the Code so that the Compensation Committee may grant incentive stock options, or ISOs. +21 +Best Practices +Independent oversight . The Compensation Committee of our Board (the “Committee”), composed solely of independent directors, will approve all grants made under the 2018 Plan other than grants made to directors, which shall be approved by our Board. Additionally, the Committee may delegate to any committee of the Board, to the Chief Executive Officer and to any of our other senior officers its duties under the 2018 Plan pursuant to such conditions or limitations as the Committee may establish; provided, however, that such delegation will not extend to the authority to make awards to participant who are subject to Section 16 of the Exchange Act. +No repricing of options or stock appreciation rights . The 2018 Plan prohibits repricing, replacement and regranting of stock options or stock appreciation rights (“SARs”) at lower prices, unless approved by our stockholders. +No discounted options or SARs . Stock options and SARs may not be granted with an exercise price below the closing price of our common stock on the date of grant. +No dividends on options or SARs . Dividends and dividend equivalents may not be paid or accrued on stock options or SARs. +Limited terms for options and SARs . Stock options and SARs granted under the 2018 Plan are limited to 10-year terms. +No liberal share counting with respect to options or SARs . Shares that are tendered by a participant or withheld (1) as full or partial payment of withholding taxes related to the exercise or settlement of options or SARs, or (2) as payment for the option exercise price, and (3) shares repurchased in the open market with the proceeds of the payment of the option exercise price will not become available again for awards under the 2018 Plan. +No dividends or dividend equivalents on unvested awards . Any dividends or dividend equivalents will only be paid if the underlying shares vest pursuant to the terms of the award. +Annual limitation on director awards and compensation . The aggregate grant value of awards and cash compensation paid to any individual non-employee director may not exceed $1,000,000 in any calendar year. +Clawback or recoupment . All awards granted under the 2018 Plan will be subject to any clawback policy implemented by the Company. +No transferability . Awards generally may not be transferred, except by will or the laws of descent and distribution or pursuant to a qualified domestic relations order, unless otherwise provided in the applicable award agreement. +No “evergreen” provision . Shares authorized for issuance under the 2018 Plan will not be replenished automatically. Any additional shares to be issued over and above the amount for which we are seeking authorization must be approved by our stockholders. +No automatic grants . There are no automatic grants to new participants or “reload” grants when outstanding awards are exercised, expire or are forfeited. +No tax gross-ups . Participants do not receive tax gross-ups under the 2018 Plan. +Summary of the 2018 Plan +A description of the 2018 Plan appears below. Because the description of the 2018 Plan in this Proxy Statement is a summary, it may not contain all the information that may be important to you. The summary is qualified by reference to the 2018 Plan. You should carefully read the 2018 Plan. A copy of the full text of the 2018 Plan is attached hereto as Appendix A to this Proxy Statement. +Eligibility +Persons eligible for Awards (as defined in the 2018 Plan) are (i) all employees of the Company and its subsidiaries, (ii) non-employee directors and (iii) certain independent contractors. As of February 28, 2018, approximately 174 employees and seven non-employee directors would be eligible for grants of Awards under the 2018 Plan. +Shares available for awards +The 2018 Plan provides that up to 9,400,000 shares of Common Stock, plus the shares remaining available for Awards under the Prior Incentive Plan, may be issued, all of which may be issued as incentive stock options under Section 422 of the Code. The closing price per share of our Common Stock on February 28, 2018 was $10.57. +22 +The number of shares of Common Stock that are the subject of Awards under the 2018 Plan or the Prior Incentive Plan that are forfeited or terminated, expire unexercised, are settled in cash in lieu of Common Stock or are exchanged for Awards that do not involve Common Stock, immediately become available for additional Awards under the 2018 Plan. However, the number of shares reserved for issuance under the 2018 Plan is not increased by (i) shares of Common Stock not issued or delivered as a result of the net settlement of stock-settled SARs or stock option, (ii) shares of Common Stock used to pay the exercise price or withholding taxes related to an outstanding Option or SAR, or (iii) shares of Common Stock repurchased on the open market with the proceeds of the option exercise price. +Administration +The Committee administers the 2018 Plan with respect to Awards to employees and independent contractors and has broad power to take actions thereunder, to interpret the 2018 Plan and to adopt rules, regulations and guidelines for carrying out its purposes. The Board has the sole authority to grant Awards and administer the 2018 Plan with respect to non-employee directors. The Committee may, in its discretion, among other things, extend or accelerate the exercisability of, accelerate the vesting of or eliminate or make less restrictive any restrictions contained in any Award, waive any restrictions or other provision of the 2018 Plan or in any Award or otherwise amend or modify any Award in any manner that is either (a) not adverse to that participant holding the Award or (b) consented to by that participant. +Except in connection with a transaction involving the Company or its capitalization, the terms of outstanding Awards may not be amended without approval of the stockholders of the Company to (i) reduce the exercise price of outstanding options or SARs, (ii) cancel, exchange, substitute, buyout or surrender outstanding options or SARs in exchange for cash or other Awards, (iii) take any other action with respect to a stock option or SAR that would be treated as a repricing under the rules and regulations of the principal national securities exchange on which the shares of Common Stock are listed or (iv) permit the grant of any stock options or SARs that contain a so-called “reload” feature under which additional stock options, SARs or other Awards are granted automatically to the participant upon exercise of the original stock option or SAR. +The Compensation Committee also may delegate to the CEO, other senior officers of the Company or to other committees of the Board its duties under the 2018 Plan to the extent allowed by applicable law. +The Committee will determine the employees and independent contractors to receive Awards and the terms, conditions and limitations applicable to each such Award, which conditions may, but need not, include continuous service with the Company, achievement of specific business objectives, attainment of specified growth rates, increases in specified indices or other comparable measures of performance. +Amendment; termination +The Board may amend, modify, suspend or terminate the 2018 Plan for the purpose of addressing any changes in legal requirements or for any other lawful purpose, except that no amendment that would adversely affect the rights of any participant under any Award previously granted to such participant may be made without the consent of such participant and no amendment will be effective prior to its approval by the stockholders of the Company to the extent such approval is then required pursuant to Rule 16b-3 in order to preserve the applicability of any exemption provided by such rule to any Award then outstanding (unless the holder of such Award consents) or to the extent stockholder approval is otherwise required by applicable law. +Adjustment +The Board may make certain adjustments, including changes to the shares subject to outstanding Awards and shares available for grant under the 2018 Plan, in the event of any subdivision, split or consolidation of outstanding shares of Common Stock, any declaration of a stock dividend payable in shares of Common Stock, any recapitalization or capital reorganization of the Company, any consolidation or merger of the Company with another corporation or entity, any adoption by the Company of any plan of exchange affecting the Common Stock, or any distribution to holders of Common Stock of securities or property (other than normal cash dividends). +Change in Control +The Committee (or the Board in the case of Awards to non-employee directors), in its sole discretion, will determine the treatment of Awards upon a change in control (as defined in the 2018 Plan). A “change in control” generally occurs upon the occurrence of any of the following: (i) a person other than an exempt person becomes the beneficial owner of 50% or more of the total fair market value or total voting power of the Company’s voting stock; (ii) during any 12-month period, a person other than an exempt person becomes the beneficial owner of 30% or more of the total voting power of the Company’s voting stock; (iii) during any three-year period, individuals who at the beginning of the period were members of the Board cease for any reason to constitute at least a majority of the Board unless the election of each new director was approved by a vote of at least a majority of the directors then still in office who were directors at the beginning of such period or whose election or nomination was previously so approved; or (iv) a person acquires assets of the Company +23 +that have a total gross fair market value equal to at least 40% of the total gross fair market value of all of the Company’s assets immediately before such acquisition; provided, however, that such transfer is not to an entity that is controlled by the stockholders of the Company immediately after the transfer. +Clawback +Awards under the 2018 Plan will be subject to the provisions of any clawback policy required by applicable law and implemented by the Company, which clawback policy may provide for forfeiture, repurchase and/or recoupment of Awards and amounts paid or payable pursuant to or with respect to Awards. +Awards +At the discretion of the Committee or the Board, as applicable, employees, consultants or non-employee directors may be granted Awards under the 2018 Plan in the form of stock options, SARs, restricted stock awards, restricted stock units (including phantom shares and phantom stock units), cash awards or performance awards. Such Awards may be granted singly, in combination, or in tandem. +Options +Awards may be in the form of rights to purchase a specified number of shares of Common Stock at a specified price not less than that of the fair market value of a share of Common Stock on the date of grant (“Options”). An Option may be either an incentive stock option (“ISO”) that is intended to comply, or a nonqualified stock option (“NSO”) that is not intended to comply, with the requirements of Section 422 of the Code; provided that independent contractors and directors cannot be awarded ISOs. The Committee will determine the participants to receive Options and the terms, conditions and limitations applicable to each such Option. The term of each Option may not be longer than ten years from the date of grant. Any Option (i) that remains outstanding as of the last day of its term, (ii) has an exercise price per share that is less than the fair market value of a share of Common Stock as of such day, and (iii) whose exercise is prohibited as of such day pursuant to the operation of the Company’s insider trading policy, shall be automatically exercised (without any action on the part of the participant holding such Option) by (A) foregoing the delivery of shares of Common Stock otherwise deliverable upon the exercise of the Option in an amount sufficient to pay the exercise price of the Option, and (B) satisfying tax withholding obligations by withholding from the shares of Common Stock otherwise deliverable upon the exercise of the Option using the minimum tax rate applicable to the participant. +Stock appreciation rights +Awards may also be in the form of SARs, which are rights to receive a payment, in cash or Common Stock, equal to the fair market value or other specified value of a number of shares of Common Stock on the rights exercise date over a specified strike price not less than the fair market value of a share of Common Stock on the date of grant. The term of each SAR may not be longer than ten years from the date of grant. Any SAR (i) that remains outstanding as of the last day of its term, (ii) has a strike price per share that is less than the fair market value of a share of Common Stock as of such day, and (iii) whose exercise is prohibited as of such day pursuant to the operation of the Company’s insider trading policy, shall be automatically exercised (without any action on the part of the participant holding such SAR) and any tax withholding obligations will be satisfied by withholding from the cash or shares of Common Stock, otherwise deliverable upon the exercise of the SAR, using the minimum tax rate applicable to the participant. +Stock awards +Awards may also be in the form of grants of Common Stock or units denominated in Common Stock, including restricted stock, restricted stock units, phantom shares and phantom stock units (“Stock Awards”). The terms, conditions and limitations applicable to any Stock Award will be determined by the Committee. At the discretion of the Committee, the terms of a Stock Award may include rights to receive dividends or dividend equivalents, which will only be paid if the underlying shares vest pursuant to the terms of the Stock Award. +Cash awards +Awards may also be in the form of grants denominated in cash. The terms, conditions and limitations applicable to any cash awards granted pursuant to the 2018 Plan will be determined by the Compensation Committee. +Performance awards +At the discretion of the Committee, any of the above-described Awards may be made in the form of a performance award. A Performance Award shall be paid, vested, or otherwise deliverable solely on account of the attainment of one or more performance goals, either individually or in any combination, established by the Committee and specified in the award agreement. +24 +A performance goal need not be based upon an increase or positive result under a particular business criterion and could include, for example, maintaining the status quo or limiting economic losses (measured, in each case, by reference to specific business criteria). The amount of cash or shares payable or vested pursuant to Performance Awards may be adjusted upward or downward, either on a formula or discretionary basis or any combination, as the Committee determines. +Director award limits +No non-employee director may be granted during any calendar year Awards (in his or her capacity as a director) having a fair value determined on the date of grant when added to all cash compensation paid to the non-employee director during the same calendar year in excess of $1,000,000. +U.S. Federal Income Tax Consequences +The following is a summary of the general rules of current U.S. Federal income tax law relating to the tax treatment of award that may be issued under the 2018 Plan. The discussion is general in nature and does not take into account a number of considerations which may apply in light of the particular circumstances of a participant. This summary is not complete and does not attempt to describe any tax consequences arising in the context of the participant’s death or the income tax laws of any local, state or foreign country in which the participant’s income or gain may be taxable. +Stock awards +Restricted stock . A participant generally recognizes no taxable income at the time of an award of restricted stock. A participant may, however, make an election under Section 83(b) of the Code to have the grant taxed as compensation income at the date of receipt, with the result that any future appreciation or depreciation in the value of the shares of stock granted may be taxed as capital gain or loss on a subsequent sale of the shares. If the participant does not make a Section 83(b) election, the grant will be taxed as compensation income at the full fair market value on the date the restrictions imposed on the shares expire. Unless a participant makes a Section 83(b) election, any dividends paid to the participant on the shares of restricted stock will generally be compensation income to the participant and deductible by us as compensation expense. In general, we will receive a deduction for U.S. Federal income tax purposes for any compensation income taxed to the participant. To the extent a participant realizes capital gains, as described above, we will not be entitled to any deduction for federal income tax purposes. +Restricted stock units . A participant who is granted restricted stock units will recognize no income upon grant of the restricted stock units. At the time the underlying shares of common stock (or cash in lieu thereof) are delivered to a participant, the participant will recognize compensation income equal to the full fair market value of the shares received. We will generally be entitled to a deduction for U.S. Federal income tax purposes that corresponds to the compensation income recognized by the participant. +Options; stock appreciation rights +Options granted under the 2018 Plan may constitute ISOs within the meaning of Section 422 of the Code, while other options granted under the 2018 Plan may constitute NSOs. Grants of Options to non-employee directors and independent contractors are NSOs. The Code provides for tax treatment of Options qualifying as ISOs that may be more favorable to participants than the tax treatment accorded NSOs. Generally, upon the exercise of an ISO, the optionee will recognize no taxable income for U.S. Federal income tax purposes, although the difference between the exercise price of the ISO and the fair market value of the stock at the date of exercise is an addition to income in determining alternative minimum taxable income and such amount may be sufficient in amount to subject the optionee to the alternative minimum tax. On the sale of shares acquired by exercise of an ISO (assuming that the sale does not occur within two years of the grant date or within one year of the exercise date), any gain will be taxed to the optionee as long-term capital gain. Except with respect to death or disability, an optionee has three months after termination of employment in which to exercise an ISO and retain favorable tax treatment at exercise. No deduction is available to the Company upon the grant or exercise of an ISO (although a deduction may be available if the participant disposes of the shares so purchased before the applicable holding periods expire). +In contrast, upon the exercise of an NSO, the optionee recognizes ordinary taxable income on the exercise date in an amount equal to the excess of the fair market value of the shares purchased over the exercise price. Upon the sale of such shares by the optionee, any difference between the fair market value at the date of sale and the fair market value at the date of exercise will be treated generally as capital gain or loss. Subject to the limitations discussed below, upon exercise of an NSO, the Company is entitled to a tax deduction in an amount equal to the ordinary taxable income recognized by the participant. +Participants do not recognize taxable income upon the grant of a SAR. Upon the exercise of a SAR, the participant will recognize ordinary income in an amount equal to the cash or fair market value of the shares of stock received at the date of exercise of the SAR. The +25 +participant’s tax basis in any shares of Common Stock received on the exercise of a SAR will generally equal the fair market value of such shares on the date of exercise. Subject to the limitations discussed below, the Company will be entitled to a deduction for U.S. Federal income tax purposes that corresponds as to timing and amount with the taxable income recognized by the participant under the foregoing rules. +Deductibility; excise taxes +Code section 162(m) . In general, a U.S. Federal income tax deduction is allowed to the Company in an amount equal to the ordinary taxable income recognized by a participant with respect to Awards granted under the 2018 Plan, provided that such amount constitutes an ordinary and necessary business expense of the Company, that such amount is reasonable and that the Company satisfies any withholding obligations with respect to the participant’s ordinary taxable income. Following the enactment of the Tax Cuts and Jobs Act, beginning with the 2018 calendar year, the $1 million annual deduction limitation under Section 162(m) applies to compensation paid to any individual who serves as the Chief Executive Officer, Chief Financial Officer or qualifies as one of the other three most highly compensated executive officers in 2017 or any later calendar year. See also “Compensation Discussion and Analysis- Internal Revenue Service Limitations” for a more robust discussion of Section 162(m) of the Internal Revenue Code. +Change in control . The acceleration of the exercisability or the vesting of an Award upon the occurrence of a change in control may result in an “excess parachute payment” within the meaning of Section 280G of the Code. A “parachute payment” occurs when an employee receives payments contingent upon a change in control that exceed an amount equal to three times his or her “base amount.” The term “base amount” generally means the average annual compensation paid to such employee during the five calendar years preceding calendar year in which the change in control occurs. An “excess parachute payment” is the excess of all parachute payments made to the employee on account of a change in control over the employee’s base amount. If any amount received by an employee is characterized as an excess parachute payment, the employee is subject to a 20% excise tax on the amount of the excess, and the Company is denied a tax deduction with respect to such excess. +Code section 409A . Section 409A of the Code generally provides that any deferred compensation arrangement must satisfy specific requirements, both in operation and in form, regarding (i) the timing of payment, (ii) the advance election of deferrals, and (iii) restrictions on the acceleration of payment. Failure to comply with Section 409A of the Code may result in the early taxation (plus interest) to the participant of deferred compensation and the imposition of a 20% penalty on the participant on such deferred amounts included in the participant’s taxable income. The Company intends to structure Awards under the 2018 Plan in a manner that is designed to be exempt from or comply with Section 409A of the Code. +2018 Plan Future Benefits +The allocation of some of the shares that would become available for issuance under the 2018 Plan is not currently determinable, as such allocation depends on future decisions to be made by the Compensation Committee or the Board in their sole discretion, subject to applicable provisions of the 2018 Plan. No Awards have been granted that are contingent on the approval of the 2018 Plan. Therefore, it is not possible to determine the benefits that will be received in the future by participants in the 2018 Plan or the benefits that would have been received by such participants if the 2018 Plan had been in effect in the year ended December 31, 2017. Certain tables in this Proxy Statement set forth information with respect to prior awards granted to our NEOs under the Prior Incentive Plan currently in effect. +In 2018, the Company currently expects to award each non-employee director restricted stock units as described in more detail under “Director Compensation.” Because future Awards are in the discretion of the Board and Compensation Committee, the number of shares subject to future Awards could increase or decrease and the type and terms of future Awards could change as well, all without the need for future stockholder approval. +The Board believes that the approval of the 2018 Plan is in the best interest of the Company and its stockholders. The Board therefore recommends a vote for the 2018 Plan, and it is intended that the proxies not marked to the contrary will be so voted. Because approval of the 2018 Plan will increase the number of shares available for issuance to all directors and executive officers of the Company, each of the directors and executive officers of the Company has an interest and may benefit from the approval of the 2018 Plan. +Pursuant to our bylaws, approval of the 2018 Plan requires the affirmative vote of a majority of the common shares present in person or by proxy and entitled to vote on the proposal. In addition to the vote required by our bylaws, under New York Stock Exchange (“NYSE”) rules, approval of the 2018 plan requires approval of a majority of votes cast on the proposal. In both cases, abstentions will have the effect of a vote cast against the proposal. Broker non-votes will not be counted as shares present and entitled to vote and so will have no effect upon the outcome of the vote. +The Board recommends that you vote “FOR” the approval of the 2018 Plan. +26 +PROPOSAL 4 - RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM, GRANT THORNTON LLP, FOR 2018 +The Audit Committee has appointed Grant Thornton LLP, as the independent registered public accounting firm, to audit our consolidated financial statements for the year ending December 31, 2018. We are asking stockholders to ratify this appointment. Grant Thornton LLP has served as the Company’s independent registered public accounting firm since being appointed effective as of March 3, 2016. A representative of Grant Thornton LLP will be present at the 2018 Annual Meeting and will have the opportunity to make a statement, if they desire, and to respond to appropriate questions from stockholders. +Fees +The following table sets forth the fees incurred by us for services performed by Grant Thornton LLP in the fiscal years 2016 and 2017: +Fee Category +2016 +2017 +Audit (a) +$ +904,687 +$ +817,789 +Audit-related fees (b) +— +— +Tax (c) +— +15,900 +All other fees (d) +— +— +Total +$ +904,687 +$ +833,689 +(a) +Audit fees consist of the aggregate fees billed for professional services related to the audit and quarterly reviews of our financial statements and for services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements. +(b) +Audit-related fees consist of the aggregate fees billed for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements that are not reported above under “Audit” fees. +(c) +Tax fees consist of the aggregate fees billed for professional services rendered for tax compliance (including filing state and federal tax returns), tax advice and tax planning. Tax fees do not include fees for services rendered in connection with the audit. +(d) +Other fees consist of the aggregate fees billed for professional services other than the services reported above. +Pre-approval policy . The Audit Committee pre-approves all audit and permissible non-audit services (including the fees and terms thereof) exceeding $25,000 to be performed for us by our independent registered public accounting firm, as required by applicable law or listing standards and subject to the terms of the audit and non-audit services pre-approval policy in accordance with the Audit Committee charter. The Committee may delegate authority to one or more of its members when appropriate, including the authority to grant pre-approvals of audit and permitted non-audit services, provided that decisions of any such member to grant pre-approvals are consistent with the terms of the Pre-Approval Policy and are presented to the full Committee at its next scheduled meeting. +Audit Committee Report +Acting pursuant to its Charter, the Audit Committee reviewed and discussed our audited financial statements for the year ended December 31, 2017, with management and Grant Thornton LLP, and recommended to our Board that our audited consolidated financial statements be included in our Annual Report on Form 10-K for the year ended December 31, 2017, for filing with the SEC. This recommendation was based on: +• +the Audit Committee’s review of the audited financial statements; +• +discussion of the financial statements with management; +• +discussion with our independent registered public accounting firm, Grant Thornton LLP, of the matters required to be discussed by auditing standards generally accepted in the United States of America, including the communication matters required to be discussed by Auditing Standard No. 1301, Communications with Audit Committees, issued by the Public Company Accounting Oversight Board; +• +receipt from Grant Thornton LLP of the written disclosures and letter required by Public Company Accounting Standards Board Rule 3526 (Communications with Audit Committees Concerning Independence); +• +discussions with Grant Thornton LLP regarding its independence from Callon, our Board and our management; +• +Grant Thornton LLP’s confirmation that it would issue its opinion that the consolidated financial statements present fairly, in all material respects, our financial position and the results of our operations and cash flows for the periods presented in conformity with accounting principles generally accepted in the United States of America; and +• +other matters the Audit Committee deemed relevant and appropriate. +Management is responsible for the preparation, presentation and integrity of our consolidated financial statements in accordance with generally accepted accounting principles, the establishment and maintenance of our disclosure controls and procedures, and the establishment, maintenance and evaluation of the effectiveness of our internal controls over financial reporting. The independent registered +27 +public accounting firm is responsible for performing an independent audit of our consolidated financial statements and internal control over financial reporting in accordance with the standards of the PCAOB and issuing reports thereon. The Audit Committee’s responsibilities include monitoring and overseeing these processes. +Members of the Audit Committee rely, without independent verification, on the information provided to them and on the representations made by management and our independent registered public accounting firm. The Audit Committee’s considerations and discussions referred to above do not assure that the audit of our financial statements and internal control over financial reporting have been carried out according to the standards of the PCAOB, that the financial statements are presented according to GAAP, or that Grant Thornton LLP is in fact independent. +Respectfully submitted by the Audit Committee of the Board of Directors, +John C. Wallace, Chairman +Michael L. Finch +L. Richard Flury +Larry D. McVay +Anthony J. Nocchiero +The submission of this matter for approval by stockholders is not legally required; however, the Board and Audit Committee believe that this submission is consistent with best practices in corporate governance and is an opportunity for stockholders to provide direct feedback to the Board and Audit Committee on an important issue of corporate governance. Although the results of the vote are not binding on the Audit Committee, if the appointment is not ratified the Audit Committee will consider whether it should select another independent registered public accounting firm. +This proposal will be approved if it receives the affirmative vote of a majority of shares of our common stock present and entitled to vote at the Annual Meeting. If you hold your shares through a broker and you do not instruct the broker how to vote, your broker will have the authority to vote your shares in its discretion on this proposal. Abstentions will have the effect as a vote cast against this proposal. +The Board recommends that you vote “FOR” the ratification of the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2018. +28 +BENEFICIAL OWNERSHIP OF SECURITIES +Management and Principal Stockholders +The following table sets forth, as of the Record Date, certain information with respect to the beneficial ownership of shares of common stock held by: (i) all persons known by us to be the beneficial owners of 5% or more of the outstanding common stock; (ii) each director; (iii) the nominees for director; (iv) each executive officer named in the Summary Compensation Table; and (v) all of our executive officers and directors as a group. Information set forth in the table with respect to beneficial ownership of common stock has been obtained from filings made by the named beneficial owners with the SEC as of the Record Date or, in the case of our executive officers and directors, has been provided to us by such individuals. As of March 16, 2018 , the Company had 201,947,883 shares of Common Stock issued, outstanding, and eligible to vote. +Common Stock +Name and Address of Beneficial Owner +Beneficial Ownership +Notes +% +Directors +Matthew R. Bob +58,447 +(a)(b) +<1% +Fred L. Callon +— +n/a +Barbara J. Faulkenberry +— +(c) +n/a +Michael L. Finch +26,897 +(a)(d) +<1% +L. Richard Flury +162,999 +(a)(e) +<1% +Joseph C. Gatto, Jr. +194,835 +(a)(f) +<1% +Larry D. McVay +147,432 +(a)(g) +<1% +Anthony J. Nocchiero +134,296 +(a)(h) +<1% +James M. Trimble +39,447 +(a)(i) +<1% +John C. Wallace +— +(a)(j) +<1% +Executive Officers +James P. Ulm II +— +(k) +n/a +Gary A. Newberry +328,073 +(a)(l) +<1% +Jerry A. Weant +87,454 +(a)(m) +<1% +Mitzi P. Conn +84,810 +(a)(n) +<1% +Michol L. Ecklund +— +(k) +n/a +Correne S. Loeffler +8,530 +(a)(o) +<1% +Directors and Executive Officers (16 persons, as a group) +1,273,220 +(p) +<1% +Certain Beneficial Owners +Wellington Management Group, LLP +24,322,947 +(q) +12.05% +BlackRock, Inc. +21,602,597 +(r) +10.70% +The Vanguard Group +17,257,289 +(s) +8.55% +FMR LLC +11,808,551 +(t) +5.85% +State Street Corp. +10,826,531 +(u) +5.36% +(a) +Unless otherwise indicated, each of the persons listed in the table may be deemed to have sole voting and dispositive power with respect to such shares. Beneficial ownership does not include the unvested portion of stock awards due to lack of voting and disposition power, unless such award will vest within sixty days of March 16, 2018. Percentage ownership of a holder or class of holders is calculated by dividing (i) the number of shares of common stock beneficially owned by such holder or class of holders plus the total number of shares of common stock underlying options exercisable or stock awards vesting within sixty days of March 16, 2018, by (ii) the total number of shares of common stock outstanding plus the total number of shares of common stock underlying options exercisable and stock awards vesting within sixty days of March 16, 2018, but not common stock underlying such securities held by any other person. +(b) +Comprised of 45,640 shares held directly by Mr. Bob and 12,807 unvested RSUs that will vest within 60 days of the Record Date. Does not include 11,522 unvested RSUs payable in stock. +(c) +Ms. Faulkenberry is a director nominee who currently does not own any shares of the Company’s common stock. +(d) +Comprised of 14,090 shares held directly by Mr. Finch and 12,807 unvested RSUs that will vest within 60 days of the Record Date. Does not include 11,522 unvested RSUs payable in stock. +(e) +Comprised of 132,999 shares held directly by Mr. Flury and 30,000 shares held in a joint tenancy with his wife. Does not include 50,969 RSUs deferred, pursuant to his election under the Deferred Compensation Plan for Outside Directors, and payable in cash upon his separation of service as a director. Mr. Flury’s deferred RSUs are comprised of 26,640 vested shares and 24,329 unvested shares of which 12,807 shares will vest within 60 days of the Record Date. +29 +(f) +Comprised of 149,382 shares held directly by Mr. Gatto, 20,605 shares held indirectly within the Company’s Employee Savings and Protection Plan (the “401(k) Plan”), and 24,848 unvested RSUs payable in stock that will vest within 60 days of the Record Date. Does not include 1,500 shares of the Company’s Series A Preferred Stock, 249,906 unvested RSUs payable in stock, 10,895 unvested RSUs payable in cash, and 129,404 unvested PSUs payable in 50% stock and 50% cash. +(g) +Comprised of 134,625 shares held directly by Mr. McVay and 12,807 unvested RSUs that will vest within 60 days of the Record Date. Does not include 11,522 unvested RSUs payable in stock and 35,014 vested RSUs deferred, pursuant to his election under the Deferred Compensation Plan for Outside Directors, and payable in cash upon his separation of service as a director. +(h) +Comprised of 121,489 shares held directly by Mr. Nocchiero and 12,807 unvested RSUs that will vest within 60 days of the Record Date. Does not include 11,522 unvested RSUs payable in stock. +(i) +Comprised of 26,640 shares held directly by Mr. Trimble and 12,807 unvested RSUs that will vest within 60 days of the Record Date. Does not include 11,522 unvested RSUs payable in stock. +(j) +Mr. Wallace transferred his equity ownership in the Company to The Wallace Family Trust in April 2008. All equity ownership in the Company acquired by him since April 2008 has also been transferred to the Wallace Family Trust. He has no voting and dispositive power over the shares owned by the Trust. From May 2011 through May 2016, Mr. Wallace was granted a combined 116,599 RSUs for which he elected to defer compensation pursuant to the terms of the Deferred Compensation Plan for Outside Directors. All deferred shares will be payable in cash upon his separation of service as a director. Mr. Wallace also has 11,120 unvested RSUs payable in stock. All of Mr. Wallace’s awards, deferred or otherwise, will be settled upon his retirement from the Board on May 10, 2018. +(k) +Currently does not own any shares of the Company’s common stock. +(l) +Comprised of 245,782 shares held directly by Mr. Newberry, 56.239 shares held indirectly within the Company’s 401(k) Plan and 24,848 unvested RSUs payable in stock that will vest within 60 days of the Record Date. Does not include 268,390 unvested RSUs payable in stock, 10,895 unvested RSUs payable in cash, and 129,404 unvested PSUs payable in 50% stock and 50% cash. +(m) +Comprised of 70,829 shares held directly by Mr. Weant, 4,201 shares held indirectly within the Company’s 401(k) Plan and 12,424 unvested RSUs payable in stock that will vest within 60 days of the Record Date. Does not include 21,026 unvested RSUs payable in stock, 3,982 unvested RSUs payable in cash, and 34,226 unvested PSUs payable in 50% stock and 50% cash. +(n) +Comprised of 48,285 shares held directly by Ms. Conn, 24,101 shares held indirectly within the Company’s 401(k) Plan and 12,424 unvested RSUs payable in stock that will vest within sixty days of the Record Date. Does not include 31,026 unvested RSUs payable in stock, 3,982 unvested RSUs payable in cash, and 34,226 unvested PSUs payable in 50% stock and 50% cash. +(o) +Comprised of 8,453 shares held directly by Ms. Loeffler and 77 shares held indirectly within the Company’s 401(k) Plan. Does not include 30,401 unvested RSUs payable in stock and 3,030 unvested PSUs payable in cash. +(p) +Comprised of 998,214 shares held directly by the beneficial owners list above, 1,500 shares of the Company’s Series A Preferred Stock, 30,000 shares held in joint tenancy, 106,427 shares held indirectly within the Company’s 401(k) Plan and 138,579 unvested RSUs payable in stock that will vest within 60 days of the Record Date. +(q) +Information is based upon a Schedule 13G/A filed with the SEC on February 8, 2018 by Wellington Management Group, LLP, Wellington Group Holdings LLP, Wellington Investment Advisors Holdings LLP and Wellington Management Company LLP (collectively “Wellington”). In this Schedule 13G/A, Wellington represents that it has shared voting power with respect to 15,417,691 shares of common stock and shared dispositive power with respect to 24,322,947 shares of common stock. The address of the principal business office of Wellington is 280 Congress St., Boston, MA 02210. +(r) +Information is based upon a Schedule 13G/A filed with the SEC on January 19, 2018 by BlackRock Inc. (“BlackRock”). In this Schedule 13G/A, BlackRock represents that it has sole voting power with respect to 21,141,934 shares of common stock and sole dispositive power with respect to 21,602,597 shares of common stock. The address of the principal business office of BlackRock is 55 East 52nd Street, New York, NY. +(s) +Information is based upon a Schedule 13G/A filed with the SEC on February 8, 2018 by The Vanguard Group - 23-1945930 (“Vanguard”). In this Schedule 13G/A, Vanguard represents that it has sole voting power with respect to 223,175 shares of common stock and sole and shared dispositive power with respect to 17,257,289 shares of common stock. The address of the principal business office of Vanguard is 100 Vanguard Blvd., Malvern, PA 19355. +(t) +Information is based upon a Schedule 13G/A filed with the SEC on February 13, 2018 by FMR LLC (“FMR”). In this Schedule 13G/A, FMR represents that it has sole voting power with respect to 5,290,096 shares of common stock and sole dispositive power with respect to 11,808,551 shares of common stock. The address of the principal business office of FMR is 245 Summer St., Boston, MA 02210. +(u) +Information is based upon a Schedule 13G filed with the SEC on February 14, 2018 by State Street Corp. (“State Street”). In this Schedule 13G, State Street represents that it has shared dispositive power with respect to 10,826,531 shares of common stock. The address of the principal business office of State Street is One Lincoln St., Boston, MA 02111. +Section 16(a) beneficial ownership reporting compliance. Our executive officers and directors are required to file reports with the SEC, disclosing the amount and nature of their beneficial ownership in our common stock, as well as changes in that ownership. To our knowledge, based solely on our review of these reports and written representations from these individuals that no other reports were required, all required reports were timely filed during 2017, except that our recently hired CFO, James P. Ulm II, filed the initial Form 3 and Form 4 that covered one transaction late. +30 +COMPENSATION DISCUSSION AND ANALYSIS +Oversight of Executive Compensation Program +The Compensation Committee (referred to in this section as the “Committee”), appointed by our Board, assists the Board in performing its fiduciary responsibilities relating to the compensation of our CEO and other executive officers. The following compensation discussion and analysis (“CD&A”) describes the actions and decisions of the Committee as they relate to our executive compensation decisions. The Committee, which is composed entirely of independent directors, is primarily responsible for establishing, implementing and monitoring our executive compensation programs, including those applicable to our NEOs. +Our NEOs include the individuals who served as Chief Executive Officer and Chief Financial Officer during 2017 and the three other most highly compensated executive officers for the calendar year. Reflecting several officer transitions during the year, our NEOs for 2017 were: +NEO +Title +Joseph C. Gatto, Jr. +Current President and CEO; former CFO +James P. Ulm II +Senior Vice President and CFO +Gary A. Newberry +Senior Vice President and COO +Jerry A. Weant +Vice President, Land +Mitzi P. Conn +Vice President and CAO +Fred L. Callon +Former Chairman of the Board and CEO +Correne S. Loeffler +Treasurer and Former Interim CFO +The Committee meets several times a year to review executive compensation programs, approve compensation levels, consider performance targets, review management performance and administer our annual and long-term incentive (“LTI”) compensation plans. The Committee operates in accordance with its charter, as revised and approved in November 2017, which sets forth the committee’s authority and responsibilities. +31 +Executive Summary and 2017 Highlights +2017 was a year of transition, growth and solid results for Callon. In May 2017, we unexpectedly lost our long-time Board Chairman and CEO, Fred Callon, which led to several changes on our leadership team. Even with these transitions, the Company achieved strong results as we continued to grow production, reserves, and cash margins against the backdrop of an improving but tenuous commodity environment. Importantly, we successfully integrated over 40,000 net acres in the Midland and Delaware Basins that were acquired over the last two years, ensuring that these investments had a near-term impact on shareholder value in 2017. Other key accomplishments included the following: +Production growth +l +Increased daily production approximately 50% year over year to 22,940 Boepd, with a sustained oil content of nearly 80%; +l +Substantial contribution from newly established WildHorse area; and +l +Three-year compounded annual growth rate of 60%. +Reserve growth +l +Increased estimated net proved reserves nearly 50% year over year to 137 million barrels of oil equivalent (“MMBoe”) at December 31, 2017, with 51% classified as proved developed producing; and +l +Replaced 2017 production by 642%. +Improved margins +l +Increased corporate cash margins by 34% to $25.05 per Boe despite an inflationary service cost environment and substantial increase in employee count to execute our growth strategy; +l +Decreased LOE per Boe by 13% and G&A per Boe by 32% year over year; and +l +EBITDA margins continue to be amongst the highest within our Permian peer group. +Operational efficiency +l +Improved our “drill bit” finding and development costs to $8.21 per Boe despite an inflationary service cost environment; and +l +Proactive investments in critical water handling and other infrastructure delivering both reliability and cost benefits in an increasingly active basin. +Financial strength +l +Reduced our Debt/LTQA EBITDA ratio (i) to 2.2x (1.8x on a Debt /LQA basis (i) ); +l +Issued senior notes at an effective yield of 5.2%, contributing to a improved cost of capital; and +l +Increased liquidity with an increased borrowing base amount of $700 million and also added four lending institutions to our bank group. +Accretive expansion of acreage position +l +Closed on our acquisition of over 16,000 net acres in the Delaware Basin, establishing our new Spur operating area as a beachhead for future growth; and +l +Subsequently acquired an additional ~2,500 contiguous net acres within our footprint during the year. +Health, environment and safety +l +65% decrease in water spills and 50% decrease in oil spills per MMBoe vs 2016; and +l +Nearly doubled participation in our proactive safety observation card program (Callon and contractors) compared to 2016, with ~4,500 cards submitted. +Management Changes in 2017 +As noted above, there were significant changes to our management team in 2017, which resulted in several one-time and off-cycle compensation actions. These began with the passing of our CEO, Mr. Callon in May of 2017. Upon his passing, Mr. Gatto was promoted to CEO and Ms. Loeffler was named interim CFO. In December 2017, Mr. Ulm was hired as CFO. This series of transitions resulted in several one-time equity grants for several NEOs, as well as increases in compensation for both Mr. Gatto and Mr. Newberry as they took on additional responsibilities. The Committee’s actions and rationale are explained further below. +Key Committee Actions for 2017 +The Committee took the following key actions in 2017 as a result of our management team’s performance and the management transitions: +• +Assessed salaries relative to competitive data and each officer’s scope of responsibility, and made adjustments where appropriate. +• +Paid bonuses at approximately 120% of target to reflect the Company’s success in executing on our strategy to grow production, reserves, and cash margins. +• +Granted performance-based and time-based LTI awards to provide retention incentives and to further align management’s interests with shareholder value creation. +• +Re-evaluated our peer group used for compensation purposes prior to granting the May 2017 LTI awards due to the Company’s growth and changes in the industry. +• +Vested the 2015-2017 phantom unit awards at 183% of target as a result of Callon’s third place ranking in relative total stockholder return (“TSR”) against the peer group. +• +Granted promotional and retention awards of time-based RSUs to Mr. Gatto and Mr. Newberry in June 2017, as they assumed increased responsibilities following Mr. Callon’s passing. +• +Granted hire-on awards to Ms. Loeffler and Mr. Ulm upon their hiring in April and December of 2017, respectively. +(i) See Appendix B for a reconciliation of Non-GAAP financial measures. +32 +In total, the Committee believes these actions helped align pay with the Company’s performance and helped manage challenging transitions in the executive management team. +Committee Best Practices +We believe our compensation programs incorporate many best practices, including the following: +What We Do +ü +Substantial focus on performance-based pay +ü +Balance of short- and long-term incentives +ü +Align executive compensation with shareholder returns through substantial weighting on long-term incentives +ü +Retain an independent external compensation consultant +ü +Review of peer group benchmarks when establishing compensation +ü +Substantial stock ownership guidelines for our NEOs and directors +ü +Double-trigger CIC severance for both cash severance and equity vesting +ü +Annual assessment of the compensation programs to ensure avoidance of excessive risk taking +What We Don't Do +NO hedging or pledging of our stock +NO tax gross-ups +NO employment agreements +NO excessive benefits or perquisites +Role of Stockholder Say-on-Pay Advisory Vote +We have historically received very strong support for our executive compensation practices. In the advisory vote held at the 2017 Annual Meeting, approximately 96% of the votes cast were in favor of our 2016 executive compensation programs. The Committee acknowledged the support received from our stockholders and viewed the results as an affirmation of our existing executive compensation policies and programs. The “say-on-pay” vote serves as an additional tool to guide the Board and the Committee in ensuring alignment of our executive compensation programs with stockholder interests. Accordingly, based on the Committee’s analysis of this support, it generally maintained our executive compensation policies for 2017 and into 2018. The Committee will continue to review stockholder votes on our executive compensation and determine whether to make any changes to the program as a result of these votes. +Role of Independent Compensation Consultant +For 2017, the Committee continued its engagement of Meridian Compensation Partners, LLC (“Meridian” or the “Consultant”) as its independent compensation consultant to provide information and objective advice regarding NEO and director compensation. The Committee retained Meridian because of its extensive experience and familiarity with our NEO compensation program and the compensation programs of our Peer Group, including specific experience in the oil and gas industry. Importantly, the Committee makes all of the decisions with respect to our executive compensation, and in setting compensation for our NEOs, considers the Consultant’s advice as only one factor among many other factors discussed within this CD&A. Other factors include our overall performance, individual NEO performance, experience, skills, tenure with Callon, industry trends and similar factors. +Meridian reports solely to the Committee, and the Committee determines the scope of Meridian’s engagement. To help ensure that our NEO compensation programs are competitive and consistent with our compensation philosophy, the Consultant assisted the Committee as follows: +• +Regularly attending meetings of the Compensation Committee and meeting privately in executive session with the Compensation Committee to discuss its recommendations; +• +Providing recommendations on executive compensation matters to align the Committee’s actions with stockholder interests, our business strategy and pay philosophy, prevailing market practices and relevant legal and regulatory requirements; +• +Periodically evaluating the peer group and providing peer company data for the Committee to use in its decision-making process, including assessment of pay and performance relative to peers; +• +Providing comprehensive, competitive market data to consider in evaluating the competitiveness of the executive base salaries and short and long-term incentive plans and awards; +• +Reviewing data in connection with the Committee’s determination of annual cash incentive performance objectives and performance-based incentive vesting levels for completed performance periods; +33 +• +Advising on the Company’s compensation arrangements for its non-employee directors, including providing peer group data; +• +Reviewing and providing feedback on our SEC filings relating to executive compensation disclosures, including our CD&A disclosures; and +• +Informing the Committee about marketplace compensation trends in the industry, best practices and other general trends and developments affecting executive compensation. +The Committee did not direct Meridian to perform its services in any particular manner or under any particular method. The Committee has the final authority to hire and terminate the Consultant, and the Committee evaluates the Consultant annually. Meridian provides no other services to Callon aside from its role as advisor to the Committee, and pursuant to applicable SEC and NYSE rules, the Committee has determined that no conflicts of interest exist because of Meridian’s engagement by the Committee. The Committee has retained Meridian as its Consultant on NEO and director compensation for 2018. +From time to time, Meridian contacts our NEOs for information needed to fulfill the objectives established by the Committee, and makes reports and presentations to both the Committee and our NEOs. However, the Committee established procedures that it considers adequate to ensure that the Consultant’s advice to the Committee remains objective and is not influenced by our NEOs or other management. +Role of Management +The Committee considers input from our CEO in making determinations regarding our executive compensation program and the individual compensation of each of his direct reports and other select officers of Callon. The officer team makes recommendations to the Committee regarding potential objectives for the annual cash bonus incentive program and provides information to the Committee regarding the performance of the Company for the Committee’s determination of annual cash bonuses. The Committee makes the final determination of NEO compensation. Our CEO makes no recommendations regarding, and does not participate in discussions about, his own compensation. +Role of Market Data +The Compensation Committee of the Board strives to ensure that our executives are compensated in a manner that is fair, equitable, performance-based and guided by the long-term interests of investors. In order to attract, motivate and retain talented executive officers, the Committee must also ensure that our executive compensation program remains competitive with the types and ranges of compensation paid by our peer companies who compete for the same executive talent. On an annual basis, the Committee reviews and discusses compensation data for our CEO and other NEOs as compared with compensation data for similarly situated executive officers at peer companies selected by the Consultant and approved by the Committee. +The Committee engages Meridian to conduct annual assessments of our industry peer group (“Peer Group”) in order to ensure each peer remains appropriate year-over-year. The Peer Group is selected based on multiple factors, such as: +• +Size, including enterprise value, market capitalization, and asset size; +• +Similar geographic footprint and operational focus, particularly in the Permian Basin; +• +Comparability of asset portfolio; and +• +Availability of compensation data. +The Committee does not target executive compensation to a specific percentile of the Peer Group, as the market data is just one of many factors considered by the Committee in determining compensation. The Committee believes this Peer Group provides a reasonable point of reference for comparing the compensation of our NEOs to others holding similar positions and having similar responsibilities. The Committee considers Peer Group data relevant to, but not determinative of, the Committee’s consideration of overall executive compensation matters. +The Peer Group used by the Committee in evaluating the competitiveness of executive compensation and making 2017 compensation decisions consisted of the companies in the first column of the following table. The Committee also reviewed data from proprietary benchmarking surveys provided by Meridian for additional market perspective and to validate the peer group data. +Due to industry volatility and changes, the Committee re-evaluated the Peer Group in preparation for making the May 2017 grants of long-term incentives, resulting in the peer group in the second column of the following table. This Peer Group is being used to measure Callon’s relative total shareholder return (“TSR”) performance for the May 2017 grant of PSUs. +34 +Initial 2017 Peer Group +May 2017 Peer Group (May 2017 LTI Awards) +Abraxas Petroleum Corp. +Abraxas Petroleum Corp. +Bill Barrett Corp. +Bill Barrett Corp. +Bonanza Creek Energy, Inc. +Carrizo Oil & Gas, Inc. +Carrizo Oil & Gas, Inc. +EP Energy Corp. +EXCO Resources, Inc. +Jones Energy, Inc. +Jones Energy, Inc. +Laredo Petroleum, Inc. +Laredo Petroleum, Inc. +Matador Resources, Inc. +Matador Resources, Inc. +Parsley Energy, Inc. +Parsley Energy, Inc. +PDC Energy, Inc. +PDC Energy, Inc. +RSP Permian, Inc. +RSP Permian, Inc. +Sanchez Energy Corp. +Sanchez Energy Corp. +SM Energy Co. +The Committee understands the inherent limitations in using any peer group or data set including fluctuations in survey participation and competition for executive talent by companies potentially much larger than Callon. Accordingly, the Committee does not consider data collected from any of these sources to be prescriptive. Rather, the Committee relies upon this and similar data as reference points around which to make informed decisions about the appropriate level and form of compensation for each NEO. +Risk Assessment Related to our Compensation Structure +The Committee believes our compensation plans and policies are appropriately structured to encourage and reward prudent business judgment and avoid excessive risk-taking over the long term. The Committee, with the assistance of the Consultant, reviewed the compensation programs maintained by the Company during 2017 to determine whether they encouraged excessive risk taking. Upon evaluation of the assessment, the Committee concluded that our compensation policies and practices for our employees do not present risks that are reasonably likely to have a material adverse effect on the Company. The Committee’s risk review identified the following risk mitigating features designed into our compensation programs: +• +A balance of short-term and long-term programs to focus management on both elements of Callon’s performance; +• +Annual grants of long-term incentives designed to be the largest component of each NEO’s compensation package, with typical vesting periods of three years that are based on the value of our common stock and not on any particular metric that could encourage excessive risk-taking; +• +Performance criteria and targets designed to encourage performance, but not excessive risk taking, and discretion to decrease payouts if it is believed management exercised excessive risk taking; +• +The use by the Committee of its discretion to assess annual performance in the bonus plan; +• +Performance targets measured at the corporate level, rather than at the individual or business unit level; +• +Reasonable change-in-control severance protections; and +• +Significant executive stock ownership requirements. +Executive Compensation Components and Philosophy +Our pay-for-performance philosophy is demonstrated in the mix of compensation that we provide to our NEOs. The Committee designs our compensation program to maintain a balance between rewarding the achievement of annual performance objectives and the long-term objective of aligning the interests of our executives with those of our stockholders. Accordingly, a significant portion of our NEOs’ compensation in 2017 was in the form of annual cash incentives and long-term incentives. Our executive compensation program is designed to do the following: +• +Reward the management team for delivering results against its long-term objectives, thereby creating value for the stockholders; +• +Emphasize pay for performance, in which Company and individual performance substantially influence the amount realized by a NEO; +• +Attract and retain a highly qualified and motivated management team by offering industry competitive opportunities; +• +Hold NEOs accountable and appropriately reward them for their contributions to the achievement of our key short-term and long-term strategic objectives through the use of variable compensation; and +• +Align the compensation of our NEOs with the long-term interests of our stockholders by weighting the programs toward at-risk, performance-based compensation, consisting of an objective-driven annual incentive program, stock grants with three-year vesting, and TSR-contingent incentive awards. +35 +The Committee believes that this approach awards and compensates our NEOs in a manner that fairly and reasonably provides incentives for the enhancement of stockholder value, for the successful implementation of our business plan, and the continuous improvement in corporate and personal performance. In order to compete in our industry, the Committee believes that our NEOs’ compensation should include the following components: +Base salary +Purpose +l +Pay for expertise and experience; +l +Attract and retain talented executives; +l +Provide compensation stability; and +l +Compete with comparable companies. +Philosophy +l +Fixed component of compensation reflective of individual skills, experience and expertise necessary to execute our business strategy; and +l +Competitive with similarly sized peers. +Annual Cash Bonus Incentive +Purpose +l +Motivate our executive officers to achieve our short-term business objectives that drive long-term performance while providing flexibility to respond to opportunities and changing market conditions; +l +Reward achievement of financial, operating, safety and strategic goals for which NEOs are held accountable; and +l +Promote and encourage pay-for-performance. +Philosophy +l +At-risk component of compensation, with modest or no reward for performance below expectations and potential for increased reward for exceptional performance; +l +Reflective of internal equity considerations; +l +Goals aligned with our annual performance targets; +l +Provide balance in compensation programs and avoid encouraging undue risk-taking; and +l +Competitive with similarly-sized peers. +Long-term incentive (LTI) awards (60% TSR PSUs / 40% RSUs) +Purpose +l +Motivate and reward long-term achievement of business objectives, aligning the interests of our NEOs with stockholders; +l +Match competitive practices to attract and retain employees; and +l +Provide a mix of LTI awards that focuses the NEO on creating long-term value while avoiding undue risk-taking. +Philosophy +l +Ensures that realized value to the executive aligns with value delivered to stockholders; +l +Recognizes and rewards share price performance relative to industry peers; +l +At-risk component of compensation, providing a strong performance-based LTI component; +l +Aligns compensation with sustained long-term value creation; and +l +Allows NEOs to acquire a meaningful and sustained ownership stake in the Company. +Other (Retirement; Health benefits; Severance) +Purpose +l +Provide financial security for the NEOs and their families; +l +Ensure a financial safety net; +l +Provide competitive level of benefits; +l +Provide competitive benefits to attract and retain NEOs; and +l +Ensure NEOs consider all possible transactions to increase stockholder value related to changes in control of the Company. +Philosophy +l +Helps attract and retain NEO talent and remain competitive among our peers by offering a comprehensive benefits package; +l +Provides financial security in the event of various individual risks and maximizes the efficiency of tax-advantaged compensation vehicles; +l +Benefits levels based on peer group practices while considering stockholder value; and +l +Attracts and retains NEOs in a competitive and changing industry, ensures NEOs act in the best interests of the stockholders in a change in control. +36 +Determination of Each Element of Compensation +Base salaries +We provide all of our employees, including the NEOs, with an annual base salary to compensate them for their services throughout the year. Our Committee recognizes that a substantial amount of competition exists in the oil and gas industry for attracting and retaining qualified management teams, particularly in the Permian Basin. Accordingly, the Committee evaluates our NEOs’ salaries together with other components of their compensation to ensure that the NEOs’ total compensation is competitive relative to market practices in our Peer Group or our industry in general, and is consistent with the Committee’s compensation philosophy. +Annually, generally in March of each year, the Committee reviews the base salary of our NEOs. Individual salary amounts reflect the Committee’s subjective analysis of a number of factors, including: +• +Individual officer’s experience, skills, contributions and tenure with Callon; +• +Changes to the individual’s position within Callon; +• +Trends in compensation practices within our Peer Group and industry; and +• +The NEO’s roles, responsibilities and expected future contribution to Callon’s success. +In addition, the Committee also considers the input and recommendations of Meridian regarding base salaries, as well as the input of the CEO when evaluating base salary for the other NEOs. +After considering the market analysis and advice of its Consultant, the Committee did not increase salaries at its March 2017 meeting. Upon the passing of Mr. Callon and promotion of Mr. Gatto to CEO in June 2017, the Committee increased Mr. Gatto’s salary from $400,000 to $575,000 and Mr. Newberry’s salary from $400,000 to $475,000, reflecting their increased roles and responsibilities after the transition. The salaries for Mr. Ulm and Ms. Loeffler were negotiated at their hiring and reflect consideration of market information from Meridian. +Performance-based annual cash bonus incentive +A core component of our NEO compensation philosophy is to emphasize pay-for-performance by structuring a significant portion of total annual compensation as “at risk.” Each year, the Compensation Committee establishes an annual performance bonus program, which is designed to promote the achievement of annual corporate objectives including key financial, operating, safety and strategic objectives that are aligned with the creation of stockholder value. Performance is judged at the end of the year based on a retrospective evaluation of performance against these specified objectives, although the Committee retains discretion to determine the ultimate bonus amounts paid. +To motivate employees to pursue our annual business goals in a way most beneficial to our stockholders, NEOs, senior management and other non-management technical personnel have the potential to receive a significant portion of their annual cash compensation as a bonus. The Committee set 2017 annual bonus award opportunities for each NEO as a percentage of the NEO’s annual base salary, and ultimately awarded a cash bonus to the NEOs based on the achievement of specified Company performance goals and the NEO’s individual performance, as determined at the Committee’s discretion. +The 2017 annual bonus award opportunities for our NEOs were as follows: +NEO +Target Bonus Opportunity (% of Base Salary) +Joseph C. Gatto, Jr. +100% +Gary A. Newberry +100% +James P. Ulm II +90% +Other NEOs +60% - 70% +Mr. Gatto and Mr. Newberry’s targets were increased from 90% to 100% in June 2017 reflecting their expanded roles and responsibilities following Mr. Callon’s passing. The bonus targets for Mr. Ulm and Ms. Loeffler were negotiated at their hiring and reflect consideration of market information from Meridian. +37 +Setting objectives and assessing annual performance +For purposes of evaluating performance, the Committee, in collaboration with management and the Consultant, oversees a rigorous process to set performance objectives for the annual bonus program, evaluate progress toward these objectives, monitor external trends, measure competitiveness and determine compensation outcomes. During the first quarter of each year, the Committee approves our operational, financial and strategic objectives for that year’s bonus program based on recommendations and input from management. These approved company performance objectives become the individual performance objectives for our CEO. The Committee believes that these quantitative and qualitative factors and performance expectations, taken together, are objective indicators of overall successful performance. The Committee prefers not to rely solely on a formulaic approach that results in automatic payouts, so the Committee retains the flexibility to exercise its judgment and discretion as appropriate and take into account special or unusual factors that may have contributed to the achievement of these objectives, such as acquisitions, commodity prices, or other factors considered appropriate by the Committee at the time of the award. +The key 2017 operational, financial and strategic objectives and the Committee’s assessment of performance against those objectives are as follows: +Objective +Assessment +Result +Operate in a safe an environmentally friendly manner +OSHA recordable rate was higher than prior year’s reflecting industry-wide trends; environmental spill rates and safety engagement metrics improved. +Below expectations +Increase daily production +Increased approximately 50% year over year to 22,940 Boepd +Met expectations +Increase proved reserves +Increased nearly 50% year over year to 137 MMBoe, with 50% PDP +Exceeded expectations +Manage expenses and improve margins +LOE reduced 13% to $5.96 per Boe and cash G&A reduced 13% to $2.51 per Boe. Corporate cash margin increased 34% to $25.05 per Boe despite an inflationary service environment and substantial growth in employee count. +Mostly exceeded expectations +Efficiently deploy capital +Drill-Bit F&D reduced by 6% year over year to $8.21/Boe despite inflationary service environment +Exceeded expectations +Maintain appropriate financial flexibility +Lowered Debt/LTQA EBITDA (i) to 2.2x with liquidity of approximately 150% of projected 2018 capital budget +Met expectations +In addition to performance criteria above, the Committee considers the economic and industry environment, commodity price fluctuations and other unforeseen influences (adverse or beneficial) in its evaluation. For 2017, the Committee took into account the following in determining bonus payouts: +• +Management’s successful integration of 2016 acquisitions, including the addition of a newly established Delaware Basin position; +• +The successful growth of Callon’s employee base to manage the increased operations activity and growing asset base; and +• +Managing through a challenging and unanticipated leadership transition, including the hiring of several new senior management team members. +The Committee evaluated the NEOs’ performance against the 2017 performance criteria described above and determined that overall the management team exceeded expectations for the year. Based on the results of the Committee’s assessment set forth above, the Committee determined actual bonus amounts paid for 2017 performance at approximately 120% of target, as follows: +NEO +2017 Annual Bonus +Joseph C. Gatto, Jr. +$ +690,000 +James P. Ulm II (a) +$ +52,000 +Gary A. Newberry +$ +570,000 +Jerry A. Weant +$ +193,500 +Mitzi P. Conn +$ +189,000 +Fred L. Callon (b) +$ +312,500 +Correne S. Loeffler +$ +176,400 +(a) +Bonus amount pro-rated for less than a full year of employment. +(b) +Bonus amount pro-rated through May 2017, based on a target bonus opportunity of 100% of base salary. +(i) See Appendix B for a reconciliation of Non-GAAP financial measures. +38 +Annual award of long-term incentives +We believe that a long-term incentive program that includes awards of both restricted stock units (“RSUs”) and performance stock units (“PSUs”) provides appropriate retention incentives and effectively aligns our executive officers’ interests with the interests of our stockholders on a long-term basis. PSUs also have an additional performance-based component that compares our performance with that of our peer companies. We believe this combination of LTI awards appropriately provides incentives that capture absolute total return performance of our common stock, as well as comparative returns relative to other oil and gas companies. The Committee believes that granting LTI awards is the most effective means to provide substantial forward-looking incentives to our NEOs that emphasizes: +• +Long-term value creation by linking compensation provided to our NEOs with long-term operational success; +• +Alignment of the long-term interests of our NEOs with those of our stockholders by directly linking rewards to stockholder return and our pay-for-performance philosophy; +• +Retention incentives for our executive officers; and +• +Meaningful equity participation by our executive officers. +The Committee administers our long-term incentive programs, approves award recipients and amounts, and determines the vesting and performance criteria. For the grant of LTI compensation to NEOs, the Committee will typically consider information provided by the Consultant related to the overall competitive environment associated with long-term compensation. We have no program, plan or obligation that requires us to grant LTI compensation on specified dates. However, the Committee adheres to our policy of only granting stock based compensation grants during open trading windows. +For 2017 LTI grants, the Committee approved a 40%/60% mix for our NEOs of time-based RSUs and performance based awards tied to relative TSR. The performance awards are granted as PSUs that settle 50% in cash and 50% in stock. The following table sets forth the number of RSUs and PSUs awarded to the NEOs at our normal annual grant in May 2017: +NEO +Total Value $ +RSUs Payable in +Common Stock (a) +TSR PSUs Payable in 50% Stock and 50% cash (b) +Joseph C. Gatto, Jr. +$ +1,300,000 +42,868 +64,304 +Gary A. Newberry +$ +1,300,000 +42,868 +64,304 +Jerry A. Weant +$ +330,000 +10,881 +16,324 +Mitzi P. Conn +$ +330,000 +10,881 +16,324 +Fred L. Callon +$ +2,950,000 +97,279 +145,918 +Correne S. Loeffler +$ +122,500 +7,068 +3,030 +(c) +(a) +Amounts represent RSUs that are scheduled to vest on May 11, 2020 and settle in Company common stock on the vesting date. +(b) +Amounts represent TSR PSUs that are scheduled to vest on December 31, 2019 and settled in 50% Company common stock and 50% cash at a variable rate between 0% and 200% based on our TSR when compared to pre-determined peer companies. +(c) +Ms. Loeffler’s TSR PSU award consists only of units that will settle in 100% cash on the vesting date. +RSU program. The Committee awarded NEOs with time-based RSUs that will vest in full if the executive continues to be employed on the third anniversary of the grant date and will be paid in shares of the company’s common stock. +39 +PSU program. In May 2017, the Committee awarded PSUs to the NEOs that will vest at the end of the performance period based on the Company’s TSR ranking relative to the peer group listed in the second column of the peer group table found in the Role of Market Data section above. TSR is the change in the common stock price plus dividends using a 20-day average at the beginning and end of the performance period. The Committee believes relative TSR is an appropriate long-term performance metric because it generally reflects all elements of a company’s performance and provides the best alignment of the interests of management and the Company’s stockholders. The Committee also believes that the TSR PSU program provides a good balance to the restricted stock unit program. TSR PSUs are eligible for vesting if the employee continues to be employed until the vesting date on December 31, 2019. TSR PSUs will vest at the percentage set forth below based on the Company’s relative TSR ranking for the performance period: +Callon’s TSR Rank Among the Peer Companies +TSR PSUs Vesting as a Percentage of Target +1 - 2 +200% +3 +183% +4 +163% +5 +142% +6 +121% +7 +100% +8 +75% +9 +50% +10 +25% +11 - 13 +0% +However, if Callon’s TSR is negative during the performance period, the payout will be limited to 100% of target. The vested TSR PSUs will pay out 50% in cash and 50% in shares of Callon common stock. +Vesting of 2015-2017 performance awards +TSR PSUs - Results for performance period ending December 31, 2017. In May 2015, our Compensation Committee granted TSR PSUs to the NEOs, which vested on December 31, 2017. Under the provisions of these awards, the targeted shares were subject to our relative TSR performance compared with the TSR of the peer companies specified in the award grant. Callon TSR during the performance period ranked third relative to the 10 peer companies, resulting in vesting of 183% of the number of awarded TSR PSUs. Vested units were paid 50% in cash and 50% in Company common stock. +The table below summarizes the TSR PSUs earned by the NEOs for the 2015-2017 performance period: +NEO +Target Number +of TSR PSUs +Percent of Target TSR PSUs Earned +Actual Vested TSR PSUs (Settled 50% Cash and 50% Shares) +Joseph C. Gatto, Jr. +43,849 +183% +80,242 +Gary A. Newberry +43,849 +183% +80,242 +Jerry A. Weant +21,925 +183% +40,122 +Mitzi P. Conn +21,925 +183% +40,122 +Settlement of outstanding equity awards for Mr. Callon +Upon Mr. Callon’s passing in May 2017, all outstanding equity awards vested, with the TSR Phantom Units settled based on performance to date. The table below summarizes the performance measurement and settlement of those awards based on performance through May 24, 2017. +Grant Year +Callon's TSR Rank +Percent of Target TSR PSUs Earned +Actual Vested TSR PSUs (Settled 50% Cash and 50% Shares) +2015 +2 +200% +240,000 +2016 +4 +163% +194,541 +2017 +5 +142% +207,204 +40 +Promotional and inducement awards +In addition to our regular annual LTI grants, we made the following promotional or inducement awards to our NEOs in 2017: +• +Mr. Gatto received a $1.3 million grant of time-based RSUs vesting ratably over three years at one-third per year upon his promotion to CEO in June 2017; +• +Mr. Newberry received a $1.5 million grant of time-based RSUs vesting 50% after two years and 50% after three years upon our executive transition to reflect his increased role and responsibilities and to retain him through the critical transition; +• +Mr. Ulm received 90,000 time-based RSUs vesting ratably over three years at one-third per year upon his hiring to induce him to join the company and provide initial forfeitable retention value; and +• +Ms. Loeffler received a grant of 35,000 time-based RSUs vesting ratably over three years at one-third per year upon her hiring to induce her to join the company and provide initial forfeitable retention value. +Other Compensation +Perquisites and other benefits +Benefits represent a relatively small part of our overall compensation package; however, these benefits help attract and retain senior level executives, and we review these benefits annually to ensure that they are competitive with industry norms. We provide benefits commonly offered in the oil and gas E&P industry to all of our employees. These benefits consist of: +• +Group medical and dental insurance program for employees and their qualified dependents; +• +Group life insurance for employees and their spouses; +• +Accidental death and dismemberment coverage for employees; +• +Long-term disability coverage +• +Callon sponsored cafeteria plan; and +• +401(k) employee savings and protection plan. +We pay the full costs of these benefits, including the 401(k) plan administration for all employees. Employee life insurance amounts that surpass the Internal Revenue Service maximum are treated as additional compensation to all employees. +Under our 401(k) plan, employees may elect to defer a portion of their compensation up to the statutorily prescribed limit. The company provides contributions for qualified employees, including NEOs, of 5% of the employee’s IRS eligible salary, excluding annual cash bonuses, which are paid one-half in cash and one-half in our common stock, limited to IRS regulation dollar limits. We also match employee deferral amounts, including amounts deferred by NEOs, up to a maximum of 5% of IRS eligible compensation. +Each year, we purchase a certain number of hours of flight time through a fractional aircraft ownership arrangement. These hours are made available for business use to the NEOs and our other employees in connection with their business travel requirements in an effort to reduce travel time and related disruptions and to provide additional security. We believe these flight hours are a cost-effective way to increase the NEOs availability, efficiency, and productivity. The Committee disallows employees, including NEOs, from using these hours for personal use, though the Committee recognizes occasions will arise when a personal guest (including a family member) will accompany an employee on a business-related flight at no, or immaterial, incremental cost to Callon. +Our NEOs are entitled to certain benefits, or perquisites, that are not otherwise available to all of our employees. We provide our executive officers with use of a Company automobile. We purchase the automobile and pay for all maintenance, repairs, insurance and fuel. The employee is required to recognize taxable income using the Internal Revenue Service’s annual lease value method for personal use of the vehicle. The costs associated with these benefits for the NEOs are reported as “Other Compensation” in the Summary Compensation Table. The Committee believes these perquisites are modest yet competitive with the perquisites provided to similarly situated oil and gas industry executives. +Severance protection +We have no employment agreements with our NEOs, but we do have change in control severance agreements with certain NEOs. The Committee believes that change-in-control severance arrangements serve stockholders’ best interests by diminishing potential distractions for our NEOs in the event of a potential corporate restructuring or change-in-control transaction. These protections also help ensure continuity of management in the event of certain corporate transactions. However, the Committee believes that executives should not be unduly enriched if change-in-control severance arrangements are triggered. Accordingly, each NEO has entered into an agreement with the Company that provides certain protections upon a change-in-control. +41 +These agreements include certain non-competition and non-solicitation provisions and are triggered only if there is both a change in control of the Company and a qualifying termination of employment (commonly called a “double trigger”). In addition, in order to protect us if the benefits are triggered, the agreements contain a “claw back” provision that will apply in the event the NEO violates any of these provisions. None of the agreements includes an excise tax gross-up provision, and the Committee chose not to provide guaranteed severance benefits outside of a change-in-control. +Stock Ownership Policy +Consistent with its goal of driving long-term value creation for our stockholders and in order to discourage undue risk-taking, the Committee’s stock ownership guidelines require significant stock ownership by the NEOs and directors. The Committee believes that requiring meaningful stock ownership by our NEOs and directors is an important way to further align their interests with the interests of our stockholders. Accordingly, the Committee has adopted a stock ownership policy which applies to the CEO, the other NEOs and outside directors as described below. The guidelines require the NEOs and directors to hold the following amounts of our stock, computed on December 31 of each year as follows: +NEO/Directors +Required Common Stock Ownership as a Multiple of Annual Base Salary / Annual Retainer +CEO +6x +Other NEOs +2x +Directors +5x +For purposes of the guidelines, shares owned indirectly, equivalent shares invested in the NEO’s 401(k) plan, and any unvested time-based RSUs are included. The value of unvested PSUs is excluded. +Each NEO has a transition period of five years from the date the individual becomes subject to the guidelines to attain the required investment position. If a NEO becomes subject to a greater ownership requirement due to a promotion or an increase in salary, the NEO will be expected to attain the higher level within three years of the change. The Committee reserves the right to approve an alternate stock ownership guideline for NEOs who can demonstrate a severe hardship in meeting the general guidelines. +Each outside director is required to achieve a minimum value of common stock equal to at least five times the annual retainer within five years following their election as a director. +All participants are currently in compliance with the stock ownership policy, either through meeting the ownership requirement or by being within the transition period. +Internal Revenue Service Limitations +When establishing our compensation programs, the Committee considers the effects of relevant tax laws. The Committee reviewed and considered the deductibility of executive compensation under Section 162(m) of the Internal Revenue Code, which provides that the Company generally may not deduct for federal income tax purposes annual compensation in excess of $1 million paid to any “covered employee.” However, the $1 million limit did not apply to qualifying performance-based compensation that is paid pursuant to stockholder-approved plans and is approved by directors who qualify as “outside directors” within the meaning of Section 162(m) of the Internal Revenue Code. The Committee generally structured and administered executive compensation plans and arrangements so that they would not be subject to the 162(m) deduction limit, where appropriate. However, tax deductibility is only one factor the Committee considers in structuring appropriate compensation programs, and the Committee reserves the right to use its judgment to authorize compensation payments that are not deductible under Section 162(m) when it believes that such payments are appropriate. The performance-based compensation exception under Section 162(m) was repealed by the 2017 Tax Cuts and Jobs Act for new awards granted after November 2, 2017. +Insider Trading Policy +The Company’s Board has adopted a comprehensive Insider Trading Policy (“Policy”) to promote compliance with federal and state securities laws that prohibit certain persons who are aware of material nonpublic information about a company from: (i) trading in securities of that company; or (ii) providing material nonpublic information to other persons who may trade on the basis of that information. When material non-public information about us may exist and may have an influence on the marketplace, a trading blackout period is placed in effect by management. All employees, including our NEOs and members of our Board, are subject to this Policy and are prohibited from engaging in short-term or speculative transactions in our securities, including short sales, options and other derivatives, hedging and from holding Company securities in a margin account or pledging securities as collateral for a loan. In addition, this Policy also applies to family members, other members of a person’s household and entities controlled by a person covered by this Policy. Officers, +42 +directors, and designated employees, as well as the family members and controlled entities of such persons, may not engage in any transaction in Company securities without first obtaining pre-clearance of the transaction from the Compliance Officer. +Certain Relationships and Related Party Transactions +The Board’s Audit Committee charter provides that the Audit Committee shall review and approve all related party transactions. A transaction will be considered a “related party transaction” if the transaction would be required to be disclosed under Item 404 of Regulation S-K. In addition, our Code of Business Conduct and Ethics provides that an officer’s or a director’s conflict of interest with Callon may only be waived if the Nominating and Corporate Governance Committee approves the waiver and the full Board ratifies the waiver. As of December 31, 2017, we are not aware of any related party transactions with our executive officers that may cause a conflict of interest with us. +Recoupment Policy +We have no recoupment policy applicable to annual incentive bonuses or LTI awards other than those required under Sarbanes-Oxley legislation, though the Committee regularly evaluates the need to adopt such a policy. +Compensation Committee Report +The Compensation Committee has reviewed and discussed with management the CD&A required by Item 402(b) of Regulation S-K promulgated under the Securities Exchange Act of 1934, as amended, and based on such review and discussions, the Committee has recommended to the Board that the CD&A be included in this Proxy Statement relating to the 2018 Annual Meeting of Stockholders. +Respectfully submitted by the Compensation Committee of the Board, +Matthew R. Bob, Chairman +L. Richard Flury +Anthony J. Nocchiero +James M. Trimble +John C. Wallace +43 +EXECUTIVE COMPENSATION TABLES +Summary Compensation Table +The compensation paid to the Company’s executive officers generally consists of base salaries, annual cash incentive payments, awards under the 2011 Omnibus Incentive Plan, contributions to the Company’s defined contribution 401(k) retirement plan and miscellaneous perquisites. The table below sets forth information regarding fiscal years 2017, 2016 and 2015 compensation awarded to, earned by or paid to the Company’s NEOs, which includes all individuals who served as the Company’s CEO or CFO during 2017 and the three other most highly compensated NEOs for the year: +NEO +Year +Annual Salary +Cash Bonus +Stock Awards +Other (a) +Total +Joseph C. Gatto, Jr. +2017 +$ +494,568 +(b) +$ +690,000 +(c) +$ +2,599,998 +(d)(e) +$ +41,816 +$ +3,826,382 +2016 +367,308 +630,000 +1,907,000 +(f)(g) +35,948 +2,940,256 +2015 +350,000 +600,000 +600,000 +(h) +35,281 +1,585,281 +James P. Ulm II +2017 +$ +17,885 +(i) +$ +52,000 +(c)(j) +$ +989,100 +(k) +$ +— +$ +1,058,985 +Gary A. Newberry +2017 +$ +440,529 +(l) +$ +570,000 +(c) +$ +2,799,995 +(d)(m) +$ +41,171 +$ +3,851,695 +2016 +367,308 +630,000 +1,907,000 +(f)(n) +40,613 +2,944,921 +2015 +350,000 +600,000 +600,000 +(h) +40,522 +1,590,522 +Jerry A. Weant +2017 +$ +250,000 +$ +193,500 +(c) +$ +329,997 +(d) +$ +36,211 +$ +809,708 +2016 +250,000 +250,000 +330,000 +(f) +36,740 +866,740 +2015 +250,000 +225,000 +300,000 +(h) +36,661 +811,661 +Mitzi P. Conn +2017 +$ +225,000 +$ +189,000 +(c) +$ +329,997 +(d) +$ +30,118 +$ +774,115 +2016 +198,370 +250,000 +471,400 +(f)(o) +28,811 +948,581 +2015 +190,000 +225,000 +300,000 +(h) +30,194 +745,194 +Fred L. Callon +2017 +$ +360,577 +(p) +$ +312,400 +(c)(q) +$ +2,949,979 +(d) +$ +32,741 +$ +3,655,697 +2016 +525,000 +918,750 +2,200,000 +(f) +53,633 +3,697,383 +2015 +525,000 +800,000 +1,642,000 +(h) +53,347 +3,020,347 +Correne S. Loeffler +2017 +$ +164,904 +(r) +$ +176,400 +(c) +$ +537,239 +(d)(s) +$ +3,710 +$ +882,253 +(a) +See the Table of All Other Compensation and related footnotes below for reconciliation of Other. +(b) +During May 2017, Mr. Gatto was promoted to CEO, which increased his salary to $575,000 from $400,000 +(c) +Cash bonus awarded in March 2018 in recognition of 2017 performance. +(d) +Represents the grant date fair value of the RSUs and TSR PSUs granted to the NEOs on May 11, 2017 computed in accordance with FASB ASC Topic 718. The assumptions utilized in the calculation of these amounts are set forth in footnotes 8 and 9 to our consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2017 filed with the SEC on February 28, 2018. +(e) +Includes the grant date fair value of the RSUs granted to Mr. Gatto on July 11, 2017, following his promotion to CEO. +(f) +Represents the grant date fair value of the RSUs and TSR PSUs granted to the NEOs on May 13, 2016 computed in accordance with FASB ASC Topic 718. The assumptions utilized in the calculation of these amounts are set forth in footnotes 8 and 9 to our consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2016 filed with the SEC on February 28, 2017. +(g) +Includes the grant date fair value of the RSUs granted to Mr. Gatto on August 24, 2016, following his promotion to President. +(h) +Represents the grant date fair value of the RSUs and TSR PSUs granted to the NEOs on May 14, 2015 computed in accordance with FASB ASC Topic 718. The assumptions utilized in the calculation of these amounts are set forth in footnotes 8 and 9 to our consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2015 filed with the SEC on March 5, 2016. +(i) +Salary amount of $465,000 pro-rated for less than a full year of employment. +(j) +Bonus amount pro-rated for less than a full year of employment. +(k) +Represents the grant date fair value of the RSUs granted to Mr. Ulm upon his employment as CFO in December 2017. +(l) +During May 2017, Mr. Newberry’s salary was increased to $475,000 from $400,000. +(m) +Includes the grant date fair value of the RSUs granted to Mr. Newberry on July 11, 2017. +(n) +Includes the grant date fair value of the RSUs granted to Mr. Newberry on August 24, 2016, following his promotion to COO. +(o) +Includes the grant date fair value of the RSUs granted to Ms. Conn on August 24, 2016, following her promotion to Vice President and CAO. +(p) +Salary amount of $625,000 pro-rated through May 2017. +(q) +Bonus amount pro-rated through May 2017. +(r) +Salary amount of $245,000 pro-rated for less than a full year of employment. +44 +(s) +Represents the grant date fair value of the RSUs granted to Ms. Loeffler upon her employment as Treasurer in April 2017. +Table of All Other Compensation +NEO +Year +Company Contributed Cash to 401(k) +Company Contributed Common Stock to 401(k) (a) +Company Provided Auto (b) +Company Paid Other (c) +Total +Joseph C. Gatto, Jr. +2017 +$ +24,750 +$ +6,750 +$ +10,316 +$ +— +$ +41,816 +2016 +19,875 +6,625 +9,448 +— +35,948 +2015 +19,875 +6,625 +8,781 +— +35,281 +James P. Ulm II +2017 +$ +— +$ +— +$ +— +$ +— +$ +— +Gary A. Newberry +2017 +$ +20,250 +$ +6,750 +$ +14,171 +$ +— +$ +41,171 +2016 +19,875 +6,625 +14,113 +— +40,613 +2015 +19,875 +6,625 +14,022 +— +40,522 +Jerry A. Weant +2017 +$ +18,750 +$ +6,250 +$ +11,211 +$ +— +$ +36,211 +2016 +18,750 +6,250 +11,740 +— +36,740 +2015 +18,750 +6,250 +11,661 +— +36,661 +Mitzi P. Conn +2017 +$ +16,875 +$ +5,625 +$ +7,618 +$ +— +$ +30,118 +2016 +15,159 +5,053 +8,599 +— +28,811 +2015 +14,250 +4,750 +11,194 +— +30,194 +Fred L. Callon +2017 +$ +19,832 +$ +6,611 +$ +6,298 +$ +— +$ +32,741 +2016 +19,875 +6,625 +12,444 +14,689 +53,633 +2015 +19,875 +6,625 +12,158 +14,689 +53,347 +Correne S. Loeffler +2017 +$ +2,768 +$ +942 +$ +— +$ +— +$ +3,710 +(a) +Subject to IRS limits, Company contributions to each person’s 401(k) account consist of a 2.5% non-matching contribution in cash and a 2.5% non-matching contribution in the form of the Company’s stock unit fund plus a matching contribution at the rate of 0.625% in cash for every 1% that the participant deferred, limited to a maximum matching contribution by the Company of 5% in cash. The number of shares contributed to the Company’s stock unit fund is determined on a quarterly basis using the closing market price on the last trading day of the quarter. +(b) +Represents annual depreciation based on a three-year life, plus insurance, fuel, maintenance and repairs, pursuant to IRS Reg §1.61-21, Taxation of Fringe Benefits. +(c) +Represents premiums paid by us on a personal life insurance policy for which Mr. Callon was the sole beneficiary. +45 +Grants of Plan-Based Awards During 2017 +The following table presents grants of equity awards during the fiscal year ending December 31, 2017 : +Estimated Future Payouts Under +Equity Incentive Plan Awards (a) +NEO +Grant Date +Threshold +Target +Maximum +Other Awards (Shares or Units) +Grant Date Fair Value (b) +Joseph C. Gatto, Jr. +5/11/2017 +— +— +— +42,868 +(c) +$ +519,989 +5/11/2017 +— +64,304 +128,608 +— +780,008 +7/11/2017 +— +— +— +120,148 +(d) +1,300,001 +James P. Ulm II +12/11/2017 +— +— +— +90,000 +(e) +$ +989,100 +Gary A. Newberry +5/11/2017 +— +— +— +42,868 +(c) +$ +519,989 +5/11/2017 +— +64,304 +128,608 +— +780,008 +7/11/2017 +— +— +— +138,632 +(f) +1,499,998 +Jerry A. Weant +5/11/2017 +— +— +— +10,881 +(c) +$ +131,987 +5/11/2017 +— +16,324 +32,648 +— +198,010 +Mitzi P. Conn +5/11/2017 +— +— +— +10,881 +(c) +$ +131,987 +5/11/2017 +— +16,324 +32,648 +— +198,010 +Fred L. Callon +5/11/2017 +— +— +— +97,279 +(c) +$ +1,179,994 +5/11/2017 +— +145,918 +291,836 +— +1,769,985 +Correne S. Loeffler +4/24/2017 +— +— +— +35,000 +(g) +$ +414,750 +5/11/2017 +— +— +— +7,068 +(c) +85,735 +5/11/2017 +— +3,030 +(h) +6,060 +(h) +— +36,754 +(a) +Amounts represent TSR PSUs payable in 50% cash and 50% stock on the vesting date, with the exception of Ms. Loeffer, which will be adjusted between 0% and 200% based on our TSR compared with the TSR of the peer companies. The adjusted PSUs will vest on December 31, 2019. +(b) +This column shows the grant date fair value of the awards granted to the NEOs on the date indicated computed in accordance with FASB ASC Topic 718. The assumptions utilized in the calculation of these amounts are set forth in footnotes 8 and 9 to our consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2017, filed with the SEC on February 27, 2018. The value ultimately realized by the executive upon the actual vesting of the awards may be more or less than the grant date fair value. +(c) +Amounts represent RSUs subject to cliff vesting on May 11, 2020 that will settle in common stock. +(d) +Amounts represent RSUs subject to three-year ratable vesting with one-third vesting each year subsequent to the award year. The first tranche will vest on July 1, 2018. The second tranche will vest on July 1, 2019. The third and final tranche will vest on July 1, 2020. +(e) +Amounts represent RSUs subject to three-year ratable vesting with one-third vesting each year subsequent to the award year. The first tranche will vest on January 1, 2019. The second tranche will vest on January 1, 2020. The third and final tranche will vest on January 1, 2021. +(f) +Amounts represent RSUs subject to ratable vesting with one-half vesting on the second year subsequent to the award year. The second half will vest on the third anniversary of the grant date. +(g) +Amounts represent RSUs subject to three-year ratable vesting with one-third vesting each year subsequent to the award year. The first tranche vested on March 1, 2018. The second tranche will vest on March 1, 2019. The third and final tranche will vest on March 1, 2020. +(h) +Ms. Loeffler’s TSR PSU award consists only of units that will settle in 100% cash on the vesting date. +Stock-Based Incentive Compensation Plans +The 2011 Plan was approved by stockholders on May 12, 2011 and amended on May 14, 2015. Awards available under the 2011 Plan include grants of stock options, stock appreciation rights or units, restricted stock, RSUs, phantom stock or performance shares or units. As of March 16, 2018, 1,370,310 shares remain unissued within the 2011 Plan. +46 +Outstanding Equity Awards at Fiscal Year-End +The following table contains information concerning all unvested equity awards that were held as of December 31, 2017 for the NEOs: +Stock Awards +Unvested Shares or +Units of Stock +Equity Incentive +Plan Awards +NEO +Number of Unvested Shares or Units of Stock +Market Value of Unvested Shares or Units of +Stock (a) +Number of Unearned Shares, Units or Other Unvested Rights +Market of Payout Value of Unearned Shares, Units or Other Unvested Rights (a) +Joseph C. Gatto, Jr. +24,848 +(b) +$ +301,903 +4,385 +(c) +$ +53,278 +36,890 +(d) +448,214 +6,510 +(e) +79,097 +50,000 +(f) +607,500 +— +— +42,868 +(g) +520,846 +— +— +120,148 +(h) +1,459,798 +— +— +— +— +32,550 +(i) +395,483 +32,550 +(j) +395,483 +— +— +— +— +32,152 +(k) +390,647 +32,152 +(l) +390,647 +— +— +James P. Ulm II +90,000 +(m) +$ +1,093,500 +— +$ +— +Gary A. Newberry +24,848 +(b) +$ +301,903 +4,385 +(c) +$ +53,278 +36,890 +(d) +448,214 +6,510 +(e) +79,097 +50,000 +(f) +607,500 +— +— +42,868 +(g) +520,846 +— +— +138,632 +(n) +1,684,379 +— +— +— +— +32,550 +(i) +395,483 +32,550 +(j) +395,483 +— +— +— +— +32,152 +(k) +390,647 +32,152 +(l) +390,647 +— +— +Jerry A. Weant +12,424 +(b) +$ +150,952 +2,192 +(c) +$ +26,633 +10,145 +(d) +123,262 +1,790 +(e) +21,749 +10,881 +(g) +132,204 +— +— +— +— +8,951 +(i) +108,755 +8,951 +(j) +108,755 +— +— +— +— +8,162 +(k) +99,168 +8,162 +(l) +99,168 +— +— +Mitzi P. Conn +12,424 +(b) +$ +150,952 +2,192 +(c) +$ +26,633 +10,145 +(d) +123,262 +1,790 +(e) +21,749 +10,000 +(f) +121,500 +— +— +10,881 +(g) +132,204 +— +— +— +— +8,951 +(i) +108,755 +8,951 +(j) +108,755 +— +— +— +— +8,162 +(k) +99,168 +8,162 +(l) +99,168 +— +— +Correne S. Loeffler +35,000 +(o) +$ +425,250 +— +$ +— +7,068 +(g) +85,876 +— +— +— +— +3,030 +(i) +36,815 +(a) +Amounts calculated using the closing price of $12.15 per share of our common stock on the last trading day of 2017. +(b) +Stock settleable RSUs awarded on May 14, 2015 subject to cliff vesting on May 14, 2018. +47 +(c) +Cash settleable RSUs awarded on May 14, 2015 subject to cliff vesting on May 14, 2018. +(d) +Stock settleable RSUs awarded on May 13, 2016 subject to cliff vesting on May 13, 2019. +(e) +Cash settleable RSUs awarded on May 13, 2016 subject to cliff vesting on May 13, 2019. +(f) +Stock settleable RSUs awarded August 24, 2016 subject to cliff vesting on August 24, 2019. +(g) +Stock settleable RSUs awarded on May 11, 2017 subject to cliff vesting on May 11, 2020. +(h) +Stock settleable RSUs awarded on July 11, 2017 subject to three-year ratable vesting with one-third vesting each year subsequent to the award year. The first tranche will vest on July 1, 2018. The second tranche will vest on July 1, 2019. The third and final tranche will vest on July 1, 2020. +(i) +Cash settleaable TSR PSUs awarded on May 13, 2016 with vesting terms subject to a performance criteria related to the TSR of the Company compared to a group of peer companies on December 31, 2018. The number of units subject to vest under this award can range from 0% to 200%. +(j) +Stock settleaable TSR PSUs awarded on May 13, 2016 with vesting terms subject to a performance criteria related to the TSR of the Company compared to a group of peer companies on December 31, 2018. The number of units subject to vest under this award can range from 0% to 200%. +(k) +Cash settleaable TSR PSUs awarded on May 11, 2017 with vesting terms subject to a performance criteria related to the TSR of the Company compared to a group of peer companies on December 31, 2019. The number of units subject to vest under this award can range from 0% to 200%. +(l) +Stock settleaable TSR PSUs awarded on May 11, 2017 with vesting terms subject to a performance criteria related to the TSR of the Company compared to a group of peer companies on December 31, 2018. The number of units subject to vest under this award can range from 0% to 200%. +(m) +Stock settleable RSUs awarded on December 11, 2017 subject to three-year ratable vesting with one-third vesting each year subsequent to the award year. The first tranche will vest on January 1, 2019. The second tranche will vest on January 1, 2020. The third and final tranche will vest on January 1, 2021. +(n) +Stock settleable RSUs awarded on July 11, 2017 subject to three-year ratable vesting with one-half vesting on the second year subsequent to the award year. The first tranche will vest on July 1, 2019. The second and final tranche will vest on July 1, 2020. +(o) +Stock settleable RSUs awarded on April 24, 2017 subject to three-year ratable vesting with one-third vesting each year subsequent to the award year. The first tranche vested on March 1, 2018. The second tranche will vest on March 1, 2019. The third and final tranche will vest on March 1, 2020. +48 +Stock Vested +The following table provides information about the value realized by the NEOs on vestings of RSUs, phantom stock units and PSUs during 2017 : +Vesting (a) +NEO +Number of Shares Acquired +Value Realized $ +Joseph C. Gatto, Jr. +20,482 +(b) +$ +255,001 +(c) +44,452 +(d) +40,120 +(e) +487,458 +(c) +487,482 +(c)(f) +Gary A. Newberry +20,482 +(b) +$ +255,001 +(c) +44,452 +(d) +40,120 +(e) +487,458 +(c) +487,482 +(c)(f) +Jerry A. Weant +5,598 +(b) +$ +69,695 +(c) +12,152 +(d) +20,060 +(e) +243,729 +(c) +243,753 +(c)(f) +Mitzi P. Conn +5,598 +(b) +$ +69,695 +(c) +12,152 +(d) +20,060 +(e) +243,729 +(c) +243,753 +(c)(f) +Fred L. Callon +56,052 +(b) +$ +697,847 +(c) +— +121,672 +(d) +68,000 +(g) +822,120 +(h) +146,040 +(i) +120,000 +(j) +1,450,800 +(h) +1,450,800 +(h)(k) +67,631 +(l) +817,659 +(h) +145,249 +(m) +97,270 +(n) +1,175,997 +(h) +1,175,997 +(h)(o) +97,279 +(p) +1,176,103 +(h) +103,602 +(q) +1,252,546 +(h) +1,252,546 +(h)(r) +(a) +No options were awarded, outstanding, expired, or exercised by any NEO in 2017 . +(b) +Represents RSUs awarded on May 14, 2014 that settled in stock on the May 14, 2017 vesting date. +(c) +Represents the aggregate dollar amount realized on the date of vesting, based on the closing market price per share of Company common stock on the vesting date or last business day prior to the vesting date if such date fell on a weekend or holiday. +(d) +Represents phantom stock units awarded on May 14, 2014 that were settled in cash on the May 14, 2017 vesting date, based on the average of the opening and closing market price per share of Company common stock on the vesting date or last business day prior to the vesting date if such date fell on a weekend or holiday. +(e) +Represents TSR PSUs awarded on May 14, 2015 that settled in stock on the December 31, 2017 vesting date. +(f) +Represents TSR PSUs awarded on May 14, 2015 that settled in cash on the December 31, 2017 vesting date. +(g) +Represents RSUs awarded on May 14, 2015 that settled in stock on the May 24, 2017 accelerated vesting date triggered by the passing of Mr. Callon. +(h) +Represents the aggregate dollar amount realized on the date of vesting, based on the closing market price per share of Company common stock on the vesting date. +(i) +Represents phantom stock units awarded on May 14, 2015 that were settled in cash on the May 24, 2017 accelerated vesting date triggered by the passing of Mr. Callon, based on the average of the opening and closing market price per share of Company common stock on the vesting date. +(j) +Represents TSR PSUs awarded on May 14, 2015 that settled in stock on the May 24, 2017 accelerated vesting date triggered by the passing of Mr. Callon. +(k) +Represents TSR PSUs awarded on May 14, 2015 that settled in cash on the May 24, 2017 accelerated vesting date triggered by the passing of Mr. Callon. +49 +(l) +Represents RSUs awarded on May 13, 2016 that settled in stock on the May 24, 2017 accelerated vesting date triggered by the passing of Mr. Callon. +(m) +Represents phantom stock units awarded on May 13, 2016 that were settled in cash on the May 24, 2017 accelerated vesting date triggered by the passing of Mr. Callon, based on the average of the opening and closing market price per share of Company common stock on the vesting date. +(n) +Represents TSR PSUs awarded on May 13, 2016 that settled in stock on the May 24, 2017 accelerated vesting date triggered by the passing of Mr. Callon. +(o) +Represents TSR PSUs awarded on May 13, 2016 that settled in cash on the May 24, 2017 accelerated vesting date triggered by the passing of Mr. Callon. +(p) +Represents RSUs awarded on May 11, 2017 that settled in stock on the May 24, 2017 accelerated vesting date triggered by the passing of Mr. Callon. +(q) +Represents TSR PSUs awarded on May 11, 2017 that settled in stock on the May 24, 2017 accelerated vesting date triggered by the passing of Mr. Callon. +(r) +Represents TSR PSUs awarded on May 11, 2017 that settled in cash on the May 24, 2017 accelerated vesting date triggered by the passing of Mr. Callon. +Employment Agreements, Termination of Employment and Change‑in‑Control Arrangements +Employment agreements +We do not have employment agreements with any of our executive officers. +Severance compensation agreements +We entered into Severance Compensation Agreements (“SCA”) with each of our NEOs. The SCA will terminate, except to the extent that any obligation of Callon thereunder remains unpaid as of such time, upon the earliest of (i) December 31, 2018, provided, however, that, on each anniversary date thereafter, the expiration date shall automatically be extended for one additional year unless, immediately prior to such anniversary date, either party shall have given written notice that it does not wish to extend this SCA, but in no event shall the expiration date be earlier than the second anniversary of the effective date of a change of control; (ii) the termination of the NEOs employment with Callon based on death, disability (as defined in the SCA), or cause (as defined in the SCA); and (iii) the voluntary resignation of the NEOs for any reason other than good reason (as defined in the SCA). +Pursuant to the SCA, if the executive incurs a “separation from service” from Callon (as such term is defined in final Treasury Regulations issued under Code Section 409A and other authoritative guidance issued thereunder) without cause by Callon or for good reason by him within two years following a change of control of Callon (or in certain cases, prior to a change of control), then the executive is entitled to a single lump-sum cash payment (payable on the date that is six months following the triggering event) in an amount equal to three times the sum, with respect to our CEO Mr. Gatto, of (i) the annual base salary in effect immediately prior to the change of control or, if higher, in effect immediately prior to the separation from service, and (ii) the greater of the average bonus earned with respect to the three most recently completed full fiscal years or the target bonus for the fiscal year in which the change of control occurs, based on a forecast that has been approved by the Board of the results for the fiscal year in which the change of control occurs. For the other NEOs, the salary and bonus multiple is two times. In addition, we must maintain at our expense until thirty-six months after a separation from service all life, disability, medical, dental, accident, and health insurance coverage for Mr. Gatto. For the other NEOs, the continued benefit period is twenty-four months. If the executive’s employment is terminated because of his death or disability, we are only required to make such payments if the termination occurred within six months after a change of control. “Good reason” is generally defined in the SCA as a change in the executive’s compensation, benefits, position, responsibilities, or location. A change of control is generally defined in the SCA as (i) any person or group of persons acting in concert shall have become the beneficial owner of more than 50% of our outstanding common stock; (ii) our stockholders shall cause a change in the majority of the members of the Board within a twelve-month period; or (iii) we or our stockholders shall enter into an agreement to dispose of all or substantially all of our assets or outstanding capital stock. +The SCAs also provide that, upon a change of control, all stock options shall automatically become fully exercisable and all performance shares, restricted stock, stock appreciation rights and other similar rights held by the executive shall become fully vested, provided, however, that such acceleration of vesting shall not occur if it would be an impermissible acceleration under Section 409A of the Code. If we cannot provide for acceleration of vesting as a result of provisions in existence prior to a change of control, any plan or agreement, or Section 409A, we must provide in lieu thereof a lump-sum cash payment equal to the total value of the outstanding and unvested stock rights as of the date of separation from service. +The SCAs incorporate a provision to provide for the possible impact of the federal excise tax on excess parachute payments. The so-called “golden parachute” tax rules subject “excess parachute payments” to a dual penalty: the imposition of a 20 percent excise tax upon the recipient and non-deductibility of such payments by the paying corporation. While the excise tax is seemingly evenhanded, the excise tax can discriminate against long-serving employees in favor of new hires, against individuals who do not exercise stock options in favor of those who do and against those who elect to defer compensation in favor of those who do not. For these reasons, we believe that the “net-best” provision included in the SCA is appropriate. If any payment is subject to any excise tax under Section 4999 of the Internal Revenue Code of 1986, as amended, the payment will be reduced so that no portion of the payment is subject to such excise tax if the net benefit payable would be at least as much as it would have been if no reduction was made. +50 +Potential payments upon termination or change-in-control +The following table shows the estimated gross taxable compensation payable upon termination following a change in control or upon death, disability or retirement. No amounts would be payable upon termination for other causes. The information assumes, in each case, that the officer’s termination was effective as of December 31, 2017. In presenting this disclosure, we describe amounts earned through December 31, 2017 and, in those cases where the actual amounts to be paid out can only be determined at the time of such executive’s separation from us, the estimates are of the amounts which would be paid out to the executives upon their termination. +NEO / Reason for Termination +Base Salary (a) +Cash Bonus (a) +Accelerated Stock Award Vesting (b) +Continued +Employee +Benefits (c) +Total +Joseph C. Gatto, Jr. - CIC (d) +$ +1,725,000 +$ +1,920,000 +$ +5,042,894 +$ +57,771 +$ +8,745,665 +Death, Disability or Retirement (e) +— +— +5,042,894 +— +5,042,894 +James P. Ulm II - CIC (d) +$ +930,000 +$ +837,000 +$ +1,093,500 +$ +38,514 +$ +2,899,014 +Death, Disability or Retirement (e) +— +— +1,093,500 +— +1,093,500 +Gary A. Newberry - CIC (d) +$ +950,000 +$ +1,200,000 +$ +5,267,475 +$ +25,878 +$ +7,443,353 +Death, Disability or Retirement (e) +— +— +5,267,475 +— +5,267,475 +Jerry A. Weant - CIC (d) +$ +500,000 +$ +445,667 +$ +870,645 +$ +25,878 +$ +1,842,190 +Death, Disability or Retirement (e) +— +— +870,645 +— +870,645 +Mitzi P. Conn - CIC (d) +$ +450,000 +$ +442,667 +$ +992,145 +$ +38,514 +$ +1,923,326 +Death, Disability or Retirement (e) +— +— +992,145 +— +992,145 +Correne S. Loeffler - CIC (d) +$ +490,000 +$ +294,000 +$ +547,941 +$ +38,514 +$ +1,370,455 +Death, Disability or Retirement (e) +— +— +547,941 +— +547,941 +(a) +In accordance with Mr. Gatto’s Severance Compensation Agreement, the computation uses a three-year multiple with respect to the severance amount relating to salary and target bonus, while a two-year multiple is used for the other NEOs. See “Employment Agreements, Termination of Employment and Change‑in‑Control Arrangements.” +(b) +The amounts are calculated based on unvested stock awards at December 31, 2017 using the closing price of $12.15 per share of our common stock on the last trading day of 2017. +(c) +Benefits consist of thirty-six months of employer provided family medical and dental insurance, life insurance, dependent life insurance, accidental death coverage and disability coverage for Mr. Gatto and twenty-four months for the other NEOs in the table. +(d) +We entered into a Severance Compensation Agreement with each of the NEOs listed in the table above. See “Employment Agreements, Termination of Employment and Change‑in‑Control (“CIC”) Arrangements.” +(e) +“Disability” is generally defined as the employee’s inability to carry out the normal and usual duties of his employment on a full-time basis for an entire period of six continuous months together with the reasonable likelihood, as determined by the Board after consultation of a qualified physician, he will be unable to carry out his normal and usual duties of employment. “Retirement” is generally defined as the employee’s attainment of an age which the Board determines to be consistent with normal retirement age. +Director Compensation +The compensation of our non-employee directors is reviewed by the Compensation Committee and is approved by the Board. We use a combination of cash and stock-based incentive compensation to attract and retain qualified candidates to serve on our Board. In determining director compensation, we consider the significant amount of time the directors spend fulfilling their duties, as well as the competitive market for skilled directors. Annually the Compensation Committee directly engages Meridian to conduct an analysis of director compensation, and recommends any adjustments to the total annual compensation of the non-employee directors. Specifically, Meridian evaluates competitive market data, utilizing peer and general industry data for comparison. +In 2017, each non-employee director received compensation consisting of an annual retainer of $60,000 per year, with an additional $20,000 per year for the chairman of the Audit Committee, an additional $15,000 per year to the chairman of the Compensation Committee, an additional $10,000 per year to the chairman of the Nominating and Corporate Governance Committee, and an additional $10,000 to the chairman of the Strategic Planning and Reserves Committee. As indicated herein, with the passing of Mr. Callon, Chairman of the Board and CEO, the Board appointed Mr. Flury as the non-executive Chairman of the Board, with an annual retainer of $120,000. Each non-employee director is reimbursed for reasonable out-of-pocket costs incurred to attend Board meetings. In addition to cash compensation, we also grant to our non-employee directors restricted common shares under our stock-based compensation plan. These grants are to compensate our directors and to provide them with incentives to remain as a director by offering them a long-term stake in +51 +our potential future value. During 2017, the Compensation Committee awarded RSUs with equivalent value equal to $135,000 each to the non-employee directors. The RSUs will vest ratably over three years or the Compensation Committee may determine in its sole discretion that the RSUs shall vest on a “qualified separation from service.” If a member of our Board is an officer or employee of the Company, they do not receive compensation for their services as a director. The table below indicates the total compensation earned and paid during 2017 for each non-employee director: +Non-Employee Director Compensation for 2017 +Director +Fees Earned or Paid in Cash (a) +Stock Awards (b) +Option Awards +All Other Compensation +Total +Matthew R. Bob +$ +75,000 +(c) +$ +135,000 +$ +— +$ +— +$ +210,000 +Michael L. Finch +$ +60,000 +$ +135,000 +$ +— +$ +— +$ +195,000 +L. Richard Flury +$ +180,000 +(d) +$ +135,000 +(e) +$ +— +$ +— +$ +315,000 +Larry D. McVay +$ +70,000 +(f) +$ +135,000 +$ +— +$ +— +$ +205,000 +Anthony J. Nocchiero +$ +70,000 +(g) +$ +135,000 +$ +— +$ +— +$ +205,000 +James M. Trimble +$ +60,000 +$ +135,000 +$ +— +$ +— +$ +195,000 +John C. Wallace +$ +80,000 +(h) +$ +135,000 +$ +— +$ +— +$ +215,000 +(a) +Does not include reimbursement of expenses associated with attending the Board meetings. +(b) +Amounts calculated utilizing the provisions of FASB ASC Topic 718. See footnotes 8 and 9 of the Notes to the Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2017 regarding assumptions underlying valuation of equity awards. +(c) +Represents annual retainer of $60,000 and an additional $15,000 for acting as chairman of the Compensation Committee. +(d) +Represents annual retainer of $60,000 and an additional $120,000 for acting as the non-executive Chairman of the Board. Mr. Flury elected to have his annual retainer deferred pursuant to the terms of a Deferred Compensation Plan for non-employee directors, under which participants may elect to convert the cash fees to phantom shares and defer the receipt of the proceeds in cash until separation of service as a director. +(e) +Represents a director who elected to have his restricted stock award deferred pursuant to the terms of a Deferred Compensation Plan for non-employee directors, under which participants may elect to defer the receipt of the proceeds in cash until separation of service as a director. +(f) +Represents annual retainer of $60,000 and an additional $10,000 for acting as chairman of the Strategic Planning and Reserves Committee. +(g) +Represents annual retainer of $60,000 and an additional $10,000 for acting as chairman of the Nominating and Corporate Governance Committee. +(h) +Represents annual retainer of $60,000 and an additional $20,000 per year for acting as chairman of the Audit Committee. +CEO Pay Ratio +Pursuant to a mandate of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the ratio of the median employee’s compensation to the Chief Executive Officer (CEO) of Callon Petroleum is 25:1. +In order to find the median employee, we used the Consistently Applied Compensation Measure (CACM) defined as sum of the base salary and bonus, including any overtime or commission that was paid to the employee. Furthermore, we annualized the bonus, base salary, and any overtime for employees that were not employed the entire 2017 year. We identified the median employee from the employee population as of December 31, 2017. +In accordance with SEC rules, we then determined the amount of the median of the annual total compensation of all our employees (excluding the CEO) for 2017 was $140,628. This amount represents the total compensation that would have been reported in the Summary Compensation Table in accordance with the requirements of Item 402(c)(x) of Regulation S-K for the median employee if the employee had been a NEO for fiscal year 2017. For purposes of calculating the ratio, an additional value of $14,466 was included in the annual compensation for non-discriminatory benefits bringing the annual total compensation to $155,094. +We determined the amount of the CEO’s annual total compensation was $3,826,382 which represents the amount reported for the CEO in the “Total” column of our 2017 Summary Compensation Table. For purposes of the ratio, an additional value of $23,432 was included in the annual total compensation for non-discriminatory benefits to bring the value to $3,849,814. +Based on the foregoing, for 2017 the ratio of the median of the annual total compensation of all employees to the annual total compensation of our CEO is 25:1. +The pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on our payroll and employment records. +52 +Stockholders’ Proposals and Director Nominations for the 2019 Annual Meeting +Stockholders who desire to present proposals at the 2019 Annual Meeting of Stockholders and to have such proposals included in our proxy materials, must submit their proposals to us at our principal executive offices not later than November 30, 2018. If the date of the 2019 Annual Meeting of Stockholders is changed by more than 30 days from the date of the 2018 Annual Meeting of Stockholders, the deadline for submitting proposals is a reasonable time before we begin to print and mail our proxy materials for our 2019 Annual Meeting of Stockholders. +If the date of the 2019 Annual Meeting of Stockholders is advanced or delayed by more than 30 calendar days from the date of the 2018 Annual Meeting of Stockholders, we shall, in a timely manner, inform our stockholders of such change, by including a notice, under Item 5, in our earliest possible quarterly report on Form 10-Q. The notice will include the new deadline for submitting proposals to be included in our Proxy Statement and the new date for determining whether we may exercise discretionary voting authority because we have not received timely notice of a matter. +In order to avoid controversy as to the date on which we receive any such proposal, we suggest that stockholders submit their proposals by certified mail, return receipt requested, or other means that permit them to prove the date of delivery. We reserve the right to reject, rule out of order or take other appropriate action with respect to any proposal that does not comply with the requirements described above or other applicable requirements. +Our Certificate of Incorporation requires that any person intending to nominate a person to serve as a director of Callon must provide written notice to us of the intent to nominate at least 120 days prior to the scheduled date of the 2019 annual meeting. +53 +ANNUAL MEETING INFORMATION +Information Concerning Solicitation and Voting +We are providing you this Proxy Statement in connection with the solicitation of proxies by our Board to be voted at the 2018 Annual Meeting of stockholders of Callon Petroleum Company. The Annual Meeting will be held on Thursday, May 10, 2018 at 9:00 a.m. CDT in the Grand Ballroom of the Natchez Grand Hotel, 111 Broadway Street, Natchez, Mississippi 39120. This Proxy Statement contains important information for you to consider when deciding how to vote on the matters brought before the meeting. Please read it carefully. +The Board will primarily solicit proxies by mail, and we will bear all costs incurred in the solicitation of proxies, including the preparation, printing and mailing of these proxy materials. In addition to solicitation by mail, our directors, officers and employees may solicit proxies personally or by telephone, email, facsimile or other means, without additional compensation. We may also make arrangements with brokerage houses and other custodians, nominees and fiduciaries for the forwarding of solicitation material to the beneficial owners of the common stock held by such persons, and we may reimburse those brokerage houses and other custodians, nominees and fiduciaries for reasonable expenses incurred in connection therewith. In addition, to assist us with our solicitation efforts, we have retained the services of Alliance Advisors for a fee of approximately $15,000, plus out-of-pocket expenses. +Information About Voting and the Annual Meeting +Who may vote +You may vote if you are the record holder of our common stock as of the close of business on the Record Date. On that date, 201,947,884 shares of our common stock were outstanding and are entitled to vote at the Annual Meeting. Each share of common stock is entitled to one vote on each matter considered at this meeting. +Attending the Annual Meeting +If you meet the above criteria to vote at our Annual Meeting, you may attend the Annual Meeting. If you wish to attend the Annual Meeting in person, you must present valid, government-issued picture identification. If your shares are held in the name of a bank, broker or other nominee and you plan to attend the Annual Meeting, in order to be admitted you must present proof of your beneficial ownership of the common stock, such as a bank or brokerage account statement, indicating that you owned shares of our common stock at the close of business on the Record Date. +For safety and security reasons, no cameras, recording equipment, cellular telephones, electronic devices, large bags, briefcases or packages will be permitted in the Annual Meeting. No banners, signs, firearms or weapons will be allowed in the meeting room. We reserve the right to inspect all items entering the meeting room. +Proposals +Qualifying stockholders will vote on the following four proposals at the meeting: +1) +The election of directors; +2) +Advisory approval of our executive compensation; +3) +The approval of the 2018 Plan; and +4) +The ratification of the appointment of Grant Thornton LLP. +Notice and access +The Company is furnishing proxy materials to its stockholders through the Internet as permitted under the rules of the Securities and Exchange Commission (the “SEC”). Under these rules, the Company’s stockholders will receive a Notice Regarding the Availability of Proxy Materials instead of a paper copy of the Notice of 2018 Annual Meeting of Stockholders and Proxy Statement, our proxy card, and our Annual Report on Form 10-K, often referred to as “notice and access.” We believe this process gives us the opportunity to serve you more efficiently by making the proxy materials available quickly online and reducing costs associated with printing and distributing our proxy materials. This Notice includes instructions on how to access the proxy materials over the Internet or to request a paper copy of proxy materials, including a proxy card or voting instruction form. In addition and as described in the Notice, stockholders may request to receive future proxy materials in printed form by mail or electronically by email. A stockholder’s election to receive proxy materials by mail or email will remain in effect until terminated by the stockholder. +54 +Our Board has made these proxy materials available to you on the Internet on or about March 23, 2018 at https://www.viewproxy.com/CallonPetroleum/2018, which is the cookies-free website described in the Notice. Accordingly, we are sending the Notice to our stockholders of record and beneficial owners of our stock, and filing the Notice with the SEC, on or about March 23, 2018. Please note that the Notice identifies the items on which stockholders will vote at the meeting, but stockholders cannot vote by marking the Notice and returning it. The Notice provides instructions on how to vote via the Internet, by telephone or by requesting and returning a paper proxy card, or by submitting a ballot in person at the meeting. +In addition to the proxy materials being available for review at https://www.viewproxy.com/CallonPetroleum/2018, the site contains instructions on how to access the proxy materials on a website or to request free of charge printed materials, including a copy of our Form 10-K for the year ended December 31, 2017 as filed with the SEC. On an ongoing basis, stockholders may contact our Corporate Secretary at our principal offices in Natchez, Mississippi to request proxy materials by mail or by e-mail. +Casting your vote +There are three methods for registered stockholders to vote by proxy without attending the Annual Meeting: +1. +By Internet +You can vote via the Internet by going to the website address provided on your Notice or proxy card. You will need to use the control and request ID appearing on your proxy card to vote via the Internet. You can use the Internet to transmit your voting instructions up until 11:59 p.m. CDT on May 9, 2018. If you vote via the Internet, you do NOT need to vote by telephone or return a proxy card. Internet voting is available 24 hours a day. +2. +By Telephone +You can also vote by telephone by calling the toll-free telephone number provided on your proxy card. You will need to use the control and request ID appearing on your proxy card to vote by telephone. You may transmit your voting instructions from any touch-tone telephone up until 11:59 p.m. CDT on May 9, 2018. Voting by telephone is available 24 hours a day. +3. +By Mail +If you received a printed copy of the proxy card, you can vote by marking, dating and signing it, and returning it in the reply envelope provided. Please promptly mail your proxy card to ensure that we receive it prior to the closing of the polls at the Annual Meeting. +If you receive more than one Notice and/or Proxy Statement then it means that your shares are likely registered in more than one account. Please provide voting instructions for all Notices, proxy and voting instruction cards you receive. If you send us a signed proxy card without marking your voting selections, your shares will be voted on each proposal as recommended by our Board, and in the discretion of the proxy holders as to any other matters that may properly come before the meeting or any postponement or adjournment of the meeting. The Board is not presently aware of any other proposals or any other business to be considered at the Annual Meeting. +Difference between a “holder of record” and a “street name” holder +If your shares are registered directly in your name, you are considered the stockholder of record with respect to those shares. If your shares are held in a stock brokerage account or by a bank, trust or other nominee, then the broker, bank, trust or other nominee is considered to be the stockholder of record with respect to those shares. However, you are still considered to be the beneficial owner of those shares, and your shares are said to be held in “street name.” Street name holders generally cannot submit a proxy or vote their shares directly and must instead instruct the broker, bank, trust or other nominee how to vote their shares. You will receive instructions from your broker, bank or other nominee that you must follow in order for your broker, bank or other nominee to vote your shares per your instructions. Many brokerage firms and banks have a process for their beneficial holders to provide instructions via the Internet or over the telephone. If Internet or telephone voting is unavailable from your broker, bank or other nominee, please complete and return the enclosed voting instruction card in the addressed, postage paid envelope provided. +In the event you do not provide instructions on how to vote shares held in street name, your broker may have authority to vote your shares. Under the rules that govern brokers who are voting with respect to shares that are held in street name, brokers have the discretion to vote such shares on routine matters, but they are not permitted to vote (a “broker non-vote”) on non-routine or non-discretionary items absent instructions from the beneficial owner. With respect to the Annual Meeting, brokers are prohibited from exercising discretionary authority in the election of directors, the non-binding advisory proposal on executive compensation, and the proposal to approve the 2018 Plan, but such brokers may exercise discretionary authority with respect to the ratification of the appointment of our independent registered public accounting firm. Your vote is especially important. Therefore, please promptly instruct y our broker regarding how to vote your shares on these matters. +If you hold shares through a broker, bank or other nominee and wish to be able to vote in person at the meeting, you must obtain a legal proxy from your broker, bank or other nominee and present it to the inspector of election with your ballot at the meeting. If you need +55 +assistance in obtaining a legal proxy, please call Alliance Advisors toll-free at (833)-786-5511. Submitting your proxy by mail will not affect your right to vote in person if you decide to attend the Annual Meeting. +Revoking a proxy +You may revoke or change a previously delivered proxy at any time before the meeting by delivering another proxy with a later date, by voting again via the Internet or by telephone, or by delivering written notice of revocation of your proxy to our Corporate Secretary at our principal offices in Natchez, Mississippi before the beginning of the meeting. You may also revoke your proxy by attending the meeting and voting in person, although attendance at the meeting will not necessarily revoke a valid proxy that was previously delivered. If you hold shares through a broker, bank or other nominee, you must contact that nominee to revoke any prior voting instructions. You also may revoke any prior voting instructions by voting in person at the meeting if you obtain a legal proxy as described above. +Recommendation of the Board +The Board unanimously recommends you vote “FOR” each of the proposals. A proxy that is properly completed and submitted will be voted at the Annual Meeting in accordance with the instructions on the proxy. If you properly complete and submit a proxy, but do not indicate any contrary voting instructions, your shares will be voted as follows: +• +“ FOR ” the election of each of the nominees named in this Proxy Statement to our Board of Directors; +• +“ FOR ” the approval, on an advisory basis, of our executive compensation; +• +“ FOR ” the approval of the 2018 Plan; and +• +“ FOR ” the ratification of the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2018 +Counting the vote +We have appointed Alliance Advisors to serve as the inspector of election and to tabulate and certify the vote. +Quorum +A quorum is the number of shares that must be present to hold the meeting. The quorum requirement for the meeting is a majority of the outstanding shares as of the Record Date, present in person or represented by proxy. We will count your shares for purposes of determining if there is a quorum if either you are present and vote in person at the meeting or have voted on the Internet, by telephone or by properly submitting a proxy card or voting instruction card by mail. Abstentions and broker non-votes also count toward the quorum. +Required Vote +Proposal 1 - Election of directors +The nominees for election as directors will be elected by a plurality of all votes cast, subject to the Company’s majority voting policy. Because the number of director nominees equals the number of directors to be elected at this Annual Meeting, to be elected, each director must receive a majority of the votes cast. A majority of the votes cast means that the number of shares voted “for” a director must exceed the number of shares voted “withheld.” Abstentions and broker non-votes will not be included in determining the number of votes cast in the election of directors and will not have any effect on the outcome. This majority voting standard is discussed further under “Proposal 1 - Election of directors - Majority Vote Standard.” +Proposal 2 - Advisory vote to approve NEO compensation +The advisory vote on our executive compensation is non-binding, so no specific vote is required. Abstentions will have the same effect as a vote against this proposal, and broker non-votes will not be counted as shares present and entitled to vote, and, accordingly, will not affect the outcome of the vote on this proposal. While the law requires this advisory vote, the vote will neither be binding on us or our Board, nor will it create or imply any change in the fiduciary duties of, or impose any additional fiduciary duty on, us or our Board. However, the views of our stockholders are important to us, and our Compensation Committee will take into account the outcome of the vote when considering future executive compensation decisions. We urge you to read the section entitled “Compensation Discussion and Analysis,” which discusses in detail how our executive compensation program implements our compensation philosophy. +56 +Proposal 3 - Approval of the 2018 Plan +Pursuant to our bylaws, approval of the 2018 Plan requires the affirmative vote of a majority of the common shares present in person or by proxy and entitled to vote on the proposal. In addition to the vote required by our bylaws, under New York Stock Exchange (“NYSE”) rules, approval of the 2018 plan requires approval of a majority of votes cast on the proposal. In both cases, abstentions will have the effect of a vote cast against the proposal. Broker non-votes will not be counted as shares present and entitled to vote and so will have no effect upon the outcome of the vote. +Proposal 4 - Ratification of the appointment of the independent registered public accounting firm +The advisory vote on the ratification of the appointment of Grant Thornton LLP as our independent registered public accounting firm for the 2018 fiscal year is non-binding, so no specific vote is required. If you hold your shares through a broker and you do not instruct the broker how to vote, your broker will have the authority to vote your shares in its discretion on this proposal. An abstention will have the effect of a vote against this proposal. Because your vote is advisory, it will not be binding on the Board or the Company. However, the Board and the Audit Committee will consider the outcome of the vote in determining the selection of the Company’s independent registered public accounting firm. +Voting Results +We will announce the preliminary voting results at the Annual Meeting and will publish the final voting results in a current report on Form 8-K to be filed with the SEC within four business days of the meeting. +Householding Information +The SEC permits companies and intermediaries (such as brokers and banks) to satisfy delivery requirements for proxy statements and annual reports with respect to two or more stockholders sharing the same address by delivering a single proxy statement and annual report to those stockholders. This process, which is commonly referred to as “householding,” is intended to reduce the volume of duplicate information stockholders receive and reduce expenses for companies. Both we and some of our intermediaries may be householding our proxy materials and annual report. Once you have received notice from your broker or another intermediary that they will be householding materials sent to your address, householding will continue until you are notified otherwise or until you revoke your consent. Should you wish to receive separate copies of our Annual Report and Proxy Statement in the future, we will promptly deliver a separate copy of each of these documents to you if you send a written request to us at our address appearing on the cover of this Proxy Statement, to the attention of the Corporate Secretary. If you hold your shares through an intermediary that is householding and you want to receive separate copies of our Annual Report and Proxy Statement in the future, you should contact your bank, broker or other nominee record holder. +Financial Statements and Other Available Documents +Financial statements for our most recent fiscal year are contained in the 2017 Annual Report to Stockholders and our Report on Form 10-K for the fiscal year ended December 31, 2017, filed with the SEC on February 28, 2018. Our Annual Report, our Annual Report on Form 10-K, Corporate Governance Guidelines, Code of Business Conduct and Ethics, and Charters of Board Committees may be accessed by stockholders on our website at www.callon.com or printed copies are available upon written request to B.F. Weatherly, Corporate Secretary at our principal executive office in Natchez, Mississippi. +Other Business +The Board is not aware of any matter to be acted upon at the 2018 Annual Meeting other than those described above. If other business properly comes before the 2018 Annual Meeting, the persons named on the proxy will vote the proxy in accordance with what they consider to be in the best interests of us and our stockholders. Please sign, date, and return your proxy promptly to avoid unnecessary expense. All stockholders are urged, regardless of the number of shares owned, to participate in the 2018 Annual Meeting by voting their shares. +57 +By Order of the Board of Directors +March 23, 2018 +Natchez, Mississippi +Joseph C. Gatto, Jr. +President and Chief Executive Officer +58 +Appendix A +CALLON PETROLEUM COMPANY +2018 OMNIBUS INCENTIVE PLAN +1. +Plan . This Callon Petroleum Company 2018 Omnibus Incentive Plan (this “ Plan ”) was adopted by Callon Petroleum Company to reward and provide incentives to certain employees, independent contractors and directors by enabling them to acquire awards from the Company, including Awards related to shares of common stock of Callon Petroleum Company. +2. +Definitions . As used herein, the terms set forth below shall have the following respective meanings: +“ Affiliate ” has the meaning ascribed to such term in Rule 12b-2 of the General Rules and Regulations of the Exchange Act. +“ Award ” means the grant of any Option, SAR, Stock Award, Cash Award or Performance Award whether granted singly, in combination or in tandem, to a Participant pursuant to such applicable terms, conditions and limitations as the Committee may establish in order to fulfill the objectives of this Plan. +“ Award Agreement ” means the document (in written or electronic form) setting forth the terms, conditions and limitations applicable to an Award. Such agreement shall be written except that the Committee may, in its discretion, require or allow that the Participant electronically execute or accept such Award Agreement. +“ Board ” means the Board of Directors of the Company. +“ Cash Award ” means an Award denominated in cash. +“ Change in Control ” means the occurrence of one or more of the following: +(a) +Change in Ownership . A change in ownership of the Company occurs on the date that any Person, other than (1) the Company or any of its Subsidiaries, (2) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Affiliates, (3) an underwriter temporarily holding stock pursuant to an offering of such stock, or (4) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of the Company’s stock (each of (1) through (4) an “Exempt Person”), acquires ownership of the Company’s stock that, together with stock held by such Person, constitutes more than fifty percent (50%) of the total fair market value or total voting power of the Company’s Voting Stock. However, if any Person is considered to own already more than fifty percent (50%) of the total fair market value or total voting power of the Company’s Voting Stock, the acquisition of additional stock by the same Person is not considered to be a Change in Control. In addition, if any Person has effective control of the Company through ownership of thirty percent (30%) or more of the total voting power of the Company’s Voting Stock, as discussed in paragraph (b) below, the acquisition of additional control of the Company by the same Person is not considered to cause a Change in Control pursuant to this paragraph (a); or +(b) +Change in Effective Control . Even though the Company may not have undergone a change in ownership under paragraph (a) above, a change in the effective control of the Company occurs on either of the following dates: (1) the date that any Person (other than an Exempt Person) acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such Person) ownership of the Company’s stock possessing thirty percent (30%) or more of the total voting power of the Company’s Voting Stock. However, if any Person owns thirty percent (30%) or more of the total voting power of the Company’s Voting Stock, the acquisition of additional control of the Company by the same Person is not considered to cause a Change in Control pursuant to this subparagraph (b)(1); or (2) the date that during any period of three consecutive years, individuals who at the beginning of such period were members of the Board cease for any reason to constitute at least a majority thereof unless the election, or the nomination for election by the Company's stockholders, of each new director was approved by a vote of at least a majority of the directors then still in office who were directors at the beginning of such period or whose election or nomination was previously so approved; provided, however, that any such director shall not be considered to be approved by the Board if his or her initial assumption of office occurs as a result of an actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or +59 +(c) +Change in Ownership of Substantial Portion of Assets . A change in the ownership of a substantial portion of the Company’s assets occurs on the date that a Person acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such Person) assets of the Company that have a total gross fair market value equal to at least forty percent (40%) of the total gross fair market value of all of the Company’s assets immediately before such acquisition or acquisitions. However, there is no Change in Control when there is such a transfer to an entity that is controlled by the stockholders of the Company immediately after the transfer, through a transfer to (1) a stockholder of the Company (immediately before the asset transfer) in exchange for or with respect to the Common Stock; (2) an entity, at least fifty percent (50%) of the total value or voting power of the stock of which is owned, directly or indirectly, by the Company; (3) a Person that owns directly or indirectly, at least fifty percent (50%) of the total value or voting power of the Company’s outstanding Voting Stock; or (4) an entity, at least fifty percent (50%) of the total value or voting power of the stock of which is owned by a Person that owns, directly or indirectly, at least fifty percent (50%) of the total value or voting power of the Company’s outstanding Voting Stock. +Notwithstanding the foregoing, no Change in Control payment event shall be deemed to have occurred with respect to an Award that is subject to Section 409A of the Code unless such event constitutes a permissible payment event specified in Section 409A of the Code and the Treasury regulations promulgated thereunder. +“ Code ” means the Internal Revenue Code of 1986, as amended from time to time. +“ Committee ” means (i) the Compensation Committee of the Board or (ii) such other committee of the Board as is designated by the Board to administer this Plan or (iii) to the extent contemplated hereby, the Board. +“ Common Stock ” means the common stock, par value $.01 per share, of the Company. +“ Company ” means Callon Petroleum Company, a Delaware corporation. +“ Director ” means an individual serving as a member of the Board. +“ Dividend Equivalents ” means, with respect to the shares of Common Stock subject to a Stock Award other than Restricted Stock, an amount equal to all dividends and other distributions (or the economic equivalent thereof) that are payable to stockholders of record during the Restriction Period on a like number of shares of Common Stock. +“ Effective Date ” means May 10, 2018. +“ Employee ” means an employee of the Company or any of its Subsidiaries. +“ Exchange Act ” means the Securities Exchange Act of 1934, as amended from time to time. +“ Fair Market Value ” of a share of Common Stock means, as of a particular date, (i)(A) if the shares of Common Stock are listed or on a national securities exchange (including the NASDAQ Global Select Market), the closing price per share of the Common Stock on the consolidated transaction reporting system for the principal national securities exchange on which shares of Common Stock are listed on that date, or, if there shall have been no such sale so reported on that date, on the last preceding date on which such a sale was so reported, or, at the discretion of the Committee, the price prevailing on the exchange at the time of exercise or other relevant event (as determined under procedures established by the Committee) including the average of the closing bid and asked price on that date, (B) if the shares of Common Stock are not so listed but are listed or quoted on another securities exchange or market, the closing price per share of Common Stock reported on the principal securities exchange or market on which the shares of Common Stock are traded (as determined by the Committee), or, if there shall have been no such sale so reported on that date, on the last preceding date on which such a sale was so reported or, at the discretion of the Committee, the price prevailing on such principal securities exchange or market at the time of exercise or other relevant event, including the average of the closing bid and asked price on that date, or, if there are no quotations available for such date, on the last preceding date on which such quotations shall be available, (C) if the shares of Common Stock are not publicly traded, the most recent value determined by an independent appraiser appointed by the Company for such purpose, or (D) if none of (A)-(C) are applicable, the fair market value of a share of Common Stock as determined in good faith by the Committee; or (ii) if applicable, the price per share as determined in accordance with the procedures of a third party administrator retained by the Company to administer this Plan and as approved by the Committee. +60 +“ Incentive Option ” means an Option that is intended to comply with the requirements set forth in Section 422 of the Code. +“ Independent Contractor ” means an individual providing services to the Company or any of its Subsidiaries, who is not an Employee. An Independent Contractor can include an individual who is serving as a Non-employee Director. +“ Non-employee Director ” means a Director who is not an Employee. A Non-employee Director may, in the discretion of the Committee, receive an Award both in the capacity as a Non-employee Director and Independent Contractor. +“ Nonqualified Stock Option ” means an Option that is not an Incentive Option. +“ Option ” means a right to purchase a specified number of shares of Common Stock at a specified price, which is either an Incentive Option or a Nonqualified Stock Option. +“ Participant ” means an Employee, Non-employee Director or Independent Contractor to whom an Award has been made under this Plan. +“ Performance Award ” means an award made pursuant to this Plan to a Participant which is subject to the attainment of one or more Performance Goals. +“ Performance Goal ” means a standard established by the Committee, to determine in whole or in part whether a Performance Award shall be earned. +“ Person ” shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a “group” as defined in Section 13(d) thereof. +“ Prior Plan ” means the Callon Petroleum Company 2011 Omnibus Incentive Plan, as thereafter amended. +“ Restricted Stock ” means any Common Stock that is restricted or subject to forfeiture provisions. +“ Restricted Stock Unit ” means a right to receive a share of Common Stock or the value thereof on such terms and conditions as may be established by the Committee. For the avoidance of doubt, such term includes phantom shares and phantom stock units. +“ Restriction Period ” means a period of time beginning as of the date upon which a Stock Award is made pursuant to this Plan and ending as of the date upon which the Common Stock subject to such Stock Award is deliverable or no longer restricted or such Stock Award is no longer subject to forfeiture provisions. +“ Rule 16b-3 ” means Rule 16b-3 promulgated under the Exchange Act, or any successor rule. +“ SAR ” means a right to receive a payment, in cash or Common Stock, equal to the excess of the Fair Market Value or other specified valuation of a specified number of shares of Common Stock on the date the right is exercised over a specified strike price, in each case, as determined by the Committee. +“ Stock Award ” means an award in the form of shares of Common Stock or units denominated in shares of Common Stock, including Restricted Stock and Restricted Stock Units. For the avoidance of doubt, a Stock Award does not include an Option or SAR. +“ Subsidiary ” means (i) in the case of a corporation, any corporation of which the Company directly or indirectly owns shares representing more than 50% of the combined voting power of the shares of all classes or series of capital stock of such corporation which have the right to vote generally on matters submitted to a vote of the stockholders of such corporation and (ii) in the case of a partnership or other business entity not organized as a corporation, any such business entity of which the Company directly or indirectly owns more than 50% of the voting, capital or profits interests (whether in the form of partnership interests, membership interests or otherwise). +“ Voting Stock ” shall mean stock of any class or kind having the power to vote generally for the election of Directors. +3. +Eligibility . All Employees, Non-employee Directors and Independent Contractors are eligible for Awards under this Plan in the sole discretion of the Committee. +61 +4. +Common Stock Available for Awards . Subject to the provisions of Section 14 hereof, there shall be available for Awards under this Plan granted wholly or partly in Common Stock (including rights or Options that may be exercised for or settled in Common Stock) an aggregate of 9,400,000 shares of Common Stock, plus the shares remaining available for awards under the Prior Plan as of the Effective Date, all of which shall be available for Incentive Options. The number of shares of Common Stock that are the subject of Awards under this Plan or the Prior Plan, that are forfeited or terminated, expire unexercised, are settled in cash in lieu of Common Stock or are exchanged for Awards that do not involve Common Stock, shall again immediately become available for additional Awards hereunder. Notwithstanding the foregoing, the following shares of Common Stock may not again be made available for issuance as Awards under this Plan: (i) shares of Common Stock not issued or delivered as a result of the net settlement of a stock-settled SAR or Option, (ii) shares of Common Stock used to pay the exercise price or withholding taxes related to an outstanding Option or SAR, or (iii) shares of Common Stock repurchased on the open market with the proceeds of the option exercise price. The Board and the appropriate officers of the Company shall from time to time take whatever actions are necessary to file any required documents with governmental authorities, stock exchanges and transaction reporting systems to ensure that shares of Common Stock are available for issuance pursuant to Awards. +5. +Administration . +(a) +Except as otherwise provided in this Plan with respect to actions or determinations by the Board, this Plan shall be administered by the Committee. To the extent required in order for Awards to be exempt from Section 16 of the Exchange Act by virtue of the provisions of Rule 16b-3, (i) the Committee shall consist of at least two members of the Board who meet the requirements of the definition of “Non-employee Director” set forth in Rule 16b-3 (b)(3)(i) promulgated under the Exchange Act or (ii) Awards may be granted by, and this Plan may be administered by, the Board. +(b) +Subject to the provisions hereof, the Committee shall have full and exclusive power and authority to administer this Plan and to take all actions that are specifically contemplated hereby or are necessary or appropriate in connection with the administration hereof. The Committee shall also have full and exclusive power to interpret this Plan and to adopt such rules, regulations and guidelines for carrying out this Plan as it may deem necessary or proper. The Committee may, in its discretion, provide for the extension of the exercisability of an Award, accelerate the vesting or exercisability of an Award, eliminate or make less restrictive any restrictions contained in an Award, waive any restriction or other provision of this Plan or an Award or otherwise amend or modify an Award in any manner that is either (i) not adverse to the Participant to whom such Award was granted or (ii) consented to by such Participant. The Committee may make an Award to an individual who it expects to become an Employee, Non-employee Director or Independent Contractor of the Company or any of its Subsidiaries within the next six months, with such award being subject to the individual actually becoming an Employee, Non-employee Director or Independent Contractor, as applicable, within such time period, and subject to such other terms and conditions as may be established by the Committee. The Committee may correct any defect or supply any omission or reconcile any inconsistency in this Plan or in any Award in the manner and to the extent the Committee deems necessary or desirable to further the purposes of this Plan. Any decision of the Committee in the interpretation and administration of this Plan shall lie within its sole and absolute discretion and shall be final, conclusive and binding on all parties concerned. The Board shall have the same powers as the Committee with respect to Awards granted to Non-employee Directors. +(c) +Notwithstanding the foregoing, except in connection with a transaction involving the Company or its capitalization (as provided in Section 14), the terms of outstanding Awards may not be amended without approval of the stockholders of the Company to (i) reduce the exercise price of outstanding Options or SARs or (ii) cancel, exchange, substitute, buyout or surrender outstanding Options or SARs in exchange for cash or other Awards when the exercise price per share of the original Options or SARs exceeds the Fair Market Value of one share of Common Stock, (iii) take any other action with respect to an Option or SAR that would be treated as a repricing under the rules and regulations of the principal national securities exchange on which the shares of Common Stock are listed or (iv) permit the grant of any Options or SARs that contains a so-called “reload” feature under which additional Options, SARs or other Awards are granted automatically to the Participant upon exercise of the original Option or SAR. +(d) +No member of the Committee or the Board or officer of the Company to whom the Committee has delegated authority in accordance with the provisions of Section 6 of this Plan shall be liable for anything done or omitted to be done by him or her, by any member of the Committee or by any officer of the Company in connection +62 +with the performance of any duties under this Plan, except for his or her own willful misconduct or as expressly provided by statute. +6. +Delegation of Authority . To the extent allowed by applicable law, the Committee may delegate to the Chief Executive Officer, to other senior officers of the Company or to other committees of the Board its duties under this Plan pursuant to such conditions or limitations as the Committee may establish, except that the Committee may not delegate to any person the authority to grant Awards to, or take other action with respect to, Participants who are subject to Section 16 of the Exchange Act. +7. +Employee and Independent Contractor Awards . The Committee shall determine the type or types of Awards to be made under this Plan and shall designate from time to time the Employees and Independent Contractors who are to be the recipients of such Awards. Each Award may be embodied in an Award Agreement, which shall contain such terms, conditions and limitations as shall be determined by the Committee in its sole discretion, including any treatment upon a Change in Control, and shall be accepted by the Participant to whom the Award is made. Awards may consist of those listed in this Section 7 and may be granted singly, in combination or in tandem. Awards may also be made in combination or in tandem with, in replacement of, or as alternatives to, grants or rights under this Plan or any other employee plan of the Company or any of its Subsidiaries, including the plan of any acquired entity. All or part of an Award may be subject to conditions established by the Committee, which may include, but are not limited to, continuous service with the Company, its Affiliates and Subsidiaries, or achievement of specific performance or business objectives. Upon the termination of service with the Company, its Affiliates and Subsidiaries of a Participant, any unexercised, deferred, unvested or unpaid Awards shall be treated as set forth in the applicable Award Agreement. +(a) +Stock Option . An Award may be in the form of an Option. An Option awarded pursuant to this Plan may consist of an Incentive Option or a Nonqualified Option. The price at which a share of Common Stock may be purchased upon the exercise of an Option shall be not less than the Fair Market Value of the Common Stock on the date of grant. Subject to the foregoing provisions, the terms, conditions and limitations applicable to any Options awarded pursuant to this Plan, including the term of any Options and the date or dates upon which they become exercisable, shall be determined by the Committee. Only Employees may be granted Incentive Options. The term of Options shall not exceed ten years from the date of grant. Any Option (i) that remains outstanding as of the last day of its term, (ii) has an exercise price per share that is less than the Fair Market Value of a share of Common Stock as of such day and (iii) whose exercise is prohibited as of such day pursuant to the operation of the Company’s insider trading policy, shall be automatically exercised (without any action on the part of the Participant holding such Option) by (A) foregoing the delivery of shares of Common Stock otherwise deliverable upon the exercise of the Option pursuant to Section 10 in an amount sufficient to pay the exercise price of the Option and (B) satisfying tax withholding obligations pursuant to Section 11 by withholding from the shares of Common Stock otherwise deliverable upon the exercise of the Option using the minimum tax rate applicable to the Participant. Each Participant who receives Options pursuant to the Plan shall be deemed to have accepted this automatic exercise provision as a condition of receiving the Option. +(b) +Stock Appreciation Right . An Award may be in the form of a SAR. The per share strike price for a SAR shall be not less than the Fair Market Value of the Common Stock on the date on which the SAR is granted. The terms, conditions and limitations applicable to any SARs awarded pursuant to this Plan, including the term of any SARs, whether the SAR will be settled in cash or stock and the date or dates upon which they become exercisable, shall be determined by the Committee. The term of SARs shall not exceed ten years from the date of grant. Any SAR (i) that remains outstanding as of the last day of its term, (ii) has a strike price per share that is less than the Fair Market Value of a share of Common Stock as of such day and (iii) whose exercise is prohibited as of such day pursuant to the operation of the Company’s insider trading policy, shall be automatically exercised (without any action on the part of the Participant holding such SAR) and any tax withholding obligations will be satisfied pursuant to Section 11 by withholding from the cash or shares of Common Stock otherwise deliverable upon the exercise of the SAR using the minimum tax rate applicable to the Participant. Each Participant who receives SARs pursuant to the Plan shall be deemed to have accepted this automatic exercise provision as a condition of receiving the SAR. +(c) +Stock Award . An Award may be in the form of a Stock Award. The terms, conditions and limitations applicable to any Stock Awards granted pursuant to this Plan shall be determined by the Committee. +(d) +Cash Award . An Award may be in the form of a Cash Award. The terms, conditions and limitations applicable to any Cash Awards granted pursuant to this Plan shall be determined by the Committee. +63 +(e) +Performance Award . Without limiting the type or number of Awards that may be made under the other provisions of this Plan, an Award may be in the form of a Performance Award. A Performance Award shall be paid, vested or otherwise deliverable solely on account of the attainment of one or more Performance Goals, either individually or in any combination, established by the Committee and specified in the award agreement. +Unless otherwise stated, such a Performance Goal need not be based upon an increase or positive result under a particular business criterion and could include, for example, maintaining the status quo or limiting economic losses (measured, in each case, by reference to specific business criteria). The amount of cash or shares payable or vested pursuant to Performance Awards may be adjusted upward or downward, either on a formula or discretionary basis or any combination, as the Committee determines. Subject to the foregoing provisions, the terms, conditions and limitations applicable to any Performance Awards made pursuant to this Plan shall be determined by the Committee. +8. +Director Awards . +(a) +The Board has the sole authority to grant Awards to Non-employee Directors from time to time in accordance with this Section 8. Such Awards may consist of the forms of Award described in Section 7, other than Incentive Options, and shall be granted subject to such terms and conditions as specified in Section 7. +(b) +No Non-employee Director may be granted during any calendar year Awards having a fair value determined on the date of grant when added to all cash compensation paid to the Non-employee Director (in his capacity as Non-employee Director) during the same calendar year in excess of $1,000,000. +9. +Payment of Awards . +(a) +General . Payment of Awards may be made in the form of cash or Common Stock, or a combination thereof, and may include such restrictions as the Committee shall determine, including, in the case of Common Stock, restrictions on transfer and forfeiture provisions. If payment of an Award is made in the form of Restricted Stock, the right to receive such shares shall be evidenced by book entry registration or in such other manner as the Committee may determine. Any statement of ownership evidencing such Restricted Stock shall contain appropriate legends and restrictions that describe the terms and conditions of the restrictions applicable thereto. +(b) +Dividends and Interest . In the discretion of the Committee, rights to dividends or Dividend Equivalents may be extended to and made part of any Stock Award or Performance Award, but such dividends or Dividend Equivalents shall be accrued and held by the Company and paid, without interest, within 10 days following the lapse of the restrictions on the Stock Award or Performance Award. For the avoidance of doubt, dividends and Dividend Equivalents will not, in any event, be payable until the restrictions on the underlying Stock Award or Performance Award have lapsed. In the event the Stock Award or Performance Award is forfeited, dividends and Dividend Equivalents paid with respect to such shares during the Restriction Period shall also be forfeited. No Dividend Equivalents may be paid in respect of an Award of Options or SARs. +10. +Stock Option Exercise . The price at which shares of Common Stock may be purchased under an Option shall be paid in full at the time of exercise in cash or, if elected by the optionee, the optionee may purchase such shares by means of tendering Common Stock valued at Fair Market Value on the date of exercise, or any combination thereof. The Committee shall determine acceptable methods for Participants to tender Common Stock. The Committee may provide for procedures to permit the exercise or purchase of such Awards by foregoing the delivery of shares of Common Stock otherwise deliverable upon the exercise of the Option or by use of the proceeds to be received from the sale of Common Stock issuable pursuant to an Award. +11. +Taxes . The Company shall have the right to deduct applicable taxes from any Award payment and withhold, at the time of delivery or vesting of cash or shares of Common Stock under this Plan, an appropriate amount of cash or number of shares of Common Stock or a combination thereof for payment of taxes required by law or to take such other action as may be necessary in the opinion of the Company to satisfy all obligations for withholding of such taxes. The Committee may also permit withholding to be satisfied by (i) the transfer to the Company of shares of Common Stock theretofore owned by the holder of the Award or (ii) withholding from the shares otherwise deliverable under the Award, in either case with respect to which withholding is required, up to the maximum tax rate applicable to the Participant, as determined by the Committee. If shares of Common Stock are used to satisfy tax withholding, such shares shall be valued based on the Fair Market Value when the tax withholding is required to be made. +64 +12. +Amendment, Modification, Suspension or Termination . The Board may amend, modify, suspend or terminate this Plan for the purpose of meeting or addressing any changes in legal requirements or for any other purpose permitted by law, except that (i) no amendment or alteration that would adversely affect the rights of any Participant under any Award previously granted to such Participant shall be made without the consent of such Participant and (ii) no amendment or alteration shall be effective prior to its approval by the stockholders of the Company to the extent such approval is then required pursuant to Rule 16b-3 in order to preserve the applicability of any exemption provided by such rule to any Award then outstanding (unless the holder of such Award consents) or to the extent stockholder approval is otherwise required by applicable legal requirements. +13. +Assignability . Unless otherwise determined by the Committee and provided in the Award Agreement, no Award or any other benefit under this Plan constituting a derivative security within the meaning of Rule 16a-1(c) under the Exchange Act shall be assignable or otherwise transferable except by will or the laws of descent and distribution or pursuant to a qualified domestic relations order in a form acceptable to the Committee. The Committee may prescribe and include in applicable Award Agreements other restrictions on transfer. Any attempted assignment of an Award or any other benefit under this Plan in violation of this Section 13 shall be null and void. +14. +Adjustments . +(a) +The existence of outstanding Awards shall not affect in any manner the right or power of the Company or its stockholders to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in the capital stock of the Company or its business or any merger or consolidation of the Company, or any issue of bonds, debentures, preferred or prior preference stock (whether or not such issue is prior to, on a parity with or junior to the Common Stock) or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding of any kind, whether or not of a character similar to that of the acts or proceedings enumerated above. +(b) +In the event of any subdivision or consolidation of outstanding shares of Common Stock, declaration of a dividend payable in shares of Common Stock or other stock split, the adoption by the Company of any plan of exchange affecting the Common Stock or any distribution to holders of Common Stock of securities or property (other than normal cash dividends or dividends payable in Common Stock), (i) the number of shares of Common Stock reserved under this Plan, (ii) the number of shares of Common Stock covered by Awards in the form of Common Stock or units denominated in Common Stock, (iii) the exercise or other price in respect of such Awards, and (iv) the appropriate Fair Market Value and other price determinations for such Awards shall each be proportionately adjusted by the Board to reflect such event; provided that such adjustments shall only be such as are necessary to maintain the proportionate interest of the holders of the Awards and preserve, without exceeding, the value of such Awards. +(c) +In the event of a corporate merger, consolidation, acquisition of property or stock, separation, reorganization or liquidation, the Board may make such adjustments to outstanding Awards or other provisions for the disposition of outstanding Awards as it deems equitable, and shall be authorized, in its discretion, (i) to provide for the substitution of a new Award or other arrangement (which, if applicable, may be exercisable for such property or stock as the Board determines) for an outstanding Award or the assumption of an outstanding Award, regardless of whether in a transaction to which Section 424(a) of the Code applies, (ii) to provide, prior to the transaction, for the acceleration of the vesting and exercisability of, or lapse of restrictions with respect to, the outstanding Award and, if the transaction is a cash merger, to provide for the termination of any portion of the Award that remains unexercised at the time of such transaction or (iii) to provide for the acceleration of the vesting and exercisability of an outstanding Award and the cancellation thereof in exchange for such payment of such cash or property as shall be determined by the Board in its sole discretion, which for the avoidance of doubt in the case of Options or SARs (whether stock- or cash-settled) shall be the excess, if any, of the Fair Market Value of the shares of Common Stock subject to the Option or SAR on such date over the aggregate exercise price of such Award; provided , however , that no such adjustment shall increase the aggregate value of any outstanding Award. No adjustment or substitution pursuant to this Section 14 shall be made in a manner that results in noncompliance with Section 409A of the Code, to the extent applicable. +15. +Restrictions . No Common Stock or other form of payment shall be issued with respect to any Award unless the Company shall be satisfied based on the advice of its counsel that such issuance will be in compliance with applicable federal and state securities laws. It is the intent of the Company that grants of Awards under this Plan comply with Rule 16b-3 with respect to persons subject to Section 16 of the Exchange Act unless otherwise provided herein or in an Award Agreement and that any ambiguities or inconsistencies in the construction of such an Award or this Plan be interpreted to give effect to such +65 +intention. Certificates evidencing shares of Common Stock delivered under this Plan (to the extent that such shares are so evidenced) may be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations and other requirements of the Securities and Exchange Commission, any securities exchange or transaction reporting system upon which the Common Stock is then listed or to which it is admitted for quotation and any applicable federal or state securities law. The Committee may cause a legend or legends to be placed upon such certificates (if any) to make appropriate reference to such restrictions. The Committee may also impose such restrictions, conditions or limitations as it determines appropriate as to the timing and manner of any resales by a Participant, other subsequent transfers by the Participant of any shares of Common Stock issued as a result of or under an Award, or the exercise of Options and SARs, including without limitation, restrictions under an insider trading policy. +16. +Unfunded Plan . Insofar as it provides for Awards of cash, Common Stock or rights thereto, this Plan shall be unfunded. Although bookkeeping accounts may be established with respect to Participants who are entitled to cash, Common Stock or rights thereto under this Plan, any such accounts shall be used merely as a bookkeeping convenience. The Company shall not be required to segregate any assets that may at any time be represented by cash, Common Stock or rights thereto, nor shall this Plan be construed as providing for such segregation, nor shall the Company, the Board or the Committee be deemed to be a trustee of any cash, Common Stock or rights thereto to be granted under this Plan. Any liability or obligation of the Company to any Participant with respect to an Award of cash, Common Stock or rights thereto under this Plan shall be based solely upon any contractual obligations that may be created by this Plan and any Award Agreement, and no such liability or obligation of the Company shall be deemed to be secured by any pledge or other encumbrance on any property of the Company. Neither the Company nor the Board nor the Committee shall be required to give any security or bond for the performance of any obligation that may be created by this Plan. +17. +Section 409A of the Code . All Awards under this Plan are intended either to be exempt from, or to comply with the requirements of Section 409A, and this Plan and all Awards shall be interpreted and operated in a manner consistent with that intention. Notwithstanding anything in this Plan to the contrary, if any Plan provision or Award under this Plan would result in the imposition of an applicable tax under Section 409A, that Plan provision or Award shall be reformed to avoid imposition of the applicable tax and no such action shall be deemed to adversely affect the Participant’s rights to an Award. +18. +Governing Law . This Plan and all determinations made and actions taken pursuant hereto, to the extent not otherwise governed by mandatory provisions of the Code or the securities laws of the United States, shall be governed by and construed in accordance with the laws of the State of Delaware. +19. +Clawback . To the extent required by applicable law or any applicable securities exchange listing standards, or as otherwise determined by the Committee, Awards and amounts paid or payable pursuant to or with respect to Awards shall be subject to the provisions of any clawback policy implemented by the Company, which clawback policy may provide for forfeiture, repurchase or recoupment of Awards and amounts paid or payable pursuant to or with respect to Awards. Notwithstanding any provision of this Plan or any Award Agreement to the contrary, the Company reserves the right, without the consent of any Participant, to adopt any such clawback policies and procedures. +20. +No Right to Employment or Continued Service . Nothing in this Plan or an Award Agreement shall interfere with or limit in any way the right of the Company or a Subsidiary to terminate any Participant’s employment or other service relationship at any time, nor confer upon any Participant any right to continue in the capacity in which he or she is employed or otherwise serves the Company or any Subsidiary. Further, nothing in this Plan or an Award Agreement constitutes any assurance or obligation of the Board to nominate any Non-employee Director for re-election by the Company’s stockholders. +21. +Successors . All obligations of the Company under this Plan with respect to Awards granted hereunder shall be binding on any successor to the Company by merger, consolidation or otherwise. +22. +Effectiveness . This Plan, as approved by the Board on March 21, 2018, shall be effective as of the Effective Date, the date on which it was approved by the stockholders of the Company. This Plan shall continue in effect for a term of ten years after the Effective Date, unless sooner terminated by action of the Board. Notwithstanding the foregoing, the adoption of this Plan is expressly conditioned upon the approval by the holders of a majority of shares of Common Stock present, or represented, and entitled to vote at a meeting of the Company’s stockholders at the Company’s 2018 annual stockholders meeting to be held on May 10, 2018 or any adjournment or postponement thereof. If the stockholders of the Company should fail to so approve this Plan on such date, this Plan shall not be of any force or effect and the Prior Plan shall continue in force and effect. +66 +IN WITNESS WHEREOF, the Company has caused this Plan to be executed by its duly authorized officer. +CALLON PETROLEUM COMPANY +By: +Title: +67 +Appendix B +2Q17 +3Q17 +4Q17 +EBITDA Reconciliation +Net income (loss) +$ +33,390 +$ +17,081 +$ +22,824 +Adjustments: +Write-down of oil and natural gas properties +— +— +— +Net (gain) loss on derivatives, net of settlements +(10,761 +) +12,947 +26,037 +Non-cash stock-based compensation expense +6,850 +1,952 +2,101 +Loss on early redemption of debt +— +— +— +Withdrawn proxy contest expenses +— +— +— +Acquisition expense +2,373 +205 +(112 +) +Income tax expense +322 +237 +248 +Interest expense +589 +444 +461 +Depreciation, depletion and amortization +26,765 +29,132 +37,222 +Accretion expense +208 +131 +154 +EBITDA +$ +59,736 +$ +62,129 +$ +88,935 +Debt/LQA EBITDA Reconciliation +Debt at December 31, 2017 +$ +625,000 +LQA EBITDA +$ +355,740 +Debt/LQA EBITDA +1.8x +Debt/LTQA EBITDA Reconciliation +Debt at December 31, 2017 +$ +625,000 +LTQA EBITDA +$ +281,067 +Debt/LTQA EBITDA +2.2x +68 +69 +70 \ No newline at end of file diff --git a/raw/proxies/0000928022/0000928022-18-000022/proxy_rpt.txt b/raw/proxies/0000928022/0000928022-18-000022/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..8e384d43de14019376687bfac3438afa6e1b9a8b --- /dev/null +++ b/raw/proxies/0000928022/0000928022-18-000022/proxy_rpt.txt @@ -0,0 +1,13 @@ +Certain Relationships and Related Party Transactions +The Board’s Audit Committee charter provides that the Audit Committee shall review and approve all related party transactions. A transaction will be considered a “related party transaction” if the transaction would be required to be disclosed under Item 404 of Regulation S-K. In addition, our Code of Business Conduct and Ethics provides that an officer’s or a director’s conflict of interest with Callon may only be waived if the Nominating and Corporate Governance Committee approves the waiver and the full Board ratifies the waiver. As of December 31, 2017, we are not aware of any related party transactions with our executive officers that may cause a conflict of interest with us. +Recoupment Policy +We have no recoupment policy applicable to annual incentive bonuses or LTI awards other than those required under Sarbanes-Oxley legislation, though the Committee regularly evaluates the need to adopt such a policy. +Compensation Committee Report +The Compensation Committee has reviewed and discussed with management the CD&A required by Item 402(b) of Regulation S-K promulgated under the Securities Exchange Act of 1934, as amended, and based on such review and discussions, the Committee has recommended to the Board that the CD&A be included in this Proxy Statement relating to the 2018 Annual Meeting of Stockholders. +Respectfully submitted by the Compensation Committee of the Board, +Matthew R. Bob, Chairman +L. Richard Flury +Anthony J. Nocchiero +James M. Trimble +John C. Wallace +43 \ No newline at end of file diff --git a/raw/proxies/0000928022/0000928022-19-000055/proxy.txt b/raw/proxies/0000928022/0000928022-19-000055/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..0e6570f88aededc1d523bed95466f486e48f6102 --- /dev/null +++ b/raw/proxies/0000928022/0000928022-19-000055/proxy.txt @@ -0,0 +1,2705 @@ +DEF 14A +1 +callon2019proxy.htm +DEF 14A +Document +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Proxy Statement Pursuant to Section 14(a) of +the Securities Exchange Act of 1934 (Amendment No. ) +Filed by the Registrant ý +Filed by a Party other than the Registrant ¨ +Check the appropriate box: +¨ +Preliminary Proxy Statement +¨ +Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +ý +Definitive Proxy Statement +¨ +Definitive Additional Materials +¨ +Soliciting Material under §240.14a-12 +Callon Petroleum Company +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +¨ +No fee required. +¨ +Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. +(1) +Title of each class of securities to which transaction applies: +(2) +Aggregate number of securities to which transaction applies: +(3) +Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): +(4) +Proposed maximum aggregate value of transaction: +(5) +Total fee paid: +¨ +Fee paid previously with preliminary materials. +¨ +Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. +(1) +Amount Previously Paid: +(2) +Form, Schedule or Registration Statement No.: +(3) +Filing Party: +(4) +Date Filed: +A JOINT LETTER FROM OUR CHAIRMAN AND OUR CHIEF EXECUTIVE OFFICER +March 28, 2019 +DEAR FELLOW SHAREHOLDERS, +On behalf of the Board of Directors of Callon Petroleum Company, we are pleased to invite you to our 2019 Annual Meeting of Shareholders, which will take place on Thursday, May 9, 2019 at 9:00 a.m. Central Daylight Time (“CDT”), in the Wishmaker Ballroom of the Hotel ZaZa, located at 9787 Katy Freeway in Houston, Texas. +Today we are filing the Notice of Annual Meeting of Shareholders and the Proxy Statement which describe the matters to be acted upon at the meeting. This year we are asking our shareholders to elect directors, ratify the appointment of our auditors, and approve, on a non-binding advisory basis, the compensation of our named executive officers. +Callon had a strong year in 2018 that was reflected in industry-leading operating margins and competitive growth in production and reserves. With a high-quality Permian asset base and declining well obligations, we have now transitioned to a full-field, larger pad development model that has Callon well-positioned to deliver continued improvements capital efficiency and cash flow for our shareholders in 2019 and beyond. We remain steadfast in our long-term value focus, and all of our stakeholders benefit from our early infrastructure investments, a focus on responsible operations and values, and a talented workforce that was named a “Top Workplace” by the Houston Chronicle in 2018. +Your vote is important, and we encourage you to review this proxy statement and to vote promptly so that your shares will be represented at the meeting. On behalf of everyone at Callon, we want to thank you, our valued shareholders, for your continued support of the work we do. +Sincerely, +L. Richard Flury +Chairman of the Board +Joseph C. Gatto, Jr. +President, Chief Executive Officer and Director +L. Richard Flury +Chairman of the Board +Joseph C. Gatto, Jr. +President, Chief Executive Officer and Director +We encourage you to read our 2018 Annual Report, which includes our financial statements as of and for the year ended December 31, 2018. Please also refer to the sections captioned “Risk Factors” and “Special Note Regarding Forward-Looking Statements,” for a description of the substantial risks and uncertainties related to the forward-looking statements included herein. +CALLON PETROLEUM 3 +NOTICE OF ANNUAL MEETING +OF SHAREHOLDERS +Dear Shareholders, +You are invited to participate in the 2019 Annual Meeting of Shareholders (the “Annual Meeting”) of Callon Petroleum Company (“Callon,” the “Company,” “us,” “we,” “our” or like terms), a Delaware corporation. +Voting matters +Board +Recommendation +Proposal 1: +To elect two Class I directors to serve on our Board of Directors (the “Board”), each for three years +FOR each of the Class I directors +See page 7 +Proposal 2: +To approve, on a non-binding advisory basis, the compensation of our named executive officers (“NEOs”) +FOR +See page 29 +Proposal 3: +To ratify the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2019 +FOR +See page 53 +We will also transact other business that may properly come before the Annual Meeting. +This Notice of Annual Meeting of Shareholders and the Proxy Statement herein provide further information on the Company’s performance and corporate governance and describe the matters to be presented at the Annual Meeting. The Board set March 15, 2019, as the record date (the “Record Date”) for the Annual Meeting. Holders of record of our common stock at the close of business on the Record Date are entitled to receive this notice of, and vote at, the Annual Meeting. +Beginning on or about March 28, 2019, we mailed an Important Notice Regarding the Availability of Proxy Materials (the “Notice”) to our holders of record. The Notice contained instructions on how to access the Proxy Statement and related materials on the Internet and how to enter your voting instructions. Instructions for requesting a paper copy of the proxy materials are contained in the Notice. +We thank you for your continued support and look forward to seeing you at the Annual Meeting. +By Order of the Board of Directors, +Michol L. Ecklund +Senior Vice President, General Counsel +and Corporate Secretary +Houston, Texas +March 28, 2019 +4 CALLON PETROLEUM +TABLE OF CONTENTS +A JOINT LETTER FROM OUR CHAIRMAN AND OUR CHIEF EXECUTIVE OFFICER +3 +NOTICE OF ANNUAL MEETING OF SHAREHOLDERS +4 +STRATEGY AND PERFORMANCE HIGHLIGHTS +6 +PROPOSAL 1 - ELECTION OF CLASS I DIRECTORS +7 +Board of Directors +7 +Directors Nominated for Re-Election +9 +CORPORATE GOVERNANCE +10 +Directors Continuing in Office +10 +Director Compensation +15 +Director Independence +16 +Board Structure and Responsibilities +17 +Committees of the Board +20 +Corporate Governance Matters +25 +EXECUTIVE OFFICERS +27 +PROPOSAL 2 - APPROVE, ON AN ADVISORY BASIS, THE COMPENSATION OF THE COMPANY'S NEOS +29 +EXECUTIVE COMPENSATION +31 +Compensation Discussion and Analysis +31 +Compensation Committee Report +43 +Executive Compensation Tables +44 +CEO Pay Ratio +52 +PROPOSAL 3 - RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM, GRANT THORNTON LLP, FOR 2019 +53 +Audit Committee Report +55 +OTHER MATTERS +56 +Beneficial Ownership of Securities +56 +Principal Shareholders and Management +56 +Section 16(a) Beneficial Ownership Reporting Compliance +58 +Certain Relationships and Related Party Transactions +58 +Shareholders’ Proposals and Director Nominations for the 2020 Annual Meeting +59 +ANNUAL MEETING INFORMATION +60 +Information Concerning Solicitation and Voting +60 +Information About Voting and the Annual Meeting +60 +Required Vote +62 +Voting Results +63 +Householding Information +63 +Financial Statements and Other Available Documents +63 +Other Business +63 +APPENDIX A +65 +CALLON PETROLEUM 5 +STRATEGY AND PERFORMANCE HIGHLIGHTS +Callon is an independent oil and natural gas company focused on the acquisition and development of unconventional onshore oil and natural gas reserves in the Permian Basin with a strong foundation that spans over 70 years. Callon’s mission is to build trust, create value and drive sustainable growth responsibly for our investors, our employees and the communities in which we operate. We are positioned to deliver value for our shareholders in 2019 and beyond through the following: +PREPARATION +PURPOSE +PRIORITIES +• Significant scale attained via ~85,000 net acres of best in class Permian footprint with a high degree of operational control +• Robust infrastructure network resulting from thoughtful multi-year planning and investment +• Significant liquidity and healthy capital structure support development plans +• Talented workforce with selective recent additions to our technical, operational and analytical teams +• Creating value by delivering sustainable, prudent growth and corporate level returns in a responsible manner +• Harvesting asset value from premier acreage position +• “Life of field” development, balancing capital efficiency and longer term reinvestment +• Thoughtful capital allocation to focus on value maximization +• Executing consistently with our core values, including responsibility, integrity and respect +• Sustainable organic growth funded with internally generated cash flow +• Large pad development, benefiting resource optimization and capital efficiency +• Preservation of leading cash margins through cost management and leveraging of existing infrastructure +• Select asset monetization opportunities to enhance returns on capital +2018 was a year of significant progress in the maturity of Callon’s Permian operations as we continued to grow cash margins, production and reserves while transitioning to scaled development of our high quality asset base. The Company also added approximately 35,000 highly complementary net surface acres to our Delaware Basin operating area that promote efficiencies through increased operational scale, longer laterals and integration of infrastructure. Key operational and financial highlights include: +Increased daily production approximately 44% year-over-year to 32,900 barrels of oil equivalent ("Boe") per day in 2018, with a sustained oil content of 79%. +Completed the acquisition of 34,523 net working interest acres and 1,530 net mineral acres and traded 4,420 net acres to further longer-lateral development. +Increased estimated net proved reserves by nearly 74% year-over-year to 238.5 million barrels of oil equivalent (“MMBoe”), which replaced 690% of 2018 production. +Divested 3,540 net acres as part of ongoing asset rationalization initiatives. +Achieved a “drill bit” finding and development (“F&D”) cost (i) of $7.03 per Boe and provided developed finding and development cost (i) of $13.40 per Boe. +Expanded our dual-basin recycling program that utilized 4.2 million barrels of produced water, significantly reducing freshwater needs and our environmental footprint. +Generated operating margins of $40.16 per Boe, among the highest within the industry. +Improved safety and environmental performance including reductions of over 40% for recordable incident rates and spills to the environment. +Decreased lease operating expense (“LOE”) per Boe by 3% versus 2017, representing the fifth consecutive year of cost reduction. +Increased liquidity by expanding the borrowing base to $1.1 billion with an elected commitment of $850 million. +Realized net income of $300.4 million and generated Adjusted EBITDA (i) of $432.5 million relative to cash drilling and completion capital expenditures of $403.5 million . +Issued $400MM o f Senior Notes at an effective yield of 6.4%, contributing to an improved cost of capital. +(i) +See Appendix A for a reconciliation of Non-GAAP financial measures +Coming off a strong 2018, Callon remains driven by a long-term value focus, and our progress in maturing our operations and production base in recent years now allows us to drive continued improvements in our cash flow profile and corporate-level returns. In 2019 and beyond, the Company is well-positioned to progress efficiencies in our development program through larger pad developments, increased lateral lengths, reduced leasehold obligations and leveraging of established infrastructure for the benefit of our shareholders. +6 CALLON PETROLEUM +Proposal 1 +Election of +Class I +Directors +The Board of Directors Recommends a vote FOR each of the Class I director nominees named in this Proxy Statement +• Our director nominees provide experience and perspectives that enhance the overall strategic and oversight functions of Callon’s Board. +• For more information about the nominees’ experience, skills, and qualifications, please see page 9. +Board of Directors +Process for Selecting Directors +Director Identification and Selection +Criteria. The Nominating and Corporate Governance Committee has established guidelines for considering nominations to our Board. The Committee evaluates potential nominees based on the contribution such nominee’s background and skills could have upon achieving the goal of a well-rounded, diverse Board that functions collegially as a unit. While not an exhaustive list, key criteria include: +• +Relevant oil and gas exploration and production industry knowledge and experience; +• +Complimentary mix of backgrounds and experience in areas including business, finance, accounting, technology, and strategy; +• +Personal qualities of leadership, character, judgment and personal and professional integrity and high ethical standards; +• +The candidate’s ability to exercise independent and informed business judgment; +• +Whether the candidate is free of conflicts and has the time required for preparation, participation, and attendance at meetings; +• +Diversity, including differences in viewpoints, background, education, gender, race or ethnicity, age, and other individual qualifications and attributes; +• +The ability to work with other members of the Board, the CEO and senior officers of the Company in a constructive and collaborative fashion to achieve the Company’s goals and implement its strategy; and +• +In the case of an incumbent director, such director’s past performance on the Board. +The Nominating and Corporate Governance Committee and the Board may also consider other qualifications and attributes that they believe are appropriate in evaluating the ability of an individual to serve as a member of the Board. The Nominating and Corporate Governance Committee’s goal is to assemble a Board that brings to us a variety of perspectives and skills derived from high quality business and professional experience to perform its oversight role satisfactorily for our shareholders. In making its determinations, the Committee evaluates each individual in the context of the Board as a whole, with the objective of assembling a group that can best represent shareholder interests through the active, objective, and constructive participation in meetings and the strategic decision-making processes. +Diversity. Our Corporate Governance Guidelines set forth our policy with respect to Board diversity. We are committed to building a diverse Board comprised of individuals from different backgrounds, including differences in viewpoints, education, gender, race or ethnicity, age, and other individual qualifications and attributes. To accomplish this, the Nominating and Corporate Governance Committee will continue to require that search firms engaged by the Company seek to present a robust selection of women and ethnically diverse candidates in all prospective director candidate pools. +Nominating Process. In making its nominations, the Nominating and Corporate Governance Committee identifies nominees by first evaluating the current members of the Board willing to continue their service and any potential need to expand the Board to include additional expertise. Current members with a record of quality contribution to the Board whose experience contributes to a complementary mix of backgrounds that enhance the Board are renominated. When vacancies become available, the Committee may seek input from industry experts or engage third-party search firms to help source particular areas of expertise or backgrounds. +CALLON PETROLEUM 7 +PROPOSAL 1 +Over time, the Board refreshes its membership through a combination of adding or replacing directors to achieve the appropriate balance between maintaining longer-term directors with deep institutional knowledge of the Company and adding directors who bring a diversity of perspectives and experience. As a reflection of this philosophy, if all of the nominees are elected to the Board, following the Annual Meeting: +5/8 +directors will have tenures of five or fewer years. +7/8 +directors will be independent. +Majority Vote Standard +Our Corporate Governance Guidelines provide for a majority voting policy in uncontested director elections. The Company believes that the majority vote standard ensures accountability and the opportunity for a positive mandate from the Company’s shareholders. At any shareholder meeting for the election of directors at which a quorum is present, any nominee for director who receives a greater number of votes “withheld” from his or her election than votes “for” such election (“Majority Withheld Vote”) shall tender his or her resignation for consideration by the Nominating and Corporate Governance Committee following certification of the shareholder vote, unless the number of nominees exceeds the number of directors to be elected as of the Record Date for such meeting, in which event the directors shall be elected by a plurality of the votes cast. Such resignation will only be effective upon Board acceptance of such resignation after receiving the recommendation of the Nominating and Corporate Governance Committee. +If a director nominee receives a Majority Withheld Vote, then promptly following the certification of the election results, the Nominating and Corporate Governance Committee will consider any factors it deems relevant to the best interests of the Company and our shareholders in determining whether to accept the director’s resignation and recommend to the Board that action to be taken with respect to the tendered resignation. Within 120 days following certification of the shareholder vote, the Board shall consider the recommendation and make a determination as to whether to accept or reject such director’s resignation and shall notify the director concerned of its decision. We will also promptly publicly disclose the Board’s decision and process in a periodic or current report filed with or furnished to the SEC. +If you hold your shares through a broker and you do not instruct the broker how to vote, your broker will not have the authority to vote your shares. Abstentions and broker non-votes will each be counted as present for purposes of determining the presence of a quorum but will have no effect upon the outcome of the vote. All shares of common stock represented by proxies will be voted “FOR” the election of the director nominees, except where authority to vote in the election of directors has been withheld. Should the nominees become unable or unwilling to serve as a director at the time of the 2019 Annual Meeting, the person or persons exercising the proxies will vote for the election of substitute nominees designated by the Board, or the Board may choose to reduce the number of members of the Board to be elected at the 2019 Annual Meeting in order to eliminate the vacancy. Your proxy cannot be otherwise voted for a person who is not named in this Proxy as a candidate for director or for a greater number of persons than the number of director nominees named. The Board has no reason to believe that the nominees will be unable or unwilling to serve if elected. +The Board recommends a vote FOR each of the two Class I director nominees . +8 CALLON PETROLEUM +PROPOSAL 1 +Directors Nominated For Re-Election +The Board currently consists of eight directors. Consistent with our Certificate of Incorporation, the current Board is divided into three classes designated as Class I, Class II, and Class III, each with staggered, three-year terms. Based on the recommendations from the Nominating and Corporate Governance Committee, our Board has nominated two continuing Class I Directors, Messrs. Michael L. Finch and Larry D. McVay, to stand for re-election or, in each case, until the election and qualification of their respective successors or until their earlier death, retirement, resignation or removal. +The following biographies reflect the particular experience, qualifications, attributes, and skills that led the Board to conclude that each nominee should stand for re-election to serve on the Board: +Class I Directors +Michael L. Finch +Former Chief Financial Officer (Retired) of Stone Energy Corporation +Michael Finch has served as a member of the Board since 2015. He spent nearly 20 years affiliated with Stone Energy Corporation, a publicly-traded oil and gas exploration company, from which he retired as Chief Financial Officer and a member of the Board of Directors in 1999. Prior to his service with Stone Energy, he was employed by Arthur Andersen & Co. +Mr. Finch was an independent director of Petroquest Energy, Inc. a publicly-traded oil and gas company, from 2003–2016, where he served as chairman of the Audit Committee and as a member of the Compensation Committee and the Nominating and Corporate Governance Committee. Mr. Finch currently serves on the advisory board of C.H. Fenstermaker & Associates, a multi-disciplinary consulting firm that specializes in surveying and mapping, engineering and environmental consulting. +Mr. Finch holds a B.S. in Accounting from the University of South Alabama and was licensed as a Certified Public Accountant (currently inactive). +SKILLS AND QUALIFICATIONS: +Mr. Finch’s extensive financial, accounting, and operating experience within the oil and gas industry are extremely valuable to the Board and qualify him as a director. In particular, Mr. Finch’s accounting background and status as a “financial expert” provide the Board valuable perspective on issues facing audit committees. +INDEPENDENT +Age 63 +Director Since 2015 +Callon Committees: +Audit, Compensation, Strategic Planning & Reserves +Larry D. McVay +Managing Director of Edgewater Energy, LLC +Larry McVay has served as a member of the Board since 2007. Mr. McVay has been a Managing Director of Edgewater Energy, LLC, a privately held oil and gas investment company, since 2007. From 2003–2006, he served as Chief Operating Officer of TNK-BP Holding, one of the largest oil producing companies in Russia. From 2000–2003, he served as Technology Vice President and Vice President of Health, Safety and Environment for BP plc. Prior to joining BP, Mr. McVay held numerous positions at Amoco, including engineering management and senior operating leadership positions. +Mr. McVay is a director of Linde plc, a publicly-traded industrial gas and engineering company. Previously, Mr. McVay was a director of Praxair, Inc., an industrial gases company in North and South America, until Praxair, Inc. and Linde AG combined to create Linde plc in 2018. Additionally, Mr. McVay was previously a director of Chicago Bridge and Iron Company, N.V., a publicly-traded engineering, procurement and construction company, until it merged into McDermott International in 2018. +Mr. McVay earned a B.S. in Mechanical Engineering from Texas Tech University, where he was recognized as a Distinguished Engineer in 1995. +SKILLS AND QUALIFICATIONS: +Mr. McVay has been directly involved in nearly all aspects of the oil and gas industry, including drilling, production, finance, environmental, risk, and safety. We believe that this experience and his knowledge of the exploration and production industry, particularly in the Permian Basin, as well as his senior executive experience, service on other boards, and independence, provide valuable insight in the development of our long-term strategies and qualify him for service on our Board. +INDEPENDENT +Age 71 +Director Since 2007 +Callon Committees: +Strategic Planning & Reserves (Chairman), Audit, Nominating & Corporate Governance +Other Current Directorships: +Linde plc +CALLON PETROLEUM 9 +CORPORATE GOVERNANCE +Directors Continuing in Office +Biographical information for our directors continuing in office is set forth below. These individuals are not standing for re-election at this time: +Class II Directors +Matthew R. Bob +President of Eagle Oil and Gas; Managing Member of MB Exploration +Matthew Bob has served as a member of the Board since 2014. Mr. Bob currently serves as President of Eagle Oil and Gas and has been the founder and managing member of MB Exploration and affiliated companies since 1994. Previously, Mr. Bob served as President of Hall Phoenix Energy LLC, a privately held oil and gas exploration company, from 2009–2011. Prior to forming MB Exploration, Mr. Bob was Chief Geophysicist at Pitts Oil Company. He began his career at Union Oil Company of California where he held various geological positions. +Mr. Bob holds a B.A. in Geology from St. Louis University, an M.S. in Geology from Memphis University, and is a graduate of Harvard University’s Executive Management Program. He is a member of the American Association of Petroleum Geologists, the Society of Exploration Geophysicists and the Dallas Petroleum Club, and is a registered Geoscientist in the States of Texas, Mississippi and Louisiana. +SKILLS AND QUALIFICATIONS: +Mr. Bob’s extensive knowledge of the exploration and production industry and technical expertise are assets to the Board and qualify him as a director. His experience as a senior executive further strengthens the strategic and oversight functions of the Board. +INDEPENDENT +Age 62 +Director Since 2014 +Callon Committees: +Compensation (Chairman), Nominating & Corporate Governance, Strategic Planning & Reserves +Anthony J. Nocchiero +Former SVP and Chief Financial Officer (Retired) of CF Industries, Inc. +Anthony Nocchiero has served as a member of the Board since 2011. Mr. Nocchiero retired as Senior Vice President and Chief Financial Officer for CF Industries, Inc. in 2010, a position he had held since 2007. From 2005–2007, he was the Vice President and Chief Financial Officer for Merisant Worldwide, Inc. Prior to that, Mr. Nocchiero was self-employed as an advisor and private consultant from 2002–2005. From 1999–2001, Mr. Nocchiero served as Vice President and CFO of BP Chemicals, the global petrochemical business of BP plc. Prior to that, he spent 24 years with Amoco Corporation in various financial and management positions, including service as Amoco’s Vice President and Controller from 1998–1999. +Mr. Nocchiero has previous experience serving as a board member of various public and private companies, including Terra Nitrogen LP, Keytrade AG, Vysis Corporation and the Chicago Chamber of Commerce. +Mr. Nocchiero holds a B.S. degree in Chemical Engineering from Washington University in St. Louis and an M.B.A. degree from the Kellogg Graduate School of Management at Northwestern University. +SKILLS AND QUALIFICATIONS: +Mr. Nocchiero’s broad financial, accounting and operating experience within the energy industry are valuable to the Board and make him a meaningful contributor as a director. Additionally, Mr. Nocchiero’s status as a “financial expert” and knowledge of public company reporting requirements add meaningful insights to our Board and Audit Committee. +INDEPENDENT +Age 68 +Director Since 2011 +Callon Committees: +Audit (Chairman), Compensation, Nominating & Corporate Governance, Strategic Planning & Reserves +10 CALLON PETROLEUM +CORPORATE GOVERNANCE +James M. Trimble +Former Chief Executive Officer and President (Retired) of Stone Energy Corporation +James Trimble has served as a member of the Board since 2014. Most recently, Mr. Trimble served as the interim Chief Executive Officer and President of Stone Energy Corporation from 2017–2018. Prior to that, Mr. Trimble served as CEO and President of PDC Energy, Inc. from 2011 until his retirement in 2015. Mr. Trimble was Managing Director of Grand Gulf Energy Limited, a public company traded on the Australian Securities Exchange, and President and CEO of Grand Gulf’s U.S. subsidiary Grand Gulf Energy Company LLC, an exploration and development company focused primarily on drilling in mature basins in Texas, Louisiana and Oklahoma, from 2005–2010. Earlier in his career, Mr. Trimble was CEO of TexCal (formerly Tri-Union Development) and CEO of Elysium Energy, a privately held oil and gas exploration company. Prior to that, he was Senior Vice President of Exploration and Production for Cabot Oil and Gas, a publicly-traded independent energy company. +Mr. Trimble currently serves as a director of Talos Energy, a publicly-traded oil and gas exploration company, and Chairman of the Board of Crestone Peak Resources LLC, a privately held oil and gas exploration company. Previously, Mr. Trimble was a director of Stone Energy Corporation from 2017–2018, PDC Energy from 2009–2016, C&J Energy Services from 2016–2017, Seisgen Exploration from 2008–2015; Grand Gulf Energy from 2009–2012, and Blue Dolphin Energy from 2002–2006. +Mr. Trimble was an officer of PDC Energy in September 2013, when each of the twelve partnerships for which the company was the managing general partner filed for bankruptcy in the federal bankruptcy court, Northern District of Texas, Dallas Division and was on the board of C&J Energy Services when it filed for bankruptcy in the court of the Southern District of Texas, Houston Division in July 2016. +Mr. Trimble graduated from Mississippi State University where he majored in petroleum engineering for undergraduate (Bachelor of Science) and graduate studies. He is a Registered Professional Engineer in the State of Texas. +SKILLS AND QUALIFICATIONS: +Mr. Trimble’s deep knowledge of the exploration and production industry and his leadership experience at previous companies strengthen the strategic and oversight functions of our Board. His experience on the boards of several other public companies provide valuable perspective on best practices relating to corporate governance, management and strategic transactions. +INDEPENDENT +Age 70 +Director Since 2014 +Callon Committees: +Nominating & Corporate Governance (Chair), Strategic Planning & Reserves, Compensation +Other Current Directorships: +Talos Energy +CALLON PETROLEUM 11 +CORPORATE GOVERNANCE +Class III Directors +Major General (Ret.) Barbara J. Faulkenberry +Major General (Ret.) of the U.S. Air Force +Barbara Faulkenberry has served as a member of the Board since 2018. Ms. Faulkenberry retired from the U.S. Air Force in 2014 as a Major General (2-stars) after a 32-year career, finishing in the top 150 leaders of a 320,000-person global organization. Her last assignment was as Vice Commander (COO) and interim Commander (CEO) of a 37,000-person organization conducting all global Department of Defense air cargo, passenger, and medical patient movements with 1,100 military aircraft plus contracted commercial aircraft. +Ms. Faulkenberry is currently an independent director for USA Truck, a publicly-traded provider of logistics and trucking services across North America, where she serves as chair of the Technology Committee and as a member of the Nominating and Corporate Governance Committee. +Ms. Faulkenberry received a B.S. degree from the Air Force Academy in 1982, an M.B.A. from Georgia College in 1986, and a Master of National Security from the National Defense University in 1999. She has also attended strategic leadership courses at Harvard, Cambridge, and Syracuse Universities. +SKILLS AND QUALIFICATIONS: +Ms. Faulkenberry brings to the Company senior leadership experience in the areas of supply chain management, logistics, strategic planning, risk management, technology, cyber security, and leadership development. Additionally, she is a NACD Board Leadership Fellow and earned the Carnegie Mellon/NACD CERT Certificate in Cybersecurity Oversight, both of which contribute to best practices in corporate governance and cyber security and provide great value to the Board. +INDEPENDENT +Age 59 +Director Since 2018 +Callon Committees: +Audit, Nominating & Corporate Governance, Strategic Planning & Reserves +Other Current Directorships: +USA Truck, Inc. +L. Richard Flury +Chairman of the Board +Former Chief Executive (Retired) for Gas, Power & Renewables of BP plc +Richard Flury has served as a member of the Board since 2004 and has served as Chairman since 2017. He spent over 30 years with Amoco Corporation, and later, BP plc, from which he retired as Chief Executive for Gas and Power and Renewables in 2001. Prior to Amoco’s merger with BP in 1998, he served in various executive positions and was Chief Executive for Worldwide Exploration and Production and Executive Vice President of Amoco Corporation at the time of the merger. +Mr. Flury is a director of McDermott International, a publicly-traded engineering, procurement and construction company. Mr. Flury was a director and the non-executive Chairman of Chicago Bridge and Iron Company, N.V., a publicly-traded engineering, procurement and construction company, until it merged into McDermott International in 2018. Previously, Mr. Flury was a member of the Board of QEP Resources, Inc., a publicly-traded oil and gas exploration company, from 2010–2015. +He is a graduate of the University of Victoria (Canada) where he studied geology. +SKILLS AND QUALIFICATIONS: +Mr. Flury’s deep knowledge of the energy industry and years of executive and management experience provide him with a valuable insights into the strategic issues affecting companies in the oil and gas industry that are helpful to our Company and Board. His service on the boards of other publicly traded companies has provided him exposure to different industries and approaches to governance that we believe further enhances our Board. +INDEPENDENT +Age 71 +Director Since 2004 +Callon Committees: +Audit, Compensation, Strategic Planning & Reserves +Other Current Directorships: +McDermott International +12 CALLON PETROLEUM +CORPORATE GOVERNANCE +Joseph C. Gatto, Jr. +President, Chief Executive Officer and Director +Joseph C. Gatto, Jr. is President, Chief Executive Officer and Director of Callon. Mr. Gatto was elected to the Board in 2018. He has served as the Company's CEO since 2017 and as President since 2016. Prior to his appointment as CEO, he served as Chief Financial Officer and Treasurer of the Company from 2014–2017, and held various other senior leadership positions within the Company since joining Callon in 2012. +Prior to joining the Company, Mr. Gatto served as Head of Structuring and Execution with Merrill Lynch Commodities from 2010–2011, as the founder of MarchWire Capital, LLC, a financial advisory and strategic consulting firm in 2009, and as a Managing Director in the energy investment banking groups of Merrill Lynch & Co. and Barclays Capital from 1997–2009. +Mr. Gatto graduated from Cornell University with a B.S. degree and The Wharton School of the University of Pennsylvania with an M.B.A. +SKILLS AND QUALIFICATIONS: +Mr. Gatto’s extensive experience in investment banking and the oil and gas industry make him a valuable addition to the Board. Additionally, Mr. Gatto's knowledge of the Company and strong background in capital markets, transactions, strategic planning, and investor relations provide the Board with essential insight and guidance. +Age 48 +Director Since 2018 +CALLON PETROLEUM 13 +CORPORATE GOVERNANCE +Current Composition of the Board +The following table provides information with respect to the skills and experience of all current directors and the nominees for Class I terms who have been nominated to stand for election at the 2019 Annual Meeting. +Name +Matthew R. Bob +Barbara J. Faulkenberry +Michael L. Finch +L. Richard Flury +(Chairman) +Joseph C. Gatto, Jr. +Larry D. McVay +Anthony J. Nocchiero +James M. Trimble +Age (May 9, 2019) +62 +59 +63 +71 +48 +71 +68 +70 +Tenure (as of May 9, 2019) +5 +1 +4 +15 +1 +12 +8 +5 +Gender Diversity +● +CEO/President Experience +● +● +● +● +Senior Executive Leadership +● +● +● +● +● +● +● +● +Outside Public Boards (current) +● +● +● +● +Outside Public Boards (prior) +● +● +● +● +● +● +E&P Industry Experience +● +● +● +● +● +● +● +Energy (Other than E&P) Industry Experience +● +● +● +● +● +Financial Expert +● +● +Financial Literacy +● +● +● +● +● +● +● +● +Financial Oversight/Accounting +● +● +● +● +● +● +Petroleum and Other Engineering +● +● +● +Geologist or Geophysicist +● +● +Government/Public Policy/Regulatory +● +● +HES Experience/Environmental +● +● +Strategic Advising +● +● +● +● +● +Investment Banking +● +Supply Chain +● +● +Technology/IT/Cybersecurity +● +● +● +● +14 CALLON PETROLEUM +CORPORATE GOVERNANCE +Director Compensation +The compensation of our non-employee directors is reviewed by the Compensation Committee and is approved by the Board. We use a combination of cash and stock-based incentive compensation to attract and retain qualified candidates to serve on our Board. In determining director compensation, we consider the responsibilities of our directors, the significant amount of time the directors spend fulfilling their duties, and the competitive market for skilled directors. +Annually the Compensation Committee directly engages Meridian to conduct an analysis of director compensation and recommend any adjustments to the total annual compensation of the non-employee directors. Specifically, Meridian evaluates competitive market data, utilizing the same Peer Group used for executive compensation market data (see page 36). The Compensation Committee generally targets total compensation near the median of this Peer Group. The Company's director compensation program generally consists of cash retainers and an annual grant of Restricted Stock Units ("RSUs") awarded under the Company’s 2018 Omnibus Incentive Plan (the “2018 Plan”). The RSU grants are awarded to match competitive practices and encourage a long-term alignment with shareholders. +In March 2018, with input from compensation advisor Meridian, the Compensation Committee reviewed the competitiveness of the director compensation package. Relative to the Initial 2018 Peer Group (page 36), the director compensation package fell below the 25th percentile. Accordingly, upon recommendation from the Compensation Committee, in May 2018 the Board approved a market-based increase in the annual cash retainer to $80,000 and the annual restricted stock unit grant to $165,000. With these increases, the average total compensation for Callon directors is at approximately the median of the Peer Group. +For 2018, the Company's non-employee director compensation consisted of the following: +Board member cash retainer +$80,000 +Restricted Stock Unit (RSU) Grant Value +$165,000 +Chairmen Fees +Non-Executive Chair +$120,000 +Audit Committee Chair +$20,000 +Compensation Committee Chair +$15,000 +Nominating and Corporative Governance Committee Chair +$10,000 +Strategic Planning and Reserves Committee Chair +$10,000 +Each non-employee director is reimbursed for reasonable out-of-pocket costs incurred to attend Board and Committee meetings. If a member of our Board is an officer or employee of the Company, they do not receive compensation for their service as a director. +The RSUs granted to directors in 2018 will vest on the first anniversary date following the grant, or on the date of the Company’s 2019 Annual Meeting of Shareholders, whichever occurs first. +Directors have the opportunity to make an annual election to defer some or all of their cash retainer or annual stock award pursuant to the terms of a Deferred Compensation Plan for non-employee directors until separation from service as a director. All deferrals under the plan are credited as phantom stock units of Callon stock. Callon's directors are subject to stock ownership guidelines of five times the annual cash retainer of $80,000. For more information on the stock ownership guidelines see page 42. +CALLON PETROLEUM 15 +CORPORATE GOVERNANCE +The table below indicates the total compensation earned during 2018 for each non-employee director: +NON-EMPLOYEE DIRECTOR COMPENSATION FOR 2018 +Director +Fees Earned or +Paid in Cash (a) +Stock +Awards (b) +All Other +Compensation +Total +Matthew R. Bob +$95,000 +(c) +$165,000 +$0 +$260,000 +Barbara J. Faulkenberry +$80,000 +(d) +$165,000 +$0 +$245,000 +Michael L. Finch +$80,000 +(d) +$165,000 +$0 +$245,000 +L. Richard Flury +$200,000 +(e) +$165,000 +$0 +$365,000 +Larry D. McVay +$90,000 +(f) +$165,000 +$0 +$255,000 +Anthony J. Nocchiero +$100,000 +(g) +$165,000 +$0 +$265,000 +James M. Trimble +$90,000 +(h) +$165,000 +$0 +$255,000 +(a) +Does not include reimbursement of expenses associated with attending Board and Committee meetings. +(b) +Amounts calculated utilizing the provisions of FASB ASC Topic 718. See footnotes 9 and 10 of the Notes to the Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2018 regarding assumptions underlying valuation of equity awards. Represents the amount recognized for financial statement reporting purposes for the fiscal year ended December 31, 2018, in accordance with GAAP regarding stock compensation, for the annual restricted stock unit award. These amounts are also equal to the grant date fair value of the awards. The aggregate number of stock unit awards outstanding as of December 31, 2018 for each director is as follows: Messrs. Flury, Bob, Finch, McVay, Nocchiero and Trimble -19,468; and Ms. Faulkenberry - 11,652. +(c) +Represents annual retainer of $80,000 and an additional $15,000 for acting as Chairman of the Compensation Committee. +(d) +Represents annual retainer of $80,000. +(e) +Represents annual retainer of $80,000 and an additional $120,000 for acting as the non-executive Chairman of the Board. Mr. Flury elected to have his annual retainer and his non-executive Chairman of the Board fees deferred pursuant to the terms of a Deferred Compensation Plan for non-employee directors, under which participants may elect to convert cash fees earned to phantom shares and defer the receipt of the proceeds in cash until separation from service as a director. +(f) +Represents annual retainer of $80,000 and an additional $10,000 for acting as Chairman of the Strategic Planning and Reserves Committee. +(g) +Represents annual retainer of $80,000 and an additional $20,000 for acting as Chairman of the Audit Committee. +(h) +Represents annual retainer of $80,000 and an additional $10,000 for acting as Chairman of the Nominating and Corporate Governance Committee. +Director Independence +To minimize potential conflicts, it is a policy of the Board that a majority of the Board be independent. In accordance with the standards for companies listed on the NYSE and the rules and regulations promulgated by the SEC, as well as our Corporate Governance Guidelines, the Board considers a director to be independent if it has affirmatively determined that the director has no material relationship with the Company that could compromise his or her ability to exercise independent judgment in carrying out his or her responsibilities. The Board revisits the independence of each director on an annual basis and makes independence determinations when a newly appointed director joins the Board between annual meetings. The Board reviewed the independence of its directors and nominees in accordance with the standards described above and affirmatively determined that each of the directors (other than Mr. Gatto) and nominees is independent. +16 CALLON PETROLEUM +CORPORATE GOVERNANCE +Board Structure and Responsibilities +Governance Highlights +We are committed to effective and sustainable corporate governance, which we believe strengthens Board and management accountability, promotes the long-term interests of our shareholders, and helps build public trust in our Company. We adhere to our core values and governance principles to ensure that we operate our business responsibly, ethically, and in a manner aligned with the interests of our shareholders. Highlights of our commitment to strong corporate governance include the following: +• +Seven of our eight directors are independent. Joseph C. Gatto, Jr., our President and CEO, is the only non‑independent member of the Board. +• +All Board committees are comprised entirely of independent directors. +• +An independent, non-executive director serves as the Company’s Chairman of the Board. +• +The Company encourages a paced refreshment of the Board. Five of the eight directors have joined within the last five years. +• +Our Board includes a balance of experience, tenure, and qualifications in areas important to our business. +• +Election of directors by majority of votes cast in an uncontested election +• +We have an overboarding policy in place for directors. +• +Our Board conducts regular executive sessions with our independent directors. +• +We regularly refresh our governance documents. +• +Our Board and its committees conduct annual self-evaluations. +• +We have adopted stringent insider trading, anti-hedging, and anti-pledging policies. +• +We engage in active shareholder engagement practices. +• +Our Board oversees environmental, social and governance practices. +• +Our Board oversees succession planning for the CEO and executive officer positions. +• +We engage an independent executive compensation consultant that reports directly to the Compensation Committee. +• +The Company adopted Annual Say-On-Pay voting. +• +The Compensation Committee has implemented significant director and executive officer stock ownership guidelines. +• +We do not have employment agreements with any executive officers. +• +We have double-trigger change in control provisions in our severance agreements and equity awards. +• +We do not have a Poison Pill (Shareholder Rights Plan). +General Information +Our Board is responsible for determining the ultimate direction of our business strategy, overseeing our governance policies and culture and promoting the long-term interests of the Company. The Board possesses and exercises oversight authority over our business but, subject to our governing documents and applicable law, delegates day-to-day management of the Company to our CEO and senior management. The Board generally fulfills its responsibilities through regular meetings to review significant developments affecting the Company and to act on matters requiring Board approval. Between regularly scheduled meetings, the Board may also hold special meetings, execute written consents, and participate in telephonic conference calls when an important matter requires Board action. During 2018, our Board met formally six times and transacted business on twelve occasions during the year by unanimous written consent. All of our directors attended at least 75% of Board and committee meetings either in person or by telephone. In addition, to promote open discussion, the non-employee directors meet in executive session without management regularly. L. Richard Flury, the Chairman of the Board, was selected to preside over all executive sessions during 2018. It is the policy of the Board that, to the extent possible, all directors attend the Company’s Annual Meeting of shareholders. +The Board, in consultation with the Nominating and Governance Committee, has determined that a classified board structure continues to be appropriate for us, particularly in an industry where a long-term strategic planning outlook is critical for the successful development of oil and natural gas resources through commodity price cycles. Our future success depends in significant part on the in-depth knowledge of our business and operations by our directors. We believe that a classified board promotes stability, continuity and experience among our directors, which is essential to developing and implementing long-term strategies, while resisting the pressure to focus on short-term results at the expense of enhancing long-term value and success. +CALLON PETROLEUM 17 +CORPORATE GOVERNANCE +Board Leadership Structure +One of the Board’s key responsibilities is determining the appropriate leadership structure for the Board, which helps ensure its effective and independent oversight of management on behalf of our shareholders. Our Board believes that there is no one generally accepted approach to providing board leadership and given the dynamic and competitive environment in which we operate, the optimal board leadership structure may vary as circumstances warrant. Accordingly, the Board has no policy mandating the separation or combination of the roles of Chairman of the Board and CEO, but periodically discusses and considers the structure as circumstances change. As such, the Board believes that it is in the best position to evaluate the needs of the Company and to determine how best to organize the Company’s leadership structure to meet those needs. +Currently, the Board has separated the roles of CEO and Chairman and appointed independent director Mr. Flury as Chairman of the Board and Mr. Gatto as CEO. +The Board is currently comprised of eight directors, of whom seven out of eight are independent. Mr. Gatto, the Company’s President and CEO, serves as an executive member of the Board. Independent directors and management generally have different perspectives and roles in strategy development. Our independent directors have backgrounds in the oil and gas industry or other relevant experiences which complement the CEO’s comprehensive, company-specific perspective. As the officer having primary responsibility for managing our daily operations and identifying strategic priorities, the CEO is best positioned to lead the Board through reviews of key business and strategy decisions. This dynamic effectively promotes the opportunity for a successful blend of our independent directors’ perspectives and oversight responsibilities and facilitates information flow and communication between senior management and the Board, which are both essential to effective governance. +The role of our Chairman is to oversee and ensure Board effectiveness. As Chairman, Mr. Flury has the following responsibilities: +• +Establishes Board meeting agendas and ensures critical issues are included. +• +Chairs meetings of the Board and the Annual Meeting of Shareholders. +• +Ensures that the flow of information provided to the Board is timely, complete, and accurate. +• +Communicates with all directors on key issues and concerns outside of Board meetings. +• +Assists the Board and executive officers in assuring compliance with and implementation of our governance principles. +18 CALLON PETROLEUM +CORPORATE GOVERNANCE +Areas of Board Oversight +Board Risk Oversight +As an independent oil and gas company, we face a number of risks. Assessing and managing material risk is the responsibility of our management team, while our Board, as a whole and through its committees, generally oversees risk management and our long-term strategic direction, ensuring that risks undertaken by the Company are consistent with the Board’s risk tolerance. Our Board leadership structure and our practice of a high degree of interaction between our directors and members of senior management facilitate this oversight function. Our executive officers regularly attend the Board meetings and are available to address any questions or concerns raised by the Board on risk management-related and any other matters. Other members of our management team periodically attend the Board meetings or are otherwise available to confer with the Board to the extent their expertise is required to address risk management matters. The information flow and communication throughout the year between our Board and senior management regarding long-term strategic planning and short-term operational reporting includes matters of material risk inherent in our business of developing oil and natural gas assets. The Board realizes, however, that it is not possible or prudent to eliminate all risk and that appropriate risk-taking is essential in order to achieve our near and longer-term objectives. +While the Board is ultimately responsible for risk oversight, the Board exercises additional risk oversight responsibilities through its committees, which are comprised solely of independent directors. Each such committee has primary risk oversight responsibility with respect to matters within the scope of its duties as contemplated by its charter and as described below. +Standing Committees of the Board of Directors +The Board has four stading committees, each of which is comprised entirely of independent directors. Each committee, discussed below in greater detail, has a written charter that establishes the responsibilities and scope of the committee and its Chairman. Each committee charter was reviewed in November 2018 and revised as deemed necessary by the Board. +BOARD OF DIRECTORS +The Audit Committee , among other duties, is charged with overseeing material risk exposures in the areas of financial reporting, internal controls, compliance, hedging and cybersecurity. This Committee also oversees responses to any alleged violations of our Code of Business Conduct. +The Nominating & Corporate Governance Committee focuses on issues relating to corporate governance and Board and Board committee composition. This Committee also assists the Board in fulfilling its oversight responsibilities with respect to succession planning for our directors and executive officers. +The Compensation Committee oversees the Company's compensation programs and the reviews the potential risks that may result from our compensation policies in order that they do not encourage unnecessary or excessive risk taking by management. +The Strategic Planning & Reserves Committee oversees the development and implementation of our strategic plan and the integrity of our reserve estimation reporting process and related disclosures. +CALLON PETROLEUM 19 +CORPORATE GOVERNANCE +Committees of the Board +Callon Committees +Name, Age, Independence +Audit +Compensation +Nominating +& Corporate +Governance +Strategic +Planning & +Reserves +Class I Directors (term expires in 2019) +Michael L. Finch , 63 +Independent +○ +○ +○ +Larry D. McVay , 71 +Independent +○ +○ +● +Class II Directors (term expires in 2020) +Matthew R. Bob , 62 +Independent +● +○ +○ +Anthony J. Nocchiero , 68 +Independent +● +○ +○ +○ +James M. Trimble , 70 +Independent +○ +● +○ +Class III Directors (term expires in 2021) +Barbara J. Faulkenberry , 59 +Independent +○ +○ +○ +L. Richard Flury , 71 +Independent Chairman of the Board +○ +○ +○ +Joseph C. Gatto, Jr. , 48 +President and Chief Executive Officer +● Chairman ○ Member +20 CALLON PETROLEUM +CORPORATE GOVERNANCE +Audit Committee +Anthony J. Nocchiero (Chairman and Financial Expert) +Barbara J. Faulkenberry +Michael L. Finch (Financial Expert) +L. Richard Flury +Larry D. McVay +PURPOSE +The principal function of the Audit Committee is to assist the Board in overseeing the areas of financial reporting, accounting integrity, compliance, and risk management. +MEETINGS IN 2018 +Five meetings; all members attended at least 75% of Committee meetings. +RESPONSIBILITIES +Pursuant to its charter, our Audit Committee functions in an oversight role and has the following purposes: +• +Overseeing the quality, integrity and reliability of the financial statements and other financial information we provide to any governmental body or the public; +• +Overseeing our compliance with legal and regulatory requirements; +• +Selecting and hiring (subject to ratification by our shareholders) the independent public accounting firm; +• +Overseeing the qualifications, independence and performance of the independent auditor; +• +Overseeing the effectiveness and performance of our internal audit function; +• +Overseeing our internal controls regarding finance, accounting, legal compliance and ethics; +• +Establishing and overseeing procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls or audit matters, including the confidential, anonymous submission of concerns regarding such matters; +• +Assessing matters related to risk, risk controls and compliance, including the review and approval of hedging practices and policies; +• +Overseeing matters related to cybersecurity and the security of information technology systems, including management’s plans, programs and policies designed to mitigate cybersecurity risks and third party reports on the information technology control environment; +• +Producing the Audit Committee Report for inclusion in our annual proxy statement; and +• +Performing such other functions our Board may assign to the Audit Committee from time to time. +The Audit Committee oversees our accounting and auditing procedures and financial reporting practices, and is responsible for the engagement of and oversight of all audit work conducted by our independent registered public accounting firm. The Audit Committee meets periodically, at least quarterly, with our executive and financial management teams, internal auditor and our independent registered public accounting firm to review our financial information and systems of internal controls. The independent registered public accounting firm reports directly to the Audit Committee and, if requested, meets with the Audit Committee in executive session without management representatives present. The Audit Committee has the authority to investigate any matters brought to its attention and to retain outside legal, accounting or other consultants if deemed necessary. +The Audit Committee is required to pre-approve all audit, audit-related and non-audit services provided by the independent registered public accounting firm exceeding $25,000. The Audit Committee approved all of the fees described in Proposal 3. +Relationship with Independent Registered Public Accounting Firm +Management is responsible for establishing and maintaining internal controls over financial reporting and for assessing the effectiveness of those controls. The independent registered public accounting firm is responsible for performing independent audits of our consolidated financial statements and internal controls over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (“PCAOB”) (United States) and issuing reports thereon. The Audit Committee’s responsibility is to monitor and oversee these processes. Grant Thornton LLP, an independent registered public accounting firm, has served as our independent registered public accounting firm since 2016. +INDEPENDENCE +The Board has determined that all members meet the independence requirements of the SEC and NYSE rules and the financial literacy requirements of the NYSE. Members of the Audit Committee may not simultaneously serve on the audit committee of more than two other public companies. +CALLON PETROLEUM 21 +CORPORATE GOVERNANCE +Compensation Committee +Matthew R. Bob (Chairman) +Michael L. Finch +L. Richard Flury +Anthony J. Nocchiero +James M. Trimble +PURPOSE +The purpose of the Compensation Committee is to establish our compensation programs and oversee the alignment of our compensation with our business strategies. +MEETINGS IN 2018 +Four meetings; all members attended at least 75% of Committee meetings. +RESPONSIBILITIES +Pursuant to its charter, the Compensation Committee’s duties include the responsibility to assist the Board in: +• +Evaluating the performance of and establishing the compensation of the CEO; +• +Establishing, with input from the CEO, the compensation for our other executive officers; +• +Establishing and reviewing our overall executive compensation philosophy and approve changes to our compensation program; +• +Reviewing incentive compensation arrangements to confirm that executive compensation does not encourage unnecessary risk taking; +• +Administering our long-term incentive plans; +• +Reviewing and approving the CD&A for inclusion in the annual proxy statement; +• +Reviewing and recommending to the Board compensation for non-employee directors; +• +Retaining and overseeing compensation consultants, including the independence of the consultants; +• +Reviewing and approving performance criteria and results for bonus and performance-based equity awards for executive officers and approve awards to those officers; and +• +Performing such other functions as our Board may assign to the Compensation Committee from time to time. +The Committee retained the services of Meridian Compensation Partners LLC, an independent compensation consulting firm, to assist in the annual review of market and industry data to assess our competitive position with respect to each element of total compensation and to assist with the attraction and retention of, and appropriate reward to, our CEO and other executive officers. Pursuant to applicable SEC and NYSE rules, the Committee has determined that no conflicts of interest exist related to Meridian’s engagement by the Committee. +INDEPENDENCE +Consistent with the listing requirements of the NYSE, the Compensation Committee is composed entirely of independent members of our Board, as each member meets the independence requirements set by the NYSE and applicable federal securities laws. +COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION +None of the members of our Compensation Committee is presently or has been an officer or employee of the Company. In addition, during the last fiscal year, none of our executive officers served as a member of the board or the compensation committee (or other board committee performing similar functions or, in the absence of any such committee, the entire board) of any entity in which a Callon Board or Compensation Committee member is an executive officer. +22 CALLON PETROLEUM +CORPORATE GOVERNANCE +Nominating & Corporate +Governance Committee +James M. Trimble (Chairman) +Matthew R. Bob +Barbara J. Faulkenberry +Larry D. McVay +Anthony J. Nocchiero +PURPOSE +The purpose of the Nominating & Corporate Governance Committee is to identify and recommend qualified candidates to the Board for nomination as members of the Board; assess director, Board and committee effectiveness; develop and implement our Corporate Governance Guidelines; oversee succession planning for executive officers; and otherwise take a leadership role in shaping the corporate governance of our Company. +MEETINGS IN 2018 +Five meetings; all members attended at least 75% of Committee meetings. +RESPONSIBILITIES +Pursuant to its charter, the Nominating & Corporate Governance Committee’s duties include the responsibility to assist the Board in: +• +Evaluating a set of specific criteria for Board membership and identifying individuals qualified to become Board members, recommending nominees for election at the next annual meeting of shareholders, reviewing the suitability for continued service as a director of each Board member, and filling any vacancies; +• +Assessing the size and composition of the Board and its committees and recommending to the Board the members and chair for each Board committee; +• +Advising the Board and making recommendations regarding appropriate corporate governance practices and assisting the Board in implementing those practices, including periodically reviewing the adequacy of our Corporate Governance Guidelines, our Code of Business Conduct and Ethics, and the various Board committee charters, and making recommendations for changes thereto to the Board; +• +Overseeing the annual self-evaluation of the performance of the Board and its committees; +• +Overseeing and approving plans for management continuity and succession; +• +Recommending to the Board a successor to the CEO when a vacancy occurs; +• +Reviewing directorships in other public companies held by or offered to directors or executive officers of the Company; +• +Overseeing continuing education for the Board; and +• +Performing other such functions as the Board may assign to the Nominating and Corporate Governance Committee from time to time. +INDEPENDENCE +Each member of the Committee meets the independence requirements of the NYSE and applicable federal securities laws. +CALLON PETROLEUM 23 +CORPORATE GOVERNANCE +Strategic Planning & +Reserves Committee +Larry D. McVay (Chairman) +Matthew R. Bob +Michael L. Finch +L. Richard Flury +Anthony J. Nocchiero +James M. Trimble +Barbara J. Faulkenberry +PURPOSE +The purpose of the Strategic Planning & Reserves Committee is to manage and oversee the Board’s participation in the development of the Company’s strategic plan, and oversee the integrity of the determination of our oil and natural gas reserve estimates. +MEETINGS IN 2018 +Five meetings; all members attended at least 75% of Committee meetings. +RESPONSIBILITIES +The Strategic Planning & Reserves Committee was created to oversee the responsibilities of the Board relating to strategic planning, including: +• +Overseeing the Board’s participation in the development of a strategic plan; +• +Monitoring management's implementation of the strategic plan, and advising the Board if additional Board action appears to be needed; +• +Assuring that management is addressing the personnel requirements for the successful implementation of the strategic plan; +• +Overseeing our reserve engineering reports and reserve engineering firm, including: (i) the integrity of our reserve reports, (ii) determinations regarding the qualifications and independence of our independent reserve engineering firm, (iii) the performance of our independent reserve engineering firm, and (iv) our compliance with certain legal and regulatory requirements relating to reserve reporting; and +• +Performing other such functions as the Board may assign to the Strategic Planning and Reserves Committee from time to time. +INDEPENDENCE +Each member of the Committee meets the independence requirements of the NYSE and applicable federal securities laws. +24 CALLON PETROLEUM +CORPORATE GOVERNANCE +Corporate Governance Matters +Corporate Governance Principles +The Board believes that sound corporate governance practices and policies provide an important framework to assist in fulfilling its duty to shareholders. The framework for our corporate governance can be found in our governance documents, which include: +• +Corporate Governance Guidelines; +• +Code of Business Conduct and Ethics; and +• +Charters for the Audit, Compensation, Nominating & Corporate Governance, and Strategic Planning & Reserves Committees. +In keeping with sound corporate governance practices, each of these documents is reviewed annually and is available on our website www.callon.com under the “About Callon - Governance” menu. Shareholders may obtain a printed copy, free of charge, by sending a written request to our Corporate Secretary at our principal executive office in Houston, Texas. Any amendments to these documents are promptly posted on our website. +Code of Business Conduct and Ethics +Our Code of Business Conduct and Ethics (the “Code”) sets forth the policies and expectations for Callon’s officers, employees and directors as well as consultants, representatives, agents, and contractors while acting on Callon’s behalf. The Code addresses a number of topics including conflicts of interest, compliance with laws, insider trading, prohibitions on discrimination and harassment, workplace safety and protection of the environment, and fair disclosure. In addition, the Code explicitly prohibits directors, officers and employees from engaging in hedging transactions in Callon stock. It also states that no corporate funds may be used for political contributions. +The Code meets the NYSE’s requirements for a code of business conduct and ethics and also includes a code of ethics applicable to our senior financial officers consistent with the requirements of the SEC. We intend to satisfy the disclosure requirements regarding any amendment to, or any waiver of, a provision of the Code by promptly posting such information on our website. Concerns about potential violations of the Code can be anonymously reported to our ethics hotline by calling 1-844-471-7637 or accessing the following website: callon.ethicspoint.com. +Environmental, Social and Governance +Callon’s mission is to build trust, create value and drive sustainable growth responsibly for our investors, our employees and the communities in which we operate. Consistent with this mission, the Board oversees the Company’s environmental, social and governance programs with a focus on a long-term, sustainable investments in our operations, team member development, and protecting the environment in the best interests of all of our stakeholders. The Board regularly addresses the Company’s efforts to continuously improve outcomes regarding workplace safety, environmental impact, team member diversity and workforce development. As described in more detail above beginning on page 17, the Board is also committed to effective and sustainable corporate governance, which we believe strengthens Board and management accountability, promotes the long-term interests of our shareholders, and helps build public trust in our Company. +Communication with Directors +Shareholders or other interested parties who wish to communicate with the full Board, independent directors as a group, or individual directors, may do so by sending a letter in care of the Corporate Secretary to our principal executive office located at 1401 Enclave Parkway, Suite 600, Houston, Texas 77077. Our Corporate Secretary has the authority to discard any solicitations, job inquiries, advertisements, surveys or other inappropriate communications, but will forward any other mail to the named director or group of directors. Our Corporate Secretary will forward approved mail addressed to the full Board to the Chairman of the Board who, if appropriate, will share the item with the full Board. +CALLON PETROLEUM 25 +CORPORATE GOVERNANCE +Board Evaluations +The Nominating & Corporate Governance Committee, in consultation with the Chairman of the Board, annually leads the performance review of the Board and its Committees. The self-evaluation process seeks to obtain each director’s assessment of the effectiveness of the Board, the Committees and their leadership, Board and Committee composition and Board and management dynamics. In 2018, the Board self-evaluation process included a survey completed by each director about the Board and the Committees on which the director served. The Board Chairman also conducted interviews with each director for feedback and insights. The results were discussed by the full Board and within each Committee. +Director Education +The Company sponsors an ongoing director education program that assists Board members in fulfilling their responsibilities. Training commences with an orientation program when a new director joins the Board. Ongoing education is provided through written materials, presentations in Board meetings, and training outside the boardroom. All Callon directors are members of the National Association of Corporate Directors and are provided an annual training allowance to pursue relevant director education programs. +26 CALLON PETROLEUM +EXECUTIVE OFFICERS +Executive Officer Biographies +Joseph C. Gatto, Jr. +President, Chief Executive Officer and Director +Joseph C. Gatto, Jr. joined the Company in April 2012 as Senior Vice President, Corporate Finance, with responsibility for our capital markets and strategic planning functions, in addition to investor relations activities. Effective March 31, 2014, Mr. Gatto was appointed Chief Financial Officer and Treasurer of the Company and in August 2016 was promoted to President while retaining the roles of Chief Financial Officer and Treasurer. In May 2017 he was promoted to Chief Executive Officer while retaining the role as President. Mr. Gatto was elected as a member of the Board of Directors in May 2018. Prior to joining Callon, Mr. Gatto was a Managing Director in the energy investment banking groups of Merrill Lynch & Co. and Barclays Capital where he worked from July 1997 until February 2009, with involvement in all phases of M&A and capital raising transactions for his clients. In February 2009, he founded MarchWire Capital, LLC, a financial advisory and strategic consulting firm, and subsequently served as Head of Structuring and Execution with Merrill Lynch Commodities, Inc. from January 2010 until November 2011. Mr. Gatto graduated from Cornell University with a B.S. degree and The Wharton School of the University of Pennsylvania with an M.B.A. +James P. Ulm, II +Senior Vice President and Chief Financial Officer +James P. Ulm, II is the Senior Vice President and Chief Financial Officer for the Company. Prior to joining Callon in December 2017, Mr. Ulm was Founder and Managing Partner of NewVista Energy Partners, a private E&P company focused on emerging resource plays in the Permian and Anadarko Basins, from 2015–2017. Previously, he served as Senior Vice President and Chief Financial Officer for three private companies from 2008–2015 where he was responsible for financial and accounting management, capital formation, and corporate strategy. Prior to these roles, Mr. Ulm served from 1999–2008 as Senior Vice President and Chief Financial Officer for Pogo Producing Company, a publicly-traded oil and gas company which had meaningful operations in the Permian Basin. From 1995–1999, he was the Treasurer for Newfield Exploration Company. Earlier in his career, he held finance and accounting leadership roles with American Exploration Company and Tenneco Oil Company. Mr. Ulm has more than 30 years of experience in the energy industry with responsibilities including finance, accounting, strategic planning, M&A, business development and risk management. Mr. Ulm holds an M.B.A. and an undergraduate degree in Accounting, both from the University of Texas at Austin. +Jeffrey S. Balmer +Senior Vice President and Chief Operating Officer +Jeffrey S. Balmer has over 30 years of operations and subsurface leadership experience in the energy industry. His most recent role was Vice President and General Manager, Southern Operating Area, for Encana Corporation with responsibility for all of Encana’s upstream operations in the Permian Basin. After joining Encana in 2008, he held various leadership roles including Vice President and General Manager, Western Operating Area, managing operations in the Eagle Ford, DJ, San Juan, Piceance and Wind River Basins, and Vice President, Emerging Plays. Prior to joining Encana, Dr. Balmer served in a variety of technical and operations leadership roles, including positions with ConocoPhillips, Burlington Resources and ExxonMobil Corporation. He holds B.S. and Ph.D. degrees in Petroleum Engineering, in addition to an M.S. in Environmental and Planning Engineering, from Missouri University of Science and Technology (formerly University of Missouri – Rolla). +CALLON PETROLEUM 27 +EXECUTIVE OFFICERS +Michol L. Ecklund +Senior Vice President, General Counsel and Corporate Secretary +Michol L. Ecklund is the Senior Vice President, General Counsel and Corporate Secretary for the Company. Prior to joining Callon in November 2017, Ms. Ecklund was Deputy General Counsel for Operations & Commercial Law at Marathon Oil Company where she oversaw the legal team for global operations and acquisitions and divestitures as well as corporate communications. During her 15 years at Marathon Oil, Ms. Ecklund served in progressive positions within and outside the Law Organization including compliance, litigation, human resources, investor relations, corporate communications and tax. Prior to Marathon Oil, she practiced law at Baker Botts LLP in Houston. Ms. Ecklund received a B.A. degree from Rice University and J.D. from Harvard Law School. +Correne S. Loeffler +Vice President, Finance and Treasurer +Correne S. Loeffler is the Vice President, Finance and Treasurer for the Company. Prior to joining Callon in April 2017, Ms. Loeffler served as an Executive Director with JPMorgan Securities, LLC where she spent ten years in the Corporate Client Banking Group. During her time at JPMorgan she served as Callon’s Relationship Manager beginning in 2013. Ms. Loeffler graduated with a B.A. degree from Indiana University and received her M.B.A. from the University of Texas at Austin. +Mitzi P. Conn +Vice President and Chief Accounting Officer +Mitzi P. Conn is the Vice President and Chief Accounting Officer for the Company. Prior to being appointed to that position in May 2007, she had served as Assistant Controller. Mrs. Conn has held various other positions in finance and accounting since she joined the Company in June 1993. Prior thereto, she was with Graham Resources, Inc. She received her B.S. degree in Accounting from Southeastern Louisiana University in 1990 and is a member of the American Institute of Certified Public Accountants and the Mississippi Society of Certified Public Accountants. +Jerry A. Weant +Vice President, Land +Jerry A. Weant is the Vice President of Land for the Company. Prior to joining Callon in September 2013, Mr. Weant held the position of Sr. Staff Landman at Pioneer Natural Resources USA, Inc. and served as a Land Liaison in Pioneer's corporate office for special projects involving water flood and horizontal drilling for Pioneer’s Permian operations. Mr. Weant also served as President of Trilogy Operating, Inc. prior to joining Pioneer. Mr. Weant received a BBA/PLM degree from the University of Texas at Austin in 1980 and has participated in the oil and gas business as a Landman since that time. Mr. Weant is an active member of the American Association of Professional Landman and Permian Basin Landman’s Association. +Mr. Weant has announced his intention to retire from the Company effective March 31, 2019. +28 CALLON PETROLEUM +PROPOSAL 2 +Proposal 2 +Approve, on an Advisory Basis, +the Compensation of the Company’s NEOs +The Board of Directors Recommends a vote FOR the compensation paid to the Company’s named executive officers, as disclosed in this Proxy Statement. +• Provides performance-based and market-aligned pay opportunities that are intended to foster motivation, engagement, and retention of key talent to drive Company performance and long-term shareholder value. +In accordance with the requirements of Section 14A of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and the related rules of the SEC, we are including in this Proxy Statement a separate proposal, which gives our shareholders the opportunity to approve the compensation of our NEOs by voting “ FOR ” or “ AGAINST ” the resolution below (commonly referred to as “Say-on-Pay”) on an annual basis. While our Board and Compensation Committee intend to carefully consider the shareholder vote resulting from the proposal, the final vote will not be binding on us and is advisory in nature. +The Board recognizes that executive compensation is an important matter for our shareholders. The Compensation Committee is tasked with the implementation of our executive compensation philosophy and, as described in detail in the CD&A below, the design of our executive compensation programs. Our executive compensation program is designed to attract, motivate and retain a qualified executive management team and to appropriately reward our executive officers for their contributions to the achievement of our short-term and long-term business goals and the creation and enhancement of shareholder value. +As described in the CD&A, we believe our compensation program is effective, appropriate and aligned with the long-term interests of our shareholders and that the total compensation package provided to the NEOs is reasonable and not excessive. As you consider this Proposal 2, we urge you to read the CD&A for additional details on executive compensation. Further, in determining whether to approve this proposal, we believe that shareholders should also consider the following: +• +Independent Compensation Committee. Executive compensation is reviewed and established by a Compensation Committee of the Board consisting solely of independent directors. The Compensation Committee meets in executive session, without executive officers present, in determining annual compensation. The Compensation Committee receives data, analysis and input from a compensation consultant that is independent of management and free of conflicts of interest with us. +• +Performance-based incentive compensation. Our executive compensation program seeks to align executive compensation with shareholder value on an annual and long-term basis through a combination of base pay, annual incentives and long-term incentives. Please review the CD&A for more information on how our 2018 compensation was tied to results. +• +Long-term incentive plans. Our long-term incentive awards generally include three-year minimum vesting periods. +• +“Double trigger” severance agreements with fixed term. Change in control severance agreements with our executive officers require an actual or constructive termination of employment before benefits are paid following any change in control. +• +Stock ownership guidelines. Each of the NEOs has been granted equity to provide the officer a stake in our long-term success. The purpose of the ownership requirement is to further our goal of increasing shareholder value by aligning the interests of our NEOs with the interests of our shareholders. +• +Hedging policy. Our directors and executive officers are prohibited from entering into transactions in puts, calls and other derivative securities with respect to our securities and from engaging in short sales of our securities. We believe these activities are often perceived as involving insider trading and may focus the holder’s attention on our short-term performance rather than our long-term objectives. +CALLON PETROLEUM 29 +PROPOSAL 2 +In light of the above and as more fully described in the CD&A, we believe that the compensation of our NEOs for 2018 was appropriate and reasonable and that our compensation programs and practices are sound and in the best interests of the Company and our shareholders. We therefore respectfully request that shareholders vote on the following resolution: +“RESOLVED, that the compensation paid to Callon’s NEOs, as disclosed in Callon’s 2019 Proxy Statement (including the Compensation Discussion and Analysis, the compensation tables and related footnotes and narrative disclosures) is hereby approved.” +The vote on this resolution is not intended to address any specific element of compensation, but rather the overall compensation of our NEOs and our compensation-related policies and practices as described in this Proxy Statement. As noted above, the vote solicited by this proposal is advisory in nature and its outcome will not be binding on the Company, the Board or the Compensation Committee, nor will the outcome of the vote require the Board or the Compensation Committee to take any action. The outcome of the vote will not be construed as overruling any decision of the Board or the Compensation Committee or creating or implying any additional fiduciary duty of the Board or the Compensation Committee. However, the Board and the Compensation Committee will carefully consider the outcome of the vote when considering future executive compensation arrangements. For a review of the results of the previous year's vote, which reflects overwhelming validation from our shareholders of our pay philosophy and approach, please see the “Role of Shareholder Say-on-Pay Advisory Vote” on page 35. +Notwithstanding the advisory nature of this vote, the foregoing resolution will be deemed approved with the affirmative vote of the majority of the votes present and entitled to vote on the proposal at the Annual Meeting. If you hold your shares through a broker and you do not instruct the broker how to vote, your broker will not have the authority to vote your shares. Abstentions will have the effect as a vote cast against the proposal. Broker non-votes will not be counted as shares present and entitled to vote, and so will have no effect upon the outcome of the vote. +The Board recommends a vote FOR the compensation paid to the Company’s named executives. +30 CALLON PETROLEUM +EXECUTIVE COMPENSATION +Compensation Discussion and Analysis +Oversight of Executive Compensation Program +The Compensation Committee (referred to in this section as the “Committee”) appointed by our Board, assists the Board in performing its fiduciary responsibilities relating to the compensation of our CEO and other executive officers. The Committee, which is composed entirely of independent directors, is primarily responsible for establishing, implementing and monitoring our executive compensation programs, including those applicable to our named executive officers (“NEOs”). The following compensation discussion and analysis (“CD&A”) describes the actions taken by the Committee in 2018 related to our executive compensation programs. +The Committee meets several times a year to review our executive compensation programs, approve compensation levels, consider performance targets, review management performance and administer our annual and long-term incentive (“LTI”) compensation plans. The Committee operates in accordance with its charter, as revised and approved in November 2018, which sets forth the Committee’s authority and responsibilities. +Our NEOs include the individuals who served as Chief Executive Officer and Chief Financial Officer during 2018 and the three other most highly compensated executive officers for the calendar year. The list also includes our former Senior Vice President and Chief Operating Officer, Gary A. Newberry, who transitioned from the role effective December 10, 2018. Our NEOs for 2018 were: +NEO +Age +Title +Joseph C. Gatto, Jr. +48 +President, Chief Executive Officer and Director +James P. Ulm, II +56 +Senior Vice President and Chief Financial Officer +Michol L. Ecklund +44 +Senior Vice President, General Counsel and Corporate Secretary +Correne S. Loeffler +42 +Vice President – Finance and Treasurer +Mitzi P. Conn +50 +Vice President and Chief Accounting Officer +Gary A. Newberry +64 +Former Senior Vice President and Chief Operating Officer +CALLON PETROLEUM 31 +EXECUTIVE COMPENSATION +2018 Performance Highlights +2018 was a year of significant progress in the maturity of Callon’s Permian operations as we continued to grow margins, production and reserves while transitioning to scaled development of our high quality asset base. . The Company also added over 30,000 highly complementary net surface acres to our Delaware Basin operating area that promote efficiencies through increased scale, longer laterals and integration of infrastructure. Key operational and financial highlights include: +• Increased daily production approximately 44% year-over-year to 32,900 barrels of oil equivalent ("Boe") per day in 2018, with a sustained oil content of 79%. +• Increased estimated net proved reserves by nearly 74% year-over-year to 238.5 million barrels of oil equivalent (“MMBoe”), which replaced 690% of 2018 production. +• Achieved a “drill bit” finding and development (“F&D”) cost (i) of $7.03 per Boe and provided developed finding and development cost (i) of $13.40 per Boe. +• Generated operating margins of $40.16 per Boe, among the highest within the industry. +• Decreased lease operating expense (“LOE”) per Boe by 3% versus 2017, representing the fifth consecutive year of cost reduction. +• Realized net income of $300.4 million and generated Adjusted EBITDA (i) of $432.5 million relative to cash drilling and completion capital expenditures of $403.5 million . +• Completed the acquisition of 34,523 net working interest acres and 1,530 net mineral acres and traded 4,420 net acres to further longer-lateral development. +• Divested 3,540 net acres as part of ongoing asset rationalization initiatives. +• Expanded our dual-basin recycling program that utilized 4.2 million barrels of produced water, significantly reducing freshwater needs and our environmental footprint. +• Improved safety and environmental performance including reductions of over 40% for recordable incident rates and spills to the environment. +• Increased liquidity by expanding the borrowing base to $1.1 billion with an elected commitment of $850 million. +• Issued $400MM of Senior Notes at an effective yield of 6.4%, contributing to an improved cost of capital. +(i) +See Appendix A for a reconciliation of Non-GAAP financial measures +Recent Management Changes +Gary A. Newberry transitioned from the role of Senior Vice President and Chief Operating Officer effective December 10, 2018, and retired from the Company effective January 31, 2019. Effective December 10, 2018, Jeffrey S. Balmer became the Company’s Senior Vice President and Chief Operating Officer. To see Dr. Balmer’s biography, please see “Executive Officer Biographies” on page 27. +Jerry A. Weant, Vice President, Land, has announced his intention to retire from the Company effective March 31, 2019. +32 CALLON PETROLEUM +EXECUTIVE COMPENSATION +Key Committee Actions for 2018 +The Committee took the following key actions in 2018: +Performance Based +• Established new performance metrics for the annual bonus program to better align with shareholder priorities of cash flow and capital efficiency. +• Granted performance-based and time-based LTI awards to provide retention incentives and to further align management’s interests with shareholder value creation. +Market Based +• Assessed salaries and total compensation relative to competitive data and each officer’s scope of responsibility and performance, and made adjustments where appropriate. +• Re-evaluated our peer group used to measure relative performance for our LTI awards and the competitiveness of executive compensation due to the Company’s growth and changes in the industry. +Additionally the Committee approved certain changes to the Company's change in control severance agreements to align with market practices and increase consistency across the Company’s compensation arrangements. +Compensation Program Governance Highlights +We believe our compensation programs incorporate many sound practices, including the following: +What We Do +What We Don’t Do +• Substantial focus on performance-based pay +• Balance of short- and long-term incentives +• Align executive compensation with shareholder returns through substantial weighting on long-term incentives +• Retain an independent external compensation consultant +• Review of peer group benchmarks when establishing compensation +• Substantial stock ownership guidelines for our NEOs and directors +• Double-trigger change in control severance for both cash severance and equity vesting +• Annual assessment of compensation programs intended to ensure avoidance of excessive risk taking +• NO hedging or pledging of our stock +• NO employment agreements +• NO excessive benefits or perquisites +• NO single trigger change in control benefits +Executive Compensation Components and Philosophy +Our pay-for-performance philosophy is demonstrated in the mix of compensation that we provide to our NEOs. The Committee designs our compensation program to maintain a balance between rewarding the achievement of annual performance objectives and the long-term objective of aligning the interests of our executives with those of our shareholders. Accordingly, a significant portion of our NEOs’ compensation in 2018 was in the form of annual cash incentives and long-term incentives. Our executive compensation program is designed to do the following: +• +Reward the management team for delivering results against its strategic objectives, thereby creating value for the shareholders; +• +Emphasize pay for performance, in which Company and individual performance substantially influence the amount realized by an NEO; +• +Attract and retain a qualified and motivated management team by offering industry competitive opportunities; +• +Hold NEOs accountable and appropriately reward them for their contributions to the achievement of our key short-term and long-term strategic objectives through the use of variable compensation; and +• +Align the compensation of our NEOs with the long-term interests of our shareholders by weighting the programs toward at-risk, performance-based compensation, consisting of an objective-driven annual incentive program, stock grants with three-year vesting, and TSR-contingent incentive awards. +CALLON PETROLEUM 33 +EXECUTIVE COMPENSATION +The Committee believes that this approach compensates our NEOs in a manner that fairly and reasonably provides incentives for the enhancement of shareholder value, the successful implementation of our business plan, and continuous improvement in corporate and personal performance. In order to compete in our industry, the Committee believes that our NEOs’ compensation should include the following components: +BASE SALARY +Purpose +Philosophy +• Pay for expertise and experience; +• Attract and retain talented executives; +• Provide compensation stability; and +• Compete with comparable companies. +• Fixed component of compensation reflective of individual skills, experience and expertise necessary to execute our business strategy; and +• Competitive with similarly sized peers. +ANNUAL CASH BONUS INCENTIVE +Purpose +Philosophy +• Motivate our executive officers to achieve our short-term business objectives that drive long-term performance; +• Reward achievement of financial, operating, and strategic goals for which NEOs are held accountable; and +• Promote and encourage pay-for-performance. +• At-risk component of compensation, with modest or no reward for performance below expectations and potential for increased reward for exceptional performance; +• Goals aligned with our annual business plan and performance targets; +• Provide balance in compensation programs and avoid encouraging undue risk-taking; and +• Competitive with similarly-sized peers. +LONG-TERM INCENTIVE (LTI) AWARDS +Purpose +Philosophy +• Motivate and reward long-term achievement of business objectives, aligning the interests of our NEOs with shareholders; +• Provide competitive pay to attract and retain NEOs; and +• Provide a mix of LTI awards that focuses NEOs on creating long-term value while avoiding undue risk-taking. +• Ensures that realized value to NEOs aligns with value delivered to shareholders; +• Recognizes and rewards share price performance relative to industry peers; +• At-risk component of compensation that aligns with sustained long-term value creation; and +• Allows NEOs to acquire a meaningful and sustained ownership stake in the Company. +OTHER (RETIREMENT; HEALTH BENEFITS; CHANGE IN CONTROL SEVERANCE) +Purpose +Philosophy +• Provide financial security for the NEOs and their families; +• Provide competitive benefits to attract and retain NEOs; and +• Ensure NEOs consider all possible transactions to increase shareholder value related to changes in control of the Company. +• Attracts and retains NEOs with a comprehensive benefits package; +• Provides financial security and maximizes the efficiency of tax-advantaged compensation vehicles; and +• Ensures NEOs act in the best interests of the shareholders in a change in control. +34 CALLON PETROLEUM +EXECUTIVE COMPENSATION +Role of Shareholder Say-on-Pay Advisory Vote +We have historically received strong support from our shareholders for our executive compensation practices. In the advisory vote held at the 2018 Annual Meeting, approximately 96% of the votes cast were in favor of our 2017 executive compensation programs. The Committee acknowledged the support received from our shareholders and viewed the results as an affirmation of our existing executive compensation policies and programs. Accordingly, based on the Committee’s analysis of this support, it generally maintained our executive compensation policies for 2018 and into 2019. However, based on feedback received during shareholder engagement, the Committee modified the 2019 annual bonus to include a performance-based, formulaic assessment component as described below. The Committee will continue to review shareholder votes and conduct shareholder engagement on our executive compensation programs to ensure alignment with shareholder interests. +Role of Independent Compensation Consultant +For 2018, the Committee continued its engagement of Meridian Compensation Partners, LLC (“Meridian” or the “Consultant”) as its independent compensation consultant to provide information and objective advice regarding executive officer and director compensation. The Committee retained Meridian because of its extensive familiarity with executive compensation programs in our industry. Importantly, the Committee makes all of the decisions with respect to our executive compensation, and in setting compensation for our NEOs, considers Meridian's advice as only one factor among many other factors discussed within this CD&A. Other factors include our overall performance; individual NEO performance, experience, skills and tenure with the Company; and industry trends. +Meridian reports solely to the Committee, and the Committee determines the scope of Meridian’s engagement. In an effort to ensure that our NEO compensation programs are competitive and consistent with our compensation philosophy, Meridian assisted the Committee as follows: +• +Regularly attending meetings of the Compensation Committee and meeting privately in executive session with the Compensation Committee to discuss its recommendations; +• +Providing recommendations on executive compensation matters to align the Committee’s actions with shareholder interests, our business strategy and pay philosophy, prevailing market practices and relevant legal and regulatory requirements; +• +Periodically evaluating the peer group and providing peer company data for the Committee to use in its decision-making process, including assessment of pay and performance relative to peers; +• +Providing competitive market data to consider in evaluating the competitiveness of the executive base salaries and short and long-term incentive plans and awards; +• +Reviewing data in connection with the Committee’s determination of annual cash incentive performance objectives and performance-based incentive vesting levels for completed performance periods; +• +Advising on the Company’s compensation arrangements for its non-employee directors, including providing peer group data; +• +Reviewing and providing feedback on our SEC filings relating to executive compensation disclosures, including our CD&A disclosures; and +• +Informing the Committee about compensation trends in the industry, best practices and other general trends and developments affecting executive compensation. +The Committee did not direct Meridian to perform its services in any particular manner or under any particular method. The Committee has the final authority to hire and terminate Meridian, and the Committee evaluates Meridian annually. Pursuant to applicable SEC and NYSE rules, the Committee has determined that no conflicts of interest exist related to Meridian’s engagement by the Committee. The Committee has retained Meridian as its consultant on NEO and director compensation for 2019. +From time to time, Meridian contacts our NEOs for information needed to fulfill the objectives established by the Committee. However, the Committee established procedures that it considers adequate to ensure that Meridian’s advice to the Committee remains objective and is not influenced by our NEOs or other management. +CALLON PETROLEUM 35 +EXECUTIVE COMPENSATION +Role of Management +The Committee considers input from our CEO in making determinations regarding our executive compensation program and the individual compensation of each of his direct reports and other select officers of Callon. The officer team makes recommendations to the Committee regarding potential objectives for the annual cash bonus incentive program and provides information to the Committee regarding the performance of the Company for the Committee’s determination of annual cash bonuses. The Committee makes the final determination of all elements of NEO compensation. Our CEO makes no recommendations regarding, and does not participate in discussions about, his own compensation. +Role of Market Data +The Compensation Committee of the Board strives to ensure that our executives are compensated in a manner that is fair, equitable, performance-based and guided by the long-term interests of investors. In order to attract, motivate and retain talented executive officers, the Committee must also ensure that our executive compensation program remains competitive with the types and ranges of compensation paid by our peer companies who compete for the same executive talent. On an annual basis, the Committee reviews and discusses compensation data for our CEO and other executive officers as compared with compensation data for similarly situated executive officers at peer companies recommended by Meridian and approved by the Committee. +The Committee engages Meridian to conduct annual assessments of our industry peer group (“Peer Group”) in order to ensure each peer remains appropriate year-over-year. The Peer Group is selected based on multiple factors, such as: +• +Size, including enterprise value and market capitalization; +• +Similar geographic footprint and operational focus, particularly in the Permian Basin; +• +Comparability of asset portfolio; and +• +Availability of compensation data. +The Committee believes this Peer Group provides a reasonable point of reference for comparing the compensation of our executive officers to others holding similar positions and having similar responsibilities. The Committee considers Peer Group data relevant to, but not determinative of, the Committee’s consideration of overall executive compensation matters. +The Peer Group used by the Committee in evaluating the competitiveness of executive compensation and making 2018 compensation decisions consisted of the companies in the first column of the following table. The Committee also reviewed data from proprietary E&P benchmarking surveys provided by Meridian for additional market perspective and to validate the Peer Group data. +Due to industry volatility and merger activity, the Committee re-evaluated the Peer Group in preparation for making the May 2018 grants of long-term incentives, resulting in the Peer Group in the second column of the following table. The changes reflect recent transactions in the peer group and better align the Peer Group based on size, geography and ownership. The Committee also revisits the Peer Group as needed to reflect business combinations among peer companies. This Peer Group is being used to measure the Company's relative total shareholder return (“TSR”) performance for the May 2018 grant of PSUs and to evaluate the competitiveness of executive compensation beginning in May 2018. +Initial 2018 Peer Group +New 2018 Peer Group +• Carrizo Oil & Gas, Inc. +• EP Energy Corporation +• HighPoint Resources Corporation +• Laredo Petroleum, Inc. +• Matador Resources, Inc. +• Parsley Energy, Inc. +• PDC Energy, Inc. +• QEP Resources, Inc. +• RSP Permian, Inc. +• SM Energy Company +• SRC Energy, Inc. +• Carrizo Oil & Gas, Inc. +• Centennial Resource Development, Inc. (New) +• Jagged Peak Energy, Inc. (New) +• HighPoint Resources Corporation +• Laredo Petroleum, Inc. +• Matador Resources, Inc. +• Oasis Petroleum, Inc. (New) +• Parsley Energy, Inc. +• PDC Energy, Inc. +• QEP Resources, Inc. +• SM Energy Company +• SRC Energy Inc. +36 CALLON PETROLEUM +EXECUTIVE COMPENSATION +The Committee understands the inherent limitations in using any peer group or data set including fluctuations in survey participation and competition for executive talent by companies potentially much larger than Callon. Accordingly, the Committee does not consider data collected from any of these sources to be prescriptive. Rather, the Committee relies upon this and similar data as reference points around which to make informed decisions about the appropriate level and form of compensation for each NEO. +Risk Assessment Related to Our Compensation Structure +The Committee believes our compensation plans and policies are appropriately structured to encourage and reward prudent business judgment and avoid excessive risk-taking. The Committee, with the assistance of Meridian, reviewed the compensation programs maintained by the Company during 2018 to determine whether they encouraged excessive risk taking. Upon evaluation of the assessment, the Committee concluded that our compensation policies and practices for our employees do not present risks that are reasonably likely to have a material adverse effect on the Company. The Committee’s risk review identified the following risk mitigating features of our compensation programs: +• +A balance of short-term and long-term programs to focus management on both elements of Callon’s performance; +• +Annual grants of long-term incentives designed to be the largest component of each NEO’s compensation package, with typical vesting periods of three years that are based on the value of our common stock and not on any particular metric that could encourage excessive risk-taking; +• +Performance criteria and targets for our annual bonus program designed to encourage performance, but not excessive risk taking, and discretion to decrease payouts if it is believed management exercised excessive risk taking; +• +Performance targets measured at the corporate level, rather than at the individual or business unit level; +• +Reasonable change in control severance protections; and +• +Significant executive stock ownership requirements. +Determination of Each Element of Compensation +Base Salaries +We provide all of our employees, including the NEOs, with an annual base salary to compensate them for their services throughout the year. Our Committee recognizes that a substantial amount of competition exists in the oil and gas industry for attracting and retaining qualified management teams, particularly in the Permian Basin. Accordingly, the Committee evaluates our NEOs’ salaries together with other components of their compensation to ensure that the NEOs’ total compensation is competitive relative to market practices in our Peer Group and our industry in general and is consistent with the Committee’s compensation philosophy. +Annually, generally in the first quarter of each year, the Committee reviews the base salaries of our NEOs. Individual salary amounts reflect the Committee’s subjective analysis of a number of factors, including: +• +Individual officer’s experience, skills, contributions and tenure with Callon; +• +Changes to the individual’s position within Callon; +• +Trends in compensation practices within our Peer Group and industry; and +• +The NEO’s roles, responsibilities and expected future contributions to Callon’s success. +In addition, the Committee also considers the input and recommendations of Meridian regarding base salaries, as well as the input of the CEO, when evaluating base salaries for the other NEOs. +After considering the market analysis and advice of Meridian, at its March 2018 meeting, the Committee increased Mr. Gatto’s salary from $575,000 to $700,000 to reflect the growth and performance of the Company and his continued development in the CEO role. This increase brought Mr. Gatto's salary closer to a competitive level relative to peers. +CALLON PETROLEUM 37 +EXECUTIVE COMPENSATION +Performance-Based Annual Cash Bonus Incentive +A core component of our NEO compensation philosophy is to emphasize pay-for-performance by structuring a significant portion of total annual compensation as “at risk.” Each year, the Compensation Committee establishes an annual performance bonus program, which is designed to promote the achievement of annual financial, operating and strategic goals that are aligned with the creation of shareholder value. Performance is judged at the end of the year, or shortly thereafter, based on evaluation of performance against these specified objectives and the Committee's views of corporate and individual performance. +To motivate employees to pursue our annual business goals in a way most beneficial to our shareholders, NEOs, senior management and other non-management technical personnel have the potential to receive a significant portion of their annual cash compensation as a bonus. The Committee set 2018 annual bonus award opportunities for each NEO as a percentage of the NEO’s annual base salary as follows: +NEO +Target Bonus Opportunity +(% of Base Salary) +Joseph C. Gatto, Jr. +100% +Gary A. Newberry +100% +James P. Ulm, II +90% +Other NEOs +60% - 70% +For purposes of evaluating performance, the Committee, in collaboration with management and Meridian, oversees a rigorous process to set performance objectives for the annual bonus program that reflects shareholder and corporate priorities for the upcoming year and provides appropriate incentives for meeting or exceeding our annual corporate plan. +To better align our executive compensation with shareholder priorities including a focus on cash flow and capital efficiency, the Committee modified the performance metrics for the annual bonus program during the first quarter of 2018. The Committee established both quantitative objectives, which measure operational and financial performance, and qualitative objectives, which evaluate progress on safety and environmental performance and key strategic initiatives. The objectives for 2018 and the Committee’s assessment of performance against each are set forth below: +QUANTITATIVE OBJECTIVES +Objective +Description +Target +Actual +Assessment +(LOE + Cash G&A)/BOE +Measure of critical cash margin components influenced by management. +$8.60 +$8.29 +(i) +Exceeded Target +Production Growth +Key component in our ability to convert assets into shareholder value and deliver returns on capital investment. +31,000 (77% oil) +31,091 (78% oil) +(i) +Exceeded Target +Proved Developed F&D/BOE (ii) +Measure of capital efficiency for annual proved developed reserve additions that captures well costs and well productivity. +$15.50 +$13.40 +(i) +Exceeded Target +Cash Flow Growth per Debt-Adjusted Share +Measure of quality of growth reflecting cash margins, outstanding debt, and share price +30% +36% +(iii) +Exceeded Target +Net Debt/EBITDA +Measure of our ability to cover our debt which ensures focus on a strong balance sheet. +2.4x +2.4x +(iv) +Met Target +(i) +Excludes effects of the Delaware Basin Acquisition which closed August 31, 2018. +(ii) +PD F&D/BOE reflects all operational capital including exploration, development and facilities capital. See Appendix A for a reconciliation of Non-GAAP financial measures. +(iii) +Pro-forma for Delaware Basin Acquisition and related financings as of September 1, 2018. Calculated using discretionary cash flow (excluding working capital) and CPE average 2018 stock price of $11.23. +(iv) +Net Debt to LTM Adjusted EBITDA is calculated as the sum of total long-term debt less unrestricted cash and cash equivalents, divided by the Company’s Adjusted EBITDA inclusive of annualized pro-forma results from its acquisitions completed over the last twelve month period. See Appendix A for a reconciliation of Non-GAAP financial measures. +38 CALLON PETROLEUM +EXECUTIVE COMPENSATION +QUALITATIVE OBJECTIVES +Objective +Assessment and Commentary +Improve Health, Safety & Environmental Performance +Exceeded Target. The Company made meaningful improvements in HES performance in 2018, including improvements of 40% or more in recordable incident rates, proactive safety observations, spill occurrences and spill volumes, while supporting increased production and activity levels. +Enhance Talent and Organizational Developmental Activities +Exceeded Target. The management team added and integrated critical skill sets in subsurface technology, IT, supply chain, risk management and other disciplines. The Company also established an enhanced talent readiness initiative to support employee development. +Strategic Initiatives +Exceeded Target. The Company advanced its longer-term resource capture model through the refinement of larger pad development concepts, completion designs and landing zones. We also acquired an additional 35,000 net surface acres at competitive prices as strategic “bolt on” assets complementary to our existing footprint. Management also enhanced financial flexibility through capital markets transactions and an increase in the borrowing base to $1.1B with an elected commitment of $850 million. +The Committee evaluated the NEOs’ performance against the 2018 performance criteria described above and determined that overall the management team exceeded the qualitative and quantitative objectives for the year and did so significantly in several areas. Based on the results set forth above and relevant market survey data, the Committee determined actual bonus amounts paid for 2018 performance at approximately 140% of target, as follows: +NEO +2018 Annual Bonus +Joseph C. Gatto, Jr. +$980,000 +James P. Ulm, II +$585,900 +Michol L. Ecklund +$343,000 +Correne S. Loeffler +$259,700 +Mitzi P. Conn +$240,100 +Gary A. Newberry +$665,000 +2019 Annual Cash Bonus Program +In March 2019, the Committee established the annual bonus program for 2019 to include a performance-based formulaic assessment for 60% of the bonus and a discretionary assessment linked to qualitative strategic objectives for 40% of the bonus. Under the program, each officer’s bonus is capped at 200% of target. The formulaic portion of the bonus is designed to align executive officers’ interests with shareholder priorities of corporate returns on capital and progress towards free cash flow generation and is based on achievement of defined performance levels and weightings related to: +Quantitative Objective +Weighting +Oil Production +10% +(LOE + Cash G&A)/BOE +12.5% +Proved Developed F&D/BOE +10% +Net Debt/EBITDA +15% +Cash Return on Cash Invested +12.5% +The Committee also established strategic qualitative objectives for the 2019 annual cash bonus program related to the following: +• +Health, safety and environmental performance +• +Organizational and talent development +• +Advancement of "life of field" development plans and associated well productivity initiatives +• +Other strategic initiatives, including selective divestitures of non-core assets to reduce capital intensity. +Collectively, these qualitative factors will carry a weighting of 40% in the bonus calculation for 2019. +CALLON PETROLEUM 39 +EXECUTIVE COMPENSATION +Annual Award of Long-Term Incentives +We believe that a long-term incentive program that includes awards of both restricted stock units (“RSUs”) and performance stock units (“PSUs”) provides appropriate retention incentives and effectively aligns our executive officers’ interests with the interests of our shareholders on a long-term basis. Our PSUs have a performance-based component that compares our total shareholder return ("TSR") with that of the Peer Group over a defined performance period. We believe this combination of LTI awards provides appropriate incentives that capture absolute performance of our common stock as well as comparative returns relative to other oil and gas companies. The Committee believes that granting LTI awards is an effective means to provide substantial forward-looking incentives to our executive officers that emphasize: +• +Long-term value creation by linking compensation with long-term operational success; +• +Alignment of the long-term interests of our executive officers with those of our shareholders by directly linking rewards to shareholder return; +• +Retention incentives for our executive officers; and +• +Meaningful equity participation by our executive officers. +The Committee administers our long-term incentive programs, approves award recipients and amounts, and determines the vesting and performance criteria. For the grant of LTI compensation to executive officers, the Committee will typically consider market information provided by Meridian related to the program design and award amounts. We have no program, plan or obligation that requires us to grant LTI compensation on specified dates. +For the 2018 LTI grants, the Committee approved a 40%/60% mix for our executive officers of time-based RSUs and performance based awards tied to relative TSR, respectively. The performance awards are granted as PSUs that settle 50% in cash and 50% in stock. The following table sets forth the number of RSUs and PSUs awarded to the executive officers at our normal annual grant in May 2018: +NEO +Total Value +$ +RSUs Payable in +Common Stock (a) +PSUs Payable in +50% Stock and 50% cash (b) +Joseph C. Gatto, Jr. +$3,899,990 +110,169 +165,254 +James P. Ulm, II (c) +$1,062,000 +— +75,000 +Michol L. Ecklund +$700,000 +19,773 +29,662 +Correne S. Loeffler +$357,993 +10,112 +15,170 +Mitzi P. Conn +$330,990 +9,349 +14,026 +Gary A. Newberry +$2,099,999 +59,321 +88,984 +(a) +Amounts represent RSUs that are subject to three-year ratable vesting with one-third vesting each year subsequent to the award year. The first tranche will vest on June 1, 2019; the second on June 1, 2020; and the third on June 1, 2021 and each tranche will settle in Company common stock on the vesting date. +(b) +Amounts represent PSUs that are scheduled to vest on December 31, 2020 and settled in 50% Company common stock and 50% cash at a variable rate between 0% and 200% based on our TSR when compared to pre-determined peer companies. +(c) +Mr. Ulm was awarded a hire-on grant of RSUs upon joining the Company in December 2017 in lieu of an annual grant in May 2018. +RSU program +In 2018, the Committee awarded NEOs with time-based RSUs that will vest in one-third increments annually beginning June 1, 2019, provided the executive officer continues to be employed on the vesting dates, and will be paid in shares of the Company’s common stock. +40 CALLON PETROLEUM +EXECUTIVE COMPENSATION +PSU program +In 2018, the Committee awarded PSUs to the NEOs that will vest at the end of the 32-month performance period based on the Company’s TSR ranking relative to the "New 2018 Peer Group" listed on page 36. TSR is the change in the common stock price plus dividends over the defined performance period using a 20-day average at the beginning and end of the performance period. The Committee believes relative TSR is an appropriate long-term performance metric because it provides a strong alignment of the interests of management and the Company’s shareholders. The Committee also believes that the PSU program provides a good balance to the restricted stock unit program. PSUs are eligible for vesting if the employee continues to be employed until the vesting date on December 31, 2020. PSUs will vest at the percentage set forth below based on the Company’s relative TSR ranking for the performance period. Vesting will be interpolated for percentile ranks between the percentiles described: +Callon’s TSR Percentile Rank Among the Peer Companies +PSUs Vesting as a Percentage of Target +>=90th Percentile +200 +% +70th Percentile +150 +% +50th Percentile +100 +% +30th Percentile +50 +% +<30th Percentile +0 +% +If the Company's TSR is negative during the performance period the payout will be capped at 100% of target. The vested PSUs will pay out 50% in cash and 50% in shares of the Company's common stock. +Vesting of 2016-2018 Performance Awards +In May 2016, our Compensation Committee granted PSUs to the executive officers that vested on December 31, 2018. Under the provisions of these awards, the awards were subject to our relative TSR performance compared with the TSR of the peer companies specified in the award agreement. The Company's TSR during the performance period ranked fifth relative to the 13 peer companies, resulting in vesting of 142% of the target PSUs awarded. Vested units were paid 50% in cash and 50% in Company common stock. +The table below summarizes the PSUs earned by the executive officers for the 2016-2018 performance period: +NEO +Target Number +of PSUs +Percent of Target +PSUs Earned +Actual Vested PSUs +(Settled 50% Cash and 50% Shares) +Joseph C. Gatto, Jr. +65,100 +142% +92,442 +James P. Ulm, II (a) +— +— +— +Michol L. Ecklund (a) +— +— +— +Correne S. Loeffler (a) +— +— +— +Mitzi P. Conn +17,902 +142% +25,420 +Gary A. Newberry +65,100 +142% +92,442 +(a) +Executive was not employed by the Company in May 2016 when award was granted. +Other Compensation +Perquisites and Other Benefits +Benefits represent a relatively small part of our overall compensation package; however, these benefits help attract and retain senior level executives. We review these benefits annually to ensure that they are competitive with industry norms. We provide benefits commonly offered in the oil and gas E&P industry to all of our employees. These benefits consist of: +• +Group medical and dental insurance program for employees and their qualified dependents; +• +Group life insurance for employees and their spouses; +• +Accidental death and dismemberment coverage for employees; +• +Long-term disability coverage; +• +Callon's sponsored cafeteria plan; and +• +401(k) employee savings and protection plan. +CALLON PETROLEUM 41 +EXECUTIVE COMPENSATION +We pay the full costs of these benefits, including the 401(k) plan administration, for all employees. Employee life insurance amounts that surpass the Internal Revenue Service maximum are treated as additional compensation to all employees. +Under our 401(k) plan, employees may elect to defer a portion of their compensation up to the statutorily prescribed limit. The Company provides contributions for qualified employees, including NEOs, of 5% of the employee’s IRS eligible salary. We also match employee deferral amounts, including amounts deferred by NEOs, up to a maximum of 5% of IRS eligible salary. +Our NEOs are entitled to certain benefits, or perquisites, that are not otherwise available to all of our employees. We provide our executive officers with use of a Company automobile. We purchase the automobile and pay for all maintenance, repairs, insurance and fuel. The employee is required to recognize taxable income using the Internal Revenue Service’s annual lease value method for personal use of the vehicle. The costs associated with these benefits for the NEOs are reported as “Other Compensation” in the Summary Compensation Table. The Committee believes these perquisites are modest, yet competitive with the perquisites provided to similarly situated oil and gas industry executives. +Change in Control Severance Protection +We have no employment agreements with our executive officers, but we do provide change in control severance compensation agreements (“SCAs”) with each of our executive officers that provide certain protections upon a change in control. The Committee believes that SCAs serve shareholders’ best interests by diminishing potential distractions for our executive officers in the event of a potential corporate restructuring or change in control transaction. These protections also help ensure continuity of management in the event of certain corporate transactions. However, the Committee believes that executives should not be unduly enriched, and all benefits under the SCAs require a "double trigger." For a more detailed explanation of the SCAs, including amendments adopted as of January 1, 2019, please see “Employment Agreements, Termination of Employment and Change in Control (“CIC”) Arrangements” on page 50. +Stock Ownership Guidelines +Consistent with its goal of driving long-term value creation for our shareholders, the Committee’s stock ownership guidelines require significant stock ownership by the executive officers and directors. The Committee believes that requiring meaningful stock ownership by our executive officers and directors is an important way to further align their interests with the interests of our shareholders and discourage undue risk taking. Accordingly, the Committee has adopted a stock ownership policy which applies to the CEO, the other executive officers and outside directors as described below. The guidelines require the executive officers and directors to hold the following amounts of our stock: +Executive Officers/Directors +Required Common Stock Ownership as a Multiple of Annual Base Salary / Annual Retainer +CEO +6x +Directors +5x +Other Executive Officers +2x +The Committee evaluates compliance with these guidelines on an annual basis. For purposes of the guidelines, shares owned indirectly, shares in the executive officer's 401(k) plan and any unvested time-based RSUs are included. The value of unvested PSUs is excluded. +Each executive officer has a transition period of five years from the date the individual becomes subject to the guidelines to attain the required investment position. If an executive officer becomes subject to a greater ownership requirement due to a promotion or an increase in salary, the executive officer will be expected to attain the higher level within three years of the change. +Each outside director is required to achieve the ownership requirement within five years following their election as a director. +All participants are currently in compliance with the stock ownership policy, either through meeting the ownership requirement or by being within the transition period. +42 CALLON PETROLEUM +EXECUTIVE COMPENSATION +Internal Revenue Service Limitations +Section 162(m) of the Internal Revenue Code places a limit of $1.0 million on the amount of compensation that we may deduct in any one year with respect to compensation paid to each covered employee. For years prior to 2018, an exception to the deduction limit for compensation qualified as “performance-based.” The enactment of the Tax Cuts and Jobs Act on December 22, 2017 repealed the "performance-based" exemption from Section 162(m)‘s deduction limit. In addition, the limitation on deductibility was expanded to include any individual who is an NEO in 2017 or any later calendar year. As a result, compensation paid to our NEOs in excess of $1 million will not be deductible for years subsequent to 2017, subject to limited transition relief for arrangements in place as of November 2, 2017. Despite the change in law, the Committee intends to continue to consider the deductibility of compensation and to implement compensation programs that it believes are competitive and in the best interests of the Company and its shareholders. +Insider Trading Policy +The Company’s Board has adopted a comprehensive Insider Trading Policy for employees and directors to promote compliance with federal and state securities laws. The policy prohibits certain persons who are aware of material non-public information about a company from: (i) trading in securities of that company; or (ii) providing material non-public information to other persons who may trade on the basis of that information. When material non-public information about us may exist and may have an influence on the marketplace, a trading blackout period is placed in effect by management. In addition, this Insider Trading Policy also applies to family members, other members of a person’s household, and entities controlled by a person covered by this Insider Trading Policy. Officers, directors, and designated employees, as well as the family members and controlled entities of such persons, may not engage in any transaction in Company securities without first obtaining pre-clearance of the transaction from our General Counsel. +Under the Insider Trading Policy, directors, executive officers and other employees are prohibited from entering into any hedging or monetization transactions relating to Callon's securities or otherwise trading in any instrument relating to the future securities' price. This Insider Trading Policy also prevents directors and executive officers from pledging Callon common stock as collateral for loans or holding Callon securities in a margin account. +Recoupment Policy +We have no recoupment policy applicable to annual incentive bonuses or LTI awards other than those required under Sarbanes-Oxley legislation, though the Committee regularly evaluates the need to adopt such a policy. +Compensation Committee Report +The Compensation Committee has reviewed and discussed with management the CD&A required by Item 402(b) of Regulation S-K promulgated under the Exchange Act, and based on such review and discussions, the Committee has recommended to the Board that the CD&A be included in this Proxy Statement relating to the 2019 Annual Meeting of Shareholders. +Respectfully submitted by the Compensation Committee of the Board of Directors, +Matthew R. Bob, Chairman +Michael L. Finch +L. Richard Flury +Anthony J. Nocchiero +James M. Trimble +CALLON PETROLEUM 43 +EXECUTIVE COMPENSATION +Executive Compensation Tables +Summary Compensation Table +The compensation paid to the Company’s executive officers generally consists of base salaries, annual cash incentive payments, awards under the 2011 Omnibus Incentive Plan and the 2018 Omnibus Incentive Plan (approved by shareholders in 2018), contributions to the Company’s defined contribution 401(k) retirement plan and miscellaneous perquisites. The table below sets forth information regarding fiscal years 2018, 2017 and 2016 compensation awarded to, earned by or paid to the Company’s NEOs, in each case for the years in which these individuals constituted "named executive officers" under SEC rules. This includes all individuals who served as the Company's CEO or CFO during 2018, the three other most highly compensated executive officers serving at the end of the fiscal year, and our former Chief Operating Officer who would have been in the top three but stepped down from the role prior to year-end: +Name and Principal Position +Year +Salary +Bonus (a) +Stock +Awards +All Other Compensation (b) +Total +Joseph C. Gatto, Jr. (c) +President & CEO +2018 +$666,346 +(d) +$980,000 +$3,899,990 +(e) +$31,430 +$5,577,766 +2017 +$494,568 +$690,000 +$2,599,998 +$41,816 +$3,826,382 +2016 +$367,308 +$630,000 +$1,907,000 +$35,948 +$2,940,256 +James P. Ulm, II (f) +Senior Vice President & CFO +2018 +$465,000 +$585,900 +$1,062,000 +(e) +$39,245 +$2,152,145 +2017 +$17,885 +$52,000 +$989,100 +$0 +$1,058,985 +Michol L. Ecklund (g) +Senior Vice President, General Counsel & Corporate Secretary +2018 +$340,577 +(h) +$343,000 +$700,000 +(e) +$38,131 +$1,421,708 +Correne S. Loeffler (i) +Vice President - Finance +& Treasurer +2018 +$259,615 +(j) +$259,700 +$357,993 +(e) +$31,167 +$908,475 +2017 +$164,904 +$176,400 +$537,239 +$3,710 +$882,253 +Mitzi P. Conn (k) +Vice President & +Chief Accounting Officer +2018 +$239,615 +(l) +$240,100 +$330,990 +(e) +$30,987 +$841,692 +2017 +$225,000 +$189,000 +$329,997 +$30,118 +$774,115 +2016 +$198,370 +$250,000 +$471,400 +$28,811 +$948,581 +Gary A. Newberry (m) +Former SVP & +Chief Operating Officer +2018 +$475,000 +$665,000 +$2,099,999 +(e) +$45,361 +$3,285,360 +2017 +$440,529 +$570,000 +$2,799,995 +$41,171 +$3,851,695 +2016 +$367,308 +$630,000 +$1,907,000 +$40,613 +$2,944,921 +(a) +Cash bonus awarded in first quarter of following year in recognition of previous year's performance. See "Performance-Based Annual Cash Incentive" in the CD&A above for further information. +(b) +See the "Table of All Other Compensation” below and related footnotes for reconciliation. +(c) +Mr. Gatto was promoted to Chief Executive Officer in May 2017. +(d) +Mr. Gatto's salary was increased from $575,000 to $700,000 in March 2018. See page 37 for more information. +(e) +Represents the grant date fair value of the RSUs and PSUs granted to the NEOs on May 10, 2018, computed in accordance with FASB ASC Topic 718. The assumptions utilized in the calculation of these amounts are set forth in footnotes 9 and 10 to our consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2018, filed with the SEC on February 27, 2019. +(f) +Mr. Ulm began serving as our Chief Financial Officer in December 2017. +(g) +Ms. Ecklund was not an NEO prior to 2018. +(h) +Effective April 2, 2018, Ms. Ecklund's salary was increased from $315,000 to $350,000. +(i) +Ms. Loeffler began serving as our Treasurer in April 2017. +(j) +During April 2018, Ms. Loeffler's salary was increased from $245,000 to $265,000. +(k) +Ms. Conn was promoted to Vice President and Chief Accounting Officer in August 2016. +(l) +During April 2018, Ms. Conn's salary was increased from $225,000 to $245,000. +(m) +Mr. Newberry was promoted to Chief Operating Officer in August 2016. +44 CALLON PETROLEUM +EXECUTIVE COMPENSATION +Table of All Other Compensation +NEO +Year +Company +Contributions to 401(k) (a) +Company +Provided +Auto (b) +Total +Joseph C. Gatto, Jr. +2018 +$25,000 +$6,430 +$31,430 +2017 +$31,500 +$10,316 +$41,816 +2016 +$26,500 +$9,448 +$35,948 +James P. Ulm, II +2018 +$26,493 +$12,752 +$39,245 +2017 +$0 +$0 +$0 +Michol L. Ecklund +2018 +$25,312 +$12,819 +$38,131 +Correne S. Loeffler +2018 +$25,902 +$5,265 +$31,167 +2017 +$3,710 +$0 +$3,710 +Mitzi P. Conn +2018 +$23,961 +$7,026 +$30,987 +2017 +$22,500 +$7,618 +$30,118 +2016 +$20,212 +$8,599 +$28,811 +Gary A. Newberry +2018 +$27,500 +$17,861 +$45,361 +2017 +$27,000 +$14,171 +$41,171 +2016 +$26,500 +$14,113 +$40,613 +(a) +Subject to IRS limits, Company contributions to each employee's 401(k) account consist of a 5% non-matching contribution plus a matching contribution at the rate of 0.625% in cash for every 1% that the participant deferred up to 5%. +(b) +Represents annual depreciation based on a three-year life, plus insurance, fuel, maintenance and repairs, pursuant to IRS rules. +CALLON PETROLEUM 45 +EXECUTIVE COMPENSATION +Grants of Plan-Based Awards During 2018 +The following table presents grants of equity awards during the fiscal year ending December 31, 2018: +Estimated Future Payouts Under +Equity Incentive Plan Awards (a) +NEO +Grant +Date +Threshold +Target +Maximum +Other Awards +(Shares or Units) (b) +Grant Date +Fair Value (c) +Joseph C. Gatto, Jr. +5/10/2018 +— +— +— +110,169 +$1,559,993 +5/10/2018 +— +165,254 +330,508 +— +$2,339,997 +James P. Ulm, II (d) +5/10/2018 +— +75,000 +150,000 +— +$1,062,000 +Michol L. Ecklund +5/10/2018 +— +— +— +19,773 +$279,986 +5/10/2018 +— +29,662 +59,324 +— +$420,014 +Correne S. Loeffler +5/10/2018 +— +— +— +10,112 +$143,186 +5/10/2018 +— +15,170 +30,340 +— +$214,807 +Mitzi P. Conn +5/10/2018 +— +— +— +9,349 +$132,382 +5/10/2018 +— +14,026 +28,052 +— +$198,608 +Gary A. Newberry +5/10/2018 +— +— +— +59,321 +$839,986 +5/10/2018 +— +88,984 +177,968 +— +$1,260,013 +(a) +Amounts represent PSUs payable 50% in cash and 50% in stock on the vesting date, currently scheduled for December 31, 2020. See "PSU Program" in the CD&A above for further details. +(b) +Amounts represent RSUs granted to our NEOs on May 10, 2018. These awards are scheduled to vest in equal installments on June 1, 2019, 2020, and 2021, subject to the NEO's continued service. +(c) +This column shows the grant date fair value of the awards granted to the NEOs on the date indicated computed in accordance with FASB ASC Topic 718. The assumptions utilized in the calculation of these amounts are set forth in footnotes 9 and 10 to our consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2018, filed with the SEC on February 27, 2019. The value ultimately realized by the executive upon the actual vesting of the awards may be more or less than the grant date fair value. +(d) +Mr. Ulm received an award of 90,000 RSUs when he joined the Company in December 2017. He did not receive an RSU award in 2018. +Stock-Based Incentive Compensation Plans +The 2011 Omnibus Incentive Plan (the "2011 Plan") was approved by shareholders on May 12, 2011 and amended on May 14, 2015. The 2018 Omnibus Incentive Plan (the "2018 Plan") was approved by shareholders on May 10, 2018. Awards available under each of the 2011 Plan and the 2018 Plan include grants of stock options, stock appreciation rights or units, restricted stock, RSUs, and performance shares or units. As of May 10, 2018, no more shares will be issued from the 2011 Plan and the remaining 1,322,742 shares authorized and available for issuance under the 2011 Plan will be transferred into the 2018 Plan. Shares, which would otherwise become available for issuance under the 2011 Plan as a result of vesting and/or forfeiture of any equity awards existing prior to the effective date of the 2018 Plan, will increase the authorized shares available to the 2018 Plan. As of March 15, 2019, 7,811,037 shares remain unissued in the 2018 Plan. +46 CALLON PETROLEUM +EXECUTIVE COMPENSATION +Outstanding Equity Awards at Fiscal Year-End +The following table contains information concerning all outstanding equity awards that were held as of December 31, 2018 for the NEOs: +Stock Awards +NEO +Number of Shares or Units of Stock That Have Not Vested (#) +Market Value of Shares or Units of Stock That Have Not Vested (a) +Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested +Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested (a) +Joseph C. Gatto, Jr. +36,890 +(b) +$239,416 +— +$0 +— +$0 +6,510 +(c) +$42,250 +50,000 +(d) +$324,500 +— +$0 +42,868 +(e) +$278,213 +— +$0 +80,098 +(f) +$519,836 +— +$0 +110,169 +(g) +$714,997 +— +$0 +— +$0 +32,152 +(h) +$208,666 +— +$0 +32,152 +(i) +$208,666 +— +$0 +82,627 +(j) +$536,249 +— +$0 +82,627 +(k) +$536,249 +James P. Ulm, II +90,000 +(l) +$584,100 +— +$0 +— +$0 +37,500 +(j) +$243,375 +— +$0 +37,500 +(k) +$243,375 +Michol L. Ecklund +37,500 +(m) +$243,375 +— +$0 +19,773 +(g) +$128,327 +— +$0 +— +$0 +14,831 +(j) +$96,253 +— +$0 +14,831 +(k) +$96,253 +Correne S. Loeffler +23,333 +(n) +$151,431 +— +$0 +7,068 +(e) +$45,871 +— +$0 +10,112 +(g) +$65,627 +— +$0 +— +$0 +3,030 +(h) +$19,655 +— +$0 +7,585 +(j) +$49,227 +— +$0 +7,585 +(k) +$49,227 +Mitzi P. Conn +10,145 +(b) +$65,841 +— +$0 +— +$0 +1,790 +(c) +$11,617 +10,000 +(d) +$64,900 +— +$0 +10,881 +(e) +$70,618 +— +$0 +9,349 +(g) +$60,675 +— +$0 +— +$0 +8,162 +(h) +$52,971 +— +$0 +8,162 +(i) +$52,971 +— +$0 +7,013 +(j) +$45,514 +— +$0 +7,013 +(k) +$45,514 +Gary A. Newberry +36,890 +(b) +$239,416 +— +$0 +— +$0 +6,510 +(c) +$42,250 +50,000 +(d) +$324,500 +— +$0 +42,868 +(e) +$278,213 +— +$0 +59,321 +(g) +$384,993 +— +$0 +— +$0 +32,152 +(h) +$208,666 +— +$0 +32,152 +(i) +$208,666 +— +$0 +44,492 +(j) +$288,753 +— +$0 +44,492 +(k) +$288,753 +138,632 +(o) +$899,722 +— +$0 +(a) +Amounts calculated using the closing price of $6.49 per share of our common stock on the last trading day of 2018. +(b) +Stock settleable RSUs awarded on May 13, 2016 subject to cliff vesting on May 13, 2019. +(c) +Cash settleable RSUs awarded on May 13, 2016 subject to cliff vesting on May 13, 2019. +(d) +Stock settleable RSUs awarded August 24, 2016 subject to cliff vesting on August 24, 2019. +CALLON PETROLEUM 47 +EXECUTIVE COMPENSATION +(e) +Stock settleable RSUs awarded on May 11, 2017 subject to cliff vesting on May 11, 2020. +(f) +Stock settleable RSUs awarded to Mr. Gatto upon his promotion to CEO on July 11, 2017 subject to three-year ratable vesting with one-third vesting each year subsequent to the award year. The first tranche vested on July 1, 2018. The second tranche will vest on July 1, 2019. The third and final tranche will vest on July 1, 2020. +(g) +Stock settleable RSUs awarded on May 10, 2018 subject to three-year ratable vesting with one-third vesting each year subsequent to the award year. The first tranche will vest on June 1, 2019. The second tranche will vest on June 1, 2020. The third and final tranche will vest on June 1, 2021. +(h) +Stock settleable PSUs awarded on May 11, 2017 with vesting terms subject to performance criteria related to the TSR of the Company compared to a group of peer companies from May 2017 through December 31, 2019. The number of units subject to vest under this award can range from 0% to 200%. +(i) +Cash settleable PSUs awarded on May 11, 2017 with vesting terms subject to performance criteria related to the TSR of the Company compared to a group of peer companies from May 2017 through December 31, 2019. The number of units subject to vest under this award can range from 0% to 200%. +(j) +Stock settleable PSUs awarded on May 10, 2018 with vesting terms subject to performance criteria related to the TSR of the Company compared to a group of peer companies from May 2018 through December 31, 2020. The number of units subject to vest under this award can range from 0% to 200%. +(k) +Cash settleable RSUs awarded on May 10, 2018 with vesting terms subject to performance criteria related to the TSR of the Company compared to a group of peer companies from May 2018 through December 31, 2020. The number of units subject to vest under this award can range from 0% to 200%. +(l) Stock settleable RSUs awarded to Mr. Ulm upon his hiring on December 11, 2017 subject to three-year ratable vesting with one-third vesting each year subsequent to the award year. The first tranche vested on January 1, 2019. The second tranche will vest on January 1, 2020. The third and final tranche will vest on January 1, 2021. +(m) Stock settleable RSUs awarded to Ms. Ecklund upon her hiring on November 6, 2018 subject to three-year ratable vesting with one-third vesting each year subsequent to the award year. The first tranche vested on January 1, 2019. The second tranche will vest on January 1, 2020. The third and final tranche will vest on January 1, 2021. +(n) +Stock settleable RSUs awarded to Ms. Loeffler upon her hiring on April 24, 2017 subject to three-year ratable vesting with one-third vesting each year subsequent to the award year. The first tranche vested on March 1, 2018. The second tranche vested on March 1, 2019. The third and final tranche will vest on March 1, 2020. +(o) +Stock settleable RSUs awarded to Mr. Newberry on July 11, 2017 subject to three-year ratable vesting with one-half vesting on the second year subsequent to the award year. The first tranche will vest on July 1, 2019; and the second and final tranche will vest on July 1, 2020. +48 CALLON PETROLEUM +EXECUTIVE COMPENSATION +Stock Vested +The following table provides information about the value realized by the NEOs on vesting of RSUs and PSUs during 2018: +Stock Awards (a) +NEO +Number of Shares +Acquired on Vesting (#) +Value Realized on Vesting $ (b) +Joseph C. Gatto, Jr. +46,221 +(c) +$299,974 +— +$299,974 +(d) +24,848 +(e) +$344,145 +— +$61,127 +(f) +40,050 +(g) +$430,137 +James P. Ulm, II (h) +— +$0 +Michol L. Ecklund (h) +— +$0 +Correne S. Loeffler +11,667 +(i) +$125,304 +Mitzi P. Conn +12,710 +(c) +$82,488 +— +$82,488 +(d) +12,424 +(e) +$172,072 +— +$30,557 +(f) +Gary A. Newberry +46,221 +(c) +$299,974 +— +$299,974 +(d) +24,848 +(e) +$344,145 +— +$61,127 +(f) +(a) +No options were awarded, outstanding, expired, or exercised by any NEO in 2018. +(b) +Except as otherwise indicated, represents the aggregate dollar amount realized on the date of vesting, based on the closing market price per share of Company common stock on the vesting date or last business day prior to the vesting date if such date fell on a weekend or holiday. +(c) +Represents PSUs awarded on May 13, 2016 that settled in stock on December 31, 2018. +(d) +Represents PSUs awarded on May 13, 2016 that settled in cash on December 31, 2018, which include amounts as follows: Mr. Gatto - 46,221, Ms. Conn - 12,710, and Mr. Newberry - 46,221. +(e) +Represents RSUs awarded on May 14, 2015 that settled in stock on the May 14, 2018 vesting date. +(f) +Represents RSUs awarded on May 14, 2015 that settled in cash on the May 14, 2018 vesting date, which include amounts as follows: Mr. Gatto - 4,385, Ms. Conn - 2,192, and Mr. Newberry - 4,385. +(g) +Represents RSUs awarded on July 11, 2017; the first tranche of which vested on July 11, 2018. +(h) +NEO had no stock vest during 2018. +(i) +Represents RSUs awarded on April 24, 2017; the first tranche of which vested on March 1, 2018. +CALLON PETROLEUM 49 +EXECUTIVE COMPENSATION +Employment Agreements, Termination of Employment and Change in Control Arrangements +Employment Agreements +We do not have employment agreements with any of our executive officers. +Severance Compensation Agreements +We entered into amended Change in Control Severance Compensation Agreements (“SCA”) with each of our NEOs effective as of January 1, 2019. The SCA will terminate, except to the extent that any obligation of Callon thereunder remains unpaid as of such time, upon the earliest of (i) December 31, 2019, except that, on each anniversary date thereafter, the expiration date will automatically be extended for one additional year unless, as of such date and prior to such anniversary date, either party has given proper written notice that it does not wish to extend the SCA, but in no event will the expiration date be earlier than the second anniversary of the effective date of a change in control; (ii) the termination of the NEOs employment with Callon based on death, disability (as defined in the SCA), or cause (as defined in the SCA); (iii) the voluntary resignation of the NEOs for any reason other than a post-change in control resignation for good reason (as defined in the SCA); and (iv) any resignation of the NEO prior to a change in control. +Pursuant to the SCA, if the executive is terminated without cause by Callon or for good reason by him within two years following a change in control of Callon (or in certain cases, prior to a change in control), then the executive is entitled to a single lump-sum cash payment equal to an SCA multiple times the sum of (i) the annual base salary in effect immediately prior to the change in control or, if higher, in effect immediately prior to the separation from service, and (ii) the greater of the average bonus earned with respect to the three most recently completed full fiscal years or the target bonus for the fiscal year in which the change in control or termination occurs. For Mr. Gatto, the SCA multiple is three times. For the other NEOs, the SCA multiple is two times. The SCAs also provide that in the event an NEO is eligible for benefits due to a “double trigger” termination, any outstanding equity awards then held by the NEO shall vest in full with any performance-based awards earned at the level specified in the applicable award agreement or, if not specified, at the target level. In addition, we must maintain at our expense until twenty-four months after a separation from service all medical, dental, and health insurance coverage. A change in control as generally defined in the SCA occurs when (i) any person or group of persons acting in concert becomes the beneficial owner of more than 50% of our outstanding common stock; (ii) our shareholders cause a change in the majority of the members of the Board within a thirty-six month period; (iii) there is a change in control in ownership of at least 40% of Company assets; or (iv) a third party acquires more than 30% of the voting power of our common stock in a twelve month period. +The SCAs incorporate a provision to provide for the possible impact of the federal excise tax on excess parachute payments. If any SCA payment is subject to any excise tax under Section 4999 of the Internal Revenue Code of 1986, as amended, the payment will be reduced so that no portion of the payment is subject to such excise tax if the net benefit payable would be at least as much as it would have been if no reduction was made. The so-called “golden parachute” tax rules subject “excess parachute payments” to a dual penalty: the imposition of a 20 percent excise tax upon the recipient and non-deductibility of such payments by the paying corporation. While the excise tax is seemingly evenhanded, the excise tax can discriminate against long-serving employees in favor of new hires, against individuals who do not exercise stock options in favor of those who do and against those who elect to defer compensation in favor of those who do not. For these reasons, we believe that the “net-best” provision included in the SCA is appropriate. +50 CALLON PETROLEUM +EXECUTIVE COMPENSATION +Potential Payments upon Termination or Change in Control +The following table shows the estimated gross taxable compensation payable upon termination following a change in control or upon death, disability or retirement. No amounts would be payable upon termination for other causes. The information assumes, in each case, that the officer’s termination was effective as of December 31, 2018. In presenting this disclosure, we describe amounts earned through December 31, 2018 and, in those cases where the actual amounts to be paid out can only be determined at the time of such executive’s separation from us, the estimates are of the amounts which would be paid out to the executives upon their termination. +NEO / Reason for Termination +Base +Salary (a) +Cash +Bonus (a) +Accelerated +Stock Award +Vesting (b) +Continued +Employee +Benefits (c) +Total +Joseph C. Gatto, Jr. - CIC (d) +$2,100,000 +$2,100,000 +$4,031,547 +$46,763 +$8,278,310 +Death, Disability or Retirement (e) +$0 +$0 +$4,031,547 +$0 +$4,031,547 +James P. Ulm, II - CIC (d) +$930,000 +$837,000 +$1,070,850 +$46,763 +$2,884,613 +Death, Disability or Retirement (e) +$0 +$0 +$1,070,850 +$0 +$1,070,850 +Michol L. Ecklund - CIC (d) +$700,000 +$490,000 +$564,208 +$46,763 +$1,800,971 +Death, Disability or Retirement (e) +$0 +$0 +$564,208 +$0 +$564,208 +Correne S. Loeffler - CIC (d) +$530,000 +$371,000 +$381,050 +$46,414 +$1,328,464 +Death, Disability or Retirement (e) +$0 +$0 +$381,050 +$0 +$381,050 +Mitzi P. Conn - CIC (d) +$490,000 +$439,000 +$586,806 +$46,214 +$1,562,020 +Death, Disability or Retirement (e) +$0 +$0 +$586,806 +$0 +$586,806 +Gary A. Newberry (f) - CIC (d) +$950,000 +$1,200,000 +$3,586,432 +$33,429 +$5,769,861 +Death, Disability or Retirement (e) +$0 +$0 +$3,586,432 +$0 +$3,586,432 +(a) +In accordance with Mr. Gatto’s SCA, the computation uses a three-year multiple with respect to the severance amount relating to salary and target bonus, while a two-year multiple is used for the other NEOs. See “Employment Agreements, Termination of Employment and Change in Control Arrangements.” +(b) +The amounts are calculated based on unvested stock awards at December 31, 2018 using the closing price of $6.49 per share of our common stock on the last trading day of 2018. +(c) +Benefits consist of twenty-four months of employer provided family medical and dental insurance and disability and life insurance for the NEOs in the table. +(d) +We entered into a Severance Compensation Agreement with each of the NEOs listed in the table above. See “Employment Agreements, Termination of Employment and Change in Control Arrangements.” +(e) +“Disability” is generally defined as the employee’s inability to carry out the normal and usual duties of his employment on a full-time basis for an entire period of six continuous months together with the reasonable likelihood, as determined by the Board after consultation of a qualified physician, he will be unable to carry out his normal and usual duties of employment. “Retirement” is generally defined as the employee’s attainment of age 55 with at least 10 years of service. +(f) +Gary A. Newberry retired from the Company effective January 31, 2019 and is no longer eligible to receive any payment upon termination following a change in control or upon death, disability or retirement. +Pension and Non-Qualified Deferred Compensation Plans. +We sponsor a 401(k) plan for all eligible employees, including the NEOs as described on page 42. We do not sponsor any qualified or non-qualified defined benefit plans, or any non-qualified defined contribution plan. The Board or Compensation Committee may elect to adopt qualified or non-qualified defined benefit plans or non-qualified defined contribution plans in the future if it determines that doing so is in the Company’s best interest. +CALLON PETROLEUM 51 +EXECUTIVE COMPENSATION +CEO Pay Ratio +Pursuant to a mandate of the Dodd-Frank Wall Street Reform and Consumer Protection Act, we are disclosing here that the ratio of our median employee’s compensation to the compensation of our Chief Executive Officer (CEO) is 40:1. +In order to find the median employee, we used the sum of the base salary and bonus, including any overtime or commission that was paid to the employee. Furthermore, we annualized the bonus, base salary, and any overtime for employees that were not employed the entire 2018 year, other than for temporary and seasonal employees. We identified the median employee from the employee population as of December 31, 2018. +In accordance with SEC rules, we then determined the annual total compensation of our median employee for 2018, which was $137,712. This amount represents the total compensation that would have been reported in the Summary Compensation Table in accordance with the requirements of Item 402(c)(x) of Regulation S-K for the median employee if the employee had been a Named Executive Officer for fiscal year 2018. For purposes of calculating the ratio, an additional value of $2,789 was included in the annual compensation for non-discriminatory benefits bringing the annual total compensation to $140,501. +We determined the amount of the CEO’s annual total compensation was $5,577,766 which represents the amount reported for the CEO in the “Total” column of our 2018 Summary Compensation Table. For purposes of the ratio, an additional value of $23,882 was included in the annual total compensation for non-discriminatory benefits to bring the value to $5,601,148. +Based on the foregoing, for 2018 the ratio of the median of the annual total compensation of all employees to the annual total compensation of our CEO is 40:1. +Callon’s CEO Pay Ratio increased from 2017 to 2018 due to several contributing factors. The 2018 Pay Ratio reflects increases in the salary and target long-term incentive value for the CEO that were approved by the Compensation Committee in 2018 in order to better align his compensation with the competitive market, reflect his tenure in the role, and reward performance. In addition, the employee selected as our median employee for the ratio comparison did not receive a long-term incentive award from the Company in 2018 because she commenced employment in the middle of the 2018 calendar year. For this reason, we have calculated an additional pay ratio that includes an estimated amount of long-term incentive value that the median employee would have been awarded for calendar year 2018 had she been employed on the long-term incentive award grant date. If the estimated long-term incentive amount had been included in the median employee’s total compensation, then the pay ratio would have been 32:1. +The pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on our payroll and employment records. +52 CALLON PETROLEUM +Proposal 3 +Ratification of the Appointment of the Independent Registered Public Accounting Firm, Grant Thornton LLP, for 2019 +The Board recommends that you vote “ FOR ” the ratification of the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2019. +• The Board and the Audit Committee believe the retention of Grant Thornton LLP is in the best interests of Callon and its shareholders based on the information presented below. +The Audit Committee has appointed Grant Thornton LLP, as the independent registered public accounting firm to audit our consolidated financial statements for the year ending December 31, 2019. We are asking shareholders to ratify this appointment. Grant Thornton LLP has served as the Company’s independent registered public accounting firm since being appointed effective March 3, 2016. A representative of Grant Thornton LLP will be present at the 2019 Annual Meeting and will have the opportunity to make a statement, if they desire, and to respond to appropriate questions from shareholders. +Fees +The following table sets forth the fees incurred by us for services performed by Grant Thornton LLP in the fiscal years 2017 and 2018: +Fee Category +2017 +2018 +Audit fees (a) +$817,789 +$959,652 +Audit-related fees (b) +$0 +$0 +Tax fees (c) +$15,900 +$21,647 +All other fees (d) +$0 +$0 +Total +$833,689 +$993,499 +(a) +Audit fees consist of the aggregate fees billed for professional services related to the audit and quarterly reviews of our financial statements and for services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements. +(b) +Audit-related fees consist of the aggregate fees billed for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements that are not reported above under “Audit” fees. +(c) +Tax fees consist of the aggregate fees billed for professional services rendered for tax compliance (including filing state and federal tax returns), tax advice and tax planning. Tax fees do not include fees for services rendered in connection with the audit. +(d) +Other fees consist of the aggregate fees billed for professional services other than the services repo rted above. +Pre-approval policy +The Audit Committee pre-approves all audit and permissible non-audit services (including the fees and terms thereof) exceeding $25,000 to be performed on behalf of the Company by our independent registered public accounting firm, as required by applicable law or listing standards and subject to the terms of the audit and non-audit services pre-approval policy in accordance with the Audit Committee charter. The Committee may delegate authority to one or more of its members when appropriate, including the authority to grant pre-approvals of audit and permitted non-audit services, provided that any decisions to grant pre-approvals are consistent with the terms of the delegation and the Audit Committee Charter and are presented to the full Committee at its next scheduled meeting. +CALLON PETROLEUM 53 +PROPOSAL 3 +Voting Standard +The submission of this matter for approval by shareholders is not legally required. However, the Board and Audit Committee believe that this submission is consistent with best practices in corporate governance and is an opportunity for shareholders to provide direct feedback to the Board and Audit Committee on an important issue of corporate governance. Although the results of the vote are not binding on the Audit Committee, if the appointment is not ratified the Audit Committee will consider whether it should select another independent registered public accounting firm. +This proposal will be approved if it receives the affirmative vote of a majority of shares of our common stock present and entitled to vote at the Annual Meeting. If you hold your shares through a broker and you do not instruct the broker how to vote, your broker will have the authority to vote your shares in its discretion on this proposal. Abstentions will have the effect as a vote cast against this proposal. +The Board recommends a vote FOR the ratification of the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm. +54 CALLON PETROLEUM +PROPOSAL 3 +Audit Committee Report +Acting pursuant to its Charter, the Audit Committee reviewed and discussed the Company's audited financial statements for the year ended December 31, 2018, with management and Grant Thornton LLP, and recommended to the Board that the audited consolidated financial statements be included in the Company's Annual Report on Form 10-K for the year ended December 31, 2018, for filing with the SEC. This recommendation was based on: +• +The Audit Committee’s review of the audited financial statements; +• +Discussion of the financial statements with management; +• +Discussion with our independent registered public accounting firm, Grant Thornton LLP, of the matters required to be discussed by auditing standards generally accepted in the United States of America, including the communication matters required to be discussed by Auditing Standard No. 1301, Communications with Audit Committees, issued by the Public Company Accounting Oversight Board; +• +Receipt from Grant Thornton LLP of the written disclosures and letter required by Public Company Accounting Standards Board Rule 3526 (Communications with Audit Committees Concerning Independence); +• +Discussions with Grant Thornton LLP regarding its independence from Callon, our Board and our management; +• +Grant Thornton LLP’s confirmation that it would issue its opinion that the consolidated financial statements present fairly, in all material respects, our financial position and the results of our operations and cash flows for the periods presented in conformity with accounting principles generally accepted in the United States of America; and +• +Other matters the Audit Committee deemed relevant and appropriate. +Management is responsible for the preparation, presentation and integrity of our consolidated financial statements in accordance with Generally Accepted Accounting Principles ("GAAP"), the establishment and maintenance of our disclosure controls and procedures, and the establishment, maintenance and evaluation of the effectiveness of our internal controls over financial reporting. The independent registered public accounting firm is responsible for performing an independent audit of our consolidated financial statements and internal control over financial reporting in accordance with the standards of the PCAOB and issuing reports thereon. The Audit Committee’s responsibilities include monitoring and overseeing these processes. +Members of the Audit Committee rely, without independent verification, on the information provided to them and on the representations made by management and our independent registered public accounting firm. The Audit Committee’s considerations and discussions referred to above do not assure that the audit of our financial statements and internal control over financial reporting have been carried out according to the standards of the PCAOB, that the financial statements are presented according to GAAP, or that Grant Thornton LLP is in fact independent. +Respectfully submitted by the Audit Committee of the Board of Directors, +Anthony J. Nocchiero, Chairman +Barbara J. Faulkenberry +Michael L. Finch +L. Richard Flury +Larry D. McVay +CALLON PETROLEUM 55 +OTHER MATTERS +Beneficial Ownership of Securities +Principal Shareholders and Management +The following table sets forth beneficial ownership information with respect to our common stock as of March 15, 2019, for (i) each person known by us to own beneficially 5% or more of our outstanding common stock; (ii) each of our named executive officers referenced in the Summary Compensation Table, (iii) each of our directors and nominees for director, and (iv) all of our directors and executive officers as of March 15, 2019, as a group. Unless otherwise noted, each person listed below has sole voting and investment power with respect to the shares of our common stock listed below as beneficially owned by the person. Information set forth in the table with respect to beneficial ownership of common stock has been obtained from filings made by the named beneficial owners with the SEC as of the Record Date or, in the case of our executive officers and directors, has been provided to us by such individuals. As of March 15, 2019, the Company had 227,884,091 shares outstanding. +None of the shares beneficially owned by our executive officers or directors has been pledged as security for an obligation. Our Insider Trading Policy prohibits our executive officers and directors from holding Callon securities in a margin account or pledging Callon securities as collateral for a loan. +Beneficial Ownership (1) +Name of Beneficial Owner +Shares (#) +Percent of Class +Holders of More Than 5%: +BlackRock, Inc. (2) +26,888,623 +11.8% +The Vanguard Group, Inc. (3) +20,839,300 +9.2% +State Street Corporation (4) +13,961,168 +6.1% +Wellington Management Group, LLP (5) +13,450,287 +5.9% +Named Executive Officers: +Joseph C. Gatto, Jr. (6) +282,968 +* +James P. Ulm, II (7) +22,269 +* +Michol L. Ecklund (8) +9,396 +* +Correne S. Loeffler (9) +17,444 +* +Mitzi P. Conn (10) +85,215 +* +Gary A. Newberry (11) +547,080 +* +Directors: +Matthew R. Bob (12) +77,915 +* +Barbara J. Faulkenberry (13) +12,277 +* +Michael L. Finch (14) +46,365 +* +L. Richard Flury (15) +225,620 +* +Larry D. McVay (16) +166,900 +* +Anthony J. Nocchiero (17) +135,771 +* +James M. Trimble (18) +58,915 +* +All Executive Officers and Directors as a Group (consisting of 14 persons) (19) +1,294,271 +* +* +Less than 1% +(1) +The amounts shown for our Directors and Named Executive Officers include, as of March 15, 2019: (a) shares of common stock held under Callon’s 401(k) Plan for the accounts of participants; (b) shares of common stock owned outright by the individual; and (c) shares of common stock that may be acquired within 60 days through the vesting or settlement of certain restricted stock units, if any. Until restricted stock units vest, these individuals have neither voting nor investment power over the underlying shares of common stock. As of March 15, 2019, none of the directors or executive officers held any stock options to purchase shares of Company stock. +CALLON PETROLEUM 56 +OTHER MATTERS +(2) +BlackRock, Inc. (BlackRock), in its capacity as a parent holding company or control person for various subsidiaries (none of which individually owns more than 5% of our outstanding common stock), may be deemed to beneficially own the indicated shares. BlackRock has sole voting power over 26,094,734 shares and sole dispositive power over 26,888,623 shares. BlackRock does not have shared voting or shared dispositive power over any of the shares. BlackRock’s address is 55 East 52nd St., New York, NY 10055. This information is based on BlackRock’s most recent Statement on Schedule 13G filed on January 30, 2019. +(3) +The Vanguard Group, Inc. ("Vanguard"), in its capacity as an investment adviser, may be deemed to beneficially own the indicated shares, along with certain of its wholly-owned subsidiaries that serve as investment managers. Vanguard has sole voting power over 223,726 shares, shared voting power over 40,735 shares, sole dispositive power over 20,596,963 shares and shared dispositive power over 242,337 shares. Vanguard’s address is 100 Vanguard Blvd., Malvern, PA 19355. This information is based on Vanguard’s most recent Statement on Schedule 13G filed on February 11, 2019. +(4) +State Street Corp. ("State Street"), in its capacity as a parent holding company or control person for various subsidiaries (none of which individually owns more than 5% of our outstanding common stock), may be deemed to beneficially own the indicated shares, along with certain of its wholly-owned subsidiaries that serve as investment managers. State Street has shared voting power over 13,035,022 shares and shared dispositive power over 13,961,168 shares. State Street does not have sole voting or sole dispositive power over any shares. State Street's principal business address is State Street Financial Center, One Lincoln St., Boston, MA 02111. This information is based on State Street's most recent Statement on Schedule 13G filed with the SEC on February 11, 2019. +(5) +Wellington Management Group LLP ("Wellington"), in its capacity as a parent holding company or control person for various subsidiaries (none of which individually owns more than 5% of our outstanding common stock), may be deemed to beneficially own the indicated shares, which are owned of record by clients of one or more investment advisors directly or indirectly owned by Wellington. Wellington does not have sole voting power or sole dispositive power over any shares. It has shared voting power over 6,107,299 shares and shared dispositive power over 13,450,287 shares. Wellington’s address is c/o Wellington Management Company, LLP, 280 Congress Street, Boston, MA 02210. This information is based on Wellington’s most recent Statement on Schedule 13G filed jointly on February 14, 2019, with Wellington Group Holdings LLP, Wellington Investment Advisors Holdings LLP and Wellington Management Company LLP. +(6) +Comprised of 222,935 shares held directly by Mr. Gatto, 23,143 shares held indirectly within the Company's Employee Savings and Protection Plan (the 401(k) Plan"), and 36,890 unvested restricted stock units payable in stock that will vest within 60 days of the Record Date. Does not include 1,500 shares of the Company's Preferred Series A Stock, 494,436 unvested restricted stock units payable in stock, 6,510 unvested restricted stock units payable in cash, and 546,512 unvested performance stock units payable in 50% stock and 50% cash. +(7) +Comprised of 21,695 shares held directly by Mr. Ulm and 574 shares held indirectly within the 401(k) Plan. Does not include 145,700 unvested restricted stock units payable in stock and 203,550 unvested performance stock units payable in 50% stock and 50% cash. +(8) +Comprised of 8,793 shares held directly by Ms. Ecklund and 603 shares held indirectly within the 401(k) Plan. Does not include 93,913 unvested restricted stock units payable in stock and 103,372 unvested performance stock units payable in 50% stock and 50% cash. +(9) +Comprised of 16,716 shares held directly by Ms. Loeffler and 728 shares held indirectly within the 401(k) Plan. Does not include 49,483 unvested restricted stock units payable in stock and 49,160 unvested performance stock units payable in 50% stock and 50% cash. +(10) +Comprised of 50,368 shares held directly by Ms. Conn, 24,702 shares held indirectly within the 401(k) Plan, and 10,145 unvested restricted stock units payable in stock that will vest within 60 days of the Record Date. Does not include 48,115 unvested restricted stock units payable in stock, 1,790 unvested restricted stock units payable in cash, and 57,182 unvested performance stock units payable in 50% stock and 50% cash. +(11) +Comprised of 448,406 shares held directly by Mr. Newberry, 240,822 of which shares fully vested upon his retirement effective January 31, 2019, 61,784 shares held indirectly within the 401(k) Plan, and 36,890 unvested restricted stock units payable in stock that will vest within 60 days of the Record Date. Does not include 119,316 unvested restricted stock units payable in stock, 6,510 unvested restricted stock units payable in cash, and 53,288 unvested performance stock units payable in 50% stock and 50% cash. +(12) +Comprised of 58,447 shares held directly by Mr. Bob and 19,468 unvested restricted stock units payable in stock that will vest within 60 days of the Record Date. Does not include 3,706 unvested restricted stock units payable in stock. +(13) +Comprised of 625 shares held directly by Ms. Faulkenberry and 11,652 unvested restricted stock units payable in stock that will vest within 60 days of the Record Date. +(14) +Comprised of 26,897 shares held directly by Mr. Finch and 19,468 unvested restricted stock units payable in stock that will vest within 60 days of the Record Date. Does not include 3,706 unvested restricted stock units payable in stock. +(15) +Comprised of 195,620 shares held directly by Mr. Flury and 30,000 shares held in a joint tenancy with his spouse, which includes 62,621 deferred RSUs, pursuant to Mr. Flury's election under the Deferred Compensation Plan for Outside Directors, which are payable in cash upon his separation of service as a director. Mr. Flury's deferred RSUs are comprised of 39,447 vested shares and 23,174 unvested shares, of which 19,468 will vest within 60 days of the Record Date. +(16) +Comprised of 147,432 shares held directly by Mr. McVay and 19,468 unvested restricted stock units payable in stock that will vest within 60 days of the Record Date. Does not include 3,706 unvested restricted stock units payable in stock. +(17) +Comprised of 116,303 shares held directly by Mr. Nocchiero and 19,468 unvested restricted stock units payable in stock that will vest within 60 days of the Record Date. Does not include 3,706 unvested restricted stock units payable in stock. +(18) +Comprised of 39,447 shares held directly by Mr. Trimble and 19,468 unvested restricted stock units payable in stock that will vest within 60 days of the Record Date. Does not include 3,706 unvested restricted stock units payable in stock. +(19) +Comprised of 994,446 shares held directly by the Company's executive officers and directors, 30,000 shares held in a joint tenancy, 54,737 shares held indirectly within the Company's 401(k) Plan and 215,088 unvested RSUs payable in stock that will vest within 60 days of the Record Date. The executive officers include Jeffrey Balmer and Jerry Weant, but exclude Gary Newberry. +CALLON PETROLEUM 57 +OTHER MATTERS +Section 16(a) Beneficial Ownership Reporting Compliance +Section 16(a) of the Exchange Act requires our officers and directors and persons who own 10% or more of our common stock to file reports of beneficial ownership and changes in ownership with the SEC. These persons are required by SEC regulations to furnish us with copies of these reports. Based solely on our review of these reports received by us during fiscal year 2018, and representations from certain reporting persons that they have complied with the relevant filing requirements, we believe that all such filing requirements were complied with in 2018 and 2019 to date with the exception that Mr. L. Richard Flury had a delinquent Form 5 filing on January 3, 2019 reporting PSUs inadvertently excluded in prior filings that were awarded in 2014-2017. +Certain Relationships and Related Party Transactions +The Board’s Audit Committee charter provides that the Audit Committee shall review and approve all related party transactions. A transaction will be considered a “related party transaction” if the transaction would be required to be disclosed under Item 404 of Regulation S-K. In addition, our Code of Business Conduct and Ethics provides that an officer’s or a director’s conflict of interest with Callon may only be waived if the Nominating and Corporate Governance Committee approves the waiver and the full Board ratifies the waiver. +For the fiscal year ended 2018, David Newberry, who is the son of Gary Newberry, our former Senior Vice President and Chief Operating Officer, received $213,500 in total compensation as an employee of the Company, which is consistent with market compensation for his services. In addition, David Newberry was eligible to participate in all benefit plans and programs available generally to the Company’s employees. +For the fiscal year ended 2018, Austin Weant, who is the son of Jerry Weant, our Vice President of Land, received $159,366 in total compensation as an employee of the Company, which is consistent with market compensation for his services. In addition, Austin Weant was eligible to participate in all benefit plans and programs available generally to the Company’s employees. +Except for the foregoing, as of December 31, 2018, we are not aware of any related party transactions with our executive officers that require disclosure under Item 404 of Regulation S-K. +58 CALLON PETROLEUM +OTHER MATTERS +Shareholders’ Proposals and Director Nominations for the 2020 Annual Meeting +In order for a proposal to be considered for inclusion in the proxy statement for the 2020 Annual Meeting of Shareholders (the “2020 Annual Meeting”) pursuant to Rule 14a-8 of the Exchange Act, such proposal must be received by the Secretary of the Company at our principal executive offices no later than November 29, 2019, and must otherwise be in compliance with the requirements of the SEC’s proxy rules. +For a shareholder proposal to be introduced for consideration at the 2020 Annual Meeting but not intended to be considered for inclusion in the Company's proxy statement and form of proxy relating to such meeting (i.e. not pursuant to Rule 14a-8 of the Exchange Act), including shareholder nominations for candidates for election as directors, a shareholder must provide written notice of such proposal to Company not later than 120 days nor earlier than 150 days before the date of the 2020 Annual Meeting. Any such notice must describe the shareholder proposal in reasonable detail and otherwise comply with the requirements set forth in our Bylaws. +Nominating Process +In accordance with our Certificate of Incorporation, any shareholder may nominate a person for election to the Board upon delivery of written notice to us of such nomination. Such notice must be sent as provided in our Certificate of Incorporation on or before the deadline set forth in our Certificate of Incorporation, and must otherwise comply with the procedures set forth in our Certificate of Incorporation. For nominations at the 2019 Annual Meeting, the Board will consider individuals identified by shareholders on the same basis as nominees identified from other sources. A submission recommending a nominee should include: +• +Sufficient biographical information to allow the Nominating and Corporate Governance Committee to evaluate the qualifications of a potential nominee in light of the director nomination procedures and criteria and any other information that would be required to be disclosed in solicitations of proxies for the election of directors; +• +An indication as to whether the proposed nominee will meet the requirements for independence under New York Stock Exchange (“NYSE”) and Securities and Exchange Commission (“SEC”) guidelines; +• +A description of all direct and indirect compensation and other material monetary agreements, arrangements, and understandings during the past three years, and any other material relationships, between or among the nominating shareholder or beneficial owner and each proposed nominee; +• +A completed and signed questionnaire, representation, and agreement, pursuant to the amended and restated bylaws of the Company (the "Bylaws"), with respect to each nominee for election or re-election to the Board; and +• +The proposed nominee’s written consent to serve if nominated and elected. +CALLON PETROLEUM 59 +ANNUAL MEETING INFORMATION +Information Concerning Solicitation and Voting +We are providing you this Proxy Statement in connection with the solicitation of proxies by our Board to be voted at the 2019 Annual Meeting of shareholders of Callon Petroleum Company. The Annual Meeting will be held on Thursday, May 9, 2019 at 9:00 a.m. CDT in the Wishmaker Ballroom of the Hotel Zaza, 9787 Katy Freeway, Houston, Texas. This Proxy Statement contains important information for you to consider when deciding how to vote on the matters brought before the meeting. Please read it carefully. +The Board will primarily solicit proxies by mail, and we will bear all costs incurred in the solicitation of proxies, including the preparation, printing and mailing of these proxy materials. In addition to solicitation by mail, our directors, officers and employees may solicit proxies personally or by telephone, email, facsimile or other means, without additional compensation. We may also make arrangements with brokerage houses and other custodians, nominees and fiduciaries for the forwarding of solicitation material to the beneficial owners of the common stock held by such persons, and we may reimburse those brokerage houses and other custodians, nominees and fiduciaries for reasonable expenses incurred in connection therewith. In addition, to assist us with our solicitation efforts, we have retained the services of Innisfree M&A Incorporated for a fee of approximately $20,000, plus out-of-pocket expenses. +Information About Voting and the Annual Meeting +Who may vote +You may vote if you are the record holder of our common stock as of the close of business on the Record Date. On that date, 227,884,091 shares of our common stock were outstanding and are entitled to vote at the Annual Meeting. Each share of common stock is entitled to one vote on each matter considered at this meeting. A list of shareholders entitled to vote at the Annual Meeting will be available at our office at 1401 Enclave Parkway, Suite 600, Houston, TX 77077 during normal business hours for a period of ten days prior to the meeting and will also be available for inspection at the Annual Meeting. +Attending the Annual Meeting +If you meet the above criteria to vote at our Annual Meeting, you may attend the Annual Meeting. If you wish to attend the Annual Meeting in person, you must present valid, government-issued picture identification. If your shares are held in the name of a bank, broker or other nominee and you plan to attend the Annual Meeting, in order to be admitted you must present proof of your beneficial ownership of the common stock, such as a bank or brokerage account statement, or copy of your Voting Instruction Form or Notice, indicating that you owned shares of our common stock at the close of business on the Record Date. +For safety and security reasons, no cameras, recording equipment, cellular telephones, electronic devices, large bags, briefcases or packages will be permitted in the Annual Meeting. No banners, signs, firearms or weapons will be allowed in the meeting room. We reserve the right to inspect all items entering the meeting room. +Proposals +Qualifying shareholders will vote on the following three proposals at the meeting: +1) +The election of directors; +2) +Advisory approval of our executive compensation; and +3) +The ratification of the appointment of Grant Thornton LLP. +Notice and access +The Company is furnishing proxy materials to its shareholders through the Internet as permitted under the rules of the SEC. Under these rules, the Company’s shareholders will receive a Notice Regarding the Availability of Proxy Materials instead of a paper copy of the Notice of 2019 Annual Meeting of Shareholders and Proxy Statement, our proxy card, and our Annual Report on Form 10-K, often referred to as “notice and access.” We believe this process gives us the opportunity to serve you more efficiently by making the proxy materials available quickly online and reducing costs associated with printing and distributing our proxy materials. This Notice includes instructions on how to access the proxy materials over the Internet or to request a paper +CALLON PETROLEUM 60 +ANNUAL MEETING INFORMATION +copy of proxy materials, including a proxy card or voting instruction form. In addition and as described in the Notice, shareholders may request to receive future proxy materials in printed form by mail or electronically by email. A shareholder’s election to receive proxy materials by mail or email will remain in effect until terminated by the shareholder. +The Company's proxy materials were made available by our Board on the Internet on or about March 28, 2019 at https://www.viewproxy.com/CallonPetroleum/2019, which is the cookies-free website described in the Notice. Accordingly, we are sending the Notice to our shareholders of record and beneficial owners of our stock, and filing the Notice with the SEC, on or about March 28, 2019. Please note that the Notice identifies the Proposals on which shareholders will vote at the meeting, but shareholders cannot vote by marking the Notice and returning it. The Notice provides instructions on how to vote via the Internet, by telephone or by requesting and returning a paper proxy card, or by submitting a ballot in person at the meeting. +In addition to the proxy materials being available for review at https://www.viewproxy.com/CallonPetroleum/2019, the site contains instructions on how to access the proxy materials on a website or to request free of charge printed materials, including a copy of our Annual Report on Form 10-K for the year ended December 31, 2018 as filed with the SEC. On an ongoing basis, shareholders may contact our Corporate Secretary at our principal offices in Houston, Texas to request proxy materials by mail or by e-mail. +Casting your vote +There are three methods for registered shareholders to vote by proxy without attending the Annual Meeting: +1. By Internet +You can vote via the Internet by going to the website address provided on your Notice or proxy card. You will need to use the control and request ID appearing on your proxy card to vote via the Internet. You can use the Internet to transmit your voting instructions up until 11:59 p.m. CDT on May 8, 2019. If you vote via the Internet, you do NOT need to vote by telephone or return a proxy card. Internet voting is available 24 hours a day. +2. By Telephone +You can also vote by telephone by calling the toll-free telephone number provided on your proxy card. You will need to use the control and request ID appearing on your proxy card to vote by telephone. You may transmit your voting instructions from any touch-tone telephone up until 11:59 p.m. CDT on May 8, 2019. Voting by telephone is available 24 hours a day. +3. By Mail +If you received a printed copy of the proxy card, you can vote by marking, dating and signing it, and returning it in the reply envelope provided. Please promptly mail your proxy card to ensure that we receive it prior to the closing of the polls at the Annual Meeting. +If you receive more than one Notice and/or Proxy Statement then it means that your shares are likely registered in more than one account. Please provide voting instructions for all Notices, proxy and voting instruction cards you receive. If you send us a signed proxy card without marking your voting selections, your shares will be voted on each proposal as recommended by our Board, and in the discretion of the proxy holders as to any other matters that may properly come before the meeting or any postponement or adjournment of the meeting. The Board is not presently aware of any other proposals or any other business to be considered at the Annual Meeting. +Difference between a “holder of record” and a “street name” holder +If your shares are registered directly in your name, you are considered the shareholder of record with respect to those shares. If your shares are held in a stock brokerage account or by a bank, trust or other nominee, then the broker, bank, trust or other nominee is considered to be the shareholder of record with respect to those shares. However, you are still considered to be the beneficial owner of those shares, and your shares are said to be held in “street name.” Street name holders generally cannot submit a proxy or vote their shares directly and must instead instruct the broker, bank, trust or other nominee how to vote their shares. You will receive instructions from your broker, bank or other nominee that you must follow in order for your broker, bank or other nominee to vote your shares per your instructions. Many brokerage firms and banks have a process for their beneficial holders to provide instructions via the Internet or over the telephone. If Internet or telephone voting is unavailable from your broker, bank or other nominee, please complete and return the enclosed voting instruction card in the addressed, postage paid envelope provided. +In the event you do not provide instructions on how to vote shares held in street name, your broker may have authority to vote your shares. Under the rules that govern brokers who are voting with respect to shares that are held in street name, brokers have the discretion to vote such shares on routine matters, but they are not permitted to vote (a “broker non-vote”) on non-routine or non-discretionary items absent instructions from the beneficial owner. With respect to the Annual Meeting, brokers are prohibited from exercising discretionary authority in the election of directors and the non-binding advisory proposal on +CALLON PETROLEUM 61 +ANNUAL MEETING INFORMATION +executive compensation, but such brokers may exercise discretionary authority with respect to the ratification of the appointment of our independent registered public accounting firm. Your vote is especially important. Therefore, please promptly instruct your broker regarding how to vote your shares on these matters. +If you hold shares through a broker, bank or other nominee and wish to be able to vote in person at the meeting, you must obtain a legal proxy from your broker, bank or other nominee and present it to the inspector of election with your ballot at the meeting. If you need have questions about how to obtain a legal proxy, please call Innisfree M&A Incorporated toll-free at (888)-750-5834. Submitting your proxy by mail will not affect your right to vote in person if you decide to attend the Annual Meeting. +Revoking a proxy +You may revoke or change a previously delivered proxy at any time before the meeting by delivering another proxy with a later date, by voting again via the Internet or by telephone, or by delivering written notice of revocation of your proxy to our Corporate Secretary at our principal offices in Houston, Texas before the beginning of the meeting. You may also revoke your proxy by attending the meeting and voting in person, although attendance at the meeting will not necessarily revoke a valid proxy that was previously delivered. If you hold shares through a broker, bank or other nominee, you must contact that nominee to revoke any prior voting instructions. You also may revoke any prior voting instructions by voting in person at the meeting if you obtain a legal proxy as described above. +Recommendation of the Board +The Board unanimously recommends you vote “FOR” each of the proposals. A proxy that is properly completed and submitted will be voted at the Annual Meeting in accordance with the instructions on the proxy. If you properly complete and submit a proxy, but do not indicate any contrary voting instructions, your shares will be voted as follows: +• +“ FOR ” the election of each of the nominees named in this Proxy Statement to our Board of Directors; +• +“ FOR ” the approval, on an advisory basis, of our executive compensation; and +• +“ FOR ” the ratification of the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2019. +Counting the vote +We have appointed Alliance Advisors to tabulate and certify the vote. +Quorum +A quorum is the number of shares that must be present to hold the meeting. The quorum requirement for the meeting is a majority of the outstanding shares as of the Record Date, present in person or represented by proxy. We will count your shares for purposes of determining if there is a quorum if either you are present and vote in person at the meeting or have voted on the Internet, by telephone or by properly submitting a proxy card or voting instruction card by mail. Abstentions and broker non-votes also count toward the quorum. +Required Vote +Proposal 1 - Election of directors +The nominees for election as directors will be elected by a plurality of all votes cast, subject to the Company’s majority voting policy. Because the number of director nominees equals the number of directors to be elected at this Annual Meeting, to be elected, each director must receive a majority of the votes cast. A majority of the votes cast means that the number of shares voted “for” a director must exceed the number of shares voted “withheld.” Abstentions and broker non-votes will not be included in determining the number of votes cast in the election of directors and will not have any effect on the outcome. This majority voting standard is discussed further under “Proposal 1 - Election of directors - Majority Vote Standard.” +Proposal 2 - Advisory vote to approve NEO compensation +The advisory vote on our executive compensation is non-binding, so no specific vote is required. Abstentions will have the same effect as a vote against this proposal, and broker non-votes will not be counted as shares present and entitled to vote, and, accordingly, will not affect the outcome of the vote on this proposal. While the law requires this advisory vote, the vote will neither be binding on us or our Board, nor will it create or imply any change in the fiduciary duties of, or impose any additional +62 CALLON PETROLEUM +ANNUAL MEETING INFORMATION +fiduciary duty on, us or our Board. However, the views of our shareholders are important to us, and our Compensation Committee will take into account the outcome of the vote when considering future executive compensation decisions. We urge you to read the section entitled “Compensation Discussion and Analysis,” which discusses in detail how our executive compensation program implements our compensation philosophy. +Proposal 3 - Ratification of the appointment of the independent registered public accounting firm +The advisory vote on the ratification of the appointment of Grant Thornton LLP as our independent registered public accounting firm for the 2019 fiscal year is non-binding, so no specific vote is required. If you hold your shares through a broker and you do not instruct the broker how to vote, your broker will have the authority to vote your shares in its discretion on this proposal. An abstention will have the effect of a vote against this proposal. Because your vote is advisory, it will not be binding on the Board or the Company. However, the Board and the Audit Committee will consider the outcome of the vote in determining the selection of the Company’s independent registered public accounting firm. +Voting Results +We will announce the preliminary voting results at the Annual Meeting and will publish the final voting results in a current report on Form 8-K to be filed with the SEC within four business days of the meeting. +Householding Information +The SEC permits companies and intermediaries (such as brokers and banks) to satisfy delivery requirements for proxy statements and annual reports with respect to two or more shareholders sharing the same address by delivering a single proxy statement and annual report to those shareholders. This process, which is commonly referred to as “householding,” is intended to reduce the volume of duplicate information shareholders receive and reduce expenses for companies. Both we and some of our intermediaries may be householding our proxy materials and annual report. Once you have received notice from your broker or another intermediary that they will be householding materials sent to your address, householding will continue until you are notified otherwise or until you revoke your consent. Should you wish to receive separate copies of our Annual Report and Proxy Statement in the future, we will promptly deliver a separate copy of each of these documents to you if you send a written request to us at our address appearing on the cover of this proxy statement, to the attention of the Corporate Secretary. If you hold your shares through an intermediary that is householding and you want to receive separate copies of our Annual Report and Proxy Statement in the future, you should contact your bank, broker or other nominee record holder. +Financial Statements and Other Available Documents +Financial statements for our most recent fiscal year are contained in the 2018 Annual Report to Shareholders and our Report on Form 10-K for the fiscal year ended December 31, 2018, filed with the SEC on February 27, 2019. Our Annual Report, our Annual Report on Form 10-K, Corporate Governance Guidelines, Code of Business Conduct and Ethics, and Charters of Board Committees may be accessed by shareholders on our website at www.callon.com or printed copies are available upon written request to Michol Ecklund, Corporate Secretary at our principal executive office in Houston, Texas. +Other Business +The Board is not aware of any matter to be acted upon at the 2019 Annual Meeting other than those described above. If other business properly comes before the 2019 Annual Meeting, the persons named on the proxy will vote the proxy in accordance with what they consider to be in the best interests of us and our shareholders. Please sign, date, and return your proxy promptly to avoid unnecessary expense. All shareholders are urged, regardless of the number of shares owned, to participate in the 2019 Annual Meeting by voting their shares. +CALLON PETROLEUM 63 +ANNUAL MEETING INFORMATION +By Order of the Board of Directors, +Joseph C. Gatto, Jr. +President, Chief Executive Officer and Director +Houston, Texas +March 28, 2019 +64 CALLON PETROLEUM +APPENDIX A +NON-GAAP RECONCILIATIONS +Calculation +F&D and Reserve Replacement: +Parameters +2018 +Production (Mboe) +(A) +12,018 +Proved reserve data (Mboe) +Total Proved extensions, discoveries, and other additions +(B) +84,955 +Proved Undeveloped extensions, discoveries, and other additions, net of revisions +(C) +52,526 +Proved Undeveloped transfers to Proved Developed +(D) +11,075 +Total Proved additions, net of revisions and reclassifications +(E) +113,552 +Total Proved extensions, discoveries, and other additions, net of revisions +(F) +82,934 +Costs Incurred (in thousands) +Acquisition costs: +Evaluated properties +$ +347,305 +Unevaluated properties +466,816 +Development costs +(G) +259,410 +Exploration costs +(H) +323,458 +Total costs incurred +$ +1,396,989 +Drill-bit F&D costs per Boe (two-stream) +(G + H) / (F) +$ +7.03 +PD F&D per Boe (two-stream) +(G + H) / (B - C + D) +$ +13.40 +Organic reserve replacement ratio +(F) / (A) +690 +% +All-sources reserve replacement ratio +(E) / (A) +945 +% +Adjusted EBITDA Reconciliation (in thousands) : +2018 +Net income +$ +300,360 +Adjustments: +Net (gain) loss on derivatives, net of settlements +(75,818 +) +Non-cash stock-based compensation expense +6,664 +Acquisition expense +5,083 +Income tax expense +8,110 +Interest expense +2,500 +Depreciation, depletion and amortization +184,731 +Accretion expense +874 +Adjusted EBITDA +$ +432,504 +Net Debt to LTM Adjusted EBITDA (in thousands) : +2018 +Senior secured revolving credit facility +$ +200,000 +6.125% senior unsecured notes due 2024 +600,000 +6.375% senior unsecured notes due 2026 +400,000 +Total principal outstanding +1,200,000 +LESS: Unrestricted cash +(16,100 +) +Net Debt +1,183,900 +Adjusted EBITDA +432,504 +Acquisitions - pro forma adjustments +54,325 +LTM Adjusted EBITDA +$ +486,829 +Net debt to LTM Adjusted EBITDA +2.4x +CALLON PETROLEUM 65 +CALLON PETROLEUM COMPANY +ANNUAL MEETING OF SHAREHOLDERS +MAY 9, 2019 AT 9:00 AM CDT +SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF CALLON PETROLEUM COMPANY +The undersigned hereby appoints Michol L. Ecklund, as proxy with full power of substitution and re-substitution, to vote all shares of Common Stock of Callon Petroleum Company that the undersigned is entitled to vote at the Annual Meeting of Shareholders thereof to be held at the Wishmaker Ballroom of the Hotel ZaZa, 9787 Katy Freeway, Houston, Texas 77024 on May 9, 2019 or at any adjournment or postponement thereof, as follows: +ALL SHARES WILL BE VOTED AS DIRECTED HEREIN AND, UNLESS OTHERWISE DIRECTED, WILL BE VOTED “FOR” PROPOSAL 1 (ALL NOMINEES), “FOR” PROPOSAL 2, AND “FOR” PROPOSAL 3, AND IN ACCORDANCE WITH THE DISCRETION OF THE PERSON VOTING THE PROXY WITH RESPECT TO ANY OTHER BUSINESS PROPERLY BROUGHT BEFORE THE MEETING OR AT ANY ADJOURNMENT OR POSTPONEMENT THEREOF. The undersigned shareholder further hereby ratifies all that the said proxies may do by virtue hereof. If any nominee named on the reverse side is unable to serve or for good cause will not serve as a director, the person named as proxy shall have the authority to vote for any other person who may be nominated at the instruction and discretion of the Board of Directors or an authorized committee thereof. +The undersigned shareholder hereby revokes any other proxy heretofore executed by the undersigned for the Annual Meeting and acknowledges receipt of the Notice of the 2019 Annual Meeting of Shareholders and Proxy Statement dated March 28, 2019 and the Annual Report to Shareholders furnished in connection therewith. +You are encouraged to specify your choice by marking the appropriate box (SEE REVERSE SIDE), but you need not mark any box if you wish to vote in favor. +(CONTINUED AND TO BE SIGNED ON REVERSE SIDE) +PLEASE DETACH ALONG PERFORATED LINE AND MAIL IN THE ENVELOPE PROVIDED. +IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 9, 2019. +THE PROXY STATEMENT IS AVAILABLE AT: +HTTP://WWW.VIEWPROXY.COM/CALLONPETROLEUM/2019 +Please mark votes as in this example +ý +THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” PROPOSALS 1, 2, AND 3. +1. +Election of Directors: +3. +The ratification of the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2019. +FOR ALL +WITHHOLD +ALL +FOR ALL +EXCEPT +01 +Michael L. Finch +☐ +☐ +☐ +☐ +FOR +☐ +AGAINST +☐ +ABSTAIN +02 +Larry D. McVay +☐ +4. +The transaction of such other business as may properly come before the Annual Meeting or any adjournment(s) thereof. +2. +The approval, by non-binding advisory vote, of the compensation of our named executive officers. +MARK “X” HERE IF YOU PLAN TO ATTEND THE MEETING: +☐ +☐ +FOR +☐ +AGAINST +☐ +ABSTAIN +Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person. +DO NOT PRINT IN THIS AREA +(Shareholder Name & Address Data) +Date: +Signature +Signature (if held jointly) +Address Change/Comments: (If you noted any Address Changes and/or Comments above, please mark box.) ¨ +CONTROL NUMBER +PLEASE DETACH ALONG PERFORATED LINE AND MAIL IN THE ENVELOPE PROVIDED. +CONTROL NUMBER +SCAN TO +VIEW MATERIALS & VOTE +PROXY VOTING INSTRUCTIONS +Please have your 11 digit control number ready when voting by Internet or Telephone. +If you vote by phone, fax or Internet, please DO NOT mail your proxy card. +INTERNET +TELEPHONE +MAIL +Vote Your Proxy on the Internet: +Vote Your Proxy by Phone: +Vote Your Proxy by Mail: +Go to www.AALVote.com/CPE +Call 1 (866) 804-9616 +Have your proxy card available when you access the above website. Follow the prompts to vote your shares. +Use any touch-tone telephone to vote your proxy. Have your proxy card available when you call. Follow the voting instructions to vote your shares. +Mark, sign, and date your proxy card, then detach it, and return it in the postage-paid envelope provided. \ No newline at end of file diff --git a/raw/proxies/0000928022/0000928022-19-000055/proxy_rpt.txt b/raw/proxies/0000928022/0000928022-19-000055/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..685cf976f9264ec5803008c34fdcc2cfcf2b0db7 --- /dev/null +++ b/raw/proxies/0000928022/0000928022-19-000055/proxy_rpt.txt @@ -0,0 +1,5 @@ +Certain Relationships and Related Party Transactions +The Board’s Audit Committee charter provides that the Audit Committee shall review and approve all related party transactions. A transaction will be considered a “related party transaction” if the transaction would be required to be disclosed under Item 404 of Regulation S-K. In addition, our Code of Business Conduct and Ethics provides that an officer’s or a director’s conflict of interest with Callon may only be waived if the Nominating and Corporate Governance Committee approves the waiver and the full Board ratifies the waiver. +For the fiscal year ended 2018, David Newberry, who is the son of Gary Newberry, our former Senior Vice President and Chief Operating Officer, received $213,500 in total compensation as an employee of the Company, which is consistent with market compensation for his services. In addition, David Newberry was eligible to participate in all benefit plans and programs available generally to the Company’s employees. +For the fiscal year ended 2018, Austin Weant, who is the son of Jerry Weant, our Vice President of Land, received $159,366 in total compensation as an employee of the Company, which is consistent with market compensation for his services. In addition, Austin Weant was eligible to participate in all benefit plans and programs available generally to the Company’s employees. +Except for the foregoing, as of December 31, 2018, we are not aware of any related party transactions with our executive officers that require disclosure under Item 404 of Regulation S-K. \ No newline at end of file diff --git a/raw/proxies/0000928022/0000928022-20-000059/proxy.txt b/raw/proxies/0000928022/0000928022-20-000059/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..2a6e2ba51e7bc941709b762a7bb716e30e2a32e9 --- /dev/null +++ b/raw/proxies/0000928022/0000928022-20-000059/proxy.txt @@ -0,0 +1,3936 @@ +DEF 14A +1 +callon2020proxy.htm +DEF 14A +Document +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Proxy Statement Pursuant to Section 14(a) of +the Securities Exchange Act of 1934 (Amendment No. ) +Filed by the Registrant ý +Filed by a Party other than the Registrant ¨ +Check the appropriate box: +ý +Preliminary Proxy Statement +¨ +Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +¨ +Definitive Proxy Statement +¨ +Definitive Additional Materials +¨ +Soliciting Material under §240.14a-12 +Callon Petroleum Company +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +ý +No fee required. +¨ +Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. +(1) +Title of each class of securities to which transaction applies: +(2) +Aggregate number of securities to which transaction applies: +(3) +Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): +(4) +Proposed maximum aggregate value of transaction: +(5) +Total fee paid: +¨ +Fee paid previously with preliminary materials. +¨ +Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. +(1) +Amount Previously Paid: +(2) +Form, Schedule or Registration Statement No.: +(3) +Filing Party: +(4) +Date Filed: +ABOUT CALLON +Callon Petroleum is an independent oil and natural gas company focused on the acquisition, exploration and development of high-quality assets in the leading oil plays of West and South Texas. +Our Values +Responsibility +The safety of our employees, contractors and communities is of utmost importance – this is not negotiable. We recognize that we earn the right to operate every day by developing our assets responsibly and with respect for the environment. We focus on safety and protection of the environment in every operation, and all Callon representatives are authorized to “stop work” if these are at risk. +Integrity +We always strive to do the right thing and pride ourselves on being a preferred partner. We are consistently open, honest, ethical and genuine. We do what we say and are accountable for our actions. +Drive +Keenly focused on leading, we relentlessly challenge the status quo to meet and exceed our expectations for top-tier performance in all aspects of our business. +Respect +We value the ideas and contributions of all team members and show consideration and appreciation for one another. We recognize and embrace each other’s differences and work towards our common goals. +Excellence +Our business requires focused innovation and evaluation of new opportunities for resource extraction. We balance the application of new technologies and testing of new concepts with prudent risk management and thorough data analysis. +Awards and Recognition +We are recognized as one of the top places to work in 2017, 2018, and 2019 by the Houston Chronicle. +A JOINT LETTER FROM OUR CHAIRMAN AND OUR CHIEF EXECUTIVE OFFICER +April [•], 2020 +DEAR FELLOW SHAREHOLDERS, +On behalf of the Board of Directors of Callon Petroleum Company, we are pleased to invite you to our 2020 Annual Meeting of Shareholders, which will take place on [•], 2020 at [•] Central Daylight Time (CDT), in the La Scala Room of The Moran Hotel, located at 800 Sorella Court in Houston, Texas. +Today we are filing the Notice of Annual Meeting of Shareholders and the Proxy Statement which describe the matters to be acted upon at the meeting. This year we are asking our shareholders to elect directors, approve our 2020 incentive plan, ratify the appointment of our auditors, approve, on a non-binding advisory basis, the compensation of our named executive officers, and allow our Board to approve amendments to our certificate of incorporation to effect a reverse stock split and a pro rata reduction to the number of authorized shares . +2019 was a transformational year for Callon. The Company continued its long-term value creation focus with the execution of multiple strategic initiatives across operations, finance, environmental, social and governance. The Company’s development program successfully transitioned to larger projects featuring multi-zone co-development, leading to improved capital efficiency, lower costs and the preservation of industry-leading margins. +The year culminated with the successful closing of the Carrizo Acquisition, which more than doubled the Company’s production, reserves, acreage, and cash flow. Importantly, the acquisition also brought together two talented organizations that are grounded in strong values and a shared commitment to responsible operations, integrity and a drive to deliver results. Together, we face the challenges brought on by the global outbreak of the COVID-19 virus with a diversified asset base that provides optionality to support cash generation amid commodity price volatility. +Your vote is important, and we encourage you to review this proxy statement and to vote promptly so that your shares will be represented at the meeting. On behalf of everyone at Callon, we want to thank you, our valued shareholders, for your continued support of the work we do. +Sincerely, +L. Richard Flury +Chairman of the Board +Joseph C. Gatto, Jr. +President, Chief Executive Officer and Director +L. Richard Flury +Chairman of the Board +Joseph C. Gatto, Jr. +President, Chief Executive Officer and Director +We encourage you to read our 2019 Annual Report, which includes our financial statements as of and for the year ended December 31, 2019. Please also refer to the sections captioned “Risk Factors” and “Special Note Regarding Forward-Looking Statements,” for a description of the substantial risks and uncertainties related to the forward-looking statements included herein. +2020 PROXY STATEMENT 3 +NOTICE OF ANNUAL +MEETING OF SHAREHOLDERS +Dear Shareholders, +You are invited to participate in the 2020 Annual Meeting of Shareholders (the “Annual Meeting”) of Callon Petroleum Company (“Callon,” the “Company,” “us,” “we,” “our” or like terms), a Delaware corporation. +When +[•], 2020, at [•] Central Daylight Time (“CDT") +Where +The Moran Hotel +La Scala Room +800 Sorella Court +Houston, Texas 77024 +We are monitoring coronavirus (COVID-19) developments and the related recommendations and protocols issued by public health authorities and federal, state and local governments, and we are sensitive to the public health and travel concerns that our shareholders may have. In the event we determine it is necessary or appropriate to postpone or move the Annual Meeting to another location or hold the Annual Meeting virtually, we will announce this decision in advance in a press release and post details on our website, which will also be filed with the Securities and Exchange Commission. +Whether or not you plan to attend the Annual Meeting, please vote electronically via the Internet, by telephone, or by mail as soon as possible. +Voting matters +Board +Recommendation +Proposal 1: +To elect three Class II directors to serve on our Board of Directors (the “Board”), each for three years. +FOR each of the Class II directors +See page 11 +Proposal 2: +To approve, on a non-binding advisory basis, the compensation of our named executive officers (“NEOs”). +FOR +See page 34 +Proposal 3: +To approve the Company's 2020 Omnibus Incentive Plan (the "2020 Plan"). +FOR +See page 62 +Proposal 4: +To ratify the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2020. +FOR +See page 70 +Proposal 5: +To approve an amendment to our certificate of incorporation to permit us to effect a reverse stock split of our issued and outstanding common stock, par value $0.01 per share (the “common stock”), at a ratio that will be determined by the Board and that will be within a range of 1-for-10 and 1-for-50 (the “Reverse Stock Split”), if the Board determines, in its sole discretion, at any time prior to the first anniversary of the Annual Meeting, that the Reverse Stock Split is in the best interests of the Company and its shareholders. +FOR +By Internet or telephone following the simple instructions on the enclosed proxy card or voting instruction form +By mail +mark, date and sign your proxy card, and return it in the reply envelope provided +w +See page 72 +Proposal 6: +To approve an amendment to our certificate of incorporation to reduce the number of authorized shares of common stock by the reverse stock split ratio determined by the Board (the “Authorized Share Reduction”). +FOR +YOUR VOTE IS IMPORTANT! +Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Shareholders. This Proxy Statement and our 2019 Annual Report on Form 10-K are available at: www.viewproxy.com/ CallonPetroleum/2020. If you have any questions or need assistance voting your shares, please call our proxy solicitor, Innisfree M&A Incorporated, 501 Madison Avenue, 20th Floor, New York, NY 10022 +Banks and Brokerage Firms, please call: (212) 750-5833 +Shareholders, please call toll-free:(888) 750-5834 +w +See page 79 +4 CALLON PETROLEUM +NOTICE OF ANNUAL MEETING OF SHAREHOLDERS +We will also transact other business that may properly come before the Annual Meeting. +This Notice of Annual Meeting of Shareholders and the Proxy Statement herein provide further information on the Company’s performance and corporate governance and describe the matters to be presented at the Annual Meeting. The Board set April 14, 2020, as the record date (the “Record Date”) for the Annual Meeting. Holders of record of our common stock at the close of business on the Record Date are entitled to receive this notice of, and vote at, the Annual Meeting. A list of the names of shareholders entitled to vote at the Annual Meeting will be available for ten days prior to the Annual Meeting for examination by any shareholder for any purpose germane to the Annual Meeting between the hours of 9:00 a.m. and 5:00 p.m., Central Time, at our headquarters at 2000 W. Sam Houston Parkway South, Suite 2000, Houston, TX 77042. This list will also be available for such purposes during the Annual Meeting at the place of the Annual Meeting or, in the event that the Annual Meeting is held virtually, at a website to be provided in the announcement notifying shareholders of the change in meeting format. +Beginning on or about [•] , 2020, we mailed an Important Notice Regarding the Availability of Proxy Materials (the “Notice”) to our holders of record. The Notice contained instructions on how to access the Proxy Statement and related materials on the Internet and how to enter your voting instructions. Instructions for requesting a paper copy of the proxy materials are contained in the Notice. +We thank you for your continued support and look forward to seeing you at the Annual Meeting. +By Order of the Board of Directors, +Michol L. Ecklund +Senior Vice President, General Counsel +and Corporate Secretary +Houston, Texas +[•], 2020 +2020 PROXY STATEMENT 5 +TABLE OF CONTENTS +A JOINT LETTER FROM OUR CHAIRMAN AND OUR CHIEF EXECUTIVE OFFICER +3 +NOTICE OF ANNUAL MEETING OF SHAREHOLDERS +4 +PERFORMANCE HIGHLIGHTS +7 +SUSTAINABILITY AT CALLON PETROLEUM +9 +PROPOSAL 1 - ELECTION OF CLASS II DIRECTORS +11 +Board of Directors +11 +Directors Nominated for Re-Election +13 +CORPORATE GOVERNANCE +15 +Directors Continuing in Office +15 +Director Compensation +20 +Director Independence +21 +Board Structure and Responsibilities +22 +Committees of the Board +25 +Corporate Governance Matters +30 +EXECUTIVE OFFICERS +32 +PROPOSAL 2 - APPROVE, ON AN ADVISORY BASIS, THE COMPENSATION OF THE COMPANY'S NEOS +34 +EXECUTIVE COMPENSATION +36 +Compensation Discussion and Analysis +36 +Compensation Committee Report +51 +Executive Compensation Tables +52 +CEO Pay Ratio +61 +PROPOSAL 3 - APPROVE THE 2020 OMNIBUS INCENTIVE PLAN +62 +PROPOSAL 4 - RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM, GRANT THORNTON LLP, FOR 20 20 +70 +Audit Committee Report +71 +PROPOSAL 5 - APPROVE THE REVERSE STOCK SPLIT +72 +PROPOSAL 6 - APPROVE THE AUTHORIZED SHARE REDUCTION +79 +OTHER MATTERS +81 +Beneficial Ownership of Securities +81 +Principal Shareholders and Management +81 +Section 16(a) Beneficial Ownership Reporting Compliance +83 +Certain Relationships and Related Party Transactions +83 +Shareholders’ Proposals and Director Nominations for the 202 1 Annual Meeting +83 +ANNUAL MEETING INFORMATION +85 +Information Concerning Solicitation and Voting +85 +Information About Voting and the Annual Meeting +85 +Required Vote +88 +Voting Results +89 +Householding Information +89 +Financial Statements and Other Available Documents +89 +Other Business +89 +APPENDIX A +90 +APPENDIX B +91 +APPENDIX C +99 +6 CALLON PETROLEUM +PERFORMANCE HIGHLIGHTS +Callon is an independent oil and natural gas company focused on the acquisition, exploration, and development of high-quality assets in leading Texas oil plays located in the Permian Basin and the Eagle Ford Shale. Callon’s strong foundation spans over 70 years with an ongoing mission to build trust, create long-term value, and drive sustainable cash flow growth for our stakeholders. We are positioned to deliver value for our stakeholders in 2020 and beyond through the following: +PREPARATION +PURPOSE +EXECUTION OF PURPOSE +• Significant scale and high operational control of ~200,000 net acres in Texas's producer-friendly Permian Basin and Eagle Ford Shale +• Robust infrastructure network from multiple years of thoughtful planning and investment reduces overall capital intensity +• Liquidity flexibility and free cash flow initiatives support long-term co-development for inventory and balance sheet preservation +• Talented workforce with growing technical expertise identifies with a culture of responsibility and adaptability in a cyclical commodity business +• Long-term value creation focuses on growing corporate level returns through capital efficiency and reserve recovery optimization +• Sustainable business model balances capital efficiency improvements with longer-term reinvestment reduction initiatives +• Stakeholder alignment through governance structure and ongoing engagement across shareholders, employees, and communities in which we operate +• Expanding ESG oversight to maximize impact of initiatives and ensure corporate responsibility priorities are achieved +• Accelerate corporate returns on capital through margin preservation, capital intensity reduction, and portfolio optimization +• Generate meaningful free cash flow through breakeven cost reduction and moderation of production declines +• Improve financial profile with simplified capital structure and no near-term maturities with asset monetization upside +• Long term vision focused on safety and sustainability to maximize reserve capture through prudent co-development operations +2019 was a transformational year for Callon. The Company continued its long-term value creation focus with the execution of multiple strategic initiatives across operations, finance, environmental, social and governance. The Company’s development program successfully transitioned to larger projects featuring multi-zone co-development, leading to improved capital efficiency, lower costs and the preservation of industry-leading margins. The year culminated with the successful closing of the Carrizo Acquisition, which more than doubled the Company’s production, reserves, acreage, and cash flow. The combined Company features a diversified asset base that supports our scaled development model and provides significant optionality to support cash generation amid commodity price volatility. While Callon’s share price was negatively impacted, along with its industry peers, by commodity price volatility and a shift in sector-wide investor sentiment, the Company maintained its commitment to long-term value creation in 2019 as reflected by the achievement of multiple key operational, financial and ESG highlights as described below. +2020 PROXY STATEMENT 7 +PERFORMANCE HIGHLIGHTS +• With the closing of the Carrizo Acquisition, more than doubled our acreage position to nearly 200,000 net acres in Texas's producer-friendly Permian Basin and Eagle Ford Shale. +• Generated over $500 million in Adjusted EBITDA (i) . +• Completed over $300 million of non-core asset monetizations. +• Redeemed approximately $270 million of preferred securities resulting in prospective dividend savings of nearly $25 million annually. +• Generated $58.2 million in free cash flow (ii) during the fourth quarter of 2019 (on a pro forma basis). +• Maintained an industry leading EBITDA margin of $33.28 per Boe for 2019. (i) +• Achieved record production (top of guidance) with operational capital spending below the bottom of full year guidance range. +• Initiated full-field co-development across all asset areas, lowering target development costs and improving capital efficiency. +• Grew total proved reserves to 540 MMBoe with a PV-10 (i) value of $5.4 billion as of December 31, 2019. +• Achieved record safety performance metrics, including a Total Recordable Incident Rate that was 50% lower than prior year. +• 2x recycled water volumes from 2018, further reducing environmental impact of operations. +• Reduced flaring by more than 40% year over year and was in the lowest third of all Texas producers in flaring intensity per the most recent TX RRC report. (iii) +(i) +See Appendix A for a reconciliation of Non-GAAP financial measures +(ii) +Free cash flow is defined as Adjusted EBITDA minus the sum of operational capital, capitalized interest, capitalized G&A, and interest expense. Adjusted EBITDA is a Non-GAAP financial measure; please refer to Appendix A for a reconciliation +(ii) +TX RRC defines flare intensity as gross daily flare volumes divided by gross daily oil production +Coming off a strong 2019, Callon remains driven by a long-term value focus, and our progress in maturing our operations and production base in recent years now allows us to drive continued improvements in our cash flow profile and corporate-level returns. In 2020 and beyond, the Company is well-positioned to progress efficiencies in our development program through larger pad developments, reduced leasehold obligations and leveraging of established infrastructure for the benefit of our shareholders. +8 CALLON PETROLEUM +SUSTAINABILITY AT +CALLON PETROLEUM +At Callon, our commitment to our shareholders is simple: create value in a responsible manner. Our focus on integrating sustainable business practices and achieving long-term results drives our operations. In alignment with these goals, our Board of Directors oversees the company’s safety and environmental policies, development of a positive corporate culture and an effective corporate governance program. To ensure that sustainability matters remain a priority at Callon, the independent Nominating and Corporate Governance Committee of our Board has direct oversight responsibility for our ESG policies and performance for the development of Company positions related to stakeholder concerns and emerging issues that affect our industry. The entire Callon team is committed to improving returns for our shareholders while positively impacting the communities in which we live and work. +Our corporate focus is anchored by five core values: Responsibility , Integrity , Drive , Respect and Excellence . +Environmental +Callon is committed to safeguarding the environment and conducting our business in a manner designed to comply with applicable environmental laws and regulations and apply responsible standards where such laws or regulations do not exist. We have adopted a Safety and Environmental Policy that sets forth our operating principles and our expectations of Callon employees and contractors to operate safely, responsibly and in an environmentally sound manner. +WATER +AIR +LAND +Protecting local water supplies and minimizing our use of fresh water resources are high priorities in our operations. +As part of our environmental program, Callon monitors and seeks to reduce greenhouse gas (GHG) and other emissions from our operations. +At Callon, we strive to be good stewards of the environment and minimize our impact in the areas where we operate. +2x recycled water volumes from 2018, further reducing environmental impact from operations +All of the drilling rigs operating on Callon assets are dual-fuel rigs, which reduce greenhouse gas emissions in our operations. +Decreased total fluid spill rate by ~50% +<20% +permitted water infrastructure utilization rate in Permian Basin minimizes future environmental impact +Eliminated diesel-powered generators as a primary source of power and in doing so lowered our emissions and operating costs. +>2x increase in average project size in 2020 minimizes surface impact +60% produced water sourced for Delaware completions +>40% reduction in gas flaring intensity (1) +>90% of crude and water transported via pipeline +(1) +Based on flaring intensity MCF/Bbl as defined by the Texas Railroad Commission (TX RRC). TX RRC defines flare intensity as gross daily flare volumes divided by gross daily oil production. +Social +Callon values the perspectives of all stakeholders including employees, contractors, local communities and shareholders. We are focused on protecting, empowering and developing our team members and contributing meaningfully to the communities where we live and work. For us, corporate stewardship is not just a financial obligation, but a social duty as well. +2020 PROXY STATEMENT 9 +SUSTAINABILITY AT CALLON PETROLEUM +Safety +50% reduction in Total Recordable Incident Rate (TRIR) (2019 best year on record for safety performance) +At Callon, protecting our people and our communities is our top priority. We believe that a strong safety culture is tantamount to being a leading operator in the exploration and production (E&P) business. +Workforce +BUILDING A TOP PLACE TO WORK +At Callon, a goal is to assemble and inspire a team of passionate and innovative professionals in an environment where they can achieve their professional goals. We empower our employees and engage team members in decision-making at every level while recognizing contributions to our success. This unique environment has helped us achieve top-tier engagement scores, resulting in Callon being named a Top Workplace by Houston Chronicle in 2017 (small company), 2018 (mid-size company), and 2019 (mid-size company). +EMBRACING DIVERSE BACKGROUNDS AND PERSPECTIVES +At Callon, we value the diversity of our employees and their contributions. We are firmly committed to fostering an inclusive environment and providing equal opportunity to all qualified persons. +MINORITY EMPLOYEES +IN 2020 +Community +OPERATING IN LOCAL COMMUNITIES +SUPPORTING LOCAL COMMUNITIES +When our assets necessitate development projects near populated areas, we make every effort to mitigate the impact of our activities and work closely with city officials and neighboring landowners to proactively address considerations such as: noise, traffic, greenhouse gas emissions, and liquid spill prevention +Callon has a longstanding history of supporting the local communities in which we operate. It is our privilege to make a positive impact through charitable giving and volunteerism to support key initiatives to support education, community, and the environment. +We also sponsor a charitable matching program to support our employees’ philanthropic priorities. +Governance +At Callon, we are committed to high ethical standards and effective and sustainable corporate governance. We believe this commitment promotes the long-term interests of our shareholders, helps build public trust in our Company and strengthens Board and management accountability. We continually assess our governance principles to ensure that we are operating our business responsibly, ethically and in a manner aligned with the interests of our shareholders. Our CD&A beginning on page 36 provides additional information on governance practices for executive compensation. +Our Board expanded the scope of our independent Nominating & Corporate Governance committee to enhance oversight of the Company’s ESG policies, performance and disclosure. +Two female directors +Less than five year tenure for over half the directors +Independent , non-executive director serves as chair of the Board +10 CALLON PETROLEUM +Proposal 1 +Election of +Class II +Directors +The Board of Directors recommends a vote FOR each of the Class II director nominees named in this Proxy Statement. +• Our director nominees provide experience and perspectives that enhance the overall strategic and oversight functions of Callon’s Board. +• For more information about the nominees’ experience, skills, and qualifications, please see page 13 . +Board of Directors +Process for Selecting Directors +Director Identification and Selection +Criteria. The Nominating and Corporate Governance Committee has established guidelines for considering nominations to the Board. The Committee evaluates potential nominees based on the contribution such nominee’s background and skills could have upon achieving the goal of a well-rounded, diverse Board that functions collegially as a unit. While not an exhaustive list, key criteria include: +• +Relevant oil and gas exploration and production industry knowledge and experience; +• +Complimentary mix of backgrounds and experience in areas including business, finance, accounting, technology, and strategy; +• +Personal qualities of leadership, character, judgment and personal and professional integrity and high ethical standards; +• +The candidate’s ability to exercise independent and informed business judgment; +• +Whether the candidate is free of conflicts and has the time required for preparation, participation, and attendance at meetings; +• +Diversity, including differences in viewpoints, background, education, gender, race or ethnicity, age, and other individual qualifications and attributes; +• +The ability to work with other members of the Board, the Chief Executive Officer (the "CEO"), and senior officers of the Company in a constructive and collaborative fashion to achieve the Company’s goals and implement its strategy; and +• +In the case of an incumbent director, such director’s past performance on the Board. +The Nominating and Corporate Governance Committee and the Board may also consider other qualifications and attributes that they believe are appropriate in evaluating the ability of an individual to serve as a member of the Board. The Nominating and Corporate Governance Committee’s goal is to assemble a Board that brings to us a variety of perspectives and skills derived from high quality business and professional experience to perform its oversight role satisfactorily for our shareholders. In making its determinations, the Committee evaluates each individual in the context of the Board as a whole, with the objective of assembling a group that can best represent shareholder interests through the active, objective, and constructive participation in meetings and the strategic decision-making processes. +Diversity. Our Corporate Governance Guidelines set forth our policy with respect to Board diversity. We are committed to building a diverse Board comprised of individuals from different backgrounds, including differences in viewpoints, education, gender, race or ethnicity, age, and other individual qualifications and attributes. To accomplish this, the Nominating and Corporate Governance Committee will continue to require that search firms engaged by the Company seek to present a robust selection of women and ethnically diverse candidates in all prospective director candidate pools. +Nominating Process. In making its nominations, the Nominating and Corporate Governance Committee identifies nominees by first evaluating the current members of the Board willing to continue their service and any potential need to expand the Board to include additional expertise. Current members with a record of quality contribution to the Board whose experience contributes to a complementary mix of backgrounds that enhance the Board are renominated. When vacancies become available, the Committee may seek input from industry experts or engage third-party search firms to help source particular areas of expertise or backgrounds. +2020 PROXY STATEMENT 11 +PROPOSAL 1 +Over time, the Board refreshes its membership through a combination of adding or replacing directors to achieve the appropriate balance between maintaining longer-term directors with deep institutional knowledge of the Company and adding directors who bring a diversity of perspectives and experience. As a reflection of this philosophy, if all of the nominees are elected to the Board, following the Annual Meeting: +6/11 +directors will have tenures of five or fewer years. +10/11 +directors will be independent. +Majority Vote Standard +Our Corporate Governance Guidelines provide for a majority voting policy in uncontested director elections. The Company believes that the majority vote standard ensures accountability and the opportunity for a positive mandate from the Company’s shareholders. At any shareholder meeting for the election of directors at which a quorum is present, any nominee for director who receives a greater number of votes “withheld” from his or her election than votes “for” such election (“Majority Withheld Vote”) shall tender his or her resignation for consideration by the Nominating and Corporate Governance Committee following certification of the shareholder vote, unless the number of nominees exceeds the number of directors to be elected as of the Record Date for such meeting, in which event the directors shall be elected by a plurality of the votes cast. Such resignation will only be effective upon Board acceptance of such resignation after receiving the recommendation of the Nominating and Corporate Governance Committee. +If a director nominee receives a Majority Withheld Vote, then promptly following the certification of the election results, the Nominating and Corporate Governance Committee will consider any factors it deems relevant to the best interests of the Company and our shareholders in determining whether to accept the director’s resignation and recommend to the Board that action to be taken with respect to the tendered resignation. Within 120 days following certification of the shareholder vote, the Board shall consider the recommendation and make a determination as to whether to accept or reject such director’s resignation and shall notify the director concerned of its decision. We will also promptly publicly disclose the Board’s decision and process in a periodic or current report filed with or furnished to the SEC. +If you hold your shares through a broker and you do not instruct the broker how to vote, your broker will not have the authority to vote your shares. Abstentions and broker non-votes will each be counted as present for purposes of determining the presence of a quorum but will have no effect upon the outcome of the vote. All shares of common stock represented by proxies will be voted “FOR” the election of the director nominees, except where authority to vote in the election of directors has been withheld. Should the nominees become unable or unwilling to serve as a director at the time of the Annual Meeting, the person or persons exercising the proxies will vote for the election of substitute nominees designated by the Board, or the Board may choose to reduce the number of members of the Board to be elected at the Annual Meeting in order to eliminate the vacancy. Your proxy cannot be otherwise voted for a person who is not named in this Proxy Statement as a candidate for director or for a greater number of persons than the number of director nominees named. The Board has no reason to believe that the nominees will be unable or unwilling to serve if elected. +The Board recommends a vote FOR each of the three Class II director nominees . +12 CALLON PETROLEUM +PROPOSAL 1 +Directors Nominated For Re-Election +The Board currently consists of eleven directors. Consistent with our certificate of incorporation, the current Board is divided into three classes designated as Class I, Class II, and Class III, each with staggered, three-year terms. Based on the recommendations from the Nominating and Corporate Governance Committee, the Board has nominated three continuing Class II Directors, Messrs. Matthew R. Bob, Anthony J. Nocchiero and James M. Trimble, to stand for re-election or, in each case, until the election and qualification of their respective successors or until their earlier death, retirement, resignation or removal. +The following biographies reflect the particular experience, qualifications, attributes, and skills that led the Board to conclude that each nominee should stand for re-election to serve on the Board: +Class II Directors +Matthew R. Bob +President of Eagle Oil and Gas; Managing Member of MB Exploration +Matthew Bob has served as a member of the Board since 2014. Mr. Bob currently serves as President of Eagle Oil and Gas and has been the founder and managing member of MB Exploration and affiliated companies since 1994. Previously, Mr. Bob served as President of Hall Phoenix Energy LLC, a privately held oil and gas exploration company, from 2009 to 2011. Prior to forming MB Exploration, Mr. Bob was Chief Geophysicist at Pitts Oil Company. He began his career at Union Oil Company of California where he held various geological positions. +Mr. Bob currently serves as an independent director of Southcross Energy, a natural gas processing and transportation company with operations in South Texas. +Mr. Bob holds a B.A. in Geology from St. Louis University and an M.S. in Geology from Memphis University, and is a graduate of Harvard University’s Executive Management Program. He is a member of the American Association of Petroleum Geologists, the Society of Exploration Geophysicists and the Dallas Petroleum Club, and is a registered Geoscientist in the States of Texas, Mississippi and Louisiana. +SKILLS AND QUALIFICATIONS: +Mr. Bob’s extensive knowledge of the exploration and production industry and technical expertise are assets to the Board and qualify him as a director. His experience as a senior executive further strengthens the strategic and oversight functions of the Board. +INDEPENDENT +Age 63 +Director Since 2014 +Callon Committees: +Compensation (Chairman), Nominating and Corporate Governance, Strategic Planning and Reserves +Other Current Directorships: +Southcross Energy +Anthony J. Nocchiero +Former SVP and Chief Financial Officer (Retired) of CF Industries, Inc. +Anthony Nocchiero has served as a member of the Board since 2011. Mr. Nocchiero retired as Senior Vice President and Chief Financial Officer for CF Industries, Inc. in 2010, a position he had held since 2007. From 2005 to 2007, he was the Vice President and Chief Financial Officer for Merisant Worldwide, Inc. Prior to that, Mr. Nocchiero was self-employed as an advisor and private consultant from 2002 to 2005. From 1999 to 2001, Mr. Nocchiero served as Vice President and CFO of BP Chemicals, the global petrochemical business of BP plc. Prior to that, he spent 24 years with Amoco Corporation in various financial and management positions, including service as Amoco’s Vice President and Controller from 1998 to 1999. +Mr. Nocchiero has previous experience serving as a board member of various public and private companies, including Terra Nitrogen LP, Keytrade AG, Vysis Corporation and the Chicago Chamber of Commerce. +Mr. Nocchiero holds a B.S. degree in Chemical Engineering from Washington University in St. Louis and an M.B.A. degree from the Kellogg Graduate School of Management at Northwestern University. +SKILLS AND QUALIFICATIONS: +Mr. Nocchiero’s broad financial, accounting and operating experience within the energy industry are valuable to the Board and make him a meaningful contributor as a director. Additionally, Mr. Nocchiero’s status as a “financial expert” and knowledge of public company reporting requirements add meaningful insights to the Board and Audit Committee. +INDEPENDENT +Age 69 +Director Since 2011 +Callon Committees: +Audit (Chairman), Compensation, Strategic Planning and Reserves +2020 PROXY STATEMENT 13 +PROPOSAL 1 +James M. Trimble +Former Chief Executive Officer and President (Retired) of Stone Energy Corporation +James Trimble has served as a member of the Board since 2014. Most recently, Mr. Trimble served as the interim Chief Executive Officer and President of Stone Energy Corporation from 2017 to 2018. Prior to that, Mr. Trimble served as CEO and President of PDC Energy, Inc. from 2011 until his retirement in 2015. Mr. Trimble was Managing Director of Grand Gulf Energy Limited, a public company traded on the Australian Securities Exchange, and President and CEO of Grand Gulf’s U.S. subsidiary Grand Gulf Energy Company LLC, an exploration and development company focused primarily on drilling in mature basins in Texas, Louisiana and Oklahoma, from 2005 to 2010. Earlier in his career, Mr. Trimble was CEO of TexCal (formerly Tri-Union Development) and CEO of Elysium Energy, a privately held oil and gas exploration company. Prior to that, he was Senior Vice President of Exploration and Production for Cabot Oil and Gas, a publicly-traded independent energy company. +Mr. Trimble currently serves as a director of Talos Energy, a publicly-traded oil and gas exploration company, and Chairman of the Board of Crestone Peak Resources LLC, a privately held oil and gas exploration company. Previously, Mr. Trimble was a director of Stone Energy Corporation from 2017 to 2018, PDC Energy from 2009 to 2016, C&J Energy Services from 2016 to 2017, Seisgen Exploration from 2008 to 2015, Grand Gulf Energy from 2009 to 2012, and Blue Dolphin Energy from 2002 to 2006. +Mr. Trimble was an officer of PDC Energy in September 2013, when each of the twelve partnerships for which the company was the managing general partner filed for bankruptcy in the federal bankruptcy court, Northern District of Texas, Dallas Division and was on the board of C&J Energy Services when it filed for bankruptcy in the court of the Southern District of Texas, Houston Division in July 2016. +Mr. Trimble graduated from Mississippi State University where he majored in petroleum engineering for undergraduate (Bachelor of Science) and graduate studies. He is a Registered Professional Engineer in the State of Texas. +SKILLS AND QUALIFICATIONS: +Mr. Trimble’s deep knowledge of the exploration and production industry and his leadership experience at previous companies strengthen the strategic and oversight functions of the Board. His experience on the boards of several other public companies provide valuable perspective on best practices relating to corporate governance, management and strategic transactions. +INDEPENDENT +Age 71 +Director Since 2014 +Callon Committees: +Nominating and Corporate Governance (Chairman), Compensation, Strategic Planning and Reserves +Other Current Directorships: +Talos Energy +14 CALLON PETROLEUM +CORPORATE GOVERNANCE +Directors Continuing in Office +Biographical information for our directors continuing in office is set forth below. These individuals are not standing for re-election at this time: +Class I Directors +Michael L. Finch +Former Chief Financial Officer (Retired) of Stone Energy Corporation +Michael Finch has served as a member of the Board since 2015. He spent nearly 20 years affiliated with Stone Energy Corporation, a publicly-traded oil and gas exploration company, from which he retired as Chief Financial Officer and a member of the Board of Directors in 1999. Prior to his service with Stone Energy, he was employed by Arthur Andersen & Co. +Mr. Finch was an independent director of Petroquest Energy, Inc. a publicly-traded oil and gas company, from 2003 to 2016, where he served as chairman of the Audit Committee and as a member of the Compensation Committee and the Nominating and Corporate Governance Committee. Mr. Finch currently serves on the advisory board of C.H. Fenstermaker & Associates, a multi-disciplinary consulting firm that specializes in surveying and mapping, engineering and environmental consulting. +Mr. Finch holds a B.S. in Accounting from the University of South Alabama and was licensed as a Certified Public Accountant (currently inactive). +SKILLS AND QUALIFICATIONS: +Mr. Finch’s extensive financial, accounting, and operating experience within the oil and gas industry are extremely valuable to the Board and qualify him as a director. In particular, Mr. Finch’s accounting background and status as a “financial expert” provide the Board valuable perspective on issues facing audit committees. +INDEPENDENT +Age 64 +Director Since 2015 +Callon Committees: +Audit, Compensation, Strategic Planning and Reserves +S. P. Johnson IV +Former President, Chief Executive Officer and Co-Founder (Retired) of Carrizo Oil & Gas, Inc. +Mr. Johnson was a co-founder of Carrizo and served as the President and Chief Executive Officer and as a director from December 1993 to December 2019, when Carrizo merged with the Company. Prior to that, he worked for Shell Oil Company for 15 years, where his managerial positions included Operations Superintendent, Manager of Planning and Finance and Manager of Development Engineering. +Mr. Johnson was also a director of Basic Energy Services, Inc., an oilfield service provider, and served as a director of Pinnacle Gas Resources, Inc., a coalbed methane exploration and production company, from 2003 to 2011. +Mr. Johnson is a Registered Petroleum Engineer and holds a B.S. in Mechanical Engineering from the University of Colorado. +SKILLS AND QUALIFICATIONS: +Mr. Johnson brings to the Board extensive experience in oil and gas exploration and production and the energy industry through his roles at Carrizo and other energy companies. +INDEPENDENT +Age 64 +Director Since 2019 +Callon Committees: +Strategic Planning and Reserves +2020 PROXY STATEMENT 15 +CORPORATE GOVERNANCE +Larry D. McVay +Managing Director of Edgewater Energy, LLC +Larry McVay has served as a member of the Board since 2007. Mr. McVay has been a Managing Director of Edgewater Energy, LLC, a privately held oil and gas investment company, since 2007. From 2003-2006, he served as Chief Operating Officer of TNK-BP Holding, one of the largest oil producing companies in Russia. From 2000-2003, he served as Technology Vice President and Vice President of Health, Safety and Environment for BP plc. Prior to joining BP, Mr. McVay held numerous positions at Amoco, including engineering management and senior operating leadership positions. +Mr. McVay is a director of Linde plc, a publicly-traded industrial gas and engineering company. Previously, Mr. McVay was a director of Praxair, Inc., an industrial gases company in North and South America, until Praxair, Inc. and Linde AG combined to create Linde plc in 2018. Additionally, Mr. McVay was previously a director of Chicago Bridge and Iron Company, N.V., a publicly-traded engineering, procurement and construction company, until it merged into McDermott International in 2018. +Mr. McVay earned a B.S. in Mechanical Engineering from Texas Tech University, where he was recognized as a Distinguished Engineer in 1995. +SKILLS AND QUALIFICATIONS: +Mr. McVay has been directly involved in nearly all aspects of the oil and gas industry, including drilling, production, finance, environmental, risk, and safety. We believe that this experience and his knowledge of the exploration and production industry, particularly in the Permian Basin, as well as his senior executive experience, service on other boards, and independence, provide valuable insight in the development of our long-term strategies and qualify him for service on the Board. +INDEPENDENT +Age 72 +Director Since 2007 +Callon Committees: +Strategic Planning and Reserves (Chairman), Audit, Nominating and Corporate Governance +Other Current Directorships: +Linde plc +Steven A. Webster +Former Chairman of the Board and Co-Founder of Carrizo Oil & Gas, Inc. +Mr. Webster was a co-founder of Carrizo for which he served as a director since 1993 and as its Chairman of the Board since 1997 until December 2019, when Carrizo merged with the Company. Since 2016, Mr. Webster has served as Managing Partner of AEC Partners, a private equity firm engaged in energy investment which was the successor to Avista Capital Partners, a private equity firm he co-founded in 2005 and for which he served as Co-Managing Partner. From 2000 through 2005, Mr. Webster served as Chairman of Global Energy Partners, an affiliate of DLJ Merchant Banking and CSFB Private Equity. From 1988 through 1999, Mr. Webster was the CEO and President of R&B Falcon Corporation and Chairman and CEO of one of its predecessor companies, Falcon Drilling Company, which he founded. Mr. Webster has been a founder or seed investor in numerous other private and public companies. +He has held numerous board positions and currently serves as a director of ERA Group, Oceaneering International and various private companies. Since its founding in 1993, Mr. Webster has served as a Trust Manager of Camden Property Trust, a REIT. +Mr. Webster holds an M.B.A. from Harvard Business School where he was a Baker Scholar. He also holds a B.S. in Industrial Management and an Honorary Doctorate in Management from Purdue University. +SKILLS AND QUALIFICATIONS: +Mr. Webster brings to the Board experience in, and knowledge of, the energy industry, business leadership skills from his tenure as chief executive officer of publicly traded companies and his over 30-year career in private equity and investment activities, and experience as a director of several other public and private companies. +INDEPENDENT +Age 68 +Director Since 2019 +Callon Committees: +Audit, Strategic Planning and Reserves +Other Current Directorships: +Camden Property Trust; Era Group Inc.; Oceaneering International, Inc. +16 CALLON PETROLEUM +CORPORATE GOVERNANCE +Class III Directors +Major General (Ret.) Barbara J. Faulkenberry +Major General (Ret.) of the U.S. Air Force +Barbara Faulkenberry has served as a member of the Board since 2018. Ms. Faulkenberry retired from the U.S. Air Force in 2014 as a Major General (2-stars) after a 32-year career, finishing in the top 150 leaders of a 320,000-person global organization. Her last assignment was as Vice Commander (COO) and interim Commander (CEO) of a 37,000-person organization conducting all global Department of Defense air cargo, passenger, and medical patient movements with 1,100 military aircraft plus contracted commercial aircraft. +Ms. Faulkenberry is currently an independent director for USA Truck, a publicly-traded provider of logistics and trucking services across North America, where she serves as chair of the Technology Committee and as a member of the Nominating and Corporate Governance Committee. +Ms. Faulkenberry received a B.S. degree from the Air Force Academy in 1982, an M.B.A. from Georgia College in 1986, and a Master of National Security from the National Defense University in 1999. She has also attended strategic leadership courses at Harvard, Cambridge, and Syracuse Universities. +SKILLS AND QUALIFICATIONS: +Ms. Faulkenberry brings to the Company senior leadership experience in the areas of supply chain management, logistics, strategic planning, risk management, technology, cyber security, and leadership development. Additionally, she is a NACD Board Leadership Fellow and earned the Carnegie Mellon/NACD CERT Certificate in Cybersecurity Oversight, both of which contribute to best practices in corporate governance and cyber security and provide great value to the Board. +INDEPENDENT +Age 60 +Director Since 2018 +Callon Committees: +Audit, Nominating and Corporate Governance, Strategic Planning and Reserves +Other Current Directorships: +USA Truck, Inc. +L. Richard Flury +Chairman of the Board +Former Chief Executive (Retired) for Gas, Power & Renewables of BP plc +Richard Flury has served as a member of the Board since 2004 and has served as Chairman since 2017. He spent over 30 years with Amoco Corporation, and later, BP plc, from which he retired as Chief Executive for Gas and Power and Renewables in 2001. Prior to Amoco’s merger with BP in 1998, he served in various executive positions and was Chief Executive for Worldwide Exploration and Production and Executive Vice President of Amoco Corporation at the time of the merger. +Mr. Flury is a director of McDermott International, a publicly-traded engineering, procurement and construction company, including when it filed voluntary petitions for reorganization in the United States Bankruptcy Court for the Southern District of Texas in January 2020. Mr. Flury was a director and the non-executive Chairman of Chicago Bridge and Iron Company, N.V., a publicly-traded engineering, procurement and construction company, until it merged into McDermott International in 2018. Previously, Mr. Flury was a member of the Board of QEP Resources, Inc., a publicly-traded oil and gas exploration company, from 2010 to 2015. +He is a graduate of the University of Victoria (Canada) where he studied geology. +SKILLS AND QUALIFICATIONS: +Mr. Flury’s deep knowledge of the energy industry and years of executive and management experience provide him with valuable insights into the strategic issues affecting companies in the oil and gas industry that are helpful to our Company and Board. His service on the boards of other publicly-traded companies has provided him exposure to different industries and approaches to governance that we believe further enhances the Board. +INDEPENDENT +Age 72 +Director Since 2004 +Callon Committees: +Audit, Compensation, Strategic Planning and Reserves +Other Current Directorships: +McDermott International +2020 PROXY STATEMENT 17 +CORPORATE GOVERNANCE +Joseph C. Gatto, Jr. +President, Chief Executive Officer and Director +Joseph C. Gatto, Jr. is President, Chief Executive Officer and Director of Callon. Mr. Gatto was elected to the Board in 2018. He has served as the Company's CEO since 2017 and as President since 2016. Prior to his appointment as CEO, he served as Chief Financial Officer and Treasurer of the Company from 2014 to 2017, and held various other senior leadership positions within the Company since joining Callon in 2012. +Prior to joining the Company, Mr. Gatto served as Head of Structuring and Execution with Merrill Lynch Commodities from 2010 to 2011, as the founder of MarchWire Capital, LLC, a financial advisory and strategic consulting firm in 2009, and as a Managing Director in the energy investment banking groups of Merrill Lynch & Co. and Barclays Capital from 1997 to 2009. +Mr. Gatto graduated from Cornell University with a B.S. degree and The Wharton School of the University of Pennsylvania with an M.B.A. +SKILLS AND QUALIFICATIONS: +Mr. Gatto’s extensive experience in investment banking and the oil and gas industry make him a valuable addition to the Board. Additionally, Mr. Gatto's knowledge of the Company and strong background in capital markets, transactions, strategic planning, and investor relations provide the Board with essential insight and guidance. +Age 49 +Director Since 2018 +Frances Aldrich Sevilla-Sacasa +Former Chief Executive Officer of Banco Itaú International +Ms. Aldrich Sevilla-Sacasa is a private investor and was Chief Executive Officer of Banco Itaú International, Miami, Florida, from April 2012 to December 2016. Prior to that time, she served as Executive Advisor to the Dean of the University of Miami School of Business from 2011 to 2012, Interim Dean of the University of Miami School of Business from 2011 to 2011, President of U.S. Trust, Bank of America Private Wealth Management from 2007 to 2008, President and Chief Executive Officer of US Trust Company in 2007, and President of US Trust Company from November 2005 until June 2007. She previously served in a variety of roles with Citigroup’s private banking business, including President of Latin America Private Banking, President of Europe Private Banking, and Head of International Trust Business. +Ms. Aldrich Sevilla-Sacasa holds a Bachelor of Arts Degree from the University of Miami and an M.B.A. from the Thunderbird School of Global Management. +SKILLS AND QUALIFICATIONS: +Ms. Aldrich Sevilla-Sacasa brings to the Board considerable experience in financial services, banking and wealth management. In addition, her experience as a former president and chief executive officer of a trust and wealth management company, and as a director of other corporate and not-for-profit boards has provided her with expertise in the area of corporate governance. +Age 64 +Director Since 2019 +Callon Committees: +Nominating and Corporate Governance; Strategic Planning and Reserves +Other Current Directorships: +Camden Property Trust +18 CALLON PETROLEUM +CORPORATE GOVERNANCE +Current Composition of the Board +The following table provides information with respect to the skills and experience of all current directors and the nominees for Class II terms who have been nominated to stand for election at the Annual Meeting. +Name +Matthew R. Bob +Barbara J. Faulkenberry +Michael L. Finch +L. Richard Flury +(Chairman) +Joseph C. Gatto, Jr. +S.P. Johnson IV +Larry D. McVay +Anthony J. Nocchiero +Frances A. Sevilla-Sacasa +James M. Trimble +Steven A. Webster +Age (as of April 1, 2020) +63 +60 +64 +72 +49 +64 +72 +69 +64 +71 +68 +Tenure (as of April 1, 2020) +6 +2 +5 +16 +2 +1 +13 +9 +1 +6 +1 +Gender Diversity +● +● +CEO/President Experience +● +● +● +● +● +● +● +Senior Executive Leadership +● +● +● +● +● +● +● +● +● +● +● +Outside Public Boards (current) +● +● +● +● +● +● +● +Outside Public Boards (prior) +● +● +● +● +● +● +● +E&P Industry Experience +● +● +● +● +● +● +● +● +● +Energy (Other than E&P) Industry Experience +● +● +● +● +● +● +● +Financial Expert +● +● +● +Financial Literacy +● +● +● +● +● +● +● +● +● +● +● +Financial Oversight/Accounting +● +● +● +● +● +● +● +● +● +Petroleum and Other Engineering +● +● +● +● +Geologist or Geophysicist +● +● +Government/Public Policy/Regulatory +● +● +HES Experience/Environmental +● +● +● +Strategic Advising +● +● +● +● +● +● +● +● +● +Investment Banking +● +● +Supply Chain +● +● +Technology/IT/Cybersecurity +● +● +● +● +2020 PROXY STATEMENT 19 +CORPORATE GOVERNANCE +Director Compensation +The compensation of our non-employee directors is reviewed by the Compensation Committee and is approved by the Board. We use a combination of cash and stock-based incentive compensation to attract and retain qualified candidates to serve on the Board. In determining director compensation, we consider the responsibilities of our directors, the significant amount of time the directors spend fulfilling their duties, and the competitive market for skilled directors. +Annually the Compensation Committee directly engages Meridian Compensation Partners ("Meridian") to conduct an analysis of director compensation and recommend any adjustments to the total annual compensation of the non-employee directors. Specifically, Meridian evaluates competitive market data, utilizing the same industry peer group ("Peer Group") used for executive compensation market data (see page 42). The Compensation Committee generally targets total compensation near the median of this Peer Group. The Company's director compensation program generally consists of cash retainers and an annual grant of restricted stock units ("RSUs") awarded under the Company’s 2018 Omnibus Incentive Plan (the “2018 Plan”). The RSU grants are awarded to match competitive practices and encourage a long-term alignment with shareholders. +In March 2019, with input from compensation advisor Meridian, the Compensation Committee reviewed the competitiveness of the director compensation package. Upon recommendation from the Compensation Committee, the Board determined to maintain compensation levels established in 2018, maintaining both an annual cash retainer of $80,000 and an annual restricted stock unit grant of $165,000. The average total compensation for Callon directors is at approximately the median of the Peer Group. +For 2019, the Company's non-employee director compensation consisted of the following: +Board member cash retainer +$ +80,000 +Restricted Stock Unit (RSU) Grant Value +$ +165,000 +Chairmen Fees +Non-Executive Chair +$ +120,000 +Audit Committee Chair +$ +20,000 +Compensation Committee Chair +$ +15,000 +Nominating and Corporative Governance Committee Chair +$ +10,000 +Strategic Planning and Reserves Committee Chair +$ +10,000 +Each non-employee director is reimbursed for reasonable out-of-pocket costs incurred to attend Board and Committee meetings. If a member of the Board is an officer or employee of the Company, he or she does not receive compensation for his or her service as a director. +The RSUs granted to directors in 2019 will vest on the first anniversary date following the grant, or on the date of the Company’s Annual Meeting , whichever occurs first. +Directors have the opportunity to make an annual election to defer some or all of their cash retainer or annual stock award pursuant to the terms of a deferred compensation plan for non-employee directors (the "Deferred Compensation Plan") until separation from service as a director. All deferrals under the plan are credited as phantom stock units of Callon stock. Callon's directors are subject to stock ownership guidelines of five times the annual cash retainer of $80,000. For more information on the stock ownership guidelines, see page 49. +20 CALLON PETROLEUM +CORPORATE GOVERNANCE +The table below indicates the total compensation earned during 2019 for each non-employee director: +NON-EMPLOYEE DIRECTOR COMPENSATION FOR 2019 +Director +Fees Earned or +Paid in Cash (a) +Stock +Awards (b) +All Other +Compensation +Total +Matthew R. Bob +$ +95,000 +(c) +$ +165,000 +$0 +$ +260,000 +Barbara J. Faulkenberry +$ +80,000 +(d) +$ +165,000 +$0 +$ +245,000 +Michael L. Finch +$ +80,000 +(d) +$ +165,000 +$0 +$ +245,000 +L. Richard Flury +$ +200,000 +(e) +$ +165,000 +$0 +$ +365,000 +S. P. Johnson IV (i) +$ +0 +$ +0 +$0 +$ +0 +Larry D. McVay +$ +90,000 +(f) +$ +165,000 +$0 +$ +255,000 +Anthony J. Nocchiero +$ +100,000 +(g) +$ +165,000 +$0 +$ +265,000 +Frances Aldrich Sevilla-Sacasa (i) +$ +0 +$ +0 +$0 +$ +0 +James M. Trimble +$ +90,000 +(h) +$ +165,000 +$0 +$ +255,000 +Steven A. Webster (i) +$ +0 +$ +0 +$0 +$ +0 +(a) +Does not include reimbursement of expenses associated with attending Board and Committee meetings. +(b) +Amounts calculated utilizing the provisions of FASB ASC Topic 718. These amounts are equal to the grant date fair value of the awards. The aggregate number of stock unit awards outstanding as of December 31, 2019 for each director is as follows: Messrs. Bob, Flinch, Flury, McVay, Nocchiero and Trimble - 24,076; Ms. Faulkenberry - 20,370; Messrs. Johnson and Webster - 0; and Ms. Sevilla-Sacasa - 0. +(c) +Represents annual retainer of $80,000 and an additional $15,000 for acting as Chairman of the Compensation Committee. +(d) +Represents annual retainer of $80,000. +(e) +Represents annual retainer of $80,000 and an additional $120,000 for acting as the non-executive Chairman of the Board. Mr. Flury elected to have his annual retainer and his non-executive Chairman of the Board fees deferred pursuant to the terms of the Deferred Compensation Plan , under which participants may elect to convert cash fees earned to phantom shares and defer the receipt of the proceeds in cash until separation from service as a director. +(f) +Represents annual retainer of $80,000 and an additional $10,000 for acting as Chairman of the Strategic Planning and Reserves Committee. +(g) +Represents annual retainer of $80,000 and an additional $20,000 for acting as Chairman of the Audit Committee. +(h) +Represents annual retainer of $80,000 and an additional $10,000 for acting as Chairman of the Nominating and Corporate Governance Committee. +(i) +Messrs. Johnson and Webster and Ms. Sevilla-Sacasa were not members of Callon's Board prior to December 20, 2019. Amounts shown for Messrs. Johnson and Webster and Ms. Sevilla-Sacasa represent compensation paid by Callon following the Carrizo Acquisition. +Pursuant to the terms of the Merger Agreement and the Carrizo Change in Control Severance Plan, during 2020 the Company will pay to Mr. Johnson $4,146,000 in severance benefits and a 2019 annual bonus of $670,175. For more information about the 2019 Carrizo annual bonus payout, please see page 46. +Director Independence +To minimize potential conflicts, it is a policy of the Board that a majority of the Board be independent. In accordance with the standards for companies listed on the New York Stock Exchange ("NYSE") and the rules and regulations promulgated by the SEC, as well as our Corporate Governance Guidelines, the Board considers a director to be independent if it has affirmatively determined that the director has no material relationship with the Company that could compromise his or her ability to exercise independent judgment in carrying out his or her responsibilities. The Board revisits the independence of each director on an annual basis and makes independence determinations when a newly appointed director joins the Board between annual meetings. The Board reviewed the independence of its directors and nominees in accordance with the standards described above and affirmatively determined that each of the directors (other than Mr. Gatto) and nominees is independent. +2020 PROXY STATEMENT 21 +CORPORATE GOVERNANCE +Board Structure and Responsibilities +Governance Highlights +We are committed to effective and sustainable corporate governance, which we believe strengthens Board and management accountability, promotes the long-term interests of our shareholders, and helps build public trust in our Company. We adhere to our core values and governance principles to ensure that we operate our business responsibly, ethically, and in a manner aligned with the interests of our shareholders. Highlights of our commitment to strong corporate governance include the following: +• +Ten of our eleven directors are independent. Joseph C. Gatto, Jr., our President and CEO, is the only non‑independent member of the Board. +• +All Board committees are comprised entirely of independent directors. +• +An independent, non-executive director serves as the Company’s Chairman of the Board. +• +The Company encourages a paced refreshment of the Board. Six of the eleven directors have joined within the last five years. +• +The Board includes a balance of experience, tenure, and qualifications in areas important to our business. +• +Election of directors by majority of votes cast in an uncontested election +• +We have an over-boarding policy in place for directors. +• +The Board conducts regular executive sessions with our independent directors. +• +We regularly refresh our governance documents. +• +The Board and its committees conduct annual self-evaluations. +• +We have adopted stringent insider trading, anti-hedging, and anti-pledging policies. +• +We engage in active shareholder engagement practices. +• +The Board oversees environmental, social and governance practices. +• +The Board oversees succession planning for the CEO and executive officer positions. +• +We engage an independent executive compensation consultant that reports directly to the Compensation Committee. +• +The Company adopted Annual Say-On-Pay voting. +• +The Compensation Committee has implemented significant director and executive officer stock ownership guidelines. +• +We do not have employment agreements with any executive officers, with the exception of an employment agreement with Gregory F. Conaway that was adopted by the Company as a result of the acquisition of Carrizo (the "Carrizo Acquisition"). +• +We have double-trigger change in control provisions in our severance agreements and equity awards. +• +We do not have a Poison Pill (Shareholder Rights Plan). +General Information +The Board is responsible for determining the ultimate direction of our business strategy, overseeing our governance policies and culture and promoting the long-term interests of the Company. The Board possesses and exercises oversight authority over our business but, subject to our governing documents and applicable law, delegates day-to-day management of the Company to our CEO and senior management. The Board generally fulfills its responsibilities through regular meetings to review significant developments affecting the Company and to act on matters requiring Board approval. Between regularly scheduled meetings, the Board may also hold special meetings, execute written consents, and participate in telephonic conference calls when an important matter requires Board action. During 2019, the Board met formally 15 times and transacted business on ten occasions during the year by unanimous written consent. All of our directors attended at least 75% of Board and committee meetings either in person or by telephone during the time he or she served on the Board or committees. In addition, to promote open discussion, the non-employee directors meet in executive session without management regularly. L. Richard Flury, the Chairman of the Board, was selected to preside over all executive sessions during 2019. It is the policy of the Company that, to the extent possible, all directors attend the Company’s Annual Meetings of Shareholders. Each then-current member of the Board attended the Company's 2019 Annual Meeting of Shareholders. +22 CALLON PETROLEUM +CORPORATE GOVERNANCE +The Board, in consultation with the Nominating and Corporate Governance Committee, has determined that a classified board structure continues to be appropriate for us, particularly in an industry where a long-term strategic planning outlook is critical for the successful development of oil and natural gas resources through commodity price cycles. Our future success depends in significant part on the in-depth knowledge of our business and operations by our directors. We believe that a classified board promotes stability, continuity and experience among our directors, which is essential to developing and implementing long-term strategies, while resisting the pressure to focus on short-term results at the expense of enhancing long-term value and success. +Board Leadership Structure +One of the Board’s key responsibilities is determining the appropriate leadership structure for the Board, which helps ensure its effective and independent oversight of management on behalf of our shareholders. The Board believes that there is no one generally accepted approach to providing board leadership and given the dynamic and competitive environment in which we operate, the optimal board leadership structure may vary as circumstances warrant. Accordingly, the Board has no policy mandating the separation or combination of the roles of Chairman of the Board and CEO, but periodically discusses and considers the structure as circumstances change. As such, the Board believes that it is in the best position to evaluate the needs of the Company and to determine how best to organize the Company’s leadership structure to meet those needs. +Currently, the Board has separated the roles of CEO and Chairman and appointed independent director Mr. Flury as Chairman of the Board and Mr. Gatto as CEO. +The Board is currently comprised of eleven directors, of whom ten out of eleven are independent. Mr. Gatto, the Company’s President and CEO, serves as an executive member of the Board. Independent directors and management generally have different perspectives and roles in strategy development. Our independent directors have backgrounds in the oil and gas industry or other relevant experiences which complement the CEO’s comprehensive, company-specific perspective. As the officer having primary responsibility for managing our daily operations and identifying strategic priorities, the CEO is best positioned to lead the Board through reviews of key business and strategy decisions. This dynamic effectively promotes the opportunity for a successful blend of our independent directors’ perspectives and oversight responsibilities and facilitates information flow and communication between senior management and the Board, which are both essential to effective governance. +2020 PROXY STATEMENT 23 +CORPORATE GOVERNANCE +Areas of Board Oversight +Board Risk Oversight +As an independent oil and gas company, we face a number of risks. Assessing and managing material risk is the responsibility of our management team, while the Board, as a whole and through its committees, generally oversees risk management and our long-term strategic direction, ensuring that risks undertaken by the Company are consistent with the Board’s risk tolerance. The Board leadership structure and our practice of a high degree of interaction between our directors and members of senior management facilitate this oversight function. Our executive officers regularly attend the Board meetings and are available to address any questions or concerns raised by the Board related to risk management and any other matters. Other members of our management team periodically attend the Board meetings or are otherwise available to confer with the Board to the extent their expertise is required to address risk management matters. The information flow and communication throughout the year between the Board and senior management regarding long-term strategic planning and short-term operational reporting includes matters of material risk inherent in our business of developing oil and natural gas assets. The Board realizes, however, that it is not possible or prudent to eliminate all risk and that appropriate risk-taking is essential in order to achieve our near and longer-term objectives. +While the Board is ultimately responsible for risk oversight, the Board exercises additional risk oversight responsibilities through its committees, which are comprised solely of independent directors. Each such committee has primary risk oversight responsibility with respect to matters within the scope of its duties as contemplated by its charter and as described below. +Standing Committees of the Board of Directors +The Board has four standing committees, each of which is comprised entirely of independent directors. Each committee, discussed below in greater detail, has a written charter that establishes the responsibilities and scope of the committee and its Chairman. Each committee charter was reviewed in November 2019 and revised as deemed necessary by the Board. +BOARD OF DIRECTORS +The Audit Committee , among other duties, is charged with overseeing material risk exposures in the areas of financial reporting, internal controls, compliance, hedging and cybersecurity. This Committee also oversees responses to any alleged violations of our Code of Business Conduct. +The Nominating and Corporate Governance Committee focuses on issues relating to corporate governance and Board committee composition. This Committee also assists the Board in fulfilling its oversight responsibilities with respect to succession planning for our directors and executive officers and ESG matters. +The Compensation Committee oversees the Company's compensation programs and reviews the potential risks that may result from our compensation policies to ensure they do not encourage unnecessary or excessive risk taking by management. +The Strategic Planning and Reserves Committee oversees the development and implementation of our strategic plan and the integrity of our reserve estimation reporting process and related disclosures. +24 CALLON PETROLEUM +CORPORATE GOVERNANCE +Committees of the Board +Callon Committees +Name, Age, Independence +Audit +Compensation +Nominating +and Corporate +Governance +Strategic +Planning and +Reserves +Class I Directors (term expires in 2022) +Michael L. Finch , 64 +Independent +○ +○ +○ +S. P. Johnson IV , 64 +Independent +○ +Larry D. McVay , 72 +Independent +○ +○ +● +Steven A. Webster , 68 +Independent +○ +○ +Class II Directors (term expires in 2020) +Matthew R. Bob , 63 +Independent +● +○ +○ +Anthony J. Nocchiero , 69 +Independent +● +○ +○ +James M. Trimble , 71 +Independent +○ +● +○ +Class III Directors (term expires in 2021) +Barbara J. Faulkenberry , 60 +Independent +○ +○ +○ +L. Richard Flury , 72 +Independent Chairman of the Board +○ +○ +○ +Joseph C. Gatto, Jr. , 49 +President and Chief Executive Officer +Frances A. Sevilla-Sacasa , 64 +Independent +○ +○ +● Chairman ○ Member +2020 PROXY STATEMENT 25 +CORPORATE GOVERNANCE +Audit Committee +Anthony J. Nocchiero (Chairman and Financial Expert) +Barbara J. Faulkenberry +Michael L. Finch (Financial Expert) +L. Richard Flury +Larry D. McVay +Steven A. Webster +PURPOSE +The principal function of the Audit Committee is to assist the Board in overseeing the areas of financial reporting, accounting integrity, compliance, and risk management. +MEETINGS IN 2019 +Five meetings; all members attended at least 75% of Committee meetings during the time he or she served on the Committee. +RESPONSIBILITIES +Pursuant to its charter, our Audit Committee functions in an oversight role and has the following purposes: +• +Overseeing the quality, integrity and reliability of the financial statements and other financial information we provide to any governmental body or the public; +• +Overseeing our compliance with legal and regulatory requirements; +• +Selecting and hiring (subject to ratification by our shareholders) the independent public accounting firm; +• +Overseeing the qualifications, independence and performance of the independent auditor; +• +Overseeing the effectiveness and performance of our internal audit function; +• +Overseeing our internal controls regarding finance, accounting, legal compliance and ethics; +• +Establishing and overseeing procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls or audit matters, including the confidential, anonymous submission of concerns regarding such matters; +• +Assessing matters related to risk, risk controls and compliance, including the review and approval of hedging practices and policies; +• +Overseeing matters related to cybersecurity and the security of information technology systems, including management’s plans, programs and policies designed to mitigate cybersecurity risks and third party reports on the information technology control environment; +• +Producing the Audit Committee Report for inclusion in our annual proxy statement; and +• +Performing such other functions the Board may assign to the Audit Committee from time to time. +The Audit Committee oversees our accounting and auditing procedures and financial reporting practices, and is responsible for the engagement of and oversight of all audit work conducted by our independent registered public accounting firm. The Audit Committee meets periodically, at least quarterly, with our executive and financial management teams, internal auditor and our independent registered public accounting firm to review our financial information and systems of internal controls. The independent registered public accounting firm reports directly to the Audit Committee and, if requested, meets with the Audit Committee in executive session without management representatives present. The Audit Committee has the authority to investigate any matters brought to its attention and to retain outside legal, accounting or other consultants if deemed necessary. +The Audit Committee is required to pre-approve all audit, audit-related and non-audit services provided by the independent registered public accounting firm exceeding $25,000. The Audit Committee approved all of the fees described in Proposal 4. +Relationship with Independent Registered Public Accounting Firm +Management is responsible for establishing and maintaining internal controls over financial reporting and for assessing the effectiveness of those controls. The independent registered public accounting firm is responsible for performing independent audits of our consolidated financial statements and internal controls over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (“PCAOB”) (United States) and issuing reports thereon. The Audit Committee’s responsibility is to monitor and oversee these processes. Grant Thornton LLP has served as our independent registered public accounting firm since 2016. +INDEPENDENCE +The Board has determined that all members meet the independence requirements of the Securities Exchange Commission ("SEC") and NYSE rules and the financial literacy requirements of the NYSE. Members of the Audit Committee may not simultaneously serve on the audit committee of more than two other public companies. +26 CALLON PETROLEUM +CORPORATE GOVERNANCE +Compensation Committee +Matthew R. Bob (Chairman) +Michael L. Finch +L. Richard Flury +Anthony J. Nocchiero +James M. Trimble +PURPOSE +The purpose of the Compensation Committee is to establish our compensation programs and oversee the alignment of our compensation with our business strategies. +MEETINGS IN 2019 +Five meetings; all members attended at least 75% of Committee meetings. +RESPONSIBILITIES +Pursuant to its charter, the Compensation Committee’s duties include the responsibility to assist the Board in: +• +Evaluating the performance of and establishing the compensation of the CEO; +• +Establishing, with input from the CEO, the compensation for our other executive officers; +• +Establishing and reviewing our overall executive compensation philosophy and approving changes to our compensation program; +• +Reviewing incentive compensation arrangements to confirm that executive compensation does not encourage unnecessary risk taking; +• +Administering our long-term incentive plans; +• +Reviewing and approving the Compensation Discussion and Analysis ("CD&A") for inclusion in the annual proxy statement; +• +Reviewing and recommending to the Board compensation for non-employee directors; +• +Retaining and overseeing compensation consultants, including the independence of the consultants; +• +Reviewing and approving performance criteria and results for bonus and performance-based equity awards for executive officers and approving awards to those officers; and +• +Performing such other functions as the Board may assign to the Compensation Committee from time to time. +The Committee retained the services of Meridian, an independent compensation consulting firm, to assist in the annual review of market and industry data to assess our competitive position with respect to each element of total compensation and to assist with the attraction and retention of, and appropriate reward to, our CEO and other executive officers. Pursuant to applicable SEC and NYSE rules, the Committee has determined that no conflicts of interest exist related to Meridian’s engagement by the Committee. +INDEPENDENCE +Consistent with the listing requirements of the NYSE, the Compensation Committee is composed entirely of independent members of the Board, as each member meets the independence requirements set by the NYSE and applicable federal securities laws. +COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION +L. Richard Flury, Matthew R. Bob, Michael L. Finch, Anthony J. Nocchiero and James M. Trimble served on the Company’s Compensation Committee during fiscal year 2019. No member of our Compensation Committee is presently or has been an officer or employee of the Company. In addition, during the last fiscal year, no executive officer served as a member of the board or the compensation committee (or other board committee performing similar functions or, in the absence of any such committee, the entire board) of any entity in which a Callon Board member is an executive officer. +2020 PROXY STATEMENT 27 +CORPORATE GOVERNANCE +Nominating and Corporate +Governance Committee +James M. Trimble (Chairman) +Matthew R. Bob +Barbara J. Faulkenberry +Larry D. McVay +Frances A. Sevilla-Sacasa +PURPOSE +The purpose of the Nominating and Corporate Governance Committee is to identify and recommend qualified candidates to the Board for nomination as members of the Board; assess director, Board and committee effectiveness; develop and implement our Corporate Governance Guidelines; oversee succession planning for executive officers; oversee ESG matters; and otherwise take a leadership role in shaping the corporate governance of our Company. +MEETINGS IN 2019 +Four meetings; all members attended at least 75% of Committee meetings during the time he or she served on the Committee. +RESPONSIBILITIES +Pursuant to its charter, the Nominating and Corporate Governance Committee’s duties include the responsibility to assist the Board in: +• +Evaluating a set of specific criteria for Board membership and identifying individuals qualified to become Board members, recommending nominees for election at the next annual meeting of shareholders, reviewing the suitability for continued service as a director of each Board member, and filling any vacancies; +• +Assessing the size and composition of the Board and its committees and recommending to the Board the members and chair for each Board committee; +• +Advising the Board and making recommendations regarding appropriate corporate governance practices and assisting the Board in implementing those practices, including periodically reviewing the adequacy of our Corporate Governance Guidelines, our Code of Business Conduct and Ethics, and the various Board committee charters, and making recommendations for changes thereto to the Board; +• +Overseeing the annual self-evaluation of the performance of the Board and its committees; +• +Overseeing and approving plans for management continuity and succession; +• +Recommending to the Board a successor to the CEO when a vacancy occurs; +• +Reviewing directorships in other public companies held by or offered to directors or executive officers of the Company; +• +Overseeing ESG policies, performance and disclosure, and develop recommendations for the Board on emerging issues related to our industry; +• +Overseeing continuing education for the Board; and +• +Performing other such functions as the Board may assign to the Nominating and Corporate Governance Committee from time to time. +INDEPENDENCE +Each member of the Committee meets the independence requirements of the NYSE and applicable federal securities laws. +28 CALLON PETROLEUM +CORPORATE GOVERNANCE +Strategic Planning and +Reserves Committee +Larry D. McVay (Chairman) +Matthew R. Bob +Barbara J. Faulkenberry +Michael L. Finch +L. Richard Flury +S. P. Johnson IV +Anthony J. Nocchiero +Frances A. Sevilla-Sacasa +James M. Trimble +Steven A. Webster +PURPOSE +The purpose of the Strategic Planning and Reserves Committee is to manage and oversee the Board’s participation in the development of the Company’s strategic plan, and oversee the integrity of the determination of our oil and natural gas reserve estimates. +MEETINGS IN 2019 +Five meetings; all members attended at least 75% of Committee meetings during the time he or she served on the Committee. +RESPONSIBILITIES +The Strategic Planning and Reserves Committee was created to oversee the responsibilities of the Board relating to strategic planning, including: +• +Overseeing the Board’s participation in the development of a strategic plan and the consideration and assessment of strategic decisions; +• +Monitoring management's implementation of the strategic plan, and advising the Board if additional Board action appears to be needed; +• +Assuring that management is addressing the personnel requirements for the successful implementation of the strategic plan; +• +Overseeing our reserve engineering reports and reserve engineering firm, including: (i) the integrity of our reserve reports, (ii) determinations regarding the qualifications and independence of our independent reserve engineering firm, (iii) the performance of our independent reserve engineering firm, and (iv) our compliance with certain legal and regulatory requirements relating to reserve reporting; and +• +Performing other such functions as the Board may assign to the Strategic Planning and Reserves Committee from time to time. +INDEPENDENCE +Each member of the Committee meets the independence requirements of the NYSE and applicable federal securities laws. +2020 PROXY STATEMENT 29 +CORPORATE GOVERNANCE +Corporate Governance Matters +Corporate Governance Principles +The Board believes that sound corporate governance practices and policies provide an important framework to assist in fulfilling its duty to shareholders. The framework for our corporate governance can be found in our governance documents, which include: +• +Corporate Governance Guidelines; +• +Code of Business Conduct and Ethics; and +• +Charters for the Audit, Compensation, Nominating and Corporate Governance, and Strategic Planning and Reserves Committees. +In keeping with sound corporate governance practices, each of these documents is reviewed annually and is available on our website www.callon.com under the “About Callon - Governance” menu. Shareholders may obtain a printed copy, free of charge, by sending a written request to our Corporate Secretary at our principal executive office in Houston, Texas. Any amendments to these documents are promptly posted on our website. +Code of Business Conduct and Ethics +Our Code of Business Conduct and Ethics (the “Code”) sets forth the policies and expectations for Callon’s officers, employees and directors as well as consultants, representatives, agents, and contractors while acting on Callon’s behalf. The Code addresses a number of topics including conflicts of interest, compliance with laws, insider trading, prohibitions on discrimination and harassment, workplace safety and protection of the environment, and fair disclosure. In addition, the Code explicitly prohibits directors, officers and employees from engaging in hedging transactions in Callon stock. It also states that no corporate funds may be used for political contributions. +The Code meets the NYSE’s requirements for a code of business conduct and ethics and also includes a code of ethics applicable to our senior financial officers consistent with the requirements of the SEC. We intend to satisfy the disclosure requirements regarding any amendment to, or any waiver of, a provision of the Code by promptly posting such information on our website. Concerns about potential violations of the Code can be anonymously reported to our ethics hotline by calling 1-844-471-7637 or accessing the following website: callon.ethicspoint.com. +Environmental, Social and Governance +Callon’s mission is to build trust, create value and drive sustainable growth responsibly for our investors, our employees and the communities in which we operate. Consistent with this mission, the Board oversees the Company’s environmental, social and governance programs with a focus on long-term, sustainable investments in our operations, team member development, and protecting the environment in the best interests of all of our stakeholders. The Board regularly addresses the Company’s efforts to continuously improve outcomes regarding workplace safety, environmental impact, team member diversity and workforce development. As described in more detail above beginning on page 9, the Board is also committed to effective and sustainable corporate governance, which we believe strengthens Board and management accountability, promotes the long-term interests of our shareholders, and helps build public trust in our Company. +Communication with Directors +Shareholders or other interested parties who wish to communicate with the full Board, independent directors as a group, or individual directors, may do so by sending a letter in care of the Corporate Secretary to our principal executive office located at 2000 West Sam Houston Parkway South, Suite 2000, Houston, Texas 77042. Our Corporate Secretary has the authority to discard any solicitations, job inquiries, advertisements, surveys or other inappropriate communications, but will forward any other mail to the named director or group of directors. Our Corporate Secretary will forward approved mail addressed to the full Board to the Chairman of the Board who, if appropriate, will share the item with the full Board. +30 CALLON PETROLEUM +CORPORATE GOVERNANCE +Board Evaluations +The Nominating and Corporate Governance Committee, in consultation with the Chairman of the Board, annually leads the performance review of the Board and its committees. The self-evaluation process seeks to obtain each director’s assessment of the effectiveness of the Board, the committees and their leadership, Board and committee composition and Board and management dynamics. In 2019, the Board self-evaluation process included a survey completed by each director about the Board and the committees on which the director served. The results were discussed by the full Board and within each committee. +Director Education +The Company sponsors an ongoing director education program that assists Board members in fulfilling their responsibilities. Training commences with an orientation program when a new director joins the Board. Ongoing education is provided through written materials, presentations in Board meetings, and training outside the boardroom. All Callon directors are members of the National Association of Corporate Directors and are provided an annual training allowance to pursue relevant director education programs. +2020 PROXY STATEMENT 31 +EXECUTIVE OFFICERS +Executive Officer Biographies +Joseph C. Gatto, Jr. +President, Chief Executive Officer and Director +Joseph C. Gatto, Jr. has served the Company as Chief Executive Officer since May 2017 and as a Director since May 2018. Mr. Gatto joined the Company in April 2012 as Senior Vice President, Corporate Finance, with responsibility for our capital markets and strategic planning functions, in addition to investor relations activities. Effective March 31, 2014, Mr. Gatto was appointed Chief Financial Officer and Treasurer of the Company and in August 2016 was promoted to President while retaining the roles of Chief Financial Officer and Treasurer. In May 2017 he was promoted to Chief Executive Officer while retaining the role as President. Mr. Gatto was elected as a member of the Board of Directors in May 2018. Prior to joining Callon, Mr. Gatto was a Managing Director in the energy investment banking groups of Merrill Lynch & Co. and Barclays Capital from July 1997 until February 2009, with involvement in all phases of M&A and capital raising transactions for his clients. In February 2009, he founded MarchWire Capital, LLC, a financial advisory and strategic consulting firm, and subsequently served as Head of Structuring and Execution with Merrill Lynch Commodities, Inc. from January 2010 until November 2011. Mr. Gatto graduated from Cornell University with a B.S. degree and The Wharton School of the University of Pennsylvania with an M.B.A. +James P. Ulm, II +Senior Vice President and Chief Financial Officer +James P. Ulm, II is the Senior Vice President and Chief Financial Officer for the Company. Prior to joining Callon in December 2017, Mr. Ulm was Founder and Managing Partner of NewVista Energy Partners, a private E&P company focused on emerging resource plays in the Permian and Anadarko Basins, from 2015–2017. Previously, he served as Senior Vice President and Chief Financial Officer for three private companies from 2008–2015 where he was responsible for financial and accounting management, capital formation, and corporate strategy. Prior to these roles, Mr. Ulm served from 1999–2008 as Senior Vice President and Chief Financial Officer for Pogo Producing Company, a publicly-traded oil and gas company which had meaningful operations in the Permian Basin. From 1995–1999, he was the Treasurer for Newfield Exploration Company. Earlier in his career, he held finance and accounting leadership roles with American Exploration Company and Tenneco Oil Company. Mr. Ulm has more than 30 years of experience in the energy industry with responsibilities including finance, accounting, strategic planning, M&A, business development and risk management. Mr. Ulm holds an M.B.A. and an undergraduate degree in Accounting, both from the University of Texas at Austin. +Jeffrey S. Balmer +Senior Vice President and Chief Operating Officer +Dr. Jeffrey S. Balmer has over 30 years of operations and subsurface leadership experience in the energy industry. Prior to joining Callon in November 2018, his most recent role was Vice President and General Manager, Southern Operating Area, for Encana Corporation with responsibility for all of Encana’s upstream operations in the Permian Basin. After joining Encana in 2008, he held various leadership roles including Vice President and General Manager, Western Operating Area, managing operations in the Eagle Ford, DJ, San Juan, Piceance and Wind River Basins, and Vice President, Emerging Plays. Prior to joining Encana, Dr. Balmer served in a variety of technical and operations leadership roles, including positions with ConocoPhillips, Burlington Resources and ExxonMobil Corporation. He holds B.S. and Ph.D. degrees in Petroleum Engineering, in addition to an M.S. in Environmental and Planning Engineering, from Missouri University of Science and Technology (formerly University of Missouri – Rolla). +32 CALLON PETROLEUM +EXECUTIVE OFFICERS +Michol L. Ecklund +Senior Vice President, General Counsel and Corporate Secretary +Michol L. Ecklund is the Senior Vice President, General Counsel and Corporate Secretary for the Company. Prior to joining Callon in November 2017, Ms. Ecklund was Deputy General Counsel for Operations & Commercial Law at Marathon Oil Company where she oversaw the legal team for global operations and acquisitions and divestitures as well as corporate communications. During her 15 years at Marathon Oil, Ms. Ecklund served in progressive positions within and outside the Law Organization including compliance, litigation, human resources, investor relations, corporate communications and tax. Prior to Marathon Oil, she practiced law at Baker Botts LLP in Houston. Ms. Ecklund received a B.A. degree from Rice University and J.D. from Harvard Law School. +Gregory F. Conaway +Vice President and Chief Accounting Officer +Gregory F. Conaway is the Vice President and Chief Accounting Officer for the Company and joined Callon in December 2019. Prior to joining Callon, Mr. Conaway served as Vice President and Chief Accounting Officer of Carrizo from 2014 to December 2019, when Carrizo merged with the Company, as Controller of Financial Reporting from 2012 to 2014 and Assistant Controller from 2011 to 2012. Prior to that, Mr. Conaway worked for Ernst & Young, holding positions of increasing responsibility, including senior manager. Mr. Conaway began his career with Arthur Andersen in 1998. Mr. Conaway is a CPA and holds an M.B.A. and a B.B.A. in Accounting from Angelo State University. +2020 PROXY STATEMENT 33 +Proposal 2 +Approve, on an Advisory Basis, +the Compensation +of the Company’s NEOs +The Board of Directors recommends a vote FOR the compensation paid to the Company’s named executive officers, as disclosed in this Proxy Statement. +• Provides performance-based and market-aligned pay opportunities that are intended to foster alignment, engagement, and retention of key talent to drive Company performance and long-term shareholder value. +In accordance with the requirements of Section 14A of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the related rules of the SEC, we are including in this Proxy Statement a separate proposal, which gives our shareholders the opportunity to approve the compensation of our NEOs by voting “ FOR ” or “ AGAINST ” the resolution below (commonly referred to as “Say-on-Pay”) on an annual basis. While the Board and Compensation Committee intend to carefully consider the shareholder vote resulting from the proposal, the final vote will not be binding on us and is advisory in nature. +The Board recognizes that executive compensation is an important matter for our shareholders. The Compensation Committee is tasked with the implementation of our executive compensation philosophy and, as described in detail in the CD&A below, the design of our executive compensation programs. Our executive compensation program is designed to attract, motivate and retain a qualified executive management team and to appropriately reward our executive officers for their contributions to the achievement of our short-term and long-term business goals and the creation and enhancement of shareholder value. +As described in the CD&A, we believe our compensation program is effective, appropriate and aligned with the long-term interests of our shareholders and that the total compensation package provided to the NEOs is reasonable and not excessive. As you consider this Proposal 2, we urge you to read the CD&A for additional details on executive compensation. Further, in determining whether to approve this proposal, we believe that shareholders should also consider the following: +• +Performance-based compensation. Our executive compensation program seeks to align executive compensation with shareholder value on an annual and long-term basis through a combination of base pay, annual incentives and long-term incentives. By design, a significant portion of our NEO compensation is performance-based, with variable pay comprising 86 percent of compensation opportunity for our CEO and 71 percent for NEOs in 2019. Please review the CD&A for more information on how our 2019 compensation was linked to Company performance. +• +Pay practices reflect individual and market factors. The Compensation Committee considers the skills, experience and performance of each of our NEOs as well as competitive market data in setting annual compensation opportunities, and directs our independent compensation consultant to provide benchmarking data which serves as one of the considerations of compensation decisions. +• +“Double trigger” severance agreements with fixed term. Change in control severance agreements with our executive officers require an actual or constructive termination of employment before benefits are paid following any change in control. +• +Stock ownership guidelines. Each of the NEOs has been granted equity to provide the officer a stake in our long-term success. The purpose of the ownership requirement is to further our goal of increasing shareholder value by aligning the interests of our NEOs with those of our long-term shareholders. +• +Clawback Policy. The Compensation Committee has adopted a clawback policy that establishes conditions under which the Committee may recoup previously-paid compensation in event of error, misconduct, or certain other circumstances. +• +Hedging policy. Our directors and executive officers are prohibited from entering into transactions in puts, calls and other derivative securities with respect to our securities and from engaging in short sales of our securities. We believe these activities are often perceived as involving insider trading and may focus the holder’s attention on our short-term performance rather than our long-term objectives. +34 CALLON PETROLEUM +PROPOSAL 2 +In light of the above and as more fully described in the CD&A, we believe that the compensation of our NEOs for 2019 was appropriate and reasonable and that our compensation programs and practices are sound and in the best interests of the Company and our shareholders. We therefore respectfully request that shareholders vote on the following resolution: +“RESOLVED, that the compensation paid to Callon’s NEOs, as disclosed in Callon’s 2020 Proxy Statement (including the Compensation Discussion and Analysis, the compensation tables and related footnotes and narrative disclosures) is hereby approved.” +The vote on this resolution is not intended to address any specific element of compensation, but rather the overall compensation of our NEOs and our compensation-related policies and practices as described in this Proxy Statement. As noted above, the vote solicited by this proposal is advisory in nature and its outcome will not be binding on the Company, the Board or the Compensation Committee, nor will the outcome of the vote require the Board or the Compensation Committee to take any action. The outcome of the vote will not be construed as overruling any decision of the Board or the Compensation Committee or creating or implying any additional fiduciary duty of the Board or the Compensation Committee. However, the Board and the Compensation Committee will carefully consider the outcome of the vote when considering future executive compensation arrangements. For a review of the results of the previous year's vote, which reflects overwhelming validation from our shareholders of our pay philosophy and approach, please see the “Role of Shareholder Say-on-Pay Advisory Vote” on page 40. +Notwithstanding the advisory nature of this vote, the foregoing resolution will be deemed approved with the affirmative vote of the majority of the votes present and entitled to vote on the proposal at the Annual Meeting. If you hold your shares through a broker and you do not instruct the broker how to vote, your broker will not have the authority to vote your shares. Abstentions will have the effect as a vote cast against the proposal. Broker non-votes will not be counted as shares present and entitled to vote, and so will have no effect upon the outcome of the vote. +The Board recommends a vote FOR the compensation paid to the Company’s named executives. +2020 PROXY STATEMENT 35 +EXECUTIVE COMPENSATION +Recent Market Disruption and Callon’s Response +Consistent with regulatory requirements, the below CD&A highlights our historic performance and executive compensation decisions for 2019. In light of the precipitous decline in commodity prices in recent weeks due to substantial demand destruction from the global outbreak of the COVID-19 virus and concurrent supply-related decisions by OPEC+ producers, Callon’s Board and management team are taking proactive steps to reduce costs and revise our plans to realign with the macroeconomic outlook. On April 16, 2020, Callon announced certain cost-saving measures including the following voluntary compensation reductions: +• +Board members agreed to reduce their total compensation by 35%; +• +Chief Executive Officer agreed to reduce his salary by 20% and his total target cash compensation by 35%; and +• +All other officers agreed to reduce their total target cash compensation by at least 25%, including salary reductions of 15% and 10% by senior vice presidents and vice presidents, respectively. +The Board and management will continue to evaluate the Company’s executive compensation and incentive programs in light of the volatility and uncertainty in financial and commodity markets, and next year’s CD&A will discuss and describe the eventual realized compensation from the performance periods that conclude at the end of 2020. +Compensation Discussion and Analysis +The Company’s executive compensation program is designed to reward the management team for delivering results consistent with our long-term strategic objectives. The Compensation Committee (referred to in this section as the “Committee”) strives to evolve Callon’s compensation program each year to reflect shifts in shareholder priorities, most recently the focus on returns on capital and free cash flow over production growth, and governance best practices. The following CD&A describes the actions taken by the Committee in 2019 related to our executive compensation programs. +Key Committee Actions for 2019 +• Instituted a formulaic approach for the Company’s annual incentive compensation program with a 60/40 weighting of quantitative/qualitative factors that included shareholder priorities of corporate-level returns, capital efficiency, cash flow, balance sheet strength and ESG performance +• Revised our peer group, used as the basis for evaluating the competitiveness of compensation opportunities and relative long-term TSR performance, in light of the Company’s growth and industry consolidation +• Assessed the annual salaries and incentive compensation opportunities of the CEO and other NEOs based on their experience, performance and growth in their roles, as well as competitive market data +• Talented workforce with growing technical expertise identifies with a culture of responsibility and adaptability in a cyclical commodity business +• Conducted a review of long-term incentive program design, resulting in the addition of an absolute TSR modifier to the PSUs granted in January 2020 to further align long-term incentives with absolute shareholder returns +• Developed the framework for a peer-leading Clawback Policy (adopted in January 2020), which allows the Committee to recoup previously-paid compensation in event of error, fraud, misconduct, or certain other circumstances +36 CALLON PETROLEUM +EXECUTIVE COMPENSATION +Our NEOs include the Chief Executive Officer, Chief Financial Officer and the three other most highly compensated executive officers who were serving in such capacity at the end of 2019. The list also includes our former Vice President and Chief Accounting Officer, Mitzi P. Conn, who transitioned from the role effective December 20, 2019, and would have been among our most highly compensated executive officers if she had been serving in such capacity at the end of 2019. Our NEOs for 2019 were: +NEO +Age +Title +Joseph C. Gatto, Jr. +49 +President, Chief Executive Officer and Director +James P. Ulm, II +57 +Senior Vice President and Chief Financial Officer +Jeffrey S. Balmer +55 +Senior Vice President and Chief Operating Officer +Michol L. Ecklund +45 +Senior Vice President, General Counsel and Corporate Secretary +Gregory F. Conaway +44 +Vice President and Chief Accounting Officer +Mitzi P. Conn +51 +Former Vice President and Chief Accounting Officer +Gregory F. Conaway became the Company's Vice President and Chief Accounting Officer upon the effective time of the Carrizo Acquisition on December 20, 2019, and Ms. Conn transitioned to her new role. For Mr. Conaway's biography, please see "Executive Officer Biographies" on page 32. During 2019, two previous NEOs departed the Company. Jerry A. Weant, who was formerly Vice President, Land, retired from the Company effective March 31, 2019. Correne S. Loeffler, who was formerly Vice President - Finance and Treasurer, resigned from the Company, effective July 31, 2019. +2019 Performance Highlights +2019 was a transformational year for Callon. The Company continued its long-term value creation focus with the execution of multiple strategic initiatives across operations, finance, environmental, social and governance. The Company’s development program successfully transitioned to larger projects featuring multi-zone co-development, leading to improved capital efficiency, lower costs and the preservation of industry-leading margins. The year culminated with the successful closing of the Carrizo Acquisition, which more than doubled the Company’s production, reserves, acreage, and cash flow. The combined company features a diversified asset base that supports our scaled development model and provides significant optionality to support cash generation amid commodity price volatility. While Callon’s share price was negatively impacted, along with its industry peers, by commodity price volatility and a shift in sector-wide investor sentiment, the Company maintained its commitment to long-term value creation in 2019 as reflected by the achievement of multiple key operational, financial and ESG highlights as described below. Additional information about our 2019 performance relative to the pre-established performance metrics for the annual cash incentive bonus can be found on page 45. +• With the closing of the Carrizo Acquisition, more than doubled our acreage position to nearly 200,000 net acres in Texas's producer-friendly Permian Basin and Eagle Ford Shale. +• Generated over $500 million in Adjusted EBITDA (i) . +• Completed over $300 million of non-core asset monetizations. +• Redeemed approximately $270 million of preferred securities resulting in prospective dividend savings of nearly $25 million annually. +• Generated $58.2 million in free cash flow (ii) during the fourth quarter of 2019 (on a pro forma basis). +• Maintained an industry leading EBITDA margin of $33.28 per Boe for 2019. (i) +• Achieved record production (top of guidance) with operational capital spending below the bottom of full year guidance range +• Initiated full-field co-development across all asset areas, lowering target development costs and improving capital efficiency. +• Grew total proved reserves to 540 MMBoe with a PV-10 (i) value of $5.4 billion as of December 31, 2019. +• Achieved record safety performance metrics, including a Total Recordable Incident Rate that was 50% lower than the prior year +• Increased recycled water volumes by 80% from 2018, further reducing environmental impact of operations. +• Reduced flaring by more than 40% year over year and was in the lowest third of all Texas producers in flaring intensity per the most recent TX RRC report. (iii) +(i) +See Appendix A for a reconciliation of Non-GAAP financial measures +(ii) +Free cash flow is defined as Adjusted EBITDA minus the sum of operational capital, capitalized interest, capitalized G&A, and interest expense. Adjusted EBITDA is a Non-GAAP financial measure; please refer to Appendix A for a reconciliation +2020 PROXY STATEMENT 37 +EXECUTIVE COMPENSATION +(ii) +TX RRC defines flare intensity as gross daily flare volumes divided by gross daily oil production +Compensation Program Governance Highlights +Our Compensation Committee, composed entirely of independent directors, operates in accordance with its charter, which sets forth the Committee’s authority and responsibilities, is assessed annually, and can be found at www.callon.com/about-callon/governance. We believe our compensation program incorporates many sound practices, including the following: +What We Do +What We Don’t Do +• Substantial focus on performance-based pay +• Strong alignment with shareholder returns through significant weighting on long-term incentives +• Review of peer group benchmarks when establishing compensation +• Robust stock ownership guidelines for our NEOs and directors +• Clawback policy applies in the event of error, fraud or misconduct +• Double-trigger change in control severance for both cash severance and equity vesting +• NO hedging or pledging of our stock +• NO employment agreements* +• NO excessive benefits or perquisites +• NO single trigger change in control benefits +* +Callon assumed an employment agreement with Mr. Conaway as a result of the Carrizo Acquisition. See “Employment Agreements, Termination of Employment and Change in Control Arrangements” on page 57. +Executive Compensation Components and Philosophy +The Committee designs our compensation program to reward our CEO and other NEOs for delivering results consistent with the Company’s long-term strategic objectives and to align their interests with those of our shareholders. To do so, the Committee has designed a compensation program that is heavily weighted to “at risk” compensation delivered through annual cash incentives and long-term equity-based incentive awards. The Committee believes that this approach compensates our NEOs in a manner that provides incentives for the enhancement of shareholder value, the successful implementation of our business plan, and continuous improvement in corporate and individual performance. +Overall, our executive compensation program is designed to achieve the following objectives: +• +Reward the management team for delivering results against its strategic objectives, thereby creating value for the shareholders; +• +Emphasize pay for performance, in which Company and individual performance against preset goals are inherently linked to the amount realized by an NEO; +• +Attract and retain a qualified and motivated management team by offering industry competitive opportunities; +• +Incentivize NEOs and appropriately reward them for their contributions to the achievement of our key short-term and long-term strategic objectives through the use of variable compensation; and +• +Align the compensation of our NEOs with the interests of our long-term shareholders by weighting the programs toward at-risk, performance-based compensation, consisting of an objective-driven annual incentive program, TSR-contingent incentive awards, and retention stock grants with three-year vesting. +38 CALLON PETROLEUM +EXECUTIVE COMPENSATION +The charts below illustrate the design and impact of our pay-for-performance philosophy on our CEO’s 2019 target compensation. To illustrate the alignment of pay and performance, the second chart compares Mr. Gatto’s target 2019 compensation to its estimated realizable value as of December 31, 2019, and March 31, 2020, reflecting the actual payout of the 2019 annual bonus as well as the impact of our absolute and relative stock price performance on his long-term equity compensation as of those dates. +2019 CEO COMPENSATION MIX +2019 CEO COMPENSATION – TARGET vs. REALIZABLE +Elements of Compensation Program +The primary elements of our executive compensation program, and the purpose and philosophy of each, are described in detail below: +BASE SALARY +Purpose +Philosophy +• Pay for expertise and experience; +• Attract and retain talented executives; +• Provide compensation stability; and +• Compete with comparable companies. +• Fixed component of compensation reflective of individual skills, experience and expertise necessary to execute our business strategy; and +• Competitive with similarly sized peers. +2020 PROXY STATEMENT 39 +EXECUTIVE COMPENSATION +ANNUAL CASH BONUS INCENTIVE +Purpose +Philosophy +• Motivate our NEOs to achieve our short-term business objectives that drive long-term performance; +• Reward achievement of financial, operating, and strategic goals for which NEOs are held accountable; and +• Promote and encourage pay-for-performance. +• At-risk component of compensation, with modest or no reward for performance below expectations and potential for increased reward for exceptional performance; +• Goals aligned with our annual business plan and performance targets; +• Provide balance in compensation programs and avoid encouraging undue risk-taking; and +• Competitive with similarly-sized peers. +LONG-TERM INCENTIVE (LTI) AWARDS +Purpose +Philosophy +• Motivate and reward long-term achievement of business objectives, aligning the interests of our NEOs with those of long-term shareholders; +• Provide competitive pay to attract and retain NEOs; and +• Provide a mix of LTI awards that focuses NEOs on creating long-term value while avoiding undue risk-taking. +• Ensures that realized value to NEOs aligns with value delivered to shareholders; +• Recognizes and rewards share price performance relative to industry peers; +• At-risk component of compensation that aligns with sustained long-term value creation; and +• Allows NEOs to acquire a meaningful and sustained ownership stake in the Company. +OTHER (RETIREMENT; HEALTH BENEFITS; CHANGE IN CONTROL SEVERANCE) +Purpose +Philosophy +• Provide financial security for the NEOs and their families; +• Provide competitive benefits to attract and retain NEOs; and +• Ensure NEOs consider all possible transactions to increase shareholder value related to changes in control of the Company. +• Attracts and retains NEOs with a comprehensive benefits package; +• Provides financial security and maximizes the efficiency of tax-advantaged compensation vehicles; and +• Ensures NEOs act in the best interests of the shareholders in a change in control. +Role of Shareholder and the Annual Say-on-Pay Advisory Vote +At Callon, we are committed to high ethical standards and effective and sustainable corporate governance. We believe this commitment promotes the interests of our long-term shareholders, helps build public trust in our Company and strengthens Board and management accountability. We continually assess our governance principles to ensure that we are operating our business responsibly, ethically and in a manner aligned with the interests of our long-term shareholders. +Approximately 97% of the votes were cast in favor of our 2018 executive compensation programs +We have historically received strong support from our shareholders for our executive compensation practices. In the advisory vote held at the Company's 2019 Annual Meeting of Shareholders, approximately 97% of the votes cast were in favor of our 2018 executive compensation programs. The Committee acknowledged the support received from our shareholders and viewed the results as an affirmation of our existing executive compensation policies and programs. +Based on feedback received during our on-going shareholder engagement efforts, the Committee modified its incentive programs in both 2019 and in 2020 as follows: +• +In 2019, the Committee established that 60% of each NEO's annual cash bonus incentive would be based on a formulaic assessment of quantitative results and 40% would be based a subjective assessment of quantitative and qualitative factors. The 60% formulaic results were heavily weighted towards investor priorities of corporate-level returns, capital efficiency, cash flow, and balance sheet strength; and +40 CALLON PETROLEUM +EXECUTIVE COMPENSATION +• +For 2020, the Committee added an absolute TSR modifier to the 2020 PSU grants, which creates a further tie to absolute shareholder returns. +The Committee will continue to review shareholder votes and feedback on our executive compensation programs to ensure alignment with shareholder interests. +Role of Independent Compensation Consultant +For 2019, the Committee continued its engagement of Meridian as its independent compensation consultant to provide information and objective advice regarding executive officer and director compensation. The Committee retained Meridian because of its extensive familiarity with executive compensation programs in our industry. Importantly, the Committee makes all of the decisions with respect to our executive compensation, and in setting compensation for our NEOs, considers Meridian's advice as only one factor among many other factors discussed within this CD&A. Other factors include our overall performance; individual NEO performance, experience, skills and tenure with the Company; and industry trends. +Meridian reports solely to the Committee, and the Committee determines the scope of Meridian’s engagement. In an effort to ensure that our NEO compensation programs are competitive and consistent with our compensation philosophy, Meridian assisted the Committee as follows: +• +Regularly attending meetings of the Compensation Committee and meeting privately in executive session with the Compensation Committee to discuss its recommendations; +• +Providing recommendations on executive compensation matters to align the Committee’s actions with shareholder interests, our business strategy and pay philosophy, prevailing market practices and relevant legal and regulatory requirements; +• +Periodically evaluating the Peer Group and providing peer company data for the Committee to use in its decision-making process, including assessment of pay and performance relative to peers; +• +Providing competitive market data to consider in evaluating the competitiveness of the executive base salaries and short and long-term incentive plans and awards; +• +Reviewing data in connection with the Committee’s determination of annual cash incentive performance objectives and performance-based incentive vesting levels for completed performance periods; +• +Advising on the Company’s compensation arrangements for its non-employee directors, including providing Peer Group data; +• +Reviewing and providing feedback on our SEC filings relating to executive compensation disclosures, including our CD&A disclosures; and +• +Informing the Committee about compensation trends in the industry, best practices and other general trends and developments affecting executive compensation. +The Committee did not direct Meridian to perform its services in any particular manner or under any particular method. The Committee has the final authority to hire and terminate Meridian, and the Committee evaluates Meridian annually. Pursuant to applicable SEC and NYSE rules, the Committee has determined that no conflicts of interest exist related to Meridian’s engagement by the Committee. The Committee has retained Meridian as its consultant on NEO and director compensation for 2020. +From time to time, Meridian contacts our NEOs for information needed to fulfill the objectives established by the Committee. However, the Committee established procedures that it considers adequate to ensure that Meridian’s advice to the Committee remains objective and is not influenced by our NEOs or other management. +Role of Management +The Committee considers input from our CEO in making determinations regarding our executive compensation program and the individual compensation of each of his direct reports and other select officers of Callon. The officer team makes recommendations to the Committee regarding potential objectives for the annual cash bonus incentive program and provides information to the Committee regarding the performance of the Company for the Committee’s determination of annual cash bonuses. The Committee makes the final determination of all elements of NEO compensation. Our CEO makes no recommendations regarding, and does not participate in discussions about, his own compensation. +2020 PROXY STATEMENT 41 +EXECUTIVE COMPENSATION +Role of Market Data +The Compensation Committee strives to ensure that our executives are compensated in a manner that is fair, equitable, performance-based and guided by the interests of long-term investors. In order to attract, motivate and retain talented executive officers, the Committee must also ensure that our executive compensation program remains competitive with the types and ranges of compensation paid by our peer companies who compete for the same executive talent. On an annual basis, the Committee reviews and discusses compensation data for our CEO and other executive officers as compared with compensation data for similarly situated executive officers at peer companies recommended by Meridian and approved by the Committee. +The Committee engages Meridian to conduct annual assessments of our Peer Group in order to ensure each peer remains appropriate year-over-year. The Peer Group is selected based on multiple factors, such as: +• +Size, including enterprise value and market capitalization; +• +Similar geographic footprint and operational focus; +• +Comparability of asset portfolio; and +• +Availability of compensation data. +The Committee believes this Peer Group provides a reasonable point of reference for comparing the compensation of our executive officers to others holding similar positions and having similar responsibilities. The Committee considers Peer Group data relevant to, but not determinative of, the Committee’s consideration of overall executive compensation matters. +In light of industry volatility and consolidation as well as the Company’s growth, in late 2018 the Committee updated the Peer Group to ensure that it included a sufficient number of similarly-situated peers to provide a reasonable range of market-based compensation comparisons. The Peer Group used by the Committee in evaluating the competitiveness of executive compensation and making 2019 compensation decisions consisted of the companies set forth in the following table. The Committee also reviewed data from proprietary E&P benchmarking surveys provided by Meridian for additional market perspective and to validate the Peer Group data. +The Committee understands the inherent limitations in using any peer group or data set including fluctuations in survey participation and competition for executive talent by companies potentially much larger than Callon. Accordingly, the Committee does not consider data collected from any of these sources to be prescriptive. Rather, the Committee relies upon this and similar data as reference points around which to make informed decisions about the appropriate level and form of compensation for each NEO. +2019 Peer Group +• Carrizo Oil & Gas, Inc. +• Centennial Resource Development, Inc. (PSUs only) +• Energen Corporation (compensation only) +• HighPoint Resources Corporation +• Jagged Peak Energy, Inc. +• Laredo Petroleum, Inc. +• Matador Resources, Inc. +• Oasis Petroleum Inc. +• Parsley Energy, Inc. +• PDC Energy, Inc. +• QEP Resources, Inc. +• SM Energy Company +• SRC Energy, Inc. +In addition, the Committee adopts a Peer Group when granting performance stock units ("PSUs") to the NEOs each year for the purpose of aligning executive compensation with the Company’s total shareholder return (“TSR”) relative to peers over a pre-defined performance period. For the January 2019 PSU grant, the Committee used the Peer Group listed in the table above but replaced Energen Corporation, which had been acquired, with Centennial Resource Development, Inc., to provide an additional similarly-sized Permian Basin peer. +In the event a member of the Peer Group selected for an annual PSU grant is involved in a merger or acquisition during the first half of the performance period, the Committee has discretion to replace that company within the Peer Group. If a peer company is involved in a merger or acquisition during the second half of the performance period, the performance of that peer will be “locked in” as of the date of the transaction announcement. Since the January 2019 grant date of the 2019 PSU awards, the Committee has replaced Carrizo Oil & Gas, Inc., Jagged Peak Energy, Inc., and SRC Energy, Inc. with Cimarex Energy Co., Whiting Petroleum Corporation and WPX Energy, Inc., to reflect Callon’s larger size and broader geographic footprint following the Carrizo Acquisition. +42 CALLON PETROLEUM +EXECUTIVE COMPENSATION +In late 2019, the Committee revised the Peer Group in light of the pending Carrizo Acquisition to better reflect the size and geographic footprint of the combined company. The Committee adopted the following changes to the Peer Group to be used for evaluating the competitiveness of the 2020 executive compensation program to ensure that our executive compensation program remains competitive with the companies with whom we are compared by the market and compete for executive talent. +2019 Peer Group - Compensation +2020 Peer Group - Compensation +• Carrizo Oil & Gas, Inc. +• Energen Corporation +• HighPoint Resources Corporation +• Jagged Peak Energy, Inc. +• Laredo Petroleum, Inc. +• Matador Resources, Inc. +• Oasis Petroleum Inc. +• Parsley Energy, Inc. +• PDC Energy, Inc. +• QEP Resources, Inc. +• SM Energy Company +• SRC Energy, Inc. +• Centennial Resource Development, Inc. +• Cimarex Energy Co. +• Jagged Peak Energy, Inc. +• EP Energy Corporation +• Matador Resources, Inc. +• Oasis Petroleum Inc. +• Parsley Energy, Inc. +• PDC Energy, Inc. +• QEP Resources, Inc. +• SM Energy Company +• Whiting Petroleum Corp. +• WPX Energy, Inc. +ADDED +• Centennial Resource Development, Inc.. +• Cimarex Energy Co. +• Whiting Petroleum Corp. +• WPX Energy, Inc. +REMOVED +• Carrizo Oil & Gas, Inc. +• Energen Corporation +• Highpoint Resources Corp. +• Laredo Petroleum, Inc. +• SRC Energy, Inc. +Risk Assessment Related to Our Compensation Structure +The Committee believes our compensation plans and policies are appropriately structured to encourage and reward prudent business judgment and avoid excessive risk-taking. The Committee, with the assistance of Meridian, reviewed the compensation programs maintained by the Company during 2019 to determine whether they encouraged excessive risk taking. Upon evaluation of the assessment, the Committee concluded that our compensation policies and practices for our employees do not present risks that are reasonably likely to have a material adverse effect on the Company. The Committee’s risk review identified the following risk mitigating features of our compensation programs: +• +A balance of short-term and long-term programs to focus management on both elements of Callon’s performance; +• +Annual grants of long-term incentives designed to be the largest component of each NEO’s compensation package, with typical vesting periods of three years that are based on the value of our common stock and not on any particular metric that could encourage excessive risk-taking; +• +Performance criteria and targets for our annual bonus program designed to encourage performance, but not excessive risk taking, and discretion to decrease payouts if it is believed management exercised excessive risk taking; +• +Performance targets measured at the corporate level, rather than at the individual or business unit level; +• +Clawback policy that provides the Committee authority to recoup compensation due to error, fraud or other misconduct; +• +Reasonable change in control severance protections; and +• +Significant executive stock ownership requirements. +Determination of Each Element of Compensation +Base Salaries +We provide all of our employees, including the NEOs, with an annual base salary to compensate them for their services throughout the year. Our Committee recognizes that substantial competition exists in the oil and gas industry for attracting and retaining qualified management teams. Accordingly, the Committee evaluates our NEOs’ salaries together with other components of their compensation to ensure that the NEOs’ total compensation is competitive relative to market practices in our Peer Group and our industry in general and is consistent with the Committee’s compensation philosophy. +2020 PROXY STATEMENT 43 +EXECUTIVE COMPENSATION +Annually, generally in the first quarter of each year, the Committee reviews the base salaries of our NEOs. Individual salary amounts reflect the Committee’s subjective analysis of a number of factors, including: +• +Individual officer’s experience, skills, contributions and tenure with Callon; +• +Changes to the individual’s position within Callon; +• +Competitive market data within our Peer Group and industry; and +• +The NEO’s roles, responsibilities and expected future contributions to Callon’s success. +In addition, the Committee also considers the input and recommendations of Meridian regarding base salaries, as well as the input of the CEO, when evaluating base salaries for the other NEOs. +After considering the market analysis and advice of Meridian, at its January 2019 meeting, the Committee increased Mr. Gatto’s salary from $700,000 to $825,000 to reflect the performance of the Company and his continued development after almost two years in the CEO role. This increase brought Mr. Gatto's salary closer to a competitive level relative to peers. The Committee also increased Ms. Ecklund’s salary from $350,000 to $400,000 to reflect her expanded responsibilities upon promotion to Senior Vice President and increased Ms. Conn’s salary from $245,000 to $260,000 to reflect market analysis. +Performance-Based Annual Cash Bonus Incentive +A core component of our NEO compensation philosophy is to emphasize pay-for-performance by structuring a significant portion of total annual compensation as “at risk.” Each year, the Compensation Committee establishes an annual performance bonus program, which is designed to promote the achievement of annual financial, operating and strategic goals that are aligned with the creation of shareholder value. For 2019, the Committee formalized a formulaic approach for the Company’s annual incentive compensation program with 60% of each NEO's annual incentive based on an assessment against quantitative metrics and 40% based on the assessment of certain preset qualitative goals as well as overall performance. As a result, the NEOs’ annual cash bonus for 2019 is now reported as Non-Equity Incentive Plan Compensation in the Summary Compensation Table on page 57. As described in more detail below, the 2019 performance factors were heavily weighted towards investor priorities of corporate-level returns, capital efficiency, cash flow, balance sheet strength and ESG performance. +To align NEO compensation with the annual business plan and strategic priorities, the Committee set 2019 annual bonus target award opportunities for each NEO as a percentage of the NEO’s annual base salary as follows: +NEO +2018 Target Bonus Opportunity +(% of Base Salary) +2019 Target Bonus Opportunity +(% of Base Salary) +Joseph C. Gatto, Jr. +100% +110% +James P. Ulm, II +90% +90% +Jeffrey S. Balmer +85% +85% +Michol L. Ecklund +70% +80% +Gregory F. Conaway (i) +— +70% +Mitzi C. Conn +70% +70% +(i) +Mr. Conaway’s 2019 target annual bonus opportunity of 70% was established by Carrizo. See page 46 for more information about the 2019 Carrizo annual incentive bonus program. +In early 2019, the Committee increased Mr. Gatto’s target bonus opportunity after considering competitive market analysis, his tenure and performance as CEO, and the advice of Meridian. The Committee increased Ms. Ecklund’s target bonus opportunity for 2019 to reflect her expanded responsibilities. Actual awards can range from 0 - 200% of target based on the achievement of pre-established performance metrics as described below. +2019 Performance Goals +For purposes of evaluating performance, the Committee, in collaboration with management and Meridian, oversees a rigorous process to set quantitative and qualitative performance objectives for the annual bonus program that are derived from the annual business plan and reflect key shareholder and strategic priorities for the upcoming year. +44 CALLON PETROLEUM +EXECUTIVE COMPENSATION +In early 2019, the Committee established the formulaic, quantitative objectives for 2019 and their respective weightings as set forth below: +Quantitative Objective +Description +Weighting +Net Debt/Adjusted EBITDA (i) +Measure of our ability to cover our debt, which is impacted by cash flow, and ensures focus on a strong balance sheet +15% +Cash Return on Cash Invested (ii) +Measure of total corporate returns on capital +12.5% +(LOE + Cash G&A)/BOE +Measure of critical cash margin components that are controlled by management +12.5% +Oil Production +Key component in our ability to deliver cash flow and returns on capital investment +10% +Proved Developed F&D/BOE (iii) +Measure of capital efficiency for annual proved developed reserve base additions +10% +TOTAL +60% +(i) +Net Debt to Adjusted EBITDA is calculated as the sum of total long-term debt less unrestricted cash and cash equivalents, divided by the Company’s Adjusted EBITDA inclusive of annualized pro forma results from its acquisitions and divestitures completed over the last twelve month period. See Appendix A for a reconciliation of Non-GAAP financial measures. +(ii) +Cash Return on Invested Capital is defined as (GAAP cash flow from operations + after tax interest expense) / (average total debt + average stockholders’ equity). 2019 CROCI based on Callon standalone. +(iii) +Proved Developed F&D/BOE reflects all operational capital including facilities costs (development costs + exploratory costs) / (total proved extensions, discoveries, and other additions except those related to PUD reserves + PUD reserves converted to proved developed reserves during the period). +For the remaining 40% of the annual bonus framework, the Committee evaluates factors of Company performance related to short- and long-term strategic goals that are not otherwise captured by the formulaic metrics. To guide their discretionary assessment of performance and align expectations with management, the Committee established qualitative strategic objectives and corresponding preset goals in early 2019 related to the following: +• +Health, safety and environmental performance +• +Organizational and talent development +• +Other strategic initiatives, including selective divestitures of non-core assets and advancement of "life of field" development plans +2019 Performance Results +After the close of the 2019 calendar year, the Committee assessed the Company’s and the NEOs’ annual performance overall and relative to the framework established for the annual incentive compensation program. The results relative to the quantitative ’performance metrics were as set forth below. Because the Carrizo Acquisition closed near the end of the year on December 20, 2019, the Committee determined that it was appropriate to assess performance of the preset metrics relative to standalone Callon results without including Carrizo contributions for the 11-day post-close period. +Quantitative Objective +Weighting +Threshold +(50%) +Target +(100%) +Max +(200%) +Actuals (i) +Weighted +Contribution +Net Debt/Adjusted EBITDA +15% +2.8x +2.6x +2.3x +2.5x +20% +Cash Return on Cash Invested +12.5% +11.00% +12.25% +14.00% +12.96% +17.6% +(LOE + Cash G&A)/BOE +12.5% +$8.85 +$8.30 +$7.60 +$8.10 +16.1% +Oil Production +10% +29,600 +31,000 +32,400 +30,787 +9.2% +Proved Developed F&D/BOE +10% +$15.25 +$14.00 +$12.50 +below threshold +0% +Quantitative Total +60% +63% +(i) +Reflects actual results for standalone Callon 2019 performance, pro forma for the sale of the Southern Midland Basin assets that was announced in April 2019. +2020 PROXY STATEMENT 45 +EXECUTIVE COMPENSATION +With respect to the qualitative performance component, the Committee considered the Company’s and management’s overall performance for 2019, as well as progress made on the strategic objectives established in early 2019, including the factors described below: +Qualitative Factors +2019 Achievements +Health, Safety, and Environmental +• Achieved the Company’s best safety performance on record, reducing the total recordable incident rate by 50% +• Reduced environmental impact by increasing recycled water volumes by 80% and reducing flaring intensity by more than 40%. +• Published inaugural Sustainability web site to enhance communication of the Company’s ESG initiatives +Organizational and Talent Development +• Named a “Best Place to Work” by the Houston Chronicle for third year in a row +• Enhanced leadership development with new training and goal-setting initiatives +• Advanced succession planning and critical talent initiatives for key leadership roles across the organization +Strategic Initiatives +• Successfully closed the Carrizo Acquisition to advance returns, cash flow, capital efficiency and development plan flexibility +• Completed over $300 million of non-core asset monetizations +• Advanced large-scale, multi-zone development in the Midland and Delaware Basins +• Achieved free cash flow generation in 4Q on a stand-alone and pro forma basis +Overall, the Committee determined that the management team achieved strong operational and financial performance in the base business in 2019-exceeding the quantitative and qualitative performance objectives for the year-while also executing the complex, transformative Carrizo Acquisition. The Committee also took into consideration Callon’s negative stock price performance during 2019. After accounting for all factors, the Committee awarded an overall 2019 annual incentive bonus payout for the Callon NEOs of 115%, which aligned with the annual bonus payout for all other eligible Callon employees. +2019 Annual Incentive Compensation Payouts +Based on the Committee’s assessment of 2019 performance relative to the pre-established annual bonus programs as described above, the Committee awarded 2019 annual incentive compensation payouts for the NEOs as follows: +NEO +2019 Annual Bonus +Joseph C. Gatto, Jr. +$ +1,043,625 +James P. Ulm, II +$ +481,275 +Jeffrey S. Balmer +$ +439,875 +Michol L. Ecklund +$ +368,000 +Gregory F. Conaway (a) +$ +197,400 +Mitzi P. Conn +$ +209,300 +(a) +Mr. Conaway's bonus was determined under Carrizo’s 2019 annual bonus program and in accordance with the Merger Agreement as described below. +Carrizo 2019 Bonus Program +As part of the Merger Agreement between Callon and Carrizo dated July 14, 2019, Callon agreed to assume the Carrizo annual bonus program for 2019 if the Carrizo Acquisition closed prior to the end of the year. Callon further agreed such 2019 Carrizo bonuses would be paid out at not less than 100% of each employee’s target bonus opportunity. +In early 2019, the Compensation Committee of the Carrizo Board of Directors had established the 2019 target bonus opportunities and annual performance metrics for the Carrizo executive officers. Mr. Johnson’s and Mr. Conaway’s target bonus opportunities were set at 100% and 70% of salary, respectively. The executive officers’ bonuses were based on the achievement of pre-established quantitative performance metrics for Oil Production, Lease Operating Expense, G&A Costs, and Drill-Bit F&D +46 CALLON PETROLEUM +EXECUTIVE COMPENSATION +Costs. Following the close of 2019, the Callon Compensation Committee evaluated Carrizo’s stand-alone 2019 results relative to the pre-established quantitative bonus metrics and determined that the payout percentage for Carrizo executive officers for 2019 was below 100%. Accordingly, pursuant to the terms of the Merger Agreement, the Carrizo executive officers including Mr. Johnson and Mr. Conaway received a 2019 annual bonus equal to 100% of their target bonus opportunity, which aligned with the 2019 annual bonus payout for all other legacy Carrizo employees who were eligible for a 2019 bonus. +Annual Award of Long-Term Incentives +Our executive compensation program is heavily weighted to long-term incentives, which reward our NEOs for delivering results consistent with the Company’s long-term strategic objectives and align their interests with those of our shareholders. We believe that a long-term incentive program that includes awards of both RSUs and PSUs provides an appropriate balance of retention and performance-based incentives that captures absolute performance of our common stock as well as comparative returns relative to other oil and gas companies. The Committee believes that granting LTI awards is an effective means to provide substantial forward-looking incentives to our executive officers that emphasize: +• +Long-term value creation by linking compensation with long-term operational success; +• +Alignment of the interests of our executive officers with those of our long-term shareholders by directly linking rewards to shareholder return; +• +Retention incentives for our executive officers; and +• +Meaningful equity participation by our executive officers that further aligns their interests with shareholders. +For the grant of LTI compensation to executive officers, the Committee considers market analysis and the advice of Meridian in determining the program design and award amounts. In 2019, the Committee adjusted target long-term incentive values for the NEOs to reflect market competitiveness, a continued shift in the mix of total compensation towards long-term awards, appropriate retention incentives especially for shorter-tenured executives, and personal and Company performance. +For the 2019 LTI grants, the Committee approved a 60%/40% mix for our executive officers of performance-based awards tied to relative 3-year TSR and time-based RSUs, respectively. The performance awards are granted as PSUs that settle 50% in cash and 50% in stock. The following table sets forth the number of RSUs and PSUs awarded to the executive officers in January 2019: +NEO +Total Value +$ (a) +RSUs Payable in +Common Stock +PSUs Payable in +50% Stock and 50% cash (b) +Joseph C. Gatto, Jr. +$ +4,299,996 +211,301 +(c) +316,954 +James P. Ulm, II +$ +1,743,995 +85,700 +(c) +128,550 +Jeffrey S. Balmer +$ +1,629,097 +90,000 +(d) +128,378 +Michol L. Ecklund +$ +999,999 +49,140 +(c) +73,710 +Gregory F. Conaway +$ +0 +0 +0 +Mitzi P. Conn +$ +363,996 +17,885 +(c) +26,832 +(a) +Represents the intended target value of the awards based on the trading price of Callon stock on the grant date, which is different from the grant date fair value computed in accordance with FASB ASC Topic 718 as reported in the Summary Compensation Table. +(b) +Amounts represent PSUs that are scheduled to vest on December 31, 2021 at a variable rate between 0% and 200% based on our TSR when compared to pre-determined peer companies and will be settled in 50% Company common stock and 50% cash. +(c) +Amounts represent RSUs that are subject to three-year ratable vesting with one-third vesting each year subsequent to the award year. The first tranche vested on April 1, 2020; the second on April 1, 2021; and the third on April 1, 2022; and each tranche will settle in Company common stock on the vesting date. +(d) +Amounts represent RSUs granted to Dr. Balmer upon joining the Company that are subject to three-year ratable vesting with one-third vesting each year subsequent to the award year. The first tranche vested on January 1, 2020; the second will vest on January 1, 2021; and the third will vest on January 1, 2022; and each tranche will settle in Company common stock on the vesting date. +PSU program +In January 2019, the Committee awarded PSUs to the NEOs (with the exception of Mr. Conaway) that will vest at the end of the 36-month performance period (January 1, 2019 to December 31, 2021) based on the Company’s TSR ranking relative to the “2019 Peer Group” listed on page 42 as revised per the description on page 42. TSR is the change in the common stock price, plus any dividends paid, over the defined performance period using a 20-day average at the beginning and end of the performance period. The Committee believes relative TSR is an appropriate long-term performance metric because it provides a +2020 PROXY STATEMENT 47 +EXECUTIVE COMPENSATION +measure of long-term performance relative to peers as well as strong alignment of the interests of management and the Company’s long-term shareholders. PSUs are eligible for vesting if the employee continues to be employed until the vesting date on December 31, 2021. The vested PSUs will pay out 50% in cash and 50% in shares of the Company's common stock. PSUs will vest at the percentage set forth below based on the Company’s relative TSR ranking for the performance period, with vesting capped at 100% of target if the Company’s TSR is negative. Vesting will be interpolated for percentile ranks between the percentiles described: +Callon’s TSR Percentile Rank Among the Peer Companies +PSUs Vesting as a Percentage of Target +>=90th Percentile +200 +% +70th Percentile +150 +% +50th Percentile +100 +% +30th Percentile +50 +% +<30th Percentile +0 +% +RSU program +In January 2019, the Committee awarded NEOs (with the exception of Mr. Conaway) with time-based RSUs that will vest in one-third increments annually beginning April 1, 2020, provided the executive officer continues to be employed on the vesting dates, and will be paid in shares of the Company’s common stock. +2020 Long-Term Incentive Program +For the 2020 PSU awards granted in January 2020, the Committee added an absolute TSR modifier to further link NEO compensation to absolute shareholder returns and reflect investor feedback regarding recent energy industry compensation trends. The new absolute TSR modifier was added as a second factor, in addition to the relative TSR multiplier, to determine the vesting percentage for the PSUs at the end of the performance period in December 2022. +The absolute TSR modifier further incentivizes NEOs to create positive shareholder value during the three-year performance period and reduces outcomes if TSR is less than 5% over that period. The absolute TSR modifier is calculated on an annualized basis and is structured as follows: +Callon’s annualized absolute TSR during the performance period +Modifier +>15% +150 +% +10 - 15% +125 +% +5 - 10% +100 +% +0 - 5% +75 +% +<0% +50 +% +Vesting of 2017-2019 Performance Awards +In May 2017, our Compensation Committee granted PSUs to the then-executive officers covering the performance period from May 2017 to December 2019. The Company’s relative TSR for the performance period ranked seventh relative to the 13 peer companies defined by the Compensation Committee, resulting in vesting of 100% of the target PSUs awarded. Vested PSUs were paid 50% in cash and 50% in Company common stock. +48 CALLON PETROLEUM +EXECUTIVE COMPENSATION +The table below summarizes the PSUs earned by the executive officers for the 2017-2019 performance period: +NEO +Target Number +of PSUs +Percent of Target +PSUs Earned +Actual Vested PSUs +(Settled 50% Cash and 50% Shares) +Joseph C. Gatto, Jr. +64,304 +100% +64,304 +James P. Ulm, II (a) +— +— +— +Jeffrey S. Balmer (a) +— +— +— +Michol L. Ecklund (a) +— +— +— +Gregory F. Conaway (a) +— +— +— +Mitzi P. Conn +16,324 +100% +16,324 +(a) +Executive was not employed by the Company in May 2017 when award was granted. +Other Compensation +Perquisites and Other Benefits +Benefits represent a relatively small part of our overall compensation package; however, these benefits help attract and retain senior level executives. We review these benefits annually to ensure that they are competitive with industry norms. We provide benefits commonly offered in the E&P industry to all of our employees. These benefits consist of: +• +Group medical and dental insurance program for employees and their qualified dependents; +• +Group life insurance for employees and their spouses; +• +Accidental death and dismemberment coverage for employees; +• +Long-term disability coverage; +• +Callon's sponsored cafeteria plan; and +• +401(k) employee savings and protection plan (the "401(k) plan"). +We pay the full costs of these benefits, including the 401(k) plan administration, for all employees. Employee life insurance amounts that surpass the U.S. Internal Revenue Service (the "IRS") maximum are treated as additional compensation to all employees. +Under our 401(k) plan, all eligible employees may elect to defer a portion of their compensation up to the statutorily prescribed limit. In 2019, the Company provided a non-elective contribution of 5%, and a matching contribution of up to 5%, of the employee’s IRS eligible salary for qualified employees, including NEOs. +We have also provided Dr. Balmer with reimbursement for certain reasonable relocation expenses which included transportation expenses, home sale and purchase assistance, shipment of additional household goods, and tax gross-ups on these payments. These benefits are consistent with those provided to all similarly-situated employees upon relocation. +Our NEOs are entitled to certain benefits, or perquisites, that are not otherwise available to all of our employees. We provide our executive officers with use of a Company automobile. We purchase the automobile and pay for all maintenance, repairs, insurance and fuel. The employee is required to recognize taxable income using the IRS’s annual lease value method for personal use of the vehicle. The costs associated with these benefits for the NEOs are reported as “Other Compensation” in the Summary Compensation Table. The Committee believes these perquisites are modest, yet competitive with the perquisites provided to similarly situated oil and gas industry executives. +Change in Control Severance Protection +We have no employment agreements with our executive officers, with the exception Mr. Conaway, but we do provide change in control severance compensation agreements (“SCAs”) with each of our executive officers that provide for certain protections upon a change in control. The Committee believes that SCAs serve shareholders’ best interests by helping ensure retention of management and by diminishing potential distractions for our executive officers in the event of a change in control transaction. However, the Committee believes that executives should not be unduly enriched, and all benefits under the SCAs require a “double trigger.” Mr. Conaway and the Company (as successor-in-interests to Carrizo as a result of the Carrizo Merger) are parties to an employment agreement. For a more detailed explanation of the SCAs and Mr. Conaway’s employment agreement, please see “Employment Agreements, Termination of Employment and Change in Control Arrangements” on page 57. +2020 PROXY STATEMENT 49 +EXECUTIVE COMPENSATION +Stock Ownership Guidelines +Consistent with its goal of driving long-term value creation for our shareholders, the Company's stock ownership guidelines require significant stock ownership by the executive officers and directors. The Committee believes that requiring meaningful stock ownership by our executive officers and directors is an important way to further align their interests with the interests of our long-term shareholders and discourage undue risk taking. Accordingly, the Committee has adopted a stock ownership policy which applies to the CEO, the other executive officers and outside directors as described below. The guidelines require the executive officers and directors to hold the following amounts of our stock: +Executive Officers/Directors +Required Common Stock Ownership as a Multiple of Annual Base Salary / Annual Retainer +CEO +6x +Directors +5x +Other Executive Officers +2x +The Committee evaluates compliance with these guidelines on an annual basis. For purposes of the guidelines, shares owned indirectly, shares in the executive officer's 401(k) plan and any unvested time-based RSUs are included. The value of unvested PSUs is excluded. Pursuant to the policy, shares granted to the executive under the Company’s incentive compensation plans are valued at the greater of the then-current trading price or the value on the date of grant. +Each executive officer has a transition period of five years from the date the individual becomes subject to the guidelines to attain the required investment position. If an executive officer becomes subject to a greater ownership requirement due to a promotion or an increase in salary, the executive officer will be expected to attain the higher level within three years of the change. +Each outside director is required to achieve the ownership requirement within five years following their election as a director. +As of December 31, 2019, all participants were in compliance with the stock ownership policy, either through meeting the ownership requirement or by being within the transition period. +Internal Revenue Service Limitations +Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Tax Code") places a limit of $1.0 million on the amount of compensation that we may deduct in any one year with respect to compensation paid to each covered employee. For years prior to 2018, an exception to the deduction limit for compensation qualified as “performance-based.” The enactment of the Tax Cuts and Jobs Act on December 22, 2017 repealed the "performance-based" exemption from Section 162(m)‘s deduction limit. In addition, the limitation on deductibility was expanded to include any individual who is an NEO in 2017 or any later calendar year. As a result, compensation paid to our NEOs in excess of $1.0 million will not be deductible for years subsequent to 2017, subject to limited transition relief for arrangements in place as of November 2, 2017. Despite the change in law, the Committee intends to continue to consider the deductibility of compensation and to implement compensation programs that it believes are competitive and in the best interests of the Company and its shareholders. +Insider Trading Policy +The Company’s Board has adopted a comprehensive Insider Trading Policy for employees and directors to promote compliance with federal and state securities laws. The policy prohibits certain persons who are aware of material non-public information about a company from: (i) trading in securities of that company; or (ii) providing material non-public information to other persons who may trade on the basis of that information. When material non-public information about us may exist and may have an influence on the marketplace, a trading blackout period is placed in effect by management. In addition, this Insider Trading Policy also applies to family members, other members of a person’s household, and entities controlled by a person covered by this Insider Trading Policy. Officers, directors, and designated employees, as well as the family members and controlled entities of such persons, may not engage in any transaction in Company securities without first obtaining pre-clearance of the transaction from our General Counsel. +Under the Insider Trading Policy, directors, executive officers and other employees are prohibited from entering into any hedging or monetization transactions relating to Callon's securities or otherwise trading in any instrument relating to the future securities' price. This Insider Trading Policy also prevents directors and executive officers from pledging Callon common stock as collateral for loans or holding Callon securities in a margin account. The Insider Trading Policy is published as Addendum A to our Code of Business Conduct and is available at www.callon.com/about-callon/governance. +50 CALLON PETROLEUM +EXECUTIVE COMPENSATION +Clawback Policy +In January 2020, the Committee adopted a comprehensive clawback policy. The clawback policy provides the Committee the authority to recoup previously-paid compensation under the following circumstances: +• +If there is a correction to previously approved performance metrics (not necessarily limited to a financial restatement), the Committee may clawback from executive officers any annual or long-term incentive compensation paid in error during the prior three years. +• +If an executive officer engages in fraud or misconduct, or was grossly negligent in a supervisory role, where such action caused or could reasonably lead to material financial or reputational harm to Callon, the Committee may clawback annual and long-term incentive compensation from the past year from the executive officer +The Committee believes this clawback policy helps protect the Company and its shareholders in the unlikely event of a restatement or potential fraud or misconduct by an executive officer. +The clawback rights described above are in addition to those required under Sarbanes-Oxley legislation. +Compensation Committee Report +The Compensation Committee has reviewed and discussed with management the CD&A required by Item 402(b) of Regulation S-K promulgated under the Exchange Act, and based on such review and discussions, the Committee has recommended to the Board that the CD&A be included in this Proxy Statement relating to the 2020 Annual Meeting of Shareholders. +Respectfully submitted by the Compensation Committee of the Board of Directors, +Matthew R. Bob, Chairman +Michael L. Finch +L. Richard Flury +Anthony J. Nocchiero +James M. Trimble +2020 PROXY STATEMENT 51 +EXECUTIVE COMPENSATION +Executive Compensation Tables +The compensation paid to the Company’s executive officers generally consists of base salaries, annual cash incentive payments, awards under the 2011 Omnibus Incentive Plan (the "2011 Plan") and the 2018 Plan, contributions to the Company’s 401(k) plan and miscellaneous perquisites. The table below sets forth information regarding fiscal years 2019, 2018 and 2017 compensation awarded to, earned by or paid to the Company’s NEOs, in each case for the years in which these individuals constituted "named executive officers" under SEC rules. This includes all individuals who served as the Company's CEO or CFO during 2019, the three other most highly compensated executive officers serving at the end of the fiscal year, and our former Chief Accounting Officer who would have been in the top three but transitioned from her role prior to year-end. Mr. Conaway was appointed as an executive officer of the Company as of the closing of the Carrizo Acquisition on December 20, 2019. The below tables reflect compensation paid to Mr. Conaway by the Company on or after that date. +Summary Compensation Table +Name and Principal Position +Year +Salary +Bonus (a) +Stock +Awards (b) +Non-Equity Incentive Plan Compensation (c) +All Other Compensation (d) +Total +Joseph C. Gatto, Jr. (e)(f) +President & CEO +2019 +$ +796,153 +$ +0 +$ +5,136,754 +$ +1,043,625 +$ +33,055 +$ +7,009,587 +2018 +$ +666,346 +$ +980,000 +$ +4,313,125 +$ +0 +$ +31,430 +$ +5,990,901 +2017 +$ +494,568 +$ +690,000 +$ +2,852,712 +$ +0 +$ +41,816 +$ +4,079,096 +James P. Ulm, II (g) +Senior Vice President & CFO +2019 +$ +465,000 +$ +0 +$ +2,083,367 +$ +481,275 +$ +42,352 +$ +3,071,994 +2018 +$ +465,000 +$ +585,900 +$ +1,249,500 +$ +0 +$ +39,245 +$ +2,339,645 +2017 +$ +17,885 +$ +52,000 +$ +989,100 +$ +0 +$ +0 +$ +1,058,985 +Jeffrey S. Balmer (h) +Senior Vice President & Chief Operating Officer +2019 +$ +450,000 +$ +0 +$ +1,968,015 +$ +439,875 +$ +57,350 +$ +2,915,240 +Michol L. Ecklund (i)(j) +Senior Vice President, General Counsel & Corporate Secretary +2019 +$ +388,462 +$ +0 +$ +1,194,593 +$ +368,000 +$ +38,953 +$ +1,990,008 +2018 +$ +340,577 +$ +343,000 +$ +774,155 +$ +0 +$ +38,131 +$ +1,495,863 +Gregory F. Conaway (k)(l) +Vice President & Chief Accounting Officer +2019 +$ +8,677 +$ +0 +$ +0 +$ +197,400 +$ +174 +$ +206,251 +Mitzi P. Conn (m) +Former Vice President & +Chief Accounting Officer +2019 +$ +256,538 +$ +0 +$ +434,833 +$ +209,300 +$ +35,744 +$ +936,415 +2018 +$ +239,615 +$ +240,100 +$ +366,055 +$ +0 +$ +30,987 +$ +876,757 +2017 +$ +225,000 +$ +189,000 +$ +394,150 +$ +0 +$ +30,118 +$ +838,268 +(a) +Cash bonus awarded in first quarter of following year in recognition of previous year's performance. +(b) +The amounts reported in the “Stock Awards” column represent the aggregate grant date fair value of RSUs and PSUs computed in accordance with FASB ASC Topic 718, disregarding any estimates of forfeiture. The performance unit awards granted in 2019, 2018 and 2017 are subject to market conditions and have been valued based on the probable outcome of the market conditions as of the grant date of the awards. The assumptions utilized in the calculation of these amounts for 2019 are set forth in footnotes 9 and 10 to our consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2019. +(c) +The amounts reported in the “Non-Equity Incentive Plan Compensation” column represent payouts under the 2019 annual performance bonus program. See “Performance-Based Annual Cash Incentive” in the CD&A above for further information. +(d) +See the "Table of All Other Compensation” below and related footnotes for reconciliation. +(e) +Mr. Gatto was promoted to Chief Executive Officer in May 2017. +(f) +Mr. Gatto’s salary was increased from $700,000 to $825,000 effective March 2019. +(g) +Mr. Ulm began serving as our Chief Financial Officer in December 2017. +(h) +Dr. Balmer was not an NEO prior to 2019. +(i) +Ms. Ecklund was not an NEO prior to 2018. +(j) +Ms. Ecklund's salary was increased from $350,000 to $400,000 effective March 2019. +(k) +Mr. Conaway was appointed to an executive officer role with the Company as of the closing of the Carrizo Acquisition on December 20, 2019. +52 CALLON PETROLEUM +EXECUTIVE COMPENSATION +(l) +The amount in Non-Equity Incentive Plan Compensation represents the amount paid to Mr. Conaway by the Company as a 2019 annual performance bonus in accordance with the terms of Carrizo’s 2019 annual bonus program and the Merger Agreement. See “Performance-Based Annual Cash Incentive” in the CD&A above for further information. +(m) +Ms. Conn's salary was increased from $245,000 to $260,000 effective March 2019. +Table of All Other Compensation +NEO +Year +Company +Contributions to 401(k) (a) +Company +Provided +Auto (b) +Additional Perquisites +Total +Joseph C. Gatto, Jr. +2019 +$ +26,250 +$ +6,805 +$ +0 +$ +33,055 +2018 +$ +25,000 +$ +6,430 +$ +0 +$ +31,430 +2017 +$ +31,500 +$ +10,316 +$ +0 +$ +41,816 +James P. Ulm, II +2019 +$ +28,000 +$ +14,352 +$ +0 +$ +42,352 +2018 +$ +26,493 +$ +12,752 +$ +0 +$ +39,245 +2017 +$ +0 +$ +0 +$ +0 +$ +0 +Jeffrey S. Balmer +2019 +$ +24,642 +$ +1,851 +$ +30,857 +(c) +$ +57,350 +Michol L. Ecklund +2019 +$ +25,962 +$ +12,991 +$ +0 +$ +38,953 +2018 +$ +25,312 +$ +12,819 +$ +0 +$ +38,131 +Gregory F. Conaway +2019 +$ +174 +$ +0 +$ +0 +$ +174 +Mitzi P. Conn +2019 +$ +23,654 +$ +12,090 +$ +0 +$ +35,744 +2018 +$ +23,961 +$ +7,026 +$ +0 +$ +30,987 +2017 +$ +22,500 +$ +7,618 +$ +0 +$ +30,118 +(a) +Subject to IRS limits, Company contributions to each employee's 401(k) account for 2019 consist of a 5% non-matching contribution plus a matching contribution at the rate of 1% in cash for every 1% that the participant deferred up to 5%. +(b) +The imputed value for personal use of a company-provided automobile represents annual depreciation based on a three-year life, plus insurance, fuel, maintenance and repairs, pursuant to IRS rules. +(c) +Dr. Balmer received $30,857 for reimbursement for certain reasonable relocation expenses which included transportation expenses, home sale and purchase assistance, shipment of additional household goods, and tax gross-ups on these payments. +2020 PROXY STATEMENT 53 +EXECUTIVE COMPENSATION +Grants of Plan-Based Awards During 2019 +The following table presents grants of equity awards during the fiscal year ending December 31, 2019: +Grant +Date +Estimated Future Payouts Under Non-Equity Incentive Plan Awards (a) +Estimated Future Payouts Under Equity Incentive Plan Awards (b) +Other Awards +(Shares or Units) (c) +Grant Date +Fair Value of Stock Awards (d) +NEO +Threshold +Target +Maximum +Threshold +Target +Maximum +Joseph C. Gatto, Jr. +1/1/2019 +$ +0 +$ +907,500 +$ +1,815,000 +1/31/2019 +— +211,301 +$ +1,719,990 +1/31/2019 +— +316,954 +633,908 +$ +3,416,764 +James P. Ulm, II +1/1/2019 +$ +0 +$ +418,500 +$ +837,000 +1/31/2019 +85,700 +$ +697,598 +1/31/2019 +— +128,550 +257,100 +— +$ +1,385,769 +Jeffrey S. Balmer +1/1/2019 +$ +0 +$ +382,500 +$ +765,000 +1/1/2019 +90,000 (e) +$ +584,100 +1/31/2019 +128,378 +245,756 +$ +1,383,915 +Michol L. Ecklund +1/1/2019 +$ +0 +$ +320,000 +$ +640,000 +1/31/2019 +— +— +— +49,140 +$ +400,000 +1/31/2019 +— +73,710 +147,420 +— +$ +794,594 +Gregory F. Conaway +— +$ +0 +$ +0 +$ +0 +— +— +— +— +— +$ +0 +Mitzi P. Conn +1/1/2019 +$ +0 +$ +182,000 +$ +364,000 +1/31/2019 +— +— +— +17,885 +$ +145,584 +1/31/2019 +— +26,832 +53,664 +— +$ +289,249 +(a) +Amounts represent the threshold, target, and maximum payouts for the 2019 annual performance bonus program. The actual amounts paid under the 2019 annual performance bonus program are set forth in the "Non-Equity Incentive Compensation" column in the Summary Compensation Table above. +(b) +Amounts represent PSUs payable 50% in cash and 50% in stock on the vesting date, currently scheduled for December 31, 2021. See "PSU Program" in the CD&A above for further details. +(c) +Except as otherwise indicated, amounts represent RSUs granted to our NEOs on January 31, 2019. The first tranche vested on April 1, 2020; the second and third tranches are scheduled to vest in equal installments on April 1, 2021 and 2022, subject to the NEO’s continued service. +(d) +This column shows the grant date fair value of the awards granted to the NEOs on the date indicated computed in accordance with FASB ASC Topic 718. The value ultimately realized by the executive upon the actual vesting of the awards may be more or less than the grant date fair value. +(e) +Amount represents RSUs granted to Dr. Balmer on January 1, 2019 at a grant price of $6.49. The first tranche vested on January 1, 2020; the second and third tranches are scheduled to vest in equal installments on January 1, 2021 and 2022, subject to Dr. Balmer’s continued service. +Stock-Based Incentive Compensation Plans +The 2011 Plan was approved by shareholders on May 12, 2011 and amended on May 14, 2015. The 2018 Plan was approved by shareholders on May 10, 2018. Awards available under each of the 2011 Plan and the 2018 Plan include grants of stock options, stock appreciation rights or units, restricted stock, RSUs, and performance shares or units. As of May 10, 2018, no more shares will be issued from the 2011 Plan and the then-remaining 1,322,742 shares authorized and available for issuance under the 2011 Plan were transferred into the 2018 Plan. Shares, which would otherwise become available for issuance under the 2011 Plan as a result of vesting and/or forfeiture of any equity awards existing prior to the effective date of the 2018 Plan, will increase the authorized shares available to the 2018 Plan. In connection with the Carrizo Acquisition, an additional 5,620,416 shares became available for issuance under the 2018 Plan, which represented the remaining number of shares of common stock of Carrizo that were available for issuance under the 2017 Incentive Plan of Carrizo Oil & Gas, Inc., as amended and restated +54 CALLON PETROLEUM +EXECUTIVE COMPENSATION +effective as of May 16, 2019, immediately prior to the Carrizo Acquisition, as appropriately adjusted to reflect such transaction. As of April 3, 2020, approximately 5,850,000 shares remain unissued in the 2018 Plan, which includes approximately 3,430,000 shares available for grant only to legacy Carrizo employees and approximately approximately 2,420,000 shares available for grant to any eligible grantee. +Outstanding Equity Awards at Fiscal Year-End +The following table contains information concerning all outstanding equity awards that were held as of December 31, 2019 for the NEOs: +Stock Awards +NEO +Number of Shares or Units of Stock That Have Not Vested (#) +Market Value of Shares or Units of Stock That Have Not Vested (a) +Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested +Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested (a) +Joseph C. Gatto, Jr. +211,301 +(c) +$ +1,020,584 +— +$ +0 +— +$ +0 +158,477 +(d) +$ +765,444 +$ +0 +158,477 +(e) +$ +765,444 +42,868 +(f) +$ +207,052 +— +$ +0 +40,049 +(g) +$ +193,437 +— +$ +0 +73,446 +(h) +$ +354,744 +— +$ +0 +— +$ +0 +82,627 +(i) +$ +399,088 +— +$ +0 +82,627 +(j) +$ +399,088 +James P. Ulm, II +85,700 +(c) +$ +413,931 +— +$ +0 +— +$ +0 +64,275 +(d) +$ +310,448 +— +$ +0 +64,275 +(e) +$ +310,448 +60,000 +(k) +$ +289,800 +— +$ +0 +— +$ +0 +37,500 +(i) +$ +181,125 +— +$ +0 +37,500 +(j) +$ +181,125 +Jeffrey S. Balmer +90,000 +(b) +$ +434,700 +— +$ +0 +— +$ +0 +64,189 +(d) +$ +310,033 +— +$ +0 +64,189 +(e) +$ +310,033 +Michol L. Ecklund +49,140 +(c) +$ +237,346 +— +$ +0 +— +$ +0 +36,855 +(d) +$ +178,010 +— +$ +0 +36,855 +(e) +$ +178,010 +25,000 +(l) +$ +120,750 +— +$ +0 +13,182 +(h) +$ +63,669 +— +$ +0 +— +$ +0 +14,831 +(i) +$ +71,634 +— +$ +0 +14,831 +(j) +$ +71,634 +Gregory F. Conaway (m) +— +— +— +— +Mitzi P. Conn +17,885 +(c) +$ +86,385 +— +$ +0 +— +$ +0 +13,416 +(d) +$ +64,799 +— +$ +0 +13,416 +(e) +$ +64,799 +10,881 +(f) +$ +52,555 +— +$ +0 +6,232 +(h) +$ +30,101 +— +$ +0 +— +$ +0 +7,013 +(i) +$ +33,873 +— +$ +0 +7,013 +(j) +$ +33,873 +(a) +Amounts calculated using the closing price of $4.83 per share of our common stock on the last trading day of 2019. +2020 PROXY STATEMENT 55 +EXECUTIVE COMPENSATION +(b) +Stock settleable RSUs awarded on January 1, 2019 subject to three-year ratable vesting with one-third vesting each year subsequent to the award year. The first tranche vested on January 1, 2020. The second tranche will vest on January 1, 2021. The third and final tranche will vest on January 1, 2022. +(c) +Stock settleable RSUs awarded on January 31, 2019 subject to three-year ratable vesting with one-third vesting each year subsequent to the award year. The first tranche vested on April 1, 2020. The second tranche will vest on April 1, 2021. The third and final tranche will vest on April 1, 2022. +(d) +Stock settleable PSUs awarded on January 31, 2019 with vesting terms subject to performance criteria related to the TSR of the Company compared to a group of peer companies from December 31, 2018 through December 31, 2021. The number of units subject to vest under this award can range from 0% to 200%. +(e) +Cash settleable PSUs awarded on January 31, 2019 with vesting terms subject to performance criteria related to the TSR of the Company compared to a group of peer companies from December 31, 2018 through December 31, 2021. The number of units subject to vest under this award can range from 0% to 200%. +(f) +Stock settleable RSUs awarded on May 11, 2017 subject to cliff vesting on May 11, 2020. +(g) +Stock settleable RSUs awarded to Mr. Gatto upon his promotion to CEO on July 11, 2017 subject to three-year ratable vesting with one-third vesting each year subsequent to the award year. The first tranche vested on July 1, 2018, and the second tranche vested on July 1, 2019. The third and final tranche will vest on July 1, 2020. +(h) +Stock settleable RSUs awarded on May 10, 2018 subject to three-year ratable vesting with one-third vesting each year subsequent to the award year. The first tranche vested on June 1, 2019. The second tranche will vest on June 1, 2020. The third and final tranche will vest on June 1, 2021. +(i) +Stock settleable PSUs awarded on May 10, 2018 with vesting terms subject to performance criteria related to the TSR of the Company compared to a group of peer companies from May 2018 through December 31, 2020. The number of units subject to vest under this award can range from 0% to 200%. +(j) +Cash settleable PSUs awarded on May 10, 2018 with vesting terms subject to performance criteria related to the TSR of the Company compared to a group of peer companies from May 2018 through December 31, 2020. The number of units subject to vest under this award can range from 0% to 200%. +(k) +Stock settleable RSUs awarded to Mr. Ulm upon his hiring on December 11, 2017 subject to three-year ratable vesting with one-third vesting each year subsequent to the award year. The first tranche vested on January 1, 2019. The second tranche vested on January 1, 2020. The third and final tranche will vest on January 1, 2021. +(l) +Stock settleable RSUs awarded to Ms. Ecklund upon her hiring on November 6, 2017 subject to three-year ratable vesting with one-third vesting each year subsequent to the award year. The first tranche vested on January 1, 2019. The second tranche vested on January 1, 2020. The third and final tranche will vest on January 1, 2021. +(m) +Mr. Conaway held the following outstanding cash-settled stock appreciation right awards as of December 31, 2019: +. +Option/SAR Awards +NEO +Number of Securities Underlying Unexercised Options/ +SARs (#) Exercisable +Number of Securities Underlying Unexercised Options/ +SARs (#) Unexercisable +Equity Incentive Plan Awards: +Number of Securities Underlying Exercised Unearned Options/SARs (#) +Option/ +SARs Exercise Price +($) +Option/ +SARs Expiration Date +Gregory F. Conaway +19,960 +(1) +— +— +$ +15.60 +3/17/2021 +20,051 +(2) +— +— +$ +15.40 +3/23/2022 +31,442 +(3) +— +— +$ +8.39 +3/17/2025 +42,588 +(4) +— +— +$ +6.28 +3/17/2026 +(1) +Cash-settled stock appreciation rights received in connection with the Carrizo Acquisition in exchange for 11,406 Carrizo stock appreciation rights with an exercise price of $27.295 pursuant to the Merger Agreement. +(2) +Cash-settled stock appreciation rights received in connection with the Carrizo Acquisition in exchange for 11,458 Carrizo stock appreciation rights with an exercise price of $26.94 pursuant to the Merger Agreement. +(3) +Cash-settled stock appreciation rights received in connection with the Carrizo Acquisition in exchange for 17,967 Carrizo stock appreciation rights with an exercise price of $14.67 pursuant to the Merger Agreement. +(4) +Cash-settled stock appreciation rights received in connection with the Carrizo Acquisition in exchange for 24,336 Carrizo stock appreciation rights with an exercise price of $10.98 pursuant to the Merger Agreement. +56 CALLON PETROLEUM +EXECUTIVE COMPENSATION +Stock Vested +The following table provides information about the value realized by the NEOs on vesting of RSUs and PSUs during 2019: +Stock Awards (a) +NEO +Number of Shares +Acquired on Vesting (#) +Value Realized on Vesting $ (b) +Joseph C. Gatto, Jr. +6,510 +(c) +$ +50,453 +36,890 +(d) +$ +281,471 +36,723 +(e) +$ +229,519 +40,049 +(f) +$ +267,127 +50,000 +(g) +$ +209,500 +64,304 +(h) +$ +310,588 +James P. Ulm, II (h) +30,000 +(i) +$ +194,700 +Jeffrey S. Balmer +— +$ +— +Michol L. Ecklund (h) +6,591 +(e) +$ +41,194 +12,500 +(j) +$ +81,125 +Gregory F. Conaway +— +$ +— +Mitzi P. Conn +1,790 +(c) +$ +13,873 +10,145 +(d) +$ +77,406 +3,117 +(e) +$ +19,481 +10,000 +(g) +$ +41,900 +(a) +No options were awarded, outstanding, expired, or exercised by any NEO in 2019. +(b) +Except as otherwise indicated, represents the aggregate dollar amount realized on the date of vesting, based on the closing market price per share of Company common stock on the vesting date or last business day prior to the vesting date if such date fell on a weekend or holiday. +(c) +Represents phantom stock units awarded on May 13, 2016 ,that settled in cash on May 13, 2019. +(d) +Represents RSUs awarded on May 13, 2016, that cliff-vested on May 13, 2019. +(e) +Represents RSUs awarded on May 10, 2018, the first tranche of which vested on June 1, 2019. +(f) +Represents RSUs awarded to Mr. Gatto upon his promotion to CEO on July 11, 2017, the second tranche of which vested on July 1, 2019. +(g) +Represents RSUs awarded on August 24, 2016, that cliff vested on August 24, 2019. +(h) +Represents PSUs awarded on May 12, 2017, that settled 50% in stock and 50% in cash on December 31, 2019, at 100% of target. +(i) +Represents RSUs awarded to Mr. Ulm upon his hiring on December 11, 2017, the first tranche of which vested on January 1, 2019. +(j) +Represents RSUs awarded to Ms. Ecklund upon her hiring on November 6, 2017, the first tranche of which vested on January 1, 2019. +2020 PROXY STATEMENT 57 +EXECUTIVE COMPENSATION +Employment Agreements, Termination of Employment and Change in Control Arrangements +Employment Agreements; Carrizo Change in Control Severance Plan +We do not have employment agreements with any of our executive officers, with the exception of an employment agreement with Mr. Conaway that was inherited by the Company as a result of the Carrizo Acquisition and amended in connection therewith. +Mr. Conaway's employment agreement has an initial one-year term, provided that the date of the agreement and on every day thereafter, the term of the employment agreement is automatically extended for one day, such that the remaining term of the agreement shall never be less than one year until an event (as described in the agreement) that gives rise to termination of employment occurs. The Company has given notice that the employment agreement will terminate on December 20, 2021, unless earlier terminated in accordance with its terms. Mr. Conaway’s employment agreement also subjects Mr. Conaway to a one-year post-termination non-competition and non-solicitation covenant, and a perpetual confidentiality covenant. +Mr. Conaway’s employment agreement provides for severance benefits, subject to Mr. Conaway's execution and non-revocation of a general release of claims in favor of the Company, upon a termination as a result of disability, but does not provide for severance benefits (other than accrued benefits) in the event of a termination by the Company without cause or by Mr. Conaway for any or no reason. However, Mr. Conaway is party to a Severance Compensation Agreement with the Company (an “SCA”) and is a participant of the Carrizo Change in Control Severance Plan (which the Company inherited as a result of the Carrizo Acquisition), each of which provide for severance benefits upon a termination without cause or for good reason under certain circumstances (as further described below). Pursuant to the terms of Mr. Conaway’s SCA, in the event a change in control of Callon occurs and Mr. Conaway experiences a qualifying termination following such change in control, Mr. Conaway will be entitled to the severance benefits provided for under his SCA in lieu of those provided for under his employment agreement or the Carrizo Change in Control Severance Plan. The severance benefits payable under his SCA are described in the “Severance Compensation Agreements” section below. +In the event Mr. Conaway is terminated on or prior to the second anniversary of the closing of the Carrizo Acquisition (the “Carrizo CIC Protected Period”), the severance provisions of the Carrizo Change in Control Severance Plan will apply in lieu of the severance provisions set forth in his employment agreement, except to the extent the employment agreement provides for additional or greater severance benefits. The Carrizo Change in Control Severance Plan provides for the following severance benefits if Mr. Conaway's employment is terminated during the Carrizo CIC Protected Period by the Company without cause, by Mr. Conaway for good reason, or as a result of death or disability (as such terms are defined in the Carrizo Change in Control Severance Plan): (i) accrued benefits, (ii) a lump sum payment equal to 1.5 multiplied by the sum of (A) his base salary plus (B) his target annual bonus, (iii) continued Company-paid health benefits for up to 18 months, (iv) a pro-rated target annual bonus for the calendar year in which his termination occurs, and (v) any outstanding equity awards then held by Mr. Conaway will vest in full with any performance-based awards earned at the target level and, to the extent applicable, any awards with an exercise period (e.g. stock appreciation rights) will remain exercisable for their full original term. Such severance benefits are conditioned upon Mr. Conaway’s execution and non-revocation of a general release of claims in favor of the Company. The Carrizo Change in Control Severance Plan also includes a 280G “best-net” cutback provision, which provides that if amounts payable to a participant under the Carrizo Change in Control Severance Plan (together with any other amounts that are payable as a result of a change in control) would subject a participant to an excise tax under Section 280G of the Internal Revenue Code, such payments will either be: (i) reduced to the level at which no excise tax applies, or (ii) paid in full, whichever results in a better after-tax result for the participant. +Upon termination as a result of disability outside of the Carrizo CIC Protected Period, Mr. Conaway’s employment agreement provides for the following severance benefits: (i) accrued benefits (including any earned but unpaid annual bonus with respect to the prior fiscal year), (ii) a lump sum payment equal to 97% of his annual base salary, (iii) an additional lump sum payment equal to 70% of his annual base salary, (iii) an additional lump sum payment equal to 3% of his annual base salary, (iv) continued medical and dental benefits coverage for Mr. Conaway and his dependents for one year following his termination of employment, and (v) any outstanding equity awards then held by Mr. Conaway will vest in full, and, to the extent applicable, the period of exercisability of any such awards will extend to the earlier of (A) one year following his termination date or (B) the date such awards would have lapsed had Mr. Conaway remained employed for the remaining term. Mr. Conaway’s employment agreement also entitles Mr. Conaway to accrued benefits and equity acceleration benefits (as described in the immediately prior sentence) in the event Mr. Conaway’s employment is terminated as a result of his death. +58 CALLON PETROLEUM +EXECUTIVE COMPENSATION +Severance Compensation Agreements +We entered into amended SCAs with each of our NEOs effective as of January 1, 2019, with the exception of Mr. Conaway, who entered into his SCA effective December 20, 2019 in connection with his appointment as an officer. The SCA will terminate, except to the extent that any obligation of Callon thereunder remains unpaid as of such time, upon the earliest of (i) December 31, 2019 (in the case of each NEO other than Mr. Conaway) and December 31, 2020 (in the case of Mr. Conaway), except that, on each anniversary date thereafter, the expiration date will automatically be extended for one additional year unless, as of such date and prior to such anniversary date, either party has given proper written notice that it does not wish to extend the SCA, but in no event will the expiration date be earlier than the second anniversary of the effective date of a change in control; (ii) the termination of the NEO's employment with Callon based on death, disability (as defined in the SCA), or cause (as defined in the SCA); (iii) the voluntary resignation of the NEO for any reason other than a post-change in control resignation for good reason (as defined in the SCA); and (iv) any resignation of the NEO prior to a change in control. +Pursuant to the SCA, if the executive is terminated without cause by Callon or for good reason by him within two years following a change in control of Callon (or in certain cases, prior to a change in control (i.e., a "double-trigger termination)), then the executive is entitled to a single lump-sum cash payment equal to an SCA multiple times the sum of (i) the annual base salary in effect immediately prior to the change in control or, if higher, in effect immediately prior to the separation from service, and (ii) the greater of the average bonus earned with respect to the three most recently completed full fiscal years, the target bonus for the fiscal year in which the change in control occurs, or the target bonus for the fiscal year in which the change in control or termination occurs. For Mr. Gatto, the SCA multiple is three times. For the other NEOs, the SCA multiple is two times. The SCAs also provide that in the event an NEO is eligible for benefits due to a “double trigger” termination, any outstanding equity awards then held by the NEO shall vest in full with any performance-based awards earned at the level specified in the applicable award agreement or, if not specified, at the target level. In addition, we must maintain at our expense until twenty-four months after a "double-trigger" separation from service all medical, dental, and health insurance coverage. Such severance benefits are subject to the executive’s execution and non-revocation of a general release of claims. A change in control as generally defined in the SCA occurs when (i) any person or group of persons acting in concert becomes the beneficial owner of more than 50% of our outstanding common stock; (ii) our shareholders cause a change in the majority of the members of the Board within a thirty-six month period; (iii) there is a change in control in ownership of at least 40% of Company assets; or (iv) a third party acquires more than 30% of the voting power of our common stock in a twelve month period. +The SCAs also subject each executive to a one-year post-termination non-competition and two- year post-termination non-solicitation covenant in the event the applicable executive becomes eligible to receive severance benefits under the SCA. The SCAs also include a perpetual confidentiality covenant. +The SCAs incorporate a provision to provide for the possible impact of the federal excise tax on excess parachute payments. If any SCA payment is subject to any excise tax under Section 4999 of the Tax Code, the payment will be reduced so that no portion of the payment is subject to such excise tax if the net benefit payable would be at least as much as it would have been if no reduction was made. The so-called “golden parachute” tax rules subject “excess parachute payments” to a dual penalty: the imposition of a 20 percent excise tax upon the recipient and non-deductibility of such payments by the paying corporation. While the excise tax is seemingly evenhanded, the excise tax can discriminate against long-serving employees in favor of new hires, against individuals who do not exercise stock options in favor of those who do and against those who elect to defer compensation in favor of those who do not. For these reasons, we believe that the 280G “best-net” cutback provision included in the SCA is appropriate. +2020 PROXY STATEMENT 59 +EXECUTIVE COMPENSATION +Potential Payments upon Termination or Change in Control +The following table shows the estimated gross taxable compensation payable upon termination following a change in control ("CIC") or upon death, disability or retirement (or, in the case of Mr. Conaway, during the Carrizo CIC Protection Period on his termination without cause or for good reason, or due to death or disability). No amounts would be payable upon termination for other causes. The information assumes, in each case, that the officer’s termination was effective as of December 31, 2019. In presenting this disclosure, we describe amounts earned through December 31, 2019 and, in those cases where the actual amounts to be paid out can only be determined at the time of such executive’s separation from us, the estimates are of the amounts which would be paid out to the executives upon their termination. +NEO / Reason for Termination +Base +Salary (a) +Cash +Bonus (a) +Accelerated +Stock Award +Vesting (b) +Continued +Employee +Benefits (c) +Total +Joseph C. Gatto, Jr. - CIC (d) +$ +2,475,000 +$ +1,815,000 +$ +7,297,881 +$ +52,650 +$ +11,640,531 +Death, Disability or Retirement (e) +$ +0 +$ +0 +$ +7,297,881 +$ +0 +$ +7,297,881 +James P. Ulm, II - CIC (d) +$ +930,000 +$ +837,000 +$ +1,686,877 +$ +52,650 +$ +3,506,527 +Death, Disability or Retirement (e) +$ +0 +$ +0 +$ +1,686,877 +$ +0 +$ +1,686,877 +Jeffrey S. Balmer - CIC (d) +$ +900,000 +$ +765,000 +$ +1,054,766 +$ +52,650 +$ +2,772,416 +Death, Disability or Retirement (e) +$ +0 +$ +0 +$ +1,054,766 +$ +0 +$ +1,054,766 +Michol L. Ecklund - CIC (d) +$ +800,000 +$ +640,000 +$ +921,053 +$ +52,650 +$ +2,413,703 +Death, Disability or Retirement (e) +$ +0 +$ +0 +$ +921,053 +$ +0 +$ +921,053 +Gregory F. Conaway - CIC (d) +$ +546,000 +$ +382,200 +$ +0 +$ +52,650 +$ +980,850 +Without Cause, Good Reason, Death or Disability (f) +$ +409,500 +$ +477,750 +$ +0 +$ +39,488 +$ +926,738 +Mitzi P. Conn - CIC (d) +$ +520,000 +$ +364,000 +$ +351,339 +$ +52,250 +$ +1,287,589 +Death, Disability or Retirement (e) +$ +0 +$ +0 +$ +351,339 +$ +0 +$ +351,339 +(a) +In accordance with Mr. Gatto’s SCA, the computation uses a 3x multiple with respect to the severance amount relating to salary and target bonus, while a 2x multiple is used for the other NEOs. See “Employment Agreements, Termination of Employment and Change in Control Arrangements.” +(b) +The amounts are calculated based on unvested stock awards at December 31, 2019 using the closing price of $4.83 per share of our common stock on the last trading day of 2019. The table above assumes that PSUs vest at the target level. Actual vesting of PSUs would be determined based on performance at the time of such executive's separation. +(c) +Benefits consist of twenty-four months of employer provided family medical and dental insurance and disability and life insurance for the NEOs in the table. +(d) +We entered into an SCA with each of the NEOs listed in the table above. See “Employment Agreements, Termination of Employment and Change in Control Arrangements.” +(e) +“Disability,” for purposes of the SCAs, is generally defined as the employee’s inability to carry out the normal and usual duties of his employment on a full-time basis for an entire period of six continuous months together with the reasonable likelihood, as determined by the Board after consultation of a qualified physician, he will be unable to carry out his normal and usual duties of employment. “Retirement” is generally defined as the employee’s attainment of age 55 with at least 10 years of service. +(f) +Mr. Conaway would be entitled to payments of 1.5 times the sum of his annual base salary and target annual bonus, a pro-rated target annual bonus for the calendar year in which his termination occurs, accelerated vesting of outstanding equity awards, and 18 months of continued subsidized benefits continuation under the Carrizo Change in Control Severance Plan in the event he is terminated without cause or for good reason or due to death or disability within two years after the closing of the Carrizo Acquisition. “Disability,” for purposes of the Carrizo Change in Control Severance Plan, has the same meaning assigned to such term in the Company’s long-term disability plan, as in effect from time to time, or if no such plan is in effect. “Disability” means “permanent and total disability” as defined in Section 22(e)(3) of the Tax Code. The Carrizo Change in Control Severance Plan does not provide for severance benefits upon retirement or a voluntary resignation by the executive. See "Employment Agreements, Termination of Employment and Change in Control Agreements." +Pension and Non-Qualified Deferred Compensation Plans. +We sponsor a 401(k) plan for all eligible employees, including the NEOs as described on page 49. We do not sponsor any qualified or non-qualified defined benefit plans, or any non-qualified defined contribution plan for NEOs or other employees. The Board or Compensation Committee may elect to adopt qualified or non-qualified defined benefit plans or non-qualified defined contribution plans in the future if it determines that doing so is in the Company’s best interest. +60 CALLON PETROLEUM +EXECUTIVE COMPENSATION +CEO Pay Ratio +Pursuant to a mandate of the Dodd-Frank Wall Street Reform and Consumer Protection Act, we are disclosing here that the ratio of our median employee’s compensation to the compensation of our CEO is 40:1. +In order to find the median employee, we used the sum of the base salary and bonus, including any overtime or commission that was paid to the employee. The median employee was identified from the employee population as of December 31, 2018. We are maintaining the median employee identified in 2018 as there have not been significant compensation changes that have impacted the pay ratio. +In accordance with SEC rules, we determined the annual total compensation of our median employee for 2019, which was $159,312. This amount represents the total compensation that would have been reported in the Summary Compensation Table in accordance with the requirements of Item 402(c)(x) of Regulation S-K for the median employee if the employee had been a NEO for fiscal year 2019. For purposes of calculating the ratio, an additional value of $17,020 was included in the annual compensation for non-discriminatory benefits bringing the annual total compensation to $176,332. +We determined the amount of the CEO’s annual total compensation was $7,009,587 which represents the amount reported for the CEO in the “Total” column of our 2019 Summary Compensation Table. For purposes of the ratio, an additional value of $26,325 was included in the annual total compensation for non-discriminatory benefits to bring the value to $7,035,912. +Based on the foregoing, for 2019 the ratio of the median of the annual total compensation of all employees to the annual total compensation of our CEO (the "CEO Pay Ratio") is 40:1. Callon’s CEO Pay Ratio remained consistent from 2018 to 2019, remaining at 40:1. +The CEO Pay Ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on our payroll and employment records. +2020 PROXY STATEMENT 61 +Proposal 3 +Approve the Company's +2020 Omnibus +Incentive Plan +The Board of Directors recommends a vote FOR the approval of the Company’s 2020 Omnibus Incentive Plan (the "2020 Plan"). +• Provides the Company the ability to remain competitive in our industry in attracting and retaining experienced talent while aligning executive, director and employee interests with those of our long-term shareholders. +One of the core objectives of Callon’s pay-for-performance compensation philosophy is to align the compensation opportunities of our executives, directors and employees with the interests of our shareholders. To do so, a meaningful component of our program is the ability to grant performance-contingent and retention share-based equity awards that directly link compensation to our share price performance over time. In order to maintain this important element of our program, our Board is recommending that shareholders approve the 2020 Plan in order to have sufficient shares available to successfully attract, retain and motivate our employees and directors in line with the creation of sustainable shareholder value. +The Board has unanimously approved the 2020 Plan to replace the 2018 Plan (the “Prior Incentive Plan”), subject to shareholder approval at the Annual Meeting, and recommends that the Company’s shareholders approve and adopt the 2020 Plan. We intend to reserve 13,250,000 shares for issuance pursuant to awards under the 2020 Plan, in addition to the shares remaining available for issuance under the Prior Incentive Plan as of the effective date of the 2020 Plan that would be transferred to the 2020 Plan. If our shareholders approve the 2020 Plan, the shares that remain available for grant pursuant to the Prior Incentive Plan, plus any shares that would have otherwise become available for issuance under the Prior Incentive Plan or the 2011 Plan as a result of forfeitures, expiration or cancellation of previously made awards, will become available for issuance under the 2020 Plan, and no additional grants will be made pursuant to the Prior Incentive Plan. +Why You Should Vote for the 2020 Plan +• +Callon’s Growth. Since the Prior Incentive Plan was approved, we have grown our average daily production by 475% and our employee base by 55%. Additional shares are needed to continue equity awards for the larger employee population. +• +Consolidation of Legacy Carrizo Share Pool. The Prior Plan maintains a separate share pool that is only available for legacy Carrizo employees. Shareholder approval to merge this pool with shares available for grant under the 2020 Plan would better accomplish the integration of the Carrizo Acquisition. +• +Broad-based Equity Awards under the Plan. Equity incentives are utilized to motivate and retain employees outside of the named executives officers. Under the Prior Plan, equity incentives were awarded to approximately 70% of Callon employees for fiscal 2019. +• +Pay-for-Performance. For fiscal 2019, equity awards comprised of 86% of total direct compensation for the CEO, including a significant majority of equity being awarded with performance conditions. We continue to evolve our compensation program to align with shareholder priorities, including the inclusion of a returns-based metric in our annual incentive program and, as of 2020, an “absolute” shareholder return multiplier for our performance share awards. +• +Consistent Shareholder Support. Callon’s annual Say on Pay proposal has consistently received over 95% shareholder approval in each of the last 8 years. +• +2020 Plan Incorporates Shareholder-Friendly Practices. The plan submitted for shareholder approval includes an express prohibition on repricing without shareholder approval, no evergreen provisions, and other provisions that protect the incentive value of awards. If Proposal 5 is approved and a Reverse Stock Split is effectuated, the number of shares of common stock available for grant under the 2020 Plan, as well as shares subject to outstanding equity awards, would be reduced in proportion to the Reverse Stock Split. See page 76 for more information. +Rationale for Replacing the Prior Incentive Plan +We believe that aligning the interests of employees with those of long-term shareholders is a key element of compensation at the Company. To continue to execute on this objective, it is critical that Company maintain the flexibility and sufficient share reserve to appropriately incentivize employees. The 2020 Plan is intended to replace the Prior Incentive Plan and is needed to continue our equity compensation program, which is an important element in our ability to remain competitive in attracting and retaining experienced talent. As with the Prior Incentive Plan, the 2020 Plan is a broad-based plan under which the Company would grant awards to its current and prospective employees, including officers, and its directors. While the Board is cognizant of the potential dilutive effect of compensatory stock awards, it also recognizes the significant motivational and performance benefits that are achieved from making such awards and continues to believe that the Company’s long-term interests are best advanced by aligning the interests of its employees and directors with the interests of its shareholders. +62 CALLON PETROLEUM +PROPOSAL 3 +In considering the appropriate number of shares to request under the 2020 Plan, the Company has carefully considered its anticipated equity needs in light of the recent growth in its employee base. On December 20, 2019, the Company completed the Carrizo Acquisition. The addition of Carrizo’s assets increased our portfolio to over 200,000 net acres across Texas and more than doubled our pro forma production to over 100,000 barrels of oil equivalent per day. The Carrizo Acquisition also significantly increased our employee base. As of April 3, 2020, the Company had approximately 330 permanent employees, as compared to 218 employees as of December 31, 2018. In light of this significant growth, Callon does not believe that the shares available for grant under the Prior Plan are sufficient to meet the future needs of the Company to continue to attract and retain top talent in the competitive onshore U.S. oil and gas industry. Our ability to grant equity awards under the Prior Plan is further restricted by the current requirement that a separate share pool be maintained for legacy Carrizo employees. Shareholder approval of the 2020 Plan would remove this restriction and allow us to better accomplish the integration of the Carrizo Acquisition. +In addition to the increased employee base, the Company has also considered its current share price in determining the number of shares proposed for issuance under the 2020 Plan. With the economic downturn and its impact on the oil and gas industry, we have experienced a significant decrease in our share price since the Prior Incentive Plan was adopted. Due to this decline as well as the growth in our employee base, we will not be able to maintain competitive equity grant practices without the approval of the 2020 Plan and may be required to increase significantly the cash component of our compensation program in order to remain competitive and adequately compensate our employees. +As of April 3, 2020, there were approximately 5,850,000 shares of common stock remaining available for grant under the Prior Incentive Plan, of which approximately 3,430,000 shares were available for grant only to legacy Carrizo employees and approximately 2,420,000 shares were available for any eligible grantee. Any previously granted awards that are outstanding under the Prior Incentive Plan and the 2011 Plan will remain outstanding in accordance with their terms. As of April 3, 2020, an aggregate of approximately 10,870,000 shares are subject to unvested restricted stock, restricted stock unit, performance share or performance unit awards under the Prior Incentive Plan and the 2011 Plan, assuming any performance-based awards vest at maximum performance level. See “Compensation Discussion and Analysis-Annual Award of Long-term Incentives” for additional information concerning our equity compensation plans. +The Company considers the 2020 Plan an essential element of total compensation and believes the 2020 Plan promotes its interests and the interests of its shareholders by (i) attracting and retaining the services of key employees, including officers, and directors and (ii) encouraging the active interest of those persons in the development and financial success of the Company by granting awards designed to provide participants in the 2020 Plan with proprietary interest in the growth and performance of the Company. +Shareholder approval of the 2020 Plan will also constitute approval for purposes of satisfying the shareholder approval requirements under Section 422 of the Internal Revenue Code of 1986, as amended (the “Tax Code”), so that the Compensation Committee may grant incentive stock options (“ISOs”). +The 2020 Plan Combines Compensation and Governance Best Practices +2020 Plan Highlights +• Express prohibition of repricing of Options and SARs, or cash buyout of outstanding awards without shareholder approval +• Newly adopted one-year minimum vesting provision (for at least 95% of authorized shares) +• Awards are subject to clawbacks under Callon policy as well as legal requirements +• The exercise price of a stock option or SAR award may not be less than the fair market value of the stock on the date of grant +• Annual compensation cap of $1,000,000 for non-employee directors +• No liberal CIC vesting +• No evergreen provision +• No recycling of shares used to pay the exercise price of stock option or SAR awards +• No dividends or other distributions payable with respect to plan awards unless and until the underlying award vests +• No tax gross-ups or reload grants +2020 PROXY STATEMENT 63 +PROPOSAL 3 +The 2020 Plan includes several features that are consistent with the interests of shareholders and corporate governance best practices, including the following: +• +Independent Oversight. The Compensation Committee, composed solely of independent directors, will approve all grants made under the 2020 Plan, other than grants made to directors, which shall be approved by the Board. Additionally, the Compensation Committee may delegate to any committee of the Board, to the CEO and to any of our other senior officers its duties under the 2020 Plan other than the authority to make awards to participants who are subject to Section 16 of the Exchange Act. +• +No Repricing of Options or Stock Appreciation Rights. The 2020 Plan prohibits repricing, replacement and regranting of stock options or stock appreciation rights (“SARs”) at lower prices, unless approved by our shareholders. +• +Minimum Vesting Period. Subject to limited exceptions described below, awards under the 2020 Plan are subject to a one-year minimum vesting period.. +• +No Discounted Options or SARs. Stock options and SARs may not be granted with an exercise price below the closing price of our common stock on the date of grant. +• +No Dividends on Options or SARs. Dividends and Dividend Equivalents (as defined in the 2020 Plan) may not be paid or accrued on stock options or SARs. +• +Limited Terms for Options and SARs. Stock options and SARs granted under the 2020 Plan are limited to 10-year terms. +• +No Liberal Share Counting with Respect to Options or SARs. Shares that are tendered by a participant or withheld as full or partial payment of withholding taxes related to the exercise or settlement of options or SARs or as payment for the option exercise price and shares repurchased in the open market with the proceeds of the payment of the option exercise price will not become available again for awards under the 2020 Plan. +• +No Dividends or Dividend Equivalents on Unvested Awards. Any dividends or Dividend Equivalents will only be paid if the underlying shares vest pursuant to the terms of the award. +• +Annual Limitation on Director Awards and Compensation. The aggregate grant value of awards and cash compensation paid to any individual non-employee director may not exceed $1,000,000 in any calendar year. +• +Clawback or Recoupment. All awards granted under the 2020 Plan will be subject to the clawback policy implemented by the Company. +• +No Transferability. Awards generally may not be transferred, except by will or the laws of descent and distribution or pursuant to a qualified domestic relations order, unless otherwise provided in the applicable award agreement. +• +No “Evergreen” Provision. Shares authorized for issuance under the 2020 Plan will not be replenished automatically. Any additional shares to be issued over and above the amount for which we are seeking authorization must be approved by our shareholders. +• +No Automatic Grants. There are no automatic grants to new participants or “reload” grants when outstanding awards are exercised, expire or are forfeited. +• +No Tax Gross-Ups. Participants do not receive tax gross-ups under the 2020 Plan. +Summary of the 2020 Plan +A description of the principal features of the 2020 Plan appears below. Because the following description is a summary, it may not contain all the information that may be important to you and it is qualified by reference to the full text of the 2020 Plan that is attached hereto as Appendix B. +Eligibility. Persons eligible for Awards (as defined in the 2020 Plan) are (i) all employees of the Company and its subsidiaries, (ii) non-employee directors and (iii) certain independent contractors. As of April 3, 2020, approximately 330 employees and ten non-employee directors would be eligible for grants of Awards under the 2020 Plan. +Shares Available for Awards. The 2020 Plan provides that up to 13,250,000 shares of common stock, plus the shares remaining available for Awards under the Prior Incentive Plan, may be issued, all of which may be issued as incentive stock options under Section 422 of the Tax Code. The closing price per share of our common stock on April 9, 2020 was $0.51. +64 CALLON PETROLEUM +PROPOSAL 3 +The number of shares of common stock that are the subject of Awards under the 2020 Plan or awards under the Prior Incentive Plan or the 2011 Plan that are forfeited or terminated, expire unexercised, withheld to satisfy withholding taxes in respect of such Awards, are settled in cash in lieu of common stock or are exchanged for Awards that do not involve common stock, immediately become available for additional Awards under the 2020 Plan. However, the number of shares reserved for issuance under the 2020 Plan is not increased by (i) shares of common stock not issued or delivered as a result of the net settlement of stock-settled SARs or stock option, (ii) shares of common stock used to pay the exercise price or withholding taxes related to an outstanding SAR or stock option or (iii) shares of common stock repurchased on the open market with the proceeds of the option exercise price. +Administration. The Compensation Committee administers the 2020 Plan for Awards to employees and independent contractors. The Board has the sole authority to grant Awards and administer the 2020 Plan for non-employee directors. The Compensation Committee has authority to amend or modify any Award in any manner that is either (i) not adverse to the participant holding the Award or (ii) consented to by that participant. +Except in connection with a transaction involving the Company or its capitalization, the terms of outstanding Awards may not be amended without approval of the shareholders of the Company to (i) reduce the exercise price of outstanding options or SARs, (ii) cancel, exchange, substitute, buyout or surrender outstanding options or SARs in exchange for cash or other Awards, (iii) take any other action with respect to a stock option or SAR that would be treated as a repricing under the rules and regulations of the principal national securities exchange on which the shares of common stock are listed or (iv) permit the grant of any stock options or SARs that contain a so-called “reload” feature under which additional stock options, SARs or other Awards are granted automatically to the participant upon exercise of the original stock option or SAR. +The Compensation Committee also may delegate to the CEO, other senior officers of the Company or to other committees of the Board its duties under the 2020 Plan to the extent allowed by applicable law. +The Compensation Committee will determine the employees and independent contractors to receive Awards and the terms, conditions and limitations applicable to each such Award, which conditions may, but need not, include continuous service with the Company, achievement of specific business objectives, increases in specified indices or other comparable measures of performance. +Amendment; Termination. The Board may amend, modify, suspend or terminate the 2020 Plan for the purpose of addressing any changes in legal requirements or for any other lawful purpose, except that (i) it may not adversely affect the rights of a participant under an outstanding Award without the consent of the participant and (ii) no amendment will be effective prior to its approval by the shareholders of the Company to the extent such approval is required by applicable law or applicable stock exchange rules. +Adjustment. As is customary in plans of this nature, the share limit and the number and kind of shares available under the amended 2020 Plan and any outstanding Awards, as well as the exercise or purchase prices of Awards, are subject to adjustment in the event of certain reorganizations, mergers, combinations, recapitalizations, stock splits, stock dividends, or other similar events that change the number or kind of shares outstanding, and extraordinary dividends or distributions of property to the shareholders. +Change in Control. The Compensation Committee (or the Board in the case of Awards to non-employee directors), in its sole discretion, will determine the treatment of Awards upon a change in control (as defined in the 2020 Plan). A “change in control” generally occurs upon the occurrence of any of the following: (i) a person other than an exempt person becomes the beneficial owner of more than 50% of the total fair market value or total voting power of the Company’s voting stock; (ii) during any 12-month period, a person other than an exempt person becomes the beneficial owner of 30% or more of the total voting power of the Company’s voting stock; (iii) during any three-year period, individuals who at the beginning of the period were members of the Board cease for any reason to constitute at least a majority of the Board unless the election of each new director was approved by a vote of at least a majority of the directors then still in office who were directors at the beginning of such period or whose election or nomination was previously so approved; or (iv) a person acquires assets of the Company that have a total gross fair market value equal to at least 40% of the total gross fair market value of all of the Company’s assets immediately before such acquisition; provided, however, that such transfer is not to an entity that is controlled by the shareholders of the Company immediately after the transfer. +Clawback. Awards under the 2020 Plan will be subject to the provisions of any clawback policy required by applicable law , or as otherwise determined by the Committee, and implemented by the Company, which clawback policy may provide for forfeiture, repurchase and/or recoupment of Awards and amounts paid or payable pursuant to or with respect to Awards. +2020 PROXY STATEMENT 65 +PROPOSAL 3 +Vesting Period. All Awards granted under the 2020 Plan would generally be subject to a one-year minimum vesting period; however, (i) up to 5% of all shares available under the 2020 Plan could be subject to a minimum vesting period that is less than one year, (ii) Awards granted to non-employee directors under the 2020 Plan in connection with an annual shareholders’ meeting would be deemed to satisfy such one-year minimum vesting requirement so long as such Awards vest upon the next annual shareholders’ meeting and such meeting is not less than 50 weeks from the grant date and (iii) any dividends or Dividend Equivalents (as defined in the 2020 Plan) issued in connection with any Award will not be subject to or counted for either such restrictions or such 5% share issuance limit.. +Awards. At the discretion of the Compensation Committee or the Board, as applicable, employees, independent contractors or non-employee directors may be granted Awards under the 2020 Plan in the form of stock options, SARs, restricted stock awards, RSUs (including phantom shares and phantom stock units), cash awards or performance awards. Such Awards may be granted individually, in combination or in tandem. +Options. Awards may be in the form of rights to purchase a specified number of shares of common stock at a specified price not less than that of the fair market value of a share of common stock on the date of grant (“Options”). An Option may be either an ISO that is intended to comply, or a nonqualified stock option (“NSO”) that is not intended to comply, with the requirements of Section 422 of the Tax Code; provided, however, that independent contractors and directors cannot be awarded ISOs. The Compensation Committee will determine the participants to receive Options and the terms, conditions and limitations applicable to each such Option. The term of each Option may not be longer than ten years from the date of grant. Any Option (i) that remains outstanding as of the last day of its term, (ii) has an exercise price per share that is less than the fair market value of a share of common stock as of such day and (iii) whose exercise is prohibited as of such day pursuant to the operation of the Company’s insider trading policy, shall be automatically exercised (without any action on the part of the participant holding such Option) by (a) foregoing the delivery of shares of common stock otherwise deliverable upon the exercise of the Option in an amount sufficient to pay the exercise price of the Option and (b) satisfying tax withholding obligations by withholding from the shares of common stock otherwise deliverable upon the exercise of the Option. +SARs. Awards may also be in the form of SARs, which are rights to receive a payment, in cash or common stock, equal to the fair market value of a number of shares of common stock on the SARs’ exercise date over a specified strike price that is not less than the fair market value on the date of grant. The term of each SAR may not be longer than ten years from the date of grant. Any SAR (i) that remains outstanding as of the last day of its term, (ii) has a strike price per share that is less than the fair market value of a share of common stock as of such day and (iii) whose exercise is prohibited as of such day pursuant to the operation of the Company’s insider trading policy, shall be automatically exercised (without any action on the part of the participant holding such SAR) and any tax withholding obligations will be satisfied by withholding from the cash or shares of common stock otherwise deliverable upon the exercise of the SAR. +Stock Awards. Awards may also be in the form of grants of common stock or units denominated in common stock, including restricted stock, RSUs, phantom shares and phantom stock units (“Stock Awards”). The terms, conditions and limitations applicable to any Stock Award will be determined by the Compensation Committee. At the discretion of the Compensation Committee, the terms of a Stock Award may include rights to receive dividends or Dividend Equivalents, which will only be paid if the underlying shares vest pursuant to the terms of the Stock Award. +Cash Awards. Awards may also be in the form of grants denominated in cash. The terms, conditions and limitations applicable to any cash awards granted pursuant to the 2020 Plan will be determined by the Compensation Committee. +Performance Awards. At the discretion of the Compensation Committee, any of the above-described Awards may be made in the form of a Performance Award (as defined in the 2020 Plan). A Performance Award shall be paid, vested or otherwise deliverable solely on account of the attainment of one or more performance goals, either individually or in any combination, established by the Compensation Committee and specified in the award agreement. +A performance goal need not be based upon an increase or positive result under a particular business criterion and could include, for example, maintaining the status quo or limiting economic losses (measured, in each case, by reference to specific business criteria). The amount of cash or shares payable or vested pursuant to Performance Awards may be adjusted upward or downward, either on a formula or discretionary basis or any combination, as the Compensation Committee determines. +Director Award Limits. No non-employee director may be granted during any calendar year Awards (in his or her capacity as a director) having a fair value determined on the date of grant when added to all cash compensation paid to the non-employee director during the same calendar year in excess of $1,000,000. +66 CALLON PETROLEUM +PROPOSAL 3 +Withholding. We have the right to deduct applicable taxes in connection with the payment or vesting of any Award, and the Compensation Committee may also permit withholding obligations to be satisfied by the transfer of shares of common stock previously owned by the participant or by withholding shares of common stock otherwise deliverable under the Award, in either case up to the maximum tax rate applicable to the participant. +U.S. Federal Income Tax Consequences +The following is a summary of the general rules of current U.S. federal income tax laws relating to the tax treatment of Awards that may be issued under the 2020 Plan based on the law as in effect on the date of the filing of this Proxy Statement. The discussion is not complete and general in nature and does not take into account a number of considerations that may apply in light of the particular circumstances of a participant. This summary does not attempt to describe any tax consequences arising in the context of the participant’s death or the income tax laws of any local, state or foreign country in which the participant’s income or gain may be taxable. +Restricted Stock. A participant generally recognizes no taxable income at the time of an award of restricted stock. A participant may, however, make an election under Section 83(b) of the Tax Code to have the grant taxed as compensation income at the date of receipt, with the result that any future appreciation or depreciation in the value of the shares of stock granted may be taxed as capital gain or loss on a subsequent sale of the shares. If the participant does not make a Section 83(b) election, the grant will be taxed as compensation income at the full fair market value on the date the restrictions imposed on the shares expire. Unless a participant makes a Section 83(b) election, any dividends paid to the participant on the shares of restricted stock will generally be compensation income to the participant and deductible by us as compensation expense. In general, we will receive a deduction for U.S. federal income tax purposes for any compensation income taxed to the participant. To the extent a participant realizes capital gains, as described above, we will not be entitled to any deduction for federal income tax purposes. +Restricted Stock Units. A participant who is granted RSUs will recognize no income upon grant of the RSUs. At the time the underlying shares of common stock (or cash in lieu thereof) are delivered to a participant, the participant will recognize compensation income equal to the full fair market value of the shares received. We will generally be entitled to a deduction for U.S. federal income tax purposes that corresponds to the compensation income recognized by the participant. +Options. Options granted under the 2020 Plan may constitute ISOs within the meaning of Section 422 of the Tax Code, while other options granted under the 2020 Plan may constitute NSOs. Grants of Options to non-employee directors and independent contractors are NSOs. The Tax Code provides for tax treatment of Options qualifying as ISOs that may be more favorable to participants than the tax treatment accorded NSOs. Generally, upon the exercise of an ISO, the optionee will recognize no taxable income for U.S. federal income tax purposes, although the difference between the exercise price of the ISO and the fair market value of the stock at the date of exercise is an addition to income in determining alternative minimum taxable income and such amount may be sufficient in amount to subject the optionee to the alternative minimum tax. On the sale of shares acquired by exercise of an ISO (assuming that the sale does not occur within two years of the grant date or within one year of the exercise date), any gain will be taxed to the optionee as long-term capital gain. Except with respect to death or disability, an optionee has three months after termination of employment in which to exercise an ISO and retain favorable tax treatment at exercise. No deduction is available to the Company upon the grant or exercise of an ISO (although a deduction may be available if the participant disposes of the shares so purchased before the applicable holding periods expire). +In contrast, upon the exercise of an NSO, the optionee recognizes ordinary taxable income on the exercise date in an amount equal to the excess of the fair market value of the shares purchased over the exercise price. Upon the sale of such shares by the optionee, any difference between the fair market value at the date of sale and the fair market value at the date of exercise will be treated generally as capital gain or loss. Subject to the limitations discussed below, upon exercise of an NSO, the Company is entitled to a tax deduction in an amount equal to the ordinary taxable income recognized by the participant. +SARs. Participants do not recognize taxable income upon the grant of a SAR. Upon the exercise of a SAR, the participant will recognize ordinary income in an amount equal to the cash or fair market value of the shares of stock received at the date of exercise of the SAR. The participant’s tax basis in any shares of common stock received on the exercise of a SAR will generally equal the fair market value of such shares on the date of exercise. Subject to the limitations discussed below, the Company will be entitled to a deduction for U.S. federal income tax purposes that corresponds as to timing and amount with the taxable income recognized by the participant under the foregoing rules. +2020 PROXY STATEMENT 67 +PROPOSAL 3 +Deductibility; Excise Taxes +Tax Code Section 162(m). Under Code Section 162(m), no deduction is allowed in any taxable year of the Company for compensation in excess of $1 million paid to the Company’s “covered employees.” A “covered employee” is any individual who has served at any time after December 31, 2016 as the Company’s chief executive officer, chief financial officer, or other executive officer whose compensation has been reported in a Company proxy statement, regardless of whether any such individual is still employed by the Company. We may be prohibited under Code Section 162(m) from deducting compensation paid pursuant to the 2020 Plan to our “covered employees.” See also “Compensation Discussion and Analysis-Internal Revenue Service Limitations” for an additional discussion of Section 162(m) of the Tax Code. +Change in Control. The acceleration of the exercisability or the vesting of an Award upon the occurrence of a change in control may result in an “excess parachute payment” within the meaning of Section 280G of the Tax Code. A “parachute payment” occurs when an employee receives payments contingent upon a change in control that exceed an amount equal to three times his or her “base amount.” The term “base amount” generally means the average annual compensation paid to such employee during the five calendar years preceding the calendar year in which the change in control occurs. An “excess parachute payment” is the excess of all parachute payments made to the employee on account of a change in control over the employee’s base amount. If any amount received by an employee is characterized as an excess parachute payment, the employee is subject to a 20% excise tax on the amount of the excess, and the Company is denied a tax deduction with respect to such excess. +Tax Code Section 409A. Section 409A of the Tax Code generally provides that any deferred compensation arrangement must satisfy specific requirements, both in operation and in form, regarding (i) the timing of payment, (ii) the advance election of deferrals and (iii) restrictions on the acceleration of payment. Failure to comply with Section 409A of the Tax Code may result in the early taxation (plus interest) to the participant of deferred compensation and the imposition of a 20% penalty on the participant on such deferred amounts included in the participant’s taxable income. The Company intends to structure Awards under the 2020 Plan in a manner that is designed to be exempt from or comply with Section 409A of the Tax Code. +2020 Plan Future Benefits +The allocation of some of the shares that would become available for issuance under the 2020 Plan is not currently determinable, as such allocation depends on future decisions to be made by the Compensation Committee or the Board in their sole discretion, subject to applicable provisions of the 2020 Plan. No Awards have been granted that are contingent on the approval of the 2020 Plan. Therefore, it is not possible to determine the benefits that will be received in the future by participants in the 2020 Plan or the benefits that would have been received by such participants if the 2020 Plan had been in effect in the year ended December 31, 2019. Certain tables in this Proxy Statement set forth information with respect to prior awards granted to our NEOs under the Prior Incentive Plan currently in effect or the 2011 Plan. +Because future Awards are in the discretion of the Board and Compensation Committee, the number of shares subject to future Awards could increase or decrease and the type and terms of future Awards could change as well, all without the need for future shareholder approval. +Board Recommendation and Vote Required +The Board believes that the approval of the 2020 Plan is in the best interest of the Company and its shareholders. The Board therefore recommends a vote for the 2020 Plan, and it is intended that the proxies not marked to the contrary will be so voted. Because approval of the 2020 Plan will increase the number of shares available for issuance to all directors and executive officers of the Company, each of the directors and executive officers of the Company has an interest and may benefit from the approval of the 2020 Plan. +Pursuant to our bylaws, approval of the 2020 Plan requires the affirmative vote of a majority of the common shares present in person or by proxy and entitled to vote on the proposal. In addition to the vote required by our bylaws, under NYSE rules, approval of the 2020 Plan requires approval of a majority of votes cast on the proposal. In both cases, abstentions will have the effect of a vote cast against the proposal. Broker non-votes will not be counted as shares present and entitled to vote and so will have no effect upon the outcome of the vote. +68 CALLON PETROLEUM +PROPOSAL 3 +Equity Compensation Plan Information +The following table provides information regarding the shares of our common stock that may be issued under our existing equity compensation plan, the LTIP, as of April 3, 2020. The number of securities reported in column (c) as available for future issuance does not include any of the additional shares under the LTIP that shareholders are being asked to approve at the 2020 Annual Meeting. +Plan Category +Number of securities to be issued upon exercise of outstanding options, warrants and rights +(a) (1) +Weighted-average exercise price of outstanding options, warrants and rights +(b) (2) +Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column(a)) +(c) (3)(4) +Equity compensation plans approved by security holders +10,870,000 +— +5,850,000 +Equity compensation plans not approved by security holders +— +— +— +Total +10,870,000 +— +5,850,000 +(1) +Reflects 4,620,000 outstanding RSUs and 6,250,000 stock-settled PSUs assuming vesting at maximum performance level. +(2) +The weighted-average exercise prices of outstaning options is omitted because no options or equity-based stock appreciation rights were outstanding as of April 3, 2020. +(3) +The number of securities remaining available for future issuances has been reduced by the number of securities to be issued pursuant to RSUs subject to time vesting and PSUs subject to certain market‑based performance goals over a specified period of time assuming vesting at the maximum performance level. +(3) +The number of securities remaining available for future issuance includes approximately 3,430,000 shares available for grant only to legacy Carrizo employees and approximately 2,420,000 shares available for grant to any eligible grantee. +The Board recommends a vote FOR the approval of the 2020 Plan. +2020 PROXY STATEMENT 69 +Proposal 4 +Ratification of the Appointment of the Independent Registered Public Accounting Firm, Grant Thornton LLP, for 2020. +The Board recommends that you vote “ FOR ” the ratification of the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2020. +• The Board and the Audit Committee believe the retention of Grant Thornton LLP is in the best interests of Callon and its shareholders based on the information presented below. +The Audit Committee has appointed Grant Thornton LLP, as the independent registered public accounting firm to audit our consolidated financial statements for the year ending December 31, 2020. We are asking shareholders to ratify this appointment. Grant Thornton LLP has served as the Company’s independent registered public accounting firm since being appointed effective March 3, 2016. A representative of Grant Thornton LLP will be present at the Annual Meeting and will have the opportunity to make a statement, if they desire, and to respond to appropriate questions from shareholders. +Fees +The following table sets forth the fees incurred by us for services performed by Grant Thornton LLP in the fiscal years 2018 and 2019: +Fee Category +2018 +2019 +Audit fees (a) +$ +959,652 +$ +1,187,217 +Audit-related fees (b) +$ +0 +$ +0 +Tax fees (c) +$ +21,647 +$ +108,385 +All other fees (d) +$ +0 +$ +0 +Total +$ +981,299 +$ +1,295,602 +(a) +Audit fees consist of the aggregate fees billed for professional services related to the audit and quarterly reviews of our financial statements and for services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements. +(b) +Audit-related fees consist of the aggregate fees billed for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements that are not reported above under “Audit” fees. +(c) +Tax fees consist of the aggregate fees billed for professional services rendered for tax compliance (including filing state and federal tax returns), tax advice and tax planning. Tax fees do not include fees for services rendered in connection with the audit. +(d) +Other fees consist of the aggregate fees billed for professional services other than the services repo rted above. +Pre-approval policy +The Audit Committee pre-approves all audit and permissible non-audit services (including the fees and terms thereof) exceeding $25,000 to be performed on behalf of the Company by our independent registered public accounting firm, as required by applicable law or listing standards and subject to the terms of the audit and non-audit services pre-approval policy in accordance with the Audit Committee charter. The Committee may delegate authority to one or more of its members when appropriate, including the authority to grant pre-approvals of audit and permitted non-audit services, provided that any decisions to grant pre-approvals are consistent with the terms of the delegation and the Audit Committee charter and are presented to the full Committee at its next scheduled meeting. +Required Vote +The submission of this matter for approval by shareholders is not legally required. However, the Board and Audit Committee believe that this submission is consistent with best practices in corporate governance and is an opportunity for shareholders to provide direct feedback to the Board and Audit Committee on an important issue of corporate governance. Although the results of the vote are not binding on the Audit Committee, if the appointment is not ratified the Audit Committee will consider whether it should select another independent registered public accounting firm. +70 CALLON PETROLEUM +PROPOSAL 4 +This proposal will be approved if it receives the affirmative vote of a majority of shares of our common stock present and entitled to vote at the Annual Meeting. If you hold your shares through a broker and you do not instruct the broker how to vote, your broker will have the authority to vote your shares in its discretion on this proposal. Abstentions will have the effect as a vote cast against this proposal. +The Board recommends a vote FOR the ratification of the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm. +Audit Committee Report +Acting pursuant to its charter, the Audit Committee reviewed and discussed the Company’s audited financial statements for the year ended December 31, 2019, with management and Grant Thornton LLP, and recommended to the Board that the audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, for filing with the SEC. This recommendation was based on: +• +The Audit Committee’s review of the audited financial statements; +• +Discussion of the financial statements with management; +• +Discussion with our independent registered public accounting firm, Grant Thornton LLP, of the matters required to be discussed by auditing standards generally accepted in the United States of America, including the communication matters required to be discussed by Auditing Standard No. 1301, Communications with Audit Committees, issued by the Public Company Accounting Oversight Board; +• +Receipt from Grant Thornton LLP of the written disclosures and letter required by Public Company Accounting Standards Board Rule 3526 (Communications with Audit Committees Concerning Independence); +• +Discussions with Grant Thornton LLP regarding its independence from Callon, the Board and our management; +• +Grant Thornton LLP’s confirmation that it would issue its opinion that the consolidated financial statements present fairly, in all material respects, our financial position and the results of our operations and cash flows for the periods presented in conformity with accounting principles generally accepted in the United States of America; and +• +Other matters the Audit Committee deemed relevant and appropriate. +Management is responsible for the preparation, presentation and integrity of our consolidated financial statements in accordance with Generally Accepted Accounting Principles (“GAAP”), the establishment and maintenance of our disclosure controls and procedures, and the establishment, maintenance and evaluation of the effectiveness of our internal controls over financial reporting. The independent registered public accounting firm is responsible for performing an independent audit of our consolidated financial statements and internal control over financial reporting in accordance with the standards of the PCAOB and issuing reports thereon. The Audit Committee’s responsibilities include monitoring and overseeing these processes. +Members of the Audit Committee rely, without independent verification, on the information provided to them and on the representations made by management and our independent registered public accounting firm. The Audit Committee’s considerations and discussions referred to above do not assure that the audit of our financial statements and internal control over financial reporting have been carried out according to the standards of the PCAOB, that the financial statements are presented according to GAAP, or that Grant Thornton LLP is in fact independent. +Respectfully submitted by the Audit Committee of the Board of Directors, +Anthony J. Nocchiero, Chairman +Barbara J. Faulkenberry +Michael L. Finch +L. Richard Flury +Larry D. McVay +Steven A. Webster +2020 PROXY STATEMENT 71 +Proposal 5 +Approve the Reverse Stock Split +The Board of Directors recommends a vote FOR the approval of an amendment to the certificate of incorporation to permit us to effect the Reverse Stock Split, as disclosed in this Proxy Statement. +• Provides the Company with the flexibility to effect, at any time on or prior to the first anniversary of the Annual Meeting and without the need for any further action on the part of our shareholders, a Reverse Stock Split of our common stock in a manner designed to maximize the anticipated benefits for our shareholders. +We are seeking shareholder approval for a proposal to adopt an amendment to our certificate of incorporation to permit us to effect the Reverse Stock Split of our issued and outstanding common stock by a ratio within a range of 1-for-10 and 1-for-50. If approved by the shareholders, the proposal will authorize our Board, in its sole discretion, to effectuate the Reverse Stock Split at any time prior to the first anniversary of the Annual Meeting. +The form of the amendment to our certificate of incorporation to effect the Reverse Stock Split is set forth on Appendix C. Approval of the proposal would permit (but not require) the Board to effect the Reverse Stock Split by a ratio of not less than 1-for-10 and not more than 1-for-50, with the exact ratio to be determined by the Board in its sole discretion. The exact ratio of the Reverse Stock Split would be determined by the Board prior to the effective time of the split and publicly announced by the Company prior to the effective time of the split. We believe that enabling the Board to set the ratio of the Reverse Stock Split within the stated range will provide us with the flexibility to implement the Reverse Stock Split in a manner designed to maximize the anticipated benefits for our shareholders. In determining a ratio of the Reverse Stock Split, if any, following the receipt of shareholder approval, the Board may consider, among other things, factors such as: +• +the existing and expected marketability and liquidity of our common stock; +• +the historical trading prices and trading volume of our common stock; +• +listing requirements of the NYSE or other applicable exchange or trading venues; +• +the number of shares of our common stock outstanding; +• +the then-prevailing trading price and trading volume of our common stock and the anticipated or actual impact of the Reverse Stock Split on the trading price and trading volume for our common stock; +• +the anticipated impact of a particular ratio on our ability to reduce administrative and transactional costs; and +• +the outlook for oil price volatility and other prevailing general market and economic conditions. +The Board reserves the right to not effect a Reverse Stock Split if it determines, in its sole discretion, that the Reverse Stock Split is not in the best interests of the Company and its shareholders. +Depending on the ratio for the Reverse Stock Split determined by the Board, no less than every 10 and no more than every 50 shares of common stock will be combined into one share of common stock. As described in Proposal 6 and subject to shareholder approval thereof, if the Reverse Stock Split is effectuated, it is the Board's intent to amend our certificate of incorporation to reduce the authorized number of shares of common stock in proportion to the Reverse Stock Split. Except for the shares issuable upon the exercise or conversion of our outstanding common stock warrants or outstanding awards under our equity incentive plans, we do not currently have any plans, proposals or arrangement to issue any of our authorized but unissued shares of common stock. +Reasons for the Reverse Stock Split; Potential Consequences of the Reverse Stock Split +NYSE Listing +On April 10, 2020, we were notified by the NYSE that the average closing price of our common stock had fallen below $1.00 per share over a period of 30 consecutive trading days, which is the minimum average share price for continued listing on the NYSE. We have a six-month cure period to regain compliance. We may regain compliance if (i) the closing price per share is $1.00 or higher on the last trading day of any calendar month within the cure period and the average closing price per share is $1.00 or higher over the 30 trading-day period ending on such day or (ii) the closing price per share is $1.00 or higher on the last trading day at the end of the cure period and the average closing price per share is $1.00 or higher over the 30 trading-day period ending on such day. +The Board is thus seeking shareholder approval to permit us to effect the Reverse Stock Split to increase the per share price of our common stock. There can be no assurances, however, that we will be able to regain compliance with the NYSE’s continued +72 CALLON PETROLEUM +PROPOSAL 5 +listing standards and that our common stock will remain listed on the NYSE. If we effectuate the Reverse Stock Split, the minimum share price deficiency will be deemed cured if the per share price of our common stock promptly exceeds $1.00, and the per share price of our common stock remains above that level for at least the following 30 trading days. If we are not able to regain compliance with the NYSE’s continued listing standards in the applicable time period, the NYSE may initiate procedures to suspend and delist our common stock. If our stock is delisted, then our common stock would likely become traded on an over-the-counter market such as those maintained by OTC Markets Group Inc., which do not have the substantial corporate governance or quantitative listing requirements for continued trading that NYSE has. A delisting could negatively affect the market price of our common stock, reduce the number of investors willing to hold or acquire our common stock, limit our ability to issue additional securities or obtain additional financing in the future, affect our ability to provide equity incentives to our employees, and might negatively impact our reputation and, as a consequence, our business. +Marketability of our Common Stock +We believe that the increased stock price that may result from Reverse Stock Split will make our common stock more attractive to a broader range of institutional and other investors, as we have been advised that the current market price of our common stock may affect its acceptability to certain institutional investors, professional investors and other members of the investing public. Many brokerage houses and institutional investors have internal policies and practices that either prohibit them from investing in low-priced stocks or tend to discourage individual brokers from recommending low-priced stocks to their customers. In addition, some of those policies and practices may function to make the processing of trades in low-priced stocks economically unattractive to brokers. Moreover, because brokers’ commissions on low-priced stocks generally represent a higher percentage of the stock price than commissions on higher-priced stocks, the current average price per share of common stock can result in individual shareholders paying transaction costs representing a higher percentage of their total share value than would be the case if the share price were substantially higher. We believe that the Reverse Stock Split will make our common stock a more attractive and cost effective investment for investors. +Other Considerations +In addition to the increased stock price that may result from Reverse Stock Split, we believe that a Reverse Stock Split will provide the Company and its shareholders with other benefits. Currently, the fees that we pay to list our shares on the NYSE are based on the number of shares we have outstanding. Also, the fees that we pay for custody and clearing services, the fees that we pay to the SEC to register securities for issuance and the costs of our proxy solicitations are all based on or related to the number of shares. Reducing the number of shares that are outstanding and that will be issued in the future may reduce the amount of fees and taxes that we pay to these organizations and agencies, as well as other organizations and agencies that levy charges based on the number of shares rather than the value of the shares. +Reducing the number of outstanding shares of common stock through the Reverse Stock Split is intended, absent other factors, to increase the per share market price of our common stock. However, other factors, such as commodity prices for oil and gas, our financial results, market conditions and the market perception of our business may adversely affect the market price of our common stock. As a result, there can be no assurance that the Reverse Stock Split, if completed, will result in the intended benefits described above, that the market price of our common stock will increase following the Reverse Stock Split in proportion to the reduction in the number of shares of our common stock outstanding before the Reverse Stock Split or that the market price of our common stock will not decrease in the future. Accordingly, the total market capitalization of our common stock after the Reverse Stock Split may be lower than the total market capitalization before the Reverse Stock Split. Furthermore, the liquidity of our common stock may be decreased by the proposed Reverse Stock Split given the reduced number of shares that would be outstanding after the Reverse Stock Split. +Not a "Going Private Transaction" +Notwithstanding the decrease in the number of issued and outstanding shares following the Reverse Stock Split, the Board does not intend for this transaction to be the first step in a series of plans or proposals of a “going private transaction” within the meaning of Rule 13e-3 of the Exchange Act. +Determination of the Specific Reverse Stock Split Ratio +If the Board chooses to implement the Reverse Stock Split, the Board’s selection of the specific reverse stock split ratio will be based primarily on the price of our common stock immediately prior to the Reverse Stock Split and the expected stability of that price. We expect that the primary focus of the Board will be to select a ratio that they believe is likely to result in increased marketability and liquidity of our common stock and encourage interest and trading in our common stock for the reasons discussed under “Background and Reasons for the Reverse Stock Split; Potential Consequences of the Reverse Stock Split” above. +2020 PROXY STATEMENT 73 +PROPOSAL 5 +We believe that granting the Board the authority to set the ratio for the Reverse Stock Split is essential because it provides the Board with the maximum flexibility to react to changing market conditions and to therefore act in the best interests of the Company and our shareholders. If the Board implements the Reverse Stock Split, the Company will make a public announcement regarding the determination of the exact reverse stock split ratio. +Procedure for Implementing the Reverse Stock Split +The Reverse Stock Split would become effective upon the filing of a certificate of amendment to our certificate of incorporation with the Secretary of State of the State of Delaware. The exact timing of the filing of the certificate of amendment that will effect the Reverse Stock Split will be determined by the Board, in its sole discretion, provided that in no event shall the filing occur after the first anniversary of the Annual Meeting. +Amendment Effective Time +The effective date of the Reverse Stock Split will be the date on which the certificate of amendment to our certificate of incorporation to effect the amendment contemplated by this proposal is accepted and recorded by the Delaware Secretary of State (subject to any specific future time of effectiveness stated therein) in accordance with Section 103 of the Delaware General Corporation Law (the "DGCL"). The exact timing of the filing of the amendment will be determined by the Board based on its assessments of the best interests of the Company and its shareholders. Except as explained herein with respect to fractional shares, on the effective date of the amendment to effect the Reverse Stock Split, shares of the common stock issued and outstanding will be combined and converted, without any action on the part of the shareholders, into new shares of the common stock in accordance with the reverse stock split ratio determined by the Board. +Reservation of Right to Abandon Reverse Stock Split +The Board reserves the right, notwithstanding shareholder approval of this Proposal 5 and without further action by the shareholders, to elect not to proceed with the Reverse Stock Split if the Board, in its sole discretion, determines that it is no longer in the Company’s best interests and the best interests of our shareholders to proceed with the Reverse Stock Split. Such determination will be based upon factors the Board deems appropriate, including the Company’s then current stock price, the existing and expected marketability and liquidity of our common stock, prevailing market conditions and the likely effect on the market price of our common stock. If a certificate of amendment effecting the Reverse Stock Split has not been filed with the Secretary of State of the State of Delaware on or before the first anniversary of the Annual Meeting, the Board will be deemed to have abandoned the Reverse Stock Split. +Effect of the Reverse Stock Split on Holders of Outstanding Common Stock +After the effective date of the Reverse Stock Split, each holder of our common stock will own fewer shares of common stock, and the total number of issued and outstanding shares of common stock will be reduced in proportion to the reverse stock split ratio determined by the Board. See “Proposal 6-Approval of the Authorized Share Reduction-Effects of the Authorized Share Reduction” for an illustrative example of the effect of both the Reverse Stock Split and the Authorized Share Reduction on the number of authorized, issued and outstanding and available shares of common stock. +The Reverse Stock Split will affect all holders of our common stock uniformly and will not affect any shareholder’s percentage ownership interest in the Company, except that, as described herein under “-Fractional Shares,” record holders of common stock otherwise entitled to a fractional share as a result of the Reverse Stock Split will receive cash in lieu of such fractional share. In addition, the Reverse Stock Split will not affect any shareholder’s proportionate voting power (subject to the treatment of fractional shares). For example, a holder of 2% of the voting power of the outstanding shares of common stock immediately prior to the Reverse Stock Split would continue to hold 2% of the voting power of the outstanding shares of common stock immediately after the Reverse Stock Split (subject to adjustment for any payment of cash in lieu of fractional shares). +The number of shareholders of record will not be affected by the Reverse Stock Split (except to the extent that any shareholder holds only a fractional share interest and receives cash for such interest after the Reverse Stock Split). +The Reverse Stock Split may result in some shareholders owning “odd lots” of less than 100 shares of common stock. Odd lot shares may be more difficult to sell, and brokerage commissions and other costs of transactions in odd lots may be higher than the costs of transactions in “round lots” of even multiples of 100 shares. +After the effective time of the Reverse Stock Split, our common stock will have a new Committee on Uniform Securities Identification Procedures (CUSIP) number, which is a number used to identify our equity securities, and stock certificates with the older CUSIP numbers will need to be exchanged for stock certificates with the new CUSIP numbers by following the procedures described below. After the Reverse Stock Split, we will continue to be subject to the periodic reporting and other requirements of the Exchange Act. +74 CALLON PETROLEUM +PROPOSAL 5 +Authorized Shares of Common Stock +Unless “Proposal 6-Approve the Authorized Share Reduction” is approved by the shareholders, the Reverse Stock Split will not change the number of authorized shares of our common stock under our certificate of incorporation. Because the number of shares of issued and outstanding common stock will decrease as a result of the Reverse Stock Split, the number of common stock available for issuance will increase. Currently, we are authorized to issue up to a total of 527,500,000 shares of capital stock, comprising 525,000,000 shares of common stock and 2,500,000 shares of preferred stock. Except for the shares issuable upon the exercise or conversion of our common stock warrants or outstanding awards under our equity incentive plans, we do not currently have any plans, proposals or arrangement to issue any of our authorized but unissued shares of common stock. +Exchange of Stock Certificates +If the Reverse Stock Split is effected, shareholders holding certificated shares (i.e., shares represented by one or more physical stock certificates) will be requested to exchange their old stock certificate(s) (“Old Certificate(s)”) for shares held electronically in book-entry form through the Depository Trust Company’s Direct Registration System representing the appropriate number of whole shares of our common stock resulting from the Reverse Stock Split. This means that, instead of receiving a new stock certificate, shareholders holding certificated shares prior to the effective time of the Reverse Stock Split will receive a statement of holding indicating the number of shares held by them electronically in book-entry form after giving effect to the Reverse Stock Split. Shareholders of record upon the effective time of the Reverse Stock Split will be furnished the necessary materials and instructions for the surrender and exchange of their Old Certificate(s) at the appropriate time by our transfer agent, American Stock Transfer & Trust Company, LLC (the “transfer agent”). Shareholders will not have to pay any transfer fee or other fee in connection with such exchange. As soon as practicable after the effective time of the Reverse Stock Split, the transfer agent will send a transmittal letter to each shareholder advising such holder of the procedure for surrendering Old Certificate(s) in exchange for new shares held in book-entry form. Your Old Certificate(s) representing pre-split shares cannot be used for either transfers or deliveries. Accordingly, you must exchange your Old Certificate(s) in order to effect transfers or deliveries of your shares. +YOU SHOULD NOT SEND YOUR OLD CERTIFICATES NOW. YOU SHOULD SEND THEM ONLY IF YOU RECEIVE A LETTER OF TRANSMITTAL FROM THE TRANSFER AGENT. +As soon as practicable after the surrender to the transfer agent of any Old Certificate(s), together with a properly completed and duly executed transmittal letter and any other documents the transfer agent may specify, the transfer agent will have its records adjusted to reflect that the shares represented by such Old Certificate(s) are held in book-entry form in the name of such person. +Until surrendered as contemplated herein, a shareholder’s Old Certificate(s) shall be deemed at and after the effective time of the Reverse Stock Split to represent the number of whole shares of our common stock resulting from the Reverse Stock Split. +Any shareholder whose Old Certificate(s) have been lost, destroyed or stolen will be entitled to new shares in book-entry form only after complying with the requirements that we and our transfer agent customarily apply in connection with lost, stolen or destroyed certificates. +No service charges, brokerage commissions or transfer taxes shall be payable by any holder of any Old Certificate to effectuate an exchange as described above. +Any shareholder who wants to continue holding certificated shares may request new certificate(s) from the transfer agent. +Shareholders who hold only uncertificated shares, either as direct or beneficial owners, will have their holdings electronically adjusted by the transfer agent and, for beneficial owners, by their brokers or banks which hold in “street name” for their benefit, as the case may be to give effect to the Reverse Stock Split. +No Appraisal Rights +Under the DGCL, holders of our Common Stock will not be entitled to dissenter's rights or appraisal rights with respect to the Reverse Stock Split. +Fractional Shares +Fractional shares will not be issued in connection with the Reverse Stock Split. Shareholders who would otherwise hold fractional shares of our common stock as a result of the Reverse Stock Split will be entitled to receive cash (without interest and subject to applicable withholding taxes) in lieu of such fractional shares. To avoid the existence of fractional shares of the common stock, shares that would otherwise result in fractional shares from the application of the Reverse Stock Split will be +2020 PROXY STATEMENT 75 +PROPOSAL 5 +collected and pooled by the transfer agent and sold in the open market, and the proceeds will be allocated to the shareholders’ respective accounts pro rata in lieu of fractional shares. The Company will not receive any proceeds from any such sales. The ownership of a fractional interest will not give the holder any voting, dividend or other rights, except to receive the above-described cash payment. The Company will be responsible for any brokerage fees or commissions related to the transfer agent’s selling in the open market shares that would otherwise represent fractional shares. +Shareholders should be aware that, under the escheat laws of the various jurisdictions where shareholders reside, where we are domiciled and where the funds will be deposited, sums due for fractional interests resulting from the Reverse Stock Split that are not timely claimed after the effective time in accordance with applicable law may be required to be paid to the designated agent for each such jurisdiction. Thereafter, if applicable, shareholders otherwise entitled to receive such funds, but who do not receive them due, for example, to their failure to timely comply with the transfer agent’s instructions (described herein), may have to seek to obtain them directly from the state to which they were paid. +Effect of the Reverse Stock Split on Common Stock Warrants +Pursuant to the agreement governing our common stock warrants, upon effectiveness of the Reverse Stock Split, the exercise price shall be divided by a fraction, the numerator of which is equal to the number of shares of common stock outstanding immediately prior to the effective date of the Reverse Stock Split and the denominator of which is equal to the number of shares of common stock outstanding immediately after the opening of business on the effective date of the Reverse Stock Split. In any such event, the number of shares of common stock issuable upon exercise of each warrant at the time of the effective date of the Reverse Stock Split shall be proportionately adjusted so that the warrant holder, after such date, shall be entitled to purchase the number of shares of common stock that such holder would have owned or been entitled to receive in respect of the shares of common stock subject to the warrant after such date had the warrant been exercised immediately prior to such date. +Effect of the Reverse Stock Split on Equity Incentive Plans and Awards +If the Reverse Stock Split is effectuated, the number of shares of common stock available for grant under our equity incentive plans, as well as the number of shares of common stock subject to outstanding equity awards, would be reduced in proportion to the Reverse Stock Split. +Under the terms of the proposed 2020 Plan as well as the Prior Incentive Plan, in the event of a Reverse Stock Split the Board will reduce the number of shares of common stock available for issuance under the plans in proportion to the ratio of the Reverse Stock Split. For illustrative purposes only, the following table shows the approximate effect on shares available for issuance under the Prior Incentive Plan and the proposed 2020 Plan (if approved by shareholders) in the event of a 1-for-10 and a 1-for-50 reverse stock split as of April 3, 2020: +Number of Shares of Common Stock Remaining Available for Future Issuance as of April 3 +Number of Shares of Common Stock Remaining Available for Future Issuance After Reverse Stock Split +1:10 +1:50 +Prior Incentive Plan (a) +5,850,000 +585,000 +117,000 +2020 Plan (b) +13,250,000 +1,325,000 +265,000 +(a) +Please see Proposal 3, and specifically the table on page 68, for more information about the Prior Incentive Plan and the shares available for issuance thereunder. If the 2020 Plan is approved by the shareholders, the shares available for issuance under the Prior Incentive Plan will be transferred to the 2020 Plan. +(b) +These shares will become available only if Proposal 3 is approved by the shareholders. Please see Proposal 3 for more information about the 2020 Plan. +In addition, in connection with any Reverse Stock Split the Board will reduce the cash or shares of common stock issuable under outstanding equity awards in proportion to the ratio of the Reverse Stock Split. The Board will also make proportional adjustments to the calculation of the Company’s total shareholder return under the outstanding performance share unit awards and to the exercise price of the outstanding cash stock appreciation rights. These adjustments will be made by the Board as necessary to maintain the proportionate interest of the holders of the awards and preserve, without exceeding, the value of such awards, and the Board’s determination as to what of the adjustments shall be final, binding and conclusive. +76 CALLON PETROLEUM +PROPOSAL 5 +Regulatory Effects +The common stock is currently registered under Section 12(b) of the Exchange Act, and the Company is subject to the periodic reporting and other requirements of the Exchange Act. The Reverse Stock Split will not affect the registration of the common stock under the Exchange Act or the Company’s obligation to publicly file financial and other information with the SEC. If the Reverse Stock Split is implemented, the common stock will continue to trade on the NYSE under the symbol “CPE” (although the NYSE would likely add the letter “D” to the end of the trading symbol for a period of 20 trading days to indicate that the Reverse Stock Split has occurred). +Interests of Certain Persons in the Proposal +Certain of the Company’s officers and directors have an interest in this proposal as a result of their ownership of shares of stock of the Company, as set forth in the section entitled “Beneficial Ownership of Securities” below. However, the Company does not believe that its officers or directors have interests in the Reverse Stock Split that are different from or greater than those of any other shareholder of the Company. +Accounting Matters +The amendment to our certificate of incorporation will not affect the par value of our common stock per share, which will remain $0.01 per share. As a result, as of the effective time of the Reverse Stock Split, the stated capital attributable to common stock and the additional paid-in capital on our balance sheet will, in total, not change due to the Reverse Stock Split. However, the allocation between the stated capital attributable to common stock and the additional paid-in capital on our balance sheet will change because there will be fewer shares of common stock outstanding. The stated capital attributable to common stock will decrease, and in turn, the stated capital attributable to the additional paid-in capital will increase. Further, reported per share net income or loss will be higher because there will be fewer shares of common stock outstanding. +Material U.S. Federal Income Tax Consequences of the Reverse Stock Split +The following discussion is a summary of the material U.S. federal income tax consequences of the proposed Reverse Stock Split to U.S. Holders (as defined below) of our common stock. This discussion is based on the Tax Code, U.S. Treasury regulations promulgated thereunder, judicial decisions, and published rulings and administrative pronouncements of the IRS in each case in effect as of the date of this proxy statement. These authorities may change or be subject to differing interpretations. Any such change or differing interpretation may be applied retroactively in a manner that could adversely affect a U.S. Holder. +We have not sought and will not seek any rulings from the IRS or an opinion from legal or tax counsel regarding the matters discussed below. There can be no assurance the IRS or a court will not take a contrary position to that discussed below regarding the tax consequences of the proposed Reverse Stock Split. +For purposes of this discussion, a “U.S. Holder” is a beneficial owner of our common stock that, for U.S. federal income tax purposes, is or is treated as: +• +an individual who is a citizen or resident of the United States; +• +a corporation (or any other entity or arrangement treated as a corporation for U.S. federal income tax purposes) created or organized under the laws of the United States, any state thereof, or the District of Columbia; +• +an estate, the income of which is subject to U.S. federal income tax regardless of its source; or +• +a trust if (1) its administration is subject to the primary supervision of a court within the United States and all of its substantial decisions are subject to the control of one or more “United States persons” (within the meaning of Section 7701(a)(30) of the Tax Code), or (2) it has a valid election in effect under applicable U.S. Treasury regulations to be treated as a United States person. +This discussion is limited to U.S. Holders who hold our common stock as a “capital asset” within the meaning of Section 1221 of the Tax Code (generally, property held for investment). This discussion does not address all U.S. federal income tax consequences relevant to the particular circumstances of a U.S. Holder, including the impact of the alternative minimum tax or the Medicare contribution tax on net investment income. In addition, it does not address consequences relevant to U.S. Holders that are subject to special rules, including, without limitation, financial institutions, insurance companies, real estate investment trusts, regulated investment companies, dealers or trades in securities or currencies, shareholders who hold common stock as part of a position in a straddle or as part of a hedging, conversion or integrated transaction for U.S. federal income tax purposes or U.S. Holders that have a functional currency other than the U.S. dollar. +If a partnership (or other entity treated as a partnership for U.S. federal income tax purposes) is the beneficial owner of common stock, the U.S. federal income tax treatment of a partner in the partnership will generally depend on the status of the partner, the +2020 PROXY STATEMENT 77 +PROPOSAL 5 +activities of the partnership and certain determinations made at the partner level. Accordingly, partnerships (and other entities treated as partnerships for U.S. federal income tax purposes) holding common stock and the partners in such entities should consult their tax advisors regarding the U.S. federal income tax consequences of the proposed Reverse Stock Split to them. +In addition, the following discussion does not address the U.S. federal estate and gift tax, or state, local and non-U.S. tax law consequences of the proposed Reverse Stock Split. Furthermore, the following discussion does not address any tax consequences of transactions effectuated before, after or at the same time as the proposed Reverse Stock Split, whether or not they are in connection with the proposed Reverse Stock Split. +SHAREHOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE APPLICATION OF THE U.S. FEDERAL INCOME TAX LAWS TO THEIR PARTICULAR SITUATIONS AS WELL AS ANY TAX CONSEQUENCES OF THE PROPOSED REVERSE STOCK SPLIT ARISING UNDER THE U.S. FEDERAL ESTATE OR GIFT TAX LAWS OR UNDER THE LAWS OF ANY STATE, LOCAL OR NON-U.S. TAXING JURISDICTION OR UNDER ANY APPLICABLE INCOME TAX TREATY. +The proposed Reverse Stock Split should constitute a “recapitalization” for U.S. federal income tax purposes pursuant to Section 368(a)(1)(E) of the Tax Code. As a result, a U.S. Holder generally should not recognize gain or loss upon the proposed Reverse Stock Split for U.S. federal income tax purposes, except with respect to cash received in lieu of a fractional share of our common stock, as discussed below. A U.S. Holder’s aggregate adjusted tax basis in the shares of common stock held immediately after the proposed Reverse Stock Split should equal the aggregate adjusted tax basis of the shares of common stock held immediately before the Reverse Stock Split (reduced by the amount of such basis that is allocated to any fractional share of our common stock). The U.S. Holder’s holding period in the shares of common stock held immediately after the Reverse Stock Split should include the holding period in the shares of common stock held immediately before the Reverse Stock Split. U.S. Treasury Regulations provide detailed rules for allocating the tax basis and holding period among shares of common stock which were acquired by a shareholder on different dates and at different prices. U.S. Holders of shares of our common stock acquired on different dates and at different prices should consult their tax advisors regarding the allocation of the tax basis and holding period among such shares. +A U.S. Holder that, pursuant to the proposed Reverse Stock Split, receives cash in lieu of a fractional share of our common stock will be treated as having received the fractional share pursuant to the Reverse Stock Split and then as having exchanged the fractional share for cash in a redemption by the Company. Accordingly, such U.S. Holder should recognize taxable gain or loss in an amount equal to the difference, if any, between the amount of cash received and the portion of such U.S. Holder’s aggregate adjusted tax basis in the shares of common stock surrendered that is allocated to such fractional share. Such capital gain or loss will be short term if the pre-reverse split shares were held for one year or less at the effective time of the Reverse Stock Split and long term if held for more than one year. +No gain or loss will be recognized by us as a result of the proposed Reverse Stock Split. In addition, we do not expect the Reverse Stock Split to affect our ability to utilize our net operating loss carryforwards. +Payments of cash made in lieu of a fractional share of our common stock may, under certain circumstances, be subject to information reporting and backup withholding. To avoid backup withholding, each holder of our common stock that does not otherwise establish an exemption should furnish on applicable IRS forms its taxpayer identification number and comply with the applicable certification procedures. +Backup withholding is not an additional tax and amounts withheld will be allowed as a credit against the holder’s U.S. federal income tax liability and may entitle such holder to a refund, provided the required information is timely furnished to the IRS. Holders of our common stock should consult their own tax advisors regarding the application of the information reporting and backup withholding rules to them. +Required Vote +Approval of this proposal requires the affirmative vote, either in person or by proxy, of the holders of a majority of the issued and outstanding shares of common stock. Abstentions, failing to vote, and “broker non-votes” will have the same effect as voting “AGAINST” the adoption of this proposal because the required vote is based on the number of shares outstanding rather than the number of votes cast. +The Board recommends a vote FOR the approval of the Reverse Stock Split. +78 CALLON PETROLEUM +Proposal 6 +Approve the Authorized Share Reduction +The Board recommends a vote FOR the approval of the amendment to the Company’s certificate of incorporation to effect the Authorized Share Reduction. +• Provides the Company with the flexibility to effect, at any time on or prior to the first anniversary of the Annual Meeting, and without the need for any further action on the part of our shareholders, a reduction in the amount of authorized shares of the Company in proportion to the reverse stock split ratio. +General +The Board has authorized, and recommends for approval by the shareholders, an amendment to the Company’s certificate of incorporation that, if approved by the shareholders and filed with the Secretary of State of the State of Delaware, would reduce the number of authorized shares of common stock by the ratio determined by the Board for the Reverse Stock Split described under “Proposal 5-Approve the Reverse Stock Split.” +This Proposal 6 to approve the amendment to our certificate of incorporation to effect the Authorized Share Reduction is conditioned on the approval of the amendment to our certificate of incorporation to effect the Reverse Stock Split. Therefore, if Proposal 5 is not approved, then this Proposal 6 will automatically be deemed to not have been approved, regardless of the number of shares actually voted “FOR” Proposal 6. +If both Proposal 5 and Proposal 6 are approved by our shareholders, the Authorized Share Reduction will become effective upon filing the amendment to our certificate of incorporation with the Secretary of State of the State of Delaware. However, notwithstanding approval of the Reverse Stock Split and the Authorized Share Reduction by the shareholders, the Board will have the sole authority to elect, at any time prior to the first anniversary of the Annual Meeting, whether or not to amend our certificate of incorporation to effect the Reverse Stock Split and the Authorized Share Reduction. +The text of the proposed amendment to our certificate of incorporation to effect the Authorized Share Reduction is included as Appendix C to this Proxy Statement. +Reasons for the Authorized Share Reduction +We currently have 525,000,000 authorized shares of common stock. The Board believes that it is in our best interests to decrease the authorized number of shares of common stock in connection with the Reverse Stock Split in proportion to the reverse stock split ratio determined by the Board. +Effects of the Authorized Share Reduction +The decrease in the number of authorized shares of common stock would result in fewer shares of authorized but unissued shares of common stock being available for future issuance. This would decrease the number of shares of common stock available for issuance for various purposes such as to raise capital or to make acquisitions without further approvals from our shareholders. +For illustrative purposes only, the following table shows the approximate effect on our common stock of a one-for-10 and a one-for-50 reverse stock split (as followed by the proportional reduction in authorized shares), based on the 397,002,537 shares of common stock issued and outstanding as of April 1, 2020: +Number of Shares of Common Stock Prior to Reverse Stock Split +Number of Shares of Common Stock After Reverse Stock Split and Authorized Share Reduction +1:10 +1:50 +Authorized +525,000,000 +52,500,000 +10,500,000 +Issued and Outstanding (a) +397,002,537 +39,700,253 +7,940,050 +Authorized and Reserved for Issuance (b) +16,723,143 +1,672,314 +334,462 +Authorized and Unreserved and Available for Future Issuances (c) +111,274,320 +11,127,432 +2,225,486 +(a) +Subject to adjustment for fractional shares in connection with the Reverse Stock Split. +(b) +Includes shares of common stock reserved for issuance (i) upon the settlement of restricted stock units and performance share units, and (ii) remaining under the Incentive Plans. +2020 PROXY STATEMENT 79 +PROPOSAL 6 +(c) +Excludes shares of common stock reserved for issuance (i) upon the settlement of restricted stock units and performance share units, and (ii) remaining under the Incentive Plans. +Required Vote +Approval of this proposal requires the affirmative vote, either in person or by proxy, of the holders of a majority of the issued and outstanding shares of common stock. Abstentions, failing to vote, and “broker non-votes” will have the same effect as voting “AGAINST” the adoption of this proposal because the required vote is based on the number of shares outstanding rather than the number of votes cast. +The Board recommends a vote FOR the approval of the Authorized Share Reduction. +80 CALLON PETROLEUM +OTHER MATTERS +Beneficial Ownership of Securities +Principal Shareholders and Management +The following table sets forth beneficial ownership information with respect to our common stock as of April 1, 2020, for (i) each person known by us to own beneficially 5% or more of our outstanding common stock; (ii) each of our NEOs referenced in the Summary Compensation Table, (iii) each of our directors and nominees for director, and (iv) all of our directors and executive officers as of April 1, 2020, as a group. Unless otherwise noted, each person listed below has sole voting and investment power with respect to the shares of our common stock listed below as beneficially owned by the person. Information set forth in the table with respect to beneficial ownership of common stock has been obtained from filings made by the named beneficial owners with the SEC as of April 1, 2020, or, in the case of our executive officers and directors, has been provided to us by such individuals. As of April 1, 2020, the Company had 397,002,537 shares outstanding. +None of the shares beneficially owned by our executive officers or directors has been pledged as security for an obligation. Our Insider Trading Policy prohibits our executive officers and directors from holding Callon securities in a margin account or pledging Callon securities as collateral for a loan. +Beneficial Ownership (1) +Name of Beneficial Owner +Shares (#) +Percent of Class +Holders of More Than 5%: +BlackRock, Inc. (2) +61,419,994 +15.5 +% +The Vanguard Group, Inc. (3) +41,484,255 +10.5 +% +Dimensional Fund Advisors LP (4) +25,991,513 +6.6 +% +State Street Corporation (5) +25,571,822 +6.4 +% +Named Executive Officers: +Joseph C. Gatto, Jr. (6) +505,965 +* +James P. Ulm, II (7) +65,368 +* +Jeffrey S. Balmer (8) +21,615 +* +Michol L. Ecklund (9) +42,157 +* +Gregory F. Conaway (10) +422,908 +* +Mitzi P. Conn (11) +137,875 +* +Directors: +Matthew R. Bob (12) +101,991 +* +Barbara J. Faulkenberry (13) +40,112 +* +Michael L. Finch (14) +70,441 +* +L. Richard Flury (15) +270,681 +* +S. P. Johnson IV (16) +1,545,518 +* +Larry D. McVay (17) +190,976 +* +Anthony J. Nocchiero (18) +159,847 +* +Frances A. Sevilla-Sacasa (19) +23,473 +* +James M. Trimble (20) +82,991 +* +Steven A.Webster (21) +7,488,540 +1.9 +% +All Executive Officers and Directors as a Group (consisting of 16 persons) (22) +11,170,458 +2.8 +% +* +Less than 1% +(1) +The amounts shown for our directors and NEOs include, as of April 1, 2020: (a) shares of common stock held under Callon’s 401(k) Plan for the accounts of participants; (b) shares of common stock owned outright by the individual; and (c) shares of common stock that may be +2020 PROXY STATEMENT 81 +OTHER MATTERS +acquired within 60 days through the vesting or settlement of certain RSUs, if any. Until RSUs vest, these individuals have neither voting nor investment power over the underlying shares of common stock. As of April 1, 2020, none of the directors or executive officers held any stock options to purchase shares of Company stock. +(2) +BlackRock, Inc. (BlackRock), in its capacity as a parent holding company or control person for various subsidiaries (none of which individually owns more than 5% of our outstanding common stock), may be deemed to beneficially own the indicated shares. BlackRock has sole voting power over 60,306,188 shares and sole dispositive power over 61,419,994 shares. BlackRock does not have shared voting or shared dispositive power over any of the shares. BlackRock’s address is 55 East 52nd St., New York, NY 10055. This information is based on BlackRock’s most recent Statement on Schedule 13G filed on February 4, 2020. +(3) +The Vanguard Group, Inc. ("Vanguard"), in its capacity as an investment adviser, may be deemed to beneficially own the indicated shares, along with certain of its wholly-owned subsidiaries that serve as investment managers. Vanguard has sole voting power over 373,162 shares, shared voting power over 65,635 shares, sole dispositive power over 41,098,129 shares and shared dispositive power over 386,126 shares. Vanguard’s address is 100 Vanguard Blvd., Malvern, PA 19355. This information is based on Vanguard’s most recent Statement on Schedule 13G filed on February 12, 2020. +(4) +Dimensional Fund Advisors LP ("Dimensional"), in its capacity as an investment adviser, may be deemed to beneficially own the indicated shares, along with certain of its wholly-owned subsidiaries that serve as investment managers. Dimensional has sole voting power over 25,775,016 shares and sole dispositive power over 25,991,513 shares. Dimensional does not have shared voting or shared dispositive power over any shares. Dimensional's address is 6300 Bee Cave Road, Austin, TX 78746. This information is based on Dimensional's most recent Statement on Schedule 13G filed on February 12, 2020. +(5) +State Street Corp. ("State Street"), in its capacity as a parent holding company or control person for various subsidiaries (none of which individually owns more than 5% of our outstanding common stock), may be deemed to beneficially own the indicated shares, along with certain of its wholly-owned subsidiaries that serve as investment managers. State Street has shared voting power over 24,101,336 shares and shared dispositive power over 25,571,822 shares. State Street does not have sole voting or sole dispositive power over any shares. State Street's principal business address is State Street Financial Center, One Lincoln St., Boston, MA 02111. This information is based on State Street's most recent Statement on Schedule 13G filed with the SEC on February 13, 2020 +(6) +Comprised of 388,224 shares held directly by Mr. Gatto, 38,150 shares held indirectly within the 401(k) Plan, and 79,591 unvested RSUs payable in stock that will vest within 60 days of the Record Date. Does not include 705,632 unvested RSUs payable in stock and 1,214,202 unvested PSUs payable in 50% stock and 50% cash. +(7) +Comprised of 64,794 shares held directly by Mr. Ulm and 574 shares held indirectly within the 401(k) Plan. Does not include 307,911 unvested RSUs payable in stock and 534,720 unvested PSUs payable in 50% stock and 50% cash. +(8) +Comprised of 21,482 shares held directly by Dr. Balmer and 133 shares held indirectly within the 401(k) Plan. Does not include 290,493 unvested RSUs payable in stock and 474,118 unvested PSUs payable in 50% stock and 50% cash. +(9) +Comprised of 34,963 shares held directly by Ms. Ecklund, 603 shares held indirectly within the 401(k) Plan, and 6,591 unvested RSUs payable in stock that will vest within 60 days of the Record Date. Does not include 197,044 unvested RSUs payable in stock and 321,166 unvested PSUs payable in 50% stock and 50% cash. +(10) +Comprised of 422,908 shares held directly by Mr. Conaway. Does not include 102,986 unvested RSUs payable in stock and 80,454 unvested PSUs payable in 50% stock and 50% cash. +(11) +Comprised of 99,176 shares held directly by Ms. Conn, 24,702 shares held indirectly within the 401(k) Plan, and 13,997 unvested RSUs payable in stock that will vest within 60 days of the Record Date. Does not include 15,039 unvested RSUs payable in stock and 40,858 unvested PSUs payable in 50% stock and 50% cash. +(12) +Comprised of 77,915 shares held directly by Mr. Bob and 24,076 unvested RSUs payable in stock that will vest within 60 days of the Record Date. +(13) +Comprised of 19,742 shares held directly by Ms. Faulkenberry and 20,370 unvested RSUs payable in stock that will vest within 60 days of the Record Date. +(14) +Comprised of 46,365 shares held directly by Mr. Finch and 24,076 unvested RSUs payable in stock that will vest within 60 days of the Record Date. +(15) +Comprised of 216,605 shares held directly by Mr. Flury and 30,000 shares held in a joint tenancy with his spouse, which includes 83,606 deferred RSUs, pursuant to Mr. Flury's election under the Deferred Compensation Plan for Outside Directors, which are payable in cash upon his separation of service as a director, and 24,076 unvested shares that will vest within 60 days of the Record Date. +(16) +Comprised of 845,518 shares held directly by Mr. Johnson and 700,000 shares held indirectly with a Family Limited Partnership, which includes 4,866 deferred RSUs, pursuant to Mr. Johnson's election under the Deferred Compensation Plan for Outside Directors, which are payable in cash upon his separation of service as a director. Mr. Johnson's deferred RSUs are all vested shares. +(17) +Comprised of 166,900 shares held directly by Mr. McVay and 24,076 unvested RSUs payable in stock that will vest within 60 days of the Record Date. +(18) +Comprised of 135,771 shares held directly by Mr. Nocchiero and 24,076 unvested RSUs payable in stock that will vest within 60 days of the Record Date. +(19) +Comprised of 23,473 shares held directly by Ms. Sevilla-Sacasa. +(20) +Comprised of 58,915 shares held directly by Mr. Trimble and 24,076 unvested RSUs payable in stock that will vest within 60 days of the Record Date. +82 CALLON PETROLEUM +OTHER MATTERS +(21) +Comprised of 5,349,790 shares held directly by Mr. Webster, 645,000 shares held indirectly with his spouse, and 1,493,750 shares held indirectly through San Felipe Resources Company, which includes 4,866 deferred RSUs, pursuant to Mr. Webster's election under the Deferred Compensation Plan for Outside Directors, which are payable in cash upon his separation of service as a director. Mr. Webster's deferred RSUs are all vested shares. +(22) +Comprised of 7,972,541 shares held directly by the Company's executive officers and directors, 30,000 shares held in a joint tenancy, 645,000 shares held indirectly by a spouse, 700,000 shares held indirectly by a Family Limited Partnership, 64,162 shares held indirectly within the Company's 401(k) Plan, 1,493,730 shares held indirectly by San Felipe Resources Company, and 265,005 unvested RSUs payable in stock that will vest within 60 days of the Record Date. +Section 16(a) Beneficial Ownership Reporting Compliance +Section 16(a) of the Exchange Act requires our officers and directors and persons who own 10% or more of our common stock to file reports of beneficial ownership and changes in ownership with the SEC. These persons are required by SEC regulations to furnish us with copies of these reports. Based solely on our review of these reports received by us during fiscal year 2019, and representations from certain reporting persons that they have complied with the relevant filing requirements, we believe that all such filing requirements were complied with in 2019 and 2020 to date with the exception that Mr. L. Richard Flury had a delinquent Form 5 filing on January 3, 2019 reporting phantom stock units inadvertently excluded in prior filings that were awarded in 2014-2017. +Certain Relationships and Related Party Transactions +The Audit Committee charter provides that the Audit Committee shall review and approve all related party transactions. A transaction will be considered a “related party transaction” if the transaction would be required to be disclosed under Item 404 of Regulation S-K. In addition, our Code provides that an officer’s or a director’s conflict of interest with Callon may only be waived if the Nominating and Corporate Governance Committee approves the waiver and the full Board ratifies the waiver. +For the fiscal year ended 2019, Austin Weant, who is the son of Jerry Weant, our former Vice President of Land, received $162,400 in total compensation as an employee of the Company, which is consistent with market compensation for his services. In addition, Austin Weant was eligible to participate in all benefit plans and programs available generally to the Company’s employees. +Except for the foregoing, as of December 31, 2019, we are not aware of any related party transactions with our executive officers that require disclosure under Item 404 of Regulation S-K. +Shareholders’ Proposals and Director Nominations for the 2021 Annual Meeting +In order for a proposal to be considered for inclusion in the proxy statement for the 2021 Annual Meeting of Shareholders (the “2021 Annual Meeting”) pursuant to Rule 14a-8 of the Exchange Act, such proposal must be received by the Secretary of the Company at our principal executive offices no later than [•], 2020 (assuming the date of the 2021 Annual Meeting has not been changed by more than 30 days from the date of this year’s Annual Meeting), and must otherwise be in compliance with the requirements of the SEC’s proxy rules. If the date of the 2021 Annual meeting has been changed by more than 30 days from the date of this Annual Meeting, then the deadline is a reasonable time before we begin to print and send our proxy materials for the 2021 Annual Meeting. +For a shareholder proposal to be introduced for consideration at the 2021 Annual Meeting but not intended to be considered for inclusion in the Company's proxy statement and form of proxy relating to such meeting (i.e. not pursuant to Rule 14a-8 of the Exchange Act), including shareholder nominations for candidates for election as directors, a shareholder must provide written notice of such proposal to Company not later than 120 days nor earlier than 150 days before the date of the 2021 Annual Meeting. Any such notice must describe the shareholder proposal in reasonable detail and otherwise comply with the requirements set forth in our bylaws. +2020 PROXY STATEMENT 83 +OTHER MATTERS +Nominating Process +In accordance with our certificate of incorporation, any shareholder may nominate a person for election to the Board upon delivery of written notice to us of such nomination. Such notice must be sent as provided in our certificate of incorporation on or before the deadline set forth in our certificate of incorporation, and must otherwise comply with the procedures set forth in our certificate of incorporation. For nominations, the Board will consider individuals identified by shareholders on the same basis as nominees identified from other sources. A submission recommending a nominee should include: +• +Sufficient biographical information to allow the Nominating and Corporate Governance Committee to evaluate the qualifications of a potential nominee in light of the director nomination procedures and criteria and any other information that would be required to be disclosed in solicitations of proxies for the election of directors; +• +An indication as to whether the proposed nominee will meet the requirements for independence under NYSE and SEC guidelines; +• +A description of all direct and indirect compensation and other material monetary agreements, arrangements, and understandings during the past three years, and any other material relationships, between or among the nominating shareholder or beneficial owner and each proposed nominee; +• +A completed and signed questionnaire, representation, and agreement, pursuant to our bylaws, with respect to each nominee for election or re-election to the Board; and +• +The proposed nominee’s written consent to serve if nominated and elected. +84 CALLON PETROLEUM +ANNUAL MEETING INFORMATION +Information Concerning Solicitation and Voting +We are providing you this Proxy Statement in connection with the solicitation of proxies by the Board to be voted at the Annual Meeting, which will be held on [•] at [•] CDT in the La Scala Room of The Moran Hotel, located at 800 Sorella Court in Houston, Texas. This Proxy Statement contains important information for you to consider when deciding how to vote on the matters brought before the meeting. Please read it carefully. +The Board will primarily solicit proxies by mail, and we will bear all costs incurred in the solicitation of proxies, including the preparation, printing and mailing of these proxy materials. In addition to solicitation by mail, our directors, officers and employees may solicit proxies personally or by telephone, email, facsimile or other means, without additional compensation. We may also make arrangements with brokerage houses and other custodians, nominees and fiduciaries for the forwarding of solicitation material to the beneficial owners of the common stock held by such persons, and we may reimburse those brokerage houses and other custodians, nominees and fiduciaries for reasonable expenses incurred in connection therewith. In addition, to assist us with our solicitation efforts, we have retained the services of Innisfree M&A Incorporated for a fee of approximately $15,000, plus out-of-pocket expenses. +Information About Voting and the Annual Meeting +Who may vote +You may vote if you are the record holder of our common stock as of the close of business on the Record Date. On that date, 397,002,537 shares of our common stock were outstanding and are entitled to vote at the Annual Meeting. Each share of common stock is entitled to one vote on each matter considered at this meeting. A list of shareholders entitled to vote at the Annual Meeting will be available at our office at 2000 West Sam Houston Parkway South, Suite 2000, Houston, TX 77042 during normal business hours for a period of ten (10) days prior to the meeting and will also be available for inspection at the Annual Meeting. +Attending the Annual Meeting +If you meet the above criteria to vote at our Annual Meeting, you may attend the Annual Meeting. If you wish to attend the Annual Meeting in person, you must present valid, government-issued picture identification. If your shares are held in the name of a bank, broker or other nominee and you plan to attend the Annual Meeting, in order to be admitted you must present proof of your beneficial ownership of the common stock, such as a bank or brokerage account statement, or copy of your Voting Instruction Form or Notice, indicating that you owned shares of our common stock at the close of business on the Record Date. +For safety and security reasons, no cameras, recording equipment, cellular telephones, electronic devices, large bags, briefcases or packages will be permitted in the Annual Meeting. No banners, signs, firearms or weapons will be allowed in the meeting room. We reserve the right to inspect all items entering the meeting room. +Proposals +Qualifying shareholders will vote on the following six proposals at the Annual Meeting: +1) +The election of directors; +2) +Advisory approval of our executive compensation; +3) +Approval of the 2020 Plan; +4) +The ratification of the appointment of Grant Thornton LLP; +5) +Approval of the Reverse Stock Split; and +6) +Approval of the Authorized Share Reduction. +2020 PROXY STATEMENT 85 +ANNUAL MEETING INFORMATION +Notice and access +The Company is furnishing proxy materials to its shareholders through the Internet as permitted under the rules of the SEC. Under these rules, the Company’s shareholders will receive a Notice Regarding the Availability of Proxy Materials instead of a paper copy of the Notice of 2020 Annual Meeting of Shareholders and Proxy Statement, our proxy card, and our Annual Report on Form 10-K, often referred to as “notice and access.” We believe this process gives us the opportunity to serve you more efficiently by making the proxy materials available quickly online and reducing costs associated with printing and distributing our proxy materials. This Notice includes instructions on how to access the proxy materials over the Internet or to request a paper copy of proxy materials, including a proxy card or voting instruction form. In addition and as described in the Notice, shareholders may request to receive future proxy materials in printed form by mail or electronically by email. A shareholder’s election to receive proxy materials by mail or email will remain in effect until terminated by the shareholder. +The Company's proxy materials were made available by the Board on the Internet on or about [ ● ] , 2020 at https://www.viewproxy.com/CallonPetroleum/2020, which is the cookies-free website described in the Notice. Accordingly, we are sending the Notice to our shareholders of record and beneficial owners of our stock, and filing the Notice with the SEC, on or about [ ● ] , 2020. Please note that the Notice identifies the proposals on which shareholders will vote at the meeting, but shareholders cannot vote by marking the Notice and returning it. The Notice provides instructions on how to vote via the Internet, by telephone or by requesting and returning a paper proxy card, or by submitting a ballot in person at the meeting. +In addition to the proxy materials being available for review at https://www.viewproxy.com/CallonPetroleum/2020, the site contains instructions on how to access the proxy materials on a website or to request free of charge printed materials, including a copy of our Annual Report on Form 10-K for the year ended December 31, 2019 as filed with the SEC. On an ongoing basis, shareholders may contact our Corporate Secretary at our principal offices in Houston, Texas to request proxy materials by mail or by e-mail. +Casting your vote +There are three methods for registered shareholders to vote by proxy without attending the Annual Meeting: +1. By Internet +You can vote via the Internet by going to the website address provided on your Notice or proxy card. You will need to use the control and request ID appearing on your proxy card to vote via the Internet. You can use the Internet to transmit your voting instructions up until 11:59 p.m. CDT on [ ● ] , 2020. If you vote via the Internet, you do NOT need to vote by telephone or return a proxy card. Internet voting is available 24 hours a day. +2. By Telephone +You can also vote by telephone by calling the toll-free telephone number provided on your proxy card. You will need to use the control and request ID appearing on your proxy card to vote by telephone. You may transmit your voting instructions from any touch-tone telephone up until 11:59 p.m. CDT on [ ● ] , 2020. Voting by telephone is available 24 hours a day. +3. By Mail +If you received a printed copy of the proxy card, you can vote by marking, dating and signing it, and returning it in the reply envelope provided. Please promptly mail your proxy card to ensure that we receive it prior to the closing of the polls at the Annual Meeting. +If you receive more than one Notice and/or Proxy Statement then it means that your shares are likely registered in more than one account. Please provide voting instructions for all Notices, proxy and voting instruction cards you receive. If you send us a signed proxy card without marking your voting selections, your shares will be voted on each proposal as recommended by the Board, and in the discretion of the proxy holders as to any other matters that may properly come before the meeting or any postponement or adjournment of the meeting. The Board is not presently aware of any other proposals or any other business to be considered at the Annual Meeting. +Difference between a “holder of record” and a “street name” holder +If your shares are registered directly in your name, you are considered the shareholder of record with respect to those shares. If your shares are held in a stock brokerage account or by a bank, trust or other nominee, then the broker, bank, trust or other nominee is considered to be the shareholder of record with respect to those shares. However, you are still considered to be the beneficial owner of those shares, and your shares are said to be held in “street name.” Street name holders generally cannot submit a proxy or vote their shares directly and must instead instruct the broker, bank, trust or other nominee how to vote their shares. You will receive instructions from your broker, bank or other nominee that you must follow in order for your broker, bank or other nominee to vote your shares per your instructions. Many brokerage firms and banks have a process for their beneficial +86 CALLON PETROLEUM +ANNUAL MEETING INFORMATION +holders to provide instructions via the Internet or over the telephone. If Internet or telephone voting is unavailable from your broker, bank or other nominee, please complete and return the enclosed voting instruction card in the addressed, postage paid envelope provided. +In the event you do not provide instructions on how to vote shares held in street name, your broker may have authority to vote your shares. Under the rules that govern brokers who are voting with respect to shares that are held in street name, brokers have the discretion to vote such shares on routine matters, but they are not permitted to vote (a “broker non-vote”) on non-routine or non-discretionary items absent instructions from the beneficial owner. With respect to the Annual Meeting, brokers are prohibited from exercising discretionary authority in the election of directors and the non-binding advisory proposal on executive compensation, but such brokers may exercise discretionary authority with respect to the ratification of the appointment of our independent registered public accounting firm. Your vote is especially important. Therefore, please promptly instruct your broker regarding how to vote your shares on these matters. +If you hold shares through a broker, bank or other nominee and wish to be able to vote in person at the meeting, you must obtain a legal proxy from your broker, bank or other nominee and present it to the inspector of election with your ballot at the meeting. If you have questions about how to obtain a legal proxy, please call Innisfree M&A Incorporated toll-free at (888) 750-5834. Submitting your proxy by mail will not affect your right to vote in person if you decide to attend the Annual Meeting. +Revoking a proxy +You may revoke or change a previously delivered proxy at any time before the meeting by delivering another proxy with a later date, by voting again via the Internet or by telephone, or by delivering written notice of revocation of your proxy to our Corporate Secretary at our principal offices in Houston, Texas before the beginning of the meeting. You may also revoke your proxy by attending the meeting and voting in person, although attendance at the meeting will not necessarily revoke a valid proxy that was previously delivered. If you hold shares through a broker, bank or other nominee, you must contact that nominee to revoke any prior voting instructions. You also may revoke any prior voting instructions by voting in person at the meeting if you obtain a legal proxy as described above. +Recommendation of the Board +The Board unanimously recommends you vote “FOR” each of the proposals. A proxy that is properly completed and submitted will be voted at the Annual Meeting in accordance with the instructions on the proxy. If you properly complete and submit a proxy, but do not indicate any contrary voting instructions, your shares will be voted as follows: +• +“ FOR ” the election of each of the nominees named in this Proxy Statement to the Board of Directors; +• +“ FOR ” the approval, on an advisory basis, of our executive compensation; +• +“ FOR ” the approval of the 2020 Plan; +• +“ FOR ” the ratification of the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2020; +• +“ FOR ” the approval of the Reverse Stock Split; and +• +“ FOR ” the approval of the Authorized Share Reduction. +Counting the vote +We have appointed Alliance Advisors to tabulate and certify the vote. +Quorum +A quorum is the number of shares that must be present to hold the meeting. The quorum requirement for the meeting is a majority of the outstanding shares as of the Record Date, present in person or represented by proxy. We will count your shares for purposes of determining if there is a quorum if either you are present and vote in person at the meeting or have voted on the Internet, by telephone or by properly submitting a proxy card or voting instruction card by mail. Abstentions and broker non-votes also count toward the quorum. +2020 PROXY STATEMENT 87 +ANNUAL MEETING INFORMATION +Required Vote +Proposal 1 - Election of directors +The nominees for election as directors will be elected by a plurality of all votes cast, subject to the Company’s majority voting policy. Because the number of director nominees equals the number of directors to be elected at this Annual Meeting, to be elected, each director must receive a majority of the votes cast. A majority of the votes cast means that the number of shares voted “for” a director must exceed the number of shares voted “withheld.” Abstentions and broker non-votes will not be included in determining the number of votes cast in the election of directors and will not have any effect on the outcome. This majority voting standard is discussed further under “Proposal 1 - Election of directors - Majority Vote Standard.” +Proposal 2 - Advisory vote to approve NEO compensation +The advisory vote on our executive compensation is non-binding, so no specific vote is required. Abstentions will have the same effect as a vote against this proposal, and broker non-votes will not be counted as shares present and entitled to vote, and, accordingly, will not affect the outcome of the vote on this proposal. While the law requires this advisory vote, the vote will neither be binding on us or the Board, nor will it create or imply any change in the fiduciary duties of, or impose any additional fiduciary duty on, us or the Board. However, the views of our shareholders are important to us, and our Compensation Committee will take into account the outcome of the vote when considering future executive compensation decisions. We urge you to read the section entitled “Compensation Discussion and Analysis,” which discusses in detail how our executive compensation program implements our compensation philosophy. +Proposal 3 - Approval of 2020 Plan +Pursuant to our bylaws, approval of the 2020 Plan requires the affirmative vote of a majority of the common shares present in person or by proxy and entitled to vote on the proposal. In addition to the vote required by our bylaws, under NYSE rules, approval of the 2020 Plan requires approval of a majority of votes cast on the proposal. In both cases, abstentions will have the effect of a vote cast against the proposal. Broker non-votes will not be counted as shares present and entitled to vote and so will have no effect upon the outcome of the vote. +Proposal 4 - Ratification of the appointment of the independent registered public accounting firm +The advisory vote on the ratification of the appointment of Grant Thornton LLP as our independent registered public accounting firm for the 2020 fiscal year is non-binding, so no specific vote is required. If you hold your shares through a broker and you do not instruct the broker how to vote, your broker will have the authority to vote your shares in its discretion on this proposal. An abstention will have the effect of a vote against this proposal. Because your vote is advisory, it will not be binding on the Board or the Company. However, the Board and the Audit Committee will consider the outcome of the vote in determining the selection of the Company’s independent registered public accounting firm. +Proposal 5 - Approval of the Reverse Stock Split +Approval of this proposal requires the affirmative vote, either in person or by proxy, of the holders of a majority of the issued and outstanding shares of common stock. Abstentions, failing to vote, and “broker non-votes” will have the same effect as voting “AGAINST” the adoption of this proposal because the required vote is based on the number of shares outstanding rather than the number of votes cast. +Proposal 6 - Approval of the Authorized Share Reduction +Approval of this proposal requires the affirmative vote, either in person or by proxy, of the holders of a majority of the issued and outstanding shares of common stock. Abstentions, failing to vote, and “broker non-votes” will have the same effect as voting “AGAINST” the adoption of this proposal because the required vote is based on the number of shares outstanding rather than the number of votes cast. +88 CALLON PETROLEUM +ANNUAL MEETING INFORMATION +Voting Results +We will announce the preliminary voting results at the Annual Meeting and will publish the final voting results in a current report on Form 8-K to be filed with the SEC within four business days of the meeting. +Householding Information +The SEC permits companies and intermediaries (such as brokers and banks) to satisfy delivery requirements for proxy statements and annual reports with respect to two or more shareholders sharing the same address by delivering a single proxy statement and annual report to those shareholders. This process, which is commonly referred to as “householding,” is intended to reduce the volume of duplicate information shareholders receive and reduce expenses for companies. Both we and some of our intermediaries may be householding our proxy materials and annual report. Once you have received notice from your broker or another intermediary that they will be householding materials sent to your address, householding will continue until you are notified otherwise or until you revoke your consent. Should you wish to receive separate copies of our Annual Report and Proxy Statement in the future, we will promptly deliver a separate copy of each of these documents to you if you send a written request to us at our address appearing on the cover of this proxy statement, to the attention of the Corporate Secretary. If you hold your shares through an intermediary that is householding and you want to receive separate copies of our Annual Report and Proxy Statement in the future, you should contact your bank, broker or other nominee record holder. +Financial Statements and Other Available Documents +Financial statements for our most recent fiscal year are contained in the 2019 Annual Report to Shareholders and our Report on Form 10-K for the fiscal year ended December 31, 2019, filed with the SEC on February 28, 2020. Our Annual Report, our Annual Report on Form 10-K, Corporate Governance Guidelines, Code, and charters of Board committees may be accessed by shareholders on our website at www.callon.com or printed copies are available upon written request to Michol Ecklund, Corporate Secretary at our principal executive office in Houston, Texas. +Other Business +The Board is not aware of any matter to be acted upon at the Annual Meeting other than those described above. If other business properly comes before the Annual Meeting, the persons named on the proxy will vote the proxy in accordance with what they consider to be in the best interests of us and our shareholders. Please sign, date, and return your proxy promptly to avoid unnecessary expense. All shareholders are urged, regardless of the number of shares owned, to participate in the Annual Meeting by voting their shares. +By Order of the Board of Directors, +Joseph C. Gatto, Jr. +President, Chief Executive Officer and Director +Houston, Texas +[ ● ] , 2020 +2020 PROXY STATEMENT 89 +APPENDIX A +NON-GAAP RECONCILIATIONS +Adjusted EBITDA Reconciliation (in thousands) : +2019 +Net income +$ +67,928 +Adjustments: +Loss on derivatives, net +62,109 +Non-cash stock-based compensation expense +11,364 +Cash paid for commodity derivative settlement, net +(3,789 +) +Merger-related expenses +74,363 +Other operating expense +1,076 +Income tax expense +35,301 +Interest expense +2,907 +Depreciation, depletion and amortization +244,991 +Accretion expense +945 +Loss on extinguishment of debt +4,881 +Adjusted EBITDA +$ +502,076 +PV-10 Reconciliation (in thousands) : +2019 +Standardized measure of discounted future net cash flows +$ +4,951,026 +Add: present value of future income taxes discounted at 10% per annum +418,555 +Total Proved Reserves - PV-10 +5,369,581 +Total Proved Developed Reserves - PV-10 +3,246,802 +Total Proved Undeveloped Reserves - PV-10 +$ +2,122,779 +90 CALLON PETROLEUM +APPENDIX B +CALLON PETROLEUM COMPANY +2020 OMNIBUS INCENTIVE PLAN +1. +Plan . This Callon Petroleum Company 2020 Omnibus Incentive Plan (this “ Plan ”), is effective as of [•], 2020 (the “ Effective Date ”), was adopted by the Company to reward and provide incentives to certain employees, independent contractors and directors by enabling them to acquire awards from the Company, including Awards related to shares of common stock of the Company. +2. +Definitions . As used herein, the terms set forth below shall have the following respective meanings: +“ Affiliate ” has the meaning ascribed to such term in Rule 12b-2 of the General Rules and Regulations of the Exchange Act. +“ Award ” means the grant of any Option, SAR, Stock Award, Cash Award or Performance Award whether granted singly, in combination or in tandem, to a Participant pursuant to such applicable terms, conditions and limitations as the Committee may establish in order to fulfill the objectives of this Plan. +“ Award Agreement ” means the document (in written or electronic form) setting forth the terms, conditions and limitations applicable to an Award. Such agreement shall be written except that the Committee may, in its discretion, require or allow that the Participant electronically execute or accept such Award Agreement. +“ Board ” means the Board of Directors of the Company. +“ Cash Award ” means an Award denominated in cash. +“ Change in Contro l ” means the occurrence of one or more of the following: +(a) +Change in Ownership . A change in ownership of the Company occurs on the date that any Person, other than (1) the Company or any of its Subsidiaries, (2) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Affiliates, (3) an underwriter temporarily holding stock pursuant to an offering of such stock, or (4) a corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of the Company’s stock (each of (1) through (4) an “Exempt Person”), acquires ownership of the Company’s stock that, together with stock held by such Person, constitutes more than fifty percent (50%) of the total fair market value or total voting power of the Company’s Voting Stock. However, if any Person is considered to own already more than fifty percent (50%) of the total fair market value or total voting power of the Company’s Voting Stock, the acquisition of additional stock by the same Person is not considered to be a Change in Control. In addition, if any Person has effective control of the Company through ownership of thirty percent (30%) or more of the total voting power of the Company’s Voting Stock, as discussed in paragraph (b) below, the acquisition of additional control of the Company by the same Person is not considered to cause a Change in Control pursuant to this paragraph (a); or +(b) +Change in Effective Control . Even though the Company may not have undergone a change in ownership under paragraph (a) above, a change in the effective control of the Company occurs on either of the following dates: (1) the date that any Person (other than an Exempt Person) acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such Person) ownership of the Company’s stock possessing thirty percent (30%) or more of the total voting power of the Company’s Voting Stock. However, if any Person owns thirty percent (30%) or more of the total voting power of the Company’s Voting Stock, the acquisition of additional control of the Company by the same Person is not considered to cause a Change in Control pursuant to this subparagraph (b)(1); or (2) the date that during any period of three consecutive years, individuals who at the beginning of such period were members of the Board cease for any reason to constitute at least a majority thereof unless the election, or the nomination for election by the Company’s shareholders, of each new director was approved by a vote of at least a majority of the directors then still in office who were directors at the beginning of such period or whose election or nomination was previously so approved; provided, however, that any such director shall not be considered to be approved by the Board if his or her initial assumption of office occurs as a result of an actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or +2020 PROXY STATEMENT 91 +APPENDIX B +(c) +Change in Ownership of Substantial Portion of Assets . A change in the ownership of a substantial portion of the Company’s assets occurs on the date that a Person acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such Person) assets of the Company that have a total gross fair market value equal to at least forty percent (40%) of the total gross fair market value of all of the Company’s assets immediately before such acquisition or acquisitions. However, there is no Change in Control when there is such a transfer to an entity that is controlled by the shareholders of the Company immediately after the transfer, through a transfer to (1) a shareholder of the Company (immediately before the asset transfer) in exchange for or with respect to the Common Stock; (2) an entity, at least fifty percent (50%) of the total value or voting power of the stock of which is owned, directly or indirectly, by the Company; (3) a Person that owns directly or indirectly, at least fifty percent (50%) of the total value or voting power of the Company’s outstanding Voting Stock; or (4) an entity, at least fifty percent (50%) of the total value or voting power of the stock of which is owned by a Person that owns, directly or indirectly, at least fifty percent (50%) of the total value or voting power of the Company’s outstanding Voting Stock. +Notwithstanding the foregoing, no Change in Control payment event shall be deemed to have occurred with respect to an Award that is subject to Section 409A of the Code unless such event constitutes a permissible payment event specified in Section 409A of the Code and the Treasury regulations promulgated thereunder. +“ Code ” means the Internal Revenue Code of 1986, as amended from time to time. +“ Committee ” means (i) the Compensation Committee of the Board or (ii) such other committee of the Board as is designated by the Board to administer this Plan or (iii) to the extent contemplated hereby, the Board. +“ Common Stock ” means the common stock, par value $.01 per share, of the Company. +“ Company ” means Callon Petroleum Company, a Delaware corporation. +“ Director ” means an individual serving as a member of the Board. +“ Dividend Equivalents ” means, with respect to the shares of Common Stock subject to a Stock Award other than Restricted Stock, an amount equal to all dividends and other distributions (or the economic equivalent thereof) that are payable to shareholders of record during the Restriction Period on a like number of shares of Common Stock. +“ Employee ” means an employee of the Company or any of its Subsidiaries. +“ Exchange Act ” means the Securities Exchange Act of 1934, as amended from time to time. +“ Fair Market Value ” of a share of Common Stock means, as of a particular date, (i)(A) if the shares of Common Stock are listed or on a national securities exchange (including the NASDAQ Global Select Market), the closing price per share of the Common Stock on the consolidated transaction reporting system for the principal national securities exchange on which shares of Common Stock are listed on that date, or, if there shall have been no such sale so reported on that date, on the last preceding date on which such a sale was so reported, or, at the discretion of the Committee, the price prevailing on the exchange at the time of exercise or other relevant event (as determined under procedures established by the Committee) including the average of the closing bid and asked price on that date, (B) if the shares of Common Stock are not so listed but are listed or quoted on another securities exchange or market, the closing price per share of Common Stock reported on the principal securities exchange or market on which the shares of Common Stock are traded (as determined by the Committee), or, if there shall have been no such sale so reported on that date, on the last preceding date on which such a sale was so reported or, at the discretion of the Committee, the price prevailing on such principal securities exchange or market at the time of exercise or other relevant event, including the average of the closing bid and asked price on that date, or, if there are no quotations available for such date, on the last preceding date on which such quotations shall be available, (C) if the shares of Common Stock are not publicly traded, the most recent value determined by an independent appraiser appointed by the Company for such purpose, or (D) if none of (A)-(C) are applicable, the fair market value of a share of Common Stock as determined in good faith by the Committee; or (ii) if applicable, the price per share as determined in accordance with the procedures of a third party administrator retained by the Company to administer this Plan and as approved by the Committee. +“ Incentive Option ” means an Option that is intended to comply with the requirements set forth in Section 422 of the Code. +“ Independent Contractor ” means an individual providing services to the Company or any of its Subsidiaries, who is not an Employee. An Independent Contractor can include an individual who is serving as a Non-employee Director. +92 CALLON PETROLEUM +APPENDIX B +“ Non-employee Director ” means a Director who is not an Employee. A Non-employee Director may, in the discretion of the Committee, receive an Award both in the capacity as a Non-employee Director and Independent Contractor. +“ Nonqualified Stock Option ” means an Option that is not an Incentive Option. +“ Option ” means a right to purchase a specified number of shares of Common Stock at a specified price, which is either an Incentive Option or a Nonqualified Stock Option. +“ Participant ” means an Employee, Non-employee Director or Independent Contractor to whom an Award has been made under this Plan. +“ Performance Award ” means an award made pursuant to this Plan to a Participant which is subject to the attainment of one or more Performance Goals. +“ Performance Goal ” means a standard established by the Committee, to determine in whole or in part whether a Performance Award shall be earned. +“ Person ” shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a “group” as defined in Section 13(d) thereof. +“ Prior Plans ” means the Callon Petroleum Company 2018 Omnibus Incentive Plan and the Callon Petroleum 2011 Omnibus Incentive Plan, as thereafter amended from time to time. +“ Restricted Stock ” means any Common Stock that is restricted or subject to forfeiture provisions. +“ Restricted Stock Unit ” means a right to receive a share of Common Stock or the value thereof on such terms and conditions as may be established by the Committee. For the avoidance of doubt, such term includes phantom shares and phantom stock units. +“ Restriction Period ” means a period of time beginning as of the date upon which a Stock Award is made pursuant to this Plan and ending as of the date upon which the Common Stock subject to such Stock Award is deliverable or no longer restricted or such Stock Award is no longer subject to forfeiture provisions. +“ Rule 16b-3 ” means Rule 16b-3 promulgated under the Exchange Act, or any successor rule. +“ SAR ” means a right to receive a payment, in cash or Common Stock, equal to the excess of the Fair Market Value or other specified valuation of a specified number of shares of Common Stock on the date the right is exercised over a specified strike price, in each case, as determined by the Committee. +“ Stock Award ” means an award in the form of shares of Common Stock or units denominated in shares of Common Stock, including Restricted Stock and Restricted Stock Units. For the avoidance of doubt, a Stock Award does not include an Option or SAR. +“ Subsidiary ” means (i) in the case of a corporation, any corporation of which the Company directly or indirectly owns shares representing more than 50% of the combined voting power of the shares of all classes or series of capital stock of such corporation which have the right to vote generally on matters submitted to a vote of the shareholders of such corporation and (ii) in the case of a partnership or other business entity not organized as a corporation, any such business entity of which the Company directly or indirectly owns more than 50% of the voting, capital or profits interests (whether in the form of partnership interests, membership interests or otherwise). +“ Voting Stock ” shall mean stock of any class or kind having the power to vote generally for the election of Directors. +3. +Eligibility . All Employees, Non-employee Directors and Independent Contractors are eligible for Awards under this Plan in the sole discretion of the Committee. +4. +Common Stock Available for Awards . Subject to the provisions of Section 15 hereof, there shall be available for Awards under this Plan granted wholly or partly in Common Stock (including rights or Options that may be exercised for or settled in Common Stock) an aggregate of 13,250,000 shares of Common Stock (“ Share Reserve ”), plus the shares remaining available for awards under the Prior Plans as of the Effective Date, all of which shall be available for Incentive Options. The number of shares of Common Stock that are subject to Awards under this Plan or the Prior Plans, that are forfeited or terminated, expire unexercised, are settled in cash in lieu of Common Stock, or are exchanged for Awards that do not involve Common Stock, and the number of shares of Common Stock that are subject to Awards under this Plan or Prior Plans that are withheld to satisfy withholding taxes in respect to such awards shall again immediately become available for additional Awards hereunder (subject to the following sentence). Notwithstanding the foregoing, the following shares of Common Stock may not again be made available for issuance as Awards under this Plan: (i) shares of Common Stock not issued or delivered as a result of the net +2020 PROXY STATEMENT 93 +APPENDIX B +settlement of a stock-settled SAR or Option, (ii) shares of Common Stock used to pay the exercise price or withholding taxes related to an outstanding Option or SAR, or (iii) shares of Common Stock repurchased on the open market with the proceeds of the option exercise price. The Board and the appropriate officers of the Company shall from time to time take whatever actions are necessary to file any required documents with governmental authorities, stock exchanges and transaction reporting systems to ensure that shares of Common Stock are available for issuance pursuant to Awards. +5. +Administration . +(a) +Except as otherwise provided in this Plan with respect to actions or determinations by the Board, this Plan shall be administered by the Committee. To the extent required in order for Awards to be exempt from Section 16 of the Exchange Act by virtue of the provisions of Rule 16b-3, (i) the Committee shall consist of at least two members of the Board who meet the requirements of the definition of “Non-employee Director” set forth in Rule 16b-3 (b)(3)(i) promulgated under the Exchange Act or (ii) Awards may be granted by, and this Plan may be administered by, the Board. +(b) +Subject to the provisions hereof, the Committee shall have full and exclusive power and authority to administer this Plan and to take all actions that are specifically contemplated hereby or are necessary or appropriate in connection with the administration hereof. The Committee shall also have full and exclusive power to interpret this Plan and to adopt such rules, regulations and guidelines for carrying out this Plan as it may deem necessary or proper. The Committee may, in its discretion, provide for the extension of the exercisability of an Award, accelerate the vesting or exercisability of an Award, eliminate or make less restrictive any restrictions contained in an Award, waive any restriction or other provision of this Plan or an Award or otherwise amend or modify an Award in any manner that is either (i) not adverse to the Participant to whom such Award was granted or (ii) consented to by such Participant. The Committee may make an Award to an individual who it expects to become an Employee, Non-employee Director or Independent Contractor of the Company or any of its Subsidiaries within the next six months, with such award being subject to the individual actually becoming an Employee, Non-employee Director or Independent Contractor, as applicable, within such time period, and subject to such other terms and conditions as may be established by the Committee. The Committee may correct any defect or supply any omission or reconcile any inconsistency in this Plan or in any Award in the manner and to the extent the Committee deems necessary or desirable to further the purposes of this Plan. Any decision of the Committee in the interpretation and administration of this Plan shall lie within its sole and absolute discretion and shall be final, conclusive and binding on all parties concerned. The Board shall have the same powers as the Committee with respect to Awards granted to Non-employee Directors. +(c) +Notwithstanding the foregoing, except in connection with a transaction involving the Company or its capitalization (as provided in Section 15), the terms of outstanding Awards may not be amended without approval of the shareholders of the Company to (i) reduce the exercise price of outstanding Options or SARs or (ii) cancel, exchange, substitute, buyout or surrender outstanding Options or SARs in exchange for cash or other Awards when the exercise price per share of the original Options or SARs exceeds the Fair Market Value of one share of Common Stock, (iii) take any other action with respect to an Option or SAR that would be treated as a repricing under the rules and regulations of the principal national securities exchange on which the shares of Common Stock are listed or (iv) permit the grant of any Options or SARs that contains a so-called “reload” feature under which additional Options, SARs or other Awards are granted automatically to the Participant upon exercise of the original Option or SAR. +(d) +No member of the Committee or the Board or officer of the Company to whom the Committee has delegated authority in accordance with the provisions of Section 6 of this Plan shall be liable for anything done or omitted to be done by him or her, by any member of the Committee or by any officer of the Company in connection with the performance of any duties under this Plan, except for his or her own willful misconduct or as expressly provided by statute. +6. +Delegation of Authority . To the extent allowed by applicable law, the Committee may delegate to the Chief Executive Officer, to other senior officers of the Company or to other committees of the Board its duties under this Plan pursuant to such conditions or limitations as the Committee may establish, except that the Committee may not delegate to any person the authority to grant Awards to, or take other action with respect to, Participants who are subject to Section 16 of the Exchange Act. +7. +Employee and Independent Contractor Awards . The Committee shall determine the type or types of Awards to be made under this Plan and shall designate from time to time the Employees and Independent Contractors who are to be the recipients of such Awards. Each Award may be embodied in an Award Agreement, which shall contain such terms, conditions and limitations as shall be determined by the Committee in its sole discretion, including any treatment upon a Change in Control, and shall be accepted by the Participant to whom the Award is made. Awards may consist of those listed in this Section 7 and may be granted singly, in combination or in tandem. Awards may also be made in combination or in tandem with, in replacement of, or as alternatives to, grants or rights under this Plan or any other employee plan of the Company or any of its Subsidiaries, including the plan of any acquired entity. All or part of an Award may be subject to conditions established by the Committee, which may +94 CALLON PETROLEUM +APPENDIX B +include, but are not limited to, continuous service with the Company, its Affiliates and Subsidiaries, or achievement of specific performance or business objectives. Upon the termination of service with the Company, its Affiliates and Subsidiaries of a Participant, any unexercised, deferred, unvested or unpaid Awards shall +(a) +Stock Option . An Award may be in the form of an Option. An Option awarded pursuant to this Plan may consist of an Incentive Option or a Nonqualified Option. The price at which a share of Common Stock may be purchased upon the exercise of an Option shall be not less than the Fair Market Value of the Common Stock on the date of grant. Subject to the foregoing provisions, the terms, conditions and limitations applicable to any Options awarded pursuant to this Plan, including the term of any Options and the date or dates upon which they become exercisable, shall be determined by the Committee. Only Employees may be granted Incentive Options. The term of Options shall not exceed ten years from the date of grant. Any Option (i) that remains outstanding as of the last day of its term, (ii) has an exercise price per share that is less than the Fair Market Value of a share of Common Stock as of such day and (iii) whose exercise is prohibited as of such day pursuant to the operation of the Company’s insider trading policy, shall be automatically exercised (without any action on the part of the Participant holding such Option) by (A) foregoing the delivery of shares of Common Stock otherwise deliverable upon the exercise of the Option pursuant to Section 10 in an amount sufficient to pay the exercise price of the Option and (B) satisfying tax withholding obligations pursuant to Section 11 by withholding from the shares of Common Stock otherwise deliverable upon the exercise of the Option. Each Participant who receives Options pursuant to the Plan shall be deemed to have accepted this automatic exercise provision as a condition of receiving the Option. +(b) +Stock Appreciation Right . An Award may be in the form of a SAR. The per share strike price for a SAR shall be not less than the Fair Market Value of the Common Stock on the date on which the SAR is granted. The terms, conditions and limitations applicable to any SARs awarded pursuant to this Plan, including the term of any SARs, whether the SAR will be settled in cash or stock and the date or dates upon which they become exercisable, shall be determined by the Committee. The term of SARs shall not exceed ten years from the date of grant. Any SAR (i) that remains outstanding as of the last day of its term, (ii) has a strike price per share that is less than the Fair Market Value of a share of Common Stock as of such day and (iii) whose exercise is prohibited as of such day pursuant to the operation of the Company’s insider trading policy, shall be automatically exercised (without any action on the part of the Participant holding such SAR) and any tax withholding obligations will be satisfied pursuant to Section 11 by withholding from the cash or shares of Common Stock otherwise deliverable upon the exercise of the SAR. Each Participant who receives SARs pursuant to the Plan shall be deemed to have accepted this automatic exercise provision as a condition of receiving the SAR. +(c) +Stock Award . An Award may be in the form of a Stock Award. The terms, conditions and limitations applicable to any Stock Awards granted pursuant to this Plan shall be determined by the Committee. +(d) +Cash Award . An Award may be in the form of a Cash Award. The terms, conditions and limitations applicable to any Cash Awards granted pursuant to this Plan shall be determined by the Committee. +(e) +Performance Award . Without limiting the type or number of Awards that may be made under the other provisions of this Plan, an Award may be in the form of a Performance Award. A Performance Award shall be paid, vested or otherwise deliverable solely on account of the attainment of one or more Performance Goals, either individually or in any combination, established by the Committee and specified in the award agreement. +Unless otherwise stated, such a Performance Goal need not be based upon an increase or positive result under a particular business criterion and could include, for example, maintaining the status quo or limiting economic losses (measured, in each case, by reference to specific business criteria). The amount of cash or shares payable or vested pursuant to Performance Awards may be adjusted upward or downward, either on a formula or discretionary basis or any combination, as the Committee determines. Subject to the foregoing provisions, the terms, conditions and limitations applicable to any Performance Awards made pursuant to this Plan shall be determined by the Committee. +8. +Director Awards . +(a) +The Board has the sole authority to grant Awards to Non-employee Directors from time to time in accordance with this Section 8. Such Awards may consist of the forms of Award described in Section 7, other than Incentive Options, and shall be granted subject to such terms and conditions as specified in Section 7. +(b) +No Non-employee Director may be granted during any calendar year Awards having a fair value determined on the date of grant when added to all cash compensation paid to the Non-employee Director (in his capacity as Non-employee Director) during the same calendar year in excess of $1,000,000. +2020 PROXY STATEMENT 95 +APPENDIX B +9. +Payment of Awards . +(a) +General . Payment of Awards may be made in the form of cash or Common Stock, or a combination thereof, and may include such restrictions as the Committee shall determine, including, in the case of Common Stock, restrictions on transfer and forfeiture provisions. If payment of an Award is made in the form of Restricted Stock, the right to receive such shares shall be evidenced by book entry registration or in such other manner as the Committee may determine. Any statement of ownership evidencing such Restricted Stock shall contain appropriate legends and restrictions that describe the terms and conditions of the restrictions applicable thereto. +(b) +Dividends and Interest . In the discretion of the Committee, rights to dividends or Dividend Equivalents may be extended to and made part of any Stock Award or Performance Award, but such dividends or Dividend Equivalents shall be accrued and held by the Company and paid, without interest, within 10 days following the lapse of the restrictions on the Stock Award or Performance Award. For the avoidance of doubt, dividends and Dividend Equivalents will not, in any event, be payable until the restrictions on the underlying Stock Award or Performance Award have lapsed. In the event the Stock +Award or Performance Award is forfeited, dividends and Dividend Equivalents paid with respect to such shares during the Restriction Period shall also be forfeited. No Dividend Equivalents may be paid in respect of an Award of Options or SARs. +10. +Stock Option Exercise . The price at which shares of Common Stock may be purchased under an Option shall be paid in full at the time of exercise in cash or, if elected by the optionee, the optionee may purchase such shares by means of tendering Common Stock valued at Fair Market Value on the date of exercise, or any combination thereof. The Committee shall determine acceptable methods for Participants to tender Common Stock. The Committee may provide for procedures to permit the exercise or purchase of such Awards by foregoing the delivery of shares of Common Stock otherwise deliverable upon the exercise of the Option or by use of the proceeds to be received from the sale of Common Stock issuable pursuant to an Award. +11. +Taxes . The Company shall have the right to deduct applicable taxes from any Award payment and withhold, at the time of delivery or vesting of cash or shares of Common Stock under this Plan, an appropriate amount of cash or number of shares of Common Stock or a combination thereof for payment of taxes required by law or to take such other action as may be necessary in the opinion of the Company to satisfy all obligations for withholding of such taxes. The Committee may also permit withholding to be satisfied by (i) the transfer to the Company of shares of Common Stock theretofore owned by the holder of the Award or (ii) withholding from the shares otherwise deliverable under the Award, in either case with respect to which withholding is required, up to the maximum tax rate applicable to the Participant, as determined by the Committee. If shares of Common Stock are used to satisfy tax withholding, such shares shall be valued based on the Fair Market Value when the tax withholding is required to be made. +12. +Amendment, Modification, Suspension or Termination . The Board may amend, modify, suspend or terminate this Plan for the purpose of meeting or addressing any changes in legal requirements or for any other purpose permitted by law, except that (i) no amendment or alteration that would adversely affect the rights of any Participant under any Award previously granted to such Participant shall be made without the consent of such Participant and (ii) no amendment or alteration shall be effective prior to its approval by the shareholders of the Company to the extent such approval is then required pursuant to Rule 16b-3 in order to preserve the applicability of any exemption provided by such rule to any Award then outstanding (unless the holder of such Award consents) or to the extent shareholder approval is otherwise required by applicable legal requirements. +13. +Minimum Vesting . Notwithstanding anything to the contrary in the Plan, each Award Agreement will require that an Award be subject to a minimum vesting period of at least one (1) year commencing from the date of grant or, for any Participant who is a “Non-Employee Director”, a vesting period of less than one year from the date of grant, but not less than 50 weeks, so long as such Awards are granted in connection with a regular annual meeting of shareholders and vest at the next annual meeting of the shareholders following the grant; provided that (a) up to five percent (5%) of the maximum number of shares available for issuance pursuant to the Plan may be granted without being subject to the foregoing restrictions and (b) any dividends or Dividend Equivalents issued in connection with any Award granted at any time under the Plan shall not be subject to or counted for either such restrictions or such five percent (5%) share issuance limit. The foregoing five percent (5%) share issuance limit shall be subject to adjustment consistent with the adjustment provisions of Section 15 and the share usage rules of Section 4. For the purpose of clarity, this Section 13 will not prevent the Committee from accelerating the vesting of any Award in accordance with any of the provisions set forth in the Plan upon the occurrence of a specific event, such as a termination of a Participant's employment or service or a Change in Control or other corporate transaction. +96 CALLON PETROLEUM +APPENDIX B +14. +Assignability . Unless otherwise determined by the Committee and provided in the Award Agreement, no Award or any other benefit under this Plan constituting a derivative security within the meaning of Rule 16a-1(c) under the Exchange Act shall be assignable or otherwise transferable except by will or the laws of descent and distribution or pursuant to a qualified domestic relations order in a form acceptable to the Committee. The Committee may prescribe and include in applicable Award Agreements other restrictions on transfer. Any attempted assignment of an Award or any other benefit under this Plan in violation of this Section 14 shall be null and void. +15. +Adjustments . +(a) +The existence of outstanding Awards shall not affect in any manner the right or power of the Company or its shareholders to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in the capital stock of the Company or its business or any merger or consolidation of the Company, or any issue of bonds, debentures, preferred or prior preference stock (whether or not such issue is prior to, on a parity with or junior to the Common Stock) or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding of any kind, whether or not of a character similar to that of the acts or proceedings enumerated above. +(b) +In the event of any subdivision or consolidation of outstanding shares of Common Stock, declaration of a dividend payable in shares of Common Stock or other stock split, the adoption by the Company of any plan of exchange affecting the Common Stock or any distribution to holders of Common Stock of securities or property (other than normal cash dividends or dividends payable in Common Stock), (i) the number of shares of Common Stock reserved under this Plan, (ii) the number of shares of Common Stock covered by Awards in the form of Common Stock or units denominated in Common Stock, (iii) the exercise or other price in respect of such Awards, and (iv) the appropriate Fair Market Value and other price determinations for such Awards shall each be proportionately adjusted by the Board to reflect such event; provided that such adjustments shall only be such as are necessary to maintain the proportionate interest of the holders of the Awards and preserve, without exceeding, the value of such Awards. +(c) +In the event of a corporate merger, consolidation, acquisition of property or stock, separation, reorganization or liquidation, the Board may make such adjustments to outstanding Awards or other provisions for the disposition of outstanding Awards as it deems equitable, and shall be authorized, in its discretion, (i) to provide for the substitution of a new Award or other arrangement (which, if applicable, may be exercisable for such property or stock as the Board determines) for an outstanding Award or the assumption of an outstanding Award, regardless of whether in a transaction to which Section 424(a) of the Code applies, (ii) to provide, prior to the transaction, for the acceleration of the vesting and exercisability of, or lapse of restrictions with respect to, the outstanding Award and, if the transaction is a cash merger, to provide for the termination of any portion of the Award that remains unexercised at the time of such transaction or (iii) to provide for the acceleration of the vesting and exercisability of an outstanding Award and the cancellation thereof in exchange for such payment of such cash or property as shall be determined by the Board in its sole discretion, which for the avoidance of doubt in the case of Options or SARs (whether stock- or cash-settled) shall be the excess, if any, of the Fair Market Value of the shares of Common Stock subject to the Option or SAR on such date over the aggregate exercise price of such Award; provided , however , that no such adjustment shall increase the aggregate value of any outstanding Award. No adjustment or substitution pursuant to this Section 15 shall be made in a manner that results in noncompliance with Section 409A of the Code, to the extent applicable. +16. +Restrictions . No Common Stock or other form of payment shall be issued with respect to any Award unless the Company shall be satisfied based on the advice of its counsel that such issuance will be in compliance with applicable federal and state securities laws. It is the intent of the Company that grants of Awards under this Plan comply with Rule 16b-3 with respect to persons subject to Section 16 of the Exchange Act unless otherwise provided herein or in an Award Agreement and that any ambiguities or inconsistencies in the construction of such an Award or this Plan be interpreted to give effect to such intention. Certificates evidencing shares of Common Stock delivered under this Plan (to the extent that such shares are so evidenced) may be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations and other requirements of the Securities and Exchange Commission, any securities exchange or transaction reporting system upon which the Common Stock is then listed or to which it is admitted for quotation and any applicable federal or state securities law. The Committee may cause a legend or legends to be placed upon such certificates (if any) to make appropriate reference to such restrictions. The Committee may also impose such restrictions, conditions or limitations as it determines appropriate as to the timing and manner of any resales by a Participant, other subsequent transfers by the Participant of any shares of Common Stock issued as a result of or under an Award, or the exercise of Options and SARs, including without limitation, restrictions under an insider trading policy. +2020 PROXY STATEMENT 97 +APPENDIX B +17. +Unfunded Plan . Insofar as it provides for Awards of cash, Common Stock or rights thereto, this Plan shall be unfunded. Although bookkeeping accounts may be established with respect to Participants who are entitled to cash, Common Stock or rights thereto under this Plan, any such accounts shall be used merely as a bookkeeping convenience. The Company shall not be required to segregate any assets that may at any time be represented by cash, Common Stock or rights thereto, nor shall this Plan be construed as providing for such segregation, nor shall the Company, the Board or the Committee be deemed to be a trustee of any cash, Common Stock or rights thereto to be granted under this Plan. Any liability or obligation of the Company to any Participant with respect to an Award of cash, Common Stock or rights thereto under this Plan shall be based solely upon any contractual obligations that may be created by this Plan and any Award Agreement, and no such liability or obligation of the Company shall be deemed to be secured by any pledge or other encumbrance on any property of the Company. Neither the Company nor the Board nor the Committee shall be required to give any security or bond for the performance of any obligation that may be created by this Plan. +18. +Section 409A of the Code . All Awards under this Plan are intended either to be exempt from, or to comply with the requirements of Section 409A, and this Plan and all Awards shall be interpreted and operated in a manner consistent with that intention. Notwithstanding anything in this Plan to the contrary, if any Plan provision or Award under this Plan would result in the imposition of an applicable tax under Section 409A, that Plan provision or Award shall be reformed to avoid imposition of the applicable tax and no such action shall be deemed to adversely affect the Participant’s rights to an Award. +19. +Governing Law . This Plan and all determinations made and actions taken pursuant hereto, to the extent not otherwise governed by mandatory provisions of the Code or the securities laws of the United States, shall be governed by and construed in accordance with the laws of the State of Delaware. +20. +Clawback . To the extent required by applicable law or any applicable securities exchange listing standards, or as otherwise determined by the Committee, Awards and amounts paid or payable pursuant to or with respect to Awards shall be subject to the provisions of any clawback policy implemented by the Company, which clawback policy may provide for forfeiture, repurchase or recoupment of Awards and amounts paid or payable pursuant to or with respect to Awards. Notwithstanding any provision of this Plan or any Award Agreement to the contrary, the Company reserves the right, without the consent of any Participant, to adopt any such clawback policies and procedures. +21. +No Right to Employment or Continued Service . Nothing in this Plan or an Award Agreement shall interfere with or limit in any way the right of the Company or a Subsidiary to terminate any Participant’s employment or other service relationship at any time, nor confer upon any Participant any right to continue in the capacity in which he or she is employed or otherwise serves the Company or any Subsidiary. Further, nothing in this Plan or an Award Agreement constitutes any assurance or obligation of the Board to nominate any Non-employee Director for re-election by the Company’s shareholders. +22. +Successors . All obligations of the Company under this Plan with respect to Awards granted hereunder shall be binding on any successor to the Company by merger, consolidation or otherwise. +23. +Effectiveness . This Plan, as approved by the Board on April 17, 2020, shall be effective as of the Effective Date, the date on which it was approved by the shareholders of the Company. This Plan shall continue in effect for a term of ten years after the Effective Date, unless sooner terminated by action of the Board. Notwithstanding the foregoing, the adoption of this Plan is expressly conditioned upon the approval by the holders of a majority of shares of Common Stock present, or represented, and entitled to vote at a meeting of the Company’s shareholders at the Company’s 2020 annual shareholders meeting to be held on [•], 2020, or any adjournment or postponement thereof. If the shareholders of the Company should fail to so approve this Plan on such date, this Plan shall not be of any force or effect and the Prior Plan shall continue in force and effect. +IN WITNESS WHEREOF, the Company has caused this Plan to be executed by its duly authorized officer. +CALLON PETROLEUM COMPANY +By: +Title: +98 CALLON PETROLEUM +APPENDIX C +FORM OF +CERTIFICATE OF AMENDMENT OF +CERTIFICATE OF INCORPORATION OF +CALLON PETROLEUM COMPANY +The undersigned, Michol L. Ecklund, Corporate Secretary of Callon Petroleum Company (the “Corporation” ), a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the “DGCL” ), does hereby certify as follows: +FIRST: The name of the Corporation is Callon Petroleum Company. +SECOND: This Amendment (the “Amendment” ) to the Certificate of Incorporation of the Corporation (the “Certificate” ) was duly adopted in accordance with the provisions of Section 242 of the Delaware General Corporation Law. The Board of Directors has duly adopted resolutions setting forth and declaring advisable this Amendment and the holders of a majority of the outstanding stock of the Corporation entitled to vote at the meeting of the stockholders called and held upon notice in accordance with Section 222 of the General Corporation Law of the State of Delaware for the purpose of voting on the Amendment have voted in favor of this Amendment. +THIRD: The Certificate is hereby amended by amending and restating the first sentence of Article Four to be and read as follows: +The Corporation shall have authority to issue two classes of stock, and the total number authorized shall be [10,500,000-52,500,000] shares of Common Stock, par value $.01 per share, and 2,500,000 shares of Preferred Stock, par value $.01 per share. +Each [10-50] shares of the Corporation’s common stock, par value $0.01 per share (the “Common Stock” ) issued and outstanding on the effective date of this Amendment shall automatically be combined into one validly issued, fully paid and non-assessable share of Common Stock, without any action by the holder thereof, subject to the treatment of fractional interests as described below (the “Reverse Stock Split” ). No certificates representing fractional shares of Common Stock shall be issued in connection with the Reverse Stock Split. Stockholders who otherwise would be entitled to receive fractional share interests of Common Stock in connection with the Reverse Stock Split shall, with respect to such fractional interest, be entitled to receive cash, without interest, in lieu of fractional shares of Common Stock, in an amount equal to the proceeds attributable to the sale of such fractional interest following the aggregation and sale by the Company’s transfer agent of all fractional shares otherwise issuable. Each certificate that prior to such combination represented shares of Common Stock ( “Old Certificates” ) shall thereafter represent that number of shares of Common Stock into which the shares of Common Stock represented by the Old Certificate shall have been combined, subject to the elimination of fractional share interests as described above. +IN WITNESS WHEREOF , the undersigned has executed this amendment on behalf of the Corporation and has attested such execution and does verify and affirm, under penalty of perjury, that this amendment is the act and deed of the Corporation and that the facts stated herein are true as of this [•] day of [•], [•]. +CALLON PETROLEUM COMPANY +By: +Michol L. Ecklund, Corporate Secretary +2020 PROXY STATEMENT 99 +PRELIMINARY PROXY CARD--SUBJECT TO COMPLETION +CALLON PETROLEUM COMPANY +ANNUAL MEETING OF SHAREHOLDERS +[ ● ], 2020 AT [ ● ] CDT +SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF CALLON PETROLEUM COMPANY +The undersigned hereby appoints Michol L. Ecklund, as proxy with full power of substitution and re-substitution, to vote all shares of Common Stock of Callon Petroleum Company that the undersigned is entitled to vote at the Annual Meeting of Shareholders thereof to be held at the La Scala Meeting Room of The Moran Hotel, 800 Sorella Court, Houston, Texas 77024 on [ ● ], 2020, or at any adjournment or postponement thereof, as follows: +ALL SHARES WILL BE VOTED AS DIRECTED HEREIN AND, UNLESS OTHERWISE DIRECTED, WILL BE VOTED “FOR” PROPOSAL 1 (ALL NOMINEES), “FOR” PROPOSAL 2, “FOR” PROPOSAL 3, “FOR” PROPOSAL 4, “FOR” PROPOSAL 5, AND “FOR” PROPOSAL 6, AND IN ACCORDANCE WITH THE DISCRETION OF THE PERSON VOTING THE PROXY WITH RESPECT TO ANY OTHER BUSINESS PROPERLY BROUGHT BEFORE THE MEETING OR AT ANY ADJOURNMENT OR POSTPONEMENT THEREOF. The undersigned shareholder further hereby ratifies all that the said proxy may do by virtue hereof. If any nominee named on the reverse side is unable to serve or for good cause will not serve as a director, the person named as proxy shall have the authority to vote for any other person who may be nominated at the instruction and discretion of the Board of Directors or an authorized committee thereof. +The undersigned shareholder hereby revokes any other proxy heretofore executed by the undersigned for the Annual Meeting and acknowledges receipt of the Notice of the 2020 Annual Meeting of Shareholders and Proxy Statement dated [ ● ], 2020 and the Annual Report to Shareholders furnished in connection therewith. +You are encouraged to specify your choice by marking the appropriate box (SEE REVERSE SIDE), but you need not mark any box if you wish to vote in favor. +(CONTINUED AND TO BE SIGNED ON REVERSE SIDE) +PLEASE DETACH ALONG PERFORATED LINE AND MAIL IN THE ENVELOPE PROVIDED. +IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD [ ● ]. +THE PROXY STATEMENT IS AVAILABLE AT: +HTTP://WWW.VIEWPROXY.COM/CALLONPETROLEUM/2020 +Please mark votes as in this example +ý +THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” PROPOSALS 1, 2, 3, 4, 5, and 6. +1. +Election of Directors: +4. +The ratification of the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2020. +FOR ALL +WITHHOLD +ALL +FOR ALL +EXCEPT +01 +Matthew R. Bob +¨ +¨ +¨ +¨ +FOR +¨ +AGAINST +¨ +ABSTAIN +02 +Anthony J. Nocchiero +¨ +5. +The approval of an amendment to the Company’s certificate of incorporation in the form attached to the accompanying Proxy Statement as Appendix C to effect a reverse stock split of our issued and outstanding common stock at a ratio that will be determined by the Board of Directors and that will be within a range of 1-for-10 to 1-for-50, if the Board determines, in its sole discretion, at any time prior to the first anniversary of the Annual Meeting that the reverse stock split is in the best interests of the Company and its shareholders. +03 +James M. Trimble +¨ +2. +The approval, by non-binding advisory vote, of the compensation of our named executive officers. +¨ +FOR +¨ +AGAINST +¨ +ABSTAIN +3. +The approval of the Company's 2020 Omnibus Incentive Plan. +¨ +FOR +¨ +AGAINST +¨ +ABSTAIN +¨ +FOR +¨ +AGAINST +¨ +ABSTAIN +6. +The approval of an amendment to the Company’s certificate of incorporation in the form attached to the accompanying Proxy Statement as Appendix C to reduce the number of authorized shares of our common stock by the reverse stock split ratio determined by the Board. +¨ +FOR +¨ +AGAINST +¨ +ABSTAIN +MARK “X” HERE IF YOU PLAN TO ATTEND THE MEETING: +¨ +Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person. +DO NOT PRINT IN THIS AREA +(Shareholder Name & Address Data) +Date: +Signature +Signature (if held jointly) +Address Change/Comments: (If you noted any Address Changes and/or Comments above, please mark box.) ¨ +CONTROL NUMBER +PLEASE DETACH ALONG PERFORATED LINE AND MAIL IN THE ENVELOPE PROVIDED. +CONTROL NUMBER +SCAN TO +VIEW MATERIALS & VOTE +PROXY VOTING INSTRUCTIONS +Please have your 11 digit control number ready when voting by Internet or Telephone. +If you vote by phone, fax or Internet, please DO NOT mail your proxy card. +INTERNET +TELEPHONE +MAIL +Vote Your Proxy on the Internet: +Vote Your Proxy by Phone: +Vote Your Proxy by Mail: +Go to www.AALVote.com/CPE +Call 1 (866) 804-9616 +Have your proxy card available when you access the above website. Follow the prompts to vote your shares. +Use any touch-tone telephone to vote your proxy. Have your proxy card available when you call. Follow the voting instructions to vote your shares. +Mark, sign, and date your proxy card, then detach it, and return it in the postage-paid envelope provided. \ No newline at end of file diff --git a/raw/proxies/0000928022/0000928022-20-000059/proxy_rpt.txt b/raw/proxies/0000928022/0000928022-20-000059/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..ce99198e8dab14ee44de4f2b684db554a9c8a0b0 --- /dev/null +++ b/raw/proxies/0000928022/0000928022-20-000059/proxy_rpt.txt @@ -0,0 +1,7 @@ +Certain Relationships and Related Party Transactions +The Audit Committee charter provides that the Audit Committee shall review and approve all related party transactions. A transaction will be considered a “related party transaction” if the transaction would be required to be disclosed under Item 404 of Regulation S-K. In addition, our Code provides that an officer’s or a director’s conflict of interest with Callon may only be waived if the Nominating and Corporate Governance Committee approves the waiver and the full Board ratifies the waiver. +For the fiscal year ended 2019, Austin Weant, who is the son of Jerry Weant, our former Vice President of Land, received $162,400 in total compensation as an employee of the Company, which is consistent with market compensation for his services. In addition, Austin Weant was eligible to participate in all benefit plans and programs available generally to the Company’s employees. +Except for the foregoing, as of December 31, 2019, we are not aware of any related party transactions with our executive officers that require disclosure under Item 404 of Regulation S-K. +Shareholders’ Proposals and Director Nominations for the 2021 Annual Meeting +In order for a proposal to be considered for inclusion in the proxy statement for the 2021 Annual Meeting of Shareholders (the “2021 Annual Meeting”) pursuant to Rule 14a-8 of the Exchange Act, such proposal must be received by the Secretary of the Company at our principal executive offices no later than [•], 2020 (assuming the date of the 2021 Annual Meeting has not been changed by more than 30 days from the date of this year’s Annual Meeting), and must otherwise be in compliance with the requirements of the SEC’s proxy rules. If the date of the 2021 Annual meeting has been changed by more than 30 days from the date of this Annual Meeting, then the deadline is a reasonable time before we begin to print and send our proxy materials for the 2021 Annual Meeting. +For a shareholder proposal to be introduced for consideration at the 2021 Annual Meeting but not intended to be considered for inclusion in the Company's proxy statement and form of proxy relating to such meeting (i.e. not pursuant to Rule 14a-8 of the Exchange Act), including shareholder nominations for candidates for election as directors, a shareholder must provide written notice of such proposal to Company not later than 120 days nor earlier than 150 days before the date of the 2021 Annual Meeting. Any such notice must describe the shareholder proposal in reasonable detail and otherwise comply with the requirements set forth in our bylaws. \ No newline at end of file diff --git a/raw/proxies/0000928022/0000928022-20-000063/proxy.txt b/raw/proxies/0000928022/0000928022-20-000063/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..eeee85615cedbd8b9bf807191f0575c3f99f3694 --- /dev/null +++ b/raw/proxies/0000928022/0000928022-20-000063/proxy.txt @@ -0,0 +1,3938 @@ +DEF 14A +1 +callon2020proxydef14a42820.htm +DEF 14A +Document +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Proxy Statement Pursuant to Section 14(a) of +the Securities Exchange Act of 1934 (Amendment No. ) +Filed by the Registrant ý +Filed by a Party other than the Registrant ¨ +Check the appropriate box: +¨ +Preliminary Proxy Statement +¨ +Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +ý +Definitive Proxy Statement +¨ +Definitive Additional Materials +¨ +Soliciting Material under §240.14a-12 +Callon Petroleum Company +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +ý +No fee required. +¨ +Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. +(1) +Title of each class of securities to which transaction applies: +(2) +Aggregate number of securities to which transaction applies: +(3) +Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): +(4) +Proposed maximum aggregate value of transaction: +(5) +Total fee paid: +¨ +Fee paid previously with preliminary materials. +¨ +Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. +(1) +Amount Previously Paid: +(2) +Form, Schedule or Registration Statement No.: +(3) +Filing Party: +(4) +Date Filed: +ABOUT CALLON +Callon Petroleum is an independent oil and natural gas company focused on the acquisition, exploration and development of high-quality assets in the leading oil plays of West and South Texas. +Our Values +Responsibility +The safety of our employees, contractors and communities is of utmost importance – this is not negotiable. We recognize that we earn the right to operate every day by developing our assets responsibly and with respect for the environment. We focus on safety and protection of the environment in every operation, and all Callon representatives are authorized to “stop work” if these are at risk. +Integrity +We always strive to do the right thing and pride ourselves on being a preferred partner. We are consistently open, honest, ethical and genuine. We do what we say and are accountable for our actions. +Drive +Keenly focused on leading, we relentlessly challenge the status quo to meet and exceed our expectations for top-tier performance in all aspects of our business. +Respect +We value the ideas and contributions of all team members and show consideration and appreciation for one another. We recognize and embrace each other’s differences and work towards our common goals. +Excellence +Our business requires focused innovation and evaluation of new opportunities for resource extraction. We balance the application of new technologies and testing of new concepts with prudent risk management and thorough data analysis. +Awards and Recognition +We are recognized as one of the top places to work in 2017, 2018, and 2019 by the Houston Chronicle. +A JOINT LETTER FROM OUR CHAIRMAN AND OUR CHIEF EXECUTIVE OFFICER +April 28, 2020 +DEAR FELLOW SHAREHOLDERS, +On behalf of the Board of Directors of Callon Petroleum Company, we are pleased to invite you to our 2020 Annual Meeting of Shareholders, which will take place on June 8, 2020 at 9:00 a.m. Central Daylight Time (CDT), in the La Scala Room of The Moran Hotel, located at 800 Sorella Court in Houston, Texas. +Today we are filing the Notice of Annual Meeting of Shareholders and the Proxy Statement which describe the matters to be acted upon at the meeting. This year we are asking our shareholders to elect directors, approve our 2020 incentive plan, ratify the appointment of our auditors, approve, on a non-binding advisory basis, the compensation of our named executive officers, and allow our Board to approve amendments to our certificate of incorporation to effect a reverse stock split and a pro rata reduction to the number of authorized shares . +2019 was a transformational year for Callon. The Company continued its long-term value creation focus with the execution of multiple strategic initiatives across operations, finance, environmental, social and governance. The Company’s development program successfully transitioned to larger projects featuring multi-zone co-development, leading to improved capital efficiency, lower costs and the preservation of industry-leading margins. +The year culminated with the successful closing of the Carrizo Acquisition, which more than doubled the Company’s production, reserves, acreage, and cash flow. Importantly, the acquisition also brought together two talented organizations that are grounded in strong values and a shared commitment to responsible operations, integrity and a drive to deliver results. Together, we face the challenges brought on by the global outbreak of the COVID-19 virus with a diversified asset base that provides optionality to support cash generation amid commodity price volatility. +Your vote is important, and we encourage you to review this proxy statement and to vote promptly so that your shares will be represented at the meeting. On behalf of everyone at Callon, we want to thank you, our valued shareholders, for your continued support of the work we do. +Sincerely, +L. Richard Flury +Chairman of the Board +Joseph C. Gatto, Jr. +President, Chief Executive Officer and Director +L. Richard Flury +Chairman of the Board +Joseph C. Gatto, Jr. +President, Chief Executive Officer and Director +We encourage you to read our 2019 Annual Report, which includes our financial statements as of and for the year ended December 31, 2019. Please also refer to the sections captioned “Risk Factors” and “Special Note Regarding Forward-Looking Statements,” for a description of the substantial risks and uncertainties related to the forward-looking statements included herein. +2020 PROXY STATEMENT 3 +NOTICE OF ANNUAL +MEETING OF SHAREHOLDERS +Dear Shareholders, +You are invited to participate in the 2020 Annual Meeting of Shareholders (the “Annual Meeting”) of Callon Petroleum Company (“Callon,” the “Company,” “us,” “we,” “our” or like terms), a Delaware corporation. +When +June 8, 2020, at 9:00 a.m. Central Daylight Time (“CDT") +Where +The Moran Hotel +La Scala Room +800 Sorella Court +Houston, Texas 77024 +We are monitoring coronavirus (COVID-19) developments and the related recommendations and protocols issued by public health authorities and federal, state and local governments, and we are sensitive to the public health and travel concerns that our shareholders may have. In the event we determine it is necessary or appropriate to postpone or move the Annual Meeting to another location or hold the Annual Meeting virtually, we will announce this decision in advance in a press release and post details on our website, which will also be filed with the Securities and Exchange Commission. +Whether or not you plan to attend the Annual Meeting, please vote electronically via the Internet, by telephone, or by mail as soon as possible. +Voting matters +Board +Recommendation +Proposal 1: +To elect three Class II directors to serve on our Board of Directors (the “Board”), each for three years. +FOR each of the Class II directors +See page 11 +Proposal 2: +To approve, on a non-binding advisory basis, the compensation of our named executive officers (“NEOs”). +FOR +See page 34 +Proposal 3: +To approve the Company's 2020 Omnibus Incentive Plan (the "2020 Plan"). +FOR +See page 62 +Proposal 4: +To ratify the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2020. +FOR +See page 70 +Proposal 5: +To approve an amendment to our certificate of incorporation to permit us to effect a reverse stock split of our issued and outstanding common stock, par value $0.01 per share (the “common stock”), at a ratio that will be determined by the Board and that will be within a range of 1-for-10 and 1-for-50 (the “Reverse Stock Split”), if the Board determines, in its sole discretion, at any time prior to the first anniversary of the Annual Meeting, that the Reverse Stock Split is in the best interests of the Company and its shareholders. +FOR +By Internet or telephone following the simple instructions on the enclosed proxy card or voting instruction form +By mail +mark, date and sign your proxy card, and return it in the reply envelope provided +w +See page 72 +Proposal 6: +To approve an amendment to our certificate of incorporation to reduce the number of authorized shares of common stock by the reverse stock split ratio determined by the Board (the “Authorized Share Reduction”). +FOR +YOUR VOTE IS IMPORTANT! +Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Shareholders. This Proxy Statement and our 2019 Annual Report on Form 10-K are available at: www.viewproxy.com/ CallonPetroleum/2020. If you have any questions or need assistance voting your shares, please call our proxy solicitor, Innisfree M&A Incorporated, 501 Madison Avenue, 20th Floor, New York, NY 10022 +Banks and Brokerage Firms, please call: (212) 750-5833 +Shareholders, please call toll-free:(888) 750-5834 +w +See page 79 +4 CALLON PETROLEUM +NOTICE OF ANNUAL MEETING OF SHAREHOLDERS +We will also transact other business that may properly come before the Annual Meeting. +This Notice of Annual Meeting of Shareholders and the Proxy Statement herein provide further information on the Company’s performance and corporate governance and describe the matters to be presented at the Annual Meeting. The Board set April 14, 2020, as the record date (the “Record Date”) for the Annual Meeting. Holders of record of our common stock at the close of business on the Record Date are entitled to receive this notice of, and vote at, the Annual Meeting. A list of the names of shareholders entitled to vote at the Annual Meeting will be available for ten days prior to the Annual Meeting for examination by any shareholder for any purpose germane to the Annual Meeting between the hours of 9:00 a.m. and 5:00 p.m., Central Time, at our headquarters at 2000 W. Sam Houston Parkway South, Suite 2000, Houston, TX 77042. This list will also be available for such purposes during the Annual Meeting at the place of the Annual Meeting or, in the event that the Annual Meeting is held virtually, at a website to be provided in the announcement notifying shareholders of the change in meeting format. +Beginning on or about April 28, 2020, we mailed an Important Notice Regarding the Availability of Proxy Materials (the “Notice”) to our holders of record. The Notice contained instructions on how to access the Proxy Statement and related materials on the Internet and how to enter your voting instructions. Instructions for requesting a paper copy of the proxy materials are contained in the Notice. +We thank you for your continued support and look forward to seeing you at the Annual Meeting. +By Order of the Board of Directors, +Michol L. Ecklund +Senior Vice President, General Counsel +and Corporate Secretary . +Houston, Texas +April 28, 2020 +2020 PROXY STATEMENT 5 +TABLE OF CONTENTS +A JOINT LETTER FROM OUR CHAIRMAN AND OUR CHIEF EXECUTIVE OFFICER +3 +NOTICE OF ANNUAL MEETING OF SHAREHOLDERS +4 +PERFORMANCE HIGHLIGHTS +7 +SUSTAINABILITY AT CALLON PETROLEUM +9 +PROPOSAL 1 - ELECTION OF CLASS II DIRECTORS +11 +Board of Directors +11 +Directors Nominated for Re-Election +13 +CORPORATE GOVERNANCE +15 +Directors Continuing in Office +15 +Director Compensation +20 +Director Independence +21 +Board Structure and Responsibilities +22 +Committees of the Board +25 +Corporate Governance Matters +30 +EXECUTIVE OFFICERS +32 +PROPOSAL 2 - APPROVE, ON AN ADVISORY BASIS, THE COMPENSATION OF THE COMPANY'S NEOS +34 +EXECUTIVE COMPENSATION +36 +Compensation Discussion and Analysis +36 +Compensation Committee Report +51 +Executive Compensation Tables +52 +CEO Pay Ratio +61 +PROPOSAL 3 - APPROVE THE 2020 OMNIBUS INCENTIVE PLAN +62 +PROPOSAL 4 - RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM, GRANT THORNTON LLP, FOR 20 20 +70 +Audit Committee Report +71 +PROPOSAL 5 - APPROVE THE REVERSE STOCK SPLIT +72 +PROPOSAL 6 - APPROVE THE AUTHORIZED SHARE REDUCTION +79 +OTHER MATTERS +81 +Beneficial Ownership of Securities +81 +Principal Shareholders and Management +81 +Section 16(a) Beneficial Ownership Reporting Compliance +83 +Certain Relationships and Related Party Transactions +83 +Shareholders’ Proposals and Director Nominations for the 202 1 Annual Meeting +83 +ANNUAL MEETING INFORMATION +85 +Information Concerning Solicitation and Voting +85 +Information About Voting and the Annual Meeting +85 +Required Vote +88 +Voting Results +89 +Householding Information +89 +Financial Statements and Other Available Documents +89 +Other Business +89 +APPENDIX A +90 +APPENDIX B +91 +APPENDIX C +99 +6 CALLON PETROLEUM +PERFORMANCE HIGHLIGHTS +Callon is an independent oil and natural gas company focused on the acquisition, exploration, and development of high-quality assets in leading Texas oil plays located in the Permian Basin and the Eagle Ford Shale. Callon’s strong foundation spans over 70 years with an ongoing mission to build trust, create long-term value, and drive sustainable cash flow growth for our stakeholders. We are positioned to deliver value for our stakeholders in 2020 and beyond through the following: +PREPARATION +PURPOSE +EXECUTION OF PURPOSE +• Significant scale and high operational control of ~200,000 net acres in Texas's producer-friendly Permian Basin and Eagle Ford Shale +• Robust infrastructure network from multiple years of thoughtful planning and investment reduces overall capital intensity +• Liquidity flexibility and free cash flow initiatives support long-term co-development for inventory and balance sheet preservation +• Talented workforce with growing technical expertise identifies with a culture of responsibility and adaptability in a cyclical commodity business +• Long-term value creation focuses on growing corporate level returns through capital efficiency and reserve recovery optimization +• Sustainable business model balances capital efficiency improvements with longer-term reinvestment reduction initiatives +• Stakeholder alignment through governance structure and ongoing engagement across shareholders, employees, and communities in which we operate +• Expanding ESG oversight to maximize impact of initiatives and ensure corporate responsibility priorities are achieved +• Accelerate corporate returns on capital through margin preservation, capital intensity reduction, and portfolio optimization +• Generate meaningful free cash flow through breakeven cost reduction and moderation of production declines +• Improve financial profile with simplified capital structure and no near-term maturities with asset monetization upside +• Long term vision focused on safety and sustainability to maximize reserve capture through prudent co-development operations +2019 was a transformational year for Callon. The Company continued its long-term value creation focus with the execution of multiple strategic initiatives across operations, finance, environmental, social and governance. The Company’s development program successfully transitioned to larger projects featuring multi-zone co-development, leading to improved capital efficiency, lower costs and the preservation of industry-leading margins. The year culminated with the successful closing of the Carrizo Acquisition, which more than doubled the Company’s production, reserves, acreage, and cash flow. The combined Company features a diversified asset base that supports our scaled development model and provides significant optionality to support cash generation amid commodity price volatility. While Callon’s share price was negatively impacted, along with its industry peers, by commodity price volatility and a shift in sector-wide investor sentiment, the Company maintained its commitment to long-term value creation in 2019 as reflected by the achievement of multiple key operational, financial and ESG highlights as described below. +2020 PROXY STATEMENT 7 +PERFORMANCE HIGHLIGHTS +• With the closing of the Carrizo Acquisition, more than doubled our acreage position to nearly 200,000 net acres in Texas's producer-friendly Permian Basin and Eagle Ford Shale. +• Generated over $500 million in Adjusted EBITDA (i) . +• Completed over $300 million of non-core asset monetizations. +• Redeemed approximately $270 million of preferred securities resulting in prospective dividend savings of nearly $25 million annually. +• Generated $58.2 million in free cash flow (ii) during the fourth quarter of 2019 (on a pro forma basis). +• Maintained an industry leading EBITDA margin of $33.28 per Boe for 2019. (i) +• Achieved record production (top of guidance) with operational capital spending below the bottom of full year guidance range. +• Initiated full-field co-development across all asset areas, lowering target development costs and improving capital efficiency. +• Grew total proved reserves to 540 MMBoe with a PV-10 (i) value of $5.4 billion as of December 31, 2019. +• Achieved record safety performance metrics, including a Total Recordable Incident Rate that was 50% lower than prior year. +• 2x recycled water volumes from 2018, further reducing environmental impact of operations. +• Reduced flaring by more than 40% year over year and was in the lowest third of all Texas producers in flaring intensity per the most recent TX RRC report. (iii) +(i) +See Appendix A for a reconciliation of Non-GAAP financial measures +(ii) +Free cash flow is defined as Adjusted EBITDA minus the sum of operational capital, capitalized interest, capitalized G&A, and interest expense. Adjusted EBITDA is a Non-GAAP financial measure; please refer to Appendix A for a reconciliation +(ii) +TX RRC defines flare intensity as gross daily flare volumes divided by gross daily oil production +Coming off a strong 2019, Callon remains driven by a long-term value focus, and our progress in maturing our operations and production base in recent years now allows us to drive continued improvements in our cash flow profile and corporate-level returns. In 2020 and beyond, the Company is well-positioned to progress efficiencies in our development program through larger pad developments, reduced leasehold obligations and leveraging of established infrastructure for the benefit of our shareholders. +8 CALLON PETROLEUM +SUSTAINABILITY AT +CALLON PETROLEUM +At Callon, our commitment to our shareholders is simple: create value in a responsible manner. Our focus on integrating sustainable business practices and achieving long-term results drives our operations. In alignment with these goals, our Board of Directors oversees the company’s safety and environmental policies, development of a positive corporate culture and an effective corporate governance program. To ensure that sustainability matters remain a priority at Callon, the independent Nominating and Corporate Governance Committee of our Board has direct oversight responsibility for our ESG policies and performance for the development of Company positions related to stakeholder concerns and emerging issues that affect our industry. The entire Callon team is committed to improving returns for our shareholders while positively impacting the communities in which we live and work. +Our corporate focus is anchored by five core values: Responsibility , Integrity , Drive , Respect and Excellence . +Environmental +Callon is committed to safeguarding the environment and conducting our business in a manner designed to comply with applicable environmental laws and regulations and apply responsible standards where such laws or regulations do not exist. We have adopted a Safety and Environmental Policy that sets forth our operating principles and our expectations of Callon employees and contractors to operate safely, responsibly and in an environmentally sound manner. +WATER +AIR +LAND +Protecting local water supplies and minimizing our use of fresh water resources are high priorities in our operations. +As part of our environmental program, Callon monitors and seeks to reduce greenhouse gas (GHG) and other emissions from our operations. +At Callon, we strive to be good stewards of the environment and minimize our impact in the areas where we operate. +2x recycled water volumes from 2018, further reducing environmental impact from operations +All of the drilling rigs operating on Callon assets are dual-fuel rigs, which reduce greenhouse gas emissions in our operations. +Decreased total fluid spill rate by ~50% +<20% +permitted water infrastructure utilization rate in Permian Basin minimizes future environmental impact +Eliminated diesel-powered generators as a primary source of power and in doing so lowered our emissions and operating costs. +>2x increase in average project size in 2020 minimizes surface impact +60% produced water sourced for Delaware completions +>40% reduction in gas flaring intensity (1) +>90% of crude and water transported via pipeline +(1) +Based on flaring intensity MCF/Bbl as defined by the Texas Railroad Commission (TX RRC). TX RRC defines flare intensity as gross daily flare volumes divided by gross daily oil production. +Social +Callon values the perspectives of all stakeholders including employees, contractors, local communities and shareholders. We are focused on protecting, empowering and developing our team members and contributing meaningfully to the communities where we live and work. For us, corporate stewardship is not just a financial obligation, but a social duty as well. +2020 PROXY STATEMENT 9 +SUSTAINABILITY AT CALLON PETROLEUM +Safety +50% reduction in Total Recordable Incident Rate (TRIR) (2019 best year on record for safety performance) +At Callon, protecting our people and our communities is our top priority. We believe that a strong safety culture is tantamount to being a leading operator in the exploration and production (E&P) business. +Workforce +BUILDING A TOP PLACE TO WORK +At Callon, a goal is to assemble and inspire a team of passionate and innovative professionals in an environment where they can achieve their professional goals. We empower our employees and engage team members in decision-making at every level while recognizing contributions to our success. This unique environment has helped us achieve top-tier engagement scores, resulting in Callon being named a Top Workplace by Houston Chronicle in 2017 (small company), 2018 (mid-size company), and 2019 (mid-size company). +EMBRACING DIVERSE BACKGROUNDS AND PERSPECTIVES +At Callon, we value the diversity of our employees and their contributions. We are firmly committed to fostering an inclusive environment and providing equal opportunity to all qualified persons. +MINORITY EMPLOYEES +IN 2020 +Community +OPERATING IN LOCAL COMMUNITIES +SUPPORTING LOCAL COMMUNITIES +When our assets necessitate development projects near populated areas, we make every effort to mitigate the impact of our activities and work closely with city officials and neighboring landowners to proactively address considerations such as: noise, traffic, greenhouse gas emissions, and liquid spill prevention +Callon has a longstanding history of supporting the local communities in which we operate. It is our privilege to make a positive impact through charitable giving and volunteerism to support key initiatives to support education, community, and the environment. +We also sponsor a charitable matching program to support our employees’ philanthropic priorities. +Governance +At Callon, we are committed to high ethical standards and effective and sustainable corporate governance. We believe this commitment promotes the long-term interests of our shareholders, helps build public trust in our Company and strengthens Board and management accountability. We continually assess our governance principles to ensure that we are operating our business responsibly, ethically and in a manner aligned with the interests of our shareholders. Our CD&A beginning on page 36 provides additional information on governance practices for executive compensation. +Our Board expanded the scope of our independent Nominating & Corporate Governance committee to enhance oversight of the Company’s ESG policies, performance and disclosure. +Two female directors +Less than five year tenure for over half the directors +Independent , non-executive director serves as chair of the Board +10 CALLON PETROLEUM +Proposal 1 +Election of +Class II +Directors +The Board of Directors recommends a vote FOR each of the Class II director nominees named in this Proxy Statement. +• Our director nominees provide experience and perspectives that enhance the overall strategic and oversight functions of Callon’s Board. +• For more information about the nominees’ experience, skills, and qualifications, please see page 13 . +Board of Directors +Process for Selecting Directors +Director Identification and Selection +Criteria. The Nominating and Corporate Governance Committee has established guidelines for considering nominations to the Board. The Committee evaluates potential nominees based on the contribution such nominee’s background and skills could have upon achieving the goal of a well-rounded, diverse Board that functions collegially as a unit. While not an exhaustive list, key criteria include: +• +Relevant oil and gas exploration and production industry knowledge and experience; +• +Complimentary mix of backgrounds and experience in areas including business, finance, accounting, technology, and strategy; +• +Personal qualities of leadership, character, judgment and personal and professional integrity and high ethical standards; +• +The candidate’s ability to exercise independent and informed business judgment; +• +Whether the candidate is free of conflicts and has the time required for preparation, participation, and attendance at meetings; +• +Diversity, including differences in viewpoints, background, education, gender, race or ethnicity, age, and other individual qualifications and attributes; +• +The ability to work with other members of the Board, the Chief Executive Officer (the "CEO"), and senior officers of the Company in a constructive and collaborative fashion to achieve the Company’s goals and implement its strategy; and +• +In the case of an incumbent director, such director’s past performance on the Board. +The Nominating and Corporate Governance Committee and the Board may also consider other qualifications and attributes that they believe are appropriate in evaluating the ability of an individual to serve as a member of the Board. The Nominating and Corporate Governance Committee’s goal is to assemble a Board that brings to us a variety of perspectives and skills derived from high quality business and professional experience to perform its oversight role satisfactorily for our shareholders. In making its determinations, the Committee evaluates each individual in the context of the Board as a whole, with the objective of assembling a group that can best represent shareholder interests through the active, objective, and constructive participation in meetings and the strategic decision-making processes. +Diversity. Our Corporate Governance Guidelines set forth our policy with respect to Board diversity. We are committed to building a diverse Board comprised of individuals from different backgrounds, including differences in viewpoints, education, gender, race or ethnicity, age, and other individual qualifications and attributes. To accomplish this, the Nominating and Corporate Governance Committee will continue to require that search firms engaged by the Company seek to present a robust selection of women and ethnically diverse candidates in all prospective director candidate pools. +Nominating Process. In making its nominations, the Nominating and Corporate Governance Committee identifies nominees by first evaluating the current members of the Board willing to continue their service and any potential need to expand the Board to include additional expertise. Current members with a record of quality contribution to the Board whose experience contributes to a complementary mix of backgrounds that enhance the Board are renominated. When vacancies become available, the Committee may seek input from industry experts or engage third-party search firms to help source particular areas of expertise or backgrounds. +2020 PROXY STATEMENT 11 +PROPOSAL 1 +Over time, the Board refreshes its membership through a combination of adding or replacing directors to achieve the appropriate balance between maintaining longer-term directors with deep institutional knowledge of the Company and adding directors who bring a diversity of perspectives and experience. As a reflection of this philosophy, if all of the nominees are elected to the Board, following the Annual Meeting: +6/11 +directors will have tenures of five or fewer years. +10/11 +directors will be independent. +Majority Vote Standard +Our Corporate Governance Guidelines provide for a majority voting policy in uncontested director elections. The Company believes that the majority vote standard ensures accountability and the opportunity for a positive mandate from the Company’s shareholders. At any shareholder meeting for the election of directors at which a quorum is present, any nominee for director who receives a greater number of votes “withheld” from his or her election than votes “for” such election (“Majority Withheld Vote”) shall tender his or her resignation for consideration by the Nominating and Corporate Governance Committee following certification of the shareholder vote, unless the number of nominees exceeds the number of directors to be elected as of the Record Date for such meeting, in which event the directors shall be elected by a plurality of the votes cast. Such resignation will only be effective upon Board acceptance of such resignation after receiving the recommendation of the Nominating and Corporate Governance Committee. +If a director nominee receives a Majority Withheld Vote, then promptly following the certification of the election results, the Nominating and Corporate Governance Committee will consider any factors it deems relevant to the best interests of the Company and our shareholders in determining whether to accept the director’s resignation and recommend to the Board that action to be taken with respect to the tendered resignation. Within 120 days following certification of the shareholder vote, the Board shall consider the recommendation and make a determination as to whether to accept or reject such director’s resignation and shall notify the director concerned of its decision. We will also promptly publicly disclose the Board’s decision and process in a periodic or current report filed with or furnished to the SEC. +If you hold your shares through a broker and you do not instruct the broker how to vote, your broker will not have the authority to vote your shares. Abstentions and broker non-votes will each be counted as present for purposes of determining the presence of a quorum but will have no effect upon the outcome of the vote. All shares of common stock represented by proxies will be voted “FOR” the election of the director nominees, except where authority to vote in the election of directors has been withheld. Should the nominees become unable or unwilling to serve as a director at the time of the Annual Meeting, the person or persons exercising the proxies will vote for the election of substitute nominees designated by the Board, or the Board may choose to reduce the number of members of the Board to be elected at the Annual Meeting in order to eliminate the vacancy. Your proxy cannot be otherwise voted for a person who is not named in this Proxy Statement as a candidate for director or for a greater number of persons than the number of director nominees named. The Board has no reason to believe that the nominees will be unable or unwilling to serve if elected. +The Board recommends a vote FOR each of the three Class II director nominees . +12 CALLON PETROLEUM +PROPOSAL 1 +Directors Nominated For Re-Election +The Board currently consists of eleven directors. Consistent with our certificate of incorporation, the current Board is divided into three classes designated as Class I, Class II, and Class III, each with staggered, three-year terms. Based on the recommendations from the Nominating and Corporate Governance Committee, the Board has nominated three continuing Class II Directors, Messrs. Matthew R. Bob, Anthony J. Nocchiero and James M. Trimble, to stand for re-election or, in each case, until the election and qualification of their respective successors or until their earlier death, retirement, resignation or removal. +The following biographies reflect the particular experience, qualifications, attributes, and skills that led the Board to conclude that each nominee should stand for re-election to serve on the Board: +Class II Directors +Matthew R. Bob +President of Eagle Oil and Gas; Managing Member of MB Exploration +Matthew Bob has served as a member of the Board since 2014. Mr. Bob currently serves as President of Eagle Oil and Gas and has been the founder and managing member of MB Exploration and affiliated companies since 1994. Previously, Mr. Bob served as President of Hall Phoenix Energy LLC, a privately held oil and gas exploration company, from 2009 to 2011. Prior to forming MB Exploration, Mr. Bob was Chief Geophysicist at Pitts Oil Company. He began his career at Union Oil Company of California where he held various geological positions. +Mr. Bob currently serves as an independent director of Southcross Energy, a natural gas processing and transportation company with operations in South Texas. +Mr. Bob holds a B.A. in Geology from St. Louis University and an M.S. in Geology from Memphis University, and is a graduate of Harvard University’s Executive Management Program. He is a member of the American Association of Petroleum Geologists, the Society of Exploration Geophysicists and the Dallas Petroleum Club, and is a registered Geoscientist in the States of Texas, Mississippi and Louisiana. +SKILLS AND QUALIFICATIONS: +Mr. Bob’s extensive knowledge of the exploration and production industry and technical expertise are assets to the Board and qualify him as a director. His experience as a senior executive further strengthens the strategic and oversight functions of the Board. +INDEPENDENT +Age 63 +Director Since 2014 +Callon Committees: +Compensation (Chairman), Nominating and Corporate Governance, Strategic Planning and Reserves +Other Current Directorships: +Southcross Energy +Anthony J. Nocchiero +Former SVP and Chief Financial Officer (Retired) of CF Industries, Inc. +Anthony Nocchiero has served as a member of the Board since 2011. Mr. Nocchiero retired as Senior Vice President and Chief Financial Officer for CF Industries, Inc. in 2010, a position he had held since 2007. From 2005 to 2007, he was the Vice President and Chief Financial Officer for Merisant Worldwide, Inc. Prior to that, Mr. Nocchiero was self-employed as an advisor and private consultant from 2002 to 2005. From 1999 to 2001, Mr. Nocchiero served as Vice President and CFO of BP Chemicals, the global petrochemical business of BP plc. Prior to that, he spent 24 years with Amoco Corporation in various financial and management positions, including service as Amoco’s Vice President and Controller from 1998 to 1999. +Mr. Nocchiero has previous experience serving as a board member of various public and private companies, including Terra Nitrogen LP, Keytrade AG, Vysis Corporation and the Chicago Chamber of Commerce. +Mr. Nocchiero holds a B.S. degree in Chemical Engineering from Washington University in St. Louis and an M.B.A. degree from the Kellogg Graduate School of Management at Northwestern University. +SKILLS AND QUALIFICATIONS: +Mr. Nocchiero’s broad financial, accounting and operating experience within the energy industry are valuable to the Board and make him a meaningful contributor as a director. Additionally, Mr. Nocchiero’s status as a “financial expert” and knowledge of public company reporting requirements add meaningful insights to the Board and Audit Committee. +INDEPENDENT +Age 69 +Director Since 2011 +Callon Committees: +Audit (Chairman), Compensation, Strategic Planning and Reserves +2020 PROXY STATEMENT 13 +PROPOSAL 1 +James M. Trimble +Former Chief Executive Officer and President (Retired) of Stone Energy Corporation +James Trimble has served as a member of the Board since 2014. Most recently, Mr. Trimble served as the interim Chief Executive Officer and President of Stone Energy Corporation from 2017 to 2018. Prior to that, Mr. Trimble served as CEO and President of PDC Energy, Inc. from 2011 until his retirement in 2015. Mr. Trimble was Managing Director of Grand Gulf Energy Limited, a public company traded on the Australian Securities Exchange, and President and CEO of Grand Gulf’s U.S. subsidiary Grand Gulf Energy Company LLC, an exploration and development company focused primarily on drilling in mature basins in Texas, Louisiana and Oklahoma, from 2005 to 2010. Earlier in his career, Mr. Trimble was CEO of TexCal (formerly Tri-Union Development) and CEO of Elysium Energy, a privately held oil and gas exploration company. Prior to that, he was Senior Vice President of Exploration and Production for Cabot Oil and Gas, a publicly-traded independent energy company. +Mr. Trimble currently serves as a director of Talos Energy, a publicly-traded oil and gas exploration company, and Chairman of the Board of Crestone Peak Resources LLC, a privately held oil and gas exploration company. Previously, Mr. Trimble was a director of Stone Energy Corporation from 2017 to 2018, PDC Energy from 2009 to 2016, C&J Energy Services from 2016 to 2017, Seisgen Exploration from 2008 to 2015, Grand Gulf Energy from 2009 to 2012, and Blue Dolphin Energy from 2002 to 2006. +Mr. Trimble was an officer of PDC Energy in September 2013, when each of the twelve partnerships for which the company was the managing general partner filed for bankruptcy in the federal bankruptcy court, Northern District of Texas, Dallas Division and was on the board of C&J Energy Services when it filed for bankruptcy in the court of the Southern District of Texas, Houston Division in July 2016. +Mr. Trimble graduated from Mississippi State University where he majored in petroleum engineering for undergraduate (Bachelor of Science) and graduate studies. He is a Registered Professional Engineer in the State of Texas. +SKILLS AND QUALIFICATIONS: +Mr. Trimble’s deep knowledge of the exploration and production industry and his leadership experience at previous companies strengthen the strategic and oversight functions of the Board. His experience on the boards of several other public companies provide valuable perspective on best practices relating to corporate governance, management and strategic transactions. +INDEPENDENT +Age 71 +Director Since 2014 +Callon Committees: +Nominating and Corporate Governance (Chairman), Compensation, Strategic Planning and Reserves +Other Current Directorships: +Talos Energy +14 CALLON PETROLEUM +CORPORATE GOVERNANCE +Directors Continuing in Office +Biographical information for our directors continuing in office is set forth below. These individuals are not standing for re-election at this time: +Class I Directors +Michael L. Finch +Former Chief Financial Officer (Retired) of Stone Energy Corporation +Michael Finch has served as a member of the Board since 2015. He spent nearly 20 years affiliated with Stone Energy Corporation, a publicly-traded oil and gas exploration company, from which he retired as Chief Financial Officer and a member of the Board of Directors in 1999. Prior to his service with Stone Energy, he was employed by Arthur Andersen & Co. +Mr. Finch was an independent director of Petroquest Energy, Inc. a publicly-traded oil and gas company, from 2003 to 2016, where he served as chairman of the Audit Committee and as a member of the Compensation Committee and the Nominating and Corporate Governance Committee. Mr. Finch currently serves on the advisory board of C.H. Fenstermaker & Associates, a multi-disciplinary consulting firm that specializes in surveying and mapping, engineering and environmental consulting. +Mr. Finch holds a B.S. in Accounting from the University of South Alabama and was licensed as a Certified Public Accountant (currently inactive). +SKILLS AND QUALIFICATIONS: +Mr. Finch’s extensive financial, accounting, and operating experience within the oil and gas industry are extremely valuable to the Board and qualify him as a director. In particular, Mr. Finch’s accounting background and status as a “financial expert” provide the Board valuable perspective on issues facing audit committees. +INDEPENDENT +Age 64 +Director Since 2015 +Callon Committees: +Audit, Compensation, Strategic Planning and Reserves +S. P. Johnson IV +Former President, Chief Executive Officer and Co-Founder (Retired) of Carrizo Oil & Gas, Inc. +Mr. Johnson was a co-founder of Carrizo and served as the President and Chief Executive Officer and as a director from December 1993 to December 2019, when Carrizo merged with the Company. Prior to that, he worked for Shell Oil Company for 15 years, where his managerial positions included Operations Superintendent, Manager of Planning and Finance and Manager of Development Engineering. +Mr. Johnson was also a director of Basic Energy Services, Inc., an oilfield service provider, and served as a director of Pinnacle Gas Resources, Inc., a coalbed methane exploration and production company, from 2003 to 2011. +Mr. Johnson is a Registered Petroleum Engineer and holds a B.S. in Mechanical Engineering from the University of Colorado. +SKILLS AND QUALIFICATIONS: +Mr. Johnson brings to the Board extensive experience in oil and gas exploration and production and the energy industry through his roles at Carrizo and other energy companies. +INDEPENDENT +Age 64 +Director Since 2019 +Callon Committees: +Strategic Planning and Reserves +2020 PROXY STATEMENT 15 +CORPORATE GOVERNANCE +Larry D. McVay +Managing Director of Edgewater Energy, LLC +Larry McVay has served as a member of the Board since 2007. Mr. McVay has been a Managing Director of Edgewater Energy, LLC, a privately held oil and gas investment company, since 2007. From 2003-2006, he served as Chief Operating Officer of TNK-BP Holding, one of the largest oil producing companies in Russia. From 2000-2003, he served as Technology Vice President and Vice President of Health, Safety and Environment for BP plc. Prior to joining BP, Mr. McVay held numerous positions at Amoco, including engineering management and senior operating leadership positions. +Mr. McVay is a director of Linde plc, a publicly-traded industrial gas and engineering company. Previously, Mr. McVay was a director of Praxair, Inc., an industrial gases company in North and South America, until Praxair, Inc. and Linde AG combined to create Linde plc in 2018. Additionally, Mr. McVay was previously a director of Chicago Bridge and Iron Company, N.V., a publicly-traded engineering, procurement and construction company, until it merged into McDermott International in 2018. +Mr. McVay earned a B.S. in Mechanical Engineering from Texas Tech University, where he was recognized as a Distinguished Engineer in 1995. +SKILLS AND QUALIFICATIONS: +Mr. McVay has been directly involved in nearly all aspects of the oil and gas industry, including drilling, production, finance, environmental, risk, and safety. We believe that this experience and his knowledge of the exploration and production industry, particularly in the Permian Basin, as well as his senior executive experience, service on other boards, and independence, provide valuable insight in the development of our long-term strategies and qualify him for service on the Board. +INDEPENDENT +Age 72 +Director Since 2007 +Callon Committees: +Strategic Planning and Reserves (Chairman), Audit, Nominating and Corporate Governance +Other Current Directorships: +Linde plc +Steven A. Webster +Former Chairman of the Board and Co-Founder of Carrizo Oil & Gas, Inc. +Mr. Webster was a co-founder of Carrizo for which he served as a director since 1993 and as its Chairman of the Board since 1997 until December 2019, when Carrizo merged with the Company. Since 2016, Mr. Webster has served as Managing Partner of AEC Partners, a private equity firm engaged in energy investment which was the successor to Avista Capital Partners, a private equity firm he co-founded in 2005 and for which he served as Co-Managing Partner. From 2000 through 2005, Mr. Webster served as Chairman of Global Energy Partners, an affiliate of DLJ Merchant Banking and CSFB Private Equity. From 1988 through 1999, Mr. Webster was the CEO and President of R&B Falcon Corporation and Chairman and CEO of one of its predecessor companies, Falcon Drilling Company, which he founded. Mr. Webster has been a founder or seed investor in numerous other private and public companies. +He has held numerous board positions and currently serves as a director of ERA Group, Oceaneering International and various private companies. Since its founding in 1993, Mr. Webster has served as a Trust Manager of Camden Property Trust, a REIT. +Mr. Webster holds an M.B.A. from Harvard Business School where he was a Baker Scholar. He also holds a B.S. in Industrial Management and an Honorary Doctorate in Management from Purdue University. +SKILLS AND QUALIFICATIONS: +Mr. Webster brings to the Board experience in, and knowledge of, the energy industry, business leadership skills from his tenure as chief executive officer of publicly traded companies and his over 30-year career in private equity and investment activities, and experience as a director of several other public and private companies. +INDEPENDENT +Age 68 +Director Since 2019 +Callon Committees: +Audit, Strategic Planning and Reserves +Other Current Directorships: +Camden Property Trust; Era Group Inc.; Oceaneering International, Inc. +16 CALLON PETROLEUM +CORPORATE GOVERNANCE +Class III Directors +Major General (Ret.) Barbara J. Faulkenberry +Major General (Ret.) of the U.S. Air Force +Barbara Faulkenberry has served as a member of the Board since 2018. Ms. Faulkenberry retired from the U.S. Air Force in 2014 as a Major General (2-stars) after a 32-year career, finishing in the top 150 leaders of a 320,000-person global organization. Her last assignment was as Vice Commander (COO) and interim Commander (CEO) of a 37,000-person organization conducting all global Department of Defense air cargo, passenger, and medical patient movements with 1,100 military aircraft plus contracted commercial aircraft. +Ms. Faulkenberry is currently an independent director for USA Truck, a publicly-traded provider of logistics and trucking services across North America, where she serves as chair of the Technology Committee and as a member of the Nominating and Corporate Governance Committee. +Ms. Faulkenberry received a B.S. degree from the Air Force Academy in 1982, an M.B.A. from Georgia College in 1986, and a Master of National Security from the National Defense University in 1999. She has also attended strategic leadership courses at Harvard, Cambridge, and Syracuse Universities. +SKILLS AND QUALIFICATIONS: +Ms. Faulkenberry brings to the Company senior leadership experience in the areas of supply chain management, logistics, strategic planning, risk management, technology, cyber security, and leadership development. Additionally, she is a NACD Board Leadership Fellow and earned the Carnegie Mellon/NACD CERT Certificate in Cybersecurity Oversight, both of which contribute to best practices in corporate governance and cyber security and provide great value to the Board. +INDEPENDENT +Age 60 +Director Since 2018 +Callon Committees: +Audit, Nominating and Corporate Governance, Strategic Planning and Reserves +Other Current Directorships: +USA Truck, Inc. +L. Richard Flury +Chairman of the Board +Former Chief Executive (Retired) for Gas, Power & Renewables of BP plc +Richard Flury has served as a member of the Board since 2004 and has served as Chairman since 2017. He spent over 30 years with Amoco Corporation, and later, BP plc, from which he retired as Chief Executive for Gas and Power and Renewables in 2001. Prior to Amoco’s merger with BP in 1998, he served in various executive positions and was Chief Executive for Worldwide Exploration and Production and Executive Vice President of Amoco Corporation at the time of the merger. +Mr. Flury is a director of McDermott International, a publicly-traded engineering, procurement and construction company, including when it filed voluntary petitions for reorganization in the United States Bankruptcy Court for the Southern District of Texas in January 2020. Mr. Flury was a director and the non-executive Chairman of Chicago Bridge and Iron Company, N.V., a publicly-traded engineering, procurement and construction company, until it merged into McDermott International in 2018. Previously, Mr. Flury was a member of the Board of QEP Resources, Inc., a publicly-traded oil and gas exploration company, from 2010 to 2015. +He is a graduate of the University of Victoria (Canada) where he studied geology. +SKILLS AND QUALIFICATIONS: +Mr. Flury’s deep knowledge of the energy industry and years of executive and management experience provide him with valuable insights into the strategic issues affecting companies in the oil and gas industry that are helpful to our Company and Board. His service on the boards of other publicly-traded companies has provided him exposure to different industries and approaches to governance that we believe further enhances the Board. +INDEPENDENT +Age 72 +Director Since 2004 +Callon Committees: +Audit, Compensation, Strategic Planning and Reserves +Other Current Directorships: +McDermott International +2020 PROXY STATEMENT 17 +CORPORATE GOVERNANCE +Joseph C. Gatto, Jr. +President, Chief Executive Officer and Director +Joseph C. Gatto, Jr. is President, Chief Executive Officer and Director of Callon. Mr. Gatto was elected to the Board in 2018. He has served as the Company's CEO since 2017 and as President since 2016. Prior to his appointment as CEO, he served as Chief Financial Officer and Treasurer of the Company from 2014 to 2017, and held various other senior leadership positions within the Company since joining Callon in 2012. +Prior to joining the Company, Mr. Gatto served as Head of Structuring and Execution with Merrill Lynch Commodities from 2010 to 2011, as the founder of MarchWire Capital, LLC, a financial advisory and strategic consulting firm in 2009, and as a Managing Director in the energy investment banking groups of Merrill Lynch & Co. and Barclays Capital from 1997 to 2009. +Mr. Gatto graduated from Cornell University with a B.S. degree and The Wharton School of the University of Pennsylvania with an M.B.A. +SKILLS AND QUALIFICATIONS: +Mr. Gatto’s extensive experience in investment banking and the oil and gas industry make him a valuable addition to the Board. Additionally, Mr. Gatto's knowledge of the Company and strong background in capital markets, transactions, strategic planning, and investor relations provide the Board with essential insight and guidance. +Age 49 +Director Since 2018 +Frances Aldrich Sevilla-Sacasa +Former Chief Executive Officer of Banco Itaú International +Ms. Aldrich Sevilla-Sacasa is a private investor and was Chief Executive Officer of Banco Itaú International, Miami, Florida, from April 2012 to December 2016. Prior to that time, she served as Executive Advisor to the Dean of the University of Miami School of Business from 2011 to 2012, Interim Dean of the University of Miami School of Business from 2011 to 2011, President of U.S. Trust, Bank of America Private Wealth Management from 2007 to 2008, President and Chief Executive Officer of US Trust Company in 2007, and President of US Trust Company from November 2005 until June 2007. She previously served in a variety of roles with Citigroup’s private banking business, including President of Latin America Private Banking, President of Europe Private Banking, and Head of International Trust Business. +Ms. Aldrich Sevilla-Sacasa holds a Bachelor of Arts Degree from the University of Miami and an M.B.A. from the Thunderbird School of Global Management. +SKILLS AND QUALIFICATIONS: +Ms. Aldrich Sevilla-Sacasa brings to the Board considerable experience in financial services, banking and wealth management. In addition, her experience as a former president and chief executive officer of a trust and wealth management company, and as a director of other corporate and not-for-profit boards has provided her with expertise in the area of corporate governance. +Age 64 +Director Since 2019 +Callon Committees: +Nominating and Corporate Governance; Strategic Planning and Reserves +Other Current Directorships: +Camden Property Trust +18 CALLON PETROLEUM +CORPORATE GOVERNANCE +Current Composition of the Board +The following table provides information with respect to the skills and experience of all current directors and the nominees for Class II terms who have been nominated to stand for election at the Annual Meeting. +Name +Matthew R. Bob +Barbara J. Faulkenberry +Michael L. Finch +L. Richard Flury +(Chairman) +Joseph C. Gatto, Jr. +S.P. Johnson IV +Larry D. McVay +Anthony J. Nocchiero +Frances A. Sevilla-Sacasa +James M. Trimble +Steven A. Webster +Age (as of April 1, 2020) +63 +60 +64 +72 +49 +64 +72 +69 +64 +71 +68 +Tenure (as of April 1, 2020) +6 +2 +5 +16 +2 +1 +13 +9 +1 +6 +1 +Gender Diversity +● +● +CEO/President Experience +● +● +● +● +● +● +● +Senior Executive Leadership +● +● +● +● +● +● +● +● +● +● +● +Outside Public Boards (current) +● +● +● +● +● +● +● +Outside Public Boards (prior) +● +● +● +● +● +● +● +E&P Industry Experience +● +● +● +● +● +● +● +● +● +Energy (Other than E&P) Industry Experience +● +● +● +● +● +● +● +Financial Expert +● +● +● +Financial Literacy +● +● +● +● +● +● +● +● +● +● +● +Financial Oversight/Accounting +● +● +● +● +● +● +● +● +● +Petroleum and Other Engineering +● +● +● +● +Geologist or Geophysicist +● +● +Government/Public Policy/Regulatory +● +● +HES Experience/Environmental +● +● +● +Strategic Advising +● +● +● +● +● +● +● +● +● +Investment Banking +● +● +Supply Chain +● +● +Technology/IT/Cybersecurity +● +● +● +● +2020 PROXY STATEMENT 19 +CORPORATE GOVERNANCE +Director Compensation +The compensation of our non-employee directors is reviewed by the Compensation Committee and is approved by the Board. We use a combination of cash and stock-based incentive compensation to attract and retain qualified candidates to serve on the Board. In determining director compensation, we consider the responsibilities of our directors, the significant amount of time the directors spend fulfilling their duties, and the competitive market for skilled directors. +Annually the Compensation Committee directly engages Meridian Compensation Partners ("Meridian") to conduct an analysis of director compensation and recommend any adjustments to the total annual compensation of the non-employee directors. Specifically, Meridian evaluates competitive market data, utilizing the same industry peer group ("Peer Group") used for executive compensation market data (see page 42). The Compensation Committee generally targets total compensation near the median of this Peer Group. The Company's director compensation program generally consists of cash retainers and an annual grant of restricted stock units ("RSUs") awarded under the Company’s 2018 Omnibus Incentive Plan (the “2018 Plan”). The RSU grants are awarded to match competitive practices and encourage a long-term alignment with shareholders. +In March 2019, with input from compensation advisor Meridian, the Compensation Committee reviewed the competitiveness of the director compensation package. Upon recommendation from the Compensation Committee, the Board determined to maintain compensation levels established in 2018, maintaining both an annual cash retainer of $80,000 and an annual restricted stock unit grant of $165,000. The average total compensation for Callon directors is at approximately the median of the Peer Group. +For 2019, the Company's non-employee director compensation consisted of the following: +Board member cash retainer +$ +80,000 +Restricted Stock Unit (RSU) Grant Value +$ +165,000 +Chairmen Fees +Non-Executive Chair +$ +120,000 +Audit Committee Chair +$ +20,000 +Compensation Committee Chair +$ +15,000 +Nominating and Corporative Governance Committee Chair +$ +10,000 +Strategic Planning and Reserves Committee Chair +$ +10,000 +Each non-employee director is reimbursed for reasonable out-of-pocket costs incurred to attend Board and Committee meetings. If a member of the Board is an officer or employee of the Company, he or she does not receive compensation for his or her service as a director. +The RSUs granted to directors in 2019 will vest on the first anniversary date following the grant, or on the date of the Company’s Annual Meeting , whichever occurs first. +Directors have the opportunity to make an annual election to defer some or all of their cash retainer or annual stock award pursuant to the terms of a deferred compensation plan for non-employee directors (the "Deferred Compensation Plan") until separation from service as a director. All deferrals under the plan are credited as phantom stock units of Callon stock. Callon's directors are subject to stock ownership guidelines of five times the annual cash retainer of $80,000. For more information on the stock ownership guidelines, see page 49. +20 CALLON PETROLEUM +CORPORATE GOVERNANCE +The table below indicates the total compensation earned during 2019 for each non-employee director: +NON-EMPLOYEE DIRECTOR COMPENSATION FOR 2019 +Director +Fees Earned or +Paid in Cash (a) +Stock +Awards (b) +All Other +Compensation +Total +Matthew R. Bob +$ +95,000 +(c) +$ +165,000 +$0 +$ +260,000 +Barbara J. Faulkenberry +$ +80,000 +(d) +$ +165,000 +$0 +$ +245,000 +Michael L. Finch +$ +80,000 +(d) +$ +165,000 +$0 +$ +245,000 +L. Richard Flury +$ +200,000 +(e) +$ +165,000 +$0 +$ +365,000 +S. P. Johnson IV (i) +$ +0 +$ +0 +$0 +$ +0 +Larry D. McVay +$ +90,000 +(f) +$ +165,000 +$0 +$ +255,000 +Anthony J. Nocchiero +$ +100,000 +(g) +$ +165,000 +$0 +$ +265,000 +Frances Aldrich Sevilla-Sacasa (i) +$ +0 +$ +0 +$0 +$ +0 +James M. Trimble +$ +90,000 +(h) +$ +165,000 +$0 +$ +255,000 +Steven A. Webster (i) +$ +0 +$ +0 +$0 +$ +0 +(a) +Does not include reimbursement of expenses associated with attending Board and Committee meetings. +(b) +Amounts calculated utilizing the provisions of FASB ASC Topic 718. These amounts are equal to the grant date fair value of the awards. The aggregate number of stock unit awards outstanding as of December 31, 2019 for each director is as follows: Messrs. Bob, Flinch, Flury, McVay, Nocchiero and Trimble - 24,076; Ms. Faulkenberry - 20,370; Messrs. Johnson and Webster - 0; and Ms. Sevilla-Sacasa - 0. +(c) +Represents annual retainer of $80,000 and an additional $15,000 for acting as Chairman of the Compensation Committee. +(d) +Represents annual retainer of $80,000. +(e) +Represents annual retainer of $80,000 and an additional $120,000 for acting as the non-executive Chairman of the Board. Mr. Flury elected to have his annual retainer and his non-executive Chairman of the Board fees deferred pursuant to the terms of the Deferred Compensation Plan , under which participants may elect to convert cash fees earned to phantom shares and defer the receipt of the proceeds in cash until separation from service as a director. +(f) +Represents annual retainer of $80,000 and an additional $10,000 for acting as Chairman of the Strategic Planning and Reserves Committee. +(g) +Represents annual retainer of $80,000 and an additional $20,000 for acting as Chairman of the Audit Committee. +(h) +Represents annual retainer of $80,000 and an additional $10,000 for acting as Chairman of the Nominating and Corporate Governance Committee. +(i) +Messrs. Johnson and Webster and Ms. Sevilla-Sacasa were not members of Callon's Board prior to December 20, 2019. Amounts shown for Messrs. Johnson and Webster and Ms. Sevilla-Sacasa represent compensation paid by Callon following the Carrizo Acquisition. +Pursuant to the terms of the Merger Agreement and the Carrizo Change in Control Severance Plan, during 2020 the Company will pay to Mr. Johnson $4,146,000 in severance benefits and a 2019 annual bonus of $670,175. For more information about the 2019 Carrizo annual bonus payout, please see page 46. +Director Independence +To minimize potential conflicts, it is a policy of the Board that a majority of the Board be independent. In accordance with the standards for companies listed on the New York Stock Exchange ("NYSE") and the rules and regulations promulgated by the SEC, as well as our Corporate Governance Guidelines, the Board considers a director to be independent if it has affirmatively determined that the director has no material relationship with the Company that could compromise his or her ability to exercise independent judgment in carrying out his or her responsibilities. The Board revisits the independence of each director on an annual basis and makes independence determinations when a newly appointed director joins the Board between annual meetings. The Board reviewed the independence of its directors and nominees in accordance with the standards described above and affirmatively determined that each of the directors (other than Mr. Gatto) and nominees is independent. +2020 PROXY STATEMENT 21 +CORPORATE GOVERNANCE +Board Structure and Responsibilities +Governance Highlights +We are committed to effective and sustainable corporate governance, which we believe strengthens Board and management accountability, promotes the long-term interests of our shareholders, and helps build public trust in our Company. We adhere to our core values and governance principles to ensure that we operate our business responsibly, ethically, and in a manner aligned with the interests of our shareholders. Highlights of our commitment to strong corporate governance include the following: +• +Ten of our eleven directors are independent. Joseph C. Gatto, Jr., our President and CEO, is the only non‑independent member of the Board. +• +All Board committees are comprised entirely of independent directors. +• +An independent, non-executive director serves as the Company’s Chairman of the Board. +• +The Company encourages a paced refreshment of the Board. Six of the eleven directors have joined within the last five years. +• +The Board includes a balance of experience, tenure, and qualifications in areas important to our business. +• +Election of directors by majority of votes cast in an uncontested election +• +We have an over-boarding policy in place for directors. +• +The Board conducts regular executive sessions with our independent directors. +• +We regularly refresh our governance documents. +• +The Board and its committees conduct annual self-evaluations. +• +We have adopted stringent insider trading, anti-hedging, and anti-pledging policies. +• +We engage in active shareholder engagement practices. +• +The Board oversees environmental, social and governance practices. +• +The Board oversees succession planning for the CEO and executive officer positions. +• +We engage an independent executive compensation consultant that reports directly to the Compensation Committee. +• +The Company adopted Annual Say-On-Pay voting. +• +The Compensation Committee has implemented significant director and executive officer stock ownership guidelines. +• +We do not have employment agreements with any executive officers, with the exception of an employment agreement with Gregory F. Conaway that was adopted by the Company as a result of the acquisition of Carrizo (the "Carrizo Acquisition"). +• +We have double-trigger change in control provisions in our severance agreements and equity awards. +• +We do not have a Poison Pill (Shareholder Rights Plan). +General Information +The Board is responsible for determining the ultimate direction of our business strategy, overseeing our governance policies and culture and promoting the long-term interests of the Company. The Board possesses and exercises oversight authority over our business but, subject to our governing documents and applicable law, delegates day-to-day management of the Company to our CEO and senior management. The Board generally fulfills its responsibilities through regular meetings to review significant developments affecting the Company and to act on matters requiring Board approval. Between regularly scheduled meetings, the Board may also hold special meetings, execute written consents, and participate in telephonic conference calls when an important matter requires Board action. During 2019, the Board met formally 15 times and transacted business on ten occasions during the year by unanimous written consent. All of our directors attended at least 75% of Board and committee meetings either in person or by telephone during the time he or she served on the Board or committees. In addition, to promote open discussion, the non-employee directors meet in executive session without management regularly. L. Richard Flury, the Chairman of the Board, was selected to preside over all executive sessions during 2019. It is the policy of the Company that, to the extent possible, all directors attend the Company’s Annual Meetings of Shareholders. Each then-current member of the Board attended the Company's 2019 Annual Meeting of Shareholders. +22 CALLON PETROLEUM +CORPORATE GOVERNANCE +The Board, in consultation with the Nominating and Corporate Governance Committee, has determined that a classified board structure continues to be appropriate for us, particularly in an industry where a long-term strategic planning outlook is critical for the successful development of oil and natural gas resources through commodity price cycles. Our future success depends in significant part on the in-depth knowledge of our business and operations by our directors. We believe that a classified board promotes stability, continuity and experience among our directors, which is essential to developing and implementing long-term strategies, while resisting the pressure to focus on short-term results at the expense of enhancing long-term value and success. +Board Leadership Structure +One of the Board’s key responsibilities is determining the appropriate leadership structure for the Board, which helps ensure its effective and independent oversight of management on behalf of our shareholders. The Board believes that there is no one generally accepted approach to providing board leadership and given the dynamic and competitive environment in which we operate, the optimal board leadership structure may vary as circumstances warrant. Accordingly, the Board has no policy mandating the separation or combination of the roles of Chairman of the Board and CEO, but periodically discusses and considers the structure as circumstances change. As such, the Board believes that it is in the best position to evaluate the needs of the Company and to determine how best to organize the Company’s leadership structure to meet those needs. +Currently, the Board has separated the roles of CEO and Chairman and appointed independent director Mr. Flury as Chairman of the Board and Mr. Gatto as CEO. +The Board is currently comprised of eleven directors, of whom ten out of eleven are independent. Mr. Gatto, the Company’s President and CEO, serves as an executive member of the Board. Independent directors and management generally have different perspectives and roles in strategy development. Our independent directors have backgrounds in the oil and gas industry or other relevant experiences which complement the CEO’s comprehensive, company-specific perspective. As the officer having primary responsibility for managing our daily operations and identifying strategic priorities, the CEO is best positioned to lead the Board through reviews of key business and strategy decisions. This dynamic effectively promotes the opportunity for a successful blend of our independent directors’ perspectives and oversight responsibilities and facilitates information flow and communication between senior management and the Board, which are both essential to effective governance. +2020 PROXY STATEMENT 23 +CORPORATE GOVERNANCE +Areas of Board Oversight +Board Risk Oversight +As an independent oil and gas company, we face a number of risks. Assessing and managing material risk is the responsibility of our management team, while the Board, as a whole and through its committees, generally oversees risk management and our long-term strategic direction, ensuring that risks undertaken by the Company are consistent with the Board’s risk tolerance. The Board leadership structure and our practice of a high degree of interaction between our directors and members of senior management facilitate this oversight function. Our executive officers regularly attend the Board meetings and are available to address any questions or concerns raised by the Board related to risk management and any other matters. Other members of our management team periodically attend the Board meetings or are otherwise available to confer with the Board to the extent their expertise is required to address risk management matters. The information flow and communication throughout the year between the Board and senior management regarding long-term strategic planning and short-term operational reporting includes matters of material risk inherent in our business of developing oil and natural gas assets. The Board realizes, however, that it is not possible or prudent to eliminate all risk and that appropriate risk-taking is essential in order to achieve our near and longer-term objectives. +While the Board is ultimately responsible for risk oversight, the Board exercises additional risk oversight responsibilities through its committees, which are comprised solely of independent directors. Each such committee has primary risk oversight responsibility with respect to matters within the scope of its duties as contemplated by its charter and as described below. +Standing Committees of the Board of Directors +The Board has four standing committees, each of which is comprised entirely of independent directors. Each committee, discussed below in greater detail, has a written charter that establishes the responsibilities and scope of the committee and its Chairman. Each committee charter was reviewed in November 2019 and revised as deemed necessary by the Board. +BOARD OF DIRECTORS +The Audit Committee , among other duties, is charged with overseeing material risk exposures in the areas of financial reporting, internal controls, compliance, hedging and cybersecurity. This Committee also oversees responses to any alleged violations of our Code of Business Conduct. +The Nominating and Corporate Governance Committee focuses on issues relating to corporate governance and Board committee composition. This Committee also assists the Board in fulfilling its oversight responsibilities with respect to succession planning for our directors and executive officers and ESG matters. +The Compensation Committee oversees the Company's compensation programs and reviews the potential risks that may result from our compensation policies to ensure they do not encourage unnecessary or excessive risk taking by management. +The Strategic Planning and Reserves Committee oversees the development and implementation of our strategic plan and the integrity of our reserve estimation reporting process and related disclosures. +24 CALLON PETROLEUM +CORPORATE GOVERNANCE +Committees of the Board +Callon Committees +Name, Age, Independence +Audit +Compensation +Nominating +and Corporate +Governance +Strategic +Planning and +Reserves +Class I Directors (term expires in 2022) +Michael L. Finch , 64 +Independent +○ +○ +○ +S. P. Johnson IV , 64 +Independent +○ +Larry D. McVay , 72 +Independent +○ +○ +● +Steven A. Webster , 68 +Independent +○ +○ +Class II Directors (term expires in 2020) +Matthew R. Bob , 63 +Independent +● +○ +○ +Anthony J. Nocchiero , 69 +Independent +● +○ +○ +James M. Trimble , 71 +Independent +○ +● +○ +Class III Directors (term expires in 2021) +Barbara J. Faulkenberry , 60 +Independent +○ +○ +○ +L. Richard Flury , 72 +Independent Chairman of the Board +○ +○ +○ +Joseph C. Gatto, Jr. , 49 +President and Chief Executive Officer +Frances A. Sevilla-Sacasa , 64 +Independent +○ +○ +● Chairman ○ Member +2020 PROXY STATEMENT 25 +CORPORATE GOVERNANCE +Audit Committee +Anthony J. Nocchiero (Chairman and Financial Expert) +Barbara J. Faulkenberry +Michael L. Finch (Financial Expert) +L. Richard Flury +Larry D. McVay +Steven A. Webster +PURPOSE +The principal function of the Audit Committee is to assist the Board in overseeing the areas of financial reporting, accounting integrity, compliance, and risk management. +MEETINGS IN 2019 +Five meetings; all members attended at least 75% of Committee meetings during the time he or she served on the Committee. +RESPONSIBILITIES +Pursuant to its charter, our Audit Committee functions in an oversight role and has the following purposes: +• +Overseeing the quality, integrity and reliability of the financial statements and other financial information we provide to any governmental body or the public; +• +Overseeing our compliance with legal and regulatory requirements; +• +Selecting and hiring (subject to ratification by our shareholders) the independent public accounting firm; +• +Overseeing the qualifications, independence and performance of the independent auditor; +• +Overseeing the effectiveness and performance of our internal audit function; +• +Overseeing our internal controls regarding finance, accounting, legal compliance and ethics; +• +Establishing and overseeing procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls or audit matters, including the confidential, anonymous submission of concerns regarding such matters; +• +Assessing matters related to risk, risk controls and compliance, including the review and approval of hedging practices and policies; +• +Overseeing matters related to cybersecurity and the security of information technology systems, including management’s plans, programs and policies designed to mitigate cybersecurity risks and third party reports on the information technology control environment; +• +Producing the Audit Committee Report for inclusion in our annual proxy statement; and +• +Performing such other functions the Board may assign to the Audit Committee from time to time. +The Audit Committee oversees our accounting and auditing procedures and financial reporting practices, and is responsible for the engagement of and oversight of all audit work conducted by our independent registered public accounting firm. The Audit Committee meets periodically, at least quarterly, with our executive and financial management teams, internal auditor and our independent registered public accounting firm to review our financial information and systems of internal controls. The independent registered public accounting firm reports directly to the Audit Committee and, if requested, meets with the Audit Committee in executive session without management representatives present. The Audit Committee has the authority to investigate any matters brought to its attention and to retain outside legal, accounting or other consultants if deemed necessary. +The Audit Committee is required to pre-approve all audit, audit-related and non-audit services provided by the independent registered public accounting firm exceeding $25,000. The Audit Committee approved all of the fees described in Proposal 4. +Relationship with Independent Registered Public Accounting Firm +Management is responsible for establishing and maintaining internal controls over financial reporting and for assessing the effectiveness of those controls. The independent registered public accounting firm is responsible for performing independent audits of our consolidated financial statements and internal controls over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (“PCAOB”) (United States) and issuing reports thereon. The Audit Committee’s responsibility is to monitor and oversee these processes. Grant Thornton LLP has served as our independent registered public accounting firm since 2016. +INDEPENDENCE +The Board has determined that all members meet the independence requirements of the Securities Exchange Commission ("SEC") and NYSE rules and the financial literacy requirements of the NYSE. Members of the Audit Committee may not simultaneously serve on the audit committee of more than two other public companies. +26 CALLON PETROLEUM +CORPORATE GOVERNANCE +Compensation Committee +Matthew R. Bob (Chairman) +Michael L. Finch +L. Richard Flury +Anthony J. Nocchiero +James M. Trimble +PURPOSE +The purpose of the Compensation Committee is to establish our compensation programs and oversee the alignment of our compensation with our business strategies. +MEETINGS IN 2019 +Five meetings; all members attended at least 75% of Committee meetings. +RESPONSIBILITIES +Pursuant to its charter, the Compensation Committee’s duties include the responsibility to assist the Board in: +• +Evaluating the performance of and establishing the compensation of the CEO; +• +Establishing, with input from the CEO, the compensation for our other executive officers; +• +Establishing and reviewing our overall executive compensation philosophy and approving changes to our compensation program; +• +Reviewing incentive compensation arrangements to confirm that executive compensation does not encourage unnecessary risk taking; +• +Administering our long-term incentive plans; +• +Reviewing and approving the Compensation Discussion and Analysis ("CD&A") for inclusion in the annual proxy statement; +• +Reviewing and recommending to the Board compensation for non-employee directors; +• +Retaining and overseeing compensation consultants, including the independence of the consultants; +• +Reviewing and approving performance criteria and results for bonus and performance-based equity awards for executive officers and approving awards to those officers; and +• +Performing such other functions as the Board may assign to the Compensation Committee from time to time. +The Committee retained the services of Meridian, an independent compensation consulting firm, to assist in the annual review of market and industry data to assess our competitive position with respect to each element of total compensation and to assist with the attraction and retention of, and appropriate reward to, our CEO and other executive officers. Pursuant to applicable SEC and NYSE rules, the Committee has determined that no conflicts of interest exist related to Meridian’s engagement by the Committee. +INDEPENDENCE +Consistent with the listing requirements of the NYSE, the Compensation Committee is composed entirely of independent members of the Board, as each member meets the independence requirements set by the NYSE and applicable federal securities laws. +COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION +L. Richard Flury, Matthew R. Bob, Michael L. Finch, Anthony J. Nocchiero and James M. Trimble served on the Company’s Compensation Committee during fiscal year 2019. No member of our Compensation Committee is presently or has been an officer or employee of the Company. In addition, during the last fiscal year, no executive officer served as a member of the board or the compensation committee (or other board committee performing similar functions or, in the absence of any such committee, the entire board) of any entity in which a Callon Board member is an executive officer. +2020 PROXY STATEMENT 27 +CORPORATE GOVERNANCE +Nominating and Corporate +Governance Committee +James M. Trimble (Chairman) +Matthew R. Bob +Barbara J. Faulkenberry +Larry D. McVay +Frances A. Sevilla-Sacasa +PURPOSE +The purpose of the Nominating and Corporate Governance Committee is to identify and recommend qualified candidates to the Board for nomination as members of the Board; assess director, Board and committee effectiveness; develop and implement our Corporate Governance Guidelines; oversee succession planning for executive officers; oversee ESG matters; and otherwise take a leadership role in shaping the corporate governance of our Company. +MEETINGS IN 2019 +Four meetings; all members attended at least 75% of Committee meetings during the time he or she served on the Committee. +RESPONSIBILITIES +Pursuant to its charter, the Nominating and Corporate Governance Committee’s duties include the responsibility to assist the Board in: +• +Evaluating a set of specific criteria for Board membership and identifying individuals qualified to become Board members, recommending nominees for election at the next annual meeting of shareholders, reviewing the suitability for continued service as a director of each Board member, and filling any vacancies; +• +Assessing the size and composition of the Board and its committees and recommending to the Board the members and chair for each Board committee; +• +Advising the Board and making recommendations regarding appropriate corporate governance practices and assisting the Board in implementing those practices, including periodically reviewing the adequacy of our Corporate Governance Guidelines, our Code of Business Conduct and Ethics, and the various Board committee charters, and making recommendations for changes thereto to the Board; +• +Overseeing the annual self-evaluation of the performance of the Board and its committees; +• +Overseeing and approving plans for management continuity and succession; +• +Recommending to the Board a successor to the CEO when a vacancy occurs; +• +Reviewing directorships in other public companies held by or offered to directors or executive officers of the Company; +• +Overseeing ESG policies, performance and disclosure, and develop recommendations for the Board on emerging issues related to our industry; +• +Overseeing continuing education for the Board; and +• +Performing other such functions as the Board may assign to the Nominating and Corporate Governance Committee from time to time. +INDEPENDENCE +Each member of the Committee meets the independence requirements of the NYSE and applicable federal securities laws. +28 CALLON PETROLEUM +CORPORATE GOVERNANCE +Strategic Planning and +Reserves Committee +Larry D. McVay (Chairman) +Matthew R. Bob +Barbara J. Faulkenberry +Michael L. Finch +L. Richard Flury +S. P. Johnson IV +Anthony J. Nocchiero +Frances A. Sevilla-Sacasa +James M. Trimble +Steven A. Webster +PURPOSE +The purpose of the Strategic Planning and Reserves Committee is to manage and oversee the Board’s participation in the development of the Company’s strategic plan, and oversee the integrity of the determination of our oil and natural gas reserve estimates. +MEETINGS IN 2019 +Five meetings; all members attended at least 75% of Committee meetings during the time he or she served on the Committee. +RESPONSIBILITIES +The Strategic Planning and Reserves Committee was created to oversee the responsibilities of the Board relating to strategic planning, including: +• +Overseeing the Board’s participation in the development of a strategic plan and the consideration and assessment of strategic decisions; +• +Monitoring management's implementation of the strategic plan, and advising the Board if additional Board action appears to be needed; +• +Assuring that management is addressing the personnel requirements for the successful implementation of the strategic plan; +• +Overseeing our reserve engineering reports and reserve engineering firm, including: (i) the integrity of our reserve reports, (ii) determinations regarding the qualifications and independence of our independent reserve engineering firm, (iii) the performance of our independent reserve engineering firm, and (iv) our compliance with certain legal and regulatory requirements relating to reserve reporting; and +• +Performing other such functions as the Board may assign to the Strategic Planning and Reserves Committee from time to time. +INDEPENDENCE +Each member of the Committee meets the independence requirements of the NYSE and applicable federal securities laws. +2020 PROXY STATEMENT 29 +CORPORATE GOVERNANCE +Corporate Governance Matters +Corporate Governance Principles +The Board believes that sound corporate governance practices and policies provide an important framework to assist in fulfilling its duty to shareholders. The framework for our corporate governance can be found in our governance documents, which include: +• +Corporate Governance Guidelines; +• +Code of Business Conduct and Ethics; and +• +Charters for the Audit, Compensation, Nominating and Corporate Governance, and Strategic Planning and Reserves Committees. +In keeping with sound corporate governance practices, each of these documents is reviewed annually and is available on our website www.callon.com under the “About Callon - Governance” menu. Shareholders may obtain a printed copy, free of charge, by sending a written request to our Corporate Secretary at our principal executive office in Houston, Texas. Any amendments to these documents are promptly posted on our website. +Code of Business Conduct and Ethics +Our Code of Business Conduct and Ethics (the “Code”) sets forth the policies and expectations for Callon’s officers, employees and directors as well as consultants, representatives, agents, and contractors while acting on Callon’s behalf. The Code addresses a number of topics including conflicts of interest, compliance with laws, insider trading, prohibitions on discrimination and harassment, workplace safety and protection of the environment, and fair disclosure. In addition, the Code explicitly prohibits directors, officers and employees from engaging in hedging transactions in Callon stock. It also states that no corporate funds may be used for political contributions. +The Code meets the NYSE’s requirements for a code of business conduct and ethics and also includes a code of ethics applicable to our senior financial officers consistent with the requirements of the SEC. We intend to satisfy the disclosure requirements regarding any amendment to, or any waiver of, a provision of the Code by promptly posting such information on our website. Concerns about potential violations of the Code can be anonymously reported to our ethics hotline by calling 1-844-471-7637 or accessing the following website: callon.ethicspoint.com. +Environmental, Social and Governance +Callon’s mission is to build trust, create value and drive sustainable growth responsibly for our investors, our employees and the communities in which we operate. Consistent with this mission, the Board oversees the Company’s environmental, social and governance programs with a focus on long-term, sustainable investments in our operations, team member development, and protecting the environment in the best interests of all of our stakeholders. The Board regularly addresses the Company’s efforts to continuously improve outcomes regarding workplace safety, environmental impact, team member diversity and workforce development. As described in more detail above beginning on page 9, the Board is also committed to effective and sustainable corporate governance, which we believe strengthens Board and management accountability, promotes the long-term interests of our shareholders, and helps build public trust in our Company. +Communication with Directors +Shareholders or other interested parties who wish to communicate with the full Board, independent directors as a group, or individual directors, may do so by sending a letter in care of the Corporate Secretary to our principal executive office located at 2000 West Sam Houston Parkway South, Suite 2000, Houston, Texas 77042. Our Corporate Secretary has the authority to discard any solicitations, job inquiries, advertisements, surveys or other inappropriate communications, but will forward any other mail to the named director or group of directors. Our Corporate Secretary will forward approved mail addressed to the full Board to the Chairman of the Board who, if appropriate, will share the item with the full Board. +30 CALLON PETROLEUM +CORPORATE GOVERNANCE +Board Evaluations +The Nominating and Corporate Governance Committee, in consultation with the Chairman of the Board, annually leads the performance review of the Board and its committees. The self-evaluation process seeks to obtain each director’s assessment of the effectiveness of the Board, the committees and their leadership, Board and committee composition and Board and management dynamics. In 2019, the Board self-evaluation process included a survey completed by each director about the Board and the committees on which the director served. The results were discussed by the full Board and within each committee. +Director Education +The Company sponsors an ongoing director education program that assists Board members in fulfilling their responsibilities. Training commences with an orientation program when a new director joins the Board. Ongoing education is provided through written materials, presentations in Board meetings, and training outside the boardroom. All Callon directors are members of the National Association of Corporate Directors and are provided an annual training allowance to pursue relevant director education programs. +2020 PROXY STATEMENT 31 +EXECUTIVE OFFICERS +Executive Officer Biographies +Joseph C. Gatto, Jr. +President, Chief Executive Officer and Director +Joseph C. Gatto, Jr. has served the Company as Chief Executive Officer since May 2017 and as a Director since May 2018. Mr. Gatto joined the Company in April 2012 as Senior Vice President, Corporate Finance, with responsibility for our capital markets and strategic planning functions, in addition to investor relations activities. Effective March 31, 2014, Mr. Gatto was appointed Chief Financial Officer and Treasurer of the Company and in August 2016 was promoted to President while retaining the roles of Chief Financial Officer and Treasurer. In May 2017 he was promoted to Chief Executive Officer while retaining the role as President. Mr. Gatto was elected as a member of the Board of Directors in May 2018. Prior to joining Callon, Mr. Gatto was a Managing Director in the energy investment banking groups of Merrill Lynch & Co. and Barclays Capital from July 1997 until February 2009, with involvement in all phases of M&A and capital raising transactions for his clients. In February 2009, he founded MarchWire Capital, LLC, a financial advisory and strategic consulting firm, and subsequently served as Head of Structuring and Execution with Merrill Lynch Commodities, Inc. from January 2010 until November 2011. Mr. Gatto graduated from Cornell University with a B.S. degree and The Wharton School of the University of Pennsylvania with an M.B.A. +James P. Ulm, II +Senior Vice President and Chief Financial Officer +James P. Ulm, II is the Senior Vice President and Chief Financial Officer for the Company. Prior to joining Callon in December 2017, Mr. Ulm was Founder and Managing Partner of NewVista Energy Partners, a private E&P company focused on emerging resource plays in the Permian and Anadarko Basins, from 2015–2017. Previously, he served as Senior Vice President and Chief Financial Officer for three private companies from 2008–2015 where he was responsible for financial and accounting management, capital formation, and corporate strategy. Prior to these roles, Mr. Ulm served from 1999–2008 as Senior Vice President and Chief Financial Officer for Pogo Producing Company, a publicly-traded oil and gas company which had meaningful operations in the Permian Basin. From 1995–1999, he was the Treasurer for Newfield Exploration Company. Earlier in his career, he held finance and accounting leadership roles with American Exploration Company and Tenneco Oil Company. Mr. Ulm has more than 30 years of experience in the energy industry with responsibilities including finance, accounting, strategic planning, M&A, business development and risk management. Mr. Ulm holds an M.B.A. and an undergraduate degree in Accounting, both from the University of Texas at Austin. +Jeffrey S. Balmer +Senior Vice President and Chief Operating Officer +Dr. Jeffrey S. Balmer has over 30 years of operations and subsurface leadership experience in the energy industry. Prior to joining Callon in November 2018, his most recent role was Vice President and General Manager, Southern Operating Area, for Encana Corporation with responsibility for all of Encana’s upstream operations in the Permian Basin. After joining Encana in 2008, he held various leadership roles including Vice President and General Manager, Western Operating Area, managing operations in the Eagle Ford, DJ, San Juan, Piceance and Wind River Basins, and Vice President, Emerging Plays. Prior to joining Encana, Dr. Balmer served in a variety of technical and operations leadership roles, including positions with ConocoPhillips, Burlington Resources and ExxonMobil Corporation. He holds B.S. and Ph.D. degrees in Petroleum Engineering, in addition to an M.S. in Environmental and Planning Engineering, from Missouri University of Science and Technology (formerly University of Missouri – Rolla). +32 CALLON PETROLEUM +EXECUTIVE OFFICERS +Michol L. Ecklund +Senior Vice President, General Counsel and Corporate Secretary +Michol L. Ecklund is the Senior Vice President, General Counsel and Corporate Secretary for the Company. Prior to joining Callon in November 2017, Ms. Ecklund was Deputy General Counsel for Operations & Commercial Law at Marathon Oil Company where she oversaw the legal team for global operations and acquisitions and divestitures as well as corporate communications. During her 15 years at Marathon Oil, Ms. Ecklund served in progressive positions within and outside the Law Organization including compliance, litigation, human resources, investor relations, corporate communications and tax. Prior to Marathon Oil, she practiced law at Baker Botts LLP in Houston. Ms. Ecklund received a B.A. degree from Rice University and J.D. from Harvard Law School. +Gregory F. Conaway +Vice President and Chief Accounting Officer +Gregory F. Conaway is the Vice President and Chief Accounting Officer for the Company and joined Callon in December 2019. Prior to joining Callon, Mr. Conaway served as Vice President and Chief Accounting Officer of Carrizo from 2014 to December 2019, when Carrizo merged with the Company, as Controller of Financial Reporting from 2012 to 2014 and Assistant Controller from 2011 to 2012. Prior to that, Mr. Conaway worked for Ernst & Young, holding positions of increasing responsibility, including senior manager. Mr. Conaway began his career with Arthur Andersen in 1998. Mr. Conaway is a CPA and holds an M.B.A. and a B.B.A. in Accounting from Angelo State University. +2020 PROXY STATEMENT 33 +Proposal 2 +Approve, on an Advisory Basis, +the Compensation +of the Company’s NEOs +The Board of Directors recommends a vote FOR the compensation paid to the Company’s named executive officers, as disclosed in this Proxy Statement. +• Provides performance-based and market-aligned pay opportunities that are intended to foster alignment, engagement, and retention of key talent to drive Company performance and long-term shareholder value. +In accordance with the requirements of Section 14A of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the related rules of the SEC, we are including in this Proxy Statement a separate proposal, which gives our shareholders the opportunity to approve the compensation of our NEOs by voting “ FOR ” or “ AGAINST ” the resolution below (commonly referred to as “Say-on-Pay”) on an annual basis. While the Board and Compensation Committee intend to carefully consider the shareholder vote resulting from the proposal, the final vote will not be binding on us and is advisory in nature. +The Board recognizes that executive compensation is an important matter for our shareholders. The Compensation Committee is tasked with the implementation of our executive compensation philosophy and, as described in detail in the CD&A below, the design of our executive compensation programs. Our executive compensation program is designed to attract, motivate and retain a qualified executive management team and to appropriately reward our executive officers for their contributions to the achievement of our short-term and long-term business goals and the creation and enhancement of shareholder value. +As described in the CD&A, we believe our compensation program is effective, appropriate and aligned with the long-term interests of our shareholders and that the total compensation package provided to the NEOs is reasonable and not excessive. As you consider this Proposal 2, we urge you to read the CD&A for additional details on executive compensation. Further, in determining whether to approve this proposal, we believe that shareholders should also consider the following: +• +Performance-based compensation. Our executive compensation program seeks to align executive compensation with shareholder value on an annual and long-term basis through a combination of base pay, annual incentives and long-term incentives. By design, a significant portion of our NEO compensation is performance-based, with variable pay comprising 86 percent of compensation opportunity for our CEO and 71 percent for NEOs in 2019. Please review the CD&A for more information on how our 2019 compensation was linked to Company performance. +• +Pay practices reflect individual and market factors. The Compensation Committee considers the skills, experience and performance of each of our NEOs as well as competitive market data in setting annual compensation opportunities, and directs our independent compensation consultant to provide benchmarking data which serves as one of the considerations of compensation decisions. +• +“Double trigger” severance agreements with fixed term. Change in control severance agreements with our executive officers require an actual or constructive termination of employment before benefits are paid following any change in control. +• +Stock ownership guidelines. Each of the NEOs has been granted equity to provide the officer a stake in our long-term success. The purpose of the ownership requirement is to further our goal of increasing shareholder value by aligning the interests of our NEOs with those of our long-term shareholders. +• +Clawback Policy. The Compensation Committee has adopted a clawback policy that establishes conditions under which the Committee may recoup previously-paid compensation in event of error, misconduct, or certain other circumstances. +• +Hedging policy. Our directors and executive officers are prohibited from entering into transactions in puts, calls and other derivative securities with respect to our securities and from engaging in short sales of our securities. We believe these activities are often perceived as involving insider trading and may focus the holder’s attention on our short-term performance rather than our long-term objectives. +34 CALLON PETROLEUM +PROPOSAL 2 +In light of the above and as more fully described in the CD&A, we believe that the compensation of our NEOs for 2019 was appropriate and reasonable and that our compensation programs and practices are sound and in the best interests of the Company and our shareholders. We therefore respectfully request that shareholders vote on the following resolution: +“RESOLVED, that the compensation paid to Callon’s NEOs, as disclosed in Callon’s 2020 Proxy Statement (including the Compensation Discussion and Analysis, the compensation tables and related footnotes and narrative disclosures) is hereby approved.” +The vote on this resolution is not intended to address any specific element of compensation, but rather the overall compensation of our NEOs and our compensation-related policies and practices as described in this Proxy Statement. As noted above, the vote solicited by this proposal is advisory in nature and its outcome will not be binding on the Company, the Board or the Compensation Committee, nor will the outcome of the vote require the Board or the Compensation Committee to take any action. The outcome of the vote will not be construed as overruling any decision of the Board or the Compensation Committee or creating or implying any additional fiduciary duty of the Board or the Compensation Committee. However, the Board and the Compensation Committee will carefully consider the outcome of the vote when considering future executive compensation arrangements. For a review of the results of the previous year's vote, which reflects overwhelming validation from our shareholders of our pay philosophy and approach, please see the “Role of Shareholder Say-on-Pay Advisory Vote” on page 40. +Notwithstanding the advisory nature of this vote, the foregoing resolution will be deemed approved with the affirmative vote of the majority of the votes present and entitled to vote on the proposal at the Annual Meeting. If you hold your shares through a broker and you do not instruct the broker how to vote, your broker will not have the authority to vote your shares. Abstentions will have the effect as a vote cast against the proposal. Broker non-votes will not be counted as shares present and entitled to vote, and so will have no effect upon the outcome of the vote. +The Board recommends a vote FOR the compensation paid to the Company’s named executives. +2020 PROXY STATEMENT 35 +EXECUTIVE COMPENSATION +Recent Market Disruption and Callon’s Response +Consistent with regulatory requirements, the below CD&A highlights our historic performance and executive compensation decisions for 2019. In light of the precipitous decline in commodity prices in recent weeks due to substantial demand destruction from the global outbreak of the COVID-19 virus and concurrent supply-related decisions by OPEC+ producers, Callon’s Board and management team are taking proactive steps to reduce costs and revise our plans to realign with the macroeconomic outlook. On April 16, 2020, Callon announced certain cost-saving measures including the following voluntary compensation reductions: +• +Board members agreed to reduce their total compensation by 35%; +• +Chief Executive Officer agreed to reduce his salary by 20% and his total target cash compensation by 35%; and +• +All other officers agreed to reduce their total target cash compensation by at least 25%, including salary reductions of 15% and 10% by senior vice presidents and vice presidents, respectively. +The Board and management will continue to evaluate the Company’s executive compensation and incentive programs in light of the volatility and uncertainty in financial and commodity markets, and next year’s CD&A will discuss and describe the eventual realized compensation from the performance periods that conclude at the end of 2020. +Compensation Discussion and Analysis +The Company’s executive compensation program is designed to reward the management team for delivering results consistent with our long-term strategic objectives. The Compensation Committee (referred to in this section as the “Committee”) strives to evolve Callon’s compensation program each year to reflect shifts in shareholder priorities, most recently the focus on returns on capital and free cash flow over production growth, and governance best practices. The following CD&A describes the actions taken by the Committee in 2019 related to our executive compensation programs. +Key Committee Actions for 2019 +• Instituted a formulaic approach for the Company’s annual incentive compensation program with a 60/40 weighting of quantitative/qualitative factors that included shareholder priorities of corporate-level returns, capital efficiency, cash flow, balance sheet strength and ESG performance +• Revised our peer group, used as the basis for evaluating the competitiveness of compensation opportunities and relative long-term TSR performance, in light of the Company’s growth and industry consolidation +• Assessed the annual salaries and incentive compensation opportunities of the CEO and other NEOs based on their experience, performance and growth in their roles, as well as competitive market data +• Talented workforce with growing technical expertise identifies with a culture of responsibility and adaptability in a cyclical commodity business +• Conducted a review of long-term incentive program design, resulting in the addition of an absolute TSR modifier to the PSUs granted in January 2020 to further align long-term incentives with absolute shareholder returns +• Developed the framework for a peer-leading Clawback Policy (adopted in January 2020), which allows the Committee to recoup previously-paid compensation in event of error, fraud, misconduct, or certain other circumstances +36 CALLON PETROLEUM +EXECUTIVE COMPENSATION +Our NEOs include the Chief Executive Officer, Chief Financial Officer and the three other most highly compensated executive officers who were serving in such capacity at the end of 2019. The list also includes our former Vice President and Chief Accounting Officer, Mitzi P. Conn, who transitioned from the role effective December 20, 2019, and would have been among our most highly compensated executive officers if she had been serving in such capacity at the end of 2019. Our NEOs for 2019 were: +NEO +Age +Title +Joseph C. Gatto, Jr. +49 +President, Chief Executive Officer and Director +James P. Ulm, II +57 +Senior Vice President and Chief Financial Officer +Jeffrey S. Balmer +55 +Senior Vice President and Chief Operating Officer +Michol L. Ecklund +45 +Senior Vice President, General Counsel and Corporate Secretary +Gregory F. Conaway +44 +Vice President and Chief Accounting Officer +Mitzi P. Conn +51 +Former Vice President and Chief Accounting Officer +Gregory F. Conaway became the Company's Vice President and Chief Accounting Officer upon the effective time of the Carrizo Acquisition on December 20, 2019, and Ms. Conn transitioned to her new role. For Mr. Conaway's biography, please see "Executive Officer Biographies" on page 32. During 2019, two previous NEOs departed the Company. Jerry A. Weant, who was formerly Vice President, Land, retired from the Company effective March 31, 2019. Correne S. Loeffler, who was formerly Vice President - Finance and Treasurer, resigned from the Company, effective July 31, 2019. +2019 Performance Highlights +2019 was a transformational year for Callon. The Company continued its long-term value creation focus with the execution of multiple strategic initiatives across operations, finance, environmental, social and governance. The Company’s development program successfully transitioned to larger projects featuring multi-zone co-development, leading to improved capital efficiency, lower costs and the preservation of industry-leading margins. The year culminated with the successful closing of the Carrizo Acquisition, which more than doubled the Company’s production, reserves, acreage, and cash flow. The combined company features a diversified asset base that supports our scaled development model and provides significant optionality to support cash generation amid commodity price volatility. While Callon’s share price was negatively impacted, along with its industry peers, by commodity price volatility and a shift in sector-wide investor sentiment, the Company maintained its commitment to long-term value creation in 2019 as reflected by the achievement of multiple key operational, financial and ESG highlights as described below. Additional information about our 2019 performance relative to the pre-established performance metrics for the annual cash incentive bonus can be found on page 45. +• With the closing of the Carrizo Acquisition, more than doubled our acreage position to nearly 200,000 net acres in Texas's producer-friendly Permian Basin and Eagle Ford Shale. +• Generated over $500 million in Adjusted EBITDA (i) . +• Completed over $300 million of non-core asset monetizations. +• Redeemed approximately $270 million of preferred securities resulting in prospective dividend savings of nearly $25 million annually. +• Generated $58.2 million in free cash flow (ii) during the fourth quarter of 2019 (on a pro forma basis). +• Maintained an industry leading EBITDA margin of $33.28 per Boe for 2019. (i) +• Achieved record production (top of guidance) with operational capital spending below the bottom of full year guidance range +• Initiated full-field co-development across all asset areas, lowering target development costs and improving capital efficiency. +• Grew total proved reserves to 540 MMBoe with a PV-10 (i) value of $5.4 billion as of December 31, 2019. +• Achieved record safety performance metrics, including a Total Recordable Incident Rate that was 50% lower than the prior year +• Increased recycled water volumes by 80% from 2018, further reducing environmental impact of operations. +• Reduced flaring by more than 40% year over year and was in the lowest third of all Texas producers in flaring intensity per the most recent TX RRC report. (iii) +(i) +See Appendix A for a reconciliation of Non-GAAP financial measures +(ii) +Free cash flow is defined as Adjusted EBITDA minus the sum of operational capital, capitalized interest, capitalized G&A, and interest expense. Adjusted EBITDA is a Non-GAAP financial measure; please refer to Appendix A for a reconciliation +2020 PROXY STATEMENT 37 +EXECUTIVE COMPENSATION +(ii) +TX RRC defines flare intensity as gross daily flare volumes divided by gross daily oil production +Compensation Program Governance Highlights +Our Compensation Committee, composed entirely of independent directors, operates in accordance with its charter, which sets forth the Committee’s authority and responsibilities, is assessed annually, and can be found at www.callon.com/about-callon/governance. We believe our compensation program incorporates many sound practices, including the following: +What We Do +What We Don’t Do +• Substantial focus on performance-based pay +• Strong alignment with shareholder returns through significant weighting on long-term incentives +• Review of peer group benchmarks when establishing compensation +• Robust stock ownership guidelines for our NEOs and directors +• Clawback policy applies in the event of error, fraud or misconduct +• Double-trigger change in control severance for both cash severance and equity vesting +• NO hedging or pledging of our stock +• NO employment agreements* +• NO excessive benefits or perquisites +• NO single trigger change in control benefits +* +Callon assumed an employment agreement with Mr. Conaway as a result of the Carrizo Acquisition. See “Employment Agreements, Termination of Employment and Change in Control Arrangements” on page 57. +Executive Compensation Components and Philosophy +The Committee designs our compensation program to reward our CEO and other NEOs for delivering results consistent with the Company’s long-term strategic objectives and to align their interests with those of our shareholders. To do so, the Committee has designed a compensation program that is heavily weighted to “at risk” compensation delivered through annual cash incentives and long-term equity-based incentive awards. The Committee believes that this approach compensates our NEOs in a manner that provides incentives for the enhancement of shareholder value, the successful implementation of our business plan, and continuous improvement in corporate and individual performance. +Overall, our executive compensation program is designed to achieve the following objectives: +• +Reward the management team for delivering results against its strategic objectives, thereby creating value for the shareholders; +• +Emphasize pay for performance, in which Company and individual performance against preset goals are inherently linked to the amount realized by an NEO; +• +Attract and retain a qualified and motivated management team by offering industry competitive opportunities; +• +Incentivize NEOs and appropriately reward them for their contributions to the achievement of our key short-term and long-term strategic objectives through the use of variable compensation; and +• +Align the compensation of our NEOs with the interests of our long-term shareholders by weighting the programs toward at-risk, performance-based compensation, consisting of an objective-driven annual incentive program, TSR-contingent incentive awards, and retention stock grants with three-year vesting. +38 CALLON PETROLEUM +EXECUTIVE COMPENSATION +The charts below illustrate the design and impact of our pay-for-performance philosophy on our CEO’s 2019 target compensation. To illustrate the alignment of pay and performance, the second chart compares Mr. Gatto’s target 2019 compensation to its estimated realizable value as of December 31, 2019, and March 31, 2020, reflecting the actual payout of the 2019 annual bonus as well as the impact of our absolute and relative stock price performance on his long-term equity compensation as of those dates. +2019 CEO COMPENSATION MIX +2019 CEO COMPENSATION – TARGET vs. REALIZABLE +Elements of Compensation Program +The primary elements of our executive compensation program, and the purpose and philosophy of each, are described in detail below: +BASE SALARY +Purpose +Philosophy +• Pay for expertise and experience; +• Attract and retain talented executives; +• Provide compensation stability; and +• Compete with comparable companies. +• Fixed component of compensation reflective of individual skills, experience and expertise necessary to execute our business strategy; and +• Competitive with similarly sized peers. +2020 PROXY STATEMENT 39 +EXECUTIVE COMPENSATION +ANNUAL CASH BONUS INCENTIVE +Purpose +Philosophy +• Motivate our NEOs to achieve our short-term business objectives that drive long-term performance; +• Reward achievement of financial, operating, and strategic goals for which NEOs are held accountable; and +• Promote and encourage pay-for-performance. +• At-risk component of compensation, with modest or no reward for performance below expectations and potential for increased reward for exceptional performance; +• Goals aligned with our annual business plan and performance targets; +• Provide balance in compensation programs and avoid encouraging undue risk-taking; and +• Competitive with similarly-sized peers. +LONG-TERM INCENTIVE (LTI) AWARDS +Purpose +Philosophy +• Motivate and reward long-term achievement of business objectives, aligning the interests of our NEOs with those of long-term shareholders; +• Provide competitive pay to attract and retain NEOs; and +• Provide a mix of LTI awards that focuses NEOs on creating long-term value while avoiding undue risk-taking. +• Ensures that realized value to NEOs aligns with value delivered to shareholders; +• Recognizes and rewards share price performance relative to industry peers; +• At-risk component of compensation that aligns with sustained long-term value creation; and +• Allows NEOs to acquire a meaningful and sustained ownership stake in the Company. +OTHER (RETIREMENT; HEALTH BENEFITS; CHANGE IN CONTROL SEVERANCE) +Purpose +Philosophy +• Provide financial security for the NEOs and their families; +• Provide competitive benefits to attract and retain NEOs; and +• Ensure NEOs consider all possible transactions to increase shareholder value related to changes in control of the Company. +• Attracts and retains NEOs with a comprehensive benefits package; +• Provides financial security and maximizes the efficiency of tax-advantaged compensation vehicles; and +• Ensures NEOs act in the best interests of the shareholders in a change in control. +Role of Shareholder and the Annual Say-on-Pay Advisory Vote +At Callon, we are committed to high ethical standards and effective and sustainable corporate governance. We believe this commitment promotes the interests of our long-term shareholders, helps build public trust in our Company and strengthens Board and management accountability. We continually assess our governance principles to ensure that we are operating our business responsibly, ethically and in a manner aligned with the interests of our long-term shareholders. +Approximately 97% of the votes were cast in favor of our 2018 executive compensation programs +We have historically received strong support from our shareholders for our executive compensation practices. In the advisory vote held at the Company's 2019 Annual Meeting of Shareholders, approximately 97% of the votes cast were in favor of our 2018 executive compensation programs. The Committee acknowledged the support received from our shareholders and viewed the results as an affirmation of our existing executive compensation policies and programs. +Based on feedback received during our on-going shareholder engagement efforts, the Committee modified its incentive programs in both 2019 and in 2020 as follows: +• +In 2019, the Committee established that 60% of each NEO's annual cash bonus incentive would be based on a formulaic assessment of quantitative results and 40% would be based a subjective assessment of quantitative and qualitative factors. The 60% formulaic results were heavily weighted towards investor priorities of corporate-level returns, capital efficiency, cash flow, and balance sheet strength; and +40 CALLON PETROLEUM +EXECUTIVE COMPENSATION +• +For 2020, the Committee added an absolute TSR modifier to the 2020 PSU grants, which creates a further tie to absolute shareholder returns. +The Committee will continue to review shareholder votes and feedback on our executive compensation programs to ensure alignment with shareholder interests. +Role of Independent Compensation Consultant +For 2019, the Committee continued its engagement of Meridian as its independent compensation consultant to provide information and objective advice regarding executive officer and director compensation. The Committee retained Meridian because of its extensive familiarity with executive compensation programs in our industry. Importantly, the Committee makes all of the decisions with respect to our executive compensation, and in setting compensation for our NEOs, considers Meridian's advice as only one factor among many other factors discussed within this CD&A. Other factors include our overall performance; individual NEO performance, experience, skills and tenure with the Company; and industry trends. +Meridian reports solely to the Committee, and the Committee determines the scope of Meridian’s engagement. In an effort to ensure that our NEO compensation programs are competitive and consistent with our compensation philosophy, Meridian assisted the Committee as follows: +• +Regularly attending meetings of the Compensation Committee and meeting privately in executive session with the Compensation Committee to discuss its recommendations; +• +Providing recommendations on executive compensation matters to align the Committee’s actions with shareholder interests, our business strategy and pay philosophy, prevailing market practices and relevant legal and regulatory requirements; +• +Periodically evaluating the Peer Group and providing peer company data for the Committee to use in its decision-making process, including assessment of pay and performance relative to peers; +• +Providing competitive market data to consider in evaluating the competitiveness of the executive base salaries and short and long-term incentive plans and awards; +• +Reviewing data in connection with the Committee’s determination of annual cash incentive performance objectives and performance-based incentive vesting levels for completed performance periods; +• +Advising on the Company’s compensation arrangements for its non-employee directors, including providing Peer Group data; +• +Reviewing and providing feedback on our SEC filings relating to executive compensation disclosures, including our CD&A disclosures; and +• +Informing the Committee about compensation trends in the industry, best practices and other general trends and developments affecting executive compensation. +The Committee did not direct Meridian to perform its services in any particular manner or under any particular method. The Committee has the final authority to hire and terminate Meridian, and the Committee evaluates Meridian annually. Pursuant to applicable SEC and NYSE rules, the Committee has determined that no conflicts of interest exist related to Meridian’s engagement by the Committee. The Committee has retained Meridian as its consultant on NEO and director compensation for 2020. +From time to time, Meridian contacts our NEOs for information needed to fulfill the objectives established by the Committee. However, the Committee established procedures that it considers adequate to ensure that Meridian’s advice to the Committee remains objective and is not influenced by our NEOs or other management. +Role of Management +The Committee considers input from our CEO in making determinations regarding our executive compensation program and the individual compensation of each of his direct reports and other select officers of Callon. The officer team makes recommendations to the Committee regarding potential objectives for the annual cash bonus incentive program and provides information to the Committee regarding the performance of the Company for the Committee’s determination of annual cash bonuses. The Committee makes the final determination of all elements of NEO compensation. Our CEO makes no recommendations regarding, and does not participate in discussions about, his own compensation. +2020 PROXY STATEMENT 41 +EXECUTIVE COMPENSATION +Role of Market Data +The Compensation Committee strives to ensure that our executives are compensated in a manner that is fair, equitable, performance-based and guided by the interests of long-term investors. In order to attract, motivate and retain talented executive officers, the Committee must also ensure that our executive compensation program remains competitive with the types and ranges of compensation paid by our peer companies who compete for the same executive talent. On an annual basis, the Committee reviews and discusses compensation data for our CEO and other executive officers as compared with compensation data for similarly situated executive officers at peer companies recommended by Meridian and approved by the Committee. +The Committee engages Meridian to conduct annual assessments of our Peer Group in order to ensure each peer remains appropriate year-over-year. The Peer Group is selected based on multiple factors, such as: +• +Size, including enterprise value and market capitalization; +• +Similar geographic footprint and operational focus; +• +Comparability of asset portfolio; and +• +Availability of compensation data. +The Committee believes this Peer Group provides a reasonable point of reference for comparing the compensation of our executive officers to others holding similar positions and having similar responsibilities. The Committee considers Peer Group data relevant to, but not determinative of, the Committee’s consideration of overall executive compensation matters. +In light of industry volatility and consolidation as well as the Company’s growth, in late 2018 the Committee updated the Peer Group to ensure that it included a sufficient number of similarly-situated peers to provide a reasonable range of market-based compensation comparisons. The Peer Group used by the Committee in evaluating the competitiveness of executive compensation and making 2019 compensation decisions consisted of the companies set forth in the following table. The Committee also reviewed data from proprietary E&P benchmarking surveys provided by Meridian for additional market perspective and to validate the Peer Group data. +The Committee understands the inherent limitations in using any peer group or data set including fluctuations in survey participation and competition for executive talent by companies potentially much larger than Callon. Accordingly, the Committee does not consider data collected from any of these sources to be prescriptive. Rather, the Committee relies upon this and similar data as reference points around which to make informed decisions about the appropriate level and form of compensation for each NEO. +2019 Peer Group +• Carrizo Oil & Gas, Inc. +• Centennial Resource Development, Inc. (PSUs only) +• Energen Corporation (compensation only) +• HighPoint Resources Corporation +• Jagged Peak Energy, Inc. +• Laredo Petroleum, Inc. +• Matador Resources, Inc. +• Oasis Petroleum Inc. +• Parsley Energy, Inc. +• PDC Energy, Inc. +• QEP Resources, Inc. +• SM Energy Company +• SRC Energy, Inc. +In addition, the Committee adopts a Peer Group when granting performance stock units ("PSUs") to the NEOs each year for the purpose of aligning executive compensation with the Company’s total shareholder return (“TSR”) relative to peers over a pre-defined performance period. For the January 2019 PSU grant, the Committee used the Peer Group listed in the table above but replaced Energen Corporation, which had been acquired, with Centennial Resource Development, Inc., to provide an additional similarly-sized Permian Basin peer. +In the event a member of the Peer Group selected for an annual PSU grant is involved in a merger or acquisition during the first half of the performance period, the Committee has discretion to replace that company within the Peer Group. If a peer company is involved in a merger or acquisition during the second half of the performance period, the performance of that peer will be “locked in” as of the date of the transaction announcement. Since the January 2019 grant date of the 2019 PSU awards, the Committee has replaced Carrizo Oil & Gas, Inc., Jagged Peak Energy, Inc., and SRC Energy, Inc. with Cimarex Energy Co., Whiting Petroleum Corporation and WPX Energy, Inc., to reflect Callon’s larger size and broader geographic footprint following the Carrizo Acquisition. +42 CALLON PETROLEUM +EXECUTIVE COMPENSATION +In late 2019, the Committee revised the Peer Group in light of the pending Carrizo Acquisition to better reflect the size and geographic footprint of the combined company. The Committee adopted the following changes to the Peer Group to be used for evaluating the competitiveness of the 2020 executive compensation program to ensure that our executive compensation program remains competitive with the companies with whom we are compared by the market and compete for executive talent. +2019 Peer Group - Compensation +2020 Peer Group - Compensation +• Carrizo Oil & Gas, Inc. +• Energen Corporation +• HighPoint Resources Corporation +• Jagged Peak Energy, Inc. +• Laredo Petroleum, Inc. +• Matador Resources, Inc. +• Oasis Petroleum Inc. +• Parsley Energy, Inc. +• PDC Energy, Inc. +• QEP Resources, Inc. +• SM Energy Company +• SRC Energy, Inc. +• Centennial Resource Development, Inc. +• Cimarex Energy Co. +• Jagged Peak Energy, Inc. +• EP Energy Corporation +• Matador Resources, Inc. +• Oasis Petroleum Inc. +• Parsley Energy, Inc. +• PDC Energy, Inc. +• QEP Resources, Inc. +• SM Energy Company +• Whiting Petroleum Corp. +• WPX Energy, Inc. +ADDED +• Centennial Resource Development, Inc.. +• Cimarex Energy Co. +• Whiting Petroleum Corp. +• WPX Energy, Inc. +REMOVED +• Carrizo Oil & Gas, Inc. +• Energen Corporation +• Highpoint Resources Corp. +• Laredo Petroleum, Inc. +• SRC Energy, Inc. +Risk Assessment Related to Our Compensation Structure +The Committee believes our compensation plans and policies are appropriately structured to encourage and reward prudent business judgment and avoid excessive risk-taking. The Committee, with the assistance of Meridian, reviewed the compensation programs maintained by the Company during 2019 to determine whether they encouraged excessive risk taking. Upon evaluation of the assessment, the Committee concluded that our compensation policies and practices for our employees do not present risks that are reasonably likely to have a material adverse effect on the Company. The Committee’s risk review identified the following risk mitigating features of our compensation programs: +• +A balance of short-term and long-term programs to focus management on both elements of Callon’s performance; +• +Annual grants of long-term incentives designed to be the largest component of each NEO’s compensation package, with typical vesting periods of three years that are based on the value of our common stock and not on any particular metric that could encourage excessive risk-taking; +• +Performance criteria and targets for our annual bonus program designed to encourage performance, but not excessive risk taking, and discretion to decrease payouts if it is believed management exercised excessive risk taking; +• +Performance targets measured at the corporate level, rather than at the individual or business unit level; +• +Clawback policy that provides the Committee authority to recoup compensation due to error, fraud or other misconduct; +• +Reasonable change in control severance protections; and +• +Significant executive stock ownership requirements. +Determination of Each Element of Compensation +Base Salaries +We provide all of our employees, including the NEOs, with an annual base salary to compensate them for their services throughout the year. Our Committee recognizes that substantial competition exists in the oil and gas industry for attracting and retaining qualified management teams. Accordingly, the Committee evaluates our NEOs’ salaries together with other components of their compensation to ensure that the NEOs’ total compensation is competitive relative to market practices in our Peer Group and our industry in general and is consistent with the Committee’s compensation philosophy. +2020 PROXY STATEMENT 43 +EXECUTIVE COMPENSATION +Annually, generally in the first quarter of each year, the Committee reviews the base salaries of our NEOs. Individual salary amounts reflect the Committee’s subjective analysis of a number of factors, including: +• +Individual officer’s experience, skills, contributions and tenure with Callon; +• +Changes to the individual’s position within Callon; +• +Competitive market data within our Peer Group and industry; and +• +The NEO’s roles, responsibilities and expected future contributions to Callon’s success. +In addition, the Committee also considers the input and recommendations of Meridian regarding base salaries, as well as the input of the CEO, when evaluating base salaries for the other NEOs. +After considering the market analysis and advice of Meridian, at its January 2019 meeting, the Committee increased Mr. Gatto’s salary from $700,000 to $825,000 to reflect the performance of the Company and his continued development after almost two years in the CEO role. This increase brought Mr. Gatto's salary closer to a competitive level relative to peers. The Committee also increased Ms. Ecklund’s salary from $350,000 to $400,000 to reflect her expanded responsibilities upon promotion to Senior Vice President and increased Ms. Conn’s salary from $245,000 to $260,000 to reflect market analysis. +Performance-Based Annual Cash Bonus Incentive +A core component of our NEO compensation philosophy is to emphasize pay-for-performance by structuring a significant portion of total annual compensation as “at risk.” Each year, the Compensation Committee establishes an annual performance bonus program, which is designed to promote the achievement of annual financial, operating and strategic goals that are aligned with the creation of shareholder value. For 2019, the Committee formalized a formulaic approach for the Company’s annual incentive compensation program with 60% of each NEO's annual incentive based on an assessment against quantitative metrics and 40% based on the assessment of certain preset qualitative goals as well as overall performance. As a result, the NEOs’ annual cash bonus for 2019 is now reported as Non-Equity Incentive Plan Compensation in the Summary Compensation Table on page 57. As described in more detail below, the 2019 performance factors were heavily weighted towards investor priorities of corporate-level returns, capital efficiency, cash flow, balance sheet strength and ESG performance. +To align NEO compensation with the annual business plan and strategic priorities, the Committee set 2019 annual bonus target award opportunities for each NEO as a percentage of the NEO’s annual base salary as follows: +NEO +2018 Target Bonus Opportunity +(% of Base Salary) +2019 Target Bonus Opportunity +(% of Base Salary) +Joseph C. Gatto, Jr. +100% +110% +James P. Ulm, II +90% +90% +Jeffrey S. Balmer +85% +85% +Michol L. Ecklund +70% +80% +Gregory F. Conaway (i) +— +70% +Mitzi C. Conn +70% +70% +(i) +Mr. Conaway’s 2019 target annual bonus opportunity of 70% was established by Carrizo. See page 46 for more information about the 2019 Carrizo annual incentive bonus program. +In early 2019, the Committee increased Mr. Gatto’s target bonus opportunity after considering competitive market analysis, his tenure and performance as CEO, and the advice of Meridian. The Committee increased Ms. Ecklund’s target bonus opportunity for 2019 to reflect her expanded responsibilities. Actual awards can range from 0 - 200% of target based on the achievement of pre-established performance metrics as described below. +2019 Performance Goals +For purposes of evaluating performance, the Committee, in collaboration with management and Meridian, oversees a rigorous process to set quantitative and qualitative performance objectives for the annual bonus program that are derived from the annual business plan and reflect key shareholder and strategic priorities for the upcoming year. +44 CALLON PETROLEUM +EXECUTIVE COMPENSATION +In early 2019, the Committee established the formulaic, quantitative objectives for 2019 and their respective weightings as set forth below: +Quantitative Objective +Description +Weighting +Net Debt/Adjusted EBITDA (i) +Measure of our ability to cover our debt, which is impacted by cash flow, and ensures focus on a strong balance sheet +15% +Cash Return on Cash Invested (ii) +Measure of total corporate returns on capital +12.5% +(LOE + Cash G&A)/BOE +Measure of critical cash margin components that are controlled by management +12.5% +Oil Production +Key component in our ability to deliver cash flow and returns on capital investment +10% +Proved Developed F&D/BOE (iii) +Measure of capital efficiency for annual proved developed reserve base additions +10% +TOTAL +60% +(i) +Net Debt to Adjusted EBITDA is calculated as the sum of total long-term debt less unrestricted cash and cash equivalents, divided by the Company’s Adjusted EBITDA inclusive of annualized pro forma results from its acquisitions and divestitures completed over the last twelve month period. See Appendix A for a reconciliation of Non-GAAP financial measures. +(ii) +Cash Return on Invested Capital is defined as (GAAP cash flow from operations + after tax interest expense) / (average total debt + average stockholders’ equity). 2019 CROCI based on Callon standalone. +(iii) +Proved Developed F&D/BOE reflects all operational capital including facilities costs (development costs + exploratory costs) / (total proved extensions, discoveries, and other additions except those related to PUD reserves + PUD reserves converted to proved developed reserves during the period). +For the remaining 40% of the annual bonus framework, the Committee evaluates factors of Company performance related to short- and long-term strategic goals that are not otherwise captured by the formulaic metrics. To guide their discretionary assessment of performance and align expectations with management, the Committee established qualitative strategic objectives and corresponding preset goals in early 2019 related to the following: +• +Health, safety and environmental performance +• +Organizational and talent development +• +Other strategic initiatives, including selective divestitures of non-core assets and advancement of "life of field" development plans +2019 Performance Results +After the close of the 2019 calendar year, the Committee assessed the Company’s and the NEOs’ annual performance overall and relative to the framework established for the annual incentive compensation program. The results relative to the quantitative ’performance metrics were as set forth below. Because the Carrizo Acquisition closed near the end of the year on December 20, 2019, the Committee determined that it was appropriate to assess performance of the preset metrics relative to standalone Callon results without including Carrizo contributions for the 11-day post-close period. +Quantitative Objective +Weighting +Threshold +(50%) +Target +(100%) +Max +(200%) +Actuals (i) +Weighted +Contribution +Net Debt/Adjusted EBITDA +15% +2.8x +2.6x +2.3x +2.5x +20% +Cash Return on Cash Invested +12.5% +11.00% +12.25% +14.00% +12.96% +17.6% +(LOE + Cash G&A)/BOE +12.5% +$8.85 +$8.30 +$7.60 +$8.10 +16.1% +Oil Production +10% +29,600 +31,000 +32,400 +30,787 +9.2% +Proved Developed F&D/BOE +10% +$15.25 +$14.00 +$12.50 +below threshold +0% +Quantitative Total +60% +63% +(i) +Reflects actual results for standalone Callon 2019 performance, pro forma for the sale of the Southern Midland Basin assets that was announced in April 2019. +2020 PROXY STATEMENT 45 +EXECUTIVE COMPENSATION +With respect to the qualitative performance component, the Committee considered the Company’s and management’s overall performance for 2019, as well as progress made on the strategic objectives established in early 2019, including the factors described below: +Qualitative Factors +2019 Achievements +Health, Safety, and Environmental +• Achieved the Company’s best safety performance on record, reducing the total recordable incident rate by 50% +• Reduced environmental impact by increasing recycled water volumes by 80% and reducing flaring intensity by more than 40%. +• Published inaugural Sustainability web site to enhance communication of the Company’s ESG initiatives +Organizational and Talent Development +• Named a “Best Place to Work” by the Houston Chronicle for third year in a row +• Enhanced leadership development with new training and goal-setting initiatives +• Advanced succession planning and critical talent initiatives for key leadership roles across the organization +Strategic Initiatives +• Successfully closed the Carrizo Acquisition to advance returns, cash flow, capital efficiency and development plan flexibility +• Completed over $300 million of non-core asset monetizations +• Advanced large-scale, multi-zone development in the Midland and Delaware Basins +• Achieved free cash flow generation in 4Q on a stand-alone and pro forma basis +Overall, the Committee determined that the management team achieved strong operational and financial performance in the base business in 2019-exceeding the quantitative and qualitative performance objectives for the year-while also executing the complex, transformative Carrizo Acquisition. The Committee also took into consideration Callon’s negative stock price performance during 2019. After accounting for all factors, the Committee awarded an overall 2019 annual incentive bonus payout for the Callon NEOs of 115%, which aligned with the annual bonus payout for all other eligible Callon employees. +2019 Annual Incentive Compensation Payouts +Based on the Committee’s assessment of 2019 performance relative to the pre-established annual bonus programs as described above, the Committee awarded 2019 annual incentive compensation payouts for the NEOs as follows: +NEO +2019 Annual Bonus +Joseph C. Gatto, Jr. +$ +1,043,625 +James P. Ulm, II +$ +481,275 +Jeffrey S. Balmer +$ +439,875 +Michol L. Ecklund +$ +368,000 +Gregory F. Conaway (a) +$ +197,400 +Mitzi P. Conn +$ +209,300 +(a) +Mr. Conaway's bonus was determined under Carrizo’s 2019 annual bonus program and in accordance with the Merger Agreement as described below. +Carrizo 2019 Bonus Program +As part of the Merger Agreement between Callon and Carrizo dated July 14, 2019, Callon agreed to assume the Carrizo annual bonus program for 2019 if the Carrizo Acquisition closed prior to the end of the year. Callon further agreed such 2019 Carrizo bonuses would be paid out at not less than 100% of each employee’s target bonus opportunity. +In early 2019, the Compensation Committee of the Carrizo Board of Directors had established the 2019 target bonus opportunities and annual performance metrics for the Carrizo executive officers. Mr. Johnson’s and Mr. Conaway’s target bonus opportunities were set at 100% and 70% of salary, respectively. The executive officers’ bonuses were based on the achievement of pre-established quantitative performance metrics for Oil Production, Lease Operating Expense, G&A Costs, and Drill-Bit F&D +46 CALLON PETROLEUM +EXECUTIVE COMPENSATION +Costs. Following the close of 2019, the Callon Compensation Committee evaluated Carrizo’s stand-alone 2019 results relative to the pre-established quantitative bonus metrics and determined that the payout percentage for Carrizo executive officers for 2019 was below 100%. Accordingly, pursuant to the terms of the Merger Agreement, the Carrizo executive officers including Mr. Johnson and Mr. Conaway received a 2019 annual bonus equal to 100% of their target bonus opportunity, which aligned with the 2019 annual bonus payout for all other legacy Carrizo employees who were eligible for a 2019 bonus. +Annual Award of Long-Term Incentives +Our executive compensation program is heavily weighted to long-term incentives, which reward our NEOs for delivering results consistent with the Company’s long-term strategic objectives and align their interests with those of our shareholders. We believe that a long-term incentive program that includes awards of both RSUs and PSUs provides an appropriate balance of retention and performance-based incentives that captures absolute performance of our common stock as well as comparative returns relative to other oil and gas companies. The Committee believes that granting LTI awards is an effective means to provide substantial forward-looking incentives to our executive officers that emphasize: +• +Long-term value creation by linking compensation with long-term operational success; +• +Alignment of the interests of our executive officers with those of our long-term shareholders by directly linking rewards to shareholder return; +• +Retention incentives for our executive officers; and +• +Meaningful equity participation by our executive officers that further aligns their interests with shareholders. +For the grant of LTI compensation to executive officers, the Committee considers market analysis and the advice of Meridian in determining the program design and award amounts. In 2019, the Committee adjusted target long-term incentive values for the NEOs to reflect market competitiveness, a continued shift in the mix of total compensation towards long-term awards, appropriate retention incentives especially for shorter-tenured executives, and personal and Company performance. +For the 2019 LTI grants, the Committee approved a 60%/40% mix for our executive officers of performance-based awards tied to relative 3-year TSR and time-based RSUs, respectively. The performance awards are granted as PSUs that settle 50% in cash and 50% in stock. The following table sets forth the number of RSUs and PSUs awarded to the executive officers in January 2019: +NEO +Total Value +$ (a) +RSUs Payable in +Common Stock +PSUs Payable in +50% Stock and 50% cash (b) +Joseph C. Gatto, Jr. +$ +4,299,996 +211,301 +(c) +316,954 +James P. Ulm, II +$ +1,743,995 +85,700 +(c) +128,550 +Jeffrey S. Balmer +$ +1,629,097 +90,000 +(d) +128,378 +Michol L. Ecklund +$ +999,999 +49,140 +(c) +73,710 +Gregory F. Conaway +$ +0 +0 +0 +Mitzi P. Conn +$ +363,996 +17,885 +(c) +26,832 +(a) +Represents the intended target value of the awards based on the trading price of Callon stock on the grant date, which is different from the grant date fair value computed in accordance with FASB ASC Topic 718 as reported in the Summary Compensation Table. +(b) +Amounts represent PSUs that are scheduled to vest on December 31, 2021 at a variable rate between 0% and 200% based on our TSR when compared to pre-determined peer companies and will be settled in 50% Company common stock and 50% cash. +(c) +Amounts represent RSUs that are subject to three-year ratable vesting with one-third vesting each year subsequent to the award year. The first tranche vested on April 1, 2020; the second on April 1, 2021; and the third on April 1, 2022; and each tranche will settle in Company common stock on the vesting date. +(d) +Amounts represent RSUs granted to Dr. Balmer upon joining the Company that are subject to three-year ratable vesting with one-third vesting each year subsequent to the award year. The first tranche vested on January 1, 2020; the second will vest on January 1, 2021; and the third will vest on January 1, 2022; and each tranche will settle in Company common stock on the vesting date. +PSU program +In January 2019, the Committee awarded PSUs to the NEOs (with the exception of Mr. Conaway) that will vest at the end of the 36-month performance period (January 1, 2019 to December 31, 2021) based on the Company’s TSR ranking relative to the “2019 Peer Group” listed on page 42 as revised per the description on page 42. TSR is the change in the common stock price, plus any dividends paid, over the defined performance period using a 20-day average at the beginning and end of the performance period. The Committee believes relative TSR is an appropriate long-term performance metric because it provides a +2020 PROXY STATEMENT 47 +EXECUTIVE COMPENSATION +measure of long-term performance relative to peers as well as strong alignment of the interests of management and the Company’s long-term shareholders. PSUs are eligible for vesting if the employee continues to be employed until the vesting date on December 31, 2021. The vested PSUs will pay out 50% in cash and 50% in shares of the Company's common stock. PSUs will vest at the percentage set forth below based on the Company’s relative TSR ranking for the performance period, with vesting capped at 100% of target if the Company’s TSR is negative. Vesting will be interpolated for percentile ranks between the percentiles described: +Callon’s TSR Percentile Rank Among the Peer Companies +PSUs Vesting as a Percentage of Target +>=90th Percentile +200 +% +70th Percentile +150 +% +50th Percentile +100 +% +30th Percentile +50 +% +<30th Percentile +0 +% +RSU program +In January 2019, the Committee awarded NEOs (with the exception of Mr. Conaway) with time-based RSUs that will vest in one-third increments annually beginning April 1, 2020, provided the executive officer continues to be employed on the vesting dates, and will be paid in shares of the Company’s common stock. +2020 Long-Term Incentive Program +For the 2020 PSU awards granted in January 2020, the Committee added an absolute TSR modifier to further link NEO compensation to absolute shareholder returns and reflect investor feedback regarding recent energy industry compensation trends. The new absolute TSR modifier was added as a second factor, in addition to the relative TSR multiplier, to determine the vesting percentage for the PSUs at the end of the performance period in December 2022. +The absolute TSR modifier further incentivizes NEOs to create positive shareholder value during the three-year performance period and reduces outcomes if TSR is less than 5% over that period. The absolute TSR modifier is calculated on an annualized basis and is structured as follows: +Callon’s annualized absolute TSR during the performance period +Modifier +>15% +150 +% +10 - 15% +125 +% +5 - 10% +100 +% +0 - 5% +75 +% +<0% +50 +% +Vesting of 2017-2019 Performance Awards +In May 2017, our Compensation Committee granted PSUs to the then-executive officers covering the performance period from May 2017 to December 2019. The Company’s relative TSR for the performance period ranked seventh relative to the 13 peer companies defined by the Compensation Committee, resulting in vesting of 100% of the target PSUs awarded. Vested PSUs were paid 50% in cash and 50% in Company common stock. +48 CALLON PETROLEUM +EXECUTIVE COMPENSATION +The table below summarizes the PSUs earned by the executive officers for the 2017-2019 performance period: +NEO +Target Number +of PSUs +Percent of Target +PSUs Earned +Actual Vested PSUs +(Settled 50% Cash and 50% Shares) +Joseph C. Gatto, Jr. +64,304 +100% +64,304 +James P. Ulm, II (a) +— +— +— +Jeffrey S. Balmer (a) +— +— +— +Michol L. Ecklund (a) +— +— +— +Gregory F. Conaway (a) +— +— +— +Mitzi P. Conn +16,324 +100% +16,324 +(a) +Executive was not employed by the Company in May 2017 when award was granted. +Other Compensation +Perquisites and Other Benefits +Benefits represent a relatively small part of our overall compensation package; however, these benefits help attract and retain senior level executives. We review these benefits annually to ensure that they are competitive with industry norms. We provide benefits commonly offered in the E&P industry to all of our employees. These benefits consist of: +• +Group medical and dental insurance program for employees and their qualified dependents; +• +Group life insurance for employees and their spouses; +• +Accidental death and dismemberment coverage for employees; +• +Long-term disability coverage; +• +Callon's sponsored cafeteria plan; and +• +401(k) employee savings and protection plan (the "401(k) plan"). +We pay the full costs of these benefits, including the 401(k) plan administration, for all employees. Employee life insurance amounts that surpass the U.S. Internal Revenue Service (the "IRS") maximum are treated as additional compensation to all employees. +Under our 401(k) plan, all eligible employees may elect to defer a portion of their compensation up to the statutorily prescribed limit. In 2019, the Company provided a non-elective contribution of 5%, and a matching contribution of up to 5%, of the employee’s IRS eligible salary for qualified employees, including NEOs. +We have also provided Dr. Balmer with reimbursement for certain reasonable relocation expenses which included transportation expenses, home sale and purchase assistance, shipment of additional household goods, and tax gross-ups on these payments. These benefits are consistent with those provided to all similarly-situated employees upon relocation. +Our NEOs are entitled to certain benefits, or perquisites, that are not otherwise available to all of our employees. We provide our executive officers with use of a Company automobile. We purchase the automobile and pay for all maintenance, repairs, insurance and fuel. The employee is required to recognize taxable income using the IRS’s annual lease value method for personal use of the vehicle. The costs associated with these benefits for the NEOs are reported as “Other Compensation” in the Summary Compensation Table. The Committee believes these perquisites are modest, yet competitive with the perquisites provided to similarly situated oil and gas industry executives. +Change in Control Severance Protection +We have no employment agreements with our executive officers, with the exception Mr. Conaway, but we do provide change in control severance compensation agreements (“SCAs”) with each of our executive officers that provide for certain protections upon a change in control. The Committee believes that SCAs serve shareholders’ best interests by helping ensure retention of management and by diminishing potential distractions for our executive officers in the event of a change in control transaction. However, the Committee believes that executives should not be unduly enriched, and all benefits under the SCAs require a “double trigger.” Mr. Conaway and the Company (as successor-in-interests to Carrizo as a result of the Carrizo Merger) are parties to an employment agreement. For a more detailed explanation of the SCAs and Mr. Conaway’s employment agreement, please see “Employment Agreements, Termination of Employment and Change in Control Arrangements” on page 57. +2020 PROXY STATEMENT 49 +EXECUTIVE COMPENSATION +Stock Ownership Guidelines +Consistent with its goal of driving long-term value creation for our shareholders, the Company's stock ownership guidelines require significant stock ownership by the executive officers and directors. The Committee believes that requiring meaningful stock ownership by our executive officers and directors is an important way to further align their interests with the interests of our long-term shareholders and discourage undue risk taking. Accordingly, the Committee has adopted a stock ownership policy which applies to the CEO, the other executive officers and outside directors as described below. The guidelines require the executive officers and directors to hold the following amounts of our stock: +Executive Officers/Directors +Required Common Stock Ownership as a Multiple of Annual Base Salary / Annual Retainer +CEO +6x +Directors +5x +Other Executive Officers +2x +The Committee evaluates compliance with these guidelines on an annual basis. For purposes of the guidelines, shares owned indirectly, shares in the executive officer's 401(k) plan and any unvested time-based RSUs are included. The value of unvested PSUs is excluded. Pursuant to the policy, shares granted to the executive under the Company’s incentive compensation plans are valued at the greater of the then-current trading price or the value on the date of grant. +Each executive officer has a transition period of five years from the date the individual becomes subject to the guidelines to attain the required investment position. If an executive officer becomes subject to a greater ownership requirement due to a promotion or an increase in salary, the executive officer will be expected to attain the higher level within three years of the change. +Each outside director is required to achieve the ownership requirement within five years following their election as a director. +As of December 31, 2019, all participants were in compliance with the stock ownership policy, either through meeting the ownership requirement or by being within the transition period. +Internal Revenue Service Limitations +Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Tax Code") places a limit of $1.0 million on the amount of compensation that we may deduct in any one year with respect to compensation paid to each covered employee. For years prior to 2018, an exception to the deduction limit for compensation qualified as “performance-based.” The enactment of the Tax Cuts and Jobs Act on December 22, 2017 repealed the "performance-based" exemption from Section 162(m)‘s deduction limit. In addition, the limitation on deductibility was expanded to include any individual who is an NEO in 2017 or any later calendar year. As a result, compensation paid to our NEOs in excess of $1.0 million will not be deductible for years subsequent to 2017, subject to limited transition relief for arrangements in place as of November 2, 2017. Despite the change in law, the Committee intends to continue to consider the deductibility of compensation and to implement compensation programs that it believes are competitive and in the best interests of the Company and its shareholders. +Insider Trading Policy +The Company’s Board has adopted a comprehensive Insider Trading Policy for employees and directors to promote compliance with federal and state securities laws. The policy prohibits certain persons who are aware of material non-public information about a company from: (i) trading in securities of that company; or (ii) providing material non-public information to other persons who may trade on the basis of that information. When material non-public information about us may exist and may have an influence on the marketplace, a trading blackout period is placed in effect by management. In addition, this Insider Trading Policy also applies to family members, other members of a person’s household, and entities controlled by a person covered by this Insider Trading Policy. Officers, directors, and designated employees, as well as the family members and controlled entities of such persons, may not engage in any transaction in Company securities without first obtaining pre-clearance of the transaction from our General Counsel. +Under the Insider Trading Policy, directors, executive officers and other employees are prohibited from entering into any hedging or monetization transactions relating to Callon's securities or otherwise trading in any instrument relating to the future securities' price. This Insider Trading Policy also prevents directors and executive officers from pledging Callon common stock as collateral for loans or holding Callon securities in a margin account. The Insider Trading Policy is published as Addendum A to our Code of Business Conduct and is available at www.callon.com/about-callon/governance. +50 CALLON PETROLEUM +EXECUTIVE COMPENSATION +Clawback Policy +In January 2020, the Committee adopted a comprehensive clawback policy. The clawback policy provides the Committee the authority to recoup previously-paid compensation under the following circumstances: +• +If there is a correction to previously approved performance metrics (not necessarily limited to a financial restatement), the Committee may clawback from executive officers any annual or long-term incentive compensation paid in error during the prior three years. +• +If an executive officer engages in fraud or misconduct, or was grossly negligent in a supervisory role, where such action caused or could reasonably lead to material financial or reputational harm to Callon, the Committee may clawback annual and long-term incentive compensation from the past year from the executive officer +The Committee believes this clawback policy helps protect the Company and its shareholders in the unlikely event of a restatement or potential fraud or misconduct by an executive officer. +The clawback rights described above are in addition to those required under Sarbanes-Oxley legislation. +Compensation Committee Report +The Compensation Committee has reviewed and discussed with management the CD&A required by Item 402(b) of Regulation S-K promulgated under the Exchange Act, and based on such review and discussions, the Committee has recommended to the Board that the CD&A be included in this Proxy Statement relating to the 2020 Annual Meeting of Shareholders. +Respectfully submitted by the Compensation Committee of the Board of Directors, +Matthew R. Bob, Chairman +Michael L. Finch +L. Richard Flury +Anthony J. Nocchiero +James M. Trimble +2020 PROXY STATEMENT 51 +EXECUTIVE COMPENSATION +Executive Compensation Tables +The compensation paid to the Company’s executive officers generally consists of base salaries, annual cash incentive payments, awards under the 2011 Omnibus Incentive Plan (the "2011 Plan") and the 2018 Plan, contributions to the Company’s 401(k) plan and miscellaneous perquisites. The table below sets forth information regarding fiscal years 2019, 2018 and 2017 compensation awarded to, earned by or paid to the Company’s NEOs, in each case for the years in which these individuals constituted "named executive officers" under SEC rules. This includes all individuals who served as the Company's CEO or CFO during 2019, the three other most highly compensated executive officers serving at the end of the fiscal year, and our former Chief Accounting Officer who would have been in the top three but transitioned from her role prior to year-end. Mr. Conaway was appointed as an executive officer of the Company as of the closing of the Carrizo Acquisition on December 20, 2019. The below tables reflect compensation paid to Mr. Conaway by the Company on or after that date. +Summary Compensation Table +Name and Principal Position +Year +Salary +Bonus (a) +Stock +Awards (b) +Non-Equity Incentive Plan Compensation (c) +All Other Compensation (d) +Total +Joseph C. Gatto, Jr. (e)(f) +President & CEO +2019 +$ +796,153 +$ +0 +$ +5,136,754 +$ +1,043,625 +$ +33,055 +$ +7,009,587 +2018 +$ +666,346 +$ +980,000 +$ +4,313,125 +$ +0 +$ +31,430 +$ +5,990,901 +2017 +$ +494,568 +$ +690,000 +$ +2,852,712 +$ +0 +$ +41,816 +$ +4,079,096 +James P. Ulm, II (g) +Senior Vice President & CFO +2019 +$ +465,000 +$ +0 +$ +2,083,367 +$ +481,275 +$ +42,352 +$ +3,071,994 +2018 +$ +465,000 +$ +585,900 +$ +1,249,500 +$ +0 +$ +39,245 +$ +2,339,645 +2017 +$ +17,885 +$ +52,000 +$ +989,100 +$ +0 +$ +0 +$ +1,058,985 +Jeffrey S. Balmer (h) +Senior Vice President & Chief Operating Officer +2019 +$ +450,000 +$ +0 +$ +1,968,015 +$ +439,875 +$ +57,350 +$ +2,915,240 +Michol L. Ecklund (i)(j) +Senior Vice President, General Counsel & Corporate Secretary +2019 +$ +388,462 +$ +0 +$ +1,194,593 +$ +368,000 +$ +38,953 +$ +1,990,008 +2018 +$ +340,577 +$ +343,000 +$ +774,155 +$ +0 +$ +38,131 +$ +1,495,863 +Gregory F. Conaway (k)(l) +Vice President & Chief Accounting Officer +2019 +$ +8,677 +$ +0 +$ +0 +$ +197,400 +$ +174 +$ +206,251 +Mitzi P. Conn (m) +Former Vice President & +Chief Accounting Officer +2019 +$ +256,538 +$ +0 +$ +434,833 +$ +209,300 +$ +35,744 +$ +936,415 +2018 +$ +239,615 +$ +240,100 +$ +366,055 +$ +0 +$ +30,987 +$ +876,757 +2017 +$ +225,000 +$ +189,000 +$ +394,150 +$ +0 +$ +30,118 +$ +838,268 +(a) +Cash bonus awarded in first quarter of following year in recognition of previous year's performance. +(b) +The amounts reported in the “Stock Awards” column represent the aggregate grant date fair value of RSUs and PSUs computed in accordance with FASB ASC Topic 718, disregarding any estimates of forfeiture. The performance unit awards granted in 2019, 2018 and 2017 are subject to market conditions and have been valued based on the probable outcome of the market conditions as of the grant date of the awards. The assumptions utilized in the calculation of these amounts for 2019 are set forth in footnotes 9 and 10 to our consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2019. +(c) +The amounts reported in the “Non-Equity Incentive Plan Compensation” column represent payouts under the 2019 annual performance bonus program. See “Performance-Based Annual Cash Incentive” in the CD&A above for further information. +(d) +See the "Table of All Other Compensation” below and related footnotes for reconciliation. +(e) +Mr. Gatto was promoted to Chief Executive Officer in May 2017. +(f) +Mr. Gatto’s salary was increased from $700,000 to $825,000 effective March 2019. +(g) +Mr. Ulm began serving as our Chief Financial Officer in December 2017. +(h) +Dr. Balmer was not an NEO prior to 2019. +(i) +Ms. Ecklund was not an NEO prior to 2018. +(j) +Ms. Ecklund's salary was increased from $350,000 to $400,000 effective March 2019. +(k) +Mr. Conaway was appointed to an executive officer role with the Company as of the closing of the Carrizo Acquisition on December 20, 2019. +52 CALLON PETROLEUM +EXECUTIVE COMPENSATION +(l) +The amount in Non-Equity Incentive Plan Compensation represents the amount paid to Mr. Conaway by the Company as a 2019 annual performance bonus in accordance with the terms of Carrizo’s 2019 annual bonus program and the Merger Agreement. See “Performance-Based Annual Cash Incentive” in the CD&A above for further information. +(m) +Ms. Conn's salary was increased from $245,000 to $260,000 effective March 2019. +Table of All Other Compensation +NEO +Year +Company +Contributions to 401(k) (a) +Company +Provided +Auto (b) +Additional Perquisites +Total +Joseph C. Gatto, Jr. +2019 +$ +26,250 +$ +6,805 +$ +0 +$ +33,055 +2018 +$ +25,000 +$ +6,430 +$ +0 +$ +31,430 +2017 +$ +31,500 +$ +10,316 +$ +0 +$ +41,816 +James P. Ulm, II +2019 +$ +28,000 +$ +14,352 +$ +0 +$ +42,352 +2018 +$ +26,493 +$ +12,752 +$ +0 +$ +39,245 +2017 +$ +0 +$ +0 +$ +0 +$ +0 +Jeffrey S. Balmer +2019 +$ +24,642 +$ +1,851 +$ +30,857 +(c) +$ +57,350 +Michol L. Ecklund +2019 +$ +25,962 +$ +12,991 +$ +0 +$ +38,953 +2018 +$ +25,312 +$ +12,819 +$ +0 +$ +38,131 +Gregory F. Conaway +2019 +$ +174 +$ +0 +$ +0 +$ +174 +Mitzi P. Conn +2019 +$ +23,654 +$ +12,090 +$ +0 +$ +35,744 +2018 +$ +23,961 +$ +7,026 +$ +0 +$ +30,987 +2017 +$ +22,500 +$ +7,618 +$ +0 +$ +30,118 +(a) +Subject to IRS limits, Company contributions to each employee's 401(k) account for 2019 consist of a 5% non-matching contribution plus a matching contribution at the rate of 1% in cash for every 1% that the participant deferred up to 5%. +(b) +The imputed value for personal use of a company-provided automobile represents annual depreciation based on a three-year life, plus insurance, fuel, maintenance and repairs, pursuant to IRS rules. +(c) +Dr. Balmer received $30,857 for reimbursement for certain reasonable relocation expenses which included transportation expenses, home sale and purchase assistance, shipment of additional household goods, and tax gross-ups on these payments. +2020 PROXY STATEMENT 53 +EXECUTIVE COMPENSATION +Grants of Plan-Based Awards During 2019 +The following table presents grants of equity awards during the fiscal year ending December 31, 2019: +Grant +Date +Estimated Future Payouts Under Non-Equity Incentive Plan Awards (a) +Estimated Future Payouts Under Equity Incentive Plan Awards (b) +Other Awards +(Shares or Units) (c) +Grant Date +Fair Value of Stock Awards (d) +NEO +Threshold +Target +Maximum +Threshold +Target +Maximum +Joseph C. Gatto, Jr. +1/1/2019 +$ +0 +$ +907,500 +$ +1,815,000 +1/31/2019 +— +211,301 +$ +1,719,990 +1/31/2019 +— +316,954 +633,908 +$ +3,416,764 +James P. Ulm, II +1/1/2019 +$ +0 +$ +418,500 +$ +837,000 +1/31/2019 +85,700 +$ +697,598 +1/31/2019 +— +128,550 +257,100 +— +$ +1,385,769 +Jeffrey S. Balmer +1/1/2019 +$ +0 +$ +382,500 +$ +765,000 +1/1/2019 +90,000 (e) +$ +584,100 +1/31/2019 +128,378 +245,756 +$ +1,383,915 +Michol L. Ecklund +1/1/2019 +$ +0 +$ +320,000 +$ +640,000 +1/31/2019 +— +— +— +49,140 +$ +400,000 +1/31/2019 +— +73,710 +147,420 +— +$ +794,594 +Gregory F. Conaway +— +$ +0 +$ +0 +$ +0 +— +— +— +— +— +$ +0 +Mitzi P. Conn +1/1/2019 +$ +0 +$ +182,000 +$ +364,000 +1/31/2019 +— +— +— +17,885 +$ +145,584 +1/31/2019 +— +26,832 +53,664 +— +$ +289,249 +(a) +Amounts represent the threshold, target, and maximum payouts for the 2019 annual performance bonus program. The actual amounts paid under the 2019 annual performance bonus program are set forth in the "Non-Equity Incentive Compensation" column in the Summary Compensation Table above. +(b) +Amounts represent PSUs payable 50% in cash and 50% in stock on the vesting date, currently scheduled for December 31, 2021. See "PSU Program" in the CD&A above for further details. +(c) +Except as otherwise indicated, amounts represent RSUs granted to our NEOs on January 31, 2019. The first tranche vested on April 1, 2020; the second and third tranches are scheduled to vest in equal installments on April 1, 2021 and 2022, subject to the NEO’s continued service. +(d) +This column shows the grant date fair value of the awards granted to the NEOs on the date indicated computed in accordance with FASB ASC Topic 718. The value ultimately realized by the executive upon the actual vesting of the awards may be more or less than the grant date fair value. +(e) +Amount represents RSUs granted to Dr. Balmer on January 1, 2019 at a grant price of $6.49. The first tranche vested on January 1, 2020; the second and third tranches are scheduled to vest in equal installments on January 1, 2021 and 2022, subject to Dr. Balmer’s continued service. +Stock-Based Incentive Compensation Plans +The 2011 Plan was approved by shareholders on May 12, 2011 and amended on May 14, 2015. The 2018 Plan was approved by shareholders on May 10, 2018. Awards available under each of the 2011 Plan and the 2018 Plan include grants of stock options, stock appreciation rights or units, restricted stock, RSUs, and performance shares or units. As of May 10, 2018, no more shares will be issued from the 2011 Plan and the then-remaining 1,322,742 shares authorized and available for issuance under the 2011 Plan were transferred into the 2018 Plan. Shares, which would otherwise become available for issuance under the 2011 Plan as a result of vesting and/or forfeiture of any equity awards existing prior to the effective date of the 2018 Plan, will increase the authorized shares available to the 2018 Plan. In connection with the Carrizo Acquisition, an additional 5,620,416 shares became available for issuance under the 2018 Plan, which represented the remaining number of shares of common stock of Carrizo that were available for issuance under the 2017 Incentive Plan of Carrizo Oil & Gas, Inc., as amended and restated +54 CALLON PETROLEUM +EXECUTIVE COMPENSATION +effective as of May 16, 2019, immediately prior to the Carrizo Acquisition, as appropriately adjusted to reflect such transaction. As of April 3, 2020, approximately 5,850,000 shares remain unissued in the 2018 Plan, which includes approximately 3,430,000 shares available for grant only to legacy Carrizo employees and approximately approximately 2,420,000 shares available for grant to any eligible grantee. +Outstanding Equity Awards at Fiscal Year-End +The following table contains information concerning all outstanding equity awards that were held as of December 31, 2019 for the NEOs: +Stock Awards +NEO +Number of Shares or Units of Stock That Have Not Vested (#) +Market Value of Shares or Units of Stock That Have Not Vested (a) +Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested +Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested (a) +Joseph C. Gatto, Jr. +211,301 +(c) +$ +1,020,584 +— +$ +0 +— +$ +0 +158,477 +(d) +$ +765,444 +$ +0 +158,477 +(e) +$ +765,444 +42,868 +(f) +$ +207,052 +— +$ +0 +40,049 +(g) +$ +193,437 +— +$ +0 +73,446 +(h) +$ +354,744 +— +$ +0 +— +$ +0 +82,627 +(i) +$ +399,088 +— +$ +0 +82,627 +(j) +$ +399,088 +James P. Ulm, II +85,700 +(c) +$ +413,931 +— +$ +0 +— +$ +0 +64,275 +(d) +$ +310,448 +— +$ +0 +64,275 +(e) +$ +310,448 +60,000 +(k) +$ +289,800 +— +$ +0 +— +$ +0 +37,500 +(i) +$ +181,125 +— +$ +0 +37,500 +(j) +$ +181,125 +Jeffrey S. Balmer +90,000 +(b) +$ +434,700 +— +$ +0 +— +$ +0 +64,189 +(d) +$ +310,033 +— +$ +0 +64,189 +(e) +$ +310,033 +Michol L. Ecklund +49,140 +(c) +$ +237,346 +— +$ +0 +— +$ +0 +36,855 +(d) +$ +178,010 +— +$ +0 +36,855 +(e) +$ +178,010 +25,000 +(l) +$ +120,750 +— +$ +0 +13,182 +(h) +$ +63,669 +— +$ +0 +— +$ +0 +14,831 +(i) +$ +71,634 +— +$ +0 +14,831 +(j) +$ +71,634 +Gregory F. Conaway (m) +— +— +— +— +Mitzi P. Conn +17,885 +(c) +$ +86,385 +— +$ +0 +— +$ +0 +13,416 +(d) +$ +64,799 +— +$ +0 +13,416 +(e) +$ +64,799 +10,881 +(f) +$ +52,555 +— +$ +0 +6,232 +(h) +$ +30,101 +— +$ +0 +— +$ +0 +7,013 +(i) +$ +33,873 +— +$ +0 +7,013 +(j) +$ +33,873 +(a) +Amounts calculated using the closing price of $4.83 per share of our common stock on the last trading day of 2019. +2020 PROXY STATEMENT 55 +EXECUTIVE COMPENSATION +(b) +Stock settleable RSUs awarded on January 1, 2019 subject to three-year ratable vesting with one-third vesting each year subsequent to the award year. The first tranche vested on January 1, 2020. The second tranche will vest on January 1, 2021. The third and final tranche will vest on January 1, 2022. +(c) +Stock settleable RSUs awarded on January 31, 2019 subject to three-year ratable vesting with one-third vesting each year subsequent to the award year. The first tranche vested on April 1, 2020. The second tranche will vest on April 1, 2021. The third and final tranche will vest on April 1, 2022. +(d) +Stock settleable PSUs awarded on January 31, 2019 with vesting terms subject to performance criteria related to the TSR of the Company compared to a group of peer companies from December 31, 2018 through December 31, 2021. The number of units subject to vest under this award can range from 0% to 200%. +(e) +Cash settleable PSUs awarded on January 31, 2019 with vesting terms subject to performance criteria related to the TSR of the Company compared to a group of peer companies from December 31, 2018 through December 31, 2021. The number of units subject to vest under this award can range from 0% to 200%. +(f) +Stock settleable RSUs awarded on May 11, 2017 subject to cliff vesting on May 11, 2020. +(g) +Stock settleable RSUs awarded to Mr. Gatto upon his promotion to CEO on July 11, 2017 subject to three-year ratable vesting with one-third vesting each year subsequent to the award year. The first tranche vested on July 1, 2018, and the second tranche vested on July 1, 2019. The third and final tranche will vest on July 1, 2020. +(h) +Stock settleable RSUs awarded on May 10, 2018 subject to three-year ratable vesting with one-third vesting each year subsequent to the award year. The first tranche vested on June 1, 2019. The second tranche will vest on June 1, 2020. The third and final tranche will vest on June 1, 2021. +(i) +Stock settleable PSUs awarded on May 10, 2018 with vesting terms subject to performance criteria related to the TSR of the Company compared to a group of peer companies from May 2018 through December 31, 2020. The number of units subject to vest under this award can range from 0% to 200%. +(j) +Cash settleable PSUs awarded on May 10, 2018 with vesting terms subject to performance criteria related to the TSR of the Company compared to a group of peer companies from May 2018 through December 31, 2020. The number of units subject to vest under this award can range from 0% to 200%. +(k) +Stock settleable RSUs awarded to Mr. Ulm upon his hiring on December 11, 2017 subject to three-year ratable vesting with one-third vesting each year subsequent to the award year. The first tranche vested on January 1, 2019. The second tranche vested on January 1, 2020. The third and final tranche will vest on January 1, 2021. +(l) +Stock settleable RSUs awarded to Ms. Ecklund upon her hiring on November 6, 2017 subject to three-year ratable vesting with one-third vesting each year subsequent to the award year. The first tranche vested on January 1, 2019. The second tranche vested on January 1, 2020. The third and final tranche will vest on January 1, 2021. +(m) +Mr. Conaway held the following outstanding cash-settled stock appreciation right awards as of December 31, 2019: +. +Option/SAR Awards +NEO +Number of Securities Underlying Unexercised Options/ +SARs (#) Exercisable +Number of Securities Underlying Unexercised Options/ +SARs (#) Unexercisable +Equity Incentive Plan Awards: +Number of Securities Underlying Exercised Unearned Options/SARs (#) +Option/ +SARs Exercise Price +($) +Option/ +SARs Expiration Date +Gregory F. Conaway +19,960 +(1) +— +— +$ +15.60 +3/17/2021 +20,051 +(2) +— +— +$ +15.40 +3/23/2022 +31,442 +(3) +— +— +$ +8.39 +3/17/2025 +42,588 +(4) +— +— +$ +6.28 +3/17/2026 +(1) +Cash-settled stock appreciation rights received in connection with the Carrizo Acquisition in exchange for 11,406 Carrizo stock appreciation rights with an exercise price of $27.295 pursuant to the Merger Agreement. +(2) +Cash-settled stock appreciation rights received in connection with the Carrizo Acquisition in exchange for 11,458 Carrizo stock appreciation rights with an exercise price of $26.94 pursuant to the Merger Agreement. +(3) +Cash-settled stock appreciation rights received in connection with the Carrizo Acquisition in exchange for 17,967 Carrizo stock appreciation rights with an exercise price of $14.67 pursuant to the Merger Agreement. +(4) +Cash-settled stock appreciation rights received in connection with the Carrizo Acquisition in exchange for 24,336 Carrizo stock appreciation rights with an exercise price of $10.98 pursuant to the Merger Agreement. +56 CALLON PETROLEUM +EXECUTIVE COMPENSATION +Stock Vested +The following table provides information about the value realized by the NEOs on vesting of RSUs and PSUs during 2019: +Stock Awards (a) +NEO +Number of Shares +Acquired on Vesting (#) +Value Realized on Vesting $ (b) +Joseph C. Gatto, Jr. +6,510 +(c) +$ +50,453 +36,890 +(d) +$ +281,471 +36,723 +(e) +$ +229,519 +40,049 +(f) +$ +267,127 +50,000 +(g) +$ +209,500 +64,304 +(h) +$ +310,588 +James P. Ulm, II +30,000 +(i) +$ +194,700 +Jeffrey S. Balmer +— +$ +— +Michol L. Ecklund +6,591 +(e) +$ +41,194 +12,500 +(j) +$ +81,125 +Gregory F. Conaway +— +$ +— +Mitzi P. Conn +1,790 +(c) +$ +13,873 +10,145 +(d) +$ +77,406 +3,117 +(e) +$ +19,481 +10,000 +(g) +$ +41,900 +16,324 +(h) +$ +78,845 +(a) +No options were awarded, outstanding, expired, or exercised by any NEO in 2019. +(b) +Except as otherwise indicated, represents the aggregate dollar amount realized on the date of vesting, based on the closing market price per share of Company common stock on the vesting date or last business day prior to the vesting date if such date fell on a weekend or holiday. +(c) +Represents phantom stock units awarded on May 13, 2016 ,that settled in cash on May 13, 2019. +(d) +Represents RSUs awarded on May 13, 2016, that cliff-vested on May 13, 2019. +(e) +Represents RSUs awarded on May 10, 2018, the first tranche of which vested on June 1, 2019. +(f) +Represents RSUs awarded to Mr. Gatto upon his promotion to CEO on July 11, 2017, the second tranche of which vested on July 1, 2019. +(g) +Represents RSUs awarded on August 24, 2016, that cliff vested on August 24, 2019. +(h) +Represents PSUs awarded on May 12, 2017, that settled 50% in stock and 50% in cash on December 31, 2019, at 100% of target. +(i) +Represents RSUs awarded to Mr. Ulm upon his hiring on December 11, 2017, the first tranche of which vested on January 1, 2019. +(j) +Represents RSUs awarded to Ms. Ecklund upon her hiring on November 6, 2017, the first tranche of which vested on January 1, 2019. +2020 PROXY STATEMENT 57 +EXECUTIVE COMPENSATION +Employment Agreements, Termination of Employment and Change in Control Arrangements +Employment Agreements; Carrizo Change in Control Severance Plan +We do not have employment agreements with any of our executive officers, with the exception of an employment agreement with Mr. Conaway that was inherited by the Company as a result of the Carrizo Acquisition and amended in connection therewith. +Mr. Conaway's employment agreement has an initial one-year term, provided that the date of the agreement and on every day thereafter, the term of the employment agreement is automatically extended for one day, such that the remaining term of the agreement shall never be less than one year until an event (as described in the agreement) that gives rise to termination of employment occurs. The Company has given notice that the employment agreement will terminate on December 20, 2021, unless earlier terminated in accordance with its terms. Mr. Conaway’s employment agreement also subjects Mr. Conaway to a one-year post-termination non-competition and non-solicitation covenant, and a perpetual confidentiality covenant. +Mr. Conaway’s employment agreement provides for severance benefits, subject to Mr. Conaway's execution and non-revocation of a general release of claims in favor of the Company, upon a termination as a result of disability, but does not provide for severance benefits (other than accrued benefits) in the event of a termination by the Company without cause or by Mr. Conaway for any or no reason. However, Mr. Conaway is party to a Severance Compensation Agreement with the Company (an “SCA”) and is a participant of the Carrizo Change in Control Severance Plan (which the Company inherited as a result of the Carrizo Acquisition), each of which provide for severance benefits upon a termination without cause or for good reason under certain circumstances (as further described below). Pursuant to the terms of Mr. Conaway’s SCA, in the event a change in control of Callon occurs and Mr. Conaway experiences a qualifying termination following such change in control, Mr. Conaway will be entitled to the severance benefits provided for under his SCA in lieu of those provided for under his employment agreement or the Carrizo Change in Control Severance Plan. The severance benefits payable under his SCA are described in the “Severance Compensation Agreements” section below. +In the event Mr. Conaway is terminated on or prior to the second anniversary of the closing of the Carrizo Acquisition (the “Carrizo CIC Protected Period”), the severance provisions of the Carrizo Change in Control Severance Plan will apply in lieu of the severance provisions set forth in his employment agreement, except to the extent the employment agreement provides for additional or greater severance benefits. The Carrizo Change in Control Severance Plan provides for the following severance benefits if Mr. Conaway's employment is terminated during the Carrizo CIC Protected Period by the Company without cause, by Mr. Conaway for good reason, or as a result of death or disability (as such terms are defined in the Carrizo Change in Control Severance Plan): (i) accrued benefits, (ii) a lump sum payment equal to 1.5 multiplied by the sum of (A) his base salary plus (B) his target annual bonus, (iii) continued Company-paid health benefits for up to 18 months, (iv) a pro-rated target annual bonus for the calendar year in which his termination occurs, and (v) any outstanding equity awards then held by Mr. Conaway will vest in full with any performance-based awards earned at the target level and, to the extent applicable, any awards with an exercise period (e.g. stock appreciation rights) will remain exercisable for their full original term. Such severance benefits are conditioned upon Mr. Conaway’s execution and non-revocation of a general release of claims in favor of the Company. The Carrizo Change in Control Severance Plan also includes a 280G “best-net” cutback provision, which provides that if amounts payable to a participant under the Carrizo Change in Control Severance Plan (together with any other amounts that are payable as a result of a change in control) would subject a participant to an excise tax under Section 280G of the Internal Revenue Code, such payments will either be: (i) reduced to the level at which no excise tax applies, or (ii) paid in full, whichever results in a better after-tax result for the participant. +Upon termination as a result of disability outside of the Carrizo CIC Protected Period, Mr. Conaway’s employment agreement provides for the following severance benefits: (i) accrued benefits (including any earned but unpaid annual bonus with respect to the prior fiscal year), (ii) a lump sum payment equal to 97% of his annual base salary, (iii) an additional lump sum payment equal to 70% of his annual base salary, (iii) an additional lump sum payment equal to 3% of his annual base salary, (iv) continued medical and dental benefits coverage for Mr. Conaway and his dependents for one year following his termination of employment, and (v) any outstanding equity awards then held by Mr. Conaway will vest in full, and, to the extent applicable, the period of exercisability of any such awards will extend to the earlier of (A) one year following his termination date or (B) the date such awards would have lapsed had Mr. Conaway remained employed for the remaining term. Mr. Conaway’s employment agreement also entitles Mr. Conaway to accrued benefits and equity acceleration benefits (as described in the immediately prior sentence) in the event Mr. Conaway’s employment is terminated as a result of his death. +58 CALLON PETROLEUM +EXECUTIVE COMPENSATION +Severance Compensation Agreements +We entered into amended SCAs with each of our NEOs effective as of January 1, 2019, with the exception of Mr. Conaway, who entered into his SCA effective December 20, 2019 in connection with his appointment as an officer. The SCA will terminate, except to the extent that any obligation of Callon thereunder remains unpaid as of such time, upon the earliest of (i) December 31, 2019 (in the case of each NEO other than Mr. Conaway) and December 31, 2020 (in the case of Mr. Conaway), except that, on each anniversary date thereafter, the expiration date will automatically be extended for one additional year unless, as of such date and prior to such anniversary date, either party has given proper written notice that it does not wish to extend the SCA, but in no event will the expiration date be earlier than the second anniversary of the effective date of a change in control; (ii) the termination of the NEO's employment with Callon based on death, disability (as defined in the SCA), or cause (as defined in the SCA); (iii) the voluntary resignation of the NEO for any reason other than a post-change in control resignation for good reason (as defined in the SCA); and (iv) any resignation of the NEO prior to a change in control. +Pursuant to the SCA, if the executive is terminated without cause by Callon or for good reason by him within two years following a change in control of Callon (or in certain cases, prior to a change in control (i.e., a "double-trigger termination)), then the executive is entitled to a single lump-sum cash payment equal to an SCA multiple times the sum of (i) the annual base salary in effect immediately prior to the change in control or, if higher, in effect immediately prior to the separation from service, and (ii) the greater of the average bonus earned with respect to the three most recently completed full fiscal years, the target bonus for the fiscal year in which the change in control occurs, or the target bonus for the fiscal year in which the change in control or termination occurs. For Mr. Gatto, the SCA multiple is three times. For the other NEOs, the SCA multiple is two times. The SCAs also provide that in the event an NEO is eligible for benefits due to a “double trigger” termination, any outstanding equity awards then held by the NEO shall vest in full with any performance-based awards earned at the level specified in the applicable award agreement or, if not specified, at the target level. In addition, we must maintain at our expense until twenty-four months after a "double-trigger" separation from service all medical, dental, and health insurance coverage. Such severance benefits are subject to the executive’s execution and non-revocation of a general release of claims. A change in control as generally defined in the SCA occurs when (i) any person or group of persons acting in concert becomes the beneficial owner of more than 50% of our outstanding common stock; (ii) our shareholders cause a change in the majority of the members of the Board within a thirty-six month period; (iii) there is a change in control in ownership of at least 40% of Company assets; or (iv) a third party acquires more than 30% of the voting power of our common stock in a twelve month period. +The SCAs also subject each executive to a one-year post-termination non-competition and two- year post-termination non-solicitation covenant in the event the applicable executive becomes eligible to receive severance benefits under the SCA. The SCAs also include a perpetual confidentiality covenant. +The SCAs incorporate a provision to provide for the possible impact of the federal excise tax on excess parachute payments. If any SCA payment is subject to any excise tax under Section 4999 of the Tax Code, the payment will be reduced so that no portion of the payment is subject to such excise tax if the net benefit payable would be at least as much as it would have been if no reduction was made. The so-called “golden parachute” tax rules subject “excess parachute payments” to a dual penalty: the imposition of a 20 percent excise tax upon the recipient and non-deductibility of such payments by the paying corporation. While the excise tax is seemingly evenhanded, the excise tax can discriminate against long-serving employees in favor of new hires, against individuals who do not exercise stock options in favor of those who do and against those who elect to defer compensation in favor of those who do not. For these reasons, we believe that the 280G “best-net” cutback provision included in the SCA is appropriate. +2020 PROXY STATEMENT 59 +EXECUTIVE COMPENSATION +Potential Payments upon Termination or Change in Control +The following table shows the estimated gross taxable compensation payable upon termination following a change in control ("CIC") or upon death, disability or retirement (or, in the case of Mr. Conaway, during the Carrizo CIC Protection Period on his termination without cause or for good reason, or due to death or disability). No amounts would be payable upon termination for other causes. The information assumes, in each case, that the officer’s termination was effective as of December 31, 2019. In presenting this disclosure, we describe amounts earned through December 31, 2019 and, in those cases where the actual amounts to be paid out can only be determined at the time of such executive’s separation from us, the estimates are of the amounts which would be paid out to the executives upon their termination. +NEO / Reason for Termination +Base +Salary (a) +Cash +Bonus (a) +Accelerated +Stock Award +Vesting (b) +Continued +Employee +Benefits (c) +Total +Joseph C. Gatto, Jr. - CIC (d) +$ +2,475,000 +$ +2,722,500 +$ +4,104,882 +$ +52,650 +$ +9,355,032 +Death, Disability or Retirement (e) +$ +0 +$ +0 +$ +4,104,882 +$ +0 +$ +4,104,882 +James P. Ulm, II - CIC (d) +$ +930,000 +$ +837,000 +$ +1,686,877 +$ +52,650 +$ +3,506,527 +Death, Disability or Retirement (e) +$ +0 +$ +0 +$ +1,686,877 +$ +0 +$ +1,686,877 +Jeffrey S. Balmer - CIC (d) +$ +900,000 +$ +765,000 +$ +1,054,766 +$ +52,650 +$ +2,772,416 +Death, Disability or Retirement (e) +$ +0 +$ +0 +$ +1,054,766 +$ +0 +$ +1,054,766 +Michol L. Ecklund - CIC (d) +$ +800,000 +$ +640,000 +$ +921,053 +$ +52,650 +$ +2,413,703 +Death, Disability or Retirement (e) +$ +0 +$ +0 +$ +921,053 +$ +0 +$ +921,053 +Gregory F. Conaway - CIC (d) +$ +546,000 +$ +382,200 +$ +0 +$ +52,650 +$ +980,850 +Without Cause, Good Reason, Death or Disability (f) +$ +409,500 +$ +477,750 +$ +0 +$ +39,488 +$ +926,738 +Mitzi P. Conn - CIC (d) +$ +520,000 +$ +364,000 +$ +351,339 +$ +52,250 +$ +1,287,589 +Death, Disability or Retirement (e) +$ +0 +$ +0 +$ +351,339 +$ +0 +$ +351,339 +(a) +In accordance with Mr. Gatto’s SCA, the computation uses a 3x multiple with respect to the severance amount relating to salary and target bonus, while a 2x multiple is used for the other NEOs. See “Employment Agreements, Termination of Employment and Change in Control Arrangements.” +(b) +The amounts are calculated based on unvested stock awards at December 31, 2019 using the closing price of $4.83 per share of our common stock on the last trading day of 2019. The table above assumes that PSUs vest at the target level. Actual vesting of PSUs would be determined based on performance at the time of such executive's separation. +(c) +Benefits consist of twenty-four months of employer provided family medical and dental insurance and disability and life insurance for the NEOs in the table. +(d) +We entered into an SCA with each of the NEOs listed in the table above. See “Employment Agreements, Termination of Employment and Change in Control Arrangements.” +(e) +“Disability,” for purposes of the SCAs, is generally defined as the employee’s inability to carry out the normal and usual duties of his employment on a full-time basis for an entire period of six continuous months together with the reasonable likelihood, as determined by the Board after consultation of a qualified physician, he will be unable to carry out his normal and usual duties of employment. “Retirement” is generally defined as the employee’s attainment of age 55 with at least 10 years of service. +(f) +Mr. Conaway would be entitled to payments of 1.5 times the sum of his annual base salary and target annual bonus, a pro-rated target annual bonus for the calendar year in which his termination occurs, accelerated vesting of outstanding equity awards, and 18 months of continued subsidized benefits continuation under the Carrizo Change in Control Severance Plan in the event he is terminated without cause or for good reason or due to death or disability within two years after the closing of the Carrizo Acquisition. “Disability,” for purposes of the Carrizo Change in Control Severance Plan, has the same meaning assigned to such term in the Company’s long-term disability plan, as in effect from time to time, or if no such plan is in effect. “Disability” means “permanent and total disability” as defined in Section 22(e)(3) of the Tax Code. The Carrizo Change in Control Severance Plan does not provide for severance benefits upon retirement or a voluntary resignation by the executive. See "Employment Agreements, Termination of Employment and Change in Control Agreements." +Pension and Non-Qualified Deferred Compensation Plans. +We sponsor a 401(k) plan for all eligible employees, including the NEOs as described on page 49. We do not sponsor any qualified or non-qualified defined benefit plans, or any non-qualified defined contribution plan for NEOs or other employees. The Board or Compensation Committee may elect to adopt qualified or non-qualified defined benefit plans or non-qualified defined contribution plans in the future if it determines that doing so is in the Company’s best interest. +60 CALLON PETROLEUM +EXECUTIVE COMPENSATION +CEO Pay Ratio +Pursuant to a mandate of the Dodd-Frank Wall Street Reform and Consumer Protection Act, we are disclosing here that the ratio of our median employee’s compensation to the compensation of our CEO is 40:1. +In order to find the median employee, we used the sum of the base salary and bonus, including any overtime or commission that was paid to the employee. The median employee was identified from the employee population as of December 31, 2018. We are maintaining the median employee identified in 2018 as there have not been significant compensation changes that have impacted the pay ratio. +In accordance with SEC rules, we determined the annual total compensation of our median employee for 2019, which was $159,312. This amount represents the total compensation that would have been reported in the Summary Compensation Table in accordance with the requirements of Item 402(c)(x) of Regulation S-K for the median employee if the employee had been a NEO for fiscal year 2019. For purposes of calculating the ratio, an additional value of $17,020 was included in the annual compensation for non-discriminatory benefits bringing the annual total compensation to $176,332. +We determined the amount of the CEO’s annual total compensation was $7,009,587 which represents the amount reported for the CEO in the “Total” column of our 2019 Summary Compensation Table. For purposes of the ratio, an additional value of $26,325 was included in the annual total compensation for non-discriminatory benefits to bring the value to $7,035,912. +Based on the foregoing, for 2019 the ratio of the median of the annual total compensation of all employees to the annual total compensation of our CEO (the "CEO Pay Ratio") is 40:1. Callon’s CEO Pay Ratio remained consistent from 2018 to 2019, remaining at 40:1. +The CEO Pay Ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on our payroll and employment records. +2020 PROXY STATEMENT 61 +Proposal 3 +Approve the Company's +2020 Omnibus +Incentive Plan +The Board of Directors recommends a vote FOR the approval of the Company’s 2020 Omnibus Incentive Plan (the "2020 Plan"). +• Provides the Company the ability to remain competitive in our industry in attracting and retaining experienced talent while aligning executive, director and employee interests with those of our long-term shareholders. +One of the core objectives of Callon’s pay-for-performance compensation philosophy is to align the compensation opportunities of our executives, directors and employees with the interests of our shareholders. To do so, a meaningful component of our program is the ability to grant performance-contingent and retention share-based equity awards that directly link compensation to our share price performance over time. In order to maintain this important element of our program, our Board is recommending that shareholders approve the 2020 Plan in order to have sufficient shares available to successfully attract, retain and motivate our employees and directors in line with the creation of sustainable shareholder value. +The Board has unanimously approved the 2020 Plan to replace the 2018 Plan (the “Prior Incentive Plan”), subject to shareholder approval at the Annual Meeting, and recommends that the Company’s shareholders approve and adopt the 2020 Plan. We intend to reserve 13,250,000 shares for issuance pursuant to awards under the 2020 Plan, in addition to the shares remaining available for issuance under the Prior Incentive Plan as of the effective date of the 2020 Plan that would be transferred to the 2020 Plan. If our shareholders approve the 2020 Plan, the shares that remain available for grant pursuant to the Prior Incentive Plan, plus any shares that would have otherwise become available for issuance under the Prior Incentive Plan or the 2011 Plan as a result of forfeitures, expiration or cancellation of previously made awards, will become available for issuance under the 2020 Plan, and no additional grants will be made pursuant to the Prior Incentive Plan. +Why You Should Vote for the 2020 Plan +• +Callon’s Growth. Since the Prior Incentive Plan was approved, we have grown our average daily production by 475% and our employee base by 55%. Additional shares are needed to continue equity awards for the larger employee population. +• +Consolidation of Legacy Carrizo Share Pool. The Prior Plan maintains a separate share pool that is only available for legacy Carrizo employees. Shareholder approval to merge this pool with shares available for grant under the 2020 Plan would better accomplish the integration of the Carrizo Acquisition. +• +Broad-based Equity Awards under the Plan. Equity incentives are utilized to motivate and retain employees outside of the named executives officers. Under the Prior Plan, equity incentives were awarded to approximately 70% of Callon employees for fiscal 2019. +• +Pay-for-Performance. For fiscal 2019, equity awards comprised of 86% of total direct compensation for the CEO, including a significant majority of equity being awarded with performance conditions. We continue to evolve our compensation program to align with shareholder priorities, including the inclusion of a returns-based metric in our annual incentive program and, as of 2020, an “absolute” shareholder return multiplier for our performance share awards. +• +Consistent Shareholder Support. Callon’s annual Say on Pay proposal has consistently received over 95% shareholder approval in each of the last 8 years. +• +2020 Plan Incorporates Shareholder-Friendly Practices. The plan submitted for shareholder approval includes an express prohibition on repricing without shareholder approval, no evergreen provisions, and other provisions that protect the incentive value of awards. If Proposal 5 is approved and a Reverse Stock Split is effectuated, the number of shares of common stock available for grant under the 2020 Plan, as well as shares subject to outstanding equity awards, would be reduced in proportion to the Reverse Stock Split. See page 76 for more information. +Rationale for Replacing the Prior Incentive Plan +We believe that aligning the interests of employees with those of long-term shareholders is a key element of compensation at the Company. To continue to execute on this objective, it is critical that Company maintain the flexibility and sufficient share reserve to appropriately incentivize employees. The 2020 Plan is intended to replace the Prior Incentive Plan and is needed to continue our equity compensation program, which is an important element in our ability to remain competitive in attracting and retaining experienced talent. As with the Prior Incentive Plan, the 2020 Plan is a broad-based plan under which the Company would grant awards to its current and prospective employees, including officers, and its directors. While the Board is cognizant of the potential dilutive effect of compensatory stock awards, it also recognizes the significant motivational and performance benefits that are achieved from making such awards and continues to believe that the Company’s long-term interests are best advanced by aligning the interests of its employees and directors with the interests of its shareholders. +62 CALLON PETROLEUM +PROPOSAL 3 +In considering the appropriate number of shares to request under the 2020 Plan, the Company has carefully considered its anticipated equity needs in light of the recent growth in its employee base. On December 20, 2019, the Company completed the Carrizo Acquisition. The addition of Carrizo’s assets increased our portfolio to over 200,000 net acres across Texas and more than doubled our pro forma production to over 100,000 barrels of oil equivalent per day. The Carrizo Acquisition also significantly increased our employee base. As of April 3, 2020, the Company had approximately 330 permanent employees, as compared to 218 employees as of December 31, 2018. In light of this significant growth, Callon does not believe that the shares available for grant under the Prior Plan are sufficient to meet the future needs of the Company to continue to attract and retain top talent in the competitive onshore U.S. oil and gas industry. Our ability to grant equity awards under the Prior Plan is further restricted by the current requirement that a separate share pool be maintained for legacy Carrizo employees. Shareholder approval of the 2020 Plan would remove this restriction and allow us to better accomplish the integration of the Carrizo Acquisition. +In addition to the increased employee base, the Company has also considered its current share price in determining the number of shares proposed for issuance under the 2020 Plan. With the economic downturn and its impact on the oil and gas industry, we have experienced a significant decrease in our share price since the Prior Incentive Plan was adopted. Due to this decline as well as the growth in our employee base, we will not be able to maintain competitive equity grant practices without the approval of the 2020 Plan and may be required to increase significantly the cash component of our compensation program in order to remain competitive and adequately compensate our employees. +As of April 3, 2020, there were approximately 5,850,000 shares of common stock remaining available for grant under the Prior Incentive Plan, of which approximately 3,430,000 shares were available for grant only to legacy Carrizo employees and approximately 2,420,000 shares were available for any eligible grantee. Any previously granted awards that are outstanding under the Prior Incentive Plan and the 2011 Plan will remain outstanding in accordance with their terms. As of April 3, 2020, an aggregate of approximately 10,870,000 shares are subject to unvested restricted stock, restricted stock unit, performance share or performance unit awards under the Prior Incentive Plan and the 2011 Plan, assuming any performance-based awards vest at maximum performance level. See “Compensation Discussion and Analysis-Annual Award of Long-term Incentives” for additional information concerning our equity compensation plans. +The Company considers the 2020 Plan an essential element of total compensation and believes the 2020 Plan promotes its interests and the interests of its shareholders by (i) attracting and retaining the services of key employees, including officers, and directors and (ii) encouraging the active interest of those persons in the development and financial success of the Company by granting awards designed to provide participants in the 2020 Plan with proprietary interest in the growth and performance of the Company. +Shareholder approval of the 2020 Plan will also constitute approval for purposes of satisfying the shareholder approval requirements under Section 422 of the Internal Revenue Code of 1986, as amended (the “Tax Code”), so that the Compensation Committee may grant incentive stock options (“ISOs”). +The 2020 Plan Combines Compensation and Governance Best Practices +2020 Plan Highlights +• Express prohibition of repricing of Options and SARs, or cash buyout of outstanding awards without shareholder approval +• Newly adopted one-year minimum vesting provision (for at least 95% of authorized shares) +• Awards are subject to clawbacks under Callon policy as well as legal requirements +• The exercise price of a stock option or SAR award may not be less than the fair market value of the stock on the date of grant +• Annual compensation cap of $1,000,000 for non-employee directors +• No liberal CIC vesting +• No evergreen provision +• No recycling of shares used to pay the exercise price of stock option or SAR awards +• No dividends or other distributions payable with respect to plan awards unless and until the underlying award vests +• No tax gross-ups or reload grants +2020 PROXY STATEMENT 63 +PROPOSAL 3 +The 2020 Plan includes several features that are consistent with the interests of shareholders and corporate governance best practices, including the following: +• +Independent Oversight. The Compensation Committee, composed solely of independent directors, will approve all grants made under the 2020 Plan, other than grants made to directors, which shall be approved by the Board. Additionally, the Compensation Committee may delegate to any committee of the Board, to the CEO and to any of our other senior officers its duties under the 2020 Plan other than the authority to make awards to participants who are subject to Section 16 of the Exchange Act. +• +No Repricing of Options or Stock Appreciation Rights. The 2020 Plan prohibits repricing, replacement and regranting of stock options or stock appreciation rights (“SARs”) at lower prices, unless approved by our shareholders. +• +Minimum Vesting Period. Subject to limited exceptions described below, awards under the 2020 Plan are subject to a one-year minimum vesting period.. +• +No Discounted Options or SARs. Stock options and SARs may not be granted with an exercise price below the closing price of our common stock on the date of grant. +• +No Dividends on Options or SARs. Dividends and Dividend Equivalents (as defined in the 2020 Plan) may not be paid or accrued on stock options or SARs. +• +Limited Terms for Options and SARs. Stock options and SARs granted under the 2020 Plan are limited to 10-year terms. +• +No Liberal Share Counting with Respect to Options or SARs. Shares that are tendered by a participant or withheld as full or partial payment of withholding taxes related to the exercise or settlement of options or SARs or as payment for the option exercise price and shares repurchased in the open market with the proceeds of the payment of the option exercise price will not become available again for awards under the 2020 Plan. +• +No Dividends or Dividend Equivalents on Unvested Awards. Any dividends or Dividend Equivalents will only be paid if the underlying shares vest pursuant to the terms of the award. +• +Annual Limitation on Director Awards and Compensation. The aggregate grant value of awards and cash compensation paid to any individual non-employee director may not exceed $1,000,000 in any calendar year. +• +Clawback or Recoupment. All awards granted under the 2020 Plan will be subject to the clawback policy implemented by the Company. +• +No Transferability. Awards generally may not be transferred, except by will or the laws of descent and distribution or pursuant to a qualified domestic relations order, unless otherwise provided in the applicable award agreement. +• +No “Evergreen” Provision. Shares authorized for issuance under the 2020 Plan will not be replenished automatically. Any additional shares to be issued over and above the amount for which we are seeking authorization must be approved by our shareholders. +• +No Automatic Grants. There are no automatic grants to new participants or “reload” grants when outstanding awards are exercised, expire or are forfeited. +• +No Tax Gross-Ups. Participants do not receive tax gross-ups under the 2020 Plan. +Summary of the 2020 Plan +A description of the principal features of the 2020 Plan appears below. Because the following description is a summary, it may not contain all the information that may be important to you and it is qualified by reference to the full text of the 2020 Plan that is attached hereto as Appendix B. +Eligibility. Persons eligible for Awards (as defined in the 2020 Plan) are (i) all employees of the Company and its subsidiaries, (ii) non-employee directors and (iii) certain independent contractors. As of April 3, 2020, approximately 330 employees and ten non-employee directors would be eligible for grants of Awards under the 2020 Plan. +Shares Available for Awards. The 2020 Plan provides that up to 13,250,000 shares of common stock, plus the shares remaining available for Awards under the Prior Incentive Plan, may be issued, all of which may be issued as incentive stock options under Section 422 of the Tax Code. The closing price per share of our common stock on April 9, 2020 was $0.51. +64 CALLON PETROLEUM +PROPOSAL 3 +The number of shares of common stock that are the subject of Awards under the 2020 Plan or awards under the Prior Incentive Plan or the 2011 Plan that are forfeited or terminated, expire unexercised, withheld to satisfy withholding taxes in respect of such Awards, are settled in cash in lieu of common stock or are exchanged for Awards that do not involve common stock, immediately become available for additional Awards under the 2020 Plan. However, the number of shares reserved for issuance under the 2020 Plan is not increased by (i) shares of common stock not issued or delivered as a result of the net settlement of stock-settled SARs or stock option, (ii) shares of common stock used to pay the exercise price or withholding taxes related to an outstanding SAR or stock option or (iii) shares of common stock repurchased on the open market with the proceeds of the option exercise price. +Administration. The Compensation Committee administers the 2020 Plan for Awards to employees and independent contractors. The Board has the sole authority to grant Awards and administer the 2020 Plan for non-employee directors. The Compensation Committee has authority to amend or modify any Award in any manner that is either (i) not adverse to the participant holding the Award or (ii) consented to by that participant. +Except in connection with a transaction involving the Company or its capitalization, the terms of outstanding Awards may not be amended without approval of the shareholders of the Company to (i) reduce the exercise price of outstanding options or SARs, (ii) cancel, exchange, substitute, buyout or surrender outstanding options or SARs in exchange for cash or other Awards, (iii) take any other action with respect to a stock option or SAR that would be treated as a repricing under the rules and regulations of the principal national securities exchange on which the shares of common stock are listed or (iv) permit the grant of any stock options or SARs that contain a so-called “reload” feature under which additional stock options, SARs or other Awards are granted automatically to the participant upon exercise of the original stock option or SAR. +The Compensation Committee also may delegate to the CEO, other senior officers of the Company or to other committees of the Board its duties under the 2020 Plan to the extent allowed by applicable law. +The Compensation Committee will determine the employees and independent contractors to receive Awards and the terms, conditions and limitations applicable to each such Award, which conditions may, but need not, include continuous service with the Company, achievement of specific business objectives, increases in specified indices or other comparable measures of performance. +Amendment; Termination. The Board may amend, modify, suspend or terminate the 2020 Plan for the purpose of addressing any changes in legal requirements or for any other lawful purpose, except that (i) it may not adversely affect the rights of a participant under an outstanding Award without the consent of the participant and (ii) no amendment will be effective prior to its approval by the shareholders of the Company to the extent such approval is required by applicable law or applicable stock exchange rules. +Adjustment. As is customary in plans of this nature, the share limit and the number and kind of shares available under the amended 2020 Plan and any outstanding Awards, as well as the exercise or purchase prices of Awards, are subject to adjustment in the event of certain reorganizations, mergers, combinations, recapitalizations, stock splits, stock dividends, or other similar events that change the number or kind of shares outstanding, and extraordinary dividends or distributions of property to the shareholders. +Change in Control. The Compensation Committee (or the Board in the case of Awards to non-employee directors), in its sole discretion, will determine the treatment of Awards upon a change in control (as defined in the 2020 Plan). A “change in control” generally occurs upon the occurrence of any of the following: (i) a person other than an exempt person becomes the beneficial owner of more than 50% of the total fair market value or total voting power of the Company’s voting stock; (ii) during any 12-month period, a person other than an exempt person becomes the beneficial owner of 30% or more of the total voting power of the Company’s voting stock; (iii) during any three-year period, individuals who at the beginning of the period were members of the Board cease for any reason to constitute at least a majority of the Board unless the election of each new director was approved by a vote of at least a majority of the directors then still in office who were directors at the beginning of such period or whose election or nomination was previously so approved; or (iv) a person acquires assets of the Company that have a total gross fair market value equal to at least 40% of the total gross fair market value of all of the Company’s assets immediately before such acquisition; provided, however, that such transfer is not to an entity that is controlled by the shareholders of the Company immediately after the transfer. +Clawback. Awards under the 2020 Plan will be subject to the provisions of any clawback policy required by applicable law , or as otherwise determined by the Committee, and implemented by the Company, which clawback policy may provide for forfeiture, repurchase and/or recoupment of Awards and amounts paid or payable pursuant to or with respect to Awards. +2020 PROXY STATEMENT 65 +PROPOSAL 3 +Vesting Period. All Awards granted under the 2020 Plan would generally be subject to a one-year minimum vesting period; however, (i) up to 5% of all shares available under the 2020 Plan could be subject to a minimum vesting period that is less than one year, (ii) Awards granted to non-employee directors under the 2020 Plan in connection with an annual shareholders’ meeting would be deemed to satisfy such one-year minimum vesting requirement so long as such Awards vest upon the next annual shareholders’ meeting and such meeting is not less than 50 weeks from the grant date and (iii) any dividends or Dividend Equivalents (as defined in the 2020 Plan) issued in connection with any Award will not be subject to or counted for either such restrictions or such 5% share issuance limit.. +Awards. At the discretion of the Compensation Committee or the Board, as applicable, employees, independent contractors or non-employee directors may be granted Awards under the 2020 Plan in the form of stock options, SARs, restricted stock awards, RSUs (including phantom shares and phantom stock units), cash awards or performance awards. Such Awards may be granted individually, in combination or in tandem. +Options. Awards may be in the form of rights to purchase a specified number of shares of common stock at a specified price not less than that of the fair market value of a share of common stock on the date of grant (“Options”). An Option may be either an ISO that is intended to comply, or a nonqualified stock option (“NSO”) that is not intended to comply, with the requirements of Section 422 of the Tax Code; provided, however, that independent contractors and directors cannot be awarded ISOs. The Compensation Committee will determine the participants to receive Options and the terms, conditions and limitations applicable to each such Option. The term of each Option may not be longer than ten years from the date of grant. Any Option (i) that remains outstanding as of the last day of its term, (ii) has an exercise price per share that is less than the fair market value of a share of common stock as of such day and (iii) whose exercise is prohibited as of such day pursuant to the operation of the Company’s insider trading policy, shall be automatically exercised (without any action on the part of the participant holding such Option) by (a) foregoing the delivery of shares of common stock otherwise deliverable upon the exercise of the Option in an amount sufficient to pay the exercise price of the Option and (b) satisfying tax withholding obligations by withholding from the shares of common stock otherwise deliverable upon the exercise of the Option. +SARs. Awards may also be in the form of SARs, which are rights to receive a payment, in cash or common stock, equal to the fair market value of a number of shares of common stock on the SARs’ exercise date over a specified strike price that is not less than the fair market value on the date of grant. The term of each SAR may not be longer than ten years from the date of grant. Any SAR (i) that remains outstanding as of the last day of its term, (ii) has a strike price per share that is less than the fair market value of a share of common stock as of such day and (iii) whose exercise is prohibited as of such day pursuant to the operation of the Company’s insider trading policy, shall be automatically exercised (without any action on the part of the participant holding such SAR) and any tax withholding obligations will be satisfied by withholding from the cash or shares of common stock otherwise deliverable upon the exercise of the SAR. +Stock Awards. Awards may also be in the form of grants of common stock or units denominated in common stock, including restricted stock, RSUs, phantom shares and phantom stock units (“Stock Awards”). The terms, conditions and limitations applicable to any Stock Award will be determined by the Compensation Committee. At the discretion of the Compensation Committee, the terms of a Stock Award may include rights to receive dividends or Dividend Equivalents, which will only be paid if the underlying shares vest pursuant to the terms of the Stock Award. +Cash Awards. Awards may also be in the form of grants denominated in cash. The terms, conditions and limitations applicable to any cash awards granted pursuant to the 2020 Plan will be determined by the Compensation Committee. +Performance Awards. At the discretion of the Compensation Committee, any of the above-described Awards may be made in the form of a Performance Award (as defined in the 2020 Plan). A Performance Award shall be paid, vested or otherwise deliverable solely on account of the attainment of one or more performance goals, either individually or in any combination, established by the Compensation Committee and specified in the award agreement. +A performance goal need not be based upon an increase or positive result under a particular business criterion and could include, for example, maintaining the status quo or limiting economic losses (measured, in each case, by reference to specific business criteria). The amount of cash or shares payable or vested pursuant to Performance Awards may be adjusted upward or downward, either on a formula or discretionary basis or any combination, as the Compensation Committee determines. +Director Award Limits. No non-employee director may be granted during any calendar year Awards (in his or her capacity as a director) having a fair value determined on the date of grant when added to all cash compensation paid to the non-employee director during the same calendar year in excess of $1,000,000. +66 CALLON PETROLEUM +PROPOSAL 3 +Withholding. We have the right to deduct applicable taxes in connection with the payment or vesting of any Award, and the Compensation Committee may also permit withholding obligations to be satisfied by the transfer of shares of common stock previously owned by the participant or by withholding shares of common stock otherwise deliverable under the Award, in either case up to the maximum tax rate applicable to the participant. +U.S. Federal Income Tax Consequences +The following is a summary of the general rules of current U.S. federal income tax laws relating to the tax treatment of Awards that may be issued under the 2020 Plan based on the law as in effect on the date of the filing of this Proxy Statement. The discussion is not complete and general in nature and does not take into account a number of considerations that may apply in light of the particular circumstances of a participant. This summary does not attempt to describe any tax consequences arising in the context of the participant’s death or the income tax laws of any local, state or foreign country in which the participant’s income or gain may be taxable. +Restricted Stock. A participant generally recognizes no taxable income at the time of an award of restricted stock. A participant may, however, make an election under Section 83(b) of the Tax Code to have the grant taxed as compensation income at the date of receipt, with the result that any future appreciation or depreciation in the value of the shares of stock granted may be taxed as capital gain or loss on a subsequent sale of the shares. If the participant does not make a Section 83(b) election, the grant will be taxed as compensation income at the full fair market value on the date the restrictions imposed on the shares expire. Unless a participant makes a Section 83(b) election, any dividends paid to the participant on the shares of restricted stock will generally be compensation income to the participant and deductible by us as compensation expense. In general, we will receive a deduction for U.S. federal income tax purposes for any compensation income taxed to the participant. To the extent a participant realizes capital gains, as described above, we will not be entitled to any deduction for federal income tax purposes. +Restricted Stock Units. A participant who is granted RSUs will recognize no income upon grant of the RSUs. At the time the underlying shares of common stock (or cash in lieu thereof) are delivered to a participant, the participant will recognize compensation income equal to the full fair market value of the shares received. We will generally be entitled to a deduction for U.S. federal income tax purposes that corresponds to the compensation income recognized by the participant. +Options. Options granted under the 2020 Plan may constitute ISOs within the meaning of Section 422 of the Tax Code, while other options granted under the 2020 Plan may constitute NSOs. Grants of Options to non-employee directors and independent contractors are NSOs. The Tax Code provides for tax treatment of Options qualifying as ISOs that may be more favorable to participants than the tax treatment accorded NSOs. Generally, upon the exercise of an ISO, the optionee will recognize no taxable income for U.S. federal income tax purposes, although the difference between the exercise price of the ISO and the fair market value of the stock at the date of exercise is an addition to income in determining alternative minimum taxable income and such amount may be sufficient in amount to subject the optionee to the alternative minimum tax. On the sale of shares acquired by exercise of an ISO (assuming that the sale does not occur within two years of the grant date or within one year of the exercise date), any gain will be taxed to the optionee as long-term capital gain. Except with respect to death or disability, an optionee has three months after termination of employment in which to exercise an ISO and retain favorable tax treatment at exercise. No deduction is available to the Company upon the grant or exercise of an ISO (although a deduction may be available if the participant disposes of the shares so purchased before the applicable holding periods expire). +In contrast, upon the exercise of an NSO, the optionee recognizes ordinary taxable income on the exercise date in an amount equal to the excess of the fair market value of the shares purchased over the exercise price. Upon the sale of such shares by the optionee, any difference between the fair market value at the date of sale and the fair market value at the date of exercise will be treated generally as capital gain or loss. Subject to the limitations discussed below, upon exercise of an NSO, the Company is entitled to a tax deduction in an amount equal to the ordinary taxable income recognized by the participant. +SARs. Participants do not recognize taxable income upon the grant of a SAR. Upon the exercise of a SAR, the participant will recognize ordinary income in an amount equal to the cash or fair market value of the shares of stock received at the date of exercise of the SAR. The participant’s tax basis in any shares of common stock received on the exercise of a SAR will generally equal the fair market value of such shares on the date of exercise. Subject to the limitations discussed below, the Company will be entitled to a deduction for U.S. federal income tax purposes that corresponds as to timing and amount with the taxable income recognized by the participant under the foregoing rules. +2020 PROXY STATEMENT 67 +PROPOSAL 3 +Deductibility; Excise Taxes +Tax Code Section 162(m). Under Code Section 162(m), no deduction is allowed in any taxable year of the Company for compensation in excess of $1 million paid to the Company’s “covered employees.” A “covered employee” is any individual who has served at any time after December 31, 2016 as the Company’s chief executive officer, chief financial officer, or other executive officer whose compensation has been reported in a Company proxy statement, regardless of whether any such individual is still employed by the Company. We may be prohibited under Code Section 162(m) from deducting compensation paid pursuant to the 2020 Plan to our “covered employees.” See also “Compensation Discussion and Analysis-Internal Revenue Service Limitations” for an additional discussion of Section 162(m) of the Tax Code. +Change in Control. The acceleration of the exercisability or the vesting of an Award upon the occurrence of a change in control may result in an “excess parachute payment” within the meaning of Section 280G of the Tax Code. A “parachute payment” occurs when an employee receives payments contingent upon a change in control that exceed an amount equal to three times his or her “base amount.” The term “base amount” generally means the average annual compensation paid to such employee during the five calendar years preceding the calendar year in which the change in control occurs. An “excess parachute payment” is the excess of all parachute payments made to the employee on account of a change in control over the employee’s base amount. If any amount received by an employee is characterized as an excess parachute payment, the employee is subject to a 20% excise tax on the amount of the excess, and the Company is denied a tax deduction with respect to such excess. +Tax Code Section 409A. Section 409A of the Tax Code generally provides that any deferred compensation arrangement must satisfy specific requirements, both in operation and in form, regarding (i) the timing of payment, (ii) the advance election of deferrals and (iii) restrictions on the acceleration of payment. Failure to comply with Section 409A of the Tax Code may result in the early taxation (plus interest) to the participant of deferred compensation and the imposition of a 20% penalty on the participant on such deferred amounts included in the participant’s taxable income. The Company intends to structure Awards under the 2020 Plan in a manner that is designed to be exempt from or comply with Section 409A of the Tax Code. +2020 Plan Future Benefits +The allocation of some of the shares that would become available for issuance under the 2020 Plan is not currently determinable, as such allocation depends on future decisions to be made by the Compensation Committee or the Board in their sole discretion, subject to applicable provisions of the 2020 Plan. No Awards have been granted that are contingent on the approval of the 2020 Plan. Therefore, it is not possible to determine the benefits that will be received in the future by participants in the 2020 Plan or the benefits that would have been received by such participants if the 2020 Plan had been in effect in the year ended December 31, 2019. Certain tables in this Proxy Statement set forth information with respect to prior awards granted to our NEOs under the Prior Incentive Plan currently in effect or the 2011 Plan. +Because future Awards are in the discretion of the Board and Compensation Committee, the number of shares subject to future Awards could increase or decrease and the type and terms of future Awards could change as well, all without the need for future shareholder approval. +Board Recommendation and Vote Required +The Board believes that the approval of the 2020 Plan is in the best interest of the Company and its shareholders. The Board therefore recommends a vote for the 2020 Plan, and it is intended that the proxies not marked to the contrary will be so voted. Because approval of the 2020 Plan will increase the number of shares available for issuance to all directors and executive officers of the Company, each of the directors and executive officers of the Company has an interest and may benefit from the approval of the 2020 Plan. +Pursuant to our bylaws, approval of the 2020 Plan requires the affirmative vote of a majority of the common shares present in person or by proxy and entitled to vote on the proposal. In addition to the vote required by our bylaws, under NYSE rules, approval of the 2020 Plan requires approval of a majority of votes cast on the proposal. In both cases, abstentions will have the effect of a vote cast against the proposal. Broker non-votes will not be counted as shares present and entitled to vote and so will have no effect upon the outcome of the vote. +68 CALLON PETROLEUM +PROPOSAL 3 +Equity Compensation Plan Information +The following table provides information regarding the shares of our common stock that may be issued under our existing equity compensation plan, the LTIP, as of April 3, 2020. The number of securities reported in column (c) as available for future issuance does not include any of the additional shares under the LTIP that shareholders are being asked to approve at the 2020 Annual Meeting. +Plan Category +Number of securities to be issued upon exercise of outstanding options, warrants and rights +(a) (1) +Weighted-average exercise price of outstanding options, warrants and rights +(b) (2) +Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column(a)) +(c) (3)(4) +Equity compensation plans approved by security holders +10,870,000 +— +5,850,000 +Equity compensation plans not approved by security holders +— +— +— +Total +10,870,000 +— +5,850,000 +(1) +Reflects 4,620,000 outstanding RSUs and 6,250,000 stock-settled PSUs assuming vesting at maximum performance level. +(2) +The weighted-average exercise prices of outstanding options is omitted because no options or equity-based stock appreciation rights were outstanding as of April 3, 2020. +(3) +The number of securities remaining available for future issuances has been reduced by the number of securities to be issued pursuant to RSUs subject to time vesting and PSUs subject to certain market‑based performance goals over a specified period of time assuming vesting at the maximum performance level. +(4) +The number of securities remaining available for future issuance includes approximately 3,430,000 shares available for grant only to legacy Carrizo employees and approximately 2,420,000 shares available for grant to any eligible grantee. +The Board recommends a vote FOR the approval of the 2020 Plan. +2020 PROXY STATEMENT 69 +Proposal 4 +Ratification of the Appointment of the Independent Registered Public Accounting Firm, Grant Thornton LLP, for 2020. +The Board recommends that you vote “ FOR ” the ratification of the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2020. +• The Board and the Audit Committee believe the retention of Grant Thornton LLP is in the best interests of Callon and its shareholders based on the information presented below. +The Audit Committee has appointed Grant Thornton LLP, as the independent registered public accounting firm to audit our consolidated financial statements for the year ending December 31, 2020. We are asking shareholders to ratify this appointment. Grant Thornton LLP has served as the Company’s independent registered public accounting firm since being appointed effective March 3, 2016. A representative of Grant Thornton LLP will be present at the Annual Meeting and will have the opportunity to make a statement, if they desire, and to respond to appropriate questions from shareholders. +Fees +The following table sets forth the fees incurred by us for services performed by Grant Thornton LLP in the fiscal years 2018 and 2019: +Fee Category +2018 +2019 +Audit fees (a) +$ +959,652 +$ +1,187,217 +Audit-related fees (b) +$ +0 +$ +0 +Tax fees (c) +$ +21,647 +$ +108,385 +All other fees (d) +$ +0 +$ +0 +Total +$ +981,299 +$ +1,295,602 +(a) +Audit fees consist of the aggregate fees billed for professional services related to the audit and quarterly reviews of our financial statements and for services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements. +(b) +Audit-related fees consist of the aggregate fees billed for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements that are not reported above under “Audit” fees. +(c) +Tax fees consist of the aggregate fees billed for professional services rendered for tax compliance (including filing state and federal tax returns), tax advice and tax planning. Tax fees do not include fees for services rendered in connection with the audit. +(d) +Other fees consist of the aggregate fees billed for professional services other than the services repo rted above. +Pre-approval policy +The Audit Committee pre-approves all audit and permissible non-audit services (including the fees and terms thereof) exceeding $25,000 to be performed on behalf of the Company by our independent registered public accounting firm, as required by applicable law or listing standards and subject to the terms of the audit and non-audit services pre-approval policy in accordance with the Audit Committee charter. The Committee may delegate authority to one or more of its members when appropriate, including the authority to grant pre-approvals of audit and permitted non-audit services, provided that any decisions to grant pre-approvals are consistent with the terms of the delegation and the Audit Committee charter and are presented to the full Committee at its next scheduled meeting. +Required Vote +The submission of this matter for approval by shareholders is not legally required. However, the Board and Audit Committee believe that this submission is consistent with best practices in corporate governance and is an opportunity for shareholders to provide direct feedback to the Board and Audit Committee on an important issue of corporate governance. Although the results of the vote are not binding on the Audit Committee, if the appointment is not ratified the Audit Committee will consider whether it should select another independent registered public accounting firm. +70 CALLON PETROLEUM +PROPOSAL 4 +This proposal will be approved if it receives the affirmative vote of a majority of shares of our common stock present and entitled to vote at the Annual Meeting. If you hold your shares through a broker and you do not instruct the broker how to vote, your broker will have the authority to vote your shares in its discretion on this proposal. Abstentions will have the effect as a vote cast against this proposal. +The Board recommends a vote FOR the ratification of the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm. +Audit Committee Report +Acting pursuant to its charter, the Audit Committee reviewed and discussed the Company’s audited financial statements for the year ended December 31, 2019, with management and Grant Thornton LLP, and recommended to the Board that the audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, for filing with the SEC. This recommendation was based on: +• +The Audit Committee’s review of the audited financial statements; +• +Discussion of the financial statements with management; +• +Discussion with our independent registered public accounting firm, Grant Thornton LLP, of the matters required to be discussed by auditing standards generally accepted in the United States of America, including the communication matters required to be discussed by Auditing Standard No. 1301, Communications with Audit Committees, issued by the Public Company Accounting Oversight Board; +• +Receipt from Grant Thornton LLP of the written disclosures and letter required by Public Company Accounting Standards Board Rule 3526 (Communications with Audit Committees Concerning Independence); +• +Discussions with Grant Thornton LLP regarding its independence from Callon, the Board and our management; +• +Grant Thornton LLP’s confirmation that it would issue its opinion that the consolidated financial statements present fairly, in all material respects, our financial position and the results of our operations and cash flows for the periods presented in conformity with accounting principles generally accepted in the United States of America; and +• +Other matters the Audit Committee deemed relevant and appropriate. +Management is responsible for the preparation, presentation and integrity of our consolidated financial statements in accordance with Generally Accepted Accounting Principles (“GAAP”), the establishment and maintenance of our disclosure controls and procedures, and the establishment, maintenance and evaluation of the effectiveness of our internal controls over financial reporting. The independent registered public accounting firm is responsible for performing an independent audit of our consolidated financial statements and internal control over financial reporting in accordance with the standards of the PCAOB and issuing reports thereon. The Audit Committee’s responsibilities include monitoring and overseeing these processes. +Members of the Audit Committee rely, without independent verification, on the information provided to them and on the representations made by management and our independent registered public accounting firm. The Audit Committee’s considerations and discussions referred to above do not assure that the audit of our financial statements and internal control over financial reporting have been carried out according to the standards of the PCAOB, that the financial statements are presented according to GAAP, or that Grant Thornton LLP is in fact independent. +Respectfully submitted by the Audit Committee of the Board of Directors, +Anthony J. Nocchiero, Chairman +Barbara J. Faulkenberry +Michael L. Finch +L. Richard Flury +Larry D. McVay +Steven A. Webster +2020 PROXY STATEMENT 71 +Proposal 5 +Approve the Reverse Stock Split +The Board of Directors recommends a vote FOR the approval of an amendment to the certificate of incorporation to permit us to effect the Reverse Stock Split, as disclosed in this Proxy Statement. +• Provides the Company with the flexibility to effect, at any time on or prior to the first anniversary of the Annual Meeting and without the need for any further action on the part of our shareholders, a Reverse Stock Split of our common stock in a manner designed to maximize the anticipated benefits for our shareholders. +We are seeking shareholder approval for a proposal to adopt an amendment to our certificate of incorporation to permit us to effect the Reverse Stock Split of our issued and outstanding common stock by a ratio within a range of 1-for-10 and 1-for-50. If approved by the shareholders, the proposal will authorize our Board, in its sole discretion, to effectuate the Reverse Stock Split at any time prior to the first anniversary of the Annual Meeting. +The form of the amendment to our certificate of incorporation to effect the Reverse Stock Split is set forth on Appendix C. Approval of the proposal would permit (but not require) the Board to effect the Reverse Stock Split by a ratio of not less than 1-for-10 and not more than 1-for-50, with the exact ratio to be determined by the Board in its sole discretion. The exact ratio of the Reverse Stock Split would be determined by the Board prior to the effective time of the split and publicly announced by the Company prior to the effective time of the split. We believe that enabling the Board to set the ratio of the Reverse Stock Split within the stated range will provide us with the flexibility to implement the Reverse Stock Split in a manner designed to maximize the anticipated benefits for our shareholders. In determining a ratio of the Reverse Stock Split, if any, following the receipt of shareholder approval, the Board may consider, among other things, factors such as: +• +the existing and expected marketability and liquidity of our common stock; +• +the historical trading prices and trading volume of our common stock; +• +listing requirements of the NYSE or other applicable exchange or trading venues; +• +the number of shares of our common stock outstanding; +• +the then-prevailing trading price and trading volume of our common stock and the anticipated or actual impact of the Reverse Stock Split on the trading price and trading volume for our common stock; +• +the anticipated impact of a particular ratio on our ability to reduce administrative and transactional costs; and +• +the outlook for oil price volatility and other prevailing general market and economic conditions. +The Board reserves the right to not effect a Reverse Stock Split if it determines, in its sole discretion, that the Reverse Stock Split is not in the best interests of the Company and its shareholders. +Depending on the ratio for the Reverse Stock Split determined by the Board, no less than every 10 and no more than every 50 shares of common stock will be combined into one share of common stock. As described in Proposal 6 and subject to shareholder approval thereof, if the Reverse Stock Split is effectuated, it is the Board's intent to amend our certificate of incorporation to reduce the authorized number of shares of common stock in proportion to the Reverse Stock Split. Except for the shares issuable upon the exercise or conversion of our outstanding common stock warrants or outstanding awards under our equity incentive plans, we do not currently have any plans, proposals or arrangement to issue any of our authorized but unissued shares of common stock. +Reasons for the Reverse Stock Split; Potential Consequences of the Reverse Stock Split +NYSE Listing +On April 10, 2020, we were notified by the NYSE that the average closing price of our common stock had fallen below $1.00 per share over a period of 30 consecutive trading days, which is the minimum average share price for continued listing on the NYSE. We have a six-month cure period to regain compliance. We may regain compliance if (i) the closing price per share is $1.00 or higher on the last trading day of any calendar month within the cure period and the average closing price per share is $1.00 or higher over the 30 trading-day period ending on such day or (ii) the closing price per share is $1.00 or higher on the last trading day at the end of the cure period and the average closing price per share is $1.00 or higher over the 30 trading-day period ending on such day. +The Board is thus seeking shareholder approval to permit us to effect the Reverse Stock Split to increase the per share price of our common stock. There can be no assurances, however, that we will be able to regain compliance with the NYSE’s continued +72 CALLON PETROLEUM +PROPOSAL 5 +listing standards and that our common stock will remain listed on the NYSE. If we effectuate the Reverse Stock Split, the minimum share price deficiency will be deemed cured if the per share price of our common stock promptly exceeds $1.00, and the per share price of our common stock remains above that level for at least the following 30 trading days. If we are not able to regain compliance with the NYSE’s continued listing standards in the applicable time period, the NYSE may initiate procedures to suspend and delist our common stock. If our stock is delisted, then our common stock would likely become traded on an over-the-counter market such as those maintained by OTC Markets Group Inc., which do not have the substantial corporate governance or quantitative listing requirements for continued trading that NYSE has. A delisting could negatively affect the market price of our common stock, reduce the number of investors willing to hold or acquire our common stock, limit our ability to issue additional securities or obtain additional financing in the future, affect our ability to provide equity incentives to our employees, and might negatively impact our reputation and, as a consequence, our business. +Marketability of our Common Stock +We believe that the increased stock price that may result from Reverse Stock Split will make our common stock more attractive to a broader range of institutional and other investors, as we have been advised that the current market price of our common stock may affect its acceptability to certain institutional investors, professional investors and other members of the investing public. Many brokerage houses and institutional investors have internal policies and practices that either prohibit them from investing in low-priced stocks or tend to discourage individual brokers from recommending low-priced stocks to their customers. In addition, some of those policies and practices may function to make the processing of trades in low-priced stocks economically unattractive to brokers. Moreover, because brokers’ commissions on low-priced stocks generally represent a higher percentage of the stock price than commissions on higher-priced stocks, the current average price per share of common stock can result in individual shareholders paying transaction costs representing a higher percentage of their total share value than would be the case if the share price were substantially higher. We believe that the Reverse Stock Split will make our common stock a more attractive and cost effective investment for investors. +Other Considerations +In addition to the increased stock price that may result from Reverse Stock Split, we believe that a Reverse Stock Split will provide the Company and its shareholders with other benefits. Currently, the fees that we pay to list our shares on the NYSE are based on the number of shares we have outstanding. Also, the fees that we pay for custody and clearing services, the fees that we pay to the SEC to register securities for issuance and the costs of our proxy solicitations are all based on or related to the number of shares. Reducing the number of shares that are outstanding and that will be issued in the future may reduce the amount of fees and taxes that we pay to these organizations and agencies, as well as other organizations and agencies that levy charges based on the number of shares rather than the value of the shares. +Reducing the number of outstanding shares of common stock through the Reverse Stock Split is intended, absent other factors, to increase the per share market price of our common stock. However, other factors, such as commodity prices for oil and gas, our financial results, market conditions and the market perception of our business may adversely affect the market price of our common stock. As a result, there can be no assurance that the Reverse Stock Split, if completed, will result in the intended benefits described above, that the market price of our common stock will increase following the Reverse Stock Split in proportion to the reduction in the number of shares of our common stock outstanding before the Reverse Stock Split or that the market price of our common stock will not decrease in the future. Accordingly, the total market capitalization of our common stock after the Reverse Stock Split may be lower than the total market capitalization before the Reverse Stock Split. Furthermore, the liquidity of our common stock may be decreased by the proposed Reverse Stock Split given the reduced number of shares that would be outstanding after the Reverse Stock Split. +Not a "Going Private Transaction" +Notwithstanding the decrease in the number of issued and outstanding shares following the Reverse Stock Split, the Board does not intend for this transaction to be the first step in a series of plans or proposals of a “going private transaction” within the meaning of Rule 13e-3 of the Exchange Act. +Determination of the Specific Reverse Stock Split Ratio +If the Board chooses to implement the Reverse Stock Split, the Board’s selection of the specific reverse stock split ratio will be based primarily on the price of our common stock immediately prior to the Reverse Stock Split and the expected stability of that price. We expect that the primary focus of the Board will be to select a ratio that they believe is likely to result in increased marketability and liquidity of our common stock and encourage interest and trading in our common stock for the reasons discussed under “Background and Reasons for the Reverse Stock Split; Potential Consequences of the Reverse Stock Split” above. +2020 PROXY STATEMENT 73 +PROPOSAL 5 +We believe that granting the Board the authority to set the ratio for the Reverse Stock Split is essential because it provides the Board with the maximum flexibility to react to changing market conditions and to therefore act in the best interests of the Company and our shareholders. If the Board implements the Reverse Stock Split, the Company will make a public announcement regarding the determination of the exact reverse stock split ratio. +Procedure for Implementing the Reverse Stock Split +The Reverse Stock Split would become effective upon the filing of a certificate of amendment to our certificate of incorporation with the Secretary of State of the State of Delaware. The exact timing of the filing of the certificate of amendment that will effect the Reverse Stock Split will be determined by the Board, in its sole discretion, provided that in no event shall the filing occur after the first anniversary of the Annual Meeting. +Amendment Effective Time +The effective date of the Reverse Stock Split will be the date on which the certificate of amendment to our certificate of incorporation to effect the amendment contemplated by this proposal is accepted and recorded by the Delaware Secretary of State (subject to any specific future time of effectiveness stated therein) in accordance with Section 103 of the Delaware General Corporation Law (the "DGCL"). The exact timing of the filing of the amendment will be determined by the Board based on its assessments of the best interests of the Company and its shareholders. Except as explained herein with respect to fractional shares, on the effective date of the amendment to effect the Reverse Stock Split, shares of the common stock issued and outstanding will be combined and converted, without any action on the part of the shareholders, into new shares of the common stock in accordance with the reverse stock split ratio determined by the Board. +Reservation of Right to Abandon Reverse Stock Split +The Board reserves the right, notwithstanding shareholder approval of this Proposal 5 and without further action by the shareholders, to elect not to proceed with the Reverse Stock Split if the Board, in its sole discretion, determines that it is no longer in the Company’s best interests and the best interests of our shareholders to proceed with the Reverse Stock Split. Such determination will be based upon factors the Board deems appropriate, including the Company’s then current stock price, the existing and expected marketability and liquidity of our common stock, prevailing market conditions and the likely effect on the market price of our common stock. If a certificate of amendment effecting the Reverse Stock Split has not been filed with the Secretary of State of the State of Delaware on or before the first anniversary of the Annual Meeting, the Board will be deemed to have abandoned the Reverse Stock Split. +Effect of the Reverse Stock Split on Holders of Outstanding Common Stock +After the effective date of the Reverse Stock Split, each holder of our common stock will own fewer shares of common stock, and the total number of issued and outstanding shares of common stock will be reduced in proportion to the reverse stock split ratio determined by the Board. See “Proposal 6-Approval of the Authorized Share Reduction-Effects of the Authorized Share Reduction” for an illustrative example of the effect of both the Reverse Stock Split and the Authorized Share Reduction on the number of authorized, issued and outstanding and available shares of common stock. +The Reverse Stock Split will affect all holders of our common stock uniformly and will not affect any shareholder’s percentage ownership interest in the Company, except that, as described herein under “-Fractional Shares,” record holders of common stock otherwise entitled to a fractional share as a result of the Reverse Stock Split will receive cash in lieu of such fractional share. In addition, the Reverse Stock Split will not affect any shareholder’s proportionate voting power (subject to the treatment of fractional shares). For example, a holder of 2% of the voting power of the outstanding shares of common stock immediately prior to the Reverse Stock Split would continue to hold 2% of the voting power of the outstanding shares of common stock immediately after the Reverse Stock Split (subject to adjustment for any payment of cash in lieu of fractional shares). +The number of shareholders of record will not be affected by the Reverse Stock Split (except to the extent that any shareholder holds only a fractional share interest and receives cash for such interest after the Reverse Stock Split). +The Reverse Stock Split may result in some shareholders owning “odd lots” of less than 100 shares of common stock. Odd lot shares may be more difficult to sell, and brokerage commissions and other costs of transactions in odd lots may be higher than the costs of transactions in “round lots” of even multiples of 100 shares. +After the effective time of the Reverse Stock Split, our common stock will have a new Committee on Uniform Securities Identification Procedures (CUSIP) number, which is a number used to identify our equity securities, and stock certificates with the older CUSIP numbers will need to be exchanged for stock certificates with the new CUSIP numbers by following the procedures described below. After the Reverse Stock Split, we will continue to be subject to the periodic reporting and other requirements of the Exchange Act. +74 CALLON PETROLEUM +PROPOSAL 5 +Authorized Shares of Common Stock +Unless “Proposal 6-Approve the Authorized Share Reduction” is approved by the shareholders, the Reverse Stock Split will not change the number of authorized shares of our common stock under our certificate of incorporation. Because the number of shares of issued and outstanding common stock will decrease as a result of the Reverse Stock Split, the number of common stock available for issuance will increase. Currently, we are authorized to issue up to a total of 527,500,000 shares of capital stock, comprising 525,000,000 shares of common stock and 2,500,000 shares of preferred stock. Except for the shares issuable upon the exercise or conversion of our common stock warrants or outstanding awards under our equity incentive plans, we do not currently have any plans, proposals or arrangement to issue any of our authorized but unissued shares of common stock. +Exchange of Stock Certificates +If the Reverse Stock Split is effected, shareholders holding certificated shares (i.e., shares represented by one or more physical stock certificates) will be requested to exchange their old stock certificate(s) (“Old Certificate(s)”) for shares held electronically in book-entry form through the Depository Trust Company’s Direct Registration System representing the appropriate number of whole shares of our common stock resulting from the Reverse Stock Split. This means that, instead of receiving a new stock certificate, shareholders holding certificated shares prior to the effective time of the Reverse Stock Split will receive a statement of holding indicating the number of shares held by them electronically in book-entry form after giving effect to the Reverse Stock Split. Shareholders of record upon the effective time of the Reverse Stock Split will be furnished the necessary materials and instructions for the surrender and exchange of their Old Certificate(s) at the appropriate time by our transfer agent, American Stock Transfer & Trust Company, LLC (the “transfer agent”). Shareholders will not have to pay any transfer fee or other fee in connection with such exchange. As soon as practicable after the effective time of the Reverse Stock Split, the transfer agent will send a transmittal letter to each shareholder advising such holder of the procedure for surrendering Old Certificate(s) in exchange for new shares held in book-entry form. Your Old Certificate(s) representing pre-split shares cannot be used for either transfers or deliveries. Accordingly, you must exchange your Old Certificate(s) in order to effect transfers or deliveries of your shares. +YOU SHOULD NOT SEND YOUR OLD CERTIFICATES NOW. YOU SHOULD SEND THEM ONLY IF YOU RECEIVE A LETTER OF TRANSMITTAL FROM THE TRANSFER AGENT. +As soon as practicable after the surrender to the transfer agent of any Old Certificate(s), together with a properly completed and duly executed transmittal letter and any other documents the transfer agent may specify, the transfer agent will have its records adjusted to reflect that the shares represented by such Old Certificate(s) are held in book-entry form in the name of such person. +Until surrendered as contemplated herein, a shareholder’s Old Certificate(s) shall be deemed at and after the effective time of the Reverse Stock Split to represent the number of whole shares of our common stock resulting from the Reverse Stock Split. +Any shareholder whose Old Certificate(s) have been lost, destroyed or stolen will be entitled to new shares in book-entry form only after complying with the requirements that we and our transfer agent customarily apply in connection with lost, stolen or destroyed certificates. +No service charges, brokerage commissions or transfer taxes shall be payable by any holder of any Old Certificate to effectuate an exchange as described above. +Any shareholder who wants to continue holding certificated shares may request new certificate(s) from the transfer agent. +Shareholders who hold only uncertificated shares, either as direct or beneficial owners, will have their holdings electronically adjusted by the transfer agent and, for beneficial owners, by their brokers or banks which hold in “street name” for their benefit, as the case may be to give effect to the Reverse Stock Split. +No Appraisal Rights +Under the DGCL, holders of our Common Stock will not be entitled to dissenter's rights or appraisal rights with respect to the Reverse Stock Split. +Fractional Shares +Fractional shares will not be issued in connection with the Reverse Stock Split. Shareholders who would otherwise hold fractional shares of our common stock as a result of the Reverse Stock Split will be entitled to receive cash (without interest and subject to applicable withholding taxes) in lieu of such fractional shares. To avoid the existence of fractional shares of the common stock, shares that would otherwise result in fractional shares from the application of the Reverse Stock Split will be +2020 PROXY STATEMENT 75 +PROPOSAL 5 +collected and pooled by the transfer agent and sold in the open market, and the proceeds will be allocated to the shareholders’ respective accounts pro rata in lieu of fractional shares. The Company will not receive any proceeds from any such sales. The ownership of a fractional interest will not give the holder any voting, dividend or other rights, except to receive the above-described cash payment. The Company will be responsible for any brokerage fees or commissions related to the transfer agent’s selling in the open market shares that would otherwise represent fractional shares. +Shareholders should be aware that, under the escheat laws of the various jurisdictions where shareholders reside, where we are domiciled and where the funds will be deposited, sums due for fractional interests resulting from the Reverse Stock Split that are not timely claimed after the effective time in accordance with applicable law may be required to be paid to the designated agent for each such jurisdiction. Thereafter, if applicable, shareholders otherwise entitled to receive such funds, but who do not receive them due, for example, to their failure to timely comply with the transfer agent’s instructions (described herein), may have to seek to obtain them directly from the state to which they were paid. +Effect of the Reverse Stock Split on Common Stock Warrants +Pursuant to the agreement governing our common stock warrants, upon effectiveness of the Reverse Stock Split, the exercise price shall be divided by a fraction, the numerator of which is equal to the number of shares of common stock outstanding immediately prior to the effective date of the Reverse Stock Split and the denominator of which is equal to the number of shares of common stock outstanding immediately after the opening of business on the effective date of the Reverse Stock Split. In any such event, the number of shares of common stock issuable upon exercise of each warrant at the time of the effective date of the Reverse Stock Split shall be proportionately adjusted so that the warrant holder, after such date, shall be entitled to purchase the number of shares of common stock that such holder would have owned or been entitled to receive in respect of the shares of common stock subject to the warrant after such date had the warrant been exercised immediately prior to such date. +Effect of the Reverse Stock Split on Equity Incentive Plans and Awards +If the Reverse Stock Split is effectuated, the number of shares of common stock available for grant under our equity incentive plans, as well as the number of shares of common stock subject to outstanding equity awards, would be reduced in proportion to the Reverse Stock Split. +Under the terms of the proposed 2020 Plan as well as the Prior Incentive Plan, in the event of a Reverse Stock Split the Board will reduce the number of shares of common stock available for issuance under the plans in proportion to the ratio of the Reverse Stock Split. For illustrative purposes only, the following table shows the approximate effect on shares available for issuance under the Prior Incentive Plan and the proposed 2020 Plan (if approved by shareholders) in the event of a 1-for-10 and a 1-for-50 reverse stock split as of April 3, 2020: +Number of Shares of Common Stock Remaining Available for Future Issuance as of April 3 +Number of Shares of Common Stock Remaining Available for Future Issuance After Reverse Stock Split +1:10 +1:50 +Prior Incentive Plan (a) +5,850,000 +585,000 +117,000 +2020 Plan (b) +13,250,000 +1,325,000 +265,000 +(a) +Please see Proposal 3, and specifically the table on page 68, for more information about the Prior Incentive Plan and the shares available for issuance thereunder. If the 2020 Plan is approved by the shareholders, the shares available for issuance under the Prior Incentive Plan will be transferred to the 2020 Plan. +(b) +These shares will become available only if Proposal 3 is approved by the shareholders. Please see Proposal 3 for more information about the 2020 Plan. +In addition, in connection with any Reverse Stock Split the Board will reduce the cash or shares of common stock issuable under outstanding equity awards in proportion to the ratio of the Reverse Stock Split. The Board will also make proportional adjustments to the calculation of the Company’s total shareholder return under the outstanding performance share unit awards and to the exercise price of the outstanding cash stock appreciation rights. These adjustments will be made by the Board as necessary to maintain the proportionate interest of the holders of the awards and preserve, without exceeding, the value of such awards, and the Board’s determination as to what of the adjustments shall be final, binding and conclusive. +76 CALLON PETROLEUM +PROPOSAL 5 +Regulatory Effects +The common stock is currently registered under Section 12(b) of the Exchange Act, and the Company is subject to the periodic reporting and other requirements of the Exchange Act. The Reverse Stock Split will not affect the registration of the common stock under the Exchange Act or the Company’s obligation to publicly file financial and other information with the SEC. If the Reverse Stock Split is implemented, the common stock will continue to trade on the NYSE under the symbol “CPE” (although the NYSE would likely add the letter “D” to the end of the trading symbol for a period of 20 trading days to indicate that the Reverse Stock Split has occurred). +Interests of Certain Persons in the Proposal +Certain of the Company’s officers and directors have an interest in this proposal as a result of their ownership of shares of stock of the Company, as set forth in the section entitled “Beneficial Ownership of Securities” below. However, the Company does not believe that its officers or directors have interests in the Reverse Stock Split that are different from or greater than those of any other shareholder of the Company. +Accounting Matters +The amendment to our certificate of incorporation will not affect the par value of our common stock per share, which will remain $0.01 per share. As a result, as of the effective time of the Reverse Stock Split, the stated capital attributable to common stock and the additional paid-in capital on our balance sheet will, in total, not change due to the Reverse Stock Split. However, the allocation between the stated capital attributable to common stock and the additional paid-in capital on our balance sheet will change because there will be fewer shares of common stock outstanding. The stated capital attributable to common stock will decrease, and in turn, the stated capital attributable to the additional paid-in capital will increase. Further, reported per share net income or loss will be higher because there will be fewer shares of common stock outstanding. +Material U.S. Federal Income Tax Consequences of the Reverse Stock Split +The following discussion is a summary of the material U.S. federal income tax consequences of the proposed Reverse Stock Split to U.S. Holders (as defined below) of our common stock. This discussion is based on the Tax Code, U.S. Treasury regulations promulgated thereunder, judicial decisions, and published rulings and administrative pronouncements of the IRS in each case in effect as of the date of this proxy statement. These authorities may change or be subject to differing interpretations. Any such change or differing interpretation may be applied retroactively in a manner that could adversely affect a U.S. Holder. +We have not sought and will not seek any rulings from the IRS or an opinion from legal or tax counsel regarding the matters discussed below. There can be no assurance the IRS or a court will not take a contrary position to that discussed below regarding the tax consequences of the proposed Reverse Stock Split. +For purposes of this discussion, a “U.S. Holder” is a beneficial owner of our common stock that, for U.S. federal income tax purposes, is or is treated as: +• +an individual who is a citizen or resident of the United States; +• +a corporation (or any other entity or arrangement treated as a corporation for U.S. federal income tax purposes) created or organized under the laws of the United States, any state thereof, or the District of Columbia; +• +an estate, the income of which is subject to U.S. federal income tax regardless of its source; or +• +a trust if (1) its administration is subject to the primary supervision of a court within the United States and all of its substantial decisions are subject to the control of one or more “United States persons” (within the meaning of Section 7701(a)(30) of the Tax Code), or (2) it has a valid election in effect under applicable U.S. Treasury regulations to be treated as a United States person. +This discussion is limited to U.S. Holders who hold our common stock as a “capital asset” within the meaning of Section 1221 of the Tax Code (generally, property held for investment). This discussion does not address all U.S. federal income tax consequences relevant to the particular circumstances of a U.S. Holder, including the impact of the alternative minimum tax or the Medicare contribution tax on net investment income. In addition, it does not address consequences relevant to U.S. Holders that are subject to special rules, including, without limitation, financial institutions, insurance companies, real estate investment trusts, regulated investment companies, dealers or trades in securities or currencies, shareholders who hold common stock as part of a position in a straddle or as part of a hedging, conversion or integrated transaction for U.S. federal income tax purposes or U.S. Holders that have a functional currency other than the U.S. dollar. +If a partnership (or other entity treated as a partnership for U.S. federal income tax purposes) is the beneficial owner of common stock, the U.S. federal income tax treatment of a partner in the partnership will generally depend on the status of the partner, the +2020 PROXY STATEMENT 77 +PROPOSAL 5 +activities of the partnership and certain determinations made at the partner level. Accordingly, partnerships (and other entities treated as partnerships for U.S. federal income tax purposes) holding common stock and the partners in such entities should consult their tax advisors regarding the U.S. federal income tax consequences of the proposed Reverse Stock Split to them. +In addition, the following discussion does not address the U.S. federal estate and gift tax, or state, local and non-U.S. tax law consequences of the proposed Reverse Stock Split. Furthermore, the following discussion does not address any tax consequences of transactions effectuated before, after or at the same time as the proposed Reverse Stock Split, whether or not they are in connection with the proposed Reverse Stock Split. +SHAREHOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE APPLICATION OF THE U.S. FEDERAL INCOME TAX LAWS TO THEIR PARTICULAR SITUATIONS AS WELL AS ANY TAX CONSEQUENCES OF THE PROPOSED REVERSE STOCK SPLIT ARISING UNDER THE U.S. FEDERAL ESTATE OR GIFT TAX LAWS OR UNDER THE LAWS OF ANY STATE, LOCAL OR NON-U.S. TAXING JURISDICTION OR UNDER ANY APPLICABLE INCOME TAX TREATY. +The proposed Reverse Stock Split should constitute a “recapitalization” for U.S. federal income tax purposes pursuant to Section 368(a)(1)(E) of the Tax Code. As a result, a U.S. Holder generally should not recognize gain or loss upon the proposed Reverse Stock Split for U.S. federal income tax purposes, except with respect to cash received in lieu of a fractional share of our common stock, as discussed below. A U.S. Holder’s aggregate adjusted tax basis in the shares of common stock held immediately after the proposed Reverse Stock Split should equal the aggregate adjusted tax basis of the shares of common stock held immediately before the Reverse Stock Split (reduced by the amount of such basis that is allocated to any fractional share of our common stock). The U.S. Holder’s holding period in the shares of common stock held immediately after the Reverse Stock Split should include the holding period in the shares of common stock held immediately before the Reverse Stock Split. U.S. Treasury Regulations provide detailed rules for allocating the tax basis and holding period among shares of common stock which were acquired by a shareholder on different dates and at different prices. U.S. Holders of shares of our common stock acquired on different dates and at different prices should consult their tax advisors regarding the allocation of the tax basis and holding period among such shares. +A U.S. Holder that, pursuant to the proposed Reverse Stock Split, receives cash in lieu of a fractional share of our common stock will be treated as having received the fractional share pursuant to the Reverse Stock Split and then as having exchanged the fractional share for cash in a redemption by the Company. Accordingly, such U.S. Holder should recognize taxable gain or loss in an amount equal to the difference, if any, between the amount of cash received and the portion of such U.S. Holder’s aggregate adjusted tax basis in the shares of common stock surrendered that is allocated to such fractional share. Such capital gain or loss will be short term if the pre-reverse split shares were held for one year or less at the effective time of the Reverse Stock Split and long term if held for more than one year. +No gain or loss will be recognized by us as a result of the proposed Reverse Stock Split. In addition, we do not expect the Reverse Stock Split to affect our ability to utilize our net operating loss carryforwards. +Payments of cash made in lieu of a fractional share of our common stock may, under certain circumstances, be subject to information reporting and backup withholding. To avoid backup withholding, each holder of our common stock that does not otherwise establish an exemption should furnish on applicable IRS forms its taxpayer identification number and comply with the applicable certification procedures. +Backup withholding is not an additional tax and amounts withheld will be allowed as a credit against the holder’s U.S. federal income tax liability and may entitle such holder to a refund, provided the required information is timely furnished to the IRS. Holders of our common stock should consult their own tax advisors regarding the application of the information reporting and backup withholding rules to them. +Required Vote +Approval of this proposal requires the affirmative vote, either in person or by proxy, of the holders of a majority of the issued and outstanding shares of common stock. Abstentions, failing to vote, and “broker non-votes” will have the same effect as voting “AGAINST” the adoption of this proposal because the required vote is based on the number of shares outstanding rather than the number of votes cast. +The Board recommends a vote FOR the approval of the Reverse Stock Split. +78 CALLON PETROLEUM +Proposal 6 +Approve the Authorized Share Reduction +The Board recommends a vote FOR the approval of the amendment to the Company’s certificate of incorporation to effect the Authorized Share Reduction. +• Provides the Company with the flexibility to effect, at any time on or prior to the first anniversary of the Annual Meeting, and without the need for any further action on the part of our shareholders, a reduction in the amount of authorized shares of the Company in proportion to the reverse stock split ratio. +General +The Board has authorized, and recommends for approval by the shareholders, an amendment to the Company’s certificate of incorporation that, if approved by the shareholders and filed with the Secretary of State of the State of Delaware, would reduce the number of authorized shares of common stock by the ratio determined by the Board for the Reverse Stock Split described under “Proposal 5-Approve the Reverse Stock Split.” +This Proposal 6 to approve the amendment to our certificate of incorporation to effect the Authorized Share Reduction is conditioned on the approval of the amendment to our certificate of incorporation to effect the Reverse Stock Split. Therefore, if Proposal 5 is not approved, then this Proposal 6 will automatically be deemed to not have been approved, regardless of the number of shares actually voted “FOR” Proposal 6. +If both Proposal 5 and Proposal 6 are approved by our shareholders, the Authorized Share Reduction will become effective upon filing the amendment to our certificate of incorporation with the Secretary of State of the State of Delaware. However, notwithstanding approval of the Reverse Stock Split and the Authorized Share Reduction by the shareholders, the Board will have the sole authority to elect, at any time prior to the first anniversary of the Annual Meeting, whether or not to amend our certificate of incorporation to effect the Reverse Stock Split and the Authorized Share Reduction. +The text of the proposed amendment to our certificate of incorporation to effect the Authorized Share Reduction is included as Appendix C to this Proxy Statement. +Reasons for the Authorized Share Reduction +We currently have 525,000,000 authorized shares of common stock. The Board believes that it is in our best interests to decrease the authorized number of shares of common stock in connection with the Reverse Stock Split in proportion to the reverse stock split ratio determined by the Board. +Effects of the Authorized Share Reduction +The decrease in the number of authorized shares of common stock would result in fewer shares of authorized but unissued shares of common stock being available for future issuance. This would decrease the number of shares of common stock available for issuance for various purposes such as to raise capital or to make acquisitions without further approvals from our shareholders. +For illustrative purposes only, the following table shows the approximate effect on our common stock of a one-for-10 and a one-for-50 reverse stock split (as followed by the proportional reduction in authorized shares), based on the 397,002,537 shares of common stock issued and outstanding as of April 1, 2020: +Number of Shares of Common Stock Prior to Reverse Stock Split +Number of Shares of Common Stock After Reverse Stock Split and Authorized Share Reduction +1:10 +1:50 +Authorized +525,000,000 +52,500,000 +10,500,000 +Issued and Outstanding (a) +397,002,537 +39,700,253 +7,940,050 +Authorized and Reserved for Issuance (b) +16,723,143 +1,672,314 +334,462 +Authorized and Unreserved and Available for Future Issuances (c) +111,274,320 +11,127,432 +2,225,486 +(a) +Subject to adjustment for fractional shares in connection with the Reverse Stock Split. +(b) +Includes shares of common stock reserved for issuance (i) upon the settlement of restricted stock units and performance share units, and (ii) remaining under the Incentive Plans. +2020 PROXY STATEMENT 79 +PROPOSAL 6 +(c) +Excludes shares of common stock reserved for issuance (i) upon the settlement of restricted stock units and performance share units, and (ii) remaining under the Incentive Plans. +Required Vote +Approval of this proposal requires the affirmative vote, either in person or by proxy, of the holders of a majority of the issued and outstanding shares of common stock. Abstentions, failing to vote, and “broker non-votes” will have the same effect as voting “AGAINST” the adoption of this proposal because the required vote is based on the number of shares outstanding rather than the number of votes cast. +The Board recommends a vote FOR the approval of the Authorized Share Reduction. +80 CALLON PETROLEUM +OTHER MATTERS +Beneficial Ownership of Securities +Principal Shareholders and Management +The following table sets forth beneficial ownership information with respect to our common stock as of April 1, 2020, for (i) each person known by us to own beneficially 5% or more of our outstanding common stock; (ii) each of our NEOs referenced in the Summary Compensation Table, (iii) each of our directors and nominees for director, and (iv) all of our directors and executive officers as of April 1, 2020, as a group. Unless otherwise noted, each person listed below has sole voting and investment power with respect to the shares of our common stock listed below as beneficially owned by the person. Information set forth in the table with respect to beneficial ownership of common stock has been obtained from filings made by the named beneficial owners with the SEC as of April 1, 2020, or, in the case of our executive officers and directors, has been provided to us by such individuals. As of April 1, 2020, the Company had 397,002,537 shares outstanding. +None of the shares beneficially owned by our executive officers or directors has been pledged as security for an obligation. Our Insider Trading Policy prohibits our executive officers and directors from holding Callon securities in a margin account or pledging Callon securities as collateral for a loan. +Beneficial Ownership (1) +Name of Beneficial Owner +Shares (#) +Percent of Class +Holders of More Than 5%: +BlackRock, Inc. (2) +61,419,994 +15.5 +% +The Vanguard Group, Inc. (3) +41,484,255 +10.5 +% +Dimensional Fund Advisors LP (4) +25,991,513 +6.6 +% +State Street Corporation (5) +25,571,822 +6.4 +% +Named Executive Officers: +Joseph C. Gatto, Jr. (6) +505,965 +* +James P. Ulm, II (7) +65,368 +* +Jeffrey S. Balmer (8) +21,615 +* +Michol L. Ecklund (9) +42,157 +* +Gregory F. Conaway (10) +422,908 +* +Mitzi P. Conn (11) +137,875 +* +Directors: +Matthew R. Bob (12) +101,991 +* +Barbara J. Faulkenberry (13) +40,112 +* +Michael L. Finch (14) +70,441 +* +L. Richard Flury (15) +270,681 +* +S. P. Johnson IV (16) +1,545,518 +* +Larry D. McVay (17) +190,976 +* +Anthony J. Nocchiero (18) +159,847 +* +Frances A. Sevilla-Sacasa (19) +23,473 +* +James M. Trimble (20) +82,991 +* +Steven A.Webster (21) +7,488,540 +1.9 +% +All Executive Officers and Directors as a Group (consisting of 16 persons) (22) +11,170,458 +2.8 +% +* +Less than 1% +(1) +The amounts shown for our directors and NEOs include, as of April 1, 2020: (a) shares of common stock held under Callon’s 401(k) Plan for the accounts of participants; (b) shares of common stock owned outright by the individual; and (c) shares of common stock that may be +2020 PROXY STATEMENT 81 +OTHER MATTERS +acquired within 60 days through the vesting or settlement of certain RSUs, if any. Until RSUs vest, these individuals have neither voting nor investment power over the underlying shares of common stock. As of April 1, 2020, none of the directors or executive officers held any stock options to purchase shares of Company stock. +(2) +BlackRock, Inc. (BlackRock), in its capacity as a parent holding company or control person for various subsidiaries (none of which individually owns more than 5% of our outstanding common stock), may be deemed to beneficially own the indicated shares. BlackRock has sole voting power over 60,306,188 shares and sole dispositive power over 61,419,994 shares. BlackRock does not have shared voting or shared dispositive power over any of the shares. BlackRock’s address is 55 East 52nd St., New York, NY 10055. This information is based on BlackRock’s most recent Statement on Schedule 13G filed on February 4, 2020. +(3) +The Vanguard Group, Inc. ("Vanguard"), in its capacity as an investment adviser, may be deemed to beneficially own the indicated shares, along with certain of its wholly-owned subsidiaries that serve as investment managers. Vanguard has sole voting power over 373,162 shares, shared voting power over 65,635 shares, sole dispositive power over 41,098,129 shares and shared dispositive power over 386,126 shares. Vanguard’s address is 100 Vanguard Blvd., Malvern, PA 19355. This information is based on Vanguard’s most recent Statement on Schedule 13G filed on February 12, 2020. +(4) +Dimensional Fund Advisors LP ("Dimensional"), in its capacity as an investment adviser, may be deemed to beneficially own the indicated shares, along with certain of its wholly-owned subsidiaries that serve as investment managers. Dimensional has sole voting power over 25,775,016 shares and sole dispositive power over 25,991,513 shares. Dimensional does not have shared voting or shared dispositive power over any shares. Dimensional's address is 6300 Bee Cave Road, Austin, TX 78746. This information is based on Dimensional's most recent Statement on Schedule 13G filed on February 12, 2020. +(5) +State Street Corp. ("State Street"), in its capacity as a parent holding company or control person for various subsidiaries (none of which individually owns more than 5% of our outstanding common stock), may be deemed to beneficially own the indicated shares, along with certain of its wholly-owned subsidiaries that serve as investment managers. State Street has shared voting power over 24,101,336 shares and shared dispositive power over 25,571,822 shares. State Street does not have sole voting or sole dispositive power over any shares. State Street's principal business address is State Street Financial Center, One Lincoln St., Boston, MA 02111. This information is based on State Street's most recent Statement on Schedule 13G filed with the SEC on February 13, 2020 +(6) +Comprised of 388,224 shares held directly by Mr. Gatto, 38,150 shares held indirectly within the 401(k) Plan, and 79,591 unvested RSUs payable in stock that will vest within 60 days of the Record Date. Does not include 705,632 unvested RSUs payable in stock and 1,214,202 unvested PSUs payable in 50% stock and 50% cash. +(7) +Comprised of 64,794 shares held directly by Mr. Ulm and 574 shares held indirectly within the 401(k) Plan. Does not include 307,911 unvested RSUs payable in stock and 534,720 unvested PSUs payable in 50% stock and 50% cash. +(8) +Comprised of 21,482 shares held directly by Dr. Balmer and 133 shares held indirectly within the 401(k) Plan. Does not include 290,493 unvested RSUs payable in stock and 474,118 unvested PSUs payable in 50% stock and 50% cash. +(9) +Comprised of 34,963 shares held directly by Ms. Ecklund, 603 shares held indirectly within the 401(k) Plan, and 6,591 unvested RSUs payable in stock that will vest within 60 days of the Record Date. Does not include 197,044 unvested RSUs payable in stock and 321,166 unvested PSUs payable in 50% stock and 50% cash. +(10) +Comprised of 422,908 shares held directly by Mr. Conaway. Does not include 102,986 unvested RSUs payable in stock and 80,454 unvested PSUs payable in 50% stock and 50% cash. +(11) +Comprised of 99,176 shares held directly by Ms. Conn, 24,702 shares held indirectly within the 401(k) Plan, and 13,997 unvested RSUs payable in stock that will vest within 60 days of the Record Date. Does not include 15,039 unvested RSUs payable in stock and 40,858 unvested PSUs payable in 50% stock and 50% cash. +(12) +Comprised of 77,915 shares held directly by Mr. Bob and 24,076 unvested RSUs payable in stock that will vest within 60 days of the Record Date. +(13) +Comprised of 19,742 shares held directly by Ms. Faulkenberry and 20,370 unvested RSUs payable in stock that will vest within 60 days of the Record Date. +(14) +Comprised of 46,365 shares held directly by Mr. Finch and 24,076 unvested RSUs payable in stock that will vest within 60 days of the Record Date. +(15) +Comprised of 216,605 shares held directly by Mr. Flury and 30,000 shares held in a joint tenancy with his spouse, which includes 83,606 deferred RSUs, pursuant to Mr. Flury's election under the Deferred Compensation Plan for Outside Directors, which are payable in cash upon his separation of service as a director, and 24,076 unvested shares that will vest within 60 days of the Record Date. +(16) +Comprised of 845,518 shares held directly by Mr. Johnson and 700,000 shares held indirectly with a Family Limited Partnership, which includes 4,866 deferred RSUs, pursuant to Mr. Johnson's election under the Deferred Compensation Plan for Outside Directors, which are payable in cash upon his separation of service as a director. Mr. Johnson's deferred RSUs are all vested shares. +(17) +Comprised of 166,900 shares held directly by Mr. McVay and 24,076 unvested RSUs payable in stock that will vest within 60 days of the Record Date. +(18) +Comprised of 135,771 shares held directly by Mr. Nocchiero and 24,076 unvested RSUs payable in stock that will vest within 60 days of the Record Date. +(19) +Comprised of 23,473 shares held directly by Ms. Sevilla-Sacasa. +(20) +Comprised of 58,915 shares held directly by Mr. Trimble and 24,076 unvested RSUs payable in stock that will vest within 60 days of the Record Date. +82 CALLON PETROLEUM +OTHER MATTERS +(21) +Comprised of 5,349,790 shares held directly by Mr. Webster, 645,000 shares held indirectly with his spouse, and 1,493,750 shares held indirectly through San Felipe Resources Company, which includes 4,866 deferred RSUs, pursuant to Mr. Webster's election under the Deferred Compensation Plan for Outside Directors, which are payable in cash upon his separation of service as a director. Mr. Webster's deferred RSUs are all vested shares. +(22) +Comprised of 7,972,541 shares held directly by the Company's executive officers and directors, 30,000 shares held in a joint tenancy, 645,000 shares held indirectly by a spouse, 700,000 shares held indirectly by a Family Limited Partnership, 64,162 shares held indirectly within the Company's 401(k) Plan, 1,493,730 shares held indirectly by San Felipe Resources Company, and 265,005 unvested RSUs payable in stock that will vest within 60 days of the Record Date. +Section 16(a) Beneficial Ownership Reporting Compliance +Section 16(a) of the Exchange Act requires our officers and directors and persons who own 10% or more of our common stock to file reports of beneficial ownership and changes in ownership with the SEC. These persons are required by SEC regulations to furnish us with copies of these reports. Based solely on our review of these reports received by us during fiscal year 2019, and representations from certain reporting persons that they have complied with the relevant filing requirements, we believe that all such filing requirements were complied with in 2019 and 2020 to date with the exception that Mr. L. Richard Flury had a delinquent Form 5 filing on January 3, 2019 reporting phantom stock units inadvertently excluded in prior filings that were awarded in 2014-2017. +Certain Relationships and Related Party Transactions +The Audit Committee charter provides that the Audit Committee shall review and approve all related party transactions. A transaction will be considered a “related party transaction” if the transaction would be required to be disclosed under Item 404 of Regulation S-K. In addition, our Code provides that an officer’s or a director’s conflict of interest with Callon may only be waived if the Nominating and Corporate Governance Committee approves the waiver and the full Board ratifies the waiver. +For the fiscal year ended 2019, Austin Weant, who is the son of Jerry Weant, our former Vice President of Land, received $162,400 in total compensation as an employee of the Company, which is consistent with market compensation for his services. In addition, Austin Weant was eligible to participate in all benefit plans and programs available generally to the Company’s employees. +Except for the foregoing, as of December 31, 2019, we are not aware of any related party transactions with our executive officers that require disclosure under Item 404 of Regulation S-K. +Shareholders’ Proposals and Director Nominations for the 2021 Annual Meeting +In order for a proposal to be considered for inclusion in the proxy statement for the 2021 Annual Meeting of Shareholders (the “2021 Annual Meeting”) pursuant to Rule 14a-8 of the Exchange Act, such proposal must be received by the Secretary of the Company at our principal executive offices no later than December 29, 2020 (assuming the date of the 2021 Annual Meeting has not been changed by more than 30 days from the date of this year’s Annual Meeting), and must otherwise be in compliance with the requirements of the SEC’s proxy rules. If the date of the 2021 Annual meeting has been changed by more than 30 days from the date of this Annual Meeting, then the deadline is a reasonable time before we begin to print and send our proxy materials for the 2021 Annual Meeting. +For a shareholder proposal to be introduced for consideration at the 2021 Annual Meeting but not intended to be considered for inclusion in the Company's proxy statement and form of proxy relating to such meeting (i.e. not pursuant to Rule 14a-8 of the Exchange Act), including shareholder nominations for candidates for election as directors, a shareholder must provide written notice of such proposal to Company not later than 120 days nor earlier than 150 days before the date of the 2021 Annual Meeting. Any such notice must describe the shareholder proposal in reasonable detail and otherwise comply with the requirements set forth in our bylaws. +2020 PROXY STATEMENT 83 +OTHER MATTERS +Nominating Process +In accordance with our certificate of incorporation, any shareholder may nominate a person for election to the Board upon delivery of written notice to us of such nomination. Such notice must be sent as provided in our certificate of incorporation on or before the deadline set forth in our certificate of incorporation, and must otherwise comply with the procedures set forth in our certificate of incorporation. For nominations, the Board will consider individuals identified by shareholders on the same basis as nominees identified from other sources. A submission recommending a nominee should include: +• +Sufficient biographical information to allow the Nominating and Corporate Governance Committee to evaluate the qualifications of a potential nominee in light of the director nomination procedures and criteria and any other information that would be required to be disclosed in solicitations of proxies for the election of directors; +• +An indication as to whether the proposed nominee will meet the requirements for independence under NYSE and SEC guidelines; +• +A description of all direct and indirect compensation and other material monetary agreements, arrangements, and understandings during the past three years, and any other material relationships, between or among the nominating shareholder or beneficial owner and each proposed nominee; +• +A completed and signed questionnaire, representation, and agreement, pursuant to our bylaws, with respect to each nominee for election or re-election to the Board; and +• +The proposed nominee’s written consent to serve if nominated and elected. +84 CALLON PETROLEUM +ANNUAL MEETING INFORMATION +Information Concerning Solicitation and Voting +We are providing you this Proxy Statement in connection with the solicitation of proxies by the Board to be voted at the Annual Meeting, which will be held on June 8, 2020 at 9:00 a.m. CDT in the La Scala Room of The Moran Hotel, located at 800 Sorella Court in Houston, Texas. This Proxy Statement contains important information for you to consider when deciding how to vote on the matters brought before the meeting. Please read it carefully. +The Board will primarily solicit proxies by mail, and we will bear all costs incurred in the solicitation of proxies, including the preparation, printing and mailing of these proxy materials. In addition to solicitation by mail, our directors, officers and employees may solicit proxies personally or by telephone, email, facsimile or other means, without additional compensation. We may also make arrangements with brokerage houses and other custodians, nominees and fiduciaries for the forwarding of solicitation material to the beneficial owners of the common stock held by such persons, and we may reimburse those brokerage houses and other custodians, nominees and fiduciaries for reasonable expenses incurred in connection therewith. In addition, to assist us with our solicitation efforts, we have retained the services of Innisfree M&A Incorporated for a fee of approximately $15,000, plus out-of-pocket expenses. +Information About Voting and the Annual Meeting +Who may vote +You may vote if you are the record holder of our common stock as of the close of business on the Record Date. On that date, 397,002,537 shares of our common stock were outstanding and are entitled to vote at the Annual Meeting. Each share of common stock is entitled to one vote on each matter considered at this meeting. A list of shareholders entitled to vote at the Annual Meeting will be available at our office at 2000 West Sam Houston Parkway South, Suite 2000, Houston, TX 77042 during normal business hours for a period of ten (10) days prior to the meeting and will also be available for inspection at the Annual Meeting. +Attending the Annual Meeting +If you meet the above criteria to vote at our Annual Meeting, you may attend the Annual Meeting. If you wish to attend the Annual Meeting in person, you must present valid, government-issued picture identification. If your shares are held in the name of a bank, broker or other nominee and you plan to attend the Annual Meeting, in order to be admitted you must present proof of your beneficial ownership of the common stock, such as a bank or brokerage account statement, or copy of your Voting Instruction Form or Notice, indicating that you owned shares of our common stock at the close of business on the Record Date. +For safety and security reasons, no cameras, recording equipment, cellular telephones, electronic devices, large bags, briefcases or packages will be permitted in the Annual Meeting. No banners, signs, firearms or weapons will be allowed in the meeting room. We reserve the right to inspect all items entering the meeting room. +Proposals +Qualifying shareholders will vote on the following six proposals at the Annual Meeting: +1) +The election of directors; +2) +Advisory approval of our executive compensation; +3) +Approval of the 2020 Plan; +4) +The ratification of the appointment of Grant Thornton LLP; +5) +Approval of the Reverse Stock Split; and +6) +Approval of the Authorized Share Reduction. +2020 PROXY STATEMENT 85 +ANNUAL MEETING INFORMATION +Notice and access +The Company is furnishing proxy materials to its shareholders through the Internet as permitted under the rules of the SEC. Under these rules, the Company’s shareholders will receive a Notice Regarding the Availability of Proxy Materials instead of a paper copy of the Notice of 2020 Annual Meeting of Shareholders and Proxy Statement, our proxy card, and our Annual Report on Form 10-K, often referred to as “notice and access.” We believe this process gives us the opportunity to serve you more efficiently by making the proxy materials available quickly online and reducing costs associated with printing and distributing our proxy materials. This Notice includes instructions on how to access the proxy materials over the Internet or to request a paper copy of proxy materials, including a proxy card or voting instruction form. In addition and as described in the Notice, shareholders may request to receive future proxy materials in printed form by mail or electronically by email. A shareholder’s election to receive proxy materials by mail or email will remain in effect until terminated by the shareholder. +The Company's proxy materials were made available by the Board on the Internet on or about April 28, 2020 at https://www.viewproxy.com/CallonPetroleum/2020, which is the cookies-free website described in the Notice. Accordingly, we are sending the Notice to our shareholders of record and beneficial owners of our stock, and filing the Notice with the SEC, on or about April 28, 2020. Please note that the Notice identifies the proposals on which shareholders will vote at the meeting, but shareholders cannot vote by marking the Notice and returning it. The Notice provides instructions on how to vote via the Internet, by telephone or by requesting and returning a paper proxy card, or by submitting a ballot in person at the meeting. +In addition to the proxy materials being available for review at https://www.viewproxy.com/CallonPetroleum/2020, the site contains instructions on how to access the proxy materials on a website or to request free of charge printed materials, including a copy of our Annual Report on Form 10-K for the year ended December 31, 2019 as filed with the SEC. On an ongoing basis, shareholders may contact our Corporate Secretary at our principal offices in Houston, Texas to request proxy materials by mail or by e-mail. +Casting your vote +There are three methods for registered shareholders to vote by proxy without attending the Annual Meeting: +1. By Internet +You can vote via the Internet by going to the website address provided on your Notice or proxy card. You will need to use the control and request ID appearing on your proxy card to vote via the Internet. You can use the Internet to transmit your voting instructions up until 11:59 p.m. CDT on June 7, 2020. If you vote via the Internet, you do NOT need to vote by telephone or return a proxy card. Internet voting is available 24 hours a day. +2. By Telephone +You can also vote by telephone by calling the toll-free telephone number provided on your proxy card. You will need to use the control and request ID appearing on your proxy card to vote by telephone. You may transmit your voting instructions from any touch-tone telephone up until 11:59 p.m. CDT on June 7, 2020. Voting by telephone is available 24 hours a day. +3. By Mail +If you received a printed copy of the proxy card, you can vote by marking, dating and signing it, and returning it in the reply envelope provided. Please promptly mail your proxy card to ensure that we receive it prior to the closing of the polls at the Annual Meeting. +If you receive more than one Notice and/or Proxy Statement then it means that your shares are likely registered in more than one account. Please provide voting instructions for all Notices, proxy and voting instruction cards you receive. If you send us a signed proxy card without marking your voting selections, your shares will be voted on each proposal as recommended by the Board, and in the discretion of the proxy holders as to any other matters that may properly come before the meeting or any postponement or adjournment of the meeting. The Board is not presently aware of any other proposals or any other business to be considered at the Annual Meeting. +Difference between a “holder of record” and a “street name” holder +If your shares are registered directly in your name, you are considered the shareholder of record with respect to those shares. If your shares are held in a stock brokerage account or by a bank, trust or other nominee, then the broker, bank, trust or other nominee is considered to be the shareholder of record with respect to those shares. However, you are still considered to be the beneficial owner of those shares, and your shares are said to be held in “street name.” Street name holders generally cannot submit a proxy or vote their shares directly and must instead instruct the broker, bank, trust or other nominee how to vote their shares. You will receive instructions from your broker, bank or other nominee that you must follow in order for your broker, bank or other nominee to vote your shares per your instructions. Many brokerage firms and banks have a process for their beneficial +86 CALLON PETROLEUM +ANNUAL MEETING INFORMATION +holders to provide instructions via the Internet or over the telephone. If Internet or telephone voting is unavailable from your broker, bank or other nominee, please complete and return the enclosed voting instruction card in the addressed, postage paid envelope provided. +In the event you do not provide instructions on how to vote shares held in street name, your broker may have authority to vote your shares. Under the rules that govern brokers who are voting with respect to shares that are held in street name, brokers have the discretion to vote such shares on routine matters, but they are not permitted to vote (a “broker non-vote”) on non-routine or non-discretionary items absent instructions from the beneficial owner. With respect to the Annual Meeting, brokers are prohibited from exercising discretionary authority in the election of directors and the non-binding advisory proposal on executive compensation, but such brokers may exercise discretionary authority with respect to the ratification of the appointment of our independent registered public accounting firm. Your vote is especially important. Therefore, please promptly instruct your broker regarding how to vote your shares on these matters. +If you hold shares through a broker, bank or other nominee and wish to be able to vote in person at the meeting, you must obtain a legal proxy from your broker, bank or other nominee and present it to the inspector of election with your ballot at the meeting. If you have questions about how to obtain a legal proxy, please call Innisfree M&A Incorporated toll-free at (888) 750-5834. Submitting your proxy by mail will not affect your right to vote in person if you decide to attend the Annual Meeting. +Revoking a proxy +You may revoke or change a previously delivered proxy at any time before the meeting by delivering another proxy with a later date, by voting again via the Internet or by telephone, or by delivering written notice of revocation of your proxy to our Corporate Secretary at our principal offices in Houston, Texas before the beginning of the meeting. You may also revoke your proxy by attending the meeting and voting in person, although attendance at the meeting will not necessarily revoke a valid proxy that was previously delivered. If you hold shares through a broker, bank or other nominee, you must contact that nominee to revoke any prior voting instructions. You also may revoke any prior voting instructions by voting in person at the meeting if you obtain a legal proxy as described above. +Recommendation of the Board +The Board unanimously recommends you vote “FOR” each of the proposals. A proxy that is properly completed and submitted will be voted at the Annual Meeting in accordance with the instructions on the proxy. If you properly complete and submit a proxy, but do not indicate any contrary voting instructions, your shares will be voted as follows: +• +“ FOR ” the election of each of the nominees named in this Proxy Statement to the Board of Directors; +• +“ FOR ” the approval, on an advisory basis, of our executive compensation; +• +“ FOR ” the approval of the 2020 Plan; +• +“ FOR ” the ratification of the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2020; +• +“ FOR ” the approval of the Reverse Stock Split; and +• +“ FOR ” the approval of the Authorized Share Reduction. +Counting the vote +We have appointed Alliance Advisors to tabulate and certify the vote. +Quorum +A quorum is the number of shares that must be present to hold the meeting. The quorum requirement for the meeting is a majority of the outstanding shares as of the Record Date, present in person or represented by proxy. We will count your shares for purposes of determining if there is a quorum if either you are present and vote in person at the meeting or have voted on the Internet, by telephone or by properly submitting a proxy card or voting instruction card by mail. Abstentions and broker non-votes also count toward the quorum. +2020 PROXY STATEMENT 87 +ANNUAL MEETING INFORMATION +Required Vote +Proposal 1 - Election of directors +The nominees for election as directors will be elected by a plurality of all votes cast, subject to the Company’s majority voting policy. Because the number of director nominees equals the number of directors to be elected at this Annual Meeting, to be elected, each director must receive a majority of the votes cast. A majority of the votes cast means that the number of shares voted “for” a director must exceed the number of shares voted “withheld.” Abstentions and broker non-votes will not be included in determining the number of votes cast in the election of directors and will not have any effect on the outcome. This majority voting standard is discussed further under “Proposal 1 - Election of directors - Majority Vote Standard.” +Proposal 2 - Advisory vote to approve NEO compensation +The advisory vote on our executive compensation is non-binding, so no specific vote is required. Abstentions will have the same effect as a vote against this proposal, and broker non-votes will not be counted as shares present and entitled to vote, and, accordingly, will not affect the outcome of the vote on this proposal. While the law requires this advisory vote, the vote will neither be binding on us or the Board, nor will it create or imply any change in the fiduciary duties of, or impose any additional fiduciary duty on, us or the Board. However, the views of our shareholders are important to us, and our Compensation Committee will take into account the outcome of the vote when considering future executive compensation decisions. We urge you to read the section entitled “Compensation Discussion and Analysis,” which discusses in detail how our executive compensation program implements our compensation philosophy. +Proposal 3 - Approval of 2020 Plan +Pursuant to our bylaws, approval of the 2020 Plan requires the affirmative vote of a majority of the common shares present in person or by proxy and entitled to vote on the proposal. In addition to the vote required by our bylaws, under NYSE rules, approval of the 2020 Plan requires approval of a majority of votes cast on the proposal. In both cases, abstentions will have the effect of a vote cast against the proposal. Broker non-votes will not be counted as shares present and entitled to vote and so will have no effect upon the outcome of the vote. +Proposal 4 - Ratification of the appointment of the independent registered public accounting firm +The advisory vote on the ratification of the appointment of Grant Thornton LLP as our independent registered public accounting firm for the 2020 fiscal year is non-binding, so no specific vote is required. If you hold your shares through a broker and you do not instruct the broker how to vote, your broker will have the authority to vote your shares in its discretion on this proposal. An abstention will have the effect of a vote against this proposal. Because your vote is advisory, it will not be binding on the Board or the Company. However, the Board and the Audit Committee will consider the outcome of the vote in determining the selection of the Company’s independent registered public accounting firm. +Proposal 5 - Approval of the Reverse Stock Split +Approval of this proposal requires the affirmative vote, either in person or by proxy, of the holders of a majority of the issued and outstanding shares of common stock. Abstentions, failing to vote, and “broker non-votes” will have the same effect as voting “AGAINST” the adoption of this proposal because the required vote is based on the number of shares outstanding rather than the number of votes cast. +Proposal 6 - Approval of the Authorized Share Reduction +Approval of this proposal requires the affirmative vote, either in person or by proxy, of the holders of a majority of the issued and outstanding shares of common stock. Abstentions, failing to vote, and “broker non-votes” will have the same effect as voting “AGAINST” the adoption of this proposal because the required vote is based on the number of shares outstanding rather than the number of votes cast. +88 CALLON PETROLEUM +ANNUAL MEETING INFORMATION +Voting Results +We will announce the preliminary voting results at the Annual Meeting and will publish the final voting results in a current report on Form 8-K to be filed with the SEC within four business days of the meeting. +Householding Information +The SEC permits companies and intermediaries (such as brokers and banks) to satisfy delivery requirements for proxy statements and annual reports with respect to two or more shareholders sharing the same address by delivering a single proxy statement and annual report to those shareholders. This process, which is commonly referred to as “householding,” is intended to reduce the volume of duplicate information shareholders receive and reduce expenses for companies. Both we and some of our intermediaries may be householding our proxy materials and annual report. Once you have received notice from your broker or another intermediary that they will be householding materials sent to your address, householding will continue until you are notified otherwise or until you revoke your consent. Should you wish to receive separate copies of our Annual Report and Proxy Statement in the future, we will promptly deliver a separate copy of each of these documents to you if you send a written request to us at our address appearing on the cover of this proxy statement, to the attention of the Corporate Secretary. If you hold your shares through an intermediary that is householding and you want to receive separate copies of our Annual Report and Proxy Statement in the future, you should contact your bank, broker or other nominee record holder. +Financial Statements and Other Available Documents +Financial statements for our most recent fiscal year are contained in the 2019 Annual Report to Shareholders and our Report on Form 10-K for the fiscal year ended December 31, 2019, filed with the SEC on February 28, 2020. Our Annual Report, our Annual Report on Form 10-K, Corporate Governance Guidelines, Code, and charters of Board committees may be accessed by shareholders on our website at www.callon.com or printed copies are available upon written request to Michol Ecklund, Corporate Secretary at our principal executive office in Houston, Texas. +Other Business +The Board is not aware of any matter to be acted upon at the Annual Meeting other than those described above. If other business properly comes before the Annual Meeting, the persons named on the proxy will vote the proxy in accordance with what they consider to be in the best interests of us and our shareholders. Please sign, date, and return your proxy promptly to avoid unnecessary expense. All shareholders are urged, regardless of the number of shares owned, to participate in the Annual Meeting by voting their shares. +By Order of the Board of Directors, +Joseph C. Gatto, Jr. +President, Chief Executive Officer and Director +Houston, Texas +April 28, 2020 +2020 PROXY STATEMENT 89 +APPENDIX A +NON-GAAP RECONCILIATIONS +Adjusted EBITDA Reconciliation (in thousands) : +2019 +Net income +$ +67,928 +Adjustments: +Loss on derivatives, net +62,109 +Non-cash stock-based compensation expense +11,364 +Cash paid for commodity derivative settlement, net +(3,789 +) +Merger-related expenses +74,363 +Other operating expense +1,076 +Income tax expense +35,301 +Interest expense +2,907 +Depreciation, depletion and amortization +244,991 +Accretion expense +945 +Loss on extinguishment of debt +4,881 +Adjusted EBITDA +$ +502,076 +PV-10 Reconciliation (in thousands) : +2019 +Standardized measure of discounted future net cash flows +$ +4,951,026 +Add: present value of future income taxes discounted at 10% per annum +418,555 +Total Proved Reserves - PV-10 +5,369,581 +Total Proved Developed Reserves - PV-10 +3,246,802 +Total Proved Undeveloped Reserves - PV-10 +$ +2,122,779 +90 CALLON PETROLEUM +APPENDIX B +CALLON PETROLEUM COMPANY +2020 OMNIBUS INCENTIVE PLAN +1. +Plan . This Callon Petroleum Company 2020 Omnibus Incentive Plan (this “ Plan ”), is effective as of [•], 2020 (the “ Effective Date ”), was adopted by the Company to reward and provide incentives to certain employees, independent contractors and directors by enabling them to acquire awards from the Company, including Awards related to shares of common stock of the Company. +2. +Definitions . As used herein, the terms set forth below shall have the following respective meanings: +“ Affiliate ” has the meaning ascribed to such term in Rule 12b-2 of the General Rules and Regulations of the Exchange Act. +“ Award ” means the grant of any Option, SAR, Stock Award, Cash Award or Performance Award whether granted singly, in combination or in tandem, to a Participant pursuant to such applicable terms, conditions and limitations as the Committee may establish in order to fulfill the objectives of this Plan. +“ Award Agreement ” means the document (in written or electronic form) setting forth the terms, conditions and limitations applicable to an Award. Such agreement shall be written except that the Committee may, in its discretion, require or allow that the Participant electronically execute or accept such Award Agreement. +“ Board ” means the Board of Directors of the Company. +“ Cash Award ” means an Award denominated in cash. +“ Change in Contro l ” means the occurrence of one or more of the following: +(a) +Change in Ownership . A change in ownership of the Company occurs on the date that any Person, other than (1) the Company or any of its Subsidiaries, (2) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Affiliates, (3) an underwriter temporarily holding stock pursuant to an offering of such stock, or (4) a corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of the Company’s stock (each of (1) through (4) an “Exempt Person”), acquires ownership of the Company’s stock that, together with stock held by such Person, constitutes more than fifty percent (50%) of the total fair market value or total voting power of the Company’s Voting Stock. However, if any Person is considered to own already more than fifty percent (50%) of the total fair market value or total voting power of the Company’s Voting Stock, the acquisition of additional stock by the same Person is not considered to be a Change in Control. In addition, if any Person has effective control of the Company through ownership of thirty percent (30%) or more of the total voting power of the Company’s Voting Stock, as discussed in paragraph (b) below, the acquisition of additional control of the Company by the same Person is not considered to cause a Change in Control pursuant to this paragraph (a); or +(b) +Change in Effective Control . Even though the Company may not have undergone a change in ownership under paragraph (a) above, a change in the effective control of the Company occurs on either of the following dates: (1) the date that any Person (other than an Exempt Person) acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such Person) ownership of the Company’s stock possessing thirty percent (30%) or more of the total voting power of the Company’s Voting Stock. However, if any Person owns thirty percent (30%) or more of the total voting power of the Company’s Voting Stock, the acquisition of additional control of the Company by the same Person is not considered to cause a Change in Control pursuant to this subparagraph (b)(1); or (2) the date that during any period of three consecutive years, individuals who at the beginning of such period were members of the Board cease for any reason to constitute at least a majority thereof unless the election, or the nomination for election by the Company’s shareholders, of each new director was approved by a vote of at least a majority of the directors then still in office who were directors at the beginning of such period or whose election or nomination was previously so approved; provided, however, that any such director shall not be considered to be approved by the Board if his or her initial assumption of office occurs as a result of an actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or +2020 PROXY STATEMENT 91 +APPENDIX B +(c) +Change in Ownership of Substantial Portion of Assets . A change in the ownership of a substantial portion of the Company’s assets occurs on the date that a Person acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such Person) assets of the Company that have a total gross fair market value equal to at least forty percent (40%) of the total gross fair market value of all of the Company’s assets immediately before such acquisition or acquisitions. However, there is no Change in Control when there is such a transfer to an entity that is controlled by the shareholders of the Company immediately after the transfer, through a transfer to (1) a shareholder of the Company (immediately before the asset transfer) in exchange for or with respect to the Common Stock; (2) an entity, at least fifty percent (50%) of the total value or voting power of the stock of which is owned, directly or indirectly, by the Company; (3) a Person that owns directly or indirectly, at least fifty percent (50%) of the total value or voting power of the Company’s outstanding Voting Stock; or (4) an entity, at least fifty percent (50%) of the total value or voting power of the stock of which is owned by a Person that owns, directly or indirectly, at least fifty percent (50%) of the total value or voting power of the Company’s outstanding Voting Stock. +Notwithstanding the foregoing, no Change in Control payment event shall be deemed to have occurred with respect to an Award that is subject to Section 409A of the Code unless such event constitutes a permissible payment event specified in Section 409A of the Code and the Treasury regulations promulgated thereunder. +“ Code ” means the Internal Revenue Code of 1986, as amended from time to time. +“ Committee ” means (i) the Compensation Committee of the Board or (ii) such other committee of the Board as is designated by the Board to administer this Plan or (iii) to the extent contemplated hereby, the Board. +“ Common Stock ” means the common stock, par value $.01 per share, of the Company. +“ Company ” means Callon Petroleum Company, a Delaware corporation. +“ Director ” means an individual serving as a member of the Board. +“ Dividend Equivalents ” means, with respect to the shares of Common Stock subject to a Stock Award other than Restricted Stock, an amount equal to all dividends and other distributions (or the economic equivalent thereof) that are payable to shareholders of record during the Restriction Period on a like number of shares of Common Stock. +“ Employee ” means an employee of the Company or any of its Subsidiaries. +“ Exchange Act ” means the Securities Exchange Act of 1934, as amended from time to time. +“ Fair Market Value ” of a share of Common Stock means, as of a particular date, (i)(A) if the shares of Common Stock are listed or on a national securities exchange (including the NASDAQ Global Select Market), the closing price per share of the Common Stock on the consolidated transaction reporting system for the principal national securities exchange on which shares of Common Stock are listed on that date, or, if there shall have been no such sale so reported on that date, on the last preceding date on which such a sale was so reported, or, at the discretion of the Committee, the price prevailing on the exchange at the time of exercise or other relevant event (as determined under procedures established by the Committee) including the average of the closing bid and asked price on that date, (B) if the shares of Common Stock are not so listed but are listed or quoted on another securities exchange or market, the closing price per share of Common Stock reported on the principal securities exchange or market on which the shares of Common Stock are traded (as determined by the Committee), or, if there shall have been no such sale so reported on that date, on the last preceding date on which such a sale was so reported or, at the discretion of the Committee, the price prevailing on such principal securities exchange or market at the time of exercise or other relevant event, including the average of the closing bid and asked price on that date, or, if there are no quotations available for such date, on the last preceding date on which such quotations shall be available, (C) if the shares of Common Stock are not publicly traded, the most recent value determined by an independent appraiser appointed by the Company for such purpose, or (D) if none of (A)-(C) are applicable, the fair market value of a share of Common Stock as determined in good faith by the Committee; or (ii) if applicable, the price per share as determined in accordance with the procedures of a third party administrator retained by the Company to administer this Plan and as approved by the Committee. +“ Incentive Option ” means an Option that is intended to comply with the requirements set forth in Section 422 of the Code. +“ Independent Contractor ” means an individual providing services to the Company or any of its Subsidiaries, who is not an Employee. An Independent Contractor can include an individual who is serving as a Non-employee Director. +92 CALLON PETROLEUM +APPENDIX B +“ Non-employee Director ” means a Director who is not an Employee. A Non-employee Director may, in the discretion of the Committee, receive an Award both in the capacity as a Non-employee Director and Independent Contractor. +“ Nonqualified Stock Option ” means an Option that is not an Incentive Option. +“ Option ” means a right to purchase a specified number of shares of Common Stock at a specified price, which is either an Incentive Option or a Nonqualified Stock Option. +“ Participant ” means an Employee, Non-employee Director or Independent Contractor to whom an Award has been made under this Plan. +“ Performance Award ” means an award made pursuant to this Plan to a Participant which is subject to the attainment of one or more Performance Goals. +“ Performance Goal ” means a standard established by the Committee, to determine in whole or in part whether a Performance Award shall be earned. +“ Person ” shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a “group” as defined in Section 13(d) thereof. +“ Prior Plans ” means the Callon Petroleum Company 2018 Omnibus Incentive Plan and the Callon Petroleum 2011 Omnibus Incentive Plan, as thereafter amended from time to time. +“ Restricted Stock ” means any Common Stock that is restricted or subject to forfeiture provisions. +“ Restricted Stock Unit ” means a right to receive a share of Common Stock or the value thereof on such terms and conditions as may be established by the Committee. For the avoidance of doubt, such term includes phantom shares and phantom stock units. +“ Restriction Period ” means a period of time beginning as of the date upon which a Stock Award is made pursuant to this Plan and ending as of the date upon which the Common Stock subject to such Stock Award is deliverable or no longer restricted or such Stock Award is no longer subject to forfeiture provisions. +“ Rule 16b-3 ” means Rule 16b-3 promulgated under the Exchange Act, or any successor rule. +“ SAR ” means a right to receive a payment, in cash or Common Stock, equal to the excess of the Fair Market Value or other specified valuation of a specified number of shares of Common Stock on the date the right is exercised over a specified strike price, in each case, as determined by the Committee. +“ Stock Award ” means an award in the form of shares of Common Stock or units denominated in shares of Common Stock, including Restricted Stock and Restricted Stock Units. For the avoidance of doubt, a Stock Award does not include an Option or SAR. +“ Subsidiary ” means (i) in the case of a corporation, any corporation of which the Company directly or indirectly owns shares representing more than 50% of the combined voting power of the shares of all classes or series of capital stock of such corporation which have the right to vote generally on matters submitted to a vote of the shareholders of such corporation and (ii) in the case of a partnership or other business entity not organized as a corporation, any such business entity of which the Company directly or indirectly owns more than 50% of the voting, capital or profits interests (whether in the form of partnership interests, membership interests or otherwise). +“ Voting Stock ” shall mean stock of any class or kind having the power to vote generally for the election of Directors. +3. +Eligibility . All Employees, Non-employee Directors and Independent Contractors are eligible for Awards under this Plan in the sole discretion of the Committee. +4. +Common Stock Available for Awards . Subject to the provisions of Section 15 hereof, there shall be available for Awards under this Plan granted wholly or partly in Common Stock (including rights or Options that may be exercised for or settled in Common Stock) an aggregate of 13,250,000 shares of Common Stock (“ Share Reserve ”), plus the shares remaining available for awards under the Prior Plans as of the Effective Date, all of which shall be available for Incentive Options. The number of shares of Common Stock that are subject to Awards under this Plan or the Prior Plans, that are forfeited or terminated, expire unexercised, are settled in cash in lieu of Common Stock, or are exchanged for Awards that do not involve Common Stock, and the number of shares of Common Stock that are subject to Awards under this Plan or Prior Plans that are withheld to satisfy withholding taxes in respect to such awards shall again immediately become available for additional Awards hereunder (subject to the following sentence). Notwithstanding the foregoing, the following shares of Common Stock may not again be made available for issuance as Awards under this Plan: (i) shares of Common Stock not issued or delivered as a result of the net +2020 PROXY STATEMENT 93 +APPENDIX B +settlement of a stock-settled SAR or Option, (ii) shares of Common Stock used to pay the exercise price or withholding taxes related to an outstanding Option or SAR, or (iii) shares of Common Stock repurchased on the open market with the proceeds of the option exercise price. The Board and the appropriate officers of the Company shall from time to time take whatever actions are necessary to file any required documents with governmental authorities, stock exchanges and transaction reporting systems to ensure that shares of Common Stock are available for issuance pursuant to Awards. +5. +Administration . +(a) +Except as otherwise provided in this Plan with respect to actions or determinations by the Board, this Plan shall be administered by the Committee. To the extent required in order for Awards to be exempt from Section 16 of the Exchange Act by virtue of the provisions of Rule 16b-3, (i) the Committee shall consist of at least two members of the Board who meet the requirements of the definition of “Non-employee Director” set forth in Rule 16b-3 (b)(3)(i) promulgated under the Exchange Act or (ii) Awards may be granted by, and this Plan may be administered by, the Board. +(b) +Subject to the provisions hereof, the Committee shall have full and exclusive power and authority to administer this Plan and to take all actions that are specifically contemplated hereby or are necessary or appropriate in connection with the administration hereof. The Committee shall also have full and exclusive power to interpret this Plan and to adopt such rules, regulations and guidelines for carrying out this Plan as it may deem necessary or proper. The Committee may, in its discretion, provide for the extension of the exercisability of an Award, accelerate the vesting or exercisability of an Award, eliminate or make less restrictive any restrictions contained in an Award, waive any restriction or other provision of this Plan or an Award or otherwise amend or modify an Award in any manner that is either (i) not adverse to the Participant to whom such Award was granted or (ii) consented to by such Participant. The Committee may make an Award to an individual who it expects to become an Employee, Non-employee Director or Independent Contractor of the Company or any of its Subsidiaries within the next six months, with such award being subject to the individual actually becoming an Employee, Non-employee Director or Independent Contractor, as applicable, within such time period, and subject to such other terms and conditions as may be established by the Committee. The Committee may correct any defect or supply any omission or reconcile any inconsistency in this Plan or in any Award in the manner and to the extent the Committee deems necessary or desirable to further the purposes of this Plan. Any decision of the Committee in the interpretation and administration of this Plan shall lie within its sole and absolute discretion and shall be final, conclusive and binding on all parties concerned. The Board shall have the same powers as the Committee with respect to Awards granted to Non-employee Directors. +(c) +Notwithstanding the foregoing, except in connection with a transaction involving the Company or its capitalization (as provided in Section 15), the terms of outstanding Awards may not be amended without approval of the shareholders of the Company to (i) reduce the exercise price of outstanding Options or SARs or (ii) cancel, exchange, substitute, buyout or surrender outstanding Options or SARs in exchange for cash or other Awards when the exercise price per share of the original Options or SARs exceeds the Fair Market Value of one share of Common Stock, (iii) take any other action with respect to an Option or SAR that would be treated as a repricing under the rules and regulations of the principal national securities exchange on which the shares of Common Stock are listed or (iv) permit the grant of any Options or SARs that contains a so-called “reload” feature under which additional Options, SARs or other Awards are granted automatically to the Participant upon exercise of the original Option or SAR. +(d) +No member of the Committee or the Board or officer of the Company to whom the Committee has delegated authority in accordance with the provisions of Section 6 of this Plan shall be liable for anything done or omitted to be done by him or her, by any member of the Committee or by any officer of the Company in connection with the performance of any duties under this Plan, except for his or her own willful misconduct or as expressly provided by statute. +6. +Delegation of Authority . To the extent allowed by applicable law, the Committee may delegate to the Chief Executive Officer, to other senior officers of the Company or to other committees of the Board its duties under this Plan pursuant to such conditions or limitations as the Committee may establish, except that the Committee may not delegate to any person the authority to grant Awards to, or take other action with respect to, Participants who are subject to Section 16 of the Exchange Act. +7. +Employee and Independent Contractor Awards . The Committee shall determine the type or types of Awards to be made under this Plan and shall designate from time to time the Employees and Independent Contractors who are to be the recipients of such Awards. Each Award may be embodied in an Award Agreement, which shall contain such terms, conditions and limitations as shall be determined by the Committee in its sole discretion, including any treatment upon a Change in Control, and shall be accepted by the Participant to whom the Award is made. Awards may consist of those listed in this Section 7 and may be granted singly, in combination or in tandem. Awards may also be made in combination or in tandem with, in replacement of, or as alternatives to, grants or rights under this Plan or any other employee plan of the Company or any of its Subsidiaries, including the plan of any acquired entity. All or part of an Award may be subject to conditions established by the Committee, which may +94 CALLON PETROLEUM +APPENDIX B +include, but are not limited to, continuous service with the Company, its Affiliates and Subsidiaries, or achievement of specific performance or business objectives. Upon the termination of service with the Company, its Affiliates and Subsidiaries of a Participant, any unexercised, deferred, unvested or unpaid Awards shall +(a) +Stock Option . An Award may be in the form of an Option. An Option awarded pursuant to this Plan may consist of an Incentive Option or a Nonqualified Option. The price at which a share of Common Stock may be purchased upon the exercise of an Option shall be not less than the Fair Market Value of the Common Stock on the date of grant. Subject to the foregoing provisions, the terms, conditions and limitations applicable to any Options awarded pursuant to this Plan, including the term of any Options and the date or dates upon which they become exercisable, shall be determined by the Committee. Only Employees may be granted Incentive Options. The term of Options shall not exceed ten years from the date of grant. Any Option (i) that remains outstanding as of the last day of its term, (ii) has an exercise price per share that is less than the Fair Market Value of a share of Common Stock as of such day and (iii) whose exercise is prohibited as of such day pursuant to the operation of the Company’s insider trading policy, shall be automatically exercised (without any action on the part of the Participant holding such Option) by (A) foregoing the delivery of shares of Common Stock otherwise deliverable upon the exercise of the Option pursuant to Section 10 in an amount sufficient to pay the exercise price of the Option and (B) satisfying tax withholding obligations pursuant to Section 11 by withholding from the shares of Common Stock otherwise deliverable upon the exercise of the Option. Each Participant who receives Options pursuant to the Plan shall be deemed to have accepted this automatic exercise provision as a condition of receiving the Option. +(b) +Stock Appreciation Right . An Award may be in the form of a SAR. The per share strike price for a SAR shall be not less than the Fair Market Value of the Common Stock on the date on which the SAR is granted. The terms, conditions and limitations applicable to any SARs awarded pursuant to this Plan, including the term of any SARs, whether the SAR will be settled in cash or stock and the date or dates upon which they become exercisable, shall be determined by the Committee. The term of SARs shall not exceed ten years from the date of grant. Any SAR (i) that remains outstanding as of the last day of its term, (ii) has a strike price per share that is less than the Fair Market Value of a share of Common Stock as of such day and (iii) whose exercise is prohibited as of such day pursuant to the operation of the Company’s insider trading policy, shall be automatically exercised (without any action on the part of the Participant holding such SAR) and any tax withholding obligations will be satisfied pursuant to Section 11 by withholding from the cash or shares of Common Stock otherwise deliverable upon the exercise of the SAR. Each Participant who receives SARs pursuant to the Plan shall be deemed to have accepted this automatic exercise provision as a condition of receiving the SAR. +(c) +Stock Award . An Award may be in the form of a Stock Award. The terms, conditions and limitations applicable to any Stock Awards granted pursuant to this Plan shall be determined by the Committee. +(d) +Cash Award . An Award may be in the form of a Cash Award. The terms, conditions and limitations applicable to any Cash Awards granted pursuant to this Plan shall be determined by the Committee. +(e) +Performance Award . Without limiting the type or number of Awards that may be made under the other provisions of this Plan, an Award may be in the form of a Performance Award. A Performance Award shall be paid, vested or otherwise deliverable solely on account of the attainment of one or more Performance Goals, either individually or in any combination, established by the Committee and specified in the award agreement. +Unless otherwise stated, such a Performance Goal need not be based upon an increase or positive result under a particular business criterion and could include, for example, maintaining the status quo or limiting economic losses (measured, in each case, by reference to specific business criteria). The amount of cash or shares payable or vested pursuant to Performance Awards may be adjusted upward or downward, either on a formula or discretionary basis or any combination, as the Committee determines. Subject to the foregoing provisions, the terms, conditions and limitations applicable to any Performance Awards made pursuant to this Plan shall be determined by the Committee. +8. +Director Awards . +(a) +The Board has the sole authority to grant Awards to Non-employee Directors from time to time in accordance with this Section 8. Such Awards may consist of the forms of Award described in Section 7, other than Incentive Options, and shall be granted subject to such terms and conditions as specified in Section 7. +(b) +No Non-employee Director may be granted during any calendar year Awards having a fair value determined on the date of grant when added to all cash compensation paid to the Non-employee Director (in his capacity as Non-employee Director) during the same calendar year in excess of $1,000,000. +2020 PROXY STATEMENT 95 +APPENDIX B +9. +Payment of Awards . +(a) +General . Payment of Awards may be made in the form of cash or Common Stock, or a combination thereof, and may include such restrictions as the Committee shall determine, including, in the case of Common Stock, restrictions on transfer and forfeiture provisions. If payment of an Award is made in the form of Restricted Stock, the right to receive such shares shall be evidenced by book entry registration or in such other manner as the Committee may determine. Any statement of ownership evidencing such Restricted Stock shall contain appropriate legends and restrictions that describe the terms and conditions of the restrictions applicable thereto. +(b) +Dividends and Interest . In the discretion of the Committee, rights to dividends or Dividend Equivalents may be extended to and made part of any Stock Award or Performance Award, but such dividends or Dividend Equivalents shall be accrued and held by the Company and paid, without interest, within 10 days following the lapse of the restrictions on the Stock Award or Performance Award. For the avoidance of doubt, dividends and Dividend Equivalents will not, in any event, be payable until the restrictions on the underlying Stock Award or Performance Award have lapsed. In the event the Stock +Award or Performance Award is forfeited, dividends and Dividend Equivalents paid with respect to such shares during the Restriction Period shall also be forfeited. No Dividend Equivalents may be paid in respect of an Award of Options or SARs. +10. +Stock Option Exercise . The price at which shares of Common Stock may be purchased under an Option shall be paid in full at the time of exercise in cash or, if elected by the optionee, the optionee may purchase such shares by means of tendering Common Stock valued at Fair Market Value on the date of exercise, or any combination thereof. The Committee shall determine acceptable methods for Participants to tender Common Stock. The Committee may provide for procedures to permit the exercise or purchase of such Awards by foregoing the delivery of shares of Common Stock otherwise deliverable upon the exercise of the Option or by use of the proceeds to be received from the sale of Common Stock issuable pursuant to an Award. +11. +Taxes . The Company shall have the right to deduct applicable taxes from any Award payment and withhold, at the time of delivery or vesting of cash or shares of Common Stock under this Plan, an appropriate amount of cash or number of shares of Common Stock or a combination thereof for payment of taxes required by law or to take such other action as may be necessary in the opinion of the Company to satisfy all obligations for withholding of such taxes. The Committee may also permit withholding to be satisfied by (i) the transfer to the Company of shares of Common Stock theretofore owned by the holder of the Award or (ii) withholding from the shares otherwise deliverable under the Award, in either case with respect to which withholding is required, up to the maximum tax rate applicable to the Participant, as determined by the Committee. If shares of Common Stock are used to satisfy tax withholding, such shares shall be valued based on the Fair Market Value when the tax withholding is required to be made. +12. +Amendment, Modification, Suspension or Termination . The Board may amend, modify, suspend or terminate this Plan for the purpose of meeting or addressing any changes in legal requirements or for any other purpose permitted by law, except that (i) no amendment or alteration that would adversely affect the rights of any Participant under any Award previously granted to such Participant shall be made without the consent of such Participant and (ii) no amendment or alteration shall be effective prior to its approval by the shareholders of the Company to the extent such approval is then required pursuant to Rule 16b-3 in order to preserve the applicability of any exemption provided by such rule to any Award then outstanding (unless the holder of such Award consents) or to the extent shareholder approval is otherwise required by applicable legal requirements. +13. +Minimum Vesting . Notwithstanding anything to the contrary in the Plan, each Award Agreement will require that an Award be subject to a minimum vesting period of at least one (1) year commencing from the date of grant or, for any Participant who is a “Non-Employee Director”, a vesting period of less than one year from the date of grant, but not less than 50 weeks, so long as such Awards are granted in connection with a regular annual meeting of shareholders and vest at the next annual meeting of the shareholders following the grant; provided that (a) up to five percent (5%) of the maximum number of shares available for issuance pursuant to the Plan may be granted without being subject to the foregoing restrictions and (b) any dividends or Dividend Equivalents issued in connection with any Award granted at any time under the Plan shall not be subject to or counted for either such restrictions or such five percent (5%) share issuance limit. The foregoing five percent (5%) share issuance limit shall be subject to adjustment consistent with the adjustment provisions of Section 15 and the share usage rules of Section 4. For the purpose of clarity, this Section 13 will not prevent the Committee from accelerating the vesting of any Award in accordance with any of the provisions set forth in the Plan upon the occurrence of a specific event, such as a termination of a Participant's employment or service or a Change in Control or other corporate transaction. +96 CALLON PETROLEUM +APPENDIX B +14. +Assignability . Unless otherwise determined by the Committee and provided in the Award Agreement, no Award or any other benefit under this Plan constituting a derivative security within the meaning of Rule 16a-1(c) under the Exchange Act shall be assignable or otherwise transferable except by will or the laws of descent and distribution or pursuant to a qualified domestic relations order in a form acceptable to the Committee. The Committee may prescribe and include in applicable Award Agreements other restrictions on transfer. Any attempted assignment of an Award or any other benefit under this Plan in violation of this Section 14 shall be null and void. +15. +Adjustments . +(a) +The existence of outstanding Awards shall not affect in any manner the right or power of the Company or its shareholders to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in the capital stock of the Company or its business or any merger or consolidation of the Company, or any issue of bonds, debentures, preferred or prior preference stock (whether or not such issue is prior to, on a parity with or junior to the Common Stock) or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding of any kind, whether or not of a character similar to that of the acts or proceedings enumerated above. +(b) +In the event of any subdivision or consolidation of outstanding shares of Common Stock, declaration of a dividend payable in shares of Common Stock or other stock split, the adoption by the Company of any plan of exchange affecting the Common Stock or any distribution to holders of Common Stock of securities or property (other than normal cash dividends or dividends payable in Common Stock), (i) the number of shares of Common Stock reserved under this Plan, (ii) the number of shares of Common Stock covered by Awards in the form of Common Stock or units denominated in Common Stock, (iii) the exercise or other price in respect of such Awards, and (iv) the appropriate Fair Market Value and other price determinations for such Awards shall each be proportionately adjusted by the Board to reflect such event; provided that such adjustments shall only be such as are necessary to maintain the proportionate interest of the holders of the Awards and preserve, without exceeding, the value of such Awards. +(c) +In the event of a corporate merger, consolidation, acquisition of property or stock, separation, reorganization or liquidation, the Board may make such adjustments to outstanding Awards or other provisions for the disposition of outstanding Awards as it deems equitable, and shall be authorized, in its discretion, (i) to provide for the substitution of a new Award or other arrangement (which, if applicable, may be exercisable for such property or stock as the Board determines) for an outstanding Award or the assumption of an outstanding Award, regardless of whether in a transaction to which Section 424(a) of the Code applies, (ii) to provide, prior to the transaction, for the acceleration of the vesting and exercisability of, or lapse of restrictions with respect to, the outstanding Award and, if the transaction is a cash merger, to provide for the termination of any portion of the Award that remains unexercised at the time of such transaction or (iii) to provide for the acceleration of the vesting and exercisability of an outstanding Award and the cancellation thereof in exchange for such payment of such cash or property as shall be determined by the Board in its sole discretion, which for the avoidance of doubt in the case of Options or SARs (whether stock- or cash-settled) shall be the excess, if any, of the Fair Market Value of the shares of Common Stock subject to the Option or SAR on such date over the aggregate exercise price of such Award; provided , however , that no such adjustment shall increase the aggregate value of any outstanding Award. No adjustment or substitution pursuant to this Section 15 shall be made in a manner that results in noncompliance with Section 409A of the Code, to the extent applicable. +16. +Restrictions . No Common Stock or other form of payment shall be issued with respect to any Award unless the Company shall be satisfied based on the advice of its counsel that such issuance will be in compliance with applicable federal and state securities laws. It is the intent of the Company that grants of Awards under this Plan comply with Rule 16b-3 with respect to persons subject to Section 16 of the Exchange Act unless otherwise provided herein or in an Award Agreement and that any ambiguities or inconsistencies in the construction of such an Award or this Plan be interpreted to give effect to such intention. Certificates evidencing shares of Common Stock delivered under this Plan (to the extent that such shares are so evidenced) may be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations and other requirements of the Securities and Exchange Commission, any securities exchange or transaction reporting system upon which the Common Stock is then listed or to which it is admitted for quotation and any applicable federal or state securities law. The Committee may cause a legend or legends to be placed upon such certificates (if any) to make appropriate reference to such restrictions. The Committee may also impose such restrictions, conditions or limitations as it determines appropriate as to the timing and manner of any resales by a Participant, other subsequent transfers by the Participant of any shares of Common Stock issued as a result of or under an Award, or the exercise of Options and SARs, including without limitation, restrictions under an insider trading policy. +2020 PROXY STATEMENT 97 +APPENDIX B +17. +Unfunded Plan . Insofar as it provides for Awards of cash, Common Stock or rights thereto, this Plan shall be unfunded. Although bookkeeping accounts may be established with respect to Participants who are entitled to cash, Common Stock or rights thereto under this Plan, any such accounts shall be used merely as a bookkeeping convenience. The Company shall not be required to segregate any assets that may at any time be represented by cash, Common Stock or rights thereto, nor shall this Plan be construed as providing for such segregation, nor shall the Company, the Board or the Committee be deemed to be a trustee of any cash, Common Stock or rights thereto to be granted under this Plan. Any liability or obligation of the Company to any Participant with respect to an Award of cash, Common Stock or rights thereto under this Plan shall be based solely upon any contractual obligations that may be created by this Plan and any Award Agreement, and no such liability or obligation of the Company shall be deemed to be secured by any pledge or other encumbrance on any property of the Company. Neither the Company nor the Board nor the Committee shall be required to give any security or bond for the performance of any obligation that may be created by this Plan. +18. +Section 409A of the Code . All Awards under this Plan are intended either to be exempt from, or to comply with the requirements of Section 409A, and this Plan and all Awards shall be interpreted and operated in a manner consistent with that intention. Notwithstanding anything in this Plan to the contrary, if any Plan provision or Award under this Plan would result in the imposition of an applicable tax under Section 409A, that Plan provision or Award shall be reformed to avoid imposition of the applicable tax and no such action shall be deemed to adversely affect the Participant’s rights to an Award. +19. +Governing Law . This Plan and all determinations made and actions taken pursuant hereto, to the extent not otherwise governed by mandatory provisions of the Code or the securities laws of the United States, shall be governed by and construed in accordance with the laws of the State of Delaware. +20. +Clawback . To the extent required by applicable law or any applicable securities exchange listing standards, or as otherwise determined by the Committee, Awards and amounts paid or payable pursuant to or with respect to Awards shall be subject to the provisions of any clawback policy implemented by the Company, which clawback policy may provide for forfeiture, repurchase or recoupment of Awards and amounts paid or payable pursuant to or with respect to Awards. Notwithstanding any provision of this Plan or any Award Agreement to the contrary, the Company reserves the right, without the consent of any Participant, to adopt any such clawback policies and procedures. +21. +No Right to Employment or Continued Service . Nothing in this Plan or an Award Agreement shall interfere with or limit in any way the right of the Company or a Subsidiary to terminate any Participant’s employment or other service relationship at any time, nor confer upon any Participant any right to continue in the capacity in which he or she is employed or otherwise serves the Company or any Subsidiary. Further, nothing in this Plan or an Award Agreement constitutes any assurance or obligation of the Board to nominate any Non-employee Director for re-election by the Company’s shareholders. +22. +Successors . All obligations of the Company under this Plan with respect to Awards granted hereunder shall be binding on any successor to the Company by merger, consolidation or otherwise. +23. +Effectiveness . This Plan, as approved by the Board on April 17, 2020, shall be effective as of the Effective Date, the date on which it was approved by the shareholders of the Company. This Plan shall continue in effect for a term of ten years after the Effective Date, unless sooner terminated by action of the Board. Notwithstanding the foregoing, the adoption of this Plan is expressly conditioned upon the approval by the holders of a majority of shares of Common Stock present, or represented, and entitled to vote at a meeting of the Company’s shareholders at the Company’s 2020 annual shareholders meeting to be held on June 8, 2020, or any adjournment or postponement thereof. If the shareholders of the Company should fail to so approve this Plan on such date, this Plan shall not be of any force or effect and the Prior Plan shall continue in force and effect. +IN WITNESS WHEREOF, the Company has caused this Plan to be executed by its duly authorized officer. +CALLON PETROLEUM COMPANY +By: +Title: +98 CALLON PETROLEUM +APPENDIX C +FORM OF +CERTIFICATE OF AMENDMENT OF +CERTIFICATE OF INCORPORATION OF +CALLON PETROLEUM COMPANY +The undersigned, Michol L. Ecklund, Corporate Secretary of Callon Petroleum Company (the “Corporation” ), a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the “DGCL” ), does hereby certify as follows: +FIRST: The name of the Corporation is Callon Petroleum Company. +SECOND: This Amendment (the “Amendment” ) to the Certificate of Incorporation of the Corporation (the “Certificate” ) was duly adopted in accordance with the provisions of Section 242 of the Delaware General Corporation Law. The Board of Directors has duly adopted resolutions setting forth and declaring advisable this Amendment and the holders of a majority of the outstanding stock of the Corporation entitled to vote at the meeting of the stockholders called and held upon notice in accordance with Section 222 of the General Corporation Law of the State of Delaware for the purpose of voting on the Amendment have voted in favor of this Amendment. +THIRD: The Certificate is hereby amended by amending and restating the first sentence of Article Four to be and read as follows: +The Corporation shall have authority to issue two classes of stock, and the total number authorized shall be [10,500,000-52,500,000] shares of Common Stock, par value $.01 per share, and 2,500,000 shares of Preferred Stock, par value $.01 per share. +Each [10-50] shares of the Corporation’s common stock, par value $0.01 per share (the “Common Stock” ) issued and outstanding on the effective date of this Amendment shall automatically be combined into one validly issued, fully paid and non-assessable share of Common Stock, without any action by the holder thereof, subject to the treatment of fractional interests as described below (the “Reverse Stock Split” ). No certificates representing fractional shares of Common Stock shall be issued in connection with the Reverse Stock Split. Stockholders who otherwise would be entitled to receive fractional share interests of Common Stock in connection with the Reverse Stock Split shall, with respect to such fractional interest, be entitled to receive cash, without interest, in lieu of fractional shares of Common Stock, in an amount equal to the proceeds attributable to the sale of such fractional interest following the aggregation and sale by the Company’s transfer agent of all fractional shares otherwise issuable. Each certificate that prior to such combination represented shares of Common Stock ( “Old Certificates” ) shall thereafter represent that number of shares of Common Stock into which the shares of Common Stock represented by the Old Certificate shall have been combined, subject to the elimination of fractional share interests as described above. +IN WITNESS WHEREOF , the undersigned has executed this amendment on behalf of the Corporation and has attested such execution and does verify and affirm, under penalty of perjury, that this amendment is the act and deed of the Corporation and that the facts stated herein are true as of this [•] day of [•], [•]. +CALLON PETROLEUM COMPANY +By: +Michol L. Ecklund, Corporate Secretary +2020 PROXY STATEMENT 99 +CALLON PETROLEUM COMPANY +ANNUAL MEETING OF SHAREHOLDERS +JUNE 8, 2020 AT 9:00 A.M. CDT +SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF CALLON PETROLEUM COMPANY +The undersigned hereby appoints Michol L. Ecklund, as proxy with full power of substitution and re-substitution, to vote all shares of Common Stock of Callon Petroleum Company that the undersigned is entitled to vote at the Annual Meeting of Shareholders thereof to be held at the La Scala Meeting Room of The Moran Hotel, 800 Sorella Court, Houston, Texas 77024 on June 8, 2020, or at any adjournment or postponement thereof, as follows: +ALL SHARES WILL BE VOTED AS DIRECTED HEREIN AND, UNLESS OTHERWISE DIRECTED, WILL BE VOTED “FOR” PROPOSAL 1 (ALL NOMINEES), “FOR” PROPOSAL 2, “FOR” PROPOSAL 3, “FOR” PROPOSAL 4, “FOR” PROPOSAL 5, AND “FOR” PROPOSAL 6, AND IN ACCORDANCE WITH THE DISCRETION OF THE PERSON VOTING THE PROXY WITH RESPECT TO ANY OTHER BUSINESS PROPERLY BROUGHT BEFORE THE MEETING OR AT ANY ADJOURNMENT OR POSTPONEMENT THEREOF. The undersigned shareholder further hereby ratifies all that the said proxy may do by virtue hereof. If any nominee named on the reverse side is unable to serve or for good cause will not serve as a director, the person named as proxy shall have the authority to vote for any other person who may be nominated at the instruction and discretion of the Board of Directors or an authorized committee thereof. +The undersigned shareholder hereby revokes any other proxy heretofore executed by the undersigned for the Annual Meeting and acknowledges receipt of the Notice of the 2020 Annual Meeting of Shareholders and Proxy Statement dated April 28, 2020 and the Annual Report to Shareholders furnished in connection therewith. +You are encouraged to specify your choice by marking the appropriate box (SEE REVERSE SIDE), but you need not mark any box if you wish to vote in favor. +(CONTINUED AND TO BE SIGNED ON REVERSE SIDE) +PLEASE DETACH ALONG PERFORATED LINE AND MAIL IN THE ENVELOPE PROVIDED. +IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD JUNE 8, 2020. +THE PROXY STATEMENT IS AVAILABLE AT: +HTTP://WWW.VIEWPROXY.COM/CALLONPETROLEUM/2020 +Please mark votes as in this example +ý +THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” PROPOSALS 1, 2, 3, 4, 5, and 6. +1. +Election of Directors: +4. +The approval of the Company's 2020 Omnibus Incentive Plan. +FOR ALL +WITHHOLD +ALL +FOR ALL +EXCEPT +¨ +FOR +¨ +AGAINST +¨ +ABSTAIN +01 +Matthew R. Bob +¨ +¨ +¨ +The ratification of the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2020. +02 +Anthony J. Nocchiero +¨ +03 +James M. Trimble +¨ +¨ +FOR +¨ +AGAINST +¨ +ABSTAIN +2. +The approval, by non-binding advisory vote, of the compensation of our named executive officers. +5. +The approval of an amendment to the Company’s certificate of incorporation in the form attached to the accompanying Proxy Statement as Appendix C to effect a reverse stock split of our issued and outstanding common stock at a ratio that will be determined by the Board of Directors and that will be within a range of 1-for-10 to 1-for-50, if the Board determines, in its sole discretion, at any time prior to the first anniversary of the Annual Meeting that the reverse stock split is in the best interests of the Company and its shareholders. +¨ +FOR +¨ +AGAINST +¨ +ABSTAIN +¨ +FOR +¨ +AGAINST +¨ +ABSTAIN +6. +The approval of an amendment to the Company’s certificate of incorporation in the form attached to the accompanying Proxy Statement as Appendix C to reduce the number of authorized shares of our common stock by the reverse stock split ratio determined by the Board. +¨ +FOR +¨ +AGAINST +¨ +ABSTAIN +MARK “X” HERE IF YOU PLAN TO ATTEND THE MEETING: +¨ +Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person. +DO NOT PRINT IN THIS AREA +(Shareholder Name & Address Data) +Date: +Signature +Signature (if held jointly) +Address Change/Comments: (If you noted any Address Changes and/or Comments above, please mark box.) ¨ +CONTROL NUMBER +PLEASE DETACH ALONG PERFORATED LINE AND MAIL IN THE ENVELOPE PROVIDED. +CONTROL NUMBER +SCAN TO +VIEW MATERIALS & VOTE +PROXY VOTING INSTRUCTIONS +Please have your 11 digit control number ready when voting by Internet or Telephone. +If you vote by phone, fax or Internet, please DO NOT mail your proxy card. +INTERNET +TELEPHONE +MAIL +Vote Your Proxy on the Internet: +Vote Your Proxy by Phone: +Vote Your Proxy by Mail: +Go to www.AALVote.com/CPE +Call 1 (866) 804-9616 +Have your proxy card available when you access the above website. Follow the prompts to vote your shares. +Use any touch-tone telephone to vote your proxy. Have your proxy card available when you call. Follow the voting instructions to vote your shares. +Mark, sign, and date your proxy card, then detach it, and return it in the postage-paid envelope provided. \ No newline at end of file diff --git a/raw/proxies/0000928022/0000928022-20-000063/proxy_rpt.txt b/raw/proxies/0000928022/0000928022-20-000063/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..afbf30563991c3a813e5b65692e5f6f5fb04d1e5 --- /dev/null +++ b/raw/proxies/0000928022/0000928022-20-000063/proxy_rpt.txt @@ -0,0 +1,7 @@ +Certain Relationships and Related Party Transactions +The Audit Committee charter provides that the Audit Committee shall review and approve all related party transactions. A transaction will be considered a “related party transaction” if the transaction would be required to be disclosed under Item 404 of Regulation S-K. In addition, our Code provides that an officer’s or a director’s conflict of interest with Callon may only be waived if the Nominating and Corporate Governance Committee approves the waiver and the full Board ratifies the waiver. +For the fiscal year ended 2019, Austin Weant, who is the son of Jerry Weant, our former Vice President of Land, received $162,400 in total compensation as an employee of the Company, which is consistent with market compensation for his services. In addition, Austin Weant was eligible to participate in all benefit plans and programs available generally to the Company’s employees. +Except for the foregoing, as of December 31, 2019, we are not aware of any related party transactions with our executive officers that require disclosure under Item 404 of Regulation S-K. +Shareholders’ Proposals and Director Nominations for the 2021 Annual Meeting +In order for a proposal to be considered for inclusion in the proxy statement for the 2021 Annual Meeting of Shareholders (the “2021 Annual Meeting”) pursuant to Rule 14a-8 of the Exchange Act, such proposal must be received by the Secretary of the Company at our principal executive offices no later than December 29, 2020 (assuming the date of the 2021 Annual Meeting has not been changed by more than 30 days from the date of this year’s Annual Meeting), and must otherwise be in compliance with the requirements of the SEC’s proxy rules. If the date of the 2021 Annual meeting has been changed by more than 30 days from the date of this Annual Meeting, then the deadline is a reasonable time before we begin to print and send our proxy materials for the 2021 Annual Meeting. +For a shareholder proposal to be introduced for consideration at the 2021 Annual Meeting but not intended to be considered for inclusion in the Company's proxy statement and form of proxy relating to such meeting (i.e. not pursuant to Rule 14a-8 of the Exchange Act), including shareholder nominations for candidates for election as directors, a shareholder must provide written notice of such proposal to Company not later than 120 days nor earlier than 150 days before the date of the 2021 Annual Meeting. Any such notice must describe the shareholder proposal in reasonable detail and otherwise comply with the requirements set forth in our bylaws. \ No newline at end of file diff --git a/raw/proxies/0000928022/0000928022-21-000045/proxy.txt b/raw/proxies/0000928022/0000928022-21-000045/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..20f97a43b31f3061b54cba0a62b22a939e7d5ee5 --- /dev/null +++ b/raw/proxies/0000928022/0000928022-21-000045/proxy.txt @@ -0,0 +1,2133 @@ +DEF 14A +1 +callon2021proxydef14a.htm +DEF 14A +Document +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Proxy Statement Pursuant to Section 14(a) of +the Securities Exchange Act of 1934 (Amendment No. ) +Filed by the Registrant ý +Filed by a Party other than the Registrant ¨ +Check the appropriate box: +☐ Preliminary Proxy Statement +☐ Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +ý Definitive Proxy Statement +☐ Definitive Additional Materials +☐ Soliciting Material under §240.14a-12 +Callon Petroleum Company +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +ý No fee required. +¨ Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. +(1) Title of each class of securities to which transaction applies: +(2) Aggregate number of securities to which transaction applies: +(3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): +(4) Proposed maximum aggregate value of transaction: +(5) Total fee paid: +¨ Fee paid previously with preliminary materials. +¨ Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. +(1) Amount Previously Paid: +(2) Form, Schedule or Registration Statement No.: +(3) Filing Party: +(4) Date Filed: +ABOUT CALLON +Callon Petroleum is an independent oil and natural gas company focused on the acquisition, exploration and development of high-quality assets in the leading oil plays of West and South Texas. +Our Values +Responsibility +The safety of our employees, contractors and communities is of utmost importance – this is not negotiable. We recognize that we earn the right to operate every day by developing our assets responsibly and with respect for the environment. We focus on safety and protection of the environment in every operation, and all Callon representatives are authorized to “stop work” if these are at risk. +Integrity +We always strive to do the right thing and pride ourselves on being a preferred partner. We are consistently open, honest, ethical and genuine. We do what we say and are accountable for our actions. +Drive +Keenly focused on leading, we relentlessly challenge the status quo to meet and exceed our expectations for top-tier performance in all aspects of our business. +Respect +We value the ideas and contributions of all team members and show consideration and appreciation for one another. We recognize and embrace each other’s differences and work towards our common goals. +Excellence +Our business requires focused innovation and evaluation of new opportunities for resource extraction. We balance the application of new technologies and testing of new concepts with prudent risk management and thorough data analysis. +Awards and Recognition +We were recognized as one of the top places to work in 2017, 2018, 2019 and 2020 by the Houston Chronicle. +A JOINT LETTER FROM OUR CHAIRMAN AND OUR CHIEF EXECUTIVE OFFICER +April 9, 2021 +DEAR FELLOW SHAREHOLDERS, +On behalf of the Board of Directors of Callon Petroleum Company, we are pleased to invite you to our 2021 Annual Meeting of Shareholders, which will take place on Friday, May 14, 2021 at 9:00 a.m. Central Daylight Time (CDT), in the Wishmaker Ballroom of the Hotel ZaZa, located at 9787 Katy Freeway in Houston, Texas. +Today we are filing the Notice of Annual Meeting of Shareholders and the Proxy Statement which describe the matters to be acted upon at the meeting. This year we are asking our shareholders to elect directors; approve, on a non-binding advisory basis, the compensation of our named executive officers; ratify the appointment of our auditors; and approve an amendment to our certificate of incorporation to increase the number of authorized shares of common stock. +This past year presented our company, our employees, and the oil and gas sector as a whole with challenges unlike anything in recent memory. Our leadership was swift to react, our people were dedicated and innovative, and the Callon spirit was on display as our team successfully navigated some difficult situations; all while completing a corporate integration remotely. Our team found ways to help relieve financial pressures and showed enormous operational prowess, significantly reducing our capital expectations while improving field efficiency. We closed the year on a high note - exceeding our own expectations across nearly every guidance metric provided and generating positive adjusted free cash flow for the full year. +Despite the financial and operational hurdles presented by highly volatile commodity prices and the presence of COVID-19, our team still set new records for safety and showed significant progress in emissions reduction efforts. The continued focus on advancing our ESG initiatives and aligning ourselves with changing investor norms was well represented in our inaugural sustainability report. We are happy to present additional progress and notable changes in the pages that follow. +Your vote is important, and we encourage you to review this proxy statement and to vote promptly so that your shares will be represented at the meeting. On behalf of everyone at Callon, we want to thank you, our valued shareholders, for your continued support of the work we do. +Sincerely, +L. Richard Flury +Chairman of the Board +Joseph C. Gatto, Jr. +President, Chief Executive Officer and Director +L. Richard Flury +Chairman of the Board +Joseph C. Gatto, Jr. +President, Chief Executive Officer and Director +We encourage you to read our 2020 Annual Report, which includes our financial statements as of and for the year ended December 31, 2020. Please also refer to the sections captioned “Risk Factors” and “Special Note Regarding Forward-Looking Statements,” for a description of the substantial risks and uncertainties related to the forward-looking statements included herein. +2021 PROXY STATEMENT 3 +NOTICE OF ANNUAL +MEETING OF SHAREHOLDERS +Dear Shareholders, +You are invited to participate in the 2021 Annual Meeting of Shareholders (the “Annual Meeting”) of Callon Petroleum Company (“Callon,” the “Company,” “us,” “we,” “our” or like terms), a Delaware corporation. +When +Friday, May 14, 2021, at 9:00 a.m. +Central Daylight Time (“CDT") +Where +Hotel ZaZa +Wishmaker Ballroom +9787 Katy Freeway +Houston, Texas 77024 +We are monitoring coronavirus (COVID-19) developments and the related recommendations and protocols issued by public health authorities and federal, state and local governments, and we are sensitive to the public health and travel concerns that our shareholders may have. In the event we determine it is necessary or appropriate to postpone or move the Annual Meeting to another location or hold the Annual Meeting virtually, we will announce this decision in advance in a press release and post details on our website, which will also be filed with the Securities and Exchange Commission. +Whether or not you plan to attend the Annual Meeting, please vote electronically via the Internet, by telephone, or by mail as soon as possible. +Voting Matters Board +Recommendation +Proposal 1: +To elect four Class III directors to serve on our Board of Directors (the “Board”), each for three years. +FOR each of the Class III directors +See page 10 +Proposal 2: +To approve, on a non-binding advisory basis, the compensation of our named executive officers (“NEOs”). +FOR +See page 35 +Proposal 3: +To ratify the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2021. +FOR +See page 63 +Proposal 4: +To approve an amendment to our certificate of incorporation to increase the number of authorized shares of our common stock. +FOR +See page 65 +We will also transact other business that may properly come before the Annual Meeting. +This Notice of Annual Meeting of Shareholders and the Proxy Statement provide further information on the Company’s performance and corporate governance and describe the matters to be presented at the Annual Meeting. The Board set March 15, 2021, as the record date (the “Record Date”) for the Annual Meeting. Holders of record of our common stock at the close of business on the Record Date are entitled to receive this notice of, and vote at, the Annual Meeting. A list of the names of shareholders entitled to vote at the Annual Meeting will be available for ten days prior to the Annual Meeting for examination by any shareholder for any purpose germane to the Annual Meeting between the hours of 9:00 a.m. and 5:00 p.m., Central Time, at our headquarters at 2000 W. Sam Houston Parkway South, Suite 2000, Houston, TX 77042. This list will also be available for such purposes during the Annual Meeting at the place of the Annual Meeting or, in the event that the Annual Meeting is held virtually, at a website to be provided in the announcement notifying shareholders of the change in meeting format. +Beginning on or about April 9, 2021, we will mail this proxy statement, our 2020 Annual Report on Form 10-K, and the form of proxy to shareholders. +We thank you for your continued support and look forward to seeing you at the Annual Meeting. +By Order of the Board of Directors, +Michol L. Ecklund +Senior Vice President, General Counsel +and Corporate Secretary . +Houston, Texas +April 9, 2021 +By Internet or telephone following the simple instructions on the enclosed proxy card or voting instruction form +By mail +mark, date and sign your proxy card, and return it in the reply envelope provided +YOUR VOTE IS IMPORTANT! +Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Shareholders. This Proxy Statement and our 2020 Annual Report on Form 10-K are available at: www.viewproxy.com/ CallonPetroleum/2021. If you have any questions or need assistance voting your shares, please call our proxy solicitor, Innisfree M&A Incorporated, 501 Madison Avenue, 20th Floor, New York, NY 10022 +Banks and Brokerage Firms, please call: (212) 750-5833 +Shareholders, please call toll-free:(888) 750-5834 +4 CALLON PETROLEUM +TABLE OF CONTENTS +A JOINT LETTER FROM OUR CHAIRMAN AND OUR CHIEF EXECUTIVE OFFICER +3 +NOTICE OF ANNUAL MEETING OF SHAREHOLDERS +4 +PERFORMANCE HIGHLIGHTS +6 +SUSTAINABILITY AT CALLON PETROLEUM +7 +PROPOSAL 1 - ELECTION OF CLASS III DIRECTORS +10 +Board of Directors +10 +Directors Nominated for Re-Election +13 +CORPORATE GOVERNANCE +16 +Directors Continuing in Office +16 +Director Compensation +21 +Director Independence +23 +Board Structure and Responsibilities +23 +Committees of the Board +26 +Corporate Governance Matters +31 +EXECUTIVE OFFICERS +33 +PROPOSAL 2 - APPROVE, ON AN ADVISORY BASIS, THE COMPENSATION OF THE COMPANY'S NEOS +35 +EXECUTIVE COMPENSATION +37 +Compensation Discussion and Analysis +37 +Compensation Committee Report +52 +Executive Compensation Tables +53 +CEO Pay Ratio +62 +PROPOSAL 3 - RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM, GRANT THORNTON LLP, FOR 20 21 +63 +Audit Committee Report +64 +PROPOSAL 4 - APPROVE THE AMENDMENT TO THE CERTIFICATE OF INCORPORATION TO INCREASE AUTHORIZED SHARES OF COMMON STOCK +65 +OTHER MATTERS +67 +Beneficial Ownership of Securities +67 +Principal Shareholders and Management +67 +Section 16(a) Beneficial Ownership Reporting Compliance +68 +Certain Relationships and Related Party Transactions +69 +Shareholders’ Proposals and Director Nominations for the 202 2 Annual Meeting +69 +ANNUAL MEETING INFORMATION +70 +Information Concerning Solicitation and Voting +70 +Information About Voting and the Annual Meeting +70 +Required Vote +73 +Voting Results +74 +Householding Information +74 +Financial Statements and Other Available Documents +74 +Other Business +74 +APPENDIX A +75 +APPENDIX B +76 +2021 PROXY STATEMENT 5 +PERFORMANCE HIGHLIGHTS +Callon is an independent oil and natural gas company focused on the acquisition, exploration, and development of high-quality assets in leading Texas oil plays located in the Permian and the Eagle Ford. Callon’s strong foundation spans over 70 years with an ongoing mission to build trust, create long-term value, and drive sustainable cash flow growth for our stakeholders. The critical elements of our business that contribute to our ability to generate meaningful value for our shareholders include: +PREPARATION +PURPOSE +EXECUTION +• Significant scale and high operational control of ~180,000 net acres in Texas's producer-friendly Permian Basin and Eagle Ford Shale +• A robust infrastructure network from multiple years of thoughtful planning and investment that reduces overall capital intensity over time +• Scaled and cost-efficient multi-zone asset development programs that generate attractive rates of return while preserving future inventory value +• Talented workforce with expansive technical expertise paired with a culture of responsibility and adaptability in a cyclical commodity business +• Stakeholder alignment through a governance structure and ongoing engagement across shareholders, employees, and communities in which we operate +• Expanded sustainability disclosures and environmental, social and governance ("ESG") oversight to maximize impact of initiatives and ensure corporate responsibility priorities are achieved +• Durable business model which balances capital efficiency improvements with longer-term reinvestment reduction initiatives +• Specific targets for corporate returns on capital through margin preservation, capital intensity reduction, and portfolio optimization +• The ability to generate durable free cash flow through breakeven cost reduction and moderation of production declines +• Improved liquidity and no near-term maturities coupled with a variety of asset monetization opportunities +2020 was a year marked by extraordinary volatility in commodity prices and workplace challenges created by the COVID-19 pandemic. While the dramatic decline in oil prices led to significant reduction in industry-wide activity, Callon’s rapid reduction in drilling and completion activity resulted in a more flexible operational plan that created opportunities for optimizing our balance sheet. Because of our thoughtful approach, we were able to achieve a number of initiatives that had a positive effect on both our margins and our surrounding community. +• Completed the full integration of Carrizo and Callon, much of which was handled with a fully remote workforce due to social distancing and pandemic safety-related concerns. +• Generated over $120 million of adjusted free cash flow (i) ("Adjusted FCF") during the last three quarters of the year, resulting in a positive FCF position for the full year. +• Posted annual adjusted EBITDA (i) of over $700 million despite a drop of more than 40% in average realized prices compared to the prior year. +• Issued $300 million in new second lien notes providing a meaningful increase in liquidity. +• Exchanged $389 million of our existing senior notes for second lien notes, reducing our long-term debt outstanding by $172 million . +• Completed an overriding royalty interest sale and non-operated property divestiture for combined net proceeds of approximately $170 million which were used to reduce outstanding borrowings. +• Achieved full year production of 101.6 MBoe per day (63% oil) exceeding annual production guidance expectations. +• Reduced lease operating expenses by more than $30 million (>10%) from pro forma 2019 (ii) levels through effective implementation of our field operating best practices. +• Reduced total cash general and administrative expenses by more than 60% from pro forma 2019 (ii) levels. +• Completed the expansion of our Delaware recycling facilities allowing for handling of up to 60,000 barrels per day of produced water volumes. +• Completed our first six-well pad in the Delaware that sourced more than 95% of fracture stimulation volumes (nearly 100 million gallons ) from recycled produced water volumes. +• Expanded our electrical substation network allowing for the removal of over 40 diesel generators improving operating reliability and reducing our carbon emissions by approximately 34 metric tons . +• Achieved our best year on record for safety with a total recordable incident rate of just 0.54 . +• Reduced our flaring volumes by 40% . +• Lowered our spill rate by 66% as compared to our 2019 figures. +(i) Adjusted FCF and adjusted EBITDA are non-GAAP financial measures. See Appendix A for reconciliations of our non-GAAP financials measures. +(ii) All references to 2019 pro forma figures assume full year Callon and Carrizo combined financials. +6 CALLON PETROLEUM +SUSTAINABILITY AT +CALLON PETROLEUM +At Callon, our commitment to our shareholders is simple: create value in a responsible manner. Our focus on integrating sustainable business practices and achieving long-term results drives our operations. In alignment with these goals, our Board oversees the Company’s safety and environmental policies, development of a positive corporate culture and an effective corporate governance program. To ensure that sustainability matters remain a priority at Callon, the independent Nominating, Environmental, Social and Governance Committee of our Board has direct oversight responsibility for our ESG policies and performance for the development of Company positions related to emerging issues that affect our industry. The entire Callon team is committed to improving returns for our shareholders while positively impacting the communities in which we live and work. Our 2020 ESG initiatives built a strong foundation for 2021 objectives. +The Callon executive team recognizes the need for transparent and robust ESG reporting. In 2020, we published our inaugural sustainability report in alignment with the Sustainability Accounting Standards Board (SASB) framework. We plan to publish our 2020 Sustainability Report with highlights of Callon’s continued commitment to ESG and transparency later this year which will include the following highlights: +Environmental +In 2020, we expanded on several strategies and programs to develop our natural resources in a responsible manner while working to minimize our impact on the environment. Our continued focus to reduce flaring by actively working with third party natural gas gatherers and minimizing processing downtimes reduced flare volumes by 40%. We also connected to secondary gathering systems for our two highest-volume natural gas gathering systems and continue to pursue back-up options to minimize flaring in the future. Additionally, we implemented spill mitigation measures and achieved a 66% reduction in our total fluid spill rate. These additional measures, including night-time monitoring and activation of wellhead valves to shut in wells in emergency situations, demonstrate our commitment to prevent unnecessary releases to the environment. +WATER +AIR +LAND +Protecting local water supplies and minimizing our use of fresh water resources are high priorities in our operations. +As part of our environmental program, Callon monitors and seeks to reduce greenhouse gas (GHG) and other emissions from our operations. +At Callon, we strive to be good stewards of the environment and minimize our impact in the areas where we operate. +10% increase in recycled produced water usage (1) +40% reduction in flared volumes (2) +66% reduction in total spill volumes (3) +(1) Percentage of recycled water utilized in all operations. +(2) Percent change of total gas flared year-over-year. +(3) Percent change in total fluids released from primary containment year-over-year. +2021 PROXY STATEMENT 7 +SUSTAINABILITY AT CALLON PETROLEUM +Social +Callon employs a talented workforce, and we are committed to the safety, health, and development of each team member. We remained focus on improving our safety culture and implementing programs to create a safe workplace for all stakeholders. In 2020, we reduced our OSHA Total Recordable Incident Rate (TRIR) by 10% and achieved record safety performance for the second consecutive year despite the combined challenges of the pandemic. In addition, we recognized the hardship that the pandemic has caused to many of the communities where we operate and increased our philanthropic support in the areas of education and social welfare. +Safety +Community +At Callon, protecting our people and our communities is our top priority. We believe that a strong safety culture is tantamount to being a leading operator in the exploration and production (E&P) business.In 2020 Callon quickly adapted operations to incorporate strict COVID-10 safety protocols. +OPERATING IN LOCAL COMMUNITIES +When our assets necessitate development projects near populated areas, we make every effort to mitigate the impact of our activities and work closely with city officials and neighboring landowners to proactively address considerations such as: noise, traffic, GHG emissions, and liquid spill prevention. +We also partner with beautification groups in Permian and Houston. +SUPPORTING LOCAL COMMUNITIES +Callon has a longstanding history of supporting the local communities in which we operate. It is our privilege to make a positive impact through charitable giving and volunteerism to support education, community, and the environment. +We also sponsor a charitable matching program to support our employees’ philanthropic priorities. +10% +improvement in safety TRIR to 0.54 for a second straight record year for safety performance +Workforce +BUILDING A TOP PLACE TO WORK +At Callon, a goal is to assemble and inspire a team of passionate and innovative professionals in an environment where they can achieve their professional goals. We empower our employees and engage team members in decision-making at every level while recognizing contributions to our success. This unique environment has helped us achieve top-tier engagement scores, resulting in Callon being named a Top Workplace by Houston Chronicle in for the fourth straight year. +EMBRACING DIVERSE BACKGROUNDS AND PERSPECTIVES +At Callon, we value the diversity of our employees and their contributions. We are firmly committed to fostering an inclusive environment and providing equal opportunity to all qualified persons. +MINORITY EMPLOYEES +IN 2020 +8 CALLON PETROLEUM +SUSTAINABILITY AT CALLON PETROLEUM +Governance +At Callon, we are committed to high ethical standards and effective and sustainable corporate governance. We believe this commitment promotes the long-term interests of our shareholders, helps build public trust in our Company and strengthens Board and management accountability. We continually assess our governance principles to ensure that we are operating our business responsibly, ethically and in a manner aligned with the interests of our shareholders. Our Compensation Discussion and Analysis ("CD&A") beginning on page 37 provides additional information on governance practices for executive compensation. +Our Board expanded the remit and renamed our independent Nominating and Corporate Governance Committee as "Nominating, Environmental, Social, and Governance Committee" to better reflect the Committee's focus and oversight on the Company’s ESG policies, performance and disclosure. +Diversity Refreshment Independence +One minority and +two female directors +Less than +five years' tenure +for nearly half the directors +Ten directors are independent +and a non-executive director +serves as chair of the Board +Our corporate focus is anchored by five core values: Responsibility , Integrity , Drive , Respect and Excellence . More information regarding our core values and details on our ESG initiatives and outcomes can be found in our 2019 Sustainability Report located on our Company’s website (https://www.callon.com/sustainability). +2021 PROXY STATEMENT 9 +Proposal 1 +Election of +Class III +Directors +The Board recommends a vote FOR each of the Class III director nominees named in this Proxy Statement. +• Our director nominees provide experience and perspectives that enhance the overall strategic and oversight functions of Callon’s Board. +• For more information about the nominees’ experience, skills, and qualifications, please see page 13. +Board of Directors +Process for Selecting Directors +Director Identification and Selection +Criteria. The Nominating, Environmental, Social and Governance Committee (the "N&ESG Committee") has established guidelines for considering nominations to the Board. The N&ESG Committee evaluates potential nominees based on the contribution such nominee’s background and skills could have upon achieving the goal of a well-rounded, diverse Board that functions collegially as a unit. While not an exhaustive list, key criteria include: +• Relevant oil and gas E&P industry knowledge and experience; +• Complementary mix of backgrounds and experience in areas including business, finance, accounting, ESG, technology, and strategy; +• Personal qualities of leadership, character, judgment and personal and professional integrity and high ethical standards; +• The candidate’s ability to exercise independent and informed business judgment; +• Whether the candidate is free of conflicts and has the time required for preparation, participation, and attendance at meetings; +• Diversity, including differences in viewpoints, background, education, gender, race or ethnicity, age, and other individual qualifications and attributes; +• The ability to work with other members of the Board, the Chief Executive Officer (the "CEO"), and senior officers of the Company in a constructive and collaborative fashion to achieve the Company’s goals and implement its strategy; and +• In the case of an incumbent director, such director’s past performance on the Board. +The N&ESG Committee and the Board may also consider other qualifications and attributes that they believe are appropriate in evaluating the ability of an individual to serve as a member of the Board. The N&ESG Committee’s goal is to assemble a Board that brings to us a variety of perspectives and skills derived from high quality business and professional experience to perform its oversight role satisfactorily for our shareholders. In making its determinations, the N&ESG Committee evaluates each individual in the context of the Board as a whole, with the objective of assembling a group that can best represent shareholder interests through the active, objective, and constructive participation in meetings and the strategic decision-making processes. +Diversity. Our Corporate Governance Guidelines set forth our policy with respect to Board diversity. We are committed to building a diverse Board comprised of individuals from different backgrounds, including differences in viewpoints, education, gender, race or ethnicity, age, and other individual qualifications and attributes. To accomplish this, the N&ESG Committee will continue to require that search firms engaged by the Company seek to present a robust selection of women and ethnically diverse candidates in all prospective director candidate pools. +Nominating Process. In making its nominations, the N&ESG Committee identifies nominees by first evaluating the current members of the Board willing to continue their service and any potential need to expand the Board to include additional expertise. Current members with a record of quality contribution to the Board whose experience contributes to a complementary mix of backgrounds that enhance the Board are renominated. When vacancies become available, the N&ESG Committee may seek input from industry experts or engage third-party search firms to help source particular areas of expertise or backgrounds. +Retirement Policy. The Board believes that, regardless of age, experienced individuals may make a substantial contribution to the Company. However, the Board has adopted a retirement policy for independent directors. Under the policy, an independent director must retire in conjunction with the annual meeting of stockholders prior to his or her 75th birthday, except in special circumstances upon the request of a majority of the Board (not including the subject director). +10 CALLON PETROLEUM +PROPOSAL 1 +Over time, the Board refreshes its membership through a combination of adding or replacing directors to achieve the appropriate balance between maintaining longer-term directors with deep institutional knowledge of the Company and adding directors who bring a diversity of perspectives and experience. As a reflection of this philosophy, if all of the nominees are elected to the Board, following the Annual Meeting: +5/11 +directors will have tenures of five or fewer years. +10/11 +directors will be independent. +Board Succession Planning Initiatives +In 2020, the N&ESG Committee and the Board enhanced their focus on long-term board composition, diversity and succession, with the objective of developing a view of the key skills and experiences needed at the board level to support the Company’s strategy in the evolving energy landscape. The Board engaged a third-party advisory firm to conduct a fulsome evaluation of the board and its governance practices, including interviews with each director and select members of management. The firm provided a report to the Board on recommendations to prepare for board leadership and director succession as well as benchmarking against corporate governance best practices. Following discussions and upon the recommendation of the N&ESG Committee, the Board adopted a retirement policy (as described above) as a governance best practice and in support of continuing refreshment of board composition. +In considering the nominees to stand for re-election, the N&ESG Committee and the Board discussed Chairman Flury’s proposed term as a Class III director, which would extend beyond the board retirement age. The Board considered Mr. Flury’s four-year tenure as Chairman and agreed they desire near-term continuity in the Chairman role to continue momentum on the Company’s strategic priorities. The Board unanimously approved Mr. Flury’s re-nomination as a Class III director. The Board also agreed to appoint a special committee to evaluate candidates to succeed Chairman Flury with the intention of appointing a successor no later than the expiration of Mr. Flury’s term in 2024. +Voting Standard +Directors will be elected by a plurality of the votes cast by the shares entitled to vote in the election of directors. This standard means the nominees for available directorships who receive the highest number of affirmative votes of the shares present, in person or by proxy, and entitled to vote, are elected. However, as described below, the Company has an additional voting standard in uncontested director elections. The Company believes that this voting standard ensures accountability and the opportunity for a positive mandate from the Company’s shareholders. +Our Corporate Governance Guidelines provide that any nominee for director who receives a greater number of votes “withheld” than votes “for” in an uncontested election (i.e., an election in which the number of nominees for election does not exceed the number of directors to be elected) is required to tender his or her resignation for consideration by the N&ESG Committee and Board following certification of the shareholder vote. Such resignation will only be effective upon Board acceptance of such resignation after receiving the recommendation of the N&ESG Committee. If the number of nominees exceeds the number of directors to be elected as of the Record Date for such meeting then the directors shall be elected by a plurality of the votes cast. Full details of this policy are set forth in our Corporate Governance Guidelines. +If a director nominee receives a receives a greater number of votes “withheld” than votes “for” in an uncontested election, then promptly following the certification of the election results, the N&ESG Committee will consider any factors it deems relevant to the best interests of the Company and our shareholders in determining whether to accept the director’s resignation and recommend to the Board that action to be taken with respect to the tendered resignation. Within 120 days following certification of the shareholder vote, the Board shall consider the recommendation and make a determination as to whether to accept or reject such director’s resignation and shall notify the director concerned of its decision. We will also promptly publicly disclose the Board’s decision and process in a periodic or current report filed with or furnished to the Securities Exchange Commission ("SEC"). +If you hold your shares through a broker and you do not instruct the broker how to vote, your broker will not have the authority to vote your shares. Abstentions and broker non-votes will each be counted as present for purposes of determining the presence of a quorum but will have no effect upon the outcome of the vote on this proposal. All shares of common stock represented by proxies will be voted “FOR” the election of the director nominees, except where authority to vote in the election of directors has been withheld. Should the nominees become unable or unwilling to serve as a director at the time of the Annual Meeting, the person or persons exercising the proxies will vote for the election of substitute nominees designated by the Board, or the Board +2021 PROXY STATEMENT 11 +PROPOSAL 1 +may choose to reduce the number of members of the Board to be elected at the Annual Meeting in order to eliminate the vacancy. Your proxy cannot be otherwise voted for a person who is not named in this Proxy Statement as a candidate for director or for a greater number of persons than the number of director nominees named. The Board has no reason to believe that the nominees will be unable or unwilling to serve if elected. +The Board recommends a vote FOR each of the four Class III director nominees . +12 CALLON PETROLEUM +PROPOSAL 1 +Directors Nominated For Re-Election +The Board currently consists of eleven directors. Consistent with our certificate of incorporation, the current Board is divided into three classes designated as Class I, Class II, and Class III, each with staggered, three-year terms. Based on the recommendations from the N&ESG Committee, the Board has nominated four continuing Class III Directors, Frances Aldrich Sevilla-Sacasa, Major General (Ret.) Barbara J. Faulkenberry, L. Richard Flury, and Joseph C. Gatto, Jr., to stand for re-election or, in each case, until the election and qualification of their respective successors or until their earlier death, retirement, resignation or removal. +The following biographies reflect the particular experience, qualifications, attributes, and skills that led the Board to conclude that each nominee should stand for re-election to serve on the Board: +Class III Directors +Frances Aldrich Sevilla-Sacasa +Former Chief Executive Officer of Banco Itaú International +Ms. Aldrich Sevilla-Sacasa is a private investor and was Chief Executive Officer of Banco Itaú International, Miami, Florida, from April 2012 to December 2016. Prior to that time, she served as Executive Advisor to the Dean of the University of Miami School of Business from 2011 to 2012, Interim Dean of the University of Miami School of Business from 2011 to 2011, President of U.S. Trust Bank of America Private Wealth Management from 2007 to 2008, President and Chief Executive Officer of US Trust Company in 2007, and President of US Trust Company from November 2005 until June 2007. She previously served in a variety of roles with Citigroup’s private banking business, including President of Latin America Private Banking, President of Europe Private Banking, and Head of International Trust Business. Ms. Aldrich Sevilla-Sacasa holds a Bachelor of Arts Degree from the University of Miami and an M.B.A. from the Thunderbird School of Global Management. +Ms. Aldrich Sevilla-Sacasa also serves on the boards of Camden Property Trust (NYSE: CPT), where she chairs the audit committee, New Senior Investment Group (NYSE: SNR), and the Delaware Funds by Macquarie, where she chairs the nominating and corporate governance committee. +Ms. Aldrich Sevilla-Sacasa holds a Bachelor of Arts Degree from the University of Miami and an M.B.A. from the Thunderbird School of Global Management. +SKILLS AND QUALIFICATIONS: +Ms. Aldrich Sevilla-Sacasa brings to the Board considerable experience in financial services, banking and wealth management. In addition, her experience as a former president and chief executive officer of a trust and wealth management company, and as a director of other corporate and not-for-profit boards has provided her with expertise in the area of corporate governance. Her designation as a “financial expert” and knowledge of public company reporting requirements add meaningful insights to the Board. +INDEPENDENT +Age as of the Record Date 65 +Director Since 2019 +Callon Committees: +N&ESG; Strategic Planning and Reserves +Other Current Directorships: +Camden Property Trust +New Senior Investment Group +Delaware Funds by Macquarie +2021 PROXY STATEMENT 13 +PROPOSAL 1 +Barbara J. Faulkenberry +Former Major General, United States Air Force +Barbara Faulkenberry has served as a member of the Board since 2018. Ms. Faulkenberry retired from the U.S. Air Force in 2014 as a Major General (2-stars) after a 32-year career, finishing in the top 150 leaders of a 320,000-person global organization. Her last assignment was as Vice Commander (COO) and interim Commander (CEO) of a 37,000-person organization conducting all global Department of Defense air cargo, passenger, and medical patient movements with 1,100 military aircraft plus contracted commercial aircraft. +Ms. Faulkenberry is currently an independent director for USA Truck, a publicly-traded provider of logistics and trucking services across North America, where she serves as chair of the Technology Committee and as a member of the Nominating and Corporate Governance Committee. +Ms. Faulkenberry received a B.S. degree from the Air Force Academy in 1982, an M.B.A. from Georgia College in 1986, and a Master of National Security from the National Defense University in 1999. She has also attended strategic leadership courses at Harvard University, University of Cambridge, and Syracuse University. +SKILLS AND QUALIFICATIONS: +Ms. Faulkenberry brings to the Company senior leadership experience in the areas of supply chain management, logistics, strategic planning, risk management, technology, cyber security, and leadership development. Additionally, she is a NACD Board Leadership Fellow and earned the Carnegie Mellon/NACD CERT Certificate in Cybersecurity Oversight, both of which contribute to best practices in corporate governance and cyber security and provide great value to the Board. +INDEPENDENT +Age as of the Record Date 61 +Director Since 2018 +Callon Committees: +Audit, N&ESG, Strategic Planning and Reserves +Other Current Directorships: +USA Truck, Inc. +L. Richard Flury +Chairman of the Board +Former Chief Executive (Retired) for Gas, Power & Renewables of BP plc +Richard Flury has served as a member of the Board since 2004 and has served as Chairman since 2017. He spent over 30 years with Amoco Corporation, and later, BP plc, from which he retired as Chief Executive for Gas, Power and Renewables in 2001. Prior to Amoco’s merger with BP in 1998, he served in various executive positions and was Chief Executive for Worldwide Exploration and Production and Executive Vice President of Amoco Corporation at the time of the merger. +Mr. Flury was a director of McDermott International, a publicly-traded engineering, procurement and construction company, including when it filed voluntary petitions for reorganization in the United States Bankruptcy Court for the Southern District of Texas in January 2020. Mr. Flury was a director and the non-executive Chairman of Chicago Bridge and Iron Company, N.V., a publicly-traded engineering, procurement and construction company, until it merged into McDermott International in 2018. Previously, Mr. Flury was a member of the Board of QEP Resources, Inc., a publicly-traded oil and gas exploration company, from 2010 to 2015. +Mr. Flury graduated from University of Victoria with a degree in Honors Physics. +SKILLS AND QUALIFICATIONS: +Mr. Flury’s deep knowledge of the energy industry and years of executive and management experience provide him with valuable insights into the strategic issues affecting companies in the oil and gas industry that are helpful to our Company and Board. His service on the boards of other publicly-traded companies has provided him exposure to different industries and approaches to governance that we believe further enhances the Board. +INDEPENDENT +Age as of the Record Date 73 +Director Since 2004 +Callon Committees: +Audit, Compensation, Strategic Planning and Reserves +14 CALLON PETROLEUM +PROPOSAL 1 +Joseph C. Gatto, Jr. +President, Chief Executive Officer and Director +Joseph C. Gatto, Jr. is President, CEO and Director of Callon. Mr. Gatto was elected to the Board in 2018. He has served as the Company's CEO since 2017 and as President since 2016. Prior to his appointment as CEO, he served as Chief Financial Officer and Treasurer of the Company from 2014 to 2017, and held various other senior leadership positions within the Company since joining Callon in 2012. +Prior to joining the Company, Mr. Gatto served as Head of Structuring and Execution with Merrill Lynch Commodities from 2010 to 2011, as the founder of MarchWire Capital, LLC, a financial advisory and strategic consulting firm in 2009, and as a Managing Director in the energy investment banking groups of Merrill Lynch & Co. and Barclays Capital from 1997 to 2009. +Mr. Gatto graduated from Cornell University with a B.S. degree and The Wharton School of the University of Pennsylvania with an M.B.A. He currently serves on the board of directors for the Independent Petroleum Association of America. +SKILLS AND QUALIFICATIONS: +Mr. Gatto’s extensive experience in investment banking and the oil and gas industry make him a valuable addition to the Board. Additionally, Mr. Gatto's knowledge of the Company and strong background in capital markets, transactions, strategic planning, and investor relations provide the Board with essential insight and guidance. +Age as of the Record Date 50 +Director Since 2018 +2021 PROXY STATEMENT 15 +CORPORATE GOVERNANCE +Directors Continuing in Office +Biographical information, including age as of the Record Date, for our directors continuing in office is set forth below. These individuals are not standing for re-election at this time: +Class I Directors +Michael L. Finch +Former Chief Financial Officer (Retired) of Stone Energy Corporation +Michael Finch has served as a member of the Board since 2015. He spent nearly 20 years affiliated with Stone Energy Corporation, a publicly-traded oil and gas exploration company, from which he retired as Chief Financial Officer and a member of the Board of Directors in 1999. Prior to his service with Stone Energy, he was employed by Arthur Andersen & Co. +Mr. Finch currently serves on the advisory board of C.H. Fenstermaker & Associates, a multi-disciplinary consulting firm that specializes in surveying and mapping, engineering and environmental consulting. Previously, Mr. Finch was an independent director of Petroquest Energy, Inc. a publicly-traded oil and gas company, from 2003 to 2016, where he served as chairman of the Audit Committee and as a member of the Compensation Committee and the Nominating and Corporate Governance Committee. +Mr. Finch holds a B.S. in Accounting from the University of South Alabama and was licensed as a Certified Public Accountant (currently inactive). +SKILLS AND QUALIFICATIONS: +Mr. Finch’s extensive financial, accounting, and operating experience within the oil and gas industry are extremely valuable to the Board and qualify him as a director. In particular, Mr. Finch’s accounting background and status as a “financial expert” provide the Board valuable perspective on issues facing audit committees. +INDEPENDENT +Age as of the Record Date 65 +Director Since 2015 +Callon Committees: +Audit, Compensation, Strategic Planning and Reserves +S. P. Johnson IV +Former President, Chief Executive Officer and Co-Founder (Retired) of Carrizo Oil & Gas, Inc. +Mr. Johnson was a co-founder of Carrizo and served as its President and CEO as well as a director from December 1993 to December 2019, when Carrizo merged with the Company. Prior to that, he worked for Shell Oil Company for 15 years, where his managerial positions included Operations Superintendent, Manager of Planning and Finance and Manager of Development Engineering. +Mr. Johnson currently serves as a director of Southwestern Energy Company, a publicly-traded oil and gas exploration company. Mr. Johnson previously served as a director of Basic Energy Services, Inc., an oilfield service provider, and as a director of Pinnacle Gas Resources, Inc., a coalbed methane exploration and production company. +Mr. Johnson is a Registered Petroleum Engineer and holds a B.S. in Mechanical Engineering from the University of Colorado. +SKILLS AND QUALIFICATIONS: +Mr. Johnson brings to the Board extensive experience in oil and gas exploration and production and the energy industry through his roles at Carrizo and other energy companies. +INDEPENDENT +Age as of the Record Date 65 +Director Since 2019 +Callon Committees: +Strategic Planning and Reserves +Other Current Directorships: +Southwestern Energy Company +16 CALLON PETROLEUM +CORPORATE GOVERNANCE +Larry D. McVay +Managing Director of Edgewater Energy, LLC +Larry McVay has served as a member of the Board since 2007. Mr. McVay has been a Managing Director of Edgewater Energy, LLC, a privately held oil and gas investment company, since 2007. From 2003-2006, he served as Chief Operating Officer of TNK-BP Holding, one of the largest oil producing companies in Russia. From 2000-2003, he served as Technology Vice President and Vice President of Health, Safety and Environment for BP plc. Prior to joining BP, Mr. McVay held numerous positions at Amoco, including engineering management and senior operating leadership positions. +Mr. McVay is a director of Linde plc, a publicly-traded industrial gas and engineering company. Previously, Mr. McVay was a director of Praxair, Inc., an industrial gases company in North and South America, until Praxair, Inc. and Linde AG combined to create Linde plc in 2018. Additionally, Mr. McVay was previously a director of Chicago Bridge and Iron Company, N.V., a publicly-traded engineering, procurement and construction company, until it merged into McDermott International in 2018. +Mr. McVay earned a B.S. in Mechanical Engineering from Texas Tech University, where he was recognized as a Distinguished Engineer in 1995. +SKILLS AND QUALIFICATIONS: +Mr. McVay has been directly involved in nearly all aspects of the oil and gas industry, including drilling, production, finance, environmental, risk, and safety. We believe that this experience and his knowledge of the exploration and production industry, particularly in the Permian Basin, as well as his senior executive experience, service on other boards, and independence, provide valuable insight in the development of our long-term strategies and qualify him for service on the Board. +INDEPENDENT +Age as of the Record Date 73 +Director Since 2007 +Callon Committees: +Strategic Planning and Reserves (Chairman), Audit, N&ESG +Other Current Directorships: +Linde plc +Steven A. Webster +Former Chairman of the Board and Co-Founder of Carrizo Oil & Gas, Inc. +Mr. Webster was a co-founder of Carrizo for which he served as a director since 1993 and as its Chairman of the Board since 1997 until December 2019, when Carrizo merged with the Company. Since 2016, Mr. Webster has served as Managing Partner of AEC Partners, a private equity firm engaged in energy investment which was the successor to Avista Capital Partners, a private equity firm he co-founded in 2005 and for which he served as Co-Managing Partner. From 2000 through 2005, Mr. Webster served as Chairman of Global Energy Partners, an affiliate of DLJ Merchant Banking and CSFB Private Equity. From 1988 through 1999, Mr. Webster was the CEO and President of R&B Falcon Corporation and Chairman and CEO of one of its predecessor companies, Falcon Drilling Company, which he founded. Mr. Webster has been a founder or seed investor in numerous other private and public companies. +He has held numerous board positions and currently serves as a director of Oceaneering International and various private companies. Since its founding in 1993, Mr. Webster has served as a Trust Manager of Camden Property Trust, a REIT. Previously, Mr. Webster was a director of Era Group, Inc. +Mr. Webster holds an M.B.A. from Harvard Business School where he was a Baker Scholar. He also holds a B.S. in Industrial Management and an Honorary Doctorate in Management from Purdue University. +SKILLS AND QUALIFICATIONS: +Mr. Webster brings to the Board experience in, and knowledge of, the energy industry, business leadership skills from his tenure as chief executive officer of publicly traded companies and his over 30-year career in private equity and investment activities, and experience as a director of several other public and private companies. +INDEPENDENT +Age as of the Record Date 69 +Director Since 2019 +Callon Committees: +Audit, Strategic Planning and Reserves +Other Current Directorships: +Camden Property Trust +Oceaneering International, Inc. +2021 PROXY STATEMENT 17 +CORPORATE GOVERNANCE +Class II Directors +Matthew R. Bob +President of Eagle Oil and Gas; Managing Member of MB Exploration +Matthew Bob has served as a member of the Board since 2014. Mr. Bob currently serves as President of Eagle Oil and Gas and has been the founder and managing member of MB Exploration and affiliated companies since 1994. Previously, Mr. Bob served as President of Hall Phoenix Energy LLC, a privately held oil and gas exploration company, from 2009 to 2011. Prior to forming MB Exploration, Mr. Bob was Chief Geophysicist at Pitts Oil Company. He began his career at Union Oil Company of California where he held various geological positions. +Mr. Bob currently serves as an independent director of Southcross Energy, a natural gas processing and transportation company with operations in South Texas. +Mr. Bob holds a B.A. in Geology from St. Louis University and an M.S. in Geology from Memphis University, and is a graduate of Harvard University’s Executive Management Program. He is a member of the American Association of Petroleum Geologists, the Society of Exploration Geophysicists and the Dallas Petroleum Club, and is a registered Geoscientist in the States of Texas, Mississippi and Louisiana. +SKILLS AND QUALIFICATIONS: +Mr. Bob’s extensive knowledge of the exploration and production industry and technical expertise are assets to the Board and qualify him as a director. His experience as a senior executive further strengthens the strategic and oversight functions of the Board. He is NACD Directorship Certified. +INDEPENDENT +Age as of the Record Date 63 +Director Since 2014 +Callon Committees: +Compensation (Chairman), N&ESG , Strategic Planning and Reserves +Other Current Directorships: +Southcross Energy +Anthony J. Nocchiero +Former SVP and Chief Financial Officer (Retired) of CF Industries, Inc. +Anthony Nocchiero has served as a member of the Board since 2011. Mr. Nocchiero retired as Senior Vice President and Chief Financial Officer for CF Industries, Inc. in 2010, a position he had held since 2007. From 2005 to 2007, he was the Vice President and Chief Financial Officer for Merisant Worldwide, Inc. Prior to that, Mr. Nocchiero was self-employed as an advisor and private consultant from 2002 to 2005. From 1999 to 2001, Mr. Nocchiero served as Vice President and Chief Financial Officer of BP Chemicals, the global petrochemical business of BP plc. Prior to that, he spent 24 years with Amoco Corporation in various financial and management positions, including service as Amoco’s Vice President and Controller from 1998 to 1999. +Mr. Nocchiero has previous experience serving as a board member of various public and private companies, including Terra Nitrogen LP, Keytrade AG, Vysis Corporation and the Chicago Chamber of Commerce. +Mr. Nocchiero holds a B.S. degree in Chemical Engineering from Washington University in St. Louis and an M.B.A. degree from the Kellogg Graduate School of Management at Northwestern University. +SKILLS AND QUALIFICATIONS: +Mr. Nocchiero’s broad financial, accounting and operating experience within the energy industry are valuable to the Board and make him a meaningful contributor as a director. Additionally, Mr. Nocchiero’s status as a “financial expert” and knowledge of public company reporting requirements add meaningful insights to the Board and Audit Committee. +INDEPENDENT +Age as of the Record Date 69 +Director Since 2011 +Callon Committees: +Audit (Chairman), Compensation, Strategic Planning and Reserves +18 CALLON PETROLEUM +CORPORATE GOVERNANCE +James M. Trimble +Former Chief Executive Officer and President (Retired) of Stone Energy Corporation +James Trimble has served as a member of the Board since 2014. Most recently, Mr. Trimble served as the interim Chief Executive Officer and President of Stone Energy Corporation from 2017 to 2018. Prior to that, Mr. Trimble served as CEO and President of PDC Energy, Inc. from 2011 until his retirement in 2015. Mr. Trimble was Managing Director of Grand Gulf Energy Limited, a public company traded on the Australian Securities Exchange, and President and CEO of Grand Gulf’s U.S. subsidiary Grand Gulf Energy Company LLC, an exploration and development company focused primarily on drilling in mature basins in Texas, Louisiana and Oklahoma, from 2005 to 2010. Earlier in his career, Mr. Trimble was CEO of TexCal (formerly Tri-Union Development) and CEO of Elysium Energy, a privately held oil and gas exploration company. Prior to that, he was Senior Vice President of Exploration and Production for Cabot Oil and Gas, a publicly-traded independent energy company. +Mr. Trimble currently serves as a director of Talos Energy, a publicly-traded oil and gas exploration company, and Chairman of the Board of Crestone Peak Resources LLC, a privately held oil and gas exploration company. Previously, Mr. Trimble was a director of Stone Energy Corporation from 2017 to 2018, PDC Energy from 2009 to 2016, C&J Energy Services from 2016 to 2017, Seisgen Exploration from 2008 to 2015, Grand Gulf Energy from 2009 to 2012, and Blue Dolphin Energy from 2002 to 2006. +Mr. Trimble was an officer of PDC Energy in September 2013, when each of the twelve partnerships for which the company was the managing general partner filed for bankruptcy in the federal bankruptcy court, Northern District of Texas, Dallas Division and was on the board of directors of C&J Energy Services when it filed for bankruptcy in the court of the Southern District of Texas, Houston Division in July 2016. +Mr. Trimble graduated from Mississippi State University where he majored in petroleum engineering for undergraduate (Bachelor of Science) and graduate studies. He is a Registered Professional Engineer in the State of Texas. +SKILLS AND QUALIFICATIONS: +Mr. Trimble’s deep knowledge of the exploration and production industry and his leadership experience at previous companies strengthen the strategic and oversight functions of the Board. His experience on the boards of several other public companies provide valuable perspective on best practices relating to corporate governance, management and strategic transactions. +INDEPENDENT +Age as of the Record Date 72 +Director Since 2014 +Callon Committees: +N&ESG (Chairman), Compensation, Strategic Planning and Reserves +Other Current Directorships: +Talos Energy +2021 PROXY STATEMENT 19 +CORPORATE GOVERNANCE +Current Composition of the Board +The following table provides information with respect to the skills and experience of all current directors and the nominees for Class III terms who have been nominated to stand for election at the Annual Meeting. +Name Frances Aldrich Sevilla-Sacasa Matthew R. Bob Barbara J. Faulkenberry Michael L. Finch L. Richard Flury +(Chairman) Joseph C. Gatto, Jr. S.P. Johnson IV Larry D. McVay Anthony J. Nocchiero James M. Trimble Steven A. Webster +Age (on March 15, 2021) +65 63 61 65 73 50 65 73 69 72 69 +Tenure (on March 15, 2021) +2 7 3 6 17 3 2 14 10 7 2 +Gender Diversity +● +● +CEO/President Experience ● ● ● ● ● ● ● +Senior Executive Leadership ● ● ● ● ● ● ● ● ● ● ● +Outside Public Boards (current) ● ● ● ● ● ● ● ● +Outside Public Boards (prior) ● ● ● ● ● ● ● +E&P Industry Experience ● ● ● ● ● ● ● ● ● +Energy (Other than E&P) Industry Experience ● ● ● ● ● ● ● +Financial Expert ● ● ● +Financial Literacy ● ● ● ● ● ● ● ● ● ● ● +Financial Oversight/Accounting ● ● ● ● ● ● ● ● ● +Petroleum and Other Engineering ● ● ● ● +Geologist or Geophysicist ● ● +Government/Public Policy/Regulatory ● ● +HES Experience/Environmental ● ● ● +Strategic Advising ● ● ● ● ● ● ● ● ● ● +Investment Banking ● ● +Supply Chain ● ● +Technology/IT/Cybersecurity ● ● ● ● +20 CALLON PETROLEUM +CORPORATE GOVERNANCE +Director Compensation +The compensation of our non-employee directors is reviewed by the Compensation Committee and is approved by the Board. We use a combination of cash and stock-based incentive compensation to attract and retain qualified candidates to serve on the Board. In determining director compensation, we consider the responsibilities of our directors, the significant amount of time the directors spend fulfilling their duties, and the competitive market for skilled directors. +Annually the Compensation Committee directly engages an independent compensation consultant to conduct an analysis of director compensation and recommend any adjustments to the total annual compensation of the non-employee directors. The consultant evaluates competitive market data, utilizing the same industry peer group used for executive compensation market data (see page 50). The Compensation Committee generally targets total compensation near the median of this peer group. The Company's director compensation program generally consists of cash retainers and an annual grant of restricted stock units ("RSUs") awarded under the 2020 Omnibus Incentive Plan (the "2020 Plan"). The RSU grants are awarded to match competitive practices and encourage a long-term alignment with shareholders. The RSUs vest on the first anniversary following the grant, or on the date of the Company’s subsequent Annual Meeting, whichever occurs first. +In first quarter 2020, prior to the global outbreak of COVID-19, the Compensation Committee reviewed the competitiveness of the director compensation package with input from its compensation consultant Meridian Compensation Partners, LLC and determined that director compensation was at approximately the median of the peer group. Upon recommendation from the Compensation Committee, the Board determined to maintain compensation levels established in 2019, except to increase fees for the chairs of the N&ESG Committee and the Strategic Planning and Reserves Committee to $15,000 and $20,000, respectively, in recognition of the increased scope of responsibilities of those roles. +However, in response to commodity price volatility resulting from the worldwide outbreak of COVID-19 and the related supply decisions of the Organization of Petroleum Exporting Countries ("OPEC"), Board members agreed to temporarily reduce their compensation by 17.5% for 2020. This reduction was executed through an initial 35% reduction in compensation in June 2020. After evaluating the partial recovery of commodity prices later in the year, the Board approved and paid a supplementary payment to the non-employee directors in an amount of half of the original reduction (i.e., 17.5%) to align with the reinstatement of senior officer salaries as described on page 42. Due to share price volatility and dilution concerns, the Board also decided to limit the annual grant of RSUs for non-employee directors to 2,037 RSUs (the same number of RSUs granted to each director in 2019) and issue the remaining amount of the annual director compensation in cash. +For 2021, the Board has approved a 12.5% reduction in non-employee director compensation to align with investor priorities and changes to the executive compensation program as described more fully on page 42. +For 2020, the Company's non-employee director compensation consisted of the following, which reflects the net 17.5% compensation reduction: +Fee Type +Original 2020 Compensation +Actual 2020 Compensation (with 17.5% Reduction and Equity Reallocation) +Board member cash retainer $80,000 $150,966 +Restricted Stock Unit (RSU) Grant Value (1) +$165,000 $51,129 +Chairmen Fees +Non-Executive Chair +$120,000 $99,000 +Audit Committee Chair +$20,000 $16,500 +Compensation Committee Chair +$15,000 $12,375 +Nominating, Environmental, Social and Governance Committee Chair +$15,000 $12,375 +Strategic Planning and Reserves Committee Chair $20,000 $16,500 +(1) Targeted equity value for 2020 delivered via same number of shares granted in 2019, which is 2,037 (with a grant date fair value of $51,129 based on June 8, 2020, closing stock price of $25.10, adjust to reflect the 1-for-10 reverse stock split effective August 7, 2020), with the remainder paid in cash in a single lump sum on June 8, 2020. +In the first quarter of 2020, the Company issued payment to Ms. Aldrich Sevilla-Sacasa and Messrs. Johnson and Webster for the final quarterly retainer for their 2019-2020 service on the Carrizo Board of Directors in accordance with the terms of the merger agreement. +2021 PROXY STATEMENT 21 +CORPORATE GOVERNANCE +Each non-employee director is reimbursed for reasonable out-of-pocket costs incurred to attend Board and Committee meetings. If a member of the Board is an officer or employee of the Company, he or she does not receive compensation for his or her service as a director. +Non-employee directors have the opportunity to make an annual election to defer some or all of their cash retainer or annual stock award pursuant to the terms of a deferred compensation plan for non-employee directors (the "Deferred Compensation Plan") until separation from service as a director. All deferrals under the plan are credited as phantom stock units of Callon stock. Callon's non-employee directors are subject to stock ownership guidelines of five times the annual cash retainer of $80,000. As of December 31, 2020, all non-employee directors were in compliance with the stock ownership policy, either through meeting the ownership requirement or by being within the transition period. For more information on the stock ownership guidelines, see page 50. +The table below indicates the total compensation earned during 2020 for each non-employee director: +NON-EMPLOYEE DIRECTOR COMPENSATION FOR 2020 +Director +Fees Earned or +Paid in Cash (a)(b)(c) +Stock +Awards (d) +All Other +Compensation +Total +Frances Aldrich Sevilla-Sacasa (e) +$ 170,996 (f) $ 51,129 +(g) +$0 $ 222,125 +Matthew R. Bob $ 163,371 +(h) +$ 51,129 +$0 $ 214,500 +Barbara J. Faulkenberry $ 150,996 (f) $ 51,129 $0 $ 202,125 +Michael L. Finch $ 150,996 (f) $ 51,129 $0 $ 202,125 +L. Richard Flury $ 249,996 (i) $ 51,129 $0 $ 301,125 +S. P. Johnson IV (e) +$ 170,996 (j) $ 51,129 +(g) +$4,816,175 (n) $ 5,038,300 +Larry D. McVay $ 167,496 (k) $ 51,129 $0 $ 218,625 +Anthony J. Nocchiero $ 167,496 (l) $ 51,129 $0 $ 218,625 +James M. Trimble $ 163,371 (m) $ 51,129 $0 $ 214,500 +Steven A. Webster (e) +$ 170,996 (j) $ 51,129 $0 $ 222,125 +(a) Does not include reimbursement of expenses associated with attending Board and Committee meetings. +(b) The Board elected to receive a 17.5% reduction in annual retainer and fees related chairing a Board committee for 2020. +(c) Cash compensation for 2020 includes the director's annual retainer as well as cash paid in lieu of equity in the amount of $84,996 as a result of the decision by the Board to limit the issuance of shares to non-employee directors in 2020 due to the recent low trading prices of Callon. +(d) Amounts calculated utilizing the provisions of FASB ASC Topic 718. These amounts utilize a grant date fair value of $25.10 per share for the awards. The aggregate number of stock unit awards outstanding as of December 31, 2020 for each director is 2,037. These amounts reflect the 1-for-10 reverse stock split of common stock of the Company effective August 7, 2020. +(e) Mr. Johnson, Mr. Webster, and Ms. Aldrich Sevilla-Sacasa received a $20,000 cash payment in January 2020 for outstanding board fees owed by Carrizo. Mr. Johnson and Mr. Webster each elected to have his cash payment deferred pursuant to the terms of the Deferred Compensation Plan. +(f) Represents annual retainer of $66,000 and $84,996 in lieu of equity. +(g) Mr. Johnson and Ms. Aldrich Sevilla-Sacasa each elected to have their equity award deferred pursuant to the terms of the Deferred Compensation Plan. +(h) Represents annual retainer of $66,000, $84,996 in lieu of equity, and an additional $12,375 for acting as Chairman of the Compensation Committee. +(i) Represents annual retainer of $66,000, $84,996 in lieu of equity, and an additional $99,000 for acting as the non-executive Chairman of the Board. +(j) Represents annual retainer of $66,000 and $84,996 in lieu of equity. Mr. Johnson and Mr. Webster each elected to have his annual retainer deferred pursuant to the terms of the Deferred Compensation Plan. +(k) Represents annual retainer of $66,000, $84,996 in lieu of equity, and an additional $16,500 for acting as Chairman of the Strategic Planning and Reserves Committee. +(l) Represents annual retainer of $66,000, $84,996 in lieu of equity, and an additional $16,500 for acting as Chairman of the Audit Committee. +(m) Represents annual retainer of $66,000, $84,996 in lieu of equity, and an additional $12,375 for acting as Chairman of the N&ESG Committee. +(n) Pursuant to the terms of the Merger Agreement and the Carrizo Change in Control Severance Plan, in July 2020 the Company paid to Mr. Johnson $4,146,000 in severance benefits and a 2019 annual bonus of $670,175 +22 CALLON PETROLEUM +CORPORATE GOVERNANCE +Director Independence +To minimize potential conflicts, it is a policy of the Board that a majority of the Board be independent. In accordance with the standards for companies listed on the New York Stock Exchange ("NYSE") and the rules and regulations promulgated by the SEC, as well as our Corporate Governance Guidelines, the Board considers a director to be independent if it has affirmatively determined that the director has no material relationship with the Company that could compromise his or her ability to exercise independent judgment in carrying out his or her responsibilities. The Board revisits the independence of each director on an annual basis and makes independence determinations when a newly appointed director joins the Board between annual meetings. The Board reviewed the independence of its directors and nominees in accordance with the standards described above and affirmatively determined that each of the directors (other than Mr. Gatto) and nominees is independent. +Board Structure and Responsibilities +Governance Highlights +We are committed to effective and sustainable corporate governance, which we believe strengthens Board and management accountability, promotes the long-term interests of our shareholders, and helps build public trust in our Company. We adhere to our core values and governance principles to ensure that we operate our business responsibly, ethically, and in a manner aligned with the interests of our shareholders. Highlights of our commitment to strong corporate governance include the following: +• Ten of our eleven directors are independent. Joseph C. Gatto, Jr., our President and CEO, is the only non‑independent member of the Board. +• All Board committees are comprised entirely of independent directors. +• An independent, non-executive director serves as the Company’s Chairman of the Board. +• The Company encourages a paced refreshment of the Board. Five of the eleven directors have joined within the last five years. +• The Board includes a balance of experience, tenure, and qualifications in areas important to our business. +• We have an over-boarding policy in place for directors. +• The Board conducts regular executive sessions with our independent directors. +• We regularly refresh our governance documents. +• The Board and its committees conduct annual self-evaluations. +• We have adopted stringent insider trading, anti-hedging, and anti-pledging policies. +• We engage in active shareholder engagement practices. +• The Board oversees environmental, social and governance practices. +• The Board oversees succession planning for the CEO and executive officer positions. +• We engage an independent executive compensation consultant that reports directly to the Compensation Committee. +• The Company adopted Annual Say-On-Pay voting. +• The Compensation Committee has implemented significant director and executive officer stock ownership guidelines. +• We do not have employment agreements with any executive officers, with the exception of a legacy employment agreement with Gregory F. Conaway that was inherited by the Company as a result of the Carrizo Acquisition. +• We have double-trigger change in control provisions in our severance agreements and equity awards. +• We do not have a Poison Pill (Shareholder Rights Plan). +2021 PROXY STATEMENT 23 +CORPORATE GOVERNANCE +General Information +The Board is responsible for determining the ultimate direction of our business strategy, overseeing our governance policies and culture and promoting the long-term interests of the Company. The Board possesses and exercises oversight authority over our business but, subject to our governing documents and applicable law, delegates day-to-day management of the Company to our CEO and senior management. The Board generally fulfills its responsibilities through regular meetings to review significant developments affecting the Company and to act on matters requiring Board approval. Between regularly scheduled meetings, the Board may also hold special meetings, execute written consents, and participate in telephonic conference calls when an important matter requires Board action. During 2020, faced with the challenges of COVID-19 and the related commodity price volatility the Board met formally 16 times. All of our directors attended at least 75% of Board and committee meetings either in person or by telephone during the time he or she served on the Board or committees. In addition, to promote open discussion, the non-employee directors meet in executive session without management regularly. L. Richard Flury, the Chairman of the Board, was selected to preside over all executive sessions during 2020. It is the policy of the Company that, to the extent possible, all directors attend the Company’s Annual Meetings of Shareholders. Each then-current member of the Board attended the Company's 2020 Annual Meeting of Shareholders. +The Board, in consultation with the N&ESG Committee, has determined that a classified board structure continues to be appropriate for us, particularly in an industry where a long-term strategic planning outlook is critical for the successful development of oil and natural gas resources through commodity price cycles. Our future success depends in significant part on the in-depth knowledge of our business and operations by our directors. We believe that a classified board promotes stability, continuity and experience among our directors, which is essential to developing and implementing long-term strategies, while resisting the pressure to focus on short-term results at the expense of enhancing long-term value and success. +Board Leadership Structure +One of the Board’s key responsibilities is determining the appropriate leadership structure for the Board, which helps ensure its effective and independent oversight of management on behalf of our shareholders. The Board believes that there is no one generally accepted approach to providing board leadership and given the dynamic and competitive environment in which we operate, the optimal board leadership structure may vary as circumstances warrant. Accordingly, the Board has no policy mandating the separation or combination of the roles of Chairman of the Board and CEO, but periodically discusses and considers the structure as circumstances change. As such, the Board believes that it is in the best position to evaluate the needs of the Company and to determine how best to organize the Company’s leadership structure to meet those needs. +24 CALLON PETROLEUM +CORPORATE GOVERNANCE +Currently, the Board has separated the roles of CEO and Chairman of the Board and appointed independent director Mr. Flury as Chairman of the Board and Mr. Gatto as CEO. +The Board is currently comprised of eleven directors, of whom ten are independent. Mr. Gatto, the Company’s President and CEO, serves as an executive member of the Board. Independent directors and management generally have different perspectives and roles in strategy development. Our independent directors have backgrounds in the oil and gas industry or other relevant experiences which complement the CEO’s comprehensive, company-specific perspective. As the officer having primary responsibility for managing our daily operations and identifying strategic priorities, the CEO is best positioned to lead the Board through reviews of key business and strategy decisions. This dynamic effectively promotes the opportunity for a successful blend of our independent directors’ perspectives and oversight responsibilities and facilitates information flow and communication between senior management and the Board, which are both essential to effective governance. +Areas of Board Oversight +Board Risk Oversight +As an independent oil and gas company, we face a number of risks. Assessing and managing material risk is the responsibility of our management team, while the Board, as a whole and through its committees, generally oversees risk management and our long-term strategic direction, ensuring that risks undertaken by the Company are consistent with the Board’s risk tolerance. The Board leadership structure and our practice of a high degree of interaction between our directors and members of senior management facilitate this oversight function. Our executive officers regularly attend the Board meetings and are available to address any questions or concerns raised by the Board related to risk management and any other matters. Other members of our management team periodically attend Board meetings or are otherwise available to confer with the Board to the extent their expertise is required to address risk management matters. The information flow and communication throughout the year between the Board and senior management regarding long-term strategic planning and short-term operational reporting includes matters of material risk inherent in our business of developing oil and natural gas assets. The Board realizes, however, that it is not possible or prudent to eliminate all risk and that appropriate risk-taking is essential in order to achieve our near and longer-term objectives. +While the Board is ultimately responsible for risk oversight, the Board exercises additional risk oversight responsibilities through its committees, which are comprised solely of independent directors. Each such committee has primary risk oversight responsibility with respect to matters within the scope of its duties as contemplated by its charter and as described below. +Standing Committees of the Board of Directors +The Board has four standing committees, each of which is comprised entirely of independent directors. Each committee, discussed below in greater detail, has a written charter that establishes the responsibilities and scope of the committee and its Chairman. Each committee charter was reviewed in 2020 and revised as deemed necessary by the Board. +BOARD OF DIRECTORS +The Audit Committee , among other duties, is charged with overseeing material risk exposures in the areas of financial reporting. +The N&ESG Committee focuses on issues relating to corporate governance, ESG matters, and Board committee composition. This Committee also assists the Board in fulfilling its oversight responsibilities with respect to succession planning for our directors and executive officers. +The Compensation Committee oversees the Company's compensation programs and reviews the potential risks that may result from our compensation policies to ensure they do not encourage unnecessary or excessive risk taking by management. +The Strategic Planning and Reserves Committee oversees the development and implementation of our strategic plan and the integrity of our reserve estimation reporting process. +2021 PROXY STATEMENT 25 +CORPORATE GOVERNANCE +Committees of the Board +Callon Committees +Name and Independence Audit Compensation Nominating +and ESG Strategic +Planning and +Reserves +Class I Directors (term expires in 2022) +Michael L. Finch +Independent +○ ○ ○ +S. P. Johnson IV +Independent +○ +Larry D. McVay +Independent +○ ○ ● +Steven A. Webster +Independent +○ ○ +Class II Directors (term expires in 2023) +Matthew R. Bob +Independent +● ○ ○ +Anthony J. Nocchiero +Independent +● ○ ○ +James M. Trimble +Independent +○ ● ○ +Class III Directors (term expires in 2021) +Frances Aldrich Sevilla-Sacasa +Independent +○ ○ +Barbara J. Faulkenberry +Independent +○ ○ ○ +L. Richard Flury +Independent Chairman of the Board +○ ○ ○ +Joseph C. Gatto, Jr. +President and Chief Executive Officer +● Chairman ○ Member +26 CALLON PETROLEUM +CORPORATE GOVERNANCE +Audit Committee +Anthony J. Nocchiero (Chairman and Financial Expert) +Barbara J. Faulkenberry +Michael L. Finch (Financial Expert) +L. Richard Flury +Larry D. McVay +Steven A. Webster +PURPOSE +The principal function of the Audit Committee is to assist the Board in overseeing the areas of financial reporting, accounting integrity, compliance, and risk management. +MEETINGS IN 2020 +Six meetings; all members attended at least 75% of Committee meetings during the time he or she served on the Committee. +RESPONSIBILITIES +Pursuant to its charter, our Audit Committee functions in an oversight role and has the following purposes: +• Overseeing the quality, integrity and reliability of the financial statements and other financial information we provide to any governmental body or the public; +• Overseeing our compliance with legal and regulatory requirements; +• Selecting and hiring (subject to ratification by our shareholders) the independent public accounting firm; +• Overseeing the qualifications, independence and performance of the independent auditor; +• Overseeing the effectiveness and performance of our internal audit function; +• Overseeing our internal controls regarding finance, accounting, legal compliance and ethics; +• Establishing and overseeing procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls or audit matters, including the confidential, anonymous submission of concerns regarding such matters; +• Assessing matters related to risk, risk controls and compliance, including the review and approval of hedging practices and policies; +• Overseeing matters related to cybersecurity and the security of information technology systems, including management’s plans, programs and policies designed to mitigate cybersecurity risks and third party reports on the information technology control environment; +• Producing the Audit Committee Report for inclusion in our annual proxy statement; and +• Performing such other functions the Board may assign to the Audit Committee from time to time. +The Audit Committee oversees our accounting and auditing procedures and financial reporting practices, and is responsible for the engagement of and oversight of all audit work conducted by our independent registered public accounting firm. The Audit committee also oversees the periodic rotation of the lead audit partner from our independent registered public accounting firm, as required by SEC rules, and is directly involved in the selection of such partner. The Audit Committee meets at least quarterly with our executive and financial management teams, internal auditor and our independent registered public accounting firm to review our financial information and systems of internal controls. The independent registered public accounting firm reports directly to the Audit Committee and, if requested, meets with the Audit Committee in executive session without management representatives present. The Audit Committee has the authority to investigate any matters brought to its attention and to retain outside legal, accounting or other consultants if deemed necessary. +The Audit Committee is required to pre-approve all audit, audit-related and non-audit services provided by the independent registered public accounting firm exceeding $25,000. The Audit Committee approved all of the fees described in Proposal 3. +Relationship with Independent Registered Public Accounting Firm +Management is responsible for establishing and maintaining internal controls over financial reporting and for assessing the effectiveness of those controls. The independent registered public accounting firm is responsible for performing independent audits of our consolidated financial statements and internal controls over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (“PCAOB”) (United States) and issuing reports thereon. The Audit Committee’s responsibility is to monitor and oversee these processes. Grant Thornton LLP has served as our independent registered public accounting firm since 2016. The Audit Committee evaluated and reaffirmed Grant Thornton LLP as our independent registered public accounting firm following the Carrizo Acquisition. +INDEPENDENCE +The Board has determined that all members meet the independence requirements of the SEC and NYSE rules and the financial literacy requirements of the NYSE. Members of the Audit Committee may not simultaneously serve on the audit committee of more than two other public companies. +2021 PROXY STATEMENT 27 +CORPORATE GOVERNANCE +Compensation Committee +Matthew R. Bob (Chairman) +Michael L. Finch +L. Richard Flury +Anthony J. Nocchiero +James M. Trimble +PURPOSE +The purpose of the Compensation Committee is to establish our compensation programs and oversee the alignment of our compensation with our business strategies. +MEETINGS IN 2020 +Eleven meetings; all members attended at least 75% of Committee meetings. +RESPONSIBILITIES +Pursuant to its charter, the Compensation Committee’s duties include the responsibility to assist the Board in: +• Evaluating the performance of and establishing the compensation of the CEO; +• Establishing, with input from the CEO, the compensation for our other executive officers; +• Establishing and reviewing our overall executive compensation philosophy and approving changes to our compensation program; +• Reviewing incentive compensation arrangements to confirm that executive compensation does not encourage unnecessary risk taking; +• Administering our long-term incentive plans; +• Reviewing and approving the CD&A for inclusion in our annual proxy statement; +• Reviewing and recommending to the Board compensation for non-employee directors; +• Retaining and overseeing compensation consultants, including the independence of the consultants; +• Reviewing and approving performance criteria and results for bonus and performance-based equity awards for executive officers and approving awards to those officers; and +• Performing such other functions as the Board may assign to the Compensation Committee from time to time. +The Committee retains the services of an independent compensation consultant to assist in the annual review of market and industry data to assess our competitive position with respect to each element of total compensation and to assist with the attraction and retention of, and appropriate reward to, our CEO and other executive officers. Pursuant to applicable SEC and NYSE rules, the Committee has determined that no conflicts of interest exist or have existed related to the Committee’s engagement of FW Cook or Meridian. +INDEPENDENCE +Consistent with the listing requirements of the NYSE, the Compensation Committee is composed entirely of independent members of the Board, as each member meets the independence requirements set by the NYSE and applicable federal securities laws. +COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION +L. Richard Flury, Matthew R. Bob, Michael L. Finch, Anthony J. Nocchiero and James M. Trimble served on the Company’s Compensation Committee during fiscal year 2020. No member of our Compensation Committee is presently or has been an officer or employee of the Company. In addition, during the last fiscal year, no executive officer served as a member of the board or the compensation committee (or other board committee performing similar functions or, in the absence of any such committee, the entire board) of any entity in which a Callon Board member is an executive officer. +28 CALLON PETROLEUM +CORPORATE GOVERNANCE +Nominating, Environmental, Social and +Governance Committee +James M. Trimble (Chairman) +Frances Aldrich Sevilla-Sacasa +Matthew R. Bob +Barbara J. Faulkenberry +Larry D. McVay +PURPOSE +The purpose of the N&ESG Committee is to oversee ESG matters; identify and recommend qualified candidates to the Board for nomination as members of the Board; assess director, Board and committee effectiveness; develop and implement our Corporate Governance Guidelines; oversee succession planning for executive officers; and otherwise take a leadership role in shaping the corporate governance of our Company. +MEETINGS IN 2020 +Four meetings; all members attended at least 75% of Committee meetings. +RESPONSIBILITIES +Pursuant to its charter, the N&ESG Committee’s duties include the responsibility to assist the Board in: +• Overseeing ESG policies, performance and disclosure, as well as developing recommendations for the Board on emerging issues related to our industry; +• Evaluating a set of specific criteria for Board membership and identifying individuals qualified to become Board members, recommending nominees for election at the next annual meeting of shareholders, reviewing the suitability for continued service as a director of each Board member, and filling any Board vacancies; +• Assessing the size and composition of the Board and its committees and recommending to the Board the members and chair for each Board committee; +• Overseeing and approving plans for Board continuity and succession; +• Advising the Board and making recommendations regarding appropriate corporate governance practices and assisting the Board in implementing those practices, including periodically reviewing the adequacy of our Corporate Governance Guidelines, our Code of Business Conduct and Ethics, and the various Board committee charters, and making recommendations for changes thereto to the Board; +• Overseeing the annual self-evaluation of the performance of the Board and its committees; +• Overseeing and approving plans for management continuity and succession; +• Recommending to the Board a successor to the CEO when a vacancy occurs; +• Reviewing directorships in other public companies held by or offered to directors or executive officers of the Company; +• Overseeing continuing education for the Board; and +• Performing other such functions as the Board may assign to the N&ESG Committee from time to time. +INDEPENDENCE +Each member of the Committee meets the independence requirements of the NYSE and applicable federal securities laws. +2021 PROXY STATEMENT 29 +CORPORATE GOVERNANCE +Strategic Planning and +Reserves Committee +Larry D. McVay (Chairman) +Frances Aldrich Sevilla-Sacasa +Matthew R. Bob +Barbara J. Faulkenberry +Michael L. Finch +L. Richard Flury +S. P. Johnson IV +Anthony J. Nocchiero +James M. Trimble +Steven A. Webster +PURPOSE +The purpose of the Strategic Planning and Reserves Committee is to manage and oversee the Board’s participation in the development of the Company’s strategic plan, and oversee the integrity of the determination of our oil and natural gas reserve estimates. +MEETINGS IN 2020 +Five meetings; all members attended at least 75% of Committee meetings. +RESPONSIBILITIES +The Strategic Planning and Reserves Committee was created to oversee the responsibilities of the Board relating to strategic planning, including: +• Overseeing the Board’s participation in the development of a strategic plan and the consideration and assessment of strategic decisions; +• Monitoring management's implementation of the strategic plan, and advising the Board if additional Board action appears to be needed; +• Assuring that management is addressing the personnel requirements for the successful implementation of the strategic plan; +• Overseeing our reserve engineering reports and reserve engineering firm, including: (i) the integrity of our reserve reports, (ii) determinations regarding the qualifications and independence of our independent reserve engineering firm, and (iii) the performance of our independent reserve engineering firm; and +• Performing other such functions as the Board may assign to the Strategic Planning and Reserves Committee from time to time. +INDEPENDENCE +Each member of the Committee meets the independence requirements of the NYSE and applicable federal securities laws. +30 CALLON PETROLEUM +CORPORATE GOVERNANCE +Corporate Governance Matters +Corporate Governance Principles +The Board believes that sound corporate governance practices and policies provide an important framework to assist in fulfilling its duty to shareholders. The framework for our corporate governance can be found in our governance documents, which include: +• Corporate Governance Guidelines; +• Code of Business Conduct and Ethics; and +• Charters for the Audit, Compensation, N&ESG, and Strategic Planning and Reserves Committees. +In keeping with sound corporate governance practices, each of these documents is reviewed annually and is available on our website www.callon.com under the “About Callon - Governance” menu. Shareholders may obtain a printed copy, free of charge, by sending a written request to our Corporate Secretary at our principal executive office in Houston, Texas. Any amendments to these documents are promptly posted on our website. +Code of Business Conduct and Ethics +Our Code of Business Conduct and Ethics (the “Code”) sets forth the policies and expectations for Callon’s officers, employees and directors as well as consultants, representatives, agents, and contractors while acting on Callon’s behalf. The Code addresses a number of topics including conflicts of interest, compliance with laws, insider trading, prohibitions on discrimination and harassment, workplace safety and protection of the environment, and fair disclosure. In addition, the Code explicitly prohibits directors, officers and employees from engaging in hedging transactions in Callon stock. It also states that no corporate funds may be used for political contributions. +The Code meets the NYSE’s requirements for a code of business conduct and ethics and also includes a code of ethics applicable to our senior financial officers consistent with the requirements of the SEC. We intend to satisfy the disclosure requirements regarding any amendment to, or any waiver of, a provision of the Code by promptly posting such information on our website. Concerns about potential violations of the Code can be anonymously reported to our ethics helpline by calling 1-844-471-7637 or accessing the following website: callon.ethicspoint.com. +Environmental, Social and Governance +Callon’s mission is to build trust, create value and drive sustainable growth responsibly for our investors, our employees and the communities in which we operate. Consistent with this mission, the Board oversees the Company’s ESG programs with a focus on long-term, sustainable investments in our operations, team member development, and protecting the environment in the best interests of all of our stakeholders. The Board regularly addresses the Company’s efforts to continuously improve outcomes regarding workplace safety, environmental impact, team member diversity and workforce development. As described in more detail above beginning on page 10, the Board is also committed to effective and sustainable corporate governance, which we believe strengthens Board and management accountability, promotes the long-term interests of our shareholders, and helps build public trust in our Company. +Communication with Directors +Shareholders or other interested parties who wish to communicate with the full Board, independent directors as a group, or individual directors, may do so by sending a letter in care of the Corporate Secretary to our principal executive office located at 2000 West Sam Houston Parkway South, Suite 2000, Houston, Texas 77042. Our Corporate Secretary has the authority to discard any solicitations, job inquiries, advertisements, surveys or other inappropriate communications, but will forward any other mail to the named director or group of directors. Our Corporate Secretary will forward approved mail addressed to the full Board to the Chairman of the Board who, if appropriate, will share the item with the full Board. +2021 PROXY STATEMENT 31 +CORPORATE GOVERNANCE +Board Evaluations +The N&ESG Committee, in consultation with the Chairman of the Board, annually leads the performance review of the Board and its committees. The self-evaluation process seeks to obtain each director’s assessment of the effectiveness of the Board, the committees and their leadership, Board and committee composition, and Board and management dynamics. In 2020, the Board engaged an independent third-party advisor to conduct the annual Board evaluation process. Each director, as well as select members of management, was interviewed by the advisor and also completed a survey about the Board and the committees on which the director served. The results were discussed by the full Board and within each committee. +Director Education +The Company sponsors an ongoing director education program that assists Board members in fulfilling their responsibilities. Training commences with an orientation program when a new director joins the Board. Ongoing education is provided through written materials, presentations in Board meetings, and training outside the boardroom. All Callon directors are members of the National Association of Corporate Directors and are provided an annual training allowance to pursue relevant director education programs. +32 CALLON PETROLEUM +EXECUTIVE OFFICERS +Executive Officer Biographies +Joseph C. Gatto, Jr. +President, Chief Executive Officer and Director +Joseph C. Gatto, Jr. has served the Company as Chief Executive Officer since May 2017 and as a Director since May 2018. Mr. Gatto joined the Company in April 2012 as Senior Vice President, Corporate Finance, with responsibility for our capital markets and strategic planning functions, in addition to investor relations activities. Effective March 31, 2014, Mr. Gatto was appointed Chief Financial Officer and Treasurer of the Company and in August 2016 was promoted to President while retaining the roles of Chief Financial Officer and Treasurer. In May 2017 he was promoted to Chief Executive Officer while retaining the role as President. Mr. Gatto was elected as a member of the Board of Directors in May 2018. Prior to joining Callon, Mr. Gatto was a Managing Director in the energy investment banking groups of Merrill Lynch & Co. and Barclays Capital from July 1997 until February 2009, with involvement in all phases of M&A and capital raising transactions for his clients. In February 2009, he founded MarchWire Capital, LLC, a financial advisory and strategic consulting firm, and subsequently served as Head of Structuring and Execution with Merrill Lynch Commodities, Inc. from January 2010 until November 2011. Mr. Gatto currently serves on the board of directors for the Independent Petroleum Association of America and as a member of the Contemporary Arts Museum Houston Board of Trustees. Mr. Gatto graduated from Cornell University with a B.S. degree and The Wharton School of the University of Pennsylvania with an M.B.A. +James P. Ulm, II +Senior Vice President and Chief Financial Officer +James P. Ulm, II has served the Company as Senior Vice President and Chief Financial Officer since December 2017. Prior to joining Callon in December 2017, Mr. Ulm was Founder and Managing Partner of NewVista Energy Partners, a private E&P company focused on emerging resource plays in the Permian and Anadarko Basins, from 2015 to 2017. Previously, he served as Senior Vice President and Chief Financial Officer for three private companies from 2008 to 2015 where he was responsible for financial and accounting management, capital formation, and corporate strategy. Prior to these roles, Mr. Ulm served from 1999 to 2008 as Senior Vice President and Chief Financial Officer for Pogo Producing Company, a publicly-traded oil and gas company which had meaningful operations in the Permian Basin. From 1995 to 1999, he was the Treasurer for Newfield Exploration Company. Earlier in his career, he held finance and accounting leadership roles with American Exploration Company and Tenneco Oil Company. Mr. Ulm has more than 30 years of experience in the energy industry with responsibilities including finance, accounting, strategic planning, M&A, business development and risk management. Mr. Ulm holds an M.B.A. and an undergraduate degree in Accounting, both from the University of Texas at Austin. +On March 16, 2021, the Company announced that, due to personal and health reasons, Mr. Ulm will retire in May 2021. The Company has commenced a search for a successor to Mr. Ulm, who will continue in an advisory role to the Company after his retirement to assist with the transition of the new CFO. +Jeffrey S. Balmer +Senior Vice President and Chief Operating Officer +Dr. Jeffrey S. Balmer served the Company as Senior Vice President and Chief Operating Officer since November 2018. Dr. Balmer has over 30 years of operations and subsurface leadership experience in the energy industry. Prior to joining Callon in November 2018, his most recent role was Vice President and General Manager, Southern Operating Area, for Encana Corporation with responsibility for all of Encana’s upstream operations in the Permian Basin from 2015 to 2018. After joining Encana in 2008, he held various leadership roles including Vice President and General Manager, Western Operating Area, managing operations in the Eagle Ford, DJ, San Juan, Piceance and Wind River Basins, and Vice President, Emerging Plays. Prior to joining Encana, Dr. Balmer served in a variety of technical and operations leadership roles, including positions with ConocoPhillips, Burlington Resources and ExxonMobil Corporation. Dr. Balmer is a member of the board of directors of the Permian Basin Petroleum Association. He holds B.S. and Ph.D. degrees in Petroleum Engineering, in addition to an M.S. in Environmental and Planning Engineering, from Missouri University of Science and Technology (formerly University of Missouri – Rolla). +2021 PROXY STATEMENT 33 +EXECUTIVE OFFICERS +Michol L. Ecklund +Senior Vice President, General Counsel and Corporate Secretary +Michol L. Ecklund has served the Company as Senior Vice President, General Counsel and Corporate Secretary since February 2019 and as Vice President, General Counsel and Corporate Secretary from November 2017 to February 2019. Prior to joining Callon in November 2017, Ms. Ecklund was Deputy General Counsel for Operations & Commercial Law at Marathon Oil Company from October 2014 to October 2017, where she oversaw the legal team for global operations and acquisitions and divestitures as well as corporate communications. During her 15 years at Marathon Oil, Ms. Ecklund served in progressive positions within and outside the Law Organization including compliance, litigation, human resources, investor relations, corporate communications and tax. Prior to Marathon Oil, she practiced law at Baker Botts LLP in Houston. Ms. Ecklund currently serves as a member of the Rice University Board of Trustees, a director of The Woman's Hospital of Texas, and a director of the World Affairs Council of Houston. Ms. Ecklund received a B.A. degree from Rice University and a J.D. degree from Harvard Law School. +Gregory F. Conaway +Vice President and Chief Accounting Officer +Gregory F. Conaway has served the Company as Vice President and Chief Accounting Officer since he joined Callon in December 2019. Prior to joining Callon, Mr. Conaway served as Vice President and Chief Accounting Officer of Carrizo from 2014 to December 2019, when Carrizo merged with the Company, as Controller of Financial Reporting from 2012 to 2014 and Assistant Controller from 2011 to 2012. Prior to that, Mr. Conaway worked for Ernst & Young, holding positions of increasing responsibility, including senior manager. Mr. Conaway began his career with Arthur Andersen in 1998. Mr. Conaway is a member of the American Institute of CPAs and the Texas Society of CPAs, and is a board member of Faith West Academy Athletic Booster Club. Mr. Conaway is a CPA and holds an M.B.A. and a B.B.A. in Accounting from Angelo State University. +34 CALLON PETROLEUM +Proposal 2 +Approve, on an Advisory Basis, +the Compensation +of the Company’s NEOs +The Board recommends a vote FOR the compensation paid to the Company’s named executive officers, as disclosed in this Proxy Statement. +• Provides performance-based and market-aligned pay opportunities that are intended to foster alignment, engagement, and retention of key talent to drive Company performance and long-term shareholder value. +In accordance with the requirements of Section 14A of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the related rules of the SEC, we are including in this Proxy Statement a separate proposal, which gives our shareholders the opportunity to approve the compensation of our NEOs by voting “ FOR ” or “ AGAINST ” the resolution below (commonly referred to as “Say-on-Pay”) on an annual basis. While the Board and the Compensation Committee intend to carefully consider the shareholder vote resulting from the proposal, the final vote will not be binding on us and is advisory in nature. +The Board recognizes that executive compensation is an important matter for our shareholders. The Compensation Committee is tasked with the implementation of our executive compensation philosophy and, as described in detail in the CD&A below, the design of our executive compensation programs. Our executive compensation program is designed to attract, motivate and retain a qualified executive management team and to appropriately reward our executive officers for their contributions to the achievement of our short-term and long-term business goals and the creation and enhancement of shareholder value. +As described in the CD&A, we believe our compensation program is effective, appropriate and aligned with the long-term interests of our shareholders and that the total compensation package provided to the NEOs is reasonable and not excessive. As you consider this Proposal 2, we urge you to read the CD&A for a full description of our 2020 executive compensation program and recently-adopted leading-edge 2021 program. Further, in determining whether to approve this proposal, we believe that shareholders should also consider the following: +• Performance-based compensation. Our executive compensation program seeks to align executive compensation with shareholder value on an annual and long-term basis through a combination of base pay, annual incentives and long-term incentives. By design, a significant portion of our NEO compensation is performance-based, with variable pay comprising 83% percent of compensation opportunity for our CEO. Please review the CD&A for more information on how our 2020 compensation was linked to Company performance. +• Pay practices reflect individual and market factors. The Compensation Committee considers the skills, experience and performance of each of our NEOs as well as competitive market data in setting annual compensation opportunities, and directs our independent compensation consultant to provide benchmarking data which serves as one of the considerations of compensation decisions. +• “Double trigger” severance agreements with fixed term. Change in control severance compensation agreements (CIC Agreement) with our executive officers require an actual or constructive termination of employment before benefits are paid following any change in control. +• Stock ownership guidelines. Each of the NEOs has been granted equity to provide the officer a stake in our long-term success. The purpose of the ownership requirement is to further our goal of increasing shareholder value by aligning the interests of our NEOs with those of our long-term shareholders. +• Clawback Policy. The Compensation Committee has adopted a comprehensive clawback policy (the "Clawback Policy") that establishes conditions under which the Committee may recoup previously-paid compensation in event of error, misconduct, or certain other circumstances. +• Hedging policy. Our directors and executive officers are prohibited from entering into transactions in puts, calls and other derivative securities with respect to our securities and from engaging in short sales of our securities. We believe these activities are often perceived as involving insider trading and may focus the holder’s attention on our short-term performance rather than our long-term objectives. +2021 PROXY STATEMENT 35 +PROPOSAL 2 +In light of the above and as more fully described in the CD&A, we believe that the compensation of our NEOs for 2020 was appropriate and reasonable and that our compensation programs and practices are sound and in the best interests of the Company and our shareholders. We therefore respectfully request that shareholders vote on the following resolution: +“RESOLVED, that the compensation paid to Callon’s NEOs, as disclosed in Callon’s 2021 Proxy Statement (including the Compensation Discussion and Analysis, the compensation tables and related footnotes and narrative disclosures) is hereby approved.” +The vote on this resolution is not intended to address any specific element of compensation, but rather the overall compensation of our NEOs and our compensation-related policies and practices as described in this Proxy Statement. As noted above, the vote solicited by this proposal is advisory in nature and its outcome will not be binding on the Company, the Board or the Compensation Committee, nor will the outcome of the vote require the Board or the Compensation Committee to take any action. The outcome of the vote will not be construed as overruling any decision of the Board or the Compensation Committee or creating or implying any additional fiduciary duty of the Board or the Compensation Committee. However, the Board and the Compensation Committee will carefully consider the outcome of the vote when considering future executive compensation arrangements. For a review of the results of the previous year's vote, which reflects overwhelming validation from our shareholders of our pay philosophy and approach, please see the “Role of Annual Say-on-Pay Advisory Vote” on page 41. +Notwithstanding the advisory nature of this vote, the foregoing resolution will be deemed approved with the affirmative vote of the majority of the votes present and entitled to vote on the proposal at the Annual Meeting. If you hold your shares through a broker and you do not instruct the broker how to vote, your broker will not have the authority to vote your shares. Abstentions will have the effect of a vote cast against the proposal. Broker non-votes will not be counted as shares present and entitled to vote, and so will have no effect upon the outcome of the vote. +The Board recommends a vote FOR the compensation paid to the Company’s named executive officers. +36 CALLON PETROLEUM +EXECUTIVE COMPENSATION +Compensation Discussion and Analysis +Unprecedented 2020 Impact on Oil and Gas Industry +What Happened +The challenges that the oil and gas industry faced in 2020 were unprecedented due in part to the worldwide outbreak of COVID-19 that resulted in a dramatic drop in demand for oil and natural gas. At the same time, the decision by Saudi Arabia in March 2020 to drastically reduce export prices and increase oil production followed by curtailment agreements among OPEC and other producing countries such as Russia, further increased uncertainty and volatility around global oil supply/demand dynamics. The combination of excess supply and drastically reduced demand resulted in a precipitous decline in commodity prices. +The drop in commodity prices had a negative impact on Callon and its peers in 2020: +• Average total shareholder return for Callon and its peer group was -44% +• Oil and gas revenue declined by 35% on average for Callon and its peers, reflecting the ~30% drop in average crude prices year over year +• Two of the companies in the peer group filed for bankruptcy (Oasis Petroleum and Whiting Petroleum) +Our Decisive Response – 2020 & Beyond +To combat these macro industry conditions, the Board and management team took decisive steps to strategically reposition the Company in 2020 while integrating the Carrizo acquisition that closed in December 2019 (the "Carrizo Acquisition"). In connection with its strategic repositioning, the Company took action to recalibrate pay in 2020 and undertook a holistic evaluation of its executive compensation programs for 2021 and beyond to realign with investor priorities and the long-term industry outlook. These actions allowed the Company to navigate a challenging industry environment and positioned the Company for success as illustrated by our March 17, 2021, closing stock price of $39.05, which is nearly 300% higher than the stock price at year end 2020 and over a 1,000% higher than the March 2020 low of $3.80. +Key Strategic Actions Compensation Actions to Support Strategy +Integration of Carrizo Acquisition Aligned Compensation with Synergy Capture +• Achieved sustainable capital efficiency gains from scaled operations +• Exceeded targeted annual run rate synergies of $125MM +• Adopted 2020 annual bonus framework that tied 20% of payouts to merger synergies and a portion of the qualitative component to merger integration +Reduced Spending to Maintain Commitment to Free Cash Flow Generation Temporarily Reduced 2020 Compensation +• Reduced 2020 operational capital program by over 50% versus original plan +• Captured ~$30 million in annual LOE run rate savings +• Reduced cash G&A costs by 60% year-over-year +• Lowered Board of Director compensation by 17.5% +• Lowered base salaries by 20% for CEO, 15% for SVPs and 10% for VPs +2021 PROXY STATEMENT 37 +EXECUTIVE COMPENSATION +Strategically Repositioned the Company for Future Success Aligned 2020 Pay Program with Evolving Priorities +• Generated over $120 million of free cash flow in the last three quarters of 2020 +• Improved liquidity in 3Q 2020 with issuance of $300 million of 2 nd lien notes +• Reduced absolute debt by >10% from March 2020 via a senior notes exchange and $170 million in asset monetizations +• Evolved 2020 annual bonus framework to align with investor priorities of returns, leverage and free cash flow and increased quantitative weighting to 80% +• Exercised downward discretion for 2020 bonus payouts in recognition of stock price performance +• Added an absolute total shareholder return (“TSR”) multiplier to long-term performance share units that reduces payouts if annualized TSR is less than 5% +• Adopted a cash-based transition incentive retention program derived from positive free cash flow to help retain executives critical to our strategic repositioning by serving as a bridge between our existing incentive program and new design in 2021 +Adopted Leading-Edge Incentive Compensation Program in Support of Go-Forward Business Objectives +• Developed a new executive compensation program beginning in 2021 that supports our strategic repositioning and aligns with investor priorities +• Adopted a new annual bonus framework that prioritizes financial performance and ESG initiatives, eliminates traditional operational metrics, and caps payouts at target in the event of negative absolute TSR +• Implemented a new long-term incentive ("LTI") program that maintains a 60% weighting on performance-based LTI with performance units tied to free cash flow and return on capital employed ("ROCE") performance +• Reduced target LTI values by 17.5% for CEO and an average of >10% for other NEOs compared to 2020 grant values +Building on Strong Foundation for Continuous Improvement in ESG Initiatives Enhanced Compensation Alignment with ESG Performance +• Reduced flaring volumes by 40% and GHG emissions >20% year-over-year +• Achieved 2 nd consecutive company record for annual TRIR safety performance +• Continued diversity focus with 36% minority employees +• Issued first comprehensive, SASB-aligned sustainability report +• Established long-term GHG and flaring reduction targets +• Embedded ESG goals related to flaring, safety, environment, diversity, and team development in 2020 annual bonus framework +• Adopted ESG metrics for 2021 annual bonus framework with 15% quantitative weighting plus qualitative component tied to sustained progress towards GHG reduction targets +2021 Incentive Compensation Program Supports Go-Forward Business Objectives +Following a comprehensive review of its compensation structure, in the first quarter of 2021 the Company adopted a leading-edge compensation program to align with investor priorities and drive sustainable results. The 2021 program includes reductions to target pay levels for executives and directors: +• The target LTI value for the CEO was reduced by 17.5%, which lowered his total target compensation by 12.5% +• The target LTI value for the other NEOs was reduced by an average of more than 10% +• Annual compensation for directors was reduced by 12.5% +Within the refreshed program, the Compensation Committee (referred to in this section as “the Committee”) implemented a mix of incentive metrics aligned with emerging investor priorities for the energy industry across the annual and long-term frameworks as follows: +38 CALLON PETROLEUM +EXECUTIVE COMPENSATION +Investor Priorities +Debt Reduction Cash Flow Returns Stock Performance ESG +Annual Cash Bonus Incentive +(1 year performance) +Net Debt / EBITDA Total Corporate Cash Margin Cash Return On Capital Invested +TSR vs XOP (i) peers +Absolute TSR +(cap @ target if negative) +Flaring +Safety +Spills +Progress on 5-yr Emissions Target +LTIP +(3 year performance) +Free Cash Flow +(performance unit metric) +ROCE +(performance unit metric) +Restricted Stock Units +Sustainability +Implications +(linkage of short-term program to long-term goals and incentives to drive sustainability) +Financial strength for durability through commodity price volatility +Revenue and cost management to support near-term cash flow; Prudent capital allocation and reinvestment rate decisions to drive sustainable FCF over time +Transition from cash-based returns excluding DD&A (CROCI) to more earnings / profitability-based metric (ROCE) over time +Highlight imperative to compete for investor mindshare in an industry with varying capital deployment +Our license to operate and sustain investor, stakeholder and employee support in the near and long-term +(i) Relative TSR performance will be determined relative to the companies in the S&P Oil & Gas Exploration & Production Select Industry Index (“XOP”) at the beginning of the year. Net Debt to Adjusted EBITDA is calculated as the sum of total long-term debt less unrestricted cash and cash equivalents, divided by the Company’s Adjusted EBITDA inclusive of annualized pro forma results from its acquisitions and divestitures completed over the last twelve-month period. See Appendix A for a reconciliation of non-GAAP financial measures. +The table below outlines the 2021 annual incentive compensation framework, which accomplishes the following objectives: +• Focus on pay-for-performance by maintaining 80% weighting on quantitative metrics +• Prioritize financial performance by increasing the financial metric weighting to 65% and eliminating traditional operational metrics +• Demonstrate our ESG value proposition by introducing a quantitative ESG category (weighted 15%) focused on flaring, safety, and spills; other key ESG focus areas such as GHG emission targets and diversity and development initiatives will be assessed under the qualitative component of the program +• Align incentive plan payouts with the shareholder experience by including a relative TSR comparison to a broader energy index (XOP) and capping bonus payouts at target if absolute TSR is negative for the year +2021 Annual Incentive Compensation Framework +Financial 65% +Net Debt / EBITDA 20% +Cash Return on Capital Invested 20% +Total Corporate Cash Margin 15% +TSR vs. XOP Peers 10% +ESG 15% +Environmental - Flaring Intensity +(volumes flared / gas produced) +5% +Safety - TRIR 5% +Environmental - Spill Rate 5% +Qualitative 20% +The Committee established qualitative objectives for management in 2021 related to progress on long-term GHG emissions targets, diversity and team development initiatives, inventory delineation, ongoing evaluation of strategy, and management of unforeseen challenges. +Our 2021 long-term incentive program was designed to accomplish the following objectives: +• Focus on pay-for-performance by maintaining 60% weighting on performance-based LTI +• Align compensation with company strategy and shareholder priorities of free cash flow and ROCE +• Manage equity dilution by delivering a portion of the long-term incentive program in cash +• Provide direct alignment with shareholders by providing a portion of the program in Restricted Stock Units +2021 PROXY STATEMENT 39 +EXECUTIVE COMPENSATION +Our 2021 long-term incentive program incorporates two elements: +• Cash Performance Units (weighted 60% of the LTI vehicle mix): These awards will vest at the end of the three-year performance period. The value of the awards will range from 0-200% of target and will be determined by (i) our adjusted free cash flow performance over three, one-year performance periods relative to goals established by the Committee and (ii) a cap on the final payout opportunity will be capped based on our three-year average ROCE performance including a maximum payout of 75% of target if three-year ROCE is less than 10 percent +• Restricted Stock Units (weighted 40% of the LTI vehicle mix): These awards will vest ratably over three-years +Executive Pay Aligned with Shareholders +Realizable Compensation Demonstrates Alignment Between Pay and Performance +The Committee designs our compensation programs to reward our CEO and other NEOs for delivering results consistent with the Company’s long-term strategic objectives and to align their interests with those of our shareholders. To do so, the Committee has adopted programs that are heavily weighted to “at risk” compensation delivered through annual cash incentives and long-term incentive awards. As a result of this philosophy, the compensation outcomes for our NEOs were meaningfully impacted by the challenges faced by the oil and gas industry and our shareholders in 2020, As shown below, our CEO's realized and realizable compensation at year-end 2020 reflected the Company’s share price performance: +2020 CPE Share Price +73% Less +CEO Target Pay vs. +Realizable Pay (i) (2020) +56% Less +CEO PSUs: Target Value +vs. Realized Value +(2018 – 2020) +95% Less +(i) 2020 CEO realizable pay includes (i) actual amounts received for salary, 2020 annual bonus, and third and fourth quarter 2020 transition cash incentive program, and (ii) the value as of December 31, 2020, of RSUs and PSUs granted in 2020 based on the closing price of $13.16 per share of our common stock on the last trading day of 2020, a relative TSR modifier of 0.36 and an absolute TSR modifier of 0.50. +Strong Compensation Governance +We believe our compensation program incorporates many sound practices, including the following: +What We Do +What We Don’t Do +• Substantial focus on performance-based pay +• Strong alignment with shareholder priorities through significant weighting on long-term incentives +• Review of peer group benchmarks when establishing compensation +• Robust stock ownership guidelines for our NEOs and directors +• Clawback policy applies in the event of error, fraud or misconduct +• Double-trigger change in control severance for both cash severance and equity vesting +• NO hedging or pledging of our stock +• NO employment agreements* +• NO excessive benefits or perquisites +• NO single trigger change in control benefits +* Callon assumed an employment agreement with Mr. Conaway, our Vice President and Chief Accounting Officer, as a result of the Carrizo Acquisition. See “Employment Agreements, Termination of Employment and Change in Control Arrangements” on page 59. +40 CALLON PETROLEUM +EXECUTIVE COMPENSATION +Role of Annual Say-on-Pay Advisory Vote +We have historically received strong support from our shareholders for our executive compensation practices. In the advisory vote held at the Company's 2020 Annual Meeting of Shareholders, approximately 93% of the votes cast were in favor of our 2019 executive compensation programs. The Committee acknowledged the support received from our shareholders and viewed the results as an affirmation of our existing executive compensation policies and programs. The Committee will continue to review shareholder votes and feedback on our executive compensation programs to ensure alignment with shareholder interests. +Approximately 93% of the votes were cast in favor of our 2019 executive compensation programs +Executive Compensation Philosophy +Our executive compensation program is designed to achieve the following objectives: +• Emphasize pay for performance, in which Company and individual performance against preset goals are inherently linked to the amount realized by an NEO; +• Attract and retain a qualified and motivated management team by offering industry competitive opportunities and providing the majority of NEO compensation in the form of long-term incentives that vest over a three-year period; +• Incentivize NEOs and appropriately reward them for their contributions to the achievement of our key short-term and long-term strategic objectives with variable compensation; and +• Align the compensation of our NEOs with the interests of our long-term shareholders by providing 60% of the LTI mix in the form of performance-based incentives and 40% in the form of restricted stock units. +Executive Pay Program and Decisions +2020 Named Executive Officers +Our named executive officers (“NEOs”) include the Chief Executive Officer, Chief Financial Officer and the three other most highly compensated executive officers who were serving in such capacity at the end of 2020. Our NEOs for 2020 were: +NEO +Age +Title +Joseph C. Gatto, Jr. +50 +President, Chief Executive Officer and Director +James P. Ulm, II (i) +58 +Senior Vice President and Chief Financial Officer +Jeffrey S. Balmer +56 +Senior Vice President and Chief Operating Officer +Michol L. Ecklund +46 +Senior Vice President, General Counsel and Corporate Secretary +Gregory F. Conaway +45 +Vice President and Chief Accounting Officer +(i) On March 16, 2021, the Company announced that, due to personal and health reasons, Mr. Ulm has elected to retire in May 2021. The Company has commenced a search for a successor to Mr. Ulm, who will continue in an advisory role to the Company after his retirement to assist with the transition of the new CFO. +Incentive-Based 2020 Compensation Program +In the first quarter of 2020 prior to the global outbreak of COVID-19, the Committee established the 2020 executive compensation program, including target pay levels and performance metrics. The program was heavily weighted to incentive-based compensation for the NEOs, including Mr. Gatto as follows: +2021 PROXY STATEMENT 41 +EXECUTIVE COMPENSATION +Base Salaries +We provide all of our employees, including the NEOs, with an annual base salary that is reflective of individual skills, experience and expertise to compensate them for their service throughout the year. The Committee evaluates our NEOs’ salaries and other components of their compensation to ensure that the NEOs’ total compensation is competitive relative to market practices and is consistent with the Committee’s compensation philosophy. +In January 2020, the Committee established base salaries for each of the NEOs as set forth in the table below. With the input of the independent compensation consultant, the Committee approved these salary increases to reflect the increased scope of responsibility for each of the NEOs following the Carrizo Acquisition and market data for the revised peer group. +Pay Reductions in Response to COVID-19 +In April 2020 our NEOs volunteered to have their base salaries reduced due to the challenging industry conditions. Our CEO's annual base salary was reduced by 20% and our senior vice presidents' and vice presidents' annual base salaries were reduced by 15% and 10%, respectively. As macro conditions improved, the Committee approved the reinstatement of the NEOs’ base salaries effective in July for vice presidents and in October for the CEO and senior vice presidents. +NEO +2019 Base Salary +2020 Base Salary +Actual 2020 Base Salary Received +Joseph C. Gatto, Jr. +$825,000 $865,000 $773,885 +James P. Ulm, II +$465,000 $500,000 $458,462 +Jeffrey S. Balmer +$450,000 $510,000 $464,827 +Michol L. Ecklund +$400,000 $430,000 $394,289 +Gregory F. Conaway +$282,000 $295,000 $286,125 +Performance-Based Annual Cash Bonus Incentive +Each year, the Committee establishes an annual incentive bonus program that is designed to align NEO compensation with the annual business plan and strategic priorities. In January 2020, the Committee set annual bonus target award opportunities for each NEO as a percentage of the NEO’s annual base salary as follows: +NEO 2019 Target Bonus Opportunity +(% of Base Salary) 2020 Target Bonus Opportunity +(% of Base Salary) +Joseph C. Gatto, Jr. 110% 115% +James P. Ulm, II 90% 95% +Jeffrey S. Balmer 85% 95% +Michol L. Ecklund 80% 90% +Gregory F. Conaway 70% 70% +The Committee approved increased bonus targets for the CEO and senior vice presidents for 2020 after considering competitive market analysis for the new peer group of larger companies adopted following the Carrizo Acquisition and to enhance retention of the senior leadership team. Actual awards can range from 0 - 200% of target based on the achievement of pre-established performance metrics as described below. +42 CALLON PETROLEUM +EXECUTIVE COMPENSATION +2020 Annual Bonus Metrics +In early 2020, prior to the global outbreak of the COVID-19 pandemic, the Committee established the framework for the annual cash bonus incentive program, including increasing the quantitative weighting to 80%. The objectives were designed to align with achievement of the financial, operational and strategic priorities of the Company for 2020, including capture of the synergies identified in the Carrizo Acquisition, as follows: +Objective Description Weighting +Quantitative Objectives (60%) +Net Debt/Adjusted EBITDA (i) +Measure of our ability to cover our debt, which is impacted by cash flow, and ensures focus on a strong balance sheet +15% +Cash Return on Capital Invested (ii) +Measure of total corporate returns on capital +15% +LOE+GP&T/Boe +Measure of critical cash margin components that are controlled by management +10% +Oil Production +Key component in our ability to deliver cash flow and returns on capital investment +10% +Proved Developed F&D/BOE (iii) +Measure of capital efficiency for annual proved developed reserve base additions +10% +Carrizo Transaction Synergies (20%) G&A Synergies +Measure of cash G&A savings relative to 2019 pro forma spend +10% +Operations Synergies +Captures achievement of scale efficiencies by measuring reductions in Delaware Basin DC&E spend per 1,000’ lateral +10% +Qualitative Objectives (20%) +ESG, Integration, Strategy, Other Key Objectives +Measure of our success relative to key objectives tied to ESG performance, merger integration, execution of strategic objectives, and other key organizational mandates +20% +(i) Net Debt to Adjusted EBITDA is calculated as the sum of total long-term debt less unrestricted cash and cash equivalents, divided by the Company’s Adjusted EBITDA inclusive of annualized pro forma results from its acquisitions and divestitures completed over the last twelve-month period. See Appendix A for a reconciliation of non-GAAP financial measures. +(ii) Cash Return on Invested Capital is defined as (GAAP cash flow from operations + after tax interest expense) / (average total debt + average stockholders’ equity). +(iii) Proved Developed F&D/BOE cost is defined as exploration and development costs, divided by the sum of reserves associated with transfers from proved undeveloped reserves during 2020 including any associated revisions except pricing revisions, and extensions and discoveries placed on production during 2020. +Following the global outbreak of COVID-19, the Company adopted a revised development plan that reduced the 2020 operational capital program by over 50% versus original plan. To align with this shift in priorities and revised business plan, during the third quarter the Committee adopted a revised discretionary annual incentive plan framework that included quantitative metrics for synergy attainment, free cash flow, LOE, safety and environmental performance. +2020 Performance Results +After the close of the 2020 calendar year, the Committee assessed the Company’s and the NEOs’ annual performance overall and relative to the frameworks established for the annual incentive compensation program. The Committee chose to adhere to the more rigorous, pre-COVID-19 performance framework even though the Company’s performance was significantly impacted by the unprecedented global oil supply/demand dynamics of the pandemic to better align with shareholder outcomes. If the Committee had chosen to reflect the revised, discretionary framework adopted in the third quarter, quantitative performance would have exceeded 120% of target. Results relative to the original 2020 performance framework are set forth below. +2021 PROXY STATEMENT 43 +EXECUTIVE COMPENSATION +Quantitative Objective Weighting +Threshold +(50%) +Target +(100%) +Max +(200%) +Actuals Weighted +Contribution +Net Debt/Adjusted EBITDA +15% 2.8x 2.5x 2.2x 4.2x 0% +Cash Return on Cash Invested 15% 17.0% 18.5% 20.0% 13.5% 0% +LOE+GP&T/Boe 10% $7.50 $6.50 $5.75 $7.30 6% +Oil Production 10% 75,000 77,500 79,500 64,325 0% +Proved Developed F&D/BOE 10% $15.00 $13.50 $12.00 $10.78 20% +G&A Synergies +Cash G&A Savings +10% $35.0 $40.0 $45.0 $74.2 20% +Operational Synergies +DC&E in DE Basin/1,000' +10% $995 $950 $885 $825.0 20% +Qualitative/Discretionary 20% — — — +4%/9% +CEO/NEOs +Total 100% — — — +70%/75% +CEO/NEOs +When determining the weighted contribution for the discretionary component of the program, the Committee considered the Company’s and management’s overall performance for 2020. The Committee believes that the management team performed well during the challenging industry environment of 2020 and met or exceeded expectations relative to the qualitative performance factors set forth in the table below. The Committee also commended the management team’s efforts to evaluate and execute financial alternatives during the COVID-19 crisis, which ultimately led to the notes issuance, debt exchange and asset sale transactions that bolstered Callon’s financial position in the third and fourth quarters of 2020. +The Committee also believes that annual bonuses should reflect, in part, share price performance for the year. This belief was reflected through qualitative discretion in 2020 and is being codified as a quantitative element in the redesigned 2021 program. Given the Company’s negative share price performance in 2020, the Committee elected to reduce the funding of the qualitative portion of the program to only 20% of target for the CEO (4% weighted contribution) and 45% of target (9% weighted contribution) for the other NEOs. The Committee’s decision to reduce the qualitative weighting for the CEO reflects a larger discretionary reduction for the CEO for greater alignment with shareholders. +Qualitative Factors 2020 Achievements +Environmental, Social, and Governance +• 40% reduction in flared volumes +• Achieved the Company's best safety performance on record for a second straight year, reducing the total recordable incident rate by 10% +• 66% reduction in total spill volumes +• Published inaugural SASB-aligned sustainability report +Strategic Initiatives +• On track to deliver medium-term adjusted FCF in line with public CRZO acquisition targets +• ~$170MM of credit-enhancing divestitures despite challenging A&D market +• Adherence to “life of field development” to preserve value of inventory +Integration & Development +• Assimilated team into cohesive culture within a remote work environment +• Named a “Top Workplace” by Houston Chronicle for 4th year in a row +• Harmonized compensation programs and continued expansion of succession planning initiatives +44 CALLON PETROLEUM +EXECUTIVE COMPENSATION +2020 Annual Incentive Compensation Payouts +Based on the Committee’s assessment of 2020 performance relative to the pre-established annual bonus programs as described above, the Committee awarded 2020 annual incentive compensation payouts of 70% of target for the CEO and 75% of target for the other NEOs, which were below the funding level for the annual bonus pool for non-officers for 2020. Bonuses were calculated based on the actual amount of salary received by each officer in 2020 to reflect the temporary salary reductions as set forth above. +NEO Payout as a % of Target 2020 Annual Bonus +Joseph C. Gatto, Jr. 70% $622,977 +James P. Ulm, II 75% $326,654 +Jeffrey S. Balmer 75% $331,189 +Michol L. Ecklund 75% $266,145 +Gregory F. Conaway 75% $150,216 +Annual Award of Long-Term Incentives +Our executive compensation program is heavily weighted to long-term incentives, which reward our NEOs for delivering results consistent with the Company’s long-term strategic objectives and align their interests with those of our shareholders. For 2020, the Committee awarded long-term incentives via the following vehicles: +LTI Vehicle Weighting Objective +Time-Based RSUs +(3-year Ratable Vest) +40% +• Create direct alignment with shareholder interests +• Provide direct retention incentives for our executives +Performance Share Units +(3-year Cliff Vest) +60% +• Reward for absolute shareholder return and shareholder return relative to other oil and gas companies +For the grant of LTI awards to executive officers, the Committee considers market analysis and the advice of the independent compensation consultant to determine the program design and target award amounts. In 2020, the Committee adjusted target long-term incentive values for the NEOs to reflect market competitiveness relative to the post-Carrizo Acquisition peer group; a continued shift in the mix of total compensation towards long-term awards; appropriate retention incentives especially for shorter-tenured executives; and personal and Company performance. +The following table sets forth the target LTI value for each NEO and the number of RSUs and target PSUs awarded to the executive officers in January 2020. The Committee uses the 20-day average closing price of Callon stock as of the grant date to determine the number of RSUs and PSUs granted. +NEO +Target Value +$ (a) +RSUs Payable in +Common Stock (b) +PSUs Payable in +50% Stock and 50% cash (c) +Joseph C. Gatto, Jr. $4,697,000 48,799 73,200 +James P. Ulm, II $2,125,000 22,078 33,118 +Jeffrey S. Balmer $2,219,000 23,049 34,574 +Michol L. Ecklund $1,398,000 14,519 21,780 +Gregory F. Conaway $516,000 5,364 8,046 +(a) Represents the intended target value of the awards, which is different from the grant date fair value computed in accordance with FASB ASC Topic 718 as reported in the Summary Compensation Table. The methodology adopted by the Committee for awarding LTI equity awards uses the 20-day average closing price of Callon stock as of the grant date to determine the number of RSUs and PSUs granted. +(b) Amounts represent RSUs that are subject to three-year ratable vesting with one-third vesting each year subsequent to the award year. The first tranche vests on April 1, 2021; the second vests on April 1, 2022; and the third vests on April 1, 2023; and each tranche will settle in Company common stock on the vesting date. Reflects the 1-for-10 reverse split of the common stock of the Company, effective August 7, 2020. +(c) Amounts represent PSUs that are scheduled to vest on December 31, 2022 at a variable rate between 0% and 300% based on our absolute TSR and relative TSR when compared to a pre-determined group of peer companies. The PSUs will be settled 50% in Company common stock and 50% in cash. Reflects the 1-for-10 reverse split of the common stock of the Company, effective August 7, 2020. +2021 PROXY STATEMENT 45 +EXECUTIVE COMPENSATION +RSU program +In January 2020, the Committee awarded NEOs with time-based RSUs that will vest in one-third increments annually beginning April 1, 2021, provided the executive officer continues to be employed on the vesting dates. The RSUs will be settled in shares of the Company’s common stock. +PSU program +In January 2020, the Committee awarded PSUs to the NEOs that will vest based on the Company’s performance over the 36-month performance period (January 1, 2020 to December 31, 2022) on absolute TSR—a new modifier added to the program in 2020—and relative TSR compared to the 2020 peer group described on page 50. The PSUs are eligible for vesting if the employee continues to be employed until the vesting date on December 31, 2022 and will settle 50% in cash and 50% in stock. The vested value of the PSUs at the end of the performance period on December 31, 2022 will be determined as follows: +Relative TSR +The Committee believes relative TSR is an appropriate long-term performance metric because it provides a measure of long-term performance relative to peers as well as strong alignment with the Company’s long-term shareholders. The relative TSR modifier for the PSUs will be the percentage set forth below based on the Company’s relative TSR ranking for the performance period compared to the 11 peer companies described on page 50. Vesting will be interpolated for percentile ranks between the percentiles described: +Callon’s TSR Percentile +Rank Among the Peer Companies PSUs Vesting as a +Percentage of Target +1st 200 % +4th 145 % +6th 109 % +9th 55 % +12th 0 % +Absolute TSR +For 2020, the Committee added an absolute TSR modifier to the PSU awards to further link NEO compensation to absolute shareholder returns and reflect investor feedback regarding recent energy industry compensation trends. The absolute TSR modifier further incentivizes NEOs to create positive shareholder value during the three-year performance period and reduces outcomes if annualized TSR is less than 5% over that period and effectively caps payouts out at target or below if absolute TSR is negative: +Callon’s annualized absolute TSR during the performance period Modifier +>15% 150 % +10 - 15% 125 % +5 - 10% 100 % +0 - 5% 75 % +<0% 50 % +46 CALLON PETROLEUM +EXECUTIVE COMPENSATION +Transition Cash Incentive Awards & Retention Award Programs +In September 2020, the Committee adopted an incentive (“Cash Incentive Awards”) that provides our NEOs and other officers with the near-term opportunity to earn performance-based cash payments for generating positive free cash flow. This is a one-time program that the Committee believes is aligned with the following critical priorities: +1. Retention of key employees – the business is in a period of strategic transition and our management is well qualified to execute on our evolving strategy. +2. Focus on free cash flow imperative – Investors have expressed a priority for oil and gas companies to generate free cash flow to fund operational activities and strengthen balance sheets. The transition cash incentive plan provides direct alignment with the optimization of the Company’s free cash flow. +3. Self-funded program – the Cash Incentive Awards were designed to only pay out if adjusted free cash flow is positive. +4. Build a bridge to newly designed incentive systems – in response to industry conditions, we redesigned our 2021 incentive system to support our go-forward business strategy. The Cash Incentive Award program provides an opportunity to earn incentive pay in the transition period. +The Cash Incentive Awards are performance-based and designed to align the officers with the Company’s focus on sustainable free cash flow generation. Under the program, officers are eligible to receive quarterly cash awards from a pool equal to 2.5% of the Company’s positive adjusted free cash flow (excluding non-recurring items) from third quarter 2020 through the end of 2021. The total aggregate award value may not exceed $6 million over the six quarters of the program. Each NEO’s cash incentive award opportunity is based on the relative proportion of such individual’s target annual bonus amount to the total target annual bonus compensation of the participants in the Cash Incentive Award program. The Cash Incentive Awards, if earned, are paid on a quarterly basis in respect of six three-month performance periods, commencing on July 1, 2020 and ending December 31, 2021. No Cash Incentive Award payment is made if the Company does not have positive free cash flow for the quarter. We do not anticipate that this arrangement will continue beyond the 2021 fiscal year. +The following table sets forth each NEO’s applicable percentage the maximum amount he or she is eligible to receive over the six quarters of the Cash Incentive Award program. The amount earned by each NEO for the third and fourth quarters of 2020 is reported in the non-equity incentive plan compensation column of the summary compensation table on page 53. +NEO Applicable Percentage of Pool (%) Maximum ($) +Joseph C. Gatto, Jr. 28.89% $1,733,140 +James P. Ulm, II 13.79% $827,586 +Jeffrey S. Balmer 14.07% $844,138 +Michol L. Ecklund 11.24% $674,265 +Gregory F. Conaway 6.00% $359,782 +As of September 30, 2020, the Committee also awarded a one-time cash retention award for Dr. Balmer in recognition of operational performance under his leadership and to incentivize his retention with the Company. Under the terms of the award, Dr. Balmer will receive $175,000 on each of the first- and second anniversaries of the grant date subject to his continued employment with the Company. +In connection with his appointment as Chief Accounting Officer upon the closing of the Carrizo Acquisition in December 2019, the Committee awarded Mr. Conaway a retention award of 4,935 RSUs effective as of January 1, 2020. The RSUs vest in one-third increments on the first three anniversaries of the grant date, subject to Mr. Conaway’s continued employment with the Company. +2021 PROXY STATEMENT 47 +EXECUTIVE COMPENSATION +Vesting of 2018-2020 Performance Awards +In May 2018, the Compensation Committee granted PSUs to the then-executive officers covering the performance period from May 2018 to December 2020. The Company’s relative TSR for the performance period relative to the peer companies defined by the Compensation Committee, resulted in vesting of 50% of the target PSUs awarded. Vested PSUs were paid 50% in cash and 50% in Company common stock. +The table below summarizes the PSUs earned by the executive officers for the 2018-2020 performance period: +NEO +Target Number +of PSUs (a) +Percent of Target +PSUs Earned Actual Vested PSUs +(Settled 50% Cash and 50% Shares) +Joseph C. Gatto, Jr. 16,526 50% 8,263 +James P. Ulm, II 7,500 50% 3,750 +Jeffrey S. Balmer (b) +— — — +Michol L. Ecklund 2,966 50% 1,483 +Gregory F. Conaway (b) +— — — +(a) Reflects the 1-for-10 reverse split of the common stock of the Company, effective August 7, 2020. +(b) Executive was not employed by the Company in May 2018 when award was granted. +Other Compensation +Perquisites and Other Benefits +Benefits represent a relatively small part of our overall compensation package; however, these benefits help attract and retain senior level executives. We review these benefits annually to ensure that they are competitive with industry norms. We provide benefits commonly offered in the E&P industry to all of our employees. These benefits consist of: +• Group medical and dental insurance program for employees and their qualified dependents; +• Group life insurance for employees and their spouses; +• Accidental death and dismemberment coverage for employees; +• Long-term disability coverage; +• Callon's sponsored cafeteria plan; and +• 401(k) employee savings and protection plan (the "401(k) plan"). +We pay the full costs of these benefits, including the 401(k) plan administration, for all employees. +Under our 401(k) plan, all eligible employees may elect to defer a portion of their compensation up to the statutorily prescribed limit. In 2020, the Company provided a matching contribution of up to 6% of the employee’s IRS eligible salary for qualified employees, including NEOs, and the potential for a profit sharing contribution of up to 2%. +Our NEOs are entitled to certain benefits, or perquisites, that are not otherwise available to all of our employees. We provide our executive officers with use of a Company automobile. We purchase the automobile and pay for all maintenance, repairs, insurance and fuel. The employee is required to recognize taxable income using the IRS’s annual lease value method for personal use of the vehicle. The costs associated with these benefits for the NEOs are reported as “Other Compensation” in the Summary Compensation Table. The Committee believes these perquisites are modest, yet competitive with the perquisites provided to similarly situated oil and gas industry executives. +Change in Control Severance and Employment Agreements +We have no employment agreements with our executive officers, with the exception Mr. Conaway, but we do provide CIC Agreements with each of our executive officers that provide for certain protections upon a change in control. The Committee believes that CIC Agreements serve shareholders’ best interests by helping ensure retention of management and by diminishing potential distractions for our executive officers in the event of a change in control transaction. However, the Committee believes that executives should not be unduly enriched, and all benefits under the CIC Agreements require a “double trigger.” Mr. Conaway and the Company (as successor-in-interests to Carrizo as a result of the Carrizo Acquisition) are parties to an employment agreement. For a more detailed explanation of the CIC Agreements and Mr. Conaway’s employment agreement, please see “Employment Agreements, Termination of Employment and Change in Control Arrangements” on page 59. +48 CALLON PETROLEUM +EXECUTIVE COMPENSATION +How We Make Compensation Decisions +Role of Independent Compensation Consultant +For the first half of 2020, the Committee continued its engagement of Meridian as its independent compensation consultant to provide information and objective advice regarding executive officer and director compensation. After issuing a request for proposals and conducting a fulsome interview process, in August of 2020 the Committee engaged FW Cook as its independent compensation consultant. The Committee retained Meridian and later FW Cook because of their extensive familiarity with executive compensation programs in our industry. +The Committee makes all final decisions with respect to our executive compensation, and in setting compensation for our NEOs, and it considers the independent compensation consultant’s advice as one factor among many other factors discussed within this CD&A. Other factors include our overall Company performance; individual NEO performance, experience, skills and tenure with the Company; and industry trends. +The compensation consultant reports solely to the Committee, and the Committee determines the scope of the engagement. In an effort to ensure that our NEO compensation programs are competitive and consistent with our compensation philosophy, Meridian and then FW Cook assisted the Committee as follows: +• Regularly attending meetings of the Committee and meeting privately in executive session with the Committee to discuss its recommendations; +• Providing recommendations on executive compensation matters to align the Committee’s actions with shareholder interests, our business strategy and pay philosophy, prevailing market practices and relevant legal and regulatory requirements; +• Periodically evaluating the Peer Group and providing peer company data for the Committee to use in its decision-making process, including assessment of pay and performance relative to peers; +• Providing competitive market data to consider in evaluating the competitiveness of the executive base salaries and short- and long-term incentive plans and awards; +• Reviewing data in connection with the Committee’s determination of annual cash incentive performance objectives and performance-based incentive vesting levels for completed performance periods; +• Advising on the Company’s compensation arrangements for its non-employee directors, including providing Peer Group data; +• Reviewing and providing feedback on our SEC filings relating to executive compensation disclosures, including our CD&A disclosures; and +• Informing the Committee about compensation trends in the industry, best practices and other general trends and developments affecting executive compensation. +The Committee has the final authority to hire and terminate the compensation consultant, and the Committee evaluates the consultant’s performance annually. +Pursuant to applicable SEC and NYSE rules, the Committee has determined that no conflicts of interest existed related to Meridian’s or FW Cook’s engagement by the Committee in 2020. +Role of Management +The Committee considers input from our CEO in making determinations regarding our executive compensation program and the individual compensation of each of the executives. The officer team makes recommendations to the Committee regarding potential objectives for the annual cash bonus incentive program and provides information to the Committee regarding the performance of the Company for the Committee’s determination of annual cash bonuses. The Committee makes the final determination of all elements of NEO compensation. Our CEO makes no recommendations regarding, and does not participate in discussions about, his own compensation. +2021 PROXY STATEMENT 49 +EXECUTIVE COMPENSATION +Role of Market Data +The Committee reviews compensation of our NEOs annually. Individual compensation amounts reflect the Committee’s subjective analysis of a number of factors, including: +• Individual NEO’s experience, skills, contributions and tenure with Callon; +• Changes to the NEO’s position within Callon; +• Competitive market data within our peer group and industry; and +• The NEO’s roles, responsibilities and expected future contributions to Callon’s success. +On an annual basis, the Committee reviews and discusses compensation data for our CEO and other NEOs as compared with compensation data for similarly situated executive officers at peer companies recommended by the compensation consultant and approved by the Committee. The peer group is selected based on multiple factors, such as: +• Size, including enterprise value and market capitalization; +• Similar geographic footprint and operational focus; +• Comparability of asset portfolio; and +• Availability of compensation data. +The Committee believes this Peer Group provides a reasonable point of reference for comparing the compensation of our NEOs to others holding similar positions and having similar responsibilities. The peer group used by the Committee in evaluating the competitiveness of executive compensation and making 2020 compensation decisions consisted of the companies set forth in the following table. In 2020, the Committee also reviewed data from proprietary E&P benchmarking surveys provided by Meridian for additional market perspective and to validate the peer group data. +The Committee does not consider data collected from any of these sources to be prescriptive. Rather, the Committee relies upon this and similar data as reference points around which to make informed decisions about the appropriate level and form of compensation for each NEO. +2020 Compensation Peer Group +• Centennial Resource Development, Inc. +• Cimarex Energy Co. +• Jagged Peak Energy, Inc. +• Matador Resources, Inc. +• Oasis Petroleum Inc. +• Parsley Energy, Inc. +• PDC Energy, Inc. +• QEP Resources, Inc. +• SM Energy Company +• Whiting Petroleum Corporation +• WPX Energy, Inc. +In addition, the Committee adopted a peer group for purposes of measuring the Company’s relative TSR performance to determine vesting of the 2020 PSUs over the three-year performance period. For the January 2020 PSU grant, the Committee used the peer group listed in the table above but replaced Jagged Peak Energy, which had been acquired, with Magnolia Oil & Gas to provide an additional similarly-sized peer with Texas-based operations. Since the January 2020 grant date of the 2020 PSU awards, the Committee has replaced Parsley Energy, QEP Resources, and WPX Energy, each of whom has been acquired, with Laredo Petroleum and Penn Virginia Corporation, both of whom are similarly-sized with Texas-based operations, and the XOP index, which provides a comparison to a broader basket of energy investment options against whom the Company competes for capital. +Practices and Policies Related to Compensation +Stock Ownership Guidelines +Consistent with its goal of driving long-term value creation for our shareholders, the Company's stock ownership guidelines require significant stock ownership by the executive officers and directors. The guidelines require the executive officers and directors to hold the following amounts of our stock: +Executive Officers/Directors Required Common Stock Ownership as a Multiple of Annual Base Salary / Annual Retainer +CEO 6x +Directors 5x +Other Executive Officers 2x +The Committee evaluates compliance with these guidelines on an annual basis. For purposes of the guidelines, shares owned indirectly, shares in the executive officer's 401(k) plan and any unvested time-based RSUs are included. The value of unvested +50 CALLON PETROLEUM +EXECUTIVE COMPENSATION +PSUs is excluded. Pursuant to the policy, shares granted to the executive under the Company’s incentive compensation plans are valued at the greater of the then-current trading price or the value on the date of grant. +Each executive officer has a transition period of five years from the date the individual becomes subject to the guidelines to attain the required investment position. If an executive officer becomes subject to a greater ownership requirement due to a promotion or an increase in salary, the executive officer will be expected to attain the higher level within three years of the change. +Each outside director is required to achieve the ownership requirement within five years following their election as a director. +As of December 31, 2020, all participants were in compliance with the stock ownership policy, either through meeting the ownership requirement or by being within the transition period. +Internal Revenue Service Limitations +Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Tax Code") places a limit of $1.0 million on the amount of compensation that we may deduct in any one year with respect to compensation paid to each covered employee. For years prior to 2018, an exception to the deduction limit applied to compensation that qualified as “performance-based.” The enactment of the Tax Cuts and Jobs Act on December 22, 2017 repealed the "performance-based" exemption from Section 162(m)‘s deduction limit. In addition, the limitation on deductibility was expanded to include any individual who is an NEO in 2017 or any later calendar year. As a result, compensation paid to our NEOs in excess of $1.0 million will not be deductible for years subsequent to 2017, subject to limited transition relief for arrangements in place as of November 2, 2017. Despite the change in law, the Committee intends to continue to consider the deductibility of compensation and to implement compensation programs that it believes are competitive and in the best interests of the Company and its shareholders. +Insider Trading Policy +The Board has adopted a comprehensive Insider Trading Policy for employees and directors to promote compliance with federal and state securities laws. The policy prohibits certain persons who are aware of material non-public information about a company from: (i) trading in securities of that company; or (ii) providing material non-public information to other persons who may trade on the basis of that information. When material non-public information about us may exist and may have an influence on the marketplace, a trading blackout period is placed in effect by management. In addition, this Insider Trading Policy also applies to family members, other members of a person’s household, and entities controlled by a person covered by this Insider Trading Policy. Officers, directors, and designated employees, as well as the family members and controlled entities of such persons, may not engage in any transaction in Company securities without first obtaining pre-clearance of the transaction from our General Counsel. +Under the Insider Trading Policy, directors, executive officers and other employees are prohibited from entering into any hedging or monetization transactions relating to Callon's securities or otherwise trading in any instrument relating to the securities' future price. This Insider Trading Policy also prevents directors and executive officers from pledging Callon common stock as collateral for loans or holding Callon securities in a margin account. The Insider Trading Policy is published as Addendum A to our Code of Business Conduct and is available at www.callon.com/about-callon/governance. +Clawback Policy +In January 2020, the Committee adopted the Clawback Policy. The Clawback Policy provides the Committee the authority to recoup previously-paid compensation under the following circumstances: +• If there is a correction to previously approved performance metrics (not necessarily limited to a financial restatement), the Committee may clawback from executive officers any annual or long-term incentive compensation paid in error during the prior three years. +• If an executive officer engages in fraud or misconduct, or was grossly negligent in a supervisory role, where such action caused or could reasonably lead to material financial or reputational harm to Callon, the Committee may clawback annual and long-term incentive compensation from the past year from the executive officer +The Committee believes the Clawback Policy helps protect the Company and its shareholders in the unlikely event of a restatement or potential fraud or misconduct by an executive officer. The clawback rights described above are in addition to those required under the Sarbanes-Oxley Act of 2002. +2021 PROXY STATEMENT 51 +EXECUTIVE COMPENSATION +Risk Assessment Related to Our Compensation Structure +The Committee believes our compensation plans and policies are appropriately structured to encourage and reward prudent business judgment and avoid excessive risk-taking. The Committee, with the assistance of Meridian, reviewed the compensation programs maintained by the Company during 2020 to determine whether they encouraged excessive risk taking. Upon evaluation of the assessment, the Committee concluded that our compensation policies and practices for our employees do not present risks that are reasonably likely to have a material adverse effect on the Company. The Committee’s risk review identified the following risk mitigating features of our compensation programs: +• A balance of short-term and long-term programs to focus management on both elements of Callon’s performance; +• Annual grants of long-term incentives designed to be the largest component of each NEO’s compensation package, with typical vesting periods of three years that are based on the value of our common stock and not on any particular metric that could encourage excessive risk-taking; +• Performance criteria and targets for our annual bonus program designed to encourage performance, but not excessive risk taking, and discretion to decrease payouts if it is believed management exercised excessive risk taking; +• Performance targets measured at the corporate level, rather than at the individual or business unit level; +• A Clawback Policy that grants the Committee authority to recoup compensation due to error, fraud or other misconduct; +• Reasonable change in control severance protections; and +• Significant executive stock ownership requirements. +Compensation Committee Report +The Compensation Committee has reviewed and discussed with management the CD&A required by Item 402(b) of Regulation S-K promulgated under the Exchange Act, and based on such review and discussions, the Committee has recommended to the Board that the CD&A be included in this Proxy Statement relating to the Annual Meeting. +Respectfully submitted by the Compensation Committee of the Board of Directors, +Matthew R. Bob, Chairman +Michael L. Finch +L. Richard Flury +Anthony J. Nocchiero +James M. Trimble +52 CALLON PETROLEUM +EXECUTIVE COMPENSATION +Executive Compensation Tables +The compensation paid to the Company’s executive officers generally consists of base salaries, annual cash incentive payments, awards under the 2018 Omnibus Incentive Plan (the "2018 Plan") and the 2020 Plan, contributions to the Company’s 401(k) plan and miscellaneous perquisites. The table below sets forth information regarding fiscal years 2020, 2019, and 2018 compensation awarded to, earned by or paid to the Company’s NEOs, in each case for the years in which these individuals constituted "named executive officers" under SEC rules. This includes all individuals who served as the Company's CEO or CFO during 2020, and the three other most highly compensated executive officers serving at the end of the fiscal year. The CD&A above provides a full description of our 2020 executive compensation program design. +Summary Compensation Table +Name and Principal Position Year Salary +Bonus (a) +Stock +Awards (b) +Non-Equity Incentive Plan Compensation (c) +All Other Compensation (d) +Total +Realizable Total Compensation (e) +Joseph C. Gatto, Jr. (f) +President & CEO +2020 $ 773,885 $ — $ 3,945,450 $ 1,378,902 $ 30,288 $ 6,128,525 $ 2,998,666 +2019 $ 796,153 $ — $ 5,136,754 $ 1,043,625 $ 33,055 $ 7,009,587 $ 2,359,461 +2018 $ 666,346 $ 980,000 $ 4,313,125 $ — $ 31,430 $ 5,990,901 $ 1,931,496 +James P. Ulm, II (g) +Senior Vice President & CFO +2020 $ 458,462 $ — $ 1,785,040 $ 687,478 $ 36,837 $ 2,967,817 $ 1,551,773 +2019 $ 465,000 $ — $ 2,083,367 $ 481,275 $ 42,352 $ 3,071,994 $ 1,185,994 +2018 $ 465,000 $ 585,900 $ 1,249,500 $ — $ 39,245 $ 2,339,645 $ 1,139,495 +Jeffrey S. Balmer (h)(i) +Senior Vice President & Chief Operating Officer +2020 $ 464,827 $ — $ 1,863,529 $ 699,339 $ 23,242 $ 3,050,937 $ 1,572,632 +2019 $ 450,000 $ — $ 1,968,015 $ 439,875 $ 57,350 $ 2,915,240 $ 1,150,138 +Michol L. Ecklund (j) +Senior Vice President, General Counsel & Corporate Secretary +2020 $ 394,289 $ — $ 1,173,912 $ 560,246 $ 42,605 $ 2,171,052 $ 1,239,803 +2019 $ 388,462 $ — $ 1,194,593 $ 368,000 $ 38,953 $ 1,990,008 $ 908,584 +2018 $ 340,577 $ 343,000 $ 774,155 $ — $ 38,131 $ 1,495,863 $ 767,247 +Gregory F. Conaway (k)(l) +Vice President & Chief Accounting Officer +2020 $ 286,125 $ — $ 672,040 $ 307,210 $ 25,653 $ 1,291,028 $ 773,582 +2019 $ 8,677 $ — $ — $ 197,400 $ 174 $ 206,251 $ 206,251 +(a) The annual cash bonus for 2018 did not qualify as non-equity incentive plan compensation. +(b) The amounts reported in the “Stock Awards” column represent the aggregate grant date fair value of RSUs and PSUs computed in accordance with FASB ASC Topic 718. The PSUs granted in 2020, 2019, and 2018 are subject to market conditions and have been valued utilizing a Monte Carlo simulation as of the grant date of the awards. The assumptions utilized in the calculation of these amounts for 2020 are set forth in footnote 10 to our consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2020. +(c) The amounts reported in the “Non-Equity Incentive Plan Compensation” column represent payouts under the annual performance bonus program for 2019 and 2020 and the transition cash incentive award payouts for the third and fourth quarters of 2020. See “Performance-Based Annual Cash Incentive” and “Transition Cash Incentive Awards & Retention Award Programs” in the CD&A above for further information. +(d) See the "Table of All Other Compensation” below and related footnotes for reconciliation. +(e) Amounts shown are intended to illustrate the pay-for-performance nature of the executive compensation program by presenting the realizable pay of the 2020, 2019 and 2018 compensation programs for the named executive officers as of December 31, 2020. The amounts reported in this column differ substantially from the amounts reported in the Total column required under SEC rules and are not a substitute for total compensation. Realizable pay includes (i) actual amounts received for salary and bonus for the applicable year, and (ii) the value as of December 31, 2020, of RSUs and PSUs granted in the applicable year based on the closing price of $13.16 per share of our common stock on the last trading day of 2020 and the applicable TSR-based performance modifier for each PSU grant as of December 31, 2020. +(f) Mr. Gatto’s salary was increased from $825,000 to $865,000 effective February 2020. In April 2020 Mr. Gatto voluntarily reduced his salary by 20%. The Compensation Committee reinstated senior executive officer salaries in October 2020. +(g) Mr. Ulm's salary was increased from $465,000 to $500,000 effective February 2020. In April 2020 Mr. Ulm voluntarily reduced his salary by 15%. The Compensation Committee reinstated senior executive officer salaries in October 2020. +(h) Dr. Balmer was not an NEO prior to 2019. +(i) Dr. Balmer's salary was increased from $450,000 to $510,000 effective February 2020. In April 2020 Dr. Balmer voluntarily reduced his salary by 15%. The Compensation Committee reinstated senior executive officer salaries in October 2020. +(j) Ms. Ecklund's salary was increased from $400,000 to $430,000 effective February 2020. In April 2020 Ms. Ecklund voluntarily reduced her salary by 15%. The Compensation Committee reinstated senior executive officer salaries in October 2020. +2021 PROXY STATEMENT 53 +EXECUTIVE COMPENSATION +(k) Mr. Conaway was appointed to an executive officer role with the Company as of the closing of the Carrizo Acquisition on December 20, 2019. +(l) Mr. Conaway's salary was increased from $282,000 to $295,000 effective February 2020. In April 2020 Mr. Conaway voluntarily reduced his salary by 10%. The Compensation Committee reinstated vice president salaries in October 2020. +Table of All Other Compensation +NEO +Year +Company +Contributions to 401(k) (a) +Company +Provided +Auto (b) +Additional Perquisites Total +Joseph C. Gatto, Jr. 2020 $ 22,800 $ 7,488 $ — $ 30,288 +2019 $ 26,250 $ 6,805 $ — $ 33,055 +2018 $ 25,000 $ 6,430 $ — $ 31,430 +James P. Ulm, II 2020 $ 22,685 $ 14,152 $ — $ 36,837 +2019 $ 28,000 $ 14,352 $ — $ 42,352 +2018 $ 26,493 $ 12,752 $ — $ 39,245 +Jeffrey S. Balmer 2020 $ 17,414 $ 5,828 $ 23,242 +2019 $ 24,642 $ 1,851 $ 30,857 +(c) +$ 57,350 +Michol L. Ecklund 2020 $ 19,090 $ 23,515 $ 42,605 +2019 $ 25,962 $ 12,991 $ — $ 38,953 +2018 $ 25,312 $ 12,819 $ — $ 38,131 +Gregory F. Conaway 2020 $ 18,911 $ 6,742 $ 25,653 +2019 $ 174 $ — $ — $ 174 +(a) Subject to IRS limits, Company contributions to each employee's 401(k) account for 2020 consist of a 6% matching contribution plus a a 2% profit sharing contribution for a portion of 2020. +(b) The imputed value for personal use of a company-provided automobile represents annual depreciation based on a three-year life, plus insurance, fuel, maintenance and repairs, pursuant to IRS rules. +(c) Dr. Balmer received $30,857 for reimbursement for certain reasonable relocation expenses which included transportation expenses, home sale and purchase assistance, shipment of additional household goods, and tax gross-ups on these payments. +Stock-Based Incentive Compensation Plans +The 2018 Plan was approved by shareholders on May 10, 2018. The 2020 Plan was approved by shareholders on June 8, 2020. Awards available under each of the 2018 Plan and the 2020 Plan include grants of stock options, stock appreciation rights or units, restricted stock, RSUs, and performance shares or units. As of June 8, 2020, no more shares were issued from the 2018 Plan and the then-remaining 1,008,354 shares authorized and available for issuance under the 2018 Plan were transferred into the 2020 Plan. Shares, which would otherwise become available for issuance under the 2018 Plan as a result of vesting and/or forfeiture of any equity awards existing prior to the effective date of the 2020 Plan, increased the authorized shares available to the 2020 Plan. As of March 15, 2021, approximately 1,922,707 shares remain unissued and available for grant in the 2020 Plan. +54 CALLON PETROLEUM +EXECUTIVE COMPENSATION +Grants of Plan-Based Awards During 2020 +The following table presents grants of awards under the 2020 Plan during the fiscal year ending December 31, 2020: +Grant +Date +Estimated Future Payouts Under Non-Equity Incentive Plan Awards (a) +Estimated Future Payouts Under Equity Incentive Plan Awards (b)(c) +Other Awards +(Shares or Units) (b)(d) +Grant Date +Fair Value of Stock Awards (e) +NEO Threshold Target Maximum Threshold Target Maximum +Joseph C. Gatto, Jr. +1/1/2020 +$ — $ 995,000 $ 1,990,000 +1/31/2020 +— 48,799 $ 1,463,970 +1/31/2020 — 73,200 219,600 $ 2,481,480 +9/29/2020 +$ — $ 801,577 $ 1,733,140 +James P. Ulm, II +1/1/2020 +$ — $ 475,000 $ 950,000 +1/31/2020 +22,078 $ 662,340 +1/31/2020 — 33,118 99,354 $ 1,122,700 +9/29/2020 +$ — $ 382,759 $ 827,587 +Jeffrey S. Balmer +1/1/2020 +$ — $ 485,000 $ 970,000 +1/31/2020 +23,049 $ 691,470 +1/31/2020 34,574 103,722 $ 1,172,059 +9/29/2020 +$ — $ 390,414 $ 844,139 +Michol L. Ecklund +1/1/2020 +$ — $ 387,000 $ 774,000 +1/31/2020 +— — — 14,519 $ 435,570 +1/31/2020 — 21,780 65,340 $ 738,342 +9/29/2020 +$ — $ 311,848 $ 674,266 +Gregory F. Conaway +1/1/2020 +$ — $ 207,000 $ 414,000 +1/1/2020 +4,935 (f) +$ 238,361 +1/31/2020 +— — — 5,364 $ 160,920 +1/31/2020 — 8,046 24,138 — $ 272,759 +9/29/2020 +$ — $ 166,399 $ 359,782 +(a) Amounts represent the threshold, target, and maximum payouts for the 2020 annual performance bonus program and the target and maximum award values for the transition cash incentive award. The actual amounts paid under the annual performance bonus program and the transition cash incentive award for 2020 are set forth in the "Non-Equity Incentive Compensation" column in the Summary Compensation Table above. +(b) Reflects the 1-for-10 reverse split of the common stock of the Company, effective August 7, 2020. +(c) Amounts represent PSUs payable 50% in cash and 50% in stock on the vesting date, currently scheduled for December 31, 2022. See "PSU Program" in the CD&A above for further details. +(d) Except as otherwise indicated, amounts represent RSUs granted to our NEOs on January 31, 2020. The first tranche will vest on April 1, 2021; the second and third tranches are scheduled to vest in equal installments on April 1, 2022 and 2023, subject to the NEO’s continued service. +(e) This column shows the grant date fair value of the awards granted to the NEOs on the date indicated computed in accordance with FASB ASC Topic 718. The value ultimately realized by the executive upon the actual vesting of the awards may be more or less than the grant date fair value. +(f) Amount represents RSUs granted to Mr. Conaway on January 1, 2020 at a grant price of $48.30. The first tranche vested on January 1, 2021; the second and third tranches are scheduled to vest in equal installments on January 1, 2022 and 2023, subject to Mr. Conaway’s continued service. +2021 PROXY STATEMENT 55 +EXECUTIVE COMPENSATION +Outstanding Equity Awards at Fiscal Year-End +The following table contains information concerning all outstanding equity awards that were held as of December 31, 2020 for the NEOs: +Stock Awards (a) +NEO Number of Shares or Units of Stock That Have Not Vested (#) +Market Value of Shares or Units of Stock That Have Not Vested (b) +Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested +Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested (a) +Joseph C. Gatto, Jr. 48,799 +(c) +$ 642,195 — $ — +— $ — 36,600 +(d) +$ 481,656 +— $ — 36,600 +(e) +$ 481,656 +14,087 +(f) +$ 185,385 — $ — +— $ — 15,848 +(g) +$ 208,560 +— $ — 15,848 +(h) +$ 208,560 +3,672 +(i) +$ 48,324 — $ — +James P. Ulm, II 22,078 +(c) +$ 290,546 — $ — +— $ — 16,559 +(d) +$ 217,916 +— $ — 16,559 +(e) +$ 217,916 +5,713 +(f) +$ 75,183 — $ — +— $ — 6,428 +(g) +$ 84,592 +6,428 +(h) +$ 84,592 +3,000 +(j) +$ 39,480 — $ — +Jeffrey S. Balmer 23,049 +(c) +$ 303,325 — $ — +— $ — 17,287 +(d) +$ 227,497 +— $ — 17,287 +(e) +$ 227,497 +6,000 +(k) +$ 78,960 — $ — +— $ — 6,419 +(g) +$ 84,474 +— $ — 6,419 +(h) +$ 84,474 +Michol L. Ecklund 14,519 +(c) +$ 191,070 +— $ — 10,890 +(d) +$ 143,312 +— $ — 10,890 +(e) +$ 143,312 +3,276 +(f) +$ 43,112 — $ — +— $ — 3,686 +(g) +$ 48,508 +— $ — 3,686 +(h) +$ 48,508 +1,250 +(l) +$ 16,450 — $ — +659 +(i) +$ 8,672 — $ — +Gregory F. Conaway (n) +5,364 +(c) +$ 70,590 — $ — +— $ — 4,023 +(d) +$ 52,943 +— $ — 4,023 +(e) +$ 52,943 +4,935 +(m) +$ 64,945 — $ — +(a) Reflects the 1-for-10 reverse split of the common stock of the Company, effective August 7, 2020. +(b) Amounts calculated using the closing price of $13.16 per share of our common stock on the last trading day of 2020. +(c) Stock settleable RSUs awarded on January 31, 2020 subject to three-year ratable vesting with one-third vesting each year subsequent to the award year. The first tranche will vest on April 1, 2021. The second tranche will vest on April 1, 2022. The third and final tranche will vest on April 1, 2023. +56 CALLON PETROLEUM +EXECUTIVE COMPENSATION +(d) Stock settleable PSUs awarded on January 31, 2020 with vesting terms subject to performance criteria related to the TSR of the Company compared to a group of peer companies from December 31, 2019 through December 31, 2022. The number of units subject to vest under this award can range from 0% to 300%. +(e) Cash settleable PSUs awarded on January 31, 2020 with vesting terms subject to performance criteria related to the TSR of the Company compared to a group of peer companies from December 31, 2019 through December 31, 2022. The number of units subject to vest under this award can range from 0% to 300%. +(f) Stock settleable RSUs awarded on January 31, 2019 subject to three-year ratable vesting with one-third vesting each year subsequent to the award year. The first tranche vested on April 1, 2020. The second tranche vested on April 1, 2021. The third and final tranche will vest on April 1, 2022. +(g) Stock settleable PSUs awarded on January 31, 2019 with vesting terms subject to performance criteria related to the TSR of the Company compared to a group of peer companies from December 31, 2018 through December 31, 2021. The number of units subject to vest under this award can range from 0% to 200%. +(h) Cash settleable PSUs awarded on January 31, 2019 with vesting terms subject to performance criteria related to the TSR of the Company compared to a group of peer companies from December 31, 2018 through December 31, 2021. The number of units subject to vest under this award can range from 0% to 200%. +(i) Stock settleable RSUs awarded on May 10, 2018 subject to three-year ratable vesting with one-third vesting each year subsequent to the award year. The first tranche vested on June 1, 2019. The second tranche vested on June 1, 2020. The third and final tranche will vest on June 1, 2021. +(j) Stock settleable RSUs awarded to Mr. Ulm upon his hiring on December 11, 2017 subject to three-year ratable vesting with one-third vesting each year subsequent to the award year. The first tranche vested on January 1, 2019. The second tranche vested on January 1, 2020. The third and final tranche vested on January 1, 2021. +(k) Stock settleable RSUs awarded on January 1, 2019 subject to three-year ratable vesting with one-third vesting each year subsequent to the award year. The first tranche vested on January 1, 2020. The second tranche vested on January 1, 2021. The third and final tranche will vest on January 1, 2022. +(l) Stock settleable RSUs awarded to Ms. Ecklund upon her hiring on November 6, 2017 subject to three-year ratable vesting with one-third vesting each year subsequent to the award year. The first tranche vested on January 1, 2019. The second tranche vested on January 1, 2020. The third and final tranche vested on January 1, 2021. +(m) Stock settleable RSUs awarded to Mr. Conaway on January 1, 2020, upon his appointment as an executive officer following the Carrizo Acquisition, subject to three-year ratable vesting with one-third vesting each year subsequent to the award year. The first tranche vested on January 1, 2021. The second tranche will vest on January 1, 2022. The third and final tranche will vest on January 1, 2023. +(n) Mr. Conaway held the following outstanding cash-settled stock appreciation right awards as of December 31, 2020: +Option/SAR Awards +NEO Number of Securities Underlying Unexercised Options/ +SARs (#) Exercisable Number of Securities Underlying Unexercised Options/ +SARs (#) Unexercisable Equity Incentive Plan Awards: +Number of Securities Underlying Exercised Unearned Options/SARs (#) Option/ +SARs Exercise Price +($) Option/ +SARs Expiration Date +Gregory F. Conaway 1,996 +(1) +— — $ 156.00 +3/17/2021 +2,005 +(2) +— — $ 154.00 +3/23/2022 +3,144 +(3) +— — $ 83.90 +3/17/2025 +4,258 +(4) +— — $ 62.80 +3/17/2026 +(1) Cash-settled stock appreciation rights received in connection with the Carrizo Acquisition in exchange for 11,406 Carrizo stock appreciation rights with an exercise price of $27.295 pursuant to the merger agreement relating to the Carrizo Acquisition (the "Merger Agreement"). +(2) Cash-settled stock appreciation rights received in connection with the Carrizo Acquisition in exchange for 11,458 Carrizo stock appreciation rights with an exercise price of $26.94 pursuant to the Merger Agreement. +(3) Cash-settled stock appreciation rights received in connection with the Carrizo Acquisition in exchange for 17,967 Carrizo stock appreciation rights with an exercise price of $14.67 pursuant to the Merger Agreement. +(4) Cash-settled stock appreciation rights received in connection with the Carrizo Acquisition in exchange for 24,336 Carrizo stock appreciation rights with an exercise price of $10.98 pursuant to the Merger Agreement. +2021 PROXY STATEMENT 57 +EXECUTIVE COMPENSATION +Stock Vested +The following table provides information about the value realized by the NEOs on vesting of RSUs and PSUs during 2020: +Stock Awards (a)(b) +NEO Number of Shares +Acquired on Vesting (#) +Value Realized on Vesting $ (c) +Joseph C. Gatto, Jr. 4,287 +(d) +$ 33,439 +4,005 +(e) +$ 46,058 +3,672 +(f) +$ 26,438 +8,262 +(g) +$ 108,728 +7,043 +(h) +$ 28,876 +James P. Ulm, II 3,000 +(i) +$ 144,900 +3,750 +(g) +$ 49,350 +2,857 +(h) +$ 11,714 +Jeffrey S. Balmer 3,000 +(j) +$ 144,900 +Michol L. Ecklund 1,250 +(k) +$ 60,375 +659 +(f) +$ 4,745 +1,482 +(g) +$ 19,503 +1,638 +(h) +$ 6,716 +Gregory F. Conaway — $ — +(a) Reflects the 1-for-10 reverse split of the common stock of the Company, effective August 7, 2020. +(b) No options were awarded, outstanding, expired, or exercised by any NEO in 2020. +(c) Except as otherwise indicated, represents the aggregate dollar amount realized on the date of vesting, based on the closing market price per share of Company common stock on the vesting date or last business day prior to the vesting date if such date fell on a weekend or holiday. +(d) Represents RSUs awarded on May 11, 2017, that cliff-vested on May 11, 2020. +(e) Represents RSUs awarded to Mr. Gatto upon his promotion to CEO on July 11, 2017, the third and final tranche of which vested on July 1, 2020. +(f) Represents RSUs awarded on May 10, 2018, the second tranche of which vested on June 1, 2020. +(g) Represents PSUs awarded on May 10, 2018, that settled 50% in stock and 50% in cash on December 31, 2020, at 50% of target. +(h) Represents RSUs awarded on January 31, 2019, the first tranche of which vested on April 1, 2020. +(i) Represents RSUs awarded to Mr. Ulm upon his hiring on December 11, 2017, the second tranche of which vested on January 1, 2020. +(j) Represents RSUs awarded to Dr. Balmer upon his hiring on January 1, 2019, the first tranche of which vested on January 1, 2020. +(k) Represents RSUs awarded to Ms. Ecklund upon her hiring on November 6, 2017, the second tranche of which vested on January 1, 2020. +58 CALLON PETROLEUM +EXECUTIVE COMPENSATION +Employment Agreements, Termination of Employment and Change in Control Arrangements +Employment Agreements; Carrizo Change in Control Severance Plan +We do not have employment agreements with any of our executive officers, with the exception of an employment agreement with Mr. Conaway that was inherited by the Company as a result of the Carrizo Acquisition and amended in connection therewith. +Mr. Conaway's employment agreement has an initial one-year term, provided that the date of the agreement and on every day thereafter, the term of the employment agreement is automatically extended for one day, such that the remaining term of the agreement shall never be less than one year until an event (as described in the agreement) that gives rise to termination of employment occurs. The Company has given notice that the employment agreement will terminate on December 20, 2021, unless earlier terminated in accordance with its terms. Mr. Conaway’s employment agreement also subjects Mr. Conaway to a one-year post-termination non-competition and non-solicitation covenant, and a perpetual confidentiality covenant. +Mr. Conaway’s employment agreement provides for severance benefits, subject to Mr. Conaway's execution and non-revocation of a general release of claims in favor of the Company, upon a termination as a result of disability, but does not provide for severance benefits (other than accrued benefits) in the event of a termination by the Company without cause or by Mr. Conaway for any or no reason. However, Mr. Conaway is party to a Severance Compensation Agreement with the Company (a “CIC Agreement”) and is a participant of the Carrizo Change in Control Severance Plan (which the Company inherited as a result of the Carrizo Acquisition), each of which provide for severance benefits upon a termination without cause or for good reason under certain circumstances (as further described below). Pursuant to the terms of Mr. Conaway’s CIC Agreement, in the event a change in control of Callon occurs and Mr. Conaway experiences a qualifying termination following such change in control, Mr. Conaway will be entitled to the severance benefits provided for under his CIC Agreement in lieu of those provided for under his employment agreement or the Carrizo Change in Control Severance Plan. The severance benefits payable under his CIC Agreement are described in the “Severance Compensation Agreements” section below. +In the event Mr. Conaway is terminated on or prior to the second anniversary of the closing of the Carrizo Acquisition (the “Carrizo CIC Protected Period”), the severance provisions of the Carrizo Change in Control Severance Plan will apply in lieu of the severance provisions set forth in his employment agreement, except to the extent the employment agreement provides for additional or greater severance benefits. The Carrizo Change in Control Severance Plan provides for the following severance benefits if Mr. Conaway's employment is terminated during the Carrizo CIC Protected Period by the Company without cause, by Mr. Conaway for good reason, or as a result of death or disability (as such terms are defined in the Carrizo Change in Control Severance Plan): (i) accrued benefits, (ii) a lump sum payment equal to 1.5 multiplied by the sum of (A) his base salary plus (B) his target annual bonus, (iii) continued Company-paid health benefits for up to 18 months, (iv) a pro-rated target annual bonus for the calendar year in which his termination occurs, and (v) any outstanding equity awards then held by Mr. Conaway will vest in full with any performance-based awards earned at the target level and, to the extent applicable, any awards with an exercise period (e.g. stock appreciation rights) will remain exercisable for their full original term. Such severance benefits are conditioned upon Mr. Conaway’s execution and non-revocation of a general release of claims in favor of the Company. The Carrizo Change in Control Severance Plan also includes a 280G “best-net” cutback provision, which provides that if amounts payable to a participant under the Carrizo Change in Control Severance Plan (together with any other amounts that are payable as a result of a change in control) would subject a participant to an excise tax under Section 280G of the Internal Revenue Code, such payments will either be: (i) reduced to the level at which no excise tax applies, or (ii) paid in full, whichever results in a better after-tax result for the participant. +Upon termination as a result of disability outside of the Carrizo CIC Protected Period, Mr. Conaway’s employment agreement provides for the following severance benefits: (i) accrued benefits (including any earned but unpaid annual bonus with respect to the prior fiscal year), (ii) a lump sum payment equal to 97% of his annual base salary, (iii) an additional lump sum payment equal to 70% of his annual base salary, (iii) an additional lump sum payment equal to 3% of his annual base salary, (iv) continued medical and dental benefits coverage for Mr. Conaway and his dependents for one year following his termination of employment, and (v) any outstanding equity awards then held by Mr. Conaway will vest in full, and, to the extent applicable, the period of exercisability of any such awards will extend to the earlier of (A) one year following his termination date or (B) the date such awards would have lapsed had Mr. Conaway remained employed for the remaining term. Mr. Conaway’s employment agreement also entitles Mr. Conaway to accrued benefits and equity acceleration benefits (as described in the immediately prior sentence) in the event Mr. Conaway’s employment is terminated as a result of his death. +2021 PROXY STATEMENT 59 +EXECUTIVE COMPENSATION +Change in Control Severance Compensation Agreements ("CIC Agreements") +We entered into amended CIC Agreements with each of our NEOs effective as of January 1, 2019, with the exception of Mr. Conaway, who entered into his CIC Agreement effective December 20, 2019 in connection with his appointment as an officer. The CIC Agreements will terminate, except to the extent that any obligation of Callon thereunder remains unpaid as of such time, on December 31, 2020, except that, on each anniversary date thereafter, the expiration date will automatically be extended for one additional year unless, as of such date and prior to such anniversary date, either party has given proper written notice that it does not wish to extend the CIC Agreement, but in no event will the expiration date be earlier than the second anniversary of the effective date of a change in control; (ii) the termination of the NEO's employment with Callon based on death, disability (as defined in the CIC Agreement), or cause (as defined in the CIC Agreement); (iii) the voluntary resignation of the NEO for any reason other than a post-change in control resignation for good reason (as defined in the CIC Agreement); and (iv) any resignation of the NEO prior to a change in control. +Pursuant to the CIC Agreement, if the executive is terminated without cause by Callon or for good reason by him within two years following a change in control of Callon (or in certain cases, prior to a change in control (i.e., a "double-trigger termination)), then the executive is entitled to a single lump-sum cash payment equal to an CIC Agreement multiple times the sum of (i) the annual base salary in effect immediately prior to the change in control or, if higher, in effect immediately prior to the separation from service, and (ii) the greater of the average bonus earned with respect to the three most recently completed full fiscal years, the target bonus for the fiscal year in which the change in control occurs, or the target bonus for the fiscal year in which the change in control or termination occurs. For Mr. Gatto, the CIC Agreement multiple is three times. For the other NEOs, the CIC Agreement multiple is two times. The CIC Agreements also provide that in the event an NEO is eligible for benefits due to a “double trigger” termination, any outstanding equity awards then held by the NEO shall vest in full with any performance-based awards earned at the level specified in the applicable award agreement or, if not specified, at the target level. In addition, we must maintain at our expense until twenty-four months after a "double-trigger" separation from service all medical, dental, and health insurance coverage. Such severance benefits are subject to the executive’s execution and non-revocation of a general release of claims. A change in control as generally defined in the CIC Agreement occurs when (i) any person or group of persons acting in concert becomes the beneficial owner of more than 50% of our outstanding common stock; (ii) our shareholders cause a change in the majority of the members of the Board within a thirty-six month period; (iii) there is a change in control in ownership of at least 40% of Company assets; or (iv) a third party acquires more than 30% of the voting power of our common stock in a twelve month period. +The CIC Agreements also subject each executive to a one-year post-termination non-competition and two- year post-termination non-solicitation covenant in the event the applicable executive becomes eligible to receive severance benefits under the CIC Agreement. The CIC Agreements also include a perpetual confidentiality covenant. +The CIC Agreements incorporate a provision to provide for the possible impact of the federal excise tax on excess parachute payments. If any CIC Agreement payment is subject to any excise tax under Section 4999 of the Tax Code, the payment will be reduced so that no portion of the payment is subject to such excise tax if the net benefit payable would be at least as much as it would have been if no reduction was made. The so-called “golden parachute” tax rules subject “excess parachute payments” to a dual penalty: the imposition of a 20% excise tax upon the recipient and non-deductibility of such payments by the paying corporation. While the excise tax is seemingly evenhanded, the excise tax can discriminate against long-serving employees in favor of new hires, against individuals who do not exercise stock options in favor of those who do and against those who elect to defer compensation in favor of those who do not. For these reasons, we believe that the 280G “best-net” cutback provision included in the CIC Agreement is appropriate. +60 CALLON PETROLEUM +EXECUTIVE COMPENSATION +Potential Payments upon Termination or Change in Control +The following table shows the estimated gross taxable compensation payable upon termination following a change in control ("CIC") or upon death, disability or retirement (or, in the case of Mr. Conaway, during the Carrizo CIC Protection Period on his termination without cause or for good reason, or due to death or disability). No amounts would be payable upon termination for other causes. The information assumes, in each case, that the officer’s termination was effective as of December 31, 2020. In presenting this disclosure, we describe amounts earned through December 31, 2020 and, in those cases where the actual amounts to be paid out can only be determined at the time of such executive’s separation from us, the estimates are of the amounts which would be paid out to the executives upon their termination. +NEO / Reason for Termination +Base +Salary (a) +Cash +Bonus (a) +Accelerated Cash Incentive and Stock Award Vesting (b)(c) +Continued +Employee +Benefits (d) +Total +Joseph C. Gatto, Jr. +Change in Control $ — $ — $ — $ — $ — +Change in Control Termination (e) +$ 2,595,000 $ 2,984,250 $ 2,236,812 $ 61,002 $ 7,877,064 +Death, Disability or Retirement (f) +$ — $ — $ 2,236,812 $ — $ 2,236,812 +James P. Ulm, II +Change in Control $ — $ — $ — $ — $ — +Change in Control Termination (e) +$ 1,000,000 $ 950,000 $ 1,035,787 $ 61,002 $ 3,046,789 +Death, Disability or Retirement (f) +$ — $ — $ 1,035,787 $ — $ 1,035,787 +Jeffrey S. Balmer +Change in Control $ — $ — $ — $ — $ — +Change in Control Termination (e)(g) +$ 1,020,000 $ 1,319,000 $ 1,025,457 $ 61,002 $ 3,425,459 +Death, Disability or Retirement (f)(g) +$ — $ 350,000 $ 1,025,457 $ — $ 1,375,457 +Michol L. Ecklund +Change in Control $ — $ — $ — $ — $ — +Change in Control Termination (e) +$ 860,000 $ 774,000 $ 740,090 $ 61,002 $ 2,435,092 +Death, Disability or Retirement (f) +$ — $ — $ 740,090 $ — $ 740,090 +Gregory F. Conaway +Change in Control $ — $ — $ — $ — $ — +Change in Control Termination (e) +$ 590,000 $ 413,000 $ 357,563 $ 60,924 $ 1,421,487 +Without Cause, Good Reason, Death or Disability (h) +$ 752,250 $ 206,500 $ 357,563 $ 45,693 $ 1,362,006 +(a) In accordance with Mr. Gatto’s CIC Agreement, the computation uses a 3x multiple with respect to the severance amount relating to salary and target bonus, while a 2x multiple is used for the other NEOs. See “Employment Agreements, Termination of Employment and Change in Control Arrangements.” +(b) The amounts include the value of unvested Cash Incentive Awards at December 31, 2020. The table above assumes the Cash Incentive Awards for the remaining quarters of the program are paid out at the average of the actual results for the third and fourth quarters of 2020. The actual amount paid with respect to the Cash Incentive Award would be determined based on the average award for the completed quarters at the time of such executive’s separation. +(c) The amounts include the value of unvested stock awards at December 31, 2020 using the closing price of $13.16 per share of our common stock on the last trading day of 2020. The table above assumes that PSUs vest based on actual performance as of December 31, 2020. Actual vesting of PSUs would be determined based on performance at the time of such executive's separation. +(d) Benefits consist of twenty-four months of employer-provided family medical and dental insurance and disability and life insurance for the NEOs in the table. +(e) We entered into an CIC Agreement with each of the NEOs listed in the table above. See “Employment Agreements, Termination of Employment and Change in Control Arrangements.” +(f) “Disability,” for purposes of the CIC Agreements, is generally defined as the employee’s inability to carry out the normal and usual duties of his employment on a full-time basis for an entire period of six continuous months together with the reasonable likelihood, as determined by +2021 PROXY STATEMENT 61 +EXECUTIVE COMPENSATION +the Board after consultation of a qualified physician, he will be unable to carry out his normal and usual duties of employment. “Retirement” is generally defined as the employee’s attainment of age 55 with at least 10 years of service. +(g) The amounts for Dr. Balmer include $350,000 for his unvested fixed cash retention award, which would vest in the event of a change in control termination, death or disability, but not in the event of retirement. +(h) Mr. Conaway would be entitled to payments of 1.5 times the sum of his annual base salary and target annual bonus, a pro-rated target annual bonus for the calendar year in which his termination occurs, accelerated vesting of outstanding equity awards, and 18 months of continued subsidized benefits continuation under the Carrizo Change in Control Severance Plan in the event he is terminated without cause or for good reason or due to death or disability within two years after the closing of the Carrizo Acquisition. “Disability,” for purposes of the Carrizo Change in Control Severance Plan, has the same meaning assigned to such term in the Company’s long-term disability plan, as in effect from time to time, or if no such plan is in effect. “Disability” means “permanent and total disability” as defined in Section 22(e)(3) of the Tax Code. The Carrizo Change in Control Severance Plan does not provide for severance benefits upon retirement or a voluntary resignation by the executive. See "Employment Agreements, Termination of Employment and Change in Control Agreements." +Pension and Non-Qualified Deferred Compensation Plans +We sponsor a 401(k) plan for all eligible employees, including the NEOs as described on page 48. We do not sponsor any qualified or non-qualified defined benefit plans, or any non-qualified defined contribution plan for NEOs or other employees. The Board or Compensation Committee may elect to adopt qualified or non-qualified defined benefit plans or non-qualified defined contribution plans in the future if it determines that doing so is in the Company’s best interest. +CEO Pay Ratio +Pursuant to a mandate of the Dodd-Frank Wall Street Reform and Consumer Protection Act, we are disclosing here that the ratio of our median employee’s compensation to the compensation of our CEO is 38:1. +In order to find the median employee, we compared the sum of the base salary, bonus, and any overtime paid to each employee that was employed by the Company on December 31, 2020. For any employees who were not employed the entire 2020 calendar year (excluding temporary and seasonal employees), we annualized the bonus, base salary, and any overtime. +In accordance with SEC rules, we determined the annual total compensation of our median employee for 2020 was $150,560. This amount represents the total compensation that would have been reported in the Summary Compensation Table in accordance with the requirements of Item 402(c)(x) of Regulation S-K for the median employee if the employee had been a NEO for fiscal year 2020. For purposes of calculating the ratio, an additional value of $11,043 was included in the annual compensation for non-discriminatory benefits bringing the annual total compensation to $161,603. +We determined the amount of the CEO’s annual total compensation was $6,128,525, which represents the amount reported for the CEO in the “Total” column of our 2020 Summary Compensation Table. For purposes of the ratio, an additional value of $30,501 was included in the annual total compensation for non-discriminatory benefits to bring the value to $6,159,026. +Based on the foregoing, for 2020 the ratio of the median of the annual total compensation of all employees to the annual total compensation of our CEO (the "CEO Pay Ratio") is 38:1. This ratio demonstrates a lower pay ratio for 2020 than 2019, reducing from 40:1 in 2019 to the current ratio of 38:1 for 2020. +The CEO Pay Ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on our payroll and employment records. +62 CALLON PETROLEUM +PROPOSAL 3 +Proposal 3 +Ratification of the Appointment of the Independent Registered Public Accounting Firm, Grant Thornton LLP, for 2021. +The Board recommends a vote FOR the ratification of the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2021. +• The Board and the Audit Committee believe the retention of Grant Thornton LLP is in the best interests of Callon and its shareholders based on the information presented below. +The Audit Committee has appointed Grant Thornton LLP, as the independent registered public accounting firm to audit our consolidated financial statements for the year ending December 31, 2021. We are asking shareholders to ratify this appointment. Grant Thornton LLP has served as the Company’s independent registered public accounting firm since being appointed effective March 3, 2016. A representative of Grant Thornton LLP will be present at the Annual Meeting and will have the opportunity to make a statement, if they desire, and to respond to appropriate questions from shareholders. +Fees +The following table sets forth the fees incurred by us for services performed by Grant Thornton LLP in the fiscal years 2019 and 2020: +Fee Category +2019 2020 +Audit fees (a) +$ 1,187,217 $ 1,208,400 +Audit-related fees (b) +$ — $ — +Tax fees (c) +$ 108,385 $ 178,398 +All other fees (d) +$ — $ — +Total +$ 1,295,602 $ 1,386,798 +(a) Audit fees consist of the aggregate fees billed for professional services related to the audit and quarterly reviews of our financial statements and for services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements. +(b) Audit-related fees consist of the aggregate fees billed for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements that are not reported above under “Audit fees." +(c) Tax fees consist of the aggregate fees billed for professional services rendered for tax compliance (including filing state and federal tax returns), tax advice and tax planning. Tax fees do not include fees for services rendered in connection with the audit. +(d) Other fees consist of the aggregate fees billed for professional services other than the services repo rted above. +Pre-approval policy +The Audit Committee pre-approves all audit and permissible non-audit services (including the fees and terms thereof) exceeding $25,000 to be performed on behalf of the Company by our independent registered public accounting firm, as required by applicable law or listing standards and subject to the terms of the audit and non-audit services pre-approval policy in accordance with the Audit Committee charter. The Committee may delegate authority to one or more of its members when appropriate, including the authority to grant pre-approvals of audit and permitted non-audit services, provided that any decisions to grant pre-approvals are consistent with the terms of the delegation and the Audit Committee charter and are presented to the full Committee at its next scheduled meeting. +2021 PROXY STATEMENT 63 +PROPOSAL 3 +Required Vote +The submission of this matter for approval by shareholders is not legally required. However, the Board and Audit Committee believe that this submission is consistent with best practices in corporate governance and is an opportunity for shareholders to provide direct feedback to the Board and Audit Committee on an important issue of corporate governance. Although the results of the vote are not binding on the Audit Committee, if the appointment is not ratified by the shareholders, then the Audit Committee will consider whether it should select another independent registered public accounting firm. +This proposal will be approved if it receives the affirmative vote of a majority of shares of our common stock present and entitled to vote at the Annual Meeting. If you hold your shares through a broker and you do not instruct the broker how to vote, your broker will have the authority to vote your shares in its discretion on this proposal. Abstentions will have the effect as a vote cast against this proposal. +The Board recommends a vote FOR the ratification of the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm. +Audit Committee Report +Acting pursuant to its charter, the Audit Committee reviewed and discussed the Company’s audited financial statements for the year ended December 31, 2020, with management and Grant Thornton LLP, and recommended to the Board that the audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, for filing with the SEC. This recommendation was based on: +• The Audit Committee’s review of the audited financial statements; +• Discussion of the financial statements with management; +• Discussion with our independent registered public accounting firm, Grant Thornton LLP, of the matters required to be discussed by auditing standards generally accepted in the United States of America, including the communication matters required to be discussed by Auditing Standard No. 1301, Communications with Audit Committees, issued by the PCAOB; +• Receipt from Grant Thornton LLP of the written disclosures and letter required by Public Company Accounting Standards Board Rule 3526 (Communications with Audit Committees Concerning Independence); +• Discussions with Grant Thornton LLP regarding its independence from Callon, the Board and our management; +• Grant Thornton LLP’s confirmation that it would issue its opinion that the consolidated financial statements present fairly, in all material respects, our financial position and the results of our operations and cash flows for the periods presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”); and +• Other matters the Audit Committee deemed relevant and appropriate. +Management is responsible for the preparation, presentation and integrity of our consolidated financial statements in accordance with GAAP, the establishment and maintenance of our disclosure controls and procedures, and the establishment, maintenance and evaluation of the effectiveness of our internal controls over financial reporting. The independent registered public accounting firm is responsible for performing an independent audit of our consolidated financial statements and internal control over financial reporting in accordance with the standards of the PCAOB and issuing reports thereon. The Audit Committee’s responsibilities include monitoring and overseeing these processes. +Members of the Audit Committee rely, without independent verification, on the information provided to them and on the representations made by management and our independent registered public accounting firm. The Audit Committee’s considerations and discussions referred to above do not assure that the audit of our financial statements and internal control over financial reporting have been carried out according to the standards of the PCAOB, that the financial statements are presented according to GAAP, or that Grant Thornton LLP is in fact independent. +Respectfully submitted by the Audit Committee of the Board of Directors, +Anthony J. Nocchiero, Chairman +Barbara J. Faulkenberry +Michael L. Finch +L. Richard Flury +Larry D. McVay +Steven A. Webster +64 CALLON PETROLEUM +PROPOSAL 4 +Proposal 4 +Approve the Amendment to the Certificate of Incorporation to Increase Authorized Shares of Common Stock. +The Board recommends a vote FOR the approval of an amendment to the Company's certificate of incorporation to increase the number of authorized shares from 52.5 million to 78.75 million. +• Provides the Company with the flexibility to issue shares for business, financial, and compensation purposes. +We are seeking shareholder approval for a proposal to adopt an amendment to our certificate of incorporation to permit us to increase the authorized number of shares of Callon common stock from 52.5 million shares to 78.75 million shares (the "Proposed Charter Amendment"). Our certificate of incorporation currently provides that the total number of shares of common stock that Callon is authorized to issue is 52.5 million. The Board believes that the increased number of authorized shares of Callon common stock contemplated by the Proposed Charter Amendment is important to the Company as it will ensure the availability of additional shares for issuance from time to time, without further action or authorization by the Callon shareholders (except as required by law or the NYSE rules), if needed for such corporate purposes as may be determined by the Board. +The additional 26.25 million authorized shares would be a part of the existing class of Callon common stock and, if issued, would have the same rights and privileges as the shares of Callon common stock presently issued and outstanding. Adoption of the Proposed Charter Amendment would not affect the rights of the holders of currently outstanding shares of the Company’s common stock, except, if and to the extent additional shares of common stock are ultimately issued, the effects of increasing the number of shares of the Company’s common stock outstanding, such as dilution of the earnings per share and voting rights of current holders of common stock. The Proposed Charter Amendment does not affect the number of shares of preferred stock authorized. +If our shareholders approve the proposal to amend our certificate of incorporation, Callon expects to file a certificate of amendment with the Delaware Secretary of State (the "Certificate of Amendment") to increase the number of authorized shares of its capital and common stock. Upon filing of the Certificate of Amendment with the Delaware Secretary of State, the text of which is provided in Appendix B, the first sentence of Article IV of our certificate of incorporation will be amended and restated to read as follows: +The Corporation shall have authority to issue two classes of stock, and the total number authorized shall be 78,750,000 shares of Common Stock, par value $.01 per share, and 2,500,000 shares of Preferred Stock, par value $.01 per share. +Rationale for the Proposed Charter Amendment +As of March 15, 2021, Callon had an aggregate of 46,155,799 shares of common stock issued and outstanding or reserved for issuance. The Board has no immediate or specific plans, arrangements or understandings to issue any of the shares of common stock that would be authorized under the Proposed Charter Amendment. However, the Board desires to have the shares available to provide additional flexibility for business and financial purposes and provide appropriate equity incentives for Callon’s employees and directors. The additional shares may be used for various purposes without further shareholder approval (except as required by law or the NYSE rules). These purposes may include: (i) raising capital, if Callon has an appropriate opportunity, through offerings of common stock or securities that are convertible into common stock; (ii) exchanging common stock or securities that are convertible into common stock for other outstanding securities; (iii) providing equity incentives to employees, officers, directors, consultants, or advisors; (iv) expanding Callon’s business through the acquisition of other businesses or assets; (v) stock splits, dividends, and similar transactions; and (vi) debt or equity restructuring or refinancing transactions. +2021 PROXY STATEMENT 65 +PROPOSAL 4 +The Board has not proposed the increase in the number of authorized shares of common stock with the intent of preventing or discouraging any actual or threatened tender offers or takeover attempts of the Company. Rather, the Proposed Charter Amendment has been prompted by business and financial considerations, as set out above, and it is the intended purpose of the Proposed Charter Amendment to provide greater flexibility to the Board in considering and planning for our potential future corporate needs. Under certain circumstances, however, an increase in the number of authorized shares of the Company’s common stock may make it more difficult to, or discourage an attempt to, obtain control of the Company by means of a takeover bid that the Board determines is not in the Company’s best interest nor in the best interests of the Company’s shareholders. In this regard, if the Company was to become concerned that it may be a potential target of an unsolicited acquisition attempt, it could try to impede the acquisition by issuing additional shares of common stock or rights or other equity interests related thereto, thereby diluting the voting power of the other outstanding shares and increasing the potential cost to the bidder of the acquisition. The Company does not currently have a shareholder rights plan (commonly referred to as a “poison pill”) in place, nor does the Board currently have any plans to adopt any such plan or similar anti-takeover measures. The Board is not currently aware of any attempt or plan to acquire control of the Company. +Required Vote +Approval of this proposal requires the affirmative vote, either in person or by proxy, of the holders of a majority of the issued and outstanding shares of common stock. Abstentions, failing to vote, and “broker non-votes” will have the same effect as voting “AGAINST” the adoption of this proposal because the required vote is based on the number of shares outstanding rather than the number of votes cast. +The Board recommends a vote FOR the approval of an amendment to our certificate of incorporation to increase the number of authorized shares of common stock. +66 CALLON PETROLEUM +OTHER MATTERS +Beneficial Ownership of Securities +Principal Shareholders and Management +The following table sets forth beneficial ownership information with respect to our common stock as of the Record Date (March 15, 2021) for (i) each person known by us to beneficially own 5% or more of our outstanding common stock; (ii) each of our NEOs, (iii) each of our directors and nominees for director, and (iv) all of our directors and executive officers as of the Record Date, as a group. Unless otherwise noted, each person listed below has sole voting and investment power with respect to the shares of our common stock listed below as beneficially owned by the person. Information set forth in the table with respect to beneficial ownership of common stock has been obtained from filings made by the named beneficial owners with the SEC as of March 15, 2021, or, in the case of our executive officers and directors, has been provided to us by such individuals. As of March 15, 2021, the Company had 46,155,799 shares outstanding. +None of the shares beneficially owned by our executive officers or directors has been pledged as security for an obligation. Our Insider Trading Policy prohibits our executive officers and directors from holding Callon securities in a margin account or pledging Callon securities as collateral for a loan. +Beneficial Ownership (1)(2) +Name of Beneficial Owner Shares (#) Percent of Class +Holders of More Than 5%: +Kimmeridge Energy Management Company, LLC (3) +5,585,654 12.1 % +BlackRock, Inc. (4) +4,415,315 9.6 % +JB Investments Management, LLC (5) +2,459,022 5.3 % +Named Executive Officers: +Joseph C. Gatto, Jr. (6) +78,550 * +James P. Ulm, II (7) +19,450 * +Jeffrey S. Balmer (8) +11,504 * +Michol L. Ecklund (9) +11,633 * +Gregory F. Conaway (10) +34,988 * +Directors: * +Frances Aldrich Sevilla-Sacasa (11) +2,347 * +Matthew R. Bob 10,199 * +Barbara J. Faulkenberry 6,760 * +Michael L. Finch 7,044 * +L. Richard Flury (12) +31,858 * +S. P. Johnson IV (13) +155,257 * +Larry D. McVay (14) +22,598 * +Anthony J. Nocchiero 15,984 * +James M. Trimble 8,299 * +Steven A.Webster (15) +761,559 1.6 % +All Executive Officers and Directors as a Group (consisting of 15 persons) (16) +1,178,030 2.6 % +* Less than 1% +(1) Reflects the 1-for-10 reverse split of the common stock of the Company effective August 7, 2020. +(2) The amounts shown for our directors and NEOs include, as of the Record Date: (a) shares of common stock held under the 401(k) Plan for the accounts of participants; (b) shares of common stock owned outright by the individual; and (c) shares of common stock that may be acquired within 60 days through the vesting or settlement of certain RSUs, if any. Until RSUs vest, these individuals have neither voting nor +2021 PROXY STATEMENT 67 +OTHER MATTERS +investment power over the underlying shares of common stock, and share amounts are represented on a pre-tax basis. As of the Record Date, none of the directors or executive officers held any stock options to purchase shares of Company stock. +(3) Kimmeridge Energy Management Company, LLC ("Kimmeridge"), in its capacity as an investment adviser to Chamber Investments, LLC ("Chamber"), exercises voting and investment control over the securities held by Chambers. Kimmeridge has shared voting and shared dispositive power over 5,585,654 shares. Kimmeridge does not have sole voting or sole dispositive power over any shares. Kimmeridge’s address is 412 West 15 Street, 11th Floor, New York, NY 10011. This information is based on Kimmeridge’s most recent Statement on Schedule 13G filed on March 5, 2021. +(4) BlackRock, Inc. (BlackRock), in its capacity as a parent holding company or control person for various subsidiaries (none of which individually owns more than 5% of our outstanding common stock), may be deemed to beneficially own the indicated shares. BlackRock has sole voting power over 4,404,928 shares and sole dispositive power over 4,415,315 shares. BlackRock does not have shared voting or shared dispositive power over any of the shares. BlackRock’s address is 55 East 52nd St., New York, NY 10055. This information is based on BlackRock’s most recent Statement on Schedule 13G filed on February 5, 2021. +(5) JB Investments Management, LLC ("JB Investments"), in its capacity as an investment adviser, may be deemed to beneficially own the indicated shares, along with JB Investments Fund III, L.P., JB Investments Parallel Fund III, L.P. (together with JB Investments Fund III, L.P., the “Funds”). JB Investments Fund III GP, LLC is the general partner of, and may be deemed to beneficially own securities owned by the Funds. Mr. Brian J. Riley is the sole manager of, and may be deemed to beneficially own securities owned by JB Investments. JB Investments has shared voting and shared dispositive power over 2,459,022 shares. JB Investment’s address is 355 Valey Park Road, Phoenixville, PA 19460. This information is based on JB Investment’s most recent Statement on Schedule 13G filed on March 12, 2021. +(6) Comprised of 48,984 shares held directly by Mr. Gatto, 6,255 shares held indirectly within the 401(k) Plan, and 23,311 unvested RSUs payable in stock that will vest within 60 days of the Record Date. Does not include 95,950 unvested RSUs payable in stock and 104,896 unvested PSUs payable in 50% stock and 50% cash. +(7) Comprised of 9,176 shares held directly by Mr. Ulm, 57 shares held indirectly within the 401(k) Plan, and 10,217 unvested RSUs payable in stock that will vest within 60 days of the Record Date. Does not include 17,574 unvested RSUs payable in stock and 45,974 unvested PSUs payable in 50% stock and 50% cash. +(8) Comprised of 3,808 shares held directly by Dr. Balmer, 13 shares held indirectly within the 401(k) Plan, and 7,683 unvested RSUs payable in stock that will vest within 60 days of the Record Date. Does not include 44,604 unvested RSUs payable in stock and 47,412 unvested PSUs payable in 50% stock and 50% cash. +(9) Comprised of 5,095 shares held directly by Ms. Ecklund, 60 shares held indirectly within the 401(k) Plan, and 6,478 unvested RSUs payable in stock that will vest within 60 days of the Record Date. Does not include 28,506 unvested RSUs payable in stock and 29,152 unvested PSUs payable in 50% stock and 50% cash. +(10) Comprised of 33,200 shares held directly by Mr. Conaway and 1,788 unvested RSUs payable in stock that will vest within 60 days of the Record Date Does not include 13,316 unvested RSUs payable in stock and 8,046 unvested PSUs payable in 50% stock and 50% cash. +(11) Comprised of 2,347 shares held directly by Ms. Aldrich Sevilla-Sacasa. Does not include 2,037 unvested deferred RSUs, pursuant to Ms. Aldrich Sevilla-Sacasa's election under the Deferred Compensation Plan for Outside Directors, which are payable in cash upon her separation of service as a director. +(12) Comprised of 28,858 shares held directly by Mr. Flury and 3,000 shares held in a joint tenancy with his spouse, which includes 15,559 vested deferred RSUs, pursuant to Mr. Flury's election under the Deferred Compensation Plan for Outside Directors, which are payable in cash upon his separation of service as a director. +(13) Comprised of 85,257 shares held directly by Mr. Johnson and 70,000 shares held indirectly with a Family Limited Partnership, which includes 13,192 vested deferred RSUs, pursuant to Mr. Johnson's election under the Deferred Compensation Plan for Outside Directors, which are payable in cash upon his separation of service as a director. Does not include 2,037 unvested deferred RSUs, pursuant to pursuant to Mr. Johnson's election under the Deferred Compensation Plan for Outside Directors, which are payable in common stock upon his separation of service as a director. +(14) Comprised of 19,097 shares held directly by Mr. McVay, which includes 3,501 vested deferred RSUs, pursuant to Mr. McVay's election under the Deferred Compensation Plan for Outside Directors, which are payable in cash upon his separation of service as a director. +(15) Comprised of 547,684 shares held directly by Mr. Webster, 64,500 shares held indirectly with his spouse, and 149,375 shares held indirectly through San Felipe Resources Company, which includes 13,192 vested deferred RSUs, pursuant to Mr. Webster's election under the Deferred Compensation Plan for Outside Directors, which are payable in common stock upon his separation of service as a director. +(16) Comprised of 835,293 shares held directly by the Company's executive officers and directors, 3,000 shares held in a joint tenancy, 64,500 shares held indirectly by a spouse, 70,000 shares held indirectly by a Family Limited Partnership, 6,385 shares held indirectly within the Company's 401(k) Plan, 149,375 shares held indirectly by San Felipe Resources Company, and 49,477 unvested RSUs payable in stock that will vest within 60 days of the Record Date. +Section 16(a) Beneficial Ownership Reporting Compliance +Section 16(a) of the Exchange Act requires our officers and directors and persons who own 10% or more of our common stock to file reports of beneficial ownership and changes in ownership with the SEC. These persons are required by SEC regulations to furnish us with copies of these reports. Based solely on our review of these reports received by us during fiscal year 2020, and representations from certain reporting persons that they have complied with the relevant filing requirements, we believe that all such filing requirements were complied with in 2020 and 2021 to date. +68 CALLON PETROLEUM +OTHER MATTERS +Certain Relationships and Related Party Transactions +The Audit Committee charter provides that the Audit Committee shall review and approve all related party transactions. A transaction will be considered a “related party transaction” if the transaction would be required to be disclosed under Item 404 of Regulation S-K. In addition, our Code provides that an officer’s or a director’s conflict of interest with Callon may only be waived if the N&ESG Committee approves the waiver and the full Board ratifies the waiver. +We are not aware of any related party transactions with our executive officers that require disclosure under Item 404 of Regulation S-K. +Shareholders’ Proposals and Director Nominations for the 2022 Annual Meeting +In order for a proposal to be considered for inclusion in the proxy statement for the 2022 Annual Meeting of Shareholders (the “2022 Annual Meeting”) pursuant to Rule 14a-8 of the Exchange Act, such proposal must be received by the Secretary of the Company at our principal executive offices no later than December 10, 2021 (assuming the date of the 2022 Annual Meeting has not been changed by more than 30 days from the date of this year’s Annual Meeting), and must otherwise be in compliance with the requirements of the SEC’s proxy rules. If the date of the 2022 Annual Meeting has been changed by more than 30 days from the date of this Annual Meeting, then the deadline is a reasonable time before we begin to print and send our proxy materials for the 2022 Annual Meeting. +For a shareholder proposal to be introduced for consideration at the 2022 Annual Meeting but not intended to be considered for inclusion in the Company's proxy statement and form of proxy relating to such meeting (i.e. not pursuant to Rule 14a-8 of the Exchange Act), including shareholder nominations for candidates for election as directors, a shareholder must provide written notice of such proposal to Company not later than 120 days nor earlier than 150 days before the date of the 2022 Annual Meeting. Any such notice must describe the shareholder proposal in reasonable detail and otherwise comply with the requirements set forth in our bylaws. +Nominating Process +In accordance with our certificate of incorporation, any shareholder may nominate a person for election to the Board upon delivery of written notice to us of such nomination. Such notice must be sent as provided in our certificate of incorporation on or before the deadline set forth in our certificate of incorporation, and must otherwise comply with the procedures set forth in our certificate of incorporation. For nominations, the Board will consider individuals identified by shareholders on the same basis as nominees identified from other sources. A submission recommending a nominee should include: +• Sufficient biographical information to allow the N&ESG Committee to evaluate the qualifications of a potential nominee in light of the director nomination procedures and criteria and any other information that would be required to be disclosed in solicitations of proxies for the election of directors; +• An indication as to whether the proposed nominee will meet the requirements for independence under NYSE and SEC guidelines; +• A description of all direct and indirect compensation and other material monetary agreements, arrangements, and understandings during the past three years, and any other material relationships, between or among the nominating shareholder or beneficial owner and each proposed nominee; +• A completed and signed questionnaire, representation, and agreement, pursuant to our bylaws, with respect to each nominee for election or re-election to the Board; and +• The proposed nominee’s written consent to serve if nominated and elected. +2021 PROXY STATEMENT 69 +ANNUAL MEETING INFORMATION +Information Concerning Solicitation and Voting +We are providing you this Proxy Statement in connection with the solicitation of proxies by the Board to be voted at the Annual Meeting, which will be held on Friday, May 14, 2021, at 9:00 a.m. CDT in the Wishmaker Ballroom of Hotel ZaZa, 9787 Katy Freeway, Houston, Texas. This Proxy Statement contains important information for you to consider when deciding how to vote on the matters brought before the meeting. Please read it carefully. +The Board will primarily solicit proxies by mail, and we will bear all costs incurred in the solicitation of proxies, including the preparation, printing and mailing of these proxy materials. In addition to solicitation by mail, our directors, officers and employees may solicit proxies personally or by telephone, email, facsimile or other means, without additional compensation. We may also make arrangements with brokerage houses and other custodians, nominees and fiduciaries for the forwarding of solicitation material to the beneficial owners of the common stock held by such persons, and we may reimburse those brokerage houses and other custodians, nominees and fiduciaries for reasonable expenses incurred in connection therewith. In addition, to assist us with our solicitation efforts, we have retained the services of Innisfree M&A Incorporated for a fee of approximately $15,000, plus out-of-pocket expenses. +Information About Voting and the Annual Meeting +Who may vote +You may vote if you are the record holder of our common stock as of the close of business on the Record Date. On that date, 46,155,799 shares of our common stock were outstanding and are entitled to vote at the Annual Meeting. Each share of common stock is entitled to one vote on each matter considered at this meeting. A list of shareholders entitled to vote at the Annual Meeting will be available at our office at 2000 West Sam Houston Parkway South, Suite 2000, Houston, TX 77042 during normal business hours for a period of ten (10) days prior to the meeting and will also be available for inspection at the Annual Meeting. +Attending the Annual Meeting +If you meet the above criteria to vote at our Annual Meeting, you may attend the Annual Meeting. If you wish to attend the Annual Meeting in person, you must present valid, government-issued picture identification. If your shares are held in the name of a bank, broker or other nominee and you plan to attend the Annual Meeting, in order to be admitted you must present proof of your beneficial ownership of the common stock, such as a bank or brokerage account statement, or copy of your Voting Instruction Form or proxy card, indicating that you owned shares of our common stock at the close of business on the Record Date. +For safety and security reasons, no cameras, recording equipment, cellular telephones, electronic devices, large bags, briefcases or packages will be permitted in the Annual Meeting. No banners, signs, firearms or weapons will be allowed in the meeting room. We reserve the right to inspect all items entering the meeting room. +Proposals +Qualifying shareholders will vote on the following five proposals at the Annual Meeting: +1) The election of directors; +2) Advisory approval of our executive compensation; +3) The ratification of the appointment of Grant Thornton LLP; +4) The approval of an amendment to our certificate of incorporation increasing the number of authorized shares of our common stock; and +5) The approval of the Proposed Incentive Plan Amendment. +70 CALLON PETROLEUM +ANNUAL MEETING INFORMATION +Casting your vote +There are three methods for registered shareholders to vote by proxy without attending the Annual Meeting: +1. By Internet +You can vote via the Internet by going to the website address provided on your proxy card. You will need to use the control and request ID appearing on your proxy card to vote via the Internet. You can use the Internet to transmit your voting instructions up until 11:59 p.m. CDT on May 13, 2021. If you vote via the Internet, you do NOT need to vote by telephone or return a proxy card. Internet voting is available 24 hours a day. +2. By Telephone +You can also vote by telephone by calling the toll-free telephone number provided on your proxy card. You will need to use the control and request ID appearing on your proxy card to vote by telephone. You may transmit your voting instructions from any touch-tone telephone up until 11:59 p.m. CDT on May 13, 2021. Voting by telephone is available 24 hours a day. +3. By Mail +If you received a printed copy of the proxy card, you can vote by marking, dating and signing it, and returning it in the reply envelope provided. Please promptly mail your proxy card to ensure that we receive it prior to the closing of the polls at the Annual Meeting. +If you receive more than one Proxy Statement then it means that your shares are likely registered in more than one account. Please provide voting instructions for all proxy and voting instruction cards you receive. If you send us a signed proxy card without marking your voting selections, your shares will be voted on each proposal as recommended by the Board, and in the discretion of the proxy holders as to any other matters that may properly come before the meeting or any postponement or adjournment of the meeting. The Board is not presently aware of any other proposals or any other business to be considered at the Annual Meeting. +Difference between a “holder of record” and a “street name” holder +If your shares are registered directly in your name, you are considered the shareholder of record with respect to those shares. If your shares are held in a stock brokerage account or by a bank, trust or other nominee, then the broker, bank, trust or other nominee is considered to be the shareholder of record with respect to those shares. However, you are still considered to be the beneficial owner of those shares, and your shares are said to be held in “street name.” Street name holders generally cannot submit a proxy or vote their shares directly and must instead instruct the broker, bank, trust or other nominee how to vote their shares. You will receive instructions from your broker, bank or other nominee that you must follow in order for your broker, bank or other nominee to vote your shares per your instructions. Many brokerage firms and banks have a process for their beneficial holders to provide instructions via the Internet or over the telephone. If Internet or telephone voting is unavailable from your broker, bank or other nominee, please complete and return the enclosed voting instruction card in the addressed, postage paid envelope provided. +In the event you do not provide instructions on how to vote shares held in street name, your broker may have authority to vote your shares. Under the rules that govern brokers who are voting with respect to shares that are held in street name, brokers have the discretion to vote such shares on routine matters, but they are not permitted to vote (a “broker non-vote”) on non-routine or non-discretionary items absent instructions from the beneficial owner. With respect to the Annual Meeting, brokers are prohibited from exercising discretionary authority in the election of directors and the non-binding advisory proposal on executive compensation, but such brokers may exercise discretionary authority with respect to the ratification of the appointment of our independent registered public accounting firm. Your vote is especially important. Therefore, please promptly instruct your broker regarding how to vote your shares on these matters. +If you hold shares through a broker, bank or other nominee and wish to be able to vote in person at the meeting, you must obtain a legal proxy from your broker, bank or other nominee and present it to the inspector of election with your ballot at the meeting. If you have questions about how to obtain a legal proxy, please call Innisfree M&A Incorporated toll-free at (888) 750-5834. Submitting your proxy by mail will not affect your right to vote in person if you decide to attend the Annual Meeting. +Revoking a proxy +You may revoke or change a previously delivered proxy at any time before the meeting by delivering another proxy with a later date, by voting again via the Internet or by telephone, or by delivering written notice of revocation of your proxy to our Corporate Secretary at our principal offices in Houston, Texas before the beginning of the meeting. You may also revoke your proxy by attending the meeting and voting in person, although attendance at the meeting will not necessarily revoke a valid proxy that was previously delivered. If you hold shares through a broker, bank or other nominee, you must contact that nominee +2021 PROXY STATEMENT 71 +ANNUAL MEETING INFORMATION +to revoke any prior voting instructions. You also may revoke any prior voting instructions by voting in person at the meeting if you obtain a legal proxy as described above. +Recommendation of the Board +The Board unanimously recommends you vote “FOR” each of the proposals. A proxy that is properly completed and submitted will be voted at the Annual Meeting in accordance with the instructions on the proxy. If you properly complete and submit a proxy, but do not indicate any contrary voting instructions, your shares will be voted as follows: +• “ FOR ” the election of each of the nominees named in this Proxy Statement to the Board of Directors; +• “ FOR ” the approval, on an advisory basis, of our executive compensation; +• “ FOR ” the ratification of the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2021; and +• “ FOR ” the approval of an amendment to our certificate of incorporation to increase the number of authorized shares of common stock. +Counting the vote +We have appointed Alliance Advisors to tabulate and certify the vote. +Quorum +A quorum is the number of shares that must be present to hold the meeting. The quorum requirement for the meeting is a majority of the outstanding shares as of the Record Date, present in person or represented by proxy. We will count your shares for purposes of determining if there is a quorum if either you are present and vote in person at the meeting or have voted on the Internet, by telephone or by properly submitting a proxy card or voting instruction card by mail. Abstentions and broker non-votes also count toward the quorum. +72 CALLON PETROLEUM +ANNUAL MEETING INFORMATION +Required Vote +Proposal 1 - Election of directors +The nominees for election as directors will be elected by a plurality of the votes cast by the shares entitled to vote in the election of directors. However, because the number of director nominees equals the number of directors to be elected at this Annual Meeting, if any nominee for director receives a greater number of votes “withheld” than votes “for” then such nominee required to tender his or her resignation for consideration by the N&ESG Committee following certification of the shareholder vote. Such resignation will only be effective upon Board acceptance of such resignation after receiving the recommendation of the N&ESG Committee. Abstentions and broker non-votes will not be included in determining the number of votes cast in the election of directors and will not have any effect on the outcome. This voting standard is discussed further under “Proposal 1 - Election of Class III Directors.” +Proposal 2 - Advisory vote to approve NEO compensation +The advisory vote on our executive compensation is non-binding, so no specific vote is required. Abstentions will have the same effect as a vote against this proposal, and broker non-votes will not be counted as shares present and entitled to vote, and, accordingly, will not affect the outcome of the vote on this proposal. While the law requires this advisory vote, the vote will neither be binding on us or the Board, nor will it create or imply any change in the fiduciary duties of, or impose any additional fiduciary duty on, us or the Board. However, the views of our shareholders are important to us, and our Compensation Committee will take into account the outcome of the vote when considering future executive compensation decisions. We urge you to read the section entitled “Compensation Discussion and Analysis,” which discusses in detail how our executive compensation program implements our compensation philosophy. +Proposal 3 - Ratification of the appointment of the independent registered public accounting firm +The advisory vote on the ratification of the appointment of Grant Thornton LLP as our independent registered public accounting firm for the 2020 fiscal year is non-binding, so no specific vote is required. If you hold your shares through a broker and you do not instruct the broker how to vote, your broker will have the authority to vote your shares in its discretion on this proposal. An abstention will have the effect of a vote against this proposal. Because your vote is advisory, it will not be binding on the Board or the Company. However, the Board and the Audit Committee will consider the outcome of the vote in determining the selection of the Company’s independent registered public accounting firm. +Proposal 4 - Approval of an amendment to our certificate of incorporation in increase the number of authorized shares of common stock +Approval of this proposal requires the affirmative vote, either in person or by proxy, of the holders of a majority of the issued and outstanding shares of common stock. Abstentions, failing to vote, and “broker non-votes” will have the same effect as voting “AGAINST” the adoption of this proposal because the required vote is based on the number of shares outstanding rather than the number of votes cast. +2021 PROXY STATEMENT 73 +ANNUAL MEETING INFORMATION +Voting Results +We will announce the preliminary voting results at the Annual Meeting and will publish the final voting results in a Current Report on Form 8-K to be filed with the SEC within four business days of the meeting. +Householding Information +The SEC permits companies and intermediaries (such as brokers and banks) to satisfy delivery requirements for proxy statements and annual reports with respect to two or more shareholders sharing the same address by delivering a single proxy statement and annual report to those shareholders. This process, which is commonly referred to as “householding,” is intended to reduce the volume of duplicate information shareholders receive and reduce expenses for companies. Both we and some of our intermediaries may be householding our proxy materials and annual report. Once you have received notice from your broker or another intermediary that they will be householding materials sent to your address, householding will continue until you are notified otherwise or until you revoke your consent. Should you wish to receive separate copies of our Annual Report and Proxy Statement in the future, we will promptly deliver a separate copy of each of these documents to you if you send a written request to us at our address appearing on the cover of this Proxy Statement, to the attention of the Corporate Secretary. If you hold your shares through an intermediary that is householding and you want to receive separate copies of our Annual Report and Proxy Statement in the future, you should contact your bank, broker or other nominee record holder. +Financial Statements and Other Available Documents +Financial statements for our most recent fiscal year are contained in the 2020 Annual Report to Shareholders and our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 filed with the SEC on February 25, 2021. Our Annual Report, our Annual Report on Form 10-K, Corporate Governance Guidelines, Code, and charters of Board committees may be accessed by shareholders on our website at www.callon.com or printed copies are available upon written request to Michol L. Ecklund, Corporate Secretary at our principal executive office in Houston, Texas. +Other Business +The Board is not aware of any matter to be acted upon at the Annual Meeting other than those described above. If other business properly comes before the Annual Meeting, the persons named on the proxy will vote the proxy in accordance with what they consider to be in the best interests of us and our shareholders. Please sign, date, and return your proxy promptly to avoid unnecessary expense. All shareholders are urged, regardless of the number of shares owned, to participate in the Annual Meeting by voting their shares. +By Order of the Board of Directors, +Joseph C. Gatto, Jr. +President, Chief Executive Officer and Director +Houston, Texas +April 9, 2021 +74 CALLON PETROLEUM +APPENDIX A +APPENDIX A +NON-GAAP RECONCILIATIONS +Adjusted EBITDA (in thousands) : +2020 +Net loss $ (2,533,621) +Adjustments: +Loss on derivatives contracts $ 27,773 +Gain on commodity derivative settlements, net $ 95,856 +Non-cash stock-based compensation expense $ 2,663 +Impairment of evaluated oil and gas properties $ 2,547,241 +Merger and integration expense $ 28,482 +Other expense $ 14,625 +Income tax expense $ 122,054 +Interest expense, net of capitalized amounts $ 94,329 +Depreciation, depletion and amortization $ 480,631 +Gain on extinguishment of debt $ (170,370) +Adjusted EBITDA $ 709,633 +Adjusted Free Cash Flow (in thousands) : +1Q2020 2Q2020 3Q2020 4Q2020 +Net cash provided by operating activities $ 191,695 $ 97,801 $ 135,701 $ 134,578 +Changes in working capital and other $ (32,569) $ 40,078 $ 14,473 $ 12,011 +Change in accrued hedge settlements $ 22,513 $ (14,480) $ (5,993) $ (5,055) +Cash interest expense, net $ 20,071 $ 21,944 $ 24,246 $ 24,167 +Merger and integration expense $ 15,830 $ 8,067 $ 2,465 $ 2,120 +Adjusted EBITDA $ 217,540 $ 153,410 $ 170,892 $ 167,821 +Less: Operational capital expenditures (accrual) $ 277,640 $ 85,087 $ 38,408 $ 87,488 +Less: Capitalized interest $ 23,985 $ 20,924 $ 20,675 $ 23,015 +Less: Interest expense, net of capitalized amounts $ 20,478 $ 22,682 $ 24,683 $ 26,486 +Less: Capitalized cash G&A $ 7,371 $ 6,740 $ 6,831 $ 6,465 +Adjusted Free Cash Flow $ (111,934) $ 17,977 $ 80,295 $ 24,367 +2021 PROXY STATEMENT 75 +APPENDIX B +FORM OF CERTIFICATE OF AMENDMENT OF +CERTIFICATE OF INCORPORATION OF +CALLON PETROLEUM COMPANY +The undersigned, Michol L. Ecklund, Corporate Secretary of Callon Petroleum Company (the “Corporation”), a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the “DGCL”), does hereby certify as follows: +FIRST : The name of the Corporation is Callon Petroleum Company. +SECOND : This Amendment (this “Amendment”) to the Certificate of Incorporation of the Corporation (the “Certificate”) was duly adopted in accordance with the provisions of Section 242 of the DGCL. The Board of Directors has duly adopted resolutions setting forth and declaring advisable this Amendment and the holders of a majority of the outstanding stock of the Corporation entitled to vote at the special meeting of the stockholders called and held upon notice in accordance with Section 222 of the DGCL for the purpose of voting on the Amendment have voted in favor of this Amendment. +THIRD : Upon the filing and effectiveness of this Amendment pursuant to the DGCL, the Certificate is hereby amended by amending and restating the first sentence of Article Four to be and read as follows: +“The Corporation shall have authority to issue two classes of stock, and the total number authorized shall be 78,750,000 shares of Common Stock, par value $.01 per share, and 2,500,000 shares of Preferred Stock, par value $.01 per share.” +IN WITNESS WHEREOF , the undersigned has executed this Amendment on behalf of the Corporation and has attested such execution and does verify and affirm, under penalty of perjury, that this Amendment is the act and deed of the Corporation and that the facts stated herein are true as of this [•] day of [•] 2021. +Callon Petroleum Company +By: +Michol L. Ecklund, Corporate Secretary +76 CALLON PETROLEUM +CALLON PETROLEUM COMPANY +ANNUAL MEETING OF SHAREHOLDERS +May 14, 2021, AT 9:00 AM CDT +SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF CALLON PETROLEUM COMPANY +The undersigned hereby appoints Michol L. Ecklund, as proxy with full power of substitution and re-substitution, to vote all shares of Common Stock of Callon Petroleum Company that the undersigned is entitled to vote at the Annual Meeting of Shareholders thereof to be held at the Wishmaker Ballroom of the Hotel ZaZa, 9787 Katy Freeway, Houston, Texas 77024 on May 14, 2021, or at any adjournment or postponement thereof, as follows: +ALL SHARES WILL BE VOTED AS DIRECTED HEREIN AND, UNLESS OTHERWISE DIRECTED, WILL BE VOTED “FOR” PROPOSAL 1 (ALL NOMINEES), “FOR” PROPOSAL 2, “FOR” PROPOSAL 3, AND "FOR" PROPOSAL 4, AND IN ACCORDANCE WITH THE DISCRETION OF THE PERSON VOTING THE PROXY WITH RESPECT TO ANY OTHER BUSINESS PROPERLY BROUGHT BEFORE THE MEETING OR AT ANY ADJOURNMENT OR POSTPONEMENT THEREOF. The undersigned shareholder further hereby ratifies all that the said proxy may do by virtue hereof. If any nominee named on the reverse side is unable to serve or for good cause will not serve as a director, the person named as proxy shall have the authority to vote for any other person who may be nominated at the instruction and discretion of the Board of Directors or an authorized committee thereof. +The undersigned shareholder hereby revokes any other proxy heretofore executed by the undersigned for the Annual Meeting and acknowledges receipt of the Notice of the 2021 Annual Meeting of Shareholders and Proxy Statement dated April 9, 2021 and the Annual Report to Shareholders furnished in connection therewith. +You are encouraged to specify your choice by marking the appropriate box (SEE REVERSE SIDE), but you need not mark any box if you wish to vote in favor. +(CONTINUED AND TO BE SIGNED ON REVERSE SIDE) +PLEASE DETACH ALONG PERFORATED LINE AND MAIL IN THE ENVELOPE PROVIDED. +IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 14, 2021. +THE PROXY STATEMENT IS AVAILABLE AT: +HTTP://WWW.VIEWPROXY.COM/CALLONPETROLEUM/2021 +Please mark votes as in this example +ý +THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” PROPOSALS 1, 2, 3, and 4. +1. +Election of Directors: +3 The ratification of the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2021. +FOR ALL WITHHOLD +ALL FOR ALL +EXCEPT +01 Barbara J. Faulkenberry ¨ +¨ +¨ ¨ +FOR ¨ +AGAINST ¨ +ABSTAIN +02 L. Richard Flury ¨ 4. The approval of an amendment to the Company’s certificate of incorporation in the form attached to the accompanying Proxy Statement as Appendix B to increase the number of authorized shares of our common stock. +03 Joseph C. Gatto, Jr. ¨ +04 Frances Aldrich Sevilla-Sacasa ¨ +2. +The approval, by non-binding advisory vote, of the compensation of our named executive officers. +¨ FOR ¨ AGAINST ¨ ABSTAIN +¨ FOR ¨ AGAINST ¨ ABSTAIN +MARK “X” HERE IF YOU PLAN TO ATTEND THE MEETING: ¨ +Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person. +DO NOT PRINT IN THIS AREA +(Shareholder Name & Address Data) +Date: +Signature +Signature (if held jointly) +Address Change/Comments: (If you noted any Address Changes and/or Comments above, please mark box.) ¨ +CONTROL NUMBER +PLEASE DETACH ALONG PERFORATED LINE AND MAIL IN THE ENVELOPE PROVIDED. +CONTROL NUMBER +SCAN TO +VIEW MATERIALS & VOTE +PROXY VOTING INSTRUCTIONS +Please have your 11 digit control number ready when voting by Internet or Telephone. +If you vote by phone, fax or Internet, please DO NOT mail your proxy card. +INTERNET TELEPHONE MAIL +Vote Your Proxy on the Internet: Vote Your Proxy by Phone: Vote Your Proxy by Mail: +Go to www.AALVote.com/CPE +Call 1 (866) 804-9616 +Have your proxy card available when you access the above website. Follow the prompts to vote your shares. Use any touch-tone telephone to vote your proxy. Have your proxy card available when you call. Follow the voting instructions to vote your shares. Mark, sign, and date your proxy card, then detach it, and return it in the postage-paid envelope provided. \ No newline at end of file diff --git a/raw/proxies/0000928022/0000928022-21-000045/proxy_rpt.txt b/raw/proxies/0000928022/0000928022-21-000045/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..a27097e1447823efdde938be53831fb58908068f --- /dev/null +++ b/raw/proxies/0000928022/0000928022-21-000045/proxy_rpt.txt @@ -0,0 +1,13 @@ +Certain Relationships and Related Party Transactions +The Audit Committee charter provides that the Audit Committee shall review and approve all related party transactions. A transaction will be considered a “related party transaction” if the transaction would be required to be disclosed under Item 404 of Regulation S-K. In addition, our Code provides that an officer’s or a director’s conflict of interest with Callon may only be waived if the N&ESG Committee approves the waiver and the full Board ratifies the waiver. +We are not aware of any related party transactions with our executive officers that require disclosure under Item 404 of Regulation S-K. +Shareholders’ Proposals and Director Nominations for the 2022 Annual Meeting +In order for a proposal to be considered for inclusion in the proxy statement for the 2022 Annual Meeting of Shareholders (the “2022 Annual Meeting”) pursuant to Rule 14a-8 of the Exchange Act, such proposal must be received by the Secretary of the Company at our principal executive offices no later than December 10, 2021 (assuming the date of the 2022 Annual Meeting has not been changed by more than 30 days from the date of this year’s Annual Meeting), and must otherwise be in compliance with the requirements of the SEC’s proxy rules. If the date of the 2022 Annual Meeting has been changed by more than 30 days from the date of this Annual Meeting, then the deadline is a reasonable time before we begin to print and send our proxy materials for the 2022 Annual Meeting. +For a shareholder proposal to be introduced for consideration at the 2022 Annual Meeting but not intended to be considered for inclusion in the Company's proxy statement and form of proxy relating to such meeting (i.e. not pursuant to Rule 14a-8 of the Exchange Act), including shareholder nominations for candidates for election as directors, a shareholder must provide written notice of such proposal to Company not later than 120 days nor earlier than 150 days before the date of the 2022 Annual Meeting. Any such notice must describe the shareholder proposal in reasonable detail and otherwise comply with the requirements set forth in our bylaws. +Nominating Process +In accordance with our certificate of incorporation, any shareholder may nominate a person for election to the Board upon delivery of written notice to us of such nomination. Such notice must be sent as provided in our certificate of incorporation on or before the deadline set forth in our certificate of incorporation, and must otherwise comply with the procedures set forth in our certificate of incorporation. For nominations, the Board will consider individuals identified by shareholders on the same basis as nominees identified from other sources. A submission recommending a nominee should include: +• Sufficient biographical information to allow the N&ESG Committee to evaluate the qualifications of a potential nominee in light of the director nomination procedures and criteria and any other information that would be required to be disclosed in solicitations of proxies for the election of directors; +• An indication as to whether the proposed nominee will meet the requirements for independence under NYSE and SEC guidelines; +• A description of all direct and indirect compensation and other material monetary agreements, arrangements, and understandings during the past three years, and any other material relationships, between or among the nominating shareholder or beneficial owner and each proposed nominee; +• A completed and signed questionnaire, representation, and agreement, pursuant to our bylaws, with respect to each nominee for election or re-election to the Board; and +• The proposed nominee’s written consent to serve if nominated and elected. \ No newline at end of file diff --git a/raw/proxies/0000928022/0000928022-21-000153/proxy.txt b/raw/proxies/0000928022/0000928022-21-000153/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..4e51d994f466b5e31be0a7fc8018d13c4cd95ab6 --- /dev/null +++ b/raw/proxies/0000928022/0000928022-21-000153/proxy.txt @@ -0,0 +1,878 @@ +DEF 14A +1 +a2021finalexchangeproxy.htm +DEF 14A +Document +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Proxy Statement Pursuant to Section 14(a) of +the Securities Exchange Act of 1934 (Amendment No. ) +Filed by the Registrant ☒ +Filed by a Party other than the Registrant ☐ +Check the appropriate box: +☐ Preliminary Proxy Statement +☐ Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +☒ Definitive Proxy Statement +☐ Definitive Additional Materials +☐ Soliciting Material under §240.14a-12 +Callon Petroleum Company +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +☒ No fee required. +☐ Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. +(1) Title of each class of securities to which transaction applies: +______________________________________________________________________________________ +(2) Aggregate number of securities to which transaction applies: +______________________________________________________________________________________ +(3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 +(set forth the amount on which the filing fee is calculated and state how it was determined): +______________________________________________________________________________________ +(4) Proposed maximum aggregate value of transaction: +______________________________________________________________________________________ +(5) Total fee paid: +______________________________________________________________________________________ +☐ Fee paid previously with preliminary materials. +☐ Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the +filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement +number, of the Form or Schedule and the date of its filing. +(1) Amount Previously Paid: +______________________________________________________________________________________ +(2) Form, Schedule or Registration Statement No.: +______________________________________________________________________________________ +(3) Filing Party: +______________________________________________________________________________________ +(4) Date Filed: +______________________________________________________________________________________ +One Briarlake Plaza +2000 W. Sam Houston Parkway S., Suite 2000 +Houston, Texas 77042 +NOTICE OF SPECIAL MEETING OF SHAREHOLDERS +NOTICE IS HEREBY GIVEN that a special meeting of shareholders (the “Special Meeting”) of Callon Petroleum Company (“Callon,” the “Company,” “our,” “we” or “us”) will be held on November 3, 2021 at 9:00 a.m. Central Daylight Time in the Conversation Salon room of the Hotel ZaZa Memorial City, located at 9787 Katy Freeway in Houston, Texas, for the purpose of considering and taking the following action, which is described in the accompanying Proxy Statement: +To vote, for purposes of complying with Rule 312.03(b) of the New York Stock Exchange (“NYSE”) Listed Company Manual, upon a proposal (the “Issuance Proposal”) to approve the issuance to Chambers Investments, LLC, a Delaware limited liability company (“Kimmeridge”), of 5,512,623 shares of common stock, par value $0.01, of the Company (the “Common Stock” and such shares to be issued the “New Common Stock”). +Callon will transact no other business at the Special Meeting, except such business as may properly be brought before the Special Meeting or any adjournments or postponements thereof by or at the direction of the Callon board of directors (the “Board”) in accordance with Callon’s bylaws. +The Board has unanimously determined that the issuance to Kimmeridge of the New Common Stock is in the best interests of Callon and its shareholders. The Board unanimously recommends that you vote “FOR” the Issuance Proposal. +Only shareholders of record as of the close of business on October 4, 2021 (the “Record Date”) are entitled to receive notice of and to vote at the Special Meeting. +On August 3, 2021, we entered into an Exchange Agreement with Kimmeridge, pursuant to which we agreed to issue and deliver to Kimmeridge, subject to shareholder approval, the New Common Stock in exchange for $197.0 million aggregate principal amount of the Company’s 9.00% Second Lien Senior Secured Notes due 2025 held by Kimmeridge, including in respect of any accrued and unpaid interest (the “Exchange Agreement”). The Exchange Agreement is described in the accompanying Proxy Statement and is attached thereto as Annex A. We are seeking shareholder approval of the Issuance Proposal in order to comply with Rule 312.03(b) of the NYSE Listed Company Manual (“Rule 312.03(b)”). Under Rule 312.03(b), shareholder approval is required prior to any issuance or sale of common stock in any transaction or series of related transactions (i) to a substantial security holder of the company (a “Related Party”) if the number of shares of common stock to be issued exceeds either 1% of the number of shares of common stock or 1% of the voting power outstanding before the issuance or (ii) when a Related Party has a 5% or greater interest, directly or indirectly, in the company or in the consideration to be paid in the transaction or series of related transactions, and the present or potential issuance of common stock could result in an issuance that exceeds either 5% of the number of shares of common stock or 5% of the voting power outstanding before the issuance. As described further in the accompanying Proxy Statement, due to Kimmeridge’s beneficial ownership of approximately 11.2% of our Common Stock (as of October 4, 2021), Kimmeridge is a Related Party for purposes of Rule 312.03(b). +Pursuant to the Exchange Agreement, Kimmeridge agreed to vote all shares of Common Stock beneficially owned by it as of the Record Date in favor of the Issuance Proposal. In connection with the execution of the Exchange Agreement, each of the Company’s executive officers and directors also entered into a Voting Agreement, dated as of the date of the Exchange Agreement (the “Voting Agreement”). On the terms and conditions set forth in the Voting Agreement, our executive officers and directors agreed to vote all of the shares of Common Stock over which they have voting power (representing in the aggregate approximately 2% of the Company’s total outstanding voting power) in favor of the Issuance Proposal. The Voting Agreement is described in the accompanying Proxy Statement and is attached thereto as Annex B. +Additionally, pursuant to those certain purchase and sale agreements, dated as of August 3, 2021, between the Company, Callon Petroleum Operating Company and Primexx Resource Development, LLC and BPP Acquisition, LLC, respectively (collectively, “Primexx” and such transactions contemplated by such purchase and sale agreements, the “Primexx Transaction”), Primexx agreed to vote all shares of Common Stock over which they have voting power (which, as of the Record Date, was approximately 8.8 million shares) in favor of the Issuance Proposal. In the aggregate, the foregoing voting agreements represent approximately 16 million, or approximately 30%, of the shares outstanding on the Record Date. +It is important that your shares be represented at the Special Meeting, regardless of the number of shares you may hold. Whether or not you plan to attend, please vote using the Internet, by telephone or by mail, in each case by following the instructions in the accompanying Proxy Statement. This will not prevent you from voting your shares in person at the Special Meeting if you are present. +By Order of the Board of Directors, +L. Richard Flury +Chairman of the Board +Dated: October 5, 2021 +Important Notice Regarding the Availability of Proxy Materials for the Special Meeting to be held on November 3, 2021: this Proxy Statement and the accompanying Proxy Card are available electronically at www.viewproxy.com/CallonPetroleum/2021SM. +This Proxy Statement and the accompanying Proxy Card are being mailed to shareholders on or about October 5, 2021. The Proxy Card includes instructions on how to access the proxy materials over the Internet, how to request additional printed copies of these materials, and how to vote shares of our Common Stock. In addition, by following the instructions in the Proxy Card or other voting instruction card, shareholders may request to receive proxy materials in printed form by mail or electronically by e-mail on an ongoing basis. +Table of Contents +DATE, TIME AND PLACE OF THE SPECIAL MEETING +1 +QUESTIONS AND ANSWERS +1 +SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS +8 +WHERE YOU CAN FIND MORE INFORMATION +11 +Information Incorporated by Reference +11 +THE ISSUANCE PROPOSAL +12 +Overview and Reason for the Issuance Proposal +12 +The Voting Agreements +13 +Registration Rights Agreement +13 +BENEFICIAL OWNERSHIP OF SECURITIES +14 +OTHER MATTERS +17 +Requirements, including Deadlines, for Submission of Proxy Proposals, Nomination of Directors and Other Business of Shareholders +17 +List of Shareholders Entitled to Vote at the Special Meeting +18 +Expenses Relating to this Proxy Solicitation +18 +ANNEX A EXCHANGE AGREEMENT +A-1 +ANNEX B VOTING AGREEMENT +B-1 +PROXY STATEMENT +PROXY STATEMENT FOR SPECIAL MEETING OF SHAREHOLDERS +TO BE HELD ON NOVEMBER 3, 2021 +You are receiving this proxy statement (the “Proxy Statement”) and the accompanying proxy card or other voting instruction card (the “Proxy Card”) because you own shares of common stock, par value $0.01 (“Common Stock”), of Callon Petroleum Company (“Callon,” the “Company,” “our,” “we” or “us”) that entitle you to vote at a special meeting of shareholders (the “Special Meeting”). Callon’s board of directors (the “Board”) is soliciting proxies from shareholders entitled to vote at the Special Meeting. By use of the Proxy Card, you can vote even if you do not attend the Special Meeting. This Proxy Statement describes the matter on which you are being asked to vote and provides information on this matter so that you can make an informed decision. These proxy materials are being distributed and/or made available to shareholders on or about October 5, 2021. +DATE, TIME AND PLACE OF THE SPECIAL MEETING +We will hold the Special Meeting on November 3, 2021, at 9:00 a.m. Central Daylight Time in the Conversation Salon room of the Hotel ZaZa Memorial City, located at 9787 Katy Freeway in Houston, Texas. +The Board has fixed the close of business on October 4, 2021, as the record date (the “Record Date”) for the determination of shareholders entitled to notice of and to vote at the Special Meeting. Each shareholder will be entitled to one vote for each share of Common Stock held as of the Record Date on the matter to come before the Special Meeting and may vote in person at the Special Meeting, via Internet, by telephone or by proxy authorized in writing. +QUESTIONS AND ANSWERS +Q: What is the purpose of the Special Meeting? +A : At the Special Meeting, shareholders will act upon a proposal (the “Issuance Proposal”) to approve the issuance to Chambers Investments, LLC, a Delaware limited liability company (“Kimmeridge”), of Common Stock of the Company. On August 3, 2021, we entered into an Exchange Agreement with Kimmeridge (the “Exchange Agreement”), pursuant to which we agreed to issue and deliver to Kimmeridge, subject to shareholder approval, 5,512,623 shares of Common Stock (such shares to be issued, the “New Common Stock”) in exchange for $197.0 million in aggregate principal amount of the Company’s 9.00% Second Lien Senior Secured Notes due 2025 (the “Second Lien Notes”) held by Kimmeridge, including in respect of any accrued and unpaid interest. Please see page 12 for information on the exchange valuation. The Exchange Agreement is attached hereto as Annex A. +As described in more detail below, in accordance with the applicable NYSE rules, the Company is calling the Special Meeting to consider and vote on the Issuance Proposal. +Q: Who is Kimmeridge ? +A: Chambers Investments, LLC is a private investment vehicle managed by Kimmeridge Energy Management Company, LLC (“Kimmeridge EMC”), an energy private equity firm focused on making direct investments in unconventional oil and gas assets in the United States. Kimmeridge is the holder of $197.0 million in aggregate principal amount of the Company’s Second Lien Notes, issued pursuant to the Indenture, dated as of September 30, 2020 (the “Second Lien Notes Indenture”), by and among the Company, the subsidiary guarantors named therein and U.S. Bank National Association, as trustee and collateral agent. As of October 4, 2021, Kimmeridge EMC beneficially owned 6,188,157 shares of Common Stock of the Company. Kimmeridge’s current holdings in the Company’s Second Lien Notes and all but 602,503 shares of Common Stock were obtained as part of concurrent transactions agreed to in September 2020 whereby Kimmeridge purchased Second Lien Notes, warrants for Common Stock, and an overriding royalty interest +1 +in substantially all Callon-operated oil and gas leaseholds as of the effective date of such transactions. Kimmeridge’s remaining shares of Common Stock were purchased in the open market. It is headquartered at 412 West 15th Street, 11th Floor, New York, NY 10011. Neither Kimmeridge nor any of its affiliated entities has Board representation or any other governance rights with respect to the Company. +Q: Why is shareholder approval of the issuance of the New Common Stock required? +A: We are seeking shareholder approval of the Issuance Proposal in order to comply with Rule 312.03(b) of the New York Stock Exchange (“NYSE”) Listed Company Manual (“Rule 312.03(b)”). Under Rule 312.03(b), shareholder approval is required prior to any issuance or sale of common stock in any transaction or series of related transactions (i) to a substantial security holder of the company (a “Related Party”) if the number of shares of common stock to be issued exceeds either 1% of the number of shares of common stock or 1% of the voting power outstanding before the issuance or (ii) when a Related Party has a 5% or greater interest, directly or indirectly, in the company or in the consideration to be paid in the transaction or series of related transactions, and the present or potential issuance of common stock could result in an issuance that exceeds either 5% of the number of shares of common stock or 5% of the voting power outstanding before the issuance. Under Rule 312.04(e) of the NYSE Listed Company Manual (“Rule 312.04(e)”), a shareholder is presumed to be a “substantial security holder” (and therefore, a “Related Party” for purposes of Rule 312.03(b)) if it owns either 5% or more of the number of shares of common stock or 5% or more of the voting power outstanding of a NYSE listed company. +Due to Kimmeridge’s beneficial ownership of approximately 11.2% of our outstanding shares of Common Stock as of October 4, 2021, Kimmeridge is a Related Party for purposes of Rule 312.03(b). Upon consummation of the transactions contemplated by the Exchange Agreement, the Company would issue to Kimmeridge New Common Stock equal to approximately 10.0% of the Company’s then-outstanding Common Stock. As a result, the issuance of the New Common Stock pursuant to the Exchange Agreement is subject to shareholder approval for purposes of complying with Rule 312.03(b). +Q: What is the effect of shareholder approval? +A: Upon shareholder approval of the Issuance Proposal and the satisfaction of the other closing conditions contained in the Exchange Agreement (as described below), the transactions contemplated by the Exchange Agreement would be consummated. As a result of the issuance of the New Common Stock pursuant to the Exchange Agreement, Kimmeridge would hold, in the aggregate, approximately 19.3% of our issued and outstanding Common Stock and the Company would acquire and then cancel $197.0 million of Second Lien Notes. +The transactions contemplated by the Exchange Agreement are intended to strengthen the Company’s financial position by accelerating deleveraging initiatives and reducing cash interest expense by approximately $20 million per year. In addition, the transactions will improve the standing of shareholders in the capital structure of the Company and enhance Callon’s access to debt capital markets, providing the opportunity for reductions in the corporate cost of capital. +Q: What will happen if the Company’s shareholders do not approve the Issuance Proposal? +A: If we do not obtain the requisite shareholder approval of the Issuance Proposal at the Special Meeting, the transactions contemplated by the Exchange Agreement will not be consummated. The New Common Stock will not be issued to Kimmeridge and the $197.0 million of Second Lien Notes owed by Kimmeridge will remain outstanding. +Q: Are there conditions to the closing of the transactions pursuant to the Exchange Agreement? +A: Yes. The closing of the transactions pursuant to the Exchange Agreement is subject to various closing conditions, including (i) for purposes of complying with Rule 312.03(b) of the NYSE Listed Company +2 +Manual, approval of the Company’s shareholders of the issuance of New Common Stock to Kimmeridge, (ii) the closing of the Company’s previously announced acquisitions of certain producing oil and gas properties and undeveloped acreage in the Delaware Basin from Primexx (the “Primexx Transaction”), which closing occurred on October 1, 2021, (iii) approval by the NYSE of the listing of the New Common Stock, (iv) the accuracy of each party’s representations and warranties, subject to certain materiality qualifiers and (v) the absence of any injunctions or orders preventing the Exchange. +If any of these conditions are not satisfied or waived, the transactions pursuant to the Exchange Agreement will not close and, as a result, (i) the New Common Stock will not be issued to Kimmeridge and (ii) the $197.0 million of Second Lien Notes owned by Kimmeridge will remain outstanding. +Q: How important is my vote? +A: Your vote “ FOR ” the Issuance Proposal is very important and you are encouraged to submit a proxy as soon as possible. The transactions contemplated by the Exchange Agreement cannot be completed without approval of the Issuance Proposal by the affirmative vote of the holders of a majority of the votes cast with regard to the Issuance Proposal at the Special Meeting. +Q: How does the Board recommend that I vote? +A: The Board has unanimously determined that the issuance to Kimmeridge of the New Common Stock is in the best interests of Callon and its shareholders. The Board unanimously recommends that you vote “ FOR ” the Issuance Proposal. +Q: When and where will the meeting take place? +A: The Special Meeting will be held on November 3, 2021, at 9:00 a.m. Central Daylight Time in the Conversation Salon room of the Hotel ZaZa Memorial City, located at 9787 Katy Freeway in Houston, Texas. You may register and attend the Special Meeting by following the instructions provided under the question “ How do I attend the Special Meeting? ”. +Q: Who may vote at the Special Meeting? +A: You may vote all of the shares of Common Stock that you owned at the close of business on the Record Date. On the Record Date, we had 55,132,150 shares of Common Stock issued and outstanding and entitled to be voted at the Special Meeting. You may cast one vote for each share of Common Stock held by you on the Record Date on the Issuance Proposal. +Q: How do I attend the Special Meeting? +A: If you wish to attend the Special Meeting in person, you must present valid, government-issued picture identification. If your shares are held in the name of a bank, broker or other nominee and you plan to attend the Special Meeting, in order to be admitted you must present proof of your beneficial ownership of the Common Stock, such as a bank or brokerage account statement, or copy of your Voting Instruction Form or Proxy Card, indicating that you owned shares of our Common Stock at the close of business on the Record Date. +For safety and security reasons, no cameras, recording equipment, cellular telephones, electronic devices, large bags, briefcases or packages will be permitted in the Special Meeting. No banners, signs, firearms or weapons will be allowed in the meeting room. We reserve the right to inspect all items entering the meeting room. +3 +Q: What is the difference between a shareholder of record and a beneficial owner? +A: Shareholder of Record : If your shares of Common Stock are registered directly in your name with Callon’s transfer agent, American Stock Transfer & Trust Company, LLC, you are considered, with respect to those shares, to be the “shareholder of record.” +Beneficial Owner : If your shares of Common Stock are held by a nominee, you are considered the “beneficial owner” of shares held in “street name.” The Proxy Card has been forwarded to you by your nominee who is considered, with respect to those shares, to be the “shareholder of record.” As the beneficial owner, you have the right to direct your nominee on how to vote your shares by following their instructions for voting by telephone or on the Internet or, if you specifically request a copy of the printed materials, you may use the Proxy Card included in such materials. +Q: How do I obtain electronic access to the proxy materials? +A: This Proxy Statement is available to shareholders free of charge at www.viewproxy.com/CallonPetroleum/2021SM. If you hold your shares in street name, you may be able to elect to receive future annual reports or proxy statements electronically. For information regarding electronic delivery you should contact your brokerage firm, bank, trustee or other agent (each, a “nominee”). +Q: How do I vote? +A: Shareholder of Record : If you are a shareholder of record, there are four ways to vote: +• By Attending the Special Meeting. You may vote in person at the Special Meeting by requesting a ballot when you arrive. You must bring valid picture identification such as a driver’s license or passport and provide proof of stock ownership as of the Record Date. +• Via the Internet . You can vote via the Internet by going to the website address provided on your Proxy Card. You will need to use the control number appearing on your Proxy Card to vote via the Internet. +• By Telephone . You can also vote by telephone by calling the toll-free telephone number provided on your Proxy Card. You will need to use the control number appearing on your Proxy Card to vote by telephone. You may transmit your voting instructions from any touch-tone telephone. +• By Mail . If you received a printed copy of the Proxy Card, you can vote by marking, dating and signing it, and returning it in the reply envelope provided. Please promptly mail your Proxy Card to ensure that we receive it prior to the closing of the polls at the Special Meeting. +Beneficial Owners : If you are a beneficial owner of shares held in “street name,” there are four ways to vote: +• By Attending the Special Meeting. You must obtain a “legal proxy” from the organization that holds your shares. A legal proxy is a written document that will authorize you to vote your shares held in “street name” at the Special Meeting. Please contact your nominee for instructions regarding obtaining a legal proxy. You must also bring valid picture identification such as a driver’s license or passport and provide proof of stock ownership as of the Record Date. +• Via the Internet. You can vote via the Internet by going to the website address provided on your Proxy Card. You will need to use the control number appearing on your Proxy Card to vote via the Internet. The availability of Internet voting may depend on the voting process of your nominee. +4 +• By Telephone . You can also vote by telephone by calling the toll-free telephone number provided on your Proxy Card. You will need to use the control number appearing on your Proxy Card to vote by telephone. The availability of telephone voting may depend on the voting process of your nominee. +• By Mail . You can vote by marking, dating and signing a printed copy of the Proxy Card, and returning it in the reply envelope provided. Please promptly mail your Proxy Card to ensure that we receive it prior to the closing of the polls at the Special Meeting. +If you vote on the Internet or by telephone, you do not need to return your Proxy Card. Internet and telephone voting for shareholders will be available 24 hours a day, and will close at 11:59 p.m., Central Daylight Time, on November 2, 2021. Even if you plan to attend the Special Meeting, the Company recommends that you vote your shares in advance as described above so that your vote will be counted if you later decide not to attend the Special Meeting. +Q: How do I vote shares of Callon Common Stock held in Callon’s 401(k) plan? +A. If your shares of Callon Common Stock are held in Callon’s Employee Savings and Protection Plan (“Callon’s 401(k) plan”), you will receive an email from the plan administrator with voting instructions. The trustee of Callon’s 401(k) plan will vote your shares of Callon Common Stock in accordance with your directions. +If you do not timely direct the trustee how to vote your shares in the Callon 401(k) plan, or if you do not direct the trustee, the trustee of Callon’s 401(k) plan will vote your shares of Callon Common Stock in proportion to the voting directions received from all plan participants who properly vote. Please note that votes for shares held in Callon’s 401(k) plan have an earlier voting deadline. Please review the instructions for the date by which your voting directions must be received in order for your shares of Callon Common Stock to be voted as you direct. +In the case of internet or telephone voting, you should have your voting instructions in hand until you have completed the voting process. +Please note that no votes will be accepted at the Special Meeting in respect of shares of Callon Common Stock held in Callon’s 401(k) plan and that all such votes must be voted prior to the Callon Special Meeting. +Q: What constitutes a quorum, and why is a quorum required? +A: Under our Amended and Restated Bylaws, we are required to have a quorum of shareholders present for the Issuance Proposal to be voted at the Special Meeting. The presence at the Special Meeting, in person or by proxy, of the holders of a majority of the stock issued and outstanding and entitled to vote as of the Record Date will constitute a quorum, permitting us to conduct the business of the Special Meeting. Proxies received but marked as abstentions as well as broker non-votes (as described below), if any, will be included in the calculation of the number of shares considered to be present at the Special Meeting for quorum purposes. If we do not have a quorum present or represented, then the Chairman of the Special Meeting or the shareholders present or represented by proxy and entitled to vote at the Special Meeting may adjourn the meeting from time to time, as authorized by our Amended and Restated Bylaws, until a quorum is present. +Q: How many votes are needed to approve the Issuance Proposal? +A: Approval of the Issuance Proposal requires the affirmative vote of the holders of a majority of the votes cast with regard to the Issuance Proposal at the Special Meeting, if a quorum is present. Abstentions and broker non-votes will each be counted as present for purposes of determining the presence of a quorum but +5 +will not be included in determining the number of votes cast and will have no effect upon the outcome of the vote on the Issuance Proposal. +Pursuant to the Exchange Agreement, Kimmeridge has agreed to vote all shares of Common Stock beneficially owned by it as of the Record Date in favor of the Issuance Proposal. In connection with the execution of the Exchange Agreement, each of the Company’s executive officers and directors also entered into a Voting Agreement, dated as of the date of the Exchange Agreement (the “Voting Agreement”). On the terms and conditions set forth in the Voting Agreement, our executive officers and directors agreed to vote all of the shares of Common Stock over which they have voting power (representing in the aggregate approximately 2% of the Company’s total outstanding voting power as of October 4, 2021) in favor of the Issuance Proposal. The Voting Agreement is attached hereto as Annex B. +Additionally, pursuant to those certain purchase and sale agreements, dated as of August 3, 2021, between the Company and Callon Petroleum Operating Company and Primexx Resource Development LLC and BPP Acquisition, LLC, respectively (collectively, “Primexx”) executed in connection with the Primexx Transaction, Primexx has agreed to vote shares of Common Stock over which they have voting power (which, as of the Record Date, was approximately 8.8 million shares) in favor of the Issuance Proposal. In the aggregate, the foregoing voting agreements represent approximately 16 million, or approximately 30%, of the shares outstanding on the Record Date. +Q: What if I sign and return my proxy without making any selections? +A: If you sign and return your Proxy Card without making any selections, your shares will be voted “ FOR ” the Issuance Proposal. +Q: What if I am a beneficial owner and I do not give the nominee voting instructions? +A: If you are a beneficial owner and your shares are held in the name of a broker or other nominee, such broker or nominee is bound by the rules of the NYSE regarding whether or not it can exercise discretionary voting power for any particular proposal if the broker has not received voting instructions from you. Brokers have discretionary authority to vote shares for which their customers do not provide voting instructions on certain “routine” matters. A broker non-vote occurs when a nominee who holds shares for another does not vote on a particular item because the nominee does not have discretionary voting authority for that item and has not received instructions from the beneficial owner of the shares. The Issuance Proposal is not considered a “routine” matter; accordingly, if you hold your shares of Common Stock through a broker or other nominee, and you return your voting instruction card without providing voting instructions, your nominee will not have discretionary authority to vote your shares of Common Stock. +Q: Can I change my vote after I have delivered my Proxy Card? +A: Yes. You may revoke your Proxy Card at any time before its exercise. You may also revoke your proxy by (i) voting in person at the Special Meeting, (ii) delivering to the Corporate Secretary (at our principal executive offices in Houston, Texas) a revocation of proxy or (iii) executing a new proxy bearing a later date. If you are a beneficial owner, you must contact your nominee to change your vote or obtain a proxy to vote your shares if you wish to cast your vote in person at the Special Meeting. +Q: If I plan to attend the Special Meeting, should I still vote by proxy? +A: Yes. Casting your vote in advance does not affect your right to attend the Special Meeting. +If you vote in advance and also attend the Special Meeting, you do not need to vote again at the Special Meeting unless you want to change your vote. Written ballots will be available at the Special Meeting for shareholders of record. +6 +Q: What happens if I sell or otherwise transfer my shares of Common Stock before the Special Meeting? +A: The Record Date is prior to the date of the Special Meeting. If you sell or otherwise transfer your shares of Common Stock after the Record Date but before the Special Meeting, unless special arrangements are made between you and the person to whom you transfer your shares of Common Stock (such as provision of a proxy), you will retain your right to vote such shares at the Special Meeting but will otherwise transfer ownership of and the economic interest in your shares of Common Stock. +Q: Will any other business be conducted at the Special Meeting? +A: Callon will transact no other business at the Special Meeting, except such business as may properly be brought before the Special Meeting or any adjournments or postponements thereof by or at the direction of the Board in accordance with Callon’s bylaws. +Q: Where can I find voting results of the Special Meeting? +A: We will announce the results for the proposals voted upon at the Special Meeting and publish final detailed voting results in a Form 8-K filed with the Securities and Exchange Commission (the “SEC”) within four business days after the Special Meeting. +Q: Am I entitled to dissenter’s rights? +A: No. Delaware General Corporation Law (the “DGCL”) does not provide for dissenter’s rights in connection with the Issuance Proposal being voted on at the Special Meeting. +Q: Am I entitled to preemptive rights? +A: No. Under the DGCL and our Certificate of Incorporation, as amended, shareholders are not entitled to any preemptive rights in connection with the issuance of the New Common Stock to Kimmeridge. +Q: Who should I call with other questions? +A: If you need assistance voting your shares, please contact Investor Relations at (281) 589-5200. If you have additional questions about this Proxy Statement or the Special Meeting or would like additional copies of this Proxy Statement or the Proxy Card, please contact our proxy solicitor: +Innisfree M&A Incorporated +501 Madison Avenue, 20th Floor +New York NY 10022. +Banks and Brokerage Firms, please call: (281) 589-5200 +Shareholders, please call toll-free: (888) 750-5834 +7 +SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS +This Proxy Statement includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. In some cases, you can identify forward-looking statements in this Proxy Statement by words such as “anticipate,” “project,” “intend,” “estimate,” “expect,” “believe,” “predict,” “budget,” “projection,” “goal,” “plan,” “forecast,” “target” or similar expressions. +All statements, other than statements of historical facts, included in this Proxy Statement and the information incorporated by reference that address activities, events or developments that we expect or anticipate will or may occur in the future are forward-looking statements, including such things as: +• our oil and natural gas reserve quantities, and the discounted present value of these reserves; +• the amount and nature of our capital expenditures; +• our future drilling and development plans and our potential drilling locations; +• the timing and amount of future capital and operating costs; +• production decline rates from our wells being greater than expected; +• commodity price risk management activities and the impact on our average realized prices; +• business strategies and plans of management; +• our ability to consummate and efficiently integrate recent acquisitions; and +• prospect development and property acquisitions. +We caution you that the forward-looking statements contained or incorporated by reference in this Proxy Statement are subject to all of the risks and uncertainties, many of which are beyond our control, incident to the exploration for and development, production and sale of oil and natural gas. These and other risks include, but are not limited to, the risks described in Part I, Item 1A of our 2020 Annual Report on Form 10-K and in all Quarterly Reports on Form 10-Q filed subsequently thereto. These factors include: +• volatility of oil, natural gas and natural gas liquids (“NGLs”) prices or a prolonged period of low oil, natural gas or NGLs prices; +• general economic conditions including the availability of credit and access to existing lines of credit; +• changes in the supply of and demand for oil and natural gas, including as a result of the COVID-19 pandemic and various governmental actions taken to mitigate its impact or actions by, or disputes among, members of OPEC and other oil and natural gas producing countries, such as Russia, with respect to production levels or other matters related to the price of oil; +• the uncertainty of estimates of oil and natural gas reserves; +• impairments; +• the impact of competition; +8 +• the availability and cost of seismic, drilling and other equipment, waste and water disposal infrastructure, and personnel; +• operating hazards inherent in the exploration for and production of oil and natural gas; +• difficulties encountered during the exploration for and production of oil and natural gas; +• the potential impact of future drilling on production from existing wells; +• difficulties encountered in delivering oil and natural gas to commercial markets; +• the uncertainty of our ability to attract capital and obtain financing on favorable terms; +• compliance with, or the effect of changes in, the extensive governmental regulations regarding the oil and natural gas business including those related to climate change and greenhouse gases; +• the impact of government regulation, including regulation of hydraulic fracturing and water disposal wells; +• any increase in severance or similar taxes; +• the financial impact of accounting regulations and critical accounting policies; +• the comparative cost of alternative fuels; +• credit risk relating to the risk of loss as a result of non-performance by our counterparties; +• cyberattacks on the Company or on systems and infrastructure used by the oil and natural gas industry; and +• weather conditions. +In addition, there are risks and uncertainties relating to the Primexx Transaction, which include the following: +• the Primexx Transaction may not be accretive, and may be dilutive, to Callon’s earnings per share, which may negatively affect the market price of Callon Common Stock; and +• the ultimate timing, outcome, and results of integrating the assets acquired in the Primexx Transaction. +Should one or more of these risks or uncertainties occur, or should underlying assumptions prove incorrect, our actual results and plans could differ materially from those expressed in any forward-looking statements. Additional risks or uncertainties that are not currently known to us, that we currently deem to be immaterial, or that could apply to any company could also materially adversely affect our business, financial condition, or future results. Any forward-looking statement speaks only as of the date of which such statement is made and the Company undertakes no obligation to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by applicable law. +In addition, we caution that reserve engineering is a process of estimating oil and natural gas accumulated underground and cannot be measured exactly. Accuracy of reserve estimates depend on a number of factors including data available at the point in time, engineering interpretation of the data, and assumptions used by the reserve engineers as it relates to price and cost estimates and recoverability. New results of drilling, testing, and production history may result in revisions of previous estimates and, if significant, would impact future development plans. As such, reserve estimates may differ from actual results of oil and natural gas quantities ultimately recovered. +9 +Except as required by applicable law, all forward-looking statements attributable to us are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue. +10 +WHERE YOU CAN FIND MORE INFORMATION +We file annual, quarterly and current reports, proxy statements and other information with the SEC (File No. 001-14039). The SEC maintains an Internet site that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC. The address of the site is http://www.sec.gov. +We also make available free of charge on our website, at www.callon.com under the “Investor” section, all of the documents that we file with the SEC as soon as reasonably practicable after we electronically file those documents with the SEC. Information contained on, or that can be accessed through, our website is not incorporated by reference into this Proxy Statement, and you should not consider such information as part of this Proxy Statement. +Information Incorporated by Reference +We “incorporate by reference” into this Proxy Statement certain information we file with the SEC, which means that we can disclose important information to you by referring you to that information. The information incorporated by reference is considered to be part of this Proxy Statement, and later information that we file with the SEC will automatically update and supersede that information. We incorporate by reference the documents listed below and any future filings made by us with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, until the date of the Special Meeting (unless otherwise stated, other than information furnished under Items 2.02 or 7.01 of any Form 8-K, which is not deemed filed): +• our Annual Report on Form 10-K for the year ended December 31, 2020 filed on February 25, 2021; +• our Quarterly Reports on Form 10-Q for the three months ended March 31, 2021 filed on May 6, 2021, and for the six months ended June 30, 2021 filed on August 4, 2021; and +• our Current Reports on Form 8-K filed on March 16, 2021, April 16, 2021, May 11, 2021, May 14, 2021, June 21, 2021, June 22, 2021, July 7, 2021, July 23, 2021, August 5, 2021, August 5, 2021, and October 5, 2021. +Any statement contained in this Proxy Statement or in a document incorporated or deemed to be incorporated by reference in this Proxy Statement shall be deemed to be modified or superseded for purposes of this Proxy Statement to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference modifies or supersedes the statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this offering memorandum. +You may obtain any of the documents incorporated by reference in this Proxy Statement from the SEC through the SEC’s website at the address provided above. We will provide you a copy of this Proxy Statement or any or all of the information that has been incorporated by reference in this Proxy Statement (including exhibits to those documents specifically incorporated by reference in this document), at no cost, upon your written or oral request to us at the following address or telephone number: +Callon Petroleum Company +One Briarlake Plaza +2000 W. Sam Houston Parkway S., Suite 2000 +Houston, TX 77042 +Telephone: (281) 589-5200 +Attn: Investor Relations +If you would like to request any documents, please do so by October 27, 2021, which is five business days prior to the date of the Special Meeting, in order to receive them before the meeting. +11 +THE ISSUANCE PROPOSAL +Overview and Reason for the Issuance Proposal +On August 3, 2021, the Company, entered into the Exchange Agreement by and among the Company and Kimmeridge, as holder of the Second Lien Notes. Pursuant to the Exchange Agreement, Kimmeridge agreed to exchange, on the Closing Date (as defined in the Exchange Agreement), $197.0 million in aggregate principal amount of Second Lien Notes held by Kimmeridge for 5,512,623 shares of New Common Stock (which equals a notional amount of approximately $223.1 million of New Common Stock as of August 3, 2021). Kimmeridge’s current holdings in the Company’s Second Lien Notes and all but 602,503 shares of Common Stock were obtained as part of concurrent transactions agreed to in September 2020 whereby Kimmeridge purchased Second Lien Notes, warrants for Common Stock, and an overriding royalty interest in substantially all Callon-operated oil and gas leaseholds as of the effective date of such transactions. Kimmeridge’s remaining shares of Common Stock were purchased in the open market. +The closing of the transactions pursuant to the Exchange Agreement is subject to various closing conditions, including (i) for purposes of complying with Rule 312.03(b), approval of the Company’s shareholders of the issuance of New Common Stock to Kimmeridge, (ii) the closing of the Primexx Transaction (which closing occurred on October 1, 2021), (iii) approval by the NYSE of the listing of the New Common Stock, (iv) the accuracy of each party’s representations and warranties, subject to certain materiality qualifiers and (v) the absence of any injunctions or orders preventing the Exchange. If any of these conditions are not satisfied or waived, the transactions pursuant to the Exchange Agreement will not close and, as a result, (i) the New Common Stock will not be issued to Kimmeridge and (ii) $197.0 million of Second Lien Notes owned by Kimmeridge will remain outstanding. +The Exchange Agreement may be terminated (i) upon the mutual consent of the parties thereto, (ii) by either party if the Exchange has not been consummated by December 31, 2021 (the “Outside Date”), (iii) by either party in the event of an order, judgment or decree delaying the closing beyond the Outside Date and (iv) by either party if the other party materially breaches the Exchange Agreement. +The foregoing description of the Exchange Agreement is qualified in its entirety by reference to the Exchange Agreement, which is attached hereto as Annex A. +We are seeking shareholder approval of the Issuance Proposal in order to comply with Rule 312.03(b) with respect to the issuance of the New Common Stock pursuant to the Exchange Agreement. Our Common Stock is listed on the NYSE, and thus, we are subject to NYSE listing requirements. Under Rule 312.03(b), shareholder approval is required prior to any issuance or sale of common stock in any transaction or series of related transactions (i) to a Related Party if the number of shares of common stock to be issued exceeds either 1% of the number of shares of common stock or 1% of the voting power outstanding before the issuance or (ii) when a Related Party has a 5% or greater interest, directly or indirectly, in the company or in the consideration to be paid in the transaction or series of related transactions, and the present or potential issuance of common stock could result in an issuance that exceeds either 5% of the number of shares of common stock or 5% of the voting power outstanding before the issuance. Under Rule 312.04(e), a shareholder is presumed to be a “substantial security holder” (and therefore, a “Related Party” for purposes of Rule 312.03(b)) if it owns either 5% or more of the number of shares of common stock or 5% or more of the voting power outstanding of a NYSE listed company. +Due to Kimmeridge’s beneficial ownership of approximately 11.2% of our outstanding shares of Common Stock as of October 4, 2021, Kimmeridge is a Related Party for purposes of Rule 312.03(b). Upon consummation of the transactions contemplated by the Exchange Agreement, the Company would issue to Kimmeridge New Common Stock equal to approximately 10.0% of the Company’s then-outstanding Common Stock. As a result, the issuance of the New Common Stock pursuant to the Exchange Agreement is subject to shareholder approval for purposes of complying with Rule 312.03(b). Approval of the Issuance Proposal requires the affirmative vote of the holders of a majority of the votes cast with regard to the Issuance Proposal at the Special Meeting, if a quorum is present. +The terms of the Exchange Agreement were negotiated between the parties on an arms-length basis. Neither Kimmeridge nor any of its affiliated entities has Board representation or any other governance rights with respect to the Company. The value of Common Stock to be delivered was based on the construct of the optional +12 +redemption language in the Second Lien Notes Indenture. The price of the Common Stock used to calculate the Common Stock issued was based on the 10-day volume-weighted average price as of August 2, 2021, which was the 10-day period prior to execution of the Exchange Agreement. +The Exchange Agreement was unanimously approved by the Board upon the recommendation of the independent Nominating & ESG Committee of the Board, which is responsible for review of related party transactions for the Company. +The Board believes that the transactions contemplated by the Exchange Agreement will strengthen the Company’s financial position by accelerating deleveraging initiatives and reducing cash interest expense by approximately $20 million per year. In addition, the transactions will improve the standing of shareholders in the capital structure of the Company and enhance Callon’s access to debt capital markets, providing the opportunity for reductions in the corporate cost of capital. +The Voting Agreements +In connection with the execution of the Exchange Agreement, each of our executive officers and directors entered into the Voting Agreement. On the terms and conditions set forth in the Voting Agreement, our executive officers and directors agreed to vote all of the shares of Common Stock over which they have voting power (representing in the aggregate approximately 2% of the Company’s total outstanding voting power as of the Record Date) in favor of the Issuance Proposal. The foregoing description of the Voting Agreement is qualified in its entirety by reference to the Voting Agreement, which is attached hereto as Annex B. +Kimmeridge has also agreed, pursuant to the Exchange Agreement, to vote all of the shares of Common Stock for which it has voting power in favor of the Issuance Proposal. Additionally, Kimmeridge agreed, pursuant to the Exchange Agreement, not to transfer any Second Lien Notes and substantially all of the Common Stock beneficially held by it until the closing of the transactions pursuant to the Exchange Agreement, subject to certain exceptions, including (i) transfers of Common Stock to Affiliates who agree in writing to be bound by the Exchange Agreement and deliver an executed written agreement to that effect to the Company prior to such transfer, (ii) transfers of up to 500,000 shares of Common Stock, and (iii) transfers of Common Stock with the prior written consent the Company. As of October 4, 2021, Kimmeridge was the beneficial owner of 6,188,157 shares of Common Stock, representing approximately 11.2% of the Company’s total outstanding voting power. Additionally, pursuant to the purchase and sale agreements executed in connection with the Primexx Transaction, Primexx has also agreed to vote all shares of Common Stock over which they have voting power (which, as of the Record Date, was approximately 8.8 million shares) in favor of the Issuance Proposal. +In the aggregate, the foregoing voting agreements represent approximately 16 million, or approximately 30%, of the shares outstanding on the Record Date. +Registration Rights Agreement +In connection with the execution of the Exchange Agreement and issuance of New Common Stock thereunder, the Company and Kimmeridge agreed to enter into a registration rights agreement (the “Registration Rights Agreement”) pursuant to which the Company is required to, subject to certain exceptions, prepare and file a registration statement under the Securities Act with the Securities and Exchange Commission, within three business days of the Closing Date (as defined in the Exchange Agreement), in order to permit the public resale of the New Common Stock. The Registration Rights Agreement will also include certain customary demand rights for underwritten offerings and piggyback rights. +RECOMMENDATION OF THE BOARD +THE BOARD RECOMMENDS A VOTE “FOR” +THE APPROVAL OF THE ISSUANCE PROPOSAL +13 +BENEFICIAL OWNERSHIP OF SECURITIES +The following table sets forth beneficial ownership information with respect to our Common Stock as of the Record Date (October 4, 2021) for (i) each person known by us to beneficially own 5% or more of our outstanding Common Stock; (ii) each of our named executive officers (“NEOs”), (iii) each of our directors, and (iv) all of our directors and executive officers as of the Record Date, as a group. Unless otherwise noted, each person listed below has sole voting and investment power with respect to the shares of our Common Stock listed below as beneficially owned by the person. Information set forth in the table with respect to beneficial ownership of Common Stock has been obtained from filings made by the named beneficial owners with the SEC as of October 4, 2021, or, in the case of our executive officers and directors, has been provided to us by such individuals. As of October 4, 2021, the Company had 55,132,150 shares outstanding. +None of the shares beneficially owned by our executive officers or directors has been pledged as security for an obligation. Our Insider Trading Policy prohibits our executive officers and directors from holding Callon securities in a margin account or pledging Callon securities as collateral for a loan. +Beneficial Ownership +Name of Beneficial Owner Shares (#) Percent of Class +Holders of More Than 5%: +Blackstone Inc. (1) +8,841,539 16.0% +Kimmeridge Energy Management Company, LLC (2) +6,188,157 11.2% +BlackRock, Inc. (3) +4,415,315 8.0% +JB Investments Management, LLC (4) +3,055,211 5.5% +Named Executive Officers: +Joseph C. Gatto, Jr. (5) +75,457 * +Kevin Haggard (6) +– +– +Jeffrey S. Balmer (7) +8,480 * +Michol L. Ecklund (8) +9,482 * +Gregory F. Conaway (9) +34,289 * +James P. Ulm, II (10) +15,428 * +Directors: +Frances Aldrich Sevilla-Sacasa (11) +4,384 * +Matthew R. Bob 12,236 * +Barbara J. Faulkenberry 8,798 * +Michael L. Finch 9,081 * +L. Richard Flury (12) +33,895 * +S. P. Johnson IV (13) +148,894 * +Larry D. McVay (14) +24,635 * +Anthony J. Nocchiero 18,021 * +James M. Trimble 10,336 * +Steven A. Webster (15) +763,596 1.4% +All Executive Officers and Directors as a Group (consisting of 16 persons) (16) +1,177,012 +2.1% +* Less than 1%. +14 +(1) Represents (i) 4,440,934 shares held directly by Primexx Energy Partners, Ltd., (ii) 1,813,307 shares held directly by BPP Energy Partners LLC, (iii) 1,983,407 shares held in escrow for the benefit of Primexx Resource Development LLC, an indirect wholly owned subsidiary of Primexx Energy Partners Ltd., and (iv) 603,891 shares held in escrow for the benefit of BPP Acquisition LLC, an indirect wholly owned subsidiary of BPP Energy Partners LLC. The securities were acquired on October 1, 2021 in connection with the consummation of the Primexx Transaction. +Primexx Energy Corporation is the managing general partner of Primexx Energy Partners, Ltd. BPP HoldCo LLC is the majority shareholder and has the power to appoint the majority of the members of the board of directors of Primexx Energy Corporation and has the power to appoint the majority of the members of the board of managers of BPP Energy Partners LLC. BX Primex Topco LLC is the sole member of BPP HoldCo LLC. BCP VII/BEP II Holdings Manager L.L.C. is the managing member of BX Primexx Topco LLC. Blackstone Energy Management Associates II L.L.C. and Blackstone Management Associates VII L.L.C. are the managing members of BCP VII/BEP II Holdings Manager L.L.C. Blackstone EMA II L.L.C. is the sole member of Blackstone Energy Management Associates II L.L.C. BMA VII L.L.C. is the sole member of Blackstone Management Associates VII L.L.C. Blackstone Holdings III L.P. is the managing member of each of BMA VII L.L.C. and Blackstone EMA II L.L.C. Blackstone Holdings III GP L.P. is the general partner of Blackstone Holdings III L.P. Blackstone Holdings III GP Management L.L.C. is the general partner of Blackstone Holdings III GP L.P. Blackstone Inc. is the sole member of Blackstone Holdings III GP Management L.L.C. The sole holder of the Series II preferred stock of Blackstone Inc. is Blackstone Group Management L.L.C. Blackstone Group Management L.L.C. is wholly-owned by Blackstone’s senior managing directors and controlled by its founder, Stephen A. Schwarzman. The address of the principal business office of Blackstone Inc. is 345 Park Avenue, New York, NY 10154. +Pursuant to the purchase and sale agreements for the Primexx Transaction, 50% of the shares held in escrow will be released six months after the closing date, and the remaining shares will be released 12 months after the closing date, in each case subject to holdback for the satisfaction of applicable indemnification claims. Pursuant to the purchase and sale agreements and the applicable escrow agreements, the shares held in escrow are entitled to be voted at the Special Meeting, and as further described in this Proxy Statement, Primexx has agreed to vote all of its shares, including such shares held in escrow, in favor of the Issuance Proposal. +(2) Kimmeridge EMC, in its capacity as an investment adviser to Kimmeridge, exercises voting and investment control over the securities held by Kimmeridge. Kimmeridge EMC has shared voting and shared dispositive power over 5,585,654 shares. Kimmeridge does not have sole voting or sole dispositive power over any shares. Kimmeridge EMC’s address is 412 West 15 Street, 11th Floor, New York, NY 10011. This information is based on Kimmeridge EMC’s most recent Statement on Schedule 13G filed on March 5, 2021. +(3) BlackRock, Inc. (“BlackRock”), in its capacity as a parent holding company or control person for various subsidiaries (none of which individually owns more than 5% of our outstanding Common Stock), may be deemed to beneficially own the indicated shares. BlackRock has sole voting power over 4,404,928 shares and sole dispositive power over 4,415,315 shares. BlackRock does not have shared voting or shared dispositive power over any of the shares. BlackRock’s address is 55 East 52nd St., New York, NY 10055. This information is based on BlackRock’s most recent Statement on Schedule 13G filed on February 5, 2021. +(4) JB Investments Management, LLC (“JB Investments”), in its capacity as an investment adviser, may be deemed to beneficially own the indicated shares, along with JB Investments Fund III, L.P., JB Investments Parallel Fund III, L.P. (together with JB Investments Fund III, L.P., the “Funds”). JB Investments Fund III GP, LLC is the general partner of, and may be deemed to beneficially own securities owned by the Funds. Mr. Brian J. Riley is the sole manager of, and may be deemed to beneficially own securities owned by JB Investments. JB Investments has shared voting and shared dispositive power over 3,055,211 shares. JB Investment’s address is 355 Valley Park Road, Phoenixville, PA 19460. This information is based on JB Investment’s most recent Statement on Schedule 13D filed on May 12, 2021. +(5) Comprised of 68,844 shares held directly by Mr. Gatto and 6,613 shares held indirectly within the 401(k) Plan. Does not include 92,278 unvested restricted stock units (“RSUs”) payable in stock and 104,896 unvested performance stock units (“PSUs”) payable in 50% stock and 50% cash. +(6) Mr. Haggard holds has 32,406 unvested RSUs. +15 +(7) Comprised of 8,467 shares held directly by Dr. Balmer and 13 shares held indirectly within the 401(k) Plan. Does not include 44,604 unvested RSUs payable in stock and 47,412 unvested PSUs payable in 50% stock and 50% cash. +(8) Comprised of 9,422 shares held directly by Ms. Ecklund and 60 shares held indirectly within the 401(k) Plan. Does not include 27,847 unvested RSUs payable in stock and 29,152 unvested PSUs payable in 50% stock and 50% cash. +(9) Comprised of 34,829 shares held directly by Mr. Conaway. Does not include 13,316 unvested RSUs payable in stock and 8,046 unvested PSUs payable in 50% stock and 50% cash. +(10) Comprised of 15,371 shares held directly by Mr. Ulm and 57 shares held indirectly within the 401(k) Plan. +(11) Comprised of 4,384 shares held directly by Ms. Aldrich Sevilla-Sacasa, which includes 2,037 vested deferred RSUs, pursuant to Ms. Aldrich Sevilla-Sacasa’s election under the Deferred Compensation Plan for Outside Directors, which are payable in cash upon her separation of service as a director. Does not include 3,240 unvested deferred RSUs, pursuant to Ms. Aldrich Sevilla-Sacasa’s election under the Deferred Compensation Plan for Outside Directors, which are payable in cash upon her separation of service as a director. +(12) Comprised of 30,895 shares held directly by Mr. Flury and 3,000 shares held in a joint tenancy with his spouse, which includes 15,559 vested deferred RSUs, pursuant to Mr. Flury’s election under the Deferred Compensation Plan for Outside Directors, which are payable in cash upon his separation of service as a director. +(13) Comprised of 78,894 shares held directly by Mr. Johnson and 70,000 shares held indirectly with a Family Limited Partnership, which includes 15,229 vested deferred RSUs, pursuant to Mr. Johnson’s election under the Deferred Compensation Plan for Outside Directors, which are payable in cash upon his separation of service as a director. +(14) Comprised of 24,635 shares held directly by Mr. McVay, which includes 3,501 vested deferred RSUs, pursuant to Mr. McVay’s election under the Deferred Compensation Plan for Outside Directors, which are payable in cash upon his separation of service as a director. +(15) Comprised of 549,721 shares held directly by Mr. Webster, 64,500 shares held indirectly with his spouse, and 149,375 shares held indirectly through San Felipe Resources Company, which includes 13,192 vested deferred RSUs, pursuant to Mr. Webster’s election under the Deferred Compensation Plan for Outside Directors, which are payable in Common Stock upon his separation of service as a director. +(16) Comprised of 883,394 shares held directly by the Company’s executive officers and directors, 3,000 shares held in a joint tenancy, 64,500 shares held indirectly by a spouse, 70,000 shares held indirectly by a Family Limited Partnership, 6,743 shares held indirectly within the Company’s 401(k) Plan, and 149,375 shares held indirectly by San Felipe Resources Company. +16 +OTHER MATTERS +Requirements, including Deadlines, for Submission of Proxy Proposals, Nomination of Directors and Other Business of Shareholders +In order for a proposal to be considered for inclusion in the proxy statement for the 2022 Annual Meeting of Shareholders (the “2022 Annual Meeting”) pursuant to Rule 14a-8 of the Exchange Act, such proposal must be received by the Secretary of the Company at our principal executive offices no later than December 10, 2021 (assuming the date of the 2022 Annual Meeting has not been changed by more than 30 days from the date of the 2021 Annual Meeting of Shareholders), and must otherwise be in compliance with the requirements of the SEC’s proxy rules. If the date of the 2022 Annual Meeting has been changed by more than 30 days from the date of this Annual Meeting, then the deadline is a reasonable time before we begin to print and send our proxy materials for the 2022 Annual Meeting. +For a shareholder proposal to be introduced for consideration at the 2022 Annual Meeting but not intended to be considered for inclusion in the Company’s proxy statement and form of proxy relating to such meeting (i.e. not pursuant to Rule 14a-8 of the Exchange Act), including shareholder nominations for candidates for election as directors, a shareholder must provide written notice of such proposal to the Company not later than 120 days nor earlier than 150 days before the date of the 2022 Annual Meeting. Any such notice must describe the shareholder proposal in reasonable detail and otherwise comply with the requirements set forth in our bylaws. +Nominating Process +In accordance with our certificate of incorporation and bylaws, any shareholder may nominate a person for election to the Board upon delivery of written notice to us of such nomination. Such notice must be sent as provided in our certificate of incorporation and bylaws on or before the deadline set forth in our certificate of incorporation and bylaws and must otherwise comply with the procedures set forth in our certificate of incorporation. For nominations, the Board will consider individuals identified by shareholders on the same basis as nominees identified from other sources. A submission recommending a nominee should include: +• Sufficient biographical information to allow the Nominating & ESG Committee to evaluate the qualifications of a potential nominee in light of the director nomination procedures and criteria and any other information that would be required to be disclosed in solicitations of proxies for the election of directors; +• An indication as to whether the proposed nominee will meet the requirements for independence under NYSE and SEC guidelines; +• A description of all direct and indirect compensation and other material monetary agreements, arrangements, and understandings during the past three years, and any other material relationships, between or among the nominating shareholder or beneficial owner and each proposed nominee; +• A completed and signed questionnaire, representation, and agreement, pursuant to our bylaws, with respect to each nominee for election or re-election to the Board; and +• The proposed nominee’s written consent to serve if nominated and elected. +Other than the Issuance Proposal described in this Proxy Statement, there are no other matters to be considered at the Special Meeting. +17 +List of Shareholders Entitled to Vote at the Special Meeting +The names of shareholders of record entitled to vote at the Special Meeting will be available at the Company’s principal office in Houston, Texas, for a period of ten (10) days prior to the Special Meeting and continuing through the Special Meeting. +Expenses Relating to this Proxy Solicitation +The Board will primarily solicit proxies by mail, and we will bear all costs incurred in the solicitation of proxies, including the preparation, printing and mailing of these proxy materials. In addition to solicitation by mail, our directors, officers and employees may solicit proxies personally or by telephone, email, facsimile or other means, without additional compensation. We may also make arrangements with brokerage houses and other custodians, nominees and fiduciaries for the forwarding of solicitation material to the beneficial owners of the Common Stock held by such persons, and we may reimburse those brokerage houses and other custodians, nominees and fiduciaries for reasonable expenses incurred in connection therewith. In addition, to assist us with our solicitation efforts, we have retained the services of Innisfree M&A Incorporated for a fee of approximately $15,000, plus out-of-pocket expenses. +18 +ANNEX A +Execution Version +EXCHANGE AGREEMENT +THIS EXCHANGE AGREEMENT (this “ Agreement ”) is made and entered into as of August 3, 2021 (the “ Execution Date ”) by and among Callon Petroleum Company, a Delaware corporation (the “ Company ”) and Chambers Investments, LLC a Delaware limited liability company (“ Kimmeridge ”) as holder of the Company’s 9.00% Second Lien Senior Secured Notes due 2025 (the “ Second Lien Notes ”), issued pursuant to the Indenture, dated as of September 30, 2020 (the “ Second Lien Notes Indenture ”), by and among the Company, the subsidiary guarantors named therein and U.S. Bank National Association, as trustee and collateral agent (in such capacity, the “ Second Lien Notes Trustee ”). +RECITALS +WHEREAS, subject to the terms and conditions set forth herein, the Company desires to issue to Kimmeridge, in exchange for the Exchanged Notes (as defined herein), new shares of common stock, par value $0.01, of the Company (the “ Common Stock ”), and grant certain registration rights to Kimmeridge pursuant to the registration rights agreement substantially in the form attached hereto as Exhibit A (the “ Registration Rights Agreement ”). +NOW, THEREFORE, subject to the premises and other conditions contained herein, the parties hereto hereby agree as follows: +ARTICLE I +EXCHANGE OF NOTES +Section 1.1 Exchange of Exchanged Notes . +(a) Subject to the terms and conditions set forth in this Agreement, at the Closing, Kimmeridge shall assign, transfer and deliver to the Company all of its right, title and interest in and to all of the Second Lien Notes held by Kimmeridge as of the date hereof, as set forth on Schedule I hereto (the “ Exchanged Notes ”), free and clear of any Lien (as defined herein). +(b) Subject to the terms and conditions set forth in this Agreement, at the Closing, the Company shall issue and deliver to Kimmeridge, which shall be deemed in full satisfaction of all obligations of the Company under the Exchanged Notes, including in respect of any accrued and unpaid interest, 5,512,623 shares of Common Stock (such shares the “ New Common Stock ”). For the avoidance of doubt, Kimmeridge will be entitled to the interest payment that is due on October 1, 2021, and shall not be entitled to any cash payment for accrued interest after such date. +(c) The Company is entitled to deduct and withhold from the consideration otherwise payable by or deliverable by the Company to Kimmeridge in connection with the transactions contemplated by this Section 1.1 such amounts as are required to be withheld under the Internal Revenue Code of 1986, as amended (the “ Code ”), or other applicable law. Any amount properly deducted and withheld and timely remitted to the appropriate taxing authority shall be treated for all purposes of this Agreement as having been paid to Kimmeridge in respect of which such deduction and withholding was made. Except in the case of any withholding required as a result of Kimmeridge’s failure to comply with Section 2.2(d) , the Company shall use commercially reasonable efforts to notify Kimmeridge of its intention to withhold or deduct from the consideration payable or deliverable to Kimmeridge at least two (2) Business Days prior to the date of the applicable payment or delivery, which notice shall include a statement of the amounts it intends to withhold or deduct in respect of the applicable payment or delivery and the applicable provision of law requiring such withholding or deduction. To the extent any such +A-1 +withholding or deduction is required by law, the parties hereto shall cooperate in good faith to reduce or otherwise eliminate any such withholding or deduction. +(d) The transactions contemplated by this Section 1.1 are referred to herein as the “ Exchange .” +ARTICLE II +CLOSINGS +Section 2.1 Closing . Subject to the terms and conditions set forth in this Agreement, the closing of the Exchange will take place two Business Days following the satisfaction or waiver of the conditions set forth in Article V hereof or at such time as the Company and Kimmeridge mutually agree upon in writing, at the offices of Kirkland & Ellis LLP, 609 Main Street, Houston, Texas 77002 (which time and place are designated as the “ Closing ” and which day is referred to herein as the “ Closing Date ”). +Section 2.2 Closing Deliverables . On the Closing Date: +(a) Kimmeridge shall deliver to the Second Lien Notes Trustee customary closing documentation relating to the cancelation of the Exchanged Notes, duly executed and delivered by Kimmeridge; +(b) the Company shall deliver to Kimmeridge evidence that the New Common Stock has been issued to Kimmeridge, in accordance with Section 1.1 and the allocations set forth on Schedule I hereto, in book-entry form which such entry shall include customary restrictive legends; +(c) Kimmeridge shall effect through, the facilities of the DTC, the delivery to the Company (or its trustee or designee) of the Exchanged Notes and all other documents and instruments reasonably requested by the Company to effect the transfer and cancellation of such Exchanged Notes to the Company in accordance with the terms hereof; and +(d) Kimmeridge shall deliver to the Company, as applicable, a properly completed and duly executed Internal Revenue Service Form W-9 or applicable W-8 or other applicable tax forms to provide the information and certification necessary to minimize or avoid any withholding tax. +Section 2.3 Consummation of Closings . Subject to the satisfaction of all of the closing actions and deliverables set forth in Section 2.2 other than Section 2.2(d) , all acts, deliveries and confirmations comprising the Closing, regardless of chronological sequence, will be deemed to occur contemporaneously and simultaneously on the date hereof. +Section 2.4 No Transfer of Exchanged Notes after the Exchange Closing; No Further Ownership Rights in Exchanged Notes . Upon consummation of the Exchange, all Exchanged Notes (or interests therein) exchanged pursuant to this Agreement will cease to be transferable and there shall be no further registration of any transfer of any such Exchanged Notes or interests therein. From and after the Exchange, Kimmeridge will cease to have any rights with respect to such Exchanged Notes, including in respect of any accrued and unpaid interest, except as otherwise provided for herein or by applicable law. Upon consummation of the Exchange, the Exchanged Notes will be cancelled and will cease to be outstanding. +ARTICLE III +REPRESENTATIONS AND WARRANTIES OF THE COMPANY +The Company hereby represents and warrants to Kimmeridge that the statements contained in this Article III are true and correct, except as may be disclosed in the Company’s reports (the “ Company Reports ”) filed with or furnished to the Securities and Exchange Commission (the “ Commission ”) and publicly available prior to the date of this Agreement (other than in the case of fraud or intentional misrepresentation or as set forth in any risk factor contained in the Company Reports): +A-2 +Section 3.1 Organization and Good Standing . The Company is a corporation duly organized or formed, validly existing and in good standing under the laws of its state of incorporation and has all requisite corporate power and authority (a) to own and operate its properties, and to enter into this Agreement and the Registration Rights Agreement and perform its obligations hereunder and thereunder and (b) to issue and deliver the New Common Stock. The Company is duly qualified to do business and is in good standing in all jurisdictions wherein such qualification is necessary, except where failure so to qualify would not have a material adverse effect on the business, properties, operations, condition (financial or otherwise), prospects or results of operations of the Company, taken as a whole (a “ Material Adverse Effect ”). +Section 3.2 Due Authorization . The Company has all requisite power and authority (corporate, limited liability company and other) to execute, deliver and perform its obligations under this Agreement and the Registration Rights Agreement. This Agreement has been duly and validly authorized, executed and delivered by the Company and, assuming the due authorization, execution and delivery of Kimmeridge, constitutes a valid and legally binding obligation of the Company enforceable against, subject, as to enforcement, to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting creditors’ rights and to general equity principles, whether considered in a proceeding in equity or at law (collectively, the “ Enforceability Exceptions ”). +Section 3.3 No Conflicts . The execution and delivery by the Company of this Agreement and the Registration Rights Agreement and consummation of the transactions contemplated herein and therein do not and will not (i) result in any violation of any terms of the organizational documents of the Company; (ii) conflict with or result in a breach by the Company of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust or other material agreement or instrument to which the Company is a party or by which the Company or any of its properties or assets is bound or affected or (iii) violate or contravene any applicable law, rule or regulation or any applicable decree, judgment or order of any court or arbitrator or regulatory or government or political subdivision thereof, whether federal, state, local or foreign, or any agency or instrumentality of any such government or political subdivision thereof (a “ Governmental Body ”) having jurisdiction over the Company or any of its properties or assets, except, in the case of (ii) and (iii), as would not reasonably be expected to, individually or in the aggregate, have a Material Adverse Effect. +Section 3.4 No Consents Required . No consent, approval, authorization, order, registration or qualification of, or filing with, any such court or governmental agency or body is required for the execution, delivery and performance, as relevant, by the Company of this Agreement or the Registration Rights Agreement or the consummation of the transactions contemplated herein or therein, except for such consents, approvals, authorizations, registrations or qualifications: (i) as have been obtained and which are in full force and effect, (ii) as are required in connection with the filing with the SEC of the Proxy Statement in definitive form, (iii) as are required in connection with the filing with the SEC of such reports and other filings under, and such other compliance with, the Exchange Act and the Securities Act, and under state securities, takeover and “blue sky” laws, in each case as may be required in connection with this Agreement and the transactions contemplated hereby, (iv) as are required in connection with obtaining NYSE Stockholder Approval, (v) as are required in connection with obtaining approval of the listing of the New Common Stock to be issued pursuant to this Agreement, and (vi) such consents, approvals, authorizations, orders, registrations, qualifications or filings which if not obtained or made would not, individually or in the aggregate, have a Material Adverse Effect. +Section 3.5 Capitalization . The authorized capital stock of the Company is (a) 78,750,000 shares of Common Stock and (b) 2,500,000 shares of preferred stock, par value $0.01 per share (the “ Preferred Stock ”). All of the outstanding capital stock of the Company has been duly authorized and validly issued and is fully paid and nonassessable. As of July 31, 2021, there were: (a) 46,290,613 shares of Common Stock outstanding and (b) no shares of Preferred Stock outstanding. As of July 31, 2021, the Company had (a) 919,975 shares of Common Stock reserved for issuance pursuant to outstanding restricted stock unit awards, (b) 338,098 shares of Common Stock reserved for issuance pursuant to outstanding performance stock unit awards, which includes the maximum number of shares issuable pursuant to such awards, (c) 1,589,450 shares of Common Stock authorized and available for issuance pursuant to future grants made under the Company’s equity incentive plan and (d) 1,066,380 shares of Common Stock reserved for future exercises of currently outstanding warrants. The Company has no shares of +A-3 +Common Stock reserved for issuance except for the shares of Common Stock referenced in the preceding sentence. The Company has good title to all outstanding capital stock or limited liability company interests of its subsidiaries, subject to Liens granted under the Company’s Credit Agreement, dated as of December 20, 2019, by and among the Company, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto (as amended, the “ Credit Agreement ”), the Security Documents (as defined in the Second Lien Notes Indenture) and other liens permitted under the Credit Agreement, the Second Lien Notes Indenture, and all such capital stock or limited liability company interests are duly issued, fully paid and non-assessable, to the extent applicable. Except as disclosed in the Company Reports, as of the date of this Agreement, there are no preemptive or other outstanding rights, options, warrants, conversion rights, stock appreciation rights, redemption rights, repurchase rights, agreements, arrangements, calls, commitments or rights of any kind that obligate the Company to issue or sell any shares of capital stock or other equity securities of the Company or any securities or obligations convertible or exchangeable into or exercisable for, or giving any person a right to subscribe for or acquire, any equity securities of the Company, and no securities or obligations evidencing such rights are authorized, issued or outstanding. Except as disclosed in the Company Reports, as of the date of this Agreement, the Company does not have outstanding any bonds, debentures, notes or other obligations the holders of which have the right to vote (or convertible into or exercisable for securities having the right to vote) with the stockholders of the Company on any matter. +Section 3.6 No Violation or Default . Neither the Company nor any of its subsidiaries is in (i) violation of its certificate of formation, certificate of incorporation, limited liability company agreement, bylaws or other equivalent organizational documents, (ii) breach or default (or an event which, with notice or lapse of time or both, would constitute such an event) in the performance or observance of any term, covenant or condition contained in any indenture, mortgage, deed of trust, loan agreement, lease or other agreement or instrument to which it is a party or by which it or any of its properties may be bound or (iii) violation of any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over the Company or any of its subsidiaries or any of their properties and assets, except for, with respect to clauses (ii) and (iii), any such violation, breach or default that has not had, or would not reasonably be expected to, individually or in the aggregate, have a Material Adverse Effect. +Section 3.7 Offering . Assuming the accuracy of the representations and warranties of Kimmeridge contained in Article IV , (i) the offer, issue, and delivery of the New Common Stock pursuant to this Agreement by the Company to Kimmeridge under this Agreement does not require registration under the Securities Act, (ii) the New Common Stock was not offered by any form of general solicitation or general advertising and (iii) the New Common Stock is not being offered in a manner involving a public offering under, or in a distribution in violation of, the Securities Act or any state securities laws. +Section 3.8 No Broker’s Fees . Neither the Company nor any of its subsidiaries is a party to any contract, agreement or understanding with any person that would give rise to a valid claim against the Company or any of its subsidiaries for a brokerage commission, finder’s fee or like payment in connection with the Exchange. Kimmeridge is not required to pay any broker, finder or investment banker any brokerage, finder’s or other fee or commission with respect to the consummation of the transactions contemplated by this Agreement as a result of arrangements made the Company or any of its subsidiaries. +Section 3.9 No Other Representations or Warranties . Except for the representations and warranties contained in this Article III , neither the Company nor any Affiliate or representative of the Company has made or is making any representation or warranty of any kind or nature whatsoever, oral or written, express or implied with respect to the Company, this Agreement or the transactions contemplated hereby and the Company hereby disclaims any reliance on any representation or warranty of Kimmeridge or any Affiliate or representative thereof except for the representations and expressly set forth in Article IV . +ARTICLE IV +REPRESENTATIONS AND WARRANTIES OF KIMMERIDGE +Kimmeridge hereby represents and warrants to the Company that the statements contained in this Article IV are true and correct: +A-4 +Section 4.1 Organization and Good Standing . Kimmeridge is duly organized, validly existing and in good standing under the laws of its jurisdiction of formation or incorporation and has all requisite power and authority to enter into this Agreement and perform its obligations hereunder. +Section 4.2 Due Authorization . Kimmeridge has all requisite power and authority (corporate, limited liability company or other) to execute, deliver and perform its obligations under this Agreement. This Agreement has been duly and validly authorized, executed and delivered by Kimmeridge and will constitute a valid and binding obligation of Kimmeridge, enforceable against such Kimmeridge in accordance with its terms, except as such enforceability may be limited by Enforceability Exceptions. +Section 4.3 No Conflicts . The execution and delivery by Kimmeridge of this Agreement and consummation of the transactions contemplated herein do not and will not (i) result in any violation of any terms of the organizational documents of Kimmeridge; (ii) conflict with or result in a breach by Kimmeridge of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust or other material agreement or instrument to which Kimmeridge is a party or by which Kimmeridge or any of its properties or assets is bound or affected or (iii) violate or contravene any applicable law, rule or regulation or any applicable decree, judgment or order of any court or arbitrator or regulatory or Governmental Body having jurisdiction over Kimmeridge or any of its properties or assets, except, in the case of (ii) and (iii), as would not reasonably be expected to, individually or in the aggregate, have a material adverse effect on the business, properties, operations, financial condition or results of operations of Kimmeridge and its subsidiaries, taken as a whole. +Section 4.4 Ownership of Notes . Kimmeridge is, as of the date hereof, (i) the sole beneficial owner of the Exchanged Notes, the principal amount of which is set forth on Schedule I hereto, having the power to vote and dispose of such Exchanged Notes and (ii) entitled to all of the rights and economic benefits of such Exchanged Notes. There are no outstanding agreements, arrangements or understandings under which Kimmeridge may be obligated to transfer any of the Exchanged Notes, other than this Agreement. +Section 4.5 Ownership of Common Stock . Kimmeridge is, as of the date hereof, the sole beneficial owner of 5,585,654 shares of Common Stock, having the sole power to dispose of such shares Common Stock and vote such shares of Common Stock at any meeting of the stockholders of the Company. There are no outstanding agreements, arrangements or understandings under which Kimmeridge may be obligated to transfer such shares of Common Stock prior to the Closing Date. +Section 4.6 Transfers . Kimmeridge has made no prior assignment, sale, participation, grant, conveyance or other transfer of, and has not entered into any other agreement to assign, sell, participate, grant or otherwise transfer (except for Liens in favor of a broker dealer over property in an account with such dealer generally in which an encumbrance is released upon transfer), in whole or in part, any portion of its right, title or interests in the Exchanged Notes, subject to this Agreement, that is inconsistent with the representations and warranties made in Section 4.4 or Section 4.5 hereof or that would render Kimmeridge otherwise unable to comply with its obligations under this Agreement. +Section 4.7 No Liens . The Exchanged Notes are not subject to any Lien, except for Liens in favor of a broker dealer over property in an account with such dealer generally in which an encumbrance is released upon transfer. The execution and delivery of, and the performance by Kimmeridge of its obligations under, this Agreement, will not result in the creation of any Lien upon the Exchanged Notes other than those arising hereunder. Upon the consummation of the Exchange, the Company will acquire the Exchanged Notes free and clear of any Lien other than Liens arising from acts of the Company, contemplated herein, provided for under the Credit Agreement or the Second Lien Notes Indenture or arising under applicable securities laws. +Section 4.8 Investment Experience . Kimmeridge has such knowledge and experience in financial and business affairs that Kimmeridge is capable of evaluating the merits and risks of an investment in the New Common Stock. Kimmeridge is an “accredited investor,” within the meaning of Rule 501 under the Securities Act and a “qualified institutional buyer” as defined in Rule 144A under the Securities Act. Kimmeridge will acquire the New Common Stock for its own account, for investment, and not with a view to or for sale in connection with any +A-5 +distribution thereof in violation of the registration provisions of the Securities Act or the rules and regulations promulgated thereunder. Kimmeridge understands that the New Common Stock is being issued to it in reliance on specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying upon the truth and accuracy of, and Kimmeridge’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of Kimmeridge set forth herein in order to determine the availability of such exemptions and the eligibility of Kimmeridge to acquire the New Common Stock. Kimmeridge acknowledges that no representations, express or implied, are being made with respect to the Company, the New Common Stock, or otherwise in connection with the transactions contemplated by this Agreement, other than those expressly set forth herein. In making its decision to invest in the New Common Stock hereunder, Kimmeridge has relied upon independent investigations made by Kimmeridge and, to the extent believed by Kimmeridge to be appropriate, Kimmeridge’s representatives, including Kimmeridge’s own professional, tax and other advisors. Kimmeridge and its representatives have been given the opportunity to ask questions of, and to receive answers from, the Company and its representatives concerning the terms and conditions of the investment in the New Common Stock. Kimmeridge has reviewed, or has had the opportunity to review, all information it deems necessary and appropriate for its to evaluate the financial risks inherent in an investment in the New Common Stock and has had sufficient time to evaluate the transactions contemplated by the this Agreement. Kimmeridge understands that its investment in the New Common Stock involves a high degree of risk and that no Governmental Body having jurisdiction over such Investor or any of its subsidiaries or any of their properties and assets has passed on or made any recommendation or endorsement of the New Common Stock. +Section 4.9 Securities Law Matters . Kimmeridge has been advised by the Company and acknowledges that: (i) the offer and sale of the New Common Stock has not been registered under the Securities Act; and (ii) the offer and sale of the New Common Stock is intended to be exempt from registration under the Securities Act pursuant to Section 4(a)(2) under the Securities Act. Kimmeridge is familiar with the Securities Act, as presently in effect, and understands the resale limitations imposed thereby. +Section 4.10 No Other Representations or Warranties . Except for the representations and warranties contained in this Article IV , neither Kimmeridge nor any Affiliate or representative of Kimmeridge has made or is making any representation or warranty of any kind or nature whatsoever, oral or written, express or implied with respect to Kimmeridge, this Agreement or the transactions contemplated hereby and Kimmeridge hereby disclaims any reliance on any representation or warranty of the Company or any Affiliate or representative thereof except for the representations and expressly set forth in Article III . +ARTICLE V +CONDITIONS PRECEDENT TO EXCHANGE +Section 5.1 Conditions Precedent to the Company’s Obligation to Consummate the Exchange . The obligation of the Company to consummate the Exchange at Closing is subject to the satisfaction or waiver (by the Company) of the following conditions: +(a) Representations and Warranties . Each of the representations and warranties of Kimmeridge set forth in this Agreement shall be true and correct as of the date of this Agreement and as of the Closing Date as though made on and as of such date (except to the extent such representation or warranty speaks to a specific date, in which case, as of such specific date). +(b) Performance; No Default . Kimmeridge shall have performed and complied in all material respects with all agreements and conditions contained in this Agreement required to be performed or complied with by it prior to or at the Closing Date. +(c) No Actions . No action suit or legal, administrative or arbitral proceeding or investigation (an “ Action ”) shall have been instituted (or be pending) by or before any court or governmental agency or body to restrain or prohibit this Agreement or the consummation of the Exchange. No preliminary or permanent injunction or other order issued by any federal or state court of competent jurisdiction preventing consummation of the Exchange shall be in effect. +A-6 +(d) Stockholder Approval . The Company shall have obtained NYSE Stockholder Approval for the issuance of the New Common Stock to Kimmeridge pursuant to this Agreement. +Section 5.2 Conditions Precedent to Kimmeridge’s Obligation to Consummate the Exchange . The obligation of Kimmeridge to consummate the Exchange at Closing is subject to the satisfaction or waiver (by Kimmeridge) of the following conditions: +(a) Representations and Warranties . Each of the representations and warranties of the Company set forth in this Agreement shall be true and correct as of the date of this Agreement and as of the Closing Date as though made on and as of such date (except to the extent such representation or warranty speaks to a specific date, in which case, as of such specific date). +(b) Performance; No Default . The Company shall have performed and complied in all material respects with all agreements and conditions contained in this Agreement required to be performed or complied with by the Company prior to or at the Closing Date. +(c) Officer’s Certificate . Kimmeridge shall have received a certificate, dated as of the Closing Date, of an Officer of the Company, certifying that the conditions specified in Section 5.2(a) and Section 5.2(b) have been fulfilled. +(d) No Actions . No Actions shall have been instituted (or be pending) by or before any court or governmental agency or body to restrain or prohibit this Agreement or the consummation of the Exchange. No preliminary or permanent injunction or other order issued by any federal or state court of competent jurisdiction preventing consummation of the Exchange shall be in effect. +(e) Stockholder Approval . The Company shall have obtained NYSE Stockholder Approval for the issuance of the New Common Stock to Kimmeridge pursuant to this Agreement. +(f) NYSE SLAP . The Company has delivered to Kimmeridge a fully executed “Supplemental Listing Application” approving the shares of New Common Stock for listing by the NYSE. +(g) Registration Rights Agreement . The Registration Rights Agreement shall have been executed and delivered by the parties thereto and shall be in full force and effect. +(h) Primexx Acquisition . The Company shall have consummated the transactions contemplated by (i) that certain purchase and sale agreement, dated as of the date hereof, by and among the Company, Callon Petroleum Operating Company and Primexx Resource Development, LLC and (ii) that certain purchase and sale agreement, dated as of the date hereof, by and among the Company, Callon Petroleum Operating Company and BPP Acquisition LLC. +ARTICLE VI +CERTAIN COVENANTS AND AGREEMENTS +Section 6.1 NYSE Stockholder Approval . The Company shall use its reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things reasonably necessary or advisable to obtain, as promptly as reasonably practicable, stockholder approval (“ NYSE Stockholder Approval ”) under the stockholder approval rules contained in Rule 312.03(b) of the New York Stock Exchange Listed Company Manual, for the issuance of the New Common Stock to Kimmeridge pursuant to this Agreement. Notwithstanding the foregoing, within 30 days following the date hereof, the Company shall prepare and file with the Commission a proxy statement in preliminary form containing the information specified in Schedule 14A of the Securities Exchange Act of 1934, as amended, in connection with obtaining NYSE Stockholder Approval (the “ Proxy Statement ” and such proposal to be approved by the Company’s stockholders, the “ Related Party Issuance Proposal ”). The Company shall cooperate and provide Kimmeridge with a reasonable opportunity to review and comment on the Proxy Statement (including each amendment or supplement thereto) and all responses to requests +A-7 +for additional information by and replies to comments of the SEC, including the proposed final version of any such document or responses, prior to filing such documents with the SEC, and the Company will give reasonable consideration to all comments reasonably proposed by Kimmeridge. The Company will take, in accordance with applicable law, the NYSE listing rules and its certificate of incorporation and bylaws, all action necessary to call, hold and convene a special meeting of its stockholders to consider and vote upon the Related Party Issuance Proposal as promptly as reasonably practicable after the filing of the Proxy Statement in definitive form with the SEC. +Section 6.2 Agreement To Retain Securities . +(a) From the date hereof until the Closing Date, Kimmeridge shall not, with respect to any shares of Common Stock Beneficially Owned or Exchanged Notes held by Kimmeridge, (i) Transfer any such Exchanged Notes or Common Stock or (ii) deposit any such shares of Common Stock into a voting trust or enter into a voting agreement or arrangement with respect to such shares of Common Stock or grant any proxy (except as otherwise provided herein) or power of attorney with respect thereto or (iii) agree (regardless of whether in writing) to take any of the actions referred to in the foregoing clause (i) or (ii). +(b) Notwithstanding Section 6.2(a) , Kimmeridge may: (i) Transfer shares of Common Stock to one or more Affiliates who agrees in writing to be bound by this Agreement and delivers a copy of such executed written agreement to the Company prior to the consummation of such transfer, (ii) Transfer up to 500,000 shares of Common Stock or (iii) Transfer shares of Common Stock with the prior written consent the Company. +Section 6.3 Agreement to Vote . +(a) From and after the date hereof until the earlier of (i) the Closing Date and (ii) the termination of this Agreement in accordance with Section 8.1 , Kimmeridge irrevocably and unconditionally agrees that it shall, at any meeting of the stockholders of the Company (whether or not an adjourned or postponed meeting), however called, (x) appear at such meeting or otherwise cause the shares of Common Stock to be counted as present thereat for purpose of establishing a quorum and (y) with respect to any meeting at which a vote of the Company’s stockholders is requested , vote, or cause to be voted at such meeting, all shares of Common Stock then Beneficially Owned by Kimmeridge (including by proxy or written consent, if applicable) as of the record date set therefore: +(i) in favor of the Related Party Issuance Proposal; +(ii) against any other proposal, transaction, agreement or other action inconsistent with or made in opposition to approval of the Related Party Issuance Proposal or matters contemplated by this Agreement. +(iii) against any other proposal, transaction, agreement or other action that would or would reasonably be expected to result in a breach in any respect of any covenant, representation, warranty or other agreement contained in this Agreement; and +(iv) in favor of any proposal to adjourn or postpone such stockholder meeting to a later date if there are not sufficient votes to approve the Related Party Issuance Proposal. +(b) From and after the date hereof until the earlier of (i) the Closing Date and (ii) the termination of this Agreement in accordance with Section 8.1 , Kimmeridge hereby irrevocably and unconditionally grants to, and appoints, the Company and any designee of the Company (determined in the Company’s sole discretion) as its proxy and attorney-in-fact (with full power of substitution), for and in the name, place and stead of Kimmeridge, to vote or cause to be voted (including by proxy or written consent, if applicable) its then owned shares of Common Stock at any such meeting of the Company’s stockholders contemplated by this Agreement in accordance with the Section 6.3(a) . Kimmeridge further affirms that the irrevocable proxy set forth in this Section 6.3(b) is coupled with an interest and, except upon the occurrence of the Closing or termination in accordance with Section 8.1 , is intended to be irrevocable. +A-8 +(c) From and after the date hereof until the earlier of (i) the Closing Date and (ii) the termination of this Agreement in accordance with Section 8.1 , Kimmeridge agrees not to take, and shall cause its controlled Affiliates and representatives not to take, any other action that could reasonably be expected to impede, interfere with, delay, discourage, postpone or adversely affect the transactions contemplated by this Agreement. Any attempt to vote, consent or dissent with respect to (or otherwise to utilize the voting power of), the shares of Common Stock Beneficially Owned by Kimmeridge in contravention of Section 6.2 and this Section 6.3 shall be null and void ab initio . +Section 6.4 Tax Matters . The Company and Kimmeridge agree that the transactions contemplated by this Agreement are properly considered a “recapitalization” under Section 368(a)(1)(E) of the Internal Revenue Code of 1986, as amended. Each of the Company and Kimmeridge shall report the transactions contemplated herein consistent with this Section 6.4 and shall not take any position contrary on any tax return, audit, or otherwise except as clearly required by law; provided , that nothing in this Section 6.4 shall be interpreted to in any way hinder or prevent either Party’s ability to settle any audit, litigation, or other dispute with any taxing authority. +ARTICLE VII +SURVIVAL; INDEMNIFICATION +Section 7.1 Survival . The representations and warranties of the Company and Kimmeridge contained in this Agreement or in any certificate furnished hereunder shall survive Closing for a period of twelve (12) months following the Closing Date regardless of any investigation made by or on behalf of the Company or Kimmeridge, except (a) the representations and warranties of the Company set forth in Section 3.1 , and 3.2 , shall survive indefinitely and (b) the representations and warranties of Kimmeridge set forth in Section 4.1 , and 4.2 shall survive indefinitely. The covenants in this Agreement that are to be performed in whole or part from or after Closing shall survive the Closing until fully performed. +Section 7.2 Indemnification . +(a) The Company agrees to indemnify and hold harmless Kimmeridge, its affiliates, directors and officers, from and against any and all losses, claims, damages and liabilities (including, without limitation, reasonable legal fees and other expenses incurred in connection with any suit, action or proceeding or any claim asserted, as such fees and expenses are incurred), joint or several, that arise out of, or are based upon, any breach of its representations or covenants contained in this Agreement. +(b) Kimmeridge agrees to indemnify and hold harmless the Company, each of its respective directors and officers from and against any and all losses, claims, damages and liabilities (including, without limitation, reasonable legal fees and other expenses incurred in connection with any suit, action or proceeding or any claim asserted, as such fees and expenses are incurred), joint or several, that arise out of, or are based upon, any breach of Kimmeridge’s representations or covenants contained in this Agreement. +(c) If any suit, action, proceeding (including any governmental or regulatory investigation), claim or demand shall be brought or asserted against any person in respect of which indemnification may be sought pursuant to either paragraph (a) or (b) above, such person (the “ Indemnified Person ”) shall promptly notify the person against whom such indemnification may be sought (the “ Indemnifying Person ”) in writing; provided that the failure to notify the Indemnifying Person shall not relieve it from any liability that it may have under paragraph (a) or (b) above except to the extent that it has been materially prejudiced (through the forfeiture of substantive rights or defenses) by such failure; and provided , further , that the failure to notify the Indemnifying Person shall not relieve it from any liability that it may have to an Indemnified Person otherwise than under paragraph (a) or (b) above. If any such proceeding shall be brought or asserted against an Indemnified Person and it shall have notified the Indemnifying Person thereof, the Indemnifying Person shall retain counsel reasonably satisfactory to the Indemnified Person (who shall not, without the consent of the Indemnified Person, be counsel to the Indemnifying Person) to represent the Indemnified Person in such proceeding and shall pay the fees and expenses of such counsel related to such proceeding, as incurred. In any such proceeding, any Indemnified Person shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Person unless +A-9 +(i) the Indemnifying Person and the Indemnified Person shall have mutually agreed to the contrary; (ii) the Indemnifying Person has failed within a reasonable time to retain counsel reasonably satisfactory to the Indemnified Person; (iii) the Indemnified Person shall have reasonably concluded that there may be legal defenses available to it that are different from or in addition to those available to the Indemnifying Person; or (iv) the named parties in any such proceeding (including any impleaded parties) include both the Indemnifying Person and the Indemnified Person and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It is understood and agreed that the Indemnifying Person shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the fees and expenses of more than one separate firm (in addition to any local counsel) for all Indemnified Persons, and that all such fees and expenses shall be paid or reimbursed as they are incurred. Any such separate firm for Kimmeridge, its affiliates, directors and officers and any control persons of Kimmeridge shall be designated in writing by Kimmeridge and any such separate firm for the Company, its respective directors and officers and any control persons of the Company shall be designated in writing by the Company. The Indemnifying Person shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the Indemnifying Person agrees to indemnify each Indemnified Person from and against any loss or liability by reason of such settlement or judgment. Notwithstanding the foregoing sentence, if at any time an Indemnified Person shall have requested that an Indemnifying Person reimburse the Indemnified Person for fees and expenses of counsel as contemplated by this paragraph, the Indemnifying Person shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 30 days after receipt by the Indemnifying Person of such request and (ii) the Indemnifying Person shall not have reimbursed the Indemnified Person in accordance with such request prior to the date of such settlement. No Indemnifying Person shall, without the written consent of the Indemnified Person, effect any settlement of any pending or threatened proceeding in respect of which any Indemnified Person is or could have been a party and indemnification could have been sought hereunder by such Indemnified Person, unless such settlement (x) includes an unconditional release of such Indemnified Person, in form and substance reasonably satisfactory to such Indemnified Person, from all liability on claims that are the subject matter of such proceeding and (y) does not include any statement as to or any admission of fault, culpability or a failure to act by or on behalf of any Indemnified Person. +ARTICLE VIII +MISCELLANEOUS +Section 8.1 Termination . +(a) This Agreement may be terminated at any time prior to Closing as follows: +(i) by the Company and Kimmeridge upon the mutual written agreement to terminate the Agreement; +(ii) by the Company or Kimmeridge if the consummation of the Exchange has not occurred at or prior to 11:59 p.m. on December 31, 2021 (the “ Outside Date ”); +(iii) by the Company or Kimmeridge in the event of an order, judgment or decree delaying the consummation of the Exchange beyond the Outside Date; or +(iv) by Kimmeridge, if the Company has materially breached this Agreement, or by the Company, if Kimmeridge has materially breached this Agreement. +(b) In the event of any termination as provided in this Section 8.1 , this Agreement, solely as it relates to the agreements contained herein between Kimmeridge and the Company, shall immediately become void and of no further force or effect; provided , however , that the provisions of this Article VIII shall survive any such termination. Notwithstanding the foregoing, in no event shall any such termination pursuant to this Section 8.1 relieve Kimmeridge or the Company from: (i) liability for its breach or non-performance of its obligations under this Agreement before the date of such termination or (ii) any obligations under this Agreement which expressly survive any such termination hereunder. +A-10 +Section 8.2 Severability . The invalidity or unenforceability of any provision hereof will in no way affect the validity or enforceability of any other provision or the validity and enforceability of this Agreement in any other jurisdiction. +Section 8.3 Governing Law; Jurisdiction . This Agreement will in all respects be construed in accordance with and governed by the substantive laws of the State of New York, without reference to its choice of law rules. All actions or proceedings arising out of or relating to this Agreement will be heard and determined exclusively in any federal court of the United States of America sitting in the City of New York, Borough of Manhattan; provided , that if such federal court does not have jurisdiction over such action or proceeding, such action or proceeding will be heard and determined exclusively in any state court sitting in the City of New York, Borough of Manhattan. Consistent with the preceding sentence, the parties hereto hereby (i) submit to the exclusive jurisdiction of any federal or state court sitting in City of New York, Borough of Manhattan, for the purpose of any action or proceeding arising out of or relating to this Agreement brought by any party hereto and (ii) irrevocably waive, and agree not to assert by way of motion, defense, or otherwise, in any such action or proceeding, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that the action or proceeding is brought in an inconvenient forum, that the venue of the action or proceeding is improper, or that this Agreement or the transactions contemplated by this Agreement may not be enforced in or by any of the above-named courts. +Section 8.4 Waiver of Jury Trial . EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION. +Section 8.5 Headings . Section headings in this Agreement are included herein for convenience of reference only and will not constitute a part of, or affect the interpretation of, this Agreement. +Section 8.6 Certain Definitions . Capitalized terms in this Agreement shall have the meanings specified below, or as specified elsewhere in this Agreement, for all purposes hereof. The following terms, as used in this Agreement, shall have the meanings as set forth below: +(a) “ Affiliate ” means, with respect to a specified Person, any other Person, directly or indirectly Controlling or Controlled by or under direct or indirect common Control with such specified Person; provided , that the Company, Affiliates of the Company, and any portfolio company of Kimmeridge, or any Affiliates of any portfolio company of Kimmeridge (which are not otherwise Affiliates of Kimmeridge and would only be deemed Affiliates of Kimmeridge pursuant to their relationship with one or more portfolio companies of Kimmeridge) shall not be deemed an Affiliate of Kimmeridge, as applicable. +(b) “ Beneficially Own ” shall have the meaning assigned to such term in Rule 13d-3 under the Exchange Act, and any Person’s beneficial ownership of securities shall be calculated in accordance with the provisions of such Rule. +(c) “ Business Day ” means any day other than a day on which banks are permitted or required to be closed in New York City. +(d) “ Control ,” “ Controlling ” or “ Controlled ” means, as to a specified Person, the power to direct or cause the direction of the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise. +A-11 +(e) “ Lien ” means, except as otherwise specifically defined in this Agreement, any lien, pledge, mortgage, security interest, charge, option or other encumbrance of adverse claim of any kind. +(f) “ Officer ” means the President and Chief Executive Officer, the Chief Financial Officer, or any Senior Vice President of the Company. +(g) “ Person ” means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, limited liability company or government or other entity. +(h) “ Transfer ” means (a) any direct or indirect offer, sale, lease, assignment, encumbrance, loan, pledge, grant of a security interest, hypothecation, disposition or other similar transfer (by operation of law or otherwise), either voluntary or involuntary, or entry into any contract, option or other arrangement or understanding with respect to any offer, sale, lease, assignment, encumbrance, loan, pledge, hypothecation, disposition or other transfer (by operation of law or otherwise), of any shares of Common Stock owned by Kimmeridge (whether beneficially or of record), including in each case through the Transfer of any Person or any interest in any Person or (b) in respect of any capital stock or interest in any capital stock, to enter into any swap or any other agreement, transaction or series of transactions, other than as permitted by Section 6.2(b) , that results in an amount of Shares subject to Section 6.2 and 6.3 that is less than the amount of shares of Common Stock subject to Section 6.2 and 6.3 as of the date hereof. +Section 8.7 Counterparts . This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument, and either of the parties hereto may execute this Agreement by signing any such counterpart. A facsimile transmission of this Agreement bearing a signature on behalf of a party hereto shall be legal and binding on such party. +Section 8.8 Assignment; Binding Effect . Kimmeridge shall not convey, assign or otherwise transfer any of its rights or obligations under this Agreement without the express written consent of the Company, and the Company shall not convey, assign or otherwise transfer any of its rights and obligations under this Agreement without the express written consent of each Kimmeridge. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. +Section 8.9 Waiver; Remedies . No delay on the part of Kimmeridge or the Company in exercising any right, power or privilege under this Agreement shall operate as a waiver thereof, nor shall any waiver on the part of Kimmeridge or the Company of any right, power or privilege under this Agreement operate as a waiver of any other right, power or privilege of such party under this Agreement, nor shall any single or partial exercise of any right, power or privilege under this Agreement preclude any other or further exercise thereof or the exercise of any other right, power or privilege under this Agreement. +Section 8.10 Specific Performance . The parties hereto agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof and that the parties shall be entitled to an injunction or injunctions to prevent breaches of this agreement or to enforce specifically the performance of the terms and provisions hereof in addition to any other remedy to which they are entitled at law or in equity. +Section 8.11 Entire Agreement . This Agreement represent the entire agreement between the parties hereto with respect to the transactions contemplated hereby and supersedes all prior agreements and understandings (whether written or oral) between the parties hereto with respect to the subject matter hereof. +Section 8.12 Amendment . This Agreement may be modified or amended only by written agreement of each of the parties to this Agreement. +Section 8.13 Notice . Any notice or communications hereunder shall be in writing and will be deemed to have been given if delivered in person or by electronic transmission or by registered or certified first-class mail or +A-12 +courier service to the following addresses, or such other addresses as may be furnished hereafter by notice in writing: +if to the Company: +Callon Petroleum Company +One Briarlake Plaza +2000 W. Sam Houston Parkway S., Suite 2000 +Houston, Texas +Attention: Michol Ecklund, Senior Vice President, General Counsel and Corporate Secretary +Email: mecklund@callon.com +legal@callon.com +with a copy to, which shall not constitute notice to the Company: +Kirkland & Ellis LLP +609 Main St +Houston, TX 77002 +Attention: Sean T. Wheeler +Michael W. Rigdon +Email: sean.wheeler@kirkland.com +michael.rigdon@kirkland.com +if to Kimmeridge: +c/o Kimmeridge Energy Management Company +412 West 15th Street, 11th Floor +New York, New York 10011 +Attention: Tamar Goldstein +Email: tamar.goldstein@kimmeridge.com +With a copy to (which shall not constitute notice): +c/o Sidley Austin LLP +1000 Louisiana Street, Suite 5900 +Houston, TX 77002 +Attention: Irving L. Rotter +George J. Vlahakos +Email: irotter@sidley.com +gvlahakos@sidley.com +Section 8.14 Expenses . If, prior to the consummation of the Exchange, this Agreement is terminated in accordance with Section 8.1 , all costs and expenses incurred by Kimmeridge in connection with, or in anticipation of, this Agreement and the transactions contemplated hereby shall be paid by the Company within fifteen (15) Business Days after the Company’s receipt of the applicable invoice. For the avoidance of doubt, in the event that the Exchange is consummated, all costs and expenses incurred by Kimmeridge in connection with, or in anticipation of, this Agreement and the transactions contemplated hereby shall be borne by Kimmeridge. +[ Signature pages follow ] +A-13 +IN WITNESS WHEREOF , the parties hereto have caused this Agreement to be executed by their respective duly authorized officers, as of the date first above written. +COMPANY : +CALLON PETROLEUM COMPANY +By: /s/ Joseph C. Gatto, Jr. +Name: Joseph C. Gatto, Jr. +Title: President & CEO +KIMMERIDGE : +CHAMBERS INVESTMENTS, LLC +By: /s/ Noam Lockshin +Noam Lockshin +Manager +A-14 +Schedule I +Holder Name +Aggregate Principal Amount of 2025 Notes for DWAC Withdrawal +CUSIP/ISIN Numbers: +13123X BB7 / U1303X AF3 +Aggregate Number of Shares of New Common Stock to be Issued +Holder EIN +Business Address +Chambers Investments, LLC +$197,000,000 +5,512,623 +85-3027096 +412 West 15th Street, 11th Floor +New York, New York 10011 +Schedule I to Exchange Agreement +Exhibit A +Form of Registration Rights Agreement +[See attached] +Exhibit A to Exchange Agreement +Exhibit Version +REGISTRATION RIGHTS AGREEMENT +BY AND BETWEEN +CALLON PETROLEUM COMPANY +AND +CHAMBERS INVESTMENTS, LLC +This REGISTRATION RIGHTS AGREEMENT (this “ Agreement ”) is made and entered into as of [●], by and among Callon Petroleum Company, a Delaware corporation (the “ Company ”), and Chambers Investments, LLC, and the entities affiliated therewith (“ Kimmeridge ”). +WHEREAS, this Agreement is entered into in connection with the Company’s issuance of shares of common stock, par value $0.01, of the Company (the “ Common Stock ”) in exchange for the Company’s 9.0% Second Lien Senior Secured Notes due 2025 pursuant to that certain Exchange Agreement (the “ Exchange Agreement ”), dated as of August 3, 2021, by and between the Company and Kimmeridge; and +WHEREAS, the Company has agreed to provide the registration and other rights set forth in this Agreement for the benefit of Kimmeridge pursuant to the Exchange Agreement; and +WHEREAS, it is a condition to the obligations of Kimmeridge under the Exchange Agreement that this Agreement be executed and delivered. +NOW THEREFORE, in consideration of the mutual covenants and agreements set forth herein and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by each party hereto, the parties hereby agree as follows: +ARTICLE I +DEFINITIONS +Section 1.01 Definitions . The terms set forth below are used herein as so defined: +“ Affiliate ” shall have the meaning ascribed to it, on the date hereof, in Rule 405 under the Securities Act. +“ Agreement ” has the meaning specified therefor in the introductory paragraph of this Agreement. +“ Board ” means the Board of Directors of the Company. +“ Beneficially Own ” shall have the meaning assigned to such term in Rule 13d-3 under the Exchange Act, and any Person’s beneficial ownership of securities shall be calculated in accordance with the provisions of such Rule. +“ Business Day ” means any day other than a Saturday, Sunday, any federal legal holiday or day on which banking institutions in the State of New York or State of Texas are authorized or required by law or other governmental action to close. +“ Closing Date ” means the date of consummation of the transactions contemplated by the Exchange Agreement. +EX A-1 +“ Common Stock ” means the shares of common stock, par value $0.01 per share, of the Company. +“ Common Stock Price ” means the volume weighted average closing price of the Common Stock (as reported by the NYSE or, if the NYSE is not the Company’s primary securities exchange or market, such primary securities exchange or market) for the twenty (20) trading days immediately preceding the date on which the determination is made (or, if such price is not available, as determined in good faith by the Board). +“ Company ” has the meaning specified therefor in the introductory paragraph of this Agreement. +“ Control ” means the possession, directly or indirectly, of the power to direct, or cause the direction of, the management and policies of a Person whether though the ownership of voting securities, by contract or otherwise. The terms “ Controlled ” and “ Controlling ” shall have correlative meanings. +“ Effective Date ” means, with respect to a particular Shelf Registration Statement, the date of effectiveness of such Shelf Registration Statement. +“ Effectiveness Period ” means the period beginning on the Effective Date for the Registration Statement and ending at the time all Registrable Securities covered by such Registration Statement have ceased to be Registrable Securities. +“ Exchange Act ” means the Securities Exchange Act of 1934, as amended and the rules and regulations of the SEC promulgated thereunder. +“ Exchange Agreement ” has the meaning specified therefor in the recitals of this Agreement. +“ Existing Registration Rights Agreement ” means the registration rights agreement, dated as of September 30, 2020, by and between the Company and Kimmeridge. +“ Freely Tradable ” means, with respect to any security, that such security, when held by the holder thereof, is no longer subject to the restrictions on trading under the provisions of Rule 144 under the Securities Act (or any successor rule or regulation to Rule 144 then in force), including volume and manner of sale restrictions, and the current public information requirement of Rule 144(e) (or any successor rule or regulation to Rule 144 then in force) no longer applies; provided that if a Holder Beneficially Owns 10% or more of the Company’s then outstanding Common Stock, then such Holder’s Common Stock shall be deemed not to be Freely Tradable for so long as such Holder Beneficially Owns 10% or more of the Company’s outstanding Common Stock. +“ Governmental Authority ” means any federal, state, local or foreign government, or other governmental, regulatory or administrative authority, agency or commission or any court, tribunal, or judicial or arbitral body. +“ Holder ” means the holder of any Registrable Securities. +“ Included Registrable Securities ” has the meaning specified therefor in Section 2.02(a) of this Agreement. +“ Kimmeridge ” has the meaning specified therefor in the introductory paragraph of this Agreement. +“ Law ” means any statute, law, ordinance, regulation, rule, order, code, governmental restriction, decree, injunction or other requirement of law, or any judicial or administrative interpretation thereof, of any Governmental Authority. +“ Losses ” has the meaning specified therefor in Section 2.08(a) of this Agreement. +“ Managing Underwriter ” means, with respect to any Underwritten Offering, the book-running lead manager of such Underwritten Offering. +EX A-2 +“ Notes ” has the meaning specified therefor in the introductory paragraph of this Agreement. +“ NYSE ” means The New York Stock Exchange, Inc. +“ Opt-Out Notice ” has the meaning specified therefor in Section 2.02(a) of this Agreement. +“ Person ” means an individual or a corporation, limited liability company, joint venture, trust, unincorporated organization, association, government agency or political subdivision thereof or other entity. +“ Purchase Agreement ” means that certain purchase agreement, dated as of September 30, 2020, by and among the Company, Kimmeridge and the other parties thereto, which provided for the issuance and sale of the Company’s 9.00% Second Lien Senior Secured Notes due 2025 and the Warrants to Kimmeridge. +“ Registrable Securities ” means the Common Stock issued to the Holder pursuant to the Exchange Agreement and any securities issued or then issuable upon the exercise of the Warrants or any stock split, dividend or other distribution, recapitalization or similar event with respect thereto. +“ Registrable Securities Amount ” means the calculation based on the product of the Common Stock Price times the number of applicable Registrable Securities. +“ Registration Expenses ” has the meaning specified therefor in Section 2.07(b) of this Agreement. +“ Registration Statement ” has the meaning specified therefor in Section 2.01 of this Agreement. +“ Required Holders ” means initially, Kimmeridge, and subsequent to a transfer by Kimmeridge of the Registrable Securities, the Holder or collective Holders of greater than 50% of the Registrable Securities. +“ Rule 405 ” means Rule 405 under the Securities Act (or any successor or similar provision adopted by the SEC then in effect). +“ SEC ” means the U.S. Securities and Exchange Commission. +“ Securities Act ” means the Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder. +“ Selling Expenses ” has the meaning specified therefor in Section 2.07(b) of this Agreement. +“ Selling Holder ” means a Holder who is selling Registrable Securities under a Registration Statement pursuant to the terms of this Agreement. +“ Selling Holder Indemnified Persons ” has the meaning specified therefor in Section 2.08(a) of this Agreement. +“ Shelf Registration Statement ” means a registration statement under the Securities Act to permit the public resale of the Registrable Securities from time to time as permitted by Rule 415 under the Securities Act (or any successor or similar provision adopted by the SEC then in effect). +“ Underwritten Offering ” means an offering (including an offering pursuant to a Shelf Registration Statement) in which Registrable Securities are sold to one or more underwriters on a firm commitment basis for reoffering to the public or an offering that is a “bought deal” with one or more investment banks. +“ Warrants ” means the Series B warrants issued by the Company pursuant to the Purchase Agreement. +“ WKSI ” means a “well known seasoned issuer” as defined under Rule 405. +EX A-3 +Section 1.02 Registrable Securities . Any Registrable Security shall cease to be a Registrable Security at the earliest of the following: (a) when a registration statement covering such Registrable Security becomes or has been declared effective by the SEC and such Registrable Security has been sold or disposed of pursuant to such effective registration statement; (b) when such Registrable Security has been sold or disposed of (excluding transfers or assignments by a Holder to an Affiliate) pursuant to Rule 144 under the Securities Act (or any successor or similar provision adopted by the SEC then in effect) under circumstances in which all of the applicable conditions of Rule 144 (as then in effect) are met; (c) when such Registrable Security is held by the Company or one of its Affiliates; or (d) when such Registrable Security has been sold or disposed of in a private transaction in which the transferor’s rights under this Agreement are not assigned to the transferee of such securities pursuant to Section 2.10 hereof. In addition, any Registrable Security will cease to be a Registrable Security upon the date that such security is Freely Tradeable; provided that, for the avoidance of doubt, Common Stock that is not a Registrable Security because it is Freely Tradable will become a Registrable Security to the extent it is subsequently not Freely Tradable. +ARTICLE II +REGISTRATION RIGHTS +Section 2.01 Shelf Registration . +(a) Shelf Registration . Within three Business Days of the Closing Date, the Company shall prepare and file a Shelf Registration Statement with the SEC to permit the public resale of all Registrable Securities on the terms and conditions specified in this Section 2.01 (a “Registration Statement”). The Registration Statement filed with the SEC pursuant to this Section 2.01 shall be on Form S-3 and, if the Company is a WKSI as of the filing date thereof, shall be an Automatic Shelf Registration Statement or, if Form S-3 is not then available to the Company, on Form S-1 or such other form of registration statement as is then available to effect a registration for resale of the Registrable Securities, covering the Registrable Securities, and shall contain a prospectus in such form as to permit any Selling Holder covered by such Registration Statement to sell such Registrable Securities pursuant to Rule 415 under the Securities Act (or any successor or similar provision adopted by the SEC then in effect) at any time beginning on the Effective Date for such Registration Statement. The Company shall use its reasonable best efforts to cause a Registration Statement filed pursuant to this Section 2.01 to be declared effective as soon as reasonably practicable thereafter. During the Effectiveness Period, the Company shall use its reasonable best efforts to cause a Registration Statement filed pursuant to this Section 2.01 to remain effective, and to be supplemented and amended to the extent necessary to ensure that such Registration Statement is available or, if not available, that another registration statement is available for the resale of the Registrable Securities until all Registrable Securities have ceased to be Registrable Securities; provided , that the Company shall not be required to supplement or amend such Registration Statement more than once in any calendar quarterly period to name additional parties as the result of any transfer of registration rights. The Company shall prepare and file a supplemental listing application with the NYSE (or such other national securities exchange on which the Registrable Securities are then listed and traded) to list the Registrable Securities covered by a Registration Statement and shall use its reasonable best efforts to have such Registrable Securities approved for listing on the NYSE (or such other national securities exchange on which the Registrable Securities are then listed and traded) by the Effective Date of such Registration Statement, subject only to official notice of issuance. As soon as practicable following the Effective Date of a Registration Statement, but in any event within three Business Days of such date, the Company shall notify the Required Holders of the effectiveness of such Registration Statement. When effective, a Registration Statement (including the documents incorporated therein by reference) will comply as to form in all material respects with all applicable requirements of the Securities Act and the Exchange Act and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading (in the case of any prospectus contained in such Registration Statement, in the light of the circumstances under which a statement is made). +(b) Delay Rights . Notwithstanding anything to the contrary contained herein, the Company may, upon written notice to (i) the Holders, delay the filing of a Registration Statement required under Section 2.01, or (ii) any Selling Holder whose Registrable Securities are included in a Registration Statement or other registration statement contemplated by this Agreement, suspend such Selling Holder’s use of any prospectus that is a part of +EX A-4 +such Registration Statement or other registration statement (in which event the Selling Holder shall discontinue sales of the Registrable Securities pursuant to such Registration Statement or other registration statement contemplated by this Agreement but may settle any previously made sales of Registrable Securities) if the Company (x) is pursuing an acquisition, merger, tender offer, reorganization, disposition or other similar transaction and the Board determines reasonably and in good faith that (A) the Company’s ability to pursue or consummate such a transaction would be materially adversely affected by any required disclosure of such transaction in such Registration Statement or other registration statement or (B) such transaction renders the Company unable to comply with SEC requirements, in each case under circumstances that would make it impractical or inadvisable to cause the Registration Statement (or such filings) to become effective or to promptly amend or supplement the Registration Statement or other registration statement contemplated by this Agreement on a post effective basis, as applicable, or (y) has experienced some other material non-public event the disclosure of which at such time, in the reasonable and good faith judgment of the Board, would materially adversely affect the Company; provided , however , that in no event shall the Selling Holders be suspended from selling Registrable Securities pursuant to such Registration Statement for a period that exceeds an aggregate of 60 days in any 180-day period or 105 days in any 365-day period. Upon disclosure of such information or the termination of the condition described above, the Company shall provide prompt notice, but in any event within one Business Day of such disclosure or termination, to the Selling Holders whose Registrable Securities are included in such Registration Statement and shall promptly terminate any suspension of sales it has put into effect and shall take such other reasonable actions to permit registered sales of Registrable Securities as contemplated in this Agreement. +Section 2.02 Piggyback Rights . +(a) Participation . So long as a Holder has Registrable Securities, if the Company proposes to file (i) a shelf registration statement other than a Registration Statement contemplated by Section 2.01 and other than a registration statement on Forms S-4 or S-8 and any successor forms, (ii) a prospectus supplement to an effective shelf registration statement relating to the sale of equity securities of the Company, other than a Registration Statement contemplated by Section 2.01 and Holders may be included without the filing of a post-effective amendment thereto, or (iii) a registration statement, other than a shelf registration statement, and other than a registration statement on Forms S-4 or S-8 and any successor forms, in each case, for the sale of Common Stock in an Underwritten Offering for its own account or that of another Person, or both, then the Company shall give prompt written notice of its intention to effect such registration at least five Business Days before the proposed date of filing of the applicable Registration Statement or prospectus supplement, or at least two Business Days in connection with any overnight or bought Underwritten Offering, to the Holders and such notice shall (A) describe the intended method(s) of distribution, and the name of the proposed Managing Underwriter or Underwriters, if any, in such offering and (B) offer the Holders the opportunity to include in such registration statement, prospectus supplement or Underwritten Offering, as the case may be, such number of Registrable Securities (the “ Included Registrable Securities ”) as the Holders may request in writing (such request may include the Registrable Securities to be included on behalf of any other Holder, as specified by the Holders); provided, however , that if the Company has been advised by the Managing Underwriter of any such Underwritten Offering that the inclusion of all Registrable Securities that the Selling Holders intend to include in such offering exceeds the number that can be sold in such offering without being likely to have an adverse effect on the price, timing or distribution of the Common Stock in the Underwritten Offering, then (x) if no Registrable Securities can be included in the Underwritten Offering in the opinion of the Managing Underwriter without having such adverse effect, the Company shall not be required to offer such opportunity to the Holders or (y) if any Registrable Securities can be included in the Underwritten Offering in the opinion of the Managing Underwriter without having such adverse effect, then the amount of Registrable Securities to be offered for the accounts of Holders shall be determined based on the provisions of Section 2.02(b) or in such other manner as such Selling Holders may agree. Any notice required to be provided in this Section 2.02(a) to the Holders shall be provided on a Business Day and receipt of such notice shall be confirmed by the Holders. Holders shall then have two Business Days (or one Business Day in connection with any overnight or bought Underwritten Offering) after notice has been delivered to request in writing the inclusion of Registrable Securities in the Underwritten Offering. If no written request for inclusion from Holders is received within the specified time, each such Holder shall have no further right to participate in such Underwritten Offering. If, at any time after giving written notice of its intention to undertake an Underwritten Offering and prior to the closing of such Underwritten Offering, the Company shall determine for any reason not to undertake or to delay such Underwritten Offering, the +EX A-5 +Company may, at its election, give written notice of such determination to the Selling Holders and, (1) in the case of a determination not to undertake such Underwritten Offering, shall be relieved of its obligation to sell any Included Registrable Securities in connection with such terminated Underwritten Offering, and (2) in the case of a determination to delay such Underwritten Offering, shall be permitted to delay offering any Included Registrable Securities as part of such Underwritten Offering for the same period as the delay in the Underwritten Offering. Any Selling Holder shall have the right to withdraw such Selling Holder’s request for inclusion of such Selling Holder’s Registrable Securities in such Underwritten Offering by giving written notice to the Company of such withdrawal at least one Business Day before the time of pricing of such Underwritten Offering. Holders may deliver written notice (an “ Opt-Out Notice ”) to the Company requesting that such Holder not receive notice from the Company of any proposed Underwritten Offering; provided , however , that such Holder may later revoke any such Opt-Out Notice in writing prior to five Business Day before the time of pricing of such underwritten offering. Following receipt of an Opt-Out Notice from a Holder (unless subsequently revoked), the Company shall not be required to deliver any notice to such Holder pursuant to this Section 2.02(a) and such Holder (unless such Holder’s Opt-Out Notice is subsequently revoked) shall no longer be entitled to participate in Underwritten Offerings by the Company pursuant to this Section 2.02(a) . +(b) Priority . If the Managing Underwriter of any proposed Underwritten Offering of Common Stock involving Included Registrable Securities pursuant to this Section 2.02 advises the Company that the total amount of Common Stock that the Selling Holders and any other Persons intend to include in such offering exceeds the number of shares of Common Stock that can be sold in such offering without being likely to have an adverse effect on the price, timing or distribution of the Common Stock offered or the market for the Common Stock, then the Common Stock to be included in such Underwritten Offering shall include the number of Registrable Securities that such Managing Underwriter advises the Company can be sold without having such adverse effect, with such number to be allocated (i) first, to the Company or other party or parties requesting or initiating such registration, (ii) second, by the Selling Holders who have requested participation in such Underwritten Offering, allocated among such Selling Holders pro rata on the basis of the number of Registrable Securities held by each Selling Holder or in such manner as they may agree and (iii) third, by the other holders of Common Stock (other than Holders) with registration rights entitling them to participate in such Underwritten Offering, allocated among such other holders pro rata on the basis of the number of shares of Common Stock held by each applicable other holder or in such manner as they may agree. +Section 2.03 Underwritten Offering s. +(a) Demand Offering . In the event that any Holder elects to dispose of Registrable Securities under a Registration Statement pursuant to an Underwritten Offering and reasonably expects gross proceeds of at least $25 million from such Underwritten Offering (together with any Registrable Securities to be disposed of by a Selling Holder who has elected to participate in such Underwritten Offering pursuant to Section 2.02 ), the Company shall, at the written request of such Selling Holder(s), enter into an underwriting agreement in a form as is customary in Underwritten Offerings of securities by the Company with the Managing Underwriter or Underwriters selected by the Company (subject to the written consent of the Initiating Holder of such Underwritten Offering, which consent shall not be unreasonably withheld), which shall include, among other provisions, indemnities to the effect and to the extent provided in Section 2.08 , and shall take all such other reasonable actions as are requested by the Managing Underwriter or Underwriters in order to expedite or facilitate the disposition of such Registrable Securities; provided , however , that the Company shall have no obligation to facilitate or participate in, including entering into any underwriting agreement for more than two Underwritten Offerings at the request of the Holders hereunder; provided , further , that if the Company is conducting or actively pursuing a securities offering of Common Stock with anticipated gross offering proceeds of at least $25 million (other than in connection with any at-the-market offering or similar continuous offering program), then the Company may suspend such Selling Holders’ rights to require the Company to conduct an Underwritten Offering pursuant to this Section 2.03 ; provided , however , that the Company may only suspend such Selling Holders’ rights to require the Company to conduct an Underwritten Offering pursuant to this Section 2.03 once in any six-month period and in no event for a period that exceeds an aggregate of 75 days in any 180-day period or 105 days in any 365-day period. +EX A-6 +(b) General Procedures . In connection with any Underwritten Offering contemplated by Section 2.03(a) , the underwriting agreement into which each Selling Holder and the Company shall enter shall contain such representations, covenants, indemnities (subject to Section 2.08 ) and other rights and obligations as are customary in Underwritten Offerings of securities by the Company. No Selling Holder shall be required to make any representations or warranties to, or agreements with, the Company or the Underwriters other than representations, warranties or agreements regarding (i) such Holder’s ownership of its Registrable Securities to be sold or transferred, (ii) such Selling Holder’s authority to enter into such underwriting agreement and to sell or transfer such securities, (iii) its intended method of distribution and (iv) any other such matters or representations pertaining to compliance with securities laws as may be reasonably requested. If any Selling Holder disapproves of the terms of an Underwritten Offering contemplated by this Section 2.03 , such Selling Holder may elect to withdraw therefrom by notice to the Company and the Managing Underwriter; provided , however , that such withdrawal must be made at least one Business Day prior to the time of pricing of such Underwritten Offering to be effective; provided , further , that in the event the Managing Underwriter or Underwriters of any proposed Underwritten Offering advise the Company that the total amount of Registrable Securities that Holders intend to include in such offering exceeds the number that can be sold in such offering without being likely to have an adverse effect on the price, timing or distribution of the Registrable Securities offered or the market for the Common Stock, and the amount of Registrable Securities requested to be included in such Underwritten Offering by the Holder that initiated such Underwritten Offering pursuant to Section 2.03(a) (the “ Initiating Holder ”) is reduced by 50% or more, the Initiating Holder will have the right to withdraw from such Underwritten Offering by delivering notice to the Company at least one Business Day prior to the time of pricing of such Underwritten Offering. If, pursuant to the preceding sentence, the entire Demand Registration Request is revoked, then, at the option of the Holder or Holders who revoke such request, either (i) such Holder or Holders shall reimburse the Company for all of its reasonable and documented incremental out-of-pocket expenses incurred in the preparation, filing and processing of the Registration Statement or prospectus supplement with respect to such requested Underwritten Offering, which incremental out-of-pocket expenses, for the avoidance of doubt, shall not include overhead expenses and which requested Underwritten Offering, whether or not completed, will not decrease the number of Underwritten Offerings the Holders shall have the right and option to request under this Section 2.03 . +(c) Priority . If the Managing Underwriter of any proposed Underwritten Offering of Registrable Securities pursuant to this Section 2.03 advises the Company that the total amount of Common Stock that the Selling Holders and any other Persons intend to include in such offering exceeds the number of shares of Common Stock that can be sold in such offering without being likely to have an adverse effect on the price, timing or distribution of the Common Stock offered or the market for the Common Stock, then the Common Stock to be included in such Underwritten Offering shall include the number of Registrable Securities that such Managing Underwriter advises the Company can be sold without having such adverse effect, with such number to be allocated (i) first, to the Selling Holder who requested such Underwritten Offering, (ii) second, to any other Holders of Registrable Securities who have elected to participate in such Underwritten Offering, allocated among such other Selling Holders pro rata on the basis of the number of Registrable Securities held by each such Selling Holder or in such other manner as such Selling Holders may agree, and (iii) third, to the Company. +Section 2.04 Sale Procedures . In connection with its obligations under this Article II , the Company shall, as expeditiously as possible: +(a) use its reasonable best efforts to prepare and file with the SEC such amendments and supplements to a Registration Statement and the prospectus used in connection therewith as may be necessary to keep such Registration Statement effective for the Effectiveness Period and as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all Registrable Securities covered by such Registration Statement; +(b) if a prospectus supplement will be used in connection with the marketing of an Underwritten Offering from a Registration Statement and the Managing Underwriter at any time shall notify the Company in writing that, in the sole judgment of such Managing Underwriter, inclusion of detailed information to be used in such prospectus supplement is of material importance to the success of the Underwritten Offering of such +EX A-7 +Registrable Securities, the Company shall use its reasonable best efforts to include such information in such prospectus supplement; +(c) furnish to each Selling Holder (i) as far in advance as reasonably practicable before filing a Registration Statement or any other registration statement contemplated by this Agreement or any supplement or amendment thereto, upon request, copies of reasonably complete drafts of all such documents proposed to be filed (including exhibits and each document incorporated by reference therein to the extent then required by the rules and regulations of the SEC other than annual or quarterly reports on Form 10-K or 10-Q, respectively, current reports on Form 8-K or proxy statements; provided , however , that such reports or proxy statements shall be provided at least two Business Days prior to filing in connection with any Underwritten Offering), and provide each such Selling Holder the opportunity to object to any information pertaining to such Selling Holder and its plan of distribution that is contained therein and make the corrections reasonably requested by such Selling Holder with respect to such information prior to filing a Registration Statement or such other registration statement or supplement or amendment thereto, and (ii) such number of copies of such Registration Statement or such other registration statement and the prospectus included therein and any supplements and amendments thereto as such Selling Holder may reasonably request in order to facilitate the public sale or other disposition of the Registrable Securities covered by such Registration Statement or other registration statement; +(d) if applicable, use its reasonable best efforts to register or qualify the Registrable Securities covered by a Registration Statement or any other registration statement contemplated by this Agreement under the securities or blue sky laws of such jurisdictions as the Selling Holders or, in the case of an Underwritten Offering, the Managing Underwriter, shall reasonably request; provided, however , that the Company shall not be required to qualify generally to transact business in any jurisdiction where it is not then required to so qualify or to take any action that would subject it to general service of process in any such jurisdiction where it is not then so subject; +(e) promptly notify each Selling Holder, at any time when a prospectus relating thereto is required to be delivered by any of them under the Securities Act, of (i) the filing of a Registration Statement or any other registration statement contemplated by this Agreement or any prospectus or prospectus supplement to be used in connection therewith, or any amendment or supplement thereto, and, with respect to such Registration Statement or any other registration statement or any post-effective amendment thereto, when the same has become effective; and (ii) the receipt of any written comments from the SEC with respect to any filing referred to in clause (i) and any written request by the SEC for amendments or supplements to such Registration Statement or any other registration statement or any prospectus or prospectus supplement thereto; +(f) promptly notify each Selling Holder, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of (i) the happening of any event as a result of which the prospectus or prospectus supplement contained in a Registration Statement or any other registration statement contemplated by this Agreement, as then in effect, includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading (in the case of any prospectus contained therein, in the light of the circumstances under which a statement is made); (ii) the issuance or express threat of issuance by the SEC of any stop order suspending the effectiveness of such Registration Statement or any other registration statement contemplated by this Agreement, or the initiation of any proceedings for that purpose; or (iii) the receipt by the Company of any notification with respect to the suspension of the qualification of any Registrable Securities for sale under the applicable securities or blue sky laws of any jurisdiction. Following the provision of such notice, the Company agrees to as promptly as practicable amend or supplement the prospectus or prospectus supplement or take other appropriate action so that the prospectus or prospectus supplement does not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing and to take such other commercially reasonable action as is necessary to remove a stop order, suspension, threat thereof or proceedings related thereto; +(g) upon request and subject to appropriate confidentiality obligations, furnish to each Selling Holder copies of any and all transmittal letters or other correspondence with the SEC or any other governmental agency or +EX A-8 +self-regulatory body or other body having jurisdiction (including any domestic or foreign securities exchange) relating to such offering of Registrable Securities; +(h) in the case of an Underwritten Offering, use its reasonable best efforts to furnish to the underwriters upon request, (i) an opinion of counsel for the Company dated the date of the closing under the underwriting agreement and (ii) a “cold comfort” letter, dated the pricing date of such Underwritten Offering and a letter of like kind dated the date of the closing under the underwriting agreement, in each case, signed by the independent public accountants who have certified the Company’s financial statements included or incorporated by reference into the applicable registration statement, and each of the opinion and the “cold comfort” letter shall be in customary form and covering substantially the same matters with respect to such registration statement (and the prospectus and any prospectus supplement included therein) as have been customarily covered in opinions of issuer’s counsel and in accountants’ letters delivered to the underwriters in Underwritten Offerings of securities by the Company and such other matters as such underwriters and Selling Holders may reasonably request; +(i) otherwise use its reasonable best efforts to comply with all applicable rules and regulations of the SEC, and make available to its security holders (which may be satisfied by making such information available on the SEC’s Electronic Data Gathering, Analysis and Retrieval system or any successor system known as “ EDGAR ”), as soon as reasonably practicable, an earnings statement, covering a period of twelve months beginning within three months after the Effective Date of such Registration Statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 promulgated thereunder; +(j) make available to the appropriate representatives of the Managing Underwriter and Selling Holders access to such information and Company personnel as is reasonable and customary to enable such parties to establish a due diligence defense under the Securities Act; provided , that the Company need not disclose any non-public information to any such representative unless and until such representative has entered into a confidentiality agreement with the Company; +(k) use its reasonable best efforts to cause all such Registrable Securities registered pursuant to this Agreement to be listed on each securities exchange or nationally recognized quotation system on which the Common Stock are then listed or quoted; +(l) use its reasonable best efforts to cause the Registrable Securities to be registered with or approved by such other governmental agencies or authorities as may be necessary by virtue of the business and operations of the Company to enable the Selling Holders to consummate the disposition of such Registrable Securities; +(m) provide a transfer agent and registrar for all Registrable Securities covered by such registration statement not later than the Effective Date of such registration statement; +(n) enter into customary agreements and take such other actions as are reasonably requested by the Selling Holders or the underwriters, if any, in order to expedite or facilitate the disposition of such Registrable Securities (including, in the case of an Underwritten Offering of $50 million or greater of Registrable Securities (calculated based on the Registrable Securities Amount), making appropriate officers of the Company available to participate in any “road show” presentations before analysts, and other customary marketing activities (including one-on-one meetings with prospective purchasers of the Registrable Securities)); provided , however , that the officers of the Company shall not be required to dedicate an unreasonably burdensome amount of time in connection with activities for any Underwritten Offering; +(o) if requested by a Selling Holder, (i) as soon as practicable incorporate in a prospectus supplement or post-effective amendment such information as such Selling Holder reasonably requests to be included therein relating to the sale and distribution of Registrable Securities, including information with respect to the number of Registrable Securities being offered or sold, the purchase price being paid therefor and any other terms of the offering of the Registrable Securities to be sold in such offering, and (ii) as soon as practicable make all required filings of such prospectus supplement or post-effective amendment after being notified of the matters to be incorporated in such prospectus supplement or post-effective amendment; and +EX A-9 +(p) if reasonably required by the Company’s transfer agent, use commercially reasonably efforts to promptly deliver any authorizations, certificates and directions required by the transfer agent which authorize and direct the transfer agent to transfer such Registrable Securities without legend, in accordance with applicable law, upon sale by the Holder of such Registrable Securities under the Registration Statement. +Notwithstanding anything to the contrary in this Section 2.04 , the Company shall not name a Holder as an underwriter (as defined in Section 2(a)(11) of the Securities Act) in any Registration Statement without such Holder’s consent. +Each Selling Holder, upon receipt of notice from the Company of the happening of any event of the kind described in Section 2.04(f) , shall forthwith discontinue offers and sales of the Registrable Securities by means of a prospectus or prospectus supplement until such Selling Holder’s receipt of the copies of the supplemented or amended prospectus contemplated by Section 2.04(f) or until it is advised in writing by the Company that the use of the prospectus may be resumed and has received copies of any additional or supplemental filings incorporated by reference in the prospectus, and, if so directed by the Company, such Selling Holder shall, or shall request the Managing Underwriter, if any, to deliver to the Company (at the Company’s expense) all copies in their possession or control, other than permanent file copies then in such Selling Holder’s possession, of the prospectus covering such Registrable Securities current at the time of receipt of such notice. +Section 2.05 Cooperation by Holders . The Company shall have no obligation to include Registrable Securities of a Holder in a Registration Statement or in an Underwritten Offering pursuant to Section 2.02(a) or Section 2.03(a) who has failed to timely furnish after receipt of a written request from the Company such information that the Company determines, after consultation with its counsel, is reasonably required in order for the registration statement or prospectus supplement, as applicable, to comply with the Securities Act. +Section 2.06 Restrictions on Public Sale by Holders of Registrable Securities . To the extent requested by the Managing Underwriter, each Holder of Registrable Securities that participates in an Underwritten Offering will enter into a customary letter agreement with underwriters providing such Holder will not effect any public sale or distribution of Registrable Securities during the 60 calendar-day period beginning on the date of a prospectus or prospectus supplement filed with the SEC with respect to the pricing of such Underwritten Offering, provided that, notwithstanding the foregoing, (i) the duration of the foregoing restrictions shall be no longer than the duration of the shortest restriction imposed by the Underwriters on the Company or the officers, directors or any other Affiliate of the Company on whom a restriction is imposed and (ii) that the restrictions set forth in this Section 2.06 shall not apply to any Registrable Securities that are included in such Underwritten Offering by such Holder. In addition, this Section 2.06 shall not apply to any Holder that is not entitled to participate in such Underwritten Offering, whether because such Holder delivered an Opt-Out Notice prior to receiving notice of the Underwritten Offering or because the Registrable Securities held by such Holder may be disposed of without restriction pursuant to Rule 144 under the Securities Act (or any successor or similar provision adopted by the SEC then in effect). +Section 2.07 Expenses . +(a) Expenses . The Company shall pay all reasonable Registration Expenses as determined reasonably and in good faith by the Board, including, in the case of an Underwritten Offering, the Registration Expenses of an Underwritten Offering, regardless of whether any sale is made pursuant to such Underwritten Offering. Each Selling Holder shall pay its pro rata share of all Selling Expenses in connection with any sale of its Registrable Securities hereunder. For the avoidance of doubt, each Selling Holder’s pro rata allocation of Selling Expenses shall be the percentage derived by dividing (i) the number of Registrable Securities sold by such Selling Holder in connection with such sale by (ii) the aggregate number of Registrable Securities sold by all Selling Holders in connection with such sale. In addition, except as otherwise provided in Sections 2.07 and 2.08 hereof, the Company shall not be responsible for legal fees incurred by Holders in connection with the exercise of such Holders’ rights hereunder. +(b) Certain Definitions . “ Registration Expenses ” means all expenses incident to the Company’s performance under or compliance with this Agreement to effect the registration of Registrable Securities on a +EX A-10 +Registration Statement pursuant to Section 2.01 or an Underwritten Offering covered under this Agreement, and the disposition of such Registrable Securities, including, without limitation, all registration, filing, securities exchange listing and NYSE fees, all registration, filing, qualification and other fees and expenses of complying with securities or blue sky laws, fees of the Financial Industry Regulatory Authority, Inc., fees of transfer agents and registrars, all word processing, duplicating and printing expenses, any transfer taxes, and the fees and disbursements of counsel and independent public accountants for the Company, including the expenses of any special audits or “cold comfort” letters required by or incident to such performance and compliance. “ Selling Expenses ” means all underwriting discounts and selling commissions or similar fees or arrangements allocable to the sale of the Registrable Securities, transfer taxes and fees and disbursements of counsel to the Selling Holders, except for the reasonable fees and disbursements of counsel for the Selling Holders required to be paid by the Company pursuant to Sections 2.07 and 2.08 . +Section 2.08 Indemnification . +(a) By the Company . In the event of a registration of any Registrable Securities under the Securities Act pursuant to this Agreement, the Company shall indemnify and hold harmless each Selling Holder thereunder, its directors, officers, managers, members, partners, employees, agents and Affiliates and each Person, if any, who controls such Selling Holder or its Affiliates within the meaning of the Securities Act and the Exchange Act, and its directors, officers, members, partners, employees or agents (collectively, the “ Selling Holder Indemnified Persons ”), against any losses, claims, damages, third party expenses incurred by or on such Holder’s behalf or liabilities (including reasonable attorneys’ fees and third party expenses incurred by or on such Holder’s behalf) (collectively, “ Losses ”), joint or several, to which such Selling Holder Indemnified Person may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such Losses (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact (in the case of any prospectus, in light of the circumstances under which such statement is made) contained in (which, for the avoidance of doubt, includes documents incorporated by reference in) such Registration Statement or any other registration statement contemplated by this Agreement, any preliminary prospectus, prospectus supplement or final prospectus contained therein, or any amendment or supplement thereof, or any free writing prospectus relating thereto or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of a prospectus, in light of the circumstances under which they were made) not misleading, and shall reimburse each such Selling Holder Indemnified Person for any legal or other third party expenses reasonably incurred by or on such Holder’s behalf in connection with investigating, defending or resolving any such Loss or actions or proceedings; provided, however , that the Company shall not be liable in any such case if and to the extent that any such Loss arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission so made in conformity with information furnished by such Selling Holder Indemnified Person in writing specifically for use in such Registration Statement or such other registration statement, or prospectus supplement, as applicable. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Selling Holder Indemnified Person, and shall survive the transfer of such securities by such Selling Holder. +(b) By Each Selling Holder . Each Selling Holder agrees severally and not jointly to indemnify and hold harmless the Company, its directors, officers, employees and agents and each Person, if any, who controls the Company within the meaning of the Securities Act or of the Exchange Act, and its directors, officers, employees and agents, to the same extent as the foregoing indemnity from the Company to the Selling Holders, but only with respect to information regarding such Selling Holder furnished in writing by or on behalf of such Selling Holder expressly for inclusion in such Registration Statement or any other registration statement contemplated by this Agreement, any preliminary prospectus, prospectus supplement or final prospectus contained therein, or any amendment or supplement thereof, or any free writing prospectus relating thereto; provided, however , that the liability of each Selling Holder shall not be greater in amount than the dollar amount of the proceeds (net of any Selling Expenses) received by such Selling Holder from the sale of the Registrable Securities giving rise to such indemnification. +(c) Notice . Promptly after receipt by an indemnified party hereunder of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party +EX A-11 +hereunder, notify the indemnifying party in writing thereof, but the omission to so notify the indemnifying party shall not relieve it from any liability that it may have to any indemnified party other than under this Section 2.08 . In any action brought against any indemnified party, it shall notify the indemnifying party of the commencement thereof. The indemnifying party shall be entitled to participate in and, to the extent it shall wish, to assume and undertake the defense thereof with counsel reasonably satisfactory to such indemnified party and, after notice from the indemnifying party to such indemnified party of its election so to assume and undertake the defense thereof, the indemnifying party shall not be liable to such indemnified party under this Section 2.08 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation and of liaison with counsel so selected; provided, however , that, (i) if the indemnifying party has failed to assume the defense or employ counsel reasonably acceptable to the indemnified party or (ii) if the defendants in any such action include both the indemnified party and the indemnifying party and counsel to the indemnified party shall have concluded that there may be reasonable defenses available to the indemnified party that are different from or additional to those available to the indemnifying party, or if the interests of the indemnified party reasonably may be deemed to conflict with the interests of the indemnifying party, then the indemnified party shall have the right to select a separate counsel and to assume such legal defense and otherwise to participate in the defense of such action, with the reasonable expenses and fees of such separate counsel and other reasonable expenses related to such participation to be reimbursed by the indemnifying party as incurred. Notwithstanding any other provision of this Agreement, no indemnifying party shall settle any action brought against any indemnified party with respect to which such indemnified party is or may be entitled to indemnification hereunder without the consent of the indemnified party, unless the settlement thereof imposes no liability or obligation on, and includes a complete and unconditional release from all liability of, and does not contain any admission of wrongdoing by, the indemnified party. +(d) Contribution . If the indemnification provided for in this Section 2.08 is held by a court or government agency of competent jurisdiction to be unavailable to any indemnified party or is insufficient to hold them harmless in respect of any Losses, then each such indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such Loss in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of such indemnified party on the other in connection with the statements or omissions that resulted in such Losses, as well as any other relevant equitable considerations; provided, however , that in no event shall such Selling Holder be required to contribute an aggregate amount in excess of the dollar amount of proceeds (net of Selling Expenses) received by such Selling Holder from the sale of Registrable Securities giving rise to such indemnification. The relative fault of the indemnifying party on the one hand and the indemnified party on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact has been made by, or relates to, information supplied by such party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The parties hereto agree that it would not be just and equitable if contributions pursuant to this paragraph were to be determined by pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to herein. The amount paid by an indemnified party as a result of the Losses referred to in the first sentence of this paragraph shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating, defending or resolving any Loss that is the subject of this paragraph. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who is not guilty of such fraudulent misrepresentation. +(e) Other Indemnification . The provisions of this Section 2.08 shall be in addition to any other rights to indemnification or contribution that an indemnified party may have pursuant to law, equity, contract or otherwise. To the extent that any of the Holders is, or would be expected to be, deemed to be an underwriter of Registrable Securities pursuant to any SEC comments or policies or any court of law or otherwise, the Company agrees that (i) the indemnification and contribution provisions contained in this Section 2.08 shall be applicable to the benefit of such Holder in its role as deemed underwriter in addition to its capacity as a Holder (so long as the amount for which any other Holder is or becomes responsible does not exceed the amount for which such Holder would be responsible if the Holder were not deemed to be an underwriter of Registrable Securities) and (ii) such Holder and its representatives shall be entitled to conduct the due diligence which would normally be conducted in connection with +EX A-12 +an offering of securities registered under the Securities Act, including receipt of customary opinions and comfort letters. +Section 2.09 Rule 144 Reporting . With a view to making available the benefits of certain rules and regulations of the SEC that may permit the sale of the Registrable Securities to the public without registration, the Company agrees to use its reasonable best efforts to: +(a) make and keep public information regarding the Company available, as those terms are understood and defined in Rule 144 under the Securities Act (or any successor or similar provision adopted by the SEC then in effect), at all times from and after the date hereof (which may be satisfied by making such information available on EDGAR); +(b) file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act at all times from and after the date hereof; and +(c) so long as a Holder owns any Registrable Securities, furnish, (i) to the extent accurate, forthwith upon request, a written statement of the Company that it has complied with the reporting requirements of Rule 144 under the Securities Act (or any similar provision then in effect) and (ii) unless otherwise available electronically at no additional charge via the SEC’s EDGAR system, to such Holder forthwith upon request a copy of the most recent annual or quarterly report of the Company, and such other reports and documents as such Holder may reasonably request in availing itself of any rule or regulation of the SEC allowing such Holder to sell any such securities without registration. +Section 2.10 Transfer or Assignment of Registration Rights . The rights to cause the Company to register Registrable Securities under this Article II may not be transferred or assigned except pursuant to this Section 2.10 . +(a) If a Holder transfers or assigns all (and not less than all) of the Registerable Securities Beneficially Owned by such Holder, then such Holder may transfer or assign its rights pursuant to this Agreement to such transferee or assignee. +(b) If a Holder transfers or assigns (A) 20% or more of the Registerable Securities issued on the Closing Date but less than all of the Registerable Securities issued on the Closing Date, then the transferee or assignee thereof shall be entitled to the rights granted to a Holder pursuant to this Agreement except those contained in Section 2.03 and (B) less than 20% of the Registerable Securities issued on the Closing Date, then the transferee or assignee thereof shall be entitled to the rights granted to a Holder pursuant to this Agreement except those contained in Sections 2.02 and 2.03 . +(c) In the case of any such transfer or assignment where the transferee or assignee shall have any rights of a Holder hereunder, the Holder making such transfer or assignment must provide the Company written notice of any said transfer or assignment, stating the name and address of each such transferee or assignee and identifying the Registerable Securities Beneficially Owned thereby. +Section 2.11 Limitation on Subsequent Registration Rights . From and after the date hereof, the Company shall not, without the prior written consent of the Required Holders, enter into any agreement with any current or future holder of any equity securities of the Company that would allow such current or future holder to require the Company to include equity securities in any registration statement filed by the Company on a basis other than pari passu with, or expressly subordinated to the piggyback rights granted to the Holders pursuant to Section 2.02 ; provided, that in no event shall the Company enter into any agreement that would permit another holder of securities of the Company to participate on a superior or pari passu basis (in terms of priority of cut-back based on advice of Underwriters) with a Holder requesting registration or takedown in an Underwritten Offering pursuant to Section 2.03(a) . +EX A-13 +Section 2.12 Termination of Registration Rights . The rights to cause the Company to register Registrable Securities granted to the Required Holders by the Company under this Article II shall terminate upon the date on which all Registrable Securities no longer constitute Registrable Securities in accordance with Section 1.02 . +ARTICLE III +MISCELLANEOUS +Section 3.01 Communications . All notices and other communications provided for or permitted hereunder shall be made in writing by electronic mail, courier service or personal delivery: +(a) if to Kimmeridge: +c/o Kimmeridge Energy Management Company +412 West 15th Street, 11th Floor +New York, New York 10011 +Attention: Noam Lockshin +Email: noam.lockshin@kimmeridge.com +With a copy to: +c/o Kimmeridge Energy Management Company +412 West 15th Street, 11th Floor +New York, New York 10011 +Attention: Tamar Goldstein +Email: tamar.goldstein@kimmeridge.com +With a copy to (which shall not constitute notice): +c/o Sidley Austin LLP +1000 Louisiana Street, Suite 5900 +Houston, Texas 77002 +Attention: Irving L. Rotter +George J. Vlahakos +Email: irotter@sidley.com +gvlahakos@sidley.com +(b) if to a transferee of Kimmeridge, to such Holder at the address provided pursuant to Section 2.10 above; and +(c) if to the Company: +Callon Petroleum Company +2000 W. Sam Houston Parkway S., Suite 2000 +Houston, TX 77042 +Attention: Michol L. Ecklund, Senior Vice President, General Counsel and Corporate Secretary +Email: mecklund@callon.com +legal@callon.com +With a copy to (which shall not constitute notice): +EX A-14 +c/o Kirkland & Ellis LLP +609 Main Street +Houston, Texas 77002 +Attention: Sean T. Wheeler, P.C. +Michael W. Rigdon +Email: sean.wheeler@kirkland.com +michael.rigdon@kirkland.com +All such notices and communications shall be deemed to have been received at the time delivered by hand, if personally delivered; when receipt acknowledged, if sent via electronic mail; and when actually received, if sent by courier service or any other means. +Section 3.02 Successor and Assigns . This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of each of the parties, including subsequent Holders of Registrable Securities to the extent permitted herein. +Section 3.03 Assignment of Rights . The rights, interests or obligations of the Holders hereunder may not be transferred or assigned, by operation of law or otherwise, in whole or in part, by the Holders without the prior written consent of the Company, except in accordance with Section 2.10 hereof. +Section 3.04 Recapitalization, Exchanges, Etc. Affecting the Common Stock . The provisions of this Agreement shall apply to the full extent set forth herein with respect to any and all equity interests of the Company or any successor or assign of the Company (whether by merger, acquisition, consolidation, reorganization, sale of assets or otherwise) that may be issued in respect of, in exchange for or in substitution of, the Registrable Securities, and shall be appropriately adjusted for combinations, share splits, recapitalizations, pro rata distributions of shares and the like occurring after the date of this Agreement. +Section 3.05 Aggregation of Registrable Securities . All Registrable Securities held or acquired by Persons who are Affiliates of one another shall be aggregated together for the purpose of determining the availability of any rights under this Agreement. +Section 3.06 Specific Performance . Damages in the event of breach of this Agreement by a party hereto may be difficult, if not impossible, to ascertain, and it is therefore agreed that each such Person, in addition to and without limiting any other remedy or right it may have, shall have the right to an injunction or other equitable relief in any court of competent jurisdiction, enjoining any such breach, and enforcing specifically the terms and provisions hereof, and each of the parties hereto hereby waives any and all defenses it may have on the ground of lack of jurisdiction or competence of the court to grant such an injunction or other equitable relief. The existence of this right shall not preclude any such Person from pursuing any other rights and remedies at law or in equity that such Person may have. +Section 3.07 Counterparts . This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, including facsimile or .pdf counterparts, each of which counterparts, when so executed and delivered, shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the same Agreement. +Section 3.08 Headings . The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. +Section 3.09 Governing Law . This Agreement, including all issues and questions concerning its application, construction, validity, interpretation and enforcement, shall be construed in accordance with, and governed by, the laws of the State of New York without regard to the choice of law or conflicts of law. +EX A-15 +Section 3.10 Waiver of Jury Trial . THE PARTIES TO THIS AGREEMENT EACH HEREBY WAIVE, AND AGREE TO CAUSE THEIR AFFILIATES TO WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING UNDER THIS AGREEMENT OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS RELATED HERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. THE PARTIES TO THIS AGREEMENT EACH HEREBY AGREE AND CONSENT THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT THE PARTIES TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. +Section 3.11 Severability of Provisions . Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or affecting or impairing the validity or enforceability of such provision in any other jurisdiction. +Section 3.12 Entire Agreement . This Agreement and the Exchange Agreement are intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein and therein. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein or in the Exchange Agreement with respect to the rights granted by the Company set forth herein. This Agreement and the Exchange Agreement supersede all prior agreements and understandings between the parties with respect to such subject matter, including the Existing Registration Rights Agreement which shall terminate upon on the execution hereof, and in the event of a conflict between any such agreement or agreements and this Agreement, the terms of this Agreement shall prevail. +Section 3.13 Amendment . This Agreement may be amended only by means of a written amendment signed by the Company and the Required Holders; provided, however , that no such amendment shall materially and adversely affect the rights of any Holder hereunder without the prior written consent of such Holder. +Section 3.14 No Presumption . If any claim is made by a party relating to any conflict, omission or ambiguity in this Agreement, no presumption or burden of proof or persuasion shall be implied by virtue of the fact that this Agreement was prepared by or at the request of a particular party or its counsel. +Section 3.15 Obligations Limited to Parties to Agreement . Each of the parties hereto covenants, agrees and acknowledges that no Person other than the Required Holders (and its permitted transferees and assignees) and the Company shall have any obligation hereunder. No recourse under this Agreement or under any documents or instruments delivered in connection herewith or therewith shall be had against any former, current or future director, officer, employee, agent, general or limited partner, manager, member, stockholder or Affiliate of the Required Holders or any former, current or future director, officer, employee, agent, general or limited partner, manager, member, stockholder or Affiliate thereof, whether by the enforcement of any assessment or by any legal or equitable proceeding, or by virtue of any applicable Law, it being expressly agreed and acknowledged that no personal liability whatsoever shall attach to, be imposed on or otherwise be incurred by any former, current or future director, officer, employee, agent, general or limited partner, manager, member, stockholder or Affiliate of the Required Holders or any former, current or future director, officer, employee, agent, general or limited partner, manager, member, stockholder or Affiliate thereof, as such, for any obligations of the Required Holders under this Agreement or any documents or instruments delivered in connection herewith or therewith or for any claim based on, in respect of or by reason of such obligation or its creation, except in each case for any transferee or assignee of a Required Holders hereunder. +Section 3.16 Interpretation . Article and Section references are to this Agreement, unless otherwise specified. All references to instruments, documents, contracts and agreements are references to such instruments, +EX A-16 +documents, contracts and agreements as the same may be amended, supplemented and otherwise modified from time to time, unless otherwise specified. The words “include,” “includes” and “including” or words of similar import shall be deemed to be followed by the words “without limitation.” A term has the meaning assigned to it. Words in the singular include the plural, and words in the plural include the singular. The word “or” is not exclusive. The words “herein,” “hereof” and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision. References to agreements or instruments, or to statutes or regulations, are to such agreements or instruments, or statutes or regulations, as amended from time to time (or to successor statutes and regulations). Whenever any determination, consent or approval is to be made or given by the Required Holders (and its transferees or assignees) under this Agreement, such action shall be in the Required Holder’s (and its transferees or assignees) sole discretion unless otherwise specified. Unless expressly set forth or qualified otherwise ( e.g. , by “Business” or “trading”), all references herein to a “day” are deemed to be a reference to a calendar day. +( Signature pages follow ) +EX A-17 +IN WITNESS WHEREOF , the parties hereto execute this Agreement, effective as of the date first above written. +CALLON PETROLEUM COMPANY +By: +Name: +Title: +CHAMBERS INVESTMENTS, LLC +By: +Noam Lockshin +Manager +Signature Page to Registration Rights Agreement +ANNEX B +VOTING AGREEMENT +THIS VOTING AGREEMENT (this “ Agreement ”) is made and entered into as of August 3, 2021 by and among Callon Petroleum Company, a Delaware corporation (the “ Company ”), and each of the undersigned stockholders listed on the signature page hereto (each, a “ Stockholder ” and collectively, the “ Stockholders ”) of the Company. +WHEREAS, the Company has entered into an Exchange Agreement on or about August 3, 2021 (the “ Exchange Agreement ”), pursuant to which the Company will issue to Chambers Investments, LLC, a Delaware limited liability company (“ Kimmeridge ”), in exchange for certain principal amounts of the Company’s 9.00% Second Lien Senior Secured Notes due 2025 held by Kimmeridge, new shares of common stock, par value $0.01, of the Company (the “ Exchange ”). +WHEREAS, each Stockholder has agreed that certain shares of the Company’s common stock (“ Company Common Stock ”) owned by it shall be subject to the terms and conditions of this Agreement. +NOW, THEREFORE, intending to be legally bound, the parties hereto hereby agree as follows: +1. Certain Definitions . Capitalized terms that are used but not otherwise defined herein shall have the respective meanings ascribed to them in the Exchange Agreement. For purposes of this Agreement, the following terms shall have the following respective meanings: +(a) “ Affiliate ” shall mean, with respect to a specified Person, any other Person, directly or indirectly Controlling or Controlled by or under direct or indirect common Control with such specified Person. +(b) “ Control ,” “ Controlling ” or “ Controlled ” means, as to a specified Person, the power to direct or cause the direction of the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise. +(c) “ Beneficially Own ” shall have the meaning assigned to such term in Rule 13d-3 under the Securities Exchange Act of 1934, as amended, and any Person’s beneficial ownership of securities shall be calculated in accordance with the provisions of such Rule. +(d) “ Expiration Time ” shall mean the earlier to occur of (i) such date and time as the Exchange Agreement shall have been terminated in accordance with its terms, and (ii) the Exchange. +(e) “ Person ” shall mean any individual, corporation, limited liability company, general or limited partnership, business trust, unincorporated association or other business organization or entity, or any governmental body or authority. +(f) “ Shares ” shall mean any and all voting securities of the Company beneficially owned (however held or titled, and including joint ownership) by the Stockholder as of the record date (whether now owned or hereafter acquired) for every meeting of stockholders of the Company called with respect to the Proposal (as defined below), and every postponement or adjournment thereof. +(g) Transfer . A Person shall be deemed to have effected a “ Transfer ” of a security if such person directly or indirectly (i) sells, pledges, encumbers, grants an option with respect to, transfers or disposes of such security or any interest in such security, or (ii) enters into an agreement or commitment providing for the sale of, pledge of, encumbrance of, grant of an option with respect to, transfer of or disposition of such security or any interest therein. +B-1 +2. Voting Restrictions . Each Stockholder hereby agrees that, other than pursuant to the terms of this Agreement, at all times during the period commencing with the execution and delivery of the Exchange Agreement and continuing until the Expiration Time, each Stockholder shall not, directly or indirectly, grant any proxies or enter into any voting trust or other agreement or arrangement that would transfer, limit or otherwise affect the rights of the Stockholder with respect to the voting of any Shares in respect of the Proposal (as defined below). +3. Agreement to Vote Shares . Each Stockholder hereby, each separately, agrees with the Company that, at all times during the period commencing with the execution and delivery of the Exchange Agreement and continuing until the Expiration Time, the Stockholder shall (a) when a meeting of the stockholders of the Company is called to present the Exchange for a vote of the stockholders (whether or not an adjourned or postponed meeting), appear at such meeting or otherwise cause any shares of Company Common Stock Beneficially Owned by such Stockholder to be counted as present thereat for the purpose of establishing a quorum and (b) with respect to any meeting at which a vote of the Company’s stockholders is requested, vote, or cause to be voted at such meeting, all shares of Company Common Stock Beneficially Owned by such Stockholder or any of its Affiliates (including by proxy or written consent, if applicable) (i) in favor of any proposal (the “ Proposal ”) to approve the Exchange and in favor of any other matter presented or proposed that is related to the Exchange in accordance with the terms and conditions set forth in the Exchange Agreement, (ii) against any other proposal, transaction, agreement or other action inconsistent with or made in opposition to approval of the Exchange and (iii) in favor of any proposal to adjourn or postpone such stockholder meeting to a later date if there are not sufficient votes to approve the Exchange. Prior to the Expiration Time, each Stockholder shall not enter into any agreement or understanding with any person to vote or give instructions in any manner inconsistent with the terms of this Agreement. The provisions of this Section 3 shall apply to all Shares owned as of the record date for the vote on the Proposal (the “ Record Date ”), regardless of whether a Transfer of some or all of such Shares occurs after the Record Date. +4. Irrevocable Proxy . Each Stockholder hereby, each separately, appoints the Company and any designee of the Company (determined in the Company’s sole discretion) as its proxy and attorney-in-fact (with full power of substitution), for and in the name, place and stead of such Stockholder, to vote or cause to be voted (including by proxy or written consent, if applicable) its shares of Company Common Stock to approve the Exchange at any such meeting of the Company’s stockholders in accordance with Section 3 hereof. This proxy is given to secure the performance of the duties of each Stockholder under this Agreement. Each Stockholder shall take such further action or execute such other instruments as may be necessary to effectuate the intent of this proxy. The proxy and power of attorney granted pursuant to Section 4 by each Stockholder shall be irrevocable during the term of this Agreement, shall be deemed to be coupled with an interest sufficient in law to support an irrevocable proxy and shall revoke any and all prior proxies granted by such Stockholder. The power of attorney granted by each Stockholder herein is a durable power of attorney and shall survive the bankruptcy, death or incapacity of such Stockholder. The proxy and power of attorney granted hereunder shall terminate upon the termination of this Agreement. +5. Representations and Warranties of the Stockholders . Each Stockholder hereby represents and warrants, severally and not jointly, to the Company that this Agreement has been duly and validly executed and delivered by such Stockholder and (assuming due authorization, execution and delivery of this Agreement by the Company) constitutes the valid and binding obligation of such Stockholder, enforceable against such Stockholder in accordance with its terms, except as enforcement may be limited by general principles of equity whether applied in a court of law or a court of equity and by bankruptcy, insolvency and similar laws affecting creditors’ rights and remedies generally. +6. Termination . This Agreement shall terminate and be of no further force or effect whatsoever upon the Expiration Time without any action on the part of any party hereto. +7. Miscellaneous . +(a) Waiver . No waiver by any party hereto of any condition or any breach of any term or provision set forth in this Agreement shall be effective unless in writing and signed by each party hereto. The waiver of a condition or any breach of any term or provision of this Agreement shall not operate as, or +B-2 +be construed to be, a waiver of any other previous or subsequent breach of any term or provision of this Agreement. +(b) Severability . In the event that any term, provision, covenant or restriction set forth in this Agreement, or the application of any such term, provision, covenant or restriction to any person, entity or set of circumstances, shall be determined by a court of competent jurisdiction to be invalid, unlawful, void or unenforceable to any extent, the remainder of the terms, provisions, covenants and restrictions set forth in this Agreement, and the application of such terms, provisions, covenants and restrictions to persons, entities or circumstances other than those as to which it is determined to be invalid, unlawful, void or unenforceable, shall remain in full force and effect, shall not be impaired, invalidated or otherwise affected and shall continue to be valid and enforceable to the fullest extent permitted by applicable law. +(c) Binding Effect; Assignment . This Agreement and all of the terms and provisions hereof shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and permitted assigns, but, except as otherwise specifically provided herein, neither this Agreement nor any of the rights, interests or obligations of the Stockholders may be assigned to any other Person without the prior written consent of the Company. +(d) Amendments . This Agreement may not be modified, amended, altered or supplemented, except upon the execution and delivery of a written agreement executed by each of the parties hereto; provided that any amendment to an agreement between a specific party and the Company contained herein shall only require the consent of such parties and not all parties hereto. +(e) Specific Performance; Injunctive Relief . Each of the parties hereto hereby acknowledge that (i) the representations, warranties, covenants and restrictions set forth in this Agreement are necessary, fundamental and required for the protection of the Company and to preserve for the Company the benefits of the Exchange, (ii) such covenants relate to matters which are of a special, unique, and extraordinary character that gives each such representation, warranty, covenant and restriction a special, unique, and extraordinary value, and (iii) a breach of any such representation, warranty, covenant or restriction, or any other term or provision of this Agreement, will result in irreparable harm and damages to the Company which cannot be adequately compensated by a monetary award. Accordingly, the Company and each Stockholder hereby expressly agree that in addition to all other remedies available at law or in equity, the Company shall be entitled to the immediate remedy of specific performance, a temporary and/or permanent restraining order, preliminary injunction, or such other form of injunctive or equitable relief as may be used by any court of competent jurisdiction to restrain or enjoin any of the parties hereto from breaching any representations, warranties, covenants or restrictions set forth in this Agreement, or to specifically enforce the terms and provisions hereof. +(f) Governing Law . This Agreement shall be governed by and construed, interpreted and enforced in accordance with the internal laws of the State of Delaware without giving effect to any choice or conflict of law provision, rule or principle (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware. +(g) Entire Agreement . This Agreement and the other agreements referred to in this Agreement set forth the entire agreement and understanding of the Company and the Stockholders with respect to the subject matter hereof and thereof, and supersede all prior discussions, agreements and understandings between the Company and the Stockholders, both oral and written, with respect to the subject matter hereof and thereof. +(h) Notices . All notices and other communications pursuant to this Agreement shall be in writing and deemed to be sufficient if contained in a written instrument and shall be deemed given if delivered personally, telecopied, sent by nationally-recognized overnight courier or mailed by registered or certified mail (return receipt requested), postage prepaid, to the respective parties at the following address (or at such other address for a party as shall be specified by like notice): +B-3 +(i) If to the Company, to: +Callon Petroleum Company +One Briarlake Plaza +2000 W. Sam Houston Parkway S., Suite 2000 +Houston, Texas +Attention: Michol Ecklund, Senior Vice President, General Counsel and Corporate Secretary +Email: mecklund@callon.com +legal@callon.com +with a copy to, which shall not constitute notice to the Company: +Kirkland & Ellis LLP +609 Main St +Houston, TX 77002 +Attention: Sean T. Wheeler +Michael W. Rigdon +Email: sean.wheeler@kirkland.com +michael.rigdon@kirkland.com +(ii) If to a Stockholder, such holder shall provide separately to the Company. +(i) Headings. The section headings set forth in this Agreement are for convenience of reference only and shall not affect the construction or interpretation of this Agreement in any manner. +(j) Counterparts . This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Counterparts may be delivered via facsimile, electronic mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes. +[ Remainder of Page Intentionally Left Blank ] +IN WITNESS WHEREOF, the undersigned have caused this Agreement to be validly executed by a duly authorized officer thereof as of the date first above written. +CALLON PETROLEUM COMPANY +By: +Name: +Title: +B-4 +IN WITNESS WHEREOF, the undersigned have caused this Agreement to be validly executed as of the date first above written. +Joseph C. Gatto, Jr. S. P. Johnson IV +Jeffrey S. Balmer Larry D. McVay +Kevin Haggard Anthony J. Nocchiero +Michol L. Ecklund James M. Trimble +Gregory F. Conaway Steven A.Webster +Frances Aldrich Sevilla-Sacasa +Matthew R. Bob +Barbara J. Faulkenberry +Michael L. Finch +L. Richard Flury +[Voting Agreement] +CALLON PETROLEUM COMPANY +SPECIAL MEETING OF SHAREHOLDERS +NOVEMBER 3, 2021, AT 9:00 A.M. CDT +SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF CALLON PETROLEUM COMPANY +The undersigned hereby appoints Michol L. Ecklund, as proxy with full power of substitution and re-substitution, to vote all shares of Common Stock of Callon Petroleum Company that the undersigned is entitled to vote at the Special Meeting of Shareholders thereof to be held in the Conversation Salon meeting room of Hotel ZaZa Memorial City, 9787 Katy Freeway, Houston, Texas 77024 on November 3, 2021, or at any adjournment or postponement thereof, as follows: +ALL SHARES WILL BE VOTED AS DIRECTED HEREIN AND, UNLESS OTHERWISE DIRECTED, WILL BE VOTED “FOR” THE ISSUANCE PROPOSAL, AND IN ACCORDANCE WITH THE DISCRETION OF THE PERSON VOTING THE PROXY WITH RESPECT TO ANY OTHER BUSINESS PROPERLY BROUGHT BEFORE THE MEETING OR AT ANY ADJOURNMENT OR POSTPONEMENT THEREOF. The undersigned shareholder further hereby ratifies all that the said proxy may do by virtue hereof. +The undersigned shareholder hereby revokes any other proxy heretofore executed by the undersigned for the Special Meeting and acknowledges receipt of the Notice of the Special Meeting of Shareholders and Proxy Statement dated October 5, 2021. +You are encouraged to specify your choice by marking the appropriate box (SEE REVERSE SIDE), but you need not mark any box if you wish to vote in favor. +(CONTINUED AND TO BE SIGNED ON REVERSE SIDE) +PLEASE DETACH ALONG PERFORATED LINE AND MAIL IN THE ENVELOPE PROVIDED. +IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SPECIAL MEETING OF SHAREHOLDERS TO BE HELD NOVEMBER 3, 2021. +THE PROXY STATEMENT IS AVAILABLE AT: +http://www.viewproxy.com/CallonPetroleum/2021SM +Please mark votes like this +ý +THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE ISSUANCE PROPOSAL. +1. +The approval of the issuance to Chambers Investments, LLC +of 5,512,623 shares of common stock, par value $0.01, of the Company: +¨ FOR ¨ AGAINST ¨ ABSTAIN +MARK “X” HERE IF YOU PLAN TO ATTEND THE MEETING: ¨ +Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person. +DO NOT PRINT IN THIS AREA +(Shareholder Name & Address Data) +Date: +Signature +Signature (if held jointly) +Address Change/Comments: (If you noted any Address Changes and/or Comments above, please mark box.) ¨ +CONTROL NUMBER +PLEASE DETACH ALONG PERFORATED LINE AND MAIL IN THE ENVELOPE PROVIDED. +CONTROL NUMBER +SCAN TO +VIEW MATERIALS & VOTE +PROXY VOTING INSTRUCTIONS +Please have your 11 digit control number ready when voting by Internet or Telephone. +If you vote by phone, fax or Internet, please DO NOT mail your proxy card. +INTERNET TELEPHONE MAIL +Vote Your Proxy on the Internet: Vote Your Proxy by Phone: Vote Your Proxy by Mail: +Go to http://www.aalvote.com/CPESM Call 1 (866) 804-9616 +Have your proxy card available when you access the above website. Follow the prompts to vote your shares. Use any touch-tone telephone to vote your proxy. Have your proxy card available when you call. Follow the voting instructions to vote your shares. Mark, sign, and date your proxy card, then detach it, and return it in the postage-paid envelope provided. \ No newline at end of file diff --git a/raw/proxies/0000928022/0000928022-21-000153/proxy_rpt.txt b/raw/proxies/0000928022/0000928022-21-000153/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..e69de29bb2d1d6434b8b29ae775ad8c2e48c5391 diff --git a/raw/proxies/0000928022/0000928022-22-000063/proxy.txt b/raw/proxies/0000928022/0000928022-22-000063/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..28fb7018a9d98ed1cb60eb8152690ac8b751b9e1 --- /dev/null +++ b/raw/proxies/0000928022/0000928022-22-000063/proxy.txt @@ -0,0 +1,2112 @@ +DEF 14A +1 +callon2022proxydef14a.htm +DEF 14A +Document +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Proxy Statement Pursuant to Section 14(a) of +the Securities Exchange Act of 1934 (Amendment No. ) +Filed by the Registrant ý +Filed by a Party other than the Registrant ¨ +Check the appropriate box: +☐ Preliminary Proxy Statement +☐ Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +ý Definitive Proxy Statement +☐ Definitive Additional Materials +☐ Soliciting Material under §240.14a-12 +Callon Petroleum Company +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +ý No fee required. +¨ Fee paid previously with preliminary materials. +¨ Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11. +ABOUT CALLON +Callon Petroleum is an independent oil and natural gas company focused on the acquisition, exploration and development of high-quality assets in the leading oil plays of South and West Texas. +Our Values +Responsibility +The safety of our employees, contractors and communities is of utmost importance – this is not negotiable. We recognize that we earn the right to operate every day by developing our assets responsibly and with respect for the environment. We focus on safety and protection of the environment in every operation, and all Callon representatives are authorized to “stop work” if these are at risk. +Integrity +We always strive to do the right thing and pride ourselves on being a preferred partner. We are consistently open, honest, ethical and genuine. We do what we say and are accountable for our actions. +Drive +Keenly focused on leading, we relentlessly challenge the status quo to meet and exceed our expectations for top-tier performance in all aspects of our business. +Respect +We value the ideas and contributions of all team members and show consideration and appreciation for one another. We recognize and embrace each other’s differences and work towards our common goals. +Excellence +Our business requires focused innovation and evaluation of new opportunities for resource extraction. We balance the application of new technologies and testing of new concepts with prudent risk management and thorough data analysis. +A JOINT LETTER FROM OUR CHAIR AND OUR CHIEF EXECUTIVE OFFICER +April 11, 2022 +DEAR FELLOW SHAREHOLDERS, +On behalf of the Board of Directors of Callon Petroleum Company, we are pleased to invite you to our 2022 Annual Meeting of Shareholders, which will take place on May 25, 2022 at 9:00 a.m. Central Daylight Time (CDT), in the Conversation Salon Room of the Hotel ZaZa Memorial City, located at 9787 Katy Freeway in Houston, Texas. +Today we are filing the Notice of Annual Meeting of Shareholders and the Proxy Statement which describe the matters to be acted upon at the meeting. This year we are asking our shareholders to elect directors; approve, on a non-binding advisory basis, the compensation of our named executive officers; ratify the appointment of our auditors; and approve an amendment to our certificate of incorporation to increase the number of authorized shares of common stock. +This past year, we set several new financial records and achieved key strategic goals, all while maintaining a disciplined reinvestment model and expanding our inventory portfolio through the acquisition of assets in the Southern Delaware Basin. These outstanding achievements allowed us to dramatically improve the balance sheet and associated metrics measuring leverage during the year. +Our focus on maintaining the sustainability of our business has not wavered. We continue advancing our environmental, social and governance (“ESG”) initiatives and aligning ourselves with the changing investor norms as evidenced by our adoption of the Task Force on Climate-Related Financial Disclosures (“TCFD”) framework in our second sustainability report. Our team made important progress to reduce our carbon footprint through significant reductions in flaring and overall greenhouse gas (“GHG”) intensity. Given our substantial progress on this front, we are happy to present accelerated, and new, emission reduction goals in the pages that follow. +Your vote is important, and we encourage you to review this proxy statement and to vote promptly so that your shares will be represented at the meeting. +On behalf of everyone at Callon, we want to thank you, our valued shareholders, for your continued support of the work we do. We would also like to personally thank Larry McVay for his many contributions to the strategy, culture, and success of the Company. Larry will be retiring in May after serving as a Board member for 15 years, and we wish him well in his future endeavors. +Sincerely, +L. Richard Flury +Chair of the Board +Joseph C. Gatto, Jr. +President, Chief Executive Officer and Director +L. Richard Flury +Chair of the Board +Joseph C. Gatto, Jr. +President, Chief Executive Officer and Director +We encourage you to read our 2021 Annual Report, which includes our financial statements as of and for the year ended December 31, 2021. Please also refer to the sections captioned “Risk Factors” and “Special Note Regarding Forward-Looking Statements” in our 2021 Annual Report for a description of the substantial risks and uncertainties related to the forward-looking statements included herein. +2022 PROXY STATEMENT 3 +NOTICE OF ANNUAL +MEETING OF SHAREHOLDERS +Dear Shareholders, +You are invited to participate in the 2022 Annual Meeting of Shareholders (the “Annual Meeting”) of Callon Petroleum Company (“Callon,” the “Company,” “us,” “we,” “our” or like terms), a Delaware corporation. +When +May 25, 2022, at 9:00 a.m. Central Daylight Time (“CDT") +Where +Hotel ZaZa Memorial City +Conversation Salon Room +9787 Katy Freeway +Houston, Texas 77024 +We continue to monitor coronavirus (COVID-19) developments and the related recommendations and protocols issued by public health authorities and federal, state and local governments, and we are sensitive to the public health and travel concerns that our shareholders may have. In the event we determine it is necessary or appropriate to postpone or move the Annual Meeting to another location or hold the Annual Meeting virtually, we will announce this decision in advance in a press release and post details on our website, which will also be filed with the Securities and Exchange Commission. +Whether or not you plan to attend the Annual Meeting, please vote electronically via the Internet, by telephone, or by mail as soon as possible. +Voting Matters Board +Recommendation +Proposal 1: +To elect three Class I directors to serve on our Board of Directors (the “Board”), each for three years. +FOR each of the Class I directors +See page 11 +Proposal 2: +To approve, on a non-binding advisory basis, the compensation of our named executive officers (“NEOs”). +FOR +See page 36 +Proposal 3: +To ratify the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2022. +FOR +See page 64 +Proposal 4: +To approve an amendment to our certificate of incorporation to increase the number of authorized shares of our common stock. +FOR +See page 66 +We will also transact other business that may properly come before the Annual Meeting. +This Notice of Annual Meeting of Shareholders and the Proxy Statement provide further information on the Company’s performance and corporate governance and describe the matters to be presented at the Annual Meeting. The Board set March 30, 2022, as the record date (the “Record Date”) for the Annual Meeting. Holders of record of our common stock at the close of business on the Record Date are entitled to receive this notice of, and vote at, the Annual Meeting. A list of the names of shareholders entitled to vote at the Annual Meeting will be available for ten days prior to the Annual Meeting for examination by any shareholder for any purpose germane to the Annual Meeting between the hours of 9:00 a.m. and 5:00 p.m., Central Time, at our headquarters at 2000 W. Sam Houston Parkway South, Suite 2000, Houston, TX 77042. This list will also be available for such purposes during the Annual Meeting at the place of the Annual Meeting or, in the event that the Annual Meeting is held virtually, at a website to be provided in the announcement notifying shareholders of the change in meeting format. +Beginning on or about April 11, 2022, we mailed an Important Notice Regarding the Availability of Proxy Materials (the “Notice”) to our holders of record. The Notice contained instructions on how to access the Proxy Statement and related materials on the Internet and how to enter your voting instructions. Instructions for requesting a paper copy of the proxy materials are contained in the Notice. +We thank you for your continued support and look forward to seeing you at the Annual Meeting. +By Order of the Board of Directors, +Michol L. Ecklund +Senior Vice President, General Counsel +and Corporate Secretary +Houston, Texas +April 11, 2022 +By Internet or telephone following the simple instructions on the enclosed proxy card or voting instruction form +By mail +mark, date and sign your proxy card, and return it in the reply envelope provided +YOUR VOTE IS IMPORTANT! +Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Shareholders. This Proxy Statement and our 2021 Annual Report on Form 10-K are available at: www.viewproxy.com/ CallonPetroleum/2022. If you have any questions or need assistance voting your shares, please call our proxy solicitor, Innisfree M&A Incorporated, 501 Madison Avenue, 20th Floor, New York, NY 10022 +Banks and Brokerage Firms, please call: +(212) 750-5833 +Shareholders, please call toll-free: +(888) 750-5834 +4 CALLON PETROLEUM +TABLE OF CONTENTS +A JOINT LETTER FROM OUR CHAIR AND OUR CHIEF EXECUTIVE OFFICER +3 +NOTICE OF ANNUAL MEETING OF SHAREHOLDERS +4 +2021 PERFORMANCE HIGHLIGHTS +6 +SUSTAINABILITY +7 +PROPOSAL 1 - ELECTION OF CLASS I DIRECTORS +11 +Board of Directors +11 +Directors Nominated for Election +14 +CORPORATE GOVERNANCE +16 +Directors Continuing in Office +16 +Retiring Director +20 +Director Compensation +22 +Director Independence +24 +Board Structure and Responsibilities +24 +Committees of the Board +27 +Corporate Governance Matters +32 +EXECUTIVE OFFICERS +34 +PROPOSAL 2 - APPROVE, ON AN ADVISORY BASIS, THE COMPENSATION OF THE COMPANY'S NEOS +36 +EXECUTIVE COMPENSATION +38 +Compensation Discussion and Analysis +38 +Compensation Committee Report +52 +Executive Compensation Tables +53 +CEO Pay Ratio +63 +PROPOSAL 3 - RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM, GRANT THORNTON LLP, FOR 20 22 +64 +Audit Committee Report +65 +PROPOSAL 4 - APPROVE AN AMENDMENT TO THE CERTIFICATE OF INCORPORATION TO INCREASE AUTHORIZED SHARES OF COMMON STOCK +66 +OTHER MATTERS +68 +Beneficial Ownership of Securities +68 +Principal Shareholders and Management +68 +Delinquent Section 16(a) Reports +70 +Certain Relationships and Related Party Transactions +70 +Shareholders’ Proposals and Director Nominations for the 202 3 Annual Meeting +71 +ANNUAL MEETING INFORMATION +72 +Information Concerning Solicitation and Voting +72 +Information About Voting and the Annual Meeting +72 +Required Vote +75 +Voting Results +76 +Householding Information +76 +Financial Statements and Other Available Documents +76 +Other Business +76 +APPENDIX A +77 +APPENDIX B +78 +2022 PROXY STATEMENT 5 +2021 PERFORMANCE HIGHLIGHTS +41 % +Year-over-year +increase in +adjusted EBITDA (1) +141 % +Callon is an independent oil and natural gas company focused on the acquisition, exploration, and development of high-quality assets in leading Texas oil plays located in the Permian and the Eagle Ford. +Our strong foundation spans over 70 years with an ongoing mission to build trust, create long-term value, and drive sustainable cash flow growth for our stakeholders. +Achieving our strategic objectives in 2021 allowed us to generate positive adjusted free cash flow that funded absolute debt reduction while we also advanced our environmental, social, and governance (“ESG”) initiatives. In 2021, we successfully executed our strategy and realized the following results: +Year-over-year +operating margin growth +~$275 million +Adjusted free cash flow (1) +~$1 billion +Adjusted EBITDA (1) +~485 MMBoe +Total proved reserves +96 MBoe/d +Full year average production +64 % +Total oil production +~$300 million +Year-over-year absolute +debt reduction +~$210 million +Total gross proceeds from divestitures +59 % +FY21 reinvestment rate (2) +î 2 x +Leverage ratio reduction +(1) Adjusted free cash flow is defined as adjusted EBITDA minus the sum of operational capital, capitalized interest, capitalized general and administrative expense and interest expense. Adjusted EBITDA is a non-GAAP financial measure. See Appendix A for a reconciliation of non-GAAP financial measures. +(2) The Company defines “reinvestment rate” as capital expenditures divided by cash flow from operating activities. +6 CALLON PETROLEUM +SUSTAINABILITY +Our focus on integrating sustainable business practices and achieving long-term results drives our business decisions. In alignment with these goals, our Board oversees the Company’s approach to ESG through our safety and environmental policies and performance, development of a positive corporate culture and an effective corporate governance program. The Board recognizes that ESG risks are interconnected with other business risks and opportunities, and thus regularly reviews salient ESG-related issues alongside other operational, financial, and strategic matters. +Our commitment to ESG is outlined in our second annual Sustainability Report, which we hope you will access on the Company’s website at www.callon.com/sustainability. The report highlights ESG performance in alignment with the frameworks set forth by the Sustainability Accounting Standards Board and the Task Force on Climate-Related Financial Disclosures. +CLIMATE RISK +At Callon, we share our stakeholders’ concerns about the risks and effects of climate change. We also recognize the potential impacts to our industry, including the evolving preferences of consumers and investors as well as increasing regulatory obligations. As concerned citizens and responsible operators, we are committed to diligently minimizing and mitigating our environmental impact while we work to responsibly meet the demand for affordable energy in the United States and beyond. +Our Board oversees our assessment of and response to climate risks, and each of our Board committees has a role in our climate-related risk strategies. The Nominating & ESG Committee has responsibility for overseeing and guiding the Company’s policies and performance relating to ESG matters, including assessment and monitoring of stakeholder concerns and emerging issues such as climate-related risks and opportunities. The Operations & Reserves Committee oversees operational performance relative to established environmental goals, and the Audit Committee oversees the Company’s risk related disclosures in compliance with regulatory requirements. The Compensation Committee is responsible for aligning executive compensation with strategic Company priorities, including environmental performance. +ENVIRONMENTAL INITIATIVES +In early 2021, we announced the adoption of meaningful medium-term emission reduction goals to reduce flaring and GHG emissions in our operations. After making substantial progress on our action plans throughout the year as described below, we were proud to present the following accelerated, and new, emission reduction goals earlier this year which have been linked to our executive compensation programs as described in the Compensation Discussion and Analysis beginning on page 38 . +New and Accelerated Emissions Reduction Targets +End routine flaring by end of 2022 ( accelerated by three years ) (1) +50% reduction in GHG intensity by 2024 (targeting high end and accelerated by one year vs. previous goal) +Reduce all flaring to <1% by 2024 +Reduce methane emissions to <0.2% by 2024 (2) +(1) Routine flaring as defined by The World Bank +(2) Methane emissions calculated as percent of gas produced +2022 PROXY STATEMENT 7 +SUSTAINABILITY +To support advancement towards these goals, we completed several GHG reduction initiatives in 2021 that helped set our emissions strategy for 2022: +• Developed a three-phase GHG reduction action plan that laid out the path towards achieving these goals as described in our 2020 Sustainability Report; +• Completed the second series of field electrification projects in Eagle Ford and Delaware Basin, resulting in the removal of diesel generators and replacement of natural gas operated pneumatic control systems with instrument air; +• Evaluated and secured additional secondary gas gathering options to provide flow assurance flexibility and mitigate third-party flaring risk; +• Improved compressor reliability and natural gas treatment; +• Completed field testing of both dual fuel and electric frac fleets; and +• Completed field pilot test of "no-bleed" and air-actuated pneumatic devices to reduce methane emissions. +Through the addition of our secondary gas gathering options and our asset-wide mapping analysis of higher gas-to-oil ratio wells, we greatly reduced our total gas flared (calculated as flared gas as a percent of gas produced) by almost 50% in 2021, outperforming our own internal goals and allowing us to accelerate our flared gas target to less than 1% by 2024. +Our work on our 2021 initiatives, especially our efforts to reduce flaring, helped Callon achieve an 11% reduction in GHG emissions intensity across our legacy asset base, which helped offset the additional emissions that came with our acquisition of certain producing oil and gas properties in the Southern Delaware Basin, resulting in a net decrease for our overall GHG emissions intensity year over year. +To achieve our new GHG emissions goals as set forth above, Callon will be investing nearly $20 million into emission reduction projects in 2022 as we enter phase 3 of our GHG reduction action plan. These projects will include: +• Replacing the majority of natural gas operated pneumatic control systems in the Eagle Ford with instrument air and in the Permian with "no-bleed" systems, and completing the replacement of natural gas operated pneumatics by year-end 2023; +• Expanding field electrification across most of the remaining Eagle Ford asset to eliminate diesel generators; +• Upgrading natural gas treatment facilities in the Delaware Basin to reduce flaring; and +• Initiating replacement of natural gas driven compression with electric compression engines. +Our sustainable business practices also include managing biodiversity risk. We implement industry best practices throughout the lifecycle of our operations as it relates to biodiversity, including environmental site assessments prior to new construction, spill prevention measures during active operations, and responsible disposal of waste when our activities are complete. In 2021, we realized a record year for our land stewardship program with a reduction of 24% in our total fluid spill rate and 13% in hydrocarbon spill occurrences to the environment. +AIR +BIODIVERSITY +As part of our environmental program, Callon monitors and seeks to reduce greenhouse gas (GHG) and other emissions from our operations. +At Callon, we strive to be good stewards of the environment and minimize our impact in the areas where we operate. +11% reduction in legacy Callon GHG emissions intensity (1) +24% reduction in total fluid spill rate (3) +2% reduction in overall GHG emissions intensity +13% reduction in hydrocarbon spill occurrences +49% reduction in flare rate (2) +(1) Scope 1 GHG emissions intensity calculated, in accordance with EPA guidelines, as metric tons CO 2 e/thousand equivalent barrels produced, Callon standalone, excluding assets acquired in the Southern Delaware Basin in transactions that closed on October 1, 2021. +(2) Calculated as total gas flared as a percent of gas produced. +(3) Calculated as barrels of total fluids spilled/million barrels produced. +8 CALLON PETROLEUM +SUSTAINABILITY +HUMAN CAPITAL +At Callon, we recognize the importance of creating a culture in which our team members feel valued. At Callon, we develop more than energy resources. We also develop people. We foster an entrepreneurial environment where we empower employees and engage team members in decision-making at every level. Our experienced leadership team provides an excellent learning environment, with mentorship opportunities to accelerate professional growth. +In 2021, we advanced several initiatives to further opportunities for our employees: +Development and Training +Wellbeing +• Introduced a formal Employee Development Program, which provides employees the opportunity to advance their career ambitions, with an 83% participation rate +• Engaged company supervisors through regularly scheduled facilitated leadership training modules +• Expanded annual training hours by 69% for short service employees and by 50% for full time and contract workers +• Introduced the Callon Wellness Program, aimed at encouraging employees to complete a wellness check-up +• Provided personal finance training and increased participation in 401(k) program +• Organized several company-wide volunteer opportunities that supported team building and community engagement +EMBRACING DIVERSE BACKGROUNDS AND PERSPECTIVES +At Callon, we value the diversity of our employees and their contributions. We are firmly committed to fostering an inclusive environment and providing equal opportunity to all qualified persons. In 2021, our hiring program focused on expanding diversity in our candidate pool, resulting in 65% of new hires identifying as female, racially or ethnically diverse, or both. +RACIAL/ETHNIC DIVERSE EMPLOYEES +IN 2021 +COMMUNITY SUPPORT +Our focus on our stakeholders extends beyond our operations into the communities where we live. Through our community engagement program, our charitable giving is directed towards our core philanthropy pillars of education, community services, and the environment to uplift our communities. We are especially proud of our new collaborative partnership with Comp-U-Dopt that has allowed us to invest in the next generation by bringing much-needed computer equipment and STEM-focused technology programs to the remote areas of our operations that are under-resourced. We are also proud to be to a founding member of the Children's Assessment Center Lighting the Path Giving Society, whose work and community outreach programs help thousands of children and families heal from abuse. +CORPORATE GOVERNANCE +Our belief in the importance of diversity starts from the Board and is demonstrated by the continuous process of thoughtful board refreshment and leading corporate governance practices that ensures diversity of thought in the pursuit of sustainable value for all our stakeholders. Please see page 11 for more information about our recent board refreshment activities. +Diversity Refreshment Independence +One ethnically diverse and +three female directors +Less than five years' tenure +for nearly half the directors +Ten directors are independent +and a non-executive director +serves as chair of the Board +2022 PROXY STATEMENT 9 +SUSTAINABILITY +We are also committed to high ethical standards and effective and sustainable corporate governance. We believe this commitment promotes the long-term interests of our shareholders, helps build public trust in our Company and strengthens Board and management accountability. We continually assess our governance principles to ensure that we are operating our business responsibly, ethically and in a manner aligned with the interests of our shareholders. More information about our approach to corporate governance can be found beginning on page 16 . +As a demonstration of responsible corporate governance, our Compensation Committee has taken proactive steps in recent years to refresh our executive compensation programs to align with investor priorities for our industry and to formally incorporate ESG performance into management incentives. Our Compensation Discussion and Analysis (“CD&A”), beginning on page 38 , provides additional information on governance practices for executive compensation. +10 CALLON PETROLEUM +Proposal 1 +Election of +Class I +Directors +The Board recommends a vote FOR each of the Class I director nominees named in this Proxy Statement. +• Our director nominees provide experience and perspectives that enhance the overall strategic and oversight functions of Callon’s Board. +• For more information about the nominees’ experience, skills, and qualifications, please see page 14 . +Board of Directors +2021 Governance Highlights +Board Refreshment +Callon’s Board of Directors is committed to thoughtful and responsible refreshment of the composition of the Board. During 2021, in recognition of the three board members who are scheduled to retire over the next three years starting in May 2022, the Board initiated a search to identify a potential addition to the Board to maintain and enhance the expertise needed to support company strategy and sustainable value creation for the long-term. With the support of a third-party search firm, the Board considered a wide range of candidates representing diverse personal and professional backgrounds. Following a thorough review and interview process, the Board appointed Mary Shafer-Malicki to the Board effective January 1, 2022. Ms. Shafer-Malicki is nominated in this Proxy Statement for election to a full three-year term by the shareholders, and her biography can be found on page 15. +In an unrelated development, in January 2022, S.P. “Chip” Johnson IV elected to voluntarily resign from the Board to focus on other professional endeavors. Mr. Johnson, the former Chief Executive Officer of Carrizo, had joined the Board following the closing of the merger with Carrizo in December 2019 and noted the successful integration of the two companies upon his departure from the Board. +Board Evaluations +During 2021, the Board engaged a third-party facilitator to conduct a fulsome board evaluation in support of its continuous improvement and succession planning objectives. Each director and certain members of senior management completed a written questionnaire and participated in a personal interview with the third-party advisor regarding the performance and effectiveness of the Board, its committees, and individual directors. At the conclusion of the process, the advisors delivered a comprehensive report to the Chair and subsequently presented their findings to the full Board of Directors. In addition, the Chair and the lead advisor met individually with each member of the Board to provide personal feedback and solicit reactions to the full report. The Board will use the results of the 2021 evaluation process to continue improving Board effectiveness as a part of its annual nomination process and for long-term succession planning initiatives. +Process for Selecting Directors +Director Identification and Selection +Criteria. The Nominating and ESG Committee (the “N&ESG Committee” has established guidelines for considering nominations to the Board. The N&ESG Committee evaluates nominees based on the potential contributions such nominee’s background and skills to corporate strategy, governance and creating sustainable value for shareholders as well as towards achieving the goal of a well-rounded, diverse Board that functions collegially as a unit. While not an exhaustive list, key criteria include: +• Relevant industry knowledge and experience; +• Complementary mix of backgrounds and experience in areas including business operations, finance, accounting, ESG, technology, human capital, and strategy; +• Personal qualities of leadership, character, judgment and personal and professional integrity and high ethical standards; +• Ability to exercise independent and informed business judgment; +• Whether the candidate is free of conflicts and has the time required for preparation, participation, and attendance at meetings; +2022 PROXY STATEMENT 11 +PROPOSAL 1 +• Diversity, including differences in viewpoints, background, education, gender, race or ethnicity, age, and other individual qualifications and attributes; +• The ability to work with other members of the Board, the Chief Executive Officer (the "CEO"), and senior officers of the Company in a constructive and collaborative fashion to achieve the Company’s goals and implement its strategy; and +• In the case of an incumbent director, such director’s past performance on the Board. +The N&ESG Committee and the Board may also consider other qualifications and attributes that they believe are appropriate in evaluating the ability of an individual to serve as a member of the Board. The N&ESG Committee’s goal is to assemble a Board that brings to us a variety of perspectives and skills derived from high quality business and professional experience to perform its oversight role satisfactorily for our shareholders. In making its determinations, the N&ESG Committee evaluates each individual in the context of the Board as a whole, with the objective of assembling a group that can best represent shareholder interests through the active, objective, and constructive participation in meetings and the strategic decision-making processes. +Diversity. Our Corporate Governance Guidelines set forth our policy with respect to Board diversity. We are committed to building a diverse Board comprised of individuals from different backgrounds, including differences in viewpoints, education, gender, race or ethnicity, age, and other individual qualifications and attributes. To accomplish this, the N&ESG Committee requires that search firms engaged by the Company seek to present a robust selection of women and racially or ethnically diverse candidates in all prospective director candidate pools. The Board appointed Mary Shafer-Malicki as a member of the Board effective January 1, 2022, increasing the number of female directors on our Board to three directors. +Nominating Process. In making its nominations, the N&ESG Committee identifies nominees by first evaluating the current members of the Board willing to continue their service and any potential need to expand the Board to include additional expertise and prepare for succession. Current members with a record of quality contribution to the Board whose experience contributes to a complementary mix of backgrounds that enhance the Board are renominated. When vacancies become available, the N&ESG Committee may seek input from industry experts or engage third-party search firms to help source particular areas of expertise or backgrounds. +Retirement Policy. The Board believes that, regardless of age, experienced individuals may make a substantial contribution to the Company. However, the Board has adopted a retirement policy for independent directors. Under the policy, an independent director must retire in conjunction with the annual meeting of stockholders prior to his or her 75th birthday, except in special circumstances upon the request of a majority of the Board (not including the subject director). In accordance with the retirement policy, Larry D. McVay will retire from the Board effective as of the date of the Annual Meeting. +In 2021, the Board unanimously approved the renomination of Chair Flury as a Class III director in order to maintain near-term continuity in the Chair role, despite the fact that his term would extend beyond the board retirement age. Mr. Flury was re-elected to the Board at our 2021 Annual Meeting of Shareholders. The Board also agreed to appoint a special committee plan for long-term leadership succession on the Board, including plans to name a new chair no later than the expiration of Mr. Flury’s term in 2024. +Board Refreshment. Over time, the Board refreshes its membership through a combination of adding or replacing directors to achieve the appropriate balance between maintaining longer-term directors with deep institutional knowledge of the Company and adding directors who bring a diversity of perspectives and experience. As a reflection of this philosophy: +5/11 +directors have tenures of five or fewer years. +10/11 +directors are independent. +Voting Standard +Directors will be elected by a plurality of the votes cast by the shares entitled to vote in the election of directors. This standard means the nominees for available directorships who receive the highest number of affirmative votes of the shares present, in person or by proxy, and entitled to vote, are elected. However, as described below, the Company has an additional requirement in uncontested director elections. The Company believes that this requirement ensures accountability and the opportunity for a positive mandate from the Company’s shareholders. +Our Corporate Governance Guidelines provide that any nominee for director who receives a greater number of votes “withheld” than votes “for” in an uncontested election (i.e., an election in which the number of nominees for election does not exceed the number of directors to be elected) is required to promptly tender his or her resignation for consideration by the N&ESG Committee and Board. Such resignation will only be effective upon Board acceptance of such resignation after receiving the +12 CALLON PETROLEUM +PROPOSAL 1 +recommendation of the N&ESG Committee. The N&ESG Committee will consider any factors it deems relevant to the best interests of the Company and our shareholders in determining whether to accept the director’s resignation. The Board will consider the recommendation, make a determination as to whether to accept or reject such director’s resignation, and notify the director concerned of its decision as well as publicly disclose the Board's decision within 120 days following certification of the shareholder vote. Full details of this policy are set forth in our Corporate Governance Guidelines. +If you hold your shares through a broker and you do not instruct the broker how to vote, your broker will not have the authority to vote your shares. Abstentions and broker non-votes will each be counted as present for purposes of determining the presence of a quorum but will have no effect upon the outcome of the vote on this proposal. All shares of common stock represented by proxies will be voted “FOR” the election of the director nominees, except where authority to vote in the election of directors has been withheld. Should the nominees become unable or unwilling to serve as a director at the time of the Annual Meeting, the person or persons exercising the proxies will vote for the election of substitute nominees designated by the Board, or the Board may choose to reduce the number of members of the Board to be elected at the Annual Meeting in order to eliminate the vacancy. Your proxy cannot be otherwise voted for a person who is not named in this Proxy Statement as a candidate for director or for a greater number of persons than the number of director nominees named. The Board has no reason to believe that the nominees will be unable or unwilling to serve if elected. +The Board recommends a vote FOR each of the three Class I director nominees . +2022 PROXY STATEMENT 13 +PROPOSAL 1 +Directors Nominated For Election +The Board currently consists of eleven directors. Consistent with our certificate of incorporation, the current Board is divided into three classes designated as Class I, Class II, and Class III, each with staggered, three-year terms. Based on the recommendations from the N&ESG Committee, the Board has nominated three Class I Directors, Michael L. Finch, Mary Shafer-Malicki, and Steven A. Webster, to stand for election or, in each case, until the election and qualification of their respective successors or until their earlier death, retirement, resignation or removal. +The following biographies reflect the particular experience, qualifications, attributes, and skills that led the Board to conclude that each nominee should stand for election to serve on the Board: +Class I Directors +Michael L. Finch +Former Chief Financial Officer (Retired) of Stone Energy Corporation +Michael Finch has served as a member of the Board since 2015. He spent nearly 20 years affiliated with Stone Energy Corporation, a publicly-traded oil and gas exploration company, from which he retired as Chief Financial Officer and a member of the Board of Directors in 1999. Prior to his service with Stone Energy, he was employed by Arthur Andersen & Co. +Since 2019, Mr. Finch has served on the advisory board of C.H. Fenstermaker & Associates. He was also an independent director of Petroquest Energy, Inc. a publicly-traded oil and gas company, from 2003 to 2016, where he served as Chair of the Audit Committee and as a member of the Compensation Committee and the Nominating and Corporate Governance Committee. +Mr. Finch holds a B.S. in Accounting from the University of South Alabama and was licensed as a Certified Public Accountant (currently inactive). +SKILLS AND QUALIFICATIONS: +Mr. Finch’s extensive financial, accounting, and operating experience within the oil and gas industry are extremely valuable to the Board and qualify him as a director. In particular, Mr. Finch’s accounting background and status as a “financial expert” provide the Board valuable perspective on issues facing audit committees. +INDEPENDENT +Age as of the Record Date 66 +Director Since 2015 +Callon Committees: +Audit, Compensation +14 CALLON PETROLEUM +PROPOSAL 1 +Mary Shafer-Malicki +Former Chief Executive Officer (Retired) of BP Angola +Mary Shafer-Malicki has served as a member of the Board since appointed in January 2022. Over a career spanning more than 25 years at BP, she held domestic and international leadership roles across the energy value chain. She served as Chief Operating Officer and General Manager for BP's operations in Angola from 2005 to 2009 and Director General for BP's operations in Vietnam from 2003 to 2005. Prior to this, she held various technical and operations leadership roles at BP including as the Business Unit Leader for BP's Central North Sea gas business, General Manager for support services to all of BP's Continental Shelf upstream operations, and President and General Manager for Amoco/BP's Dutch onshore and offshore production and gas storage operations in the Netherlands. +Ms. Shafer-Malicki has held numerous board positions at publicly traded companies during her career. She served as Chair of the Board of QEP Resources, Inc., prior to its merger with Diamondback Energy in March 2021. She was also previously a director at Wood plc, Ausenco Limited, and McDermott International, including when McDermott filed voluntary petitions for reorganization in the United States Bankruptcy Court for the Southern District of Texas in January 2020. She currently serves as a director of the University of Wyoming Foundation, as a member of industry advisory board for the Chemical Engineering department at the University of Wyoming, and as a member of the Strategic Advisory Council to the Dean of Engineering at Oklahoma State University. +Ms. Shafer-Malicki holds a B.S. in Chemical Engineering from Oklahoma State University. +SKILLS AND QUALIFICATIONS: +Ms. Shafer-Malicki brings valuable technical and operational experience across the energy value chain to our Board. In addition, her experience serving on the boards of several other public companies provides valuable perspective on corporate governance and strategic transactions. She also brings valuable leadership insight after having served as chair of a board and as chair of audit, compensation, and governance committees. +INDEPENDENT +Age as of the Record Date 61 +Director Since 2022 +Callon Committees: +Audit, Operations & Reserves +Steven A. Webster +Managing Partner at AEC Partners and Co-Founder of Carrizo Oil & Gas, Inc. +Mr. Webster was a co-founder of Carrizo for which he served as a director from 1993 and as its Chair of the Board from 1997 until December 2019, when Carrizo merged with the Company. Mr. Webster currently serves as the Managing Partner of AEC Partners, a private equity firm engaged in energy investment which was the successor to Avista Capital Partners, a private equity firm he co-founded in 2005 and for which he served as Co-Managing Partner. Prior to forming Avista, Mr. Webster served as Chair of Global Energy Partners, an affiliate of DLJ Merchant Banking and CSFB Private Equity, as CEO and President of R&B Falcon Corporation, and as Chair and CEO of one of its predecessor companies, Falcon Drilling Company, which he also founded. Mr. Webster has been a founder or seed investor in numerous other private and public companies. +He has held numerous board positions at publicly-traded companies and currently serves as a director of Oceaneering International, Camden Property Trust, and various private companies. +Mr. Webster holds an M.B.A. from Harvard Business School where he was a Baker Scholar. He also holds a B.S. in Industrial Management and an Honorary Doctorate in Management from Purdue University. +SKILLS AND QUALIFICATIONS: +Mr. Webster brings to the Board experience in, and knowledge of, the energy industry, business leadership skills from his tenure as chief executive officer of publicly traded companies and his over 30-year career in private equity and investment activities, and experience as a director of several other public and private companies. +INDEPENDENT +Age as of the Record Date 70 +Director Since 2019 +Callon Committees: +N&ESG, Operations & Reserves +Other Current Directorships: +Camden Property Trust +Oceaneering International +2022 PROXY STATEMENT 15 +CORPORATE GOVERNANCE +Directors Continuing in Office +Biographical information, including age as of the Record Date, for our directors continuing in office is set forth below. These individuals are not standing for re-election at this time: +Class II Directors +Matthew R. Bob +President of Eagle Oil and Gas; Managing Member of MB Exploration +Matthew Bob has served as a member of the Board since 2014. Mr. Bob currently serves as President of Eagle Oil & Gas Co., a privately-held, independent oil and gas E&P company, a position he has held since 2014. Mr. Bob is also the founder and managing member of MB Exploration, LLC and affiliated companies, which provide advisory services for exploration, development, and minerals, since 1994. Previously, Mr. Bob served as President of Hall Phoenix Energy LLC, a privately held oil and gas exploration company, from 2009 to 2011. Prior to forming MB Exploration, Mr. Bob was Chief Geophysicist at Pitts Oil Company. He began his career at Union Oil Company of California where he held various geological positions. +Mr. Bob currently serves as an independent director of Southcross Energy Partners, L.P., a natural gas processing and transportation company with operations in South Texas. +Mr. Bob holds a B.A. in Geology from St. Louis University and an M.S. in Geology from Memphis University, and is a graduate of Harvard University’s Executive Management Program. He is a member of the American Association of Petroleum Geologists, the Society of Exploration Geophysicists and the Dallas Petroleum Club, and is a registered Geoscientist in the States of Texas, Mississippi and Louisiana. +SKILLS AND QUALIFICATIONS: +Mr. Bob’s extensive knowledge of the E&P industry and technical expertise are assets to the Board and qualify him as a director. His experience as a senior executive further strengthens the strategic and oversight functions of the Board. He is NACD Directorship Certified. +INDEPENDENT +Age as of the Record Date 64 +Director Since 2014 +Callon Committees: +Compensation (Chair), N&ESG , Operations & Reserves +Other Current Directorships: +Southcross Energy +Anthony J. Nocchiero +Former SVP and Chief Financial Officer (Retired) of CF Industries, Inc. +Anthony Nocchiero has served as a member of the Board since 2011. Mr. Nocchiero retired as Senior Vice President and Chief Financial Officer for CF Industries, Inc. in 2010. Earlier in his career, he held the roles of Vice President and Chief Financial Officer for Merisant Worldwide, Vice President and Chief Financial Officer of BP Chemicals, various financial and management positions at Amoco Corporation, including service as Amoco’s Vice President and Controller from 1998 to 1999. +Mr. Nocchiero has previous experience serving as a board member of various public and private companies, including Terra Nitrogen LP, Keytrade AG, Vysis Corporation and the Chicago Chamber of Commerce. He currently serves as a member of the National Engineering Council of Washington University in St. Louis. +Mr. Nocchiero holds a B.S. degree in Chemical Engineering from Washington University in St. Louis and an M.B.A. degree from the Kellogg Graduate School of Management at Northwestern University. +SKILLS AND QUALIFICATIONS: +Mr. Nocchiero’s broad financial, accounting and operating experience within the energy industry are valuable to the Board and make him a meaningful contributor as a director. Additionally, Mr. Nocchiero’s status as a “financial expert” and knowledge of public company reporting requirements add meaningful insights to the Board and Audit Committee. +INDEPENDENT +Age as of the Record Date 70 +Director Since 2011 +Callon Committees: +Audit (Chair), Compensation +16 CALLON PETROLEUM +CORPORATE GOVERNANCE +James M. Trimble +Former Chief Executive Officer and President (Retired) of Stone Energy Corporation +James Trimble has served as a member of the Board since 2014. Most recently, Mr. Trimble served as the interim Chief Executive Officer and President of Stone Energy Corporation, an independent oil and natural gas E&P company, from 2017 to 2018. Prior to that, Mr. Trimble served as Chief Executive Officer and President of PDC Energy, Inc., Managing Director of Grand Gulf Energy Limited, and President and Chief Executive Officer of Grand Gulf’s U.S. subsidiary Grand Gulf Energy Company LLC. Earlier in his career, Mr. Trimble was Chief Executive Officer of TexCal (formerly Tri-Union Development), Chief Executive Officer of Elysium Energy, and Senior Vice President of Exploration and Production for Cabot Oil and Gas. +Mr. Trimble currently serves as a director of Civitas Resources, Inc., a publicly-traded oil and gas exploration company. Previously, he served as Chair of the Board of Crestone Peak Resources LLC, a privately held oil and gas exploration company. Mr. Trimble has also served a director of Talos Energy Inc., Stone Energy Corporation, PDC Energy, C&J Energy Services, Seisgen Exploration, Grand Gulf Energy, and Blue Dolphin Energy. +Mr. Trimble was an officer of PDC Energy in September 2013, when each of the twelve partnerships for which the company was the managing general partner filed for bankruptcy in the federal bankruptcy court, Northern District of Texas, Dallas Division and was on the board of directors of C&J Energy Services when it filed for bankruptcy in the court of the Southern District of Texas, Houston Division in July 2016. +Mr. Trimble graduated from Mississippi State University where he majored in petroleum engineering for undergraduate (Bachelor of Science) and graduate studies. He is a Registered Professional Engineer in the State of Texas. +SKILLS AND QUALIFICATIONS: +Mr. Trimble’s deep knowledge of the E&P industry and his leadership experience at previous companies strengthen the strategic and oversight functions of the Board. His experience on the boards of several other public companies provides valuable perspective on best practices relating to corporate governance, management and strategic transactions. +INDEPENDENT +Age as of the Record Date 73 +Director Since 2014 +Callon Committees: +N&ESG (Chair), Compensation, Operations & Reserves +Other Current Directorships: +Civitas Resources, Inc. +2022 PROXY STATEMENT 17 +CORPORATE GOVERNANCE +Class III Directors +Frances Aldrich Sevilla-Sacasa +Former Chief Executive Officer of Banco Itaú International +Ms. Aldrich Sevilla-Sacasa is a private investor and was Chief Executive Officer of Banco Itaú International, Miami, Florida, from April 2012 to December 2016. Prior to that time, she served as Executive Advisor to the Dean of the University of Miami School of Business from 2011 to 2012, Interim Dean of the University of Miami School of Business from 2011 to 2011, President of U.S. Trust Bank of America Private Wealth Management from 2007 to 2008, President and Chief Executive Officer of US Trust Company in 2007, and President of US Trust Company from November 2005 until June 2007. She previously served in a variety of roles with Citigroup’s private banking business, including President of Latin America Private Banking, President of Europe Private Banking, and Head of International Trust Business. +Ms. Aldrich Sevilla-Sacasa also serves on the boards of Camden Property Trust, where she chairs the nominating and corporate governance committee, and the Delaware Funds by Macquarie, where she chairs the audit committee. +Ms. Aldrich Sevilla-Sacasa holds a Bachelor of Arts Degree from the University of Miami and an M.B.A. from the Thunderbird School of Global Management. +SKILLS AND QUALIFICATIONS: +Ms. Aldrich Sevilla-Sacasa brings to the Board considerable experience in financial services, banking and wealth management. In addition, her experience as a former president and chief executive officer of a trust and wealth management company, and as a director of other corporate and not-for-profit boards has provided her with expertise in the area of corporate governance. Her designation as a “financial expert” and knowledge of public company reporting requirements add meaningful insights to the Board. +INDEPENDENT +Age as of the Record Date 66 +Director Since 2019 +Callon Committees: +Audit, Compensation +Other Current Directorships: +Camden Property Trust +Delaware Funds by Macquarie +Barbara J. Faulkenberry +Former Major General, United States Air Force +Barbara Faulkenberry has served as a member of the Board since 2018. Ms. Faulkenberry retired from the U.S. Air Force in 2014 as a Major General (2-stars) after a 32-year career, finishing in the top 150 leaders of a 320,000-person global organization. Her last assignment was as Vice Commander (COO) and interim Commander (CEO) of a 37,000-person organization conducting all global Department of Defense air cargo, passenger, and medical patient movements with 1,100 military aircraft plus contracted commercial aircraft. +Ms. Faulkenberry also serves on the boards of Target Hospitality and USA Truck, Inc., where she served as Chair of the Technology Committee from 2016 to 2021, and now serves as Chair of the Strategy and Risk Committee. +Ms. Faulkenberry received a B.S. degree from the Air Force Academy in 1982, an M.B.A. from Georgia College in 1986, and a Master of National Security from the National Defense University in 1999. She has also attended strategic leadership courses at Harvard University, University of Cambridge, and Syracuse University. +SKILLS AND QUALIFICATIONS: +Ms. Faulkenberry brings to the Company senior leadership experience in the areas of supply chain management, logistics, strategic planning, risk management, technology, cyber security, and leadership development. Additionally, she is a NACD Board Leadership Fellow and earned the Carnegie Mellon/NACD CERT Certificate in Cybersecurity Oversight, both of which contribute to best practices in corporate governance and cyber security and provide great value to the Board. She has also completed the NACD Directorship Certification. +INDEPENDENT +Age as of the Record Date 62 +Director Since 2018 +Callon Committees: +Audit, N&ESG +Other Current Directorships: +Target Hospitality +USA Truck, Inc. +18 CALLON PETROLEUM +CORPORATE GOVERNANCE +L. Richard Flury +Chair of the Board +Former Chief Executive (Retired) for Gas, Power & Renewables of BP plc +Richard Flury has served as a member of the Board since 2004 and has served as Chair since 2017. He spent over 30 years with Amoco Corporation, and later, BP plc, from which he retired as Chief Executive for Gas, Power and Renewables in 2001. Prior to Amoco’s merger with BP in 1998, he served in various executive positions and was Chief Executive for Worldwide Exploration and Production and Executive Vice President of Amoco Corporation at the time of the merger. +Mr. Flury was a director of McDermott International, a publicly-traded engineering, procurement and construction company, including when it filed voluntary petitions for reorganization in the United States Bankruptcy Court for the Southern District of Texas in January 2020. Mr. Flury was a director and the non-executive Chair of Chicago Bridge and Iron Company, N.V., a publicly-traded engineering, procurement and construction company, until it merged into McDermott International in 2018. Previously, Mr. Flury was a member of the Board of QEP Resources, Inc., a publicly-traded oil and gas exploration company, from 2010 to 2015. +Mr. Flury graduated from University of Victoria with a degree in Honors Physics. +SKILLS AND QUALIFICATIONS: +Mr. Flury’s deep knowledge of the energy industry and years of executive and management experience provide him with valuable insights into the strategic issues affecting companies in the oil and gas industry that are helpful to the Company and Board. His service on the boards of other publicly-traded companies has provided him exposure to different industries and approaches to governance that we believe further enhances the Board. +INDEPENDENT +Age as of the Record Date 74 +Director Since 2004 +Callon Committees: +Audit, Compensation, N&ESG, Operations & Reserves (non-voting member of each) +Joseph C. Gatto, Jr. +President, Chief Executive Officer and Director +Joseph C. Gatto, Jr. is President, CEO and Director of Callon. Mr. Gatto was elected to the Board in 2018. He has served as the Company's CEO since 2017 and as President since 2016. Prior to his appointment as CEO, he served as Chief Financial Officer and Treasurer of the Company from 2014 to 2017, and held various other senior leadership positions within the Company since joining Callon in 2012. +Prior to joining the Company, Mr. Gatto served as Head of Structuring and Execution with Merrill Lynch Commodities from 2010 to 2011, as the founder of MarchWire Capital, LLC, a financial advisory and strategic consulting firm in 2009, and as a Managing Director in the energy investment banking groups of Merrill Lynch & Co. and Barclays Capital from 1997 to 2009. +Mr. Gatto graduated from Cornell University with a B.S. degree and The Wharton School of the University of Pennsylvania with an M.B.A. He currently serves on the board of directors for the American Production & Exploration Council and the Independent Petroleum Association of America. +SKILLS AND QUALIFICATIONS: +Mr. Gatto’s extensive experience in investment banking and the oil and gas industry make him a valuable addition to the Board. Additionally, Mr. Gatto’s leadership of the Company over the past five years and strong background in capital markets, mergers and acquisitions, strategic planning, and investor relations provide the Board with essential insight and guidance. +Age as of the Record Date 51 +Director Since 2018 +2022 PROXY STATEMENT 19 +CORPORATE GOVERNANCE +Retiring Director +Biographical information, including age as of the Record Date, for Mr. Larry D. McVay, who is retiring from the Board effective as of the date of the Annual Meeting. +Larry D. McVay +Managing Director of Edgewater Energy, LLC +Larry McVay has served as a member of the Board since 2007. Mr. McVay has been a Managing Director of Edgewater Energy, LLC, a privately held oil and gas investment company, since 2007. From 2003-2006, he served as Chief Operating Officer of TNK-BP Holding, one of the largest oil producing companies in Russia. From 2000-2003, he served as Technology Vice President and Vice President of Health, Safety and Environment for BP plc. Prior to joining BP, Mr. McVay held numerous positions at Amoco, including engineering management and senior operating leadership positions. +Mr. McVay was a director of Linde plc, a publicly-traded industrial gas and engineering company until March 2022. Previously, Mr. McVay was a director of Praxair, Inc., an industrial gases company in North and South America, until Praxair, Inc. and Linde AG combined to create Linde plc in 2018. Additionally, Mr. McVay was previously a director of Chicago Bridge and Iron Company, N.V., a publicly-traded engineering, procurement and construction company, until it merged into McDermott International in 2018. +Mr. McVay earned a B.S. in Mechanical Engineering from Texas Tech University, where he was recognized as a Distinguished Engineer in 1995. +SKILLS AND QUALIFICATIONS: +Mr. McVay has been directly involved in nearly all aspects of the oil and gas industry, including drilling, production, finance, environmental, risk, and safety. We believe that this experience and his knowledge of the exploration and production industry, particularly in the Permian Basin, as well as his senior executive experience, service on other boards, and independence, provide valuable insight in the development of our long-term strategies and qualify him for service on the Board. +INDEPENDENT +Age as of the Record Date 74 +Director Since 2007 +Callon Committees: +Operations & Reserves (Chair), Audit, N&ESG +20 CALLON PETROLEUM +CORPORATE GOVERNANCE +Current Composition of the Board +The following table provides information with respect to the skills and experience of all current directors, including the Class I director nominees standing for re-election at the Annual Meeting. +Name Frances Aldrich Sevilla-Sacasa Matthew R. Bob Barbara J. Faulkenberry Michael L. Finch L. Richard Flury +(Chair) Joseph C. Gatto, Jr. +Larry D. McVay (a) +Anthony J. Nocchiero Mary Shafer-Malicki James M. Trimble Steven A. Webster +Age (on March 30, 2022) +66 64 62 66 74 51 74 70 61 73 70 +Tenure (on March 30, 2022) +3 8 4 7 18 4 15 11 1 8 3 +Gender Diversity +● +● +● +Racial/Ethnic Diversity +● +CEO/President Experience ● ● ● ● ● +Senior Executive Leadership ● ● ● ● ● ● ● ● ● ● ● +Outside Public Boards (current) ● ● ● ● +Outside Public Boards (prior) ● ● ● ● ● ● ● ● +E&P Industry Experience ● ● ● ● ● ● ● ● ● +Energy (Other than E&P) Industry Experience ● ● ● ● ● ● ● ● +Financial Expert ● ● ● +Financial Literacy ● ● ● ● ● ● ● ● ● ● ● +Financial Oversight/Accounting ● ● ● ● ● ● ● ● ● +Petroleum and Other Engineering ● ● ● ● +Geologist or Geophysicist ● ● +Government/Public Policy/Regulatory ● ● +HES Experience/Environmental ● ● ● +Strategic Advising ● ● ● ● ● ● ● ● ● ● +Investment Banking ● ● +Supply Chain ● ● ● +Technology/IT/Cybersecurity ● ● ● ● +(a) Mr. McVay is retiring from the Board effective as of the date of the Annual Meeting. +2022 PROXY STATEMENT 21 +CORPORATE GOVERNANCE +Director Compensation +The compensation of our non-employee directors is reviewed by the Compensation Committee and is approved by the Board. We use a combination of cash and stock-based incentive compensation to attract and retain qualified candidates to serve on the Board. In determining director compensation, we consider the responsibilities of our directors, the significant amount of time the directors spend fulfilling their duties, and the competitive market for skilled directors. +Annually the Compensation Committee directly engages an independent compensation consultant to conduct an analysis of director compensation and recommend any adjustments to the total annual compensation of the non-employee directors. The consultant evaluates competitive market data, utilizing the same industry peer group used for executive compensation market data (see page 50). +In 2021, the Compensation Committee, with input from its compensation consultant FW Cook, recommended a decrease to non-employee director compensation to reflect challenged industry conditions and align with similar reductions to target compensation for the NEOs. The Compensation Committee also recommended a reallocation between the cash and equity components of director pay to align with general industry trends and increases to chair fees for the Compensation and Nominating & ESG committees in recognition of the expanded scope and complexity of those roles . +Upon recommendation from the Compensation Committee, the Board approved an overall reduction in non-employee director compensation for 2021 as well as changes to components of the package as follows: +Fee Type 2020 +Compensation 2021 +Compensation +Board Member Cash Retainer $80,000 $95,000 +Restricted Stock Unit ("RSU") Grant Value $165,000 $120,000 +Total Director Compensation $245,000 $215,000 +Chairmen Fees +Non-Executive Chair +$120,000 $120,000 +Audit Committee Chair +$20,000 $20,000 +Compensation Committee Chair +$15,000 $20,000 +N&ESG Committee Chair +$15,000 $20,000 +Operations & Reserves Committee Chair $20,000 $20,000 +The Company's director compensation program generally consists of cash retainers and an annual grant of RSUs awarded under the 2020 Omnibus Incentive Plan (the "2020 Plan"). The RSU grants are awarded to match competitive practices and encourage long-term alignment with shareholders. The RSUs vest on the first anniversary following the grant date, or on the date of the Company’s subsequent Annual Meeting, whichever occurs first. +Each non-employee director is reimbursed for reasonable out-of-pocket costs incurred to attend Board and committee meetings and for director education. If a member of the Board is an officer or other employee of the Company, he or she does not receive compensation for his or her service as a director. +Non-employee directors have the opportunity to make an annual election to defer some or all of their cash retainer or annual stock award pursuant to the terms of a deferred compensation plan for non-employee directors (the "Deferred Compensation Plan") until separation from service as a director. All deferrals under the plan are credited as phantom stock units of Callon common stock. +Callon's non-employee directors are subject to stock ownership guidelines of five times the annual cash retainer of $95,000. As of December 31, 2021, all non-employee directors were in compliance with the stock ownership policy, either through meeting the ownership requirement or by being within the transition period. For more information on the stock ownership guidelines, see page 50. +22 CALLON PETROLEUM +CORPORATE GOVERNANCE +The table below indicates the total compensation earned during 2021 for each non-employee director. In addition to his role as a director, Mr. Gatto also serves as the Company's President and CEO. His compensation is disclosed in the Summary Compensation Table. +NON-EMPLOYEE DIRECTOR COMPENSATION FOR 2021 +Director +Fees Earned or +Paid in Cash (a) +Stock +Awards (b) +All Other +Compensation Total +Frances Aldrich Sevilla-Sacasa $ 95,000 (c) $ 118,940 +(d) +$ — $ 213,940 +Matthew R. Bob $ 115,000 (e) $ 118,940 +$ — $ 233,940 +Barbara J. Faulkenberry $ 95,000 (c) $ 118,940 $ — $ 213,940 +Michael L. Finch $ 95,000 (c) $ 118,940 $ — $ 213,940 +L. Richard Flury $ 215,000 (f) $ 118,940 $ — $ 333,940 +S. P. Johnson IV (g) +$ 95,000 (c) $ 118,940 $ — $ 213,940 +Larry D. McVay $ 115,000 (h) $ 118,940 $ — $ 233,940 +Anthony J. Nocchiero $ 115,000 (i) $ 118,940 $ — $ 233,940 +Mary Shafer-Malicki (j) +$ — $ — $ — $ — +James M. Trimble $ 115,000 (k) $ 118,940 $ — $ 233,940 +Steven A. Webster $ 95,000 (c) $ 118,940 $ — $ 213,940 +(a) Does not include reimbursement of expenses associated with attending Board and committee meetings and for board education. +(b) Amounts calculated utilizing the provisions of FASB ASC Topic 718. These amounts utilize a grant date fair value of $36.71 per share for the awards. The aggregate number of RSU awards outstanding as of December 31, 2021 for each director is 3,240, which RSUs are scheduled to vest on the earlier of either (i) May 14, 2022, or (ii) the date of the Company's 2022 Annual Meeting of Shareholders. +(c) Represents annual retainer of $95,000. +(d) Ms. Aldrich Sevilla-Sacasa elected to have her equity award deferred pursuant to the terms of the Deferred Compensation Plan. +(e) Represents annual retainer of $95,000 and an additional $20,000 for acting as Chair of the Compensation Committee. +(f) Represents annual retainer of $95,000 and an additional $120,000 for acting as the non-executive Chair of the Board. +(g) Mr. Johnson resigned from the Board effective January 5, 2022, and forfeited his unvested 2021 RSU grant. +(h) Represents annual retainer of $95,000 and an additional $20,000 for acting as Chair of the Operations & Reserves Committee. +(i) Represents annual retainer of $95,000 and an additional $20,000 for acting as Chair of the Audit Committee. +(j) Ms. Shafer-Malicki was appointed effective January 1, 2022, and did not earn compensation in 2021. +(k) Represents annual retainer of $95,000 and an additional $20,000 for acting as Chair of the N&ESG Committee. +2022 PROXY STATEMENT 23 +CORPORATE GOVERNANCE +Director Independence +To minimize potential conflicts, it is a policy of the Board that a majority of the Board be independent. In accordance with the standards for companies listed on the New York Stock Exchange (the "NYSE") and the rules and regulations promulgated by the Securities and Exchange Commission (the "SEC"), as well as our Corporate Governance Guidelines, the Board considers a director to be independent if it has affirmatively determined that the director has no material relationship with the Company that could compromise his or her ability to exercise independent judgment in carrying out his or her responsibilities. The Board revisits the independence of each director on an annual basis and makes independence determinations when a newly appointed director joins the Board between annual meetings. The Board reviewed the independence of its directors and nominees in accordance with the standards described above and affirmatively determined that each of the directors (other than Mr. Gatto) and nominees is independent. +Board Structure and Responsibilities +Governance Highlights +We are committed to effective and sustainable corporate governance, which we believe strengthens Board and management accountability, promotes the long-term interests of our shareholders, and helps build public trust in the Company. We adhere to our core values and governance principles to ensure that we operate our business responsibly, ethically, and in a manner aligned with the interests of our shareholders. Highlights of our commitment to strong corporate governance include the following: +• Ten of our eleven directors are independent. Joseph C. Gatto, Jr., our President and CEO, is the only non‑independent member of the Board; +• All Board committees are comprised entirely of independent directors; +• An independent, non-executive director serves as the Company’s Chair of the Board; +• The Company encourages a paced refreshment of the Board. Five of the eleven directors have joined within the last five years; +• The Board includes a balance of experience, tenure, and qualifications in areas important to our business; +• We have an over-boarding policy in place for directors; +• The Board conducts regular executive sessions with our independent directors; +• We regularly refresh our governance documents; +• The Board and its committees conduct annual self-evaluations; +• We have adopted stringent insider trading, anti-hedging, and anti-pledging policies; +• We engage in active shareholder engagement practices; +• The Board oversees environmental, social and governance practices; +• The Board oversees succession planning for the CEO and other executive officer positions; +• We engage an independent executive compensation consultant that reports directly to the Compensation Committee; +• The Company adopted annual say-on-pay voting; +• The Compensation Committee has implemented significant director and executive officer stock ownership guidelines; +• We do not have employment agreements with any executive officers; +• We have double-trigger change in control provisions in our severance agreements and equity awards; +• We do not have a poison pill (shareholder rights plan); and +• We promote annual director education and are a NACD Corporate Board member. +24 CALLON PETROLEUM +CORPORATE GOVERNANCE +General Information +The Board is responsible for determining the ultimate direction of our business strategy, overseeing our governance policies and culture and promoting the long-term interests of the Company. The Board possesses and exercises oversight authority over our business but, subject to our governing documents and applicable law, delegates day-to-day management of the Company to our CEO and senior management. The Board generally fulfills its responsibilities through regular meetings to review significant developments affecting the Company and to act on matters requiring Board approval. Between regularly scheduled meetings, the Board may also hold special meetings, execute written consents, and participate in video or telephonic conference calls when an important matter requires Board action. During 2021, the Board met formally 13 times. All of our directors attended at least 75% of Board and committee meetings either in person or by telephone during the time he or she served on the Board or committees. In addition, to promote open discussion, the non-employee directors meet in executive session without management regularly. L. Richard Flury, the Chair of the Board, was selected to preside over all executive sessions during 2021. It is the policy of the Company that, to the extent possible, all directors attend the Company’s Annual Meetings of Shareholders. Each then-current member of the Board attended the Company's 2021 Annual Meeting of Shareholders. +The Board, in consultation with the N&ESG Committee, has determined that a classified board structure continues to be appropriate for us, particularly in an industry where a long-term strategic planning outlook is critical for the successful development of oil and natural gas resources through commodity price cycles. Our future success depends in significant part on the in-depth knowledge of our business and operations by our directors. We believe that a classified board, with responsible refreshment, promotes stability, continuity and experience among our directors, which is essential to developing and implementing long-term strategies, while resisting the pressure to focus on short-term results at the expense of enhancing long-term value and success. +Board Leadership Structure +One of the Board’s key responsibilities is determining the appropriate leadership structure for the Board, which helps ensure its effective and independent oversight of management on behalf of our shareholders. The Board believes that there is no one generally accepted approach to providing board leadership and given the dynamic and competitive environment in which we operate, the optimal board leadership structure may vary as circumstances warrant. Accordingly, the Board has no policy mandating the separation or combination of the roles of Chair of the Board and CEO, but periodically discusses and considers the structure as circumstances change. As such, the Board believes that it is in the best position to evaluate the needs of the Company and to determine how best to organize the Company’s leadership structure to meet those needs. +2022 PROXY STATEMENT 25 +CORPORATE GOVERNANCE +Currently, the Board has separated the roles of CEO and Chair of the Board and appointed independent director Mr. Flury as Chair of the Board and Mr. Gatto as CEO. +The Board is currently comprised of eleven directors, of whom ten are independent. Mr. Gatto, the Company’s President and CEO, serves as an executive member of the Board. Independent directors and management generally have different perspectives and roles in strategy development. Our independent directors have backgrounds in the oil and gas industry or other relevant experiences which complement the CEO’s comprehensive, company-specific perspective. As the officer having primary responsibility for managing our daily operations and identifying strategic priorities, the CEO is best positioned to lead the Board through reviews of key business and strategy decisions. This dynamic effectively promotes the opportunity for a successful blend of our independent directors’ perspectives and oversight responsibilities and facilitates information flow and communication between senior management and the Board, which are both essential to effective governance. +Areas of Board Oversight +Board Risk Oversight +As an independent oil and gas company, we face a number of risks. The Board, as a whole and through its committees, generally oversees risk management and our long-term strategic direction, ensuring that risks undertaken by the Company are consistent with the Board’s risk tolerance. The Board leadership structure and our practice of a high degree of interaction between our directors and members of senior management facilitate this oversight function. Our executive officers regularly attend the Board meetings and are available to address any questions or concerns raised by the Board related to risk management and any other matters. Other members of our management team periodically attend Board meetings or are otherwise available to confer with the Board to the extent their expertise is required to address risk management matters. The information flow and communication throughout the year between the Board and senior management regarding long-term strategic planning and short-term operational reporting includes matters of material risk inherent in our business of developing oil and natural gas assets. The Board realizes, however, that it is not possible or prudent to eliminate all risk and that appropriate risk-taking is essential in order to achieve our near and longer-term objectives. +While the Board is ultimately responsible for risk oversight, the Board exercises additional risk oversight responsibilities through its committees, which are comprised solely of independent directors. Each such committee has primary risk oversight responsibility with respect to matters within the scope of its duties as contemplated by its charter and as described below. +Standing Committees of the Board of Directors +The Board has four standing committees, each of which is comprised entirely of independent directors. Each committee, discussed below in greater detail, has a written charter that establishes the responsibilities and scope of the committee and its Chair. Each committee charter was reviewed in 2021 and revised as deemed necessary by the Board. +BOARD OF DIRECTORS +The Audit Committee , among other duties, is charged with overseeing financial reporting, accounting integrity, and material risk exposures. +The N&ESG Committee focuses on issues relating to corporate governance, ESG matters, and Board and Committee composition. This Committee also assists the Board in fulfilling its oversight responsibilities with respect to succession planning for our directors and executive officers. +The Compensation Committee oversees the Company's compensation programs and reviews the potential risks that may result from our compensation policies to ensure they do not encourage unnecessary or excessive risk taking by management. +The Operations & Reserves Committee oversees the operations of the Company and the integrity of our reserve estimation reporting process. +26 CALLON PETROLEUM +CORPORATE GOVERNANCE +Committees of the Board +Callon Committees +Name and Independence Audit Compensation N&ESG Operations & +Reserves +Class I Directors (term expires in 2022) +Michael L. Finch +Independent +○ ○ +Mary Shafer-Malicki +Independent +○ ○ +Larry D. McVay (a) +Independent +○ ○ ● +Steven A. Webster +Independent +○ ○ +Class II Directors (term expires in 2023) +Matthew R. Bob +Independent +● ○ ○ +Anthony J. Nocchiero +Independent +● ○ +James M. Trimble +Independent +○ ● ○ +Class III Directors (term expires in 2024) +Frances Aldrich Sevilla-Sacasa +Independent +○ ○ +Barbara J. Faulkenberry +Independent +○ ○ +L. Richard Flury +Independent Chair of the Board +☐ ☐ ☐ ☐ +Joseph C. Gatto, Jr. +President and Chief Executive Officer +● Chair ○ Member ☐ Non-Voting Member +(a) Mr. McVay is retiring from the Board effective as of the date of the Annual Meeting. +2022 PROXY STATEMENT 27 +CORPORATE GOVERNANCE +Audit Committee +Anthony J. Nocchiero (Chair and Financial Expert) +Frances Aldrich Sevilla-Sacasa (Financial Expert) +Barbara J. Faulkenberry +Michael L. Finch (Financial Expert) +Larry D. McVay +Mary Shafer-Malicki +L. Richard Flury (non-voting member) +PURPOSE +The principal function of the Audit Committee is to assist the Board in overseeing the areas of financial reporting, accounting integrity, compliance, and risk management. +MEETINGS IN 2021 +Six meetings; all members attended at least 75% of Audit Committee meetings during the time he or she served on the Audit Committee. +RESPONSIBILITIES +Pursuant to its charter, our Audit Committee functions in an oversight role and has the following purposes: +• Overseeing the quality, integrity and reliability of the financial statements and other financial information we provide to any governmental body or the public; +• Overseeing our compliance with legal and regulatory requirements; +• Selecting and hiring (subject to ratification by our shareholders) the independent public accounting firm; +• Overseeing the qualifications, independence and performance of the independent auditor; +• Overseeing the effectiveness and performance of our internal audit function, internal accounting controls, disclosure controls and procedures, internal control over financial reporting and the internal auditors; +• Establishing and overseeing procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls or audit matters, including the confidential, anonymous submission of concerns regarding such matters; +• Assessing matters related to risk, risk controls and compliance, including oversight of the Company's hedging policy; +• Producing the Audit Committee Report for inclusion in our annual proxy statement; +• Reviewing and approving related party transactions; and +• Performing such other functions the Board may assign to the Audit Committee from time to time, which currently includes overseeing matters related to cybersecurity and the security of information technology systems, including management’s plans, programs and policies designed to mitigate cybersecurity risks and third party reports on the information technology control environment. +The Audit Committee oversees our accounting and auditing procedures and financial reporting practices and is responsible for the engagement of and oversight of all audit work conducted by our independent registered public accounting firm. The Audit Committee conducts an annual evaluation of the firm’s independence and performance based on factors such as technical aptitude, responsiveness, and value for service, and provides feedback to firm leadership. The Audit Committee also oversees the periodic rotation of the lead audit partner from our independent registered public accounting firm, as required by SEC rules, and is directly involved in the selection of such partner. In late 2020 and early 2021, in preparation for the required rotation of Grant Thornton’s lead audit partner, the Audit Committee evaluated candidates for the lead partner role and made a recommendation to the firm based on relevant industry experience and personal traits. +The Audit Committee meets at least quarterly with our executive and financial management teams, internal auditor and our independent registered public accounting firm to review our financial information and internal controls systems. The independent registered public accounting firm reports directly to the Audit Committee and, if requested, meets with the Audit Committee in executive session without management representatives present. The Audit Committee has the authority to investigate any matters brought to its attention and to retain outside legal, accounting or other consultants if deemed necessary. +The Audit Committee oversees the fee structure of the independent registered public accounting firm and is required to pre-approve all audit, audit-related and non-audit services provided by the firm exceeding $25,000. The Audit Committee approved all of the fees described in Proposal 3. +Relationship with Independent Registered Public Accounting Firm +Management is responsible for establishing and maintaining internal controls over financial reporting and for assessing the effectiveness of those controls. The independent registered public accounting firm is responsible for performing independent audits of our consolidated financial statements and internal controls over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (“PCAOB”) (United States) and issuing reports thereon. The Audit Committee’s responsibility is to monitor and oversee these processes. Grant Thornton LLP has served as our independent registered public accounting firm since 2016. The Audit Committee evaluated and reaffirmed Grant Thornton LLP as our independent registered public accounting firm following the Carrizo Acquisition. +INDEPENDENCE +The Board has determined that all members meet the independence requirements of the SEC and NYSE rules and the financial literacy requirements of the NYSE. Members of the Audit Committee may not simultaneously serve on the audit committee of more than two other public companies. +28 CALLON PETROLEUM +CORPORATE GOVERNANCE +Compensation Committee +Matthew R. Bob (Chair) +Frances Aldrich Sevilla-Sacasa +Michael L. Finch +Anthony J. Nocchiero +James M. Trimble +L. Richard Flury (non-voting member) +PURPOSE +The purpose of the Compensation Committee is to establish our compensation programs and oversee the alignment of our compensation with our business strategies. +MEETINGS IN 2021 +Eight meetings; all members attended at least 75% of Compensation Committee meetings. +RESPONSIBILITIES +Pursuant to its charter, the Compensation Committee’s duties include the responsibility to assist the Board in: +• Evaluating the performance of and establishing the compensation of the CEO; +• Establishing, with input from the CEO, the compensation for our other executive officers; +• Establishing and reviewing our overall executive compensation philosophy and approving changes to our compensation program; +• Reviewing incentive compensation arrangements to confirm that executive compensation does not encourage unnecessary risk taking; +• Administering our long-term incentive plans; +• Reviewing and approving the CD&A for inclusion in our annual proxy statement; +• Reviewing and recommending to the Board compensation for non-employee directors; +• Retaining and overseeing compensation consultants, including the independence of the consultants; +• Reviewing and approving performance criteria and results for bonus and performance-based compensation awards for executive officers and approving awards to those officers; and +• Performing such other functions as the Board may assign to the Compensation Committee from time to time. +The Compensation Committee retains the services of an independent compensation consultant to assist in the annual review of market and industry data to assess our competitive position with respect to each element of total compensation and to assist with the attraction and retention of, and appropriate reward to, our CEO and other executive officers. Pursuant to applicable SEC and NYSE rules, the Compensation Committee has determined that no conflicts of interest exist or have existed related to the Compensation Committee’s engagement of FW Cook. +INDEPENDENCE +Consistent with the listing requirements of the NYSE, the Compensation Committee is composed entirely of independent members of the Board, as each member meets the independence requirements set by the NYSE and applicable federal securities laws. +COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION +Frances Aldrich Sevilla-Sacasa, Matthew R. Bob, Michael L. Finch, Anthony J. Nocchiero and James M. Trimble served on the Company’s Compensation Committee during fiscal year 2021, with L. Richard Flury attending meetings as a non-voting member. No member of our Compensation Committee is presently or has been an officer or employee of the Company. In addition, during the last fiscal year, no executive officer served as a member of the board or the compensation committee (or other board committee performing similar functions or, in the absence of any such committee, the entire board) of any entity in which a Callon Board member is an executive officer. +2022 PROXY STATEMENT 29 +CORPORATE GOVERNANCE +Nominating & ESG Committee +James M. Trimble (Chair) +Matthew R. Bob +Barbara J. Faulkenberry +Larry D. McVay +Steven A. Webster +L. Richard Flury (non-voting member) +PURPOSE +The purpose of the N&ESG Committee is to oversee ESG matters; identify and recommend qualified candidates to the Board; assess director, Board and committee effectiveness; develop and implement our Corporate Governance Guidelines; oversee succession planning for the Board and executive officers; and otherwise take a leadership role in shaping the corporate governance of the Company. +MEETINGS IN 2021 +Five meetings; all members attended at least 75% of N&ESG Committee meetings. +RESPONSIBILITIES +Pursuant to its charter, the N&ESG Committee’s duties include the responsibility to assist the Board in: +• Overseeing ESG policies, performance and disclosure, as well as developing recommendations for the Board on emerging issues related to our industry; +• Evaluating criteria for Board membership and identifying individuals qualified to become Board members, recommending nominees for election at the next annual meeting of shareholders, reviewing the suitability for continued service as a director of each Board member, and leading the search for qualified candidates to fill any Board vacancies; +• Assessing the size and composition of the Board and its committees and recommending to the Board the members and chair for each Board committee; +• Overseeing the development of succession and plans for the Board including overall Board and Committee composition and leadership; +• Advising the Board and making recommendations regarding appropriate corporate governance practices and assisting the Board in implementing those practices, including periodically reviewing the adequacy of our Corporate Governance Guidelines, our Code of Business Conduct and Ethics, and the various Board committee charters, and making recommendations for changes thereto to the Board; +• Overseeing the annual self-evaluation of the performance of the Board and its committees; +• Overseeing and approving plans for management continuity and succession; +• Recommending to the Board a successor to the CEO when a vacancy occurs; +• Reviewing directorships in other public companies held by or offered to directors or executive officers of the Company; +• Overseeing continuing education for the Board; and +• Performing other such functions as the Board may assign to the N&ESG Committee from time to time. +INDEPENDENCE +Each member of the N&ESG Committee meets the independence requirements of the NYSE and applicable federal securities laws. +30 CALLON PETROLEUM +CORPORATE GOVERNANCE +Operations & Reserves Committee +Larry D. McVay (Chair) +Matthew R. Bob +Mary Shafer-Malicki +James M. Trimble +Steven A. Webster +L. Richard Flury (non-voting member) +PURPOSE +The purpose of the Operations & Reserves Committee is to assist the Board in its oversight of the Company's operations and its oversight of the integrity of the determination of our oil and natural gas reserve estimates. +MEETINGS IN 2021 +Three meetings; all members attended at least 75% of Operations & Reserves Committee meetings during the time he or she served on the Operations & Reserves Committee. +RESPONSIBILITIES +The Operations & Reserves Committee was created to oversee the responsibilities of the Board relating to operations and reserves, including: +• Overseeing the Board’s participation in the review of the Company's performance related to production and development operations, including safety and environmental performance; +• Supporting the Company's management in driving continuous operational improvement and excellence; +• Reviewing and monitoring the Company's long-term resource development strategy and associated activity plans; +• Overseeing our reserve engineering reports and reserve engineering firm, including: (i) the integrity of our reserve reports, (ii) determinations regarding the qualifications and independence of our independent reserve engineering firm, and (iii) the performance of our independent reserve engineering firm; and +• Performing other such functions as the Board may assign to the Operations & Reserves Committee from time to time. +INDEPENDENCE +Each member of the Operations & Reserves Committee meets the independence requirements of the NYSE and applicable federal securities laws. +2022 PROXY STATEMENT 31 +CORPORATE GOVERNANCE +Corporate Governance Matters +Corporate Governance Principles +The Board believes that sound corporate governance practices and policies provide an important framework to assist in fulfilling its duty to shareholders. The framework for our corporate governance can be found in our governance documents, which include: +• Corporate Governance Guidelines; +• Code of Business Conduct and Ethics; and +• Charters for the Audit, Compensation, N&ESG, and Operations & Reserves Committees. +In keeping with sound corporate governance practices, each of these documents is reviewed annually and is available on our website www.callon.com under the “About Callon - Governance” menu. Shareholders may obtain a printed copy, free of charge, by sending a written request to our Corporate Secretary at our principal executive office in Houston, Texas. Any amendments to these documents are promptly posted on our website. +Code of Business Conduct and Ethics +Our Code of Business Conduct and Ethics (the “Code”) sets forth the policies and expectations for Callon’s officers, employees and directors as well as consultants, representatives, agents, and contractors while acting on Callon’s behalf. The Code addresses a number of topics including conflicts of interest, compliance with laws, insider trading, prohibitions on discrimination and harassment, workplace safety and protection of the environment, and fair disclosure. In addition, the Code explicitly prohibits directors, officers and employees from engaging in hedging transactions in Callon stock. It also states that no corporate funds may be used for political contributions. +The Code meets the NYSE’s requirements for a code of business conduct and ethics and also includes a code of ethics applicable to our senior financial officers consistent with the requirements of the SEC. We intend to satisfy the disclosure requirements regarding any amendment to, or any waiver of, a provision of the Code by promptly posting such information on our website. Concerns about potential violations of the Code can be anonymously reported to our ethics helpline by calling 1-844-471-7637 or accessing the following website: callon.ethicspoint.com. +Environmental, Social and Governance +Callon’s mission is to build trust, create value and drive sustainable growth responsibly for our investors, our employees and the communities in which we operate. Consistent with this mission, the Board oversees the Company’s ESG programs with a focus on long-term, sustainable investments in our operations, team member development, and protecting the environment in the best interests of all of our stakeholders. The Board regularly addresses the Company’s efforts to continuously improve outcomes regarding workplace safety, environmental impact, team member diversity and workforce development. As described in more detail above beginning on page 11 , the Board is also committed to effective and sustainable corporate governance, which we believe strengthens Board and management accountability, promotes the long-term interests of our shareholders, and helps build public trust in the Company. +Communication with Directors +Shareholders or other interested parties who wish to communicate with the full Board, independent directors as a group, or individual directors, may do so by sending a letter in care of the Corporate Secretary to our principal executive office located at 2000 West Sam Houston Parkway South, Suite 2000, Houston, Texas 77042. Our Corporate Secretary has the authority to discard any solicitations, job inquiries, advertisements, surveys or other inappropriate communications, but will forward any other mail to the named director or group of directors. Our Corporate Secretary will forward approved mail addressed to the full Board to the Chair of the Board who, if appropriate, will share the item with the full Board. +32 CALLON PETROLEUM +CORPORATE GOVERNANCE +Board Evaluations +The N&ESG Committee, in consultation with the Chair of the Board, annually conducts a performance review of the Board and its committees. This annual evaluation process seeks to obtain each director’s assessment of the effectiveness of the Board, the committees and their leadership, Board and committee composition, and Board and management dynamics. See page 11 for a description of the board evaluation process for 2021. +Director Education +The Company sponsors an ongoing director education program that assists Board members in fulfilling their responsibilities. Training commences with an orientation program when a new director joins the Board. Ongoing education is provided through written materials, presentations in Board meetings, and training outside the boardroom. All Callon directors are members of the National Association of Corporate Directors and are provided an annual training allowance to pursue relevant director education programs. +2022 PROXY STATEMENT 33 +EXECUTIVE OFFICERS +Executive Officer Biographies +Joseph C. Gatto, Jr. +President, Chief Executive Officer and Director +Joseph C. Gatto, Jr. has served the Company as Chief Executive Officer since May 2017 and as a Director since May 2018. Mr. Gatto joined the Company in April 2012 as Senior Vice President, Corporate Finance, with responsibility for our capital markets and strategic planning functions, in addition to investor relations activities. Effective March 31, 2014, Mr. Gatto was appointed Chief Financial Officer and Treasurer of the Company and in August 2016 was promoted to President while retaining the roles of Chief Financial Officer and Treasurer. In May 2017 he was promoted to Chief Executive Officer while retaining the role as President. Mr. Gatto was elected as a member of the Board of Directors in May 2018. Prior to joining Callon, Mr. Gatto was a Managing Director in the energy investment banking groups of Merrill Lynch & Co. and Barclays Capital from July 1997 until February 2009, with involvement in all phases of M&A and capital raising transactions for his clients. In February 2009, he founded MarchWire Capital, LLC, a financial advisory and strategic consulting firm, and subsequently served as Head of Structuring and Execution with Merrill Lynch Commodities, Inc. from January 2010 until November 2011. Mr. Gatto currently serves on the board of directors for the American Production & Exploration Council and the Independent Petroleum Association of America and as a member of the Contemporary Arts Museum Houston Board of Trustees. Mr. Gatto graduated from Cornell University with a B.S. degree and The Wharton School of the University of Pennsylvania with an M.B.A. +Kevin Haggard +Senior Vice President and Chief Financial Officer +Kevin Haggard has served the Company as Senior Vice President and Chief Financial Officer since May 2021. Prior to joining Callon, Mr. Haggard was Vice President and Treasurer of Noble Energy, Inc., an independent oil and natural gas E&P company, where he directed the company's global corporate finance and treasury operations, from 2016 to 2020. Before joining Noble Energy, Mr. Haggard served as Vice President, Finance and Treasurer of Trinity River Energy and held the same position at HighMount Exploration & Production. Prior to those roles, he served as Chief Financial Officer of SunCap Financial and as an investment banker with Credit Suisse. Mr. Haggard has more than 20 years of leadership experience across energy and finance. Mr. Haggard holds a Master of Management from the Kellogg School of Management at Northwestern University and a Bachelor of Science in Business Administration from Georgetown University. +Jeffrey S. Balmer +Senior Vice President and Chief Operating Officer +Dr. Jeffrey S. Balmer has served the Company as Senior Vice President and Chief Operating Officer since November 2018. Dr. Balmer has over 30 years of operations and subsurface leadership experience in the energy industry. Prior to joining Callon in November 2018, his most recent role was Vice President and General Manager, Southern Operating Area, for Encana Corporation, with responsibility for all of Encana’s upstream operations in the Permian Basin from 2015 to 2018. After joining Encana in 2008, he held various leadership roles including Vice President and General Manager, Western Operating Area, managing operations in the Eagle Ford, DJ, San Juan, Piceance and Wind River Basins, and Vice President, Emerging Plays. Prior to joining Encana, Dr. Balmer served in a variety of technical and operations leadership roles, including positions with ConocoPhillips, Burlington Resources and ExxonMobil Corporation. Dr. Balmer is a member of the board of directors of the Permian Basin Petroleum Association. He holds B.S. and Ph.D. degrees in Petroleum Engineering, in addition to an M.S. in Environmental and Planning Engineering, from Missouri University of Science and Technology (formerly University of Missouri – Rolla). +34 CALLON PETROLEUM +EXECUTIVE OFFICERS +Michol L. Ecklund +Senior Vice President, General Counsel and Corporate Secretary +Michol L. Ecklund has served the Company as Senior Vice President, General Counsel and Corporate Secretary since February 2019 and as Vice President, General Counsel and Corporate Secretary from November 2017 to February 2019. Prior to joining Callon, Ms. Ecklund was Deputy General Counsel for Operations & Commercial Law at Marathon Oil Company, an independent E&P company, from October 2014 to October 2017, where she oversaw the legal team for global operations and acquisitions and divestitures as well as corporate communications. During her 15 years at Marathon Oil, Ms. Ecklund served in progressive positions within and outside the Law Organization including compliance, litigation, human resources, investor relations, corporate communications and tax. Prior to Marathon Oil, she practiced law at Baker Botts LLP in Houston. Ms. Ecklund currently serves as a member of the Rice University Board of Trustees, a director of the World Affairs Council of Houston, and a member of the Greater Houston Partnership's Executive Women's Partnership. Ms. Ecklund received a B.A. degree from Rice University and a J.D. degree from Harvard Law School. +Gregory F. Conaway +Vice President and Chief Accounting Officer +Gregory F. Conaway has served the Company as Vice President and Chief Accounting Officer since he joined Callon in December 2019 when Carrizo merged with the Company. Prior to joining Callon, Mr. Conaway served as Vice President and Chief Accounting Officer of Carrizo from 2014 to December 2019, as Controller of Financial Reporting from 2012 to 2014 and Assistant Controller from 2011 to 2012. Prior to that, Mr. Conaway worked for Ernst & Young, holding positions of increasing responsibility, including senior manager. Mr. Conaway began his career with Arthur Andersen in 1998. Mr. Conaway is a member of the American Institute of CPAs and the Texas Society of CPAs, and is treasurer of Faith West Academy Athletic Booster Club. Mr. Conaway is a CPA and holds an M.B.A. and a B.B.A. in Accounting from Angelo State University. +2022 PROXY STATEMENT 35 +Proposal 2 +Approve, on an Advisory Basis, +the Compensation +of the Company’s NEOs +The Board recommends a vote FOR the compensation paid to the Company’s named executive officers, as disclosed in this Proxy Statement. +• Provides performance-based and market-aligned pay opportunities that are intended to foster alignment, engagement, and retention of key talent to drive Company performance and long-term shareholder value. +In accordance with the requirements of Section 14A of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the related rules of the SEC, we are including in this Proxy Statement a separate proposal, which gives our shareholders the opportunity to approve the compensation of our NEOs by voting “FOR” or “AGAINST” the resolution below (commonly referred to as “Say-on-Pay”) on an annual basis. While the Board and the Compensation Committee intend to carefully consider the shareholder vote resulting from the proposal, the final vote will not be binding on us and is advisory in nature. +The Board recognizes that executive compensation is an important matter for our shareholders. The Compensation Committee is tasked with the implementation of our executive compensation philosophy and, as described in detail in the CD&A below, the design of our executive compensation programs. Our executive compensation program is designed to attract, motivate and retain a qualified executive management team and to appropriately reward our executive officers for their contributions to the achievement of our short-term and long-term business goals and the creation and enhancement of shareholder value. +As described in the CD&A, we believe our compensation program is effective, appropriate and aligned with the long-term interests of our shareholders and that the total compensation package provided to the NEOs is reasonable and not excessive. As you consider this Proposal 2, we urge you to read the CD&A for a full description of our leading-edge executive compensation program. Further, in determining whether to approve this proposal, we believe that shareholders should also consider the following: +• Performance-based compensation. Our executive compensation program seeks to align executive compensation with shareholder value on an annual and long-term basis through a combination of base pay, annual incentives and long-term incentives. By design, a significant portion of our NEO compensation is performance-based, with variable pay comprising 85% percent of compensation opportunity for our CEO. Please review the CD&A for more information on how our 2021 compensation was linked to Company performance. +• Pay practices reflect individual and market factors. The Compensation Committee considers the skills, experience and performance of each of our NEOs as well as competitive market data in setting annual compensation opportunities and directs our independent compensation consultant to provide peer group market data which serves as one of the considerations of compensation decisions. +• “Double-trigger” severance agreements with fixed term. Change in control severance compensation agreements ("CIC Agreements") with our executive officers require an actual or constructive termination of employment before benefits are paid following any change in control. +• Stock ownership guidelines. Each of the NEOs has been granted equity to provide the officer a stake in our long-term success. The purpose of the ownership requirement is to further our goal of increasing shareholder value by aligning the interests of our NEOs with those of our long-term shareholders. +• Clawback Policy. The Compensation Committee maintains a comprehensive clawback policy (the "Clawback Policy") that establishes conditions under which the Committee may recoup previously-paid compensation in event of error, misconduct, or certain other circumstances. +• Hedging policy. Our directors and executive officers are prohibited from entering into transactions in puts, calls and other derivative securities with respect to our securities and from engaging in short sales of our securities. We believe these activities are often perceived as involving insider trading and may focus the holder’s attention on our short-term performance rather than our long-term objectives. +36 CALLON PETROLEUM +PROPOSAL 2 +In light of the above and as more fully described in the CD&A, we believe that the compensation of our NEOs for 2021 was appropriate and reasonable and that our compensation programs and practices are sound and in the best interests of the Company and our shareholders. We therefore respectfully request that shareholders vote on the following resolution: +“RESOLVED, that the compensation paid to Callon’s NEOs, as disclosed in Callon’s 2022 Proxy Statement (including the Compensation Discussion and Analysis, the compensation tables and related footnotes and narrative disclosures) is hereby approved.” +The vote on this resolution is not intended to address any specific element of compensation, but rather the overall compensation of our NEOs and our compensation-related policies and practices as described in this Proxy Statement. As noted above, the vote solicited by this proposal is advisory in nature and its outcome will not be binding on the Company, the Board or the Compensation Committee, nor will the outcome of the vote require the Board or the Compensation Committee to take any action. The outcome of the vote will not be construed as overruling any decision of the Board or the Compensation Committee or creating or implying any additional fiduciary duty of the Board or the Compensation Committee. However, the Board and the Compensation Committee will carefully consider the outcome of the vote when considering future executive compensation arrangements. For a review of the results of the previous year's vote, which reflects overwhelming validation from our shareholders of our pay philosophy and approach, please see the “Role of Annual Say-on-Pay Advisory Vote” on page 40. +Notwithstanding the advisory nature of this vote, the foregoing resolution will be deemed approved with the affirmative vote of the holders of a majority of the stock having voting power present in person or represented by proxy at the Annual Meeting. If you hold your shares through a broker and you do not instruct the broker how to vote, your broker will not have the authority to vote your shares. Abstentions will have the effect of a vote cast against the proposal. Broker non-votes will not be counted as shares having voting power , and so will have no effect upon the outcome of the vote. +The Board recommends a vote FOR the compensation paid to the Company’s named executive officers. +2022 PROXY STATEMENT 37 +EXECUTIVE COMPENSATION +Compensation Discussion and Analysis +Callon’s Strategic Repositioning to Drive Sustainable Value +Decisive Actions to Reposition the Company +Over the past 24 months, the Board and management team took decisive steps to strategically reposition the Company. These steps demonstrated the Company’s proactive response to severe industry conditions and resulted in outstanding performance in 2021, highlighted below: +• Meaningful Stock Price Increase: Callon’s stock price was over 350% higher at year-end 2021 than year-end 2020 and was positioned at the 95th percentile relative to the constituents of the XOP energy index. At of the end of 2021, our stock price had increased by over 1,100% from its March 2020 low of $3.80. +• Step Change in Balance Sheet Strength: Callon reduced total debt by approximately $760 million (excluding cash consideration paid for acquisitions) in 2021 and reduced its leverage ratio by over 2x to achieve an exit leverage ratio of 2.3x (1) . +• Record Financial Results: The Company generated net cash provided by operating activities of $974 million and adjusted free cash flow of approximately $275 million, net income of $365 million and annual adjusted EBITDA of approximately $1 billion in 2021, all of which represented record performance for the Company. +• Strategic Transaction: Callon closed on and integrated the acquisition of 35,000 net acres and approximately 18,000 Boe/d in the Southern Delaware Basin that was both accretive and deleveraging. +• Commitment to ESG: Callon established long-term GHG reduction goals in early 2021 which have since been accelerated following the achievement of a 11% reduction GHG Intensity on legacy assets in 2021. In addition, the Company improved gender diversity by 12% year-over-year and maintained safety performance above industry standards. +(1) Reflects net debt as of December 31, 2021, to EBITDA for the last twelve months pro forma for the Delaware Basin South acquisition. +Changes to Executive Compensation Program Support our Sustainable Business Model +During 2021, the Compensation Committee (the “Committee”) undertook a holistic redesign of the Company’s executive pay programs to strengthen alignment with company strategy and investor priorities for creating a sustainable business model in the energy industry. Objectives of the refreshed framework include: +• A new annual bonus framework that prioritizes financial performance and ESG initiatives, eliminates traditional operational metrics, and caps payouts at target in the event of negative absolute total shareholder return (“TSR”); +• A long-term incentive (“LTI”) program that maintains a 60% weighting on performance-based LTI and manages equity dilution by adopting cash performance units tied to free cash flow and return on capital employed (“ROCE”) performance; +• Incentives that are directly aligned with shareholder outcomes by granting restricted stock units (“RSUs”) and incorporating relative and absolute TSR performance in the annual bonus program; and +• Incorporating ESG performance through 15% quantitative weighting in the annual bonus program plus a qualitative component tied to sustained progress toward GHG reduction targets. +In adopting the new framework, the Committee considered the heightened volatility in energy markets in recent years and aimed to adopt a pay mix that would lower the overall leverage in the program while providing greater transparency and predictability in order to enhance executive retention. Within the 2021 program, the Committee elected to reduce target pay levels for our senior officers in light of challenged industry conditions as follows: +• The target LTI value for the CEO was reduced by 17%, which lowered his total target compensation by 12%; and +• The target LTI value for the other NEOs was reduced by an average of more than 10%. +38 CALLON PETROLEUM +EXECUTIVE COMPENSATION +Within the refreshed program, the Committee sought to align with key investor priorities for the energy industry including strong balance sheets, free cash flow generation, returns and ESG performance. It adopted a compensation structure that would balance near-term incentives linked to each of these investor priorities with long-term incentives to drive sustainable shareholder value creation. The balance across the mix of time horizons and incentive vehicles within the 2021 program is illustrated in the table below, and the specific incentive opportunities and metrics for each component are described in more detail in the sections that follow. +Investor Priorities +Debt Reduction Cash Flow Returns Stock Performance ESG +Annual Cash Bonus Incentive +(One year performance) +Net Debt / EBITDA (1) +Total Corporate Cash Margin +Cash Return on Capital Invested (“CROCI”) +TSR vs XOP (2) peers +Absolute TSR +(cap at target if negative) +Flaring +Safety +Spills +Progress on 5-yr Emissions Target +LTIP +(Three year performance) +Free Cash Flow +(performance unit metric) +ROCE +(performance unit metric) +Restricted Stock Units +Sustainability +Implications +(linkage of short-term program to long-term goals and incentives to drive sustainability) +Financial strength for durability through commodity price volatility +Revenue and cost management to support near-term cash flow; prudent capital allocation and reinvestment rate decisions to drive sustainable free cash flow over time +Transition from cash-based returns excluding DD&A (CROCI) to more earnings / profitability-based metric (ROCE) over time +Highlight imperative to compete for investor mindshare in an industry with varying capital deployment +Our license to operate and sustain investor, stakeholder and employee support in the near and long-term +(1) Net Debt to EBITDA is calculated as the sum of total long-term debt less unrestricted cash and cash equivalents divided by EBITDA, as defined by the Company’s credit facility, inclusive of the pro forma effects of Material Acquisitions or Divestitures, as defined by the Company’s credit facility, as if they occurred on the first day of the trailing twelve-month period. See Appendix A for a reconciliation of non-GAAP financial measures. +(2) Relative TSR performance will be determined relative to the companies in the S&P Oil & Gas Exploration & Production Select Industry Index (“XOP”) at the beginning of the year. +The Committee intended for the refreshed framework to provide longer-term continuity in program design. As planned, the core framework has been continued into 2022 with the addition of a long-term ESG factor linked to the Company’s publicly stated long-term GHG intensity goal. See page 48 for more information about the 2022 incentive program design. +Executive Pay Aligned with Shareholders +Realizable Compensation Demonstrates Alignment Between Pay and Performance +The Compensation Committee (referred to throughout the Compensation Discussion & Analysis as the “Committee”) designs our compensation programs to reward our CEO and other NEOs for delivering results consistent with the Company’s long-term strategic objectives and to align their interests with those of our shareholders. To do so, the Committee has adopted programs that are heavily weighted to “at risk” compensation delivered through annual cash incentives and long-term incentive awards. In addition to awarding “at risk” pay, to further align executives with the shareholder experience in early 2021 the Committee lowered target annual compensation for the CEO and NEOs by 12% and an average of 5%, respectively, to reflect the challenged market conditions. +The alignment between executive pay and performance is exemplified in our CEO's realizable annual 2021 compensation value at year-end, which reflects the Company’s strong execution and stock price recovery throughout the year: +2022 PROXY STATEMENT 39 +EXECUTIVE COMPENSATION +CEO Target Annual Pay +12% +CPE 2021 Stock Price Performance +359% +CEO Target Pay vs. Realizable Pay (i) (2021) +143% +(i) 2021 CEO realizable pay includes (i) actual amounts received for salary and 2021 annual bonus, (ii) the value as of December 31, 2021, of RSUs granted in 2021 based on the closing price of $47.25 per share of our common stock on the last trading day of 2021, and (iii) the value of 2021 cash CPUs as of December 31, 2021, based on performance to date. +Strong Compensation Governance +We believe our compensation program incorporates many sound practices, including the following: +What We Do +What We Don’t Do +• Substantial focus on performance-based pay +• Strong alignment with shareholder priorities through significant weighting on long-term incentives +• Review of peer group market data when establishing compensation +• Robust stock ownership guidelines for our NEOs and directors +• Clawback Policy applies in the event of error, fraud or misconduct +• Double-trigger change in control severance for both cash severance and equity vesting +• NO hedging or pledging of our stock +• NO employment agreements +• NO excessive benefits or perquisites +• NO single trigger change in control benefits +Role of Annual Say-on-Pay Advisory Vote +We have historically received strong support from our shareholders for our executive compensation practices. In the advisory vote held at the Company's 2021 Annual Meeting of Shareholders, approximately 96% of the votes cast were in favor of our 2020 executive compensation programs. The Committee acknowledged the support received from our shareholders and viewed the results as an affirmation of our executive compensation policies and programs. The Committee will continue to review shareholder votes and feedback on our executive compensation programs to ensure alignment with shareholder interests. +Approximately 96% of the votes were cast in favor of our 2020 executive compensation programs +40 CALLON PETROLEUM +EXECUTIVE COMPENSATION +Executive Compensation Philosophy +Our executive compensation program is designed to achieve the following objectives: +• Emphasize pay for performance, in which Company and individual performance against preset goals are inherently linked to the amount realized by an NEO; +• Attract and retain a qualified and motivated management team by offering industry competitive opportunities and providing the majority of NEO compensation in the form of long-term incentives that vest over a three-year period; +• Incentivize NEOs and appropriately reward them for their contributions to the achievement of our key short-term and long-term strategic objectives with variable compensation; and +• Align the compensation of our NEOs with the interests of our long-term shareholders by providing 60% of the LTI mix in the form of performance-based incentives and 40% in the form of RSUs. +Executive Pay Program and Decisions +2021 Named Executive Officers +Our named executive officers (“NEOs”) include the individuals who served as the Company's Chief Executive Officer or Chief Financial Officer during 2021, and the three other most highly compensated executive officers who were serving in such capacity at the end of 2021. +Our former Chief Financial Officer James P. Ulm II retired from the Company in May 2021, and Kevin Haggard was appointed Chief Financial Officer as of May 17, 2021. The Committee reviewed and approved Mr. Haggard’s initial compensation package as described in this CD&A and also authorized the Separation Agreement and Consulting Agreement between the Company and Mr. Ulm as described on page 60. Since Mr. Haggard and Mr. Ulm both served in the capacity of Chief Financial Officer during 2021, both are NEOs. Our NEOs for 2021 were: +NEO +Age +Title +Joseph C. Gatto, Jr. +51 +President, Chief Executive Officer and Director +Kevin Haggard (i) +51 +Senior Vice President and Chief Financial Officer +Jeffrey S. Balmer +57 +Senior Vice President and Chief Operating Officer +Michol L. Ecklund +47 +Senior Vice President, General Counsel and Corporate Secretary +Gregory F. Conaway +46 +Vice President and Chief Accounting Officer +James P. Ulm, II (i) +59 +Former Senior Vice President and Chief Financial Officer +(i) Mr. Ulm retired from the Company in May 2021. The Company named Kevin Haggard as Senior Vice President and Chief Financial Officer effective May 17, 2021. +2021 Incentive Compensation Program Supports Go-Forward Business Objectives +As part of its comprehensive review of the Company’s compensation structure in the first quarter of 2021, the Committee adopted a performance-based compensation program to align with investor priorities and drive sustainable results. +The program was heavily weighted to incentive-based compensation linked to financial and ESG performance for the NEOs, including Mr. Gatto as follows: +2022 PROXY STATEMENT 41 +EXECUTIVE COMPENSATION +Base Salaries +We provide our employees, including the NEOs, with an annual base salary that is reflective of individual skills, experience and expertise to compensate them for their service throughout the year. The Committee evaluates our NEOs’ salaries and other components of their compensation to ensure that the NEOs’ total compensation is competitive relative to market practices and is consistent with the Committee’s compensation philosophy. +In early 2021, the Committee established base salaries for each of the NEOs as set forth in the table below with the input of the independent compensation consultant. The Committee did not increase base salaries for most of the executive team for 2021 in light of continued commodity price uncertainty related to the COVID-19 pandemic. +NEO +2020 Base Salary (Reinstated) +2021 Base Salary +Joseph C. Gatto, Jr. +$865,000 $865,000 +Kevin Haggard N/A $450,000 +Jeffrey S. Balmer +$510,000 $510,000 +Michol L. Ecklund +$430,000 $430,000 +Gregory F. Conaway $295,000 $310,000 +James P. Ulm, II +$500,000 $500,000 +Note: The actual base salaries reported in the Summary Compensation Table for 2020 were lower than the 2020 base salary rate outlined above as our NEOs volunteered to have their base salaries reduced due to the challenging industry conditions starting in April 2020. As macro conditions improved, the Committee approved the reinstatement of base salaries effective in July 2020 for vice presidents and in October 2020 for the CEO and senior vice presidents. +Performance-Based Annual Cash Bonus Incentive +Each year, the Committee establishes an annual incentive bonus program that is designed to align NEO compensation with the annual business plan and strategic priorities for the year. In early 2021, the Committee approved the annual incentive compensation framework described below as part of its comprehensive redesign of the executive incentive compensation program to better align with investor priorities. +When establishing the annual bonus program for 2021, the Committee held the annual bonus target award opportunity flat for most of the NEOs as outlined below. +NEO 2020 Target Bonus Opportunity +(% of Base Salary) 2021 Target Bonus Opportunity +(% of Base Salary) +Joseph C. Gatto, Jr. 115% 115% +Kevin Haggard N/A 90% +Jeffrey S. Balmer 95% 95% +Michol L. Ecklund 90% 90% +Gregory F. Conaway 70% 75% +Actual bonus awards under the program can range from 0 - 200% of target based on the achievement of pre-established performance metrics as described below. A 2021 annual bonus target was not established for Mr. Ulm due to his retirement in May 2021. +2021 Annual Bonus Metrics +In redesigning the Company’s annual bonus program, the Committee sought to more directly align executive compensation opportunities with investor and Company priorities for financial and ESG performance to support long-term value creation for shareholders. To achieve these objectives, the Committee established a 2021 annual bonus program that would: +• Focus on pay-for-performance by maintaining 80% weighting on quantitative metrics; +• Prioritize financial results by increasing the financial metric weighting to 65% and eliminating traditional operational metrics from the program; +42 CALLON PETROLEUM +EXECUTIVE COMPENSATION +• Align incentive payouts with the shareholder experience by including a relative TSR comparison to the XOP energy index and capping bonus payouts at target if absolute TSR was negative for the year; and +• Support our sustainability objectives by introducing a quantitative ESG category (weighted 15%) and aligning with long-term ESG objectives within the qualitative component of the program. +Objective Description Weighting +Quantitative Objectives - Financial +(65%) +Net Debt/Adjusted EBITDA (i) +Measure of our ability to cover our debt, which is impacted by cash flow, and ensures focus on a strong balance sheet +20% +Cash Return on Capital Invested (ii) +Measure of total corporate returns on capital +20% +Total Corporate Cash Margin (iii) +Measure of annual cash generation that captures all critical elements of revenue generation and expense control initiatives +15% +TSR vs. XOP Peers +Measure of competitiveness of shareholder return relative to competing investor alternatives +10% +Quantitative Objectives - ESG +(15%) +Environmental - Flaring Intensity +(volumes flared / gas produced) +Measure of one component of GHG emissions that represents potential lost revenue due to flaring +5% +Safety - Total Recordable Incident Rate (“TRIR”) +Measure of rate of injuries within our workforce +5% +Environmental - Spill Rate +Measure of impact to the environment from spills relative to production +5% +Qualitative Objectives (20%) +Other key organizational mandates +Measure of our success relative to key objectives tied to strategy execution, asset disposition goals, long-term GHG emissions reduction, diversity and development initiatives, inventory delineation, and management of unforeseen industry events +20% +(i) Net Debt to EBITDA is calculated as the sum of total long-term debt less unrestricted cash and cash equivalents divided by EBITDA, as defined by the Company’s credit facility, inclusive of the pro forma effects of Material Acquisitions or Divestitures, as defined by the Company’s credit facility, as if they occurred on the first day of the trailing twelve-month period. See Appendix A for a reconciliation of non-GAAP financial measures. +(ii) Cash Return on Invested Capital is defined as Adjusted EBITDA / (average total debt + average stockholders’ equity). +(iii) Total Corporate Cash Margin is adjusted free cash flow plus operational capital expenditures. +For the financial elements of the program, the Committee selected metrics to align with evolving investor priorities for the energy industry including strong balance sheets, capital discipline, and positive free cash flow, all of which support a pathway to potential returns of capital. In addition, the Committee incorporated a relative total shareholder return metric that compared the Company’s stock price performance for the year to those of representative companies across the energy value chain as represented in the XOP index. +To establish the threshold, target and maximum goals for each metric, the Committee sought to align the goals with publicly stated guidance for the year and then considered sensitivities for key operational inputs, asset dispositions, and commodity prices (assuming a 15% downside pricing case and a 20% upside pricing case), to arrive at a range of potential outcomes. In each instance, the Committee adopted an expanded upside range to align maximum goals with “stretch” performance. +2021 Performance Results +After the close of the 2021 calendar year, the Committee assessed the Company’s and the NEOs’ annual performance overall and relative to the frameworks established for the annual incentive compensation program. As summarized in the table below, 2021 Company results exceeded the maximum goal for each of the quantitative financial metrics, including achievement of a total shareholder return that outperformed 95% of the companies in the XOP energy index. With respect to the other quantitative financial metrics, the Committee noted that the Company’s 2021 outperformance reflected strong operational execution as well as multiple accretive transactions including the Delaware Basin South acquisition, asset dispositions of $210 million, and the equitization of nearly $200 million in debt. The Company also met or exceeded target performance for each of the 2021 quantitative ESG goals. +2022 PROXY STATEMENT 43 +EXECUTIVE COMPENSATION +Quantitative Objective Weighting Threshold Target Max Actual Results 12/31/2021 Performance Factor Funding Level +Net Debt/Adjusted EBITDA (i) +20% 3.9x 3.5x 3.0x 2.3x 200% 40% +Cash Return on Cash Invested (ii) +20% 18.0% 20.0% 22.5% 25.3% 200% 40% +Total Corporate Cash Margin (iii) +15% $15.50 $17.00 $19.00 $22.43 200% 30% +TSR vs. XOP 10% P30 P50 P90 P95 200% 20% +ESG +TRIR 5% N/A 0.62 N/A 0.62 100% 5% +Spills (Bbl/MMBoe) 5% N/A <50 N/A 29 100% 5% +Gas Flaring (Mcf/Bbl) 5% N/A <3.2% N/A 2.1% 100% 5% +Total Quantitative 80% 145%/80% +(i) Net Debt to EBITDA is calculated as the sum of total long-term debt less unrestricted cash and cash equivalents divided by EBITDA, as defined by the Company’s credit facility, inclusive of the pro forma effects of Material Acquisitions or Divestitures, as defined by the Company’s credit facility, as if they occurred on the first day of the trailing twelve-month period. See Appendix A for a reconciliation of non-GAAP financial measures. +(ii) Cash Return on Invested Capital is defined as Adjusted EBITDA / (average total debt + average stockholders’ equity). +(iii) Total Corporate Cash Margin is adjusted free cash flow plus operational capital expenditures. +When determining the weighted contribution for the qualitative component of the program for 2021, the Committee considered the Company’s and management’s performance overall and relative to the qualitative performance factors set forth in the table below. The Committee determined that the management team met or exceeded expectations relative to the established qualitative goals and commended the management team's significant progress on financial and strategic initiatives during the year. In particular, the Committee considered the following noteworthy achievements for 2021: +• Reduction of Callon's leverage ratio by over 2x, to achieve an exit leverage ratio of 2.3x (1) ; +• Achievement of multiple financial records for the Company including net income of $365.2 million, annual adjusted EBITDA of $999 million (2) and adjusted free cash flow of $274 million (2) ; +• Execution and integration of the Delaware Basin South acquisition and closing of $210 million in credit-enhancing asset dispositions; +• Significant progress made toward the Company’s long-term GHG emissions reduction goals, which culminated in the announcement of an acceleration of those goals in February 2022 (see page 7 ); +• Addressing pandemic-related workplace challenges; and +• CPE stock price was over 350% at year-end 2021 than year-end 2020. +(1) Reflects net debt as of December 31, 2021, to EBITDA for the last twelve months pro forma for the Delaware Basin South acquisition. +(2) Adjusted free cash flow is defined as adjusted EBITDA minus the sum of operational capital, capitalized interest, capitalized general and administrative expense and interest expense. Adjusted EBITDA is a non-GAAP financial measure. See Appendix A for a reconciliation of non-GAAP financial measures. +In considering these qualitative factors for 2021, the Committee elected to fund the qualitative component of the annual bonus program at 30% (above the target of 20%). +44 CALLON PETROLEUM +EXECUTIVE COMPENSATION +Goals Results +Progress on long-term GHG emission targets +• >10% reduction in GHG intensity (including Primexx) +• Completed assessment of current methane intensity profile and now executing plan for 2022/2023 +• Tangible progress made toward accelerating timeline for initial reduction targets +Diversity and development initiatives +• Initiated company-wide employee development program with >80% engagement +• Improved gender diversity >12% YOY +Inventory delineation/framework for testing +• Completed rigorous inventory assessment with coordinated effort from subsurface technology, asset development, and reserves teams +• Instituted protocol for regular reassessments +Ongoing evaluation of strategic options within a maturing industry environment +• Closed and integrated strategic Primexx transaction +• Closed asset dispositions of $210MM (target of $125MM - $225MM) at valuations that benefited pro forma credit metrics +Management of unforeseen industry events +• Safely managed response to unprecedented Winter Storm Uri in February 2021 and avoided long-term impacts to production +• Quickly implemented multiple initiatives to address Texas Railroad Commission limitations on salt water disposal +2021 Annual Incentive Compensation Payouts +Based on the Committee’s assessment of 2021 performance relative to the pre-established annual bonus programs as described above, the Committee awarded annual incentive compensation payouts of 175% of target for the NEOs. Accordingly, individual bonus payouts for 2021 were as follows: +NEO Payout as a % of Target 2021 Annual Bonus +Joseph C. Gatto, Jr. 175% $1,740,812 +Kevin Haggard 175% $708,750 +Jeffrey S. Balmer 175% $847,875 +Michol L. Ecklund 175% $677,250 +Gregory F. Conaway 175% $406,875 +Mr. Ulm was not eligible to receive a 2021 annual incentive compensation payout due to his retirement from the Company in May 2021. +Annual Award of Long-Term Incentives +In early 2021, the Committee approved the long-term incentive framework outlined below as part of the redesign of the executive compensation program to better align with investor priorities for the energy industry. The Committee sought to accomplish the following objectives with the revamped LTI program: +• Focus on pay-for-performance by maintaining 60% weighting on performance-based LTI; +• Align compensation with company strategy and shareholder priorities of free cash flow and ROCE to drive sustainable value creation; +• Manage equity dilution by delivering a portion of the long-term incentive program in cash; and +• Provide direct alignment with shareholders by providing a portion of the program in Restricted Stock Units. +2022 PROXY STATEMENT 45 +EXECUTIVE COMPENSATION +Accordingly, the Committee adopted a 2021 long-term incentive program that incorporated two elements: +LTI Vehicle Weighting Objective +Cash Performance Units +(Three-year Cliff Vest) +60% +• Reward for adjusted free cash flow generation +• Align with long-term Return on Capital Employed results +Time-Based RSUs +(Three-year Ratable Vest) +40% +• Create direct alignment with shareholder interests +• Provide direct retention incentives for our executives +For the grant of LTI awards to executive officers, the Committee considers market analysis and the advice of its independent compensation consultant to determine the program design and target award amounts. For 2021, the Compensation Committee elected to reduce target LTI levels for the NEOs in recognition of challenged industry conditions as reflected in the following table: +NEO +2020 Target Value (a) +2021 Target Value (a) +% Reduction +Joseph C. Gatto, Jr. $4,697,000 $3,900,000 -17% +Kevin Haggard N/A $1,462,500 N/A +Jeffrey S. Balmer $2,219,000 $1,941,625 -12.5% +Michol L. Ecklund $1,398,000 $1,223,250 -12.5% +Gregory F. Conaway $516,000 $477,300 -7.5% +(a) Represents the intended target value of the awards, which is different from the grant date fair value computed in accordance with FASB ASC Topic 718 as reported in the Summary Compensation Table. The methodology adopted by the Committee for awarding LTI equity awards uses the 20-day average closing price of Callon stock as of the grant date to determine the number of RSUs granted. +The target LTI values were delivered to each NEO as a grant of RSUs for 40% of the target value and grant of cash performance units ("CPUs") for 60% of the target value as described in more detail below. A 2021 LTI target value was not established for Mr. Ulm due to his retirement in May 2021. +RSU program +In 2021, the Committee awarded NEOs with time-based RSUs that will vest annually in one-third increments beginning on April 1, 2022, provided the NEO continues to be employed on the vesting dates. The RSUs will be settled in shares of the Company’s common stock. +Cash Performance Units +In 2021, the Committee adopted a new long-term incentive vehicle in the form of CPUs. The CPUs were designed to align with long-term investor priorities of free cash flow generation and return on capital employed while managing the Company’s equity dilution. The CPUs will vest subject to achievement of the performance targets described below, and the NEO's continued employment through the vesting date. +Each CPU has a target value of $1 and will pay out in cash within the range of 0-200% of target based on Company results relative to pre-established performance targets for the 2021-2023 calendar years. The value of the awards will be determined by (i) our adjusted free cash flow performance over three, one-year performance periods relative to annual goals established by the Committee and (ii) a cap on the final payout opportunity based on our three-year average ROCE performance including a maximum payout of 75% of target if three-year ROCE is less than 10 percent. The following table summarizes the performance components of the CPU vehicle: +Objective Description Measurement Payout Opportunity +Adjusted Free Cash Flow Key investor priority providing a clear path to absolute debt reduction and cash return to shareholders over time Three, one-year performance periods Ranges from 0% to 200% based on achievement against threshold, target, and max goals +Return on Capital Employed Returns based measure that includes a proxy for ongoing reinvestment in the business (DD&A) and provides comparison to cost of capital. Bottom line profits focus allows for comparability to cost of capital and across sectors. Three-year average Caps the payout opportunity based on performance +46 CALLON PETROLEUM +EXECUTIVE COMPENSATION +2020 Transition and Retention Incentive Awards +During the third quarter of 2020, as the Company and industry confronted the challenges of the global COVID-19 pandemic and world oil price collapse, the Committee, supported by the advice of its independent compensation consultant, adopted a one-time, performance-based transition cash incentive program (the “2020 Cash Incentive Awards”) to support the retention of our officers. +At that time, our executives had limited retention incentives in place. Due to relatively short tenures in their roles (on average, the NEOs had been in their roles for approximately two years), no NEO had participated in a full three-year incentive compensation cycle. Further, the retention value of outstanding incentive awards was meaningfully below targeted values due in part to macro factors outside of executives’ control including the significant decline in commodity prices in 2020 and the shift in investor capital away from the energy industry that further reduced stock prices. In addition, our NEOs had voluntarily agreed to reduce their base pay by 15-20% in response to the challenged commodity pricing environment of 2020. +By third quarter 2020, the Committee had initiated a full redesign of the Company’s compensation program to better align with investor priorities while also enhancing retention incentives for executives. In the interim, it was a priority for the Board to ensure continuity of the management team to lead the Company through the challenges and financial pressures caused by commodity price volatility and to preserve the integration and synergy gains achieved for shareholders following a December 2019 corporate merger. Accordingly, the Committee sought to ensure there were medium-term retention incentives in place for the executive team as the Company transitioned to the revamped compensation program by implementing the one-time 2020 Cash Incentive Award program. +The Committee designed the 2020 Cash Incentive Award program to align with the investor priority of generating sustainable free cash flow to fund operational activities and strengthen the balance sheet. Under the self-funded transitional incentive program, officers were eligible to receive quarterly cash awards from a pool equal to 2.5% of the Company’s positive adjusted free cash flow (excluding non-recurring items) for the six quarters between third quarter 2020 through the end of 2021. The targeted award amounts were established to align with the Committee's retention objectives, and each NEO’s 2020 Cash Incentive Award opportunity was based on the relative proportion of such individual’s target annual bonus amount to the total target annual bonus amount for the participants in the program. The total aggregate award value was capped at $6 million which would only be achieved if the Company generated $240 million or more of positive adjusted free cash flow during the six quarters of the program. +The following table sets forth each NEO’s applicable percentage of the award pool and the maximum amount he or she was eligible to receive over the six quarters of the 2020 Cash Incentive Award program. +2020 Transitional Cash Incentive Award Program - 2.5% of Adjusted Free Cash Flow +NEO Applicable Percentage of Pool (%) Maximum Achievable with $240MM Adjusted FCF +Joseph C. Gatto, Jr. 28.89% $1,733,140 +James P. Ulm, II (1) +13.79% $827,586 +Jeffrey S. Balmer 14.07% $844,138 +Michol L. Ecklund 11.24% $674,265 +Gregory F. Conaway 6.00% $359,782 +(1) Mr. Ulm forfeited his right to future potential 2020 Cash Incentive Awards after his retirement on May 31, 2021. +The 2020 Cash Incentive Awards were paid on a quarterly basis commencing on July 1, 2020, based on 2.5% of positive adjusted free cash flow up to the maximum of $6 million. The program expired as of December 31, 2021. The amounts earned by each NEO in 2020 and 2021 are reported in the non-equity incentive plan compensation column of the Summary Compensation Table on page 53 . +The Committee also awarded a special cash retention award to Dr. Balmer in the third quarter 2020 in recognition of operational performance under his leadership and to further incentivize his retention with the Company. Under the terms of the award, Dr. Balmer received a $175,000 cash bonus on October 1, 2021, and will receive second bonus of the same amount on October 1, 2022, subject to his continued employment with the Company. +2022 PROXY STATEMENT 47 +EXECUTIVE COMPENSATION +Vesting of 2019-2021 Performance Awards +In 2019, the Committee granted performance share units (“PSUs”) to the then-executive officers covering a three-year performance period beginning in 2019 and ending in 2021. The Company’s relative TSR for the performance period compared to the peer companies defined by the Committee resulted in vesting of 50% of the target PSUs awarded per the terms of the PSU award agreement. Vested PSUs were paid 50% in cash and 50% in Company common stock. +The table below summarizes the PSUs earned by the NEOs for the 2019-2021 performance period: +NEO Target Number +of PSUs(a) Percent of Target +PSUs Earned Actual Vested PSUs +(Settled 50% Cash and 50% Shares) +Joseph C. Gatto, Jr. 31,696 50% 15,848 +Kevin Haggard (b) +— — — +Jeffrey S. Balmer 12,838 50% 6,418 +Michol L. Ecklund 7,372 50% 3,686 +Gregory F. Conaway (b) +— — — +(a) Mr. Ulm forfeited his PSUs upon his retirement on May 31, 2021. +(b) Messrs. Haggard and Conaway were not employed by the Company in January 2019 when the awards were granted. +2022 Incentive Compensation Program +In the first quarter 2022, the Committee considered the design of the incentive compensation program awards for the upcoming year with the input of FW Cook. The Committee opted to continue the core structure of the refreshed incentive design adopted in 2021, while evolving and enhancing the links to ESG performance. +For the 2022 annual bonus program, the Committee adopted the same quantitative metric categories and weightings as set forth on page 43 (with new target goals to align with the Company’s 2022 business plan) except they expanded the ESG metrics. In addition to safety performance and flaring intensity, the Committee will hold management accountable for progress towards the Company’s medium-term GHG goals (see page 45) by including elimination of routine flaring and achievement of an interim GHG intensity goal in the 15% weighting for ESG for 2022. +Within the long-term incentive program for 2022, the Committee continued its practice of delivering target LTI values 40% in RSUs and 60% in CPUs with GHG intensity added as a performance factor. The 2022 CPUs are comprised of two components and will pay out based on Company results relative to pre-established performance targets for the 2022-2024 calendar years: +• “Business Sustainability” CPUs: 70% of target CPU value. Payouts will be determined by (i) our adjusted free cash flow performance over three, one-year performance periods relative to annual goals established by the Committee and (ii) an ESG modifier ranging from 0.8 to 1.2 and tied to achievement of our 2024 “base” and “stretch” goals for GHG intensity. +• “Returns” CPUs: 30% of target CPU value. Payouts will be determined by our three-year average ROCE performance relative to established goals, including a threshold goal requiring three-year ROCE of at least 10 percent. +Other Compensation +Perquisites and Other Benefits +Benefits represent a relatively small part of our overall compensation package; however, these benefits help attract and retain senior level executives. We provide benefits commonly offered in the E&P industry to all of our employees, including our NEOs, and review these benefits annually to ensure that they are competitive with industry norms. These benefits consist of: +• Group medical and dental insurance program for employees and their qualified dependents; +• Group life insurance for employees and their spouses; +• Accidental death and dismemberment coverage for employees; +• Long-term disability coverage; +• Callon's sponsored cafeteria plan; and +• 401(k) employee savings and protection plan (the "401(k) plan"). +48 CALLON PETROLEUM +EXECUTIVE COMPENSATION +We pay the full costs of these benefits, including the 401(k) plan administration, for all employees. +Under our 401(k) plan, all eligible employees may elect to defer a portion of their compensation up to the statutorily prescribed limit. In 2021, the Company provided a matching contribution of up to 6% and a profit sharing contribution of up to 2% of the employee’s IRS eligible salary for qualified employees, including our NEOs. +Our NEOs are entitled to certain benefits that are not otherwise available to all of our employees. We provide our executive officers with use of a Company vehicle. We purchase or lease the vehicle and pay for all maintenance, repairs, insurance and fuel. The NEO is required to recognize taxable income using the IRS’s annual lease value method for personal use of the vehicle. The costs associated with these benefits for the NEOs are reported as “Other Compensation” in the Summary Compensation Table. The Committee believes these perquisites are modest, yet competitive with the perquisites provided to similarly situated industry executives. +We do not sponsor any qualified or non-qualified defined benefit plans, or any non-qualified defined contribution plan for NEOs or other employees. +Change in Control Severance and Employment Agreements +We have no employment agreements with our executive officers but we do provide change in control severance agreements (“CIC Agreements”) with each of our executive officers that provide for certain protections upon a change in control. The Committee believes that CIC Agreements serve shareholders’ best interests by aligning executive interests with shareholders, helping ensure retention of management and diminishing potential distractions for our executive officers in the event of a change in control transaction. However, the Committee believes that executives should not be unduly enriched, and all benefits under the CIC Agreements require a “double-trigger.” For a detailed description of our CIC Agreements, please refer to page 59. In addition, in 2021 the Committee authorized the Separation Agreement and Consulting Agreement for Mr. Ulm as described on page 60 upon his retirement in May. +How We Make Compensation Decisions +Role of Independent Compensation Consultant +For 2021, the Committee continued its engagement of FW Cook as its independent compensation consultant to provide information and objective advice regarding executive officer and director compensation. +The Committee makes all final decisions with respect to our executive compensation. When designing pay programs and setting compensation levels for our NEOs, the Committee considers the independent compensation consultant’s advice as one factor among many other factors discussed within this CD&A. Other factors include our overall Company performance; individual NEO performance, experience, skills and tenure with the Company; competitive market data; and industry trends. +The compensation consultant reports solely to the Committee, and the Committee determines the scope of the engagement. In an effort to ensure that our NEO compensation programs are competitive and consistent with our compensation philosophy, FW Cook assists the Committee as follows: +• Regularly attending meetings of the Committee and meeting privately in executive session with the Committee to discuss its recommendations; +• Providing recommendations on executive compensation matters to align the Committee’s actions with shareholder interests, our business strategy and pay philosophy, prevailing market practices and relevant legal and regulatory requirements; +• Periodically evaluating the Company's peer group and providing peer company data for the Committee to use in its decision-making process, including assessment of pay and performance relative to peers; +• Providing competitive market data to consider in evaluating the competitiveness of the executive base salaries and short- and long-term incentive plans and awards; +• Reviewing data in connection with the Committee’s determination of annual cash incentive performance objectives and performance-based incentive vesting levels for completed performance periods; +• Advising on the Company’s compensation arrangements for its non-employee directors, including providing peer group data; +• Reviewing and providing feedback on our SEC filings relating to executive compensation disclosures, including our CD&A disclosures; and +• Informing the Committee about compensation trends in the industry, best practices and other general trends and developments affecting executive compensation. +2022 PROXY STATEMENT 49 +EXECUTIVE COMPENSATION +The Committee has the final authority to hire and terminate the compensation consultant, and the Committee evaluates the consultant’s performance annually. +Pursuant to applicable SEC and NYSE rules, the Committee has determined that no conflicts of interest existed related to FW Cook’s engagement by the Committee in 2021. +Role of Management +The Committee considers input from our CEO in making determinations regarding our executive compensation program and the individual compensation of each of the executives other than himself. The officer team makes recommendations to the Committee regarding potential objectives for the incentive programs and provides information to the Committee regarding the performance of the Company for the Committee’s determination of incentive compensation outcomes. The Committee makes the final determination of all elements of NEO compensation. Our CEO makes no recommendations regarding, and does not participate in discussions about, his own compensation. +Role of Market Data +The Committee reviews compensation of our NEOs annually. Individual compensation amounts reflect the Committee’s subjective analysis of a number of factors, including: +• The NEO’s experience, skills, contributions and tenure with Callon; +• Changes to the NEO’s position within Callon; +• Competitive market data within our peer group and industry; and +• The NEO’s roles, responsibilities and expected future contributions to Callon’s success. +On an annual basis, the Committee reviews and discusses compensation data for our CEO and other NEOs as compared with compensation data for similarly situated executive officers at peer companies recommended by the compensation consultant and approved by the Committee. The peer group is selected based on multiple factors, such as: +• Size, including enterprise value and market capitalization; +• Similar geographic footprint and operational focus; +• Comparability of asset portfolio; +• Competition for executive talent in the market; and +• Availability of compensation data. +The Committee believes the selected peer group provides a reasonable point of reference for comparing the compensation of our NEOs to others holding similar positions and having similar responsibilities. The peer group used by the Committee in evaluating the competitiveness of executive compensation and making 2021 compensation decisions consisted of the companies set forth in the following table. +The Committee does not consider data collected from any source to be prescriptive. Rather, the Committee relies upon this and similar data as reference points around which to make informed decisions about the appropriate level and form of compensation for each NEO. +2021 Compensation Peer Group +• Centennial Resource Development, Inc. +• Cimarex Energy Co. +• Laredo Petroleum, Inc. +• Matador Resources, Inc. +• Parsley Energy, Inc. +• PDC Energy, Inc. +• QEP Resources, Inc. +• Ranger Oil Corporation +• SM Energy Company +• Whiting Petroleum Corporation +• WPX Energy, Inc. +Practices and Policies Related to Compensation +Stock Ownership Guidelines +Consistent with its goal of driving long-term value creation for our shareholders, the Company's stock ownership guidelines require significant stock ownership by the executive officers and directors. The guidelines require the executive officers and +50 CALLON PETROLEUM +EXECUTIVE COMPENSATION +directors to hold the following amounts of our stock: +Executive Officers/Directors Required Common Stock Ownership as a Multiple of Annual Base Salary / Annual Retainer +CEO 6x +Directors 5x +Other Executive Officers 2x +The Committee evaluates compliance with these guidelines on an annual basis. For purposes of the guidelines, shares owned directly and indirectly, shares in the executive officer's 401(k) plan and any unvested time-based RSUs are included. The value of unvested PSUs is excluded. Pursuant to the policy, shares granted under the Company’s incentive compensation plans are valued at the greater of the then-current trading price or the value on the date of grant. +Each executive officer and director has a transition period of five years from the date the individual becomes subject to the guidelines to attain the required investment position. If an executive officer becomes subject to a greater ownership requirement due to a promotion or an increase in salary, the executive officer will be expected to attain the higher level within three years of the change. +As of December 31, 2021, all participants were in compliance with the stock ownership policy, either through meeting the ownership requirement or by being within the transition period. +Internal Revenue Service Limitations +Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Tax Code") places a limit of $1.0 million on the amount of compensation that we may deduct in any one year with respect to compensation paid to each covered employee. The Committee considers the deductibility of compensation in its decision making and implements compensation programs that it believes are competitive and in the best interests of the Company and its shareholders. +Insider Trading Policy +The Board maintains a comprehensive insider trading policy (the "Insider Trading Policy") for employees and directors to promote compliance with federal and state securities laws. The Insider Trading Policy prohibits certain persons who are aware of material non-public information about a company from: (i) trading in securities of that company; or (ii) providing material non-public information to other persons who may trade on the basis of that information. When material non-public information about us may exist and may have an influence on the marketplace, a trading blackout period is placed in effect by management. In addition, the Insider Trading Policy also applies to family members, other members of a person’s household, and entities controlled by a person covered by this Insider Trading Policy. Officers, directors, and designated employees, as well as the family members and controlled entities of such persons, may not engage in any transaction in Company securities without first obtaining pre-clearance of the transaction from our General Counsel. +Under the Insider Trading Policy, directors, executive officers and other employees are prohibited from entering into any hedging or monetization transactions relating to Callon's securities or otherwise trading in any instrument relating to the securities' future price. This Insider Trading Policy also prevents directors and executive officers from pledging Callon common stock as collateral for loans or holding Callon securities in a margin account. The Insider Trading Policy is published as Addendum A to our Code of Business Conduct and is available at www.callon.com/about-callon/governance. +Clawback Policy +The Committee maintains the Clawback Policy, which provides the Committee the authority to recoup previously-paid compensation under the following circumstances: +• If there is a correction to previously approved performance metrics (not necessarily limited to a financial restatement), the Committee may clawback from executive officers any annual or long-term incentive compensation paid in error during the prior three years. +• If an executive officer engages in fraud or misconduct, or was grossly negligent in a supervisory role, where such action caused or could reasonably lead to material financial or reputational harm to Callon, the Committee may clawback annual and long-term incentive compensation paid in the past year from the executive officer. +The Committee believes the Clawback Policy helps protect the Company and its shareholders in the unlikely event of a restatement or potential fraud or misconduct by an executive officer. The clawback rights described above are in addition to those required under the Sarbanes-Oxley Act of 2002. +2022 PROXY STATEMENT 51 +EXECUTIVE COMPENSATION +Risk Assessment Related to Our Compensation Structure +The Committee believes our compensation plans and policies are appropriately structured to encourage and reward prudent business judgment and avoid excessive risk-taking. The Committee, with the assistance of FW Cook, reviewed the compensation programs maintained by the Company during 2021 to determine whether they encouraged excessive risk taking. Upon evaluation of the assessment, the Committee concluded that our compensation policies and practices for our employees do not present risks that are reasonably likely to have a material adverse effect on the Company. The Committee’s risk review identified the following risk-mitigating features of our compensation programs: +• A balance of short-term and long-term programs to focus management on both elements of Callon’s performance; +• Annual grants of long-term incentives designed to be the largest component of each NEO’s compensation package, with typical vesting periods of three years that are based on the value of our common stock and not on any particular metric that could encourage excessive risk-taking; +• Performance criteria and targets for our annual bonus program designed to encourage performance, but not excessive risk taking, and discretion to decrease payouts if it is believed management exercised excessive risk taking; +• Performance targets measured at the corporate level, rather than at the individual or business unit level; +• A Clawback Policy that grants the Committee authority to recoup compensation due to error, fraud or other misconduct; +• Reasonable change in control severance protections; and +• Significant executive stock ownership requirements. +Compensation Committee Report +The Committee has reviewed and discussed with management the CD&A required by Item 402(b) of Regulation S-K promulgated under the Exchange Act, and based on such review and discussions, the Committee has recommended to the Board that the CD&A be included in this Proxy Statement relating to the Annual Meeting. +Respectfully submitted by the Compensation Committee of the Board of Directors, +Matthew R. Bob, Chair +Frances Aldrich Sevilla-Sacasa +Michael L. Finch +L. Richard Flury (non-voting member) +Anthony J. Nocchiero +James M. Trimble +52 CALLON PETROLEUM +EXECUTIVE COMPENSATION +Executive Compensation Tables +The compensation paid to the Company’s executive officers generally consists of base salaries, annual cash incentive payments, awards under the 2018 Omnibus Incentive Plan (the "2018 Plan") and the 2020 Plan, contributions to the Company’s 401(k) plan and miscellaneous perquisites. The table below sets forth information regarding fiscal years 2021, 2020, and 2019 compensation awarded to, earned by or paid to the Company’s NEOs, in each case for the years in which these individuals constituted "named executive officers" under SEC rules. This includes all individuals who served as the Company's CEO or CFO during 2021, and the three other most highly compensated executive officers serving at the end of the fiscal year. Since Kevin Haggard and James P. Ulm, II both served in the capacity of CFO during 2021, both are included in the tables below. The CD&A above provides a full description of our 2021 executive compensation program design. +Summary Compensation Table +Name and Principal Position Year Salary Bonus +Stock +Awards (a) +Non-Equity Incentive Plan Compensation (b) +All Other Compensation (c) +Total +Joseph C. Gatto, Jr. +President & CEO +2021 $ 865,000 $ — $ 2,092,309 $ 2,718,028 $ 34,142 $ 5,709,479 +2020 $ 773,885 $ — $ 3,945,450 $ 1,378,902 $ 30,288 $ 6,128,525 +2019 $ 796,153 $ — $ 5,136,754 $ 1,043,625 $ 33,055 $ 7,009,587 +Kevin Haggard (d) +Senior Vice President & CFO +2021 $ 276,923 $ — $ 1,289,435 $ 708,750 $ 18,000 $ 2,293,108 +Jeffrey S. Balmer (e) +Senior Vice President & Chief Operating Officer +2021 $ 510,000 $ 175,000 $ 1,041,649 $ 1,323,863 $ 27,272 $ 3,077,784 +2020 $ 464,827 $ — $ 1,863,529 $ 699,339 $ 23,242 $ 3,050,937 +2019 $ 450,000 $ — $ 1,968,015 $ 439,875 $ 57,350 $ 2,915,240 +Michol L. Ecklund +Senior Vice President, General Counsel & Corporate Secretary +2021 $ 430,000 $ — $ 656,241 $ 1,057,414 $ 33,773 $ 2,177,428 +2020 $ 394,289 $ — $ 1,173,912 $ 560,246 $ 31,986 $ 2,160,433 +2019 $ 388,462 $ — $ 1,194,593 $ 368,000 $ 38,953 $ 1,990,008 +Gregory F. Conaway (f)(g) +Vice President & Chief Accounting Officer +2021 $ 305,385 $ — $ 256,065 $ 609,663 $ 35,323 $ 1,206,436 +2020 $ 286,125 $ — $ 672,040 $ 307,210 $ 25,653 $ 1,291,028 +2019 $ 8,677 $ — $ — $ 197,400 $ 174 $ 206,251 +James P. Ulm, II (h) +Former Senior Vice President & CFO +2021 $ 299,581 $ — $ — $ 99,417 $ 395,116 $ 794,114 +2020 $ 458,462 $ — $ 1,785,040 $ 687,478 $ 36,837 $ 2,967,817 +2019 $ 465,000 $ — $ 2,083,367 $ 481,275 $ 42,352 $ 3,071,994 +(a) The amounts reported in the “Stock Awards” column represent the aggregate grant date fair value of RSUs and PSUs computed in accordance with FASB ASC Topic 718 disregarding estimates for forfeitures. The PSUs granted in 2020 and 2019 are subject to market conditions and have been valued utilizing a Monte Carlo simulation as of the grant date of the awards; no PSUs were granted in 2021. +(b) The amounts reported in the “Non-Equity Incentive Plan Compensation” column represent payouts under the annual performance bonus program for 2019, 2020, and 2021, and the 2020 Cash Incentive Award payouts for 2020 and 2021. See “Performance-Based Annual Cash Bonus Incentive” and “2020 Transition and Retention Incentive Awards” in the CD&A above for further information. +(c) See the "Table of All Other Compensation” below and related footnotes for reconciliation. +(d) Mr. Haggard was not an NEO prior to 2021. +(e) Dr. Balmer received a fixed cash retention bonus of $175,000 in October 2021. +(f) Mr. Conaway was appointed to an executive officer role with the Company as of the closing of the Carrizo Acquisition on December 20, 2019. +(g) Mr. Conaway's salary was increased from $295,000 to $310,000 effective April 1, 2021. +(h) Mr. Ulm ceased serving as Senior Vice President and Chief Financial Officer for the Company effective May 17, 2021, due to his retirement. In connection with Mr. Ulm's departure from the Company, the Company entered into a separation agreement with Mr. Ulm dated as of July 1, 2021 (the "Separation Agreement"). Pursuant to the Separation Agreement, Mr. Ulm received a prorated bonus for the second quarter of 2021 under the 2020 Officer Cash Incentive Award program. See “Employment Agreements, Termination of Employment and Change in Control Arrangements.” +2022 PROXY STATEMENT 53 +EXECUTIVE COMPENSATION +Table of All Other Compensation +NEO +Year +Company +Contributions to 401(k) (a) +Company +Provided +Auto (b) +Other Total +Joseph C. Gatto, Jr. 2021 $ 25,761 $ 8,381 $ — $ 34,142 +Kevin Haggard 2021 $ 18,000 $ — $ — $ 18,000 +Jeffrey S. Balmer 2021 $ 17,569 $ 9,703 $ — $ 27,272 +Michol L. Ecklund 2021 $ 20,669 $ 13,104 $ — $ 33,773 +Gregory F. Conaway 2021 $ 20,546 $ 14,777 $ — $ 35,323 +James P. Ulm, II 2021 $ 23,775 $ 55,584 +(c) +$ 315,757 +(d) +$ 395,116 +(a) Subject to IRS limits, Company contributions to each NEO's 401(k) account for 2021 consist of a 6% matching contribution plus a 2% profit sharing contribution for 2021. +(b) The imputed value for personal use of a company-provided vehicle represents annual depreciation based on a three-year life, plus insurance, fuel, maintenance and repairs, pursuant to IRS rules. +(c) In addition to the payment detailed in footnote (b) above, upon Mr. Ulm's retirement, the Company transferred to Mr. Ulm the title to the company vehicle that was being used by Mr. Ulm, which was valued at approximately $46,000. +(d) Mr. Ulm received $300,000 in monthly consulting fees pursuant to the Consulting Agreement between the Company and Mr. Ulm, dated as of June 1, 2021 (the "Consulting Agreement"). Pursuant to the Consulting Agreement, Mr. Ulm received a monthly fee of $50,000 in exchange for assisting the Company in transitioning the duties of the Chief Financial Officer position. The Consulting Agreement terminated on December 31, 2021. Pursuant to Mr. Ulm's Separation Agreement, the Company agreed to maintain COBRA continuation coverage for Mr. Ulm and his eligible family members for a period of 18 months. During 2021, the Company paid $15,757 for COBRA continuation coverage. See “Employment Agreements, Termination of Employment and Change in Control Arrangements.” +Stock-Based Incentive Compensation Plans +The 2018 Plan was approved by shareholders on May 10, 2018. The 2020 Plan was approved by shareholders on June 8, 2020. Awards available under each of the 2018 Plan and the 2020 Plan include grants of stock options, stock appreciation rights or units, restricted stock, RSUs, and performance shares or units. As of June 8, 2020, no more shares were issued from the 2018 Plan and the then-remaining 1,008,354 shares authorized and available for issuance under the 2018 Plan were transferred into the 2020 Plan. In addition, shares which would otherwise become available for issuance under the 2018 Plan as a result of vesting and/or forfeiture of any equity awards existing prior to the effective date of the 2020 Plan, are made available for grant under the 2020 Plan. As of March 30, 2022, approximately 1,306,373 shares remain unissued and available for grant in the 2020 Plan. +54 CALLON PETROLEUM +EXECUTIVE COMPENSATION +Grants of Plan-Based Awards During 2021 +The following table presents grants of awards under the 2020 Plan during the fiscal year ending December 31, 2021: +Grant +Date +Estimated Future Payouts Under Non-Equity Incentive Plan Awards (a) +Other Awards +(Shares or Units) (b) +Grant Date +Fair Value of Stock Awards (c) +NEO Threshold Target Maximum +Joseph C. Gatto, Jr. +1/1/2021 $ — $ 994,750 $ 1,989,500 +3/12/2021 52,703 $ 2,092,309 +3/12/2021 $ — $ 2,340,000 $ 4,680,000 +Kevin Haggard +5/10/2021 $ — $ 405,000 $ 810,000 +5/10/2021 15,998 +(d) +$ 636,561 +5/10/2021 16,408 +(e) +$ 652,874 +5/10/2021 $ — $ 877,500 $ 1,755,000 +Jeffrey S. Balmer +1/1/2021 $ — $ 484,500 $ 969,000 +3/12/2021 +26,238 $ 1,041,649 +3/12/2021 +$ — $ 1,164,975 $ 2,329,950 +Michol L. Ecklund +1/1/2021 $ — $ 387,000 $ 774,000 +3/12/2021 +16,530 $ 656,241 +3/12/2021 +$ — $ 733,950 $ 1,467,900 +Gregory F. Conaway +1/1/2021 $ — $ 232,500 $ 465,000 +3/12/2021 +6,450 $ 256,065 +3/12/2021 +$ — $ 286,380 $ 572,760 +James P. Ulm, II +1/1/2021 $ — $ — $ — +(a) Amounts represent the threshold, target, and maximum payouts for the 2021 annual performance bonus program and the CPUs granted to the NEOs in 2021. The actual amounts paid under the 2021 annual performance bonus program are included in the "Non-Equity Incentive Compensation" column in the Summary Compensation Table above. The long-term cash incentive awards granted to the NEOs pursuant to the 2020 Plan will be earned at the end of the performance period ending December 31, 2023 based on the Company’s achievement of performance objectives relating to the Company’s adjusted free cash flow. Subject to certain qualifying termination events, the participant is required to be employed on the award settlement date in order to vest in the award. +(b) Except as otherwise indicated in footnotes (d) and (e) below, amounts represent RSUs granted to our NEOs on March 12, 2021. The first, second and third tranches are scheduled to vest in equal installments on April 1, 2022, 2023 and 2024, subject to the NEO’s continued service. +(c) This column shows the grant date fair value of the awards granted to the NEOs on the date indicated computed in accordance with FASB ASC Topic 718. The value ultimately realized by the NEO upon the actual vesting of the awards may be more or less than the grant date fair value. +(d) These RSUs were granted to Mr. Haggard on May 10, 2021, and are scheduled to vest in equal installments on April 1, 2022, 2023 and 2024, subject to Mr. Haggard’s continued service. +(e) These RSUs were granted to Mr. Haggard on May 10, 2021, and are scheduled to cliff vest in full on June 1, 2024, subject to Mr. Haggard’s continued service. +2022 PROXY STATEMENT 55 +EXECUTIVE COMPENSATION +Outstanding Equity Awards at Fiscal Year-End +The following table contains information concerning all outstanding equity awards that were held as of December 31, 2021, by the NEOs: +Stock Awards (a) +NEO Number of Shares or Units of Stock That Have Not Vested (#) +Market Value of Shares or Units of Stock That Have Not Vested (a) +Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested +Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested (a) +Joseph C. Gatto, Jr. 52,703 +(b) +$ 2,490,217 — $ — +32,532 +(c) +$ 1,537,137 — $ — +— $ — 36,600 +(d) +$ 1,729,350 +— $ — 36,600 +(e) +$ 1,729,350 +7,043 +(f) +$ 332,782 — $ — +Kevin Haggard 15,998 +(g) +$ 755,906 — $ — +16,408 +(h) +$ 775,278 — $ — +Jeffrey S. Balmer 26,238 +(b) +$ 1,239,746 — $ — +15,366 +(c) +$ 726,044 $ — +— $ — 17,287 +(d) +$ 816,811 +— $ — 17,287 +(e) +$ 816,811 +3,000 +(i) +$ 141,750 — $ — +Michol L. Ecklund 16,530 +(b) +$ 781,043 — $ — +9,679 +(c) +$ 457,333 $ — +— $ — 10,890 +(d) +$ 514,553 +— $ — 10,890 +(e) +$ 514,553 +1,638 +(f) +$ 77,396 — $ — +Gregory F. Conaway (k) +6,450 +(b) +$ 304,763 — $ — +3,576 +(c) +$ 168,966 $ — +— $ — 4,023 +(d) +$ 190,087 +— $ — 4,023 +(e) +$ 190,087 +3,290 +(j) +$ 155,453 — $ — +James P. Ulm, II — $ — — $ — +(a) Amounts calculated using the closing price of $47.25 per share of our common stock on the last trading day of 2021. +(b) Stock settleable RSUs awarded on March 12, 2021 subject to three-year ratable vesting with one-third vesting each year subsequent to the award year. The first tranche will vest April 1, 2022. The second tranche will vest on April 1, 2023. The third and final tranche will vest on April 1, 2024. +(c) Stock settleable RSUs awarded on January 31, 2020 subject to three-year ratable vesting with one-third vesting each year subsequent to the award year. The first tranche vested on April 1, 2021. The second tranche will vest April 1, 2022. The third and final tranche will vest on April 1, 2023. +(d) Stock settleable PSUs awarded on January 31, 2020 with vesting terms subject to performance criteria related to the absolute TSR of the Company and relative TSR compared to a group of peer companies from December 31, 2019 through December 31, 2022. The number of units subject to vest under this award can range from 0% to 300%. +(e) Cash settleable PSUs awarded on January 31, 2020 with vesting terms subject to performance criteria related to the absolute TSR of the Company and relative TSR compared to a group of peer companies from December 31, 2019 through December 31, 2022. The number of units subject to vest under this award can range from 0% to 300%. +(f) Stock settleable RSUs awarded on January 31, 2019 subject to three-year ratable vesting with one-third vesting each year subsequent to the award year. The first tranche vested on April 1, 2020. The second tranche vested on April 1, 2021. The third and final tranche will vest on April 1, 2022. +(g) Stock settleable RSUs awarded to Mr. Haggard on May 10, 2021 upon his appointment as an executive officer, subject to three-year ratable vesting with one-third vesting each year subsequent to the award year. The first tranche will vest on April 1, 2022. The second tranche vested on April 1, 2023. The third and final tranche will vest on April 1, 2024. +56 CALLON PETROLEUM +EXECUTIVE COMPENSATION +(h) Stock settleable RSUs awarded to Mr. Haggard on May 10, 2021 upon his appointment as an executive officer, subject to cliff vesting in full on June 1, 2024. +(i) Stock settleable RSUs awarded to Dr. Balmer upon his hiring with an effective date of January 1, 2019 subject to three-year ratable vesting with one-third vesting each year subsequent to the award year. The first tranche vested on January 1, 2020. The second tranche vested on January 1, 2021. The third and final tranche vested on January 1, 2022. +(j) Stock settleable RSUs awarded to Mr. Conaway on January 1, 2020 upon his appointment as an executive officer, subject to three-year ratable vesting with one-third vesting each year subsequent to the award year. The first tranche vested on January 1, 2021. The second tranche vested on January 1, 2022. The third and final tranche will vest on January 1, 2023. +(k) Mr. Conaway held the following outstanding cash-settled stock appreciation right awards as of December 31, 2021: +Option/SAR Awards +NEO Number of Securities Underlying Unexercised Options/ +SARs (#) Exercisable Number of Securities Underlying Unexercised Options/ +SARs (#) Unexercisable Equity Incentive Plan Awards: +Number of Securities Underlying Exercised Unearned Options/SARs (#) Option/ +SARs Exercise Price +($) Option/ +SARs Expiration Date +Gregory F. Conaway 2,005 +(1) +— — $ 154.00 +3/23/2022 +3,144 +(2) +— — $ 83.90 +3/17/2025 +4,258 +(3) +— — $ 62.80 +3/17/2026 +(1) Cash-settled stock appreciation rights received in connection with the Carrizo Acquisition in exchange for 11,458 Carrizo stock appreciation rights with an exercise price of $26.94 pursuant to the Merger Agreement. +(2) Cash-settled stock appreciation rights received in connection with the Carrizo Acquisition in exchange for 17,967 Carrizo stock appreciation rights with an exercise price of $14.67 pursuant to the Merger Agreement. +(3) Cash-settled stock appreciation rights received in connection with the Carrizo Acquisition in exchange for 24,336 Carrizo stock appreciation rights with an exercise price of $10.98 pursuant to the Merger Agreement. +2022 PROXY STATEMENT 57 +EXECUTIVE COMPENSATION +Option Exercises and Stock Vested +The following table provides information about the value realized by the NEOs on vesting of RSUs and PSUs during 2021. No options were awarded, outstanding, expired, or exercised by any NEO in fiscal year 2021. +Stock Awards (a) +NEO Number of Shares +Acquired on Vesting (#) +Value Realized on Vesting $ (b) +Joseph C. Gatto, Jr. 3,672 +(b) +$ 158,410 +7,044 +(c) +$ 286,691 +15,848 +(d) +$ 763,002 +16,267 +(e) +$ 662,067 +Kevin Haggard — $ — +Jeffrey S. Balmer 3,000 +(f) +$ 39,480 +6,418 +(d) +$ 308,995 +7,683 +(e) +$ 312,698 +Michol L. Ecklund 1,250 +(f) +$ 16,450 +659 +(b) +$ 28,429 +1,638 +(c) +$ 66,667 +3,686 +(d) +$ 177,462 +4,840 +(e) +$ 196,988 +Gregory F. Conaway 1,645 +(h) +$ 21,648 +1,788 +(e) +$ 72,772 +James P. Ulm, II 3,000 +(i) +$ 39,480 +2,857 +(c) +$ 116,280 +7,360 +(e) +$ 299,552 +(a) Except as otherwise indicated, represents the aggregate dollar amount realized on the date of vesting, based on the closing market price per share of Company common stock on the vesting date or last business day prior to the vesting date if such date fell on a weekend or holiday, without taking into account any shares withheld to satisfy applicable tax obligations. +(b) Represents RSUs awarded on May 10, 2018, the third and final tranche of which vested on June 1, 2021. +(c) Represents RSUs awarded on January 31, 2019, the second tranche of which vested on April 1, 2021. +(d) Represents PSUs awarded on January 31, 2019, that settled 50% in stock and 50% in cash on December 31, 2021, at 50% of target. +(e) Represents RSUs awarded on January 31, 2020, the first tranche of which vested on April 1, 2021. +(f) Represents RSUs awarded to Dr. Balmer upon his hiring on January 1, 2019, the second tranche of which vested on January 1, 2021. +(g) Represents RSUs awarded to Ms. Ecklund upon her hiring on November 6, 2017, the third and final tranche of which vested on January 1, 2021. +(h) Represents RSUs awarded to Mr. Conaway upon his appointment as an executive officer on January 1, 2020, the first tranche of which vested on January 1, 2021. +(i) Represents RSUs awarded to Mr. Ulm upon his hiring on December 11, 2017, the third and final tranche of which vested on January 1, 2021. +58 CALLON PETROLEUM +EXECUTIVE COMPENSATION +Employment Agreements, Termination of Employment and Change in Control Arrangements +Employment Agreements +We do not have employment agreements with any of our executive officers. +Change in Control Severance Compensation Agreements +We are a party to change in control severance compensation agreements (“CIC Agreements”) with each of the NEOs. We entered into amended CIC Agreements with each of our NEOs effective as of April 16, 2021. The amendments revised certain provisions within the CIC Agreements to provide for payment of a pro rata annual bonus in the event of a mid-year double-trigger termination and to update the definition of change in control to include a merger of equals, among other changes. +The CIC Agreements will terminate upon the earlier of an NEO’s termination of employment prior and unrelated to a change in control or on December 31, 2022, except that such expiration date will automatically be extended for one additional year on such date and each anniversary date thereafter unless, as of such date and prior to such anniversary date, either party has given proper written notice that it does not wish to extend the CIC Agreement. However, in no event will the expiration date be earlier than the second anniversary of the effective date of a change in control. +Pursuant to the CIC Agreement, if the executive is terminated without cause by Callon or for resigns good reason within two years following a change in control of Callon (or in certain cases, prior to a change in control (i.e., a "double-trigger termination)), then the executive is entitled to a single lump-sum cash payment equal to a multiple as set forth in the respective CIC Agreement times the sum of (i) the annual base salary in effect immediately prior to the change in control or, if higher, in effect immediately prior to the separation from service, and (ii) the greater of the average bonus earned with respect to the three most recently completed full fiscal years, the target bonus for the fiscal year in which the change in control occurs, or the target bonus for the fiscal year in which the termination occurs. For Mr. Gatto, the CIC Agreement multiple is three times. For the other NEOs, the CIC Agreement multiple is two times. The CIC Agreements also provide that in the event an NEO is eligible for benefits due to a “double trigger” termination, any outstanding equity awards then held by the NEO shall vest in full with any performance-based awards earned at the level specified in the applicable award agreement or, if not specified, at the target level. In addition, in the event of a double trigger termination we must maintain at our expense until twenty-four months after separation from service all medical, dental, and health insurance coverage. The severance benefits described above are subject to the executive’s execution and non-revocation of a general release of claims +A change in control as generally defined in the CIC Agreement occurs when (i) any person or group of persons acting in concert becomes the beneficial owner of more than 50% of our outstanding common stock; (ii) our shareholders cause a change in the majority of the members of the Board within a thirty-six month period; (iii) there is a change in control in ownership of at least 40% of Company assets; or (iv) a third party acquires more than 30% of the voting power of our common stock in a twelve month period. +The CIC Agreements also subject each executive to a one-year post-termination non-competition and two-year (or, in the case of Mr. Gatto, three-year) post-termination non-solicitation covenant in the event the applicable executive becomes eligible to receive severance benefits under the CIC Agreement. The CIC Agreements also include a perpetual confidentiality covenant. +The CIC Agreements incorporate a provision to provide for the possible impact of the federal excise tax on excess parachute payments. If any CIC Agreement payment is subject to any excise tax under Section 4999 of the Tax Code, the payment will be reduced so that no portion of the payment is subject to such excise tax if the net benefit payable would be at least as much as it would have been if no reduction was made. The so-called “golden parachute” tax rules subject “excess parachute payments” to a dual penalty: the imposition of a 20% excise tax upon the recipient and non-deductibility of such payments by the paying corporation. While the excise tax is seemingly evenhanded, the excise tax can discriminate against long-serving employees in favor of new hires, against individuals who do not exercise stock options in favor of those who do and against those who elect to defer compensation in favor of those who do not. For these reasons, we believe that the 280G “best-net” cutback provision included in the CIC Agreement is appropriate. +Equity Award Agreements +We are party to Restricted Stock Unit Award Agreements (the “RSU Agreements”) and Performance Share Award Agreements (the “PSU Agreements”) with our NEOs. Pursuant to the terms of the RSU Agreements, upon termination of the NEO’s employment with the Company as a result of the death or “disability” (as defined in the RSU Agreement) of the NEO, all of the NEO’s RSUs then outstanding under the RSU Agreement will immediately vest. +2022 PROXY STATEMENT 59 +EXECUTIVE COMPENSATION +Under the PSU Agreements, upon termination of the NEO’s employment with the Company as a result of the death or “disability” (as defined in the PSU Agreements) of the NEO, the NEO’s PSUs then outstanding will vest immediately, with the applicable performance level calculated based on the Company’s relative TSR ranking as compared to the Company’s performance peer group, with a modifier based on the Company’s absolute annualized TSR performance, as if the date of termination was the last day of the applicable performance period. +Separation Agreement +Mr. Ulm ceased serving as Senior Vice President and Chief Financial Officer for the Company effective May 17, 2021. Mr. Ulm continued in active service as an employee until his resignation date on May 31, 2021 (the “Resignation Date”) to assist in the transition. In connection with his departure from the Company, the Company entered into the Separation Agreement with Mr. Ulm. Pursuant to the Separation Agreement, Mr. Ulm received a prorated payment for second quarter 2021 under the 2020 Cash Incentive Award program. The Company also transferred to Mr. Ulm the title to the company vehicle that was being used by Mr. Ulm, which was valued at approximately $46,000. The Company also agreed to maintain COBRA continuation coverage for Mr. Ulm and his eligible family members for a period of eighteen (18) months after the Resignation Date, for medical, dental, and vision insurance coverage. During 2021, the Company paid $15,757 for COBRA continuation coverage and will pay $24,762 for the remaining coverage period in 2022. In exchange for the foregoing, Mr. Ulm agreed to certain waivers and releases for the Company’s benefit. Mr. Ulm has also agreed that for a period of one year following the Resignation Date, he will not, directly or indirectly, compete or provide services to any oil and gas E&P company in the Permian Basin or Eagle Ford Shale, and that for a period of two (2) years following the Resignation Date, he will not, directly or indirectly, hire, solicit, or influence any employee of the Company or its subsidiaries to leave the employment of the Company or its subsidiaries. The Company also entered into the Consulting Agreement with Mr. Ulm. Pursuant to the Consulting Agreement, Mr. Ulm received a monthly fee of $50,000 in exchange for assisting the Company in transitioning the duties of the Chief Financial Officer position. The Consulting Agreement terminated on December 31, 2021. +60 CALLON PETROLEUM +EXECUTIVE COMPENSATION +Potential Payments upon Termination or Change in Control +The following table shows the estimated gross taxable compensation payable upon a qualifying termination following a change in control ("CIC") or upon death, disability or retirement. No amounts would be payable upon termination for other causes. The information assumes, in each case, that the NEO’s termination was effective as of December 31, 2021. In presenting this disclosure, we describe amounts earned through December 31, 2021 and, in those cases where the actual amounts to be paid out can only be determined at the time of such executive’s separation from us, the estimates are of the amounts which would be paid out to the executives upon their termination. +NEO / Reason for Termination +Base +Salary (a) +Cash +Bonus (a) +Accelerated Cash Incentive and Stock Award Vesting (b)(c) +Continued +Employee +Benefits (d) +Total +Joseph C. Gatto, Jr. +Change in Control $ — $ — $ — $ — $ — +Change in Control Termination (e) +$ 2,595,000 $ 3,407,415 $ 9,382,421 $ 56,502 $ 15,441,338 +Death or Disability (f) +$ — $ — $ 9,382,421 $ — $ 9,382,421 +Retirement (g) +$ — $ — $ — $ — $ — +Kevin Haggard +Change in Control $ — $ — $ — $ — $ — +Change in Control Termination (e) +$ 900,000 $ 1,417,500 $ 2,701,184 $ 56,502 $ 5,075,186 +Death or Disability (f) +$ — $ — $ 2,701,184 $ — $ 2,701,184 +Retirement (g) +$ — $ — $ — $ — $ — +Jeffrey S. Balmer +Change in Control $ — $ — $ — $ — $ — +Change in Control Termination (e)(h) +$ 1,020,000 $ 1,254,293 $ 4,559,251 $ 56,502 $ 6,890,046 +Death or Disability (f) +$ — $ 175,000 $ 4,559,251 $ — $ 4,734,251 +Retirement (g) +$ — $ — $ — $ — $ — +Michol L. Ecklund +Change in Control $ — $ — $ — $ — $ — +Change in Control Termination (e) +$ 860,000 $ 874,264 $ 2,860,331 $ 56,502 $ 4,651,097 +Death or Disability (f) +$ — $ — $ 2,860,331 $ — $ 2,860,331 +Retirement (g) +$ — $ — $ — $ — $ — +Gregory F. Conaway +Change in Control $ — $ — $ — $ — $ — +Change in Control Termination (e) +$ 620,000 $ 502,994 $ 1,220,055 $ 56,502 $ 2,399,551 +Death or Disability (f) +$ — $ — $ 1,220,055 $ — $ 1,220,055 +Retirement (g) +$ — $ — $ — $ — $ — +James P. Ulm, II (i) +Change in Control $ — $ — $ — $ — $ — +Change in Control Termination $ — $ — $ — $ — $ — +Death or Disability (f) +$ — $ — $ — $ — $ — +Retirement (g) +$ — $ — $ — $ — $ — +(a) In accordance with Mr. Gatto’s CIC Agreement, the computation uses a 3x multiple with respect to the severance amount relating to salary and target bonus, while a 2x multiple is used for the other NEOs. See “Employment Agreements, Termination of Employment and Change in Control Arrangements.” +(b) The amounts include the value of unvested CPUs as of December 31, 2021, reflecting actual results for 2021 and target amounts for the remaining years of the performance period. +2022 PROXY STATEMENT 61 +EXECUTIVE COMPENSATION +(c) The amounts include the value of unvested stock awards at December 31, 2021 using the closing price of $47.25 per share of our common stock on the last trading day of 2021. The table above assumes that PSUs vest based on actual performance as of December 31, 2021. Actual vesting of PSUs would be determined based on performance at the time of such executive's separation. +(d) Benefits consist of 24 months of employer-provided family medical and dental insurance and disability and life insurance for the NEOs in the table. +(e) We entered into a CIC Agreement with each of the NEOs listed in the table above. See “Employment Agreements, Termination of Employment and Change in Control Arrangements.” +(f) “Disability,” for purposes of the incentive awards is generally defined as the employee’s inability to carry out the normal and usual duties of the employee's employment on a full-time basis for an entire period of six continuous months together with the reasonable likelihood, as determined by the Board after consultation of a qualified physician, the employee will be unable to carry out the employee's normal and usual duties of employment. +(g) “Retirement” is generally defined as the employee’s attainment of age 55 with at least 10 years of service. None of the NEOs who were active employees as of December 31, 2021, is retirement eligible. +(h) The amounts for Dr. Balmer include $175,000 for his unvested portion of his fixed cash retention award, which would vest in the event of a change in control termination, death or disability, but not in the event of retirement. +(i) Actual amounts paid in connection with Mr. Ulm's retirement are based above under the heading "Separation Agreement.". +Pension and Non-Qualified Deferred Compensation Plans +We sponsor a 401(k) plan for all eligible employees, including the NEOs as described on page 49. We do not sponsor any qualified or non-qualified defined benefit plans, or any non-qualified defined contribution plan for NEOs or other employees. The Board or Compensation Committee may elect to adopt qualified or non-qualified defined benefit plans or non-qualified defined contribution plans in the future if it determines that doing so is in the Company’s best interest. +Equity Compensation Plan Information +The following table summarizes information regarding the number of shares of our common stock that are available for issuance under all of our existing equity compensation plans as of December 31, 2021. +Plan Category +Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights +(a) (1) +Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights +(b) (2) +Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (excluding securities reflected in column (a)) +(c) (3) +Equity compensation plans approved by security holders 1,157,062 $ — 1,619,272 +Equity compensation plans not approved by security holders — $ — — +Total 1,157,062 $ — 1,619,272 +(1) Reflects 872,992 RSUs and 284,070 stock-settled PSUs assuming vesting at maximum performance level as of December 31, 2021. +(2) The weighted-average exercise prices of outstanding options is omitted because no options or equity-based stock appreciation rights were outstanding as of December 31, 2021. +(3) Relates to remaining shares available for issuance under our stock-based compensation plans for our executives, employees and non-employee directors. +62 CALLON PETROLEUM +EXECUTIVE COMPENSATION +CEO Pay Ratio +Pursuant to a mandate of the Dodd-Frank Wall Street Reform and Consumer Protection Act, we are disclosing here that the ratio of our median employee’s compensation to the compensation of our CEO is 29:1. +We identified our median employee from the employee population as of December 31, 2021, by comparing the sum of the base salary, bonus, and any overtime paid to each employee that was employed by the Company on December 31, 2021. For any employees who were not employed the entire 2021 calendar year (excluding temporary and seasonal employees), we annualized the base salary, bonus, and any overtime. +In accordance with SEC rules, we determined the annual total compensation of our median employee for 2021 was $186,974. This amount represents the total compensation that would have been reported in the Summary Compensation Table in accordance with the requirements of Item 402(c)(x) of Regulation S-K for the median employee if the employee had been a NEO for fiscal year 2021. For purposes of calculating the ratio, an additional value of $10,144 was included in the annual compensation for non-discriminatory benefits bringing the annual total compensation to $197,118. +We determined the amount of the CEO’s annual total compensation was $5,709,479, which represents the amount reported for the CEO in the “Total” column of our 2021 Summary Compensation Table. For purposes of the ratio, an additional value of $28,847 was included in the annual total compensation for non-discriminatory benefits to bring the value to $5,738,326. +Based on the foregoing, for 2021 the ratio of the median of the annual total compensation of all employees to the annual total compensation of our CEO (the "CEO Pay Ratio") is 29:1. This ratio demonstrates a lower pay ratio for 2021 than 2020, reducing from 38:1 in 2020 to the current ratio of 29:1 for 2021. +The CEO Pay Ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on our payroll and employment records. +2022 PROXY STATEMENT 63 +Proposal 3 +Ratification of the Appointment of the Independent Registered Public Accounting Firm, Grant Thornton LLP, for 2022 +The Board recommends a vote FOR the ratification of the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2022. +• The Board and the Audit Committee believe the retention of Grant Thornton LLP is in the best interests of Callon and its shareholders based on the information presented below. +The Audit Committee has appointed Grant Thornton LLP as the independent registered public accounting firm to audit our consolidated financial statements for the year ending December 31, 2022. We are asking shareholders to ratify this appointment. Grant Thornton LLP has served as the Company’s independent registered public accounting firm since being appointed effective March 3, 2016. A representative of Grant Thornton LLP will be present at the Annual Meeting and will have the opportunity to make a statement, if they desire, and to respond to appropriate questions from shareholders. +Fees +The following table sets forth the fees incurred by us for services performed by Grant Thornton LLP in the fiscal years 2020 and 2021: +Fee Category +2020 2021 +Audit fees (a) +$ 1,208,400 $ 1,518,400 +Audit-related fees (b) +$ — $ — +Tax fees (c) +$ 178,398 $ — +All other fees (d) +$ — $ — +Total +$ 1,386,798 $ 1,518,400 +(a) Audit fees consist of the aggregate fees billed for professional services related to the audit and quarterly reviews of our financial statements and for services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements. +(b) Audit-related fees consist of the aggregate fees billed for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements that are not reported above under “Audit fees." +(c) Tax fees consist of the aggregate fees billed for professional services rendered for tax compliance (including filing state and federal tax returns), tax advice and tax planning. Tax fees do not include fees for services rendered in connection with the audit. +(d) Other fees consist of the aggregate fees billed for professional services other than the services repo rted above. +Pre-approval policy +The Audit Committee pre-approves all audit and permissible non-audit services (including the fees and terms thereof) exceeding $25,000 to be performed on behalf of the Company by our independent registered public accounting firm, as required by applicable law or listing standards and subject to the terms of the audit and non-audit services pre-approval policy in accordance with the Audit Committee charter. The Committee may delegate authority to one or more of its members when appropriate, including the authority to grant pre-approvals of audit and permitted non-audit services, provided that any decisions to grant pre-approvals are consistent with the terms of the delegation and the Audit Committee charter and are presented to the full Committee at its next scheduled meeting. +64 CALLON PETROLEUM +PROPOSAL 3 +Required Vote +The submission of this matter for approval by shareholders is not legally required. However, the Board and Audit Committee believe that this submission is consistent with best practices in corporate governance and is an opportunity for shareholders to provide direct feedback to the Board and Audit Committee on an important issue of corporate governance. Although the results of the vote are not binding on the Audit Committee, if the appointment is not ratified by the shareholders, then the Audit Committee will consider whether it should select another independent registered public accounting firm. +This proposal will be approved if it receives the affirmative vote of the holders of a majority of the shares of our common stock having voting power present in person or represented by proxy at the Annual Meeting. If you hold your shares through a broker and you do not instruct the broker how to vote, your broker will have the authority to vote your shares in its discretion on this proposal. Abstentions will have the effect of a vote cast against this proposal. +The Board recommends a vote FOR the ratification of the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm. +Audit Committee Report +Acting pursuant to its charter, the Audit Committee reviewed and discussed the Company’s audited financial statements for the year ended December 31, 2021, with management and Grant Thornton LLP, and recommended that the audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, for filing with the SEC. This recommendation was based on: +• The Audit Committee’s review of the audited financial statements; +• Discussion of the financial statements with management; +• Discussion with our independent registered public accounting firm, Grant Thornton LLP, of the matters required to be discussed by auditing standards generally accepted in the United States of America, including the communication matters required to be discussed by Auditing Standard No. 1301, Communications with Audit Committees, issued by the PCAOB; +• Receipt from Grant Thornton LLP of the written disclosures and letter required by Public Company Accounting Standards Board Rule 3526 (Communications with Audit Committees Concerning Independence); +• Discussions with Grant Thornton LLP regarding its independence from Callon, the Board and our management; +• Grant Thornton LLP’s confirmation that it would issue its opinion that the consolidated financial statements present fairly, in all material respects, our financial position and the results of our operations and cash flows for the periods presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”); and +• Other matters the Audit Committee deemed relevant and appropriate. +Management is responsible for the preparation, presentation and integrity of our consolidated financial statements in accordance with GAAP, the establishment and maintenance of our disclosure controls and procedures, and the establishment, maintenance and evaluation of the effectiveness of our internal controls over financial reporting. The independent registered public accounting firm is responsible for performing an independent audit of our consolidated financial statements and internal control over financial reporting in accordance with the standards of the PCAOB and issuing reports thereon. The Audit Committee’s responsibilities include monitoring and overseeing these processes. +Members of the Audit Committee rely, without independent verification, on the information provided to them and on the representations made by management and our independent registered public accounting firm. The Audit Committee’s considerations and discussions referred to above do not assure that the audit of our financial statements and internal control over financial reporting have been carried out according to the standards of the PCAOB, that the financial statements are presented according to GAAP, or that Grant Thornton LLP is in fact independent. +Respectfully submitted by the Audit Committee of the Board of Directors, +Anthony J. Nocchiero, Chair +Frances Aldrich Sevilla-Sacasa +Barbara J. Faulkenberry +Michael L. Finch +L. Richard Flury +Larry D. McVay +Mary Shafer-Malicki +2022 PROXY STATEMENT 65 +Proposal 4 +Approve an Amendment to the Certificate of Incorporation to Increase Authorized Shares of Common Stock +The Board recommends a vote FOR the approval of an amendment to the Company's certificate of incorporation to increase the number of authorized shares from 78.75 million to 130 million. +• Provides the Company with the flexibility to issue shares for business, financial, and compensation purposes. +We are seeking shareholder approval for a proposal to adopt an amendment to our certificate of incorporation to permit us to increase the authorized number of shares of Callon common stock from 78.75 million shares to 130 million shares (the "Proposed Charter Amendment"). Our certificate of incorporation currently provides that the total number of shares of common stock that Callon is authorized to issue is 78.75 million. The Board believes that the increased number of authorized shares of Callon common stock contemplated by the Proposed Charter Amendment is important to the Company as it will ensure the availability of additional shares for issuance from time to time, without further action or authorization by Callon shareholders (except as required by law or the NYSE rules), if needed for such corporate purposes as may be determined by the Board. +The additional 51.25 million authorized shares would be a part of the existing class of Callon common stock and, if issued, would have the same rights and privileges as the shares of Callon common stock presently issued and outstanding. Adoption of the Proposed Charter Amendment would not affect the rights of the holders of currently outstanding shares of the Company’s common stock, except, if and to the extent additional shares of common stock are ultimately issued, the effects of increasing the number of shares of the Company’s common stock outstanding, such as dilution of the earnings per share and voting rights of current holders of common stock. The Proposed Charter Amendment does not affect the number of shares of preferred stock authorized. +If our shareholders approve the proposal to amend our certificate of incorporation, Callon expects to file a certificate of amendment with the Delaware Secretary of State (the "Certificate of Amendment") to increase the number of authorized shares of its capital and common stock. Upon filing of the Certificate of Amendment with the Delaware Secretary of State, the text of which is provided in Appendix B, the first sentence of Article IV of our certificate of incorporation will be amended and restated to read as follows: +The Corporation shall have authority to issue two classes of stock, and the total number authorized shall be 130,000,000 shares of Common Stock, par value $.01 per share, and 2,500,000 shares of Preferred Stock, par value $.01 per share. +Rationale for the Proposed Charter Amendment +As of March 30, 2022, Callon had an aggregate of 64,263,962 shares of common stock issued and outstanding or reserved for issuance. The Board has no immediate or specific plans, arrangements or understandings to issue any of the shares of common stock that would be authorized under the Proposed Charter Amendment. However, the Board desires to have the shares available to provide additional flexibility for business and financial purposes and provide appropriate equity incentives for Callon’s employees and directors. The additional shares may be used for various purposes without further shareholder approval (except as required by law or the NYSE rules). These purposes may include: (i) raising capital, if Callon has an appropriate opportunity, through offerings of common stock or securities that are convertible into common stock; (ii) exchanging common stock or securities that are convertible into common stock for other outstanding securities; (iii) providing equity incentives to employees, officers, directors, consultants, or advisors; (iv) expanding Callon’s business through the acquisition of other businesses or assets; (v) stock splits, dividends, and similar transactions; and (vi) debt or equity restructuring or refinancing transactions. +66 CALLON PETROLEUM +PROPOSAL 4 +The Board has not proposed the increase in the number of authorized shares of common stock with the intent of preventing or discouraging any actual or threatened tender offers or takeover attempts of the Company. Rather, the Proposed Charter Amendment has been prompted by business and financial considerations, as set out above, and it is the intended purpose of the Proposed Charter Amendment to provide greater flexibility to the Board in considering and planning for our potential future corporate needs. Under certain circumstances, however, an increase in the number of authorized shares of the Company’s common stock may make it more difficult to, or discourage an attempt to, obtain control of the Company by means of a takeover bid that the Board determines is not in the Company’s best interest nor in the best interests of the Company’s shareholders. In this regard, if the Company was to become concerned that it may be a potential target of an unsolicited acquisition attempt, it could try to impede the acquisition by issuing additional shares of common stock or rights or other equity interests related thereto, thereby diluting the voting power of the other outstanding shares and increasing the potential cost to the bidder of the acquisition. The Company does not currently have a shareholder rights plan (commonly referred to as a “poison pill”) in place, nor does the Board currently have any plans to adopt any such plan or similar anti-takeover measures. The Board is not currently aware of any attempt or plan to acquire control of the Company. +Required Vote +Approval of this proposal requires the affirmative vote, either in person or by proxy, of the holders of a majority of the issued and outstanding shares of common stock. Abstentions, failing to vote, and broker non-votes will have the same effect as voting “AGAINST” the adoption of this proposal because the required vote is based on the number of shares outstanding rather than the number of votes cast. +The Board recommends a vote FOR the approval of an amendment to our certificate of incorporation to increase the number of authorized shares of common stock. +2022 PROXY STATEMENT 67 +OTHER MATTERS +Beneficial Ownership of Securities +Principal Shareholders and Management +The following table sets forth beneficial ownership information with respect to our common stock as of the Record Date (March 30, 2022) for (i) each person known by us to beneficially own 5% or more of our outstanding common stock; (ii) each of our NEOs, (iii) each of our directors and nominees for director, and (iv) all of our directors and current executive officers as of the Record Date, as a group. Unless otherwise noted, each person listed below has sole voting and investment power with respect to the shares of our common stock listed below as beneficially owned by the person. Information set forth in the table with respect to beneficial ownership of common stock has been obtained from filings made by the named beneficial owners with the SEC as of March 30, 2022, or, in the case of our current executive officers and directors, has been provided to us by such individuals. As of March 30, 2022, the Company had 61,493,753 shares outstanding. +None of the shares beneficially owned by our executive officers or directors has been pledged as security for an obligation. Our Insider Trading Policy prohibits our executive officers and directors from holding Callon securities in a margin account or pledging Callon securities as collateral for a loan. +Beneficial Ownership (1) +Name of Beneficial Owner Shares (#) Percent of Class +Holders of More Than 5%: +Kimmeridge Energy Management Company, LLC (2) +11,700,780 19.0 % +BlackRock, Inc. (3) +7,390,749 12.0 % +Blackstone Inc. (4) +7,321,344 11.9 % +The Vanguard Group, Inc. (5) +3,620,731 5.9 % +JB Investments Management, LLC (6) +3,183,470 5.2 % +Named Executive Officers: +Joseph C. Gatto, Jr. (7) +120,985 * +Kevin Haggard (8) +5,333 * +Jeffrey S. Balmer (9) +28,519 * +Michol L. Ecklund (10) +22,490 * +Gregory F. Conaway (11) +39,137 * +James P. Ulm, II (12) +15,428 * +Directors: * +Frances Aldrich Sevilla-Sacasa (13) +7,624 * +Matthew R. Bob (14) +15,476 * +Barbara J. Faulkenberry (15) +12,038 * +Michael L. Finch (16) +12,321 * +L. Richard Flury (17) +37,135 * +Larry D. McVay (18) +27,875 * +Anthony J. Nocchiero (19) +21,261 * +Mary Shafer-Maliki (20) +1,223 * +James M. Trimble (21) +13,576 * +Steven A. Webster (22) +766,836 1.2 % +All Current Executive Officers and Directors as a Group (consisting of 15 persons) (23) +1,131,829 1.8 % +* Less than 1% +68 CALLON PETROLEUM +OTHER MATTERS +(1) The amounts shown for our directors and NEOs include, as of the Record Date: (a) shares of common stock held under the 401(k) Plan for the accounts of participants; (b) shares of common stock owned outright by the individual; and (c) shares of common stock that may be acquired within 60 days through the vesting or settlement of certain RSUs, if any. Until RSUs vest, these individuals have neither voting nor investment power over the underlying shares of common stock, and share amounts are represented on a pre-tax basis. As of the Record Date, none of the directors or executive officers held any stock options to purchase shares of Company stock. +(2) Kimmeridge Energy Management Company, LLC (“Kimmeridge”), in its capacity as an investment adviser to Chambers Investments, LLC (“Chambers”), exercises voting and investment control over the securities held by Chambers. Kimmeridge has sole voting and sole dispositive power over 11,700,780 shares. Kimmeridge does not have shared voting or shared dispositive power over any shares. Kimmeridge’s address is 412 West 15 Street, 11th Floor, New York, NY 10011. This information is based on Kimmeridge’s most recent Statement on Schedule 13G/A filed on November 5, 2021. +(3) BlackRock, Inc. (“BlackRock”), in its capacity as a parent holding company or control person for various subsidiaries (none of which individually owns more than 5% of our outstanding common stock), may be deemed to beneficially own the indicated shares. BlackRock has sole voting power over 7,311,028 shares and sole dispositive power over 7,390,749 shares. BlackRock does not have shared voting or shared dispositive power over any of the shares. BlackRock’s address is 55 East 52nd Street, New York, NY 10055. This information is based on BlackRock’s most recent Statement on Schedule 13G, which was filed on February 7, 2022. +(4) Represents (i) 3,468,875 shares held directly by Primexx Energy Partners, Ltd., (ii) 1,265,171 shares held directly by BPP Energy Partners LLC, (iii) 1,983,407 shares held in escrow for the benefit of Primexx Resource Development LLC, an indirect wholly owned subsidiary of Primexx Energy Partners Ltd., and (iv) 603,891 shares held in escrow for the benefit of BPP Acquisition LLC, an indirect wholly owned subsidiary of BPP Energy Partners LLC. The securities were acquired on October 1, 2021 in connection with the consummation of the transactions contemplated by those certain purchase and sale agreements, dated as of August 3, 2021, between the Company, Callon Petroleum Operating Company and Primexx Resource Development, LLC and BPP Acquisition, LLC, respectively (the “Primexx Transaction”). +Primexx Energy Corporation is the managing general partner of Primexx Energy Partners, Ltd. BPP HoldCo LLC is the majority shareholder and has the power to appoint the majority of the members of the board of directors of Primexx Energy Corporation and has the power to appoint the majority of the members of the board of managers of BPP Energy Partners LLC. BX Primexx Topco LLC is the sole member of BPP HoldCo LLC. BCP VII/BEP II Holdings Manager L.L.C. is the managing member of BX Primexx Topco LLC. Blackstone Energy Management Associates II L.L.C. and Blackstone Management Associates VII L.L.C. are the managing members of BCP VII/BEP II Holdings Manager L.L.C. Blackstone EMA II L.L.C. is the sole member of Blackstone Energy Management Associates II L.L.C. BMA VII L.L.C. is the sole member of Blackstone Management Associates VII L.L.C. Blackstone Holdings III L.P. is the managing member of each of BMA VII L.L.C. and Blackstone EMA II L.L.C. Blackstone Holdings III GP L.P. is the general partner of Blackstone Holdings III L.P. Blackstone Holdings III GP Management L.L.C. is the general partner of Blackstone Holdings III GP L.P. Blackstone Inc. is the sole member of Blackstone Holdings III GP Management L.L.C. The sole holder of the Series II preferred stock of Blackstone Inc. is Blackstone Group Management L.L.C. Blackstone Group Management L.L.C. is wholly-owned by Blackstone’s senior managing directors and controlled by its founder, Stephen A. Schwarzman. The address of the principal business office of Blackstone Inc. is 345 Park Avenue, New York, NY 10154. The above information is based on the most recent Form 4 of Primexx Energy Partners, Ltd. and the other entities referred to above, which was filed on March 29, 2022. +Pursuant to the purchase and sale agreements for the Primexx Transaction, 50% of the shares held in escrow will be released six months after the closing date, and the remaining shares will be released 12 months after the closing date, in each case subject to holdback for the satisfaction of applicable indemnification claims. +(5) The Vanguard Group, Inc. (“Vanguard”), in its capacity as an investment adviser, may be deemed to beneficially own the indicated shares, along with certain of its wholly-owned subsidiaries that serve as investment managers. Vanguard does not have sole voting power over any shares, but has shared voting power over 90,570 shares, sole dispositive power over 3,494,484 shares and shared dispositive power over 126,247 shares. Vanguard’s address is 100 Vanguard Blvd., Malvern, PA 19355. This information is based on Vanguard’s most recent Statement on Schedule 13G filed on February 9, 2022. +(6) JB Investments Management, LLC (“JB Investments”), in its capacity as an investment adviser, may be deemed to beneficially own the indicated shares, along with JB Investments Fund III, L.P., JB Investments Parallel Fund III, L.P. (together with JB Investments Fund III, L.P., the “Funds”). JB Investments Fund III GP, LLC is the general partner of, and may be deemed to beneficially own securities owned by the Funds. Mr. Brian J. Riley is the sole manager of, and may be deemed to beneficially own securities owned by JB Investments. JB Investments has shared voting and shared dispositive power over 3,183,470 shares. JB Investment’s address is 355 Valley Park Road, Phoenixville, PA 19460. This information is based on JB Investment’s most recent Statement on Schedule 13G, which was filed on February 14, 2022. +(7) Comprised of 73,495 shares held directly by Mr. Gatto, 6,613 shares held indirectly within the 401(k) Plan, and 40,877 unvested RSUs payable in stock that will vest within 60 days of the Record Date. Does not include 82,415 unvested restricted stock units (“RSUs”) payable in stock and 73,200 unvested performance stock units (“PSUs”) payable in 50% stock and 50% cash. +(8) Comprised of 5,333 unvested RSUs payable in stock that will vest within 60 days of the Record Date. Does not include 40,086 unvested RSUs payable in stock. +(9) Comprised of 12,077 shares held directly by Dr. Balmer, 13 shares held indirectly within the 401(k) Plan, and 16,429 unvested RSUs payable in stock that will vest within 60 days of the Record Date. Does not include 40,067 unvested RSUs payable in stock and 34,574 unvested PSUs payable in 50% stock and 50% cash. +(10) Comprised of 10,442 shares held directly by Ms. Ecklund, 60 shares held indirectly within the 401(k) Plan, and 11,988 unvested RSUs payable in stock that will vest within 60 days of the Record Date. Does not include 25,619 unvested RSUs payable in stock and 21,780 unvested PSUs payable in 50% stock and 50% cash. +2022 PROXY STATEMENT 69 +OTHER MATTERS +(11) Comprised of 35,199 shares held directly by Mr. Conaway and 3,938 unvested RSUs payable in stock that will vest within 60 days of the Record Date. Does not include 11,528 unvested RSUs payable in stock and 8,046 unvested PSUs payable in 50% stock and 50% cash. +(12) Comprised of 15,371 shares held directly by Mr. Ulm and 57 shares held indirectly within the 401(k) Plan. +(13) Comprised of 4,384 shares held directly by Ms. Aldrich Sevilla-Sacasa, which includes 2,037 vested deferred RSUs, pursuant to Ms. Aldrich Sevilla-Sacasa’s election under the Deferred Compensation Plan, which are payable in cash upon her separation of service as a director, and 3,240 unvested deferred RSUs, pursuant to Ms. Aldrich Sevilla-Sacasa’s election under the Deferred Compensation Plan, which are payable in cash upon her separation of service as a director and that will vest within 60 days of the Record Date. +(14) Comprised of 12,236 shares held directly by Mr. Bob and 3,240 unvested RSUs payable in stock that will vest within 60 days of the Record Date. +(15) Comprised of 8,798 shares held directly by Ms. Faulkenberry and 3,240 unvested RSUs payable in stock that will vest within 60 days of the Record Date. +(16) Comprised of 9,081 shares held directly by Mr. Finch and 3,240 unvested RSUs payable in stock that will vest within 60 days of the Record Date. +(17) Comprised of 30,895 shares held directly by Mr. Flury, which includes 15,559 vested deferred RSUs, pursuant to Mr. Flury’s election under the Deferred Compensation Plan, which are payable in cash upon his separation of service as a director, 3,000 shares held in a joint tenancy with his spouse, and 3,240 unvested RSUs payable in stock that will vest within 60 days of the Record Date. +(18) Comprised of 24,635 shares held directly by Mr. McVay, which includes 3,501 vested deferred RSUs, pursuant to Mr. McVay’s election under the Deferred Compensation Plan, which are payable in cash upon his separation of service as a director, and 3,240 unvested RSUs payable in stock that will vest within 60 days of the Record Date. +(19) Comprised of 18,021 shares held directly by Mr. Nocchiero and 3,240 unvested RSUs payable in stock that will vest within 60 days of the Record Date. +(20) Comprised of 1,223 unvested RSUs payable in stock that will vest within 60 days of the Record Date. +(21) Comprised of 10,336 shares held directly by Mr. Trimble and 3,240 unvested RSUs payable in stock that will vest within 60 days of the Record Date. +(22) Comprised of 549,721 shares held directly by Mr. Webster, which includes 13,192 vested deferred RSUs, pursuant to Mr. Webster’s election under the Deferred Compensation Plan, which are payable in common stock upon his separation of service as a director, 64,500 shares held indirectly with his spouse, 149,375 shares held indirectly through San Felipe Resources Company, and 3,240 unvested RSUs payable in stock that will vest within 60 days of the Record Date. +(23) Comprised of 799,320 shares held directly by the Company’s current executive officers and directors, 3,000 shares held in a joint tenancy, 64,500 shares held indirectly by a spouse, 6,686 shares held indirectly within the Company’s 401(k) Plan, 149,375 shares held indirectly by San Felipe Resources Company, and 108,948 unvested RSUs payable in stock that will vest within 60 days of the Record Date.. +Delinquent Section 16(a) Reports +Section 16(a) of the Exchange Act requires our officers and directors and persons who own 10% or more of our common stock to file reports of beneficial ownership and changes in ownership with the SEC. These persons are required by SEC regulations to furnish us with copies of these reports. Based solely on our review of these reports received by us during fiscal year 2021 and representations from certain reporting persons that they have complied with the relevant filing requirements, we believe that all such filing requirements were complied with in 2021 and 2022 to date, except that our NEOs (with the exception of Mr. Haggard) filed the Forms 4 that covered the April 1, 2021 vesting of RSUs late. +Certain Relationships and Related Party Transactions +The Audit Committee charter provides that the Audit Committee shall review and approve all related party transactions. A transaction will be considered a “related party transaction” if the transaction would be required to be disclosed under Item 404 of Regulation S-K. In addition, our Code provides that an officer’s or a director’s conflict of interest with Callon may only be waived if the N&ESG Committee approves the waiver and the full Board ratifies the waiver. +We are not aware of any related party transactions that require disclosure under Item 404 of Regulation S-K; however, as previously disclosed, the debt-for-equity exchange transaction completed with Kimmeridge on November 5, 2021, constituted a related party transaction because Kimmeridge held approximately 11% of our issued and outstanding common stock at the time we entered into the Exchange Agreement. The transaction was negotiated on an arms-length basis, was reviewed and approved in advance by our independent Nominating and ESG Committee and our Board, and prior to closing of the transaction was approved by the Company's shareholders at a special meeting on November 3, 2021. Pursuant to the Exchange Agreement, Kimmeridge exchanged $197.0 million in aggregate principal amount of our 9.00% Senior Secured Second Lien Notes for +70 CALLON PETROLEUM +OTHER MATTERS +5,512,623 shares of our common stock. The exchange terms were based on the optional redemption language in the notes indenture and the 10-day volume weighted average price of Callon common stock as of the day prior to execution of the Exchange Agreement. The Board believed that the transactions contemplated by the Exchange Agreement has strengthened the Company’s financial position by accelerating deleveraging initiatives and reducing cash interest expense by approximately $20 million per year. In addition, the transactions improved the standing of shareholders in the capital structure of the Company and enhanced Callon’s access to debt capital markets, providing the opportunity for reductions in the corporate cost of capital. Please see footnote 2 of the Beneficial Ownership of Securities table on page 68 . +Shareholders’ Proposals and Director Nominations for the 2023 Annual Meeting +In order for a proposal to be considered for inclusion in the proxy statement for the 2023 Annual Meeting of Shareholders (the “2023 Annual Meeting”) pursuant to Rule 14a-8 of the Exchange Act, such proposal must be received by the Secretary of the Company at our principal executive offices no later than December 12, 2022 (assuming the date of the 2023 Annual Meeting has not been changed by more than 30 days from the date of this year’s Annual Meeting), and must otherwise be in compliance with the requirements of the SEC’s proxy rules. If the date of the 2023 Annual Meeting has been changed by more than 30 days from the date of this Annual Meeting, then the deadline is a reasonable time before we begin to print and send our proxy materials for the 2023 Annual Meeting. +For a shareholder proposal to be introduced for consideration at the 2023 Annual Meeting but not intended to be considered for inclusion in the Company's proxy statement and form of proxy relating to such meeting (i.e., not pursuant to Rule 14a-8 of the Exchange Act), including shareholder nominations for candidates for election as directors, a shareholder must provide written notice of such proposal to Company not later than 120 days nor earlier than 150 days before the date of the 2023 Annual Meeting. Any such notice must describe the shareholder proposal in reasonable detail and otherwise comply with the requirements set forth in our bylaws. In addition to satisfying the notice, informational and other requirements contained in our bylaws, shareholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must also comply with the universal proxy rules set forth in Rule 14a-19 of the Exchange Act (once effective). +Nominating Process +In accordance with our certificate of incorporation, any shareholder may nominate a person for election to the Board upon delivery of written notice to us of such nomination. Such notice must be sent as provided in our certificate of incorporation on or before the deadline set forth in our certificate of incorporation, and must otherwise comply with the procedures set forth in our certificate of incorporation. For nominations, the Board will consider individuals identified by shareholders on the same basis as nominees identified from other sources. A submission recommending a nominee should include: +• Sufficient biographical information to allow the N&ESG Committee to evaluate the qualifications of a potential nominee in light of the director nomination procedures and criteria and any other information that would be required to be disclosed in solicitations of proxies for the election of directors; +• An indication as to whether the proposed nominee will meet the requirements for independence under NYSE and SEC guidelines; +• A description of all direct and indirect compensation and other material monetary agreements, arrangements, and understandings during the past three years, and any other material relationships, between or among the nominating shareholder or beneficial owner and each proposed nominee; +• A completed and signed questionnaire, representation, and agreement, pursuant to our bylaws, with respect to each nominee for election or re-election to the Board; and +• The proposed nominee’s written consent to serve if nominated and elected. +2022 PROXY STATEMENT 71 +ANNUAL MEETING INFORMATION +Information Concerning Solicitation and Voting +We are providing you this Proxy Statement in connection with the solicitation of proxies by the Board to be voted at the Annual Meeting, which will be held on May 25, 2022 at 9:00 a.m. CDT in the Conversation Salon Room of Hotel ZaZa Memorial City, located at 9787 Katy Freeway in Houston, Texas. This Proxy Statement contains important information for you to consider when deciding how to vote on the matters brought before the meeting. Please read it carefully. +The Board will primarily solicit proxies by mail, and we will bear all costs incurred in the solicitation of proxies, including the preparation, printing and mailing of these proxy materials. In addition to solicitation by mail, our directors, officers and employees may solicit proxies personally or by telephone, email, facsimile or other means, without additional compensation. We may also make arrangements with brokerage houses and other custodians, nominees and fiduciaries for the forwarding of solicitation material to the beneficial owners of the common stock held by such persons, and we may reimburse those brokerage houses and other custodians, nominees and fiduciaries for reasonable expenses incurred in connection therewith. In addition, to assist us with our solicitation efforts, we have retained the services of Innisfree M&A Incorporated for a fee of approximately $15,000, plus out-of-pocket expenses. +Information About Voting and the Annual Meeting +Who may vote +You may vote if you are the record holder of our common stock as of the close of business on the Record Date. On that date, 61,493,753 shares of our common stock were outstanding and are entitled to vote at the Annual Meeting. Each share of common stock is entitled to one vote on each matter considered at this meeting. A list of shareholders entitled to vote at the Annual Meeting will be available at our office at 2000 West Sam Houston Parkway South, Suite 2000, Houston, TX 77042 during normal business hours for a period of ten days prior to the meeting and will also be available for inspection at the Annual Meeting. +Attending the Annual Meeting +If you meet the above criteria to vote at our Annual Meeting, you may attend the Annual Meeting. If you wish to attend the Annual Meeting in person, you must present valid, government-issued picture identification. If your shares are held in the name of a bank, broker or other nominee and you plan to attend the Annual Meeting, in order to be admitted you must present proof of your beneficial ownership of the common stock, such as a bank or brokerage account statement, or copy of your Voting Instruction Form or Notice, indicating that you owned shares of our common stock at the close of business on the Record Date. +For safety and security reasons, no cameras, recording equipment, cellular telephones, electronic devices, large bags, briefcases or packages will be permitted in the Annual Meeting. No banners, signs, firearms or weapons will be allowed in the meeting room. We reserve the right to inspect all items entering the meeting room. +Proposals +Qualifying shareholders will vote on the following four proposals at the Annual Meeting: +1) The election of three Class I directors; +2) Advisory approval of our executive compensation; +3) The ratification of the appointment of Grant Thornton LLP; and +4) The approval of an amendment to our certificate of incorporation increasing the number of authorized shares of our common stock. +72 CALLON PETROLEUM +ANNUAL MEETING INFORMATION +Notice and access +The Company is furnishing proxy materials to its shareholders through the Internet as permitted under the rules of the SEC. Under these rules, the Company’s shareholders will receive a Notice Regarding the Availability of Proxy Materials instead of a paper copy of the Notice of 2022 Annual Meeting of Shareholders and Proxy Statement, our proxy card, and our Annual Report on Form 10-K, often referred to as “notice and access.” We believe this process gives us the opportunity to serve you more efficiently by making the proxy materials available quickly online and reducing costs associated with printing and distributing our proxy materials. This Notice includes instructions on how to access the proxy materials over the Internet or to request a paper copy of proxy materials, including a proxy card or voting instruction form. In addition and as described in the Notice, shareholders may request to receive future proxy materials in printed form by mail or electronically by email. A shareholder’s election to receive proxy materials by mail or email will remain in effect until terminated by the shareholder. +The Company's proxy materials were made available by the Board on the Internet on or about April 11, 2022 at https://www.viewproxy.com/CallonPetroleum/2022, which is the cookies-free website described in the Notice. Accordingly, we are sending the Notice to our shareholders of record and beneficial owners of our stock, and filing the Notice with the SEC, on or about April 11, 2022. Please note that the Notice identifies the proposals on which shareholders will vote at the meeting, but shareholders cannot vote by marking the Notice and returning it. The Notice provides instructions on how to vote via the Internet, by telephone or by requesting and returning a paper proxy card, or by submitting a ballot in person at the meeting. +In addition to the proxy materials being available for review at https://www.viewproxy.com/CallonPetroleum/2022, the site contains instructions on how to access the proxy materials on a website or to request free of charge printed materials, including a copy of our Annual Report on Form 10-K for the year ended December 31, 2021 as filed with the SEC. On an ongoing basis, shareholders may contact our Corporate Secretary at our principal offices in Houston, Texas to request proxy materials by mail or by email. +Casting your vote +There are three methods for registered shareholders to vote by proxy without attending the Annual Meeting: +1. By Internet +You can vote via the Internet by going to the website address provided on your Notice or proxy card. You will need to use the control and request ID appearing on your proxy card to vote via the Internet. You can use the Internet to transmit your voting instructions up until 11:59 p.m. CDT on May 24, 2022. If you vote via the Internet, you do NOT need to vote by telephone or return a proxy card. Internet voting is available 24 hours a day. +2. By Telephone +You can also vote by telephone by calling the toll-free telephone number provided on your proxy card. You will need to use the control and request ID appearing on your proxy card to vote by telephone. You may transmit your voting instructions from any touch-tone telephone up until 11:59 p.m. CDT on May 24, 2022. Voting by telephone is available 24 hours a day. +3. By Mail +If you received a printed copy of the proxy card, you can vote by marking, dating and signing it, and returning it in the reply envelope provided. Please promptly mail your proxy card to ensure that we receive it prior to the closing of the polls at the Annual Meeting. +If you receive more than one Notice and/or Proxy Statement then it means that your shares are likely registered in more than one account. Please provide voting instructions for all Notices, proxy and voting instruction cards you receive. If you send us a signed proxy card without marking your voting selections, your shares will be voted on each proposal as recommended by the Board, and in the discretion of the proxy holders as to any other matters that may properly come before the meeting or any postponement or adjournment of the meeting. The Board is not presently aware of any other proposals or any other business to be considered at the Annual Meeting. +Difference between a “holder of record” and a “street name” holder +If your shares are registered directly in your name, you are considered the shareholder of record with respect to those shares. If your shares are held in a stock brokerage account or by a bank, trust or other nominee, then the broker, bank, trust or other nominee is considered to be the shareholder of record with respect to those shares. However, you are still considered to be the beneficial owner of those shares, and your shares are said to be held in “street name.” Street name holders generally cannot submit a proxy or vote their shares directly and must instead instruct the broker, bank, trust or other nominee how to vote their shares. You will receive instructions from your broker, bank or other nominee that you must follow in order for your broker, bank or other nominee to vote your shares per your instructions. Many brokerage firms and banks have a process for their beneficial +2022 PROXY STATEMENT 73 +ANNUAL MEETING INFORMATION +holders to provide instructions via the Internet or over the telephone. If Internet or telephone voting is unavailable from your broker, bank or other nominee, please complete and return the enclosed voting instruction card in the addressed, postage paid envelope provided. +In the event you do not provide instructions on how to vote shares held in street name, your broker may have authority to vote your shares. Under the rules that govern brokers who are voting with respect to shares that are held in street name, brokers have the discretion to vote such shares on routine matters, but they are not permitted to vote (a “broker non-vote”) on non-routine or non-discretionary items absent instructions from the beneficial owner. With respect to the Annual Meeting, brokers are prohibited from exercising discretionary authority in the election of directors, the non-binding advisory proposal on executive compensation, and the Proposed Charter Amendment, but such brokers may exercise discretionary authority with respect to the ratification of the appointment of our independent registered public accounting firm. Your vote is especially important. Therefore, please promptly instruct your broker regarding how to vote your shares on these matters. +If you hold shares through a broker, bank or other nominee and wish to be able to vote in person at the meeting, you must obtain a legal proxy from your broker, bank or other nominee and present it to the inspector of election with your ballot at the meeting. If you have questions about how to obtain a legal proxy, please call Innisfree M&A Incorporated toll-free at (888) 750-5834. Submitting your proxy by mail will not affect your right to vote in person if you decide to attend the Annual Meeting. +Revoking a proxy +You may revoke or change a previously delivered proxy at any time before the meeting by delivering another proxy with a later date, by voting again via the Internet or by telephone, or by delivering written notice of revocation of your proxy to our Corporate Secretary at our principal executive office in Houston, Texas before the beginning of the meeting. You may also revoke your proxy by attending the meeting and voting in person, although attendance at the meeting will not necessarily revoke a valid proxy that was previously delivered. If you hold shares through a broker, bank or other nominee, you must contact that nominee to revoke any prior voting instructions. You also may revoke any prior voting instructions by voting in person at the meeting if you obtain a legal proxy as described above. +Recommendation of the Board +The Board unanimously recommends you vote “FOR” each of the proposals. A proxy that is properly completed and submitted will be voted at the Annual Meeting in accordance with the instructions on the proxy. If you properly complete and submit a proxy, but do not indicate any contrary voting instructions, your shares will be voted as follows: +• “ FOR ” the election of each of the nominees named in this Proxy Statement to the Board of Directors; +• “ FOR ” the approval, on an advisory basis, of our executive compensation; +• “ FOR ” the ratification of the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2022; and +• “ FOR ” the approval of an amendment to our certificate of incorporation to increase the number of authorized shares of common stock. +Counting the vote +We have appointed Alliance Advisors to tabulate and certify the vote. +Quorum +A quorum is the number of shares that must be present to hold the meeting. The quorum requirement for the meeting is a majority of the outstanding shares as of the Record Date, present in person or represented by proxy. We will count your shares for purposes of determining if there is a quorum if either you are present and vote in person at the meeting or have voted on the Internet, by telephone or by properly submitting a proxy card or voting instruction card by mail. Abstentions and broker non-votes also count toward the quorum. +74 CALLON PETROLEUM +ANNUAL MEETING INFORMATION +Required Vote +Proposal 1 - Election of directors +The nominees for election as directors will be elected by a plurality of the votes cast by the shares entitled to vote in the election of directors. However, because the number of director nominees equals the number of directors to be elected at this Annual Meeting, if any nominee for director receives a greater number of votes “withheld” than votes “for,” then such nominee is required to promptly tender his or her resignation for consideration by the N&ESG Committee. Such resignation will only be effective upon Board acceptance of such resignation after receiving the recommendation of the N&ESG Committee. Abstentions and broker non-votes will not be included in determining the number of votes cast in the election of directors and will not have any effect on the outcome. This voting standard is discussed further under “Proposal 1 - Election of Class I Directors.” +Proposal 2 - Advisory vote to approve NEO compensation +The advisory vote on our executive compensation is non-binding, so no specific vote is required. Abstentions will have the same effect as a vote against this proposal, and broker non-votes will not be counted as shares present and entitled to vote, and, accordingly, will not affect the outcome of the vote on this proposal. While the law requires this advisory vote, the vote will neither be binding on us or the Board, nor will it create or imply any change in the fiduciary duties of, or impose any additional fiduciary duty on, us or the Board. However, the views of our shareholders are important to us, and our Compensation Committee will take into account the outcome of the vote when considering future executive compensation decisions. We urge you to read the section entitled “Compensation Discussion and Analysis,” which discusses in detail how our executive compensation program implements our compensation philosophy. +Proposal 3 - Ratification of the appointment of the independent registered public accounting firm +The advisory vote on the ratification of the appointment of Grant Thornton LLP as our independent registered public accounting firm for the 2022 fiscal year is non-binding, so no specific vote is required. If you hold your shares through a broker and you do not instruct the broker how to vote, your broker will have the authority to vote your shares in its discretion on this proposal. An abstention will have the effect of a vote against this proposal. Because your vote is advisory, it will not be binding on the Board or the Company. However, the Board and the Audit Committee will consider the outcome of the vote in determining the selection of the Company’s independent registered public accounting firm. +Proposal 4 - Approval of an amendment to our certificate of incorporation in increase the number of authorized shares of common stock +Approval of this proposal requires the affirmative vote, either in person or by proxy, of the holders of a majority of the issued and outstanding shares of common stock. Abstentions, failing to vote, and “broker non-votes” will have the same effect as voting “AGAINST” the adoption of this proposal because the required vote is based on the number of shares outstanding rather than the number of votes cast. +2022 PROXY STATEMENT 75 +ANNUAL MEETING INFORMATION +Voting Results +We will announce the preliminary voting results at the Annual Meeting and will publish the final voting results in a Current Report on Form 8-K to be filed with the SEC within four business days of the meeting. +Householding Information +The SEC permits companies and intermediaries (such as brokers and banks) to satisfy delivery requirements for proxy statements and annual reports with respect to two or more shareholders sharing the same address by delivering a single proxy statement and annual report to those shareholders. This process, which is commonly referred to as “householding,” is intended to reduce the volume of duplicate information shareholders receive and reduce expenses for companies. Both we and some of our intermediaries may be householding our proxy materials and annual report. Once you have received notice from your broker or another intermediary that they will be householding materials sent to your address, householding will continue until you are notified otherwise or until you revoke your consent. Should you wish to receive separate copies of our annual report and proxy statement in the future, we will promptly deliver a separate copy of each of these documents to you if you send a written request to us at our address appearing on the cover of this Proxy Statement, to the attention of the Corporate Secretary. If you hold your shares through an intermediary that is householding and you want to receive separate copies of our annual report and proxy statement in the future, you should contact your bank, broker or other nominee record holder. +Financial Statements and Other Available Documents +Financial statements for our most recent fiscal year are contained in the 2021 Annual Report to Shareholders and our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 filed with the SEC on February 24, 2022. Our Annual Report, our Annual Report on Form 10-K, Corporate Governance Guidelines, Code, and charters of Board committees may be accessed by shareholders on our website at www.callon.com or printed copies are available upon written request to Michol L. Ecklund, Corporate Secretary at our principal executive office in Houston, Texas. +Other Business +The Board is not aware of any matter to be acted upon at the Annual Meeting other than those described above. If other business properly comes before the Annual Meeting, the persons named on the proxy will vote the proxy in accordance with what they consider to be in the best interests of us and our shareholders. Please sign, date, and return your proxy promptly to avoid unnecessary expense. All shareholders are urged, regardless of the number of shares owned, to participate in the Annual Meeting by voting their shares. +By Order of the Board of Directors, +Joseph C. Gatto, Jr. +President, Chief Executive Officer and Director +Houston, Texas +April 11, 2022 +76 CALLON PETROLEUM +APPENDIX A +NON-GAAP RECONCILIATIONS +Adjusted EBITDA (in thousands): +2020 2021 +Net income (loss) $ (2,533,621) $ 365,151 +Adjustments: +Loss on derivatives contracts $ 27,773 $ 522,300 +Gain (loss) on commodity derivative settlements, net $ 95,856 $ (423,306) +Non-cash expense related to share-based awards $ 2,663 $ 12,923 +Impairment of evaluated oil and gas properties $ 2,547,241 $ — +Merger, integration and transaction $ 28,482 $ 14,289 +Other expense $ 14,625 $ 7,655 +Income tax expense $ 122,054 $ 180 +Interest expense, net $ 94,329 $ 102,012 +Depreciation, depletion and amortization $ 480,631 $ 356,556 +(Gain) loss on extinguishment of debt $ (170,370) $ 41,040 +Adjusted EBITDA $ 709,663 $ 998,800 +Adjusted Free Cash Flow (in thousands): +2021 +Net cash provided by operating activities $ 974,143 +Changes in working capital and other $ (53,312) +Change in accrued hedge settlements $ (28,208) +Cash interest expense, net $ 91,888 +Merger, integration and transaction $ 14,289 +Adjusted EBITDA $ 998,800 +Less: Operational capital expenditures (accrual) $ 508,616 +Less: Capitalized interest $ 89,738 +Less: Interest expense, net of capitalized amounts $ 91,888 +Less: Capitalized cash G&A $ 34,386 +Adjusted Free Cash Flow $ 274,172 +Total Corporate Cash Margin (in thousands, except per Boe data): +2021 +Adjusted free cash flow $ 274,172 +Plus: Operational capital expenditures (accrual) $ 508,616 +Total Corporate Cash Margin $ 782,788 +Total production in barrels of oil equivalent 34,894 +Total Corporate Cash Margin per Boe $ 22.43 +2022 PROXY STATEMENT 77 +APPENDIX B +FORM OF CERTIFICATE OF AMENDMENT OF +CERTIFICATE OF INCORPORATION OF +CALLON PETROLEUM COMPANY +The undersigned, Michol L. Ecklund, Corporate Secretary of Callon Petroleum Company (the “Corporation”), a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the “DGCL”), does hereby certify as follows: +FIRST : The name of the Corporation is Callon Petroleum Company. +SECOND : This Amendment (this “Amendment”) to the Certificate of Incorporation of the Corporation (the “Certificate”) was duly adopted in accordance with the provisions of Section 242 of the DGCL. The Board of Directors has duly adopted resolutions setting forth and declaring advisable this Amendment and the holders of a majority of the outstanding stock of the Corporation entitled to vote at the special meeting of the stockholders called and held upon notice in accordance with Section 222 of the DGCL for the purpose of voting on the Amendment have voted in favor of this Amendment. +THIRD : Upon the filing and effectiveness of this Amendment pursuant to the DGCL, the Certificate is hereby amended by amending and restating the first sentence of Article Four to be and read as follows: +The Corporation shall have authority to issue two classes of stock, and the total number authorized shall be 130,000,000 shares of Common Stock, par value $.01 per share, and 2,500,000 shares of Preferred Stock, par value $.01 per share. +IN WITNESS WHEREOF , the undersigned has executed this Amendment on behalf of the Corporation and has attested such execution and does verify and affirm, under penalty of perjury, that this Amendment is the act and deed of the Corporation and that the facts stated herein are true as of this [ ] day of [ ] 2022. +Callon Petroleum Company +By: +Michol L. Ecklund, Corporate Secretary +78 CALLON PETROLEUM +CALLON PETROLEUM COMPANY +ANNUAL MEETING OF SHAREHOLDERS +MAY 25, 2022 AT 9:00 A.M. CDT +SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF CALLON PETROLEUM COMPANY +The undersigned hereby appoints Michol L. Ecklund, as proxy with full power of substitution and re-substitution, to vote all shares of Common Stock of Callon Petroleum Company that the undersigned is entitled to vote at the Annual Meeting of Shareholders thereof to be held at the Conversation Salon Room of the Hotel ZaZa Memorial City, 9787 Katy Freeway, Houston, Texas on 77024 on May 25, 2022, or at any adjournment or postponement thereof, as follows: +ALL SHARES WILL BE VOTED AS DIRECTED HEREIN AND, UNLESS OTHERWISE DIRECTED, WILL BE VOTED “FOR” PROPOSAL 1 (ALL NOMINEES), “FOR” PROPOSAL 2, “FOR” PROPOSAL 3, AND "FOR" PROPOSAL 4, AND IN ACCORDANCE WITH THE DISCRETION OF THE PERSON VOTING THE PROXY WITH RESPECT TO ANY OTHER BUSINESS PROPERLY BROUGHT BEFORE THE MEETING OR AT ANY ADJOURNMENT OR POSTPONEMENT THEREOF. The undersigned shareholder further hereby ratifies all that the said proxy may do by virtue hereof. If any nominee named on the reverse side is unable to serve or for good cause will not serve as a director, the person named as proxy shall have the authority to vote for any other person who may be nominated at the instruction and discretion of the Board of Directors or an authorized committee thereof. +The undersigned shareholder hereby revokes any other proxy heretofore executed by the undersigned for the Annual Meeting and acknowledges receipt of the Notice of the 2022 Annual Meeting of Shareholders and Proxy Statement dated April 11, 2022 and the Annual Report to Shareholders furnished in connection therewith. +You are encouraged to specify your choice by marking the appropriate box (SEE REVERSE SIDE), but you need not mark any box if you wish to vote in favor. +(CONTINUED AND TO BE SIGNED ON REVERSE SIDE) +PLEASE DETACH ALONG PERFORATED LINE AND MAIL IN THE ENVELOPE PROVIDED. +IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 25, 2022. +THE PROXY STATEMENT IS AVAILABLE AT: +HTTP://WWW.VIEWPROXY.COM/CALLONPETROLEUM/2022 +Please mark votes as in this example +ý +THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” PROPOSALS 1, 2, 3, and 4. +1. +Election of Directors: +3 The ratification of the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2022. +FOR ALL WITHHOLD +ALL FOR ALL +EXCEPT +01 Michael L. Finch ¨ +¨ +¨ ¨ +FOR ¨ +AGAINST ¨ +ABSTAIN +02 Mary Shafer-Malicki ¨ 4. The approval of an amendment to the Company’s certificate of incorporation in the form attached to the accompanying Proxy Statement as Appendix B to increase the number of authorized shares of our common stock . +03 Steven A. Webster ¨ +2. +The approval, by non-binding advisory vote, of the compensation of our named executive officers. +¨ FOR ¨ AGAINST ¨ ABSTAIN +¨ FOR ¨ AGAINST ¨ ABSTAIN +MARK “X” HERE IF YOU PLAN TO ATTEND THE MEETING: ¨ +Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person. +DO NOT PRINT IN THIS AREA +(Shareholder Name & Address Data) +Date +Signature +Signature (if held jointly) +Address Change/Comments: (If you noted any Address Changes and/or Comments above, please mark box.) ¨ +CONTROL NUMBER +PLEASE DETACH ALONG PERFORATED LINE AND MAIL IN THE ENVELOPE PROVIDED. +CONTROL NUMBER +SCAN TO +VIEW MATERIALS & VOTE +PROXY VOTING INSTRUCTIONS +Please have your 11 digit control number ready when voting by Internet or Telephone. +If you vote by phone, fax or Internet, please DO NOT mail your proxy card. +INTERNET TELEPHONE MAIL +Vote Your Proxy on the Internet: Vote Your Proxy by Phone: Vote Your Proxy by Mail: +Go to www.AALVote.com/CPE +Call 1 (866) 804-9616 +Have your proxy card available when you access the above website. Follow the prompts to vote your shares. Use any touch-tone telephone to vote your proxy. Have your proxy card available when you call. Follow the voting instructions to vote your shares. Mark, sign, and date your proxy card, then detach it, and return it in the postage-paid envelope provided. \ No newline at end of file diff --git a/raw/proxies/0000928022/0000928022-22-000063/proxy_rpt.txt b/raw/proxies/0000928022/0000928022-22-000063/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..bea4c3b86b9d25949c7ff7717b8dffaa594bbc32 --- /dev/null +++ b/raw/proxies/0000928022/0000928022-22-000063/proxy_rpt.txt @@ -0,0 +1,3 @@ +Certain Relationships and Related Party Transactions +The Audit Committee charter provides that the Audit Committee shall review and approve all related party transactions. A transaction will be considered a “related party transaction” if the transaction would be required to be disclosed under Item 404 of Regulation S-K. In addition, our Code provides that an officer’s or a director’s conflict of interest with Callon may only be waived if the N&ESG Committee approves the waiver and the full Board ratifies the waiver. +We are not aware of any related party transactions that require disclosure under Item 404 of Regulation S-K; however, as previously disclosed, the debt-for-equity exchange transaction completed with Kimmeridge on November 5, 2021, constituted a related party transaction because Kimmeridge held approximately 11% of our issued and outstanding common stock at the time we entered into the Exchange Agreement. The transaction was negotiated on an arms-length basis, was reviewed and approved in advance by our independent Nominating and ESG Committee and our Board, and prior to closing of the transaction was approved by the Company's shareholders at a special meeting on November 3, 2021. Pursuant to the Exchange Agreement, Kimmeridge exchanged $197.0 million in aggregate principal amount of our 9.00% Senior Secured Second Lien Notes for \ No newline at end of file diff --git a/raw/proxies/0000928022/0000928022-23-000047/proxy.txt b/raw/proxies/0000928022/0000928022-23-000047/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..d6add2b7bd1bf38f4c6b3764f8f069bceed500f8 --- /dev/null +++ b/raw/proxies/0000928022/0000928022-23-000047/proxy.txt @@ -0,0 +1,2166 @@ +cpe-20230309 +0000928022 DEF 14A FALSE 0000928022 2022-01-01 2022-12-31 iso4217:USD 0000928022 2021-01-01 2021-12-31 0000928022 2020-01-01 2020-12-31 0000928022 cpe:AdjustmentRemoveValueOfEquityAwardsGrantedMember ecd:PeoMember 2022-01-01 2022-12-31 0000928022 cpe:AdjustmentPriorYearEquityAwardsMember ecd:PeoMember 2022-01-01 2022-12-31 0000928022 cpe:AdjustmentRemoveValueOfEquityAwardsGrantedMember ecd:NonPeoNeoMember 2022-01-01 2022-12-31 0000928022 cpe:AdjustmentPriorYearEquityAwardsMember ecd:NonPeoNeoMember 2022-01-01 2022-12-31 0000928022 cpe:AdjustmentRemoveValueOfEquityAwardsGrantedMember ecd:PeoMember 2021-01-01 2021-12-31 0000928022 cpe:AdjustmentPriorYearEquityAwardsMember ecd:PeoMember 2021-01-01 2021-12-31 0000928022 cpe:AdjustmentRemoveValueOfEquityAwardsGrantedMember ecd:NonPeoNeoMember 2021-01-01 2021-12-31 0000928022 cpe:AdjustmentPriorYearEquityAwardsMember ecd:NonPeoNeoMember 2021-01-01 2021-12-31 0000928022 cpe:AdjustmentRemoveValueOfEquityAwardsGrantedMember ecd:PeoMember 2020-01-01 2020-12-31 0000928022 cpe:AdjustmentPriorYearEquityAwardsMember ecd:PeoMember 2020-01-01 2020-12-31 0000928022 cpe:AdjustmentRemoveValueOfEquityAwardsGrantedMember ecd:NonPeoNeoMember 2020-01-01 2020-12-31 0000928022 cpe:AdjustmentPriorYearEquityAwardsMember ecd:NonPeoNeoMember 2020-01-01 2020-12-31 0000928022 1 2022-01-01 2022-12-31 0000928022 5 2022-01-01 2022-12-31 0000928022 2 2022-01-01 2022-12-31 0000928022 6 2022-01-01 2022-12-31 0000928022 3 2022-01-01 2022-12-31 0000928022 7 2022-01-01 2022-12-31 0000928022 4 2022-01-01 2022-12-31 +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Proxy Statement Pursuant to Section 14(a) of +the Securities Exchange Act of 1934 (Amendment No. ) +Filed by the Registrant ý +Filed by a Party other than the Registrant ¨ +Check the appropriate box: +☐ Preliminary Proxy Statement +☐ Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +ý Definitive Proxy Statement +☐ Definitive Additional Materials +☐ Soliciting Material under §240.14a-12 +Callon Petroleum Company +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check all boxes that apply): +ý No fee required. +¨ Fee paid previously with preliminary materials. +¨ Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11. +ABOUT CALLON +Callon Petroleum is an independent oil and natural gas company focused on the acquisition, exploration and development of high-quality assets in the leading oil plays of South and West Texas. +Our Values +Responsibility +The safety of our employees, contractors and communities is of utmost importance – this is not negotiable. We recognize that we earn the right to operate every day by developing our assets responsibly and with respect for the environment. We focus on safety and protection of the environment in every operation, and all Callon representatives are authorized to “stop work” if these are at risk. +Integrity +We always strive to do the right thing and pride ourselves on being a preferred partner. We are consistently open, honest, ethical and genuine. We do what we say and are accountable for our actions. +Drive +Keenly focused on leading, we relentlessly challenge the status quo to meet and exceed our expectations for top-tier performance in all aspects of our business. +Respect +We value the ideas and contributions of all team members and show consideration and appreciation for one another. We recognize and embrace each other’s differences and work towards our common goals. +Excellence +Our business requires focused innovation and evaluation of new opportunities for resource extraction. We balance the application of new technologies and testing of new concepts with prudent risk management and thorough data analysis. +A JOINT LETTER FROM OUR CHAIR AND OUR CHIEF EXECUTIVE OFFICER +March 13, 2023 +DEAR FELLOW SHAREHOLDERS, +On behalf of the Board of Directors of Callon Petroleum Company, we are pleased to invite you to our 2023 Annual Meeting of Shareholders, which will take place on April 26, 2023, at 9:00 a.m. Eastern Daylight Time (EDT), in the Boardroom of The Ritz-Carlton New York, Nomad, located at 25 West 28th Street, New York, NY. +Today we are filing the Notice of Annual Meeting of Shareholders and the Proxy Statement that describe the matters to be acted upon at the meeting. This year we are asking our shareholders to elect directors; approve, on a non-binding advisory basis, the compensation of our named executive officers; vote, on a non-binding advisory basis, on the frequency of future advisory votes on the compensation of our named executive officers; and ratify the appointment of our auditors. +In the past year, Callon continued to deliver operational and financial success as we profitably grew production and set a new Company record for cash flow. Going forward, we believe our business model is sustainable with a deep inventory of high-return oil projects that adhere to our “Life of Field” co-development model. The cash flow we generate will continue to be allocated to disciplined reinvestment, further debt reduction, and eventual returns of capital as we pursue shareholder value creation from multiple sources. +Our focus on maintaining the sustainability of our business has not wavered. During the year, we published our third annual sustainability report where we detailed our ESG priorities including our continued progress on reducing greenhouse gas intensity and our initiatives to empower and develop a diverse workforce and enrich our communities. +Your vote is important, and we encourage you to review this proxy statement and to vote promptly so that your shares will be represented at the meeting. +On behalf of everyone at Callon, we want to thank you, our valued shareholders, for your continued support of the work we do. +Sincerely, +L. Richard Flury +Chair of the Board +Joseph C. Gatto, Jr. +President, Chief Executive Officer and Director +L. Richard Flury +Chair of the Board +Joseph C. Gatto, Jr. +President, Chief Executive Officer and Director +We encourage you to read our 2022 Annual Report, which includes our financial statements as of and for the year ended December 31, 2022. Please also refer to the sections captioned “Risk Factors” and “Special Note Regarding Forward-Looking Statements” in our 2022 Annual Report for a description of the substantial risks and uncertainties related to the forward-looking statements included herein. +2023 PROXY STATEMENT 3 +NOTICE OF ANNUAL +MEETING OF SHAREHOLDERS +Dear Shareholders, +You are invited to participate in the 2023 Annual Meeting of Shareholders (the “Annual Meeting”) of Callon Petroleum Company (“Callon,” the “Company,” “us,” “we,” “our” or like terms), a Delaware corporation. +When +April 26, 2023, at 9:00 a.m. Eastern Daylight Time (“EDT") +Where +The Ritz-Carlton New York, Nomad +The Boardroom +25 West 28th Street +New York, NY 10001 +We continue to monitor coronavirus (COVID-19) developments and the related recommendations and protocols issued by public health authorities and federal, state and local governments, and we are sensitive to the public health and travel concerns that our shareholders may have. In the event we determine it is necessary or appropriate to postpone or move the Annual Meeting to another location or hold the Annual Meeting virtually, we will announce this decision in advance in a press release and post details on our website, which will also be filed with the Securities and Exchange Commission. +Whether or not you plan to attend the Annual Meeting, please vote electronically via the Internet, by telephone, or by mail as soon as possible. +Voting Matters Board +Recommendation +Proposal 1: +To elect three Class II directors to serve on our Board of Directors (the “Board”), each for three years. +FOR each of the Class II directors +See page 10 +Proposal 2: +To approve, on a non-binding advisory basis, the compensation of our named executive officers (“NEOs”). +FOR +See page 37 +Proposal 3: +Advisory vote on the frequency of future advisory votes on the compensation of our NEOs. +ONE YEAR +See page 68 +Proposal 4: +To ratify the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2023. +FOR +See page 69 +We will also transact other business that may properly come before the Annual Meeting. +This Notice of Annual Meeting of Shareholders and the Proxy Statement provide further information on the Company’s performance and corporate governance and describe the matters to be presented at the Annual Meeting. The Board set March 2, 2023, as the record date (the “Record Date”) for the Annual Meeting. Holders of record of our common stock at the close of business on the Record Date are entitled to receive this notice of, and vote at, the Annual Meeting. A list of the names of shareholders entitled to vote at the Annual Meeting will be available for ten days prior to the Annual Meeting for examination by any shareholder for any purpose germane to the Annual Meeting between the hours of 9:00 a.m. and 5:00 p.m., Central Time, at our headquarters at 2000 W. Sam Houston Parkway South, Suite 2000, Houston, TX 77042. This list will also be available for such purposes during the Annual Meeting at the place of the Annual Meeting or, in the event that the Annual Meeting is held virtually, at a website to be provided in the announcement notifying shareholders of the change in meeting format. +We thank you for your continued support and look forward to seeing you at the Annual Meeting. +By Order of the Board of Directors, +Michol L. Ecklund +Senior Vice President, General Counsel +and Corporate Secretary +Houston, Texas +March 13, 2023 +By Internet or telephone following the simple instructions on the enclosed proxy card or voting instruction form +By mail +mark, date and sign your proxy card, and return it in the reply envelope provided +YOUR VOTE IS IMPORTANT! +Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Shareholders. This Proxy Statement and our 2022 Annual Report on Form 10-K are available at: www.viewproxy.com/ CallonPetroleum/2023. If you have any questions or need assistance voting your shares, please call our proxy solicitor, Innisfree M&A Incorporated, 501 Madison Avenue, 20th Floor, New York, NY 10022 +Banks and Brokerage Firms, please call: +(212) 750-5833 +Shareholders, please call toll-free: +(888) 750-5834 +4 CALLON PETROLEUM +TABLE OF CONTENTS +A JOINT LETTER FROM OUR CHAIR AND OUR CHIEF EXECUTIVE OFFICER +3 +NOTICE OF ANNUAL MEETING OF SHAREHOLDERS +4 +202 2 PERFORMANCE HIGHLIGHTS +6 +SUSTAINABILITY +7 +PROPOSAL 1 - ELECTION OF CLASS I I DIRECTORS +10 +Board of Directors - Background for Nominations +10 +Directors Nominated for Election +14 +Directors Continuing in Office +17 +Retiring Director s +22 +Director Independence +24 +Corporate Governance Principles & Transparency +24 +Board Structure and Responsibilities +25 +Committees of the Board +28 +Director Compensation +33 +EXECUTIVE OFFICERS +35 +PROPOSAL 2 - APPROVE, ON AN ADVISORY BASIS, THE COMPENSATION OF THE COMPANY'S NEO s +37 +EXECUTIVE COMPENSATION +39 +Compensation Discussion and Analysis +39 +Compensation Committee Report +52 +Executive Compensation Tables +53 +Pay V ersus Performance +63 +CEO Pay Ratio +67 +PROPOSAL 3 - ADVISORY VOTE ON THE FREQUENCY OF FUTURE ADVISORY VOTES ON THE COMPENSATION OF THE COMPANY’S NEO s +68 +PROPOSAL 4 - RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM, GRANT THORNTON LLP, FOR 2023 +69 +Audit Committee Report +70 +OTHER MATTERS +71 +Beneficial Ownership of Securities +71 +Principal Shareholders and Management +71 +Delinquent Section 16(a) Reports +73 +Certain Relationships and Related Party Transactions +73 +Shareholders’ Proposals and Director Nominations for the 2024 Annual Meeting +73 +ANNUAL MEETING INFORMATION +75 +Information Concerning Solicitation and Voting +75 +Information About Voting and the Annual Meeting +75 +Required Vote +78 +Voting Results +79 +Householding Information +79 +Financial Statements and Other Available Documents +79 +Other Business +79 +APPENDIX A +80 +Beginning on or about March 13, 2023, we mailed an Important Notice Regarding the Availability of Proxy Materials (the “Notice”) to our holders of record. The Notice contained instructions on how to access the Proxy Statement and related materials on the Internet and how to enter your voting instructions. Instructions for requesting a paper copy of the proxy materials are contained in the Notice. +2023 PROXY STATEMENT 5 +Premium Assets and Disciplined Execution Drive Free Cash Flow +Callon Petroleum is an independent oil and natural gas company focused on the acquisition, exploration, and development of high-quality assets in leading Texas oil plays located in the Permian and the Eagle Ford. +We employ a “Life of Field” co-development model that balances today’s high-returns with future development economics, providing a more consistent capital efficiency profile over time. +The combination of our returns driven strategy and our capital discipline allowed us to profitably grow production in 2022 while spending less than 60% of our operating cash flow on capital expenditures. +We remain focused on rapid debt reduction and strengthening our balance sheet. During the year, we paid down $462 million in debt and reduced our leverage ratio by 1.0x. +~480 MMBoe +>1,500 +Total proved reserves Risked drilling locations +<60 % +62 % +FY22 reinvestment rate (1) +Total oil production (2) +2022 Performance Highlights +68 % +$623 million +Year-over-year +increase in +adjusted EBITDA (3) +Adjusted free cash flow (3) +~$1.7 billion +$462 million +Adjusted EBITDA (3) +Year-over-year absolute +debt reduction +9% +1.0 x +Year-over-year production growth +Leverage ratio reduction (4) +(1) The Company defines “reinvestment rate” as operational capital expenditures divided by cash flow from operating activities. +(2) Sixty-two percent of the 104.3 MBoe/d produced by Callon in 2022 was oil. +(3) Adjusted free cash flow is defined as adjusted EBITDA minus the sum of operational capital, capitalized interest, capitalized general and administrative expense and interest expense. Adjusted EBITDA and Adjusted free cash flow are non-GAAP financial measures. See Appendix A for additional information regarding non-GAAP financial measures, including a reconciliation of non-GAAP financial measures to the nearest comparable GAAP measures. +(4) Leverage ratio is calculated as the sum of total long-term debt less unrestricted cash and cash equivalents divided by EBITDA, as defined by the Company’s credit facility, inclusive of the pro forma effects of Material Acquisitions or Divestitures, as defined by the Company’s credit facility, as if they occurred on the first day of the trailing twelve-month period. See Appendix A for a reconciliation of non-GAAP financial measures. +6 CALLON PETROLEUM +SUSTAINABILITY +Our focus on integrating sustainable business practices and achieving long-term results drives our business decisions. In alignment with these goals, our Board oversees the Company’s approach to ESG through our safety and environmental policies and performance, development of a positive corporate culture and an effective corporate governance program. The Board recognizes that ESG risks are interconnected with other business risks and opportunities, and thus regularly reviews salient ESG-related issues alongside other operational, financial, and strategic matters. +Our commitment to ESG is outlined in our third annual Sustainability Report, which we hope you will access on the Company’s website at www.callon.com/sustainability. The report highlights ESG performance in alignment with the frameworks set forth by the Sustainability Accounting Standards Board, the Task Force on Climate-Related Financial Disclosures, the American Production and Exploration Council and the United Nations Sustainable Development Goals. +ENVIRONMENTAL INITIATIVES +In early 2022, we announced the acceleration and adoption of meaningful medium-term emission reduction goals to reduce flaring and GHG emissions in our operations. These goals have been linked to our executive compensation programs as described in the Compensation Discussion and Analysis beginning on page 39 . +Emissions Reduction Targets +Reduce Callon-controlled flaring to <1% by 2024 +50% reduction in GHG intensity by 2024 (1) +Reduce methane emissions to <0.2% by 2024 (2) +(1) Relative to 2019 baseline +(2) Methane emissions calculated as percent of gas produced +In 2022 we made significant investments to advance our GHG and methane reduction initiatives, and we remain on track to achieve our 2024 goals as described above. In 2022, we: +• Exceeded our 2022 target for replacement of natural gas operated pneumatic control devices, and remain on track to complete the replacement of natural gas operated pneumatics in 2023; +• Expanded field electrification across most of the remaining Eagle Ford asset to reduce usage of diesel fuel and natural gas generators; +• Replaced select natural gas driven compressors with dual drive electric compressor engines in the Eagle Ford; and +• Released natural gas compressor engines through artificial lift conversions. +SCOPE 1 GHG INTENSITY +Since 2019 +2023 PROXY STATEMENT 7 +SUSTAINABILITY +SAFETY +Protecting our employees, contractors, and communities is a core value at Callon and we are committed to making sure everyone goes home safe at the end of every day. As part of our effort to continuously improve our safety performance, we are focused on engaging leadership, managing contractors and safety risks, and safety training. In addition, safety performance is incorporated in our executive compensation programs as described in the Compensation Discussion and Analysis beginning on page 39 . In 2022, our focused efforts resulted in a safety performance record that achieved Callon’s lowest recorded incident rate as an onshore operator. +TOTAL REPORTABLE INCIDENT RATE +Since 2020 +CLIMATE RISK +At Callon, we share our stakeholders’ concerns about the risks and effects of climate change. We also recognize the potential impacts to our industry, including the evolving preferences of consumers and investors as well as increasing regulatory obligations. As concerned citizens and responsible operators, we are committed to diligently minimizing and mitigating our environmental impact while we work to responsibly meet the demand for affordable energy in the United States and beyond. +Our Board oversees our assessment of and response to climate risks, and each of our Board committees has a role in our climate-related risk strategies. The Nominating & ESG Committee has responsibility for overseeing and guiding policies and performance relating to ESG matters, including the assessment and monitoring of stakeholder concerns and emerging issues such as climate-related risks and opportunities. The Operations & Reserves Committee oversees operational performance relative to established environmental goals, and the Audit Committee oversees risk-related disclosures in compliance with regulatory requirements. The Compensation Committee is responsible for aligning executive compensation with our strategic priorities, including environmental performance. +HUMAN CAPITAL +At Callon, we recognize the importance of creating a culture in which our team members feel valued. We foster an entrepreneurial environment where we empower employees and engage team members in decision-making at every level. Our experienced leadership team provides an excellent learning environment, with development opportunities to accelerate professional growth. +In 2022, we advanced several initiatives to further opportunities for our employees: +Development and Training +Well-being +• Implemented a formal leadership development program, providing all leaders with the opportunity to build their personal leadership skills, expand cross functional relationships, gain exposure to executives, and provide input on company culture and business initiatives +• Enhanced our formal performance feedback program +• Developed high potential employees through rotations, project assignments, and exposure to other areas of the organization +• Conducted unconscious bias training +• Made key hires specifically dedicated to the talent development function at Callon +• Continued the Callon Wellness Program, aimed at encouraging employees to complete a wellness check-up by bringing mobile clinics and flu shots onsite +• Provided additional education around our benefits and 401(k) program to increase utilization +• Organized numerous volunteer opportunities that supported team building and local community engagement +• Increased participation in our charitable match program +8 CALLON PETROLEUM +SUSTAINABILITY +EMBRACING DIVERSE BACKGROUNDS AND PERSPECTIVES +RACIAL/ETHNIC DIVERSE EMPLOYEES +IN 2022 +At Callon, we value the diversity of our employees and their contributions. We are firmly committed to fostering an inclusive environment and providing equal opportunity to all qualified persons. As of December 31, 2022, approximately 41% of our permanent, full-time employees identified as a racial or ethnic minority and 22% were female. Within our non-field workforce, 32% of our employees were female. In addition, we are constantly seeking to expand diversity in our workforce as we grow our team. In 2022, 50% of our newly hired employees identified as a racial or ethnic minority and 36% were female. +COMMUNITY SUPPORT +Our focus on our stakeholders extends beyond our operations into the communities where we live and work. Through our community engagement program, our charitable giving is directed towards our core philanthropy pillars of education, community services, and the environment to uplift our communities. We are especially proud of our continued collaborative partnership with Comp-U-Dopt that has allowed us to invest in the next generation by bringing much-needed computer equipment and STEM-focused technology programs to the remote areas of our operations that are under-resourced. +CORPORATE GOVERNANCE +Our belief in the importance of diversity starts with the Board and is demonstrated by the continuous process of thoughtful board refreshment and leading corporate governance practices that ensures diversity of thought in the pursuit of sustainable value for all our stakeholders. Please see page 10 for more information about our recent board refreshment activities. +Diversity Refreshment Independence +One ethnically diverse and +three female directors (1) +Five or fewer years' tenure +for over half of the directors (1) +Eight directors are independent +and a non-executive director +serves as chair of the Board (1) +(1) As of March 2, 2023 +We are also committed to high ethical standards and effective and sustainable corporate governance. We believe this commitment promotes the long-term interests of our shareholders, helps build public trust in Callon and strengthens Board and management accountability. We continually assess our governance principles to ensure that we are operating our business responsibly, ethically and in a manner aligned with the interests of our shareholders. +As a demonstration of responsible corporate governance, our Compensation Committee has taken proactive steps in recent years to refresh our executive compensation programs to align with investor priorities for our industry and to formally incorporate ESG performance into management incentives. Our Compensation Discussion and Analysis (“CD&A”), beginning on page 39 , provides additional information on governance practices for executive compensation. +2023 PROXY STATEMENT 9 +Proposal 1 +Election of +Class II +Directors +The Board recommends a vote FOR each of the Class II director nominees named in this Proxy Statement. +• Our director nominees provide experience and perspectives that enhance the overall strategic and oversight functions of Callon’s Board. +• For more information about the nominees’ experience, skills, and qualifications, please see page 14 . +Board of Directors - Background for Nominations +Board Composition & Succession Planning +Callon’s Board of Directors is committed to thoughtful and responsible refreshment of the composition of the Board to ensure the Company is led by a well-rounded and diverse governing body that is positioned to provide strategic guidance and oversight to the Company. Through its intentional succession planning and refreshment initiatives, the Board seeks to assemble a broad range of skills and experience sets among its members in a collegial culture that promotes a constructive exchange of ideas and effective decision making. +In recognition of several forthcoming retirements pursuant to the Board retirement policy that was introduced in 2021, the Board has undertaken a multi-year succession planning process with the support of an outside firm to ensure the Board has the leadership and expertise needed to support sustainable value creation in today’s complex energy industry. +Following these multi-year succession planning efforts, in February 2023, Mr. Flury announced his retirement from the Board effective as of the date of the upcoming Annual Meeting. Upon Mr. Flury's announcement, the Board named Matthew R. Bob as Chair-elect. The Board anticipates naming Mr. Bob as Chair of the Board at the conclusion of the Annual Meeting. Mr. Bob is an experienced energy executive with nine years of experience on our Board. His biography can be found on page 14 . +In addition, in accordance with the Board retirement policy, James M. Trimble has not been nominated for re-election and will retire from the Board effective as of the date of the Annual Meeting. +In light of the impending retirements of Mr. Flury and Mr. Trimble, who have contributed meaningful industry expertise to the Company, the Board made the decision to nominate an additional seasoned oil and gas executive to the Board. Following a thorough review and interview process, the Board is nominating James E. Craddock in this Proxy Statement for election to a full three-year term by the shareholders, and his biography can be found on page 15. +Effective Board Development +Board Refreshment. Over time, the Board refreshes its membership through a combination of adding or replacing directors to achieve the appropriate balance between maintaining longer-term directors with deep institutional knowledge of the Company and adding directors who bring a diversity of perspectives and experience. As a reflection of this philosophy: +5/9 +directors have tenures of five or fewer years (1) +8/9 +directors are independent (1) +(1) As of March 2, 2023 +Board Evaluations. The Nominating and ESG Committee (the “N&ESG Committee”), in consultation with the Chair of the Board, annually conducts a performance review of the Board and its committees. This annual evaluation process seeks to obtain each director’s assessment of the effectiveness of the Board, the committees and their leadership, Board and committee composition, and Board and management interactions. In addition, these regular evaluations inform the Board’s decisions on the re-nomination of existing directors for additional terms of service on the Board. The evaluation process includes individual feedback for each Board member. On a regular basis, including twice in the past four years, the Board engages a third-party facilitator to conduct a full board evaluation and review relative to best practices in support of its continuous improvement objectives. +10 CALLON PETROLEUM +PROPOSAL 1 +Director Orientation & Education. Callon sponsors an ongoing director education program that assists Board members in fulfilling their responsibilities. Training commences with an orientation program when a new director joins the Board. New directors are provided with comprehensive in-person briefings on all aspects of the Company and are invited to meet with representatives from each organizational discipline. For any directors who are new to the energy industry, we also host an introductory field tour and provide tuition for an energy industry overview course offered by well-regarded third-party experts. +Ongoing education is provided through written materials, presentations in Board meetings, and training outside the boardroom. We regularly invite outside speakers to present to our Board on matters of strategic importance including developments in the energy industry, macroeconomic trends, and corporate governance best practices. In addition, members of our management team provide regular updates to the Board on industry trends, pertinent legal and regulatory developments, financial markets, and evolving risks to our business. All Callon directors are members of the National Association of Corporate Directors and are provided an annual training allowance to pursue relevant director education programs. +Retirement Policy. The Board believes that, regardless of age, experienced individuals may make a substantial contribution to the Company. However, the Board has adopted a retirement policy for independent directors. Under the policy, an independent director must retire in conjunction with the annual meeting of shareholders prior to his or her 75th birthday, except in special circumstances upon the request of a majority of the Board (not including the subject director). In accordance with the retirement policy, James M. Trimble has not been nominated for re-election and will retire from the Board effective as of the date of the Annual Meeting. +Process for Selecting Directors +Director Identification and Selection +Criteria. The N&ESG Committee has established guidelines for considering nominations to the Board. The N&ESG Committee evaluates nominees based on the potential contributions of such nominee’s background and skills to corporate strategy, governance and creating sustainable value for shareholders as well as towards achieving the goal of a well-rounded, diverse Board that functions collegially as a unit. While not an exhaustive list, key criteria include: +• Relevant industry knowledge and experience; +• Complementary mix of backgrounds and experience in areas including business operations, finance, accounting, ESG, technology, human capital, and strategy; +• Personal qualities of leadership, character, judgment and personal and professional integrity and high ethical standards; +• Ability to exercise independent and informed business judgment; +• Whether the candidate is free of conflicts and has the time required for preparation, participation, and attendance at meetings; +• Diversity, including differences in expertise, viewpoints, background, education, gender, race or ethnicity, age, and other individual qualifications and attributes; +• The ability to work with other members of the Board, the Chief Executive Officer (the "CEO"), and senior officers of the Company in a constructive and collaborative fashion to achieve the Company’s goals and implement its strategy; and +• In the case of an incumbent director, such director’s past performance on the Board. +The N&ESG Committee and the Board may also consider other qualifications and attributes that they believe are appropriate in evaluating the ability of an individual to serve as a member of the Board. The N&ESG Committee’s goal is to assemble a Board that brings to us a variety of perspectives and skills derived from high quality business and professional experience to perform its strategy and oversight roles satisfactorily for our shareholders. In making its determinations, the N&ESG Committee evaluates each individual in the context of the Board as a whole, with the objective of assembling a group that can best represent shareholder interests through the active, objective, and constructive participation in meetings and the strategic decision-making processes. +Diversity. Our Corporate Governance Guidelines set forth our policy with respect to Board diversity. We are committed to building a diverse Board comprised of individuals from different backgrounds, including differences in expertise, viewpoints, education, gender, race or ethnicity, age, and other individual qualifications and attributes. To accomplish this, the N&ESG Committee requires that search firms engaged by the Company seek to present a robust selection of women and racially or ethnically diverse candidates in all prospective director candidate pools. +Nominating Process. In making its nominations, the N&ESG Committee identifies nominees by first evaluating the current members of the Board willing to continue their service and any potential need to expand the Board to include additional +2023 PROXY STATEMENT 11 +PROPOSAL 1 +expertise and prepare for succession. Current members with a record of quality contribution to the Board whose experience contributes to a complementary mix of backgrounds that enhance the Board are renominated. When vacancies become available, the N&ESG Committee may seek input from industry experts or engage third-party search firms to help source particular areas of expertise or backgrounds. +Voting Standard +Directors will be elected by a plurality of the votes cast by the shares entitled to vote in the election of directors. This standard means the nominees for available directorships who receive the highest number of affirmative votes of the shares present, in person or by proxy, and entitled to vote, are elected. However, as described below, Callon has an additional requirement in uncontested director elections. We believe that this requirement ensures accountability and the opportunity for a positive mandate from the Company’s shareholders. +Our Corporate Governance Guidelines provide that any nominee for director who receives a greater number of votes “withheld” than votes “for” in an uncontested election (i.e., an election in which the number of nominees for election does not exceed the number of directors to be elected) is required to promptly tender his or her resignation for consideration by the N&ESG Committee and Board. Such resignation will only be effective upon Board acceptance of such resignation after receiving the recommendation of the N&ESG Committee. The N&ESG Committee will consider any factors it deems relevant to the best interests of the Company and our shareholders in determining whether to accept the director’s resignation. The Board will consider the recommendation, make a determination as to whether to accept or reject such director’s resignation, and notify the director concerned of its decision as well as publicly disclose the Board's decision within 120 days following certification of the shareholder vote. Full details of this policy are set forth in our Corporate Governance Guidelines. +If you hold your shares through a broker and you do not instruct the broker how to vote, your broker will not have the authority to vote your shares. Abstentions and broker non-votes will each be counted as present for purposes of determining the presence of a quorum but will have no effect upon the outcome of the vote on this proposal. All shares of common stock represented by proxies will be voted “FOR” the election of the director nominees, except where authority to vote in the election of directors has been withheld. Should the nominees become unable or unwilling to serve as a director at the time of the Annual Meeting, the person or persons exercising the proxies will vote for the election of substitute nominees designated by the Board, or the Board may choose to reduce the number of members of the Board to be elected at the Annual Meeting in order to eliminate the vacancy. Your proxy cannot be otherwise voted for a person who is not named in this Proxy Statement as a candidate for director or for a greater number of persons than the number of director nominees named. The Board has no reason to believe that the nominees will be unable or unwilling to serve if elected. +The Board recommends a vote FOR each of the three Class II director nominees . +12 CALLON PETROLEUM +PROPOSAL 1 +Composition of the Proposed Board +The following table provides information with respect to the skills and experience of the proposed Board of Directors, assuming the election of the three Class II director nominees who are standing for election at the Annual Meeting. +Name Frances Aldrich Sevilla-Sacasa Matthew R. Bob James E. Craddock Barbara J. Faulkenberry Joseph C. Gatto, Jr. Anthony J. Nocchiero Mary Shafer-Malicki Steven A. Webster +Age (on March 2, 2023) +67 65 64 62 52 71 62 71 +Tenure (on March 2, 2023) +4 9 N/A 5 5 12 2 4 +Gender Diversity +● +● +● +Racial/Ethnic Diversity +● +CEO/President Experience ● ● ● ● ● ● +Senior Executive Leadership ● ● ● ● ● ● ● ● +Outside Public Boards (current) ● ● ● ● +Outside Public Boards (prior) ● ● ● ● ● +E&P Industry Experience ● ● ● ● ● ● +Energy (Other than E&P) Industry Experience ● ● ● ● ● +Financial Expert (1) +● ● +Financial Literacy (1) +● ● ● ● ● ● ● ● +Financial Oversight/Accounting ● ● ● ● ● +Petroleum and Other Engineering ● ● ● +Geologist or Geophysicist ● +Government/Public Policy/Regulatory ● +HES Experience/Environmental ● ● +Strategic Advising ● ● ● ● ● ● ● ● +Investment Banking ● ● +Supply Chain ● ● +Technology/IT/Cybersecurity ● ● +(1) As such term is used in the NYSE Listed Company Manual. +2023 PROXY STATEMENT 13 +PROPOSAL 1 +Directors Nominated for Election +The Board currently consists of nine directors. Consistent with our certificate of incorporation, the current Board is divided into three classes designated as Class I, Class II, and Class III, each with staggered, three-year terms. Based on the recommendations from the N&ESG Committee, the Board has nominated three Class II Directors, Matthew R. Bob, James E. Craddock, and Anthony J. Nocchiero, to stand for election or, in each case, until the election and qualification of their respective successors or until their earlier death, retirement, resignation or removal. +The following biographies reflect the particular experience, qualifications, attributes, and skills that led the Board to conclude that each nominee should stand for election to serve on the Board: +Class II Directors +Experience +• Founder and managing member (1994 – present), MB Exploration, LLC, a privately held company that provides advisory services for exploration, development, and minerals +• President (2014 – 2022), Eagle Oil & Gas Co., a privately held, independent oil and gas E&P company +• President, Hall Phoenix Energy LLC, a privately held, independent oil and gas exploration company +• Chief Geophysicist, Pitts Oil Company, an independent oil and gas E&P company +• Began his career at Union Oil Company of California where he held various geological positions +Matthew R. Bob +Chair-elect of the Board +Age: 65 +Independent Director since 2014 +Committees: +• Compensation (Chair) +• Operations & Reserves +Other Boards +• Former Independent Director, Southcross Energy Partners LLC, a natural gas processing and transportation company with operations in South Texas (2020 – 2022) +Qualifications and Expertise Provided to our Board +• Extensive executive and operational experience with U.S. onshore oil and gas companies, including oversight of E&P operations in Texas +• Deep knowledge and demonstrated subsurface technical expertise applicable to the E&P industry +• Experience as an organizational leader that has prepared him well for his role as Chair elect +• Service on the board of another company that has provided him exposure to different segments of the energy industry as well as governance insights +• Registered Geoscientist +• National Association of Corporate Directors Board Certified +Education & Professional Affiliations +• B.A. in Geology, St. Louis University +• M.S. in Geology, Memphis University +• Completed the Executive Management Program at Harvard University +• Member of the American Association of Petroleum Geologists, the Society of Exploration Geophysicists, and the Dallas Petroleum Club +14 CALLON PETROLEUM +PROPOSAL 1 +Experience +• Chairman, CEO and President, Rosetta Resources Inc., an independent oil and gas company +• Senior Vice President – Drilling & Production Operations, Rosetta Resources Inc., an independent oil and gas company +• Chief Operating Officer, BPI Energy, Inc., an E&P start-up company focused on coal bed methane development +• Various technical, operational, and strategic roles, including Chief Engineer, at Burlington Resources, Inc. and its predecessor companies +Other Boards +• Independent Director, Crescent Point Energy Corp., a publicly traded oil and gas company (2019 – present) +• Independent Director, Amplify Energy Corp., a publicly traded oil and natural gas company (2023 – present) +• Former Independent Director, Civitas Resources, Inc., a publicly traded oil and gas exploration company (2021 – 2021) +• Former Independent Director, Templar Energy LLC, an independent upstream oil and gas company (2017 – 2019) +• Former Independent Director, Noble Energy Inc., a publicly traded oil and gas E&P company (2015 – 2020) +• Former Director, Rosetta Resources Inc., an independent oil and gas company, until its merger with Noble Energy Inc. +James E. Craddock +Age: 64 +Qualifications and Expertise Provided to our Board +• Seasoned upstream executive and director who possesses broad-based technical and operational knowledge of U.S. onshore operations with over 30 years of experience +• Wide-ranging experience in corporate strategy and oversight as a board member and executive of multiple E&P companies +• Service on the boards of other publicly traded companies that has provided him with exposure to oversight, risk assessment, and corporate governance that will bring diverse experience to the Board +Education +• B.S. in Mechanical Engineering, Texas A&M University +2023 PROXY STATEMENT 15 +PROPOSAL 1 +Experience +• Senior Vice President and Chief Financial Officer, CF Industries, Inc., a publicly traded manufacturer in global agricultural and industrial markets +• Vice President and Chief Financial Officer, Merisant Worldwide Inc., a privately held company specializing in the selling and distribution of food additives +• Chief Financial Officer, BP Chemicals, a global chemical business +• Various financial and management positions at Amoco Corporation, including service as Amoco’s Vice President and Controller +Other Boards +• Former Director, Terra Nitrogen LP, a manufacturer in agricultural and industrial markets +• Former Director, Keytrade AG, a global fertilizer trading organization +• Former Director, Vysis Corporation, a provider of genomic disease management products and related customer and technical services +• Former Director, Chicagoland Chamber of Commerce, a non-profit organization +• Member, National Council of the McKelvey School of Engineering advising the Dean of Engineering at Washington University in St. Louis +Anthony J. Nocchiero +Age: 71 +Independent Director since 2011 +Committees: +• Audit +• N&ESG +Qualifications and Expertise Provided to our Board +• Broad knowledge of the finance, energy, and commodities industries and extensive experience with finance and M&A related transactions +• Status as a “financial expert” and knowledge of public company financial reporting regulations, compliance requirements, audit functions and internal controls contribute valuable expertise to the Board and Audit Committee +• Professional experience in risk identification and mitigation that are additive to the Board’s risk assessment capabilities +• Service on the boards of other companies has provided him exposure to different industries and approaches to governance that further enhances the Board's oversight function +Education +• B.S. in Chemical Engineering, Washington University in St. Louis +• M.B.A. in Finance, Northwestern University +16 CALLON PETROLEUM +PROPOSAL 1 +Directors Continuing in Office +Biographical information, including age as of the Record Date, for our directors continuing in office is set forth below. These individuals' terms are ongoing so they are not standing for re-election at this time: +Class I Directors +Experience +• Chief Executive Officer, BP Angola, a subsidiary of BP focused on offshore E&P activities +• Chief Operating Officer, BP Angola, a subsidiary of BP focused on offshore E&P activities +• Director General, BP Vietnam, a subsidiary of BP focused on offshore E&P activities and onshore processing and power generation +• Various operational, engineering, and management positions at BP and Amoco Corporation +Other Boards +• Former Independent Director and Board Chair, QEP Resources, Inc., publicly traded oil and gas E&P company (2017 – 2021) +• Former Independent Director, Wood Plc, a Scotland-based engineering, operations and maintenance services provider for the oil & gas, infrastructure and power generation markets (2012 – 2021) +• Former Independent Director, McDermott International Inc., publicly traded EPC company, including when it filed voluntary petitions for reorganization in the United States Bankruptcy Court for the Southern District of Texas in January 2020 (2011 – 2020) +• Director and Chair, University of Wyoming Foundation, a foundation with the mission of securing resources and delivering stewardship of funding for the university (2016 – present) +• Member, Industry Advisory Board for Chemical Engineering Department at the University of Wyoming (2010 – present) +• Member, Strategic Advisory Counsel to the Dean of Engineering at Oklahoma State University (2021 – present) +• Former Independent Director, Ausenco Limited, an Australian-based engineering services company +Mary Shafer-Malicki +Age: 62 +Independent Director since 2022 +Committees: +• Operations & Reserves (Chair) +• Audit +Qualifications and Expertise Provided to our Board +• Over 25 years of operations, engineering, and management experience across the energy value chain positions her to advise on complex issues of strategy and execution +• Deep technical expertise developed through her professional career and academic engagements make her well-suited for oversight of the Company’s reserves process +• Service on the boards of other publicly traded companies, including in leadership roles, has provided her exposure to a wide range of strategic decision making and approaches to corporate governance that enhances the Board’s deliberations +• Experience with safety, environmental and regulatory matters contributes to the Board’s oversight function +Education +• B.S. in Chemical Engineering, Oklahoma State University +• Completed the Executive Education Program at University of Cambridge +• Completed the New Global Business Environment Executive Program at Harvard University +2023 PROXY STATEMENT 17 +PROPOSAL 1 +Experience +• Managing Partner (2005 – present), of AEC Partners and its predecessor Avista Capital Partners, which are private equity firms engaged in venture capital and investment activities in energy and other industries +• Co-founder (1993 – 2019), Carrizo Oil & Gas, Inc., a publicly traded oil and gas company that merged with Callon Petroleum Company in 2019 +• Chair, Global Energy Partners, an affiliate of DLJ Merchant Banking and CSFB Private Equity +• CEO and President, R&B Falcon Corporation, an offshore drilling contractor and successor to Falcon Drilling Company, a drilling company that he founded +• Founder or seed investor in numerous other private and public companies, including Grey Wolf, Inc. (a land drilling rig contractor), Hercules Offshore, Inc. (an offshore drilling rig contractor), and Crown Resources Corporation (a precious metals exploration company) +Steven A. Webster +Age: 71 +Independent Director since 2019 +Committees: +• N&ESG +• Operations & Reserves +Other Boards +• Independent Director, Camden Property Trust, a publicly traded real estate investment trust (2011 – present) +• Independent Director, Oceaneering International, Inc., a subsea engineering and applied technology company (2015 – present) +• Former Independent Director and Board Chair, Carrizo Oil & Gas, Inc., a publicly traded oil and gas company that merged with Callon Petroleum Company in 2019 (1993 – 2019) +• Former Independent Director, Era Group Inc., a global manufacturing company (2013 – 2020) +• Former Independent Director and Board Chair, Basic Energy Services, Inc., a privately held well services contractor +• Former Independent Director and Board Chair, Solitario Zinc Corp., a gold, silver, platinum-palladium, and base metal exploration company +• Former Independent Director, Brigham Exploration Company, an oil and gas company +Qualifications and Expertise Provided to our Board +• Distinctive investment experience in energy and other industries that brings valuable insight to the Company’s investment decisions and financial strategies +• Over 30 years of board, executive, and investor experience with a large number of publicly and privately held companies in energy and energy-related fields +• Extensive entrepreneurial and executive leadership experience in founding and managing multiple companies brings a unique perspective to the Board in strategic, value-based decision making, oversight and risk assessment +• Exceptionally deep board experience, including board chair of multiple companies has provided him exposure to strategic decision making and approaches to governance that brings diversity of experience to the Board +Education +• B.S. in Industrial Management, Purdue University +• M.B.A., Harvard University (Baker Scholar) +• Honorary Doctorate in Management, Purdue University +18 CALLON PETROLEUM +PROPOSAL 1 +Class III Directors +Experience +• Chief Executive Officer, Banco Itaú International, a global bank +• Executive Advisor to the Dean, School of Business, University of Miami, a private university +• Interim Dean, School of Business, University of Miami, a private university +• President, US Trust Company, Bank of America Private Wealth Management, a trust company focusing on investment management, wealth structuring, and credit and lending services +• President and CEO, US Trust Company, a trust company focusing on investment management, wealth structuring, and credit and lending services +• Various operational and management positions at Citigroup’s private banking business, including President of Latin America Private Banking, President of Europe Private Banking, and Head of International Trust Business +Frances Aldrich Sevilla-Sacasa +Age: 67 +Independent Director since 2019 +Committees: +• Audit (Chair) +• Compensation +Other Boards +• Independent Director, Camden Property Trust, a publicly traded real estate investment trust (2011 – present) +• Independent Director, Delaware Funds by Macquarie, a full service asset manager (2011 – present) +• Former Independent Director, New Senior Investment Group, a publicly traded real estate investment trust (2021 – 2021) +• Former Independent Director and Board Chair, Carrizo Oil and Gas, Inc., a publicly traded oil and gas company that merged with Callon Petroleum Company in 2019 (2018 – 2019) +• Member, Florida chapter of National Association of Corporate Directors (2022 – present) +Qualifications and Expertise Provided to our Board +• Deep investment management company and private banking experience brings strong financial acumen to the Board’s financial and investment decisions and supports alignment with the priorities of Company shareholders +• Her designation as a “financial expert” and knowledge of public company reporting requirements make her well-suited to lead the Company’s Audit Committee +• Experience in C-suite and other senior executive roles brings valuable strategic and leadership insights to the Board +• Considerable service on the boards of other companies, including in multiple committee leadership roles, has provided her with meaningful corporate governance experience +• Board Leadership Fellow of National Association of Corporate Directors +Education +• B.A., University of Miami +• M.B.A., Thunderbird School of Global Management +2023 PROXY STATEMENT 19 +PROPOSAL 1 +Experience +• Major General (2-stars), United States Air Force (1986 - 2018), the air service branch of the United States Armed Forces +• Progressive posts and rankings over a 32-year career with the U.S. Air Force, which culminated in her being in the top 150 leaders of a 320,000-person global organization +• Her last assignment was as Vice Commander (COO) and interim Commander (CEO) of a 37,000-person organization conducting all global Department of Defense air cargo, passenger, and medical patient movements with 1,100 military aircraft plus contracted commercial aircraft +Other Boards +• Independent Director, Target Hospitality Corp., a national provider of vertically integrated modular accommodations and hospitality services (2021 - present) +• Former Independent Director, USA Truck Inc., a publicly traded provider of trucking services (2016 - 2022) +• Advisory Director, Momentum Aerospace Group (2014 – 2018), an aerial intelligence, surveillance, and reconnaissance company +Barbara J. Faulkenberry +Age: 62 +Independent Director since 2018 +Committees: +• Compensation +• N&ESG +Qualifications and Expertise Provided to our Board +• Specialized substantive knowledge in cybersecurity deployment and management, including earning the Carnegie Mellon/NACD CERT Certificate in Cybersecurity Oversight, which are areas of increasing focus for the Company and the Board +• Broad leadership experience and uniquely valuable global perspective gained during her U.S. Air Force career, which supports and aligns with the Board’s strategic planning role and risk oversight function +• Deep supply chain management and logistics knowledge stemming from commanding global mobilization and logistics efforts +• Career experience in leadership development and succession planning +• Service on the boards of other publicly traded companies, including leadership roles, has provided her exposure to different industries and approaches to governance that further enhances the Board +• National Association of Corporate Directors Board Certified +Education +• B.S. in Operations Research, United States Air Force Academy +• M.B.A., Georgia College & State University +• Master of National Security, National Defense University +• Completed strategic leadership courses at Harvard University, University of Cambridge, and Syracuse University +20 CALLON PETROLEUM +PROPOSAL 1 +Experience +• President and Chief Executive Officer (2017 - present), Callon Petroleum Company +• President and Chief Financial Officer, Callon Petroleum Company +• Chief Financial Officer and Treasurer, Callon Petroleum Company +• Senior Vice President, Corporate Finance, Callon Petroleum Company +• Managing Director, Head of Structuring and Execution, Merrill Lynch Commodities, focusing on energy investment banking +• Founder, MarchWire Capital, LLC, a financial advisory and strategic consulting firm +• Managing Director, Barclays Investment Bank, focusing on natural resources investment banking +• Managing Director, Merrill Lynch & Co., focusing on energy investment banking +Joseph C. Gatto, Jr. +President and Chief Executive Officer +Age: 52 +Director since 2018 +Qualifications and Expertise Provided to our Board +• With over two decades of experience as an energy executive and investment banker, Mr. Gatto brings valuable insights to the Board for setting and executing Company strategy in a dynamic industry +• Knowledge and experience with the key operational and commercial drivers of the upstream industry provide the Board with invaluable insights to guide their direction of the business and affairs of our Company +• His financial and investment expertise, as well as ongoing engagement with industry leaders and investors, contribute to the Board’s evaluation of strategies and decisions that will attract capital and align with investor priorities +• Widely recognized as industry leader, his engagement in U.S. energy policy matters brings valuable insights to Board discussions on strategic planning and execution +Education +• B.S. in Finance/Real Estate, Cornell University +• M.B.A. in Strategy/Finance, The Wharton School of the University of Pennsylvania +2023 PROXY STATEMENT 21 +PROPOSAL 1 +Retiring Directors +Biographical information, including age as of the Record Date, for Messrs. L. Richard Flury and James M. Trimble, who are retiring from the Board effective as of the date of the Annual Meeting. Callon is grateful for Messrs. Flury and Trimble and their many contributions to the strategy, culture, and success of the Company. The entire Callon team wishes them well in their future endeavors. +Experience +• Chief Executive Officer, Gas, Power and Renewables, BP plc, a global producer of oil and gas +• Executive Vice President, Amoco Corporation, a global producer of oil and gas, prior to its merger with BP +• Various operational and management positions at Amoco Corporation, including Chief Executive for Worldwide Exploration and Production +Other Boards +• Former Independent Director, McDermott International Inc., a publicly traded engineering, procurement and construction company, including when it filed voluntary petitions for reorganization in the United States Bankruptcy Court for the Southern District of Texas in January 2020 (2018 - 2020) +• Former Independent Director and Non-executive Board Chair, Chicago Bridge and Iron Company, N.V., a publicly traded engineering, procurement and construction company, until it merged into McDermott International in 2018 (2003 - 2018) +• Former Independent Director, QEP Resources, an independent oil and gas E&P company, and spin-off of Questar +• Former Independent Director, Questar Corporation, an independent oil and gas E&P company +L. Richard Flury +Chair of the Board +Age: 75 +Independent Director since 2004 +Committees: +• Audit (non-voting member) +• Compensation (non-voting member) +• N&ESG (non-voting member) +• Operations & Reserves (non-voting member) +Qualifications and Expertise Provided to our Board +• Over 30 years of operations and management experience in in all aspects of the energy value chain, both domestically and internationally +• Comprehensive executive, strategic, and operational experience in the energy industry, with perspective and insight from numerous disciplines within the industry +• Deep knowledge of the energy industry and years of executive and management experience provide him with valuable insights into the strategic issues affecting companies in the oil and gas industry that are helpful to the Company and Board +• Service on the boards of other publicly traded companies has provided him exposure to different industries and approaches to governance that further enhances the Board +Education +• B.S. in Honors Physics, University of Victoria +"It has been a great honor to serve Callon during a period of extraordinary growth and change for our Company and our industry. I am confident that now is the right time to transition the role of Chair as Callon is well positioned with a strong board and management team to continue pursuing strategies to drive shareholder value." +L. Richard Flury +22 CALLON PETROLEUM +PROPOSAL 1 +Experience +• Chief Executive Officer and President, Interim (2017 - 2018), Stone Energy Corporation, an independent oil and natural gas E&P company +• Chief Executive Officer and President , PDC Energy, Inc., an independent oil and natural gas E&P company, including when each of the twelve partnerships for which the company was the managing general partner filed for bankruptcy in the federal bankruptcy court, Northern District of Texas, Dallas Division in July 2016 +• Managing Director, Grand Gulf Energy Limited, an Australian listed company focusing on pure-play helium exploration +• Chief Executive Officer and President, Grand Gulf Energy Company LLC., the U.S. subsidiary of Grand Gulf Energy Limited +• Chief Executive Officer, TexCal Energy LLC, a global oil and gas exploration company and successor to Tri-Union Development +• Chief Executive Officer, Elysium Energy, a privately held oil and gas exploration company +• Senior Vice President of Exploration and Production, Cabot Oil and Gas, a publicly traded oil and gas exploration company +James M. Trimble +Age: 74 +Independent Director since 2014 +Committees: +• N&ESG (Chair) +• Operations & Reserves +Other Boards +• Independent Director, Civitas Resources, Inc., a publicly traded oil and gas exploration company and successor to Crestone Peak Resources (2021 - present) +• Independent Director, Eagle Energy Resources, LLC, a privately held oil and gas company (2021 - present) +• Former Independent Director and Board Chair, Crestone Peak Resources, LLC, a privately held oil and gas exploration company (2016 - 2021) +• Former Independent Director, Talos Energy Inc., an independent oil and gas E&P company and successor to Stone Energy Corporation (2018 – 2021) +• Former Independent Director, Stone Energy Corporation, an independent oil and natural gas E&P company (2017 - 2018) +• Former Independent Director, C&J Energy Services, Inc., a hydraulic fracturing company, including when it filed for bankruptcy in the court of the Southern District of Texas, Houston Division in July 2016 +• Former Independent Director, PDC Energy, Inc., an independent oil and natural gas E&P company, including when each of the twelve partnerships for which the company was the managing general partner filed for bankruptcy in the federal bankruptcy court, Northern District of Texas, Dallas Division in July 2016 +• Former Independent Director, Seisgen Exploration LLC, a privately held geophysical oil services company +• Former Independent Director, Grand Gulf Energy Ltd., an Australian listed company focusing on pure-play helium exploration +• Former Independent Director, Blue Dolphin Energy Company, a publicly traded petroleum refining and marketing company +Qualifications and Expertise Provided to our Board +• Over 45 years of comprehensive executive, strategic, and operational experience in the energy industry, with perspective and insight from numerous levels of the industry structure +• Deep knowledge of the energy industry and years of executive and management experience provide him with valuable insights into the strategic issues affecting companies in the oil and gas industry that are helpful to the Company and Board +• Service on the boards of other publicly traded companies has provided him exposure to different industries and approaches to governance that we believe further enhances the Board +• Registered Professional Engineer in the State of Texas +Education +• B.S. in Petroleum Engineering, Mississippi State University +2023 PROXY STATEMENT 23 +PROPOSAL 1 +Director Independence +To minimize potential conflicts, it is a policy of the Board that a majority of the Board be independent. In accordance with the standards for companies listed on the New York Stock Exchange (the "NYSE") and the rules and regulations promulgated by the Securities and Exchange Commission (the "SEC"), as well as our Corporate Governance Guidelines, the Board considers a director to be independent if it has affirmatively determined that the director has no material relationship with the Company that could compromise his or her ability to exercise independent judgment in carrying out his or her responsibilities. The Board revisits the independence of each director on an annual basis and makes independence determinations when a newly appointed director joins the Board between annual meetings. The Board reviewed the independence of its directors and nominees in accordance with the standards described above and affirmatively determined that each of the directors (other than Mr. Gatto) and nominees is independent. +Corporate Governance Principles & Transparency +The Board believes that sound corporate governance practices and policies provide an important framework to assist in fulfilling its duty to shareholders. The framework for our corporate governance can be found in our governance documents, which include: +• Corporate Governance Guidelines; +• Code of Business Conduct and Ethics; +• Charters for the Audit, Compensation, N&ESG, and Operations & Reserves Committees; and +• Human Rights Policy. +In keeping with sound corporate governance practices, each of these documents is reviewed annually and is available on our website www.callon.com under the “About Callon - Governance” menu. Shareholders may obtain a printed copy, free of charge, by sending a written request to our Corporate Secretary at our principal executive office located at 2000 W. Sam Houston Parkway S., Suite 2000, Houston, Texas 77042. Any amendments to these documents are promptly posted on our website. +Code of Business Conduct and Ethics +Our Code of Business Conduct and Ethics (the “Code”) sets forth the policies and expectations for Callon’s officers, employees and directors as well as consultants, representatives, agents, and contractors while acting on Callon’s behalf. The Code addresses a number of topics including conflicts of interest, compliance with laws, insider trading, prohibitions on discrimination and harassment, workplace safety and protection of the environment, and fair disclosure. In addition, the Code explicitly prohibits directors, officers and employees from engaging in hedging transactions in Callon stock. It also states that no corporate funds may be used for political contributions. +The Code meets the NYSE’s requirements for a code of business conduct and ethics and also includes a code of ethics applicable to our senior financial officers consistent with the requirements of the SEC. We intend to satisfy the disclosure requirements regarding any amendment to, or any waiver of, a provision of the Code by promptly posting such information on our website. Concerns about potential violations of the Code can be anonymously reported to our ethics helpline by calling 1-844-471-7637 or accessing the following website: callon.ethicspoint.com. +Environmental, Social and Governance +Callon’s mission is to build trust, create value and drive sustainable growth responsibly for our investors, our employees and the communities in which we operate. Consistent with this mission, the Board oversees the Company’s ESG programs with a focus on long-term, sustainable investments in our operations, team member development, and protecting the environment in the best interests of all of our stakeholders. The Board regularly addresses the Company’s efforts to continuously improve outcomes regarding workplace safety, environmental impact, team member diversity and workforce development. The Board is also committed to effective and sustainable corporate governance, which we believe strengthens Board and management accountability, promotes the long-term interests of our shareholders, and helps build public trust in the Company. +24 CALLON PETROLEUM +PROPOSAL 1 +Communication with Directors +Shareholders or other interested parties who wish to communicate with the full Board, independent directors as a group, or individual directors, may do so by sending a letter in care of the Corporate Secretary to our principal executive office located at 2000 West Sam Houston Parkway South, Suite 2000, Houston, Texas 77042. Our Corporate Secretary has the authority to discard any solicitations, job inquiries, advertisements, surveys or other inappropriate communications, but will forward any other mail to the named director or group of directors. Our Corporate Secretary will forward approved mail addressed to the full Board to the Chair of the Board who, if appropriate, will share the item with the full Board. +Board Structure and Responsibilities +Governance Highlights +We are committed to effective and sustainable corporate governance, which we believe strengthens Board and management accountability, promotes the long-term interests of our shareholders, and helps build public trust in the Company. We adhere to our core values and governance principles to ensure that we operate our business responsibly, ethically, and in a manner aligned with the interests of our shareholders. Highlights of our commitment to strong corporate governance include the following: +• Eight of our nine directors are independent. Joseph C. Gatto, Jr., our President and CEO, is the only non‑independent member of the Board; +• All Board committees are comprised entirely of independent directors; +• An independent, non-executive director serves as the Company’s Chair of the Board; +• The Company encourages a paced refreshment of the Board. Five of the nine directors have joined within the last five years; +• The Board includes a balance of experience, tenure, and qualifications in areas important to our business; +• We have an over-boarding policy in place for directors; +• The Board conducts regular executive sessions with our independent directors; +• We regularly refresh our governance documents; +• The Board and its committees conduct annual self-evaluations; +• We have adopted stringent insider trading, anti-hedging, and anti-pledging policies; +• We engage in active shareholder engagement practices; +• The Board oversees environmental, social and governance practices; +• The Board oversees succession planning for the CEO and other executive officer positions; +• We engage an independent executive compensation consultant that reports directly to the Compensation Committee; +• The Company adopted annual say-on-pay voting; +• The Compensation Committee has implemented significant director and executive officer stock ownership guidelines; +• We do not have employment agreements with any executive officers; +• We have double-trigger change in control provisions in our severance agreements and equity awards; +• We do not have a poison pill (shareholder rights plan); and +• We promote annual director education and are an NACD Corporate Board member. +General Information +The Board is responsible for determining the ultimate direction of our business strategy, overseeing our governance policies and culture and promoting the long-term interests of the Company. The Board possesses and exercises oversight authority over our business but, subject to our governing documents and applicable law, delegates day-to-day management of the Company to our CEO and senior management. The Board generally fulfills its responsibilities through regular meetings to review significant developments affecting the Company and to act on matters requiring Board approval. Between regularly scheduled meetings, the Board may also hold special meetings, execute written consents, and participate in video or telephonic conference calls when an important matter requires Board action. During 2022, the Board met formally nine times. All of our directors attended at least 75% of Board and committee meetings either in person or virtually during the time he or she served on the Board or committees. In addition, to promote open discussion, the non-employee directors meet in executive session without management regularly. L. Richard Flury, the Chair of the Board, was selected to preside over all executive sessions during 2022. +2023 PROXY STATEMENT 25 +PROPOSAL 1 +It is Callon's policy that, to the extent possible, all directors attend our Annual Meetings of Shareholders. Each then-current member of the Board attended Callon's 2022 Annual Meeting of Shareholders. +The Board, in consultation with the N&ESG Committee, has determined that a classified board structure continues to be appropriate for us, particularly in an industry where a long-term strategic planning outlook is critical for the successful development of oil and natural gas resources through commodity price cycles. Our future success depends in significant part on the in-depth knowledge of our business and operations by our directors. We believe that a classified board, with responsible refreshment, promotes stability, continuity and experience among our directors, which is essential to developing and implementing long-term strategies, while resisting the pressure to focus on short-term results at the expense of enhancing long-term value and success. +Board Leadership Structure +One of the Board’s key responsibilities is determining the appropriate leadership structure for the Board, which helps ensure its effective and independent oversight of management on behalf of our shareholders. The Board believes that there is no one generally accepted approach to providing board leadership and given the dynamic and competitive environment in which we operate, the optimal board leadership structure may vary as circumstances warrant. Accordingly, the Board has no policy mandating the separation or combination of the roles of Chair of the Board and CEO, but periodically discusses and considers the structure as circumstances change. As such, the Board believes that it is in the best position to evaluate the needs of the Company and to determine how best to organize the Company’s leadership structure to meet those needs. +(1) As of March 2, 2023 +Currently, the Board has separated the roles of CEO and Chair of the Board and appointed independent director Mr. Flury as Chair of the Board and Mr. Gatto as CEO. In light of Mr. Flury’s impending retirement, the Board has named independent director Matthew Bob as Chair-elect. +26 CALLON PETROLEUM +PROPOSAL 1 +Areas of Board Oversight +Board Risk Oversight +As an independent oil and gas company, we face a number of risks. The Board, as a whole and through its committees, generally oversees risk management and our long-term strategic direction, ensuring that risks undertaken by the Company are consistent with the Board’s risk tolerance. The Board leadership structure and our practice of a high degree of interaction between our directors and members of senior management facilitate this oversight function. Our executive officers regularly attend the Board meetings and are available to address any questions or concerns raised by the Board related to risk management and any other matters. Other members of our management team periodically attend Board meetings or are otherwise available to confer with the Board to the extent their expertise is required to address risk management matters. The information flow and communication throughout the year between the Board and senior management regarding long-term strategic planning and short-term operational reporting includes matters of material risk inherent in our business of developing oil and natural gas assets. The Board realizes, however, that it is not possible or prudent to eliminate all risk and that appropriate risk-taking is essential in order to achieve our near and longer-term objectives. +While the Board is ultimately responsible for risk oversight, the Board exercises additional risk oversight responsibilities through its committees, which are comprised solely of independent directors. Each such committee has primary risk oversight responsibility with respect to matters within the scope of its duties as contemplated by its charter and as described below. +Standing Committees of the Board of Directors +The Board has four standing committees, each of which is comprised entirely of independent directors. Each committee, discussed below in greater detail, has a written charter that establishes the responsibilities and scope of the committee and its Chair. Each committee charter was reviewed in 2022 and revised as deemed necessary by the Board. +BOARD OF DIRECTORS +The Audit Committee , among other duties, is charged with overseeing financial reporting, accounting integrity, and material risk exposures. +The N&ESG Committee focuses on issues relating to corporate governance, ESG matters, and Board and Committee composition. This Committee also assists the Board in fulfilling its oversight responsibilities with respect to succession planning for our directors and executive officers. +The Compensation Committee oversees the Company's compensation programs and reviews the potential risks that may result from our compensation policies to ensure they do not encourage unnecessary or excessive risk taking by management. +The Operations & Reserves Committee oversees the operations of the Company and the integrity of our reserve estimation reporting process. +2023 PROXY STATEMENT 27 +PROPOSAL 1 +Committees of the Board +The following table provides the composition of the Committees of the Board as of March 2, 2023. +Callon Committees +Name and Independence Audit Compensation N&ESG Operations & +Reserves +Class I Directors (term expires in 2025) +Mary Shafer-Malicki +Independent +○ ● +Steven A. Webster +Independent +○ ○ +Class II Directors (term expires in 2023) +Matthew R. Bob +Independent +● ○ +Anthony J. Nocchiero +Independent +○ ○ +James M. Trimble (a) +Independent +● ○ +Class III Directors (term expires in 2024) +Frances Aldrich Sevilla-Sacasa +Independent +● ○ +Barbara J. Faulkenberry +Independent +○ ○ +L. Richard Flury (a) +Independent Chair of the Board +☐ ☐ ☐ ☐ +Joseph C. Gatto, Jr. +President and Chief Executive Officer +● Chair ○ Member ☐ Non-Voting Member +(a) Messrs. Flury and Trimble are retiring from the Board effective as of the date of the Annual Meeting. +28 CALLON PETROLEUM +PROPOSAL 1 +Audit Committee +Frances Aldrich Sevilla-Sacasa (Chair and Financial Expert) +Anthony J. Nocchiero (Financial Expert) +Mary Shafer-Malicki +L. Richard Flury (non-voting member) +PURPOSE +The principal function of the Audit Committee is to assist the Board in overseeing the areas of financial reporting, accounting integrity, compliance, and risk management. +MEETINGS IN 2022 +Seven meetings; all members attended at least 75% of Audit Committee meetings during the time he or she served on the Audit Committee. +RESPONSIBILITIES +Pursuant to its charter, our Audit Committee functions in an oversight role and has the following purposes: +• Overseeing the quality, integrity and reliability of the financial statements and other financial information we provide to any governmental body or the public; +• Overseeing our compliance with legal and regulatory requirements; +• Selecting and hiring (subject to ratification by our shareholders) the independent public accounting firm; +• Overseeing the qualifications, independence and performance of the independent auditor; +• Overseeing the effectiveness and performance of our internal audit function, internal accounting controls, disclosure controls and procedures, internal control over financial reporting and the internal auditors; +• Establishing and overseeing procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls or audit matters, including the confidential, anonymous submission of concerns regarding such matters; +• Assessing matters related to risk, risk controls and compliance, including oversight of Callon's hedging policy; +• Producing the Audit Committee Report for inclusion in our annual proxy statement; +• Reviewing and approving related party transactions; and +• Performing such other functions the Board may assign to the Audit Committee from time to time, which currently includes overseeing matters related to cybersecurity and the security of information technology systems, including management’s plans, programs and policies designed to mitigate cybersecurity risks and third party reports on the information technology control environment. +The Audit Committee oversees our accounting and auditing procedures and financial reporting practices and is responsible for the engagement of and oversight of all audit work conducted by our independent registered public accounting firm. The Audit Committee conducts an annual evaluation of the firm’s independence and performance based on factors such as technical aptitude, responsiveness, and value for service, and provides feedback to firm leadership. The Audit Committee also oversees the periodic rotation of the lead audit partner from our independent registered public accounting firm, as required by SEC rules, and is directly involved in the selection of such partner. +The Audit Committee meets at least quarterly with our executive and financial management teams, internal auditor and our independent registered public accounting firm to review our financial information and internal controls systems. The independent registered public accounting firm reports directly to the Audit Committee and, if requested, meets with the Audit Committee in executive session without management representatives present. The Audit Committee has the authority to investigate any matters brought to its attention and to retain outside legal, accounting or other consultants if deemed necessary. +The Audit Committee oversees the fee structure of the independent registered public accounting firm and is required to pre-approve all audit, audit-related and tax services provided by the firm exceeding $50,000. The Audit Committee approved all of the fees described in Proposal 4. +Relationship with Independent Registered Public Accounting Firm +Management is responsible for establishing and maintaining internal controls over financial reporting and for assessing the effectiveness of those controls. The independent registered public accounting firm is responsible for performing independent audits of our consolidated financial statements and internal controls over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (“PCAOB”) (United States) and issuing reports thereon. The Audit Committee’s responsibility is to monitor and oversee these processes. Grant Thornton LLP has served as our independent registered public accounting firm since 2016. +INDEPENDENCE +The Board has determined that all members meet the independence requirements of the SEC and NYSE rules and the financial literacy requirements of the NYSE. Members of the Audit Committee may not simultaneously serve on the audit committee of more than two other public companies. +2023 PROXY STATEMENT 29 +PROPOSAL 1 +Compensation Committee +Matthew R. Bob (Chair) +Frances Aldrich Sevilla-Sacasa +Barbara J. Faulkenberry +L. Richard Flury (non-voting member) +PURPOSE +The purpose of the Compensation Committee is to establish our compensation programs and oversee the alignment of our compensation with our business strategies. +MEETINGS IN 2022 +Six meetings; all members attended at least 75% of Compensation Committee meetings. +RESPONSIBILITIES +Pursuant to its charter, the Compensation Committee’s duties include the responsibility to assist the Board in: +• Evaluating the performance of and establishing the compensation of the CEO; +• Establishing, with input from the CEO, the compensation for our other executive officers; +• Establishing and reviewing our overall executive compensation philosophy and approving changes to our compensation program; +• Reviewing incentive compensation arrangements to confirm that executive compensation does not encourage unnecessary risk taking; +• Administering our long-term incentive plans; +• Reviewing and approving the CD&A for inclusion in our annual proxy statement; +• Reviewing and recommending to the Board compensation for non-employee directors; +• Retaining and overseeing compensation consultants, including the independence of the consultants; +• Reviewing and approving performance criteria and results for bonus and performance-based compensation awards for executive officers and approving awards to those officers; and +• Performing such other functions as the Board may assign to the Compensation Committee from time to time. +The Compensation Committee retains the services of an independent compensation consultant to assist in the annual review of market and industry data to assess our competitive position with respect to each element of total compensation and to assist with the attraction and retention of, and appropriate reward to, our CEO and other executive officers. Pursuant to applicable SEC and NYSE rules, the Compensation Committee has determined that no conflicts of interest exist or have existed related to the Compensation Committee’s engagement of FW Cook. +INDEPENDENCE +Consistent with the listing requirements of the NYSE, the Compensation Committee is composed entirely of independent members of the Board, as each member meets the independence requirements set by the NYSE and applicable federal securities laws. +COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION +Frances Aldrich Sevilla-Sacasa, Matthew R. Bob, Barbara J. Faulkenberry, Anthony J. Nocchiero and James M. Trimble served on the Company’s Compensation Committee at various times during fiscal year 2022, with L. Richard Flury attending meetings as a non-voting member. No member of our Compensation Committee is presently or has been an officer or employee of the Company. In addition, during the last fiscal year, no executive officer served as a member of the board or the compensation committee (or other board committee performing similar functions or, in the absence of any such committee, the entire board) of any entity in which a Callon Board member is an executive officer. +30 CALLON PETROLEUM +PROPOSAL 1 +Nominating & ESG Committee +James M. Trimble (Chair) +Barbara J. Faulkenberry +Anthony J. Nocchiero +Steven A. Webster +L. Richard Flury (non-voting member) +PURPOSE +The purpose of the N&ESG Committee is to oversee ESG matters; identify and recommend qualified candidates to the Board; assess director, Board and committee effectiveness; develop and implement our Corporate Governance Guidelines; oversee succession planning for the Board and executive officers; and otherwise take a leadership role in shaping the corporate governance of the Company. +MEETINGS IN 2022 +Seven meetings; all members attended at least 75% of N&ESG Committee meetings. +RESPONSIBILITIES +Pursuant to its charter, the N&ESG Committee’s duties include the responsibility to assist the Board in: +• Overseeing ESG policies, performance and disclosure, as well as developing recommendations for the Board on emerging issues related to our industry; +• Evaluating criteria for Board membership and identifying individuals qualified to become Board members, recommending nominees for election at the next annual meeting of shareholders, reviewing the suitability for continued service as a director of each Board member, and leading the search for qualified candidates to fill any Board vacancies; +• Assessing the size and composition of the Board and its committees and recommending to the Board the members and chair for each Board committee; +• Overseeing the development of succession and plans for the Board including overall Board and Committee composition and leadership; +• Advising the Board and making recommendations regarding appropriate corporate governance practices and assisting the Board in implementing those practices, including periodically reviewing the adequacy of our Corporate Governance Guidelines, our Code of Business Conduct and Ethics, and the various Board committee charters, and making recommendations for changes thereto to the Board; +• Overseeing the annual self-evaluation of the performance of the Board and its committees; +• Overseeing and approving plans for management continuity and succession; +• Recommending to the Board a successor to the CEO when a vacancy occurs; +• Reviewing directorships in other public companies held by or offered to our directors or executive officers; +• Overseeing continuing education for the Board; and +• Performing other such functions as the Board may assign to the N&ESG Committee from time to time. +INDEPENDENCE +Each member of the N&ESG Committee meets the independence requirements of the NYSE and applicable federal securities laws. +2023 PROXY STATEMENT 31 +PROPOSAL 1 +Operations & Reserves Committee +Mary Shafer-Malicki (Chair) +Matthew R. Bob +James M. Trimble +Steven A. Webster +L. Richard Flury (non-voting member) +PURPOSE +The purpose of the Operations & Reserves Committee is to assist the Board in its oversight of the Company's operations and its oversight of the integrity of the determination of our oil and natural gas reserve estimates. +MEETINGS IN 2022 +Five meetings; all members attended at least 75% of Operations & Reserves Committee meetings during the time he or she served on the Operations & Reserves Committee. +RESPONSIBILITIES +The Operations & Reserves Committee was created to oversee the responsibilities of the Board relating to operations and reserves, including: +• Overseeing the Board’s participation in the review of Callon's performance related to production and development operations, including safety and environmental performance; +• Supporting our management in driving continuous operational improvement and excellence; +• Reviewing and monitoring long-term resource development strategy and associated activity plans; +• Overseeing our reserve engineering reports and reserve engineering firm, including: (i) the integrity of our reserve reports, (ii) determinations regarding the qualifications and independence of our independent reserve engineering firm, and (iii) the performance of our independent reserve engineering firm; and +• Performing other such functions as the Board may assign to the Operations & Reserves Committee from time to time. +INDEPENDENCE +Each member of the Operations & Reserves Committee meets the independence requirements of the NYSE and applicable federal securities laws. +32 CALLON PETROLEUM +PROPOSAL 1 +Director Compensation +The compensation of our non-employee directors is reviewed by the Compensation Committee and is approved by the Board. We use a combination of cash and stock-based incentive compensation to attract and retain qualified candidates to serve on the Board. In determining director compensation, we consider the responsibilities of our directors, the significant amount of time the directors spend fulfilling their duties, and the competitive market for skilled directors. +Annually, the Compensation Committee directly engages an independent compensation consultant to conduct an analysis of director compensation and recommend any adjustments to the total annual compensation of the non-employee directors. The consultant evaluates competitive market data, utilizing the same industry peer group used for executive compensation market data (see page 50). +For 2022, the Compensation Committee, with input from its compensation consultant FW Cook, recommended an increase to the RSU grant value to return the total director compensation package to pre-COVID levels and align with the industry peer group. The Compensation Committee also recommended that all other aspects of the non-employee director compensation remain consistent with 2021, including chair fees. +Upon recommendation from the Compensation Committee, for 2022, the Board approved an increase to the RSU grant value while retaining all other components of the director compensation packages consistent with 2021 amounts: +Fee Type 2021 +Compensation 2022 +Compensation +Board Member Cash Retainer $ 95,000 $ 95,000 +Restricted Stock Unit ("RSU") Grant Value $ 120,000 $ 150,000 +Total Director Compensation $ 215,000 $ 245,000 +Chairmen Fees +Non-Executive Chair +$ 120,000 $ 120,000 +Audit Committee Chair +$ 20,000 $ 20,000 +Compensation Committee Chair +$ 20,000 $ 20,000 +N&ESG Committee Chair +$ 20,000 $ 20,000 +Operations & Reserves Committee Chair $ 20,000 $ 20,000 +Our director compensation program generally consists of cash retainers and an annual grant of RSUs awarded under the 2020 Omnibus Incentive Plan (the "2020 Plan"). The RSU grants are awarded to match competitive practices and encourage long-term alignment with shareholders. Grants are made using the 20-day average closing stock price of Callon’s stock. The RSUs vest on the first anniversary following the grant date, or on the date of the Company’s subsequent Annual Meeting, whichever occurs first. +Each non-employee director is reimbursed for reasonable out-of-pocket costs incurred to attend Board and committee meetings and for director education. If a member of the Board is an officer or other employee of the Company, he or she does not receive compensation for his or her service as a director. +Non-employee directors have the opportunity to make an annual election to defer some or all of their cash retainer or annual stock award pursuant to the terms of a deferred compensation plan for non-employee directors (the "Deferred Compensation Plan") until separation from service as a director. All deferrals under the plan are credited as phantom stock units of Callon common stock. +Callon's non-employee directors are subject to stock ownership guidelines of five times the annual cash retainer of $95,000. As of December 31, 2022, all non-employee directors were in compliance with the stock ownership policy, either through meeting the ownership requirement or by being within the transition period. For more information on the stock ownership guidelines, see page 51. +2023 PROXY STATEMENT 33 +PROPOSAL 1 +The table below indicates the total compensation earned during 2022 for each non-employee director. In addition to his role as a director, Mr. Gatto also serves as the Company's President and CEO. His compensation is disclosed in the Summary Compensation Table. +NON-EMPLOYEE DIRECTOR COMPENSATION FOR 2022 +Director +Fees Earned or +Paid in Cash (a) +Stock +Awards (b) +All Other +Compensation Total +Frances Aldrich Sevilla-Sacasa $ 115,000 (f) $ 157,485 +(d) +$ — $ 272,485 +Matthew R. Bob $ 115,000 (e) $ 157,485 +$ — $ 272,485 +Barbara J. Faulkenberry $ 95,000 (c) $ 157,485 $ — $ 252,485 +Michael L. Finch (g) +$ 115,000 (f) $ 157,485 $ — $ 272,485 +L. Richard Flury $ 215,000 (h) $ 157,485 $ — $ 372,485 +Larry D. McVay (i) +$ — $ — $ — $ — +Anthony J. Nocchiero $ 95,000 (c) $ 157,485 $ — $ 252,485 +Mary Shafer-Malicki $ 162,500 (j) $ 215,272 +(k) +$ — $ 377,772 +James M. Trimble $ 115,000 (l) $ 157,485 $ — $ 272,485 +Steven A. Webster $ 95,000 (c) $ 157,485 $ — $ 252,485 +(a) Does not include reimbursement of expenses associated with attending Board and committee meetings and for board education. +(b) Amounts calculated utilizing the provisions of FASB ASC Topic 718. These amounts utilize a grant date fair value of $51.55 per share for the awards. With the exception of Mr. Finch as discussed in FN(g) below, the aggregate number of RSU awards outstanding as of December 31, 2022 for each director is 3,055, which RSUs are scheduled to vest on the earlier of either (i) May 25, 2023, or (ii) the date of the Company's 2023 Annual Meeting of Shareholders. +(c) Represents annual retainer of $95,000. +(d) Ms. Aldrich Sevilla-Sacasa elected to have her equity award deferred pursuant to the terms of the Deferred Compensation Plan. +(e) Represents annual retainer of $95,000 and an additional $20,000 for acting as Chair of the Compensation Committee. +(f) Represents annual retainer of $95,000 and an additional $20,000 for acting as Chair of the Audit Committee. +(g) Mr. Finch resigned from the Board effective as of November 3, 2022, and his outstanding RSUs vested immediately thereafter. +(h) Represents annual retainer of $95,000 and an additional $120,000 for acting as the non-executive Chair of the Board. +(i) Mr. McVay retired from the Board effective as of the date of the 2022 Annual Meeting. Mr. McVay previously elected to have certain historical equity award deferred pursuant to the terms of the Deferred Compensation Plan. Upon Mr. McVay's retirement such deferred awards were paid in cash. +(j) Represents a partial year retainer issued upon Ms. Shafer-Malicki's appointment to the Board in January 2022 of $47,500, an annual retainer of $95,000, and an additional $20,000 for acting as Chair of the Operations & Reserves Committee. +(k) Ms. Shafer-Malicki elected to have her equity award deferred pursuant to the terms of the Deferred Compensation Plan. In addition to the shares referenced in FN(b) above, this amount also represents a pro-rata award of 1,223 RSUs granted to Ms. Shafer-Malicki upon her appointment to the Board in January 2022, utilizing a grant date fair value of $47.25 per share for the award. +(l) Represents annual retainer of $95,000 and an additional $20,000 for acting as Chair of the N&ESG Committee. +34 CALLON PETROLEUM +EXECUTIVE OFFICERS +Executive Officer Biographies +Joseph C. Gatto, Jr. +President, Chief Executive Officer and Director +Joseph C. Gatto, Jr. has served the Company as Chief Executive Officer since May 2017 and as a Director since May 2018. Mr. Gatto joined the Company in April 2012 as Senior Vice President, Corporate Finance, with responsibility for our capital markets and strategic planning functions, in addition to investor relations activities. Effective March 31, 2014, Mr. Gatto was appointed Chief Financial Officer and Treasurer of the Company and in August 2016 was promoted to President while retaining the roles of Chief Financial Officer and Treasurer. In May 2017, he was promoted to Chief Executive Officer while retaining the role as President. Mr. Gatto was elected as a member of the Board of Directors in May 2018. Prior to joining Callon, Mr. Gatto was a Managing Director in the energy investment banking groups of Merrill Lynch & Co. and Barclays Capital from July 1997 until February 2009, with involvement in all phases of M&A and capital raising transactions for his clients. In February 2009, he founded MarchWire Capital, LLC, a financial advisory and strategic consulting firm, and subsequently served as Head of Structuring and Execution with Merrill Lynch Commodities, Inc. from January 2010 until November 2011. Mr. Gatto currently serves on the board of directors for the American Production & Exploration Council and the Independent Petroleum Association of America and as a member of the Contemporary Arts Museum Houston Board of Trustees. Mr. Gatto graduated from Cornell University with a B.S. degree and The Wharton School of the University of Pennsylvania with an M.B.A. +Kevin Haggard +Senior Vice President and Chief Financial Officer +Kevin Haggard has served the Company as Senior Vice President and Chief Financial Officer since May 2021. Prior to joining Callon, Mr. Haggard was Vice President and Treasurer of Noble Energy, Inc., an independent oil and natural gas E&P company, from 2016 to 2020, where he directed the company's global corporate finance and treasury operations. Before joining Noble Energy, Mr. Haggard served as Vice President, Finance and Treasurer of Trinity River Energy and held the same position at HighMount Exploration & Production. Prior to those roles, he served as Chief Financial Officer of SunCap Financial and as an investment banker with Credit Suisse. Mr. Haggard has more than 20 years of leadership experience across energy and finance. He currently serves on the Board of Kids Meals, Inc. Mr. Haggard holds a Master of Management from the Kellogg School of Management at Northwestern University and a Bachelor of Science in Business Administration from Georgetown University. +2023 PROXY STATEMENT 35 +EXECUTIVE OFFICERS +Jeffrey S. Balmer +Senior Vice President and Chief Operating Officer +Dr. Jeffrey S. Balmer has served the Company as Senior Vice President and Chief Operating Officer since November 2018. Dr. Balmer has over 30 years of operations and subsurface leadership experience in the energy industry. Prior to joining Callon in November 2018, his most recent role was Vice President and General Manager, Southern Operating Area, for Encana Corporation, with responsibility for all of Encana’s upstream operations in the Permian Basin from 2015 to 2018. After joining Encana in 2008, he held various leadership roles including Vice President and General Manager, Western Operating Area, managing operations in the Eagle Ford, DJ, San Juan, Piceance and Wind River Basins, and Vice President, Emerging Plays. Prior to joining Encana, Dr. Balmer served in a variety of technical and operations leadership roles, including positions with ConocoPhillips, Burlington Resources and ExxonMobil Corporation. Dr. Balmer is a member of the board of directors of the Permian Basin Petroleum Association. He holds B.S. and Ph.D. degrees in Petroleum Engineering, in addition to an M.S. in Environmental and Planning Engineering, from Missouri University of Science and Technology (formerly University of Missouri – Rolla). +Michol L. Ecklund +Senior Vice President, General Counsel and Corporate Secretary +Michol L. Ecklund has served the Company as Senior Vice President, General Counsel and Corporate Secretary since February 2019 and as Vice President, General Counsel and Corporate Secretary from November 2017 to February 2019. She has responsibility for legal, human resources, sustainability and other administrative functions for the Company. Prior to joining Callon, Ms. Ecklund was Deputy General Counsel for Operations & Commercial Law at Marathon Oil Company, an independent E&P company, where she oversaw the legal team for global operations and acquisitions and divestitures as well as corporate communications. During her 15 years at Marathon Oil, Ms. Ecklund served in progressive positions within and outside the Law Organization including compliance, litigation, human resources, investor relations, corporate communications and tax. Prior to Marathon Oil, she practiced law at Baker Botts LLP in Houston. Ms. Ecklund currently serves as a member of the Rice University Board of Trustees and as a director for YES Prep Public Schools and Houston’s Collaborative for Children. Ms. Ecklund received a B.A. degree from Rice University and a J.D. degree from Harvard Law School. +Gregory F. Conaway +Vice President and Chief Accounting Officer +Gregory F. Conaway has served the Company as Vice President and Chief Accounting Officer since he joined Callon in December 2019 when Carrizo merged with the Company. Prior to joining Callon, Mr. Conaway served as Vice President and Chief Accounting Officer of Carrizo from 2014 to December 2019, as Controller of Financial Reporting from 2012 to 2014 and Assistant Controller from 2011 to 2012. Prior to that, Mr. Conaway worked for Ernst & Young, holding positions of increasing responsibility, including senior manager. Mr. Conaway began his career with Arthur Andersen in 1998. Mr. Conaway is a member of the American Institute of CPAs and the Texas Society of CPAs, and is treasurer of Faith West Academy Athletic Booster Club. Mr. Conaway is a CPA and holds an M.B.A. and a B.B.A. in Accounting from Angelo State University. +36 CALLON PETROLEUM +Proposal 2 +Approve, on an Advisory Basis, +the Compensation +of the Company’s NEOs +The Board recommends a vote FOR the compensation paid to the Company’s named executive officers, as disclosed in this Proxy Statement. +• Provides performance-based and market-aligned pay opportunities that are intended to foster alignment, engagement, and retention of key talent to drive Company performance and long-term shareholder value. +In accordance with the requirements of Section 14A of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the related rules of the SEC, we are including in this Proxy Statement a separate proposal, which gives our shareholders the opportunity to approve the compensation of our NEOs by voting “FOR” or “AGAINST” the resolution below (commonly referred to as “Say-on-Pay”) on an annual basis. While the Board and the Compensation Committee intend to carefully consider the shareholder vote resulting from the proposal, the final vote will not be binding on us and is advisory in nature. +The Board recognizes that executive compensation is an important matter for our shareholders. The Compensation Committee is tasked with the implementation of our executive compensation philosophy and, as described in detail in the CD&A below, the design of our executive compensation programs. Our executive compensation program is designed to attract, motivate and retain a qualified executive management team and to appropriately reward our executive officers for their contributions to the achievement of our short-term and long-term business goals and the creation and enhancement of shareholder value. +As described in the CD&A, we believe our compensation program is effective, appropriate and aligned with the long-term interests of our shareholders and that the total compensation package provided to the NEOs is reasonable and not excessive. As you consider this Proposal 2, we urge you to read the CD&A for a full description of our leading-edge executive compensation program. Further, in determining whether to approve this proposal, we believe that shareholders should also consider the following: +• Performance-based compensation. Our executive compensation program seeks to align executive compensation with shareholder value on an annual and long-term basis through a combination of base pay, annual incentives and long-term incentives. By design, a significant portion of our NEO compensation is performance-based, with variable pay comprising 86% of compensation opportunity for our CEO. Please review the CD&A for more information on how our 2022 compensation was linked to Company performance. +• Pay practices reflect individual and market factors. The Compensation Committee considers the skills, experience and performance of each of our NEOs as well as competitive market data in setting annual compensation opportunities and directs our independent compensation consultant to provide peer group market data which serves as one of the considerations of compensation decisions. +• “Double-trigger” severance agreements with fixed term. Change in control severance compensation agreements ("CIC Agreements") with our executive officers require an actual or constructive termination of employment before benefits are paid following any change in control. +• Stock ownership guidelines. Each of the NEOs has been granted equity to provide the officer a stake in our long-term success. The purpose of the ownership requirement is to further our goal of increasing shareholder value by aligning the interests of our NEOs with those of our long-term shareholders. +• Clawback policy. The Compensation Committee maintains a comprehensive clawback policy (the "Clawback Policy") that establishes conditions under which the Committee may recoup previously-paid compensation in event of error, misconduct, or certain other circumstances. +• Hedging policy. Our directors and executive officers are prohibited from entering into transactions in puts, calls and other derivative securities with respect to our securities and from engaging in short sales of our securities. We believe these activities are often perceived as involving insider trading and may focus the holder’s attention on our short-term performance rather than our long-term objectives. +In light of the above and as more fully described in the CD&A, we believe that the compensation of our NEOs for 2022 was appropriate and reasonable and that our compensation programs and practices are sound and in the best interests of the Company and our shareholders. We therefore respectfully request that shareholders vote on the following resolution: +“RESOLVED, that the compensation paid to Callon’s NEOs, as disclosed in Callon’s 2023 Proxy Statement (including the Compensation Discussion and Analysis, the compensation tables and related footnotes and narrative disclosures) is hereby approved.” +2023 PROXY STATEMENT 37 +PROPOSAL 2 +The vote on this resolution is not intended to address any specific element of compensation, but rather the overall compensation of our NEOs and our compensation-related policies and practices as described in this Proxy Statement. As noted above, the vote solicited by this proposal is advisory in nature and its outcome will not be binding on the Company, the Board or the Compensation Committee, nor will the outcome of the vote require the Board or the Compensation Committee to take any action. The outcome of the vote will not be construed as overruling any decision of the Board or the Compensation Committee or creating or implying any additional fiduciary duty of the Board or the Compensation Committee. However, the Board and the Compensation Committee will carefully consider the outcome of the vote when considering future executive compensation arrangements. For a review of the results of the previous year's vote, which reflects overwhelming validation from our shareholders of our pay philosophy and approach, please see the “Role of Annual Say-on-Pay Advisory Vote” on page 42. +Notwithstanding the advisory nature of this vote, the foregoing resolution will be deemed approved with the affirmative vote of the holders of a majority of the stock having voting power present in person or represented by proxy at the Annual Meeting. If you hold your shares through a broker and you do not instruct the broker how to vote, your broker will not have the authority to vote your shares. Abstentions will have the effect of a vote cast against the proposal. Broker non-votes will not be counted as shares having voting power, and so will have no effect upon the outcome of the vote. +The Board recommends a vote FOR the compensation paid to the Company’s named executive officers. +38 CALLON PETROLEUM +EXECUTIVE COMPENSATION +Compensation Discussion and Analysis +Callon Driving Sustainable Value with Strong Execution and Financial Outcomes +Creation of Long-Term Value +During 2022, the Board and management team drove new company records in profitability and cash flow as we continued to execute on Callon's strategy of sustained value creation through disciplined reinvestment in its quality, oil-weighted asset base with a “life of field” co-development model. Our success is reflected in our strong financial performance in 2022: +Adjusted Free Cash Flow +(in $ millions) +Adjusted EBITDA +(in $ millions) +Rapid Deleveraging PV-10 Value of Proved Reserves +1. Leverage ratio is calculated as net debt / LTM adjusted EBITDA as defined in our credit facility +1. SEC trailing twelve-month oil price used to calculate the PV-10 at year-end +Note: See Appendix A for a reconciliation of the non-GAAP financial measures of Adjusted Free Cash Flow, Adjusted EBITDA, and PV-10. +2023 PROXY STATEMENT 39 +EXECUTIVE COMPENSATION +Other Key Highlights +• Returns-Driven Strategy: Deployment of a differentiated “Life of Field” co-development model to achieve three consecutive years of free cash flow growth and increases in adjusted EBITDA per BOE. +• High-Return Asset Portfolio: Assembled more than 10 years of economic inventory at <$60/Bbl in premier oil basins in Texas. +• Rapid Debt Reduction: Over the past two years, reduced leverage by 70% and total debt by over $700 million, eliminated our second lien notes, and extended our average debt term maturity to over five years. +• Asset Integration: Successfully integrated recently-acquired Delaware South assets, achieving asset-level production growth of 11% and a reduction in LOE per BOE of 20% (1) . +• Record Safety Performance: Achieved our lowest recordable incident rate on record in 2022. +• Commitment to ESG: On track to achieve our peer-leading goal to reduce GHG intensity by 50% by 2024 compared to 2019. +• Focus on Diversity and Inclusion: Steadily increased workforce racial and ethnic diversity to 41% and gender diversity to 22%, including the hiring of two female officers in 2022. +(1) Changes reflect 4Q 2022 performance over 4Q 2021 performance. +Executive Compensation Program Supports our Sustainable Business Model +Our executive pay programs reward execution of the Company’s strategy for creating a sustainable business model in the energy industry and addressing investor priorities over time. Key aspects of our executive pay program include: +• An annual bonus framework that incentivizes financial performance and ESG initiatives, and excludes traditional operational metrics; +• A long-term incentive (“LTI”) program that maintains a 60% weighting on performance-based LTI and manages equity dilution by employing cash performance units tied to free cash flow, return on capital employed (“ROCE”) performance, and GHG reduction targets; +• Incentives that are directly aligned with shareholder outcomes by granting restricted stock units (“RSUs”) and incorporating relative TSR performance in the annual bonus program; and +• Incorporating ESG performance in both the annual bonus and LTI programs. +Our program aligns with key investor priorities for the energy industry by rewarding for the delivery of strong balance sheets, free cash flow generation, returns and ESG performance. It balances near-term incentives linked to each of these investor priorities with long-term incentives to drive sustainable shareholder value creation. The balance across the mix of time horizons and incentive vehicles within the 2022 program is illustrated in the table below, and the specific incentive opportunities and metrics for each component are described in more detail in the sections that follow. +40 CALLON PETROLEUM +EXECUTIVE COMPENSATION +Annual Cash Bonus Incentive +(One year performance) +LTIP +(Three year performance) +Sustainability Implications +(linkage of short-term program to long-term goals and incentives to drive sustainability) +Debt Reduction +Net Debt / EBITDA (1) +Financial strength for durability through commodity price cycles +Cash Flow Total Corporate Cash Margin +Free Cash Flow +(performance unit metric) +Revenue and cost management to support near-term cash flow; prudent capital allocation and reinvestment rate decisions to drive sustainable free cash flow over time +Returns +Cash Return on Capital Invested (“CROCI”) +ROCE +(performance unit metric) +Transition from cash-based returns excluding DD&A (CROCI) to more earnings / profitability-based metric (ROCE) over time +Stock +Performance +TSR vs XOP (2) peers +Restricted Stock Units +Imperative to compete for investor mindshare in an industry with varying capital deployment +ESG Flaring/Safety/ +GHG Emissions +Long-term GHG emission reductions +Our license to operate and sustain investor, stakeholder and employee support in the near and long-term +(1) Net Debt to EBITDA is calculated as the sum of total long-term debt less unrestricted cash and cash equivalents divided by EBITDA, as defined by the Company’s credit facility. See Appendix A for a reconciliation of non-GAAP financial measures. +(2) Relative TSR performance will be determined relative to the companies in the S&P Oil & Gas Exploration & Production Select Industry Index (“XOP”) at the beginning of the year. +Strong Compensation Governance +We believe our compensation program incorporates many sound practices, including the following: +What We Do +What We Don’t Do +• Substantial focus on performance-based pay +• Strong alignment with shareholder priorities through significant weighting on long-term incentives +• Review of peer group market data when establishing compensation +• Robust stock ownership guidelines for our NEOs and directors +• Clawback Policy applies in the event of error, fraud or misconduct +• Double-trigger change in control severance for both cash severance and equity vesting +• NO hedging or pledging of our stock +• NO employment agreements +• NO excessive benefits or perquisites +• NO single trigger change in control benefits +2023 PROXY STATEMENT 41 +EXECUTIVE COMPENSATION +Role of Annual Say-on-Pay Advisory Vote +We have historically received strong support from our shareholders for our executive compensation practices. In the advisory vote held at the Company's 2022 Annual Meeting of Shareholders, approximately 95% of the votes cast were in favor of our 2021 executive compensation programs. The Committee acknowledged the support received from our shareholders and viewed the results as an affirmation of our executive compensation policies and programs. The Committee will continue to review shareholder votes and feedback on our executive compensation programs to ensure alignment with shareholder interests. +Approximately 95% of the votes were cast in favor of our 2021 executive compensation programs +Executive Compensation Philosophy +Our executive compensation program is designed to achieve the following objectives: +• Emphasize pay for performance, in which Company and individual performance against preset goals are inherently linked to the amount realized by a NEO; +• Attract and retain a qualified and motivated management team by offering industry competitive opportunities and providing the majority of NEO compensation in the form of long-term incentives that vest over a three-year period; +• Incentivize NEOs and appropriately reward them for their contributions to the achievement of our key short-term and long-term strategic objectives with variable compensation; and +• Align the compensation of our NEOs with the interests of our long-term shareholders by providing 60% of the LTI mix in the form of performance-based incentives and 40% in the form of RSUs. +Executive Pay Program and Decisions +2022 Named Executive Officers +Our named executive officers (“NEOs”) include the individuals who served as the Company's Chief Executive Officer or Chief Financial Officer during 2022, and the three other most highly compensated executive officers who were serving in such capacity at the end of 2022. +NEO +Age +Title +Joseph C. Gatto, Jr. +52 +President, Chief Executive Officer and Director +Kevin Haggard 52 +Senior Vice President and Chief Financial Officer +Jeffrey S. Balmer +58 +Senior Vice President and Chief Operating Officer +Michol L. Ecklund +48 +Senior Vice President, General Counsel and Corporate Secretary +Gregory F. Conaway +47 +Vice President and Chief Accounting Officer +42 CALLON PETROLEUM +EXECUTIVE COMPENSATION +2022 Incentive Compensation Program Supports Go-Forward Business Objectives +Our executive pay program is heavily weighted to incentive-based compensation linked to financial and ESG performance for the NEOs, including Mr. Gatto as follows: +Base Salaries +We provide our employees, including the NEOs, with an annual base salary that is reflective of individual skills, experience and expertise to compensate them for their service throughout the year. The Committee evaluates our NEOs’ salaries and other components of their compensation to ensure that the NEOs’ total compensation is competitive relative to market practices, reflective of the executive’s performance and value to the Company, and consistent with the Committee’s compensation philosophy. In early 2022, the Committee established base salaries for each of the NEOs as set forth in the table below with the input of the independent compensation consultant. +NEO +2021 Base Salary +2022 Base Salary +Joseph C. Gatto, Jr. +$ 865,000 $ 908,250 +Kevin Haggard $ 450,000 $ 485,000 +Jeffrey S. Balmer +$ 510,000 $ 535,000 +Michol L. Ecklund +$ 430,000 $ 455,000 +Gregory F. Conaway $ 310,000 $ 325,000 +Performance-Based Annual Cash Bonus Incentive +Each year, the Committee establishes an annual incentive bonus program that is designed to align NEO compensation with the annual business plan and strategic priorities for the year. When establishing the annual bonus program for 2022, the Committee approved the following annual incentive bonus opportunities for the NEOs. With input from the independent compensation consultant, the Committee increased Mr. Gatto’s target bonus opportunity in consideration of competitive market data and his leadership of the Company. +NEO 2021 Target Bonus Opportunity +(% of Base Salary) 2022 Target Bonus Opportunity +(% of Base Salary) +Joseph C. Gatto, Jr. 115% 125% +Kevin Haggard 90% 90% +Jeffrey S. Balmer 95% 95% +Michol L. Ecklund 90% 90% +Gregory F. Conaway 75% 75% +Actual bonus awards under the program can range from 0 - 200% of target based on the achievement of pre-established performance metrics as described below. +2023 PROXY STATEMENT 43 +EXECUTIVE COMPENSATION +2022 Annual Bonus Metrics +The Committee seeks to directly align executive compensation opportunities with investor and Company priorities for financial and ESG performance to support long-term value creation for shareholders. To achieve these objectives, the Committee established a 2022 annual bonus program that would: +• Focus on pay-for-performance by maintaining 80% weighting on quantitative metrics; +• Prioritize financial results by tying 65% of the program to financial metrics and excluding traditional operational metrics from the program; +• Align incentive payouts with the shareholder experience by including a relative TSR comparison to the companies within the XOP energy index; and +• Support our sustainability objectives by including a quantitative ESG category (weighted 15%) and aligning with long-term ESG objectives within the qualitative component of the program. +Objective Description Weighting +Quantitative Objectives - Financial +(65%) +Net Debt/EBITDA (i) +Measure of our ability to cover our debt, which is impacted by cash flow, and ensures focus on a strong balance sheet +20% +Cash Return on Capital Invested (ii) +Measure of total corporate returns on capital +20% +Total Corporate Cash Margin (iii) +Measure of annual cash generation that captures all critical elements of revenue generation and expense control initiatives +15% +TSR vs. XOP Peers +Measure of competitiveness of shareholder return relative to competing investor alternatives +10% +Quantitative Objectives - ESG +(15%) +Environmental - Flaring Intensity +(volumes flared / gas produced) +Measure of one component of GHG emissions that represents potential lost revenue due to flaring +5% +Environmental - GHG Intensity +(mtCO2e/MBOE) +Progress on GHG emissions intensity reduction goals a measured by year-end exit rate +5% +Safety (iv) +Measure of rate of occurrence and severity of injuries without our workforce +5% +Qualitative Objectives (20%) +Other key organizational mandates +Measure of our success relative to key objectives tied to diversity and development initiatives, emissions monitoring, long-term strategy and scenario planning, digital transformation, successful efforts conversion, and management of unforeseen industry events +20% +(i) Net Debt to EBITDA is calculated as the sum of total long-term debt less unrestricted cash and cash equivalents divided by EBITDA, as defined by the Company’s credit facility. See Appendix A for a reconciliation of non-GAAP financial measures. +(ii) Cash Return on Invested Capital is defined as Adjusted EBITDA / (average total debt + average shareholders’ equity). +(iii) Total Corporate Cash Margin is adjusted free cash flow plus operational capital expenditures divided by annual production. +(iv) Includes measures related to total reportable incident rates, zero level 4 or 5 severe injury incidents, potential serious incident and fatality events, and tier 1 process safety events. +For the financial elements of the program, the Committee selected metrics to align with evolving investor priorities for the energy industry including strong balance sheets, capital discipline, and positive free cash flow, all of which support a pathway to potential returns of capital. In addition, the Committee incorporated a relative total shareholder return metric that compared the Company’s stock price performance for the year to those of representative companies across the energy value chain as represented in the XOP index. +To establish the threshold, target and maximum goals for each metric at the beginning of the year, the Committee sought to align the goals with publicly stated guidance for the year and then considered sensitivities for key performance variables and for commodity prices (based on probabilistic commodity price scenarios for the year based on the NYMEX options market), to arrive at a range of potential outcomes. In each instance, the Committee adopted an expanded upside range to align maximum goals with “stretch” performance. +44 CALLON PETROLEUM +EXECUTIVE COMPENSATION +2022 Performance Results +After the close of the 2022 calendar year, the Committee assessed the Company’s and the NEOs’ annual performance overall and relative to the frameworks established for the annual incentive compensation program. As summarized in the table below, 2022 results exceeded target for most of the quantitative financial and ESG metrics. +Quantitative Objective Weighting Threshold Target Max Actual Results 12/31/2022 Performance Factor Funding Level +Net Debt/Adjusted EBITDA (i) +20% 1.75x 1.5x 1.1x 1.34x 141% 28% +Cash Return on Cash Invested (ii) +20% 29% 32% 38% 33.8% 129% 26% +Total Corporate Cash Margin (iii) +15% $32.00 $34.70 $40.00 $38.48 171% 26% +TSR vs. XOP 10% P30 P50 P90 P7 0% 0% +ESG +Flaring (Mcf/Bbl) 5% N/A <1.55% N/A 1.3% 150% 7% +GHG Intensity - Exit Rate +(mtCO2e/MBOE) 5% N/A <15.0 N/A 15.0 100% 5% +Safety +TRIR +Zero level 4 or 5 injury incidents +Potential SIFs +Tier 1 process safety events +5% N/A +<0.50 +0 +≤3 +≤3 N/A +0.39 +0 +2 +3 175% 9% +Total Quantitative 80% 126% 101%/80% +(i) Net Debt to EBITDA is calculated as the sum of total long-term debt less unrestricted cash and cash equivalents divided by EBITDA, as defined by the Company’s credit facility. See Appendix A for a reconciliation of non-GAAP financial measures. +(ii) Cash Return on Invested Capital is defined as Adjusted EBITDA / (average total debt + average shareholders’ equity). +(iii) Total Corporate Cash Margin is adjusted free cash flow plus operational capital expenditures, presented on a per produced Boe basis. +(iv) Includes measures related to total reportable incident rates, zero level 4 or 5 severe injury incidents, potential serious incident and fatality events, and tier 1 process safety events. +When determining the weighted contribution for the qualitative component of the program for 2022, the Committee considered Callon’s and management’s performance overall and relative to the qualitative performance factors set forth in the table below. The Committee determined that the management team met or exceeded expectations relative to the established qualitative goals and commended the management team's significant progress on during the year including the achievements described on pages 39 and 40. +In considering these qualitative factors and overall Company performance for 2022, the Committee elected to fund the qualitative component of the annual bonus program at 26% (above the target of 20%). +2023 PROXY STATEMENT 45 +EXECUTIVE COMPENSATION +Goals Results +Diversity and development initiatives +• 2022 hiring initiatives increased racial/ethnic diversity to 41% and gender diversity to 22% including addition of two new female officers +• Successfully implemented a year-long company-wide leadership development program +Emissions monitoring +• Successful pilots of fence line monitoring and emissions management technology +Long-term strategy and scenario planning +• Enhanced long-term scenario modeling to support “Life of Field” co-development strategy and return of capital framework +• Ongoing evaluation of investor priorities and industry strategic landscape +Digital transformation +• Adopted multiple new technology platforms to enhance process efficiencies and data integrity +• Implemented company-wide technology project management process +Management of unforeseen industry events +• Launched new initiatives to address inflation and regulatory developments +• Successfully refinanced debt in rising interest rate environment +Successful efforts conversion +• Well prepared for adoption effective as of January 1, 2023 +2022 Annual Incentive Compensation Payouts +Based on the Committee’s assessment of 2022 performance relative to the pre-established annual bonus programs as described above, the Committee awarded annual incentive compensation payouts of 127% of target for the NEOs. Accordingly, individual bonus payouts for 2022 were as follows: +NEO Payout as a % of Target 2022 Annual Bonus +Joseph C. Gatto, Jr. 127% $ 1,441,847 +Kevin Haggard 127% $ 554,355 +Jeffrey S. Balmer 127% $ 645,478 +Michol L. Ecklund 127% $ 520,065 +Gregory F. Conaway 127% $ 309,563 +Annual Award of Long-Term Incentives +In the first quarter 2022, the Committee considered the design of the long-term incentive compensation awards for the upcoming year with the input of FW Cook. The Committee continued the core structure of the refreshed incentive design adopted in 2021, while evolving the program to link to ESG performance by incorporating long-term GHG reduction goals. +The Committee adopted a 2022 long-term incentive program that incorporated two elements: +LTI Vehicle Weighting Objective +Cash Performance Units +(Three-year Cliff Vest) +60% +• Reward for adjusted free cash flow generation +• Align with long-term Return on Capital Employed results +• Tie a portion of compensation to our three-year GHG reduction targets (new for 2022) +Time-Based RSUs +(Three-year Ratable Vest) +40% +• Create direct alignment with shareholder interests +• Provide direct retention incentives for our executives +For the grant of LTI awards to executive officers, the Committee considers market analysis and the advice of its independent compensation consultant to determine the program design and target award amounts. For 2022, the Compensation Committee increased the target award value for the CEO by 10% and for the NEOs by 12% on average. Even with these increases, the 2022 target award values were lower than the 2020 target award values for most of the executives. The Committee provided larger +46 CALLON PETROLEUM +EXECUTIVE COMPENSATION +increases in LTI target values for Mr. Haggard in recognition of his successful first year as CFO of the Company and to Mr. Conaway based on market data and the extent of his role at Callon. +NEO +2020 Target Value (a) +2021 Target Value (a) +2022 Target Value (a) +Joseph C. Gatto, Jr. $ 4,697,000 $ 3,900,000 $ 4,290,000 +Kevin Haggard N/A $ 1,462,500 $ 1,800,000 +Jeffrey S. Balmer $ 2,219,000 $ 1,941,625 $ 2,060,000 +Michol L. Ecklund $ 1,398,000 $ 1,223,250 $ 1,350,000 +Gregory F. Conaway $ 516,000 $ 477,300 $ 525,000 +(a) Represents the intended target value of the awards, which is different from the grant date fair value computed in accordance with FASB ASC Topic 718 as reported in the Summary Compensation Table. The methodology adopted by the Committee for awarding LTI equity awards uses the 20-day average closing price of Callon stock as of the grant date to determine the number of RSUs granted. +The target LTI values were delivered to each NEO as a grant of RSUs for 40% of the target value and grant of cash performance units ("CPUs") for 60% of the target value as described in more detail below. +RSU program +In 2022, the Committee awarded NEOs with time-based RSUs that will vest annually in one-third increments beginning on April 1, 2023, provided the NEO continues to be employed on the vesting dates. The RSUs will be settled in shares of Callon's common stock. +Cash Performance Units +In 2022, the Committee continued its use of CPUs. Each CPU has a target value of $1 and will pay out in cash within the range of 0-200% of target based on Company results relative to pre-established performance targets for the 2022-2024 calendar years. +Based on feedback from investors, we modified our 2022 CPUs to include a component tied to our three-year GHG intensity goal. The 2022 CPUs are comprised of the following two components: +CPU Objective Description Measurement +Business Sustainability CPUs +(70% of target CPU value) +Adjusted Free Cash Flow Key investor priority providing a clear path to absolute debt reduction and cash return to shareholders over time Three, one-year performance periods with the opportunity to earn between 0% and 200% of target +GHG Intensity Performance metric aligned with the Company’s publicly stated goal to reduce GHG intensity by 50% by 2024 (relative to 2019 performance) Modifier, which adjusts the overall payout between 0.8 and 1.2 based on achievement of our 2024 GHG intensity target +Return CPUs +(30% of target CPU value) +Return on Capital Employed Profitability metric that allows for comparability to cost of capital and returns across sectors Three-year average ROCE performance relative to established goals, including a threshold goal requiring three-year ROCE of at least 10% +Vesting of 2020-2022 Performance Awards +In 2020, the Committee granted performance share units (“PSUs”) to the then-executive officers covering a three-year performance period beginning in 2020 and ending in 2022. The Company’s relative and absolute TSR for the performance period compared to the peer companies defined by the Committee resulted in vesting of 18% of the target PSUs awarded per the terms of the PSU award agreement. Vested PSUs were paid 50% in cash and 50% in Company common stock. +2023 PROXY STATEMENT 47 +EXECUTIVE COMPENSATION +The table below summarizes the PSUs earned by the NEOs for the 2020-2022 performance period: +NEO Target Number +of PSUs Percent of Target +PSUs Earned Actual Vested PSUs +(Settled 50% Cash and 50% Shares) +Joseph C. Gatto, Jr. 73,200 18% 13,176 +Kevin Haggard (a) +— — — +Jeffrey S. Balmer 34,574 18% 6,222 +Michol L. Ecklund 21,780 18% 3,920 +Gregory F. Conaway 8,046 18% 1,448 +(a) Mr. Haggard was not employed by the Company in January 2020 when the awards were granted. +2023 Incentive Compensation Program +In the first quarter 2023, the Committee considered the design of the incentive compensation program awards for the upcoming year with the input of FW Cook. The Committee opted to continue the core structure of the refreshed incentive design adopted in 2021, while continuing to evolve the program to incorporate the metrics that are most meaningful to our shareholders. +For the 2023 annual bonus program, the Committee adopted the same relative financial and ESG weightings as set forth on page 44 but replaced Corporate Cash Margin with Operating Cash Margin and Cash Return on Cash Invested with Capital Efficiency (calculated as Adjusted Free Cash Flow/EBITDAX) to reflect evolving investor priorities and our focus on cash flow generation and capital efficiency. +Within the long-term incentive program for 2023, the Committee continued its practice of delivering target LTI values 40% in RSUs and 60% in CPUs. The 2023 CPUs remain comprised of two components and will pay out based on results relative to pre- established performance targets for the 2023-2025 calendar years: +• “Business Sustainability” CPUs: 70% of target CPU value. Payouts will be determined by (i) our adjusted free cash flow performance over three, one-year performance periods relative to annual goals established by the Committee and (ii) an ESG modifier ranging from 0.8 to 1.2 and tied to achievement of our 2025 “base” and “stretch” goals for GHG intensity. +• “Returns” CPUs: 30% of target CPU value. Payouts will be determined by our three-year average ROCE performance relative to established goals, including a threshold goal requiring three-year ROCE of at least 10 percent. +Other Compensation +Perquisites and Other Benefits +Benefits represent a relatively small part of our overall compensation package; however, these benefits help attract and retain senior level executives. We provide benefits commonly offered in the E&P industry to all of our employees, including our NEOs, and review these benefits annually to ensure that they are competitive with industry norms. These benefits consist of: +• Group medical and dental insurance program for employees and their qualified dependents; +• Group life insurance for employees and their spouses; +• Accidental death and dismemberment coverage for employees; +• Long-term disability coverage; +• Callon's sponsored cafeteria plan; and +• 401(k) employee savings and protection plan (the "401(k) plan"). +We pay the full costs of these benefits, including the 401(k) plan administration, for all employees. +Under our 401(k) plan, all eligible employees may elect to defer a portion of their compensation up to the statutorily prescribed limit. In 2022, the Company provided a matching contribution of up to 6% and a profit sharing contribution of up to 2% of the employee’s IRS eligible salary for qualified employees, including our NEOs. +Our NEOs are entitled to certain benefits that are not otherwise available to all of our employees. We provide our executive officers with use of a Company vehicle. We purchase or lease the vehicle and pay for all maintenance, repairs, insurance and fuel. The NEO is required to recognize taxable income using the IRS’s annual lease value method for personal use of the vehicle. We also reimburse our executive officers for their out-of-pocket cost of an executive physical, up to $2,500. The costs associated with these benefits for the NEOs are reported as “Other Compensation” in the Summary Compensation Table. The Committee believes these perquisites are modest, yet competitive with the perquisites provided to similarly situated industry executives. +48 CALLON PETROLEUM +EXECUTIVE COMPENSATION +We do not sponsor any qualified or non-qualified defined benefit plans, or any non-qualified defined contribution plan for NEOs or other employees. +Change in Control; Severance and Retirement Arrangements; Employment Agreements +We have no employment agreements with our executive officers. In September 2022, the Committee approved the terms of the Callon Executive Change in Control Severance Plan (the “Executive CIC Plan”) that provides for certain protections upon a change in control and replaces the existing individual change in control severance agreements (“CIC Agreements”) with each of the Company’s executive officers. Also in September 2022, the Committee approved the terms of the Executive Severance Pay Plan (the “Severance Pay Plan”) that provides for certain protections upon an involuntary termination. The Committee believes that Executive CIC Plan and the Severance Pay Plan serve shareholders’ best interests by aligning executive interests with shareholders, helping ensure retention of management and diminishing potential distractions for our executive officers in the event of an involuntary termination or change in control transaction. However, the Committee believes that executives should not be unduly enriched, and all benefits under the Executive CIC Plan and Severance Pay Plan require a “double-trigger.” For a detailed description of the Executive CIC Plan and the Severance Pay Plan, please refer to page 59. +In September 2022, the Committee also approved new retirement benefits under the CPU Agreements for NEOs and other officers for the purposes of attracting and retaining top talent and incentivizing early notice of impending retirements to ensure smooth transitions. The retirement benefits, which are available at the discretion of the Committee to eligible officers who provide at least six months’ notice prior to retirement, are described on page 60. +How We Make Compensation Decisions +Role of Independent Compensation Consultant +For 2022, the Committee continued its engagement of FW Cook as its independent compensation consultant to provide information and objective advice regarding executive officer and director compensation. +The Committee makes all final decisions with respect to our executive compensation. When designing pay programs and setting compensation levels for our NEOs, the Committee considers the independent compensation consultant’s advice as one factor among many other factors discussed within this CD&A. Other factors include our overall Company performance; individual NEO performance, experience, skills and tenure with the Company; competitive market data; and industry trends. +The compensation consultant reports solely to the Committee, and the Committee determines the scope of the engagement. In an effort to ensure that our NEO compensation programs are competitive and consistent with our compensation philosophy, FW Cook assists the Committee as follows: +• Regularly attending meetings of the Committee and meeting privately in executive session with the Committee to discuss its recommendations; +• Providing recommendations on executive compensation matters to align the Committee’s actions with shareholder interests, our business strategy and pay philosophy, prevailing market practices and relevant legal and regulatory requirements; +• Periodically evaluating our peer group and providing peer company data for the Committee to use in its decision-making process, including assessment of pay and performance relative to peers; +• Providing competitive market data to consider in evaluating the competitiveness of the executive base salaries and short- and long-term incentive plans and awards; +• Reviewing data in connection with the Committee’s determination of annual cash incentive performance objectives and performance-based incentive vesting levels for completed performance periods; +• Advising on Callon’s compensation arrangements for its non-employee directors, including providing peer group data; +• Reviewing and providing feedback on our SEC filings relating to executive compensation disclosures, including our CD&A disclosures; and +• Informing the Committee about compensation trends in the industry, best practices and other general trends and developments affecting executive compensation. +The Committee has the final authority to hire and terminate the compensation consultant, and the Committee evaluates the consultant’s performance annually. +2023 PROXY STATEMENT 49 +EXECUTIVE COMPENSATION +Pursuant to applicable SEC and NYSE rules, the Committee has determined that no conflicts of interest existed related to FW Cook’s engagement by the Committee in 2022. +Role of Management +The Committee considers input from our CEO in making determinations regarding our executive compensation program and the individual compensation of each of the executives other than himself. The officer team makes recommendations to the Committee regarding potential objectives for the incentive programs and provides information to the Committee regarding the performance of the Company for the Committee’s determination of incentive compensation outcomes. The Committee makes the final determination of all elements of NEO compensation. Our CEO makes no recommendations regarding, and does not participate in discussions about, his own compensation. +Role of Market Data +The Committee reviews compensation of our NEOs annually. Individual compensation amounts reflect the Committee’s subjective analysis of a number of factors, including: +• The NEO’s experience, skills, contributions and tenure with Callon; +• Changes to the NEO’s position within Callon; +• Competitive market data within our peer group and industry; and +• The NEO’s roles, responsibilities and expected future contributions to Callon’s success. +On an annual basis, the Committee reviews and discusses compensation data for our CEO and other NEOs as compared with compensation data for similarly situated executive officers at peer companies recommended by the compensation consultant and approved by the Committee. The peer group is selected based on multiple factors, such as: +• Size, including enterprise value and market capitalization; +• Similar geographic footprint and operational focus; +• Comparability of asset portfolio; +• Competition for executive talent in the market; and +• Availability of compensation data. +The Committee believes the selected peer group provides a reasonable point of reference for comparing the compensation of our NEOs to others holding similar positions and having similar responsibilities. The peer group used by the Committee in evaluating the competitiveness of executive compensation and making 2022 compensation decisions consisted of the companies set forth in the following table. +The Committee does not consider data collected from any source to be prescriptive. Rather, the Committee relies upon this and similar data as reference points around which to make informed decisions about the appropriate level and form of compensation for each NEO. +2022 Compensation Peer Group +• Centennial Resource Development, Inc. +• Cimarex Energy Co. +• CNX Resources Corporation +• Comstock Resources, Inc. +• Kosmos Energy Ltd. +• Laredo Petroleum, Inc. +• Matador Resources Company +• Murphy Oil Corporation +• PDC Energy, Inc. +• Range Resources Corporation +• SM Energy Company +• Southwestern Energy Company +• Talos Energy Inc. +• Whiting Petroleum Corporation +Practices and Policies Related to Compensation +Stock Ownership Guidelines +Consistent with its goal of driving long-term value creation for our shareholders, the Company's stock ownership guidelines require significant stock ownership by the executive officers and directors. The guidelines require the executive officers and directors to hold the following amounts of our stock: +50 CALLON PETROLEUM +EXECUTIVE COMPENSATION +Executive Officers/Directors Required Common Stock Ownership as a Multiple of Annual Base Salary / Annual Retainer +CEO 6x +Directors 5x +Other Executive Officers 2x +The Committee evaluates compliance with these guidelines on an annual basis. For purposes of the guidelines, shares owned directly and indirectly and any unvested time-based RSUs are included. Pursuant to the policy, shares granted under the Company’s incentive compensation plans are valued at the greater of the then-current trading price or the value on the date of grant. +Each executive officer and director has a transition period of five years from the date the individual becomes subject to the guidelines to attain the required investment position. If an executive officer becomes subject to a greater ownership requirement due to a promotion or an increase in salary, the executive officer will be expected to attain the higher level within three years of the change. +As of December 31, 2022, all participants were in compliance with the stock ownership policy, either through meeting the ownership requirement or by being within the transition period. +Internal Revenue Service Limitations +Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Tax Code") places a limit of $1.0 million on the amount of compensation that we may deduct in any one year with respect to compensation paid to each covered employee. The Committee considers the deductibility of compensation in its decision making and implements compensation programs that it believes are competitive and in the best interests of the Company and its shareholders. +Insider Trading Policy +The Board maintains a comprehensive insider trading policy (the "Insider Trading Policy") for employees and directors to promote compliance with federal and state securities laws. The Insider Trading Policy prohibits certain persons who are aware of material non-public information about a company from: (i) trading in securities of that company; or (ii) providing material non-public information to other persons who may trade on the basis of that information. When material non-public information about us may exist and may have an influence on the marketplace, a trading blackout period is placed in effect by management. In addition, the Insider Trading Policy also applies to family members, other members of a person’s household, and entities controlled by a person covered by this Insider Trading Policy. Officers, directors, and designated employees, as well as the family members and controlled entities of such persons, may not engage in any transaction in Company securities without first obtaining pre-clearance of the transaction from our General Counsel. +Under the Insider Trading Policy, directors, executive officers and other employees are prohibited from entering into any hedging or monetization transactions relating to Callon's securities or otherwise trading in any instrument relating to the securities' future price. This Insider Trading Policy also prevents directors and executive officers from pledging Callon common stock as collateral for loans or holding Callon securities in a margin account. The Insider Trading Policy is published as Addendum A to our Code of Business Conduct and is available at www.callon.com/about-callon/governance. +Clawback Policy +The Committee maintains the Clawback Policy, which provides the Committee the authority to recoup previously-paid compensation under the following circumstances: +• If there is a correction to previously approved performance metrics (not necessarily limited to a financial restatement), the Committee may clawback from executive officers any annual or long-term incentive compensation paid in error during the prior three years. +• If an executive officer engages in fraud or misconduct, or was grossly negligent in a supervisory role, where such action caused or could reasonably lead to material financial or reputational harm to Callon, the Committee may clawback annual and long-term incentive compensation paid in the past year from the executive officer. +The Committee believes the Clawback Policy helps protect Callon and its shareholders in the unlikely event of a restatement or potential fraud or misconduct by an executive officer. The clawback rights described above are in addition to those required under the Sarbanes-Oxley Act of 2002. +2023 PROXY STATEMENT 51 +EXECUTIVE COMPENSATION +The Committee is reviewing the final rule issued by the SEC implementing the provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act relating to recoupment of incentive-based compensation and will amend the Clawback Policy when the NYSE adopts listing standards in accordance with the final rules. +Risk Assessment Related to Our Compensation Structure +The Committee believes our compensation plans and policies are appropriately structured to encourage and reward prudent business judgment and avoid excessive risk-taking. The Committee, with the assistance of FW Cook, reviewed the compensation programs maintained by the Company during 2022 to determine whether they encouraged excessive risk taking. Upon evaluation of the assessment, the Committee concluded that our compensation policies and practices for our employees do not present risks that are reasonably likely to have a material adverse effect on the Company. The Committee’s risk review identified the following risk-mitigating features of our compensation programs: +• A balance of short-term and long-term programs to focus management on both elements of Callon’s performance; +• Annual grants of long-term incentives designed to be the largest component of each NEO’s compensation package, with typical vesting periods of three years that are based on the value of our common stock and not on any particular metric that could encourage excessive risk-taking; +• Performance criteria and targets for our annual bonus program designed to encourage performance, but not excessive risk taking, and discretion to decrease payouts if it is believed management exercised excessive risk taking; +• Performance targets measured at the corporate level, rather than at the individual or business unit level; +• A Clawback Policy that grants the Committee authority to recoup compensation due to error, fraud or other misconduct; +• Reasonable change in control severance protections; and +• Significant executive stock ownership requirements. +Compensation Committee Report +The Committee has reviewed and discussed with management the CD&A required by Item 402(b) of Regulation S-K promulgated under the Exchange Act, and based on such review and discussions, the Committee has recommended to the Board that the CD&A be included in this Proxy Statement relating to the Annual Meeting. +Respectfully submitted by the Compensation Committee of the Board of Directors, +Matthew R. Bob, Chair +Frances Aldrich Sevilla-Sacasa +Barbara J. Faulkenberry +L. Richard Flury (non-voting member) +52 CALLON PETROLEUM +EXECUTIVE COMPENSATION +Executive Compensation Tables +The compensation paid to the Company’s executive officers generally consists of base salaries, annual cash incentive payments, awards under the 2018 Omnibus Incentive Plan (the "2018 Plan") and the 2020 Plan, contributions to the Company’s 401(k) plan and miscellaneous perquisites. The table below sets forth information regarding fiscal years 2022, 2021, and 2020 compensation awarded to, earned by or paid to the Company’s NEOs, in each case for the years in which these individuals constituted "named executive officers" under SEC rules. This includes all individuals who served as the Company's CEO or CFO during 2022, and the three other most highly compensated executive officers serving at the end of the fiscal year. The CD&A above provides a full description of our 2022 executive compensation program design. +Summary Compensation Table +Name and Principal Position Year Salary Bonus +Stock +Awards (a) +Non-Equity Incentive Plan Compensation (b) +All Other Compensation (c) +Total +Joseph C. Gatto, Jr. (d) +President & CEO +2022 $ 896,606 $ — $ 1,828,585 $ 1,441,847 $ 29,167 $ 4,196,205 +2021 $ 865,000 $ — $ 2,092,309 $ 2,718,028 $ 34,142 $ 5,709,479 +2020 $ 773,885 $ — $ 3,945,450 $ 1,378,902 $ 30,288 $ 6,128,525 +Kevin Haggard (e)(f) +Senior Vice President & CFO +2022 $ 475,578 $ — $ 767,246 $ 554,355 $ 37,547 $ 1,834,726 +2021 $ 276,923 $ — $ 1,289,435 $ 708,750 $ 18,000 $ 2,293,108 +Jeffrey S. Balmer (g)(h) +Senior Vice President & Chief Operating Officer +2022 $ 528,269 $ 175,000 $ 878,032 $ 645,478 $ 36,875 $ 2,263,654 +2021 $ 510,000 $ 175,000 $ 1,041,649 $ 1,323,863 $ 27,272 $ 3,077,784 +2020 $ 464,827 $ — $ 1,863,529 $ 699,339 $ 23,242 $ 3,050,937 +Michol L. Ecklund (i) +Senior Vice President, General Counsel & Corporate Secretary +2022 $ 448,269 $ — $ 575,450 $ 520,065 $ 30,407 $ 1,574,191 +2021 $ 430,000 $ — $ 656,241 $ 1,057,414 $ 33,773 $ 2,177,428 +2020 $ 394,289 $ — $ 1,173,912 $ 560,246 $ 31,986 $ 2,160,433 +Gregory F. Conaway (j) +Vice President & Chief Accounting Officer +2022 $ 320,961 $ — $ 223,753 $ 309,563 $ 37,692 $ 891,969 +2021 $ 305,385 $ — $ 256,065 $ 609,663 $ 35,323 $ 1,206,436 +2020 $ 286,125 $ — $ 672,040 $ 307,210 $ 25,653 $ 1,291,028 +(a) The amounts reported in the “Stock Awards” column represent the aggregate grant date fair value of RSUs and PSUs computed in accordance with FASB ASC Topic 718 disregarding estimates for forfeitures. The PSUs granted in 2020 are subject to market conditions and have been valued utilizing a Monte Carlo simulation as of the grant date of the awards; no PSUs were granted in 2021 or 2022. +(b) The amounts reported in the “Non-Equity Incentive Plan Compensation” column represent payouts under the annual performance bonus program for 2020, 2021, and 2022. See “Performance-Based Annual Cash Bonus Incentive” in the CD&A above and “2020 Transition and Retention Incentive Awards” in the CD&A in our 2022 proxy statement for further information. +(c) See the "Table of All Other Compensation” below and related footnotes for reconciliation. +(d) Mr. Gatto's salary was increased from $865,000 to $908,250 effective March 9, 2022. +(e) Mr. Haggard was not an NEO prior to 2021. +(f) Mr. Haggard's salary was increased from $450,000 to $485,000 effective March 9, 2022. +(g) Dr. Balmer received a fixed cash retention bonus of $175,000 in October 2021 and October 2022. +(h) Dr. Balmer's salary was increased from $510,000 to $535,000 effective March 9, 2022. +(i) Ms. Ecklund's salary was increased from $430,000 to $455,000 effective March 9, 2022. +(j) Mr. Conaway's salary was increased from $310,000 to $325,000 effective March 9, 2022. +2023 PROXY STATEMENT 53 +EXECUTIVE COMPENSATION +Table of All Other Compensation +NEO +Year +Company +Contributions to 401(k) (a) +Company +Provided +Auto (b) +Other (c) +Total +Joseph C. Gatto, Jr. 2022 $ 21,839 $ 7,328 $ — $ 29,167 +Kevin Haggard 2022 $ 26,477 $ 11,070 $ — $ 37,547 +Jeffrey S. Balmer 2022 $ 22,670 $ 14,205 $ — $ 36,875 +Michol L. Ecklund 2022 $ 24,015 $ 4,292 $ 2,100 $ 30,407 +Gregory F. Conaway 2022 $ 24,262 $ 11,280 $ 2,150 $ 37,692 +(a) Subject to IRS limits, Company contributions to each NEO's 401(k) account for 2022 consist of a 6% matching contribution plus a 2% profit sharing contribution for 2022. +(b) The imputed value for personal use of a company-provided vehicle represents annual depreciation based on a three-year life, plus insurance, fuel, maintenance and repairs, pursuant to IRS rules. +(c) Executive officers are reimbursed up to $2,500 for an annual physical. +Stock-Based Incentive Compensation Plans +The 2018 Plan was approved by shareholders on May 10, 2018. The 2020 Plan was approved by shareholders on June 8, 2020. Awards available under each of the 2018 Plan and the 2020 Plan include grants of stock options, stock appreciation rights or units, restricted stock, RSUs, and performance shares or units. As of June 8, 2020, no more shares were issued from the 2018 Plan and the then-remaining 1,008,354 shares authorized and available for issuance under the 2018 Plan were transferred into the 2020 Plan. In addition, shares which would otherwise become available for issuance under the 2018 Plan as a result of vesting and/or forfeiture of any equity awards existing prior to the effective date of the 2020 Plan, are made available for grant under the 2020 Plan. As of March 2, 2023, approximately 1,721,901 shares remain unissued and available for grant in the 2020 Plan. +54 CALLON PETROLEUM +EXECUTIVE COMPENSATION +Grants of Plan-Based Awards During 2022 +The following table presents grants of awards under the 2020 Plan during the fiscal year ending December 31, 2022: +Grant +Date +Estimated Future Payouts Under Non-Equity Incentive Plan Awards (a) +Other Awards +(Shares or Units) (b) +Grant Date +Fair Value of Stock Awards (c) +NEO Threshold Target Maximum +Joseph C. Gatto, Jr. +1/1/2022 $ — $ 1,135,313 $ 2,270,626 +3/9/2022 31,014 $ 1,828,585 +3/9/2022 $ — $ 2,574,000 $ 5,148,000 +Kevin Haggard +1/1/2022 $ — $ 436,500 $ 873,000 +3/9/2022 13,013 $ 767,246 +3/9/2022 $ — $ 1,080,000 $ 2,160,000 +Jeffrey S. Balmer +1/1/2022 $ — $ 508,250 $ 1,016,500 +3/9/2022 14,892 $ 878,032 +3/9/2022 $ — $ 1,236,000 $ 2,472,000 +Michol L. Ecklund +1/1/2022 $ — $ 409,500 $ 819,000 +3/9/2022 9,760 $ 575,450 +3/9/2022 $ — $ 810,000 $ 1,620,000 +Gregory F. Conaway +1/1/2022 $ — $ 243,750 $ 487,500 +3/9/2022 3,795 $ 223,753 +3/9/2022 $ — $ 315,000 $ 630,000 +(a) Amounts represent the threshold, target, and maximum payouts for the 2022 annual performance bonus program and the CPUs granted to the NEOs in 2022. The actual amounts paid under the 2022 annual performance bonus program are included in the "Non-Equity Incentive Compensation" column in the Summary Compensation Table above. The CPUs will be earned at the end of the performance period ending December 31, 2024 based on the Company’s achievement of performance objectives relating to the Company’s adjusted free cash flow, GHG emissions intensity reduction, and return on capital employed. Subject to certain qualifying termination events, the participant is required to be employed on the award settlement date in order to vest in the award. +(b) Amounts represent RSUs granted to our NEOs on March 9, 2022. The first, second and third tranches are scheduled to vest in equal installments on April 1, 2023, 2024 and 2025, respectively, subject to the NEO’s continued service. +(c) This column shows the grant date fair value of the awards granted to the NEOs on the date indicated computed in accordance with FASB ASC Topic 718. The value ultimately realized by the NEO upon the actual vesting of the awards may be more or less than the grant date fair value. +2023 PROXY STATEMENT 55 +EXECUTIVE COMPENSATION +Outstanding Equity Awards at Fiscal Year-End +The following table contains information concerning all outstanding equity awards that were held as of December 31, 2022, by the NEOs: +Stock Awards +NEO Number of Shares or Units of Stock That Have Not Vested (#) +Market Value of Shares or Units of Stock That Have Not Vested (a) +Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested +Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested (a) +Joseph C. Gatto, Jr. 31,014 +(b) +$ 1,150,309 — — +35,135 +(c) +$ 1,303,157 — — +16,266 +(d) +$ 603,306 — +Kevin Haggard 13,013 +(b) +$ 482,652 — — +10,665 +(e) +$ 395,565 +16,408 +(f) +$ 608,573 — — +Jeffrey S. Balmer 14,892 +(b) +$ 552,344 — — +17,492 +(c) +$ 648,778 — +7,683 +(d) +$ 284,962 +Michol L. Ecklund 9,760 +(b) +$ 361,998 — — +11,020 +(c) +$ 408,732 — +4,839 +(d) +$ 179,479 +Gregory F. Conaway (h) +3,795 +(b) +$ 140,757 — — +4,300 +(c) +$ 159,487 — +1,788 +(d) +$ 66,317 +1,645 +(g) +$ 61,013 +(a) Amounts calculated using the closing price of $37.09 per share of our common stock on the last trading day of 2022. +(b) Stock settleable RSUs awarded on March 9, 2022, subject to three-year ratable vesting with one-third vesting each year subsequent to the award year. The first tranche will vest on April 1, 2023. The second tranche will vest on April 1, 2024. The third and final tranche will vest on April 1, 2025. +(c) Stock settleable RSUs awarded on March 12, 2021, subject to three-year ratable vesting with one-third vesting each year subsequent to the award year. The first tranche vested on April 1, 2022. The second tranche will vest on April 1, 2023. The third and final tranche will vest on April 1, 2024. +(d) Stock settleable RSUs awarded on January 31, 2020, subject to three-year ratable vesting with one-third vesting each year subsequent to the award year. The first tranche vested on April 1, 2021. The second tranche vested on April 1, 2022. The third and final tranche will vest on April 1, 2023. +(e) Stock settleable RSUs awarded to Mr. Haggard on May 10, 2021, upon his appointment as an executive officer, subject to three-year ratable vesting with one-third vesting each year subsequent to the award year. The first tranche vested on April 1, 2022. The second tranche will vest on April 1, 2023. The third and final tranche will vest on April 1, 2024. +(f) Stock settleable RSUs awarded to Mr. Haggard on May 10, 2021 upon his appointment as an executive officer, subject to cliff vesting in full on June 1, 2024. +(g) Stock settleable RSUs awarded to Mr. Conaway on January 1, 2020 upon his appointment as an executive officer, subject to three-year ratable vesting with one-third vesting each year subsequent to the award year. The first tranche vested on January 1, 2021. The second tranche vested on January 1, 2022. The third and final tranche vested on January 1, 2023. +(h) Mr. Conaway held the following outstanding cash-settled stock appreciation right awards as of December 31, 2022: +56 CALLON PETROLEUM +EXECUTIVE COMPENSATION +Option/SAR Awards +NEO Number of Securities Underlying Unexercised Options/ +SARs (#) Exercisable Number of Securities Underlying Unexercised Options/ +SARs (#) Unexercisable Equity Incentive Plan Awards: +Number of Securities Underlying Exercised Unearned Options/SARs (#) Option/ +SARs Exercise Price +($) Option/ +SARs Expiration Date +Gregory F. Conaway 3,144 +(1) +— — $ 83.90 +3/17/2025 +4,258 +(2) +— — $ 62.80 +3/17/2026 +(1) Cash-settled stock appreciation rights received in connection with the Carrizo Acquisition in exchange for 17,967 Carrizo stock appreciation rights with an exercise price of $14.67 pursuant to the Merger Agreement. +(2) Cash-settled stock appreciation rights received in connection with the Carrizo Acquisition in exchange for 24,336 Carrizo stock appreciation rights with an exercise price of $10.98 pursuant to the Merger Agreement. +2023 PROXY STATEMENT 57 +EXECUTIVE COMPENSATION +Option Exercises and Stock Vested +The following table provides information about the value realized by the NEOs on vesting of RSUs and PSUs during 2022. No options were awarded, outstanding, or exercised by any NEO in fiscal year 2022. +Stock Awards (a) +NEO Number of Shares +Acquired on Vesting (#) Value Realized on Vesting $ +Joseph C. Gatto, Jr. 7,043 +(b) +$ 439,624 +13,176 +(c) +$ 481,978 +16,266 +(d) +$ 1,015,324 +17,568 +(e) +$ 1,096,595 +Kevin Haggard 5,333 +(f) +$ 332,886 +Jeffrey S. Balmer 3,000 +(g) +$ 141,750 +6,222 +(c) +$ 227,601 +7,683 +(d) +$ 479,573 +8,746 +(e) +$ 545,925 +Michol L. Ecklund 1,638 +(b) +$ 102,244 +3,920 +(c) +$ 143,394 +4,840 +(d) +$ 302,113 +5,510 +(e) +$ 343,934 +Gregory F. Conaway 1,645 +(h) +$ 77,726 +1,448 +(c) +$ 52,968 +1,788 +(d) +$ 111,607 +2,150 +(e) +$ 134,203 +(a) Except as otherwise indicated, represents the aggregate dollar amount realized on the date of vesting, based on the closing market price per share of Company common stock on the vesting date or last business day prior to the vesting date if such date fell on a weekend or holiday, without taking into account any shares withheld to satisfy applicable tax obligations. +(b) Represents RSUs awarded on January 31, 2019, the third tranche of which vested on April 1, 2022. +(c) Represents PSUs awarded on January 31, 2020, that settled 50% in stock and 50% in cash on December 31, 2022, at 18% of target. +(d) Represents RSUs awarded on January 31, 2020, the second tranche of which vested on April 1, 2022. +(e) Represents RSUs awarded on March 12, 2021, the first tranche of which vested on April 1, 2022. +(f) Represents RSUs awarded to Mr. Haggard upon his hiring on May 10, 2021, the first tranche of which vested on April 1, 2022. +(g) Represents RSUs awarded to Dr. Balmer upon his hiring on January 1, 2019, the third and final tranche of which vested on January 1, 2022. +(h) Represents RSUs awarded to Mr. Conaway upon his appointment as an executive officer on January 1, 2020, the second tranche of which vested on January 1, 2022. +58 CALLON PETROLEUM +EXECUTIVE COMPENSATION +Employment Agreements, Termination of Employment and Change in Control Arrangements +Employment Agreements +We do not have employment agreements with any of our executive officers. +Executive Severance Compensation Plans +During 2022, the Committee adopted the Severance Pay Plan and the Executive CIC Plan, pursuant to which eligible participants, including each of our NEOs, are eligible to receive certain severance payments and benefits upon an involuntary termination (pursuant to the Severance Pay Plan) or upon an Eligible Termination or Deemed Eligible Termination in connection with a Change in Control (pursuant to the Executive CIC Plan). For additional background information, please see “Change in Control, Severance, and Employment Agreements” in the CD&A above. +Severance Pay Plan +In the event of a NEO’s Involuntary Termination (as defined in the Severance Pay Plan), subject to the NEO’s (1) execution of a release of claims against the Company and (2) continued employment with the Company through the ultimate date established by the Company as the NEO’s termination date, the NEO is entitled to receive: (i) the Accrued Obligations (as defined in the Severance Pay Plan), (ii) an amount equal to the sum of (x) the Applicable Multiple (as defined below) times the sum of the NEO’s (A) annual base salary and (B) target annual bonus, (y) any earned but unpaid annual bonus for the calendar year prior to the year of the Involuntary Termination, based on the Company’s actual performance during such calendar year and (z) an amount equal to a pro rata portion of the NEO’s annual bonus for the calendar year of the Involuntary Termination, with the amount subject to proration to be calculated as follows based on the number of days in the calendar year the NEO remained employed through the date of the Involuntary Termination (as applicable, the “Pro-Rata Bonus”): (1) if the Involuntary Termination occurs prior to July 1st, the NEO’s Target Annual bonus (as defined in the Severance Pay Plan) or (2) if the Involuntary Termination occurs on or after July 1st, the NEO’s actual annual bonus for the year in which the Involuntary Termination occurs, as determined by the Committee (the severance benefits provided in this clause (ii), collectively, the “Severance Pay”) and (iii) continued health and welfare benefits coverage for the NEO and the NEO’s eligible dependents for a period of 12 months after the date of the Involuntary Termination. For purposes of the Severance Pay Plan, “Applicable Multiple” means 2x for Mr. Gatto and 1.5x for each of the other NEOs. +Except with respect to the Pro-Rata Bonus for any Involuntary Termination occurring on or after July 1st, the Severance Pay (less all applicable withholdings and deductions) will be paid in a lump sum as soon as practicable following the date the release signed by the NEO has become final and irrevocable. In no event, however, will the Severance Pay be paid later than the last day of the second taxable year following the taxable year in which occurs the NEO’s Involuntary Termination. +As a condition to any NEO’s receipt of severance benefits under the Severance Pay Plan, the NEO must comply with non-competition and non-solicitation covenants that apply for a period of one year after the date of termination, as well as customary non-disparagement, non-disclosure, confidentiality, and ownership covenants. +Executive CIC Plan +The Executive CIC Plan was adopted by the Committee in September 2022 to replace then-existing individual Change in Control Severance Compensation Agreements (the “CIC Agreements”). The Executive CIC Plan is effective for each NEO as of the earlier of (i) the date on which such NEO agrees in writing to the early termination of the NEO’s CIC Agreement or (ii) January 1, 2023. The Executive CIC Plan provides for severance payments and benefits in the event that (i) there is a Change in Control (as defined in the Executive CIC Plan), and the NEO’s employment is terminated within two years after the date of such Change in Control either (a) by the Company other than for Cause or due to the NEO’s Disability (each as defined in the Executive CIC Plan) or (b) by the NEO for Good Reason (as defined in the Executive CIC Plan), or (ii) there is a Merger of Equals (as defined in the Executive CIC Plan), and the NEO’s employment is terminated by the Company other than for Cause or due to the NEO’s Disability within 12 months following the date of such Merger of Equals (each an “Eligible Termination”). If the NEO’s employment is terminated by the Company for reasons other than Cause or Disability within six months prior to the date on which a Change in Control is effective and it is reasonably demonstrated that such termination: (x) was at the request of a third party who has taken steps reasonably calculated to effectuate such Change in Control or (y) otherwise arose in connection with such Change in Control, then for all purposes of the Executive CIC Plan, such termination will be deemed to have occurred following such Change in Control (for purposes of the Executive CIC Plan, a “Deemed Eligible Termination”). +2023 PROXY STATEMENT 59 +EXECUTIVE COMPENSATION +Upon an Eligible Termination or a Deemed Eligible Termination, and subject to the NEO’s satisfaction of the conditions described below, the NEO would be entitled to receive, subject to the NEO’s execution (without revocation) of a release of claims against the Company: (i) a lump sum cash payment, payable on the date that is six months following the date of the NEO’s termination of employment, equal to the sum of: (x) the Applicable Multiplier (as defined below) times the sum of (A) the NEO’s annual base salary as in effect immediately prior to the Change in Control or Merger of Equals, as applicable, or, if higher, in effect immediately prior to the date of termination and (B) the greatest of (1) the average annual bonus earned with respect to the three most recently completed full fiscal years (provided that if the NEO has not been employed for the entire duration of each of the three most recently completed full fiscal years, the NEO will be deemed to have earned his or her target annual bonus for any year for which he or she was not employed for the entire fiscal year for purposes of calculating the average), (2) the target annual bonus for the fiscal year in which the Change in Control or Merger of Equals, as applicable, occurs or (3) the target annual bonus for the fiscal year in which the date of termination occurs, (y) a Pro-Rata Bonus (as defined in the Executive CIC Plan) and (z) any actual annual bonus for any completed calendar year that has been earned by but not paid to the NEO as of such NEO’s date of termination and (ii) continued health and welfare benefits coverage for the NEO and the NEO’s eligible dependents for a period of 24 months. For purposes of the Executive CIC Plan, “Applicable Multiplier” means 3x for Mr. Gatto and 2x for each of the other NEOs. +As a condition to any NEO’s receipt of severance benefits under the Executive CIC Plan, the NEO must comply with non-competition and non-solicitation covenants that apply for a period of one year after the date of termination, as well as customary non-disparagement, non-disclosure, and confidentiality covenants. +If the Total Payments (as defined in the Executive CIC Plan), were to cause the NEO to be subject to the excise tax provisions of Section 4999 of the Internal Revenue Code of 1986, as amended, then the amount of the Total Payments will either be reduced, such that the excise tax would not be applicable, or the NEO will be entitled to retain such NEO’s full Total Payments, whichever results in the better after-tax position to the NEO. +Long-Term Incentive Award Agreements +We are party to Restricted Stock Unit Award Agreements (the “RSU Agreements”) with our NEOs. Pursuant to the terms of the RSU Agreements, upon termination of the NEO’s employment with the Company as a result of the death or “disability” (as defined in the RSU Agreement) of the NEO, all of the NEO’s RSUs then outstanding under the RSU Agreement will immediately vest. +We are also party to Cash Performance Unit Award Agreements (the “CPU Agreements”) with our NEOs as described in under the sub-heading “Cash Performance Units” in the CD&A above. Pursuant to the terms of the CPU Agreements, upon termination of the NEO’s employment with the Company as a result of the death or “disability” (as defined in the CPU Agreement) of the NEO, all of the NEO’s CPUs then outstanding will immediately vest and payout based on actual results from completed quarters and target results for all other periods, and the Year 3 GHG intensity modifier would not apply. +During 2022, the Committee adopted new retirement benefits under the CPU Agreements for NEOs and other officers for the purposes of attracting and retaining top talent and incentivizing early notice of impending retirements to ensure smooth transitions. In the event of a “qualifying retirement” (as defined the amendments to the CPU Agreements), the NEO’s outstanding CPUs would vest on a pro rata basis based on actual results for completed quarters and target results for any “stub” quarters that were not complete as of his or her retirement date, and the Year 3 GHG intensity modifier would not apply. As of December 31, 2022, Dr. Balmer was the only NEO who was eligible for a “qualifying retirement” based on his age and years of service. +60 CALLON PETROLEUM +EXECUTIVE COMPENSATION +Potential Payments upon Termination or Change in Control +The following table shows the estimated gross taxable compensation payable upon a qualifying termination following a change in control ("CIC") or upon death, disability, involuntary termination without cause, or retirement. No amounts would be payable upon termination for other causes. The information assumes, in each case, that the NEO’s termination was effective as of December 31, 2022. In presenting this disclosure, we describe amounts earned through December 31, 2022 and, in those cases where the actual amounts to be paid out can only be determined at the time of such executive’s separation from us, the estimates are of the amounts which would be paid out to the executives upon their termination. +NEO / Reason for Termination +Base +Salary (a) +Cash +Bonus (a) +Accelerated Cash Incentive and Stock Award Vesting (b)(c) +Continued +Employee +Benefits (d) +Total +Joseph C. Gatto, Jr. +Change in Control $ — $ — $ — $ — $ — +Change in Control Termination (e) +$ 2,724,750 $ 5,247,483 $ 8,876,131 $ 52,521 $ 16,900,885 +Death or Disability (f) +$ — $ — $ 8,876,131 $ — $ 8,876,131 +Retirement (g) +$ — $ — $ — $ — $ — +Involuntary Termination Without Cause (h) +$ 1,816,500 $ 3,712,472 $ — $ 26,261 $ 5,555,233 +Kevin Haggard +Change in Control $ — $ — $ — $ — $ — +Change in Control Termination (e) +$ 970,000 $ 1,687,425 $ 3,786,230 $ 52,858 $ 6,496,513 +Death or Disability (f) +$ — $ — $ 3,786,230 $ — $ 3,786,230 +Retirement (g) +$ — $ — $ — $ — $ — +Involuntary Termination Without Cause (h) +$ 727,500 $ 1,209,105 $ — $ 26,429 $ 1,963,034 +Jeffrey S. Balmer +Change in Control $ — $ — $ — $ — $ — +Change in Control Termination (e) +$ 1,070,000 $ 1,861,839 $ 4,336,832 $ 52,966 $ 7,321,637 +Death or Disability (f) +$ — $ 4,336,832 $ — $ 4,336,832 +Retirement (g) +$ — $ — $ 1,762,022 $ — $ 1,762,022 +Involuntary Termination Without Cause (h) +$ 802,500 $ 1,407,853 $ — $ 26,483 $ 2,236,836 +Michol L. Ecklund +Change in Control $ — $ — $ — $ — $ — +Change in Control Termination (e) +$ 910,000 $ 1,495,705 $ 2,778,184 $ 52,378 $ 5,236,267 +Death or Disability (f) +$ — $ — $ 2,778,184 $ — $ 2,778,184 +Retirement (g) +$ — $ — $ — $ — $ — +Involuntary Termination Without Cause (h) +$ 682,500 $ 1,134,315 $ — $ 26,189 $ 1,843,004 +Gregory F. Conaway +Change in Control $ — $ — $ — $ — $ — +Change in Control Termination (e) +$ 650,000 $ 887,332 $ 1,139,755 $ 52,966 $ 2,730,053 +Death or Disability (f) +$ — $ — $ 1,139,755 $ — $ 1,139,755 +Retirement (g) +$ — $ — $ — $ — $ — +Involuntary Termination Without Cause (h) +$ 487,500 $ 675,188 $ — $ 26,483 $ 1,189,171 +(a) In accordance with the Executive CIC Plan, the computation uses a 3x multiple with respect to the severance amount relating to salary and target bonus for Mr. Gatto, and a 2x multiple for each of the other NEOs. In accordance with the Severance Pay Plan, the computation uses a 2x multiple with respect to the severance amount relating to salary and target bonus for Mr. Gatto, and a 1.5x multiple for each of the other NEOs. See “Employment Agreements, Termination of Employment and Change in Control Arrangements.” +2023 PROXY STATEMENT 61 +EXECUTIVE COMPENSATION +(b) The amounts include the value of unvested CPUs as of December 31, 2022, reflecting actual results through 2022 and target amounts for the remaining years of the performance period for termination due to change in control or death or disability. The value of unvested CPUs due to termination due to retirement are pro-rated for the time the retirement eligible employee was employed with the Company. +(c) The amounts include the value of unvested stock awards at December 31, 2022 using the closing price of $37.09 per share of our common stock on the last trading day of 2022. Unvested stock awards are forfeited at the date of termination due to retirement. +(d) Benefits consist of 24 and 12 months of employer-provided family medical, dental and vision insurance for the NEOs in the table for termination due to change in control and involuntary termination, respectively. +(e) Each of the NEOs listed in the table above are eligible to receive benefits pursuant to the Executive CIC Plan. See “Employment Agreements, Termination of Employment and Change in Control Arrangements.” +(f) "Disability,” for purposes of the incentive awards is generally defined as the employee’s inability to carry out the normal and usual duties of the employee's employment on a full-time basis for an entire period of six continuous months together with the reasonable likelihood, as determined by the Board after consultation of a qualified physician, the employee will be unable to carry out the employee's normal and usual duties of employment. +(g) For RSUs, “Retirement” is generally defined as the employee’s attainment of age 55 with at least 10 years of service. None of the NEOs who were active employees as of December 31, 2022, were retirement eligible under this general definition. However, for purposes of the CPUs, “Qualified Retirement” means the termination of employment with the Company, other than (x) for Cause or (y) due to death or Disability (each as defined in the CPU Award agreements), on a date that is more than six months following the effective date, provided that, as of the date of such termination, the grantee (A) has attained a minimum of three years of employment with the Company, (B) has attained the age of 55 and the sum of the grantee’s years of employment and the grantee’s age totals at least 60, (C) has provided the Company with notice of such intent to terminate at least six months prior to the termination date and satisfactorily completed the duties of his position up to the termination date, including any transition services reasonably requested by the Company, (D) enters into an agreement not to compete with, and not directly or indirectly induce any employee to leave the employment of, the Company, any subsidiary or affiliate for a period of at least one year following the grantee’s termination of employment, which agreement, in both form and substance, is provided by the Committee or is otherwise satisfactory to the Committee, and (E) timely executes (and does not revoke in any time provided to do so) a release of claims in favor of the Company in a form reasonably acceptable to the Committee. The retirement provisions in the CPU agreements are described on page 60. As of December 31, 2022, Dr. Balmer was the only NEO who was retirement eligible for purposes of the CPU Award Agreements based on his age and years of service. +(h) In accordance with the Severance Pay Plan, the computation uses a 2x multiple with respect to the severance amount relating to salary and target bonus for Mr. Gatto and a 1.5x multiple for the other NEOs. See “Employment Agreements, Termination of Employment and Change in Control Arrangements.” +Pension and Non-Qualified Deferred Compensation Plans +We sponsor a 401(k) plan for all eligible employees, including the NEOs, as described on page 48. We do not sponsor any qualified or non-qualified defined benefit plans, or any non-qualified defined contribution plan for NEOs or other employees. The Board or Compensation Committee may elect to adopt qualified or non-qualified defined benefit plans or non-qualified defined contribution plans in the future if it determines that doing so is in the Company’s best interest. +Equity Compensation Plan Information +The following table summarizes information regarding the number of shares of our common stock that are available for issuance under all of our existing equity compensation plans as of December 31, 2022. +Plan Category Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights +(a) +Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights +(b) (1) +Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (excluding securities reflected in column (a)) +(c) (2) +Equity compensation plans approved by security holders 799,661 $ — 1,703,829 +Equity compensation plans not approved by security holders — $ — — +Total 799,661 $ — 1,703,829 +(1) The weighted-average exercise prices of outstanding options is omitted because no options or equity-based stock appreciation rights were outstanding as of December 31, 2022. +(2) Relates to remaining shares available for issuance under our stock-based compensation plans for our executives, employees and non-employee directors. +62 CALLON PETROLEUM +EXECUTIVE COMPENSATION +Pay Versus Performance +The following table shows the total compensation for our NEOs for the past three fiscal years as set forth in the Summary Compensation Table, the “compensation actually paid” to our CEO and, on an average basis, our other NEOs. The table also provides our TSR performance, the selected peer group TSR, net income and our company selected financial measure of adjusted free cash flow, all measured over the same time period. +Pay Versus Performance Table +Value of initial fixed $100 investment based on: +Year +Summary Compensation table total for CEO (a) +Compensation Actually Paid to CEO (b) +Average Summary Compensation Table for non-CEO named executive officers (c) +Average compensation actually paid to non-CEO named executive officers (b)(c) +Total Shareholder Return (d) +Peer Group Total Shareholder Return (d) +Net Income/Loss +(In Thousands) +Adjusted Free Cash Flow (e) +(In Thousands) +2022 $ 4,196,205 $ ( 1,513,003 ) $ 1,641,135 $ 236,676 $ 76.79 $ 154.35 $ 1,209,816 $ 622,698 +2021 $ 5,709,479 $ 13,034,840 $ 1,909,774 $ 3,256,601 $ 97.83 $ 106.21 $ 365,151 $ 274,172 +2020 $ 6,128,525 $ 912,538 $ 2,367,554 $ 1,046,732 $ 27.25 $ 63.69 $ ( 2,533,621 ) $ 10,705 +(a) Mr. Gatto was the CEO for each of 2020, 2021, and 2022. +(b) The SEC requires an additional disclosure that reconciles the differences between our CEO and NEO Summary Compensation Table (“SCT”) pay and Compensation Actually Paid (“CAP”) as defined and calculated under applicable SEC rules. Once SCT pay is calculated, CAP is adjusted to include the fair market value of equity awards as of December 31st of 2020, 2021, and 2022. Our NEOs do not participate in benefit programs requiring an adjustment for pension benefits calculation. The following table provides the adjustments made between SCT pay and CAP. +Year CEO/NEO Summary Compensation table total +Remove Value of Equity Awards Granted (1) +Prior Year Equity Award Adjustments (2) +Compensation Actually Paid +2022 CEO $ 4,196,205 $ ( 1,828,585 ) $ ( 3,880,623 ) $ ( 1,513,003 ) +Other NEOs $ 1,641,135 $ ( 611,120 ) $ ( 793,339 ) $ 236,676 +2021 CEO $ 5,709,479 $ ( 2,092,309 ) $ 9,417,670 $ 13,034,840 +Other NEOs $ 1,909,774 $ ( 648,678 ) $ 1,995,505 $ 3,256,601 +2020 CEO $ 6,128,525 $ ( 3,945,450 ) $ ( 1,270,537 ) $ 912,538 +Other NEOs $ 2,367,554 $ ( 1,373,630 ) $ 52,808 $ 1,046,732 +(1) Represents the grant date fair value and average grant date fair value of the equity awards granted to the CEO and NEOs, respectively. +(2) Reflects the fair value/change in fair value of the awards at year end or upon vesting; RSUs are revalued using updated stock price on 12/30/22. +(c) For 2022, the other NEOs were Dr. Balmer, Ms. Ecklund, and Messrs. Haggard and Conaway. For 2021, the other NEOs were Dr. Balmer, Ms. Ecklund, and Messrs. Haggard, Ulm, and Conaway. For 2020, the other NEOs were Dr. Balmer, Ms. Ecklund, and Messrs. Ulm and Conaway. +(d) TSR is determined based on the value of an initial fixed income of $100. The peer group used for TSR comparisons is the XOP index. +(e) Adjusted free cash flow is defined as adjusted EBITDA minus the sum of operational capital, capitalized interest, capitalized general and administrative expense and interest expense. Adjusted EBITDA and Adjusted free cash flow are non-GAAP financial measures. See Appendix A for additional information regarding non-GAAP financial measures, including a reconciliation of non-GAAP financial measures to the nearest comparable GAAP measures. +2023 PROXY STATEMENT 63 +EXECUTIVE COMPENSATION +2022 Performance Measures +The following list identifies the seven most important financial performance measures used to link compensation actually paid to our NEOs to company performance. These financial measures are integrated within our incentive programs and align with our short-term and long-term strategic plans. +Important Financial Performance Measures +• Adjusted Free Cash Flow +• Leverage - Net Debt to EBITDA +• Cash Return on Cash Invested +• Return on Capital Employed +• Corporate Cash Margin +• Stock Price Performance +• GHG Intensity +Relationship Between CAP and Performance Measures +We believe the table above shows the alignment between compensation actually paid to the NEOs and the Company’s performance, consistent with our compensation philosophy as described in our CD&A on page 39.The following charts below show, for 2020 – 2022, provide a summary of our TSR performance versus the peer group TSR consisting of the XOP Index and correlation between CAP and various financial measures (TSR, Net Income, and Adjusted Free Cash Flow). +Stock Price Return Performance Chart +64 CALLON PETROLEUM +EXECUTIVE COMPENSATION +Pay Versus TSR 2020-2022 +Pay Versus Net Income 2020-2022 +2023 PROXY STATEMENT 65 +EXECUTIVE COMPENSATION +Pay Versus Adjusted Free Cash Flow 2020-2022 +66 CALLON PETROLEUM +EXECUTIVE COMPENSATION +CEO Pay Ratio +Pursuant to a mandate of the Dodd-Frank Wall Street Reform and Consumer Protection Act, we are disclosing here that the ratio of our median employee’s compensation to the compensation of our CEO is 18:1. +We identified our median employee from the employee population as of December 31, 2022, by comparing the sum of the base salary, bonus, and any overtime paid to each employee that was employed by the Company on December 31, 2022. For any employees who were not employed the entire 2022 calendar year (excluding temporary and seasonal employees), we annualized the base salary, bonus, and any overtime. +In accordance with SEC rules, we determined the annual total compensation of our median employee for 2022 was $213,106. This amount represents the total compensation that would have been reported in the Summary Compensation Table in accordance with the requirements of Item 402(c)(x) of Regulation S-K for the median employee if the employee had been a NEO for fiscal year 2022. For purposes of calculating the ratio, an additional value of $18,878 was included in the annual compensation for non-discriminatory benefits bringing the annual total compensation to $231,984. +We determined the amount of the CEO’s annual total compensation was $4,196,205, which represents the amount reported for the CEO in the “Total” column of our 2022 Summary Compensation Table. For purposes of the ratio, an additional value of $28,203 was included in the annual total compensation for non-discriminatory benefits to bring the value to $4,224,408. +Based on the foregoing, for 2022 the ratio of the median of the annual total compensation of all employees to the annual total compensation of our CEO (the "CEO Pay Ratio") is 18:1. This ratio demonstrates a lower pay ratio for 2022 than 2021, reducing from 29:1 in 2021 to the current ratio of 18:1 for 2022. +The CEO Pay Ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on our payroll and employment records. +2023 PROXY STATEMENT 67 +Proposal 3 +Advisory Vote on the Frequency of Future Advisory Votes on the Compensation of the Company’s NEOs +The Board recommends a vote for the option of “ONE YEAR” as the frequency for future advisory votes on the compensation of our named executive officers. +• The Board believes that an advisory vote on the compensation of the Company’s NEOs held every year is in the best interests of Callon and its shareholders based on the information presented below. +Section 14A of the Exchange Act requires the Company to submit for a vote a proposal as to whether to have the advisory vote on executive compensation on the agenda for future annual meetings of shareholders every one, two, or three years. +The Board recognizes the importance of receiving regular input from the Company’s shareholders on important issues such as the Company’s executive compensation program. Additionally, the Board is aware that many influential commentators in the area of corporate governance recommend that the advisory vote on executive compensation be held every year. Therefore, the Board recommends that the advisory vote on the compensation of the Company’s NEOs be held every year. +While the Board recommends that the advisory vote on the compensation of the Company’s NEOs be held every year, the proxy card provides you the ability to vote to approve holding the vote every one, two, or three years, or to abstain from voting. This vote is advisory and is not binding on the Company, the Board, or the Compensation Committee in any way, and the outcome of the vote will not require the Board or the Compensation Committee to take any action. The outcome of the vote will not be construed as overruling any decision of the Board or the Compensation Committee or creating or implying any additional fiduciary duty of the Board or the Compensation Committee. However, the Board and the Compensation Committee will carefully consider the outcome of the vote in determining the frequency of future advisory votes on executive compensation. +You may vote for any of the three alternatives (every one, two, or three years) or abstain from voting. Approval of this proposal requires the affirmative vote of the holders of a majority of the stock having voting power present in person or represented by proxy at the Annual Meeting. Because this vote is advisory and non-binding, if none of the frequency options receives a majority of the votes, the choice receiving the greatest number of votes will be considered the frequency recommended by the Company’s shareholders. If you hold your shares through a broker and you do not instruct the broker how to vote, your broker will not have the authority to vote your shares. Abstentions will have the effect of a vote cast against the proposal. Broker non-votes will not be counted as shares having voting power, and so will have no effect upon the outcome of the vote. +The Board recommends a vote for the option of “ONE YEAR” as the frequency for future advisory votes on the compensation of the Company’s named executive officers. +68 CALLON PETROLEUM +Proposal 4 +Ratification of the Appointment of the Independent Registered Public Accounting Firm, Grant Thornton LLP, for 2023 +The Board recommends a vote FOR the ratification of the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2023. +• The Board and the Audit Committee believe the retention of Grant Thornton LLP is in the best interests of Callon and its shareholders based on the information presented below. +The Audit Committee has appointed Grant Thornton LLP as the independent registered public accounting firm to audit our consolidated financial statements for the year ending December 31, 2023. We are asking shareholders to ratify this appointment. Grant Thornton LLP has served as the Company’s independent registered public accounting firm since being appointed effective March 3, 2016. A representative of Grant Thornton LLP will be present at the Annual Meeting and will have the opportunity to make a statement, if they desire, and to respond to appropriate questions from shareholders. +Fees +The following table sets forth the fees incurred by us for services performed by Grant Thornton LLP in the fiscal years 2021 and 2022: +Fee Category +2021 2022 +Audit fees (a) +$ 1,518,400 $ 1,315,000 +Audit-related fees (b) +$ — $ 125,000 +Tax fees (c) +$ — $ — +All other fees (d) +$ — $ — +Total +$ 1,518,400 $ 1,440,000 +(a) Audit fees consist of the aggregate fees billed for professional services related to the audit and quarterly reviews of our financial statements and for services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements. +(b) Audit-related fees consist of the aggregate fees billed for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements that are not reported above under “Audit fees." +(c) Tax fees consist of the aggregate fees billed for professional services rendered for tax compliance (including filing state and federal tax returns), tax advice and tax planning. Tax fees do not include fees for services rendered in connection with the audit. +(d) Other fees consist of the aggregate fees billed for professional services other than the services repo rted above. +Pre-approval policy +The Audit Committee pre-approves all audit and permissible non-audit services (including the fees and terms thereof) exceeding $25,000 to be performed on behalf of the Company by our independent registered public accounting firm, as required by applicable law or listing standards and subject to the terms of the audit and non-audit services pre-approval policy in accordance with the Audit Committee charter. The Committee may delegate authority to one or more of its members when appropriate, including the authority to grant pre-approvals of audit and permitted non-audit services, provided that any decisions to grant pre-approvals are consistent with the terms of the delegation and the Audit Committee charter and are presented to the full Committee at its next scheduled meeting. +2023 PROXY STATEMENT 69 +PROPOSAL 4 +Required Vote +The submission of this matter for approval by shareholders is not legally required. However, the Board and Audit Committee believe that this submission is consistent with best practices in corporate governance and is an opportunity for shareholders to provide direct feedback to the Board and Audit Committee on an important issue of corporate governance. Although the results of the vote are not binding on the Audit Committee, if the appointment is not ratified by the shareholders, then the Audit Committee will consider whether it should select another independent registered public accounting firm. +This proposal will be approved if it receives the affirmative vote of the holders of a majority of the shares of our common stock having voting power present in person or represented by proxy at the Annual Meeting. If you hold your shares through a broker and you do not instruct the broker how to vote, your broker will have the authority to vote your shares in its discretion on this proposal. Abstentions will have the effect of a vote cast against this proposal. +The Board recommends a vote FOR the ratification of the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm. +Audit Committee Report +Acting pursuant to its charter, the Audit Committee reviewed and discussed the Company’s audited financial statements for the year ended December 31, 2022, with management and Grant Thornton LLP, and recommended that the audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, for filing with the SEC. This recommendation was based on: +• The Audit Committee’s review of the audited financial statements; +• Discussion of the financial statements with management; +• Discussion with our independent registered public accounting firm, Grant Thornton LLP, of the matters required to be discussed by auditing standards generally accepted in the United States of America, including the communication matters required to be discussed by Auditing Standard No. 1301, Communications with Audit Committees, issued by the PCAOB; +• Receipt from Grant Thornton LLP of the written disclosures and letter required by Public Company Accounting Standards Board Rule 3526 (Communications with Audit Committees Concerning Independence); +• Discussions with Grant Thornton LLP regarding its independence from Callon, the Board and our management; +• Grant Thornton LLP’s confirmation that it would issue its opinion that the consolidated financial statements present fairly, in all material respects, our financial position and the results of our operations and cash flows for the periods presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”); and +• Other matters the Audit Committee deemed relevant and appropriate. +Management is responsible for the preparation, presentation and integrity of our consolidated financial statements in accordance with GAAP, the establishment and maintenance of our disclosure controls and procedures, and the establishment, maintenance and evaluation of the effectiveness of our internal controls over financial reporting. The independent registered public accounting firm is responsible for performing an independent audit of our consolidated financial statements and internal control over financial reporting in accordance with the standards of the PCAOB and issuing reports thereon. The Audit Committee’s responsibilities include monitoring and overseeing these processes. +Members of the Audit Committee rely, without independent verification, on the information provided to them and on the representations made by management and our independent registered public accounting firm. The Audit Committee’s considerations and discussions referred to above do not assure that the audit of our financial statements and internal control over financial reporting have been carried out according to the standards of the PCAOB, that the financial statements are presented according to GAAP, or that Grant Thornton LLP is in fact independent. +Respectfully submitted by the Audit Committee of the Board of Directors, +Frances Aldrich Sevilla-Sacasa, Chair +L. Richard Flury +Anthony J. Nocchiero +Mary Shafer-Malicki +70 CALLON PETROLEUM +OTHER MATTERS +Beneficial Ownership of Securities +Principal Shareholders and Management +The following table sets forth beneficial ownership information with respect to our common stock as of the Record Date (March 2, 2023) for (i) each person known by us to beneficially own 5% or more of our outstanding common stock; (ii) each of our NEOs, (iii) each of our directors and nominees for director, and (iv) all of our directors and current executive officers as of the Record Date, as a group. Unless otherwise noted, each person listed below has sole voting and investment power with respect to the shares of our common stock listed below as beneficially owned by the person. Information set forth in the table with respect to beneficial ownership of common stock has been obtained from filings made by the named beneficial owners with the SEC as of March 2, 2023, or, in the case of our current executive officers and directors, has been provided to us by such individuals. As of March 2, 2023, the Company had 61,625,170 shares outstanding. +None of the shares beneficially owned by our executive officers or directors has been pledged as security for an obligation. Our Insider Trading Policy prohibits our executive officers and directors from holding Callon securities in a margin account or pledging Callon securities as collateral for a loan. +Beneficial Ownership (1) +Name of Beneficial Owner Shares (#) Percent of Class +Holders of More Than 5%: +BlackRock, Inc. (2) +7,998,948 13.0 % +The Vanguard Group, Inc. (3) +6,728,744 10.9 % +Blackstone Inc. (4) +5,832,824 9.5 % +State Street Corporation (5) +4,506,810 7.3 % +Named Executive Officers: +Joseph C. Gatto, Jr. (6) +147,221 * +Kevin Haggard (7) +13,690 * +Jeffrey S. Balmer (8) +45,154 * +Michol L. Ecklund (9) +32,398 * +Gregory F. Conaway (10) +44,462 * +Directors: +Frances Aldrich Sevilla-Sacasa (11) +10,679 * +Matthew R. Bob (12) +18,531 * +Barbara J. Faulkenberry (13) +15,343 * +L. Richard Flury (14) +40,190 * +Anthony J. Nocchiero (15) +24,316 * +Mary Shafer-Malicki (16) +4,278 * +James M. Trimble (17) +16,631 * +Steven A. Webster (18) +769,891 1.2 % +All Current Executive Officers and Directors as a Group (consisting of 13 persons) (19) +1,182,784 1.9 % +* Less than 1% +2023 PROXY STATEMENT 71 +OTHER MATTERS +(1) The amounts shown for our directors and NEOs include, as of the Record Date, (a) shares of common stock owned outright by the individual; and (b) shares of common stock that may be acquired within 60 days through the vesting or settlement of certain RSUs, if any. Until RSUs vest, these individuals have neither voting nor investment power over the underlying shares of common stock, and share amounts are represented on a pre-tax basis. As of the Record Date, none of the directors or executive officers held any stock options to purchase shares of Company stock. +(2) BlackRock, Inc. (“BlackRock”), in its capacity as a parent holding company or control person for various subsidiaries (none of which individually owns more than 5% of our outstanding common stock), may be deemed to beneficially own the indicated shares. BlackRock has sole voting power of 7,938,708 shares and sole dispositive power of 7,998,948 shares. BlackRock does not have shared voting power or shared dispositive power over any shares. BlackRock’s address is 55 East 52nd Street, New York, NY 10055. This information is based on BlackRock’s most recent Statement on Schedule 13G, which was filed on January 26, 2023. +(3) The Vanguard Group, Inc. (“Vanguard”), in its capacity as an investment adviser, may be deemed to beneficially own the indicated shares, along with certain of its wholly-owned subsidiaries that serve as investment managers. Vanguard does not have sole voting power over any shares, but has shared voting power over 96,953 shares, sole dispositive power over 6,587,577 shares and shared dispositive power over 141,167 shares. Vanguard’s address is 100 Vanguard Blvd., Malvern, PA 19355. This information is based on Vanguard’s most recent Statement on Schedule 13G filed on February 9, 2023. +(4) Represents 5,832,824 shares held directly by BPP HoldCo LLC. BPP HoldCo LLC maintains sole voting and sole dispositive power of 5,832,824 shares. +BX Primexx Topco LLC is the sole member of BPP HoldCo LLC. BCP VII/BEP II Holdings Manager L.L.C. is the managing member of BX Primexx Topco LLC. Blackstone Energy Management Associates II L.L.C. and Blackstone Management Associates VII L.L.C. are the managing members of BCP VII/BEP II Holdings Manager L.L.C. Blackstone EMA II L.L.C. is the sole member of Blackstone Energy Management Associates II L.L.C. BMA VII L.L.C. is the sole member of Blackstone Management Associates VII L.L.C. Blackstone Holdings III L.P. is the managing member of each of BMA VII L.L.C. and Blackstone EMA II L.L.C. Blackstone Holdings III GP L.P. is the general partner of Blackstone Holdings III L.P. Blackstone Holdings III GP Management L.L.C. is the general partner of Blackstone Holdings III GP L.P. Blackstone Inc. is the sole member of Blackstone Holdings III GP Management L.L.C. The sole holder of the Series II preferred stock of Blackstone Inc. is Blackstone Group Management L.L.C. Blackstone Group Management L.L.C. is wholly-owned by Blackstone’s senior managing directors and controlled by its founder, Stephen A. Schwarzman. The address of the principal business office of Blackstone Inc. is 345 Park Avenue, New York, NY 10154. The above information is based on the most recent Statement on Schedule 13D of Blackstone Inc. and the other entities referred to above, which was filed on January 25, 2023. +(5) State Street Corp. ("State Street"), in its capacity as a parent holding company or control person for various subsidiaries, may be deemed to beneficially own the indicated shares, along with certain of its wholly-owned subsidiaries that serve as investment managers. State Street has shared voting power over 4,470,486 shares and shared dispositive power over 4,506,810 shares. State Street's subsidiary, SSGA Funds Management, Inc. ("SSGA"), has shared voting power over 3,608,808 shares and shared dispositive power over 3,619,908 shares. Neither State Street nor SSGA has sole voting or sole dispositive power over any shares. State Street's principal business address is State Street Financial Center, One Lincoln St., Boston, MA 02111. This information is based on State Street’s most recent Statement on Schedule 13G, which was filed on February 2, 2023. +(6) Comprised of 103,049 shares held directly by Mr. Gatto and 44,172 unvested RSUs payable in stock that will vest within 60 days of the Record Date. Does not include 38,243 unvested RSUs payable in stock. +(7) Comprised of 4,019 shares held directly by Mr. Haggard and 9,671 unvested RSUs payable in stock that will vest within 60 days of the Record Date. Does not include 30,415 unvested RSUs payable in stock. +(8) Comprised of 23,761 shares held directly by Dr. Balmer and 21,393 unvested RSUs payable in stock that will vest within 60 days of the Record Date. Does not include 18,674 unvested RSUs payable in stock. +(9) Comprised of 18,795 shares held directly by Ms. Ecklund and 13,603 unvested RSUs payable in stock that will vest within 60 days of the Record Date. Does not include 12,016 unvested RSUs payable in stock. +(10) Comprised of 39,259 shares held directly by Mr. Conaway and 5,203 unvested RSUs payable in stock that will vest within 60 days of the Record Date. Does not include 4,680 unvested RSUs payable in stock. +(11) Comprised of 7,624 shares held directly by Ms. Aldrich Sevilla-Sacasa, which includes 5,277 vested deferred RSUs, pursuant to Ms. Aldrich Sevilla-Sacasa’s election under the Deferred Compensation Plan, which are payable in cash upon her separation of service as a director, and 3,055 unvested deferred RSUs, pursuant to Ms. Aldrich Sevilla-Sacasa’s election under the Deferred Compensation Plan, which are payable in cash upon her separation of service as a director and that will vest within 60 days of the Record Date. +(12) Comprised of 15,476 shares held directly by Mr. Bob and 3,055 unvested RSUs payable in stock that will vest within 60 days of the Record Date. +(13) Comprised of 12,288 shares held directly by Ms. Faulkenberry and 3,055 unvested RSUs payable in stock that will vest within 60 days of the Record Date. +(14) Comprised of 34,135 shares held directly by Mr. Flury, which includes 15,559 vested deferred RSUs, pursuant to Mr. Flury’s election under the Deferred Compensation Plan, which are payable in cash upon his separation of service as a director, 3,000 shares held in a joint tenancy with his spouse, and 3,055 unvested RSUs payable in stock that will vest within 60 days of the Record Date. +(15) Comprised of 21,261 shares held directly by Mr. Nocchiero and 3,055 unvested RSUs payable in stock that will vest within 60 days of the Record Date. +(16) Comprised of 1,223 vested deferred RSUs, pursuant to Ms. Shafer-Malicki's election under the Deferred Compensation Plan, which are payable in cash upon her separation of service as a director, and 3,055 unvested deferred RSUs, pursuant to Ms. Shafer-Malicki's election +72 CALLON PETROLEUM +OTHER MATTERS +under the Deferred Compensation Plan, which are payable in cash upon her separation of service as a director and that will vest within 60 days of the Record Date. +(17) Comprised of 13,576 shares held directly by Mr. Trimble and 3,055 unvested RSUs payable in stock that will vest within 60 days of the Record Date. +(18) Comprised of 552,961 shares held directly by Mr. Webster, which includes 13,192 vested deferred RSUs, pursuant to Mr. Webster’s election under the Deferred Compensation Plan, which are payable in cash upon his separation of service as a director, 64,500 shares held indirectly with his spouse, 149,375 shares held indirectly through San Felipe Resources Company, and 3,055 unvested RSUs payable in stock that will vest within 60 days of the Record Date. +(19) Comprised of 847,427 shares held directly by the Company’s current executive officers and directors, 3,000 shares held in a joint tenancy, 64,500 shares held indirectly by a spouse, 149,375 shares held indirectly by San Felipe Resources Company, and 118,482 unvested RSUs payable in stock that will vest within 60 days of the Record Date. +Delinquent Section 16(a) Reports +Section 16(a) of the Exchange Act requires our officers and directors and persons who own 10% or more of our common stock to file reports of beneficial ownership and changes in ownership with the SEC. These persons are required by SEC regulations to furnish us with copies of these reports. Based solely on our review of these reports received by us during fiscal year 2022 and representations from certain reporting persons that they have complied with the relevant filing requirements, we believe that all such filing requirements were complied with in 2022 and 2023 to date. +Certain Relationships and Related Party Transactions +The Audit Committee charter provides that the Audit Committee shall review and approve all related party transactions. A transaction will be considered a “related party transaction” if the transaction would be required to be disclosed under Item 404 of Regulation S-K. In addition, our Code provides that an officer’s or a director’s conflict of interest with Callon may only be waived if the Audit Committee approves the waiver and the full Board ratifies the waiver. +We are not aware of any related party transactions that require disclosure under Item 404 of Regulation S-K. +Shareholders’ Proposals and Director Nominations for the 2024 Annual Meeting +In order for a proposal to be considered for inclusion in the proxy statement for the 2024 Annual Meeting of Shareholders (the “2024 Annual Meeting”) pursuant to Rule 14a-8 of the Exchange Act, such proposal must be received by the Secretary of the Company at our principal executive office no later than November 13, 2023 (assuming the date of the 2024 Annual Meeting has not been changed by more than 30 days from the date of this year’s Annual Meeting), and must otherwise be in compliance with the requirements of the SEC’s proxy rules. If the date of the 2024 Annual Meeting is changed by more than 30 days from the date of this Annual Meeting, then the deadline is a reasonable time before we begin to print and send our proxy materials for the 2024 Annual Meeting. +For a shareholder proposal to be introduced for consideration at the 2024 Annual Meeting but not intended to be considered for inclusion in the Company's proxy statement and form of proxy relating to such meeting (i.e., not pursuant to Rule 14a-8 of the Exchange Act), including shareholder nominations for candidates for election as directors, a shareholder must provide written notice of such proposal to Company not later than 120 days nor earlier than 150 days before the date of the 2024 Annual Meeting. Any such notice must describe the shareholder proposal in reasonable detail and otherwise comply with the requirements set forth in our bylaws. In addition to satisfying the notice, informational and other requirements contained in our +bylaws, shareholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must provide notice that sets forth the information required by Rule 14a-19 of the Exchange Act, which notice must be postmarked or +2023 PROXY STATEMENT 73 +OTHER MATTERS +transmitted electronically to the Company at its principal executive office no later February 26, 2024 (assuming the date of the 2024 Annual Meeting has not been changed by more than 30 days from the date of this year’s Annual Meeting). If the date of the 2024 Annual Meeting is changed by more than 30 days from the date of this Annual Meeting, then notice must be provided by the later of 60 days prior to the date of the 2024 Annual Meeting or the tenth day following the day on which public announcement of the date of the 2024 Annual Meeting is first made by the Company . +Nominating Process +In accordance with our certificate of incorporation, any shareholder may nominate a person for election to the Board upon delivery of written notice to us of such nomination. Such notice must be sent as provided in our certificate of incorporation on or before the deadline set forth in our certificate of incorporation, and must otherwise comply with the procedures set forth in our certificate of incorporation. For nominations, the Board will consider individuals identified by shareholders on the same basis as nominees identified from other sources. A submission recommending a nominee should include: +• Sufficient biographical information to allow the N&ESG Committee to evaluate the qualifications of a potential nominee in light of the director nomination procedures and criteria and any other information that would be required to be disclosed in solicitations of proxies for the election of directors; +• An indication as to whether the proposed nominee will meet the requirements for independence under NYSE and SEC guidelines; +• A description of all direct and indirect compensation and other material monetary agreements, arrangements, and understandings during the past three years, and any other material relationships, between or among the nominating shareholder or beneficial owner and each proposed nominee; +• A completed and signed questionnaire, representation, and agreement, pursuant to our bylaws, with respect to each nominee for election or re-election to the Board; and +• The proposed nominee’s written consent to serve if nominated and elected. +74 CALLON PETROLEUM +ANNUAL MEETING INFORMATION +Information Concerning Solicitation and Voting +We are providing you this Proxy Statement in connection with the solicitation of proxies by the Board to be voted at the Annual Meeting, which will be held on April 26, 2023, at 9:00 a.m. EDT in the Boardroom of The Ritz-Carlton New York, Nomad, located at 25 West 28th Street, New York, NY. This Proxy Statement contains important information for you to consider when deciding how to vote on the matters brought before the meeting. Please read it carefully. +The Board will primarily solicit proxies by mail, and we will bear all costs incurred in the solicitation of proxies, including the preparation, printing and mailing of these proxy materials. In addition to solicitation by mail, our directors, officers and employees may solicit proxies personally or by telephone, email, facsimile or other means, without additional compensation. We may also make arrangements with brokerage houses and other custodians, nominees and fiduciaries for the forwarding of solicitation material to the beneficial owners of the common stock held by such persons, and we may reimburse those brokerage houses and other custodians, nominees and fiduciaries for reasonable expenses incurred in connection therewith. In addition, to assist us with our solicitation efforts, we have retained the services of Innisfree M&A Incorporated for a fee of approximately $16,500, plus out-of-pocket expenses. +Information About Voting and the Annual Meeting +Who may vote +You may vote if you are the record holder of our common stock as of the close of business on the Record Date. On that date, 61,625,170 shares of our common stock were outstanding and are entitled to vote at the Annual Meeting. Each share of common stock is entitled to one vote on each matter considered at this meeting. A list of shareholders entitled to vote at the Annual Meeting will be available at our office at 2000 West Sam Houston Parkway South, Suite 2000, Houston, TX 77042 during normal business hours for a period of ten days prior to the meeting and will also be available for inspection at the Annual Meeting. +Attending the Annual Meeting +If you meet the above criteria to vote at our Annual Meeting, you may attend the Annual Meeting. If you wish to attend the Annual Meeting in person, you must present valid, government-issued picture identification. If your shares are held in the name of a bank, broker or other nominee and you plan to attend the Annual Meeting, in order to be admitted you must present proof of your beneficial ownership of the common stock, such as a bank or brokerage account statement, or copy of your Voting Instruction Form or Notice, indicating that you owned shares of our common stock at the close of business on the Record Date. +For safety and security reasons, no cameras, recording equipment, cellular telephones, electronic devices, large bags, briefcases or packages will be permitted in the Annual Meeting. No banners, signs, firearms or weapons will be allowed in the meeting room. We reserve the right to inspect all items entering the meeting room. +Proposals +Qualifying shareholders will vote on the following four proposals at the Annual Meeting: +1) The election of three Class II directors; +2) Advisory approval of our executive compensation; +3) Advisory vote on the frequency of future advisory votes of our executive compensation; and +4) The ratification of the appointment of Grant Thornton LLP. +2023 PROXY STATEMENT 75 +ANNUAL MEETING INFORMATION +Notice and access +The Company is furnishing proxy materials to its shareholders through the Internet as permitted under the rules of the SEC. Under these rules, the Company’s shareholders will receive a Notice Regarding the Availability of Proxy Materials instead of a paper copy of the Notice of 2023 Annual Meeting of Shareholders and Proxy Statement, our proxy card, and our Annual Report on Form 10-K, often referred to as “notice and access.” We believe this process gives us the opportunity to serve you more efficiently by making the proxy materials available quickly online and reducing costs associated with printing and distributing our proxy materials. This Notice includes instructions on how to access the proxy materials over the Internet or to request a paper copy of proxy materials, including a proxy card or voting instruction form. In addition and as described in the Notice, shareholders may request to receive future proxy materials in printed form by mail or electronically by email. A shareholder’s election to receive proxy materials by mail or email will remain in effect until terminated by the shareholder. +The Company's proxy materials were made available by the Board on the Internet on or about March 13, 2023, at https://www.viewproxy.com/CallonPetroleum/2023, which is the cookies-free website described in the Notice. Accordingly, we are sending the Notice to our shareholders of record and beneficial owners of our stock, and filing the Notice with the SEC, on or about March 13, 2023. Please note that the Notice identifies the proposals on which shareholders will vote at the meeting, but shareholders cannot vote by marking the Notice and returning it. The Notice provides instructions on how to vote via the Internet, by telephone or by requesting and returning a paper proxy card, or by submitting a ballot in person at the meeting. +In addition to the proxy materials being available for review at https://www.viewproxy.com/CallonPetroleum/2023, the site contains instructions on how to access the proxy materials on a website or to request free of charge printed materials, including a copy of our Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the SEC. On an ongoing basis, shareholders may contact our Corporate Secretary at our principal offices in Houston, Texas to request proxy materials by mail or by email. +Casting your vote +There are three methods for registered shareholders to vote by proxy without attending the Annual Meeting: +1. By Internet +You can vote via the Internet by going to the website address provided on your Notice or proxy card. You will need to use the control and request ID appearing on your proxy card to vote via the Internet. You can use the Internet to transmit your voting instructions up until 11:59 p.m. EDT on April 25, 2023. If you vote via the Internet, you do NOT need to vote by telephone or return a proxy card. Internet voting is available 24 hours a day. +2. By Telephone +You can also vote by telephone by calling the toll-free telephone number provided on your proxy card. You will need to use the control and request ID appearing on your proxy card to vote by telephone. You may transmit your voting instructions from any touch-tone telephone up until 11:59 p.m. EDT on April 25, 2023. Voting by telephone is available 24 hours a day. +3. By Mail +If you received a printed copy of the proxy card, you can vote by marking, dating and signing it, and returning it in the reply envelope provided. Please promptly mail your proxy card to ensure that we receive it prior to the closing of the polls at the Annual Meeting. +If you receive more than one Notice and/or Proxy Statement then it means that your shares are likely registered in more than one account. Please provide voting instructions for all Notices, proxy and voting instruction cards you receive. If you send us a signed proxy card without marking your voting selections, your shares will be voted on each proposal as recommended by the Board, and in the discretion of the proxy holders as to any other matters that may properly come before the meeting or any postponement or adjournment of the meeting. The Board is not presently aware of any other proposals or any other business to be considered at the Annual Meeting. +Difference between a “holder of record” and a “street name” holder +If your shares are registered directly in your name, you are considered the shareholder of record with respect to those shares. If your shares are held in a stock brokerage account or by a bank, trust or other nominee, then the broker, bank, trust or other nominee is considered to be the shareholder of record with respect to those shares. However, you are still considered to be the beneficial owner of those shares, and your shares are said to be held in “street name.” Street name holders generally cannot submit a proxy or vote their shares directly and must instead instruct the broker, bank, trust or other nominee how to vote their shares. You will receive instructions from your broker, bank or other nominee that you must follow in order for your broker, bank or other nominee to vote your shares per your instructions. Many brokerage firms and banks have a process for their beneficial +76 CALLON PETROLEUM +ANNUAL MEETING INFORMATION +holders to provide instructions via the Internet or over the telephone. If Internet or telephone voting is unavailable from your broker, bank or other nominee, please complete and return the enclosed voting instruction card in the addressed, postage paid envelope provided. +In the event you do not provide instructions on how to vote shares held in street name, your broker may have authority to vote your shares. Under the rules that govern brokers who are voting with respect to shares that are held in street name, brokers have the discretion to vote such shares on routine matters, but they are not permitted to vote (a “broker non-vote”) on non-routine or non-discretionary items absent instructions from the beneficial owner. With respect to the Annual Meeting, brokers are prohibited from exercising discretionary authority in the election of directors, the non-binding advisory proposal on executive compensation, and the non-binding advisory proposal on the frequency of future advisory votes on executive compensation, but such brokers may exercise discretionary authority with respect to the ratification of the appointment of our independent registered public accounting firm. Your vote is especially important. Therefore, please promptly instruct your broker regarding how to vote your shares on these matters. +If you hold shares through a broker, bank or other nominee and wish to be able to vote in person at the meeting, you must obtain a legal proxy from your broker, bank or other nominee and present it to the inspector of election with your ballot at the meeting. If you have questions about how to obtain a legal proxy, please call Innisfree M&A Incorporated toll-free at (888) 750-5834. Submitting your proxy by mail will not affect your right to vote in person if you decide to attend the Annual Meeting. +Revoking a proxy +You may revoke or change a previously delivered proxy at any time before the meeting by delivering another proxy with a later date, by voting again via the Internet or by telephone, or by delivering written notice of revocation of your proxy to our Corporate Secretary at our principal executive office in Houston, Texas before the beginning of the meeting. You may also revoke your proxy by attending the meeting and voting in person, although attendance at the meeting will not necessarily revoke a valid proxy that was previously delivered. If you hold shares through a broker, bank or other nominee, you must contact that nominee to revoke any prior voting instructions. You also may revoke any prior voting instructions by voting in person at the meeting if you obtain a legal proxy as described above. +Recommendation of the Board +The Board unanimously recommends you vote “FOR” each of the proposals. A proxy that is properly completed and submitted will be voted at the Annual Meeting in accordance with the instructions on the proxy. If you properly complete and submit a proxy, but do not indicate any contrary voting instructions, your shares will be voted as follows: +• “ FOR ” the election of each of the nominees named in this Proxy Statement to the Board of Directors; +• “ FOR ” the approval, on an advisory basis, of our executive compensation; +• " ONE YEAR " as the frequency of future advisory votes on executive compensation; and +• “ FOR ” the ratification of the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2023. +Counting the vote +We have appointed Alliance Advisors to tabulate and certify the vote. +Quorum +A quorum is the number of shares that must be present to hold the meeting. The quorum requirement for the meeting is a majority of the outstanding shares as of the Record Date, present in person or represented by proxy. We will count your shares for purposes of determining if there is a quorum if either you are present and vote in person at the meeting or have voted on the Internet, by telephone or by properly submitting a proxy card or voting instruction card by mail. Abstentions and broker non-votes also count toward the quorum. +2023 PROXY STATEMENT 77 +ANNUAL MEETING INFORMATION +Required Vote +Proposal 1 - Election of directors +The nominees for election as directors will be elected by a plurality of the votes cast by the shares entitled to vote in the election of directors. However, because the number of director nominees equals the number of directors to be elected at this Annual Meeting, if any nominee for director receives a greater number of votes “withheld” than votes “for,” then such nominee is required to promptly tender his or her resignation for consideration by the N&ESG Committee. Such resignation will only be effective upon Board acceptance of such resignation after receiving the recommendation of the N&ESG Committee. Abstentions and broker non-votes will not be included in determining the number of votes cast in the election of directors and will not have any effect on the outcome. This voting standard is discussed further under “Proposal 1 - Election of Class II Directors.” +Proposal 2 - Advisory vote to approve NEO compensation +The advisory vote on our executive compensation is non-binding, so no specific vote is required. Abstentions will have the same effect as a vote against this proposal, and broker non-votes will not be counted as shares present and entitled to vote, and, accordingly, will not affect the outcome of the vote on this proposal. While the law requires this advisory vote, the vote will neither be binding on us, the Board or the Compensation Committee, nor will it create or imply any change in the fiduciary duties of, or impose any additional fiduciary duty on, us, the Board, or the Compensation Committee. However, the views of our shareholders are important to us, and the Compensation Committee will take into account the outcome of the vote when considering future executive compensation decisions. We urge you to read the section entitled “Compensation Discussion and Analysis,” which discusses in detail how our executive compensation program implements our compensation philosophy. +Proposal 3 - Advisory vote on the frequency of future advisory votes to approve NEO compensation +The advisory vote on the frequency of future advisory votes on the compensation of our NEOs is non-binding, so no specific vote is required. If none of the frequency options receives a majority of the votes, the choice receiving the greatest number of votes will be considered the frequency recommended by the Company’s shareholders. Abstentions will have the same effect as a vote against this proposal, and broker non-votes will not be counted as shares present and entitled to vote, and, accordingly, will not affect the outcome of the vote on this proposal. While the law requires this advisory vote, the vote will neither be binding on us, the Board, or the Compensation Committee, nor will it create or imply any change in the fiduciary duties of, or impose any additional fiduciary duty on, us, the Board, or the Compensation Committee. However, the views of our shareholders are important to us, and the Board and the Compensation Committee will carefully consider the outcome of the vote in determining the frequency of future advisory votes on executive. +Proposal 4 - Ratification of the appointment of the independent registered public accounting firm +The advisory vote on the ratification of the appointment of Grant Thornton LLP as our independent registered public accounting firm for the 2023 fiscal year is non-binding, so no specific vote is required. If you hold your shares through a broker and you do not instruct the broker how to vote, your broker will have the authority to vote your shares in its discretion on this proposal. An abstention will have the effect of a vote against this proposal. Because your vote is advisory, it will not be binding on the Board or the Company. However, the Board and the Audit Committee will consider the outcome of the vote in determining the selection of the Company’s independent registered public accounting firm. +78 CALLON PETROLEUM +ANNUAL MEETING INFORMATION +Voting Results +We will announce the preliminary voting results at the Annual Meeting and will publish the final voting results in a Current Report on Form 8-K to be filed with the SEC within four business days of the meeting. +Householding Information +The SEC permits companies and intermediaries (such as brokers and banks) to satisfy delivery requirements for proxy statements and annual reports with respect to two or more shareholders sharing the same address by delivering a single proxy statement and annual report to those shareholders. This process, which is commonly referred to as “householding,” is intended to reduce the volume of duplicate information shareholders receive and reduce expenses for companies. Both we and some of our intermediaries may be householding our proxy materials and annual report. Once you have received notice from your broker or another intermediary that they will be householding materials sent to your address, householding will continue until you are notified otherwise or until you revoke your consent. Should you wish to receive separate copies of our annual report and proxy statement in the future, we will promptly deliver a separate copy of each of these documents to you if you send a written request to us at our address appearing on the cover of this Proxy Statement, to the attention of the Corporate Secretary. If you hold your shares through an intermediary that is householding and you want to receive separate copies of our annual report and proxy statement in the future, you should contact your bank, broker or other nominee record holder. +Financial Statements and Other Available Documents +Financial statements for our most recent fiscal year are contained in the 2022 Annual Report to Shareholders and our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed with the SEC on February 23, 2023. Our Annual Report, our Annual Report on Form 10-K, Corporate Governance Guidelines, Code, and charters of Board committees may be accessed by shareholders on our website at www.callon.com or printed copies are available upon written request to Michol L. Ecklund, Corporate Secretary at our principal executive office in Houston, Texas. +Other Business +The Board is not aware of any matter to be acted upon at the Annual Meeting other than those described above. If other business properly comes before the Annual Meeting, the persons named on the proxy will vote the proxy in accordance with what they consider to be in the best interests of us and our shareholders. Please sign, date, and return your proxy promptly to avoid unnecessary expense. All shareholders are urged, regardless of the number of shares owned, to participate in the Annual Meeting by voting their shares. +By Order of the Board of Directors, +Joseph C. Gatto, Jr. +President, Chief Executive Officer and Director +Houston, Texas +March 13, 2023 +2023 PROXY STATEMENT 79 +APPENDIX A +NON-GAAP RECONCILIATIONS +Adjusted EBITDA (in thousands): +2020 2021 2022 +Net income (loss) $ (2,533,621) $ 365,151 $ 1,209,816 +Adjustments: +Loss on derivatives contracts $ 27,773 $ 522,300 $ 330,953 +Gain (loss) on commodity derivative settlements, net $ 95,856 $ (423,306) $ (467,420) +Non-cash expense related to share-based awards $ 2,663 $ 12,923 $ 2,507 +Impairment of evaluated oil and gas properties $ 2,547,241 $ — $ — +Merger, integration, transaction, and other $ 43,107 $ 21,944 $ 3,414 +Income tax expense $ 122,054 $ 180 $ 11,793 +Interest expense, net $ 94,329 $ 102,012 $ 79,667 +Depreciation, depletion and amortization $ 480,631 $ 356,556 $ 466,517 +(Gain) loss on extinguishment of debt $ (170,370) $ 41,040 $ 45,658 +Adjusted EBITDA $ 709,663 $ 998,800 $ 1,682,905 +Adjusted Free Cash Flow (in thousands): +2020 2021 2022 +Net cash provided by operating activities $ 559,775 $ 974,143 $ 1,501,517 +Changes in working capital and other $ 33,993 $ (53,312) $ 79,939 +Change in accrued hedge settlements $ (3,015) $ (28,208) $ 26,294 +Cash interest expense, net $ 90,428 $ 91,888 $ 74,386 +Merger, integration and transaction $ 28,482 $ 14,289 $ 769 +Adjusted EBITDA $ 709,663 $ 998,800 $ 1,682,905 +Less: Operational capital expenditures (accrual) $ 488,623 $ 508,616 $ 841,525 +Less: Capitalized interest $ 88,599 $ 89,738 $ 101,073 +Less: Interest expense, net of capitalized amounts $ 94,329 $ 91,888 $ 74,386 +Less: Capitalized cash G&A $ 27,407 $ 34,386 $ 43,223 +Adjusted Free Cash Flow $ 10,705 $ 274,172 $ 622,698 +Net Debt 2020 2021 2022 +Total debt $ 2,969,264 $ 2,694,115 $ 2,241,295 +Unamortized premiums, discount, and deferred loan costs, net $ 43,377 $ 28,806 $ 19,726 +Adjusted total debt $ 3,012,641 $ 2,722,921 $ 2,261,021 +Less: Cash and cash equivalents $ 20,236 $ 9,882 $ 3,395 +Net Debt $ 2,992,405 $ 2,713,039 $ 2,257,626 +80 CALLON PETROLEUM +Total Corporate Cash Margin (in thousands, except per Boe data): +2020 2021 2022 +Adjusted free cash flow $ 10,705 $ 274,172 $ 622,698 +Plus: Operational capital expenditures (accrual) $ 488,623 $ 508,616 $ 841,525 +Total Corporate Cash Margin $ 499,328 $ 782,788 $ 1,464,223 +Total production in barrels of oil equivalent 37,193 34,894 38,053 +Total Corporate Cash Margin per Boe $ 13.43 $ 22.43 $ 38.48 +Total Proved Reserves - PV-10 (in millions): +2020 2021 2022 +Standardized measure of discounted future net cash flows $ 2,310 $ 6,251 $ 9,004 +Plus: present value of future income taxes discounted at 10% per annum $ 35 $ 800 $ 841,525 +Total Proved Reserves - PV-10 $ 2,345 $ 7,051 $ 850,529 +2023 PROXY STATEMENT 81 +CALLON PETROLEUM COMPANY +ANNUAL MEETING OF SHAREHOLDERS +APRIL 26, 2023, AT 9:00 A.M. EDT +SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF CALLON PETROLEUM COMPANY +The undersigned hereby appoints Michol L. Ecklund, as proxy with full power of substitution and re-substitution, to vote all shares of Common Stock of Callon Petroleum Company that the undersigned is entitled to vote at the Annual Meeting of Shareholders thereof to be held at the Boardroom of The Ritz-Carlton New York, Nomad, 25 West 28th Street, New York, NY 10001 on April 26, 2023, or at any adjournment or postponement thereof, as follows: +ALL SHARES WILL BE VOTED AS DIRECTED HEREIN AND, UNLESS OTHERWISE DIRECTED, WILL BE VOTED “FOR” PROPOSAL 1 (ALL NOMINEES), “FOR” PROPOSAL 2, "ONE YEAR" ON PROPOSAL 3, AND “FOR” PROPOSAL 4, AND IN ACCORDANCE WITH THE DISCRETION OF THE PERSON VOTING THE PROXY WITH RESPECT TO ANY OTHER BUSINESS PROPERLY BROUGHT BEFORE THE MEETING OR AT ANY ADJOURNMENT OR POSTPONEMENT THEREOF. The undersigned shareholder further hereby ratifies all that the said proxy may do by virtue hereof. If any nominee named on the reverse side is unable to serve or for good cause will not serve as a director, the person named as proxy shall have the authority to vote for any other person who may be nominated at the instruction and discretion of the Board of Directors or an authorized committee thereof. +The undersigned shareholder hereby revokes any other proxy heretofore executed by the undersigned for the Annual Meeting and acknowledges receipt of the Notice of the 2023 Annual Meeting of Shareholders and Proxy Statement dated March 13, 2023, and the Annual Report to Shareholders furnished in connection therewith. +You are encouraged to specify your choice by marking the appropriate box (SEE REVERSE SIDE), but you need not mark any box if you wish to vote in favor. +(CONTINUED AND TO BE SIGNED ON REVERSE SIDE) +PLEASE DETACH ALONG PERFORATED LINE AND MAIL IN THE ENVELOPE PROVIDED. +IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD APRIL 26, 2023. +THE PROXY STATEMENT IS AVAILABLE AT: +HTTP://WWW.VIEWPROXY.COM/CALLONPETROLEUM/2023 +Please mark votes as in this example +ý +THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” PROPOSALS 1, 2, and 4, and "ONE YEAR" IN PROPOSAL 3. +1. +Election of Directors: +3 Advisory vote on the frequency of future advisory votes on the compensation of our named executive officers. +FOR ALL WITHHOLD +ALL FOR ALL +EXCEPT +01 Matthew R. Bob ¨ +¨ +¨ ¨ +ONE YEAR ¨ +TWO YEARS ¨ THREE +YEARS ¨ +ABSTAIN +02 James E. Craddock ¨ +03 Anthony J. Nocchiero ¨ +4 The ratification of the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2023. +2. +The approval, by non-binding advisory vote, of the compensation of our named executive officers. +¨ FOR ¨ AGAINST ¨ ABSTAIN ¨ FOR ¨ AGAINST ¨ ABSTAIN +MARK “X” HERE IF YOU PLAN TO ATTEND THE MEETING: ¨ +Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person. +DO NOT PRINT IN THIS AREA +(Shareholder Name & Address Data) +Date +Signature +Signature (if held jointly) +Address Change/Comments: (If you noted any Address Changes and/or Comments above, please mark box.) ¨ +CONTROL NUMBER +PLEASE DETACH ALONG PERFORATED LINE AND MAIL IN THE ENVELOPE PROVIDED. +CONTROL NUMBER +SCAN TO +VIEW MATERIALS & VOTE +PROXY VOTING INSTRUCTIONS +Please have your 11 digit control number ready when voting by Internet or Telephone. +If you vote by phone, fax or Internet, please DO NOT mail your proxy card. +INTERNET TELEPHONE MAIL +Vote Your Proxy on the Internet: Vote Your Proxy by Phone: Vote Your Proxy by Mail: +Go to www.AALVote.com/CPE +Call 1 (866) 804-9616 +Have your proxy card available when you access the above website. Follow the prompts to vote your shares. Use any touch-tone telephone to vote your proxy. Have your proxy card available when you call. Follow the voting instructions to vote your shares. Mark, sign, and date your proxy card, then detach it, and return it in the postage-paid envelope provided. \ No newline at end of file diff --git a/raw/proxies/0000928022/0000928022-23-000047/proxy_rpt.txt b/raw/proxies/0000928022/0000928022-23-000047/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..70a1350b4bb229db8124f489e140ddcd1a618d23 --- /dev/null +++ b/raw/proxies/0000928022/0000928022-23-000047/proxy_rpt.txt @@ -0,0 +1,7 @@ +Certain Relationships and Related Party Transactions +The Audit Committee charter provides that the Audit Committee shall review and approve all related party transactions. A transaction will be considered a “related party transaction” if the transaction would be required to be disclosed under Item 404 of Regulation S-K. In addition, our Code provides that an officer’s or a director’s conflict of interest with Callon may only be waived if the Audit Committee approves the waiver and the full Board ratifies the waiver. +We are not aware of any related party transactions that require disclosure under Item 404 of Regulation S-K. +Shareholders’ Proposals and Director Nominations for the 2024 Annual Meeting +In order for a proposal to be considered for inclusion in the proxy statement for the 2024 Annual Meeting of Shareholders (the “2024 Annual Meeting”) pursuant to Rule 14a-8 of the Exchange Act, such proposal must be received by the Secretary of the Company at our principal executive office no later than November 13, 2023 (assuming the date of the 2024 Annual Meeting has not been changed by more than 30 days from the date of this year’s Annual Meeting), and must otherwise be in compliance with the requirements of the SEC’s proxy rules. If the date of the 2024 Annual Meeting is changed by more than 30 days from the date of this Annual Meeting, then the deadline is a reasonable time before we begin to print and send our proxy materials for the 2024 Annual Meeting. +For a shareholder proposal to be introduced for consideration at the 2024 Annual Meeting but not intended to be considered for inclusion in the Company's proxy statement and form of proxy relating to such meeting (i.e., not pursuant to Rule 14a-8 of the Exchange Act), including shareholder nominations for candidates for election as directors, a shareholder must provide written notice of such proposal to Company not later than 120 days nor earlier than 150 days before the date of the 2024 Annual Meeting. Any such notice must describe the shareholder proposal in reasonable detail and otherwise comply with the requirements set forth in our bylaws. In addition to satisfying the notice, informational and other requirements contained in our +bylaws, shareholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must provide notice that sets forth the information required by Rule 14a-19 of the Exchange Act, which notice must be postmarked or \ No newline at end of file diff --git a/raw/proxies/0000928022/0001354488-15-001577/proxy.txt b/raw/proxies/0000928022/0001354488-15-001577/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..14396a2aa3e6de098a2a7c6df1e69cade34074e9 --- /dev/null +++ b/raw/proxies/0000928022/0001354488-15-001577/proxy.txt @@ -0,0 +1,2091 @@ +DEF 14A +1 +cpe_def14a.htm +PRELIMINARY PROXY STATEMENT +cpe_def14a.htm +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Rule 14a-101 +Schedule 14A Information +Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 +Filed by the Registrant þ +Filed by a Party other than the Registrant o +Check the appropriate box: +o +Preliminary Proxy Statement +o +Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +þ +Definitive Proxy Statement +o +Definitive Additional Materials +o +Soliciting Material Pursuant to §240.14a-12 +Callon Petroleum Company +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +þ +No fee required. +o +Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. +(1) +Title of each class of securities to which transaction applies: +(2) +Aggregate number of securities to which transaction applies: +(3) +Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): +(4) +Proposed maximum aggregate value of transaction: +(5) +Total fee paid: +o +Fee paid previously with preliminary materials. +o +Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. +(1) +Amount Previously Paid: +(2) +Form, Schedule or Registration Statement No.: +(3) +Filing Party: +(4) +Date Filed: +CALLON PETROLEUM COMPANY +200 NORTH CANAL STREET +NATCHEZ, MISSISSIPPI 39120 +NOTICE OF THE 2015 ANNUAL MEETING OF STOCKHOLDERS +TO BE HELD THURSDAY, MAY 14, 2015 +To Our Stockholders: +Notice is hereby given and you are cordially invited to attend the 2015 Annual Meeting of Stockholders of Callon Petroleum Company (“Callon” or the “Company”), a Delaware corporation, which will be held in Natchez, Mississippi, on Thursday, May 14, 2015, at 9:00 a.m. Central Daylight Time (“CDT”) (the “Annual Meeting”), in the Grand Ballroom of the Natchez Grand Hotel, 111 Broadway Street, Natchez, Mississippi 39120, to consider the following proposals: +1. +The election of two Class III Directors, Messrs. Fred L. Callon and L. Richard Flury, for a three-year term, and the election of Mr. Michael L. Finch as a Class I Director for a one-year term; +2. +The approval, by advisory vote, of the Company’s named executive officer compensation; +3. +The approval of amendments to the Company’s 2011 Omnibus Incentive Plan (“2011 Plan”), including an amendment to increase the number of shares of common stock that may be issued under the 2011 Plan by two million shares to 4,300,000 shares; +4. +The approval of an amendment to Article Four of the Company’s Certificate of Incorporation increasing the number of authorized shares of Common Stock of the Company (“Common Stock”) from 110 million shares to 150 million shares; +5. +The ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2015; and +6. +The transaction of such other business as may properly come before the Annual Meeting or any adjournment(s) thereof. +These proposals are described in the accompanying proxy materials. You will be able to vote at the Annual Meeting only if you were a stockholder of record at the close of business on March 27, 2015 (the “Record Date”). Beginning on or about April 2, 2015, the Company mailed a Notice Regarding the Internet Availability of Proxy Materials (the "Notice") to its stockholders containing instructions on how to access the proxy statement and vote online, and the Company made proxy materials available to the stockholders over the Internet. Instructions for requesting a paper copy of the proxy materials are contained in the Notice. A stockholders’ list will be available at the Company’s office at 200 North Canal St., Natchez, MS 39120 during normal business hours for a period of ten days prior to the meeting. +Whether or not you plan to attend the meeting, please vote electronically via the Internet or by telephone, or please complete, sign, date and return the accompanying proxy card in the enclosed postage-paid envelope as soon as possible. See “Information About Voting and The Meeting” in the proxy statement for more details. +We look forward to seeing you at the meeting. +By Order of the Board of Directors +By: +/s/ B. F. Weatherly +Natchez, Mississippi +B. F. Weatherly +April 2, 2015 +Corporate Secretary +YOUR VOTE IS IMPORTANT! +Important Notice Regarding the Availability of Proxy Materials for the +Annual Meeting of Stockholders to be Held on May 14, 2015 +This proxy statement and our 2014 Annual Report on Form 10-K are available at www.iproxydirect.com/CPE and www.callon.com +If you have any questions or need assistance voting your shares, please call our proxy solicitor: +MORROW & CO., LLC +470 West Avenue – 3 rd Floor +Stamford, CT 06902 +Banks and Brokerage Firms, please call (203) 658-9400. +Stockholders, please call toll free (800) 414-4313. +PROXY STATEMENT +_____________________ +CALLON PETROLEUM COMPANY +200 North Canal Street +Natchez, Mississippi 39120 +(601) 442-1601 +2015 ANNUAL MEETING OF STOCKHOLDERS +THURSDAY, MAY 14, 2015 +INFORMATION CONCERNING SOLICITATION AND VOTING +We are providing you this proxy statement in connection with the solicitation of proxies by our board of directors (the “Board” or individually “Director” and collectively “Directors”) to be voted at the 2015 annual meeting (the “Annual Meeting”) of stockholders of Callon Petroleum Company (“Callon,” the “Company,” “us,” “we,” “our” or like terms). The Annual Meeting will be held on Thursday, May 14, 2015 at 9:00 a.m. CDT in the Grand Ballroom of the Natchez Grand Hotel, 111 Broadway Street, Natchez, Mississippi 39120. This proxy statement contains important information for you to consider when deciding how to vote on the matters brought before the meeting. Please read it carefully. +The solicitation of proxies by the Board will be conducted primarily by mail. Callon will bear all costs incurred in the solicitation of proxies, including the preparation, printing and mailing of these proxy materials. In addition to solicitation by mail, our Directors, officers and employees may solicit proxies personally or by telephone, email, facsimile or other means, without additional compensation. We may also make arrangements with brokerage houses and other custodians, nominees and fiduciaries for the forwarding of solicitation material to the beneficial owners of the common stock held by such persons, and we may reimburse those brokerage houses and other custodians, nominees and fiduciaries for reasonable expenses incurred in connection therewith. In addition, the Company has retained the services of Morrow & Co., LLC to assist us in the Company’s solicitation efforts for a fee of approximately $7,500, plus out-of-pocket expenses. +INFORMATION ABOUT VOTING AND THE MEETING +Who may vote +You may vote if you are the record holder of Callon common stock as of the close of business on the Record Date, March 27, 2015. On that date, there were 65,931,941 shares outstanding and entitled to vote at the meeting. Each share of common stock is entitled to one vote on each matter considered at the meeting. +Attending the Meeting +If you are entitled to vote at our Annual Meeting, you may attend the Annual Meeting. If you wish to attend the Annual Meeting in person, you must present valid, government-issued picture identification. If your shares are held in the name of a bank, broker or other nominee and you plan to attend the Annual Meeting, in order to be admitted you must present proof of your beneficial ownership of the common stock, such as a bank or brokerage account statement, indicating that you owned shares of our common stock at the close of business on the Record Date. For safety and security reasons, no cameras, recording equipment, cellular telephones, electronic devices, large bags, briefcases or packages will be permitted in the Annual Meeting. No banners, signs, firearms or weapons will be allowed in the meeting room. We reserve the right to inspect all items entering the meeting room. +Proposals +Five proposals are scheduled to be voted upon at the meeting: +1. The election of directors; +3 +2. Advisory approval of the Company’s executive compensation; +3. The approval of amendments to the Company’s 2011 Omnibus Incentive Plan, including an amendment to increase the number of shares of common stock that may be issued under Plan by two million shares to 4.3 million shares; +4. The approval of an amendment to the Company’s Certificate of Incorporation to increase the number of authorized shares of Common Stock from 110 million to 150 million; and +5. The ratification of the appointment of Ernst & Young LLP. +Notice and Access +Rules adopted by the Securities and Exchange Commission (the "SEC") allow companies to send stockholders a notice of internet availability of proxy materials (the “Notice”), rather than mail them full sets of proxy materials, often referred to as “notice and access.” This year the Company has elected to send a separate Notice to most of our stockholders instead of a paper copy of the proxy materials. This approach conserves natural resources and reduces the costs of printing and distributing our proxy materials, while providing stockholders with a convenient way to access our proxy materials. Instructions on how to access the proxy materials over the Internet or to request a paper copy of proxy materials, including a proxy card or voting instruction form, may be found in the Notice. In addition, stockholders may request to receive future proxy materials in printed form by mail or electronically by email by following the instructions in the Notice. A stockholder’s election to receive proxy materials by mail or email will remain in effect until the stockholder terminates it. +The Company’s Board has made these proxy materials available to you on the Internet on or about April 2, 2015 at https://www.iproxydirect.com/CPE , which is the cookies-free website described in the Notice, mailed to stockholders of record and beneficial holders. Accordingly, we are sending the Notice to our stockholders of record and beneficial owners of our stock, and filing the Notice with the SEC, on or about April 2, 2015. Please note that the Notice identifies the items to be voted on at the meeting, but you cannot vote by marking the Notice and returning it. The Notice provides instructions on how to vote via the Internet, by telephone or by requesting and returning a paper proxy card, or by submitting a ballot in person at the meeting. +In addition to the Company’s proxy materials being available for review at https://www.iproxydirect.com/CPE , the site contains instructions on how to access the proxy materials on a website or to request a printed copy, free of charge. Stockholders may request proxy materials in printed form by mail or electronically by e-mail on an ongoing basis by contacting the Company’s Corporate Secretary at our principal executive offices in Natchez, Mississippi. We will also provide stockholders upon request and free of charge with a copy of the Company’s Form 10-K for the year ended December 31, 2014 as filed with the SEC. +Casting your vote +There are three methods for registered stockholders to vote by proxy without attending the Annual Meeting: +● +By Internet. You can vote via the Internet. The website address for Internet voting is provided on your Notice or proxy card. You will need to use the control and request ID appearing on your proxy card to vote via the Internet. You can use the Internet to transmit your voting instructions up until 11:59 p.m. CDT on May 13, 2015. If you vote via the Internet, you do NOT need to vote by telephone or return a proxy card. Internet voting is available 24 hours a day. +● +By Telephone. You can also vote by telephone by calling the toll-free telephone number provided on your proxy card. You will need to use the control and request ID appearing on your proxy card to vote by telephone. You may transmit your voting instructions from any touch-tone telephone up until 11:59 p.m. CDT on May 13, 2015. Voting by telephone is available 24 hours a day. +● +By Mail. If you received a printed copy of the proxy card, you can vote by marking, dating and signing it, and returning it in the reply envelope provided. Please promptly mail your proxy card to ensure that it is received prior to the closing of the polls at the Annual Meeting. +4 +If you get more than one Notice and/or proxy statement then it means that your shares are probably registered in more than one account. Please provide voting instructions for all Notices, proxy and voting instruction cards you receive. If you send us a signed proxy card on which no directions are specified, your shares will be voted as recommended by the Company’s Board on the proposals, and in the discretion of the proxy holders as to any other matters that may properly come before the meeting or any postponement or adjournment of the meeting. The Board is not presently aware of any other proposals or any other business to be considered at the Annual Meeting. +If your shares are registered in the name of a broker, bank or other nominee (typically referred to as being held in “street name”), you will receive instructions from your broker, bank or other nominee that must be followed in order for your broker, bank or other nominee to vote your shares per your instructions. Many brokerage firms and banks have a process for their beneficial holders to provide instructions via the Internet or over the telephone. If Internet or telephone voting is unavailable from your broker, bank or other nominee, please complete and return the enclosed voting instruction card in the addressed, postage paid envelope provided. +In the event you do not provide instructions on how to vote, your broker may have authority to vote your shares. Under the rules that govern brokers who are voting with respect to shares that are held in street name, brokers have the discretion to vote such shares on routine matters, but they are not permitted to vote (a “broker non-vote”) on non-routine or non-discretionary items absent instructions from the beneficial owner. With respect to the Annual Meeting, brokers are prohibited from exercising discretionary authority in the election of directors, the non-binding advisory proposal on executive compensation and the amendments to our 2011 Plan, but such brokers may exercise discretionary authority with respect to the amendment of our certificate of incorporation to increase the number of authorized shares and the ratification of the appointment of the Company’s independent registered public accounting firm. Your vote is especially important . Therefore, please instruct your broker regarding how to vote your shares on these matters promptly . +If you hold shares through a broker, bank or other nominee and wish to be able to vote in person at the meeting, you must obtain a legal proxy from your broker, bank or other nominee and present it to the inspector of election with your ballot at the meeting. If you need assistance in obtaining a legal proxy, please call Morrow & Co., LLC toll-free at (800) 414-4313. Submitting your proxy by mail will not affect your right to vote in person if you decide to attend the Annual Meeting. +Revoking a proxy +You may revoke or change a previously delivered proxy at any time before the meeting by delivering another proxy with a later date, by voting again via the Internet or by telephone, or by delivering written notice of revocation of your proxy to the Company’s Corporate Secretary at our principal executive offices before the beginning of the meeting. You may also revoke your proxy by attending the meeting and voting in person, although attendance at the meeting will not in and of itself revoke a valid proxy that was previously delivered. If you hold shares through a broker, bank or other nominee, you must contact that nominee to revoke any prior voting instructions. You also may revoke any prior voting instructions by voting in person at the meeting if you obtain a legal proxy as described above. +Recommendation of the Board +The Board unanimously recommends you vote “FOR” each of the proposals. A proxy that is properly completed and submitted will be voted at the Annual Meeting in accordance with the instructions on the proxy. If you properly complete and submit a proxy, but do not indicate any contrary voting instructions, your shares will be voted as follows: +● +“ FOR ” each of the nominees named in this Proxy to the Company’s Board of Directors; +● +“ FOR ” the approval, on an advisory basis, of the Company’s executive compensation; +● +“FOR” the approval of the amendments to the Company’s 2011 Omnibus Incentive Plan, including the increase in the number of shares of common stock that may be issued under the Plan by two million shares; +● +“FOR” the approval of an amendment to the Certificate of Incorporation increasing the number of authorized shares of Common Stock from 110 million shares to 150 million shares; and +● +“ FOR ” the ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2015. +5 +Counting the Vote +Issuer Direct will serve as the inspector of election and will tabulate and certify the vote. +Quorum +A quorum is the number of shares that must be present to hold the meeting. The quorum requirement for the meeting is a majority of the outstanding shares as of the Record Date, present in person or represented by proxy. Your shares will be counted for purposes of determining if there is a quorum if you are present and vote in person at the meeting; or have voted on the Internet, by telephone or by properly submitting a proxy card or voting instruction card by mail. Abstentions and broker non-votes also count toward the quorum. +Required Vote +Proposal 1. Election of Directors +The three nominees for election as directors at the Annual Meeting who receive the greatest number of “FOR” votes cast by the stockholders, a plurality, will be elected as the Company’s directors. For this purpose, abstentions and broker non-votes are not counted as a vote for the election of directors . +Proposal 2. Advisory Vote to Approve Named Executive Officer Compensation +Approval of this proposal requires the affirmative vote of a majority of the shares of common stock entitled to vote and present in person or by proxy at the Annual Meeting. Abstentions will have the same effect as a vote against this matter, and broker non-votes will not be counted as shares present and entitled to vote, and, accordingly, will not affect the outcome of the vote on this proposal. While this vote is required by law, it will neither be binding on our company or the Board nor will it create or imply any change in the fiduciary duties of, or impose any additional fiduciary duty on, our company or the Board. However, the views of our stockholders are important to us, and our Compensation Committee will take into account the outcome of the vote when considering future executive compensation decisions. We urge you to read the section entitled “Compensation Discussion and Analysis,” which discusses in detail how our executive compensation program implements our compensation philosophy. +Proposal 3. Approval of the Amendments to the 2011 Omnibus Incentive Plan +Approval of the amendments to the 2011 Plan requires the affirmative vote of the majority of the shares of common stock cast for such proposal. The amendments will therefore be approved if the votes in favor are a majority of the shares that voted for, voted against or abstained with respect to this proposal. An abstention will have the effect of a vote against this proposal. A broker non-vote will not have any effect on the vote of this proposal. +Proposal 4. Approval of the Amendment to the Certificate of Incorporation +Approval of the amendment to the Company’s Certificate of Incorporation requires the affirmative vote of the holders of a majority of the outstanding shares of our common stock. The Company believes that the amendment to our certificate of incorporation to increase the number of authorized shares is a “routine matter” under the rules of the NYSE, so brokers will be permitted to vote shares for which they do not receive instructions from the beneficial owners. An abstention and any broker non-votes will have the effect of a vote against this proposal. +Proposal 5. Ratification of the Appointment of the Independent Registered Public Accounting Firm +Ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for fiscal 2014 requires the affirmative vote of a majority of the shares of common stock entitled to vote and present in person or by proxy at the Annual Meeting. Abstentions and broker non-votes will have the same effect as a vote against this proposal. +Voting Results +The preliminary voting results will be announced at the meeting. The final results will be published in a current report on Form 8-K to be filed with the SEC within four business days of the meeting. +6 +PROPOSAL 1 +ELECTION OF DIRECTORS +The Board currently consists of seven Directors and the Company’s Certificate of Incorporation provides for a classified Board. Effective as of immediately before the Annual Meeting, our Board has increased the number of directors to eight. The current Board is divided into three classes designated as Class I, Class II and Class III, with staggered, three-year terms. The following table provides information with respect to the nominees and all current Directors whose terms will continue after the 2015 Annual Meeting until the election and qualification of their respective successors or until their earlier death, retirement, resignation or removal. +Name +Age +Director +Since +Position (Committee Memberships) +Class I Directors (term expires in 2016) +Larry D. McVay +67 +2007 +Director (1,2,3,4) +John C. Wallace +76 +1994 +Director (1,2,3,4) +Michael L. Finch +59 +— +Director, Nominee +Class II Directors (term expires in 2017) +Anthony J. Nocchiero +63 +2011 +Director (1,2,3,4) +Matthew Regis Bob +57 +2014 +Director (3,4) +James M. Trimble +66 +2014 +Director (2,4) +Class III Directors (term expires in 2015) +Fred L. Callon +65 +1994 +Director, Nominee, Chairman of the Board, President, and Chief Executive Officer (“CEO”) +L. Richard Flury +67 +2004 +Director, Nominee (1,2,3,4) +(1) +Audit Committee +(2) +Compensation Committee +(3) +Nominating and Corporate Governance Committee +(4) +Strategic Planning and Reserves Committee +Based on the recommendations from the Nominating and Corporate Governance Committee, our Board has nominated its current Class III Directors, Fred L. Callon and L. Richard Flury, for election to our Board as Class III directors, with a term of office expiring at our 2018 Annual Meeting, or, in each case, until the election and qualification of their respective successors or until their earlier death, retirement, resignation or removal. In addition, based on the recommendations from the Nominating and Corporate Governance Committee and a settlement agreement with Lone Star Value Management, our Board has nominated Michael L. Finch for election to our Board as a Class I Director, with a term of office expiring at our 2016 Annual Meeting. +Nominees +Fred L. Callon has been Chairman of the Board of the Company since May 2004 and President and Chief Executive Officer of the Company since January 1997. Prior to January 1997, he was President and Chief Operating Officer of the Company, positions he had held with the Company or its predecessors since 1984. He has been employed by the Company or its predecessors since 1976. Mr. Callon graduated from Millsaps College in 1972 and received his M.B.A. degree from the Wharton School of Finance in 1974. Following graduation and until his employment by Callon Petroleum Operating Company, he was employed by Peat, Marwick, Mitchell & Co., certified public accountants. He is son of the late Sim C. Callon, one of the Company’s co-founders, and the nephew of the late John S. Callon, the other co-founder. We believe that Mr. Callon’s strong financial background, combined with his longevity with the Company and many years of operational experience in the oil and natural gas exploration and production (“E&P”) industry throughout changing conditions in the market, provide him with the ability to successfully lead the Company. +7 +L. Richard Flury was appointed to the Board in 2004. Mr. Flury has been retired since 2001. Prior to 2001, he spent over 30 years with Amoco Corporation, and later, BP plc, most recently as Chief Executive, Gas and Power and Renewables. Prior to Amoco's merger with BP in 1998, he served in various executive positions and was Chief Executive for Worldwide Exploration and Production and Executive Vice President of Amoco Corporation at the time of the merger. Currently, Mr. Flury is a member of the Board of QEP Resources, a publicly traded oil and gas company, and is also a director and the non-executive Chairman of Chicago Bridge and Iron Company, N.V., a publicly-traded engineering, procurement and construction company. He is a graduate of the University of Victoria (Canada). Mr. Flury has many years of prior experience with a major oil and gas company, as well as continued involvement in the industry through his other directorship positions. Mr. Flury’s vast experience and extensive knowledge of the oil and natural gas E&P industry, together with his executive-level perspective and strategy-making abilities, strengthen the Board’s collective qualifications, skills and experience, and will continue to prove very beneficial to the Company. +Michael L. Finch served as Chief Financial Officer and a member of the Board of Directors of Stone Energy Corporation from its initial public offering in 1993 until his resignation in 1999. He was affiliated with Stone in a variety of capacities for nineteen years. Prior to his service with Stone, he was employed by Arthur Andersen & Co. in New Orleans, Louisiana from 1976 to 1980. Mr. Finch has been a private investor since 1999. He was licensed as a Certified Public Accountant in 1978 (inactive status at present), and received a Bachelor of Science in Accounting from the University of South Alabama in 1976. Currently, Mr. Finch is an independent director of Petroquest Energy, Inc., a publicly traded oil and gas company. Since his election to Petroquest’s Board in 2003, he has served as chairman of the Audit Committee, as a member of the Compensation Committee, and as a member of the Nominating and Corporate Governance Committee. Mr. Finch has extensive financial and operating experience within our industry, and his background, prior experiences, professional credentials and expertise qualify him as a director and financial expert. +In March 2015, we agreed with Lone Star Value Management LLC and certain of its related entities to appoint Mr. Finch as a Class I director to our board on the day before the 2015 annual meeting, and to appoint him to the Nominating and Corporate Governance Committee. Our by-laws require that a person appointed to the Board serves until the next annual meeting, so Mr. Finch is standing for election at the Annual Meeting. Lone Star Value Management agreed to vote the shares it owns for the election of our director nominees, including Mr. Finch as a Class I director, at the Annual Meeting. +To be elected as a Director, each Director nominee must receive a plurality of the votes cast by the stockholders entitled to vote for the election of Directors. If you hold your shares through a broker and you do not instruct the broker how to vote, your broker will not have the authority to vote your shares. Abstentions and broker non-votes will each be counted as present for purposes of determining the presence of a quorum, but will have no effect upon the outcome of the vote. All shares of common stock represented by the proxies will be voted “FOR” the election of the above Director nominees, except where authority to vote in the election of Directors has been withheld. Should the nominees become unable or unwilling to serve as a Director at the time of the 2015 Annual Meeting, the person or persons exercising the proxies will vote for the election of substitute nominees designated by the Board, or the Board may choose to reduce the number of members of the Board to be elected at the 2015 Annual Meeting in order to eliminate the vacancy. Your proxy cannot be otherwise voted for a person who is not named in this Proxy as a candidate for Director or for a greater number of persons than the number of Director nominees named. The Board has no reason to believe that the nominees will be unable or unwilling to serve if elected. +THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “ FOR ” EACH OF THE DIRECTOR NOMINEES NOMINATED HEREIN. +8 +Directors Continuing in Office +Biographical information for our Directors who are continuing in office is provided below. +Larry D. McVay was appointed to the Board in October 2007. Mr. McVay has been a Managing Director of Edgewater Energy, LLC, a privately held oil and gas investment company since 2007. From 2003 until 2006, he served as Chief Operating Officer of TNK-BP Holding, one of the largest oil producing companies in Russia. From 2000 to 2003, he served as Technology Vice President and Vice President of Health, Safety and Environment for BP. He also led the global E&P Operations Excellence effort for improving the operating efficiency of BP’s upstream operations. Mr. McVay earned a mechanical engineering degree from Texas Tech University, where he was recognized as a Distinguished Engineer in 1995. In January 2008, Mr. McVay became a member of the board of directors of Praxair, Inc., an industrial gases company in North and South America, where he serves on the Audit Committee and is chairman of the Finance & Pension Committee. Mr. McVay is also a member of the board of directors of Chicago Bridge and Iron, N.V., a publicly traded engineering, procurement, and construction company, where he serves on the Audit Committee, the Strategic Initiatives Committee and is the chairman of the Corporate Governance Committee. Mr. McVay has been directly involved in nearly all aspects of the oil and gas industry, including drilling, production, finance, environmental risk, and safety. We believe that this experience and his knowledge of the E & P industry, particularly the Permian Basin, provides invaluable insight in the development of the Company’s long-term strategies. +John C. Wallace has been a member of the Board of the Company since 1994. Mr. Wallace has been retired since 2010. Mr. Wallace is a Chartered Accountant having qualified with PricewaterhouseCoopers in Canada in 1963, after which he joined Baring Brothers & Co., Limited in London, England. Prior to his retirement in December 2010, Mr. Wallace served for over twenty-five years as Chairman of Fred. Olsen Ltd., a London-based corporation that he joined in 1968 and which specializes in the business of shipping, renewable energy and property development. He received his B. Comm degree majoring in Accounting and Economics from McGill University in 1959. In November 2004, he successfully completed the International Uniform Certified Public Accountant Qualification Examination and has received a CPA Certificate from the State of Illinois. Mr. Wallace is also retired from the board of directors of Ganger Rolf ASA and Bonheur ASA, Oslo, both publicly-traded shipping companies with interests in offshore energy services and renewable energy. In May 2012, Mr. Wallace was appointed as a non-executive director to the board of directors of Siem Offshore Inc., a publically traded shipping company in Norway with a fleet of vessels active in the offshore energy sector, and for which he is a member of the Audit Committee. In addition, Mr. Wallace serves as a Director of Secunda Holdings LP, a Canadian company, which is 50% owned by Siem Offshore Inc. As a result of his association with Fred Olsen, Ltd. and various associated or related companies, Mr. Wallace has extensive financial and accounting experience in not only the oil and gas industry, but in a number of other related industries qualifying him as “financial expert.” We believe that this experience and his unique perspective of the risks and rewards in the oil and gas industry will continue to be beneficial to the Company. +Anthony J. Nocchiero , was first elected to the Board in March 2011. Since 2010, Mr. Nocchiero has been retired. From April 2007 until September 2010, Mr. Nocchiero held the position of senior vice president and Chief Financial Officer for CF Industries, Inc. From July 2005 until March 2007, he was the vice president and Chief Financial Officer for Merisant Worldwide, Inc. From January 2002 to July 2005, Mr. Nocchiero was self-employed as an advisor and private consultant. From January 1999 until December 2001, Mr. Nocchiero served as vice president and Chief Financial Officer of BP Chemicals, the global petrochemical business of BP p.l.c. Prior to that, he spent twenty-four years with Amoco Corporation in various financial and management positions, including service as Amoco’s vice president and controller from April 1998 to January 1999. Mr. Nocchiero holds a B.S. degree in chemical engineering from Washington University in St. Louis and an M.B.A. degree from the Kellogg Graduate School of Management at Northwestern University. Mr. Nocchiero has previous experience serving as a member of the board of directors of various public and private companies, including Terra Nitrogen LP, Keytrade AG, Vysis Corporation and the Chicago Chamber of Commerce. He brings to the Company a broad knowledge of the oil and gas industry, as well as extensive experience with finance and M&A related transactions, which we believe benefits the Board. In addition, Mr. Nocchiero has the accounting or financial management expertise to be considered a “financial expert” as defined and required by the NYSE rules and the Exchange Act. +9 +Matthew Regis Bob was elected to the Board at the 2014 Annual Meeting. Mr. Bob has been the founder and Managing Member of MB Exploration and affiliated companies since 1994. MB Exploration is engaged in the oil and gas exploration, development and consulting business. Effective August 1, 2014, Mr. Bob was appointed President of Eagle Oil and Gas. Mr. Bob also served as President of Hall Phoenix Energy LLC, a privately held oil and gas company, from 2009 to 2011. Prior to forming MB Exploration in 1994, Mr. Bob was Chief Geophysicist at Pitts Oil Company. He began his career at Union Oil Company of California where he held various geological positions. He is a member of the American Association of Petroleum Geologists, the Society of Exploration Geophysicists and the Dallas Petroleum Club, and is a registered Geoscientist in the States of Texas, Mississippi and Louisiana. He holds a B.A. in Geology from St. Louis University, an M.S. in Geology from Memphis University, and is a graduate of Harvard University's Executive Management Program. We believe Mr. Bob’s extensive experience in the oil and gas business and his technical expertise are a benefit to the Board of Directors. Mr. Bob was initially appointed to our Board pursuant to a settlement agreement with Lone Star Value Management. +James M. Trimble was elected to the Board at the 2014 Annual Meeting. Mr. Trimble was Chief Executive Officer and President of PDC Energy, Inc. since 2011 until his resignation effective January 1, 2015, and has served on the board of PDC since 2009. Mr. Trimble was an officer of PDC in September 2013 when twelve partnerships for which the Company was the managing general partner each filed for bankruptcy in the federal bankruptcy court, Northern District of Texas, Dallas Division. From 2005 until 2010, Mr. Trimble was Managing Director of Grand Gulf Energy, Limited, a public company traded on the Australian Securities Exchange, and President and Chief Executive Officer of Grand Gulf’s U.S. subsidiary Grand Gulf Energy Company LLC, an exploration and development company focused primarily on drilling in mature basins in Texas, Louisiana and Oklahoma. From 2000 through 2004, Mr. Trimble was Chief Executive Officer of Elysium Energy and then TexCal Energy LLC, both of which were privately held oil and gas companies that he managed through workouts. Prior to this, he was Senior Vice President of Exploration and Production for Cabot Oil and Gas, a publicly traded independent energy company. Mr. Trimble was hired in July 2002 as CEO of TexCal (formerly Tri-Union Development) to manage a distressed oil and gas company through bankruptcy, and that company filed for Chapter 11 reorganization within 45 days after the date that Mr. Trimble accepted such employment. He successfully managed the company through its exit from bankruptcy in 2004. From November 2002 until May 2006 he also served as a director of Blue Dolphin Energy, an independent oil and gas company with operations in the Gulf of Mexico. Mr. Trimble currently serves on the Board of Directors of Seisgen Exploration LLC, a small private exploration and production company operating in southern Texas. Mr. Trimble is a Registered Professional Engineer who brings many years of oil and gas industry executive management experience to the Board, including experience as a chief executive officer, and knowledge of current developments and best practices in the industry. Mr. Trimble was initially appointed to our Board pursuant to a settlement agreement with Lone Star Value Management. +All Directors of the Company are United States citizens, except Mr. Wallace, who is a citizen of Canada, and Mr. Flury, who holds both U.S. and Canadian citizenship. +CORPORATE GOVERNANCE +Board of Director Structure and Responsibilities +General. Our Board is responsible for managing our business affairs. The Board generally fulfills its responsibilities through regular quarterly meetings to review significant developments affecting the Company and to act on matters requiring Board approval. Between regularly scheduled meetings, the Board may also hold special meetings, execute unanimous written consents, and participate in telephone conference calls when an important matter requires Board action. During 2014, the Board of the Company met formally six times and executed four unanimous written consents. All of the Company’s Directors attended each of the Board meetings either in person or by telephone. In addition, to promote open discussion, the non-employee Directors meet in executive session without management following each quarterly board meeting. The chairperson of such executive sessions is the chairperson of the Nominating and Corporate Governance Committee unless, at the first executive session held in each fiscal year, the independent Directors select a different independent Director to serve as the chairperson for all executive sessions held during that fiscal year. L. Richard Flury, Chairman of the Compensation Committee, presided over all executive sessions during 2014. It is the policy of the Board that, to the extent possible, all Directors attend the annual meeting. All then current Directors attended the 2014 annual meeting. +Director Independence. It is the policy of the Board that a majority of the non-employee members of the Board be independent. The Board reviewed the independence of our Directors and considered whether any Director has a material relationship with us that could compromise his or her ability to exercise independent judgment in carrying out his or her responsibilities. In making its determination, the Board applied the listing requirements of the NYSE and the rules and regulations promulgated by the SEC, as well as the Company’s Corporate Governance Principles. After this review, the Board affirmatively determined that each of the Company’s Directors and nominees (other than Mr. Callon) is independent. The criteria applied by the Company’s Board in determining independence are available on the Company’s website at www.callon.com . The Board will evaluate the independence of each non-employee Director on an ongoing basis. +10 +Board Leadership Structure. Our Board understands that there is no single, generally accepted approach to providing board leadership and that given the dynamic and competitive environment in which we operate, the right board leadership structure may vary as circumstances warrant. To this end, our Board has no policy mandating the combination or separation of the roles of Chairman and Chief Executive Officer and believes the matter should be discussed and considered from time to time as circumstances change. Mr. Fred L. Callon serves as the Chairman, President and Chief Executive Officer of the Company. The Board currently believes that it is in the Company’s best interest and is the most effective Board leadership structure for the CEO to also serve as Chairman of the Board, a leadership structure that has served the Company well since inception, and is efficient and cost effective for the size of our company and the independent oil and gas E & P industry. Since the Company’s performance is an integral part of Board deliberations, the Board believes that this arrangement permits a clear, unified strategic vision that ensures alignment between the Board and management, provides clear leadership, and helps ensure accountability for performance. The CEO has the most insight into the Company’s performance, opportunities and challenges and is most capable of effectively identifying and executing the business strategy adopted by our Board. The Board believes that combining the Chairman and CEO roles fosters accountability, effective decision-making and alignment on the execution of the long-term corporate strategy. +Independent directors and management generally have different perspectives and roles in strategy development. Our independent Directors bring experience, oversight and expertise from outside Callon and the oil and gas industry, while the CEO brings a Callon-specific historical perspective, experience and expertise. As the Director having primary responsibility for managing the Company’s day-to-day operations, and most capable of effectively identifying strategic priorities, the CEO is best positioned to lead the Board through reviews of key business and strategy decisions. This effectively promotes the opportunity for a successful blend of the Company’s independent Directors’ perspectives and oversight responsibilities and facilitates information flow and communication between senior management and the Board, which are both essential to effective governance. Further, the Company has four standing committees, each of which is comprised entirely of independent Directors, including the Compensation Committee, which both objectively and subjectively evaluates Mr. Callon’s performance and determines his compensation. The Board believes that each of these measures counterbalances any risk that may exist in having Mr. Callon serve as the Chairman, President and CEO. The Board does not have an independent lead director. +The role of our Chairman is to oversee and ensure Board effectiveness, and in his capacity as Chairman, Mr. Callon has the following responsibilities: +● +schedules all meetings of the Board; +● +establishes Board meeting agendas; +● +chairs meetings of the Board and the Annual Meeting of Stockholders; +● +ensures that the flow of information provided to the Board is timely, complete, and accurate; +● +communicates with all Directors on key issues and concerns outside of Board meetings; +● +represents the Company to and interacts with external stockholders; and +● +assists the Board and executive officers in assuring compliance with and implementation of the Company’s governance principles. +Standing Committees of the Board of Directors +In order to facilitate the various functions of the Board, the Board currently has four standing committees: Audit Committee, Compensation Committee, Nominating and Corporate Governance Committee, and Strategic Planning and Reserves Committee, each of which are each comprised solely of independent Directors. Each committee has a written charter that has been approved by the Board, which sets forth guidance on the role of the chairman of such committee and the roles and responsibilities of the committee as a whole. These committees are more fully described below: +11 +Audit Committee Functions and Responsibilities +The principal function of the Audit Committee is to assist the Board in overseeing the areas of financial reporting and accounting integrity. The Board has determined that all members meet the independence requirements of the SEC and NYSE rules and the financial literacy requirements of the NYSE. Members of the Audit Committee may not simultaneously serve on the audit committee of more than three other public companies. The Audit Committee is currently comprised of Messrs. Wallace (Chairman), Flury, McVay and Nocchiero, and the committee met four times during 2014. All members of the Audit Committee attended each meeting. The Board has determined that Mr. Wallace and Mr. Nocchiero have the accounting or financial management expertise to be considered a “financial expert,” as defined and required by the NYSE rules and the Exchange Act. Pursuant to its charter, our Audit Committee functions in an oversight role and has the following purposes: +● +overseeing the quality, integrity and reliability of the financial statements and other financial information we provide to any governmental body or the public; +● +overseeing our compliance with legal and regulatory requirements; +● +overseeing the qualifications, independence and performance of the independent auditor; +● +overseeing the effectiveness and performance of our internal audit function; +● +overseeing our systems of internal controls regarding finance, accounting, legal compliance and ethics; +● +establishing and overseeing procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls or audit matters, including the confidential, anonymous submission of concerns regarding such matters; +● +producing the Audit Committee Report for inclusion in our annual proxy statement; and +● +performing such other functions our Board may assign to the Audit Committee from time to time. +The Audit Committee oversees the accounting and auditing procedures and financial reporting practices of the Company, and is responsible for the engagement of and oversight of all audit work conducted by the Company’s independent registered public accounting firm. The Audit Committee meets periodically, generally quarterly, with the Company’s management, internal auditor and its independent registered public accounting firm to review the Company’s financial information and systems of internal controls. The independent registered public accounting firm reports directly to the Audit Committee and, if requested, meets with the Audit Committee in executive session without management representatives present. The Audit Committee has the authority to investigate any matters brought to its attention and to retain outside legal, accounting or other consultants if deemed necessary. +The Audit Committee is required to pre-approve all audit, audit-related and non-audit services provided by the independent registered public accounting firm. These services may include audit services, audit-related services, tax services and other services. The Audit Committee approved all of the fees described in Proposal 5. +Relationship with Independent Registered Public Accounting Firm. Management is responsible for establishing and maintaining internal controls over financial reporting and for assessing the effectiveness of those controls. The independent registered public accounting firm is responsible for performing independent audits of the Company’s consolidated financial statements and internal controls over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (“PCAOB”) (United States) and issuing reports thereon. The Audit Committee’s responsibility is to monitor and oversee these processes. Ernst & Young LLP, an independent registered public accounting firm, served as the Company’s independent registered public accounting firm during 2012, 2013 and 2014 and was appointed by the Audit Committee to serve in that capacity for 2015. +12 +Compensation Committee Functions and Responsibilities +The purpose of the Compensation Committee is to establish the Company’s compensation policies and oversee the administration of our compensation program. The Compensation Committee is currently comprised of Messrs. Flury (Chairman), McVay, Wallace, Nocchiero and Trimble, and the Committee met five times during 2014. All members of the Compensation Committee attended each meeting. Consistent with the listing requirements of the NYSE, the Compensation Committee is composed entirely of independent members of the Company’s Board - each member meets the independence requirements set by the NYSE and applicable federal securities laws. Pursuant to its charter, our Compensation Committee’s duties include the responsibility to: +● +evaluate the performance of and establish the compensation of the CEO; +● +review with the CEO the compensation for the Company’s other executive officers; +● +review incentive compensation arrangements to confirm that executive compensation does not encourage unnecessary risk taking; +● +review matters relating to management succession; +● +administer our long-term incentive plans; +● +review and discuss with the Company’s management, the Compensation Discussion and Analysis (“CD&A”); +● +produce an annual report of the Compensation Committee; +● +review and recommend to the Board compensation for non-employee Directors; +● +retain and oversee compensation consultants, including the independence of the consultants; +● +review and approve performance criteria and results for bonus and performance-based equity awards for senior executive officers and approves awards to those officers; and +● +perform such other functions as our Board may assign to the Compensation Committee from time to time. +The Committee retained the services of Meridian Compensation Partners LLC, an independent compensation consulting firm, to assist in the annual review of market and industry data to assess the Company’s competitive position with respect to each element of total compensation and to ensure the attraction, retention and appropriate reward to the Company’s CEO and other executive officers. +Compensation Committee Interlocks and Insider Participation. No member of the Compensation Committee has ever been employed by us, as an officer or otherwise, and none of the Company’s executive officers served as a member of the Board or Compensation Committee (or other Board committee performing similar functions or, in the absence of any such committee, the entire Board) of any other entity that has one or more of its executive officers serving on the Company’s Compensation Committee. +13 +Nominating and Corporate Governance Committee Functions and Responsibilities +The Nominating and Corporate Governance Committee is currently comprised of Messrs. Nocchiero (Chairman), Flury, McVay, Wallace and Bob, and the committee met five times during 2014. All members of the Committee attended each meeting. Each member of the Committee meets the independence requirements of the NYSE and applicable federal securities laws. Pursuant to its charter, the Nominating and Corporate Governance Committee’s duties include the responsibility to assist the Board in: +● +identifying individuals qualified to become Board members, recommending nominees for election at the next annual meeting of stockholders, review the suitability for continued service as a director of each Board member, or otherwise filling any vacancies; +● +recommending to the Board the members and chairperson for each Board committee; +● +advising the Board and making recommendations regarding appropriate corporate governance practices and assist the Board in implementing those practices, including periodically reviewing and assessing the Company’s Corporate Governance Principles, the Company’s Code of Business Conduct and Ethics, and the various Board committee charters, and making recommendations for changes thereto to the Board; +● +overseeing the annual self-evaluation of the performance of the Board and its committees; +● +overseeing and approving plans for management continuity and succession; +● +recommending to the Board a successor to the CEO when a vacancy occurs; and +● +performing other such functions as the Board may assign to the Nominating and Corporate Governance Committee from time to time. +Director Identification and Selection. The Nominating and Corporate Governance Committee has established criteria it considers as guidelines in considering nominations to the Company’s Board and evaluates potential nominees based on the contribution such nominee’s background and skills could have upon the overall functioning and chemistry of the Board. The key criteria include: +● +level and diversity of experience and knowledge (specifically within the industry and relevant industries in which the Company operates, as well as his or her overall experience and knowledge), and an understanding and general acceptance of our current corporate strategy; +● +personal characteristics, including such matters as integrity, education, absence of potential conflicts of interest with the Company or its operations, and the availability and willingness to devote sufficient time to the duties of a Director of the Company; +● +experience in corporate management, such as serving as an officer or former officer of a publicly held company, particularly within the industry and relevant industries in which the Company operates; +● +experience as a board member of another publicly held company, particularly within the industry and relevant industries in which the Company operates; +● +a candidate’s ability to work with our other directors and executives in accomplishing our objectives and representing stockholders, and the contribution such nominee’s competence, background and skills could have upon the overall functioning, collaborative spirit and chemistry of the current Board.; and +● +practical and mature business judgment. +The criteria are not exhaustive and the Nominating and Corporate Governance Committee and the Board may consider other qualifications and attributes that they believe are appropriate in evaluating the ability of an individual to serve as a member of the Board. The Nominating and Corporate Governance Committee’s goal is to assemble a Board that brings to the Company a variety of perspectives and skills derived from high quality business and professional experience, while also having the requisite business and oil and gas industry experience to perform its oversight role satisfactorily for our stockholders. In making its determinations, the Committee evaluates each individual in the context of the Board as whole, with the objective of assembling a group that can best represent stockholder interests through the active, objective and constructive participation in meetings and the strategic decision-making processes. Although the Nominating and Corporate Governance Committee does not have a formal diversity policy, the Director nomination process specifically includes disclosure of the diversity provided by each candidate, and diversity is considered as part of the overall assessment of the Board’s functioning and needs. In addition to qualities of intellect, integrity and judgment, it takes into consideration diversity of personal and professional background, executive management experience, breadth of experience in the oil and natural gas E&P industry, finance, accounting, technology or law. The Nominating and Corporate Governance Committee makes its determination in the context of an assessment of the perceived needs of the Board at that point in time. +14 +In accordance with the Company’s Certificate of Incorporation, any stockholder may nominate a person for election to the Board upon delivery of written notice to the Company of such nomination. Such notice must be sent as provided in our Certificate on or before the deadline set forth in our Certificate, and must otherwise comply with the procedures set forth in our Certificate of Incorporation. For nominations at the 2016 Annual Meeting, the Board will consider individuals identified by stockholders on the same basis as nominees identified from other sources. A submission recommending a nominee should include: +● +sufficient biographical information to allow the Nominating and Corporate Governance Committee to evaluate the potential nominee in light of the Director nomination procedures and criteria; +● +an indication as to whether the proposed nominee will meet the requirements for independence under NYSE and SEC guidelines; +● +information concerning any relationships between the potential nominee and the stockholder recommending the potential nominee; and +● +an indication of the willingness of the proposed nominee to serve if nominated and elected. +In making its nominations, the Nominating and Corporate Governance Committee identifies nominees by first evaluating the current members of the Board willing to continue their service. Current members with proven service and a record of quality contribution to the Board and the qualifications and skills that are consistent with the Committee’s criteria for Board service are re-nominated. As to vacancies, the Committee will generally poll the Board members and members of management for recommendations. The Committee may also review the composition and qualification of the boards of directors of the Company’s competitors, and may seek input from industry experts or analysts. The Committee may in the future choose to engage third-party search firms in situations where particular qualifications are required or where existing contacts are not sufficient to identify an appropriate candidate for membership in the Board. +Strategic Planning and Reserves Committee Functions and Responsibilities +The Strategic Planning and Reserves Committee is currently comprised of Messrs. McVay (Chairman), Flury, Wallace, Nocchiero, Bob and Trimble, and the committee met four times during 2014. All members of the Committee attended each meeting during 2014. This Committee meets periodically during the year, generally prior to the scheduled quarterly Board meetings, to review the progress of the Company’s capital expenditure budget and to evaluate recent trends in the independent oil and gas industry that may have an impact on the Company’s current business strategy for the remainder of the year. The Committee shall consist of no fewer than three members of the Board. The Strategic Planning and Reserves Committee was created to oversee the responsibilities of the Board relating to strategic planning, including: +● +organizing and overseeing the Board’s participation in the development of a strategic plan, including the risk assessment and management process; +● +monitoring the implementation progress of the strategic plan, and advising the Board if additional Board action appears to be needed to assure successful implementation of the plan or if a need exists to revise the plan in the face of changing conditions or other factors; +● +assuring that management is addressing the personnel requirements for the successful implementation of the strategic plan; +● +assisting management and the Board with its oversight of the integrity of the determination of the Company’s oil, natural gas and natural gas liquids reserve estimates and the selection and performance of the Company’s independent petroleum reservoir engineering firm; and +● +performing other such functions as the Board may assign to the Strategic Planning and Reserves Committee from time to time. +15 +Corporate Governance Matters +Corporate Governance Principles . The Board believes that sound corporate governance practices and policies provide an important framework to assist it in fulfilling its duty to stockholders. The Board has adopted several governance documents to guide the operation and direction of the Board and its committees, which include: Corporate Governance Guidelines, a Code of Business Conduct and Ethics, and charters for the Audit, Compensation, Nominating and Corporate Governance, and Strategic Planning and Reserves Committees. During 2014, the Company updated the Corporate Governance Guidelines and Code of Business Conduct and Ethics. Each of these documents is available on our website www.callon.com, under the “About Callon – Governance” caption, and stockholders may obtain a printed copy, free of charge, by sending a written request the Company’s Corporate Secretary. We will also promptly post on our website any amendments to these documents and any waivers from the Code of Business Conduct and Ethics for our directors and principal executive, financial and accounting officers. +Ethics. The Company’s Code of Business Conduct and Ethics sets forth the policies and expectations applicable to every Director, officer and employee. The Code addresses a number of topics, including conflicts of interest, relationships with others, corporate payments, disclosure policy, compliance with laws, corporate opportunities and the protection and proper use of the Company’s assets. The Code meets the NYSE’s requirements for a code of business conduct and ethics, as well as the SEC’s definition of a code of ethics applicable to the Company’s senior officers. Neither the Board nor any Board committee has ever granted a waiver of the Code. +Board Risk Oversight. As an independent E&P company, we face a number of risks. Assessing and managing risk is the responsibility of the management of the Company, while our Board, as a whole and through its committees, oversees the long-term strategic direction of the Company. Our executive officers regularly attend the Board meetings and are available to address any questions or concerns raised by the Board on risk management-related and any other matters. Other members of our management team periodically attend the Board meetings or are otherwise available to confer with the Board to the extent their expertise is required to address risk management matters. The Board realizes, however, that it is not possible or desirable to eliminate all risk and that appropriate risk-taking is essential in order to achieve the Company’s objectives. +While it is ultimately responsible for risk oversight at the Company, the Board’s four committees assist in fulfilling its oversight responsibilities in certain areas of risk. The Company’s Audit Committee, among other duties, is charged with overseeing material financial risk exposures in the areas of financial reporting, internal controls and compliance with legal and regulatory requirements. The Audit Committee also oversees responses to any alleged violations of the Company’s policies made by whistleblowers. The Compensation Committee reviews and attempts to mitigate risks that may result from the Company’s compensation policies in order that they do not encourage unnecessary and excessive risk taking by management. The Company’s Nominating and Corporate Governance Committee focuses on issues relating to Board and Board committee composition and assists the board in fulfilling its oversight responsibilities with respect to the management of risks associated with board organization, membership and structure, succession planning for our Directors and executive officers, and our corporate governance principals. The Strategic Planning and Reserves Committee organizes and oversees the Board’s participation in the risk assessment and management process as it relates to the development and implementation of the Company’s strategic plan and the integrity of the oil and natural gas reserve estimation reporting process and related disclosures. +The Board also believes that its risk management oversight role is facilitated by the Company’s leadership structure. By combining the positions of Chairman of the Board and CEO, the Board gains a valuable perspective that combines the operational expertise of a member of management, with the oversight focus of a member of the Board. +Communication with Directors. Stockholders may communicate with the full Board, independent Directors as a group, or individual Directors, by sending a letter in care of the Corporate Secretary at Callon Petroleum Company, P. O. Box 1287, Natchez, MS 39121. The Company’s Corporate Secretary has the authority to discard any solicitations, advertisements, or other inappropriate communications, but will forward any other mail to the named Director or group of Directors. Any mail that is directed to the full Board will be directed to Mr. Callon as Chairman of the Board and, if appropriate, forwarded to the full Board. +16 +Executive Officers +The following table sets forth the names, ages and positions of our current executive officers: +Name +Age +Positions Held +Fred L. Callon +65 +Director, Chairman of the Board, President and Chief Executive Officer +Gary A. Newberry +60 +Senior Vice President, Operations +Joseph C. Gatto, Jr. +44 +Senior Vice President, Chief Financial Officer and Treasurer +Jerry A. Weant +56 +Vice President, Land +Mitzi P. Conn +45 +Corporate Controller and Principal Accounting Officer +The following is a brief description of the background and principal occupation of each executive officer: +Fred L. Callon , Chairman of the Board of Directors, President and Chief Executive Officer. Please see above for the biography of Mr. Callon. +Gary A. Newberry joined the Company in April 2010 as Vice President – Production and Development. In September 2010, Mr. Newberry was promoted to Senior Vice President – Operations. After graduation he joined Marathon Oil Company as a Production and Drilling Engineer working in Alaska, the Gulf of Mexico, and the Rockies. He held various supervisory and management roles of increasing responsibility over production and drilling operations in the Mid-Continent, Alaska and the Permian Basin. As a Business Unit Leader, Mr. Newberry was responsible for all upstream business activity in Oklahoma, Alaska, and the Rockies and served as Marathon’s Worldwide Operations Manager. Mr. Newberry retired from Marathon Oil Company after 33 years of service. Mr. Newberry graduated from Marietta College in 1977 with a B.S. degree in Petroleum Engineering. +Joseph C. Gatto, Jr. joined the Company in April 2012 as Senior Vice President, Corporate Finance, with responsibility for our capital markets and strategic planning functions, in addition to investor relations activities. Effective March 31, 2014, Mr. Gatto was appointed Chief Financial Officer and Treasurer of the Company. Prior to joining Callon, Mr. Gatto was a Managing Director in the energy investment banking groups of Merrill Lynch & Co. and Barclays Capital from July 1997 until February 2009, with involvement in all phases of M&A and capital raising transactions for his clients. In February 2009, he founded MarchWire Capital, LLC, a financial advisory and strategic consulting firm, and subsequently served as Head of Structuring and Execution with Merrill Lynch Commodities, Inc. from January 2010 until November 2011. Mr. Gatto graduated from Cornell University with a BS degree in 1992 and The Wharton School of the University of Pennsylvania with an MBA in 1997. +Jerry Weant joined the Company in September, 2013, as Vice President, Land. Mr. Weant joined Callon from Pioneer Natural Resources, an independent oil and gas company, where he was focused on Midland Basin operations, acting as a liaison with Permian Basin asset teams and coordinating internal efforts for the assessment of horizontal drilling programs. Mr. Weant spent the first 27 years of his career working as a landman in Midland, Texas, including working for Texaco, Inc. Pogo Producing, Inc., as well as other independents. He holds a Bachelor of Business Administration/Petroleum Land Management from the University of Texas and is a Certified Professional Landman and a member of the American Association of Professional Landmen and the Permian Basin Landmen's Association. +Mitzi P. Conn joined the Company in June 1993 and has been our Corporate Controller since May 2007, and effective March 31, 2014, Mrs. Conn was also appointed Principal Accounting Officer of the Company. Prior to May 2007, she served as Assistant Controller since May 2004 and has held various other positions in finance and accounting within the Company. Prior thereto, she was a general accountant for Graham Resources, Inc. She received her B.S. degree in accounting from Southeastern Louisiana University in 1990 and is a member of the American Institute of Certified Public Accountants and the Mississippi Society of Certified Public Accountants. +17 +PROPOSAL 2 +APPROVE, ON AN ADVISORY BASIS, THE COMPENSATION +OF THE COMPANY’S NAMED OFFICERS +The Company seeks a non-binding advisory vote from its stockholders to approve the compensation of its Named Officers, as described in this proxy statement. The Board recognizes that executive compensation is an important matter for our stockholders. As described in detail in the “Executive Compensation” section and elsewhere in this proxy statement, the Compensation Committee is tasked with the implementation of our executive compensation philosophy. The core of that philosophy has been, and continues to be, to pay our executive officers based on our performance and tying a significant portion of executive pay to the achievement of long-term value for stockholders. +As described in the CD&A, we believe our compensation program is effective, appropriate and strongly aligned with the long-term interests of our stockholders and that the total compensation package provided to the Named Officers is reasonable and not excessive. As you consider this Proposal 2, we urge you to read the CD&A section of this proxy statement for additional details on executive compensation. Further, in determining whether to approve this proposal, we believe that stockholders should also consider the following: +● +Independent Compensation Committee. Executive compensation is reviewed and established by a Compensation Committee of the Board consisting solely of independent Directors. The Compensation Committee meets in executive session, without executive officers present, in determining annual compensation. The Compensation Committee receives data, analysis and input from a compensation consultant that is independent of management and free of conflicts of interest with the Company. +● +Performance-Based Incentive Compensation. The Company’s executive compensation program is designed to attract, motivate and retain individuals with the skills required to formulate and drive the Company’s strategic direction and achieve the annual and long-term performance necessary to create stockholder value. The program also seeks to align executive compensation with stockholder value on an annual and long-term basis through a combination of base pay, annual incentives and long-term incentives. The Company’s practice of targeting the median in compensation and placing a significant portion of each Named Officer’s compensation at risk demonstrates its pay-for-performance philosophy. +● +Elimination of Tax Gross-ups. Started in 2011, executive officers are not eligible for a tax related gross-up on any element of current and future compensation. +● +“Double Trigger” Severance Agreements with Fixed Term . Callon’s change in control severance agreements with executive officers require an actual or constructive termination of employment before benefits are paid following any change in control. +● +Long-Term Incentive Plans. Our long-term incentive plans generally include three-year minimum vesting periods for time-based awards, and prohibit repricing or exchange of outstanding option awards. +● +Stock Ownership Guidelines. Each of the Named Officers has been granted significant equity to provide him a stake in the Company’s long-term success. The Company also has significant stock ownership guidelines applicable to its senior executives. The Company believes that this “tone at the top” guides the Company’s other officers and management personnel to obtain and maintain meaningful ownership stakes in the Company. +In light of the above, the Company believes that the compensation of its Named Officers for 2014 was appropriate and reasonable, and that its compensation programs and practices are sound and in the best interests of the Company and its stockholders. Stockholders are being asked to vote on the following resolution: +18 +“RESOLVED, that the compensation paid to Callon’s Named Officers, as disclosed in Callon’s 2015 proxy statement (including the Compensation Discussion and Analysis, the compensation tables and related footnotes and narrative disclosures), is hereby approved.” +The vote on this resolution is not intended to address any specific element of compensation; rather the vote relates to the compensation of the Named Officers, as described in this proxy statement in accordance with the compensation disclosure rules of the SEC. Although this vote is advisory and is not binding on the Board, the Compensation Committee of the Board values the input and views of the Company’s stockholders and will take into account the outcome of the vote in connection with their evaluation of future executive compensation policies and decisions. For a review of the results of the previous years’ vote, which reflects overwhelming validation from our stockholders of our pay philosophy and approach, please see the Role of Stockholder Say-on-Pay Advisory Vote summary in the CD&A section. +The affirmative vote of the holders of a majority of the shares present in person or by proxy and entitled to vote at the Annual Meeting is required to approve this resolution on a non-binding basis. If you hold your shares through a broker and you do not instruct the broker how to vote, your broker will not have the authority to vote your shares. Abstentions will have the effect as a vote cast against the proposal. Broker non-votes will not be counted as shares present and entitled to vote, and so will have no effect upon the outcome of the vote. Lone Star Value Management has agreed to vote its shares as recommended by Institutional Shareholder Services with respect to the forgoing “say-on-pay” resolution. +THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “ FOR ” APPROVAL OF THIS RESOLUTION. +19 +PROPOSAL 3 +APPROVAL OF THE FIRST AMENDMENT TO THE 2011 OMNIBUS INCENTIVE PLAN TO INCREASE THE NUMBER OF AUTHORIZED SHARES +At the 2011 Annual Meeting, stockholders voted and approved adoption and ratification of the Callon Petroleum Company 2011 Omnibus Incentive Plan, which authorized the Board to award grants at any time following the effective date of that 2011 Plan. The 2011 Plan provided for a total of 2,300,000 shares, plus all shares that are available for awards under the Company’s prior stock incentive plans that were not reserved for outstanding awards that were granted under the prior plans, which at the time represented 789,095 remaining shares. +Conditioned on and subject to obtaining stockholder approval, the Compensation Committee of the Board approved the First Amendment of the 2011 Plan (as set forth in Annex A to this proxy statement) to: (i) increase the number of authorized shares that can be awarded to the officers and employees and consultants of the Company or any of its subsidiaries and any nonemployee director of the Company under the plan by an additional 2,000,000 shares (from 2,300,000 shares to 4,300,000 shares); (ii) adopt a “double trigger,” meaning that, in the event of a Company change in control, early vesting or payment occurs only if a change in control occurs and the executive’s employment is terminated or constructively terminated; and (iii) eliminate the adding back of terminated options and stock appreciation rights (“SAR”) shares for future grants. +Current Request to Increase the Share Reserve +Awards under the 2011 Plan are a major component of our long-term incentive program for our employees and members of our Board. As noted in the “Compensation Discussion and Analysis,” we recognize that having an ownership interest in the Company is critical to aligning the financial interests of our employees and stockholders. In order to ensure that shares of our common stock continue to be available for future awards, in March 2015, the Compensation Committee of the Board approved an amendment to the 2011 Plan, subject to obtaining stockholder approval. +The Compensation Committee believes it is important to authorize an additional 2,000,000 shares for grant under the 2011 Plan. In this proxy statement, we refer to any grant under the 2011 Plan as an “award.” As of December 31, 2015, approximately 3,078,446 shares had been issued under the 2011 Plan, 1,440,400 shares were subject to awards outstanding under the 2011 Plan, and 1,286,200 shares were available for future awards. We do not believe that this amount is sufficient to meet the Company’s anticipated grants of awards through the date of our 2016 Annual Meeting of Stockholders. +If stockholders do not approve the amendment to the 2011 Plan, the 2011 Plan will remain in effect; however, we anticipate the shares available for equity-based compensation will be quickly depleted, and we will lose our ability to use equity as a compensation tool. Based on the Compensation Committee's historical practice, the Compensation Committee anticipates that the additional shares requested will enable the Company to maintain its current equity compensation program for at least three years, accommodating anticipated grants related to the hiring, retention and promotion of employees. In 2012, 2013 and 2014, the number of shares of common stock underlying equity awards granted (including stock options, shares of restricted stock and restricted stock units) was approximately 1,007,109, 944,409 and 333,468, respectively. The Compensation Committee expects to continue to grant awards under the 2011 Plan consistent with the Company’s historical share utilization rates. In its determination to approve the amendment of the 2011 Plan, the Compensation Committee reviewed the burn rate, dilution and overhang metrics disclosed below, peer group market practices and trends, and the costs associated with the addition of authorized shares to the 2011 Plan, including the estimated stockholder value transfer cost. +Term and Amendment +The 2011 Plan will terminate on May 12, 2021, unless sooner terminated by the Board, except with respect to awards then outstanding. We do not have an evergreen provision, which allows for automatic replenishment of available shares to the 2011 Plan, without stockholder approval. The Board may amend the 2011 Plan at any time, except that: (1) the Board must obtain stockholder approval to make any amendment that would increase the total number of shares reserved for issuance (except for adjustments necessary to reflect changes in capitalization), materially modify eligibility requirements, materially increase the benefits accruing to participants resulting in the repricing of awards already issued, materially extend the term of the plan, or increase the maximum number of shares covered by awards to Named Officers, and (2) certain amendments are altogether prohibited (e.g., any amendment that would impair a participant’s vested rights). +20 +Additional Plan Amendments +In addition to the increase in the number of authorized shares, we are also seeking approval to make minor amendments to the 2011 Plan. Currently, the 2011 Plan provides that upon a change in control and termination of a participant’s employment, that unless provided otherwise in the applicable award agreement, all outstanding awards will become 100% vested, free of all restrictions, immediately and fully exercisable, and deemed earned in full and payable as of the day immediately preceding the change in control. The amendment proposes that, similar to provisions in the Severance Compensation Agreements between the Company and the Named Officers, a “double trigger” be adopted, meaning that, in the event of a Company change in control, early vesting or payment occurs only if a change in control occurs and the executive’s employment is involuntarily terminated without cause. +Currently, the 2011 Plan provides that any shares: (1) withheld, surrendered or tendered in payment of the exercise price of an option, (2) tendered or withheld in order to satisfy tax withholding obligations associated with the exercise to an option or settlement of an award, or (3) that were not issued upon the exercise of a share-settled SAR, shall become available for future grants of awards under the Plan. In addition to the foregoing, we are seeking shareholder approval to amend the 2011 Plan to prohibit shares from becoming available for future grants under the Plan under the following circumstances: +● +Shares withheld by the Company or tendered by the Participant in payment of an option’s or SAR’s exercise price; +● +Shares withheld by the Company or tendered by the Participant to satisfy tax withholding obligations related to an outstanding option or SAR; +● +Shares of common stock subject to a SAR that are not actually issued in connection with its common stock settlement on exercise thereof; and +● +Shares that are repurchased by the Company with stock option proceeds. +The 2011 Plan would still provide that any shares tendered or withheld in order to satisfy tax withholding obligations associated with the settlement of an award (other than an option or SAR award), shall again become available for grants under the Plan. We believe that these are positive revisions, which are beneficial to stockholders. +Other than the proposed increase in authorized shares, these are the only material amendments to the 2011 Plan, as all other terms will remain unchanged. +The Importance of Equity Compensation +The Compensation Committee strongly believes that granting equity awards motivates employees to think and act like owners, rewarding them when value is created for our stockholders and that the approval of the amendment of the 2011 Plan is important to our continued success. Our employees and non-employee directors are some of our most valuable assets. Awards such as those provided under the 2011 Plan are vital to our ability to attract and retain outstanding and highly skilled employees in the competitive labor markets in which we must compete. The 2011 Plan is designed to offer equity-based incentive awards and cash incentives to our employees, thereby providing a proprietary interest in pursuing the long-term growth, profitability and financial success of the Company. The Compensation Committee believes that amendment of the 2011 Plan will provide it flexibility to continue to issue equity compensation in the future to: +● +Attract and retain the services of key employees, nonemployee directors and consultants who can contribute to our success; +● +Align the interests of our key employees and nonemployee directors with the interests of our stockholders through certain incentives whose value is based upon the performance of our common stock; +● +Motivate key employees to achieve our strategic business objectives; and +● +Provide a long-term equity incentive program that is competitive with our peer companies. +21 +The 2011 Plan is broad-based and designed, as a general matter, to grant equity awards on an annual basis to a majority of the Company’s employees, although future grant awards and grant recipients have not been determined. Therefore, the number, amount and type of awards to be received by or allocated to eligible persons in the future under the 2011 Plan cannot be determined at this time. Our Named Officers who are current employees of the Company and our nonemployee directors will be eligible to receive awards under the amendment of the 2011 Plan and therefore have an interest in this proposal. In the event that the amendment of the 2011 Plan is not approved by our stockholders, the 2011 Plan, which has been previously approved by our stockholders, will continue to be in full force in accordance with its terms. +Key Historical Equity Metrics +Approval of the amendment of the 2011 Plan will enable us to compete effectively in the competitive market for employee talent over the coming years, while maintaining reasonable burn rates and overhang. +● +Our three-year average burn rate is 1.88%. +● +The following table shows how the key equity metrics have changed over the past three fiscal years under the 2011 Plan: +Key Equity Metrics +2014 +2013 +2012 +3-Year Average +Shares subject to awards granted (1) +333,470 +944,400 +1,007,000 +761,623 +Gross burn rate (2) +0.74% +2.35% +2.55% +1.88% +Net burn rate (3) +0.60% +1.76% +2.10% +1.49% +Dilution (4) +5.49% +8.69% +10.13% +8.10% +Overhang (5) +3.44% +5.74% +5.93% +5.04% +(1) Reflects total number of shares subject to equity awards granted during the fiscal year and excludes any cancelled or forfeited equity awards. Performance-based RSUs are excluded from this calculation in the year they are granted and included in the year that they vest. +(2) Gross burn rate is calculated by dividing the total number of shares subject to equity awards granted during the fiscal year by the total weighted-average number of shares outstanding during the period, and excludes any cancelled or forfeited equity awards. +(3) Net burn rate is calculated by dividing the total number of shares subject to equity awards granted during the fiscal year by the total weighted-average number of shares outstanding during the period, and takes into account any cancelled or forfeited equity awards. +(4) Dilution is calculated by dividing the sum of (x) the number of shares subject to equity awards outstanding at the end of the fiscal year and (y) the number of shares available for future grants, by the number of shares outstanding at the end of the fiscal year. +(5) Overhang is calculated by dividing the number of shares subject to equity awards outstanding at the end of the fiscal year by the number of shares outstanding at the end of the fiscal year. +The last reported sales price for our common stock on the NYSE on March 27, 2015 was $7.61 per share. +Copies of the 2011 Plan as filed with the SEC may be obtained through the SEC’s website at www.sec.gov. The 2011 Plan appears as Exhibit A to the Company’s proxy statement filed March 21, 2011. A copy may also be obtained, without charge, by writing to the Company at P. O. Box 1287, Natchez, MS 39121, Attention: Corporate Secretary. +Description of the 2011 Omnibus Incentive Plan +The following is a summary of the principal features of the 2011 Plan and its operation, as currently in effect and without taking into account the amendments described above (unless noted). +Administration. The 2011 Plan is administered by the Compensation Committee (“Committee”) appointed by the Board. Subject to the terms of the 2011 Plan, the Committee has the power to select the persons eligible to receive awards, the type and amount of incentive awards to be awarded, and the terms and conditions of such awards. To the extent permitted by applicable law, the Committee may delegate its authority under the 2011 Plan to officers or other employees of the Company. The Committee also has the authority to interpret the 2011 Plan and establish, amend or waive rules necessary or appropriate for the administration of the 2011 Plan. +22 +Eligibility. Any employee, non-employee director (“Nonemployee Director”), or third-party service provider of the Company who, in the opinion of the Committee, is in a position to contribute to the growth, development or financial success of the Company is eligible to participate in the 2011 Plan. Any type of award under the 2011 Plan may be granted to employees, and any type of award other than an incentive stock option as described in Section 422 of the U.S. Internal Revenue Code (the “Code”), may be granted to consultants or Non-employee Directors of the Company. In any calendar year, no participant may be granted (in the case of stock options and SARs), or have vested (in the case of restricted stock awards, restricted stock unit awards, performance-based awards or other stock-based awards), awards relating to more than 1,000,000 shares. The maximum aggregate amount that may be paid under a performance-based award payable in cash is $10 million, as determined as of the date of payout. These limitations will be construed and administered, so as to comply with the performance-based exception to Code Section 162(m). +Shares Subject to the 2011 Plan. Any shares subject to an award under the 2011 Plan that: (a) terminate by expiration, forfeiture, cancellation or otherwise without the issuance of the shares, (b) are settled in cash in lieu of shares, or (c) are exchanged with the Committee’s permission, prior to the issuance of shares, for awards not involving shares, will again be available immediately for grants under the 2011 Plan. Any shares (i) withheld, surrendered or tendered in payment of the exercise price of an option or SAR, (ii) tendered or withheld in order to satisfy tax withholding obligations associated with the exercise of an option or SAR, (iii) that were subject to a share-settled SAR and were not issued upon the exercise of such SAR, or (iv) repurchased by the Company with stock option proceeds will not become available for future grants under the 2011 Plan. Any shares related to an award granted under any Prior Plan (defined below) that, after the Effective Date (defined below), (1) terminate by expiration, forfeiture, cancellation or otherwise without the issuance of the shares, are settled in cash in lieu of shares, or (2) are exchanged with the Committee’s permission, prior to the issuance of shares, for awards not involving shares, will again be available for grants under this 2011 Plan. Any shares (i) withheld, surrendered or tendered in payment of the exercise price of an option or SAR granted under the Prior Plans, (ii) tendered or withheld in order to satisfy tax withholding obligations associated with the exercise of an option or SAR under the Prior Plan, (iii) that were subject to a share-settled SAR granted under the Prior Plan and were not issued upon the exercise of such SAR, or (iv) repurchased by the Company with stock option proceeds will not become available for future grants under the 2011 Plan. +The term “Prior Plan” means each of the Callon Petroleum Company 1994 Stock Incentive Plan, the Callon Petroleum Company 1996 Stock Incentive Plan, the Callon Petroleum Company 2002 Stock Incentive Plan, the Callon Petroleum Company 2006 Stock Incentive Plan, and the Callon Petroleum Company 2009 Stock Incentive Plan. Subject to adjustment as provided under the 2011 Plan, the aggregate number of shares of our common stock that may be awarded under the 2011 Plan, if not amended in accordance with the First Amendment, shall be equal to the sum of 2,300,000 shares, plus a number of shares equal to the number of shares under the Prior Plans that are not reserved for outstanding stock options and other types of stock incentive awards which were granted under the Prior Plans before May 12, 2011, which was the effective date of the adoption of the 2011 Plan (the “Effective Date”). Shares under the Prior Plan that were not reserved for stock awards granted under the Prior Plan shall not be available for grants of any future awards under the Prior Plan on or after the Effective Date. +The maximum number of shares deliverable pursuant to awards granted under the 2011 Plan is subject to adjustment by the Committee in the event of certain dilutive changes in the number of outstanding shares. Under the 2011 Plan, the Company may issue authorized, but unissued shares, treasury shares, or shares purchased by the Company on the open market or otherwise. +Transferability. Rights under any award may not be transferred except by will or the laws of descent and distribution or a qualified domestic relations order. However, the Committee may, in its sole discretion, authorize in the applicable award agreement the transfer, without consideration, of all or a portion of a non-statutory stock option from a participant to one or more family members, and to an entity owned by or for the benefit of one or more family members. +23 +Amendment of the 2011 Plan. The Board has the power and authority to terminate or amend the 2011 Plan at any time; provided, however, the Board may not, without the approval of shareholders: +● +other than as a result of a dilutive event, increase the maximum number of shares which may be issued under the 2011 Plan; +● +amend the requirements as to the class of employees eligible to purchase common shares under the 2011 Plan; +● +extend the term of the 2011 Plan; or +● +increase the maximum limits on awards to covered employees as set for compliance with Code Section 162(m) or applicable regulations thereunder. +In addition, to the extent that the Committee determines that the listing requirements of any national securities exchange or quotation system on which the Company’s common shares are then listed or quoted, or the Code or regulations thereunder, require shareholder approval in order to maintain compliance with such listing requirements or to maintain any favorable tax advantages or qualifications, then the 2011 Plan will not be amended without approval of the Company’s shareholders. In addition, no amendment to the 2011 Plan may adversely affect any rights of a holder of an outstanding award under the 2011 Plan without obtaining such holder’s consent. +Change in Control. Unless otherwise determined by the Committee in its sole discretion and provided in the applicable award agreement, in the event a Participant incurs an involuntary termination of service without cause within twenty-four (24) months from the date of a change in control, all outstanding awards will become 100% vested, free of all restrictions, immediately and fully exercisable, provided that a Participant’s then-outstanding unvested awards, other than Options and SARs, as to which vesting depends upon the satisfaction of one or more performance conditions shall immediately vest as if target performance was achieved and shall be settled pro rata. A “change in control” of the Company generally means the occurrence of any one or more of the following events: +● +the acquisition by any individual, entity or group of beneficial ownership of 30% or more of the Company’s common shares or combined voting power; +● +individuals who constitute the Board as of the Effective Date, or successors to such members approved by the Board, cease for any reason to constitute at least a majority of the Board; or +● +the consolidation, merger or the sale or other disposition of at least 40% of the assets of the Company. +Award Agreements and Term. All awards under the 2011 Plan will be authorized by the Committee and evidenced by an award agreement between the Company and the participant setting forth the type of incentive being granted, the vesting schedule, and other terms and conditions of exercisability. +Types of Awards Available under the 2011 Plan. Non-qualified stock options, incentive stock options, SARs, restricted stock awards, restricted stock units, and other stock-based awards are available for incentive awards under the 2011 Plan. +Stock Options. A grant of a stock option entitles a participant to purchase from the Company a specified number of common shares at a specified price per share. In the discretion of the Committee, stock options may be granted as either (i) a non-statutory stock options or (ii) an incentive stock option as described in Code Section 422 (an “ISO”), but ISOs may only be granted to employees of the Company. The aggregate fair market value of the common shares with respect to which ISOs become first exercisable by any participant during any calendar year cannot exceed $100,000. +No ISOs may be exercisable for more than ten (10) years from the date of grant, or, in the case of an ISO granted to an employee who owns or is deemed to own more than ten percent (10%) of the Company’s common shares, five (5) years from the date of grant. In no event, however, may an ISO be granted after the expiration of ten (10) years from the Effective Date of the 2011 Plan. +For a non-statutory stock option or an ISO, the exercise price per common share, must be at least equal to the fair market value of the Company’s common shares on the date of grant, or, in the case of an employee who owns or is deemed to own more than ten percent (10%) of the Company’s common shares, the exercise price per common share of an ISO must be one hundred ten percent (110%) of the fair market value of the Company’s common shares on the grant date. The total exercise price for common shares acquired on exercise of a stock option may be paid in cash, or, if approved by the Committee, the withholding of shares that would otherwise be issuable upon exercise, and equal in value to the exercise price of the stock option. Each non-statutory stock option will vest over a three-year service period or such longer period as determined by the Committee in its discretion and as set forth in the applicable award agreement. +24 +Stock Appreciation Rights (“SARs”). The grant of a SAR provides the holder with the right to receive a “spread” equal to the excess of the fair market value of the number of common shares subject to the SAR on the date it is exercised over a SAR exercise price specified in the award agreement. The spread is paid in cash or shares, or in a combination of both as provided in the award agreement. The SAR price specified in an award agreement must be at least equal to the fair market value of the Company’s common shares on the grant date of the SAR. The term of each SAR is determined by the Committee and set forth in the award agreement. +Restricted Stock Award (“RSA”). A grant of a RSA is an award of common shares subject to restrictions or limitations set forth in the 2011 Plan and in the related award agreement. The award agreement for a RSA will specify the time or times within which such award may be subject to forfeiture and any performance goals, which must be met in order to remove any restrictions on such award. Except for the limitations on transfer or other limitations as set forth in the RSA agreement, holders of restricted stock have all of the rights of a shareholder of the Company including, if provided in the award agreement, the right to vote the shares and to receive any dividends thereon. Each grant of a RSA will vest over a three-year service period or such longer period as determined by the Committee in its discretion and as set forth in the applicable award agreement. +Restricted Stock Units (“RSUs”). RSUs may be granted to participants in such number, and upon such terms, and at any time and from time to time as will be determined by the Committee, in its discretion. A grant of RSUs will not represent the grant of shares, but will represent a promise to deliver a corresponding number of shares based upon the completion of service, performance conditions, or such other terms and conditions as specified in the applicable award agreement over the restriction period. A participant will have no voting rights with respect to any RSUs or to the shares corresponding to any such RSUs. A grant of RSUs may vest at any rate over a three-year service period or such longer period as determined by the Committee in its discretion. +Performance Criteria. The performance criteria are the performance and business measures that the Committee may select from when granting an award to a participant under the 2011 Plan that is intended to qualify as performance-based for purposes of Code Section 162(m). The performance criteria are set out in the 2011 Plan. +Performance Shares. Performance shares may be granted to participants in such number, and upon such terms and at any time and from time to time, as will be determined by the Committee in its discretion. Each performance share will have an initial value equal to the fair market value of a share on the grant date. The Committee will set performance measures, in its discretion, which, depending on the extent to which they are met over the specified performance period, will determine the number of performance shares that will be paid to a participant. In addition to the performance criteria applicable to the performance-based award, each performance share will be subject to a one-year service period or such longer period as determined by the Committee in its discretion, and as set forth in the award agreement. +Performance Units. Performance units may be granted to a participant in such number, and upon such terms and at any time and from time to time as will be determined by the Committee in its discretion. Each performance unit will have an initial notional value equal to a dollar amount determined by the Committee, in its discretion. The Committee will set performance measures in its discretion that, depending on the extent to which they are met over the specified performance period, will determine the number of performance units that will be settled and paid to the participant. In addition to the performance measures applicable to the performance-based award, each performance unit will be subject to a one-year service period or such longer period as determined by the Committee, in its discretion, and as set forth in the award agreement. +Other Stock-Based Awards and Cash-Based Awards. The Committee may grant other stock-based awards not otherwise described by the terms of the 2011 Plan, including the grant or offer for sale of unrestricted shares, in such amounts and subject to such terms and conditions, as the Committee will determine in its discretion. Such awards may involve the transfer of actual shares to participants, or payment in cash or otherwise of amounts based on the value of shares. The Committee, at any time and from time to time, may grant cash-based awards to a participant in such amounts and upon such terms as the Committee will determine in its discretion. Payment, if any, with respect to cash-based awards and other stock-based award will be made in accordance with the terms of the applicable award agreement, in cash, in shares or in a combination of both, as determined by the Committee in its discretion and set out in the award agreement. The Committee may also specify any performance criteria for vesting and payment of the award. +25 +Nonemployee Director Awards . The Board will determine and approve all awards to Nonemployee Directors. The Board may permit a Nonemployee Director with an opportunity to receive an award in lieu of payment of all or a portion of future Director fees (including but not limited to cash retainer fees and meeting fees) or other types of Awards pursuant to such terms and conditions as the Board or Committee may prescribe and set forth in an applicable sub-plan or award agreement. +Termination of Employment, Death, Disability and Retirement. Unless otherwise provided in an award agreement, upon the termination of a participant’s employment, the non-vested portions of all outstanding awards will terminate immediately. Subject to different provisions in an award agreement, the period during which vested awards may be exercised following a termination of employment are described below: +(a) +If a participant’s employment is terminated for any reason other than as a result of death, disability, retirement or for cause, the vested portion of such award is exercisable until the earlier of (1) the expiration date set forth in the applicable award agreement or (2) three months after the date of termination of employment. +(b) +In the event of the termination of participant’s employment for cause, all vested awards immediately expire. +(c) +Upon a participant’s retirement, any vested award will expire on the earlier of (1) the expiration date set forth in the award agreement for such award or (2) one (1) year after the date of retirement (three (3) months in the case of incentive stock options). +(d) +Upon the death or disability of a participant, any vested award will expire on the earlier of (1) the expiration date set forth in the award agreement or (2) the one (1) year anniversary date of the participant’s death or disability. +Similar provisions apply to awards granted to Nonemployee Directors or to third-party service providers upon their separation from service with the Company and its affiliates. +FEDERAL INCOME TAX CONSEQUENCES +The following is a brief summary of certain U.S. federal income tax consequences relating to the types of incentive awards available under the 2011 Plan. This summary does not purport to address all aspects of U.S. federal income taxation and does not describe state, local, or foreign tax consequences. This discussion is based upon provisions of the Code and the Treasury Regulations issued thereunder, and relevant judicial and administrative interpretations under the Code and Treasury Regulations, all as in effect as of the date hereof, and all of which are subject to change (possibly on a retroactive basis) or to different interpretations. This information may not be applicable to participants who are not subject to United States federal income tax and it is not intended to provide tax advice to any specific participant. +Stock Options, SARs, RSAs, RSUs, and Other Stock-Based Awards. A participant generally is not required to recognize income on the grant of a stock option, stock appreciation right, restricted stock award, restricted stock unit award, or other stock-based award. Instead, ordinary income generally is required to be recognized on the date the stock option or SAR is exercised (but see ISO discussion below), or in the case of an RSA, RSU or other stock-based award, upon the issuance of shares and/or the payment of cash pursuant to the terms of the award when it vests (subject to the RSA discussion below). In general, the amount of ordinary income required to be recognized is: (a) in the case of an option, an amount equal to the excess, if any, of the fair market value of the shares on the exercise date over the exercise price; (b) in the case of a SAR, the fair market value of any shares or cash received upon exercise; and (c) in the case of an RSA, RSU or other stock-based award, the amount of cash and/or the then fair market value of any shares received in respect thereof (but see Code Section 83(b) election discussion in the RSA section below). +26 +Incentive Stock Options. ISOs granted under the 2011 Plan are intended to meet the definitional requirements of Code Section 422. A participant receiving a grant of ISOs will not recognize income and the Company will not be allowed a tax deduction at the time the ISO is granted. When a participant exercises an ISO while employed by the Company or its subsidiary, or within the three-month (one year for disability) period after termination of employment, no ordinary income will be recognized by the participant at that time (and no deduction will be allowed to the Company), but the excess of the fair market value of the shares acquired upon such exercise over the option price will be taken into account in determining the participant’s alternative minimum taxable income for purposes of the federal alternative minimum tax applicable to individuals. If the shares acquired upon exercise of the ISO are not disposed of before (i) two years after the date of grant and (ii) one year after the date of transfer of the shares to the participant ( i.e. , the statutory holding periods), the excess of the sale proceeds over the aggregate option price of such shares will be long-term capital gain, and the Company will not be entitled to any federal income tax deduction. Except in the event of death, if the shares are disposed of prior to the expiration of the statutory holding periods (referred to as a “Disqualifying Disposition”), the excess of the fair market value of such shares at the time of exercise over the aggregate option price (but not more than the gain on the disposition if the disposition is a transaction on which a loss, if sustained, would be recognized) will be ordinary income at the time of such Disqualifying Disposition (and the Company or its subsidiary will be entitled to a federal tax deduction in a like amount), and the balance of the gain, if any, will be capital gain (short-term or long-term depending upon whether the participant held the shares for more than one (1) year following the exercise of the option). To the extent that the aggregate fair market value of stock (determined on the date of grant) with respect to which ISOs become exercisable for the first time during any calendar year exceeds $100,000, such excess options will be treated as non-statutory options. +Payment Using Shares. If a participant pays the exercise price of a non-statutory stock option or an ISO with previously owned common stock of the Company and the transaction is not a Disqualifying Disposition, the shares received equal to the number of shares surrendered are treated as having been received in a tax-free exchange. The shares received in excess of the number surrendered will not be taxable if an ISO is being exercised, but will be taxable as ordinary income to the extent of their fair market value if a non-statutory stock option is being exercised. The participant does not recognize income and the Company receives no deduction as a result of the tax-free portion of the exchange transaction. If the use of previously acquired shares from the exercise of an ISO to pay the exercise price of another ISO constitutes a Disqualifying Disposition, the tax results described in the preceding paragraph will apply. The income treatment will apply to the shares disposed of, but will not affect the favorable tax treatment of the shares received. +Restricted Stock Award. A participant receiving a grant of a RSA will not recognize income, and the Company will not be allowed a tax deduction at the time such award is granted, unless the participant makes the election described below with respect to the RSA. When a RSA vests or otherwise ceases to be subject to a substantial risk of forfeiture, the excess of the fair market value of the stock subject to the RSA on its vesting date or the cessation of the substantial risk of forfeiture over the amount paid, if any, by the participant for the award will be ordinary income to the participant and claimed as a deduction for federal income tax purposes by the Company. Upon disposition of the shares received upon vesting of the RSA, the gain or loss recognized by the participant will be treated as capital gain or loss, and the capital gain or loss will be short-term or long-term depending upon whether the participant held the shares for more than one year following the vesting or cessation of the substantial risk of forfeiture. However, if the participant files a Code Section 83(b) election with the Internal Revenue Service within 30 days after the grant date of a RSA, the participant’s ordinary income and commencement of the holding period and the Company’s deduction will be determined as of the grant date. In such a case, the amount of ordinary income recognized by such participant and deductible by the Company will be equal to the excess of the fair market value of the stock subject to the RSA as of its grant date over the amount paid, if any, by the participant for the stock. If a Code Section 83(b) election is made and the participant thereafter forfeits the RSA, no refund or deduction will be allowed for the amount previously included in the participant’s income. +Code Section 409A. Section 409A applies to certain plans providing deferred compensation to employees, directors, consultants and other service providers, and potentially could apply to certain of the different types of incentive awards available under the 2011 Plan. Generally, to the extent that deferrals of these awards fail to meet applicable requirements under Section 409A, such awards will be subject to taxation and tax penalties unless the requirements of Section 409A are satisfied. It is the intent of the Company that awards under the 2011 Plan will be structured and administered in a manner that either complies with or is exempt from the requirements of Section 409A. If any provision of the 2011 Plan or an award granted under the Plan would result in the imposition of a tax or penalty under Section 409A (and related regulations and Treasury pronouncements), that provision or award may be reformed to the extent permitted under Section 409A to avoid imposition of the tax or penalty. No action taken to comply with Section 409A, or an exemption thereunder, shall be deemed to adversely affect the Participant’s rights to the award. +27 +Gain or Loss on Sale or Exchange of Shares. In general, gain or loss from the sale or exchange of shares granted or awarded under the 2011 Plan will be treated as capital gain or loss, provided that the shares are held as capital assets by or on behalf of the participant at the time of the sale or exchange. +Tax Withholding. Awards under the 2011 Plan may be subject to tax withholding. When an award results in income subject to withholding, the Company may require the participant to remit the cash withholding amount to the Company or cause shares of the Company’s stock to be withheld from issuance to the participant or sold in order to satisfy the tax withholding obligations. Because the tax withholding requirement applies only to employees, a nonemployee participating in the 2011 Plan (for example, a Nonemployee Director) is not subject to tax withholding. +Certain Limitations on Deductibility of Executive Compensation . With certain exceptions, because the Company is a publicly-held corporation, Code Section 162(m) limits its ability to deduct compensation paid to certain of its executive officers in excess of $1 million annually per executive officer. One of the exceptions relates to certain performance-based compensation, provided the performance criteria for such compensation have been approved by the Company’s shareholders and certain other requirements are met. The Company believes that the stock options, SARs, RSUs, and other performance-based awards that it may grant under the 2011 Plan to its executive officers will be eligible to qualify for the performance-based compensation exception to Section 162(m). +Parachute Payments. Under the so-called “golden parachute” provisions of Code Section 280G, the accelerated vesting of options and benefits paid under other awards in connection with a change of control of a corporation, as described under Section 280G, may be required to be valued and taken into account in determining whether participants have received compensatory payments, contingent on the change of control, in excess of certain dollar limits under Section 280G. If these limits are exceeded, a portion of the amounts payable to the participant may be subject to an additional 20 percent federal tax and may be nondeductible to the corporation. If a participant’s rights under the 2011 Plan are accelerated as a result of a change of control and the individual is a “disqualified individual” under Section 280G, the value of any accelerated rights received by such participant may be included in determining whether the participant received an “excess parachute payment” under Section 280G. +ERISA. The Company believes that the 2011 Plan is not subject to any of the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”). Also, the 2011 Plan is not a qualified plan under Code Section 401(a). +Equity Compensation Plan Information +The following table summarizes, as of December 31, 2014, the indicated information regarding the 2011 Plan (number of securities in thousands). +Plan Category +Securities to be issued upon exercise of outstanding options, warrants and rights +Weighted-average exercise price per share of outstanding options, warrants and rights +Securities remaining available for future issuance under equity compensation plans +Equity compensation plans approved by security holders +15 +$ 13.71 +1,132 (1) +Equity compensation plans not approved by security holders +15 +$ 14.37 +— +Total +30 +$ 14.04 +1,132 +(1) +Includes 1,132,000 shares remaining available for issuance under the 2011 Plan. +The Board supports management’s belief that the approval of the proposal to increase the number of shares of the Company’s common stock that may be issued for awards under the 2011 Plan will contribute to the continuation of the Company’s history of employee and director longevity, as the Company’s stock compensation plans have done in the past. A majority of the votes cast is required to approve this Proposal 3. Brokers do not have discretion to vote on this proposal without your instruction. If you do not instruct your broker how to vote on this proposal, your broker will deliver a non-vote. Abstentions will have the same effect as votes against the proposal, but broker non-votes will not be deemed votes cast, and so will not affect the outcome of the voting on the proposal. Lone Star Value Management has agreed to vote its shares as recommended by Institutional Shareholder Services with respect to the approval of the amendments to the 2011 Plan. +“RESOLVED, that the First Amendment to the Callon Petroleum Company 2011 Omnibus Incentive Plan, as set forth in Annex A to Callon’s 2015 proxy statement, is hereby approved.” +THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “ FOR ” THE APPROVAL OF THE FIRST AMENDMENT TO THE 2011 OMNIBUS INCENTIVE PLAN. +28 +PROPOSAL 4 +AMENDMENT TO ARTICLE FOUR OF THE COMPANY’S CERTIFICATE OF INCORPORATION INCREASING THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK OF THE COMPANY FROM 110 MILLION SHARES TO +150 MILLION SHARES +Proposed Amendment to Certificate of Incorporation +The Board has adopted a resolution approving and recommending to the stockholders for their approval a proposal to amend Article Four of the Company’s Certificate of Incorporation to increase the number of authorized shares of Common Stock from 110 million shares to 150 million shares (the “Article Four Amendment”). +The form of the Article Four Amendment is as follows: +The first sentence of Article Four is hereby amended and restated to be read in its entirety as follows: +“The Corporation shall have authority to issue two classes of stock, and the total number authorized shall be 150,000,000 shares of Common Stock, par value $.01 per share, and 2,500,000 shares of Preferred Stock, par value $.01 per share.” +Background and Reasons for Increasing the Authorized Shares of Common Stock +The Company has significantly grown its onshore asset base over the past five years and is seeking the approval of additional authorized shares of Common Stock in order to provide flexibility to meet the demands of future growth and other corporate obligations. As the current capitalization table below indicates, there are only 199,081 shares currently available for issuance in conducting business and to accommodate possible equity demands in the future. The Company feels that this is a small operating margin, and it is prudent and good business practice to have an adequate amount of Common Stock available in order to be in a position to take advantage of potential growth opportunities that might arise. +The Board concurs with this assessment, and believes that the recommended increase in the number of authorized shares of Common Stock is warranted and will give the Company the financial flexibility to timely meet the future equity capital requirements of its business. If the Certificate of Incorporation is amended, the additional shares would be available for possible acquisitions requiring equity as consideration, equity issuance in capital markets transactions, stock incentive plans, the reservation related to the Series A Preferred Stock (as described below), and for any other proper general corporate purpose. The Company has no present plans, agreements or understandings for the issuance of any of the additional shares to be authorized by the proposed amendment. There will be no increase to the number of authorized preferred stock. +Capitalization Tables +The Company has outstanding 1,578,948 shares of a Series A Cumulative Preferred Stock (“Series A Preferred Stock”) with a total liquidation value of $79 million. The Series A Preferred Stock provides that upon a change of control, generally defined as the acquisition of 50% of the Company’s Common Stock by a Person or group of persons and following the acquisition, neither the Company nor the surviving entity has a class of common securities listed on a national securities exchange) (“Change of Control”), the Company may make a cash offer to purchase the Series A Preferred Stock within 120 days following the Change of Control for the liquidation value plus accrued dividends. The Series A Preferred Stock further provides that if Callon does not elect (or is unable) to purchase the Series A Preferred Stock for cash, the holders of the Series A Preferred Stock may convert the liquidation value of their holdings into shares of Common Stock at the then current market price of common stock, but in no event more, in the aggregate, than 42,331,046 shares of common stock. +Currently, the Company’s authorized capital stock consists of 110,000,000 shares of Common Stock and 2,500,000 shares of Preferred Stock. The Company has 65,931,941 shares of Common Stock outstanding and an additional 43,868,978 shares reserved for issuance upon vesting or exercise of restricted stock, stock options and the Limited Conversion Rights of the Series A Preferred Stock. The following table depicts the authorized capital stock of the Company as of the Record Date prior to the amendment of the Certificate of Incorporation and assuming the proposed amendment to the Certificate of Incorporation is adopted by the stockholders: +29 +Current +Total authorized +110,000,000 +Less: +Total shares outstanding +65,931,941 +Reserved for issuance upon exercise of outstanding stock options +30,000 +Reserved for issuance upon vesting of outstanding equity awards & 401(k) Plan +1,507,932 +Reserved for issuance for limited conversion feature of Series A Preferred Stock (“Share Cap”) +42,331,046 +Total outstanding and reserved +109,800,919 +Total available +199,081 +Post-Amendment +Total authorized +150,000,000 +Less: +Total shares outstanding +65,931,941 +Reserved for issuance upon exercise of outstanding stock options +30,000 +Reserved for issuance upon vesting of outstanding equity awards & 401(k) Plan +1,507,932 +Reserved for issuance for limited conversion feature of Series A Preferred Stock (“Share Cap”) +42,331,046 +Total outstanding and reserved +109,800,919 +Total available +40,199,081 +If the stockholders approve the amendment to the Company’s Certificate of Incorporation to increase the Company’s authorized Common Stock, the Company will have 40,199,081 shares of authorized Common Stock available for future issuance. The additional shares of Common Stock authorized by the amendment that are not reserved for other purposes may be issued periodically on authorization by the Board, without further approval by the stockholders, unless such authorization is required by applicable law or the rules of the NYSE. Shares of Common Stock may be issued for such consideration as the Board may determine, and as may be permitted by applicable law. +The proposed amendment to the Certificate of Incorporation does not change the terms of the Common Stock. The additional shares of Common Stock to be authorized by adoption of the amendment would have rights identical to the currently outstanding Common Stock of the Company. Any future issuance of additional shares of Common Stock would not affect the rights of the holders of currently outstanding Common Stock of the Company, except for effects incidental to increasing the number of shares of the Company’s Common Stock outstanding, such as a dilutive effect on the Company’s earnings per share. If our stockholders do not approve the proposal, the Company will have only 199,081 shares of authorized Common Stock for general corporate purposes and, as a result, may not be able to access the capital markets, complete acquisition transactions or partnerships, attract, retain and motivate employees, or pursue other business opportunities integral to its growth and success. However, non-approval will not have any impact on the existing terms and conditions of the Series A Preferred Stock, including the current Share Cap. +The existence of certain provisions contained in the Company’s Certificate of Incorporation and By-laws may be to render more difficult the accomplishment of any attempted merger, takeover or other change in control affecting the Company and/or the removal of the Company’s incumbent Board and management. However, this proposal is not in response to any effort of which the Company is aware to accumulate its stock or to obtain control of the Company and it is not part of a plan by management to recommend a series of similar amendments to the Board and the stockholders. +Effective Date +If approved by the stockholders, it is anticipated that the amendment to the Certificate of Incorporation will become effective as soon as practicable after the Annual Meeting. Upon approval of this proposal at the Annual Meeting, the Company will file the Article Four Amendment with the Secretary of State of the State of Delaware, and the number of authorized shares of Common Stock will be increased from 110 million shares to 150 million shares (without affecting par value). +30 +If stockholders do not approve this proposal at the Annual Meeting, then the Company may seek to obtain stockholder approval of an increase in authorized shares at future stockholder meetings. Approval of the amendment to the Certificate of Incorporation requires the affirmative vote of the holders of a majority of our outstanding shares of Common Stock. The Company believes that this is a “routine matter” for purposes of the NYSE rules, and so brokers will be entitled to vote shares with respect to which they do not receive voting instructions from the beneficial owners. Abstentions and any broker non-votes will have the same effect as a vote against the proposal to amend the Certificate of Incorporation. Lone Star Value Management has agreed to vote its shares in accordance with the recommendation of Institutional Shareholder Services with respect to the approval of the amendment to the Certificate of Incorporation to increase the number of shares. +“RESOLVED, that the amendment to Article Four of the Company’s Certificate of Incorporation increasing the total number of authorized shares of Common Stock is hereby approved.” +THE BOARD OF DIRECTORS RECOMMENDS A VOTE “ FOR ” THE INCREASE IN AUTHORIZED SHARES OF COMMON STOCK FROM 110 MILLION SHARES TO 150 MILLION SHARES. +31 +PROPOSAL 5 +RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ERNST & YOUNG LLP, FOR 2015 +The Audit Committee has appointed Ernst & Young LLP, independent registered public accounting firm, to audit the consolidated financial statements of the Company for the year ending December 31, 2015. We are asking stockholders to ratify this appointment. Ernst & Young has served as the Company’s independent registered public accounting firm and audited the Company’s consolidated financial statements beginning with the fiscal year ended December 31, 2002. +Fees +The following table sets forth the fees, net of expenses, incurred by us in fiscal years 2013 and 2014 for services performed by Ernst & Young LLP: +Fee Category +2013 +2014 +Audit (1) +$ +609,100 +$ +749,664 +Audit-Related (2) +— +— +Tax (3) +17,700 +17,150 +Other (4) +— +— +Total +$ +626,800 +$ +766,814 +(1) +Audit fees consist of the aggregate fees billed for professional services related to the audit and quarterly reviews of our financial statements and for services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements. +(2) +Audit-related fees consist of the aggregate fees billed for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements that are not reported above under “Audit Fees.” +(3) +Tax fees consist of the aggregate fees billed for professional services rendered for tax compliance (including filing state and federal tax returns), tax advice and tax planning. Tax fees do not include fees for services rendered in connection with the audit. +(4) +Other fees consist of the aggregate fees billed for professional services other than the services reported above. +Pre-Approval Policy of Audit, Audit-Related, Tax and Non-Audit Services. The Audit Committee pre-approves all audit services and non-audit services (including the fees and terms thereof) to be performed for the Company by its independent registered public accounting firm, as required by applicable law or listing standards and subject to the terms of the audit and non-audit services pre-approval policy in accordance with the Audit Committee charter. The Committee may delegate authority to one or more of its members when appropriate, including the authority to grant pre-approvals of audit and permitted non-audit services, provided that decisions of any such member to grant pre-approvals are consistent with the terms of the Pre-Approval Policy and are presented to the full Committee at its next scheduled meeting. +Audit Committee Report +Acting pursuant to its Charter, the Audit Committee reviewed and discussed the Company’s audited financial statements for the year ended, December 31, 2014, with management and Ernst & Young, and recommended to the Company’s Board that the Company’s audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014, for filing with the SEC. This recommendation was based on: +● +the Audit Committee’s review of the audited financial statements; +● +discussion of the financial statements with management; +● +discussion with the Company’s independent registered public accounting firm, Ernst & Young LLP, of the matters required to be discussed by auditing standards generally accepted in the United States of America, including the communication matters required to be discussed by Auditing Standard No. 16, Communications with Audit Committees, issued by the Public Company Accounting Oversight Board; +32 +● +receipt from Ernst &Young LLP of the written disclosures and letter required by Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees); +● +discussions with Ernst & Young LLP regarding its independence from the Company and its management; +● +Ernst & Young LLP’s confirmation that it would issue its opinion that the consolidated financial statements present fairly, in all material respects, the financial position of the Company and its consolidated subsidiaries and the results of their operations and cash flows for the periods presented in conformity with accounting principles generally accepted in the United States of America; and +● +other matters the Audit Committee deemed relevant and appropriate. +Management is responsible for the preparation, presentation and integrity of the Company’s consolidated financial statements in accordance with generally accepted accounting principles, the establishment and maintenance of our disclosure controls and procedures, and the establishment, maintenance and evaluation of the effectiveness of our internal controls over financial reporting. The independent registered public accounting firm is responsible for performing an independent audit of the Company’s consolidated financial statements and internal control over financial reporting in accordance with the standards of the PCAOB and issuing reports thereon. The Audit Committee’s responsibilities include monitoring and overseeing these processes. +Members of the Audit Committee rely, without independent verification, on the information provided to them and on the representations made by management and the Company’s independent registered public accounting firm. The Audit Committee’s considerations and discussions referred to above do not assure that the audit of the Company’s financial statements and internal control over financial reporting have been carried out according to the standards of the PCAOB, that the financial statements are presented according to GAAP standards, or that Ernst & Young LLP is in fact independent. +Respectfully submitted by the Audit Committee of the Board of Directors, +John C. Wallace, Chairman +L. Richard Flury +Larry D. McVay +Anthony J. Nocchiero +The submission of this matter for approval by stockholders is not legally required; however, the Board and Audit Committee believe that this submission is consistent with best practices in corporate governance and is an opportunity for stockholders to provide direct feedback to the Board and Audit Committee on an important issue of corporate governance. If the appointment is not ratified, the Audit Committee will consider whether it should select another independent registered public accounting firm, although the results of the vote are not binding on the Audit Committee. A representative of Ernst & Young LLP will be present at the 2015 Annual Meeting and will have the opportunity to make a statement, if they desire, and to respond to appropriate questions from stockholders. +This proposal will be approved if it receives the affirmative vote of a majority of shares of common stock of the Company cast at the Annual Meeting and entitled to vote on this proposal. Broker non-votes and abstentions will not affect the outcome of this proposal. Lone Star Value Management has agreed to vote its shares for approval of Ernst & Young LLP as our auditors. +THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “ FOR ” THE RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2015. +33 +BENEFICIAL OWNERSHIP OF SECURITIES +Management and Principal Stockholders +The following table sets forth, as of the March 27, 2015, certain information with respect to the beneficial ownership of shares of common stock held by: (i) all persons known by the Company to be the beneficial owners of 5% or more of the outstanding common stock; (ii) each Director; (iii) the nominees for Director; (iv) each current executive officer named in the Summary Compensation Table; and (v) all executive officers and Directors of the Company as a group. Information set forth in the table with respect to beneficial ownership of common stock has been obtained from filings made by the named beneficial owners with the SEC as of the Record Date or, in the case of executive officers and Directors of the Company, has been provided to the Company by such individuals. +Common Stock +Name and Address of Beneficial Owner +Beneficial Ownership +Notes +% +Directors +Fred L. Callon +505,944 +(a)(b) +* +L. Richard Flury +153,738 +(a)(c) +* +Larry D. McVay +112,169 +(a)(d) +* +Anthony J. Nocchiero +87,362 +(a)(e) +* +John C. Wallace +10,000 +(a)(f) +* +Matthew R. Bob +4,184 +(a)(g) +* +James M. Trimble +4,184 +(a)(h) +* +Michael L. Finch +— +(i) +* +Named Officers +Gary A. Newberry +238,156 +(a)(j) +* +Joseph C. Gatto, Jr. +83,620 +(a)(k) +* +Directors and Executive Officers (11 persons, as a group) +1,256,027 +(l) +1.90 +% +Certain Beneficial Owners +Franklin Resources, Inc. +One Franklin Parkway +San Mateo, CA 94403 +5,611,127 +(m) +8.51 +% +Wellington Management Group, LLP +280 Congress St. +Boston, MA 02210 +4,713,004 +(n) +7.15 +% +BlackRock, Inc. +40 East 52nd Street +New York, NY 10022 +3,464,835 +(o) +5.26 +% +__________________ +* Less than 1% of class. +a) +Unless otherwise indicated, each of the persons listed in the table may be deemed to have sole voting and dispositive power with respect to such shares. Beneficial ownership does not include the unvested portion of stock awards due to lack of voting and disposition power, unless such award will vest within sixty days of March 27, 2015. Percentage ownership of a holder or class of holders is calculated by dividing (i) the number of shares of common stock beneficially owned by such holder or class of holders plus the total number of shares of common stock underlying options exercisable or stock awards vesting within sixty days of March 27, 2015, by (ii) the total number of shares of common stock outstanding plus the total number of shares of common stock underlying options exercisable and stock awards vesting within sixty days of March 27, 2015, but not common stock underlying such securities held by any other person. +34 +b) +Of the 505,944 shares beneficially owned by Fred L. Callon, 276,905 shares are owned directly by him; 25,215 shares are held by him as custodian for certain minor Callon family members; 151,246 shares represent unvested restricted stock units which will vest within sixty days of March 27, 2015; and 52,578 shares are owned within the Company’s Employee Savings and Protection Plan. Shares indicated as beneficially owned by Mr. Callon do not include 24,904 shares of common stock owned by his wife over which he disclaims beneficial ownership, 216,430 unvested restricted stock units payable in stock, 64,884 unvested restricted stock units payable in cash, and 370,007 unvested phantom shares payable in cash. +c) +Of the 153,738 shares beneficially owned by L. Richard Flury, 102,067 shares are owned directly by him; 30,000 shares are held in joint tenancy with his wife; 10,000 stock options, of which 5,000 shares are subject to the 1996 Plan and 5,000 shares are subject to the 2002 Plan, exercisable within 60 days; and 11,671 shares of unvested restricted stock, which will vest within sixty days of March 27, 2015. Shares indicated as beneficially owned by Mr. Flury do not include 11,671 unvested restricted stock units payable in stock, and 22,768 restricted stock units awarded in May 2012 and 12,550 restricted stock units awarded in May 2014 pursuant to his election under the Deferred Compensation Plan for Outside Directors, payable in cash upon his separation of service as a Director. +d) +Of the 112,169 shares beneficially owned by Larry D. McVay, 100,395 shares are owned directly by him and 11,774 shares of unvested restricted stock that will vest within sixty days of March 27, 2015. Shares indicated as beneficially owned by Mr. McVay do not include 8,366 unvested restricted stock units payable in stock, and 35,014 restricted stock units awarded in May 2013 pursuant to his election under the Deferred Compensation Plan for Outside Directors, payable in cash upon his separation of service as a Director. +e) +Of the 87,362 shares beneficially owned by Anthony J. Nocchiero, 63,917 shares are owned directly by him and 23,445 shares of unvested restricted stock that will vest within sixty days of March 27, 2015. Shares indicated as beneficially owned by Mr. Nocchiero do not include 20,037 unvested restricted stock units payable in stock. +f) +Mr. John C. Wallace has 10,000 stock options, of which 5,000 shares are subject to the 1996 Plan and 5,000 shares are subject to the 2002 Plan, exercisable within 60 days. Mr. Wallace transferred his equity ownership in the Company to The Wallace Family Trust in April 2008. All equity ownership in the Company acquired by Mr. Wallace since April 2008 has also been transferred to the Wallace Family Trust, with the exception of the 18,968 restricted stock units awarded in May 2011, 22,768 restricted stock units awarded in May 2012, 35,014 restricted stock units awarded in May 2013 and 12,550 restricted stock units awarded in May 2014, pursuant to his election under the Deferred Compensation Plan for Outside Directors, all of which are payable in cash upon his separation of service as a Director. Mr. Wallace has no voting and dispositive power over the shares owned by the Trust. +g) +Of the 4,184 shares beneficially owned by Matthew R. Bob, all are shares of unvested restricted stock that will vest within sixty days of March 27, 2015. Shares indicated as beneficially owned by Mr. Bob do not include 8,366 unvested restricted stock units payable in stock. +h) +Of the 4,184 shares beneficially owned by James M. Trimble, all are shares of unvested restricted stock that will vest within sixty days of March 27, 2015. Shares indicated as beneficially owned by Mr. Bob do not include 8,366 unvested restricted stock units payable in stock. +i) +Michael L. Finch is a Director nominee who currently does not own any shares of the Company’s stock. +j) +Of the 238,156 shares beneficially owned by Gary A. Newberry, 155,955 shares are owned directly by him; 40,609 shares are owned within the Company’s Employee Savings and Protection Plan; and 41,592 shares represent unvested restricted stock units that will vest within sixty days of March 27, 2015. Shares indicated as beneficially owned by Mr. Newberry do not include 60,577 unvested restricted stock units payable in stock, 18,029 unvested restricted stock units payable in cash, and 103,918 unvested phantom shares payable in cash. +35 +k) +Of the 83,620 shares beneficially owned by Joseph C. Gatto, Jr., 48,432 shares are owned directly by him; 15,838 shares are owned within the Company’s Employee Savings and Protection Plan; 1,500 shares are Series A Preferred Stock and 17,850 shares represent unvested restricted stock units that will vest within sixty days of March 27, 2015. Shares indicated as beneficially owned by Mr. Gatto do not include 1,610 shares of common stock owned by his mother over which he disclaims beneficial ownership, 93,911 unvested restricted stock units payable in stock, 13,839 unvested restricted stock units payable in cash, and 103,918 unvested phantom shares payable in cash. +l) +Includes 20,000 stock options, exercisable within 60 days; 372,862 shares of unvested restricted stock which will vest within sixty days of March 27, 2015; and 250,813 shares are owned within the Company’s Employee Savings and Protection Plan. +m) +Information is based upon a Schedule 13G/A filed with the SEC on January 31, 2015 by Franklin Resources, Inc., Charles B. Johnson, Rupert H. Johnson, Jr., and Franklin Advisers, Inc. (collectively “Franklin”). In this Schedule 13G/A, Franklin represents that it has sole voting power with respect to 5,611,127 shares of common stock and sole dispositive power with respect to 5,788,627 shares of common stock. +n) +Information is based upon a Schedule 13G filed with the SEC on December 31, 2014 by Wellington Management Group, LLP (“Wellington”). In this Schedule 13G, Wellington represents that it has shared voting power with respect to 4,713,004 shares of common stock and shared dispositive power with respect to 5,757,856 shares of common stock. +o) +Information is based upon a Schedule 13G/A filed with the SEC on December 31, 2014 by BlackRock, Inc. In this Schedule 13G/A, BlackRock, Inc. represents that it has sole voting power with respect to 3,464,835 shares of common stock and sole dispositive power with respect to 3,592,907 shares of common stock. +With respect to shares issuable upon exercise of stock options, the holders or class of holders acquire investment power for these shares immediately upon a “change of control,” as defined in the applicable plan. +Section 16(a) Beneficial Ownership Reporting Compliance. The executive officers and directors of the Company are required to file reports with the SEC, disclosing the amount and nature of their beneficial ownership in the Company’s common stock, as well as changes in that ownership. To the Company’s knowledge, based solely on its review of these reports and written representations from these individuals that no other reports were required, all required reports were timely filed during 2014. +36 +COMPENSATION DISCUSSION AND ANALYSIS +Oversight of Executive Compensation Program +The Compensation Committee (the “Committee”) is appointed by the Company’s Board to assist the Board in performing its fiduciary responsibilities relating to compensation of our CEO and other executive officers. The Committee is responsible for the incentive compensation programs, which include programs that are designed for our executive management team, including our “Named Officers,” defined below. The following discussion and analysis is intended to cover all the elements of compensation paid to our executive officers and the reasoning used by the Committee in structuring our executive compensation program, which is designed primarily to incentivize our executive officers to build long-term stockholder value. Our policies are also intended to support the achievement of our strategic objectives by aligning the interests of our executive officers with those of our stockholders through operational and financial performance goals and the use of equity-based compensation. +Named Officers +During 2014, our Named Officers were: +● +Fred L. Callon, Chairman of the Board, Chief Executive Officer and President; +● +B. F. Weatherly, Executive Vice President, Corporate Secretary and Chief Administrative Officer; +● +Gary A. Newberry, Senior Vice President, Operations; +● +Joseph C. Gatto, Jr., Senior Vice President, Chief Financial Officer and Treasurer; and +● +John G. Weihe, Vice President, Exploration. +Mr. Weatherly retired as Chief Financial Officer of the Company in March 2014, but remained as Executive Vice President, Corporate Secretary and Chief Administrative Officer. In February 2015, Mr. Weatherly resigned as Executive Vice President and Chief Administrative Officer of the Company and remains as Corporate Secretary and as a consultant in a non-executive officer capacity. Mr. Weihe resigned from his position and his employment with the Company ended effective February 3, 2015. +Executive Summary and 2014 Highlights +The Committee believes that our executive compensation program has played a significant role in our ability to drive financial results and to create stockholder value. Building upon the positive momentum generated in fiscal years 2012 and 2013, fiscal 2014 was a year of progress as we accelerated the execution of our strategic plan and continued to expand our production and proved reserves base as a non-conventional resource developer focused exclusively in the Permian Basin. Key accomplishments in 2014 include: +Established Resource Base, Acreage Position and Multi-Year Drilling Inventory in the Permian Basin to Drive Production with Horizontal Development +● +Increased average daily Permian production by 154%, from 2,227 BOE/d in 2013 (78% oil) to 5,648 BOE/d in 2014 (82% oil). +● +Increased 2014 estimated net proved reserves by 121% to 32.8 MBOE from 14.9 MBOE in 2013, of which 78% were crude oil and 55% are classified as proved developed. +● +Expanded horizontal pad development efforts to six fields, drilling 27 gross (24.4 net) horizontal and 7 gross (4.3 net) vertical wells, further advancing the de-risking and delineation of additional benches of the Wolfcamp and Spraberry formations. +● +At year-end, we operated 277 gross producing wells, with 70% of our Permian production sourced from 50 horizontal wells from four discrete zones. +37 +● +Through the strategy of targeting currently producing zones, significantly increased our horizontal drilling inventory to approximately 525 locations, or 20 years under our current two-rig horizontal drilling program. With the addition of drilling locations from other prospective zones, this drilling inventory increases to over 1,000 drilling locations. +● +Continued to improve drilling and completion efficiency, achieving an average horizontal well cost of $7.4 million for average lateral lengths of 7,743’, among the lowest cost operators in the Permian Basin. +● +Increased total revenues by $49 million, or 48%, from $103 million in 2013 to $152 million in 2014, with earnings per share increasing from $(0.01) in 2013 to $0.65 in 2014. +● +Achieved an LOE per BOE of $10.85, a reduction of 22.5% from $14.00 in 2013. +Executed Strategy of Pursuing Selective Acquisitions and “Bolt-On” Opportunities in the Permian Basin +● +Acquired 6,230 gross (3,862 net) acres located in the Central Midland Basin, which are in close proximity to our existing Carpe Diem and Pecan Acres fields, for approximately $210 million, which added 194 gross (121.6 net) potential horizontal drilling locations in currently producing zones, and 255 gross (159.9 net) additional potential horizontal drilling locations in prospective zones. The acquisition also added 1,400 BOE/d (70% oil) estimated average net daily production and 4.0 million BOE of net proved developed producing reserves. +● +Acquired 1,527 net acres for approximately $8.2 million through advancing a “bolt-on” strategy, whereby we identify and pursue smaller blocks of offsetting acreage that are potentially inefficient for the current owner to develop, but have value to Callon based on its location relative to our acreage. These smaller scale acquisitions generally provide acreage at costs significantly below the value assigned to larger blocks of acreage. +● +Increased the Permian Basin leasehold position located in the core areas of the Southern and Central Midland Basin to 18,065 net surface acres, an increase of 47% over the Company’s comparable position prior to the above acquisition and bolt-on acreage. +Further Strengthened the Balance Sheet to Maintain Financial Liquidity and Capacity to Capitalize on Growth Opportunities +● +Raised approximately $430 million in gross proceeds through a combination of common equity and long-term debt securities to support the Central Midland Basin acquisition and our ongoing development efforts in the Midland Basin. +● +Increased the borrowing base under our credit facility to $250 million, with an expanded syndicate of ten lending institutions, relative to an $83 million borrowing base with five lending institutions at year-end 2013. +● +Retired the remaining $48.5 million of the 13% Senior Notes, improving our cost of debt capital. +● +Exited 2014 with approximately $215 million of available liquidity, equal to approximately 135% of our 2015 operational capital budget, positioning ourselves to supplement our cash flow from operations. +Continued to Advance an Operating Culture Focused on Safety and the Environment +● +With a Health, Safety and Environmental (“HSE”) department dedicated to our operations in the Permian Basin, we continue to further enhance the Company’s emphasis on health, safety and the environment, with focus on operating in a safe manner that respects the environment and protects people. We continue to improve operational performance, with emphasis on planning, training and communication, and empowering both our employees and third party service providers with Stop Work Authority. With the implementation of a HSE management system software program, we have enhanced Management of Change, routine inspections and compliance action tracking methods. +38 +● +OSHA Recordable Incident Rate (“ORIR”) in the field of 1.18, which is within the range of reported ORIR of other Permian Basin operators. +● +We had no lost-time accidents associated with our work activities in 2014. +● +Significantly improved the quality of near-miss reporting and behavior based safety observation, which contributes to instilling a high performance safe-work culture and reducing injuries. +The Committee took the following key compensation actions in 2014: +● +As a result of the achievements listed above, the Committee awarded bonuses above target for our Named Officers for 2014 performance. +● +In May 2014, the Committee granted long-term incentives to our Named Officers, 60% of which were tied to total stockholder return, or TSR. +● +The Committee certified the results of the 2012 grants of TSR phantom shares, which measured Callon’s TSR against its peers for the 2012-2014 time periods. Callon ranked 4 th out of 13 peers, resulting in 150% of the targeted number of phantom shares vesting. +Role of Stockholder Say-on-Pay Advisory Vote +The Committee considered the results of the 2014 non-binding advisory vote of stockholders to approve the compensation of our Named Officers, commonly referred to as “say-on-pay.” In 2014, our stockholders expressed overwhelming support for the compensation of our executive officers, with 96.0% of the shares represented at the meeting voting to approve our executive compensation. The Committee considered these results as evidence of a high degree of stockholder support for our compensation design and philosophy of linking pay to performance and building long-term stockholder value. As a result, the Committee decided to retain our general approach to executive compensation, with an emphasis on short-term and long-term incentive compensation programs that encourage, reward and retain our key executives when they deliver strong financial and operational results, as well as value for our stockholders. +Role of Independent Compensation Consultant +From time to time the Committee utilizes the expertise and objectivity of an outside, independent compensation consultant. The Committee has sole authority to retain and terminate any such consultant, including sole authority to approve the consultant’s fees and other retention terms. During 2014, the Committee retained the services of Meridian Compensation Partners, LLC (“Consultant” or “Meridian”) as its independent compensation consultant to help ensure that the Company’s executive compensation programs are competitive and consistent with the Company’s compensation philosophy, including the following services: +● +consult on executive compensation matters to align the Committee’s actions with stockholder interests, the Company’s business strategy and pay philosophy, prevailing market practices and relevant legal and regulatory requirements; +● +identify and assess potential peer groups; +● +assist in the design and level of outside director compensation; +● +provide input into plan design discussions and individual compensation actions, as needed; +● +provide comprehensive, competitive market data to consider in determining executive base salary and short- and long-term incentive plans and awards; +● +review and provide feedback on the compensation-related disclosures in this proxy statement; and +● +inform the Committee about marketplace compensation trends in the industry, best practices and generally other developments affecting executive compensation. +39 +In general, the role of an outside compensation consultant is to assist the Committee in providing an evaluation of the competitiveness of the Company's executive compensation and benefits programs and assessing the relationship between executive pay and performance. The Committee is under no obligation to follow the advice or recommendations of any compensation consultant. In the decision to retain Meridian, the Committee considered: +● +the Consultant's services to the Committee with respect to 2014 compensation matters; +● +its extensive experience and familiarity with the Company’s executive compensation program and the compensation programs of the Company’s peer companies and sector; +● +the range of compensation services offered by the Consultant; +● +the absence of any business or personal relationship between the Consultant and any member of the Committee or management; and +● +the Consultant's policies and procedures designed to avoid potential conflicts of interest arising out of the provision of services with respect to Callon. +The Committee has assessed the independence of Meridian pursuant to applicable SEC and NYSE rules and concluded that Meridian’s work for the Committee does not raise any conflict of interest. +The Committee considered the advice of the Consultant as only one factor in setting compensation of our Named Officers. Actual compensation decisions for Named Officers are the result of the Committee’s subjective analysis of a number of factors, including the Company’s performance, the individual officer’s performance, experience, skills and tenure with the Company, changes to the individual’s position, and trends in compensation practices within the Company’s Peer Group and industry generally. The Committee also uses its discretion to adjust any of the components of compensation to achieve the Company’s goal of recruiting, developing, motivating, and retaining individuals with the skills necessary to execute the Company’s business strategy. +The Committee established procedures that it considers adequate to ensure that the Consultant’s advice to the Committee remains objective and is not influenced by the Company’s management. The Consultant may, from time to time, contact the Company’s executive officers for information necessary to complete its assignments and may make reports and presentations to the Committee that the executive officers may also receive. While the Consultant interacts with the Company’s executive officers in order to complete its assignments and prepare its reports, the Consultant reports directly to the Committee. Meridian has not provided any services to the Company other than those associated with its engagement by the Committee. +Compensation Assessment +In order to attract, motivate and retain talented executive officers, the Committee must ensure that the Company’s executive compensation program remains competitive with the types and ranges of compensation paid by our peer companies who compete for the same executive talent. On an annual basis, the Committee reviews and discusses compensation data for the Company’s CEO and other Named Officers as compared with compensation data for similarly situated executive officers at peer companies selected by the Consultant and approved by the Committee. +Each November, Meridian provides the Committee with market data from a group of peer companies (“Peer Group”) in the independent oil and gas E&P industry that is developed taking into consideration peer company metrics such as asset size, revenues, market cap and enterprise value. Our 2014 Peer Group consists of public companies similar to us in terms of size, scope and nature of business operations, and competitors, including geographic footprint and operational focus, particularly in the Permian Basin, with some larger and some smaller in size and scope comparability of asset portfolio and availability of compensation data. The Committee believes this Peer Group market data provides a reasonable point of reference for comparing the compensation of the Company’s executives to others holding similar positions and having similar responsibilities. The Committee does not target a specific percentile of the Peer Group, as the market data is just one factor considered by the Committee in determining compensation. The Peer Group is periodically reviewed by Meridian and the Committee and is adjusted, as required, based on changes in the Peer Group companies’ and our assets and operations in order to ensure the continued relevance of the market data and that the Peer Group provides the most appropriate comparison to the Company as part of the Committee’s competitiveness evaluation. The Committee considers Peer Group data relevant to, but not determinative of, the Committee’s consideration of overall executive compensation matters. For 2014 decisions, the Committee used market data provided by Meridian in November of 2013 from the following Peer Group: +40 +2014 Peer Group +Abraxas Petroleum Corp. +Approach Resources Inc. +Diamondback Energy Inc. +Gastar Exploration LTD +Goodrich Petroleum Corp. +Matador Resources Co +PDC Energy Inc. +Petroquest Energy Inc. +Resolute Energy Corp. +Rex Energy Corp. +Triangle Petroleum Corp. +The Committee also uses several proprietary benchmarking surveys from a broader sample of comparably-sized oil and gas companies for additional market perspective: Meridian’s 2014 Oil & Gas E&P Survey (“Meridian Survey”), and survey data provided by Effective Compensation, Inc. ("ECI"). The Meridian Survey outlines data from similarly sized E&P companies with under $3 billion in assets. ECI's Annual Oil & Gas E&P Industry Compensation Survey (“ECI Survey”) provides data for over 300 jobs found in E&P firms in the United States. The Committee references data from these surveys for our Named Officers’ positions as additional E&P industry data points to confirm the reasonableness of compensation. +The Committee understands the inherent limitations in using any peer group or data set. For example, there are fluctuations in survey participation from year to year and competition for executive talent involves companies potentially much larger than we are. The Committee does not consider data collected from any of these sources to be prescriptive. Rather, the Committee relies upon data regarding the Peer Group as reference points around which to make informed decisions about the appropriate level and form of compensation for each Named Officer. +Compensation Philosophy and Elements of Compensation +The Company’s executive compensation program is designed to do the following: +● +Attract and retain a highly qualified and motivated management team by offering industry competitive opportunities; +● +Appropriately reward individual executive officers for their contributions to the achievement of Callon’s key short-term and long-term strategic objectives through the use of variable compensation; and +● +Align the compensation of our executive officers with the long-term interests of our shareholders through the use of long-term equity compensation with a tie to TSR. +While the Committee has no pre-established policy or target for the allocation between either cash and non-cash or short-term and long-term compensation, we have designed the components of the Company’s compensation programs, so that as an executive’s responsibility increases, the compensation mix is generally weighted more heavily toward performance-based and at-risk compensation and less heavily toward base salary, while being mindful that the overall mix remains competitive. +41 +Our compensation programs are designed to incentivize our executive officers through maintaining a balance between rewarding the achievement of short-term or annual results and ensuring the Company’s long-term growth and success, thereby aligning their interests with those of our stockholders. In order to compete in this environment, the Committee believes that our executive officers’ compensation should have the following components: +Component +Purpose +Philosophy Statement +Base Salary +· Pay for expertise and experience +· Attract and retain talented executives +· Provide stable compensation level +· Compete with comparable companies +· Reflective of individual skills, experience, tenure and expertise necessary to execute Callon’s business strategy +· Competitive relative to similarly-sized peers +Annual Cash Bonus Incentive +· Motivates our executive officers to achieve our short-term business objectives that drive long-term performance while providing flexibility to respond to opportunities and changing market conditions +· Provide annual recognition of performance based on achievement of individual and corporate strategic objectives +· Promote and encourage pay-for-performance +· Reflective of internal equity considerations +· Goals aligned with our annual performance targets +· Modest or no reward for performance below expectations and potential for significantly increased reward for exceptional performance +· Provide balance in compensation programs and avoid encouraging undue risk-taking +· Competitive relative to similarly-sized peers +Long-Term Equity or Equity-Based Incentive +Awards +· Motivates executive officers to achieve our business objectives by tying incentives to the performance of our stock over the long term +· Match competitive practices to attract and retain employees +· Provide a mix of equity awards that focuses executives on the long-term value and avoid encouraging undue risk-taking +· Ensures that realized value to the executive aligns with value delivered to stockholders. +· Recognizes and rewards share performance relative to industry peers +· Provides a strong performance-based equity component +· Aligns compensation with sustained long-term value creation +· Allows executives to acquire a meaningful and sustained ownership stake in the Company +· Competitive relative to similarly-sized peers +Retirement and Health Benefits +· Provide financial security for employees and their families +· Ensure a financial safety net +· Provide competitive level of benefits +· Helps attract and retain executive talent and remain competitive in our industry by offering a comprehensive employee benefits package +· Provides health and welfare benefits comparable to those provided to all other employees +· Provides financial security in the event of various individual risks and maximizes the efficiency of tax-advantaged compensation vehicles +Severance Protection +· Match competitive practices to attract and retain employees +· Ensure executives consider all possible transactions to increase stockholder value related to changes in control of the Company +· Benefit levels based on peer group practices with consideration to stockholder value +· Attracts and retains executives in a competitive and changing industry, ensures executives act in the best interests of stockholders in a change in control, and settles up front any potential dispute regarding an executive’s termination +42 +Determination of Each Element of Compensation +Base Salaries . We provide all of our employees, including our Named Officers, with an annual base salary to compensate them for their services during the year. Our Compensation Committee recognizes that a substantial amount of competition exists in the oil and gas industry for attracting and retaining qualified management teams, particularly in the Permian Basin. The Compensation Committee may also evaluate our Named Officers’ salaries together with other components of their compensation to ensure that the executive’s total compensation is in line with our overall compensation philosophy and market practices in our Peer Group or our industry in general. +At a regularly scheduled meeting, generally in March of each year, the Committee reviews the base salary of our CEO and other Named Officers. Actual individual salary amounts reflect the Committee’s subjective analysis of a number of factors, including the individual officer’s experience, skills, contributions and tenure with Callon, changes to the individual’s position within the Company, trends in compensation practices within the our Peer Group and industry, and his or her roles and responsibilities and expected future contribution to our success. In addition, the Committee also considers the input and recommendations of Meridian regarding base salaries, as well as the input of the CEO when evaluating base salary for the other executive officers. Upon review of these various factors and noting that the base salary of our Named Officers were generally in line with our Peer Group, except for an increase in Mr. Gatto’s base salary as a result of his promotion to CFO, no increases in base salaries for any of the Named Officers were made in 2014. Base salaries for all named executive officers for 2012, 2013 and 2014 are shown in the “Salary” column and the footnote thereto of the Summary Compensation Table. +Annual Cash Bonus Incentive . A core component of our executive compensation philosophy is that pay should be linked directly to performance and that a significant portion of total annual compensation should be placed at risk. In order to motivate executives to achieve our annual business goals, Named Officers, senior management and other non-management technical personnel have the potential to receive a significant portion of their annual cash compensation as a cash bonus. The Committee annually conducts a subjective review of factors and works with senior management to establish operational and financial target bonus opportunities, for purposes of evaluation of performance following the end of the year. The 2014 annual bonus award opportunities for each executive officer were expressed as a percentage of the executive officer’s annual base salary, and awards are ultimately paid to the executive officers based on the achievement of specified Company performance targets, as well as the executive officer’s individual performance, including overall duties, responsibilities, expertise and contributions to Company results, as determined in the Committee’s discretion. For 2014, the Committee made no changes to the target bonus opportunities, which are provided in the table below. +Named Officer +Target Bonus Opportunity +(% of Base Salary) +Chief Executive Officer +100% +Chief Financial Officer and SVP - Operations +90% +Other Named Officers +50% – 70% +Compensation Committee Process +The Compensation Committee, in collaboration with management and the Consultant, if applicable, annually reviews and approves corporate goals and objectives relevant to executive officer compensation, that include financial, operational and strategic performance goals for the Company. The Committee believes that these performance expectations , taken together, are objective indicators of overall successful performance. At regular meetings, the Committee periodically reviews the Company’s progress toward meeting the bonus objectives for the year. The Committee prefers not to rely solely on a formulaic approach that results in automatic payouts, so the Committee retains the flexibility to exercise its discretion and take into account and adjust for special or unusual factors that may have contributed to the achievement of these objectives, such as acquisitions, commodity prices or other factors considered appropriate by the Committee at the time of the award. The agreed performance objectives and results for 2014 were as follows: +43 +Performance Objectives +Rationale and Results +Operate in a Safe and Environmentally Friendly Manner +Rationale : We believe that there is a strong correlation between positive long-term business performance and solid safety performance and that operating in a safe and environmentally friendly manner is critical to ensuring execution of our business plan. +Results : +● Callon achieved a 2014 ORIR (OSHA Recordable Incident Rate) of 1.18 versus a pre-established target of 0.75 ORIR. While above the target, the Committee noted that the rate is within range of reported ORIR by other similar sized operators in the Permian Basin. The Committee also noted that, in keeping with our high safety expectations, four of the five recordable injuries in 2014 occurred in January and those Contractors no longer work for Callon. +● No lost-time accidents associated with our work activities in 2014. +● Significantly improved the quality of near-miss reporting and behavior based safety observation, which contributes to instilling a high performance safe-work culture and reducing injuries. +Increase Daily Production +Rationale : Continued production growth directly contributes to the Company’s cash flow. +Results : +● The Committee set a Permian Basin daily production “exit rate” target of 5,200 BOE/d. Driven by strong production growth in the liquids-rich Wolfcamp/Spraberry plays, the Company achieved this goal and increased both daily and annual Permian production by 154% respectively, from 2,227 BOE/d in 2013 (78% oil) to 5,648 BOE/d in 2014 (82% oil), and from 813 MBOE in 2013 to 2,062 MBOE in 2014. +● The Company increased its total net daily production for calendar year from 3,871 BOE/d in 2013 (64% oil) to 5,648 BOE/d in 2014 (82% oil), a 46% increase +● Through the successful acquisition of core acreage, added average net daily production of approximately 1,250 BOE/d (70% oil). +Increase Proved Reserves +Rationale : Growing reserves is a critical component of a healthy exploration and production business. Reserves provide the source of production, which is directly converted to revenue to drive the business. +Results : +· The Committee set a proved reserves additions target of 9.0 MBOE. The Company exceeded the target adding 20.0 MBOE of net reserves in 2014 and ending 2014 with estimated net proved reserves of 32.8 MMBOE, representing a 121% increase over comparable Permian Basin reserves at year-end 2013 of 14.9 MMBOE. +● With the utilization of 2 horizontal rigs, the Company drilled 27 gross (24.4 net) horizontal and 7 gross (4.3 net) vertical wells, further advancing the de-risking and delineation of additional benches of the Wolfcamp and Spraberry formations, contributing to the significant increase in proved reserves. +● Callon’s estimated total proved reserves were 78% oil and 55% proved developed. Using SEC prescribed commodity prices, 2014 resulted in a present value of pre-tax future net cash flows discounted at 10% (“PV-10 Value”) of $630 million for the Company’s proved reserves, compared to $301 million at year-end 2013. +● Completed the successful acquisition of core acreage, acquiring 6,230 gross (3,862 net) acres located in Midland and Andrews Counties, which are in close proximity to our existing Carpe Diem and Pecan Acres fields, adding 194 gross (121.6 net) potential horizontal drilling locations in producing benches and 255 gross (159.9 net) additional potential horizontal drilling locations targeting other prospective zones, and 4.0 million BOE of net proved developed producing reserves. +● Expanded our asset base in existing core development fields by acquiring 1,527 net acres through advancing a “bolt-on” offsetting acreage strategy, which provided acreage at costs significantly below the value assigned to larger blocks of acreage, while providing opportunities to efficiently exploit our asset base and add reserves. +44 +Increase Financial Flexibility +Rationale : Improved financial flexibility allows the Company to successfully execute its operating strategy and lowers the risk profile of the Company. +Results : We have positioned the company with the financial flexibility to accommodate existing and emerging growth initiatives. The Company: +● Increased total revenues by $49 million or 48%, from $103 million in 2013 to $152 million in 2014, and earnings per share increased from $(0.01) in 2013 to $0.65 in 2014. +● Completed a common stock offering of 14,375,000 shares for $129.4 million in gross proceeds and entered into a $300 million term loan to finance the Central Midland Basin acquisition and provide long-term capital to support our ongoing horizontal drilling program. +● Increased the Company’s borrowing base under the Credit Facility to $250 million, with a syndicate of ten lending institutions. +● Retired the remaining $48.5 million of our 13% Senior Notes, improving our cost of capital. +Improve Operating Efficiency +Rationale : Increased operating efficiency improves our margins and allows us to more efficiently deploy capital. +Results : We continue to achieve significant reductions in lease operating expenses (“LOE”) and enhance our horizontal drilling efficiencies. +· Finding and development cost of $14.21 per BOE, down from $15.32 per BOE at year-end 2013. +● Implemented an increasing proportion of gas lift systems for wells targeting the Wolfcamp zones, which, combined with the practice of restricting total produced fluids (oil and water) to a range of 1,500 - 2,400 barrels per day, are expected to contribute to shallower production declines. We also expect to benefit from reduced interference from offsetting well completions, reducing downtime due to mechanical failures and enhancing ultimate recovery estimates. +● Continued to develop our operational expertise and efficiencies, particularly in horizontal pad drilling, achieving an average horizontal well cost of $7.4 million for average lateral lengths of 7,730’, among the lowest cost operators in the Permian Basin. +● Achieved an LOE per BOE of $10.85 versus a target of $9.00, a reduction of 22.5% from $14.00 in 2013. While the target was not achieved, the Committee took into account other operating efficiencies accomplished such as lower per BOE finding and development costs. +Other Strategic Achievements +In addition to performance criteria above, the Committee considers other strategic factors and management performance in response to external conditions. For 2014, the Committee took into account the following in setting bonus compensation: +● Absolute and relative stock performance despite the effects of a low commodity price environment; +● Continued progress in building a strong technical team, promoting and enhancing communication and teamwork throughout the Company, which contributes to our success and empowers all employees to contribute to their utmost potential; +● Protected margins through well managed oil and gas derivative positions; and +● Managing overall risk. +45 +At the January 2015 Compensation Committee meeting, the Committee evaluated performance against the 2014 performance criteria described above and determined that the management team overall exceeded expectations on most of the financial and operational metrics, along with other strategic achievements as noted above. The Committee recognized that the Company exceeded the daily production, reserves, financial, and operating targets, and achieved an impressive environmental and safety record for the year. As a result, the Committee determined actual bonus amounts paid for 2014 performance as follows: +Named Officer +2014 Annual Bonus +Fred L. Callon +$ 787,500 +B. F. Weatherly +491,400 +Gary A. Newberry +500,000 +Joseph C. Gatto, Jr. +500,000 +Note: Mr. Weihe resigned from the company effective February 3, 2015 and thus did not receive an annual bonus. +Long-term Equity Incentives . Awards of long-term equity incentive compensation are intended to provide a substantial forward-looking incentive to our executive officers that emphasizes long-term value creation, aligns the long-term interests of our executive officers with those of our stockholders by directly linking rewards to stockholder return, and fosters meaningful levels of long-term stock ownership by our executive officers. The Committee administers the Company’s long-term incentive plans, including approving award recipients, determining the total number of awards, vesting of awards and performance criteria, including TSR. For the grant of equity compensation to executive officers, the Committee will typically consider information provided by the Consultant related to the overall competitive environment associated with long-term compensation. We have no program, plan or obligation that requires us to grant equity compensation on specified dates. However, the Committee follows a policy of not granting equity incentives when material non-public information exists that may affect the short-term price of the Company’s stock. +For 2014 grants, the Committee approved a mix for the Company’s Named Officers of time-based awards and performance-based awards tied to relative TSR, with a portion of the time-based awards paid in cash. The following table sets forth the number of restricted stock units, phantom shares and TSR phantom shares awarded to the Named Officers in 2014: +Named Officer +Restricted Stock Units Payable in Common Stock (1) +Phantom Shares Payable in Cash (2) +TSR Phantom Shares Payable in Cash (3) +Fred L. Callon +56,052 +9,892 +98,916 +B. F. Weatherly +20,482 +3,614 +36,145 +Gary A. Newberry +20,482 +3,614 +36,145 +Joseph C. Gatto, Jr. +20,482 +3,614 +36,145 +John G. Weihe (5) +5,598 +988 +9,880 +(1) +Amount represents restricted stock units vesting on May 14, 2017 and payable in Company common stock on the vesting date. +(2) +Amount represents phantom shares vesting on May 14, 2017 and payable in cash based on closing NYSE market price of the Common Stock on the date of vesting. +(3) +Amount represents performance-based phantom shares payable in cash and which will vest between 0% and 200% based on the Company’s TSR when compared to the specified peer group. The adjusted performance-based phantom shares will vest on December 31, 2016. +(4) +Mr. Weatherly retired from the Company effective February 15, 2015. +(5) +Mr. Weihe resigned from the Company effective February 3, 2015. +46 +Performance Share Program. Under this program, the Committee determined that performance should be measured objectively rather than subjectively and should be based on relative TSR (as defined in the award agreements) over a three-year performance period. Named Officers receive cash value based on the Company’s share price and relative TSR over the specified performance period, as ranked among the comparably-measured TSR of the applicable peer group. The Committee believes relative TSR is an appropriate long-term performance metric because it generally reflects all elements of a company’s performance and provides the best alignment of the interests of management and the Company’s stockholders. The Committee also believes that the performance share program provides a good balance to the restricted stock program. On the grant date, an employee is awarded a number of “TSR phantom shares.” The TSR phantom shares vest if the employee continues to be employed until the vesting date specified in the TSR phantom share award. When the TSR phantom shares vest, the executive is entitled to a cash payment equal to the fair market value of the “adjusted” TSR phantom shares. TSR is the change in the stock price plus dividends using a 20-day average at the beginning and end of the performance period. The scale of payout ranges between maximum, or 200% of target, and threshold, or 0% of target, as set forth below, to incentivize our executive officers to maximize stockholder value. The number of adjusted TSR phantom shares is calculated by comparing Callon’s TSR to the TSR of a peer group specified in the award agreement, according to the following 2014 schedule: +Callon’s TSR Rank versus Peers +Phantom Shares Vesting +as a Percentage of Target +1 – 2 +200% +3 +175% +4 +150% +5 +125% +6 – 7 +100% +8 +75% +9 +50% +10 +25% +11 – 12 +0% +TSR Phantom Shares – Results for Performance Period Ending December 31, 2014. In May 2012, our Compensation Committee granted TSR phantom shares to the Named Officers, which vested on December 31, 2014. Under the provisions of these awards, the targeted performance shares were subject to our relative TSR performance compared with the TSR of the peer group specified in the award grant, which was different than the peer group for the 2014 TSR phantom share awards. Callon ranked 4 th out of 13 peer companies for the May 2012 performance awards that vested December 31, 2014. As a result, 150% of the number of shares were paid, as shown in the table above under TSR Phantom Shares Payable in Cash. +Perquisites and Other Benefits . Benefits represent a relatively small part of the Company’s overall compensation package. However, these benefits help attract and retain senior level executives and are reviewed annually to ensure that they are competitive with industry norms. We provide benefits that are common in the oil and gas E&P industry to all of the Company’s employees. These benefits consist of a group medical and dental insurance program for employees and their qualified dependents, group life insurance for employees and their spouses, accidental death and dismemberment coverage for employees, long-term disability, a Company sponsored cafeteria plan and a 401(k) employee savings and protection plan. The Company pays the full costs of these benefits. Employee life insurance amounts surpassing the Internal Revenue Service maximum are treated as additional compensation to all employees. The Company’s 401(k) contribution to each qualified participant, including the Named Officers, is calculated based on 5% of the employee’s IRS eligible salary, excluding annual cash bonuses, and is paid one-half in cash and one-half in Company common stock, limited to IRS regulation dollar limits. The Company also matches employee deferral amounts, including amounts deferred by Named Officers, up to a maximum of 5% of IRS eligible compensation. The Company pays all administrative costs to maintain the plan. +47 +Each year, the Company purchases a certain number of hours of flight time through a fractional aircraft ownership arrangement. These hours are made available for business use to the executive officers and other employees of the Company. Use of this aircraft is provided to executives in connection with their extensive business travel requirements in an effort to reduce travel time and related disruptions and to provide additional security, thereby increasing their availability, efficiency, and productivity. The Company’s policy is not to permit employees, including executive officers, to use these hours for personal use. The Company expects there will be occasions when a personal guest (including a family member) will accompany an employee on a business-related flight. +The Company’s executive officers are entitled to certain benefits, or perquisites, that are not otherwise available to all of the Company’s employees. We provide the Company’s CEO, CFO and other executive officers with use of a Company automobile. We purchase the automobile and pay for all maintenance, repairs, insurance and fuel. The employee is required to recognize taxable income using the Internal Revenue Service’s annual lease value method for personal use of the vehicle. We also pay a portion of the annual premium for our CEO’s term life insurance policy, for which he is the sole beneficiary and which the Company has no economic interest in the proceeds. The costs associated with these benefits for the Named Officers are reported as “Other Compensation” in the Summary Compensation Table. The Committee feels these perquisites are modest yet competitive with the perquisites provided to similarly situated oil and gas industry executives and includes the value of such benefits in determining total compensation of the Company’s executives. +Severance Protection. The Company does not have any employment agreements with its executive officers, however, we believe that providing consistent, competitive levels of severance protection to senior executives helps minimize distraction during times of uncertainty and helps to retain key employees. To align with market practices, facilitate the Company’s ability to attract and retain executives, and ensure all Named Officers are motivated to consider transactions that could increase stockholder value, we have entered into change-in-control severance compensation agreements with the Company’s executive officers, which include continued salary, benefits and accelerated vesting of equity awards. We believe that these provisions create important retention tools for us, such as providing for accelerated vesting of equity awards upon a termination of employment in connection with a change in control, which provides employees with value in the event of a termination of employment that was beyond management’s control. In addition, we believe that it is important to provide the Named Officers with a sense of stability, both in the midst of transactions that may create uncertainty regarding their future employment and post-termination as they seek future employment. We believe post-termination payments allow management to focus their attention and energy on making objective business decisions that are in the best interest of the Company, without allowing personal considerations to cloud the decision-making process. +These agreements include non-competition, non-solicitation, and non-disclosure provisions. In addition, the agreements contain a “claw back” provision that will apply in the event the executive violates any of these provisions in order to protect the Company if the benefits are triggered. None of the agreements includes an excise tax gross-up provision. The Committee chose not to provide guaranteed severance benefits outside of a change-in-control. +Risk Assessment Related to our Compensation Structure +The Compensation Committee believes our compensation plans are appropriately structured to encourage long-term value creation and are not reasonably likely to have a material adverse effect on the Company. The Committee, with assistance of the Consultant, reviewed the elements of executive compensation during 2014 to determine whether any portion of executive compensation encouraged excessive risk taking. The Company’s management conducted a similar risk assessment with respect to other employees. Upon evaluation of those assessments, the Committee and management concluded that the Company’s compensation policies and practices for the Named Officers and other employees do not present risks that are reasonably likely to have a material adverse effect on the Company. Risk mitigating features of our executive compensation program identified in the risk review included: +48 +● +A balance of short-term and long-term programs to ensure focus on both elements of Company performance; +● +An annual long-term incentive plan award component of the program, which is intended to be the largest component of each executive officer’s overall compensation package, is divided into different types of awards, but all are weighted toward long-term achievement, with vesting periods of three years that are based on the value of the Company’s stock and not on any particular metric, which could encourage risk-taking. +● +Performance targets measured at the corporate level, rather than at the individual or business unit level; +● +The use by the Committee of its discretion to assess annual performance in the bonus plan; +● +Caps on awards payable to any individual under our bonus and performance share programs, along with Compensation Committee discretion to decrease bonus payouts in the event that it believes excessive risk was taken; +● +Reasonable change-in-control severance protections; and +● +Strong executive stock ownership requirements. +Internal Revenue Service Limitations . When establishing the Company’s compensation programs, the Committee considers the effects of relevant tax laws. The Company’s programs are designed to comply with Section 409A of the tax code, which applies to nonqualified deferred compensation, in order to prevent negative tax consequences for the Company’s executives. Under Section 162(m) of the Internal Revenue Code, a limitation is placed on tax deductions of any publicly-held corporation for individual compensation to certain “covered employees” of such corporation exceeding $1,000,000 in any taxable year, unless the compensation is performance-based. However, the Committee, after taking into consideration changing business conditions or the executive’s individual performance and/or changes in specific job duties and responsibilities, reserves the right to use its judgment to authorize compensation payments that do not comply with the exemptions in Section 162(m) when it believes that such payments are appropriate. +Insider Trading Policy. We have an Insider Trading Policy under which all employees, including our Named Officers and members of our Board, are prohibited from engaging in short-term or speculative transactions in the Company’s securities, including short sales, options and other derivatives, and from holding Company securities in a margin account or pledging securities as collateral for a loan during periodic “trading blackout” periods. When material non-public information about the Company may exist and may have an influence on the marketplace, a trading blackout period is placed in effect by management. +Stock Ownership Policy. Consistent with the goal of driving long-term value creation for our stockholders and in order to discourage undue risk-taking, the Company’s stock ownership guidelines require significant stock ownership by the Named Officers and Directors. The Committee believes that meaningful stock ownership by our officers and Directors is critical in aligning management’s interests with the interests of our stockholders. In March 2008, the Committee adopted a stock ownership policy, which applies to the CEO and the other Named Officers. The provisions of the policy provide for the investment position, computed on December 31 of each year, of the CEO to be no less than six times his or her base salary. For other Named Officers, the investment position shall be no less than two times base salary. Investment position is defined as calculated value of shares owned, shares owned indirectly, equivalent shares invested in the officer’s 401(k) plan, and unvested portion of time-based vested restricted shares. Value attributable to shares represented by both vested and unvested stock options and the value of unvested performance-based shares is excluded. Each Named Officer has a period of five years from the date of adoption to attain the required investment position. If a Named Officer becomes subject to a greater investment position due to a promotion or an increase in salary, the Named Officer will be expected to attain the increased investment position within three years of the change. The Committee reserves the right to approve an alternate stock ownership guideline for Named Officers who can demonstrate a severe hardship in meeting the general guidelines. +49 +Certain Relationships and Related Party Transactions . The Company’s Audit Committee charter provides that the Committee shall review and approve all related party transactions. A transaction will be considered a “related party transaction” if the transaction would be required to be disclosed under Item 404 of Regulation S-K. In addition, the Company’s Code of Business Conduct and Ethics provides that an officer’s or a Director’s conflict of interest with the Company may only be waived if the Nominating and Corporate Governance Committee approves the waiver and the full Board ratifies the waiver. As of December 31, 2014, we are not aware of any related party transactions with the Company’s executive officers that may cause a conflict of interest with the Company. +Recoupment Policy. We currently have no recoupment policy applicable to annual incentive bonuses or equity awards other than those required under Sarbanes-Oxley legislation. The Committee will continue to evaluate the need to adopt such a policy. +Compensation Committee Report +The Compensation Committee has reviewed and discussed with management the CD&A required by Item 402(b) of Regulation S-K promulgated under the Securities Exchange Act of 1934, as amended, and based on such review and discussions, the Committee has recommended to the Board that the CD&A be included in this proxy statement relating to the 2015 Annual Meeting of Stockholders. +Respectfully submitted by the Compensation Committee of the Board, +L. Richard Flury, Chairman +Larry D. McVay +Anthony J. Nocchiero +John C. Wallace +James M. Trimble +50 +EXECUTIVE COMPENSATION TABLES +The following table summarizes the total compensation for 2014, 2013 and 2012 awarded to, earned by or paid to the Named Officers. +Summary Compensation Table +Name +Year +Annual Salary +Cash Bonus +Stock Awards +Other (7) +Total +Fred L. Callon +2014 +$525,000 +$787,500 +(2) +$1,642,000 +(3) +$53,263 +$3,007,763 +Chairman, President and +2013 +525,000 +656,250 +1,641,382 +(4) +52,769 +2,875,401 +Chief Executive Officer +2012 +509,880 +446,250 +1,811,388 +(5) +51,280 +2,818,798 +B. F. Weatherly (8) +2014 +$364,000 +$491,500 +(2) +$600,000 +(3) +$39,167 +$1,494,667 +EVP, Corporate Secretary +2013 +364,000 +491,500 +697,589 +(4) +42,217 +1,513,806 +and Chief Administrative Officer +2012 +364,000 +278,460 +769,842 +(5) +36,177 +1,448,479 +Gary A. Newberry +2014 +$350,000 +$500,000 +(2) +$600,000 +(3) +$40,524 +$1,490,524 +SVP, Operations +2013 +350,000 +394,000 +410,347 +(4) +35,448 +1,189,795 +2012 +350,000 +267,750 +498,128 +(5) +32,945 +1,148,823 +Joseph C. Gatto, Jr. +2014 +$330,769 +(1) +$500,000 +(2) +$600,000 +(3) +$33,983 +$1,464,752 +SVP, Chief Financial Officer +2013 +300,000 +(1) +375,000 +410,347 +(4) +33,779 +1,119,126 +and Treasurer +2012 +225,000 +(1) +178,500 +669,335 +(5)(6) +27,600 +1,100,435 +John G. Weihe (9) +2014 +$233,899 +— +$164,000 +(3) +$29,041 +$426,940 +VP, Exploration +2013 +234,406 +$150,000 +164,138 +(4) +28,061 +576,605 +2012 +232,098 +130,000 +160,335 +(5) +28,422 +553,165 +(1) +Mr. Gatto’s employment date was April 5, 2012 and his annual salary was $300,000. During March 2014, Mr. Gatto was promoted to CFO, Senior Vice President and Treasurer, which increased his annual salary to $350,000. +(2) +Cash bonus awarded in March 2015 in recognition of 2014 performance. +(3) +Represents the grant date fair value of the restricted stock units and TSR phantom shares granted to the Named Officers on May 14, 2014 computed in accordance with FASB ASC Topic 718. The assumptions utilized in the calculation of these amounts are set forth in footnotes 8 and 9 to the Company’s consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2014 filed with the SEC on March 5, 2015. +(4) +Represents the grant date fair value of the restricted stock units and TSR phantom shares granted to the Named Officers on May 15, 2013 computed in accordance with FASB ASC Topic 718. The assumptions utilized in the calculation of these amounts are set forth in footnotes 7 and 8 to the Company’s consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2013 filed with the SEC on March 12, 2014. +(5) +Represents the grant date fair value of the restricted stock units and TSR phantom shares granted to the Named Officers on May 10, 2012 computed in accordance with FASB ASC Topic 718. The assumptions utilized in the calculation of these amounts are set forth in footnotes 9 and 10 to the Company’s consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2012 filed with the SEC on March 14, 2013. +(6) +Includes the grant date fair value of the restricted stock units granted to the Named Officer on April 5, 2012 as an additional incentive for employment, computed in accordance with FASB ASC Topic 718. The assumptions utilized in the calculation of this amount is set forth in footnotes 9 and 10 to the Company’s consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2012 filed with the SEC on March 14, 2013. +(7) +See the Table of All Other Compensation and related footnotes below for reconciliation of All Other Compensation. +(8) +Mr. Weatherly retired as an executive officer of the Company effective February 15, 2015. +(9) +Mr. Weihe resigned as an executive officer of the Company effective February 3, 2015. +51 +Table of All Other Compensation +Name +Year +Company +Contributed Cash to +401(k) +Company +Contributed Common Stock to 401(k) (1) +Company Provided Auto (2) +Company +Paid +Other +Total +Fred L. Callon +2014 +$19,500 +$6,500 +$12,574 +$14,689 (3) +$53,263 +2013 +19,125 +6,375 +12,580 +14,689 (3) +52,769 +2012 +18,500 +6,250 +11,625 +14,905 (3) +51,280 +B. F. Weatherly (4) +2014 +$19,500 +$6,500 +$13,167 +— +$39,167 +2013 +19,125 +6,375 +16,717 +— +42,217 +2012 +18,500 +6,250 +11,427 +— +36,177 +Gary A. Newberry +2014 +$19,500 +$6,500 +$14,524 +— +$40,524 +2013 +19,125 +6,375 +9,948 +— +35,448 +2012 +18,500 +6,250 +8,195 +— +32,945 +Joseph C. Gatto, Jr. +2014 +$19,500 +$6,500 +$7,983 +— +$33,983 +2013 +19,125 +6,375 +8,279 +— +33,779 +2012 +16,875 +5,625 +5,100 +— +27,600 +John G. Weihe (5) +2014 +$11,720 +$5,860 +$11,461 +— +$29,041 +2013 +11,720 +5,860 +10,481 +— +28,061 +2012 +11,604 +5,802 +11,016 +— +28,422 +(1) +Subject to IRS limits, Company contributions to each person’s 401(k) account consist of a basic contribution equal to five percent (5%) of eligible annual base salary (funded one-half in cash and one-half in equivalent-valued common stock) plus a matching amount (limited to five percent (5%) of eligible annual base salary if such employee individually contributed at least eight percent (8%) of their eligible annual base salary). The number of shares contributed is determined on a monthly basis by dividing one-half of the total basic cash contribution by the closing market price on the last trading day of the month. +(2) +Represents annual depreciation based on a three-year life, plus insurance, fuel, maintenance and repairs, pursuant to IRS Reg §1.61-21, Taxation of Fringe Benefits. +(3) +Represents premiums paid by the Company on a personal life insurance policy for which Mr. Callon is the sole beneficiary. +(4) +Mr. Weatherly retired as an executive officer of the Company effective February 15, 2015. +(5) +Mr. Weihe resigned as an executive officer of the Company effective February 3, 2015. +52 +Grant of Plan-Based Awards During 2014 +The following table presents grants of equity awards during the fiscal year ending December 31, 2014: +Estimated Future Payouts Under Equity Incentive Plan Awards (1) +Name +Grant Date +Threshold +Target +Maximum +Other Awards +(Shares or Units) +Grant Date Fair Value +Fred L. Callon +5/14/14 +— +— +— +56,052 (2) +$558,280 +5/14/14 +— +— +— +9,892 (3) +98,520 +5/14/14 +— +98,916 +197,832 +— +985,200 +B. F. Weatherly (4) +5/14/14 +— +— +— +20,482 (2) +$204,000 +5/14/14 +— +— +— +3,614 (3) +36,000 +5/14/14 +— +36,145 +72,290 +— +360,000 +Gary A. Newberry +5/14/14 +— +— +— +20,482 (2) +$204,000 +5/14/14 +— +— +— +3,614 (3) +36,000 +5/14/14 +— +36,145 +72,290 +— +360,000 +Joseph C. Gatto, Jr. +5/14/14 +— +— +— +20,482 (2) +$204,000 +5/14/14 +— +— +— +3,614 (3) +36,000 +5/14/14 +— +36,145 +72,290 +— +360,000 +John G. Weihe (5) +5/14/14 +— +— +— +5,598 (2) +$55,760 +5/14/14 +— +— +— +988 (3) +9,840 +5/14/14 +— +9,880 +19,760 +— +98,400 +(1) +Amount represents TSR phantom shares payable in cash on the vesting date, which will be adjusted between 0% and 200% based on our TSR compared with the TSR of our Peer Group. The adjusted performance-based phantom shares will vest on December 31, 2016. +(2) +Amount represents restricted stock units vesting on May 14, 2017 and will be settled in common stock. +(3) +Amount represents phantom shares vesting on May 14, 2017 and will be settled in cash based on the closing NYSE market price of the Common Stock on the vesting date. +(4) +This column shows the grant date fair value of the awards granted to the Named Officers on the date indicated computed in accordance with FASB ASC Topic 718. The assumptions utilized in the calculation of these amounts are set forth in footnotes 8 and 9 to the Company’s consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2014 filed with the SEC on March 5, 2015. The value ultimately realized by the executive upon the actual vesting of the awards may be more or less than the grant date fair value. +53 +Stock-Based Incentive Compensation Plans +The 2011 Plan was approved by stockholders on May 12, 2011. Awards available under the 2011 Plan include grants of stock options, stock appreciation rights or units, restricted stock, restricted stock units, phantom stock or performance shares or units. As of March 27, 2015, 1,286,200 shares remain unissued within the 2011 Plan. +Outstanding Equity Awards at Fiscal Year-End +The following table contains information concerning all unexercised and unvested stock awards that were held as of December 31, 2014 for the Named Officers: +Stock Awards +Option Awards +Unvested Shares or Units of Stock +Equity Incentive Plan Awards +Name +Number of +Securities +Underlying +Excercisable +Options +Option Exercise Price +Option Expiration Date +Number of Unvested Shares or Units of Stock +Market +Value of Unvested Shares +or Units of Stock (7) +Number of Unearned Shares, Units or Other Unvested Rights +Market or Payout Value of Unearned Shares, Units or Other Unvested Rights (7) +Fred L. Callon +— +— +— +151,246 (3) +$824,291 +26,690 (8) +$145,460 +— +— +— +160,378 (4) +874,060 +28,302 (9) +154,246 +— +— +— +56,052 (5) +305,483 +9,892 (10) +53,911 +271,091 (1) +— +— +— +— +— +1,477,446 +98,916 (2) +— +— +— +— +— +539,092 +B. F. Weatherly (11) +— +— +— +— +— +— +— +Gary A. Newberry +— +— +— +41,592 (3) +$226,676 +7,340 (8) +$40,003 +— +— +— +40,095 (4) +218,518 +7,075 (9) +38,559 +— +— +— +20,482 (5) +111,627 +3,614 (10) +19,696 +67,773 (1) +— +— +— +— +— +369,363 +36,145 (2) +— +— +— +— +— +196,990 +Joseph C. Gatto, Jr. +— +— +— +33,334 (6) +$181,670 +3,150 (8) +$17,167 +— +— +— +17,850 (3) +97,282 +7,075 (9) +38,559 +— +— +— +40,095 (4) +218,518 +3,614 (10) +19,696 +67,773 (1) +— +— +20,482 (5) +111,627 +— +369,363 +36,145 (2) +— +— +— +— +— +196,990 +John G. Weihe (12) +— +— +— +— +— +— +— +(1) +Amount represents performance-based phantom shares settleable in cash on the vesting date and which will be adjusted between 0% and 200% based on the Company’s TSR compared to the Company specified peer group. The adjusted performance-based phantom shares will vest on December 31, 2015. +54 +(2) +Amount represents performance-based phantom shares settleable in cash on the vesting date and which will be adjusted between 0% and 200% based on the Company’s TSR compared to the Company specified peer group. The adjusted performance-based phantom shares will vest on December 31, 2016. +(3) +Represents restricted stock units awarded May 10, 2012 and are settleable in stock on the May 10, 2015 vesting date. +(4) +Represents restricted stock units awarded May 15, 2013 and are settleable in stock on the May 15, 2016 vesting date. +(5) +Represents restricted stock units awarded May 14, 2014 and are settleable in stock on the May 14, 2017 vesting date. +(6) +Represents restricted stock units awarded April 5, 2012 and are settleable in stock. Units ratably vest one-third on each July 1 beginning 2013. +(7) +Amounts calculated based on the December 31, 2014 the Company’s common stock closing price as quoted on the NYSE of $5.45 per share. +(8) +Represents phantom stock shares awarded May 10, 2012 and are settleable in cash on the May 10, 2015 vesting date. +(9) +Represents phantom stock shares awarded May 15, 2013 and are settleable in cash on the May 15, 2016 vesting date. +(10) +Represents phantom stock shares awarded May 14, 2014 and are settleable in cash on the May 14, 2017 vesting date. +(11) +Mr. Weatherly retired from the Company effective February 15, 2015 and per the terms of his retirement agreement, all outstanding awards immediately vested. +(12) +Mr. Weihe resigned from the Company effective February 3, 2015 and per the terms of his retirement agreement, all outstanding awards immediately vested. +Option Exercises and Stock Vested +The following table provides information about the value realized by the Named Officers on option exercises, vesting of restricted stock units, phantom shares, and TSR phantom share award payouts during 2014: +Exercise +Vesting +Name +Number of Shares Acquired (1) +Value Realized +Number of Shares Acquired +Value Realized (6) +Fred L. Callon +— +$1,454,627 (2) +93,500 (4) +$950,895 +— +165,578 (3) +B. F. Weatherly +— +$618,215 (2) +63,750 (4) +$648,338 +— +112,894 (3) +Gary A. Newberry +— +$400,019 (2) +42,500 (4) +$432,225 +— +75,263 (3) +Joseph C. Gatto, Jr. +— +— +33,333 (5) +$397,996 +John G. Weihe +— +$85,837 (2) +18,000 (4) +$183,060 +(1) +There were no options exercised by any Named Officer in 2014. +(2) +Includes the value of the vesting of performance-based phantom shares on December 31, 2014 and settled in cash. The value realized reflects the taxable value to the Named Officer as of the date of the vesting of performance-based phantom share awards. +(3) +Represents restricted stock units awarded May 12, 2011 and were settleable in cash on the May 12, 2014 vesting date. +(4) +Represents restricted stock awarded May 12, 2011 and were settleable in stock on the May 12, 2014 vesting date. +(5) +Represents 100,000 restricted stock units awarded April 5, 2012 and are settleable in stock. Units vest one-third on each subsequent July 1 st anniversary date following the award date. +(6) +Represents the aggregate dollar amount realized on the date of the vesting of the restricted stock based on the market price of a share of Company stock on the NYSE on the vesting date. +55 +Potential Payments Upon Termination or Change-in-Control +The following table shows the estimated gross taxable compensation payable upon termination following a change in control or upon death, disability or retirement. No amounts would be payable upon termination for other causes. The information assumes, in each case, that the officer’s termination was effective as of December 31, 2014. In presenting this disclosure, we describe amounts earned through December 31, 2014 and, in those cases where the actual amounts to be paid out can only be determined at the time of such executive’s separation from the Company, the estimates are of the amounts which would be paid out to the executives upon their termination. +Name / +Reason for Termination +Base +Salary (3) +Cash +Bonus (3) +Accelerated Stock Award Vesting (4) +Continued Employee Benefits (5) +Total +Fred L. Callon +Change in Control (1) +$1,575,000 +$1,575,000 +$4,760,570 +$118,743 (6) +$8,029,313 +Death, Disability, or Retirement (2) +— +— +4,760,570 +— +4,760,570 +B. F. Weatherly (7) +Change in Control (1) +— +— +— +— +— +Death, Disability, or Retirement (2) +— +— +— +— +— +Gary A. Newberry +Change in Control (1) +$700,000 +$700,000 +$1,279,276 +$49,790 +$2,729,066 +Death, Disability, or Retirement (2) +— +— +1,279,276 +— +1,279,276 +Joseph C. Gatto, Jr. +Change in Control (1) +$661,538 +$661,538 +$1,100,914 +$49,790 +$2,473,780 +Death, Disability, or Retirement (2) +— +— +1,100,914 +— +1,100,914 +John G. Weihe (8) +Change in Control (1) +— +— +— +— +— +Death, Disability, or Retirement (2) +— +— +— +— +— +(1) +The Company entered into a Severance Compensation Agreement with each of the Named Officers listed in the table above. See “Employment Agreements, Termination of Employment and Change-in-Control Arrangements.” +(2) +“Disability” is generally defined as the employee’s inability to carry out the normal and usual duties of his employment on a full-time basis for an entire period of six continuous months together with the reasonable likelihood, as determined by the Board after consultation of a qualified physician, he will be unable to carry out his normal and usual duties of employment. “Retirement” is generally defined as the employee’s attainment of an age which the Board determines to be consistent with normal retirement age. +(3) +In accordance with Mr. Callon’s Severance Compensation Agreement, the computation uses a three-year multiple with respect to the severance amount relating to salary and target bonus, while a two-year multiple is used for the other Named Officers. See “Employment Agreements, Termination of Employment and Change-in-Control Arrangements.” +(4) +The amounts are computed based on unvested stock awards at December 31, 2014 using the closing price of the Company’s common stock on the NYSE on the last trading day of 2014, at $5.45 per share. +(5) +Benefits consist of thirty-six months of employer provided family medical and dental insurance, life insurance, dependent life insurance, accidental death coverage and disability coverage for Mr. Callon and twenty-four months for the other Named Officers in the table. +(6) +Mr. Callon’s amount includes an additional allotment for each of the three years representing premiums paid on a life insurance policy for which the Company does not have any beneficial interest. +(7) +Mr. Weatherly retired from the Company effective February 15, 2015, therefore the Severance Compensation Agreement terminated, so termination estimates are not applicable. +(8) +Mr. Weihe resigned from the Company effective February 3, 2015, therefore the Severance Compensation Agreement terminated, so termination estimates are not applicable. +56 +Employment Agreements, Termination of Employment and Change-in-Control Arrangements +Employment Agreements. We do not have employment agreements with any of our executive officers. +Severance Compensation Agreements. The Company entered into Severance Compensation Agreements (“SCA”) with each of our Named Officers. The SCA will terminate, except to the extent that any obligation of the Company thereunder remains unpaid as of such time, upon the earliest of: (1) December 31, 2015, provided, however, that, on each anniversary date thereafter, the expiration date shall automatically be extended for one additional year unless, immediately prior to such anniversary date, either party shall have given written notice that it does not wish to extend this SCA, but in no event shall the expiration date be earlier than the second anniversary of the effective date of a change of control; (2) the termination of the Named Officer’s employment with Callon based on death, disability (as defined in the SCA), or cause (as defined in the SCA); and (3) the voluntary resignation of the Named Officer for any reason other than good reason (as defined in the SCA). +Pursuant to the SCA, if the executive incurs a “separation from service” from the Company (as such term is defined in final Treasury Regulations issued under Code Section 409A and other authoritative guidance issued thereunder) without cause by the Company or for good reason by him within two years following a change of control of the Company (or in certain cases, prior to a change of control), then the executive is entitled to a single lump-sum cash payment (payable on the date that is six months following the triggering event) in an amount equal to three times the sum (with respect to Mr. Callon) of: (a) the annual base salary in effect immediately prior to the change of control or, if higher, in effect immediately prior to the separation from service, and (b) the greater of the average bonus earned with respect to the three most recently completed full fiscal years or the target bonus for the fiscal year in which the change of control occurs, based on a forecast that has been approved by the Board of the results for the fiscal year in which the change of control occurs. For the other Named Officers, the salary and bonus multiple is two times. In addition, the Company must maintain at its expense until thirty-six months after a separation from service all life, disability, medical, dental, accident, and health insurance coverage for Mr. Callon. For the other Named Officers, the continued benefit period is twenty-four months. If the executive’s employment is terminated because of his death or disability, the Company is only required to make such payments if the termination occurred within six months after a change of control. “Good reason” is generally defined in the SCA as a change in the executive’s compensation, benefits, position, responsibilities, or location. A change of control is generally defined in the SCA as: (i) any person or group of persons acting in concert shall have become the beneficial owner of more than 50% of the outstanding common stock of the Company; (ii) the stockholders of the Company shall cause a change in the majority of the members of the Board within a twelve-month period; or (iii) the Company or its stockholders shall enter into an agreement to dispose of all or substantially all of the assets or outstanding capital stock of the Company. +The SCAs also provide that, upon a change of control, all stock options shall automatically become fully exercisable and all performance shares, restricted stock, stock appreciation rights and other similar rights held by the executive shall become fully vested, provided, however, that such acceleration of vesting shall not occur if it would be an impermissible acceleration under Section 409A of the Code. If the Company cannot provide for acceleration of vesting as a result of provisions in existence prior to a change of control, any plan or agreement, or Section 409A, the Company must provide in lieu thereof a lump-sum cash payment equal to the total value of the outstanding and unvested stock rights as of the date of separation from service. +The SCAs incorporate a provision to provide for the possible impact of the federal excise tax on excess parachute payments. The so-called “golden parachute” tax rules subject “excess parachute payments” to a dual penalty: the imposition of a 20 percent excise tax upon the recipient and non-deductibility of such payments by the paying corporation. While the excise tax is seemingly evenhanded, the excise tax can discriminate against long-serving employees in favor of new hires, against individuals who do not exercise stock options in favor of those who do and against those who elect to defer compensation in favor of those who do not. For these reasons, we believe that the “net-best” provision included in the SCA is appropriate. If any payment is subject to any excise tax under Section 4999 of the Internal Revenue Code of 1986, as amended, the payment will be reduced so that no portion of the payment is subject to such excise tax if the net benefit payable would be at least as much as it would have been if no reduction was made. +Director Compensation +The compensation of our non-employee Directors is reviewed annually by the Compensation Committee and is approved by the Board. We use a combination of cash and stock-based incentive compensation to attract and retain qualified candidates to serve on our Board. In determining Director compensation, we consider the significant amount of time the Directors spend fulfilling their duties, as well as the competitive market for skilled directors. In 2014, the Compensation Committee directly engaged Meridian to review executive compensation and to conduct an annual review of the total compensation of our non-employee Directors. Specifically, Meridian evaluated retainer fees, potential meeting fees and stock-based long-term incentives using, as the competitive benchmark, total compensation paid to the directors of the Company’s Peer Group used in determining 2014 executive compensation. Historically, compensation was adjusted in January, coincident with the commencement of the Board term; however, in 2014 the Compensation Committee elected to change the commencement of the Board term to coincide with the Annual Meeting in May. Based on this review, no changes were made to our Directors’ compensation for 2014. Below is a summary of the compensation paid to our Non-Employee Directors in 2014. All Board and committee retainers are paid in annual installments. +57 +Each non-management Director receives compensation consisting of only an annual retainer of $40,000 per year, with an additional $20,000 per year for the chairman of the Audit Committee, an additional $15,000 per year to the chairman of the Compensation Committee, an additional $10,000 per year to the chairman of the Nominating and Corporate Governance Committee, and an additional $10,000 to the chairman of the Strategic Planning and Reserves Committee. Each non-management Director is reimbursed for reasonable out-of-pocket costs incurred to attend Board meetings. In addition to cash compensation, the Compensation Committee may, from time to time, grant awards under our long-term incentive plans. During 2014, the Compensation Committee awarded shares of restricted stock with equivalent value equal to $125,000 each to Messrs. Flury, McVay, Wallace, Nocchiero, Bob and Trimble. The restricted stock will vest ratably over three years or the Compensation Committee may determine in its sole discretion that the restricted stock shall vest on a “qualified separation from service.” Members of our Board who are also officers or employees of the Company do not receive compensation for their services as directors. The table below indicates the total compensation earned and paid during 2014 for each non-management Director: +Non-Management Director Compensation for 2014 +Name +Fees +Earned +or Paid +in Cash (1) +Stock +Awards (6) +Option +Awards +All Other +Compensation +Total +L. Richard Flury +$55,000 (2) +$125,000 (7) +— +— +$0 +Larry D. McVay +50,000 (3) +125,000 +— +— +175,000 +John C. Wallace +60,000 (4) +125,000 (7) +— +— +60,000 +Anthony J. Nocchiero +50,000 (5) +125,000 +— +— +175,000 +Matthew R. Bob +40,000 +125,000 +— +— +165,000 +James M. Trimble +40,000 +125,000 +— +— +165,000 +(1) +Does not include reimbursement of expenses associated with attending the Board meetings. +(2) +Represents annual retainer of $40,000 and an additional $15,000 for acting as chairman of the Compensation Committee. Mr. Flury elected to have his annual retainer deferred pursuant to the terms of a Deferred Compensation Plan for non-employee Directors, under which participants may elect to convert the cash fees to phantom shares and defer the receipt of the proceeds in cash until separation of service as a Director. +(3) +Represents annual retainer of $40,000 and an additional $10,000 for acting as chairman of the Strategic Planning and Reserves Committee. +(4) +Represents annual retainer of $40,000 and an additional $20,000 per year for acting as chairman of the Audit Committee. +(5) +Represents annual retainer of $40,000 and an additional $10,000 for acting as chairman of the Nominating and Corporate Governance Committee. +(6) +Amounts calculated utilizing the provisions of FASB ASC Topic 718. See notes 7 and 8 of the consolidated financial statements in the Company’s Annual Report for the year ended December 31, 2014 regarding assumptions underlying valuation of equity awards. +(7) +Represents a Director who elected to have his restricted stock award deferred pursuant to the terms of a Deferred Compensation Plan for non-employee Directors, under which participants may elect to defer the receipt of the proceeds in cash until separation of service as a Director. +Director Stock Ownership Guidelines +The Compensation Committee believes that meaningful stock ownership by our Directors is important in aligning a Director’s interests more closely with those of the Company’s stockholders. In 2012, our Compensation Committee established ownership requirements for our outside Directors. Each outside Director is required to achieve a minimum value of common stock equal to at least five times the annual retainer within next five years following adoption of the policy or election as a Director. +58 +STOCKHOLDERS’ PROPOSALS AND DIRECTOR NOMINATIONS +FOR THE 2016 ANNUAL MEETING +Stockholders who desire to present proposals at the 2016 Annual Meeting of Stockholders and to have such proposals included in the Company’s proxy materials, must submit their proposals to the Company at its principal executive offices not later than December 5, 2015. If the date of the 2016 Annual Meeting of Stockholders is changed by more than 30 days from the date of the 2015 Annual Meeting of Stockholders, the deadline for submitting proposals is a reasonable time before the Company begins to print and mail its proxy materials for its 2016 Annual Meeting of Stockholders. +If the date of the 2016 Annual Meeting of Stockholders is advanced or delayed by more than 30 calendar days from the date of the 2015 Annual Meeting of Stockholders, the Company shall, in a timely manner, inform stockholders of such change, by including a notice, under Item 5, in its earliest possible quarterly report on Form 10-Q. The notice will include the new deadline for submitting proposals to be included in the Company’s proxy statement and the new date for determining whether the Company may exercise discretionary voting authority because it has not received timely notice of a matter. +In order to avoid controversy as to the date on which the Company receives any such proposal, we suggest that stockholders submit their proposals by certified mail, return receipt requested, or other means that permit them to prove the date of delivery. We reserve the right to reject, rule out of order or take other appropriate action with respect to any proposal that does not comply with the requirements described above or other applicable requirements. +Our Certificate of Incorporation requires that any person intending to nominate a person to serve as a Director of the Company must provide notice to the Company of the intent to nominate at least 120 days prior to the scheduled date of the 2016 annual meeting. +HOUSEHOLDING INFORMATION +The SEC permits companies and intermediaries (such as brokers and banks) to satisfy delivery requirements for proxy statements and annual reports with respect to two or more stockholders sharing the same address by delivering a single proxy statement and annual report to those stockholders. This process, which is commonly referred to as “householding,” is intended to reduce the volume of duplicate information stockholders receive and reduce expenses for companies. Both the Company and some of our intermediaries may be householding our proxy materials and annual report. Once you have received notice from your broker or another intermediary that they will be householding materials sent to your address, householding will continue until you are notified otherwise or until you revoke your consent. Should you wish to receive separate copies of our Annual Report and proxy statement in the future, we will promptly deliver a separate copy of each of these documents to you if you send a written request to us at our address appearing on the cover of this proxy statement, to the attention of the Corporate Secretary. If you hold your shares through an intermediary that is householding and you want to receive separate copies of our Annual Report and proxy statement in the future, you should contact your bank, broker or other nominee record holder. +FINANCIAL STATEMENTS AND OTHER AVAILABLE DOCUMENTS +Financial statements of the Company for its most recent fiscal year are contained in the 2014 Annual Report to Stockholders and the Company’s Report on Form 10-K for the fiscal year ended December 31, 2014 filed with the SEC on March 5, 2015. The Company’s Annual Report, the Company’s Annual Report on Form 10-K, Corporate Governance Principles, Code of Business Conduct and Ethics, and Charters of Board Committees may be accessed by stockholders on the Company’s website at www.callon.com or printed copies are available upon written request to the B. F. Weatherly, Corporate Secretary, Callon Petroleum Company, 200 North Canal Street, Natchez, Mississippi 39120. +OTHER BUSINESS +The Board is not aware of any matter to be acted upon at the 2015 Annual Meeting other than those described above. If other business properly comes before the 2015 Annual Meeting, the persons named on the proxy will vote the proxy in accordance with what they consider to be in the best interests of the Company and its stockholders. Please sign, date, and return your proxy promptly to avoid unnecessary expense. All stockholders are urged, regardless of the number of shares owned, to participate in the 2015 Annual Meeting by voting their shares. +By Order of the Board of Directors +/s/ Fred L. Callon +Natchez, Mississippi +Fred L. Callon +April 2, 2015 +Chairman, President and +Chief Executive Officer +59 +ANNEX A +First Amendment to the Callon Petroleum Company 2011 Omnibus Incentive Plan +WHEREAS , Callon Petroleum Company (the “Company”) maintains the Callon Petroleum Company 2011 Omnibus Incentive Plan (the “2011 Plan”); and +WHEREAS , the Company reserved the right to amend the 2011 Plan in Article 21 thereof, and now desires to amend the Plan; +NOW, THEREFORE , subject to approval of the Company’s stockholders as set out below, the 2011 Plan is hereby amended effective as of May 14, 2015, as follows: +1. Section 2.26 is hereby amended, in its entirety, to read as follows: +2.26 “Extraordinary Items” means (a) extraordinary, unusual and/or nonrecurring items of gain or loss; (b) gains or losses on the disposition of a business; (c) changes in tax or accounting regulations or laws; or (d) the effect of a merger or acquisition, all of which must be identified in the audited financial statements, including footnotes, or the Management Discussion and Analysis section of the Company's annual report, pursuant to the then-current standards established by the U.S. Financial Accounting Standards Board. +2. Section 4.1 is hereby amended, in its entirety, to read as follows: +4.1 Number of Shares Authorized and Available for Awards . Subject to adjustment as provided under the Plan, the total number of Shares constituting the Share Pool which is available for Awards under the Plan shall be equal to the sum of (a) Four Million Three Hundred Thousand (4,300,000) Shares, (b) any and all Shares that are available for awards under the Prior Plans as of the Effective Date that are not reserved for outstanding awards that were granted under the Prior Plans before the Effective Date, and (c) any and all Shares that may become available for awards under the Prior Plans on or after the Effective Date that were reserved for outstanding awards that were granted under the Prior Plans before the Effective Date, as provided in Section 4.2(b). +Any of the authorized Shares may be used for any type of Award under the Plan, and any or all of the available Shares may be allocated to Incentive Stock Options. +3. Section 4.2 is hereby amended, in its entirety, to read as follows: +4.2 Calculation of Share Usage for Share Pool. The Committee shall determine the number of Shares constituting the Share Pool that is available for grants of Awards under the Plan, subject to the following: +(a) Any Shares related to an Award granted under the Plan that (1) terminate by expiration, forfeiture, cancellation or otherwise without the issuance of the Shares, (2) are settled in cash in lieu of Shares, or (3) are exchanged with the Committee’s permission, prior to the issuance of Shares, for Awards not involving Shares, shall again be available immediately for grants under this Plan. Any Shares tendered or withheld in order to satisfy tax withholding obligations associated with the settlement of an Award (except with respect to an Option or SAR Award), shall again become available for grants under this Plan. +(b) Any Shares related to an Award previously granted under any Prior Plan prior to the Effective Date that, on or after the Effective Date, (1) terminate by expiration, forfeiture, cancellation or otherwise without the issuance of the Shares, are settled in cash in lieu of Shares, or (2) are exchanged with the Committee’s permission, prior to the issuance of Shares, for Awards not involving Shares, shall again be available for grants under this Plan. Any Shares tendered or withheld in order to satisfy tax withholding obligations associated with the settlement of an Award (except with respect to an Option or SAR Award), shall again become available for grants under this Plan. +60 +4. The third from last paragraph of Section 14.2 is hereby amended, and the prior provisions that were in such paragraph have been deleted, such that Section 14.2 shall read, in its entirety, as follows: +The terms of the stated Performance Measures for each applicable Award, whether for a Performance Period of one (1) year or multiple years, must preclude the Committee's discretion to increase the amount payable to any Participant that would otherwise be due upon attainment of the Performance Measures, but may permit the Committee to reduce the amount otherwise payable to the Participant in the Committee's discretion. +5. Article 17, Effect of a Change in Control, is hereby amended by the addition of the following new Section 17(d), which reads as follows: +(d) In the event of a Change in Control, accelerated vesting or accelerated payment of an Award shall occur only in the event of a “double-trigger”, i.e ., there is separation from service of the Participant within a designated time period following the Change in Control as set out in the Award Agreement for such Participant. +Except as amended hereby, the Plan shall continue in full force and effect and the Plan and this First Amendment shall be read, taken and construed as one and the same instrument. +Executed effective for all purposes as provided above; provided, however, if this First Amendment is not approved by the stockholders of the Company at the 2014 Annual Meeting of Stockholders, this First Amendment shall not become effective. +Callon Petroleum Company +By: /s/ Fred L. Callon +Name: Fred L. Callon +Title: Chairman, President, and Chief Executive Officer +61 +CALLON PETROLEUM COMPANY +THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS +ANNUAL MEETING OF STOCKHOLDERS – MAY 14, 2015 AT 9:00 AM ET +CONTROL ID: +REQUEST ID: +The undersigned hereby appoints Fred L. Callon and B.F. Weatherly and each of them, as proxies of the undersigned, each with full power to act without the other and with full power of substitution and re-substitution, to vote all the shares of Common Stock of Callon Petroleum Company that the undersigned is entitled to vote at the Annual Meeting of Stockholders to be held on May 14, 2015 in the Grand Ballroom of the Natchez Grand Hotel, 111 Broadway Street, Natchez, Mississippi 39120, and at any adjournments or postponements thereof, with all the powers the undersigned would have if personally present as follows:: +IF NO DIRECTION AS TO THE MANNER OF VOTING THIS PROXY IS MADE, THIS PROXY WILL BE VOTED “FOR” PROPOSALS 1, 2, 3, 4, AND 5 AS INDICATED ON THE REVERSE SIDE HEREOF. +You are encouraged to specify your choice by marking the appropriate box (SEE REVERSE SIDE), but you need not mark any box if you wish to vote in favor. +(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.) +VOTING INSTRUCTIONS +If you vote by phone, fax or internet, please DO NOT mail your proxy card. +MAIL: +Please mark, sign, date, and return this Proxy Card promptly using the enclosed envelope. +FAX: +Complete the reverse portion of this Proxy Card and Fax to 202-521-3464. +INTERNET: +https://www.iproxydirect.com/CPE +PHONE: +1-866-752-VOTE(8683) +ANNUAL MEETING OF THE STOCKHOLDERS OF +CALLON PETROLEUM COMPANY +PLEASE COMPLETE, DATE, SIGN AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. +PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE: ý +PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS +Proposal 1 +à +FOR +ALL +AGAINST +ALL +FOR ALL +EXCEPT +Election of Directors: +¨ +¨ +Fred L. Callon (Class III Director, three-year term) +¨ +L. Richard Flury (Class III Director, three-year term) +¨ +CONTROL ID: +Michael L. Finch (Class I Director, one-year term) +¨ +REQUEST ID: +Proposal 2 +à +FOR +AGAINST +ABSTAIN +The approval, by advisory vote, of the Company’s named executive officer compensation. +¨ +¨ +¨ +Proposal 3 +à +FOR +AGAINST +ABSTAIN +The approval of the First Amendment to the Company’s 2011 Omnibus Incentive Plan. +¨ +¨ +¨ +Proposal 4 +à +FOR +AGAINST +ABSTAIN +The approval of an amendment to Article Four of the Company’s Certificate of Incorporation increasing the number of authorized shares of Common Stock of the Company from 110 million shares to 150 million shares. +¨ +¨ +¨ +Proposal 5 +à +FOR +AGAINST +ABSTAIN +The ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2015. +¨ +¨ +¨ +MARK “X” HERE IF YOU PLAN TO ATTEND THE MEETING: ¨ +The Board recommends you vote “ FOR ” all proposals. +In the event that you return a signed proxy card on which no directions are specified, your shares will be voted as recommended by the Company’s Board on the proposal, and in the discretion of the proxy holders as to any other matters that may properly come before the meeting or any adjournments or postponements of the meeting. The Board is not presently aware of any other proposals or any other business to be considered at the Annual Meeting. +MARK HERE FOR ADDRESS CHANGE ¨ New Address (if applicable): +____________________________ +____________________________ +____________________________ +IMPORTANT: Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person. +Dated: ________________________, 2015 +(Print Name of Stockholder and/or Joint Tenant) +(Signature of Stockholder) +(Second Signature if held jointly) \ No newline at end of file diff --git a/raw/proxies/0000928022/0001354488-15-001577/proxy_rpt.txt b/raw/proxies/0000928022/0001354488-15-001577/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..e69de29bb2d1d6434b8b29ae775ad8c2e48c5391 diff --git a/raw/proxies/0001092662/0001092662-17-000029/proxy.txt b/raw/proxies/0001092662/0001092662-17-000029/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..9566a1785f69dbfe3b96dd2c100f9d2f074df21c --- /dev/null +++ b/raw/proxies/0001092662/0001092662-17-000029/proxy.txt @@ -0,0 +1,1004 @@ +DEF 14A +1 +def_14a.htm +PROXY STATEMENT 2017 +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +SCHEDULE 14A INFORMATION +Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 +Filed by the Registrant [X] +Filed by a Party other than the Registrant [_] +Check the appropriate box: +[ ] Preliminary Proxy Statement +[_] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +[X] Definitive Proxy Statement +[_] Definitive Additional Materials +[_] Soliciting Material under Rule 14a-12 +CHEMBIO DIAGNOSTICS, INC. +---------------------------------------------- +(Name of Registrant as Specified in Its Charter) +Not Applicable +----------------------------------------------------------------- +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +[X] No fee required. +[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. +1. +Title of each class of securities to which transaction applies: +2. +Aggregate number of securities to which transaction applies: +3. +Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): +4. +Proposed maximum aggregate value of transaction: +5. +Total fee paid: +[_] Fee paid previously with preliminary materials. +[_] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. +1. +Amount Previously Paid: +2. +Form, Schedule or Registration Statement No.: +3. +Filing Party: +4. +Date Filed: +CHEMBIO DIAGNOSTICS, INC. +3661 Horseblock Road +Medford, NY 11763 +(631) 924-1135 +NOTICE OF ANNUAL MEETING OF STOCKHOLDERS +To be held May 11, 2017 +The Annual Meeting of Stockholders of Chembio Diagnostics, Inc. will be held on May 11, 2017 at 10:00 a.m. (local time) at Chembio, 3661 Horseblock Road, Medford, New York 11763, for the following purposes: +1. +To elect four directors to the Company's Board of Directors; +2. +To consider and vote upon a proposal recommended by the Board of Directors to ratify the selection of BDO USA, LLP to serve as our independent registered public accounting firm for the fiscal year ending December 31, 2017; +3. +To consider and vote on a proposal to approve, on an advisory basis, the compensation paid to our Named Executive Officers (as that term is defined in this Proxy Statement for the 2017 Annual Meeting of Stockholders); +4. +To, in their discretion, vote upon an adjournment or postponement of the meeting; and +5. To transact any other business that properly may come before the Annual Meeting. +Only the stockholders of record as shown on our transfer books at the close of business on March 15, 2017 are entitled to notice of, and to vote at, the Annual Meeting. Our Annual Report on Form 10-K for the fiscal year ended December 31, 2016 is being provided to stockholders with this Proxy Statement. The Annual Report is not part of the proxy soliciting material. +All stockholders, regardless of whether they expect to attend the meeting in person, are requested to complete, date, sign and return promptly the enclosed form of Proxy via the Internet or in the accompanying envelope (which requires no postage if mailed in the United States), as applicable. The person executing the Proxy may revoke it by filing with our Secretary an instrument of revocation or a duly executed Proxy bearing a later date, or by electing to vote in person at the Annual Meeting. +Important Notice regarding the Availability of Proxy Materials for the Stockholder Meeting to Be Held on May 11, 2017: +The Proxy Statement, form of Proxy, and Annual Report to Stockholders for the fiscal year ended December 31, 2016 are available free of charge at http://www.chembio.com/investors/proxy/. The Notice of Internet Availability of Proxy Materials will be mailed to beneficial owners beginning on or about March 27, 2017. Paper copies of the Proxy Materials were mailed to stockholders of record beginning on or about March 27, 2017. +All stockholders are extended a cordial invitation to attend the Annual Meeting. If you would like to obtain directions to be able to attend the Annual Meeting in person, please contact Ms. Bobbie Coco at (631) 924-1135 or bcoco@chembio.com. +On Behalf of the Board of Directors +/s/ John J. Sperzel III +Medford, New York John J. Sperzel III +March 20, 2017 Chembio Diagnostics, Inc., Chief Executive Officer +1 +PROXY STATEMENT +CHEMBIO DIAGNOSTICS, INC. +3661 Horseblock Road +Medford, NY 11763 +(631) 924-1135 +ANNUAL MEETING OF STOCKHOLDERS +To be held May 11, 2017 +SOLICITATION AND REVOCATION OF PROXIES +This Proxy Statement is provided in connection with the solicitation of proxies by and on behalf of the Board of Directors of Chembio Diagnostics, Inc., a Nevada corporation (referred to as the "Company" or "Chembio" or "we" or "us"), to be voted at the Annual Meeting of Stockholders to be held at 10:00 a.m. (local time) on May 11, 2017 at Chembio, 3661 Horseblock Road, Medford, New York 11763, or at any adjournment or postponement of the Annual Meeting. We anticipate that this Proxy Statement and the accompanying form of Proxy will be first made available to stockholders on or about March 27, 2017. +In accordance with rules and regulations adopted by the SEC, we are furnishing proxy materials to our stockholders of record by (i) mailing a printed copy of the proxy materials, and (ii) providing Internet access to the proxy materials at http://www.chembio.com/investors/proxy/. Stockholders of record who receive a printed copy of proxy materials as well as stockholders of record who receive a Notice of Internet Availability of Proxy Materials each will be permitted to access our proxy materials on the Internet. In addition, stockholders of record who receive a Notice of Internet Availability of Proxy Materials can receive a printed copy of the proxy materials by requesting this information from the Company. The Notice of Internet Availability of Proxy Materials will instruct you as to how you may access and review all of the important information contained in the proxy materials. The Notice of Internet Availability of Proxy Materials also instructs you as to how you may submit your proxy on the Internet. +A stockholder giving a Proxy may revoke it at any time before it is exercised by delivering written notice of revocation to our Secretary prior to the start of the Annual Meeting, by substituting a new Proxy executed at a later date prior to the start of the Annual Meeting, or by requesting, in person at the Annual Meeting, that the Proxy be returned. +The solicitation of Proxies is to be made on the Internet and through mailings. However, following the initial solicitation, further solicitations may be made by telephone or oral communication with stockholders. Our officers, directors and employees may solicit Proxies, but these persons will not receive compensation for that solicitation other than their regular compensation as employees. Arrangements also will be made with brokerage houses and other custodians, nominees and fiduciaries to provide access to the solicitation materials to beneficial owners of the shares held of record by those persons. We may reimburse those persons for reasonable out-of-pocket expenses incurred by them in so doing. We will pay all expenses involved in preparing, assembling and mailing this Proxy Statement and the enclosed material. +2 +VOTING SECURITIES +The close of business on March 15, 2017 has been fixed as the record date for the determination of holders of record of the Company's common stock, $0.01 par value per share, entitled to notice of and to vote at the Annual Meeting. Each stockholder of record as of the close of business on the record date is entitled to one vote on each matter to be voted on at the Annual Meeting for each share of common stock held by that stockholder on the record date. On the record date, 12,299,122 shares of common stock were outstanding and eligible to be voted at the Annual Meeting. A majority of the issued and outstanding shares of common stock entitled to vote, represented either in person or by Proxy, constitutes a quorum at any meeting of the stockholders. If sufficient votes for approval of the matters to be considered at the Annual Meeting have not been received prior to the meeting date, we intend to postpone or adjourn the Annual Meeting in order to solicit additional votes. The form of proxy we are soliciting requests authority for the proxies, in their discretion, to vote the stockholders' shares with respect to a postponement or adjournment of the Annual Meeting. At any postponed or adjourned meeting, we will vote any Proxies received in the same manner described in this Proxy Statement with respect to the original meeting. +VOTING PROCEDURES +Votes at the Annual Meeting are counted by an inspector of election appointed by the Chair of the meeting. You can ensure that your shares are voted at the Annual Meeting by submitting your proxy card on the Internet, or by completing, signing, dating and returning the enclosed proxy form in the envelope provided, such that they are received no later than the day before the Annual Meeting. Abstentions by those present at the Annual Meeting are tabulated separately from affirmative and negative votes and do not constitute affirmative votes . If a stockholder submits his or her proxy card and withholds authority to vote for any or all of the items, the votes represented by the proxy card will be deemed to be present at the Annual Meeting for purposes of determining the presence of a quorum but will not be counted as affirmative votes. Rule 452 of the New York Stock Exchange (NYSE), which governs all brokers, permits brokers to vote their customers' stock held in street name on routine matters when the brokers have not received voting instructions from their customers. The NYSE does not, however, allow brokers to vote their customers' stock held in street name on non-routine matters unless they have received voting instructions from their customers. In such cases, the uninstructed shares for which the broker is unable to vote are called broker non-votes. The ratification of the independent auditor is a routine matter on which brokers may vote in their discretion on behalf of customers who have not provided voting instructions. While the advisory vote on the compensation of our Named Executive Officers and the advisory vote on the frequency of such votes on compensation are routine matters, brokers are not allowed to vote on these matters unless they have received voting instructions from their customers. The election of directors is a non-routine matter on which brokers are not allowed to vote unless they have received voting instructions from their customers. Shares in the names of brokers that are not voted on a particular matter are treated as not present with respect to that matter. +We will announce voting results at the meeting, and we will publish the final results within four business days following the meeting on a Current Report on Form 8-K that will be filed with the SEC. +3 +FORWARD-LOOKING STATEMENTS +This Proxy Statement includes "forward-looking" statements within the meaning of Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical facts included in this Proxy Statement regarding our financial position, business strategy and plans and objectives of management for future operations and capital expenditures are forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements and the assumptions upon which the forward-looking statements are based are reasonable, we can give no assurance that such expectations and assumptions will prove to have been correct. +BENEFICIAL OWNERSHIP OF THE COMPANY'S SECURITIES BY FIVE PERCENT BENEFICIAL OWNERS AND MANAGEMENT +On March 15, 2017 there were 12,299,122 shares of common stock issued and outstanding and eligible to be voted at the Annual Meeting. The following table sets forth certain information regarding the beneficial ownership of our common stock on March 15, 2017 by each person or entity known by us to be the beneficial owner of more than 5% of the outstanding shares of common stock, each of our directors and nominees for director, each of our "Named Executive Officers," and all our directors and executive officers as a group. +In this Proxy Statement, the term "Named Executive Officers" refers to our principal executive officer, principal financial officer and our three most highly compensated executive officers, other than the principal executive and financial officers, who were serving as executive officers at the end of 2016. The term "Named Executive Officers" also refers to up to two additional individuals for whom disclosure would have been provided but for the fact that the individuals were not serving as executive officers of the Company at the end of 2016. There currently are no such additional individuals for the Company. +The following table sets forth certain information, as of March 20, 2017, regarding the beneficial ownership of our common stock by each person or entity known by us to be the beneficial owner of more than 5% of the outstanding shares of common stock, each of our directors, each of our "Named Executive Officers", and all of our directors and executive officers as a group. +4 +Name and Address of +Beneficial Owner +Amount and Nature +of Beneficial Ownership +Percent of Class +Sperzel, John J. (1) +3661 Horseblock Road +Medford, NY 11763 +150,000 +1.20 % +Esfandiari, Javan (2) +3661 Horseblock Road +Medford, NY 11763 +124,180 +1.01 % +Larkin, Richard J. (3) +3661 Horseblock Road +Medford, NY 11763 +52,253 +0.42 % +Ippolito, Tom (4) +3661 Horseblock Road +Medford, NY 11763 +27,272 +0.22 % +Steele, Michael (5) +3661 Horseblock Road +Medford, NY 11763 +15,292 +0.12 % +Lambotte, Paul (6) +3661 Horseblock Road +Medford, NY 11763 +24,000 +0.19 % +Klugewicz, Sharon (7) +3661 Horseblock Road +Medford, NY 11763 +48,630 +0.39 % +Meller, Gary (8) +3661 Horseblock Road +Medford, NY 11763 +133,125 +1.08 % +Davis, Katherine L. (9) +3661 Horseblock Road +Medford, NY 11763 +86,421 +0.70 % +Kissinger, Peter (10) +3661 Horseblock Road +Medford, NY 11763 +40,906 +0.33 % +GROUP (all executive officers +and directors) (11) +702,079 +5.56 % +Wellington Management Group LLP (12) +280 Congress Street +Boston, MA 02210 +1,106,880 +9.00 % +Norman H. Pessin (13) +366 Madison Ave, 14 th Floor +New York, NY 10017 +1,274,139 +10.36 % +Acuta Capital Partners LLC +1301 Shoreway Rd +Belmont, CA 94002 +1,150,925 +9.36 % +ARS Investment Partners, LLC +500 Fifth Ave, Suite 1440 +New York, NY 10110 +617,686 +5.02 % +5 +Beneficial ownership is determined in accordance with the Rule 13d-3(a) of the Securities Exchange Act of 1934, as amended, and generally includes voting or investment power with respect to securities. Except as subject to community property laws, where applicable, the person named above has sole voting and investment power with respect to all shares of our common stock shown as beneficially owned by that person. +The beneficial ownership percent in the table is calculated with respect to the number of shares (12,299,122) of the Company's common stock outstanding as of March 20, 2017. With respect to each stockholder, the denominator is the sum of the number of common shares outstanding and the number, if any, of outstanding options included in that stockholder's beneficial ownership. Each stockholder's beneficial ownership is calculated as the number of shares of common stock owned plus the number of shares of common stock into which any preferred stock, warrants, options or other convertible securities owned by that stockholder can be converted within 60 days. +The term "Named Executive Officer" refers to our principal executive officer, our principal financial officer, our three most highly compensated executive officers other than the principal executive officer and principal financial officer who were serving as executive officers at the end of , and two additional individuals for whom disclosure would have been provided but for the fact that the individuals were not serving as executive officers of the Company at the end of 2016. +(1) +Includes 150,000 shares issuable upon exercise of options exercisable within 60 days. Does not include 100,000 shares issuable upon exercise of options that are not exercisable within the next 60 days. +(2) +Includes 54,765 shares issuable upon exercise of options exercisable within 60 days. Does not include 40,000 shares issuable upon exercise of options that are not exercisable within the next 60 days. +(3) +Does not include any shares issuable upon exercise of options exercisable within 60 days. +(4) +Includes 1,775 shares issuable upon exercise of options exercisable within 60 days. +(5) +Includes 785 shares issuable upon exercise of options exercisable within 60 days. +(6) +Includes 12,000 shares issuable upon exercise of options exercisable within 60 days. Does not include 12,000 shares issuable upon exercise of options that are not exercisable within the next 60 days. +(7) +Includes 41,630 shares issuable upon exercise of options exercisable within 60 days. +(8) +Includes 28,125 shares issuable upon exercise of options exercisable within 60 days. Does not include 18,750 shares issuable upon exercise of options that are not exercisable within the next 60 days. +(9) +Includes 28,125 shares issuable upon exercise of options exercisable within 60 days. Does not include 18,750 shares issuable upon exercise of options that are not exercisable within the next 60 days. +(10) +Includes 9,375 shares issuable upon exercise of options exercisable within 60 days. Does not include 37,500 shares issuable upon exercise of options that are not exercisable within the next 60 days. +(11) +Includes the aggregate number of shares issuable upon the exercise of options as described in footnotes (1)-(10). +(12) Includes two other entities which reported the same holdings: Wellington Trust Company, NA and Wellington Trust Company, National Association Multiple Common Trust Funds Trust, Micro Cap Equity Portfolio, which reported separately to the SEC with 1,106,880 or 9.20 % and 976,680 or 8.12 %, respectively. All addresses are the same. +(13) Includes Brian Pessin of 310 East 75th Street, Apt. 2A, New York, NY 10021 who beneficially owns 131,072 or 1.10 %. +6 +Equity Compensation Plan Information +Combined Equity Compensation Plans - Information as of December 31, 2016 +Plan Category +Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights +Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights +Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans (Excluding Securities Reflected in Column (a) +(a) +(b) +(c) +Equity compensation plans approved by security holders 1 +600,549 +$ +4.55 +676,634 +Equity compensation plans not approved by security holders +- +- +- +Total +600,549 +$ +4.55 +676,634 +1 The "Number of Securities to be Issued Upon Exercise of Outstanding Warrants and Rights" represents 275,931 under the 2008 Stock Incentive Plan, 117,750 under the 2014 Stock Incentive Plan and 206,868 issued outside of the Plans. The 2008 Stock Incentive Plan was increased by 125,000 units at the Annual Stockholder meeting held September 23, 2011. The "Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans" represents 6,384 from the 2008 Stock Incentive Plan and 670,250 under the 2014 Stock Incentive Plan. +AVAILABLE INFORMATION +Copies of our Annual Report on Form 10-K are being furnished to each stockholder with this Proxy Statement, and are available on the internet at http://www.chembio.com/investors/proxy/ pursuant to the instructions set forth in the attached "Notice Regarding the Availability of Proxy Materials." Upon written request, we will provide, without charge, a copy of our Annual Report on Form 10-K for the year ended December 31, 2016, to any stockholder of record, or to any stockholder who owns, as of March 15, 2017, common stock listed in the name of a bank or broker as nominee. Any request for a copy of these reports should be mailed to the Secretary, Chembio Diagnostics, Inc., 3661 Horseblock Road, Medford, NY 11763. Stockholders also may receive copies of these reports by accessing the Company's website at www.chembio.com. We file annual, quarterly and current reports, Proxy Statements and other information with the SEC in accordance with the Securities Exchange Act of 1934, as amended. You may read and copy any reports, Proxy Statements or other information filed by us at the public reference facilities maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549. In addition, the materials we file electronically with the SEC are available at the SEC's website at www.sec.gov. The SEC's website contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. Information about the operation of the SEC's public reference facilities may be obtained by calling the SEC at 1-800-SEC-0330. +7 +ITEM 1. ELECTION OF DIRECTORS +At the Annual Meeting, the stockholders will elect four directors to serve as our Board of Directors. Each director will be elected to hold office until the next annual meeting of stockholders and thereafter until his/her successor is elected and qualified. The affirmative vote of a plurality of the shares voted at the Annual Meeting in person or by Proxy is required to elect each director. Cumulative voting is not permitted in the election of directors. In the absence of instructions to the contrary, the person named in the accompanying proxy shall vote the shares represented by that Proxy for the persons named below as management's nominees for directors. All four nominees currently serve as directors of the Company. +It is not anticipated that any of the nominees will become unable or unwilling to accept nomination or election, but, if that should occur, the persons named in the proxy intend to vote for the election of such other person as the Board of Directors (the "Board") may recommend. +The following table sets forth, with respect to each nominee for director, the nominee's age, positions and offices with the Company, the expiration of the nominee's term as a director, and the year in which the nominee first became a director. Individual background information concerning each of the nominees follows the table. For additional information concerning the nominees, including stock ownership and compensation, see "Executive Compensation," "Beneficial Ownership of the Company's Securities By Five Percent Beneficial Owners and Management", and "Director Compensation". +Name +Age +Position(s) and Office(s) with the Company +Expiration of +Term of Director +Initial Date as Director +Katherine L. Davis +60 +Director and Chairman of the Board +2017 Annual Meeting +May 2007 +Peter Kissinger +72 +Director +2017 Annual Meeting +June 2011 +Gary Meller +67 +Director +2017 Annual Meeting +March 2005 +John J. Sperzel III +53 +Chief Executive Officer, President and member of the Board +2017 Annual Meeting +March 2014 +Katherine L. Davis (60), Director and Chair of the Board. Ms. Davis was elected to the Board in May 2007, and was elected in March 2014 to serve as Chair of the Board. She currently serves on the Board's Audit, Compensation, and Nominating And Governance Committees, including as Chair of the Nominating And Governance Committee. In 2014, Ms. Davis also served on the Board's CEO Search Committee, and in 2013 she served on the Board's Special Committee for handling certain strategic opportunities. Since January 2007, Ms. Davis has been the owner of Davis Design Group LLC, a company that provides analytical and visual tools for public policy design. Since January 1 2016, Ms. Davis has served as Systems Advisor to the Mayor of Indianapolis. Previously, from February 2005 to December 2006, she served as the Chief Executive Officer of Global Access Point, a start-up company with products for data transport, data processing, and data storage network and hub facilities. From October 2003 to January 2005, Ms. Davis was Lieutenant Governor of the State of Indiana, and from January 2000 to October 2003 was Controller of the City of Indianapolis. From 1989 to 2003, Ms. Davis held leadership positions with agencies and programs in the State of Indiana including State Budget Director, Secretary of Family & Social Services Administration, and Deputy Commissioner of Transportation. From 1982 to 1989, Ms. Davis held increasingly senior positions with Cummins Engine, where she managed purchasing, manufacturing, engineering, and assembly of certain engine product lines. Ms. Davis also led the start-up of and initial investments by a $50 million Indiana state technology fund. She serves on the not-for-profit boards of Noble of Indiana, Lumina Foundation for Education, Indianapolis Foundation, Central Indiana Community Foundation, Western Governors University Indiana, and Indiana University School of Public and Environmental Affairs. She holds a Bachelor of Science in Mechanical Engineering from the Massachusetts Institute of Technology and an MBA from Harvard Business School. Ms. Davis has varied experience in business, political and financial areas that make her an excellent candidate for serving on the Board. +8 +Dr. Peter Kissinger, Ph.D. (72), Director. Dr. Kissinger was elected to the Company's Board of Directors in June 2011, and currently serves on the Company's Audit, Compensation, and Nominating And Governance Committees. Dr. Kissinger is a scientist, entrepreneur and academic, with a multi-faceted career in biotechnology and biomedical technologies. He is the founder of Bioanalytical Systems, Inc. (NASDAQ: BASI), which he led from 1974-2007, and is Professor of Chemistry at Purdue University. Dr. Kissinger's academic research has involved the study of modern liquid chromatography techniques, and in vivo methodology for drug metabolism and the neurosciences. Dr. Kissinger has published more than 240 scientific papers and is a Fellow of the American Association of Pharmaceutical Scientists and the American Association for the Advancement of Science. In 2005, he became the Chairman of Prosolia, which markets mass spectrometry innovations for life science, industrial and homeland security applications. In 2007, he and Candice Kissinger founded Phlebotics, Inc., a medical device company focused on diagnostic information for intensive care medicine. He is a columnist for the trade publication Drug Discovery News. Dr. Kissinger received a B.S. in Chemistry from Union College and a Ph.D. in Analytical Chemistry from the University of North Carolina. Dr. Kissinger has knowledge of and experience in biotechnology and biomedical technologies as well as publicly-traded companies, all of which make him an excellent candidate for serving on the Board. +Dr. Gary Meller M.D. (67), Director. Dr. Meller was elected to our Board of Directors in March 2005, and currently serves on the Board's Audit, Compensation, and Nominating And Governance Committees, including as Chairman of the Audit and Compensation Committees. Dr. Meller has been the president of CommSense Inc., a healthcare business development company, since 2001. CommSense Inc. works with clients in Europe, Asia, North America, and the Middle East on medical information technology, medical records, pharmaceutical product development and financing, health services operations and strategy, and new product and new market development. From 1999 until 2001 Dr. Meller was the executive vice president, North America, of NextEd Ltd., a leading internet educational services company in the Asia Pacific region. Dr. Meller also was a limited partner and a member of the Advisory Board of Crestview Capital Master LLC, which, at one time, was our largest stockholder. Dr. Meller is a graduate of the University of New Mexico School of Medicine and has an MBA from the Harvard Business School. Dr. Meller's experience in the medical field, both domestic and foreign (especially his experience with CommSense Inc.), as well as his financing experience, make him an excellent candidate for serving on the Board. +John J. Sperzel (53), President, Chief Executive Officer and Director. Mr. Sperzel was appointed Chief Executive Officer and President of Chembio Diagnostics, Inc. and a member of our Board in March 2014. Prior to joining the Company, Mr. Sperzel, was the President and CEO of International Technidyne Corporation (ITC) from September 2011 to December 2013. Mr. Sperzel served as President at Axis-Shield from September 2004 to September 2011. He also has held senior leadership positions at Bayer Diagnostics (Siemens Dx), Instrumentation Laboratory, and Boehringer Mannheim Diagnostics (Roche Dx). Mr. Sperzel graduated from Plymouth State College in New Hampshire, with a B.S. in Business Administration/Management. He currently serves on the board of directors of Diadexus, Inc., the common stock of which is registered under the Securities Exchange Act of 1934, and as an advisor to the board of the Diagnostic Marketing Association, and was the president of the board of that Association in 2007. Mr. Sperzel's knowledge of, and experience in, the Company's specific business and its industry sector, together with the continuing current knowledge that he is accumulating about the Company in his position as CEO of the Company, make him an excellent candidate for serving on the Board. +Required Vote; Board Recommendation +The affirmative vote of a plurality of the shares voted at the Annual Meeting in person or by proxy is required to elect each director. The Board of Directors unanimously recommends that the stockholders vote FOR the election of each of the nominees listed above. +9 +INFORMATION REGARDING THE BOARD OF DIRECTORS +AND EXECUTIVE OFFICERS +Board of Directors +Information regarding the Board of Directors is set forth above under "Item 1: Election of Directors". +Executive Officers +The following table sets forth, with respect to each executive officer, the officer's age, the officer's positions and offices with the Company, the expiration of the officer's term and the period during which the officer has served either the Company or Chembio Diagnostic Systems Inc. Individual background information concerning each of the executive officers follows the table, except that individual background information concerning Mr. Sperzel is set forth above under "Item 1: Election of Directors". Information regarding employment contracts for Mr. Sperzel, Ms. Klugewicz , and Mr. Esfandiari may be found under "Executive Compensation" and under "Certain Transactions with Management and Principal Stockholders". +Name +Age +Position With Company +Initial Date +as Officer +Expiration of Term +John J. Sperzel III* +53 +Chief Executive Officer, President +2014 +March 13, 2017 +Richard J. Larkin +60 +Chief Financial Officer; Executive Vice President +2003 +** +Javan Esfandiari +50 +Chief Scientific And Technology Officer ; Executive Vice President +2004 +March 5, 2019 +Sharon Klugewicz +49 +President Americas Region +2012 +May 22, 2017 +Robert Passas +63 +President EMEA and APAC +2016 +** +Tom Ippolito +54 +Vice President of Regulatory Affairs, Quality Assurance and Quality Control +2005 +** +Paul Lambotte +64 +Vice President of Product Development +2014 +** +David Gyorke +57 +Vice President of Operations +2017 +** +___________________________ +* Information concerning Mr. Sperzel's background is included under "Item 1. Election of Directors". +** No employment term +Richard J. Larkin (60) , Chief Financial Officer; Executive Vice President. Mr. Larkin was appointed as Chief Financial Officer of Chembio Diagnostics, Inc. 2004. Mr. Larkin oversees our financial activities and information systems. Mr. Larkin has been the Chief Financial Officer of Chembio Diagnostic Systems Inc. since September 2003. Prior to joining Chembio Diagnostic Systems Inc., Mr. Larkin served as CFO at Visual Technology Group ("VTG") from May 2000 to September 2003, and also led VTG's consultancy program that provided hands-on expertise in all aspects of financial service, including the initial assessment of client financial reporting requirements within an Enterprise Resource Planning (Manufacturing) environment through training and implementation. Prior to joining VTG, he served as CFO at Protex International Corporation from May 1987 to January 2000. Mr. Larkin holds a BBA in Accounting from Dowling College and is a member of the American Institute of Certified Public Accountants. +10 +Javan Esfandiari (50) , Chief Science And Technology Officer; Executive Vice President. Mr. Esfandiari joined Chembio Diagnostic Systems, Inc, in 2000. Mr. Esfandiari co-founded, and became a co-owner of Sinovus Biotech AB where he served as Director of Research and Development concerning lateral flow technology until Chembio Diagnostic Systems Inc. acquired Sinovus Biotech AB in 2000. From 1993 to 1997, Mr. Esfandiari was Director of Research and Development with On-Site Biotech/National Veterinary Institute, Uppsala, Sweden, which was working in collaboration with Sinovus Biotech AB on development of veterinary lateral flow technology. Mr. Esfandiari received his B.Sc. in Clinical Chemistry and his M. Sc. in Molecular Biology from Lund University, Sweden. He has published articles in various veterinary journals and has co-authored articles on tuberculosis serology with Dr. Lyashchenko. +Sharon Klugewicz (49) , President Americas Region. Prior to joining the Company in September 2012, Ms. Klugewicz, served as Senior Vice President, Scientific & Laboratory Services at Pall Corporation (NYSE:PLL), a world leader in filtration, separation and purification technologies. Prior to that, Ms. Klugewicz held a number of positions at Pall Corporation over her 20-year tenure there, including in the Pall Life Sciences Division, in Marketing Product Management, and Field Technical Services, which included a position as Senior Vice President, Global Quality Operations. Ms. Klugewicz holds an M.S. in Biochemistry from Adelphi University and a B.S. in Neurobiology from Stony Brook University. +Robert Passas Ph.D. ( 63 ), President EMEA and APAC Regions. Dr. Passas joined the Company in October 2016 and serves as President EMEA and APAC Regions. Prior to joining the Company, from 2011 to 2016, Dr. Passas was a member of the Board and the Group Commercial Director, responsible for worldwide marketing, international sales, and technical and customer support at The Binding Site Group Ltd., Birmingham, U.K.. Previously, he was employed at each of Trinity Biotech plc (as Executive VP for global sales and marketing), Quidel Corporation, and Abbot Diabetes Care. Dr. Passas received a Ph.D. in analytical chemistry and a B.S. in medical biochemistry from the University of Surrey. +Tom Ippolito (54), VP of Regulatory Affairs, QA and QC. Mr. Ippolito joined Chembio Diagnostic Systems, Inc. in June 2005, and serves as Vice President, Regulatory Affairs. Prior to joining the Company, Mr. Ippolito served as Vice President, Regulatory and Quality at Biospecifics Technologies. He previously held a number of positions with United Biomedical, Biospecifics, Merck, Rhone Merieux, Organon Teknika, Analytab Products Inc., and Olympus. Mr. Ippolito holds the position of Course Director of the Fundamentals of Bioscience Program at the State University of Stony Brook and is the instructor for clinical development and regulatory affairs. +Paul Lambotte (64), VP Product Development. Mr. Lambotte joined Chembio Diagnostic Systems, Inc. in December 2014, and serves as Vice President of Product Development. Prior to joining the Company, from 2012 to 2014, Mr. Lambotte was President of PLC Inc., a point-of-care product development consulting company. He previously served as Chief Science Officer at Axxin Pty Ltd from 2009 to 2012, held positions of VP of R&D and Business Development at Quidel Corporation from 2000 to 2009, and before that held a number of positions at Beckman Coulter and Hybritech Inc. Mr. Lambotte is the inventor of several patents in the field of rapid, point-of-care diagnostic products. He received a Master in Biochemistry and a PhD in Protein Biochemistry from the University of Mons, Belgium, and did post-doctoral work at the Ludwig Institute for Cancer research in Brussels, Belgium. +David Gyorke (57), VP Operations. Mr. Gyorke joined Chembio Diagnostic Systems, Inc. in January 2017. Mr. Gyorke has responsibility for Manufacturing and Operations for the Company's Medord, NY and Kuala Lumpur, Malaysia manufacturing facilities. Prior to joining the Company, Mr. Gyorke held VP of Operations positions at the following start-up companies: Nanomix from 2011 to 2016, an electro-chemistry-based IVD POC system; NeoVista from 2008 to 2011, an ophthalmic brachytherapy surgical device; and Farallon Medical from 2004 to 2008, a PT-time POC system (acquired by Coagusense). Prior to that he served as VP of Operations for Cholestech from 1999 to 2003, an IVD POC system, and held Technical Management positions at Boston Scientific-Target from 1993 to 1999. He received his Bachelors of Engineering (Industrial) at California Polytechnic State University. +11 +Each of our officers serves at the pleasure of the Board of Directors, with Mr. Sperzel, Ms. Klugewicz, and Mr. Esfandiari each having an employment agreement with the Company. There are no family relationships among our directors and executive officers. +Certain Transactions with Management and Principal Stockholders +The executive officers of the Company are as follows: John J. Sperzel, President, Chief Executive Officer and member of the board of directors of the Company, Richard J. Larkin, Chief Financial Officer and Executive Vice-President of the Company, and Javan Esfandiari, Chief Science and Technology Officer of the Company, Sharon Klugewicz, President of Americas Region, and Robert Passas, President EMEA and APAC Regions. +The Company entered into an employment agreement effective March 5, 2016, with Mr. Esfandiari to continue as the Company's Chief Scientific and Technology Officer for an additional term of three years through March 5, 2019. The Company also entered into an employment agreement effective May 22, 2015, with Ms. Klugewicz to serve as Chief Operating Officer (promoted to President of America Region in October 2016) for a term of two years. On March 13, 2014, Mr. Siebert, the former Chief Executive Officer, retired from the Company and entered into a six-month Consulting Agreement with the Company. Effective as of March 13, 2014, the Company entered into an employment agreement with John J. Sperzel III to serve as its Chief Executive Officer for a term of three years. The Company and Mr. Sperzel currently are discussing terms for renewal of his employment agreement. See Item 11 for additional information. +Approval of Transactions with Related Persons +The Board of Directors reviews all transactions involving us in which any of our directors, director nominees, significant stockholders and executive officers and their immediate family members are participants to determine whether such person has a direct or indirect material interest in the transaction. All directors, director nominees and executive officers must notify us of any proposed transaction involving us in which such person has a direct or indirect material interest. Such proposed transaction is then reviewed by either the Board as a whole or the Audit Committee, which determines whether to approve the transaction. After such review, the reviewing body approves the transaction only if it determines that the transaction is in, or not inconsistent with, the best interests of the Company and its stockholders. +Director Independence +Our common stock trades on the NASDAQ. Accordingly, we are subject to the corporate governance standards of NASDAQ, which require, among other things, that a majority of the board of directors be independent. We define an "independent" director in accordance with the NASDAQ Global Market's requirements for independent directors. Under this definition, we have determined that each of Katherine Davis, Peter Kissinger, and Gary Meller currently qualifies as an independent director. We do not list the "independent" definition we use on our internet website. +Section 16(a) Beneficial Ownership Reporting Compliance +Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), requires the Company's directors, executive officers and beneficial owners of more than 10% of the Company's common stock to file with the Securities and Exchange Commission initial reports of ownership and reports of changes in ownership of common stock and other equity securities of the Company. The Company believes that during the year ended December 31, 2016 each person who was an officer, director and beneficial owner of more than 10% of the Company's common stock complied with all Section 16(a) filing requirements. +12 +Code of Ethics +The Company has adopted a code of ethics that applies to its principal executive officer, principal financial officer, controller, and persons performing similar functions. A copy of the Company's code of ethics is available on the Company's website at www.chembio.com. +Board of Directors and Committees +The Board of Directors held twelve meetings during the fiscal year ended December 31, 2016 and each director participated in at least 75% of those meetings and of meetings of the committees on which he/she served. Although the Company does not have a formal policy regarding attendance by members of the Board of Directors at the Company's annual meeting of stockholders, the Company encourages each director to attend. +Audit Committee +The Company's Audit Committee met four times in 2016. As of March 20, 2017, the members of the Audit Committee were Gary Meller (Chair), Katherine L. Davis, and Peter Kissinger. The Board of Directors has determined that Dr. Meller is an "audit committee financial expert," as defined under the rules of the SEC. Each of the members of the Audit Committee is deemed "independent" in accordance with the NASDAQ Global Market's requirements for independent directors. The Audit Committee oversees, reviews, acts on and reports to our Board of Directors on various auditing and accounting matters including the selection of our independent registered public accounting firm, the scope of our annual audits, fees to be paid to the independent registered public accounting firm, and the performance of our independent registered public accounting firm. A copy of the Committee's charter is available on the Company's website at www.chembio.com +Compensation Committee +The Company's Compensation Committee met two times in 2016. As of March 20, 2017, the members of the Compensation Committee were Gary Meller (Chair), Katherine L. Davis, and Peter Kissinger. Each of the Compensation Committee members is deemed "independent" in accordance with the NASDAQ Global Market's requirements for independent directors. The Compensation Committee establishes salaries, incentives and other forms of compensation for executive officers. The Compensation Committee also administers our incentive compensation plan. The Compensation Committee's charter is available on the Company's website at www.chembio.com. The Compensation Committee does not currently delegate its authority to any other party, and does not currently engage any compensation consultants to determine the amount or form of executive and director compensation. Executive officers do not play a role in the determination or recommendation of the form or amount of any executive compensation paid, except that the Compensation Committee may request for the Chief Executive Officer to provide the Committee with oral evaluations of the performance of other executive officers. +13 +Nominating And Governance Committee +The Company's Nominating And Governance Committee met two times in 2016. As of March 20, 2017, the members of this Committee were Katherine L. Davis (Chair), Peter Kissinger, and Gary Meller. Each member of the Committee is deemed "independent" in accordance with the NASDAQ Global Market's requirements for independent directors. The Committee (i) identifies individuals qualified to become members of the Board of Directors, (ii) recommends director candidates to the Company's Board of Directors, (iii) reviews, develops, updates as necessary, and recommends to the Company's Board of Directors corporate governance principles and policies, and (iv) monitors compliance with such principles and policies. The Committee's Charter is available on the Company's website at www.chembio.com. All the nominees for director included in this Proxy Statement were recommended by the Nominating And Governance Committee, which is comprised entirely of non-management directors. +Stockholder Recommendations To The Nominating And Governance Committee +There have been no changes in the past year to the procedures by which stockholders may recommend nominees for director to our Board. For a stockholder recommendation for a director to be considered for nomination by the Board at the next annual meeting of stockholders, the recomendations must be made by a stockholder of record entitled to vote. Stockholder nominations must be made by notice in writing, delivered or mailed by first class U.S. mail, postage prepaid, to the Secretary of the Company at the Company's principal business address, not less than 60 days nor more than 90 days prior to any meeting of the stockholders at which directors are to be elected. Each notice of nomination of directors by a stockholder shall set forth the nominee's name, age, business address, if known, residence address of each nominee proposed in that notice, the principal occupation or employment of each nominee for the five years preceding the date of the notice, the number of shares of the Company's common stock beneficially owned by each nominee, and any arrangement, affiliation, association, agreement or other relationship of the nominee with any Company stockholder. +Stockholder Communications +Stockholders wishing to send communications to the Board may contact Katherine L. Davis, our Board Chair, at the Company's principal executive office address. All such communications shall be shared with the members of the Board, or if applicable, a specified committee or director. +Leadership Structure of the Board +Previously, our chief executive officer (the "CEO") served as both the CEO and Chairman of the Board (the "Chairman"). However, when our previous CEO and Chairman retired in March 2014, the Board re-evaluated the leadership structure of the Board and determined that separating the positions of CEO and Chairman was the best structure to fit the Company's then-current needs. It was determined that this structure was preferable at that time given the recent hiring of the new CEO and it continues to be preferable because this structure provides a greater role for the independent directors in the oversight of the Company and active participation of the independent directors in setting agendas and establishing priorities and procedures for the work of the Board. However, our Board has no fixed policy with respect to the separation of the offices of the Chairman and CEO. Our Board retains the discretion to make this determination on a case-by-case basis from time to time as it deems in the best interests of the Company and our stockholders at any given time. +Risk Management +Management is responsible for assessing and managing the Company's exposure to various risks. At least annually, the Company undertakes its assessment process to identify risks and develop plans to address them. This process is led by the Chief Financial Officer. The Audit Committee has oversight responsibility to review management's risk management process, including the policies and guidelines used by management to identify, assess and manage the Company's exposure to risk. The Chief Financial Officer reports directly to the Audit Committee at least quarterly to provide an update on management's efforts to manage risk. The Audit Committee also has oversight responsibility for financial risks. The Board of Directors has oversight responsibility for all other risks. +Diversity +The Board recognizes the importance of diversity in business experience, education, and professional skills in selecting nominees for director. The Board does not, however, have a formal policy concerning the consideration of diversity. +14 +Audit Committee Report +This report shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that we specifically incorporate this information by reference, and shall not otherwise be deemed filed under either of such Acts. +The Audit Committee oversees the Company's financial reporting process. Management has the primary responsibility for the financial statements and the reporting process, including the systems of internal controls. In fulfilling its oversight responsibilities, the Audit Committee reviewed and discussed with management the audited financial statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2016 and the unaudited financial statements included in the Quarterly Reports on Form 10-Q for the first three quarters of the fiscal year ended December 31, 2016. +The Committee discussed with the independent auditors, who are responsible for expressing an opinion on the conformity of audited financial statements with generally accepted accounting principles, the auditors' judgments as to the quality, not just the acceptability, of the Company's accounting principles and such other matters as are required to be discussed by the auditors with the Committee under Statement on Auditing Standard No.16, as amended. In addition, the Committee discussed with the independent auditors the auditors' independence from management and the Company, including the matters in the written disclosures and the letter that the Committee received from the auditors that is required by the PCAOB independence standards. The Committee considered whether the auditors' providing services on behalf of the Company other than audit services is compatible with maintaining the auditors' independence. +The Committee discussed with the Company's independent auditors the overall scope and plans for their respective audits. The Committee meets with the independent auditors, with and without management present, to discuss the results of the auditors' examinations, their evaluations of the Company's internal controls, and the overall quality of the Company's financial reporting. +In reliance on the reviews and discussions referred to above, the Committee approved and recommended to the Board inclusion of the audited financial statements in the Annual Report on Form 10-K for the year ended December 31, 2016 for filing with the SEC. +The Audit Committee +Gary Meller (Chair) +Katherine Davis +Peter Kissinger +March 20, 2017 +15 +EXECUTIVE COMPENSATION +The following table summarizes all compensation recorded by the Company in each of the last three completed fiscal years for our principal executive officer, principal financial officer and our three most highly compensated executive officers other than our principal officers whose annual compensation exceeded $100,000. +Name / +Salary 1 +Bonus 2 +Stock +Option Awards 3 +All Other Compensation 5 +Total +Principal +($) +($) +Awards +($) +($) +($) +Position +Year +($) +John J. Sperzel 4 +2016 +$ +375,000 +$ +100,000 +$ +- +$ +- +$ +- +$ +475,000 +CEO +2015 +$ +375,000 +$ +70,000 +$ +- +$ +- +$ +- +$ +445,000 +2014 +$ +298,558 +$ +- +$ +- +$ +669,625 +$ +- +$ +968,183 +Javan Esfandiari +2016 +$ +329,135 +$ +82,500 +$ +- +$ +- +$ +11,001 +$ +422,636 +CSTO and Executive Vice President +2015 +$ +304,130 +$ +60,000 +$ +- +$ +- +$ +10,520 +$ +374,650 +2014 +$ +315,000 +$ +90,000 +$ +- +$ +- +$ +9,825 +$ +414,825 +Sharon Klugewicz +2016 +$ +265,000 +$ +62,500 +$ +- +$ +- +$ +5,283 +$ +332,783 +Pres. Americas +2015 +$ +259,000 +$ +40,000 +$ +- +$ +- +$ +5,180 +$ +304,180 +2014 +$ +259,616 +$ +75,000 +$ +- +$ +- +$ +4,182 +$ +338,798 +Michael Steele +2016 +$ +217,413 +$ +20,000 +$ +- +$ +- +$ +3,492 +$ +240,905 +VP-Sales & Marketing +2015 +$ +217,413 +$ +25,000 +$ +- +$ +- +$ +3,010 +$ +245,423 +2014 +$ +224,910 +$ +32,130 +$ +- +$ +- +$ +1,990 +$ +259,030 +Richard J. Larkin +2016 +$ +205,000 +$ +50,000 +$ +- +$ +- +$ +4,690 +$ +259,690 +CFO and Executive Vice President +2015 +$ +202,460 +$ +20,000 +$ +- +$ +- +$ +4,094 +$ +226,554 +2014 +$ +198,403 +$ +28,343 +$ +- +$ +- +$ +3,821 +$ +230,567 +1 Salary is total base salary. John Sperzel's 2014 salary reflects his base pay from commencement of his employment on March 13, 2014 until the end of 2014. +2 Bonuses earned in 2016, 2015 and 2014 were partially based on reaching certain objectives, which included revenue dollar levels and operating profit levels. Additional amounts earned were discretionary. +3 The estimated fair value of any option or common stock granted was determined in accordance with ASC 718, "Stock-Based Payment". +4 Mr. Sperzel also serves as a director on the Company's board of directors. Mr. Sperzel does not receive any compensation for this director role. +5 Other compensation includes an employer match to 401(K) contributions and car allowances where applicable. +16 +Employment Agreements +Mr. Sperzel. Effective March 13, 2014 (the "Effective Date"), the Company entered into an Employment Agreement with John J. Sperzel III to serve as the Company's CEO for a term of three years. Mr. Sperzel's annual base salary $375,000, with the possibility of a discretionary, performance-based annual cash bonus of up to 40% of his base salary. The Employment Agreement also provided for a grant of 250,000 options to purchase shares of the Company's common stock, 43,132 of which will be incentive stock options under the Company's 2008 Stock Incentive Plan (the "Plan"), and 206,868 of which will be non-qualified stock options. The options will become exercisable at the rate of 50,000 shares per year for each of the first through the fifth anniversary of the Effective Date. In the event Mr. Sperzel's employment is terminated by reason of disability or for "cause," as defined in the Employment Agreement, all compensation, including his base salary, his right to receive a performance bonus, and the vesting of any unvested options, will cease as of his termination date, and Mr. Sperzel will receive no severance benefits. If the Company terminates Mr. Sperzel's employment without cause or Mr. Sperzel terminates his employment for a reasonable basis, as defined in the Employment Agreement (which includes involuntary termination within a six-month period upon a "Change of Control"), then the Company will pay Mr. Sperzel his base salary for a period of six months as severance and all of his unvested stock options immediately shall become vested. The Employment Agreement also contains provisions prohibiting Mr. Sperzel from (i) soliciting the Company's employees for a period of 24 months following his termination, (ii) soliciting the Company's customers, agents, or other sources of distribution of the Company's business for a period of twelve months following his termination, and (iii) except where termination is involuntary upon a "Change in Control," engaging or participating in any business that directly competes with the business activities of the Company in any market in which the Company is in business or plans to do business during the period in which he is entitled to severance, or for a period of six months if he is not entitled to severance payments under the Employment Agreement. The foregoing description of the Employment Agreement is qualified in its entirety by reference to the full text of the Employment Agreement. The Company and Mr. Sperzel currently are discussing terms for renewal of his employment agreement. +Mr. Esfandiari. The Company entered into an employment agreement effective March 5, 2016 (the "Employment Agreement"), with Mr. Esfandiari to continue as the Company's Chief Scientific and Technology Officer for an additional term of three years through March 5, 2019. Mr. Esfandiari's annual base salary is $335,000, with the possibility of a discretionary, performance-based annual cash bonus of up to 50% of his base salary for each year, which is in the same proportions as described below under "Executive Bonus Plan". The Company also granted Mr. Esfandiari, pursuant to the Company's 2008 Stock Incentive Plan, incentive stock options to purchase 60,000 shares of the Company's common stock. The price per share of these options is equal to the fair market value of the Company's common stock as of the close of the market on March 11, 2016, which is the trading date on which the Agreement was entered into. Of these stock options, options to purchase 20,000 shares vest on each of the first three anniversaries of the effective date of the Employment Agreement. Mr. Esfandiari is eligible to participate in any profit sharing, stock option, retirement plan, medical and/or hospitalization plan, and/or other benefit plans except for disability and life insurance that the Company may from time to time place in effect for the Company's executives during the term of Mr. Esfandiari's employment agreement. If Mr. Esfandiari's employment agreement is terminated by the Company without cause, or if Mr. Esfandiari terminates his employment agreement for a reasonable basis, as defined in the Employment Agreement, including within 12 months of a change in control, the Company is required to pay as severance Mr. Esfandiari's salary for twelve months, and all of his unvested stock options shall become immediately become vested. The Employment Agreement also contains provisions prohibiting Mr. Esfandiari from (i) soliciting the Company's employees for a period of 24 months following his termination, (ii) soliciting the Company's customers, agents, or other sources of distribution of the Company's business for a period of twelve months following his termination, and (iii) except where termination is involuntary upon a "Change in Control", for a period of twelve months following his termination, engaging or participating in any business that directly competes with the business activities of the Company in any market in which the Company is in business or plans to do business. +Ms. Klugewicz. The Company entered into an employment agreement dated May 22, 2015 with Ms. Klugewicz (the "Employment Agreement"), effective May 22, 2015 (the "Effective Date"). The Agreement provides that she will serve as the Company's COO for a term of two years. Ms. Klugewicz will receive an annual salary of $265,000, with the option of a discretionary, performance-based annual cash bonus of up to 37.5% of her base salary. In the event Ms. Klugewicz's employment is terminated by reason of disability or for "cause", as defined in the Employment Agreement, all compensation including her base salary, her right to receive a performance bonus, and the vesting of any unvested options, will cease as of her termination date, and Ms. Klugewicz will receive no severance benefits. If the Company terminates Ms. Klugewicz's employment without cause or Ms. Klugewicz terminates her employment for a reasonable basis, as defined in the Employment Agreement (which definition includes involuntary termination within a six-month period upon a "Change of Control"), then the Company will pay Ms. Klugewicz her base salary for a period of six months as severance, and all her unvested stock options shall immediately become vested. The Employment Agreement also contains provisions prohibiting Ms. Klugewicz from (i) soliciting the Company's employees for a period of twenty-four months following her termination, (ii) soliciting the Company's customers, agents, or other sources of distribution of the Company's business for a period of twelve months following her termination, and (iii) for a period of twelve months following termination of this Agreement, except where termination is involuntary upon a "Change in Control," engaging or participating in any business that directly competes with the business activities of the Company in any market in which the Company is in business or plans to do business. The foregoing description of the Employment Agreement is qualified in its entirety by reference to the full text of the Employment Agreement. +None of the other executive officers of the Company has an employment contract with the Company. +Executive Bonus Plan +The Company has established a bonus plan for its executives who do not have a contract (excluding Messrs. Sperzel and Esfandiari and Ms. Klugewicz who do have a contract with the Company). For the fiscal year ended December 31, 2016, there were three executives eligible for this bonus plan. Each executive can earn up to 25% of that executive's salary in the form of a cash bonus. The Compensation Committee determined that 80% of the executive's bonus will be quantitative factors, based on the budget, and the other 20%, which will be based on other factors, will be discretionary. For 2016, the quantitative 80% portion of the plan called for attaining certain revenue goals, and for attaining certain operating profit goals. +17 +OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END December 31, 2016 +Option Awards +Stock Awards +Name +Number of Securities Underlying Unexercised Options Exercisable (#) +Number of Securities Underlying Unexercised Options Unexercisable +(#) +Option Exercise Price +($) +Option Expiration Date +Option Vesting Date +Number of Shares of Stock That Have Not Vested +(#) +Market Value of Shares of Stock That Have Not Vested +($) +Equity Incentive Plan Awards: Number of Unearned Shares That Have Not Vested +(#) +Equity Incentive Plan Awards: Market Value of Unearned Shares That Have Not Vested +($) +Foot- +note +John J. Sperzel +25,000 +3.4163 +3/21/2021 +3/13/2015 +1 +25,000 +3.4163 +3/21/2021 +3/13/2015 +2 +18,132 +3.4163 +3/21/2021 +3/13/2016 +1 +31,868 +3.4163 +3/21/2021 +3/13/2016 +2 +50,000 +3.4163 +3/21/2021 +3/13/2017 +2 +50,000 +3.4163 +3/21/2021 +3/13/2018 +2 +50,000 +3.4163 +3/21/2021 +3/13/2019 +2 +Javan Esfandiari +10,000 +5.44 +3/5/2018 +3/5/2014 +1 +10,000 +5.44 +3/5/2018 +3/5/2015 +1 +10,000 +5.44 +3/5/2018 +3/5/2016 +1 +4,765 +5.56 +2/26/2018 +2/26/2013 +4 +7,969 +4.00 +2/16/2017 +2/16/2012 +3 +20,000 +5.64 +3/11/2016 +3/11/2017 +1 +20,000 +5.64 +3/11/2016 +3/11/2018 +1 +20,000 +5.64 +3/11/2016 +3/11/2019 +1 +Sharon Klugewicz +2,500 +4.50 +5/22/2018 +5/22/2014 +1 +2,500 +4.50 +5/22/2018 +5/22/2015 +1 +630 +5.56 +2/26/2018 +2/26/2013 +4 +12,000 +4.45 +9/4/2017 +9/4/2013 +5 +12,000 +4.45 +9/4/2017 +9/4/2014 +5 +12,000 +4.45 +9/4/2017 +9/4/2015 +5 +Michael Steele +785 +5.56 +2/26/2013 +2/26/2018 +4 +Richard J. Larkin +NONE +1 Options issued in connection with an employment contract and under the 2008 Stock Incentive Plan. +2 Options issued in connection with the start of employment with the Company and not under a Plan. +3 On February 16, 2012, the Company determined to grant on February 16, 2012, to certain employees of the Company, options to purchase an aggregate of 203,125 shares of the Company's common stock. The exercise price for these options was the last traded market price for the Company's common stock on February 16, 2012, which was $4.00 per share. The options become exercisable on the effective date of the grant. Each option granted will expire and terminate, if not exercised sooner, upon the earlier to occur of (a) 30 days after termination of the employee's employment with the Company or (b) the fifth anniversary of the effective date of grant. +4 On February 26, 2013, the Company determined to grant on February 26, 2013 to certain employees of the Company, options to purchase an aggregate of 16,360 shares of the Company's common stock. The exercise price for these options was the last traded market price for the Company's common stock on February 26, 2013, which was $5.56 per share. The options become exercisable on the effective date of the grant. Each option granted will expire and terminate, if not exercised sooner, upon the earlier to occur of (a) 30 days after termination of the employee's employment with the Company or (b) the fifth anniversary of the effective date of grant. +5 Options issued in connection with the start of employment with the Company and under the 2008 Stock Incentive Plan. +18 +Director Compensation +Effective January 1, 2015, all non-employee directors are paid $25,000 annual fee in semi-annual payments. In addition, once every five years, on the date of the annual meeting of shareholders at which a director is elected or re-elected (every 5 years), that director receives stock options to acquire, subject to vesting as described below, 46,875 shares of the Company's common stock, with an exercise price equal to the market price on the date of the grant. Stock options to acquire 9,375 shares become exercisable on the date of the original grant, and options to acquire an additional 9,375 shares become exercisable on the date of each of the four succeeding anniversaries of the date of grant if and to the extent that the non-employee director still a director on each such vesting date. [These options grants also are described in note 2 below.] Beginning in April 2014, the non-employee board chair was paid a monthly fee of $6,500, and as of January 1, 2015, this monthly fee was adjusted to $4,167. The audit committee chair is paid an annual fee of $2,500, paid semi-annually. In addition, the non-employee directors are paid $1,000 for each board of directors' meeting attended, and paid $500 for each telephonic board of directors meeting. The non-employee directors who are members of a committee of the board of directors are paid $500 for each committee meeting attended, or $750 for each committee meeting attended if that non-employee director is the committee chair. Directors also may be paid for serving on ad hoc committees of the Board. +DIRECTOR COMPENSATION +Name +Fees Earned or Paid in Cash +($) 1 +Stock Awards +($) +Option Awards +($) 2 +Total +($) +Katherine L. Davis +$ +85,000 +$ +- +$ +- +$ +85,000 +Barbara DeBuono +$ +16,500 +$ +- +$ +- +$ +16,500 +Peter Kissinger +$ +39,500 +$ +- +$ +151,973 +$ +191,473 +Gary Meller +$ +44,500 +$ +- +$ +- +44,500 +1 Fees earned or paid in cash represents a yearly fee and fees for meeting expenses: (a) Ms. Davis received a $25,000 annual fee as a member of the board of directors, a $4,167 monthly fee as chair aggregating $50,000 and $10,000 in meeting fees earned during 2016; (b) Dr. DeBuono received $12,500, as one-half the annual fee as a member of the board of directors until June 2016, and $4,000 in meeting fees; (c) Dr. Kissinger received a $25,000 annual fee as a member of the board of directors, $6,000 in fees as a member of a Special Committee and $8,500 in meeting fees; (d) Dr. Meller received a $25,000 annual fee as a member of the board of directors, $2,500 in fees as chairperson of the Audit Committee, $8,000 in fees as a member of a Special Committee and $9,000 in meeting fees. +2 Each non-employee member of the board of directors is granted, once every five years, options to purchase 46,875 shares of the Company's common stock with an exercise price equal to the market price on the date of the grant as part of annual non-employee board compensation. One-fifth of these options are exercisable on the date of grant, one-fifth become exercisable on the first anniversary of the date of grant, and additional one-fifths become exercisable on the second through fourth anniversaries of the date of grant, provided that the individual is still a member of the Board of Directors on the vesting date. The fair value of options at the date of grant was estimated using the Black-Scholes option pricing model. +Compensation Committee Interlocks and Insider Participation +No executive officer of the Company served as a member of the Board of any other public company during the year ended December 31, 2016. No member of the Compensation Committee served as an executive officer of any other public company during the year ended December 31, 2016. No interlocking relationship exists between the members of our Compensation Committee and the Board or compensation committee of any other company. As of March 20, 2017, the members of the Compensation Committee were Dr. Gary Meller (Chair), Katherine Davis, and Dr. Peter Kissinger, each of whom is deemed by the Board of Directors to be independent. +19 +COMPENSATION DISCUSSION AND ANALYSIS +Executive Summary +Named Executive Officers . John J. Sperzel III, who served as the Company's CEO during fiscal 2016, Richard J. Larkin, who served as the Company's Chief Financial Officer during 2016, and Javan Esfandiari, Sharon Klugewicz, and Michael Steele, are referred to herein as the "Named Executive Officers" or "NEOs". +Biographical information concerning each of our NEOs is included above in this Proxy Statement under "INFORMATION REGARDING THE BOARD OF DIRECTORS AND EXECUTIVE OFFICERS". +Compensation Philosophy and Objectives. Our policies regarding executive compensation programs are intended to balance motivating, rewarding and retaining executives with a competitive compensation package, and maximizing long-term shareholder value by linking compensation earned to both individual and Company performance. Compensation typically includes base salary, eligibility for annual cash bonuses and equity-based awards, retirement plan contributions, and other Company-sponsored benefits. A significant portion of each NEO's cash bonus and equity-based awards are dependent upon the Company's and/or the individual's achieving business and financial goals and realizing other performance objectives. Examples of Company performance metrics for which we measure achievement are net revenue, gross profit, profit margins, operating income, and net earnings, as well as achievements and other developments in the Company's business operations (such as product development, regulatory approval and/or marketing launch, new customer contracts, etc.). Annual performance targets for these metrics are set after consideration of the Company's strategic plan, historical results, and other factors. Our compensation programs are intended to reward individual contributions (for example, bringing a new product to market) and Company-wide achievement of performance metric targets (for example, overall revenue and net earnings). +The Compensation Committee is responsible for ongoing oversight of compliance with this compensation philosophy. The Compensation Committee strives to ensure that, in its judgment, the total compensation paid to the NEOs is fair, reasonable and competitive. +At our 2016 annual meeting of stockholders, we once again held an advisory, "say-on-pay" vote on the compensation of our NEOs. At that time, our stockholders approved the compensation of our NEOs, with approximately 89.2% of votes cast in favor of the prior year's compensation of our NEOs. Based on the strong stockholder support from the 2016 say-on-pay vote, the Compensation Committee concluded that stockholders were confirming their concurrence with the compensation paid to the NEOs and that the stockholders did not believe that the Compensation Committee needed to make substantial revisions to the compensation of the Company's NEOs. +Establishing Compensation Levels . Compensation levels for the NEOs are driven by market pay levels, the NEO's individual achievement and leadership performance, and overall Company performance. The Compensation Committee relies upon a combination of judgment (which is necessarily subjective) and guidelines (discussed above and elsewhere herein) in determining the amount and mix of compensation components for the NEOs. Although the Compensation Committee considers the input of our CEO as a crucial component of its compensation processes and decisions relating to NEO compensation, the Compensation Committee is not obligated to follow or otherwise adhere in any regard to those recommendations. The Company does not engage in strict numerical benchmarking in determining compensation for the NEOs. +Market Pay Levels and Role of the Compensation Consultant. Under its charter, the Compensation Committee is authorized in its discretion to engage outside advisors at the Company's expense. In fiscal 2016, the Compensation Committee did not engage an outside compensation consultant. +Pay levels for the NEOs generally are determined for each fiscal (calendar) year during the first four months of that year. +Most of our compensation decisions are made in the first few months of our fiscal year, after review of the Company's performance and the performance of our NEOs. We believe the compensation of all of our NEOs for 2016 was consistent with the Company's performance in 2016 as well as the criteria and objectives of our executive compensation policies. +20 +Company Performance . We set Company performance metric targets that are considered in establishing the performance-based component of our compensation programs. Performance metric targets that are taken into consideration in our compensation programs include new product development, regulatory approval and/or product marketing launch, new customer contracts, revenues, earnings, and profit margins. These targets are set after consideration of industry averages and historical results. Also taken into consideration in evaluating Company performance in our compensation programs are the market penetration of our DPP® platform, the build-out of the related product menu, and the success of activities related to suitable acquisition targets. +Recovery of Prior Awards . Except as provided by applicable laws and regulations, we do not have a policy with respect to adjustment or recovery of awards or payments if relevant Company performance measures upon which previous awards were based are restated or otherwise adjusted in a manner that would reduce the size of such award or payment. Under those circumstances, we expect that the Compensation Committee and the Board would evaluate whether compensation adjustments were appropriate based upon the facts and circumstances surrounding the applicable restatement or adjustment. +Summary Compensation Sheets . In setting the NEOs' compensation, the Compensation Committee reviews all components of such compensation through the use of summary compensation sheets. These sheets provide the amount of total compensation paid or earned by each NEO based on his or her base salary, cash bonus, and equity-based awards. The summary compensation sheets provide the information that is reflected in the Summary Compensation Table, including the relationships of each element of compensation with each of the other elements. As a result, the summary compensation sheet allows the Compensation Committee to consider an executive's overall compensation rather than only one or two specific components of an executive's compensation. This helps the Compensation Committee to make compensation decisions and evaluate management recommendations based on a complete analysis of an executive's total compensation. +Below is a summary of practices that highlight certain features in our compensation programs: +What Chembio Does . Pays for performance. A significant portion of executive pay is not guaranteed, but rather is tied to the achievement of various performance metrics and to the discretion of the Board as to the individual's overall performance. +Sets NEO salary guidelines in an effort to be responsive to industry trends. Target compensation for NEOs is set after consideration of market data on compensation at other peer companies. +Balances short-term and long-term incentives. The incentive programs provide what the Compensation Committee considers to be an appropriate balance of annual and longer-term incentives. +Uses multiple performance metrics and considers risk assessment. The risk of the undue influence of a single metric is mitigated by utilizing multiple performance measures for annual incentive awards and multi-year vesting for long-term incentive awards. In addition, the Committee periodically conducts a compensation risk assessment to determine whether the compensation policies and practices, or components thereof, create risks that are reasonably likely to have a material adverse effect on the Company. +Caps award payouts. Amounts that can be earned under the Company's cash bonus are capped at a specified percentage of the NEO's salary. +Maintains an independent Compensation Committee consisting entirely of independent directors. +Elements of Compensation Packages. Chembio's executive compensation and benefits packages consist of base salary, cash bonuses, long-term equity incentive awards, Company-sponsored benefit and retirement plans, and (for certain NEOs with specific provisions in an employment contract) change-in-control severance benefits. Each of these components has a certain risk profile concerning the Committee's assessment of the risk that the component would have an adverse effect on the interests of the Company's shareholders. +21 +Element +Form of Compensation +Purpose +Risk Profile +Base Salaries +Cash +Provide competitive, fixed compensation to attract and retain exceptional executive talent +Low to moderate +Annual Cash Bonuses +Cash +Provide a direct financial incentive to achieve corporate and individual operating goals +Moderate to high +Long-Term Equity Incentives +Stock options +Encourage NEOs to build and maintain a long-term equity ownership position in Chembio so that their interests are aligned with the interests of our shareholders +High +Health, Retirement and Other Benefits +Eligibility to participate in benefit plans generally available to our employees, including retirement plan contributions, and premiums paid on disability and life insurance policies +Benefit plans are part of a broad-based employee benefits program providing competitive benefits to our NEOs +Low +Change- in-Control Severance Benefits +Cash and continuation of certain benefits +For certain eligible NEOs with specific provisions in an employment contract, encourage these eligible NEOs to maximize value for shareholders in the event that the Company becomes subject to a change-in-control transaction +Moderate to high +The Compensation Committee has reviewed the risk profile of the components of the Company's executive compensation program, including the performance objectives and target levels used in connection with incentive awards, and has considered the risks that an NEO might be incentivized to take with respect to such components. When establishing the mix among these components, the Compensation Committee is careful not to encourage excessive risk taking. Specifically, the performance objectives contained in the Company's executive compensation programs have been balanced between annual and long-term incentive compensation to ensure that both components are aligned and consistent with our long-term business plan and that our overall mix of equity-based awards has been allocated to promote an appropriate combination of incentive and retention objectives. As a result, the Compensation Committee believes that the Company's executive compensation program does not incentivize the NEOs to engage in business activities or other behavior that would threaten the value of the Company or the investments of its shareholders. +The Compensation Committee continues to monitor and evaluate on an on-going basis the mix of compensation, especially equity compensation, awarded to the NEOs, and the extent to which such compensation aligns the interests of the NEOs with those of the Company's shareholders. In connection with this practice, the Compensation Committee has, from time to time, reconsidered the structure of the Company's executive compensation program and the relative weighting of various compensation elements. +Interplay of Compensation Elements . We believe that each element of our compensation program plays a substantial role in maximizing long-term value for our shareholders and employees because of the significant emphasis on pay-for-performance principles. +We strive to achieve an appropriate mix between equity incentive awards and cash payments in order to meet our objectives. Our mix of compensation elements is designed to reward recent results and motivate long-term performance through a combination of cash and equity-based awards. We believe the most important indicator of whether our compensation objectives are being met is our ability to motivate our NEOs to deliver superior performance and retain them to continue their careers with Chembio on a cost-effective basis. +22 +Base Salary . The Company pays salaries that are designed to attract, motivate and retain experienced executives who will drive superior Company performance and maintain long-term shareholder value. The Compensation Committee considers recommendations from the CEO and approves annual base salaries that are commensurate with each NEO's responsibilities and performance, as well as Company performance in the prior fiscal year, which are competitive with similar positions locally and in the industry. +Cash Bonuses . The Compensation Committee believes that employees should be rewarded based on Company results and individual performance. The Compensation Committee awards cash bonuses contingent upon both Company and individual performance. Cash bonuses, if earned, are paid in the first quarter of each fiscal year, for the prior year's performance. +Long-Term Incentive Awards . The Compensation Committee believes that equity-based compensation encourages employees to commit to the long-term goals of the Company. This ensures that the Company's NEOs have a stake in the long-term creation of shareholder value. A significant portion of the awards is performance-based, meaning the NEOs' ability to vest in that portion of awards is contingent upon the Company achieving a minimum level of net earnings. +Although Chembio does not have a written policy regarding the timing or practices related to granting equity awards, neither Chembio nor the Compensation Committee engages in spring-loading, back-dating or bullet-dodging practices. At any time that the Compensation Committee determines to grant stock options, those options are granted at the closing market price on the date of grant. +Company-Sponsored Benefit and Retirement Plans . NEOs participate in the Company's benefit and retirement plans on the same basis as other Company employees. The core benefit package includes health, short and long-term disability, and group term life insurance. Chembio generally provides retirement benefits to executives through its 401K Plan. The Company also pays a matching contribution to the Company's 401(K) Plan for all employees. This matching contribution is equal to a maximum of two percent of the employee's compensation. +Other Personal Benefits . One of the NEOs has an auto allowance that is paid by the Company, the costs of which are included in the All Other Compensation table on page 16 . The Company believes payment of this allowance to this one NEO is reasonable given the nature of NEO's the position and is consistent with the Company's overall executive compensation philosophy. +2016 Business Overview. +● +From fiscal 2015 to fiscal 2016, total cash compensation for Mr. Sperzel increased 6.7%. With respect to the other NEOs, the change in cash compensation varied from a decrease of (1.8)% to an increase of 14.6%. These increases include increased compensation for two NEOs receiving promotions during fiscal 2016. +● +Our net revenue for 2016 was $17.87 million, a decrease of 26.3%, compared to 2015 net revenue. Net loss for 2016 was $13.35 million, a decrease of 457% compared to 2015 net loss. Additionally, operating loss for 2016 decreased 113%. +● +In March 2016 and in September 2016, a number of employees, including certain NEOs, were granted cash bonuses. See the "Summary Compensation Table" and "Grants of Plan-Based Awards" on pages 16 and 18 , respectively, for details. +● +Our financial results also did not meet the minimum threshold targets in our executive compensation plan. +● +Based on our financial results in fiscal 2016 and the individual evaluations of the NEOs by the Compensation Committee, our NEOs received no merit increases in their base salaries for 2017. Base salaries across all Chembio employees below the executive level increased approximately 2.5% effective January 1, 2017. +23 +2017 Actions +As described above, there were no salary increases for the NEOs for 2017. +In February 2017, the Compensation Committee approved discretionary cash bonuses for four of the NEOs, as well as for three other officers, and on March 15, 2017 the Compensation Committee granted stock options to purchase 5,000 shares of common stock to four of the NEOs, as well as to two other officers. +Management and the Compensation Committee have intended that the earnings thresholds should be set at meaningful rates so that management must be diligent, focused and effective in order to achieve these goals. In other words, the Company and management believed at the time of the establishment of these thresholds that they would be challenging to achieve and would require substantial efforts from management. To this end, the Compensation Committee tends to set the thresholds consistent with the earnings range requiring that the low end of guidance is achieved before bonuses are paid. +CEO Employment Agreement and Supplemental Benefit Agreement +Effective March 13, 2014, the Company and Mr. Sperzel entered into the Sperzel Employment Agreement with a term of three years. The Sperzel Employment Agreement provides that Mr. Sperzel is entitled to receive an established minimum annual salary and that he is eligible to participate in the Company's bonus and stock incentive plans. The Sperzel Employment Agreement also provides that Mr. Sperzel receive a grant of 250,000 stock options vesting over five years, provided that he is employed by the Company on those dates. The Company and Mr. Sperzel currently are discussing terms for renewal of his employment agreement. +The Sperzel Employment Agreement provides for potential payments to Mr. Sperzel upon a change in control of the Company. These payments are described on page 17 of this Proxy Statement. +Javan Esfandiari Employment Agreement +Effective March 5, 2016, the Company and Javan Esfandiari entered into an employment agreement providing for Mr. Esfandiari's employment as Chief Science And Technology Officer of the Company, responsible for all research and development operations. The agreement provides that Mr. Esfandiari's annual base salary shall be $335,000, he shall be entitled to participate in the Company's cash bonus plan, he shall be awarded options to acquire 60,000 shares of the Company's common stock, vesting 33.33% each anniversary year from the date of the grant, and he shall be entitled to receive other benefits commensurate with his position with the Company. +The 2017 Esfandiari Employment Agreement provides for potential payments to Mr. Esfandiari upon a change in control of the Company. These payments are described on page 17 of this Proxy Statement. +Sharon Klugewicz Employment Agreement +On May 22, 2015, the Company and Sharon Klugewicz entered into a letter agreement providing for the terms of Ms. Klugewicz's employment as Chief Operating Officer of the Company. Ms. Klugewicz was promoted to President, Americas Region on October 11, 2016. In this new position, she is responsible for sales, marketing, customer support, clinical and regulatory affairs, and quality systems in the Americas, and will be tasked with leading the U.S. commercial team and expanding commercial operations throughout Latin America, the U.S., and Canada. The agreement provides for the following: Ms. Klugewicz's annual base salary shall be $265,000; she shall be entitled to participate in the Company's cash bonus plan; she was awarded options to acquire 5,000 shares of the Company's common stock, vesting 50% each anniversary year from date of grant; and she shall be entitled to receive other benefits commensurate with her position with the Company. +The 2017 Klugewicz Employment Agreement provides for potential payments to Ms. Klugewicz upon a change in control of the Company. These payments are described on page 17 of this Proxy Statement. +Tax Deductibility of Pay +Section 162(m) of the Internal Revenue Code contains compensation deduction limitations for certain highly compensated employees. One exception to this limitation is for performance-based compensation that is approved by, among other things, a committee of "outside directors" (as defined under IRS treasury regulations). The Committee believes that all compensation paid to the NEOs for fiscal year 2016 is properly deductible under Section 162(m), but no assurance can be made in this regard. +24 +COMPENSATION COMMITTEE REPORT +The Compensation Committee has reviewed and discussed the Compensation Discussion And Analysis required by Item 402(b) of Regulation S-K with management. Based on these reviews and discussions, the Compensation Committee recommended to the Board of Directors that this Compensation Discussion And Analysis be included in the Company's Proxy Statement on Schedule 14A. +Members of the Compensation Committee +Dr. Gary Meller (Chairman) +Katherine L. Davis +Dr. Peter Kissinger +25 +ITEM 2. PROPOSAL TO RATIFY THE SELECTION OF BDO USA, LLP +AS THE COMPANY'S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +On May 25, 2011, the Company, through and with the approval of the Audit Committee of the Company's Board of Directors, engaged BDO USA, LLP ("BDO") as its independent registered public accounting firm , and BDO has served the Company in that capacity in each succeeding year. For the fiscal year ending December 31, 2017, BDO has been engaged to be the Company's independent registered public accounting firm. +It is expected that one or more representatives of BDO will be present, or available by phone, at the Annual Meeting and will be given the opportunity to make a statement if they desire to do so. They also will be available to respond to appropriate questions from stockholders. +Principal Accountant Fees and Services +Audit Fees +For the years ended December 31, 2016 and 2015 the Company engaged BDO USA, LLP as its independent registered public accounting firm to perform an audit of the Company's annual financial statements included on Form 10-K, including reviews of the quarterly financial statements and assistance with and review of documents filed with the SEC, for $336,757 and $204,624 respectively in fees. +Audit-Related Fees +For the years ended December 31, 2016 and 2015, the Company's independent registered public accounting firm, BDO USA, LLP, did not provide the Company with any assurance and related services reasonably related to the performance of the audit or review of the Company's financial statements that are not reported above under "Audit Fees." +Tax Fees +For the years ended December 31, 2016 and 2015, the Company's independent registered public accounting firm, BDO USA, LLP, billed the Company $26,900 and $22,400, respectively for professional services for tax compliance, tax advice and tax planning. +All Other Fees +For the years ended December 31, 2016 and 2015, the Company's independent registered public accounting firm, BDO USA, LLP, did not provide the Company with any services for other matters. +Audit Committee Pre-Approval Policies +The Audit Committee approves in advance all audit and non-audit services performed by the independent registered public accounting firm. There are no other specific policies or procedures relating to the pre-approval of services performed by the independent registered public accounting firm. +Required Vote; Board Recommendation +In order to ratify the selection of auditors, the number of votes cast in favor of ratification must exceed the number of votes cast in opposition to ratification. There is no legal requirement for submitting this proposal to the stockholders; however, the Board of Directors believes that it is of sufficient importance to seek ratification. Regardless of whether the proposal is approved or defeated, the Board may reconsider its selection of BDO. +The Board of Directors recommends that the stockholders vote FOR ratifying the selection of the certified public accounting firm of BDO USA, LLP to serve as the Company's independent registered public accounting firm for the fiscal year ending December 31, 2017 or until the Board of Directors, in its discretion, replaces them. +26 +ITEM 3. ADVISORY VOTE ON COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS +We are providing our stockholders with an opportunity to vote to approve, on an advisory, non-binding basis, the compensation of our "Named Executive Officers". As stated elsewhere in this Proxy Statement, based on 2016 compensation, our "Named Executive Officers" are John J. Sperzel III, Chief Executive Officer, Richard J. Larkin, Chief Financial Officer and Executive Vice President, Javan Esfandiari, Executive Vice President and Chief Scientific And Technology Officer , Sharon Klugewicz, President, Americas Region, and Michael Steele, Vice President Sales & Marketing. This proposal, which is often referred to as a "say-on-pay" proposal, is required by the Dodd-Frank Wall Street Reform and Consumer Protection Act. The Board of Directors is providing stockholders with the opportunity to cast an advisory vote on the compensation of our "Named Executive Officers." This proposal gives you, as a stockholder, the opportunity to endorse or not endorse executive compensation programs and policies and the compensation paid to our Named Executive Officers as disclosed in this Proxy Statement +The Compensation Committee's compensation objectives are to attract and retain highly qualified individuals with a demonstrated record of achievement, reward past performance, provide incentives for future performance, and align the interests of the executive officers with the interests of our stockholders. The Board is asking stockholders to support this proposal based on the disclosure set forth in these sections of this Proxy Statement, which, among other things, demonstrates our commitment to ensuring that executive compensation is aligned with our corporate strategies and business objectives and is competitive with those of other companies in our industry. +The Board is asking stockholders to cast a non-binding, advisory vote "FOR" the compensation paid to our Named Executive Officers as disclosed in this Proxy Statement pursuant to the compensation disclosure rules of the SEC, including the compensation tables and accompanying narrative disclosure under the heading "Executive Compensation" included in this Proxy Statement. Accordingly, we are asking our stockholders to approve the following advisory resolution at our 2017 Annual Meeting: +RESOLVED, that the Company's stockholders, hereby approve, on an advisory basis, the compensation paid to the Company's "Named Executive Officers" as set forth pursuant to Item 402 of Regulation S-K, including the compensation tables and accompanying narrative disclosure under the heading "Executive Compensation" all as contained in the Company's 2017 Proxy Statement for the 2017 Annual Meeting of Stockholders. +Although the say-on-pay vote we are asking you to cast is non-binding, and the results of this vote will not require the Board or the Compensation Committee to take any action regarding executive compensation, the Board and the Compensation Committee value the views of our stockholders and carefully will consider the outcome of the vote when determining future compensation arrangements for our Named Executive Officers. +Board Recommendation +The Board of Directors recommends that stockholders vote "FOR" the compensation paid to our Named Executive Officers. +27 +Comments Concerning Advisory Vote on Frequency Of Stockholder Say-On-Pay Voting +In accordance with Section 14A of the Securities Exchange Act of 1934, the Board may ask stockholders to cast a non-binding, advisory vote on how frequently we should have stockholder say-on-pay votes. We are required to hold this advisory vote at least once every six years, although our Board can determine to hold such a vote sooner. When that occurs, stockholders may vote to hold say-on-pay votes every one, two or three years. At the 2013 Annual Meeting Of Stockholders, the stockholders voted to have a stockholder say-on-pay vote every year. The Board has determined not to hold an advisory vote on the frequency of stockholder say-on-pay voting this year, and thereby continue with adherence with the stockholders' vote at the 2013 Annual Meeting Of Stockholders. +ANNUAL REPORT TO STOCKHOLDERS +Included with this Proxy Statement is the Company's Annual Report on Form 10-K for the year ended December 31, 2016. +RESOLUTIONS PROPOSED BY INDIVIDUAL STOCKHOLDERS; +Under Rule 14a-8(e) of the Securities Exchange Act of 1934, in order to be considered for inclusion in the Proxy Statement and form of proxy relating to our next annual meeting of stockholders following the end of our 2017 fiscal year, proposals by individual stockholders must be received by us no later than November 27, 2017, which is 120 calendar days prior to the one-year anniversary of the March 27, 2017 date of the initial release to our stockholders of this Proxy Statement for the 2017 Annual Meeting. However, if the date of our next annual meeting of stockholders is changed by more than 30 days from the date of this year's Annual Meeting, then the deadline will be a reasonable time before we begin to print and send our proxy materials for the next annual meeting of stockholders. +In addition, under Rule 14a-4(c)(1) of the Securities Exchange Act of 1934, the proxy solicited by the Board of Directors for the next annual meeting of stockholders following the end of our 2017 fiscal year will confer discretionary authority on any stockholder proposal presented at that meeting unless we are provided with notice of that proposal no later than February 10, 2018, which is 45 days prior to the one-year anniversary of the March 27, 2017 date of the initial release to our stockholders of this Proxy Statement for the 2017 Annual Meeting. +28 +OTHER BUSINESS +The Board of Directors is not aware of any other matters that are to be presented at the Annual Meeting, and it has not been advised that any other person will present any other matters for consideration at the meeting. Nevertheless, if other matters should properly come before the Annual Meeting, the stockholders present, or the persons, if any, authorized by a valid proxy to vote on their behalf, shall vote on such matters in accordance with their judgment. +* * * * * +This Notice and Proxy Statement is sent by order of the Board of Directors. +Dated: March 20, 2017 /s/ John J. Sperzel III +John J. Sperzel III, President, Chief Executive Officer +* * * * * +29 +PROXY +CHEMBIO DIAGNOSTICS, INC. +For the Annual Meeting of Stockholders on May 11, 2017 +Proxy Solicited on Behalf of the Board of Directors +The undersigned hereby appoints John J. Sperzel III, Richard J. Larkin, or either of them, as proxies with full power of substitution to vote all the shares of the undersigned with all the powers that the undersigned would possess if personally present at the Annual Meeting of Stockholders of Chembio Diagnostics, Inc. (the "Company"), to be held at 10:00 a.m. (local time) on May 11, 2017, at the office of the Company, 3661 Horseblock Road, Medford, New York 11763, or any adjournments thereof, on the following matters: +(Continued and to be signed on the reverse side) +p PLEASE DETACH ALONG PERFORATED LINE AND MAIL IN THE ENVELOPE PROVIDED. p +Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be held May 11, 2017. The 2017 Proxy Statement and our 2016 Annual Report to Shareholders are available at: http://www.chembio.com/investors/proxy/ +Please mark votes as in this example ☒ +1. To elect the following four directors: +FOR WITHHOLD FOR +all nominees AUTHORITY all nominees except +Nominees: for all nominees as noted below: +01 Katherine L. Davis +02 Peter Kissinger ☐ ☐ ☐ +03 Gary Meller +04 John J. Sperzel III +Instruction: To withhold authority to vote for any individual nominee, strike-out the name of that nominee by putting a line through that nominee's name in the above list. +2. To ratify the selection of BDO USA, LLP as the Company's independent public accountants. +☐ FOR ☐ AGAINST ☐ ABSTAIN +DO NOT PRINT IN THIS AREA (Shareholder Name & Address Data) +Address Change/Comments: Please indicate if you +(If you noted any Address Changes and/or plan to attend this meeting ☐ +Comments above, please mark box.) ☐ +CONTROL NUMBER +3. Advisory vote to approve the compensation paid to the Company's named executive officers as described in the Company's 2017 Proxy Statement for the 2017 Annual Meeting of Stockholders. +☐ FOR ☐ AGAINST ☐ ABSTAIN +4. In their discretion, to vote upon an adjournment or postponement of the meeting. +☐ YES ☐ NO ☐ ABSTAIN +5. In their discretion, to vote upon such other business as may properly come before the meeting. +☐ YES ☐ NO ☐ ABSTAIN +THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" FOR EACH OF THE PROPOSALS. UNLESS CONTRARY INSTRUCTIONS ARE GIVEN, THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED "FOR" EACH DIRECTOR NOMINEE AND VOTED "FOR" ALL THE OTHER PROPOSALS. IF ANY OTHER BUSINESS IS PRESENTED AT THE MEETING, THIS PROXY WILL BE VOTED BY THE NAMED PROXIES IN ACCORDANCE WITH THEIR BEST JUDGMENT WITH RESPECT TO THOSE MATTERS. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE MEETING. +EVEN IF YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND RETURN THIS PROXY IN THE ACCOMPANYING ENVELOPE. YOUR SIGNATURE ACKNOWLEDGES PRIOR RECEIPT OF THE NOTICE OF MEETING, PROXY STATEMENT AND ANNUAL REPORT TO STOCKHOLDERS. +Number of voting shares: +Date +Signature +Signature +(Joint Owners) +(Please sign exactly as shown on your stock certificate and on the envelope in which this proxy was mailed. When signing as partner, corporate officer, attorney, executor, administrator, trustee, guardian, etc., give full title as such and sign your own name as well. If stock is held jointly, each joint owner should sign.) +p PLEASE DETACH ALONG PERFORATED LINE AND MAIL IN THE ENVELOPE PROVIDED. p +CONTROL NUMBER +PROXY VOTING INSTRUCTIONS +Please have your 11-digit control number ready when voting by Internet or Telephone +INTERNET +Vote Your Proxy on the Internet: +Go to www.aalvote.com/CEMI +Have your proxy card available when you access the above website. Follow the prompts to vote your shares. +TELEPHONE +Vote Your Proxy by Phone: +Call 1 (866) 804-9616 +Use any touch-tone telephone to vote your proxy. Have your proxy card available when you call. Follow the voting instructions to vote your shares. +MAIL +Vote Your Proxy by Mail: +Mark, sign, and date your proxy card, then detach it, and return it in the postage-paid envelope provided. \ No newline at end of file diff --git a/raw/proxies/0001092662/0001092662-17-000029/proxy_rpt.txt b/raw/proxies/0001092662/0001092662-17-000029/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..0eb63261369728ca71362a92aaab6b24bb842849 --- /dev/null +++ b/raw/proxies/0001092662/0001092662-17-000029/proxy_rpt.txt @@ -0,0 +1,4 @@ +Approval of Transactions with Related Persons +The Board of Directors reviews all transactions involving us in which any of our directors, director nominees, significant stockholders and executive officers and their immediate family members are participants to determine whether such person has a direct or indirect material interest in the transaction. All directors, director nominees and executive officers must notify us of any proposed transaction involving us in which such person has a direct or indirect material interest. Such proposed transaction is then reviewed by either the Board as a whole or the Audit Committee, which determines whether to approve the transaction. After such review, the reviewing body approves the transaction only if it determines that the transaction is in, or not inconsistent with, the best interests of the Company and its stockholders. +Director Independence +Our common stock trades on the NASDAQ. Accordingly, we are subject to the corporate governance standards of NASDAQ, which require, among other things, that a majority of the board of directors be independent. We define an "independent" director in accordance with the NASDAQ Global Market's requirements for independent directors. Under this definition, we have determined that each of Katherine Davis, Peter Kissinger, and Gary Meller currently qualifies as an independent director. We do not list the "independent" definition we use on our internet website. \ No newline at end of file diff --git a/raw/proxies/0001092662/0001140361-19-008079/proxy.txt b/raw/proxies/0001092662/0001140361-19-008079/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..d6ae26c632ceec09b3e9ffb64926901617a468fe --- /dev/null +++ b/raw/proxies/0001092662/0001140361-19-008079/proxy.txt @@ -0,0 +1,2740 @@ +DEF 14A +1 +formdef14a.htm +DEF 14A +UNITED STATES SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Proxy Statement Pursuant to +Section 14(a) of the Securities Exchange Act of 1934 +Filed by the Registrant ☒ +Filed by a Party other than the Registrant ☐ +Check the appropriate box: +☐ +Preliminary Proxy Statement +☐ +Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +☒ +Definitive Proxy Statement +☐ +Definitive Additional Materials +☐ +Soliciting Material Pursuant to §240.14a-12 +(Name of Registrant as Specified In Its Charter) +Payment of Filing Fee (Check the appropriate box): +☒ +No fee required. +☐ +Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. +(1) +Title of each class of securities to which transaction applies: +(2) +Aggregate number of securities to which transaction applies: +(3) +Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated +and state how it was determined): +(4) +Proposed maximum aggregate value of transaction: +(5) +Total fee paid: +☐ +Fee paid previously with preliminary materials. +☐ +Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid +previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. +(1) +Amount Previously Paid: +(2) +Form, Schedule or Registration Statement No.: +(3) +Filing Party: +(4) +Date Filed: +NOTICE OF +2019 ANNUAL MEETING +OF STOCKHOLDERS +and +PROXY STATEMENT +2019 Annual Meeting +Tuesday, June 18, 2019 +10 a.m., Eastern time +555 Wireless Boulevard +Inside +CEO’s letter to stockholders +Information on five voting proposals: +Hauppauge, New York +Election of five directors +Approval of 2019 Omnibus Incentive Plan +Ratification of appointment of independent auditor for 2019 +Advisory vote on 2018 executive compensation +Advisory vote on frequency of future advisory votes on executive compensation +555 Wireless Boulevard +Hauppauge, New York 11788 +April 30, 2019 +Dear Fellow Stockholder: +It is my pleasure to invite you to attend the Annual Meeting of Stockholders of Chembio Diagnostics, Inc. to be held on Tuesday, June 18, +2019, at 10 a.m., Eastern time, at 555 Wireless Boulevard, Hauppauge, New York. Each holder of common stock as of 5 p.m., Eastern time, on the record date of April 26, 2019, will be able to participate in the Annual Meeting. +During the Annual Meeting, stockholders will be asked to elect the entire board of directors, to approve our 2019 Omnibus Incentive Plan and +to ratify the appointment of BDO USA, LLP as our independent auditor for 2019. We also will be asking stockholders for approval, by an advisory vote, of our 2018 executive compensation as disclosed in the Proxy Statement for the Annual +Meeting (a “ say-on-pay ” vote) as well as of the board’s recommendation to submit our executive compensation to an advisory vote every year (a “ say-on-frequency ” vote). All of these matters are important, and we urge you to vote +in favor of the election of each of the director nominees, the approval of the 2019 Omnibus Incentive Plan, the ratification of the appointment of our independent auditor, the approval of our 2018 executive compensation and the approval of an +annual advisory vote on our executive compensation. +We are furnishing proxy materials to our stockholders over the Internet. This process expedites the delivery of proxy materials to our +stockholders, lowers our costs and reduces the environmental impact of the Annual Meeting. Today we are sending to each of our stockholders a Notice of Internet Availability of Proxy Materials containing instructions on how to access our +Proxy Statement for the Annual Meeting and our 2018 Annual Report to Stockholders, as well as how to vote via proxy either by telephone or over the Internet. +It is important that you vote your shares of common stock in person or by proxy, regardless of the number of shares you own. You will find the instructions for voting on your Notice of Internet Availability of +Proxy Materials. We appreciate your prompt attention. +The board invites you to participate in the Annual Meeting so that management can listen to your suggestions, answer your questions, and +discuss business developments and trends with you . Thank you for your support, and we look forward to joining you at the Annual Meeting. +Sincerely, +John J. Sperzel III +Chief Executive Officer and President +NOTICE OF +2019 ANNUAL MEETING OF STOCKHOLDERS +To Stockholders of Chembio Diagnostics, Inc.: +The board of directors is soliciting proxies for use at the Chembio Diagnostics, Inc. 2019 Annual Meeting. You are receiving the +enclosed proxy statement because you were a holder of common stock as of 5 p.m., Eastern time, on the record date of April 26, 2019, and therefore are entitled to vote at the Annual +Meeting. The Annual Meeting will be held to vote upon: +In addition, any other business properly presented may be acted upon at the Annual Meeting. Each share of common stock is entitled +to one vote for each director position and other proposal. +In accordance with Securities and Exchange Commission rules, we are providing stockholders with access to proxy +materials on the Internet instead of mailing printed copies. We are mailing to stockholders, commencing on or about April 30, 2019, a Notice of Internet Availability of Proxy Materials to provide: +• +directions for accessing and reviewing the proxy materials on the Internet and submitting a proxy over the Internet or +by telephone; +• +instructions for requesting copies of proxy materials in printed form or by email, at no charge; and +• +a control number for use in submitting proxies. +By Order of the Board, +David Gyorke +Secretary +April 30, 2019 +When +Tuesday, June 18, 2019 +10 a.m., Eastern time +Where +555 Wireless Boulevard +Hauppauge, New York 11788 +IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL +MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 18, 2019: +The Notice of 2019 Annual Meeting of Stockholders, the Proxy Statement, the 2018 +Annual Report to Stockholders and instructions for voting via the Internet can be accessed at: +www.chemb io.com/investors/proxy +How to Vote in Advance +Your vote is important. Please vote as soon as possible by one of the methods shown below. Your Notice of Internet +Availability, proxy card or voting instruction form should be readily available. +Via Internet (Any Web-Enabled Device) +Via Internet (Smartphone or Tablet) +By Telephone (U.S. or Canada only) +By Mail (Pur s uant to Printed Materials) +555 Wireless Boulevard +Hauppauge, New York 11788 +Proxy Statement dated April 30, 2019 +2019 Annual Meeting of Stockholders +Chembio Diagnostics, Inc., a Nevada corporation, is furnishing this Proxy Statement and related proxy materials in +connection with the solicitation by its board of directors of proxies to be voted at its 2019 Annual Meeting of Stockholders and any adjournments. Chembio Diagnostics, Inc. is providing these materials to the holders of record of its common +stock, $0.01 par value per share, as of 5 p.m., Eastern time, on the record date of April 26, 2019 and is first making available or mailing the materials on or about April 30, 2019. All stockholders are extended a cordial invitation to attend +the Annual Meeting. If you would like to obtain directions to be able to attend the Annual Meeting in person, please contact Nancy Kandell at (631) 924-1135 or nkandell@chembio.com. +The Annual Meeting is scheduled to be held as follows: +Date +Tuesday, June 18, 2019 +Time +10 a.m., Eastern time +Meeting Address +555 Wireless Boulevard +Hauppauge, New York +Your vote is important. +Please see the detailed information that follows in the Proxy Statement. +Contents +Page +2019 Proxy Summary +1 +Questions and Answers about the Annual Meeting +5 +Vote Required for Election or Approval +9 +Proposal 1 — Election of Directors +10 +Director Qualifications +10 +Identifying and Evaluating Nominees for +Directors +10 +Information Concerning Nominees for Election +as Directors +11 +Proposal 2 — Approval of 2019 Omnibus Incentive +Plan +14 +Proposal 3 — Ratification of Appointment of +Independent Auditor for 2019 +20 +Proposal 4 — Advisory Vote on 2018 Executive +Compensation +21 +Proposal 5 — Advisory Vote on Frequency of +Future Advisory Votes on Executive Compensation +22 +Corporate Governance +23 +Board of Directors Overview +23 +Independence of Directors +23 +Code of Business Conduct and Ethics +24 +Board Oversight of Risk +24 +Board Diversity +24 +Board Leadership Structure +24 +Audit Committee +25 +Nominating and Corporate Governance Committee +26 +Compensation Committee +27 +Compensation Committee Interlocks and Insider +Participation +28 +Certain Relationships and Related-Person +Transactions +29 +Beneficial Ownership of Common Stock +30 +Section 16(a) Beneficial Ownership Reporting +Compliance +31 +Director Compensation +32 +Executive Officers +33 +Executive Compensation +35 +Summary Compensation Table +35 +Narrative Explanation of the Summary +Compensation Table +35 +Grants of Plan-Based Awards +36 +Outstanding Equity Awards at 2018 Fiscal +Year-End +37 +Employment Agreements +37 +Payments Upon Termination or Change in Control +38 +Section 162(m) Considerations +38 +Equity Compensation Plan Information +39 +Accounting Matters +40 +Principal Independent Auditor Fees +40 +Audit Committee Pre-Approval Policies and +Procedures +40 +Report of Audit Committee +40 +Stockholder Proposals for 2020 Annual Meeting +42 +Delivery of Documents to Security Holders +Sharing an Address +42 +Other Matters +42 +Chembio Diagnostics, Inc. 2019 Omnibus Incentive Plan +Appendix A +Contents +2019 Proxy Summary +This summary highlights information contained elsewhere in this Proxy Statement. This summary does not contain +all of the information that you should consider, and you should read the entire Proxy Statement carefully before voting. References in this Proxy Statement to “Chembio,” and to “we,” “us,” “our” and similar terms, refer to Chembio +Diagnostics, Inc. +Annual Meeting of Stockholders +Time and Date +10 a.m., Eastern time, on June 18, 2019. +Meeting Address +555 Wireless Boulevard, Hauppauge, New York. +Record Date +5 p.m., Eastern time, on April 26, 2019. +Voting +Stockholders will be entitled to one vote for each outstanding share of common stock they hold of record +as of the record date. +Votes Eligible to be Cast +A total of 17,166,459 votes are eligible to be cast on each proposal. +Annual Meeting Agenda +Proposal +Board +Recommendation +Election of directors +FOR each +nominee +Approval of 2019 Omnibus Incentive Plan +FOR +Ratification of appointment of independent auditor for 2019 +FOR +Advisory vote on 2018 executive compensation +FOR +Advisory vote on frequency of future advisory votes on executive compensation +ANNUAL +How to Cast Your Vote +You can vote by any of the following methods: +Until 11:59 p.m., Eastern time, on May 1, 2019 +At the Annual Meeting on June 18, 2019 +• Internet: +• +Address: +555 Wireless Boulevard +4 +From any web-enabled device: www.aalvote.com/CEMI +Hauppauge, +New York +4 +Scan QR code from any smartphone or +tablet: +• +Telephone: +1 (866) 804- 9616 +• +Completed, signed and returned proxy card +1 +Contents +Election of Directors +We are asking stockholders to elect the following five director nominees, each of whom currently serves as a member of the +board of directors. +Director +Since +Experience/ +Independent +Committee +Other Public +Name +Age +Occupation +Qualifications +Yes +No +Memberships +Company Boards +Katherine L. Davis +62 +2007 +Owner of Davis Design Group LLC +Financial Advisor to Mayor of Indianapolis +• Leadership +• Governance +• Policy/ +Government +✔ +• Chair +of the Board +• Audit +• Nominating and Corporate Governance +Gail S. Page +63 +2017 +Venture Partner at Turret Capital Management, L.P. +• Industry +• Leadership +• Finance +✔ +• Audit +• Nominating and Corporate Governance +• Compensation (Chair) +Mary Lake Polan +75 +2018 +Professor of Clinical Obstetrics, Gynecology and Reproductive Sciences at Yale University School of Medicine +Chair of Scientific Advisory Board in Women’s Health for Procter and Gamble Company +Managing Director of Golden Seeds angel investing group +• Industry +• Leadership +• Governance +✔ +• Nominating and Corporate Governance (Chair) +• Compensation +• Motif Bio plc +• Quidel Corporation +John G. Potthoff +51 +2018 +Chief Executive Officer and Co-founder of Elligo Health Research +• Finance +• Industry +• Leadership +✔ +• Audit (Chair) +• Compensation +John J. Sperzel III +55 +2014 +Chief Executive Officer and President of Chembio Diagnostics, Inc. +• Industry +• Leadership +• Innovation +✔ +2 +Contents +Director Tenure +Director Age +Director Independence +Director Diversity +Additional Board Governance Practices +Elections: +Classified Board +No +Frequency of Director Elections +Annual +In-Person Shareholder Meeting +Yes +Voting Standard +Plurality +Mandatory Retirement Age or Tenure +No +Chair: +Separate Chair of the Board and CEO +Yes +Independent Chair of the Board +Yes +Robust Responsibilities and Duties Assigned to Independent Chair +Yes +Meetings: +Number of Board Meetings Held in 2018 +15 +Directors Attending Fewer than 75% of Board Meetings in 2018 +None +Independent Directors Meet without Management Present +Yes +Number of Standing Committee Meetings Held in 2018 +8 +Members Attending Fewer than 75% of Committee Meetings in 2018 +None +Director Status: +Directors “Overboarded” per ISS or Glass Lewis Voting Guidelines +None +Material Related-Party Transactions with Directors +None +Family Relationships with Executive Officers or Other Directors +None +Shares Pledged by Directors +None +3 +Contents +Approval of 2019 Omnibus Incentive Plan +We are asking stockholders to approve our 2019 Omnibus Incentive Plan to, among other things, reserve +2,400,000 shares of common stock for awards under the plan. +Ratification of Appointment of Independent Auditor for 2019 +We are asking stockholders to ratify the audit committee’s retention of BDO USA, LLP, an independent +registered public accounting firm, as our independent auditor to examine and report on our consolidated financial statements for the fiscal year ending December 31, 2019. +Advisory Vote on 2018 Executive Compensation +In accordance with rules of the Securities and Exchange Commission or SEC, we are asking stockholders for an advisory vote — +known as a “say-on-pay” vote — of the 2018 compensation of our “named executive officers” as set forth in the compensation tables, related narrative discussion and other disclosures under “Executive Compensation” in this Proxy +Statement. The following table provides information concerning the compensation paid for 2018 and 2017 to our named executive officers during 2018: +Name and Principal Position +Year +Salary ($) +Bonus($)(1) +Equity +Awards ($)(2) +All Other +Compensation($)(3) +Total($) +John J. Sperzel III +2018 +$416,847 +$89,250 +$950,000 +— +$1,456,097 +Chief Executive Officer and President +2017 +415,137 +63,750 +62,998 +— +541,885 +Neil A. Goldman +2018 +294,231 +50,400 +300,000 +$2,769 +647,400 +Executive Vice President, Chief Financial Officer +2017 +5,769 +— +423,882 +— +224,638 +Javan Esfandiari +2018 +357,807 +72,450 +375,000 +7,391 +812,648 +Executive Vice President, +Chief Science and Technology Officer +2017 +342,308 +51,750 +9,652 +5,900 +347,244 +(1) +Based on reaching revenue targets, satisfying individual objectives, and, in 2017, reaching an operating income (loss) +target and discretionary grants. +(2) +Determined in accordance with the Financial Accounting Standards Board’s Accounting Standards Codification Topic 718, Compensation—Stock Compensation . +(3) +Comprised of employer matching payments to 401(k) contributions and, in 2017, a car allowance. +Advisory Vote on Frequency of Future Advisory Votes on Executive Compensation +In accordance with rules of the SEC, we are asking stockholders for an advisory vote – known as +a “say-on-frequency” vote – on how frequently they would like to cast an advisory “say-on-pay” vote on the compensation of our named executive officers. The board of directors recommends an annual advisory “say-on-pay” vote. +SEC rules require that we submit a “say-on-frequency” vote to stockholders every six years +4 +Contents +Questions and Answers about the Annual Meeting +Q: +When and where will the Annual Meeting be held? +A: +This year the Annual Meeting of Stockholders of Chembio Diagnostics, Inc., which we refer to as the Annual Meeting, will be held at 555 Wireless Boulevard, +Hauppauge, New York beginning at 10 a.m., Eastern time, on Tuesday, June 18, 2019. +Q: +What materials have been prepared for stockholders in connection with the Annual Meeting? +A: +We are furnishing you and other stockholders of record with the following proxy materials: +• +our 2018 Annual Report to Stockholders, which we refer to as the 2018 Annual Report and which includes our Annual Report on Form 10‑K for the fiscal year +ended December 31, 2018 (including our audited consolidated financial statements for 2017 and 2018); +• +this Proxy Statement for the 2019 Annual Meeting, which we refer to as this Proxy Statement and which also includes a letter from our Chief Executive +Officer and President to stockholders and a Notice of 2019 Annual Meeting of Stockholders; and +• +a Notice of Internet Availability of Proxy Materials, which we refer to as the Notice of Internet Availability, which includes a control number for use in +submitting proxies. +These materials were first mailed to stockholders, and made available on the Internet, on or about +April 30, 2019. +If, in accordance with the instructions provided in the Notice of Internet Availability, you request a +printed set of proxy materials, you will receive by mail, at no charge, printed copies of the 2018 Annual Report, this Proxy Statement, a proxy card for the Annual Meeting and a pre-addressed envelope to be used to return the completed proxy +card. If, in accordance with the instructions provided in the Notice of Internet Availability, you request that a set of proxy materials be emailed to you, you will receive by email, at no charge, electronic copies of the 2018 Annual Report and +this Proxy Statement. +Q: +Why was I mailed a Notice of Internet Availability rather than a printed set of proxy materials? +A: +In accordance with rules adopted by the SEC, we are furnishing the proxy materials to stockholders by providing access via the Internet, instead of mailing +printed copies. This process expedites the delivery of proxy materials to our stockholders, lowers our costs and reduces the environmental impact of the Annual Meeting. The Notice of Internet Availability tells you how to access and +review the proxy materials on the Internet and how to vote on the Internet. It also provides instructions you may follow to request paper or emailed copies of the proxy materials. +Q: +Are the proxy materials available via the Internet? +A: +You can access and review the proxy materials for the Annual Meeting at www.chembio.com/investors/proxy . +In order to submit your proxies, however, you will need to refer to the Notice of Internet Availability sent to you with this Proxy Statement or a proxy card mailed to you upon your request to obtain your control number and other +personal information needed to vote by proxy or in person. +5 +Contents +Q: +What is a proxy? +A: +The term “proxy,” when used with respect to stockholder, refers to either a person or persons legally authorized to act on the stockholder’s behalf or a +format that allows the stockholder to vote without being physically present at the Annual Meeting. +Because it is important that as many stockholders as possible be represented at +the Annual Meeting, the board of directors is asking that you review this Proxy Statement carefully and then vote by following the instructions set forth on the Notice of Internet Availability or the proxy card. In voting prior to the Annual +Meeting, you will deliver your proxy to the Proxy Committee, which means you will authorize the Proxy Committee to vote your shares at the Annual Meeting in the way you instruct. The Proxy Committee consists of John J. Sperzel III and Neil A. +Goldman. All shares represented by valid proxies will be voted in accordance with the stockholder’s specific instructions. +Q: +What matters will the stockholders vote on at the Annual Meeting? +A: +Proposal +Election of the following five director nominees: +• +Katherine L. +Davis +• +Gail S. Page +• +Mary Lake Polan +• +John G. +Potthoff +• +John J. Sperzel III +Proposal +Approval of 2019 Omnibus Incentive Plan +Proposal +Ratification of appointment of our independent auditor for 2019 +Proposal +Approval, as an advisory vote, of 2018 executive compensation as disclosed in this Proxy Statement +Proposal +Approval, as an advisory vote, of the frequency of future advisory votes on executive compensation +Q: +Who can vote at the Annual Meeting? +A: +Stockholders of record of common stock at 5 p.m., Eastern time, on April 26, 2019, the record date, will be entitled to vote at the Annual Meeting. As +of the record date, there were outstanding a total of 17,166,459 shares of common stock, each of which will be entitled to one vote on each proposal. As a result, up to a total of 17,166,459 votes can be cast on each proposal. +Q: +What is a stockholder of record? +A: +A stockholder of record is a stockholder whose ownership of common stock is reflected directly on the books and records of our transfer agent, +Broadridge Corporate Issuer Solutions, Inc. +Q: +What does it mean for a broker or other nominee to hold shares in “street name”? +A: +If you beneficially own shares held in an account with a broker, bank or similar organization, that organization is the stockholder of record and is +considered to hold those shares in “street name.” An organization that holds your beneficially owned shares in street name will vote in accordance with the instructions you provide. If you do not provide the organization with +specific voting instructions with respect to a proposal, the organization’s authority to vote your shares will, under the rules of the Nasdaq Global Market or Nasdaq, depend upon whether the proposal is considered a “routine” +or a non-routine matter. +• +The organization generally may vote your beneficially owned shares on routine items for which you have not provided voting instructions to the +organization. The only routine matter expected to be voted on at the Annual Meeting is the ratification of the appointment of our independent auditor for 2019 (Proposal 3). +6 +Contents +• +The organization generally may not vote on non-routine matters, including Proposals 1, 2, 4 and 5. Instead, it will inform the inspector of election +that it does not have the authority to vote on those matters. This is referred to as a “broker non-vote.” +For the purpose of determining a quorum, we will treat as present at the Annual Meeting any +proxies that are voted on any of the four proposals to be acted upon by the stockholders, including abstentions or proxies containing broker non-votes. +Q: +How do I vote my shares if I do not attend the Annual Meeting? +A: +If you are a stockholder of record, you may vote prior to the Annual Meeting as follows: +• +Via the Internet: +You may vote via the Internet by going +to www.aalvote.com/CEMI or scanning the QR code on the Notice of Internet Availability, in accordance +with the voting instructions on the Notice of Internet Availability and the proxy card. Internet voting is available 24 hours a day until 11:59 p.m., Eastern time, on June 17, 2019. You will be given the opportunity to confirm +that your instructions have been recorded properly. +• +By Telephone : +You may vote by calling +1 (866) +804-9616 and following the instructions provided on the telephone line. Telephone voting is available 24 hours a day until 11:59 p.m., Eastern +time, on June 17, 2019. Easy-to-follow voice prompts will allow you to vote your shares and confirm that your instructions have been recorded properly. +• +By Mail : +If you obtain a proxy card by mail, you may vote by returning the completed and signed +proxy card in a postage-paid return envelope that will be provided with the proxy card. +If you +hold shares in street name, you may vote by following the voting instructions provided by your bank, broker or other nominee. In general, you may vote prior to the Annual Meeting as follows: +• +Via the Internet: +You may vote via the Internet by going +to www.ProxyVote.com o r scanning the QR code on the Notice of Internet Availability, in accordance with the voting instructions on the Notice of +Internet Availability and the proxy card. Internet voting is available 24 hours a day until 11:59 p.m., Eastern time, on June 17, 2019. You will be given the opportunity to confirm that your instructions have been recorded +properly. +For your information, voting via the Internet is the least expensive for us, +followed by telephone voting, with voting by mail being the most expensive. +Q: +Can I vote at the Annual Meeting? +A: +If you are a stockholder of record, you may vote in person at the Annual Meeting, whether +or not you previously voted. If your shares are held in street name, you must obtain a written proxy, executed in your favor, from the stockholder of record to be able to vote at the Annual Meeting. +Q: +May I change my vote or revoke my proxy? +A: +If you are a stockholder of record and previously delivered a proxy, you may subsequently change or revoke your proxy at any time before it is +exercised by: +• +voting via the Internet or telephone at a later time; +• +submitting a completed and signed proxy card with a later date; or +• +voting at the Annual Meeting. +If you are a beneficial owner of shares held in street name, you should contact your bank, broker +or other nominee for instructions as to whether, and how, you can change or revoke your proxy. +7 +Contents +Q: +What happens if I do not give specific voting instructions? +A: +If you are a stockholder of record and you return a proxy card without giving specific voting instructions, the Proxy Committee will vote your shares +in the manner recommended by the board on all five proposals presented in this Proxy Statement and as the Proxy Committee may determine in its discretion on any other matters properly presented for a vote at the Annual +Meeting. +If you are a beneficial owner of shares held +in street name and do not provide specific voting instructions to the broker, bank or other organization that is the stockholder of record of your shares, the organization generally may vote on routine, but not non-routine, matters. The +only routine matter expected to be voted on at the Annual Meeting is the ratification of the appointment of our independent auditor for 2019 (Proposal 3). If the organization does not receive instructions from you on how to vote your +shares on one or more of Proposals 1, 2, 4 and 5, your shares will be subject to a broker non-vote and no vote will be cast on those matters. See “ Q. What does it mean for a broker or other nominee to hold shares in ‘street name’? ” above.” +Q: +What if other matters are presented at the Ann ual M eeting? +A: +If a stockholder of record provides a proxy by voting in any manner described in this Proxy Statement, the Proxy Committee will have the discretion to +vote on any matters, other than the five proposals presented in this Proxy Statement, that are properly presented for consideration at the Annual Meeting. We do not know of any other matters to be presented for consideration +at the Annual Meeting. +8 +Contents +Vote Required for Election or Approval +Our only voting securities are the outstanding shares of common stock. As of the record date, which is 5 p.m., +Eastern time, on April 26, 2019, there were outstanding 17,166,459 shares of common stock, each of which will be entitled to one vote on each proposal. Based on the number of votes for each share common stock, up to a total of 17,166,459 votes can be cast on each proposal. +Only stockholders of record as of the record date will be entitled to notice of, and to vote at, the Annual +Meeting. A majority of the issued and outstanding shares of common stock entitled to vote, represented either in person or by proxy, constitutes a quorum at the Annual Meeting. For the purpose of determining a quorum, we will treat as +present at the Annual Meeting any proxies that are voted on any matter to be acted upon by the stockholders, as well as abstentions or any proxies containing broker non-votes. +Election of Directors +The affirmative vote of a plurality of votes cast by shares entitled to vote and present in person or represented by proxy +at the Annual Meeting at which a quorum is present is required to elect each director. Votes to “abstain” will not be counted for the purpose of determining whether a director is elected. Similarly, broker non‑votes will not +have any effect on the outcome of the election of directors, since broker non-votes are not counted as “votes cast.” +Approval of 2019 Omnibus Incentive Plan +Our 2019 Omnibus Incentive Plan must be affirmatively approved by a majority of the votes entitled to be cast and present +in person or represented by proxy at the Annual Meeting. Abstentions will count as votes against this proposal because shares with respect to which a stockholder abstains will be deemed present and entitled to vote. Broker +non-votes will have no effect on the outcome of this proposal because broker non-votes are not counted as “votes cast.” +Ratification of Appointment of Independent Auditor for 2019 +The ratification of BDO USA, LLP as our independent auditor for the year ending December 31, 2019 must be approved by +affirmative votes constituting a majority of the votes entitled to be voted and present in person or represented by proxy at the Annual Meeting. Abstentions will count as votes against this proposal, because shares with respect +to which the stockholder abstains will be deemed present and entitled to vote. Because this proposal is considered a routine matter, discretionary votes by brokers will be counted. +Approval of 2018 Executive Compensation on an Advisory Basis +The advisory “say-on-pay” vote to approve our 2018 executive compensation must be approved by affirmative votes +constituting a majority of the votes entitled to be cast and present in person or represented by proxy at the Annual Meeting. Abstentions will count as votes against this proposal, because shares with respect to which the +stockholder abstains will be deemed present and entitled to vote. Broker non-votes will have no effect on the outcome of this proposal, because broker non-votes are not counted as “votes cast.” +Approval of Frequency of Future Advisory “Say-on-Pay” Votes on an Advisory Basis +The advisory “say-on-frequency” vote on the frequency of future advisory “say-in-pay” votes on executive compensation must +be approved by affirmative votes constituting a majority of the votes entitled to be voted and present in person or represented by proxy at the Annual Meeting. As a result, any votes not cast, whether by abstention, broker +non-votes or otherwise, will not affect the outcome of this proposal, except to the extent that the failure to vote for a particular frequency period may result in another frequency period receiving a larger proportion of the +votes cast. +9 +Contents +Proposal +— Election of +Directors +At the Annual Meeting, stockholders will elect the entire board of directors to serve for the ensuing year and +until their successors are elected and qualified. The board has designated as nominees for election the five persons named below, each of whom currently serves as a director. +Shares of common stock that are voted as recommended by the board will be voted in favor of the election as +directors of the nominees named below. If any nominee becomes unavailable for any reason or if a vacancy should occur before the election, which we do not anticipate, the shares represented by a duly completed proxy may be voted in favor +of such other person as may be determined by the Proxy Committee. +Director Qualifications +The board of directors has determined that, as a whole, it +must have the right mix of characteristics, skills and diversity to provide effective oversight of our company. I n selecting directors, the board seeks to +achieve a mix of directors that enhances the diversity of background, skills and experience on the board, including with respect to age, gender, international background, ethnicity and specialized experience. Directors should have +relevant expertise and experience and be able to offer advice and guidance to our chief executive officer based on that expertise and experience. Also, a majority of directors should be independent under applicable Nasdaq listing +standards, board and committee guidelines, and applicable laws and regulations. Each director is also expected to have: +• +a high standard of personal and professional ethics, integrity and values; +• +the training, experience and ability to make and oversee policy in business, government and/or education sectors; +• +the willingness and ability to keep an open mind when considering matters affecting our interests and the interests of its constituents; +• +the willingness and ability to devote the required time and effort to effectively fulfill the duties and responsibilities related to board and +committee membership; +• +the willingness and ability to serve on the board for multiple terms, if nominated and elected, to enable development of a deeper understanding of our +business affairs; +• +the willingness not to engage in activities or interests that may create a conflict of interest with a director’s responsibilities and duties to us +and our constituents; and +• +the willingness to act in the best interests of our company and our constituents, and objectively assess board, committee and management performance. +Identifying and +Evaluating Nominees for Directors +When the board of directors or its nominating and corporate governance committee identifies a need to add a new director with +specific qualifications or to fill a vacancy on the board, the chair of the nominating and corporate governance committee will initiate a search, seeking input from other directors and senior management, review any candidates that the +nominating and corporate governance committee has previously identified, and, if necessary, hire a search firm. The nominating and corporate governance committee then will identify the initial list of candidates who satisfy the specific +criteria and otherwise qualify for membership on the board. Based on a satisfactory outcome of those interviews, the nominating and corporate governance committee will make its recommendation on the candidate to the board. +10 +Contents +Information +Concerning Nominees for Election as Directors +The information appearing in the following table sets forth, for each nominee for election as a director: +• +the nominee’s professional experience for at least the past five years; +• +the year in which the nominee first became one of our directors; +• +each standing committee of the board of directors on which the nominee currently serves; +• +the nominee’s age as of the record date for the Annual Meeting; +• +the relevant skills the nominee possesses that qualify him or her for nomination to the board; and +• +directorships held by each nominee presently and at any time during the past five years at any public company or registered investment company. +Katherine L. Davis +Chembio Board Service: +• Tenure: 12 years +• Chair of the Board +• Committees: +○ Audit +○ Nominating and Corporate Governance +Age: 62 +INDEPENDENT +Professional Experience +• +Chair of the Board since March 2014, and a director since 2007 +• +Owner of Davis Design Group LLC, a provider of analytical and visual tools for public policy +design, since 2007 +• +Chief Executive Officer of Global Access Point, a start-up company with products for data +transport, data processing, and data storage network and hub facilities, from 2005 to 2006 +• +Lieutenant Governor of the State of Indiana from 2003 to 2005 +• +Controller of the City of Indianapolis from 2000 to 2003 +• +Financial Advisor to the Mayor of Indianapolis since January 2016 +Gail S. Page +Chembio Board Service +• Tenure: 2 years +• Committees: +○ Audit +○ Compensation (Chair) +○ Nominating and Corporate Governance +Age: 63 +INDEPENDENT +Professional Experience +• +Director since July 2017 +• +Venture Partner at Turret Capital Management, L.P., an international healthcare-focused +investment manage-ment fund, since September 2018 +• +Managing Partner and founder of Vineyard Investment Advisors, LLC, a firm assisting with new +product and services development, from 2014 to November 2018 +• +Co-founder and director of Consortia Health Holdings LLC, a rehabilitation services provider +focused on pelvic disorders, from 2013 to June 2018 +• +President, Chief Executive Officer and director of Vermillion, Inc., a developer and +manufacturer of novel diagnostic blood tests, from 2006 to 2012 +• +Executive Vice President and Chief Operating Officer of Luminex Corporation, a developer of +testing solutions for life science applications, from 2000 to 2003 +• +Senior Vice President of Roche Biomedical Laboratories, Inc. / Laboratory Corporation of America, a healthcare +diagnostic company, from 1988 to 2000 +Education +• +Masters in Business Administration degree from Harvard Business School +• +Bachelor of Science degree in mechanical engineering from the Massachusetts Institute of +Technology +Education +• +Bachelor of Science degree in Medical Technology from the University of Florida +• +Completed executive management program at the Kellogg School in Chicago +Relevant Skills +• +Leadership +• +Governance +• +Policy / Government +Relevant Skills +• +Industry +• +Leadership +• +Finance +11 +Contents +Mary Lake Polan +Chembio Board Service: +• Tenure: 7 months +• Committees: +○ Compensation +○ Nominating and Corporate Governance (Chair) +Age: 75 +INDEPENDENT +John G. Potthoff +Chembio Board Service +• Tenure: 10 months +• Committees: +○ Audit (Chair) +○ Compensation +Age: 51 +INDEPENDENT +Professional Experience +• +Director since August 2018 +• +Clinical Professor in the Department of Clinical Obstetrics, Gynecology and Reproductive +Sciences at Yale University School of Medicine since 2014 +• +Adjunct Professor in Obstetrics and Gynecology department at Columbia University School +of Medicine from 2007 to 2014 +• +Visiting Professor in Obstetrics and Gynecology department at Columbia University School +of Medicine from 2005 to 2007 +• +Chair of Department of Obstetrics and Gynecology at Stanford University School of +Medicine from 1990 to 2005 +• +Chair of Scientific Advisory Board in Women’s Health for the Procter and Gamble Company +since 1997 +• +Managing Director of Golden Seeds, an angel investing group investing in women-led +companies, since 2007 +• +Author of more than 130 books, articles and chapters in her areas of research +Professional Experience +• +Director since May 2018 +• +Chief Executive Officer, co-founder and director of Elligo Health Research, a clinical research +company, since March 2016 +• +President and Chief Executive Officer of Theorem Clinical Research Inc., a global contract +research organization providing comprehensive clinical services, from 2011 until its acquisition by Chiltern International in September 2015 +• +Chief Operating Officer of INC Research Holdings, Inc. from its acquisition of Tanistry, Inc. +in 2001 until its acquisition by private equity investors in 2010 +• +Chief Executive Officer and founder of Tanistry, Inc., a contract research organization focused +on the central nervous system, from 2000 to 2001 +Education +• +Master of Public Health (Maternal and Child Health Program) degree from the University of +California, Berkeley +• +Medical Doctor degree from Yale University School of Medicine +• +Doctor of Philosophy degree in Molecular Biophysics and Biochemistry from Yale University +School of Medicine +• +Bachelor of Arts degree from Connecticut College +Education +• +Bachelor of Arts degree in Psychology from the University of Texas-Austin +• +Master of Arts degree in Psychology from the University of Texas-Austin +• +Doctor of Philosophy degree in Psychology from the University of Texas-Austin +Relevant Skills +• +Industry +• +Leadership +• +Governance +Relevant Skills +• +Finance +• +Industry +• +Leadership +Other Public Company Board Service +• +Motif Bio plc (AIM/NASDAQ:MTFB), a clinical-stage biopharmaceutical company specializing in +developing novel antibiotics, since 2004 +• +Quidel Corporation (NASDAQ:QDEL), a developer of point-of-care diagnostic solutions, since +1993 +12 +Contents +John J. Sperzel III +Chembio Board Service: +• Tenure: 5 years +Age: 55 +Professional Experience +• +Chief Executive Officer, President and Director since March 2014 +• +Chief Executive Officer and President of International Technidyne Corporation, a +developer of point-of-care cardiovascular diagnostic testing solutions, from 2011 to 2013 +• +President of Axis-Shield Diagnostics Ltd. (subsequently acquired by Abbott +Laboratories), a developer of point-of-care immunoassay testing solutions, from 2004 to 2011 +• +Vice President of Worldwide Marketing and Business Development of Bayer Diagnostics +(subsequently acquired by Siemens), a developer of point-of-care diagnostic testing solutions, from 2000 to 2004. +• +Vice President of Instrumentation Laboratory, a developer of laboratory hemostasis and +critical care diagnostic testing solutions, from 1997 to 2000 +• +Vice President and numerous commercial roles at Boehringer Mannheim Corp. (subsequently acquired by Roche), a developer +of point-of care diagnostic testing solutions, from 1987 to 1997. +Education +• +Bachelor of Science degree in Business Administration/Management from Plymouth State +College +Relevant Skills +• +Industry +• +Leadership +• +Innovation +The board of directors recommends a vote +FOR +each of the five nominees for election as directors. +13 +Contents +Proposal +— Approval of 2019 Omnibus Incentive Plan +Background +On April 29, 2019, the board of directors approved, subject to stockholder approval, the Chembio Diagnostics, Inc. 2019 +Omnibus Incentive Plan, or the 2019 Plan. If the 2019 Plan is approved by our stockholders, it will authorize the issuance of up to 2,400,000 shares of common stock. The 2019 Plan will supersede and replace our 2014 Stock Incentive +Plan, or the Prior Plan, and no new awards will be granted under the Prior Plan. Any awards outstanding under the Prior Plan on the date of stockholder approval of the 2019 Plan will remain subject to and be paid under the Prior Plan, +and any shares subject to outstanding awards under the Prior Plan that subsequently expire, terminate, or are surrendered or forfeited for any reason without issuance of shares will automatically become available for issuance under the +2019 Plan. +The board recommends that stockholders approve the 2019 Plan. The purposes of the 2019 Plan are to enhance our +ability to attract and retain highly qualified officers, non-employee directors, key employees and consultants, and to motivate those service providers to serve Chembio and to expend maximum effort to improve our business results and +earnings of the company, by providing to those service providers an opportunity to acquire or increase a direct proprietary interest in our operations and future success. The 2019 Plan also will allow us to promote greater ownership in +our company by the service providers in order to align the service providers’ interests more closely with the interests of our stockholders. Stockholder approval of the 2019 Plan will also enable us to grant awards under the 2019 Plan +that are designed to qualify for special tax treatment under Section 422 of the Internal Revenue Code of 1986, or the Code. +As described under “Executive Compensation—Outstanding Equity Awards at 2018 Fiscal Year-End,” on November 11, +2018, the compensation committee, based in part on advice from its independent compensation consultant, approved the grant to John Sperzel, our Chief Executive Officer and President, of a restricted stock award for 375,000 shares of +common stock that would be subject to time vesting in full on November 11, 2022. Because fewer than 375,000 shares of common stock were then available under the Prior Plan, this proposed grant to Mr. Sperzel was made subject to +stockholders’ approval of an increase in the shares reserved under the Prior Plan or of a new equity incentive plan under which the restricted shares could be issued. If the 2019 Plan is approved at the Annual Meeting, the restricted +shares will be granted to Mr. Sperzel from the shares that will become available under the 2019 Plan, without further action by the compensation committee or the board of directors. +Key Features +The following features of the 2019 Plan will protect the interests of our stockholders: +• +Limitation on terms of stock options and stock appreciation rights . +The maximum term of each stock option and stock appreciation right, or SAR, is ten years. +• +No repricing or grant of discounted stock options . The 2019 Plan does +not permit the repricing of options or SARs either by amending an existing award or by substituting a new award at a lower price. The 2019 Plan prohibits the granting of stock options or SARs with an exercise price less than +the fair market value of the common stock on the date of grant. +• +No liberal share recycling. Shares used to pay the exercise price or +withholding taxes related to an outstanding award and unissued shares resulting from the net settlement of outstanding options and SARs do not become available for issuance as future awards under the plan. +• +Minimum vesting requirements. The 2019 Plan includes minimum vesting +requirements. Equity-based awards generally cannot vest earlier than one year after grant. Certain limited exceptions are permitted. +14 +Contents +• +No single-trigger acceleration . Under the 2019 Plan we do not +automatically accelerate vesting of awards in connection with a change in control on the company. +• +Dividends . We do not pay dividends or dividend equivalents on stock +options, SARs or other unearned awards, whether time- or performance-vesting. +Summary of the 2019 Plan +The principal features of the 2019 Plan are summarized below. The following summary of the +2019 Plan does not purport to be a complete description of all of the provisions of the 2019 Plan. It is qualified in its entirety by reference to the complete text of the 2019 Plan, which is attached to this Proxy Statement as Annex A. +Eligibility +Awards may be granted under the 2019 Plan to officers, employees and consultants of our company and our +subsidiaries and to our non-employee directors. Incentive stock options may be granted only to employees of our company or one of our subsidiaries. As of April 26, 2019, approximately 250 individuals were eligible to receive awards +under the 2019 Plan, including 5 executive officers and 4 non-employee directors. +Administration +The 2019 Plan will be administered by the compensation committee of the board of directors. The compensation +committee, in its discretion, selects the individuals to whom awards may be granted, the time or times at which such awards are granted, and the terms of such awards. The compensation committee may delegate its authority to the extent +permitted by applicable law. +Number of Authorized Shares +A total of 2,400,000 shares of common stock are authorized for issuance under the 2019 Plan, which represents 13.4% of the +fully diluted common shares outstanding as of April 26, 2019. In addition, as of the date of stockholder approval of the 2019 Plan, any awards then outstanding under the Prior Plan will remain subject to and be paid under the Prior Plan +and any shares then subject to outstanding awards under the Prior Plan that subsequently expire, terminate, or are surrendered or forfeited for any reason without issuance of shares will automatically become available for issuance under +the 2019 Plan. Up to 2,400,000 shares may be granted under the 2019 Plan as incentive stock options under Section 422 of the Code. The shares of common stock issuable under the 2019 Plan will consist of authorized and unissued shares, +treasury shares, and shares purchased on the open market or otherwise. +If any award is canceled, terminates, expires or lapses for any reason prior to the issuance of shares or if +shares are issued under the 2019 Plan and thereafter are forfeited to us, the shares subject to such awards and the forfeited shares will again be available for grant under the 2019 Plan. In addition, the following items will not count +against the aggregate number of shares of common stock available for grant under the 2019 Plan: +• +the payment in cash of dividends or dividend equivalents under any outstanding award; +• +any award that is settled in cash rather than by issuance of shares of common stock; and +• +any awards granted in assumption of or in substitution for awards previously granted by an acquired company. +Shares tendered or withheld to pay the option exercise price or tax withholding for any award (including restricted stock and +restricted stock units) will continue to count against the aggregate number of shares of common stock available for grant under the 2019 Plan. In addition, the total number of shares covering stock-settled SARs or net-settled options +will be counted against the pool of available shares, not just the net shares issued upon exercise. Any shares of common stock repurchased by us with cash proceeds from the exercise of options will not be added back to the pool of +shares available for grant under the 2019 Plan. +15 +Contents +Adjustments +If certain changes in the common stock occur by reason of any recapitalization, reclassification, stock split, +reverse split, combination of shares, exchange of shares, stock dividend or other distribution payable in stock, or other increase or decrease in the common stock without our receipt of consideration, or if there occurs any spin-off, +split-up, extraordinary cash dividend or other distribution of assets by us, we will equitably adjust the number and kind of securities for which stock options and other stock-based awards may be made under the 2019 Plan. In addition, +if there occurs any spin-off, split-up, extraordinary cash dividend or other distribution of assets by us, we will equitably adjust the number and kind of securities subject to any outstanding awards and the exercise price of any +outstanding stock options or SARs. +Types of Awards +The 2019 Plan permits the granting of any or all of the following types of awards: +• +Stock Options . Stock options entitle the holder to +purchase a specified number of shares of common stock at a specified price (the exercise price), subject to the terms and conditions of the stock option grant. The compensation committee may grant either incentive stock +options, which must comply with Section 422 of the Code, or nonqualified stock options. The compensation committee sets exercise prices and terms, except that stock options must be granted with an exercise price not less +than 100% of the fair market value of the common stock on the date of grant (excluding stock options granted in connection with assuming or substituting stock options in acquisition transactions). Unless the compensation +committee determines otherwise, fair market value means, as of a given date, the closing price of the common stock. (The fair market value of a share of common stock as of April 26, 2019, the record date, was $7.43.) At the +time of grant, the compensation committee determines the terms and conditions of stock options, including the quantity, exercise price, vesting periods, term (which cannot exceed ten years) and other conditions on exercise. +• +Stock Appreciation Rights . The compensation committee may grant SARs +as a right in tandem with the number of shares underlying stock options granted under the 2019 Plan or as a freestanding award. Upon exercise, SARs entitle the holder to receive payment per share in stock or cash, or in a +combination of stock and cash, equal to the excess of the share’s fair market value on the date of exercise over the grant price of the SAR. The grant price of a tandem SAR is equal to the exercise price of the related stock +option and the grant price for a freestanding SAR is determined by the compensation committee in accordance with the procedures described above for stock options. Exercise of a SAR issued in tandem with a stock option will +reduce the number of shares underlying the related stock option to the extent of the SAR exercised. The term of a freestanding SAR cannot exceed ten years, and the term of a tandem SAR cannot exceed the term of the related +stock option. +• +Restricted Stock, Restricted Stock Units and Other Stock-Based Awards . +The compensation committee may grant awards of restricted stock, which are shares of common stock subject to specified restrictions, and restricted stock units, which represent the right to receive shares of the common stock +in the future. These awards may be made subject to repurchase, forfeiture or vesting restrictions at the compensation committee’s discretion. The restrictions may be based on continuous service with the company or the +attainment of specified performance goals, as determined by the compensation committee. Stock units may be paid in stock or cash or a combination of stock and cash, as determined by the compensation committee. The +compensation committee may also grant other types of equity or equity-based awards subject to the terms of the 2019 Plan and any other terms and conditions determined by the compensation committee. +• +Performance Awards . The compensation committee may condition the +grant, exercise, vesting, or settlement of any award on such performance conditions as it may specify. We refer to these awards as “performance awards.” The compensation committee may select such business criteria or other +performance measures as it may deem appropriate in establishing any performance conditions. +16 +Contents +Minimum Vesting Requirements +Equity-based awards granted under the 2019 Plan will have a one-year minimum vesting requirement. This +requirement does not apply to (1) substitute awards resulting from acquisitions, (2) shares delivered in lieu of fully vested cash awards, or (3) awards to non-employee directors that vest on the earlier of the one year anniversary of +the date of grant or the next annual meeting of stockholders (but not sooner than 50 weeks after the grant date). Also, the compensation committee may grant equity-based awards without regard to the minimum vesting requirement with +respect to a maximum of five percent of the available share reserve authorized for issuance under the 2019 Plan. In addition, the minimum vesting requirement does not apply to the compensation committee’s discretion to provide for +accelerated exercisability or vesting of any award, including in cases of retirement, death, disability or a change in control, in the terms of the award or otherwise. +No Repricing +Without stockholder approval, the compensation committee is not authorized to: +• +lower the exercise or grant price of a stock option or SAR after it is granted, except in connection with certain adjustments to our corporate or +capital structure permitted by the 2019 Plan, such as stock splits; +• +take any other action that is treated as a repricing under generally accepted accounting principles or +• +cancel a stock option or SAR at a time when its exercise or grant price exceeds the fair market value of the underlying stock, in exchange for cash, +another stock option or SAR, restricted stock, restricted stock units or other equity award, unless the cancellation and exchange occur in connection with a change in capitalization or other similar change. +Clawback +All cash and equity awards granted under the 2019 Plan will be subject to clawback, cancellation, recoupment, +rescission, payback, reduction, or other similar action in accordance with the terms of any company clawback or similar policy or any applicable law related to such actions, as may be in effect from time to time. +Transferability +Awards are not transferable other than by will or the laws of descent and distribution, except that in certain +instances transfers may be made to or for the benefit of designated family members of the participant for no value. +Change in Control +In the event of a change in control of the Company, the compensation committee may accelerate the time period relating to the exercise of any +award. In addition, the compensation committee may take other action, including (a) providing for the purchase of any award for an amount of cash or other property that could have been received upon the exercise of such award had the +award been currently exercisable, (b) adjusting the terms of the award in a manner determined by the compensation committee to reflect the change in control, or (c) causing an award to be assumed, or new rights substituted therefor, by +another entity with appropriate adjustments to be made regarding the number and kind of shares and exercise prices of the award. “Change in control” is defined under the 2019 Plan and requires consummation of the applicable transaction. +17 +Contents +Term, Termination and Amendment of the 2019 Plan +Unless earlier terminated by the board of directors, the 2019 Plan will terminate, and no further awards may +be granted, ten years after the date on which it is approved by stockholders. The board may amend, suspend or terminate the 2019 Plan at any time, except that, if required by applicable law, regulation or stock exchange rule, +stockholder approval will be required for any amendment. The amendment, suspension or termination of the 2019 Plan or the amendment of an outstanding award generally may not, without a participant’s consent, materially impair the +participant’s rights under an outstanding award. +New Plan Benefits +A new plan benefits table for the 2019 Plan and the benefits or amounts that would have been received by or +allocated to participants under the 2019 Plan for the year ended December 31, 2018 if the 2019 Plan were then in effect, as described in the federal proxy rules, are not provided, because, except as noted below, all awards made under +the 2019 Plan will be made at the compensation committee’s discretion, subject to the terms of the 2019 Plan. Therefore, the benefits and amounts that will be received or allocated under the 2019 Plan generally are not determinable at +this time. The equity grant program for our non-employee directors is described under “Director Compensation” in this Proxy Statement. +On November 11, 2018, the compensation committee, based in part on advice from its independent compensation +consultant, approved the grant to John Sperzel, our Chief Executive Officer and President, of a restricted stock award for 375,000 shares of common stock that would be subject to time vesting in full on November 11, 2022. Because fewer +than 375,000 shares of common stock were then available under the Prior Plan at that time, this proposed grant is to be made under the 2019 Plan, without further action by the compensation committee or the board of director, if the 2019 +Plan is approved at the Annual Meeting. See “Proposal 2—Approval of 2019 Omnibus Incentive Plan—Background”. +Federal Income Tax Information +The following is a brief summary of the U.S. federal income tax consequences of the 2019 +Plan generally applicable to us and to participants in the 2019 Plan who are subject to U.S. federal taxes. The summary is based on the Code, applicable Treasury Regulations, and administrative and judicial interpretations thereof, each +as in effect on the date of this Proxy Statement, and is, therefore, subject to future changes in the law, possibly with retroactive effect. The summary is general in nature and does not purport to be legal or tax advice. Furthermore, +the summary does not address issues relating to any U.S. gift or estate tax consequences or the consequences of any state, local or foreign tax laws. +Nonqualified Stock Options . A +participant generally will not recognize taxable income upon the grant or vesting of a nonqualified stock option with an exercise price at least equal to the fair market value of the common stock on the date of grant and no additional +deferral feature. Upon the exercise of a nonqualified stock option, a participant generally will recognize compensation taxable as ordinary income in an amount equal to the difference between the fair market value of the shares +underlying the stock option on the date of exercise and the exercise price of the stock option. When a participant sells the shares, the participant will have short-term or long-term capital gain or loss, as the case may be, equal to +the difference between the amount the participant received from the sale and the tax basis of the shares sold. The tax basis of the shares generally will be equal to the greater of the fair market value of the shares on the exercise +date or the exercise price of the stock option. +Incentive Stock Options. A participant generally will +not recognize taxable income upon the grant of an incentive stock option. If a participant exercises an incentive stock option during employment or within three months after employment ends (one year in the case of permanent and total +disability), the participant will not recognize taxable income at the time of exercise for regular U.S. federal income tax purposes (although the participant generally will have taxable income for alternative minimum tax purposes at +that time as if the stock option were a nonqualified stock option). If a participant sells or otherwise disposes of the shares acquired upon exercise of an incentive stock option after the later of (a) one year from the date the +participant exercised the option and (b) two years from the grant date of the stock option, the participant generally will recognize long-term capital gain or loss equal to the difference between the amount the participant received in +the disposition and the exercise price of the stock option. If a participant sells or otherwise disposes of shares acquired upon exercise of an incentive stock option before these holding period requirements are satisfied, the +disposition will constitute a “disqualifying disposition,” and the participant generally will recognize taxable ordinary income in the year of disposition equal to the excess of the fair market value of the shares on the date of +exercise over the exercise price of the stock option (or, if less, the excess of the amount realized on the disposition of the shares over the exercise price of the stock option). The balance of the participant’s gain on a disqualifying +disposition, if any, will be taxed as short-term or long-term capital gain, as the case may be. +18 +Contents +With respect to both nonqualified stock options and incentive stock options, special rules apply if a +participant uses shares of common stock already held by the participant to pay the exercise price or if the shares received upon exercise of the stock option are subject to a substantial risk of forfeiture by the participant. +Stock Appreciation Rights. A +participant generally will not recognize taxable income upon the grant or vesting of a SAR with a grant price at least equal to the fair market value of common stock on the date of grant and no additional deferral feature. Upon the +exercise of a SAR, a participant generally will recognize compensation taxable as ordinary income in an amount equal to the difference between the fair market value of the shares underlying the SAR on the date of exercise and the grant +price of the SAR. +Restricted Stock Awards, Restricted +Stock Units, and Performance Awards. A participant generally will not have taxable income upon the grant of restricted stock, restricted stock units or performance awards. Instead, the participant will recognize ordinary +income at the time of vesting or payout equal to the fair market value (on the vesting or payout date) of the shares or cash received minus any amount paid. For restricted stock only, a participant may instead elect to be taxed at the +time of grant. +Other Stock or Cash-Based Awards. The +U.S. federal income tax consequences of other stock or cash-based awards will depend upon the specific terms of each award. +Tax Consequences to Us. In the +foregoing cases, we generally will be entitled to a deduction at the same time, and in the same amount, as a participant recognizes ordinary income, subject to limitations imposed under the Code. +Section 409A. We intend that +awards granted under the 2019 Plan comply with, or otherwise be exempt from, Section 409A of the Code, but make no representation or warranty to that effect. +Tax Withholding. We are authorized to deduct or +withhold from any award granted or payment due under the 2019 Plan, or require a participant to remit to us, the amount of any withholding taxes due in respect of the award or payment and to take such other action as may be necessary to +satisfy all obligations for the payment of applicable withholding taxes. We are not required to issue any shares of common stock or otherwise settle an award under the 2019 Plan until all tax withholding obligations are satisfied. +The board of directors recommends a vote +FOR +the approval of the 2019 Plan. +19 +Contents +Proposal +— Ratification of Appointment of Independent Auditor for 2019 +The audit committee annually evaluates the performance of our independent auditor, BDO USA, LLP, or BDO, +including the senior audit engagement team, and determines whether to reengage the current independent auditor or consider other audit firms. Factors considered by the audit committee in deciding whether to retain include: +• +BDO’s global capabilities; +• +BDO’s technical expertise and knowledge of the Company’s global operations and industry; +• +BDO’s independence; +• +BDO’s objectivity and professional skepticism; +• +the appropriateness of BDO’s fees, BDO’s tenure as independent auditor, including the benefits of a longer tenure, and the controls and processes in +place that help ensure BDO’s independence. +BDO has served as our independent auditor since 2011. The benefits of a longer tenure are: +• +Enhanced audit quality – BDO’s institutional knowledge of the Company’s global business, accounting policies and practices, and internal control +over financial reporting enhance audit quality. +• +Competitive fees – Because of BDO’s familiarity with us, audit and other fees are competitive with peer companies. +• +Avoid costs associated with new auditor – Bringing on a new independent auditor would be costly and require a significant time commitment, which +could lead to management distractions. +Based on the above evaluation, the audit committee has approved the retention of BDO as our independent +auditor to examine and report on our consolidated financial statements and the effectiveness of our internal control over financial reporting for the fiscal year ending December 31, 2019. Even if the proposal is approved, the audit +committee may, in its discretion, appoint a different independent registered public accounting firm to serve as independent auditor at any time during the year. +Representatives of BDO will be present at the Annual Meeting. The BDO representatives will have the +opportunity to make a statement if they desire to do so, and we expect that they will be available to respond to appropriate questions. +The board of directors recommends a vote +FOR +the ratification of the appointment of BDO as our independent auditor for 2019. +20 +Contents +Proposal +— Advisory Vote on 2018 Executive Compensation +Our stockholders have the opportunity at the Annual Meeting to vote to approve, on a non-binding, advisory +basis, the compensation of our named executive officers in 2018 as disclosed in this Proxy Statement. +Our compensation program is intended to provide appropriate and balanced incentives toward achieving our +annual and long-term strategic objectives and to create an alignment of interests between our executives and stockholders. This approach is intended to motivate our existing executives and to attract new executives with the skills and +attributes that we need. Please refer to “Executive Compensation” for an overview of the compensation of our named executive officers. +We are asking for stockholder approval of the compensation of our named executive officers as disclosed in +this Proxy Statement in accordance with SEC rules, which disclosures include the disclosures in the compensation tables and narrative disclosures included under “Executive Compensation.” This vote is not intended to address any specific +item of compensation, but rather the overall compensation of our named executive officers and the policies and practices described in this Proxy Statement. +Accordingly, stockholders are being asked to vote on the following resolution: +Resolved: +That the stockholders approve the compensation paid to the “named executive officers” of Chembio Diagnostics, Inc. with respect to the fiscal year +ended December 31, 2018, as disclosed, pursuant to Item 402 of Regulation S-K promulgated by the Securities and Exchange Commission, in the Proxy Statement for the 2019 Annual Meeting of Stockholders, including the +compensation tables and narrative discussion set forth under “Executive Compensation” therein. +This vote is advisory and not binding on the board of directors or the compensation committee. The board and +the compensation committee value the opinions of our stockholders, however, and to the extent there is any significant vote against the named executive officer compensation disclosed in this Proxy Statement, we will consider our +stockholders concerns and the compensation committee will evaluate whether any actions are necessary or appropriate to address those concerns. +The board of directors recommends a vote +FOR +the approval of the compensation paid to our named executive +officers with respect to 2018, +as disclosed in the compensation tables and narrative +discussion set forth under +“Executive Compensation” and elsewhere in this Proxy +Statement. +21 +Contents +Proposal +— Advisory Vote on Frequency of Future Advisory Votes on Executive Compensation +In accordance with Section 14A of the Securities Exchange Act, we are requesting our stockholders vote, on a +non-binding, advisory basis, on how frequently they would like to cast an advisory vote on the compensation of our named executive officers. By voting on this proposal, stockholders may indicate whether they would prefer an advisory +vote on named executive officer compensation annually, every two years or every three years. +We currently present an advisory vote on executive compensation each year, and the board of directors believes +that continuing to conduct an advisory “say on pay” vote annually is the most appropriate for us. This frequency will continue to enable stockholders to annually express their views on our executive compensation program in a timely +manner, based on the most recent information presented in our proxy statements. An annual advisory vote on executive compensation helps ensure ongoing stockholder communication with the compensation committee and the board of directors +on executive compensation and corporate governance matters. Further, the annual advisory vote on executive compensation is consistent with our practice of electing all directors annually and providing stockholders the opportunity to +ratify the audit committee’s selection of independent auditors annually. +Accordingly, the stockholders are being asked to vote on the following resolution: +Resolved: +That the stockholders wish Chembio Diagnostics, Inc. to present an advisory vote on the compensation of named executive officers pursuant to Section +14A of the Securities Exchange Act on an annual basis. +This vote is advisory and not binding on the board or the compensation committee. The board and the compensation +committee value the opinions of our stockholders, however, and will carefully consider the outcome of the advisory vote when making future decisions regarding the frequency of advisory votes on executive compensation. +The board of directors recommends a vote for the approval of an +ANNUAL +advisory vote on the compensation of named executive officers +pursuant to Section 14A of the Securities Exchange Act. +22 +Contents +Corporate Governance +Board of Directors +Overview +Under our Bylaws and the Nevada Revised Statutes, our business and affairs are managed by or under the +direction of the board of directors, which selectively delegates responsibilities to its standing committees. +We expect nominees for election at each annual meeting of stockholders to participate in the Annual Meeting. +The board generally expects to hold four regular meetings per year and to meet on other occasions when circumstances require. Directors spend additional time preparing for board and committee meetings, and we may call upon directors for +advice between meetings. We encourage our directors to attend director education programs. +The board maintains an audit committee, a compensation committee, and a nominating and corporate governance +committee. The board has adopted charters for each of the committees, and those charters are to be reviewed annually by the committees and the board. Our website provides access to: +• +the audit committee charter at: +chembiodiagnosticsinc.gcs-web.com/static-files/9834f839-d259-45c5-8b25-f6fce52b724a ; +• +the compensation committee charter at: +chembiodiagnosticsinc.gcs-web.com/static-files/bd718df4-ee68-4a84-affa-c24f79ceec81 ; +and +• +the nominating and corporate governance committee charter at: +chembiodiagnosticsinc.gcs-web.com/static-files/264bc05a-d241-4fc8-88d6-9aded84378fb . +The committees have the functions and responsibilities described in the sections below. +Independence of +Directors +The board of directors must consist of a majority of independent directors under the requirements of Nasdaq. +Under Nasdaq rules, independent directors must comprise a majority of a listed company’s board within twelve +months from the date of listing. In addition, Nasdaq rules require that, subject to specified exceptions, each member of a listed company’s audit, compensation, and nominating and corporate governance committees be independent within +twelve months from the date of listing. Audit committee members must also satisfy additional independence criteria, including those set forth in Rule 10A-3 under the Securities Exchange Act, and compensation committee members must also +satisfy additional independence criteria, including those set forth in Rule 10C-1 of the Securities Exchange Act. Under Nasdaq rules, a director will qualify as an “independent director” only if, in the opinion of that company’s board, +that person does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. In order to be considered independent for purposes of Rule 10A-3 under the +Securities Exchange Act, a member of an audit committee of a listed company may not, other than in his or her capacity as a member of the audit committee, the board or any other board committee: (a) accept, directly or indirectly, any +consulting, advisory or other compensatory fee from the listed company or any of its subsidiaries, other than compensation for board service; or (b) be an affiliated person of the listed company or any of its subsidiaries. +In order to be considered independent for purposes of Rule 10C-1 under the Securities Exchange Act, each member of the compensation +committee must be a member of the board of the listed company and must otherwise be independent. In determining independence requirements for members of compensation committees, the national securities exchanges and national securities +associations are to consider relevant factors, including: (a) the source of compensation of a member of the board of a listed company, including any consulting, advisory or other compensatory fee paid by the listed company to such +member; and (b) whether a member of the board of a listed company is affiliated with the listed company, a subsidiary of the listed company or an affiliate of a subsidiary of the listed company. +23 +Contents +The board annually reviews the independence of all non-employee directors. The board determined that each of +Katherine L. Davis, Gail S. Page, John G. Potthoff and Mary Lake Polan qualify as independent directors in accordance with the rules of Nasdaq and Rules 10C-1 and 10A-3 under the Securities Exchange Act. The independent members of the +board hold separate regularly scheduled executive session meetings at which only independent directors are present. +Code of Business +Conduct and Ethics +We have a Code of Business Conduct and Ethics, or the Conduct Code, applicable to all directors, officers and +employees of Chembio and its subsidiaries. We have posted the Conduct Code on our website at www.chembiodiagnosticsinc.gcs-web.com/static-files/bca4f259-b35e-4280-a17f-2509fb6ff007 . We will post any amendments to the Conduct Code on our website. In accordance with the requirements of the SEC and Nasdaq, we will also post waivers applicable +to any of our officers or directors from provisions of the Conduct Code on our website. We have not granted any such waivers to date. +We have implemented whistleblower procedures, which establish format protocols for receiving and handling +complaints from employees. Any concerns regarding accounting or auditing matters reported under these procedures are to be communicated to the audit committee or our Chief Executive Officer and President. +Board Oversight of Risk +The board of directors has responsibility for the oversight of our risk management processes and, either as a +whole or through its committees, regularly discusses with management our major risk exposures, their potential impact on our business and the steps we take to manage them. The risk oversight process includes receiving regular reports +from board committees and members of senior management to enable the board to understand our risk identification, risk management and risk mitigation strategies with respect to areas of potential material risk, including operations, +finance, legal, regulatory, strategic and reputational risk. +The audit committee reviews information regarding liquidity and operations, and oversees our management of +financial risks. Periodically, the audit committee reviews our policies with respect to risk assessment, risk management, loss prevention and regulatory compliance. Oversight by the audit committee includes the Chief Financial Officer +reporting directly to the audit committee at least quarterly to provide an update on management’s efforts to manage risk. +Matters of significant strategic risk, including cybersecurity risks, are considered by the board as a whole. +Board Diversity +The board of directors recognizes the importance of diversity in business experience, education, and +professional skills in selecting nominees for director. It has not, however, adopted a formal policy concerning the consideration of diversity. +Board Leadership +Structure +The board of directors recognizes that it is important to determine an optimal board leadership structure to ensure the independent +oversight of management as we continue to grow. The board has determined that separating the positions of Chief Executive Officer and Chair of the Board is the best structure to fit Chembio’s current needs. This structure is preferable +because it provides a greater role for the independent directors in the oversight of Chembio and active participation of the independent directors in setting agendas and establishing priorities and procedures for the work of the board. +We do not, however, have a policy on whether the offices of Chair of the Board and Chief Executive Officer should be separate. While the board has concluded that our current leadership structure is appropriate at this time, it will +continue to periodically review our leadership structure and may make such changes in the future as it deems appropriate. +24 +Contents +Audit Committee +The principal responsibilities of the audit committee are: +• +appointing, approving the compensation of, and assessing the independence of our independent auditor; +• +approving all audit and non-audit services of the independent auditor; +• +evaluating our independent auditor’s qualifications, performance and independence; +• +reviewing our financial statements and financial disclosure; +• +conducting periodic assessments of our accounting practices and policies; +• +furnishing the audit committee report required by SEC rules; +• +reviewing and approving of all related-party transactions; +• +setting hiring policies for the hiring of employees and former employees or our independent auditor and ensuring that those policies comply with all +applicable regulations; +• +developing and monitoring compliance with a code of ethics for senior financial officers and a code of conduct for all Chembio employees, officers +and directors; +• +establishing procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls or auditing +matters; +• +establishing procedures for the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters; +• +overseeing the work of our independent auditor, including resolution of disagreements between management and the independent auditor; and +• +reviewing and discussing our annual and quarterly financial statements and related disclosures with management and the independent auditor. +Our independent auditor is ultimately accountable to the audit committee. The audit committee has the ultimate +authority and responsibility to select, evaluate, approve terms of retention and compensation of, and, where appropriate, replace the independent auditor. +The current members of the audit committee are John G. Potthoff, who serves as chair, Katherine L. Davis and +Gail S. Page. All three members are standing for re-election at the Annual Meeting. The board has determined that each of the audit committee members is financially literate and is a “non-employee director” as defined in Rule 16b‑3 +promulgated under the Securities Exchange Act. The board also determined that each of Dr. Potthoff, Ms. Davis and Ms. Page is independent, as defined in the listing standards of Nasdaq, and is an “outside director” as that term is +defined in Code Section 162(m). The board has also determined that each of Dr. Potthoff, Ms. Davis and Ms. Page is an audit committee financial expert in accordance with the standards of the SEC. +During 2018, the audit committee met privately with representatives of BDO USA, LLP, our independent auditor, on four occasions, +met privately with our management on four occasions, and held four executive sessions with only non-employee directors in attendance. Each of the then-serving members participated in all of the meetings of the audit committee during +2018. +25 +Contents +Nominating and +Corporate Governance Committee +The principal responsibilities of the nominating and corporate governance committee are: +• +reviewing, approving and recommending director candidates to the board of directors; +• +preparing proxy statement disclosure for the process used to identify and evaluate nominees for the board of directors, including an explanation of +the director nomination process and shareholder communications to the board; +• +periodically reviewing appropriateness of board size and restrictions on board service; +• +recommending to the board standards regarding our definition of independence as it relates to directors; +• +establishing, coordinating and reviewing with the Chair of the Board the criteria and method for evaluating the effectiveness of the board; +• +developing and recommending to the board procedures for selection of the Chair of the Board and for board review of and for communications of such +review to, the Chair of the Board; +• +monitoring the process and scope of director access to management and employees and communications between directors and management and employees; +• +coordinating +the board's oversight of our internal control over financial reporting, including disclosure controls; +• +developing board meeting procedures; +• +recommending to the board the number, type, functions, structure and independence of committees; +• +annually recommending to the board membership on board committees and advising board and committees with regard to the selection of chairs of +committees; +• +determining criteria and procedures for selection of committee members and chairs and establishing and coordinating with the applicable committee +chair criteria and method for evaluating the effectiveness of the committees; +• +periodically reviewing and revisions of the director orientation program and monitoring, planning and supporting director continuing education +activities; +• +developing, reviewing and recommending corporate governance policies and monitoring compliance with such policies; and +• +providing minutes of committee meetings to the board and reporting significant matters arising from committees’ work. +The current members of the nominating and corporate governance committee are Mary Lake Polan, who serves as chair, Katherine L. Davis and Gail S. Page. All three members are standing for re-election at the Annual Meeting. The board has determined that each of +Dr. Polan, Ms. Davis and Ms. Page is independent, as defined in the listing standards of Nasdaq. +The nominating and corporate governance +committee has the sole authority to retain, oversee and terminate any consulting or search firm to be used to identify director candidates or assist in +evaluating director compensation and to approve any such firm’s fees and retention terms. The nominating and corporate governance committee held two meetings in 2018. During 2018 the nominating and corporate governance committee held +two executive sessions with only non-employee directors in attendance. Each of the then-serving members participated in all of the meetings of the nominating +and corporate governance committee during 2018. +There have been no changes in the past year to the procedures by which stockholders may recommend nominees for director to the +board. For a stockholder recommendation for a director to be considered for nomination by the board at the next annual meeting of stockholders, the recommendations must be made by a stockholder of record entitled to vote. Stockholder +nominations must be made by notice in writing, delivered or mailed by first-class U.S. mail, postage prepaid, to our Secretary at our principal business address, not less than 60 days nor more than 90 days prior to any meeting of the +stockholders at which directors are to be elected. Each notice of nomination of directors by a stockholder shall set forth the nominee’s name, age, business address, if known, residence address of each nominee proposed in that notice, +the principal occupation or employment of each nominee for the five years preceding the date of the notice, the number of shares of common stock beneficially owned by each nominee, and any arrangement, affiliation, association, +agreement or other relationship of the nominee with any Chembio stockholder. +26 +Contents +Compensation Committee +The principal responsibilities of the compensation committee are to assist the board of directors in fulfilling +its responsibilities relating to: +• +developing an executive compensation philosophy and establishing and annually reviewing and approving executive compensation programs and policies; +• +reviewing and approving corporate goals and objectives for chief executive officer compensation, evaluating chief executive officer performance +based on those goals, and setting chief executive officer compensation; +• +reviewing chief executive officer recommendations with respect to, and approving annual compensation for, other executive officers; +• +establishing and administering annual and long-term incentive compensation plans for key executives; +• +recommending to the board for approval incentive compensation plans and equity-based plans; +• +reviewing and approving all special executive employment, compensation and retirement arrangements; +• +recommending to the board changes to executive compensation policies and programs; +• +recommending to the board all Internal Revenue Service tax-qualified retirement plans; +• +recommending the board all nonqualified benefit plans and periodically reviewing such plans; +• +reviewing management’s recommendations for other nonexecutive corporate incentive plans; +• +provide minutes of committee meetings to the board and reporting any significant matters arising from the committee’s work; +• +preparing the report on executive compensation required by SEC rules; +• +determining procedures for selection of the chief executive officer and other senior management; +• +determining procedures for board review of the chief executive officer and other senior management; +• +developing guidelines for, and monitoring compliance with, long-range succession planning; +• +developing and maintaining, in consultation with the Chair of the Board and the chief executive officer, a short-term succession plan for unexpected +situations affecting the senior management; and +• +monitoring procedures relating to executive development. +The current members of the compensation committee are Gail S. Page, Mary Lake Polan and John G. Potthoff. All +three members are standing for re-election at the Annual Meeting. The board has determined that each of Ms. Page, Dr. Polan and Dr. Potthoff is independent, as defined in the listing standards of Nasdaq, is a “non-employee director” as +defined in Rule 16b-3 promulgated under the Securities Exchange Act and is an “outside director” as that term is defined in Code Section 162(m). +The compensation committee has the sole authority to retain, oversee and terminate any compensation consultant to be used to assist +in the evaluation of executive compensation and to approve the consultant’s fees and retention terms. The compensation committee held two meetings in 2018. During 2018 the compensation committee held two executive sessions with only +non-employee directors in attendance. Each of the then-serving members participated in both of the meetings of the nominating and corporate governance committee during 2018. +27 +Contents +Compensation +Committee Interlocks and Insider Participation +During 2018 none of the members of the compensation committee was an officer or employee of our company or our subsidiaries and +none of our executive officers served as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on the board or compensation committee. +28 +Contents +Certain Relationships and +Related-Person Transactions +The Board of Directors reviews all transactions involving us in which any of our directors, director nominees, significant +stockholders and executive officers and their immediate family members are participants to determine whether such person has a direct or indirect material interest in the transaction. All directors, director nominees and executive +officers must notify us of any proposed transaction involving us in which such person has a direct or indirect material interest. Such proposed transaction is then reviewed by either the Board as a whole or the Audit Committee, which +determines whether to approve the transaction. After such review, the reviewing body approves the transaction only if it determines that the transaction is in, or not inconsistent with, the best interests of the Company and its +stockholders. +29 +Contents +Beneficial Ownership of Common Stock +The following table sets forth the number of outstanding shares of common stock beneficially owned, and the +percentage of the class beneficially owned, as of April 26, 2019, by: +• +each person known to us to be the beneficial owner of more than five percent of the then-outstanding shares of common stock; +• +each named executive officer included in “Executive Compensation—Summary Compensation Table,” each current director and each nominee for election as +a director; and +• +all of our executive officers, directors and director nominees as a group. +The number of shares of common stock beneficially owned by each person is determined under the rules of the +SEC. Under these rules, beneficial ownership includes any shares as to which the individual has sole or shared voting power or investment power and also any shares that the individual has the right to acquire by June 25, 2019 (sixty +days after April 26, 2019) through the exercise or conversion of a security or other right. Unless otherwise indicated, each person has sole investment and voting power, or shares such power with a family member, with respect to the +shares set forth in the following table. The inclusion in this table of any shares deemed beneficially owned does not constitute an admission of beneficial ownership of those shares for any other purpose. As of April 26, 2019, there +were 17,166,459 shares of common stock outstanding. Shares not outstanding, but deemed beneficially owned by virtue of the right of a person to acquire those shares, are treated as outstanding only for purposes of determining the number +and percent of shares co common stock owned by such person or group. +Unless otherwise noted below, the address of each person listed in the table is in care of Chembio Diagnostics, Inc., 555 Wireless +Boulevard, Hauppauge, New York 11788. +30 +Contents +Common Stock Beneficially Owned +Beneficial Owner +Shares +% +Named Executive Officers, Directors and Director Nominees +John J. Sperzel III(1) +353,446 +2.0% +Javan Esfandiari(2) +147,353 +* +Neil A. Goldman(3) +87,569 +* +Katherine L. Davis(4) +112,943 +* +John G. Potthoff(5) +37,147 +* +Gail S. Page(6) +26,522 +* +Mary Lake Polan(7) +17,147 +* +All executive officers and directors as a group (9 persons)(8) +886,577 +4.9% +5% Stockholders +Wellington Management Group LLP(9) +280 Congress Street +Boston, MA 02210 +1,506,290 +8.8% +Norman H. Pessin(10) +c/o Levy, Harkins & Co., Inc. +366 Madison Avenue, 14th Floor +New York, NY 10017 +1,498,659 +8.7% +* +Less than 1%. +(1) +Consist of (a) 98,446 restricted shares, one-third of which will vest on October 8 of 2019, 2020 and 2021, and (b) options to acquire 255,000 shares +that are exercisable by June 25, 2019. +(2) +Include (a) 38,860 restricted shares, one-third of which will vest on October 8 of 2019, 2020 and 2021, and (b) options to acquire 20,000 shares that +are exercisable by June 25, 2019. +(3) +Include (a) 31,088 restricted shares, one-third of which will vest on October 8 of 2019, 2020 and 2021, and (b) options to acquire 41,666 shares that +are exercisable by June 25, 2019. +(4) +Include (a) 7,772 restricted shares, one-third of which will vest on October 8 of 2019, 2020 and 2021, and (b) options to acquire 46,875 shares that +are exercisable by June 25, 2019. +(5) +Include (a) 7,772 restricted shares that will vest on October 8, 2019, and (b) options to acquire 9,375 shares that are exercisable by June 25, 2019. +(6) +Consist of (a) 7,772 restricted shares that will vest on October 8, 2019, and (b) options to acquire 18,750 shares that are exercisable by June 25, +2019. +(7) +Consist of (a) 7,772 restricted shares that will vest on October 8, 2019, and (b) options to acquire 9,375 shares that are exercisable by June 25, +2019. +(8) +Include, in addition to the restricted shares and options in Notes 1 through 7, (a) 20,725 restricted shares, one-third of which will vest on October 8, 2019, 2020, and 2021 and (b) options to +acquire 48,000 shares that are exercisable by June 25, 2019. +(9) +The information is based on amended Schedule 13Gs filed on February 12, 2019. +(a) +An amended Schedule 13G filed jointly by Wellington Management Group LLP, Wellington Group Holdings LLP and Wellington Investment Advisors Holdings +LLP, and a Schedule 13G filed by Wellington Trust Company NA, as investment adviser, reported holdings of 801,835 shares. These shares are owned of record by clients of the Wellington Investment Advisers. Wellington +Investment Advisors Holdings LLP controls directly, or indirectly through Wellington Management Global Holdings, Ltd., the Wellington Investment Advisers. Wellington Investment Advisors Holdings LLP is owned by Wellington +Group Holdings LLP. Wellington Group Holdings LLP is owned by Wellington Management Group LLP. The shares are owned of record by clients of Wellington Trust Company NA. +(b) +An amended Schedule 13G filed by Wellington Trust Company, National Association Multiple Common Trust Funds Trust, Micro Cap Equity Portfolio +reported holdings of 704,455 shares. +(10) +This information is based on information provided on behalf of Norman Pessin by Brian Pessin, the son of Norman Pessin. The shares include 131,072 +shares held by Brian Pessin. +Section 16(a) Beneficial +Ownership Reporting Compliance +Section 16(a) of the Securities Exchange Act requires our executive officers and directors and any persons +owning ten percent or more of the common stock to file reports with the SEC to report their beneficial ownership of and transactions in our securities and to furnish us with copies of the reports. +Based solely upon a review of the Section 16(a) reports furnished to us, along with written representations from our executive +officers and directors, we believe that all required reports were timely filed during 2018. +31 +Contents +Director Compensation +Our director compensation program is intended to enhance our ability to attract, retain and motivate +non-employee directors of exceptional ability and to promote the common interest of directors and stockholders in enhancing the value of the common stock. The board of directors reviews director compensation at least annually based on +recommendations by the nominating and governance committee. The nominating and governance committee has the sole authority to engage a consulting firm to evaluate director compensation. +Under our current non-employee director compensation program, each qualifying non-employee director is eligible to receive +compensation for board and committee service consisting of annual cash retainers, per meeting fees, and equity awards. Directors also may be paid for serving on ad hoc committees of the board. In 2018, our qualifying non-employee +directors received the following annual cash retainers and meeting fees for their service on the board: +NON-EMPLOYEE DIRECTOR ANNUAL RETAINERS AND MEETING FEES +Position +Annual Cash Retainer +Per Meeting Fee +Chair of the Board +$50,000 +$1,000 in person / $500 telephonic +All Independent Directors +$25,000 +$1,000 in person / $500 telephonic +Audit Committee Chair +$2,500 +$750 +Other Audit Committee Members +— +$500 +Compensation Committee Chair +— +$750 +Other Compensation Committee Members +— +$500 +Nominating and Governance Committee Chair +— +$750 +Other Nominating and Governance Committee Members +— +$500 +On the date of the annual meeting of stockholders at which a director is initially elected +and every fifth year thereafter at which the director is re-elected, the director receives stock options to acquire 46,875 shares of common stock, with an exercise price equal to the market price on the date of the grant. Twenty percent +(9,375 shares) of the 46,875 shares become exercisable on the date of the original grant, and an additional twenty percent become exercisable on the date of each of the four succeeding anniversaries of the date of grant if the director +is still a director on that date. +In addition, on October 8, 2018 each non-employee director received 7,772 restricted shares +of common stock that will vest in full on October 8, 2019. The amount of each such grant of restricted shares of $75,000, based on a fair market value of $9.65 per share of common stock on October 8, 2018. +The following table shows the total compensation for non-employee directors during 2018. John J. Sperzel III, +our sole executive officer who served as a member of the board during 2018, did not receive any additional compensation for his service as a director. +2018 NON-EMPLOYEE DIRECTOR COMPENSATION TABLE +Director +Fees Earned or +Paid in Cash($)(1) +Option Awards($) +Total($)(2) +Katherine L. Davis(2) +$75,000 +$ — +$ 150,000 +Gail S. Page(2) +25,000 +— +90,000 +Mary Lake Polan(2)(3)(4) +10,417 +197,165.63 +622,135.72 +John G. Potthoff(2)(3)(5) +12,500 +155,053.13 +469,531.25 +Peter Kissinger(6) +12,500 +— +12,500 +Gary Meller(7) +— +— +— +(1) +Consist of annual retainer and meeting fees, as described above under “Non-Employee Director Annual Retainer and Meeting Fees.” +(2) +On October 8, 2018 each +non-employee director received 7,772 restricted shares of common stock that will vest in full on October 8, 2019. The amount of each such grant of restricted shares of $75,000, based on a fair market value of $9.65 per share +of common stock on October 8, 2018. The fair value of options at the date of grant was estimated using the Black-Scholes option pricing model. +(3) +On the date of the annual meeting of stockholders at which a director is initially elected and every fifth year thereafter at which the director is +re-elected, the director receives stock options to acquire 46,875 shares of common stock, with an exercise price equal to the market price on the date of the grant. Twenty percent (9,375 shares) of the 46,875 shares become +exercisable on the date of the original grant, and an additional twenty percent become exercisable on the date of each of the four succeeding anniversaries of the date of grant if the director is still a director on that +date. The fair value of options at the date of grant was estimated using the Black-Scholes option pricing model. +(4) +Commenced serving as a director in August 2018. +(5) +Commenced serving as a director in May 2018. +(6) +Resigned from the board in May 2018. +(7) +Resigned from the board in February 2018. +32 +Contents +Executive Officers +The following table sets forth information, as of April 26, 2019, about our executive officers. Each executive +officer serves at the discretion of the board of directors. +EXECUTIVE OFFICERS +Name +Age +Positions and Business Experience +John J. Sperzel III +55 +Please see “Proposal 1. Election of Directors—Information Concerning Nominees for Election as Directors” +at page 13. +Neil +A. Goldman +51 +Professional Experience +• +Executive Vice President and Chief +Financial Officer since December 2017 +• +Executive Vice President-Corporate +Development and Chief Financial Officer at J.S. Held LLC, a construction consulting firm, from May 2015 to May 2017 +• +Global Finance Director for the +Delphi Data Connectivity division of Delphi Corp. (now Aptiv plc), an automotive supplier, from October 2014 to April 2015 +• +Executive Vice President-Corporate +Development and Chief Financial Officer from 2013 to September 2014, Senior Vice President-Chief Operating and Financial Officer from 2006 to 2013, and Chief Financial Officer from 2005 to 2006 at Unwired Technology LLC, a +tier-1 global automotive electronics manufacturer and distributor +• +Chief Financial Officer at EPPCO +Enterprises, Inc., a mechanics tools manufacturer, from 2003 to 2005 +• +Senior Manager at Ernst & Young LLP and its successor Cap Gemini Ernst & Young LLC, from 1989 to 2002 +• +Certified Public Accountant +Education +• +Bachelor of Science degree in +Business-Accountancy from Miami University (Ohio) +Javan Esfandiari +52 +Professional Experience +• +Executive Vice President and Chief +Scientific and Technology Officer since 2004 and Director of Research and Development, from 2000 to 2004 +• +Co-founder and Director of Research +and Development of Sinovus Biotech AB, a developer of lateral flow technology, from 1997 to 2000 +• +Director of Research and Development +with On-Site Biotech/National Veterinary Institute, a government agency for veterinary medicine, from 1993 to 1997 +Education +• +Master of Science degree in Molecular Biology from +Lund University, Sweden +• +Bachelor of Science degree in Clinical Chemistry from +Lund University, Sweden +David Gyorke +59 +Professional Experience +• +Senior Vice President, Chief Operations Officer since +January 2017 +• +Vice President of Operations at Nanomix, Inc., a +developer of analytical detection devices for point-of-care diagnostics, from 2011 to 2016 +• +Vice President of Operations at NeoVista, Inc., a +developer of medical technologies, from 2008 to 2011 +• +Vice President of Operations at +Farallon Medical, Inc., a developer of point-of-care diagnostic and drug monitoring technologies, from 2004 to 2008 +• +Vice President of Operations at +Cholestech Corporation, a developer of point-of-care diagnostic systems, from 1999 to 2003 +Education +• +Bachelor of Engineering (Industrial) degree from +California Polytechnic State University +33 +Contents +Robert Passas +66 +Professional Experience +• +Senior Vice President, Chief Commercial Officer since +October 2016 +• +Director and the Group Commercial +Director for Worldwide Sales, Marketing, and Technical and Customer Support at The Binding Site Group Ltd, a supplier of clinical diagnostic tools, from 2011 to 2016 +• +Senior Director-International at +Quidel Corporation, a manufacturer of diagnostic healthcare products, from 2010 to 2011 +• +Executive Vice President for Global +Sales and Marketing, from 2007 to 2010 and Vice President of Sales and Marketing, from 2006 to 2007 at Trinity Biotech plc, a developer, manufacturer and marketer of diagnostic test kits +• +Regional Director at Abbott Diabetes +Care, a manufacturer of blood glucose monitors and meters, from 2003 to 2006 +Education +• +Doctor of Philosophy degree in Analytical Chemistry +from the University of Surrey +• +Bachelor of Science degree in Medical Biochemistry +from the University of Surrey +There are no family relationships among our directors and executive officers. +34 +Contents +Executive Compensation +Summary Compensation +Table +The following table provides information concerning the compensation paid for 2018 and 2017 to our “named +executive officers,” who consist of our Chief Executive Officer and President and our next two most highly compensated executive officers during 2018: +SUMMARY COMPENSATION TABLE +Name and Principal Position +Year +Salary ($) +Bonus($)(1) +Equity +Awards ($)(2) +All Other +Compensation($)(3) +Total($) +John J. Sperzel III +2018 +$416,847 +$89,250 +$950,000 +— +$1,430,597 +Chief Executive Officer and President +2017 +415,137 +63,750 +62,998 +— +541,885 +Neil A. Goldman +2018 +294,231 +$50,400 +300,000 +$2,769 +597,000 +Executive Vice President, Chief Financial Officer +2017 +5,769 +— +423,882 +— +224,638 +Javan Esfandiari +2018 +357,807 +$72,450 +375,000 +7,391 +791,948 +Executive Vice President, +Chief Science and Technology Officer +2017 +342,308 +51,750 +9,652 +5,900 +347,244 +(1) +Bonuses earned in 2018 and 2017 were based in part on reaching certain objectives, which included revenue dollar levels and operating profit levels. +Additional amounts earned were discretionary. +(2) +The estimated fair value of any option or common stock granted was determined in accordance with Financial Accounting Standards Board Accounting +Standards Codification Topic 718, Compensation—Stock Compensation . In addition to the awards included in the table, the compensation committee +conditionally granted to Mr. Sperzel on November 11, 2018 restricted stock units for 375,000 shares of common stock, subject to the approval of a new equity incentive plan by the stockholders. If Proposal 2 is approved, +these additional restricted stock units will be granted to Mr. Sperzel immediately after the Annual Meeting. +(3) +Other compensation includes, where applicable, an employer match to 401(k) contributions and car allowances. +Narrative +Explanation of the Summary Compensation Table +The compensation paid to our named executive officers consists of the following components: +• +base salary; +• +performance-based cash bonuses; +• +long-term incentive compensation in the form of restricted stock units and stock options; and +• +benefits consisting principally of housing subsidies and health and welfare plan contributions. +Annual base salaries of our named executive officers in 2018 were as follows: John J. Sperzel III, $416,847; +Neil A. Goldman, $294,231; and Javan Esfandiari, $357,807. Annual base salaries of our named executive officers in 2017 were as follows: John J. Sperzel III, $415,137; Neil A. Goldman, $5,769; and Javan Esfandiari, $342,308. The +compensation committee awards cash bonuses contingent upon both Chembio’s performance and individual employee performance. Cash bonuses, if earned, are paid in the first quarter of each fiscal year, for the prior year’s performance. The +compensation committee may decide to pay cash incentive bonuses to compensate executive officers for the achievement of specific business objectives, profitability, and individual performance and objectives established by the +compensation committee. +The compensation committee believes that equity-based compensation encourages employees to commit to the +Chembio’s long-term goals. This ensures that our NEOs have a stake in the long-term creation of stockholder value. A significant portion of the awards is performance-based, meaning the NEOs’ ability to vest in that portion of awards is +contingent upon Chembio achieving a minimum level of net earnings. +Although we do not have a written policy regarding the timing or practices related to granting equity awards, neither Chembio nor +the compensation committee engages in spring-loading, back-dating or bullet-dodging practices. At any time that the compensation committee determines to grant stock options, those options are granted at the closing market price on the +date of grant. +35 +Contents +Grants of Plan-Based +Awards +We have established an annual incentive bonus plan, or the bonus plan, intended to enhance stockholder value +by aligning our performance with the variable-based compensation of our executive officers. The bonus plan is based on a calendar year and renews automatically on January 1 of each year until terminated. The compensation committee +administers the bonus plan and has all authority and discretion necessary to control the operation of the bonus plan. +Participants are eligible to receive incentive bonuses based on their individual performance, the performance +of our company, the performance of the operating group in which they work, or other performance metrics established by the compensation committee with respect to a calendar year. In order to be eligible for a bonus for a calendar year, +an individual must be identified by the compensation committee as a participant under the bonus plan for such year and must continue to be employed as of December 31 of that year and as of the payment date of the bonus. A participant +hired after commencement of a plan year is eligible for a pro-rated bonus, based on the date of hire. +Award determinations, if any, for performance for a calendar year are determined as follows: +• +Our company performance is determined by the compensation committee based on our ability to meet or exceed goals as set forth by the compensation +committee, which may include factors such as sales revenue, operating income (loss), earnings before income tax, depreciation and amortization or EBITDA, adjusted EBITDA (as defined by the compensation committee), product +development, regulatory milestones, strategic alliances, licensing and partnering transactions, and financings. +• +Operating group performance is determined by the compensation committee based on an operating group’s ability to meet or exceed goals as set forth +by the compensation committee, which may include factors identified with respect to company performance to the extent they pertain to the operating group, as well as any other factors identified by us, which may include +factors reviewed with and recommended to the compensation committee by the Chief Executive Officer. +• +Individual performance of participants other than the Chief Executive Officer are reviewed with and recommended to the compensation committee by the +Chief Executive Officer. The individual performance of each participant, including the Chief Executive Officer, is determined by the compensation committee based on the individual participant’s satisfactory completion of +individual performance goals. +The amount of a participant’s bonus for a calendar year is based on an incentive percentage of the +participant’s annual base pay as of December 31 of that year. The incentive percentage for each year is to be determined by the compensation committee at the beginning of the year, unless otherwise provided in the participant’s +employment contract. The incentive percentage for a participant may then be adjusted, in the sole discretion of the compensation committee, based on the performance of our company and operating group, or the individual participant over +the course of the year to arrive at a final performance percentage. The allocation of the final performance percentage is to be determined by the compensation committee, and communicated to each employee, at the beginning of the year. +Unless otherwise provided in a participant’s employment contract, only achievement of 100% of all company, operating group and participant’s performance targets will accrue 100% of the participant’s allocated percentage. +During the fiscal year ended December 31, 2018, we took important steps to transition our company for its next phase of growth. In +light of numerous changes and developments during the year, many of which could not be foreseen as of the beginning of the year, in March 2019 the compensation committee awarded discretionary bonuses, rather than awards based on +previously established performance targets, to our named executive officers as follows: John J. Sperzel III, $89,250; Neil A. Goldman, $50,400; Javan Esfandiari, $72,450. +36 +Contents +Outstanding +Equity Awards at December 31, 2018 +The following table sets forth information regarding each unexercised option held by each of our named +executive officers as of December 31, 2018: +OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2018 +Option Awards +Stock Awards +Name +Number of Securities +Underlying +Unexercised Options +(#) +Exercisable +Number of Securities +Underlying Unexercised +Options +(#) +Unexercisable +Option +Exercise Price($) +Option +Expiration Date +Number of Shares +that have not +Vested(#) +Market Value of +Shares that have not +Vested($) +John J. Sperzel III +200,000 +50,000 +$3.4163 +3/21/21 +98,446(1) +950,000 +5,000 +— +5.25 +3/15/22 +— +— +— +20,000 +5.3666 +3/31/24 +— +— +Neil A. Goldman +41,666 +83,334 +7.04 +12/18/24 +31,088(2) +300,000 +Javan Esfandiari +40,000 +20,000 +5.64 +3/11/21 +38,860(2) +375,000 +5,000 +— +5.25 +3/15/22 +— +— +(1) +One-third of the 98,446 shares of common stock will vest on October 8 of each of 2019, 2020 and 2021. Mr. Sperzel will receive a restricted stock +award for 375,000 shares of common stock that would be subject to time vesting in full on November 11, 2022 if the 2019 Plan is approved at the Annual Meeting. See “Proposal 2—Approval of 2019 Omnibus Incentive +Plan—Background”. +(2) +One-third of the shares of common stock will vest on October 8 of each of 2019, 2020 and 2021. +For information regarding the vesting acceleration provisions applicable to the options held +by our named executive officers, please see “—Severance Benefits” and “—Change in Control Benefits” below. +Employment Agreements +Effective as of March 13, 2017, we entered into an employment agreement with John J. Sperzel III to serve as Chief +Executive Officer for a term of three years. If Mr. Sperzel's employment is terminated by reason of disability or for “cause,” as defined in his employment agreement, all compensation, including his base salary, his right to receive a +performance bonus, and the vesting of any unvested equity awards, will cease as of his termination date and he will receive no severance benefits. If we terminate Mr. Sperzel's employment without cause or Mr. Sperzel terminates his +employment for a reasonable basis, as defined in his employment agreement (which includes involuntary termination within a six-month period upon a defined change of control of Chembio), or if we and Mr. Sperzel do not enter into a new +employment agreement prior to expiration of his initial employment agreement, then we will be required to pay Mr. Sperzel his base salary and our monthly share of health insurance premiums for a period of twelve months as severance, and +all of his unvested equity awards will vest immediately. Mr. Sperzel’s employment agreement also contains provisions prohibiting him from (i) soliciting our employees for a period of two years following his termination, (ii) soliciting +our customers, agents and other sources of distribution for a period of one year following his termination, and (iii) except where termination is involuntary upon a defined change in control, engaging or participating in any business +that directly competes with our business activities in any market in which we are in business or plan to do business during the period in which he is entitled to severance, or for a period of six months if he is not entitled to +severance payments under his employment agreement. +Effective as of December 18, 2017 and as amended on January 21, 2019, we entered into an employment agreement with Neil +A. Goldman to serve as our Chief Financial Officer and Executive Vice President. In the event Mr. Goldman's employment is terminated by reason of disability or for “cause,” as defined in Mr. Goldman’s employment agreement, or due to +Mr. Goldman's resignation or voluntary termination, all compensation, including his base salary, his right to receive a performance bonus, and benefits, and the vesting of any unvested equity awards, will cease as of his termination +date, and Mr. Goldman will receive no severance benefits. If we terminate Mr. Goldman's employment without cause or Mr. Goldman terminates his employment for a reasonable basis, as defined in his employment agreement (which includes +involuntary termination within a six-month period upon a “Change of Control”), then we will be required to pay Mr. Goldman his base salary and our monthly share of health insurance premiums for a period of twelve months as severance, +and all of his unvested equity awards will vest immediately. The Mr. Goldman’s employment agreement also contains provisions prohibiting Mr. Goldman from (i) soliciting our employees for a period of twenty-four months following his +termination, (ii) soliciting our customers, agents, or other sources of distribution of our business for a period of twelve months following his termination, and (iii) except where termination is involuntary upon a “Change in +Control”, for a period of twelve months following termination of Mr. Goldman’s employment agreement (or for a period of six months after termination if Mr. Goldman is not entitled to severance under his employment agreement), engaging +or participating in any business that directly competes with our business activities in any market in which we are in business or plan to do business. Mr. Goldman’s employment agreement continues in effect through December 31, 2019, +provided that commencing on January 1, 2020 and each January 1 thereafter, the term shall be automatically extended for one additional year. +37 +Contents +Effective as of March 5, 2016 and as amended on March 20, 2019, we entered into an employment agreement with Javan +Esfandiari to continue as our Chief Scientific & Technology Officer and Executive Vice President for an additional term through December 31, 2021. In the event Mr. Esfandiari's employment is terminated by reason of disability or for +“cause,” as defined in Mr. Esfandiari’s employment agreement, or due to Mr. Esfandiari's resignation or voluntary termination, all compensation, including his base salary, his right to receive a performance bonus, and benefits, and the +vesting of any unvested equity awards, will cease as of his termination date, and Mr. Esfandiari will receive no severance benefits. If Mr. Esfandiari’s employment agreement is terminated by us without cause, or if Mr. Esfandiari +terminates his employment agreement for a reasonable basis, as defined in his employment agreement, including within 12 months of a change in control, we will be required to pay his base salary and our monthly share of health insurance +premiums for a period of twelve months as severance, and all of his unvested equity awards will vest immediately. Mr. Esfandiari’s employment agreement also contains provisions prohibiting Mr. Esfandiari from (i) soliciting our +employees for a period of 24 months following his termination, (ii) soliciting our customers, agents, or other sources of distribution of our business for a period of twelve months following his termination, and (iii) except where +termination is involuntary upon a “Change in Control”, for a period of twelve months following his termination, engaging or participating in any business that directly competes with our business activities in any market in which we are +in business or plan to do business. +None of our other executive officers has an employment contract with us. +Payments Upon +Termination or Change in Control +For a description of cash payments and accelerated vesting of stock awards to which our named executive +officers may be entitled in the event of termination of the named executive officer’s employment or a change in control, see “—Employment Agreements” above. +Section 162(m) +Considerations +Code Section 162(m) limits the deductibility of compensation in excess of $1 +million paid to any one named executive officer in any calendar year. Under the tax rules in effect before 2018, compensation that qualified as “performance-based” under Section 162(m) was deductible without regard to this $1 million +limit. In 2018 and prior years, the board of directors and the compensation committee designed awards that were intended to qualify for this performance-based compensation exception. However, the Tax Cuts and Jobs Act, which was +signed into law December 22, 2017, eliminated this performance-based compensation exception effective January 1, 2018, subject to a special rule that “grandfathers” certain awards and arrangements that were in effect on or before +November 2, 2017. As a result, compensation that the compensation committee structured in 2018 and prior years with the intent of qualifying as performance-based compensation under Section 162(m) that is paid on or after January 1, +2018 may not be fully deductible, depending on the application of the special grandfather rules. Moreover, from and after January 1, 2018, compensation awarded in excess of $1 million to our named executive officers generally will not +be deductible. While the Tax Cuts and Jobs Act will limit the deductibility of compensation paid to the named executive officers, the compensation committee will design compensation programs that are intended to be in the best +long-term interests of our company and stockholders, with deductibility of compensation being one of a variety of considerations taken into account. The compensation committee believes that all compensation paid to our named executive officers for fiscal year 2018 is properly deductible under Section 162(m), but +no assurance can be made in this regard. +38 +Contents +Equity Compensation Plan Information +The following table provides information as of December 31, 2018 with respect to shares of common stock that +may be issued under equity plans and standalone option grants: +COMMON STOCK ISSUABLE UNDER EQUITY PLANS +Plan Category +Number of Securities to be +Issued Upon Exercise of +Outstanding Options, +Warrants and Rights +Weighted Average Exercise +Price of Outstanding +Options, Warrants and +Rights +Number of Securities Remaining +Available for Future Issuance +Under Equity Compensation Plans +Equity compensation plans approved by stockholders(1) +711,268 +$5.62 +21,061 +Equity compensation plans not approved by stockholders +— +— +— +Totals +711,268 +21,061 +(1) +“Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights” consists of 99,132 shares under the 2008 Stock +Incentive Plan, 390,968 shares under the 2014 Stock Incentive Plan, and 206,868 shares issued outside of those plans, and options to purchase 15,000 shares that have since been cancelled or expired. The 2008 Stock Incentive +Plan was increased by 125,000 shares at the Annual Stockholder meeting held on September 23, 2011. “Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans” represents zero shares under +the 2008 Stock Incentive Plan and 21,061 under the 2014 Stock Incentive Plan. +39 +Contents +Accounting Matters +Principal +Independent Auditor Fees +The following table sets forth the aggregate fees billed to us by BDO for professional services rendered for +the years ended December 31, 2018 and 2017: +2018 +2017 +Audit Fees(1) +$548,863 +$ 428,289 +Audit-related Fees(2) +87,780 +— +Tax Fees(3) +21,000 +21,000 +Total Fees +$657,643 +$449,289 +(1) +Includes services relating to the audit of the annual consolidated financial statements, review of quarterly consolidated financial statements, +statutory audits, comfort letters, and consents and review of documentation filed with SEC-registered and other securities offerings. +(2) +Includes services related to assistance with general accounting matters, work performed on acquisitions and divestitures, employee benefit plan +audits and assistance with statutory audit matters. +(3) +Includes services for tax compliance, tax advice and tax planning. +Audit Committee +Pre-Approval Policies and Procedures +The audit committee approves in advance all audit and non-audit services performed by the independent +registered public accounting firm. There are no other specific policies or procedures relating to the pre-approval of services performed by the independent registered public accounting firm. +Report of Audit +Committee +The Audit Committee of the Board of Directors consists entirely of members who meet the independence +requirements of Nasdaq and the rules and regulations of the SEC, as determined by the Board of Directors. The Audit Committee is responsible for providing independent, objective oversight of the financial reporting processes and +internal controls of Chembio Diagnostics, Inc., or Chembio. The Audit Committee operates under a written charter approved by the Board of Directors. A copy of the current charter is available on Chembio’s website at chembiodiagnosticsinc.gcs-web.com/static-files/9834f839-d259-45c5-8b25-f6fce52b724a. +Management is responsible for Chembio’s system of internal control and financial reporting processes, for the +preparation of consolidated financial statements in accordance with U.S. generally accepted accounting principles and for the annual report on Chembio’s internal control over financial reporting. The independent auditor is responsible +for performing an independent audit of Chembio s consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board, or PCAOB, and for issuing a report on the financial statements and the +effectiveness of Chembio’s internal control over financial reporting. The Audit Committee’s responsibility is to monitor and oversee these processes. Audit Committee members do not serve as professional accountants or auditors for +Chembio, and their functions are not intended to duplicate or certify the activities of Chembio’s management or independent auditor. +Consistent with its monitoring and oversight responsibilities, the Audit Committee met with management and BDO +USA, LLP, or BDO, the independent auditor of Chembio, to review and discuss the December 31, 2018 audited consolidated financial statements. Management represented that Chembio had prepared the consolidated financial statements in +accordance with U.S. generally accepted accounting principles. The Audit Committee discussed with BDO the matters required by the PCAOB in accordance with Auditing Standard No. 1301, “Communications with Audit Committees.” +The Audit Committee received from BDO the written communication that is required by PCAOB Rule 3526, “Communication with Audit +Committees Concerning Independence,” and the Audit Committee discussed with BDO that firm’s independence. The Audit Committee also considered whether BDO’s provision of non-audit services and the audit and non-audit fees paid to BDO +were compatible with maintaining that firm’s independence. On the basis of these reviews, the Audit Committee determined that BDO has the requisite independence. +40 +Contents +Management completed the documentation, testing and evaluation of Chembio’s system of internal control over +financial reporting as of December 31, 2018 as required by Section 404 of the Sarbanes-Oxley Act of 2002. The Audit Committee received periodic updates from management and BDO at Audit Committee meetings throughout the year and provided +oversight of the process. Prior to filing Chembio’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018,or the Form 10-K, with the SEC, the Audit Committee also reviewed management’s report on the effectiveness of +Chembio’s internal control over financial reporting contained in the Form 10-K, as well as the Report of Independent Registered Public Accounting Firm provided by BDO and also included in the Form 10‑K. BDO’s report included in the Form +10-K related to its audit of Chembio’s consolidated financial statements and the effectiveness of Chembio’s internal control over financial reporting. +Based upon the Audit Committee’s discussions with management and BDO and the Audit Committee’s review of the +information provided by, and the representations of, management and BDO, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements as of and for the year ended December 31, 2018 be +included in Chembio’s Annual Report on Form 10-K for the year ended December 31, 2018. The Audit Committee selected BDO as Chembio’s independent auditor for the fiscal year ending December 31, 2019, and recommended that the selection be +submitted for ratification by the stockholders of Chembio. +Audit Committee +John G. Potthoff, Chair +Gail S. Page +Katherine L. Davis +41 +Contents +Stockholder Proposals for 2020 Annual +Meeting +In order for stockholder proposals for the 2020 Annual Meeting of Stockholders to be eligible for inclusion in +the proxy statement and form of proxy card for that meeting, we must receive the proposals at our corporate headquarters, 555 Wireless Boulevard, Hauppauge, New York 11788, directed to the attention of our Corporate Secretary, no later +than December 31, 2019. In addition, all proposals will need to comply with Rule 14a-8 of the Securities Exchange Act, which sets forth the requirements for the inclusion of stockholder proposals in our sponsored proxy materials. +In addition to any other applicable requirements, for a stockholder to properly +bring business before the 2020 Annual Meeting of Stockholders, the stockholder must give us notice thereof in proper written form, including all required information, at our corporate headquarters, 555 Wireless Boulevard, Hauppauge, New York 11788, directed to the +attention of our Corporate Secretary, no later than March 15, 2020. A copy of our Bylaws is available at sec.gov/Archives/edgar/data/1092662/000114036118038547/ex3_2.htm. +Delivery of Documents +to Security Holders Sharing an Address +SEC rules permit us to deliver one Notice of Internet Availability to two or more stockholders who share an +address, unless we have received contrary instructions from one or more of the stockholders. This delivery method, which is known as “householding,” can reduce our expenses for printing and mailing. Any stockholder of record at a shared +address to which a single copy of the Notice of Internet Availability was delivered may request a separate Notice of Internet Availability, or a separate copy of the 2018 Annual Report and this Proxy Statement, by calling Alliance +Advisors at +1 (877) 777-2857, or sending a letter to Shareholder Services at Chembio Diagnostics, Inc. , 555 Wireless Boulevard, Hauppauge, New York 11788, to the attention of our Corporate Secretary. Stockholders of record who wish to +receive separate copies of these documents in the future may also contact us as stated above. Stockholders of record who share an address and receive two or more copies of the Notice of Internet Availability may contact us as stated +above to request delivery of a single copy. A stockholder who holds shares in “street name” and who wishes to obtain copies of proxy materials should follow the instructions on the stockholder’s voting instruction form or should contact +the holder of record. +Other Matters +We will pay all expenses of preparing, printing and mailing, and making available over the Internet, the Annual Meeting proxy +materials, as well as all other expenses of soliciting proxies for the Annual Meeting on behalf of the board of directors. Alliance Advisors will solicit proxies by personal interview, mail, telephone, facsimile, email, Internet or +other means of electronic transmission and will request brokerage houses, banks, and other custodians, nominees and fiduciaries to forward soliciting material to the beneficial owners of common stock held of record by these persons. We +will pay a fee of approximately $10,045.00 to Alliance Advisors for its services and will reimburse it for payments made to brokers and other nominees for their expenses in forwarding soliciting material. In addition, certain of our +directors, officers and employees, who will receive no compensation in addition to their regular salary or other compensation, may solicit proxies by personal interview, mail, telephone, facsimile, email, Internet or other means of +electronic transmission. +42 +Contents +CHEMBIO DIAGNOSTICS, INC. +For the Annual Meeting of Stockholders on June 18, 2019 +Proxy Solicited on Behalf of the Board of Directors +The undersigned hereby appoints John J. Sperzel III and Neil A. Goldman, or either of +them, as proxies with full power of substitution to vote all the shares of the undersigned with all the powers that the undersigned would possess if personally present at the Annual Meeting of Stockholders of Chembio Diagnostics, Inc. +(the “Company”), to be held at 10:00 a.m. (local time) on June 18, 2019, at 555 Wireless Boulevard, Hauppauge, New York 11788, or any adjournments thereof, on the following matters: +(Continued and to be signed on the reverse side) +PLEASE DETACH ALONG PERFORATED LINE AND MAIL IN THE ENVELOPE PROVIDED. +Important Notice Regarding the Availability of +Proxy Materials for the Annual Meeting of Stockholders to be held June 18, 2019 . The 2019 Proxy Statement and our 2018 Annual Report to Stockholders are available at: http://www.chembio.com/investors/proxy/ +Contents +Please mark votes as in this example ⌧ +1. To elect the following five directors: +Nominees: +FOR +all nominees +WITHHOLD +AUTHORITY +for all nominees +FOR +all nominees except +as noted: +01 Katherine L. Davis +02 Gail S. Page +☐ +☐ +☐ +03 Mary Lake Polan +04 John G. Potthoff +05 John J. Sperzel III +Instruction: To withhold authority to vote for any individual nominee, strike-out the name of that nominee by putting a line +through that nominee’s name in the above list. +2. Approval of 2019 Omnibus Incentive Plan. +☐ FOR ☐ AGAINST ☐ ABSTAIN +DO NOT PRINT IN THIS AREA +(Stockholder Name & Address Data) +Address Change/Comments: (If you noted any Address Changes and/or Comments above, please mark box.) ☐ +Please indicate if you plan to attend this meeting ☐ +CONTROL NUMBER +3. Ratification of appointment of BDO USA, LLP as independent auditor for the year ending +December 31, 2019. +☐ FOR ☐ AGAINST ☐ ABSTAIN +4. Advisory Vote on 2018 Executive Compensation. +☐ FOR ☐ AGAINST ☐ ABSTAIN +5. Advisory Vote on Frequency of Future Advisory Votes on Executive Compensation. +☐ 1 YEAR ☐ 2 YEARS ☐ 3 YEARS ☐ ABSTAIN +THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” FOR EACH OF PROPOSALS 1-4 AND A VOTE OF “1 YEAR” FOR PROPOSAL 5. +UNLESS CONTRARY INSTRUCTIONS ARE GIVEN, THE SHARES REPRESENTED BY +THIS PROXY WILL BE VOTED “FOR” EACH DIRECTOR NOMINEE AND VOTED “FOR” EACH OF PROPOSALS 2-4 AND A VOTE OF “1 YEAR” FOR PROPOSAL 5. IF ANY OTHER BUSINESS IS PRESENTED AT THE MEETING, THIS PROXY WILL BE VOTED BY THE NAMED PROXIES IN +ACCORDANCE WITH THEIR BEST JUDGMENT WITH RESPECT TO THOSE MATTERS. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE MEETING. +EVEN IF YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND RETURN THIS +PROXY IN THE ACCOMPANYING ENVELOPE. YOUR SIGNATURE ACKNOWLEDGES PRIOR RECEIPT OF THE NOTICE OF MEETING, PROXY STATEMENT AND ANNUAL REPORT TO STOCKHOLDERS. +Number of voting shares: +Date +Signature +Signature +(Joint Owners) +(Please sign exactly as shown on your stock certificate and on the envelope in which this proxy was mailed. When signing +as partner, corporate officer, attorney, executor, administrator, trustee, guardian, etc., give full title as such and sign your own name as well. If stock is held jointly, each joint owner should sign.) +PLEASE DETACH ALONG PERFORATED LINE AND MAIL IN THE ENVELOPE PROVIDED. +CONTROL NUMBER +PROXY VOTING INSTRUCTIONS +Please have your 11-digit control number ready when voting by Internet or Telephone +INTERNET +Vote Your Proxy on the Internet: +Go to www.aalvote.com/CEMI +Have your proxy card available +when you access the above +website. Follow the prompts to +vote your shares. +TELEPHONE +Vote Your Proxy by Phone: +Call 1 (866) 804-9616 +Use any touch-tone telephone to +vote your proxy. Have your proxy +card available when you call. +Follow the voting instructions to +vote your shares. +MAIL +Vote Your Proxy by Mail: +Mark, sign, and date your proxy +card, then detach it, and return +it in the postage-paid envelope +provided. +Contents +Appendix A +CHEMBIO DIAGNOSTICS, INC. +2019 OMNIBUS INCENTIVE PLAN +Chembio Diagnostics, Inc., a Nevada corporation, sets forth herein the terms of its +2019 Omnibus Incentive Plan, as follows: +1. +PURPOSE +The Plan is intended to enhance the Company’s and its Affiliates’ (as defined herein) +ability to attract and retain highly qualified officers, Non-Employee Directors (as defined herein), key employees, consultants and advisors, and to motivate such officers, Non-Employee Directors, key employees, consultants and +advisors to serve the Company and its Affiliates and to expend maximum effort to improve the business results and earnings of the Company, by providing to such persons an opportunity to acquire or increase a direct proprietary +interest in the operations and future success of the Company. To this end, the Plan provides for the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, unrestricted stock, other stock-based +awards and cash awards. Any of these awards may, but need not, be made as performance incentives to reward attainment of performance goals in accordance with the terms hereof. Stock options granted under the Plan may be non-qualified +stock options or incentive stock options, as provided herein. Upon becoming effective, the Plan replaces, and no further awards shall be made under, the Predecessor Plan (as defined herein). +2. +DEFINITIONS +For purposes of interpreting the Plan and related documents (including Award +Agreements), the following definitions shall apply: +2.1 “ Affiliate ” means any company or other trade or business that “controls,” is “controlled by” or is “under common control” with the Company within the meaning of Rule 405 of Regulation C under the +Securities Act, including, without limitation, any Subsidiary. +2.2 “ Award ” means a grant of an Option, Stock Appreciation Right, Restricted Stock, Restricted Stock Unit, or Other Stock-based Award +under the Plan. +2.3 “ Award Agreement ” means a written agreement between the Company and a Grantee, or notice from the Company or an Affiliate to a +Grantee that evidences and sets forth the terms and conditions of an Award. +2.4 “ Beneficial Owner ” means “Beneficial Owner” as defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act; except that, in +calculating the beneficial ownership of any particular Person, such Person shall be deemed to have beneficial ownership of all securities that such Person has the right to acquire by conversion or exercise of other securities, +whether such right is currently exercisable or is exercisable only after the passage of time. The term “Beneficial Ownership” has a corresponding meaning. +2.5 “ Board ” means the Board of Directors of the Company. +2.6 “ Change in Control ” shall have the meaning set forth in Section 14.3.2 . +2.7 “ Code ” means the Internal Revenue Code of 1986, as now in effect or as hereafter amended. References to the Code shall include the +valid and binding governmental regulations, court decisions and other regulatory and judicial authority issued or rendered thereunder. +2.8 “ Committee ” means the Compensation Committee of the Board or any committee or other person or persons designated by the Board to administer the Plan. The Board will cause the +Committee to satisfy the applicable requirements of any stock exchange on which the Common Stock may then be listed. For purposes of Awards to Grantees who are subject to Section 16 of the Exchange Act, Committee means all of the +members of the Committee who are “non-employee directors” within the meaning of Rule 16b-3 adopted under the Exchange Act. All references in the Plan to the Board shall mean such Committee or the Board. +A-1 +Contents +2.9 “ Company ” means Chembio Diagnostics, Inc., a Nevada corporation, or any successor corporation. +2.10 “ Common Stock ” or “ Stock ” means a share of common stock of the Company, par value $2.00 per share. +2.11 “ Corporate Transaction ” means a reorganization, merger, statutory share exchange, consolidation, sale of all or substantially all of +the Company’s assets, or the acquisition of assets or stock of another entity by the Company, or other corporate transaction involving the Company or any of its Subsidiaries. +2.12 “ Effective Date ” means June 18, 2019, the date the Plan was approved by the Company’s stockholders. +2.13 “ Exchange Act ” means the Securities Exchange Act of 1934, as now in effect or as hereafter amended. +2.14 “ Fair Market Value ” of a share of Common Stock as of a particular date means (i) if the Common Stock is listed on a national +securities exchange, the closing or last price of the Common Stock on the composite tape or other comparable reporting system for the applicable date, or if the applicable date is not a trading day, the trading day immediately +preceding the applicable date, or (ii) if the shares of Common Stock are not then listed on a national securi-ties ex-change, the closing or last price of the Common Stock quoted by an established quotation service for +over-the-counter securities, or (iii) if the shares of Common Stock are not then listed on a national securi-ties ex-change or quoted by an established quotation service for over-the-counter securities, -or the value of such shares +is not oth-er-wise determi-nable, such value as de-ter-mined by the Board in good faith in its sole discretion. +2.15 “ Family Member ” means a person who is a spouse, former spouse, child, stepchild, grandchild, parent, stepparent, grandparent, niece, +nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother, sister, brother-in-law, or sister-in-law, including adoptive relationships, of the applicable individual, any person sharing the applicable individual’s +household (other than a tenant or employee), a trust in which any one or more of these persons have more than fifty percent of the beneficial interest, a foundation in which any one or more of these persons (or the applicable +individual) control the management of assets, and any other entity in which one or more of these persons (or the applicable individual) own more than fifty percent of the voting interests. +2.16 “ Grant Date ” means, as determined by the Board, the latest to occur of (i) the date as of which the Board approves an Award, (ii) +the date on which the recipient of an Award first becomes eligible to receive an Award under Section 6 hereof, or (iii) such other date as may be specified by the Board in the Award Agreement. +2.17 “ Grantee ” means a person who receives or holds an Award under the Plan. +2.18 “ Incentive Stock Option ” means an “incentive stock option” within the meaning of Section 422 of the Code, or the corresponding +provision of any subsequently enacted tax statute, as amended from time to time. +2.19 “ Non-Employee Director ” means a member of the Board who is not an officer or employee of the Company or any Subsidiary. +2.20 “ Non-qualified Stock Option ” means an Option that is not an Incentive Stock Option. +2.21 +“ Option ” means an option to purchase one or more shares of Stock pursuant to the Plan. +A-2 +Contents +2.22 “ Option Price ” means the exercise price for each share of Stock subject to an Option. +2.23 “ Other Stock-based Awards ” means Awards consisting of Stock units, or other Awards, valued in whole or in part by reference to, or +otherwise based on, Common Stock, other than Options, Stock Appreciation Rights, Restricted Stock, and Restricted Stock Units. +2.24 “ Person ” means an individual, entity or group within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act. +2.25 “ Plan ” means this Chembio Diagnostics, Inc. 2019 Omnibus Incentive Plan, as amended from time to time. +2.26 “ Predecessor Plan ” means the Chembio Diagnostics, Inc. 2014 Stock Incentive Plan. +2.27 “ Purchase Price ” means the purchase price for each share of Stock pursuant to a grant of Restricted Stock. +2.28 “ Restricted Period ” shall have the meaning set forth in Section 10.1 hereof . +2.29 “ Restricted Stock ” means shares of Stock, awarded to a Grantee pursuant to Section 10 hereof. +2.30 “ Restricted Stock Unit ” means a bookkeeping entry representing the equivalent of shares of Stock, awarded to a Grantee pursuant to Section 10 hereof. +2.31 “ SAR Exercise Price ” means the per share exercise price of a SAR granted to a Grantee under Section 9 hereof. +2.32 “ SEC ” means the United States Securities and Exchange Commission. +2.33 “ Section 409A ” means Section 409A of the Code. +2.34 “ Securities Act ” means the Securities Act of 1933, as now in effect or as hereafter amended. +2.35 “ Separation from Service ” means a termination of Service by a Service Provider, as determined by the Board, which determination +shall be final, binding and conclusive; provided if any Award governed by Section 409A is to be distributed on a Separation from Service, then the definition of Separation from Service for such purposes shall comply with the +definition provided in Section 409A. +2.36 “ Service ” means service as a Service Provider to the Company or an Affiliate. Unless otherwise stated in the applicable Award +Agreement, a Grantee’s change in position or duties shall not result in interrupted or terminated Service, so long as such Grantee continues to be a Service Provider to the Company or an Affiliate. +2.37 “ Service Provider ” means an employee, officer, Non-Employee Director, consultant or advisor of the Company or an Affiliate. +2.38 “ Stock Appreciation Right ” or “SAR” means a right granted to a Grantee under Section 9 hereof. +2.39 “ Subsidiary ” means any “subsidiary corporation” of the Company within the meaning of Section 424(f) of the Code. +2.40 +“ Substitute +Award ” means any Award granted in assumption of or in substitution for an award of a company or business acquired by the Company or a Subsidiary or with +which the Company or an Affiliate combines. +A-3 +Contents +2.41 “ Ten Percent Stockholder ” means an individual who owns more than ten percent (10%) of the total combined voting power of all classes +of outstanding stock of the Company, its parent or any of its Subsidiaries. In determining stock ownership, the attribution rules of Section 424(d) of the Code shall be applied. +2.42 “ Termination Date ” means the date that is ten (10) years after the Effective Date, unless the Plan is earlier terminated by the +Board under Section 5.2 hereof. +3. +ADMINISTRATION OF THE PLAN +3.1 General . +The Board shall have such powers and authorities related to the administration of the +Plan as are consistent with the Company’s certificate of incorporation and bylaws and applicable law. The Board shall have the power and authority to delegate its responsibilities hereunder to the Committee, which shall have full +authority to act in accordance with its charter, and with respect to the authority of the Board to act hereunder, all references to the Board shall be deemed to include a reference to the Committee, to the extent such power or +responsibilities have been delegated. Except as otherwise may be required by applicable law, regulatory requirement or the certificate of incorporation or the bylaws of the Company, the Board shall have full power and authority to +take all actions and to make all determinations required or provided for under the Plan, any Award or any Award Agreement, and shall have full power and authority to take all such other actions and make all such other determinations +not inconsistent with the specific terms and provisions of the Plan that the Board deems to be necessary or appropriate to the administration of the Plan. The Committee shall administer the Plan; provided that, the Board shall retain +the right to exercise the authority of the Committee to the extent consistent with applicable law and the applicable requirements of any securities exchange on which the Common Stock may then be listed. The interpretation and +construction by the Board of any provision of the Plan, any Award or any Award Agreement shall be final, binding and conclusive. Without limitation, the Board shall have full and final authority, subject to the other terms and +conditions of the Plan, to: +(i) designate Grantees; +(ii) determine the type or types of Awards to be made to a Grantee; +(iii) determine the number of shares of Stock to be subject to an Award; +(iv) establish the terms and conditions of each Award (including, but not limited to, +the Option Price of any Option, the nature and duration of any restriction or condition (or provision for lapse thereof) relating to the vesting, exercise, transfer, or forfeiture of an Award or the shares of Stock subject thereto, +and any terms or conditions that may be necessary to qualify Options as Incentive Stock Options); +(v) prescribe the form of each Award Agreement; and +(vi) amend, modify, or supplement the terms of any outstanding Award including the +authority, in order to effectuate the purposes of the Plan, to modify Awards to foreign nationals or individuals who are employed outside the United States to recognize differences in local law, tax policy, or custom. +To the extent permitted by applicable law, the Board may delegate its authority as identified herein to any +individual or committee of individuals (who need not be directors), including without limitation the authority to make Awards to Grantees who are not subject to Section 16 of the Exchange Act or who are not Covered Employees. To the +extent that the Board delegates its authority to make Awards as provided by this Section 3.1 , all references in the Plan to the Board’s authority to make +Awards and determinations with respect thereto shall be deemed to include the Board’s delegate. Any such delegate shall serve at the pleasure of, and may be removed at any time by the Board. +A-4 +Contents +3.2 No Repricing. +Notwithstanding any provision herein to the contrary, the repricing of Options or SARs +is prohibited without prior approval of the Company’s stockholders. For this purpose, a “repricing” means any of the following (or any other action that has the same effect as any of the following): (i) changing the terms of an +Option or SAR to lower its Option Price or SAR Exercise Price; (ii) any other action that is treated as a “repricing” under generally accepted accounting principles; and (iii) repurchasing for cash or canceling an Option or SAR at a +time when its Option Price or SAR Exercise Price is greater than the Fair Market Value of the underlying shares in exchange for another Award, unless the cancellation and exchange occurs in connection with a change in capitalization +or similar change under Section 14 . A cancellation and exchange under clause (iii) would be considered a “repricing” regardless of whether it is treated as +a “repricing” under generally accepted accounting principles and regardless of whether it is voluntary on the part of the Grantee. +3.3 Clawbacks. +Awards shall be subject to the requirements of (i) Section 954 of the Dodd-Frank Wall +Street Reform and Consumer Protection Act (regarding recovery of erroneously awarded compensation) and any implementing rules and regulations thereunder, (ii) similar rules under the laws of any other jurisdiction, (iii) any +compensation recovery policies adopted by the Company to implement any such requirements or (iv) any other compensation recovery policies as may be adopted from time to time by the Company, all to the extent determined by the +Committee in its discretion to be applicable to a Grantee. +3.4 Minimum Vesting Conditions. +Notwithstanding any other provision of the Plan to the contrary, equity-based Awards +granted under the Plan shall vest no earlier than the first anniversary of the date the Award is granted, excluding, for this purpose, any (i) Substitute Awards, (ii) shares delivered in lieu of fully vested cash incentive +compensation under any applicable plan or program of the Company, and (iii) Awards to Non-Employee Directors that vest on the earlier of the one-year anniversary of the date of grant or the next annual meeting of stockholders +(provided that such vesting period under this clause (iii) may not be less than 50 weeks after grant); provided, that, the Board may grant equity-based Awards without regard to the foregoing minimum vesting requirement with respect to +a maximum of five percent (5%) of the available share reserve authorized for issuance under the Plan pursuant to Section 4.1 (subject to adjustment under Section 14 ); and, provided further, for the avoidance of doubt, that the foregoing restriction does not apply to the Board’s discretion to provide for +accelerated exercisability or vesting of any Award, including in cases of retirement, death, disability or a Change in Control, in the terms of the Award or otherwise. +3.5 Deferral Arrangement. +The Board may permit or require the deferral of any Award payment into a deferred +compensation arrangement, subject to such rules and procedures as it may establish and in accordance with Section 409A, which may include provisions for the payment or crediting of interest or dividend equivalents, including +converting such credits into deferred Stock units. +3.6 No Liability. +No member of the Board or of the Committee shall be liable for any action or +determination made in good faith with respect to the Plan, any Award or Award Agreement. +3.7 Book Entry. +Notwithstanding any other provision of this Plan to the contrary, the Company may elect to satisfy any +requirement under this Plan for the delivery of stock certificates through the use of book-entry. +A-5 +Contents +4. +STOCK SUBJECT TO THE PLAN +4.1 Authorized Number of Shares +Subject to adjustment under Section +14 , the total number of shares of Common Stock authorized to be awarded under the Plan shall not exceed 2,400,000. In addition, shares of Common +Stock underlying any outstanding award granted under the Predecessor Plan that, following the Effective Date, expires, or is terminated, surrendered or forfeited for any reason without issuance of such shares shall be available for +the grant of new Awards under this Plan. As provided in Section 1 , no new awards shall be granted under the Predecessor Plan following the Effective Date. +Shares issued under the Plan may consist in whole or in part of authorized but unissued shares, treasury shares, or shares purchased on the open market or otherwise, all as determined by the Company from time to time. +4.2 Share Counting +4.2.1 General +Each share of Common Stock granted in connection with an Award shall be counted as one +share against the limit in Section 4.1 , subject to the provisions of this Section 4.2 . +4.2.2 Cash-Settled Awards +Any Award settled in cash shall not be counted as shares of Common Stock for any +purpose under this Plan. +4.2.3 Expired or Terminated Awards +If any Award under the Plan expires, or is terminated, surrendered or forfeited, in +whole or in part, without issuance or delivery of vested shares, the unissued or surrendered Common Stock covered by such Award shall again be available for the grant of Awards under the Plan. +4.2.4 Payment of Option Price or Tax Withholding in +Shares +The full number of shares of Common Stock with respect to which an Option or SAR is +granted shall count against the aggregate number of shares available for grant under the Plan. Accordingly, if in accordance with the terms of the Plan, a Grantee pays the Option Price for an Option by either tendering previously +owned shares or having the Company withhold shares, then such shares surrendered to pay the Option Price shall continue to count against the aggregate number of shares available for grant under the Plan set forth in Section 4.1 above. In addition, if in accordance with the terms of the Plan, a Grantee satisfies any tax withholding requirement with respect to any taxable +event arising as a result of this Plan for any Award (including Restricted Stock and Restricted Stock Units) by either tendering previously owned shares or having the Company withhold shares, then such shares surrendered to satisfy +such tax withholding requirements shall continue to count against the aggregate number of shares available for grant under the Plan set forth in Section 4.1 +above. Any shares of Common Stock repurchased by the Company with cash proceeds from the exercise of Options shall not be added back to the pool of shares available for grant under the Plan set forth in Section 4.1 above. +4.2.5 Substitute Awards +In the case of any Substitute Award, such Substitute Award shall not be counted against the number of +shares reserved under the Plan. +A-6 +Contents +4.3 Award Limits +4.3.1 Incentive Stock Options. +Subject to adjustment under Section +14 , 2,400,000 shares of Common Stock available for issuance under the Plan shall be available for issuance under Incentive Stock Options. +5. +EFFECTIVE DATE, DURATION, AND AMENDMENTS +5.1 Term. +The Plan shall be effective as of the Effective Date, provided that it has been +approved by the Company’s stockholders. The Plan shall terminate automatically on the ten (10) year anniversary of the Effective Date and may be terminated on any earlier date as provided in Section 5.2 . +5.2 Amendment and Termination of the Plan. +The Board may, at any time and from time to time, amend, suspend, or terminate the +Plan as to any Awards which have not been made. An amendment shall be contingent on approval of the Company’s stockholders to the extent stated by the Board, required by applicable law or required by applicable stock exchange listing +requirements. Notwithstanding the foregoing, any amendment to Section 3.2 shall +be contingent upon the approval of the Company’s stockholders. No Awards shall be made after the Termination Date. The applicable terms of the Plan, and any terms and conditions applicable to Awards granted prior to the Termination +Date shall survive the termination of the Plan and continue to apply to such Awards. No amendment, suspension, or termination of the Plan shall, without the consent of the Grantee, materially impair rights or obligations under any +Award theretofore awarded. +6. +AWARD ELIGIBILITY AND LIMITATIONS +6.1 Service Providers. +Subject to this Section +6.1 , Awards may be made to any Service Provider, including any Service Provider who is an officer, Non-Employee Director, consultant or advisor of the Company or of any Affiliate, as the Board shall determine and designate +from time to time in its discretion. +6.2 Successive Awards. +An eligible person may receive more than one Award, subject to such restrictions as +are provided herein. +6.3 Stand-Alone, Additional, Tandem, and Substitute Awards. +Awards may, in the discretion of the Board, be granted either alone or in addition to, in tandem with, or +in substitution or exchange for, any other Award or any award granted under another plan of the Company, any Affiliate, or any business entity to be acquired by the Company or an Affiliate, or any other right of a Grantee to receive +payment from the Company or any Affiliate. Such additional, tandem, and substitute or exchange Awards may be granted at any time. If an Award is granted in substitution or exchange for another Award, the Board shall have the right to +require the surrender of such other Award in consideration for the grant of the new Award. Subject to Section 3.2 , the Board shall have the right, in its discretion, to make Awards in substitution or exchange for any other award under another plan of the Company, any Affiliate, or any business entity to be +acquired by the Company or an Affiliate. In addition, Awards may be granted in lieu of cash compensation, including in lieu of cash amounts payable under other plans of the Company or any Affiliate, in which the value of Stock subject +to the Award is equivalent in value to the cash compensation (for example, Restricted Stock Units or Restricted Stock). +A-7 +Contents +7. +AWARD AGREEMENT +Each Award shall be evidenced by an Award Agreement, in such form or forms as the +Board shall from time to time determine, consistent with the terms of the Plan. Without limiting the foregoing, an Award Agreement may be provided in the form of a notice which provides that acceptance of the Award constitutes +acceptance of all terms of the Plan and the notice. Award Agreements granted from time to time or at the same time need not contain similar provisions but shall be consistent with the terms of the Plan. Each Award Agreement +evidencing an Award of Options shall specify whether such Options are intended to be Non-qualified Stock Options or Incentive Stock Options, and in the absence of such specification such options shall be deemed Non-qualified Stock +Options. +8. +TERMS AND CONDITIONS OF OPTIONS +8.1 Option Price. +The Option Price of each Option shall be fixed by the Board and stated in the related +Award Agreement. The Option Price of each Option (except those that constitute Substitute Awards) shall be at least the Fair Market Value on the Grant Date of a share of Stock; provided , however , that in the event that a Grantee is a Ten Percent Stockholder as of the Grant Date, the Option Price of an Option granted to such Grantee that is +intended to be an Incentive Stock Option shall be not less than 110 percent of the Fair Market Value of a share of Stock on the Grant Date. In no case shall the Option Price of any Option be less than the par value of a share of +Stock. +8.2 Vesting. +Subject to Section +8.3 hereof, each Option shall become exercisable at such times and under such conditions (including, without limitation, performance requirements) +as shall be determined by the Board and stated in the Award Agreement. +8.3 Term. +Each Option shall terminate, and all rights to purchase shares of Stock thereunder +shall cease, upon the expiration of ten (10) years from the Grant Date, or under +such circumstances and on such date prior thereto as is set forth in the Plan or as may be fixed by the Board and stated in the related Award Agreement; provided , +however , that in the event that the Grantee is a Ten Percent Stockholder, an Option granted to such Grantee that is intended to be an Incentive Stock Option +at the Grant Date shall not be exercisable after the expiration of five (5) years from its Grant Date. +8.4 Limitations on Exercise of Option. +Notwithstanding any other provision of the Plan, in no event may any Option be +exercised, in whole or in part, (i) prior to the date the Plan is approved by the stockholders of the Company as provided herein or (ii) after the occurrence of an event which results in termination of the Option. +8.5 Method of Exercise. +An Option that is exercisable may be exercised by the Grantee’s delivery of a notice +of exercise to the Company, setting forth the number of shares of Stock with respect to which the Option is to be exercised, accompanied by full payment for the shares. To be effective, notice of exercise must be made in accordance +with procedures established by the Company from time to time. +8.6 Rights of Holders of Options. +Unless otherwise stated in the related Award Agreement, an individual holding or exercising an Option shall +have none of the rights of a stockholder (for example, the right to receive cash or dividend payments or distributions attributable to the subject shares of Stock or to direct the voting of the subject shares of Stock) until the +shares of Stock covered thereby are fully paid and issued to her/him. Except as provided in Section 14 hereof or the related Award Agreement, no adjustment +shall be made for dividends, distributions or other rights for which the record date is prior to the date of such issuance. +A-8 +Contents +8.7 Delivery of Stock Certificates. +Promptly after the exercise of an Option by a Grantee and the payment in full of the +Option Price, such Grantee shall be entitled, subject to any transaction fees, as required, to the issuance of a stock certificate or certificates evidencing his or her ownership of the shares of Stock subject to the Option. +8.8 Limitations on Incentive Stock Options. +An Option shall constitute an Incentive Stock Option only (i) if the Grantee of such +Option is an employee of the Company or any Subsidiary of the Company; (ii) to the extent specifically provided in the related Award Agreement; and (iii) to the extent that the aggregate Fair Market Value (determined at the time the +Option is granted) of the shares of Stock with respect to which all Incentive Stock Options held by such Grantee become exercisable for the first time during any calendar year (under the Plan and all other plans of the Grantee’s +employer and its Affiliates) does not exceed $100,000. This limitation shall be applied by taking Options into account in the order in which they were granted. +9. +TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS +9.1 Right to Payment. +A SAR shall confer on the Grantee a right to receive, upon exercise thereof, the +excess of (i) the Fair Market Value of one share of Stock on the date of exercise over (ii) the SAR Exercise Price, as determined by the Board. The Award Agreement for a SAR (except those that constitute Substitute Awards) shall +specify the SAR Exercise Price, which shall be fixed on the Grant Date as not less than the Fair Market Value of a share of Stock on that date. SARs may be granted alone or in conjunction with all or part of an Option or at any +subsequent time during the term of such Option or in conjunction with all or part of any other Award. A SAR granted in tandem with an outstanding Option following the Grant Date of such Option shall have a grant price that is equal to +the Option Price; provided , however , that the SAR’s grant price may not be +less than the Fair Market Value of a share of Stock on the Grant Date of the SAR to the extent required by Section 409A. +9.2 Other Terms. +The Board shall determine at the Grant Date, the time or times at which and the +circumstances under which a SAR may be exercised in whole or in part (including based on achievement of performance goals and/or future service requirements), the time or times at which SARs shall cease to be or become exercisable +following Separation from Service or upon other conditions, the method of exercise, whether or not a SAR shall be in tandem or in combination with any other Award, and any other terms and conditions of any SAR. +9.3 Term of SARs. +The term of a SAR granted under the Plan shall be determined by the Board, in its sole +discretion; provided , however, that such term shall not exceed ten (10) years. +9.4 Payment of SAR Amount. +Upon exercise of a SAR, a Grantee shall be entitled to receive payment from the +Company (in cash or Stock, as determined by the Board) in an amount determined by multiplying: +(i) the difference between the Fair Market Value of a share of Stock on the date of exercise over the SAR Exercise Price; by +A-9 +Contents +(ii) +the number of shares of Stock with respect to which the SAR is exercised. +10. +TERMS AND CONDITIONS OF RESTRICTED STOCK AND RESTRICTED STOCK UNITS +10.1 Restrictions. +At the time of grant, the Board may, in its sole discretion, establish a period of +time (a “ Restricted Period ”) and any additional restrictions including the satisfaction of corporate or individual performance objectives applicable to an +Award of Restricted Stock or Restricted Stock Units as determined by the Board. Each Award of Restricted Stock or Restricted Stock Units may be subject to a different Restricted Period and additional restrictions. Neither Restricted +Stock nor Restricted Stock Units may be sold, transferred, assigned, pledged or otherwise encumbered or disposed of during the Restricted Period or prior to the satisfaction of any other applicable restrictions. +10.2 Restricted Stock Certificates. +The Company shall issue stock, in the name of each Grantee to whom Restricted Stock +has been granted, stock certificates or other evidence of ownership representing the total number of shares of Restricted Stock granted to the Grantee, as soon as reasonably practicable after the Grant Date. The Board may provide in +an Award Agreement that either (i) the Secretary of the Company shall hold such certificates for the Grantee’s benefit until such time as the Restricted Stock is forfeited to the Company or the restrictions lapse, or (ii) such +certificates shall be delivered to the Grantee; provided , however , that such +certificates shall bear a legend or legends that comply with the applicable securities laws and regulations and make appropriate reference to the restrictions imposed under the Plan and the Award Agreement. +10.3 Rights of Holders of Restricted Stock. +Unless the Board otherwise provides in an Award Agreement and subject to Section 16.12 , holders of Restricted Stock shall have rights as stockholders of the +Company, including voting and dividend rights. +10.4 Rights of Holders of Restricted Stock Units. +10.4.1 Settlement of Restricted Stock Units. +Restricted Stock Units may be settled in cash or Stock, as determined by the Board and +set forth in the Award Agreement. The Award Agreement shall also set forth whether the Restricted Stock Units shall be settled (i) within the time period specified for “short term deferrals” under Section 409A or (ii) otherwise within +the requirements of Section 409A, in which case the Award Agreement shall specify upon which events such Restricted Stock Units shall be settled. +10.4.2 Voting and Dividend Rights. +Unless otherwise stated in the applicable Award Agreement and subject to Section 16.12 , holders of Restricted Stock Units shall not have rights as stockholders of the Company, including no voting or dividend or dividend equivalents +rights. +10.4.3 Creditor’s Rights. +A holder of Restricted Stock Units shall have no rights other than those of a general creditor of the +Company. Restricted Stock Units represent an unfunded and unsecured obligation of the Company, subject to the terms and conditions of the applicable Award Agreement. +A-10 +Contents +10.5 Purchase of Restricted Stock. +The Grantee shall be required, to the extent required by applicable law, to purchase +the Restricted Stock from the Company at a Purchase Price equal to the greater of (i) the aggregate par value of the shares of Stock represented by such Restricted Stock or (ii) the Purchase Price, if any, specified in the related +Award Agreement. If specified in the Award Agreement, the Purchase Price may be deemed paid by Services already rendered. The Purchase Price shall be payable in a form described in Section 11 or, in the discretion of the Board, in consideration for past Services rendered. +10.6 Delivery of Stock. +Upon the expiration or termination of any Restricted Period and the satisfaction of +any other conditions prescribed by the Board, the restrictions applicable to shares of Restricted Stock or Restricted Stock Units settled in Stock shall lapse, and, unless otherwise provided in the Award Agreement, a stock certificate +for such shares shall be delivered, free of all such restrictions, to the Grantee or the Grantee’s beneficiary or estate, as the case may be. +11. +FORM OF PAYMENT FOR OPTIONS AND RESTRICTED STOCK +11.1 General Rule. +Payment of the Option Price for the shares purchased pursuant to the exercise of an +Option or the Purchase Price for Restricted Stock shall be made in cash or in cash equivalents acceptable to the Company, except as provided in this Section 11 . +11.2 Surrender of Stock. +To the extent the Award Agreement so provides, payment of the Option Price for shares +purchased pursuant to the exercise of an Option or the Purchase Price for Restricted Stock may be made all or in part through the tender to the Company of shares of Stock, which shares shall be valued, for purposes of determining the +extent to which the Option Price or Purchase Price for Restricted Stock has been paid thereby, at their Fair Market Value on the date of exercise or surrender. Notwithstanding the foregoing, in the case of an Incentive Stock Option, +the right to make payment in the form of already owned shares of Stock may be authorized only at the time of grant. +11.3 Cashless Exercise. +With respect to an Option only (and not with respect to Restricted Stock), to the +extent permitted by law and to the extent the Award Agreement so provides, payment of the Option Price may be made all or in part by delivery (on a form acceptable to the Company) of an irrevocable direction to a licensed securities +broker acceptable to the Company to sell shares of Stock and to deliver all or part of the sales proceeds to the Company in payment of the Option Price and any withholding taxes described in Section 16.3 . +11.4 Other Forms of Payment. +To the extent the Award Agreement so provides, payment of the Option Price or the +Purchase Price for Restricted Stock may be made in any other form that is consistent with applicable laws, regulations and rules, including, but not limited to, the Company’s withholding of shares of Stock otherwise due to the +exercising Grantee. +12. +OTHER STOCK-BASED AWARDS +12.1 Grant of Other Stock-based Awards. +Other Stock-based Awards may be granted either alone or in addition to or in conjunction with other Awards +under the Plan. Other Stock-based Awards may be granted in lieu of other cash or other compensation to which a Service Provider is entitled from the Company or may be used in the settlement of amounts payable in shares of Common +Stock under any other compensation plan or arrangement of the Company. Subject to the provisions of the Plan, the Committee shall have the sole and complete authority to determine the persons to whom and the time or times at which +such Awards shall be made, the number of shares of Common Stock to be granted pursuant to such Awards, and all other conditions of such Awards. Unless the Committee determines otherwise, any such Award shall be confirmed by an Award +Agreement, which shall contain such provisions as the Committee determines to be necessary or appropriate to carry out the intent of this Plan with respect to such Award. +A-11 +Contents +12.2 Terms of Other Stock-based Awards. +Any Common Stock subject to Awards made under this Section 12 may not be sold, assigned, transferred, pledged or otherwise encumbered prior to the date on which the shares are issued, or, if later, the date on which any applicable +restriction, performance or deferral period lapses. +13. +REQUIREMENTS OF LAW +13.1 General. +The Company shall not be required to sell or issue any shares of Stock under any Award +if the sale or issuance of such shares would constitute a violation by the Grantee, any other individual exercising an Option, or the Company of any provision of any law or regulation of any governmental authority, including without +limitation any federal or state securities laws or regulations. If at any time the Company shall determine, in its discretion, that the listing, registration or qualification of any shares subject to an Award upon any securities +exchange or under any governmental regulatory body is necessary or desirable as a condition of, or in connection with, the issuance or purchase of shares hereunder, no shares of Stock may be issued or sold to the Grantee or any other +individual exercising an Option pursuant to such Award unless such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Company, and any delay +caused thereby shall in no way affect the date of termination of the Award. Specifically, in connection with the Securities Act, upon the exercise of any Option or the delivery of any shares of Stock underlying an Award, unless a +registration statement under such Act is in effect with respect to the shares of Stock covered by such Award, the Company shall not be required to sell or issue such shares unless the Board has received evidence satisfactory to it +that the Grantee or any other individual exercising an Option may acquire such shares pursuant to an exemption from registration under the Securities Act. Any determination in this connection by the Board shall be final, binding, and +conclusive. The Company may, but shall in no event be obligated to, register any securities covered hereby pursuant to the Securities Act. The Company shall not be obligated to take any affirmative action in order to cause the +exercise of an Option or the issuance of shares of Stock pursuant to the Plan to comply with any law or regulation of any governmental authority. As to any jurisdiction that expressly imposes the requirement that an Option shall not +be exercisable until the shares of Stock covered by such Option are registered or are exempt from registration, the exercise of such Option (under circumstances in which the laws of such jurisdiction apply) shall be deemed conditioned +upon the effectiveness of such registration or the availability of such an exemption. +13.2 Rule 16b-3. +During any time when the Company has a class of equity security registered under Section 12 of the Exchange +Act, it is the intent of the Company that Awards and the exercise of Options granted to officers and directors hereunder will qualify for the exemption provided by Rule 16b-3 under the Exchange Act. To the extent that any provision of +the Plan or action by the Board or Committee does not comply with the requirements of Rule 16b-3, it shall be deemed inoperative to the extent permitted by law and deemed advisable by the Board, and shall not affect the validity of +the Plan. In the event that Rule 16b-3 is revised or replaced, the Board may exercise its discretion to modify this Plan in any respect necessary to satisfy the requirements of, or to take advantage of any features of, the revised +exemption or its replacement. +A-12 +Contents +14. +EFFECT OF CHANGES IN CAPITALIZATION +14.1 Changes in Stock. +If (i) the number of outstanding shares of Stock is increased or decreased or the +shares of Stock are changed into or exchanged for a different number or kind of shares or other securities of the Company on account of any recapitalization, reclassification, stock split, reverse split, combination of shares, +exchange of shares, stock dividend or other distribution payable in capital stock, or other increase or decrease in such shares effected without receipt of consideration by the Company occurring after the Effective Date or (ii) there +occurs any spin-off, split-up, extraordinary cash dividend or other distribution of assets by the Company, the number and kinds of shares for which grants of Awards may be made under the Plan (including the per-Grantee maximums set +forth in Section 4 ) shall be equitably adjusted by the Company; provided that any such adjustment shall comply with Section 409A. In addition, in the event +of any such increase or decease in the number of outstanding shares or other transaction described in clause (ii) above, the number and kind of shares for which Awards are outstanding and the Option Price per share of outstanding +Options and SAR Exercise Price per share of outstanding SARs shall be equitably adjusted; provided that any such adjustment shall comply with Section 409A. +14.2 Effect of Certain Transactions. +Except as otherwise provided in an Award Agreement and subject to the provisions of Section 14.3 , in the event of a Corporate Transaction, the Plan and the Awards issued hereunder shall continue in effect in accordance with their respective +terms, except that following a Corporate Transaction either (i) each outstanding Award shall be treated as provided for in the agreement entered into in connection with the Corporate Transaction or (ii) if not so provided in such +agreement, each Grantee shall be entitled to receive in respect of each share of Common Stock subject to any outstanding Awards, upon exercise or payment or transfer in respect of any Award, the same number and kind of stock, +securities, cash, property or other consideration that each holder of a share of Common Stock was entitled to receive in the Corporate Transaction in respect of a share of Common stock; provided , however , that, unless otherwise determined by the Committee, such stock, securities, cash, property or other +consideration shall remain subject to all of the conditions, restrictions and performance criteria which were applicable to the Awards prior to such Corporate Transaction. Without limiting the generality of the foregoing, the +treatment of outstanding Options and SARs pursuant to this Section 14.2 in connection with a Corporate Transaction in which the consideration paid or +distributed to the Company’s stockholders is not entirely shares of common stock of the acquiring or resulting corporation may include the cancellation of outstanding Options and SARs upon consummation of the Corporate Transaction as +long as, at the election of the Committee, (i) the holders of affected Options and SARs have been given a period of at least fifteen days prior to the date of the consummation of the Corporate Transaction to exercise the Options or +SARs (to the extent otherwise exercisable) or (ii) the holders of the affected Options and SARs are paid (in cash or cash equivalents) in respect of each Share covered by the Option or SAR being canceled an amount equal to the excess, +if any, of the per share price paid or distributed to stockholders in the Corporate Transaction (the value of any non-cash consideration to be determined by the Committee in its sole discretion) over the Option Price or SAR Exercise +Price, as applicable. For avoidance of doubt, (1) the cancellation of Options and SARs pursuant to clause (ii) of the preceding sentence may be effected notwithstanding anything to the contrary contained in this Plan or any Award +Agreement and (2) if the amount determined pursuant to clause (ii) of the preceding sentence is zero or less, the affected Option or SAR may be cancelled without any payment therefore. The treatment of any Award as provided in this Section 14.2 shall be conclusively presumed to be appropriate for purposes of Section 14.1 . +14.3 Change in Control +14.3.1 Consequences of a Change in Control +In the event of a Change in Control of the Company, the Board, in its discretion, may, at any time an Award +is granted, or at any time thereafter, (i) accelerate the time period relating to the exercise or vesting of the Award; or (ii) take one or more of the following actions, which may vary among individual Grantees: (A) provide for the +purchase of the Award for an amount of cash or other property that could have been received upon the exercise or vesting of the Award (less any applicable Option Price or SAR Exercise Price in the cash of Options and SARs); (B) adjust +the terms of the Awards in a manner determined by the Board to reflect the Change in Control; (C) cause the Awards to be assumed, or new rights substituted therefor, by another entity, through the continuance of the Plan and the +assumption of outstanding Awards, or the substitution for such Awards of comparable value covering shares of a successor corporation, with appropriate adjustments as to the number and kind of shares and exercise prices, in which event +the Plan and such Awards, or the new options and rights substituted therefor, shall continue in the manner and under the terms so provided; (D) accelerate the time at which Options or SARs then outstanding may be exercised so that +such Options and SARs may be exercised for a limited period of time on or before a specified date fixed by the Board, after which specified date, all unexercised Options and SARs shall terminate; or (E) make such other provision as +the Board may consider equitable. +A-13 +Contents +14.3.2 Change in Control Defined +Except as may otherwise be defined in an Award Agreement, a “ Change in Control ” shall mean the occurrence of any of the following events: (i) the acquisition, directly or indirectly, by any Person or group (within the meaning of Section +13(d)(3) of the Exchange Act) of the Beneficial Ownership of more than fifty percent of the outstanding securities of the Company; (ii) a merger or consolidation in which the Company is not the surviving entity, except for a +transaction the principal purpose of which is to change the state in which the Company is incorporated; (iii) the sale, transfer or other disposition of all or substantially all of the assets of the Company; (i) a complete liquidation +or dissolution of the Company; or (v) any reverse merger in which the Company is the surviving entity but in which securities possessing more than fifty percent of the total combined voting power of the Company’s outstanding +securities are transferred to a Person or Persons different from the Persons holding those securities immediately prior to such merger. +Notwithstanding the foregoing, if it is determined that an Award hereunder is subject +to the requirements of Section 409A and payable upon a Change in Control, the Company will not be deemed to have undergone a Change in Control unless the Company is deemed to have undergone a “change in control event” pursuant to the +definition of such term in Section 409A. +14.4 Adjustments +Adjustments under this Section 14 related to shares of Stock or securities of the Company shall be made by the Board, whose determination in that respect shall be final, binding and conclusive. No fractional shares or other securities shall +be issued pursuant to any such adjustment, and any fractions resulting from any such adjustment shall be eliminated in each case by rounding downward to the nearest whole share. +15. +NO LIMITATIONS ON COMPANY +The making of Awards pursuant to the Plan shall not affect or limit in any way the +right or power of the Company to make adjustments, reclassifications, reorganizations, or changes of its capital or business structure or to merge, consolidate, dissolve, or liquidate, or to sell or transfer all or any part of its +business or assets. +16. +TERMS APPLICABLE GENERALLY TO AWARDS GRANTED UNDER THE PLAN +16.1 Disclaimer of Rights. +No provision in the Plan or in any Award Agreement shall be construed to confer upon any individual the +right to remain in the employ or service of the Company or any Affiliate, or to interfere in any way with any contractual or other right or authority of the Company either to increase or decrease the compensation or other payments to +any individual at any time, or to terminate any employment or other relationship between any individual and the Company. In addition, notwithstanding anything contained in the Plan to the contrary, unless otherwise stated in the +applicable Award Agreement, no Award granted under the Plan shall be affected by any change of duties or position of the Grantee, so long as such Grantee continues to be a Service Provider. The obligation of the Company to pay any +benefits pursuant to this Plan shall be interpreted as a contractual obligation to pay only those amounts described herein, in the manner and under the conditions prescribed herein. The Plan shall in no way be interpreted to require +the Company to transfer any amounts to a third party trustee or otherwise hold any amounts in trust or escrow for payment to any Grantee or beneficiary under the terms of the Plan. +A-14 +Contents +16.2 Nonexclusivity of the Plan. +Neither the adoption of the Plan nor the submission of the Plan to the stockholders of +the Company for approval shall be construed as creating any limitations upon the right and authority of the Board to adopt such other incentive compensation arrangements (which arrangements may be applicable either generally to a +class or classes of individuals or specifically to a particular individual or particular individuals), including, without limitation, the granting of stock options as the Board in its discretion determines desirable. +16.3 Withholding Taxes. +The Company or an Affiliate, as the case may be, shall have the right to deduct from +payments of any kind otherwise due to a Grantee any federal, state, or local taxes of any kind required by law to be withheld (i) with respect to the vesting of or other lapse of restrictions applicable to an Award, (ii) upon the +issuance of any shares of Stock upon the exercise of an Option or SAR, or (iii) otherwise due in connection with an Award. At the time of such vesting, lapse, or exercise, the Grantee shall pay to the Company or the Affiliate, as the +case may be, any amount that the Company or the Affiliate may reasonably determine to be necessary to satisfy such withholding obligation. Subject to the prior approval of the Company or the Affiliate, which may be withheld by the +Company or the Affiliate, as the case may be, in its sole discretion, the Grantee may elect to satisfy such obligations, or the Company may require such obligations (up to maximum statutory rates) to be satisfied, in whole or in part, +(i) by causing the Company or the Affiliate to withhold the number of shares of Stock otherwise issuable to the Grantee as may be necessary to satisfy such withholding obligation or (ii) by delivering to the Company or the Affiliate +shares of Stock already owned by the Grantee. The shares of Stock so delivered or withheld shall have an aggregate Fair Market Value equal to such withholding obligations (up to maximum statutory rates). The Fair Market Value of the +shares of Stock used to satisfy such withholding obligation shall be determined by the Company or the Affiliate as of the date that the amount of tax to be withheld is to be determined. A Grantee who has made an election pursuant to +this Section 16.3 may satisfy his or her withholding obligation only with shares of Stock that are not subject to any repurchase, forfeiture, unfulfilled +vesting, or other similar requirements. +16.4 Captions. +The use of captions in this Plan or any Award Agreement is for the convenience of +reference only and shall not affect the meaning of any provision of the Plan or any Award Agreement. +16.5 Other Provisions. +Each Award Agreement may contain such other terms and conditions not inconsistent with +the Plan as may be determined by the Board, in its sole discretion. In the event of any conflict between the terms of an employment agreement and the Plan, the terms of the employment agreement govern. +16.6 Number and Gender. +With respect to words used in this Plan, the singular form shall include the plural +form, the masculine gender shall include the feminine gender, etc., as the context requires. +16.7 Severability. +If any provision of the Plan or any Award Agreement shall be determined to be illegal or unenforceable by +any court of law in any jurisdiction, the remaining provisions hereof and thereof shall be severable and enforceable in accordance with their terms, and all provisions shall remain enforceable in any other jurisdiction. +A-15 +Contents +16.8 Governing Law. +The Plan shall be governed by and construed in accordance with the laws of the State +of Nevada without giving effect to the principles of conflicts of law, and applicable Federal law. +16.9 Section 409A. +The Plan is intended to comply with Section 409A to the extent subject thereto, and, +accordingly, to the maximum extent permitted, the Plan shall be interpreted and administered to be in compliance therewith. Any payments described in the Plan that are due within the “short-term deferral period” as defined in Section +409A shall not be treated as deferred compensation unless applicable laws require otherwise. Notwithstanding anything to the contrary in the Plan, to the extent required to avoid accelerated taxation and tax penalties under Section +409A, amounts that would otherwise be payable and benefits that would otherwise be provided pursuant to the Plan during the six (6) month period immediately following the Grantee’s Separation from Service shall instead be paid on the +first payroll date after the six-month anniversary of the Grantee’s Separation from Service (or the Grantee’s death, if earlier). Notwithstanding the foregoing, neither the Company nor the Committee shall have any obligation to take +any action to prevent the assessment of any excise tax or penalty on any Grantee under Section 409A and neither the Company nor the Committee will have any liability to any Grantee for such tax or penalty. +16.10 Separation from Service. +The Board shall determine the effect of a Separation from Service upon Awards, and +such effect shall be set forth in the appropriate Award Agreement. Without limiting the foregoing, the Board may provide in the Award Agreements at the time of grant, or any time thereafter with the consent of the Grantee, the +actions that will be taken upon the occurrence of a Separation from Service, including, but not limited to, accelerated vesting or termination, depending upon the circumstances surrounding the Separation from Service. +16.11 Transferability of Awards. +16.11.1 Transfers in General. +Except as provided in Section 16.11.2 , no Award shall be assignable or transferable by the Grantee to whom it is granted, other than by will or the laws of descent and distribution, and, during the lifetime of the Grantee, only the Grantee +personally (or the Grantee’s personal representative) may exercise rights under the Plan. +16.11.2 Family Transfers. +If authorized in the applicable Award Agreement, a Grantee may transfer, not for +value, all or part of an Award (other than Incentive Stock Options) to any Family Member. For the purpose of this Section 16.11.2 , a “not for value” +transfer is a transfer which is (i) a gift, (ii) a transfer under a domestic relations order in settlement of marital property rights; or (iii) a transfer to an entity in which more than fifty percent of the voting interests are owned +by Family Members (or the Grantee) in exchange for an interest in that entity. Following a transfer under this Section 16.11.2 , any such Award shall +continue to be subject to the same terms and conditions as were applicable immediately prior to transfer. Subsequent transfers of transferred Awards are prohibited except to Family Members of the original Grantee in accordance with +this Section 16.11.2 or by will or the laws of descent and distribution. +16.12 Dividends and Dividend Equivalent Rights. +If specified in the Award Agreement, the recipient of an Award (other than Options or SARs) may be entitled +to receive dividends or dividend equivalents with respect to the Common Stock or other securities covered by an Award. The terms and conditions of a dividend equivalent right may be set forth in the Award Agreement. Dividend +equivalents credited to a Grantee may be reinvested in additional shares of Stock or other securities of the Company at a price per unit equal to the Fair Market Value of a share of Stock on the date that such dividend was paid to +stockholders, as determined in the sole discretion of the Committee. Notwithstanding any provision herein to the contrary, in no event will dividends or dividend equivalents vest or otherwise be paid out prior to the time that the +underlying Award (or portion thereof) has vested and, accordingly, will be subject to cancellation and forfeiture if such Award does not vest (including both time-based and performance-based Awards). +The Plan was adopted by the Board of Directors on April 29, 2019. +A-16 \ No newline at end of file diff --git a/raw/proxies/0001092662/0001140361-19-008079/proxy_rpt.txt b/raw/proxies/0001092662/0001140361-19-008079/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..bc9ad1df58617f628d0541d9d88240d4301f9e91 --- /dev/null +++ b/raw/proxies/0001092662/0001140361-19-008079/proxy_rpt.txt @@ -0,0 +1,827 @@ +Material Related-Party Transactions with Directors +None +Family Relationships with Executive Officers or Other Directors +None +Shares Pledged by Directors +None +3 +Contents +Approval of 2019 Omnibus Incentive Plan +We are asking stockholders to approve our 2019 Omnibus Incentive Plan to, among other things, reserve +2,400,000 shares of common stock for awards under the plan. +Ratification of Appointment of Independent Auditor for 2019 +We are asking stockholders to ratify the audit committee’s retention of BDO USA, LLP, an independent +registered public accounting firm, as our independent auditor to examine and report on our consolidated financial statements for the fiscal year ending December 31, 2019. +Advisory Vote on 2018 Executive Compensation +In accordance with rules of the Securities and Exchange Commission or SEC, we are asking stockholders for an advisory vote — +known as a “say-on-pay” vote — of the 2018 compensation of our “named executive officers” as set forth in the compensation tables, related narrative discussion and other disclosures under “Executive Compensation” in this Proxy +Statement. The following table provides information concerning the compensation paid for 2018 and 2017 to our named executive officers during 2018: +Name and Principal Position +Year +Salary ($) +Bonus($)(1) +Equity +Awards ($)(2) +All Other +Compensation($)(3) +Total($) +John J. Sperzel III +2018 +$416,847 +$89,250 +$950,000 +— +$1,456,097 +Chief Executive Officer and President +2017 +415,137 +63,750 +62,998 +— +541,885 +Neil A. Goldman +2018 +294,231 +50,400 +300,000 +$2,769 +647,400 +Executive Vice President, Chief Financial Officer +2017 +5,769 +— +423,882 +— +224,638 +Javan Esfandiari +2018 +357,807 +72,450 +375,000 +7,391 +812,648 +Executive Vice President, +Chief Science and Technology Officer +2017 +342,308 +51,750 +9,652 +5,900 +347,244 +(1) +Based on reaching revenue targets, satisfying individual objectives, and, in 2017, reaching an operating income (loss) +target and discretionary grants. +(2) +Determined in accordance with the Financial Accounting Standards Board’s Accounting Standards Codification Topic 718, Compensation—Stock Compensation . +(3) +Comprised of employer matching payments to 401(k) contributions and, in 2017, a car allowance. +Advisory Vote on Frequency of Future Advisory Votes on Executive Compensation +In accordance with rules of the SEC, we are asking stockholders for an advisory vote – known as +a “say-on-frequency” vote – on how frequently they would like to cast an advisory “say-on-pay” vote on the compensation of our named executive officers. The board of directors recommends an annual advisory “say-on-pay” vote. +SEC rules require that we submit a “say-on-frequency” vote to stockholders every six years +4 +Contents +Questions and Answers about the Annual Meeting +Q: +When and where will the Annual Meeting be held? +A: +This year the Annual Meeting of Stockholders of Chembio Diagnostics, Inc., which we refer to as the Annual Meeting, will be held at 555 Wireless Boulevard, +Hauppauge, New York beginning at 10 a.m., Eastern time, on Tuesday, June 18, 2019. +Q: +What materials have been prepared for stockholders in connection with the Annual Meeting? +A: +We are furnishing you and other stockholders of record with the following proxy materials: +• +our 2018 Annual Report to Stockholders, which we refer to as the 2018 Annual Report and which includes our Annual Report on Form 10‑K for the fiscal year +ended December 31, 2018 (including our audited consolidated financial statements for 2017 and 2018); +• +this Proxy Statement for the 2019 Annual Meeting, which we refer to as this Proxy Statement and which also includes a letter from our Chief Executive +Officer and President to stockholders and a Notice of 2019 Annual Meeting of Stockholders; and +• +a Notice of Internet Availability of Proxy Materials, which we refer to as the Notice of Internet Availability, which includes a control number for use in +submitting proxies. +These materials were first mailed to stockholders, and made available on the Internet, on or about +April 30, 2019. +If, in accordance with the instructions provided in the Notice of Internet Availability, you request a +printed set of proxy materials, you will receive by mail, at no charge, printed copies of the 2018 Annual Report, this Proxy Statement, a proxy card for the Annual Meeting and a pre-addressed envelope to be used to return the completed proxy +card. If, in accordance with the instructions provided in the Notice of Internet Availability, you request that a set of proxy materials be emailed to you, you will receive by email, at no charge, electronic copies of the 2018 Annual Report and +this Proxy Statement. +Q: +Why was I mailed a Notice of Internet Availability rather than a printed set of proxy materials? +A: +In accordance with rules adopted by the SEC, we are furnishing the proxy materials to stockholders by providing access via the Internet, instead of mailing +printed copies. This process expedites the delivery of proxy materials to our stockholders, lowers our costs and reduces the environmental impact of the Annual Meeting. The Notice of Internet Availability tells you how to access and +review the proxy materials on the Internet and how to vote on the Internet. It also provides instructions you may follow to request paper or emailed copies of the proxy materials. +Q: +Are the proxy materials available via the Internet? +A: +You can access and review the proxy materials for the Annual Meeting at www.chembio.com/investors/proxy . +In order to submit your proxies, however, you will need to refer to the Notice of Internet Availability sent to you with this Proxy Statement or a proxy card mailed to you upon your request to obtain your control number and other +personal information needed to vote by proxy or in person. +5 +Contents +Q: +What is a proxy? +A: +The term “proxy,” when used with respect to stockholder, refers to either a person or persons legally authorized to act on the stockholder’s behalf or a +format that allows the stockholder to vote without being physically present at the Annual Meeting. +Because it is important that as many stockholders as possible be represented at +the Annual Meeting, the board of directors is asking that you review this Proxy Statement carefully and then vote by following the instructions set forth on the Notice of Internet Availability or the proxy card. In voting prior to the Annual +Meeting, you will deliver your proxy to the Proxy Committee, which means you will authorize the Proxy Committee to vote your shares at the Annual Meeting in the way you instruct. The Proxy Committee consists of John J. Sperzel III and Neil A. +Goldman. All shares represented by valid proxies will be voted in accordance with the stockholder’s specific instructions. +Q: +What matters will the stockholders vote on at the Annual Meeting? +A: +Proposal +Election of the following five director nominees: +• +Katherine L. +Davis +• +Gail S. Page +• +Mary Lake Polan +• +John G. +Potthoff +• +John J. Sperzel III +Proposal +Approval of 2019 Omnibus Incentive Plan +Proposal +Ratification of appointment of our independent auditor for 2019 +Proposal +Approval, as an advisory vote, of 2018 executive compensation as disclosed in this Proxy Statement +Proposal +Approval, as an advisory vote, of the frequency of future advisory votes on executive compensation +Q: +Who can vote at the Annual Meeting? +A: +Stockholders of record of common stock at 5 p.m., Eastern time, on April 26, 2019, the record date, will be entitled to vote at the Annual Meeting. As +of the record date, there were outstanding a total of 17,166,459 shares of common stock, each of which will be entitled to one vote on each proposal. As a result, up to a total of 17,166,459 votes can be cast on each proposal. +Q: +What is a stockholder of record? +A: +A stockholder of record is a stockholder whose ownership of common stock is reflected directly on the books and records of our transfer agent, +Broadridge Corporate Issuer Solutions, Inc. +Q: +What does it mean for a broker or other nominee to hold shares in “street name”? +A: +If you beneficially own shares held in an account with a broker, bank or similar organization, that organization is the stockholder of record and is +considered to hold those shares in “street name.” An organization that holds your beneficially owned shares in street name will vote in accordance with the instructions you provide. If you do not provide the organization with +specific voting instructions with respect to a proposal, the organization’s authority to vote your shares will, under the rules of the Nasdaq Global Market or Nasdaq, depend upon whether the proposal is considered a “routine” +or a non-routine matter. +• +The organization generally may vote your beneficially owned shares on routine items for which you have not provided voting instructions to the +organization. The only routine matter expected to be voted on at the Annual Meeting is the ratification of the appointment of our independent auditor for 2019 (Proposal 3). +6 +Contents +• +The organization generally may not vote on non-routine matters, including Proposals 1, 2, 4 and 5. Instead, it will inform the inspector of election +that it does not have the authority to vote on those matters. This is referred to as a “broker non-vote.” +For the purpose of determining a quorum, we will treat as present at the Annual Meeting any +proxies that are voted on any of the four proposals to be acted upon by the stockholders, including abstentions or proxies containing broker non-votes. +Q: +How do I vote my shares if I do not attend the Annual Meeting? +A: +If you are a stockholder of record, you may vote prior to the Annual Meeting as follows: +• +Via the Internet: +You may vote via the Internet by going +to www.aalvote.com/CEMI or scanning the QR code on the Notice of Internet Availability, in accordance +with the voting instructions on the Notice of Internet Availability and the proxy card. Internet voting is available 24 hours a day until 11:59 p.m., Eastern time, on June 17, 2019. You will be given the opportunity to confirm +that your instructions have been recorded properly. +• +By Telephone : +You may vote by calling +1 (866) +804-9616 and following the instructions provided on the telephone line. Telephone voting is available 24 hours a day until 11:59 p.m., Eastern +time, on June 17, 2019. Easy-to-follow voice prompts will allow you to vote your shares and confirm that your instructions have been recorded properly. +• +By Mail : +If you obtain a proxy card by mail, you may vote by returning the completed and signed +proxy card in a postage-paid return envelope that will be provided with the proxy card. +If you +hold shares in street name, you may vote by following the voting instructions provided by your bank, broker or other nominee. In general, you may vote prior to the Annual Meeting as follows: +• +Via the Internet: +You may vote via the Internet by going +to www.ProxyVote.com o r scanning the QR code on the Notice of Internet Availability, in accordance with the voting instructions on the Notice of +Internet Availability and the proxy card. Internet voting is available 24 hours a day until 11:59 p.m., Eastern time, on June 17, 2019. You will be given the opportunity to confirm that your instructions have been recorded +properly. +For your information, voting via the Internet is the least expensive for us, +followed by telephone voting, with voting by mail being the most expensive. +Q: +Can I vote at the Annual Meeting? +A: +If you are a stockholder of record, you may vote in person at the Annual Meeting, whether +or not you previously voted. If your shares are held in street name, you must obtain a written proxy, executed in your favor, from the stockholder of record to be able to vote at the Annual Meeting. +Q: +May I change my vote or revoke my proxy? +A: +If you are a stockholder of record and previously delivered a proxy, you may subsequently change or revoke your proxy at any time before it is +exercised by: +• +voting via the Internet or telephone at a later time; +• +submitting a completed and signed proxy card with a later date; or +• +voting at the Annual Meeting. +If you are a beneficial owner of shares held in street name, you should contact your bank, broker +or other nominee for instructions as to whether, and how, you can change or revoke your proxy. +7 +Contents +Q: +What happens if I do not give specific voting instructions? +A: +If you are a stockholder of record and you return a proxy card without giving specific voting instructions, the Proxy Committee will vote your shares +in the manner recommended by the board on all five proposals presented in this Proxy Statement and as the Proxy Committee may determine in its discretion on any other matters properly presented for a vote at the Annual +Meeting. +If you are a beneficial owner of shares held +in street name and do not provide specific voting instructions to the broker, bank or other organization that is the stockholder of record of your shares, the organization generally may vote on routine, but not non-routine, matters. The +only routine matter expected to be voted on at the Annual Meeting is the ratification of the appointment of our independent auditor for 2019 (Proposal 3). If the organization does not receive instructions from you on how to vote your +shares on one or more of Proposals 1, 2, 4 and 5, your shares will be subject to a broker non-vote and no vote will be cast on those matters. See “ Q. What does it mean for a broker or other nominee to hold shares in ‘street name’? ” above.” +Q: +What if other matters are presented at the Ann ual M eeting? +A: +If a stockholder of record provides a proxy by voting in any manner described in this Proxy Statement, the Proxy Committee will have the discretion to +vote on any matters, other than the five proposals presented in this Proxy Statement, that are properly presented for consideration at the Annual Meeting. We do not know of any other matters to be presented for consideration +at the Annual Meeting. +8 +Contents +Vote Required for Election or Approval +Our only voting securities are the outstanding shares of common stock. As of the record date, which is 5 p.m., +Eastern time, on April 26, 2019, there were outstanding 17,166,459 shares of common stock, each of which will be entitled to one vote on each proposal. Based on the number of votes for each share common stock, up to a total of 17,166,459 votes can be cast on each proposal. +Only stockholders of record as of the record date will be entitled to notice of, and to vote at, the Annual +Meeting. A majority of the issued and outstanding shares of common stock entitled to vote, represented either in person or by proxy, constitutes a quorum at the Annual Meeting. For the purpose of determining a quorum, we will treat as +present at the Annual Meeting any proxies that are voted on any matter to be acted upon by the stockholders, as well as abstentions or any proxies containing broker non-votes. +Election of Directors +The affirmative vote of a plurality of votes cast by shares entitled to vote and present in person or represented by proxy +at the Annual Meeting at which a quorum is present is required to elect each director. Votes to “abstain” will not be counted for the purpose of determining whether a director is elected. Similarly, broker non‑votes will not +have any effect on the outcome of the election of directors, since broker non-votes are not counted as “votes cast.” +Approval of 2019 Omnibus Incentive Plan +Our 2019 Omnibus Incentive Plan must be affirmatively approved by a majority of the votes entitled to be cast and present +in person or represented by proxy at the Annual Meeting. Abstentions will count as votes against this proposal because shares with respect to which a stockholder abstains will be deemed present and entitled to vote. Broker +non-votes will have no effect on the outcome of this proposal because broker non-votes are not counted as “votes cast.” +Ratification of Appointment of Independent Auditor for 2019 +The ratification of BDO USA, LLP as our independent auditor for the year ending December 31, 2019 must be approved by +affirmative votes constituting a majority of the votes entitled to be voted and present in person or represented by proxy at the Annual Meeting. Abstentions will count as votes against this proposal, because shares with respect +to which the stockholder abstains will be deemed present and entitled to vote. Because this proposal is considered a routine matter, discretionary votes by brokers will be counted. +Approval of 2018 Executive Compensation on an Advisory Basis +The advisory “say-on-pay” vote to approve our 2018 executive compensation must be approved by affirmative votes +constituting a majority of the votes entitled to be cast and present in person or represented by proxy at the Annual Meeting. Abstentions will count as votes against this proposal, because shares with respect to which the +stockholder abstains will be deemed present and entitled to vote. Broker non-votes will have no effect on the outcome of this proposal, because broker non-votes are not counted as “votes cast.” +Approval of Frequency of Future Advisory “Say-on-Pay” Votes on an Advisory Basis +The advisory “say-on-frequency” vote on the frequency of future advisory “say-in-pay” votes on executive compensation must +be approved by affirmative votes constituting a majority of the votes entitled to be voted and present in person or represented by proxy at the Annual Meeting. As a result, any votes not cast, whether by abstention, broker +non-votes or otherwise, will not affect the outcome of this proposal, except to the extent that the failure to vote for a particular frequency period may result in another frequency period receiving a larger proportion of the +votes cast. +9 +Contents +Proposal +— Election of +Directors +At the Annual Meeting, stockholders will elect the entire board of directors to serve for the ensuing year and +until their successors are elected and qualified. The board has designated as nominees for election the five persons named below, each of whom currently serves as a director. +Shares of common stock that are voted as recommended by the board will be voted in favor of the election as +directors of the nominees named below. If any nominee becomes unavailable for any reason or if a vacancy should occur before the election, which we do not anticipate, the shares represented by a duly completed proxy may be voted in favor +of such other person as may be determined by the Proxy Committee. +Director Qualifications +The board of directors has determined that, as a whole, it +must have the right mix of characteristics, skills and diversity to provide effective oversight of our company. I n selecting directors, the board seeks to +achieve a mix of directors that enhances the diversity of background, skills and experience on the board, including with respect to age, gender, international background, ethnicity and specialized experience. Directors should have +relevant expertise and experience and be able to offer advice and guidance to our chief executive officer based on that expertise and experience. Also, a majority of directors should be independent under applicable Nasdaq listing +standards, board and committee guidelines, and applicable laws and regulations. Each director is also expected to have: +• +a high standard of personal and professional ethics, integrity and values; +• +the training, experience and ability to make and oversee policy in business, government and/or education sectors; +• +the willingness and ability to keep an open mind when considering matters affecting our interests and the interests of its constituents; +• +the willingness and ability to devote the required time and effort to effectively fulfill the duties and responsibilities related to board and +committee membership; +• +the willingness and ability to serve on the board for multiple terms, if nominated and elected, to enable development of a deeper understanding of our +business affairs; +• +the willingness not to engage in activities or interests that may create a conflict of interest with a director’s responsibilities and duties to us +and our constituents; and +• +the willingness to act in the best interests of our company and our constituents, and objectively assess board, committee and management performance. +Identifying and +Evaluating Nominees for Directors +When the board of directors or its nominating and corporate governance committee identifies a need to add a new director with +specific qualifications or to fill a vacancy on the board, the chair of the nominating and corporate governance committee will initiate a search, seeking input from other directors and senior management, review any candidates that the +nominating and corporate governance committee has previously identified, and, if necessary, hire a search firm. The nominating and corporate governance committee then will identify the initial list of candidates who satisfy the specific +criteria and otherwise qualify for membership on the board. Based on a satisfactory outcome of those interviews, the nominating and corporate governance committee will make its recommendation on the candidate to the board. +10 +Contents +Information +Concerning Nominees for Election as Directors +The information appearing in the following table sets forth, for each nominee for election as a director: +• +the nominee’s professional experience for at least the past five years; +• +the year in which the nominee first became one of our directors; +• +each standing committee of the board of directors on which the nominee currently serves; +• +the nominee’s age as of the record date for the Annual Meeting; +• +the relevant skills the nominee possesses that qualify him or her for nomination to the board; and +• +directorships held by each nominee presently and at any time during the past five years at any public company or registered investment company. +Katherine L. Davis +Chembio Board Service: +• Tenure: 12 years +• Chair of the Board +• Committees: +○ Audit +○ Nominating and Corporate Governance +Age: 62 +INDEPENDENT +Professional Experience +• +Chair of the Board since March 2014, and a director since 2007 +• +Owner of Davis Design Group LLC, a provider of analytical and visual tools for public policy +design, since 2007 +• +Chief Executive Officer of Global Access Point, a start-up company with products for data +transport, data processing, and data storage network and hub facilities, from 2005 to 2006 +• +Lieutenant Governor of the State of Indiana from 2003 to 2005 +• +Controller of the City of Indianapolis from 2000 to 2003 +• +Financial Advisor to the Mayor of Indianapolis since January 2016 +Gail S. Page +Chembio Board Service +• Tenure: 2 years +• Committees: +○ Audit +○ Compensation (Chair) +○ Nominating and Corporate Governance +Age: 63 +INDEPENDENT +Professional Experience +• +Director since July 2017 +• +Venture Partner at Turret Capital Management, L.P., an international healthcare-focused +investment manage-ment fund, since September 2018 +• +Managing Partner and founder of Vineyard Investment Advisors, LLC, a firm assisting with new +product and services development, from 2014 to November 2018 +• +Co-founder and director of Consortia Health Holdings LLC, a rehabilitation services provider +focused on pelvic disorders, from 2013 to June 2018 +• +President, Chief Executive Officer and director of Vermillion, Inc., a developer and +manufacturer of novel diagnostic blood tests, from 2006 to 2012 +• +Executive Vice President and Chief Operating Officer of Luminex Corporation, a developer of +testing solutions for life science applications, from 2000 to 2003 +• +Senior Vice President of Roche Biomedical Laboratories, Inc. / Laboratory Corporation of America, a healthcare +diagnostic company, from 1988 to 2000 +Education +• +Masters in Business Administration degree from Harvard Business School +• +Bachelor of Science degree in mechanical engineering from the Massachusetts Institute of +Technology +Education +• +Bachelor of Science degree in Medical Technology from the University of Florida +• +Completed executive management program at the Kellogg School in Chicago +Relevant Skills +• +Leadership +• +Governance +• +Policy / Government +Relevant Skills +• +Industry +• +Leadership +• +Finance +11 +Contents +Mary Lake Polan +Chembio Board Service: +• Tenure: 7 months +• Committees: +○ Compensation +○ Nominating and Corporate Governance (Chair) +Age: 75 +INDEPENDENT +John G. Potthoff +Chembio Board Service +• Tenure: 10 months +• Committees: +○ Audit (Chair) +○ Compensation +Age: 51 +INDEPENDENT +Professional Experience +• +Director since August 2018 +• +Clinical Professor in the Department of Clinical Obstetrics, Gynecology and Reproductive +Sciences at Yale University School of Medicine since 2014 +• +Adjunct Professor in Obstetrics and Gynecology department at Columbia University School +of Medicine from 2007 to 2014 +• +Visiting Professor in Obstetrics and Gynecology department at Columbia University School +of Medicine from 2005 to 2007 +• +Chair of Department of Obstetrics and Gynecology at Stanford University School of +Medicine from 1990 to 2005 +• +Chair of Scientific Advisory Board in Women’s Health for the Procter and Gamble Company +since 1997 +• +Managing Director of Golden Seeds, an angel investing group investing in women-led +companies, since 2007 +• +Author of more than 130 books, articles and chapters in her areas of research +Professional Experience +• +Director since May 2018 +• +Chief Executive Officer, co-founder and director of Elligo Health Research, a clinical research +company, since March 2016 +• +President and Chief Executive Officer of Theorem Clinical Research Inc., a global contract +research organization providing comprehensive clinical services, from 2011 until its acquisition by Chiltern International in September 2015 +• +Chief Operating Officer of INC Research Holdings, Inc. from its acquisition of Tanistry, Inc. +in 2001 until its acquisition by private equity investors in 2010 +• +Chief Executive Officer and founder of Tanistry, Inc., a contract research organization focused +on the central nervous system, from 2000 to 2001 +Education +• +Master of Public Health (Maternal and Child Health Program) degree from the University of +California, Berkeley +• +Medical Doctor degree from Yale University School of Medicine +• +Doctor of Philosophy degree in Molecular Biophysics and Biochemistry from Yale University +School of Medicine +• +Bachelor of Arts degree from Connecticut College +Education +• +Bachelor of Arts degree in Psychology from the University of Texas-Austin +• +Master of Arts degree in Psychology from the University of Texas-Austin +• +Doctor of Philosophy degree in Psychology from the University of Texas-Austin +Relevant Skills +• +Industry +• +Leadership +• +Governance +Relevant Skills +• +Finance +• +Industry +• +Leadership +Other Public Company Board Service +• +Motif Bio plc (AIM/NASDAQ:MTFB), a clinical-stage biopharmaceutical company specializing in +developing novel antibiotics, since 2004 +• +Quidel Corporation (NASDAQ:QDEL), a developer of point-of-care diagnostic solutions, since +1993 +12 +Contents +John J. Sperzel III +Chembio Board Service: +• Tenure: 5 years +Age: 55 +Professional Experience +• +Chief Executive Officer, President and Director since March 2014 +• +Chief Executive Officer and President of International Technidyne Corporation, a +developer of point-of-care cardiovascular diagnostic testing solutions, from 2011 to 2013 +• +President of Axis-Shield Diagnostics Ltd. (subsequently acquired by Abbott +Laboratories), a developer of point-of-care immunoassay testing solutions, from 2004 to 2011 +• +Vice President of Worldwide Marketing and Business Development of Bayer Diagnostics +(subsequently acquired by Siemens), a developer of point-of-care diagnostic testing solutions, from 2000 to 2004. +• +Vice President of Instrumentation Laboratory, a developer of laboratory hemostasis and +critical care diagnostic testing solutions, from 1997 to 2000 +• +Vice President and numerous commercial roles at Boehringer Mannheim Corp. (subsequently acquired by Roche), a developer +of point-of care diagnostic testing solutions, from 1987 to 1997. +Education +• +Bachelor of Science degree in Business Administration/Management from Plymouth State +College +Relevant Skills +• +Industry +• +Leadership +• +Innovation +The board of directors recommends a vote +FOR +each of the five nominees for election as directors. +13 +Contents +Proposal +— Approval of 2019 Omnibus Incentive Plan +Background +On April 29, 2019, the board of directors approved, subject to stockholder approval, the Chembio Diagnostics, Inc. 2019 +Omnibus Incentive Plan, or the 2019 Plan. If the 2019 Plan is approved by our stockholders, it will authorize the issuance of up to 2,400,000 shares of common stock. The 2019 Plan will supersede and replace our 2014 Stock Incentive +Plan, or the Prior Plan, and no new awards will be granted under the Prior Plan. Any awards outstanding under the Prior Plan on the date of stockholder approval of the 2019 Plan will remain subject to and be paid under the Prior Plan, +and any shares subject to outstanding awards under the Prior Plan that subsequently expire, terminate, or are surrendered or forfeited for any reason without issuance of shares will automatically become available for issuance under the +2019 Plan. +The board recommends that stockholders approve the 2019 Plan. The purposes of the 2019 Plan are to enhance our +ability to attract and retain highly qualified officers, non-employee directors, key employees and consultants, and to motivate those service providers to serve Chembio and to expend maximum effort to improve our business results and +earnings of the company, by providing to those service providers an opportunity to acquire or increase a direct proprietary interest in our operations and future success. The 2019 Plan also will allow us to promote greater ownership in +our company by the service providers in order to align the service providers’ interests more closely with the interests of our stockholders. Stockholder approval of the 2019 Plan will also enable us to grant awards under the 2019 Plan +that are designed to qualify for special tax treatment under Section 422 of the Internal Revenue Code of 1986, or the Code. +As described under “Executive Compensation—Outstanding Equity Awards at 2018 Fiscal Year-End,” on November 11, +2018, the compensation committee, based in part on advice from its independent compensation consultant, approved the grant to John Sperzel, our Chief Executive Officer and President, of a restricted stock award for 375,000 shares of +common stock that would be subject to time vesting in full on November 11, 2022. Because fewer than 375,000 shares of common stock were then available under the Prior Plan, this proposed grant to Mr. Sperzel was made subject to +stockholders’ approval of an increase in the shares reserved under the Prior Plan or of a new equity incentive plan under which the restricted shares could be issued. If the 2019 Plan is approved at the Annual Meeting, the restricted +shares will be granted to Mr. Sperzel from the shares that will become available under the 2019 Plan, without further action by the compensation committee or the board of directors. +Key Features +The following features of the 2019 Plan will protect the interests of our stockholders: +• +Limitation on terms of stock options and stock appreciation rights . +The maximum term of each stock option and stock appreciation right, or SAR, is ten years. +• +No repricing or grant of discounted stock options . The 2019 Plan does +not permit the repricing of options or SARs either by amending an existing award or by substituting a new award at a lower price. The 2019 Plan prohibits the granting of stock options or SARs with an exercise price less than +the fair market value of the common stock on the date of grant. +• +No liberal share recycling. Shares used to pay the exercise price or +withholding taxes related to an outstanding award and unissued shares resulting from the net settlement of outstanding options and SARs do not become available for issuance as future awards under the plan. +• +Minimum vesting requirements. The 2019 Plan includes minimum vesting +requirements. Equity-based awards generally cannot vest earlier than one year after grant. Certain limited exceptions are permitted. +14 +Contents +• +No single-trigger acceleration . Under the 2019 Plan we do not +automatically accelerate vesting of awards in connection with a change in control on the company. +• +Dividends . We do not pay dividends or dividend equivalents on stock +options, SARs or other unearned awards, whether time- or performance-vesting. +Summary of the 2019 Plan +The principal features of the 2019 Plan are summarized below. The following summary of the +2019 Plan does not purport to be a complete description of all of the provisions of the 2019 Plan. It is qualified in its entirety by reference to the complete text of the 2019 Plan, which is attached to this Proxy Statement as Annex A. +Eligibility +Awards may be granted under the 2019 Plan to officers, employees and consultants of our company and our +subsidiaries and to our non-employee directors. Incentive stock options may be granted only to employees of our company or one of our subsidiaries. As of April 26, 2019, approximately 250 individuals were eligible to receive awards +under the 2019 Plan, including 5 executive officers and 4 non-employee directors. +Administration +The 2019 Plan will be administered by the compensation committee of the board of directors. The compensation +committee, in its discretion, selects the individuals to whom awards may be granted, the time or times at which such awards are granted, and the terms of such awards. The compensation committee may delegate its authority to the extent +permitted by applicable law. +Number of Authorized Shares +A total of 2,400,000 shares of common stock are authorized for issuance under the 2019 Plan, which represents 13.4% of the +fully diluted common shares outstanding as of April 26, 2019. In addition, as of the date of stockholder approval of the 2019 Plan, any awards then outstanding under the Prior Plan will remain subject to and be paid under the Prior Plan +and any shares then subject to outstanding awards under the Prior Plan that subsequently expire, terminate, or are surrendered or forfeited for any reason without issuance of shares will automatically become available for issuance under +the 2019 Plan. Up to 2,400,000 shares may be granted under the 2019 Plan as incentive stock options under Section 422 of the Code. The shares of common stock issuable under the 2019 Plan will consist of authorized and unissued shares, +treasury shares, and shares purchased on the open market or otherwise. +If any award is canceled, terminates, expires or lapses for any reason prior to the issuance of shares or if +shares are issued under the 2019 Plan and thereafter are forfeited to us, the shares subject to such awards and the forfeited shares will again be available for grant under the 2019 Plan. In addition, the following items will not count +against the aggregate number of shares of common stock available for grant under the 2019 Plan: +• +the payment in cash of dividends or dividend equivalents under any outstanding award; +• +any award that is settled in cash rather than by issuance of shares of common stock; and +• +any awards granted in assumption of or in substitution for awards previously granted by an acquired company. +Shares tendered or withheld to pay the option exercise price or tax withholding for any award (including restricted stock and +restricted stock units) will continue to count against the aggregate number of shares of common stock available for grant under the 2019 Plan. In addition, the total number of shares covering stock-settled SARs or net-settled options +will be counted against the pool of available shares, not just the net shares issued upon exercise. Any shares of common stock repurchased by us with cash proceeds from the exercise of options will not be added back to the pool of +shares available for grant under the 2019 Plan. +15 +Contents +Adjustments +If certain changes in the common stock occur by reason of any recapitalization, reclassification, stock split, +reverse split, combination of shares, exchange of shares, stock dividend or other distribution payable in stock, or other increase or decrease in the common stock without our receipt of consideration, or if there occurs any spin-off, +split-up, extraordinary cash dividend or other distribution of assets by us, we will equitably adjust the number and kind of securities for which stock options and other stock-based awards may be made under the 2019 Plan. In addition, +if there occurs any spin-off, split-up, extraordinary cash dividend or other distribution of assets by us, we will equitably adjust the number and kind of securities subject to any outstanding awards and the exercise price of any +outstanding stock options or SARs. +Types of Awards +The 2019 Plan permits the granting of any or all of the following types of awards: +• +Stock Options . Stock options entitle the holder to +purchase a specified number of shares of common stock at a specified price (the exercise price), subject to the terms and conditions of the stock option grant. The compensation committee may grant either incentive stock +options, which must comply with Section 422 of the Code, or nonqualified stock options. The compensation committee sets exercise prices and terms, except that stock options must be granted with an exercise price not less +than 100% of the fair market value of the common stock on the date of grant (excluding stock options granted in connection with assuming or substituting stock options in acquisition transactions). Unless the compensation +committee determines otherwise, fair market value means, as of a given date, the closing price of the common stock. (The fair market value of a share of common stock as of April 26, 2019, the record date, was $7.43.) At the +time of grant, the compensation committee determines the terms and conditions of stock options, including the quantity, exercise price, vesting periods, term (which cannot exceed ten years) and other conditions on exercise. +• +Stock Appreciation Rights . The compensation committee may grant SARs +as a right in tandem with the number of shares underlying stock options granted under the 2019 Plan or as a freestanding award. Upon exercise, SARs entitle the holder to receive payment per share in stock or cash, or in a +combination of stock and cash, equal to the excess of the share’s fair market value on the date of exercise over the grant price of the SAR. The grant price of a tandem SAR is equal to the exercise price of the related stock +option and the grant price for a freestanding SAR is determined by the compensation committee in accordance with the procedures described above for stock options. Exercise of a SAR issued in tandem with a stock option will +reduce the number of shares underlying the related stock option to the extent of the SAR exercised. The term of a freestanding SAR cannot exceed ten years, and the term of a tandem SAR cannot exceed the term of the related +stock option. +• +Restricted Stock, Restricted Stock Units and Other Stock-Based Awards . +The compensation committee may grant awards of restricted stock, which are shares of common stock subject to specified restrictions, and restricted stock units, which represent the right to receive shares of the common stock +in the future. These awards may be made subject to repurchase, forfeiture or vesting restrictions at the compensation committee’s discretion. The restrictions may be based on continuous service with the company or the +attainment of specified performance goals, as determined by the compensation committee. Stock units may be paid in stock or cash or a combination of stock and cash, as determined by the compensation committee. The +compensation committee may also grant other types of equity or equity-based awards subject to the terms of the 2019 Plan and any other terms and conditions determined by the compensation committee. +• +Performance Awards . The compensation committee may condition the +grant, exercise, vesting, or settlement of any award on such performance conditions as it may specify. We refer to these awards as “performance awards.” The compensation committee may select such business criteria or other +performance measures as it may deem appropriate in establishing any performance conditions. +16 +Contents +Minimum Vesting Requirements +Equity-based awards granted under the 2019 Plan will have a one-year minimum vesting requirement. This +requirement does not apply to (1) substitute awards resulting from acquisitions, (2) shares delivered in lieu of fully vested cash awards, or (3) awards to non-employee directors that vest on the earlier of the one year anniversary of +the date of grant or the next annual meeting of stockholders (but not sooner than 50 weeks after the grant date). Also, the compensation committee may grant equity-based awards without regard to the minimum vesting requirement with +respect to a maximum of five percent of the available share reserve authorized for issuance under the 2019 Plan. In addition, the minimum vesting requirement does not apply to the compensation committee’s discretion to provide for +accelerated exercisability or vesting of any award, including in cases of retirement, death, disability or a change in control, in the terms of the award or otherwise. +No Repricing +Without stockholder approval, the compensation committee is not authorized to: +• +lower the exercise or grant price of a stock option or SAR after it is granted, except in connection with certain adjustments to our corporate or +capital structure permitted by the 2019 Plan, such as stock splits; +• +take any other action that is treated as a repricing under generally accepted accounting principles or +• +cancel a stock option or SAR at a time when its exercise or grant price exceeds the fair market value of the underlying stock, in exchange for cash, +another stock option or SAR, restricted stock, restricted stock units or other equity award, unless the cancellation and exchange occur in connection with a change in capitalization or other similar change. +Clawback +All cash and equity awards granted under the 2019 Plan will be subject to clawback, cancellation, recoupment, +rescission, payback, reduction, or other similar action in accordance with the terms of any company clawback or similar policy or any applicable law related to such actions, as may be in effect from time to time. +Transferability +Awards are not transferable other than by will or the laws of descent and distribution, except that in certain +instances transfers may be made to or for the benefit of designated family members of the participant for no value. +Change in Control +In the event of a change in control of the Company, the compensation committee may accelerate the time period relating to the exercise of any +award. In addition, the compensation committee may take other action, including (a) providing for the purchase of any award for an amount of cash or other property that could have been received upon the exercise of such award had the +award been currently exercisable, (b) adjusting the terms of the award in a manner determined by the compensation committee to reflect the change in control, or (c) causing an award to be assumed, or new rights substituted therefor, by +another entity with appropriate adjustments to be made regarding the number and kind of shares and exercise prices of the award. “Change in control” is defined under the 2019 Plan and requires consummation of the applicable transaction. +17 +Contents +Term, Termination and Amendment of the 2019 Plan +Unless earlier terminated by the board of directors, the 2019 Plan will terminate, and no further awards may +be granted, ten years after the date on which it is approved by stockholders. The board may amend, suspend or terminate the 2019 Plan at any time, except that, if required by applicable law, regulation or stock exchange rule, +stockholder approval will be required for any amendment. The amendment, suspension or termination of the 2019 Plan or the amendment of an outstanding award generally may not, without a participant’s consent, materially impair the +participant’s rights under an outstanding award. +New Plan Benefits +A new plan benefits table for the 2019 Plan and the benefits or amounts that would have been received by or +allocated to participants under the 2019 Plan for the year ended December 31, 2018 if the 2019 Plan were then in effect, as described in the federal proxy rules, are not provided, because, except as noted below, all awards made under +the 2019 Plan will be made at the compensation committee’s discretion, subject to the terms of the 2019 Plan. Therefore, the benefits and amounts that will be received or allocated under the 2019 Plan generally are not determinable at +this time. The equity grant program for our non-employee directors is described under “Director Compensation” in this Proxy Statement. +On November 11, 2018, the compensation committee, based in part on advice from its independent compensation +consultant, approved the grant to John Sperzel, our Chief Executive Officer and President, of a restricted stock award for 375,000 shares of common stock that would be subject to time vesting in full on November 11, 2022. Because fewer +than 375,000 shares of common stock were then available under the Prior Plan at that time, this proposed grant is to be made under the 2019 Plan, without further action by the compensation committee or the board of director, if the 2019 +Plan is approved at the Annual Meeting. See “Proposal 2—Approval of 2019 Omnibus Incentive Plan—Background”. +Federal Income Tax Information +The following is a brief summary of the U.S. federal income tax consequences of the 2019 +Plan generally applicable to us and to participants in the 2019 Plan who are subject to U.S. federal taxes. The summary is based on the Code, applicable Treasury Regulations, and administrative and judicial interpretations thereof, each +as in effect on the date of this Proxy Statement, and is, therefore, subject to future changes in the law, possibly with retroactive effect. The summary is general in nature and does not purport to be legal or tax advice. Furthermore, +the summary does not address issues relating to any U.S. gift or estate tax consequences or the consequences of any state, local or foreign tax laws. +Nonqualified Stock Options . A +participant generally will not recognize taxable income upon the grant or vesting of a nonqualified stock option with an exercise price at least equal to the fair market value of the common stock on the date of grant and no additional +deferral feature. Upon the exercise of a nonqualified stock option, a participant generally will recognize compensation taxable as ordinary income in an amount equal to the difference between the fair market value of the shares +underlying the stock option on the date of exercise and the exercise price of the stock option. When a participant sells the shares, the participant will have short-term or long-term capital gain or loss, as the case may be, equal to +the difference between the amount the participant received from the sale and the tax basis of the shares sold. The tax basis of the shares generally will be equal to the greater of the fair market value of the shares on the exercise +date or the exercise price of the stock option. +Incentive Stock Options. A participant generally will +not recognize taxable income upon the grant of an incentive stock option. If a participant exercises an incentive stock option during employment or within three months after employment ends (one year in the case of permanent and total +disability), the participant will not recognize taxable income at the time of exercise for regular U.S. federal income tax purposes (although the participant generally will have taxable income for alternative minimum tax purposes at +that time as if the stock option were a nonqualified stock option). If a participant sells or otherwise disposes of the shares acquired upon exercise of an incentive stock option after the later of (a) one year from the date the +participant exercised the option and (b) two years from the grant date of the stock option, the participant generally will recognize long-term capital gain or loss equal to the difference between the amount the participant received in +the disposition and the exercise price of the stock option. If a participant sells or otherwise disposes of shares acquired upon exercise of an incentive stock option before these holding period requirements are satisfied, the +disposition will constitute a “disqualifying disposition,” and the participant generally will recognize taxable ordinary income in the year of disposition equal to the excess of the fair market value of the shares on the date of +exercise over the exercise price of the stock option (or, if less, the excess of the amount realized on the disposition of the shares over the exercise price of the stock option). The balance of the participant’s gain on a disqualifying +disposition, if any, will be taxed as short-term or long-term capital gain, as the case may be. +18 +Contents +With respect to both nonqualified stock options and incentive stock options, special rules apply if a +participant uses shares of common stock already held by the participant to pay the exercise price or if the shares received upon exercise of the stock option are subject to a substantial risk of forfeiture by the participant. +Stock Appreciation Rights. A +participant generally will not recognize taxable income upon the grant or vesting of a SAR with a grant price at least equal to the fair market value of common stock on the date of grant and no additional deferral feature. Upon the +exercise of a SAR, a participant generally will recognize compensation taxable as ordinary income in an amount equal to the difference between the fair market value of the shares underlying the SAR on the date of exercise and the grant +price of the SAR. +Restricted Stock Awards, Restricted +Stock Units, and Performance Awards. A participant generally will not have taxable income upon the grant of restricted stock, restricted stock units or performance awards. Instead, the participant will recognize ordinary +income at the time of vesting or payout equal to the fair market value (on the vesting or payout date) of the shares or cash received minus any amount paid. For restricted stock only, a participant may instead elect to be taxed at the +time of grant. +Other Stock or Cash-Based Awards. The +U.S. federal income tax consequences of other stock or cash-based awards will depend upon the specific terms of each award. +Tax Consequences to Us. In the +foregoing cases, we generally will be entitled to a deduction at the same time, and in the same amount, as a participant recognizes ordinary income, subject to limitations imposed under the Code. +Section 409A. We intend that +awards granted under the 2019 Plan comply with, or otherwise be exempt from, Section 409A of the Code, but make no representation or warranty to that effect. +Tax Withholding. We are authorized to deduct or +withhold from any award granted or payment due under the 2019 Plan, or require a participant to remit to us, the amount of any withholding taxes due in respect of the award or payment and to take such other action as may be necessary to +satisfy all obligations for the payment of applicable withholding taxes. We are not required to issue any shares of common stock or otherwise settle an award under the 2019 Plan until all tax withholding obligations are satisfied. +The board of directors recommends a vote +FOR +the approval of the 2019 Plan. +19 +Contents +Proposal +— Ratification of Appointment of Independent Auditor for 2019 +The audit committee annually evaluates the performance of our independent auditor, BDO USA, LLP, or BDO, +including the senior audit engagement team, and determines whether to reengage the current independent auditor or consider other audit firms. Factors considered by the audit committee in deciding whether to retain include: +• +BDO’s global capabilities; +• +BDO’s technical expertise and knowledge of the Company’s global operations and industry; +• +BDO’s independence; +• +BDO’s objectivity and professional skepticism; +• +the appropriateness of BDO’s fees, BDO’s tenure as independent auditor, including the benefits of a longer tenure, and the controls and processes in +place that help ensure BDO’s independence. +BDO has served as our independent auditor since 2011. The benefits of a longer tenure are: +• +Enhanced audit quality – BDO’s institutional knowledge of the Company’s global business, accounting policies and practices, and internal control +over financial reporting enhance audit quality. +• +Competitive fees – Because of BDO’s familiarity with us, audit and other fees are competitive with peer companies. +• +Avoid costs associated with new auditor – Bringing on a new independent auditor would be costly and require a significant time commitment, which +could lead to management distractions. +Based on the above evaluation, the audit committee has approved the retention of BDO as our independent +auditor to examine and report on our consolidated financial statements and the effectiveness of our internal control over financial reporting for the fiscal year ending December 31, 2019. Even if the proposal is approved, the audit +committee may, in its discretion, appoint a different independent registered public accounting firm to serve as independent auditor at any time during the year. +Representatives of BDO will be present at the Annual Meeting. The BDO representatives will have the +opportunity to make a statement if they desire to do so, and we expect that they will be available to respond to appropriate questions. +The board of directors recommends a vote +FOR +the ratification of the appointment of BDO as our independent auditor for 2019. +20 +Contents +Proposal +— Advisory Vote on 2018 Executive Compensation +Our stockholders have the opportunity at the Annual Meeting to vote to approve, on a non-binding, advisory +basis, the compensation of our named executive officers in 2018 as disclosed in this Proxy Statement. +Our compensation program is intended to provide appropriate and balanced incentives toward achieving our +annual and long-term strategic objectives and to create an alignment of interests between our executives and stockholders. This approach is intended to motivate our existing executives and to attract new executives with the skills and +attributes that we need. Please refer to “Executive Compensation” for an overview of the compensation of our named executive officers. +We are asking for stockholder approval of the compensation of our named executive officers as disclosed in +this Proxy Statement in accordance with SEC rules, which disclosures include the disclosures in the compensation tables and narrative disclosures included under “Executive Compensation.” This vote is not intended to address any specific +item of compensation, but rather the overall compensation of our named executive officers and the policies and practices described in this Proxy Statement. +Accordingly, stockholders are being asked to vote on the following resolution: +Resolved: +That the stockholders approve the compensation paid to the “named executive officers” of Chembio Diagnostics, Inc. with respect to the fiscal year +ended December 31, 2018, as disclosed, pursuant to Item 402 of Regulation S-K promulgated by the Securities and Exchange Commission, in the Proxy Statement for the 2019 Annual Meeting of Stockholders, including the +compensation tables and narrative discussion set forth under “Executive Compensation” therein. +This vote is advisory and not binding on the board of directors or the compensation committee. The board and +the compensation committee value the opinions of our stockholders, however, and to the extent there is any significant vote against the named executive officer compensation disclosed in this Proxy Statement, we will consider our +stockholders concerns and the compensation committee will evaluate whether any actions are necessary or appropriate to address those concerns. +The board of directors recommends a vote +FOR +the approval of the compensation paid to our named executive +officers with respect to 2018, +as disclosed in the compensation tables and narrative +discussion set forth under +“Executive Compensation” and elsewhere in this Proxy +Statement. +21 +Contents +Proposal +— Advisory Vote on Frequency of Future Advisory Votes on Executive Compensation +In accordance with Section 14A of the Securities Exchange Act, we are requesting our stockholders vote, on a +non-binding, advisory basis, on how frequently they would like to cast an advisory vote on the compensation of our named executive officers. By voting on this proposal, stockholders may indicate whether they would prefer an advisory +vote on named executive officer compensation annually, every two years or every three years. +We currently present an advisory vote on executive compensation each year, and the board of directors believes +that continuing to conduct an advisory “say on pay” vote annually is the most appropriate for us. This frequency will continue to enable stockholders to annually express their views on our executive compensation program in a timely +manner, based on the most recent information presented in our proxy statements. An annual advisory vote on executive compensation helps ensure ongoing stockholder communication with the compensation committee and the board of directors +on executive compensation and corporate governance matters. Further, the annual advisory vote on executive compensation is consistent with our practice of electing all directors annually and providing stockholders the opportunity to +ratify the audit committee’s selection of independent auditors annually. +Accordingly, the stockholders are being asked to vote on the following resolution: +Resolved: +That the stockholders wish Chembio Diagnostics, Inc. to present an advisory vote on the compensation of named executive officers pursuant to Section +14A of the Securities Exchange Act on an annual basis. +This vote is advisory and not binding on the board or the compensation committee. The board and the compensation +committee value the opinions of our stockholders, however, and will carefully consider the outcome of the advisory vote when making future decisions regarding the frequency of advisory votes on executive compensation. +The board of directors recommends a vote for the approval of an +ANNUAL +advisory vote on the compensation of named executive officers +pursuant to Section 14A of the Securities Exchange Act. +22 +Contents \ No newline at end of file diff --git a/raw/proxies/0001116463/0001116463-24-000022/proxy.txt b/raw/proxies/0001116463/0001116463-24-000022/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..cf2519f1a0436087360a365de91ad25f0ce03531 --- /dev/null +++ b/raw/proxies/0001116463/0001116463-24-000022/proxy.txt @@ -0,0 +1,2433 @@ +osur-20240403 +0001116463 DEF 14A false 0001116463 2023-01-01 2023-12-31 0001116463 2022-01-01 2022-12-31 0001116463 osur:CarrieEglintonMannerMember 2023-01-01 2023-12-31 iso4217:USD 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osur:FairValueAsOfPriorFiscalYearendOfOptionAwardsAndStockAwardsGrantedInPriorFiscalYearsThatFailedToMeetApplicableVestingConditionsDuringFiscalYearMember 2022-01-01 2022-12-31 0001116463 ecd:NonPeoNeoMember osur:FairValueAsOfPriorFiscalYearendOfOptionAwardsAndStockAwardsGrantedInPriorFiscalYearsThatFailedToMeetApplicableVestingConditionsDuringFiscalYearMember 2021-01-01 2021-12-31 0001116463 ecd:NonPeoNeoMember osur:FairValueAsOfPriorFiscalYearendOfOptionAwardsAndStockAwardsGrantedInPriorFiscalYearsThatFailedToMeetApplicableVestingConditionsDuringFiscalYearMember 2020-01-01 2020-12-31 0001116463 1 2023-01-01 2023-12-31 0001116463 2 2023-01-01 2023-12-31 0001116463 3 2023-01-01 2023-12-31 0001116463 4 2023-01-01 2023-12-31 +Table of Contents +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Proxy Statement Pursuant to Section 14(a) +of the Securities Exchange Act of 1934 +Filed by the Registrant x Filed by a Party other than the Registrant o +Check the appropriate box: +o +Preliminary Proxy Statement +o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +x +Definitive Proxy Statement +o Definitive Additional Materials +o +Soliciting Material under §240.14a-12 +OraSure Technologies, Inc. +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check all boxes that apply): +x No fee required. +o Fee paid previously with preliminary materials +o Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11 +Table of Contents +Proxy Statement +Notice of Annual Meeting of Stockholders +2024 Tuesday, May 14, 2024 ● 10:00 a.m. (Eastern Time) +Table of Contents +Letter to the Stockholders +Carrie Eglinton Manner +Chief Executive Officer (“CEO”) +April 3, 2024 +Dear Fellow Stockholders: +At OTI, our a vision is to transform health through actionable insights, powering the shift that connects people to healthcare wherever they are. We believe our mission of improving access, quality, and value of healthcare with innovation in effortless tests, sample management solutions, and services is aligned with where healthcare is headed, and we are proud to be part of this evolution that empowers people to manage their health. +This year, we have made fantastic progress on our three-part transformation journey to strengthen our foundation, elevate our core growth, and accelerate profitable growth. In 2023, we had a record year for revenue, driven by our InteliSwab ® COVID-19 test, and we generated significant positive operating cash flow, fueled by our enterprise-wide focus on innovating and operating with disciplined execution. In 2024, we will maintain our focus on achieving our target of break-even in cash flow from operations for the core business. +As contracts for our InteliSwab ® tests taper down, we are investing in our innovation roadmap, both organically and inorganically, and building opportunities for future growth. External partnerships are a fundamental part of our strategy to drive expansion in our core business, and we believe the progress we are making positions us for profitable growth, strengthens our medium to long-term competitiveness, and creates additional shareholder value. +I believe we are in a strong strategic position to play an important role in the future of healthcare as we expect to see the increased importance of empowering consumers. Paired with our mantra of innovating and operating with disciplined execution and accountability, I anticipate that we will profitably power the shift that connects people to better healthcare. +We will be holding our 2024 Annual Meeting of Stockholders (the “Annual Meeting”) of OraSure Technologies, Inc. (the “Company”) on Tuesday, May 14, 2024 at 10:00 a.m. (Eastern Time) . This year’s Annual Meeting will (again) be a virtual meeting, conducted as a live webcast. You will be able to attend the Annual Meeting online, vote your shares electronically if you wish, and submit your questions during the meeting by visiting www.virtualshareholdermeeting.com/OSUR2024. +Pursuant to the Securities and Exchange Commission rule allowing companies to furnish proxy materials to their stockholders over the internet, a Notice of Internet Availability of Proxy Materials (the “Notice”) will be sent to stockholders on or about April 4, 2024. The Notice contains information on how to access copies of the proxy materials and vote your shares. +Table of Contents +At the Annual Meeting, you will be asked to (i) elect two Class III Directors to serve on the Board of Directors until the Annual Meeting of Stockholders in 2027; (ii) ratify the appointment of Grant Thornton LLP as our independent registered public accounting firm for the 2024 fiscal year; (iii) approve, by an advisory (non-binding) vote, the compensation of the Company’s named executive officers as disclosed in the proxy materials; (iv) approve, an amendment to our Certificate of Incorporation to limit the liability of certain officers of the Company as permitted by recent amendments to Delaware law; (v) approve an amendment and restatement of the OraSure Technologies, Inc. Stock Award Plan (the "Stock Award Plan" or the "Plan") to increase the number of shares to be authorized for grant under the Plan by 3,000,000 shares; (vi) approve one or more adjournments of the Annual Meeting to a later date or dates, if necessary or appropriate, to permit further solicitation and vote of proxies in the event that there are insufficient votes to adopt the foregoing proposals; and (vii) transact such other business as may properly come before the meeting, and any adjournment(s) or postponement(s) thereof. +The Board of Directors has approved two nominees for the Class III Directors and recommends that you vote FOR their election to the Board of Directors. In addition, the Board of Directors recommends that you vote FOR the ratification of Grant Thornton LLP’s appointment, FOR the approval of the Company’s executive compensation, FOR the approval of an amendment to our Certificate of Incorporation to limit the liability of certain officers of the Company, FOR the approval of the amendment and restatement of the Company’s Stock Award Plan, and FOR the approval of adjournments to the Annual Meeting if necessary or appropriate to permit further solicitation and vote of proxies. +Your vote is very important, regardless of the number of shares you own. Whether or not you plan to attend the Annual Meeting online, we urge you to submit your vote as soon as possible . You will have the option to vote by telephone, via the internet, or by completing, signing, dating and returning a paper proxy card. Additional details on these options can be found in the Notice sent to you and in the other proxy materials. You may, of course, attend the Annual Meeting online and vote your shares during the meeting regardless of whether you have previously voted by phone, the internet or mail. +Thank you for your cooperation and your ongoing support of, and continued interest in, OraSure Technologies, Inc. +Sincerely yours, +Carrie Eglinton Manner +CEO & President +Table of Contents +NOTICE OF 2024 ANNUAL MEETING OF STOCKHOLDERS OF ORASURE TECHNOLOGIES, INC. +DATE AND TIME +Tuesday, May 14, 2024 +10:00 a.m. (Eastern Time) +To be held virtually by visiting: +www.virtualshareholdermeeting.com/OSUR2024 +ITEMS OF BUSINESS +The 2024 Annual Meeting of Stockholders will be held for the following purposes: +1. To elect two (2) Class III Directors to serve for a term expiring at the Company’s Annual Meeting of Stockholders in 2027; +2. To ratify the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2024; +3. To approve, by an advisory (non-binding) vote, the compensation of the Company’s named executive officers as disclosed in the Proxy Statement accompanying this Notice; +4. To approve an amendment to our Certificate of Incorporation to limit the liability of certain officers of the Company as permitted by recent amendments to Delaware law; +5. To approve an amendment and restatement of the Company’s Stock Award Plan to increase the number of shares of Common Stock authorized to be granted under the Plan; +6. To approve one or more adjournments of the Annual Meeting to a later date or dates, if necessary or appropriate, to permit further solicitation and vote of proxies in the event that there are insufficient votes to adopt the foregoing proposals; and +7. To consider such other business as may properly come before the meeting, and any adjournment(s) or postponement(s) thereof. +HOW TO VOTE +Via the Internet . Go to www.proxyvote.com to vote your shares online prior to the Annual Meeting. Have the control number that is printed in your Notice of Internet Availability of Proxy Materials or Proxy Card available and follow the instructions. You may also vote online during the Annual Meeting by going to www.virtualshareholdermeeting.com/OSUR2024 and following the instructions. +By Phone . Call the toll-free number on your Notice of Internet Availability of Proxy Materials or Proxy Card and follow the prompts. +By Mail . You can vote by mail by requesting a paper copy of the materials, which will include a Proxy Card. Please review your Notice of Internet Availability of Proxy Materials for instructions on how to request a paper copy of the materials. Mark, sign and date your Proxy Card and return it as indicated on the Proxy Card. +NOTICE OF 2024 ANNUAL MEETING OF STOCKHOLDERS OF ORASURE TECHNOLOGIES, INC. +Who Can Vote : Only holders of shares of the Company’s Common Stock of record at the close of business on March 22, 2024 will be entitled to vote at the Annual Meeting of Stockholders and any adjournment(s) or postponement(s) thereof. Additional information is included in the Proxy Statement accompanying this Notice. +A complete list of stockholders entitled to vote at the meeting will be available for examination by any stockholder for any purpose germane to the meeting beginning 10 days before the meeting at the Company’s headquarters at 220 East First Street, Bethlehem, PA 18015 during ordinary business hours. In addition, such list will be available for inspection during the meeting in the virtual meeting room at: www.virtualshareholdermeeting.com/OSUR2024 . +By Order of the Board of Directors, +Stefano Taucer +Secretary +April 3, 2024 +Table of Contents +Proxy Statement Table of Contents +Proxy Statement Summary +1 +2024 Annual Meeting Information +1 +Proposals for Stockholder Consideration +1 +2023 Performance Highlights +4 +Most Significant Compensation Components +5 +Key Features of our Executive Compensation Program +6 +Questions And Answers About the 2024 Annual Meeting And Voting +7 +Why Did I Receive These Proxy Materials? +7 +What is a Proxy +7 +What is the Record Date and What Does It Mean? +7 +What is the Difference Between a Stockholder of Record and a Stockholder Who Holds Stock in Street Name? +7 +How Can I Vote My Shares for the Annual Meeting? +8 +How Will my Shares Be Voted if I Send In a Proxy +8 +Will My Shares Be Voted if I Do Not Provide My Proxy? +8 +How Many Shares Must Be Present to Hold The Annual Meeting? +9 +How Can I Revoke a Proxy +9 +What Items Will Be Voted On At The Annual Meeting? +9 +Who Will Pay the Cost of this Proxy Solicitation? +9 +How Can I Participate in the Annual Meeting? +9 +What If I Have Technical Difficulties or Trouble ACCESSING The Virtual Meeting +10 +Are Votes Confidential? +10 +Who Counts the Votes? +10 +May Stockholders Ask Questions At The Annual Meeting? +10 +Stock Ownership of Certain Beneficial Owners and Management +11 +Corporate Governance +12 +Board Responsibilities, Operation and Composition +12 +Governance Guidelines and Code of Conduct +12 +Environmental, Social and Governance Issues +13 +Independent Board Chairperson +15 +Director Independence +16 +Oversight of Risk Management +16 +Annual Meeting Attendance and Stockholder Communications +16 +Committees of the Board +17 +Nomination of Directors +19 +Director Qualifications +20 +Insider Trading +21 +Prohibition against Short Sales, Hedging and Pledging +21 +Stock Ownership and Retention Guidelines +22 +Audit Committee Matters +22 +Report of the Audit Committee for the year ended December 31, 2023 +22 +Audit Fees; Audit Related Fees; Tax Fees; all Other Fees +23 +Change in Independent Registered Public Accounting Firm +24 +Compensation Committee Matters +25 +Compensation Processes and Procedures +25 +Table of Contents +Annual Performance Evaluations +25 +Role of the Compensation Committee +26 +Role of the CEO +26 +Role of the Compensation Consultant +26 +Compensation Committee Interlocks and Insider Participation +27 +Compensation Committee Report +27 +Executive Officers +28 +Transactions with Related Persons +30 +Compensation Discussion and Analysis +32 +Employment Agreements and Potential Payments Upon Termination or Change of Control +58 +CEO Pay Ratio +62 +Pay Versus Performance +63 +Stock Award Plan Information +68 +Director Compensation +68 +Annual Fees +68 +Initial and Annual Equity Awards +69 +Equity Award Terms +69 +Deferred Compensation +69 +Director Compensation During 2023 +70 +Proposals Requiring Your Vote +71 +Proposal No. 1. Election of Directors +71 +Proposal No. 2. Ratification of Appointment of Independent Registered Public Accounting Firm +75 +Proposal No. 3. Advisory (Non-Binding) Vote to Approve Executive Compensation +76 +Proposal No. 4. Approval of an Amendment to the Company's Certificate of Incorporation +77 +Proposal No. 5. Amendment and Restatement of Stock Award Plan +79 +Proposal No. 6. A djournment of Annu al Meeting +84 +Delinquent Section 16(A) Reports +85 +Annual Report +85 +Deadline for Stockholder Proposals +86 +Table of Contents +PROXY STATEMENT SUMMARY +We are providing these proxy materials to stockholders of OraSure Technologies, Inc., a Delaware corporation (as used herein, “we,” “us,” “our”, “OraSure” or the “Company”), and we are first making available or mailing the materials on or about April 4, 2024, in connection with the Company’s solicitation of proxies (each, a “Proxy”) for use at the Annual Meeting of Stockholders to be held on Tuesday, May 14, 2024 at 10:00 a.m. (Eastern Time), and at any adjournment(s) or postponement(s) thereof (the “Annual Meeting”). +As a stockholder, you are invited to participate in the Annual Meeting and are requested to vote on the matters described in this Proxy Statement. The +Annual Meeting will be conducted in a completely virtual manner through a live webcast that you can access online by going to www.virtualshareholdermeeting.com/OSUR2024 . The webcast will not include a presentation by management. A question and answer session will be provided at the Annual Meeting only for questions that are germane to the matters being discussed and voted on at the meeting. +This summary highlights information contained elsewhere in this Proxy Statement but does not contain all of the information that you should consider. You should read the entire Proxy Statement carefully before voting your shares. +2024 ANNUAL MEETING INFORMATION +• Date and Time: Tuesday, May 14, 2024 at 10:00 a.m. (Eastern Time) +• Location: Online by visiting www.virtualshareholdermeeting.com/OSUR2024 +• Record Date: March 22, 2024 +PROPOSALS FOR STOCKHOLDER CONSIDERATION +Proposals Board +Recommendation Page Reference +for More Detail +1.) +Election of two Class III Directors +FOR EACH NOMINEE +71 +2.) +Ratification of a ppointment of our i ndependent r egistered p ublic a ccounting f irm for 2024 +FOR +75 +3.) +A dvisory ( n on- b inding) v ote to a pprove e xecutive c ompensation +FOR +76 +4.) +Approval of an amendment to our Certificate of Incorporation to limit the liability of certain officers of the Company as permitted by recent amendments to Delaware law +FOR +77 +5.) +Approval of an a mendment and r estatement of our Stock Award Plan to i ncrease the s hares a uthorized for i ssuance t hereunder +FOR +79 +6.) +Approval to adjourn the Annual Meeting to a later date or dates, if necessary or appropriate, to permit further solicitation and vote of proxies in the event that there are insufficient votes for, or otherwise in connection with, the approval of the foregoing proposals +FOR +84 +1 +Table of Contents +Proposal No. 1 – Election of Directors +The table below provides summary information about each of our nominees for Class III Directors, whose new terms will expire at the 2027 Annual Meeting of Stockholders. The Board of Directors (the “Board”) is recommending that stockholders vote for each Director nominee. +Committee +Memberships 1 +Other +Public +Boards +Name and Principal Occupation Age Director +Since Independent AC CC N& +CG +Nancy J. Gagliano, M.D. +Managing Director, Granite Healthcare Advisors 64 2021 Yes No √ C No +Lelio Marmora +President, Former Executive Director, Unitaid 57 2020 Yes √ No √ No +______________________ +1 AC = Audit Committee; CC = Compensation Committee; N&CG = Nominating & Corporate Governance Committee; C = Chairperson; √ = Member. +Proposal No. 2 – Ratification of Appointment of Independent Registered Public Accounting Firm +Our Audit Committee has selected Grant Thornton LLP (“GT”) to be our independent registered public accounting firm for the 2024 fiscal year. The Board believes GT is well qualified to serve in this capacity and is recommending that the engagement of GT be ratified by our stockholders. The Board is recommending that stockholders vote for the appointment of GT as provided above. +Proposal No. 3 – Advisory (Non-Binding) Vote to Approve Executive Compensation +Our compensation program is designed to focus and reward our executives for balancing both short and long-term priorities. To fulfill this mission, we have adopted a pay-for-performance philosophy that forms the foundation for executive compensation decisions made by our Board and the Compensation Committee of the Board (the “Compensation Committee”). +The Compensation Discussion and Analysis portion of this Proxy Statement (the “CD&A”) contains a detailed description of our executive compensation philosophy and program, the compensation decisions the Board and Compensation Committee have made under that program and the factors considered in making those decisions, focusing on the compensation of our named executive officers (“NEOs”) for the year ended December 31, 2023, who were: +Name Position(s) +Carrie Eglinton Manner President and CEO +Kenneth McGrath Chief Financial Officer +Kathleen G. Weber Chief Product Officer +As described further in the CD&A and elsewhere in this Proxy Statement, the following should be considered by stockholders in evaluating the compensation of our NEOs for 2023: +• We delivered record revenue, generated strong cash flow, significantly improved profitability, invested in our innovation pipeline, established strategic relationships with key partners, and outperformed our peers and industry in Total Shareholder Return in 2023. +• OraSure is a diverse portfolio business operating in highly competitive and evolving healthcare market segments; the Company provided demonstrable value for customers, employees, and stockholders in 2023 while fulfilling its contract obligations to the U.S. Government in service of the COVID-19 pandemic ahead of schedule and on budget. +2 +Table of Contents +• The Compensation Committee applied no positive discretion in determining performance and payouts for our NEOs. +• We regularly solicit input from our stockholders on executive compensation matters. In response to the 2023 Say-on-Pay results (66% approval), and as discussed in the Say-on-Pay Results in 2023, Stockholder Feedback and Company Response section of this Proxy Statement, we initiated an even more robust shareholder engagement program and integrated the feedback we received from investors into our executive compensation program. We plan to continue to engage with our stockholders in the future to help ensure that our executive compensation programs are well understood by our stakeholders and that we remain responsive to stockholder concerns. +• We maintain and adhere by a full suite of good governance policies and processes. +The Board is recommending that stockholders vote in favor of the compensation of our NEOs, as described in this Proxy Statement. +Proposal No. 4 – Approval of an Amendment to the Company's Certificate of Incorporation +The State of Delaware, which is the Company’s state of incorporation, enacted legislation, effective August 1, 2022, that enables Delaware companies to limit the liability of certain officers in limited circumstances under Section 102(b)(7) of the Delaware General Corporation Law (the “DGCL”). Amended DGCL Section 102(b)(7) only permits exculpation for direct claims brought by stockholders for breach of an officer’s fiduciary duty of care, including class actions, but does not eliminate officers’ monetary liability for breach of fiduciary duty claims brought by the corporation itself or for derivative claims brought by stockholders in the name of the corporation. Furthermore, the limitation on liability does not apply to breaches of the duty of loyalty, acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, or any transaction in which the officer derived an improper personal benefit. +The Board believes it is important to provide protection from certain liabilities and expenses that may discourage prospective or current directors from accepting or continuing membership on corporate boards and prospective or current officers from serving corporations. The Board believes that by providing exculpation in accordance with DGCL Section 102(b)(7), the Company would be able to attract and retain the services of highly qualified individuals to serve the Company as key officers and potentially reduce litigation costs associated with frivolous lawsuits. +The Board balanced these considerations with our corporate governance guidelines and practices and determined that it is advisable and in the best interests of the Company and our stockholders to amend our Certificate of Incorporation to adopt amended DGCL Section 102(b)(7) and extend exculpation protection to our officers in addition to our directors. The proposed Certificate of Amendment to the Certificate of Incorporation (the “Certificate of Amendment”) reflecting this amendment is attached as Exhibit A to this Proxy Statement. +The Board is recommending that stockholders vote in favor of an amendment to our Certificate of Incorporation to limit the liability of certain officers of the Company as permitted by recent amendments to Delaware law , as described in this Proxy Statement. +Proposal No. 5 – Amendment and Restatement of Stock Award Plan +In order to enable the Company to continue to attract qualified directors, officers, employees and outside advisors, and to compensate these individuals in a manner that is competitive with compensation provided by other medical diagnostic and healthcare companies, the Board has determined that additional shares of Common Stock are needed to be available for grants under the Company’s Stock Award Plan. In addition, the Board wants to ensure that sufficient shares are available, if needed, to provide retention or other equity awards in connection with potential acquisitions or other business development activities. +Accordingly, subject to stockholder approval, the Board approved an amendment and restatement of the OraSure Technologies, Inc. Stock Award Plan (last amended and restated, March 31, 2023) (the “Stock Award Plan” or the “Plan”) to increase the number of shares to be authorized for grant under the Plan by 3,000,000 shares. On and after March 25, 2024, as a result of this increase, there will be a total of 5,302,283 shares available in the Plan for future issuance, subject to stockholder approval. A copy of the Amended and Restated Stock Award Plan reflecting this amendment is attached as Exhibit B to this Proxy Statement. +Proposal No. 6 – Adjournment of Annual Meeting +3 +Table of Contents +If, at the Annual Meeting, the number of shares of Common Stock present or represented and voting in favor of the approval of any of Proposal 1, 2, 3, 4 or 5 (collectively, the “Proposals”) is not sufficient to approve the Proposals, our management may move to adjourn the Annual Meeting to a later date or dates, if necessary or appropriate, to permit further solicitation and vote of proxies in favor of the Proposals. +In this proposal, we are asking our stockholders to authorize the holder of any proxy solicited by our Board to vote in favor of granting discretionary authority to the proxy holders, and each of them individually, to adjourn the Annual Meeting to another time and place for the purpose of soliciting additional proxies. If the stockholders approve this proposal, we could adjourn the Annual Meeting and any adjourned session of the Annual Meeting and use the additional time to solicit additional proxies, including the solicitation of proxies from stockholders who have previously voted. +2023 PERFORMANCE HIGHLIGHTS +In 2023, we delivered meaningful progress on our three pillars of strategic transformation to: +1) Strengthen our foundation; +2) Elevate growth in our core business; and +3) Accelerate profitable growth. +Notable highlights in 2023 include: +• We reported record revenue of $405 million, representing 5% growth compared to the prior year and 74% cumulative growth over the past two years. +• We demonstrated strong execution on our Covid-19 contracts and generated $257 million of revenue from our Covid-19 products. +• We grew our Core revenue (which excludes Covid-19 revenue) by 2% compared to the prior year while navigating headwinds in our end markets and the macroeconomy. +• We delivered significant expansion in both our gross margin and our operating margin through our initiatives focused on operational efficiency, cost reductions, and building an enterprise-wide mindset that is focused on continuous improvement. +• We exceeded our target of $15 million of annualized cost savings. +• We generated operating income of approximately $33 million compared to an operating loss of approximately $22 million in 2022. +• We reported net income of approximately $54 million compared to a net loss of approximately $17 million in 2022. +• We completed the milestones and collected the corresponding milestone payments included in our contract with the U.S. government related to capacity expansion at our Opus Way facility earlier than expected, and we made progress in streamlining our operational footprint in order to leverage the automation and infrastructure at our new facility. +• We generated $142 million of Cash Flow from Operations and increased our cash and short-term investments balance at the end of 2023 to $290 million, which is an increase of $180 million compared to the end of 2022. +• With our stronger balance sheet, we are investing in our internal innovation roadmap and evaluating external opportunities to expand our product portfolio in order to accelerate our long-term growth rate. +• We continued to diversify and expand our client base through new and expanded agreements with diagnostic, pharma, biotech companies, along with other innovators. +• We expanded the portfolio of products that our sales teams can provide to our customers in several important segments through new distribution relationships. +• In January 2024, we announced our investment in KKR Sapphiros, L.P. ("Sapphiros") and our entry into a wide-ranging distribution relationship with Sapphiros and certain of its related entities. Through this strategic relationship, we expect to be able to offer a more comprehensive range of low-cost diagnostic tests and sample management solutions to our customers globally. +• We outperformed our peers and the NASDAQ Healthcare index Total Shareholder Return (TSR) of 0.4% by delivering 54% TSR based on the average stock price for the last twenty trading days of the year in 2023 compared to the last twenty trading days of 2022. +4 +Table of Contents +MOST SIGNIFICANT COMPENSATION COMPONENTS +We have structured the components of our executive compensation program to be directly tied to the performance of both the Company and our executives and aligned with the best interests of our stockholders. These components consist of the following: +Base Salary Salaries are based on the individual executive’s position relative to market and the executive’s individual performance and contribution. +Annual Cash Incentive Plan Bonuses +Annual incentive cash bonuses through our OraSure Technologies Incentive Plan (“OTIP”) reflect market-based targets with individual bonus payouts and are contingent upon (i) our achievement of corporate financial and/or strategic objectives, and (ii) the executive’s individual performance against pre-determined objectives. +Equity Awards under our Long-Term Incentive Policy (“LTIP”) Long-term incentive equity compensation reflects market-based targets with the value of individual awards contingent upon each executive’s individual performance against pre-determined objectives during the fiscal year prior to award. Fifty percent (50%) of each NEO’s annual LTIP award consists of performance-vested restricted units (“PRUs”) which require achievement of certain financial performance measures selected by the Board and Compensation Committee and the satisfaction of a 3-year service period for vesting of the award. The other fifty percent (50%) consists of time-vested restricted stock (“RS”) which vests in equal installments over a three-year service period. +5 +Table of Contents +KEY FEATURES OF OUR EXECUTIVE COMPENSATION PROGRAM +Key features of our compensation program illustrate our commitment to pay-for-performance, the strong alignment of our executives’ interests with those of our stockholders, and strong corporate governance. Several of the more significant of these features are summarized below: +• Compensation is market driven with total compensation of our executives targeted at the 50 th percentile of the Company’s peer group (as set forth in the CD&A) (the “Peer Group”). +• Regular stockholder outreach on compensation and governance matters. +• Compensation is predominantly variable or performance based. +• Use of a third-party compensation consultant to provide executive compensation market assessment and independent advice on compensation matters. +• Balanced mix of cash/equity, fixed/variable, short-term/long-term compensation components. +• Strong stock ownership/retention requirements for executives and Directors. +• In order to incentivize growth, performance objectives for annual bonus incentives target key financial measures and/or important strategic goals. +• As a general matter, no perquisites for NEOs that are not offered to all employees of the Company. +• The Board’s discretionary ability to adjust annual incentive bonus payment is limited to +/- 10% in order to avoid excessive discretionary bonus adjustments. In 2023, the Compensation Committee and Board included a condition that the annual incentive bonus may be further adjusted downward based on profitability and cash liquidity needs of the Company. +• Use of peer company benchmarking. +• Long-term equity incentive awards include 50% PRUs that vest based on (i) three-year cumulative revenue, (ii) three-year relative total stockholder return (“rTSR”) and (iii) three years of continued service. +• Compensation recoupment or “clawback” policy, under which we are required to recover excess compensation paid to an executive if our financial statements are restated. +• No excise tax gross-up in any of our NEO employment agreements and no “single trigger” change-in-control severance in any of our new executive employment agreements. +• No hedging or pledging of our Common Stock. +6 +Table of Contents +QUESTIONS AND ANSWERS ABOUT THE 2024 ANNUAL MEETING AND VOTING +1.   WHY DID I RECEIVE THESE PROXY MATERIALS? +Our Board of Directors (the “Board”) is furnishing proxy materials, including this Proxy Statement, a Proxy Card and the Company’s Annual Report to Stockholders for the year ended December 31, 2023 (the “2023 Annual Report”), to our stockholders in order to solicit proxies to be voted at the Annual Meeting (each, a “Proxy”). On or about April 4, 2024, we will mail a Notice of Internet Availability of Proxy Materials (the “Notice”) to each stockholder at the holder’s address of record, indicating that this Proxy Statement is now available to our stockholders of record entitled to vote at the Annual Meeting. Please carefully review this Proxy for information on the matters to be presented at the Annual Meeting and for instructions on how to vote your shares. Our 2023 Annual Report, including financial statements for such +period, does not constitute any part of the material for the solicitation of proxies, but copies are available to stockholders upon request. +Securities and Exchange Commission (“SEC”) rules permit us to deliver only one copy of the Notice or a single set of proxy materials to multiple stockholders sharing the same address. Upon written or oral request, we will deliver separate Notices and/or copies of our 2023 Annual Report and/or this Proxy Statement to any stockholder at a shared address to which a single copy of the Notice was delivered. Stockholders may notify the Company of their requests by calling or writing us at OraSure Technologies, Inc., 220 East First Street, Bethlehem, Pennsylvania 18015, Attention: Corporate Secretary; (610) 882-1820. +2.   WHAT IS A PROXY? +A Proxy is your legal designation of another person to vote the shares of Common Stock you own. That other person is called a “proxy.” If you designate someone as your proxy in a written document, that document also is called a Proxy or a Proxy Card. +Carrie Eglinton Manner and Stefano Taucer, each of whom are officers of the Company, have been designated by the Board as proxies to vote on behalf of stockholders for the Annual Meeting. +3.   WHAT IS THE RECORD DATE AND WHAT DOES IT MEAN? +The record date for the Annual Meeting is March 22, 2024 (the “record date”). The record date is established by the Board as required by Delaware law. Only stockholders of record at the close of business on the record date are entitled to: +(a) receive notice of the Annual Meeting; and +(b) vote at the Annual Meeting and any adjournment(s) or postponement(s) of the meeting. +Each stockholder of record on the record date is entitled to one vote for each share of Common Stock held. +On the record date, there were 76,509,975 shares of our Common Stock outstanding and entitled to vote at the Annual Meeting. +A list of stockholders will be open for examination by any stockholder for any purpose germane to the Annual Meeting for a period of 10 days prior to the meeting at our principal executive offices at 220 East First Street, Bethlehem, PA 18015, and electronically during the Annual Meeting at www.virtualshareholdermeeting.com/OSUR2024 when you enter the control number provided in the Notice sent to you. +4.   WHAT IS THE DIFFERENCE BETWEEN A STOCKHOLDER OF RECORD AND A STOCKHOLDER WHO HOLDS STOCK IN STREET NAME? +If your shares of stock are registered in your name on the books and records of our transfer agent, Computershare, Inc., you are a stockholder of record. +If your shares of stock are held for you in the name of your broker, bank or other nominee, your shares are held in “street name.” The answer to Question 7 describes brokers’ discretionary voting +7 +Table of Contents +authority and when your broker, bank or other nominee is permitted to vote your shares of stock without instructions from you. +It is important that you vote your shares if you are a stockholder of record and, if you hold +shares in street name, that you provide appropriate voting instructions to your broker, bank or other nominee as discussed in the answer to Question 7. +5.   HOW CAN I VOTE MY SHARES FOR THE ANNUAL MEETING? +All stockholders have a choice of voting via the internet, over the telephone or by completing and mailing a paper Proxy Card, as described below. +Voting via the Internet or by Telephone. Stockholders of record desiring to vote online via the internet or by telephone prior to the Annual Meeting, should go to www.proxyvote.com or call the toll-free number indicated on the Proxy Card or Notice. You may vote via the internet or by telephone provided you do so by 11:59 p.m. (Eastern Time) (8:59 p.m. Pacific Time) on Monday, May 13, 2024. Stockholders who attend the Annual Meeting via the internet may vote their shares at that time up to and during the Annual Meeting by following the instructions at www.virtualshareholdermeeting.com/OSUR2024 . +Street name holders may vote via the internet or by telephone if their brokers, banks or other nominees make those methods available. If that is the case, each broker, bank or nominee will include instructions with the Notice or Proxy Statement. +The telephone and internet voting procedures, including the use of control numbers, are designed to +authenticate your identity, to allow you to give your voting instructions and to confirm that your instructions have been recorded properly. +If you vote via the internet, you should understand that you will be responsible for any costs associated with this method of voting, such as usage charges from internet access providers and telephone companies. +Voting by Mail . If you desire to vote prior to the Annual Meeting by mail by using a paper Proxy Card instead of by telephone or via the internet, you will need to follow the instructions in your Notice that will be mailed to you. You will then need to complete, sign, date and return the Proxy Card, as described on the Proxy Card. Street name holders should complete and return the voting card provided by their broker, bank or nominee. +Voting at the Annual Meeting. All stockholders of record may vote online during the Annual Meeting, as described above. Submitting a Proxy via the internet, over the telephone or by mail will not affect your right to withdraw your Proxy and vote during the Annual Meeting. +6.   HOW WILL MY SHARES BE VOTED IF I SEND IN A PROXY? +If you are represented by a properly executed Proxy, whether delivered by phone, the internet or mail, your shares will be voted in accordance with your instructions. +If you do not provide instructions with your Proxy, your shares will be voted according to the recommendations of our Board as stated on the Proxy. +7.   WILL MY SHARES BE VOTED IF I DO NOT PROVIDE MY PROXY? +Stockholders of Record : If you are a stockholder of record, your shares will not be voted if you do not provide your Proxy, unless you vote online during the Annual Meeting. It is, therefore, important that you vote your shares. +Street Name Holders : If your shares are held in street name and you do not provide your signed and dated voting instruction form to your bank, broker or other nominee, your shares may be voted by your broker, bank or other nominee but only under certain circumstances. Specifically, under rules of the New +York Stock Exchange, which also apply to companies listed on the Nasdaq Stock Exchange (“Nasdaq”), shares held in the name of your broker, bank or other nominee may be voted by your broker, bank or other nominee on certain “routine” matters if you do not provide voting instructions. +At the upcoming Annual Meeting, only the ratification of the selection of Grant Thornton LLP as the Company’s independent registered public accounting firm is considered a “routine” matter for which brokers, banks or other nominees may vote uninstructed shares. The other proposals to be voted +8 +Table of Contents +on at our Annual Meeting (specifically, the election of each of the Director nominees, the advisory vote to approve the compensation of the Company’s NEOs, the vote on the Charter Amendment and the vote to approve the amendment and restatement of the Company’s Stock Award Plan are not considered “routine”, so the broker, bank or other nominee +cannot vote your shares on any of these proposals unless you provide to the broker, bank or other nominee voting instructions for each of these matters. If you do not provide voting instructions on these matters, your shares will not be voted on the matter, which is referred to as a “broker non-vote.” It is, therefore, important that you vote your shares. +8.   HOW MANY SHARES MUST BE PRESENT TO HOLD THE ANNUAL MEETING? +Your shares are counted as present at the meeting if you attend the meeting and vote online or if you properly return a Proxy by internet, telephone or mail. In order for us to conduct our Annual Meeting, a majority of our outstanding shares of Common Stock +as of the record date, must be present online or by Proxy at the meeting. This is referred to as a quorum. Broker non-votes, votes withheld and abstentions are included in determining whether there are a sufficient number of shares present to constitute a quorum. +9.   HOW CAN I REVOKE A PROXY? +You can revoke a Proxy before the completion of voting at the Annual Meeting by: +(a) Giving written notice to the Corporate Secretary of the Company to revoke your Proxy; or +(b) Delivering a later-dated Proxy that indicates the change in your vote; or +(c) Logging on to www.proxyvote.com in the same manner you would to submit your Proxy electronically or calling the telephone number indicated in your Notice, and in each case, following the instructions to revoke or change your vote; or +(d) Attending the Annual Meeting online and voting, which will automatically cancel any Proxy previously given. Attendance alone will not revoke any Proxy that you have given previously. +If you choose any of the first three methods, you must take the described action no later than 11:59 p.m. Eastern Time (8:59 p.m. Pacific Time) on Monday, May 13, 2024. Once voting on a particular matter is completed at the Annual Meeting, you will not be able to revoke your Proxy or change your vote. If your shares are held in street name by a broker or other nominee, you must contact that institution to change or revoke your vote. +10.   WHAT ITEMS WILL BE VOTED ON AT THE ANNUAL MEETING? +At the Annual Meeting, action will be taken on the matters set forth in the accompanying Notice and described in this Proxy Statement. The Board knows of no other matters to be presented for action at the Annual Meeting. +If any other matters do properly come before the Annual Meeting, the persons named in the Proxy Card will have discretionary authority to vote on those matters in accordance with their best judgment. +11.   WHO WILL PAY THE COST OF THIS PROXY SOLICITATION? +Solicitation of Proxies is made on behalf of the Board. The cost of soliciting Proxies will be borne by the Company. In addition to solicitations by e-proxy and/or by mail, certain of our Directors, officers and regular employees may solicit Proxies personally or by telephone or other means without additional compensation. +We have also engaged Alliance Advisors, LLC, 200 Broadacres Drive, 3 rd Floor, Bloomfield, NJ +07003, to provide proxy solicitation services at an estimated fee of $15,000, plus expenses. Arrangements will be made with brokerage firms and other custodians, nominees and fiduciaries to forward solicitation materials to the beneficial owners of stock held of record by such persons, and we will, upon request, reimburse them for their reasonable expenses in so doing. +12.   HOW CAN I PARTICIPATE IN THE ANNUAL MEETING? +9 +Table of Contents +This year’s Annual Meeting will be a virtual meeting of stockholders and will be conducted via live webcast on the Internet. You are entitled to participate in the Annual Meeting only if you were a stockholder of the Company as of the close of business on March 22, 2024, the record date for the meeting, or if you hold a valid Proxy for the Annual Meeting. +You will be able to participate in the Annual Meeting online and submit your questions during the +meeting by visiting www.virtualshareholdermeeting.com/OSUR2024. To participate in the Annual Meeting, you will need the control number that is included on your Notice, on our Proxy Card or on the instructions that accompanied your proxy materials. The Annual Meeting will begin promptly at 10:00 a.m. (Eastern Time), and you should allow ample time to complete the online check-in procedures. +13.   WHAT IF I HAVE TECHNICAL DIFFICULTIES OR TROUBLE ACCESSING THE VIRTUAL MEETING? +If you encounter any difficulties accessing the virtual meeting during the check-in or meeting time, +please call the technical support number that will be posted on the Virtual Shareholder Meeting log in page. +14.   ARE VOTES CONFIDENTIAL? +We will continue our long-standing practice of holding the votes of each stockholder in confidence from Directors, officers and employees, except: (a) as necessary to meet applicable legal requirements and to assert or defend claims for or against the +Company; (b) in the case of a contested proxy solicitation; (c) if a stockholder makes a written comment on the Proxy Card or otherwise communicates his or her vote to the Company; or (d) as needed to allow the independent inspectors of election to certify the results of the vote. +15.   WHO COUNTS THE VOTES? +We will continue, as we have for many years, to retain an independent inspector of election to receive +and tabulate the Proxies and certify the results. These activities will be handled electronically. +16.   MAY STOCKHOLDERS ASK QUESTIONS AT THE ANNUAL MEETING? +Yes. The CEO will answer stockholders’ written questions submitted during the question and answer period of the meeting. Stockholders should confine their questions to matters that relate to the business of the meeting. The CEO will determine which questions are appropriate to answer during the meeting. +We reserve the right to edit or reject any questions we deem profane or otherwise inappropriate, or that do not relate to the business of the meeting. Detailed guidelines for submitting written questions during the meeting are available at www.virtualshareholdermeeting.com/OSUR2024. +10 +Table of Contents +STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT +The following table sets forth information, as of the March 22, 2024 record date, regarding the beneficial ownership of the Company’s Common Stock by (a) each person who is known by us to be the beneficial owner of more than five percent of the Common Stock outstanding; (b) each Director and nominee for election as Director; (c) each of our executive officers named in the Summary Compensation Table in this Proxy Statement; and (d) all of our Directors, the nominees for election as Director and executive officers as a group. Unless otherwise indicated, the address of each person identified below is c/o OraSure Technologies, Inc., 220 East First Street, Bethlehem, Pennsylvania 18015. +Pursuant to Rule 13d-3 under the Exchange Act, shares of Common Stock which a person has a right to acquire pursuant to the exercise of stock options held by that person that are exercisable within 60 days of March 22, 2024 are deemed to be outstanding for the purpose of computing the ownership percentage of that person, but are not deemed outstanding for computing the ownership percentage of any other person. +Name and Address of +Beneficial Owner +Amount and Nature of +the Beneficial Ownership 1,2 +Percent +of Class +Black Rock, Inc. 3 +55 East 52nd Street +New York, NY 10055 +12,622,864 16.5% +The Vanguard Group 4 +100 Vanguard Blvd. +Malvern, PA 19355 +5,309,456 6.9% +Camber Capital Management, LP 5 +101 Huntington Avenue +Boston, MA 02199 +4,250,000 5.6% +Dimensional Fund Advisors 6 +6300 Bee Cave Road, Building One +Austin, TX 787746 +3,906,687 5.1% +Carrie Eglinton Manner 1,582,657 2.1% +Kenneth McGrath 326,131 * +Kathleen G. Weber 307,296 * +Mara G. Aspinall 136,335 * +James Datin 85,164 * +Nancy Gagliano, M.D. 58,831 * +David J. Shulkin, M.D. 45,338 * +Lelio Marmora 44,737 * +Robert W. McMahon 22,703 * +All Directors, the nominees for election as Director, and executive officers as a group +(9 people) 2,609,192 3.4% +* Less than 1%. +1 Subject to community property laws where applicable, beneficial ownership consists of sole voting and investment power except as otherwise indicated. +2 Includes shares subject to options exercisable within 60 days of March 22, 2024, as follows: Ms. Weber, 10,404 shares; and Ms. Aspinall, 40,000 shares; and all Directors, the nominees for election as Director and executive officers as a group, 50,404 shares. Also includes unvested RS, as follows: Ms. Eglinton Manner, 1,464,849 shares; Mr. McGrath, 182,434; Ms. Weber, 103,739 shares; Ms. Aspinall, 24,517 shares; Mr. Datin, 19,802 shares; Dr. Shulkin, 19,802 shares; Mr. Marmora, 19,802 shares; Dr. Gagliano, 19,802 shares; and Mr. McMahon 22,703 shares; and all Directors, the nominees for election as Director and executive officers as a group, 1,877,450 shares. Does not include unvested PRUs. +3 Based on information contained in a Schedule 13G/A filed January 22, 2024. The filing person has sole voting power with respect to 12,385,548 shares and sole dispositive power with respect to all of the indicated shares. +11 +Table of Contents +4 Based on information contained in a Schedule 13G/A filed February 13, 2024. The filing person has shared voting power with respect to 46,646 shares, sole dispositive power with respect to 5,203,056 shares and shared dispositive power with respect to 106,400 shares. +5 Based on information contained in a Schedule 13G filed February 2, 2023. The filing person has sole voting power with respect to 4,250,000 shares and sole dispositive power with respect to all of the indicated shares. +6 Based on information contained in a Schedule 13G filed February 9, 2024. The filing person has sole voting power with respect to 3,823,054 shares and sole dispositive power with respect to all of the indicated shares. +CORPORATE GOVERNANCE +BOARD RESPONSIBILITIES, OPERATION AND COMPOSITION +The primary responsibility of the Board of Directors is to promote the long-term success of the Company. In fulfilling this role, each Director must exhibit good faith business judgment as to what is in the best interests of the Company. The Board is responsible for establishing broad corporate policies, setting strategic direction and overseeing management. The Company’s management is responsible for the day-to-day operations of the Company. +Currently, the Board is divided into three classes with Class I consisting of two Directors, Class II consisting of two Directors and Class III consisting of three Directors. There are currently seven Directors serving on the Board. The Board has determined that Mr. Datin, a current Class III member of the Board, will not stand for re-election at the Annual Meeting, and his service as a member of the Board will end effective as of the Annual Meeting. Accordingly, Mr. Datin's seat shall remain vacant until such seat is filled or the size of the Board is reduced, in each case in accordance with our Bylaws. At each annual meeting of stockholders, the nominees for the class of Directors whose term is expiring at that annual meeting are elected for a three-year term. A Director holds office until the annual meeting of stockholders for the year in which his or her term expires or until his or her successor is elected and duly qualified, subject to prior death, resignation, retirement, disqualification or removal. Each nominee for election at our upcoming Annual Meeting currently serves as a Director. +The Board typically holds regular, quarterly, meetings, with additional meetings held as needed. The Board’s organizational meeting follows the annual meeting of stockholders. The Board usually meets in executive session at all regularly scheduled meetings. The Board held 13 meetings and acted by written consent on 6 occasions during the fiscal year ended December 31, 2023. Each member of the Board attended more than 75 percent of the combined total of meetings of the Board and of the Committees of the Board on which such member served during the period in the year in which he or she served as a Director. +The Board holds four regularly scheduled meetings each year and special meetings as needed. Directors attended greater than 75% of all Board and Committee meetings during 2023. +GOVERNANCE GUIDELINES AND CODE OF CONDUCT +The Board has adopted Corporate Governance Guidelines which, along with the Charters for each of its Committees and the Company’s Code of Business Conduct and Ethics, as amended through November 14, 2023, provide a framework for the governance of the Company. The Company’s Corporate Governance Guidelines address matters such as the responsibilities and composition of the Board, Director independence and the conduct of Board and Committee meetings. The Company’s Code of Business Conduct and Ethics sets forth guiding principles of business ethics and certain legal requirements applicable to all Company employees, contractors and non-employee Directors. Copies of the current Corporate Governance Guidelines and Code of Business Conduct and Ethics are available on the Investor Relations — Corporate Governance section of the Company’s website, https://orasure.gcs-web.com/governance . Upon request, the Company will provide a copy of each policy free of charge to any stockholder. +If we make substantive amendments to or grant any waiver from the Code of Business Conduct and Ethics applicable to our directors or executive officers, we will disclose the nature of such amendments or waiver to our stockholders to the extent and in the manner required by applicable exchange listing standards or any other regulation. For conduct involving an executive officer or Board member, only the Board of Directors or +12 +Table of Contents +the Audit Committee of the Board has the authority to waive a provision of the Code of Business Conduct and Ethics. Should the Company amend or grant a waiver to its Code of Business Conduct and Ethics, the Company intends to post such amendment or notice of the waiver to its website at https://orasure.gcs-web.com/governance . Any waivers granted to the Code of Business Conduct and Ethics will be available on the website for at least a 12-month period. +We operate under a Code of Business Conduct and Ethics and Corporate Governance Guidelines, which apply to all employees, contractors and non-employee Board members. +ENVIRONMENTAL, SOCIAL, AND GOVERNANCE MATTERS +We believe that conducting our business in a socially, environmentally and ethically responsible manner, and in compliance with applicable legal requirements, is important to our long-term success and the health and well-being of our employees, customers, the communities that we serve, and other stakeholders. As a result, environmental, social and governance (“ESG") issues have become an area of increasing focus for our management team and our Board. +On March 6, 2024, the SEC adopted extensive and comprehensive new rules that will require us to provide detailed climate-related disclosures. These disclosures will include information about material climate-related risks, financial statement disclosures, together with details relating to our governance of climate-related risks and risk-management processes, the likelihood of those risks having a material impact on our business and financial statements, among others. Additionally, the new rules will require us to disclose information about our Scope 1 and Scope 2 greenhouse gas emissions in fiscal year beginning in 2028. +ESG Oversight +Historically, ESG issues have been addressed by our management team with the primary focus on regulatory and legal compliance, ethical operations, and development of our human capital resources. Material risks in these areas have been regularly reviewed with our Board, either directly or through the Audit Committee. +In 2023, we established an ESG Steering group with representation from a broad set of functional areas with our Company, including Operations, Legal, Quality & Regulatory, Product Management, Human Resources, and Finance. This cross-functional team will guide our Sustainability initiatives, review ESG issues in order to identify material ESG risks impacting our business, and determine appropriate mitigation and corrective strategies. These risks were discussed by the Board in 2023 and will be discussed by the Board at least annually as part of the Board’s oversight of risk management. +We released our second “OraSure Cares” ESG report in 2023, which provides a snapshot of the ways that we are preserving the environment, empowering our people, modeling integrity, and positively impacting the communities that we serve and in which we are located. A copy of the report may be accessed on our website at www.orasure.com. We intend to issue our next ESG report in 2024. +Environmental +We endeavor to implement responsible and sustainable environmental practices throughout our organization. Our goal is to eliminate or minimize any harm to our employees, the communities that we serve and the environment. For the last several years, we have identified and adopted sustainable practices to reduce our global environmental footprint, reuse and repurpose resources, and inspire action in others. Sustainability is a company priority and is considered in our business decisions, from making purchases, to investing in research efforts, to designing and shipping products. +Formed in 2020, our Sustainability Initiative focuses on identifying additional steps we can take to reduce our impact on the environment and our carbon footprint, including through the use of renewable energy sources and promoting clean communities and positive environmental stewardship. +In each of the last 2 years, we have engaged an advisory firm to create a Greenhouse Gas (“GHG”) Emissions Inventory Report (the “GHG Report”) for our Bethlehem, Pennsylvania sites covering emissions for +13 +Table of Contents +the prior year. The GHG Report, which contains a detailed accounting of our Scope 1 and Scope 2 GHG emissions associated with those sites, provides us with a data-focused foundation for effective management of our GHG emissions. We conducted this study independently given our stated goal of positive environmental stewardship, and we plan to share additional data regarding our GHG emissions in our 2024 ESG Report. +We undertook several initiatives that significantly lessened our emissions in 2022 and 2023. For example, based upon the results of our GHG inventory, we identified that the largest source of emissions associated with our InteliSwab ® manufacturing process was related to supplier materials. As a result, in early 2023 we implemented a re-design of the packaging of our InteliSwab ® COVID-19 Rapid Tests to significantly reduce the amount of plastic and paper included in the product packaging. We estimate this change could save 90 tons of plastic and 1,500 tons of paper, reduce required delivery truckloads by approximately 50%, and drive cost savings of approximately $0.50 per test. +Healthcare Access & Quality +Our mission is to improve access, quality, and value of healthcare with innovation in effortless tests, sample management solutions, and services. Health equity is a significant priority around the globe, and our technologies, which are available in more than 100 countries, are valuable tools for reducing health inequities and making healthcare more accessible to underserved populations. +We aim to earn customer loyalty by consistently meeting or exceeding expectations while helping advance health and wellness worldwide. We endeavor to continuously improve our quality system and provide our customers with solutions that are safe and effective, comply with all applicable laws and regulations, and satisfy our customers. In 2023, we successfully completed 15 external assessments of our quality system, which led to continued registration, licensure, and confirmation of our commitment to quality to regulatory agencies and our customers. We also consolidated three separate quality systems into one global system. +Social & Human Capital +We believe our employees are our most important resource and are critical to our continued success. The health and safety of our workforce is a critical priority across our organization. We safeguard our people, projects, and reputation by striving for zero employee injuries, while operating and delivering our work responsibly and sustainably. We provide our employees upfront and ongoing safety training to ensure that safety policies and procedures are effectively communicated and implemented. Personal protective equipment is provided to those employees where needed to safely perform their job function. We have a Safety Committee consisting of employees from various functional departments to administer our internal safety inspection program, monitor compliance, investigate safety incidents and oversee the effectiveness of our safety procedures and policies. +We focus significant attention on attracting and retaining talented and experienced individuals to manage and support our operations, and our management team routinely reviews employee turnover rates at various levels of the organization. Management also reviews employee engagement and satisfaction surveys to monitor employee morale and receive feedback on a variety of issues. +As part of our compensation philosophy, we believe that we must offer and maintain market competitive compensation and benefits programs for our employees in order to attract and retain superior talent. In addition to competitive base wages, additional programs include annual bonus opportunities, a Company matched 401(k) Plan or other savings plan, healthcare and insurance benefits, health savings and flexible spending accounts, paid time off, family leave, flexible work schedules, and employee assistance programs. +We are committed to a thoughtful, robust, and proactive talent acquisition strategy that focuses on competitively hiring top talent to join our teams. By creating trusting partnerships and through enhanced candidate engagement initiatives, we empower and advise our business leaders to hire talent that innovates and elevates the business. We encourage applications from all qualified candidates who represent the communities in which we operate. We work to cultivate a sense of belonging for all via providing exceptional, responsive, and considerate candidate experiences. We have developed standardized, quality-driven talent acquisition processes. In 2023, we improved both our internal and external job posting experiences to make it +14 +Table of Contents +easier for qualified applicants to apply to our open positions. We have moved forward with posting our external positions to a wider range of job boards, allowing for an increased audience of potential applicants. +The OraSure family of companies is committed to creating and fostering an inclusive workplace that reflects and contributes to the global communities in which we do business and the customers and partners we serve. This includes all communities impacted by our corporate presence. Our management teams and our employees are expected to exhibit and promote honest, ethical, and respectful conduct in the workplace. All of our employees must adhere to a Code of Business Conduct and Ethics that sets standards for appropriate behavior and includes required annual training on preventing, identifying, reporting, and stopping any type of unlawful discrimination, breach of laws or unethical behavior. We strive to recruit the best people for the job regardless of gender, ethnicity, or other protected trait and it is our policy to fully comply with all laws (domestic and foreign) applicable to discrimination in the workplace. We have established a hotline and other communication methods that employees can use to anonymously report discrimination or other complaints. +We have an active All Means U Council that strives to drive belonging and inclusion within the workplace. At the end of 2023, the composition of the Board of Directors was 43% female and 57% male while the executive leadership team was 45% female and 55% male. We believe a variety of perspectives are critical to achieving success, and that belonging and inclusion are key drivers to growth-based innovation and profitability. We are committed to creating a culture where all people feel valued, supported, and inspired to be themselves fearlessly, without judgement. We believe that when all voices are heard, we honor and exemplify our core values and best serve our customers and communities. +Governance +In pursuing our mission and vision, we are committed to operating our business in accordance with the highest moral, legal and ethical standards. We have adopted a Code of Business Conduct and Ethics in order to define the high standards under which all members of our Board and our employees are expected to operate. We also have an Anti-Corruption Policy, a Policy on Interactions with Healthcare Professionals, and other policies which further require honest, ethical, and lawful behavior. These policies are part of a broader compliance program designed to ensure that all policies and legal requirements are followed, that we make and sell high-quality products in accordance with applicable regulatory requirements, and that we otherwise operate in a responsible, ethical, and compliant manner. +INDEPENDENT BOARD CHAIRPERSON +The positions of Chairman of the Board and CEO of the Company are held by different individuals, with the Chairman being independent of management. +The Board has carefully considered its leadership structure and believes that the Company and its stockholders are best served by having the positions of Chairperson and CEO filled by different individuals. This allows the CEO to, among other things, focus on the Company’s day-to-day business, while allowing the Chairperson to lead the Board in its fundamental role of providing strategic advice and oversight of management. +15 +Table of Contents +DIRECTOR INDEPENDENCE +Our Corporate Governance Guidelines require, among other things, that a majority of the members of the Board meet the independence requirements of the SEC and Nasdaq, on which our Common Stock is listed. Each year our Board, with assistance from the Nominating and Corporate Governance Committee, conducts a review of Director independence. The most recent annual review occurred in the first quarter of 2024, during which the Board considered transactions and relationships, if any, between each +A majority of our Directors are independent as required under applicable SEC and Nasdaq rules. All standing Board Committees consist of independent Directors. +Director and any member of such Director’s immediate family and the Company. As a result of this review, the Board determined that Mara G. Aspinall, Dr. Nancy J. Gagliano, M.D., James A. Datin, Lelio Marmora, David J. Shulkin, M.D. and Robert W. McMahon, are “independent,” as that term is defined in the applicable rules of Nasdaq and the SEC. Ms. Carrie Eglinton Manner was determined by the Board not to be independent because she is serving as an executive officer employed by the Company. Based on the foregoing, the Board of Directors is comprised of a majority of independent Directors. The Audit Committee, the Nominating and Corporate Governance Committee and Compensation Committee of the Board are also comprised solely of independent Directors. Additionally, the Board previously determined that Anne Whitaker, a former director who served as a member of the Board for a portion of the 2023 fiscal year, was “independent” as that term is defined in the applicable rules of Nasdaq and the SEC. +OVERSIGHT OF RISK MANAGEMENT +As part of its oversight of the Company’s operations, the Board and Audit Committee monitor the management of risks by the Company’s executives. The Audit Committee reviews the risks that the Company may face and receives reports from senior management on the nature of these risks and the procedures. Processes are implemented to manage and mitigate such risks. Substantive areas of risk reviewed by the Audit Committee include financial, legal, regulatory, operational, information technology, cybersecurity and employment matters. The Audit Committee provides a report to the full +The Board and Audit Committee monitor the major risks facing the Company and the procedures and processes implemented by the management to mitigate those risks. +Board on the matters covered during each of its meetings, including its risk monitoring activities. In addition, senior management provides periodic reports to the full Board on the major risks facing the Company and the processes and procedures in place to manage such risks. Management also conducts a risk assessment of the Company’s compensation policies and practices, including its executive compensation program, as described in greater detail in the Section of this Proxy Statement entitled, “Compensation Committee Matters.” +ANNUAL MEETING ATTENDANCE AND STOCKHOLDER COMMUNICATIONS +The Board has approved a policy concerning Board members’ attendance at our Annual Meeting of Stockholders and a process for security holders to send communications to members of the Board. A description of the Board’s policy on Annual Meeting attendance is provided on our website, at www.orasure.com . As a general matter, each Board member is required to attend each Annual Meeting of Stockholders. +Security holders may communicate with the Board by sending their communications to OraSure Technologies, Inc., 220 East First Street, Bethlehem, Pennsylvania 18015, Attention: Corporate Secretary, fax: (610) 882-2275, email: corporatesecretary@orasure.com . +All Board members are required to attend each Annual Meeting of Stockholders. The entire Board attended the 2023 Annual Meeting. +16 +Table of Contents +COMMITTEES OF THE BOARD +The Board currently has a standing Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee. Members of the Audit Committee, Compensation Committee, and the Nominating and Corporate Governance Committee are each “independent,” as defined in the Exchange Act and Nasdaq rules applicable to such Committees. In addition, the Board has determined that Mara G. Aspinall and Robert W. McMahon are each an “audit committee financial expert,” as that term is defined by applicable rules of the SEC. Each committee operates pursuant to a written charter, copies of which are available on our website, at www.orasure.com . Additional information on each standing committee is provided below: +AUDIT COMMITTEE +Committee Members*: +Responsibilities include but are not limited to: +• Oversees accounting and financial reporting process, internal controls and audits. +• Consults with management and the Company’s independent registered public accounting firm on, among other items, matters related to the annual audits, the published financial statements and the accounting principles applied. +• Appoints, evaluates and retains our independent registered public accounting firm. +• Responsible for the compensation, termination and oversight of our independent registered public accounting firm. +• Evaluates the independent registered public accounting firm’s qualifications, performance and independence. +• Pre-approves all services provided by the independent registered public accounting firm. +• Monitors the Company’s major risk exposures and reviews risk assessment and mitigation policies and determines the appropriate levels and types of insurance policies to be purchased by the Company. +• Maintains procedures for the receipt, retention and treatment, on a confidential basis, of complaints received by the Company regarding accounting, internal accounting controls or auditing matters, and the confidential, anonymous submissions by employees of concerns regarding questionable accounting or auditing matters. +•  Reviews the Company’s cybersecurity program and risks, as identified by Company management, and the steps that the Company management has taken to protect against threats to the Company’s assets including information systems and data security. +Robert W. McMahon (1) +(C, I) +Mara G. Aspinall (1) +(I) +James A. Datin (2) +(I) +Lelio Marmora (I) +Number of Meetings during +fiscal 2023: 6 +C – Committee Chairperson +I – Determined by the Board to be independent under applicable SEC and Nasdaq rules. +(1) +– Determined by the Board to be an audit committee financial expert as defined under applicable SEC Rules. +(2) +– The Board has determined that Mr. Datin will not stand for re-election at the Annual Meeting, and his service as a member of the Board will end effective as of the Annual Meeting. +17 +Table of Contents +COMPENSATION COMMITTEE +Committee Members*: +Responsibilities include but are not limited to: +• Oversees compensation for executives and non-employee Directors. +• Reviews and recommends to the Board for approval the performance criteria, goals and objectives for CEO compensation. +• In consultation with other independent non-employee Directors, evaluates the CEO’s annual performance. +• Evaluates and recommends the CEO’s compensation to the Board for approval. +• In consultation with the CEO, reviews and approves the compensation of other executive officers. +• Oversees compliance with SEC and Nasdaq rules and regulations regarding stockholder approval of certain executive compensation matters. +• Establishes performance measures and goals and evaluates the attainment of such goals under performance-based incentive compensation plans. +• Reviews compensation and benefits issues relating to the Company. +• Reviews and recommends for Board approval, the terms of any employment agreements between the Company and each executive officer. +• Periodically reviews and administers the Company’s Compensation Recoupment Policy for executive officers and non-employee Directors. +• Reviews compliance with the Company’s stock ownership guidelines and monitors compliance by directors and executive officers. +James A. Datin (1) +(C, I) +Mara G. Aspinall (I) +Nancy J. Gagliano, M.D. +(I) +David J. Shulkin, M.D. (I) +Number of Meetings during fiscal 2023: 6 +C – Committee Chairperson +I – Determined by the Board to be independent under applicable SEC and Nasdaq rules. +(1) +– The Board has determined that Mr. Datin will not stand for re-election at the Annual Meeting, and his service as a member of the Board will end effective as of the Annual Meeting. +18 +Table of Contents +NOMINATING AND CORPORATE GOVERNANCE COMMITTEE +Committee Members: +Responsibilities include but are not limited to: +• Identifies, evaluates and recommends candidates for nomination or re-election to the Board. +• Reviews and makes recommendations to the Board on the range of skills, qualifications, diversity and expertise required for service as a Director. +• Reviews and recommends for Board approval the appropriate structure of the Board and Board committees. +• Recommends committee assignments and candidates for the position of Chairperson of each committee. +• Develops and recommends for Board approval Corporate Governance Guidelines and a Code of Business Conduct and Ethics, and procedures for the implementation thereof. +• Periodically reviews and recommends for Board approval the Board’s leadership structure, including whether the same person should serve as both CEO and Chairperson of the Board. +• Assists in the development of succession plans for the Company’s CEO and other executives. +• Assists the Board in evaluating the independence of individual Directors for purposes of Board and committee service. +• Develops and implements an annual self-evaluation process for the Board and its committees. +Nancy J. Gagliano, M.D. +(C, I) +Lelio Marmora (I) +David J. Shulkin, M.D. (I) +Number of Meetings during fiscal 2023: 4 +C – Committee Chairperson +I – Determined by the Board to be independent under applicable SEC and Nasdaq rules. +NOMINATION OF DIRECTORS +Our Bylaws provide that nominations for election to the Board may be made by the Board or by any stockholder entitled to vote for the election of Directors at the Annual Meeting. A stockholder’s notice of nomination must be made in writing to the Company’s Corporate Secretary and must be delivered to or received at our principal executive offices not less than ninety (90) days nor more than one hundred twenty (120) days prior to the meeting. Stockholders can nominate individuals to serve on the Board by the following procedures described in our Bylaws. +However, in the event that less than one hundred (100) days’ notice or prior public disclosure of the date of the meeting is given or made to stockholders, in order for notice by the stockholder to be timely, notice must be received no later than the close of business on the tenth (10 th ) day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made, whichever first occurs. The notice to the Corporate Secretary must set forth, with respect to the nominee, the name, age, business address, residence address, principal occupation or employment of the person, the class and number of shares of capital stock of the Company which are beneficially owned by the person, and any other information relating to the person that is required to be disclosed in solicitations for proxies for election of Directors pursuant to Regulation 14A under the Exchange Act. The notice must also include, as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination is made: (i) the name and address of the stockholder and such beneficial owner; (ii) the class and number of shares of capital stock of the Company which are held of record or beneficially owned by such stockholder and such beneficial owner and any other direct or indirect pecuniary or economic interest in any capital stock of the Company of such stockholder and beneficial owner, including without limitation, any derivative instrument, swap, option, warrant, short interest, hedge, profit sharing arrangement or borrowed or loaned shares; (iii) a description of any arrangements or understandings between such stockholder and beneficial owner and each proposed nominee and any other person (including their names) pursuant to which the nomination(s) are to be made by such stockholder and such beneficial owner or with respect to actions to be proposed or taken by such nominee if elected as a Director; (iv) a representation that such stockholder intends to appear in person or by proxy at the meeting to nominate the persons named in +19 +Table of Contents +its notice; and (v) any other information relating to such stockholder and such beneficial owner that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of Directors, or may otherwise be required pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder. We may also require any proposed nominee to furnish such other information as we may reasonably require to determine the eligibility of the proposed nominee to serve as a Director of the Company. +The Nominating and Corporate Governance Committee may also consult with outside advisors or retain search firms to assist in the search for qualified candidates. Candidates recommended by stockholders will be considered by the Nominating and Corporate Governance Committee in the same manner as candidates recommended by other sources, but only if the stockholder makes a recommendation in accordance with the advance notification provisions set forth in our Bylaws. +DIRECTOR QUALIFICATIONS +The Board considers diversity, including personal factors such as race and gender, and other relevant factors in evaluating Director candidates. In determining whether an incumbent Director will be nominated for re-election, we evaluate the individual’s background, experience and prior service as a Director. +Although there is no formal policy governing Board diversity, the Nominating and Corporate Governance Committee considers diversity as one of many important factors in identifying new candidates for the Board. Such diversity includes personal characteristics such as race and gender as well as diversity in background and skills and experience that relate to our Board’s performance of its responsibilities. The Nominating and Corporate Governance Committee does not assign specific weight to any particular criteria when reviewing candidates and may not apply the same criteria to all prospective nominees. +The following matrix highlights the mix of key skills, qualities, attributes, and experiences of the Directors. +Aspinall +Datin +Eglinton Manner +Gagliano +Marmora +McMahon +Shulkin +Business Operations +X +X +X X X X X +Financial Analysis and Control +X +X +X X X +Global Business +X +X +X X X X +Regulatory US and International +X X X X X X +Health systems and Life Sciences +X +X +X X X X X +Commercial Execution +X +X +X +As currently constituted, the Board represents a deliberate mix of members who have a deep understanding of our business as well as members who have different skill sets and points of view. The recently adopted listing requirements of Nasdaq require each listed company to have, or explain why it does not have, two diverse directors on the board, including at least one diverse director who self-identifies as female and at least one diverse director who self-identifies as an underrepresented minority or LGBTQ+. Each term used above and in the matrix below has the meaning given to it in Nasdaq Listing Rule 5605(f). +As a company listed on the Nasdaq Global Select Market, we are required to have, or explain why we do not have, at least one diverse director by December 31, 2023 and at least two diverse directors by +20 +Table of Contents +December 31, 2025. We currently have four diverse directors on our Board. The matrix below provides certain highlights of the composition of our Board members based on self-identification. +Board Diversity Matrix (As of April 3, 2024) +Total Number of Directors 7 +Female Male Non-Binary Did Not Disclose +Gender +Part I: Gender Identity +Directors 3 4 — — +Part II: Demographic Background +African American or Black — — — — +Alaskan Native or Native American — — — — +Asian — — — — +Hispanic or Latinx — 1 — — +Native Hawaiian or Pacific +Islander — — — — +White 3 3 — — +Two or More Races or +Ethnicities +— — — — +LGBTQ+ — — — — +Did Not Disclose Demographic +Background +— — — — +INSIDER TRADING +Our Insider Trading Policy prohibits trading by Directors, executive officers or employees who are in possession of material nonpublic information about the Company. We have a policy designed to prevent any trading in the Company’s Common Stock or other securities by Directors, executive officers and certain other employees of the Company and its affiliates while such person is in possession of material nonpublic information. The policy prohibits trading in the Company’s securities on the basis of material nonpublic information, requires preapproval of transactions in Company securities for Directors, executive officers and all other employees and establishes regular trading windows after each calendar quarter following the Company’s announcement of its quarterly financial results. +PROHIBITION AGAINST SHORT SALES, HEDGING AND PLEDGING +We believe it is inappropriate for any employee of the Company or its affiliates or any member of the Board to engage in short-term or speculative transactions involving Company securities, including entering into financial instruments or engaging in other transactions that hedge or offset, or that are designed to hedge or offset, any decrease in the market value of our Common Stock. As a result, our insider trading policy prohibits Directors, executive officers and all other employees from entering into transactions involving our Common Stock, such as short sales, the buying or selling of puts or calls, the purchase of securities on margin, prepaid variable forward contracts, equity swaps, collars, exchange funds and other similar financial instruments. Our policy also prohibits employees and Directors from pledging shares of our Common Stock as collateral. We have implemented several governance policies related to our Common Stock. Our policies prohibit short-term, speculative transactions in our stock, such as hedging, pledging and short sales. +21 +Table of Contents +STOCK OWNERSHIP AND RETENTION GUIDELINES +We have implemented stock ownership and retention guidelines for our CEO, other executives and members of the Board. The Board has adopted stock ownership and retention guidelines applicable to our President and CEO, our Chief Financial Officer and all of our other executive officers and all non-employee members of the Board. Under these guidelines, the covered individuals must meet the following ownership requirements, as of December 31 of each year, expressed either as a multiple of base salary (in the case of Company officers) or annual cash fees (in the case of non-employee Board members): +Covered Individual Multiple of Base Salary +or Director Cash Fees +President and CEO 6x +Chief Financial Officer 2x +Other Executive Officers 1x +Non-Employee Directors 3x +Any individual who becomes subject to the guidelines is required to meet the guidelines within five years. Any individual already subject to the guidelines who becomes subject to a higher ownership requirement, due to a promotion, a further amendment to the guidelines or an increase in compensation, is required to meet the new ownership requirement within five years following the effective date of promotion, change in compensation or guideline amendment. In determining whether an individual meets the required ownership requirement, shares owned directly or indirectly, restricted stock (including both time and performance-based) and shares deferred under our deferred compensation plan will be counted. Compliance will be determined as of December 31 of each fiscal year. The guidelines also require each covered individual to retain at least 50% of the net shares acquired upon the exercise of stock options and the vesting of restricted stock until the individual’s holdings of Common Stock equal or exceed the applicable ownership requirement. As of December 31, 2023, one of the non-employee Directors was not in compliance with the stock ownership guidelines as they have recently joined the Company. The Company will ensure they are in compliance within five years, which is the guideline. +AUDIT COMMITTEE MATTERS +REPORT OF THE AUDIT COMMITTEE FOR THE YEAR ENDED DECEMBER 31, 2023 +The information contained in this report shall not be deemed to be “soliciting material” or “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to liability under that Section. This report shall not be deemed “incorporated by reference” into any document filed under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, whether such filing occurs before or after the date hereof, regardless of any general incorporation language in such filing. +The role of the Audit Committee is to assist the Board of Directors in fulfilling its responsibilities to oversee (i) the integrity of the Company’s financial statements, (ii) management’s conduct of the Company’s accounting and financial reporting processes, (iii) the Company’s systems of internal control over financial reporting and disclosure controls and procedures, (iv) the outside auditor’s qualifications, engagement, compensation, independence and performance, (v) the Company’s compliance with legal and regulatory requirements and management of financial and other risks, including insurance review and cybersecurity, (vi) the annual independent audit of the Company’s financial statements and internal control over financial reporting, (vii) the application of the Company’s related person transaction policy and (viii) such other matters as directed by the Board or as set forth in the Audit Committee Charter. The Audit Committee selects the Company’s outside independent registered public accounting firm, and once selected, the outside independent registered public accounting firm reports directly to the Audit Committee. The Audit Committee is responsible for approving both audit and non-audit services to be provided by the outside independent registered public accounting firm. +22 +Table of Contents +The Audit Committee is composed of four (4) non-employee directors and operates pursuant to a Charter that was last amended and restated by the Board on August 1, 2023 (which can be found on the Company’s website at orasure.gcs-web.com/committee-details/audit-committee ). +Management of the Company is responsible for the preparation, presentation and integrity of the Company’s financial statements, the Company’s accounting and financial reporting principles and internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations. The independent registered public accounting firm is responsible for auditing the Company’s financial statements and expressing an opinion as to their conformity with U.S. generally accepted accounting principles. The Audit Committee’s responsibility is to monitor and review these processes. It is not the Audit Committee’s duty or responsibility to conduct auditing or accounting reviews. +In the performance of its oversight function, the Audit Committee has considered and discussed the audited financial statements with management, which included a discussion of not only the quality, but also the acceptability, of the accounting principles, the reasonableness of significant judgments and the clarity of disclosures in the financial statements. The Audit Committee met with the independent registered public accounting firm, with and without management, to discuss the results of their audit and their judgments regarding the Company’s accounting policies. The Audit Committee has also discussed with the independent registered public accounting firm the matters required to be discussed under applicable standards, including those in Public Company Accounting Oversight Board Auditing Standard No. 1301, as currently in effect. Finally, the Audit Committee has received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the Public Company Accounting Oversight Board as currently in effect, has considered whether the provision of non-audit services by the independent registered public accounting firm to the Company is compatible with maintaining the firm’s independence and has discussed with the independent registered public accounting firm the firm’s independence. +Based upon the reports and discussions described in this report, and subject to the limitations on the role and responsibilities of the Audit Committee referred to above and in the Audit Committee’s Charter, the Audit Committee recommended to the Board that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 for filing with the SEC and selected Grant Thornton, LLP to succeed KPMG as the independent registered public accounting firm for fiscal year 2024. The Board is recommending that stockholders ratify that selection at the Annual Meeting. +Submitted by the Audit Committee of the Company’s Board of Directors: +Robert W. McMahon, Chairperson +Mara G. Aspinall +James A. Datin +Lelio Marmora +April 3, 2024 +AUDIT FEES; AUDIT RELATED FEES; TAX FEES; ALL OTHER FEES +The following table presents fees for professional audit services rendered by KPMG LLP ("KPMG") (i) for the audits of our annual consolidated financial statements and review of the financial statements in our Quarterly Reports on Form 10-Q for the fiscal years ended December 31, 2023 and 2022, and (ii) for the audits +23 +Table of Contents +of our internal control over financial reporting as of December 31, 2023 and 2022. The following table also includes fees billed for other services rendered by KPMG: +2023 2022 +Audit fees 1 +$ 1,681,614 $ 1,475,304 +Tax fees 2 +$ 140,464 $ 258,854 +Total fees $ 1,822,078 $ 1,734,158 +__________ +1 Includes fees related to the audits of our consolidated annual financial statements, interim reviews of our quarterly financial statements and audits of our internal control over financial reporting for each indicated year and preparation of written consents for Registration Statements on Form S-8 in 2023 filed by OraSure Technologies, Inc. +2 During the fiscal years ended December 31, 2023 and 2022, KPMG was engaged to provide tax compliance, planning and consulting services. +PRE-APPROVAL PROCEDURES +The Audit Committee has adopted a practice of pre-approving all audit and non-audit services provided to the Company by our independent registered public accounting firm. The Chairperson of the Audit Committee has been delegated the authority to pre-approve audit and non-audit services having an aggregate value of up to $50,000 between meetings of the Audit Committee, provided that such pre-approval is communicated to the Audit Committee at its next scheduled meeting. All services by KPMG in 2023 and 2022 were approved in accordance with these practices. +CHANGE IN INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +As previously disclosed in a Current Report on Form 8-K filed with the SEC on December 5, 2023 (“Auditor 8-K”), effective upon the completion of the audit of our consolidated financial statements as of and for the year ended December 31, 2023 and the effectiveness of our internal control over financial reporting as of December 31, 2023, and the issuance of their reports thereon, on March 11, 2024, we dismissed KPMG as our independent registered public accounting firm. The decision to dismiss KPMG as the Company’s independent registered public accounting firm was at the direction of and approved by the Audit Committee after a competitive selection process. The Audit Committee and the Board approved the appointment of Grant Thornton LLP (“GT”) as our independent registered public accounting firm for the fiscal year ending December 31, 2024, which became effective immediately upon the dismissal of KPMG. +The audit reports of KPMG on our consolidated financial statements for the fiscal years ended December 31, 2023 and 2022 did not contain an adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles. The audit reports of KPMG on the effectiveness of our internal control over financial reporting as of December 31, 2023 and 2022 did not contain any adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope, or accounting principles. +In connection with the audits of the Company’s consolidated financial statements and internal control over financial reporting for the fiscal years ended December 31, 2023 and 2022 and through March 11, 2024, the effective date of KPMG’s dismissal, there were no disagreements (within the meaning of Item 304(a)(1)(iv) of Regulation S-K and the related instructions) between the Company and KPMG on any matters of accounting principles or practices, financial statement disclosure or auditing scope and procedures which, if not resolved to the satisfaction of KPMG would have caused KPMG to make reference to the subject matter of the disagreements in connection with its reports for such fiscal years. +There were no “reportable events” (within the meaning of Item 304(a)(1)(v) of Regulation S-K) during the fiscal years ended December 31, 2023 and 2022, or in the subsequent interim period through March 11, 2024, the effective date of KPMG’s dismissal, except that in the third quarter of fiscal 2023 our management identified the existence of a material weakness in internal control over financial reporting related to customer pricing in the revenue recognition process as disclosed in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2023 and as disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. The financial statements for the nine months ended September 30, 2023 and for the year ended December 31, 2023 were not impacted by this material weakness and are not misstated. During the quarter ended December 31, 2023, we implemented controls to validate accurate pricing in customer sales +24 +Table of Contents +orders and remediated the material weakness. This reportable event was discussed among the Company’s management, the Audit Committee and KPMG. We have authorized KPMG to respond fully to the inquiries of GT concerning this reportable event. +We provided KPMG with a copy of the disclosures regarding the dismissal reproduced in this Proxy Statement and received a letter from KPMG addressed to the SEC stating that it agreed with the above statements. This letter was filed as an exhibit to the Auditor 8-K. +During the two most recent fiscal years ended December 31, 2023 and 2022, and in the subsequent interim period through March 11, 2024, neither the Company nor anyone on its behalf has consulted with GT with respect to either (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s financial statements, and neither a written nor oral advice was provided to the Company that GT concluded was an important factor considered by the Company in reaching a decision as to any accounting, auditing or financial reporting issue, or (ii) any matter that was either the subject of a “disagreement” or a “reportable event”, each as defined in Regulation S-K Item 304(a)(1)(iv) and (v), respectively. +It is anticipated that a representative of GT will attend the Annual Meeting. Such representative will have an opportunity to make a statement, if he or she desires, and will be available to respond to appropriate questions of stockholders. +COMPENSATION COMMITTEE MATTERS +The Compensation Committee assists the Board in developing and managing the compensation provided to executive officers of the Company and non-employee members of the Board. The Compensation Committee is responsible for developing and overseeing the implementation of the Company’s compensation philosophy and for setting executive compensation at levels that are sufficiently competitive so that the Company can attract, retain, motivate and reward high quality executives who can contribute to the Company’s success. +COMPENSATION PROCESSES AND PROCEDURES +Compensation for executives is established by the Compensation Committee in accordance with the compensation philosophy established under its charter as set forth in the CD&A Section of this Proxy Statement. In setting executive compensation, the Compensation Committee considers the Company’s and each executive’s performance against previously established objectives, internal pay equity, the compensation practices of the Company’s Peer Group, the Company’s industry position and general industry compensation data. The Compensation Committee periodically retains independent compensation consultants to review our executive compensation practices and to assist in establishing competitive compensation levels for our executives. +ANNUAL PERFORMANCE EVALUATIONS +On an annual basis, the Compensation Committee and other non-employee Directors evaluate the performance of the CEO, based on the overall performance of the Company. The CEO also evaluates the performance of the other NEOs against their respective predetermined performance objectives. Annual performance objectives for the NEOs are established at the beginning of the applicable year and generally include two parts: (1) the Company’s overall target financial objectives, and (2) individual objectives in the functional areas for which the executive is responsible. The Compensation Committee has implemented a policy that positive discretion will not be applied to individual objectives in determining payouts for our NEOs. +Depending on the Company’s overall performance and the extent to which an executive achieves his or her individual objectives for a particular year, the executive will be rated as “Does Not Meet,” “Does Not Consistently Meet,” “Meets Expectations,” “Exceeds Expectations” or “Outstanding.” On occasion, a blended rating such as “Meets/Exceeds” or “High Meets” will be used to indicate performance between the foregoing performance rating levels. The Compensation Committee uses the performance ratings and other factors to determine base salary adjustments, incentive cash bonuses and long-term incentive equity awards. Although +25 +Table of Contents +this approach was also followed in evaluating Ms. Eglinton Manner’s performance for 2023, Ms. Eglinton Manner’s performance assessment was primarily based on the Company’s overall performance. +ROLE OF THE COMPENSATION COMMITTEE +The Compensation Committee is comprised of independent non-employee Directors who oversee our executive compensation program. Each year, the Compensation Committee determines the appropriate level of compensation for all NEOs other than the CEO, and in the case of the CEO, recommends to the Board the appropriate level of compensation for the CEO. As an initial guideline, the Compensation Committee sets the total direct compensation opportunity (base salary, annual incentive bonus target, and long-term incentive equity target) for each of our executive officers within a range around the 50th percentile of comparable medical diagnostics and healthcare companies. The variation of actual pay relative to the market data is dependent on the executive officer’s performance, experience, knowledge, skills, level of responsibility, potential to impact our performance and future success, and the need to retain and motivate strategic talent. +The Compensation Committee generally determines an executive officer’s compensation based upon the objectives of our executive compensation program. The Compensation Committee makes compensation recommendations to the Board for the CEO and approves decisions for the other NEOs after careful review and analysis of appropriate performance information and market compensation data. Compensation for the CEO is approved by the independent members of the Board of Directors. +Beyond determining and recommending (in the case of the CEO) specific compensation for the NEOs, the Compensation Committee works with the executive management team to review and adjust compensation policies and practices to ensure that they remain consistent with the Company’s values and philosophy, support the recruitment and retention of executive talent, and help the Company achieve its business objectives. The Compensation Committee also determines a market-based level of compensation for non-employee Directors. +ROLE OF THE CEO +The CEO provides performance assessments and recommendations to the Compensation Committee on the compensation for each executive of the Company. The CEO’s recommendations are based on her review of each executive’s performance, job responsibilities, importance to our overall business strategy, and our compensation philosophy. Although the CEO’s recommendations are given significant weight, the Compensation Committee retains full discretion when determining compensation. +ROLE OF THE COMPENSATION CONSULTANT +To assist in the review of executive compensation and to obtain information regarding market trends and governance best practices, the Compensation Committee engages independent executive compensation consultants to analyze our executive compensation structure and plan designs, and to assess whether our compensation program is competitive and supports our goal of aligning the interests of our executive officers with those of our stockholders. Such consultants also provide the Compensation Committee with the Peer Group and other market data that is discussed in the CD&A, which the Compensation Committee evaluates when establishing programs and features and determining compensation for executive officers. In connection with its 2023 compensation decisions, the Compensation Committee engaged Pay Governance LLC (“Pay Governance”) to provide market assessments of the target compensation for our executives and consult on the preparation of this Proxy Statement. +The Compensation Committee has the sole authority to approve any independent compensation consultant’s fees and terms of engagement. The Compensation Committee annually reviews its relationship with each consultant to ensure their independence. The process in 2023 included a review of the services Pay Governance provides, the quality of those services, and the fees associated with those services during the fiscal year as well as consideration of the factors impacting independence that Nasdaq rules require and a review of Pay Governance’s independence policy. The Compensation Committee concluded that there were no conflicts +26 +Table of Contents +of interest that prevented Pay Governance from serving as an independent consultant to the Compensation Committee on executive compensation matters. +COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION +Mara G. Aspinall, James A., Datin, David J. Shulkin, M.D., and Nancy J. Gagliano, M.D. each served as members of the Compensation Committee during 2023. None of these Directors has served or is currently serving as an officer or employee of the Company, nor have they engaged in any transactions involving the Company which would require disclosure as a transaction with a related person. There are no Compensation Committee interlocks between the Company and any other entity involving the Company’s or such entity’s executive officers or board members. +COMPENSATION COMMITTEE REPORT +The information contained in this report shall not be deemed to be “soliciting material” or “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that Section. This report shall not be deemed to be “incorporated by reference” into any document filed under the Securities Act or the Exchange Act, whether such filing occurs before or after the date hereof, regardless of any general incorporation language in such filing. +The Compensation Committee of OraSure Technologies, Inc. has reviewed and discussed with the Company’s management the CD&A, contained in this Proxy Statement. Based on that review and discussion, the Compensation Committee recommended to the Company’s Board of Directors that the foregoing CD&A be included in the Company’s 2023 Annual Report on Form 10-K Report and Proxy Statement for the 2024 Annual Meeting of Stockholders. +COMPENSATION COMMITTEE: +James A. Datin, Chairperson +Mara G. Aspinall +Nancy J. Gagliano, M.D. +David J. Shulkin, M.D. +April 3, 2024 +27 +Table of Contents +EXECUTIVE OFFICERS +The table below provides information about the executive officers of the Company as of March 22, 2024. Officers of the Company hold office at the discretion of the Board. +Name Age Position +Carrie Eglinton Manner 50 President and CEO +Kenneth J. McGrath 52 Chief Financial Officer +Kathleen G. Weber 57 Chief Product Officer +Carrie Eglinton Manner, CEO and Director +Carrie Eglinton Manner has been our President, CEO and a director on the Board since June 2022. Ms. Eglinton Manner brings more than 27 years of healthcare leadership and transformation expertise to the Company. Prior to joining the Company, Ms. Eglinton Manner was with Quest Diagnostics Inc. from January 2017 until June 2022 where she served as Senior Vice President, Advanced & General Diagnostics Clinical Solutions. In that role, she was responsible for bringing innovative diagnostic solutions to market in the areas of women’s health, neurology, oncology, cardiovascular, metabolic, endocrinology, infectious disease, and immunology testing services, as well as drug monitoring and toxicology. Ms. Eglinton Manner also led Quest’s pharmaceutical services, AmeriPath/Dermpath, and international businesses, as well as their molecular genetics team in pioneering next-generation sequencing innovation. Prior to Quest Diagnostics, Ms. Eglinton Manner served for 20 years in a variety of leadership roles at GE Healthcare, a division of General Electric (GE). Ms. Eglinton Manner has served as a director of Repligen Corporation since June 2020. Ms. Manner received a B.S. degree in mechanical engineering from University of Notre Dame. +Kenneth J. McGrath, Chief Financial Officer +Kenneth J. McGrath has served as our Chief Financial Officer since August 2022. Prior to joining the Company, Mr. McGrath served in various roles at Quest Diagnostics from January 2014 until July 2022, most recently as the Vice President, Finance. While in this position, he led Quest’s financial function for its clinical franchises, R&D, global markets, and information technology groups. Prior to his tenure at Quest, Mr. McGrath spent over 15 years at Johnson & Johnson, serving in various roles, including as the Senior Finance Director of Janssen R&D. Mr. McGrath began his career in 1993 as an engineer at Ford Motor Company. He holds a B.S. in mechanical engineering from the University of Notre Dame and an MBA from the Stephen M. Ross School of Business at the University of Michigan. +28 +Table of Contents +Kathleen G. Weber, Chief Product Officer +Kathleen G. Weber has served as our Chief Product Officer since November 2022. Previously, Ms. Weber served as our President of Molecular Solutions since December 2021. Prior to that, Ms. Weber served as our Executive Vice President, Business Unit Leader, Molecular Solutions at DNAG from January 2019 until December 2021 and as our Senior Vice President and General Manager, Consumer Products since joining us in November 2012 until December 2018. Prior to her time at the Company, Ms. Weber served in executive leadership roles at Pfizer, Johnson and Johnson, and Schering-Plough. Ms. Weber began her career in the finance industry at Chase Manhattan Bank (now known as JP Morgan Chase). Ms. Weber received a B.S. in business administration from Georgetown University and an M.B.A. from New York University’s Stern School of Business. +29 +Table of Contents +TRANSACTIONS WITH RELATED PERSONS +Since January 1, 2023, there have been no transactions with related persons that would require disclosure in this Proxy Statement. The Audit Committee is required to review and approve in advance all transactions with related persons involving the Company. The Audit Committee may approve a related party transaction if the transaction is on terms comparable to those that could be obtained in arms’ length dealings with an unrelated third party. The Audit Committee also reviews any public disclosures of a related party transaction contained in our SEC filings. These responsibilities are described in the Audit Committee’s charter, a copy of which is available on our website at www.orasure.com . +Information regarding employment, severance and retirement agreements between our executive officers and the Company is set forth in the Section entitled, “Employment Agreements and Potential Payments Upon Termination or Change of Control,” in this Proxy Statement. +30 +Table of Contents +COMPENSATION DISCUSSION AND ANALYSIS - TABLE OF CONTENTS +EXECUTIVE SUMMARY +32 +Overview +32 +2023 Performance +32 +2023 Business Highlights +33 +2023 NEO Compensation at a Glance +33 +Pay for Performance +34 +Compensation Governance Practices +35 +Say-on-Pay Results in 2023, Stockholder Feedback and the Company’s Response +36 +Compensation Risk Assessment +38 +COMPENSATION PHILOSOPHY +39 +BENCHMARKING +39 +2023 EXECUTIVE COMPENSATION COMPONENTS +41 +Overview +41 +Pay Mix +41 +Compensation Components in Detail +42 +2023 Bonus Payments +47 +OTHER COMPENSATION +51 +Retirement Programs +51 +Perquisites and Other Compensation +51 +Potential Payments Upon Termination or Change of Control Pursuant to Employment Agreements +51 +Accounting and Tax Treatment of Compensation +51 +Compensation Recoupment Policy +52 +COMPENSATION TABLES - TABLE OF CONTENTS +Summary Compensation Table +53 +Grants of Plan-Based Awards +54 +Outstanding Equity Awards at December 31, 2023 +55 +Option Exercises and Stock Vested +56 +Retirement Benefits +56 +Nonqualified Deferred Compensation +56 +31 +Table of Contents +COMPENSATION DISCUSSION AND ANALYSIS +EXECUTIVE SUMMARY +Overview +This CD&A describes the material elements of the compensation of our NEOs and describes the objectives and principles underlying the Company’s executive compensation program, the compensation decisions we have recently made under this program and the factors we considered in making these decisions. +Our NEOs for 2023 who are covered in this CD&A include: +Name Position +Carrie Eglinton Manner President and CEO +Kenneth McGrath Chief Financial Officer +Kathleen G. Weber Chief Product Officer +2023 Performance +The following charts describe our consolidated financial performance during the last three fiscal years, expressed in dollars (thousands). +32 +Table of Contents +2023 Business Highlights +Business highlights from 2023 and the principal factors driving our financial performance are summarized below: +• We continue to execute significant progress on our three pillars of our strategic transformation to: 1) STRENGTHEN our foundation; 2) ELEVATE our core growth, and 3) ACCELERATE profitable growth. +•  Total net revenues in 2023 were $405 million, a 5% increase over 2022. +• COVID-19 revenues were $258 million and increased 6% over 2022 and largely was comprised of InteliSwab® shipments under our contracts with the U.S. Government. +• Total Core revenues, which excludes COVID-19 revenues, were $148 million and increased 2% compared to 2022. This increase was due to growth in sales of our HIV products, partially offset by lower sales of our Molecular Sample Management Solutions which are being impacted by macro-economic factors. +• We grew our cash and short-term investments by $180 million during the year to $290 million as of December 31, 2023. We generated $142 million of cash flow from operations in 2023. +• We continue to improve our operating efficiency, including gross margin expansion and reduced overhead expenses. Our gross margin increased 400 basis points to 42.3% in 2023 from 38.3% in 2022. Our operating expenses, excluding non-cash impairment losses, decreased by $25 million in 2023 as compared to 2022. +• We completed the milestones and collected the corresponding milestone payments included in our contract with the U.S. government related to our manufacturing capacity expansion at our Opus Way facility earlier than expected in 2023, and we made progress in streamlining our operational footprint in order to leverage our automation and infrastructure. +• With our stronger balance sheet, we are investing in our internal innovation roadmap and evaluating external opportunities to expand our product portfolio in order to accelerate our long-term growth rate. +• We expanded the portfolio of products that our sales teams can provide to our customers in several important segments through new distribution and strategic relationships. +• In January 2024, we invested in Sapphiros and also entered into a wide-ranging strategic distribution agreement with Sapphiros and certain of its related entities. Through this strategic relationship, we expect to be able to offer a more comprehensive range of low-cost diagnostic tests and molecular sample management solutions to our customers globally. +2023 NEO Compensation at a Glance +NEO compensation for 2023 was as follows: +• Base Salary : The base salaries paid to our senior management (including the NEOs) during 2023 increased from 2022 by 3% on average. Salary adjustments for 2023 were based on the performance of each executive and the Company during 2022, the marketplace compensation data provided to the Compensation Committee in 2022 by its compensation consultant and the Company-wide average salary merit increase budget of 3%. Generally, an executive’s annual salary adjustment tended to be at the higher end of the range budgeted by the Company if the executive received a performance rating of “Meets Expectations” or better and such executive’s pre-adjustment salary level was below the 50 th percentile for his or her position as reflected in marketplace and the Peer Group compensation data. +• Annual Incentive Bonuses : Incentive cash bonus awards for 2023 performance were based on pre-established financial goals consistent with our operating plan. Payouts determined based on actual Company performance during 2023 were at 153% of target for each of the NEOs based on Company results. The Compensation Committee has implemented a policy that positive discretion will not be applied to individual objectives in determining payouts for our NEOs. +33 +Table of Contents +• Long-Term Incentive Awards : Incentive equity awards granted to the NEOs in March 2023 were based on the Company’s financial performance and/or each executive’s performance during 2022, as described under the “2023 Base Salaries” Section, above. The value of the awards ranged from 125% to 140%, (excluding CEO) of each executive’s base salary. The NEOs received equity awards consisting of 50% time-vested restricted shares (RS) and 50% performance-vested restricted units (PRUs). For the PRUs granted in 2023, a cumulative three-year revenue target for the period 2023-2025 and a rTSR target for the period 2023-2025 was established as the performance vesting criteria in September 2023 based on targets established in February 2023. See further discussion below in this CD&A. +Additional information regarding NEO compensation for 2023 is provided below in this CD&A and in the accompanying tables, including the Summary Compensation Table (“SCT”) set forth below. +Pay for Performance +We follow a pay-for-performance approach in compensating executives. Our program pays executives for performance by rewarding the achievement of predetermined financial and/or strategic objectives. +A significant portion of each NEO’s annual compensation opportunity is provided in variable and long-term compensation that is intended to align such compensation with the long-term interests of our stockholders. Both our annual and long-term compensation are tied to the Company’s overall performance in a variety of ways, including our financial results and share price performance. A further discussion of our pay mix for the NEOs is set forth in the “Pay Mix” Section, below. +One aspect of our compensation program is the use of performance targets to incentivize management to achieve financial objectives. A combination of financial and strategic objectives may also be considered, and in the past have been used, where the Compensation Committee and the Board desire to incentivize management to meet certain near-term strategic objectives which could help drive improved financial performance in a year with increased financial uncertainty. Each year the Compensation Committee and the Board evaluate whether financial objectives, strategic objectives, or some combination thereof, would provide the most appropriate near-term incentives for our NEOs to achieve improved financial performance. +In addition, for the past several years we have followed a policy of granting annual equity awards to executives that consist of 50% PRUs and 50% time-vested RS. The PRUs will only vest if (i) the NEO remains employed by the Company for three years following the date of grant and (ii) the performance criteria determined by the Compensation Committee and the Board are met. The time-vested RS portion of the award vests in equal annual installments over the three-year period following the grant date, subject to the NEO’s continued employment by the Company. +We believe the performance targets in the PRUs and the three-year service periods applicable to both the RS and PRU awards complement the short-term incentives in our annual bonus plan. We also believe the combination of the structure of our annual bonus plan and the structure of our equity award policy appropriately incentivize management to achieve financial performance objectives both on an annual basis and over a longer term period and help drive long-term growth in stockholder value. +The Compensation Committee has implemented a policy that NEO payouts be based solely on Company performance and, consistent with the policy, applied no positive discretion in determining performance and payouts for our NEOs. +34 +Table of Contents +Compensation Governance Practices +We are committed to maintaining good corporate governance and practices. As a result, and in response to input from stockholders, the Compensation Committee and the Board have adopted a number of changes over the past several years to specifically respond to stockholder concerns and better align our compensation program with performance. The most significant of these changes was the adoption of PRUs for 50% of the value of annual long-term equity awards for our executives. These changes and certain other important aspects of our compensation practices are summarized below: +Performance Mix – The vast majority of our NEOs’ compensation is performance-based. For example, for NEOs other than our CEO, 67% of their aggregate annual compensation consists of performance-based compensation. +Diversified and Performance Based Portfolio – Our executive compensation consists of a mix of cash/equity, fixed/ variable and short-term/long-term compensation. +Performance Vested Equity – 50% of our NEOs’ annual equity awards consist of PRUs that will not vest until three years after the grant date and only if certain performance measures are met during the three-year period. +Long-Term Focus – Equity awards are subject to long-term vesting requirements, with time-vested RS vesting over 3 years. PRUs also vest only after three years. Structuring our equity awards in this manner helps align the interests of our executives with the long-term interests of our stockholders. +Target Bonus Objectives – Our annual bonus plan is paid based on the achievement of annual financial objectives, strategic objectives or a combination thereof, in order to incentivize management to achieve financial performance objectives. +Limited Bonus Discretion – The aggregate bonus for annual cash bonuses is determined pursuant to a formula tied to the Company’s achievement of specific financial objectives. The Board and Compensation Committee can make discretionary adjustments to the performance factor, but such adjustments are limited to +/- 10% of the bonus amount determined under the plan’s self-funding formula. Furthermore, the Compensation Committee and Board can make further downward discretionary adjustments to the annual incentive bonus based on profitability and cash liquidity needs of the Company. The Compensation Committee has implemented a policy that positive discretion will not be applied to individual objectives in determining payouts for our NEOs. +Balanced Performance Metrics – Variable compensation is based on a combination of corporate and individual performance, measured over varying timeframes to help ensure balanced incentives for executives. +Change-in-Control Severance and Tax Gross Ups – Our policy is that employment agreements with our executives provide for “double trigger” change-in-control severance rather than “single trigger” change-in-control severance and do not provide for a 280G income tax gross up. +Strong Stock Ownership and Retention Conditions – We have implemented stock ownership requirements of six (6) times salary for our President and CEO, two (2) times salary for our Chief Financial Officer and one (1) times salary for other NEOs. +Prudent Benchmarking – The total compensation paid to our executives is targeted at the 50 th percentile of our Peer Group of comparable companies based on achievement of performance objectives. We use a Peer Group consisting of companies in the medical diagnostic and healthcare industries comparable in size to the Company based on total revenues and market value. +Independent Compensation Consultants – The Compensation Committee regularly utilizes independent compensation consultants to provide compensation governance, design and benchmarking advice. During 2023, the Compensation Committee engaged Pay Governance as its independent consultant. +Recoupment Policy – The Company maintains a compensation recoupment or “clawback” policy, under which we will seek to recover excess compensation paid to an executive if our financial statements are restated due to misconduct by that executive. +No Repricing – Our LTIP prohibits both the repricing and repurchase of underwater stock options or other equity awards without stockholder approval. +No Perquisites – As a general matter, we do not provide executives with any perquisites that are not offered to all employees of the Company. +35 +Table of Contents +Risk Review Process – We periodically assess the risks associated with our compensation programs. +No Hedging – Our policy prohibits Directors and NEOs from engaging in hedging activities with respect to our stock. +No Pledging – Our Directors and NEOs are not permitted to pledge our stock. +Confidentiality/Non-Compete Agreements – Our NEOs are subject to confidentiality and non-compete agreements. +Say-on-Pay Results in 2023, Stockholder Feedback and the Company’s Response +2023 Stockholder Outreach +We regularly solicit input from our stockholders. Our executive leadership team and Board believe that engagement with our investors provides valuable feedback for consideration on a variety of important matters, including on governance, policy, and environmental initiatives. Additionally, at our 2023 Annual Meeting, 66% of stockholder votes cast were in favor of the "Say-on-Pay" (“SOP”) advisory vote on executive compensation. As a result, our executive leadership team and Board concluded that an even more robust stockholder engagement program should be initiated to seek additional feedback regarding our executive compensation program, as well as input regarding our efforts to build a stronger and more sustainable growth enterprise. +During 2023, we conducted a robust stockholder engagement effort. +• We contacted investors that, in total, own approximately 70% of our outstanding shares, including our 25 largest stockholders. +• We engaged in active dialogue with every stockholder who accepted our invitation. We met with 13 investors, and these investors own more than 50% of our outstanding shares, in total. +OraSure Participants in Stockholder Engagement +Our engagement team included the following participants: +• Mara Aspinall - Chair of the Board, Independent Director, and member of the Compensation Committee +• Carrie Eglinton Manner - CEO and Director +• Ken McGrath - Chief Financial Officer +• Management representatives from our investor relations team +Our Chair of the Board participated in more than 50% of these stockholder engagement meetings. +During each meeting, our CEO and CFO offered to recuse themselves during conversations regarding Executive Compensation, if requested by the stockholder. +We discussed the feedback from our investor outreach with the Compensation Committee in detail, as well as sharing highlights with the full Board. The table below summarizes some of the most frequent areas of feedback that we received from our stockholders and the actions taken in response to this input: +36 +Table of Contents +Topic +What we heard +Company Response & Actions +Executive Compensation +Payment of severance benefits in 2022 for a non-qualifying termination were a concern +We discussed the topic of severance benefits paid for non-qualifying terminations with stockholders throughout our engagement process, and a vast majority of stockholders did not consider it to be a cause for concern going forward. +In 2023, we did not pay any executive severance, and in the future, we plan to only pay executive severance benefits for qualified terminations. +Alignment of Pay-for-Performance with Key Measures of Success +We refined our OTIP and LTIP in 2023 to include additional performance objectives: +OTIP (annual incentive program): The Compensation Committee has implemented a policy that positive discretion will not be applied to individual objectives in determining payouts for our NEOs in 2023. We removed individual performance modifiers for NEOs in 2024. +LTIP (long-term incentive program) changes included: +• Increased the weight of the rTSR component to 50% +• Increased the rTSR target to 105% so that OraSure has to outperform the broader market to achieve 100% attainment +• Added a rTSR performance threshold so that attainment is capped if relative TSR is negative +• Added Revenue performance thresholds aligned with our operating cash flow targets +• 50% of our LTIP is performance-based +Provide key measures of success for NEOs for the current year in the proxy statement +• Consistent with our current guidance practices, we will continue to share OTIP/LTIP resulting payouts through the proxy cycle, rather than through metrics ahead of time, because this is aligned with our public disclosures +Equity grants should be a part of Pay-for-Performance rather than one-time or retention grants +• 50% of our LTIP is performance-based +• No issuance of one-time grants for employee retention in 2023 +37 +Table of Contents +Governance +Disclose a Board skills matrix +• The board skills matrix is added to this Proxy Statement +• As part of our ongoing governance process, we survey and collect information about the skills represented on our board on an annual basis +Consider a de-classified board structure +• We reaffirmed our view that staggered, three-year terms provide governance continuity, and enable directors to focus as a group on the Company’s long-term performance for stockholder value creation +Sustainability +Identification of Sustainability-related topics that are Material to our Company +• We conducted a Materiality Assessment with an external consultant, and we plan to share the results in April as part of our 2024 ESG Report +Environmental +Disclosure of Scope 1 and Scope 2 Greenhouse Gas (GHG) emissions data +• We completed a study of our GHG emissions and plan to share the results as part of our 2024 ESG Report +Social and Human Capital Disclosure of additional data regarding our workforce and Human Capital initiatives +• We plan to disclose additional data and discussion on this topic as part of our 2024 ESG Report +We believe our stockholder engagement program has been, and continues to be, beneficial for the Company and our stockholders. Our Board and management found our conversations with stockholders to be extremely constructive. We plan to continue to engage in these discussions in the future to ensure that our relevant programs are well understood by all stakeholders and that we remain responsive to stockholder input and concerns. +Compensation Risk Assessment +Management periodically conducts a risk assessment of the Company’s compensation policies and practices, including its executive compensation program. In its review, management considers the attributes of the Company’s policies and practices and other factors, including: +• The mix of fixed and variable compensation opportunities; +• The balance between annual and long-term performance opportunities; +• The corporate and individual performance objectives established for annual and long-term incentive compensation; +• The internal controls and procedures in place to mitigate risks facing the Company, including the Company’s “clawback” policy and stock ownership guidelines; and +• The risk that unintended consequences could result from various aspects of the Company’s compensation policies and practices. +Based on its consideration of the foregoing, management believes that the Company’s policies and practices are designed with the appropriate balance of risk and reward in relation to the Company’s overall business strategy and do not incentivize employees to take unnecessary or excessive risks. The Company has also concluded that any risks arising from the Company’s compensation policies and practices are not reasonably likely to have a material adverse effect on the Company. +38 +Table of Contents +COMPENSATION PHILOSOPHY +The primary objectives of our compensation program for executive officers are to: +Set compensation opportunities at levels sufficient to attract and retain high quality executives, to motivate them to contribute to our success, and to reward them for performance. +Ensure the compensation opportunities provided align the interests of executives with the interests of our stockholders. +Focus our executives on both short and longer-term individual and Company priorities established by the Board and appropriately reward them for performance against these objectives. +The total direct compensation provided to each executive consists of an annual base salary, an annual incentive cash bonus and long-term incentive equity awards. The amount of the incentive cash bonus and the size of annual incentive equity awards are variable and depend on an executive’s and the Company’s achievement of predetermined financial and other objectives. As a result, a substantial portion of each executive’s annual compensation is based on performance. +BENCHMARKING +Among various other internal and external considerations, the Compensation Committee uses the practices and policies at other comparable medical diagnostic and healthcare companies as one piece of context in annually assessing the reasonableness and appropriateness of our executive compensation programs. With the assistance of Pay Governance, an independent compensation consultant engaged by the Compensation Committee, we annually review and select a Peer Group of companies using criteria primarily based on industry and company size. +39 +Table of Contents +No changes were made to the peer group during 2023. The following table provides information about the Peer Group used by the Compensation Committee in assessing the competitiveness of executive compensation (all dollars in millions): +Company +FY2023 Revenue 1 +Primary Industry +AngioDynamics, Inc. $ 339 Health Care Equipment +AtriCure, Inc. $ 399 Health Care Equipment +Atrion Corporation $ 169 Health Care Supplies +Avanos Medical, Inc. $ 673 Health Care Supplies +BioLife Solutions, Inc. +$ 143 Life Sciences Tools and Services +Cerus Corporation $ 156 Health Care Supplies +CONMED Corporation $ 1,245 Health Care Equipment +Haemonetics Corporation $ 1169 Health Care Supplies +Heska Corporation +NA 2 +Health Care Equipment +Lantheus Holdings, Inc. $ 1,296 Health Care Supplies +Meridian Bioscience, Inc. +NA 3 +Health Care Supplies +Merit Medical Systems, Inc. $ 1,257 Health Care Supplies +Mesa Laboratories, Inc. $ 219 Life Sciences Tools and Services +NanoString Technologies, Inc. 4 +$ 162 Life Sciences Tools and Services +Neogen Corporation $ 822 Health Care Supplies +Quanterix Corporation $ 122 Life Sciences Tools and Services +Standard BioTools Inc. (fka Fluidigm) +$ 98 Life Sciences Tools and Services +Surmodics, Inc. $ 133 Health Care Equipment +Summary Statistics: +25th Percentile $ 153 +Median $ 279 +75th Percentile $ 909 +OraSure Technologies, Inc. $ 405 Health Care Supplies +Percentile Rank 60% +___________________ +1 Data collected from Standard & Poor’s Capital I.Q. database. +2 Heska Corporation was acquired in June 2023. +3 Meridian Bioscience was acquired in January 2023. +4 Reflects most recently available four quarters of revenue as of 9/30/2023. +The Compensation Committee seeks to set total direct compensation opportunity levels for each executive near the fiftieth (50 th ) percentile of amounts paid by the Peer Group of companies for performance consistent with the Company’s target financial and other business plans for the applicable year. Use of the fiftieth (50 th ) percentile is intended as a market-based reference and not as a strict target or limit. As a result, the total direct compensation opportunity and the value of specific compensation components for individual executives may fall below or exceed the fiftieth (50 th ) percentile depending on the experience and individual performance of the executive, the criticality of his or her role, the executive’s contribution to our business, and other factors. +In preparing its 2023 competitive assessment of executive compensation, Pay Governance compared the compensation of our NEOs with the pay practices of similar roles at companies within the Peer Group and using data for comparable positions reported in the 2023 Radford Global Life Sciences Survey. Since compensation market data can be volatile from year to year, the Compensation Committee considers both samples to ensure a thorough understanding of the competitive market. +40 +Table of Contents +2023 EXECUTIVE COMPENSATION COMPONENTS +Overview +Our compensation program consists of the following components: +Compensation Form of +Compensation Purpose +Base Salary Cash Base salaries provide fixed compensation necessary to attract and retain key executives. +Annual Incentive Bonus Awards Cash Annual incentive bonus awards provide performance-based incentives to our executives to achieve both Company-wide financial and strategic goals and the executives’ individual performance objectives. +Long-Term Incentive Awards Performance-Vested Restricted Units (PRU) and Time-Vested Restricted Stock (RS) The largest component of our executive compensation is paid in equity. Annual LTIP awards for the NEOs consist of 50% PRUs and 50% time-vested RS in order to provide a strong link between pay and performance. +Benefits 401(k) Plan +Health and Welfare Benefits Retirement and health and welfare benefits provide a complete compensation package that is competitive with the market and addresses the needs of all employees and their families, including our executives. +Employment Agreements Cash severance and accelerated equity vesting Severance and accelerated equity vesting are provided to our executive officers upon qualifying terminations only in order to ensure continued focus on the strategic matters of the Company during potentially uncertain times. +Pay Mix +We follow a pay-for-performance approach to executive compensation, with a significant portion of our executives’ compensation consisting of annual incentive cash bonuses and long-term equity awards that are based on the executives’ and the Company’s achievement of predetermined performance objectives. +41 +Table of Contents +The following charts illustrate the relative proportion of 2023 base salaries compared to the performance-based elements of our executive compensation for Ms. Eglinton Manner and the other NEOs. +Approximately 89% of Ms. Eglinton Manner’s aggregate compensation and 67% of the other NEOs’ aggregate compensation for 2023 consisted of performance-based compensation. +Compensation Components in Detail +2023 Base Salaries +Annual base salaries paid in 2023 to our NEOs were established by the Compensation Committee at the beginning of 2023 based on a review of the Company’s performance and the individual contributions of each officer compared to pre-established performance objectives for 2022. The Compensation Committee also considered the Company’s budget for expected salary adjustments and salary levels for comparable roles in the annual benchmarking review prepared by the Committee’s independent compensation consultant. +Based on these factors, the Compensation Committee approved an annual base salary increase for our senior management averaging approximately 3%. Individual salary increases for 2023 were determined by using the following guidelines: +Performance Rating Merit Increase Range +Outstanding 3.0% - 5.0% +Exceeds Requirements 2.5% - 4.0% +Meets Requirements 2.0% - 3.5% +Does Not Consistently Meet 0% - 1.5% +Does Not Meet Requirements 0% +42 +Table of Contents +The NEOs were evaluated based on Company performance and individual objectives established for their respective positions. +As a result of these performance ratings, the Compensation Committee approved the 2023 salary levels set forth below for the NEOs. +NEO 2022 +Performance +Rating 2022 +Salary 2023 +Salary % +Increase +Carrie Eglinton Manner +President and CEO +Exceeds $700,000 $721,000 3% +Kenneth McGrath +Chief Financial Officer +Exceeds $475,000 $483,000 2% +Kathleen G. Weber +Chief Product Officer +Meets $460,000 $473,800 3% +2023 Annual Incentive Cash Bonuses +Annual cash bonuses are included as part of executive compensation because the Compensation Committee and Board believe that a significant portion of each executive’s compensation should be structured as a variable incentive focused on short-term priorities relating to both the overall performance of the Company and the individual contributions of the executive. On an annual basis, the Compensation Committee has adopted, with approval of the Board, the OraSure Technologies Incentive Plan (“OTIP”), which is intended to be the principal vehicle for incentive cash bonus awards. +When establishing the terms of the OTIP, the Compensation Committee and the Board evaluate which funding objectives will provide the most appropriate incentives for our NEOs to improve our annual financial performance. In recent years, OTIP bonuses have been based solely on the achievement of annual financial objectives. Strategic objectives may also be (and in the past have been) used in combination with annual financial objectives where there is greater financial uncertainty facing the Company and the Compensation Committee and the Board desires to incentivize our NEOs to take near-term strategic steps required to drive annual financial growth and stability. In general, the Compensation Committee and the Board will choose those funding objectives, whether they be financial, strategic, or a combination thereof, which in their judgement provide the most appropriate incentive for management to drive improved financial performance on a year-over-year basis. +Individual bonus payments to executives are generally calculated using a formula that considers the executive’s achievement of individual performance objectives, company performance and the executive’s target bonus percentage. Bonuses are paid based on an assessment of each executive’s performance for the applicable year, using targets expressed as a percentage of the executive officer’s annual base salary. +If an executive has met or exceeded his or her individual performance objectives and/or the Company’s expectations for the applicable year, he or she may be eligible to receive up to 120% of his or her target bonus. The Compensation Committee and Board retain the discretion to adjust an individual executive’s performance evaluation and to increase or decrease the bonus paid to such individual to reflect the specific contributions of that executive, the Company’s overall performance, market conditions or other circumstances. The following guidelines are used to determine the multiple of an executive’s target bonus, or individual +43 +Table of Contents +performance factor, to be used to calculate a bonus payout based on the executive’s performance rating for the applicable year: +Performance Rating % Target Bonus +Outstanding 100% - 120% +Exceeds 100% - 110% +Meets 90 - 105% +Needs Improvement 0% - 90% +Unsatisfactory 0% +The Compensation Committee recommends for Board approval any bonus award for the CEO based on an assessment of the Company’s overall performance. The CEO recommends individual awards for the other executive officers for approval by the Compensation Committee based on an assessment of each executive’s performance against his or her applicable individual performance objectives. The Compensation Committee and Board have the right, in their sole discretion, to decrease or reject any or all of the recommended bonus awards, even if any or all applicable performance criteria have been satisfied, based on the business conditions of the Company or other factors deemed relevant by the Compensation Committee or the Board. +In establishing the 2023 OTIP, the Board and Compensation Committee decided that the bonus plan metrics should be based on the achievement of three key financial objectives: consolidated revenues, adjusted operating income, and cash and cash equivalents ending balance. Note, adjusted operating income is defined as our U.S. GAAP operating income adjusted for certain non-cash or non-recurring expenditures including: stock compensation, amortization of acquisition-related intangible assets, reduction in workforce severance, accelerated depreciation, inventory reserves for excess levels, impairment loss, transformation-related expenses, governmental grant accounting, and the change in fair value of acquisition-related contingent consideration. +Under the 2023 Incentive Plan, Threshold, Target and Maximum performance levels were established for the financial objectives. For each objective, the Company must attain a Threshold, as defined by a minimum level of achievement, to be eligible for any payout on that component of the plan. The Target levels for the objective were set at the performance reflected in our Operating Plan for 2023, which included challenging growth targets considering the uncertainty in the fourth year of the impact of COVID-19 on volume trends, particularly in our US Government contracts for InteliSwab ® test kits. +The Threshold levels were established as follows: +• Consolidated Net Revenues: 80% of Target +• Adjusted Operating Income: Breakeven +• Cash and Cash Equivalents Ending Balance: 35% growth over year-end 2022 balance +44 +Table of Contents +The following sets forth the financial objectives and actual achievement under the 2023 Incentive Plan (amounts in millions): +Financial Objectives/Weight +Threshold (80%) +Target (100%) +Maximum 1 +(200%) +Actual +Achieved +% +Payout 2 +Consolidated Net Revenues (50%) $300 +$375-$400 +$500 $406 106% 53% +Adjusted Operating Income (15%) $0 +$17- $32 +$70 $74 200% 30% +Cash and Cash Equivalents Ending Balance (35%) $150 +$180-$220 +$250 $290 200% 70% +Calculated Final Payout 153% +Actual Final Payout 153% +1 Maximum payout limited to 100% if core revenues in 2023 did not exceed 2022 core revenues of $144.2 million. 2023 core revenues were $147.7 million, and as such, maximum payout was not limited to 100%. +2 Payout % equals Weight multiplied by Achieved %. +During 2023, we recorded revenues totaling $405.5 million, adjusted operating income of $73.6 million, and ending cash and cash equivalents balance of $290.4 million. Revenue grew 5% on a year-over-year basis in 2023, which was above the upper range of the Target performance level of 3% growth, but below the Maximum performance level. Adjusted operating income exceeded the Maximum performance level, and cash and cash equivalent ending balance grew $180 million compared to year-end 2022, also exceeding the Maximum performance level. This financial performance resulted in a payout of 153% to Target, and no adjustment was made to the bonus amounts. +The Company's performance against its 2023 goals was approved by the Compensation Committee and the full Board and was used to determine bonus payouts to the Company’s NEOs and other members of our management team. The specific target payouts for NEO bonuses for 2023 (expressed as a percentage of annual base salary) are shown below: +Title Target Payout +Opportunities +(% of Salary) +CEO 100% +Chief Financial Officer and Chief Product Officer 50% +In February 2024, the Compensation Committee authorized the payout of individual bonus awards to executive officers based on the target bonus amounts and an assessment based on the Company's overall performance. Individual performance of each of the officers, which is capped at 100%, was considered as described below. +Factors Considered in CEO & NEO Performance Evaluation +In evaluating Ms. Eglinton Manner’s and the Company’s performance, the Compensation Committee recognized that the Company delivered greater than 100% attainment on its targets for Revenue, Adjusted Operating Income, and cash balance for 2023. Additionally, management made significant progress in its strategic transformation, strengthening the Company's foundation while delivering the second-consecutive year of record financial performance. Consolidated revenues were $405.5 million in 2023, representing a 5% increase over 2022. The Compensation Committee noted that this increase was primarily driven by 10% increased sales of its InteliSwab ® COVID-19 Rapid Test, while also growing its core (non-InteliSwab ® ) portfolio 2%, driven by strong HIV sales offsetting its molecular solutions revenue decline. The Company completed all milestones, and received payment for those milestones, included in its contract with the U.S. government related to manufacturing capacity expansion at its Opus Way facility earlier than expected while also streamlining its operational footprint, leveraging automation and infrastructure. Additionally, the Company built upon the strength of its government contracts, winning a new federal RFP for InteliSwab ® in 2023. +45 +Table of Contents +The Compensation Committee also noted that the Company improved its operating efficiency and increased its gross margin 400 basis points through the course of the year to 42.3% in 2023 from 38.3% in 2022. Operating expenses, excluding non-cash impairment losses, also declined by $25 million in 2023 as compared to 2022. +The Compensation Committee further noted that the company generated $142 million in cash flow from operations in 2023 and grew its balance of cash and cash equivalents by $180 million during the year to $290 million as of December 31, 2023. Furthermore, with its stronger balance sheet the Company invested in its innovation pipeline while working to elevate its core and accelerate profitable growth, including by expanding the portfolio of products that its sales teams can offer to customers in several important segments through distribution and strategic agreements. +Finally, the Compensation Committee recognized that the Company delivered outstanding TSR, outperforming the Nasdaq Healthcare index and its peers with 54% TSR based on the average stock price for the last twenty trading days of the year in 2023 compared to the last twenty trading days of 2022. This compares to the Nasdaq Healthcare index TSR of 0.4% for the same period. +In view of the foregoing, the Compensation Committee determined that Ms. Eglinton Manner should receive an Outstanding performance rating for 2023. +The remaining NEOs were evaluated based on Company and individual objectives established for their respective positions. +The Compensation Committee changed its consideration of individual performance factors in 2023, determining that those ratings may not increase the bonuses for Ms. Eglinton Manner and the other NEOs. Based on strong performance ratings for each of them, the Compensation Committee determined that each would receive a bonus based on their target (% salary) level at the 2023 Company Performance Factor (153%) with no further individual adjustment. +Using the approach described above, a final 2023 incentive cash bonus was calculated for Ms. Eglinton Manner, representing approximately 153% of her target bonus, as follows: +2023 +Salary X Bonus +Target +(% Salary) X 2023 +Company +Performance +Factor X +2023 Individual Performance Factor 1 += 2023 +Bonus +$721,000 100% 153% 100% $1,103,130 +1 Individual performance factor for NEOs cannot exceed 100% which has the affect of limiting NEO payments to a maximum of the Company performance factor. +46 +Table of Contents +This same formula was used to calculate the 2023 bonus awards for all other NEOs, as follows: +2023 NEO Bonus Payments +NEO 2023 +Salary Bonus +Target +(% Salary) 2023 Company Performance Factor +2023 Individual Performance Factor 1 +2023 +Bonus +Kenneth McGrath +Chief Financial Officer +$483,000 50% 153% 100% $369,495 +Kathleen G. Weber +Chief Product Officer +$473,800 50% 153% 100% $362,457 +1 Individual performance factor for NEOs cannot exceed 100% which has the affect of limiting NEO payments to a maximum of the Company performance factor. +2023 Long-Term Incentive Equity Awards +An additional way that we promote the long-term growth of the Company and align the interests of our executives with those of our stockholders is by compensating executives with equity in the Company that vests over a multi-year period and in part only on achievement against certain performance expectations. To accomplish this, the Compensation Committee administers the Company’s LTIP pursuant to which grants of RS and PRUs are made to executive officers. +Incentive equity awards under the LTIP are made on an annual basis, and are discretionary and subject to approval by the Compensation Committee and/or the Board. Awards to individual participants under the LTIP are based on an evaluation of a number of factors, including: +• Performance of the participant for the applicable year; +• The participant’s level of responsibilities and relative contribution to the Company’s business; +• A competitive assessment of awards at Peer Group companies; +• History of equity awards to the participant; and +• Other factors deemed relevant by the Compensation Committee and/or the Board. +Each participant’s individual performance for the applicable year is evaluated against his or her individual performance objectives for that year, except for our CEO who is evaluated based on total Company performance. A “Meets Expectations” performance is typically the threshold requirement to receive an equity award under the LTIP. Awards below this performance level may be considered on an exception basis at the discretion of the Compensation Committee and/or the Board. +The value of potential incentive equity awards that could have been granted in 2023 under the LTIP (expressed as a percentage of annual base salary) based on performance during 2022, are summarized below: +2023 LTIP Award Ranges (% of salary) +Performance +Position Lower End Target Maximum +President/CEO Market Assessment 300% Market Assessment +Chief Financial Officer 105% 140% 175% +Chief Product Officer 95% 125% 155% +The percentages set forth above were established at levels that the Compensation Committee believed represented an appropriate long-term incentive compensation value for each executive, based on the results of the benchmarking review prepared by its independent consultant. Once the aggregate dollar value of +47 +Table of Contents +an award has been established by applying the Compensation Committee approved award percentage to a participant’s base salary, the value is converted into shares or units based on a valuation of the restricted stock and restricted unit portions of the award using the average of the high and low stock price on the grant date as reported on the Nasdaq Stock Market. +Under the LTIP, 50% of an executive’s total equity award consists of PRUs that will not vest until three years after the grant date and only if certain performance measures are met during that three-year period. The awards made in 2023 incorporate two performance metrics, each at 50% weighting and each with a performance threshold payout modifier: +Component (Weighting) PRU Performance Metrics PRU Performance Threshold Payout Modifier* +Revenue (50%) Cumulative revenues during the three-year period beginning with 2023 Profitability: cash from operations (CFO) must be positive in 2025 to payout revenue > 100% +rTSR (50%) Relative TSR performance vs NASDAQ Healthcare Index TSR: If the Company's TSR is negative, the payout on rTSR cannot exceed 105% +With respect to each of the performance metrics, the Compensation Committee approved the following threshold, target, and maximum levels of achievement, with the performance threshold payout modifier set forth above: +Component (Weighting) +Threshold * +Target * +Maximum * +Revenue (50%) $570.0 million $677.0 - $749.0 million $856.0 million +rTSR (50%) 50% 105% 150% +*To the extent performance falls between two levels, achievement shall be determined using linear interpolation +The remaining 50% of each executive’s incentive equity award consists of grants of time-vested RS that vest in equal annual installments over a three-year period. These vesting restrictions serve to promote the Company’s long-term growth by restricting executives’ ability to realize short-term gains from their awards. The Compensation Committee believes the terms of its incentive equity awards to executives are competitive with the terms of equity awards offered at comparable medical diagnostics and healthcare companies. +The structure of the equity awards reflects market-based good governance practices as well as historical input from our stockholders reflecting that a meaningful portion of the equity awards should have performance-based vesting. We believe 50% is a meaningful portion and is consistent with or exceeds the performance orientation of our Peer Group. +The adoption of performance-based vesting conditions with a three-year service requirement for 50% of an executive’s annual equity award substantially strengthens the link between pay and performance and creates an appropriate long-term incentive for our executives. At the same time, the use of time-based vesting conditions for the remaining 50% of each award achieves the equally important goal of share ownership/accumulation that directly promotes alignment with stockholders and further supports executive retention. +Overall, the Compensation Committee and Board believe that our approach represents a balanced performance-based approach to our executive compensation program that is appropriate for our Company, directly responds to feedback from our stockholders, and is consistent with executive pay governance best practices. +Equity awards are generally made by the Compensation Committee each year as part of the normal annual compensation cycle. The awards for a particular year generally occur in early February, or early March of the following year after the Company’s full year financial results are known and performance evaluations for the executive officers have been prepared. Equity awards approved by the Compensation Committee for the +48 +Table of Contents +CEO are then reviewed and approved by the Board. In addition to the annual equity awards, the Compensation Committee may approve equity awards for newly hired officers or in recognition of an executive’s promotion or expansion of responsibilities. These latter grants may have vesting or other terms that differ from the terms generally approved for annual equity awards. Notwithstanding the terms of the LTIP, equity awards are made at the discretion of the Compensation Committee or Board. +Effective March 1, 2023, the Compensation Committee approved equity awards for the NEOs under the LTIP based on the performance evaluations of such officers for 2022, as summarized below. A description of the basis for each of the NEO’s 2022 performance evaluation is set forth above under the Section entitled, “2023 Base Salaries,” in this CD&A. +The following summarizes the equity award provided to the NEOs during 2023 under the LTIP: +Executive Officer +2023 +Performance +Assessment +Time Vested Restricted Stock (in shs) +Performance-Vested Restricted Units (in shs) +Carrie Eglinton Manner President and CEO +Outstanding +258,065 — +Kenneth McGrath Chief Financial Officer +Outstanding +53,629 — +Kathleen G. Weber Chief Product Officer +Exceeds +46,371 — +2021 PRU Payout in 2023 +Pay Out Under 2021 PRUs . The PRU portion of equity awards made to executives in early 2021 based on performance during 2020 did not vest until three years after the grant date, based on one performance metric: cumulative revenues during the three-year period beginning with 2021, subject to a modifier of up to +/- 15% based on relative TSR against the TSRs of each member of the Nasdaq Health Care Index. The three-year service period for these PRUs expired on February 1, 2024. The following table summarizes the potential range of shares that could be delivered based upon the degree of achievement of the applicable performance measures: +3-Year Cumulative Revenue Payout Percentage* +$1,297.5 million 150% +$921.2 million 100% +$695.0 million 50% +below $695.0 million 0% +• intermediate results are interpolated on a straight line basis +OraSure's TSR Percentile Rank PRU Payout Modifier +90th and Above 115% +55th 100% +25th and Below 85% +For the 2021 PRUs, the Company's cumulative three-year revenue was $1,026.6 million and exceeded the cumulative three-year revenue target by 114%. The Company's TSR for the three year measurement period was ranked at the 76th percentile relative to the TSR of each member of the Nasdaq Health Care Index. This resulted in a payout of 131%. The following summarizes the three-year cumulative +49 +Table of Contents +revenue target for the 2021 PRUs and, our performance against this target and the resulting number of shares delivered to the NEOs upon settlement of the PRUs: +Performance Target Actual Performance % of Target % Vested +Revenue $921.2 million $1,026.6 million 114% 114% +rTSR Modifier 115% +Final Vesting 131% +2021 PRU’s Target and Actual Payout +Revenue Target +(# of shs) Revenue Actual +(# of shs) +Carrie Eglinton Manner 1 +N/A N/A +Kenneth McGrath 1 +N/A N/A +Kathleen G. Weber 18,218 23,866 +1 Ms. Eglinton Manner and Mr. McGrath did not receive any 2021 PRU’s because they joined the Company after these awards were made. +50 +Table of Contents +OTHER COMPENSATION +We provide minimal additional benefits outside of our primary elements of compensation, as follows: +Retirement Programs +All of our U.S. employees, including executive officers, are eligible to participate in our 401(k) profit sharing plan (the “401(k) Plan”). We make matching contributions for participants on a dollar-for-dollar basis up to $4,000 per year. Our subsidiary DNA Genotek, which is located in Canada, offers a registered retirement plan to its employees, which similarly allows employee contributions for retirement savings, with matching contributions by DNA Genotek of up to CAD $4,000 per year. +The Company also maintains the OraSure Technologies, Inc. Deferred Compensation Plan (the “Deferred Compensation Plan”) for the benefit of the Company’s highly compensated employees, including all of the NEOs, and its non-employee Directors. The Deferred Compensation Plan allows participants to defer up to 100% of their annual base salaries (or fees in the case of non-employee Directors) and up to 100% of annual incentive cash bonuses and, upon vesting, restricted shares of the Company’s Common Stock awarded to the participant. The Company may also make discretionary contributions to the participants’ accounts that vest over one or more years as determined by the Company, as well as upon death, disability or a change of control. Since the Deferred Compensation Plan was put in place, the Company has made no discretionary contributions. Participants may elect to receive distributions of deferred amounts on a specified date, separation from service, a change of control, disability and/or death. A further description of these benefits is set forth in the Section entitled “Nonqualified Deferred Compensation.” +Perquisites and Other Compensation +As a general matter, the Compensation Committee and Board do not believe that executive officers should be treated differently than other employees by receiving special perquisites unrelated to our general compensation program. Therefore, our healthcare, disability, and other insurance programs and benefits are the same for all eligible employees, including executive officers. Executive officers generally do not receive any additional perquisites, except for Ms. Weber who receives certain benefits under her employment agreement in connection with her international assignment at our Canadian subsidiary, DNA Genotek, Inc. A further description of these benefits is set forth in the Section entitled, “Employment Agreements and Potential Payments Upon Termination or Change of Control.” +Potential Payments Upon Termination or Change of Control Pursuant to Employment Agreements +The Company has entered into employment agreements with each of the NEOs. In addition to the compensation elements discussed above, these agreements provide for post-employment severance payments and benefits in the event of termination of employment by the Company without “cause” or by the executive for “good reason” and provide enhanced severance payments upon such terminations in connection with a “change of control” of the Company. The terms of these arrangements are discussed in more detail under the Section entitled, “Employment Agreements and Potential Payments Upon Termination or Change of Control,” in this Proxy Statement. The Compensation Committee believes that these arrangements are generally consistent with industry practice at the Peer Group companies, provide an incentive to the applicable executive to remain with the Company, and serve to align the interests of stockholders and the executives in the event of a change of control of the Company. +Accounting and Tax Treatment of Compensation +In approving the amount and form of compensation for the NEOs, the Compensation Committee considers all elements of the cost to the Company of providing such compensation, including accounting and tax implications. In particular, it considers the potential impact of Section 162(m) of the Internal Revenue Code (the “Code”), which disallows a tax deduction for any publicly-held corporation for individual compensation exceeding $1 million in any taxable year for certain covered employees. Notwithstanding these deductibility limitations, the Compensation Committee intends to maintain flexibility to pay compensation that is not entirely deductible when the best interests of the Company would make that advisable. +51 +Table of Contents +Compensation Recoupment Policy +The Board has adopted a compensation recoupment or “clawback” policy, applicable to all officers subject to Section 16 of the Exchange Act. Under this policy, the Company will pursue recoupment of any excess compensation, which was awarded to a covered officer based on financial statements of the Company where such statements are required to be restated. In addition to recoupment of any excess compensation, the Company will seek to recoup up to 100% of all incentive-based compensation in the case of (i) willful, knowing or intentional misconduct or a willful, knowing or intentional violation of any of the Company's rules or applicable legal or regulatory requirements or (ii) fraud in the course of a covered employee's employment. The recovery period for recoupment of any compensation is up to three fiscal years preceding the date on which the Company determines it is required to prepare and file the restated financial statements. This policy has been adopted to comply with the final guidance under Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“the Dodd-Frank Act”). +52 +Table of Contents +COMPENSATION TABLES +SUMMARY COMPENSATION TABLE +The following table summarizes the compensation of our CEO and the other NEOs, for the fiscal years ended December 31, 2023, 2022 and 2021: +Name & Principal Position Year +Salary ($) (1) +Bonus ($) +Stock Awards +($) (2) +Option Awards ($) +Non-Equity Incentive Plan Compensation ($) (3) +Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) +All other +Compensation +($) (4) +Total ($) +Carrie Eglinton Manner 2023 $ 721,000 — $ 4,873,637 — $ 1,103,130 — $ 4,000 $ 6,701,767 +President and Chief Executive Officer 2022 $ 376,923 — $ 5,600,000 — $ 770,000 — — $ 6,746,923 +2021 — — — — — — — — +Ken McGrath 2023 $ 483,000 — $ 672,104 — $ 369,495 — $ 4,000 $ 1,528,599 +Chief Financial Officer 2022 $ 173,558 — $ 400,000 — $ 261,250 — $ 4,000 $ 838,808 +2021 — — — — — — — — +Kathleen G. Weber 2023 $ 473,800 — $ 752,471 — $ 362,457 — $ 84,169 $ 1,672,897 +Chief Product Officer 2022 $ 460,000 — $ 801,778 — $ 241,500 — $ 172,920 $ 1,676,198 +2021 $ 416,246 — $ 483,596 — $ 233,098 — $ 418,505 $ 1,551,445 +1 The 2022 salary shown for Ms. Eglinton Manner represents the amount paid to Ms. Eglinton Manner after she joined the Company on June 4, 2022 and the 2022 salary shown for Mr. McGrath represents the amount paid to Mr. McGrath after he joined the Company on August 8, 2022. +2 The indicated amounts reflect the aggregate grant date fair value of RS and PRU awards made to the NEOs during the applicable year, computed in accordance with FASB ASC Topic 718. The value of the PRUs reflect the assumption that 100% of target will be achieved for each of the performance measures reflected in the terms of the PRUs. Certain assumptions used in the calculation of the indicated amounts are set forth for the applicable year of award in footnote 11 to the Company’s audited consolidated financial statements for the year ended December 31, 2023, included in the Company’s Annual Report on Form 10-K filed with the SEC on March 11, 2024 (the “2023 10-K Report”). The maximum grant-date fair value of the PRU awards made in 2021, assuming the highest level of performance measures will be achieved (120% of target resulting in a 150% payout), are as follows: Ms. Weber $300,324. The indicated amount for Ms. Eglinton Manner in 2022 includes her Make Whole Award of $4,000,000. The indicated amounts in 2022 do not include the grant of 2022 PRU awards as the metrics were not finalized until 2023 and, accordingly, the grant-date fair value of the 2022 PRUs was not determined as of December 31, 2022. Accordingly, the amounts indicated in 2023 include both the value of the 2022 PRUs and the value of the 2023 PRUs. The maximum grant-date fair value of the 2022 PRU awards, assuming the highest level of performance measures will be achieved, are as follows: Ms. Eglinton Manner, $1,885,354 and Ms. Weber $197,026. The maximum grant-date fair value of the 2023 PRU awards made in 2023, assuming the highest level of performance measures will be achieved, are as follows: Ms. Eglinton Manner, $2,450,327, Mr. McGrath, $509,207, and Ms. Weber, $440,293. +3 The indicated amounts reflect incentive cash bonuses paid to the NEOs pursuant to an Incentive Plan, based on performance during the applicable year. For a description of incentive cash bonus payments for performance during 2023, see the Section entitled, “2023 Annual Incentive Cash Bonuses,” in the CD&A. +4 The indicated amounts of $4,000 in 2023 reflect cash contributed to a 401(k) profit sharing plan as an employer-matching contribution, which was offered to U.S. employees of the Company during each of the indicated years. Ms. Weber’s 2023 amount represents $4,000 in matching contributions to a 401(k) profit sharing plan, $15,828 for reimbursement of tax preparation fees, and $64,341 in tax equalization payments. +53 +Table of Contents +GRANTS OF PLAN-BASED AWARDS +The following table summarizes information concerning possible incentive cash bonuses and possible and actual RS and PRU awards for the NEOs during the fiscal year ended December 31, 2023: +Estimated Possible Payouts +Under Non-Equity Incentive +Plan Awards 2 +Estimated Possible Payouts Under +Equity Incentive Plan Awards 3 +Name & Principle +Position Grant +Date Threshold +($) Target +($) Maximum +($) Threshold +(# Shs.) Target +(# Shs.) Maximum +(# Shs.) +All other Stock +Awards: +Number +of Shares +of Stock +or Units 4 +(#Shs.) +All other +Option +Awards: +Number +of +Securities +Underlying +Options +(#Shs.) Exercise +of Base +Price of +Option +awards +($/Sh) +Grant +Date +Fair +Value of +Stock +Awards 5 +($) +Carrie Eglinton Manner +President and Chief Executive Officer +3/1/2023 +1 +— — — — — — 258,065 RS — — $1,600,648 +3/1/2023 +1 +— — — 129,033 258,065 387,098 — — — $1,633,551 +6/4/2022 +6 +— — — 244,449 325,932 423,712 — — — $1,639,438 +NA $576,800 $721,000 $1,442,000 — — — — — — NA +NA — — — — — — — — — NA +Ken McGrath +Chief Financial Officer +3/1/2023 +1 +— — — — — — 53,629 RS — — $332,633 +3/1/2023 +1 +— — — 26,815 53,629 80,444 — — — $339,471 +NA $193,200 $241,500 $483,000 — — — — — — NA +NA — — — — — — — — — NA +Kathleen G. Weber +Chief Product Officer +3/1/2023 +1 +— — — — — — 46,371 RS — — $287,616 +3/1/2023 +1 +— — — 23,186 46,371 69,557 — — — $293,528 +2/1/2022 +6 +— — — 25,546 34,061 44,279 — — — $171,327 +N/A $189,520 $236,900 $473,800 — — — — — — N/A +N/A — — — — — — — — — N/A +1 Annual incentive equity awards to NEOs consisted of a combination of time-vested RS and PRUs that were granted in 2023 pursuant to the LTIP based on performance during 2022. Annual equity awards made during 2023 were approved by the Compensation Committee effective on March 1, 2023. For a description of these equity awards and their terms, see the Section entitled, “2023 Long-Term Incentive Awards,” in the CD&A. +2 The indicated amounts represent potential incentive cash bonus payments to the NEOs under the 2023 Incentive Plan. On February 15, 2024, bonus payments under the 2023 Incentive Plan were approved by the Compensation Committee for the NEOs (except for Ms. Eglinton Manner) and by the Board for Ms. Eglinton Manner, in each case based on performance during 2023. The Threshold and Target amounts assume the executive receives 80% and 100% of his or her target bonus if the Company achieves 80% and 100% for each performance objective in the 2023 Incentive Plan, respectively. The maximum amounts assume that the recipient receives 200% of his or her target bonus if the Company achieves 200% or the maximum level for each performance objective in the 2023 Incentive Plan . A further description of the payments approved under the 2023 Incentive Plan is set forth in the Section entitled, “2023 Annual Incentive Cash Bonuses,” in the CD&A. +3 The indicated amounts represent the threshold, target, and maximum number of shares which could be earned under the PRU awards granted to the NEOs in 2023 pursuant to the LTIP, based on performance during 2022. The target share numbers for each potential award were calculated by dividing 50% of the long-term incentive targets for each NEO set forth in the LTIP by the mean between the high and low sales price of the Common Stock as reported by Nasdaq on the date of grant. The target number of shares corresponding to the PRUs were calculated based on the assumption that 100% of target is achieved for each of the performance measures set forth in the terms of such PRU awards. The actual number of shares received upon vesting of the PRUs could vary from 50% to 150% of target depending on the degree to which the performance measures are achieved. +4 The indicated amounts represent the actual number of shares of RS granted to the NEOs in 2023 under the LTIP, based on performance during 2022. A further description of these equity awards and their terms is set forth in the Section entitled, “2023 Long-Term Incentive Awards,” in the CD&A. +5 The indicated amounts represent the grant date fair value calculated in accordance with FASB ASC Topic 718. +6 PRU's granted in 2022 to Ms. Eglinton Manner and Ms. Weber were not considered granted from an accounting perspective in 2022 and had no grant date value as of December 31, 2022. Grant date value was determined in 2023 and, accordingly, such awards are included herein. The indicated amounts represent the threshold, target, and maximum shares which could be earned under the PRU awards granted to the NEOs in 2022 pursuant to the LTIP, based on performance during 2021. The target share numbers for each potential awards were calculated by dividing 50% of the long-term incentive targets for each NEO set forth in the LTIP by the mean between the high and low sales price of the Common Stock as reported by Nasdaq on the date of grant. The target number of shares corresponding to the PRUs were calculated based on the assumption that 100% of the target is achieved for each of the performance measures set forth in the terms of the PRU awards. The actual number of shares received upon vesting of the PRUs could vary from 75% to 130% of target depending on the degree to which the performance measures are achieved. +54 +Table of Contents +OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2023 +The following table summarizes information regarding unexercised stock options and unvested RS and PRUs held by the NEOs as of December 31, 2023: +Option Awards Stock Awards +Name Number of +Securities +Underlying +Unexercised +Options +(#) +Exercisable +Number of +Securities +Underlying +Unexercised +Options 1 +(#) +Unexercisable +Equity +Incentive +Plan +Awards: +Number of +Securities +Underlying +Unexercised +Unearned +Options (#) Option +Exercise +Price +($/Sh.) Option +Expiration +Date +Number of +Shares or +Units of +Stock +That +Have +Not +Vested 1 (#) +Market +Value of +Shares or +Units of +Stock +That +Have Not +Vested 5 ($) +Equity +Incentive +Plan +Awards: +Number of +Unearned +Shares, +Units or +Other +Rights +that +Have Not +Vested 1 (#) +Equity +Incentive +Plan +Awards: +Market +or Payout +Value of +Unearned +Shares, +Units or +other +Rights +That +Have Not +Vested 5 ($) +Carrie Eglinton Manner +President and Chief Executive Officer +— — — — — 814,830 +2(a) +$6,681,606 — $— +— — — — — 217,288 +2(b) +$1,781,762 — $— +— — — — — 258,065 +2(c) +$2,116,133 — $— +— — — — — — $— 407,415 +2(d) +$3,340,803 +— — — — — — $— 258,065 +2(e) +$2,116,133 +Kenneth McGrath +Chief Financial Officer +— — — — — 87,922 +3(a) +$720,960 — $— +— — — — — 53,629 +3(b) +$439,758 — $— +— — — — — — $— 53,629 +3(c) +439,758 +Kathleen Weber +Chief Product Officer +10,404 — — $9.31 2/3/2025 — $— — $— +— — — — — 6,073 +4(a) +$49,799 — $— +— — — — — 40,601 +4(b) +$332,928 — $— +— — — — — 22,707 +4(c) +$186,197 — $— +— — — — — 46,371 +4(d) +$380,242 — $— +— — — — — — $— 23,866 +4(e) +$195,698 +— — — — — — $— 42,576 +4(f) +$349,125 +— — — — — — $— 46,371 +4(g) +$380,242 +1 Stock options vest over four years, with the first 25% vesting on the first anniversary of the grant date and the remaining 75% vesting on a monthly basis over the next three years following the first anniversary of the grant date. Grants of RS vest over a three-year period, with one-third vesting on the first anniversary of the grant date, a second third vesting on the second anniversary and the final third vesting on the third anniversary. PRUs will not vest until three years from the grant date and only if certain performance measures are met during the three-year service period. +2 The indicated RS and PRUs vest as follows: +(a) 814,830 restricted shares cliff vest on June 4, 2024; and +(b) 108,644 restricted shares each on June 4, 2024, and June 4, 2025, respectively. +(c) 86,022 restricted shares each vest on March 1, 2024 and March 1, 2026, respectively, and 86,021 vest on March 1, 2025. +(d) 407,415 PRUs cliff vesting on June 4, 2025, provided performance metrics have been achieved; +(e) 258,065 PRUs cliff vesting on March 1, 2026, provided performance metrics have been achieved. +3 The indicated RS and PRUs vest as follows: +(a) 43,961 restricted shares each on August 8, 2024, and August 8, 2025, respectively. +(b) 17,876 restricted shares each on March 1, 2024 and March 1, 2026, respectively and 17,877 on March 1, 2025. +(c) 53,629 PRUs cliff vesting on March 1, 2026, provided performance metrics have been achieved. +55 +Table of Contents +4 The indicated RS and PRUs vest as follows: +(a) 6,073 restricted shares on February 1, 2024; +(b) 20,301 restricted shares on January 5, 2024 and 20,300 restricted shares on January 5, 2025; +(c) 11,353 restricted shares on February 1, 2024 and 11,354 restricted shares on February 1, 2025; +(d) 15,457 restricted shares vest on March 1, 2024, March 1, 2025, and March 1, 2026, respectively. +(e) 23,866 PRUs cliff vesting on February 1, 2024, provided performance metrics have been achieved; +(f) 42,576 PRUs cliff vesting on February 1, 2025, provided performance metrics have been achieved; +(g) 46,371 PRUs cliff vesting on March 1, 2026, provided performance metrics have been achieved. +5 The indicated values were determined by multiplying the number of unvested shares of RS and target number of unvested PRUs shown in this table by $8.20 per share, the closing price of the Company's Common Stock as reported by Nasdaq on December 31, 2023. +OPTION EXERCISES AND STOCK VESTED +The following table summarizes information with respect to the exercise of stock options and vesting of restricted stock for each of the NEOs during the fiscal year ended December 31, 2023: +Option Awards +Stock Awards 1 +Name Number of Shares Acquired on Exercise +(#) +Value Realized on Exercise 2 +($) +Number of Shares Acquired on Vesting +(#) +Value Realized on Vesting 3 +($) +Carrie Eglinton Manner — — 108,644 $ 595,369 +President and Chief Executive Officer +Ken McGrath — — 43,961 $ 285,307 +Chief Financial Officer +Kathleen G. Weber 4,129 $ 9,644 100,587 $ 536,125 +Chief Product Officer +1 Includes the vesting of restricted stock awards and performance-vested restricted units. +2 The indicated amount represents the number of shares acquired upon the exercise of the options multiplied by the difference between the market value of the Company’s Common Stock on the applicable exercise date and the option exercise price. +3 The indicated amounts were calculated by multiplying the number of restricted shares and performance-vested restricted shares acquired upon vesting by the market value of the Company’s Common Stock on the applicable vesting date. The market value was determined by calculating the mean between the high and low sales prices of the Common Stock as reported by Nasdaq on the vesting date. +RETIREMENT BENEFITS +The NEOs are eligible to participate in our 401(k) Plan on the same terms and conditions applicable to other employees. For a further description of the terms of the 401(k) Plan, see the Section entitled, “Retirement Programs,” in the CD&A. +NONQUALIFIED DEFERRED COMPENSATION +The OraSure Technologies, Inc. Deferred Compensation Plan (the “Plan”) is a non-qualified deferred compensation plan designed to provide deferred compensation benefits to a select group of the Company’s highly compensated employees, including all of the NEOs, and to non-employee members of the Board. +The Plan allows for deferrals by participants of up to 100% of their annual base salaries (or in the case of non-employee Directors, 100% of fees payable under the Company’s Non-Employee Director Compensation Policy), up to 100% of annual incentive cash bonuses and, upon vesting, restricted shares of the Company’s Common Stock and shares received in respect of PRUs awarded under the LTIP. The Company may also make discretionary contributions to the accounts of employees participating in the Plan. Cash balances in participants’ accounts may be invested in a list of investment options that are similar to the fund +56 +Table of Contents +choices offered in the Company’s 401(k) plan. Participants will be permitted to sell vested shares in their accounts, subject to compliance with the Company’s Insider Trading Policy and applicable securities laws, and invest the proceeds of any such sale in the investment options available under the Plan. Participants will be 100% vested in their accounts and the restricted shares they defer, except that Company contributions will vest over one or more years as determined by the Company. In the event of death, disability or change of control, a participant will become 100% vested in any then unvested Company contributions. +A Participant may elect to receive a distribution from his or her account upon a specified date, separation from service, change of control, disability and/or death. Distributions will be made in a lump sum or installments, as allowed under the Plan. +Amounts contributed to a participant’s account through elective deferrals or through the Company’s discretionary contributions are generally not subject to income tax, and the Company does not receive a deduction until they are distributed pursuant to the Plan. +However, cash deferrals are subject to the Federal Insurance Contributions Act Tax imposed at the time of deferral (the “FICA tax”). Deferrals of restricted shares and shares received in respect of PRUs are subject to the FICA tax at the time the shares vest, but are not subject to income tax, and the Company does not receive the deduction until the shares are distributed pursuant to the Plan. The Company may amend or terminate the Plan at any time in accordance with applicable law. +None of the Company’s NEO’s participated in the Plan during 2023. +57 +Table of Contents +EMPLOYMENT AGREEMENTS AND POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL +Employment Agreements +We have entered into employment agreements with all of our NEOs. We believe such agreements are necessary to attract and retain critical talent, and are in-line with market practices. The following summary describes certain of the material terms of the employment arrangements with Ms. Eglinton Manner, and the other NEOs. +Ms. Eglinton Manner +In May 2022, we entered into an employment agreement with Ms. Eglinton Manner in connection with her appointment as the Company’s President and CEO, effective June 4, 2022. Under the agreement, Ms. Eglinton Manner would receive (i) an annual base salary of at least $700,000, (ii) an annual cash bonus opportunity under the Company’s annual Incentive Plan with a bonus target of at least 100% of her base salary, (iii) a restricted stock (or restricted stock unit) award for a number of shares of the Company’s common stock determined by dividing $4,000,000 by the average closing price of the Company’s common stock for the 20 trading days immediately preceding the grant date (the “Trailing Average Price”), which award will vest on the second anniversary of the effective date and is intended to replace compensation from her prior employer that Ms. Eglinton Manner will forfeit to accept employment with the Company, (iv) a restricted stock (or restricted stock unit) award for a number of shares of the Company’s common stock determined by dividing $1,600,000 by the Trailing Average Price, which award will vest in three equal annual installments, on the first three anniversaries of the effective Date, and (v) a performance-based restricted stock unit award for a target number of shares of the Company’s common stock determined by dividing $1,600,000 by the Trailing Average Price, which award will be subject to the same vesting and performance conditions as are applicable to the 2022 performance-based restricted stock unit awards granted to the Company’s other executive officers. The agreement also provides that the Company will reimburse Ms. Eglinton Manner for reasonable car service fees incurred to commute between her home and the Company’s offices and, subject to the Company’s policies, other reasonable and necessary expenses incurred in the course of her employment. +Under the terms of Ms. Eglinton Manner’s employment agreement, upon the termination of Ms. Eglinton Manner’s employment due to death, disability, her unilateral termination without good reason (as such term is defined in her employment agreement), or the Company’s termination for cause (as such term is defined in her employment agreement), Ms. Eglinton Manner will be entitled to receive her salary through the date of termination. In the case of a termination upon her death, disability, or her unilateral termination without good reason, Ms. Eglinton Manner will be entitled to receive any annual bonus that has been earned, but not yet paid with respect to a year ending prior to the date of termination. In the case of a termination upon her death or disability or a unilateral termination by Ms. Eglinton Manner without good reason where in either case the termination were to occur after June 30 of any year, Ms. Eglinton Manner will also be entitled to receive a cash bonus for the year of termination prorated through the date of termination. +In addition, in the event of termination for good reason or without cause and not during a change of control period (as defined in her employment agreement), Ms. Eglinton Manner will be entitled to receive additional severance in the form of (i) a lump sum amount equivalent to 18 months of her annual salary (or 24 months if such termination occurs during a change of control period) period plus reimbursement of the costs of continuation coverage under the Company’s health plans (if Ms. Eglinton Manner elects coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985) for a period of 18 months after the date of termination and (ii) a lump sum cash payment equal to 150% (or 200% if such termination occurs during a change of control period) of her target bonus amount for the applicable calendar year in which such termination occurs. If Ms. Eglinton Manner is a “specified employee” within the meaning of Code Section 409A at the time of the termination of his employment and any of the foregoing payments would subject him to any tax, interest or penalty under Code Section 409A or regulation thereunder, then the payment shall not be made until the first day which is at least six months after the date of termination of his employment. +Under the terms of her agreement, all equity awards subject to time-based vesting conditions granted to Ms. Eglinton Manner were required to immediately vest if Ms. Eglinton Manner’s employment was +58 +Table of Contents +terminated for good reason by Ms. Eglinton Manner or by the Company without cause during a change of control period, and 50% of such equity awards would vest in the event Ms. Eglinton Manner’s employment was terminated for good reason by Ms. Eglinton Manner or by the Company without cause during any period other than a change of control period, provided that 50% of any equity awards subject to performance-based vesting conditions would remain eligible to vest if such termination occurs not in connection with a change of control (or 100%, in the case of a termination during a change of control period). +Mr. McGrath +In August 2022, we entered into an employment agreement with Mr. McGrath, pursuant to which Mr. McGrath would receive (i) an annual base salary of at least $475,000, (ii) a target bonus opportunity under the Company’s annual Incentive Plan of 50% of his base salary, and (iii) 131,883 shares of restricted common stock of the Company, which amount was determined by dividing $400,000 by the average closing price of the Company’s common stock for the twenty (20) trading days immediately preceding Mr. McGrath’s commencement of employment. Such award will vest in three equal annual installments, on the first three anniversaries of Mr. McGrath’s commencement of employment, subject in each case to his continued service through the applicable vesting date. +If Mr. McGrath’s employment ceases due to a termination by the Company without cause or his resignation with good reason (as such terms are defined in his agreement), then, subject to his timely execution and non-revocation of a release of claims, he will receive: (i) payment of any otherwise earned but unpaid annual bonus for the preceding year, (ii) a lump sum cash payment equal to (x) 12 months of his annual base salary, plus (y) his target annual bonus amount, (iii) subsidized COBRA premiums for 12 months, (iv) accelerated vesting of 50% of outstanding and otherwise unvested time-based equity awards and (v) an opportunity to earn 50% of outstanding performance-based equity awards, based on actual performance through the end of the applicable performance period. +The severance payments and benefits described above will be provided if the applicable termination of Mr. McGrath’s employment does not occur within a change of control period (as defined in Mr. McGrath’s employment agreement). If Mr. McGrath’s employment ceases due to a termination by the Company without cause or his resignation with good reason, in either case during a change of control period, then in lieu of the above described severance payments and benefits and subject to his timely execution and non-revocation of a release of claims, Mr. McGrath will instead receive: (i) payment of any otherwise earned but unpaid annual bonus for the preceding year, (ii) a lump sum cash payment equal to (x) 24 months of his annual base salary, plus (y) his target annual bonus amount, (iii) subsidized COBRA premiums for 18 months, (iv) accelerated vesting of all outstanding and otherwise unvested time-based equity awards and (v) an opportunity to earn all outstanding performance-based equity awards, based on actual performance through the end of the applicable performance period (but at not less than the target level of performance, if such severance event occurs after the change of control). +Pursuant to the agreement, Mr. McGrath agreed to be restricted from (i) competing with the Company or its affiliates and (ii) soliciting their employees and customers, in each case during his employment and for 18 months thereafter. +Ms. Weber +In January 2019, we entered into an employment agreement with Ms. Weber, in connection with her move to Canada to head our Molecular Solutions business unit. Effective as of December 31, 2021, Ms. Weber’s employment agreement with the Company was amended and she was named President of Molecular Solutions. We promoted Ms. Weber again as our Chief Product Officer, effective November 14, 2022. Pursuant to the amended employment agreement, Ms. Weber will receive (i) an annual base salary of at least $471,000, (ii) a target bonus opportunity under the Company’s annual Incentive Plan of at least 50% of her base salary, and (iii) annual equity awards under the Company’s long-term incentive policy ranging from 125% to 150% of her base salary (with a target of 125%). In addition, Ms. Weber is entitled to receive benefits typical of international assignments, including: +• Legal services paid by the Company for visas and work permits for Ms. Weber and her husband; +• Relocation expenses reimbursed up to $10,000; +59 +Table of Contents +• A housing allowance of up to $3,438 per month; +• Tax equalization payments to the extent Ms. Weber’s Canadian income tax liability exceeds the income tax she would have paid in the United States; +• Reimbursement for tax preparation services; +• An annual expense allowance of $3,544; +• Home leave reimbursement for Ms. Weber and her husband to travel to the United States twice during each 12-month period; and +• Reimbursement for repatriation expenses for Ms. Weber and her husband to relocate back to the United States at the end of her assignment. +If Ms. Weber’s employment ceases due to a termination by the Company without cause or her resignation with good reason (as such terms are defined in her agreement), then, subject to her timely execution and non-revocation of a release of claims, she will receive: (i) any bonus that has been approved by the Board or Compensation Committee prior to the date of termination but not yet paid, (ii) a lump sum cash payment equal to (x) 12 months of her annual base salary, plus (y) her target annual bonus amount, (iii) subsidized COBRA premiums for 12 months, and (iv) accelerated vesting of 50% of outstanding and otherwise unvested equity awards. +The severance payments and benefits described above will be provided if the applicable termination of Ms. Weber’s employment does not occur within the change of control period (as defined in her employment agreement). If Ms. Weber’s employment ceases due to a termination by the Company without cause or her resignation with good reason, in either case during a change of control period, then in lieu of the above described severance payments and benefits and subject to her timely execution and non-revocation of a release of claims, Ms. Weber will instead receive: (i) any bonus that has been approved by the Board or Compensation Committee prior to the date of termination but not yet paid, (ii) a lump sum cash payment equal to (x) 24 months of her annual base salary, plus (y) her target annual bonus amount, (iii) subsidized COBRA premiums for 24 months, and (iv) accelerated vesting of all outstanding and otherwise unvested equity awards. +Such benefits ceased upon Ms. Weber’s relocation to the United States in 2022, except for the tax equalization payments and reimbursement for tax preparation services, which she is entitled to receive until she files her tax return for 2022 (as such benefits relate to the period on or prior to Ms. Weber’s relocation). +60 +Table of Contents +Termination and Severance Benefits +The following table provides estimates of the potential severance and other post-termination benefits the NEOs would receive assuming their employment was terminated as of December 31, 2023: +Name Benefit +Voluntary +Termination +or +Termination +for Cause 1 +Termination +for Death +or Disability 2 +Termination +for Good +Reason or +Without +Cause Not +Within +Change of +Control +Period 2 +Voluntary +Termination +after Change of +Control, or +Termination for +Good Reason or +Without Cause +Within Change of +Control Period 2 +Carrie Eglinton Manner +President and Chief Executive Officer +Salary Continuation $ — $ — $ 1,081,500 $ 1,442,000 +Bonus 721,000 1,103,130 1,081,500 1,442,000 +Accelerated Option Vesting — — — — +Accelerated Restricted Stock/Unit Vesting — 15,368,276 15,368,276 15,368,276 +Health Care Benefits — — 25,512 25,086 +Total $ 721,000 $ 16,471,406 $ 17,556,788 $ 18,277,362 +Kenneth McGrath +Chief Financial Officer +Salary Continuation $ — $ — $ 483,000 $ 966,000 +Bonus 241,500 369,495 241,500 241,500 +Accelerated Option Vesting — — — — +Accelerated Restricted Stock/Unit Vesting — 1,600,476 800,238 1,600,476 +Health Care Benefits — — 24,732 25,810 +Total $ 241,500 $ 1,969,971 $ 1,549,470 $ 2,833,786 +Kathleen G. Weber +Chief Product Officer +Salary Continuation $ — $ — $ 473,800 $ 947,600 +Bonus 236,900 362,457 236,900 236,900 +Accelerated Option Vesting — — — — +Accelerated Restricted Stock/Unit Vesting — 1,758,096 879,048 1,758,096 +Health Care Benefits — — 25,537 36,180 +Total $ 236,900 $ 2,120,553 $ 1,615,285 $ 2,978,776 +1 In the event of a unilateral termination by Ms. Weber after June 30, she would receive a prorated bonus for the year in which termination occurs. +2 The indicated values for the accelerated vesting of stock options reflect (i) the number of option shares which would vest on an accelerated basis, multiplied by (ii) the excess, if any, of the $8.20 per share closing price for the Company’s Common Stock, as reported by Nasdaq on December 31, 2023, over the applicable exercise price for each option. The indicated values for the accelerated vesting of RS and PRUs reflect the $8.20 per share closing price on December 31, 2023 multiplied by the number of shares which would vest on an accelerated basis (assuming, in the case of PRUs, that the applicable performance measures for the PRUs are met at 100% of target). +61 +Table of Contents +CEO PAY RATIO +As required by applicable law and SEC regulations, we are providing the following information about the relationship of the median of the annual total compensation of our employees and the annual total compensation of Carrie Eglinton Manner, our President and CEO. +For the 2023 fiscal year, (i) the median of the annual total compensation of all employees of the Company (other than Ms. Eglinton Manner) and its subsidiaries was $69,968; and (ii) the annual total compensation of Ms. Eglinton Manner, as reported in the SCT included immediately after this CD&A, was $6,701,767. Based on this information, for 2023 the ratio of the annual total compensation of Ms. Eglinton Manner, our President and CEO, to the median of the annual total compensation for employees was 96 to 1. +To identify the median of the annual total compensation of all our employees, as well as to determine the annual total compensation of our median employee, we took the following steps: +• We determined that, as of December 31, 2023, our world-wide employee population consisted of 617 people. +• To identify the “median employee” from our employee population, we compared the amount of salary, wages, overtime, commissions and bonuses of our employees as reflected in our payroll records. In making this determination, we did not annualize the compensation of employees who were hired in 2023 but did not work for us for the entire fiscal year. Since we do not widely distribute annual equity awards to our employees, such awards were excluded from our compensation measure. +• Once we identified our median employee, we combined all of the elements of this employee’s compensation for 2023 in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K, resulting in the annual total compensation as described above. +62 +Table of Contents +PAY VERSUS PERFORMANCE +The information below presents the relationship between the compensation of the Company’s named executive officer and certain performance measures in accordance with Item 402(v) of Regulation S-K. For a discussion of the Company’s compensation programs and pay for performance philosophy, please refer to the section captioned “Compensation Discussion and Analysis,” above. +Fiscal Year 2023 Pay versus Performance Table +Summary Compensation Table +Total Compensation Actually Paid Value of Initial Fixed +$100 Investment +Based On: +Fiscal +Year +Carrie +Eglinton +Manner +($) 1 +Nancy +Gagliano, +M.D. +($) 2 +Stephen +S. Tang, +Ph.D. +($) 3 +Carrie +Eglinton +Manner +($) 4 +Nancy +Gagliano, +M.D. +($) 4 +Stephen +S. Tang, +Ph.D. +($) 4 +Average +Summary +Compensation +Table Total for +Non-PEO NEOs +($) 5 +Average +Compensation +Actually Paid +to +Non-PEO NEOs +($) 6 +Total +Stockholder +Return +($) 7 +Peer Group +Total +Stockholder +Return +($) 8 +Net Income +(Loss) +(thousands) +($) 9 +Total +Revenue +(millions) +($) 10 +2023 6,701,767 — — 13,791,592 — — 1,600,748 2,390,906 102.12 106.34 53,655 405.5 +2022 6,746,923 940,292 2,769,508 6,645,396 347,561 714,651 1,457,621 751,486 60.02 99.31 ( 17,934 ) 387.5 +2021 — — 2,959,781 — — 2,697,616 1,088,815 808,537 108.22 125.43 ( 22,998 ) 233.7 +2020 — — 3,085,421 — — 3,888,690 1,601,825 1,595,129 131.82 130.04 ( 14,922 ) 171.1 +1 During fiscal year 2022, Ms. Eglinton Manner was appointed as our President and CEO effective June 4, 2022. Dr. Gagliano resigned effective June 4, 2022 from her position as the Company’s Interim CEO. +2 During fiscal year 2022, Dr. Gagliano was appointed as our Interim CEO effective April 1, 2022 following Dr. Tang’s termination on March 31, 2022 and resigned from the position effective June 4, 2022. +3 During fiscal years 2022, 2021 and 2020, Dr. Tang served as our President and CEO for all or a portion of the year. Dr. Tang’s employment with the Company as CEO ended on March 31, 2022. +4 Represents amounts of “compensation actually paid” to each of our CEO’s in each of 2023, 2022, 2021, and 2020 as computed in accordance with Item 402(v) of Regulation S-K, not the actual amount of compensation earned by or paid to each of our CEO’s during fiscal year 2023. The table below reflects the adjustments made from the amounts reported in the “Total” column of the Summary Compensation Table for each year to calculate the amounts set forth in “Compensation Actually Paid to PEO” column in the table above. +63 +Table of Contents +Carrie Eglinton Manner Nancy Gagliano, M.D. Stephen S. Tang, Ph.D. +2023 ($) 2022 ($) 2022 ($) 2022 ($) +2021 ($) (a) +2020 ($) (a) +Summary Compensation Table Total 6,701,767 6,746,923 940,292 2,769,508 2,959,781 3,085,421 +Grant Date Fair Value of Option Awards and Stock Awards Granted in Fiscal Year ( 4,873,637 ) ( 5,600,000 ) ( 770,000 ) +(b) +( 834,913 ) ( 1,946,860 ) ( 1,218,000 ) +Fair Value at Fiscal Year-End of Outstanding and Unvested Option Awards and Stock Awards Granted in Fiscal Year 8,377,123 5,498,473 — — 1,337,758 1,799,376 +Change in Fair Value of Outstanding and Unvested Option Awards and Stock Awards Granted in Prior Fiscal Years 3,488,559 — ( 40,879 ) — 132,795 237,531 +Fair Value at Vesting of Option Awards and Stock Awards Granted in Fiscal Year That Vested During Fiscal Year — — 218,148 664,350 — — +Change in Fair Value as of Vesting Date of Option Awards and Stock Awards Granted in Prior Fiscal Years For Which Applicable Vesting Conditions Were Satisfied During Fiscal Year 97,780 — — ( 1,387,479 ) 214,142 ( 15,638 ) +Fair Value as of Prior Fiscal Year-End of Option Awards and Stock Awards Granted in Prior Fiscal Years That Failed to Meet Applicable Vesting Conditions During Fiscal Year — — — ( 496,815 ) — — +Compensation Actually Paid to PEOs 13,791,592 6,645,396 347,561 714,651 2,697,616 3,888,690 +(a) The fair values of time-based equity awards and performance-based restricted share units granted in 2020 are based on the closing price of the Company’s common shares as reported on the NASDAQ on the relevant valuation date. Performance-based restricted share units granted in 2021 were valued on the relevant valuation date using a Monte Carlo simulation model in accordance with the provisions of ASC Topic 718 using the following assumptions: (A) for valuations as of December 31, 2021, a risk free interest rate of 0.73% and share price volatility of 75.82%, for valuations on December 31, 2022, a risk free interest rate of 4.67% and share price volatility of 60.57%.” Note that the reference to valuations on December 31, 2022 is appropriate as this relates to the valuation of the 2021 PRUs as of December 31, 2022. +(b) Dr. Gagliano received, as part of her Interim CEO agreement, a sign-on equity grant consisting of $100,000 of fully vested shares (14,815 shares) and $670,000 of restricted stock units (99,259 restricted stock units) which vest in equal monthly installments beginning on April 30, 2022, subject to continued employment as Interim CEO. Dr. Gagliano vested in 24,815 units of the 99,259 restricted stock units granted prior to her resignation as Interim CEO in June 2022, and accordingly, 74,444 units of her restricted stock unit award were forfeited. +5 Our non-PEO NEOs includes the individuals indicated in the table below for each fiscal year: +Year Non-PEO NEOs +2023 Kenneth McGrath, Kathleen Weber +2022 Kenneth McGrath, Kathleen Weber, Lisa Nibauer, Agnieszka Gallagher, Scott Gleason +2021 Kathleen Weber, Jack Jerrett, Roberto Cuca, Agnieszka Gallagher, Scott Gleason +2020 Kathleen Weber, Jack Jerrett, Roberto Cuca, Anthony Zezzo, Lisa Nibauer +6 Represents amounts of average “compensation actually paid” as computed in accordance with Item 402(v) of Regulation S-K, not the actual average amount of compensation earned by or paid to the Company’s named executive officers, except for Dr. Tang with respect to fiscal years 2022, 2021, and 2020, Ms. Gagliano with respect to fiscal year 2022, and Ms. Eglinton Manner with respect to fiscal years 2023 and 2022. The table below reflects the adjustments made from the amounts reported in the “Total” column of the Summary Compensation Table for the named executive officers as a group (excluding Dr. Tang and Mses. Gagliano and Eglinton Manner, as applicable) each year to calculate the amounts set forth in “Compensation Actually Paid to non-PEO NEOs” column in the table above, using the same methodology as set forth in footnote 4, above. +64 +Table of Contents +NEO Averages +2023 ($) 2022 ($) +2021 ($) (a) +2020 ($) (a) +Summary Compensation Table Total 1,600,748 1,457,621 1,088,815 1,601,825 +Grant Date Fair Value of Option Awards and Stock Awards Granted in Fiscal Year ( 712,288 ) ( 729,670 ) ( 552,646 ) ( 766,909 ) +Fair Value at Fiscal Year-End of Outstanding and Unvested Option Awards and Stock Awards Granted in Fiscal Year 1,127,865 293,934 353,108 625,180 +Change in Fair Value of Outstanding and Unvested Option Awards and Stock Awards Granted in Prior Fiscal Years 316,490 ( 102,310 ) 43,223 59,438 +Fair Value at Vesting of Option Awards and Stock Awards Granted in Fiscal Year That Vested During Fiscal Year — 85,437 29,005 80,708 +Change in Fair Value as of Vesting Date of Option Awards and Stock Awards Granted in Prior Fiscal Years For Which Applicable Vesting Conditions Were Satisfied During Fiscal Year 58,090 ( 103,440 ) 59,492 ( 5,113 ) +Fair Value as of Prior Fiscal Year-End of Option Awards and Stock Awards Granted in Prior Fiscal Years That Failed to Meet Applicable Vesting Conditions During Fiscal Year — ( 150,086 ) ( 212,460 ) — +Compensation Actually Paid to NEOs 2,390,906 751,486 808,537 1,595,129 +(a) The fair values of time-based equity awards and performance-based restricted share units granted in 2020 are based on the closing price of the Company’s common shares as reported on the NASDAQ on the relevant valuation date. Performance-based restricted share units granted in 2021 were valued on the relevant valuation date using a Monte Carlo simulation model in accordance with the provisions of ASC Topic 718 using the following assumptions: (A) for valuations on December 31, 2021, a risk free interest rate of 0.73% and share price volatility of 75.82%. The fair value of non-qualified stock options granted to Ms. Gallagher as of December 31, 2021 were valued using a Black-Scholes model in accordance with the provision of ASC Topic 718 using the following assumptions: an expected term of 2 years, a risk-free interest rate of 0.73%, a dividend yield of 0% and share price volatility of 75.82%. +7 For the relevant fiscal year, represents the cumulative total shareholder return (TSR) of OraSure Technologies, Inc. for the measurement periods ending on December 31 of each of 2023, 2022, 2021, and 2020, respectively. +8 For the relevant fiscal year, represents the cumulative total shareholder return (TSR) of NASDAQ Health Care Index for the measurement periods ending on December 31 of each of 2023, 2022, 2021, and 2020, respectively. +9 Reflects GAAP “Net Income (Loss)” in the Company’s Consolidated Statement of Operations included in the Company’s Annual Report on Form 10-K for each of the years ended December 31, 2023, 2022, 2021, and 2020. +10 Represents “Net Revenues” in the Company’s Consolidated Statement of Operations included in the Company’s Annual Report on Form 10-K for each of the years ended December 31, 2023, 2022, 2021, and 2020. +Relationship Between Compensation Actually Paid and Financial Performance +As described in more detail in the section “Executive Compensation – Compensation Discussion and Analysis,” while the Company utilizes several performance measures to align executive compensation with Company performance, all of those Company measures are not presented in the Pay versus Performance table above. Moreover, the Company’s executive compensation program includes components designed to incentivize long-term performance, and therefore does not specifically align the Company’s performance measures with compensation that is actually paid (as computed in accordance with Item 402(v) of Regulation S-K) for a particular year. In accordance with Item 402(v) of Regulation S-K, the following graphs illustrate the relationship across the Company’s last three completed fiscal years between the amounts disclosed in the Pay Versus Performance Table, above, as “Compensation Actually Paid” to the Company’s First PEO, Second PEO, and Third PEO respectively, and the “Average Compensation Actually Paid” to the Company’s non-PEO named executive officers and Total Stockholder Return, Peer Group Total Stockholder Return, Net Income (Loss) and Total Revenue. +65 +Table of Contents +66 +Table of Contents +Tabular List of Performance Measures +The following table lists the financial performance measures that the Company considers to be the most important financial performance measures used by the Company to link compensation actually paid to its named executive officers for the most recently completed fiscal year to performance of the Company. +Important Financial Performance Measures +Net Revenues +Adjusted Operating Income +Income Before Interest and Taxes +Stock Price +67 +Table of Contents +STOCK AWARD PLAN INFORMATION +The following table provides information as of December 31, 2023 about the shares of Common Stock that may be issued upon the exercise of options under the OraSure Technologies, Inc. Stock Award Plan (the “Stock Award Plan” or the “Plan”). Additional grants of equity compensation may only be made under the Stock Award Plan. +Plan Category Number of Securities to be Issued Upon Exercise of Outstanding Options (a) Weighted-Average Exercise Price of Outstanding Options (b) +Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a))(c) 1 +Equity compensation plans approved by +security holders 2,070,085 $9.27 4,581,158 +Equity compensation plans not approved by +security holders — — — +Total 2,070,085 4,581,158 +1 Represents shares remaining available for future issuance as of December 31, 2023 under the Stock Award Plan. +DIRECTOR COMPENSATION +ANNUAL FEES +Under our Non-Employee Director Compensation Policy (“Director Policy”), non-employee members of the Board receive fixed annual fees for service on the Board and Committees of the Board during 2023, as set forth below. The fees were paid quarterly in arrears. +Position Annual Fee +Board Member (Base Fee) $ 55,000 +Board Chairperson (Additional Fee) $ 25,000 +Audit Chairperson $ 20,000 +Compensation Chairperson $ 20,000 +Nominating & Corporate Governance Chairperson $ 20,000 +Non-Chairperson Committee member $ 5,000 +Each non-employee Director has the option to receive shares of the Company’s Common Stock in lieu of cash fees, as described above. Prior to the end of each calendar year, each non-employee Director shall make an annual election with respect to cash fees for the following calendar year, indicating whether he or she elects to receive the fees in cash, or in Company Common Stock in lieu of the cash fees. If no election has been made as of the first day of the year, the non-employee Director shall receive all fees in cash, as set forth above, or, if a previous election has been made to receive Common Stock in lieu of the cash fees, such election shall remain in effect for subsequent calendar years until such election is changed by the completion, signature and delivery to the Company of a new election form. Each newly elected or appointed non-employee Director shall make an election prior to, or within 30 days of, his or her initial appointment or election to the Board, for the remainder of the year of such appointment or election, whether to receive the fees in cash or in Common Stock. +In the event an election is made by a non-employee Director to receive Common Stock in lieu of cash fees, such Director shall automatically be granted on the applicable fee payment date a number of shares of Common Stock having an aggregate fair market value equal to the aggregate amount of such non-employee Director’s cash fee for such fiscal quarter, determined by dividing (A) the aggregate amount of the fee by (B) the average of the high and low sales price of the Company’s Common Stock as reported on Nasdaq on the +68 +Table of Contents +applicable fee payment date (rounded down to the nearest whole share) (the “Quarterly Grant”). Non-employee Directors are permitted to direct the Company to withhold shares of stock in order to pay tax withholding obligations arising upon the receipt of a Quarterly Grant. +INITIAL AND ANNUAL EQUITY AWARDS +Upon joining the Board, non-employee Directors receive an initial grant of restricted shares of the Company’s Common Stock having an aggregate value of $100,000 (the “Initial Grant”). The Initial Grant will cliff vest two (2) years after the Director joins the Board. In addition, non-employee Directors will receive an annual grant of restricted shares (the “Annual Grant”) on the date of the Company’s Annual Meeting of Stockholders, which will vest on or prior to the Company’s next Annual Meeting of Stockholders. The value of Annual Grants for Board members are as follows: +Board Position Award Grant Value +Board Member (Base) $105,000 +Board Chairperson (Additional Value) $25,000 +The dollar value of each Initial Grant and Annual Grant is converted into restricted stock by dividing the above values by the average of the high and low sales prices of the Company’s Common Stock, as reported on the Nasdaq Stock Market, on the grant date. Non-employee Directors are permitted to direct the Company to withhold restricted stock in order to pay tax withholding obligations arising upon the vesting of such shares. +EQUITY AWARD TERMS +Each Initial Grant, Annual Grant and Quarterly Grant shall be made under the terms of the Company’s Stock Award Plan or a successor plan and will be subject to the terms and conditions of such plan and the applicable award agreement. +Any unvested restricted stock granted to non-employee Directors will vest in their entirety immediately upon the occurrence of a “change of control” of the Company. A “change of control” means a change of control that would be required to be reported under the Exchange Act, as amended, and would be deemed to have occurred at such time as (i) any person, or more than one person acting as a group within the meaning of Section 409A of the Code, acquires ownership of stock of the Company that, together with stock held by such person or group, constitutes more than 50 percent of the total fair market value or total voting power of the stock of the Company; (ii) any person, or more than one person acting as a group within the meaning of Section 409A of the Code, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition) ownership of stock of the Company possessing 30 percent or more of the total voting power of the Company’s stock; (iii) a majority of the members of the Board is replaced during any 12-month period by Directors whose appointment or election is not endorsed by a majority of the members of the Board before the date of the appointment or election; or (iv) a person, or more than one person acting as a group within the meaning of Section 409A of the Code, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition) assets from the Company that have a total gross fair market value equal to or more than 40 percent of the total gross fair market value of all the assets of the Company immediately before such acquisition or acquisitions. In addition, if a non-employee Director leaves the Board for any reason other than a change of control, prior to the end of the vesting period for the Annual Grant of restricted stock, such award shall immediately vest on a pro-rata basis based on the actual duration of such Director’s service to the Board during such vesting period. +DEFERRED COMPENSATION +Non-employee Directors are permitted to defer all or a portion of the fees and grants of restricted stock under the Company’s Non-Qualified Deferred Compensation Plan, on terms similar to those applicable to our officers. +69 +Table of Contents +DIRECTOR COMPENSATION DURING 2023 +The following table summarizes information related to compensation of non-employee Directors during the fiscal year ended December 31, 2023: +Name 1, 2 +Fees +Earned +or Paid +in Cash 3 +($) +Stock +Awards 4 +($) +Option +Awards +($) Non-Equity +Incentive Plan +Compensation +($) Change in +Pension +Value and +Nonqualified +Deferred +Compensation +Earnings All Other +Compensation +($) Total ($) +Mara G. Aspinall $ 98,992 $ 130,000 — — — — $ 228,992 +James A. Datin $ 80,000 $ 105,000 — — — — $ 185,000 +David J. Shulkin, M.D. $ 65,000 $ 105,000 — — — — $ 170,000 +Lelio Marmora $ 65,000 $ 105,000 — — — — $ 170,000 +Nancy Gagliano, M.D. $ 78,122 $ 105,000 — — — — $ 183,122 +Anne Whitaker 5 +$ 22,667 $ — — — — — $ 22,667 +Robert W. McMahon $ 30,927 $ 105,000 — — — — $ 135,927 +__________________________ +1 Because Ms. Eglinton Manner was an officer of the Company, she was not entitled to any separate compensation for service on the Board or any Committee thereof and has not been included in this table. +2 Non-employee Directors held the following number of unvested shares of restricted stock (“RS”) at December 31, 2023: Ms. Aspinall: 24,517 RS; Mr. Datin: 19,802 RS; Dr. Shulkin: 19,802 RS; Mr. Marmora: 19,802 RS; Dr. Gagliano: 19,802 RS; and Mr. McMahon: 22,703 RS. The aggregate number of performance stock units and restricted shares held by Ms. Eglinton Manner are set forth in the table in the Section entitled, “Outstanding Equity Awards,” in this Proxy Statement. +3 Mr. Datin elected to receive all his cash board fees in shares of the Company’s Common Stock in lieu of cash fees in accordance with the Director compensation policy described above. During 2023, Mr. Datin received 13,514 shares of restricted stock in lieu of cash payment. +4 The indicated amounts reflect the aggregate grant date fair value of restricted stock awards made to non-employee Directors during 2023, computed in accordance with FASB ASC Topic 718. +5 Ms. Whitaker did not stand for re-election at our 2023 Annual Stockholder Meeting. +70 +Table of Contents +PROPOSALS REQUIRING YOUR VOTE +PROPOSAL NO. 1. ELECTION OF DIRECTORS +Background +At the Annual Meeting, you will be asked to vote on the election of two Directors. A majority of the independent members of the Board have nominated Nancy J. Gagliano, M.D., and Lelio Marmora for election as the Class III Directors, for terms expiring at the Annual Meeting of Stockholders in 2027. The Board has determined that Mr. Datin, a current Class III member of the Board, will not stand for re-election at the Annual Meeting, and his service as a member of the Board will end effective as of the Annual Meeting. Accordingly, Mr. Datin's seat shall remain vacant until such seat is filled or the size of the Board is reduced, in each case in accordance with our Bylaws. We extend our deepest gratitude to Mr. Datin for his distinguished service to the Board. +We do not know of anything that would preclude any of the nominees from serving. However, should any nominee for any reason become unable or unwilling to serve as a Director, the persons named in the enclosed Proxy Card will vote the shares represented by each Proxy for such substitute nominee as the Board may approve. +Each of the nominees for election as Directors is currently a member of our Board and has consented to continue to serve if re-elected to the Board. Mr. Datin joined the Board in 2019 and serves as the Chairperson of the Compensation Committee and a member of the Audit Committee. Dr. Gagliano joined the Board in 2021 and serves as the Chairperson of the Nominating and Corporate Governance Committee and a member of the Compensation Committee. Mr. Marmora joined the Board in 2020 and serves as a member of the Audit Committee and the Nominating and Corporate Governance Committee. +Any vacancy that occurs on the Board that results from an increase in the number of Directors may be filled by the affirmative vote of a majority of the Directors then in office, and any other vacancy on the Board may be filled by the affirmative vote of a majority of the Directors then in office, even though less than a quorum of the Board, or by a sole remaining Director. +Certain information with respect to each person nominated for election as a Director and each person whose term of office as a Director will continue after the Annual Meeting, including the particular experience, qualifications, attributes and skills they possess that led to the conclusion that they should serve as a Director, is set forth below. +Name Principal Occupation Age Director +Since +Class III (Nominees Whose Terms Expire in 2024): +Nancy J. Gagliano, M.D. +Managing Director, Granite Healthcare Advisors 64 2021 +Lelio Marmora Former Executive Director, Unitaid 57 2020 +Class I (Directors For Terms Expiring in 2025): +Carrie Eglinton Manner President and CEO, OraSure Technologies, Inc. 50 2022 +David J. Shulkin, M.D. +President and CEO, Shulkin Solutions, Inc. 64 2020 +Class II (Directors For Terms Expiring in 2026): +Mara G. Aspinall +Partner, Illumina Ventures +61 2017 +Robert W. McMahon Senior Vice President and Chief Financial Officer, Agilent Technologies 55 2023 +71 +Table of Contents +Nancy J. Gagliano, M.D. +Independent Director +Director since: 2021 +Class III Nominee +Term Expires: 2024 +Age: 64 +Other Current +Public Company +Directorships: None +Nancy J. Gagliano, M.D. became a member of the Board in November 2021 and is the chair of the Nominating and Corporate Governance Committee and member of the Compensation Committee. Dr. Gagliano also served as interim CEO from March to June 2022. Dr. Gagliano has more than 35 years of experience as a senior healthcare physician executive and practicing physician in internal medicine. Dr. Gagliano most recently served as an executive leader of the National Institute of Health’s RADx Tech, Rapid Acceleration of Diagnostics program, from May 2020 to November 2021. In this position she has helped oversee over one billion dollars of sponsored programs to bring millions of new COVID-19 tests to market. Prior to her work for the National Institute of Health, Dr. Gagliano was the Chief Medical Officer of Culbert Healthcare Solutions from September 2016 to May 2020, providing strategic guidance on healthcare consulting services. Before joining Culbert Healthcare, Dr. Gagliano spent six years with CVS Health holding senior leadership positions including as the Chief Medical Officer of Minute Clinic, and as a Senior Vice President overseeing key programs such as the enterprise smoking cessation program and the development of the company’s telemedicine program. Prior to her leadership roles at CVS Health, Dr. Gagliano was a practicing internal medicine physician and held numerous leadership positions at Massachusetts General Hospital and Massachusetts General Physicians Organization. Dr. Gagliano holds an M.D. from Harvard Medical School, an MBA from Northeastern University, and a Bachelor’s of Science Degree from Union College in Computer Science and Biology. +Skills and Qualifications leading to conclusion that she should serve on the Board: +• Extensive medical and healthcare experience. +•  Executive leadership experience. +• Strong background managing public health programs. +Lelio Marmora +Independent Director +Director since: 2020 +Class III Nominee +Term Expires: 2024 +Age: 57 +Other Current +Public Company +Directorships: None +Lelio Marmora became a member of the Board in June 2020 and serves as a member of the Audit Committee and as a member of the Nominating and Corporate Governance Committee. Since June 2020, he has served as the President of The Management Lab. Prior to that, Mr. Marmora served as Executive Director of Unitaid in Geneva, Switzerland, from 2014 to 2020, overseeing a portfolio of $1.5 billion in 100 countries. Prior to Unitaid, Mr. Marmora was a member of the board of directors for The Global Fund to Fight AIDS, Tuberculosis and Malaria from 2016 to 2019, overseeing a $4 billion portfolio. Earlier in his career, Mr. Marmora served in various capacities at a range of international organizations, including the World Bank, the Inter-American Development Bank and the United Nations Development Program, managing modernization of the State programs. Mr. Marmora graduated from the Universite Pantheon-Assas (Paris II) with a Master’s degree in International Law and Administration of International Organizations. +Skills and Qualifications leading to conclusion that he should serve on the Board: +•  Extensive experience in international public health. +•   Expertise in public funding. +•  Executive leadership experience. +72 +Table of Contents +Carrie Eglinton Manner +Director +Director since: 2022 +Class I Director +Term Expires: 2025 +Age: 50 +Other Current +Public Company +Directorships: 1 +For biographical information on Ms. Eglinton Manner, see the Section entitled, “Executive Officers,” in this Proxy Statement. +Skills and Qualifications leading to conclusion that he should serve on the Board: +• Extensive experience in the healthcare industry. +• Extensive experience managing business operations in areas such as diagnostic imaging, lab services and medical devices. +• Extensive leadership experience. +David J. Shulkin, M.D. +Independent Director +Director since: 2020 +Class I Director +Term Expires: 2025 +Age: 64 +Other Current +Public Company +Directorships: 1 +David J. Shulkin, M.D. became a member of the Board in April 2020 and serves as a member of the Compensation Committee and as a member of the Nominating and Corporate Governance Committee. Since 2018, he has served as President and CEO of Shulkin Solutions, Inc., a company that promotes innovation in healthcare and advocates for veterans and underserved populations. From July 2015 through March 2018, Dr. Shulkin served in various capacities at the U.S. Department of Veterans Affairs (the “VA”), including as Secretary of the VA from February 2017 to March 2018 and as Under Secretary for Health from July 2015 to February 2017. Prior to his tenure at the VA, he served in executive leadership positions at Morristown Medical Center, Beth Israel Medical Center, Temple University Hospital, Drexel University School of Medicine, Doctor Quality, Inc. and the University of Pennsylvania Health System and Hospital of the University of Pennsylvania. Dr. Shulkin received a B.A. from Hampshire College and his M.D. from the Medical College of Pennsylvania (Drexel College of Medicine). He also completed residencies in Internal Medicine at Yale University School of Medicine and University of Pittsburgh School of Medicine, was a Fellow in General Medicine at the University of Pittsburgh School of Medicine and was a Robert Wood Johnson Foundation Clinical Scholar at the University of Pennsylvania School of Medicine. Dr. Shulkin is certified by the American Board of Internal Medicine. He currently serves on the board of directors of Cactus Acquisition Corp. 1 Ltd. +Skills and Qualifications leading to conclusion that he should serve on the Board: +•  Expertise in medical matters and public health. +•  Expertise in government affairs. +• Executive-level management experience. +73 +Table of Contents +Mara G. Aspinall +Independent Director +Director since: 2017 +Class II Director +Term Expires: 2026 +Age: 61 +Other Current +Public Company +Directorships: 1 +Mara G. Aspinall joined the Board in June 2017 and serves as a member of the Audit Committee and as a member the Compensation Committee. Ms. Aspinall is Partner at Illumina Ventures, a venture capital firm focused on investing in innovative, genomics-related companies. Since 2014, she has served as the Managing Member of her single-member consulting firm, Health Catalysts Group. Ms. Aspinall has also served as Managing Director of BlueStone Venture Partners, a venture capital firm dedicated to investing in life sciences and healthcare related companies. Prior to these positions, Ms. Aspinall served as President and CEO, Global Head of Roche Tissue Diagnostics/Ventana Medical Systems, a division of The Roche Group that provides tissue-based cancer diagnostic instruments, products and services. Ms. Aspinall also spent 12 years with Genzyme Corporation, serving as President of the Genzyme Genetics division, a leading provider of esoteric and genetic tests for the reproductive, oncology and personalized medicine markets, and as President of the Genzyme Pharmaceuticals division, a custom pharmaceutical intermediates provider. Ms. Aspinall began her career as a management consultant with Bain & Company. Ms. Aspinall holds an M.B.A. from Harvard Business School and a B.A. in International Relations from Tufts University. Ms. Aspinall is certified in Cybersecurity Oversight from Carnegie Mellon University. Ms. Aspinall currently serves on the board of directors of Castle Biosciences, Inc. (“Castle”). In March 2024, Ms. Aspinall notified the board of directors of Castle that she will not stand for re-election to Castle’s board of directors at the expiration of her current term, which expires on the date of Castle’s 2024 annual meeting of stockholders. +Skills and Qualifications leading to conclusion that she should serve on the Board: +•  Executive-level experience as a CEO. +•  Executive experience in the life sciences industry. +• Extensive experience in biomedical diagnostics. +74 +Table of Contents +Robert W. McMahon +Independent Director +Director since: 2023 +Class II Director +Term Expires: 2026 +Age: 55 +Other Current +Public Company +Directorships: None +Robert W. McMahon became a member of the Board in July 2023 and is the chair of the Audit Committee. Mr. McMahon has served as the Senior Vice President and Chief Financial Officer, since August 2018 and September 2018, respectively, of Agilent Technologies, Inc., a leading life sciences tools and diagnostics company, where he is responsible for Finance, Audit, Treasury, Tax, and Investor Relations. Prior to his work for Agilent, Mr. McMahon spent four years serving as Chief Financial Officer for Hologic, Inc., a medical technology company, where he helped reshape the product portfolio and significantly improved company performance and profitability. He also spent 20 years at Johnson & Johnson, a producer of medical devices and pharmaceuticals, and the owner of many well- known consumer brands, most recently as Worldwide Vice President of Finance and Business Development for Ortho Clinical Diagnostics, a division of Johnson & Johnson’s Medical Device and Diagnostics group. Mr. McMahon holds an MBA in Finance from the University of Central Florida and a bachelor’s degree in Finance from the University of Florida. +Skills and Qualifications leading to conclusion that he should serve on the Board: +•  Extensive leadership experience in life sciences industry. +•  Executive-level experience as a CFO. +• Executive-level management experience. +Vote Required; Board Recommendation +If a quorum is present, each nominee will be elected if he or she receives a majority of the votes cast by shares present in person or by Proxy and entitled to vote on the election of directors. This means that each nominee shall be elected to the Board if the votes validly cast “for” such nominee’s election exceed the votes validly cast “against” such nominee’s election. Abstention and broker non-votes will have no effect on the required vote. In the absence of instructions to the contrary, shares of Common Stock represented by properly executed Proxies will be voted for nominees, each whom has consented to be named and to serve if elected. +Your Board recommends that you vote FOR the election of the Director nominees. +PROPOSAL NO. 2. RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +Background +The Audit Committee of the Board of Directors has approved the appointment of Grant Thornton (“GT”) as our independent registered public accounting firm for the 2024 fiscal year after a competitive selection process conducted by the Audit Committee. The Audit Committee has also recommended that the Board submit the appointment of GT for ratification by stockholders at the Annual Meeting. Although action by the stockholders on this matter is not legally required, the Audit Committee and the Board believe it is appropriate to seek stockholder ratification of this appointment in light of the important role played by the independent registered public accounting firm in reporting on the Company’s consolidated financial statements. If this appointment is not ratified by stockholders, the Audit Committee may reconsider its appointment of GT for the 2024 fiscal year or in the future. +One or more representatives of GT are expected to attend the Annual Meeting electronically. They will have an opportunity to make a statement and will be available to respond to appropriate questions. +75 +Table of Contents +Vote Required; Board Recommendation +Ratification of the appointment of GT requires the affirmative vote of a majority of shares present in person or by proxy and entitled to vote on this proposal. Abstentions will have the effect of voting against this proposal. Broker non-votes, if any, will have no effect on this proposal. In the absence of instructions to the contrary, shares of Common Stock represented by properly executed Proxies will be voted for ratification of the appointment of GT as our independent registered public accounting firm for the 2024 fiscal year. +Your Board recommends that the stockholders vote FOR ratification of the appointment of GT. +PROPOSAL NO. 3. ADVISORY (NON-BINDING) VOTE TO APPROVE EXECUTIVE COMPENSATION +Background +Section 14A of the Exchange Act, enacted pursuant to the Dodd-Frank Act, requires that stockholders be given the opportunity to vote to approve, on an advisory (non-binding) basis, no less frequently than once every three years, the compensation of our NEOs. Based on feedback received at our 2023 Annual Meeting, the Board determined that such a vote will continue to be held on an annual basis until the next advisory vote on frequency. +The vote on the resolution recommended below is not intended to address any specific element of compensation, but rather relates to the overall compensation of our NEOs. As described more fully under the CD&A Section of this Proxy Statement and the related tables and narrative, our compensation program is performance-based and is designed to pay executives for performance by offering rewards for the achievement of pre-determined objectives. In addition, our program is designed to align the interests of executives with the interests of our stockholders, provide long-term incentives and set compensation at levels sufficiently competitive to attract, retain and motivate high quality executives, and meet strong corporate governance principles. You are urged to carefully review the CD&A Section of this Proxy Statement which contains a detailed discussion of our executive compensation program, including the 2023 compensation of our NEOs. +Compensation Program Features +As described more fully in the CD&A, there are many important features to our compensation program that illustrate our commitment to pay-for-performance and good corporate governance. A summary of some of the more significant of these features is set forth below: +• Compensation is market driven and performance -based. +• Total compensation targeted at 50 th percentile of Peer Group. +• Balanced mix of cash/equity, fixed/variable, short-term/ long-term compensation components. +• Use of peer company benchmarking. +• Threshold financial performance objectives for annual bonus meet or exceed certain elements of fiscal performance for the prior fiscal year. +• Compensation recoupment policy. +• Equity awards provide long-term incentive with three year vesting. +• No hedging or pledge of our Common Stock. +• 50% of annual equity is performance-based vesting. +• Robust stockholder outreach on compensation/ governance matters. +Vote Required; Board Recommendation +If a quorum is present, the affirmative vote of a majority of shares present, in person or by Proxy and entitled to vote on this proposal, is required to approve, on an advisory (non-binding) basis, the compensation paid to NEOs. Abstentions will have the effect of voting against this proposal. Broker non-votes will not count toward the determination of whether this proposal is approved and will have no impact on the vote. In the +76 +Table of Contents +absence of instructions to the contrary, shares of Common Stock represented by properly executed Proxies will be voted for approval of our executive compensation, as disclosed in this Proxy Statement. Because this stockholder vote is advisory, it will not be binding on the Company or the Board of Directors. However, the Compensation Committee and Board will take into account the outcome of the vote when considering future executive compensation programs and arrangements. +Based on the foregoing, the Board is requesting that stockholders vote on the following resolution: +“ RESOLVED , that the compensation paid to the Company’s named executive officers, as disclosed in the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED.” +Your Board recommends that the stockholders vote FOR the approval of our executive compensation as described in the preceding resolution. +PROPOSAL NO. 4. APPROVAL OF AN AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION +Background +The State of Delaware, which is the Company’s state of incorporation, enacted legislation, effective August 1, 2022, that enables Delaware companies to limit the liability of certain officers in limited circumstances under Section 102(b)(7) of the Delaware General Corporation Law (the “DGCL”). Amended DGCL Section 102(b)(7) only permits exculpation for direct claims brought by stockholders for breach of an officer’s fiduciary duty of care, including class actions, but does not eliminate officers’ monetary liability for breach of fiduciary duty claims brought by the corporation itself or for derivative claims brought by stockholders in the name of the corporation. Furthermore, the limitation on liability does not apply to breaches of the duty of loyalty, acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, or any transaction in which the officer derived an improper personal benefit. +The Board believes it is important to provide protection from certain liabilities and expenses that may discourage prospective or current directors from accepting or continuing membership on corporate boards and prospective or current officers from serving corporations. In the absence of such protection, qualified directors and officers might be deterred from serving as directors or officers due to exposure to personal liability and the risk that substantial expense will be incurred in defending lawsuits, regardless of merit. In particular, the Board took into account the narrow class and type of claims that such officers would be exculpated from liability pursuant to amended DGCL Section 102(b)(7), the limited number of the Company’s officers that would be impacted, and the benefits the Board believes would accrue to the Company by providing exculpation in accordance with DGCL Section 102(b)(7), including, without limitation, the ability to attract and retain key officers and the potential to reduce litigation costs associated with frivolous lawsuits. +The Board balanced these considerations with our corporate governance guidelines and practices and determined that it is advisable and in the best interests of the Company and our stockholders to amend our Certificate of Incorporation to adopt amended DGCL Section 102(b)(7) and extend exculpation protection to our officers in addition to our directors. We refer to this proposed amendment to our certificate of incorporation as the “Charter Amendment” in this Proxy Statement. +Text of Proposed Charter Amendment +Our Certificate of Incorporation currently provides for the exculpation of directors, but does not include a provision that allows for the exculpation of officers. To ensure the Company is able to attract and retain key officers and in an effort to reduce litigation costs associated with frivolous lawsuits, we propose to amend our certificate of incorporation to amend Article IX, which would state in its entirety as follows: +“Article IX +No Director of the Corporation shall be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty by such Director as a Director; provided, however, that this ARTICLE IX shall not eliminate or limit the liability of a Director to the extent provided by applicable law: (i) for any breach of the Director's duty of loyalty to the Corporation or its stockholders; (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; (iii) under Section 174 of the +77 +Table of Contents +General Corporation Law of Delaware; or (iv) for any transaction from which the Director derived an improper personal benefit. +To the fullest extent permitted by the General Corporation Law of Delaware, an Officer (as defined below) of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of his or her fiduciary duty as an officer of the Corporation, except for liability (a) for any breach of the Officer’s duty of loyalty to the Corporation or its stockholders, (b) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (c) for any transaction from which the Officer derived an improper personal benefit, or (d) arising from any claim brought by or in the right of the Corporation. If the General Corporation Law of Delaware is amended after the effective date of this Certificate to authorize corporate action further eliminating or limiting the personal liability of Officers, then the liability of an Officer of the Corporation shall be eliminated or limited to the fullest extent permitted by the General Corporation Law of Delaware, as so amended. For purposes of this Article IX, “Officer” shall mean an individual who has been duly appointed as an officer of the Corporation and who, at the time of an act or omission as to which liability is asserted, is deemed to have consented to service of process to the registered agent of the Corporation as contemplated by 10 Del. C. § 3114(b). +No amendment to or repeal of this ARTICLE IX shall apply to or have any effect on the liability or alleged liability of any Director or Officer of the Corporation for or with respect to any acts or omissions of such Director or Officer occurring prior to such amendment or repeal.” +The proposed Certificate of Amendment to the Certificate of Incorporation (the “Certificate of Amendment”), reflecting the foregoing Charter Amendment is attached as Exhibit A to this Proxy Statement. +Reasons for the Proposed Charter Amendment +The Board believes it is appropriate for public companies in states that allow exculpation of officers to have exculpation clauses in their certificates of incorporation. The nature of the role of directors and officers often requires them to make decisions on crucial matters. Frequently, directors and officers must make decisions in response to time-sensitive opportunities and challenges, which can create substantial risk of investigations, claims, actions, suits or proceedings seeking to impose liability on the basis of hindsight, especially in the current litigious environment and regardless of merit. Limiting concern about personal risk would empower both directors and officers to best exercise their business judgment in furtherance of stockholder interests. We expect our peers to adopt exculpation clauses that limit the personal liability of officers in their certificates of incorporation, and failing to adopt the proposed Charter Amendment could impact our recruitment and retention of exceptional officer candidates that conclude that the potential exposure to liabilities, costs of defense and other risks of proceedings exceeds the benefits of serving as an officer of the Company. +For the reasons stated above, on March 19, 2024, the Board determined that the proposed Charter Amendment is advisable and in the best interest of the Company and our stockholders and authorized and approved the proposed Charter Amendment and directed that it be considered at the Annual Meeting. The Board believes the proposed Charter Amendment would better position the Company to attract top officer candidates and retain our current officers and enable the officers to exercise their business judgment in furtherance of the interests of the stockholders without the potential for distraction posed by the risk of personal liability. +Additionally, it would align the protections for our officers with those protections currently afforded to our directors. +The proposed Charter Amendment is not being proposed in response to any specific resignation, threat of resignation or refusal to serve by any officer. +Timing and Effect of the Charter Amendment +If the proposed Charter Amendment is approved by our stockholders, it will become effective immediately upon the filing of the Certificate of Amendment with the Secretary of State of the State of Delaware, which we expect to file promptly after the Annual Meeting. Other than the proposed amendment of Article IX, the remainder of our certificate of incorporation will remain unchanged after effectiveness of the Charter Amendment. If the proposed Charter Amendment is not approved by our stockholders, our certificate of incorporation will remain unchanged. In accordance with the DGCL, the Board may elect to abandon the proposed Charter Amendment without further action by the stockholders at any time prior to the effectiveness of the filing of the Certificate of Amendment with the Secretary of State of the State of Delaware, notwithstanding stockholder approval of the proposed Charter Amendment. +Vote Required; Board Recommendation +78 +Table of Contents +If a quorum is present, the affirmative vote of a majority of all of our issued and outstanding shares of common stock is required for approval of the proposed Charter Amendment. Abstentions and broker non-votes will have the effect of voting against this proposal. +Your Board recommends that the stockholders vote FOR the amendment to the Company's Certificate of Incorporation. +PROPOSAL NO. 5. AMENDMENT AND RESTATEMENT OF STOCK AWARD PLAN +General +Effective September 29, 2000, in connection with the merger of Epitope and STC Technologies, Inc. into the Company (the “Merger”), the Company adopted the Epitope, Inc. 2000 Stock Award Plan, which was subsequently renamed the OraSure Technologies, Inc. Stock Award Plan (the “Stock Award Plan” or the “Plan”). +The Board has approved and recommended for submission to stockholders an amendment and restatement of the Stock Award Plan to increase in the number of shares of Common Stock authorized for grant under the Plan. A description of the proposed Amendment and Restatement of the Stock Award Plan are set forth below. +Amendment and Restatement of Stock Award Plan +In order to enable the Company to continue to attract qualified officers, employees, directors and outside advisors, and to compensate these individuals in a manner that is competitive with compensation provided by other medical diagnostic and healthcare companies, the Board has determined that additional shares of Common Stock are needed to be available for grants under the Plan. In addition, the Board wants to ensure that sufficient shares are available, if needed, to provide retention or other equity awards in connection with potential acquisitions or other business development activities. In determining the amount of the increase to our share reserve under the Stock Award Plan, the Board and Compensation Committee considered a number of factors, including the following: +• Shares Available for Grant . Currently, a maximum of 10,168,183 shares of our common stock may be granted under the Stock Award Plan. As of March 25, 2024, 2,302,283 shares remained available for grant under the Stock Award Plan. The proposed amendment and restatement of the Stock Award Plan would increase the number of shares available for grant under the Amended and Restated Stock Award Plan by 3,000,000 shares, bringing the total that will be available to be granted under the Amended and Restated Stock Award Plan to 5,302,283 shares. As of March 25, 2024, no benefits or amounts relating to the additional 3,000,000 shares have been received by, or allocated to, any individuals. +• Shares Underlying Outstanding Awards . As of March 25, 2024, under the Stock Award Plan there were: +(a) 2,302,283 shares of the Company’s Common Stock remaining available for grant under the Plan as stock options or other equity awards; +(b) 2,427,751 stock options issued and outstanding, with a weighted-average exercise price of $8.72 per share and a weighted average remaining contractual term of 7.34 years; +(c) 2,728,242 restricted shares issued and unvested, with a weighted-average grant date fair value of $6.01 per share; and +(d) 1,453,367 performance restricted units issued and unvested, with a weighted-average grant date for value of $6.87 per share. +• Overhang . As of March 25, 2024, our overhang is 10.78%. For this purpose we calculated overhang as (i) 2,302,283 shares remaining available for grant, plus (ii) 2,427,751 stock options issued and +79 +Table of Contents +outstanding, plus (iii) 2,728,242 restricted shares issued and unvested, plus (iv) 1,453,367 performance restricted units issued and unvested, divided by 73,788,226 weighted average number of shares outstanding, plus (i) 2,302,283 shares remaining available for grant, plus (ii) 2,427,751 stock options issued and outstanding, plus (iii) 2,728,242 restricted shares issued and unvested, plus (iv) 1,453,367 performance restricted units issued and unvested. +• Burn Rate . Burn rate measures our usage of shares for the Amended and Restated Stock Award Plan as a percentage of the total outstanding shares of our Common Stock. For 2023 and 2022, our burn rates were 3.0% and 5.7%, respectively. The rates were calculated by dividing the number of options, restricted shares and performance restricted stock units that were granted during the year, by the weighted average number of shares outstanding during the year. Our average annual burn rate over this period was 4.3%. +• Forecasted Grants . Our Board anticipates that the proposed share increase under the Amended and Restated Stock Award Plan, based on currently projected share use, will be sufficient for the granting of equity awards under the Amended and Restated Stock Award Plan for approximately one additional year, i.e. for grants through 2025. The forecasted projected share use assumes we will make awards (less cancellations and forfeitures) based on our historical averages. Despite the projected share use described above, future circumstances and business needs may result in a significant increase in projected awards. +Accordingly, subject to stockholder approval, the Board approved an Amendment and Restatement of the Stock Award Plan to increase the number of shares to be authorized for grant under the Plan by 3,000,000 shares. As a result of this increase there will be a total of 5,302,283 shares available in the Amended and Restated Stock Award Plan for future issuance on and after March 25, 2024, subject to stockholder approval. A copy of the Amended and Restated Stock Award Plan reflecting this amendment is attached as Exhibit B to this Proxy Statement. +Summary of Amended and Restated Stock Award Plan +A summary description of certain terms and provisions of the Stock Award Plan, as amended, follows. Defined terms that are not otherwise defined herein are as defined in the Plan. To the extent the description below differs from the text of the Stock Award Plan, the text of the Plan will control. +Purpose . The purpose of the Stock Award Plan is to promote and advance the interests of the Company and its stockholders by enabling the Company to attract, retain, and reward employees, outside advisors, and Directors of the Company and any subsidiaries. The Stock Award Plan is intended to strengthen the mutuality of interests between employees, advisors, and Directors and the Company’s stockholders by offering equity-based incentives to promote the long-term growth, profitability and financial success of the Company. +Eligibility . The Stock Award Plan provides for stock-based awards (“Awards”) to (i) employees of the Company and any subsidiaries, (ii) members of advisory committees or other consultants to the Company or its subsidiaries (“Advisors”), and (iii) non-employee Directors of the Company. Persons who help the Company raise money by selling securities or who promote or maintain a market for the Company’s securities are not eligible to participate in the Stock Award Plan as Advisors. In addition, only Advisors who, in the judgment of the Compensation Committee of the Board (the “Committee”), are or will be contributors to the long-term success of the Company, will be eligible to receive Awards (as defined below). As of March 25, 2024, the Company and its subsidiaries had 585 employees, 0 Advisors and 6 non-employee Directors, all of whom are eligible to receive Awards under the Plan. +The Stock Award Plan will continue in effect until February 21, 2027 or until the Plan is otherwise terminated by the Board. Termination or expiration of the Plan will not affect outstanding Awards. +Administration of the Stock Award Plan . The Committee administers the Stock Award Plan and determines the persons who are to receive Awards and the types, amounts, and terms of Awards. For example, the Committee may determine the exercise price, the form of payment of the exercise price, the number of shares subject to an Award, and the date or dates on which an Award becomes exercisable. The Committee may delegate to one or more officers of the Company the authority to determine the recipients of and the types, +80 +Table of Contents +amounts and terms of Awards granted to participants who are not subject to the reporting requirements of Section 16(a) of the Securities Exchange Act of 1934, as amended. It is our policy that Awards made by the Committee for the Company’s CEO are also reviewed and approved by the full Board. The Stock Award Plan permits the Board to amend, suspend or terminate the Plan or any portion of the Plan. Notwithstanding the foregoing, Awards granted under the Plan are subject to a minimum vesting period of one year following the date of grant of the Award, provided, that Awards representing 5% of the shares authorized for issuance under the Plan may be subject to a shorter vesting period, and further that the Committee shall retain authority to accelerate vesting or exercisability upon the death, disability or retirement of the participant or upon a change in control of the Company, or as may be required pursuant to an employment agreement. +Shares Subject to the Stock Award Plan . If the Amendment is approved by our stockholders at our 2024 Annual Meeting, there will be 5,302,283 shares available for issuance under the Stock Award Plan as of March 25, 2024. Any shares granted in connection with restricted awards, performance awards or other stock-based awards will be counted against this limit on the basis of one and a half shares for every one share granted in connection with such Awards. +If an Award under the Plan is cancelled or expires for any reason prior to becoming fully vested or exercised or is settled in cash in lieu of shares, or is exchanged for other Awards under the Plan, then all shares covered by such Awards will be made available for future Awards under the Plan. Shares retained or reacquired by the Company in payment of an option price or in satisfaction of a withholding tax obligation in connection with any Award, shares repurchased by the Company with option proceeds and shares covered by a stock appreciation right, to the extent the stock appreciation right is exercised and settled in shares and whether or not shares are actually issued to the participant, will not be made available for future Awards under the Plan. In the event of a change in the Company’s capitalization affecting the Common Stock, including a stock dividend, stock split, recapitalization, merger, consolidation, split-up, combination or exchange of shares or other form of reorganization, the Committee shall make such proportionate adjustments as it may determine, in its sole discretion to be appropriate as a result of such change, to the aggregate number of shares for which Awards may be granted under the Plan, the maximum number of shares which may be sold or awarded to any participant, the number of shares covered by each outstanding Award, and the price per share in respect of outstanding Awards. +Awards . Awards that may be granted under the Stock Award Plan include stock options, stock appreciation rights, restricted awards, performance awards, and other stock-based awards. The following is a brief summary of the various types of Awards that may be granted under the Plan. +Stock Options . Options granted under the Stock Award Plan may be either incentive stock options (“ISOs”), a tax-favored form of Award meeting the requirements of Section 422 of the Code, as amended, or nonqualified options (“NQOs”), which are not entitled to special tax treatment. The Stock Award Plan limits the maximum term of any option granted to a period not longer than ten years from the date of grant. The exercise price of any option granted under the Plan may not be less than 100% of the fair market value of the Common Stock on the date of grant, except that in the case of an option granted to holders of 10% or more of the Company’s voting securities, the exercise price may not be less than 110% of the fair market value of the Common Stock on the date of grant. +The agreement evidencing the grant of a stock option (the “Option Agreement”) will specify, as determined by the Committee, the time or times when the option is exercisable, in whole or in part, and the extent to which the option remains exercisable after the option holder ceases to be an employee, Advisor or non-employee Director of the Company. The Option Agreement may, in the discretion of the Committee, provide whether the option will become fully exercisable upon the death, disability or retirement of the option holder or upon a change in control of the Company. As a general matter, the option holder may not transfer an option except by testamentary will or the laws of descent and distribution. An option may be exercised by payment of the exercise price in cash or, at the discretion of the Committee, with previously held shares of Common Stock or share equivalents, with proceeds from the sale of shares subject to the option or in any combination of the foregoing. +Options granted to employees under the Stock Award Plan generally vest over four years, with 25% of the grant vesting on the first anniversary of the grant date and the remaining 75% vesting ratably on a monthly basis over the next three years. Options granted to non-employee Directors in the past have generally +81 +Table of Contents +vested ratably on a monthly basis over either a 12- or 24-month period, depending on the type of grant. Options granted under the Plan generally provide for accelerated vesting upon a “change in control.” The Committee may provide for different vesting for any option granted under the Plan. In no event may options for more than 500,000 shares of Common Stock be granted to any individual under the Stock Award Plan during any fiscal year period. +Stock Appreciation Rights . A recipient of stock appreciation rights (“SARs”) will receive, upon exercise, a payment (in cash or in shares of Common Stock) based on the increase in the fair market value of a share of Common Stock between the date of grant and the date of exercise. SARs may be granted in connection with options or other Awards granted under the Stock Award Plan or may be granted as independent Awards. The Plan limits the maximum term for the exercise of a SAR to a period not longer than ten years from the date of grant. In no event may SARs for more than 500,000 shares of Common Stock be granted to any individual under the Plan during any fiscal year period. +Restricted Awards . Restricted Awards may take the form of restricted shares or restricted units. Restricted shares are shares of Common Stock that may be subject to forfeiture if the recipient terminates employment or service as an Advisor or non-employee Director during a specified period (the “Restriction Period”). Stock certificates representing restricted shares are issued in the name of the recipient, but are held by the Company until the expiration of the Restriction Period. From the date of issuance of restricted shares, the recipient is entitled to the rights of a stockholder with respect to the shares, including voting and dividend rights. Any right to receive dividends on restricted shares shall be subject to the same forfeiture requirements applicable to the restricted shares. Restricted units are Awards that entitle the recipient to receive a share of Common Stock or the fair market value of a share at some future date, which similarly may be subject to forfeiture if the recipient terminates employment or service as an Advisor or non-employee Director during the applicable Restriction Period. Unvested Restricted Awards may not be sold, assigned, transferred, pledged, encumbered or otherwise transferred, voluntarily or involuntarily, by the recipient. +At the expiration of the Restriction Period, payment with respect to restricted units is made in an amount equal to the fair market value of the number of shares of Common Stock covered by the restricted units. Payment may be in cash, unrestricted shares of Common Stock, or any other form approved by the Committee. +Performance Awards . Performance Awards are designated in units equivalent in value to a share of Common Stock. A Performance Award is subject to forfeiture if or to the extent that the Company, a subsidiary, an operating group, or the recipient, as specified by the Committee in the Award, fails to meet performance goals established for a designated performance period, which must have a duration of at least one year. Performance Awards earned by attaining performance goals are paid at the end of a performance period in cash, shares of Common Stock, or any other form approved by the Committee. The number of shares of Common Stock issuable with respect to Performance Awards granted to any individual executive officer may not exceed 150,000 shares for any calendar year. +Other Stock-Based Awards . The Committee may grant other Awards that involve payments or grants of shares of Common Stock or are measured by or in relation to shares of Common Stock. +Change in Control . The Committee, in its discretion, may provide in any Award agreement that in the event of a “change in control” of the Company, (i) all, or a specified portion of, Awards requiring exercise will become fully and immediately exercisable, notwithstanding any other limitations on exercise; (ii) all, or a specified portion of, Awards subject to restrictions will become fully vested; and/or (iii) all, or a specified portion of, Awards subject to performance goals will be deemed to have been fully earned. The Committee, in its discretion, may include change in control provisions in some Award agreements and not in others, may include different change in control provisions in different Award agreements, and may include change in control provisions for some Awards or some participants and not for others. A “change in control” generally is defined to take place when disclosure of such a change would be required by the proxy rules promulgated by the SEC or when: +• any person, or more than one person acting as a group within the meaning of Section 409A of the Code and the regulations issued thereunder, acquires ownership of stock of the Company that, together with stock held by such person or group, constitutes more than 50 percent of the total fair market value or total voting power of the stock of the Company; +82 +Table of Contents +• any person, or more than one person acting as a group within the meaning of Code Section 409A and the regulations issued thereunder, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition) ownership of stock of the Company possessing 30 percent or more of the total voting power of the Company’s stock; +• a majority of the members of the Board is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board before the date of the appointment or election; or +• a person, or more than one person acting as a group within the meaning of Code Section 409A and the regulations issued thereunder, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition) assets from the Company that have a total gross fair market value equal to or more than 40 percent of the total gross fair market value of all the assets of the Company immediately before such acquisition or acquisitions. +No Repricing or Exchanges . Stockholder approval of an action is required if (i) such action would increase the number of shares of Common Stock subject to the Plan, (ii) such action would result in the repricing, replacement or repurchase of out-of-the money options, stock appreciation rights or other Awards, (iii) such action would result in an Award becoming fully vested, exercisable or earned in the event of a change in control prior to the consummation of the change in control or (iv) such approval is required by law or regulation or the rules of a stock exchange or over-the-counter trading system. Since the Merger, neither the Board nor the Committee has taken any action that resulted in the repricing, replacement or repurchase of out-of-the-money Options, SARs or other Awards. +Federal Income Tax Consequences . The following discussion summarizes the principal anticipated federal income tax consequences of Awards granted under the Stock Award Plan, to participants and to the Company. The following information is only a summary and does not address all aspects of taxation that may be relevant to a particular participant in light of his or her personal circumstances. Participants should consult with their own tax advisors with respect to the tax consequences inherent in the ownership and exercise of the awards and the ownership and disposition of any underlying securities. The summary does not address the effects of other federal taxes (including possible “golden parachute” excise taxes) or taxes imposed under state, local or foreign tax laws. Tax laws are subject to change. Under Section 162(m), the Company cannot deduct compensation paid to certain covered employees in excess of $1 million per year. +Incentive Stock Options . A recipient of an option does not recognize taxable income upon the grant or exercise of an ISO. If no disposition of shares occurs within two years from the date of grant or within one year from the date of exercise, then (a) upon the sale of the shares, any amount realized in excess of the exercise price is taxed to the option recipient as long-term capital gain and any loss sustained will be a long-term capital loss, and (b) no deduction is allowed to the Company for federal income tax purposes. For purposes of computing alternative minimum taxable income, an ISO is treated as an NQO. +If shares of Common Stock acquired upon the exercise of an ISO are disposed of prior to the expiration of the two-year and one-year holding periods described above (a “disqualifying disposition”), then (a) the recipient will recognize ordinary income in the year of disposition in an amount equal to the excess (if any) of the fair market value of the shares at exercise (or, if less, the amount realized on a sale of the shares) over the exercise price thereof and (b) the Company would be entitled to deduct such amount. Any further gain realized is taxed as a short-term or long-term capital gain, as applicable, and does not result in any deduction for the Company. +Nonqualified Options . No income is recognized by an option recipient at the time an NQO is granted. Upon exercise, (a) ordinary income is recognized by the option recipient in an amount equal to the difference between the exercise price and the fair market value of the shares on the date of exercise and (b) the Company receives a tax deduction for the same amount. Upon disposition of the shares, appreciation or depreciation in the value of the shares after the date of exercise is treated as a short-term or long-term capital gain or loss, as applicable, and will not result in any deduction to the Company. +Stock Appreciation Rights . The grant of a SAR to a participant will not cause the recognition of income by the participant. Upon exercise of a SAR, the participant will recognize ordinary income equal to the amount of cash payable to the participant plus the fair market value of any shares of Common Stock delivered +83 +Table of Contents +to the participant. The Company will be entitled to a deduction equal to the amount of ordinary income recognized by the participant in connection with the exercise of a SAR. +Restricted Awards and Performance Awards . Generally, a participant will not recognize any income upon issuance of a Restricted Award or Performance Award that is subject to forfeiture. Generally, a participant will recognize ordinary income upon the vesting of Restricted Awards or Performance Awards in an amount equal to the amount of cash payable to the participant plus the fair market value of shares of Common Stock delivered to the participant. Dividends paid with respect to Awards during the Restriction Period will be subject to the same restrictions and will be taxable as ordinary income to the participant when, and if, the restrictions lapse. However, a participant may elect to recognize compensation income upon the grant of restricted shares, based on the fair market value of the shares of Common Stock subject to the Award at the date of grant. If a participant makes such an election, dividends paid with respect to the restricted shares will not be treated as compensation, but rather as dividend income at the time when the restricted shares vest. The Company will be entitled to a deduction equal to the amount of ordinary income recognized by the participant. If a participant who receives an Award of restricted shares makes the special election described above, the Company will not be entitled to deduct dividends paid with respect to the restricted shares. When shares of common stock or cash with respect to restricted unit Awards are delivered to the participant, the value of the shares or cash is then taxable to the participant as ordinary income and the Company will be entitled to a deduction equal to the amount of ordinary income recognized by the participant. +New Plan Benefits . All awards to executive officers in future periods are made at the discretion of the Compensation Committee and our Board. Therefore, the benefits and amounts that will be received or allocated under the Plan to such persons are not determinable at this time. +Vote Required; Board Recommendation +If a quorum is present, the affirmative vote of a majority of shares present, in person or by proxy and entitled to vote on this proposal, is required for approval of the proposed Amendment. Abstentions will have the effect of voting against this proposal. Broker non-votes will have no effect on the vote for this proposal. +Your Board recommends that stockholders vote FOR approval of the Company’s Amended and Restated Stock Award Plan. +PROPOSAL NO. 6. ADJOURNMENT OF ANNUAL MEETING +Background +If, at the Annual Meeting, the number of shares of Common Stock present or represented and voting in favor of the approval of any of Proposal 1, 2, 3, 4 or 5 (collectively, the “Proposals”) is not sufficient to approve the Proposals, our management may move to adjourn the Annual Meeting to a later date or dates, if necessary or appropriate, to permit further solicitation and vote of proxies in favor of the Proposals. +In this proposal, we are asking our stockholders to authorize the holder of any proxy solicited by our Board to vote in favor of granting discretionary authority to the proxy holders, and each of them individually, to adjourn the Annual Meeting to another time and place for the purpose of soliciting additional proxies. If the stockholders approve this proposal, we could adjourn the Annual Meeting and any adjourned session of the Annual Meeting and use the additional time to solicit additional proxies, including the solicitation of proxies from stockholders who have previously voted. +Vote Required; Board Recommendation +If a quorum is present, the affirmative vote of a majority of shares present, in person or by proxy and entitled to vote on this proposal, is required for approval of the proposal. Abstentions will have the effect of voting against this proposal. Broker non-votes will have no effect on the vote for this proposal. +Your Board recommends that the stockholders vote FOR the adjournment of the Annual Meeting to a later date or dates, if necessary or appropriate, to permit further solicitation and vote of proxies in favor of the Proposals if there are insufficient votes to adopt the Proposals at the Annual Meeting. +84 +Table of Contents +DELINQUENT SECTION 16(A) REPORTS +Section 16(a) of the Exchange Act requires our directors and executive officers, and any persons who beneficially own more than 10% of a registered class of our equity securities, to file reports of securities ownership and changes in such ownership with the SEC. Officers, directors and greater than ten percent stockholders are also required by SEC rules to furnish us with copies of all Section 16(a) forms they file. Based solely on a review of the Company’s records and written representations by the persons required to file such reports, management believes that all filing requirements of Section 16(a) were satisfied with respect to the 2023 fiscal year. +ANNUAL REPORT +Our Annual Report to Stockholders for the year ended December 31, 2023 accompanies this Proxy Statement. Following receipt of a written request, we will provide, without charge, a copy of our Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC (including a list briefly describing the exhibits thereto), to any record holder or beneficial owner of our Common Stock on March 22, 2024, the record date for the Annual Meeting, or to any person who subsequently becomes such a record holder or beneficial owner. Requests should be directed to the attention of the Corporate Secretary of the Company at our address set forth in the Notice of Annual Meeting of Stockholders immediately preceding this Proxy Statement. +85 +Table of Contents +DEADLINE FOR STOCKHOLDER PROPOSALS +You may submit proposals for inclusion in the proxy materials for the Company’s 2025 Annual Meeting of Stockholders. Any such proposals must meet the stockholder eligibility and other requirements imposed by rules issued by the SEC and must be received by the Company at 220 East First Street, Bethlehem, Pennsylvania 18015, Attention: Corporate Secretary, in accordance with Rule 14a-8 promulgated under the Exchange Act, not later than December 4, 2024. +In addition, our Bylaws provide that a stockholder proposal must meet certain predetermined requirements in order to be considered at the Annual Meeting. These requirements are separate from, and in addition to, the requirements discussed above to have the stockholder proposal included in the proxy materials pursuant to the SEC’s rules and regulations. In order to be considered, a stockholder’s proposal must be made in writing to the Company’s Secretary and must be delivered to or received at our principal executive offices not less than ninety (90) days nor more than one hundred twenty (120) days prior to the meeting. However, if less than one hundred (100) days’ notice or prior public disclosure of the date of the meeting is given or made to stockholders, notice by the stockholder to be timely must be so received no later than the close of business on the tenth (10 th ) day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made, whichever first occurs. The notice to the Secretary must set forth, with respect to each matter the stockholder proposes to bring before the meeting, a brief description of the matter and the reasons for considering that matter at the Annual Meeting. The notice must also include, as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf notice of the proposed business is made: (i) the name and address of the stockholder and such beneficial owner; (ii) any material interest of such stockholder and such beneficial holder in such business; (iii) the class and number of shares of capital stock of the Company which are held of record or beneficially owned by the stockholder and such beneficial owner and any other direct or indirect pecuniary or economic interest in any capital stock of the Company of such stockholder and such beneficial owner, including without limitation, any derivative instrument, swap, option, warrant, short interest, hedge, profit sharing arrangement or borrowed or loaned shares; (iv) a representation that such stockholder intends to appear in person or by proxy at the meeting to propose the business described in its notice; and (v) any other information relating to such business matter that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder. To the extent the Board of Directors or the SEC, or a court of competent jurisdiction, deems these Bylaw provisions to be inconsistent with the right of stockholders to request inclusion of a proposal in the Company’s proxy materials pursuant to Rule 14a-8 promulgated under the Exchange Act, such rule shall prevail. To comply with the universal proxy rules, stockholders who intend to solicit proxies for the 2025 Annual Meeting in support of director nominees other than the Company’s nominees must provide notice by the same deadline noted herein to submit notice of mattes for consideration at an annual meeting. Such notice must comply with the additional requirements of Rule 14a-19(b). +The SEC has promulgated rules relating to the exercise of discretionary voting authority under proxies solicited by the Board. If a stockholder intends to present a proposal at our 2025 Annual Meeting without inclusion of that proposal in the Company’s proxy materials and written notice of the proposal is not received by the Secretary of the Company by February 17, 2025 (the date that is 45 days before the one-year anniversary of the date on which the Company first sent its proxy materials for the Annual Meeting), or if the Company meets other requirements of the applicable SEC rules and regulations, the proxies solicited by the Board for use at the 2025 Annual Meeting will confer discretionary authority to vote on the proposal should it then be raised at the 2025 Annual Meeting. +BY ORDER OF THE BOARD OF DIRECTORS +Stefano Taucer +Secretary +April 3, 2024 +86 +Table of Contents +EXHIBIT A +CERTIFICATE OF AMENDMENT TO THE CERTIFICATE OF INCORPORATION +87 +Table of Contents +CERTIFICATE OF AMENDMENT +TO THE +CERTIFICATE OF INCORPORATION +OF +ORASURE TECHNOLOGIES, INC. +OraSure Technologies, Inc. (the “ Corporation ”), a corporation organized and existing under the provisions of the General Corporation Law of the State of Delaware (the “ General Corporation Law ”), hereby certifies that: +1. The name of this corporation is OraSure Technologies, Inc. The Corporation’s original Certificate of Incorporation was filed with the Secretary of State of the State of Delaware on May 5, 2000 under the name Edward Merger Subsidiary, Inc. The Certificate of Incorporation was previously amended on May 23, 2000 pursuant to Sections 242 of the General Corporation Law. Pursuant to Section 242 of the General Corporation Law, this Certificate of Amendment (this “ Amendment ”) amends certain provisions of the Company’s Certificate of Incorporation, as amended (the “ Charter ”). +2. This Amendment has been approved and duly adopted by the Corporation’s Board of Directors and stockholders in accordance with the provisions of Section 242 of the General Corporation Law. +3. The Charter is hereby amended by amending and restating Article IX thereof to read in its entirety as follows: +Article IX +A. No Director of the Corporation shall be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty by such Director as a Director; provided, however, that this ARTICLE IX shall not eliminate or limit the liability of a Director to the extent provided by applicable law: (i) for any breach of the Director's duty of loyalty to the Corporation or its stockholders; (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; (iii) under Section 174 of the General Corporation Law of Delaware; or (iv) for any transaction from which the Director derived an improper personal benefit. +B. To the fullest extent permitted by the General Corporation Law of Delaware, an Officer (as defined below) of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of his or her fiduciary duty as an officer of the Corporation, except for liability (a) for any breach of the Officer’s duty of loyalty to the Corporation or its stockholders, (b) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (c) for any transaction from which the Officer derived an improper personal benefit, or (d) arising from any claim brought by or in the right of the Corporation. If the General Corporation Law of Delaware is amended after the effective date of this Certificate to authorize corporate action further eliminating or limiting the personal liability of Officers, then the liability of an Officer of the Corporation shall be eliminated or limited to the fullest extent permitted by the General Corporation Law of Delaware, as so amended. For purposes of this ARTICLE IX, “Officer” shall mean an individual who has been duly appointed as an officer of the Corporation and who, at the time of an act or omission as to which liability is asserted, is deemed to have consented to service of process to the registered agent of the Corporation as contemplated by 10 Del. C. § 3114(b). +C. No amendment to or repeal of this Article IX shall apply to or have any effect on the liability or alleged liability of any Director or Officer of the Corporation for or with respect to any acts or omissions of such Director or Officer occurring prior to such amendment or repeal. +4. All other provisions of the Charter shall remain in full force and effect. +[ Remainder of Page Intentionally Left Blank ] +88 +Table of Contents +IN WITNESS WHEREOF, this Certificate of Amendment to the Certificate of Incorporation has been executed by a duly authorized officer of this Corporation on this [___] day of [_____], 2024. +ORASURE TECHNOLOGIES, INC. +By: +Carrie Eglinton Manner +President and Chief Executive Officer +89 +Table of Contents +EXHIBIT B +AMENDED AND RESTATED +ORASURE TECHNOLOGIES, INC. 2000 STOCK AWARD PLAN +1 +Table of Contents +ORASURE TECHNOLOGIES, INC. +STOCK AWARD PLAN +ARTICLE 1 ESTABLISHMENT AND PURPOSE +(Amended and Restated Effective as of March 25, 2024) +Establishment. Epitope, Inc. established this Plan as the Epitope, Inc. 2000 Stock Award Plan, effective as of February 15, 2000, and the Plan was approved by shareholders of Epitope, Inc. at the 2000 annual shareholders meeting. Effective September 29, 2000, in connection with the merger of Epitope, Inc. with and into OraSure Technologies, Inc., the name of the Plan was changed to the OraSure Technologies, Inc. 2000 Stock Award Plan and the Plan was adopted as a stock award plan of OraSure Technologies, Inc. The Plan was amended and restated, subject to shareholder approval, effective May 16, 2006. The Plan was amended further, subject to shareholder approval, effective May 13, 2008. The Plan again was amended and restated in its entirety, subject to shareholder approval, effective May 17, 2011 and February 12, 2013. The Plan was amended further, subject to shareholder approval, effective May 22, 2014. The Plan was again amended and restated in its entirety, subject to shareholder approval, effective May 16, 2017, April 2, 2020, April 1, 2022 and March 31, 2023. +1.1 Purpose. The purpose of the Plan is to promote and advance the interests of Corporation and its shareholders by enabling Corporation to attract, retain, and reward employees, outside advisors, and directors of Corporation and its subsidiaries. It is also intended to strengthen the mutuality of interests between such employees, advisors, and directors and Corporation’s shareholders. The Plan is designed to meet this intent by offering stock options and other equity-based incentive awards, thereby providing a proprietary interest in pursuing the long-term growth, profitability, and financial success of Corporation. +ARTICLE 2 +DEFINITIONS +2.1 Defined Terms. For purposes of the Plan, the following terms have the meanings set forth below: +“ Advisor ” means a natural person who is a consultant to or member of an Advisory Committee of Corporation or a Subsidiary, who provides bona fide services to Corporation and who is neither an employee of Corporation or a Subsidiary nor a Non-Employee Director. “Advisor” excludes any person who provides services to Corporation in connection with the offer or sale of securities in a capital raising transaction or to promote or maintain a market for Corporation’s securities, and any other person excluded from the class of persons to whom securities may be offered pursuant to a registration statement on Form S-8 or any successor form of registration statement. +“ Advisory Committee ” means a scientific advisory committee to Corporation or a Subsidiary. +“ Award ” ‘ means an award or grant made to a Participant of Options, Stock Appreciation Rights, Restricted Awards, Performance Awards, or Other Stock-Based Awards pursuant to the Plan. +“ Award Agreement ” means an agreement as described in Section 6.4. +“ Board ” means the Board of Directors of Corporation. +“ Change in Control ” means, unless otherwise provided in the applicable Award Agreement, a change of control of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A pursuant to the Exchange Act; provided, however, that a change of control shall only be deemed to have occurred at such time as (i) any person, or more than one person acting as a group within the meaning of Section 409A of the Code, acquires ownership of stock of the Corporation that, together with stock held by such person or group, constitutes more than 50 percent of the total fair market value or total voting power of the stock of the Corporation; (ii) any person, or more than one person acting as a group within the meaning of Section 409A of the Code, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition) ownership of stock of the Corporation possessing 30 percent or more of the total voting power of the Corporation’s stock; (iii) a majority of the members of the Board is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board before the date of the appointment or election; or (iv) a person, or more than one person acting as a group +2 +Table of Contents +within the meaning of Section 409A of the Code, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition) assets from the Corporation that have a total gross fair market value equal to or more than 40 percent of the total gross fair market value of all the assets of the Corporation immediately before such acquisition or acquisitions. +“ Code ” means the Internal Revenue Code of 1986, as amended and in effect from time to time, or any successor thereto, together with rules, regulations, and interpretations promulgated thereunder. Where the context so requires, any reference to a particular Code section will be construed to refer to the successor provision to such Code section. +“ Committee ” means the committee appointed by the Board to administer the Plan as provided in Article 3 of the Plan. +“ Common Stock ” means the Common Stock, par value $0.000001 per share, of Corporation or any security of Corporation issued in substitution, in exchange, or in lieu of such stock. +“ Continuing Restriction ” means a Restriction contained in Sections 6.7, 6.8, and 15.4 of the Plan and any other Restrictions expressly designated by the Committee in an Award Agreement as a Continuing Restriction. +“ Corporation ” means OraSure Technologies, Inc., a Delaware corporation, or any successor corporation. As to awards granted or other action taken prior to September 29, 2000, “Corporation” includes Epitope, Inc., as predecessor to OraSure Technologies, Inc. +“ Disability ” means the condition of being “disabled” within the meaning of Section 422(c)(6) of the Code. However, the Committee may change the foregoing definition of “Disability” or may adopt a different definition for purposes of specific Awards. +“ Exchange Act ” means the Securities Exchange Act of 1934, as amended and in effect from time to time, or any successor statute. Where the context so requires, any reference to a particular section of the Exchange Act, or to any rule promulgated under the Exchange Act, shall be construed to refer to successor provisions to such section or rule. +“ Fair Market Value ” means with respect to Common Stock, on a particular day, without regard to any restrictions (other than a restriction which, by its terms, will never lapse): +(1) if the Common Stock is at the time listed or admitted to trading on any stock exchange, the mean between the highest and lowest prices of the Common Stock on the date in question on the principal national securities exchange on which it is then listed or admitted to trading. If no reported sale of Common Stock takes place on the date in question on the principal exchange, then the reported closing asked price of the Common Stock on such date on the principal exchange shall be determinative of “Fair Market Value;” +(2) if the Common Stock is not at the time listed or admitted to trading on a stock exchange, the mean between the highest reported asked price and lowest reported bid price of the Common Stock on the date in question in the over-the-counter market, as such prices are reported in a publication of general circulation selected by the Committee and regularly reporting the market price of Common Stock in such market; or +(3) if the Common Stock is not listed or admitted to trading on any stock exchange or traded in the over-the-counter market, an amount as determined in good faith by the Committee and which shall comply with Section 409A of the Code. +“ Incentive Stock Option ” or “ ISO ” means any Option granted pursuant to the Plan that is intended to be and is specifically designated in its Award Agreement as an “incentive stock option” within the meaning of Section 422 of the Code. +“ Minimum Vesting Period ” means the one-year period following the date of grant of an Award. +“ Non-Employee Director ” means a member of the Board who is not an employee of Corporation or any Subsidiary. +3 +Table of Contents +“ Nonqualified Option ” or “ NQSO ” means any Option granted pursuant to the Plan that is not an Incentive Stock Option. +“ Option ” means an ISO or an NQSO. +" Other Stock-Based Award ” means an Award as defined in Section 11.1. +“ Participant ” means an employee of Corporation or a Subsidiary, an Advisor, or a Non-Employee Director who is granted an Award under the Plan. +“ Performance Award ” means an Award granted pursuant to the provisions of Article 10 of the Plan, the Vesting of which is contingent on performance attainment. +“ Performance Cycle ” means a designated performance period pursuant to the provisions of Section 10.3 of the Plan. +“ Performance Goal ” means a designated performance objective pursuant to the provisions of Section 10.4 of the Plan. +“ Plan ” means this OraSure Technologies, Inc. 2000 Stock Award Plan, as set forth herein and as it may be amended from time to time. +“ Reporting Person ” means a Participant who is subject to the reporting requirements of Section 16(a) of the Exchange Act. +“ Restricted Award ” means a Restricted Share or a Restricted Unit granted pursuant to Article 9 of the Plan. +“ Restricted Share ” means an Award described in Section 9.1(a) of the Plan. +“ Restricted Unit ” means an Award of units representing Shares described in Section 9.1(b) of the Plan. +“ Restriction ” means a provision in the Plan or in an Award Agreement which limits the exercisability or transferability, or which governs the forfeiture, of an Award or the Shares, cash, or other property payable pursuant to an Award. +“ Retirement ” means: +(a) For Participants who are employees, retirement from active employment with Corporation and its Subsidiaries at or after age 50, or such earlier retirement date as approved by the Committee for purposes of the Plan; +(b) For Participants who are Non-Employee Directors, termination of membership on the Board after attaining age 50, or such earlier retirement date as approved by the Committee for purposes of the Plan; and +(c) For Participants who are Advisors, termination of service as an Advisor after attaining age 50, or such earlier retirement date as approved by the Committee for purposes of the Plan. +However, the Committee may change the foregoing definition of “Retirement” or may adopt a different definition for purposes of specific Awards. +“ Share ” means a share of Common Stock. +“ Stock Appreciation Right ” or “ SAR ” means an Award to benefit from the appreciation of Common Stock granted pursuant to the provisions of Article 8 of the Plan. +4 +Table of Contents +“ Subsidiary ” means any “subsidiary corporation” of Corporation within the meaning of Section 424 of the Code, namely any corporation in which Corporation directly or indirectly controls 50 percent or more of the total combined voting power of all classes of stock having voting power. +“ Ten Percent Shareholder ” means a person who on any given date owns, either directly or indirectly (taking into account the attribution rules contained in Section 424(d) of the Code), stock possessing more than 10 percent of the total combined voting power of all classes of stock of the Corporation or any Subsidiary under Section 424(f) of the Code. +“ Vest ” or “ Vested ” means: +(a) In the case of an Award that requires exercise, to be or to become immediately and fully exercisable and free of all Restrictions (other than Continuing Restrictions); +(b) In the case of an Award that is subject to forfeiture, to be or to become nonforfeitable, freely transferable, and free of all Restrictions (other than Continuing Restrictions); +(c) In the case of an Award that is required to be earned by attaining specified Performance Goals, to be or to become earned and nonforfeitable, freely transferable, and free of all Restrictions (other than Continuing Restrictions); or +(d) In the case of any other Award as to which payment is not dependent solely upon the exercise of a right, election, exercise, or option, to be or to become immediately payable and free of all Restrictions (except Continuing Restrictions). +2.2 Gender and Number. Except where otherwise indicated by the context, any masculine or feminine terminology used in the Plan shall also include the opposite gender; and the definition of any term in Section 2.1 in the singular shall also include the plural, and vice versa. +ARTICLE 3 +ADMINISTRATION +3.1 General . Except as provided in Section 3.7, the Plan will be administered by a Committee composed as described in Section 3.2. +3.2 Composition of the Committee . The Committee will be appointed by the Board from among its members in a number and with such qualifications as will meet the independence and other requirements for (i) approval by a committee pursuant to Rule 16b-3 under the Exchange Act, (ii) establishing, administering and certifying performance goals pursuant to Section 162(m) of the Code and (iii) trading or listing securities on the securities exchange or association on which the Common Stock is then traded or listed. The Board may from time to time remove members from, or add members to, the Committee. Vacancies on the Committee, however caused, will be filled by the Board. The initial members of the Committee will be the members of Corporation’s existing Executive Compensation Committee. The Board may at any time replace the Executive Compensation Committee with another Committee. In the event that the Executive Compensation Committee ceases to satisfy the requirements of Rule 16b-3, Section 162(m) of the Code or a securities exchange or association described above in 3.2(iii), the Board will appoint another Committee satisfying such requirements. +3.3 Authority of the Committee . The Committee will have full power and authority (subject to such orders or resolutions as may be issued or adopted from time to time by the Board) to administer the Plan in its sole discretion, including the authority to: +(a) Construe and interpret the Plan and any Award Agreement; +(b) Promulgate, amend, and rescind rules and procedures relating to the implementation of the Plan; +(c) With respect to employees and Advisors: +(i) Select the employees and Advisors who shall be granted Awards; +(ii) Determine the number and types of Awards to be granted to each such Participant; +(iii) Determine the number of Shares, or Share equivalents, to be subject to each Award; +5 +Table of Contents +(iv) Determine the option price, purchase price, base price, or similar feature for any Award; and +(v) Determine all the terms and conditions of all Award Agreements, consistent with the requirements of the Plan. +Decisions of the Committee, or any delegate as permitted by the Plan, shall be final, conclusive, and binding on all Participants. +3.4 Action by the Committee . A majority of the members of the Committee will constitute a quorum for the transaction of business. Action approved by a majority of the members present at any meeting at which a quorum is present, or action in writing by all the members of the Committee, will be the valid acts of the Committee. +3.5 Delegation . Notwithstanding the foregoing, the Committee may delegate to one or more officers of Corporation the authority to determine the recipients, types, amounts, and terms of Awards granted to Participants who are not Reporting Persons or “covered employees” within the meaning of Section 162(m) of the Code. +3.6 Liability of Committee Members . No member of the Committee will be liable for any action or determination made in good faith with respect to the Plan, any Award, or any Participant. +3.7 Awards to Non-Employee Directors . The Board or Committee may grant Awards from time to time to Non-Employee Directors. +3.8 Costs of Plan . The costs and expenses of administering the Plan will be borne by Corporation. +3.9 Minimum Vesting Period . The vesting period for each Award granted under the Plan must be at least equal to the Minimum Vesting Period; provided, however, nothing in this Section 3.9 shall limit the Committee’s authority to accelerate vesting or exercisability upon a Change in Control, or upon the death, Disability or retirement of the Participant, or as may be required pursuant to an employment agreement between the Participant and the Corporation; provided, however, notwithstanding the foregoing, up to 5% of the Shares authorized for issuance under the Plan may be utilized for Awards with a vesting period that is less than the Minimum Vesting Period (each such Award, an “Excepted Award”). Notwithstanding the foregoing, in addition to Excepted Awards, the Committee may grant Awards that vest (or permit previously granted Awards to vest) within the Minimum Vesting Period (i) if such Awards are granted as substitute Awards in replacement of other Awards (or awards previously granted by an entity being acquired (or assets of which are being acquired)) that were scheduled to vest within the Minimum Vesting Period or (ii) if such Awards are being granted in connection with an elective deferral of cash compensation that, absent a deferral election, otherwise would have been paid to the grantee within the Minimum Vesting Period. +ARTICLE 4 +DURATION OF THE PLAN AND SHARES SUBJECT TO THE PLAN +4.1 Duration of the Plan . This amendment and restatement of the Plan is effective March 25, 2024. The Plan shall remain in full force and effect until February 21, 2027, or the date it is terminated by the Board. The Board shall have the power to amend, suspend or terminate the Plan as provided in Article 14. Termination of the Plan under Article 14 shall not affect Awards outstanding under the Plan at the time of termination. +4.2 Shares Subject to the Plan . +4.2.1 Genera l. The shares which may be made subject to Awards under the Plan are Shares of Common Stock, which may be either authorized and unissued Shares or reacquired Shares. No fractional Shares may be issued under the Plan. +4.2.2 Number of Shares; Limits . +(a) The maximum number of Shares for which Awards may be granted under the Plan on or after March 25, 2024, is 5,302,283 Shares, plus any Shares that become available as the result of the cancellation or expiration of any Award, subject to adjustment for changes in capitalization affecting the Corporation’s Common Stock pursuant to Section 13.2 of the Plan. Any Shares granted in connection with Options and Stock Appreciation Rights shall be counted against this limit on the basis of one Share for each Share subject to such Option or Stock Appreciation Right. Any Shares granted in connection with Restricted Awards, Performance +6 +Table of Contents +Awards or Other Stock-Based Awards shall be counted against this limit on the basis of one and a half Shares for every one Share granted in connection with such Awards. +(b) The maximum number of Shares that may be issued pursuant to paragraph (a) above on or after March 25, 2024, pursuant to Incentive Stock Options, is 5,302,283 Shares, subject to adjustment for changes in capitalization affecting the Corporation’s Common Stock pursuant to Section 13.2 of the Plan. +4.2.3 Availability of Shares for Future Awards . If an Award under the Plan is canceled or expires for any reason prior to having been fully Vested or exercised by a Participant or is settled in cash in lieu of Shares or is exchanged for other Awards, all Shares covered by such Awards will be made available for future Awards under the Plan. In no event shall the following be made available for future awards under the Plan: (a) Shares retained or reacquired by the Corporation in payment of an option price or satisfaction of a withholding tax obligation by a Participant in connection with any Award, (b) Shares repurchased by the Corporation with Option proceeds and (c) Shares covered by an SAR, to the extent the SAR is exercised and settled in Shares and whether or not Shares are actually issued to the Participant upon exercise of the SAR. +ARTICLE 5 ELIGIBILITY +5.1 Employees and Advisors . Officers and other employees of Corporation and any Subsidiaries (who may also be directors of Corporation or a Subsidiary) and Advisors who, in the Committee’s judgment, are or will be contributors to the long-term success of Corporation will be eligible to receive Awards under the Plan. +5.2 Non-Employee Directors . All Non-Employee Directors will be eligible to receive Awards as provided in Section 3.7 of the Plan. +ARTICLE 6 AWARDS +6.1 Types of Awards . The types of Awards that may be granted under the Plan are: +(a) Options governed by Article 7 of the Plan; +(b) Stock Appreciation Rights governed by Article 8 of the Plan; +(c) Restricted Awards governed by Article 9 of the Plan; +(d) Performance Awards governed by Article 10 of the Plan; and +(e) Other Stock-Based Awards or combination awards governed by Article 11 of the Plan. +In the discretion of the Committee, any Award may be granted alone, in addition to, or in tandem with other Awards under the Plan. +6.2 General . Subject to the limitations of the Plan, the Committee may cause Corporation to grant Awards to such Participants, at such times, of such types, in such amounts, for such periods, with such option prices, purchase prices, or base prices, and subject to such terms, conditions, limitations, and restrictions as the Committee, in its discretion, deems appropriate. Awards may be granted as additional compensation to a Participant or in lieu of other compensation to such Participant. A Participant may receive more than one Award and more than one type of Award under the Plan. +6.3 Nonuniform Determinations . The Committee’s determinations under the Plan or under one or more Award Agreements, including without limitation, (a) the selection of Participants to receive Awards, (b) the type, form, amount, and timing of Awards, (c) the terms of specific Award Agreements, and (d) elections and determinations made by the Committee with respect to exercise or payments of Awards, need not be uniform and may be made by the Committee selectively among Participants and Awards, whether or not Participants are similarly situated. +6.4 Award Agreements . Each Award will be evidenced by a written Award Agreement between Corporation and the Participant. Award Agreements may, subject to the provisions of the Plan, contain any provision approved by the Committee. +6.5 Provisions Governing All Awards . All Awards will be subject to the following provisions: +7 +Table of Contents +(a) Alternative Awards . If any Awards are designated in their Award Agreements as alternative to each other, the exercise of all or part of one Award automatically will cause an immediate equal (or pro rata) corresponding termination of the other alternative Award or Awards. +(b) Rights as Shareholders . No Participant will have any rights of a shareholder with respect to Shares subject to an Award until such Shares are issued in the name of the Participant. +(c) Employment Rights . Neither the adoption of the Plan nor the granting of any Award will confer on any person the right to continued employment with Corporation or any Subsidiary or the right to remain as a director of Corporation or a member of any Advisory Committee, as the case may be, nor will it interfere in any way with the right of Corporation or a Subsidiary to terminate such person’s employment or to remove such person as an Advisor or as a director at any time for any reason or for no reason, with or without cause. +(d) Termination of Employment . The terms and conditions under which an Award may be exercised or will continue to Vest, if at all, after a Participant’s termination of employment or service as an Advisor or as a Non-Employee Director will be determined by the Committee and specified in the applicable Award Agreement. +(e) Change in Control . The Committee, in its discretion, may provide in any Award Agreement that in the event of a Change in Control of the Corporation: +(i) All, or a specified portion of, Awards requiring exercise will become fully and immediately exercisable, notwithstanding any other limitations on exercise; +(ii) All, or a specified portion of, Awards subject to Restrictions will become fully Vested; and +(iii) All, or a specified portion of, Awards subject to Performance Goals will be deemed to have been fully earned. +The Committee, in its discretion, may include Change in Control provisions in some Award Agreements and not in others, may include different Change in Control provisions in different Award Agreements, and may include Change in Control provisions for some Awards or some Participants and not for others. +(f) Service Periods . At the time of granting Awards, the Committee may specify, by resolution or in the Award Agreement, the period or periods of service performed or to be performed by the Participant in connection with the grant of the Award. +6.6 Tax Withholding +(a) General . Corporation will have the right to deduct from any settlement, including the delivery or Vesting of Shares, made under the Plan any federal, state, or local taxes of any kind required by law to be withheld with respect to such payments or to take such other action as may be necessary in the opinion of Corporation to satisfy all obligations for the payment of such taxes. The recipient of any payment or distribution under the Plan will make arrangements satisfactory to Corporation for the satisfaction of any such withholding tax obligations. Corporation will not be required to make any such payment or distribution under the Plan until such obligations are satisfied. +(b) Stock Withholding . The Committee, in its sole discretion, may permit a Participant to satisfy all or a part of the withholding tax obligations incident to the settlement of an Award involving payment or delivery of Shares to the Participant by having Corporation withhold a portion of the Shares that would otherwise be issuable to the Participant. Such Shares will be valued based on their Fair Market Value on the date the tax withholding is required to be made. Any stock withholding with respect to a Reporting Person will be subject to such limitations as the Committee may impose to comply with the requirements of the Exchange Act. Notwithstanding the foregoing, Reporting Persons shall be permitted to elect to satisfy all or a portion of the withholding tax obligations incident to the settlement of an Award involving payment or delivery of Shares to such Participant by having Corporation withhold a portion of the Shares that would otherwise be issuable to the Participant. +6.7 Annulment of Awards . Any Award Agreement may provide that the grant of an Award payable in cash is provisional until cash is paid in settlement thereof or that grant of an Award payable in Shares is provisional until the Participant becomes entitled to the Shares in settlement thereof. In the event the employment (or service as an Advisor or membership on the Board) of a Participant is terminated for cause (as +8 +Table of Contents +defined below), any Award that is provisional will be annulled as of the date of such termination for cause. For the purpose of this Section 6.7, the term “for cause” has the meaning set forth in the Participant’s employment agreement, if any, or otherwise means any discharge (or removal) for material or flagrant violation of the policies and procedures of Corporation or for other job performance or conduct which is materially detrimental to the best interests of Corporation, as determined by the Committee. +6.8 Engaging in Competition With Corporation . Any Award Agreement may provide that, if a Participant terminates employment with Corporation or a Subsidiary for any reason whatsoever, and within 18 months after the date thereof accepts employment with any competitor of (or otherwise engages in competition with) Corporation, the Committee, in its sole discretion, may require such Participant to return to Corporation the economic value of any Award that is realized or obtained (measured at the date of exercise, Vesting, or payment) by such Participant at any time during the period beginning on the date that is six months prior to the date of such Participant’s termination of employment with Corporation. +ARTICLE 7 +OPTIONS +7.1 Types of Options . Options granted under the Plan may be in the form of Incentive Stock Options or Nonqualified Options. The grant of each Option and the Award Agreement governing each Option will identify the Option as an ISO or an NQSO. In the event the Code is amended to provide for tax-favored forms of stock options other than or in addition to Incentive Stock Options, the Committee may grant Options under the Plan meeting the requirements of such forms of options. +7.2 General . Options will be subject to the terms and conditions set forth in Article 6 and this Article 7 and may contain such additional terms and conditions, not inconsistent with the express provisions of the Plan, as the Committee (or the Board with respect to Awards to Non-Employee Directors) deems desirable. +7.3 Option Price . Each Award Agreement for Options will state the option exercise price per Share of Common Stock purchasable under the Option, which will not be less than 100 percent (100%) of the Fair Market Value of a Share on the date of grant for all Options (ISOs or NQSOs); provided, however, that in the case of any ISO granted to a Ten Percent Shareholder, the option exercise price per Share shall not be less than 110 percent (110%) of the Fair Market Value of a Share on the date of grant +7.4 Option Term . The Award Agreement for each Option will specify the term of each Option, which shall have a specified period during which the Option may be exercised which is no longer than ten years, as determined by the Committee. +7.5 Time of Exercise. The Award Agreement for each Option will specify, as determined by the Committee: +(a) The time or times when the Option will become exercisable and whether the Option will become exercisable in full or in graduated amounts over a period specified in the Award Agreement; +(b) Such other terms, conditions, and restrictions as to when the Option may be exercised as determined by the Committee; and +(c) The extent, if any, to which the Option will remain exercisable after the Participant ceases to be an employee, Advisor, or director of Corporation or a Subsidiary. +An Award Agreement for an Option may, in the discretion of the Committee, provide whether, and to what extent, the Option will become immediately and fully exercisable (i) in the event of the death, Disability, or Retirement of the Participant, or (ii) upon the occurrence of a Change in Control of Corporation . +7.6 Method of Exercise . The Award Agreement for each Option will specify the method or methods of payment acceptable upon exercise of an Option. An Award Agreement may provide that the option price is payable in full in cash or, at the discretion of the Committee: +(a) In previously acquired Shares (including Restricted Shares); +(b) By surrendering outstanding Awards under the Plan denominated in Shares or in Share-equivalent units; +9 +Table of Contents +(c) By delivery (in a form approved by the Committee) of an irrevocable direction to a securities broker acceptable to the Committee: +(i) To sell Shares subject to the Option and to deliver all or a part of the sales proceeds to Corporation in payment of all or a part of the option price and withholding taxes due; or +(ii) To pledge Shares subject to the Option to the broker as security for a loan and to deliver all or a part of the loan proceeds to Corporation in payment of all or a part of the option price and withholding taxes due; or +(d) In any combination of the foregoing or in any other form approved by the Committee. +If Restricted Shares are surrendered in full or partial payment of an Option price, a corresponding number of the Shares issued upon exercise of the Option will be Restricted Shares subject to the same Restrictions as the surrendered Restricted Shares. +7.7 Special Rules for Incentive Stock Options . In the case of an Option designated as an Incentive Stock Option, the terms of the Option and the Award Agreement must be in conformance with the statutory and regulatory requirements specified in Section 422 of the Code, as in effect on the date such ISO is granted. ISOs may be granted only to employees of Corporation or a Subsidiary. ISOs may not be granted under the Plan after February 21, 2027, unless the ten-year limitation of Section 422(b)(2) of the Code is removed or extended. +7.8 Restricted Shares . In the discretion of the Committee, the Shares issuable upon exercise of an Option may be Restricted Shares if so provided in the Award Agreement. +7.9 Limitation on Number of Shares Subject to Options . In no event may Options for more than 500,000 Shares be granted to any individual under the Plan during any fiscal year period. +ARTICLE 8 +STOCK APPRECIATION RIGHTS +8.1 General . Stock Appreciation Rights will be subject to the terms and conditions set forth in Article 6 and this Article 8 and may contain such additional terms and conditions, not inconsistent with the express terms of the Plan, as the Committee (or the Board with respect to Awards to Non-Employee Directors) deems desirable. +8.2 Nature of Stock Appreciation Right . A Stock Appreciation Right is an Award entitling a Participant to receive an amount equal to the excess (or if the Committee determines at the time of grant, a portion of the excess) of the Fair Market Value of a Share of Common Stock on the date of exercise of the SAR over the base price, as described below, on the date of grant of the SAR, multiplied by the number of Shares with respect to which the SAR has been exercised. The base price will be designated by the Committee in the Award Agreement for the SAR and shall be not less than 100 percent (100%) of the Fair Market Value of a Share on the grant date of the SAR. +8.3 Exercise . A Stock Appreciation Right may be exercised by a Participant in accordance with procedures established by the Committee. The Committee may also provide that an SAR will be automatically exercised on one or more specified dates or upon the satisfaction of one or more specified conditions. In the case of SARs granted to Reporting Persons, exercise of the SAR will be limited by the Committee to the extent required to comply with the applicable requirements of Rule 16b-3 under the Exchange Act. +8.4 Term . The Award Agreement for each SAR shall have a specified period during which the SAR may be exercised, which is no longer than ten years, as determined by the Committee. +8.5 Form of Payment . Payment upon exercise of a Stock Appreciation Right may be made in cash, in installments, in Shares, or in any combination of the foregoing, or in any other form as the Committee determines . +8.6 Limitation on Number of Shares Subject to SARs . In no event may SARs for more than 500,000 Shares be granted to any individual under the Plan during any fiscal year period. +ARTICLE 9 +RESTRICTED AWARDS +10 +Table of Contents +9.1 Types of Restricted Awards . Restricted Awards granted under the Plan may be in the form of either Restricted Shares or Restricted Units. +(a) Restricted Shares . A Restricted Share is an Award of Shares transferred to a Participant subject to such terms and conditions as the Committee deems appropriate, including, without limitation, restrictions on the sale, assignment, transfer, or other disposition of such Restricted Shares and may include a requirement that the Participant forfeit such Restricted Shares back to Corporation upon termination of Participant’s employment (or service as an Advisor or Non-Employee Director) for specified reasons within a specified period of time or upon other conditions, as set forth in the Award Agreement for such Restricted Shares. Each Participant receiving a Restricted Share will be issued a stock certificate in respect of such Shares, registered in the name of such Participant, or such certificate, registered in the name of such Participant, will be placed in a restricted stock account (including an electronic account) with a transfer agent. If such certificate is issued to the Participant, the Participant will be required to execute a stock power in blank with respect to the Shares evidenced by such certificate, and such certificate and the stock power will be held in custody by Corporation until the Restrictions thereon will have lapsed. +(b) Restricted Units . A Restricted Unit is an Award to receive a Share or the Fair Market Value of a Share at some date in the future, which is granted to a Participant subject to such terms and conditions as the Committee deems appropriate, and may include a requirement that the Participant forfeit such Restricted Units upon termination of Participant’s employment (or service as an Advisor or Non-Employee Director) for specified reasons within a specified period of time or upon other conditions, as set forth in the Award Agreement for such Restricted Units. +9.2 General . Restricted Awards will be subject to the terms and conditions of Article 6 and this Article 9 and may contain such additional terms and conditions, not inconsistent with the express provisions of the Plan, as the Committee (or the Board with respect to Awards to Non-Employee Directors) deems desirable. +9.3 Restriction Period . Restricted Awards will provide that such Awards, and the Shares subject to such Awards, may not be transferred, and may provide that, in order for a Participant to Vest in such Awards, the Participant must remain in the employment (or remain as an Advisor or Non-Employee Director) of Corporation or its Subsidiaries, subject to relief for reasons specified in the Award Agreement, for a period commencing on the date of the Award and ending on such later date or dates as the Committee designates at the time of the Award (the “Restriction Period”). During the Restriction Period, a Participant may not sell, assign, transfer, pledge, encumber, or otherwise dispose of Shares received under or governed by a Restricted Award grant. The Committee, in its sole discretion, may provide for the lapse of restrictions in installments during the Restriction Period. Upon expiration of the applicable Restriction Period (or lapse of Restrictions during the Restriction Period where the Restrictions lapse in installments) the Participant shall be entitled to settlement of the Restricted Award or portion thereof, as the case may be. Although Restricted Awards will usually Vest based on continued employment (or service as an Advisor or Non-Employee Director) and Performance Awards under Article 10 shall usually Vest based on attainment of Performance Goals, the Committee, in its discretion, may condition Vesting of Restricted Awards on attainment of Performance Goals as well as continued employment (or service as an Advisor or Non-Employee Director). In such case, the Restriction Period for such a Restricted Award will include the period prior to satisfaction of the Performance Goals. +9.4 Forfeiture . If a Participant ceases to be an employee, Advisor of Corporation or a Subsidiary or Non-Employee Director during the Restriction Period for any reason other than reasons which may be specified in an Award Agreement (such as death, Disability, or Retirement), the Award Agreement may require that all non-Vested Restricted Awards previously granted to the Participant be forfeited and returned to Corporation. +9.5 Settlement of Restricted Awards. +(a) Restricted Shares . Upon Vesting of a Restricted Share Award, the legend on such Shares will be removed and the Participant’s stock power, if any, will be returned and the Shares will no longer be Restricted Shares. The Committee may also, in its discretion, permit a Participant to receive, in lieu of unrestricted Shares at the conclusion of the Restriction Period, payment in cash, installments, or in any other manner or combination of such methods as the Committee, in its sole discretion, determines. +(b) Restricted Units . Upon Vesting of a Restricted Unit Award, a Participant will be entitled to receive payment for Restricted Units in an amount equal to the aggregate Fair Market Value of the Shares covered by such Restricted Units at the expiration of the Applicable Restriction Period. Payment in settlement of a Restricted Unit will be made as soon as practicable following the conclusion of the applicable Restriction Period +11 +Table of Contents +in cash, in installments, in Shares equal to the number of Restricted Units, or in any other manner or combination of such methods as the Committee, in its sole discretion, determines, subject to the applicable restrictions contained in Section 409A of the Code. +9.6 Rights as a Shareholder . A Participant will have, with respect to unforfeited Shares received under a grant of Restricted Shares, all the rights of a shareholder of Corporation, including the right to vote the Shares and the right to receive any cash dividends. The right to receive cash dividends on Restricted Shares shall be subject to the Restrictions applicable to the Restricted Shares. Stock dividends issued with respect to Restricted Shares will be treated as additional Shares covered by the grant of Restricted Shares and will also be subject to the same Restrictions. +ARTICLE 10 +PERFORMANCE AWARDS +10.1 General . Performance Awards will be subject to the terms and conditions set forth in Article 6 and this Article 10 and may contain such other terms and conditions not inconsistent with the express provisions of the Plan, as the Committee (or the Board with respect to Awards to Non-Employee Directors) deems desirable. +10.2 Nature of Performance Awards . A Performance Award is an Award of units (with each unit having a value equivalent to one Share) granted to a Participant subject to such terms and conditions as the Committee deems appropriate, including, without limitation, the requirement that the Participant forfeit such Performance Award or a portion thereof in the event specified performance criteria are not met within a designated period of time. +10.3 Performance Cycles . For each Performance Award, the Committee will designate a performance period (the “Performance Cycle”) with a duration of at least one (1) year, as may be determined by the Committee in its discretion within which specified Performance Goals are to be attained. There may be several Performance Cycles in existence at any one time and the duration of Performance Cycles may differ from each other. +10.4 Performance Goals . The Committee will establish Performance Goals for each Performance Cycle on the basis of such criteria and to accomplish such objectives as the Committee may from time to time select. Performance Goals may be based on performance criteria for Corporation, a Subsidiary, or an operating group, or based on a Participant’s individual performance. Performance Goals may include objective and subjective criteria. During any Performance Cycle, the Committee may adjust the Performance Goals for such Performance Cycle as it deems equitable in recognition of unusual or nonrecurring events affecting Corporation, changes in applicable tax laws or accounting principles, or such other factors as the Committee may determine. +10.5 Determination of Awards . As soon as practicable after the end of a Performance Cycle, the Committee will determine the extent to which Performance Awards have been earned on the basis of performance in relation to the established Performance Goals. +10.6 Timing and Form of Payment . Settlement of earned Performance Awards will be made to the Participant as soon as practicable after the expiration of the Performance Cycle and the Committee’s determination under Section 10.5, in the form of cash, installments, Shares, or any combination of the foregoing or in any other form as the Committee determines. +10.7 Performance Goals for Executive Officers . The performance goals for Performance Awards granted to executive officers of Corporation may relate to corporate performance, business unit performance, or a combination of both. +(a) Corporate performance goals will be based on financial performance goals related to the performance of Corporation as a whole and may include one or more measures related to earnings, profitability, efficiency, or return to stockholders such as earnings per share, operating profit, stock price, costs of production, or other measures. +(b) Business unit performance goals will be based on a combination of financial goals and strategic goals related to the performance of an identified business unit for which a Participant has responsibility. Strategic goals for a business unit may include one or a combination of objective factors relating to success in implementing strategic plans or initiatives, introductory products, constructing facilities, or other identifiable objectives. Financial goals for a business unit may include the degree to which the business unit achieves one +12 +Table of Contents +or more objective measures related to its revenues, earnings, profitability, efficiency, operating profit, costs of production, or other measures. +(c) Any corporate or business unit goals may be expressed as absolute amounts or as ratios or percentages. Success may be measured against various standards, including budget targets, improvement over prior periods, and performance relative to other companies, business units, or industry groups. +10.8 Award Limitations . The maximum number of Shares issuable with respect to Performance Awards granted to any individual executive officer may not exceed 150,000 Shares for any calendar year. +ARTICLE 11 +OTHER STOCK-BASED AND COMBINATION AWARDS +11.1 Other Stock-Based Awards . The Committee (or the Board with respect to Awards to Non-Employee Directors) may grant other Awards under the Plan pursuant to which Shares are or may in the future be acquired, or Awards denominated in or measured by Share equivalent units, including Awards valued using measures other than the market value of Shares. Such Other Stock-Based Awards may be granted either alone, in addition to, or in tandem with, any other type of Award granted under the Plan. +11.2 Combination Awards . The Committee may also grant Awards under the Plan in tandem or combination with other Awards or in exchange of Awards, or in tandem or combination with, or as alternatives to, grants or rights under any other employee plan of Corporation, including the plan of any acquired entity. No action authorized by this section may reduce the amount of any existing benefits or change the terms and conditions thereof without the Participant’s consent. +ARTICLE 12 +DEFERRAL ELECTIONS +The Committee may permit a Participant to elect to defer receipt of the payment of cash or the delivery of Shares that would otherwise be due to such Participant by virtue of the exercise, earn-out, or Vesting of an Award made under the Plan. If any such election is permitted, the Committee will establish rules and procedures for such payment deferrals, including, but not limited to: (a) payment or crediting of reasonable interest on such deferred amounts credited in cash or (b) the payment or crediting of dividend equivalents in respect of deferrals credited in Share equivalent units. Such deferrals, if permitted, shall to the extent possible, comply with Section 409A of the Code and the regulations and other guidance promulgated thereunder. +ARTICLE 13 +ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, ETC. +13.1 Plan Does Not Restrict Corporation . The existence of the Plan and the Awards granted hereunder will not affect or restrict in any way the right or power of the Board or the shareholders of Corporation to make or authorize any adjustment, recapitalization, reorganization, or other change in Corporation’s capital structure or its business, any merger or consolidation of the Corporation, any issue of bonds, debentures, preferred or prior preference stocks ahead of or affecting Corporation’s capital stock or the rights thereof, the dissolution or liquidation of Corporation or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding. +13.2 Adjustments by the Committee . In the event of any change in capitalization affecting the Common Stock of Corporation, such as a stock dividend, stock split, recapitalization, merger, consolidation, split-up, combination or exchange of shares or other form of reorganization, or any other change affecting the Common Stock, such proportionate adjustments, if any, as the Committee, in its sole discretion, may deem appropriate to reflect such change, will be made with respect to the aggregate number of Shares for which Awards in respect thereof may be granted under the Plan, the maximum number of Shares which may be sold or awarded to any Participant, the number of Shares covered by each outstanding Award, and the price per Share in respect of outstanding Awards. The Committee may also make such adjustments in the number of Shares covered by, and price or other value of any outstanding Awards in the event of a spin-off or other distribution (other than normal cash dividends), of Corporation assets to shareholders. +ARTICLE 14 +AMENDMENT AND TERMINATION +13 +Table of Contents +The Board may amend, suspend, or terminate the Plan or any portion of the Plan at any time; provided that no such action may be taken without shareholder approval if (i) such action would increase the number of shares subject to the Plan; (ii) such action would result in the repricing, replacement or repurchase of out-of-the money Options, Stock Appreciation Rights or other Awards; (iii) such action would result in an Award being fully Vested, exercisable or earned in the event of a Change in Control prior to the consummation of the Change in Control; or (iv) such approval is required by applicable law or regulation or the applicable requirements of a stock exchange or over-the-counter stock trading system; provided further that the Board may, in its discretion, determine to submit any other changes to the Plan to the shareholders for approval; provided further that no amendment, suspension or termination of the Plan may materially and adversely affect the rights of a Participant under any outstanding Award without such Participant’s consent, unless such action is necessary to ensure a deduction under Section 162(m) of the Code or to avoid the additional tax described in Section 409A of the Code. +ARTICLE 15 +MISCELLANEOUS +15.1 Unfunded Plan . The Plan will be unfunded and Corporation will not be required to segregate any assets that may at any time be represented by Awards under the Plan. Any liability of Corporation to any person with respect to any Award under the Plan will be based solely upon any contractual obligations that may be effected pursuant to the Plan. No such obligation of Corporation will be deemed to be secured by any pledge of, or other encumbrance on, any property of Corporation. +15.2 Payments to Trust . The Committee is authorized (but has no obligation) to cause to be established a trust agreement or several trust agreements whereunder the Committee may make payments of amounts due or to become due to Participants in the Plan. +15.3 Other Corporation Benefit and Compensation Programs . Payments and other benefits received by a Participant under an Award made pursuant to the Plan will not be deemed a part of a Participant’s regular, recurring compensation for purposes of the termination, indemnity or severance pay law of any state or country and shall not be included in, or have any effect on, the determination of benefits under any other employee benefit plan or similar arrangement provided by Corporation or a Subsidiary unless expressly so provided by such other plan or arrangements, or except where the Committee expressly determines that an Award or portion of an Award should be included to accurately reflect competitive compensation practices or to recognize that an Award has been made in lieu of a portion of cash compensation. Awards under the Plan may be made in combination with or in tandem with, or as alternatives to, grants, awards, or payments under any other Corporation or Subsidiary plans, arrangements, or programs. The Plan notwithstanding, Corporation or any Subsidiary may adopt such other compensation programs and additional compensation arrangements as it deems necessary to attract, retain, and reward employees and directors for their service with Corporation and its Subsidiaries. +15.4 Securities Law Restrictions . No Shares may be issued under the Plan unless counsel for Corporation is satisfied that such issuance will be in compliance with applicable federal and state securities laws. Certificates for Shares delivered under the Plan may be subject to such stop-transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations, and other requirements of the Securities and Exchange Commission, any stock exchange upon which the Common Stock is then listed, and any applicable federal or state securities law. The Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions. +15.5 Governing Law . Except with respect to references to the Code or federal securities laws, the Plan and all actions taken thereunder shall be governed by and construed in accordance with the laws of the state of Delaware. +ARTICLE 16 +SHAREHOLDER APPROVAL +The Plan, as amended and restated, is expressly subject to the approval of the Plan by the shareholders at the 2024 annual meeting of Corporation’s shareholders. +14 +Table of Contents +15 +Table of Contents \ No newline at end of file diff --git a/raw/proxies/0001116463/0001116463-24-000022/proxy_rpt.txt b/raw/proxies/0001116463/0001116463-24-000022/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..140a0448eb4c93b81039b3b3b7195b7293780d10 --- /dev/null +++ b/raw/proxies/0001116463/0001116463-24-000022/proxy_rpt.txt @@ -0,0 +1,5 @@ +TRANSACTIONS WITH RELATED PERSONS +Since January 1, 2023, there have been no transactions with related persons that would require disclosure in this Proxy Statement. The Audit Committee is required to review and approve in advance all transactions with related persons involving the Company. The Audit Committee may approve a related party transaction if the transaction is on terms comparable to those that could be obtained in arms’ length dealings with an unrelated third party. The Audit Committee also reviews any public disclosures of a related party transaction contained in our SEC filings. These responsibilities are described in the Audit Committee’s charter, a copy of which is available on our website at www.orasure.com . +Information regarding employment, severance and retirement agreements between our executive officers and the Company is set forth in the Section entitled, “Employment Agreements and Potential Payments Upon Termination or Change of Control,” in this Proxy Statement. +30 +Table of Contents \ No newline at end of file diff --git a/raw/proxies/0001116463/0001116463-25-000025/proxy.txt b/raw/proxies/0001116463/0001116463-25-000025/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..079954db2615fd037977046b5a2269d24fe4bb2d --- /dev/null +++ b/raw/proxies/0001116463/0001116463-25-000025/proxy.txt @@ -0,0 +1,2398 @@ +osur-20250402 +0001116463 DEF 14A false iso4217:USD 0001116463 2024-01-01 2024-12-31 0001116463 osur:CarrieEglintonMannerMember 2024-01-01 2024-12-31 0001116463 osur:CarrieEglintonMannerMember 2023-01-01 2023-12-31 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+SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Proxy Statement Pursuant to Section 14(a) +of the Securities Exchange Act of 1934 +Filed by the Registrant x Filed by a Party other than the Registrant o +Check the appropriate box: +o +Preliminary Proxy Statement +o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +x +Definitive Proxy Statement +o Definitive Additional Materials +o +Soliciting Material under §240.14a-12 +OraSure Technologies, Inc. +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check all boxes that apply): +x No fee required. +o Fee paid previously with preliminary materials +o Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11 +Table of Contents +Proxy Statement +Notice of Annual Meeting of Stockholders +2025 Wednesday, May 14, 2025 ● 10:00 a.m. (Eastern Time) +Table of Contents +Letter to the Stockholders +Carrie Eglinton Manner +Chief Executive Officer (“CEO”) +April 4, 2025 +Dear Fellow Stockholders: +At OTI, we have a vision to transform health through actionable insights, and power the shift that connects people to healthcare wherever they are. During the past year, we made significant advancements on our strategic transformation, which allows us to continue to execute on that vision. +We’ve rebuilt our cash balance and achieved our target of operating cash flow break-even for the core business, ultimately strengthening our foundation. It is our stronger foundation that is enabling us to advance our internal innovation roadmap and invest in external innovation, both of which contribute to our strategy to expand our portfolio of diagnostic tests and sample management solutions. In the past year we invested in consumer diagnostics company Sapphiros, partnered with Diagnostics Direct for syphilis testing, acquired Sherlock Biosciences for molecular diagnostics capabilities, and announced plans to launch a blood proteomics solution in 2025. +We also made significant progress on our plan to in-source manufacturing efforts to the U.S. by the end of 2025, including those currently completed by contract manufacturers in Canada. This initiative will further consolidate our operational footprint, which is expected to lower costs and increase efficiency. +As we move through 2025, we are well positioned to profitably power the shift that connects people to better healthcare despite headwinds from uncertainty in our external landscape, such as government funding for critical public health programs and impacts of tariffs. I am confident that we will continue to execute on our mission while providing value for our stockholders. +We will hold our 2025 Annual Meeting of Stockholders (the “Annual Meeting”) of OraSure Technologies, Inc. (the “Company”) on Wednesday, May 14, 2025 at 10:00 a.m. (Eastern Time) . This year’s Annual Meeting will (again) be a virtual meeting, conducted as a live webcast. You will be able to attend the Annual Meeting online, vote your shares electronically if you wish, and submit your questions during the meeting by visiting www.virtualshareholdermeeting.com/OSUR2025. +Pursuant to the Securities and Exchange Commission rule allowing companies to furnish proxy materials to their stockholders over the internet, a Notice of Internet Availability of Proxy Materials (the “Notice”) will be sent to stockholders on or about April 4, 2025. The Notice contains information on how to access copies of the proxy materials and vote your shares. +Table of Contents +NOTICE OF 2025 ANNUAL MEETING OF STOCKHOLDERS OF ORASURE TECHNOLOGIES, INC. +DATE AND TIME +Wednesday, May 14, 2025 +10:00 a.m. (Eastern Time) +To be held virtually by visiting: +www.virtualshareholdermeeting.com/OSUR2025 +ITEMS OF BUSINESS +The 2025 Annual Meeting of Stockholders will be held for the following purposes: +1. To elect three (3) Class I Directors to serve for a term expiring at the Company’s Annual Meeting of Stockholders in 2028; +2. To ratify the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2025; +3. To approve, by an advisory (non-binding) vote, the compensation of the Company’s named executive officers as disclosed in the Proxy Statement accompanying this Notice; +4. To approve an amendment and restatement of the Company’s Stock Award Plan to increase the number of shares of Common Stock authorized to be granted under the Plan; +5. To consider such other business as may properly come before the meeting, and any adjournment(s) or postponement(s) thereof. +HOW TO VOTE +Via the Internet . Go to www.proxyvote.com to vote your shares online prior to the Annual Meeting. Have the control number that is printed in your Notice of Internet Availability of Proxy Materials or Proxy Card available and follow the instructions. You may also vote online during the Annual Meeting by going to www.virtualshareholdermeeting.com/OSUR2025 and following the instructions. +By Phone . Call the toll-free number on your Notice of Internet Availability of Proxy Materials or Proxy Card and follow the prompts. +By Mail . You can vote by mail by requesting a paper copy of the materials, which will include a Proxy Card. Please review your Notice of Internet Availability of Proxy Materials for instructions on how to request a paper copy of the materials. Mark, sign and date your Proxy Card and return it as indicated on the Proxy Card. +NOTICE OF 2025 ANNUAL MEETING OF STOCKHOLDERS OF ORASURE TECHNOLOGIES, INC. +Who Can Vote : Only holders of shares of the Company’s Common Stock of record at the close of business on March 21, 2025 will be entitled to vote at the Annual Meeting of Stockholders and any adjournment(s) or postponement(s) thereof. Additional information is included in the Proxy Statement accompanying this Notice. +A complete list of stockholders entitled to vote at the meeting will be available for examination by any stockholder for any purpose germane to the meeting beginning 10 days before the meeting at the Company’s headquarters at 220 East First Street, Bethlehem, PA 18015 during ordinary business hours. In addition, such list will be available for inspection during the meeting in the virtual meeting room at: www.virtualshareholdermeeting.com/OSUR2025 . +By Order of the Board of Directors, +Stefano Taucer +Secretary +April 4, 2025 +Table of Contents +Proxy Statement Table of Contents +Proxy Statement Summary +1 +2025 Annual Meeting Information +1 +Proposals for Stockholder Consideration +1 +2024 Performance Highlights +3 +Most Significant Compensation Components +4 +Key Features of our Executive Compensation Program +5 +Questions And Answers About the 2025 Annual Meeting And Voting +6 +Why Did I Receive These Proxy Materials? +6 +What is a Proxy +6 +What is the Record Date and What Does It Mean? +6 +What is the Difference Between a Stockholder of Record and a Stockholder Who Holds Stock in Street Name? +6 +How Can I Vote My Shares for the Annual Meeting? +7 +How Will my Shares Be Voted if I Send In a Proxy +7 +Will My Shares Be Voted if I Do Not Provide My Proxy? +7 +How Many Shares Must Be Present to Hold The Annual Meeting? +8 +How Can I Revoke a Proxy +8 +What Items Will Be Voted On At The Annual Meeting? +8 +Who Will Pay the Cost of this Proxy Solicitation? +8 +How Can I Participate in the Annual Meeting? +9 +What If I Have Technical Difficulties or Trouble ACCESSING The Virtual Meeting +9 +Are Votes Confidential? +9 +Who Counts the Votes? +9 +May Stockholders Ask Questions At The Annual Meeting? +9 +Stock Ownership of Certain Beneficial Owners and Management +10 +Corporate Governance +11 +Board Responsibilities, Operation and Composition +11 +Governance Guidelines and Code of Conduct +11 +Environmental, Social and Governance Issues +12 +Independent Board Chairperson +14 +Director Independence +14 +Oversight of Risk Management +15 +Annual Meeting Attendance and Stockholder Communications +15 +Committees of the Board +15 +Nomination of Directors +18 +Director Qualifications +18 +Insider Trading +19 +Prohibition against Short Sales, Hedging and Pledging +19 +Stock Ownership and Retention Guidelines +20 +Audit Committee Matters +20 +Report of the Audit Committee for the year ended December 31, 2024 +20 +Audit Fees; Audit Related Fees; Tax Fees; all Other Fees +21 +Change in Independent Registered Public Accounting Firm +22 +Compensation Committee Matters +23 +Compensation Processes and Procedures +23 +Table of Contents +Annual Performance Evaluations +23 +Role of the Compensation Committee +24 +Role of the CEO +24 +Role of the Compensation Consultant +24 +Compensation Committee Interlocks and Insider Participation +25 +Compensation Committee Report +25 +Executive Officers +26 +Transactions with Related Persons +28 +Compensation Discussion and Analysis +30 +Employment Agreements and Potential Payments Upon Termination or Change of Control +57 +CEO Pay Ratio +61 +Pay Versus Performance +62 +Stock Award Plan Information +67 +Director Compensation +67 +Annual Fees +67 +Initial and Annual Equity Awards +68 +Equity Award Terms +68 +Deferred Compensation +69 +Director Compensation During 2024 +69 +Proposals Requiring Your Vote +70 +Proposal No. 1. Election of Directors +70 +Proposal No. 2. Ratification of Appointment of Independent Registered Public Accounting Firm +74 +Proposal No. 3. Advisory (Non-Binding) Vote to Approve Executive Compensation +75 +Proposal No. 4 . Amendment and Restatement of Stock Award Plan +76 +Annual Report +82 +Deadline for Stockholder Proposals +83 +Table of Contents +PROXY STATEMENT SUMMARY +We are providing these proxy materials to stockholders of OraSure Technologies, Inc., a Delaware corporation (as used herein, “we,” “us,” “our”, “OraSure”, "OTI" or the “Company”), and we are first making available or mailing the materials on or about April 4, 2025, in connection with the Company’s solicitation of proxies (each, a “Proxy”) for use at the Annual Meeting of Stockholders to be held on Wednesday, May 14, 2025 at 10:00 a.m. (Eastern Time), and at any adjournment(s) or postponement(s) thereof (the “Annual Meeting”). +As a stockholder, you are invited to participate in the Annual Meeting and are requested to vote on the matters described in this Proxy Statement. The +Annual Meeting will be conducted in a completely virtual manner through a live webcast that you can access online by going to www.virtualshareholdermeeting.com/OSUR2025 . The webcast will not include a presentation by management. A question and answer session will be provided at the Annual Meeting only for questions that are germane to the matters being discussed and voted on at the meeting. +This summary highlights information contained elsewhere in this Proxy Statement but does not contain all of the information that you should consider. You should read the entire Proxy Statement carefully before voting your shares. +2025 ANNUAL MEETING INFORMATION +• Date and Time: Wednesday, May 14, 2025 at 10:00 a.m. (Eastern Time) +• Location: Online by visiting www.virtualshareholdermeeting.com/OSUR2025 +• Record Date: March 21, 2025 +PROPOSALS FOR STOCKHOLDER CONSIDERATION +Proposal No. 1 – Election of Directors +The table below provides summary information about each of our nominees for Class I Directors, whose new terms will expire at the 2028 Annual Meeting of Stockholders. The Board of Directors (the “Board”) is recommending that stockholders vote for each Director nominee. +Committee +Memberships 1 +Other +Public +Boards +Name and Principal Occupation Age Director +Since Independent AC CC N& +CG +Carrie Eglinton Manner +President and CEO, OraSure Technologies, Inc. 51 +2022 +No +No +No +No +Yes +David J. Shulkin, M.D. +President and CEO, Shulkin Solutions, Inc. 65 2020 Yes +No +√ +No +No +John P. Kenny +Former CEO, Meridian Bioscience +57 +2024 +Yes No √ √ +Yes +______________________ +1 AC = Audit Committee; CC = Compensation Committee; N&CG = Nominating & Corporate Governance Committee; C = Chairperson; √ = Member. +1 +Table of Contents +Proposal No. 2 – Ratification of Appointment of Independent Registered Public Accounting Firm +Our Audit Committee has selected Grant Thornton LLP (“GT”) to be our independent registered public accounting firm for the 2025 fiscal year. The Board believes GT is well qualified to serve in this capacity and is recommending that the engagement of GT be ratified by our stockholders. The Board is recommending that stockholders vote for the appointment of GT as provided above. +Proposal No. 3 – Advisory (Non-Binding) Vote to Approve Executive Compensation +Our compensation program is designed to focus and reward our executives for balancing both short and long-term priorities. To fulfill this mission, we have adopted a pay-for-performance philosophy that forms the foundation for executive compensation decisions made by our Board and the Compensation Committee of the Board (the “Compensation Committee”). +The Compensation Discussion and Analysis portion of this Proxy Statement (the “CD&A”) contains a detailed description of our executive compensation philosophy and program, the compensation decisions the Board and Compensation Committee have made under that program and the factors considered in making those decisions, focusing on the compensation of our named executive officers (“NEOs”) for the year ended December 31, 2024, who were: +Name Position(s) +Carrie Eglinton Manner President and CEO +Kenneth McGrath Chief Financial Officer +Kathleen G. Weber Chief Product Officer +As described further in the CD&A and elsewhere in this Proxy Statement, the following should be considered by stockholders in evaluating the compensation of our NEOs for 2024: +• We strengthened the foundation of the business by re-balancing its cost structure, consolidating sites, exiting unprofitable, non-strategic businesses, increasing profitability, delivering earlier than anticipated breakeven cash flow from operations for our core business, bolstering our healthy balance sheet, and expanding our innovation pipeline internally and with external collaboration and acquisition to accelerate future growth. +• OraSure is a diverse portfolio business operating in highly competitive and evolving healthcare market segments; the Company made significant progress in its strategic transformation in 2024 while fulfilling its contract obligations to the U.S. Government in service of the COVID-19 pandemic. +• The Compensation Committee applied no positive discretion in determining performance and payouts for our NEOs. +• We regularly solicit input from our stockholders on executive compensation matters. As discussed in the Say-on-Pay Results in 2024, Stockholder Feedback and Company Response section of this Proxy Statement, we continued our robust stockholder engagement program and integrated the feedback we received from investors into our executive compensation program. We plan to continue to engage with our stockholders in the future to help ensure that our executive compensation programs are well understood by our stakeholders and that we remain responsive to stockholder feedback. +• We maintain and adhere by a full suite of good governance policies and processes. +The Board is recommending that stockholders vote in favor of the compensation of our NEOs, as described in this Proxy Statement. +Proposal No. 4 – Amendment and Restatement of Stock Award Plan +In order to enable the Company to continue to attract qualified directors, officers, employees and outside advisors, and to compensate these individuals in a manner that is competitive with compensation provided by other medical diagnostic and healthcare companies, the Board has determined that additional shares of Common Stock are needed to be available for grants under the Company’s Stock Award Plan. In addition, the +2 +Table of Contents +Board wants to ensure that sufficient shares are available, if needed, to provide retention or other equity awards in connection with potential acquisitions or other business development activities. +Accordingly, subject to stockholder approval, the Board approved an amendment and restatement of the OraSure Technologies, Inc. Stock Award Plan (last amended and restated, May 14, 2024) (the “Stock Award Plan” or the “Plan”) to increase the number of shares to be authorized for grant under the Plan by 6,000,000 shares. This increase will be sufficient for the granting of equity awards under the Amended and Restated Stock Award Plan for approximately one additional year (i.e. for grants through 2026). On and after March 24, 2025, as a result of this increase, there will be a total of 6,196,597 shares available in the Plan for future issuance, subject to stockholder approval. A copy of the Amended and Restated Stock Award Plan reflecting this amendment is attached as Exhibit A to this Proxy Statement. +2024 PERFORMANCE HIGHLIGHTS +In 2024, we continued to delivered meaningful progress on our three pillars of strategic transformation to: +1) Strengthen our foundation; +2) Elevate growth in our core business; and +3) Accelerate profitable growth. +Notable highlights in 2024 include: +• We generated $27 million of Cash Flow from Operations. +• Our core business delivered positive cash flow from operations in Q3 and Q4, which was slightly earlier than our previously stated target. +• We drove $24.5M of annualized run rate cost savings in 2024. +• Diagnostic revenues grew 3% year-over-year in 2024 after delivering 41% growth in 2023. Sample Management Solutions revenues declined 6% year-over-year in 2024 as a result of continuing headwinds in some of our end markets and the macroeconomy. +• With our strong balance sheet, we expanded our innovation pipeline by investing in our internal R&D roadmap and external opportunities to increase our product portfolio in order to accelerate our long-term growth rate. +• We completed the acquisition of Sherlock Biosciences, Inc. in December, which we expect will allow us to enter the molecular testing space with a versatile diagnostics platform for assay development, including an initial disposable rapid molecular test for Chlamydia Trachomatis (CT) and Neisseria Gonorrhoeae (NG). +• We launched a strategic partnership with our investment in Sapphiros and associated distribution relationship securing exclusive distribution rights to certain products in the Sapphiros development pipeline, including self-collected blood devices and diagnostic tests. +• We signed a strategic agreement with Diagnostics Direct to distribute Syphilis Health Check, the first CLIA-waived treponemal test. +• We received FDA approval for a labeling change to the OraQuick® HIV Self-Test that increases access to HIV testing for adolescents. The change expands the approved age range for the OraQuick® HIV Self-Test to include individuals 14 years of age and older. Previously the test was approved for use in those 17 and older. +• We achieved prequalification status from the World Health Organization for our OraQuick® HCV Self-test, representing the first Hepatitis C self-test to earn this designation. +• We executed on our COVID-19 contracts which tapered down during the year and generated $45 million in revenues. +• We continued to streamline our operating footprint and our cost structure in order to focus our resources in markets that offer the most attractive opportunities for profitable growth and that align with our core strengths in rapid diagnostics and sample management solutions. +• We commenced projects to insource production of certain sample management products from external contract manufacturers into our manufacturing Center of Excellence in Bethlehem, PA. Upon completion in 2025, this transition is expected to result in meaningful cost savings through improved operating efficiency and further leveraging of our existing infrastructure. +• In the fourth quarter of 2024, we announced the discontinuance of sales of our risk assessment testing product line which is expected to be completed in the first half of 2025. +• We exited our Molecular Services business offered by our Diversigen, Inc. subsidiary and wound down our facilities in Belgium in order to further streamline our cost structure. +3 +Table of Contents +MOST SIGNIFICANT COMPENSATION COMPONENTS +We have structured the components of our executive compensation program to be directly tied to the performance of both the Company and our executives and aligned with the best interests of our stockholders. These components consist of the following: +Base Salary Salaries are based on the individual executive’s position relative to market and the executive’s individual performance and contribution. +Annual Cash Incentive Plan Bonuses ("OTIP") +Annual incentive cash bonuses through our OraSure Technologies Incentive Plan (“OTIP”) reflect market-based targets with individual bonus payouts and are contingent upon (i) our achievement of corporate financial and/or strategic objectives, and (ii) the executive’s individual performance against pre-determined objectives. +Equity Awards under our Long-Term Incentive Policy (“LTIP”) Long-term incentive equity compensation reflects market-based targets with the value of individual awards contingent upon each executive’s individual performance against pre-determined objectives during the fiscal year prior to award. Fifty percent (50%) of each NEO’s annual LTIP award consists of performance-vested restricted units (“PRUs”) which require achievement of certain financial performance measures selected by the Board and Compensation Committee and the satisfaction of a 3-year service period for vesting of the award. The other fifty percent (50%) consists of time-vested restricted stock (“RS”) which vests in equal installments over a three-year service period. +4 +Table of Contents +KEY FEATURES OF OUR EXECUTIVE COMPENSATION PROGRAM +Key features of our compensation program illustrate our commitment to pay-for-performance, the strong alignment of our executives’ interests with those of our stockholders, and strong corporate governance. Several of the more significant of these features are summarized below: +• Compensation is market driven with total compensation of our executives targeted at the 50 th percentile of the Company’s peer group (as set forth in the CD&A) (the “Peer Group”). +• Regular stockholder outreach on compensation and governance matters. +• Compensation is predominantly variable or performance based. +• Use of a third-party compensation consultant to provide executive compensation market assessment and independent advice on compensation matters. +• Balanced mix of cash/equity, fixed/variable, short-term/long-term compensation components. +• Strong stock ownership/retention requirements for executives and Directors. +• In order to incentivize growth, performance objectives for annual bonus incentives target key financial measures and/or important strategic goals. +• As a general matter, no perquisites for NEOs that are not offered to all employees of the Company. +• The Board’s discretionary ability to adjust annual incentive bonus payment is limited to +/- 10% in order to avoid excessive discretionary bonus adjustments. The Compensation Committee and Board may further adjust the annual incentive bonus downward based on profitability and cash liquidity needs of the Company. +• Use of peer company benchmarking to provide market-based context for compensation decisions. +• Long-term equity incentive awards include 50% PRUs that vest based on (i) three-year cumulative revenue, (ii) three-year relative total stockholder return (“rTSR”) and (iii) three years of continued service. +• Compensation recoupment or “clawback” policy, which exceeds the minimum SEC requirements, under which we are required to recover excess compensation paid to an executive, or any other person designated by the Board, if our financial statements are restated. +• No excise tax gross-up in any of our NEO employment agreements and no “single trigger” change-in-control severance in any of our new executive employment agreements. +• No hedging or pledging of our Common Stock. +5 +Table of Contents +QUESTIONS AND ANSWERS ABOUT THE 2025 ANNUAL MEETING AND VOTING +1.   WHY DID I RECEIVE THESE PROXY MATERIALS? +Our Board of Directors (the “Board”) is furnishing proxy materials, including this Proxy Statement, a Proxy Card and the Company’s Annual Report to Stockholders for the year ended December 31, 2024 (the “2024 Annual Report”), to our stockholders in order to solicit proxies to be voted at the Annual Meeting (each, a “Proxy”). On or about April 4, 2025, we will mail a Notice of Internet Availability of Proxy Materials (the “Notice”) to each stockholder at the holder’s address of record, indicating that this Proxy Statement is now available to our stockholders of record entitled to vote at the Annual Meeting. Please carefully review this Proxy for information on the matters to be presented at the Annual Meeting and for instructions on how to vote your shares. Our 2024 Annual Report, including financial statements for such +period, does not constitute any part of the material for the solicitation of proxies, but copies are available to stockholders upon request. +Securities and Exchange Commission (“SEC”) rules permit us to deliver only one copy of the Notice or a single set of proxy materials to multiple stockholders sharing the same address. Upon written or oral request, we will deliver separate Notices and/or copies of our 2024 Annual Report and/or this Proxy Statement to any stockholder at a shared address to which a single copy of the Notice was delivered. Stockholders may notify the Company of their requests by calling or writing us at OraSure Technologies, Inc., 220 East First Street, Bethlehem, Pennsylvania 18015, Attention: Corporate Secretary; (610) 882-1820. +2.   WHAT IS A PROXY? +A Proxy is your legal designation of another person to vote the shares of Common Stock you own. That other person is called a “proxy.” If you designate someone as your proxy in a written document, that document also is called a Proxy or a Proxy Card. +Carrie Eglinton Manner and Stefano Taucer, each of whom are officers of the Company, have been designated by the Board as proxies to vote on behalf of stockholders for the Annual Meeting. +3.   WHAT IS THE RECORD DATE AND WHAT DOES IT MEAN? +The record date for the Annual Meeting is March 21, 2025 (the “record date”). The record date is established by the Board as required by Delaware law. Only stockholders of record at the close of business on the record date are entitled to: +(a) receive notice of the Annual Meeting; and +(b) vote at the Annual Meeting and any adjournment(s) or postponement(s) of the meeting. +Each stockholder of record on the record date is entitled to one vote for each share of Common Stock held. +On the record date, there were 77,488,414 shares of our Common Stock outstanding and entitled to vote at the Annual Meeting. +A list of stockholders will be open for examination by any stockholder for any purpose germane to the Annual Meeting for a period of 10 days prior to the meeting at our principal executive offices at 220 East First Street, Bethlehem, PA 18015, and electronically during the Annual Meeting at www.virtualshareholdermeeting.com/OSUR2025 when you enter the control number provided in the Notice sent to you. +4.   WHAT IS THE DIFFERENCE BETWEEN A STOCKHOLDER OF RECORD AND A STOCKHOLDER WHO HOLDS STOCK IN STREET NAME? +If your shares of stock are registered in your name on the books and records of our transfer agent, Computershare, Inc., you are a stockholder of record. +If your shares of stock are held for you in the name of your broker, bank or other nominee, your shares are held in “street name.” The answer to Question 7 describes brokers’ discretionary voting +6 +Table of Contents +authority and when your broker, bank or other nominee is permitted to vote your shares of stock without instructions from you. +It is important that you vote your shares if you are a stockholder of record and, if you hold +shares in street name, that you provide appropriate voting instructions to your broker, bank or other nominee as discussed in the answer to Question 7. +5.   HOW CAN I VOTE MY SHARES FOR THE ANNUAL MEETING? +All stockholders have a choice of voting via the internet, over the telephone or by completing and mailing a paper Proxy Card, as described below. +Voting via the Internet or by Telephone. Stockholders of record desiring to vote online via the internet or by telephone prior to the Annual Meeting, should go to www.proxyvote.com or call the toll-free number indicated on the Proxy Card or Notice. You may vote via the internet or by telephone provided you do so by 11:59 p.m. (Eastern Time) (8:59 p.m. Pacific Time) on Tuesday, May 13, 2025. Stockholders who attend the Annual Meeting via the internet may vote their shares at that time up to and during the Annual Meeting by following the instructions at www.virtualshareholdermeeting.com/OSUR2025 . +Street name holders may vote via the internet or by telephone if their brokers, banks or other nominees make those methods available. If that is the case, each broker, bank or nominee will include instructions with the Notice or Proxy Statement. +The telephone and internet voting procedures, including the use of control numbers, are designed to +authenticate your identity, to allow you to give your voting instructions and to confirm that your instructions have been recorded properly. +If you vote via the internet, you should understand that you will be responsible for any costs associated with this method of voting, such as usage charges from internet access providers and telephone companies. +Voting by Mail . If you desire to vote prior to the Annual Meeting by mail by using a paper Proxy Card instead of by telephone or via the internet, you will need to follow the instructions in your Notice that will be mailed to you. You will then need to complete, sign, date and return the Proxy Card, as described on the Proxy Card. Street name holders should complete and return the voting card provided by their broker, bank or nominee. +Voting at the Annual Meeting. All stockholders of record may vote online during the Annual Meeting, as described above. Submitting a Proxy via the internet, over the telephone or by mail will not affect your right to withdraw your Proxy and vote during the Annual Meeting. +6.   HOW WILL MY SHARES BE VOTED IF I SEND IN A PROXY? +If you are represented by a properly executed Proxy, whether delivered by phone, the internet or mail, your shares will be voted in accordance with your instructions. +If you do not provide instructions with your Proxy, your shares will be voted according to the recommendations of our Board as stated on the Proxy. +7.   WILL MY SHARES BE VOTED IF I DO NOT PROVIDE MY PROXY? +Stockholders of Record : If you are a stockholder of record, your shares will not be voted if you do not provide your Proxy, unless you vote online during the Annual Meeting. It is, therefore, important that you vote your shares. +Street Name Holders : If your shares are held in street name and you do not provide your signed and dated voting instruction form to your bank, broker or other nominee, your shares may be voted by your broker, bank or other nominee but only under certain +circumstances. Specifically, under rules of the New York Stock Exchange, which also apply to companies listed on the Nasdaq Stock Exchange (“Nasdaq”), shares held in the name of your broker, bank or other nominee may be voted by your broker, bank or other nominee on certain “routine” matters if you do not provide voting instructions. +At the upcoming Annual Meeting, only the ratification of the selection of Grant Thornton LLP as the Company’s independent registered public accounting firm is considered a “routine” matter for +7 +Table of Contents +which brokers, banks or other nominees may vote uninstructed shares. The other proposals to be voted on at our Annual Meeting (specifically, the election of each of the Director nominees, the advisory vote to approve the compensation of the Company’s NEOs, and the vote to approve the amendment and restatement of the Company’s Stock Award Plan are not considered “routine”, so the broker, bank or other +nominee cannot vote your shares on any of these proposals unless you provide to the broker, bank or other nominee voting instructions for each of these matters. If you do not provide voting instructions on these matters, your shares will not be voted on the matter, which is referred to as a “broker non-vote.” It is, therefore, important that you vote your shares. +8.   HOW MANY SHARES MUST BE PRESENT TO HOLD THE ANNUAL MEETING? +Your shares are counted as present at the meeting if you attend the meeting and vote online or if you properly return a Proxy by internet, telephone or mail. In order for us to conduct our Annual Meeting, a majority of our outstanding shares of Common Stock +as of the record date, must be present online or by Proxy at the meeting. This is referred to as a quorum. Broker non-votes, votes withheld and abstentions are included in determining whether there are a sufficient number of shares present to constitute a quorum. +9.   HOW CAN I REVOKE A PROXY? +You can revoke a Proxy before the completion of voting at the Annual Meeting by: +(a) Giving written notice to the Corporate Secretary of the Company to revoke your Proxy; or +(b) Delivering a later-dated Proxy that indicates the change in your vote; or +(c) Logging on to www.proxyvote.com in the same manner you would to submit your Proxy electronically or calling the telephone number indicated in your Notice, and in each case, following the instructions to revoke or change your vote; or +(d) Attending the Annual Meeting online and voting, which will automatically cancel any Proxy previously given. Attendance alone will not revoke any Proxy that you have given previously. +If you choose any of the first three methods, you must take the described action no later than 11:59 p.m. Eastern Time (8:59 p.m. Pacific Time) on Tuesday, May 13, 2025. Once voting on a particular matter is completed at the Annual Meeting, you will not be able to revoke your Proxy or change your vote. If your shares are held in street name by a broker or other nominee, you must contact that institution to change or revoke your vote. +10.   WHAT ITEMS WILL BE VOTED ON AT THE ANNUAL MEETING? +At the Annual Meeting, action will be taken on the matters set forth in the accompanying Notice and described in this Proxy Statement. The Board knows of no other matters to be presented for action at the Annual Meeting. +If any other matters do properly come before the Annual Meeting, the persons named in the Proxy Card will have discretionary authority to vote on those matters in accordance with their best judgment. +11.   WHO WILL PAY THE COST OF THIS PROXY SOLICITATION? +Solicitation of Proxies is made on behalf of the Board. The cost of soliciting Proxies will be borne by the Company. In addition to solicitations by e-proxy and/or by mail, certain of our Directors, officers and regular employees may solicit Proxies personally or by telephone or other means without additional compensation. +We have also engaged Alliance Advisors, LLC, 200 Broadacres Drive, 3 rd Floor, Bloomfield, NJ +07003, to provide proxy solicitation services at an estimated fee of $15,000, plus expenses. Arrangements will be made with brokerage firms and other custodians, nominees and fiduciaries to forward solicitation materials to the beneficial owners of stock held of record by such persons, and we will, upon request, reimburse them for their reasonable expenses in so doing. +8 +Table of Contents +12.   HOW CAN I PARTICIPATE IN THE ANNUAL MEETING? +This year’s Annual Meeting will be a virtual meeting of stockholders and will be conducted via live webcast on the Internet. You are entitled to participate in the Annual Meeting only if you were a stockholder of the Company as of the close of business on March 21, 2025, the record date for the meeting, or if you hold a valid Proxy for the Annual Meeting. +You will be able to participate in the Annual Meeting online and submit your questions during the +meeting by visiting www.virtualshareholdermeeting.com/OSUR2025. To participate in the Annual Meeting, you will need the control number that is included on your Notice, on our Proxy Card or on the instructions that accompanied your proxy materials. The Annual Meeting will begin promptly at 10:00 a.m. (Eastern Time), and you should allow ample time to complete the online check-in procedures. +13.   WHAT IF I HAVE TECHNICAL DIFFICULTIES OR TROUBLE ACCESSING THE VIRTUAL MEETING? +If you encounter any difficulties accessing the virtual meeting during the check-in or meeting time, +please call the technical support number that will be posted on the Virtual Shareholder Meeting log in page. +14.   ARE VOTES CONFIDENTIAL? +We will continue our long-standing practice of holding the votes of each stockholder in confidence from Directors, officers and employees, except: (a) as necessary to meet applicable legal requirements and to assert or defend claims for or against the +Company; (b) in the case of a contested proxy solicitation; (c) if a stockholder makes a written comment on the Proxy Card or otherwise communicates his or her vote to the Company; or (d) as needed to allow the independent inspectors of election to certify the results of the vote. +15.   WHO COUNTS THE VOTES? +We will continue, as we have for many years, to retain an independent inspector of election to receive +and tabulate the Proxies and certify the results. These activities will be handled electronically. +16.   MAY STOCKHOLDERS ASK QUESTIONS AT THE ANNUAL MEETING? +Yes. The CEO will answer stockholders’ written questions submitted during the question and answer period of the meeting. Stockholders should confine their questions to matters that relate to the business of the meeting. The CEO will determine which questions are appropriate to answer during the meeting. +We reserve the right to edit or reject any questions we deem profane or otherwise inappropriate, or that do not relate to the business of the meeting. Detailed guidelines for submitting written questions during the meeting are available at www.virtualshareholdermeeting.com/OSUR2025. +9 +Table of Contents +STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT +The following table sets forth information, as of the March 21, 2025 record date, regarding the beneficial ownership of the Company’s Common Stock by (a) each person who is known by us to be the beneficial owner of more than five percent of the Common Stock outstanding; (b) each Director and nominee for election as Director; (c) each of our executive officers named in the Summary Compensation Table in this Proxy Statement; and (d) all of our Directors, the nominees for election as Director and executive officers as a group. Unless otherwise indicated, the address of each person identified below is c/o OraSure Technologies, Inc., 220 East First Street, Bethlehem, Pennsylvania 18015. +Pursuant to Rule 13d-3 under the Exchange Act, shares of Common Stock which a person has a right to acquire pursuant to the exercise of stock options held by that person that are exercisable within 60 days of March 21, 2025 are deemed to be outstanding for the purpose of computing the ownership percentage of that person, but are not deemed outstanding for computing the ownership percentage of any other person. +Name and Address of Beneficial Owner +Amount and Nature of +the Beneficial Ownership (1) (2) +Percent +of Class +BlackRock, Inc. (3) +50 Hudson Yards +New York, NY 10001 +7,533,129 9.7% +The Vanguard Group (4) +100 Vanguard Blvd. +Malvern, PA 19355 +4,381,276 5.7% +Camber Capital Management, LP (5) +101 Huntington Avenue +Boston, MA 02199 +4,250,000 5.5% +Dimensional Fund Advisors LP (6) +6300 Bee Cave Road, Building One +Austin, TX 787746 +3,906,687 5.0% +Carrie Eglinton Manner 1,688,366 2.2% +Ken McGrath 460,987 * +Kathleen G. Weber 391,206 * +Mara Aspinall 154,407 * +Nancy Gagliano, M.D. 91,524 * +John P. Kenny 70,915 * +Lelio Marmora 67,720 * +David J. Shulkin, M.D. 60,317 * +Robert W. McMahon 42,646 * +All Directors and executive officers as a group (9 people) 3,028,088 3.9% +* Less than 1%. +1 Subject to community property laws where applicable, beneficial ownership consists of sole voting and investment power except as otherwise indicated. +2 Includes shares subject to options exercisable within 60 days of March 21, 2025, as follows: Ms. Aspinall, 40,000 shares; and all Directors and executive officers as a group, 40,000 shares. Also includes unvested RS, as follows: Ms. Eglinton Manner, 830,872 shares; Mr. McGrath, 201,657 shares; Ms. Weber, 131,052 shares; Ms. Aspinall, 24,691 shares; Dr. Gagliano, 19,943 shares; Mr. Kenny, 23,256 shares; Ms. Marmora, 19,943 shares; Dr. Shulkin, 19,943 shares; and Mr. McMahon, 42,646 shares; and all Directors and executive officers as a group, 1,314,003 shares. Does not include unvested PRUs. +3 Based on information contained in a Schedule 13G/A filed September 10, 2024. The filing person has sole voting power with respect to 7,299,263 shares and sole dispositive power with respect to 7,533,129 shares. +4 Based on information contained in a Schedule 13G/A filed November 12, 2024. The filing person has shared voting power with respect to 114,210 shares, sole dispositive power with respect to 4,241,491 shares and shared dispositive power with respect to 139,785 shares. +5 Based on information contained in a Schedule 13G filed February 2, 2023. The filing person has shared voting and dispositive power with respect to all of the indicated shares. +6 Based on information contained in a Schedule 13G/A filed February 9, 2024. The filing person has sole voting power with respect to 3,823,054 shares and sole dispositive power with respect to 3,906,687 shares. +10 +Table of Contents +CORPORATE GOVERNANCE +BOARD RESPONSIBILITIES, OPERATION AND COMPOSITION +The primary responsibility of the Board of Directors is to promote the long-term success of the Company. In fulfilling this role, each Director must exhibit good faith business judgment as to what is in the best interests of the Company. The Board is responsible for establishing broad corporate policies, setting strategic direction and overseeing management. The Company’s management is responsible for the day-to-day operations of the Company. +Currently, the Board is divided into three classes with Class I consisting of three Directors, Class II consisting of two Directors and Class III consisting of two Directors. There are currently seven Directors serving on the Board. At each annual meeting of stockholders, the nominees for the class of Directors whose term is expiring at that annual meeting are elected for a three-year term. A Director holds office until the annual meeting of stockholders for the year in which his or her term expires or until his or her successor is elected and duly qualified, subject to prior death, resignation, retirement, disqualification or removal. Each nominee for election at our upcoming Annual Meeting currently serves as a Director. +The Board typically holds regular, quarterly, meetings, with additional meetings held as needed. The Board’s organizational meeting follows the annual meeting of stockholders. The Board usually meets in executive session at all regularly scheduled meetings. The Board held 13 meetings and acted by written consent on 6 occasions during the fiscal year ended December 31, 2024. Each member of the Board attended more than 75 percent of the combined total of meetings of the Board and of the Committees of the Board on which such member served during the period in the year in which he or she served as a Director. +The Board holds four regularly scheduled meetings each year and special meetings as needed. Directors attended greater than 75% of all Board and Committee meetings during 2024. +GOVERNANCE GUIDELINES AND CODE OF CONDUCT +The Board has adopted Corporate Governance Guidelines which, along with the Charters for each of its Committees and the Company’s Code of Business Conduct and Ethics, provides a framework for the governance of the Company. The Company’s Corporate Governance Guidelines address matters such as the responsibilities and composition of the Board, Director independence and the conduct of Board and Committee meetings. The Company’s Code of Business Conduct and Ethics sets forth guiding principles of business ethics and certain legal requirements applicable to all Company employees, contractors and non-employee Directors. Copies of the current Corporate Governance Guidelines and Code of Business Conduct and Ethics are available on the Investor Relations — Corporate Governance section of the Company’s website, https://orasure.gcs-web.com/governance . Upon request, the Company will provide a copy of each policy free of charge to any stockholder. +If we make substantive amendments to or grant any waiver from the Code of Business Conduct and Ethics applicable to our directors or executive officers, we will disclose the nature of such amendments or waiver to our stockholders to the extent and in the manner required by applicable exchange listing standards or any other regulation. For conduct involving an executive officer or Board member, only the Board of Directors or the Audit Committee of the Board has the authority to waive a provision of the Code of Business Conduct and Ethics. Should the Company amend or grant a waiver to its Code of Business Conduct and Ethics, the Company intends to post such amendment or notice of the waiver to its website at https://orasure.gcs-web.com/governance . Any waivers granted to the Code of Business Conduct and Ethics will be available on the website for at least a 12-month period. +We operate under a Code of Business Conduct and Ethics and Corporate Governance Guidelines, which apply to all employees, contractors and non-employee Board members. +11 +Table of Contents +ENVIRONMENTAL, SOCIAL, AND GOVERNANCE MATTERS +We believe that conducting our business in a socially, environmentally, and ethically responsible manner, while adhering to all applicable legal requirements, is vital to our long-term success and the well-being of our employees, customers, the communities we serve, and other stakeholders. As a result, environmental, social, and governance (ESG) issues continue to be a significant focus for our management team and Board. +ESG Oversight +Historically, ESG issues have been addressed by our management team with the primary focus on regulatory and legal compliance, ethical operations, and development of our human capital resources. Material risks in these areas have been regularly reviewed with our Board, either directly or through the Audit Committee. +In 2023, we established an ESG Steering group with representation from a broad set of functional areas with our Company, including Operations, Legal, Quality & Regulatory, Product Management, Human Resources, and Finance. This cross-functional team will guide our Sustainability initiatives, review ESG issues in order to identify material ESG risks impacting our business, and determine appropriate mitigation and corrective strategies. These risks were initially considered by the Board in 2023 and are now discussed by the Board at least annually as part of the Board’s oversight of risk management. +We released our third “OraSure Cares” ESG report in May 2024, which showcases the ways in which we are safeguarding the environment, empowering our people, modeling integrity, and positively impacting the communities that we serve. A copy of the report may be accessed on our website at www.orasure.com. +In our ESG report published in May 2024, we shared the results of a materiality assessment to identify and matrix the ESG-related topics identified as most important to our internal and external stakeholders ("double materiality"). And in our May 2025 report, we plan to share updates regarding strategic initiatives that align with topics identified in that ESG materiality assessment. A copy of our ESG report may be accessed on our website at www.orasure.com. +Environmental +We endeavor to implement responsible and sustainable environmental practices throughout our organization. Our goal is to eliminate or minimize any harm to our employees, the communities that we serve and the environment. For the last several years, we have identified and adopted sustainable practices to reduce our global environmental footprint, reuse and repurpose resources, and inspire action in others. Sustainability is a company priority and is considered in our business decisions, from making purchases, to investing in research efforts, to designing and shipping products. +Formed in 2020, our Sustainability Initiative focuses on identifying additional steps we can take to reduce our impact on the environment and our carbon footprint, including through the use of renewable energy sources and promoting clean communities and positive environmental stewardship. +For example, in 2024 we received FDA approval for a new packaging and labeling configuration for our OraQuick ® HIV Self-Test, which is expected to result in reduced plastic usage and increased shipping efficiencies. We also made significant progress on our plan to in-source certain manufacturing efforts to the U.S. by the end of 2025. This initiative will further consolidate our operational footprint, which we expect will lower costs, increase efficiency, and reduce our carbon footprint. +We have engaged an advisory firm to create a Greenhouse Gas (“GHG”) Emissions Inventory Report (the “GHG Report”) for our Bethlehem, Pennsylvania sites covering emissions for the prior year. The GHG Report, which contained a detailed accounting of our Scope 1 and Scope 2 GHG emissions associated +12 +Table of Contents +with those sites, provided us with a data-focused foundation for effective management of our Scope 1 and Scope 2 GHG emissions. +Healthcare Access & Quality +Our mission is to improve access, quality, and value of healthcare with innovation in effortless tests, sample management solutions, and services. Health equity is a significant priority around the globe, and our technologies, which are available in more than 100 countries, are valuable tools for reducing health inequities and making healthcare insights more accessible to underserved populations. In 2024, we achieved prequalification status from the World Health Organization for our OraQuick® HCV Self-test, representing the first Hepatitis C self-test to earn this designation. We are working with the global health community to bring this test to populations in need, including the 50 million people living with HCV and 1 million individuals who acquire HCV each year. +We aim to earn customer loyalty by consistently meeting or exceeding expectations while helping advance health and wellness worldwide. We endeavor to continuously improve our quality system and provide our customers with solutions that are safe and effective, comply with all applicable laws and regulations, and satisfy our customers. +Social & Human Capital +We believe our employees are our most important resource and are critical to our continued success. The health and safety of our workforce is a critical priority across our organization. We safeguard our people, projects, and reputation by striving for zero employee injuries, while operating and delivering our work responsibly and sustainably. We provide our employees upfront and ongoing safety training to ensure that safety policies and procedures are effectively communicated and implemented. Personal protective equipment is provided to those employees where needed to safely perform their job function. We have a Safety Committee consisting of employees from various functional departments to administer our internal safety inspection program, monitor compliance, investigate safety incidents and oversee the effectiveness of our safety procedures and policies. +We focus significant attention on attracting and retaining talented and experienced individuals to manage and support our operations, and our management team routinely reviews employee turnover rates at various levels of the organization. Management also reviews employee engagement and satisfaction surveys to monitor employee morale and receive feedback on a variety of issues. +As part of our compensation philosophy, we believe that we must offer and maintain market competitive compensation and benefits programs for our employees in order to attract and retain superior talent. In addition to competitive base wages, additional programs include annual bonus opportunities, a Company matched 401(k) Plan or other savings plan, healthcare and insurance benefits, health savings and flexible spending accounts, paid time off, family and parental leave, flexible work schedules, and employee assistance programs. +We are committed to a thoughtful, robust, and proactive talent acquisition strategy that focuses on competitively hiring top talent to join our teams. By creating trusting partnerships and through enhanced candidate engagement initiatives, we empower and advise our business leaders to hire talent that innovates and elevates the business. We encourage applications from all qualified candidates who represent the communities in which we operate. We work to cultivate a sense of belonging for all via providing exceptional, responsive, and considerate candidate experiences. We have developed standardized, quality-driven talent acquisition processes. +In 2024, we launched a successful manager training program available to employees twice each year. It is a valued component of OTI's talent development strategy and also contributes to employee engagement and retention efforts. +We are committed to creating and fostering an inclusive workplace that reflects and contributes to the global communities in which we do business and the customers and partners we serve. This includes all communities impacted by our corporate presence. Our management teams and our employees are expected to exhibit and promote honest, ethical, and respectful conduct in the workplace. All of our employees must adhere +13 +Table of Contents +to a Code of Business Conduct and Ethics that sets standards for appropriate behavior and includes required annual training on preventing, identifying, reporting, and stopping any type of unlawful discrimination, breach of laws or unethical behavior. We strive to recruit the best people for the job regardless of gender, ethnicity, or other protected trait and it is our policy to fully comply with all laws (domestic and foreign) applicable to discrimination in the workplace. We have established a hotline and other communication methods that employees can use to anonymously report discrimination or other complaints. +We have an active All Means U Council that strives to drive belonging within the workplace. We believe a variety of perspectives are critical to achieving success. We are committed to creating a culture where all people feel valued, supported, and inspired to be themselves fearlessly. We believe that when all voices are heard, we honor and exemplify our core values and best serve our customers and communities. +Governance +In pursuing our mission and vision, we are committed to operating our business in accordance with the highest moral, legal and ethical standards. We have adopted a Code of Business Conduct and Ethics in order to define the high standards under which all members of our Board and our employees are expected to operate. We also have an Anti-Corruption Policy, a Policy on Interactions with Healthcare Professionals, and other policies which further require honest, ethical, and lawful behavior. These policies are part of a broader compliance program designed to ensure that all policies and legal requirements are followed, that we make and sell high-quality products in accordance with applicable regulatory requirements, and that we otherwise operate in a responsible, ethical, and compliant manner. +INDEPENDENT BOARD CHAIRPERSON +The positions of Chairman of the Board and CEO of the Company are held by different individuals, with the Chairman being independent of management. +The Board has carefully considered its leadership structure and believes that the Company and its stockholders are best served by having the positions of Chairperson and CEO filled by different individuals. This allows the CEO to, among other things, focus on the Company’s day-to-day business, while allowing the Chairperson to lead the Board in its fundamental role of providing strategic advice and oversight of management. +DIRECTOR INDEPENDENCE +Our Corporate Governance Guidelines require, among other things, that a majority of the members of the Board meet the independence requirements of the SEC and Nasdaq, on which our Common Stock is listed. Each year our Board, with assistance from the Nominating and Corporate Governance Committee, conducts a review of Director independence. The most recent annual review occurred in the first quarter of 2025, during which the Board considered transactions and relationships, if any, between each +A majority of our Directors are independent as required under applicable SEC and Nasdaq rules. All standing Board Committees consist of independent Directors. +Director and any member of such Director’s immediate family and the Company. As a result of this review, the Board determined that Mara G. Aspinall, Dr. Nancy J. Gagliano, M.D., John P. Kenny, Lelio Marmora, David J. Shulkin, M.D. and Robert W. McMahon, are “independent,” as that term is defined in the applicable rules of Nasdaq and the SEC. Ms. Carrie Eglinton Manner was determined by the Board not to be independent because she is serving as an executive officer employed by the Company. Based on the foregoing, the Board of Directors is comprised of a majority of independent Directors. The Audit Committee, the Nominating and Corporate Governance Committee and Compensation Committee of the Board are also comprised solely of independent Directors. Additionally, the Board previously determined that James Datin, a former director who served as a member of the Board for a portion of the 2024 fiscal year, was “independent” as that term is defined in the applicable rules of Nasdaq and the SEC. +14 +Table of Contents +OVERSIGHT OF RISK MANAGEMENT +As part of its oversight of the Company’s operations, the Board and Audit Committee monitor the management of risks by the Company’s executives. The Audit Committee reviews the risks that the Company may face and receives reports from senior management on the nature of these risks and the procedures. Processes are implemented to manage and mitigate such risks. Substantive areas of risk reviewed by the Audit Committee include financial, legal, regulatory, operational, information technology, cybersecurity and employment matters. The Audit Committee provides a report to the full +The Board and Audit Committee monitor the major risks facing the Company and the procedures and processes implemented by the management to mitigate those risks. +Board on the matters covered during each of its meetings, including its risk monitoring activities. In addition, senior management provides periodic reports to the full Board on the major risks facing the Company and the processes and procedures in place to manage such risks. Management also conducts a risk assessment of the Company’s compensation policies and practices, including its executive compensation program, as described in greater detail in the Section of this Proxy Statement entitled, “Compensation Committee Matters.” +ANNUAL MEETING ATTENDANCE AND STOCKHOLDER COMMUNICATIONS +The Board has approved a policy concerning Board members’ attendance at our Annual Meeting of Stockholders and a process for security holders to send communications to members of the Board. A description of the Board’s policy on Annual Meeting attendance is provided on our website, at www.orasure.com . As a general matter, each Board member is expected to attend each Annual Meeting of Stockholders. Five of six Board members attended the 2024 Annual Meeting of Stockholders. +Security holders may communicate with the Board by sending their communications to OraSure Technologies, Inc., 220 East First Street, Bethlehem, Pennsylvania 18015, Attention: Corporate Secretary, fax: (610) 882-2275, email: corporatesecretary@orasure.com . +COMMITTEES OF THE BOARD +The Board currently has a standing Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee. Members of the Audit Committee, Compensation Committee, and the Nominating and Corporate Governance Committee are each “independent,” as defined in the Exchange Act and Nasdaq rules applicable to such Committees. In addition, the Board has determined that Mara G. Aspinall and Robert W. McMahon are each an “audit committee financial expert,” as that term is defined by applicable rules of the SEC. Each committee operates pursuant to a written charter, copies of which are available on our website, at www.orasure.com . Additional information on each standing committee is provided below: +15 +Table of Contents +AUDIT COMMITTEE +Committee Members*: +Responsibilities include but are not limited to: +• Oversees accounting and financial reporting process, internal controls and audits. +• Consults with management and the Company’s independent registered public accounting firm on, among other items, matters related to the annual audits, the published financial statements and the accounting principles applied. +• Appoints, evaluates and retains our independent registered public accounting firm. +• Responsible for the compensation, termination and oversight of our independent registered public accounting firm. +• Evaluates the independent registered public accounting firm’s qualifications, performance and independence. +• Pre-approves all services provided by the independent registered public accounting firm. +• Monitors the Company’s major risk exposures and reviews risk assessment and mitigation policies and determines the appropriate levels and types of insurance policies to be purchased by the Company. +• Maintains procedures for the receipt, retention and treatment, on a confidential basis, of complaints received by the Company regarding accounting, internal accounting controls or auditing matters, and the confidential, anonymous submissions by employees of concerns regarding questionable accounting or auditing matters. +•  Reviews the Company’s cybersecurity program and risks, as identified by Company management, and the steps that the Company management has taken to protect against threats to the Company’s assets including information systems and data security. +Robert W. McMahon (1) +(C, I) +Mara G. Aspinall (1) +(I) +Lelio Marmora (I) +Number of Meetings during +fiscal 2024: 6 +C – Committee Chairperson +I – Determined by the Board to be independent under applicable SEC and Nasdaq rules. +(1) +– Determined by the Board to be an audit committee financial expert as defined under applicable SEC Rules. +16 +Table of Contents +COMPENSATION COMMITTEE +Committee Members*: +Responsibilities include but are not limited to: +• Oversees compensation for executives and non-employee Directors. +• Reviews and recommends to the Board for approval the performance criteria, goals and objectives for CEO compensation. +• In consultation with other independent non-employee Directors, evaluates the CEO’s annual performance. +• Evaluates and recommends the CEO’s compensation to the Board for approval. +• In consultation with the CEO, reviews and approves the compensation of other executive officers. +• Oversees compliance with SEC and Nasdaq rules and regulations regarding stockholder approval of certain executive compensation matters. +• Establishes performance measures and goals and evaluates the attainment of such goals under performance-based incentive compensation plans. +• Reviews compensation and benefits issues relating to the Company. +• Reviews and recommends for Board approval, the terms of any employment agreements between the Company and each executive officer. +• Periodically reviews and administers the Company’s Compensation Recoupment Policy for executive officers and non-employee Directors. +• Reviews compliance with the Company’s stock ownership guidelines and monitors compliance by directors and executive officers. +Nancy J. Gagliano, M.D. +(C, I) +John P. Kenny +(I) +David J. Shulkin, M.D. +(I) +Number of Meetings during fiscal 2024: 5 +C – Committee Chairperson +I – Determined by the Board to be independent under applicable SEC and Nasdaq rules. +NOMINATING AND CORPORATE GOVERNANCE COMMITTEE +Committee Members: +Responsibilities include but are not limited to: +• Identifies, evaluates and recommends candidates for nomination or re-election to the Board. +• Reviews and makes recommendations to the Board on the range of skills, qualifications, experience and expertise required for service as a Director. +• Reviews and recommends for Board approval the appropriate structure of the Board and Board committees. +• Recommends committee assignments and candidates for the position of Chairperson of each committee. +• Develops and recommends for Board approval Corporate Governance Guidelines and a Code of Business Conduct and Ethics, and procedures for the implementation thereof. +• Periodically reviews and recommends for Board approval the Board’s leadership structure, including whether the same person should serve as both CEO and Chairperson of the Board. +• Assists in the development of succession plans for the Company’s CEO and other executives. +• Assists the Board in evaluating the independence of individual Directors for purposes of Board and committee service. +• Develops and implements an annual self-evaluation process for the Board and its committees. +John P. Kenny +(C, I) +Nancy J. Gagliano, M.D. +(I) +Lelio Marmora +(I) +Number of Meetings during fiscal 2024: 4 +C – Committee Chairperson +I – Determined by the Board to be independent under applicable SEC and Nasdaq rules. +17 +Table of Contents +NOMINATION OF DIRECTORS +Our Bylaws provide that nominations for election to the Board may be made by the Board or by any stockholder entitled to vote for the election of Directors at the Annual Meeting. A stockholder’s notice of nomination must be made in writing to the Company’s Corporate Secretary and must be delivered to or received at our principal executive offices not less than ninety (90) days nor more than one hundred twenty (120) days prior to the meeting. Stockholders can nominate individuals to serve on the Board by the following procedures described in our Bylaws. +However, in the event that less than one hundred (100) days’ notice or prior public disclosure of the date of the meeting is given or made to stockholders, in order for notice by the stockholder to be timely, notice must be received no later than the close of business on the tenth (10 th ) day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made, whichever first occurs. The notice to the Corporate Secretary must set forth, with respect to the nominee, the name, age, business address, residence address, principal occupation or employment of the person, the class and number of shares of capital stock of the Company which are beneficially owned by the person, and any other information relating to the person that is required to be disclosed in solicitations for proxies for election of Directors pursuant to Regulation 14A under the Exchange Act. The notice must also include, as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination is made: (i) the name and address of the stockholder and such beneficial owner; (ii) the class and number of shares of capital stock of the Company which are held of record or beneficially owned by such stockholder and such beneficial owner and any other direct or indirect pecuniary or economic interest in any capital stock of the Company of such stockholder and beneficial owner, including without limitation, any derivative instrument, swap, option, warrant, short interest, hedge, profit sharing arrangement or borrowed or loaned shares; (iii) a description of any arrangements or understandings between such stockholder and beneficial owner and each proposed nominee and any other person (including their names) pursuant to which the nomination(s) are to be made by such stockholder and such beneficial owner or with respect to actions to be proposed or taken by such nominee if elected as a Director; (iv) a representation that such stockholder intends to appear in person or by proxy at the meeting to nominate the persons named in its notice; and (v) any other information relating to such stockholder and such beneficial owner that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of Directors, or may otherwise be required pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder. We may also require any proposed nominee to furnish such other information as we may reasonably require to determine the eligibility of the proposed nominee to serve as a Director of the Company. +The Nominating and Corporate Governance Committee may also consult with outside advisors or retain search firms to assist in the search for qualified candidates. Candidates recommended by stockholders will be considered by the Nominating and Corporate Governance Committee in the same manner as candidates recommended by other sources, but only if the stockholder makes a recommendation in accordance with the advance notification provisions set forth in our Bylaws. +DIRECTOR QUALIFICATIONS +When considering potential Director candidates and incumbent Directors, the Nominating and Corporate Governance Committee seeks individuals with backgrounds and qualities that, when combined with those of the other Directors, provide a blend of skills and experience that will further enhance the Board’s effectiveness. The Nominating and Corporate Governance Committee does not assign specific weight to any particular criteria when reviewing candidates and may not apply the same criteria to all prospective nominees. +Director candidates should be persons of high integrity who possess independence and demonstrate inquisitiveness, strong analytical skills, forthrightness, and sound judgment. Directors are expected to be collaborative and committed to the long-term interests of the Company's shareholders overall as opposed to those of a particular constituency. +18 +Table of Contents +The Nominating and Corporate Governance Committee takes into consideration Director candidates' existing commitments, including service on other boards, in order to select and nominate Directors who are capable and committed to devoting the time and attention required for Board duties. +The following matrix highlights the mix of key skills, qualities, attributes, and experiences of the Directors. +Aspinall +Eglinton Manner +Gagliano +Kenny +Marmora +McMahon +Shulkin +Business Operations +X +X X +X +X X X +Financial Analysis and Control +X X X X +Global Business +X X X X +Regulatory (US and International) +X X X X X +Health Systems and Life Sciences +X X X X X X X +Commercial Execution +X X X +X +Mergers and Acquisition +X X X X +X +As currently constituted, the Board represents a deliberate mix of members who have a deep understanding of our business as well as members who have different skill sets and points of view. +INSIDER TRADING +Our Insider Trading Policy prohibits trading by Directors, executive officers or employees who are in possession of material nonpublic information about the Company. +We have a policy that the Company believes are reasonably designed to promote compliance with insider trading laws, rules and regulations, and applicable Nasdaq listing standards, including to prevent any trading in the Company’s Common Stock or other securities by Directors, executive officers and certain other employees of the Company and its affiliates while such person is in possession of material nonpublic information. The policy prohibits trading in the Company’s securities on the basis of material nonpublic information, requires preapproval of transactions in Company securities for Directors, executive officers and all other employees and establishes regular trading windows after each calendar quarter following the Company’s announcement of its quarterly financial results. In addition, with regard to trading in the Company’s own securities, it is the Company’s policy to comply with the federal securities laws and the applicable exchange listing requirements. A copy of the Insider Trading Policy is filed as Exhibit 19.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. +PROHIBITION AGAINST SHORT SALES, HEDGING AND PLEDGING +We believe it is inappropriate for any employee of the Company or its affiliates or any member of the Board to engage in short-term or speculative transactions involving Company securities, including entering into financial instruments or engaging in other transactions that hedge or offset, or that are designed to hedge or offset, any decrease in the market value of our Common Stock. As a result, our insider trading policy prohibits Directors, executive officers and all other employees from entering into transactions involving our Common Stock, such as short sales, the buying or selling of puts or calls, the purchase of securities on margin, prepaid variable forward contracts, equity swaps, collars, exchange funds and other similar financial instruments. Our policy also prohibits employees and Directors from pledging shares of our Common Stock as collateral. We have implemented several governance policies related to our Common Stock. Our policies prohibit short-term, speculative transactions in our stock, such as hedging, pledging and short sales. +19 +Table of Contents +STOCK OWNERSHIP AND RETENTION GUIDELINES +We have implemented stock ownership and retention guidelines for our CEO, other executives and members of the Board. The Board has adopted stock ownership and retention guidelines applicable to our President and CEO, our Chief Financial Officer and all of our other executive officers and all non-employee members of the Board. Under these guidelines, the covered individuals must meet the following ownership requirements, as of December 31 of each year, expressed either as a multiple of base salary (in the case of Company officers) or annual cash fees (in the case of non-employee Board members): +Covered Individual Multiple of Base Salary +or Director Cash Fees +President and CEO 6x +Chief Financial Officer 2x +Other Executive Officers 1x +Non-Employee Directors +3x +Any individual who becomes subject to the guidelines is required to meet the guidelines within five years. Any individual already subject to the guidelines who becomes subject to a higher ownership requirement, due to a promotion, a further amendment to the guidelines or an increase in compensation, is required to meet the new ownership requirement within five years following the effective date of promotion, change in compensation or guideline amendment. In determining whether an individual meets the required ownership requirement, shares owned directly or indirectly, restricted stock (including both time and performance-based) and shares deferred under our deferred compensation plan will be counted. Compliance will be determined as of December 31 of each fiscal year. The guidelines also require each covered individual to retain at least 50% of the net shares acquired upon the exercise of stock options and the vesting of restricted stock until the individual’s holdings of Common Stock equal or exceed the applicable ownership requirement. As of December 31, 2024, two of the non-employee Directors were not in compliance with the stock ownership guidelines as they have recently joined the Company. The Company will ensure they are in compliance within five years, which is the guideline. Effective as of January 1, 2025, the Board adopted new stock ownership and retention guidelines for non-employee Directors, requiring each to meet a 4x multiple of director cash fees. +AUDIT COMMITTEE MATTERS +REPORT OF THE AUDIT COMMITTEE FOR THE YEAR ENDED DECEMBER 31, 2024 +The information contained in this report shall not be deemed to be “soliciting material” or “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to liability under that Section. This report shall not be deemed “incorporated by reference” into any document filed under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, whether such filing occurs before or after the date hereof, regardless of any general incorporation language in such filing. +The role of the Audit Committee is to assist the Board of Directors in fulfilling its responsibilities to oversee (i) the integrity of the Company’s financial statements, (ii) management’s conduct of the Company’s accounting and financial reporting processes, (iii) the Company’s systems of internal control over financial reporting and disclosure controls and procedures, (iv) the outside auditor’s qualifications, engagement, compensation, independence and performance, (v) the Company’s compliance with legal and regulatory requirements and management of financial and other risks, including insurance review and cybersecurity, (vi) the annual independent audit of the Company’s financial statements and internal control over financial reporting, (vii) the application of the Company’s related person transaction policy and (viii) such other matters as directed by the Board or as set forth in the Audit Committee Charter. The Audit Committee selects the Company’s outside independent registered public accounting firm, and once selected, the outside independent registered public accounting firm reports directly to the Audit Committee. The Audit Committee is responsible for approving +20 +Table of Contents +both audit and non-audit services to be provided by the outside independent registered public accounting firm. The Audit Committee is composed of three (3) non-employee directors and operates pursuant to a Charter that was last amended and restated by the Board on August 1, 2023 (which can be found on the Company’s website at orasure.gcs-web.com/committee-details/audit-committee ). +Management of the Company is responsible for the preparation, presentation and integrity of the Company’s financial statements, the Company’s accounting and financial reporting principles and internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations. The independent registered public accounting firm is responsible for auditing the Company’s financial statements and expressing an opinion as to their conformity with U.S. generally accepted accounting principles. The Audit Committee’s responsibility is to monitor and review these processes. It is not the Audit Committee’s duty or responsibility to conduct auditing or accounting reviews. +In the performance of its oversight function, the Audit Committee has considered and discussed the audited financial statements with management, which included a discussion of not only the quality, but also the acceptability, of the accounting principles, the reasonableness of significant judgments and the clarity of disclosures in the financial statements. The Audit Committee met with the independent registered public accounting firm, with and without management, to discuss the results of their audit and their judgments regarding the Company’s accounting policies. The Audit Committee has also discussed with the independent registered public accounting firm the matters required to be discussed under applicable standards, including those in Public Company Accounting Oversight Board Auditing Standard No. 1301, as currently in effect. Finally, the Audit Committee has received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the Public Company Accounting Oversight Board as currently in effect, has considered whether the provision of non-audit services by the independent registered public accounting firm to the Company is compatible with maintaining the firm’s independence and has discussed with the independent registered public accounting firm the firm’s independence. +Based upon the reports and discussions described in this report, and subject to the limitations on the role and responsibilities of the Audit Committee referred to above and in the Audit Committee’s Charter, the Audit Committee recommended to the Board that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 for filing with the SEC. +Submitted by the Audit Committee of the Company’s Board of Directors: +Robert W. McMahon, Chairperson +Mara G. Aspinall +Lelio Marmora +April 4, 2025 +AUDIT FEES; AUDIT RELATED FEES; TAX FEES; ALL OTHER FEES +The following table presents fees for professional audit services rendered by Grant Thornton, LLP ("GT") and KPMG LLP ("KPMG") (i) for the audits of our annual consolidated financial statements and review of the financial statements in our Quarterly Reports on Form 10-Q for the fiscal years ended December 31, 2024 and 2023, respectively and (ii) for the audits of our internal control over financial reporting as of December 31, +21 +Table of Contents +2024 and 2023, respectively. The following table also includes fees billed for other services rendered by GT in 2024 and KPMG in 2023: +2024 2023 +Audit fees 1 +$ 1,006,336 $ 1,681,614 +Tax fees 2,3 +$ 210,958 $ 140,464 +Total fees $ 1,217,294 $ 1,822,078 +__________ +1 Includes fees related to the audits of our consolidated annual financial statements, interim reviews of our quarterly financial statements and audits of our internal control over financial reporting for each indicated year, consent filed for the annual 2024 10-K and preparation of written consents for Registration Statements on Form S-8 in 2024 and 2023 filed by OraSure Technologies, Inc. +2 During the fiscal year ended December 31, 2023, KPMG was engaged to provide tax compliance, planning and consulting services. +3 During the fiscal year ended December 31, 2024, GT was engaged to provide tax compliance, planning and consulting services. +PRE-APPROVAL PROCEDURES +The Audit Committee has adopted a practice of pre-approving all audit and non-audit services provided to the Company by our independent registered public accounting firm. The Chairperson of the Audit Committee has been delegated the authority to pre-approve audit and non-audit services having an aggregate value of up to $50,000 between meetings of the Audit Committee, provided that such pre-approval is communicated to the Audit Committee at its next scheduled meeting. All services by GT and KPMG in 2024 and 2023 were approved in accordance with these practices. +CHANGE IN INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +As previously disclosed in a Current Report on Form 8-K filed with the SEC on December 5, 2023 (“Auditor 8-K”), effective upon the completion of the audit of our consolidated financial statements as of and for the year ended December 31, 2023 and the effectiveness of our internal control over financial reporting as of December 31, 2023, and the issuance of their reports thereon, on March 11, 2024, we dismissed KPMG as our independent registered public accounting firm. The decision to dismiss KPMG as the Company’s independent registered public accounting firm was at the direction of and approved by the Audit Committee after a competitive selection process. The Audit Committee and the Board approved the appointment of Grant Thornton LLP (“GT”) as our independent registered public accounting firm for the fiscal year ending December 31, 2024, which became effective immediately upon the dismissal of KPMG. +The audit reports of KPMG on our consolidated financial statements for the fiscal years ended December 31, 2023 and 2022 did not contain an adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles. The audit reports of KPMG on the effectiveness of our internal control over financial reporting as of December 31, 2023 and 2022 did not contain any adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope, or accounting principles. +In connection with the audits of the Company’s consolidated financial statements and internal control over financial reporting for the fiscal years ended December 31, 2023 and 2022 and through March 11, 2024, the effective date of KPMG’s dismissal, there were no disagreements (within the meaning of Item 304(a)(1)(iv) of Regulation S-K and the related instructions) between the Company and KPMG on any matters of accounting principles or practices, financial statement disclosure or auditing scope and procedures which, if not resolved to the satisfaction of KPMG would have caused KPMG to make reference to the subject matter of the disagreements in connection with its reports for such fiscal years. +There were no “reportable events” (within the meaning of Item 304(a)(1)(v) of Regulation S-K) during the fiscal years ended December 31, 2023 and 2022, or in the subsequent interim period through March 11, 2024, the effective date of KPMG’s dismissal, except that in the third quarter of fiscal 2023 our management identified the existence of a material weakness in internal control over financial reporting related to customer pricing in the revenue recognition process as disclosed in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2023 and as disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. The financial statements for the nine months ended September 30, 2023 and for the year ended December 31, 2023 were not impacted by this material weakness and are not misstated. During the quarter ended December 31, 2023, we implemented controls to validate accurate pricing in customer sales +22 +Table of Contents +orders and remediated the material weakness. This reportable event was discussed among the Company’s management, the Audit Committee and KPMG. We have authorized KPMG to respond fully to the inquiries of GT concerning this reportable event. +We provided KPMG with a copy of the disclosures regarding the dismissal reproduced in this Proxy Statement and received a letter from KPMG addressed to the SEC stating that it agreed with the above statements. This letter was filed as an exhibit to the Auditor 8-K. +During the two fiscal years ended December 31, 2023 and 2022, and in the subsequent interim period through March 11, 2024, neither the Company nor anyone on its behalf has consulted with GT with respect to either (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s financial statements, and neither a written nor oral advice was provided to the Company that GT concluded was an important factor considered by the Company in reaching a decision as to any accounting, auditing or financial reporting issue, or (ii) any matter that was either the subject of a “disagreement” or a “reportable event”, each as defined in Regulation S-K Item 304(a)(1)(iv) and (v), respectively. +It is anticipated that a representative of GT will attend the Annual Meeting. Such representative will have an opportunity to make a statement, if he or she desires, and will be available to respond to appropriate questions of stockholders. +COMPENSATION COMMITTEE MATTERS +The Compensation Committee assists the Board in developing and managing the compensation provided to executive officers of the Company and non-employee members of the Board. The Compensation Committee is responsible for developing and overseeing the implementation of the Company’s compensation philosophy and for setting executive compensation at levels that are sufficiently competitive so that the Company can attract, retain, motivate and reward high quality executives who can contribute to the Company’s success. +COMPENSATION PROCESSES AND PROCEDURES +Compensation for executives is established by the Compensation Committee in accordance with the compensation philosophy established under its charter as set forth in the CD&A Section of this Proxy Statement. In setting executive compensation, the Compensation Committee considers the Company’s and each executive’s performance against previously established objectives, internal pay equity, the compensation practices of the Company’s Peer Group, the Company’s industry position and general industry compensation data. The Compensation Committee periodically retains independent compensation consultants to review our executive compensation practices and to assist in establishing competitive compensation levels for our executives. +ANNUAL PERFORMANCE EVALUATIONS +On an annual basis, the Compensation Committee and other non-employee Directors evaluate the performance of the CEO, based on the overall performance of the Company. The CEO also evaluates the performance of the other NEOs against their respective predetermined performance objectives. Annual performance objectives for the NEOs are established at the beginning of the applicable year and generally include two parts: (1) the Company’s overall target financial objectives, and (2) individual objectives in the functional areas for which the executive is responsible. The Compensation Committee has implemented a policy that positive discretion will not be applied to individual objectives in determining payouts for our NEOs. +Depending on the Company’s overall performance and the extent to which an executive achieves his or her individual objectives for a particular year, the executive will be rated as “Does Not Meet,” “Does Not Consistently Meet,” “Meets Expectations,” “Exceeds Expectations” or “Outstanding.” On occasion, a blended rating such as “Meets/Exceeds” or “High Meets” will be used to indicate performance between the foregoing performance rating levels. The Compensation Committee uses the performance ratings and other factors to determine base salary adjustments, incentive cash bonuses and long-term incentive equity awards. Although +23 +Table of Contents +this approach is also followed in evaluating Ms. Eglinton Manner’s performance for each fiscal year, Ms. Eglinton Manner’s performance assessment is primarily based on the Company’s overall performance. +ROLE OF THE COMPENSATION COMMITTEE +The Compensation Committee is comprised of independent non-employee Directors who oversee our executive compensation program. Each year, the Compensation Committee determines the appropriate level of compensation for all NEOs other than the CEO, and in the case of the CEO, recommends to the Board the appropriate level of compensation for the CEO. As an initial guideline, the Compensation Committee sets the total direct compensation opportunity (base salary, annual incentive bonus target, and long-term incentive equity target) for each of our executive officers within a range around the 50th percentile of comparable medical diagnostics and healthcare companies. The variation of actual pay relative to the market data is dependent on the executive officer’s performance, experience, knowledge, skills, level of responsibility, potential to impact our performance and future success, and the need to retain and motivate strategic talent. +The Compensation Committee generally determines an executive officer’s compensation based upon the objectives of our executive compensation program. The Compensation Committee makes compensation recommendations to the Board for the CEO and approves decisions for the other NEOs after careful review and analysis of appropriate performance information and market compensation data. Compensation for the CEO is approved by the independent members of the Board of Directors. +Beyond determining and recommending (in the case of the CEO) specific compensation for the NEOs, the Compensation Committee works with the executive management team to review and adjust compensation policies and practices to ensure that they remain consistent with the Company’s values and philosophy, support the recruitment and retention of executive talent, and help the Company achieve its business objectives. The Compensation Committee also determines a market-based level of compensation for non-employee Directors. +ROLE OF THE CEO +The CEO provides performance assessments and recommendations to the Compensation Committee on the compensation for each executive of the Company. The CEO’s recommendations are based on her review of each executive’s performance, job responsibilities, importance to our overall business strategy, and our compensation philosophy. Although the CEO’s recommendations are given significant weight, the Compensation Committee retains full discretion when determining compensation. +ROLE OF THE COMPENSATION CONSULTANT +To assist in the review of executive compensation and to obtain information regarding market trends and governance best practices, the Compensation Committee engages independent executive compensation consultants to analyze our executive compensation structure and plan designs, and to assess whether our compensation program is competitive and supports our goal of aligning the interests of our executive officers with those of our stockholders. Such consultants also provide the Compensation Committee with the Peer Group and other market data that is discussed in the CD&A, which the Compensation Committee evaluates when establishing programs and features and determining compensation for executive officers. In connection with its 2024 compensation decisions, the Compensation Committee engaged Pay Governance LLC (“Pay Governance”) to provide market assessments of the target compensation for our executives and consult on the preparation of this Proxy Statement. +The Compensation Committee has the sole authority to approve any independent compensation consultant’s fees and terms of engagement. The Compensation Committee annually reviews its relationship with each consultant to ensure their independence. The process in 2024 included a review of the services Pay Governance provides, the quality of those services, and the fees associated with those services during the fiscal year as well as consideration of the factors impacting independence that Nasdaq rules require and a review of Pay Governance’s independence policy. The Compensation Committee concluded that there were no conflicts +24 +Table of Contents +of interest that prevented Pay Governance from serving as an independent consultant to the Compensation Committee on executive compensation matters. +COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION +Mara G. Aspinall, David J. Shulkin, M.D., Nancy J. Gagliano, M.D. and James Datin each served as members of the Compensation Committee during 2024. The Compensation Committee is currently comprised of Nancy J. Gagliano, M.D., John P. Kenny and David J. Shulkin, M.D. None of these Directors has served or is currently serving as an officer or employee of the Company, nor have they engaged in any transactions involving the Company which would require disclosure as a transaction with a related person. There are no Compensation Committee interlocks between the Company and any other entity involving the Company’s or such entity’s executive officers or board members. +COMPENSATION COMMITTEE REPORT +The information contained in this report shall not be deemed to be “soliciting material” or “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that Section. This report shall not be deemed to be “incorporated by reference” into any document filed under the Securities Act or the Exchange Act, whether such filing occurs before or after the date hereof, regardless of any general incorporation language in such filing. +The Compensation Committee of OraSure Technologies, Inc. has reviewed and discussed with the Company’s management the CD&A, contained in this Proxy Statement. Based on that review and discussion, the Compensation Committee recommended to the Company’s Board of Directors that the foregoing CD&A be included in the Company’s 2024 Annual Report on Form 10-K Report and Proxy Statement for the 2025 Annual Meeting of Stockholders. +COMPENSATION COMMITTEE: +Nancy J. Gagliano, M.D., Chairperson +John P. Kenny +David J. Shulkin, M.D. +April 4, 2025 +25 +Table of Contents +EXECUTIVE OFFICERS +The table below provides information about the executive officers of the Company as of the date of this proxy statement. Officers of the Company hold office at the discretion of the Board. +Name Age Position +Carrie Eglinton Manner 51 President and CEO +Kenneth J. McGrath 53 Chief Financial Officer +Kathleen G. Weber 58 Chief Product Officer +Carrie Eglinton Manner, CEO and Director +Carrie Eglinton Manner has been our President, CEO and a director on the Board since June 2022. Ms. Eglinton Manner brings more than 28 years of healthcare leadership and transformation expertise to the Company. Prior to joining the Company, Ms. Eglinton Manner was with Quest Diagnostics Inc. from January 2017 until June 2022 where she served as Senior Vice President, Advanced & General Diagnostics Clinical Solutions. In that role, she was responsible for bringing innovative diagnostic solutions to market in the areas of women’s health, neurology, oncology, cardiovascular, metabolic, endocrinology, infectious disease, and immunology testing services, as well as drug monitoring and toxicology. Ms. Eglinton Manner also led Quest’s pharmaceutical services, AmeriPath/Dermpath, and international businesses, as well as their molecular genetics team in pioneering next-generation sequencing innovation. Prior to Quest Diagnostics, Ms. Eglinton Manner served for 20 years in a variety of leadership roles at GE Healthcare, a division of General Electric (GE). Ms. Eglinton Manner has served as a director of Repligen Corporation since June 2020. Ms. Manner received a B.S. degree in mechanical engineering from the University of Notre Dame. +Kenneth J. McGrath, Chief Financial Officer +Kenneth J. McGrath has served as our Chief Financial Officer since August 2022. Prior to joining the Company, Mr. McGrath served in various roles at Quest Diagnostics from January 2014 until July 2022, most recently as the Vice President, Finance. While in this position, he led Quest’s financial function for its clinical franchises, R&D, global markets, and information technology groups. Prior to his tenure at Quest, Mr. McGrath spent over 15 years at Johnson & Johnson, serving in various roles, including as the Senior Finance Director of Janssen R&D. Mr. McGrath began his career in 1993 as an engineer at Ford Motor Company. He holds a B.S. degree in mechanical engineering from the University of Notre Dame and an MBA from the Stephen M. Ross School of Business at the University of Michigan. +26 +Table of Contents +Kathleen G. Weber, Chief Product Officer +Kathleen G. Weber has served as our Chief Product Officer since November 2022. Previously, Ms. Weber served as our President of Molecular Solutions since December 2021. Prior to that, Ms. Weber served as our Executive Vice President, Business Unit Leader, Molecular Solutions at DNAG from January 2019 until December 2021 and as our Senior Vice President and General Manager, Consumer Products since joining us in November 2012 until December 2018. Prior to her time at the Company, Ms. Weber served in executive leadership roles at Pfizer, Johnson & Johnson, and Schering-Plough. Ms. Weber began her career in the finance industry at Chase Manhattan Bank (now known as JP Morgan Chase). Ms. Weber received a B.S. in business administration from Georgetown University and an M.B.A. from New York University’s Stern School of Business. +27 +Table of Contents +TRANSACTIONS WITH RELATED PERSONS +Since January 1, 2024, there have been no transactions with related persons that would require disclosure in this Proxy Statement. The Audit Committee is required to review and approve in advance all transactions with related persons involving the Company. The Audit Committee may approve a related party transaction if the transaction is on terms comparable to those that could be obtained in arms’ length dealings with an unrelated third party. The Audit Committee also reviews any public disclosures of a related party transaction contained in our SEC filings. These responsibilities are described in the Audit Committee’s charter, a copy of which is available on our website at www.orasure.com . +Information regarding employment, severance and retirement agreements between our executive officers and the Company is set forth in the Section entitled, “Employment Agreements and Potential Payments Upon Termination or Change of Control,” in this Proxy Statement. +28 +Table of Contents +COMPENSATION DISCUSSION AND ANALYSIS - TABLE OF CONTENTS +EXECUTIVE SUMMARY +30 +Overview +30 +2024 Performance +30 +2024 Business Highlights +31 +2024 NEO Compensation at a Glance +32 +Pay for Performance +32 +Compensation Governance Practices +33 +Say-on-Pay Results in 2024, Stockholder Feedback and the Company’s Response +34 +Compensation Risk Assessment +38 +COMPENSATION PHILOSOPHY +38 +BENCHMARKING +38 +2024 EXECUTIVE COMPENSATION COMPONENTS +40 +Overview +40 +Pay Mix +40 +Compensation Components in Detail +41 +2024 Bonus Payments +45 +OTHER COMPENSATION +50 +Retirement Programs +50 +Perquisites and Other Compensation +50 +Potential Payments Upon Termination or Change of Control Pursuant to Employment Agreements +50 +Accounting and Tax Treatment of Compensation +50 +Compensation Recoupment Policy +51 +COMPENSATION TABLES - TABLE OF CONTENTS +Summary Compensation Table +52 +Grants of Plan-Based Awards +53 +Outstanding Equity Awards at December 31, 2024 +54 +Option Exercises and Stock Vested +55 +Retirement Benefits +55 +Nonqualified Deferred Compensation +55 +29 +Table of Contents +COMPENSATION DISCUSSION AND ANALYSIS +EXECUTIVE SUMMARY +Overview +T his CD&A describes the material elements of the compensation of our NEOs and describes the objectives and principles underlying the Company’s executive compensation program, the compensation decisions we have recently made under this program and the factors we considered in making these decisions. +Our NEOs for 2024 who are covered in this CD&A include: +Name Position +Carrie Eglinton Manner President and CEO +Kenneth McGrath Chief Financial Officer +Kathleen G. Weber Chief Product Officer +2024 Performance +The following charts describe our consolidated financial performance during the last three fiscal years, expressed in dollars (thousands). +30 +Table of Contents +2024 Business Highlights +Business highlights from 2024 and the principal factors driving our financial performance are summarized below: +• We continued to execute significant progress on our three pillars of our strategic transformation to: 1) STRENGTHEN our foundation; 2) ELEVATE our core growth, and 3) ACCELERATE profitable growth. +• We generated $27 million of Cash Flow from Operations. +• Our core business delivered positive cash flow from operations in Q3 and Q4, which was slightly earlier than our previously stated target. +• We drove $24.5M of annualized run rate cost savings in 2024. +• Diagnostic revenues grew 3% year-over-year in 2024 after delivering 41% growth in 2023. Sample Management Solutions revenues declined 6% year-over-year in 2024 as a result of continuing headwinds in some of our end markets and the macroeconomy. +• With our strong balance sheet, we expanded our innovation pipeline by investing in our internal R&D roadmap and external opportunities to increase our product portfolio in order to accelerate our long-term growth rate. +• We completed the acquisition of Sherlock Biosciences, Inc. in December, which we expect will allow us to enter the molecular testing space with a versatile diagnostics platform for assay development, including an initial disposable rapid molecular test for Chlamydia Trachomatis (CT) and Neisseria Gonorrhoeae (NG). +• We launched a strategic partnership early in 2024 with our investment in Sapphiros and associated distribution relationship securing exclusive distribution rights to certain products in the Sapphiros development pipeline, including self-collected blood devices and diagnostic tests. +• We signed a strategic agreement with Diagnostics Direct to distribute Syphilis Health Check, the first CLIA-waived treponemal test. +• We received FDA approval for a labeling change to the OraQuick® HIV Self-Test that increases access to HIV testing for adolescents. The change expands the approved age range for the OraQuick® HIV Self-Test to include individuals 14 years of age and older. Previously the test was approved for use in those 17 and older. +• We achieved prequalification status from the World Health Organization for our OraQuick® HCV Self-test, representing the first Hepatitis C self-test to earn this designation. +• We executed on our COVID-19 contracts which tapered down during the year and generated $45 million in revenues. +• We continued to streamline our operating footprint and our cost structure in order to focus our resources in markets that offer the most attractive opportunities for profitable growth and that align with our core strengths in rapid diagnostics and sample management solutions. +• We commenced projects to insource production of certain sample management products from external contract manufacturers into our manufacturing Center of Excellence in Bethlehem, PA. Upon completion in 2025, this transition is expected to result in meaningful cost savings through improved operating efficiency and further leveraging of our existing infrastructure. +• In the fourth quarter of 2024, we announced the discontinuance of sales of our risk assessment product line which is expected to be completed in the first half of 2025. +• We exited our Molecular Services business offered by our Diversigen, Inc. subsidiary and wound down our facilities in Belgium in order to further streamline our cost structure. +31 +Table of Contents +2024 NEO Compensation at a Glance +NEO compensation for 2024 was as follows: +NEO 2023 Performance Rating 2024 Performance Rating +Carrie Eglinton Manner +President and CEO +Outstanding Meets +Kenneth McGrath +Chief Financial Officer +Outstanding Meets +Kathleen G. Weber +Chief Product Officer +Exceeds Meets +• Base Salary : The base salaries paid to our senior management (including the NEOs) during 2024 increased from 2023 by 3% on average. Salary adjustments for 2024 were based on the performance of each executive and the Company during 2023, the marketplace compensation data provided to the Compensation Committee in 2023 by its compensation consultant and the Company-wide average salary merit increase budget of 3%. Generally, an executive’s annual salary adjustment tended to be at the higher end of the range budgeted by the Company if the executive received a performance rating of “Meets Expectations” or better and such executive’s pre-adjustment salary level was below the 50 th percentile for his or her position as reflected in marketplace and the Peer Group compensation data. +• OTIP : Incentive cash bonus awards for 2024 performance were based on pre-established financial goals consistent with our operating plan. Payouts determined based on actual Company performance during 2024 were at 95.7% of target for each of the NEOs based on Company results. The Compensation Committee has implemented a policy that positive discretion will not be applied to individual objectives in determining payouts for our NEOs. +• LTIP : Long-term incentive equity awards granted to the NEOs in March 2024 were based on the Company’s financial performance and/or each executive’s performance during 2023, as described under the “Base Salary” Section, above. The value of the awards ranged from 125% to 140%, (excluding CEO) of each executive’s base salary. The NEOs received equity awards consisting of 50% time-vested restricted shares (RS) and 50% performance-vested restricted units (PRUs). For the PRUs granted in 2024, a cumulative three-year revenue target for the period 2024-2026 and a rTSR target for the period 2024-2026 was established as the performance vesting criteria in March 2024 based on targets established at that time. See further discussion below in this CD&A. +Additional information regarding NEO compensation for 2024 is provided below in this CD&A and in the accompanying tables, including the Summary Compensation Table (“SCT”) set forth below. +Pay for Performance +We follow a pay-for-performance approach in compensating executives. Our program pays executives for performance against predetermined financial and/or strategic objectives. +The vast majority of each NEO’s annual compensation opportunity is provided in variable cash and long-term equity compensation that is intended to align such compensation with the long-term interests of our stockholders. Both our annual and long-term incentive compensation are tied to the Company’s overall performance in a variety of ways, including our financial results and share price performance. A further discussion of our pay mix for the NEOs is set forth in the “Pay Mix” Section, below. +One aspect of our compensation program is the use of performance targets to incentivize management to achieve financial objectives. A combination of financial and strategic objectives may also be considered, and in the past have been used, where the Compensation Committee and the Board desire to incentivize management to meet certain near-term strategic objectives which could help drive improved financial performance in a year with increased financial uncertainty. Each year the Compensation Committee and the +32 +Table of Contents +Board evaluate whether financial objectives, strategic objectives, or some combination thereof, would provide the most appropriate near-term incentives for our NEOs to achieve improved financial performance. +In addition, for the past several years we have followed a policy of granting annual equity awards to executives that consist of 50% PRUs and 50% time-vested RS. The PRUs will only vest if (i) the NEO remains employed by the Company for three years following the date of grant and (ii) the performance criteria determined by the Compensation Committee and the Board are met. The time-vested RS portion of the award vests in equal annual installments over the three-year period following the grant date, subject to the NEO’s continued employment by the Company. +We believe the performance targets in the PRUs and the three-year service periods applicable to both the RS and PRU awards complement the short-term incentives in our annual bonus plan. We also believe the combination of the structure of our annual bonus plan and the structure of our equity award policy appropriately incentivize management to achieve financial performance objectives both on an annual basis and over a longer term period and help drive long-term growth in stockholder value. +The Compensation Committee has implemented a policy that NEO payouts be based solely on Company performance and, consistent with the policy, applied no positive discretion in determining performance and payouts for our NEOs. +Compensation Governance Practices +We are committed to maintaining good corporate governance and practices. As a result, and in response to input from stockholders, the Compensation Committee and the Board have adopted a number of changes over the past several years to specifically respond to stockholder concerns and better align our compensation program with performance. These changes and certain other important aspects of our compensation practices are summarized below: +Performance Mix – The vast majority of our NEOs’ compensation is performance-based. For example, for NEOs other than our CEO, 67% of their aggregate annual compensation consists of performance-based compensation. +Diversified and Performance Based Portfolio – Our executive compensation consists of a mix of cash/equity, fixed/ variable and short-term/long-term compensation. +Performance Vested Equity – 50% of our NEOs’ annual equity awards consist of PRUs that will not vest until three years after the grant date and only if certain performance measures are met during the three-year period. +Long-Term Focus – Equity awards are subject to long-term vesting requirements, with time-vested RS vesting over 3 years. PRUs also vest only after three years. Structuring our equity awards in this manner helps align the interests of our executives with the long-term interests of our stockholders. +Target Bonus Objectives – Our annual bonus plan is paid based on the achievement of annual financial objectives, strategic objectives or a combination thereof, in order to incentivize management to achieve financial performance objectives. +Limited Bonus Discretion – The aggregate bonus for annual cash bonuses is determined pursuant to a formula tied to the Company’s achievement of specific financial objectives. The Board and Compensation Committee can make discretionary adjustments to the performance factor, but such adjustments are limited to +/- 10% of the bonus amount determined under the plan’s self-funding formula. Furthermore, the Compensation Committee and Board can make further downward discretionary adjustments to the annual incentive bonus based on profitability and cash liquidity needs of the Company. The Compensation Committee has implemented a policy that positive discretion will not be applied to individual objectives in determining payouts for our NEOs. +Balanced Performance Metrics – Variable compensation is based on a combination of corporate and individual performance, measured over varying timeframes to help ensure balanced incentives for executives. +Change-in-Control Severance and Tax Gross Ups – Our policy is that employment agreements with our executives provide for “double trigger” change-in-control severance rather than “single trigger” change-in-control severance and do not provide for a 280G income tax gross up. +33 +Table of Contents +Strong Stock Ownership and Retention Conditions – We have implemented stock ownership requirements of six (6) times salary for our President and CEO, two (2) times salary for our Chief Financial Officer and one (1) times salary for other NEOs. +Prudent Benchmarking – The total compensation paid to our executives is targeted at the 50 th percentile of our Peer Group of comparable companies based on achievement of performance objectives. We use a Peer Group consisting of companies in the medical diagnostic and healthcare industries comparable in size to the Company based on total revenues and market value. +Independent Compensation Consultants – The Compensation Committee regularly utilizes independent compensation consultants to provide compensation governance, design and benchmarking advice. During 2024, the Compensation Committee engaged Pay Governance as its independent consultant. +Recoupment Policy – The Company maintains a compensation recoupment or “clawback” policy, under which we will seek to recover excess compensation paid to an executive if our financial statements are restated due to misconduct by that executive. +No Repricing – Our LTIP prohibits both the repricing and repurchase of underwater stock options or other equity awards without stockholder approval. +No Perquisites – As a general matter, we do not provide executives with any perquisites that are not offered to all employees of the Company. +Risk Review Process – We periodically assess the risks associated with our compensation programs. +No Hedging – Our policy prohibits Directors and NEOs from engaging in hedging activities with respect to our stock. +No Pledging – Our Directors and NEOs are not permitted to pledge our stock. +Confidentiality/Non-Compete Agreements – Our NEOs are subject to confidentiality and non-compete agreements. +Say-on-Pay Results in 2024, Stockholder Feedback and the Company’s Response +Stockholder Outreach +We regularly solicit input from our stockholders. Our executive leadership team and Board believe that on-going engagement with our investors provides valuable feedback for consideration on a variety of important matters, including on governance, policy, human capital, and executive compensation, as well as input regarding our efforts to build a stronger and more sustainable growth enterprise. At our 2023 Annual Meeting, 66% of stockholder votes cast were in favor of the “Say on Pay” (“SOP”) advisory vote on executive compensation. Accordingly, we conducted a robust stockholder engagement effort in 2023 to discuss and solicit feedback regarding our executive compensation program, as well. We implemented changes to our executive compensation program based upon such feedback and accordingly, at our 2024 Annual Meeting, 93% of stockholder votes cast were in favor of the SOP advisory vote. +During 2024, we continued to conduct a robust stockholder engagement effort that built on our 2023 outreach: +• We contacted investors that, in total, represent more than 50% of our outstanding shares, including our 10 largest stockholders, +• We engaged in active dialogue with investors holding more than 35% of our outstanding shares, in total. +OraSure Participants in Stockholder Engagement +Our engagement team included the following participants: +• Mara Aspinall - Chair of the Board, Independent Director, and member of the Audit Committee +• Bob McMahon - Independent Director and Chair of the Audit Committee +• Carrie Eglinton Manner - CEO and Director +• Ken McGrath - Chief Financial Officer +34 +Table of Contents +• Management representatives from our investor relations team +Our Chair of the Board participated in more than 50% of these stockholder engagement meetings that were focused on governance-related topics. +During each meeting, our CEO and CFO offered to recuse themselves during conversations regarding Executive Compensation, if requested by the stockholder. +We discussed the feedback from our investor outreach with the Compensation Committee in detail, as well as sharing highlights with the full Board. The table below summarizes some of the most frequent areas of feedback that we received from our stockholders and the actions taken in response to this input: +35 +Table of Contents +Topic +What we heard +Company Response & Actions +Executive Compensation +Payment of severance benefits in 2022 for a non-qualifying termination were a concern +We discussed the topic of severance benefits paid for non-qualifying terminations with stockholders throughout our engagement process, and a vast majority of stockholders did not consider it to be a cause for concern going forward. +In 2023 and 2024, we did not pay any executive severance, and in the future, we plan to only pay executive severance benefits for qualified terminations. +Alignment of Pay-for-Performance with Key Measures of Success +Building upon the changes we made in 2023, we further refined our OTIP and LTIP in 2024 to include the following performance objectives: +OTIP: In 2023, the Compensation Committee removed individual performance modifiers for NEOs and capped revenue payout at 100% if core revenue does not grow, which practice continued in 2024. +LTIP changes in 2023 and 2024 included: +• Increased the weight of the rTSR component to 50% +• Changed rTSR comparison from Healthcare Index to peer group. Increased the rTSR target to 51st percentile (p51) so that OraSure has to outperform the broader market to achieve 100% attainment +• Added a rTSR performance threshold so that attainment is capped if absolute TSR is negative +• Added Revenue performance thresholds aligned with our operating cash flow targets +• 50% of our LTIP is performance-based +Provide key measures of success for NEOs for the current year in the proxy statement +• Given that we do not currently provide forward-looking annual financial guidance in our external public disclosures, we plan to continue to share OTIP/LTIP resulting payouts through the proxy cycle, rather than through metrics ahead of time. +Equity grants should be a part of Pay-for-Performance rather than one-time or retention grants +• 50% of our LTIP is performance-based +• No issuance of one-time grants for employee retention in 2023 or 2024 +36 +Table of Contents +Governance +Disclose a Board skills matrix +• A board skills matrix was included in our Proxy Statement in 2023 and 2024. +• As part of our ongoing governance process, we survey and collect information about the skills represented on our board on an annual basis +Consider a de-classified board structure +• We reaffirmed our view that staggered, three-year terms provide governance continuity, and enable directors to focus as a group on the Company’s long-term performance for stockholder value creation +Sustainability +Identification of Sustainability-related topics that are Material to our Company +• We conducted a Materiality Assessment with an external consultant and shared the results in our ESG Report that was published in May 2024 +Environmental +Disclosure of Scope 1 and Scope 2 Greenhouse Gas (GHG) emissions data +• We completed a study of our GHG emissions and shared the results as part of our ESG Report in May 2024 +Social and Human Capital Disclosure of additional data regarding our workforce and Human Capital initiatives +• We disclosed additional data and discussion on this topic, including our recruiting, retention, and employee engagement initiatives, as part of our ESG Report +Cybersecurity +Provide additional disclosure regarding our Cybersecurity programs +• We have an information security management system that is designed to protect the Company, our employees, and our customers from cybersecurity threats. This system is informed by the National Institute of Standards and Technology (NIST) Cybersecurity Framework. We have also developed an incident response policy and procedure designed to facilitate the handling of cybersecurity incidents. +• The Audit Committee regularly reviews our cybersecurity program, including a description of risks, and work to mitigate the risks, from cybersecurity threats. +• We revised and updated several of our cybersecurity programs and software vendors following the cybersecurity incident that we disclosed in April 2024. +We believe our stockholder engagement program has been, and continues to be, beneficial for the Company and our stockholders. Our Board and management found our conversations with stockholders to be extremely constructive. We plan to continue to engage in these discussions in the future to ensure that our relevant programs are well understood by all stakeholders and that we remain responsive to stockholder input and concerns. +37 +Table of Contents +Compensation Risk Assessment +Management periodically conducts a risk assessment of the Company’s compensation policies and practices, including its executive compensation program. In its review, management considers the attributes of the Company’s policies and practices and other factors, including: +• The mix of fixed and variable compensation opportunities; +• The balance between annual and long-term performance opportunities; +• The corporate and individual performance objectives established for annual and long-term incentive compensation; +• The internal controls and procedures in place to mitigate risks facing the Company, including the Company’s “clawback” policy and stock ownership guidelines; and +• The risk that unintended consequences could result from various aspects of the Company’s compensation policies and practices. +Based on its consideration of the foregoing, management believes that the Company’s policies and practices are designed with the appropriate balance of risk and reward in relation to the Company’s overall business strategy and do not incentivize employees to take unnecessary or excessive risks. The Company has also concluded that any risks arising from the Company’s compensation policies and practices are not reasonably likely to have a material adverse effect on the Company. +COMPENSATION PHILOSOPHY +The primary objectives of our compensation program for executive officers are to: +Set compensation opportunities at levels sufficient to attract and retain high quality executives, to motivate them to contribute to our success, and to reward them for performance. +Ensure the compensation opportunities provided align the interests of executives with the interests of our stockholders. +Focus our executives on both short and longer-term individual and Company priorities established by the Board and appropriately reward them for performance against these objectives. +The total direct compensation provided to each executive consists of an annual base salary, an annual incentive cash bonus and long-term incentive equity awards. The amount of the incentive cash bonus and the size of annual incentive equity awards are variable and depend on an executive’s and the Company’s achievement of predetermined financial and other objectives. As a result, a substantial portion of each executive’s annual compensation is based on performance. +BENCHMARKING +Among various other internal and external considerations, the Compensation Committee uses the practices and policies at other comparable medical diagnostic and healthcare companies as one piece of context in annually assessing the reasonableness and appropriateness of our executive compensation programs. With the assistance of Pay Governance, an independent compensation consultant engaged by the Compensation Committee, we annually review and select a Peer Group of companies using criteria primarily based on industry and company size. +Based on advice from Pay Governance, the Compensation Committee modified the Peer Group used for benchmark purposes to (i) remove seven of the companies from the prior year’s Peer Group and (ii) add seven new companies to the current Peer Group. This revision ensured that our peer group, which was last revised in 2021, is comprised of similarly sized companies relevant to our business (healthcare supplies, tools and services companies with particular focus on diagnostics) and reflective of the market in which we compete +38 +Table of Contents +for executive talent. The following provides information about the Peer Group used by the Compensation Committee in assessing the competitiveness of executive compensation (all dollars in millions): +Company +FY2024 Revenue 1 +Primary Industry +Adaptive Biotechnologies Corporation +$ 179 +Life Sciences Tools and Services +AngioDynamics, Inc. $ 304 Health Care Equipment +AtriCure, Inc. $ 465 Health Care Equipment +Atrion Corporation +NA 2 +Health Care Supplies +BioLife Solutions, Inc. +$ 82 Life Sciences Tools and Services +CareDx, Inc. +$ 334 +Biotechnology +Castle Biosciences, Inc. +$ 332 +Health Care Services +Cerus Corporation $ 180 Health Care Supplies +Cryoport, Inc. +$ 228 +Life Sciences Tools and Services +Fulgent Genetics, Inc. +$ 283 +Health Care Services +Harvard Bioscience, Inc. 3 +$ 98 +Life Sciences Tools and Services +Heska Corporation +NA 4 +Health Care Equipment +Mesa Laboratories, Inc. $ 216 Life Sciences Tools and Services +NanoString Technologies, Inc. +NA 5 +Life Sciences Tools and Services +Quanterix Corporation 3 +$ 134 Life Sciences Tools and Services +Standard BioTools Inc. +$ 174 Life Sciences Tools and Services +Surmodics, Inc. $ 126 Health Care Equipment +Veracyte, Inc. +$ 446 +Biotechnology +Summary Statistics: +25th Percentile $ 154 +Median $ 216 +75th Percentile $ 318 +OraSure Technologies, Inc. $ 186 Health Care Supplies +Percentile Rank 44% +___________________ +1 Data collected from Standard & Poor’s Capital I.Q. database. +2 Atrion Corporation was acquired in August 2024. +3 Reflects most recently available four quarters of revenues as of September 30, 2024 +4 Heska Corporation was acquired in June 2023. +5 NanoString Technologies, Inc. was acquired in May 2024. +The Compensation Committee seeks to set total direct compensation opportunity levels for each executive near the fiftieth (50 th ) percentile of amounts paid by the Peer Group of companies for performance consistent with the Company’s target financial and other business plans for the applicable year. Use of the fiftieth (50 th ) percentile is intended as a market-based reference and not as a strict target or limit. As a result, the total direct compensation opportunity and the value of specific compensation components for individual executives may fall below or exceed the fiftieth (50 th ) percentile depending on the experience and individual performance of the executive, the criticality of his or her role, the executive’s contribution to our business, and other factors. +In preparing its 2024 competitive assessment of executive compensation, Pay Governance compared the compensation of our NEOs with the pay practices of similar roles at companies within the Peer Group and using data for comparable positions reported in the 2024 Radford Global Life Sciences Survey. Since compensation market data can be volatile from year to year and publicly available data from the Peer Group companies is limited to select leadership positions, the Compensation Committee considers both samples to ensure a thorough understanding of the competitive market. +39 +Table of Contents +2024 EXECUTIVE COMPENSATION COMPONENTS +Overview +Our compensation program consists of the following components: +Compensation Form of +Compensation Purpose +Base Salary Cash Base salaries provide fixed compensation necessary to attract and retain key executives. +Annual Incentive Bonus Awards ("OTIP" plan) +Cash +Bonus awards under the OTIP plan provide performance-based incentives to our executives to achieve both Company-wide financial and strategic goals and the executives’ individual performance objectives. +Long-Term Incentive Awards ("LTIP" plan) +Performance-Vested Restricted Units (PRU) and Time-Vested Restricted Stock (RS) The largest component of our executive compensation is paid in equity. Annual LTIP awards for the NEOs consist of 50% PRUs and 50% time-vested RS in order to provide a strong link between pay and performance. +Benefits 401(k) Plan +Health and Welfare Benefits Retirement and health and welfare benefits provide a complete compensation package that is competitive with the market and addresses the needs of all employees and their families, including our executives. +Employment Agreements +Cash severance and accelerated equity vesting under select and limited circumstances +Severance and accelerated equity vesting are provided to our executive officers upon qualifying terminations only in order to ensure continued focus on the strategic matters of the Company during potentially uncertain times. +Pay Mix +We follow a pay-for-performance approach to executive compensation, with a significant portion of our executives’ compensation consisting of annual incentive cash bonuses and long-term equity awards that are based on the executives’ and the Company’s achievement of predetermined performance objectives. +40 +Table of Contents +The following charts illustrate the relative proportion of 2024 base salaries compared to the performance-based elements of our executive compensation for Ms. Eglinton Manner and the other NEOs. +Approximately 87% of Ms. Eglinton Manner’s aggregate compensation and 67% of the other NEOs’ aggregate compensation for 2024 consisted of performance-based compensation. +Compensation Components in Detail +2024 Base Salaries +Annual base salaries paid in 2024 to our NEOs were established by the Compensation Committee at the beginning of 2024 based on a review of the Company’s performance and the individual contributions of each officer compared to pre-established performance objectives for 2023. The Compensation Committee also considered the Company’s budget for expected salary adjustments and salary levels for comparable roles in the annual benchmarking review prepared by the Committee’s independent compensation consultant. +Based on these factors, the Compensation Committee approved an annual base salary increase for our senior management averaging approximately 3%. Individual salary increases for 2024 were determined by using the following guidelines: +Performance Rating Merit Increase Range +Outstanding 5.0% - 7.0% +Exceeds Requirements 3.0% - 4.0% +Meets Requirements 2.0% - 3.0% +Does Not Consistently Meet 0% - 1.5% +Does Not Meet Requirements 0% +41 +Table of Contents +The NEOs were evaluated based on Company performance and individual objectives established for their respective positions. +As a result of these performance ratings, the Compensation Committee approved the 2024 salary levels set forth below for the NEOs and accepted the CEO's recommendation not to increase her own salary. +NEO 2023 Performance Rating 2023 Salary 2024 +Salary % +Increase +Carrie Eglinton Manner +President and CEO +Outstanding $721,000 $721,000 —% +Kenneth McGrath +Chief Financial Officer +Outstanding $483,000 $497,500 3% +Kathleen G. Weber +Chief Product Officer +Exceeds $473,800 $488,000 3% +2024 OTIP +Annual cash bonuses are included as part of executive compensation because the Compensation Committee and Board believe that a significant portion of each executive’s compensation should be structured as a variable incentive focused on short-term priorities relating to both the overall performance of the Company and the individual contributions of the executive. On an annual basis, the Compensation Committee has adopted, with approval of the Board, the OraSure Technologies Incentive Plan (“OTIP”), which is intended to be the principal vehicle for incentive cash bonus awards. +When establishing the terms of the OTIP, the Compensation Committee and the Board evaluate which funding objectives will provide the most appropriate incentives for our NEOs to improve our annual financial performance. In recent years, OTIP bonuses have been based solely on the achievement of annual financial objectives. Strategic objectives may also be (and in the past have been) used in combination with annual financial objectives where there is greater financial uncertainty facing the Company and the Compensation Committee and the Board desires to incentivize our NEOs to take near-term strategic steps required to drive annual financial growth and stability. In general, the Compensation Committee and the Board will choose those funding objectives, whether they be financial, strategic, or a combination thereof, which in their judgement provide the most appropriate incentive for management to drive improved financial performance on a year-over-year basis. +Individual bonus payments to executives are generally calculated using a formula that considers the executive’s achievement of individual performance objectives, company performance and the executive’s target bonus percentage. Bonuses are paid based on an assessment of each executive’s performance for the applicable year, using targets expressed as a percentage of the executive officer’s annual base salary, as shown below: +Title Target Payout +Opportunities +(% of Salary) +CEO 100% +Chief Financial Officer and Chief Product Officer 50% +If an executive has met or exceeded his or her individual performance objectives and/or the Company’s expectations for the applicable year, he or she may be eligible to receive up to 200% of his or her target bonus, but shall not exceed the Company results payout percentage. The Compensation Committee removed individual performance modifiers for NEOs in 2024 that could result in a higher payout. The Compensation Committee and Board retain the discretion to adjust an individual executive’s performance +42 +Table of Contents +evaluation and to decrease the bonus paid to such individual to reflect the specific contributions of that executive, the Company’s overall performance, market conditions or other circumstances. +The Compensation Committee recommends for Board approval any bonus award for the CEO based on an assessment of the Company’s overall performance. The CEO recommends individual awards for the other executive officers for approval by the Compensation Committee based on an assessment of each executive’s performance against his or her applicable individual performance objectives. The Compensation Committee and Board have the right, in their sole discretion, to decrease or reject any or all of the recommended bonus awards, even if any or all applicable performance criteria have been satisfied, based on the business conditions of the Company or other factors deemed relevant by the Compensation Committee or the Board. +In establishing the 2024 OTIP, the Board and Compensation Committee decided that the bonus plan metrics should be based on the achievement of three key financial objectives: consolidated revenues, adjusted operating income, and cost saving targets. Note, adjusted operating income is defined as our U.S. GAAP operating income adjusted for certain non-cash or non-recurring expenditures including: stock compensation, amortization of acquisition-related intangible assets, reduction in workforce severance, certain inventory reserves for unusual or non-recurring write-downs, impairment losses, and transaction costs. +Under the 2024 OTIP, Threshold, Target and Maximum performance levels were established for the financial objectives. For each objective, the Company must attain a Threshold, as defined by a minimum level of achievement, to be eligible for any payout on that component of the plan. The Target levels for the objective were set at the performance reflected in our Operating Plan for 2024. +The Threshold levels were established as follows: +• Consolidated Net Revenues: 5% below Target +• Adjusted Operating Income: 13% below Target +• Cost Savings: 11% below Target +43 +Table of Contents +The following sets forth the financial objectives and actual achievement under the 2024 OTIP Plan (amounts in millions): +Financial Objectives/Weight Threshold (80%) Target (100%) +Maximum 1 +(150%/200%) +Actual % Achieved +% Calculated +Payout 2 +% Adjusted Actual Payout 3 +Consolidated Net Revenues (50%) $180 $190.1-$194.1 $220 $ 185.8 91% 45.7% 45.7% +Adjusted Operating Income (Loss) (25%) $(18) ($16-$13) +$0 +$ (6.2) 152% 38.0% 25.0% +Cost Savings (25%) 4 +$15 $17.6-$24.5 $30 $ 24.5 100% 25.0% 25.0% +95.7% +1 Maximum consolidated net revenue payout lowered from 200% to 150% and consolidated net revenue payout was further limited to 100% if core revenues in 2024 did not exceed 2023 core revenues of $143.2 million. 2024 core revenues were $138.9 million, and as such, maximum consolidated net revenue payout was limited to 100%. +2 Payout % equals Weight multiplied by Achieved %.To the extent performance falls between two levels, achievement shall be determined using linear interpolation. +3 The achievement level for adjusted operating income had actual results which exceeded Target levels, however, the % achieved was capped at 100% by the Compensation Committee, thereby lowering the Actual Payout %. +4 Cost reductions implemented in 2024 (annualized run rate). +During 2024, we recorded revenues totaling $185.8 million, adjusted operating income (loss) of $(6.2) million, and cost savings of $24.5 million. Revenues declined 54% on a year-over-year basis in 2024 which was below the lower range of the Target performance level representing a 48% decline, but above the Threshold performance level. Adjusted operating income (loss) exceeded the Target performance level but came in below the Maximum performance level, and cost savings equaled the upper range of the Target performance level. This financial performance resulted in a Calculated Payout to Target at 108.7%; however, the Compensation Committee capped the payout on adjusted operating income (loss) at 100%, resulting in a final Adjusted Actual Payout of 95.7% for NEOs. +The Company's performance against its 2024 goals was assessed by the Compensation Committee and the full Board and was used to determine bonus payouts to the Company’s NEOs, which were authorized for payment in February 2025. +Factors Considered in CEO & NEO Performance Evaluation +In evaluating Ms. Eglinton Manner’s and the Company’s performance, the Compensation Committee noted that the Company fell below 100% attainment on its target for Revenue but delivered greater than 100% attainment of its target for Adjusted Operating Income (Loss) and Cost Savings for 2024. Additionally, management made significant progress in its strategic transformation and strengthening the Company's foundation to elevate its core and accelerate future profitable growth. Consolidated revenues were $185.8 million in 2024, representing a 54% decrease from 2023. The Compensation Committee noted that this decrease was primarily driven by an 82% decline in sales of its InteliSwab ® COVID-19 Rapid Test as the Company's contract with the U.S. government was fulfilled, while its core (excluding COVID-19 and Molecular services revenue) portfolio declined 3%. Core revenues included an increase in Diagnostic product revenue of 3% offset by a decrease in Sample Management Solution revenue of 6% as a result of continuing headwinds in end markets and the macroeconomy. +The Compensation Committee also noted that, in spite of significant headwinds, the Company improved its operating efficiency and increased its gross margin 100 basis points through the course of the year to 43% in 2024 from 42% in 2023. The Company also took meaningful action to decrease its operating expenses, which declined by $25 million in 2024 as compared to 2023, excluding non-cash impairment losses. +44 +Table of Contents +The Compensation Committee further noted that the company generated $27 million in cash flow from operations in 2024 despite the significant decline in overall revenues. Furthermore, with its strong balance sheet the Company invested in its innovation pipeline while working to elevate its core and accelerate profitable growth, including by expanding the portfolio of products that its sales teams can offer to customers in several important segments through distribution and strategic agreements including a $30 million investment in a strategic partnership with Sapphiros, the launch of Diagnostics Direct's Syphilis Health Check rapid test through the Company's distribution channels, and a $5 million initial investment in the acquisition of Sherlock Biosciences, Inc. +In view of the foregoing, the Compensation Committee determined that Ms. Eglinton Manner should receive a Meets performance rating for 2024. +The remaining NEOs were evaluated based on Company and individual objectives established for their respective positions. +The Compensation Committee also noted that previously in 2023, the committee changed its consideration of individual performance factors, determining that those ratings may not increase the bonuses for Ms. Eglinton Manner and the other NEOs. Based on individual performance meeting expectations for each of them, the Compensation Committee determined that each would receive a bonus based on their target (% salary) level at the 2024 Company Performance Factor with no further individual adjustment. +Using the approach described above, a final 2024 incentive cash bonus was calculated for Ms. Eglinton Manner, representing approximately 95.7% of her target bonus, as follows: +2024 +Salary X Bonus +Target +(% Salary) X 2024 Company Performance Factor X +2024 +Individual +Performance +Factor (1) += 2024 +Bonus +$721,000 100% 95.7% 100% $689,997 +(1) Individual performance factor for NEOs cannot exceed 100% which has the affect of limiting NEO payments to a maximum of the Company performance factor. +This same formula was used to calculate the 2024 bonus awards for all other NEOs, as follows: +2024 NEO Bonus Payments +NEO 2024 +Salary Bonus +Target +(% Salary) 2024 Company Performance Factor +2024 +Individual +Performance +Factor (1) +2024 +Bonus +Kenneth McGrath +Chief Financial Officer +$497,500 50% 95.7% 100% $238,054 +Kathleen G. Weber +Chief Product Officer +$488,000 50% 95.7% 100% $233,508 +(1) Individual performance factor for NEOs cannot exceed 100% which has the affect of limiting NEO payments to a maximum of the Company performance factor. +2024 LTIP +An additional way that we promote the long-term growth of the Company and align the interests of our executives with those of our stockholders is by compensating executives with equity in the Company that vests over a multi-year period and in part only on achievement against certain performance expectations. To accomplish this, the Compensation Committee administers the Company’s LTIP pursuant to which grants of RS and PRUs are made to executive officers. +45 +Table of Contents +Incentive equity awards under the LTIP are made on an annual basis, and are discretionary and subject to approval by the Compensation Committee and/or the Board. Awards to individual participants under the LTIP are based on an evaluation of a number of factors, including: +• Performance of the participant for the applicable year; +• The participant’s level of responsibilities and relative contribution to the Company’s business; +• A competitive assessment of awards at Peer Group companies; +• History of equity awards to the participant; and +• Other factors deemed relevant by the Compensation Committee and/or the Board. +Each participant’s individual performance for the applicable year is evaluated against his or her individual performance objectives for that year, except for our CEO who is evaluated based on total Company performance. A “Meets Expectations” performance is typically the threshold requirement to receive an equity award under the LTIP. Awards below this performance level may be considered on an exception basis at the discretion of the Compensation Committee and/or the Board. +The value of potential incentive equity awards that could have been granted in 2024 under the LTIP (expressed as a percentage of annual base salary) based on performance during 2023, are summarized below: +2024 LTIP Award Ranges (% of salary) +Performance +Position Lower End Target Maximum +President/CEO Market Assessment 300% Market Assessment +Chief Financial Officer 105% 140% 175% +Chief Product Officer 95% 125% 155% +The percentages set forth above were established at levels that the Compensation Committee believed represented an appropriate long-term incentive compensation value for each executive, based on the results of the benchmarking review prepared by its independent consultant. Once the aggregate dollar value of an award has been established by applying the Compensation Committee approved award percentage to a participant’s base salary, the value is converted into shares or units based on a valuation of the restricted stock and restricted unit portions of the award using the average of the high and low stock price on the grant date as reported on the Nasdaq Stock Market. +Under the LTIP, 50% of an executive’s total equity award consists of PRUs that will not vest until three years after the grant date and only if certain performance measures are met during that three-year period. +46 +Table of Contents +The awards made in 2024 incorporate two performance metrics, each at 50% weighting and each with a performance threshold payout modifier: +Component (Weighting) PRU Performance Metrics PRU Performance Threshold Payout Modifier* +Revenue (50%) +Cumulative revenues during the three-year period beginning with 2024 +Profitability: cash from operations (CFO) must be positive in 2025 to payout on cumulative revenue > 100% of target +rTSR (50%) +Relative TSR performance vs peer group (1) +TSR: If the Company's TSR is negative, the payout on rTSR cannot exceed 105% of target +(1) See peer group above in Benchmarking section. +With respect to each of the performance metrics, the Compensation Committee approved the following threshold, target, and maximum levels of achievement, with the performance threshold payout modifier set forth above: +Component (Weighting) +Threshold * +(50% of Target payout) +Target * +(100% of Target Payout) +Maximum * +(150% of Target Payout) +Revenue (50%) $450 million $500 million $550 million +rTSR (50%) p25 +p51 +p75 +*To the extent performance falls between two levels, achievement shall be determined using linear interpolation +The remaining 50% of each executive’s incentive equity award consists of grants of time-vested RS that vest in equal annual installments over a three-year period. These vesting restrictions serve to promote the Company’s long-term growth by restricting executives’ ability to realize short-term gains from their awards. The Compensation Committee believes the terms of its incentive equity awards to executives are competitive with the terms of equity awards offered at comparable medical diagnostics and healthcare companies. +The structure of the equity awards reflects market-based good governance practices as well as historical input from our stockholders reflecting that a meaningful portion of the equity awards should have performance-based vesting. We believe 50% is a meaningful portion and is consistent with or exceeds the performance orientation of our Peer Group. +The adoption of performance-based vesting conditions with a three-year service requirement for 50% of an executive’s annual equity award substantially strengthens the link between pay and performance and creates an appropriate long-term incentive for our executives. At the same time, the use of time-based vesting conditions for the remaining 50% of each award achieves the equally important goal of share ownership/accumulation that directly promotes alignment with stockholders and further supports executive retention. +Overall, the Compensation Committee and Board believe that our approach represents a balanced performance-based approach to our executive compensation program that is appropriate for our Company, directly responds to feedback from our stockholders, and is consistent with executive pay governance best practices. +Equity awards are generally made by the Compensation Committee each year as part of the normal annual compensation cycle. The awards for a particular year generally occur in early February or early March of the following year after the Company’s full year financial results are known and performance evaluations for the executive officers have been prepared. Equity awards approved by the Compensation Committee for the CEO are then reviewed and approved by the Board. In addition to the annual equity awards, the Compensation Committee may approve equity awards for newly hired officers or in recognition of an executive’s promotion or expansion of responsibilities. These latter grants may have vesting or other terms that differ from the terms +47 +Table of Contents +generally approved for annual equity awards. Notwithstanding the terms of the LTIP, equity awards are made at the discretion of the Compensation Committee or Board. +Effective March 1, 2024, the Compensation Committee approved equity awards for the NEOs under the LTIP based on the performance evaluations of such officers for 2023, as summarized below. A description of the basis for each of the NEO’s 2023 performance evaluation is set forth above under the Section entitled, “2024 Base Salaries,” in this CD&A. +The following summarizes the equity award provided to the NEOs during 2024 under the LTIP: +Executive Officer +2023 +Performance +Assessment +Time Vested Restricted Stock (50%) (# shs) +Performance-Vested Restricted Units (50%) (# shs) +Carrie Eglinton Manner President and CEO +Outstanding +260,688 260,688 +Kenneth McGrath Chief Financial Officer +Outstanding +58,759 58,759 +Kathleen G. Weber Chief Product Officer +Exceeds +41,171 41,171 +2022 PRUs (Performance Period Ending December 31, 2024) +Pay Out Under 2022-2024 PRUs . The PRU portion of equity awards made to executives in early 2022 based on performance during 2021 did not vest until three years after the grant date, based on two performance metrics: cumulative revenues and TSR during the three-year period beginning in 2022 and ending December 31, 2024. The three-year service period for these PRUs expired on February 1, 2025. The PRU grant made to Carrie Eglinton Manner as part of her on-boarding package with a grant date of June 4, 2022 (her hire date) contained the same performance metrics and performance period as those granted to other executives in early 2022, with the exception that the service period for Ms. Eglinton Manner will expire on June 22, 2025. The following table summarizes the potential range of shares that could be delivered based upon the degree of achievement of the applicable performance measures: +3-Year Cumulative Revenue Payout Percentage* +$933 - $1,066 million up to 120% +$844-932 million 100% +$710-843 million 50% +Below $710 million 0% +• intermediate results are interpolated on a straight line basis +OraSure's TSR vs. Healthcare Index +PRU Payout Modifier +Above 110% 110 - 115% linear interpolation +90%-110% 100% +Below 90% 85-90% linear interpolation +For the 2022 PRUs, the Company's cumulative three-year revenue was $978.8 million and was 116% of the cumulative three-year revenue target. The Company's TSR modifier for the three year measurement period was 85% as the Company's TSR underperformed compared to the Nasdaq Health Care Index. This combination resulted in a payout of 103%. The following summarizes the three-year cumulative +48 +Table of Contents +revenue target for the 2022 PRUs and, our performance against this target and the resulting number of shares earned: +Performance Target Actual Performance % of Target +% Earned +Revenue $844-932 million +$978.8 million +116% 121% +rTSR Modifier 85% +Total +103% +2022-2024 PRU’s Target and Actual Payout +Target +(# of shs) +Actual +(# of shs) +Carrie Eglinton Manner 1 +325,932 335,710 +Kenneth McGrath 2 +N/A N/A +Kathleen G. Weber 34,061 35,083 +1 Ms. Eglinton Manner's shares will vest on 6/22/2025. Accordingly, the shares noted herein are the actual shares that will be paid out at that time, subject to her continued employment through such date. +2 Mr. McGrath did not receive any 2022-2024 PRU’s as per the timing of his on-boarding package. +49 +Table of Contents +OTHER COMPENSATION +We provide minimal additional benefits outside of our primary elements of compensation, as follows: +Retirement Programs +All of our U.S. employees, including executive officers, are eligible to participate in our 401(k) profit sharing plan (the “401(k) Plan”). We make matching contributions for participants on a dollar-for-dollar basis up to $4,000 per year. Our subsidiary DNA Genotek, which is located in Canada, offers a registered retirement plan to its employees, which similarly allows employee contributions for retirement savings, with matching contributions by DNA Genotek of up to CAD $4,000 per year. +The Company also maintains the OraSure Technologies, Inc. Deferred Compensation Plan (the “Deferred Compensation Plan”) for the benefit of the Company’s highly compensated employees, including all of the NEOs, and its non-employee Directors. The Deferred Compensation Plan allows participants to defer up to 100% of their annual base salaries (or fees in the case of non-employee Directors) and up to 100% of annual incentive cash bonuses and, upon vesting, restricted shares of the Company’s Common Stock awarded to the participant. The Company may also make discretionary contributions to the participants’ accounts that vest over one or more years as determined by the Company, as well as upon death, disability or a change of control. Since the Deferred Compensation Plan was put in place, the Company has made no discretionary contributions. Participants may elect to receive distributions of deferred amounts on a specified date, separation from service, a change of control, disability and/or death. A further description of these benefits is set forth in the Section entitled “Nonqualified Deferred Compensation.” +Perquisites and Other Compensation +As a general matter, the Compensation Committee and Board do not believe that executive officers should be treated differently than other employees by receiving special perquisites unrelated to our general compensation program. Therefore, our healthcare, disability, and other insurance programs and benefits are the same for all eligible employees, including executive officers. Executive officers generally do not receive any additional perquisites, except for Ms. Weber who receives certain benefits under her employment agreement in connection with her international assignment at our Canadian subsidiary, DNA Genotek, Inc. A further description of these benefits is set forth in the Section entitled, “Employment Agreements and Potential Payments Upon Termination or Change of Control.” +Potential Payments Upon Termination or Change of Control Pursuant to Employment Agreements +The Company has entered into employment agreements with each of the NEOs. In addition to the compensation elements discussed above, these agreements provide for post-employment severance payments and benefits in the event of termination of employment by the Company without “cause” or by the executive for “good reason” and provide enhanced severance payments upon such terminations in connection with a “change of control” of the Company. The terms of these arrangements are discussed in more detail under the Section entitled, “Employment Agreements and Potential Payments Upon Termination or Change of Control,” in this Proxy Statement. The Compensation Committee believes that these arrangements are generally consistent with industry practice at the Peer Group companies, provide an incentive to the applicable executive to remain with the Company, and serve to align the interests of stockholders and the executives in the event of a change of control of the Company. +Accounting and Tax Treatment of Compensation +In approving the amount and form of compensation for the NEOs, the Compensation Committee considers all elements of the cost to the Company of providing such compensation, including accounting and tax implications. In particular, it considers the potential impact of Section 162(m) of the Internal Revenue Code (the “Code”), which disallows a tax deduction for any publicly-held corporation for individual compensation exceeding $1 million in any taxable year for certain covered employees. Notwithstanding these deductibility limitations, the Compensation Committee intends to maintain flexibility to pay compensation that is not entirely deductible when the best interests of the Company would make that advisable. +50 +Table of Contents +Compensation Recoupment Policy +The Board has adopted a compensation recoupment or “clawback” policy, applicable to all officers subject to Section 16 of the Exchange Act. Under this policy, the Company will pursue recoupment of any excess compensation, which was awarded to a covered officer based on financial statements of the Company where such statements are required to be restated. In addition to recoupment of any excess compensation, the Company will seek to recoup up to 100% of all incentive-based compensation in the case of (i) willful, knowing or intentional misconduct or a willful, knowing or intentional violation of any of the Company's rules or applicable legal or regulatory requirements or (ii) fraud in the course of a covered employee's employment. The recovery period for recoupment of any compensation is up to three fiscal years preceding the date on which the Company determines it is required to prepare and file the restated financial statements. This policy has been adopted to comply with the final guidance under Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“the Dodd-Frank Act”). +51 +Table of Contents +COMPENSATION TABLES +SUMMARY COMPENSATION TABLE +The following table summarizes the compensation of our CEO and the other NEOs, for the fiscal years ended December 31, 2024, 2023 and 2022: +Name & Principal Position Year +Salary ($) (1) +Bonus ($) +Stock Awards +($) (2) (3) (4) +Option Awards ($) +Non-Equity Incentive Plan Compensation ($) (5) +Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) +All other +Compensation +($) (6) +Total ($) +Carrie Eglinton Manner 2024 $ 721,000 — $ 4,187,301 — $ 689,997 — $ 4,000 $ 5,602,298 +President and Chief Executive Officer 2023 $ 721,000 — $ 4,873,637 — $ 1,103,130 — $ 4,000 $ 6,701,767 +2022 $ 376,923 — $ 5,600,000 — $ 770,000 — — $ 6,746,923 +Ken McGrath 2024 $ 497,500 — $ 943,816 — $ 238,054 — $ 4,000 $ 1,683,370 +Chief Financial Officer 2023 $ 483,000 — $ 672,104 — $ 369,495 — $ 4,000 $ 1,528,599 +2022 $ 173,558 — $ 400,000 — $ 261,250 — $ 4,000 $ 838,808 +Kathleen G. Weber 2024 $ 488,000 — $ 661,309 — $ 233,508 — $ 14,921 $ 1,397,738 +Chief Product Officer 2023 $ 473,800 — $ 752,471 — $ 362,457 — $ 91,603 $ 1,680,331 +2022 $ 460,000 — $ 801,778 — $ 241,500 — $ 172,920 $ 1,676,198 +1 The 2022 salary shown for Ms. Eglinton Manner represents the amount paid to Ms. Eglinton Manner after she joined the Company on June 4, 2022 and the 2022 salary shown for Mr. McGrath represents the amount paid to Mr. McGrath after he joined the Company on August 8, 2022. +2 The indicated amounts reflect the aggregate grant date fair value of RS and PRU awards made to the NEOs during the applicable year, computed in accordance with FASB ASC Topic 718. The value of the PRUs reflect the assumption that 100% of target will be achieved for each of the performance measures reflected in the terms of the PRUs. Certain assumptions used in the calculation of the indicated amounts are set forth for the applicable year of award in footnote 11 to the Company’s audited consolidated financial statements for the year ended December 31, 2024, included in the Company’s Annual Report on Form 10-K filed with the SEC on March 7, 2025 (the “2024 10-K Report”). +3 The indicated amount for Ms. Eglinton Manner in 2022 includes her Make Whole Award of $4,000,000. +4 The indicated amounts in 2022 do not include the grant of 2022 PRU awards as the metrics were not finalized until 2023 and, accordingly, the grant-date fair value of the 2022 PRUs was not determined as of December 31, 2022. Accordingly, the amounts indicated in 2023 include both the value of the 2022 PRUs and the value of the 2023 PRUs. The maximum grant-date fair values of the PRU awards, assuming the highest level of performance measures will be achieved, are summarized in the table below: +Grant Year +Name & Principal Position +2024 2023 2022 +Carrie Eglinton Manner +President and Chief Executive Officer +$ 3,468,454 $ 2,450,327 $ 1,885,354 +Ken McGrath +Chief Financial Officer +$ 781,788 $ 509,207 $ — +Kathleen G. Weber +Chief Product Officer +$ 547,780 $ 440,293 $ 197,026 +5 The indicated amounts reflect incentive cash bonuses paid to the NEOs pursuant to an Incentive Plan, based on performance during the applicable year. For a description of incentive cash bonus payments for performance during 2024, see the Section entitled, “2024 OTIP,” in the CD&A. +6 The indicated amounts of $4,000 in 2024 reflect cash contributed to a 401(k) profit sharing plan as an employer-matching contribution, which was offered to U.S. employees of the Company during each of the indicated years. Ms. Weber’s 2024 amount represents $4,000 in matching contributions to a 401(k) profit sharing plan, $9,784 for reimbursement of tax preparation fees, and $1,137 in tax equalization payments. +52 +Table of Contents +GRANTS OF PLAN-BASED AWARDS +The following table summarizes information concerning possible incentive cash bonuses and possible and actual RS and PRU awards for the NEOs during the fiscal year ended December 31, 2024: +Estimated Possible Payouts +Under Non-Equity Incentive +Plan Awards (2) +Estimated Possible Payouts Under +Equity Incentive Plan Awards (3) +Name & Principle Position Grant +Date Threshold +($) Target +($) Maximum +($) Threshold +(# Shs.) Target +(# Shs.) Maximum +(# Shs.) +All other Stock +Awards: +Number +of Shares +of Stock +or Units (4) +(#Shs.) +All other +Option +Awards: +Number +of +Securities +Underlying +Options +(#Shs.) Exercise +of Base +Price of +Option +awards +($/Sh) +Grant +Date +Fair +Value of +Stock +Awards (5) +($) +Carrie Eglinton Manner +President and Chief Executive Officer +3/1/2024 +(1) +— — — — — — 260,688 — — $ 1,874,998 +3/1/2024 +(1) +— — — 130,344 260,688 391,032 — — — $ 2,312,303 +NA $ 576,800 $ 721,000 $ 1,442,000 — — — — — — N/A +Ken McGrath +Chief Financial Officer 3/1/2024 +(1) +— — — — — — 58,759 — — $ 422,624 +3/1/2024 +(1) +— — — 29,380 58,759 88,139 — — — $ 521,192 +NA $ 199,000 $ 248,750 $ 497,500 — — — — — — N/A +Kathleen G. Weber +Chief Product Officer 3/1/2024 +(1) +— — — — — — 41,171 — — $ 296,122 +3/1/2024 +(1) +— — — 20,586 41,171 61,757 — — — $ 365,187 +N/A $ 195,200 $ 244,000 $ 488,000 — — — — — — N/A +1 Annual incentive equity awards to NEOs consisted of a combination of time-vested RS and PRUs that were granted in 2024 pursuant to the LTIP based on performance during 2023. Annual equity awards made during 2024 were approved by the Compensation Committee effective on February 15, 2024. For a description of these equity awards and their terms, see the Section entitled, “2024 Long-Term Incentive Awards,” in the CD&A. +2 The indicated amounts represent potential incentive cash bonus payments to the NEOs under the 2024 OTIP Plan. On February 15, 2025, bonus payments under the 2024 OTIP Plan were approved by the Compensation Committee for the NEOs (except for Ms. Eglinton Manner) and by the Board for Ms. Eglinton Manner, in each case based on performance during 2024. The Threshold and Target amounts assume the executive receives 80% and 100% of his or her target bonus if the Company achieves 80% and 100% for each performance objective in the 2024 Incentive Plan, respectively. The maximum amounts assume that the recipient receives 200% of his or her target bonus if the Company achieves 200% or the maximum level for each performance objective in the 2024 OTIP Plan. A further description of the payments approved under the 2024 OTIP Plan is set forth in the Section entitled, “2024 OTIP,” in the CD&A. +3 The indicated amounts represent the threshold, target, and maximum number of shares which could be earned under the PRU awards granted to the NEOs in 2024 pursuant to the LTIP, based on performance during 2023. The target share numbers for each potential award were calculated by dividing 50% of the long-term incentive targets for each NEO set forth in the LTIP by the mean between the high and low sales price of the Common Stock as reported by Nasdaq on the date of grant. The target number of shares corresponding to the PRUs were calculated based on the assumption that 100% of target is achieved for each of the performance measures set forth in the terms of such PRU awards. The actual number of shares received upon vesting of the PRUs could vary from 50% to 150% of target depending on the degree to which the performance measures are achieved. +4 The indicated amounts represent the actual number of shares of RS granted to the NEOs in 2024 under the LTIP, based on performance during 2023. A further description of these equity awards and their terms is set forth in the Section entitled, “2024 LTIP,” in the CD&A. +5 The indicated amounts represent the grant date fair value calculated in accordance with FASB ASC Topic 718. +53 +Table of Contents +OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2024 +The following table summarizes information regarding unexercised stock options and unvested RS and PRUs held by the NEOs as of December 31, 2024: +Option Awards Stock Awards +Name Number of +Securities +Underlying +Unexercised +Options +(#) +Exercisable +Number of +Securities +Underlying +Unexercised +Options 1 +(#) +Unexercisable +Equity +Incentive +Plan +Awards: +Number of +Securities +Underlying +Unexercised +Unearned +Options (#) Option +Exercise +Price +($/Sh.) Option +Expiration +Date +Number of +Shares or +Units of +Stock +That +Have +Not +Vested 1 (#) +Market +Value of +Shares or +Units of +Stock +That +Have Not +Vested 5 ($) +Equity +Incentive +Plan +Awards: +Number of +Unearned +Shares, +Units or +Other +Rights +that +Have Not +Vested 1 (#) +Equity +Incentive +Plan +Awards: +Market +or Payout +Value of +Unearned +Shares, +Units or +other +Rights +That +Have Not +Vested 5 ($) +Carrie Eglinton Manner +President and Chief Executive Officer +— — — — — 108,644 +2(a) +$392,205 — $— +— — — — — 172,043 +2(b) +$621,075 — $— +— — — — — 260,688 +2(c) +$941,084 — $— +— — — — — — $— 335,710 +2(d) +$1,211,913 +— — — — — — $— 258,065 +2(e) +$931,615 +— — — — — — $— 130,344 +2(f) +$470,542 +— — — — — — $— 130,344 +2(f) +$470,542 +Kenneth McGrath +Chief Financial Officer +— — — — — 43,961 +3(a) +$158,699 — $— +— — — — — 35,753 +3(b) +$129,068 — $— +— — — — — 58,759 +3(c) +$212,120 439,758 +— — — — — — $— 53,629 +3(d) +$193,604 +— — — — — — $— 29,379 +3(e) +$106,058 +— — — — — — $— 29,380 +3(e) +$106,062 +Kathleen Weber +Chief Product Officer +10,404 — — $9.31 2/3/2025 — $— — $— +— — — — — 20,300 +4(a) +$73,283 — $— +— — — — — 11,354 +4(b) +$40,988 — $— +— — — — — 30,914 +4(c) +$111,600 — $— +— — — — — 41,171 +4(d) +$148,627 — $— +— — — — — — $— 35,083 +4(e) +$126,649 +— — — — — — $— 46,371 +4(f) +$167,399 +20,586 +4(g) +$74,315 +— — — — — — $— 20,585 +4(g) +$74,312 +1 Stock options vest over four years, with the first 25% vesting on the first anniversary of the grant date and the remaining 75% vesting on a monthly basis over the next three years following the first anniversary of the grant date. Grants of RS vest over a three-year period, with one-third vesting on the first anniversary of the grant date, a second third vesting on the second anniversary and the final third vesting on the third anniversary. PRUs will not vest until three years from the grant date and only if certain performance measures are met during the three-year service period. +2 The indicated RS and PRUs vest as follows: +(a) 108,644 restricted shares vest on June 4, 2025; and +(b) 86,021 restricted shares vest on March 1, 2025 and 86,022 vest on March 1, 2026, respectively. +(c) 86,896 restricted shares each vest on March 1, 2025, March 1, 2026, and March 1, 2027, respectively. +(d) 335,710 PRUs were earned as of December 31, 2024, based upon achievement of applicable performance metrics and shall cliff vest on June 4, 2025. +(e) 258,065 PRUs cliff vesting on March 1, 2026, provided the 3-year revenue and TSR metrics have been achieved. +(f) 130,344 PRUs cliff vesting on March 1, 2027, provided the 3-year revenue and TSR metrics have been achieved. +3 The indicated RS and PRUs vest as follows: +(a) 43,961 restricted shares vest on August 8, 2025. +(b) 17,877 restricted shares vest on March 1, 2025 and 17,876 vest on March 1, 2026. +(c) 19,586 restricted shares each vest on March 1, 2025 and March 1, 2027, and 19,587 vest on March 1, 2026, respectively. +(d) 53,629 PRUs cliff vesting on March 1, 2026, provided the 3-year revenue and TSR metrics have been achieved. +(e) 29,379 and 29,380 PRUs cliff vesting on March 1, 2027, provided the 3-year revenue and TSR metrics have been achieved. +54 +Table of Contents +4 The indicated RS and PRUs vest as follows: +(a) 20,300 restricted shares vest on January 5, 2025. +(b) 11,354 restricted shares vest on February 1, 2025; +(c) 15,457 restricted shares vest on March 1, 2025, and March 1, 2026, respectively. +(d) 13,724 restricted shares each vest on March 1, 2025 and March 1, 2027, and 13,723 vest on March 1, 2026, respectively. +(e) 35,083 PRUs were earned as of December 31, 2024, based upon achievement of applicable performance metrics and cliff vested on February 1, 2025. +(f) 46,371 PRUs cliff vesting on February 1, 2026, provided the 3-year revenue and TSR metrics have been achieved. +(g) 20,586 and 20,585 PRUs cliff vesting on March 1, 2027, provided the 3-year revenue and TSR metrics have been achieved. +5 The indicated values were determined by multiplying the number of unvested shares of RS and target number of unvested PRUs shown in this table by $3.61 per share, the closing price of the Company's Common Stock as reported by Nasdaq on December 31, 2024. +OPTION EXERCISES AND STOCK VESTED +The following table summarizes information with respect to the exercise of stock options and vesting of restricted stock for each of the NEOs during the fiscal year ended December 31, 2024: +Option Awards +Stock Awards 1 +Name Number of Shares Acquired on Exercise +(#) +Value Realized on Exercise 2 +($) +Number of Shares Acquired on Vesting +(#) +Value Realized on Vesting 3 +($) +Carrie Eglinton Manner — $ — 1,009,496 $ 4,912,867 +President and Chief Executive Officer +Ken McGrath — $ — 61,837 $ 330,354 +Chief Financial Officer +Kathleen G. Weber — $ — 77,050 $ 582,703 +Chief Product Officer +1 Includes the vesting of restricted stock awards. +2 The indicated amount represents the number of shares acquired upon the exercise of the options multiplied by the difference between the market value of the Company’s Common Stock on the applicable exercise date and the option exercise price. +3 The indicated amounts were calculated by multiplying the number of restricted shares upon vesting by the market value of the Company’s Common Stock on the applicable vesting date. The market value was determined by calculating the mean between the high and low sales prices of the Common Stock as reported by Nasdaq on the vesting date. +RETIREMENT BENEFITS +The NEOs are eligible to participate in our 401(k) Plan on the same terms and conditions applicable to other employees. For a further description of the terms of the 401(k) Plan, see the Section entitled, “Retirement Programs,” in the CD&A. +NONQUALIFIED DEFERRED COMPENSATION +The OraSure Technologies, Inc. Deferred Compensation Plan (the “Plan”) is a non-qualified deferred compensation plan designed to provide deferred compensation benefits to a select group of the Company’s highly compensated employees, including all of the NEOs, and to non-employee members of the Board. +The Plan allows for deferrals by participants of up to 100% of their annual base salaries (or in the case of non-employee Directors, 100% of fees payable under the Company’s Non-Employee Director Compensation Policy), up to 100% of annual incentive cash bonuses and, upon vesting, restricted shares of the Company’s Common Stock and shares received in respect of PRUs awarded under the LTIP. The Company may also make discretionary contributions to the accounts of employees participating in the Plan. Cash +55 +Table of Contents +balances in participants’ accounts may be invested in a list of investment options that are similar to the fund choices offered in the Company’s 401(k) plan. Participants will be permitted to sell vested shares in their accounts, subject to compliance with the Company’s Insider Trading Policy and applicable securities laws, and invest the proceeds of any such sale in the investment options available under the Plan. Participants will be 100% vested in their accounts and the restricted shares they defer, except that Company contributions will vest over one or more years as determined by the Company. In the event of death, disability or change of control, a participant will become 100% vested in any then unvested Company contributions. +A Participant may elect to receive a distribution from his or her account upon a specified date, separation from service, change of control, disability and/or death. Distributions will be made in a lump sum or installments, as allowed under the Plan. +Amounts contributed to a participant’s account through elective deferrals or through the Company’s discretionary contributions are generally not subject to income tax, and the Company does not receive a deduction until they are distributed pursuant to the Plan. +However, cash deferrals are subject to the Federal Insurance Contributions Act Tax imposed at the time of deferral (the “FICA tax”). Deferrals of restricted shares and shares received in respect of PRUs are subject to the FICA tax at the time the shares vest, but are not subject to income tax, and the Company does not receive the deduction until the shares are distributed pursuant to the Plan. The Company may amend or terminate the Plan at any time in accordance with applicable law. +None of the Company’s NEO’s participated in the Plan during 2024. +56 +Table of Contents +EMPLOYMENT AGREEMENTS AND POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL +Employment Agreements +We have entered into employment agreements with all of our NEOs. We believe such agreements are necessary to attract and retain critical talent, and are in-line with market practices. The following summary describes certain of the material terms of the employment arrangements with Ms. Eglinton Manner, and the other NEOs. +Ms. Eglinton Manner +In May 2022, we entered into an employment agreement with Ms. Eglinton Manner in connection with her appointment as the Company’s President and CEO, effective June 4, 2022. Under the agreement, Ms. Eglinton Manner would receive (i) an annual base salary of at least $700,000, (ii) an annual cash bonus opportunity under the Company’s annual Incentive Plan with a bonus target of at least 100% of her base salary, (iii) a restricted stock (or restricted stock unit) award for a number of shares of the Company’s common stock determined by dividing $4,000,000 by the average closing price of the Company’s common stock for the 20 trading days immediately preceding the grant date (the “Trailing Average Price”), which award will vest on the second anniversary of the effective date and is intended to replace compensation from her prior employer that Ms. Eglinton Manner will forfeit to accept employment with the Company, (iv) a restricted stock (or restricted stock unit) award for a number of shares of the Company’s common stock determined by dividing $1,600,000 by the Trailing Average Price, which award will vest in three equal annual installments, on the first three anniversaries of the effective Date, and (v) a performance-based restricted stock unit award for a target number of shares of the Company’s common stock determined by dividing $1,600,000 by the Trailing Average Price, which award will be subject to the same vesting and performance conditions as are applicable to the 2022 performance-based restricted stock unit awards granted to the Company’s other executive officers. The agreement also provides that the Company will reimburse Ms. Eglinton Manner for reasonable car service fees incurred to commute between her home and the Company’s offices and, subject to the Company’s policies, other reasonable and necessary expenses incurred in the course of her employment. +Under the terms of Ms. Eglinton Manner’s employment agreement, upon the termination of Ms. Eglinton Manner’s employment due to death, disability, her unilateral termination without good reason (as such term is defined in her employment agreement), or the Company’s termination for cause (as such term is defined in her employment agreement), Ms. Eglinton Manner will be entitled to receive her salary through the date of termination. In the case of a termination upon her death, disability, or her unilateral termination without good reason, Ms. Eglinton Manner will be entitled to receive any annual bonus that has been earned, but not yet paid with respect to a year ending prior to the date of termination. In the case of a termination upon her death or disability or a unilateral termination by Ms. Eglinton Manner without good reason where in either case the termination were to occur after June 30 of any year, Ms. Eglinton Manner will also be entitled to receive a cash bonus for the year of termination prorated through the date of termination. +In addition, in the event of termination for good reason or without cause and not during a change of control period (as defined in her employment agreement), Ms. Eglinton Manner will be entitled to receive additional severance in the form of (i) a lump sum amount equivalent to 18 months of her annual salary (or 24 months if such termination occurs during a change of control period) period plus reimbursement of the costs of continuation coverage under the Company’s health plans (if Ms. Eglinton Manner elects coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985) for a period of 18 months after the date of termination and (ii) a lump sum cash payment equal to 150% (or 200% if such termination occurs during a change of control period) of her target bonus amount for the applicable calendar year in which such termination occurs. If Ms. Eglinton Manner is a “specified employee” within the meaning of Code Section 409A at the time of the termination of his employment and any of the foregoing payments would subject him to any tax, interest or penalty under Code Section 409A or regulation thereunder, then the payment shall not be made until the first day which is at least six months after the date of termination of his employment. +Under the terms of her agreement, all equity awards subject to time-based vesting conditions granted to Ms. Eglinton Manner were required to immediately vest if Ms. Eglinton Manner’s employment was +57 +Table of Contents +terminated for good reason by Ms. Eglinton Manner or by the Company without cause during a change of control period, and 50% of such equity awards would vest in the event Ms. Eglinton Manner’s employment was terminated for good reason by Ms. Eglinton Manner or by the Company without cause during any period other than a change of control period, provided that 50% of any equity awards subject to performance-based vesting conditions would remain eligible to vest if such termination occurs not in connection with a change of control (or 100%, in the case of a termination during a change of control period). +Mr. McGrath +In August 2022, we entered into an employment agreement with Mr. McGrath, pursuant to which Mr. McGrath would receive (i) an annual base salary of at least $475,000, (ii) a target bonus opportunity under the Company’s annual Incentive Plan of 50% of his base salary, and (iii) 131,883 shares of restricted common stock of the Company, which amount was determined by dividing $400,000 by the average closing price of the Company’s common stock for the twenty (20) trading days immediately preceding Mr. McGrath’s commencement of employment. Such award will vest in three equal annual installments, on the first three anniversaries of Mr. McGrath’s commencement of employment, subject in each case to his continued service through the applicable vesting date. +If Mr. McGrath’s employment ceases due to a termination by the Company without cause or his resignation with good reason (as such terms are defined in his agreement), then, subject to his timely execution and non-revocation of a release of claims, he will receive: (i) payment of any otherwise earned but unpaid annual bonus for the preceding year, (ii) a lump sum cash payment equal to (x) 12 months of his annual base salary, plus (y) his target annual bonus amount, (iii) subsidized COBRA premiums for 12 months, (iv) accelerated vesting of 50% of outstanding and otherwise unvested time-based equity awards and (v) an opportunity to earn 50% of outstanding performance-based equity awards, based on actual performance through the end of the applicable performance period. +The severance payments and benefits described above will be provided if the applicable termination of Mr. McGrath’s employment does not occur within a change of control period (as defined in Mr. McGrath’s employment agreement). If Mr. McGrath’s employment ceases due to a termination by the Company without cause or his resignation with good reason, in either case during a change of control period, then in lieu of the above described severance payments and benefits and subject to his timely execution and non-revocation of a release of claims, Mr. McGrath will instead receive: (i) payment of any otherwise earned but unpaid annual bonus for the preceding year, (ii) a lump sum cash payment equal to (x) 24 months of his annual base salary, plus (y) his target annual bonus amount, (iii) subsidized COBRA premiums for 18 months, (iv) accelerated vesting of all outstanding and otherwise unvested time-based equity awards and (v) an opportunity to earn all outstanding performance-based equity awards, based on actual performance through the end of the applicable performance period (but at not less than the target level of performance, if such severance event occurs after the change of control). +Pursuant to the agreement, Mr. McGrath agreed to be restricted from (i) competing with the Company or its affiliates and (ii) soliciting their employees and customers, in each case during his employment and for 18 months thereafter. +Ms. Weber +In January 2019, we entered into an employment agreement with Ms. Weber, in connection with her move to Canada to head our Molecular Solutions business unit. Effective as of December 31, 2021, Ms. Weber’s employment agreement with the Company was amended and she was named President of Molecular Solutions. We promoted Ms. Weber again as our Chief Product Officer, effective November 14, 2022. Pursuant to the amended employment agreement, Ms. Weber will receive (i) an annual base salary of at least $471,000, (ii) a target bonus opportunity under the Company’s annual Incentive Plan of at least 50% of her base salary, and (iii) annual equity awards under the Company’s long-term incentive policy ranging from 125% to 150% of her base salary (with a target of 125%). In addition, Ms. Weber is entitled to receive benefits typical of international assignments, including: +• Legal services paid by the Company for visas and work permits for Ms. Weber and her husband; +• Relocation expenses reimbursed up to $10,000; +58 +Table of Contents +• A housing allowance of up to $3,438 per month; +• Tax equalization payments to the extent Ms. Weber’s Canadian income tax liability exceeds the income tax she would have paid in the United States; +• Reimbursement for tax preparation services; +• An annual expense allowance of $3,544; +• Home leave reimbursement for Ms. Weber and her husband to travel to the United States twice during each 12-month period; and +• Reimbursement for repatriation expenses for Ms. Weber and her husband to relocate back to the United States at the end of her assignment. +If Ms. Weber’s employment ceases due to a termination by the Company without cause or her resignation with good reason (as such terms are defined in her agreement), then, subject to her timely execution and non-revocation of a release of claims, she will receive: (i) any bonus that has been approved by the Board or Compensation Committee prior to the date of termination but not yet paid, (ii) a lump sum cash payment equal to (x) 12 months of her annual base salary, plus (y) her target annual bonus amount, (iii) subsidized COBRA premiums for 12 months, and (iv) accelerated vesting of 50% of outstanding and otherwise unvested equity awards. +The severance payments and benefits described above will be provided if the applicable termination of Ms. Weber’s employment does not occur within the change of control period (as defined in her employment agreement). If Ms. Weber’s employment ceases due to a termination by the Company without cause or her resignation with good reason, in either case during a change of control period, then in lieu of the above described severance payments and benefits and subject to her timely execution and non-revocation of a release of claims, Ms. Weber will instead receive: (i) any bonus that has been approved by the Board or Compensation Committee prior to the date of termination but not yet paid, (ii) a lump sum cash payment equal to (x) 24 months of her annual base salary, plus (y) her target annual bonus amount, (iii) subsidized COBRA premiums for 24 months, and (iv) accelerated vesting of all outstanding and otherwise unvested equity awards. +Such benefits ceased upon Ms. Weber’s relocation to the United States in 2022, except for the tax equalization payments and reimbursement for tax preparation services, which she is entitled to receive until she files her tax return for 2025 (as such benefits relate to the period on or prior to Ms. Weber’s relocation). +59 +Table of Contents +Termination and Severance Benefits +The following table provides estimates of the potential severance and other post-termination benefits the NEOs would receive assuming their employment was terminated as of December 31, 2024: +Name Benefit +Voluntary +Termination +or +Termination +for Cause 1 +Termination +for Death +or Disability 2 +Termination +for Good +Reason or +Without +Cause Not +Within +Change of +Control +Period 2 +Voluntary +Termination +after Change of +Control, or +Termination for +Good Reason or +Without Cause +Within Change of +Control Period 2 +Carrie Eglinton Manner +President and Chief Executive Officer +Salary Continuation $ — $ — $ 1,081,500 $ 1,442,000 +Bonus 721,000 689,997 1,081,500 1,442,000 +Accelerated Option Vesting — — — — +Accelerated Restricted Stock/Unit Vesting — 5,003,677 5,003,677 5,003,677 +Health Care Benefits — — 24,692 24,692 +Total $ 721,000 $ 5,693,674 $ 7,191,369 $ 7,912,369 +Kenneth McGrath +Chief Financial Officer +Salary Continuation $ — $ — $ 497,500 $ 995,000 +Bonus 248,750 238,054 248,750 248,750 +Accelerated Option Vesting — — — — +Accelerated Restricted Stock/Unit Vesting — 905,608 452,804 905,608 +Health Care Benefits — — 23,684 23,684 +Total $ 248,750 $ 1,143,662 $ 1,222,738 $ 2,173,042 +Kathleen G. Weber +Chief Product Officer +Salary Continuation $ — $ — $ 488,000 $ 976,000 +Bonus 244,000 233,508 244,000 244,000 +Accelerated Option Vesting — — — — +Accelerated Restricted Stock/Unit Vesting — 813,485 406,742 813,485 +Health Care Benefits — — 25,597 25,597 +Total $ 244,000 $ 1,046,993 $ 1,164,339 $ 2,059,082 +1 In the event of a unilateral termination by Ms. Weber after June 30, she would receive a prorated bonus for the year in which termination occurs. +2 The indicated values for the accelerated vesting of stock options reflect (i) the number of option shares which would vest on an accelerated basis, multiplied by (ii) the excess, if any, of the $3.61 per share closing price for the Company’s Common Stock, as reported by Nasdaq on December 31, 2024, over the applicable exercise price for each option. The indicated values for the accelerated vesting of RS and PRUs reflect the $3.61 per share closing price on December 31, 2024 multiplied by the number of shares which would vest on an accelerated basis (assuming, in the case of PRUs, that the applicable performance measures for the PRUs are met at 100% of target). +60 +Table of Contents +CEO PAY RATIO +As required by applicable law and SEC regulations, we are providing the following information about the relationship of the median of the annual total compensation of our employees and the annual total compensation of Carrie Eglinton Manner, our President and CEO. +For the 2024 fiscal year, (i) the median of the annual total compensation of all employees of the Company (other than Ms. Eglinton Manner) and its subsidiaries was $71,998; and (ii) the annual total compensation of Ms. Eglinton Manner, as reported in the SCT included immediately after this CD&A, was $5,602,298. Based on this information, for 2024 the ratio of the annual total compensation of Ms. Eglinton Manner, our President and CEO, to the median of the annual total compensation for employees was 78 to 1. +To identify the median of the annual total compensation of all our employees, as well as to determine the annual total compensation of our median employee, we took the following steps: +• We determined that, as of December 31, 2024, our world-wide employee population consisted of 534 people. +• To identify the “median employee” from our employee population, we compared the amount of salary, wages, overtime, commissions and bonuses of our employees as reflected in our payroll records. In making this determination, we did not annualize the compensation of employees who were hired in 2024 but did not work for us for the entire fiscal year. Since we do not widely distribute annual equity awards to our employees, such awards were excluded from our compensation measure. +• Once we identified our median employee, we combined all of the elements of this employee’s compensation for 2024 in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K, resulting in the annual total compensation as described above. +61 +Table of Contents +PAY VERSUS PERFORMANCE +The information below presents the relationship between the compensation of the Company’s named executive officer and certain performance measures in accordance with Item 402(v) of Regulation S-K. For a discussion of the Company’s compensation programs and pay for performance philosophy, please refer to the section captioned “Compensation Discussion and Analysis,” above. +Fiscal Year 2024 Pay versus Performance Table +Summary Compensation Table +Total Compensation Actually Paid Value of Initial Fixed +$100 Investment +Based On: +Fiscal +Year +Carrie +Eglinton +Manner +($) (1) +Nancy +Gagliano, +M.D. +($) (2) +Stephen +S. Tang, +Ph.D. +($) (3) +Carrie +Eglinton +Manner +($) (4) +Nancy +Gagliano, +M.D. +($) (4) +Stephen +S. Tang, +Ph.D. +($) (4) +Average +Summary +Compensation +Table Total for +Non-PEO NEOs +($) (5) +Average +Compensation +Actually Paid +to +Non-PEO NEOs +($) (6) +Total +Stockholder +Return +($) (7) +Peer Group +Total +Stockholder +Return +($) (8) +Net Income +(Loss) +(thousands) +($) (9) +Total +Revenue +(millions) +($) (10) +2024 5,602,298 — — ( 5,710,406 ) — — 1,540,554 140,969 44.96 84.53 ( 19,500 ) 185.8 +2023 6,701,767 — — 13,791,592 — — 1,600,748 2,390,905 102.12 106.34 53,655 405.5 +2022 6,746,923 940,292 2,769,508 6,645,396 347,561 714,651 1,457,621 751,486 60.02 99.31 ( 17,133 ) 387.5 +2021 — — 2,959,781 — — 2,697,616 1,088,815 808,537 108.22 125.43 ( 22,998 ) 233.7 +2020 — — 3,085,421 — — 3,888,690 1,601,825 1,595,129 131.82 130.04 ( 14,922 ) 171.1 +1 During fiscal year 2022, Ms. Eglinton Manner was appointed as our President and CEO effective June 4, 2022. Dr. Gagliano resigned effective June 4, 2022 from her position as the Company’s Interim CEO. +2 During fiscal year 2022, Dr. Gagliano was appointed as our Interim CEO effective April 1, 2022 following Dr. Tang’s termination on March 31, 2022 and resigned from the position effective June 4, 2022. +3 During fiscal years 2022, 2021 and 2020, Dr. Tang served as our President and CEO for all or a portion of the year. Dr. Tang’s employment with the Company as CEO ended on March 31, 2022. +4 Represents amounts of “compensation actually paid” to each of our CEO’s in each of 2024, 2023, 2022, 2021, and 2020 as computed in accordance with Item 402(v) of Regulation S-K, not the actual amount of compensation earned by or paid to each of our CEO’s during fiscal year 2024. The table below reflects the adjustments made from the amounts reported in the “Total” column of the Summary Compensation Table for each year to calculate the amounts set forth in “Compensation Actually Paid to PEO” column in the table above. +Carrie Eglinton Manner Nancy Gagliano, M.D. Stephen S. Tang, Ph.D. +2024 ($) 2023 ($) 2022 ($) 2022 ($) 2022 ($) +2021 ($) (a) +2020 ($) (a) +Summary Compensation Table Total 5,602,298 6,701,767 6,746,923 940,292 2,769,508 2,959,781 3,085,421 +Grant Date Fair Value of Option Awards and Stock Awards Granted in Fiscal Year ( 4,187,301 ) ( 4,873,637 ) ( 5,600,000 ) ( 770,000 ) +(b) +( 834,913 ) ( 1,946,860 ) ( 1,218,000 ) +Fair Value at Fiscal Year-End of Outstanding and Unvested Option Awards and Stock Awards Granted in Fiscal Year 1,787,016 8,377,123 5,498,473 — — 1,337,758 1,799,376 +Change in Fair Value of Outstanding and Unvested Option Awards and Stock Awards Granted in Prior Fiscal Years ( 5,554,086 ) 3,488,559 — ( 40,879 ) — 132,795 237,531 +Fair Value at Vesting of Option Awards and Stock Awards Granted in Fiscal Year That Vested During Fiscal Year — — — 218,148 664,350 — — +Change in Fair Value as of Vesting Date of Option Awards and Stock Awards Granted in Prior Fiscal Years For Which Applicable Vesting Conditions Were Satisfied During Fiscal Year ( 3,358,333 ) 97,780 — — ( 1,387,479 ) 214,142 ( 15,638 ) +Fair Value as of Prior Fiscal Year-End of Option Awards and Stock Awards Granted in Prior Fiscal Years That Failed to Meet Applicable Vesting Conditions During Fiscal Year — — — — ( 496,815 ) — — +Compensation Actually Paid to PEOs ( 5,710,406 ) 13,791,592 6,645,396 347,561 714,651 2,697,616 3,888,690 +(a) The fair values of time-based equity awards and performance-based restricted share units granted in 2020 are based on the closing price of the Company’s common shares as reported on the NASDAQ on the relevant valuation date. Performance-based +62 +Table of Contents +restricted share units granted in 2021 were valued on the relevant valuation date using a Monte Carlo simulation model in accordance with the provisions of ASC Topic 718 using the following assumptions: (A) for valuations as of December 31, 2021, a risk free interest rate of 0.73% and share price volatility of 75.82%, for valuations on December 31, 2022, a risk free interest rate of 4.67% and share price volatility of 60.57%. Note that the reference to valuations on December 31, 2022 is appropriate as this relates to the valuation of the 2021 PRUs as of December 31, 2022. +(b) Dr. Gagliano received, as part of her Interim CEO agreement, a sign-on equity grant consisting of $100,000 of fully vested shares (14,815 shares) and $670,000 of restricted stock units (99,259 restricted stock units) which vest in equal monthly installments beginning on April 30, 2022, subject to continued employment as Interim CEO. Dr. Gagliano vested in 24,815 units of the 99,259 restricted stock units granted prior to her resignation as Interim CEO in June 2022, and accordingly, 74,444 units of her restricted stock unit award were forfeited. +5 Our non-PEO NEOs include the individuals indicated in the table below for each fiscal year: +Year Non-PEO NEOs +2024 +Kenneth McGrath, Kathleen Weber +2023 +Kenneth McGrath, Kathleen Weber +2022 +Kenneth McGrath, Kathleen Weber, Lisa Nibauer, Agnieszka Gallagher, Scott Gleason +2021 +Kathleen Weber, Jack Jerrett, Roberto Cuca, Agnieszka Gallagher, Scott Gleason +2020 +Kathleen Weber, Jack Jerrett, Roberto Cuca, Anthony Zezzo, Lisa Nibauer +6 Represents amounts of average “compensation actually paid” as computed in accordance with Item 402(v) of Regulation S-K, not the actual average amount of compensation earned by or paid to the Company’s named executive officers, except for Dr. Tang with respect to fiscal years 2022, 2021, and 2020, Ms. Gagliano with respect to fiscal year 2022, and Ms. Eglinton Manner with respect to fiscal years 2024, 2023, and 2022. The table below reflects the adjustments made from the amounts reported in the “Total” column of the Summary Compensation Table for the named executive officers as a group (excluding Dr. Tang and Mses. Gagliano and Eglinton Manner, as applicable) each year to calculate the amounts set forth in “Compensation Actually Paid to non-PEO NEOs” column in the table above, using the same methodology as set forth in footnote 4, above. +NEO Averages +2024 ($) 2023 ($) 2022 ($) +2021 ($) (a) +2020 ($) (a) +Summary Compensation Table Total 1,540,554 1,600,748 1,457,621 1,088,815 1,601,825 +Grant Date Fair Value of Option Awards and Stock Awards Granted in Fiscal Year ( 802,563 ) ( 712,288 ) ( 729,670 ) ( 552,646 ) ( 766,909 ) +Fair Value at Fiscal Year-End of Outstanding and Unvested Option Awards and Stock Awards Granted in Fiscal Year 342,510 1,127,865 293,934 353,108 625,180 +Change in Fair Value of Outstanding and Unvested Option Awards and Stock Awards Granted in Prior Fiscal Years ( 829,139 ) 316,490 ( 102,310 ) 43,223 59,438 +Fair Value at Vesting of Option Awards and Stock Awards Granted in Fiscal Year That Vested During Fiscal Year — — 85,437 29,005 80,708 +Change in Fair Value as of Vesting Date of Option Awards and Stock Awards Granted in Prior Fiscal Years For Which Applicable Vesting Conditions Were Satisfied During Fiscal Year ( 110,393 ) 58,090 ( 103,440 ) 59,492 ( 5,113 ) +Fair Value as of Prior Fiscal Year-End of Option Awards and Stock Awards Granted in Prior Fiscal Years That Failed to Meet Applicable Vesting Conditions During Fiscal Year — — ( 150,086 ) ( 212,460 ) — +Compensation Actually Paid to NEOs 140,969 2,390,905 751,486 808,537 1,595,129 +(a) The fair values of time-based equity awards and performance-based restricted share units granted in 2020 are based on the closing price of the Company’s common shares as reported on the NASDAQ on the relevant valuation date. Performance-based restricted share units granted in 2021 were valued on the relevant valuation date using a Monte Carlo simulation model in accordance with the provisions of ASC Topic 718 using the following assumptions: (A) for valuations on December 31, 2021, a risk free interest rate of 0.73% and share price volatility of 75.82%. The fair value of non-qualified stock options granted to Ms. Gallagher as of December 31, 2021 were valued using a Black-Scholes model in accordance with the provision of ASC Topic 718 using the following assumptions: an expected term of 2 years, a risk-free interest rate of 0.73%, a dividend yield of 0% and share price volatility of 75.82%. +7 For the relevant fiscal year, represents the cumulative total shareholder return (TSR) of OraSure Technologies, Inc. for the measurement periods ending on December 31 of each of 2024, 2023, 2022, 2021, and 2020 respectively. +8 For the relevant fiscal year, represents the cumulative total shareholder return (TSR) of NASDAQ Health Care Index for the measurement periods ending on December 31 of each of 2024, 2023, 2022, 2021, and 2020 respectively. +63 +Table of Contents +9 Reflects GAAP “Net Income (Loss)” in the Company’s Consolidated Statement of Operations included in the Company’s Annual Report on Form 10-K for each of the years ended December 31, 2024, 2023, 2022, 2021, and 2020. +10 Represents “Net Revenues” in the Company’s Consolidated Statement of Operations included in the Company’s Annual Report on Form 10-K for each of the years ended December 31, 2024, 2023, 2022, 2021, and 2020. +Relationship Between Compensation Actually Paid and Financial Performance +As described in more detail in the section “Executive Compensation – Compensation Discussion and Analysis,” while the Company utilizes several performance measures to align executive compensation with Company performance, all of those Company measures are not presented in the Pay versus Performance table above. Moreover, the Company’s executive compensation program includes components designed to incentivize long-term performance, and therefore does not specifically align the Company’s performance measures with compensation that is actually paid (as computed in accordance with Item 402(v) of Regulation S-K) for a particular year. In accordance with Item 402(v) of Regulation S-K, the following graphs illustrate the relationship across the Company’s last three completed fiscal years between the amounts disclosed in the Pay Versus Performance Table, above, as “Compensation Actually Paid” to the Company’s First PEO, Second PEO, and Third PEO respectively, and the “Average Compensation Actually Paid” to the Company’s non-PEO named executive officers and Total Stockholder Return, Peer Group Total Stockholder Return, Net Income (Loss) and Total Revenue. +64 +Table of Contents +Tabular List of Performance Measures +The following table lists the financial performance measures that the Company considers to be the most important financial performance measures used by the Company to link compensation actually paid to its named executive officers for the most recently completed fiscal year to performance of the Company. +65 +Table of Contents +Important Financial Performance Measures +Revenues +Adjusted Operating Income +Cost Savings +Relative TSR +66 +Table of Contents +STOCK AWARD PLAN INFORMATION +The following table provides information as of December 31, 2024 about the shares of Common Stock that may be issued upon the exercise of options under the OraSure Technologies, Inc. Stock Award Plan (the “Stock Award Plan” or the “Plan”). Additional grants of equity compensation may only be made under the Stock Award Plan. +Plan Category Number of Securities to be Issued Upon Exercise of Outstanding Options (a) Weighted-Average Exercise Price of Outstanding Options (b) +Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a))(c) 1 +Equity compensation plans approved by +security holders 2,237,110 $8.73 5,412,417 +Equity compensation plans not approved by +security holders — — — +Total 2,237,110 5,412,417 +1 Represents shares remaining available for future issuance as of December 31, 2024 under the Stock Award Plan. +Policies and Practices Related to the Grant of Certain Equity Awards +Our Compensation Committee and Board generally make equity grants on regularly scheduled dates , which includes grants in March for executive officers and other employees and following our annual meetings of shareholders for non-employee Directors. The Board or Compensation Committee may change any regularly scheduled grant date if the Board or Compensation Committee determines that making grants on such date would not be in the Company's best interest. Equity grants may also be made on other dates in connection with new hires, promotions or similar events. During 2024, our Compensation Committee did not take into account any material nonpublic information when determining the timing and terms of equity incentive awards and we did not time the disclosure of material nonpublic information when determining the timing and terms of equity incentive awards and we did not time the disclosure of material nonpublic information for the purpose of affecting the value of such awards . +DIRECTOR COMPENSATION +ANNUAL FEES +Under our Non-Employee Director Compensation Policy (“Director Policy”), non-employee members of the Board receive fixed annual fees for service on the Board and Committees of the Board during 2024, as set forth below. The fees were paid quarterly in arrears. +Position Annual Fee +Board Member (Base Fee) $ 55,000 +Board Chairperson (Additional Fee) $ 25,000 +Audit Chairperson $ 20,000 +Compensation Chairperson $ 20,000 +Nominating & Corporate Governance Chairperson $ 20,000 +Non-Chairperson Committee member $ 5,000 +Each non-employee Director has the option to receive shares of the Company’s Common Stock in lieu of cash fees, as described above. Prior to the end of each calendar year, each non-employee Director shall +67 +Table of Contents +make an annual election with respect to cash fees for the following calendar year, indicating whether he or she elects to receive the fees in cash, or in Company Common Stock in lieu of the cash fees. If no election has been made as of the first day of the year, the non-employee Director shall receive all fees in cash, as set forth above, or, if a previous election has been made to receive Common Stock in lieu of the cash fees, such election shall remain in effect for subsequent calendar years until such election is changed by the completion, signature and delivery to the Company of a new election form. Each newly elected or appointed non-employee Director shall make an election prior to, or within 30 days of, his or her initial appointment or election to the Board, for the remainder of the year of such appointment or election, whether to receive the fees in cash or in Common Stock. Effective as of January 1, 2025, the Board modified the annual fees by increasing the annual fee for the Board Chairperson to $50,000. +In the event an election is made by a non-employee Director to receive Common Stock in lieu of cash fees, such Director shall automatically be granted on the applicable fee payment date a number of shares of Common Stock having an aggregate fair market value equal to the aggregate amount of such non-employee Director’s cash fee for such fiscal quarter, determined by dividing (A) the aggregate amount of the fee by (B) the average of the high and low sales price of the Company’s Common Stock as reported on Nasdaq on the applicable fee payment date (rounded down to the nearest whole share) (the “Quarterly Grant”). Non-employee Directors are permitted to direct the Company to withhold shares of stock in order to pay tax withholding obligations arising upon the receipt of a Quarterly Grant. +INITIAL AND ANNUAL EQUITY AWARDS +Upon joining the Board, non-employee Directors receive an initial grant of restricted shares of the Company’s Common Stock having an aggregate value of $100,000 (the “Initial Grant”). The Initial Grant will cliff vest two (2) years after the Director joins the Board. In addition, non-employee Directors will receive an annual grant of restricted shares (the “Annual Grant”) on the date of the Company’s Annual Meeting of Stockholders, which will vest on or prior to the Company’s next Annual Meeting of Stockholders. The value of Annual Grants for Board members, effective during 2024 was as follows: +Board Position Award Grant Value +Board Member (Base) $105,000 +Board Chairperson (Additional Value) $25,000 +The dollar value of each Initial Grant and Annual Grant is converted into restricted stock by dividing the above values by the average of the high and low sales prices of the Company’s Common Stock, as reported on the Nasdaq Stock Market, on the grant date. Non-employee Directors are permitted to direct the Company to withhold restricted stock in order to pay tax withholding obligations arising upon the vesting of such shares. Effective as of January 1, 2025, the Board modified the Annual Grant by eliminating the Annual Grant for the Board Chairperson (while increasing the Board Chairperson's annual fee to $50,000), and increasing the value of the Annual Grant for non-employee Directors to $185,000. +EQUITY AWARD TERMS +Each Initial Grant, Annual Grant and Quarterly Grant shall be made under the terms of the Company’s Stock Award Plan or a successor plan and will be subject to the terms and conditions of such plan and the applicable award agreement. +Any unvested restricted stock granted to non-employee Directors will vest in their entirety immediately upon the occurrence of a “change of control” of the Company. A “change of control” means a change of control that would be required to be reported under the Exchange Act, as amended, and would be deemed to have occurred at such time as (i) any person, or more than one person acting as a group within the meaning of Section 409A of the Code, acquires ownership of stock of the Company that, together with stock held by such person or group, constitutes more than 50 percent of the total fair market value or total voting power of the stock of the Company; (ii) any person, or more than one person acting as a group within the meaning of Section 409A of the Code, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition) ownership of stock of the Company possessing 30 percent or more of the total +68 +Table of Contents +voting power of the Company’s stock; (iii) a majority of the members of the Board is replaced during any 12-month period by Directors whose appointment or election is not endorsed by a majority of the members of the Board before the date of the appointment or election; or (iv) a person, or more than one person acting as a group within the meaning of Section 409A of the Code, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition) assets from the Company that have a total gross fair market value equal to or more than 40 percent of the total gross fair market value of all the assets of the Company immediately before such acquisition or acquisitions. In addition, if a non-employee Director leaves the Board for any reason other than a change of control, prior to the end of the vesting period for the Annual Grant of restricted stock, such award shall immediately vest on a pro-rata basis based on the actual duration of such Director’s service to the Board during such vesting period. +DEFERRED COMPENSATION +Non-employee Directors are permitted to defer all or a portion of the fees and grants of restricted stock under the Company’s Non-Qualified Deferred Compensation Plan, on terms similar to those applicable to our officers. +DIRECTOR COMPENSATION DURING 2024 +The following table summarizes information related to compensation of non-employee Directors during the fiscal year ended December 31, 2024 : +Name 1, 2 +Fees +Earned +or Paid +in Cash +($) +Stock +Awards 4 +($) +Option +Awards +($) Non-Equity +Incentive Plan +Compensation +($) Change in +Pension +Value and +Nonqualified +Deferred +Compensation +Earnings All Other +Compensation +($) Total ($) +Mara G. Aspinall $ 90,000 $ 129,998 — — — — $ 219,998 +James A. Datin 3 +$ 29,679 $ — — — — — $ 29,679 +David J. Shulkin, M.D. $ 65,000 $ 105,000 — — — — $ 170,000 +Lelio Marmora $ 65,000 $ 105,000 — — — — $ 170,000 +Nancy Gagliano, M.D. $ 88,333 $ 105,000 — — — — $ 193,333 +John P. Kenny $ 19,110 $ 100,000 — — — — $ 119,110 +Robert W. McMahon $ 75,000 $ 105,000 — — — — $ 180,000 +__________________________ +1 Because Ms. Eglinton Manner was an officer of the Company, she was not entitled to any separate compensation for service on the Board or any Committee thereof and has not been included in this table. +2 Non-employee Directors held the following number of unvested shares of restricted stock (“RS”) at December 31, 2024: Ms. Aspinall: 24,691 RS; Dr. Shulkin: 19,943 RS; Mr. Marmora: 19,943 RS; Dr. Gagliano: 19,943 RS; Mr. Kenny: 23,256 RS; and Mr. McMahon: 42,646 RS. The aggregate number of performance stock units and restricted shares held by Ms. Eglinton Manner are set forth in the table in the Section entitled, “Outstanding Equity Awards,” in this Proxy Statement. +3 Mr. Datin elected to receive all his cash board fees in shares of the Company’s Common Stock in lieu of cash fees in accordance with the Director compensation policy described above. During 2024, Mr. Datin received 5,429 shares of restricted stock in lieu of cash payment. Mr. Datin did not stand for re-election at our 2024 Annual Stockholder Meeting. +4 The indicated amounts reflect the aggregate grant date fair value of restricted stock awards made to non-employee Directors during 2024, computed in accordance with FASB ASC Topic 718. +69 +Table of Contents +PROPOSALS REQUIRING YOUR VOTE +PROPOSAL NO. 1. ELECTION OF DIRECTORS +Background +At the Annual Meeting, you will be asked to vote on the election of three Directors. A majority of the independent members of the Board have nominated Carrie Eglinton Manner, David J. Shulkin, M.D. and John P. Kenny for election as the Class I Directors, for terms expiring at the Annual Meeting of Stockholders in 2028. We do not know of anything that would preclude any of the nominees from serving. However, should any nominee for any reason become unable or unwilling to serve as a Director, the persons named in the enclosed Proxy Card will vote the shares represented by each Proxy for such substitute nominee as the Board may approve. +Each of the nominees for election as Directors is currently a member of our Board and has consented to continue to serve if re-elected to the Board. +Certain information with respect to each person nominated for election as a Director and each person whose term of office as a Director will continue after the Annual Meeting, including the particular experience, qualifications, attributes and skills they possess that led to the conclusion that they should serve as a Director, is set forth below. +Name Principal Occupation Age Director +Since +Class I (Nominees Whose Terms Expire in 2025): +Carrie Eglinton Manner President and CEO, OraSure Technologies, Inc. 51 2022 +David J. Shulkin, M.D. +President and CEO, Shulkin Solutions, Inc. 65 2020 +John P. Kenny +Former Chief Executive Officer, Meridian Bioscience +56 +2024 +Class II (Directors For Terms Expiring in 2026): +Mara G. Aspinall +Partner, Illumina Ventures +62 2017 +Robert W. McMahon Senior Vice President and Chief Financial Officer, Agilent Technologies 56 2023 +Class III (Directors For Terms Expiring in 2027): +Nancy J. Gagliano, M.D. +Managing Director, Granite Healthcare Advisors 65 2021 +Lelio Marmora Former Executive Director, Unitaid 58 2020 +70 +Table of Contents +Carrie Eglinton Manner +Director +Director since: 2022 +Class I Director +Term Expires: 2025 +Age: 51 +Other Current +Public Company +Directorships: 1 +For biographical information on Ms. Eglinton Manner, see the Section entitled, “Executive Officers,” in this Proxy Statement. +Skills and Qualifications leading to conclusion that he should serve on the Board: +• Extensive experience in the healthcare industry. +• Extensive experience managing business operations in areas such as diagnostic imaging, lab services and medical devices. +• Extensive leadership experience. +David J. Shulkin, M.D. +Independent Director +Director since: 2020 +Class I Director +Term Expires: 2025 +Age: 65 +Other Current +Public Company +Directorships: 1 +David J. Shulkin, M.D. became a member of the Board in April 2020 and serves as a member of the Compensation Committee Since 2018, he has served as President and CEO of Shulkin Solutions, Inc., a company that promotes innovation in healthcare and advocates for veterans and underserved populations. From July 2015 through March 2018, Dr. Shulkin served in various capacities at the U.S. Department of Veterans Affairs (the “VA”), including as Secretary of the VA from February 2017 to March 2018 and as Under Secretary for Health from July 2015 to February 2017. Prior to his tenure at the VA, he served in executive leadership positions at Morristown Medical Center, Beth Israel Medical Center, Temple University Hospital, Drexel University School of Medicine, Doctor Quality, Inc. and the University of Pennsylvania Health System and Hospital of the University of Pennsylvania. Dr. Shulkin received a B.A. from Hampshire College and his M.D. from the Medical College of Pennsylvania (Drexel College of Medicine). He also completed residencies in Internal Medicine at Yale University School of Medicine and University of Pittsburgh School of Medicine, was a Fellow in General Medicine at the University of Pittsburgh School of Medicine and was a Robert Wood Johnson Foundation Clinical Scholar at the University of Pennsylvania School of Medicine. Dr. Shulkin is certified by the American Board of Internal Medicine. +Skills and Qualifications leading to conclusion that he should serve on the Board: +•  Expertise in medical matters and public health. +•  Expertise in government affairs. +• Executive-level management experience. +71 +Table of Contents +John P. Kenny +Independent Director +Director since: 2024 +Class I Director +Term Expires: 2025 +Age: 56 +Other Current +Public Company +Directorships: 1 +John P. Kenny became a member of the Board in September 2024 and is the Chair of the Nominating and Corporate Governance Committee and serves on the Compensation Committee. He has more than 30 years of experience with leadership roles in the in vitro diagnostics, anatomic pathology, molecular, microbiology, and lab services industries. Mr. Kenny previously served as Meridian Bioscience’s Chief Executive Officer. During his time there, Mr. Kenny built the company into a strong performer, growing consistently above market growth in sales and earnings, and bolstered its product line. Before his tenure at Meridian, Mr. Kenny served as Senior Vice President and General Manager, North America, with Siemens Healthcare and as Vice President and General Manager, U.S. Region, for Becton Dickinson, Diagnostic Systems. Prior to that, he held executive roles at Danaher Corporation and Quest Diagnostics. His experience spans marketing, product launches, portfolio planning, lifecycle management, new product development, and mergers and acquisitions. Mr. Kenny currently is an independent director on the Board of Directors for Quantum Si (Nasdaq: QSI) and DCN Dx (privately held by Martis Capital). He holds a bachelor’s degree in management from Kettering University. +Skills and Qualifications leading to conclusion that he should serve on the Board: +• Executive-level experience as a CEO. +• Extensive experience in the healthcare industry. +• Extensive leadership experience. +Mara G. Aspinall +Independent Director +Director since: 2017 +Class II Director +Term Expires: 2026 +Age: 62 +Other Current +Public Company +Directorships: 0 +Mara G. Aspinall joined the Board in June 2017 and is the current Chair. Ms. Aspinall serves as a member of the Audit Committee. Ms. Aspinall is Partner at Illumina Ventures, an independently managed venture capital firm focused on investing in innovative, genomics-based companies. Since 2014, she has served as the Managing Member of her single-member consulting firm, Health Catalysts Group. Ms. Aspinall was previously Managing Director of BlueStone Venture Partners. Prior to these positions, Ms. Aspinall served as President and CEO, Global Head of Roche Tissue Diagnostics/Ventana Medical Systems, a division of The Roche Group that provides tissue-based cancer diagnostic instruments, products and services. Ms. Aspinall also spent 12 years with Genzyme Corporation, serving as President of the Genzyme Genetics division, a leading provider of esoteric and genetic tests for the reproductive, oncology and personalized medicine markets, and as President of the Genzyme Pharmaceuticals division, a custom pharmaceutical intermediates manufacturer. Ms. Aspinall began her career as a management consultant with Bain & Company. Ms. Aspinall holds an M.B.A. from Harvard Business School and a B.A. in International Relations from Tufts University. Ms. Aspinall is certified in Cybersecurity Oversight from Carnegie Mellon University. Ms. Aspinall is also a member of the Board of BlueCross BlueShield Arizona, which is not a publicly traded company. +Skills and Qualifications leading to conclusion that she should serve on the Board: +•  Executive-level experience as a CEO. +•  Executive experience in the life sciences industry. +• Extensive experience in biomedical diagnostics. +72 +Table of Contents +Robert W. McMahon +Independent Director +Director since: 2023 +Class II Director +Term Expires: 2026 +Age: 56 +Other Current +Public Company +Directorships: None +Robert W. McMahon became a member of the Board in July 2023 and is the Chair of the Audit Committee. Mr. McMahon has served as the Senior Vice President and Chief Financial Officer, since August 2018 and September 2018, respectively, of Agilent Technologies, Inc., a leading life sciences tools and diagnostics company, where he is responsible for Finance, Audit, Treasury, Tax, and Investor Relations. Prior to his work for Agilent, Mr. McMahon spent four years serving as Chief Financial Officer for Hologic, Inc., a medical technology company, where he helped reshape the product portfolio and significantly improved company performance and profitability. He also spent 20 years at Johnson & Johnson, a producer of medical devices and pharmaceuticals, and the owner of many well- known consumer brands, most recently as Worldwide Vice President of Finance and Business Development for Ortho Clinical Diagnostics, a division of Johnson & Johnson’s Medical Device and Diagnostics group. Mr. McMahon holds an MBA in Finance from the University of Central Florida and a bachelor’s degree in Finance from the University of Florida. +Skills and Qualifications leading to conclusion that he should serve on the Board: +•  Extensive leadership experience in life sciences industry. +•  Executive-level experience as a CFO. +• Executive-level management experience. +Nancy J. Gagliano, M.D. +Independent Director +Director since: 2021 +Class III Nominee +Term Expires: 2027 +Age: 65 +Other Current +Public Company +Directorships: None +Nancy J. Gagliano, M.D. became a member of the Board in November 2021 and is the Chair of the Compensation Committee and serves on the Nominating and Corporate Governance Committee. Dr. Gagliano also served as interim CEO from March to June 2022. Dr. Gagliano has more than 35 years of experience as a senior healthcare physician executive and practicing physician in internal medicine. Dr. Gagliano most recently served as an executive leader of the National Institute of Health’s RADx Tech, Rapid Acceleration of Diagnostics program, from May 2020 to November 2021. In this position she has helped oversee over one billion dollars of sponsored programs to bring millions of new COVID-19 tests to market. Prior to her work for the National Institute of Health, Dr. Gagliano was the Chief Medical Officer of Culbert Healthcare Solutions from September 2016 to May 2020, providing strategic guidance on healthcare consulting services. Before joining Culbert Healthcare, Dr. Gagliano spent six years with CVS Health holding senior leadership positions including as the Chief Medical Officer of Minute Clinic, and as a Senior Vice President overseeing key programs such as the enterprise smoking cessation program and the development of the company’s telemedicine program. Prior to her leadership roles at CVS Health, Dr. Gagliano was a practicing internal medicine physician and held numerous leadership positions at Massachusetts General Hospital and Massachusetts General Physicians Organization. Dr. Gagliano holds an M.D. from Harvard Medical School, an MBA from Northeastern University, and a Bachelor’s of Science Degree from Union College in Computer Science and Biology. +Skills and Qualifications leading to conclusion that she should serve on the Board: +• Extensive medical and healthcare experience. +•  Executive leadership experience. +• Strong background managing public health programs. +73 +Table of Contents +Lelio Marmora +Independent Director +Director since: 2020 +Class III Nominee +Term Expires: 2027 +Age: 58 +Other Current +Public Company +Directorships: None +Lelio Marmora joined the Board in June 2020 and serves as a member of the Audit Committee and the Nominating and Corporate Governance Committee. Since June 2020, he has served as the President and CEO of The Management Lab Inc., a Geneva-based company providing advisory services to develop global health corporate strategies, and sits on several global health strategic advisory boards. He is a board member of the London-based MTV Foundation, the world's leading media response to HIV and AIDS, providing targeted information about the pandemic using a wide range of interventions. Mr. Marmora is also a founder and member of Santé Mondiale 2030, a French independent think-tank, bringing together Nobel Prize winners and relevant actors in the field of global health. From 2006 to 2014, he served as CEO of Unitaid, a Geneva-based investment fund investing nearly $300 million per year to promote the development and market introduction of new treatments and cutting-edge health technologies in over 100 countries. From 2006-2014, Mr. Marmora served as Director for Africa and the Middle East at the The Global Fund to Fight AIDS, Tuberculosis and Malaria, overseeing an $8 billion portfolio, later serving as a board member. Earlier in his career, he worked in various executive leadership roles at a range of international organizations, including the World Bank and several UN agencies. Mr. Marmora graduated from the Université Panthéon-Assas (Paris II) with a Master’s degree in International Law and Administration of International Organizations. +Skills and Qualifications leading to conclusion that he should serve on the Board: +•  Extensive experience in international public health. +•   Expertise in public funding. +•  Executive leadership experience. +Vote Required; Board Recommendation +If a quorum is present, each nominee will be elected if he or she receives a majority of the votes cast by shares present in person or by Proxy and entitled to vote on the election of directors. This means that each nominee shall be elected to the Board if the votes validly cast “for” such nominee’s election exceed the votes validly cast “against” such nominee’s election. Abstention and broker non-votes will have no effect on the required vote. In the absence of instructions to the contrary, shares of Common Stock represented by properly executed Proxies will be voted for nominees, each whom has consented to be named and to serve if elected. +Your Board recommends that you vote FOR the election of the Director nominees. +PROPOSAL NO. 2. RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +Background +The Audit Committee of the Board of Directors has approved the appointment of Grant Thornton (“GT”) as our independent registered public accounting firm for the 2025 fiscal year after a competitive selection process conducted by the Audit Committee. The Audit Committee has also recommended that the Board submit the appointment of GT for ratification by stockholders at the Annual Meeting. Although action by the stockholders on this matter is not legally required, the Audit Committee and the Board believe it is appropriate to seek stockholder ratification of this appointment in light of the important role played by the independent registered public accounting firm in reporting on the Company’s consolidated financial statements. If this appointment is not ratified by stockholders, the Audit Committee may reconsider its appointment of GT for the 2025 fiscal year or in the future. +74 +Table of Contents +One or more representatives of GT are expected to attend the Annual Meeting electronically. They will have an opportunity to make a statement and will be available to respond to appropriate questions. +Vote Required; Board Recommendation +Ratification of the appointment of GT requires the affirmative vote of a majority of shares present in person or by proxy and entitled to vote on this proposal. Abstentions will have the effect of voting against this proposal. Broker non-votes, if any, will have no effect on this proposal. In the absence of instructions to the contrary, shares of Common Stock represented by properly executed Proxies will be voted for ratification of the appointment of GT as our independent registered public accounting firm for the 2025 fiscal year. +Your Board recommends that the stockholders vote FOR ratification of the appointment of GT. +PROPOSAL NO. 3. ADVISORY (NON-BINDING) VOTE TO APPROVE EXECUTIVE COMPENSATION +Background +Section 14A of the Exchange Act, enacted pursuant to the Dodd-Frank Act, requires that stockholders be given the opportunity to vote to approve, on an advisory (non-binding) basis, no less frequently than once every three years, the compensation of our NEOs. Based on feedback received at our 2023 Annual Meeting, the Board determined that such a vote will continue to be held on an annual basis until the next advisory vote on frequency. +The vote on the resolution recommended below is not intended to address any specific element of compensation, but rather relates to the overall compensation of our NEOs. As described more fully under the CD&A Section of this Proxy Statement and the related tables and narrative, our compensation program is performance-based and is designed to pay executives for performance by offering rewards for the achievement of pre-determined objectives. In addition, our program is designed to align the interests of executives with the interests of our stockholders, provide long-term incentives and set compensation at levels sufficiently competitive to attract, retain and motivate high quality executives, and meet strong corporate governance principles. You are urged to carefully review the CD&A Section of this Proxy Statement which contains a detailed discussion of our executive compensation program, including the 2024 compensation of our NEOs. +Compensation Program Features +As described more fully in the CD&A, there are many important features to our compensation program that illustrate our commitment to pay-for-performance and good corporate governance. A summary of some of the more significant of these features is set forth below: +• Compensation is market driven and performance -based. +• Total compensation targeted at 50 th percentile of Peer Group. +• Balanced mix of cash/equity, fixed/variable, short-term/ long-term compensation components. +• Use of peer company benchmarking. +• Threshold financial performance objectives for annual bonus meet or exceed certain elements of fiscal performance for the prior fiscal year. +• Compensation recoupment policy. +• Equity awards provide long-term incentive with three year vesting. +• No hedging or pledge of our Common Stock. +• 50% of annual equity is performance-based vesting. +• Robust stockholder outreach on compensation/ governance matters. +75 +Table of Contents +Vote Required; Board Recommendation +If a quorum is present, the affirmative vote of a majority of shares present, in person or by Proxy and entitled to vote on this proposal, is required to approve, on an advisory (non-binding) basis, the compensation paid to NEOs. Abstentions will have the effect of voting against this proposal. Broker non-votes will not count toward the determination of whether this proposal is approved and will have no impact on the vote. In the absence of instructions to the contrary, shares of Common Stock represented by properly executed Proxies will be voted for approval of our executive compensation, as disclosed in this Proxy Statement. Because this stockholder vote is advisory, it will not be binding on the Company or the Board of Directors. However, the Compensation Committee and Board will take into account the outcome of the vote when considering future executive compensation programs and arrangements. +Based on the foregoing, the Board is requesting that stockholders vote on the following resolution: +“ RESOLVED , that the compensation paid to the Company’s named executive officers, as disclosed in the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED.” +Your Board recommends that the stockholders vote FOR the approval of our executive compensation as described in the preceding resolution. +PROPOSAL NO. 4. AMENDMENT AND RESTATEMENT OF STOCK AWARD PLAN +General +Effective September 29, 2000, in connection with the merger of Epitope and STC Technologies, Inc. into the Company (the “Merger”), the Company adopted the Epitope, Inc. 2000 Stock Award Plan, which was subsequently renamed the OraSure Technologies, Inc. Stock Award Plan (the “Stock Award Plan” or the “Plan”). +The Board has approved and recommended for submission to stockholders an amendment and restatement of the Stock Award Plan to increase in the number of shares of Common Stock authorized for grant under the Plan. A description of the proposed Amendment and Restatement of the Stock Award Plan are set forth below. +Amendment and Restatement of Stock Award Plan +In order to enable the Company to continue to attract qualified officers, employees, directors and outside advisors, and to compensate these individuals in a manner that is competitive with compensation provided by other medical diagnostic and healthcare companies, the Board has determined that additional shares of Common Stock are needed to be available for grants under the Plan. In addition, the Board wants to ensure that sufficient shares are available, if needed, to provide retention or other equity awards in connection with potential acquisitions or other business development activities. In determining the amount of the increase to our share reserve under the Stock Award Plan, the Board and Compensation Committee considered a number of factors, including the following: +• Shares Available for Grant . Currently, a maximum of 13,168,183 shares of our common stock may be granted under the Stock Award Plan. As of March 24, 2025, 196,597 shares remained available for grant under the Stock Award Plan. The proposed amendment and restatement of the Stock Award Plan would increase the number of shares available for grant under the Amended and Restated Stock Award Plan by 6,000,000 shares, bringing the total that will be available to be granted under the Amended and Restated Stock Award Plan to 6,196,597 shares. As of March 24, 2025, no benefits or amounts relating to the additional 6,000,000 shares have been received by, or allocated to, any individuals. +76 +Table of Contents +• Shares Underlying Outstanding Awards . As of March 24, 2025, under the Stock Award Plan there were: +(a) 196,597 shares of the Company’s Common Stock remaining available for grant under the Plan as stock options or other equity awards; +(b) 3,468,762 stock options issued and outstanding, with a weighted-average exercise price of $6.79 per share and a weighted average remaining contractual term of 7.57 years; +(c) 2,627,002 restricted shares issued and unvested, with a weighted-average grant date fair value of $4.51 per share; and +(d) 2,412,187 performance restricted units issued and unvested, with a weighted-average grant date for value of $5.46 per share. +• Overhang . As of March 24, 2025, our overhang is 10.36%. For this purpose we calculated overhang as (i) 196,597 shares remaining available for grant, plus (ii) 3,468,762 stock options issued and outstanding, plus (iii) 2,627,002 restricted shares issued and unvested, plus (iv) 2,412,187 performance restricted units issued and unvested, divided by 75,350,723 weighted average number of shares outstanding, plus (i) 196,597 shares remaining available for grant, plus (ii) 3,468,762 stock options issued and outstanding, plus (iii) 2,627,002 restricted shares issued and unvested, plus (iv) 2,412,187 performance restricted units issued and unvested. +• Burn Rate . Burn rate measures our usage of shares for the Amended and Restated Stock Award Plan as a percentage of the total outstanding shares of our Common Stock. For 2024 and 2023, our burn rates were 2.7% and 3.0%, respectively. The rates were calculated by dividing the number of options, restricted shares and performance restricted stock units that were granted during the year, by the weighted average number of shares outstanding during the year. Our average annual burn rate over this period was 2.8%. +• Forecasted Grants . Our Board anticipates that the proposed share increase under the Amended and Restated Stock Award Plan, based on currently projected share use, will be sufficient for the granting of equity awards under the Amended and Restated Stock Award Plan for approximately one additional year, i.e. for grants through 2026. The forecasted projected share use assumes we will make awards (less cancellations and forfeitures) based on our historical averages. Despite the projected share use described above, future circumstances and business needs may result in a significant increase in projected awards. +Accordingly, subject to stockholder approval, the Board approved an Amendment and Restatement of the Stock Award Plan to increase the number of shares to be authorized for grant under the Plan by 6,000,000 shares. As a result of this increase there will be a total of 6,196,597 shares available in the Amended and Restated Stock Award Plan for future issuance on and after March 24, 2025, subject to stockholder approval. A copy of the Amended and Restated Stock Award Plan reflecting this amendment is attached as Exhibit B to this Proxy Statement. +Summary of Amended and Restated Stock Award Plan +A summary description of certain terms and provisions of the Stock Award Plan, as amended, follows. Defined terms that are not otherwise defined herein are as defined in the Plan. To the extent the description below differs from the text of the Stock Award Plan, the text of the Plan will control. +Purpose . The purpose of the Stock Award Plan is to promote and advance the interests of the Company and its stockholders by enabling the Company to attract, retain, and reward employees, outside advisors, and Directors of the Company and any subsidiaries. The Stock Award Plan is intended to strengthen the mutuality of interests between employees, advisors, and Directors and the Company’s stockholders by offering equity-based incentives to promote the long-term growth, profitability and financial success of the Company. +Eligibility . The Stock Award Plan provides for stock-based awards (“Awards”) to (i) employees of the Company and any subsidiaries, (ii) members of advisory committees or other consultants to the Company or its subsidiaries (“Advisors”), and (iii) non-employee Directors of the Company. Persons who help the Company +77 +Table of Contents +raise money by selling securities or who promote or maintain a market for the Company’s securities are not eligible to participate in the Stock Award Plan as Advisors. In addition, only Advisors who, in the judgment of the Compensation Committee of the Board (the “Committee”), are or will be contributors to the long-term success of the Company, will be eligible to receive Awards (as defined below). As of March 24, 2025, the Company and its subsidiaries had 526 employees, 0 Advisors and 6 non-employee Directors, all of whom are eligible to receive Awards under the Plan. +The Stock Award Plan will continue in effect until February 21, 2027 or until the Plan is otherwise terminated by the Board. Termination or expiration of the Plan will not affect outstanding Awards. +Administration of the Stock Award Plan . The Committee administers the Stock Award Plan and determines the persons who are to receive Awards and the types, amounts, and terms of Awards. For example, the Committee may determine the exercise price, the form of payment of the exercise price, the number of shares subject to an Award, and the date or dates on which an Award becomes exercisable. The Committee may delegate to one or more officers of the Company the authority to determine the recipients of and the types, amounts and terms of Awards granted to participants who are not subject to the reporting requirements of Section 16(a) of the Securities Exchange Act of 1934, as amended. It is our policy that Awards made by the Committee for the Company’s CEO are also reviewed and approved by the full Board. The Stock Award Plan permits the Board to amend, suspend or terminate the Plan or any portion of the Plan. Notwithstanding the foregoing, Awards granted under the Plan are subject to a minimum vesting period of one year following the date of grant of the Award, provided, that Awards representing 5% of the shares authorized for issuance under the Plan may be subject to a shorter vesting period, and further that the Committee shall retain authority to accelerate vesting or exercisability upon the death, disability or retirement of the participant or upon a change in control of the Company, or as may be required pursuant to an employment agreement. +Shares Subject to the Stock Award Plan . If the Amendment is approved by our stockholders at our 2025 Annual Meeting, there will be 6,196,597 shares available for issuance under the Stock Award Plan as of March 24, 2025. Any shares granted in connection with restricted awards, performance awards or other stock-based awards will be counted against this limit on the basis of one and a half shares for every one share granted in connection with such Awards. +If an Award under the Plan is cancelled or expires for any reason prior to becoming fully vested or exercised or is settled in cash in lieu of shares, or is exchanged for other Awards under the Plan, then all shares covered by such Awards will be made available for future Awards under the Plan. Shares retained or reacquired by the Company in payment of an option price or in satisfaction of a withholding tax obligation in connection with any Award, shares repurchased by the Company with option proceeds and shares covered by a stock appreciation right, to the extent the stock appreciation right is exercised and settled in shares and whether or not shares are actually issued to the participant, will not be made available for future Awards under the Plan. In the event of a change in the Company’s capitalization affecting the Common Stock, including a stock dividend, stock split, recapitalization, merger, consolidation, split-up, combination or exchange of shares or other form of reorganization, the Committee shall make such proportionate adjustments as it may determine, in its sole discretion to be appropriate as a result of such change, to the aggregate number of shares for which Awards may be granted under the Plan, the maximum number of shares which may be sold or awarded to any participant, the number of shares covered by each outstanding Award, and the price per share in respect of outstanding Awards. +Awards . Awards that may be granted under the Stock Award Plan include stock options, stock appreciation rights, restricted awards, performance awards, and other stock-based awards. The following is a brief summary of the various types of Awards that may be granted under the Plan. +Stock Options . Options granted under the Stock Award Plan may be either incentive stock options (“ISOs”), a tax-favored form of Award meeting the requirements of Section 422 of the Code, as amended, or nonqualified options (“NQOs”), which are not entitled to special tax treatment. The Stock Award Plan limits the maximum term of any option granted to a period not longer than ten years from the date of grant. The exercise price of any option granted under the Plan may not be less than 100% of the fair market value of the Common Stock on the date of grant, except that in the case of an option granted to holders of 10% or more of the Company’s voting securities, the exercise price may not be less than 110% of the fair market value of the Common Stock on the date of grant. +78 +Table of Contents +The agreement evidencing the grant of a stock option (the “Option Agreement”) will specify, as determined by the Committee, the time or times when the option is exercisable, in whole or in part, and the extent to which the option remains exercisable after the option holder ceases to be an employee, Advisor or non-employee Director of the Company. The Option Agreement may, in the discretion of the Committee, provide whether the option will become fully exercisable upon the death, disability or retirement of the option holder or upon a change in control of the Company. As a general matter, the option holder may not transfer an option except by testamentary will or the laws of descent and distribution. An option may be exercised by payment of the exercise price in cash or, at the discretion of the Committee, with previously held shares of Common Stock or share equivalents, with proceeds from the sale of shares subject to the option or in any combination of the foregoing. +Options granted to employees under the Stock Award Plan generally vest over four years, with 25% of the grant vesting on the first anniversary of the grant date and the remaining 75% vesting ratably on a monthly basis over the next three years. Options granted to non-employee Directors in the past have generally vested ratably on a monthly basis over either a 12- or 24-month period, depending on the type of grant. Options granted under the Plan generally provide for accelerated vesting upon a “change in control.” The Committee may provide for different vesting for any option granted under the Plan. In no event may options for more than 500,000 shares of Common Stock be granted to any individual under the Stock Award Plan during any fiscal year period. +Stock Appreciation Rights . A recipient of stock appreciation rights (“SARs”) will receive, upon exercise, a payment (in cash or in shares of Common Stock) based on the increase in the fair market value of a share of Common Stock between the date of grant and the date of exercise. SARs may be granted in connection with options or other Awards granted under the Stock Award Plan or may be granted as independent Awards. The Plan limits the maximum term for the exercise of a SAR to a period not longer than ten years from the date of grant. In no event may SARs for more than 500,000 shares of Common Stock be granted to any individual under the Plan during any fiscal year period. +Restricted Awards . Restricted Awards may take the form of restricted shares or restricted units. Restricted shares are shares of Common Stock that may be subject to forfeiture if the recipient terminates employment or service as an Advisor or non-employee Director during a specified period (the “Restriction Period”). Stock certificates representing restricted shares are issued in the name of the recipient, but are held by the Company until the expiration of the Restriction Period. From the date of issuance of restricted shares, the recipient is entitled to the rights of a stockholder with respect to the shares, including voting and dividend rights. Any right to receive dividends on restricted shares shall be subject to the same forfeiture requirements applicable to the restricted shares. Restricted units are Awards that entitle the recipient to receive a share of Common Stock or the fair market value of a share at some future date, which similarly may be subject to forfeiture if the recipient terminates employment or service as an Advisor or non-employee Director during the applicable Restriction Period. Unvested Restricted Awards may not be sold, assigned, transferred, pledged, encumbered or otherwise transferred, voluntarily or involuntarily, by the recipient. +At the expiration of the Restriction Period, payment with respect to restricted units is made in an amount equal to the fair market value of the number of shares of Common Stock covered by the restricted units. Payment may be in cash, unrestricted shares of Common Stock, or any other form approved by the Committee. +Performance Awards . Performance Awards are designated in units equivalent in value to a share of Common Stock. A Performance Award is subject to forfeiture if or to the extent that the Company, a subsidiary, an operating group, or the recipient, as specified by the Committee in the Award, fails to meet performance goals established for a designated performance period, which must have a duration of at least one year. Performance Awards earned by attaining performance goals are paid at the end of a performance period in cash, shares of Common Stock, or any other form approved by the Committee. The number of shares of Common Stock issuable with respect to Performance Awards granted to any individual executive officer may not exceed 150,000 shares for any calendar year. +Other Stock-Based Awards . The Committee may grant other Awards that involve payments or grants of shares of Common Stock or are measured by or in relation to shares of Common Stock. +79 +Table of Contents +Change in Control . The Committee, in its discretion, may provide in any Award agreement that in the event of a “change in control” of the Company, (i) all, or a specified portion of, Awards requiring exercise will become fully and immediately exercisable, notwithstanding any other limitations on exercise; (ii) all, or a specified portion of, Awards subject to restrictions will become fully vested; and/or (iii) all, or a specified portion of, Awards subject to performance goals will be deemed to have been fully earned. The Committee, in its discretion, may include change in control provisions in some Award agreements and not in others, may include different change in control provisions in different Award agreements, and may include change in control provisions for some Awards or some participants and not for others. A “change in control” generally is defined to take place when disclosure of such a change would be required by the proxy rules promulgated by the SEC or when: +• any person, or more than one person acting as a group within the meaning of Section 409A of the Code and the regulations issued thereunder, acquires ownership of stock of the Company that, together with stock held by such person or group, constitutes more than 50 percent of the total fair market value or total voting power of the stock of the Company; +• any person, or more than one person acting as a group within the meaning of Code Section 409A and the regulations issued thereunder, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition) ownership of stock of the Company possessing 30 percent or more of the total voting power of the Company’s stock; +• a majority of the members of the Board is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board before the date of the appointment or election; or +• a person, or more than one person acting as a group within the meaning of Code Section 409A and the regulations issued thereunder, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition) assets from the Company that have a total gross fair market value equal to or more than 40 percent of the total gross fair market value of all the assets of the Company immediately before such acquisition or acquisitions. +No Repricing or Exchanges . Stockholder approval of an action is required if (i) such action would increase the number of shares of Common Stock subject to the Plan, (ii) such action would result in the repricing, replacement or repurchase of out-of-the money options, stock appreciation rights or other Awards, (iii) such action would result in an Award becoming fully vested, exercisable or earned in the event of a change in control prior to the consummation of the change in control or (iv) such approval is required by law or regulation or the rules of a stock exchange or over-the-counter trading system. Since the Merger, neither the Board nor the Committee has taken any action that resulted in the repricing, replacement or repurchase of out-of-the-money Options, SARs or other Awards. +Federal Income Tax Consequences . The following discussion summarizes the principal anticipated federal income tax consequences of Awards granted under the Stock Award Plan, to participants and to the Company. The following information is only a summary and does not address all aspects of taxation that may be relevant to a particular participant in light of his or her personal circumstances. Participants should consult with their own tax advisors with respect to the tax consequences inherent in the ownership and exercise of the awards and the ownership and disposition of any underlying securities. The summary does not address the effects of other federal taxes (including possible “golden parachute” excise taxes) or taxes imposed under state, local or foreign tax laws. Tax laws are subject to change. Under Section 162(m), the Company cannot deduct compensation paid to certain covered employees in excess of $1 million per year. +Incentive Stock Options . A recipient of an option does not recognize taxable income upon the grant or exercise of an ISO. If no disposition of shares occurs within two years from the date of grant or within one year from the date of exercise, then (a) upon the sale of the shares, any amount realized in excess of the exercise price is taxed to the option recipient as long-term capital gain and any loss sustained will be a long-term capital loss, and (b) no deduction is allowed to the Company for federal income tax purposes. For purposes of computing alternative minimum taxable income, an ISO is treated as an NQO. +If shares of Common Stock acquired upon the exercise of an ISO are disposed of prior to the expiration of the two-year and one-year holding periods described above (a “disqualifying disposition”), then (a) the recipient will recognize ordinary income in the year of disposition in an amount equal to the excess (if any) +80 +Table of Contents +of the fair market value of the shares at exercise (or, if less, the amount realized on a sale of the shares) over the exercise price thereof and (b) the Company would be entitled to deduct such amount. Any further gain realized is taxed as a short-term or long-term capital gain, as applicable, and does not result in any deduction for the Company. +Nonqualified Options . No income is recognized by an option recipient at the time an NQO is granted. Upon exercise, (a) ordinary income is recognized by the option recipient in an amount equal to the difference between the exercise price and the fair market value of the shares on the date of exercise and (b) the Company receives a tax deduction for the same amount. Upon disposition of the shares, appreciation or depreciation in the value of the shares after the date of exercise is treated as a short-term or long-term capital gain or loss, as applicable, and will not result in any deduction to the Company. +Stock Appreciation Rights . The grant of a SAR to a participant will not cause the recognition of income by the participant. Upon exercise of a SAR, the participant will recognize ordinary income equal to the amount of cash payable to the participant plus the fair market value of any shares of Common Stock delivered to the participant. The Company will be entitled to a deduction equal to the amount of ordinary income recognized by the participant in connection with the exercise of a SAR. +Restricted Awards and Performance Awards . Generally, a participant will not recognize any income upon issuance of a Restricted Award or Performance Award that is subject to forfeiture. Generally, a participant will recognize ordinary income upon the vesting of Restricted Awards or Performance Awards in an amount equal to the amount of cash payable to the participant plus the fair market value of shares of Common Stock delivered to the participant. Dividends paid with respect to Awards during the Restriction Period will be subject to the same restrictions and will be taxable as ordinary income to the participant when, and if, the restrictions lapse. However, a participant may elect to recognize compensation income upon the grant of restricted shares, based on the fair market value of the shares of Common Stock subject to the Award at the date of grant. If a participant makes such an election, dividends paid with respect to the restricted shares will not be treated as compensation, but rather as dividend income at the time when the restricted shares vest. The Company will be entitled to a deduction equal to the amount of ordinary income recognized by the participant. If a participant who receives an Award of restricted shares makes the special election described above, the Company will not be entitled to deduct dividends paid with respect to the restricted shares. When shares of common stock or cash with respect to restricted unit Awards are delivered to the participant, the value of the shares or cash is then taxable to the participant as ordinary income and the Company will be entitled to a deduction equal to the amount of ordinary income recognized by the participant. +New Plan Benefits . All awards to executive officers in future periods are made at the discretion of the Compensation Committee and our Board. Therefore, the benefits and amounts that will be received or allocated under the Plan to such persons are not determinable at this time. +Vote Required; Board Recommendation +If a quorum is present, the affirmative vote of a majority of shares present, in person or by proxy and entitled to vote on this proposal, is required for approval of the proposed Amendment. Abstentions will have the effect of voting against this proposal. Broker non-votes will have no effect on the vote for this proposal. +Your Board recommends that stockholders vote FOR approval of the Company’s Amended and Restated Stock Award Plan. +81 +Table of Contents +ANNUAL REPORT +Our Annual Report to Stockholders for the year ended December 31, 2024 accompanies this Proxy Statement. Following receipt of a written request, we will provide, without charge, a copy of our Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC (including a list briefly describing the exhibits thereto), to any record holder or beneficial owner of our Common Stock on March 21, 2025, the record date for the Annual Meeting, or to any person who subsequently becomes such a record holder or beneficial owner. Requests should be directed to the attention of the Corporate Secretary of the Company at our address set forth in the Notice of Annual Meeting of Stockholders immediately preceding this Proxy Statement. +82 +Table of Contents +DEADLINE FOR STOCKHOLDER PROPOSALS +You may submit proposals for inclusion in the proxy materials for the Company’s 2026 Annual Meeting of Stockholders. Any such proposals must meet the stockholder eligibility and other requirements imposed by rules issued by the SEC and must be received by the Company at 220 East First Street, Bethlehem, Pennsylvania 18015, Attention: Corporate Secretary, in accordance with Rule 14a-8 promulgated under the Exchange Act, not later than December 5, 2025. +In addition, our Bylaws provide that a stockholder proposal must meet certain predetermined requirements in order to be considered at the Annual Meeting. These requirements are separate from, and in addition to, the requirements discussed above to have the stockholder proposal included in the proxy materials pursuant to the SEC’s rules and regulations. In order to be considered, a stockholder’s proposal must be made in writing to the Company’s Secretary and must be delivered to or received at our principal executive offices not less than ninety (90) days nor more than one hundred twenty (120) days prior to the meeting. However, if less than one hundred (100) days’ notice or prior public disclosure of the date of the meeting is given or made to stockholders, notice by the stockholder to be timely must be so received no later than the close of business on the tenth (10 th ) day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made, whichever first occurs. The notice to the Secretary must set forth, with respect to each matter the stockholder proposes to bring before the meeting, a brief description of the matter and the reasons for considering that matter at the Annual Meeting. The notice must also include, as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf notice of the proposed business is made: (i) the name and address of the stockholder and such beneficial owner; (ii) any material interest of such stockholder and such beneficial holder in such business; (iii) the class and number of shares of capital stock of the Company which are held of record or beneficially owned by the stockholder and such beneficial owner and any other direct or indirect pecuniary or economic interest in any capital stock of the Company of such stockholder and such beneficial owner, including without limitation, any derivative instrument, swap, option, warrant, short interest, hedge, profit sharing arrangement or borrowed or loaned shares; (iv) a representation that such stockholder intends to appear in person or by proxy at the meeting to propose the business described in its notice; and (v) any other information relating to such business matter that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder. To the extent the Board of Directors or the SEC, or a court of competent jurisdiction, deems these Bylaw provisions to be inconsistent with the right of stockholders to request inclusion of a proposal in the Company’s proxy materials pursuant to Rule 14a-8 promulgated under the Exchange Act, such rule shall prevail. To comply with the universal proxy rules, stockholders who intend to solicit proxies for the 2026 Annual Meeting in support of director nominees other than the Company’s nominees must provide notice by the same deadline noted herein to submit notice of matters for consideration at an annual meeting. Such notice must comply with the additional requirements of Rule 14a-19(b). +The SEC has promulgated rules relating to the exercise of discretionary voting authority under proxies solicited by the Board. If a stockholder intends to present a proposal at our 2026 Annual Meeting without inclusion of that proposal in the Company’s proxy materials and written notice of the proposal is not received by the Secretary of the Company by February 17, 2026 (the date that is 45 days before the one-year anniversary of the date on which the Company first sent its proxy materials for the Annual Meeting), or if the Company meets other requirements of the applicable SEC rules and regulations, the proxies solicited by the Board for use at the 2026 Annual Meeting will confer discretionary authority to vote on the proposal should it then be raised at the 2026 Annual Meeting. +BY ORDER OF THE BOARD OF DIRECTORS +Stefano Taucer +Secretary +April 4, 2025 +83 +Table of Contents +EXHIBIT A +AMENDED AND RESTATED +ORASURE TECHNOLOGIES, INC. 2000 STOCK AWARD PLAN +84 +Table of Contents +ORASURE TECHNOLOGIES, INC. +STOCK AWARD PLAN +ARTICLE 1 ESTABLISHMENT AND PURPOSE +(Amended and Restated Effective as of March 24, 2025) +Establishment. Epitope, Inc. established this Plan as the Epitope, Inc. 2000 Stock Award Plan, effective as of February 15, 2000, and the Plan was approved by shareholders of Epitope, Inc. at the 2000 annual shareholders meeting. Effective September 29, 2000, in connection with the merger of Epitope, Inc. with and into OraSure Technologies, Inc., the name of the Plan was changed to the OraSure Technologies, Inc. 2000 Stock Award Plan and the Plan was adopted as a stock award plan of OraSure Technologies, Inc. The Plan was amended and restated, subject to shareholder approval, effective May 16, 2006. The Plan was amended further, subject to shareholder approval, effective May 13, 2008. The Plan again was amended and restated in its entirety, subject to shareholder approval, effective May 17, 2011 and February 12, 2013. The Plan was amended further, subject to shareholder approval, effective May 22, 2014. The Plan was again amended and restated in its entirety, subject to shareholder approval, effective May 16, 2017, April 2, 2020, April 1, 2022 and March 31, 2023. +1.1 Purpose. The purpose of the Plan is to promote and advance the interests of Corporation and its shareholders by enabling Corporation to attract, retain, and reward employees, outside advisors, and directors of Corporation and its subsidiaries. It is also intended to strengthen the mutuality of interests between such employees, advisors, and directors and Corporation’s shareholders. The Plan is designed to meet this intent by offering stock options and other equity-based incentive awards, thereby providing a proprietary interest in pursuing the long-term growth, profitability, and financial success of Corporation. +ARTICLE 2 +DEFINITIONS +2.1 Defined Terms. For purposes of the Plan, the following terms have the meanings set forth below: +“ Advisor ” means a natural person who is a consultant to or member of an Advisory Committee of Corporation or a Subsidiary, who provides bona fide services to Corporation and who is neither an employee of Corporation or a Subsidiary nor a Non-Employee Director. “Advisor” excludes any person who provides services to Corporation in connection with the offer or sale of securities in a capital raising transaction or to promote or maintain a market for Corporation’s securities, and any other person excluded from the class of persons to whom securities may be offered pursuant to a registration statement on Form S-8 or any successor form of registration statement. +“ Advisory Committee ” means a scientific advisory committee to Corporation or a Subsidiary. +“ Award ” ‘ means an award or grant made to a Participant of Options, Stock Appreciation Rights, Restricted Awards, Performance Awards, or Other Stock-Based Awards pursuant to the Plan. +“ Award Agreement ” means an agreement as described in Section 6.4. +“ Board ” means the Board of Directors of Corporation. +“ Change in Control ” means, unless otherwise provided in the applicable Award Agreement, a change of control of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A pursuant to the Exchange Act; provided, however, that a change of control shall only be deemed to have occurred at such time as (i) any person, or more than one person acting as a group within the meaning of Section 409A of the Code, acquires ownership of stock of the Corporation that, together with stock held by such person or group, constitutes more than 50 percent of the total fair market value or total voting power of the stock of the Corporation; (ii) any person, or more than one person acting as a group within the meaning of Section 409A of the Code, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition) ownership of stock of the Corporation possessing 30 percent or more of the total voting power of the Corporation’s stock; (iii) a majority of the members of the Board is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board before the date of the appointment or election; or (iv) a person, or more than one person acting as a group +1 +Table of Contents +within the meaning of Section 409A of the Code, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition) assets from the Corporation that have a total gross fair market value equal to or more than 40 percent of the total gross fair market value of all the assets of the Corporation immediately before such acquisition or acquisitions. +“ Code ” means the Internal Revenue Code of 1986, as amended and in effect from time to time, or any successor thereto, together with rules, regulations, and interpretations promulgated thereunder. Where the context so requires, any reference to a particular Code section will be construed to refer to the successor provision to such Code section. +“ Committee ” means the committee appointed by the Board to administer the Plan as provided in Article 3 of the Plan. +“ Common Stock ” means the Common Stock, par value $0.000001 per share, of Corporation or any security of Corporation issued in substitution, in exchange, or in lieu of such stock. +“ Continuing Restriction ” means a Restriction contained in Sections 6.7, 6.8, and 15.4 of the Plan and any other Restrictions expressly designated by the Committee in an Award Agreement as a Continuing Restriction. +“ Corporation ” means OraSure Technologies, Inc., a Delaware corporation, or any successor corporation. As to awards granted or other action taken prior to September 29, 2000, “Corporation” includes Epitope, Inc., as predecessor to OraSure Technologies, Inc. +“ Disability ” means the condition of being “disabled” within the meaning of Section 422(c)(6) of the Code. However, the Committee may change the foregoing definition of “Disability” or may adopt a different definition for purposes of specific Awards. +“ Exchange Act ” means the Securities Exchange Act of 1934, as amended and in effect from time to time, or any successor statute. Where the context so requires, any reference to a particular section of the Exchange Act, or to any rule promulgated under the Exchange Act, shall be construed to refer to successor provisions to such section or rule. +“ Fair Market Value ” means with respect to Common Stock, on a particular day, without regard to any restrictions (other than a restriction which, by its terms, will never lapse): +(1) if the Common Stock is at the time listed or admitted to trading on any stock exchange, the mean between the highest and lowest prices of the Common Stock on the date in question on the principal national securities exchange on which it is then listed or admitted to trading. If no reported sale of Common Stock takes place on the date in question on the principal exchange, then the reported closing asked price of the Common Stock on such date on the principal exchange shall be determinative of “Fair Market Value;” +(2) if the Common Stock is not at the time listed or admitted to trading on a stock exchange, the mean between the highest reported asked price and lowest reported bid price of the Common Stock on the date in question in the over-the-counter market, as such prices are reported in a publication of general circulation selected by the Committee and regularly reporting the market price of Common Stock in such market; or +(3) if the Common Stock is not listed or admitted to trading on any stock exchange or traded in the over-the-counter market, an amount as determined in good faith by the Committee and which shall comply with Section 409A of the Code. +“ Incentive Stock Option ” or “ ISO ” means any Option granted pursuant to the Plan that is intended to be and is specifically designated in its Award Agreement as an “incentive stock option” within the meaning of Section 422 of the Code. +“ Minimum Vesting Period ” means the one-year period following the date of grant of an Award. +“ Non-Employee Director ” means a member of the Board who is not an employee of Corporation or any Subsidiary. +2 +Table of Contents +“ Nonqualified Option ” or “ NQSO ” means any Option granted pursuant to the Plan that is not an Incentive Stock Option. +“ Option ” means an ISO or an NQSO. +" Other Stock-Based Award ” means an Award as defined in Section 11.1. +“ Participant ” means an employee of Corporation or a Subsidiary, an Advisor, or a Non-Employee Director who is granted an Award under the Plan. +“ Performance Award ” means an Award granted pursuant to the provisions of Article 10 of the Plan, the Vesting of which is contingent on performance attainment. +“ Performance Cycle ” means a designated performance period pursuant to the provisions of Section 10.3 of the Plan. +“ Performance Goal ” means a designated performance objective pursuant to the provisions of Section 10.4 of the Plan. +“ Plan ” means this OraSure Technologies, Inc. 2000 Stock Award Plan, as set forth herein and as it may be amended from time to time. +“ Reporting Person ” means a Participant who is subject to the reporting requirements of Section 16(a) of the Exchange Act. +“ Restricted Award ” means a Restricted Share or a Restricted Unit granted pursuant to Article 9 of the Plan. +“ Restricted Share ” means an Award described in Section 9.1(a) of the Plan. +“ Restricted Unit ” means an Award of units representing Shares described in Section 9.1(b) of the Plan. +“ Restriction ” means a provision in the Plan or in an Award Agreement which limits the exercisability or transferability, or which governs the forfeiture, of an Award or the Shares, cash, or other property payable pursuant to an Award. +“ Retirement ” means: +(a) For Participants who are employees, retirement from active employment with Corporation and its Subsidiaries at or after age 50, or such earlier retirement date as approved by the Committee for purposes of the Plan; +(b) For Participants who are Non-Employee Directors, termination of membership on the Board after attaining age 50, or such earlier retirement date as approved by the Committee for purposes of the Plan; and +(c) For Participants who are Advisors, termination of service as an Advisor after attaining age 50, or such earlier retirement date as approved by the Committee for purposes of the Plan. +However, the Committee may change the foregoing definition of “Retirement” or may adopt a different definition for purposes of specific Awards. +“ Share ” means a share of Common Stock. +“ Stock Appreciation Right ” or “ SAR ” means an Award to benefit from the appreciation of Common Stock granted pursuant to the provisions of Article 8 of the Plan. +3 +Table of Contents +“ Subsidiary ” means any “subsidiary corporation” of Corporation within the meaning of Section 424 of the Code, namely any corporation in which Corporation directly or indirectly controls 50 percent or more of the total combined voting power of all classes of stock having voting power. +“ Ten Percent Shareholder ” means a person who on any given date owns, either directly or indirectly (taking into account the attribution rules contained in Section 424(d) of the Code), stock possessing more than 10 percent of the total combined voting power of all classes of stock of the Corporation or any Subsidiary under Section 424(f) of the Code. +“ Vest ” or “ Vested ” means: +(a) In the case of an Award that requires exercise, to be or to become immediately and fully exercisable and free of all Restrictions (other than Continuing Restrictions); +(b) In the case of an Award that is subject to forfeiture, to be or to become nonforfeitable, freely transferable, and free of all Restrictions (other than Continuing Restrictions); +(c) In the case of an Award that is required to be earned by attaining specified Performance Goals, to be or to become earned and nonforfeitable, freely transferable, and free of all Restrictions (other than Continuing Restrictions); or +(d) In the case of any other Award as to which payment is not dependent solely upon the exercise of a right, election, exercise, or option, to be or to become immediately payable and free of all Restrictions (except Continuing Restrictions). +2.2 Gender and Number. Except where otherwise indicated by the context, any masculine or feminine terminology used in the Plan shall also include the opposite gender; and the definition of any term in Section 2.1 in the singular shall also include the plural, and vice versa. +ARTICLE 3 +ADMINISTRATION +3.1 General . Except as provided in Section 3.7, the Plan will be administered by a Committee composed as described in Section 3.2. +3.2 Composition of the Committee . The Committee will be appointed by the Board from among its members in a number and with such qualifications as will meet the independence and other requirements for (i) approval by a committee pursuant to Rule 16b-3 under the Exchange Act, (ii) establishing, administering and certifying performance goals pursuant to Section 162(m) of the Code and (iii) trading or listing securities on the securities exchange or association on which the Common Stock is then traded or listed. The Board may from time to time remove members from, or add members to, the Committee. Vacancies on the Committee, however caused, will be filled by the Board. The initial members of the Committee will be the members of Corporation’s existing Executive Compensation Committee. The Board may at any time replace the Executive Compensation Committee with another Committee. In the event that the Executive Compensation Committee ceases to satisfy the requirements of Rule 16b-3, Section 162(m) of the Code or a securities exchange or association described above in 3.2(iii), the Board will appoint another Committee satisfying such requirements. +3.3 Authority of the Committee . The Committee will have full power and authority (subject to such orders or resolutions as may be issued or adopted from time to time by the Board) to administer the Plan in its sole discretion, including the authority to: +(a) Construe and interpret the Plan and any Award Agreement; +(b) Promulgate, amend, and rescind rules and procedures relating to the implementation of the Plan; +(c) With respect to employees and Advisors: +(i) Select the employees and Advisors who shall be granted Awards; +(ii) Determine the number and types of Awards to be granted to each such Participant; +(iii) Determine the number of Shares, or Share equivalents, to be subject to each Award; +4 +Table of Contents +(iv) Determine the option price, purchase price, base price, or similar feature for any Award; and +(v) Determine all the terms and conditions of all Award Agreements, consistent with the requirements of the Plan. +Decisions of the Committee, or any delegate as permitted by the Plan, shall be final, conclusive, and binding on all Participants. +3.4 Action by the Committee . A majority of the members of the Committee will constitute a quorum for the transaction of business. Action approved by a majority of the members present at any meeting at which a quorum is present, or action in writing by all the members of the Committee, will be the valid acts of the Committee. +3.5 Delegation . Notwithstanding the foregoing, the Committee may delegate to one or more officers of Corporation the authority to determine the recipients, types, amounts, and terms of Awards granted to Participants who are not Reporting Persons or “covered employees” within the meaning of Section 162(m) of the Code. +3.6 Liability of Committee Members . No member of the Committee will be liable for any action or determination made in good faith with respect to the Plan, any Award, or any Participant. +3.7 Awards to Non-Employee Directors . The Board or Committee may grant Awards from time to time to Non-Employee Directors. +3.8 Costs of Plan . The costs and expenses of administering the Plan will be borne by Corporation. +3.9 Minimum Vesting Period . The vesting period for each Award granted under the Plan must be at least equal to the Minimum Vesting Period; provided, however, nothing in this Section 3.9 shall limit the Committee’s authority to accelerate vesting or exercisability upon a Change in Control, or upon the death, Disability or retirement of the Participant, or as may be required pursuant to an employment agreement between the Participant and the Corporation; provided, however, notwithstanding the foregoing, up to 5% of the Shares authorized for issuance under the Plan may be utilized for Awards with a vesting period that is less than the Minimum Vesting Period (each such Award, an “Excepted Award”). Notwithstanding the foregoing, in addition to Excepted Awards, the Committee may grant Awards that vest (or permit previously granted Awards to vest) within the Minimum Vesting Period (i) if such Awards are granted as substitute Awards in replacement of other Awards (or awards previously granted by an entity being acquired (or assets of which are being acquired)) that were scheduled to vest within the Minimum Vesting Period or (ii) if such Awards are being granted in connection with an elective deferral of cash compensation that, absent a deferral election, otherwise would have been paid to the grantee within the Minimum Vesting Period. +ARTICLE 4 +DURATION OF THE PLAN AND SHARES SUBJECT TO THE PLAN +4.1 Duration of the Plan . This amendment and restatement of the Plan is effective March 24, 2025. The Plan shall remain in full force and effect until February 21, 2027, or the date it is terminated by the Board. The Board shall have the power to amend, suspend or terminate the Plan as provided in Article 14. Termination of the Plan under Article 14 shall not affect Awards outstanding under the Plan at the time of termination. +4.2 Shares Subject to the Plan . +4.2.1 Genera l. The shares which may be made subject to Awards under the Plan are Shares of Common Stock, which may be either authorized and unissued Shares or reacquired Shares. No fractional Shares may be issued under the Plan. +4.2.2 Number of Shares; Limits . +(a) The maximum number of Shares for which Awards may be granted under the Plan on or after March 24, 2025, is 6,196,597 Shares, plus any Shares that become available as the result of the cancellation or expiration of any Award, subject to adjustment for changes in capitalization affecting the Corporation’s Common Stock pursuant to Section 13.2 of the Plan. Any Shares granted in connection with Options and Stock Appreciation Rights shall be counted against this limit on the basis of one Share for each Share subject to such Option or Stock Appreciation Right. Any Shares granted in connection with Restricted Awards, Performance +5 +Table of Contents +Awards or Other Stock-Based Awards shall be counted against this limit on the basis of one and a half Shares for every one Share granted in connection with such Awards. +(b) The maximum number of Shares that may be issued pursuant to paragraph (a) above on or after March 24, 2025, pursuant to Incentive Stock Options, is 6,196,597 Shares, subject to adjustment for changes in capitalization affecting the Corporation’s Common Stock pursuant to Section 13.2 of the Plan. +4.2.3 Availability of Shares for Future Awards . If an Award under the Plan is canceled or expires for any reason prior to having been fully Vested or exercised by a Participant or is settled in cash in lieu of Shares or is exchanged for other Awards, all Shares covered by such Awards will be made available for future Awards under the Plan. In no event shall the following be made available for future awards under the Plan: (a) Shares retained or reacquired by the Corporation in payment of an option price or satisfaction of a withholding tax obligation by a Participant in connection with any Award, (b) Shares repurchased by the Corporation with Option proceeds and (c) Shares covered by an SAR, to the extent the SAR is exercised and settled in Shares and whether or not Shares are actually issued to the Participant upon exercise of the SAR. +ARTICLE 5 ELIGIBILITY +5.1 Employees and Advisors . Officers and other employees of Corporation and any Subsidiaries (who may also be directors of Corporation or a Subsidiary) and Advisors who, in the Committee’s judgment, are or will be contributors to the long-term success of Corporation will be eligible to receive Awards under the Plan. +5.2 Non-Employee Directors . All Non-Employee Directors will be eligible to receive Awards as provided in Section 3.7 of the Plan. +ARTICLE 6 AWARDS +6.1 Types of Awards . The types of Awards that may be granted under the Plan are: +(a) Options governed by Article 7 of the Plan; +(b) Stock Appreciation Rights governed by Article 8 of the Plan; +(c) Restricted Awards governed by Article 9 of the Plan; +(d) Performance Awards governed by Article 10 of the Plan; and +(e) Other Stock-Based Awards or combination awards governed by Article 11 of the Plan. +In the discretion of the Committee, any Award may be granted alone, in addition to, or in tandem with other Awards under the Plan. +6.2 General . Subject to the limitations of the Plan, the Committee may cause Corporation to grant Awards to such Participants, at such times, of such types, in such amounts, for such periods, with such option prices, purchase prices, or base prices, and subject to such terms, conditions, limitations, and restrictions as the Committee, in its discretion, deems appropriate. Awards may be granted as additional compensation to a Participant or in lieu of other compensation to such Participant. A Participant may receive more than one Award and more than one type of Award under the Plan. +6.3 Nonuniform Determinations . The Committee’s determinations under the Plan or under one or more Award Agreements, including without limitation, (a) the selection of Participants to receive Awards, (b) the type, form, amount, and timing of Awards, (c) the terms of specific Award Agreements, and (d) elections and determinations made by the Committee with respect to exercise or payments of Awards, need not be uniform and may be made by the Committee selectively among Participants and Awards, whether or not Participants are similarly situated. +6.4 Award Agreements . Each Award will be evidenced by a written Award Agreement between Corporation and the Participant. Award Agreements may, subject to the provisions of the Plan, contain any provision approved by the Committee. +6.5 Provisions Governing All Awards . All Awards will be subject to the following provisions: +6 +Table of Contents +(a) Alternative Awards . If any Awards are designated in their Award Agreements as alternative to each other, the exercise of all or part of one Award automatically will cause an immediate equal (or pro rata) corresponding termination of the other alternative Award or Awards. +(b) Rights as Shareholders . No Participant will have any rights of a shareholder with respect to Shares subject to an Award until such Shares are issued in the name of the Participant. +(c) Employment Rights . Neither the adoption of the Plan nor the granting of any Award will confer on any person the right to continued employment with Corporation or any Subsidiary or the right to remain as a director of Corporation or a member of any Advisory Committee, as the case may be, nor will it interfere in any way with the right of Corporation or a Subsidiary to terminate such person’s employment or to remove such person as an Advisor or as a director at any time for any reason or for no reason, with or without cause. +(d) Termination of Employment . The terms and conditions under which an Award may be exercised or will continue to Vest, if at all, after a Participant’s termination of employment or service as an Advisor or as a Non-Employee Director will be determined by the Committee and specified in the applicable Award Agreement. +(e) Change in Control . The Committee, in its discretion, may provide in any Award Agreement that in the event of a Change in Control of the Corporation: +(i) All, or a specified portion of, Awards requiring exercise will become fully and immediately exercisable, notwithstanding any other limitations on exercise; +(ii) All, or a specified portion of, Awards subject to Restrictions will become fully Vested; and +(iii) All, or a specified portion of, Awards subject to Performance Goals will be deemed to have been fully earned. +The Committee, in its discretion, may include Change in Control provisions in some Award Agreements and not in others, may include different Change in Control provisions in different Award Agreements, and may include Change in Control provisions for some Awards or some Participants and not for others. +(f) Service Periods . At the time of granting Awards, the Committee may specify, by resolution or in the Award Agreement, the period or periods of service performed or to be performed by the Participant in connection with the grant of the Award. +6.6 Tax Withholding +(a) General . Corporation will have the right to deduct from any settlement, including the delivery or Vesting of Shares, made under the Plan any federal, state, or local taxes of any kind required by law to be withheld with respect to such payments or to take such other action as may be necessary in the opinion of Corporation to satisfy all obligations for the payment of such taxes. The recipient of any payment or distribution under the Plan will make arrangements satisfactory to Corporation for the satisfaction of any such withholding tax obligations. Corporation will not be required to make any such payment or distribution under the Plan until such obligations are satisfied. +(b) Stock Withholding . The Committee, in its sole discretion, may permit a Participant to satisfy all or a part of the withholding tax obligations incident to the settlement of an Award involving payment or delivery of Shares to the Participant by having Corporation withhold a portion of the Shares that would otherwise be issuable to the Participant. Such Shares will be valued based on their Fair Market Value on the date the tax withholding is required to be made. Any stock withholding with respect to a Reporting Person will be subject to such limitations as the Committee may impose to comply with the requirements of the Exchange Act. Notwithstanding the foregoing, Reporting Persons shall be permitted to elect to satisfy all or a portion of the withholding tax obligations incident to the settlement of an Award involving payment or delivery of Shares to such Participant by having Corporation withhold a portion of the Shares that would otherwise be issuable to the Participant. +6.7 Annulment of Awards . Any Award Agreement may provide that the grant of an Award payable in cash is provisional until cash is paid in settlement thereof or that grant of an Award payable in Shares is provisional until the Participant becomes entitled to the Shares in settlement thereof. In the event the employment (or service as an Advisor or membership on the Board) of a Participant is terminated for cause (as +7 +Table of Contents +defined below), any Award that is provisional will be annulled as of the date of such termination for cause. For the purpose of this Section 6.7, the term “for cause” has the meaning set forth in the Participant’s employment agreement, if any, or otherwise means any discharge (or removal) for material or flagrant violation of the policies and procedures of Corporation or for other job performance or conduct which is materially detrimental to the best interests of Corporation, as determined by the Committee. +6.8 Engaging in Competition With Corporation . Any Award Agreement may provide that, if a Participant terminates employment with Corporation or a Subsidiary for any reason whatsoever, and within 18 months after the date thereof accepts employment with any competitor of (or otherwise engages in competition with) Corporation, the Committee, in its sole discretion, may require such Participant to return to Corporation the economic value of any Award that is realized or obtained (measured at the date of exercise, Vesting, or payment) by such Participant at any time during the period beginning on the date that is six months prior to the date of such Participant’s termination of employment with Corporation. +ARTICLE 7 +OPTIONS +7.1 Types of Options . Options granted under the Plan may be in the form of Incentive Stock Options or Nonqualified Options. The grant of each Option and the Award Agreement governing each Option will identify the Option as an ISO or an NQSO. In the event the Code is amended to provide for tax-favored forms of stock options other than or in addition to Incentive Stock Options, the Committee may grant Options under the Plan meeting the requirements of such forms of options. +7.2 General . Options will be subject to the terms and conditions set forth in Article 6 and this Article 7 and may contain such additional terms and conditions, not inconsistent with the express provisions of the Plan, as the Committee (or the Board with respect to Awards to Non-Employee Directors) deems desirable. +7.3 Option Price . Each Award Agreement for Options will state the option exercise price per Share of Common Stock purchasable under the Option, which will not be less than 100 percent (100%) of the Fair Market Value of a Share on the date of grant for all Options (ISOs or NQSOs); provided, however, that in the case of any ISO granted to a Ten Percent Shareholder, the option exercise price per Share shall not be less than 110 percent (110%) of the Fair Market Value of a Share on the date of grant +7.4 Option Term . The Award Agreement for each Option will specify the term of each Option, which shall have a specified period during which the Option may be exercised which is no longer than ten years, as determined by the Committee. +7.5 Time of Exercise. The Award Agreement for each Option will specify, as determined by the Committee: +(a) The time or times when the Option will become exercisable and whether the Option will become exercisable in full or in graduated amounts over a period specified in the Award Agreement; +(b) Such other terms, conditions, and restrictions as to when the Option may be exercised as determined by the Committee; and +(c) The extent, if any, to which the Option will remain exercisable after the Participant ceases to be an employee, Advisor, or director of Corporation or a Subsidiary. +An Award Agreement for an Option may, in the discretion of the Committee, provide whether, and to what extent, the Option will become immediately and fully exercisable (i) in the event of the death, Disability, or Retirement of the Participant, or (ii) upon the occurrence of a Change in Control of Corporation . +7.6 Method of Exercise . The Award Agreement for each Option will specify the method or methods of payment acceptable upon exercise of an Option. An Award Agreement may provide that the option price is payable in full in cash or, at the discretion of the Committee: +(a) In previously acquired Shares (including Restricted Shares); +(b) By surrendering outstanding Awards under the Plan denominated in Shares or in Share-equivalent units; +8 +Table of Contents +(c) By delivery (in a form approved by the Committee) of an irrevocable direction to a securities broker acceptable to the Committee: +(i) To sell Shares subject to the Option and to deliver all or a part of the sales proceeds to Corporation in payment of all or a part of the option price and withholding taxes due; or +(ii) To pledge Shares subject to the Option to the broker as security for a loan and to deliver all or a part of the loan proceeds to Corporation in payment of all or a part of the option price and withholding taxes due; or +(d) In any combination of the foregoing or in any other form approved by the Committee. +If Restricted Shares are surrendered in full or partial payment of an Option price, a corresponding number of the Shares issued upon exercise of the Option will be Restricted Shares subject to the same Restrictions as the surrendered Restricted Shares. +7.7 Special Rules for Incentive Stock Options . In the case of an Option designated as an Incentive Stock Option, the terms of the Option and the Award Agreement must be in conformance with the statutory and regulatory requirements specified in Section 422 of the Code, as in effect on the date such ISO is granted. ISOs may be granted only to employees of Corporation or a Subsidiary. ISOs may not be granted under the Plan after February 21, 2027, unless the ten-year limitation of Section 422(b)(2) of the Code is removed or extended. +7.8 Restricted Shares . In the discretion of the Committee, the Shares issuable upon exercise of an Option may be Restricted Shares if so provided in the Award Agreement. +7.9 Limitation on Number of Shares Subject to Options . In no event may Options for more than 500,000 Shares be granted to any individual under the Plan during any fiscal year period. +ARTICLE 8 +STOCK APPRECIATION RIGHTS +8.1 General . Stock Appreciation Rights will be subject to the terms and conditions set forth in Article 6 and this Article 8 and may contain such additional terms and conditions, not inconsistent with the express terms of the Plan, as the Committee (or the Board with respect to Awards to Non-Employee Directors) deems desirable. +8.2 Nature of Stock Appreciation Right . A Stock Appreciation Right is an Award entitling a Participant to receive an amount equal to the excess (or if the Committee determines at the time of grant, a portion of the excess) of the Fair Market Value of a Share of Common Stock on the date of exercise of the SAR over the base price, as described below, on the date of grant of the SAR, multiplied by the number of Shares with respect to which the SAR has been exercised. The base price will be designated by the Committee in the Award Agreement for the SAR and shall be not less than 100 percent (100%) of the Fair Market Value of a Share on the grant date of the SAR. +8.3 Exercise . A Stock Appreciation Right may be exercised by a Participant in accordance with procedures established by the Committee. The Committee may also provide that an SAR will be automatically exercised on one or more specified dates or upon the satisfaction of one or more specified conditions. In the case of SARs granted to Reporting Persons, exercise of the SAR will be limited by the Committee to the extent required to comply with the applicable requirements of Rule 16b-3 under the Exchange Act. +8.4 Term . The Award Agreement for each SAR shall have a specified period during which the SAR may be exercised, which is no longer than ten years, as determined by the Committee. +8.5 Form of Payment . Payment upon exercise of a Stock Appreciation Right may be made in cash, in installments, in Shares, or in any combination of the foregoing, or in any other form as the Committee determines . +8.6 Limitation on Number of Shares Subject to SARs . In no event may SARs for more than 500,000 Shares be granted to any individual under the Plan during any fiscal year period. +9 +Table of Contents +ARTICLE 9 +RESTRICTED AWARDS +9.1 Types of Restricted Awards . Restricted Awards granted under the Plan may be in the form of either Restricted Shares or Restricted Units. +(a) Restricted Shares . A Restricted Share is an Award of Shares transferred to a Participant subject to such terms and conditions as the Committee deems appropriate, including, without limitation, restrictions on the sale, assignment, transfer, or other disposition of such Restricted Shares and may include a requirement that the Participant forfeit such Restricted Shares back to Corporation upon termination of Participant’s employment (or service as an Advisor or Non-Employee Director) for specified reasons within a specified period of time or upon other conditions, as set forth in the Award Agreement for such Restricted Shares. Each Participant receiving a Restricted Share will be issued a stock certificate in respect of such Shares, registered in the name of such Participant, or such certificate, registered in the name of such Participant, will be placed in a restricted stock account (including an electronic account) with a transfer agent. If such certificate is issued to the Participant, the Participant will be required to execute a stock power in blank with respect to the Shares evidenced by such certificate, and such certificate and the stock power will be held in custody by Corporation until the Restrictions thereon will have lapsed. +(b) Restricted Units . A Restricted Unit is an Award to receive a Share or the Fair Market Value of a Share at some date in the future, which is granted to a Participant subject to such terms and conditions as the Committee deems appropriate, and may include a requirement that the Participant forfeit such Restricted Units upon termination of Participant’s employment (or service as an Advisor or Non-Employee Director) for specified reasons within a specified period of time or upon other conditions, as set forth in the Award Agreement for such Restricted Units. +9.2 General . Restricted Awards will be subject to the terms and conditions of Article 6 and this Article 9 and may contain such additional terms and conditions, not inconsistent with the express provisions of the Plan, as the Committee (or the Board with respect to Awards to Non-Employee Directors) deems desirable. +9.3 Restriction Period . Restricted Awards will provide that such Awards, and the Shares subject to such Awards, may not be transferred, and may provide that, in order for a Participant to Vest in such Awards, the Participant must remain in the employment (or remain as an Advisor or Non-Employee Director) of Corporation or its Subsidiaries, subject to relief for reasons specified in the Award Agreement, for a period commencing on the date of the Award and ending on such later date or dates as the Committee designates at the time of the Award (the “Restriction Period”). During the Restriction Period, a Participant may not sell, assign, transfer, pledge, encumber, or otherwise dispose of Shares received under or governed by a Restricted Award grant. The Committee, in its sole discretion, may provide for the lapse of restrictions in installments during the Restriction Period. Upon expiration of the applicable Restriction Period (or lapse of Restrictions during the Restriction Period where the Restrictions lapse in installments) the Participant shall be entitled to settlement of the Restricted Award or portion thereof, as the case may be. Although Restricted Awards will usually Vest based on continued employment (or service as an Advisor or Non-Employee Director) and Performance Awards under Article 10 shall usually Vest based on attainment of Performance Goals, the Committee, in its discretion, may condition Vesting of Restricted Awards on attainment of Performance Goals as well as continued employment (or service as an Advisor or Non-Employee Director). In such case, the Restriction Period for such a Restricted Award will include the period prior to satisfaction of the Performance Goals. +9.4 Forfeiture . If a Participant ceases to be an employee, Advisor of Corporation or a Subsidiary or Non-Employee Director during the Restriction Period for any reason other than reasons which may be specified in an Award Agreement (such as death, Disability, or Retirement), the Award Agreement may require that all non-Vested Restricted Awards previously granted to the Participant be forfeited and returned to Corporation. +9.5 Settlement of Restricted Awards. +(a) Restricted Shares . Upon Vesting of a Restricted Share Award, the legend on such Shares will be removed and the Participant’s stock power, if any, will be returned and the Shares will no longer be Restricted Shares. The Committee may also, in its discretion, permit a Participant to receive, in lieu of unrestricted Shares at the conclusion of the Restriction Period, payment in cash, installments, or in any other manner or combination of such methods as the Committee, in its sole discretion, determines. +(b) Restricted Units . Upon Vesting of a Restricted Unit Award, a Participant will be entitled to receive payment for Restricted Units in an amount equal to the aggregate Fair Market Value of the Shares covered by +10 +Table of Contents +such Restricted Units at the expiration of the Applicable Restriction Period. Payment in settlement of a Restricted Unit will be made as soon as practicable following the conclusion of the applicable Restriction Period in cash, in installments, in Shares equal to the number of Restricted Units, or in any other manner or combination of such methods as the Committee, in its sole discretion, determines, subject to the applicable restrictions contained in Section 409A of the Code. +9.6 Rights as a Shareholder . A Participant will have, with respect to unforfeited Shares received under a grant of Restricted Shares, all the rights of a shareholder of Corporation, including the right to vote the Shares and the right to receive any cash dividends. The right to receive cash dividends on Restricted Shares shall be subject to the Restrictions applicable to the Restricted Shares. Stock dividends issued with respect to Restricted Shares will be treated as additional Shares covered by the grant of Restricted Shares and will also be subject to the same Restrictions. +ARTICLE 10 +PERFORMANCE AWARDS +10.1 General . Performance Awards will be subject to the terms and conditions set forth in Article 6 and this Article 10 and may contain such other terms and conditions not inconsistent with the express provisions of the Plan, as the Committee (or the Board with respect to Awards to Non-Employee Directors) deems desirable. +10.2 Nature of Performance Awards . A Performance Award is an Award of units (with each unit having a value equivalent to one Share) granted to a Participant subject to such terms and conditions as the Committee deems appropriate, including, without limitation, the requirement that the Participant forfeit such Performance Award or a portion thereof in the event specified performance criteria are not met within a designated period of time. +10.3 Performance Cycles . For each Performance Award, the Committee will designate a performance period (the “Performance Cycle”) with a duration of at least one (1) year, as may be determined by the Committee in its discretion within which specified Performance Goals are to be attained. There may be several Performance Cycles in existence at any one time and the duration of Performance Cycles may differ from each other. +10.4 Performance Goals . The Committee will establish Performance Goals for each Performance Cycle on the basis of such criteria and to accomplish such objectives as the Committee may from time to time select. Performance Goals may be based on performance criteria for Corporation, a Subsidiary, or an operating group, or based on a Participant’s individual performance. Performance Goals may include objective and subjective criteria. During any Performance Cycle, the Committee may adjust the Performance Goals for such Performance Cycle as it deems equitable in recognition of unusual or nonrecurring events affecting Corporation, changes in applicable tax laws or accounting principles, or such other factors as the Committee may determine. +10.5 Determination of Awards . As soon as practicable after the end of a Performance Cycle, the Committee will determine the extent to which Performance Awards have been earned on the basis of performance in relation to the established Performance Goals. +10.6 Timing and Form of Payment . Settlement of earned Performance Awards will be made to the Participant as soon as practicable after the expiration of the Performance Cycle and the Committee’s determination under Section 10.5, in the form of cash, installments, Shares, or any combination of the foregoing or in any other form as the Committee determines. +10.7 Performance Goals for Executive Officers . The performance goals for Performance Awards granted to executive officers of Corporation may relate to corporate performance, business unit performance, or a combination of both. +(a) Corporate performance goals will be based on financial performance goals related to the performance of Corporation as a whole and may include one or more measures related to earnings, profitability, efficiency, or return to stockholders such as earnings per share, operating profit, stock price, costs of production, or other measures. +(b) Business unit performance goals will be based on a combination of financial goals and strategic goals related to the performance of an identified business unit for which a Participant has responsibility. Strategic goals for a business unit may include one or a combination of objective factors relating to success in implementing strategic plans or initiatives, introductory products, constructing facilities, or other identifiable +11 +Table of Contents +objectives. Financial goals for a business unit may include the degree to which the business unit achieves one or more objective measures related to its revenues, earnings, profitability, efficiency, operating profit, costs of production, or other measures. +(c) Any corporate or business unit goals may be expressed as absolute amounts or as ratios or percentages. Success may be measured against various standards, including budget targets, improvement over prior periods, and performance relative to other companies, business units, or industry groups. +10.8 Award Limitations . The maximum number of Shares issuable with respect to Performance Awards granted to any individual executive officer may not exceed 150,000 Shares for any calendar year. +ARTICLE 11 +OTHER STOCK-BASED AND COMBINATION AWARDS +11.1 Other Stock-Based Awards . The Committee (or the Board with respect to Awards to Non-Employee Directors) may grant other Awards under the Plan pursuant to which Shares are or may in the future be acquired, or Awards denominated in or measured by Share equivalent units, including Awards valued using measures other than the market value of Shares. Such Other Stock-Based Awards may be granted either alone, in addition to, or in tandem with, any other type of Award granted under the Plan. +11.2 Combination Awards . The Committee may also grant Awards under the Plan in tandem or combination with other Awards or in exchange of Awards, or in tandem or combination with, or as alternatives to, grants or rights under any other employee plan of Corporation, including the plan of any acquired entity. No action authorized by this section may reduce the amount of any existing benefits or change the terms and conditions thereof without the Participant’s consent. +ARTICLE 12 +DEFERRAL ELECTIONS +The Committee may permit a Participant to elect to defer receipt of the payment of cash or the delivery of Shares that would otherwise be due to such Participant by virtue of the exercise, earn-out, or Vesting of an Award made under the Plan. If any such election is permitted, the Committee will establish rules and procedures for such payment deferrals, including, but not limited to: (a) payment or crediting of reasonable interest on such deferred amounts credited in cash or (b) the payment or crediting of dividend equivalents in respect of deferrals credited in Share equivalent units. Such deferrals, if permitted, shall to the extent possible, comply with Section 409A of the Code and the regulations and other guidance promulgated thereunder. +ARTICLE 13 +ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, ETC. +13.1 Plan Does Not Restrict Corporation . The existence of the Plan and the Awards granted hereunder will not affect or restrict in any way the right or power of the Board or the shareholders of Corporation to make or authorize any adjustment, recapitalization, reorganization, or other change in Corporation’s capital structure or its business, any merger or consolidation of the Corporation, any issue of bonds, debentures, preferred or prior preference stocks ahead of or affecting Corporation’s capital stock or the rights thereof, the dissolution or liquidation of Corporation or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding. +13.2 Adjustments by the Committee . In the event of any change in capitalization affecting the Common Stock of Corporation, such as a stock dividend, stock split, recapitalization, merger, consolidation, split-up, combination or exchange of shares or other form of reorganization, or any other change affecting the Common Stock, such proportionate adjustments, if any, as the Committee, in its sole discretion, may deem appropriate to reflect such change, will be made with respect to the aggregate number of Shares for which Awards in respect thereof may be granted under the Plan, the maximum number of Shares which may be sold or awarded to any Participant, the number of Shares covered by each outstanding Award, and the price per Share in respect of outstanding Awards. The Committee may also make such adjustments in the number of Shares covered by, and price or other value of any outstanding Awards in the event of a spin-off or other distribution (other than normal cash dividends), of Corporation assets to shareholders. +12 +Table of Contents +ARTICLE 14 +AMENDMENT AND TERMINATION +The Board may amend, suspend, or terminate the Plan or any portion of the Plan at any time; provided that no such action may be taken without shareholder approval if (i) such action would increase the number of shares subject to the Plan; (ii) such action would result in the repricing, replacement or repurchase of out-of-the money Options, Stock Appreciation Rights or other Awards; (iii) such action would result in an Award being fully Vested, exercisable or earned in the event of a Change in Control prior to the consummation of the Change in Control; or (iv) such approval is required by applicable law or regulation or the applicable requirements of a stock exchange or over-the-counter stock trading system; provided further that the Board may, in its discretion, determine to submit any other changes to the Plan to the shareholders for approval; provided further that no amendment, suspension or termination of the Plan may materially and adversely affect the rights of a Participant under any outstanding Award without such Participant’s consent, unless such action is necessary to ensure a deduction under Section 162(m) of the Code or to avoid the additional tax described in Section 409A of the Code. +ARTICLE 15 +MISCELLANEOUS +15.1 Unfunded Plan . The Plan will be unfunded and Corporation will not be required to segregate any assets that may at any time be represented by Awards under the Plan. Any liability of Corporation to any person with respect to any Award under the Plan will be based solely upon any contractual obligations that may be effected pursuant to the Plan. No such obligation of Corporation will be deemed to be secured by any pledge of, or other encumbrance on, any property of Corporation. +15.2 Payments to Trust . The Committee is authorized (but has no obligation) to cause to be established a trust agreement or several trust agreements whereunder the Committee may make payments of amounts due or to become due to Participants in the Plan. +15.3 Other Corporation Benefit and Compensation Programs . Payments and other benefits received by a Participant under an Award made pursuant to the Plan will not be deemed a part of a Participant’s regular, recurring compensation for purposes of the termination, indemnity or severance pay law of any state or country and shall not be included in, or have any effect on, the determination of benefits under any other employee benefit plan or similar arrangement provided by Corporation or a Subsidiary unless expressly so provided by such other plan or arrangements, or except where the Committee expressly determines that an Award or portion of an Award should be included to accurately reflect competitive compensation practices or to recognize that an Award has been made in lieu of a portion of cash compensation. Awards under the Plan may be made in combination with or in tandem with, or as alternatives to, grants, awards, or payments under any other Corporation or Subsidiary plans, arrangements, or programs. The Plan notwithstanding, Corporation or any Subsidiary may adopt such other compensation programs and additional compensation arrangements as it deems necessary to attract, retain, and reward employees and directors for their service with Corporation and its Subsidiaries. +15.4 Securities Law Restrictions . No Shares may be issued under the Plan unless counsel for Corporation is satisfied that such issuance will be in compliance with applicable federal and state securities laws. Certificates for Shares delivered under the Plan may be subject to such stop-transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations, and other requirements of the Securities and Exchange Commission, any stock exchange upon which the Common Stock is then listed, and any applicable federal or state securities law. The Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions. +15.5 Governing Law . Except with respect to references to the Code or federal securities laws, the Plan and all actions taken thereunder shall be governed by and construed in accordance with the laws of the state of Delaware. +ARTICLE 16 +SHAREHOLDER APPROVAL +The Plan, as amended and restated, is expressly subject to the approval of the Plan by the shareholders at the 2025 annual meeting of Corporation’s shareholders. +13 +Table of Contents +14 +Table of Contents \ No newline at end of file diff --git a/raw/proxies/0001116463/0001116463-25-000025/proxy_rpt.txt b/raw/proxies/0001116463/0001116463-25-000025/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..4edda63cf8e6ad82916e37cea32a5b552588030b --- /dev/null +++ b/raw/proxies/0001116463/0001116463-25-000025/proxy_rpt.txt @@ -0,0 +1,5 @@ +TRANSACTIONS WITH RELATED PERSONS +Since January 1, 2024, there have been no transactions with related persons that would require disclosure in this Proxy Statement. The Audit Committee is required to review and approve in advance all transactions with related persons involving the Company. The Audit Committee may approve a related party transaction if the transaction is on terms comparable to those that could be obtained in arms’ length dealings with an unrelated third party. The Audit Committee also reviews any public disclosures of a related party transaction contained in our SEC filings. These responsibilities are described in the Audit Committee’s charter, a copy of which is available on our website at www.orasure.com . +Information regarding employment, severance and retirement agreements between our executive officers and the Company is set forth in the Section entitled, “Employment Agreements and Potential Payments Upon Termination or Change of Control,” in this Proxy Statement. +28 +Table of Contents \ No newline at end of file diff --git a/raw/proxies/0001116463/0001193125-15-116188/proxy.txt b/raw/proxies/0001116463/0001193125-15-116188/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..3d4d6af8a5a2e61bbd0646641e1398ec89a146e7 --- /dev/null +++ b/raw/proxies/0001116463/0001193125-15-116188/proxy.txt @@ -0,0 +1,4923 @@ +DEF 14A +1 +d893670ddef14a.htm +DEFINITIVE PROXY STATEMENT +Definitive Proxy Statement +Table of Contents +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Proxy Statement Pursuant to Section 14(a) +of the Securities Exchange Act of 1934 +(Amendment No. +) +Filed by the Registrant x Filed by a Party other than the +Registrant ¨ +Check the appropriate box: +¨ +Preliminary Proxy Statement +¨ +Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +x +Definitive Proxy Statement +¨ +Definitive Additional Materials +¨ +Soliciting Material Pursuant to §240.14a-12 +OraSure Technologies, Inc. +(Name of Registrant as +Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +x +No fee required. +¨ +Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. +(1) +Title of each class of securities to which transaction applies: +(2) +Aggregate number of securities to which transaction applies: +(3) +Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and +state how it was determined): +(4) +Proposed maximum aggregate value of transaction: +(5) +Total fee paid: +¨ +Fee paid previously with preliminary materials. +¨ +Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. +Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. +(1) +Amount Previously Paid: +(2) +Form, Schedule or Registration Statement No.: +(3) +Filing Party: +(4) +Date Filed: +Table of Contents +Notice of 2015 +Annual Meeting of Stockholders +and Proxy Statement +Table of Contents +Our vision is to be a recognized global leader focused on providing +innovative diagnostic solutions with substantial value to existing and emerging healthcare needs. +We will work toward making this vision a reality by focusing on unmet healthcare needs, leveraging our proprietary technology and cutting-edge expertise, to +continually develop accurate, versatile and easy-to-use diagnostic products. Our products will enable the delivery of crucial information – empowering patients to make critical decisions to improve and protect their health. +Dear Fellow Stockholders: +You are cordially invited to attend the 2015 Annual Meeting of Stockholders to be held on Monday, May 11, 2015 , at the ArtsQuest +Center at SteelStacks, 101 Founders Way, Bethlehem, Pennsylvania 18015 at 10:00 a.m. Eastern Time. Our Board of Directors and Executive Team look forward to greeting those present. If you cannot attend in person, we are pleased to offer a live +webcast of the Annual Meeting, which you can access by going to www.virtualshareholdermeeting.com/OSUR2015 . +Pursuant to the +Securities and Exchange Commission rule allowing companies to furnish proxy materials to their stockholders over the internet, a Notice of Internet Availability of Proxy Materials (the “Notice”) has been sent to you on or about +April 1, 2015. The Notice contains information on how to access copies of the proxy materials and vote your shares. +At the meeting, +you will be asked to (i) elect three Class III Directors to serve on the Board of Directors until the Annual Meeting of Stockholders in 2018; (ii) ratify the appointment of KPMG LLP as our independent registered public accounting firm for +the 2015 fiscal year; (iii) approve, by an advisory (non-binding) vote, the compensation of the Company’s named executive officers as disclosed in these materials; and (iv) transact such other business as my properly come before the +meeting or any adjournment(s) or postponement(s) thereof. +The Board of Directors has approved the nominees for Director and recommends +that you vote FOR their election to the Board. In addition the Board of Directors recommends that you vote FOR the ratification of KPMG’s appointment, and FOR the Company’s executive compensation. +Your vote is very important, regardless of the number of shares you own. Whether or not you plan to attend the Annual Meeting in person, we +urge you to submit your vote as soon as possible. You will have the option to vote by telephone, via the internet, or by completing, signing, dating and returning a paper Proxy Card. Additional details on these options can be found in the Notice +sent to you and in the other proxy materials. You may, of course, attend the Annual Meeting and vote in person regardless of whether you have previously voted by phone, the internet or mail. +We look forward to seeing you at the meeting. +Sincerely yours, +Douglas A. Michels +President and Chief Executive Officer +Table of Contents +NOTICE OF 2015 ANNUAL MEETING OF STOCKHOLDERS +OF ORASURE TECHNOLOGIES, INC. +To our Stockholders: +The 2015 Annual Meeting +of Stockholders of OraSure Technologies, Inc. will be held at the following location and for the following purpose: +Monday, May 11, 2015 at 10:00 a.m. Eastern Time +ArtsQuest Center at +SteelStacks +101 Founders Way +Bethlehem, Pennsylvania 18015 +1. To elect three Class III Directors, each to serve for a term expiring at the +Company’s Annual Meeting of Stockholders in 2018; +2. To ratify the appointment of KPMG LLP as our independent registered public accounting +firm for the year ending December 31, 2015; +3. To approve, by an advisory (non-binding) vote, the compensation of the Company’s +named executive officers as disclosed in the Proxy Statement accompanying this Notice; and +4. To consider such other business as may properly come before the meeting or any +adjournment(s) or postponement(s) hereof. +Only holders of shares of our Common Stock of +record at the close of business on March 19, 2015 will be entitled to vote at the Annual Meeting of Stockholders and any adjournment(s) or postponement(s) thereof. Additional information is included in the Proxy Statement accompanying this +Notice. +By order of the Board of Directors, +Jack E. Jerrett +Secretary +April 1, 2015 +Bethlehem, Pennsylvania +YOUR VOTE IS IMPORTANT . Whether or not you +plan to attend the Annual Meeting, you are urged to vote your shares as promptly as possible by telephone, via the internet, or by completing, signing, dating and returning a paper Proxy Card, as described in the attached Proxy Statement. Voting by +phone, the internet or mail does not deprive you of your right to attend the Meeting and to vote your shares in person. +Table of Contents +TABLE OF CONTENTS +PROXY STATEMENT +Proxy Statement Summary +1 +2015 Annual Meeting Information +1 +2014 Business Highlights +1 +Corporate Governance Highlights +2 +Stockholder Voting Matters and Board Voting Recommendations +2 +Compensation Components +4 +Compensation Highlights +4 +Significant Actions Taken in Response to the 2014 SOP Vote +5 +Additional Key Features of Our Executive Compensation Program +5 +Questions and Answers About the 2015 Annual Meeting and Voting +6 +Why Did I Receive These Proxy Materials? +6 +What Is a Proxy? +6 +What Is the Record Date and What Does It Mean? +6 +What Is the Difference Between a Stockholder of Record and a Stockholder Who Holds Stock in Street Name? +7 +How Can I Vote My Shares at the Annual Meeting? +7 +How Will My Shares Be Voted If I Send In a Proxy? +7 +Will My Shares Be Voted If I Do Not Provide My Proxy? +8 +How Many Votes Must Be Present To Hold the Annual Meeting? +8 +How Can I Revoke a Proxy? +8 +What Items Will Be Voted On at the Annual Meeting? +8 +Who Will Pay the Cost of this Proxy Solicitation? +9 +How Do I Obtain Admission to the Annual Meeting? +9 +Are Votes Confidential? +10 +Who Counts the Votes? +10 +May Stockholders Ask Questions at the Annual Meeting? +10 +Stock Ownership of Certain Beneficial Owners and Management +11 +Corporate Governance +12 +Board Responsibilities, Operation and Composition +12 +Governance Guidelines and Code of Conduct +13 +Independent Chairman +13 +Director Independence +13 +Oversight of Risk Management +14 +Annual Meeting Attendance and Stockholder Communications +14 +Committees of the Board +15 +Nomination of Directors +16 +Director Qualifications +17 +Insider Trading +17 +Prohibition Against Short Sales, Hedging and Pledging +17 +Stock Ownership and Retention Guidelines +18 +Audit Committee Matters +18 +Report of the Audit Committee for Year Ended December 31, 2014 +18 +Audit Fees; Audit-Related Fees; Tax Fees; All Other Fees +19 +Pre-Approval Procedures +20 +Compensation Committee Matters +20 +Compensation Process and Procedures +20 +Annual Performance Evaluations +20 +Role of the Compensation Committee +21 +Role of the CEO +21 +Role of the Compensation Consultant +21 +Tally Sheets +22 +Compensation Committee Interlocks and Insider Participation +22 +Compensation Committee Report +22 +Executive Officers +23 +Transactions With Related Persons +24 +Section 16(a) Beneficial Ownership Reporting Compliance +24 +Compensation Discussion Analysis – Table of Contents +25 +Table of Contents +Compensation Tables – Table of Contents +25 +Compensation Discussion and Analysis +26 +Executive Summary +26 +Compensation Philosophy +36 +Benchmarking +37 +Pay Mix +38 +2014 Executive Compensation Components +39 +Other Compensation +50 +Compensation Tables +52 +Employment Agreements and Potential Payments Upon Termination or Change of Control +59 +Equity Compensation Plan Information +62 +Director Compensation +62 +Annual Fees +62 +Initial Equity Awards +63 +Annual Equity Awards +63 +Equity Award Terms +63 +Deferred Compensation +64 +Director Compensation During 2014 +64 +Proposals Requiring Your Vote +65 +Proposal No. 1- Election of Directors +65 +Background +65 +Vote Required; Board Recommendation +68 +Proposal No. 2 - Ratification of Appointment of Independent Registered Public Accounting +Firm +68 +Background +68 +Vote Required; Board Recommendation +69 +Proposal No. 3 - Advisory (Non-Binding) Vote To Approve Executive Compensation +69 +Background +69 +Recent Compensation Changes +69 +Other Compensation Program Features +70 +Vote Required; Board Recommendation +70 +Annual Report +71 +Deadline for Stockholder Proposals +71 +Table of Contents +PROXY +STATEMENT +We are providing these Proxy Materials to stockholders of OraSure Technologies, Inc., a +Delaware corporation (as used herein, “we,” “us,” “our” or the “Company”), in connection with the Company’s solicitation of proxies (each, a “Proxy”) for use at the Annual Meeting of +Stockholders to be held on May 11, 2015, at 10:00 a.m. Eastern Time, at the ArtsQuest Center at SteelStacks, 101 Founders Way, Bethlehem, Pennsylvania 18015, and at any adjournment(s) or postponement(s) thereof (the “Annual Meeting”). +As a stockholder, you are invited to attend the Annual Meeting and are requested to vote on the matters described in this +Proxy Statement. For your convenience, we are pleased to offer a live webcast of our Annual Meeting which you can access by going to www.virtualshareholdermeeting.com/OSUR2015 . The webcast will end after the formal portion of the meeting is +adjourned and will not include the presentation by management or the question and answer session provided only for those present in person at the Annual Meeting. +PROXY STATEMENT SUMMARY +This summary highlights information contained elsewhere in this Proxy +Statement. This summary does not contain all of the information that you should consider. You should read the entire Proxy Statement carefully before voting . +2015 ANNUAL MEETING INFORMATION +• Date and Time: +Monday, May 11, 2015 10:00 a.m. (ET) +• Location: +ArtsQuest Center at SteelStacks, 101 Founders Way, Bethlehem, PA 18015 +• Record Date: +March 19, 2015 +2014 BUSINESS HIGHLIGHTS +• 2014 consolidated net revenues of $106.5 million - 8% +growth over 2013. +• 2014 consolidated net loss improved 59% over 2013. +• $7.5 +million in cash generated from operations in 2014. Almost $98.0 million in cash at year-end. +• Gross margin of 63% in 2014, compared to 59% in 2013. +• Common +Stock price increased 61% during 2014. +• Molecular collection systems revenues grew 17% over 2013. +• Entered +into an HCV co-promotion agreement with AbbVie during 2014. +In 2014, we exceeded $100 million in revenues for the first time in history. Our stock price increased 61% for the year, in part due to the +strong revenue growth of our molecular collection systems and OraQuick ® HCV businesses, the AbbVie co-promotion agreement and more cost-effective promotion of our OraQuick ® In-Home HIV test. +• HCV product sales grew 42% over 2013. +• Total +HCV-related revenues (including AbbVie payments) were $14.8 million, or 14% of 2014 net consolidated revenues. +• Generated $45.1 million in revenues from newest business lines (i.e. DNA +Genotek, HCV-related and HIV-OTC). +• Implemented more cost effective promotional strategy for the OraQuick ® In-Home HIV test. +• Launched new Intercept +i2 TM collector and a NIDA-5 panel of fully-automated, high-throughput oral fluid drug assays in the U.S. +• Substantial progress in developing a rapid, point-of-care Ebola +test. +1 +Table of Contents +CORPORATE GOVERNANCE HIGHLIGHTS +• Comprehensive Code of Business Conduct and Ethics applies +to Board and Management. +• Corporate Governance Principles in place to address important governance +matters. +• Independent Chairman of the Board of Directors (the “Board”). +• Six (6) +of eight (8) members of the Board (“Directors”) are independent as defined by the Securities and Exchange Commission (“SEC”) and the NASDAQ Stock Market (“NASDAQ”). +• All +committees of the Board consist solely of independent Directors. +• Regular executive sessions of independent Directors. +• Robust +stockholder engagement through investor roadshows, investor conferences and other outreach. +• High level of Board and Committee meeting attendance +during 2014. +• All Directors attended 2014 Annual Meeting of Stockholders. +• Adopted +enhanced stock ownership and retention guidelines for Directors and executive officers. +• Policy prohibiting short sales, hedging and pledging of our Common +Stock. +• Compensation recoupment or “clawback” policy. +• Strong +“pay-for-performance” compensation philosophy. +• Insider trading policy to prevent improper trading in our stock by Directors +and employees. +• Oversight of risk management by Directors. +STOCKHOLDER VOTING MATTERS AND BOARD VOTING RECOMMENDATIONS +Proposals +Board +Recommendation +Page Reference for +More Detail +1) Election of Directors +FOR +65 +2) Ratification of Appointment of Independent +Registered Public Accounting Firm +FOR +68 +3) Advisory +(Non-Binding) Vote to Approve Executive Compensation +FOR +69 +Proposal No. 1 – Election of Directors +The following table provides summary information about each of our nominees for Class III Directors, whose new terms would +expire at the 2018 Annual Meeting of Stockholders: +Name +Age +Director +Since +Principal Occupation +Independent 1 +Committee +Memberships +Other +Current +Public +Boards +AC +CC +NC +GC +Michael +Celano +56 +2006 +Chief Financial Officer of DrugScan, Inc. +Yes +— +Douglas A. +Michels +58 +2004 +President and Chief Executive Officer of the Company +No +1 +Charles W. +Patrick +60 +2006 +Principal, Patrick Consulting +Yes +— +AC = Audit Committee +CC = Compensation Committee +NCGC = Nominating & Corporate Governance Committee += Member += Chair +1 As defined by the SEC and NASDAQ. +2 +Table of Contents +Proposal No. 2 – Ratification of Appointment of Independent Registered +Public Accounting Firm +Our Board and its Audit Committee have selected KPMG LLP (“KPMG”) to be our +independent registered public accounting firm for the 2015 fiscal year. The Board believes KPMG is well qualified to serve in this capacity and is recommending that the engagement of KPMG be ratified by our stockholders. +Proposal No. 3 – Advisory (Non-Binding) Vote to Approve Executive Compensation +It takes commitment from all the talented people throughout our Company to manage the many facets of our business. We believe +that we have the right executive team in place, and we have designed our compensation programs to enable us to attract, retain and reward our executives for delivering value to stockholders over the long-term. Therefore, we are asking our +stockholders to approve, by an advisory (non-binding) vote, the compensation of our named executive officers (“NEOs”). +Our compensation programs are designed to focus and reward our executives for balancing both short and long-term priorities. +To fulfill this mission, we have a strong pay-for-performance philosophy that forms the foundation for executive compensation decisions made by our Board and the Compensation Committee of the Board (the “Compensation Committee”). In +addition, our compensation decisions are designed to align the interests of our executives with the interests of our stockholders and incorporate strong corporate governance principles. +The Compensation Discussion and Analysis portion of this Proxy Statement (the “CD&A”) contains a detailed +description of our executive compensation philosophy and program, the compensation decisions the Board and Compensation Committee have made under that program and the factors considered in making those decisions, focusing on the compensation of our +NEOs for the year ended December 31, 2014, who were: +Douglas A. Michels, President and Chief Executive Officer; +Ronald H. Spair, +Chief Financial Officer and Chief Operating Officer; +Anthony Zezzo, +II, Executive Vice President, Marketing and Sales; +Jack E. Jerrett, +Senior Vice President, General Counsel and Secretary; and +Mark L. Kuna, Senior Vice President, Finance, Controller and Assistant Secretary +At our 2014 Annual Meeting, we did not receive a majority vote approving the compensation paid +to our NEOs for the 2013 fiscal year as disclosed in our 2014 Proxy Statement. In addition, at our 2013 Annual Meeting of Stockholders (the “2013 Annual Meeting”), we did not receive a majority vote approving the compensation paid to our +NEOs for the 2012 fiscal year as described in our 2013 Proxy Statement. The Board and our management take seriously the results of each “say-on-pay” (“SOP”) vote and the views of our stockholders regarding executive compensation. +Accordingly, following each of those votes we instituted an outreach effort to contact our stockholders in order to obtain their views on the reasons for the vote and to solicit their input on other aspects of our compensation practices. As part of +that effort, we engaged with stockholders who, in the aggregate, beneficially owned approximately 30% of our outstanding Common Stock to understand their concerns. Based on that input and the advice of a newly engaged compensation consultant, we +made several important changes to our executive compensation program that we believe directly respond to the concerns of our stockholders. The CD&A provides additional detail regarding the results of this outreach effort, the input received from +our stockholders and the important actions we have taken in response to that input. +3 +Table of Contents +Compensation Components +We believe that all components of our executive compensation program are strongly tied to performance of both the Company and +our executives. These components consist of the following: +Base Salary +Salaries are based on position relative to market and individual performance and contribution. +Annual Cash Incentive Bonus +Annual incentive cash bonuses reflect market-based +targets and are contingent upon (i) achievement of corporate financial objectives, which are used to determine overall bonus pool funding, and (ii) the executive’s individual performance against pre-determined objectives, which are used to +determine individual bonus payouts. +Long-term Incentive Plan (LTIP) +Long-term incentive equity compensation reflects market-based targets with the value of individual awards +contingent upon the executive’s individual performance against pre-determined objectives during the fiscal year prior to award. During 2014, over half of the value of equity awards to executives consisted of stock options, which provide no +value to executives unless our stock price increases after the date of grant. +Compensation Highlights +We believe that compensation awarded to our executives for 2014 was closely aligned with performance. The Company’s +financial results for 2014 represented a substantial improvement over 2013. Specifically, our 2014 consolidated net revenues reached a record high of $106.5 million and grew by 8% over 2014. This performance contributed to a 59% improvement to our +consolidated net loss for the year. A particularly strong performing segment was our molecular collection systems business, which delivered revenues 17% higher in 2014 than in 2013. We also entered into a significant HCV co-promotion agreement with +AbbVie during 2014 and our HCV business grew substantially, with 2014 net product revenues increasing 42% over 2013. Late in the year, we made substantial progress in the development of a potential new rapid Ebola test and ended 2014 with almost +$98.0 million in cash on our balance sheet, which we can use for our future growth. These accomplishments helped drive a 61% increase in the price of our Common Stock during 2014. +The 2014 compensation for Mr. Michels, our President and Chief Executive officer (“CEO”), and Mr. Spair, +our Chief Financial Officer and Chief Operating Officer (“CFO/COO”), increased by an amount that is in line with our performance. We believe these compensation levels are reasonable, given the substantially improved financial and stock +performance during 2014. +4 +Table of Contents +Significant Actions Taken in Response to the 2014 SOP Vote +Following the negative SOP votes received at our 2013 Annual Meeting and 2014 Annual Meeting, the Compensation Committee +engaged a new compensation consultant, Pay Governance, LLC (“Pay Governance”), to provide a fresh assessment of our compensation program and assistance in responding to the negative SOP votes. We also contacted stockholders who, in the +aggregate, beneficially owned approximately 30% of our outstanding Common Stock, along with ISS Proxy Advisory Services and Glass Lewis & Co., two leading proxy advisory firms to solicit their views and concerns regarding our compensation +program. Based on advice from Pay Governance and input from the stockholders we contacted, the Board and Compensation Committee adopted several important changes to our program in order to more closely align compensation and performance for our +executives. +Changes Going Forward +Effective +Discussed +on Page +Modified +long-term incentive awards to include 50% performance-vested equity. +2015 +33 +Eliminated +excise tax gross-up in all NEO employment agreements and changed “single trigger” change-in-control severance to “double trigger” in CEO agreement. +2015 +33 +Adopted +increased stock ownership/retention requirements for executives. +2015 +34 +Limited +Board’s ability to make discretionary adjustments to annual incentive bonus pool funding (+/- 10%). +2015 +34 +Appointed new +Compensation Committee Chairman. +2014 +35 +Additional Key Features of Our Executive Compensation Program +We believe other key features of our compensation program further illustrate our commitment to pay-for-performance, the strong +alignment of our executives’ interests with those of our stockholders and strong corporate governance. The more significant of these features are summarized below: +• Compensation +is predominantly performance-based. +• Balanced mix of cash/equity, fixed/variable, short-term/long-term compensation +components. +• Threshold financial performance objectives for annual bonus pool funding are set +at levels that meet or exceed actual financial performance for the prior fiscal year. +• Equity awards provide long-term incentive with three to four year vesting. +• Total compensation targeted at +50 th percentile of peer group. +• Use of peer company benchmarking and tally sheets. +• Compensation +recoupment policy. +• No hedging or pledge of our Common Stock. +• Robust +stockholder outreach on compensation/governance matters. +5 +Table of Contents +QUESTIONS AND ANSWERS ABOUT THE +2015 +ANNUAL MEETING AND VOTING +1. +WHY DID I RECEIVE THESE PROXY MATERIALS? +Our Board of Directors (the “Board of Directors” or the +“Board”) is furnishing Proxy Materials, including this Proxy Statement, the Proxy Card and the Company’s Annual Report to Stockholders for the year ended December 31, 2014 (“2014 Annual Report”), to our stockholders in +order to solicit Proxies to be voted at the Annual Meeting. Each stockholder can access these documents on the internet in accordance with the rules and regulations of the SEC. On or about April 1, 2015, we mailed a Notice of Internet +Availability of Proxy Materials (the “Notice”) to each stockholder at the holder’s address of record, indicating that this Proxy Statement is now available to our stockholders of record entitled to vote at the Annual Meeting. +SEC rules permit us to deliver only one copy of the Notice or a single set of Proxy Materials to multiple stockholders +sharing the same address. Upon written or oral request, we will deliver separate Notices and/or copies of our 2014 Annual Report and/or this Proxy Statement to any stockholder at a shared address to which a single copy of the Notice +was delivered. Stockholders may notify the Company of their requests by calling or writing us at OraSure Technologies, Inc., 220 East First Street, Bethlehem, Pennsylvania 18015, Attention: +Corporate Secretary; (610) 882-1820. +All stockholders and beneficial holders have the ability to access a copy of +our Proxy Materials on the internet at the website referred to in the Notice. Stockholders will not receive printed copies of the Proxy Materials unless they request those copies. The Notice also instructs stockholders as to how to submit a +Proxy through the internet. If you would like to receive a paper or e-mail copy of your Proxy Materials, you should follow the instructions for requesting such materials included in the Notice. We will pay the entire cost of preparing, assembling, +printing, mailing and distributing these Proxy Materials and soliciting votes. If you choose to access the Proxy Materials and/or vote over the internet, you are responsible for any internet access charges you may incur. +2. +WHAT IS A PROXY? +A Proxy is your legal designation of another person to vote the stock you own. +That other person is called a proxy. If you designate someone as your proxy in a written document, that document also is called a Proxy or a Proxy Card. +Jack E. Jerrett and Mark L. Kuna have been designated as proxies by the Board +of Directors for the Annual Meeting. +3. +WHAT IS THE RECORD DATE AND WHAT DOES IT MEAN? +The record date for the Annual Meeting is March 19, 2015 (the +“record date”). The record date is established by the Board of Directors as required by Delaware law. Only stockholders of record at the close of business on the record date are entitled to: +(a) +receive notice of the meeting; and +(b) +vote at the meeting and any adjournment(s) or postponement(s) of the meeting. +Each stockholder of record on the record date is entitled to one vote for each +share of Common Stock held. On the record date, there were 57,111,671 shares of our Common Stock outstanding and entitled to vote at the Annual Meeting. +6 +Table of Contents +4. +WHAT IS THE DIFFERENCE BETWEEN A STOCKHOLDER OF RECORD AND A STOCKHOLDER WHO HOLDS STOCK IN STREET NAME? +If your shares of stock are registered in your name on the books and records +of our transfer agent, Computershare, Inc., you are a stockholder of record. +If your shares of stock are held for you +in the name of your broker, bank or other nominee, your shares are held in street name. The answer to Question 7 describes brokers’ discretionary voting authority and when your broker, bank or other +nominee is permitted to vote your shares of stock without instructions from you. +It is important that you vote your shares if you are a stockholder of record and, if you hold shares in street name, +that you provide appropriate voting instructions to your broker, bank or other nominee as discussed in the answer to Question 7. +5. +HOW CAN I VOTE MY SHARES AT THE ANNUAL MEETING? +All stockholders have a choice of voting via the internet, over the telephone +or by completing and mailing a paper Proxy Card, as described below. +Voting via the Internet or by +Telephone. Stockholders of record desiring to vote online via the internet or by telephone prior to the Annual Meeting, should go to www.proxyvote.com or call the toll free number indicated on the Proxy Card or Notice. You may +vote via the internet or by telephone provided you do so by 11:59 p.m. Eastern Time (8:59 p.m. Pacific Time) on May 10, 2015. Stockholders who attend the Annual Meeting via the internet may vote their shares at that time up to and during the +Annual Meeting by following the instructions at www.virtualshareholdermeeting.com/OSUR2015 . +Street name holders +may vote via the internet or by telephone if their brokers, banks or other nominees make those methods available. If that is the case, each broker, bank or nominee will include instructions with the Notice or Proxy Statement. +The telephone and internet voting procedures, including the use of control numbers, are designed to authenticate your +identity, to allow you to give your voting instructions and to confirm that your instructions have been recorded properly. +If you vote via the internet, you should understand that you will be +responsible for any costs associated with this method of voting, such as usage charges from internet access providers and telephone companies. +Voting by Mail. If you desire to vote by using a paper Proxy Card instead of by telephone or via the +internet, you will need to either print a copy of the Proxy Card from the website indicated in your Notice or follow the instructions in your Notice to request that a paper copy be sent to you. You will then need to complete, sign, date and return +the Proxy Card, as described on the Proxy Card. Street name holders should complete and return the voting card provided by their broker, bank or nominee. +In Person. All stockholders of record may vote in person at the Annual Meeting. Submitting a Proxy via the +internet, over the telephone or by mail will not affect your right to withdraw your Proxy and vote in person at the Annual Meeting, provided that you follow the admission procedures described in the answer to Question 12. +6. +HOW WILL MY SHARES BE VOTED IF I SEND IN A PROXY? +If you are represented by a properly executed Proxy, whether delivered by +phone, the internet or mail, your shares will be voted in accordance with your instructions. +If you do not provide instructions with your Proxy, your shares will be voted +according to the recommendations of our Board as stated on the Proxy. +7 +Table of Contents +7. +WILL MY SHARES BE VOTED IF I DO NOT PROVIDE MY PROXY? +Stockholders of Record: If you are a stockholder of record, your +shares will not be voted if you do not provide your Proxy unless you vote in person at the Annual Meeting. It is, therefore, important that you vote your shares. +Street Name Holders: If your shares are held in street name and you do not provide your signed and dated +voting instruction form to your bank, broker or other nominee, your shares may be voted by your broker, bank or other nominee but only under certain circumstances. Specifically, under NASDAQ rules, shares held in the name of your +broker, bank or other nominee may be voted by your broker, bank or other nominee on certain “routine” matters if you do not provide voting instructions. +At the upcoming Annual Meeting, only the ratification of the selection of KPMG +LLP as the Company’s independent registered public accounting firm is considered a “routine” matter for which brokers, banks or other nominees may vote uninstructed shares. The other proposals to be voted on at our Annual Meeting +(specifically, the election of Director nominees and the advisory vote to approve the compensation of the Company’s NEOs) are not considered “routine” under NASDAQ rules, so the broker, bank or other nominee cannot vote your +shares on any of these proposals unless you provide to the broker, bank or other nominee voting instructions for each of these matters. If you do not provide voting instructions on these matters, your shares will not be voted on the matter, +which is referred to as a “broker non-vote.” It is, therefore, important that you vote your shares. +8. +HOW MANY VOTES MUST BE PRESENT TO HOLD THE ANNUAL MEETING? +Your shares are counted as present at the meeting if you attend the meeting +and vote in person or if you properly return a Proxy by internet, telephone or mail. In order for us to conduct our Annual Meeting, a majority of our outstanding shares of Common Stock as of March 19, 2015, must be present in person or by Proxy +at the meeting. This is +referred to as a quorum. Broker non-votes, votes withheld and abstentions are included in determining whether there are a sufficient number of shares present to constitute a quorum. +9. +HOW CAN I REVOKE A PROXY? +You can revoke a Proxy before the completion of voting at the Annual Meeting +by: +(a) +Giving written notice to the Corporate Secretary of the Company; +(b) +Delivering a later-dated Proxy; or +(c) +Voting in person at the meeting. +10. +WHAT ITEMS WILL BE VOTED ON AT THE ANNUAL MEETING? +At the Annual Meeting, action will be taken on the matters set forth in the +accompanying Notice of Annual Meeting of Stockholders and described in this Proxy Statement. The Board knows of no other matters to be presented for action at the Annual Meeting. +If any other matters do properly come before the Annual Meeting, the persons +named in the Proxy Card will have discretionary authority to vote on those matters in accordance with their best judgment. +8 +Table of Contents +11. +WHO WILL PAY THE COST OF THIS PROXY SOLICITATION? +Solicitation of Proxies is made on behalf of the Board. The cost of soliciting +Proxies will be borne by us. In addition to solicitations by e-proxy and/or by mail, certain of our Directors, officers and regular employees may solicit Proxies personally or by telephone or other means without additional compensation. +We have also engaged Morrow & Co., LLC, 470 West Ave., Stamford, CT 06902, to provide proxy solicitation services +at an estimated fee of $7,500 plus expenses. +Arrangements will be made with brokerage firms and other custodians, nominees +and fiduciaries to forward solicitation materials to the beneficial owners of stock held of record by such persons, and we will, upon request, reimburse them for their reasonable expenses in so doing. +12. +HOW DO I OBTAIN ADMISSION TO THE ANNUAL MEETING? +All stockholders must observe the following rules for admission to the Annual Meeting: +• +Only stockholders or their legal Proxy holders may attend the Annual Meeting. +• +Guests of either stockholders or their legal Proxy holders will not be admitted. +• +Seating is available on a first-come basis. +• +All persons wishing to attend must present a form of government-issued photo identification. +• +If you are a stockholder of record, you must present one of the following items: (i) the admission ticket that is attached to your +Proxy Card delivered as part of your Proxy Materials; (ii) a copy of your Computershare account statement indicating your ownership of the Company’s Common Stock; (iii) the Notice Regarding the Availability of Proxy Materials, if you +received one; or (iv) an admission ticket provided by the Company’s Corporate Secretary (see below). If you arrive without any of these items, we will admit you only if we are able to verify that you are a stockholder. +• +If you are a street name stockholder , you must present one of the following items: (i) the voting instruction form provided by +your broker or other holder of record as part of your Proxy Materials; (ii) a copy of a recent bank or brokerage account statement indicating your ownership of the Company’s Common Stock; (iii) the Notice Regarding the Availability of +Proxy Materials, if you received one; or (iv) an admission ticket provided by the Company’s Corporate Secretary (see below). +• +If you are not a stockholder but attending as Proxy for a stockholder, you must present (i) a valid legal Proxy; or (ii) an +admission ticket provided by the Company’s Corporate Secretary (see below). If you plan to attend as Proxy for a stockholder of record, you must present a valid legal Proxy from the stockholder of record to you. If you plan to attend as Proxy +for a street name stockholder, you must present a valid legal Proxy from the stockholder of record (i.e. the bank, broker, or other holder of record) to the street name stockholder that is assignable and a valid legal Proxy from the street name +stockholder to you. Stockholders may appoint only one Proxy holder to attend on their behalf. +If you would like to expedite your admission to the Annual Meeting, you may obtain an admission ticket in +advance of the meeting by e-mailing the Company’s Corporate Secretary at corporatesecretary@orasure.com . When submitting your request, please include proof of ownership of Company’s Common Stock or a valid legal Proxy in conformance +with the rules of admission described above. Please remember that if you attend the Annual Meeting with an admission ticket, you must still present a form of government issued photo identification to be admitted. +If you do not have access to e-mail or have other questions about the admission process, you may call +Kimberly A. Smoyer, Assistant Secretary, at (610) 882-1820. +9 +Table of Contents +13. +ARE VOTES CONFIDENTIAL? +We will continue our long-standing practice of holding the votes of each +stockholder in confidence from Directors, officers and employees, except: (a) as necessary to meet applicable legal requirements and to assert or defend claims for or against the Company; (b) in the case of a contested proxy +solicitation; (c) if a stockholder makes a written comment on the Proxy Card or otherwise communicates his or her vote to the Company; or (d) as needed to allow the independent inspectors of +election to certify the results of the vote. +14. +WHO COUNTS THE VOTES? +We will continue, as we +have for many years, to retain an independent inspector of election to receive and tabulate the Proxies and certify the results. +15. +MAY STOCKHOLDERS ASK QUESTIONS AT THE ANNUAL MEETING? +Yes. The Chairman will answer stockholders’ questions of general interest +during the question and answer period of the meeting. In order to provide an opportunity for everyone who wishes to ask a question, each stockholder will be limited to two minutes. +Stockholders may ask a second question if all others have first had their turn and if time allows. +When speaking, stockholders must direct questions to the Chairman and confine +their questions to matters that relate directly to the business of the meeting. Additional information regarding the conduct of the Annual Meeting, including the procedures for stockholders to ask questions, will be made available to all persons +attending the Annual Meeting. +10 +Table of Contents +Stock Ownership of Certain Beneficial Owners and Management +The following table sets forth +information, as of March 19, 2015, regarding the beneficial ownership of the Company’s Common Stock by (a) each person who is known by us to be the beneficial owner of more than five percent of the Common Stock outstanding; +(b) each Director and nominee for election as Director; (c) each of our executive officers named in the Summary Compensation Table in this Proxy Statement; and (d) all of our Directors and executive officers as a group. Unless +otherwise indicated, the address of each person identified below is c/o OraSure Technologies, Inc., 220 East First Street, Bethlehem, Pennsylvania 18015. +Pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), shares of Common +Stock which a person has a right to acquire pursuant to the exercise of stock options held by that person that are exercisable within 60 days of March 19, 2015 are deemed to be outstanding for the purpose of computing the percentage ownership +of that person, but are not deemed outstanding for computing the percentage ownership of any other person. +Name and Address +of +Beneficial Owner +Amount and Nature of +Beneficial +Ownership 1,2 +Percent +of Class +Wells Fargo & Company 3 +420 Montgomery Street +San Francisco, CA 94104 +5,731,568 +10.0% +BlackRock, +Inc. 4 +40 East +52 nd Street +New York, NY 10022 +5,030,442 +8.8% +Douglas A. Michels +1,602,141 +2.8% +Ronald H. Spair 5 +751,473 +1.3% +Roger L. Pringle 6 +313,055 +* +Anthony Zezzo II +295,232 +* +Douglas G. Watson +237,004 +* +Jack E. Jerrett +234,201 +* +Mark L. Kuna +197,573 +* +Charles W. Patrick 5 +164,164 +* +Michael Celano +144,318 +* +Ronny B. Lancaster +96,355 +* +Stephen S. Tang, Ph.D. +71,948 +* +All Directors and executive officers as a +group (11 people) +4,107,464 +6.9% +* +Less than 1% +1 +Subject to community property laws where applicable, beneficial ownership consists of sole voting and investment power except as otherwise +indicated. +2 +Includes shares subject to options exercisable within 60 days of March 19, 2015, as follows: Mr. Michels, 900,380 shares; Mr. Spair, +533,043 shares; Mr. Pringle, 175,552 shares; Mr. Zezzo, 188,977 shares; Mr. Watson, 80,000 shares; Mr. Jerrett, 172,276 shares; Mr. Kuna, 140,358 shares; Mr. Patrick, 70,000 shares; Mr. Celano, 70,000 shares; +Mr. Lancaster, 50,000 shares; Dr. Tang, 40,000 shares; and all Directors and executive officers as a group, 2,420,586 shares. Also includes unvested restricted stock, as follows: Mr. Michels, 139,965 shares; Mr. Spair, 69,807 +shares; Mr. Pringle, 12,987 shares; Mr. Zezzo, 37,759 shares; Mr. Watson, 19,480 shares; Mr. Jerrett, 29,654 shares; Mr. Kuna, 22,488 shares; Mr. Patrick, 12,987 shares; Mr. Celano, 12,987 shares; +Mr. Lancaster, 12,987 shares; Dr. Tang, 12,987 shares; and all Directors and executive officers as a group, 384,088 shares. +11 +Table of Contents +3 +Based on information contained in a Schedule 13G/A filed February 5, 2015 by Wells Fargo & Company (“Wells Fargo”), on +behalf of certain of its subsidiaries. Wells Fargo has shared voting power with respect to 5,731,568 shares, sole voting power with respect to 2,592 shares, shared dispositive power with respect to 5,731,568 shares and sole dispositive power with +respect to 2,592 shares. +4 +Based on information contained in a Schedule 13G/A filed January 15, 2015, by BlackRock, Inc. (“BlackRock”) on behalf of certain of +its subsidiaries. BlackRock has sole voting power with respect to 4,899,754 shares and sole dispositive power with respect to 5,030,442 shares. +5 +Includes restricted shares contributed by the recipient to the OraSure Technologies, Inc. Deferred Compensation Plan, as follows: Mr. Spair, +106,767 shares; and Mr. Patrick, 17,505 shares. +6 +Includes 1,500 shares owned by Mr. Pringle’s spouse. +Corporate Governance +Board Responsibility, Operation and Composition +The primary responsibility of the Board of Directors is to promote the long-term success of the Company. In fulfilling this +role, each Director must exhibit good faith business judgment as to what is in the best interests of the Company. The Board is responsible for establishing broad corporate policies, setting strategic direction and overseeing management. The +Company’s management is responsible for the day-to-day operations of the Company. +As of the date of this Proxy +Statement, the Board consists of eight (8) Directors. The Board is divided into three classes with each class consisting, as nearly as may be possible, of one-third of the total number of Directors on the Board. At each Annual Meeting of +Stockholders, the nominees for the class of Directors whose term is expiring at that annual meeting are elected for a three-year term. A Director holds office until the Annual Meeting of Stockholders for the year in which his or her term expires or +until his or her successor is elected and duly qualified, subject to prior death, resignation, retirement, disqualification or removal. Each nominee for election at the Annual Meeting currently serves as a Director and was previously elected to the +Board at the 2012 Annual Meeting of Stockholders. +12 +Table of Contents +The Board holds regular meetings typically in February, May, August and November with special meetings held as needed. The Board’s +organizational meeting follows the Annual Meeting of Stockholders. The Board meets in executive session at all regularly scheduled meetings. The Board held ten meetings and acted by written consent on two occasions during the fiscal year ended +December 31, 2014. Each member of the Board attended more than 75 percent of the combined total of meetings of the Board and of the Committees of the Board on which such member served during the period in the year in which he served as a +Director. +The Board operates under our Code of Business Conduct and Ethics and our Corporate Governance Principles. A majority of our Directors are independent as +required under applicable SEC and NASDAQ rules and the positions of Chairman of the Board and CEO of the Company are held by different individuals, with the Chairman being independent of management. Our Directors attended greater than 75% of all +Board and Committee meetings during 2014. +Governance Guidelines and Code of Conduct +The Board has adopted Corporate +Governance Principles which, along with the Charters for each of its Committees and the Company’s Code of Business Conduct and Ethics, provide a framework for the governance of the Company. The Company’s Corporate Governance Principles +address matters such as the responsibilities and composition of the Board, Director independence and the conduct of Board and Committee meetings. The Company’s Code of Business Conduct and Ethics sets forth guiding principles of business ethics +and certain legal requirements applicable to all Company employees and non-employee Directors. Copies of the current Corporate Governance Principles and Code of Business Conduct and Ethics are available on the Company’s website, +www.orasure.com . +Independent Chairman +Currently, the Company’s Chief Executive Officer does not hold the position of Chairman of the Board as the Company +believes it is appropriate for the Board to be led by an individual who is independent of management. Douglas G. Watson has served as the Chairman of our Board since March 2003. The Board has carefully considered its leadership structure and +believes at this time that the Company and its stockholders are best served by having the positions of Chairman and Chief Executive Officer filled by different individuals. This allows the Chief Executive Officer to, among other things, focus on the +Company’s day-to-day business, while allowing the Chairman to lead the Board in its fundamental role of providing advice and oversight of management. In the future, however, the Board may reconsider whether its Chief Executive Officer should +also serve as Board Chairman. +Director Independence +Our Corporate Governance Guidelines require, among other things, that a majority of the members of the Board meet the +independence requirements of the SEC and NASDAQ, on which our Common Stock is listed. Each year our Board, with assistance from the Nominating and Corporate Governance Committee, conducts a review of Director independence. The most recent annual +review occurred in the first quarter of 2015, during which the Board considered transactions and relationships, if any, between each Director or any member of such Director’s immediate family and the Company. As a result of this review, the +Board determined that Michael Celano, Ronny B. Lancaster, Charles W. Patrick, Roger L. Pringle, Stephen S. Tang, Ph.D., and Douglas G. Watson are “independent,” as that term is defined in the applicable rules of NASDAQ and the SEC. Only +Douglas A. Michels and Ronald H. Spair were determined by the Board not to be independent because they are executive officers of the Company. Based on the foregoing, the Board of Directors is comprised of a majority of independent Directors. +13 +Table of Contents +Oversight of Risk Management +As part of its oversight of the Company’s operations, the Board and Audit Committee monitor the management of risks by +the Company’s executives. The Audit Committee reviews the risks that the Company may face and receives reports from senior management on the nature of these risks and the procedures and processes in place to manage and mitigate such risks. +Substantive areas of risk reviewed by the Audit Committee include financial, legal, regulatory, operational, information technology and employment matters. The Audit Committee provides a report to the full Board on the matters covered during each of +its meetings, including its +risk monitoring activities. In addition, senior management provides +periodic reports to the full Board on the major risks facing the Company and the processes and procedures in place to manage +such risks. Management also conducts a risk assessment of the Company’s compensation policies and practices, including its executive compensation program, as described in greater detail in the Section of this Proxy Statement entitled, +“Compensation Committee Matters.” +The Board and Audit Committee monitor the major risks facing the Company and the procedures and processes implemented by management to mitigate those risks. +Members of all standing Committees of the Board are independent of management and meet applicable SEC and NASDAQ requirements. Our policy is that all Board members are expected to attend each Annual Meeting of Stockholders. The entire Board was +present at the 2014 Annual Meeting. +Annual Meeting Attendance and Stockholder Communications +The Board has approved a policy +concerning Board members’ attendance at our Annual Meeting of Stockholders and a process for security holders to send communications to members of the Board. A description of the Board’s policy on annual meeting attendance is provided on +our website, at www.orasure.com . As a general matter, each Board member is expected to attend each Annual Meeting of Stockholders. Our 2014 Annual Meeting was attended by all members of the Board. +Security holders may communicate +with the Board by sending their communications to OraSure Technologies, Inc. 220 East First Street, Bethlehem, Pennsylvania 18015, Attention: Corporate Secretary, fax: (610) 882-2275, email: corporatesecretary@orasure.com . +14 +Table of Contents +Committees of the Board +The Board currently has three standing committees – the Audit Committee, the Compensation Committee and the Nominating +and Corporate Governance Committee. Members of these committees are each “independent,” as defined in the Exchange Act and NASDAQ rules applicable to such Committees. In addition, the Board has determined that Michael Celano is an +“audit committee financial expert,” as that term is defined by applicable rules of the SEC. Each committee operates pursuant to a written charter, copies of which are available on our website, www.orasure.com . The following +summarizes the primary responsibilities of each standing committee: +Committee +Primary Responsibilities +Audit +The Audit Committee oversees the Company’s accounting and +financial reporting process, internal controls and audits, and consults with management and the Company’s independent registered public accounting firm on, among other items, matters related to the annual audits, the published financial +statements and the accounting principles applied. As part of its duties, the Audit Committee: (i) appoints, evaluates and retains our independent registered public accounting firm; (ii) maintains direct responsibility for the compensation, +termination and oversight of our independent registered public accounting firm; (iii) evaluates the independent registered public accounting firm’s qualifications, performance and independence; (iv) approves all services provided to the Company +by the independent registered public accounting firm; and (iv) maintains procedures for the receipt, retention and treatment, on a confidential basis, of complaints received by the Company, regarding accounting, internal accounting controls or +auditing matters, and the confidential, anonymous submissions by employees of concerns regarding questionable accounting or auditing matters. +Compensation +The Compensation Committee assists the Board in overseeing all types +of compensation for our executive officers and non-employee Directors. Our compensation philosophy is to (i) reward executive officers for performance; (ii) align the interests of our executives with the interests of our stockholders; (iii) provide +long-term incentives for our executive officers; and (iv) set compensation at levels sufficient to attract, retain and motivate high quality executives and to motivate them to contribute to our success. Except as prohibited by law, the Compensation +Committee is authorized to delegate any of its responsibilities to subcommittees or individual members, as the Compensation Committee deems appropriate. A further discussion of our process for determining executive officer compensation is set forth +in the “Compensation Committee Matters” and “Compensation Discussion and Analysis” Sections of this Proxy Statement. +Nominating & Corporate Governance +The Nominating and Corporate +Governance Committee of the Board identifies, evaluates and recommends to the Board candidates for election or re-election to the Board and administers our Corporate Governance Guidelines. In evaluating candidates for the Board, the Nominating and +Corporate Governance Committee will consider individuals recommended by members of the Nominating and Corporate Governance Committee or the Board of Directors, officers or employees of the Company, the Company’s security holders and other +business contacts. The Nominating and Corporate Governance Committee may also consult with outside advisors or retain search firms to assist in the search for qualified candidates. Candidates recommended by security holders will be considered by the +Nominating and Corporate Governance Committee in the same manner as candidates recommended by other sources, but only if the security holder makes a recommendation in accordance with the advance notification provisions set forth in the +Company’s By-laws. +15 +Table of Contents +The following table sets forth the current members of each standing committee of +the Board and the number of meetings and actions by written consent for each committee during 2014: +Director +Audit +Compensation +Nominating & +Corporate +Governance +Michael Celano +Ronny B. Lancaster +Douglas A. Michels +Charles W. Patrick +Roger L. Pringle +Ronald H. Spair +Stephen S. Tang, Ph.D. +Douglas G. Watson +2014 Meetings/Written Consents +8/0 +8/3 +4/0 += Member += Chair +Nomination of Directors +Our Bylaws provide that nominations for election to the Board may be made by the Board or by any stockholder entitled to vote for the +election of Directors at the Annual Meeting. A stockholder’s notice of nomination must be made in writing to the Company’s Secretary and must be delivered to or received at our principal executive offices not less than ninety +(90) days nor more than one hundred twenty (120) days prior to the meeting. However, in the event that less than one hundred (100) days’ notice or prior public disclosure of the date of the meeting is given or made to +stockholders, notice by the stockholder to be timely must be received no later than the close of business on the tenth (10 th ) day following the day on which such notice of the date of the +meeting was mailed or such public disclosure was made, whichever first occurs. The notice to the Corporate Secretary must set forth, with respect to the nominee, the name, age, business address, residence address, principal occupation or employment +of the person, the class and number of shares of capital stock of the Company which are +Stockholders can nominate individuals to serve on the Board by following the procedures described in the Company’s By-Laws. Diversity is an important +factor that is considered in evaluating new candidates for the Board. In determining whether incumbent Directors will be nominated for re-election, we evaluate the individual’s background, experience and prior service as a Director. +beneficially owned by the person, and any other information relating to the person that is required to be disclosed in solicitations for proxies for +election of Directors pursuant to Regulation 14A under the Exchange Act. The notice must also include, as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination is made: (i) the name and address of +the stockholder and such beneficial owner; (ii) the class and number of shares of capital stock of the Company which are held of record or beneficially owned by such stockholder and such beneficial owner and any other direct or indirect +pecuniary or economic interest in any capital stock of the Company of such stockholder and beneficial owner, including without limitation, any derivative instrument, swap, option, warrant, short interest, hedge, profit sharing arrangement or +borrowed or loaned shares; (iii) a description of any arrangements or understandings between such stockholder and beneficial owner and each proposed nominee and any other person (including their names) pursuant to which the nomination(s) are to +be made by such stockholder and such beneficial owner or with respect to actions to be proposed or taken by such nominee if elected as a Director; (iv) a representation that such stockholder intends to appear in person or by proxy at the +meeting to nominate the persons named in its +16 +Table of Contents +notice; and (v) any other information relating to such stockholder and such beneficial owner that would be required to be disclosed in a proxy +statement or other filings required to be made in connection with solicitations of proxies for election of Directors, or may otherwise be required pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder. +We may also require any proposed nominee to furnish such other information as we may reasonably require to determine the eligibility of the proposed nominee to serve as a Director of the Company. +Director Qualifications +Although there is no formal policy governing Board diversity, the Nominating and Corporate Governance Committee considers +diversity and other factors in evaluating new candidates for the Board. The term diversity is used broadly to include not only race, gender and national origin, but also any other factors determined to be relevant by the Nominating and Corporate +Governance Committee based on the needs of the Board and Company, including independence, integrity, knowledge, judgment, character, leadership skills, education, industry experience, financial literacy, technical background, specialized expertise, +and standing in the community. In evaluating incumbent Directors for re-election, the Nominating and Corporate Governance Committee considers that Director’s background, experience and overall service to the Company, including the number of +meetings attended, level of participation, quality of performance and other factors deemed relevant by the Nominating and Corporate Governance Committee. +Insider Trading +We have a policy designed to prevent any trading in the Company’s Common Stock or other securities +by a person while such person is in possession of material nonpublic +information. This policy applies to Directors, executive officers and all other employees of the Company. The policy +prohibits trading in the Company’s securities on the basis of material nonpublic information, requires preapproval for Directors, executive officers and all other employees of the Company of transactions in Company securities and establishes +regular trading windows after each calendar quarter following the Company’s announcement of its quarterly financial results. +We have implemented several governance policies related to our Common Stock. Our Insider Trading Policy prohibits trading by Directors or employees who are +in possession of undisclosed material information about the Company. Our policy also prohibits short-term, speculative transactions in our stock, such as hedging, pledging and short sales. We recently implemented enhanced stock ownership and +retention guidelines for our CEO and other executives. +Prohibition Against Short Sales, Hedging and Pledging +We believe it is inappropriate for +any employee or member of the Board to engage in short-term or speculative transactions involving Company securities. As a result, our insider trading policy prohibits Directors, executive officers and all other employees of the Company from +entering into these types of transactions involving our Common Stock, including short sales, the buying or selling of puts or calls, the purchase of securities on margin, prepaid variable forward contracts, equity swaps, collars, exchange funds and +other similar financial instruments. Our policy also prohibits employees and Directors from pledging shares of our Common Stock as collateral. +17 +Table of Contents +Stock Ownership and Retention Guidelines +The Board has adopted stock ownership and retention guidelines applicable to the Company’s President and Chief Executive +Officer, its Chief Financial Officer and Chief Operating Officer, all other executive officers and all non-employee members of the Board. Under these guidelines, which were recently amended to increase the holding and retention requirements to +better reflect what we believe to be market practice, the covered individuals must meet the following ownership requirements, expressed either as a multiple of base salary (in the case of Company officers) or annual cash fees (in the case of Board +members): +Covered Individual +Multiple of Base Salary or Director Fees +President and Chief Executive Officer +6x +Chief Financial Officer and Chief Operating Officer +2x +Other Executive Officers +1x +Non-Employee Directors +1x +Any individual who was covered by the guidelines at the time of adoption or who becomes +subject to the guidelines following adoption is required to meet the guidelines within five years. Any individual already subject to the guidelines who becomes subject to a higher ownership requirement, due to a promotion, a further amendment to the +guidelines or an increase in compensation, is required to meet the new ownership requirement within five years following the effective date of promotion, change in compensation or guideline amendment. In determining whether an individual meets the +required ownership requirement, shares owned directly or indirectly, restricted stock (including both time and performance vested) and shares deferred under our deferred compensation plan will be counted. Compliance will be determined as of +December 31 of each fiscal year. The guidelines also require each covered individual to retain at least 50% of the net shares acquired upon the exercise of stock options and the vesting of restricted stock until the individual’s holdings +of Common Stock equal or exceed the applicable ownership requirement. As of December 31, 2014, all covered officers and non-employee Directors were in compliance with the stock ownership guidelines. +Audit Committee Matters +Report of the Audit Committee for the Year Ended December 31, 2014 +The information contained in this report shall not be deemed to be “soliciting material” or “filed” for +purposes of Section 18 of the Exchange Act or otherwise subject to liability under that Section. This report shall not be deemed “incorporated by reference” into any document filed under the Securities Act of 1933, as amended (the +“Securities Act”), or the Exchange Act, whether such filing occurs before or after the date hereof, regardless of any general incorporation language in such filing. +The role of the Audit Committee is to assist the Board of Directors in fulfilling its responsibilities to oversee +management’s conduct of the Company’s financial reporting process, including monitoring (1) the participation of management and the outside independent registered public accounting firm in the financial reporting process, (2) the +Company’s systems of internal accounting and financial controls, (3) the annual independent audit of the Company’s financial statements and (4) the qualifications, independence and performance of the outside independent +registered public accounting firm. The Audit Committee selects the Company’s outside independent registered public accounting firm, and once selected, the outside independent registered public accounting firm reports directly to the Audit +Committee. The Audit Committee is responsible for approving both audit and non-audit services to be provided by the outside independent registered public accounting firm. The Audit Committee is composed of four (4) non-employee directors and +operates pursuant to a Charter that was last amended and restated by the Board on February 12, 2013 (which can be found on the Company’s website at www.orasure.com ). +18 +Table of Contents +Management of the Company is responsible for the preparation, presentation and +integrity of the Company’s financial statements, the Company’s accounting and financial reporting principles and internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations. +The independent registered public accounting firm is responsible for auditing the Company’s financial statements and expressing an opinion as to their conformity with U.S. generally accepted accounting principles. The Audit Committee’s +responsibility is to monitor and review these processes. It is not the Audit Committee’s duty or responsibility to conduct auditing or accounting reviews. +In the performance of its oversight function, the Audit Committee has considered and discussed the audited financial +statements with management, which included a discussion of not only the quality, but also the acceptability, of the accounting principles, the reasonableness of significant judgments and the clarity of disclosures in the financial statements. The +Audit Committee met with the independent registered public accounting firm, with and without management, to discuss the results of their audit and their judgments regarding the Company’s accounting policies. The Audit Committee has also +discussed with the independent registered public accounting firm the matters required to be discussed under applicable standards, including those in Public Company Accounting Oversight Board Auditing Standard No. 16, as currently in effect. +Finally, the Audit Committee has received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the Public Company Accounting Oversight Board as currently in effect, has +considered whether the provision of non-audit services by the independent registered public accounting firm to the Company is compatible with maintaining the firm’s independence and has discussed with the independent registered public +accounting firm the firm’s independence. +Based upon the reports and discussions described in this report, and +subject to the limitations on the role and responsibilities of the Audit Committee referred to above and in the Audit Committee’s Charter, the Audit Committee recommended to the Board that the audited financial statements be included in the +Company’s Annual Report on Form 10-K for the year ended December 31, 2014 for filing with the SEC and selected KPMG LLP as the independent registered public accounting firm for fiscal year 2015. The Board is recommending that stockholders +ratify that selection at the Annual Meeting. +Submitted by the Audit Committee of the Company’s Board of Directors: +Michael Celano, Chairman +Charles W. Patrick +Roger L. Pringle +Douglas G. Watson +March 4, 2015 +Audit Fees; Audit-Related Fees; Tax Fees; All Other Fees. +The following table presents fees for professional audit services rendered by KPMG (i) for the audits of our annual +consolidated financial statements and review of the financial statements in our Quarterly Reports on Form 10-Q for the fiscal years ended December 31, 2014 and 2013, and (ii) for the audits of our internal control over financial +reporting as of December 31, 2014 and 2013. The following table also includes fees billed for other services rendered by KPMG: +2014 +2013 +Audit fees 1 +$670,000 +$ +660,000 +Audit-related fees +— +— +Tax fees 2 +114,789 +160,310 +All other fees +— +— +Total fees +$784,789 +$ +820,310 +19 +Table of Contents +1 Includes fees related to the audits of our +annual financial consolidated statements, interim reviews of our quarterly financial statements and audits of our internal control over financial reporting for each indicated year. +2 During the fiscal years ended December 31, 2014 and +2013, we engaged KPMG to provide tax compliance, planning and consulting services. +Pre-Approval Procedures +The Audit Committee has adopted a general practice of pre-approving all audit and non-audit services provided to the Company +by our independent registered public accounting firm. The Chairman of the Audit Committee has been delegated the authority to pre-approve audit and non-audit services having an aggregate value of up to $25,000 between meetings of the Audit +Committee, provided that such pre-approval is communicated to the Audit Committee at its next scheduled meeting. All services by KPMG in 2014 and 2013 were approved in accordance with these practices. +Compensation Committee Matters +The Compensation Committee assists the Board of Directors in +developing and managing the compensation provided to executive officers of the Company and non-employee members of the Board. The Compensation Committee is responsible for developing and overseeing the implementation of the Company’s +compensation philosophy and for setting executive compensation at levels that are sufficiently competitive so that the Company can attract, retain and motivate high quality executives who can contribute to the Company’s success. +Compensation Process and Procedures +Compensation for executives is established by the Compensation Committee in accordance with the compensation philosophy +detailed in the CD&A Section set forth later in this Proxy Statement. In setting executive compensation, the Compensation Committee considers the Company’s and each executive’s performance against previously established objectives, +internal pay equity, the compensation practices of the Company’s peer group (listed on page 37 of this Proxy Statement), the Company’s industry position and general industry data. The Compensation Committee periodically retains independent +compensation consultants to review our executive compensation practices and to assist in establishing competitive compensation levels for our executives. +Annual Performance Evaluations +On an annual basis, the Compensation Committee and other non-employee Directors evaluate the performance of the CEO and +CFO/COO against predetermined performance objectives. The CEO also evaluates the performance of the other NEOs against their respective predetermined performance objectives. Annual performance objectives for the CEO and other NEOs are established at +the beginning of the applicable year and generally include two parts: (1) the Company’s overall target financial objectives, and (2) individual objectives in the functional areas for which the executive is responsible. For each NEO, +these objectives are then weighted to reflect their relative importance to the Company and the executive’s functional responsibilities. +Depending on the Company’s overall performance and the extent to which an executive achieves his individual objectives +for a particular year, the executive will be rated as “Does Not Meet,” “Does Not Consistently Meet,” “Meets Expectations,” “Exceeds Expectations” or “Outstanding.” The Compensation Committee uses the +performance ratings to determine base salary adjustments, incentive cash bonuses and long-term incentive equity awards, except for Messrs. Michels and Spair. The Compensation Committee decided that, because of their senior positions with the +Company, it is more appropriate to determine the base salary, incentive cash bonuses and long-term incentive equity awards for Messrs. Michels and Spair primarily based on the Company’s overall performance and, in doing so, does not apply +individual performance rating labels to them. +20 +Table of Contents +Role of the Compensation Committee +The Compensation Committee is comprised of non-employee independent Directors who oversee our executive compensation program. +Each year, the Compensation Committee determines the appropriate level of compensation for all executive officers, including the NEOs. As an initial guideline, the Committee sets the total direct compensation opportunity (base salary, annual +incentive bonus target, and long-term incentive target) for each of our executive officers within a range around the 50th percentile of comparable medical diagnostics and healthcare companies. The variation of actual pay relative to the market data +is dependent on the executive officer’s performance, experience, knowledge, skills, level of responsibility, potential to impact our performance and future success, and the need to retain and motivate strategic talent. +The Compensation Committee generally determines an executive officer’s compensation based upon the objectives of our +executive compensation program. The Compensation Committee makes compensation recommendations for the CEO and the CFO/COO and approves decisions for the other NEOs after careful review and analysis of appropriate performance information and market +compensation data. Compensation for the CEO and CFO/COO is approved by the full Board of Directors. +Beyond determining +specific compensation for NEOs, the Compensation Committee works with executive management to review and adjust compensation policies and practices to remain consistent with the Company’s values and philosophy, support the recruitment and +retention of executive talent, and help the Company achieve its business objectives. +Role of the CEO +The CEO provides recommendations to the Compensation Committee on the total direct compensation for each executive, other than +himself. The CEO’s recommendations are based on his review of each executive’s performance, job responsibilities, importance to our overall business strategy, and our compensation philosophy. Although the CEO’s recommendations are +given significant weight, the Compensation Committee retains full discretion when determining compensation. +Role of the Compensation Consultant +To assist in the review and approval of executive compensation and to obtain information regarding market trends, the +Compensation Committee engages the services of one or more independent executive compensation consultants, to analyze our executive compensation structure and plan designs, and to assess whether the compensation program is competitive and supports +our goal of aligning the interests of our executive officers with those of our stockholders. In addition, a consultant provides the Compensation Committee with the peer group and other market data that is discussed in the CD&A, which the +Compensation Committee evaluates when determining compensation for executive officers. During 2014, the Compensation Committee specifically engaged Pearl Meyer & Partners (“PM&P”) to provide a competitive assessment of +executive compensation including the design of its incentive cash bonus and long-term incentive programs. PM&P was also engaged to consult on the preparation of our 2014 Proxy Statement. We paid PM&P approximately $136,000 for their +services. The Compensation Committee also engaged a second consultant in 2014, Pay Governance LLC (“Pay Governance”), to assist the Company in responding to the negative SOP votes at its 2013 Annual Meeting and 2014 Annual Meeting and to +provide advice regarding the design of long-term incentive equity awards with performance vesting. +The Compensation +Committee has the sole authority to approve the independent compensation consultant’s fees and terms of the engagement. Thus, the Compensation Committee annually reviews its relationship with each consultant to ensure executive compensation +consulting independence. The process included a review of the services PM&P and Pay Governance provide, the quality of those services, and fees associated with the services +21 +Table of Contents +during the fiscal year as well as consideration of the factors impacting independence that NASDAQ rules require. The Compensation Committee concluded that there were no conflicts of interest that +prevented PM&P and Pay Governance from serving as independent consultants to the Compensation Committee on executive compensation matters. +Tally Sheets +In determining annual compensation, the Compensation Committee reviews tally sheets for each executive. Tally sheets set forth +the dollar amounts of all components of each NEO’s current compensation, including salary, incentive cash bonus, incentive equity awards, potential change of control payments and other benefits deemed relevant by the Compensation Committee. +These tally sheets allow the Compensation Committee to review how a change in the amount of each compensation component affects each executive’s total compensation and to consider each executive’s compensation in the aggregate. Included in +each tally sheet is the estimated amount of severance and other benefits payable to the executive under various termination scenarios. Based upon the review of tally sheets, the Compensation Committee establishes aggregate compensation for our +executives which it believes to be reasonable. +Compensation Committee Interlocks and Insider Participation +Stephen S. Tang, Ph.D., Ronny B. Lancaster, Roger L. Pringle, and Douglas G. Watson served as members of the Compensation +Committee of the Board during 2014. None of these Directors has served or is currently serving as an officer or employee of the Company, nor have they engaged in any transactions involving the Company which would require disclosure as a transaction +with a related person. There are no compensation committee interlocks between the Company and any other entity involving the Company’s or such entity’s executive officers or board members. +Compensation Committee Report +The information contained in this report shall not be deemed to be “soliciting material” or “filed” for +purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that Section. This report shall not be deemed to be “ incorporated by reference” into any document filed under the Securities Act or the +Exchange Act, whether such filing occurs before or after the date hereof, regardless of any general incorporation language in such filing. +The Compensation Committee of OraSure Technologies, Inc. has reviewed and discussed with the Company’s management the +Section entitled, “Compensation Discussion and Analysis,” contained in this Proxy Statement. Based on that review and discussion, the Compensation Committee recommended to the Company’s Board of Directors that the foregoing +Compensation Discussion and Analysis be included in the Company’s 2014 10-K Report and Proxy Statement for the 2015 Annual Meeting of Stockholders. +COMPENSATION COMMITTEE: +Stephen S. Tang, Ph.D., Chairman +Roger L. Pringle +Ronny B. +Lancaster +Douglas G. Watson +March 23, 2015 +22 +Table of Contents +Executive +Officers +The table below provides information about the executive officers of the Company as of March 19, +2015 record date. Officers of the Company hold office at the discretion of the Board. +Name +Age +Position +Douglas A. Michels +58 +President and Chief Executive Officer +Ronald H. Spair +59 +Chief Financial Officer and Chief Operating Officer +Anthony Zezzo II +61 +Executive Vice President, Marketing and Sales +Jack E. Jerrett +56 +Senior Vice President, General Counsel and Secretary +Mark L. Kuna +51 +Senior Vice President, Finance, Controller and Assistant Secretary +Douglas A. Michels has been the Company’s President and Chief Executive Officer since June 2004. Prior to that, Mr. Michels served as Group Vice +President, Global Marketing of Ortho-Clinical Diagnostics, President of Ortho-Clinical Diagnostics International, and President of Johnson & Johnson Healthcare Systems, Inc. Earlier in his career, Mr. Michels held various sales and +marketing positions of increasing responsibility within the Johnson & Johnson family of companies and with the Diagnostics Division of Abbott Laboratories. Mr. Michels received a B.S. degree in Public Health Administration from the +University of Illinois and an M.B.A. from Rutgers University. Mr. Michels also serves on the Presidential Advisory Council on HIV/AIDS (PACHA) and on the board of directors of West Pharmaceutical Services, Inc. +Ronald H. Spair has been the Company’s Chief Financial Officer and Chief Operating Officer since September 2006 and served as Executive Vice President and +Chief Financial Officer since November 2001. Prior to that time, Mr. Spair served as Chief Financial Officer for various companies in the pharmaceutical industry, including Delsys Pharmaceutical Corporation, SuperGen, Inc., and Sparta +Pharmaceuticals, Inc. Mr. Spair received both his B.S. in Accounting and M.B.A. from Rider College. He is also a licensed Certified Public Accountant, a Chartered Global Management Accountant, a member of the New Jersey Society of Certified +Public Accountants and the American Institute of Certified Public Accountants, and serves on the board of Pennsylvania Bio. +Anthony Zezzo II has been the Company’s Executive Vice President, Marketing and Sales since January 2011. From 2004 to December 2010, Mr. Zezzo was +Vice President, North American Sales and Marketing at the Ortho-Clinical Diagnostics Division of Johnson & Johnson. Prior to that time, Mr. Zezzo held a series of increasingly responsible sales and marketing positions within +Johnson & Johnson. Mr. Zezzo received his B.A. in Political Science from Grove City College. +23 +Table of Contents +Jack E. Jerrett has been the Company’s Senior Vice President and General Counsel since February 2003 and served as Vice President and General Counsel since +November 2000. He has also served as the Company’s Secretary since February 2001. Prior to joining the Company, Mr. Jerrett worked as an Associate at Morgan, Lewis & Bockius and held positions of increasing legal responsibilities +with companies in the transportation and energy industries. Mr. Jerrett received his B.S. in Accounting from Villanova University and his J.D. from the Villanova University School of Law. He is a member of the Pennsylvania Bar and the American +and Pennsylvania Bar Associations. +Mark L. Kuna has been the Company’s Senior Vice President, Finance and Controller since September 2006, and served as Vice President and Controller since +February 2003 and as Controller since February 2001. Mr. Kuna has also served as the Company’s Assistant Secretary since May 2002 and provided accounting and financial analysis support since joining the Company in October 2000. Prior to +that time, Mr. Kuna served as an accountant with Deloitte and Touche and held senior accounting and management positions with companies in the petrochemical, manufacturing, and telecommunications industries. Mr. Kuna received his B.S. in +Accounting from the University of Scranton and is a licensed Certified Public Accountant, a Chartered Global Management Accountant, and a member of the Pennsylvania and American Institutes of Certified Public Accountants. +Transactions With Related Persons +Since January 1, 2014, there have been no transactions +with related persons which would require disclosure in this Proxy Statement. The Audit Committee is required to review and approve in advance all transactions with related persons involving the Company. The Audit Committee may approve a related +party transaction if the transaction is on terms comparable to those that could be obtained in arms’ length dealings with an unrelated third party. The Audit Committee also reviews any public disclosures of a related party transaction contained +in our SEC filings. These responsibilities are described in the Audit Committee’s charter, a copy of which is available on our website at www.orasure.com . +Information regarding employment and severance agreements between our executive officers and the Company is set forth in the +Section entitled, “Employment Agreements and Potential Payments Upon Termination or Change of Control,” in this Proxy Statement. +Section 16(a) Beneficial Ownership Reporting Compliance +Section 16(a) of the +Exchange Act requires that our executive officers, Directors and persons who own more than ten percent of our Common Stock (collectively, “Reporting Persons”) file reports of ownership and changes in ownership with the SEC. Reporting +Persons are required by the SEC’s regulations to furnish us with copies of all Section 16(a) forms they file. +As a matter of practice, our administrative staff assists each of the Reporting Persons who are employees and Directors of the +Company in preparing initial reports of ownership and reports of changes in beneficial ownership and filing such reports with the SEC and the NASDAQ. Based solely on a review of the copies of forms filed by or on behalf of the Reporting Persons and +on written representations (if any) from each of the Reporting Persons, we believe that all Reporting Persons complied on a timely basis with all applicable filing requirements with respect to the 2014 fiscal year. +24 +Table of Contents +Compensation +Discussion and Analysis - Table of Contents +EXECUTIVE SUMMARY +26 +Overview +26 +Our Performance in 2014 +26 +2014 Business Highlights in Detail +27 +NEO Compensation At a Glance – 2014 +27 +Pay for Performance +28 +Realizable Pay vs. TSR +29 +Realizable Pay vs. SCT Compensation +29 +Pay vs. Other Company Measures of Performance +30 +Say on Pay Results in 2014 and Company Response +30 +Compensation Changes in Response to Stockholder Input +32 +Other Good Compensation Governance Practices +35 +Compensation Risk Assessment +36 +COMPENSATION PHILOSOPHY +36 +BENCHMARKING +37 +PAY MIX +38 +2014 EXECUTIVE COMPENSATION COMPONENTS +39 +Overview +39 +Compensation Components in Detail +41 +OTHER COMPENSATION +50 +Retirement Programs +50 +Perquisites and Other Compensation +50 +Potential Payments Upon Termination or Change of Control Pursuant to Employment Agreements +50 +Accounting and Tax Treatment of Compensation +50 +Compensation Recoupment Policy +51 +Compensation Tables – Table of Contents +Summary Compensation Table +52 +Grants of Plan-Based Awards During 2014 +53 +Outstanding Equity Awards at December 31, 2014 +54 +Option Exercises and Stock Vested During 2014 +57 +Retirement Benefits +57 +Nonqualified Deferred Compensation +57 +25 +Table of Contents +Compensation +Discussion and Analysis +Executive Summary +Overview +This Compensation Discussion and Analysis, or CD&A, describes the material elements of the compensation of our NEOs and +describes the objectives and principals underlying the Company’s executive compensation program, the compensation decisions we have recently made under this program and the factors we considered in making these decisions. +Our NEOs for 2014 who are covered in this CD&A include: +Name +Position during 2014 +Douglas A. Michels +President and Chief Executive Officer +Ronald H. Spair +Chief Financial Officer and Chief Operating Officer +Anthony Zezzo, II +Executive Vice President, Marketing and Sales +Jack E. Jerrett +Senior Vice President, General Counsel and Secretary +Mark L. Kuna +Senior Vice President, Finance, Controller and Assistant Secretary +Our Performance in 2014 +Our financial performance for 2014 represented a substantial improvement over 2013. The following charts and summary describe +our consolidated financial performance (expressed in thousands) and several of the principal contributors to the growth we achieved. +Our performance in 2014 included a record level of consolidated net revenues and a substantially +improved bottom line. These results contributed to a 61% increase in our stock price during the year. +26 +Table of Contents +2014 Business Highlights in Detail +• Consolidated +net revenues were $106.5 million (8% over 2013), exceeding $100 million for the first time in our history. +• Revenue growth and lower operating expenses improved our consolidated net loss by +more than $6.5 million, or 59% compared to 2013. +• We generated $7.5 million in cash from operations during 2014. +• Aggregate +cash and cash equivalent balances totaled almost $98.0 million at year-end. +• Gross margin grew to 63% in 2014, compared to 59% in 2013. +• Molecular +collections systems revenues of $23.8 million increased 17% over 2013. +• The new co-promotion agreement with AbbVie for our OraQuick ® HCV test may generate up to $75.0 million in exclusivity payments over its term with the opportunity for additional amounts annually if we achieve certain performance milestones. +• OraQuick ® HCV product +revenues of $7.3 million represented a 42% increase over 2013. +• Net revenues related to our HCV business (i.e. product sales plus AbbVie +exclusivity payments) totaled $14.8 million, or about 14% of consolidated net revenues in 2014. +• Net revenues from our newest business lines (i.e. DNA Genotek, HCV-related and HIV +OTC) totaled $45.1 million, or 42.4%, of consolidated net revenues for 2014. +• We stopped the very expensive broad-based consumer advertising for our OraQuick ® In-Home HIV test and implemented a more cost effective promotional strategy at the retail outlet level. +• Launched our next generation Intercept i2 TM collector and a NIDA-5 panel of high-throughput, fully-automated oral fluid drug assays into the U.S. criminal justice and drug treatment markets. +• Substantial +progress in the development of a rapid, point-of-care Ebola test using our OraQuick ® technology platform. +NEO Compensation At a Glance – 2014 +Compensation for the NEOs in 2014 was directly or indirectly tied to the performance of both the executives and the Company, +resulting in the following actions: +• +Base Salary : The base salaries paid to our management (including the NEOs) during 2014 increased 2.7% on average, with +Mr. Michels receiving a 3.0% increase for the year. These adjustments were based on the performance of each executive and the Company during 2013 and the results of a competitive marketplace assessment prepared by PM&P. +NEO +2013 Performance Rating +2013 Salary +2014 Salary +Change (%) +Douglas A. Michels +N/A +$564,000 +$580,920 +3.0% +Ronald H. Spair +N/A +$443,000 +$456,290 +3.0% +Anthony Zezzo II +Exceeds +$362,000 +$376,480 +4.0% +Jack E. Jerrett +Meets/Exceeds +$320,000 +$328,000 +2.5% +Mark L. +Kuna +Meets/Exceeds +$254,500 +$262,135 +3.0% +• +Annual Incentive Bonuses : Incentive cash bonus awards for 2014 ranged from 137% to 181% of target for the NEOs and for +Mr. Michels specifically was 152.5% of his target. The bonus amounts exceeded the applicable targets for each NEO primarily due to the strong financial performance and the improved strategic positioning of the Company during 2014, as described +under the “2014 Business Highlights in Detail” Section above. Two NEO’s (Messrs. Zezzo and Jerrett) received small, special achievement bonuses in recognition of their work in negotiating the HCV co-promotion agreement with AbbVie. +27 +Table of Contents +Actual 2014 Bonus Payments +NEO +2014 +Performance +Rating +2014 Target +(% Salary) +($) +(% Salary) +(% Target) +Douglas A. Michels +N/A +70% +$620,000 +106.7% +152.5% +Ronald H. +Spair +N/A +50% +$322,970 +70.8% +141.6% +Anthony Zezzo +II +Meets +40% +$206,840 +54.9% +137.3% +Jack E. +Jerrett +Outstanding +35% +$207,850 +63.4% +181.1% +Mark L. Kuna +Meets/Exceeds +35% +$127,060 +48.5% +138.5% +• +Long-Term Incentive Awards : Equity incentive awards to NEOs during 2014 were earned based on each +executive’s performance during 2013 and ranged from 80% to 225% of the executive’s base salary. The value of Mr. Michels’ award was 225% of his salary. Mr. Michels’ award fell toward the upper end of the range for his +position because of the significant positive accomplishments during 2013, as described under the “Base Salary” Section, above. The mix for each award was 60% stock options and 40% restricted stock. As described in greater detail below, the +equity incentive awards granted to the NEOs during 2014 are time-vested, i.e., they vest subject to the NEOs continuing employment with the Company. The 60% portion of these awards consisting of stock options provides no value to the recipient +unless our stock price appreciates after the grant date. +2014 Awards +NEO +2013 Rating +Target Range +(% Salary) +($) +(% Salary) +Douglas A. Michels +N/A +150% - 250% +$1,269,000 +225% +Ronald H. Spair +N/A +90% - 160% +$ 642,350 +145% +Anthony Zezzo II +Exceeds +75% - 125% +$ 416,300 +115% +Jack E. Jerrett +Meets/Exceeds +55% - 95% +$ 256,000 +80% +Mark L. +Kuna +Meets/Exceeds +55% - 95% +$ 203,600 +80% +Pay for Performance +We follow a pay-for-performance approach in compensating executives. Our program pays executives for performance by rewarding +the achievement of predetermined financial and other performance objectives. A significant portion of each NEO’s compensation is paid out in variable and long-term compensation that is intended to align with the long-term interests of our +stockholders. Both our annual and long-term compensation are also tied to the Company’s overall performance. +28 +Table of Contents +Realizable Pay vs. TSR +To ensure that we are adhering to a pay-for-performance approach, we evaluated the degree of alignment between our CEO’s +total realizable pay versus total stockholder return (“TSR”) over the prior three fiscal years relative to our compensation peer group (listed on page 37 of this Proxy Statement), which, as described below, we considered in response to +stockholder feedback on our executive compensation. The graph below shows the comparison of three-year TSR and “realizable pay” relative to our peer group. We provide further detail regarding the companies in our compensation peer group in +the “Benchmarking” section of this CD&A. +Realizable pay includes base salary, incentive cash bonus and all +other cash compensation reported in the Summary Compensation Table. Realizable pay also includes the value of equity awards using each company’s closing stock price on December 31, 2014. Restricted stock awards are valued by multiplying +the number of shares granted by the closing stock price on December 31, 2014. Option awards are valued as the difference between the closing stock price on December 31, 2014 and the exercise price multiplied by the number of option shares +granted during the period. An option award with an exercise price greater than the closing stock price on December 31, 2014 is valued as $0. +As the graph indicates, our three-year TSR performance has been below median (50%) over the measurement period. However, +as a result of the strong link between pay and performance embedded in our incentive plans, the realizable pay for our CEO, Mr. Michels was also below median relative to the peer group. +Realizable Pay vs. SCT Compensation +As described further below, we believe long-term equity awards are a key incentive for our executives to drive long-term +growth. The Summary Compensation Table includes the estimated value of long-term incentive equity awards at the time of grant during each applicable year. However, the value of these awards that may be realizable by our executives will vary +depending on the Company’s stock performance and often differs significantly from what is reported in the Summary Compensation Table. +Comparing the realizable value of long-term equity incentive awards with the values reported in the Summary Compensation Table +provides clarity in how compensation outcomes can be impacted by our performance. This comparison also shows the degree of alignment between our stock performance and the level of compensation provided to executives. +29 +Table of Contents +The table below shows the differences between the compensation reported in the +Summary Compensation Table (“SCT”) and the value of realizable pay (“RP”) for 2013 and 2014 for our CEO, Mr. Michels. +This table shows significant differences between Mr. Michels’ SCT compensation and +realizable pay. The main reason is our stock price. In 2013, our stock price declined approximately 12% during the year, thereby reducing what was realizable by Mr. Michels at year end. However, in 2014 our stock price increased 61%, which +resulted in a realizable pay value well above Mr. Michels’ SCT compensation. The movement in realizable pay demonstrates that Mr. Michels’ compensation for 2013 and 2014 was aligned with the Company’s +performance. +Pay vs. Other Company Measures of Performance +While TSR is a common and important measure of performance that is often used to evaluate a company’s compensation +practices, at our stage of development we consider other performance measures to be equally important to the success of our business. Thus, our executive compensation does not follow a straight linear relationship with TSR. Rather, we have tried to +align our executive compensation with performance results that are part of our overall business strategy that we believe eventually will drive stock price improvement and increased value for our stockholders. For example, in past years we have had a +number of “first-of-their-kind” achievements in the diagnostics field. Specifically, we developed and commercialized the first and only rapid HCV test in the U.S. along with the first ever rapid in-home HIV test. More recently, we entered +into an HCV co-promotion agreement with AbbVie, which, to our knowledge, is an unprecedented arrangement between a diagnostics company and a pharmaceutical firm. We also successfully completed the acquisition of DNA Genotek in late 2011, providing +us with an entrance into the high growth molecular diagnostics field. This acquisition is now contributing double digit growth to our business and accounted for 22% of our 2014 consolidated net revenues. Finally, we delivered a strong 2014 as +described above, which allowed us to exceed the $100 million revenue threshold for the first time in our history. +When +evaluating our executive compensation, we believe TSR alone will not always appropriately account for the strategic significance of these accomplishments and may often be affected by market or other factors unrelated to our business or the +performance of our management. In many cases it may take time for the impact of our business accomplishments to be fully reflected in the value of our stock. For these reasons, TSR is only one of several factors we consider in making compensation +decisions for our executives. +Say on Pay Results in 2014 and Company Response +At our 2014 Annual Meeting, stockholders were asked to vote on an advisory (non-binding) basis on the compensation paid to our +NEOs for 2013. We failed to obtain stockholder approval of our NEO compensation with approximately 53% of stockholder votes cast against our “say-on-pay” resolution. We take the outcome of this vote seriously and, as a result, we +instituted an outreach effort to contact certain of our major stockholders in +30 +Table of Contents +order to understand their concerns regarding our compensation practices. We also contracted both ISS Proxy Advisory Services (“ISS”) and Glass Lewis & Co. (“Glass +Lewis”), two leading proxy advisory firms, in order to solicit their views on these issues. Several of our independent Directors participated in this outreach, including the Chairman of our Compensation Committee and the Chairman of our Board. +Overall, we contacted stockholders who, in the aggregate, beneficially held approximately 30% of our outstanding Common Stock entitled to participate in the 2014 SOP vote. +As a general matter, the following input was provided by the stockholders we contacted: +• A strong pay for performance approach was +advocated; +• We were urged to adopt performance vesting for a +significant portion of long-term incentive equity awards; +• Stockholders generally want us to adopt +meaningful targets for equity with performance vesting; +• Several stockholders suggested TSR as a +performance metric, but did not indicate this was an absolute requirement; +• Several stockholders supported the use of +financial and other Company-specific performance targets other than TSR, over a multi-year period; +• There was general support for enhanced stock +ownership and retention guidelines; +• A limitation on discretionary bonus pool +adjustments was viewed positively; +• A change in the Chairman of our Compensation +Committee was supported; +• Stockholders preferred the elimination of excise +tax gross up and “single trigger” change of control severance provisions from executive employment agreements; +• One stockholder urged us to reduce the dilutive +impact of equity awards to management, through stock buy-backs; and +• Two stockholders urged us to continue evaluating +the possible declassification of our Board and adoption of majority voting for the election of Directors. +In addition, the Compensation Committee engaged a new independent compensation consultant, Pay +Governance, to provide a fresh assessment of our compensation programs and advise on how best to address our stockholders’ concerns. Based on the outcome of our discussions with stockholders, ISS and Glass Lewis, and the advice received from +Pay Governance, we made several important changes to our compensation program, as described below. We believe our stockholder engagement was beneficial and the Board intends to continue ongoing dialogue with our stockholders to ensure our executive +compensation programs are well understood and meet the needs of all stakeholders. +31 +Table of Contents +Compensation Changes in Response to Stockholder Input +The Compensation Committee and Board adopted the following changes in order to respond to the concerns of our stockholders and +better align our compensation program with the performance of the Company and our executives: +Change +Old +New +Rationale +Effective +Performance-Vested Long-Term Incentive Equity Awards +Awards consisted of 60% Stock Options and 40% Restricted Stock, all time-vested over three or four years. +Awards will consist of 50% performance vested Restricted Stock and 50% time-vested Restricted Stock. +• Focuses +executives on long-term priorities. +• Responds to stockholder input. +• Alignment with market practice. +2015 +Changes to Executive Employment Agreements +Contained excise tax gross up and “single trigger” change of control severance provisions. Adopted policy that new agreements will contain no excise tax +gross up and will provide for “double trigger” change of control severance. +CEO agreement amended to remove excise tax gross up and change “single trigger” to “double trigger” change of control severance. Other NEO +agreements amended to remove excise tax gross up. +• Responds to stockholder input. +• Consistent with good governance practices. +2015 +Enhanced Stock Ownership and Retention Guidelines +CEO – 2x salary +CFO/COO – 1x salary +Other Executives – None +CEO – 6x salary +CFO/COO – 2x salary +Other Executives – 1x +salary +• Consistent with good governance practices. +• Supported by stockholders. +• Strengthens alignment between executives and stockholders. +2015 +Limit on Discretionary Bonus Pool Adjustments +Compensation Committee and Board historically have had unlimited discretion to adjust bonus pool funding. +Discretionary adjustments will be limited to +/-10% of aggregate pool funding determined under applicable Incentive Plan formula. +• Responds to concerns about discretionary bonus awards and misalignment of +pay and performance. +• Ensures bonus pool amount/payouts are predominately +tied to previously agreed performance goals +• Allows for reasonable +discretion to accommodate unforeseen circumstances. +2015 +Change in Compensation Committee Chairman +Roger L. Pringle +Stephen A. Tang, Ph.D. +• Brings +new leadership perspective to compensation matters. +2014 +32 +Table of Contents +Performance Based Equity Awards +In the past, our long-term incentive equity awards have been granted based upon the performance of an executive for the prior +year. Once granted, these awards generally consisted of a mix of 60% stock options and 40% restricted stock, all of which vested annually and/or monthly based on the passage of time during which the recipient remained employed by the Company. +Accordingly, more than half of these awards (i.e. the stock options) provide no value to the recipient unless our stock price appreciates after the grant date. +Based on input from our stockholders and advice from Pay Governance, we have decided to implement performance vesting for a +significant portion of incentive equity awards for our executives. The new performance vesting program will be implemented beginning with the 2015 performance year. As a result, the first incentive equity awards with performance vesting will be made +in early 2016 with the value of individual awards to vary based on performance during 2015. This timing after the 2014 Annual Meeting was selected due to our pay-for-performance practice of making equity awards in a particular year dependent on and +sized in relation to the recipient’s performance during the prior fiscal year. Because our executives performed during 2014 with the expectation that our prior practice of granting time-vested awards would continue for that performance year, +the Compensation Committee concluded it would not be fair to move to performance vesting for the most recent equity awards granted in early 2015 for performance during 2014. +Under our new Long-Term Incentive Plan (“LTIP”), 50% of an executives total equity award will consist of +performance-vested restricted stock that will not vest until three years after the grant date and only if certain performance measures are met during that three-year period. For the awards anticipated to be granted in early 2016 for performance +during 2015, these performance measures are expected to be growth in consolidated net revenues and earnings per share (“EPS”) for the Company to be measured during the period 2016-2018. The specific revenue and EPS targets will be +determined by the Compensation Committee and Board shortly before the new equity awards are granted in early 2016. The remaining 50% of each executive’s incentive equity award will consist of time-vested restricted stock and will utilize a +three-year vesting period as we have done in the past. +The structure of the new equity awards reflects the input from our +stockholders, several of whom advocated that a meaningful portion of the equity awards should have performance vesting. We believe 50% is a meaningful portion and is consistent with or exceeds the performance orientation of our peer companies. In +addition, although some stockholders mentioned TSR as a possible performance target, most of the stockholders we contacted indicated that other measures such as financial or strategic objectives would also be appropriate. The Board decided to use +consolidated net revenue and earnings per share targets because they are important for our business, especially as we move to profitability, and because of the Board’s belief that these measures will directly influence the performance of our +stock over time. +We believe the adoption of new performance vesting over three years for 50% of an executive’s +annual equity award substantially improves the link between pay and performance and creates an appropriate long-term incentive for our executives. At the same time, the use of time-vested restricted stock for the remaining 50% of each award achieves +the equally important goal of employee retention while providing an additional performance incentive since the ultimate value will vary with our stock price. Overall, the Compensation Committee and Board believe that this change represents a +balanced performance-based improvement to our executive compensation program that directly responds to feedback from our stockholders. +Employment +Agreement Changes +The Company’s employment agreements with Mr. Michels and the other NEOs were put in +place in 2004 and 2006, except for Mr. Zezzo’s agreement which was entered into in 2011 when he joined the Company. The earlier agreements require the Company to provide a gross up for excise tax imposed under Section 280G of the +Internal Revenue Code on compensation paid as a result of a change of control, in an amount up to $1.0 million for Mr. Michels and $500,000 for the other NEOs. These agreements also include a “single trigger” +33 +Table of Contents +severance provision, which permits the executive to obtain a higher amount of cash severance following a change of control even though that executive’s position or scope of responsibilities +following the change have not been adversely affected. Beginning with Mr. Zezzo’s agreement in 2011, we implemented a new policy of no longer providing any excise tax gross up or “single” or “modified single” trigger +severance provisions. Instead, Mr. Zezzo’s agreement contains a “double trigger” severance provision under which there needs to be both a change of control and some adverse impact to Mr. Zezzo’s position or +responsibilities before he is entitled to receive increased cash severance. +In early 2015, Mr. Michels and the other +NEOs agreed to amend their employment agreements to remove the excise tax gross up provision. In addition, Mr. Michels agreed to change the “single trigger” severance provision in his agreement to a “double trigger” +severance provision. +These changes were implemented in response to input from several stockholders. In considering this +matter, the Board was mindful that these changes required amendments to long-standing employment agreements with our executives. Neither Mr. Michels nor any of the other NEO’s were obligated to agree to any changes to their agreements, but +they did so in an effort to be responsive to the concerns of our stockholders and in order to improve our compensation practices. +Enhanced Stock +Ownership/Retention Guidelines +A second change made by the Compensation Committee and Board was to adopt enhanced stock ownership +and retention guidelines for our executives. Specifically, the following changes were made: +Position +Old Guideline +New Guideline +President and CEO +2x +6x +Chief Financial Officer and Chief Operating Officer +1x +2x +Other Executive Officers +N/A +1x +In addition, the guidelines were changed to require an executive to retain at least 50% of the +net shares acquired upon the exercise of stock options or the vesting of restricted shares until the executive’s stock holdings meet or exceed the applicable ownership guideline. The Compensation Committee and Board believe these changes were +appropriate in order to respond to stockholder concerns about pay for performance, more closely align the interests of our executives with those of our stockholders and make our guidelines consistent with what we believe to be market practice. +Limited Bonus Pool Funding Discretion +Under our Management Incentive Plan, adopted each year for the payment of incentive cash bonuses to executives, the aggregate +pool used to pay bonuses is determined in a formulaic manner based on the achievement of objective, pre-determined financial objectives. However, the Compensation Committee and the Board retain discretion to increase or decrease the size of the +bonus pool based on performance conditions, market conditions or other factors deemed appropriate. +Beginning with the +Management Incentive Plan adopted for performance during 2015, the Compensation Committee and Board will limit any discretionary adjustments that may be made to +/- 10% of the bonus pool calculated under the plan formula. The Compensation Committee +and Board believe this change is appropriate in order to make our incentive cash bonus plans more performance-based and to bring our plans in line with what we believe to be market practice. This change also directly responds to feedback from +stockholders. +34 +Table of Contents +Change in Compensation Committee Chairman +For the past several years, Roger L. Pringle has served as Chairman of our Compensation Committee. Mr. Pringle has been a +Director for our Company since 2000 and the Board is grateful for his service and strong leadership as both a member of the Board and Chairman of the Compensation Committee. +However, following our 2014 Annual Meeting, the Board decided to make a change and appointed Dr. Steven S. Tang as +the new Chairman of the Compensation Committee. The Board took this action in order to bring a fresh perspective and new leadership to the Company’s executive compensation matters. Mr. Pringle continues to serve on the Compensation +Committee. +Other Good Compensation Governance and Practices +We are committed to maintaining good corporate governance and practices. Apart from the changes discussed above, there are many other aspects +of our compensation program that reflect this commitment: +Performance Mix - The vast majority of our NEOs’ +compensation is performance-based. For example, approximately 76% of Mr. Michels’ 2014 compensation consisted of an incentive cash bonus and long-term incentive equity awards, which are awarded based on Company and/or individual performance. +For the other NEOs, over 62% of their aggregate 2014 compensation consisted of performance-based compensation. +Diversified Portfolio - Our executive compensation consists of +a mix of cash/equity, fixed/variable and short-term/long-term compensation. Equity awards in 2014 consisted of a mix of stock options (60%) and restricted stock (40%). +Threshold Bonus Objectives - Threshold financial performance +objectives for annual bonus pool funding are set at levels that meet or exceed the Company’s actual financial performance for the prior fiscal year. +Performance Value of Options - Because stock options, even +though time-vested, only provide value to executives if the price of our stock increases after the date of grant, the issuance of 60% of an executive’s annual equity award as stock options means that the realizable value of long-term equity +awards provided to executives is heavily weighted and dependent on the Company’s future performance. +Multiple Performance Metrics - Variable compensation is based +on a combination of corporate and individual performance measurements to help ensure balanced incentives for executives. +Long-Term Focus - Equity awards are subject to long-term +vesting requirements, with restricted shares vesting over 3 years and stock options vesting over a minimum of 4 years. Structuring our equity awards in this manner helps align the interests of our executives with the long-term interests of our +stockholders. +Prudent Benchmarking - The total compensation paid to +executives is targeted at the 50 th percentile of a peer group of comparable companies based on achievement of performance objectives. We use a peer group (listed on page 37 of this Proxy +Statement) consisting of companies in the medical diagnostic and healthcare industries comparable in size to the Company based on total revenues and market value. +Tally Sheets - The Compensation Committee reviews tally sheets +as part of making individual compensation decisions. +Stockholder Outreach - Since our 2013 SOP vote, we have +implemented a robust outreach effort to regularly ask our stockholders for feedback on our compensation and governance practices. This outreach effort is in addition to our regular investor relations program where we routinely discuss our business +with investors. +Independent Compensation Consultants - The Board and +Compensation Committee regularly utilize independent compensation consultants to provide compensation advice, including competitive assessments of our program compared to compensation paid to executives at the peer group of comparable medical +diagnostic and healthcare companies (listed on page 37 of this Proxy Statement). During 2014, the Compensation Committee engaged two of such consultants. +35 +Table of Contents +Recoupment Policy - Our Board has adopted a compensation recoupment or +“clawback” policy, under which the Board or Compensation Committee will seek to recover excess compensation paid to our executives if our financial statements are restated due to misconduct by that executive. +No Repricing - Our Stock Award Plan prohibits both the repricing and repurchase +of under-water stock options or other equity awards without stockholder approval. +No Perquisites - We do not provide executives with any perquisites that are not +offered to all employees of the Company. +Risk Review Process - We regularly assess the risks associated with our +compensation programs. +No Hedging - Our policy prohibits Directors and NEOs from engaging in hedging +activities with our stock. +No Pledging - Our Directors and NEOs are not permitted to pledge our +stock. +Confidentiality/Non-Compete Agreements - Our NEOs are subject to +confidentiality and non-compete agreements. +Compensation Risk Assessment +Management periodically conducts a risk assessment of the Company’s compensation policies and practices, including its +executive compensation program. In its review, management considers the attributes of the Company’s policies and practices and other factors, including: +• +The mix of fixed and variable compensation opportunities; +• +The balance between annual and long-term performance opportunities; +• +The corporate and individual performance objectives established for annual and long-term incentive compensation; +• +The internal controls and procedures in place to mitigate risks facing the Company, including the Company’s “clawback” policy and +stock ownership guidelines; and +• +The risk that unintended consequences could result from various aspects of the Company’s compensation policies and practices. +Based on its review and assessment, management has concluded that the Company’s policies and +practices are designed with the appropriate balance of risk and reward in relation to the Company’s overall business strategy and do not incentivize employees to take unnecessary or excessive risks. The Company has also concluded that any risks +arising from the Company’s compensation policies and practices are not reasonably likely to have a material adverse effect on the Company. +Compensation Philosophy +The primary objectives of our compensation program for executive officers are to: +Align the interests +of executives with the interests of our stockholders; +Reward executives for the performance of the +Company and achievement of individual performance objectives; +Provide long-term incentives for the executives; +and +Set compensation +at sufficiently competitive levels to attract and retain high quality executives and to motivate them to contribute to our success. +36 +Table of Contents +The total direct compensation provided to each executive consists of an annual +base salary, incentive cash bonus and long-term incentive equity awards. The amount of the incentive cash bonus and the size of annual incentive equity awards are variable and depend on an executive’s and the Company’s achievement of +predetermined financial and other objectives. As a result, a substantial portion of each executive’s annual compensation is based on performance. +Benchmarking +We believe it is useful to regularly compare our compensation program against compensation paid to executives at other +comparable medical diagnostic and healthcare companies. With the assistance of PM&P, a peer group of companies was selected using criteria based on industry, revenues, market capitalization. +The Compensation Committee seeks to set total direct compensation levels for each executive near the fiftieth (50 th ) percentile of amounts paid by the peer companies for performance consistent with the Company’s target financial and other business plans for the applicable year. Use of the fiftieth (50 th ) percentile is intended as a market -based reference and not as an absolute target. As a result, the total direct compensation and the value of specific compensation components for individual +executives may fall below or exceed the fiftieth (50 th ) percentile depending on individual performance and contribution by the executive. +The following provides information about the peer group used by the Compensation Committee for benchmarking purposes in +setting executive compensation in 2014 and how we compare to these companies (all dollars in millions): +Peer Company 1 +2014 Revenue 2 +12/31/14 Market +Capitalization 3 +Business 4 +Abaxis, Inc. +$172 +$1,281 +Health Care Equipment +Abiomed, Inc. +$184 +$1,540 +Health Care Equipment +Anika Therapeutics, Inc. +$106 +$ 561 +Health Care Supplies +Array Biopharma, Inc. +$ 42 +$ 624 +Biotechnology +Atrion Corp. +$141 +$ 662 +Health Care Supplies +Cardiovascular Systems, Inc. +$137 +$ 946 +Health Care Equipment +Cerus Corp. +$ 37 +$ 488 +Health Care Supplies +Cynosure, Inc. +$292 +$ 594 +Health Care Equipment +Dyax Corp. +$ 82 +$1,918 +Biotechnology +Enzo Biochem, Inc. +$ 96 +$ 219 +Life Sciences Tools & Services +Fluidigm Corp. +$116 +$ 953 +Life Sciences Tools & Services +Genomic Health, Inc. +$276 +$1,014 +Biotechnology +Harvard Bioscience, Inc. +$109 +$ 184 +Life Sciences Tools & Services +Luminex Corp. +$227 +$ 804 +Life Sciences Tools & Services +Meridian Bioscience, Inc. +$187 +$ 686 +Health Care Supplies +Neogenomics, Inc. +$ 87 +$ 250 +Life Sciences Tools & Services +Quidel Corp. +$181 +$ 996 +Health Care Supplies +Rockwell Medical, Inc. +$ 54 +$ 488 +Health Care Equipment +Sequenom, Inc. +$152 +$ 434 +Life Sciences Tools & Services +Spectrnetics Corp. +$202 +$1,448 +Health Care Supplies +Staar Surgical Co. +$ 75 +$ 352 +Health Care Supplies +Vascular Solutions, Inc. +$125 +$ 467 +Health Care Supplies +25 th Percentile +$ 89 +$ 472 +Median +$ 131 +$ 643 +75 th Percentile +$183 +$ 985 +OraSure Technologies, Inc. +$ 106 +$ 472 +37 +Table of Contents +1 Astex Pharmaceuticals, Inc. was eliminated from the peer group because of its acquisition +by Otsuka Pharmaceutical in 2013. +2 Reflects reported revenues for the most recent fiscal year ended +during 2014. +3 Market capitalization at December 31, 2014 was obtained from Standard & +Poors Capital I.Q. +4 Reflects applicable Global Industry Classification Standard sub-industry +designation. +In preparing its 2014 competitive assessment of executive compensation, PM&P compared the compensation of +our NEOs with a 50/50 blend of proxy data from the peer group of companies and data for each NEO position from the 2014 Radford Global Life Sciences Survey. Since compensation market data can be volatile from year to year, the Committee believes a +blend of specific peer group proxy data and broader survey data better reflect market trends. PM&P also compared the mix of executive compensation and the relative compensation levels of the NEOs with data from the peer group. Based on this +analysis, PM&P reached the following conclusions: +• +On average, salaries, total cash compensation (salaries plus incentive cash bonuses) and target total direct compensation (total cash compensation +and incentive equity awards) for our executives are competitive with the market median; +• +The long-term incentive equity targets are competitive with the median; +• +Mr. Michels’ target total direct compensation is competitive with the market median; +• +The mix of cash and long-term incentive compensation for our executives is generally competitive with the market median; and +• +No significant changes to the target compensation for our executives were recommended by PM&P based on their assessment. +Pay Mix +We follow a pay-for-performance approach to executive compensation, with a significant portion of our executives’ +compensation consisting of annual incentive cash bonuses and long-term incentive equity awards that are based on the executives’ and the Company’s achievement of predetermined performance objectives. Our program is also designed to align +the interests of executives with those of our stockholders, provide long-term incentives and set compensation at levels sufficiently competitive to attract and retain high quality executives and motivate them to contribute to our success, and +incorporate sound corporate governance principles. +38 +Table of Contents +The following illustrates the relative proportion of 2014 base salaries, and the +performance-based compensation consisting of incentive cash bonuses and long-term incentive equity awards, for Mr. Michels and the other NEOs, respectively: +Approximately 76% of Mr. Michels’ aggregate +compensation and 62% of the other NEOs’ aggregate compensation for 2014 consisted of variable or performance-based compensation. +2014 Executive Compensation Components +Overview +Our compensation program consists of the following components: +Compensation +Form +of Compensation +Purpose +Base Salary +Cash +Base salaries provide fixed compensation necessary to attract and retain key executives. Salary levels are +established for each position based on competitive market data, with annual adjustments tied to performance and market changes as appropriate. +39 +Table of Contents +Compensation +Form +of +Compensation +Purpose +Annual Incentive Bonus Awards +Cash +Annual incentive bonus awards provide performance-based incentives to our executives to achieve both Company-wide financial and strategic goals and the executives’ +individual performance objectives. Targets for individual bonuses are set at levels consistent with those offered in the marketplace. Beginning in 2015, the Board will limit discretionary adjustments to bonus pool funding to +/- 10% of the +pool amount otherwise determined under the incentive plan formula . +Long-Term Incentive Awards +Stock Options and Restricted Stock +The largest component of our executive compensation is paid in equity. Awards consist of 60% stock options and +40% restricted shares and strongly incentivize our executives to perform at their highest levels to achieve our long-term strategic business plans and increase our share price, thereby aligning the interests of our executives with those of our +stockholders. Beginning with the 2015 performance year, executive LTIP awards to be made in early 2016 shall consist of 50% performance-vested restricted stock and 50% time-vested restricted stock in order to strengthen the link between pay and +performance for our executives . +Benefits +401(k) Plan +Health and Welfare Benefits +Retirement and health and welfare benefits provide a complete compensation package that is competitive with the market and addresses the +needs of all employees and their families, including our executives. +40 +Table of Contents +Compensation +Form +of Compensation +Purpose +Employment Agreements +Cash severance and accelerated equity vesting +Severance and accelerated equity vesting are provided to our executive officers in order to ensure they are not +distracted by the possibility of termination in the event of a change of control and to encourage continued dedication to the Company. In 2015, we eliminated the excise tax gross up from all NEO employment agreements and Mr. Michels agreed to +change his “single trigger” change of control severance provision to a “double trigger” provision . +Compensation Components in Detail +2014 Base Salaries +The Compensation Committee believes that competitive salaries must be paid in order to provide fixed compensation necessary to +attract and retain key executives. Each year, the Compensation Committee evaluates and determines the annual base salaries for the NEOs. The Compensation Committee considers the annual performance evaluation of the CEO prepared by non-employee +members of the Board and the annual performance evaluations prepared by the CEO for all other NEOs. The Committee also considers the Company’s budget for expected salary adjustments, salary levels paid at the peer group companies (listed on +page 37 of this Proxy Statement) and any recommendations that may be made by any compensation consultant engaged to assist the Compensation Committee. An executive’s annual salary adjustment will tend to be at the higher end of the range +budgeted by the Company if the executive receives a performance rating of “Meets Expectations” or better and such executive’s pre-adjustment salary level is below the 50 th +percentile for his or her position at the peer group companies. +Annual base salaries paid in 2014 to our NEOs were +established by the Compensation Committee at the beginning of 2014 based on a review of the Company’s performance during 2013, an evaluation of the individual contributions of each officer compared to pre-established performance objectives for +2013 and a review of the competitive data and recommendations provided by the Compensation Committee’s independent compensation consultant, PM&P. +Based on these factors, the Compensation Committee approved an annual base salary increase for our management (including the +NEOs) averaging approximately 2.7%. In order to reflect the Company’s performance and each executive’s contributions, and to equitably move salaries towards the fiftieth +(50 th ) percentile of amounts paid by the peer group companies or maintain them at approximately that level, the Compensation Committee used the following guidelines to assist in determining +annual base salary increases. +Performance Rating +Merit Increase Range +Outstanding +5.0% - 7.0% +Exceeds Requirements +3.0% - 4.0% +Meets Requirements +2.0% - 2.5% +Does Not Meet Requirements +0% +41 +Table of Contents +In establishing NEO base salaries for 2014, the Compensation Committee recognized +that the Company’s 2013 consolidated net revenues of $99.0 million were a record performance and met or exceeded the Company’s budget or operating plan for the year. These revenues represented a 13% increase over 2012. The Compensation +Committee also noted that the Company’s $12.2 million consolidated net loss represented a $13.3 million improvement over the net loss projected in the Company’s operating plan for 2013 and a 26% improvement over the Company’s bottom +line performance from 2012. Other specific factors considered by the Compensation Committee included the following: +• A 43% increase in net revenues generated by the Company’s molecular +collection systems business; +• A 32% improvement in sales of the Company’s OraQuick ® HCV test as a result of the Company’s ongoing efforts to broaden awareness and demand for this product; +• The progress made by management in pursuing significant industry and +public-private collaborations to further expand its HCV business (which ultimately led to the HCV collaboration with AbbVie in 2014); +• A $9.1 million net revenue contribution from the OraQuick ® In-Home HIV test and the progress made by management in understanding the market for this unique product and in refining its promotional messaging for its target consumer audiences; +• The successful termination of the Company’s collaboration with Roche +Diagnostics and the replacement of that collaboration with a new development and supply agreement with Thermo Fisher for fully-automated, high-throughput oral fluid drug assays to be used with the Company’s next generation Intercept ® collection device; +• The strong performance by the Company’s cryosurgical systems business, which +generated revenues greater than the Company’s operating plan for that business; +• Successful maintenance of strong relationships with our investor base, +particularly institutional investors and increased coverage and interest in our Common Stock by analysts; +• The significant progress made in implementing major manufacturing process +enhancements and raw material changes for several critical product lines; and +• The careful and detailed evaluation of numerous potential business development opportunities as management explored +additional areas of growth for the Company. +42 +Table of Contents +Although in the past the Compensation Committee had used the performance rating +labels mentioned above (i.e. Meets Expectations, Exceeds Expectations, etc.) for all of the NEOs, the Compensation Committee decided that those labels should no longer be used for Messrs. Michels and Spair beginning with performance for the 2013 +fiscal year. Given the senior positions of Messrs. Michels and Spair, the Compensation Committee determined it would be more appropriate to evaluate these executives based on the overall performance of the Company. As a result, the Compensation +Committee approved the following 2013 performance ratings and 2014 salary adjustments for Mr. Michels and the other NEOs: +NEO +2013 +Performance +Rating +2013 +Salary +2014 +Salary +% +Increase +2013 Performance +Douglas A. Michels President and Chief Executive Officer +N/A +$564,000 +$580,920 +3.0% +• Strong corporate performance as described above. +Ronald H. Spair Chief Financial Officer and Chief Operating Officer +N/A +$443,000 +$456,290 +3.0% +• Strong corporate performance described above. +Anthony Zezzo II Executive Vice President, Marketing and Sales +Exceeds +$362,000 +$376,480 +4.0% +• Exceeded revenue targets in 2013 operating plan for core product lines. +• Successfully executed initiatives to expand awareness and demand for OraQuick ® HCV test. +• Helped lead negotiations for new +third-party HCV collaboration. +• Increased International sales for HIV and HCV +products. +Jack E. Jerrett Senior Vice President and General Counsel +Meets/Exceeds +$320,000 +$328,000 +2.5% +• Leadership in negotiating termination of Roche Diagnostics collaboration. +• Assistance in negotiating new high-throughput assay development and supply collaboration with Thermo +Fisher. +• Assistance on numerous commercial matters. Oversight of SEC and other compliance +matters. +• Ongoing advice and counsel to Board and senior management. +Mark L. Kuna Senior Vice President, Finance, Controller and Assistant +Secretary +Meets/Exceeds +$254,500 +$262,135 +3.0% +• Leadership in debt and capitalization restructuring for DNA Genotek. +• Implemented impairment testing of intangibles associated with DNA Genotek acquisition. +• Oversight of Treasury Management. +• Consolidated global banking relationships. +• Tax and accounting diligence support for multiple business development opportunities. +43 +Table of Contents +2014 Annual Incentive Cash Bonuses +Annual cash bonuses are included as part of executive compensation because the Compensation Committee believes that a +significant portion of each executive’s compensation should be structured as a variable incentive tied to both the overall performance of the Company and the individual contributions of the executive. On an annual basis, the Compensation +Committee has adopted, with approval of the Board, a Management Incentive Plan (the “Incentive Plan”), which is intended to be the principal vehicle for incentive cash bonus awards. +Incentive cash bonuses are generally paid out of a cash pool funded under the Incentive Plan based on the Company’s +achievement of specific financial objectives determined by the Compensation Committee and approved by the Board at the beginning of each fiscal year. The financial objectives typically consist of short-term targets that represent improvement in +financial performance compared to the prior year. The objectives are each weighted to determine their respective contributions to the pool amount. Each objective can be adjusted by the Compensation Committee or Board in an equitable manner to +reflect unexpected changes in the Company’s business or assumptions underlying the original objective or other factors. +With respect to each financial objective, a Threshold, Target and Maximum performance level is established. The Target levels +generally reflect the Company’s financial budget or operating plan for the year and incorporate the expected improved performance from the prior year. Except in special circumstances, the Threshold levels equal or exceed financial performance +achieved during the prior year and represent a minimum level of performance for which the Compensation Committee is willing to provide bonus pool funding. Thus, the Company must meet or exceed the prior year’s performance in order to obtain any +funding for a Threshold objective. The Maximum levels reflect outstanding performance for which the Compensation Committee is willing to reward executives with bonuses above the Target level payout. The Committee and/or Board can also establish +“breakthrough” performance levels at which additional bonus pool funding can be provided. +If the Company meets +all the Target levels, the pool is funded at 100% of the aggregate target bonuses for all participants in the Incentive Plan, as described below. The pool is funded at 50% of the aggregate target bonuses if all of the Threshold levels are met and at +150% if all of the Maximum levels are met. If the Company achieves a “breakthrough” performance level as determined by the Committee and/or Board, the pool can be funded up to 200% of the aggregate target bonuses. Prior to 2014, funding at +a “breakthrough” performance level had never occurred. Pro-rata adjustments to the amount of funding for each objective are made where a particular performance is in between the pre-established performance levels. To the extent a +performance level is below the Threshold objective, generally there is no funding for that particular item unless the Compensation Committee or Board determines, in its discretion, that some funding is warranted to recognize extraordinary +circumstances. +The amount of the cash bonus pool is determined by the Compensation Committee and recommended for Board +approval. The Compensation Committee and Board also retain discretion to increase or decrease the size of the pool in order to reflect specific performance or market conditions affecting the Company and the final performance assessments for each +participant for the applicable year. The cash bonus pool is used to pay bonuses not only to the Company’s NEOs, but also to all other officers and certain higher-level employees of the Company. Beginning with the 2015 Incentive Plan, the +Compensation Committee and Board have limited their ability to make discretionary bonus pool adjustments to +/- 10% of the pool size otherwise determined pursuant to the formula under the Incentive Plan. +Individual payments from the bonus pool to executives depend on the size of the bonus pool, the executive’s achievement +of individual performance objectives (except in the case of Messrs. Michels and Spair, as described below), the number of individuals participating in the plan at the time bonuses are awarded and the executive’s target bonus percentage. Bonuses +are paid, based on an assessment of each executive’s performance for the applicable year, using targets expressed as a percentage of the executive officer’s annual base salary. +44 +Table of Contents +If an executive officer has met or exceeded his or her individual performance +objectives and/or the Company’s expectations for the applicable year, he or she may be eligible to receive up to 150% of his or her target bonus, depending on the size of the bonus pool. The Compensation Committee and Board retain the +discretion to adjust an individual executive’s performance evaluation and to increase or decrease the bonus paid to such individual to reflect the specific contributions of that executive, the Company’s overall performance, market +conditions or other circumstances. +The Compensation Committee recommends for Board approval any bonus award for the CEO +based on an assessment of his performance. The CEO recommends individual awards for the other executive officers for approval by the Compensation Committee based on an assessment of each executive’s performance against his or her applicable +individual performance objectives. The Compensation Committee and Board have the right, in their sole discretion, to reject any or all of the recommended bonus awards, even if the bonus pool has been funded and any or all applicable performance +criteria have been satisfied, based on the business conditions of the Company or other factors deemed relevant by the Compensation Committee or Board. +Under the 2014 Incentive Plan, the Compensation Committee had previously established Threshold, Target and Maximum performance +levels for two financial objectives to be used to fund the bonus pool. In addition, the Compensation Committee established “breakthrough” performance levels for these objectives. The Threshold financial objectives in our 2014 Incentive +Plan reflected improved performance over 2013 after excluding a contract termination payment recorded in the prior year. The Target levels reflected our annual budget or operating plan for 2014. The following table summarizes these objectives and +performance levels (dollar amounts in millions): +Financial +Objectives/ +Weight +Threshold +Target +Maximum +Breakthrough +Consolidated Net Revenues (50%) +$104.0 +$112.2 +$117.1 +$120.0 +Consolidated Net Operating Loss (50%) +$ (16.6 +) +$ (13.6 +) +$ (8.6 +) +$ +(5.0 +) +Incentive Plan Payout +(% of Target) +50 +% +100 +% +150 +% +200 +% +In establishing the 2014 Incentive Plan, the Compensation Committee decided to change the +relative weighting given to the revenue and operating loss objectives from 70%/30% as used in the prior year to a 50%/50% weighting. The Compensation Committee made this change in order to provide management with increased incentive to improve the +Company’s bottom line performance and profitability. The following sets forth the weighting and potential bonus pool funding for both objectives at each performance level established under the 2014 Incentive Plan, based on the participants +covered by the Plan at year-end: +Objectives +Weight +Threshold +Target +Maximum +Breakthrough +Consolidated Net Revenues +50% +$565,000 +$1,130,000 +$1,695,000 +$2,260,000 +Consolidated Net Operating Loss +50% +$565,000 +$1,130,000 +$1,695,000 +$2,260,000 +Potential Total Pool Funding +$1,130,000 +$2,260,000 +$3,390,000 +$4,520,000 +During 2014, we crossed the $100 million revenue threshold level for the first time in our +history with consolidated net revenues totaling $106.5 million. This performance exceeded the Threshold performance level but was less than the Target performance level for this objective, resulting in funding of $734,000. The Company’s 2014 +consolidated net operating loss was $(4.9) million which was well above the Maximum performance level and exceeded the “breakthrough” performance level for this objective. The primary reasons for this performance were management’s +cost reduction efforts, including a significant reduction to promotional costs for the OraQuick ® In-Home HIV test, the initial exclusivity payment received under the AbbVie HCV collaboration +and a $5.5 million settlement payment received in connection with the termination of our high-throughput drug assay collaboration with Roche Diagnostics. As a result of this performance, the Compensation Committee decided to recognize the +breakthrough performance level for this objective, which resulted in funding of $2,260,000. +45 +Table of Contents +Based on the foregoing, the total bonus pool funding calculated for 2014 +performance is $2,994,000 ($734,000 plus $2,260,000). However, in order to fully fund all of the individual bonuses based on the actual performance ratings for each executive, it was determined that an additional $44,000 in funding would be +required. Based on the Company’s strong financial performance in 2014 and the very small adjustment required (i.e. less than 1.5% of the total pool), the Compensation Committee exercised its discretion to add the additional funding and approve +a total pool of $3,038,000. The bonus pool amount was also approved by the full Board and used to pay bonuses to the Company’s NEOs and 21 other members of our management team. The specific target payouts for NEO bonuses (expressed as a +percentage of annual base salary) are shown below: +Title +Target Payouts +Chief Executive Officer +70% +Chief Financial Officer and Chief Operating Officer +50% +Executive Vice President +40% +Senior Vice President +35% +In January 2015, the Compensation Committee authorized the payout of individual bonus awards +to executive officers from the bonus pool for 2014, based on the target bonus amounts described above and an assessment of each officer’s performance during 2014 against pre-established performance objectives. +In evaluating Mr. Michels and the Company’s performance, the Compensation Committee recognized the record level of +2014 consolidated net revenues of $106.5 million, the 59% improvement on the Company’s 2014 bottom line performance compared to 2013 and the significant HCV co-promotion agreement negotiated with AbbVie during the year. In addition, the +Compensation Committee considered the following other factors: +• The 17% growth in molecular collection systems revenues compared to 2013; +• The 42% growth in OraQuick ® HCV net product revenues +compared to 2013; +• The $45.1 million in revenues generated by our newest business lines (i.e., DNA Genotek, HCV-related and +HIV-OTC); +• The improved profitability of our OraQuick ® In-Home +HIV product line; +• The launch of our next generation Intercept i2 ™ +collector with a NIDA-5 panel of high-throughput fully-automated oral fluid drug assays; +• Progress towards the funded development and commercialization of a new rapid, point-of-care Ebola +test; +• The successful maintenance of strong relationships with our investors; and +• The extensive review of multiple business development opportunities by +management. +As a result, the Compensation Committee approved the following annual incentive cash bonuses +for 2014: +NEO +2014 Rating +Target +Bonus (% +Salary) +2014 Bonus +2014 Bonus +(% Salary) +2014 Performance +Douglas A. Michels President and +Chief +Executive Officer +N/A +70% +$620,000 +106.7% +• Strong corporate +performance as described above. +Ronald H. Spair Chief Financial Officer and +Chief Operating Officer +N/A +50% +$322,970 +70.8% +• Strong corporate +performance as described above. +46 +Table of Contents +NEO +2014 Rating +Target +Bonus (% +Salary) +2014 Bonus +2014 Bonus +(% Salary) +2014 Performance +Anthony Zezzo II Executive Vice President, +Marketing and Sales 1 +Meets +40% +$206,840 1 +54.9% +• Leadership in negotiating HCV collaboration with AbbVie. +• Strong growth in OraQuick ® HCV sales. +• Substantial achievement of overall sales goals. +• Organizational and staffing improvement within Sales and Marketing Department. +Jack E. Jerrett Senior Vice President and +General Counsel +Outstanding +35% +$207,850 1 +63.4% +• Leadership in negotiating HCV collaboration with AbbVie. +• Leadership in negotiating reduced royalty obligations. +• Assistance on numerous important commercial matters. +• Leadership in resolving various disputes and claims. +• Oversight of SEC and other compliance matters. +• Ongoing advice and counsel to Board and senior management. +Mark L. Kuna Senior Vice President, Finance, +Controller +Meets/Exceeds +35% +$127,060 +48.5% +• Leadership in implementing new enterprise resource management system at DNA Genotek. +• Implementation of new revenue recognition policy for OraQuick ® In-Home HIV product. +• Tax and accounting +support for HCV co-promotion agreement with AbbVie. +• Oversight of financial reporting, SEC +filings and Sarbanes-Oxley compliance. +1 +The foregoing amounts include special achievement bonus awards for Messrs. Zezzo and Jerrett of $40,000 and $10,000, respectively, for their +contributions in negotiating the HCV co-promotion agreement with AbbVie. +2014 Long-Term Incentive Awards +An additional way that we promote the long-term growth of the Company and align the interests of executives with those of our +stockholders is by compensating executives with equity in the Company that vests over a multi-year period. To accomplish this, the Compensation Committee administers the Company’s LTIP, pursuant to which grants of stock options and restricted +shares are made to executive officers on an annual basis. +47 +Table of Contents +We view all awards under our LTIP as performance-based since the grant value of +each annual award is based on an assessment of the executive’s performance during the prior year. In addition, more than half (i.e. 60%) of each award to our executives consists of stock options and provides no value to the recipient unless our +stock price appreciates after the date of grant. Subject to continued employment through the vesting period, awards of restricted shares provide some immediate value to executives but are also performance-based in that the executive’s +compensation will increase or decrease with the market price of our stock. Therefore, our LTIP requires that our NEOs first earn their awards based upon their prior year performance and continue to perform for the Company throughout the vesting +period to realize any value from such awards. +The LTIP uses a “value transfer” method for determining the size +of individual awards, as described further below. The Board and Compensation Committee believe the use of a “value transfer” method rather than the use of a fixed target number of shares, eliminates volatility in the value of awards based +on short-term changes in the price of our Common Stock and is consistent with market practice. +Incentive equity awards +under the LTIP are made on an annual basis, and are discretionary and subject to approval by the Compensation Committee and/or Board. Awards to individual participants under the LTIP are based on an evaluation of a number of factors, including: +• +performance of the participant for the applicable year; +• +the participant’s level of responsibilities and relative contribution to the Company’s business; +• +a competitive assessment of awards at peer group companies (listed on page 37 of this Proxy Statement); +• +history of equity awards to the participant; and +• +other factors deemed relevant by the Compensation Committee and/or Board. +Each participant’s individual performance for the applicable year is evaluated against his or her individual performance +objectives for that year. A “Meets Expectations” performance is typically the threshold requirement to receive an equity award under the LTIP. Awards below this performance level may be considered on an exception basis in the discretion of +the Compensation Committee and/or the Board. +The value of potential incentive equity awards that could be granted in 2014 +under the LTIP (expressed as a percentage of annual base salary) based on performance during 2013, are summarized below: +Performance +Position +Lower End +Target +Maximum +President/CEO +150% +200% +250% +CFO/COO +90% +125% +160% +EVP +75% +100% +125% +SVP +55% +75% +95% +The percentages set forth above were established at levels that the Compensation Committee +believed represented an appropriate long-term incentive compensation value for each executive, based on the results of a competitive assessment of long-term incentive awards at the peer group companies (listed on page 37 of this Proxy Statement) +developed by the Compensation Committee in consultation with its independent compensation consultant, PM&P. Awards under the LTIP consist of 60% stock options and 40% restricted stock, based on the market value of the awards on the date of +grant. Once the aggregate dollar value of an award has been established by applying the appropriate percentage to a participant’s base salary, the award is converted into shares based on a valuation of the restricted stock and stock option +portions of the award as of the grant date. Restricted stock is valued based on the average of the high and low stock price on the grant date as reported on the NASDAQ Stock Market and stock options are valued based on a corresponding Black-Scholes +value in accordance with FASB ASC Topic 718. +48 +Table of Contents +Stock option awards granted under the LTIP have an exercise price equal to the +fair market value of the Company’s Common Stock on the date of grant, which is calculated using the average high and low stock price on that date. Stock options generally vest over four years, with the first 25% vesting after one year and the +remaining 75% vesting on a monthly basis over the next three years following the first anniversary of the grant date. Grants of restricted stock generally vest in equal annual installments over a three-year period. These vesting restrictions serve +to promote the Company’s long-term growth by restricting executives’ ability to realize short-term gains from their awards. The Compensation Committee believes the terms of its incentive equity awards to executives are competitive with the +terms of equity awards offered at comparable medical diagnostics and healthcare companies. +Equity awards are generally +made by the Compensation Committee each year as part of the normal annual compensation cycle. The awards for a particular year generally occur in late January or early February of the following year after the Company’s full year financial +results are known and performance evaluations for the executive officers have been prepared. Equity awards approved by the Compensation Committee for the CEO are then reviewed and approved by the Board. In addition to the annual equity awards, the +Compensation Committee may approve stock option and restricted stock awards for newly hired officers or in recognition of an executive’s promotion or expansion of responsibilities. These latter grants may have vesting or other terms that differ +from the terms generally approved for annual equity awards. Notwithstanding the terms of the LTIP, equity awards are made at the discretion of the Compensation Committee or Board. +Effective February 3, 2014, the Compensation Committee approved stock option and restricted stock awards for the NEOs +under the LTIP based on the performance evaluations of such officers for 2013, as summarized below. A description of the basis for each NEO’s 2013 performance evaluation is set forth above under the Section entitled, “2014 Base +Salaries,” in this Proxy Statement. +Executive Officer +Performance Evaluation +Restricted Stock +Stock Options +Award Value +(% of Base Salary) +Douglas A. Michels +President and Chief +Executive Officer +N/A +88,820 Shs +254,054 Shs +225% +Ronald H. Spair +Chief Financial +Officer and Chief +Operating Officer +N/A +44,959 Shs +128,599 Shs +145% +Anthony +Zezzo II +Executive Vice +President, Marketing +and Sales +Exceeds +29,138 Shs +83,343 Shs +115% +Jack E. Jerrett +Senior Vice President +and General Counsel +Meets/Exceeds +17,918 Shs +51,251 Shs +80% +Mark L. Kuna +Senior Vice President, +Finance, Controller and +Assistant Secretary +Meets/Exceeds +14,250 Shs +40,761 Shs +80% +49 +Table of Contents +Other Compensation +We provide minimal additional benefits outside of our primary elements of compensation, as follows: +Retirement Programs +All of our employees, including executive officers, are eligible to participate in our 401(k) profit sharing plan (the +“401(k) Plan”). We make matching contributions for participants on a dollar-for-dollar basis up to $4,000 per year. Payments of employer-provided benefits accrued for a 401(k) Plan participant will be made upon retirement or upon +termination of employment prior to retirement, provided certain vesting conditions have been met by the participant prior to termination. In addition, the Company maintains the OraSure Technologies, Inc. Deferred Compensation Plan (the +“Deferred Compensation Plan”) for the benefit of the Company’s highly compensated employees, including all of the NEOs, and its non-employee Directors. The Deferred Compensation Plan allows participants to defer up to 100% of their +annual base salaries (or fees in the case of non-employee Directors) and up to 100% of annual incentive cash bonuses and, upon vesting, restricted shares of the Company’s Common Stock awarded to the participant. The Company may also make +discretionary contributions to the participants’ accounts that vest over one or more years as determined by the Company, as well as upon death, disability or a change of control. Since the Deferred Compensation Plan was put in place, the +Company has made no discretionary contributions. Participants may elect to receive distributions of deferred amounts on a specified date, separation from service, a change of control, disability and/or death. +Perquisites and Other Compensation +As a general matter, the Compensation Committee and Board do not believe that executive officers should be treated differently +than other employees by receiving special perquisites unrelated to our general compensation program. Therefore, our healthcare, disability, and other insurance programs and benefits are the same for all eligible employees, including executive +officers. Executive officers do not receive any additional perquisites. +Potential Payments Upon Termination +or Change of Control Pursuant to Employment Agreements +The Company has entered into employment agreements with each +of the NEOs. In addition to the compensation elements discussed above, these agreements provide for post-employment severance payments and benefits in the event of termination of employment by the Company without “cause” or by the +executive for “good reason” and provide enhanced severance payments upon such terminations in connection with a “change of control” of the Company. The terms of these agreements are discussed in more detail under the Section +entitled, “Employment Agreements and Potential Payments Upon Termination or Change of Control,” in this Proxy Statement. The Compensation Committee believes that these agreements are generally consistent with industry practice at the peer +group companies (listed on page 37 of this Proxy Statement), provide an incentive to the applicable executive to remain with the Company, and serve to align the interests of stockholders and the executives in the event of a change of control of the +Company. +Accounting and Tax Treatment of Compensation. +In approving the amount and form of compensation for the NEOs, the Compensation Committee considers all elements of the cost +to the Company of providing such compensation, including accounting and tax implications. In particular, it considers the potential impact of Section 162(m) of the Internal Revenue Code. Section 162(m) which disallows a tax deduction for +any publicly-held corporation for individual compensation exceeding $1 million in any taxable year for the CEO and for the three most highly compensated officers (other than the Chief Financial Officer) unless compensation is performance-based. The +Compensation Committee intends to maintain flexibility to pay compensation that is not entirely deductible when the best interests of the Company would make that advisable. +50 +Table of Contents +Compensation Recoupment Policy +The Board has adopted a compensation recoupment or “clawback” policy, applicable to all officers subject to +Section 16 of the Exchange Act. Under this policy, the Board and the Compensation Committee will pursue recoupment of any excess compensation, including incentive cash bonuses, restricted stock, stock options or other compensation, which was +awarded to a covered officer based on financial statements of the Company where such statements are required to be restated as a result of the gross negligence, intentional misconduct or fraud of the covered officer. In addition to recoupment, the +Board or Compensation Committee shall take such other remedial actions deemed necessary against a covered employee, including recommending disciplinary actions up to and including termination and other available remedies. The recovery period for +recoupment of any compensation is up to three fiscal years preceding the date on which the Company is required to prepare and file the restated financial statements. This policy has been proactively adopted in advance of final guidance under +Section 954 of the Dodd-Frank Act, and will be amended to conform with this Section when final guidance is available. +51 +Table of Contents +Compensation +Tables +Summary Compensation Table +The following table summarizes the compensation of our CEO and the other NEOs, for the fiscal years ended December 31, +2014, 2013 and 2012: +Name & Principal Position +Year +Salary +($) +Bonus +($) +Stock +Awards 1 +($) +Option +Awards 2 +($) +Non-Equity +Incentive Plan +Compensation 3 +($) +Change +in +Pension +Value and +Nonqualified +Deferred +Compensation +Earnings +($) +All other +Compen- +sation 4 +($) +Total +($) +Douglas A. Michels +2014 +$ +580,139 +$ +507,606 +$ +761,400 +$ +620,000 +— +$ +4,000 +$ +2,473,145 +President and Chief Executive +2013 +$ +563,408 +$ +440,003 +$ +659,799 +$ +469,470 +$ +4,000 +$ +2,136,680 +Officer +2012 +$ +548,750 +$ +414,007 +$ +990,784 +$ +196,600 +$ +4,000 +$ +2,154,141 +Ronald H. Spair +2014 +$ +455,677 +$ +256,941 +$ +385,411 +$ +322,970 +— +$ +4,000 +$ +1,424,999 +Chief Financial Officer +2013 +$ +442,450 +$ +240,798 +$ +361,091 +$ +263,390 +$ +4,000 +$ +1,311,729 +and Chief Operating Officer +2012 +$ +429,308 +$ +247,202 +$ +617,321 +$ +166,600 +$ +4,000 +$ +1,463,831 +Anthony Zezzo II +2014 +$ +375,812 +$ +166,524 +$ +249,779 +$ +206,840 +— +— +$ +998,955 +Executive Vice President +2013 +$ +362,000 +$ +79,637 +$ +119,424 +$ +193,320 +— +$ +752,381 +Marketing and Sales +2012 +$ +361,359 +$ +119,004 +$ +178,500 +— +— +$ +659,043 +Jack E. Jerrett +2014 +$ +327,631 +$ +102,401 +$ +153,599 +$ +207,850 +— +$ +4,000 +$ +795,481 +Senior Vice President +2013 +$ +319,662 +$ +106,077 +$ +159,070 +$ +133,180 +$ +4,000 +$ +721,989 +and General Counsel +2012 +$ +311,538 +$ +114,000 +$ +171,001 +$ +83,900 +$ +4,000 +$ +684,439 +Mark L. Kuna +2014 +$ +261,783 +$ +81,439 +$ +122,161 +$ +127,060 +— +$ +4,000 +$ +596,443 +Senior Vice President, +2013 +$ +254,183 +$ +83,983 +$ +125,932 +$ +105,920 +$ +4,000 +$ +574,018 +Finance, Controller and +2012 +$ +246,615 +$ +90,078 +$ +135,093 +$ +71,800 +$ +4,000 +$ +547,586 +Assistant Secretary +(1) +The indicated amounts reflect the aggregate grant date fair value of restricted stock awards made to the NEOs during the applicable year, computed +in accordance with Financial Accounting Standards Board (“FASB”) ASC Topic 718. Certain assumptions used in the calculation of those amounts are set forth for the applicable year of award in footnote 8 to the Company’s audited +consolidated financial statements for the year ended December 31, 2014, included in the Company’s Annual Report on Form 10-K filed with the SEC on March 12, 2015 (the “2014 10-K Report”). +(2) +The values set forth in this column reflect the aggregate grant date fair value of stock option awards made to the NEOs during the applicable year, +computed in accordance with FASB ASC Topic 718. Certain assumptions used in the calculation of those amounts are set forth for the applicable year of award in footnote 8 to the Company’s audited consolidated financial statements for the year +ended December 31, 2014, included in the Company’s 2014 10-K Report. +(3) +The indicated amounts reflect incentive cash bonuses paid to the NEOs pursuant to an Incentive Plan, based on performance during the applicable +year. For a description of incentive cash bonus payments for performance during 2014, see the Section entitled, “2014 Annual Incentive Cash Bonuses,” in the CD&A. The 2014 amounts include special achievement awards for Messrs. Zezzo +and Jerrett of $40,000 and $10,000, respectively, for their contributions in negotiating the HCV co-promotion agreement with AbbVie. +(4) +The indicated amounts reflect cash contributed to a 401(k) profit sharing plan as an employer-matching contribution, which was offered to all +employees of the Company during each of the indicated years. +52 +Table of Contents +Grants of Plan-Based Awards During 2014 +The following table summarizes information concerning possible incentive cash bonuses and possible and actual restricted stock +and stock option awards for the NEOs during the fiscal year ended December 31, 2014 as well as possible payouts under the 2014 Incentive Plan: +Estimated Possible Payouts +Under Non-Equity Incentive +Plan Awards 2 +Estimated Possible Payouts Under +Equity Incentive Plan Awards 3 +All other +Stock +Awards: +Number +of Shares +of Stock +or +Units 4 +(#Shs.) +All other +Option +Awards: +Number +of +Securities +Underlying +Options 4 +(#Shs.) +Exercise +or Base +Price of +Option +Awards 5 +($/Sh) +Grant +Date +Fair +Value +of +Stock +and +Option +Awards 6 +($) +Name +Grant +Date 1 +Threshold +($) +Target +($) +Maximum +($) +Threshold +(# Shs.) +Target +(# Shs.) +Maximum +(# Shs.) +Douglas A. +Michels +2/03/14 +— +— +— +— +— +— +88,820 +$ +507,606 +President and +2/03/14 +— +— +— +— +— +— +— +254,054 +$ +5.715 +$ +761,400 +Chief Executive +N/A +$ +203,322 +$ +406,644 +$ +609,966 +59,213 RS +78,950 RS +98,688 RS +— +— +— +N/A +Officer +N/A +— +— +— +169,369 SO +225,826 SO +282,282 SO +— +— +— +N/A +Ronald H. Spair +2/03/14 +— +— +— +— +— +— +44,959 +— +— +$ +256,941 +Chief Financial +2/03/14 +— +— +— +— +— +— +— +128,599 +$ +5.715 +$ +385,411 +Officer and +N/A +$ +114,073 +$ +228,145 +$ +342,218 +27,906 RS +38,758 RS +49,610 RS +— +— +— +N/A +Chief Operating +N/A +— +— +— +79,820 SO +110,861 SO +141,902 SO +— +— +— +N/A +Officer +Anthony Zezzo II +2/03/14 +— +— +— +— +— +— +29,138 +— +— +$ +166,524 +Executive Vice +2/03/14 +— +— +— +— +— +— +— +83,343 +$ +5.715 +$ +249,779 +President, +N/A +$ +75,296 +$ +150,592 +$ +225,888 +19,003 RS +25,337 RS +31,671 RS +— +— +— +N/A +Marketing and +Sales +N/A +— +— +— +54,354 SO +72,472 SO +90,591 SO +— +— +— +N/A +Jack E. Jerrett +2/03/14 +— +— +— +— +— +— +17,918 +— +— +$ +102,401 +Senior Vice +2/03/14 +— +— +— +— +— +— +51,251 +$ +5.715 +$ +153,599 +President +N/A +$ +57,400 +$ +114,800 +$ +172,200 +12,318 RS +16,798 RS +21,277 RS +— +— +— +N/A +and General Counsel +N/A +— +— +— +35,235 SO +48,048 SO +60,861 SO +— +— +— +N/A +Mark L. Kuna +2/03/14 +— +— +— +— +— +— +14,250 +— +— +$ +81,439 +Senior Vice +2/03/14 +— +— +— +— +— +— +40,761 +$ +5.715 +$ +122,161 +President, +N/A +$ +45,874 +$ +91,747 +$ +137,621 +9,797 RS +13,360 RS +16,922 RS +— +— +— +N/A +Finance, Controller and Assistant Secretary +N/A +— +— +— +28,023 SO +38,213 SO +48,403 SO +— +— +— +N/A +1 +Annual incentive equity awards to NEOs, consisting of a combination of restricted stock (“RS”) and stock options (“SO”), were +determined for 2014 pursuant to the LTIP, based on performance during 2013. Annual equity awards made during 2014 were approved by the Compensation Committee effective on February 3, 2014. For a description of these equity awards and their +terms, see the Section entitled, “2014 Long-Term Incentive Awards,” in the CD&A. +2 +The indicated amounts represent potential incentive cash bonus payments to the NEOs under the 2014 Incentive Plan. On January 20, 2015, bonus +payments under the 2014 Incentive Plan were approved by the Compensation Committee for the NEOs, based on performance during 2014. A further description of the payments approved under the 2014 Incentive Plan is set forth in the Section entitled, +“2014 Annual Incentive Cash Bonuses,” in the CD&A. +3 +The indicated amounts represent the potential number of shares which could have been granted to the NEOs in 2014 in the form of restricted stock +and stock options pursuant to the LTIP, based on each officer’s performance during 2013. For restricted stock, the individual share numbers were calculated by dividing 40% of the long-term incentive targets for each NEO set forth in the LTIP by +the mean between the high and low sales price of the Common Stock as reported by NASDAQ on the date of grant. For stock options, the individual option numbers were calculated by dividing 60% of the long-term incentive targets for each NEO set forth +in the LTIP by the corresponding estimated Black-Scholes value of the Company’s Common Stock on the date of grant. +53 +Table of Contents +4 +The indicated amounts represent the actual number of restricted shares or stock options granted to the NEOs in 2014 under the LTIP, based on +performance during 2013. Specific RS and SO awards were approved by the Compensation Committee for the NEOs effective on February 3, 2014 based on performance during 2013. A further description of these equity awards and their terms is set +forth in the Section entitled, “2014 Long-Term Incentive Awards,” in the CD&A. +5 +The exercise price for stock options is the fair market value of the Company’s Common Stock on the date of grant, which is calculated as the +mean between the high and low sales price of the Common Stock as reported by NASDAQ on such date. +6 +The indicated amounts represent the grant date fair value calculated in accordance with FASB ASC Topic 718. +Outstanding Equity Awards at December 31, 2014 +The following table summarizes information regarding unexercised stock options and unvested +restricted stock held by the NEOs as of December 31, 2014: +Option Awards 1 +Stock Awards 1 +Name +Number +of +Securities +Underlying +Unexercised +Options +(#) +Exercisable +Number +of +Securities +Underlying +Unexercised +Options 2 +(#) +Unexercisable +Equity +Incentive +Plan +Awards: +Number of +Securities +Underlying +Unexercised +Unearned +Options (#) +Option +Exercise +Price +($/Sh.) +Option +Expiration +Date +Number of +Shares or +Units +of +Stock +That Have +Not +Vested 2 +(#) +Market +Value of +Shares or +Units of +Stock +That +Have Not +Vested 8 +($) +Equity +Incentive +Plan +Awards: +Number of +Unearned +Shares, +Units or +Other +Rights +That Have +Not +Vested +(#) +Equity +Incentive +Plan +Awards: +Market +or Payout +Value of +Unearned +Shares, +Units or +Other +Rights +That +Have +Not +Vested +($) +Douglas A. Michels +President and Chief +Executive Officer +67,500 +-- +-- +$ +9.56 +1/23/2016 +-- +-- +-- +45,000 +-- +-- +$ +8.28 +2/01/2017 +-- +-- +-- +-- +56,250 +-- +-- +$ +8.06 +2/01/2018 +-- +-- +-- +-- +90,990 +-- +-- +$ +2.81 +1/23/2019 +-- +-- +-- +-- +102,365 +-- +-- +$ +5.19 +1/25/2020 +-- +-- +-- +-- +185,245 +8,055 3(a +) +-- +$ +6.63 +2/01/2021 +-- +-- +-- +-- +142,342 +58,612 3(b +) +-- +$ +11.30 +2/01/2022 +-- +-- +-- +-- +83,363 +98,520 3(c +) +-- +$ +7.05 +2/01/2023 +-- +-- +-- +-- +-- +254,054 3(d +) +-- +$ +5.72 +2/03/2024 +-- +-- +-- +-- +-- +-- +-- +-- +-- +12,218 +3(e) +$ +123,891 +-- +-- +-- +-- +-- +-- +-- +41,637 +3(f) +$ +422,199 +-- +-- +-- +-- +-- +-- +-- +88,820 +3(g) +$ +900,635 +-- +-- +Ronald H. Spair +Chief Financial Officer and +Chief Operating Officer +27,000 +-- +-- +$ +9.56 +1/23/2016 +-- +-- +-- +-- +45,000 +-- +-- +$ +8.28 +2/01/2017 +-- +-- +-- +-- +45,500 +-- +-- +$ +8.06 +2/01/2018 +-- +-- +-- +-- +18,720 +-- +-- +$ +2.81 +1/23/2019 +-- +-- +-- +-- +82,815 +-- +-- +$ +5.19 +1/25/2020 +-- +-- +-- +-- +111,262 +4,838 4(a +) +-- +$ +6.63 +2/01/2021 +-- +-- +-- +-- +88,687 +36,520 4(b +) +-- +$ +11.30 +2/01/2022 +-- +-- +-- +-- +45,622 +53,918 4(c +) +-- +$ +7.05 +2/01/2023 +-- +-- +-- +-- +-- +128,599 4(d +) +-- +$ +5.72 +2/03/2024 +-- +-- +-- +-- +-- +-- +-- +-- +-- +7,295 +4(e) +$ +73,971 +-- +-- +-- +-- +-- +-- +-- +22,786 +4(f) +$ +231,050 +-- +-- +-- +-- +-- +-- +-- +44,959 +4(g) +$ +455,884 +-- +-- +Anthony Zezzo II +Executive Vice President, +Marketing and Sales +112,604 +2,396 5(a +) +-- +$ +5.94 +1/03/2021 +-- +-- +-- +-- +25,644 +10,560 5(b +) +-- +$ +11.30 +2/01/2022 +-- +-- +-- +-- +15,089 +17,832 5(c +) +-- +$ +7.05 +2/01/2023 +-- +-- +-- +-- +-- +83, 343 5(d +) +-- +$ +5.72 +2/03/2024 +-- +-- +-- +-- +-- +-- +-- +-- +-- +3,512 +5(e) +$ +35,612 +-- +-- +-- +-- +-- +-- +-- +7,536 +5(f) +$ +76,415 +-- +-- +-- +-- +-- +-- +-- +29,138 +5(g) +$ +295,459 +-- +-- +54 +Table of Contents +Option Awards 1 +Stock Awards 1 +Name +Number +of +Securities +Underlying +Unexercised +Options +(#) +Exercisable +Number +of +Securities +Underlying +Unexercised +Options 2 +(#) +Unexercisable +Equity +Incentive +Plan +Awards: +Number of +Securities +Underlying +Unexercised +Unearned +Options (#) +Option +Exercise +Price +($/Sh.) +Option +Expiration +Date +Number of +Shares or +Units +of +Stock +That Have +Not +Vested 2 +(#) +Market +Value of +Shares or +Units of +Stock +That +Have Not +Vested 8 +($) +Equity +Incentive +Plan +Awards: +Number of +Unearned +Shares, +Units or +Other +Rights +That Have +Not +Vested +(#) +Equity +Incentive +Plan +Awards: +Market +or Payout +Value of +Unearned +Shares, +Units or +Other +Rights +That +Have +Not +Vested +($) +Jack E. Jerrett +Senior Vice President and +General Counsel +18,000 +-- +-- +$ +9.56 +1/23/2016 +-- +-- +-- +-- +12,000 +-- +-- +$ +8.28 +2/01/2017 +-- +-- +-- +-- +12,000 +-- +-- +$ +8.06 +2/01/2018 +-- +-- +-- +-- +6,065 +-- +-- +$ +2.81 +1/23/2019 +-- +-- +-- +-- +30,350 +-- +-- +$ +5.19 +1/25/2020 +-- +-- +-- +-- +23,958 +1,042 6(a +) +-- +$ +6.63 +2/01/2021 +-- +-- +-- +-- +24,567 +10,116 6(b +) +-- +$ +11.30 +2/01/2022 +-- +-- +-- +-- +20,098 +23,752 6(c +) +-- +$ +7.05 +2/01/2023 +-- +-- +-- +-- +-- +51,251 6(d +) +-- +$ +5.72 +2/03/2024 +-- +-- +-- +-- +-- +-- +-- +3,364 +6(e) +$ +34,111 +-- +-- +-- +-- +-- +-- +-- +10,038 +6(f) +$ +101,785 +-- +-- +-- +-- +-- +-- +-- +17,918 +6(g) +$ +181,689 +-- +-- +Mark L. Kuna +Senior Vice President, +Finance, Controller and +Assistant Secretary +15,000 +-- +-- +$ +8.28 +2/01/2017 +-- +-- +-- +-- +15,000 +-- +-- +$ +8.06 +2/01/2018 +-- +-- +-- +-- +6,956 +-- +-- +$ +2.81 +1/23/2019 +-- +-- +-- +-- +15,175 +-- +-- +$ +5.19 +1/25/2020 +-- +-- +-- +-- +32,295 +1,405 7(a +) +-- +$ +6.63 +2/01/2021 +-- +-- +-- +-- +19,408 +7,992 7(b +) +-- +$ +11.30 +2/01/2022 +-- +-- +-- +-- +15,911 +18,804 7(c +) +-- +$ +7.05 +2/01/2023 +-- +-- +-- +-- +-- +40,761 7(d +) +-- +$ +5.72 +2/03/2024 +-- +-- +-- +-- +-- +-- +-- +-- +-- +2,658 +7(e) +$ +26,952 +-- +-- +-- +-- +-- +-- +-- +7,947 +7(f) +$ +80,583 +-- +-- +-- +-- +-- +-- +-- +14,250 +7(g) +$ +144,495 +-- +-- +-- +-- +1 +The table does not include restricted stock or stock options awarded to the NEOs in February 2015 pursuant to the LTIP in respect of performance during 2014. +2 +Stock options vest over four years, with the first 25% vesting on the first anniversary of the grant date and the remaining 75% vesting on a monthly basis over the next three years following the first anniversary of the +grant date. Grants of restricted stock vest over a three-year period, with one-third vesting on the first anniversary of the grant date, a second third vesting on the second anniversary and the final third vesting on the third anniversary. +3 +The indicated stock options and restricted stock vest as follows: +(a) +4,027 options on January 1 and February 1, 2015; +(b) +4,186 options on the 1 st of each month, from January 1, 2015 through February 1, 2016; +(c) +3,789 options on the 1 st of each month, from January 1, 2015 through February 1, 2017; +(d) +63,513 options on February 3, 2015 and 5,293 options on the 3 rd of each month, from March 3, 2015 through February 3, 2018; +(e) +12,218 restricted shares on February 1, 2015; +(f) +20,818 restricted shares on February 1, 2015 and 2016; and +(g) +29,607 restricted shares on February 3, 2015, 2016 and 2017. +55 +Table of Contents +4 +The indicated stock options and restricted stock vest as follows: +(a) +2,419 options on January 1, 2015 and February 1, 2015; +(b) +2,608 options on the 1 st of each month, from January 1, 2015 through February 1, 2016; +(c) +2,074 options on the 1 st of each month, from January 1, 2015 through February 1, 2017; +(d) +31,150 options on February 3, 2015 and 2,707 options on the 3 rd of each month, from March 3, 2015 through February 3, 2018; +(e) +7,295 restricted shares on February 1, 2015; +(f) +11,393 restricted shares on February 1, 2015 and 2016; and +(g) +14,986 restricted shares on February 3, 2015, 2016 and 2017. +5 +The indicated stock options and restricted stock vest as follows: +(a) +2,396 options on January 3, 2015; +(b) +754 options on the 1 st of each month, from January 1, 2015 through February 1, 2016; +(c) +686 options on the 1 st of each month, from January 1, 2015 through February 1, 2017; +(d) +20,836 options on February 3, 2015 and 1,736 options on the 3 rd of each month, from March 3, 2015 through February 3, 2018; +(e) +3,512 restricted shares on February 1, 2015; +(f) +3,768 restricted shares on February 1, 2015 and 2016; and +(g) +9,713 restricted shares on February 3, 2015, 2016 and 2017. +6 +The indicated stock options and restricted stock vest as follows: +(a) +521 options on January 1, 2015 and February 1, 2015; +(b) +723 options on the 1 st of each month, from January 1, 2015 through February 1, 2016; +(c) +913 options on the 1 st of each month, from January 1, 2015 through February 1, 2017; +(d) +12,813 options on February 3, 2015 and 1,068 options on the 3 rd of each month, from March 3, 2015 through February 1, 2018; +(e) +3,364 restricted shares on February 1, 2015; +(f) +5,019 restricted shares on February 1, 2015 and 2016; and +(g) +5,973 restricted shares on February 3, 2015, 2016 and 2017. +7 +The indicated stock options and restricted stock vest as follows: +(a) +703 options on January 1, 2015 and February 1, 2015; +(b) +571 options on the 1 st of each month, from January 1, 2015 through February 1, 2016; +(c) +723 options on the 1 st of each month, from January 1, 2015 through February 1, 2017; +(d) +10,190 options on February 3, 2015 and 849 options on the 3 rd of each month, from March 3, 2015 through February 3, 2018; +(e) +2,658 restricted shares on February 1, 2015; +(f) +3,974 restricted shares on February 1, 2015 and 2016; and +(g) +4,750 restricted shares on February 1, 2015, 2016 and 2017. +8 +The indicated values were determined by multiplying the number of unvested shares of restricted stock shown in this table by $10.14 per share, the closing price of the Company’s Common Stock as reported by NASDAQ +on December 31, 2014. +56 +Table of Contents +Option Exercises and Stock Vested During 2014 +The following table summarizes information with respect to the exercise of stock options and +vesting of restricted stock for each of the NEOs during the fiscal year ended December 31, 2014: +Option Awards +Stock Awards +Name +Number of +Shares +Acquired +on Exercise +(#) +Value +Realized +on +Exercise 1 +($) +Number Of +Shares +Acquired +on Vesting +(#) +Value +Realized +on +Vesting 2 +($) +Douglas A. Michels +President and Chief Executive Officer +12,597 +50,287 +74,097 +456,574 +Ronald H. Spair +Chief Financial Officer and Chief Operating Officer +27,000 +118,484 +35,555 +203,195 +Anthony Zezzo II +Executive Vice President, Marketing and Sales +— +— +32,280 +209,105 +Jack E. Jerrett +Senior Vice President and General Counsel +15,000 +59,880 +12,016 +68,671 +Mark L. Kuna +Senior Vice President, Finance, Controller and Assistant Secretary +— +— +11,532 +65,905 +1 +The indicated amounts represent the number of shares acquired upon the exercise of options multiplied by the difference between the market value of the Company’s Common Stock on the applicable exercise date and the +option exercise price. +2 +The indicated amounts were calculated by multiplying the number of restricted shares acquired upon vesting by the market value of the +Company’s Common Stock on the applicable vesting date. The market value was determined by calculating the mean between the high and low sales prices of the Common Stock as reported by NASDAQ on the vesting date. +Retirement Benefits +The NEOs are eligible to participate in our 401(k) Plan on the same terms and conditions +applicable to all of our employees. For a further description of the terms of the 401(k) Plan, see the Section entitled, “Retirement Programs,” in the CD&A. +Nonqualified Deferred Compensation +The OraSure Technologies, Inc. Deferred Compensation Plan (the “Plan”) is a +non-qualified deferred compensation plan designed to provide deferred compensation benefits to a select group of the Company’s highly compensated employees, including all of the NEOs, and to non-employee members of the Board. +The Plan allows for deferrals by participants of up to 100% of their annual base salaries (or in the case of non-employee +Directors, 100% of fees payable under the Company’s Non-Employee Director Compensation Policy) and up to 100% of annual incentive cash bonuses and, upon vesting, restricted shares of the Company’s Common Stock awarded under the +Company’s Stock Award Plan. The Company may also make discretionary contributions to the accounts of employees participating in the Plan. Cash balances in participants’ accounts may be invested in a list of investment options that are +similar to the fund choices offered in the Company’s 401(k) plan. Participants will be permitted to sell vested restricted shares in their accounts, subject to compliance with the Company’s Insider Trading Policy and applicable securities +laws, and invest the proceeds of any such sale in +57 +Table of Contents +the investment options available under the Plan. Participants will be 100% vested in their accounts and the restricted shares they defer, except that Company contributions will vest over one or +more years as determined by the Company. In the event of death, disability or change of control, a participant will become 100% vested in any then unvested Company contributions. +Participants may elect to receive a distribution from his or her account upon a specified date, separation from service, +change of control, disability and/or death. Distributions will be made in a lump sum or installments, as allowed under the Plan. +Amounts contributed to a participant’s account through elective deferrals or through the Company’s discretionary +contributions are generally not subject to income tax, and the Company does not receive a deduction until they are distributed pursuant to the Plan. +However, cash deferrals are subject to the Federal Insurance Contributions Act Tax imposed at the time of deferral (the +“FICA tax”). Deferrals of restricted shares are subject to the FICA tax at the time the restricted shares vest, but are not subject to income tax, and the Company does not receive the deduction until the restricted shares are distributed +pursuant to the Plan. The Company may amend or terminate the Plan at any time in accordance with applicable law. +The +following table summarizes information for each NEO with respect to the Plan for the fiscal year ended December 31, 2014: +Name +Executive +Contributions 1 +($) +Registrant +Contributions +($) +Aggregate +Earnings 2 +($) +Aggregate +Withdrawals/ +Distributions +($) +Aggregate +Balance +at 12/31/14 1,2 +($) +Douglas A. Michels +President and Chief +Executive Officer +— +— +— +— +— +Ronald H. Spair +Chief Financial Officer +and Chief Operating Officer +$ +320,663 +— +$ +105,318 +— +$ +834,487 +Anthony Zezzo II +Executive Vice President, +Marketing and Sales +— +— +— +— +— +Jack E. Jerrett +Senior Vice President and +General Counsel +— +— +— +— +— +Mark L. Kuna +Senior Vice President, +Finance, Controller and Assistant Secretary +— +— +— +— +— +1 +The indicated amounts of NEO contributions have been reported as compensation in the Summary Compensation Table. +2 +There were no earnings or deferred compensation at above market or preferential rates and, therefore, no earnings have been reported as +compensation in the Summary Compensation Table for 2014. Aggregate earnings include dividends and interest earned during the period, as well as the net unrealized appreciation of the underlying investments in the participant’s account. +58 +Table of Contents +Employment Agreements and Potential +Payments Upon Termination or Change of Control +We have entered into employment agreements with all of our NEOs. We believe such agreements +are necessary to attract and retain critical talent, and are in-line with market practices. +In March 2015, the employment +agreements with Mr. Michels and the other NEOs were amended to eliminate a provision requiring the Company to pay a gross-up for excise tax payments under Section 280G of the Internal Revenue Code. In addition, Mr. Michels’ +agreement was amended to change a “single trigger” change of control severance provision to a “double trigger” provision. The following summary describes the material terms of the employment agreements with Mr. Michels and +the other NEOs, as so amended. +Mr. Michels’ employment agreement with the Company provides for the various +components of compensation described in the CD&A. In addition, upon a termination of employment, Mr. Michels’ contract provides for certain post-employment severance and other benefits, as described below. +Mr. Michels’ employment agreement will terminate upon his death or disability. In addition, Mr. Michels may +terminate his employment at any time and for any reason upon 90 days written notice to the Company or for “good reason” (as defined below). Mr. Michels’ employment agreement can also be terminated by the Company for +“cause” (as defined below) or without “cause.” +As used in Mr. Michels’ agreement, the term +“good reason” means (i) a material breach of the agreement by the Company that is not cured within 30 days of written notice, (ii) a material diminution in Mr. Michels’ base compensation or authority, duties or +responsibilities (following a change of control, such a diminution shall occur if Mr. Michels no longer functions as the sole chief executive officer of the successor organization), (iii) a material diminution in the authority, duties or +responsibilities of the person to whom Mr. Michels reports, including a change in Mr. Michels’ reporting obligation from the Board to another employee of the Company, if applicable (following a change of control, such a diminution +shall occur if Mr. Michels no longer reports to the board of directors of a public company), (iv) a material diminution of the budget over which Mr. Michels exercises control, or (v) a material change in Mr. Michels’ +job location. +A “change of control” generally is defined to take place when disclosure of such a change would +be required by the proxy rules promulgated by the SEC or when: +• +any person, or more than one person acting as a group within the meaning of Section 409A of the Internal Revenue Code (the “Code”) and the regulations issued thereunder, acquires ownership of stock of the +Company that, together with stock held by such person or group, constitutes more than 50 percent of the total fair market value or total voting power of the stock of the Company; +• +any person, or more than one person acting as a group within the meaning of Code Section 409A and the regulations issued thereunder, acquires (or has acquired during the 12-month period ending on the date of the +most recent acquisition) ownership of stock of the Company possessing 30 percent or more of the total voting power of the Company’s stock; +• +a majority of the members of the Board is replaced during any 12-month period by Directors whose appointment or election is not endorsed by a majority of the members of the Board before the date of the appointment or +election; or +• +a person, or more than one person acting as a group within the meaning of Code Section 409A and the regulations issued thereunder, acquires (or has acquired during the 12-month period ending on the date of the most +recent acquisition) assets from the Company that have a total gross fair market value equal to or more than 40 percent of the total gross fair market value of all the assets of the Company immediately before such acquisition or acquisitions. +59 +Table of Contents +A “change of control period” is the period which begins on the +occurrence of a change of control and ends 18 months thereafter. +Upon the termination of Mr. Michels’ +employment upon his death or disability, by Mr. Michels for any reason other than good reason or by the Company for cause, Mr. Michels will be entitled to receive his salary through the date of termination and any bonus approved by the +Board or the Compensation Committee prior to the date of termination but not yet paid and, in the case of a termination upon his death or disability, a cash bonus for the calendar year in which termination occurs that Mr. Michels would have +received but for his death or disability, prorated through the date of death or commencement of disability. Upon termination of the agreement by Mr. Michels with good reason or by the Company without cause (which includes the Company’s +failure to renew the agreement), Mr. Michels would be entitled to receive his salary through the date of termination and any bonus that has been approved by the Board or the Compensation Committee prior to the date of termination but not yet +paid, a cash bonus for the calendar year in which termination occurs equal to Mr. Michels’ target bonus for such year, and for a period of one year after the date of termination, benefits for Mr. Michels and/or his family at levels +substantially equal to those that would have been provided to them by the Company if Mr. Michels’ employment had not been terminated. If termination is for good reason or without cause (which includes the Company’s failure to renew +the agreement) and does not occur during a change of control period, Mr. Michels would also receive a lump sum amount equivalent to 12 months of his annual salary. If, however, termination is for good reason or without cause (which includes the +Company’s failure to renew the agreement) and occurs during a change of control period, Mr. Michels will receive a lump sum amount equivalent to 36 months of his annual salary. If Mr. Michels is a “specified employee” within +the meaning of Code Section 409A at the time of the termination of his employment and any of the foregoing payments would subject him to any tax, interest or penalty under Code Section 409A or regulation thereunder, then the payment shall +not be made until the first day which is at least six months after the date of termination of his employment. +Upon +termination of Mr. Michels’ employment as a result of disability, for good reason, or by the Company without cause, Mr. Michels can elect to receive medical and dental insurance coverage for himself and his family under any plans +offered by the Company to the extent the Company is self-insured or coverage for former employees is available on reasonable terms (as determined by the Company) from the Company’s providers of medical and dental coverage. +All stock awards granted to Mr. Michels are required to immediately vest (i) in the event of a change of control or +(ii) if Mr. Michels’ employment is terminated for good reason by Mr. Michels or by the Company without cause during a change of control period, and 50% of such stock awards shall vest in the event Mr. Michels’ +employment is terminated for good reason or by the Company without cause during any period other than a change of control period. +The termination and severance provisions in the employment agreements for the other NEOs are substantially similar to +Mr. Michels’ employment agreement, with the following exceptions. Mr. Spair is entitled to receive severance equal to 36 months of his annual salary and Messrs. Jerrett and Kuna are entitled to receive severance equivalent to 24 +months of their annual salary, rather than 36 months, in the event of a termination of their agreements for good reason or without cause during a change of control period or after a change of control. Mr. Zezzo will be entitled to receive +severance equal to 24 months of his annual salary only if he is terminated for good reason or without cause during a change of control period. In the employment agreements with Messrs. Spair, Zezzo, Jerrett and Kuna, the term “good reason” +means (i) a material breach of the agreement by the Company that is not cured within 30 days of written notice, (ii) a material diminution in base compensation or authority, duties or responsibilities, (iii) a material diminution in +the authority, duties or responsibilities of the person to whom the executive reports, including a change in the executive’s reporting obligation from the Board to another employee of the Company, if applicable, (iv) a material diminution +of the budget over which the executive exercises control, or (v) a material change in the executive’s job location. +60 +Table of Contents +The following table provides estimates of the potential severance and other +post-termination benefits the NEOs would receive assuming their employment was terminated as of December 31, 2014: +Name +Benefit +Voluntary +Termination +or +Termination +for Cause +Termination +for Death +or +Disability 1 +Termination +for +Good +Reason or +Without +Cause Not +Within +Change of +Control +Period 1 +Termination +after Change of +Control +(except +Mr. Michels), or for +Good Reason or +Without Cause +Within Change of +Control Period 1 +Douglas A. Michels +Salary Continuation +— +— +$ +580,920 +$ +1,742,760 +President and Chief Executive Officer +Bonus +— +$ +620,000 +$ +406,644 +$ +406,644 +Accelerated Option Vesting +— +— +$ +728,711 +$ +1,457,422 +Accelerated Restricted Stock Vesting +— +$ +1,446,724 +$ +723,362 +$ +1,446,724 +Health Care Benefits +— +— +$ +14,094 +$ +14,094 +Total +— +$ +2,066,724 +$ +2,453,731 +$ +5,067,644 +Ronald H. Spair +Salary Continuation +— +— +$ +456,290 +$ +1,368,870 +Chief Financial Officer and Chief Operating Officer +Bonus +— +$ +322,970 +$ +228,145 +$ +228,145 +Accelerated Option Vesting +— +— +$ +376,466 +$ +752,932 +Accelerated Restricted Stock Vesting +— +$ +760,906 +$ +380,454 +$ +760,906 +Health Care Benefits +— +— +$ +13,964 +$ +13,964 +Total +— +$ +1,083,876 +$ +1,455,319 +$ +3,124,817 +Anthony Zezzo II +Salary Continuation +— +— +$ +376,480 +$ +752,960 +Executive Vice President, Marketing and Sales +Bonus +— +$ +166,840 +$ +150,592 +$ +150,592 +Accelerated Option Vesting +— +— +$ +217,029 +$ +434,058 +Accelerated Restricted Stock Vesting +— +$ +407,486 +$ +203,742 +$ +407,486 +Health Care Benefits +— +— +$ +3,941 +$ +3,941 +Total +— +$ +574,326 +$ +951,784 +$ +1,749,037 +Jack E. Jerrett +Salary Continuation +— +— +$ +328,000 +$ +656,000 +Senior Vice +President and General Counsel +Bonus +— +$ +197,850 +$ +114,800 +$ +114,800 +Accelerated Option Vesting +— +— +$ +151,980 +$ +303,961 +Accelerated Restricted Stock Vesting +— +$ +317,586 +$ +158,792 +$ +317,586 +Health Care Benefits +— +— +$ +13,844 +$ +13,844 +Total +— +$ +515,436 +$ +767,416 +$ +1,406,191 +Mark L. Kuna +Salary Continuation +— +— +$ +262,135 +$ +524,270 +Senior Vice President, +Finance, Controller and +Assistant Secretary +Bonus +— +$ +127,060 +$ +91,747 +$ +91,747 +Accelerated Option Vesting +— +— +$ +121,752 +$ +243,504 +Accelerated Restricted Stock Vesting +— +$ +252,030 +$ +126,014 +$ +252,030 +Health Care Benefits +— +— +$ +17,383 +$ +17,383 +Total +— +$ +379,090 +$ +619,031 +$ +1,128,934 +1 +The indicated values for the accelerated vesting of stock options reflect (i) the number of option shares which would vest on an accelerated +basis, multiplied by (ii) the excess, if any, of the $10.14 per share closing price for the Company’s Common Stock, as reported by NASDAQ on December 31, 2014, over the applicable exercise price for each option. The indicated values +for the accelerated vesting of restricted stock reflect the $10.14 per share closing price on December 31, 2014 multiplied by the number of shares which would vest on an accelerated basis. +61 +Table of Contents +Equity Compensation Plan Information +The following table provides +information as of December 31, 2014 about the shares of Common Stock that may be issued upon the exercise of options under all of our equity compensation plans. These plans include the OraSure Technologies, Inc. Stock Award Plan (“Award +Plan”), the Epitope, Inc. 1991 Stock Award Plan (the “1991 Plan”), and the Agritope, Inc. 1992 Stock Award Plan (the “Agritope Plan”). The Award Plan, the 1991 Plan and the Agritope Plan were Epitope equity compensation +plans. In connection with the merger of Epitope and STC into the Company on September 29, 2000, the Award Plan was adopted by the Company, and the Company assumed the obligation to issue shares for the then outstanding stock options granted +under the Award Plan, the 1991 Plan, and the Agritope Plan. Additional grants of equity compensation may only be made under the Award Plan. +Plan Category +Number of Securities to be +Issued Upon Exercise of +Outstanding Options +(a) +Weighted-Average Exercise +Price of Outstanding +Options +(b) +Number of Securities +Remaining Available for +Future Issuance +Under +Equity Compensation Plans +(Excluding Securities +Reflected in Column (a)) +(c) +Equity compensation plans approved by security holders +5,614,268 +$ +7.28 +4,769,742 +1 +Equity compensation plans not approved by security holders +125,552 +2 +$ +4.42 +2 +— +Total +5,739,820 +4,769,742 +1 +Represents shares remaining available for future issuance as of December 31, 2014 under the Award Plan. +2 +Represents shares issuable as of December 31, 2014, under options at a weighted-average exercise price of $4.42 per share, pursuant to the +1991 Plan and the Agritope Plan. +Director Compensation +Annual Fees +Under our Non-Employee Director Compensation Policy (“Director Policy”), non-employee members of the Board receive +fixed annual fees for service on the Board and Committees of the Board, as set forth below. The fees are paid quarterly in arrears. +Position +Annual Fee +Board Chairman +$ +60,000 +Non-Chairman Board Member +$ +40,000 +Audit Chairman +$ +18,000 +Compensation Chairman +$ +15,000 +N&CG Chairman +$ +8,000 +Non-Chairman Audit Member +$ +8,000 +Non-Chairman Compensation Member +$ +6,000 +Non-Chairman N&CG Member +$ +4,000 +62 +Table of Contents +Initial Equity Awards +Non-employee Directors receive an initial grant of 40,000 stock options for the Company’s Common Stock upon joining the +Board (the “Initial Grant”). An additional grant of 40,000 stock options is also made to any non-employee Director who becomes Chairman of the Board (the “Chairman Grant”). The options granted to non-employee Directors are +nonqualified stock options and have an exercise price equal to the mean between the high and low sales prices of the Company’s Common Stock as quoted on the NASDAQ Stock Market on the grant date. Each Initial Grant and Chairman Grant generally +vest on a monthly basis over the 24 months immediately following the grant date. Payment of the exercise price may be made in cash or by delivery of previously acquired shares of Common Stock having a fair market value equal to the aggregate +exercise price. +Annual Equity Awards +Under the Director Policy, each non-employee Director receives an annual grant of restricted shares (the “Annual +Grant”) of the Company’s Common Stock on the date of each annual meeting of stockholders. Annual grants are made using a value transfer award method similar to that used for our executives under the LTIP. The dollar values of the Annual +Awards were determined by the Compensation Committee and Board based on advice from PM&P and an assessment of director equity awards made at comparable medical diagnostics and healthcare companies. +Under the Director Policy, Annual Grants of restricted stock are made pursuant to the values set forth in the following table: +Board Position +Award Grant Value +Chairman +$ +120,000 +Non-Chairman Director +$ +80,000 +The dollar value of each Annual Grant is converted into restricted stock by dividing the above +values by the average of the high and low sales prices of the Company’s Common Stock, as reported on the NASDAQ Stock Market, on the grant date. Annual Grants of restricted stock will vest on the date that is twelve months from the date of +grant. Non-employee Directors are permitted to direct the Company to withhold restricted stock in order to pay tax withholding obligations arising upon the vesting of such shares. +In September 2014, management compared the compensation provided under our Director Policy with the compensation paid to +non-employee directors at the peer companies (listed on page 37 of this Proxy Statement) used for benchmarking executive compensation, as described above. Based on this analysis, we concluded that the mix of cash fees and annual awards of restricted +stock reflects what we believe to be market practice and the compensation value provided to our non-employee Directors is consistent with the median compensation value paid by the peer companies. +Equity Award Terms +Any unvested stock options and restricted stock granted to non-employee Directors will vest in their entirety immediately upon +the occurrence of a “change of control” of the Company. As defined in the Award Plan, a change of control means a change of control that would be required to be reported under the Securities Exchange Act of 1934, as amended, and would be +deemed to have occurred at such time as (i) any person, or more than one person acting as a group within the meaning of Section 409A of the Code, acquires ownership of stock of the Company that, together with stock held by such person or +group, constitutes more than 50 percent of the total fair market value or total voting power of the stock of the Company; (ii) any person, or more than one person acting as a group within the meaning of Section 409A of the Code, acquires +(or has acquired during the 12-month period ending on the date of the most recent acquisition) ownership of stock of the Company possessing 30 percent or more of the total voting power of the Company’s stock; (iii) a majority of the +members of the Board is replaced during any 12-month period by Directors whose appointment or election is not +63 +Table of Contents +endorsed by a majority of the members of the Board before the date of the appointment or election; or (iv) a person, or more than one person acting as a group within the meaning of +Section 409A of the Code, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition) assets from the Company that have a total gross fair market value equal to or more than 40 percent of the total +gross fair market value of all the assets of the Company immediately before such acquisition or acquisitions. In addition, if a non-employee Director leaves the Board for any reason other than a change of control, prior to the end of the vesting +period for the Annual Grant of restricted stock, such award shall immediately vest on a pro-rata basis based on the actual duration of such Director’s service to the Board during such vesting period. +Deferred Compensation +Non-employee Directors are permitted to defer all or a portion of the fees and grants of restricted stock under the +Company’s Non-Qualified Deferred Compensation Plan, on terms similar to those applicable to our officers. +Director Compensation During 2014 +The following table summarizes information related to compensation of non-employee Directors during the fiscal year ended +December 31, 2014: +Name 1, +2 +Fees +Earned or +Paid +in Cash +($) +Stock +Awards 3 +($) +Option +Awards +($) +Non-Equity +Incentive Plan +Compensation +($) +Change in +Pension +Value and +Nonqualified +Deferred +Compensation +Earnings +All Other +Compensation +($) +Total ($) +Michael Celano +$ +62,000 +$ +80,000 +— +— +— +— +$ +142,000 +Ronny B. Lancaster +$ +54,000 +$ +80,000 +— +— +— +— +$ +134,000 +Charles W. Patrick 3 +$ +52,000 +$ +80,000 +— +— +— +— +$ +132,000 +Roger L. Pringle +$ +55,950 +$ +80,000 +— +— +— +— +$ +135,950 +Stephen S. Tang, Ph.D. +$ +57,050 +$ +80,000 +— +— +— +— +$ +137,050 +Douglas G. Watson +$ +74,000 +$ +119,997 +— +— +— +— +$ +193,997 +1 +Because Messrs. Michels and Spair are officers of the Company, they are not entitled to any separate compensation for service on the Board or any Committee thereof and have not been included in this table. Gerald M. +Ostrov retired from the Board on November 11, 2014 and has not been included on this table. +2 +Non-employee Directors held the following number of restricted shares (“RSs”) and stock options (“SOs”) at December 31, 2014: Mr. Celano: 12,987 RSs; 70,000 SOs; Mr. Lancaster: 12,987 +RSs; 50,000 SOs; Mr. Patrick: 12,987 RSs; 70,000 SOs; Mr. Pringle: 12,987 RSs; 195,552 SOs; Dr. Tang: 12,987 RSs; 40,000 SOs; and Mr. Watson: 19,480 RSs; 110,000 SOs. The aggregate number of stock options and restricted shares +held by Messrs. Michels and Spair are set forth in the table in the Section entitled, “Outstanding Equity Awards at December 31, 2014,” in this Proxy Statement. +3 +The indicated amounts reflect the aggregate grant date fair value of restricted stock awards made to non-employee Directors during 2014, computed in accordance with FAS ASC Topic 718. Certain assumptions used in the +calculation of those amounts are set forth in footnote 8 to the Company’s audited consolidated financial statements for the fiscal year ended December 31, 2014, included in the Company’s 2014 10-K Report. +64 +Table of Contents +PROPOSALS REQUIRING YOUR VOTE +Proposal No. 1. Election of Directors +Background +At the Annual Meeting, you will be asked to vote on the election of three Directors. A majority of the independent members of +the Board have nominated Michael Celano, Douglas A. Michels and Charles W. Patrick for election as Class III Directors, for terms expiring at the Annual Meeting of Stockholders in 2018. +Each of the nominees for election as Directors is presently a member of our Board and has consented to continue to serve if +re-elected to the Board. Mr. Celano joined the Board in 2006, is currently Chairman of the Audit Committee, and serves as a member of the Nominating and Corporate Governance Committee. Mr. Patrick joined the Board in 2006, and serves as a +member of the Audit Committee and Nominating and Corporate Governance Committee. Mr. Michels joined the Board in 2004 and is the Company’s President and Chief Executive Officer. +We do not know of anything that would preclude any nominee from serving. However, should any nominee for any reason become +unable or unwilling to serve as a Director, the persons named in the enclosed Proxy Card will vote the shares represented by each Proxy for such substitute nominee as the Board may approve. +Any vacancy that occurs on the Board that results from an increase in the number of Directors may be filled by the affirmative +vote of a majority of the Directors then in office, and any other vacancy on the Board may be filled by the affirmative vote of a majority of the Directors then in office, even though less than a quorum of the Board, or by a sole remaining Director. +Certain information with respect to each person nominated for election as a Director and each person whose term of office +as a Director will continue after the Annual Meeting, including the particular experience, qualifications, attributes and skills they possess that led to the conclusion that they should serve as a Director, is set forth below. +Name +Principal Occupation +Age +Director +Since +Class I (Directors Whose Terms Expire in 2016): +Stephen S. Tang, Ph.D. +President and Chief Executive Officer of +The University City Science Center +54 +2011 +Douglas G. Watson +Chief Executive Officer of Pittencrieff +Glen Associates +70 +2002 +Class II (Directors Whose Terms Expire in 2017): +Ronny B. Lancaster +Senior Vice President for Federal +Government Relations of Assurant, +Inc. +63 +2003 +Roger L. Pringle +President of The Pringle Company +74 +2000 +Ronald H. Spair +Chief Financial Officer and Chief +Operating Officer of the Company +59 +2006 +Class III (Nominees for Terms Expiring in 2018): +Michael Celano +Chief Financial Officer of Drugscan, Inc. +56 +2006 +Douglas A. Michels +President and Chief Executive Officer of +the Company +58 +2004 +Charles W. Patrick +Principal, Patrick Consulting +60 +2006 +65 +Table of Contents +Stephen S. Tang, Ph.D. became a member of the Board in April 2011. Since January 2008, Dr. Tang has +served as President and Chief Executive Officer of The University City Science Center, an urban research park and business incubator owned by over thirty leading universities, medical schools and health networks in the greater Philadelphia, +Pennsylvania area. Prior to that, Dr. Tang held senior management and business development positions with several firms in the life sciences industry, including Olympus America, Inc., Millennium Cell Inc. and A.T. Kearney Inc. Dr. Tang +holds a B.S. degree in Chemistry from The College of William and Mary, an M.S. degree and Ph.D. in Chemical Engineering from Lehigh University and an MBA from The Wharton School of Business at the University of Pennsylvania. Dr. Tang’s +extensive business experience, and in particular his experience in the life sciences industry and with strategic and business development matters, led to the conclusion that he should serve on the Company’s Board. +Douglas G. Watson became a member of the Board in May 2002 and became Chairman of the Board in March 2003. +Since July 1999, Mr. Watson has been Chief Executive Officer of Pittencrieff Glen Associates, a leadership and management consulting firm, which he founded. Prior to that, Mr. Watson served as President and Chief Executive Officer of +Novartis Corporation, the U.S. subsidiary of Novartis A.G., President and Chief Executive Officer of Ciba-Geigy Corporation, President of the Ciba Pharmaceuticals Division and Senior Vice President of Planning and Business Development of Ciba’s +U.S. Pharmaceuticals Division. Mr. Watson holds an M.A. degree in pure mathematics from Churchill College, Cambridge University, and is a member of the Chartered Institute of Management Accountants. Mr. Watson also serves on the boards of +directors of Dendreon Corporation and Wright Medical Group Inc. and previously served on the boards of directors of BioMimetic Therapeutics, Inc., Engelhard Corporation, Genta Inc., Javelin Pharmaceuticals Inc., Novartis Corporation, InforMedix +Inc., BioElectronics Inc., Delcath Systems Inc. and Summit Bank Corporation. Mr. Watson’s long business career and executive-level management experience in the pharmaceutical industry, his financial and accounting expertise and his service +on the boards and board committees of other private and public companies led to the conclusion that he should serve on the Company’s Board. +Ronny B. Lancaster became a member of the Board in May 2003. Since September 2005, Mr. Lancaster has +served as Senior Vice President, Federal Government Relations of Assurant, Inc., a provider of specialty insurance and insurance-related products and services. Prior to that, Mr. Lancaster served as Chief Operating Officer of the Morehouse +School of Medicine, Executive Assistant to the Secretary and Principal Deputy Assistant Secretary for Planning and Evaluation at the U.S. Department of Health and Human Services, General Counsel of Hamilton Enterprises, Inc., Senior Washington +Representative for Blue Cross/Blue Shield Association, and Chief of the Division of Fee-For-Service Plans at the U.S. Office of Personnel Management. Mr. Lancaster received his B.A. in Economics from the Catholic University of America, his +M.B.A. from the Wharton School of the University of Pennsylvania, and his J.D. degree from The Georgetown University Law Center. He is admitted to the Bars of Pennsylvania and the District of Columbia. Mr. Lancaster previously served on the +board of directors of Immucor, Inc. Mr. Lancaster’s expertise in government affairs and political matters, his extensive medical and healthcare experience and his legal training led to the conclusion that he should serve on the +Company’s Board. +66 +Table of Contents +Roger L. Pringle has served on the Board since September 2000, when the Company was formed by the merger of +Epitope, Inc. (“Epitope”) and STC Technologies, Inc. Prior to that, Mr. Pringle served as Chairman of the Board and a member of the Board of Directors of Epitope, and was a director of Agritope, Inc., a plant genetics subsidiary of +Epitope. Mr. Pringle is the President of The Pringle Company, a strategy and executive consulting firm in Portland, Oregon, which was founded in 1976. Mr. Pringle currently serves on the board of directors of Prolifiq Software, Inc. +and previously served on the boards of directors of Bank of the Northwest, Metro One Telecommunications Inc. and North Pacific Group. Mr. Pringle received a B.S. in Business from Oregon State University and an MBA from the University of Oregon. +Mr. Pringle’s long service as a member of the Board of Epitope, his professional expertise in executive selection, assessment and compensation, as well as his entrepreneurial and business leadership skills and his service on the boards of +other private and public companies led to the conclusion that he should serve on the Company’s Board. +For biographical information on Mr. Spair, see the Section entitled, “Executive Officers,” in +this Proxy Statement. Mr. Spair’s service as Chief Financial Officer and Chief Operating Officer of the Company, his financial and accounting expertise and his extensive business and investor relations experience led to the conclusion that +he should serve on the Company’s Board. +Michael Celano became a member of the Board in October 2006. Mr. Celano has served as Chief Financial +Officer of DrugScan, Inc., a clinical laboratory services company, since January 2013. Prior to that, Mr. Celano served as Chief Financial Officer of Kensey Nash Corporation, a biomaterials company from March 2009 until June 2012, and as a +consultant to Royal DSM, the acquiror of Kensey Nash Corporation, from July 2012 through December 2012. From August 2007 to December 2008, Mr. Celano served as Managing Director of Aon Risk Services and prior to that, he served as Vice +President, Finance and Chief Financial Officer for BioRexis Pharmaceutical Corporation, a biopharmaceutical company. Before joining BioRexis, Mr. Celano served as a partner with KPMG LLP, in charge of its Mid-Atlantic Life Sciences Practice, +and was co-leader of its National Life Science Practice. Mr. Celano also was co-leader of the Life Science Practice for Arthur Andersen before he joined KPMG. Mr. Celano holds a B.S. degree in Accounting from St. Joseph’s University. +Mr. Celano’s accounting and financial expertise, and specifically his long career in public accounting focused in the life sciences area, and his extensive business experience, led to the conclusion that he should serve on the +Company’s Board. +67 +Table of Contents +For biographical information on Mr. Michels, see the Section entitled, “Executive Officers,” +in this Proxy Statement. Mr. Michels’ service as President and Chief Executive Officer of the Company, his extensive business and executive-level management experience in the medical diagnostics field and his sales and marketing expertise +led to the conclusion that he should serve on the Company’s Board. +Charles W. Patrick became a member of the Board in January 2006. Since 2000, Mr. Patrick has served as +Principal of Patrick Consulting, a management consulting firm that helps diagnostic and technology companies develop sales, marketing and distribution strategies. From 2001 through 2011, Mr. Patrick also served as the President and Co-owner of +ADS Golf, Inc., a golf equipment supplier. Prior to that time, he served as the President and Chief Executive Officer of CallNexus, Inc., a provider of virtual call center services, and Vice President of Sales and Marketing for Biosite Diagnostics, +a medical diagnostics company, where he had primary responsibility for developing and achieving Biosite’s strategic sales, marketing and distribution objectives. Prior to his time at Biosite, Mr. Patrick served as World Wide Group +Marketing Manager and held several other sales and marketing positions for the Diagnostics Division of Abbott Laboratories. Mr. Patrick received a B.A. degree from the University of Central Florida. Mr. Patrick previously served on the +board of diaDexus, Inc. Mr. Patrick’s extensive sales and marketing background, his more than 35 years of experience in the medical diagnostics industry and his entrepreneurial skills led to the conclusion that he should serve on the +Company’s Board. +Vote Required; Board Recommendation +If a quorum is present, each nominee will be elected if he receives a plurality of the votes cast by shares present in person +or by Proxy and entitled to vote at the Annual Meeting. Abstentions and broker non-votes will have no effect on the required vote. In the absence of instructions to the contrary, shares of Common Stock represented by properly executed Proxies will +be voted for the nominees, each of whom has consented to be named and to serve if elected. +Your Board recommends that you vote FOR the +election of the Director nominees. +Proposal No. 2. Ratification of Appointment of Independent Registered Public Accounting Firm +Background +The Audit Committee of the Board of Directors has approved the reappointment of KPMG LLP (“KPMG”) as our independent +registered public accounting firm for the 2015 fiscal year. The Audit Committee has also recommended that the Board submit the appointment of KPMG for ratification by stockholders at the Annual Meeting. Although action by the stockholders on this +matter is not legally required, the Audit Committee and the Board believe it is appropriate to seek stockholder ratification of this appointment in light of the important role played by the independent registered public accounting firm in reporting +on the Company’s consolidated financial statements. If this appointment is not ratified by stockholders, the Audit Committee may reconsider its appointment of KPMG for the 2015 fiscal year or in the future. +One or more representatives of KPMG are expected to be at the Annual Meeting. They will have an opportunity to make a +statement and will be available to respond to appropriate questions. +68 +Table of Contents +Vote Required; Board Recommendation +Ratification of the appointment of KPMG requires the affirmative vote of a majority of shares present in person or by Proxy +and entitled to vote at the Annual Meeting. Shares voted in person or represented by Proxy which are not voted for this ratification (by voting no or abstaining) will have the effect of voting against this proposal. In the absence of instructions to +the contrary, shares of Common Stock represented by properly executed Proxies will be voted for ratification of the appointment of KPMG as our independent registered public accounting firm for the 2015 fiscal year. +Your Board recommends that the stockholders vote FOR ratification of the appointment of KPMG. +Proposal No. 3. Advisory (Non-Binding) Vote to Approve Executive Compensation +Background +Section 14A of the Exchange Act, enacted pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 +(“Dodd-Frank Act”), requires that stockholders be given the opportunity to vote to approve, on an advisory (non-binding) basis, no less frequently than once every three years, the compensation of our NEOs. Based on feedback received at our +2011 Annual Meeting, the Board determined that such a vote should be held on an annual basis until the next advisory vote on frequency. Thus, following this vote, the next time the Company will hold a non-binding advisory vote on the compensation of +our NEOs will be at our 2016 Annual Meeting of Stockholders. +The vote on the resolution recommended below is not intended +to address any specific element of compensation, but rather relates to the overall compensation of our NEOs. As described more fully under the CD&A Section of this Proxy Statement and the related tables and narrative, our compensation program is +performance-based and is designed to pay executives for performance by offering rewards for the achievement of pre-determined objectives. In addition, our program is designed to align the interests of executives with the interests of our +stockholders, provide long-term incentives and set compensation at levels sufficiently competitive to attract, retain and motivate high quality executives, and meet strong corporate governance principles. You are urged to carefully review the +CD&A Section of this Proxy Statement which contains a detailed discussion of our executive compensation program, including the 2014 compensation of our NEOs. +Recent Compensation Changes +In response to input from our stockholders, we implemented several important changes to our compensation program in order to +more closely align compensation and performance for our executives +Performance Vesting Equity – Beginning with long term incentive equity awards +to be made in early 2016 for performance during 2015, executives will receive 50% of their awards in the form of performance-vesting restricted stock that will vest after three years only if certain revenue growth and earnings per share targets +established for that three-year period are met. The remaining 50% of each award shall consist of time-vested restricted stock that will vest in full after three years. Thus, beginning in 2016 one-half of each executive’s annual equity awards +will have performance vesting and one half time-vesting. In the past, executives received annual equity awards consisting of a 60%/40% mix of stock options and restricted stock, all of which was time vested. This change strengthens our compensation +program by more closely aligning executive pay with longer-term Company priorities and performance and responds to input from our stockholders urging us to adopt performance vesting for a significant portion of our executives’ long-term +incentive equity awards. +Employment +Agreement Changes - The employment agreements for all NEOs have been modified to eliminate the excise tax gross-up. In addition, our CEO’s employment agreement has been modified to change the “single trigger” change of control +severance provision to a “double trigger” provision. These changes respond to concerns raised by stockholders. +69 +Table of Contents +Enhanced Stock +Ownership/Retention Guidelines – The Board has recently increased the stock ownership and retention requirements for our executives as summarized below (expressed as a multiple of base salary): +Position +Old +New +President & CEO +2x +6x +Chief Financial Officer & Chief Operating Officer +1x +2x +Other Executive Officers +N/A +1x +In addition, each individual covered by these +guidelines is now required to retain 50% (rather than 25%) of the net shares acquired upon the exercise of stock options and the vesting of restricted stock until the individual’s holdings of our Common Stock meet applicable ownership +guidelines. These changes respond to input from stockholders by better aligning the interests of our executives with our stockholders and making our guidelines more consistent with market practice. +Limited Bonus +Pool Funding Discretion – Beginning in 2015, the Board will limit its authority to make discretionary adjustments to the aggregate cash pool used to fund annual incentive bonuses for executives to +/- 10% of the aggregate pool amount +otherwise determined by the funding formula for the applicable Management Incentive Plan. This change responds to input received from stockholders regarding the use of discretion in determining compensation. +Change in +Compensation Committee Chairman – Following our 2014 Annual Meeting, the Board appointed Dr. Stephen S. Tang as the new Chairman to the Compensation Committee, in order to bring a fresh perspective and new leadership to this +important position. This responds to concerns from stockholders regarding the alignment of executive compensation with Company performance. +Other Compensation Program Features +As described more fully in the CD&A, there are many other important features to our compensation program that illustrate +our commitment to pay-for-performance and good corporate governance. A summary of the more significant of these features is set forth below: +• Compensation is predominantly performance-based. +• Balanced mix +of cash/equity, fixed/variable, short-term/long-term compensation components. +• Threshold financial performance objectives for annual bonus pool funding meet or +exceed fiscal performance for the prior fiscal year. +• Equity awards provide long-term incentive with three to four year +vesting. +• Total compensation targeted at 50th percentile of peer +group +• Use +of peer company benchmarking and tally sheets +• Compensation recoupment policy. +• No hedging or +pledge of our Common Stock. +• Robust stockholder outreach on compensation/governance matters. +Vote Required; Board Recommendation +If a quorum is present, the affirmative vote of a majority of shares present, in person or by Proxy and entitled to vote at the +Annual Meeting, is required to approve, on an advisory (non-binding) basis, the compensation paid to NEOs. Shares voted in person or represented by Proxy which are not voted for approval of our executive compensation (by voting no or abstaining) +will have the effect of voting against this proposal. Broker non-votes will not count toward the determination of whether this proposal is approved and will have no impact on the vote. In the absence of instructions to the contrary, shares of Common +Stock represented by properly executed Proxies will be voted for approval of our executive compensation, as disclosed in this Proxy Statement. Because this stockholder vote is advisory, it will not be binding on the Company or the Board of +Directors. However, the Compensation Committee and Board will take into account the outcome of the vote when considering future executive compensation programs and arrangements. +70 +Table of Contents +Based on the foregoing, the Board is requesting that stockholders vote on the +following resolution: +RESOLVED , that the compensation paid to the Company’s named executive officers, as +disclosed in the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED. +Your Board +recommends that the stockholders vote FOR the approval of our executive compensation as described in the preceding resolution. +Annual Report +Our Annual Report to Stockholders for the year ended December 31, 2014 accompanies +this Proxy Statement. Following receipt of a written request, we will provide, without charge, a copy of our Annual Report on Form 10-K for the year ended December 31, 2014, as filed with the SEC (including a list briefly describing the +exhibits thereto), to any record holder or beneficial owner of our Common Stock on March 19, 2015, the record date for the Annual Meeting, or to any person who subsequently becomes such a record holder or beneficial owner. Requests should be +directed to the attention of the Corporate Secretary of the Company at our address set forth in the Notice of Annual Meeting of Stockholders immediately preceding this Proxy Statement. +Deadline For Stockholder +Proposals +You may submit proposals for inclusion in the proxy materials for the Company’s 2016 +Annual Meeting of Stockholders. Any such proposals must meet the stockholder eligibility and other requirements imposed by rules issued by the SEC and must be received by the Company at 220 East First Street, Bethlehem, Pennsylvania 18015, +Attention: Corporate Secretary, in accordance with Rule 14a-8 promulgated under the Exchange Act, not later than December 13, 2015. +In addition, our Bylaws provide that a stockholder proposal must meet certain predetermined requirements in order to be +considered at the Annual Meeting. These requirements are separate from, and in addition to, the requirements discussed above to have the stockholder proposal included in the proxy materials pursuant to the SEC’s rules and regulations. In order +to be considered, a stockholder’s proposal must be made in writing to the Company’s Secretary and must be delivered to or received at our principal executive offices not less than ninety (90) days nor more than one hundred twenty +(120) days prior to the meeting. However, if less than one hundred (100) days’ notice or prior public disclosure of the date of the meeting is given or made to stockholders, notice by the stockholder to be timely must be so received +no later than the close of business on the tenth (10 th ) day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made, whichever first +occurs. The notice to the Secretary must set forth, with respect to each matter the stockholder proposes to bring before the meeting, a brief description of the matter and the reasons for considering that matter at the Annual Meeting. The notice +must also include, as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf notice of the proposed business is made: (i) the name and address of the stockholder and such beneficial owner; (ii) any material +interest of such stockholder and such beneficial holder in such business; (iii) the class and number of shares of capital stock of the Company which are held of record or beneficially owned by the stockholder and such beneficial owner and any +other direct or indirect pecuniary or economic interest in any capital stock of the Company of such stockholder and such beneficial owner, including without limitation, any derivative instrument, swap, option, warrant, short interest, hedge, profit +sharing arrangement or borrowed or loaned shares; (iv) a representation that such stockholder intends to appear +71 +Table of Contents +in person or by proxy at the meeting to propose the business described in its notice; and (v) any other information relating to such business matter that would be required to be disclosed in +a proxy statement or other filings required to be made in connection with solicitations of proxies pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder. To the extent the Board of Directors or the SEC, +or a court of competent jurisdiction, deems these Bylaw provisions to be inconsistent with the right of stockholders to request inclusion of a proposal in the Company’s proxy materials pursuant to Rule 14a-8 promulgated under the Exchange Act, +such rule shall prevail. +BY ORDER OF THE BOARD OF DIRECTORS +Jack E. Jerrett +Secretary +April 1, 2015 +72 +Table of Contents +220 EAST FIRST +STREET +BETHLEHEM, PA 18015 +VOTE BY INTERNET +Before The Meeting - Go to www.proxyvote.com +Use the Internet to transmit your voting +instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the meeting date. Have your proxy card in hand when you access the website and follow the instructions to obtain your records and to create an +electronic voting instruction form. +During The Meeting - Go to +www.virtualshareholdermeeting.com/OSUR2015 +You may +attend the Meeting via the Internet and vote during the Meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions. +VOTE BY PHONE - 1-800-690-6903 +Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the meeting date. Have your proxy card +in hand when you call and then follow the instructions. +VOTE BY MAIL +Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 +Mercedes Way, Edgewood, NY 11717. +TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: +M84661-P62457 +KEEP THIS PORTION FOR YOUR RECORDS +— — — — — — — — — — — — +— — — — — — — — — — — — — — — — — — — — +— — — — — — — — — — — — — — — — — — — — +— — — — — — — — — — — +DETACH AND RETURN THIS PORTION ONLY +THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. +ORASURE TECHNOLOGIES, INC. +The Board of Directors recommends you vote FOR each of the following nominees: +For +All +¨ +Withhold +All +¨ +For All +Except +¨ +To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line +below. +1. +ELECTION OF DIRECTORS +Class III (Term Expiring 2018) +Nominees: +01) Michael Celano +02) Douglas A. Michels +03) Charles W. Patrick +The Board of Directors recommends you vote FOR items 2 and 3. +For +Against +Abstain +2. +Ratification of Appointment of KPMG LLP as the +Independent Registered Public Accounting Firm for Fiscal Year 2015. +¨ +¨ +¨ +3. +Advisory (Non-Binding) Vote to Approve Executive +Compensation. +¨ +¨ +¨ +Mark Here for Address Changes or Comments +SEE REVERSE +¨ +NOTE: Please sign as name appears hereon. Joint +owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. +Signature [PLEASE SIGN WITHIN BOX] +Date +Signature (Joint Owners) +Date +Table of Contents +ADMISSION TICKET +ORASURE TECHNOLOGIES, INC. +Annual Meeting of +Stockholders +Monday, May 11, 2015 +10:00 a.m. (Eastern) +ArtsQuest Center at +SteelStacks +101 Founders Way, Bethlehem, Pennsylvania 18015 +Important notice regarding the Internet availability of proxy materials for the +Annual Meeting of Stockholders. +The Notice and +Proxy Statement and 2014 Annual Report to Stockholders +are available at www.proxyvote.com. +— — — — — — — — — — — — — — +— — — — — — — — — — — — — — — — — — — — +— — — — — — — — — — — — — — — — — — — — +— — — — — — — — +M84662-P62457 +PROXY +2015 Annual Meeting of Stockholders +PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS +The undersigned hereby appoints +Jack E. Jerrett and Mark L. Kuna, and each of them, proxies with full power of substitution, to vote all of the shares which the undersigned is entitled to vote at the 2015 Annual Meeting of Stockholders of OraSure Technologies, Inc. (the +“Company”), to be held at the ArtsQuest Center at SteelStacks, 101 Founders Way, Bethlehem, Pennsylvania 18015 on Monday, May 11, 2015, at 10:00 a.m. (local time), and at any adjournment(s) or postponement(s) thereof, with all the +powers undersigned would possess if personally present, with respect to the matters listed on the reverse side. +The shares represented by this Proxy, if properly executed, will be voted as specified on the reverse side or, +if no specification is made, will be voted (i) FOR the election of the nominees listed on the reverse side as directors, (ii) FOR the ratification of the appointment of KPMG LLP as the Company’s independent registered public +accounting firm for fiscal year 2015 and (iii) FOR the advisory (non-binding) vote to approve executive compensation of the Company’s named executive officers. If any other business properly comes before the meeting, the proxies named +above will have discretionary authority to vote thereon in accordance with their best judgment. +PLEASE MARK, DATE, SIGN AND RETURN THE PROXY CARD PROMPTLY. +Address Changes/Comments: +(If you noted +any Address Changes/Comments above, please mark corresponding box on the reverse side.) +(Continued and to be marked, dated and signed, on the other side) \ No newline at end of file diff --git a/raw/proxies/0001116463/0001193125-15-116188/proxy_rpt.txt b/raw/proxies/0001116463/0001193125-15-116188/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..c25169f412df82a13c9fd0a2b26151ca721f8cbf --- /dev/null +++ b/raw/proxies/0001116463/0001193125-15-116188/proxy_rpt.txt @@ -0,0 +1,7 @@ +Transactions With Related Persons +Since January 1, 2014, there have been no transactions +with related persons which would require disclosure in this Proxy Statement. The Audit Committee is required to review and approve in advance all transactions with related persons involving the Company. The Audit Committee may approve a related +party transaction if the transaction is on terms comparable to those that could be obtained in arms’ length dealings with an unrelated third party. The Audit Committee also reviews any public disclosures of a related party transaction contained +in our SEC filings. These responsibilities are described in the Audit Committee’s charter, a copy of which is available on our website at www.orasure.com . +Information regarding employment and severance agreements between our executive officers and the Company is set forth in the +Section entitled, “Employment Agreements and Potential Payments Upon Termination or Change of Control,” in this Proxy Statement. \ No newline at end of file diff --git a/raw/proxies/0001116463/0001193125-16-529352/proxy.txt b/raw/proxies/0001116463/0001193125-16-529352/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..22bbe5a5222bc9a49207c0325edaaef2cb6ddc95 --- /dev/null +++ b/raw/proxies/0001116463/0001193125-16-529352/proxy.txt @@ -0,0 +1,5329 @@ +DEF 14A +1 +d135790ddef14a.htm +DEF 14A +DEF 14A +Table of Contents +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Proxy Statement Pursuant to Section 14(a) +of the Securities Exchange Act of 1934 +(Amendment No. +) +Filed by the Registrant x Filed by a Party other than the +Registrant ¨ +Check the appropriate box: +¨ +Preliminary Proxy Statement +¨ +Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +x +Definitive Proxy Statement +¨ +Definitive Additional Materials +¨ +Soliciting Material Pursuant to §240.14a-12 +OraSure Technologies, Inc. +(Name of Registrant as +Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +x +No fee required. +¨ +Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. +(1) +Title of each class of securities to which transaction applies: +(2) +Aggregate number of securities to which transaction applies: +(3) +Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and +state how it was determined): +(4) +Proposed maximum aggregate value of transaction: +(5) +Total fee paid: +¨ +Fee paid previously with preliminary materials. +¨ +Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. +Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. +(1) +Amount Previously Paid: +(2) +Form, Schedule or Registration Statement No.: +(3) +Filing Party: +(4) +Date Filed: +Table of Contents +Notice of 2016 +Annual Meeting of Stockholders +and Proxy Statement +Tuesday, May 17, 2016 +10:00 a.m. (Eastern Time) +Table of Contents +April 4, 2016 +Dear Fellow Stockholders: +You +are cordially invited to attend the 2016 Annual Meeting of Stockholders to be held on Tuesday, May 17, 2016 at 10:00 a.m. Eastern Time. We are pleased to announce that this year’s annual meeting will be a completely virtual meeting +of stockholders, which will be conducted as a live webcast. You will be able to attend the annual meeting of stockholders online, vote your shares electronically if you wish, and submit your questions during the meeting by visiting +www.virtualshareholdermeeting.com/OSUR2016 . This virtual meeting format will provide improved communication and cost savings for our stockholders and the Company. +Pursuant to the Securities and Exchange Commission rule allowing companies to furnish proxy materials to their stockholders over the internet, +a Notice of Internet Availability of Proxy Materials (the “Notice”) was sent to stockholders on or about April 4, 2016. The Notice contains information on how to access copies of the proxy materials and vote your shares. +At the meeting, you will be asked to (i) elect three Class I Directors to serve on the Board of Directors until the Annual Meeting of +Stockholders in 2019; (ii) ratify the appointment of KPMG LLP as our independent registered public accounting firm for the 2016 fiscal year; (iii) approve, by an advisory (non-binding) vote, the compensation of the Company’s named +executive officers as disclosed in the proxy materials; and (iv) transact such other business as may properly come before the meeting or any adjournment(s) or postponement(s) thereof. +The Board of Directors has approved the nominees for Director and recommends that you vote FOR their election to the Board. In +addition, the Board of Directors recommends that you vote FOR the ratification of KPMG LLP’s appointment and FOR the Company’s executive compensation. +Your vote is very important, regardless of the number of shares you own. Whether or not you plan to attend the Annual Meeting online, we urge +you to submit your vote as soon as possible. You will have the option to vote by telephone, via the internet, or by completing, signing, dating and returning a paper Proxy Card. Additional details on these options can be found in the Notice sent to +you and in the other proxy materials. You may, of course, attend the Annual Meeting online and vote your shares during the meeting regardless of whether you have previously voted by phone, the internet or mail. +Thank you for your cooperation, your ongoing support of, and continued interest in OraSure Technologies, Inc. +Sincerely yours, +Douglas A. Michels +President and Chief Executive Officer +Table of Contents +NOTICE OF 2016 ANNUAL MEETING OF STOCKHOLDERS +OF ORASURE TECHNOLOGIES, INC. +To Our Stockholders: +The 2016 Annual Meeting of Stockholders of OraSure Technologies, Inc. will be held virtually and for the following purpose: +Tuesday, May 17, 2016 at 10:00 am Eastern Time +Online by visiting +www.virtualshareholdermeeting.com/OSUR2016 +1. To elect three (3) Class I Directors, each to serve for a term expiring at the +Company’s Annual Meeting of Stockholders in 2019; +2. To ratify the appointment of KPMG LLP as our independent registered public accounting +firm for the year ending December 31, 2016; +3. To approve, by an advisory (non-binding) vote, the compensation of the Company’s +named executive officers as disclosed in the Proxy Statement accompaying this Notice; and +4. To consider such other business as may properly come before the meeting, or any +adjourment(s) or postponement(s) hereof. +Only holders of shares of our Common Stock of +record at the close of business on March 24, 2016 will be entitled to vote at the Annual Meeting of Stockholders and any adjournment(s) or postponement(s) thereof. Additional information is included in the Proxy Statement accompanying this +Notice. +By order of the Board of Directors, +Jack E. Jerrett +Secretary +April 4, 2016 +Bethlehem, Pennsylvania +YOUR VOTE IS IMPORTANT . Whether or not you +plan to participate in the Annual Meeting online, you are urged to vote your shares as promptly as possible by telephone, via the internet, or by completing, signing, dating and returning a paper Proxy Card, as described in the attached Proxy +Statement. Voting by phone, the internet or mail does not deprive you of your right to attend the Meeting and vote your shares at that time. +Table of Contents +TABLE OF CONTENTS +PROXY STATEMENT +Proxy Statement Summary +1 +2016 Annual Meeting Information +1 +2015 Business Highlights +1 +Stockholder Voting Matters and Board Voting Recommendations +2 +Corporate Governance Highlights +2 +Proposals for Stockholder Consideration +2 +Compensation Components +4 +Compensation Highlights +4 +Significant Actions in Response to SOP Votes +5 +Additional Key Features of Our Executive Compensation +Program +5 +Questions and Answers About the 2016 Annual Meeting and Voting +6 +Why Did I Receive These Proxy Materials? +6 +What Is a Proxy? +6 +What Is the Record Date and What Does It Mean? +6 +What Is the Difference Between a Stockholder of Record and a Stockholder Who Holds Stock in Street Name? +7 +How Can I Vote My Shares for the Annual Meeting? +7 +How Will My Shares Be Voted If I Send In a Proxy? +7 +Will My Shares Be Voted If I Do Not Provide My Proxy? +8 +How Many Votes Must Be Present To Hold the Annual Meeting? +8 +How Can I Revoke a Proxy? +8 +What Items Will Be Voted On at the Annual Meeting? +9 +Who Will Pay the Cost of this Proxy Solicitation? +9 +How Can I Participate in the Annual Meeting? +9 +Are Votes Confidential? +9 +Who Counts the Votes? +10 +May Stockholders Ask Questions at the Annual Meeting? +10 +Stock Ownership of Certain Beneficial Owners and Management +11 +Corporate Governance +12 +Board Responsibilities, Operation and Composition +12 +Governance Guidelines and Code of Conduct +13 +Independent Chairman +13 +Director Independence +13 +Oversight of Risk Management +14 +Annual Meeting Attendance and Stockholder Communications +14 +Committees of the Board +15 +Nomination of Directors +18 +Director Qualifications +18 +Insider Trading +19 +Prohibition Against Short Sales, Hedging and Pledging +19 +Stock Ownership and Retention Guidelines +19 +Audit Committee Matters +20 +Report of the Audit Committee for Year Ended December 31, 2015 +20 +Audit Fees; Audit-Related Fees; Tax Fees; All Other Fees +21 +Pre-Approval Procedures +21 +Compensation Committee Matters +22 +Compensation Process and Procedures +22 +Annual Performance Evaluations +22 +Role of the Compensation Committee +22 +Role of the CEO +23 +Role of the Compensation Consultant +23 +Tally Sheets +23 +Compensation Committee Interlocks and Insider Participation +24 +Compensation Committee Report +24 +Executive Officers +25 +Transactions With Related Persons +26 +Section 16(a) Beneficial Ownership Reporting Compliance +27 +Compensation Discussion Analysis – Table of Contents +28 +Compensation Tables – Table of Contents +28 +Table of Contents +Compensation Discussion and Analysis +29 +Executive Summary +29 +Compensation Philosophy +42 +Benchmarking +42 +Pay Mix +44 +2015 Executive Compensation Components +45 +Other Compensation +56 +Compensation Tables +58 +Employment Agreements and Potential Payments Upon Termination or Change of Control +66 +Equity Compensation Plan Information +69 +Director Compensation +69 +Annual Fees +69 +Initial Equity Awards +70 +Annual Equity Awards +70 +Equity Award Terms +70 +Deferred Compensation +71 +Director Compensation During 2015 +71 +Proposals Requiring Your Vote +72 +Proposal No. 1 - Election of Directors +72 +Background +72 +Vote Required; Board Recommendation +78 +Proposal No. 2 - Ratification of Appointment of Independent Registered Public Accounting +Firm +78 +Background +78 +Vote Required; Board Recommendation +78 +Proposal No. 3 - Advisory (Non-Binding) Vote To Approve Executive Compensation +78 +Background +78 +Recent Compensation Changes +79 +Other Compensation Program Features +80 +Vote Required; Board Recommendation +80 +Annual Report +80 +Deadline for +Stockholder Proposals +81 +Table of Contents +PROXY +STATEMENT +We are providing these Proxy Materials to stockholders of OraSure Technologies, Inc., a +Delaware corporation (as used herein, “we,” “us,” “our” or the “Company”), in connection with the Company’s solicitation of proxies (each, a “Proxy”) for use at the Annual Meeting of +Stockholders to be held on May 17, 2016, at 10:00 a.m. Eastern Time and at any adjournment(s) or postponement(s) thereof (the “Annual Meeting”). +As a stockholder, you are invited to attend the Annual Meeting and are requested to vote on the matters described in this Proxy +Statement. We are pleased to offer a completely virtual Annual Meeting, which will be conducted as a live webcast that you can access online by going to www.virtualshareholdermeeting.com/OSUR2016 . The webcast will not include a presentation +by management. A question and answer session will be provided at the Annual Meeting only for questions that are germane to the matters being discussed and voted on at the meeting. +PROXY STATEMENT SUMMARY +This summary highlights information contained elsewhere in this Proxy +Statement. This summary does not contain all of the information that you should consider. You should read the entire Proxy Statement carefully before voting . +2016 ANNUAL MEETING INFORMATION +• Date and Time: +Tuesday, May 17, 2016 10:00 a.m. (ET) +• Location: +Online by visiting www.virtualshareholdermeeting.com/OSUR2016 +• Record Date: +March 24, 2016 +2015 BUSINESS HIGHLIGHTS +• +Record consolidated net revenues of $119.7 million - 12% growth over 2014. +• +Consolidated net income of $8.2 million ($0.14 per share) - a $12.8 million improvement over 2014. +• +Four consecutive quarters of profitable operations. +• +$15.8 million in cash generated from operations - an $8.3 million improvement over 2014. +• +Over $101 million in cash and investments at year-end. +• +Gross margin of 67%, compared to 63% in 2014. +• +Molecular collection systems revenues grew 26% over 2014. +• +HCV product sales increased 57% over 2014 and grew sequentially each quarter during 2015. +• +Total HCV-related revenues (including AbbVie payments) were $24.9 million - a 68% improvement over 2014. +• +Generated $65.8 million in revenues from newest business lines (i.e. DNA Genotek, HCV-related, HIV-OTC and Ebola). +• +Obtained FDA Emergency Use Authorization for a new Ebola rapid antigen test. +• +Secured up to $10.4 million in federal government funding for clinical and regulatory activities related to the new Ebola test. +• +Launched microbiome product and service offerings. +• +Secured CE mark approval for new OMNIgene ® • Sputum (tuberculosis) and OMNIgene ® • Gut (microbiome) products. +We achieved record revenues and full-year profitability in 2015, with strong contributions +from our molecular collections systems and OraQuick ® HCV businesses. Several important new initiatives were launched in 2015, including our +OraQuick ® Ebola rapid antigen test and our new microbiome product and service offerings. +1 +Table of Contents +STOCKHOLDER VOTING MATTERS AND BOARD VOTING RECOMMENDATIONS +Proposals +Board +Recommendation +Page Reference for +More Detail +1) Election of Directors +FOR +72 +2) Ratification of Appointment of Independent +Registered Public Accounting Firm +FOR +78 +3) Advisory +(Non-Binding) Vote to Approve Executive Compensation +FOR +78 +CORPORATE GOVERNANCE HIGHLIGHTS +• Comprehensive Code of Business Conduct and Ethics applies to Board and +Management. +• All Directors attended 2015 Annual Meeting of Stockholders. +• Independent Chairman of the Board of Directors (the +“Board”). +• Strong stock ownership and retention guidelines for non-employee Directors +and executive officers. +• Seven (7) of nine (9) Board members (“Directors”) are independent as defined by the +Securities and Exchange Commission (“SEC”) and the NASDAQ Stock Market (“NASDAQ”). +• Policy prohibiting short sales, hedging and pledging of our Common +Stock. +• Corporate Governance Principles in place to address Director independence, meetings and other important +governance matters. +• Compensation recoupment or “clawback” policy. +• All committees of the Board consist solely of independent Directors. +• Strong “pay-for-performance” compensation +philosophy. +• Regular executive sessions of independent Directors. +• Insider trading policy to prevent improper trading in our stock by +non-employee Directors and employees. +• Regular stockholder engagement through meetings, conferences and other outreach. +• Oversight of risk management by Directors. +• Board and Committee meeting attendance of more than 75% of meetings during 2015. +PROPOSALS FOR STOCKHOLDER CONSIDERATION +Proposal No. 1 – +Election of Directors +The following table provides summary information about each of our nominees for Class I +Directors, whose new terms would expire at the 2019 Annual Meeting of Stockholders: +Committee +Memberships +Other +Current +Name +Age +Director +Since +Principal Occupation +Independent 1 +AC +CC +NC +GC +Public +Boards +Eamonn P. Hobbs +57 +2016 +Former President, Chief Executive Officer and Director of Antares Pharma, Inc. +Yes +— +Stephen S. Tang, Ph.D. +55 +2011 +President and Chief Executive Officer of The University Science Center +Yes +— +Douglas G. Watson +71 +2002 +Chief Executive Officer of Pittencrieff Glen Associates +Yes +— +AC = Audit Committee +CC = Compensation Committee +NCGC = Nominating & Corporate Governance Committee += Member += Chair +1 As defined by the SEC and NASDAQ. +2 +Table of Contents +Proposal No. 2 – Ratification of Appointment of Independent Registered +Public Accounting Firm +Our Board and its Audit Committee have selected KPMG LLP (“KPMG”) to be our +independent registered public accounting firm for the 2016 fiscal year. The Board believes KPMG is well qualified to serve in this capacity and is recommending that the engagement of KPMG be ratified by our stockholders. +Proposal No. 3 – Advisory (Non-Binding) Vote to Approve Executive Compensation +Our business is diverse and we operate in extremely competitive markets around the world. +It takes commitment from all of the talented people throughout our Company, and especially our executive team, to manage the +many facets of our business. We have designed our compensation programs to enable us to attract, retain and reward our executives for achieving our objectives and delivering value to stockholders over the long-term. Therefore, we are asking our +stockholders to approve, by an advisory (non-binding) vote, the compensation of our named executive officers (“NEOs”). +Our compensation programs are designed to focus and reward our executives for balancing both short and long-term priorities. +To fulfill this mission, we have adopted a pay-for-performance philosophy that forms the foundation for executive compensation decisions made by our Board and the Compensation Committee of the Board (the “Compensation Committee”). In +addition, our compensation decisions are designed to align the interests of our executives with the interests of our stockholders and incorporate strong corporate governance principles. +The Compensation Discussion and Analysis portion of this Proxy Statement (the “CD&A”) contains a detailed +description of our executive compensation philosophy and program, the compensation decisions the Board and Compensation Committee have made under that program and the factors considered in making those decisions, focusing on the compensation of our +NEOs for the year ended December 31, 2015, who were: +Douglas A. Michels, President and Chief Executive Officer; +Ronald H. Spair, +Chief Financial Officer and Chief Operating Officer; +Anthony Zezzo, +II, Executive Vice President, Marketing and Sales; +Jack E. Jerrett, +Senior Vice President, General Counsel and Secretary; and +Mark L. Kuna, Senior Vice President, Finance, Controller and Assistant Secretary +At our 2015 Annual Meeting, 54% of the votes cast approved the compensation paid to our +NEO’s for the 2014 fiscal year, as disclosed in our 2015 Proxy Statement. This represented a 24% and a 16% improvement from the results of our 2014 and 2013 Annual Meetings, respectively, where we did not receive majority support from our +stockholders. The Board and our management take seriously the results of each “say-on-pay” (“SOP”) vote and the views of our stockholders regarding executive compensation. Accordingly, following each SOP vote over the past +several years we have instituted an outreach effort to contact our stockholders in order to obtain their views on the reasons for the vote and to solicit their input on other aspects of our compensation practices. As part of that effort, after the +2015 Annual Meeting we engaged with stockholders who, in the aggregate, beneficially owned approximately 22% of our outstanding Common Stock to understand their concerns. Based on that input and the advice of an independent compensation consultant +engaged by the Compensation Committee, we believe that several important changes we recently made to our executive compensation directly responded to the concerns of our stockholders. Most of these changes were implemented in 2015 and 2016 in +response to stockholder outreach in prior years. The CD&A provides additional detail regarding the results of our outreach effort, the input received from our stockholders and the important actions we have taken in response to that input. +3 +Table of Contents +Compensation Components +We believe that all components of our executive compensation program are strongly tied to performance of both the Company and +our executives and are aligned with the best interests of our stockholders. These components consist of the following: +Base Salary +Salaries are based on position relative to market and individual performance and contribution. +Annual Cash Incentive Bonus +Annual incentive cash bonuses reflect market-based +targets and are contingent upon (i) achievement of corporate financial objectives, which are used to determine overall bonus pool funding, and (ii) the executive’s individual performance against pre-determined objectives, which are used to +determine individual bonus payouts. +Long-term Incentive Plan (LTIP) +Long-term incentive equity compensation reflects market-based targets with the value of individual awards +contingent upon the executive’s individual performance against pre-determined objectives during the fiscal year prior to award. During 2015, over half of the value of equity awards to executives consisted of stock options, which provide no +value to executives unless our stock price increases after the date of grant. +Compensation Highlights +We believe that compensation awarded to executives for 2015 was closely aligned with our strong performance for the year. The +Company’s financial results for 2015 represented a substantial improvement over 2014 and largely met or exceeded our targets for the year. With record consolidated net revenues of $119.7 million (12% growth over 2014), we reported +consolidated net income of $8.2 million, or $0.14 per share. This was the first year of profitability since 2007. Our molecular collection systems business continued its strong performance in 2015 with revenues 26% higher than in 2014. Our HCV +business also grew substantially, with 2015 net product revenues increasing 57% over 2014. Significantly, we reported sequential quarterly growth in our HCV revenues for all four quarters in 2015. During the year, we also entered into a contract for +up to $10.8 million in funding from the Federal government for the manufacturing transfer and clinical testing related to our rapid Ebola test. We ended 2015 with over $101 million in cash on our balance sheet, which we can use for our future +growth. +The 2015 compensation for Mr. Michels, our President and Chief Executive Officer (“CEO”), and +Mr. Spair, our Chief Financial Officer and Chief Operating Officer (“CFO/COO”), increased consistent with our improved 2015 financial performance, reflecting our commitment to a pay for performance philosophy. +4 +Table of Contents +Significant Actions in Respect to SOP Votes +Based on advice from an independent compensation consultant and input from our stockholders, the Board and Compensation +Committee adopted several key changes to our compensation program in order to more closely align compensation with the performance of our executives. +Recent Compensation Changes +Discussed +on Page +Modified long-term incentive awards to include 50% performance-vested equity. The first equity awards using +this new structure occurred in February 2016, with the value of individual awards based on benchmarked peer data and each executive’s performance during 2015. +38 +Eliminated excise tax gross-up in all NEO employment agreements and changed modified “single trigger” +change-in-control severance to “double trigger” in our CEO’s employment agreement. +39 +Adopted increased stock ownership/retention requirements for executives. +39 +Limited the Board’s ability to make discretionary adjustments to annual incentive bonus pool funding under +the 2015 Management Incentive Plan to +/- 10%. This limit is also included in the 2016 Management Incentive Plan. Prior to 2015, the Board’s discretion in determining pool funding was not restricted. +40 +In addition, we recently extended our previously authorized stock repurchase program and in +late 2015 and early 2016 we purchased 1.2 million shares of our Common Stock at a cost of $7.6 million. This action was taken, in part, because of concerns expressed by our stockholders regarding the dilutive impact of the annual equity awards +made to management and non-employee Directors. This recent extension of our stock repurchase program does not mean we will necessarily make similar purchases in the future. See page 40 for a further discussion of this matter. +Additional Key Features of Our Executive Compensation Program +Other key features of our compensation program further illustrate our commitment to pay-for-performance, the strong alignment +of our executives’ interests with those of our stockholders and strong corporate governance. The more significant of these features are summarized below: +• Compensation is market driven and +performance-based. +• Use of peer company benchmarking and tally sheets. +• Balanced mix of cash/equity, fixed/variable, short-term/long-term compensation components. +• Compensation +recoupment policy. +• Threshold financial performance objectives for annual bonus pool funding are set at levels that meet or exceed actual financial +performance for the prior fiscal year. +• No hedging or +pledging of our Common Stock. +• Equity awards provide a long-term incentive with three to four year vesting. +• Regular stockholder +outreach on compensation/governance matters. +• Total compensation targeted at 50 th percentile of peer group. +5 +Table of Contents +QUESTIONS AND ANSWERS ABOUT THE 2016 +ANNUAL +MEETING AND VOTING +1. +WHY DID I RECEIVE THESE PROXY MATERIALS? +Our Board is furnishing Proxy Materials, including this Proxy Statement, a +Proxy Card and the Company’s Annual Report to Stockholders for the year ended December 31, 2015 (“2015 Annual Report”), to our stockholders in order to solicit proxies to be voted at the Annual Meeting (each, a +“Proxy”). Each stockholder can access these documents on the internet in accordance with the rules and regulations of the SEC. On or about April 4, 2016, we mailed a Notice of Internet Availability of Proxy Materials (the +“Notice”) to each stockholder at the holder’s address of record, indicating that this Proxy Statement is now available to our stockholders of record entitled to vote at the Annual Meeting. +SEC rules permit us to deliver only one copy of the Notice or a single set of Proxy Materials to multiple stockholders +sharing the same address. Upon written or oral request, we will deliver separate Notices and/or copies of our 2015 Annual Report and/or this Proxy Statement to any stockholder at a shared address to which a single copy of the Notice +was delivered. Stockholders may notify the Company of their requests by calling or writing us at OraSure Technologies, Inc., 220 East First Street, Bethlehem, Pennsylvania 18015, Attention: +Corporate Secretary; (610) 882-1820. +All stockholders and beneficial holders have the ability to access a copy of +our Proxy Materials on the internet at the website referred to in the Notice. Stockholders will not receive printed copies of the Proxy Materials unless they request those copies. The Notice also instructs stockholders as to how to submit a +Proxy through the internet. If you would like to receive a paper or e-mail copy of your Proxy Materials, you should follow the instructions for requesting such materials included in the Notice. We will pay the entire cost of preparing, assembling, +printing, mailing and distributing these Proxy Materials and soliciting votes. If you choose to access the Proxy Materials and/or vote over the internet, you are responsible for any internet access charges you may incur. +2. +WHAT IS A PROXY? +A Proxy is your legal designation of another person to vote the stock you own. +That other person is called a “proxy.” If you designate someone as your proxy in a written document, that document also is called a Proxy or a Proxy Card. +Jack E. Jerrett and Mark L. Kuna, each of whom are officers of the Company, +have been designated as proxies by the Board of Directors for the Annual Meeting. +3. +WHAT IS THE RECORD DATE AND WHAT DOES IT MEAN? +The record date for the Annual Meeting is March 24, 2016 (the +“record date”). The record date is established by the Board of Directors as required by Delaware law. Only stockholders of record at the close of business on the record date are entitled to: +(a) +receive notice of the Annual Meeting; and +(b) +vote at the meeting and any adjournment(s) or postponement(s) of the meeting. +Each stockholder of record on the record date is entitled to one vote for each share of Common Stock held. On the record +date, there were 56,404,634 shares +of our Common Stock outstanding and entitled to vote at the Annual Meeting. +A list of stockholders will be open for examination by any stockholder for any purpose germane to the 2016 Annual Meeting +for a period of 10 days prior to the meeting at our principal executive offices at 220 East First Street, Bethlehem, PA 18015, and electronically during the 2016 Annual Meeting at www.virtualshareholdermeeting.com/OSUR2016 when you enter the +control number provided to you. +6 +Table of Contents +4. +WHAT IS THE DIFFERENCE BETWEEN A STOCKHOLDER OF RECORD AND A STOCKHOLDER WHO HOLDS STOCK IN STREET NAME? +If your shares of stock are registered in your name on the books and records +of our transfer agent, Computershare, Inc., you are a stockholder of record. +If your shares of stock are held for you +in the name of your broker, bank or other nominee, your shares are held in street name. The answer to Question 7 describes brokers’ discretionary voting authority and when your broker, bank or other +nominee is permitted to vote your shares of stock without instructions from you. +It is important that you vote your shares if you are a stockholder of record and, if you hold shares in street name, +that you provide appropriate voting instructions to your broker, bank or other nominee as discussed in the answer to Question 7. +5. +HOW CAN I VOTE MY SHARES FOR THE ANNUAL MEETING? +All stockholders have a choice of voting via the internet, over the telephone +or by completing and mailing a paper Proxy Card, as described below. +Voting via the Internet or by +Telephone . Stockholders of record desiring to vote online via the internet or by telephone prior to the Annual Meeting, should go to www.proxyvote.com or call the toll free number indicated on the Proxy Card +or Notice. You may vote via the internet or by telephone provided you do so by 11:59 p.m. Eastern Time (8:59 p.m. Pacific Time) on May 17, 2016. Stockholders who attend the Annual Meeting via the internet may vote their shares at that time up +to and during the Annual Meeting by following the instructions at www.virtualshareholdermeeting.com/OSUR2016 . +Street name holders may vote via the internet or by telephone if their brokers, banks or other nominees make those methods +available. If that is the case, each broker, bank or nominee will include instructions with the Notice or Proxy Statement. +The telephone and internet voting procedures, including the use of control numbers, are designed to authenticate your +identity, to allow you to give your +voting instructions and to confirm that your instructions have been recorded properly. +If you vote via the internet, you should understand that you will be responsible for any costs associated with this method +of voting, such as usage charges from internet access providers and telephone companies. +Voting by +Mail . If you desire to vote prior to the Annual Meeting by using a paper Proxy Card instead of by telephone or via the internet, you will need to either print a copy of the Proxy Card from the website indicated in your Notice or +follow the instructions in your Notice to request that a paper copy be sent to you. You will then need to complete, sign, date and return the Proxy Card, as described on the Proxy Card. Street name holders should complete and return the voting card +provided by their broker, bank or nominee. +Voting at the Annual Meeting . All +stockholders of record may vote online during the Annual Meeting. Submitting a Proxy via the internet, over the telephone or by mail will not affect your right to withdraw your Proxy and vote during the Annual Meeting. +6. +HOW WILL MY SHARES BE VOTED IF I SEND IN A PROXY? +If you are represented by a properly executed Proxy, whether delivered by +phone, the internet or mail, your shares will be voted in accordance with your instructions. +If you do not provide instructions with your Proxy, your shares will be voted +according to the recommendations of our Board as stated on the Proxy. +7 +Table of Contents +7. +WILL MY SHARES BE VOTED IF I DO NOT PROVIDE MY PROXY? +Stockholders of Record: If you are a stockholder of record, your +shares will not be voted if you do not provide your Proxy, unless you vote online during the Annual Meeting. It is, therefore, important that you vote your shares. +Street Name Holders : If your shares are held in street name and you do not provide your +signed and dated voting instruction form to your bank, broker or other nominee, your shares may be voted by your broker, bank or other nominee but only under certain circumstances. Specifically, under NASDAQ rules, shares held in the +name of your broker, bank or other nominee may be voted by your broker, bank or other nominee on certain “routine” matters if you do not provide voting instructions. +At the upcoming Annual Meeting, only the ratification of the selection of KPMG +LLP as the Company’s independent registered public accounting firm is considered a “routine” matter for which brokers, banks or other nominees may vote uninstructed shares. The other proposals to be voted on at our Annual Meeting +(specifically, the election of Director nominees and the advisory vote to approve the compensation of the Company’s NEO’s) are not considered “routine” under NASDAQ rules, so the broker, bank or other nominee cannot vote +your shares on any of these proposals unless you provide to the broker, bank or other nominee voting instructions for each of these matters. If you do not provide voting instructions on these matters, your shares will not be voted on the +matter, which is referred to as a “broker non-vote.” It is, therefore, important that you vote your shares. +8. +HOW MANY VOTES MUST BE PRESENT TO HOLD THE ANNUAL MEETING? +Your shares are counted as present at the meeting if you attend the meeting +and vote online or if you properly return a Proxy by internet, telephone or mail. In order for us to conduct our Annual Meeting, a majority of our outstanding shares of Common Stock as of March 24, 2016, must be +present online or by Proxy at the meeting. This is referred to as a quorum. Broker non-votes, votes withheld and abstentions are included in determining whether there are a sufficient number of +shares present to constitute a quorum. +9. +HOW CAN I REVOKE A PROXY? +You can revoke a Proxy before the completion of voting at the Annual Meeting +by: +(a) +Giving written notice to the Corporate Secretary of the Company to revoke your proxy; +(b) +Delivering a later-dated Proxy that indicates the change in your vote; or +(c) +Logging on to www.proxyvote.com in the same manner you would to submit your proxy electronically or calling the telephone number indicated +in your Notice, and in each case, following the instructions to revoke or change your vote; or +(d) +Attending the Annual Meeting online and voting, which will automatically cancel any Proxy previously given. Attendance alone will not revoke any +Proxy that you have given previously. +If you choose any of the first three methods, you must take the +described action no later than the beginning of the 2016 Annual Meeting. Once voting on a particular matter is completed at the Annual Meeting, you will not be able to revoke your Proxy or change your vote. If your shares are held in street name by +a broker or other nominee, you must contact that institution to change your vote. +8 +Table of Contents +10. +WHAT ITEMS WILL BE VOTED ON AT THE ANNUAL MEETING? +At the Annual Meeting, action will be taken on the matters set forth in the +accompanying Notice and described in this Proxy Statement. The Board knows of no other matters to be presented for action at the Annual Meeting. +If any other matters do properly come before the Annual Meeting, the persons +named in the Proxy Card will have discretionary authority to vote on those matters in accordance with their best judgment. +11. +WHO WILL PAY THE COST OF THIS PROXY SOLICITATION? +Solicitation of Proxies is made on behalf of the Board. The cost of soliciting +Proxies will be borne by the Company. In addition to solicitations by e-proxy and/or by mail, certain of our Directors, officers and regular employees may solicit Proxies personally or by telephone or other means without additional compensation. +We have also engaged Morrow & Co., LLC, 470 West Ave., Stamford, CT 06902, to provide proxy solicitation +services at an estimated fee of $7,500 plus expenses. +Arrangements will be made with brokerage firms and other custodians, nominees +and fiduciaries to forward solicitation materials to the beneficial owners of stock held of record by such persons, and we will, upon request, reimburse them for their reasonable expenses in so doing. +12. +HOW CAN I PARTICIPATE IN THE ANNUAL MEETING? +We are very pleased that this year’s Annual Meeting will be a completely +virtual meeting of stockholders, which will be conducted via live webcast. You are entitled to participate in the Annual Meeting only if you were a stockholder of the Company as of the close of business on March 24, 2016, the record date for +the meeting, or if you hold a valid Proxy for the Annual Meeting. +You will be able to participate in the Annual Meeting +online and submit your questions during the meeting by visiting www.virtualshareholdermeeting.com/OSUR2016 . To participate in the Annual Meeting, you will need the control number that is included on your +Notice, on our proxy card or on the instructions that accompanied your proxy materials. The Annual Meeting will begin promptly at 10:00 a.m. Eastern Time, and you should allow ample time to +complete the online check-in procedures. +We are excited to embrace the latest technology to provide expanded access, +improved communication and cost savings for our stockholders and the Company. Hosting a virtual meeting will enable increased stockholder attendance and participation since stockholders can participate from any location around the world. +13. +ARE VOTES CONFIDENTIAL? +We will continue our long-standing practice of holding the votes of each +stockholder in confidence from Directors, officers and employees, except: (a) as necessary to meet applicable legal requirements and to assert or defend claims for or against the Company; (b) in the case of a contested proxy +solicitation; (c) if a stockholder makes a written comment on the Proxy Card or otherwise communicates his or her vote to the Company; or (d) as needed to allow the independent +inspectors of election to certify the results of the vote. +9 +Table of Contents +14. +WHO COUNTS THE VOTES? +We will continue, as we have for many years, to retain an independent +inspector of election to receive +and tabulate the Proxies and certify the results. These activities will be handled electronically. +15. +MAY STOCKHOLDERS ASK QUESTIONS AT THE ANNUAL MEETING? +Yes. The Chairman will answer stockholders’ questions during the question +and answer period of the meeting. Stockholders must confine their questions to matters that relate directly to the +business of the meeting. The Chairman will determine which questions are appropriate to answer during the meeting. +10 +Table of Contents +Stock Ownership of Certain Beneficial Owners and Management +The following table sets forth +information, as of March 24, 2016, regarding the beneficial ownership of the Company’s Common Stock by (a) each person who is known by us to be the beneficial owner of more than five percent of the Common Stock outstanding; +(b) each Director and nominee for election as Director; (c) each of our executive officers named in the Summary Compensation Table in this Proxy Statement; and (d) all of our Directors and executive officers as a group. Unless +otherwise indicated, the address of each person identified below is c/o OraSure Technologies, Inc., 220 East First Street, Bethlehem, Pennsylvania 18015. +Pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), shares of Common +Stock which a person has a right to acquire pursuant to the exercise of stock options held by that person that are exercisable within 60 days of March 24, 2016 are deemed to be outstanding for the purpose of computing the ownership percentage +of that person, but are not deemed outstanding for computing the ownership percentage of any other person. +Name and Address +of +Beneficial Owner +Amount and Nature of +Beneficial Ownership 1,2 +Percent +of Class +BlackRock, Inc. 3 +40 East 52 nd Street +New York, NY 10022 +5,235,675 +9.3% +Wells +Fargo & Company 4 +420 Montgomery Street +San Francisco, CA 94104 +3,670,243 +6.5% +Douglas A. Michels +1,815,166 +3.2% +Ronald H. Spair 5 +882,864 +1.6% +Anthony Zezzo II +369,688 +* +Roger L. Pringle 6 +304,042 +* +Jack E. Jerrett +276,306 +* +Mark L. Kuna +245,411 +* +Douglas G. Watson +229,329 +* +Michael Celano +155,556 +* +Charles W. Patrick 5 +134,472 +* +Ronny B. Lancaster +86,888 +* +Stephen S. Tang, Ph.D. +83,186 +* +Eamonn P. Hobbs +3,333 +* +All Directors and executive officers as a +group (11 people) +4,586,241 +7.8% +* +Less than 1% +1 +Subject to community property laws where applicable, beneficial ownership consists of sole voting and investment power except as otherwise +indicated. +2 +Includes shares subject to options exercisable within 60 days of March 24, 2016, as follows: Mr. Michels, 1,033,268 shares; +Mr. Spair, 612,050 shares; Mr. Zezzo, 237,889 shares; Mr. Pringle, 155,552 shares; Mr. Jerrett, 195,930 shares; Mr. Kuna, 172,446 shares; Mr. Watson, 50,000 shares; Mr. Celano, 70,000 shares; Mr. Patrick, +30,000 shares; Mr. Lancaster, 30,000 shares; Dr. Tang, 40,000 shares; Mr. Hobbs 3,333 shares; and all Directors and executive officers as a group, 2,630,468 shares. Also includes unvested restricted stock, as follows: +Mr. Michels, 189,052 shares; Mr. Spair, 92,879 shares; Mr. Zezzo, 51,602 shares; Mr. Pringle, 14,883 +11 +Table of Contents +shares; Mr. Jerrett, 38,482 shares; Mr. Kuna, 30,823 shares; Mr. Watson, 22,325 shares; Mr. Celano, 14,883 shares; Mr. Patrick, 14,883 shares; Mr. Lancaster, 14,883 +shares; Dr. Tang, 14,883 shares; and all Directors and executive officers as a group, 499,578 shares. +3 +Based on information contained in a Schedule 13G/A filed January 27, 2016, by BlackRock, Inc. (“BlackRock”), on behalf of certain of +its subsidiaries. BlackRock has sole voting power with respect to 5,058,351 shares and sole dispositive power with respect to 5,235,675 shares. +4 +Based on information contained in a Schedule 13G/A filed January 27, 2016 by Wells Fargo & Company (“Wells Fargo”), on +behalf of certain of its subsidiaries. Wells Fargo has shared voting and dispositive power with respect to 3,655,701 shares and sole voting and dispositive power with respect to 14,242 shares. +5 +Includes restricted shares contributed by the recipient to the OraSure Technologies, Inc. Deferred Compensation Plan, as follows: Mr. Spair, +164,151shares; and Mr. Patrick, 32,388 shares. +6 +Includes 1,500 shares owned by Mr. Pringle’s spouse. +Corporate Governance +Board Responsibilities, Operation and Composition +The primary responsibility of the Board of Directors is to promote the long-term success of the Company. In fulfilling this +role, each Director must exhibit good faith business judgment as to what is in the best interests of the Company. The Board is responsible for establishing broad corporate policies, setting strategic direction and overseeing management. The +Company’s management is responsible for the day-to-day operations of the Company. +As of the date of this Proxy +Statement, the Board consists of nine (9) Directors. The Board is divided into three classes with each class consisting of one-third of the total number of Directors on the Board. At each Annual Meeting of Stockholders, the nominees for the +class of Directors whose term is expiring at that annual meeting are elected for a three-year term. A Director holds office until the Annual Meeting of Stockholders for the year in which his or her term expires or until his or her successor is +elected and duly qualified, subject to prior death, resignation, retirement, disqualification or removal. Each nominee for election at the Annual Meeting currently serves as a Director. +The Board typically holds regular meetings in February, May, August and November with special meetings held as needed. The Board’s +organizational meeting follows the Annual Meeting of Stockholders. The Board meets in executive session at all regularly scheduled meetings. The Board held 12 meetings and acted by written consent on one (1) occasion during the fiscal year +ended December 31, 2015. Each member of the +Directors attended greater than 75% of all Board and Committee meetings during 2015. +Board attended more than 75 percent of the combined total of meetings of the Board and of the Committees of the Board on which such member +served during the period in the year in which he served as a Director. +12 +Table of Contents +Governance Guidelines and Code of Conduct +The Board has adopted Corporate Governance Principles which, along with the Charters for each of its Committees and the Company’s Code +of Business Conduct and Ethics, provide a framework for the governance of the Company. The Company’s Corporate Governance Principles address matters such as the responsibilities and composition of the Board, Director independence and the +conduct of Board and Committee meetings. The Company’s Code of Business Conduct and Ethics sets forth guiding principles of business ethics and certain legal requirements applicable to all +The Board operates under our Code of Business Conduct and Ethics and Corporate Governance Principles. +Company employees and non-employee Directors. Copies of the current Corporate Governance Principles and Code of Business Conduct and Ethics are +available on the Company’s website, www.orasure.com . +Independent Chairman +Currently, the Company’s Chief Executive Officer does not hold the position of Chairman of the Board as the Company believes it is +appropriate for the Board to be led by an individual who is independent of management. Douglas G. Watson has served as the Chairman of our Board since March 2003. The Board has carefully considered its leadership structure and believes at this +time that the Company and its stockholders are best served by having the positions of Chairman and Chief Executive Officer filled by different individuals. This allows the Chief Executive Officer to, among other things, focus on the Company’s +day-to-day +The positions of Chairman of the Board and CEO of the Company are held by different individuals, with a the Chairman being independent of +management. +business, while allowing the Chairman to lead the Board in its fundamental role of providing advice and oversight of management. In the future, +however, the Board may reconsider whether its Chief Executive Officer should also serve as Board Chairman. +Director Independence +Our Corporate Governance Guidelines require, among other things, that a majority of the members of the Board meet the independence +requirements of the SEC and NASDAQ, on which our Common Stock is listed. Each year our Board, with assistance from the Nominating and Corporate Governance Committee, conducts a review of Director independence. The most recent annual review occurred +in the first quarter +A majority of our Directors are independent as required under applicable SEC and NASDAQ +rules. +of 2016, during which the Board considered transactions and relationships, if any, between each Director or any member of such Director’s +immediate family and the Company. The independence of our most recent Director, Eamonn P. Hobbs, was reviewed when he joined the Board in March 2016. As a result of this review, the Board determined that Michael Celano, Eamonn P. Hobbs, Ronny B. +Lancaster, Charles W. Patrick, Roger L. Pringle, Stephen S. Tang, Ph.D., and Douglas G. Watson are “independent,” as that term is defined in the applicable rules of NASDAQ and the SEC. Only Douglas A. Michels and Ronald H. Spair were +determined by the Board not to be independent because they are executive officers of the Company. Based on the foregoing, the Board of Directors is comprised of a majority of independent Directors. +13 +Table of Contents +Oversight of Risk Management +As part of its oversight of the Company’s operations, the Board and Audit Committee monitor the management of risks by the +Company’s executives. The Audit Committee reviews the risks that the Company may face and receives reports from senior management on the nature of these risks and the procedures and processes in place to manage and mitigate such risks. +Substantive areas of risk reviewed by the Audit Committee include financial, legal, regulatory, operational, information technology and employment matters. The Audit Committee provides a report to the full Board on the matters covered during each of +its meetings, including its risk monitoring activities. In addition, senior management provides +The Board and Audit Committee monitor the major risks facing the Company and the procedures and processes implemented by management to mitigate those +risks. +periodic reports to the full Board on the major risks facing the Company and the processes and procedures in +place to manage such risks. Management also conducts a risk assessment of the Company’s compensation policies and practices, including its executive compensation program, as described in greater detail in the Section of this Proxy Statement +entitled, “Compensation Committee Matters.” +Annual Meeting Attendance and Stockholder Communications +The Board has approved a policy concerning Board members’ attendance at our Annual Meeting of +Stockholders and a process for security holders to send communications to members of the Board. A description of the Board’s policy on annual meeting attendance is provided on our website, at www.orasure.com . As a general matter, each +Board member is required to attend each Annual Meeting of Stockholders. Our 2015 Annual Meeting was attended by all members of the Board. +All Board members are required to attend each Annual Meeting of Stockholders. The entire Board was present at the 2015 Annual Meeting. +Security holders may communicate with the Board by sending their communications to OraSure Technologies, Inc. 220 East First +Street, Bethlehem, Pennsylvania 18015, Attention: Corporate Secretary, fax: (610) 882-2275, email: corporatesecretary@orasure.com . +14 +Table of Contents +Committees of the Board +The Board currently has three standing committees – the Audit Committee, the Compensation Committee and the Nominating +and Corporate Governance Committee. Members of these committees are each “independent,” as defined in the Exchange Act and NASDAQ rules applicable to such Committees. In addition, the Board has determined that Michael Celano is an +“audit committee financial expert,” as that term is defined by applicable rules of the SEC. Each committee operates pursuant to a written charter, copies of which are available on our website, www.orasure.com . Information on each +standing committee is provided below: +Audit Committee +1 Mr.Hobbs joined +the Board and was appointed to the Audit Committee on March 22, 2016. +• +Oversees accounting and financial reporting process, internal controls and audits. +• +Consults with management and the Company’s independent registered public accounting firm on, +among other items, matters related to the annual audits, the published financial statements and the accounting principles applied. +• +Appoints, evaluates and retains our independent registered public accounting firm. +• +Responsible for the compensation, termination and oversight of our independent registered public +accounting firm. +• +Evaluates the independent registered public accounting firm’s qualifications, performance and +independence. +• +Approves all services provided by the independent registered public accounting firm. +• +Maintains procedures for the receipt, retention and treatment, +on a confidential basis, of complaints received by the Company, regarding accounting, internal accounting controls or auditing matters, and the confidential, anonymous submissions by employees of concerns regarding questionable accounting or +auditing matters. +- Committee Chair +- Determined by the Board to be an audit committee financial expert as defined under applicable SEC Rules. +I +- Determined by the Board to be independent under applicable NASDAQ rules. +15 +Table of Contents +Compensation Committee +• +Oversees compensation for executives and non-employee Directors. +• +Reviews and recommends to the Board for approval the performance criteria and goals and objectives +for CEO compensation. +• +In consultation with other independent non-employee Directors, evaluates the CEO’s and the +CFO/COO’s annual performance in light of the pre-established performance criteria. +• +Evaluates and recommends to the Board for approval the CEO’s compensation. +• +In consultation with the CEO, reviews and approves the compensation of other executive +officers. +• +Establishes performance measures and goals and evaluates the attainment of such goals under +performance-based incentive compensation plans. +• +Reviews compensation and benefits issues. +• +Reviews and recommends for Board approval, the terms of any employment agreement between the +Company and each executive officer. +• +Periodically reviews and administers the Company’s Compensation Recoupment Policy for +executive officers and non-employee Directors. +• +Reviews and administers the Company’s Stock Ownership +Guidelines. +16 +Table of Contents +Nominating & Corporate Governance Committee +• +Identifies, evaluates and recommends candidates for nomination or re-election to the +Board. +• +Reviews and makes recommendations to the Board on the range of skills, qualifications and expertise +required for service as a Director. +• +Reviews and recommends for Board approval the appropriate structure of the Board. +• +Reviews and recommends for Board approval the appropriate structure of Board committees, and +recommends committee assignments and candidates for the position of Chairman of each committee. +• +Develops and recommends for Board approval a set of Corporate Governance Guidelines and a Code of +Business Conduct and Ethics, and procedures for the implementation thereof. +• +Periodically reviews and recommends for Board approval the Board’s leadership structure, +including whether the same person should serve as both CEO and Chairman of the Board. +• +Assists in the development of succession plans for the Company’s CEO and other +executives. +• +Assists the Board in evaluating the independence of individual Directors for purposes of Board and +committee service. +• +Develops and implements an annual self-evaluation process for +the Board and its committees. +- Committee Chair +I +- Determined by the Board to be independent under applicable NASDAQ rules. +17 +Table of Contents +Nomination of Directors +Our Bylaws provide that nominations for election to the Board may be made by the Board or by any stockholder entitled to vote for the +election of Directors at the Annual Meeting. A stockholder’s notice of nomination must be made in writing to the Company’s Secretary and must be delivered to or received at our principal executive offices not less than ninety +(90) days nor more than one hundred twenty (120) days prior to the meeting. However, in the event that less than one hundred (100) days’ notice or prior public disclosure of the date of the meeting is given or made to +stockholders, in order for notice by the stockholder to be timely, notice must be received no later than the close of business on the tenth (10 th ) day following the day on which such notice +of the date of the meeting was mailed or such public disclosure was made, whichever first occurs. The notice to the Corporate Secretary must set forth, with respect to the nominee, the name, age, business address, residence address, principal +occupation or employment of the person, the class and number of shares of capital stock of the Company which are beneficially owned by the person, +Stockholders can nominate individuals to serve on the Board by following the procedures described in the Company’s Bylaws. Diversity is an important +factor that is considered in evaluating new candidates for the Board. In determining whether incumbent Directors will be nominated for re-election, we evaluate the individual’s background, experience and prior service as a +Director. +and any other information relating to the person that is required to be disclosed in solicitations for proxies +for election of Directors pursuant to Regulation 14A under the Exchange Act. The notice must also include, as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination is made: (i) the name and +address of the stockholder and such beneficial owner; (ii) the class and number of shares of capital stock of the Company which are held of record or beneficially owned by such stockholder and such beneficial owner and any other direct or +indirect pecuniary or economic interest in any capital stock of the Company of such stockholder and beneficial owner, including without limitation, any derivative instrument, swap, option, warrant, short interest, hedge, profit sharing arrangement +or borrowed or loaned shares; (iii) a description of any arrangements or understandings between such stockholder and beneficial owner and each proposed nominee and any other person (including their names) pursuant to which the nomination(s) are +to be made by such stockholder and such beneficial owner or with respect to actions to be proposed or taken by such nominee if elected as a Director; (iv) a representation that such stockholder intends to appear in person or by proxy at the +meeting to nominate the persons named in its notice; and (v) any other information relating to such stockholder and such beneficial owner that would be required to be disclosed in a proxy statement or other filings required to be made in +connection with solicitations of proxies for election of Directors, or may otherwise be required pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder. We may also require any proposed nominee to +furnish such other information as we may reasonably require to determine the eligibility of the proposed nominee to serve as a Director of the Company. +The Nominating and Corporate Governance Committee may also consult with outside advisors or retain search firms to assist +in the search for qualified candidates. Candidates recommended by security holders will be considered by the Nominating and Corporate Governance Committee in the same manner as candidates recommended by other sources, but only if the security holder +makes a recommendation in accordance with the advance notification provisions set forth in the Company’s Bylaws. +Director Qualifications +Although there is no formal policy governing Board diversity, the Nominating and Corporate Governance Committee considers +diversity and other factors in evaluating new candidates for the Board. The term diversity is used broadly to include not only race, gender and national origin, but also any other factors determined to be relevant by the Nominating and Corporate +Governance Committee based on the needs of the Board and Company, including independence, integrity, knowledge, judgment, character, leadership skills, education, industry experience, financial literacy, technical background, specialized expertise, +and standing in the community. In evaluating incumbent Directors for re-election, the Nominating and Corporate Governance +18 +Table of Contents +Committee considers that Director’s background, experience and overall service to the Company, including the number of meetings attended, level of participation, quality of performance and +other factors deemed relevant by the Nominating and Corporate Governance Committee. +Insider Trading +We have a policy designed to prevent any trading in the Company’s Common Stock or other securities by a person while such person is in +possession of material nonpublic information. This policy applies to Directors, executive officers and all other employees of the Company. The policy prohibits trading in the Company’s securities on the basis of material nonpublic information, +requires preapproval for Directors, executive officers and all other employees of the Company of transactions in Company securities and establishes regular trading windows after each calendar quarter following the Company’s announcement of its +quarterly financial results. +Our Insider Trading Policy prohibits trading by Directors or employees who are in possession of material nonpublic information about the +Company. +Prohibition Against Short Sales, Hedging and Pledging +We believe it is inappropriate for any employee or member of the Board to engage in short-term or speculative transactions involving Company +securities. As a result, our insider trading policy prohibits Directors, executive officers and all other employees of the Company from entering into these types of transactions involving our Common Stock, including short sales, the buying or +selling of puts or calls, the purchase of securities on margin, prepaid variable forward contracts, equity swaps, collars, exchange funds and other similar financial instruments. Our policy also prohibits employees and Directors from pledging shares +of our Common Stock as collateral. +We have implemented several governance policies related to our Common Stock. Our policies prohibit short-term, speculative transactions in our stock, such +as hedging, pledging and short sales. +Stock Ownership and Retention Guidelines +The Board has adopted stock ownership and retention guidelines applicable to the Company’s President and Chief Executive Officer, its +Chief Financial Officer and Chief Operating Officer, all other executive officers and all non-employee members of the Board. In 2015, we implemented enhanced stock ownership and retention guidelines for our CEO and other executives. Under these +guidelines, the covered individuals must meet the following ownership requirements, expressed either as a +In 2015, we implemented enhanced stock ownership and retention guidelines for our CEO and other executives. +multiple of base salary (in the case of Company officers) or annual cash fees (in the case of Board members): +Covered Individual +Multiple of Base Salary +or Director Fees +President and +Chief Executive Officer +6x +Chief Financial Officer and Chief Operating +Officer +2x +Other Executive Officers +1x +Non-Employee Directors +1x +Any individual who was covered by the guidelines at the time of adoption or who becomes +subject to the guidelines following adoption is required to meet the guidelines within five years. Any individual already subject to the guidelines who becomes subject to a higher ownership requirement, due to a promotion, a further amendment to the +guidelines or an increase in compensation, is required to meet the new ownership requirement +19 +Table of Contents +within five years following the effective date of promotion, change in compensation or guideline amendment. In determining whether an individual meets the required ownership requirement, shares +owned directly or indirectly, restricted stock (including both time and performance vested) and shares deferred under our deferred compensation plan will be counted. Compliance will be determined as of December 31 of each fiscal year. The +guidelines also require each covered individual to retain at least 50% of the net shares acquired upon the exercise of stock options and the vesting of restricted stock until the individual’s holdings of Common Stock equal or exceed the +applicable ownership requirement. As of December 31, 2015, all covered officers and non-employee Directors were in compliance with the stock ownership guidelines. +Audit Committee Matters +Report of the Audit Committee for the Year Ended December 31, 2015 +The information contained in this report shall not be deemed to be “soliciting material” or “filed” for +purposes of Section 18 of the Exchange Act or otherwise subject to liability under that Section. This report shall not be deemed “incorporated by reference” into any document filed under the Securities Act of 1933, as amended (the +“Securities Act”), or the Exchange Act, whether such filing occurs before or after the date hereof, regardless of any general incorporation language in such filing. +The role of the Audit Committee is to assist the Board of Directors in fulfilling its responsibilities to oversee +management’s conduct of the Company’s financial reporting process, including monitoring (1) the participation of management and the outside independent registered public accounting firm in the financial reporting process, (2) the +Company’s systems of internal accounting and financial controls, (3) the annual independent audit of the Company’s financial statements and (4) the qualifications, independence and performance of the outside independent +registered public accounting firm. The Audit Committee selects the Company’s outside independent registered public accounting firm, and once selected, the outside independent registered public accounting firm reports directly to the Audit +Committee. The Audit Committee is responsible for approving both audit and non-audit services to be provided by the outside independent registered public accounting firm. The Audit Committee is composed of four (4) non-employee directors and +operates pursuant to a Charter that was last amended and restated by the Board on November 9, 2015 (which can be found on the Company’s website at www.orasure.com ). +Management of the Company is responsible for the preparation, presentation and integrity of the Company’s financial +statements, the Company’s accounting and financial reporting principles and internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations. The independent registered public +accounting firm is responsible for auditing the Company’s financial statements and expressing an opinion as to their conformity with U.S. generally accepted accounting principles. The Audit Committee’s responsibility is to monitor and +review these processes. It is not the Audit Committee’s duty or responsibility to conduct auditing or accounting reviews. +In the performance of its oversight function, the Audit Committee has considered and discussed the audited financial +statements with management, which included a discussion of not only the quality, but also the acceptability, of the accounting principles, the reasonableness of significant judgments and the clarity of disclosures in the financial statements. The +Audit Committee met with the independent registered public accounting firm, with and without management, to discuss the results of their audit and their judgments regarding the Company’s accounting policies. The Audit Committee has also +discussed with the independent registered public accounting firm the matters required to be discussed under applicable standards, including those in Public Company Accounting Oversight Board Auditing Standard No. 16, as currently in effect. +Finally, the Audit Committee has received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the Public Company Accounting Oversight Board as currently in effect, has +considered whether the provision of non-audit services by the independent registered public accounting firm to the Company is compatible with maintaining the firm’s independence and has discussed with the independent registered public +accounting firm the firm’s independence. +20 +Table of Contents +Based upon the reports and discussions described in this report, and subject to +the limitations on the role and responsibilities of the Audit Committee referred to above and in the Audit Committee’s Charter, the Audit Committee recommended to the Board that the audited financial statements be included in the Company’s +Annual Report on Form 10-K for the year ended December 31, 2015 for filing with the SEC and selected KPMG LLP as the independent registered public accounting firm for fiscal year 2016. The Board is recommending that stockholders ratify that +selection at the Annual Meeting. +Submitted by the Audit Committee of the Company’s Board of Directors: +Michael Celano, Chairman +Charles W. Patrick +Roger L. Pringle +Douglas G. Watson +March 9, 2016 +Audit Fees; Audit-Related Fees; Tax Fees; All Other Fees. +The following table presents fees for professional audit services rendered by KPMG (i) for the audits of our annual +consolidated financial statements and review of the financial statements in our Quarterly Reports on Form 10-Q for the fiscal years ended December 31, 2015 and 2014, and (ii) for the audits of our internal control over financial +reporting as of December 31, 2015 and 2014. The following table also includes fees billed for other services rendered by KPMG: +2015 +2014 +Audit fees 1 +$ +695,000 +$ +670,000 +Audit-related +fees 2 +$ +15,000 +— +Tax fees 3 +$ +145,379 +$ +114,789 +All other +fees +— +— +Total +fees +$ +855,379 +$ +784,789 +1 Includes fees related to the audits of our annual +financial consolidated statements, interim reviews of our quarterly financial statements and audits of our internal control over financial reporting for each indicated year. +2 In 2015, we engaged KPMG to provide a consent for filing with a Registration Statement on +Form S-3. +3 During the fiscal years ended December 31, 2015 and 2014, we engaged +KPMG to provide tax compliance, planning and consulting services. +Pre-Approval Procedures +The Audit Committee has adopted a general practice of pre-approving all audit and non-audit services provided to the Company +by our independent registered public accounting firm. The Chairman of the Audit Committee has been delegated the authority to pre-approve audit and non-audit services having an aggregate value of up to $25,000 between meetings of the Audit +Committee, provided that such pre-approval is communicated to the Audit Committee at its next scheduled meeting. All services by KPMG in 2015 and 2014 were approved in accordance with these practices. +21 +Table of Contents +Compensation Committee Matters +The Compensation Committee assists the Board in developing and +managing the compensation provided to executive officers of the Company and non-employee members of the Board. The Compensation Committee is responsible for developing and overseeing the implementation of the Company’s compensation philosophy +and for setting executive compensation at levels that are sufficiently competitive so that the Company can attract, retain and motivate high quality executives who can contribute to the Company’s success. +Compensation Process and Procedures +Compensation for executives is established by the Compensation Committee in accordance with the compensation philosophy +detailed in the CD&A set forth later in this Proxy Statement. In setting executive compensation, the Compensation Committee considers the Company’s and each executive’s performance against previously established objectives, internal +pay equity, the compensation practices of the Company’s peer group (listed on page 43 of this Proxy Statement), the Company’s industry position and general industry data. The Compensation Committee periodically retains independent +compensation consultants to review our executive compensation practices and to assist in establishing competitive compensation levels for our executives. +Annual Performance Evaluations +On an annual basis, the Compensation Committee and other non-employee Directors evaluate the performance of the CEO and +CFO/COO against predetermined performance objectives. The CEO also evaluates the performance of the other NEOs against their respective predetermined performance objectives. Annual performance objectives for the CEO and other NEOs are established at +the beginning of the applicable year and generally include two parts: (1) the Company’s overall target financial objectives, and (2) individual objectives in the functional areas for which the executive is responsible. For each NEO, +these objectives are then weighted to reflect their relative importance to the Company and the executive’s functional responsibilities. +Depending on the Company’s overall performance and the extent to which an executive achieves his individual objectives +for a particular year, the executive will be rated as “Does Not Meet,” “Does Not Consistently Meet,” “Meets Expectations,” “Exceeds Expectations” or “Outstanding.” The Compensation Committee uses the +performance ratings to determine base salary adjustments, incentive cash bonuses and long-term incentive equity awards, except for Messrs. Michels and Spair. The Compensation Committee decided that, because of their senior positions with the +Company, it is more appropriate to determine the base salary, incentive cash bonuses and long-term incentive equity awards for Messrs. Michels and Spair primarily based on the Company’s overall performance and, in doing so, does not apply +individual performance rating labels to them. +Role of the Compensation Committee +The Compensation Committee is comprised of non-employee independent Directors who oversee our executive compensation program. +Each year, the Compensation Committee determines the appropriate level of compensation for all executive officers, including the NEOs. As an initial guideline, the Committee sets the total direct compensation opportunity (base salary, annual +incentive bonus target, and long-term incentive target) for each of our executive officers within a range around the 50th percentile of comparable medical diagnostics and healthcare companies. The variation of actual pay relative to the market data +is dependent on the executive officer’s performance, experience, knowledge, skills, level of responsibility, potential to impact our performance and future success, and the need to retain and motivate strategic talent. +22 +Table of Contents +The Compensation Committee generally determines an executive officer’s +compensation based upon the objectives of our executive compensation program. The Compensation Committee makes compensation recommendations for the CEO and the CFO/COO and approves decisions for the other NEOs after careful review and analysis of +appropriate performance information and market compensation data. Compensation for the CEO and CFO/COO is approved by the full Board of Directors. +Beyond determining specific compensation for NEOs, the Compensation Committee works with executive management to review and +adjust compensation policies and practices to remain consistent with the Company’s values and philosophy, support the recruitment and retention of executive talent, and help the Company achieve its business objectives. +Role of the CEO +The CEO provides recommendations to the Compensation Committee on the total direct compensation for each executive, other than +himself. The CEO’s recommendations are based on his review of each executive’s performance, job responsibilities, importance to our overall business strategy, and our compensation philosophy. Although the CEO’s recommendations are +given significant weight, the Compensation Committee retains full discretion when determining compensation. +Role of the Compensation Consultant +To assist in the review of executive compensation and to obtain information regarding market trends, the Compensation +Committee engages the services of one or more independent executive compensation consultants, to analyze our executive compensation structure and plan designs, and to assess whether the compensation program is competitive and supports our goal of +aligning the interests of our executive officers with those of our stockholders. In addition, a consultant provides the Compensation Committee with the peer group and other market data that is discussed in the CD&A, which the Compensation +Committee evaluates when determining compensation for executive officers. During 2015, the Compensation Committee specifically engaged Pay Governance LLC (“Pay Governance”), to assist the Company in finalizing the terms of +performance-based equity awards, to assist in responding to the SOP vote at our 2015 Annual Meeting and to consult on the preparation of our 2016 Proxy Statement. +The Compensation Committee has the sole authority to approve the independent compensation consultant’s fees and terms of +the engagement. The Compensation Committee annually reviews its relationship with each consultant to ensure executive compensation consulting independence. The process included a review of the services Pay Governance provides, the quality of those +services, and fees associated with the services during the fiscal year as well as consideration of the factors impacting independence that NASDAQ rules require. The Compensation Committee concluded that there were no conflicts of interest that +prevented Pay Governance from serving as independent consultants to the Compensation Committee on executive compensation matters. We paid Pay Governance $105,899 for their services performed in 2015. +Tally Sheets +In determining annual compensation, the Compensation Committee reviews tally sheets for each executive. Tally sheets set forth +the dollar amounts of all components of each NEO’s current compensation, including salary, incentive cash bonus, incentive equity awards, potential change of control payments and other benefits deemed relevant by the Compensation Committee. +These tally sheets allow the Compensation Committee to review how a change in the amount of each compensation component affects each executive’s total compensation and to consider each executive’s compensation in the aggregate. Included in +each tally sheet is the estimated amount of severance and other benefits payable to the executive under various termination scenarios. Based upon the review of tally sheets, the Compensation Committee establishes aggregate compensation for our +executives which it believes to be reasonable. +23 +Table of Contents +Compensation Committee Interlocks and Insider Participation +Stephen S. Tang, Ph.D., Ronny B. Lancaster, Roger L. Pringle, and Douglas G. Watson served as members of the Compensation +Committee of the Board during 2015. None of these Directors has served or is currently serving as an officer or employee of the Company, nor have they engaged in any transactions involving the Company which would require disclosure as a transaction +with a related person. There are no Compensation Committee interlocks between the Company and any other entity involving the Company’s or such entity’s executive officers or board members. +Compensation Committee Report +The information contained in this report shall not be deemed to be “soliciting material” or “filed” for +purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that Section. This report shall not be deemed to be “ incorporated by reference” into any document filed under the Securities Act or the +Exchange Act, whether such filing occurs before or after the date hereof, regardless of any general incorporation language in such filing. +The Compensation Committee of OraSure Technologies, Inc. has reviewed and discussed with the Company’s management the +Section entitled, “Compensation Discussion and Analysis,” contained in this Proxy Statement. Based on that review and discussion, the Compensation Committee recommended to the Company’s Board of Directors that the foregoing +Compensation Discussion and Analysis be included in the Company’s 2015 Annual Report on Form 10-K Report and Proxy Statement for the 2016 Annual Meeting of Stockholders. +COMPENSATION COMMITTEE: +Stephen S. Tang, Ph.D., Chairman +Eamonn P. Hobbs +Roger L. Pringle +Ronny B. Lancaster +Douglas +G. Watson +March 29, 2016 +24 +Table of Contents +Executive +Officers +The table below provides information about the executive officers of the Company as of March 24, +2016. Officers of the Company hold office at the discretion of the Board. +Name +Age +Position +Douglas A. Michels +59 +President and Chief Executive Officer +Ronald H. Spair +60 +Chief Financial Officer and Chief Operating Officer +Anthony Zezzo II +62 +Executive Vice President, Marketing and Sales +Jack E. Jerrett +57 +Senior Vice President, General Counsel and Secretary +Mark L. Kuna +53 +Senior Vice President, Finance, Controller and Assistant Secretary +Douglas A. Michels has been the Company’s President and Chief Executive Officer since June 2004. Prior to that, +Mr. Michels served as Group Vice President, Global Marketing of Ortho-Clinical Diagnostics, President of Ortho-Clinical Diagnostics International, and President of Johnson & Johnson Healthcare Systems, Inc. Earlier in his career, +Mr. Michels held various sales and marketing positions of increasing responsibility within the Johnson & Johnson family of companies and with the Diagnostics Division of Abbott Laboratories. Mr. Michels received a B.S. degree in +Public Health Administration from the University of Illinois and an M.B.A. from Rutgers University. Mr. Michels also serves on the Presidential Advisory Council on HIV/AIDS (PACHA) and on the board of directors of West Pharmaceutical Services, +Inc. +Ronald H. Spair has been the Company’s Chief Financial Officer and Chief Operating Officer since September 2006 and +served as Executive Vice President and Chief Financial Officer since November 2001. Prior to that time, Mr. Spair served as Chief Financial Officer for various companies in the pharmaceutical industry, including Delsys Pharmaceutical +Corporation, SuperGen, Inc., Sparta Pharmaceuticals, Inc. and Environgen, Inc. Mr. Spair received both his B.S. in Accounting and M.B.A. from Rider College. He is also a licensed Certified Public Accountant, a Chartered Global Management +Accountant, a member of the New Jersey Society of Certified Public Accountants and the American Institute of Certified Public Accountants, and serves on the boards of Fulton Financial Corporation and Pennsylvania Bio. +25 +Table of Contents +Anthony Zezzo II has been the Company’s Executive +Vice President, Marketing and Sales since January 2011. From 2004 to December 2010, Mr. Zezzo was Vice President, North American Sales and Marketing at the Ortho-Clinical Diagnostics Division of Johnson & Johnson. Prior to that time, +Mr. Zezzo held a series of sales and marketing positions of increasing responsibility within Johnson & Johnson. Mr. Zezzo received his B.A. in Political Science from Grove City College. +Jack E. Jerrett has been the Company’s Senior Vice +President and General Counsel since February 2003 and served as Vice President and General Counsel since November 2000. He has also served as the Company’s Secretary since February 2001. Prior to joining the Company, Mr. Jerrett worked as +an Associate at Morgan, Lewis & Bockius and held positions of increasing legal responsibilities with companies in the transportation and energy industries. Mr. Jerrett received his B.S. in Accounting from Villanova University and his +J.D. from the Villanova University School of Law. He is a member of the Pennsylvania Bar and the American and Pennsylvania Bar Associations. +Mark L. Kuna has been the Company’s Senior Vice +President, Finance and Controller since September 2006, and served as Vice President and Controller since February 2003 and as Controller since February 2001. Mr. Kuna has also served as the Company’s Assistant Secretary since May 2002 and +provided accounting and financial analysis support since joining the Company in October 2000. Prior to that time, Mr. Kuna served as an accountant with Deloitte and Touche and held senior accounting and management positions with companies in +the petrochemical, manufacturing, and telecommunications industries. Mr. Kuna received his B.S. in Accounting from the University of Scranton and is a licensed Certified Public Accountant, a Chartered Global Management Accountant, and a member +of the Pennsylvania and American Institutes of Certified Public Accountants. +Transactions With Related Persons +Since January 1, 2015, there have been no transactions +with related persons that would require disclosure in this Proxy Statement. The Audit Committee is required to review and approve in advance all transactions with related persons involving the Company. The Audit Committee may approve a related party +transaction if the transaction is on terms comparable to those that could be obtained in arms’ length dealings with an unrelated third party. The Audit Committee also reviews any public disclosures of a related party transaction contained in +our SEC filings. These responsibilities are described in the Audit Committee’s charter, a copy of which is available on our website at www.orasure.com . +26 +Table of Contents +Information regarding employment and severance agreements between our executive +officers and the Company is set forth in the Section entitled, “Employment Agreements and Potential Payments Upon Termination or Change of Control,” in this Proxy Statement. +Section 16(a) Beneficial Ownership Reporting Compliance +Section 16(a) of the +Exchange Act requires that our executive officers, Directors and persons who own more than ten percent of our Common Stock (collectively, “Reporting Persons”) file reports of ownership and changes in ownership with the SEC. Reporting +Persons are required by the SEC’s regulations to furnish us with copies of all Section 16(a) forms they file. +As a matter of practice, our administrative staff assists each of the Reporting Persons who are employees and Directors of the +Company in preparing initial reports of ownership and reports of changes in beneficial ownership and filing such reports with the SEC and the NASDAQ. Based solely on a review of the copies of forms filed by or on behalf of the Reporting Persons and +on written representations (if any) from each of the Reporting Persons, we believe that all Reporting Persons complied on a timely basis with all applicable filing requirements with respect to the 2015 fiscal year. +27 +Table of Contents +Compensation +Discussion and Analysis - Table of Contents +EXECUTIVE SUMMARY +29 +Overview +29 +Our Performance in 2015 +29 +2015 Business Highlights in Detail +30 +NEO Compensation At a Glance – 2015 +30 +Pay for Performance +32 +Realizable Pay vs. TSR +33 +Realizable Pay vs. SCT Compensation +34 +Pay vs. Other Company Measures of Performance +35 +Say on Pay Results in 2015 and Company Response +36 +Compensation Changes +36 +Other Good Compensation Governance Practices +40 +Compensation Risk Assessment +41 +COMPENSATION PHILOSOPHY +42 +BENCHMARKING +42 +PAY MIX +44 +2015 EXECUTIVE COMPENSATION COMPONENTS +45 +Overview +45 +Compensation Components in Detail +46 +OTHER COMPENSATION +56 +Retirement Programs +56 +Perquisites and Other Compensation +56 +Potential Payments Upon Termination or Change of Control Pursuant to Employment Agreements +56 +Accounting and Tax Treatment of Compensation +56 +Compensation Recoupment Policy +57 +Compensation Tables – Table of Contents +Summary Compensation Table +58 +Grants of Plan-Based Awards +59 +Outstanding Equity Awards at December 31, 2015 +60 +Option Exercises and Stock Vested +64 +Retirement Benefits +64 +Nonqualified Deferred Compensation +64 +28 +Table of Contents +Compensation +Discussion and Analysis +E xecutive Summary +Overview +This Compensation Discussion and Analysis, or CD&A, describes the material elements of the compensation of our NEOs and +describes the objectives and principals underlying the Company’s executive compensation program, the compensation decisions we have recently made under this program and the factors we considered in making these decisions. +Our NEOs for 2015 who are covered in this CD&A include: +Name +Position during 2015 +Douglas A. Michels +President and Chief Executive Officer +Ronald H. Spair +Chief Financial Officer and Chief Operating Officer +Anthony Zezzo, II +Executive Vice President, Marketing and Sales +Jack E. Jerrett +Senior Vice President, General Counsel and Secretary +Mark L. Kuna +Senior Vice President, Finance, Controller and Assistant Secretary +Our Performance in 2015 +Our financial performance for 2015 represented another year of substantial improvement over the prior- year period, +highlighted by record revenues and full-year profitability. The following charts and summary describe our consolidated financial performance (expressed in thousands) and several of the principal contributors to the growth we achieved. +2015 was another year of record consolidated net revenues and is the first full year of profitability since 2007. Our consolidated net +revenues for 2015 were $119.7 million, a 12% increase over 2014. Our 2015 consolidated net income was $8.2 million, or $0.14 per share, an improvement of $12.8 million over our 2014 net loss. +29 +Table of Contents +2015 Business Highlights in Detail +• Consolidated net revenues were $119.7 million (12% increase over +2014), a new record level for our Company. +• Revenue growth and lower operating expenses resulted in four +consecutive quarters of profitability and consolidated net income of $8.2 million for 2015. This represents a $12.8 million improvement from the ($4.6) million net loss reported for 2014. +• We generated $15.8 million in cash from operations during 2015. +• Aggregate cash and cash equivalents totaled $101 million at +year-end. +• Gross margin improved to 67% in 2015, compared to 63% in 2014. +• Molecular collection systems revenues of $29.9 million increased +26% over 2014. +• OraQuick ® HCV +product revenues reached an all-time record high of $11.4 million, representing a 57% increase over 2014. We reported four quarters of sequential HCV revenue growth in 2015. +• Net revenues related to our HCV business (i.e. product sales plus +AbbVie exclusivity payments) totaled $24.9 million, a 68% improvement over 2014. +• Net revenues from our newest business lines (i.e. DNA Genotek, +HCV-related, HIV OTC and Ebola) totaled $65.8 million, or 55%, of consolidated net revenues for 2015. +• We obtained FDA Emergency Use Authorization for our OraQuick ® rapid Ebola test and secured up to $10.8 million in federal funding for clinical development of this product during 2015. +• Initial Ebola product sales totaled $2.3 million during 2015. +• We secured initial sales of our new microbiome product and service +offerings in 2015. +NEO Compensation At a Glance – 2015 +Compensation for the NEOs in 2015 was directly or indirectly tied to the performance of both the executives and the Company, +resulting in the following actions: +• +Base Salary : The base salaries paid to our management (including the NEOs) during 2015 increased 2.8% on average, with +Mr. Michels receiving a 2.75% increase for the year. These adjustments were based on the performance of each executive and the Company during 2014, the results of a competitive marketplace assessment prepared by Pearl Meyer & Partners, +an independent compensation consultant engaged by the Compensation Committee for that purpose, and our Company-wide salary merit increase budget of 3.0%. +NEO +2014 Performance Rating +2014 Salary +2015 Salary +Change (%) +Douglas A. Michels +N/A +$580,920 +$596,895 +2.75% +Ronald H. Spair +N/A +$456,290 +$ +468,838 +2.75% +Anthony Zezzo II +Meets +$376,480 +$384,010 +2.00% +Jack E. Jerrett +Outstanding +$328,000 +$ +344,400 +5.00% +Mark L. Kuna +Meets/Exceeds +$262,135 +$269,344 +2.75% +• +Annual Incentive Bonuses : Incentive cash bonus awards for 2015 performance ranged from 99.6% to 124.5% of target for the NEOs and for +Mr. Michels specifically was 121.8% of his target. The bonus amounts equaled or exceeded the applicable targets for each NEO primarily due to the strong financial performance of the Company during 2015, as described under the “2015 +Business Highlights in Detail” Section above. In approving these bonus awards, the Board recognized the importance of broader Company performance such as total stockholder return (“TSR”) and considered the fact that our TSR +30 +Table of Contents +declined in 2015. Bonus payments at or above target were approved pursuant to the formula in our bonus plan because of the Board’s belief that continuing annual financial improvement, such +as that achieved in 2015, should be rewarded as a critical factor for delivering value to our stockholders. +Actual 2015 Bonus Payments +NEO +2015 +Performance +Rating +2015 Target +(% Salary) +($) +(% Salary) +(% Target) +Douglas A. +Michels +N/A +70% +$508,787 +85.2% +121.8% +Ronald H. +Spair +N/A +50% +$285,452 +60.9% +121.8% +Anthony Zezzo +II +Meets +40% +$153,036 +39.9% +99.6% +Jack E. +Jerrett +Meets +35% +$140,110 +40.7% +116.2% +Mark L. Kuna +Meets/Exceeds +35% +$117,402 +43.6% +124.5% +• +Long-Term Incentive Awards : Incentive equity awards to NEOs in February 2015 were earned based on each executive’s performance +during 2014 and ranged from 80% to 240% of the executive’s base salary. The value of Mr. Michels’ award was 240% of his salary. Mr. Michels’ award was toward the upper end of the range for his position because of the strong +financial performance and the significant positive accomplishments during 2014, as described under the “2015 Base Salaries” Section on page 46. The mix for each award was 60% stock options and 40% restricted stock. As described in greater +detail below, the equity incentive awards granted to the NEOs during 2015 are time-vested, i.e., they vest subject to the NEOs continuing employment with the Company. The 60% portion of these awards consisting of stock options provides no value to +the recipient unless our stock price appreciates after the grant date. +2015 Awards +NEO +2014 +Performance +Rating +Target Range +(% Salary) +($) +(% Salary) +Douglas A. Michels +N/A +150% - 250% +$1,394,208 +240% +Ronald H. Spair +N/A +90% - 160% +$ 661,621 +145% +Anthony Zezzo II +Meets +75% - 125% +$ 338,832 +90% +Jack E. Jerrett +Outstanding +55% - 95% +$ 295,200 +90% +Mark L. +Kuna +Meets/Exceeds +55% - 95% +$ 209,708 +80% +As described further in the “Compensation Changes” section of the +CD&A, below, beginning with the equity incentive awards made in February 2016 for performance during 2015, executives are now receiving equity awards that are 50% performance-vested and 50% time-vested. The decision to structure a substantial +portion of our executives’ equity compensation as performance-vested awards was made in response to stockholder feedback and further strengthens the link between performance and executive compensation. +Additional information regarding NEO compensation for 2015 is provided below in this CD&A and in the +accompanying tables, including the Summary Compensation Table (“SCT”) set forth on page 58. This information demonstrates the reasonableness of the compensation paid to executives when compared to our improved financial performance during +2015. For example, as shown in the SCT, the aggregate compensation for Messrs. Michels and Spair in 2015 increased a modest 2% and 0.8%, respectively, when compared to 2014. This level of increase is fully supported by the 12% revenue increase in +2015 and improvement from a ($4.6) million net loss in 2014 to $8.2 million in net income for 2015. +31 +Table of Contents +Pay for Performance +We follow a pay-for-performance approach in compensating executives. Our program pays executives for performance by rewarding +the achievement of predetermined financial and other performance objectives. +A significant portion of each NEO’s +compensation is paid out in variable and long-term compensation that is intended to align with the long-term interests of our stockholders. Both our annual and long-term compensation are tied to the Company’s overall performance in a variety of +ways, including our financial results and share price performance. +An important feature of our compensation program is the use of performance targets to +incentivize management to achieve improving financial results on a year-to-year basis. We believe continuous revenue growth and sustained and increasing profitability are key factors for increasing the price of our Common Stock and for delivering +long-term value for our stockholders. +The use of performance targets to drive growth is clearly illustrated by the annual +bonus plan established each year. As described further in this CD&A, annual financial objectives are selected in order to determine the amount of pool funding available to pay individual bonus awards each year. When establishing these +objectives, the Board and Compensation Committee generally select targets that, if achieved, will result in improved financial performance on an annual basis and that are consistent with our business plans. Set forth below are the Target performance +levels used to determine pool funding in our bonus plans for the three-year period 2013-2015. This provided an important incentive for the significantly improved financial performance over that period, as shown on page 29. +Annual Bonus Plan Targets +2013 +2014 +2015 +Consolidated Net Revenue +$ +100.8.8 +$ +112.2 +$ +121.7 +Operating (Loss)/Income +$ +(24.5) +$ +(13.6) +$ +5.5 +More recently, we issued annual equity awards to executives that consist of 50% +performance-vested restricted units and 50% time-vested restricted stock. The performance units will only vest if (i) the recipient remains employed by the Company for three years following the date of grant and (ii) the performance +criteria determined by the Committee and Board are met. The restricted stock piece of the award vests in equal annual installments over the three-year period following the grant date, subject to the recipient’s continued employment by the +Company. +32 +Table of Contents +For each award of performance units, one-half of that portion of the award shall +be earned based on the achievement of a compound annual growth rate (“CAGR”) target for consolidated product revenues for the three year period 2016-2018 and the remaining half shall be earned based on achievement of a one-year adjusted +earnings per share (“EPS”) target for the fiscal year 2016. The three-year product revenue CAGR target reflects a blending of projected growth taken from our internal long-range plan and growth rates contained in several published market +research growth forecasts for the medical diagnostics and molecular testing markets. The one-year EPS target represents the Company’s net income as projected in our 2016 budget or operating plan. Recipients of the awards can increase the number +of shares they receive if we exceed these performance targets. If we achieve less than 80% of a performance target, the affected restricted units will not vest and the corresponding shares will not be received. +We believe the combination of the performance targets and three-year service period in these equity awards compliment the +short-term incentives in our annual bonus plans. In combination, we believe this approach will incentivize management to deliver substantially improved financial performance both on an annual basis and over a longer term period. +Realizable Pay vs. TSR +To ensure that we are adhering to a pay-for-performance approach, we evaluated the degree of alignment between our CEO’s +total realizable pay versus total stockholder return (“TSR”) over the prior three fiscal years (2013-2015) relative to our compensation peer group (listed on page 43 of this Proxy Statement). We have adopted this approach to ensure our +compensation program is operating as intended and to respond to stockholder feedback we received on our executive compensation. The graph below shows the comparison of three-year TSR and “realizable pay” relative to our peer group. We +provide further detail regarding the companies in our compensation peer group in the “Benchmarking” section of this CD&A. +Realizable pay includes base salary, incentive cash bonus and all other cash compensation reported in the Summary Compensation +Table. Realizable pay also includes the value of equity awards using each company’s closing stock price on December 31, 2015. Restricted stock awards are valued by multiplying the number of shares granted by the closing stock price on +December 31, 2015. Option awards are valued as the difference between the closing stock price on December 31, 2015 and the exercise price multiplied by the number of option shares granted during the period. An option award with an exercise +price greater than the closing stock price on December 31, 2015 is valued at $0. +33 +Table of Contents +As the graph indicates, our three-year TSR performance has been below median +(50%) over the measurement period. The realizable pay for our CEO, Mr. Michels, was also below median relative to the peer group, highlighting the strong link between pay and performance embedded in our compensation program. +Realizable Pay vs. SCT Compensation +As described further below, we believe long-term equity awards are a key incentive for our executives to drive long-term +growth. The Summary Compensation Table includes the estimated value of long-term incentive equity awards at the time of grant during each applicable year. However, the value of these awards that may be realizable by our executives will vary +depending on the Company’s stock performance and often differs significantly from what is reported in the Summary Compensation Table. +Comparing the realizable value of long-term equity incentive awards with the values reported in the Summary Compensation Table +provides clarity in how compensation outcomes can be impacted by our performance. This comparison also shows the degree of alignment between our stock performance and the level of compensation provided to executives. +34 +Table of Contents +The table below shows the differences between the compensation reported in the +Summary Compensation Table , i.e. “pay opportunity,” and the value of realizable pay (“RP”), i.e. how much the same compensation opportunity is actually worth today, for the three year period 2013-2015 for our CEO, +Mr. Michels. +Mr. Michels’ realizable pay for the three years 2013 – 2015 of $4.9 million is 31% +lower than his SCT compensation opportunity for the same period. This shows a strong link between pay and performance as our TSR over the three year period was below the expectations of the Board and stockholders at (10.3%). +Pay vs. Other Company Measures of Performance +While TSR is a common measure of performance that is often used to evaluate a company’s compensation practices, at our +stage of development we consider other performance measures to be, at times, more reflective of the success of our business. It is important to recognize that our TSR is extremely volatile, as evidenced by the substantial movements in our stock +price during the past several years. Specifically, in 2013 our stock price declined 12%, but rose 61% in 2014 and declined again by 36.5% in 2015. These price changes are not solely tied to our performance as shown by the decline in TSR from 2014 to +2015 even though we achieved record financial performance in both years with substantial growth and full year profitability in 2015. +As a result, our executive compensation does not follow a linear relationship with TSR. Rather, we have tried to align our +executive compensation with performance results that are part of our overall business strategy that we believe will drive stock price improvement and increased value for our stockholders over time. For example, in past years we have had a number of +“first-of-their-kind” achievements in the diagnostics field. Specifically, we developed and commercialized the first and only rapid HCV test in the U.S. along with the first ever rapid in-home HIV test. More recently, we entered into an +HCV co-promotion agreement with AbbVie, which, to our knowledge, is an unprecedented arrangement between a diagnostics company and a pharmaceutical firm. We successfully completed the acquisition of DNA Genotek in late 2011, providing us with an +entrance into the high growth molecular diagnostics field. This acquisition is now contributing double digit growth to our business and accounted for 24% of our 2015 consolidated net revenues. More recently, we made significant progress in +developing and commercializing a new rapid Ebola test. These achievements, and particularly contributions from our newest business lines (i.e., molecular collection systems, HCV-related, HIV-OTC and Ebola), are the primary reasons for our +profitability in 2015 and our overall strong and continually improving financial performance for the past two fiscal years. +When establishing and evaluating our executive compensation program generally, and performance-based incentive plans in +particular, we believe that TSR alone will not always immediately account for the value of our accomplishments and, in many cases, it may take time for the impact of our strategic and other accomplishments to be fully reflected in the value of our +stock. Thus, while obviously important, TSR is only one of several factors we consider in making compensation decisions for our executives. +35 +Table of Contents +Say on Pay Results in 2015 and Company Response +At our 2015 Annual Meeting, stockholders were asked to vote on an advisory (non-binding) basis on the compensation paid to our +NEOs for 2014. We obtained stockholder approval of our NEO compensation with approximately 54% of stockholder votes cast in favor of our “say-on-pay” or SOP resolution. In response to these results, we instituted an outreach effort to +contact certain of our major stockholders in order to understand their concerns regarding our compensation practices. We also contacted both ISS Proxy Advisory Services (“ISS”) and Glass Lewis & Co. (“Glass Lewis”), two +leading proxy advisory firms, in order to solicit their views on these issues. Several of our independent Directors participated in this outreach, including the Chairman of our Board, the Chairman of our Compensation Committee, the Chairman of our +Audit Committee and the Chairman of our Nominating and Corporate Governance Committee. Overall, we had conversations with stockholders who, in the aggregate, beneficially held approximately 22% of our outstanding Common Stock entitled to participate +in the 2015 SOP vote. This outreach effort was similar to the outreach efforts we implemented following the SOP votes at our 2013 and 2014 Annual Meetings. +As a general matter, the following input was provided by the stockholders we contacted during our latest outreach: +• Acknowledged our compensation changes as +positive improvements and responsive to stockholder concerns. +• Supported our adoption of performance-vesting +for 50% of long-term incentive equity awards. +• Supported our enhanced stock ownership +guidelines. +• Supported the elimination of excise tax gross up +from executive employment agreements and the change from modified “single trigger” severance to “double trigger” severance in CEO’s employment agreement. +• Encouraged the use of meaningful targets for +equity with performance vesting. +• Acknowledged that TSR is only one relevant +performance measure. +• Supported the use of financial and other +Company-specific performance targets other than TSR, over a multi-year period; +• Encouraged the exclusion of the impact of stock +repurchases and acquisitions in determining if performance metrics are met. +• Encouraged additional efforts to offset dilution +from annual equity awards. +• Emphasized the need to create incentives for +increasing profitability through our compensation program. +• Encouraged clear and detailed disclosure as to +how performance metrics are developed and how they will raise stockholder value. +• Encouraged the Board to consider other governance changes, such as a declassified +board, majority voting, the right of stockholders to call special meetings, and reasonable proxy access. +In addition, the Compensation Committee engaged an independent compensation consultant, Pay +Governance, to assist in responding to the 2015 SOP vote. We believe our stockholder engagement was beneficial and the Board intends to continue ongoing dialogue with our stockholders to ensure our executive compensation programs are well understood +by all stakeholders. +Compensation Changes +In response to input from stockholders, the Compensation Committee and Board adopted a number of changes in 2015 to +specifically respond to stockholder concerns and better align our compensation program with performance. We believe these changes were the primary reason a majority of stockholders approved our SOP proposal at the 2015 Annual Meeting. As a result, +we concluded the best response to the latest stockholder input is to continue to implement these recent changes to our compensation program, particularly the adoption of 50% +36 +Table of Contents +performance-vested equity awards for executives which was implemented in early 2016 for performance during 2015. In addition, we decided to extend our stock buy-back program at the end of 2015 +and early 2016 in direct response to concerns by stockholders regarding the dilutive effect of our annual equity awards to executives and non-employee Directors. +The following is a summary of these changes, along with our rationale for making them: +Change +Old +New +Rationale +Effective +Performance-Vested Long-Term Incentive Equity Awards. +Awards consisted of 60% Stock Options and 40% Restricted Stock, all time-vested over three or four years. +Awards consist of 50% performance-vested restricted units and 50% time-vested restricted stock. +• Directly +responds to stockholder input. +• Enhances link between compensation and longer-term performance. +• Focuses executives on +long-term priorities. +• Alignment with market practice. +2016 for 2015 performance year. +Changes to Executive Employment Agreements. +Contained excise tax gross up and modified “single trigger” change of control severance provisions. Adopted policy that new agreements will contain no +excise tax gross up and will provide for “double trigger” change of control severance. +CEO employment agreement amended to remove excise tax gross up and change modified “single trigger” to “double trigger” change of control +severance. Other NEO agreements amended to remove excise tax gross up. +• Responds to +stockholder input. +• Consistent with good governance practices. +2015 +Enhanced Stock Ownership and Retention Guidelines. +CEO – 2x salary +CFO/COO – 1x salary +Other Executives – None +CEO – 6x salary +CFO/COO – 2x salary +Other Executives – 1x +salary. +• Consistent +with good governance practices. +• Supported by stockholders. +• Strengthens alignment between executives and stockholders. +2015 +Limit on Discretionary Bonus Pool Adjustments. +Compensation Committee and Board historically have had unlimited discretion to adjust bonus pool funding. +Discretionary adjustments will be limited to +/-10% of aggregate pool funding determined under applicable Incentive Plan +formula. +• Responds to concerns about discretionary bonus awards and misalignment of pay and +performance. +• Ensures bonus pool amount/payouts are predominately tied to +previously agreed performance goals +• Allows for reasonable, but limited, +discretion to accommodate unforeseen circumstances. +2015 and 2016 +37 +Table of Contents +Change +Old +New +Rationale +Effective +Extension of stock buyback program. +Buyback program originally authorized in 2008, with no active purchasing in recent years. +Buyback program extended in late 2015 to repurchase 1.2 million shares of common stock, which approximates shares used for annual +management and non-employee Director equity awards. +• Directly responds to stockholder input. +• Offsets dilutive impact of any annual equity incentive awards to executives and +non- employee Directors. +2015-2016 +Performance Based Equity Awards +The value of long-term incentive equity awards granted to an executive is based upon the performance of the executive for the +prior year. In the past, these awards generally consisted of a mix of 60% stock options and 40% restricted stock, all of which vested annually and/or monthly based on the passage of time during which the recipient remained employed by the Company +and the value of which fluctuated, including potentially to zero in the case of stock options, with our share price. Accordingly, more than half of these awards (i.e. the stock options) provide no value to the recipient unless our stock price +increases after the grant date. +Based on input from our stockholders and advice from Pay Governance, we recently +implemented performance vesting for a significant portion of the incentive equity awards for our executives. The new performance vesting program began with the 2015 performance year. As a result, the first incentive equity awards with performance +vesting were made in early 2016 with the value of individual awards based on performance during 2015. This approach was selected due to our pay-for-performance practice of making equity awards in a particular year dependent on and sized in relation +to the recipient’s performance during the prior fiscal year. +Under our new Long-Term Incentive Policy +(“LTIP”), 50% of an executive’s total equity award consists of performance-vested restricted units that will not vest until three years after the grant date and only if certain performance measures are met during that three-year +period. The awards granted in February 2016 incorporated two performance metrics: (i) a three-year CAGR for consolidated product revenues during the period 2016-2018 and (ii) a one-year “EPS” target for 2016 followed by a further two-year +vesting requirement. The remaining 50% of each executive’s most recent incentive equity award consists of time-vested restricted stock and will utilize a three-year ratable vesting period as we have done in the past. +The structure of the new equity awards reflects market-based good governance practices as well as the input from our +stockholders, several of whom advocated that a meaningful portion of the equity awards should have performance vesting. We believe 50% is a meaningful portion and is consistent with or exceeds the performance orientation of our peer companies. In +addition, although some stockholders have mentioned TSR as a possible performance target, most of the stockholders we contacted indicated that other measures such as financial or operational objectives would also be appropriate. The Board decided to +use consolidated net product revenue and EPS targets because they are important for our business, especially as we continue improving our profitability, and because of the Board’s belief that these measures will directly influence the +performance of our stock price over time. As discussed above, the Board does not believe that the use of TSR as a performance metric in the long-term incentive plan is appropriate at this time, although the choice of performance metrics will be +reviewed from time-to-time. +The adoption of new three-year performance-based vesting conditions for 50% of an +executive’s annual equity award substantially strengthens the link between pay and performance and creates an appropriate long-term incentive for our executives. At the same time, the use of time-based vesting conditions for the remaining +38 +Table of Contents +50% of each award achieves the equally important goal of share ownership/accumulation through a share price sensitive vehicle that directly promotes alignment with stockholders and further +supports employee retention. Overall, the Compensation Committee and Board believe that these changes represent a balanced performance-based improvement to our executive compensation program that is appropriate for our Company, directly responds to +feedback from our stockholders, is consistent with executive pay governance best practices and exceeds the performance-based focus of compensation programs used by our peer companies, the majority of which do not use performance-vested equity at +all. +Employment Agreement Changes +The Company’s employment agreements with Mr. Michels and the other NEOs were put in place in 2004 and 2006, except +for Mr. Zezzo’s agreement which was entered into in 2011 when he joined the Company. These agreements required the Company to provide a gross up for excise tax imposed under Section 280G of the Internal Revenue Code on compensation +paid as a result of a change of control, in an amount up to $1.0 million for Mr. Michels and $500,000 for the other NEOs. These agreements also included a modified “single trigger” severance provision, which would permit the executive +to voluntarily terminate his employment within a specified period following a change of control and receive increased severance even though that executive’s position or scope of responsibilities following the change had not been adversely +affected. Beginning with Mr. Zezzo’s agreement in 2011, we implemented a new policy of no longer providing any excise tax gross up or “single” or “modified single” trigger severance provisions. Instead, +Mr. Zezzo’s agreement contains a “double trigger” severance provision under which there needs to be both a change of control and an adverse impact to Mr. Zezzo’s position or responsibilities before he is entitled to +terminate his employment and receive increased cash severance. +In 2015, Mr. Michels and the other NEOs agreed to +amend their employment agreements to remove the excise tax gross up provision. In addition, Mr. Michels agreed to change the modified “single trigger” severance provision in his agreement to a “double trigger” severance +provision. +These changes were implemented in direct response to input from several stockholders. In considering this +matter, the Board was mindful that these changes required amendments to long-standing employment agreements with our executives. Neither Mr. Michels nor any of the other NEO’s were obligated to agree to any changes to their agreements, nor +did they receive direct compensation in exchange for the revised employment agreements. Our leadership team agreed to these changes, in an effort to be responsive to the concerns of our stockholders and in order to improve our compensation +governance practices. +Enhanced Stock Ownership/Retention Guidelines +Another change made by the Compensation Committee and Board in 2015 was to adopt enhanced stock ownership and retention +guidelines for our executives. Specifically, the following changes were made: +Position +Old Guideline +New Guideline +President and CEO +2x +6x +Chief Financial Officer and Chief Operating Officer +1x +2x +Other Executive Officers +None +1x +In addition, the guidelines were changed to require an executive to retain at least 50% of the +net shares acquired upon the exercise of stock options or the vesting of restricted shares until the executive’s stock holdings meet or exceed the applicable ownership guideline. +The Compensation Committee and Board believe these changes were appropriate in order to respond to stockholder concerns about +pay for performance, more closely align the interests of our executives with those of our stockholders and make our guidelines consistent with what we believe to be market practice. +39 +Table of Contents +Limited Bonus Pool Funding Discretion +Under our Management Incentive Plan, adopted each year for the payment of incentive cash bonuses to executives, the aggregate +pool used to pay bonuses is determined in a formulaic manner based on the achievement of specific, short-term financial objectives. However, the Compensation Committee and the Board historically retained discretion to increase or decrease the size +of the bonus pool based on performance conditions, market conditions or other factors deemed appropriate. +Beginning with +the Management Incentive Plan adopted for performance during 2015, the Compensation Committee and Board limited any discretionary adjustments that may be made to +/- 10% of the bonus pool calculated under the plan formula. The Compensation Committee +and Board believe this change is appropriate in order to make our incentive cash bonus plans more performance-based and to bring our plans in line with what we believe to be market practice and provide plan participants with better line of sight +between their actions, Company performance and any bonus results. This change also directly responds to feedback from stockholders. We included the same limit on discretionary pool funding in the Management Incentive Plan for 2016. +Extension of Stock Buyback Program +Our Board previously approved a $25.0 million stock buyback program and prior to 2015 a total of 1,256,023 shares of stock had +been repurchased at a total cost of approximately $5.4 million. Stock purchases under this program largely stopped in 2008. Although we had temporarily suspended stock repurchases, this program was never terminated by the Board. +In direct response to concerns from stockholders regarding the dilutive impact of annual equity awards and based on a review +of our Common Stock valuation, in late 2015 the Board decided to extend the stock buyback program. Specifically, the Board directed management to repurchase up to 1.2 million shares of stock. The 1.2 million share target represented the +approximate number of shares historically used for annual equity incentive awards for management and non-employee Directors. +Other Good Compensation Governance and Practices +We are committed to maintaining good corporate governance and practices. Apart +from the changes discussed above, there are many other aspects of our compensation program that reflect this commitment: +Performance Mix - The vast majority of our NEOs’ +compensation is performance-based. For example, approximately 75% of Mr. Michels’ 2015 compensation consisted of an incentive cash bonus and long-term incentive equity awards, which are awarded based on Company and/or individual performance. +For the other NEOs, 59% of their aggregate 2015 compensation consisted of performance-based compensation. +Diversified Portfolio - Our executive compensation consists of +a mix of cash/equity, fixed/variable and short-term/long-term compensation. Equity awards in 2015 consisted of a mix of stock options (60%) and restricted stock (40%) and, as discussed above, transitioned to 50% performance-vested +restricted units and 50% time-vested restricted stock with the February 2016 equity awards. +Threshold Bonus Objectives - Threshold financial performance +objectives for annual bonus pool funding are set at levels that meet or exceed the Company’s actual financial performance for the prior fiscal year. Target financial performance objectives generally increase or improve each year and thereby +help drive improved financial performance on a year-over-year basis. +40 +Table of Contents +Performance Value of Options and Restricted Stock Awards - +Because stock options, even though time-vested, only provide value to executives if the price of our stock increases after the date of grant, the issuance of 60% of an executive’s annual equity award during 2015 as stock options means that the +realizable value of long-term equity awards provided to executives is heavily weighted and dependent on the Company’s future performance and improvement in the price of our Common Stock. Further, the value of time-vested restricted stock awards +also tracks the experience of our stockholders as our share price fluctuates. +Multiple Performance Metrics - Variable compensation is based +on a combination of corporate and individual performance measurements to help ensure balanced incentives for executives. +Long-Term Focus - Equity awards are subject to long-term +vesting requirements, with restricted shares vesting over 3 years and stock options vesting over a minimum of 4 years. Structuring our equity awards in this manner helps align the interests of our executives with the long-term interests of our +stockholders. +Prudent Benchmarking - The total compensation paid to +executives is targeted at the 50 th percentile of a peer group of comparable companies based on achievement of performance objectives. We use a peer group (listed on page 43 of this Proxy +Statement) consisting of companies in the medical diagnostic and healthcare industries comparable in size to the Company based on total revenues and market value. +Tally Sheets - The Compensation Committee reviews tally sheets +as part of making individual compensation decisions. +Stockholder Outreach - Since our 2013 SOP vote, the Board has +implemented a robust outreach effort annually to ask our stockholders for feedback on our compensation and governance practices. This Board outreach effort is in addition to our regular investor relations program where we routinely discuss our +business with investors. +Independent Compensation Consultants - The Board and +Compensation Committee regularly utilize independent compensation consultants to provide compensation advice, including competitive assessments of our program compared to compensation paid to executives at the peer group of comparable medical +diagnostic and healthcare companies (listed on page 43 of this Proxy Statement). During 2015, the Compensation Committee engaged Pay Governance as its independent consultant and also reviewed market data prepared by another consultant, Pearl +Meyer & Partners. +Recoupment Policy - Our Board has adopted a compensation +recoupment or “clawback” policy, under which the Board or Compensation Committee will seek to recover excess compensation paid to our executives if our financial statements are restated due to misconduct by that executive. +No Repricing - Our Stock Award Plan prohibits both the +repricing and repurchase of under-water stock options or other equity awards without stockholder approval. +No Perquisites - We do not provide executives with any +perquisites that are not offered to all employees of the Company. +Risk Review Process - We regularly assess the risks associated +with our compensation programs. +No Hedging - Our policy prohibits Directors and NEOs from +engaging in hedging activities with our stock. +No Pledging - Our Directors and NEOs are not permitted to +pledge our stock. +Confidentiality/Non-Compete Agreements - Our NEOs are +subject to confidentiality and non-compete agreements. +Compensation Risk Assessment +Management periodically conducts a risk assessment of the Company’s compensation policies and practices, including its +executive compensation program. In its review, management considers the attributes of the Company’s policies and practices and other factors, including: +• +The mix of fixed and variable compensation opportunities; +• +The balance between annual and long-term performance opportunities; +41 +Table of Contents +• +The corporate and individual performance objectives established for annual and long-term incentive compensation; +• +The internal controls and procedures in place to mitigate risks facing the Company, including the Company’s “clawback” policy and +stock ownership guidelines; and +• +The risk that unintended consequences could result from various aspects of the Company’s compensation policies and practices. +Based on its review and assessment, management has concluded that the Company’s policies and +practices are designed with the appropriate balance of risk and reward in relation to the Company’s overall business strategy and do not incentivize employees to take unnecessary or excessive risks. The Company has also concluded that any risks +arising from the Company’s compensation policies and practices are not reasonably likely to have a material adverse effect on the Company. +C ompensation Philosophy +The primary objectives of our compensation program for executive officers are to: +Set compensation opportunities at levels sufficient to attract and retain high quality +executives and to motivate them to contribute to our success. +Ensure the +compensation opportunities provided align the interests of executives with the interests of our stockholders; +Focus our +executives on both short and longer-term individual and Company priorities established by the Board and appropriately reward them for performance against these objectives; +The total direct compensation provided to each executive consists of an annual base salary, +incentive cash bonus and long-term incentive equity awards. The amount of the incentive cash bonus and the size of annual incentive equity awards are variable and depend on an executive’s and the Company’s achievement of predetermined +financial and other objectives. As a result, a substantial portion of each executive’s annual compensation is based on performance. +B enchmarking +We believe it is useful to regularly compare our compensation program against compensation paid to executives at other +comparable medical diagnostic and healthcare companies. With the assistance of Pearl Meyer & Partners (“PM&P”), an independent compensation consultant previously engaged by the Compensation Committee, a peer group of companies +was selected using criteria based on industry, revenues and market capitalization and a competitive assessment of our executive compensation was prepared. +The Compensation Committee seeks to set total direct compensation opportunity levels for each executive near the fiftieth (50 th ) percentile of amounts paid by the peer companies for performance consistent with the Company’s target financial and other business plans for the applicable year. Use of the fiftieth (50 th ) percentile is intended as a market-based reference and not as an absolute target. As a result, the total direct compensation opportunity and the value of specific compensation components for +individual executives may fall below or exceed the fiftieth (50 th ) percentile depending on the individual performance of the executive, the criticality of his or her role, the +executive’s contribution to our business, and other factors. +42 +Table of Contents +The following provides information about the peer group used by the Compensation +Committee for benchmarking purposes in setting executive compensation in 2015 and how we compare to these companies (all dollars in millions): +Peer Company 1 +2015 Revenue 2 +12/31/15 Market +Capitalization +Business 3 +Abaxis, Inc. +$214 +$1,265 +Healthcare Equipment +ABIOMED Inc. +$303 +$3,829 +Healthcare Equipment +Anika Therapeutics, +Inc. +$ 93 +$ 559 +Healthcare Supplies +Array Biopharma, Inc. +$ 34 +$ 602 +Biotechnology +ATRION Corp. +$146 +$ 695 +Healthcare Supplies +Cardiovascular Systems, Inc. +$178 +$ 491 +Healthcare Equipment +Cerus Corp. +$ 34 +$ 614 +Healthcare Supplies +Cynosure, Inc. +$339 +$1,015 +Healthcare Equipment +Enzo Biochem, Inc. +$ 99 +$ 207 +Life Sciences Tools & Services +Fluidigm Corp. +$115 +$ 311 +Life Sciences Tools & Services +Genomic Health, Inc. +$287 +$1,145 +Biotechnology +Harvard Bioscience, Inc. +$111 +$ 118 +Life Sciences Tools & Services +Luminex Corp. +$238 +$ 921 +Life Sciences Tools & Services +Meridian Bioscience, Inc. +$192 +$ 863 +Healthcare Supplies +Neogenomics, Inc. +$100 +$ 477 +Life Sciences Tools & Services +Quidel Corp. +$194 +$ 705 +Healthcare Supplies +Rockwell Medical, +Inc. +$ 55 +$ 523 +Healthcare Equipment +Sequenom, Inc. +$128 +$ 194 +Life Sciences Tools & Services +The Spectrnetics +Corp. +$242 +$ 642 +Healthcare Supplies +STAAR Surgical Co. +$ 77 +$ 285 +Healthcare Supplies +Vascular Solutions, +Inc. +$146 +$ 596 +Healthcare Supplies +25 th Percentile +$ 99 +$ 477 +Median +$146 +$ 602 +75 th Percentile +$214 +$ 863 +OraSure Technologies, Inc. +$120 +$ 364 +Source: Standard & Poors Capital I.Q. +1 Dyax Corp. was removed from the peer group due to its acquisition by Shire Pharmaceuticals +International. +2 Reflects revenue reported for fiscal year 2015. +3 Reflects Global Industry Classification Standard sub-industry designation. +Because the competitive assessment by PM&P was prepared fairly recently (i.e. in 2014), the Compensation Committee decided +that a new assessment was not needed at this time. Consequently, the Compensation Committee elected to use the 2014 assessment in setting the executive compensation for the 2015 fiscal year. +In preparing its 2014 competitive assessment of executive compensation, PM&P compared the compensation of our NEOs with a +50/50 blend of proxy data from the peer group of companies and data for each NEO position from the 2014 Radford Global Life Sciences Survey. Since compensation market data can be volatile from year to year, the Committee believes a blend of specific +peer group proxy data and broader survey data better reflect market trends. PM&P also compared the mix of executive compensation and the relative compensation levels of the NEOs with data from the peer group. Based on this analysis, PM&P +reached the following conclusions: +• +On average, salaries, total cash compensation (salaries plus incentive cash bonuses) and target total direct compensation (total cash compensation +and incentive equity awards) for our executives are competitive with the market median; +43 +Table of Contents +• +The long-term incentive equity targets are competitive with the median; +• +Mr. Michels’ target total direct compensation is competitive with the market median; +• +The mix of cash and long-term incentive compensation for our executives is generally competitive with the market median; and +• +No significant changes to the target compensation for our executives were recommended by PM&P based on their assessment. +P ay Mix +We follow a pay-for-performance approach to executive compensation, with a significant portion of our executives’ +compensation consisting of annual incentive cash bonuses and long-term incentive equity awards that are based on the executives’ and the Company’s achievement of predetermined performance objectives. +The following illustrates the relative proportion of 2015 base salaries, and the performance-based compensation consisting of +incentive cash bonuses and long-term incentive equity awards, for Mr. Michels and the other NEOs, respectively: +Approximately 75% of Mr. Michels’ aggregate +compensation and 59% of the other NEOs’ aggregate compensation for 2015 consisted of variable or performance-based compensation. +44 +Table of Contents +2 015 Executive Compensation Components +Overview +Our compensation program consists of the following components: +Compensation +Form +of Compensation +Purpose +Base Salary +Cash +Base salaries provide fixed compensation necessary to attract and retain key executives. Salary levels are +established for each position based on competitive market data, with annual adjustments tied to performance and market changes as appropriate. +Annual Incentive Bonus Awards +Cash +Annual incentive bonus awards provide performance-based incentives to our executives to achieve both Company-wide financial and strategic goals and the executives’ +individual performance objectives. Targets for individual bonuses are set at levels consistent with those offered in the marketplace. Beginning in 2015, the Board has limited discretionary adjustments to bonus pool funding to +/- 10% of the pool +amount otherwise determined under the incentive plan formula . +Long-Term Incentive Awards +2015 +Stock Options and Restricted Stock +2016 +Performance-Vested Restricted Units and Time-Vested +Restricted Stock +The largest component of our executive compensation is paid in equity. For the past several years, awards +consisted of 60% stock options and 40% restricted shares and strongly incentivized our executives to perform at their highest levels to achieve our long-term strategic business plans and increase our share price, thereby aligning the interests of +our executives with those of our stockholders. Beginning in 2016 with respect to the 2015 performance year, executive LTIP awards consisted of 50% performance-vested restricted units and 50% time-vested restricted stock in order to strengthen the +link between pay and performance . +45 +Table of Contents +Compensation +Form +of Compensation +Purpose +Benefits +401(k) Plan +Health and Welfare Benefits +Retirement and health and welfare benefits provide a complete compensation package that is competitive with the market and addresses the needs +of all employees and their families, including our executives. +Employment Agreements +Cash severance and accelerated equity vesting +Severance and accelerated equity vesting are provided to our executive officers in order to ensure they are not +distracted by the possibility of termination in the event of a change of control and to encourage continued dedication to the Company. In 2015, we eliminated the excise tax gross up from all NEO employment agreements and Mr. Michels agreed to +change his modified “single trigger” change of control severance provision to a “double trigger” provision . +Compensation Components in Detail +2015 Base Salaries +The Compensation Committee believes that competitive salaries must be paid in order to provide fixed compensation necessary to +attract and retain key executives. Each year, the Compensation Committee evaluates and determines the annual base salaries for the NEOs. The Compensation Committee considers the annual performance evaluation of the CEO prepared by non-employee +members of the Board and the annual performance evaluations prepared by the CEO for all other NEOs. The Committee also considers the Company’s budget for expected salary adjustments, salary levels paid at the peer group companies (listed on +page 43 of this Proxy Statement) and any recommendations that may be made by any compensation consultant engaged to assist the Compensation Committee. An executive’s annual salary adjustment will tend to be at the higher end of the range +budgeted by the Company if the executive receives a performance rating of “Meets Expectations” or better and such executive’s pre-adjustment salary level is below the 50 th +percentile for his or her position at the peer group companies. +Annual base salaries paid in 2015 to our NEOs were +established by the Compensation Committee at the beginning of 2015 based on a review of the Company’s performance during 2014, an evaluation of the individual contributions of each officer compared to pre-established performance objectives for +2014 and a review of the competitive data and recommendations provided by PM&P, the Compensation Committee’s independent compensation consultant at the time. +Based on these factors, the Compensation Committee approved an annual base salary increase for our management (including the +NEOs) averaging approximately 2.83%. This compares with our Company-wide salary increase budget of 3.0%. In order to reflect the Company’s performance and each executive’s contributions, and to equitably move salaries towards the fiftieth +(50 th ) percentile of amounts paid by the peer +46 +Table of Contents +group companies or maintain them at approximately that level, the Compensation Committee used the following guidelines to assist in determining annual base salary increases. +Performance +Rating +Merit Increase Range +Outstanding +5.0% - 7.0% +Exceeds Requirements +3.0% - 4.0% +Meets Requirements +2.0% - 2.5% +Does Not Consistently Meet +1.0% - 1.5% +Does Not Meet Requirements +0% +In establishing NEO base salaries for 2015, the Compensation Committee recognized that the +Company’s 2014 consolidated net revenues of $106.5 million exceeded the $100 million threshold for the first time in the Company’s history. These revenues represented an 8% increase over 2013. The Compensation Committee also noted that the +Company’s $4.6 million consolidated net loss represented a $6.6 million or 59% reduction in the Company’s 2014 net loss compared to 2013. Other specific factors considered by the Compensation Committee in setting 2015 salaries included the +following: +• Execution of a major HCV co-promotion agreement with AbbVie. +• The 17% growth in molecular collection systems revenues compared to 2013; +• The 42% growth in +OraQuick ® HCV net product revenues compared to 2013; +• The $45.1 million in revenues generated by our newest business lines (i.e., DNA +Genotek, HCV-related and HIV-OTC); +• The improved profitability of our OraQuick ® In-Home HIV product line; +• The launch of our next generation Intercept i2 ® collector with a NIDA-5 panel of high-throughput fully-automated oral fluid drug assays; +• Progress towards the funded development and commercialization of a new rapid, +Ebola antigen test; +• Improved investor relations and outreach strengthened the Company’s +relationships with institutional investors; and +• Extensive and aggressive review of multiple business development opportunities by management. +47 +Table of Contents +Although the Compensation Committee generally uses the performance rating labels +mentioned above (i.e., Meets Expectations, Exceeds Expectations, etc.), the Compensation Committee has decided that those labels should not be used for Messrs. Michels and Spair. Given the senior positions of Messrs. Michels and Spair, the +Compensation Committee believes it is more appropriate to evaluate these executives based on the overall performance of the Company. As a result, the Compensation Committee approved the following 2015 salary adjustments for Mr. Michels and the +other NEOs: +NEO +2014 Individual +Performance Assessment +2014 +Performance +Rating +2014 +Salary +2015 +Salary +% +Increase +Douglas A. Michels President and Chief Executive Officer +• Strong corporate performance, as described above, including 8% revenue growth and 54% reduction in our consolidated net loss. +N/A 1 +$580,920 +$596,585 +2.75% +Ronald H. Spair Chief Financial Officer and Chief +Operating Officer +• Strong corporate +performance, as described above, including 8% revenue growth and 59% reduction in our consolidated net loss. +N/A 1 +$456,290 +$468,838 +2.75% +Anthony Zezzo II Executive Vice President, Marketing and +Sales +• Leadership in negotiating unique HCV co-promotion agreement with AbbVie, leading to substantial increased +revenues. +• 57% growth in OraQuick ® HCV +sales. +• Substantial achievement of overall sales goals. +• Organizational and staffing improvement within Sales and Marketing Department. +Meets +$376,480 +$384,010 +2.0% +Jack E. Jerrett Senior Vice President and General Counsel +• Leadership in negotiating unique HCV co-promotion agreement with AbbVie, leading to substantial increased +revenues. +• Leadership in negotiating reduced royalty obligations. +• Assistance on numerous important commercial matters. +• Leadership in resolving various disputes and claims. +• Oversight of SEC and other compliance matters. +• Ongoing advice and counsel to Board and senior management. +Outstanding +$328,000 +$344,400 +5.0% +1 Assessment based on overall corporate performance during 2014. +48 +Table of Contents +NEO +2014 Individual +Performance Assessment +2014 +Performance +Rating +2014 +Salary +2015 +Salary +% +Increase +Mark L. Kuna Senior Vice President, Finance, Controller and +Assistant Secretary +•Leadership in implementing new enterprise resource management system at DNA Genotek. +•Implementation of new revenue recognition policy for +OraQuick ® In-Home HIV product. +•Tax and accounting +support for HCV co-promotion agreement with AbbVie. +•Oversight of financial reporting, SEC filings and +Sarbanes-Oxley compliance. +Meets/Exceeds +$262,135 +$269,344 +2.75% +2015 Annual Incentive Cash Bonuses +Annual cash bonuses are included as part of executive compensation because the Compensation Committee believes that a +significant portion of each executive’s compensation should be structured as a variable incentive tied to both the overall performance of the Company and the individual contributions of the executive. On an annual basis, the Compensation +Committee has adopted, with approval of the Board, a Management Incentive Plan (the “Incentive Plan”), which is intended to be the principal vehicle for incentive cash bonus awards. +Incentive cash bonuses are generally paid out of a cash pool funded under the Incentive Plan based on the Company’s +achievement of specific financial objectives determined using a formula established by the Compensation Committee and approved by the Board at the beginning of each fiscal year. The financial objectives typically consist of annual short-term targets +that represent improvement in financial performance compared to the prior year. The objectives are each weighted to determine their respective contributions to the pool amount. Each objective can be adjusted annually by the Compensation Committee or +Board in an equitable manner to reflect unexpected changes in the Company’s business or assumptions underlying the original objective or other factors. +With respect to each financial objective, a Threshold, Target, High and Maximum performance level is established. The Target +levels generally reflect the Company’s financial budget or operating plan for the current year and incorporate the expected improved performance from the prior year. Except in special circumstances, the Threshold levels equal or exceed +financial performance achieved during the prior year and represent a minimum level of performance for which the Compensation Committee is willing to provide bonus pool funding. Thus, the Company must meet or exceed the prior year’s performance +in order to obtain any funding for a Threshold objective. The High levels reflect outstanding performance for which the Compensation Committee is willing to reward executives with bonuses above the Target level payout. The Maximum levels represent +“breakthrough” performance at which the maximum bonus pool funding can be provided. +If the Company meets all +the Target levels, the pool is funded at 100% of the aggregate target bonuses for all participants in the Incentive Plan, as described below. The pool is funded at 50% of the aggregate target bonuses if all of the Threshold levels are met and at +150% if all of the High levels are met. If the Company achieves a Maximum performance level, the pool can be funded up to 200% of the aggregate target bonuses. Pro-rata adjustments to the amount of funding for each objective are made where a +particular performance is in between the pre-established performance levels. To the extent a performance level is below the Threshold +49 +Table of Contents +objective, generally there is no funding for that particular item unless the Compensation Committee or Board determines, in its limited discretion, that some funding is warranted to recognize +extraordinary circumstances. +The amount of the cash bonus pool is determined by the Compensation Committee and +recommended for Board approval. The Compensation Committee and Board also retain discretion to increase or decrease the size of the pool in order to reflect specific performance or market conditions affecting the Company and the final performance +assessments for each participant for the applicable year. The cash bonus pool is used to pay bonuses not only to the Company’s NEOs, but also to all other officers and certain higher-level employees of the Company. Beginning with the 2015 +Incentive Plan, the Compensation Committee and Board have limited their ability to make discretionary bonus pool adjustments to +/- 10% of the pool size otherwise determined pursuant to the formula under the Incentive Plan. +Individual payments from the bonus pool to executives are calculated using a formula that considers the size of the bonus +pool, the executive’s achievement of individual performance objectives (except in the case of Messrs. Michels and Spair, as described below), the number of individuals participating in the plan at the time bonuses are awarded and the +executive’s target bonus percentage. Bonuses are paid, based on an assessment of each executive’s performance for the applicable year, using targets expressed as a percentage of the executive officer’s annual base salary. +If an executive officer has met or exceeded his or her individual performance objectives and/or the Company’s +expectations for the applicable year, he or she may be eligible to receive up to 150% of his or her target bonus, depending on the size of the bonus pool. The Compensation Committee and Board retain the discretion to adjust an individual +executive’s performance evaluation and to increase or decrease the bonus paid to such individual to reflect the specific contributions of that executive, the Company’s overall performance, market conditions or other circumstances. +The Compensation Committee recommends for Board approval any bonus award for the CEO based on an assessment of his +performance. The CEO recommends individual awards for the other executive officers for approval by the Compensation Committee based on an assessment of each executive’s performance against his or her applicable individual performance +objectives. The Compensation Committee and Board have the right, in their sole discretion, to reject any or all of the recommended bonus awards, even if the bonus pool has been funded and any or all applicable performance criteria have been +satisfied, based on the business conditions of the Company or other factors deemed relevant by the Compensation Committee or Board. +Under the 2015 Incentive Plan, the Compensation Committee established performance levels for two equally weighted financial +objectives to be used to fund the bonus pool. The Threshold financial objectives in our 2015 Incentive Plan reflected improved performance over 2014 that would result in a break-even level of consolidated operating income. The Target levels +reflected our annual budget or operating plan for 2015. The following table summarizes these objectives and performance levels (dollar amounts in millions): +Financial Objective/ +Weight +Threshold +Target +High +Breakthrough +Consolidated Net Revenues (50%) +$112.5 +$121.7 +$127.8 +$133.9 +Consolidated Net Operating Income (50%) +$ 0 +$ 5.5 +$ 9.2 +$ 12.8 +Incentive Plan Payout +(% of Target) +50 +% +100 +% +150 +% +200 +% +50 +Table of Contents +In establishing the 2015 Incentive Plan, the Compensation Committee decided on a +50%/50% weighting for the revenue and operating income objectives. The Compensation Committee believed an equal weighting provided an appropriate balance of incentives for both top and bottom line financial performance. The following sets forth the +weighting and potential bonus pool funding for both objectives at each performance level established under the 2015 Incentive Plan, based on the participants covered by the Plan at year-end: +Objective +Weight +Threshold +Target +High +Maximum +Consolidated Net Revenues +50% +$544,000 +$1,088,000 +$1,632,000 +$2,176,000 +Consolidated Net Operating Income +50% +$544,000 +$1,088,000 +$1,632,000 +$2,176,000 +Potential Total Pool Funding +$1,088,000 +$2,176,000 +$3,264,000 +$4,352,000 +During 2015, we reported consolidated net revenues totaling $119.7 million. This performance +exceeded the Threshold performance level but was slightly less than the Target performance level for this objective (98% of Target), resulting in funding of $971,000 (89% of Target funding). The Company’s 2015 consolidated net operating income +was $8.1 million, which was above the Target (147% of Target performance), but below the High performance level for this objective. In evaluating this objective, the Compensation Committee decided to adjust our operating income to eliminate $363,000 +of unbudgeted, business development expenditures in order to reward management’s aggressive efforts to find attractive acquisitions and other business development transactions. As a result, an adjusted consolidated income amount of $8.4 million +was used to determine $1.518 million of bonus pool funding for this objective (139.5% of Target funding). +Based on +the foregoing, the total bonus pool funding calculated for 2015 performance was $2,489,000, as follows:. +Objective +Funding +Consolidated Net Revenues +$ +971,000 +Consolidated Net Operating Income +$ +1,518,000 +Total 2015 Pool Funding +$ +2,489,000 +The bonus pool amount was approved by the full Board and used to pay bonuses to the +Company’s NEOs and 17 other members of our management team. The specific target payouts for NEO bonuses (expressed as a percentage of annual base salary) are shown below: +Title +Target Payouts +Chief Executive Officer +70% +Chief Financial Officer and Chief Operating Officer +50% +Executive Vice President +40% +Senior Vice President +35% +In January 2016, the Compensation Committee authorized the payout of individual bonus awards +to executive officers from the bonus pool for 2015, based on the target bonus amounts described above and an assessment of each officer’s performance during 2015 against pre-established performance objectives. The calculation of individual +bonus awards was based on a formula that adjusted the foregoing target payments for both the executives’ individual performance during 2015 and the degree to which the approved bonus pool funding was sufficient to pay the aggregate bonuses +after adjustment for individual performance. +In evaluating Mr. Michels and the Company’s performance, the +Compensation Committee recognized the record level of consolidated net revenues of $119.7 million and the full year profitability in 2015 and the +51 +Table of Contents +substantial improvement in the Company’s 2015 performance compared to 2014. In addition, the Compensation Committee considered the following other factors: +• The 26% growth in molecular collection systems revenues compared to 2014; +• The 57% growth in OraQuick ® HCV net product revenues +compared to 2014; +• The improvement in gross margin to 67% in 2015, compared to 63% in 2014; +• The $15.8 million in cash generated from operations in 2015, compared to $7.5 million in 2014; +• The $24.9 million in net revenues related to our HCV business, which represents a 68% improvement over +2014; +• A $65.8 million in net revenues from our newest business lines (i.e. DNA Genotek, HCV related, HIV OTC and +Ebola), which represents 55% of consolidated net revenues for 2015; +• The receipt of FDA Emergency Use Authorization for our +OraQuick ® rapid Ebola test, the securing of up to $10.8 million in Federal funding for the clinical development of this product and the generation of $2.3 million in initial sales of this +product during 2015; +• The extensive review of multiple business development opportunities by management; and +• The successful maintenance of strong relationships with our investors. +In view of the foregoing factors, the Compensation Committee determined that Messrs. Michels +and Spair should receive above-target bonuses for 2015. The remaining NEO’s were evaluated based on their 2015 performance against individual objectives established for their respective positions, with Mr. Zezzo receiving a Meets +Expectations performance rating, Mr. Jerrett receiving a high Meets Expectations performance rating and Mr. Kuna receiving a Meets/Exceeds performance rating. Using these performance ratings, the Compensation Committee developed individual +performance factors to adjust the target bonuses for Mr. Michels, the other NEO’s and the other participants in the 2015 Incentive Plan to reflect their performance assessments for 2015. The aggregate pool funding that would be required to +pay the performance-adjusted target bonus amounts for all participants in the 2015 Incentive Plan totaled $2,249,000. As a final step, the Compensation Committee calculated a pool funding factor of 110.7% ($2,489,000 in aggregate pool funding +divided by 2,249,000 in aggregate performance-adjusted bonuses) in order to calculate individual performance bonuses consistent with the bonus pool funding formula. +Using the approach described above, a final 2015 incentive cash bonus of $508,787 was calculated for Mr. Michels, as +follows: +2015 Base Salary +X +Target % +X +2015 Individual Performance Factor +X +2015 Pool Funding Factor += +2015 Bonus +$596,895 +70% +110% +110.7% +$508,787 +52 +Table of Contents +This same formula was used to calculate the 2015 bonus awards for all NEOs, as +follows: +2015 Bonus Payments +NEO +2015 Salary +Bonus +Target (% +salary) +2015 Performance Rating +Individual +2015 +Performance +Factor +2015 +Pool +Funding +Factor +2015 +Bonus +Douglas A. Michels President and Chief +Executive Officer +$596,895 +70% +Above Target +• Strong corporate +performance including record revenues and full-year profitability, as described above. +110% +110.7% +$508,787 +Ronald H. Spair Chief Financial Officer and +Chief Operating Officer +$468,838 +50% +Above Target +• Strong corporate +performance including record revenues and full-year profitability, as described above. +110% +110.7% +$285,452 +Anthony Zezzo II Executive Vice President, +Marketing and Sales +$384,010 +40% +Meets Expectations (High) +• 57% growth in OraQuick ® HCV sales. +• Substantial achievement of overall +sales goals. +• Organizational improvements within the Sales and Marketing Department. +• Leadership in the implementation of the HCV co-promotion agreement with AbbVie. +90% +110.7% +$153,036 +Jack E. Jerrett +Senior Vice President and +General Counsel +$344,400 +35% +Meets Expectations +• Leadership in directing +various litigation and claims resolution. +• Leadership in evaluating various business development +opportunities. +• Negotiation of reduced royalty obligations. +• Assistance on numerous important commercial matters. +• Ongoing advice and counsel to Board and senior management. +105% +110.7% +$140,110 +Mark L. Kuna Senior Vice President, Finance, +Controller +$269,344 +35% +Meets/Exceeds +• Leadership in +evaluating various business development opportunities. +• Implementation of tax strategies for DNA +Genotek. +• Oversight of financial reporting, SEC filings and Sarbanes-Oxley Compliance. +112.5% +110.7% +$117,402 +53 +Table of Contents +2015 Long-Term Incentive Awards +An additional way that we promote the long-term growth of the Company and align the interests of executives with those of our +stockholders is by compensating executives with equity in the Company that vests over a multi-year period. To accomplish this, the Compensation Committee administers the Company’s LTIP, pursuant to which grants of stock options and restricted +shares have been made to executive officers on an annual basis. +We view all awards under our LTIP as performance-based +since the grant value of each annual award is based on an assessment of the executive’s performance during the prior year. In addition, until 2016 60% of each award to our executives consists of stock options that provide no value to the +recipient unless our stock price increases after the date of grant. Subject to continued employment through the vesting period, awards of restricted shares provide some immediate value to executives but are also performance-based in that the +executive’s compensation will increase or decrease with the market price of our stock. Therefore, our LTIP requires that our NEOs first earn their awards based upon their prior year performance and continue to perform for the Company throughout +the vesting period to realize any value from such awards. +Incentive equity awards under the LTIP are made on an annual +basis, and are discretionary and subject to approval by the Compensation Committee and/or Board. Awards to individual participants under the LTIP are based on an evaluation of a number of factors, including: +• +Performance of the participant for the applicable year; +• +The participant’s level of responsibilities and relative contribution to the Company’s business; +• +A competitive assessment of awards at peer group companies (listed on page 43 of this Proxy Statement); +• +History of equity awards to the participant; and +• +Other factors deemed relevant by the Compensation Committee and/or Board. +Each participant’s individual performance for the applicable year is evaluated against his or her individual performance +objectives for that year. A “Meets Expectations” performance is typically the threshold requirement to receive an equity award under the LTIP. Awards below this performance level may be considered on an exception basis at the discretion of +the Compensation Committee and/or the Board. +The value of potential incentive equity awards that could be granted in 2015 +under the LTIP (expressed as a percentage of annual base salary) based on performance during 2014, are summarized below: +Performance +Position +Lower End +Target +Maximum +President/CEO +150% +200% +250% +CFO/COO +90% +125% +160% +EVP +75% +100% +125% +SVP +55% +75% +95% +The percentages set forth above were established at levels that the Compensation Committee +believed represented an appropriate long-term incentive compensation value for each executive, based on the results of a competitive assessment of long-term incentive awards at the peer group companies (listed on page 43 of this Proxy +Statement). Awards under the LTIP in 2015 consisted of 60% stock options and 40% restricted stock. Once the aggregate dollar value of an award has been established by applying the Committee approved award percentage to a participant’s base +salary, the value is converted into shares based on a valuation of the restricted stock and stock option portions of the award as of the grant date. Restricted stock is valued based on the average of the high and low stock price on the grant date as +reported on the NASDAQ Stock Market and stock options are valued based on a corresponding Black-Scholes value in accordance with FASB ASC Topic 718. +54 +Table of Contents +Stock option awards granted under the LTIP have an exercise price equal to the +fair market value of the Company’s Common Stock on the date of grant, which is calculated using the average high and low stock price on that date. Stock options generally vest over four years, with the first 25% vesting after one year and the +remaining 75% vesting on a monthly basis over the next three years following the first anniversary of the grant date. Grants of restricted stock generally vest in equal annual installments over a three-year period. These vesting restrictions serve +to promote the Company’s long-term growth by restricting executives’ ability to realize short-term gains from their awards. The Compensation Committee believes the terms of its incentive equity awards to executives are competitive with the +terms of equity awards offered at comparable medical diagnostics and healthcare companies. +Equity awards are generally +made by the Compensation Committee each year as part of the normal annual compensation cycle. The awards for a particular year generally occur in late January or early February of the following year after the Company’s full year financial +results are known and performance evaluations for the executive officers have been prepared. Equity awards approved by the Compensation Committee for the CEO are then reviewed and approved by the Board. In addition to the annual equity awards, the +Compensation Committee may approve stock option and restricted stock awards for newly hired officers or in recognition of an executive’s promotion or expansion of responsibilities. These latter grants may have vesting or other terms that differ +from the terms generally approved for annual equity awards. Notwithstanding the terms of the LTIP, equity awards are made at the discretion of the Compensation Committee or Board. +Effective February 3, 2015, the Compensation Committee approved stock option and restricted stock awards for the NEOs +under the LTIP based on the performance evaluations of such officers for 2014, as summarized below. A description of the basis for each NEO’s 2014 performance evaluation is set forth above under the Section entitled, “2015 Base +Salaries,” in this Proxy Statement. +Executive Officer +2014 Performance +Assessment +Restricted Stock +Stock Options +Award Value +(% of Base Salary) +Douglas A. +Michels +President and Chief +Executive Officer +N/A 1 +59,934 Shs 2 +171,919 Shs 2 +240% +Ronald H. Spair +Chief Financial +Officer and Chief +Operating Officer +N/A 1 +28,442 Shs +81,584 Shs +145% +Anthony +Zezzo II +Executive Vice +President, Marketing +and Sales +Meets +14,566 Shs +41,781 Shs +90% +Jack E. Jerrett +Senior Vice President +and General Counsel +Outstanding +12,690 Shs +36,401 Shs +90% +Mark L. +Kuna +Senior Vice President, +Finance, Controller and +Assistant Secretary +Meets/Exceeds +9,015 Shs +25,859 Shs +80% +1 +Assessment based on overall corporate performance during 2014. +2 +As discussed previously, equity awards made in 2015 for performance during 2014 were time-vested. Beginning in February 2016, 50% of each equity +award to the NEO’s consisted of performance-vested restricted units with a three-year service period. A further description of these performance-vested awards is set forth on page 38 . +55 +Table of Contents +O ther Compensation +We provide minimal additional benefits outside of our primary elements of compensation, as follows: +Retirement Programs +All of our employees, including executive officers, are eligible to participate in our 401(k) profit sharing plan (the +“401(k) Plan”). We make matching contributions for participants on a dollar-for-dollar basis up to $4,000 per year. Payments of employer-provided benefits accrued for a 401(k) Plan participant will be made upon retirement or upon +termination of employment prior to retirement, provided certain vesting conditions have been met by the participant prior to termination. In addition, the Company maintains the OraSure Technologies, Inc. Deferred Compensation Plan (the +“Deferred Compensation Plan”) for the benefit of the Company’s highly compensated employees, including all of the NEOs, and its non-employee Directors. The Deferred Compensation Plan allows participants to defer up to 100% of their +annual base salaries (or fees in the case of non-employee Directors) and up to 100% of annual incentive cash bonuses and, upon vesting, restricted shares of the Company’s Common Stock awarded to the participant. The Company may also make +discretionary contributions to the participants’ accounts that vest over one or more years as determined by the Company, as well as upon death, disability or a change of control. Since the Deferred Compensation Plan was put in place, the +Company has made no discretionary contributions. Participants may elect to receive distributions of deferred amounts on a specified date, separation from service, a change of control, disability and/or death. +Perquisites and Other Compensation +As a general matter, the Compensation Committee and Board do not believe that executive officers should be treated differently +than other employees by receiving special perquisites unrelated to our general compensation program. Therefore, our healthcare, disability, and other insurance programs and benefits are the same for all eligible employees, including executive +officers. Executive officers do not receive any additional perquisites. +Potential Payments Upon Termination +or Change of Control Pursuant to Employment Agreements +The Company has entered into employment agreements with each +of the NEOs. In addition to the compensation elements discussed above, these agreements provide for post-employment severance payments and benefits in the event of termination of employment by the Company without “cause” or by the +executive for “good reason” and provide enhanced severance payments upon such terminations in connection with a “change of control” of the Company. The terms of these agreements are discussed in more detail under the Section +entitled, “Employment Agreements and Potential Payments Upon Termination or Change of Control,” in this Proxy Statement. The Compensation Committee believes that these agreements are generally consistent with industry practice at the peer +group companies (listed on page 43 of this Proxy Statement), provide an incentive to the applicable executive to remain with the Company, and serve to align the interests of stockholders and the executives in the event of a change of control +of the Company. +Accounting and Tax Treatment of Compensation. +In approving the amount and form of compensation for the NEOs, the Compensation Committee considers all elements of the cost +to the Company of providing such compensation, including accounting and tax implications. In particular, it considers the potential impact of Section 162(m) of the Internal Revenue Code. Section 162(m) which disallows a tax deduction for +any publicly-held corporation for individual compensation exceeding $1 million in any taxable year for the CEO and for the three most highly compensated officers (other than the Chief Financial Officer) unless compensation is performance-based. The +Compensation Committee intends to maintain flexibility to pay compensation that is not entirely deductible when the best interests of the Company would make that advisable. +56 +Table of Contents +Compensation Recoupment Policy +The Board has adopted a compensation recoupment or “clawback” policy, applicable to all officers subject to +Section 16 of the Exchange Act. Under this policy, the Board and the Compensation Committee will pursue recoupment of any excess compensation, including incentive cash bonuses, restricted stock, stock options or other compensation, which was +awarded to a covered officer based on financial statements of the Company where such statements are required to be restated as a result of the gross negligence, intentional misconduct or fraud of the covered officer. In addition to recoupment, the +Board or Compensation Committee shall take such other remedial actions deemed necessary against a covered employee, including recommending disciplinary actions up to and including termination and other available remedies. The recovery period for +recoupment of any compensation is up to three fiscal years preceding the date on which the Company is required to prepare and file the restated financial statements. This policy has been proactively adopted in advance of final guidance under +Section 954 of the Dodd-Frank Act, and will be amended to conform with this Section when final guidance is available. +57 +Table of Contents +Compensation Tables +S ummary Compensation Table +The following table summarizes the compensation of our CEO and the other NEOs, for the fiscal years ended December 31, +2015, 2014 and 2013: +Name & Principal Position +Year +Salary 1 +($) +Bonus +($) +Stock +Awards 2 +($) +Option +Awards 3 +($) +Non-Equity +Incentive Plan +Compensation 4 +($) +Change +in +Pension +Value and +Nonqualified +Deferred +Compensation +Earnings +($) +All other +Compen- +sation 5 +($) +Total +($) +Douglas A. Michels +2015 +$ +619,054 +$ +557,686 +$ +836,523 +$ +508,787 +— +$ +4,000 +$ +2,526,050 +President and Chief Executive +2014 +$ +580,139 +$ +507,606 +$ +761,400 +$ +620,000 +— +$ +4,000 +$ +2,473,145 +Officer +2013 +$ +563,408 +$ +440,003 +$ +659,799 +$ +469,470 +— +$ +4,000 +$ +2,136,680 +Ronald H. Spair +2015 +$ +486,243 +$ +264,653 +$ +396,971 +$ +285,452 +— +$ +4,000 +$ +1,437,319 +Chief Financial Officer +2014 +$ +455,677 +$ +256,941 +$ +385,411 +$ +322,970 +— +$ +4,000 +$ +1,424,999 +and Chief Operating Officer +2013 +$ +442,450 +$ +240,798 +$ +361,091 +$ +263,390 +— +$ +4,000 +$ +1,311,729 +Anthony Zezzo II +2015 +$ +398,403 +$ +135,537 +$ +203,298 +$ +153,036 +— +— +$ +890,274 +Executive Vice President +2014 +$ +375,812 +$ +166,524 +$ +249,779 +$ +206,840 +— +— +$ +998,955 +Marketing and Sales +2013 +$ +362,000 +$ +79,637 +$ +119,424 +$ +193,320 +— +— +$ +752,381 +Jack E. Jerrett +2015 +$ +356,826 +$ +118,080 +$ +177,120 +$ +140,110 +— +$ +4,000 +$ +796,136 +Senior Vice President +2014 +$ +327,631 +$ +102,401 +$ +153,599 +$ +207,850 +— +$ +4,000 +$ +795,481 +and General Counsel +2013 +$ +319,662 +$ +106,077 +$ +159,070 +$ +133,180 +— +$ +4,000 +$ +721,989 +Mark L. Kuna +2015 +$ +279,343 +$ +83,885 +$ +125,825 +$ +117,402 +— +$ +4,000 +$ +610,455 +Senior Vice President, +2014 +$ +261,783 +$ +81,439 +$ +122,161 +$ +127,060 +— +$ +4,000 +$ +596,443 +Finance, Controller and +2013 +$ +254,183 +$ +83,983 +$ +125,932 +$ +105,920 +— +$ +4,000 +$ +574,018 +Assistant Secretary +1 +Salary in 2015 reflects twenty-seven bi-weekly payroll periods, as compared to twenty-six bi-weekly payroll periods in 2014 and 2013. This +additional pay period caused the actual amounts received by the NEOs during 2015 to be somewhat higher than their annual base salaries. Base salaries for 2015 were as follows: Mr. Michels, $596,895; Mr. Spair, $468,838; Mr. Zezzo, +$384,010; Mr. Jerrett, $344,400; and Mr. Kuna, $269,344. +2 +The indicated amounts reflect the aggregate grant date fair value of restricted stock awards made to the NEOs during the applicable year, computed +in accordance with Financial Accounting Standards Board (“FASB”) ASC Topic 718. Certain assumptions used in the calculation of those amounts are set forth for the applicable year of award in footnote 8 to the Company’s audited +consolidated financial statements for the year ended December 31, 2015, included in the Company’s Annual Report on Form 10-K filed with the SEC on March 14, 2016 (the “2015 10-K Report”). +3 +The values set forth in this column reflect the aggregate grant date fair value of stock option awards made to the NEOs during the applicable year, +computed in accordance with FASB ASC Topic 718. Certain assumptions used in the calculation of those amounts are set forth for the applicable year of award in footnote 8 to the Company’s audited consolidated financial statements for the year +ended December 31, 2015, included in the Company’s 2015 10-K Report. +4 +The indicated amounts reflect incentive cash bonuses paid to the NEOs pursuant to an Incentive Plan, based on performance during the applicable +year. For a description of incentive cash bonus payments for performance during 2015, see the Section entitled, “2015 Annual Incentive Cash Bonuses,” in the CD&A. The 2014 amounts include special achievement awards for Messrs. Zezzo +and Jerrett of $40,000 and $10,000, respectively, for their contributions in negotiating the HCV co-promotion agreement with AbbVie. +58 +Table of Contents +5 +The indicated amounts reflect cash contributed to a 401(k) profit sharing plan as an employer-matching contribution, which was offered to all +employees of the Company during each of the indicated years. +G rants of Plan-Based Awards +The following table summarizes information concerning possible incentive cash bonuses and possible and actual restricted stock +and stock option awards for the NEOs during the fiscal year ended December 31, 2015 as well as possible payouts under the 2015 Incentive Plan: +Estimated Possible Payouts +Under Non-Equity Incentive +Plan +Awards 2 +Estimated Possible Payouts Under +Equity Incentive Plan +Awards 3 +All other +Stock +Awards: +Number +of Shares +of Stock +or Units 4 +(#Shs.) +All +other +Option +Awards: +Number +of +Securities +Underlying +Options 4 +(#Shs.) +Exercise +or Base +Price of +Option +Awards 5 +($/Sh) +Grant +Date Fair +Value +of +Stock +and +Option +Awards 6 +($) +Name +Grant +Date 1 +Threshold +($) +Target +($) +Maximum +($) +Threshold +(# Shs.) +Target +(# Shs.) +Maximum +(# Shs.) +Douglas A. +Michels +2/03/15 +— +— +— +— +— +— +59,934 +$ +557,686 +President and +2/03/15 +— +— +— +— +— +— +— +171,919 +$ +9.305 +$ +836,523 +Chief Executive +N/A +$208,913 +$417,827 +$626,740 +37,459 RS +49,945 RS +62,431 RS +— +— +— +N/A +Officer +N/A +— +— +— +107,450 SO +143,266 SO +179,083 SO +— +— +— +N/A +Ronald H. Spair +2/03/15 +— +— +— +— +— +— +28,442 +— +— +$ +264,653 +Chief Financial +2/03/15 +— +— +— +— +— +— +— +81,584 +$ +9.305 +$ +396,971 +Officer and +N/A +$ +117,210 +$ +234,419 +$ +351,629 +17,653 RS +24,519 RS +31,384 RS +— +— +— +N/A +Chief Operating +N/A +— +— +— +50,638 SO +70,331 SO +90,024 SO +— +— +— +N/A +Officer +Anthony Zezzo II +2/03/15 +— +— +— +— +— +— +14,566 +— +— +$ +135,537 +Executive Vice +2/03/15 +— +— +— +— +— +— +— +41,781 +$ +9.305 +$ +203,298 +President, +N/A +$76,802 +$153,604 +$230,406 +12,138 RS +16,184 RS +20,230 RS +— +— +— +N/A +Marketing and +N/A +— +— +— +34,818 SO +46,424 SO +58,030 SO +— +— +— +N/A +Sales +Jack E. Jerrett +2/03/15 +— +— +— +— +— +— +12,690 +— +— +$ +118,080 +Senior Vice +2/03/15 +— +— +— +— +— +— +36,401 +$ +9.305 +$ +177,120 +President +N/A +$ +60,270 +$ +120,540 +$ +180,810 +7,755 RS +10,575 RS +13,395 RS +— +— +— +N/A +and General Counsel +N/A +— +— +— +22,245 SO +30,334 SO +38,423 SO +— +— +— +N/A +Mark L. Kuna +2/03/15 +— +— +— +— +— +— +9,015 +— +— +$ +83,885 +Senior Vice +2/03/15 +— +— +— +— +— +— +25,859 +$ +9.305 +$ +125,825 +President, +N/A +$47,135 +$94,270 +$141,406 +6,198 RS +8,451 RS +10,705 RS +— +— +— +N/A +Finance, Controller and Assistant Secretary +N/A +— +— +— +17,778 SO +24,243 SO +30,708 SO +— +— +— +N/A +1 +Annual incentive equity awards to NEOs, consisting of a combination of restricted stock (“RS”) and stock options (“SO”), were +determined for 2015 pursuant to the LTIP, based on performance during 2014. Annual equity awards made during 2015 were approved by the Compensation Committee effective on February 3, 2015. For a description of these equity awards and their +terms, see the Section entitled, “2015 Long-Term Incentive Awards,” in the CD&A. +2 +The indicated amounts represent potential incentive cash bonus payments to the NEOs under the 2015 Incentive Plan. On January 25, 2016, bonus +payments under the 2015 Incentive Plan were approved by the Compensation +59 +Table of Contents +Committee for the NEOs, based on performance during 2015. A further description of the payments approved under the 2015 Incentive Plan is set forth in the Section entitled, “2015 Annual +Incentive Cash Bonuses,” in the CD&A. +3 +The indicated amounts represent the potential number of shares which could have been granted to the NEOs in 2015 in the form of restricted stock +and stock options pursuant to the LTIP, based on each officer’s performance during 2014. For restricted stock, the individual share numbers were calculated by dividing 40% of the long-term incentive targets for each NEO set forth in the LTIP by +the mean between the high and low sales price of the Common Stock as reported by NASDAQ on the date of grant. For stock options, the individual option numbers were calculated by dividing 60% of the long-term incentive targets for each NEO set forth +in the LTIP by the corresponding estimated Black-Scholes value of the Company’s Common Stock on the date of grant. +4 +The indicated amounts represent the actual number of restricted shares or stock options granted to the NEOs in 2015 under the LTIP, based on +performance during 2014. Specific RS and SO awards were approved by the Compensation Committee for the NEOs effective on February 3, 2015 based on performance during 2014. A further description of these equity awards and their terms is set +forth in the Section entitled, “2015 Long-Term Incentive Awards,” in the CD&A. +5 +The exercise price for stock options is the fair market value of the Company’s Common Stock on the date of grant, which is calculated as the +mean between the high and low sales price of the Common Stock as reported by NASDAQ on such date. +6 +The indicated amounts represent the grant date fair value calculated in accordance with FASB ASC Topic 718. +O utstanding Equity Awards at December 31, 2015 +The following table summarizes information regarding unexercised stock options and unvested restricted stock held by the NEOs +as of December 31, 2015: +Option Awards 1 +Stock Awards 1 +Name +Number of +Securities +Underlying +Unexercised +Options +(#) +Exercisable +Number of +Securities +Underlying +Unexercised +Options 2 +(#) +Unexercisable +Equity +Incentive +Plan +Awards: +Number of +Securities +Underlying +Unexercised +Unearned +Options (#) +Option +Exercise +Price +($/Sh.) +Option +Expiration +Date +Number of +Shares or +Units of +Stock +That Have +Not +Vested 2 +(#) +Market +Value of +Shares or +Units of +Stock +That +Have +Not +Vested 8 +($) +Equity +Incentive +Plan +Awards: +Number of +Unearned +Shares, +Units or +Other +Rights +That Have +Not +Vested +(#) +Equity +Incentive +Plan +Awards: +Market +or Payout +Value of +Unearned +Shares, +Units or +Other +Rights +That +Have +Not +Vested +($) +Douglas A. Michels +President and Chief +Executive Officer +67,500 +-- +-- +$ +9.56 +1/23/2016 +-- +-- +-- +45,000 +-- +-- +$ +8.28 +2/01/2017 +-- +-- +-- +-- +56,250 +-- +-- +$ +8.06 +2/01/2018 +-- +-- +-- +-- +90,990 +-- +-- +$ +2.81 +1/23/2019 +-- +-- +-- +-- +102,365 +-- +-- +$ +5.19 +1/25/2020 +-- +-- +-- +-- +193,300 +-- +-- +$ +6.63 +2/01/2021 +-- +-- +-- +-- +192,580 +8,374 +3(a) +-- +$ +11.30 +2/01/2022 +-- +-- +-- +-- +128,833 +53,050 +3(b) +-- +$ +7.05 +2/01/2023 +-- +-- +-- +-- +116,441 +137,613 +3(c) +-- +$ +5.72 +2/03/2024 +-- +-- +-- +-- +-- +171,919 +3(d) +-- +$ +9.31 +2/03/2025 +-- +-- +-- +-- +-- +-- +-- +-- +-- +20,818 +3(e) +$ +134,068 +-- +-- +-- +-- +-- +-- +-- +59,213 +3(f) +$ +381,332 +-- +-- +-- +-- +-- +-- +-- +59,934 +3(g) +$ +385,975 +-- +-- +60 +Table of Contents +Option Awards 1 +Stock Awards 1 +Name +Number of +Securities +Underlying +Unexercised +Options +(#) +Exercisable +Number of +Securities +Underlying +Unexercised +Options 2 +(#) +Unexercisable +Equity +Incentive +Plan +Awards: +Number of +Securities +Underlying +Unexercised +Unearned +Options (#) +Option +Exercise +Price +($/Sh.) +Option +Expiration +Date +Number of +Shares or +Units of +Stock +That Have +Not +Vested 2 +(#) +Market +Value of +Shares or +Units of +Stock +That +Have +Not +Vested 8 +($) +Equity +Incentive +Plan +Awards: +Number of +Unearned +Shares, +Units or +Other +Rights +That Have +Not +Vested +(#) +Equity +Incentive +Plan +Awards: +Market +or Payout +Value of +Unearned +Shares, +Units or +Other +Rights +That +Have +Not +Vested +($) +Ronald H. Spair +Chief Financial Officer and +Chief Operating Officer +27,000 +-- +-- +$ +9.56 +1/23/2016 +-- +-- +-- +-- +45,000 +-- +-- +$ +8.28 +2/01/2017 +-- +-- +-- +-- +45,500 +-- +-- +$ +8.06 +2/01/2018 +-- +-- +-- +-- +18,720 +-- +-- +$ +2.81 +1/23/2019 +-- +-- +-- +-- +82,815 +-- +-- +$ +5.19 +1/25/2020 +-- +-- +-- +-- +116,100 +-- +-- +$ +6.63 +2/01/2021 +-- +-- +-- +-- +119,989 +5,218 4(a) +-- +$ +11.30 +2/01/2022 +-- +-- +-- +-- +70,507 +29,033 4(b) +-- +$ +7.05 +2/01/2023 +-- +-- +-- +-- +58,941 +69,658 4(c) +-- +$ +5.72 +2/03/2024 +-- +-- +-- +-- +-- +81,854 4(d) +-- +$ +9.31 +2/03/2025 +-- +-- +-- +-- +-- +-- +-- +-- +-- +11,393 +4(e) +$ +73,371 +-- +-- +-- +-- +-- +-- +-- +29,972 +4(f) +$ +193,020 +-- +-- +-- +-- +-- +-- +-- +28,442 +4(g) +$ +183,166 +-- +-- +Anthony Zezzo II +Executive Vice President, +Marketing and Sales +115,000 +-- +-- +$ +5.94 +1/03/2021 +-- +-- +-- +-- +34,695 +1,509 5(a) +-- +$ +11.30 +2/01/2022 +-- +-- +-- +-- +23,319 +9,602 5(b) +-- +$ +7.05 +2/01/2023 +-- +-- +-- +-- +38,199 +45,144 5(c) +-- +$ +5.72 +2/03/2024 +-- +-- +-- +-- +-- +41,781 5(d) +-- +$ +9.31 +2/03/2025 +-- +-- +-- +-- +-- +-- +-- +-- +-- +3,768 +5(e) +$ +24,266 +-- +-- +-- +-- +-- +-- +-- +19,425 +5(f) +$ +125,097 +-- +-- +-- +-- +-- +-- +-- +14,566 +5(g) +$ +93,805 +-- +-- +Jack E. Jerrett +Senior Vice President and +General Counsel +18,000 +-- +-- +$ +9.56 +1/23/2016 +-- +-- +-- +-- +12,000 +-- +-- +$ +8.28 +2/01/2017 +-- +-- +-- +-- +12,000 +-- +-- +$ +8.06 +2/01/2018 +-- +-- +-- +-- +6,065 +-- +-- +$ +2.81 +1/23/2019 +-- +-- +-- +-- +30,350 +-- +-- +$ +5.19 +1/25/2020 +-- +-- +-- +-- +25,000 +-- +-- +$ +6.63 +2/01/2021 +-- +-- +-- +-- +33,237 +1,446 6(a) +-- +$ +11.30 +2/01/2022 +-- +-- +-- +-- +31,060 +12,790 6(b) +-- +$ +7.05 +2/01/2023 +-- +-- +-- +-- +23,490 +27,761 6(c) +-- +$ +5.72 +2/03/2024 +-- +-- +-- +-- +-- +36,401 6(d) +-- +$ +9.31 +2/03/2025 +-- +-- +-- +-- +-- +-- +-- +-- +-- +5,019 +6(e) +$ +32,322 +-- +-- +-- +-- +-- +-- +-- +11,945 +6(f) +$ +76,926 +-- +-- +-- +-- +-- +-- +-- +12,690 +6(g) +$ +81,724 +-- +-- +61 +Table of Contents +Option Awards 1 +Stock Awards 1 +Name +Number of +Securities +Underlying +Unexercised +Options +(#) +Exercisable +Number of +Securities +Underlying +Unexercised +Options 2 +(#) +Unexercisable +Equity +Incentive +Plan +Awards: +Number of +Securities +Underlying +Unexercised +Unearned +Options (#) +Option +Exercise +Price +($/Sh.) +Option +Expiration +Date +Number of +Shares or +Units of +Stock +That Have +Not +Vested 2 +(#) +Market +Value of +Shares or +Units of +Stock +That +Have +Not +Vested 8 +($) +Equity +Incentive +Plan +Awards: +Number of +Unearned +Shares, +Units or +Other +Rights +That Have +Not +Vested +(#) +Equity +Incentive +Plan +Awards: +Market +or Payout +Value of +Unearned +Shares, +Units or +Other +Rights +That +Have +Not +Vested +($) +Mark L. Kuna +Senior Vice President, +Finance, Controller and +Assistant Secretary +15,000 +-- +-- +$ +8.28 +2/01/2017 +-- +-- +-- +-- +15,000 +-- +-- +$ +8.06 +2/01/2018 +-- +-- +-- +-- +6,956 +-- +-- +$ +2.81 +1/23/2019 +-- +-- +-- +-- +15,175 +-- +-- +$ +5.19 +1/25/2020 +-- +-- +-- +-- +33,700 +-- +-- +$ +6.63 +2/01/2021 +-- +-- +-- +-- +26,258 +1,142 7(a) +-- +$ +11.30 +2/01/2022 +-- +-- +-- +-- +24,589 +10,126 7(b) +-- +$ +7.05 +2/01/2023 +-- +-- +-- +-- +18,682 +22,079 7(c) +-- +$ +5.72 +2/03/2024 +-- +-- +-- +-- +-- +25,859 7(d) +-- +$ +9.31 +2/03/2025 +-- +-- +-- +-- +-- +-- +-- +-- +-- +3,973 +7(e) +$ +25,586 +-- +-- +-- +-- +-- +-- +-- +9,500 +7(f) +$ +61,180 +-- +-- +-- +-- +-- +-- +-- +9,015 +7(g) +$ +58,057 +-- +-- +1 +The table does not include restricted stock and restricted units awarded to the NEOs in February 2016 pursuant to the LTIP in respect of performance during 2015. +2 +Stock options vest over four years, with the first 25% vesting on the first anniversary of the grant date and the remaining 75% vesting on a monthly basis over the +next three years following the first anniversary of the grant date. Grants of restricted stock vest over a three-year period, with one-third vesting on the first anniversary of the grant date, a second third vesting on the second anniversary and the +final third vesting on the third anniversary. +3 +The indicated stock options and restricted stock vest as follows: +(a) +4,187 options on January 1 and February 1, 2016; +(b) +3,789 options on the 1 st of each month, from January 1, 2016 through February 1, 2017; +(c) +5,293 options on the 3 rd of each month, from January 3, 2016 through February 3, 2018; +(d) +42,980 options on February 3, 2016 and 3,582 options on the 3 rd of each month from March 3, 2016 through February 3, 2019; +(e) +20,818 restricted shares on February 1, 2016; +(f) +29,607 restricted shares on February 3, 2016 and 2017; and +(g) +19,978 restricted shares on February 3, 2016, 2017 and 2018. +4 +The indicated stock options and restricted stock vest as follows: +(a) +2,609 options on January 1 and February 1, 2016; +(b) +2,074 options on the 1 st of each month, from January 1, 2016 through February 1, 2017; +(c) +2,679 options on the 3 rd of each month, from January 3, 2016 through February 3, 2018; +(d) +20,464 options on February 3, 2016 and 1,705 options on the 3 rd of each month from March 3, 2016 through February 3, 2019; +(e) +11,393 restricted shares on February 1, 2016; +(f) +14,986 restricted shares on February 3, 2016 and 2017; and +(g) +9,481 restricted shares on February 3, 2016, 2017 and 2018. +62 +Table of Contents +5 +The indicated stock options and restricted stock vest as follows: +(a) +754 options on January 1, and February 1, 2016; +(b) +686 options on the 1 st of each month, from January 1, 2016 through February 1, 2017; +(c) +1,736 options on the 3 rd of each month, from January 3, 2016 through February 3, 2018; +(d) +10,445 options on February 3, 2016 and 870 options on the 3 rd of each month from March 3, 2016 through February 3, 2019; +(e) +3,768 restricted shares on February 1, 2016; +(f) +9,713 restricted shares on February 3, 2016 and 2017; and +(g) +4,855 restricted shares on February 3, 2016, 2017 and 2018. +6 +The indicated stock options and restricted stock vest as follows: +(a) +723 options on January 1 and February 1, 2016; +(b) +913 options on the 1 st of each month, from January 1, 2016 through February 1, 2017; +(c) +1,068 options on the 3 rd of each month, from January 3, 2016 through February 3, 2018; +(d) +9,100 options on February 3, 2016, and 758 options on the 3 rd of each month from March 3, 2016 through February 3, 2019; +(e) +5,019 restricted shares on February 1, 2016; +(f) +5,973 restricted shares on February 3, 2016 and 2017; and +(g) +4,230 restricted shares on February 3, 2016, 2017 and 2018. +7 +The indicated stock options and restricted stock vest as follows: +(a) +571 options on January 1 and February 1, 2016; +(b) +723 options on the 1 st of each month, from January 1, 2016 through February 1, 2017; +(c) +849 options on the 3 rd of each month, from January 3, 2016 through February 3, 2018; +(d) +6,465 options on February 3, 2016, and 539 options on the 3 rd of each month from March 3, 2016 through February 3, 2019; +(e) +3,973 restricted shares on February 1, 2016; +(f) +4,750 restricted shares on February 3, 2016 and 2017; and +(g) +3,005 restricted shares on February 1, 2016, 2017 and 2018. +8 +The indicated values were determined by multiplying the number of unvested shares of restricted stock shown in this table by $6.44 per share, the closing price of the +Company’s Common Stock as reported by NASDAQ on December 31, 2015. +63 +Table of Contents +O ption Exercises and Stock Vested +The following table summarizes information with respect to the exercise of stock options and +vesting of restricted stock for each of the NEOs during the fiscal year ended December 31, 2015: +Option Awards +Stock Awards +Name +Number of +Shares +Acquired +on Exercise +(#) +Value +Realized +on +Exercise +($) +Number Of +Shares +Acquired +on Vesting +(#) +Value +Realized +on +Vesting 1 +($) +Douglas A. +Michels +President and Chief Executive Officer +— +— +62,644 +577,121 +Ronald H. +Spair +Chief Financial Officer and Chief Operating Officer +— +— +33,675 +310,075 +Anthony +Zezzo II +Executive Vice President, Marketing and Sales +— +— +16,993 +156,846 +Jack E. +Jerrett +Senior Vice President and General Counsel +— +— +14,356 +132,116 +Mark L. +Kuna +Senior Vice President, Finance, Controller and Assistant Secretary +— +— +11,382 +104,749 +1 +The indicated amounts were calculated by multiplying the number of restricted shares acquired +upon vesting by the market value of the Company’s Common Stock on the applicable vesting date. The market value was determined by calculating the mean between the high and low sales prices of the Common Stock as reported by NASDAQ on the +vesting date. +R etirement Benefits +The NEOs are eligible to participate in our 401(k) Plan on the same terms and conditions +applicable to all of our employees. For a further description of the terms of the 401(k) Plan, see the Section entitled, “Retirement Programs,” in the CD&A. +N onqualified Deferred Compensation +The OraSure Technologies, Inc. Deferred Compensation Plan (the “Plan”) is a +non-qualified deferred compensation plan designed to provide deferred compensation benefits to a select group of the Company’s highly compensated employees, including all of the NEOs, and to non-employee members of the Board. +The Plan allows for deferrals by participants of up to 100% of their annual base salaries (or in the case of non-employee +Directors, 100% of fees payable under the Company’s Non-Employee Director Compensation Policy) and up to 100% of annual incentive cash bonuses and, upon vesting, restricted shares of the Company’s Common Stock awarded under the +Company’s Stock Award Plan. The Company may also make discretionary contributions to the accounts of employees participating in the Plan. Cash balances in participants’ accounts may be invested in a list of investment options that are +similar to the fund choices offered in the Company’s 401(k) plan. Participants will be permitted to sell vested restricted shares in their accounts, subject to compliance with the Company’s Insider Trading Policy and applicable securities +laws, and invest the proceeds of any such sale in the investment options available under the Plan. Participants will be 100% vested in their accounts and the restricted shares they defer, except that Company contributions will vest over one or more +years as determined by +64 +Table of Contents +the Company. In the event of death, disability or change of control, a participant will become 100% vested in any then unvested Company contributions. +Participants may elect to receive a distribution from his or her account upon a specified date, separation from service, +change of control, disability and/or death. Distributions will be made in a lump sum or installments, as allowed under the Plan. +Amounts contributed to a participant’s account through elective deferrals or through the Company’s discretionary +contributions are generally not subject to income tax, and the Company does not receive a deduction until they are distributed pursuant to the Plan. +However, cash deferrals are subject to the Federal Insurance Contributions Act Tax imposed at the time of deferral (the +“FICA tax”). Deferrals of restricted shares are subject to the FICA tax at the time the restricted shares vest, but are not subject to income tax, and the Company does not receive the deduction until the restricted shares are distributed +pursuant to the Plan. The Company may amend or terminate the Plan at any time in accordance with applicable law. +The +following table summarizes information for each NEO with respect to the Plan for the fiscal year ended December 31, 2015: +Name +Executive +Contributions 1 +($) +Registrant +Contributions +($) +Aggregate +Earnings/Loss 2 +($) +Aggregate +Withdrawals/ +Distributions +($) +Aggregate +Balance +at 12/31/15 1,2 +($) +Douglas A. Michels +President and Chief +Executive Officer +— +— +— +— +— +Ronald H. +Spair +Chief Financial Officer +and Chief Operating Officer +$ +238,323 +— +$ +(106,577 +) +— +$ +966,233 +Anthony +Zezzo II +Executive Vice President, +Marketing and Sales +— +— +— +— +— +Jack E. +Jerrett +Senior Vice President and +General Counsel +— +— +— +— +— +Mark L. +Kuna +Senior Vice President, +Finance, Controller and Assistant Secretary +— +— +— +— +— +1 +The indicated amounts of NEO contributions have been reported as compensation in the Summary +Compensation Table. +2 +There were no earnings or deferred compensation at above market or preferential rates and, +therefore, no earnings have been reported as compensation in the Summary Compensation Table for 2015. Aggregate earnings include dividends and interest earned during the period, as well as the net unrealized depreciation of the underlying +investments in the participant’s account. +65 +Table of Contents +Employment Agreements and Potential Payments Upon Termination or +Change of Control +We have entered into employment agreements with all of our NEOs. We believe such agreements +are necessary to attract and retain critical talent, and are in-line with market practices. +In March 2015, the employment +agreements with Mr. Michels and the other NEOs were amended to eliminate a provision requiring the Company to pay a gross-up for excise tax payments under Section 280G of the Internal Revenue Code. In addition, Mr. Michels’ +agreement was amended to change a modified “single trigger” change of control severance provision to a “double trigger” provision. The following summary describes the material terms of the employment agreements with +Mr. Michels and the other NEOs, as so amended. +Mr. Michels’ employment agreement with the Company provides +for the various components of compensation described in the CD&A. In addition, upon a termination of employment, Mr. Michels’ contract provides for certain post-employment severance and other benefits, as described below. +Mr. Michels’ employment agreement will terminate upon his death or disability. In addition, Mr. Michels may +terminate his employment at any time and for any reason upon 90 days’ written notice to the Company or for “good reason” (as defined below). Mr. Michels’ employment agreement can also be terminated by the Company for +“cause” (as defined below) or without “cause.” +As used in Mr. Michels’ agreement, the term +“good reason” means (i) a material breach of the agreement by the Company that is not cured within 30 days of written notice, (ii) a material diminution in Mr. Michels’ base compensation or authority, duties or +responsibilities (following a change of control, such a diminution shall occur if Mr. Michels no longer functions as the sole chief executive officer of the successor organization), (iii) a material diminution in the authority, duties or +responsibilities of the person to whom Mr. Michels reports, including a change in Mr. Michels’ reporting obligation from the Board to another employee of the Company, if applicable (following a change of control, such a diminution +shall occur if Mr. Michels no longer reports to the board of directors of a public company), (iv) a material diminution of the budget over which Mr. Michels exercises control, or (v) a material change in Mr. Michels’ +job location. +A “change of control” generally is defined to take place when disclosure of such a change would +be required by the proxy rules promulgated by the SEC or when: +• +any person, or more than one person acting as a group within the meaning of Section 409A of the Internal Revenue Code (the “Code”) and the regulations issued thereunder, acquires ownership of stock of the +Company that, together with stock held by such person or group, constitutes more than 50 percent of the total fair market value or total voting power of the stock of the Company; +• +any person, or more than one person acting as a group within the meaning of Code Section 409A and the regulations issued thereunder, acquires (or has acquired during the 12-month period ending on the date of the +most recent acquisition) ownership of stock of the Company possessing 30 percent or more of the total voting power of the Company’s stock; +• +a majority of the members of the Board is replaced during any 12-month period by Directors whose appointment or election is not endorsed by a majority of the members of the Board before the date of the appointment or +election; or +• +a person, or more than one person acting as a group within the meaning of Code Section 409A and the regulations issued thereunder, acquires (or has acquired during the 12-month period ending on the date of the most +recent acquisition) assets from the Company that have a total gross fair market value equal to or more than 40 percent of the total gross fair market value of all the assets of the Company immediately before such acquisition or acquisitions. +66 +Table of Contents +A “change of control period” is the period which begins on the +occurrence of a change of control and ends 18 months thereafter. +Upon the termination of Mr. Michels’ +employment upon his death or disability, by Mr. Michels for any reason other than good reason or by the Company for cause, Mr. Michels will be entitled to receive his salary through the date of termination and any bonus approved by the +Board or the Compensation Committee prior to the date of termination but not yet paid and, in the case of a termination upon his death or disability, a cash bonus for the calendar year in which termination occurs that Mr. Michels would have +received but for his death or disability, prorated through the date of death or commencement of disability. Upon termination of the agreement by Mr. Michels with good reason or by the Company without cause (which includes the Company’s +failure to renew the agreement), Mr. Michels would be entitled to receive his salary through the date of termination and any bonus that has been approved by the Board or the Compensation Committee prior to the date of termination but not yet +paid, a cash bonus for the calendar year in which termination occurs equal to Mr. Michels’ target bonus for such year, and for a period of one year after the date of termination, benefits for Mr. Michels and/or his family at levels +substantially equal to those that would have been provided to them by the Company if Mr. Michels’ employment had not been terminated. If termination is for good reason or without cause (which includes the Company’s failure to renew +the agreement) and does not occur during a change of control period, Mr. Michels would also receive a lump sum amount equivalent to 12 months of his annual salary. If, however, termination is for good reason or without cause (which includes the +Company’s failure to renew the agreement) and occurs during a change of control period, Mr. Michels will receive a lump sum amount equivalent to 36 months of his annual salary. If Mr. Michels is a “specified employee” within +the meaning of Code Section 409A at the time of the termination of his employment and any of the foregoing payments would subject him to any tax, interest or penalty under Code Section 409A or regulation thereunder, then the payment shall +not be made until the first day which is at least six months after the date of termination of his employment. +Upon +termination of Mr. Michels’ employment as a result of disability, for good reason, or by the Company without cause, Mr. Michels can elect to receive medical and dental insurance coverage for himself and his family under any plans +offered by the Company to the extent the Company is self-insured or coverage for former employees is available on reasonable terms (as determined by the Company) from the Company’s providers of medical and dental coverage. +All stock awards granted to Mr. Michels are required to immediately vest (i) in the event of a change of control or +(ii) if Mr. Michels’ employment is terminated for good reason by Mr. Michels or by the Company without cause during a change of control period, and 50% of such stock awards shall vest in the event Mr. Michels’ +employment is terminated for good reason or by the Company without cause during any period other than a change of control period. +The termination and severance provisions in the employment agreements for the other NEOs are substantially similar to +Mr. Michels’ employment agreement, with the following exceptions. Mr. Spair is entitled to receive severance equal to 36 months of his annual salary and Messrs. Jerrett and Kuna are entitled to receive severance equivalent to 24 +months of their annual salary, rather than 36 months, in the event of a termination of their agreements for good reason or without cause during a change of control period or after a change of control. Mr. Zezzo will be entitled to receive +severance equal to 24 months of his annual salary only if he is terminated for good reason or without cause during a change of control period. In the employment agreements with Messrs. Spair, Zezzo, Jerrett and Kuna, the term “good reason” +means (i) a material breach of the agreement by the Company that is not cured within 30 days of written notice, (ii) a material diminution in base compensation or authority, duties or responsibilities, (iii) a material diminution in +the authority, duties or responsibilities of the person to whom the executive reports, including a change in the executive’s reporting obligation from the Board to another employee of the Company, if applicable, (iv) a material diminution +of the budget over which the executive exercises control, or (v) a material change in the executive’s job location. +67 +Table of Contents +The following table provides estimates of the potential severance and other +post-termination benefits the NEOs would receive assuming their employment was terminated as of December 31, 2015: +Name +Benefit +Voluntary +Termination +or +Termination +for Cause +Termination +for Death +or +Disability 1 +Termination +for Good +Reason or +Without +Cause +Not +Within +Change of +Control +Period 1 +Termination +after Change of +Control +(except +Mr. Michels), or for +Good Reason or +Without Cause +Within Change of +Control Period 1 +Douglas A. Michels +Salary Continuation +— +— +$ +596,895 +$ +1,790,685 +President and Chief Executive Officer +Bonus +— +$ +508,787 +$ +417,827 +$ +417,827 +Accelerated Option Vesting +— +— +$ +49,885 +$ +99,769 +Accelerated Restricted +Stock Vesting +— +$ +901,375 +$ +450,687 +$ +901,375 +Health Care Benefits +— +— +$ +22,191 +$ +22,191 +Total +— +$ +1,410,162 +$ +1,537,485 +$ +3,231,847 +Ronald H. Spair +Salary Continuation +— +— +$ +468,838 +$ +1,406,514 +Chief Financial Officer and Chief Operating Officer +Bonus +— +$ +285,452 +$ +234,419 +$ +234,419 +Accelerated Option Vesting +— +— +$ +25,251 +$ +50,502 +Accelerated Restricted +Stock Vesting +— +$ +449,557 +$ +224,778 +$ +449,557 +Health Care Benefits +— +— +$ +21,969 +$ +21,969 +Total +— +$ +735,009 +$ +975,255 +$ +2,162,961 +Anthony Zezzo II +Salary Continuation +— +— +$ +384,010 +$ +768,020 +Executive Vice President, Marketing and Sales +Bonus +— +$ +153,036 +$ +153,604 +$ +153,604 +Accelerated Option Vesting +— +— +$ +16,365 +$ +32,729 +Accelerated Restricted +Stock Vesting +— +$ +243,168 +$ +121,585 +$ +243,168 +Health Care Benefits +— +— +$ +3,972 +$ +3,972 +Total +— +$ +396,204 +$ +679,536 +$ +1,201,493 +Jack E. Jerrett +Salary Continuation +— +— +$ +344,400 +$ +688,800 +Senior Vice +President and General Counsel +Bonus +— +$ +140,110 +$ +120,540 +$ +120,540 +Accelerated Option Vesting +— +— +$ +10,063 +$ +20,127 +Accelerated Restricted +Stock Vesting +— +$ +190,972 +$ +95,486 +$ +190,972 +Health Care Benefits +— +— +$ +21,941 +$ +21,941 +Total +— +$ +331,082 +$ +592,430 +$ +1,042,380 +Mark L. Kuna +Salary Continuation +— +— +$ +269,344 +$ +538,688 +Senior Vice President, +Finance, Controller and +Assistant Secretary +Bonus +— +$ +117,402 +$ +94,270 +$ +94,270 +Accelerated Option Vesting +— +— +$ +8,004 +$ +16,007 +Accelerated Restricted +Stock Vesting +— +$ +144,823 +$ +72,411 +$ +144,823 +Health Care Benefits +— +— +$ +28,056 +$ +28,056 +Total +— +$ +262,225 +$ +472,085 +$ +821,844 +1 +The indicated values for the accelerated vesting of stock options reflect (i) the number +of option shares which would vest on an accelerated basis, multiplied by (ii) the excess, if any, of the $6.44 per share closing price for the Company’s Common Stock, as reported by NASDAQ on December 31, 2015, over the applicable +exercise price for each option. The indicated values for the accelerated vesting of restricted stock reflect the $6.44 per share closing price on December 31, 2015 multiplied by the number of shares which would vest on an accelerated basis. +68 +Table of Contents +Equity Compensation Plan Information +The following table provides information as of December 31, 2015 about the shares of +Common Stock that may be issued upon the exercise of options under all of our equity compensation plans. These plans include the OraSure Technologies, Inc. Stock Award Plan (“Award Plan”), the Epitope, Inc. 1991 Stock Award Plan (the +“1991 Plan”), and the Agritope, Inc. 1992 Stock Award Plan (the “Agritope Plan”). The Award Plan, the 1991 Plan and the Agritope Plan were Epitope equity compensation plans. In connection with the merger of Epitope and STC into +the Company on September 29, 2000, the Award Plan was adopted by the Company, and the Company assumed the obligation to issue shares for the then outstanding stock options granted under the Award Plan, the 1991 Plan, and the Agritope Plan. +Additional grants of equity compensation may only be made under the Award Plan. +Plan Category +Number of Securities to be +Issued Upon Exercise of +Outstanding Options +(a) +Weighted-Average Exercise +Price of Outstanding +Options +(b) +Number of Securities +Remaining Available for +Future Issuance +Under +Equity Compensation Plans +(Excluding Securities +Reflected in Column (a)) +(c) +Equity compensation plans approved by security +holders +6,090,262 +$ +7.51 +3,695,756 1 +Equity compensation plans not approved by +security holders +125,552 +2 +$ +4.42 +2 +— +Total +6,215,814 +3,695,756 +1 +Represents shares remaining available for future issuance as of December 31, 2015 under +the Award Plan. +2 +Represents shares issuable as of December 31, 2015, under options at a weighted-average +exercise price of $4.42 per share, pursuant to the 1991 Plan and the Agritope Plan. +Director Compensation +Annual Fees +Under our Non-Employee Director Compensation Policy (“Director Policy”), non-employee members of the Board receive +fixed annual fees for service on the Board and Committees of the Board, as set forth below. The fees are paid quarterly in arrears. +Position +Annual Fee +Board Chairman +$ +60,000 +Non-Chairman Board Member +$ +40,000 +Audit Chairman +$ +18,000 +Compensation Chairman +$ +15,000 +N&CG Chairman +$ +8,000 +Non-Chairman Audit Member +$ +8,000 +Non-Chairman Compensation Member +$ +6,000 +Non-Chairman N&CG Member +$ +4,000 +69 +Table of Contents +Initial Equity Awards +Non-employee Directors receive an initial grant of 40,000 stock options for the Company’s Common Stock upon joining the +Board (the “Initial Grant”). An additional grant of 40,000 stock options is also made to any non-employee Director who becomes Chairman of the Board (the “Chairman Grant”). The options granted to non-employee Directors are +nonqualified stock options and have an exercise price equal to the mean between the high and low sales prices of the Company’s Common Stock as quoted on the NASDAQ Stock Market on the grant date. Each Initial Grant and Chairman Grant generally +vest on a monthly basis over the 24 months immediately following the grant date. Payment of the exercise price may be made in cash or by delivery of previously acquired shares of Common Stock having a fair market value equal to the aggregate +exercise price. +Annual Equity Awards +Under the Director Policy, each non-employee Director receives an annual grant of restricted shares (the “Annual +Grant”) of the Company’s Common Stock on the date of each annual meeting of stockholders. Annual grants are made using a value transfer award method similar to that used for our executives under the LTIP. The dollar values of the Annual +Awards were determined by the Compensation Committee and Board based on advice from PM&P and an assessment of director equity awards made at comparable medical diagnostics and healthcare companies. +Under the Director Policy, Annual Grants of restricted stock are made pursuant to the values set forth in the following table: +Board Position +Award Grant Value +Chairman +$ +120,000 +Non-Chairman Director +$ +80,000 +The dollar value of each Annual Grant is converted into restricted stock by dividing the above +values by the average of the high and low sales prices of the Company’s Common Stock, as reported on the NASDAQ Stock Market, on the grant date. Annual Grants of restricted stock will vest on the date that is twelve months from the date of +grant. Non-employee Directors are permitted to direct the Company to withhold restricted stock in order to pay tax withholding obligations arising upon the vesting of such shares. +In September 2014, management compared the compensation provided under our Director Policy with the compensation paid to +non-employee directors at the peer companies (listed on page 43 of this Proxy Statement) used for benchmarking executive compensation, as described above. Based on this analysis, we concluded that the mix of cash fees and annual awards +of restricted stock reflects what we believe to be market practice and the compensation value provided to our non-employee Directors is consistent with the median compensation value paid by the peer companies. +Equity Award Terms +Any unvested stock options and restricted stock granted to non-employee Directors will vest in their entirety immediately upon +the occurrence of a “change of control” of the Company. As defined in the Award Plan, a change of control means a change of control that would be required to be reported under the Securities Exchange Act of 1934, as amended, and would be +deemed to have occurred at such time as (i) any person, or more than one person acting as a group within the meaning of Section 409A of the Code, acquires ownership of stock of the Company that, together with stock held by such person or +group, constitutes more than 50 percent of the total fair market value or total voting power of the stock of the Company; (ii) any person, or more than one person acting as a group within the meaning of Section 409A of the Code, acquires +(or has acquired during the +70 +Table of Contents +12-month period ending on the date of the most recent acquisition) ownership of stock of the Company possessing 30 percent or more of the total voting power of the Company’s stock; +(iii) a majority of the members of the Board is replaced during any 12-month period by Directors whose appointment or election is not endorsed by a majority of the members of the Board before the date of the appointment or election; or +(iv) a person, or more than one person acting as a group within the meaning of Section 409A of the Code, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition) assets from the Company that +have a total gross fair market value equal to or more than 40 percent of the total gross fair market value of all the assets of the Company immediately before such acquisition or acquisitions. In addition, if a non-employee Director leaves the Board +for any reason other than a change of control, prior to the end of the vesting period for the Annual Grant of restricted stock, such award shall immediately vest on a pro-rata basis based on the actual duration of such Director’s service to the +Board during such vesting period. +Deferred Compensation +Non-employee Directors are permitted to defer all or a portion of the fees and grants of restricted stock under the +Company’s Non-Qualified Deferred Compensation Plan, on terms similar to those applicable to our officers. +Director Compensation During 2015 +The following table summarizes information related to compensation of non-employee Directors during the fiscal year ended +December 31, 2015: +Name 1, 2 +Fees +Earned +or Paid +in Cash +($) +Stock +Awards 3 +($) +Option +Awards +($) +Non-Equity +Incentive Plan +Compensation +($) +Change in +Pension +Value and +Nonqualified +Deferred +Compensation +Earnings +All Other +Compensation +($) +Total ($) +Michael Celano +$ +62,000 +$ +79,996 +— +— +— +— +$ +141,996 +Eamonn P. Hobbs +— +— +— +— +— +— +— +Ronny B. Lancaster +$ +54,000 +$ +79,996 +— +— +— +— +$ +133,996 +Charles W. Patrick 3 +$ +52,000 +$ +79,996 +— +— +— +— +$ +131,996 +Roger L. Pringle +$ +54,000 +$ +79,996 +— +— +— +— +$ +133,996 +Stephen S. Tang, Ph.D. +$ +59,000 +$ +79,996 +— +— +— +— +$ +138,996 +Douglas G. Watson +$ +74,000 +$ +119,997 +— +— +— +— +$ +193,997 +1 +Because Messrs. Michels and Spair are officers of the Company, they are not entitled to any separate compensation for service on the Board or any Committee thereof +and have not been included in this table. Eamonn P. Hobbs became a member of the Board in March 2016 and received no compensation during 2015. +2 +Non-employee Directors held the following number of unvested restricted shares (“RSs”) and stock options (“SOs”) at December 31, 2015: +Mr. Celano: 14,883 RSs; 70,000 SOs; Mr. Lancaster: 14,883 RSs; 50,000 SOs; Mr. Patrick: 14,883 RSs; 70,000 SOs; Mr. Pringle: 14,883 RSs; 175,552 SOs; Dr. Tang: 14,883 RSs; 40,000 SOs; and Mr. Watson: 22,325 RSs; 80,000 +SOs. The aggregate number of stock options and restricted shares held by Messrs. Michels and Spair are set forth in the table in the Section entitled, “Outstanding Equity Awards,” in this Proxy Statement. +3 +The indicated amounts reflect the aggregate grant date fair value of restricted stock awards made to non-employee Directors during 2015, computed in accordance with +FAS ASC Topic 718. Certain assumptions used in the calculation of those amounts are set forth in footnote 8 to the Company’s audited consolidated financial statements for the fiscal year ended December 31, 2015, included in the +Company’s 2015 Annual Report on Form 10-K. +71 +Table of Contents +PROPOSALS REQUIRING YOUR VOTE +Proposal No. 1. Election of Directors +Background +At the Annual Meeting, you will be asked to vote on the election of three Directors. A majority of the independent members of +the Board have nominated Eamonn P. Hobbs, Stephen S. Tang, Ph.D. and Douglas G. Watson for election as Class I Directors, for terms expiring at the Annual Meeting of Stockholders in 2019. +Each of the nominees for election as Directors is presently a member of our Board and has consented to continue to serve if +re-elected to the Board. Mr. Hobbs joined the Board in March 2016 and serves as a member of both the Audit Committee and Compensation Committee. Dr. Tang joined the Board in 2011, is currently Chairman of the Compensation Committee, and +serves as a member of the Nominating and Corporate Governance Committee. Mr. Watson joined the Board in 2002, is currently the Chairman of the Board of Directors, and serves as a member of both the Audit Committee and the Compensation +Committee. +We do not know of anything that would preclude any nominee from serving. However, should any nominee for any +reason become unable or unwilling to serve as a Director, the persons named in the enclosed Proxy Card will vote the shares represented by each Proxy for such substitute nominee as the Board may approve. +Any vacancy that occurs on the Board that results from an increase in the number of Directors may be filled by the affirmative +vote of a majority of the Directors then in office, and any other vacancy on the Board may be filled by the affirmative vote of a majority of the Directors then in office, even though less than a quorum of the Board, or by a sole remaining Director. +Certain information with respect to each person nominated for election as a Director and each person whose term of office +as a Director will continue after the Annual Meeting, including the particular experience, qualifications, attributes and skills they possess that led to the conclusion that they should serve as a Director, is set forth below. +Name +Principal Occupation +Age +Director +Since +Class I (Nominees for Terms Expiring in +2019): +Eamonn P. Hobbs +Former President and CEO of +Antares Pharma, Inc. +57 +2016 +Stephen S. Tang, Ph.D. +President and Chief Executive Officer of +The University City Science Center +55 +2011 +Douglas G. Watson +Chief Executive Officer of Pittencrieff +Glen Associates +71 +2002 +Class II (Directors Whose Terms Expire +in 2017): +Ronny B. Lancaster +Senior Vice President for Federal +Government Relations of Assurant, Inc. +64 +2003 +Roger L. Pringle +President of The Pringle Company +75 +2000 +Ronald H. Spair +Chief Financial Officer and Chief +Operating Officer of the Company +60 +2006 +Class III (Directors Whose Terms Expire +in 2018): +Michael Celano +Chief Financial Officer of Makindus, Inc. +57 +2006 +Douglas A. Michels +President and Chief Executive Officer of +the Company +59 +2004 +Charles W. Patrick +Principal, Patrick Consulting +61 +2006 +72 +Table of Contents +From July 2014 to January 2016, Mr. Hobbs served as the President and Chief Executive Officer of Antares Pharma, Inc., a +specialty pharmaceutical company focused on self-injection pharmaceutical products and technologies. He also served on the Antares board of directors from 2009 to 2016. From 2009 to 2013, Mr. Hobbs served as President and Chief Executive +Officer, and from 2008 to 2013 was a member of the board of directors, of Delcath Systems, Inc., a specialty pharmaceutical and medical device public company specializing in cancer treatment. Prior to Delcath Systems, Inc., Mr. Hobbs served as +President and Chief Executive Officer of AngioDynamics, Inc., a company he co-founded in 1988 as a division of E-Z-EM, Inc. which grew into a leading medical technology public company with a highly diverse product line. From 1988 to 2004, +Mr. Hobbs also served as Executive Vice President of Business Development of E-Z-EM, Inc., a NASDAQ-traded company. Before joining AngioDynamics, Mr. Hobbs was Director of Marketing and Product Development at NAMIC; founder, President and +Chief Executive Officer of Hobbs Medical, Inc.; and a Product Development Engineer at Cook Incorporated. Mr. Hobbs received a B.S. in Plastics Engineering with a Biomaterials emphasis at the University of Massachusetts (Lowell). Mr. Hobbs +has served on the Board of Directors of the Medical Device Manufacturers Association since 2009. +Skills and Qualifications leading to conclusion that he should serve on the Board: +• Executive-level management experience as CEO of several +public companies. +• Extensive experience in the medical device, pharmaceutical and combination +products industries. +• Extensive experience managing operations in a cost-effective, efficient +manner. +• Experience with governance and policy development for the medical device +industry. +73 +Table of Contents +Stephen S. Tang, Ph.D. became a member of the Board in April 2011. Since January 2008, Dr. Tang has served as President +and Chief Executive Officer of The University City Science Center, an urban research park and business incubator owned by over thirty leading universities, medical schools and health networks in the greater Philadelphia, Pennsylvania area. Prior to +that, Dr. Tang held senior management and business development positions with several firms in the life sciences industry, including Olympus America, Inc., Millennium Cell Inc. and A.T. Kearney Inc. Dr. Tang holds a B.S. degree in +Chemistry from The College of William and Mary, an M.S. degree and Ph.D. in Chemical Engineering from Lehigh University and an MBA from The Wharton School of Business at the University of Pennsylvania. +Skills and Qualifications leading to conclusion that +he should serve on the Board: +• Extensive business experience, particularly in the life +sciences industry. +• Experience with strategic and business development matters. +• Executive-level management experience. +Douglas G. Watson became a member of the Board in May 2002 and became Chairman of the Board in March 2003. Mr. Watson is +the Chief Executive Officer of Pittencrieff Glen Associates, a leadership and management consulting firm, which he founded in June 1999. Prior to that, Mr. Watson served as President and Chief Executive Officer of Novartis Corporation, the U.S. +subsidiary of Novartis A.G., President and Chief Executive Officer of Ciba-Geigy Corporation, President of the Ciba Pharmaceuticals Division and Senior Vice President of Planning and Business Development of Ciba’s U.S. Pharmaceuticals Division. +Mr. Watson holds an M.A. degree in pure mathematics from Churchill College, Cambridge University, and is a member of the Chartered Institute of Management Accountants. Mr. Watson previously served on the boards of directors of BioMimetic +Therapeutics, Inc., Wright Medical Group, Inc., Engelhard Corporation, Genta Inc., Javelin Pharmaceuticals Inc., Novartis Corporation, InforMedix Inc., BioElectronics Inc., Delcath Systems Inc., Dendreon Corporation and Summit Bank Corporation. +Skills and Qualifications leading to conclusion that +he should serve on the Board: +• Long business career and executive-level management +experience in the pharmaceutical industry. +• Financial and accounting expertise. +• Service +on the boards and board committees of other private and public companies. +74 +Table of Contents +Ronny B. Lancaster became a member of the Board in May 2003. Since September 2005, Mr. Lancaster has served +as Senior Vice President, Federal Government Relations of Assurant, Inc., a provider of specialty insurance and insurance-related products and services. Prior to that, Mr. Lancaster served as Chief Operating Officer of the Morehouse School of +Medicine, Executive Assistant to the Secretary and Principal Deputy Assistant Secretary for Planning and Evaluation at the U.S. Department of Health and Human Services, General Counsel of Hamilton Enterprises, Inc., Senior Washington Representative +for Blue Cross/Blue Shield Association, and Chief of the Division of Fee-For-Service Plans at the U.S. Office of Personnel Management. Mr. Lancaster received his B.A. in Economics from the Catholic University of America, his M.B.A. from the +Wharton School of the University of Pennsylvania, and his J.D. degree from The Georgetown University Law Center. He is admitted to the Bars of Pennsylvania and the District of Columbia. Mr. Lancaster previously served on the board of directors +of Immucor, Inc. +Skills and +Qualifications leading to conclusion that he should serve on the Board: +• +Expertise in government affairs and political matters, +• +Extensive medical and healthcare experience +• +Legal training. +Roger L. Pringle has served on the Board since September 2000, when the Company was formed by the merger of +Epitope, Inc. (“Epitope”) and STC Technologies, Inc. Prior to that, Mr. Pringle served as Chairman of the Board and a member of the Board of Directors of Epitope, and was a director of Agritope, Inc., a plant genetics subsidiary of +Epitope. Mr. Pringle is the President of The Pringle Company, a strategy and executive consulting firm in Portland, Oregon, which was founded in 1976. Mr. Pringle currently serves on the board of directors of Prolifiq Software, Inc. +and previously served on the boards of directors of Bank of the Northwest, Metro One Telecommunications Inc. and North Pacific Group. Mr. Pringle received a B.S. in Business from Oregon State University and an MBA from the University of +Oregon. +Skills and +Qualifications leading to conclusion that he should serve on the Board: +• +Long service as a member of the Board of Epitope, Inc., a predecessor to the Company. +• +Professional expertise in executive selection, assessment and compensation. +• +Entrepreneurial and business leadership skills +• +Service on the boards of other private and public companies. +75 +Table of Contents +For biographical information on Mr. Spair, see the Section +entitled, “Executive Officers,” in this Proxy Statement. +Skills and Qualifications leading to conclusion that he should serve on the Board: +• Service as Chief Financial Officer and Chief Operating Officer of the +Company. +• Financial and accounting expertise. +• Extensive business and investor relations experience. +For biographical information on Mr. Michels, see +the Section entitled, “Executive Officers,” in this Proxy Statement. +Skills and Qualifications leading to conclusion that he should serve on the Board: +• Service as President and Chief Executive Officer of the Company +• Extensive business and executive-level management experience in the medical +diagnostics field +• Sales and marketing expertise +76 +Table of Contents +Michael Celano became a member of the Board in October 2006. Mr. Celano is the Principal and Founder of Lafayette Hill +Consulting and as of September 2015 the Chief Financial Officer (part-time) of Makindus, Inc., a clinical-stage biotechnology company. Prior to that, Mr. Celano served as the Chief Financial Officer of DrugScan, Inc., a clinical laboratory +services company from January 2013 to May 2015. He also served as the Chief Financial Officer of Kensey Nash Corporation, a biomaterials company from March 2009 until June 2012, and as a consultant to Royal DSM, the acquiror of Kensey Nash +Corporation, from July 2012 through December 2012. From August 2007 to December 2008, Mr. Celano served as Managing Director of Aon Risk Services and prior to that, he served as Vice President, Finance and Chief Financial Officer for BioRexis +Pharmaceutical Corporation, a biopharmaceutical company. Before joining BioRexis, Mr. Celano served as a partner with KPMG LLP, in charge of its Mid-Atlantic Life Sciences Practice, and was co-leader of its National Life Science Practice. +Mr. Celano also was co-leader of the Life Science Practice for Arthur Andersen before he joined KPMG. Mr. Celano holds a B.S. degree in Accounting from St. Joseph’s University. +Skills and Qualifications leading to +conclusion that he should serve on the Board: +• Long career in public accounting focused in the life +sciences area. +• Accounting and financial expertise. +• Extensive business experience. +Charles W. Patrick became a member of the Board in January 2006. Since 2000, Mr. Patrick has served as Principal of +Patrick Consulting, a management consulting firm that helps diagnostic and technology companies develop sales, marketing and distribution strategies. From 2001 through 2011, Mr. Patrick also served as the President and Co-owner of ADS Golf, +Inc., a golf equipment supplier. Prior to that time, he served as the President and Chief Executive Officer of CallNexus, Inc., a provider of virtual call center services, and Vice President of Sales and Marketing for Biosite Diagnostics, a medical +diagnostics company, where he had primary responsibility for developing and achieving Biosite’s strategic sales, marketing and distribution objectives. Prior to his time at Biosite, Mr. Patrick served as World Wide Group Marketing Manager +and held several other sales and marketing positions for the Diagnostics Division of Abbott Laboratories. Mr. Patrick previously served on the board of directors of DiaDexus, Inc. Mr. Patrick received his undergraduate degree from the +University of Central Florida. +Skills and +Qualifications leading to conclusion that he should serve on the Board: +• Extensive sales and marketing background. +• More than 35 years of experience in the medical diagnostics +industry. +• Entrepreneurial skills. +77 +Table of Contents +Vote Required; Board Recommendation +If a quorum is present, each nominee will be elected if he receives a plurality of the votes cast by shares present in person +or by Proxy and entitled to vote at the Annual Meeting. Abstentions and broker non-votes will have no effect on the required vote. In the absence of instructions to the contrary, shares of Common Stock represented by properly executed Proxies will +be voted for the nominees, each of whom has consented to be named and to serve if elected. +Your Board recommends that you vote FOR the +election of the Director nominees. +Proposal No. 2. Ratification of Appointment of Independent Registered Public Accounting Firm +Background +The Audit Committee of the Board of Directors has approved the reappointment of KPMG LLP (“KPMG”) as our independent +registered public accounting firm for the 2016 fiscal year. The Audit Committee has also recommended that the Board submit the appointment of KPMG for ratification by stockholders at the Annual Meeting. Although action by the stockholders on this +matter is not legally required, the Audit Committee and the Board believe it is appropriate to seek stockholder ratification of this appointment in light of the important role played by the independent registered public accounting firm in reporting +on the Company’s consolidated financial statements. If this appointment is not ratified by stockholders, the Audit Committee may reconsider its appointment of KPMG for the 2016 fiscal year or in the future. +One or more representatives of KPMG are expected to be at the Annual Meeting. They will have an opportunity to make a +statement and will be available to respond to appropriate questions. +Vote Required; Board Recommendation +Ratification of the appointment of KPMG requires the affirmative vote of a majority of shares present in person or by Proxy +and entitled to vote at the Annual Meeting. Shares voted in person or represented by Proxy which are not voted for this ratification (by voting no or abstaining) will have the effect of voting against this proposal. In the absence of instructions to +the contrary, shares of Common Stock represented by properly executed Proxies will be voted for ratification of the appointment of KPMG as our independent registered public accounting firm for the 2015 fiscal year. +Your Board recommends that the stockholders vote FOR ratification of the appointment of KPMG. +Proposal No. 3. Advisory (Non-Binding) Vote to Approve Executive Compensation +Background +Section 14A of the Exchange Act, enacted pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 +(“Dodd-Frank Act”), requires that stockholders be given the opportunity to vote to approve, on an advisory (non-binding) basis, no less frequently than once every three years, the compensation of our NEOs. Based on feedback received at our +2011 Annual Meeting, the Board determined that such a vote should be held on an annual basis until the next advisory vote on frequency. Thus, following this vote, the next time the Company will hold a non-binding advisory vote on the compensation of +our NEOs will be at our 2017 Annual Meeting of Stockholders. +78 +Table of Contents +The vote on the resolution recommended below is not intended to address any +specific element of compensation, but rather relates to the overall compensation of our NEOs. As described more fully under the CD&A Section of this Proxy Statement and the related tables and narrative, our compensation program is +performance-based and is designed to pay executives for performance by offering rewards for the achievement of pre-determined objectives. In addition, our program is designed to align the interests of executives with the interests of our +stockholders, provide long-term incentives and set compensation at levels sufficiently competitive to attract, retain and motivate high quality executives, and meet strong corporate governance principles. You are urged to carefully review the +CD&A Section of this Proxy Statement which contains a detailed discussion of our executive compensation program, including the 2014 compensation of our NEOs. +Recent Compensation Changes +In response to input from our stockholders, we recently implemented several important changes to our compensation program in +order to more closely align compensation and performance for our executives. +Performance Vesting Equity – Beginning with long term incentive equity awards +made in early 2016 for performance during 2015, executives receive 50% of their awards in the form of performance-vested restricted units that will vest after three years only if a three year product sales growth target and one-year earnings per +share target are met. The remaining 50% of each award consists of time-vested restricted stock that will vest in full after three years. Thus, beginning in 2016 one-half of each executive’s annual equity awards has performance vesting and one +half has time-vesting. In 2015 and prior years, executives received annual equity awards consisting of a 60%/40% mix of stock options and restricted stock, all of which were time vested. This change strengthens our compensation program by more +closely aligning executive pay with longer-term Company priorities and performance and responds to input from our stockholders urging us to adopt performance vesting for a significant portion of our executives’ long-term incentive equity +awards. +Employment +Agreement Changes – The employment agreements for all NEOs have been modified to eliminate the excise tax gross-up. In addition, our CEO’s employment agreement has been modified to change the modified “single trigger” change +of control severance provision to a “double trigger” provision. These changes respond to concerns raised by stockholders. +Enhanced Stock Ownership/Retention Guidelines – In 2015, the Board increased the stock ownership and retention +requirements for our executives, as summarized below (expressed as a multiple of base salary): +Position +Old +New +President & CEO +2x +6x +Chief Financial Officer & Chief Operating Officer +1x +2x +Other Executive Officers +N/A +1x +In addition, each +individual covered by these guidelines is now required to retain 50% (rather than 25%) of the net shares acquired upon the exercise of stock options and the vesting of restricted stock until the individual’s holdings of our Common Stock meet +applicable ownership guidelines. These changes respond to input from stockholders by better aligning the interests of our executives with our stockholders and making our guidelines more consistent with market practice. +Limited Bonus +Pool Funding Discretion – Beginning in 2015, the Board has limited its authority to make discretionary adjustments to the aggregate cash pool used to fund annual incentive bonuses for executives to ++/- 10% of the aggregate pool amount otherwise determined by the funding formula for the applicable Management Incentive Plan. A similar limit has been included in the 2016 bonus plan. This change +responds to input received from stockholders regarding the use of discretion in determining compensation. +Extension of +Stock Buyback Program – We recently extended our previously authorized stock repurchase program and in late 2015 and early 2016, we purchased 1.2 million shares of our Common Stock at a cost of $7.6 million. This action was taken, +in part, because of concerns expressed by our stockholders regarding the dilutive impact of the annual equity awards made to management and non-employee Directors. +79 +Table of Contents +Other Compensation Program Features +As described more fully in the CD&A, there are many other important features to our compensation program that illustrate +our commitment to pay-for-performance and good corporate governance. A summary of some of the more significant of these features is set forth below: +• Compensation is market driven +and performance-based. +• Use of peer company benchmarking and tally sheets. +• Balanced mix of cash/equity, fixed/variable, short-term/long-term compensation components. +• Compensation recoupment +policy. +• Threshold financial performance objectives for annual bonus pool funding meet or exceed fiscal performance for the prior fiscal +year. +• No hedging or pledge of +our Common Stock. +• Equity awards provide long-term incentive with three to four year vesting. +• Robust stockholder +outreach on compensation/ governance matters. +• Total compensation targeted at 50 th percentile of peer group. +Vote Required; Board Recommendation +If a quorum is present, the affirmative vote of a majority of shares present, in person or by Proxy and entitled to vote at the +Annual Meeting, is required to approve, on an advisory (non-binding) basis, the compensation paid to NEOs. Shares voted in person or represented by Proxy which are not voted for approval of our executive compensation (by voting no or abstaining) +will have the effect of voting against this proposal. Broker non-votes will not count toward the determination of whether this proposal is approved and will have no impact on the vote. In the absence of instructions to the contrary, shares of Common +Stock represented by properly executed Proxies will be voted for approval of our executive compensation, as disclosed in this Proxy Statement. Because this stockholder vote is advisory, it will not be binding on the Company or the Board of +Directors. However, the Compensation Committee and Board will take into account the outcome of the vote when considering future executive compensation programs and arrangements. +Based on the foregoing, the Board is requesting that stockholders vote on the following resolution: +RESOLVED , that the compensation paid to the Company’s named executive officers, as disclosed in the Compensation +Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED. +Your Board recommends that the stockholders +vote FOR the approval of our executive compensation as described in the preceding resolution. +Annual +Report +Our Annual Report to Stockholders for the year ended December 31, 2015 accompanies +this Proxy Statement. Following receipt of a written request, we will provide, without charge, a copy of our Annual Report on Form 10-K for the year ended December 31, 2015, as filed with the SEC (including a list briefly describing the +exhibits thereto), to any record holder or beneficial owner of our Common Stock on March 24, 2016, the record date for the Annual Meeting, or to any person who subsequently becomes such a record holder or beneficial owner. Requests should be +directed to the attention of the Corporate Secretary of the Company at our address set forth in the Notice of Annual Meeting of Stockholders immediately preceding this Proxy Statement. +80 +Table of Contents +Deadline For Stockholder +Proposals +You may submit proposals for inclusion in the proxy materials for the Company’s 2017 +Annual Meeting of Stockholders. Any such proposals must meet the stockholder eligibility and other requirements imposed by rules issued by the SEC and must be received by the Company at 220 East First Street, Bethlehem, Pennsylvania 18015, +Attention: Corporate Secretary, in accordance with Rule 14a-8 promulgated under the Exchange Act, not later than December 5, 2016. +In addition, our Bylaws provide that a stockholder proposal must meet certain predetermined requirements in order to be +considered at the Annual Meeting. These requirements are separate from, and in addition to, the requirements discussed above to have the stockholder proposal included in the proxy materials pursuant to the SEC’s rules and regulations. In order +to be considered, a stockholder’s proposal must be made in writing to the Company’s Secretary and must be delivered to or received at our principal executive offices not less than ninety (90) days nor more than one hundred twenty +(120) days prior to the meeting. However, if less than one hundred (100) days’ notice or prior public disclosure of the date of the meeting is given or made to stockholders, notice by the stockholder to be timely must be so received +no later than the close of business on the tenth (10 th ) day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made, whichever first +occurs. The notice to the Secretary must set forth, with respect to each matter the stockholder proposes to bring before the meeting, a brief description of the matter and the reasons for considering that matter at the Annual Meeting. The notice +must also include, as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf notice of the proposed business is made: (i) the name and address of the stockholder and such beneficial owner; (ii) any material +interest of such stockholder and such beneficial holder in such business; (iii) the class and number of shares of capital stock of the Company which are held of record or beneficially owned by the stockholder and such beneficial owner and any +other direct or indirect pecuniary or economic interest in any capital stock of the Company of such stockholder and such beneficial owner, including without limitation, any derivative instrument, swap, option, warrant, short interest, hedge, profit +sharing arrangement or borrowed or loaned shares; (iv) a representation that such stockholder intends to appear in person or by proxy at the meeting to propose the business described in its notice; and (v) any other information relating to +such business matter that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies pursuant to Section 14 of the Exchange Act and the rules and regulations +promulgated thereunder. To the extent the Board of Directors or the SEC, or a court of competent jurisdiction, deems these Bylaw provisions to be inconsistent with the right of stockholders to request inclusion of a proposal in the Company’s +proxy materials pursuant to Rule 14a-8 promulgated under the Exchange Act, such rule shall prevail. +The SEC has +promulgated rules relating to the exercise of discretionary voting authority under proxies solicited by the Board. If a stockholder intends to present a proposal at our 2017 Annual Meeting without inclusion of that proposal in the Company’s +proxy materials and written notice of the proposal is not received by the Secretary of the Company by February 18, 2017 (the date that is 45 days before the one-year anniversary of the date on which the Company first sent its proxy materials +for the Annual Meeting), or if the Company meets other requirements of the applicable SEC rules and regulations, the proxies solicited by the Board for use at the 2017 Annual Meeting will confer discretionary authority to vote on the proposal should +it then be raised at the 2017 Annual Meeting. +BY ORDER OF THE BOARD OF DIRECTORS +Jack E. Jerrett +Secretary +April 4, 2016 +81 +Table of Contents +220 EAST FIRST +STREET +BETHLEHEM, PA 18015 +VOTE BY INTERNET +Before The Meeting - Go to www.proxyvote.com or scan the QR Barcode above +Use the Internet to transmit your voting instructions and +for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting +instruction form. +During The Meeting - Go to +www.virtualshareholdermeeting.com/OSUR2016 +You may attend the Meeting via +the Internet and vote during the Meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions. +VOTE BY PHONE - 1-800-690-6903 +Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the meeting date. Have your proxy card in hand +when you call and then follow the instructions. +VOTE BY MAIL +Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes +Way, Edgewood, NY 11717. +TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS +FOLLOWS: +E04912-P76137 KEEP THIS PORTION FOR +YOUR RECORDS +— — — — — — — — — — — — +— — — — — — — — — — — — — — — — — — — — +— — — — — — — — — — — +DETACH AND RETURN THIS PORTION ONLY +THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. +ORASURE TECHNOLOGIES, INC. +The Board of Directors recommends you vote FOR each of the following nominees: +For +All +¨ +Withhold All +¨ +For +All Except +¨ +To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below. +1. +ELECTION OF DIRECTORS +Class I (Term Expiring 2019) +Nominees: +01) Eamonn P. Hobbs +02) Stephen S. Tang, Ph.D. +03) Douglas G. Watson +The Board of Directors recommends you vote FOR items 2 and 3. +For +Against +Abstain +2. +Ratification of Appointment of KPMG LLP as the Independent +Registered Public Accounting Firm for Fiscal Year 2016. +¨ +¨ +¨ +3. +Advisory (Non-Binding) Vote to Approve Executive +Compensation. +¨ +¨ +¨ +Mark Here for Address Changes or Comments +SEE REVERSE +¨ +NOTE: Please sign as name appears hereon. Joint owners +should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. +Signature [PLEASE SIGN WITHIN BOX] +Date +Signature (Joint Owners) +Date +Table of Contents +OraSure Technologies, Inc. +2016 Annual Meeting of Stockholders +Tuesday, May 17, 2016 +Important notice regarding the Internet availability of proxy materials for the +Annual Meeting of Stockholders. +The Notice and Proxy Statement and 2015 Annual Report to Stockholders +are available at www.proxyvote.com. +— — — — — — — — — — — — — +— — — — — — — — — — — — — — — — — — — — +— — — — — — — — — — +E04913-P76137 +PROXY +2016 Annual Meeting of Stockholders +PROXY IS SOLICITED ON BEHALF OF THE BOARD OF +DIRECTORS +The undersigned hereby appoints Jack E. +Jerrett and Mark L. Kuna, and each of them, proxies with full power of substitution, to vote all of the shares which the undersigned is entitled to vote at the 2016 Annual Meeting of Stockholders of OraSure Technologies, Inc. (the +“Company”) to be held on Tuesday, May 17, 2016, at 10:00 a.m. (local time), and at any adjournment(s) or postponement(s) thereof, with all the powers the undersigned would possess if personally present, with respect to the matters listed +on the reverse side. +The shares represented by this Proxy, if +properly executed, will be voted as specified on the reverse side or, if no specification is made, will be voted (i) FOR the election of the nominees listed on the reverse side as directors, (ii) FOR the ratification of the appointment of KPMG LLP +as the Company’s independent registered public accounting firm for fiscal year 2016 and (iii) FOR the advisory (non-binding) vote to approve executive compensation of the Company’s named executive officers. If any other business properly +comes before the meeting, the proxies named above will have discretionary authority to vote thereon in accordance with their best judgment. +PLEASE MARK, DATE, SIGN AND RETURN THE PROXY CARD PROMPTLY. +Address Changes/Comments: +(If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.) +(Continued and to be marked, dated and signed, on the other +side) \ No newline at end of file diff --git a/raw/proxies/0001116463/0001193125-16-529352/proxy_rpt.txt b/raw/proxies/0001116463/0001193125-16-529352/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..8e7578034d9eb5e4f9653dadc6c6e9e8a31e14ab --- /dev/null +++ b/raw/proxies/0001116463/0001193125-16-529352/proxy_rpt.txt @@ -0,0 +1,9 @@ +Transactions With Related Persons +Since January 1, 2015, there have been no transactions +with related persons that would require disclosure in this Proxy Statement. The Audit Committee is required to review and approve in advance all transactions with related persons involving the Company. The Audit Committee may approve a related party +transaction if the transaction is on terms comparable to those that could be obtained in arms’ length dealings with an unrelated third party. The Audit Committee also reviews any public disclosures of a related party transaction contained in +our SEC filings. These responsibilities are described in the Audit Committee’s charter, a copy of which is available on our website at www.orasure.com . +26 +Table of Contents +Information regarding employment and severance agreements between our executive +officers and the Company is set forth in the Section entitled, “Employment Agreements and Potential Payments Upon Termination or Change of Control,” in this Proxy Statement. \ No newline at end of file diff --git a/raw/proxies/0001116463/0001193125-17-111753/proxy.txt b/raw/proxies/0001116463/0001193125-17-111753/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..61bee3871341022f2b9c688b9d780be87851ea7c --- /dev/null +++ b/raw/proxies/0001116463/0001193125-17-111753/proxy.txt @@ -0,0 +1,5959 @@ +DEF 14A +1 +d286487ddef14a.htm +DEFINITIVE PROXY STATEMENT +Definitive Proxy Statement +Table of Contents +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Proxy Statement Pursuant to Section 14(a) +of the Securities Exchange Act of 1934 +(Amendment No. +) +Filed by the Registrant ☒ Filed by a Party other than the Registrant ☐ +Check the appropriate box: +☐ +Preliminary Proxy Statement +☐ +Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +☒ +Definitive Proxy Statement +☐ +Definitive Additional Materials +☐ +Soliciting Material Pursuant to §240.14a-12 +OraSure Technologies, Inc. +(Name of Registrant as +Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +☒ +No fee required. +☐ +Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. +(1) +Title of each class of securities to which transaction applies: +(2) +Aggregate number of securities to which transaction applies: +(3) +Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and +state how it was determined): +(4) +Proposed maximum aggregate value of transaction: +(5) +Total fee paid: +☐ +Fee paid previously with preliminary materials. +☐ +Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. +Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. +(1) +Amount Previously Paid: +(2) +Form, Schedule or Registration Statement No.: +(3) +Filing Party: +(4) +Date Filed: +Table of Contents +Notice of +2017 Annual Meeting of Stockholders +and Proxy Statement +Tuesday, May 16, 2017 +10:00 a.m. (Eastern +Time) +Table of Contents +Douglas A. Michels +President and +Chief Executive Officer +Letter to the Stockholders +April 5, 2017 +Dear Fellow Stockholders: +You are cordially invited to attend the 2017 Annual Meeting of Stockholders (the “Annual Meeting”) to be held on Tuesday, +May 16, 2017 at 10:00 a.m. Eastern Time . This year’s Annual Meeting will again be a completely virtual meeting of stockholders, conducted as a live webcast. You will be able to attend the Annual Meeting +online, vote your shares electronically if you wish, and submit your questions during the meeting by visiting www.virtualshareholdermeeting.com/OSUR2017 . This virtual format provides improved communication and +cost savings for our stockholders and the Company. +Pursuant to the Securities and Exchange Commission rule allowing companies to furnish proxy materials to their stockholders over the +internet, a Notice of Internet Availability of Proxy Materials (the “Notice”) was sent to stockholders on or about April 5, 2017. The Notice contains information on how to access copies of the proxy materials and vote your shares. +At the Annual Meeting, you will be asked to +(i) elect two Class II Directors to serve on the Board of Directors until the Annual Meeting of Stockholders in 2020; (ii) ratify the appointment of KPMG LLP as our independent registered public accounting firm for the 2017 fiscal year; +(iii) approve, by an advisory (non-binding) vote, the compensation of the Company’s named executive officers as disclosed in the proxy materials; (iv) approve, by an advisory (non-binding) vote, the frequency of future stockholder advisory votes on executive compensation; (v) approve the amendment and restatement of the Company’s Stock Award Plan, including an increase in the +number of shares of Common Stock authorized for grant under such Plan; and (vi) transact such other business as may properly come before the meeting, and any adjournment(s) or postponement(s) thereof. +The Board of Directors has approved the nominees +for Director and recommends that you vote FOR their election to the Board. In addition, the Board of Directors recommends that you vote FOR the ratification of KPMG LLP’s appointment, FOR the approval of the Company’s +executive compensation, FOR the approval of holding future advisory votes on executive compensation every year, and FOR the amendment and restatement of the Stock Award Plan. +Your vote is very important, regardless of the +number of shares you own. Whether or not you plan to attend the Annual Meeting online, we urge you to submit your vote as soon as possible. You will have the option to vote by telephone, via the internet, or by completing, signing, dating and +returning a paper Proxy Card. Additional details on these options can be found in the Notice sent to you and in the other proxy materials. You may, of course, attend the Annual Meeting online and vote your shares during the meeting regardless of +whether you have previously voted by phone, the internet or mail. +Thank you for your cooperation, your ongoing support of, and continued interest in, OraSure Technologies, Inc. +Sincerely yours, +Douglas A. Michels +President and Chief Executive Officer +Table of Contents +NOTICE OF 2017 ANNUAL MEETING OF STOCKHOLDERS +OF ORASURE TECHNOLOGIES, INC. +To +Our Stockholders: +The 2017 Annual Meeting of Stockholders of OraSure Technologies, Inc. will be held virtually: +Date : Tuesday, May 16, 2017 +Time : 10:00 am Eastern Time +How : Online by visiting +www.virtualshareholdermeeting.com/OSUR2017 +Who Can Vote : Only holders of shares of our Common Stock of record at the close of business on +March 23, 2017 will be entitled to vote at the Annual Meeting of Stockholders and any adjournment(s) or postponement(s) thereof. Additional information is included in the Proxy Statement accompanying this Notice. +Purpose: The 2017 Annual Meeting of Stockholders will be held for the following purposes: +• To elect two (2) Class II Directors, each to serve for a term +expiring at the Company’s Annual Meeting of Stockholders in 2020; +• To ratify the appointment of KPMG LLP as our independent registered +public accounting firm for the year ending December 31, 2017; +• To approve, by an advisory +(non-binding) vote, the compensation of the Company’s named executive officers as disclosed in the Proxy Statement accompanying this notice; +• To approve, by an advisory +(non-binding) vote, the frequency of future stockholder advisory votes on executive compensation; +• To approve the amendment and restatement of the Company’s Stock +Award Plan, including an increase in the number of shares of Common Stock authorized for grant under such plan; and +• To consider such other business as may properly come +before the meeting, and any adjournment(s) or postponement(s) hereof. +By +order of the Board of Directors, +Jack E. Jerrett +Secretary +April 5, 2017 +YOUR VOTE IS VERY IMPORTANT. Whether or not you plan to participate in the Annual Meeting, you are urged to vote your shares as promptly as possible. +Via the Internet. Go to +www.proxyvote.com to vote your shares online prior to the Annual Meeting. Have the control number that is printed in your Notice of Internet Availability of Proxy Materials or Proxy Card and follow the +instructions. You may also vote online during the Annual Meeting by going to www.virtualshareholdermeeting.com/OSUR2017 and following the instructions. +By Phone . Call the toll-free number on your Notice of +Internet Availability of Proxy Materials or Proxy Card and follow the prompts. +By Mail . You can vote by mail by requesting a paper copy +of the materials, which will include a Proxy Card. (Please review your Notice of Availability of Proxy Materials for instructions on how to request a paper copy of the materials). Mark, sign and date your Proxy Card and return it as indicated on the +Proxy Card. +Table of Contents +Proxy Statement Table of Contents +Proxy Statement Summary +1 +2017 Annual Meeting Information +1 +2016 Business Highlights +1 +Corporate Governance Highlights +2 +Proposals for Stockholder Consideration +2 +Compensation Components +5 +Performance Highlights +5 +Significant Actions in Respect of our Executive Compensation Program +6 +Additional Key Features of our Executive Compensation Program +6 +Questions and Answers About the 2017 Annual Meeting and Voting +7 +Why Did I Receive These Proxy Materials? +7 +What Is a +Proxy? +7 +What Is the Record Date and What Does It Mean? +7 +What Is the Difference Between a Stockholder of Record and a Stockholder Who Holds Stock in Street Name? +8 +How Can I Vote My Shares for the Annual Meeting? +8 +How Will My Shares Be Voted If I Send In a Proxy? +8 +Will My Shares Be Voted If I Do Not Provide My Proxy? +9 +How Many Shares Must Be Present To Hold the Annual Meeting? +9 +How Can I Revoke a Proxy? +9 +What Items Will Be Voted On At The Annual Meeting? +10 +Who Will Pay The Cost of This Proxy Solicitation? +10 +How Can I Participate in The Annual Meeting? +10 +Are Votes Confidential? +10 +Who Counts The Votes? +10 +May Stockholders Ask Questions at the Annual Meeting? +11 +Stock Ownership of Certain Beneficial Owners and Management +12 +Corporate Governance +14 +Board Responsibilities, Operation and Composition +14 +Governance Guidelines and Code of Conduct +14 +Independent Chairman +15 +Director Independence +15 +Oversight of Risk Management +15 +Annual Meeting Attendance and Stockholder Communications +16 +Committees of the Board +16 +Nomination of Directors +18 +Director Qualifications +18 +Insider +Trading +19 +Prohibition Against Short Sales, Hedging and Pledging +19 +Stock Ownership and Retention Guidelines +19 +Table of Contents +Audit Committee Matters +21 +Report of the Audit Committee for Year Ended December 31, 2016 +21 +Audit Fees; Audit-Related Fees; Tax Fees; All Other Fees +22 +Pre-Approval Procedures +22 +Compensation Committee Matters +22 +Compensation Process and Procedures +22 +Annual Performance Evaluations +22 +Role of the Compensation Committee +23 +Role of the +CEO +23 +Role of the Compensation Consultant +23 +Tally +Sheets +24 +Compensation Committee Interlocks and Insider Participation +24 +Compensation Committee Report +24 +Executive Officers +25 +Transactions with Related Persons +26 +Section 16(a) Beneficial Ownership Reporting Compliance +27 +Compensation Discussion Analysis - Table of Contents +28 +Compensation Discussion and Analysis +29 +Executive +Summary +29 +Compensation Philosophy +42 +Benchmarking +42 +Pay +Mix +44 +2016 Executive Compensation Components +45 +Other Compensation +55 +Compensation Tables +57 +Employment Agreements and Potential Payments Upon Termination or Change of Control +64 +Equity Compensation Plan Information +68 +Director Compensation +68 +Annual +Fees +68 +Initial Equity Awards +69 +Annual Equity Awards +69 +Equity Award Terms +69 +Deferred Compensation +70 +Director Compensation During 2016 +70 +Proposals Requiring Your Vote +71 +Proposal No. 1 – Election of Directors +71 +Background +71 +Vote Required; Board Recommendation +76 +Table of Contents +Proposal No. +2 – Ratification of Appointment of Independent Public Accounting Firm +76 +Background +76 +Vote Required; Board Recommendation +77 +Proposal No. +3 – Advisory (Non-Binding) Vote To Approve Executive Compensation +77 +Background +77 +Recent Compensation Changes +77 +Other Compensation Program Features +78 +Vote Required; Board Recommendation +78 +Proposal No. 4. Advisory (Non-Binding) Vote on the Frequency of Advisory Votes on Executive Compensation +79 +Background +79 +Vote Required; Board Recommendation +79 +Proposal No. 5. Amendment and Restatement of OraSure Technologies, Inc. Stock Award +Plan +80 +General +80 +Amendments to the Award Plan +80 +Summary of the Amended and Restated Award Plan +81 +Vote Required for Approval; Board Recommendation +85 +Annual Report +85 +Deadline for Stockholder Proposals +86 +Table of Contents +PROXY STATEMENT SUMMARY +We are providing these Proxy Materials to stockholders of OraSure Technologies, Inc., a +Delaware corporation (as used herein, “we,” “us,” “our” or the “Company”), in connection with the Company’s solicitation of proxies (each, a “Proxy”) for use at the Annual Meeting of +Stockholders to be held on May 16, 2017, at 10:00 a.m. Eastern Time, and at any adjournment(s) or postponement(s) thereof (the “Annual Meeting”). +As a stockholder, you are invited to attend the Annual Meeting and are requested to vote on the matters described in this Proxy +Statement. We are pleased to offer a completely virtual Annual Meeting, which will be +conducted as a live webcast that you can access online by going to www.virtualshareholdermeeting.com/OSUR2017 . The webcast will not include a presentation by management. A question and answer session will be provided at the Annual Meeting only for questions that are germane to the matters being discussed and voted on at the +meeting. +This summary highlights information contained elsewhere in this Proxy Statement. This summary does not contain all +of the information that you should consider. You should read the entire Proxy Statement carefully before voting . +2017 ANNUAL MEETING +INFORMATION +• +Date and Time: Tuesday, May 16, 2017 10:00 a.m. (ET) +• +Location: Online by visiting www.virtualshareholdermeeting.com/OSUR2017 +• +Record Date: March 23, 2017 +2016 BUSINESS +HIGHLIGHTS +Ö +Record consolidated net revenues of $128.2 million - 7% growth over 2015. +Ö +Consolidated net income of $19.7 million ($0.35 per share) - an $11.5 million ($0.21 per share) improvement over 2015. +Ö +Second consecutive year of record performance and profitable operations. +Ö +Total stockholder return of 36% for 2016. +Ö +$22.8 million in cash generated from operations - a $7 million improvement over 2015. +Ö +Over $120 million in cash and investments at year-end. +Ö +Molecular collection systems revenues growth of 8% over 2015. +Ö +HCV product sales increase of 24% over 2015. +Ö +Generated $52.8 million in net product revenues (41% of total revenues) from newest business lines (i.e. Molecular collections, HCV, HIV-OTC and Ebola). +Ö +Secured up to $16.6 million in federal government funding for new Zika antibody tests. +Ö +Substantial growth in international markets. +Ö +Executed and began fulfilling $18.0 million product supply contract with foreign government – the largest in Company history. +We achieved record revenues and full-year profitability for the second consecutive year in 2016, +with strong contributions from our OraQuick ® HCV and molecular collections systems businesses. +1 +Table of Contents +CORPORATE GOVERNANCE +HIGHLIGHTS +Ö +Comprehensive Code of Business Conduct and Ethics applies to Board of Directors (the “Board”) and Management. +Ö +Independent Chairman of the Board. +Ö +Six (6) of eight (8) Board members (“Directors”) are independent as defined by the Securities and Exchange Commission (“SEC”) and the NASDAQ Stock Market (“NASDAQ”). +Ö +Corporate Governance Principles in place to address Director independence, meetings and other important governance matters. +Ö +All committees of the Board consist solely of independent Directors. +Ö +Regular executive sessions of independent Directors. +Ö +Regular stockholder engagement through meetings, conferences and annual outreach. +Ö +Board and Committee members attended more than 75% of meetings during 2016. +Ö +All Directors attended 2016 Annual Meeting of Stockholders. +Ö +Strong stock ownership and retention guidelines for non-employee Directors and executive officers. +Ö +Policy prohibiting short sales, hedging and pledging of our Common Stock. +Ö +Compensation recoupment or “clawback” policy. +Ö +Policy to prevent improper insider trading of our stock by non-employee Directors and employees. +Ö +Oversight of risk management by Directors. +Ö +Strong “pay-for-performance” compensation philosophy. +PROPOSALS FOR +STOCKHOLDER CONSIDERATION +Proposals +Board +Recommendation +Page Reference +for More Detail +1.) +Election of Directors +FOR EACH NOMINEE +71 +2.) +Ratification of Appointment of Independent Registered Public Accounting Firm for 2017 +FOR +76 +3.) +Advisory (Non-Binding) Vote to Approve Executive Compensation +FOR +77 +4.) +Advisory (Non-Binding) Vote on Frequency of Compensation Votes +EVERY YEAR +79 +5.) +Amendment and Restatement of Stock Award Plan +FOR +80 +Proposal No. 1 – Election of Directors +The table below provides summary information about each of our nominees for Class II Directors, whose new terms would expire at the 2020 Annual +Meeting of Stockholders. The Board is recommending that stockholders vote for each Director nominee. +Name and Principal Occupation 1 +Age +Director +Since +Independent 2 +Committee +Memberships 3 +Other +Public +Boards +AC +CC +N& +GC +Ronny B. +Lancaster +Senior Vice President for Federal Government Relations of Assurant, Inc. +65 +2003 +Yes +C +Ö +-- +Ronald H. Spair +Chief Financial Officer and Chief Operating Officer of the Company +61 +2006 +No +Yes +2 +Table of Contents +1 +Roger L. Pringle, also a Class II Director, will be retiring from the Board following the 2017 Annual Meeting and +thus has not been nominated for re-election. +2 +As defined by the SEC and NASDAQ. Because Mr. Spair serves as the Company’s Chief Financial Officer and Chief +Operating Officer, he is not “independent” under applicable SEC and NASDAQ rules. +3 +AC = Audit Committee; CC = Compensation Committee; NCGC = Nominating & Corporate Governance Committee; +C = Chairman; Ö = Member. +Proposal No. 2 – Ratification of Appointment of Independent Registered Public Accounting Firm +Our Board and its Audit Committee have selected KPMG LLP (“KPMG”) to be our independent registered public accounting firm for +the 2017 fiscal year. The Board believes KPMG is well qualified to serve in this capacity and is recommending that the engagement of KPMG be ratified by our stockholders. +Proposal No. 3 – Advisory (Non-Binding) Vote to Approve Executive Compensation +Our business is diverse and we operate in extremely competitive markets around the world. +It takes commitment from all of the talented people throughout our Company, and especially our executive team, to manage the many facets +of our business. We have designed our compensation programs to enable us to attract, retain and reward our executives for achieving our objectives and delivering value to stockholders over the long-term. Therefore, we are asking our stockholders to +approve, by an advisory (non-binding) vote, the compensation of our named executive officers (“NEOs”) as described in this Proxy Statement. +Our compensation programs are designed to focus and reward our executives for balancing both short and long-term priorities. To fulfill +this mission, we have adopted a pay-for-performance philosophy that forms the foundation for executive compensation decisions made by our Board and the Compensation +Committee of the Board (the “Compensation Committee”). In addition, our compensation decisions are designed to align the interests of our executives with the interests of our stockholders and incorporate strong corporate governance +principles. +The Compensation Discussion and Analysis portion of this Proxy Statement (the “CD&A”) contains a detailed +description of our executive compensation philosophy and program, the compensation decisions the Board and Compensation Committee have made under that program and the factors considered in making those decisions, focusing on the compensation of our +NEOs for the year ended December 31, 2016, who were: +Douglas A. +Michels, President and Chief Executive Officer +Ronald H. Spair, Chief Financial Officer and +Chief Operating Officer +Anthony Zezzo, II, Executive Vice President, +Marketing and Sales +Jack E. Jerrett, Senior Vice President, +General Counsel and Secretary +Michael Reed, Ph.D., Senior Vice President, +Research and Development and Chief Science Officer +At our 2016 Annual Meeting, 94% of the votes cast approved the compensation paid to our NEO’s for +the 2015 fiscal year, as disclosed in our 2016 Proxy Statement. This represented a 40% improvement from the results of our 2015 Annual Meeting. The Board and Compensation Committee take seriously the results of each “say-on-pay” (“SOP”) vote and the views of our stockholders regarding executive compensation. Accordingly, following each SOP vote over the past several years we have instituted an +outreach effort to contact our stockholders in order to obtain their views on the reasons for the vote and to solicit their input on certain aspects of our compensation practices. As part of that effort, after the 2016 Annual Meeting we contacted +stockholders who, in the aggregate, beneficially owned more than 50% of our outstanding Common Stock to understand their concerns. The input we received from +3 +Table of Contents +stockholders confirmed that the compensation changes we made in 2015 and 2016 were responsive to stockholder concerns and strengthened the pay-for-performance focus of our compensation program. The CD&A provides additional detail regarding the results of our outreach effort, the input received from our stockholders and the compensation +changes we implemented in response to that input. The Board is recommending that stockholders vote in favor of our executive compensation. +Proposal No. 4 – Advisory (Non-Binding) Vote on Frequency of Future Advisory Votes on +Executive Compensation +Section 14A of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), +provides that every six (6) years we must provide our stockholders with an opportunity to cast a separate advisory (non-binding) vote on the frequency of future advisory votes on executive compensation. +Stockholders may indicate whether they would prefer that we conduct future advisory votes every year, every two (2) years or every three (3) years. At our Annual Meeting of Stockholders held in May 2011, a majority of our stockholders cast +their vote in favor of holding an advisory vote on executive compensation each year. The Board has determined that an annual advisory vote on executive compensation will permit our stockholders to continue to provide direct input on our executive +compensation philosophy and practices as disclosed in our proxy statement each year, and is consistent with our efforts to engage in an ongoing dialogue with our stockholders on executive compensation and corporate governance matters. Accordingly, +the Board is recommending that stockholders vote in favor of having the advisory vote on executive compensation each year. +Proposal +No. 5 – Amendment and Restatement of Stock Award Plan +In order to enable the Company to continue to attract +qualified directors, officers, employees and outside advisors, and to compensate these individuals in a manner that is competitive with compensation provided by other medical diagnostic and healthcare companies, the Board has determined that +additional shares of Common Stock are needed for grants under the Company’s Stock Award Plan. In addition, the Board wants to ensure that sufficient shares are available, if needed, to provide retention or other equity awards in connection with +potential acquisitions or other business development activities. Accordingly, subject to stockholder approval, the Board approved an amendment to the Company’s Stock Award Plan (the “Award Plan”) to increase the number of authorized +shares by 3,000,000 shares. As a result of this increase, there will be a total of 4,627,471 shares available in the Award Plan on or after February 21, 2017, subject to stockholder approval. In addition, the Board has approved additional +amendments to extend the term of the Award Plan until February 21, 2027 and make a few additional changes as further explained beginning on page 80 of this Proxy Statement. The Board is recommending that stockholders vote for approval of the +amended and restated Stock Award Plan, a copy of which is attached as Exhibit A to this Proxy Statement. +4 +Table of Contents +COMPENSATION +COMPONENTS +We believe that all components of our executive compensation program are strongly tied to performance of +both the Company and our executives and are aligned with the best interests of our stockholders. These components consist of the following: +Base Salary +Salaries are based on position +relative to market and individual performance and contribution. +Annual Cash Incentive +Bonuses +Annual incentive cash bonuses reflect market-based targets +and are contingent upon (i) achievement of corporate financial objectives, which are used to determine overall bonus pool funding, and (ii) the executive’s individual performance against +pre-determined objectives, which are used to determine individual bonus payouts. +Long-term Incentive Plan (“LTIP”) Equity Awards +Long-term incentive equity compensation reflects market-based +targets with the value of individual awards contingent upon the executive’s individual performance against pre-determined objectives during the fiscal year prior to award. +PERFORMANCE +HIGHLIGHTS +We believe that compensation awarded to executives for 2016 was closely aligned with our +strong performance for the year. The Company’s financial results for 2016 represented a substantial improvement over 2015 and largely met or exceeded our targets for the year. Consolidated net revenues in 2016 were $128.2 million (7% +growth over 2015), and consolidated net income was $19.7 million, or $0.35 per share (compared to $8.2 million, or $0.14 per share in 2015). Both represent record financial performance and 2016 was the second consecutive year of +profitability. Total stockholder return for 2016 was 36%. +Our molecular collection systems business continued its strong +performance in 2016 with revenues 8% higher than in 2015. Our HCV business also grew substantially, with 2016 net product revenues increasing 24% over 2015. +During the year, we also entered into a contract for up to $16.6 million in funding +from the Federal government for the optimization, manufacturing transfer and clinical testing related to our rapid Zika test. We also entered into and began fulfilling a 12-month $18.0 million product +supply contract with a foreign government, primarily in support of a nation-wide HCV testing and treatment program. We ended 2016 with over $120 million in cash on our balance sheet, which we can use for our future growth. +The 2016 compensation for Mr. Michels, our President and Chief Executive Officer (“CEO”), and Mr. Spair, our Chief +Financial Officer and Chief Operating Officer (“CFO/COO”), increased consistent with our improved 2016 financial performance, reflecting our commitment to a +pay-for-performance philosophy. +5 +Table of Contents +SIGNIFICANT ACTIONS +IN RESPECT OF OUR EXECUTIVE COMPENSATION PROGRAM +Based on advice from an independent compensation consultant and input from our stockholders, the Board +and Compensation Committee adopted several key changes to our compensation program in 2015 and 2016 in order to more closely align compensation with the performance of our executives. 2016 was the first year all of these changes were fully +implemented. +Compensation Changes Effective in 2016 +Discussed +on Page +Modified long-term incentive awards to +include 50% performance-vested restricted units. The first equity awards using this new structure occurred in February 2016, with the value of individual awards based on benchmarked peer data and performance during 2015. This practice continued with +the annual equity awards in February 2017. The restricted units will vest only if (i) a three-year compound average growth rate for product revenues and/or a one-year earnings per share target is met; and +(ii) a three-year service period is satisfied. +38 +Eliminated excise tax gross-up in all NEO employment agreements and changed modified “single trigger” change-in-control severance to “double +trigger” in our CEO’s employment agreement. +38 +Adopted increased stock +ownership/retention requirements for executives. +39 +Limited the Board’s ability to make +discretionary adjustments to annual incentive bonus pool funding under the 2016 Management Incentive Plan to +/- 10%. This limit is also included in the 2017 Management Incentive Plan. +39 +Extended our previously authorized stock +repurchase program to purchase 1.2 million shares of our Common Stock at a cost of $7.6 million in late 2015 and early 2016. This action was taken, in part, because of concerns expressed by our stockholders regarding the dilutive impact of +the annual equity awards made to management and non-employee Directors. The impact of stock repurchases will be excluded in determining whether the earnings per-share +target for our performance-vested restricted units has been met. +40 +ADDITIONAL KEY +FEATURES OF OUR EXECUTIVE COMPENSATION PROGRAM +Other key features of our compensation program further illustrate our commitment to pay-for-performance, the strong alignment of our executives’ interests with those of our stockholders and strong corporate governance. The more significant of these +features are summarized below: +• +Compensation is market driven and performance-based. +• +Use of peer company benchmarking and tally sheets. +• +Balanced mix of cash/equity, fixed/variable, short-term/long-term compensation components. +• +Compensation recoupment policy. +• +Threshold financial performance objectives for annual bonus pool funding are set at levels that meet or exceed actual financial performance for the prior fiscal year. +• +No hedging or pledging of our Common Stock. +• +Equity awards provide a long-term incentive with three-year vesting. +• +Regular stockholder outreach on compensation/ +governance matters. +• +Total compensation targeted at 50 th percentile of peer group. +• +Use of two separate third-party compensation consultants to provide independent advice on compensation matters. +6 +Table of Contents +QUESTIONS AND ANSWERS ABOUT THE 2017 ANNUAL MEETING AND VOTING +1. WHY DID I RECEIVE +THESE PROXY MATERIALS? +Our Board is furnishing Proxy Materials, including this Proxy Statement, a Proxy Card +and the Company’s Annual Report to Stockholders for the year ended December 31, 2016 (“2016 Annual Report”), to our stockholders in order to solicit proxies to be voted at the Annual Meeting (each, a “Proxy”). Each +stockholder can access these documents on the internet in accordance with the rules and regulations of the SEC. On or about April 5, 2017, we mailed a Notice of Internet Availability of Proxy Materials (the “Notice”) to each +stockholder at the holder’s address of record, indicating that this Proxy Statement is now available to our stockholders of record entitled to vote at the Annual Meeting. +SEC rules permit us to deliver only one copy of the Notice or a single set of Proxy Materials to multiple stockholders sharing the +same address. Upon written or oral request, we will deliver separate Notices and/or copies of our 2016 Annual Report and/or this Proxy Statement to any stockholder at a shared address to +which a single copy of the Notice was delivered. Stockholders may notify the Company of their requests by calling or writing us at OraSure Technologies, Inc., 220 East First Street, Bethlehem, +Pennsylvania 18015, Attention: Corporate Secretary; (610) 882-1820. +All stockholders +and beneficial holders have the ability to access a copy of our Proxy Materials on the internet at the website referred to in the Notice. Stockholders will not receive printed copies of the Proxy Materials unless they request those copies . +The Notice also instructs stockholders as to how to submit a Proxy through the internet. If you would like to receive a paper or e-mail copy of your Proxy Materials, you should follow the instructions for +requesting such materials included in the Notice. We will pay the entire cost of preparing, assembling, printing, mailing and distributing these Proxy Materials and soliciting votes. If you choose to access the Proxy Materials and/or vote over the +internet, you are responsible for any internet access charges you may incur. +2. WHAT IS A +PROXY? +A Proxy is your legal designation of another person to vote the shares of Common Stock +you own. That other person is called a “proxy.” If you designate someone as your proxy in a written document, that document also is called a Proxy or a Proxy Card. +Jack E. Jerrett and Mark L. Kuna, each of whom are officers of the Company, have been designated as +proxies by the Board of Directors for the Annual Meeting. +3. WHAT IS THE RECORD +DATE AND WHAT DOES IT MEAN? +The record date for the Annual Meeting is March 23, 2017 (the “record +date”). The record date is established by the Board as required by Delaware law. Only stockholders of record at the close of business on the record date are entitled to: +(a) +receive notice of the Annual Meeting; and +(b) +vote at the meeting and any adjournment(s) or postponement(s) of the meeting. +Each stockholder of record on the record date is entitled to one vote for each share of Common Stock +held. On the record date, there were 58,406,047 shares of our Common Stock outstanding and entitled to vote at the Annual Meeting. +A list of stockholders will be open for examination by any stockholder for any purpose germane to the Annual Meeting for a period of +10 days prior to the meeting at our principal executive offices at 220 East First Street, Bethlehem, PA 18015, and electronically during the Annual Meeting at +www.virtualshareholdermeeting.com/OSUR2017 when you enter the control number provided in the Notice sent to you. +7 +Table of Contents +4. +WHAT IS THE DIFFERENCE BETWEEN A STOCKHOLDER OF RECORD AND A STOCKHOLDER WHO HOLDS STOCK IN STREET NAME? +If your shares of stock are registered in your name on the books and records of our +transfer agent, Computershare, Inc., you are a stockholder of record. +If your shares of stock are held for you in the name of +your broker, bank or other nominee, your shares are held in street name. The answer to Question 7 describes brokers’ discretionary voting authority and +when your broker, bank or other nominee is permitted to vote your shares of stock without instructions from you. +It is important that you vote your shares if you are a stockholder of record and, if you hold shares in street name, that you +provide appropriate voting instructions to your broker, bank or other nominee as discussed in the answer to Question 7. +5. HOW CAN I VOTE MY +SHARES FOR THE ANNUAL MEETING? +All stockholders have a choice of voting via the internet, over the telephone or by +completing and mailing a paper Proxy Card, as described below. +Voting via the Internet or by +Telephone . Stockholders of record desiring to vote online via the internet or by telephone prior to the Annual Meeting, should go to +www.proxyvote.com or call the toll free number indicated on the Proxy Card or Notice. You may vote via the internet or by telephone provided you do so by +11:59 p.m. Eastern Time (8:59 p.m. Pacific Time) on May 15, 2017. Stockholders who attend the Annual Meeting via the internet may vote their shares at that time up to and during the Annual Meeting by following the instructions at www.virtualshareholdermeeting.com/OSUR2017 . +Street name holders may vote via the internet or by telephone if their brokers, banks or other nominees make those methods available. +If that is the case, each broker, bank or nominee will include instructions with the Notice or Proxy Statement. +The telephone and +internet voting procedures, including the use of control numbers, are designed to authenticate your identity, to allow you to give your +voting instructions and to confirm that your instructions have been recorded properly. +If you vote via the internet, you should understand that you will be responsible for any costs associated with this method of voting, +such as usage charges from internet access providers and telephone companies. +Voting by +Mail . If you desire to vote prior to the Annual Meeting by using a paper Proxy Card instead of by telephone or via the internet, you will need to either print a copy of the Proxy Card from the website indicated +in your Notice or follow the instructions in your Notice to request that a paper copy be sent to you. You will then need to complete, sign, date and return the Proxy Card, as described on the Proxy Card. Street name holders should complete and +return the voting card provided by their broker, bank or nominee. +Voting at the Annual +Meeting . All stockholders of record may vote online during the Annual Meeting, as described above. Submitting a Proxy via the internet, over the telephone or by mail will not affect your right to +withdraw your Proxy and vote during the Annual Meeting. +6. HOW WILL MY SHARES +BE VOTED IF I SEND IN A PROXY? +If you are represented by a properly executed Proxy, whether delivered by phone, the +internet or mail, your shares will be voted in accordance with your instructions. +If you do not provide instructions with your Proxy, your shares will be voted according +to the recommendations of our Board as stated on the Proxy. +8 +Table of Contents +7. WILL MY SHARES BE +VOTED IF I DO NOT PROVIDE MY PROXY? +Stockholders of Record : If you are a stockholder of +record, your shares will not be voted if you do not provide your Proxy, unless you vote online during the Annual Meeting. It is, therefore, important that you vote your shares. +Street Name Holders : If your shares are held in street name and you do not provide your +signed and dated voting instruction form to your bank, broker or other nominee, your shares may be voted by your broker, bank or other nominee but only under certain circumstances. Specifically, under NASDAQ rules, shares held in the +name of your broker, bank or other nominee may be voted by your broker, bank or other nominee on certain “routine” matters if you do not provide voting instructions. +At the upcoming Annual Meeting, only the ratification of the selection of KPMG LLP as the +Company’s independent registered public accounting firm is considered a “routine” matter for which brokers, banks or other nominees may vote uninstructed shares. The other +proposals to be voted on at our Annual Meeting (specifically, the election of Director nominees, the advisory vote to approve the compensation of the Company’s NEO’s, the advisory vote on frequency of future votes on executive compensation +and the amendment and restatement of our Stock Award Plan) are not considered “routine” under NASDAQ rules, so the broker, bank or other nominee cannot vote your shares on any of these proposals unless you provide to the +broker, bank or other nominee voting instructions for each of these matters. If you do not provide voting instructions on these matters, your shares will not be voted on the matter, which is referred to as a “broker non-vote.” It is, therefore, important that you vote your shares. +8. HOW MANY SHARES +MUST BE PRESENT TO HOLD THE ANNUAL MEETING? +Your shares are counted as present at the meeting if you attend the meeting and vote +online or if you properly return a Proxy by internet, telephone or mail. In order for us to conduct our Annual Meeting, a majority of our outstanding shares of Common Stock as of +March 23, 2017, must be present online or by Proxy at the meeting. This is referred to as a quorum. Broker non-votes, votes withheld and abstentions +are included in determining whether there are a sufficient number of shares present to constitute a quorum. +9. HOW CAN I REVOKE A +PROXY? +You can revoke a Proxy before the completion of voting at the Annual Meeting by: +(a) +Giving written notice to the Corporate Secretary of the Company to revoke your Proxy; +(b) +Delivering a later-dated Proxy that indicates the change in your vote; or +(c) +Logging on to www.proxyvote.com in the same manner you would to submit your Proxy +electronically or calling the telephone number indicated in your Notice, and in each case, following the instructions to revoke or change your vote; or +(d) +Attending the Annual Meeting online and voting, which will automatically cancel any Proxy previously given. Attendance +alone will not revoke any Proxy that you have given previously. +If you choose any of the first three methods, +you must take the described action no later than 11:59 p.m. Eastern Time (8:59 p.m. Pacific Time) on May 15, 2017. Once voting on a particular matter is completed at the Annual Meeting, you will not be able to revoke your Proxy or change your +vote. If your shares are held in street name by a broker or other nominee, you must contact that institution to change or revoke your vote. +9 +Table of Contents +10. WHAT ITEMS WILL BE VOTED ON AT THE +ANNUAL MEETING? +At the Annual Meeting, action will be taken on the matters set forth in the accompanying +Notice and described in this Proxy Statement. The Board knows of no other matters to be presented for action at the Annual Meeting. +If any other matters do properly come before the Annual Meeting, the persons named in +the Proxy Card will have discretionary authority to vote on those matters in accordance with their best judgment. +11. WHO WILL PAY THE COST OF THIS PROXY +SOLICITATION? +Solicitation of Proxies is made on behalf of the Board. The cost of soliciting Proxies +will be borne by the Company. In addition to solicitations by e-proxy and/or by mail, certain of our Directors, officers and regular employees may solicit Proxies personally or by telephone or other means +without additional compensation. +We have also engaged Morrow & Co., LLC, 470 West Ave., Stamford, CT 06902, to provide +proxy +solicitation services at an estimated fee of $7,500 plus expenses. +Arrangements will be made with brokerage firms and other custodians, nominees and fiduciaries to forward solicitation materials to the +beneficial owners of stock held of record by such persons, and we will, upon request, reimburse them for their reasonable expenses in so doing. +12. HOW CAN I PARTICIPATE IN THE ANNUAL +MEETING? +This year’s Annual Meeting will be a completely virtual meeting of stockholders, +and will be conducted via live webcast on the Internet. You are entitled to participate in the Annual Meeting only if you were a stockholder of the Company as of the close of business on March 23, 2017, the record date for the meeting, or if +you hold a valid Proxy for the Annual Meeting. +You will be able to participate in the Annual Meeting online and submit your questions +during the meeting by visiting www.virtualshareholdermeeting.com/OSUR2017 . To participate in the Annual Meeting, you will need the control number that is +included on your Notice, on our proxy card or on the instructions that accompanied your proxy materials. The Annual Meeting will begin promptly at 10:00 a.m. Eastern Time, and you should allow ample time to complete the online check-in procedures. +13. ARE VOTES CONFIDENTIAL? +We will continue our long-standing practice of holding the votes of each stockholder in +confidence from Directors, officers and employees, except: (a) as necessary to meet applicable legal requirements and to assert or defend claims for or against the Company; +(b) in the case of a contested proxy solicitation; (c) if a stockholder makes a written comment on the Proxy Card or otherwise communicates his or her vote to the Company; or +(d) as needed to allow the independent inspectors of election to certify the results of the vote. +14. WHO COUNTS THE VOTES? +We will continue, as we have for many years, to retain an independent inspector of +election to receive +and tabulate the Proxies and certify the results. These activities will be handled electronically. +10 +Table of Contents +15. MAY STOCKHOLDERS ASK QUESTIONS AT +THE ANNUAL MEETING? +Yes. The Chairman of the Board will answer stockholders’ questions during the +question and answer period of the meeting. Stockholders must confine their questions to matters that relate directly to +the business of the meeting. The Chairman will determine which questions are appropriate to answer during the meeting. +11 +Table of Contents +STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT +The +following table sets forth information, as of March 23, 2017, regarding the beneficial ownership of the Company’s Common Stock by (a) each person who is known by us to be the beneficial owner of more than five percent of the Common +Stock outstanding; (b) each Director and nominee for election as Director; (c) each of our executive officers named in the Summary Compensation Table in this Proxy Statement; and (d) all of our Directors and executive officers as a +group. Unless otherwise indicated, the address of each person identified below is c/o OraSure Technologies, Inc., 220 East First Street, Bethlehem, Pennsylvania 18015. +Pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the “Exchange +Act”), shares of Common Stock which a person has a right to acquire pursuant to the exercise of stock options held by that person that are exercisable within 60 days of March 23, 2017 are deemed to be outstanding for the purpose of +computing the ownership percentage of that person, but are not deemed outstanding for computing the ownership percentage of any other person. +Name and Address of +Beneficial +Owner +Amount and Nature of +Beneficial Ownership 1,2 +Percent +of Class +BlackRock, Inc. 3 +40 East 52 nd +Street +New York, NY 10022 +5,359,573 +9.2 +% +Renaissance +Technologies, LLC 4 +800 Third Avenue +New York, NY 10022 +4,197,303 +7.2 +% +The Vanguard Group 5 +100 Vanguard Blvd. +Malvern, PA 19355 +3,429,060 +7.2 +% +Douglas A. +Michels +1,647,318 +2.8 +% +Ronald H. Spair 6 +878,668 +1.5 +% +Anthony Zezzo +II +420,753 +* +Roger L. Pringle 7 +310,980 +* +Jack E. +Jerrett +117,204 +* +Michael Reed, +Ph.D. +32,240 +* +Michael +Celano +83,079 +* +Charles W. Patrick 6 +81,881 +* +Ronny B. +Lancaster +93,603 +* +Stephen S. Tang, +Ph.D. +41,748 +* +Eamonn P. +Hobbs +35,033 +* +All Directors and executive officers as a group +(12 people) +3,885,205 +6.4 +% +* +Less than 1% +1 +Subject to community property laws where applicable, beneficial +ownership consists of sole voting and investment power except as otherwise indicated. +2 +Includes shares subject to options exercisable within 60 days of +March 23, 2017, as follows: Mr. Michels, 879,260 shares; Mr. Spair, 619,539 shares; Mr. Zezzo, 275,343 shares; Mr. Pringle, 140,552 shares; Mr. Jerrett, 58,362 shares; Mr. Patrick, 15,000 shares; +Mr. Lancaster, 15,000 shares; Dr. Tang, 10,000 shares; Mr. Hobbs 23,333 shares; and all Directors and executive officers as a group, 2,115,596 shares. Also includes unvested restricted stock, as follows: Mr. Michels, 177,333 +shares; Mr. Spair, 88,021 shares; Mr. Zezzo, 48,387 shares; Mr. Pringle, 11,700 shares; Mr. Jerrett, 35,187 shares; Dr. Reed, 32,240 shares; Mr. Celano, 11,700 shares; Mr. Patrick, 11,700; Mr. Lancaster, +11,700 shares; Dr. Tang, 11,700 shares; Mr. Hobbs 11,700 shares; and all Directors and executive officers as a group, 485,784 shares. Does not include unvested performance-vested restricted units. +12 +Table of Contents +3 +Based on information contained in a Schedule 13G/A filed +January 25, 2017. The filing person has sole voting power with respect to 5,241,380 shares and sole dispositive power with respect to 5,359,573 shares. +4 +Based on information contained in a Schedule 13G filed +February 14, 2017. The filing persons have sole voting power with respect to 4,023,301 shares and sole dispositive power with respect to 4,197,303 shares. +5 +Based on information contained in a Schedule 13G filed +February 10, 2017. The filing person has sole voting power with respect to 106,632 shares, shared voting power with respect to 4,900 shares, sole dispositive power with respect to 3,320,228 shares and shared dispositive power with respect to +108,832 shares. +6 +Includes restricted shares contributed to the OraSure Technologies, +Inc. Deferred Compensation Plan, as follows: Mr. Spair, 150,063 shares; and Mr. Patrick, 9,255 shares. +7 +Includes 1,500 shares owned by Mr. Pringle’s spouse. +13 +Table of Contents +CORPORATE GOVERNANCE +BOARD RESPONSIBILITIES, OPERATION AND COMPOSITION +The primary responsibility of the Board of Directors is to promote the long-term success of the Company. +In fulfilling this role, each Director must exhibit good faith business judgment as to what is in the best interests of the Company. The Board is responsible for establishing broad corporate policies, setting strategic direction and overseeing +management. The Company’s management is responsible for the day-to-day operations of the Company. +In November 2016, Douglas G. Watson, our long-time Chairman of the Board, retired as a Director. As a result, as of the date of this +Proxy Statement, the Board consists of eight (8) Directors. +The Board is divided into three classes with each class consisting +of one-third of the total number of Directors on the Board. At each Annual Meeting of Stockholders, the nominees for the class of Directors whose term is expiring at that annual meeting are elected for a +three-year term. A Director holds office until the Annual Meeting of Stockholders for the year in which his or her term expires or until his or her successor is elected and duly qualified, subject to prior death, resignation, retirement, +disqualification or removal. Each nominee for election at the Annual Meeting currently serves as a Director. +The Board typically holds regular meetings in February, May, August and November with special +meetings held as needed. The Board’s organizational meeting follows the Annual Meeting of Stockholders. The Board meets in executive session at all regularly scheduled meetings. The Board held 11 meetings and acted by written consent on three +(3) occasions during the fiscal year ended December 31, 2016. Each member of the Board attended more than 75 percent of the combined total of meetings of the Board and of the Committees of the Board on which such member served during +the period in the year in which he served as a Director. +Directors attended greater than 75% of all Board and Committee meetings during 2016. +GOVERNANCE GUIDELINES AND CODE OF CONDUCT +The Board has adopted Corporate Governance Principles which, along with the Charters for each of its +Committees and the Company’s Code of Business Conduct and Ethics, provide a framework for the governance of the Company. The Company’s Corporate Governance Principles address matters such as the responsibilities and composition of the +Board, Director independence and the conduct of Board and Committee meetings. The Company’s Code of Business Conduct and Ethics sets forth guiding principles of business ethics and certain legal requirements applicable to all Company employees +and non-employee Directors. Copies of the current Corporate Governance Principles and Code of Business Conduct and Ethics are available on the Company’s website, www.orasure.com . +The Board operates under our Code of Business Conduct and Ethics and Corporate Governance Principles. +14 +Table of Contents +INDEPENDENT CHAIRMAN +The positions of Chairman of the Board and CEO of the Company +are held by different individuals, with the Chairman being independent of management. +Currently, the Company’s Chief Executive Officer does not hold the position of Chairman of the +Board as the Company believes it is appropriate for the Board to be led by an individual who is independent of management. With Mr. Watson’s retirement, Stephen S. Tang, Ph.D. was appointed as Chairman of the Board in November 2016. +Dr. Tang has been a Director since 2011. The Board has carefully considered its leadership structure and believes at this time that the Company and its stockholders are best served by having the positions of Chairman and Chief Executive Officer +filled by different individuals. This allows the Chief Executive Officer to, among other things, focus on the Company’s day-to-day business, while allowing the +Chairman to lead the Board in its fundamental role of providing advice and oversight of management. In the future, however, the Board may reconsider whether its Chief Executive Officer should also serve as Board Chairman. +DIRECTOR INDEPENDENCE +Our Corporate Governance Guidelines require, among other things, that a majority of the members of the Board meet +the independence requirements of the SEC and NASDAQ, on which our Common Stock is listed. Each year our Board, with assistance from the Nominating and Corporate Governance Committee, conducts a review of Director independence. The most recent annual +review occurred in the first quarter of 2017, during which the +A majority of our Directors are independent as required under applicable SEC and NASDAQ rules. +Board considered transactions and relationships, if any, between each Director or any member of such +Director’s immediate family and the Company. As a result of this review, the Board determined that Michael Celano, Eamonn P. Hobbs, Ronny B. Lancaster, Charles W. Patrick, Roger L. Pringle, and Stephen S. Tang, Ph.D. are +“independent,” as that term is defined in the applicable rules of NASDAQ and the SEC. Only Douglas A. Michels and Ronald H. Spair were determined by the Board not to be independent because they are executive officers of the Company. Based +on the foregoing, the Board of Directors is comprised of a majority of independent Directors. +OVERSIGHT OF RISK MANAGEMENT +As part of its oversight of the Company’s operations, the Board and Audit Committee monitor the management +of risks by the Company’s executives. The Audit Committee reviews the risks that the Company may face and receives reports from senior management on the nature of these risks and the procedures and processes in place to manage and mitigate such +risks. Substantive areas of risk reviewed by the Audit Committee include financial, legal, regulatory, operational, information technology, cybersecurity and +The Board and Audit Committee monitor the major risks facing the Company and the procedures and processes implemented by management to +mitigate those risks. +employment matters. The Audit Committee provides a report to the full Board on the matters covered during each of its +meetings, including its risk monitoring activities. In addition, senior management provides periodic reports to the full Board on the major risks facing the Company and the processes and procedures in place to manage such risks. Management also +conducts a risk assessment of the Company’s compensation policies and practices, including its executive compensation program, as described in greater detail in the Section of this Proxy Statement entitled, “Compensation Committee +Matters.” +15 +Table of Contents +ANNUAL MEETING ATTENDANCE AND STOCKHOLDER COMMUNICATIONS +The Board has approved a policy concerning Board members’ attendance at our Annual Meeting of +Stockholders and a process for security holders to send communications to members of the Board. A description of the Board’s policy on annual meeting attendance is provided on our website, at +www.orasure.com . As a general matter, each Board member is required to attend each Annual Meeting of Stockholders. Our 2016 Annual Meeting was attended by +all members of the Board. +Security holders may communicate with the Board by sending their communications to OraSure +Technologies, Inc., 220 East First Street, Bethlehem, Pennsylvania 18015, Attention: Corporate Secretary, fax: (610) 882-2275, email: +corporatesecretary@orasure.com . +All Board members are required to attend each Annual Meeting of Stockholders. The entire Board was present at the 2016 Annual +Meeting. +COMMITTEES OF THE BOARD +The Board currently has three standing committees – the Audit Committee, the Compensation Committee +and the Nominating and Corporate Governance Committee. Members of these committees are each “independent,” as defined in the Exchange Act and NASDAQ rules applicable to such Committees. In addition, the Board has determined that +Michael Celano is an “audit committee financial expert,” as that term is defined by applicable rules of the SEC. Each committee operates pursuant to a written charter, copies of which are available on our website, at www.orasure.com . Information on each standing committee is provided below: +AUDIT COMMITTEE +Committee Members: +Responsibilities: +• Overseesaccounting and financial +reporting process, internal controls and audits. +• Consultswith management and the Company’s independent registered public accounting firm on, among other items, matters related to the annual audits, the published +financial statements and the accounting principles applied. +• Appoints,evaluates and retains our +independent registered public accounting firm. +• Responsiblefor the compensation, termination and oversight of our independent registered public accounting firm. +• Evaluatesthe independent registered +public accounting firm’s qualifications, performance and independence. +• Approvesall services provided by the +independent registered public accounting firm. +• Monitorsthe Company’s major risk exposures and reviews risk assessment and mitigation policies. +• Maintainsprocedures for the receipt, +retention and treatment, on a confidential basis, of complaints received by the Company regarding accounting, internal accounting controls or auditing matters, and the confidential, anonymous submissions by employees of concerns regarding +questionable accounting or auditing matters. +Michael Celano +(C, +, I) +Eamonn P. Hobbs +(I) +Charles W. Patrick +(I) +Roger L. Pringle +(I) +Number of Meetings +during +fiscal 2016: 8 +C – Committee Chair +- Determined by the Board to be an audit committee financial expert as defined under applicable SEC Rules. +I +– Determined by the Board to be independent under applicable SEC and NASDAQ rules. +16 +Table of Contents +COMPENSATION COMMITTEE +Committee Members: +Responsibilities: +• Overseescompensation for executives and +non-employee Directors. +• Reviewsand recommends to the Board for +approval the performance criteria and goals and objectives for CEO compensation. +• Inconsultation with other independent non-employee Directors, evaluates the CEO’s and the CFO/COO’s annual performance in light of the Company’s performance. +• Evaluatesand recommends to the Board +for approval the CEO’s compensation. +• Inconsultation with the CEO, reviews and approves the compensation of other executive officers. +• Establishesperformance measures and +goals and evaluates the attainment of such goals under performance-based incentive compensation plans. +• Reviewscompensation and benefits +issues. +• Reviewsand recommends for Board +approval, the terms of any employment agreement between the Company and each executive officer. +• Periodicallyreviews and administers the +Company’s Compensation Recoupment Policy for executive officers and non-employee Directors. +• Reviewscompliance with the +Company’s Stock Ownership Guidelines. +Ronny B. Lancaster +(C, I) +Eamonn P. Hobbs +(I) +Roger L. Pringle +(I) +Stephen S. Tang, Ph.D. +(I) +Number of Meetings during +fiscal 2016: 9 +NOMINATING AND CORPORATE GOVERNANCE COMMITTEE +Committee Members: +Responsibilities: +• Identifies,evaluates and recommends +candidates for nomination or re-election to the Board. +• Reviewsand makes recommendations to the +Board on the range of skills, qualifications and expertise required for service as a Director. +• Reviewsand recommends for Board +approval the appropriate structure of the Board. +• Reviewsand recommends for Board approval the appropriate structure of Board committees, and recommends committee assignments and candidates for the position of Chairman of +each committee. +• Developsand recommends for Board +approval a set of Corporate Governance Guidelines and a Code of Business Conduct and Ethics, and procedures for the implementation thereof. +• Periodicallyreviews and recommends for +Board approval the Board’s leadership structure, including whether the same person should serve as both CEO and Chairman of the Board. +• Assistsin the development of succession +plans for the Company’s CEO and other executives. +• Assiststhe Board in evaluating the +independence of individual Directors for purposes of Board and committee service. +• Developsand implements an annual +self-evaluation process for the Board and its committees +Charles W. Patrick +(C, I) +Michael Celano +(I) +Ronny B. Lancaster +(I) +Stephen S. Tang, Ph.D. +(I) +Number of Meetings during +fiscal 2016: 5 +C – Committee Chair +- Determined by the Board to be an audit committee financial expert as defined under applicable SEC Rules. +I +– Determined by the Board to be independent under applicable SEC and NASDAQ rules. +17 +Table of Contents +NOMINATION OF DIRECTORS +Our Bylaws provide that nominations for election to the Board may be made by the Board or by any stockholder +entitled to vote for the election of Directors at the Annual Meeting. A stockholder’s notice of nomination must be made in writing to the Company’s Corporate Secretary and must be delivered to or received at our principal executive offices +not less than ninety (90) days nor more than one hundred twenty (120) days prior to the meeting. However, in the event that less than one hundred (100) days’ notice or prior public disclosure of the date of the meeting is given +or made to stockholders, in order for notice by the stockholder to be timely, notice must be received no later than the close of business on the tenth (10 th ) day following the day on which +such notice of the date of the meeting was mailed or such public disclosure was made, whichever first occurs. The notice to the Corporate Secretary must set forth, with respect to the nominee, the name, age, business address, residence address, +principal occupation or employment of the person, the class and number of shares of capital stock of the Company which are beneficially owned by the person, and any other information relating to the person that is required to be disclosed +in +Stockholders can nominate individuals to serve on the Board by following the procedures described in the Company’s Bylaws. +Diversity is an important factor that is considered in evaluating new candidates for the Board. In determining whether incumbent Directors will be nominated for re-election, we evaluate the individual’s +background, experience and prior service as a Director. +solicitations for proxies for election of Directors pursuant to Regulation 14A under the Exchange Act. The notice must +also include, as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination is made: (i) the name and address of the stockholder and such beneficial owner; (ii) the class and number of shares of +capital stock of the Company which are held of record or beneficially owned by such stockholder and such beneficial owner and any other direct or indirect pecuniary or economic interest in any capital stock of the Company of such stockholder and +beneficial owner, including without limitation, any derivative instrument, swap, option, warrant, short interest, hedge, profit sharing arrangement or borrowed or loaned shares; (iii) a description of any arrangements or understandings between +such stockholder and beneficial owner and each proposed nominee and any other person (including their names) pursuant to which the nomination(s) are to be made by such stockholder and such beneficial owner or with respect to actions to be proposed +or taken by such nominee if elected as a Director; (iv) a representation that such stockholder intends to appear in person or by proxy at the meeting to nominate the persons named in its notice; and (v) any other information relating to +such stockholder and such beneficial owner that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of Directors, or may otherwise be required pursuant +to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder. We may also require any proposed nominee to furnish such other information as we may reasonably require to determine the eligibility of the proposed nominee +to serve as a Director of the Company. +The Nominating and Corporate Governance Committee may also consult with outside advisors or retain +search firms to assist in the search for qualified candidates. Candidates recommended by stockholders will be considered by the Nominating and Corporate Governance Committee in the same manner as candidates recommended by other sources, but only if +the stockholder makes a recommendation in accordance with the advance notification provisions set forth in the Company’s Bylaws. +DIRECTOR QUALIFICATIONS +Although there is no formal policy governing Board diversity, the Nominating and Corporate Governance +Committee considers diversity and other factors in evaluating new candidates for the Board. The term diversity is used broadly to include not only race, gender and national origin, but also any other factors determined to be relevant by the +Nominating and Corporate Governance Committee based on the needs of the Board and Company, including independence, integrity, knowledge, judgment, character, leadership skills, education, industry experience, financial literacy, technical +background, specialized expertise, and standing in the community. In evaluating incumbent Directors for re-election, the Nominating and Corporate Governance Committee considers that Director’s background, +experience and overall service to the Company, including the number of meetings attended, level of +18 +Table of Contents +participation, quality of performance and other factors deemed relevant by the Nominating and Corporate Governance Committee. +INSIDER TRADING +We have a policy designed to prevent any trading in the Company’s Common Stock or other securities by a +person while such person is in possession of material nonpublic information. This policy applies to Directors, executive officers and all other employees of the Company and its affiliates. The policy prohibits trading in the Company’s +securities on the basis of material nonpublic information, requires preapproval of transactions in Company securities for Directors, executive officers and all other employees and establishes regular trading windows after each calendar quarter +following the Company’s announcement of its quarterly financial results. +Our Insider Trading Policy prohibits trading by Directors or employees who are in possession of material nonpublic information about +the Company. +PROHIBITION AGAINST SHORT SALES, HEDGING AND PLEDGING +We believe it is inappropriate for any employee or member of the Board to engage in short-term or speculative +transactions involving Company securities. As a result, our insider trading policy prohibits Directors, executive officers and all other employees from entering into these types of transactions involving our Common Stock, including short sales, the +buying or selling of puts or calls, the purchase of securities on margin, prepaid variable forward contracts, equity swaps, collars, exchange funds and other similar financial instruments. Our policy also prohibits employees and Directors from +pledging shares of our Common Stock as collateral. +We have implemented several governance policies related to our Common Stock. Our policies prohibit short-term, speculative +transactions in our stock, such as hedging, pledging and short sales. +STOCK OWNERSHIP AND RETENTION GUIDELINES +In 2015, we implemented enhanced stock ownership and +retention guidelines for our CEO and other executives. +The Board has adopted stock ownership and retention guidelines applicable to the +Company’s President and Chief Executive Officer, its Chief Financial Officer and Chief Operating Officer, all other executive officers and all non-employee members of the Board. In 2015, we implemented +enhanced stock ownership and retention guidelines for our CEO and other executives. Under these guidelines, the covered individuals must meet the following ownership requirements, expressed either as a multiple of base salary (in the case of Company +officers) or annual cash fees (in the case of Board members): +Covered Individual +Multiple of Base Salary +or Director Fees +President and Chief Executive Officer +6x +Chief Financial +Officer and Chief Operating Officer +2x +Other Executive +Officers +1x +Non-Employee Directors +1x +Any individual who was covered by the guidelines at the time of adoption or who becomes subject to the +guidelines following adoption is required to meet the guidelines within five years. Any individual already subject to the guidelines who becomes subject to a higher ownership requirement, due to a promotion, a further amendment to the guidelines or +an increase in compensation, is required to meet the new ownership requirement within five years following the effective date of promotion, change in compensation or guideline amendment. In determining whether an individual meets the required +ownership requirement, shares owned directly or indirectly, restricted stock (including both time and performance vested) and shares deferred under our deferred compensation plan will be +19 +Table of Contents +counted. Compliance will be determined as of December 31 of each fiscal year. The guidelines also require each covered individual to retain at least 50% of the net shares acquired upon the +exercise of stock options and the vesting of restricted stock until the individual’s holdings of Common Stock equal or exceed the applicable ownership requirement. As of December 31, 2016, all covered officers and non-employee Directors were in compliance with the stock ownership guidelines. +20 +Table of Contents +AUDIT COMMITTEE MATTERS +REPORT OF THE AUDIT COMMITTEE FOR THE YEAR ENDED DECEMBER 31, 2016 +The information contained in this report shall not be deemed to be “soliciting material” or +“filed” for purposes of Section 18 of the Exchange Act or otherwise subject to liability under that Section. This report shall not be deemed “incorporated by reference” into any document filed under the Securities Act of +1933, as amended (the “Securities Act”), or the Exchange Act, whether such filing occurs before or after the date hereof, regardless of any general incorporation language in such filing. +The role of the Audit Committee is to assist the Board of Directors in fulfilling its responsibilities to oversee management’s +conduct of the Company’s financial reporting process, including monitoring (1) the participation of management and the outside independent registered public accounting firm in the financial reporting process, (2) the Company’s +systems of internal accounting and financial controls, (3) the annual independent audit of the Company’s financial statements and (4) the qualifications, independence and performance of the outside independent registered public +accounting firm. The Audit Committee selects the Company’s outside independent registered public accounting firm, and once selected, the outside independent registered public accounting firm reports directly to the Audit Committee. The Audit +Committee is responsible for approving both audit and non-audit services to be provided by the outside independent registered public accounting firm. The Audit Committee is composed of four (4) non-employee directors and operates pursuant to a Charter that was last amended and restated by the Board on November 9, 2015 (which can be found on the Company’s website at www.orasure.com ). +Management of the +Company is responsible for the preparation, presentation and integrity of the Company’s financial statements, the Company’s accounting and financial reporting principles and internal controls and procedures designed to assure compliance +with accounting standards and applicable laws and regulations. The independent registered public accounting firm is responsible for auditing the Company’s financial statements and expressing an opinion as to their conformity with U.S. generally +accepted accounting principles. The Audit Committee’s responsibility is to monitor and review these processes. It is not the Audit Committee’s duty or responsibility to conduct auditing or accounting reviews. +In the performance of its oversight function, the Audit Committee has considered and discussed the audited financial statements with +management, which included a discussion of not only the quality, but also the acceptability, of the accounting principles, the reasonableness of significant judgments and the clarity of disclosures in the financial statements. The Audit Committee +met with the independent registered public accounting firm, with and without management, to discuss the results of their audit and their judgments regarding the Company’s accounting policies. The Audit Committee has also discussed with the +independent registered public accounting firm the matters required to be discussed under applicable standards, including those in Public Company Accounting Oversight Board Auditing Standard No. 16, as currently in effect. Finally, the Audit +Committee has received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the Public Company Accounting Oversight Board as currently in effect, has considered whether +the provision of non-audit services by the independent registered public accounting firm to the Company is compatible with maintaining the firm’s independence and has discussed with the independent +registered public accounting firm the firm’s independence. +Based upon the reports and discussions described in this report, +and subject to the limitations on the role and responsibilities of the Audit Committee referred to above and in the Audit Committee’s Charter, the Audit Committee recommended to the Board that the audited financial statements be included in the +Company’s Annual Report on Form 10-K for the year ended December 31, 2016 for filing with the SEC and selected KPMG LLP as the independent registered public accounting firm for fiscal year 2017. +The Board is recommending that stockholders ratify that selection at the Annual Meeting. +Submitted by the Audit Committee of the Company’s Board of +Directors: +Michael Celano, Chairman +Eamonn +P. Hobbs +Charles W. Patrick +Roger L. Pringle +March 8, 2017 +21 +Table of Contents +AUDIT FEES; AUDIT RELATED FEES; TAX FEES; ALL OTHER FEES +The following table presents fees for professional audit services rendered by KPMG LLP (i) for the +audits of our annual consolidated financial statements and review of the financial statements in our Quarterly Reports on Form 10-Q for the fiscal years ended December 31, 2016 and 2015, and +(ii) for the audits of our internal control over financial reporting as of December 31, 2016 and 2015. The following table also includes fees billed for other services rendered by KPMG: +2016 +2015 +Audit fees 1 +$710,000 +$695,000 +Audit-related fees 2 +— +$15,000 +Tax fees 3 +$158,379 +$145,379 +All other +fees +— +— +Total fees +$868,379 +$855,379 +1 +Includes fees related to the audits of our annual financial +consolidated statements, interim reviews of our quarterly financial statements and audits of our internal control over financial reporting for each indicated year. +2 +In 2015 we engaged KPMG to provide a consent for filing with a +Registration Statement on Form S-3. +3 +During the fiscal years ended December 31, 2016 and 2015, we +engaged KPMG to provide tax compliance, planning and consulting services. +PRE-APPROVAL PROCEDURES +The Audit Committee has adopted a general practice of +pre-approving all audit and non-audit services provided to the Company by our independent registered public accounting firm. The Chairman of the Audit Committee has been +delegated the authority to pre-approve audit and non-audit services having an aggregate value of up to $25,000 between meetings of the Audit Committee, provided that +such pre-approval is communicated to the Audit Committee at its next scheduled meeting. All services by KPMG in 2016 and 2015 were approved in accordance with these practices. +COMPENSATION COMMITTEE MATTERS +The Compensation Committee +assists the Board in developing and managing the compensation provided to executive officers of the Company and non-employee members of the Board. The Compensation Committee is responsible for developing and +overseeing the implementation of the Company’s compensation philosophy and for setting executive compensation at levels that are sufficiently competitive so that the Company can attract, retain and motivate high quality executives who can +contribute to the Company’s success. +COMPENSATION PROCESS AND PROCEDURES +Compensation for executives is established by the Compensation Committee in accordance with the +compensation philosophy detailed in the CD&A set forth later in this Proxy Statement. In setting executive compensation, the Compensation Committee considers the Company’s and each executive’s performance against previously established +objectives, internal pay equity, the compensation practices of the Company’s peer group (listed on page 43 of this Proxy Statement), the Company’s industry position and general industry data. The Compensation Committee periodically retains +independent compensation consultants to review our executive compensation practices and to assist in establishing competitive compensation levels for our executives. +ANNUAL PERFORMANCE EVALUATIONS +On an annual basis, the Compensation Committee and other +non-employee Directors evaluate the performance of the CEO and CFO/COO based on the overall performance of the Company. The CEO also evaluates the performance of the other NEOs against their respective +predetermined performance objectives. +22 +Table of Contents +Annual performance objectives for the NEOs are established at the beginning of the applicable year and generally include two parts: (1) the Company’s overall target financial +objectives, and (2) individual objectives in the functional areas for which the executive is responsible. For each NEO, these objectives are then weighted to reflect their relative importance to the Company and the executive’s functional +responsibilities. +Depending on the Company’s overall performance and the extent to which an executive achieves his individual +objectives for a particular year, the executive will be rated as “Does Not Meet,” “Does Not Consistently Meet,” “Meets Expectations,” “Exceeds Expectations” or “Outstanding.” The Compensation +Committee uses the performance ratings to determine base salary adjustments, incentive cash bonuses and long-term incentive equity awards, except for Messrs. Michels and Spair. The Compensation Committee decided that, because of their senior +positions with the Company, it is more appropriate to determine the base salary, incentive cash bonuses and long-term incentive equity awards for Messrs. Michels and Spair primarily based on the Company’s overall performance and, in doing so, +does not apply individual performance rating labels to these executives. +ROLE OF THE COMPENSATION COMMITTEE +The Compensation Committee is comprised of non-employee +independent Directors who oversee our executive compensation program. Each year, the Compensation Committee determines the appropriate level of compensation for all executive officers, including the NEOs. As an initial guideline, the Compensation +Committee sets the total direct compensation opportunity (base salary, annual incentive bonus target, and long-term incentive target) for each of our executive officers within a range around the 50th percentile of comparable medical diagnostics and +healthcare companies. The variation of actual pay relative to the market data is dependent on the executive officer’s performance, experience, knowledge, skills, level of responsibility, potential to impact our performance and future success, +and the need to retain and motivate strategic talent. +The Compensation Committee generally determines an executive officer’s +compensation based upon the objectives of our executive compensation program. The Compensation Committee makes compensation recommendations for the CEO and the CFO/COO and approves decisions for the other NEOs after careful review and analysis of +appropriate performance information and market compensation data. Compensation for the CEO is approved by the full Board of Directors. +Beyond determining specific compensation for NEOs, the Compensation Committee works with executive management to review and adjust +compensation policies and practices to remain consistent with the Company’s values and philosophy, support the recruitment and retention of executive talent, and help the Company achieve its business objectives. +ROLE OF THE CEO +The CEO provides recommendations to the Compensation Committee on the total direct compensation for each +executive, other than himself. The CEO’s recommendations are based on his review of each executive’s performance, job responsibilities, importance to our overall business strategy, and our compensation philosophy. Although the CEO’s +recommendations are given significant weight, the Compensation Committee retains full discretion when determining compensation. +ROLE OF THE COMPENSATION CONSULTANT +To assist in the review of executive compensation and to obtain information regarding market trends, the +Compensation Committee engages the services of one or more independent executive compensation consultants to analyze our executive compensation structure and plan designs, and to assess whether the compensation program is competitive and supports +our goal of aligning the interests of our executive officers with those of our stockholders. In addition, a consultant provides the Compensation Committee with the peer group and other market data that is discussed in the CD&A, which the +Compensation Committee evaluates when determining compensation for executive officers. During 2016, the Compensation Committee engaged Pearl Meyer & Partners (“PM&P”) to provide a market assessment of the target compensation +for our executives and assess the competitiveness of our +23 +Table of Contents +compensation policy for non-employee Directors. In addition, the Compensation Committee engaged Pay Governance LLC (“Pay Governance”), to assist +in responding to the SOP vote at our 2016 Annual Meeting and to consult on the preparation of this Proxy Statement. The Compensation Committee has the sole authority to approve the independent compensation consultant’s fees and terms of the +engagement. The Compensation Committee annually reviews its relationship with each consultant to ensure executive compensation consulting independence. The process included a review of the services PM&P and Pay Governance provides, the quality +of those services, and fees associated with the services during the fiscal year as well as consideration of the factors impacting independence that NASDAQ rules require. The Compensation Committee concluded that there were no conflicts of interest +that prevented PM&P or Pay Governance from serving as independent consultants to the Compensation Committee on executive compensation matters. We paid PM&P $76,271 for their 2016 compensation assessment and Pay Governance $46,643 for their +services related to our response to the 2016 SOP vote and the preparation of this Proxy Statement. +TALLY SHEETS +In determining annual compensation, the Compensation Committee reviews tally sheets for each executive. +Tally sheets set forth the dollar amounts of all components of each NEO’s current compensation, including salary, incentive cash bonus, incentive equity awards, potential change of control payments and other benefits deemed relevant by the +Compensation Committee. These tally sheets allow the Compensation Committee to review how a change in the amount of each compensation component affects each executive’s total compensation and to consider each executive’s compensation in +the aggregate. Included in each tally sheet is the estimated amount of severance and other benefits payable to the executive under various termination scenarios. Based upon the review of tally sheets, the Compensation Committee establishes aggregate +compensation for our executives which it believes to be reasonable. +COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION +Stephen S. Tang, Ph.D., Eamonn P. Hobbs, Ronny B. Lancaster and Roger L. Pringle served as members of +the Compensation Committee during 2016. None of these Directors has served or is currently serving as an officer or employee of the Company, nor have they engaged in any transactions involving the Company which would require disclosure as a +transaction with a related person. There are no Compensation Committee interlocks between the Company and any other entity involving the Company’s or such entity’s executive officers or board members. +COMPENSATION COMMITTEE REPORT +The information contained in this report shall not be deemed to be “soliciting material” or +“filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that Section. This report shall not be deemed to be “ incorporated by reference” into any document filed +under the Securities Act or the Exchange Act, whether such filing occurs before or after the date hereof, regardless of any general incorporation language in such filing. +The Compensation Committee of OraSure Technologies, Inc. has reviewed and discussed with the Company’s management the Section +entitled, “Compensation Discussion and Analysis,” contained in this Proxy Statement. Based on that review and discussion, the Compensation Committee recommended to the Company’s Board of Directors that the foregoing Compensation +Discussion and Analysis be included in the Company’s 2016 Annual Report on Form 10-K Report and Proxy Statement for the 2017 Annual Meeting of Stockholders. +COMPENSATION COMMITTEE: +Ronny B. Lancaster, +Chairman +Eamonn P. Hobbs +Roger L. Pringle +Stephen S. Tang, Ph.D. +March 31, 2017 +24 +Table of Contents +EXECUTIVE OFFICERS +The table below provides information about +the executive officers of the Company as of March 23, 2017. Officers of the Company hold office at the discretion of the Board. +Name +Age +Position +Douglas A. Michels +60 +President and Chief Executive Officer +Ronald H. Spair +61 +Chief Financial Officer and Chief Operating Officer +Anthony Zezzo II +63 +Executive Vice President, Marketing and Sales +Jack E. Jerrett +58 +Senior Vice President, General Counsel and Secretary +Michael Reed, Ph.D. +48 +Senior Vice President, Research and Development and Chief Science +Officer +Mark L. Kuna +54 +Senior Vice President, Finance, Controller and Assistant +Secretary +Douglas A. Michels, President and Chief Executive Officer +Mr. Michels has been the Company’s President and Chief Executive Officer since June 2004. Prior to that, Mr. Michels +served as Group Vice President, Global Marketing of Ortho-Clinical Diagnostics, President of Ortho-Clinical Diagnostics International, and President of Johnson & Johnson Healthcare Systems, Inc. Earlier in his career, Mr. Michels held +various sales and marketing positions of increasing responsibility within the Johnson & Johnson family of companies and with the Diagnostics Division of Abbott Laboratories. Mr. Michels received a B.S. degree in Public Health +Administration from the University of Illinois and an M.B.A. from Rutgers University. Mr. Michels recently served on the Presidential Advisory Council on HIV/AIDS (PACHA) and currently serves on the boards of directors of West Pharmaceutical +Services, Inc. and the Miller Keystone Blood Center. +Ronald H. Spair, Chief Financial Officer and Chief Operating Officer +Mr. Spair has been the Company’s Chief Financial Officer and Chief Operating Officer since September 2006 and served as +Executive Vice President and Chief Financial Officer since November 2001. Prior to that time, Mr. Spair served as Chief Financial Officer for various companies in the pharmaceutical industry, including Delsys Pharmaceutical Corporation, +SuperGen, Inc., Sparta Pharmaceuticals, Inc. and Envirogen, Inc. Mr. Spair received both his B.S. in Accounting and M.B.A. from Rider College. He is also a licensed Certified Public Accountant, a Chartered Global Management Accountant, a member +of the New Jersey Society of Certified Public Accountants and the American Institute of Certified Public Accountants, and serves on the boards of Fulton Financial Corporation and Life Sciences PA. +Anthony Zezzo II, Executive Vice President, Business Unit Lead, Infectious +Disease +Mr. Zezzo has been the Company’s Executive Vice President, Marketing and Sales since January 2011. From 2004 to December +2010, Mr. Zezzo was Vice President, North American Sales and Marketing at the Ortho-Clinical Diagnostics Division of Johnson & Johnson. Prior to that time, Mr. Zezzo held a series of sales and marketing positions of increasing +responsibility within Johnson & Johnson. Mr. Zezzo received his B.A. in Political Science from Grove City College. +25 +Table of Contents +Jack E. Jerrett, Senior Vice President, General Counsel and Secretary +Mr. Jerrett has been the Company’s Senior Vice President and General Counsel since February 2003 and served as Vice President and General Counsel since November 2000. He has also served as the Company’s Secretary +since February 2001. Prior to joining the Company, Mr. Jerrett worked as an Associate at Morgan, Lewis & Bockius and held positions of increasing legal responsibilities with companies in the transportation and energy industries. +Mr. Jerrett received his B.S. in Accounting from Villanova University and his J.D. from the Villanova University School of Law. He is a member of the Pennsylvania Bar and the American and Pennsylvania Bar Associations. +Michael Reed, Ph.D., Senior Vice President of Research and Development and Chief Science +Officer +Dr. Reed joined the Company as the Senior Vice President of Research and Development and Chief Science Officer in April 2016. Prior to joining the Company, Dr. Reed spent eight years at Beckman Coulter, a global +diagnostics and life sciences company within the Danaher Corporation, serving in a variety of leadership positions including Director of Global Assay and Applications Development for the Beckman Coulter Life Science business and Director of +Scientific Affairs for the Cellular Analysis Business Group. Under his leadership, the Company launched and commercialized over 300 products globally across multiple disciplines. Prior to his work at Beckman Coulter, Dr. Reed served as Director +of Product Development with Osmetech Molecular Diagnostics where he led the effort to develop two U.S. FDA 510K cleared IVD systems for cystic fibrosis genotyping and a pharmacogenetics test to guide warfarin dosing. Dr. Reed received a Ph.D. +degree in Biochemistry from the University of Adelaide (Australia) and a BSc. in Biochemistry from The Australian National University (Canberra, Australia). He also conducted post-doctoral research at the Beckman Research Institute at the City of +Hope in Duarte, California. +Mark L. Kuna, Senior Vice President, Finance, Controller and Assistant Secretary +Mark L. Kuna has been the Company’s Senior Vice President, Finance and Controller since September 2006, and served as Vice +President and Controller since February 2003 and as Controller since February 2001. Mr. Kuna has also served as the Company’s Assistant Secretary since May 2002 and provided accounting and financial analysis support since joining the +Company in October 2000. Prior to that time, Mr. Kuna served as an accountant with Deloitte and Touche and held senior accounting and management positions with companies in the petrochemical, manufacturing, and telecommunications industries. +Mr. Kuna received his B.S. in Accounting from the University of Scranton and is a licensed Certified Public Accountant, a Chartered Global Management Accountant, and a member of the Pennsylvania and American Institutes of Certified Public +Accountants. +TRANSACTIONS WITH RELATED PERSONS +Since January 1, 2016, +there have been no transactions with related persons that would require disclosure in this Proxy Statement. The Audit Committee is required to review and approve in advance all transactions with related persons involving the Company. The Audit +Committee may approve a related party transaction if the transaction is on terms comparable to those that could be obtained in arms’ length dealings with an unrelated third +26 +Table of Contents +party. The Audit Committee also reviews any public disclosures of a related party transaction contained in our SEC filings. These responsibilities are described in the Audit Committee’s +charter, a copy of which is available on our website at www.orasure.com . +Information regarding employment and severance agreements between our executive officers and the Company is set forth in the Section +entitled, “Employment Agreements and Potential Payments Upon Termination or Change of Control,” in this Proxy Statement. +SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE +Section 16(a) of the Exchange Act requires that our executive officers, Directors and persons who own more than ten percent of our +Common Stock (collectively, “Reporting Persons”) file reports of ownership and changes in ownership with the SEC. Reporting Persons are required by the SEC’s regulations to furnish us with copies of all Section 16(a) forms they +file. +As a matter of practice, our administrative staff assists each of the Reporting Persons who are employees and Directors of +the Company in preparing initial reports of ownership and reports of changes in beneficial ownership and filing such reports with the SEC and the NASDAQ. Based solely on a review of the copies of forms filed by or on behalf of the Reporting Persons +and on written representations (if any) from each of the Reporting Persons, we believe that all Reporting Persons complied on a timely basis with all applicable filing requirements with respect to the 2016 fiscal year, except for Charles W. Patrick, +one of our independent Directors. Due to an administrative oversight, a Form 4 required in connection with Mr. Patrick’s sale of 6,575 shares of Common Stock on August 5, 2016 was not filed until August 31, 2016. +27 +Table of Contents +COMPENSATION DISCUSSION AND ANALYSIS - TABLE OF +CONTENTS +EXECUTIVE SUMMARY +29 +Overview +29 +Our Performance in 2016 +29 +2016 Business Highlights in Detail +30 +NEO Compensation At a Glance – 2016 +31 +Pay for Performance +32 +Realizable Pay vs. TSR +34 +Realizable Pay vs. SCT Compensation +34 +Pay vs. Other Company Measures of Performance +35 +Say-on-Pay Results +in 2016 and the Company’s Response +36 +Compensation Changes +36 +Other Good Compensation Governance Practices +40 +Compensation Risk Assessment +41 +COMPENSATION PHILOSOPHY +42 +BENCHMARKING +42 +PAY MIX +44 +2016 EXECUTIVE COMPENSATION COMPONENTS +45 +Overview +45 +Compensation Components in Detail +46 +OTHER COMPENSATION +55 +Retirement Programs +55 +Perquisites and Other Compensation +56 +Potential Payments Upon Termination or Change of Control Pursuant to Employment Agreements +56 +Accounting and Tax Treatment of Compensation +56 +Compensation Recoupment Policy +56 +COMPENSATION TABLES – TABLE OF +CONTENTS +Summary Compensation Table +57 +Grants of Plan-Based Awards +58 +Outstanding Equity Awards at December 31, 2016 +59 +Option Exercises and Stock Vested +61 +Retirement Benefits +61 +Nonqualified Deferred Compensation +62 +28 +Table of Contents +COMPENSATION DISCUSSION AND ANALYSIS +EXECUTIVE SUMMARY +Overview +This Compensation Discussion and Analysis, or CD&A, describes the material elements of the compensation of our NEOs and describes the objectives and +principals underlying the Company’s executive compensation program, the compensation decisions we have recently made under this program and the factors we considered in making these decisions. +Our NEOs for 2016 who are covered in this CD&A include: +Name +Position during 2016 +Douglas A. Michels +President and Chief Executive Officer +Ronald H. Spair +Chief Financial Officer and Chief Operating Officer +Anthony Zezzo, II +Executive Vice President, Marketing and Sales +Jack E. Jerrett +Senior Vice President, General Counsel and Secretary +Michael Reed, Ph.D. +Senior Vice President, Research and Development and Chief Science Officer +Our Performance in 2016 +Our financial performance for 2016 represented another year of substantial improvement over the prior-year period, with record revenues and a second +consecutive year of profitability. The following charts and summary describe our consolidated financial performance (expressed in thousands) and several of the principal contributors to the growth we achieved. +29 +Table of Contents +2016 was another year of record financial performance and is the second consecutive year of +profitability. Our 2016 consolidated net revenues were $128.2 million, a 7% increase over 2015. Our consolidated net income in 2016 was $19.7 million, or $0.35 per share, an improvement of $11.5 million ($0.21 per share) over 2015. +2016 Business Highlights in Detail +• +Consolidated net revenues were $128.2 million (7% increase over 2015), a new record level for our Company. +• +Revenue growth and lower operating expenses resulted in a second consecutive year of profitability with consolidated net income of $19.7 million for 2016. This represents an $11.5 million ($0.21 per share) +improvement from 2015. +• +We generated $22.8 million in cash from operations during 2016, compared to $15.8 million in 2015. +• +Our total stockholder return for 2016 was 36%. +• +Aggregate cash and cash equivalents totaled $120.9 million at year-end. +• +Gross margin improved to 69% in 2016, compared to 67% in 2015. +• +OraQuick ® HCV product revenues reached an all-time high of $14.1 million, representing a 24% increase over 2015. +• +Molecular collection systems revenues reached $32.2 million in 2016, representing an 8% increase over 2015. +• +Net product revenues from our newest business lines (i.e. molecular collections, HCV-related, HIV OTC and Ebola) totaled $52.8 million, or 41%, of consolidated net revenues +for 2016. +• +We substantially completed development of our OraQuick ® rapid Zika test and secured up to $16.6 million in federal funding for this product. +• +We entered into and began fulfilling the largest product supply agreement in our history – a 12-month $18.0 million contract with a foreign government ministry to +support a country-wide HCV elimination program. +30 +Table of Contents +NEO Compensation At a Glance – 2016 +Compensation for the NEOs in 2016 was directly or indirectly tied to the performance of both the executives and the Company, resulting +in the following: +• +Base Salary : The base salaries paid to our management (including the NEOs) during 2016 increased +2.61% on average, with Mr. Michels receiving a 2.60% increase for the year. Salary adjustments were based on the performance of each executive and the Company during 2015, the results of a competitive marketplace assessment prepared by +PM&P, and our Company-wide salary merit increase budget of 3.0%. Additional detail on these salary adjustments is provided in the “2016 Base Salaries” Section on page 46. +NEO +2015 Performance Rating +2015 Salary +2016 Salary +Change (%) +Douglas A. Michels +N/A +$596,895 +$612,580 +2.60% +Ronald H. Spair +N/A +$468,838 +$480,245 +2.40% +Anthony Zezzo II +Meets +$384,010 +$391,690 +2.0% +Jack E. Jerrett +Meets +$344,400 +$353,010 +2.50% +Michael Reed, Ph.D. 1 +N/A +----- +$305,000 +---- +1 Dr. Reed joined the Company in April 2016. +• +Annual Incentive Bonuses : Incentive cash bonus awards for 2016 performance ranged from 121% to 151% +of target for the NEOs and for Mr. Michels was 151% of his target. The bonus amounts exceeded the applicable targets for each NEO primarily due to the strong financial performance of the Company during 2016, as described under the “2016 +Business Highlights in Detail” Section above. In approving these bonus awards, the Board recognized the importance of broader Company performance such as total stockholder return (“TSR”) and considered the fact that our TSR for 2016 +was 36%, a substantial improvement from the 36% decline in TSR in 2015. Bonus payments above target were approved because of the Board’s belief that continuing annual financial improvement, such as that achieved in 2016, should be rewarded as a +critical factor for delivering value to our stockholders. Additional detail on these bonus payments is provided in the “2016 Annual Incentive Cash Bonuses” Section on page 48. +Actual 2016 Bonus Payments +NEO +2016 +Performance Rating +2016 Target +(% +Salary) +($) +(% Salary) +(% Target) +Douglas A. Michels +N/A +70% +$646,586 +105.6% +150.8% +Ronald H. Spair +N/A +50% +$362,074 +75.4% +150.8% +Anthony Zezzo II +Meets +40% +$188,998 +48.3% +120.6% +Jack E. Jerrett +Meets +35% +$149,043 +42.2% +120.6% +Michael Reed, Ph.D. +Meets +35% +$128,773 +48.2% +120.6% +31 +Table of Contents +• +Long-Term Incentive Awards : Incentive equity awards to NEOs in February 2016 were earned based on +each executive’s performance during 2015 (except for Dr. Reed who did not join the Company until April 2016) and the value of the awards ranged from 75% to 215% of each executive’s base salary. The value of Mr. Michels’ +award was 215% of his salary. Mr. Michels’ award was based on the strong financial performance during 2015, as described under the “2016 Base Salaries” Section on page 46. +2016 Awards +NEO +2015 +Performance Rating +Target Range +(% +Salary) +($) +(% Salary) +Douglas A. Michels +N/A +150% - 250% +$ +1,283,322 +215% +Ronald H. Spair +N/A +90% - 160% +$ +632,930 +135% +Anthony Zezzo II +Meets +75% - 125% +$ +345,614 +90% +Jack E. Jerrett +Meets +55% - 95% +$ +258,298 +75% +Michael Reed, Ph.D. 1 +N/A +55% - 95% +$ +274,506 +90% +1 +Dr. Reed received an onboarding equity award when he joined the Company in April 2016 which was structured in the +same manner as the annual awards granted to the other NEOs in 2016. +As described further in the +“Compensation Changes” section of the CD&A, below, beginning with the equity incentive awards made in February 2016 for performance during 2015, executives received equity awards that were 50% performance-vested restricted units and +50% time-vested restricted stock. The decision to structure a substantial portion of our executives’ equity compensation as performance-vested awards was made in response to stockholder feedback and further strengthens the link between +performance and executive compensation. +Additional information regarding NEO compensation for 2016 is provided below in this +CD&A and in the accompanying tables, including the Summary Compensation Table (“SCT”) set forth on page 57. The information provided below demonstrates the reasonableness of the compensation paid to executives considering our improved +financial performance during 2016. +Pay for Performance +We follow a pay-for-performance approach in compensating +executives. Our program pays executives for performance by rewarding the achievement of predetermined financial and other performance objectives. +A significant portion of each NEO’s compensation is paid out in variable and long-term compensation that is intended to align such +compensation with the long-term interests of our stockholders. Both our annual and long-term compensation are tied to the Company’s overall performance in a variety of ways, including our financial results and share price performance. +32 +Table of Contents +An important feature of our compensation program is the use of performance targets to +incentivize management to achieve improved financial results on a year-to-year basis. We believe continuous revenue growth and sustained and increasing profitability are +key factors for increasing the price of our Common Stock and for delivering long-term value for our stockholders. +The use of +performance targets to drive growth is clearly illustrated by the annual bonus plan established each year. As described further in this CD&A, annual financial objectives are selected in order to determine the amount of pool funding available to +pay individual bonus awards each year. When establishing these objectives, the Board and Compensation Committee generally select targets that, if achieved, will result in improved financial performance on an annual basis, consistent with our +business plans. Set forth below are the Target performance levels that were used to determine pool funding in our bonus plans for the three-year period 2014-2016. These targets provided an important incentive for the significantly improved financial +performance over that period, as shown on pages 29-30. +Annual Bonus Plan Targets +2014 +2015 +2016 +Consolidated Net +Revenue +$112.2 +$121.7 +$126.3 +Operating +(Loss)/Income +$ (13.6) +$ 5.5 +$ 12.3 +Beginning in 2016, we adopted a new policy of granting annual equity awards to executives that consist +of 50% performance-vested restricted units and 50% time-vested restricted stock. The performance units will only vest if (i) the recipient remains employed by the Company for three years following the date of grant and (ii) the performance +criteria determined by the Committee and Board are met. The time-vested restricted stock portion of the award vests in equal annual installments over the three-year period following the grant date, subject to the recipient’s continued +employment by the Company. +For each award of performance-vested restricted units granted in 2016, +one-half of such units will be earned based on the achievement of a compound annual growth rate (“CAGR”) target for consolidated product revenues for the three-year period 2016-2018 and the remaining +half will be earned based on achievement of a one-year earnings per share (“EPS”) target for the fiscal year 2016. The three-year product revenue CAGR target reflects a blending of projected growth +taken from our internal long-range plan and growth rates contained in several published market research growth forecasts for the medical diagnostics and molecular testing markets. The one-year EPS target +represents the Company’s projected net income for 2016 as indicated in our 2016 budget or operating plan. Under the terms of the grant, award recipients may receive additional units, above the initial number awarded in 2016, if we exceed the +performance criteria. If we achieve less than 80% of a performance target, the units relating to such performance target will not vest. +We believe the performance targets and three-year service period of these performance-vested equity awards complement the short-term +incentives in our annual bonus plans. We also believe the combination of the structure of our annual bonus plan and the structure of our new equity award policy will incentivize management to deliver substantially improved financial performance both +on an annual basis and over a longer term period and help drive long-term growth in stockholder value. +33 +Table of Contents +Realizable Pay vs. TSR +To ensure that we are adhering to a pay-for-performance +approach, we evaluated the degree of alignment between our CEO’s total realizable pay versus our total stockholder return, or TSR, over the prior three fiscal years (2014-2016) relative to our compensation peer group (listed on page 43 of this +Proxy Statement). We have adopted this approach to ensure our compensation program is operating as intended and to respond to stockholder feedback we received on our executive compensation. The graph below shows the comparison of three-year TSR and +“realizable pay” relative to our peer group. We provide further detail regarding the companies in our compensation peer group in the “Benchmarking” section of this CD&A. +Realizable pay includes base salary, incentive cash bonus and all other cash compensation reported in +the Summary Compensation Table. Realizable pay also includes the value of equity awards using each company’s closing stock price on December 30, 2016. Restricted stock and restricted unit awards are valued by multiplying the number of +shares granted (at the target level in the case of restricted units) by the closing stock price on December 30, 2016. Option awards are valued as the difference between the closing stock price on December 30, 2016 and the exercise price +multiplied by the number of option shares granted during the period. An option award with an exercise price greater than the closing stock price on December 30, 2016 is valued at $0. +As the graph indicates, there is a close relationship between our TSR performance and the realizable pay for our CEO, Mr. Michels, +relative to the relationship seen in our peer group. This analysis confirms the strong link between pay and performance embedded in our compensation program. +Realizable Pay vs. SCT Compensation +As described further below, we believe long-term equity awards are a key incentive for our executives to drive the Company’s +long-term growth and align the interests of our executives with those of our stockholders. The Summary Compensation Table includes the estimated value of long-term incentive equity awards at the time of grant. The actual value of these awards that +may be realizable by our executives may vary from the estimates depending on the Company’s financial and stock performance and often differs significantly from what is reported in the Summary Compensation Table. +A comparison of the realizable value of long-term equity incentive awards against the values reported in the Summary Compensation Table +indicates how compensation outcomes may be impacted by our performance. Such +34 +Table of Contents +a comparison also shows the degree of alignment between our stock performance and the level of compensation provided to executives. +The table below compares the compensation values reported in the Summary Compensation Table and the value of realizable pay +(“RP”) for the compensation awarded during the three-year period 2014-2016 for our CEO, Mr. Michels. +Mr. Michels’ realizable pay +for the three years 2014 – +2016 of $7.8 million is 3% +higher than his SCT +compensation +opportunity +for the same period. This +shows a strong link between +pay and performance as our +TSR over the three year +period was above the median +for our peers. +Pay vs. Other Company Measures of Performance +While TSR is a common measure of performance that is often used to evaluate a company’s compensation practices, at our stage of +development we consider other performance measures to be, at times, more reflective of the success of our business. It is important to recognize that our TSR is extremely volatile, as evidenced by the substantial movements in our stock price during +the past several years. Specifically, in 2013 our stock price declined 12%, but rose 61% in 2014. Our stock price declined again by 36.5% in 2015 and then rose 36% in 2016. These price changes are not solely tied to our performance. Our stock price +declined in 2015 even though we achieved record financial performance with substantial growth and full year profitability in 2015. +As a result, our executive compensation does not follow a linear relationship with TSR. Rather, we have tried to align our executive +compensation with performance results that are part of our overall business strategy that we believe will drive stock price improvement and increased value for our stockholders over the longer term. For example, in past years we have had a number of +“first-of-their-kind” achievements in the diagnostics field. Specifically, we developed and commercialized the first and only rapid HCV test in the United +States along with the first ever rapid in-home HIV test. We successfully completed the acquisition of DNA Genotek in late 2011, providing us with an entrance into the high growth molecular diagnostics field. +This acquisition is now contributing strong growth to our business and accounted for 25% of our 2016 consolidated net revenues. More recently, we developed and began commercializing a new rapid Ebola test and we have made significant progress on a +rapid Zika test. During 2016, we expanded the reach of our core HIV and HCV product lines with significant growth in international markets. These achievements are the primary reasons for our profitability in 2015 and 2016 and our overall strong and +continually improving financial performance for the past three fiscal years. +When establishing and evaluating our executive +compensation program generally, and performance-based incentive plans in particular, we believe that TSR alone will not always immediately account for the value of our accomplishments and, in many cases, it may take time for the impact of our +strategic and other accomplishments to be fully reflected in the value of our stock. Thus, while obviously important, TSR is only one of several factors we consider in making compensation decisions for our executives. +35 +Table of Contents +Say-on-Pay Results in 2016 and the +Company’s Response +At our 2016 Annual Meeting, stockholders were asked to vote on an advisory (non-binding) basis on the compensation paid to our NEOs for 2015. We obtained stockholder approval of our NEO compensation for 2015 with approximately 94% of stockholder votes cast in favor of our “say-on-pay” or SOP resolution. Even with this overwhelmingly positive response, we continued our outreach effort that had been initiated in response to prior SOP +votes to contact certain of our major stockholders in order to continue to understand their concerns regarding our compensation practices. We also contacted both ISS Proxy Advisory Services (“ISS”) and Glass Lewis & Co. +(“Glass Lewis”), two leading proxy advisory firms, in order to solicit their views on these issues. Several of our independent Directors participated in this outreach, including the Chairman of our Board, the Chairman of our Compensation +Committee and the Chairman of our Nominating and Corporate Governance Committee. Overall, we contacted stockholders who, in the aggregate, beneficially held over 50% of our outstanding Common Stock. A number of our stockholders indicated they saw no +further need to meet with us although many had done so in the past. We believe these stockholders declined our invitation because they are generally supportive of our executive compensation and governance practices and that any concerns they had did +not warrant further discussion at this time. +The stockholders we did have discussions with, which represented approximately 18% of +the holders of our outstanding Common Stock, generally provided the following feedback: +• Acknowledged our compensation changes as positive improvements and responsive to +stockholder concerns. +• Supported our adoption of performance-vested restricted units for 50% of long-term +incentive equity awards. +• Encouraged the exclusion of the impact of stock repurchases in determining if performance +metrics are met. +• Complimented the Company’s strong financial performance and TSR for +2016. +• Complimented us for being transparent in our proxy disclosures and response to stockholder +concerns. +• Appreciated our stockholder outreach efforts and encouraged us to continue this +practice. +• Encouraged us to disclose, upfront, the financial targets used for performance-vested +restricted unit awards. +• Encouraged the Board to improve the diversity of its members, particularly with respect to +gender, and to consider using third-party recruiters and publicly-available candidate databases to fill Board vacancies. +• Encouraged the Board to consider other governance issues, such as a declassified board, +majority voting, board refreshment, use of third-party advisors to assist with Board self-assessments, and use of a risk officer or risk management committee to supervise risk management. +We believe our stockholder engagement has been and continues to be beneficial. The feedback received +reaffirms that the compensation changes made in recent years were responsive to stockholder concerns and our executive compensation is strongly aligned with performance. The Board intends to continue ongoing dialogue with our stockholders to ensure +our executive compensation programs are well understood by all stakeholders and that we continue to be responsive to stockholder concerns. +Compensation Changes +In response to input from stockholders, the Compensation Committee and Board adopted a number of +changes in 2015 and 2016 to specifically respond to stockholder concerns and better align our compensation program with performance. We believe these changes were the primary reason for the strong approval of our SOP proposal at the 2016 Annual +Meeting. As a result, we concluded the best response to the latest stockholder input is to continue our current compensation program, particularly the use of 50% performance-vested equity awards for executives, which was also used for the most +recent awards in February 2017 for performance in 2016. +36 +Table of Contents +The following is a summary of these changes, along with our rationale for making them: +Change +Old +New +Rationale +Effective +Performance-Vested Long-Term +Incentive Equity Awards. +Awards consisted of 60% Stock Options and 40% Restricted Stock, all time-vested over +three or four years. +Awards consist of 50% performance-vested restricted units and 50% time-vested restricted +stock. +• Directly responds to stockholder input. +• Enhances link between compensation and longer-term performance. +• Focuses executives on long-term priorities. +• Alignment with market practice. +2016 for performance in 2015 +Changes to Executive Employment +Agreements. +Contained excise tax gross up and modified “single trigger” change of control +severance provisions. Adopted policy that new agreements will contain no excise tax gross up and will provide for “double trigger” change of control severance. +CEO employment agreement amended to remove excise tax gross up and changed modified +“single trigger” to “double trigger” change of control severance. Other NEO agreements amended to remove excise tax gross up. +• Responds to stockholder input. +• Consistent with good governance practices. +2015 +Enhanced Stock Ownership and Retention +Guidelines. +CEO – 2x salary +CFO/COO – 1x salary +Other Executives +– None +CEO – 6x salary +CFO/COO – 2x salary +Other Executives +– 1x salary. +• Consistent with good governance practices. +• Supported by stockholders. +• Strengthens alignment between executives and stockholders. +2015 +Limit on Discretionary Bonus Pool +Adjustments. +Compensation Committee and Board historically have had unlimited discretion to adjust +bonus pool funding. +Discretionary adjustments will be limited to ++/-10% of aggregate pool funding determined under applicable Incentive Plan formula. +• Responds to concerns about discretionary bonus awards and +misalignment of pay and performance. +• Ensures bonus pool amount/payouts are predominately tied to previously agreed +performance goals +• Allows for reasonable, but limited, discretion to accommodate unforeseen circumstances. +2016 +37 +Table of Contents +Extension +of stock buyback program. +Buyback program originally authorized in 2008, with no +active purchasing in recent years. +Buyback program extended to repurchase 1.2 million +shares of Common Stock in late 2015 and early 2016, which approximates shares used for annual management and non-employee Director equity awards. +• Directly responds to stockholder +input. +• Offsets dilutive impact of any annual equity incentive awards to executives and +non-employee Directors. +2015-2016 +Performance Based Equity Awards +The value of long-term incentive equity awards granted to an executive reflects the performance for the prior year. Based on input from +our stockholders and advice from Pay Governance, we have implemented performance vesting for a significant portion of the incentive equity awards for our executives. The new performance vesting program began with the awards made in 2016. +Under our Long-Term Incentive Policy (“LTIP”), 50% of an executive’s total equity award consists of performance-vested +restricted units that will not vest until three years after the grant date and only if certain performance measures are met during that three-year period. The awards currently incorporate two performance metrics: (i) a CAGR for consolidated +product revenues during the three-year period beginning with the year in which the award is made and (ii) a one-year “EPS” target for the year of award followed by a further two-year time-vesting requirement. The remaining 50% of each executive’s incentive equity award consists of time-vested restricted stock and will utilize a three-year ratable vesting period as we have done in +the past. +The structure of the equity awards reflects market-based good governance practices as well as input from our +stockholders, several of whom advocated that a meaningful portion of the equity awards should have performance-based vesting. We believe 50% is a meaningful portion and is consistent with or exceeds the performance orientation of our peer companies. +In addition, although some stockholders have mentioned TSR as a possible performance target, most of the stockholders we have contacted in recent years indicated that other measures such as financial or operational objectives would also be +appropriate. The Board decided to use consolidated net product revenue and EPS targets because they are important for our business, especially as we continue improving our profitability, and because of the Board’s belief that these measures +will directly influence the performance of our stock price over time. Under the terms of the awards, the impact of stock repurchase programs is excluded in determining whether an EPS target has been met. As discussed above, the Board does not +believe that the use of TSR as a performance metric in the long-term incentive plan is appropriate at this time, although the choice of performance metrics will be reviewed each year. +The adoption of performance-based vesting conditions with a three-year service requirement for 50% of an executive’s annual equity +award substantially strengthens the link between pay and performance and creates an appropriate long-term incentive for our executives. At the same time, the use of time-based vesting conditions for the remaining 50% of each award achieves the +equally important goal of share ownership/accumulation through a share-price sensitive vehicle that directly promotes alignment with stockholders and further supports executive retention. Overall, the Compensation Committee and Board believe that +this approach represents a balanced performance-based improvement to our executive compensation program that is appropriate for our Company, directly responds to feedback from our stockholders, and is consistent with executive pay governance best +practices. +Employment Agreement Changes +The Company’s employment agreements with Mr. Michels and the other NEOs were put in place in 2004 and 2006, except for +Dr. Reed who does not have an employment agreement, and Mr. Zezzo, whose agreement was entered into in 2011 when he joined the Company. The initial employment agreements required the Company to +38 +Table of Contents +provide a gross up for excise tax imposed under Section 280G of the Internal Revenue Code on compensation paid as a result of a change of control, in an amount up to $1.0 million for +Mr. Michels and $500,000 for the other NEOs. These agreements also included a modified “single trigger” severance provision, which would permit the executive to voluntarily terminate his employment within a specified period following +a change of control and receive increased severance even though that executive’s position or scope of responsibilities following the change had not been adversely affected. Beginning with Mr. Zezzo’s agreement in 2011, we implemented +a new policy of no longer providing any excise tax gross up or “single” or “modified single” trigger severance provisions. Instead, Mr. Zezzo’s agreement contains a “double trigger” severance provision under +which there needs to be both a change of control and an adverse impact to Mr. Zezzo’s position or responsibilities before he is entitled to terminate his employment and receive increased cash severance. +In 2015, Mr. Michels and the other NEOs agreed to amend their employment agreements to remove the excise tax gross up provision. In +addition, Mr. Michels agreed to change the modified “single trigger” severance provision in his agreement to a “double trigger” severance provision. +These changes were implemented in direct response to input from several stockholders. In considering this matter, the Board was mindful +that these changes required amendments to long-standing employment agreements with our executives. Neither Mr. Michels nor any of the other NEO’s were obligated to agree to any changes to their agreements, nor did they receive direct +compensation in exchange for the revised employment agreements. Our leadership team agreed to these changes, in an effort to be responsive to the concerns of our stockholders and in order to improve our compensation governance practices. +Enhanced Stock Ownership/Retention Guidelines +Another change made by the Compensation Committee and Board in 2015 was to adopt enhanced stock ownership and retention guidelines for +our executives. Specifically, the following changes were made: +Position +Old Guideline +New Guideline +President and CEO +2x +6x +Chief +Financial Officer and Chief Operating Officer +1x +2x +Other +Executive Officers +None +1x +Non-Employee Directors +1x +1x +In addition, the guidelines were changed to require an executive to retain at least 50% of the net +shares acquired upon the exercise of stock options or the vesting of restricted shares until the executive’s stock holdings meet or exceed the applicable ownership guideline. +The Compensation Committee and Board believe these changes were appropriate in order to respond to stockholder concerns about pay for +performance, more closely align the interests of our executives with those of our stockholders and make our guidelines consistent with what we believe to be market practice. +Limited Bonus Pool Funding Discretion +Under our Management Incentive Plan, adopted each year for the payment of incentive cash bonuses to executives, the aggregate pool used +to pay bonuses is determined in a formulaic manner based on the achievement of specific, short-term financial objectives. However, the Compensation Committee and the Board historically retained discretion to increase or decrease the size of the +bonus pool based on performance conditions, market conditions or other factors deemed appropriate. +Beginning with the 2015 +Management Incentive Plan, any discretionary adjustments that may be made to the bonus pool calculated under the plan formula were limited to +/- 10%. The Compensation Committee and Board believe this change was appropriate in order to make our +incentive cash bonus plans more performance-based and +39 +Table of Contents +to bring our plans in line with what we believe to be market practice and provide plan participants with better line of sight between their actions, Company performance and any bonus results. +This change also directly responds to feedback from stockholders. We included the same limit on discretionary pool funding in the Management Incentive Plan for 2016 and 2017, and it is our current intention to continue this limitation in future +years. +Extension of Stock Buyback Program +Our Board previously approved a $25.0 million stock buyback program and prior to 2015 a total of 1,256,023 shares of stock had been +repurchased at a total cost of approximately $5.4 million. Stock purchases under this program largely stopped in 2008. Although we had temporarily suspended stock repurchases, this program was never terminated by the Board. +In direct response to concerns from stockholders regarding the dilutive impact of annual equity awards and based on a review of our +Common Stock valuation, in late 2015 the Board decided to extend the stock buyback program. Specifically, the Board directed management to repurchase up to 1.2 million shares of stock through early 2016. The 1.2 million share target +represented the approximate number of shares historically used for annual equity incentive awards for management and non-employee Directors. +As noted above, the impact of our stock repurchase program is excluded when determining if the EPS performance targets are met in +connection with the restricted units awarded to our executives. +Other Good Compensation Governance Practices +We are committed to maintaining good corporate governance and practices. Apart from the changes discussed above, there are many other +aspects of our compensation program that reflect this commitment: +Performance Mix - The vast majority of our NEOs’ +compensation is performance-based. For example, approximately 76% of Mr. Michels’ 2016 compensation consisted of an incentive cash bonus and long-term incentive equity awards, which are awarded based on Company performance. For the other +NEOs, 59% of their aggregate 2016 compensation consisted of performance-based compensation. +Diversified and Performance Based Portfolio - Our executive compensation consists of a mix of cash/equity, fixed/variable and +short-term/long-term compensation. Equity awards consist of 50% performance-vested restricted units and 50% time-vested restricted stock. +Threshold Bonus Objectives - Threshold financial performance objectives for annual bonus pool funding are set at levels that meet or exceed the +Company’s actual financial performance for the prior fiscal year. Target financial performance objectives generally increase or improve each year and thereby help drive improved financial performance on a year-over-year basis. +Multiple Performance Metrics – Variable compensation is based on a combination of corporate and individual performance measurements to help +ensure balanced incentives for executives. +Long-Term Focus - Equity awards are subject to long-term vesting requirements, with restricted shares vesting over 3 years. Performance vested +restricted units also vest after 3 years. Structuring our equity awards in this manner helps align the interests of our executives with the long-term interests of our stockholders. +Prudent Benchmarking - The total compensation paid to executives is targeted at the 50 th +percentile of a peer group of comparable companies based on achievement of performance objectives. We use a peer group (listed on page 43 of this Proxy Statement) consisting of companies in the medical diagnostic and healthcare industries comparable +in size to the Company based on total revenues and market value. +Tally Sheets – The Compensation Committee reviews tally sheets as part of making individual compensation +decisions. +40 +Table of Contents +Stockholder Outreach – Our Board has implemented a +robust outreach effort annually to ask our stockholders for feedback on our compensation and governance practices. This Board outreach effort is in addition to our regular investor relations program where we routinely discuss our business with +investors. +Independent Compensation Consultants - The Board and Compensation Committee regularly utilize independent compensation consultants to provide +compensation advice, including competitive assessments of our program compared to compensation paid to executives at the peer group of comparable medical diagnostic and healthcare companies (listed on page 43 of this Proxy Statement). For 2016, the +Compensation Committee engaged Pearl Meyer & Partners and Pay Governance as its independent consultants. +Recoupment Policy – Our Board maintains a compensation recoupment or “clawback” policy, under which the Board or Compensation +Committee will seek to recover excess compensation paid to our executives if our financial statements are restated due to misconduct by that executive. +No Repricing - Our Stock Award Plan prohibits both the repricing and repurchase of under-water stock options or other equity awards without +stockholder approval. +No Perquisites – We do not provide executives with any perquisites that are not offered to all employees of the Company. +Risk Review Process - We regularly assess the risks associated with our compensation programs. +No Hedging – Our policy prohibits Directors and NEOs from engaging in hedging activities with our stock. +No Pledging – Our Directors and NEOs are not permitted to pledge our stock. +Confidentiality/Non-Compete Agreements – Our NEOs are subject to confidentiality and non-compete agreements. +Compensation Risk Assessment +Management periodically conducts a risk assessment of the Company’s compensation policies and practices, including its executive +compensation program. In its review, management considers the attributes of the Company’s policies and practices and other factors, including: +• +The mix of fixed and variable compensation opportunities; +• +The balance between annual and long-term performance opportunities; +• +The corporate and individual performance objectives established for annual and long-term incentive compensation; +• +The internal controls and procedures in place to mitigate risks facing the Company, including the Company’s +“clawback” policy and stock ownership guidelines; and +• +The risk that unintended consequences could result from various aspects of the Company’s compensation policies and +practices. +Based on its review and assessment, management has concluded that the Company’s policies and +practices are designed with the appropriate balance of risk and reward in relation to the Company’s overall business strategy and do not incentivize employees to take unnecessary or excessive risks. The Company has also concluded that any risks +arising from the Company’s compensation policies and practices are not reasonably likely to have a material adverse effect on the Company. +41 +Table of Contents +COMPENSATION PHILOSOPHY +The primary objectives of our compensation program for executive officers are to: +Set compensation opportunities at levels sufficient to attract and retain high quality executives and to motivate them to contribute to our success. +Ensure the compensation opportunities provided align the interests of executives with the +interests of our stockholders. +Focus our executives on both short and longer-term individual and Company priorities +established by the Board and appropriately reward them for performance against these objectives. +The total direct compensation provided to each executive consists of an annual base salary, annual +incentive cash bonuses and long-term incentive equity awards. The amount of the incentive cash bonuses and the size of annual incentive equity awards are variable and depend on an executive’s and the Company’s achievement of predetermined +financial and other objectives. As a result, a substantial portion of each executive’s annual compensation is based on performance. +BENCHMARKING +We believe it is useful to regularly compare our compensation program against compensation paid to +executives at other comparable medical diagnostic and healthcare companies. With the assistance of an independent compensation consultant engaged by the Compensation Committee, a peer group of companies was selected using criteria based on industry, +revenues and market capitalization and a competitive assessment of our executive compensation was prepared. +The Compensation +Committee seeks to set total direct compensation opportunity levels for each executive near the fiftieth (50 th ) percentile of amounts paid by the peer companies for performance consistent +with the Company’s target financial and other business plans for the applicable year. Use of the fiftieth (50 th ) percentile is intended as a market-based reference and not as an absolute +target. As a result, the total direct compensation opportunity and the value of specific compensation components for individual executives may fall below or exceed the fiftieth +(50 th ) percentile depending on the individual performance of the executive, the criticality of his or her role, the executive’s contribution to our business, and other factors. +42 +Table of Contents +The following provides information about the peer group used by the Compensation Committee +for benchmarking purposes in setting executive compensation in 2016 and how we compare to these companies (all dollars in millions): +Peer Company 1 +2016 Revenue 2 +12/31/16 Market +Capitalization +Business 3 +Abaxis, +Inc. +$219 +$1,189 +Healthcare Equipment +ABIOMED +Inc. +$330 +$4,738 +Healthcare Equipment +Anika +Therapeutics, Inc. +$103 +$ 716 +Healthcare Supplies +Array +Biopharma, Inc. +$ 31 +$1,482 +Biotechnology +Atrion +Corp. +$143 +$ 925 +Healthcare Supplies +Cardiovascular Systems, Inc. +$177 +$ 800 +Healthcare Equipment +Cerus +Corp. +$ 34 +$ 450 +Healthcare Supplies +Cynosure, +Inc. +$434 +$1,088 +Healthcare Equipment +Enzo Biochem, +Inc. +$103 +$ 321 +Life Sciences Tools and Services +Fluidigm +Corp. +$104 +$ 212 +Life Sciences Tools and Services +Genomic Health, +Inc. +$328 +$ 984 +Biotechnology +Harvard +Bioscience, Inc. +$109 +$ 105 +Life Sciences Tools and Services +Luminex +Corp. +$271 +$ 882 +Life Sciences Tools and Services +Meridian +Bioscience, Inc. +$196 +$ 747 +Healthcare Supplies +Neogenomics, +Inc. +$244 +$ 673 +Life Sciences Tools and Services +Quidel +Corp. +$192 +$ 699 +Healthcare Supplies +Rockwell +Medical, Inc. +$ 55 +$ 338 +Healthcare Equipment +The +Spectranetics Corp. +$271 +$1,057 +Healthcare Supplies +STAAR Surgical +Co. +$ 82 +$ 441 +Healthcare Supplies +Vascular Solutions, Inc. +$146 +$ 986 +Healthcare Supplies +2016 Revenue +12/31/16 Market +Capitalization +25 th Percentile +$ +103 +$ +448 +Median +$ +161 +$ +774 +75 th Percentile +$ +251 +$ +1,003 +OraSure Technologies, Inc. +$ +128 +$ +489 +Source: +Standard & Poors Capital I.Q. +1 +Sequenom Inc. was removed from the peer group due to its acquisition +by LabCorp in 2016. +2 +Reflects revenue reported for fiscal year 2016. +3 +Reflects Global Industry Classification Standard sub-industry designation. +43 +Table of Contents +In preparing its 2016 competitive assessment of executive compensation, PM&P compared +the compensation of our NEOs with a 50/50 blend of proxy data from the peer group of companies and data for each NEO position from the 2016 Radford Global Life Sciences Survey. Since compensation market data can be volatile from year to year, the +Compensation Committee believes a blend of specific peer group proxy data and broader survey data better reflect market trends. PM&P also compared the Company’s financial performance and TSR, the terms of our cash bonus incentive plan and +LTIP with data from the peer group. Based on this analysis, PM&P reached the following conclusions: +• +Our twelve-month trailing financial performance (i.e. revenues, operating income and diluted EPS growth) was strong +relative to the peer group. +• +Our one year (2016) and three year (2014 – 2016) TSRs were near or above median for the peer group. +• +Total direct compensation (“TDC”) for our NEOs is aligned with the peer group median. +• +Despite aggregate TDC alignment, our LTIP equity targets for several executives is below median and warrant adjustment +(see page 54 for a further discussion of these adjustments beginning in 2017). +• +NEO pay mix is generally higher with respect to base salary, but lower with respect to LTIP equity targets than the peer +group median. +• +The terms of our cash bonus incentive plan and LTIP are generally aligned with peer group plans. +PAY MIX +We follow a +pay-for-performance approach to executive compensation, with a significant portion of our executives’ compensation consisting of annual incentive cash bonuses and +long-term incentive equity awards that are based on the executives’ and the Company’s achievement of predetermined performance objectives. +The following illustrates the relative proportion of 2016 base salaries, and the performance-based compensation consisting of incentive +cash bonuses and long-term incentive equity awards, for Mr. Michels and the other NEOs, respectively: +Approximately 76% of Mr. Michels’ aggregate compensation and 59% of the other NEOs’ aggregate compensation for 2016 consisted of +variable or performance-based compensation. +44 +Table of Contents +2016 +EXECUTIVE COMPENSATION COMPONENTS +Overview +Our compensation program consists of the following components: +Compensation +Form of +Compensation +Purpose +Base Salary +Cash +Base salaries provide fixed compensation necessary to attract and retain key executives. Salary levels are established for each position +based on competitive market data, with annual adjustments tied to performance and market changes as appropriate. +Annual Incentive Bonus Awards +Cash +Annual incentive bonus awards provide performance-based incentives to our executives to achieve both Company-wide financial and strategic +goals and the executives’ individual performance objectives. Targets for individual bonuses are set at levels consistent with those offered in the marketplace. The Board has limited discretionary adjustments to bonus pool funding to +/- 10% of +the pool amount otherwise determined under the incentive plan formula in order to provide flexibility to account for, among other factors, the individual performance evaluations of participants in the bonus plan. +Long-Term Incentive Awards +Performance-Vested +Restricted Units and +Time-Vested Restricted +Stock +The largest component of our executive compensation is paid in equity. Beginning in 2016, executive LTIP awards consist of 50% +performance-vested restricted units and 50% time-vested restricted stock in order to strengthen the link between pay and performance. +Benefits +401(k) Plan +Health and Welfare +Benefits +Retirement and health and welfare benefits provide a complete compensation package that is competitive with the market and addresses the +needs of all employees and their families, including our executives. +Employment Agreements +Cash severance and +accelerated equity vesting +Severance and accelerated equity vesting are provided to our executive officers in order to ensure they are not distracted by the +possibility of termination in the event of a change of control and to encourage continued dedication to the Company. +45 +Table of Contents +Compensation Components in Detail +2016 Base Salaries +The Compensation +Committee believes that competitive salaries must be paid in order to provide fixed compensation necessary to attract and retain key executives. Each year, the Compensation Committee evaluates and determines the annual base salaries for the NEOs. +The Compensation Committee considers the Company’s overall performance in establishing salaries for the CEO and CFO/COO and the annual performance evaluations prepared by the CEO for all other NEOs. The Compensation Committee also considers the +Company’s budget for expected salary adjustments, salary levels paid at the peer group companies (listed on page 43 of this Proxy Statement) and any recommendations that may be made by any compensation consultant engaged to assist the +Compensation Committee. An executive’s annual salary adjustment will tend to be at the higher end of the range budgeted by the Company if the executive receives a performance rating of “Meets Expectations” or better and such +executive’s pre-adjustment salary level is below the 50 th percentile for his or her position at the peer group companies. +Annual base salaries paid in 2016 to our NEOs were established by the Compensation Committee at the beginning of 2016 based on a review +of the Company’s performance during 2015, an evaluation of the individual contributions of each officer compared to pre-established performance objectives for 2015 and a review of the competitive data and +recommendations provided by PM&P as detailed above. +Based on these factors, the Compensation Committee approved an annual base +salary increase for our management (including the NEOs) averaging approximately 2.61%. This compares with our Company-wide salary increase budget of 3.0%. In order to reflect the Company’s performance and each executive’s contributions, +and to equitably move salaries towards the fiftieth (50 th ) percentile of amounts paid by the peer group companies or maintain them at approximately that level, the Compensation Committee used +the following guidelines to assist in determining annual base salary increases. +Performance +Rating +Merit Increase Range +Outstanding +5.0% - 7.0% +Exceeds +Requirements +3.0% - 4.0% +Meets +Requirements +2.0% - 2.5% +Does Not +Consistently Meet +1.0% – 1.5% +Does Not Meet +Requirements +0% +46 +Table of Contents +In establishing NEO base salaries for 2016, the Compensation Committee recognized our +record level of consolidated net revenues of $119.7 million and full year profitability in 2015 and the substantial improvement in the Company’s 2015 performance compared to 2014. Specifically, we reported consolidated net income of +$8.2 million, or $0.14 per share on a fully diluted basis, for 2015, compared to a consolidated net loss of $4.6 million, or $0.08 per share, for 2014. In addition, the Compensation Committee considered the following other factors: +• +The 26% +growth in molecular collection systems revenues compared to 2014. +• +The 57% growth in OraQuick ® HCV net product revenues compared to 2014. +• +The improvement in gross margin to 67% in +2015, compared to 63% in 2014. +• +The $15.8 million in cash generated +from operations in 2015, compared to $7.5 million in 2014. +• +The $24.9 million in net revenues +related to our HCV business, which represents a 68% improvement over 2014. +• +The $65.8 million in net revenues +from our newest business lines (i.e. DNA Genotek, HCV related, HIV OTC and Ebola), which represents 55% of consolidated net revenues for 2015. +• +The receipt of FDA Emergency Use +Authorization for our OraQuick ® rapid Ebola test, the securing of up to $10.8 million in Federal funding for the clinical development +of this product and the generation of $2.3 million in initial sales of this product during 2015. +• +The extensive review of multiple business +development opportunities by management. +• +The successful maintenance of strong +relationships with our investors. +Although the Compensation Committee generally uses the performance rating labels mentioned above (i.e., +Meets Expectations, Exceeds Expectations, etc.), it has decided that those labels should not be used for Messrs. Michels and Spair. Given the senior positions of Messrs. Michels and Spair, the Compensation Committee believes it is more appropriate +to evaluate these executives based on the overall performance of the Company. As a result, the Compensation Committee approved the following 2016 salary adjustments for Mr. Michels and the other NEOs: +NEO +2015 Individual Performance +Assessment +2015 +Performance +Rating +2015 Salary +2016 +Salary +% +Increase +Douglas A. Michels +President and Chief Executive Officer +• Strong corporate +performance, including record revenues and full-year profitability, as described above. +Above Target 1 +$596,895 +$612,580 +2.60% +Ronald H. Spair +Chief Financial Officer and Chief Operating Officer +• Strong corporate +performance, including record revenues and full-year profitability, as described above. +Above Target 1 +$468,838 +$480,245 +2.40% +Anthony Zezzo II +Executive Vice President, Marketing and Sales +• Substantial +achievement of overall sales goals. +• 57% growth in OraQuick ® HCV sales. +• Organizational improvements within the +Sales and Marketing Department. +• Leadership in the implementation of the HCV co-promotion agreement +with AbbVie. +Meets +$384,010 +$391,690 +2.0% +47 +Table of Contents +NEO +2015 Individual Performance +Assessment +2015 +Performance +Rating +2015 Salary +2016 +Salary +% +Increase +Jack E. Jerrett +Senior Vice President and General Counsel +• Leadership in +directing various litigation and claims resolution. +• Leadership in evaluating various business development opportunities. +• Negotiation of reduced royalty +obligations. +• Assistance on numerous +important commercial matters. +• Ongoing +advice and counsel to Board and senior management. +Meets +$344,400 +$353,010 +2.50% +Michael Reed, Ph.D. +Senior Vice President Research and Development and Chief Science Officer +N/A 2 +N/A 2 +N/A 2 +$305,000 +N/A 2 +1 Assessment based on overall corporate performance during 2015. +2 Dr. Reed joined the Company in April 2016. +2016 Annual Incentive Cash Bonuses +Annual cash bonuses are included as part of executive compensation because the Compensation Committee believes that a significant +portion of each executive’s compensation should be structured as a variable incentive tied to both the overall performance of the Company and the individual contributions of the executive. On an annual basis, the Compensation Committee has +adopted, with approval of the Board, a Management Incentive Plan (the “Incentive Plan”), which is intended to be the principal vehicle for incentive cash bonus awards. +If the Company meets all the Target levels, the pool is funded at 100% of the aggregate target bonuses for all participants in the +Incentive Plan, as described below. The pool is funded at 50% of the aggregate target bonuses if all of the Threshold levels are met and at 150% if all of the High levels are met. If the Company achieves a Maximum performance level, the pool can be +funded up to 200% of the aggregate target bonuses. Pro-rata adjustments to the amount of funding for each objective are made where a particular performance is in between the +pre-established performance levels. To the extent a performance level is below the Threshold objective, generally there is no funding for that particular item unless the Compensation Committee or Board +determines, in its limited discretion, that some funding is warranted to recognize extraordinary circumstances. +The amount of the +cash bonus pool is determined by the Compensation Committee and recommended for Board approval. The Compensation Committee and Board also retain discretion to increase or decrease the size of the pool in order to reflect specific performance or +market conditions affecting the Company and the final performance assessments for each participant for the applicable year. However, the Compensation Committee and Board have limited their ability to make discretionary bonus pool adjustments to +/- +10% of the pool size otherwise determined pursuant to the formula under the Incentive Plan. The cash bonus pool is used to pay bonuses not only to the Company’s NEOs, but also to all other officers and certain higher-level employees of the +Company. +Individual payments from the bonus pool to executives are calculated using a formula that considers the size of the bonus +pool, the executive’s achievement of individual performance objectives (except in the case of Messrs. Michels and Spair, as described below), the number of individuals participating in the plan at the time bonuses are awarded and the +executive’s target bonus percentage. Bonuses are paid, based on an assessment of each +48 +Table of Contents +executive’s performance for the applicable year, using targets expressed as a percentage of the executive officer’s annual base salary. +If an executive officer has met or exceeded his or her individual performance objectives and/or the Company’s expectations for the +applicable year, he or she may be eligible to receive up to 150% of his or her target bonus, depending on the size of the bonus pool. The Compensation Committee and Board retain the discretion to adjust an individual executive’s performance +evaluation and to increase or decrease the bonus paid to such individual to reflect the specific contributions of that executive, the Company’s overall performance, market conditions or other circumstances. +The Compensation Committee recommends for Board approval any bonus award for the CEO and the CFO/COO based on an assessment of the +Company’s overall performance. The CEO recommends individual awards for the other executive officers for approval by the Compensation Committee based on an assessment of each executive’s performance against his or her applicable individual +performance objectives. The Compensation Committee and Board have the right, in their sole discretion, to reject any or all of the recommended bonus awards, even if the bonus pool has been funded and any or all applicable performance criteria have +been satisfied, based on the business conditions of the Company or other factors deemed relevant by the Compensation Committee or Board. +Under the 2016 Incentive Plan, the Compensation Committee established performance levels for two equally weighted financial objectives +to be used to fund the bonus pool. The Threshold financial objectives in our 2016 Incentive Plan reflected our actual performance for 2015. The Target levels reflected our annual budget or operating plan for 2016 and represented strong revenue +growth and improved profitability compared to 2015. +During 2016, we reported consolidated net revenues totaling +$128.2 million. For purposes of the bonus pool calculation, the Committee reduced our reported results by $5.4 million, which represents the amount of exclusivity revenues accelerated as a result of the early termination of our HCV co-promotion agreement with AbbVie, which was not anticipated in our 2016 operating plan. Thus, our adjusted consolidated net revenues were $122.8 million, which exceeded the Threshold performance level, but +were less than the Target performance level for this objective (97% of Target), resulting in funding of $842,000 (73% of Target funding). The Company’s 2016 consolidated net operating income was $20.4 million. This amount was adjusted for +several items not reflected in our 2016 operating plan, including the accelerated AbbVie exclusivity revenues ($5.4 million), severance expenses associated with our corporate restructuring ($1.4 million), business development expenses ($422,000) and +a variation between the actual U.S./Canadian dollar exchange rate and the exchange rate assumed in our 2016 operating plan ($48,000), which resulted in an adjusted operating income of $16.8 million. This amount exceeded the High performance +target, but was less than the Maximum target, resulting in funding of $1.932 million (168% of Target funding) +The following +table summarizes the 2016 Incentive Plan performance objectives and performance levels (dollar amounts in millions): +Financial Objective/Weight +Threshold +Target +High +Breakthrough +Actual +Consolidated +Net Revenues (50%) +$119.7 +$126.3 +$131.8 +$137.3 +$122.8 +Consolidated +Net Operating Income (50%) +$ 8.1 +$ 12.3 +$ 15.6 +$ 18.9 +$ 16.8 +Incentive +Plan Pool Funding (% of Target) +50% +100% +150% +200% +120.63% +49 +Table of Contents +In establishing the 2016 Incentive Plan, the Compensation Committee decided on a 50%/50% +weighting for the revenue and operating income objectives. The Compensation Committee believed an equal weighting provided an appropriate balance of incentives for both top and bottom line financial performance. The following sets forth the +weighting and potential bonus pool funding for both objectives at each performance level established under the 2016 Incentive Plan, based on the participants covered by the Plan at year-end: +Objective +Weight +Threshold +Target +High +Maximum +Actual +Consolidated Net Revenues +50% +$ +575,000 +$ +1,150,000 +$ +1,725,000 +$ +2,300,000 +$ +842,000 +Consolidated Net Operating Income +50% +$ +575,000 +$ +1,150,000 +$ +1,725,000 +$ +2,300,000 +$ +1,932,000 +Potential Total Pool Funding +$ +1,150,000 +$ +2,300,000 +$ +3,450,000 +$ +4,600,000 +$ +2,774,000 +Although the calculated pool funding was $2,774,000, the Committee recognized that a total of $2,922,000 +would be required to pay incentive bonuses for all participants under the plan at the performance assessment levels indicated for each participant. Since the difference of $148,000 was within the permitted discretion for adjustments to the bonus +pool under the plan of +/-10%, the Committee exercised its discretion to increase the bonus pool funding by such amount to $2,922,000 in view of the Company’s strong performance for 2016. +The final adjusted bonus pool amount was approved by the full Board and used to pay bonuses to the Company’s NEOs and 20 other +members of our management team. The specific target payouts for NEO bonuses (expressed as a percentage of annual base salary) are shown below: +Title +Target Payouts +Chief Executive Officer +70% +Chief Financial Officer and Chief Operating +Officer +50% +Executive Vice President +40% +Senior Vice President +35% +In January 2017, the Compensation Committee authorized the payout of individual bonus awards to +executive officers from the bonus pool for 2016, based on the target bonus amounts described above and an assessment of each officer’s performance during 2016 against pre-established performance +objectives (except for Messrs. Michels and Spair where assessments were based on Company performance). The calculation of individual bonus awards was based on a formula that adjusted the foregoing target payments for both the executives’ +individual performance during 2015 and the degree to which the approved bonus pool funding was sufficient to pay the aggregate bonuses after adjustment for individual performance. +In evaluating Mr. Michels and the Company’s performance, the Compensation Committee recognized our substantially improved +financial performance for 2016, including a record $128.2 million in consolidated net revenues (a 7% increase over 2015) and $19.7 million in consolidated net income (an $11.5 million improvement over 2015). In addition, the +Compensation Committee considered the following other factors: +Our 36% positive TSR for 2016. +The $22.8 million in cash generated from operations, compared to $15.8 million in 2015. +The record level of HCV product revenues of $14.1 million, a 24% increase over 2015. +The $32.2 million in molecular collection systems revenues, which represented an 8% improvement over 2015. +The progress made in developing a new OraQuick ® rapid Zika test, including the securing of +up to $16.6 million in federal funding for this product. +The substantial expansion of our international business, including an $18 million product supply agreement with a foreign-government and +increased sales of our HIV self-test internationally. +The extensive review of multiple business development opportunities by management. +The maintenance of strong relationships with our investors. +50 +Table of Contents +In view of the foregoing factors, the Compensation Committee determined that Messrs. +Michels and Spair should receive above-target bonuses for 2016. The remaining NEO’s were evaluated based on their 2016 performance against individual objectives established for their respective positions. Messrs. Zezzo and Jerrett and +Dr. Reed all received a Meets expectations performance rating. Using these performance ratings, the Compensation Committee developed individual performance factors to adjust the target bonuses for Mr. Michels, the other NEO’s and the +other participants in the 2016 Incentive Plan to reflect their performance assessments for 2016. The aggregate pool funding that would be required to pay the performance-adjusted target bonus amounts for all participants in the 2016 Incentive Plan +totaled $2,922,000. As a final step, the Compensation Committee calculated a pool funding factor of 1.2063 ($2,922,000 in aggregate performance-adjusted bonuses divided by $2,774,000 in aggregate funding under the plan formula) in order to calculate +individual performance bonuses consistent with the bonus pool funding formula. +Using the approach described above, a final 2016 +incentive cash bonus of $646,586 was calculated for Mr. Michels, as follows: +2016 Base +Salary +X +Target +% +X +2016 Individual Performance +Factor +X +2016 Pool Funding +Factor += +2016 +Bonus +$612,580 +70% +125% +1.2063 +$646,586 +This same formula was used to calculate the 2016 bonus awards for all NEOs, as follows: +2016 Bonus Payments +NEO +2016 +Salary +Bonus +Target +(% +salary) +2016 Performance +Assessment and Rating +Individual +2016 +Performance +Factor +2016 +Pool +Funding +Factor +2016 +Bonus +Douglas A. Michels President and Chief Executive Officer +$ +612,580 +70 +% +Above Target 1 +• Strong corporate performance, including record revenues and improved profitability, as described +above. +125% +120.63% +$ +646,586 +Ronald H. Spair Chief Financial Officer and Chief Operating Officer +$ +480,244 +50 +% +Above Target 1 +• Strong corporate performance, including record revenues and improved profitability, as described +above. +125% +120.63% +$ +362,074 +Anthony Zezzo II Executive Vice President, Marketing and Sales +$ +391,690 +40 +% +Meets +• Substantial achievement of +overall sales goals. +• 24% growth in HCV product sales. +• Substantial expansion of international sales +100% +120.63% +$ +188,998 +51 +Table of Contents +NEO +2016 +Salary +Bonus +Target +(% +salary) +2016 Performance +Assessment and Rating +Individual +2016 +Performance +Factor +2016 +Pool +Funding +Factor +2016 +Bonus +of HCV and HIV self-test revenues. +• Oversight of sales and marketing functions. +• Contribution to development of updated corporate strategy. +Jack E. Jerrett +Senior Vice President and General Counsel +$ +353,010 +35 +% +Meets +• Leadership in directing the +Ancestry litigation and resolution of other claims and disputes. +• Leadership in negotiating new credit +facility. +• Assistance in evaluating various business development opportunities. +• Assistance on numerous important commercial matters. +• Ongoing advice and counsel to the Board and senior management. +100% +120.63% +$ +149,043 +Michael Reed, Ph.D. Senior Vice President Research and Development and Chief Science Officer +$ +305,000 +35 +% +Meets +• Substantial development of +new rapid Zika antibody test and assisted in securing related federal funding. +• Submission of OraQuick ® HIV self-test for WHO pre-qualification. +• Progress in development of next generation oral specimen collection device for use with high throughput drug +assays. +100% +120.63% +$ +128,773 +52 +Table of Contents +NEO +2016 +Salary +Bonus +Target +(% +salary) +2016 Performance +Assessment and Rating +Individual +2016 +Performance +Factor +2016 +Pool +Funding +Factor +2016 +Bonus +• Oversight of +regulatory and quality functions. +• Contribution to development of updated corporate strategy and +integration of global R & D, regulatory and quality functions. +1 Assessment based on overall corporate performance during 2016. +2016 Long-Term Incentive Awards +An additional way that we promote the long-term growth of the Company and align the interests of executives with those of our +stockholders is by compensating executives with equity in the Company that vests over a multi-year period. To accomplish this, the Compensation Committee administers the Company’s LTIP (Long-Term Incentive Policy), pursuant to which grants of +time-vested restricted shares and performance-vested restricted units are made to executive officers. +Incentive equity awards under +the LTIP are made on an annual basis, and are discretionary and subject to approval by the Compensation Committee and/or Board. Awards to individual participants under the LTIP are based on an evaluation of a number of factors, including: +• +Performance of the participant for the applicable year; +• +The participant’s level of responsibilities and relative contribution to the Company’s business; +• +A competitive assessment of awards at peer group companies (listed on page 43 of this Proxy Statement); +• +History of equity awards to the participant; and +• +Other factors deemed relevant by the Compensation Committee and/or Board. +Each +participant’s individual performance for the applicable year is evaluated against his or her individual performance objectives for that year (except for Messrs. Michels and Spair who are evaluated based on total Company performance). A +“Meets Expectations” performance is typically the threshold requirement to receive an equity award under the LTIP. Awards below this performance level may be considered on an exception basis at the discretion of the Compensation Committee +and/or the Board. +The value of potential incentive equity awards that could be granted in 2016 under the LTIP (expressed as a +percentage of annual base salary) based on performance during 2015, are summarized below: +Performance +Position +Lower End +Target +Maximum +President/CEO +150% +200% +250% +CFO/COO +90% +125% +160% +EVP +75% +100% +125% +SVP +55% +75% +95% +53 +Table of Contents +The percentages set forth above were established at levels that the Compensation Committee +believed represented an appropriate long-term incentive compensation value for each executive, based on the results of a competitive assessment of long-term incentive awards at the peer group companies (listed on page 43 of this Proxy Statement). +Once the aggregate dollar value of an award has been established by applying the Committee approved award percentage to a participant’s base salary, the value is converted into shares or units based on a valuation of the restricted stock and +restricted unit portions of the award using the average of the high and low stock price on the grant date as reported on the NASDAQ Stock Market. +In February 2017, the ranges of percentages set forth above for annual incentive equity awards were increased somewhat by the +Compensation Committee for the CFO/COO (i.e. from 90%/125%/160% to 105%/140%/175%), Executive Vice President (i.e. from 75%/100%/125% to 95%/125%/155%), and Senior Vice President (i.e. from 55%/75%/95% to 70%/90%/115%), based on advice from +PM&P, in order to bring the ranges more closely in line with market levels. The new percentage ranges will be effective beginning with the incentive equity awards expected to be made in early 2018 for performance during 2017. +The grants of performance-vested restricted units will not vest until three years after the grant date and only if certain performance +measures are met during that three-year period. The awards currently incorporate two performance metrics: (i) a CAGR for consolidated product revenues during the three-year period beginning with the year in which the award is made and +(ii) a one-year “EPS” target for the year of award followed by a further two-year vesting requirement. +Grants of time-vested restricted stock generally vest in equal annual installments over a three-year period. These vesting restrictions +serve to promote the Company’s long-term growth by restricting executives’ ability to realize short-term gains from their awards. The Compensation Committee believes the terms of its incentive equity awards to executives are competitive +with the terms of equity awards offered at comparable medical diagnostics and healthcare companies. +Equity awards are generally +made by the Compensation Committee each year as part of the normal annual compensation cycle. The awards for a particular year generally occur in late January or early February of the following year after the Company’s full year financial +results are known and performance evaluations for the executive officers have been prepared. Equity awards approved by the Compensation Committee for the CEO are then reviewed and approved by the Board. In addition to the annual equity awards, the +Compensation Committee may approve equity awards for newly hired officers or in recognition of an executive’s promotion or expansion of responsibilities. Dr. Reed received such an award when he joined the Company in April 2016. These +latter grants may have vesting or other terms that differ from the terms generally approved for annual equity awards. Notwithstanding the terms of the LTIP, equity awards are made at the discretion of the Compensation Committee or Board. +54 +Table of Contents +Effective February 1, 2016, the Compensation Committee approved equity awards for the +NEOs (except Dr. Reed as described below) under the LTIP based on the performance evaluations of such officers for 2015, as summarized below. A description of the basis for each NEO’s 2015 performance evaluation is set forth above under +the Section entitled, “2016 Base Salaries,” in this Proxy Statement. The value of Dr. Reed’s onboarding equity award was determined based on a market assessment of similar awards for officers at his level. +Executive Officer +2015 +Performance +Assessment +Time Vested +Restricted Stock +Performance-Vested +Restricted Units +Award Value +(% of Base Salary) +Douglas +A. Michels +President and Chief +Executive Officer +Above Target 1 +119,490 Shs +119,490 Shs +215% +Ronald H. +Spair +Chief Financial +Officer and Chief +Operating Officer +Above Target 1 +58,932 Shs +58,932 Shs +135% +Anthony +Zezzo II +Executive Vice +President, Marketing +and Sales +Meets +32,180 Shs +32,180 Shs +90% +Jack E. +Jerrett +Senior Vice President +and General Counsel +Meets +24,050 Shs +24,050 Shs +75% +Michael +Reed, Ph.D. 2 +Senior Vice President, +Research and +Development and Chief +Science Officer +N/A +19,345 Shs +19,345 Shs +90% +1 Assessment based on overall corporate performance during 2015. +2 Dr. Reed received his equity award upon joining the Company in April 2016. +OTHER COMPENSATION +We provide minimal additional benefits outside of our primary elements of compensation, as follows: +Retirement Programs +All of our employees, including executive officers, are eligible to participate in our 401(k) profit sharing plan (the “401(k) +Plan”). We make matching contributions for participants on a dollar-for-dollar basis up to $4,000 per year. Payments of employer-provided benefits accrued for a +401(k) Plan participant will be made upon retirement or upon termination of employment prior to retirement, provided certain vesting conditions have been met by the participant prior to termination. In addition, the Company maintains the OraSure +Technologies, Inc. Deferred Compensation Plan (the “Deferred Compensation Plan”) for the benefit of the Company’s highly compensated employees, including all of the NEOs, and its non-employee +Directors. The Deferred Compensation Plan allows participants to defer up to 100% of their annual base salaries (or fees in the case of non-employee Directors) and up to 100% of annual incentive cash bonuses +and, upon vesting, restricted shares of the Company’s Common Stock awarded to the participant. The Company may also make discretionary contributions to the participants’ accounts that vest over one or more years as determined by the +Company, as well as upon death, disability or a change of control. Since the Deferred Compensation Plan was put in place, the Company has made no discretionary contributions. Participants may elect to receive distributions of deferred amounts on a +specified date, separation from service, a change of control, disability and/or death. +55 +Table of Contents +Perquisites and Other Compensation +As a general matter, the Compensation Committee and Board do not believe that executive officers should be treated differently than +other employees by receiving special perquisites unrelated to our general compensation program. Therefore, our healthcare, disability, and other insurance programs and benefits are the same for all eligible employees, including executive officers. +Executive officers do not receive any additional perquisites. +Potential Payments Upon Termination or Change of Control +Pursuant to Employment Agreements +The Company has entered into employment agreements with each of the NEOs (except for +Dr. Reed). In addition to the compensation elements discussed above, these agreements provide for post-employment severance payments and benefits in the event of termination of employment by the Company without “cause” or by the +executive for “good reason” and provide enhanced severance payments upon such terminations in connection with a “change of control” of the Company. Dr. Reed’s employment offer provides that he will receive +post-employment severance under certain circumstances. The terms of these arrangements are discussed in more detail under the Section entitled, “Employment Agreements and Potential Payments Upon Termination or Change of Control,” in this +Proxy Statement. The Compensation Committee believes that these arrangements are generally consistent with industry practice at the peer group companies (listed on page 43 of this Proxy Statement), provide an incentive to the applicable +executive to remain with the Company, and serve to align the interests of stockholders and the executives in the event of a change of control of the Company. +Accounting and Tax Treatment of Compensation. +In approving the amount and form of compensation for the NEOs, the Compensation Committee considers all elements of the cost to the +Company of providing such compensation, including accounting and tax implications. In particular, it considers the potential impact of Section 162(m) of the Internal Revenue Code. Section 162(m) which disallows a tax deduction for any +publicly-held corporation for individual compensation exceeding $1 million in any taxable year for the CEO and for the three most highly compensated officers (other than the Chief Financial Officer) unless compensation is performance-based. The +Compensation Committee intends to maintain flexibility to pay compensation that is not entirely deductible when the best interests of the Company would make that advisable. +Compensation Recoupment Policy +The Board has adopted a compensation recoupment or “clawback” policy, applicable to all officers subject to Section 16 of +the Exchange Act. Under this policy, the Board and the Compensation Committee will pursue recoupment of any excess compensation, including incentive cash bonuses, restricted awards, stock options or other compensation, which was awarded to a covered +officer based on financial statements of the Company where such statements are required to be restated as a result of the gross negligence, intentional misconduct or fraud of the covered officer. In addition to recoupment, the Board or Compensation +Committee shall take such other remedial actions deemed necessary against a covered employee, including recommending disciplinary actions up to and including termination and other available remedies. The recovery period for recoupment of any +compensation is up to three fiscal years preceding the date on which the Company is required to prepare and file the restated financial statements. This policy has been proactively adopted in advance of final guidance under Section 954 of the +Dodd-Frank Act, and will be amended to conform with this Section when final guidance is available. +56 +Table of Contents +COMPENSATION TABLES +SUMMARY COMPENSATION TABLE +The following table summarizes the compensation of our CEO and the other NEOs, for the fiscal years +ended December 31, 2016, 2015 and 2014: +Name & Principal +Position +Year +Salary +($) 1 +Bonus +($) +Stock +Awards 2 +($) +Option +Awards 3 +($) +Non- +Equity +Incentive +Plan +Compen- +sation 4 ($) +Change in +Pension Value +and +Nonquali- +fied Deferred +Compensation +Earnings +($) +All other +Compen- +sation 5 +($) +Total +($) +Douglas A. +Michels +President and Chief +Executive Officer +2016 +2015 +2014 +$612,339 +$619,054 +$580,139 +$1,283,322 +$ 557,686 +$ 507,606 +----- +$836,523 +$761,400 +$646,586 +$508,787 +$620,000 +— +$ 4,000 +$ 4,000 +$ 4,000 +$ +$ +$ +2,546,247 +2,526,050 +2,473,145 +Ronald H. +Spair +Chief Financial Officer +and Chief Operating +Officer +2016 +2015 +2014 +$480,069 +$486,243 +$455,677 +$ 632,930 +$ 264,653 +$ 256,941 +---- +$396,971 +$385,411 +$362,074 +$285,452 +$322,970 +— +$ 4,000 +$ 4,000 +$ 4,000 +$ +$ +$ +1,479,073 +1,437,319 +1,424,999 +Anthony +Zezzo II +Executive Vice +President, +Marketing and Sales +2016 +2015 +2014 +$391,572 +$398,403 +$375,812 +$ 345,614 +$ 135,537 +$ 166,524 +---- +$203,298 +$249,779 +$188,998 +$153,036 +$206,840 +— +— +$ +$ +$ +962,184 +890,274 +998,955 +Jack E. +Jerrett +Senior Vice President +and General Counsel +2016 +2015 +2014 +$352,878 +$356,826 +$327,631 +$ 258,298 +$ 118,080 +$ 102,401 +---- +$177,120 +$153,599 +$149,043 +$140,110 +$207,850 +— +$ 4,000 +$ 4,000 +$ 4,000 +$ +$ +$ +764,219 +796,136 +795,481 +Michael +Reed, Ph.D. 6 +Senior Vice President, +Research and Development +and Chief Science Officer +2016 +2015 +2014 +$211,154 +---- +---- +$ 274,506 +---- +---- +---- +---- +---- +$128,773 +— +$164,524 +---- +---- +$ +778,957 +1 +Salary in 2015 reflects twenty-seven bi-weekly payroll periods, as compared to twenty-six bi-weekly payroll periods in 2016. This additional pay period caused the actual amounts received by the NEOs during 2015 to be somewhat higher than their annual +base salaries. Base salaries for 2015 were as follows: Mr. Michels, $596,895; Mr. Spair, $468,838; Mr. Zezzo, $384,010 and Mr. Jerrett, $344,400. +2 +The indicated amounts reflect the aggregate grant date fair value of restricted stock and performance-vested restricted +unit awards made to the NEOs during the applicable year, computed in accordance with Financial Accounting Standards Board (“FASB”) ASC Topic 718. Performance-vested restricted units were included in the annual equity awards for executives +beginning in 2016. The value of the performance-vested restricted units reflect the assumption that 100% of target is achieved for each of the performance measures reflected in the terms of the restricted unit awards. Certain assumptions used in the +calculation of the indicated amounts are set forth for the applicable year of award in footnote 9 to the Company’s audited consolidated financial statements for the year ended December 31, 2016, included in the Company’s Annual Report +on Form 10-K filed with the SEC on March 14, 2017 (the “2016 10-K Report”). The maximum grant-date fair values of the performance-vested restricted unit +awards made in 2016, assuming the highest level of performance conditions will be achieved (150% of target), are as follows: Mr. Michels, $962,492, Mr. Spair, $474,697; Mr. Zezzo, $259,210; Mr. Jerrett, $193,723; and +Dr. Reed, $205,879. +3 +The values set forth in this column reflect the aggregate grant date fair value of stock option awards made to the NEOs +during the applicable year, computed in accordance with FASB ASC Topic 718. Certain assumptions used in the calculation of those amounts are set forth for the applicable year of award in footnote 9 to the Company’s audited consolidated +financial statements for the year ended December 31, 2016, included in the Company’s 2016 10-K Report. +4 +The indicated amounts reflect incentive cash bonuses paid to the NEOs pursuant to an Incentive Plan, based on performance +during the applicable year. For a description of incentive cash bonus payments for performance during 2016, see the Section entitled, “2016 Annual Incentive Cash Bonuses,” in the CD&A. The 2014 amounts include special achievement +awards for Messrs. Zezzo and Jerrett of $40,000 and $10,000, respectively, for their contributions in negotiating the HCV co-promotion agreement with AbbVie. +5 +The indicated amounts reflect cash contributed to a 401(k) profit sharing plan as an employer-matching contribution, +which was offered to all employees of the Company during each of the indicated years. The amount for Dr. Reed also includes $160,524 in one-time relocation expenses reimbursed by the Company. +6 +Dr. Reed joined the Company in April 2016. +57 +Table of Contents +GRANTS OF PLAN-BASED AWARDS +The following table summarizes information concerning possible incentive cash bonuses and possible and +actual restricted stock, performance-vested restricted unit and stock option awards for the NEOs during the fiscal year ended December 31, 2016 as well as possible payouts under the 2016 Incentive Plan: +Name +Grant +Date 1 +Estimated Possible Payouts +Under Non-Equity Incentive +Plan Awards 2 +Estimated Possible Payouts Under +Equity Incentive Plan Awards 3 +All other +Stock +Awards: +Number +of Shares +of Stock +or Units 4 +(#Shs.) +All other +Option +Awards: +Number +of +Securities +Underlying +Options +(#Shs.) +Exercise +or Base +Price of +Option +Awards +($/Sh) +Grant +Date +Fair +Value of +Stock +Awards 5 +($) +Threshold +($) +Target +($) +Maximum +($) +Threshold +(# Shs.) +Target +(# +Shs.) +Maximum +(# +Shs.) +Douglas A. +Michels +2/01/16 +— +— +— +— +— +— +119,490 RS +— +— +$641,661 +President and +2/01/16 +— +— +— +— +— +— +119,490 PRU +— +— +$641,661 +Chief Executive +N/A +$214,403 +$428,806 +$643,209 +83,365 RS +111,154 RS +138,942 RS +— +— +— +N/A +Officer +N/A +— +— +— +83,365 PRU +111,154 PRU +138,942 PRU +— +— +— +N/A +Ronald H. Spair +2/01/16 +— +— +— +— +— +— +58,932 RS +— +— +$314,465 +Chief Financial +2/01/16 +— +— +— +— +— +— +58,932 PRU +— +— +$314,465 +Officer and +N/A +$120,061 +$240,122 +$360,183 +39,288 RS +54,567 RS +69,846 RS +— +— +— +N/A +Chief Operating +N/A +— +— +— +39,288 PRU +54,567 PRU +69,846 PRU +— +— +— +N/A +Officer +Anthony Zezzo II +2/01/16 +— +— +— +— +— +— +32,180 RS +— +— +$172,807 +Executive Vice +2/01/16 +— +— +— +— +— +— +32,180 PRU +— +— +$172,807 +President, +N/A +$78,338 +$156,676 +$235,014 +26,816 RS +35,755 RS +44,694 RS +— +— +— +N/A +Marketing and +N/A +— +— +— +26,816 PRU +35,755 PRU +44,694 PRU +— +— +— +N/A +Sales +Jack E. Jerrett +2/01/16 +— +— +— +— +— +— +24,050 RS +— +— +$129,149 +Senior Vice +2/01/16 +— +— +— +— +— +— +24,050 PRU +— +— +$129,149 +President +N/A +$61,777 +$123,554 +$185,330 +17,637 RS +24,050 RS +30,464 RS +— +— +— +N/A +and General +N/A +— +— +— +17,637 PRU +24,050 PRU +30,464 PRU +— +— +— +N/A +Counsel +Michael Reed, Ph.D. +4/18/16 +— +— +— +— +— +— +19,345 RS +— +— +$137,253 +Senior Vice President, +4/18/16 +— +— +— +— +— +— +19,345 PRU +— +— +$137,253 +Research and +N/A +$53,375 +$106,750 +$160,125 +N/A +Development +N/A +N/A +And Chief Science +Officer +1 +Annual Incentive equity awards to NEOs consisted of a combination of time-vested restricted stock (“RS”) and +performance-vested restricted units (“PRU”) and, except for Dr. Reed, were determined for 2016 pursuant to the LTIP based on performance during 2015. Annual equity awards made during 2016 were approved by the Compensation Committee +effective on February 1, 2016. Dr. Reed received his award when he joined the Company in April 2016. For a description of these equity awards and their terms, see the Section entitled, “2016 Long-Term Incentive Awards,” in the +CD&A. +2 +The indicated amounts represent potential incentive cash bonus payments to the NEOs under the 2016 Incentive Plan. On +January 30, 2017, bonus payments under the 2016 Incentive Plan were approved by the Compensation Committee for the NEOs, based on performance during 2016. A further description of the payments approved under the 2016 Incentive Plan is set forth +in the Section entitled, “2016 Annual Incentive Cash Bonuses,” in the CD&A. +3 +The indicated amounts represent the potential number of shares which could have been granted to the NEOs in 2016 in the +form of restricted stock and performance-vested restricted units pursuant to the LTIP, based on performance during 2015. For restricted stock and performance-vested restricted units, the individual share numbers for each were calculated by dividing +50% of the long-term incentive targets for each NEO set forth in the LTIP by the mean between the high and low sales price of the Common Stock as reported by NASDAQ on the date of grant. The number of shares corresponding to the performance-vested +restricted units were calculated based on the assumption that 100% of target is achieved for each of the performance measures set forth in the terms of such restricted unit awards. The actual number of shares received upon vesting of the +performance-vested restricted units could vary from 50% to 150% of target depending on the degree to which the performance measures are achieved. +4 +The indicated amounts represent the actual number of restricted shares or performance-vested restricted units granted to +the NEOs in 2016 under the LTIP, based on performance during 2015. Specific RS and PRU awards were approved by the Compensation Committee for the NEOs effective on February 1, 2016. Dr. Reed received his award of restricted shares and +performance-vested restricted units when he joined the Company in April 2016. A further description of these equity awards and their terms is set forth in the Section entitled, “2016 Long-Term Incentive Awards,” in the CD&A. +5 +The indicated amounts represent the grant date fair value calculated +in accordance with FASB ASC Topic 718. +58 +Table of Contents +OUTSTANDING EQUITY AWARDS AT +DECEMBER 31, 2016 +The following table summarizes information regarding unexercised stock options and unvested restricted +stock and performance-based restricted units held by the NEOs as of December 31, 2016: +Option Awards 1 +Stock Awards 1 +Name +Number of +Securities +Underlying +Unexercised +Options +(#) +Exercisable +Number of +Securities +Underlying +Unexercised +Options 2 +(#) +Unexercisable +Equity +Incentive +Plan +Awards: +Number of +Securities +Underlying +Unexercised +Unearned +Options (#) +Option +Exercise +Price +($/Sh.) +Option +Expiration +Date +Number of +Shares or +Units of +Stock +That Have +Not +Vested 2 +(#) +Market +Value of +Shares or +Units of +Stock +That +Have Not +Vested 8 +($) +Equity +Incentive +Plan +Awards: +Number of +Unearned +Shares, +Units or +Other +Rights +That Have +Not +Vested (#) +Equity +Incentive +Plan +Awards: +Market +or Payout +Value of +Unearned +Shares, +Units or +Other +Rights +That +Have +Not +Vested +($) +Douglas A. Michels +President and Chief Executive Officer +90,990 +-- +-- +$ +2.81 +1/23/2019 +-- +-- +-- +-- +102,365 +-- +-- +$ +5.19 +1/25/2020 +-- +-- +-- +-- +193,300 +-- +-- +$ +6.63 +2/01/2021 +-- +-- +-- +-- +200,954 +-- +-- +$ +11.30 +2/01/2022 +-- +-- +-- +-- +174,304 +7,579 +3(a) +-- +$ +7.05 +2/01/2023 +-- +-- +-- +-- +179,955 +74,099 +3(b) +-- +$ +5.72 +2/03/2024 +-- +-- +-- +-- +78,796 +93,123 +3(c) +-- +$ +9.31 +2/03/2025 +-- +-- +-- +-- +-- +-- +-- +-- +-- +29,606 +3(d) +$ +259,941 +-- +-- +-- +-- +-- +-- +-- +39,956 +3(c) +$ +350,814 +-- +-- +-- +-- +-- +-- +-- +119,490 +3(f) +$ +1,049,122 +-- +-- +-- +-- +-- +-- +-- +119,490 +3(g) +$ +1,049,122 +-- +-- +Ronald H. +Spair +Chief Financial Officer and Chief Operating Officer +45,000 +-- +-- +$ +8.28 +2/01/2017 +-- +-- +-- +-- +45,500 +-- +-- +$ +8.06 +2/01/2018 +-- +-- +-- +-- +18,720 +-- +-- +$ +2.81 +1/23/2019 +-- +-- +-- +-- +82,815 +-- +-- +$ +5.19 +1/25/2020 +-- +-- +-- +-- +116,100 +-- +-- +$ +6.63 +2/01/2021 +-- +-- +-- +-- +125,207 +-- +-- +$ +11.30 +2/01/2022 +-- +-- +-- +-- +95,392 +4,148 +4(a) +-- +$ +7.05 +2/01/2023 +-- +-- +-- +-- +91,091 +37,508 +4(b) +-- +$ +5.72 +2/03/2024 +-- +-- +-- +-- +37,392 +44,192 +4(c) +-- +$ +9.31 +2/03/2025 +-- +-- +-- +-- +-- +14,986 +4(d) +$ +131,577 +-- +-- +-- +-- +-- +-- +-- +18,961 +4(e) +$ +166,478 +-- +-- +-- +-- +-- +-- +-- +58,932 +4(f) +$ +517,423 +-- +-- +-- +-- +-- +-- +-- +58,932 +4(g) +$ +517,423 +-- +-- +Anthony Zezzo II +Executive +Vice President, Marketing and Sales +115,000 +-- +-- +$ +5.94 +1/03/2021 +-- +-- +-- +-- +36,204 +-- +-- +$ +11.30 +2/01/2022 +-- +-- +-- +-- +31,549 +1,372 +5(a) +-- +$ +7.05 +2/01/2023 +-- +-- +-- +-- +59,034 +24,309 +5(b) +-- +$ +5.72 +2/03/2024 +-- +-- +-- +-- +19,150 +22,631 +5(c) +-- +$ +9.31 +2/03/2025 +-- +-- +-- +-- +-- +-- +-- +-- +-- +9,712 +5(d) +$ +85,271 +-- +-- +-- +-- +-- +-- +-- +9,710 +5(e) +$ +85,254 +-- +-- +-- +-- +-- +-- +-- +32,180 +5(f) +$ +282,540 +-- +-- +32,180 +5(g) +$ +282,540 +59 +Table of Contents +Option Awards 1 +Stock Awards 1 +Name +Number of +Securities +Underlying +Unexercised +Options +(#) +Exercisable +Number of +Securities +Underlying +Unexercised +Options 2 +(#) +Unexercisable +Equity +Incentive +Plan +Awards: +Number of +Securities +Underlying +Unexercised +Unearned +Options (#) +Option +Exercise +Price +($/Sh.) +Option +Expiration +Date +Number of +Shares or +Units of +Stock +That Have +Not +Vested 2 +(#) +Market +Value of +Shares or +Units of +Stock +That +Have Not +Vested 8 +($) +Equity +Incentive +Plan +Awards: +Number of +Unearned +Shares, +Units or +Other +Rights +That Have +Not +Vested (#) +Equity +Incentive +Plan +Awards: +Market +or Payout +Value of +Unearned +Shares, +Units or +Other +Rights +That +Have +Not +Vested +($) +Jack E. Jerrett +Senior Vice President and General Counsel +25,000 +-- +-- +$ +6.63 +2/01/2021 +-- +-- +-- +-- +34,683 +-- +-- +$ +11.30 +2/01/2022 +-- +-- +-- +-- +42,022 +1,828 +6(a) +-- +$ +7.05 +2/01/2023 +-- +-- +-- +-- +36,302 +14,949 +6(b) +-- +$ +5.72 +2/03/2024 +-- +-- +-- +-- +16,684 +19,717 +6(c) +-- +$ +9.31 +2/03/2025 +-- +-- +-- +-- +-- +-- +-- +-- +-- +5,972 +6(d) +$ +52,434 +-- +-- +-- +-- +-- +-- +-- +8,460 +6(e) +$ +74,279 +-- +-- +-- +-- +-- +-- +-- +24,050 +6(f) +$ +211,159 +-- +-- +24,050 +6(g) +$ +211,159 +Michael Reed, Ph.D. +Senior +Vice President, Research and Development And Chief Science Officer +-- +-- +-- +-- +-- +19,345 +7(a) +$ +169,849 +-- +-- +-- +-- +-- +19,345 +7(b) +$ +169,849 +1 +The table does not include restricted stock and performance-based +restricted units awarded to the NEOs in February 2017 pursuant to the LTIP in respect of performance during 2016. +2 +Stock options vest over four years, with the first 25% vesting on +the first anniversary of the grant date and the remaining 75% vesting on a monthly basis over the next three years following the first anniversary of the grant date. Grants of restricted stock vest over a three-year period, with one-third vesting on the first anniversary of the grant date, a second third vesting on the second anniversary and the final third vesting on the third anniversary. Performance-vested restricted units will not vest +until three years from the grant date and only if certain performance measures are met during the three-year service period. +3 +The indicated stock options, restricted stock and performance-vested +restricted units vest as follows: +(a) +3,789 options on January 1 and February 1, 2017; +(b) +5,293 options on the 3 rd of each month, from +January 3, 2017 through February 3, 2018; +(c) +3,582 options on the 3 rd of each month from +January 3, 2017 through February 3, 2019; +(d) +29,606 restricted shares on February 3, 2017; +(e) +19,978 restricted shares on February 3, 2017 and 2018; +(f) +39,830 restricted shares on February 1, 2017, 2018 and 2019; and +(g) +119,490 performance-based restricted units cliff vesting on February 1, 2019, provided performance metrics have been +achieved. +4 +The indicated stock options, restricted stock and performance-vested +restricted units vest as follows: +(a) +2,074 options on January 1 and February 1, 2017; +(b) +2,679 options on the 3rd of each month, from January 3, 2017 through February 3, 2018; +(c) +1,700 options on the 3 rd of each month from +January 3, 2017 through February 3, 2019; +(d) +14,986 restricted shares on February 3, 2017; +(e) +9,480 restricted shares on February 1, 2017 and 2018; +(f) +19,644 restricted shares on February 1, 2017, 2018 and 2019; and +(g) +58,932 performance-based restricted units cliff vesting on February 1, 2019, provided performance metrics have been +achieved. +5 +The indicated stock options, restricted stock and performance-vested +restricted units vest as follows: +(a) +686 options on January 1, and February 1, 2017; +(b) +1,736 options on the 3 rd of each month, from +January 3, 2017 through February 3, 2018; +(c) +870 options on the 3 rd of each month +from January 3, 2017 through February 3, 2019; +(d) +9,712 restricted shares on February 3, 2017; +60 +Table of Contents +(e) +4,855 restricted shares on February 3, 2017 and 2018; +(f) +10,727 restricted shares on February 1, 2017, 2018, and 2019; and +(g) +32,180 performance-based restricted units cliff vesting on February 1, 2019, provided performance metrics have been +achieved. +6 +The indicated stock options, restricted stock and performance-vested +restricted units vest as follows: +(a) +914 options on January 1 and February 1, 2017; +(b) +1,068 options on the 3 rd of each month, from +January 3, 2017 through February 3, 2018; +(c) +758 options on the 3 rd of each month +from January 3, 2017 through February 3, 2019; +(d) +5,972 restricted shares on February 3, 2017; +(e) +4,230 restricted shares on February 3, 2017 and 2018; +(f) +8,017 restricted shares on February 1, 2017, 2018 and 2019; and +(g) +24,050 performance-based restricted units cliff vesting on February 1, 2019, provided performance metrics have been +achieved. +7 +The indicated restricted stock and performance-vested restricted units vest as follows: +(a) +6,448 restricted shares on February 1, 2017, 2018 and 2019; and +(b) +19,345 performance-based restricted units cliff vesting on February 1, 2019, provided performance metrics have been +achieved. +8 +The indicated values were determined by multiplying the number of +unvested shares of restricted stock and unvested performance-vested restricted units shown in this table by $8.78 per share, the closing price of the Company’s Common Stock as reported by NASDAQ on December 30, 2016. +OPTION EXERCISES AND STOCK +VESTED +The following table summarizes information with respect to the exercise of stock options and vesting of +restricted stock for each of the NEOs during the fiscal year ended December 31, 2016: +Option Awards +Stock Awards +Name +Number +of Shares +Acquired +on +Exercise +(#) +Value +Realized +on +Exercise +($) 1 +Number +Of Shares +Acquired +on +Vesting +(#) +Value +Realized +on +Vesting 2 +($) +Douglas A. +Michels +101,250 +91,092 +70,403 +377,072 +President and Chief Executive Officer +Ronald H. +Spair +35,860 +192,079 +Chief Financial Officer and Chief Operating Officer +— +— +Anthony Zezzo +II +18,337 +98,178 +Executive Vice President, Marketing and Sales +— +— +Jack E. +Jerrett +69,415 +156,145 +15,222 +81,538 +Senior Vice President and General Counsel +Michael Reed, +Ph.D. +Senior Vice President, Research and +Development and Chief Science Officer +— +— +— +— +1 +The indicated amounts represent the number of shares acquired upon +exercise of the options multiplied by the difference between the market value of the Company’s Common Stock on the applicable exercise date and the option exercise price. +2 +The indicated amounts were calculated by multiplying the number of +restricted shares acquired upon vesting by the market value of the Company’s Common Stock on the applicable vesting date. The market value was determined by calculating the mean between the high and low sales prices of the Common Stock as +reported by NASDAQ on the vesting date. +RETIREMENT BENEFITS +The NEOs are eligible to participate in our 401(k) Plan on the same terms and conditions applicable to +all of our employees. For a further description of the terms of the 401(k) Plan, see the Section entitled, “Retirement Programs,” in the CD&A. +61 +Table of Contents +NONQUALIFIED DEFERRED +COMPENSATION +The OraSure Technologies, Inc. Deferred Compensation Plan (the “Plan”) is a non-qualified deferred compensation plan designed to provide deferred compensation benefits to a select group of the Company’s highly compensated employees, including all of the NEOs, and to non-employee members of the Board. +The Plan allows for deferrals by participants of up to 100% of +their annual base salaries (or in the case of non-employee Directors, 100% of fees payable under the Company’s Non-Employee Director Compensation Policy), up to +100% of annual incentive cash bonuses and, upon vesting, restricted shares of the Company’s Common Stock and shares received in respect of performance-vested restricted units awarded under the Company’s Stock Award Plan. The Company may +also make discretionary contributions to the accounts of employees participating in the Plan. Cash balances in participants’ accounts may be invested in a list of investment options that are similar to the fund choices offered in the +Company’s 401(k) plan. Participants will be permitted to sell vested shares in their accounts, subject to compliance with the Company’s Insider Trading Policy and applicable securities laws, and invest the proceeds of any such sale in the +investment options available under the Plan. Participants will be 100% vested in their accounts and the restricted shares they defer, except that Company contributions will vest over one or more years as determined by the Company. In the event of +death, disability or change of control, a participant will become 100% vested in any then unvested Company contributions. +Participants may elect to receive a distribution from his or her account upon a specified date, separation from service, change of +control, disability and/or death. Distributions will be made in a lump sum or installments, as allowed under the Plan. +Amounts +contributed to a participant’s account through elective deferrals or through the Company’s discretionary contributions are generally not subject to income tax, and the Company does not receive a deduction until they are distributed +pursuant to the Plan. +However, cash deferrals are subject to the Federal Insurance Contributions Act Tax imposed at the time of +deferral (the “FICA tax”). Deferrals of restricted shares and shares received in respect of performance-vested restricted units are subject to the FICA tax at the time the shares vest, but are not subject to income tax, and the Company +does not receive the deduction until the shares are distributed pursuant to the Plan. The Company may amend or terminate the Plan at any time in accordance with applicable law. +62 +Table of Contents +The following table summarizes information for each NEO with respect to the Plan for the +fiscal year ended December 31, 2016: +Name +Executive +Contributions 1 +($) +Registrant +Contributions +($) +Aggregate +Earnings/ +Loss 2 +($) +Aggregate +Withdrawals/ +Distributions +($) +Aggregate +Balance +at 12/31/16 1,2 +($) +Douglas A. Michels +President and Chief +Executive +Officer +— +— +— +— +— +Ronald H. Spair +Chief Financial Officer +and Chief Operating +Officer +$183,779 +— +$263,425 +— +$1,413,437 +Anthony Zezzo II +Executive Vice President, +Marketing and +Sales +— +— +— +— +— +Jack E. Jerrett +Senior Vice President and +General +Counsel +— +— +— +— +— +Michael Reed, Ph.D. +Senior Vice President, Research and Development and Chief Science Officer +— +— +— +— +— +1 +The indicated amounts of NEO contributions have been reported as +compensation in the Summary Compensation Table. +2 +There were no earnings or deferred compensation at above market or +preferential rates and, therefore, no earnings have been reported as compensation in the Summary Compensation Table for 2016. Aggregate earnings include dividends and interest earned during the period, as well as the net unrealized depreciation of +the underlying investments in the participant’s account. +63 +Table of Contents +EMPLOYMENT AGREEMENTS AND POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE +OF CONTROL +We have entered into employment agreements with all of our NEOs (except for Dr. Reed as explained below). We believe such +agreements are necessary to attract and retain critical talent, and are in-line with market practices. +In March 2015, the employment agreements with Mr. Michels and the other NEOs were amended to eliminate a provision requiring the +Company to pay a gross-up for excise tax payments under Section 280G of the Internal Revenue Code. In addition, Mr. Michels’ agreement was amended to change a modified “single trigger” +change of control severance provision to a “double trigger” provision. The following summary describes the material terms of the employment arrangements with Mr. Michels and the other NEOs, as so amended. +Mr. Michels’ employment agreement with the Company provides for the various components of compensation described in the +CD&A. In addition, upon a termination of employment, Mr. Michels’ contract provides for certain post-employment severance and other benefits, as described below. +Mr. Michels’ employment agreement will terminate upon his death or disability. In addition, Mr. Michels may terminate his +employment at any time and for any reason upon 90 days’ written notice to the Company or for “good reason” (as defined below). Mr. Michels’ employment agreement can also be terminated by the Company for “cause” (as +defined below) or without “cause.” +As used in Mr. Michels’ agreement, the term “good reason” means +(i) a material breach of the agreement by the Company that is not cured within 30 days of written notice, (ii) a material diminution in Mr. Michels’ base compensation or authority, duties or responsibilities (following a change +of control, such a diminution shall occur if Mr. Michels no longer functions as the sole chief executive officer of the successor organization), (iii) a material diminution in the authority, duties or responsibilities of the person to whom +Mr. Michels reports, including a change in Mr. Michels’ reporting obligation from the Board to another employee of the Company, if applicable (following a change of control, such a diminution shall occur if Mr. Michels no longer +reports to the board of directors of a public company), (iv) a material diminution of the budget over which Mr. Michels exercises control, or (v) a material change in Mr. Michels’ job location. +A “change of control” generally is defined to take place when disclosure of such a change would be required by the proxy rules +promulgated by the SEC or when: +• +any person, or more than one person acting as a group within the meaning of Section 409A of the Internal Revenue Code (the “Code”) and the regulations issued thereunder, acquires ownership of stock of the +Company that, together with stock held by such person or group, constitutes more than 50 percent of the total fair market value or total voting power of the stock of the Company; +• +any person, or more than one person acting as a group within the meaning of Code Section 409A and the regulations issued thereunder, acquires (or has acquired during the +12-month period ending on the date of the most recent acquisition) ownership of stock of the Company possessing 30 percent or more of the total voting power of the Company’s stock; +• +a majority of the members of the Board is replaced during any 12-month period by Directors whose appointment or election is not endorsed by a majority of the members of the Board +before the date of the appointment or election; or +• +a person, or more than one person acting as a group within the meaning of Code Section 409A and the regulations issued thereunder, acquires (or has acquired during the +12-month period ending on the date of the most recent acquisition) assets from the Company that have a total gross fair market value equal to or more than 40 percent of the total gross fair market value +of all the assets of the Company immediately before such acquisition or acquisitions. +64 +Table of Contents +A “change of control period” is the period which begins on the occurrence of a +change of control and ends 18 months thereafter. +Upon the termination of Mr. Michels’ employment upon his death or +disability, by Mr. Michels for any reason other than good reason or by the Company for cause, Mr. Michels will be entitled to receive his salary through the date of termination and any bonus approved by the Board or the Compensation +Committee prior to the date of termination but not yet paid and, in the case of a termination upon his death or disability, a cash bonus for the calendar year in which termination occurs that Mr. Michels would have received but for his death or +disability, prorated through the date of death or commencement of disability. Upon termination of the agreement by Mr. Michels with good reason or by the Company without cause (which includes the Company’s failure to renew the agreement), +Mr. Michels would be entitled to receive his salary through the date of termination and any bonus that has been approved by the Board or the Compensation Committee prior to the date of termination but not yet paid, a cash bonus for the calendar +year in which termination occurs equal to Mr. Michels’ target bonus for such year, and for a period of one year after the date of termination, benefits for Mr. Michels and/or his family at levels substantially equal to those that +would have been provided to them by the Company if Mr. Michels’ employment had not been terminated. If termination is for good reason or without cause (which includes the Company’s failure to renew the agreement) and does not occur +during a change of control period, Mr. Michels would also receive a lump sum amount equivalent to 12 months of his annual salary. If, however, termination is for good reason or without cause (which includes the Company’s failure to renew +the agreement) and occurs during a change of control period, Mr. Michels will receive a lump sum amount equivalent to 36 months of his annual salary. If Mr. Michels is a “specified employee” within the meaning of Code +Section 409A at the time of the termination of his employment and any of the foregoing payments would subject him to any tax, interest or penalty under Code Section 409A or regulation thereunder, then the payment shall not be made until +the first day which is at least six months after the date of termination of his employment. +Upon termination of +Mr. Michels’ employment as a result of disability, for good reason, or by the Company without cause, Mr. Michels can elect to receive medical and dental insurance coverage for himself and his family under any plans offered by the +Company to the extent the Company is self-insured or coverage for former employees is available on reasonable terms (as determined by the Company) from the Company’s providers of medical and dental coverage. +All stock awards granted to Mr. Michels are required to immediately vest (i) in the event of a change of control or +(ii) if Mr. Michels’ employment is terminated for good reason by Mr. Michels or by the Company without cause during a change of control period, and 50% of such stock awards shall vest in the event Mr. Michels’ +employment is terminated for good reason or by the Company without cause during any period other than a change of control period. +The termination and severance provisions in the employment agreements for the other NEOs (except for Dr. Reed) are substantially +similar to Mr. Michels’ employment agreement, with the following exceptions. Mr. Spair is entitled to receive severance equal to 36 months of his annual salary and Mr. Jerrett is entitled to receive severance equivalent to 24 +months of their annual salary, rather than 36 months, in the event of a termination of their agreements for good reason or without cause during a change of control period or after a change of control. Mr. Zezzo will be entitled to receive +severance equal to 24 months of his annual salary only if he is terminated for good reason or without cause during a change of control period. In the employment agreements with Messrs. Spair, Zezzo and Jerrett, the term “good reason” means +(i) a material breach of the agreement by the Company that is not cured within 30 days of written notice, (ii) a material diminution in base compensation or authority, duties or responsibilities, (iii) a material diminution in the +authority, duties or responsibilities of the person to whom the executive reports, including a change in the executive’s reporting obligation from the Board to another employee of the Company, if applicable, (iv) a material diminution of +the budget over which the executive exercises control, or (v) a material change in the executive’s job location. +Dr. Reed does not have an employment agreement like the other NEOs. The terms of his employment are generally the same as other non-agreement executives of the Company at the level of Senior Vice President. +65 +Table of Contents +Dr. Reed receives a base salary and is eligible to receive annual cash bonuses under our annual Incentive Plans and annual equity awards under the LTIP. He received an initial equity award +upon joining the Company in April 2016 with a value equal to 90% of his base salary. This award consisted of 50% time-vested restricted stock and 50% performance-vested restricted units, containing terms similar to those in the 2016 annual equity +awards provided to other executives. If Dr. Reed’s employment is terminated by the Company for reasons other than a violation of the Company’s Code of Conduct, Dr. Reed will receive severance equal to twelve months of his base +salary. We have also agreed to pay Dr. Reed’s relocation expenses associated with his joining the Company, up to a limit of $146,600. +66 +Table of Contents +The following table provides estimates of the potential severance and other +post-termination benefits the NEOs would receive assuming their employment was terminated as of December 31, 2016: +Name +Benefit +Voluntary +Termination +or +Termination +for Cause +Termination +for Death +or +Disability 1 +Termination +for Good +Reason or +Without +Cause Not +Within +Change of +Control +Period 1 +Termination +after Change of +Control (except +Mr. Michels), or for +Good Reason or +Without Cause +Within Change of +Control +Period 1 +Douglas A. +Michels +President and +Chief Executive +Officer +Salary Continuation +— +— +$ +612,580 +$ +1,837,740 +Bonus +— +$ +646,586 +$ +428,806 +$ +428,806 +Accelerated Option Vesting +— +— +$ +120,132 +$ +240,263 +Accelerated Restricted Stock/Unit Vesting +— +$ +2,708,999 +$ +1,354,499 +$ +2,708,999 +Health Care Benefits +— +— +$ +22,191 +$ +22,191 +Total +— +$ +3,355,585 +$ +2,538,208 +$ +5,237,999 +Ronald H. Spair +Chief Financial +Officer and +Chief Operating +Officer +Salary Continuation +— +— +$ +480,244 +$ +1,440,732 +Bonus +— +$ +362,094 +$ +240,122 +$ +240,122 +Accelerated Option Vesting +— +— +$ +61,079 +$ +122,159 +Accelerated Restricted Stock/Unit Vesting +— +$ +1,332,901 +$ +666,449 +$ +1,332,901 +Health Care Benefits +— +— +$ +22,190 +$ +22,190 +Total +— +$ +1,694,995 +$ +1,470,084 +$ +3,158,104 +Anthony Zezzo II +Executive Vice +President, +Marketing and +Sales +Salary Continuation +— +— +$ +391,690 +$ +783,380 +Bonus +— +$ +188,998 +$ +156,676 +$ +156,676 +Accelerated Option Vesting +— +— +$ +37,254 +$ +74,507 +Accelerated Restricted Stock/Unit Vesting +— +$ +735,606 +$ +367,804 +$ +735,606 +Health Care Benefits +— +— +$ +3,828 +$ +3,828 +Total +$ +924,604 +$ +957,252 +$ +1,753,997 +Jack E. Jerrett +Senior Vice +President and +General +Counsel +Salary Continuation +— +— +$ +353,010 +$ +706,020 +Bonus +— +$ +149,043 +$ +123,554 +$ +123,554 +Accelerated Option Vesting +— +— +$ +24,495 +$ +48,990 +Accelerated Restricted Stock/Unit Vesting +— +$ +549,031 +$ +274,515 +$ +549,031 +Health Care Benefits +— +— +$ +21,940 +$ +21,940 +Total +— +$ +698,074 +$ +797,514 +$ +1,449,535 +Michael Reed, +Ph.D. +Senior Vice +President, +Research and +Development +and Chief +Science Officer +Salary Continuation +— +— +$ +305,000 +$ +305,000 +Bonus +— +— +— +— +Accelerated Option Vesting +— +— +— +— +Accelerated Restricted Stock/Unit Vesting +— +$ +339,698 +$ +43,096 +$ +339,698 +Health Care Benefits +— +— +— +— +Total +— +$ +339,698 +$ +348,096 +$ +644,698 +67 +Table of Contents +1 +The indicated values for the accelerated vesting of stock options +reflect (i) the number of option shares which would vest on an accelerated basis, multiplied by (ii) the excess, if any, of the $8.78 per share closing price for the Company’s Common Stock, as reported by NASDAQ on December 30, +2016, over the applicable exercise price for each option. The indicated values for the accelerated vesting of restricted stock and performance-vested restricted units reflect the $8.78 per share closing price on December 30, 2016 multiplied by +the number of shares which would vest on an accelerated basis (assuming, in the case of restricted units, that the applicable performance measures are met at 100% of target). +EQUITY COMPENSATION PLAN INFORMATION +The following table provides +information as of December 31, 2016 about the shares of Common Stock that may be issued upon the exercise of options under all of our equity compensation plans. These plans include the OraSure Technologies, Inc. Stock Award Plan (“Award +Plan”), the Epitope, Inc. 1991 Stock Award Plan (the “1991 Plan”), and the Agritope, Inc. 1992 Stock Award Plan (the “Agritope Plan”). The Award Plan, the 1991 Plan and the Agritope Plan were Epitope equity compensation +plans. In connection with the merger of Epitope and STC into the Company on September 29, 2000, the Award Plan was adopted by the Company, and the Company assumed the obligation to issue shares for the then outstanding stock options granted +under the Award Plan, the 1991 Plan, and the Agritope Plan. Additional grants of equity compensation may only be made under the Award Plan. +Plan Category +Number of Securities to be +Issued Upon Exercise of +Outstanding +Options +(a) +Weighted- +Average Exercise +Price of Outstanding +Options +(b) +Number of Securities +Remaining Available for +Future Issuance +Under +Equity Compensation Plans +(Excluding Securities +Reflected in Column (a)) +(c) +Equity compensation +plans approved by security holders +5,329,711 +$ +7.35 +2,568,143 +1 +Equity compensation +plans not approved by security holders +125,552 +2 +$ +4.42 +2 +— +Total +5,455,263 +2,568,143 +1 +Represents shares remaining available for future issuance as of +December 31, 2016 under the Award Plan. +2 +Represents shares remaining available for future issuance as of +December 31, 2016, under options at a weighted-average exercise price of $4.42 per share, pursuant to the 1991 Plan and the Agritope Plan. +DIRECTOR COMPENSATION +ANNUAL FEES +Under our Non-Employee Director Compensation Policy +(“Director Policy”), non-employee members of the Board receive fixed annual fees for service on the Board and Committees of the Board during 2016, as set forth below. The fees were paid quarterly in +arrears. +Position +Annual Fee +Board Chairman +$ +60,000 +Non-Chairman Board Member +$ +40,000 +Audit +Chairman +$ +18,000 +Compensation +Chairman +$ +15,000 +N&CG +Chairman +$ +8,000 +Non-Chairman Audit Member +$ +8,000 +Non-Chairman Compensation Member +$ +6,000 +Non-Chairman N&CG Member +$ +4,000 +68 +Table of Contents +Based on a competitive assessment performed by PM&P, the Board decided to increase the +fee paid to the Audit Committee Chairman to $20,000 and the fee paid to the Nominating and Corporate Governance Chairman to $10,000 beginning in 2017. +INITIAL EQUITY AWARDS +Non-employee Directors receive an initial grant of 40,000 stock +options for the Company’s Common Stock upon joining the Board (the “Initial Grant”). An additional grant of 40,000 stock options is also made to any non-employee Director who becomes Chairman of +the Board (the “Chairman Grant”). The options granted to non-employee Directors are nonqualified stock options and have an exercise price equal to the mean between the high and low sales prices of +the Company’s Common Stock as quoted on the NASDAQ Stock Market on the grant date. Each Initial Grant and Chairman Grant generally vest on a monthly basis over the 24 months immediately following the grant date. Payment of the exercise price +may be made in cash or by delivery of previously acquired shares of Common Stock having a fair market value equal to the aggregate exercise price. +ANNUAL EQUITY AWARDS +Under the Director Policy, each non-employee Director receives +an annual grant of restricted shares (the “Annual Grant”) of the Company’s Common Stock on the date of each annual meeting of stockholders. Annual grants are made using a value transfer award method similar to that used for our +executives under the LTIP. The dollar values of the Annual Awards were determined by the Compensation Committee and Board based on advice from PM&P and an assessment of director equity awards made at comparable medical diagnostics and healthcare +companies. +Under the Director Policy, Annual Grants of restricted stock were made in 2016 pursuant to the values set forth in the +following table: +Board Position +Award Grant Value +Chairman +$ +120,000 +Non-Chairman Director +$ +80,000 +The dollar value of each Annual Grant is converted into restricted stock by dividing the above values by +the average of the high and low sales prices of the Company’s Common Stock, as reported on the NASDAQ Stock Market, on the grant date. Annual Grants of restricted stock will vest on the date that is twelve months from the date of grant. Non-employee Directors are permitted to direct the Company to withhold restricted stock in order to pay tax withholding obligations arising upon the vesting of such shares. +Beginning in 2017, the Award Grant value for non-chairman Directors was increased to $95,000, +based on the market assessment provided by PM&P. +EQUITY AWARD TERMS +Any unvested stock options and restricted stock granted to +non-employee Directors will vest in their entirety immediately upon the occurrence of a “change of control” of the Company. As defined in the Award Plan, a change of control means a change of control +that would be required to be reported under the Securities Exchange Act of 1934, as amended, and would be deemed to have occurred at such time as (i) any person, or more than one person acting as a group within the meaning of Section 409A +of the Code, acquires ownership of stock of the Company that, together with stock held by such person or group, constitutes more than 50 percent of the total fair market value or total voting power of the stock of the Company; (ii) any +person, or more than one person acting as a group within the meaning of Section 409A of the Code, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition) +ownership of stock of the Company possessing 30 percent or more of the total voting power of the Company’s stock; (iii) a majority of the members of the Board is replaced during any 12-month +period +69 +Table of Contents +by Directors whose appointment or election is not endorsed by a majority of the members of the Board before the date of the appointment or election; or (iv) a person, or more than one person +acting as a group within the meaning of Section 409A of the Code, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition) assets from the Company that have +a total gross fair market value equal to or more than 40 percent of the total gross fair market value of all the assets of the Company immediately before such acquisition or acquisitions. In addition, if a +non-employee Director leaves the Board for any reason other than a change of control, prior to the end of the vesting period for the Annual Grant of restricted stock, such award shall immediately vest on a pro-rata basis based on the actual duration of such Director’s service to the Board during such vesting period. +DEFERRED COMPENSATION +Non-employee Directors are permitted to defer all or a portion +of the fees and grants of restricted stock under the Company’s Non-Qualified Deferred Compensation Plan, on terms similar to those applicable to our officers. +DIRECTOR COMPENSATION DURING +2016 +The following table summarizes information related to compensation of non-employee Directors during the fiscal year ended December 31, 2016: +Name 1, 2 +Fees +Earned +or Paid +in Cash +($) +Stock +Awards 3 +($) +Option +Awards 4 +($) +Non-Equity +Incentive Plan +Compensation +($) +Change in +Pension +Value and +Nonqualified +Deferred +Compensation +Earnings +All Other +Compensation +($) +Total ($) +Michael Celano +$ +62,000 +$79,999 +— +— +— +— +$ +141,999 +Eamonn P. +Hobbs +$ +42,000 +$79,999 +— +— +— +— +$ +121,999 +Ronny B. +Lancaster +$ +54,652 +$79,999 +— +— +— +— +$ +134,651 +Charles W. Patrick 3 +$ +52,522 +$79,999 +— +— +— +— +$ +132,521 +Roger L. +Pringle +$ +54,000 +$79,999 +— +— +— +— +$ +133,999 +Stephen S. Tang, +Ph.D. +$ +60,345 +$79,999 +$158,032 +— +— +— +$ +298,376 +1 +Because Messrs. Michels and Spair are officers of the Company, they +are not entitled to any separate compensation for service on the Board or any Committee thereof and have not been included in this table. Eamonn P. Hobbs became a member of the Board in March 2016. +2 +Non-employee Directors held +the following number of unvested restricted shares (“RSs”) and stock options (“SOs”) at December 31, 2016: Mr. Celano: 11,700 RSs; 30,000 SOs; Mr. Hobbs: 11,700 RSs; 40,000 SOs; Mr. Lancaster: 11,700 RSs; +30,000 SOs; Mr. Patrick: 11,700 RSs; 30,000 SOs; Mr. Pringle: 11,700 RSs; 155,552 SOs; and Dr. Tang: 11,700 RSs; 80,000 SOs. The aggregate number of stock options and restricted shares held by Messrs. Michels and Spair are set forth +in the table in the Section entitled, “Outstanding Equity Awards,” in this Proxy Statement. +3 +The indicated amounts reflect the aggregate grant date fair value of +restricted stock awards made to non-employee Directors during 2016, computed in accordance with FAS ASC Topic 718. +4 +The indicated amount reflects the aggregate grant date fair value of the stock option award made to Dr. Tang upon +being elected as Chairman of the Board, computed in accordance with FAS ASC Topic 718. Certain assumptions used in the calculation of those amounts are set forth in footnote 9 to the Company’s audited consolidated financial statements for the +fiscal year ended December 31, 2016, included in the Company’s 2016 Annual Report on Form 10-K. +70 +Table of Contents +PROPOSALS REQUIRING YOUR VOTE +PROPOSAL NO. +1. ELECTION OF DIRECTORS +Background +At the Annual Meeting, you will be asked to vote on the election of two Directors. A majority of the independent members of the Board have nominated +Ronny B. Lancaster and Ronald H. Spair for election as Class II Directors, for terms expiring at the Annual Meeting of Stockholders in 2020. Roger L. Pringle, who is also currently a Class II Director, has advised the Company that he will +be retiring form the Board immediately after the Annual Meeting and, therefore, has not been nominated for re-election. +Each of the nominees for election as Directors is presently a member of our Board and has consented to continue to serve if re-elected to the Board. Mr. Lancaster joined the Board in 2003 and serves as Chairman of the Compensation Committee and as a member of the Nominating and Corporate Governance Committee. Mr. Spair joined +the Board in 2006 and serves as the Company’s Chief Financial Officer and Chief Operating Officer. +We do not know of anything that would +preclude any nominee from serving. However, should any nominee for any reason become unable or unwilling to serve as a Director, the persons named in the enclosed Proxy Card will vote the shares represented by each Proxy for such substitute nominee +as the Board may approve. +Any vacancy that occurs on the Board that results from an increase in the number of Directors may be filled by the +affirmative vote of a majority of the Directors then in office, and any other vacancy on the Board may be filled by the affirmative vote of a majority of the Directors then in office, even though less than a quorum of the Board, or by a sole +remaining Director. +Certain information with respect to each person nominated for election as a Director and each person whose term of office as a +Director will continue after the Annual Meeting, including the particular experience, qualifications, attributes and skills they possess that led to the conclusion that they should serve as a Director, is set forth below. +Name +Principal Occupation +Age +Director +Since +Class I (Directors +Whose Terms Expire in 2019): +Eamonn P. Hobbs +President & CEO of Digital Cognition Technologies, Inc., +58 +2016 +Stephen S. Tang, Ph.D. +President and Chief Executive Officer of The University City +Science Center +56 +2011 +Class II (Nominees for +Terms Expiring in 2020): +Ronny B. Lancaster +Senior Vice President for Federal Government Relations of Assurant, Inc. +65 +2003 +Ronald H. Spair +Chief Financial Officer and Chief Operating Officer of the +Company +61 +2006 +Class III +(Directors Whose Terms Expire in 2018): +Michael Celano +Chief Financial Officer of Recro Pharma, Inc. +58 +2006 +Douglas A. Michels +President and Chief Executive Officer of the Company +60 +2004 +Charles W. Patrick +Principal, Patrick Consulting +62 +2006 +71 +Table of Contents +Eamonn P. Hobbs +Independent Director +Director since: 2016 +Class I Director +Term Expires: 2019 +Age : +58 +Other Current +Public Company +Directorships : None +Since December 2016, Mr. Hobbs has served as President & CEO of Digital Cognition Technologies, Inc., an early stage +medical device company. From July 2014 to January 2016, Mr. Hobbs served as the President and Chief Executive Officer of Antares Pharma, Inc., a specialty pharmaceutical company focused on self-injection pharmaceutical products and +technologies. He also served on the Antares board of directors from 2009 to 2016. From 2009 to 2013, Mr. Hobbs served as President and Chief Executive Officer, and from 2008 to 2013 was a member of the board of directors, of Delcath Systems, +Inc., a specialty pharmaceutical and medical device public company specializing in cancer treatment. Prior to Delcath Systems, Inc., Mr. Hobbs served as President and Chief Executive Officer of AngioDynamics, Inc., a company he co-founded in 1988 as a division of E-Z-EM, Inc. which grew into a leading medical technology public company with a highly diverse +product line. From 1988 to 2004, Mr. Hobbs also served as Executive Vice President of Business Development of E-Z-EM, Inc., a NASDAQ-traded company. Before joining +AngioDynamics, Mr. Hobbs was Director of Marketing and Product Development at NAMIC; founder, President and Chief Executive Officer of Hobbs Medical, Inc.; and a Product Development Engineer at Cook Incorporated. Mr. Hobbs received a B.S. +in Plastics Engineering with a Biomaterials emphasis at the University of Massachusetts (Lowell). Mr. Hobbs has served on the Board of Directors of the Medical Device Manufacturers Association since 2009. +Skills and Qualifications leading to conclusion +that he should serve on the Board: +• Executive-level management experience as CEO of several public companies. +• Extensive +experience in the medical device, pharmaceutical and combination products industries. +• Extensive experience managing operations in a cost-effective, efficient manner. +• Experience with +governance and policy development for the medical device industry. +72 +Table of Contents +Stephen S. Tang, Ph.D. +Independent +Director +Director since: 2011 +Class I Director +Term Expires: 2019 +Age : 56 +Other +Current +Public Company +Directorships : None +Stephen S. Tang, Ph.D. became a member of the Board in April 2011 and has served as the Company’s Chairman of the Board since +November 2016. Since January 2008, Dr. Tang has served as President and Chief Executive Officer of The University City Science Center, an urban research park and business incubator owned by over thirty leading universities, medical schools and +health networks in the greater Philadelphia, Pennsylvania area. Prior to that, Dr. Tang held senior management and business development positions with several firms in the life sciences industry, including Olympus America, Inc., Millennium Cell +Inc. and A.T. Kearney Inc. Dr. Tang holds a B.S. degree in Chemistry from The College of William and Mary, an M.S. degree and Ph.D. in Chemical Engineering from Lehigh University and an MBA from The Wharton School of Business at the University +of Pennsylvania. +Skills and Qualifications +leading to conclusion that he should serve on the Board: +• Extensive business experience, particularly in the life sciences industry. +• Experience with +strategic and business development matters. +• Executive-level management +experience. +Ronny B. Lancaster +Independent Director +Director since: 2003 +Class II Nominee +Term Expires: 2020 +Age : +65 +Other Current +Public Company +Directorships : None +Ronny B. Lancaster became a member of the Board in May 2003. Since September 2005, Mr. Lancaster has served as Senior Vice +President, Federal Government Relations of Assurant, Inc., a provider of specialty insurance and insurance-related products and services. Prior to that, Mr. Lancaster served as Chief Operating Officer of the Morehouse School of Medicine, +Executive Assistant to the Secretary and Principal Deputy Assistant Secretary for Planning and Evaluation at the U.S. Department of Health and Human Services, General Counsel of Hamilton Enterprises, Inc., Senior Washington Representative for Blue +Cross/Blue Shield Association, and Chief of the Division of Fee-For-Service Plans at the U.S. Office of Personnel Management. Mr. Lancaster received his B.A. in +Economics from the Catholic University of America, his M.B.A. from the Wharton School of the University of Pennsylvania, and his J.D. degree from The Georgetown University Law Center. He is admitted to the Bars of Pennsylvania and the District of +Columbia. Mr. Lancaster previously served on the board of directors of Immucor, Inc. +Skills and Qualifications leading to conclusion that he should serve on the Board: +• Expertise in +government affairs and political matters. +• Extensive medical and healthcare experience. +• Legal +training. +73 +Table of Contents +Roger L. Pringle +Independent Director +Director since: 2000 +Class II Director +Term Expires: 2017 +Age : +76 +Other Current +Public Company +Directorships : None +Roger L. Pringle has served on the Board since September 2000, when the Company was formed by the merger of Epitope, Inc. +(“Epitope”) and STC Technologies, Inc. Prior to that, Mr. Pringle served as Chairman of the Board and a member of the Board of Directors of Epitope, and was a director of Agritope, Inc., a plant genetics subsidiary of Epitope. +Mr. Pringle is the President of The Pringle Company, a strategy and executive consulting firm in Portland, Oregon, which was founded in 1976. Mr. Pringle currently serves on the board of directors of Prolifiq Software, Inc. and +previously served on the boards of directors of Bank of the Northwest, Metro One Telecommunications Inc. and North Pacific Group. Mr. Pringle received a B.S. in Business from Oregon State University and an MBA from the University of Oregon. +Skills and Qualifications leading to conclusion +that he should serve on the Board: +• Long service as a member of the Board of Epitope, Inc., a predecessor to the +Company. +• Professional expertise in executive selection, assessment and compensation. +• Entrepreneurial +and business leadership skills +• Service on the boards of other private and public +companies. +Ronald H. Spair +Chief +Financial Officer +& Chief Operating +Officer +Director since: 2006 +Class II Nominee +Term Expires: 2020 +Age : 61 +Other Current +Public Company +Directorships : Fulton Financial Corporation +For biographical information on Mr. Spair, see the Section entitled, “Executive Officers,” in this Proxy Statement. +Skills and Qualifications leading to conclusion +that he should serve on the Board: +• Service as Chief Financial Officer and Chief Operating Officer of the Company. +• Financial and +accounting expertise. +• Extensive business and investor relations experience. +74 +Table of Contents +Douglas A. Michels +President & Chief +Executive Officer +Director since: +2004 +Class III +Director +Term Expires: +2018 +Age : +60 +Other Current Public Company Directorships : West Pharmaceutical +Services, Inc. +For biographical information on Mr. Michels, see the Section entitled, “Executive Officers,” in this Proxy +Statement. +Skills and Qualifications leading +to conclusion that he should serve on the Board: +• Service as President and Chief Executive Officer of the Company. +• Extensive +business and executive-level management experience in the medical device and diagnostics field. +• Public, private and non-profit board +experience. +Michael Celano +Independent Director +Director since: +2003 +Class III +Director +Term Expires: +2018 +Age : +58 +Other Current Public Company Directorships : +None +Michael Celano became a member of the Board in October 2006. Since July 2016, Mr. Celano has served as the Chief Financial Officer +of Recro Pharma, Inc., a specialty pharmaceutical company. Between September 2015 and June 2016 he served as the Chief Financial Officer (part-time) of Makindus, Inc., a clinical-stage biotechnology company. Prior to that, Mr. Celano served as +the Chief Financial Officer of DrugScan, Inc., a clinical laboratory services company from January 2013 to May 2015. He also served as the Chief Financial Officer of Kensey Nash Corporation, a biomaterials company from March 2009 until June 2012, +and as a consultant to Royal DSM, the acquirer of Kensey Nash Corporation, from July 2012 through December 2012. From August 2007 to December 2008, Mr. Celano served as Managing Director of Aon Risk Services and prior to that, he served as Vice +President, Finance and Chief Financial Officer for BioRexis Pharmaceutical Corporation, a biopharmaceutical company. Before joining BioRexis, Mr. Celano served as a partner with KPMG LLP, in charge of its +Mid-Atlantic Life Sciences Practice, and was co-leader of its National Life Science Practice. Mr. Celano also was co-leader +of the Life Science Practice for Arthur Andersen before he joined KPMG. Mr. Celano holds a B.S. degree in Accounting from St. Joseph’s University. +Skills and Qualifications leading to conclusion that he should serve on the Board: +• Long career in +public accounting focused in the life sciences area. +• Accounting and financial expertise. +• Extensive +business experience. +75 +Table of Contents +Charles W. Patrick +Independent Director +Director since: 2006 +Class III Director +Term Expires: 2018 +Age : +62 +Other Current Public Company Directorships : +None +Charles W. Patrick became a member of the Board in January 2006. Since 2000, Mr. Patrick has served as Principal of Patrick +Consulting, a management consulting firm that helps diagnostic and technology companies develop sales, marketing and distribution strategies. From 2001 through 2011, Mr. Patrick also served as the President and +Co-owner of ADS Golf, Inc., a golf equipment supplier. Prior to that time, he served as the President and Chief Executive Officer of CallNexus, Inc., a provider of virtual call center services, and Vice +President of Sales and Marketing for Biosite Diagnostics, a medical diagnostics company, where he had primary responsibility for developing and achieving Biosite’s strategic sales, marketing and distribution objectives. Prior to his time at +Biosite, Mr. Patrick served as World Wide Group Marketing Manager and held several other sales and marketing positions for the Diagnostics Division of Abbott Laboratories. Mr. Patrick previously served on the board of directors of +DiaDexus, Inc. Mr. Patrick received his undergraduate degree from the University of Central Florida. +Skills and Qualifications leading to conclusion that he should serve on the Board: +• Extensive sales +and marketing background. +• More than 40 years of experience in the medical diagnostics industry. +• Entrepreneurial +skills. +V ote Required; Board Recommendation +If a quorum is present, each nominee will be elected if he receives a plurality of the votes cast by shares present in person or by Proxy +and entitled to vote at the Annual Meeting. Abstentions and broker non-votes will have no effect on the required vote. In the absence of instructions to the contrary, shares of Common Stock represented by +properly executed Proxies will be voted for the nominees, each of whom has consented to be named and to serve if elected. +Your Board recommends +that you vote FOR the election of the Director nominees. +PROPOSAL NO. 2. RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC +ACCOUNTING FIRM +Background +The Audit Committee of the Board of Directors has approved the reappointment of KPMG LLP (“KPMG”) as our independent +registered public accounting firm for the 2017 fiscal year. The Audit Committee has also recommended that the Board submit the appointment of KPMG for ratification by stockholders at the Annual Meeting. Although action by the stockholders on this +matter is not legally required, the Audit Committee and the Board believe it is appropriate to seek stockholder ratification of this appointment in light of the important role played by the independent registered public accounting firm in reporting +on the Company’s consolidated financial statements. If this appointment is not ratified by stockholders, the Audit Committee may reconsider its appointment of KPMG for the 2017 fiscal year or in the future. +One or more representatives of KPMG are expected to be at the Annual Meeting. They will have an opportunity to make a statement and will +be available to respond to appropriate questions. +76 +Table of Contents +Vote Required; Board Recommendation +Ratification of the appointment of KPMG requires the affirmative vote of a majority of shares present in person or by Proxy and entitled +to vote at the Annual Meeting. Shares voted in person or represented by Proxy which are not voted for this ratification (by voting no or abstaining) will have the effect of voting against this proposal. In the absence of instructions to the +contrary, shares of Common Stock represented by properly executed Proxies will be voted for ratification of the appointment of KPMG as our independent registered public accounting firm for the 2017 fiscal year. +Your Board recommends that the stockholders vote FOR ratification of the appointment of KPMG. +PROPOSAL NO. 3. ADVISORY (NON-BINDING) +VOTE TO APPROVE EXECUTIVE COMPENSATION +Background +Section 14A of the Exchange Act, enacted pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 +(“Dodd-Frank Act”), requires that stockholders be given the opportunity to vote to approve, on an advisory (non-binding) basis, no less frequently than once every three years, the compensation of our +NEOs. Based on feedback received at our 2011 Annual Meeting, the Board determined that such a vote should be held on an annual basis until the next advisory vote on frequency. +The vote on the resolution recommended below is not intended to address any specific element of compensation, but rather relates to the +overall compensation of our NEOs. As described more fully under the CD&A Section of this Proxy Statement and the related tables and narrative, our compensation program is performance-based and is designed to pay executives for performance by +offering rewards for the achievement of pre-determined objectives. In addition, our program is designed to align the interests of executives with the interests of our stockholders, provide long-term incentives +and set compensation at levels sufficiently competitive to attract, retain and motivate high quality executives, and meet strong corporate governance principles. You are urged to carefully review the CD&A Section of this Proxy Statement which +contains a detailed discussion of our executive compensation program, including the 2016 compensation of our NEOs. +Recent +Compensation Changes +In response to input from our stockholders, we recently implemented several important changes to our +compensation program in order to more closely align compensation and performance for our executives. +Performance-Vested Equity – Beginning in 2016 for performance during 2015, executives received 50% of their awards in the form of +performance-vested restricted units that will vest after three years only if a three year product sales growth target and one-year earnings per share target are met. The remaining 50% of each award consists of +time-vested restricted stock that will vest ratably over a three year period. Thus, one-half of each executive’s annual equity awards has performance vesting and one half has time-vesting. This approach +strengthens our compensation program by more closely aligning executive pay with longer-term Company priorities and performance and responds to input from our stockholders urging us to adopt performance vesting for a significant portion of our +executives’ long-term incentive equity awards. +Employment Agreement +Changes - The employment agreements for all NEOs have been modified to eliminate the excise tax gross-up. In addition, our CEO’s employment agreement has been modified to change the modified +“single trigger” change of control severance provision to a “double trigger” provision. These changes respond to concerns raised by stockholders. +77 +Table of Contents +Enhanced Stock +Ownership/Retention Guidelines – In 2015, the Board increased the stock ownership and retention requirements for our executives, as summarized below (expressed as a multiple of base salary): +Position +Old +New +President & CEO +2x +6x +Chief Financial Officer & Chief Operating Officer +1x +2x +Other Executive Officers +N/A +1x +In addition, each individual +covered by these guidelines is now required to retain 50% (rather than 25%) of the net shares acquired upon the exercise of stock options and the vesting of restricted stock until the individual’s holdings of our Common Stock meet applicable +ownership guidelines. These changes respond to input from stockholders by better aligning the interests of our executives with our stockholders and making our guidelines more consistent with market practice. +Limited Bonus Pool Funding +Discretion – Beginning in 2015, the Board has limited its authority to make discretionary adjustments to the aggregate cash pool used to fund annual incentive bonuses for executives to +/- 10% of the aggregate pool amount otherwise +determined by the funding formula for the applicable Management Incentive Plan. A similar limit has been included in the 2016 and 2017 bonus plans. This change responds to input received from stockholders regarding the use of discretion in +determining compensation. +Extension of Stock Buyback +Program – We extended our previously authorized stock repurchase program and in late 2015 and early 2016, we purchased 1.2 million shares of our Common Stock at a cost of $7.6 million. This action was taken, in part, because of +concerns expressed by our stockholders regarding the dilutive impact of the annual equity awards made to management and non-employee Directors. +Other Compensation Program Features +As described more fully in the CD&A, there are many other important features to our compensation program that illustrate our +commitment to pay-for-performance and good corporate governance. A summary of some of the more significant of these features is set forth below: +• +Compensation is market driven and performance-based. +• +Use of peer company benchmarking and tally sheets. +• +Balanced mix of cash/equity, fixed/variable, short-term/long-term compensation components. +• +Compensation recoupment policy. +• +Threshold financial performance objectives for annual bonus pool funding meet or exceed fiscal performance for the prior fiscal year. +• +No hedging or pledge of our Common Stock. +• +Equity awards provide long-term incentive with three to four year vesting. +• +Robust stockholder outreach on compensation/governance matters. +• +Total compensation targeted at 50 th percentile of peer group. +• +50% of annual equity is performance-vested. +Vote Required; Board Recommendation +If a quorum is present, the affirmative vote of a majority of shares present, in person or by Proxy and entitled to vote at the Annual +Meeting, is required to approve, on an advisory (non-binding) basis, the compensation paid to NEOs. Shares voted in person or represented by Proxy which are not voted for approval of our executive compensation +(by voting no or abstaining) will have the effect of voting against this proposal. Broker non-votes will not count toward the determination of whether this proposal is approved and will have no impact on the +vote. In the absence of instructions to the contrary, shares of Common Stock represented by properly executed Proxies will be voted for approval of our executive compensation, as disclosed in this Proxy Statement. Because this stockholder vote is +advisory, it will not be binding on the Company or the Board of Directors. However, the Compensation Committee and Board will take into account the outcome of the vote when considering future executive compensation programs and arrangements. +78 +Table of Contents +Based on the foregoing, the Board is requesting that stockholders vote on the following +resolution: +RESOLVED , that the compensation paid to the Company’s named executive officers, as disclosed in the +Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED. +Your Board recommends that the +stockholders vote FOR the approval of our executive compensation as described in the preceding resolution. +PROPOSAL NO. 4. ADVISORY (NON-BINDING) VOTE ON THE FREQUENCY OF ADVISORY VOTES ON EXECUTIVE COMPENSATION +Background +The Dodd-Frank Act added Section 14A to the Securities Exchange Act of 1934, which requires that we provide stockholders with the +opportunity to vote, on an advisory (non-binding) basis, for their preference as to how frequently to vote on future advisory votes on the compensation of our NEOs as disclosed in accordance with applicable +SEC rules. +Stockholders may indicate whether they would prefer that we conduct future advisory votes on executive compensation every +year, every two years, or every three years. Stockholders also may abstain from casting a vote on this proposal. +At the Annual +Meeting of stockholders held in May 2011, a majority of the Company’s stockholders cast their vote in favor of holding an annual advisory vote on the compensation of our NEOs. The Board has determined that an annual advisory vote on executive +compensation will permit our stockholders to continue to provide direct input on the Company’s executive compensation philosophy, policies and practices as disclosed in the proxy statement each year, which is consistent with our efforts to +engage in an ongoing dialogue with our stockholders on executive compensation and corporate governance matters. +Vote Required; Board +Recommendation +Shares voted in person or represented by Proxy which are voted to abstain will have the effect of voting against +this proposal. Broker non-votes will not count toward the determination of whether this proposal is approved and will have no impact on the vote. In the absence of instructions to the contrary, shares of +Common Stock represented by properly executed Proxies will be voted for annual advisory votes on compensation. The frequency receiving the most votes will be considered the frequency preferred by stockholders. Because this stockholder vote is +advisory, it will not be binding on the Company or the Board of Directors. However, the Compensation Committee and Board will take into account the outcome of the vote, but may decide that it is in the best interests of our stockholders and the +Company to hold an advisory vote more or less frequently than the frequency receiving the most votes from stockholders. +Based on +the foregoing, the Board is requesting that stockholders vote on the following resolution: +“ RESOLVED , that the +stockholders determine on an advisory basis, whether the preferred frequency of an advisory vote on the executive compensation of the Company’s Name Executive Officers as set forth in the Company’s proxy statement should be [every year, +every two years, or every three years].” +Your Board recommends that the stockholders vote in favor of holding an advisory vote on executive +compensation EVERY YEAR. +79 +Table of Contents +PROPOSAL NO. 5. AMENDMENT AND RESTATEMENT OF ORASURE TECHNOLOGIES, INC. STOCK AWARD PLAN +General +On November 16, 1999, the Board of Directors of Epitope, Inc. adopted, subject to stockholder approval, the Epitope, Inc. 2000 +Stock Award Plan (the “Award Plan”). The Award Plan was approved by Epitope’s stockholders on February 15, 2000. The Award Plan initially authorized for award a maximum of 2,500,000 shares of common stock of Epitope, plus the +number of shares that were available for grant under the Epitope, Inc. 1991 Stock Award Plan on February 15, 2000, and such additional shares that become available under the terms of the Award Plan thereafter. +Effective September 29, 2000, in connection with the merger of Epitope and STC Technologies, Inc. into the Company (the +“Merger”), the name of the Award Plan was changed to the OraSure Technologies, Inc. 2000 Stock Award Plan and the Award Plan was adopted by the Company. All options granted under the Award Plan prior to the Merger were assumed by and +became obligations of the Company. +Since the Merger, the Award Plan has been amended several times to increase the number of +authorized shares, subject to stockholder approval, and to make certain additional amendments. Under the terms of the Award Plan, as of February 21, 2017, there were: +(a) +57,488,758 shares of the Company’s Common Stock outstanding; +(b) +1,627,471 shares of the Company’s Common Stock remaining available for grant under the Award Plan as stock options +or other equity awards; +(c) +4,332,750 stock options issued and outstanding, with a weighted-average exercise price of $7.61 per share and a weighted +average remaining contractual term of 6.2 years; and +(d) +741,932 restricted shares issued and unvested, with a weighted-average grant date fair value of $7.26 per share. +(e) +685,563 restricted units issued and unvested, with a weighted-average grant date for value of $6.60 per share. +In light of the foregoing, the Board has approved and recommended for submission to stockholders amendments to +the Award Plan to increase in the number of shares of Common Stock authorized for grant under the Award Plan and to make certain other changes. A description of the proposed amendments and terms of the Award Plan are set forth below. +Amendments to the Award Plan. +In order to enable the Company to continue to attract and retain qualified Directors, officers, employees and outside advisors and to +compensate its Directors, officers, employees and advisors in a manner that is competitive with compensation provided by other medical diagnostic companies, the Board determined that additional shares of Common Stock would need to be authorized for +grants under the Award Plan. The Board believes that the proposed increase in the number of shares is necessary for retaining the flexibility to grant equity-based compensation at optimal levels to motivate and reward the Company’s Directors, +officers, employees and advisors for their contributions to the success of the Company and the growth in the value of our stock. In addition, the Board wants to ensure that sufficient shares are available if needed to provide retention or other +equity awards in connection with potential acquisitions or other business development activities. +Accordingly, subject to +stockholder approval, the Board approved an amendment to the Award Plan to increase the number of authorized shares by 3,000,000 shares. As a result of this increase, there will be a total of 4,627,471 shares available under the Award Plan on or +after February 21, 2017, subject to stockholder approval. The Award Plan provides that any shares granted pursuant to the Award Plan as “full value” shares (i.e. Restricted Awards, Performance Awards or other stock-based Awards) shall +be counted against the total available shares on the basis of one and a half shares for every such “full value” share granted. In approving this amendment, the Board +80 +Table of Contents +considered various aspects of the Award Plan, including the number of shares subject to outstanding awards, the number of shares that remain available for future awards under the Award Plan, the +Company’s historic grant rates, the cost of issuing additional shares, the impact of share dilution on existing stockholders, and the central role of equity compensation in our executive compensation program, as described more fully in the +CD&A section of this Proxy Statement. +Because grants of future awards are based on a number of factors, including the +achievement of both business and individual performance goals, the Board cannot currently predict the rate at which shares will become subject to future grants. However, the Board determined that the proposed increase in authorized shares will meet +the Company’s needs under the Award Plan for the foreseeable future. +In addition to increasing the number of authorized +shares, the award Plan has been amended as follows: +• +The duration of the Award Plan has been extended to February 21, 2027. +• +The Award Plan provides that neither dividends or dividend equivalents will be paid on unvested equity awards. +A copy of the amended and restated Award Plan containing the foregoing amendments is attached to this Proxy +Statement as Exhibit A . +Summary of the Amended and Restated Award Plan +A summary description of certain terms and provisions of the Award Plan follows. +Purpose +The +purpose of the Award Plan is to promote and advance the interests of the Company and its stockholders by enabling the Company to attract, retain, and reward employees, outside advisors, and Directors of the Company and any subsidiaries. The Award +Plan is intended to strengthen the mutuality of interests between employees, advisors, and Directors and the Company’s stockholders by offering equity-based incentives to promote the long-term growth, +profitability and financial success of the Company. +Eligibility +The Award Plan provides for stock-based awards to (i) employees of the Company and any +subsidiaries, if any (ii) members of advisory committees or other consultants to the Company or its subsidiaries (“Advisors”), and (iii) non-employee Directors of the Company. Persons who +help the Company raise money by selling securities or who promote or maintain a market for the Company’s securities are not eligible to participate in the Award Plan as Advisors. In addition, only Advisors who, in the judgment of the +Compensation Committee of the Board (the “Committee”), are or will be contributors to the long-term success of the Company, will be eligible to receive Awards (as defined below). As of March 23, 2017, the Company had 351 employees and +six non-employee Directors, all of whom are eligible to receive Awards under the Award Plan. +Administration of the Award Plan +The Committee administers the Award Plan and determines the persons who are to receive Awards and the types, amounts, and terms of +Awards. For example, the Committee may determine the exercise price, the form of payment of the exercise price, the number of shares subject to an Award, and the date or dates on which an Award becomes exercisable. The Committee may delegate to one +or more officers of the Company the authority to determine the recipients of and the types, amounts and terms of Awards granted to participants who are not Reporting Persons. Awards made by the Committee for the Company’s Chief Executive +Officer are also reviewed and approved by the full Board. +81 +Table of Contents +The Award Plan will continue in effect until February 21, 2027 or until the Award Plan +is otherwise terminated by the Board. Termination or expiration of the Award Plan will not affect outstanding Awards. +The Award +Plan permits the Board to amend, suspend or terminate the Award Plan or any portion of the Award Plan. Stockholder approval is required if (i) any such action would increase the number of shares of Common Stock subject to the Award Plan, +(ii) such action would decrease the price at which Awards may be granted, (iii) such action would result in an Award becoming fully vested, exercisable or earned in the event of a change in control prior to the consummation of the change +in control or (iv) such approval is required by law or regulation or the rules of a stock exchange or over-the-counter trading system. +Awards +Awards that may be granted under the Award Plan include stock options, stock appreciation rights, restricted awards, performance awards, +and other stock-based awards (collectively, “Awards”). The following is a brief summary of the various types of Awards that may be granted under the Award Plan. +Stock Options . Options granted under the Award Plan may be either incentive stock options (“ISOs”), a tax-favored form of Award meeting the requirements of Section 422 of the Internal Revenue Code, as amended, or nonqualified options (“NQOs”), which are not entitled to special tax treatment. The Award +Plan limits the maximum term of any option granted to a period not longer than ten years from the date of grant. The exercise price of any option granted under the Award Plan may not be less than 100% of the fair market value of the Common Stock on +the date of grant, except that in the case of an option granted to holders of 10% or more of the Company’s voting securities, the exercise price may not be less than 110% of the fair market value of the Common Stock on the date of grant. +The agreement evidencing the grant of a stock option (the “Option Agreement”) will specify, as determined by the Committee, +the time or times when the option is exercisable, in whole or in part, and the extent to which the option remains exercisable after the option holder ceases to be an employee, Advisor or nonemployee Director of the Company. The Option Agreement may, +in the discretion of the Committee, provide whether the option will become fully exercisable upon the death, disability or retirement of the option holder or upon a change in control of the Company. As a general matter, the option holder may not +transfer an option except by testamentary will or the laws of descent and distribution. An option may be exercised by payment of the exercise price in cash or, at the discretion of the Committee, in any combination of cash, previously held shares of +Common Stock or share equivalents, or with proceeds from the sale of shares subject to the option. +A “change in control” +generally is defined to take place when disclosure of such a change would be required by the proxy rules promulgated by the SEC or when: +• +any person, or more than one person acting as a group within the meaning of Section 409A of the Internal Revenue Code +(the “Code”) and the regulations issued thereunder, acquires ownership of stock of the Company that, together with stock held by such person or group, constitutes more than 50 percent of the total fair market value or total voting +power of the stock of the Company; +• +any person, or more than one person acting as a group within the meaning of Code Section 409A and the regulations issued +thereunder, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition) ownership of stock of the Company possessing 30 percent or more of the total voting +power of the Company’s stock; +• +a majority of the members of the Board is replaced during any 12-month period by +directors whose appointment or election is not endorsed by a majority of the members of the Board before the date of the appointment or election; or +• +a person, or more than one person acting as a group within the meaning of Code Section 409A and the regulations issued +thereunder, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition) assets from the Company that have a total gross fair market value equal to or more than +40 percent of the total gross fair market value of all the assets of the Company immediately before such acquisition or acquisitions. +82 +Table of Contents +Options granted to employees under the Award Plan generally vest over four years, with 25% +of the grant vesting on the first anniversary of the grant date and the remaining 75% vesting ratably on a monthly basis over the next three years. Options granted to non-employee Directors in the past have +generally vested ratably on a monthly basis over either a 12 or 24-month period, depending on the type of grant. Options granted under the Award Plan generally provide for accelerated vesting upon a +“change in control.” The Committee may provide for different vesting for any option granted under the Award Plan. +In no +event may options for more than 500,000 shares of Common Stock be granted to any individual under the Award Plan during any fiscal year period. +Stock Appreciation Rights. A recipient of stock appreciation rights (“SARs”) will receive, upon exercise, +a payment (in cash or in shares of Common Stock) based on the increase in the fair market value of a share of Common Stock between the date of grant and the date of exercise. SARs may be granted in connection with options or other Awards granted +under the Award Plan or may be granted as independent Awards. The Award Plan limits the maximum term for the exercise of a SAR to a period not longer than ten years from the date of grant. In no event may SARs for more than 500,000 shares of Common +Stock be granted to any individual under the Award Plan during any fiscal year period. +Restricted Awards. +Restricted Awards may take the form of restricted shares or restricted units. Restricted shares are shares of Common Stock that may be subject to forfeiture if the recipient terminates employment or service as an Advisor or non-employee Director during a specified period (the “Restriction Period”). Stock certificates representing restricted shares are issued in the name of the recipient, but are held by the Company until the +expiration of the Restriction Period. From the date of issuance of restricted shares, the recipient is entitled to the rights of a stockholder with respect to the shares, including voting and dividend rights. Any right to receive dividends on +restricted shares shall be subject to the same forfeiture requirements applicable to the restricted shares. Restricted units are Awards that entitle the recipient to receive a share of Common Stock or the fair market value of a share at some future +date, which similarly may be subject to forfeiture if the recipient terminates employment or service as an Advisor or non-employee Director during the applicable Restriction Period. Unvested Restricted Awards +may not be sold, assigned, transferred, pledged, encumbered or otherwise transferred, voluntarily or involuntarily, by the recipient. +At the expiration of the Restriction Period, payment with respect to restricted units is made in an amount equal to the fair market +value of the number of shares of Common Stock covered by the restricted units. Payment may be in cash, unrestricted shares of Common Stock, or any other form approved by the Committee. Restricted Awards that are subject to forfeiture based solely on +continued employment or passage of time shall vest over a period of at least three years, subject to certain exceptions set forth in the Award Plan. +Performance Awards . Performance Awards are designated in units equivalent in value to a share of Common Stock. A +Performance Award is subject to forfeiture if or to the extent that the Company, a subsidiary, an operating group, or the recipient, as specified by the Committee in the Award, fails to meet performance goals established for a designated performance +period, which must have a duration of at least one year. Performance Awards earned by attaining performance goals are paid at the end of a performance period in cash, shares of Common Stock, or any other form approved by the Committee. The number of +shares of Common Stock issuable with respect to Performance Awards granted to any individual executive officer may not exceed 150,000 shares for any calendar year. +Other Stock-Based Awards . The Committee may grant other Awards that involve payments or grants of shares of Common +Stock or are measured by or in relation to shares of Common Stock. +No Repricing or Exchanges. Since the Company was +formed in 2000, neither the Board nor the Committee has taken any action that resulted in the repricing, replacement or repurchase of +out-of-the-money Options, SARs or other Awards. No such action can be taken under the Plan without the approval of our +stockholders. +83 +Table of Contents +Shares Subject to the Award Plan +If the amendment is approved by our stockholders at our 2017 Annual Meeting, there will be 4,627,471 shares available for issuance under +the Award Plan as of February 21, 2017. If an Award under the Award Plan is cancelled or expires for any reason prior to becoming fully vested or exercised or is settled in cash in lieu of shares, or is exchanged for other Awards under the +Award Plan, then all shares covered by such Awards will be made available for future Awards under the Award Plan. In the event of a change in the Company’s capitalization affecting the Common Stock, including a stock dividend, stock split, +recapitalization, merger, consolidation, split-up, combination or exchange of shares or other form of reorganization, the Committee shall make such proportionate adjustments as it may determine, in its sole +discretion to be appropriate as a result of such change, to the aggregate number of shares for which Awards may be granted under the Award Plan, the maximum number of shares which may be sold or awarded to any participant, the number of shares +covered by each outstanding Award, and the price per share in respect of outstanding Awards. +Federal Income Tax Consequences +The following discussion summarizes the principal anticipated federal income tax consequences of Awards granted under the Award +Plan, to participants and to the Company. +Incentive Stock Options . A recipient of an option does not recognize +taxable income upon the grant or exercise of an ISO. If no disposition of shares occurs within two years from the date of grant or within one year from the date of exercise, then (a) upon the sale of the shares, any amount realized in excess of +the exercise price is taxed to the option recipient as long-term capital gain and any loss sustained will be a long-term capital loss, and (b) no deduction is allowed to the Company for federal income tax +purposes. For purposes of computing alternative minimum taxable income, an ISO is treated as an NQO. +If shares of Common Stock +acquired upon the exercise of an ISO are disposed of prior to the expiration of the two-year and one-year holding periods described above, then (a) the recipient +will recognize ordinary income in the year of disposition in an amount equal to the excess (if any) of the fair market value of the shares at exercise (or, if less, the amount realized on a sale of the shares) over the exercise price thereof and +(b) the Company would be entitled to deduct such amount. Any further gain realized is taxed as a short-term or long-term capital gain, as applicable, and does not result in any deduction for the Company. Any disqualifying disposition as +described above will generally avoid the alternative minimum tax consequences of the exercise of an ISO. +Nonqualified +Options . No income is recognized by an option recipient at the time an NQO is granted. Upon exercise, (a) ordinary income is recognized by the option recipient in an amount equal to the difference between the exercise price and +the fair market value of the shares on the date of exercise and (b) the Company receives a tax deduction for the same amount. Upon disposition of the shares, appreciation or depreciation in the value of the shares after the date of exercise is +treated as a short-term or long-term capital gain or loss, as applicable, and will not result in any deduction to the Company. +Payment of Exercise Price in Shares. The Committee may permit participants to pay all or a portion of the exercise +price for an option using previously acquired shares of Common Stock. If an option is exercised and payment is made in previously held shares (held for six months or longer), there is no taxable gain or loss to the participant other than any gain +recognized as a result of the exercise of the option, as described above. +Stock Appreciation Rights . The grant of a +SAR to a participant will not cause the recognition of income by the participant. Upon exercise of a SAR, the participant will recognize ordinary income equal to the amount of cash payable to the participant plus the fair market value of any shares +of Common Stock delivered to the participant. The Company will be entitled to a deduction equal to the amount of ordinary income recognized by the participant in connection with the exercise of a SAR. +Restricted Awards and Performance Awards . Generally, a participant will not recognize any income upon issuance of a +Restricted Award or Performance Award that is subject to forfeiture. Generally, a participant will recognize ordinary income upon the vesting of Restricted Awards or Performance Awards in an amount equal to the +84 +Table of Contents +amount of cash payable to the participant plus the fair market value of shares of Common Stock delivered to the participant. Dividends paid with respect to Awards during the Restriction Period +will be subject to the same restrictions and will be taxable as ordinary income to the participant when, and if, the restrictions lapse. However, a participant may elect to recognize compensation income upon the grant of restricted shares, based on +the fair market value of the shares of Common Stock subject to the Award at the date of grant. If a participant makes such an election, dividends paid with respect to the restricted shares will not be treated as compensation, but rather as dividend +income at the time when the restricted shares vest. The Company will be entitled to a deduction equal to the amount of ordinary income recognized by the participant. If a participant who receives an Award of restricted shares makes the special +election described above, the Company will not be entitled to deduct dividends paid with respect to the restricted shares. +Limitation on Deductibility of Certain Compensation . Section 162(m) of the Internal Revenue Code generally +makes nondeductible to the Company taxable compensation paid to a single individual in excess of $1 million in any calendar year if the individual is the Chief Executive Officer or one of the next four highest-paid executive officers (other +than the Chief Financial Officer), unless the excess compensation is considered to be “performance based.” Among other requirements contained in Section 162(m), the material terms of a compensation plan in which such officers +participate must be approved by stockholders for awards or compensation provided under the plan to be considered “performance based.” The Company may in the future consider structuring Awards to attempt to meet the requirements of +Section 162(m) if it determines the action to be advisable +Vote Required for Approval; Board Recommendation +Assuming that a quorum is present, the affirmative vote of the holders of a majority of the shares of Common Stock present, in person or +by Proxy at the Annual Meeting, is required for approval of the proposed amended and restated Award Plan. Shares voted in person or represented by a Proxy which are not voted for approval of the amended and restated Award Plan (by voting no or +abstaining) will have the effect of voting against this proposal. Shares as to which a broker or other nominee has indicated on a duly executed and returned Proxy or otherwise advised us that it lacks voting authority will have no effect on the vote +for this proposal. +Your Board recommends that stockholders vote FOR approval of the amendment and restatement of the Award Plan. +ANNUAL REPORT +Our Annual Report to +Stockholders for the year ended December 31, 2016 accompanies this Proxy Statement. Following receipt of a written request, we will provide, without charge, a copy of our Annual Report on Form 10-K for +the year ended December 31, 2016, as filed with the SEC (including a list briefly describing the exhibits thereto), to any record holder or beneficial owner of our Common Stock on March 23, 2017, the record date for the Annual Meeting, or +to any person who subsequently becomes such a record holder or beneficial owner. Requests should be directed to the attention of the Corporate Secretary of the Company at our address set forth in the Notice of Annual Meeting of Stockholders +immediately preceding this Proxy Statement. +85 +Table of Contents +DEADLINE FOR STOCKHOLDER PROPOSALS +You may submit proposals for +inclusion in the proxy materials for the Company’s 2018 Annual Meeting of Stockholders. Any such proposals must meet the stockholder eligibility and other requirements imposed by rules issued by the SEC and must be received by the Company at +220 East First Street, Bethlehem, Pennsylvania 18015, Attention: Corporate Secretary, in accordance with Rule 14a-8 promulgated under the Exchange Act, not later than December 6, 2017. +In addition, our Bylaws provide that a stockholder proposal must meet certain predetermined requirements in order to be considered at +the Annual Meeting. These requirements are separate from, and in addition to, the requirements discussed above to have the stockholder proposal included in the proxy materials pursuant to the SEC’s rules and regulations. In order to be +considered, a stockholder’s proposal must be made in writing to the Company’s Secretary and must be delivered to or received at our principal executive offices not less than ninety (90) days nor more than one hundred twenty +(120) days prior to the meeting. However, if less than one hundred (100) days’ notice or prior public disclosure of the date of the meeting is given or made to stockholders, notice by the stockholder to be timely must be so received +no later than the close of business on the tenth (10 th ) day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made, whichever first +occurs. The notice to the Secretary must set forth, with respect to each matter the stockholder proposes to bring before the meeting, a brief description of the matter and the reasons for considering that matter at the Annual Meeting. The notice +must also include, as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf notice of the proposed business is made: (i) the name and address of the stockholder and such beneficial owner; (ii) any material +interest of such stockholder and such beneficial holder in such business; (iii) the class and number of shares of capital stock of the Company which are held of record or beneficially owned by the stockholder and such beneficial owner and any +other direct or indirect pecuniary or economic interest in any capital stock of the Company of such stockholder and such beneficial owner, including without limitation, any derivative instrument, swap, option, warrant, short interest, hedge, profit +sharing arrangement or borrowed or loaned shares; (iv) a representation that such stockholder intends to appear in person or by proxy at the meeting to propose the business described in its notice; and (v) any other information relating to +such business matter that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies pursuant to Section 14 of the Exchange Act and the rules and regulations +promulgated thereunder. To the extent the Board of Directors or the SEC, or a court of competent jurisdiction, deems these Bylaw provisions to be inconsistent with the right of stockholders to request inclusion of a proposal in the Company’s +proxy materials pursuant to Rule 14a-8 promulgated under the Exchange Act, such rule shall prevail. +The SEC has promulgated rules relating to the exercise of discretionary voting authority under proxies solicited by the Board. If a +stockholder intends to present a proposal at our 2018 Annual Meeting without inclusion of that proposal in the Company’s proxy materials and written notice of the proposal is not received by the Secretary of the Company by February 19, +2018 (the date that is 45 days before the one-year anniversary of the date on which the Company first sent its proxy materials for the Annual Meeting), or if the Company meets other requirements of the +applicable SEC rules and regulations, the proxies solicited by the Board for use at the 2018 Annual Meeting will confer discretionary authority to vote on the proposal should it then be raised at the 2018 Annual Meeting. +BY ORDER OF THE BOARD OF DIRECTORS +Jack E. Jerrett +Secretary +April 5, 2017 +86 +Table of Contents +Exhibit A +ORASURE TECHNOLOGIES, INC. +STOCK AWARD PLAN +ARTICLE 1 +ESTABLISHMENT AND PURPOSE +(Amended and Restated Effective as of February 21, 2017) +Establishment . Epitope, Inc. established this Plan as the Epitope, Inc. 2000 Stock Award Plan, effective as of February 15, 2000, +and the Plan was approved by shareholders of Epitope, Inc. at the 2000 annual shareholders meeting. Effective September 29, 2000, in connection with the merger of Epitope, Inc. with and into OraSure Technologies, Inc., the name of the Plan was +changed to the OraSure Technologies, Inc. 2000 Stock Award Plan and the Plan was adopted as a stock award plan of OraSure Technologies, Inc. The Plan was amended and restated, subject to shareholder approval, effective May 16, 2006. The Plan +was amended further, subject to shareholder approval, effective May 13, 2008. The Plan again was amended and restated in its entirety, subject to shareholder approval, effective May 17,2011 and February 12, 2013. The Plan was amended +further, subject to shareholder approval, effective May 22, 2014. +1.1 Purpose . +The purpose of the Plan is to promote and advance the interests of Corporation and its shareholders by enabling Corporation to attract, retain, and reward employees, outside advisors, and directors of Corporation and its subsidiaries. It is also +intended to strengthen the mutuality of interests between such employees, advisors, and directors and Corporation’s shareholders. The Plan is designed to meet this intent by offering stock options and other equity-based incentive awards, +thereby providing a proprietary interest in pursuing the long-term growth, profitability, and financial success of Corporation. +ARTICLE +2 +DEFINITIONS +2.1 Defined Terms . For purposes of the Plan, the following terms have the meanings set +forth below: +“ Advisor ” means a natural person who is a consultant to or member of an Advisory Committee of +Corporation or a Subsidiary, who provides bona fide services to Corporation and who is neither an employee of Corporation or a Subsidiary nor a Non-Employee Director. “Advisor” excludes any person +who provides services to Corporation in connection with the offer or sale of securities in a capital raising transaction or to promote or maintain a market for Corporation’s securities, and any other person excluded from the class of persons to +whom securities may be offered pursuant to a registration statement on Form S-8 or any successor form of registration statement. +“ Advisory Committee ” means a scientific advisory committee to Corporation or a Subsidiary. +“ Award ” means an award or grant made to a Participant of Options, Stock Appreciation Rights, Restricted Awards, +Performance Awards, or Other Stock-Based Awards pursuant to the Plan. +“ Award Agreement ” means an agreement as +described in Section 6.4. +“ Board ” means the Board of Directors of Corporation. +“ Change in Control ” means, unless otherwise provided in the applicable Award Agreement, a change of control of a +nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A pursuant to the Exchange Act; provided, however, that a change of control shall only be deemed to have occurred at such time as (i) any +Table of Contents +Exhibit A +person, or more than one person acting as a group within the meaning of Section 409A of the Code, acquires ownership of stock of the Corporation that, together +with stock held by such person or group, constitutes more than 50 percent of the total fair market value or total voting power of the stock of the Corporation; (ii) any person, or more than one person acting as a group within the meaning +of Section 409A of the Code, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition) ownership of stock of the Corporation possessing 30 percent or more of +the total voting power of the Corporation’s stock; (iii) a majority of the members of the Board is replaced during any 12-month period by directors whose appointment or election is not endorsed by a +majority of the members of the Board before the date of the appointment or election; or (iv) a person, or more than one person acting as a group within the meaning of Section 409A of the Code, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition) assets from the Corporation that have a total gross fair market value equal to or more than 40 percent of the total gross fair market value of +all the assets of the Corporation immediately before such acquisition or acquisitions. +“ Code ” means the Internal +Revenue Code of 1986, as amended and in effect from time to time, or any successor thereto, together with rules, regulations, and interpretations promulgated thereunder. Where the context so requires, any reference to a particular Code section will +be construed to refer to the successor provision to such Code section. +“ Committee ” means the committee appointed +by the Board to administer the Plan as provided in Article 3 of the Plan. +“ Common Stock ” means the Common Stock, +par value $0.000001 per share, of Corporation or any security of Corporation issued in substitution, in exchange, or in lieu of such stock. +“ Continuing Restriction ” means a Restriction contained in Sections 6.7, 6.8, and 15.4 of the Plan and any other +Restrictions expressly designated by the Committee in an Award Agreement as a Continuing Restriction. +“ Corporation ” means OraSure Technologies, Inc., a Delaware corporation, or any successor corporation. As to awards +granted or other action taken prior to September 29, 2000, “Corporation” includes Epitope, Inc., as predecessor to OraSure Technologies, Inc. +“ Disability ” means the condition of being “disabled” within the meaning of Section 422(c)(6) of the Code. +However, the Committee may change the foregoing definition of “Disability” or may adopt a different definition for purposes of specific Awards. +“ Exchange Act ” means the Securities Exchange Act of 1934, as amended and in effect from time to time, or any +successor statute. Where the context so requires, any reference to a particular section of the Exchange Act, or to any rule promulgated under the Exchange Act, shall be construed to refer to successor provisions to such section or rule. +“ Fair Market Value ” means with respect to Common Stock, on a particular day, without regard to any restrictions +(other than a restriction which, by its terms, will never lapse): +(1) if the Common Stock is at the time listed or admitted +to trading on any stock exchange, the mean between the highest and lowest prices of the Common Stock on the date in question on the principal national securities exchange on which it is then listed or admitted to trading. If no reported sale of +Common Stock takes place on the date in question on the principal exchange, then the reported closing asked price of the Common Stock on such date on the principal exchange shall be determinative of “Fair Market Value;” +(2) if the Common Stock is not at the time listed or admitted to trading on a stock exchange, the mean between the highest +reported asked price and lowest reported bid price of the Common Stock on the date in question in the over-the-counter market, as such prices are reported in a +publication of general circulation selected by the Committee and regularly reporting the market price of Common Stock in such market; or +Table of Contents +Exhibit A +(3) if the Common Stock is not listed or admitted to trading on any stock exchange or traded in the +over-the-counter market, an amount as determined in good faith by the Committee and which shall comply with Section 409A of the Code. +“ Incentive Stock Option ” or “ ISO ” means any Option granted pursuant to the Plan that is +intended to be and is specifically designated in its Award Agreement as an “incentive stock option” within the meaning of Section 422 of the Code. +“ Non-Employee Director ” means a member of the Board who is not an employee of +Corporation or any Subsidiary. +“ Nonqualified Option ” or “ NQSO ” means any Option granted +pursuant to the Plan that is not an Incentive Stock Option. +“ Option ” means an ISO or an NQSO. +“ Other Stock-Based Award ” means an Award as defined in Section 11.1. +“ Participant ” means an employee of Corporation or a Subsidiary, an Advisor, or a +Non-Employee Director who is granted an Award under the Plan. +“ Performance +Award ” means an Award granted pursuant to the provisions of Article 10 of the Plan, the Vesting of which is contingent on performance attainment. +“ Performance Cycle ” means a designated performance period pursuant to the provisions of Section 10.3 of the +Plan. +“ Performance Goal ” means a designated performance objective pursuant to the provisions of +Section 10.4 of the Plan. +“ Plan ” means this OraSure Technologies, Inc. 2000 Stock Award Plan, as set forth +herein and as it may be amended from time to time. +“ Reporting Person ” means a Participant who is subject to the +reporting requirements of Section 16(a) of the Exchange Act. +“ Restricted Award ” means a Restricted Share or a +Restricted Unit granted pursuant to Article 9 of the Plan. +“ Restricted Share ” means an Award described in +Section 9.1(a) of the Plan. +“ Restricted Unit ” means an Award of units representing Shares described in Section +9.1(b) of the Plan. +“ Restriction ” means a provision in the Plan or in an Award Agreement which limits the +exercisability or transferability, or which governs the forfeiture, of an Award or the Shares, cash, or other property payable pursuant to an Award. +“ Retirement ” means: +(a) For Participants who are employees, retirement from active employment with Corporation and its Subsidiaries at or after age +50, or such earlier retirement date as approved by the Committee for purposes of the Plan; +Table of Contents +Exhibit A +(b) For Participants who are Non-Employee Directors, termination of membership on the Board +after attaining age 50, or such earlier retirement date as approved by the Committee for purposes of the Plan; and +(c) For +Participants who are Advisors, termination of service as an Advisor after attaining age 50, or such earlier retirement date as approved by the Committee for purposes of the Plan. +However, the Committee may change the foregoing definition of “Retirement” or may adopt a different definition for purposes of +specific Awards. +“ Share ” means a share of Common Stock. +“ Stock Appreciation Right ” or “ SAR ” means an Award to benefit from the appreciation of Common +Stock granted pursuant to the provisions of Article 8 of the Plan. +“ Subsidiary ” means any “subsidiary +corporation” of Corporation within the meaning of Section 424 of the Code, namely any corporation in which Corporation directly or indirectly controls 50 percent or more of the total combined voting power of all classes of stock +having voting power. +“ Ten Percent Shareholder ” means a person who on any given date owns, either directly or indirectly +(taking into account the attribution rules contained in Section 424(d) of the Code), stock possessing more than 10 percent of the total combined voting power of all classes of stock of the Corporation or any Subsidiary under Section 424(f) of +the Code. +“ Vest ” or “ Vested ” means: +(a) In the case of an Award that requires exercise, to be or to become immediately and fully +exercisable and free of all Restrictions (other than Continuing Restrictions); +(b) In the +case of an Award that is subject to forfeiture, to be or to become nonforfeitable, freely transferable, and free of all Restrictions (other than Continuing Restrictions); +(c) In the case of an Award that is required to be earned by attaining specified Performance +Goals, to be or to become earned and nonforfeitable, freely transferable, and free of all Restrictions (other than Continuing Restrictions); or +(d) In the case of any other Award as to which payment is not dependent solely upon the +exercise of a right, election, exercise, or option, to be or to become immediately payable and free of all Restrictions (except Continuing Restrictions). +2.2 Gender and Number . Except where otherwise indicated by the context, any masculine or +feminine terminology used in the Plan shall also include the opposite gender; and the definition of any term in Section 2.1 in the singular shall also include the plural, and vice versa. +ARTICLE 3 +ADMINISTRATION +3.1 General . Except as provided in Section 3.7, the Plan will be administered by a +Committee composed as described in Section 3.2. +3.2 Composition of the +Committee . The Committee will be appointed by the Board from among its members in a number and with such qualifications as will meet the independence and other requirements for (i) approval by a committee pursuant to Rule 16b-3 under the Exchange Act, (ii) establishing, administering and certifying performance goals pursuant to +Table of Contents +Exhibit A +Section 162(m) of the Code and (iii) trading or listing securities on the securities exchange or association on which the Common Stock is then traded or +listed. The Board may from time to time remove members from, or add members to, the Committee. Vacancies on the Committee, however caused, will be filled by the Board. The initial members of the Committee will be the members of Corporation’s +existing Executive Compensation Committee. The Board may at any time replace the Executive Compensation Committee with another Committee. In the event that the Executive Compensation Committee ceases to satisfy the requirements of Rule 16b-3, Section 162(m) of the Code or a securities exchange or association described above in 3.2(iii), the Board will appoint another Committee satisfying such requirements. +3.3 Authority of the Committee . The Committee will have full power and authority (subject to such orders or resolutions as +may be issued or adopted from time to time by the Board) to administer the Plan in its sole discretion, including the authority to: +(a) Construe and interpret the Plan and any Award Agreement; +(b) Promulgate, amend, and rescind rules and procedures relating to the implementation of the Plan; +(c) With respect to employees and Advisors: +(i) Select the employees and Advisors who shall be granted Awards; +(ii) Determine the number and types of Awards to be granted to each such Participant; +(iii) Determine the number of Shares, or Share equivalents, to be subject to each Award; +(iv) Determine the option price, purchase price, base price, or similar feature for any Award; and +(v) Determine all the terms and conditions of all Award Agreements, consistent with the requirements of the Plan. +Decisions of the Committee, or any delegate as permitted by the Plan, shall be final, conclusive, and binding on all Participants. +3.4 Action by the Committee . A majority of the members of the Committee will constitute +a quorum for the transaction of business. Action approved by a majority of the members present at any meeting at which a quorum is present, or action in writing by all the members of the Committee, will be the valid acts of the Committee. +3.5 Delegation . Notwithstanding the foregoing, the Committee may delegate to one or more +officers of Corporation the authority to determine the recipients, types, amounts, and terms of Awards granted to Participants who are not Reporting Persons or “covered employees” within the meaning of Section 162(m) of the Code. +3.6 Liability of Committee Members . No member of the Committee will be liable for any +action or determination made in good faith with respect to the Plan, any Award, or any Participant. +3.7 Awards to Non-Employee Directors . The Board +or Committee may grant Awards from time to time to Non-Employee Directors. +3.8 Costs of Plan . The costs and expenses of administering the Plan will be borne by +Corporation. +ARTICLE 4 +DURATION OF THE PLAN AND SHARES SUBJECT TO THE PLAN +4.1 Duration of the Plan . This amendment and restatement of the Plan is effective +February 21, 2017. The Plan shall remain in full force and effect until February 21, 2027, or the date it is terminated by the Board. The Board shall have the power to amend, suspend or terminate the Plan as provided in Article 14. +Termination of the Plan under Article 14 shall not affect Awards outstanding under the Plan at the time of termination. +Table of Contents +Exhibit A +4.2 Shares Subject to the Plan . +4.2.1 General . The shares which may be made subject to Awards under the Plan are Shares +of Common Stock, which may be either authorized and unissued Shares or reacquired Shares. No fractional Shares may be issued under the Plan. +4.2.2 Number of Shares; Limits . +(a) The maximum number of Shares for which Awards may be granted under the Plan on or after February 21, 2017, is 4,627,471 +Shares, plus any Shares that become available as the result of the cancellation or expiration of any Award, subject to adjustment for changes in capitalization affecting the Corporation’s Common Stock pursuant to Section 13.2 of the Plan. +Any Shares granted on or after February 21, 2017, in connection with Options and Stock Appreciation Rights shall be counted against this limit on the basis of one Share for each Share subject to such Option or Stock Appreciation Right. Any +Shares granted on or after February 21, 2017, in connection with Restricted Awards, Performance Awards or Other Stock-Based Awards shall be counted against this limit on the basis of one and a half Shares for every one Share granted in +connection with such Awards. +(b) The maximum number of Shares that may be issued pursuant to paragraph (a) above on or +after February 21, 2017 pursuant to Incentive Stock Options, is 4,627,471 Shares, subject to adjustment for changes in capitalization affecting the Corporation’s Common Stock pursuant to Section 13.2 of the Plan. +4.2.3 Availability of Shares for Future Awards . If an Award under the Plan is canceled +or expires for any reason prior to having been fully Vested or exercised by a Participant or is settled in cash in lieu of Shares or is exchanged for other Awards, all Shares covered by such Awards will be made available for future Awards under the +Plan. In no event shall the following be made available for future awards under the Plan: (a) Shares retained or reacquired by the Corporation in payment of an option price or satisfaction of a withholding tax obligation by a Participant in +connection with any Award, (b) Shares repurchased by the Corporation with Option proceeds and (c) Shares covered by an SAR, to the extent the SAR is exercised and settled in Shares and whether or not Shares are actually issued to the +Participant upon exercise of the SAR. +ARTICLE 5 +ELIGIBILITY +5.1 Employees and Advisors . Officers and other employees of Corporation and any +Subsidiaries (who may also be directors of Corporation or a Subsidiary) and Advisors who, in the Committee’s judgment, are or will be contributors to the long-term success of Corporation will be eligible to receive Awards under the Plan. +5.2 Non-Employee Directors . All Non-Employee Directors will be eligible to receive Awards as provided in Section 3.7 of the Plan. +ARTICLE 6 +AWARDS +6.1 Types of Awards . The types of Awards that may be granted under the Plan +are: +(a) Options governed by Article 7 of the Plan; +(b) Stock Appreciation Rights governed by Article 8 of the Plan; +(c) Restricted Awards governed by Article 9 of the Plan; +Table of Contents +Exhibit A +(d) Performance Awards governed by Article 10 of the Plan; and +(e) Other Stock-Based Awards or combination awards governed by Article 11 of the Plan. +In the discretion of the Committee, any Award may be granted alone, in addition to, or in tandem with other Awards under the Plan. +6.2 General . Subject to the limitations of the Plan, the Committee may cause Corporation +to grant Awards to such Participants, at such times, of such types, in such amounts, for such periods, with such option prices, purchase prices, or base prices, and subject to such terms, conditions, limitations, and restrictions as the Committee, +in its discretion, deems appropriate. Awards may be granted as additional compensation to a Participant or in lieu of other compensation to such Participant. A Participant may receive more than one Award and more than one type of Award under the +Plan. +6.3 Nonuniform Determinations . The Committee’s determinations under the +Plan or under one or more Award Agreements, including without limitation, (a) the selection of Participants to receive Awards, (b) the type, form, amount, and timing of Awards, (c) the terms of specific Award Agreements, and +(d) elections and determinations made by the Committee with respect to exercise or payments of Awards, need not be uniform and may be made by the Committee selectively among Participants and Awards, whether or not Participants are similarly +situated. +6.4 Award Agreements . Each Award will be evidenced by a written Award +Agreement between Corporation and the Participant. Award Agreements may, subject to the provisions of the Plan, contain any provision approved by the Committee. +6.5 Provisions Governing All Awards . All Awards will be subject to the following +provisions: +(a) Alternative Awards . If any Awards are designated in their Award Agreements as alternative to each +other, the exercise of all or part of one Award automatically will cause an immediate equal (or pro rata) corresponding termination of the other alternative Award or Awards. +(b) Rights as Shareholders . No Participant will have any rights of a shareholder with respect to Shares subject to an Award +until such Shares are issued in the name of the Participant. +(c) Employment Rights . Neither the adoption of the Plan +nor the granting of any Award will confer on any person the right to continued employment with Corporation or any Subsidiary or the right to remain as a director of Corporation or a member of any Advisory Committee, as the case may be, nor will it +interfere in any way with the right of Corporation or a Subsidiary to terminate such person’s employment or to remove such person as an Advisor or as a director at any time for any reason or for no reason, with or without cause. +(d) Termination Of Employment . The terms and conditions under which an Award may be exercised or will continue to Vest, if +at all, after a Participant’s termination of employment or service as an Advisor or as a Non-Employee Director will be determined by the Committee and specified in the applicable Award Agreement. +(e) Change in Control . The Committee, in its discretion, may provide in any Award Agreement that in the event of a Change +in Control of the Corporation: +(i) All, or a specified portion of, Awards requiring exercise will become fully and +immediately exercisable, notwithstanding any other limitations on exercise; +(ii) All, or a specified portion of, Awards +subject to Restrictions will become fully Vested; and +Table of Contents +Exhibit A +(iii) All, or a specified portion of, Awards subject to Performance Goals will be deemed to have been fully earned. +The Committee, in its discretion, may include Change in Control provisions in some Award Agreements and not in others, may include different +Change in Control provisions in different Award Agreements, and may include Change in Control provisions for some Awards or some Participants and not for others. +(f) Service Periods . At the time of granting Awards, the Committee may specify, by resolution or in the Award Agreement, +the period or periods of service performed or to be performed by the Participant in connection with the grant of the Award. +6.6 Tax Withholding . +(a) General . Corporation will have the right to deduct from any settlement, including +the delivery or Vesting of Shares, made under the Plan any federal, state, or local taxes of any kind required by law to be withheld with respect to such payments or to take such other action as may be necessary in the opinion of Corporation to +satisfy all obligations for the payment of such taxes. The recipient of any payment or distribution under the Plan will make arrangements satisfactory to Corporation for the satisfaction of any such withholding tax obligations. Corporation will not +be required to make any such payment or distribution under the Plan until such obligations are satisfied. +(b) Stock Withholding . The Committee, in its sole discretion, may permit a Participant +to satisfy all or a part of the withholding tax obligations incident to the settlement of an Award involving payment or delivery of Shares to the Participant by having Corporation withhold a portion of the Shares that would otherwise be issuable to +the Participant. Such Shares will be valued based on their Fair Market Value on the date the tax withholding is required to be made. Any stock withholding with respect to a Reporting Person will be subject to such limitations as the Committee may +impose to comply with the requirements of the Exchange Act. Notwithstanding the foregoing, Reporting Persons shall be permitted to elect to satisfy all or a portion of the withholding tax obligations incident to the settlement of an Award involving +payment or delivery of Shares to such Participant by having Corporation withhold a portion of the Shares that would otherwise be issuable to the Participant. +6.7 Annulment of Awards . Any Award Agreement may provide that the grant of an Award +payable in cash is provisional until cash is paid in settlement thereof or that grant of an Award payable in Shares is provisional until the Participant becomes entitled to the Shares in settlement thereof. In the event the employment (or service as +an Advisor or membership on the Board) of a Participant is terminated for cause (as defined below), any Award that is provisional will be annulled as of the date of such termination for cause. For the purpose of this Section 6.7, the term +“for cause” has the meaning set forth in the Participant’s employment agreement, if any, or otherwise means any discharge (or removal) for material or flagrant violation of the policies and procedures of Corporation or for other job +performance or conduct which is materially detrimental to the best interests of Corporation, as determined by the Committee. +6.8 Engaging in Competition With Corporation . Any Award Agreement may provide that, if a +Participant terminates employment with Corporation or a Subsidiary for any reason whatsoever, and within 18 months after the date thereof accepts employment with any competitor of (or otherwise engages in competition with) Corporation, the +Committee, in its sole discretion, may require such Participant to return to Corporation the economic value of any Award that is realized or obtained (measured at the date of exercise, Vesting, or payment) by such Participant at any time during the +period beginning on the date that is six months prior to the date of such Participant’s termination of employment with Corporation. +ARTICLE 7 +OPTIONS +7.1 Types of Options . Options granted under the Plan may be in the form of +Incentive Stock Options or Nonqualified Options. The grant of each Option and the Award Agreement governing each Option will identify the Option as an ISO or an NQSO. In the event the Code is amended to provide for +tax-favored forms of stock options other than or in addition to Incentive Stock Options, the Committee may grant Options under the Plan meeting the requirements of such forms of options. +Table of Contents +Exhibit A +7.2 General . Options will be subject to the terms and conditions set forth in Article 6 +and this Article 7 and may contain such additional terms and conditions, not inconsistent with the express provisions of the Plan, as the Committee (or the Board with respect to Awards to Non-Employee +Directors) deems desirable. +7.3 Option Price . Each Award Agreement for Options will +state the option exercise price per Share of Common Stock purchasable under the Option, which will not be less than 100 percent (100%) of the Fair Market Value of a Share on the date of grant for all Options (ISOs or NQSOs); provided, however, +that in the case of any ISO granted to a Ten Percent Shareholder, the option exercise price per Share shall not be less than 110 percent (110%) of the Fair Market Value of a Share on the date of grant +7.4 Option Term . The Award Agreement for each Option will specify the term of each +Option, which shall have a specified period during which the Option may be exercised which is no longer than ten years, as determined by the Committee. +7.5 Time of Exercise . The Award Agreement for each Option will specify, as determined by +the Committee: +(a) The time or times when the Option will become exercisable and whether +the Option will become exercisable in full or in graduated amounts over a period specified in the Award Agreement; +(b) Such other terms, conditions, and restrictions as to when the Option may be exercised as +determined by the Committee; and +(c) The extent, if any, to which the Option will remain +exercisable after the Participant ceases to be an employee, Advisor, or director of Corporation or a Subsidiary. +An Award Agreement for +an Option may, in the discretion of the Committee, provide whether, and to what extent, the Option will become immediately and fully exercisable (i) in the event of the death, Disability, or Retirement of the Participant, or (ii) upon the +occurrence of a Change in Control of Corporation. +7.6 Method of Exercise . The Award +Agreement for each Option will specify the method or methods of payment acceptable upon exercise of an Option. An Award Agreement may provide that the option price is payable in full in cash or, at the discretion of the Committee: +(a) In previously acquired Shares (including Restricted Shares); +(b) By surrendering outstanding Awards under the Plan denominated in Shares or in Share-equivalent units; +(c) By delivery (in a form approved by the Committee) of an irrevocable direction to a securities broker acceptable to the +Committee: +(i) To sell Shares subject to the Option and to deliver all or a part of the sales proceeds to Corporation +in payment of all or a part of the option price and withholding taxes due; or +(ii) To pledge Shares subject to the Option to +the broker as security for a loan and to deliver all or a part of the loan proceeds to Corporation in payment of all or a part of the option price and withholding taxes due; or +(d) In any combination of the foregoing or in any other form approved by the Committee. +If Restricted Shares are surrendered in full or partial payment of an Option price, a corresponding number of the Shares issued upon exercise +of the Option will be Restricted Shares subject to the same Restrictions as the surrendered Restricted Shares. +Table of Contents +Exhibit A +7.7 Special Rules for Incentive Stock Options . In the case of an Option designated as an +Incentive Stock Option, the terms of the Option and the Award Agreement must be in conformance with the statutory and regulatory requirements specified in Section 422 of the Code, as in effect on the date such ISO is granted. ISOs may be +granted only to employees of Corporation or a Subsidiary. ISOs may not be granted under the Plan after February 21, 2027, unless the ten-year limitation of Section 422(b)(2) of the Code is removed or +extended. +7.8 Restricted Shares . In the discretion of the Committee, the Shares +issuable upon exercise of an Option may be Restricted Shares if so provided in the Award Agreement. +7.9 Limitation on Number of Shares Subject to Options . In no event may Options for more +than 500,000 Shares be granted to any individual under the Plan during any fiscal year period. +ARTICLE 8 +STOCK APPRECIATION RIGHTS +8.1 General . Stock Appreciation Rights will be subject to the terms and conditions set +forth in Article 6 and this Article 8 and may contain such additional terms and conditions, not inconsistent with the express terms of the Plan, as the Committee (or the Board with respect to Awards to +Non-Employee Directors) deems desirable. +8.2 Nature of Stock Appreciation Right . A Stock Appreciation Right is an Award entitling +a Participant to receive an amount equal to the excess (or if the Committee determines at the time of grant, a portion of the excess) of the Fair Market Value of a Share of Common Stock on the date of exercise of the SAR over the base price, as +described below, on the date of grant of the SAR, multiplied by the number of Shares with respect to which the SAR has been exercised. The base price will be designated by the Committee in the Award Agreement for the SAR and shall be not less than +100 percent (100%) of the Fair Market Value of a Share on the grant date of the SAR. +8.3 Exercise . A Stock Appreciation Right may be exercised by a Participant in accordance +with procedures established by the Committee. The Committee may also provide that an SAR will be automatically exercised on one or more specified dates or upon the satisfaction of one or more specified conditions. In the case of SARs granted to +Reporting Persons, exercise of the SAR will be limited by the Committee to the extent required to comply with the applicable requirements of Rule 16b-3 under the Exchange Act. +8.4 Term . The Award Agreement for each SAR shall have a specified period during which +the SAR may be exercised, which is no longer than ten years, as determined by the Committee. +8.5 Form of Payment . Payment upon exercise of a Stock Appreciation Right may be made in +cash, in installments, in Shares, or in any combination of the foregoing, or in any other form as the Committee determines. +8.6 Limitation on Number of Shares Subject to SARs . In no event may SARs for more than +500,000 Shares be granted to any individual under the Plan during any fiscal year period. +ARTICLE 9 +RESTRICTED AWARDS +9.1 Types of Restricted Awards . Restricted Awards granted under the Plan may be in the +form of either Restricted Shares or Restricted Units. +(a) Restricted Shares . A Restricted Share is an Award of Shares +transferred to a Participant subject to such terms and conditions as the Committee deems appropriate, including, without limitation, restrictions on the sale, assignment, transfer, or other disposition of such Restricted Shares and may include a +requirement that the Participant forfeit such Restricted +Table of Contents +Exhibit A +Shares back to Corporation upon termination of Participant’s employment (or service as an Advisor or Non-Employee +Director) for specified reasons within a specified period of time or upon other conditions, as set forth in the Award Agreement for such Restricted Shares. Each Participant receiving a Restricted Share will be issued a stock certificate in respect +of such Shares, registered in the name of such Participant, or such certificate, registered in the name of such Participant, will be placed in a restricted stock account (including an electronic account) with a transfer agent. If such certificate is +issued to the Participant, the Participant will be required to execute a stock power in blank with respect to the Shares evidenced by such certificate, and such certificate and the stock power will be held in custody by Corporation until the +Restrictions thereon will have lapsed. +(b) Restricted Units . A Restricted Unit is an Award to receive a Share or the +Fair Market Value of a Share at some date in the future, which is granted to a Participant subject to such terms and conditions as the Committee deems appropriate, and may include a requirement that the Participant forfeit such Restricted Units upon +termination of Participant’s employment (or service as an Advisor or Non-Employee Director) for specified reasons within a specified period of time or upon other conditions, as set forth in the Award +Agreement for such Restricted Units. +9.2 General . Restricted Awards will be subject +to the terms and conditions of Article 6 and this Article 9 and may contain such additional terms and conditions, not inconsistent with the express provisions of the Plan, as the Committee (or the Board with respect to Awards to Non-Employee Directors) deems desirable. +9.3 Restriction Period . Restricted Awards will provide that such Awards, and the Shares +subject to such Awards, may not be transferred, and may provide that, in order for a Participant to Vest in such Awards, the Participant must remain in the employment (or remain as an Advisor or Non-Employee +Director) of Corporation or its Subsidiaries, subject to relief for reasons specified in the Award Agreement, for a period commencing on the date of the Award and ending on such later date or dates as the Committee designates at the time of the +Award (the “Restriction Period”). During the Restriction Period, a Participant may not sell, assign, transfer, pledge, encumber, or otherwise dispose of Shares received under or governed by a Restricted Award grant. The Committee, in its +sole discretion, may provide for the lapse of restrictions in installments during the Restriction Period; provided that a Restricted Award with a Restriction Period based solely on continued employment or passage of time may not permit the lapse of +all restrictions over a total period less than three (3) years (subject to three (3) one year installments) after the date of the Award, except in the case of (a) Restricted Awards to +Non-Employee Directors or Advisors, (b) Restricted Awards granted upon the commencement of a Participant’s employment with the Corporation, (c) Restricted Awards which, in the aggregate, cover +not more than 5% of the number of Shares available for Awards under the Plan under Section 4.2.2(a) (determined without regard to any other limits set forth in Section 4.2.2(b) or (c)), or (d) restrictions which lapse (i) upon the death or +Disability of the Participant, (ii) upon the retirement of the Participant, (iii) as may be required pursuant to an employment agreement between the Participant and the Corporation or (iv) upon a Change in Control. Upon expiration of +the applicable Restriction Period (or lapse of Restrictions during the Restriction Period where the Restrictions lapse in installments) the Participant shall be entitled to settlement of the Restricted Award or portion thereof, as the case may be. +Although Restricted Awards will usually Vest based on continued employment (or service as an Advisor or Non-Employee Director) and Performance Awards under Article 10 shall usually Vest based on attainment of +Performance Goals, the Committee, in its discretion, may condition Vesting of Restricted Awards on attainment of Performance Goals as well as continued employment (or service as an Advisor or Non-Employee +Director). In such case, the Restriction Period for such a Restricted Award will include the period prior to satisfaction of the Performance Goals. +9.4 Forfeiture . If a Participant ceases to be an employee, Advisor of Corporation or a +Subsidiary or Non-Employee Director during the Restriction Period for any reason other than reasons which may be specified in an Award Agreement (such as death, Disability, or Retirement), the Award Agreement +may require that all non-Vested Restricted Awards previously granted to the Participant be forfeited and returned to Corporation. +9.5 Settlement of Restricted Awards . +(a) Restricted Shares . Upon Vesting of a Restricted Share Award, the legend on such Shares will be removed and the +Participant’s stock power, if any, will be returned and the Shares will no longer be Restricted Shares. The Committee +Table of Contents +Exhibit A +may also, in its discretion, permit a Participant to receive, in lieu of unrestricted Shares at the conclusion of the Restriction Period, payment in cash, +installments, or in any other manner or combination of such methods as the Committee, in its sole discretion, determines. +(b) Restricted Units . Upon Vesting of a Restricted Unit Award, a Participant will be entitled to receive payment for +Restricted Units in an amount equal to the aggregate Fair Market Value of the Shares covered by such Restricted Units at the expiration of the Applicable Restriction Period. Payment in settlement of a Restricted Unit will be made as soon as +practicable following the conclusion of the applicable Restriction Period in cash, in installments, in Shares equal to the number of Restricted Units, or in any other manner or combination of such methods as the Committee, in its sole discretion, +determines, subject to the applicable restrictions contained in Section 409A of the Code. +9.6 Rights as a Shareholder . A Participant will have, with respect to unforfeited Shares +received under a grant of Restricted Shares, all the rights of a shareholder of Corporation, including the right to vote the Shares and the right to receive any cash dividends. The right to receive cash dividends on Restricted Shares shall be +subject to the Restrictions applicable to the Restricted Shares. Stock dividends issued with respect to Restricted Shares will be treated as additional Shares covered by the grant of Restricted Shares and will also be subject to the same +Restrictions. +ARTICLE 10 +PERFORMANCE AWARDS +10.1 General . Performance Awards will be subject to the terms and conditions set forth +in Article 6 and this Article 10 and may contain such other terms and conditions not inconsistent with the express provisions of the Plan, as the Committee (or the Board with respect to Awards to Non-Employee +Directors) deems desirable. +10.2 Nature of Performance Awards . A Performance Award +is an Award of units (with each unit having a value equivalent to one Share) granted to a Participant subject to such terms and conditions as the Committee deems appropriate, including, without limitation, the requirement that the Participant +forfeit such Performance Award or a portion thereof in the event specified performance criteria are not met within a designated period of time. +10.3 Performance Cycles . For each Performance Award, the Committee will designate a +performance period (the “Performance Cycle”) with a duration of at least one (1) year, as may be determined by the Committee in its discretion within which specified Performance Goals are to be attained. There may be several +Performance Cycles in existence at any one time and the duration of Performance Cycles may differ from each other. +10.4 Performance Goals . The Committee will establish Performance Goals for each +Performance Cycle on the basis of such criteria and to accomplish such objectives as the Committee may from time to time select. Performance Goals may be based on performance criteria for Corporation, a Subsidiary, or an operating group, or based on +a Participant’s individual performance. Performance Goals may include objective and subjective criteria. During any Performance Cycle, the Committee may adjust the Performance Goals for such Performance Cycle as it deems equitable in +recognition of unusual or nonrecurring events affecting Corporation, changes in applicable tax laws or accounting principles, or such other factors as the Committee may determine. +10.5 Determination of Awards . As soon as practicable after the end of a Performance +Cycle, the Committee will determine the extent to which Performance Awards have been earned on the basis of performance in relation to the established Performance Goals. +10.6 Timing and Form of Payment . Settlement of earned Performance Awards will be made to +the Participant as soon as practicable after the expiration of the Performance Cycle and the Committee’s determination under Section 10.5, in the form of cash, installments, Shares, or any combination of the foregoing or in any other form +as the Committee determines. +Table of Contents +Exhibit A +10.7 Performance Goals for Executive Officers . The performance goals for Performance +Awards granted to executive officers of Corporation may relate to corporate performance, business unit performance, or a combination of both. +(a) Corporate performance goals will be based on financial performance goals related to the performance of Corporation as a whole +and may include one or more measures related to earnings, profitability, efficiency, or return to stockholders such as earnings per share, operating profit, stock price, costs of production, or other measures. +(b) Business unit performance goals will be based on a combination of financial goals and strategic goals related to the +performance of an identified business unit for which a Participant has responsibility. Strategic goals for a business unit may include one or a combination of objective factors relating to success in implementing strategic plans or initiatives, +introductory products, constructing facilities, or other identifiable objectives. Financial goals for a business unit may include the degree to which the business unit achieves one or more objective measures related to its revenues, earnings, +profitability, efficiency, operating profit, costs of production, or other measures. +(c) Any corporate or business unit goals +may be expressed as absolute amounts or as ratios or percentages. Success may be measured against various standards, including budget targets, improvement over prior periods, and performance relative to other companies, business units, or industry +groups. +10.8 Award Limitations . The maximum number of Shares issuable with respect +to Performance Awards granted to any individual executive officer may not exceed 150,000 Shares for any calendar year. +ARTICLE 11 +OTHER STOCK-BASED AND COMBINATION AWARDS +11.1 Other Stock-Based Awards . The Committee (or the Board with respect to Awards to Non-Employee Directors) may grant other Awards under the Plan pursuant to which Shares are or may in the future be acquired, or Awards denominated in or measured by Share equivalent units, including Awards valued +using measures other than the market value of Shares. Such Other Stock-Based Awards may be granted either alone, in addition to, or in tandem with, any other type of Award granted under the Plan. +11.2 Combination Awards . The Committee may also grant Awards under the Plan in tandem or +combination with other Awards or in exchange of Awards, or in tandem or combination with, or as alternatives to, grants or rights under any other employee plan of Corporation, including the plan of any acquired entity. No action authorized by this +section may reduce the amount of any existing benefits or change the terms and conditions thereof without the Participant’s consent. +ARTICLE 12 +DEFERRAL +ELECTIONS +The Committee may permit a Participant to elect to defer receipt of the payment of cash or the delivery of Shares that +would otherwise be due to such Participant by virtue of the exercise, earn-out, or Vesting of an Award made under the Plan. If any such election is permitted, the Committee will establish rules and procedures +for such payment deferrals, including, but not limited to: (a) payment or crediting of reasonable interest on such deferred amounts credited in cash or (b) the payment or crediting of dividend equivalents in respect of deferrals credited +in Share equivalent units. Such deferrals, if permitted, shall to the extent possible, comply with Section 409A of the Code and the regulations and other guidance promulgated thereunder. +ARTICLE 13 +ADJUSTMENTS +UPON CHANGES IN CAPITALIZATION, ETC. +13.1 Plan Does Not Restrict Corporation . +The existence of the Plan and the Awards granted hereunder will not affect or restrict in any way the right or power of the Board or the shareholders of Corporation to make or authorize any +Table of Contents +Exhibit A +adjustment, recapitalization, reorganization, or other change in Corporation’s capital structure or its business, any merger or consolidation of the +Corporation, any issue of bonds, debentures, preferred or prior preference stocks ahead of or affecting Corporation’s capital stock or the rights thereof, the dissolution or liquidation of Corporation or any sale or transfer of all or any part +of its assets or business, or any other corporate act or proceeding. +13.2 Adjustments +by the Committee . In the event of any change in capitalization affecting the Common Stock of Corporation, such as a stock dividend, stock split, recapitalization, merger, consolidation, split-up, +combination or exchange of shares or other form of reorganization, or any other change affecting the Common Stock, such proportionate adjustments, if any, as the Committee, in its sole discretion, may deem appropriate to reflect such change, will be +made with respect to the aggregate number of Shares for which Awards in respect thereof may be granted under the Plan, the maximum number of Shares which may be sold or awarded to any Participant, the number of Shares covered by each outstanding +Award, and the price per Share in respect of outstanding Awards. The Committee may also make such adjustments in the number of Shares covered by, and price or other value of any outstanding Awards in the event of a +spin-off or other distribution (other than normal cash dividends), of Corporation assets to shareholders. +ARTICLE 14 +AMENDMENT +AND TERMINATION +The Board may amend, suspend, or terminate the Plan or any portion of the Plan at any time; provided that no such +action may be taken without shareholder approval if (i) such action would increase the number of shares subject to the Plan; (ii) such action would result in the repricing, replacement or repurchase of out-of-the money Options, Stock Appreciation Rights or other Awards; (iii) such action would result in an Award being fully Vested, exercisable or earned in the event of a Change in Control prior to the +consummation of the Change in Control; or (iv) such approval is required by applicable law or regulation or the applicable requirements of a stock exchange or +over-the-counter stock trading system; provided further that the Board may, in its discretion, determine to submit any other changes to the Plan to the shareholders for +approval; provided further that no amendment, suspension or termination of the Plan may materially and adversely affect the rights of a Participant under any outstanding Award without such Participant’s consent, unless such action is necessary +to ensure a deduction under Section 162(m) of the Code or to avoid the additional tax described in Section 409A of the Code. +ARTICLE 15 +MISCELLANEOUS +15.1 Unfunded Plan . The Plan will be unfunded and Corporation will not be required to +segregate any assets that may at any time be represented by Awards under the Plan. Any liability of Corporation to any person with respect to any Award under the Plan will be based solely upon any contractual obligations that may be effected +pursuant to the Plan. No such obligation of Corporation will be deemed to be secured by any pledge of, or other encumbrance on, any property of Corporation. +15.2 Payments to Trust . The Committee is authorized (but has no obligation) to cause to +be established a trust agreement or several trust agreements whereunder the Committee may make payments of amounts due or to become due to Participants in the Plan. +15.3 Other Corporation Benefit and Compensation Programs . Payments and other benefits +received by a Participant under an Award made pursuant to the Plan will not be deemed a part of a Participant’s regular, recurring compensation for purposes of the termination, indemnity or severance pay law of any state or country and shall +not be included in, or have any effect on, the determination of benefits under any other employee benefit plan or similar arrangement provided by Corporation or a Subsidiary unless expressly so provided by such other plan or arrangements, or except +where the Committee expressly determines that an Award or portion of an Award should be included to accurately reflect competitive compensation practices or to recognize that an Award has been made in lieu of a portion of cash compensation. Awards +under the Plan may be made in combination with or in tandem with, or as alternatives to, grants, awards, or payments under any other Corporation or Subsidiary plans, arrangements, or programs. The Plan notwithstanding, Corporation or any Subsidiary +may adopt such other +Table of Contents +Exhibit A +compensation programs and additional compensation arrangements as it deems necessary to attract, retain, and reward employees and directors for their service +with Corporation and its Subsidiaries. +15.4 Securities Law Restrictions . No Shares +may be issued under the Plan unless counsel for Corporation is satisfied that such issuance will be in compliance with applicable federal and state securities laws. Certificates for Shares delivered under the Plan may be subject to such +stop-transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations, and other requirements of the Securities and Exchange Commission, any stock exchange upon which the Common Stock is then listed, and any +applicable federal or state securities law. The Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions. +15.5 Governing Law . Except with respect to references to the Code or federal securities +laws, the Plan and all actions taken thereunder shall be governed by and construed in accordance with the laws of the state of Delaware. +ARTICLE 16 +SHAREHOLDER +APPROVAL +The Plan, as amended and restated, is expressly subject to the approval of the Plan by the shareholders at the 2017 annual +meeting of Corporation’s shareholders. +Table of Contents +OraSure Technologies, Inc. 220 EAST FIRST STREET BETHLEHEM, PA 18015 SCAN TO +VIEW MATERIALS & VOTE +VOTE BY INTERNET +Before The Meeting - Go to www.proxyvote.com or scan the QR Barcode above +Use the Internet to +transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your +records and to create an electronic voting instruction form. +During The Meeting - Go to www.virtualshareholdermeeting.com/OSUR2017 +You may attend the Meeting via the Internet and vote during the Meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions. +VOTE BY PHONE - 1-800-690-6903 +Use any +touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the meeting date. Have your proxy card in hand when you call and then follow the instructions. +VOTE BY MAIL +Mark, sign and date your proxy card and return it in the postage-paid envelope we +have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. +TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: +E17063-P86335 +KEEP THIS PORTION FOR YOUR RECORDS +DETACH AND RETURN THIS PORTION ONLY +THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. +ORASURE TECHNOLOGIES, INC. For All Withhold All For All Except The Board of Directors recommends you vote FOR each of the following nominees: 1. ELECTION OF +DIRECTORS Class II (Term Expiring 2020) Nominees: +01) Ronny B. Lancaster 02) Ronald H. Spair +To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below. +The Board of Directors recommends you vote FOR Items 2, 3 and 5. +For Against +Abstain +2. Ratification of Appointment of KPMG LLP as the Independent Registered Public +Accounting Firm for Fiscal Year 2017. +3. Advisory (Non-Binding) Vote to Approve Executive Compensation. +The Board of Directors recommends you vote for Stockholder approval annually or “1 year” for item 4. +3 Years 2 Years 1 Year Abstain 4. Advisory (Non-Binding) Vote on Frequency of Future Advisory Votes on Executive Compensation. For Against +Abstain +5. Approval of Amended and Restated Stock Award Plan. Mark Here for Address Changes or Comments +SEE REVERSE NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title +as such. +Signature [PLEASE SIGN WITHIN BOX] +Date +Signature (Joint Owners) +Date +V.1.1 +Table of Contents +OraSure Technologies, Inc. +OraSure Technologies, +Inc. +2017 Annual Meeting of Stockholders +Tuesday, May 16, 2017 +Important notice regarding the Internet availability of proxy materials for the Annual Meeting of Stockholders. +The Notice and Proxy Statement and 2016 Annual Report to Stockholders are available at www.proxyvote.com. +E17064-P86335 +OraSure Technologies, Inc. +PROXY +2017 Annual Meeting of Stockholders +PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS +The undersigned hereby appoints Jack E. +Jerrett and Mark L. Kuna, and each of them, proxies with full power of substitution, to vote all of the shares which the undersigned is entitled to vote at the 2017 Annual Meeting of Stockholders of OraSure Technologies, Inc. (the +“Company”), on Tuesday, May 16, 2017, at 10:00 a.m. Eastern Time, and at any adjournment or adjournments thereof, with all the powers the undersigned would possess if personally present, with respect to the matters listed on the +reverse side. +The shares represented by this Proxy, if properly executed, will be voted (i) FOR the election of the nominees listed on the reverse side as +directors, (ii) FOR the ratification of the appointment of KPMG LLP as the Company’s independent registered public accounting firm for 2017, (iii) FOR approval of the compensation of the Company’s named executive officers, +(IV) FOR future advisory (non-binding) votes to approve executive compensation to take place each year and (V) FOR approval of the Amended and Restated Stock Award Plan. If any other business +properly comes before the meeting, the proxies named above will have discretionary authority to vote thereon in accordance with their best judgment. +PLEASE MARK, +DATE, SIGN AND RETURN THE PROXY CARD PROMPTLY. +Address Changes/Comments: +(If +you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.) +(Continued and to be marked, dated and signed, on the other side) +V.1.1 \ No newline at end of file diff --git a/raw/proxies/0001116463/0001193125-17-111753/proxy_rpt.txt b/raw/proxies/0001116463/0001193125-17-111753/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..9e1aa39f8489e311a8bcd1f6da7fd78c0eeb7889 --- /dev/null +++ b/raw/proxies/0001116463/0001193125-17-111753/proxy_rpt.txt @@ -0,0 +1,10 @@ +TRANSACTIONS WITH RELATED PERSONS +Since January 1, 2016, +there have been no transactions with related persons that would require disclosure in this Proxy Statement. The Audit Committee is required to review and approve in advance all transactions with related persons involving the Company. The Audit +Committee may approve a related party transaction if the transaction is on terms comparable to those that could be obtained in arms’ length dealings with an unrelated third +26 +Table of Contents +party. The Audit Committee also reviews any public disclosures of a related party transaction contained in our SEC filings. These responsibilities are described in the Audit Committee’s +charter, a copy of which is available on our website at www.orasure.com . +Information regarding employment and severance agreements between our executive officers and the Company is set forth in the Section +entitled, “Employment Agreements and Potential Payments Upon Termination or Change of Control,” in this Proxy Statement. \ No newline at end of file diff --git a/raw/proxies/0001116463/0001193125-22-098891/proxy.txt b/raw/proxies/0001116463/0001193125-22-098891/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..5fafa223bf7c449fcf08d7d53b6d85345ddd38d1 --- /dev/null +++ b/raw/proxies/0001116463/0001193125-22-098891/proxy.txt @@ -0,0 +1,5700 @@ +DEF 14A +1 +d330681ddef14a.htm +DEF 14A +DEF 14A +Table of Contents +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Proxy Statement Pursuant to Section 14(a) +of the Securities Exchange Act of 1934 +(Amendment No. ) +Filed by the Registrant ☒ Filed by a Party other than the +Registrant ☐ +Check the appropriate box: +☐ +PreliminaryProxy Statement +☐ +Confidential,for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +☒ +DefinitiveProxy Statement +☐ +DefinitiveAdditional Materials +☐ +SolicitingMaterial Pursuant to +§240.14a-12 +OraSure Technologies, Inc. +(Name of Registrant as Specified In Its +Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +☒ +No  fee required. +☐ +Fee paid previously with preliminary materials +☐ +Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules +14a-6(i)(1) and 0-11 +Table of Contents +2022 +Proxy Statement +Notice of Annual Meeting of +Stockholders +Tuesday, +May 17, 2022 ● 10:00 a.m. (Eastern Time) +Table of Contents +Letter to the Stockholders +Nancy J. Gagliano, M.D., M.B.A +Interim Chief Executive +Officer +April 7, 2022 +Dear Fellow Stockholders: +You are cordially invited to attend the 2022 Annual Meeting of Stockholders (the “Annual Meeting”) of OraSure Technologies, +Inc. (the “Company”) to be held on Tuesday, May 17, 2022 at 10:00 a.m. Eastern Time . Once again, this year’s Annual Meeting will be a completely virtual meeting, conducted as a live webcast. You +will be able to attend the Annual Meeting online, vote your shares electronically if you wish, and submit your questions during the meeting by visiting www.virtualshareholdermeeting.com/OSUR2022 . +Pursuant to the Securities and Exchange +Commission (“SEC”) rule allowing companies to furnish proxy materials to their stockholders over the internet, a Notice of Internet Availability of Proxy Materials (the “Notice”) was sent to stockholders on or about April 7, +2022. The Notice contains information on how to access copies of the proxy materials and vote your shares. +At the Annual Meeting, you will be asked to (i) elect two Class I Directors to serve on the Board of Directors until the +Annual Meeting of Stockholders in 2025; (ii) ratify the appointment of KPMG LLP as our independent registered public accounting firm for the 2022 fiscal year; (iii) approve, by an advisory (non-binding) +vote, the compensation of the Company’s named executive officers as disclosed in the proxy materials; (iv) approve an amendment and restatement of the OraSure Technologies, Inc. Stock Award Plan to increase the number of shares to be +authorized for grant under the Plan by 1,500,000 shares; and (v) transact such other business as may properly come before the meeting, and any adjournment(s) or postponement(s) thereof. +The Board of Directors has approved the nominees +for Class I Directors and recommends that you vote FOR their election to the Board of Directors. In addition, the Board of Directors recommends that you vote FOR the ratification of KPMG LLP’s appointment, FOR the +approval of the Company’s executive compensation, and FOR the approval of the amendment and restatement of the Company’s Stock Award Plan. +Your vote is very important, regardless of the number of shares you own . Whether or not you plan to attend the Annual +Meeting online, we urge you to submit your vote as soon as possible . You will have the option to vote by telephone, via the internet, or by completing, signing, dating and returning a paper proxy card. Additional details on these options +can be found in the Notice sent to you and in the other proxy materials. You may, of course, attend the Annual Meeting online and vote your shares during the meeting regardless of whether you have previously voted by phone, the internet or mail. +Thank you for your cooperation and your ongoing support of, and +continued interest in, OraSure Technologies, Inc. +Sincerely yours, +Nancy J. Gagliano, M.D., M.B.A. +Interim Chief Executive Officer +Table of Contents +NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS +OF ORASURE TECHNOLOGIES, INC. +DATE AND TIME +Tuesday May 17, 2022 +10:00 a.m. (Eastern Time) +To be held virtually by visiting +www.virtualshareholdermeeting.com/OSUR2022 +ITEMS OF BUSINESS +The 2022 Annual Meeting of Stockholders will be held for the following purposes: +• +To elect two (2) Class I Directors, each to serve for a term expiring at the Company’s Annual Meeting of +Stockholders in 2025; +• +To ratify the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the year +ending December 31, 2022; +• +To approve, by an advisory (non-binding) vote, the compensation of the +Company’s named executive officers as disclosed in the Proxy Statement accompanying this Notice; +• +To approve an amendment and restatement of the Company’s Stock Award Plan to increase the number of shares of +Common Stock authorized to be granted under the Plan; and +• +To consider such other business as may properly come before the meeting, and any adjournment(s) or postponement(s) +thereof. +HOW TO VOTE +Via the Internet . Go to +www.proxyvote.com to vote your shares online prior to the Annual Meeting. Have the control number that is printed in your Notice of Internet Availability of Proxy Materials or Proxy Card available and follow the +instructions. You may also vote online during the Annual Meeting by going to www.virtualshareholdermeeting.com/OSUR2022 and following the instructions. +By Phone . +Call the toll-free number on your Notice of Internet Availability of Proxy Materials or Proxy Card and follow the prompts. +By Mail . You can vote by mail by requesting a paper copy of the materials, +which will include a Proxy Card. Please review your Notice of Internet Availability of Proxy Materials for instructions on how to request a paper copy of the materials. Mark, sign and date your Proxy Card and return it as indicated on the Proxy +Card. +Who Can Vote : Only holders of shares of the Company’s Common Stock of record at the close of business on March 23, 2022 will +be entitled to vote at the Annual Meeting of Stockholders and any adjournment(s) or postponement(s) thereof. Additional information is included in the Proxy Statement accompanying this Notice. +A complete list of stockholders entitled to vote at the meeting will +be available for examination by any stockholder for any purpose germane to the meeting beginning 10 days before the meeting at the Company’s headquarters at 220 East First Street, Bethlehem, PA 18015 during ordinary business hours. In +addition, such list will be available for inspection during the meeting in the virtual meeting room at: +www.virtualshareholdermeeting.com/OSUR2022. +By Order of the Board of Directors, +Agnieszka M. Gallagher +Secretary +April 7, 2022 +Table of Contents +Proxy Statement Table of Contents +Proxy +Statement Summary +1 +2022 Annual Meeting Information +1 +Proposals for Stockholder Consideration +1 +2021 Performance Highlights +3 +Most Significant Compensation Components +4 +Key Features of Our Executive Compensation Program +4 +Questions +and Answers About the 2022 Annual Meeting and Voting +5 +Why Did I Receive These Proxy Materials? +5 +What is a Proxy +5 +What Is the Record Date and What Does It Mean +5 +What Is the Difference Between a Stockholder of Record and a Stockholder Who Holds Stock in +Street Name? +6 +How Can I Vote My Shares for the Annual Meeting? +6 +How Will My Shares Be Voted If I Send In a Proxy? +6 +Will My Shares Be Voted If I Do Not Provide My Proxy +7 +How Many Shares Must Be Present to Hold the Annual Meeting? +7 +How Can I Revoke a Proxy? +7 +What Items Will Be Voted On At The Annual Meeting +7 +Who Will Pay The Cost of This Proxy Solicitation? +7 +How Can I Participate In The Annual Meeting? +8 +What If I Have Technical Difficulties or Trouble Viewing The Virtual +Meeting? +8 +Are Votes Confidential? +8 +Who Counts The Votes +8 +May Stockholders Ask Questions At The Annual Meeting? +8 +Stock +Ownership of Certain Beneficial Owners and Management +9 +Corporate +Governance +10 +Board Responsibilities, Operation and Composition +10 +Governance Guidelines and Code of Conduct +11 +Environmental, Social and Governance Issues +11 +Independent Board Chairman +13 +Director Independence +13 +Oversight of Risk Management +13 +Annual Meeting Attendance and Stockholder Communications +14 +Committees of the Board +14 +Nomination of Directors +16 +Director Qualifications +16 +Insider Trading +17 +Prohibition Against Short Sales, Hedging and Pledging +18 +Stock Ownership and Retention Guidelines +18 +Audit +Committee Matters +19 +Report of the Audit Committee For the Year Ended December 31, 2021 +19 +Audit Fees; Audit Related Fees; Tax Fees; All Other Fees +20 +Pre-Approval Procedures +20 +Table of Contents +Compensation +Committee Matters +20 +Compensation Processes and Procedures +20 +Annual Performance Evaluations +20 +Role of The Compensation Committee +21 +Role of The CEO +21 +Role of The Compensation Consultant +21 +Compensation Committee Interlocks and Insider Participation +22 +Compensation Committee Report +22 +Executive +Officers +23 +Transactions +With Related Persons +25 +Compensation Discussion and Analysis – Table of Contents +26 +Compensation Tables – Table of Contents +26 +Compensation +Discussion and Analysis +27 +Executive Summary +27 +Employment +Agreements and Potential Payments Upon Termination or Change of Control +53 +Stock +Award Plan Information +58 +Director +Compensation +58 +Annual Fees +58 +Initial and Annual Equity Awards +59 +Equity Award Terms +59 +Deferred Compensation +59 +Director Compensation During 2021 +60 +Proposals +Requiring Your Vote +61 +Proposal No. 1 – Election of Directors +61 +Background +61 +Vote Required; Board Recommendation +67 +Proposal No. +2 – Ratification of Appointment of Independent Registered Public +67 +Background +67 +Vote Required; Board Recommendation +67 +Proposal No. +3 – Advisory (Non-Binding) Vote to Approve Executive Compensation +67 +Background +67 +Compensation Program Features +68 +Vote Required; Board Recommendation +68 +Proposal No. 4 – Amendment and Restatement of Stock Award +Plan +68 +Amendment and Restatement of Stock Award Plan +68 +Summary of Amended and Restated Stock Award Plan +69 +Delinquent +Section 16(a) Reports +73 +Annual +Report +74 +Deadline +For Stockholder Proposals +74 +Table of Contents +PROXY STATEMENT SUMMARY +We are providing these proxy materials to stockholders of OraSure Technologies, Inc., a +Delaware corporation (as used herein, “we,” “us,” “our”, “OraSure” or the “Company”), in connection with the Company’s solicitation of proxies (each, a “Proxy”) for use at the Annual +Meeting of Stockholders to be held on May 17, 2022 at 10:00 a.m. Eastern Time, and at any adjournment(s) or postponement(s) thereof (the “Annual Meeting”). +As a stockholder, you are invited to participate in the Annual Meeting and are requested to vote on the matters described in this +Proxy Statement. The Annual Meeting +will be conducted in a completely virtual manner through a live webcast that you can access online by going to +www.virtualshareholdermeeting.com/OSUR2022 . The webcast will not include a presentation by management. A question and answer session will +be provided at the Annual Meeting only for questions that are germane to the matters being discussed and voted on at the meeting. +This summary highlights information contained elsewhere in this Proxy Statement, but does not contain all of the information that you +should consider. You should read the entire Proxy Statement carefully before voting your shares . +2022 ANNUAL MEETING INFORMATION +• +Date and Time: Tuesday, May 17, 2022 at 10:00 a.m. (ET) +• +Location: Online by visiting www.virtualshareholdermeeting.com/OSUR2022 +• +Record Date: March 23, 2022 +PROPOSALS FOR STOCKHOLDER CONSIDERATION +Proposals +Board +Recommendation +Page Reference +for More +Detail +1.) +Election of two Class I Directors +FOR EACH NOMINEE +61 +2.) +Ratification of Appointment of Independent +Registered Public Accounting Firm for 2022 +FOR +67 +3.) +Advisory +(Non-Binding) Vote to Approve +Executive Compensation +FOR +67 +4.) +Approval of Amendment and Restatement of our Stock Award Plan To Increase the Shares +Authorized for Issuance Thereunder +FOR +68 +Proposal No. 1 – Election of Directors +The table below provides summary information about each of our nominees for Class I Directors, whose new terms will expire at the +2025 Annual Meeting of Stockholders. The Board of Directors (the “Board”) is recommending that stockholders vote for each Director nominee. +Committee +Memberships 1 +Other +Public +Boards +Name and Principal Occupation +Age +Director +Since +Independent +AC +CC +N& +CG +Eamonn P. Hobbs +President of Hobbs Medical Ventures, LLC +63 +2016 +Yes +√ +C +No +David J. Shulkin, M.D. +President and Chief Executive Officer, Shulkin Solutions, Inc. +62 +2020 +Yes +√ +√ +Yes +1 AC = Audit Committee; CC = Compensation Committee; N&CG = Nominating & +Corporate Governance Committee; C = Chairman; √ = Member. +1 +Table of Contents +Proposal No. 2 – Ratification of Appointment of Independent +Registered Public Accounting Firm +Our Audit Committee has selected KPMG LLP (“KPMG”) to be our independent +registered public accounting firm for the 2022 fiscal year. The Board believes KPMG is well qualified to serve in this capacity +and is recommending that the engagement of KPMG be ratified by our stockholders. The Board is recommending that stockholders vote for the appointment of KPMG as provided above. +Proposal +No. 3 – Advisory (Non-Binding) Vote to Approve Executive Compensation +Our compensation program is designed to focus and reward our executives for balancing both short and long-term priorities. To fulfill +this mission, we have adopted a pay-for-performance philosophy that forms the foundation for executive compensation decisions made by our Board and the Compensation +Committee of the Board (the “Compensation Committee”). +The Compensation Discussion and Analysis portion of this Proxy +Statement (the “CD&A”) contains a detailed description of our executive compensation philosophy and program, the compensation decisions the Board and Compensation Committee have made under that program and the factors considered in +making those decisions, focusing on the compensation of our named executive officers (“NEOs”) for the year ended December 31, 2021, who were: +Name +Position +Stephen S. Tang, Ph.D. 1 +Former President and Chief Executive Officer +Scott Gleason 2 +Interim Chief Financial Officer, Senior +Vice President Corporate Communications & Investor Relations +Roberto Cuca 3 +Former Chief Financial Officer +Agnieszka +Gallagher +Executive Vice President, General Counsel and Chief Compliance Officer +Jack E. Jerrett 4 +Former Senior Vice President, General Counsel and Chief Compliance Officer +Kathleen G. +Weber +President of Molecular Solutions +1 +Dr. Tang served until March 31, 2022. Effective April 1, 2022, Nancy J. Gagliano, M.D., M.B.A. was +appointed to replace Dr. Tang as the Company’s Interim Chief Executive Officer. Because Dr. Gagliano did not become an executive officer until after December 31, 2021, she is not considered an NEO and her compensation is not +reported herein. +2 +Mr. Gleason joined the Company in May 2021 as the Senior Vice President Corporate Communications & +Investor Relations and assumed the role of Interim Chief Financial Officer in September 2021 following Mr. Cuca’s resignation. +3 +Mr. Cuca served until September 17, 2021. +4 +Mr. Jerrett retired from the Company effective December 31, 2021 and was replaced by Ms. Gallagher who +joined the Company on November 26, 2021. +As described further in the CD&A and elsewhere in this Proxy +Statement, the following should be considered by stockholders in evaluating the compensation of our NEOs for 2021: +• +OraSure is a diverse and growing business operating in highly competitive and evolving markets; this has proven +especially true throughout 2021 given the challenges and opportunities presented by the ongoing COVID-19 pandemic. +• +We annually solicit input from our stockholders on executive compensation matters. The 2021 Say-on-Pay results (95% approval), combined with feedback from stockholders, suggest strong support for our programs and policies. +• +We maintain and adhere by a full suite of good governance policies and processes. +• +We achieved record revenue during 2021 for both our diagnostics and molecular solutions businesses, with our total +company growing at a 25% compound annual growth rate since the pre-pandemic period in 2019. +• +We made no COVID-19 related adjustments to our 2021 incentive bonus plan or +performance-vested restricted units (“PRUs”) performance measures and the Compensation Committee applied no positive discretion in determining performance and payouts for our NEOs. +2 +Table of Contents +The Board is recommending that stockholders vote in favor of the compensation of our +NEOs, as described in this Proxy Statement. +Proposal No. 4 – Amendment and Restatement of Stock Award Plan +In order to enable the Company to continue to attract qualified directors, officers, employees and outside advisors, and +to compensate these individuals in a manner that is competitive with compensation provided by other medical diagnostic and healthcare companies, the Board has determined that additional shares of Common Stock are needed to be available for grants +under the Company’s Stock Award Plan. In addition, the Board wants to ensure that sufficient shares are available, if needed, to provide retention or other equity awards in connection with potential acquisitions or other business development +activities. +Accordingly, subject to stockholder approval, the Board approved an amendment and restatement of the OraSure +Technologies, Inc. Stock Award Plan (last amended and restated, April 4, 2020) (the “Stock Award Plan” or the “Plan”) to increase the number of shares to be authorized for grant under the Plan by 1,500,000 shares. As a +result of this increase there will be a total of 3,621,685 shares available in the Stock Award Plan for future issuance on or after April 1, 2022, subject to stockholder approval. A copy of the Amended and Restated Stock Award Plan reflecting +this amendment is attached as Exhibit A to this Proxy Statement. +2021 PERFORMANCE HIGHLIGHTS +In 2021, we delivered record revenue for both our diagnostics and molecular solutions +businesses, with our total company growing at a 25% compound annual growth rate since the pre-pandemic period in 2019. We experienced increased sales across all existing product lines, other than our +international HIV self-test, and we generated $22.7 million in revenues from our new rapid COVID-19 antigen test, InteliSwab ® . We also achieved +significant business milestones that we believe position the Company for growth in 2022 and beyond. +First, the company achieved a +major milestone by receiving three new emergency use authorizations for our InteliSwab ® COVID-19 test from the U.S. Food and Drug Administration (the +“FDA”) for the professional, prescription self-test, and over-the-counter settings. We also received three major government contracts to support the launch of +InteliSwab ® including a $205 million procurement contract from the Defense Logistics Agency, a $109 million contract from the Department of Defense to expand our InteliSwab ® manufacturing capacity, and a $14 million contract from the Biomedical Advanced Research and Development Authority to obtain 510-k clearance from the +FDA for our InteliSwab ® test. We also continued to advance our innovation growth strategy in 2021 with the development of several new products in our molecular solutions business including our +FDA approved Omnigene ® -Gut collection kit, our metatranscriptome services launch through our Diversigen subsidiary, and new cancer chemistry on our +Collipee ® urine collection device. We believe these products will be an important contributor to our future molecular solutions business. +While we generated $22.7 million in revenues from the sale of our InteliSwab ® test, the manufacturing scale-up required to produce a new diagnostic test at levels significantly higher than our historical production levels resulted in +delays which negatively impacted our cost of goods sold and our ability to fulfill demand during the calendar year. Starting in 2022 we were able to identify production and process improvements that we believe will improve production output and +operational efficiency. +Our consolidated revenues of $233.7 million in 2021 represented a 36% increase over 2020. Our total +diagnostic revenues were $87.0 million during 2021, an increase of 37% from 2020. This increase includes the $22.7 million of InteliSwab ® sales. Our total molecular product and +services revenues were $139.9 million during 2021, an increase of 36% from 2020. This increase reflects the growth and recovery of our core molecular business from the COVID-19 pandemic. +Cash used by operating activities was $35.4 million in 2021 as we acquired and built inventory levels to meet anticipated demand +to support COVID-19 testing programs. We ended the year with approximately $170 million in cash and short-term investments on our balance sheet, which we can use for future investment and +growth. +3 +Table of Contents +MOST SIGNIFICANT COMPENSATION COMPONENTS +We have structured the components of our executive compensation program to be directly tied to the +performance of both the Company and our executives and aligned with the best interests of our stockholders. These components consist of the following: +Base Salary +Salaries are based on the individual executive’s position relative to market and the executive’s individual performance +and contribution. +Annual Cash Incentive Plan Bonuses +Annual incentive cash +bonuses reflect market-based targets and are contingent upon (i) our achievement of corporate financial and/or strategic objectives, which are used to determine overall bonus pool funding, and (ii) the executive’s individual +performance against pre-determined objectives, for such executive, which are used to determine individual bonus payouts. +Equity Awards under our Long-Term Incentive Policy (“LTIP”) +Long-term incentive +equity compensation reflects market-based targets with the value of individual awards contingent upon each executive’s individual performance against pre-determined objectives during the fiscal year prior +to award. Fifty percent (50%) of each NEO’s annual LTIP award consists of PRUs which require achievement of certain financial performance measures selected by the Board and Compensation Committee and the satisfaction of a 3-year service period for vesting of the award. The other fifty percent (50%) consists of time-vested restricted stock (“RS”) which vests in equal installments over a three-year service period. +KEY FEATURES OF OUR EXECUTIVE COMPENSATION PROGRAM +Key features of our compensation program illustrate our commitment to pay-for-performance, the strong alignment of our executives’ interests with those of our stockholders and strong corporate governance. Several of the more significant of these features are summarized +below: +• Compensation is market +driven with total compensation of our executives targeted at the 50 th percentile of the Company’s peer group (as set forth in the CD&A) (the “Peer Group”). +• Regular stockholder outreach on compensation/ governance matters. +• Compensation is predominantly variable or performance-based. +• Use of a third-party +compensation consultant to provide executive compensation market assessment and independent advice on compensation matters. +• Balanced mix of cash/equity, +fixed/variable, short-term/long-term compensation components. +• Strong stock ownership/retention requirements for executives and Directors. +• In order to incentivize growth, performance objectives for annual bonus pool funding target key +financial measures and/or important strategic goals. +• As a general matter, no perquisites for NEOs that are not offered to all employees of the +Company. +• The Board’s +discretionary ability to adjust annual incentive bonus pool funding is limited to +/- 10% of pool amount in order to avoid excessive discretionary bonus pool adjustments. +• Use of peer company benchmarking. +• Long-term equity incentive awards include 50% PRUs that vest based on (i) three-year +cumulative revenue, (ii) three-year relative total shareholder return (“TSR”) and (iii) three years of continued service. +• Compensation recoupment policy or “clawback” policy, under which we may recover excess +compensation paid to an executive if our financial statements are restated. +• No excise tax gross-up in any of our NEO employment +agreements and no “single trigger” change-in-control severance in any of our new executive employment agreements. +• No hedging or pledging of our Common Stock. +4 +Table of Contents +QUESTIONS AND ANSWERS ABOUT THE 2022 ANNUAL MEETING +AND VOTING +1.   WHY DID I RECEIVE THESE PROXY +MATERIALS? +Our Board of Directors (the “Board”) is furnishing proxy materials, including +this Proxy Statement, a Proxy Card and the Company’s Annual Report to Stockholders for the year ended December 31, 2021 (the “2021 Annual Report”), to our stockholders in order to solicit proxies to be voted at the Annual Meeting +(each, a “Proxy”). Each stockholder can access these documents on the internet in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”). On or about April 7, 2022, we mailed a Notice +of Internet Availability of Proxy Materials (the “Notice”) to each stockholder at the holder’s address of record, indicating that this Proxy Statement is now available to our stockholders of record entitled to vote at the Annual +Meeting. +SEC rules permit us to deliver only one copy of the Notice or a single set of proxy materials to multiple stockholders +sharing the same address. Upon written or oral request, we will deliver separate Notices and/or copies of our 2021 Annual Report and/or this Proxy Statement to any stockholder at a shared address to which a single copy of the Notice was delivered. +Stockholders may notify the +Company of their requests by calling or writing us at OraSure Technologies, Inc., 220 East First Street, Bethlehem, Pennsylvania 18015, Attention: Corporate Secretary; (610) 882-1820. +All stockholders and beneficial holders have the ability to access a copy +of our proxy materials on the internet at the website referred to in the Notice. Stockholders will not receive printed copies of the proxy materials unless they request those copies . The Notice also instructs stockholders as to how to +submit a Proxy through the internet. If you would like to receive a paper or e-mail copy of your proxy materials, you should follow the instructions for requesting such materials included in the Notice. We +will pay the entire cost of preparing, assembling, printing, mailing and distributing these proxy materials and soliciting votes. If you choose to access the proxy materials and/or vote over the internet, you are responsible for any internet access +charges you may incur. +2.   WHAT IS A PROXY? +A Proxy is your legal designation of another person to vote the shares of Common Stock +you own. That other person is called a “proxy.” If you designate someone as your proxy in a written document, that document also is called a Proxy or a Proxy Card. +Agnieszka M. Gallagher and Michele Miller, each of whom are officers of the Company, have been designated +by the Board of Directors as proxies to vote on behalf of stockholders for the Annual Meeting. +3.   WHAT IS THE RECORD DATE AND WHAT +DOES IT MEAN? +The record date for the Annual Meeting is March 23, 2022 (the “record +date”). The record date is established by the Board as required by Delaware law. Only stockholders of record at the close of business on the record date are entitled to: +(a) +receive notice of the Annual Meeting; and +(b) +vote at the Annual Meeting and any adjournment(s) or postponement(s) of the meeting. +Each stockholder of record on the record date is entitled to one vote for each share of Common Stock held. +On the record date, there were 73,916,495 shares of our Common Stock outstanding and entitled to vote at the Annual Meeting. +A list of stockholders will be open for examination by any stockholder for any purpose germane to the Annual Meeting for a period of +10 days prior to the meeting at our principal executive offices at 220 East First Street, Bethlehem, PA 18015, and electronically during the Annual Meeting at +www.virtualshareholder-meeting.com/OSUR2022 when you enter the control number provided in the Notice sent to you. +5 +Table of Contents +4.   WHAT IS THE DIFFERENCE BETWEEN A +STOCKHOLDER OF RECORD AND A STOCKHOLDER WHO HOLDS STOCK IN STREET NAME? +If your shares of stock are registered in your name on the books and records of our +transfer agent, Computershare, Inc., you are a stockholder of record. +If your shares of stock are held for you in the name of +your broker, bank or other nominee, your shares are held in “street name.” The answer to Question 7 describes brokers’ discretionary voting authority and when your broker, bank +or other nominee is permitted to vote your shares of stock without instructions from you. +It is important that you vote your shares if you are a stockholder of record and, if you hold shares in street name, that you +provide appropriate voting instructions to your broker, bank or other nominee as discussed in the answer to Question 7. +5.   HOW CAN I VOTE MY SHARES FOR THE +ANNUAL MEETING? +All stockholders have a choice of voting via the internet, over the telephone or by +completing and mailing a paper Proxy Card, as described below. +Voting via the Internet or by +Telephone . Stockholders of record desiring to vote online via the internet or by telephone prior to the Annual Meeting, should go to www.proxyvote.com or call the toll free number indicated on the Proxy Card or Notice. You may vote via the internet or by telephone provided you do so by 11:59 p.m. Eastern Time (8:59 p.m. Pacific Time) on May 16, 2022. Stockholders +who attend the Annual Meeting via the internet may vote their shares at that time up to and during the Annual Meeting by following the instructions at +www.virtualshareholdermeeting.com/OSUR2022 . +Street name holders may vote via the internet or by telephone if their brokers, banks or other nominees make those methods available. +If that is the case, each broker, bank or nominee will include instructions with the Notice or Proxy Statement. +The telephone and +internet voting procedures, including the use of control numbers, are designed to authenticate your identity, to allow you to give your voting +instructions and to confirm that your instructions have been recorded properly. +If you vote via the internet, you should understand that you will be responsible for any costs associated with this method of voting, +such as usage charges from internet access providers and telephone companies. +Voting by Mail . If you +desire to vote prior to the Annual Meeting by mail by using a paper Proxy Card instead of by telephone or via the internet, you will need to either print a copy of the Proxy Card from the website indicated in your Notice or follow the instructions +in your Notice to request that a paper copy be sent to you. You will then need to complete, sign, date and return the Proxy Card, as described on the Proxy Card. Street name holders should complete and return the voting card provided by their +broker, bank or nominee. +Voting at the Annual Meeting . All stockholders of record may vote online during the +Annual Meeting, as described above. Submitting a Proxy via the internet, over the telephone or by mail will not affect your right to withdraw your Proxy and vote during the Annual Meeting. +6.   HOW WILL MY SHARES BE VOTED IF I +SEND IN A PROXY? +If you are represented by a properly executed Proxy, whether delivered by phone, the +internet or mail, your shares will be voted in accordance with your instructions. +If you do not provide instructions with your Proxy, your shares will be voted according +to the recommendations of our Board as stated on the Proxy. +6 +Table of Contents +7.   WILL MY SHARES BE VOTED IF I DO NOT +PROVIDE MY PROXY? +Stockholders of Record : If you are a stockholder of +record, your shares will not be voted if you do not provide your Proxy, unless you vote online during the Annual Meeting. It is, therefore, important that you vote your shares. +Street Name Holders : If your shares are held in street name and you do not provide +your signed and dated voting instruction form to your bank, broker or other nominee, your shares may be voted by your broker, bank or other nominee but only under certain circumstances. Specifically, under rules of the Nasdaq Stock +Exchange (“Nasdaq”), shares held in the name of your broker, bank or other nominee may be voted by your broker, bank or other nominee on certain “routine” matters if you do not provide voting instructions. +At the upcoming Annual Meeting, only the ratification of the selection of KPMG LLP as +the Company’s independent registered public accounting firm is considered a “routine” matter for which brokers, banks or other nominees may vote uninstructed shares. The other proposals to be voted on at our Annual Meeting +(specifically, the election of Director nominees, the advisory vote to approve the compensation of the Company’s NEOs and the vote to approve the amendment and restatement of the Company’s Stock Award Plan are not considered +“routine” under Nasdaq rules, so the broker, bank or other nominee cannot vote your shares on either of these proposals unless you provide to the broker, bank or other nominee voting instructions for each of these matters. If you do +not provide voting instructions on these matters, your shares will not be voted on the matter, which is referred to as a “broker non-vote.” It is, therefore, important that you vote your +shares. +8.   HOW MANY SHARES MUST BE PRESENT TO +HOLD THE ANNUAL MEETING? +Your shares are counted as present at the meeting if you attend the meeting and vote +online or if you properly return a Proxy by internet, telephone or mail. In order for us to conduct our Annual Meeting, a majority of our outstanding shares of Common Stock as of the March 23, +2022 record date, must be present online or by Proxy at the meeting. This is referred to as a quorum. Broker non-votes, votes withheld and abstentions are +included in determining whether there are a sufficient number of shares present to constitute a quorum. +9.   HOW CAN I REVOKE A +PROXY? +You can revoke a Proxy before the completion of voting at the Annual Meeting by: +(a) +Giving written notice to the Corporate Secretary of the Company to revoke your Proxy; or +(b) +Delivering a later-dated Proxy that indicates the change in your vote; or +(c) +Logging on to www.proxyvote.com in the same manner you would to submit your Proxy +electronically or calling the telephone number indicated in your Notice, and in each case, following the instructions to revoke or change your vote; or +(d) +Attending the Annual Meeting online and voting, which will automatically cancel any Proxy previously given. Attendance +alone will not revoke any Proxy that you have given previously. +If you choose any of the first three methods, +you must take the described action no later than 11:59 p.m. Eastern Time (8:59 p.m. Pacific Time) on May 16, 2022. Once voting on a particular matter is completed at the Annual Meeting, you will not be able to revoke your Proxy or change your +vote. If your shares are held in street name by a broker or other nominee, you must contact that institution to change or revoke your vote. +10.   WHAT ITEMS WILL BE VOTED ON AT THE +ANNUAL MEETING? +At the Annual Meeting, action will be taken on the matters set forth in the accompanying +Notice and described in this Proxy Statement. The Board knows of no other matters to be presented for action at the Annual Meeting. +If any other matters do properly come before the Annual Meeting, the persons named in +the Proxy Card will have discretionary authority to vote on those matters in accordance with their best judgment. +11.   WHO WILL PAY THE COST OF THIS PROXY +SOLICITATION? +Solicitation of Proxies is made on behalf of the Board. The cost of soliciting Proxies +will be borne by the Company. In addition to solicitations by e-proxy and/or by mail, certain +of our Directors, officers and regular employees may solicit Proxies personally or by telephone or other means without additional compensation. +7 +Table of Contents +We have also engaged Morrow Sodali LLC, 470 West Ave., Stamford, CT 06902, to provide +proxy solicitation services at an estimated fee of $7,500 plus expenses. Arrangements will be made with brokerage firms and other +custodians, nominees and fiduciaries to forward solicitation materials to the beneficial owners of stock held of record by such persons, and we will, upon request, reimburse them for their +reasonable expenses in so doing. +12.   HOW CAN I +PARTICIPATE IN THE ANNUAL MEETING? +This year’s Annual Meeting will be a completely virtual meeting of stockholders, +and will be conducted via live webcast on the Internet. You are entitled to participate in the Annual Meeting only if you were a stockholder of the Company as of the close of business on March 23, 2022, the record date for the meeting, or if +you hold a valid Proxy for the Annual Meeting. +You will be able to participate in the Annual Meeting online and submit your +questions during the meeting by +visiting www.virtualshareholdermeeting.com/OSUR2022. To +participate in the Annual Meeting, you will need the control number that is included on your Notice, on our Proxy Card or on the instructions that accompanied your proxy materials. The Annual Meeting will begin promptly at 10:00 a.m. Eastern Time, +and you should allow ample time to complete the online check-in procedures. +13.   WHAT IF I HAVE +TECHNICAL DIFFICULTIES OR TROUBLE VIEWING THE VIRTUAL MEETING +If you encounter any difficulties accessing the virtual meeting during the check-in or +meeting time, please call the +technical support number that will be posted on the Virtual Shareholder Meeting log in page. +14.   ARE VOTES +CONFIDENTIAL? +We will continue our long-standing practice of holding the votes of each stockholder in +confidence from Directors, officers and employees, except: (a) as necessary to meet applicable legal requirements and to assert or defend claims for or against the Company; (b) in the case of a +contested proxy solicitation; (c) if a stockholder makes a written comment on the Proxy Card or otherwise communicates his or her vote to the Company; or (d) as needed to allow the +independent inspectors of election to certify the results of the vote. +15.   WHO COUNTS THE +VOTES? +We will continue, as we have for many years, to retain an independent inspector of +election to receive and +tabulate the Proxies and certify the results. These activities will be handled electronically. +16.   MAY STOCKHOLDERS +ASK QUESTIONS AT THE ANNUAL MEETING? +Yes. The Chairman of the Board will answer stockholders’ written questions +submitted during the question and answer period of the meeting. Stockholders should confine their questions to matters that relate to the business of the meeting. The Chairman will determine which questions are appropriate to answer during the +meeting. +We reserve the right to edit or reject any questions we deem profane or otherwise +inappropriate. Detailed guidelines for submitting written questions during the meeting are available at www.virtualshareholdermeeting.com/OSUR2022 . +8 +Table of Contents +STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND +MANAGEMENT +The following table sets forth information, as of the March 23, 2022 record date (except for Mr. Cuca and Mr. Jerrett, as +described below), regarding the beneficial ownership of the Company’s Common Stock by (a) each person who is known by us to be the beneficial owner of more than five percent of the Common Stock outstanding; (b) each Director and +nominee for election as Director; (c) each of our executive officers named in the Summary Compensation Table in this Proxy Statement; and (d) all of our Directors and executive officers as a group. Unless otherwise indicated, the address +of each person identified below is c/o OraSure Technologies, Inc., 220 East First Street, Bethlehem, Pennsylvania 18015. +Pursuant +to Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), shares of Common Stock which a person has a right to acquire pursuant to the exercise of stock options held +by that person that are exercisable within 60 days of March 23, 2022 are deemed to be outstanding for the purpose of computing the ownership percentage of that person, but are not deemed outstanding for computing the ownership percentage of any +other person. +Name and Address of +Beneficial Owner +Amount and Nature of +the Beneficial Ownership 1,2 +Percent +of Class +Black Rock, Inc. 3 +55 East 52 nd Street +New York, NY 10055 +13,893,887 +18.8% +The Vanguard Group 4 +100 Vanguard Blvd. +Malvern, PA 19355 +4,899,750 +6.6% +Earnest Partners, LLC 5 +1180 Peachtree Street NE, +Suite 2300 +Atlanta, GA 30309 +4,871,379 +6.6% +Managed Account Advisors, LLC 6 +101 Hudson Street, 9th +Floor +Jersey City, NJ 073302 +4,321,379 +5.9% +American Capital Management, Inc. 7 +551 Madison Ave., +Suite 902 +New York, NY 10022 +4,308,685 +5.8% +Camber Capital Management, LP 8 +101 Huntington Avenue +Boston, MA 02199 +4,250,000 +5.8% +Stephen S. Tang, +Ph.D. +349,793 +* +Kathleen G. +Weber +220,592 +* +Jack E. Jerrett 9 +124,555 +* +Roberto Cuca 10 +108,838 +* +Scott Gleason +98,505 +* +Agnieszka +Gallagher +90,584 +* +Michael Celano +118,460 +* +Eamonn P. Hobbs +83,861 +* +Mara G. +Aspinall +75,937 +* +Ronny B. +Lancaster +34,782 +* +James A. Datin +29,388 +* +David J. Shulkin, +M.D. +24,846 +* +Lelio Marmora +17,967 +* +Nancy Gagliano, +M.D. +10,563 +* +Anne Whitaker +10,563 +* +All Directors and +executive officers as a group (17 people) +1,641,997 +2.2% +9 +Table of Contents +* +Less than 1%. +1 +Subject to community property laws where applicable, beneficial ownership consists of sole voting and investment power +except as otherwise indicated. +2 +Includes shares subject to options exercisable within 60 days of March 23, 2022, as follows: Ms. Weber, +14,533 shares; Mr. Celano, 40,000 shares; Mr. Hobbs, 40,000 shares; and Ms. Aspinall, 40,000 shares; and all Directors and executive officers as a group, 187,586 shares. Also includes unvested RS, as follows: Dr. Tang, 143,129 +shares; Ms. Weber, 107,107 shares; Mr. Gleason, 98,505 shares; Ms. Gallagher, 90,584 shares; Mr. Celano, 13,559 shares; Mr. Hobbs, 10,952 shares; Ms. Aspinall, 10,952 shares; Mr. Lancaster, 10,952 shares; +Mr. Datin, 10,952 shares; Dr. Shulkin, 10,952 shares; Mr. Marmora, 10,952 shares; Dr. Gagliano, 10,563 shares; and Ms. Whitaker 10,563 shares; and all Directors and executive officers as a group, 700,034 shares. Does not +include unvested PRUs. +3 +Based on information contained in a Schedule 13G/A filed January 28, 2022. The filing person has sole voting power +with respect to 13,510,616 shares and sole dispositive power with respect to all of the indicated shares. +4 +Based on information contained in a Schedule 13G/A filed February 10, 2022. The filing person has shared voting +power with respect to 57,552 shares, sole dispositive power with respect to 4,784,919 shares and shared dispositive power with respect to 114,831 shares. +5 +Based on information contained in a Schedule 13G filed February 8, 2022. The filing person has sole voting power +with respect to 4,281,630 shares and sole dispositive power with respect to all of the indicated shares. +6 +Based on information contained in a Schedule 13G/A filed January 26, 2022. The filing person has sole dispositive +power with respect to 4,255,738 shares and shared dispositive power with respect to 65,641 shares. +7 +Based on information contained in a Schedule 13G filed February 16, 2021. The filing person has sole voting power +with respect to 18,828 shares and sole dispositive power with respect to all of the indicated shares. +8 +Mr. Jerrett, who served as the Company’s Senior Vice President, General Counsel and Chief Compliance Officer, +retired on December 31, 2021. The indicated shares reflect Mr. Jerrett’s ownership as of his retirement date and do not include a RS award granted with immediate vesting on February 1, 2022, net of shares withheld to cover taxes, +for 18,984 shares or PRUs vested on February 1, 2022, net of shares withheld to cover taxes, for 8,825 shares. +9 +Mr. Cuca, who served as the Company’s Chief Financial Officer, resigned from the Company on +September 17, 2021. The indicated shares reflect Mr. Cuca’s ownership as of his resignation date. +CORPORATE GOVERNANCE +BOARD RESPONSIBILITIES, OPERATION AND COMPOSITION +The primary responsibility of the Board of Directors is to promote the long-term success of the Company. +In fulfilling this role, each Director must exhibit good faith business judgment as to what is in the best interests of the Company. The Board is responsible for establishing broad corporate policies, setting strategic direction and overseeing +management. The Company’s management is responsible for the day-to-day operations of the Company. +The Board is divided into three classes with each class consisting of one-third of the total +number of Directors on the Board. There are currently eight Directors serving on the Board. At each annual meeting of stockholders, the nominees for the class of Directors whose term is expiring at that annual meeting are elected for a three-year +term. A Director holds office until the annual meeting of stockholders for the year in which his or her term expires or until his or her successor is elected and duly qualified, subject to prior death, resignation, retirement, disqualification or +removal. Each nominee for election at our upcoming Annual Meeting currently serves as a Director. +The Board typically holds regular meetings in February, May, August and November of each year, with special +meetings held as needed. The Board’s organizational meeting follows the annual meeting of stockholders. The Board usually meets in executive session at all regularly scheduled meetings. The Board held 13 meetings and acted by written +consent on four occasions during the fiscal year ended December 31, 2021. Each member of the Board attended more than 75 percent of the combined total of meetings of the Board and of the Committees of the Board on which such member served +during the period in the year in which he or she served as a Director. +The Board holds four regularly scheduled meetings each year and special meetings as needed. +Directors attended greater than 75% of all Board and Committee meetings during 2021. +10 +Table of Contents +GOVERNANCE GUIDELINES AND CODE OF CONDUCT +The Board has adopted Corporate Governance Principles which, along with the Charters for each of its +Committees and the Company’s Amended and Restated Code of Business Conduct and Ethics, provide a framework for the governance of the Company. The Company’s Corporate Governance Principles address matters such as the responsibilities and +composition of the Board, Director independence and the conduct of Board and Committee meetings. The Company’s Amended and Restated Code of Business Conduct and Ethics sets forth guiding principles of business ethics and certain legal +requirements applicable to all Company employees, contractors and non-employee Directors. Copies of the current Corporate Governance Principles and Amended and Restated Code of Business Conduct and Ethics are +available on the Company’s website, www.orasure.com . Upon request, the Company will provide a copy of each policy free of charge to any shareholder. +If we make substantive amendments to or grant any waiver from the Amended and Restated Code of Business Conduct and Ethics +applicable to our directors or executive officers, we will disclose the nature of such amendments or waiver to our stockholders to the extent and in the manner required by applicable exchange listing standards or any other regulation. For conduct +involving an executive officer or Board member, only the Board of Directors or the Audit Committee of the Board has the authority to waive a provision of the Amended and Restated Code of Business Conduct and Ethics. Should the Company grant a waiver +to its Amended and Restated Code of Business Conduct and Ethics, the Company intends to post notice of the waiver to its website at orasure.gcs-web.com/governance. Any waivers granted to the Amended and +Restated Code of Business Conduct and Ethics will be available on the website for at least a 12-month period. +We operate under a Code of Business Conduct and Ethics and +Corporate Governance Principles, which apply to all employees, contractors and non-employee Board members. +ENVIRONMENTAL, SOCIAL AND GOVERNANCE ISSUES +We believe that conducting our business in a socially, environmentally and ethically responsible manner, +and in compliance with applicable legal requirements, is important to our long-term success and the health and well-being of our employees, customers, the communities that we serve and other stakeholders. As a result, environmental, social and +governance (“ESG”) issues have become an increasingly important focus for our management team and our Board. +ESG Oversight +Historically, ESG issues have been addressed by the management teams in our various companies with the primary focus on regulatory and +legal compliance, ethical operations and development of our human capital resources. Material risks in these areas have been regularly reviewed with our Board, either directly or through the Audit Committee. In 2021, our management formed a cross +functional team to review ESG issues more formally in order to identify material ESG risks impacting our business and determining appropriate mitigation and corrective strategies. These risks were discussed by the Board in 2021 and will be discussed +by the Board at least annually as part of the Board’s oversight of risk management. +This year, we are proud to publicly share +our first “OraSure Cares” ESG report, which provides a snapshot of the many ways that we are preserving the environment, empowering our people, modeling integrity and positively impacting the communities that we serve and in which we are +located. A copy of the report may be accessed on our website at www.orasure.com . +Environmental +We endeavor +to implement responsible and sustainable environmental practices throughout our organization. Our goal is to eliminate or minimize any harm to our employees, the communities that we serve and the environment. +We follow practices to reduce our energy usage and operate more efficiently, including through the use of motion detectors and timers to +reduce electricity usage. We also have implemented a Company-wide waste recycling program under which recyclable materials are segregated for removal and appropriate handling. Hazardous and medical waste is also segregated and disposed of in +accordance with applicable laws and regulations. +Formed in 2020, our Sustainability Committee focuses on identifying additional +steps we can take to reduce our carbon footprint, including through the use of solar and renewable energy sources and promoting clean communities by encouraging the use of bicycles and public transportation by our employees to commute to work. +11 +Table of Contents +Social +We believe our employees are our most important resource and are critical to our continued success. The health and safety of our +workforce is a critical priority across our organization. We safeguard our people, projects and reputation by striving for zero employee injuries and illnesses, while operating and delivering our work responsibly and sustainably. We +provide our employees upfront and ongoing safety training to ensure that safety policies and procedures are effectively communicated and implemented. Personal protective equipment is provided to those employees where needed for the employees to +safely perform their job function. We have formed a Safety Committee consisting of employees from various functional departments to administer our internal safety inspection program, investigate safety incidents and oversee the effectiveness of our +safety procedures and policies. +During 2021, we continued our enhanced safety protocols and procedures to protect our employees, +our subcontractors and our customers from the ongoing COVID-19 pandemic. These protocols included complying with social distancing and other health and safety standards as required by federal, state and +local government agencies, taking into consideration guidelines from the Centers for Disease Control and Prevention and other public health authorities. In addition, we continued to conduct many aspects of our business virtually to reduce the +number of in-person interactions. Many of our administrative and operational functions have continued to function virtually as well, including much of our workforce working remotely. +As part of our compensation philosophy, we believe that we must offer and maintain market competitive compensation and benefits programs +for our employees in order to attract and retain superior talent. In addition to competitive base wages, additional programs include annual bonus opportunities, a Company matched 401(k) Plan or other savings plan, healthcare and insurance +benefits, health savings and flexible spending accounts, paid time off, family leave, flexible work schedules, and employee assistance programs. +We focus significant attention on attracting and retaining talented and experienced individuals to manage and support our operations, +and our management team routinely reviews employee turnover rates at various levels of the organization. Management also reviews employee engagement and satisfaction surveys to monitor employee morale and receive feedback on a variety of +issues. +The OraSure family of companies is committed to creating and fostering a diverse, equitable, and inclusive workplace that +reflects and contributes to the global communities in which we do business and the customers and partners we serve. This includes all communities impacted by our corporate presence. Our management teams and our employees are expected to +exhibit and promote honest, ethical and respectful conduct in the workplace. All of our employees must adhere to a Code of Business Conduct and Ethics that sets standards for appropriate behavior and includes required annual training on +preventing, identifying, reporting and stopping any type of unlawful discrimination. We strive to recruit the best people for the job regardless of gender, ethnicity or other protected trait and it is our policy to fully comply with all laws +(domestic and foreign) applicable to discrimination in the workplace. We have established a hotline and other communication methods that employees can use to anonymously submit discrimination or other complaints. +We have an active Diversity, Equity and Inclusion Council that strives to drive diversity, equity and inclusion within the +workplace. At OraSure, we believe a variety of perspectives are critical to achieving success, and that diversity, equity and inclusion are key drivers to growth-based innovation and profitability. We are committed to creating a culture +where all people feel valued, supported, and inspired to be themselves fearlessly, without judgement. We believe that when all voices are heard, we honor and exemplify our core values and best serve our customers and communities. +Governance +Our overall +corporate mission is to do good and help solve the world’s greatest health challenges. We are committed to making a difference in the world of individual and public health by enabling access to discovery and diagnostics. Our innovative +diagnostic and specimen collection devices have significantly contributed to public health on a global basis. +In pursuing our +mission, we are committed to operating our business in accordance with the highest moral, legal and ethical standards. As previously mentioned, we have adopted an Amended and Restated Code of Business Conduct and Ethics in order to define the high +standards under which all members of our Board and all of our employees are +12 +Table of Contents +expected to operate. We also have an Anti-Corruption Policy, a Policy on Interactions with Healthcare Professionals and other policies which further require honest, ethical and lawful behavior. +These policies are part of a broader compliance program designed to ensure that all policies and legal requirements are followed, that we make and sell high-quality products in accordance with applicable regulatory requirements and that we otherwise +operate in a responsible, ethical and compliant manner. +INDEPENDENT BOARD CHAIRMAN +The positions of Chairman of the Board and CEO of the Company are held by different individuals, with the Chairman +being independent of management. +The Board has carefully considered its leadership structure and believes that the Company and its stockholders are best served by +having the positions of Chairman and Interim CEO filled by different individuals. This allows the Interim CEO to, among other things, focus on the Company’s +day-to-day business, while allowing the Chairman to lead the Board in its fundamental role of providing strategic advice and oversight of management. In the future, +however, the Board may reconsider whether its CEO should also serve as Board Chairman or may elect to rotate the position of Board Chairman to other independent Directors. +DIRECTOR INDEPENDENCE +Our Corporate Governance Guidelines require, among other things, that a majority of the members of the Board meet +the independence requirements of the SEC and Nasdaq, on which our Common Stock is listed. Each year our Board, with assistance from the Nominating and Corporate Governance Committee, conducts a review of Director independence. The most recent annual +review occurred in the first quarter of 2022, during which the Board considered +A majority of our Directors are independent as required under applicable SEC and Nasdaq rules. All standing Board Committees consist of +independent Directors. +transactions and relationships, if any, between each Director and any member of such Director’s immediate family and +the Company. As a result of this review, the Board determined that Mara G. Aspinall, Michael Celano, James A. Datin, Eamonn P. Hobbs, Ronny B. Lancaster, Lelio Marmora, David J. Shulkin, M.D. and Anne C. Whitaker, are “independent,” +as that term is defined in the applicable rules of Nasdaq and the SEC. Stephen S. Tang, Ph.D., was determined by the Board not to be independent because he was serving as an executive officer employed by the Company until his termination on +March 31, 2022. As of April 1, 2022, Nancy J. Gagliano, M.D., M.B.A. is no longer independent because she became an executive officer employed by the Company on April 1, 2022, following Dr. Tang’s departure. Prior to such +time, Dr. Gagliano was considered an independent director of the Board. Based on the foregoing, the Board of Directors is comprised of a majority of independent Directors. All standing Committees of the Board are also comprised solely of +independent Directors. +OVERSIGHT OF RISK MANAGEMENT +As part of its oversight of the Company’s operations, the Board and Audit Committee monitor the management +of risks by the Company’s executives. The Audit Committee reviews the risks that the Company may face and receives reports from senior management on the nature of these risks and the procedures and processes in place to manage and mitigate such +risks. Substantive areas of risk reviewed by the Audit Committee include financial, legal, regulatory, operational, information technology, cybersecurity and employment matters. The Audit +The Board and Audit Committee +monitor the major risks +facing +the Company and the procedures +and processes implemented by +management to mitigate those +risks. +Committee provides a report to the full Board on the matters covered during each of its meetings, including its risk +monitoring activities. In addition, senior management provides periodic reports to the full Board on the major risks facing the Company and the processes and procedures in place to manage such risks. Management also conducts a risk assessment of the +Company’s compensation policies and practices, including its executive compensation program, as described in greater detail in the Section of this Proxy Statement entitled, “Compensation Committee Matters.” +13 +Table of Contents +ANNUAL MEETING ATTENDANCE AND STOCKHOLDER COMMUNICATIONS +The Board has approved a policy concerning Board members’ attendance at our Annual Meeting of +Stockholders and a process for security holders to send communications to members of the Board. A description of the Board’s policy on Annual Meeting attendance is provided on our website, at +www.orasure.com . As a general matter, each Board member is required to attend each Annual Meeting of Stockholders. Our 2021 Annual Meeting was attended by +all members of the Board. +Security holders may communicate with the Board by sending their communications to OraSure +Technologies, Inc., 220 East First Street, Bethlehem, Pennsylvania 18015, Attention: Corporate Secretary, fax: (610) 882-2275, email: +corporatesecretary@orasure.com . +All Board members are required to attend each Annual Meeting of Stockholders. The entire Board attended the 2021 Annual +Meeting. +COMMITTEES OF THE BOARD +The Board currently has a standing Audit Committee, Compensation Committee and Nominating and Corporate +Governance Committee. Members of these committees are each “independent,” as defined in the Exchange Act and Nasdaq rules applicable to such Committees. In addition, the Board has determined that Michael Celano is an “audit +committee financial expert,” as that term is defined by applicable rules of the SEC. Each committee operates pursuant to a written charter, copies of which are available on our website, at +www.orasure.com . Additional information on each standing committee is provided below: +AUDIT COMMITTEE +Committee Members*: +Responsibilities: +•  Oversees accounting and financial reporting process, internal controls and audits. +•  Consults +with management and the Company’s independent registered public accounting firm on, among other items, matters related to the annual audits, the published financial statements and the accounting principles applied. +•  Appoints, +evaluates and retains our independent registered public accounting firm. +•  Responsible for the compensation, termination and oversight of our independent registered +public accounting firm. +Mara G. Aspinall +(C, I) +Michael Celano +( +, I) +James A. +Datin +(I) +Lelio Marmora +(I) +Anne C. Whitaker* +(I) +Number of Meetings during +fiscal 2021: +9 +•  Evaluates the independent registered public accounting firm’s qualifications, +performance and independence. +•  Approves all services provided by the independent registered public accounting firm. +•  Monitors +the Company’s major risk exposures and reviews risk assessment and mitigation policies and determines the appropriate levels and types of insurance policies to be purchased by the Company. +•  Maintains +procedures for the receipt, retention and treatment, on a confidential basis, of complaints received by the Company regarding accounting, internal accounting controls or auditing matters, and the confidential, anonymous submissions by employees of +concerns regarding questionable accounting or auditing matters. +•  Reviews the Company’s cybersecurity program and risks, as identified by Company +management, and the steps that the Company management has taken to protect against threats to the Company’s assets including information systems and data security. +C +– Committee Chair +– Determined by the Board to be an audit committee financial expert as defined under applicable SEC Rules. +I +– Determined by the Board to be independent under applicable SEC and Nasdaq rules. +* +– In November 2021, Ms. Whitaker was appointed as a Class II Director and a member of the Audit +Committee, replacing Dr. Shulkin as a member of the Audit Committee. +14 +Table of Contents +COMPENSATION COMMITTEE +Committee Members*: +Responsibilities: +•  Oversees +compensation for executives and non-employee Directors. +•  Reviews and recommends to the Board for approval the performance criteria and goals and +objectives for CEO compensation. +•  In consultation with other independent non-employee +Directors, evaluates the CEO’s annual performance. +•  Evaluates and recommends to the Board for approval the CEO’s compensation. +•  In +consultation with the CEO, reviews and approves the compensation of other executive officers. +Ronny B. Lancaster +(C, I) +Mara G. Aspinall +(I) +Michael +Celano +(I) +James A. Datin +(I) +Eamonn P. +Hobbs +(I) +David J. Shulkin, M.D.* +(I) +Number of Meetings during fiscal +2021: 6 +•  Establishes performance measures and goals and evaluates the attainment of such goals under +performance-based incentive compensation plans. +•  Reviews compensation and benefits issues relating to the Company. +•  Reviews +and recommends for Board approval, the terms of any employment or retirement agreements between the Company and each executive officer. +•  Periodically reviews and administers the Company’s Compensation Recoupment Policy for +executive officers and non-employee Directors. +•  Reviews compliance with the Company’s Stock Ownership Guidelines. +C +– Committee Chair +I +– Determined by the Board to be independent under applicable SEC and Nasdaq rules. +* +– In November 2021, Dr. Shulkin was appointed as a member of the Compensation Committee. +NOMINATING AND CORPORATE GOVERNANCE COMMITTEE +Committee Members*: +Responsibilities: +•  Identifies, evaluates and recommends candidates for nomination or re-election to the Board. +•  Reviews and makes recommendations to the Board on the range of skills, qualifications and +expertise required for service as a Director. +•  Reviews and recommends for Board approval the appropriate structure of the Board and Board +committees. +Eamonn P. Hobbs +(C, I) +Ronny B. Lancaster +(I) +Lelio +Marmora +(I) +David J. Shulkin, M.D. +(I) +Number of Meetings during +fiscal 2021: 4 +•  Recommends committee assignments and candidates for the position of +Chairman of each committee. +•  Develops and recommends for Board approval Corporate Governance Guidelines and a Code of +Business Conduct and Ethics, and procedures for the implementation thereof. +•  Periodically reviews and recommends for Board approval the Board’s leadership +structure, including whether the same person should serve as both CEO and Chairman of the Board. +•  Assists in the development of succession plans for the Company’s CEO and other +executives. +•  Assists the Board in evaluating the independence of individual Directors for purposes of +Board and committee service. +•  Develops and implements an annual self-evaluation process for the Board and its +committees +C +– Committee Chair +I +– Determined by the Board to be independent under applicable SEC and Nasdaq rules. +* +– Dr. Gagliano was a member of the Nominating and Corporate Governance Committee from November 2021 until her +appointment as Interim Chief Executive Officer in April 2022. +15 +Table of Contents +NOMINATION OF DIRECTORS +Our Bylaws provide that nominations for election to the Board may be made by the Board or by any stockholder +entitled to vote for the election of Directors at the Annual Meeting. A stockholder’s notice of nomination must be made in writing to the Company’s Corporate Secretary and must be delivered to or received at our principal executive offices +not less than ninety (90) days nor more than one hundred twenty (120) days prior to the meeting. Accordingly, in order to submit a notice of nomination for the 2023 Annual Meeting, notice must be delivered to or received at our principal +executive offices between January 17, 2023 and February 16, 2023. +Stockholders can nominate individuals to serve on the Board by following the procedures described in the Company’s Bylaws. +However, in the event that less +than one hundred (100) days’ notice or prior public disclosure of the date of the meeting is given or made to stockholders, in order for notice by the stockholder to be timely, notice must be received no later than the close of business on +the tenth (10 th ) day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made, whichever first occurs. The notice to the Corporate +Secretary must set forth, with respect to the nominee, the name, age, business address, residence address, principal occupation or employment of the person, the class and number of shares of capital stock of the Company which are beneficially owned +by the person, and any other information relating to the person that is required to be disclosed in solicitations for proxies for election of Directors pursuant to Regulation 14A under the Exchange Act. The notice must also include, as to the +stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination is made: (i) the name and address of the stockholder and such beneficial owner; (ii) the class and number of shares of capital stock of the +Company which are held of record or beneficially owned by such stockholder and such beneficial owner and any other direct or indirect pecuniary or economic interest in any capital stock of the Company of such stockholder and beneficial owner, +including without limitation, any derivative instrument, swap, option, warrant, short interest, hedge, profit sharing arrangement or borrowed or loaned shares; (iii) a description of any arrangements or understandings between such stockholder +and beneficial owner and each proposed nominee and any other person (including their names) pursuant to which the nomination(s) are to be made by such stockholder and such beneficial owner or with respect to actions to be proposed or taken by such +nominee if elected as a Director; (iv) a representation that such stockholder intends to appear in person or by proxy at the meeting to nominate the persons named in its notice; and (v) any other information relating to such stockholder +and such beneficial owner that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of Directors, or may otherwise be required pursuant to +Section 14 of the Exchange Act and the rules and regulations promulgated thereunder. We may also require any proposed nominee to furnish such other information as we may reasonably require to determine the eligibility of the proposed nominee to +serve as a Director of the Company. +The Nominating and Corporate Governance Committee may also consult with outside advisors or retain +search firms to assist in the search for qualified candidates. Candidates recommended by stockholders will be considered by the Nominating and Corporate Governance Committee in the same manner as candidates recommended by other sources, but only if +the stockholder makes a recommendation in accordance with the advance notification provisions set forth in the Company’s Bylaws. +DIRECTOR QUALIFICATIONS +The Board considers diversity, including personal factors such as race and gender, and other relevant +factors in evaluating Director candidates. In determining whether an incumbent Director will be nominated for re-election, we evaluate the individual’s background, experience and prior service as a +Director. +Although there is no formal policy governing Board diversity, the Nominating and Corporate Governance +Committee considers diversity as one of many factors in identifying new candidates for the Board. Such diversity includes personal characteristics such as race and gender as well as diversity in background and skills and experience that relate to +our Board’s performance of its responsibilities. The Nominating and Corporate Governance Committee does not assign specific weight to any particular criteria when reviewing candidates and may not apply the same criteria to all prospective +nominees. +16 +Table of Contents +As presently constituted, the Board represents a deliberate mix of members who have a +deep understanding of our business as well as members who have different skill sets and points of view. The recently adopted listing requirements of Nasdaq requires each listed company to have, or explain why it does not have, two diverse directors +on the board, including at least one diverse director who self-identifies as female and at least one diverse director who self-identifies as an underrepresented minority or LGBTQ+. Each term used above and in the matrix below has the meaning given +to it in Nasdaq Listing Rule 5605(f). +As a company listed on the Nasdaq Global Select Market, we are required to have, or explain +why we do not have, at least one diverse director by the later of (i) August 7, 2023 or (ii) the date we file our proxy statement for our 2023 Annual Meeting of Stockholders, and at least two diverse directors by the later of +(i) August 6, 2025 or (ii) the date we file our proxy statement for our 2025 Annual Meeting of Stockholders. We currently have five diverse directors on our Board. The matrix below provides certain highlights of the composition of our +Board members based on self-identification. +Board Diversity Matrix (As of March 23, 2022) +Total Number of Directors +9 +Female +Male +Non-Binary +Did Not Disclose +Gender +Part I: Gender Identity +Directors +3 +6 +— +— +Part +II: Demographic Background +African American or Black +— +1 +— +— +Alaskan +Native or Native American +1 +— +— +— +Asian +— +— +— +— +Hispanic or Latinx +— +1 +— +— +Native +Hawaiian or Pacific Islander +— +— +— +— +White +2 +4 +— +— +Two or More +Races or Ethnicities +— +— +— +— +LGBTQ+ +— +Did Not +Disclose Demographic Background +— +INSIDER TRADING +Our +Insider Trading Policy prohibits trading by Directors, executive officers or employees who are in possession of material nonpublic information about the Company. +We have a policy designed to prevent any trading in the Company’s Common Stock or other securities by +Directors, executive officers and certain other employees of the Company and its affiliates while such person is in possession of material nonpublic information. The policy prohibits trading in the Company’s securities on the basis of material +nonpublic information, requires preapproval of transactions in Company securities for Directors, executive officers and all other employees and establishes regular trading windows after each calendar quarter following the Company’s announcement +of its quarterly financial results. +17 +Table of Contents +PROHIBITION AGAINST SHORT SALES, HEDGING AND PLEDGING +We believe it is inappropriate for any employee of the Company or its affiliates or any member of the Board to +engage in short-term or speculative transactions involving Company securities, including entering into financial instruments or engaging in other transactions that hedge or offset, or that are designed to hedge or offset, any decrease in the market +value of our Common Stock. As a result, our insider trading policy prohibits Directors, executive officers and all other employees from entering into transactions involving our Common Stock, such as short sales, the buying or selling of puts or +calls, the purchase of securities on margin, prepaid variable forward contracts, equity swaps, collars, exchange funds and other similar financial instruments. Our policy also prohibits employees and Directors from pledging shares of our Common +Stock as collateral. +We have implemented several governance policies related to our Common Stock. Our policies prohibit short-term, speculative transactions in +our stock, such as hedging, pledging and short sales. +STOCK OWNERSHIP AND RETENTION GUIDELINES +We have implemented stock ownership and retention guidelines +for our CEO, other executives and members of the Board. +The Board has adopted stock ownership and retention guidelines applicable to our President and CEO, our CFO +and all of our other executive officers and all non-employee members of the Board. Under these guidelines, the covered individuals must meet the following ownership requirements, expressed either as a multiple +of base salary (in the case of Company officers) or annual cash fees (in the case of non-employee Board members): +Covered Individual +Multiple of Base Salary +or +Director Fees +President and Chief Executive Officer +6x +Chief Financial Officer +2x +Other Executive Officers +1x +Non-Employee Directors +3x +Any individual who becomes subject to the guidelines is required to meet the guidelines within five +years. Any individual already subject to the guidelines who becomes subject to a higher ownership requirement, due to a promotion, a further amendment to the guidelines or an increase in compensation, is required to meet the new ownership +requirement within five years following the effective date of promotion, change in compensation or guideline amendment. In determining whether an individual meets the required ownership requirement, shares owned directly or indirectly, restricted +stock (including both time and performance-based) and shares deferred under our deferred compensation plan will be counted. Compliance will be determined as of December 31 of each fiscal year. The guidelines also require each covered individual +to retain at least 50% of the net shares acquired upon the exercise of stock options and the vesting of restricted stock until the individual’s holdings of Common Stock equal or exceed the applicable ownership requirement. As of +December 31, 2021, all covered officers and non-employee Directors were in compliance with the stock ownership guidelines. +18 +Table of Contents +AUDIT COMMITTEE MATTERS +REPORT OF THE AUDIT COMMITTEE FOR THE YEAR ENDED DECEMBER 31, 2021 +The information contained in this report shall not be deemed to be “soliciting material” or +“filed” for purposes of Section 18 of the Exchange Act or otherwise subject to liability under that Section. This report shall not be deemed “incorporated by reference” into any document filed under the Securities Act of +1933, as amended (the “Securities Act”), or the Exchange Act, whether such filing occurs before or after the date hereof, regardless of any general incorporation language in such filing. +The role of the Audit Committee is to assist the Board of Directors in fulfilling its responsibilities to oversee (i) the integrity of +the Company’s financial statements, (ii) management’s conduct of the Company’s accounting and financial reporting processes, (iii) the Company’s systems of internal control over financial reporting and disclosure controls and +procedures, (iv) the outside auditor’s qualifications, engagement, compensation, independence and performance, (v) the Company’s compliance with legal and regulatory requirements and management of financial and other risks, including +insurance review and cybersecurity, (vi) the annual independent audit of the Company’s financial statements, (vii) the application of the Company’s related person transaction policy and (viii) such other matters as directed by the Board or +as set forth in the Audit Committee Charter. The Audit Committee selects the Company’s outside independent registered public accounting firm, and once selected, the outside independent registered public accounting firm reports directly to the +Audit Committee. The Audit Committee is responsible for approving both audit and non-audit services to be provided by the outside independent registered public accounting firm. The Audit Committee is composed +of five (5) non-employee directors and operates pursuant to a Charter that was last amended and restated by the Board on May 21, 2021 (which can be found on the Company’s website at www.orasure.com ). +Management of the Company is responsible for the preparation, presentation and integrity of the Company’s financial statements, the +Company’s accounting and financial reporting principles and internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations. The independent registered public accounting firm is +responsible for auditing the Company’s financial statements and expressing an opinion as to their conformity with U.S. generally accepted accounting principles. The Audit Committee’s responsibility is to monitor and review these processes. +It is not the Audit Committee’s duty or responsibility to conduct auditing or accounting reviews. +In the performance of its +oversight function, the Audit Committee has considered and discussed the audited financial statements with management, which included a discussion of not only the quality, but also the acceptability, of the accounting principles, the reasonableness +of significant judgments and the clarity of disclosures in the financial statements. The Audit Committee met with the independent registered public accounting firm, with and without management, to discuss the results of their audit and their +judgments regarding the Company’s accounting policies. The Audit Committee has also discussed with the independent registered public accounting firm the matters required to be discussed under applicable standards, including those in Public +Company Accounting Oversight Board Auditing Standard No. 1301, as currently in effect. Finally, the Audit Committee has received the written disclosures and the letter from the independent registered public accounting firm required by +applicable requirements of the Public Company Accounting Oversight Board as currently in effect, has considered whether the provision of non-audit services by the independent registered public accounting firm +to the Company is compatible with maintaining the firm’s independence and has discussed with the independent registered public accounting firm the firm’s independence. +Based upon the reports and discussions described in this report, and subject to the limitations on the role and responsibilities of the +Audit Committee referred to above and in the Audit Committee’s Charter, the Audit Committee recommended to the Board that the audited financial statements be included in the Company’s Annual Report on +Form 10-K for the year ended December 31, 2021 for filing with the SEC and selected KPMG LLP as the independent registered public accounting firm for fiscal year 2022. The Board is recommending that +stockholders ratify that selection at the Annual Meeting. +Submitted by the Audit Committee of the Company’s Board of Directors: +Mara G. Aspinall, Chairman +Michael Celano +James A. Datin +Lelio Marmora +Anne C. Whitaker +April 7, 2022 +19 +Table of Contents +AUDIT FEES; AUDIT RELATED FEES; TAX FEES; ALL OTHER FEES +The following table presents fees for professional audit services rendered by KPMG LLP (i) for the +audits of our annual consolidated financial statements and review of the financial statements in our Quarterly Reports on Form 10-Q for the fiscal years ended December 31, 2021 and 2020, and +(ii) for the audits of our internal control over financial reporting as of December 31, 2021 and 2020. The following table also includes fees billed for other services rendered by KPMG: +2021 +2020 +Audit fees 1 +$ +1,056,643 +$ +1,231,138 +Audit-related fees 2 +$ +0 +$ +50,000 +Tax fees 3 +$ +347,382 +$ +250,408 +Total fees +$ +1,404,025 +$ +1,531,546 +1 +Includes fees related to the audits of our consolidated annual financial statements, interim reviews of our quarterly +financial statements and audits of our internal control over financial reporting for each indicated year and procedures related to business combination transactions which occurred in 2020. Includes fees for the preparation of a comfort letter for a +stock offering under a shelf registration in 2020 and preparation of a written consent for a Registration Statement on Form S-8 in 2020 related to the OraSure Technologies, Inc. Stock Award Plan. +2 +Includes fees for due diligence related to one acquisition in 2020. +3 +During the fiscal years ended December 31, 2021 and 2020, KPMG was engaged to provide tax compliance, planning and +consulting services. +PRE-APPROVAL PROCEDURES +The Audit Committee has adopted a general practice of +pre-approving all audit and non-audit services provided to the Company by our independent registered public accounting firm. The Chairman of the Audit Committee has been +delegated the authority to pre-approve audit and non-audit services having an aggregate value of up to $50,000 between meetings of the Audit Committee, provided that +such pre-approval is communicated to the Audit Committee at its next scheduled meeting. All services by KPMG in 2021 and 2020 were approved in accordance with these practices. +COMPENSATION COMMITTEE MATTERS +The Compensation Committee +assists the Board in developing and managing the compensation provided to executive officers of the Company and non-employee members of the Board. The Compensation Committee is responsible for developing and +overseeing the implementation of the Company’s compensation philosophy and for setting executive compensation at levels that are sufficiently competitive so that the Company can attract, retain, motivate and reward high quality executives who +can contribute to the Company’s success. +COMPENSATION PROCESSES AND PROCEDURES +Compensation for executives is established by the Compensation Committee in accordance with the +compensation philosophy established under its charter as set forth in the CD&A Section of this Proxy Statement. In setting executive compensation, the Compensation Committee considers the Company’s and each executive’s performance +against previously established objectives, internal pay equity, the compensation practices of the Company’s Peer Group, the Company’s industry position and general industry compensation data. The Compensation Committee periodically retains +independent compensation consultants to review our executive compensation practices and to assist in establishing competitive compensation levels for our executives. +ANNUAL PERFORMANCE EVALUATIONS +On an annual basis, the Compensation Committee and other +non-employee Directors evaluate the performance of the CEO, based on the overall performance of the Company. The CEO also evaluates the performance of the other NEOs against their respective predetermined +performance objectives. Annual performance objectives for the NEOs are established at the beginning of the applicable year and generally include two parts: (1) the Company’s overall target financial objectives, and (2) individual +objectives in the functional areas for which the executive is responsible. +20 +Table of Contents +Depending on the Company’s overall performance and the extent to which an +executive achieves his or her individual objectives for a particular year, the executive will be rated as “Does Not Meet,” “Does Not Consistently Meet,” “Meets Expectations,” “Exceeds Expectations” or +“Outstanding.” On occasion, a blended rating such as “Meets/Exceeds” or “High Meets” will be used to indicate performance between the foregoing performance rating levels. The Compensation Committee uses the performance +ratings and other factors to determine base salary adjustments, incentive cash bonuses and long-term incentive equity awards. Although this approach was also followed in evaluating Dr. Tang’s performance for 2021, Dr. Tang’s +performance assessment was primarily based on the Company’s overall performance. +ROLE OF THE COMPENSATION COMMITTEE +The Compensation Committee is comprised of independent +non-employee Directors who oversee our executive compensation program. Each year, the Compensation Committee determines the appropriate level of compensation for all NEOs other than the CEO, and in the case of +the CEO, recommends to the Board the appropriate level of compensation for the CEO. As an initial guideline, the Compensation Committee sets the total direct compensation opportunity (base salary, annual incentive bonus target, and long-term +incentive equity target) for each of our executive officers within a range around the 50th percentile of comparable medical diagnostics and healthcare companies. The variation of actual pay relative to the market data is dependent on the executive +officer’s performance, experience, knowledge, skills, level of responsibility, potential to impact our performance and future success, and the need to retain and motivate strategic talent. +The Compensation Committee generally determines an executive officer’s compensation based upon the objectives of our executive +compensation program. The Compensation Committee makes compensation recommendations to the Board for the CEO and approves decisions for the other NEOs after careful review and analysis of appropriate performance information and market compensation +data. Compensation for the CEO is approved by the independent members of the Board of Directors. +Beyond determining and +recommending (in the case of the CEO) specific compensation for the NEOs, the Compensation Committee works with the executive management team to review and adjust compensation policies and practices to ensure that they remain consistent with the +Company’s values and philosophy, support the recruitment and retention of executive talent, and help the Company achieve its business objectives. The Compensation Committee also determines a market-based level of compensation for non-employee Directors. +ROLE OF THE CEO +The CEO provides performance assessments and recommendations to the Compensation Committee on the +compensation for each executive of the Company. The CEO’s recommendations are based on their review of each executive’s performance, job responsibilities, importance to our overall business strategy, and our compensation philosophy. +Although the CEO’s recommendations are given significant weight, the Compensation Committee retains full discretion when determining compensation. +ROLE OF THE COMPENSATION CONSULTANT +To assist in the review of executive compensation and to obtain information regarding market trends and +governance best practices, the Compensation Committee engages independent executive compensation consultants to analyze our executive compensation structure and plan designs, and to assess whether our compensation program is competitive and supports +our goal of aligning the interests of our executive officers with those of our stockholders. Such consultants also provide the Compensation Committee with the Peer Group and other market data that is discussed in the CD&A, which the Compensation +Committee evaluates when establishing programs and features and determining compensation for executive officers. In connection with its 2021 compensation decisions, the Compensation Committee engaged Pay Governance LLC (“Pay Governance”) +to provide market assessments of the target compensation for our executives and consult on the preparation of this Proxy Statement. +21 +Table of Contents +The Compensation Committee has the sole authority to approve any independent +compensation consultant’s fees and terms of engagement. The Compensation Committee annually reviews its relationship with each consultant to ensure their independence. The process in 2021 included a review of the services Pay Governance +provides, the quality of those services, and the fees associated with those services during the fiscal year as well as consideration of the factors impacting independence that Nasdaq rules require and a review of Pay Governance’s independence +policy. The Compensation Committee concluded that there were no conflicts of interest that prevented Pay Governance from serving as an independent consultant to the Compensation Committee on executive compensation matters. +COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION +Mara G. Aspinall, Michael Celano, James A., Datin, Eamonn P. Hobbs, Ronny B. Lancaster and David J. +Shulkin, M.D., each served as members of the Compensation Committee during 2021, with Mr. Lancaster serving as Chairman. None of these Directors has served or is currently serving as an officer or employee of the Company, nor have they engaged +in any transactions involving the Company which would require disclosure as a transaction with a related person. There are no Compensation Committee interlocks between the Company and any other entity involving the Company’s or such +entity’s executive officers or board members. +COMPENSATION COMMITTEE REPORT +The information contained in this report shall not be deemed to be “soliciting material” or +“filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that Section. This report shall not be deemed to be “incorporated by reference” into any document filed under the Securities +Act or the Exchange Act, whether such filing occurs before or after the date hereof, regardless of any general incorporation language in such filing. +The Compensation Committee of OraSure Technologies, Inc. has reviewed and discussed with the Company’s management the CD&A, +contained in this Proxy Statement. Based on that review and discussion, the Compensation Committee recommended to the Company’s Board of Directors that the foregoing CD&A be included in the Company’s 2021 Annual Report on Form 10-K Report and Proxy Statement for the 2022 Annual Meeting of Stockholders. +COMPENSATION COMMITTEE: +Ronny B. Lancaster, Chairman +Mara G. Aspinall +Michael Celano +James A. Datin +Eamonn P. Hobbs +David J. Shulkin, M.D. +April 7, 2022 +22 +Table of Contents +EXECUTIVE OFFICERS +The table below provides information about the executive officers of the Company as of April 1, 2022. Officers of the Company hold office at the +discretion of the Board. +Name +Age +Position +Nancy J. Gagliano, M.D., M.B.A. +62 +Interim Chief Executive Officer +Scott Gleason +43 +Interim CFO, Senior Vice President, Corporate Communications & Investor Relations +Lisa Nibauer +54 +President of Diagnostics +Kathleen G. Weber +55 +President of Molecular Solutions +Agnieszka M. Gallagher +48 +Executive Vice President, General Counsel, Chief Compliance Officer and Secretary +Michele Miller +48 +Senior Vice President, Controller, Chief Accounting Officer and Assistant Secretary +Nancy J. Gagliano, M.D., M.B.A., Interim Chief Executive Officer and Director +Nancy J. Gagliano, M.D., MBA, has been a member of the Board since November 2021 and previously served on the Nominating and +Corporate Governance Committee. In April 2022, Dr. Gagliano became our Interim Chief Executive Officer. Since July 2020, she has served as Managing Director at Granite Healthcare Advisors. From May 2020 to November 2021, Dr. Gagliano +served as an executive leader of the National Institute of Health’s Rapid Acceleration of Diagnostics (RADx Tech) program, helping to oversee more than $1 billion of sponsored programs to bring millions of new COVID-19 tests to market. She previously served as Chief Medical Officer of Culbert Healthcare Solutions from September 2016 to May 2020, providing strategic guidance on healthcare consulting services. +Dr. Gagliano has also held senior leadership positions at CVS Health, including as Chief Medical Officer of Minute Clinic, and as a Senior Vice President overseeing key programs such as the enterprise smoking cessation program and the +development of the company’s telemedicine program. Dr. Gagliano previously was a practicing physician in internal medicine and held numerous leadership positions at Massachusetts General Hospital and Massachusetts General Physicians +Organization. She holds an M.D. from Harvard Medical School, an MBA from Northeastern University, and a BS in Computer Science and Biology from Union College. +Scott Gleason, Interim Chief Financial Officer, Senior Vice President, Corporate Communications & Investor Relations +Scott Gleason has served as our Interim Chief Financial Officer since September 2021, and as our Senior Vice President, Corporate +Communications and Investor Relations since May 2021. Prior to joining the Company, Mr. Gleason served as the Senior Vice President of Investor Relations and Corporate Strategy for Myriad Genetics, Inc., a leading specialty diagnostic +laboratory in the United States focused on genetic testing and precision medicine from January 2013 to April 2021. At Myriad Genetics, he managed the investor relations and corporate communications functions, led the annual strategic planning +process, and was a member of the Company’s strategic committee. Prior to his tenure at Myriad Genetics, Mr. Gleason was a senior publishing analyst at Stephens, Inc. from 2005 to 2013, covering the life science tools and diagnostics +industry. Before joining Stephens, Mr. Gleason was a United States Air Force aircraft maintenance officer and participated in two wartime deployments. Mr. Gleason received a Bachelor of Science degree in Economics from the U.S. Air Force +Academy in Colorado Springs, Colorado. +23 +Table of Contents +Lisa Nibauer, President of Diagnostics +Effective as of December 31, 2021, Lisa Nibauer was appointed as our President of Diagnostics. Previously, Ms. Nibauer +served as our Executive Vice President, Business Unit Leader, Diagnostics since joining us in May 2020. Prior to that, Ms. Nibauer spent eight years at BD Becton Dickinson, Inc. (“BD”), most recently as VP/GM, Global Medication +Delivery Solutions. In that role, she had general management responsibility for $1.6 billion in annual revenue and a team of over 300 people globally and was also accountable for the Global Marketing function for the largest business unit in +BD. Prior to that, Ms. Nibauer held the positions at BD of VP/GM, Global PreAnalytical Systems Business & Global Marketing and Senior Director, Global Blood Collection Acquisition Platform. Prior to joining BD, she held general +management, sales and marketing positions with increasing responsibilities at Adlens Beacon Inc., Schering-Plough Consumer Healthcare (Bayer), General Mills, Elf Atochem, and ICI (now part of AstraZeneca, Henkel and AkzoNobel). Ms. Nibauer +earned an M.B.A. from the UCLA Anderson School of Management and a B.S. in Chemical Engineering from Lehigh University. +Kathleen G. Weber, President of Molecular Solutions +Effective as of December 31, 2021, Kathleen G. Weber was appointed as our President of Molecular Solutions. Previously, +Ms. Weber served as our Executive Vice President, Business Unit Leader, Molecular Solutions at DNAG since January 1, 2019. Prior to that, she served as our Senior Vice President and General Manager, Consumer Products since joining us in +November 2012. Prior to her time at OraSure, Ms. Weber served in executive leadership roles at Pfizer, Johnson and Johnson, and Wyeth. Ms. Weber began her career in the finance industry at Chase Manhattan Bank (now known as JP Morgan +Chase). Ms. Weber received a B.S. in business administration from Georgetown University and an M.B.A. from New York University’s Stern School of Business. +Agnieszka Gallagher, Executive Vice President, General Counsel, Chief Compliance Officer and +Secretary +Agnieszka M. Gallagher has served as our General Counsel, Chief Compliance Officer and Secretary since November 2021. Prior to +joining OraSure, Ms. Gallagher served as the Chief Ethics and Compliance Officer at Alnylam Pharmaceuticals, a large cap biopharmaceutical company focused on RNAi therapeutics. Prior to joining Alnylam, Ms. Gallagher was the General +Counsel, Secretary, and Chief Compliance Officer of ViiV Healthcare, overseeing a multi-billion-dollar annual business. Before ViiV Healthcare, Ms. Gallagher served on GSK Vaccines executive team as Vice President, Ethics and Compliance +Officer, and prior to that she led GSK Vaccines’ legal and antitrust work following its $5 billion acquisition of Novartis Vaccines. Before joining GSK, Ms. Gallagher served in leadership roles in the legal and compliance functions at +Sandoz (a Novartis Company), Medtronic Inc., and Pfizer Inc. She holds a Juris Doctorate from Rutgers Law School and a Bachelor of Arts Degree in Spanish from Rutgers College. +Michele Miller, Senior Vice President, Controller and Chief Accounting Officer +Michele Miller has served as our Senior Vice President, Controller and Chief Accounting Officer since January 1, 2022. From +October 2018 to January 2022 Ms. Miller served as our Vice President, Finance and Controller; from December 2011 to October 2018 Ms. Miller served as our Director, Financial Reporting; and from August 2007 to December 2011 Ms. Miller served as a +Manager, Financial Reporting. Prior to joining the Company, Ms. Miller served as Manager, Financial Reporting at Knoll, Inc. and as an accountant with Beard Miller Company and Ernst & Young. Ms. Miller received her B.S. in +Accounting from Bloomsburg University and is a licensed Certified Public Accountant, a Chartered Global Management Accountant, and a member of the Pennsylvania and American Institutes of Certified Public Accountants. +24 +Table of Contents +TRANSACTIONS WITH RELATED PERSONS +Since January 1, 2021 there have been no transactions with related persons that would require disclosure in this Proxy Statement. +The Audit Committee is required to review and approve in advance all transactions with related persons involving the Company. The Audit Committee may approve a related party transaction if the transaction is on terms comparable to those that could +be obtained in arms’ length dealings with an unrelated third party. The Audit Committee also reviews any public disclosures of a related party transaction contained in our SEC filings. These responsibilities are described in the Audit +Committee’s charter, a copy of which is available on our website at www.orasure.com . +Information regarding employment, severance and retirement agreements between our executive officers and the Company is set forth in the +Section entitled, “Employment Agreements and Potential Payments Upon Termination or Change of Control,” in this Proxy Statement. +25 +Table of Contents +COMPENSATION DISCUSSION AND ANALYSIS - TABLE OF +CONTENTS +EXECUTIVE SUMMARY +27 +Overview +27 +2021 Performance +27 +2021 Business Highlights +28 +2021 NEO Compensation at a Glance +29 +Pay for Performance +30 +Compensation Governance Practices +31 +Realizable Pay vs. TSR +32 +Realizable Pay vs. SCT Compensation +32 +Pay vs. Other Company Measures of Performance +33 +Say-on-Pay +Results in 2021 and the Company’s Response +33 +Compensation Risk Assessment +34 +BENCHMARKING +35 +Overview +36 +Pay Mix +36 +Compensation Components in Detail +37 +OTHER COMPENSATION +45 +Retirement Programs +45 +Perquisites and Other Compensation +45 +Potential Payments Upon Termination or Change of Control Pursuant to Employment +Agreements +45 +Accounting and Tax Treatment of Compensation. +45 +Compensation Recoupment Policy +46 +CEO PAY RATIO +46 +COMPENSATION TABLES – TABLE OF +CONTENTS +Summary Compensation Table +47 +Grants of Plan-Based Awards +48 +Outstanding Equity Awards at December 31, 2021 +49 +Option Exercises and Stock Vested +51 +Retirement Benefits +51 +Nonqualified Deferred Compensation +51 +26 +Table of Contents +COMPENSATION DISCUSSION AND ANALYSIS +EXECUTIVE SUMMARY +Overview +This CD&A describes the material elements of the compensation of our NEOs and describes the objectives and principles underlying the +Company’s executive compensation program, the compensation decisions we have recently made under this program and the factors we considered in making these decisions. +Our NEOs for 2021 who are covered in this CD&A include: +Name +Position +Stephen S. Tang, Ph.D. 1 +Former President and Chief Executive Officer +Roberto Cuca 2 +Former Chief Financial Officer +Scott Gleason 3 +Interim CFO, Senior Vice President Corporate Communications & Investor Relations (“CFO”) +Agnieszka Gallagher 4 +Executive Vice President, General Counsel and Chief Compliance +Officer +Jack E. Jerrett 4 +Former Senior Vice President, General Counsel and Chief Compliance Officer +Kathleen G. Weber +President, Molecular +Solutions +1 +Dr. Tang served until March 31, 2022. Effective April 1, 2022, Nancy J. Gagliano, M.D., M.B.A. was +appointed to replace Dr. Tang as the Company’s Interim Chief Executive Officer. Because Dr. Gagliano did not become an executive officer until after December 31, 2021, she is not considered an NEO and her compensation is not +reported herein. +2 +Mr. Cuca served until September 17, 2021. +3 +Mr. Gleason joined the Company in May 2021 as the Senior Vice President Corporate Communications & +Investor Relations and assumed the role of Interim Chief Financial Officer in September 2021 following Mr. Cuca’s resignation. +4 +Mr. Jerrett retired from the Company effective December 31, 2021 and was replaced by Ms. Gallagher who +joined the Company on November 26, 2021. +2021 Performance +The following charts describe our consolidated financial performance during the last three fiscal years, expressed in dollars +(thousands). +27 +Table of Contents +1 2019 operating income includes a $10.1 million gain related +to the sale of the Company’s cryosurgical systems business, $664,000 of income associated with the change in the fair value of acquisition-related contingent consideration, and $1.8 million of transaction costs associated with the +acquisitions in 2019. 2020 operating loss includes $1.1 million of income associated with the change in the fair value of acquisition-related contingent consideration, and $393,000 of transaction costs associated an acquisition in 2020. 2020 +operating loss also reflects a significant investment in research and development activities associated with the development of COVID-19 testing products. 2021 operating loss includes $1.5 million of +income associated with the change in the fair value of acquisition-related contingent consideration, a $5.7 million Employee Retention Credit under the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) and also reflects +a significant investment to launch our InteliSwab ® rapid COVID-19 test including high inventory scrap expense associated with production and tech +transfer issues and marketing and advertising expenses. +In 2021, we delivered recorded revenue for both our Diagnostics and Molecular Solutions businesses, with our total company growing at a +25% compound annual growth rate since the pre-pandemic period in 2019. We experienced increased sales across all existing product lines, other than our international HIV self-test. We generated +$22.7 million in revenues from our new rapid COVID-19 antigen test, InteliSwab ® . Our net loss and operating loss reflect the negative impact of +scale up costs and the increased sales and marketing spend to get InteliSwab ® to market and inefficiencies in our InteliSwab ® +manufacturing process as we worked on our tech transfer issues. +2021 Business Highlights +Business highlights from 2021 and the principal factors driving our financial performance are summarized below: +•  Total net consolidated revenues for the full year 2021 were $233.7 million, a 36% +increase over 2020. +•  Total 2021 product and services revenues for our Diagnostics business were +$87.0 million, an increase of 37% over 2020. This includes $22.7 million of InteliSwab ® revenues. +•  Total 2021 product and services revenues for our Molecular Solutions business were +$139.9 million, an increase of 36% over 2020. +•  During 2021, our core Molecular Solutions business, serving the Genomics, Microbiome, and +Laboratory Services markets grew 65% over 2020 reflecting the rebound from the most challenging times during the COVID-19 pandemic, and strong organic growth. +•  We received three new emergency use authorizations for our InteliSwab ® COVID-19 test from the FDA for the professional, prescription self-test, and +over-the-counter settings. +28 +Table of Contents +•  We +received three major government contracts to support the launch of InteliSwab ® including a $205 million procurement contract from the Defense Logistics Agency, a $109 million +contract from the Department of Defense to expand our InteliSwab ® manufacturing capacity, and a $14 million contract from the Biomedical Advanced Research and Development Authority to +obtain 510-K clearance from the FDA for our InteliSwab ® test. +•  We continued to advance our innovation growth strategy with the development of several new +products in our Molecular Solutions business including our FDA approved Omnigene ® -Gut collection kit, our metatranscriptome services launch through our +Diversigen subsidiary, and new cancer chemistry on our Collipee ® urine collection device. +2021 NEO Compensation at a Glance +NEO compensation for 2021 was as follows: +• +Base Salary : The base salaries paid to our senior management (including the NEOs) during 2021 +increased from 2020 by 4.6% on average. Salary adjustments for 2021 were based on the performance of each executive and the Company during 2020, the marketplace compensation data provided to the Compensation Committee in 2020 by its compensation +consultant and the Company-wide average salary merit increase budget of 3.0%. Generally, an executive’s annual salary adjustment tended to be at the higher end of the range budgeted by the Company if the executive received a performance rating +of “Meets Expectations” or better and such executive’s pre-adjustment salary level was below the 50 th percentile for his or her position as +reflected in marketplace and the Peer Group compensation data. Additional detail on these salaries is provided in the “2021 Base Salaries” Section, below. +NEO +2020 Performance Rating +2020 Salary +2021 Salary +Change (%) +Stephen S. Tang, Ph.D. +Outstanding +$ 624,225 +$ 667,921 +7.00% +Scott Gleason 1 +N/A +N/A +$400,000 +N/A +Roberto Cuca +Outstanding +$439,205 +$461,165 +5.00% +Agnieszka Gallagher 1 +N/A +N/A +$465,000 +N/A +Jack E. Jerrett +Meets +$415,358 +$423,665 +2.00% +Kathleen G. Weber 2 +Outstanding +$365,650 +$416,246 +13.84% +1 Mr. Gleason and Ms. Gallagher joined the Company in May +2021 and November 2021, respectively, and the 2021 salary reflects their annualized salary for the full year. +2 Ms. Weber’s 2021 salary reflects a combined merit, performance and market-based adjustment. +• +Annual Incentive Bonuses : Incentive cash bonus awards for 2021 performance were based on +pre-established funding financial goals consistent with our operating plan, together with individual performance results. Payouts determined based on actual performance during 2021 ranged from 60% to 140% of target for each of the NEOs based on a +combination of Company and individual results. +NEO +2021 +Performance +Rating +2021 +Target +(% Salary) +Actual 2021 Bonus Payments +($) +(% Salary) +(% Target) +Stephen S. Tang, Ph.D. +Low Meets +85% +$ 340,640 +51% +60% +Scott Gleason +Exceeds +35% +$ 182,000 +46% +130% +Agnieszka Gallagher +High Meets +45% +$ 240,638 +52% +115% +Jack E. Jerrett1 +N/A +40% +$ 169,466 +40% +100% +Kathleen G. Weber +Outstanding +40% +$ 233,098 +56% +140% +1 Pursuant to his retirement agreement, Mr. Jerrett’s bonus +payment under the 2021 Incentive Plan was equal to 40% of his base salary, subject to adjustment to reflect the actual bonus pool funding approved by the Board. +29 +Table of Contents +• +Long-Term Incentive Awards : Incentive equity awards granted to Dr. Tang and the other NEOs +(except for Mr. Gleason and Ms. Gallagher who received onboarding equity awards) in February 2021 were based on the Company’s financial performance and/or each executive’s performance during 2020, as described under the +“2021 Base Salaries” Section, below. The value of the awards ranged from 96% to 366% of each executive’s base salary, as shown below. The NEOs received equity awards consisting of 50% time-vested RS and 50% PRUs. For the PRUs granted +in 2021, a cumulative three-year revenue target for the period 2021-2023 with a relative TSR modifier was established as the performance criteria. +NEO +2020 +Performance Rating +Target Range +(% +Salary) +2021 Equity Awards +($) +(% Salary) +Stephen S. Tang, +Ph.D. +Outstanding +250%-350% +$ +2,281,666 +366% +Scott Gleason 1 +N/A +70%-130% +$ +400,000 +100% +Roberto Cuca +Outstanding +105%-175% +$ +768,609 +175% +Agnieszka Gallagher 2 +N/A +95%-155% +$ +1,000,000 +215% +Jack E. +Jerrett +Meets +95%-155% +$ +519,423 +125% +Kathleen G. Weber +Outstanding +95%-155% +$ +566,758 +155% +1 Mr. Gleason received an onboarding equity award when he joined +the company in May 2021 consisting of 50% time-vested RS and 50% PRUs, with terms substantially the same as the terms of awards made to the Company’s other executives in February 2021. The indicated amount reflects the aggregate grant date fair +value of the award on May 17, 2021. +2 Ms. Gallagher +received an onboarding equity award when she joined the company in November 2021 consisting of $250,000 of time-vested RS, with cliff vesting occurring five years after date of grant; $250,000 time-vested RS vesting in equal amounts over three +years, and $500,000 of stock options vesting over four years. +Additional information regarding NEO compensation for 2021 is +provided below in this CD&A and in the accompanying tables, including the Summary Compensation Table (“SCT”) set forth below. +Pay for Performance +We follow a +pay-for-performance approach in compensating executives. Our program pays executives for performance by rewarding the achievement of predetermined financial and/or +strategic objectives. +A significant portion of each NEO’s compensation is paid out in variable and long-term compensation that +is intended to align such compensation with the long-term interests of our stockholders. Both our annual and long-term compensation are tied to the Company’s overall performance in a variety of ways, including our financial results and share +price performance. A further discussion of our pay mix for the NEOs is set forth in the “Pay Mix” Section, below. +One +aspect of our compensation program is the use of performance targets to incentivize management to achieve improved financial results on a year-to-year basis. For many +years, annual financial objectives have been used to determine the amount of pool funding available to pay individual awards under our annual cash bonus plan. These objectives are generally set at levels intended to incentivize annual financial +growth. A combination of financial and strategic objectives may also be considered, and in the past have been used, where the Compensation Committee and the Board desire to incentivize management to meet certain near-term strategic objectives which +could help drive improved financial performance in a year with increased financial uncertainty. Each year the Compensation Committee and the Board evaluate whether financial objectives, strategic objectives, or some combination thereof, would +provide the most appropriate near-term incentives for our NEOs to achieve improved financial performance. +In addition, for the past +several years we have followed a policy of granting annual equity awards to executives that consist of 50% PRUs and 50% time-vested RS. The PRUs will only vest if (i) the NEO remains employed by the Company for three years following the date of +grant and (ii) the performance criteria determined by the Compensation Committee and the Board are met. For the PRUs granted in 2021, a cumulative three-year revenue target for the period 2021-2023 with a relative TSR modifier was established +as the performance criteria. The time-vested RS portion of the award vests in equal annual installments over the three-year period following the grant date, subject to the NEO’s continued employment by the Company. +We believe the performance targets in the PRUs and the three-year service periods applicable to both the RS and PRU awards complement +the short-term incentives in our annual bonus plan. We also believe the combination of the +30 +Table of Contents +structure of our annual bonus plan and the structure of our equity award policy appropriately incentivize management to deliver substantially improved financial performance both on an annual +basis and over a longer term period and help drive long-term growth in stockholder value. +As noted above, despite the significant +pandemic-related impact on our business, we made no COVID-19 adjustments to the funding objectives for our 2021 incentive bonus plan or PRU performance measures and the Compensation Committee applied no +positive discretion in determining performance and payouts for our NEOs. +Compensation Governance Practices +We are committed to maintaining good corporate governance and practices. As a result, and in response to input from stockholders, the +Compensation Committee and the Board have adopted a number of changes over the past several years to specifically respond to stockholder concerns and better align our compensation program with performance. The most significant of these changes was +the adoption of PRUs for 50% of the value of annual long-term equity awards for our executives. These changes and certain other important aspects of our compensation practices are summarized below: +Performance Mix – The vast majority of our NEOs’ compensation is performance-based. For example, for our NEOs other than our former +CEO, 64% of their aggregate annual compensation consists of performance-based compensation. +Diversified and Performance Based Portfolio – +Our executive compensation consists of a mix of cash/equity, fixed/variable and short-term/long-term compensation. +Performance Vested +Equity – 50% of our NEOs’ annual equity awards consist of PRUs that will not vest until three years after the grant date and only if certain performance measures are met during the three-year period. +Long-Term Focus – Equity awards are subject to +long-term vesting requirements, with time-vested RS vesting over 3 years. PRUs also vest only after three years. Structuring our equity awards in this manner helps align the interests of our executives with the long-term interests of our +stockholders. +Target Bonus +Objectives – Our annual bonus pool is funded based on the achievement of annual financial objectives, strategic objectives or a combination thereof, in order to incentivize management to achieve improved financial performance on a +year-over-year basis. +Limited Bonus Pool Discretion – The aggregate +bonus pool funding for annual cash bonuses is determined pursuant to a plan funding formula tied to the Company’s achievement of specific financial objectives. The Board and Compensation Committee can make discretionary adjustments to the pool, +but such adjustments are limited to +/– 10% of the pool amount determined under the plan’s self-funding formula. +Balanced Performance +Metrics – Variable compensation is based on a combination of corporate and individual performance, measured over varying timeframes to help ensure balanced incentives for executives. +Change-in-Control Severance and Tax Gross Ups – Our policy is that employment agreements with our executives provide for “double trigger” change-in-control severance rather than “single trigger” change-in-control severance and do not provide for a 280G +income tax gross up. +Strong Stock +Ownership and Retention Conditions – We have implemented stock ownership requirements of six (6) times salary for our President and CEO, two (2) times salary for our CFO and one (1) times salary for other NEOs. +Prudent Benchmarking – The total compensation +paid to our executives is targeted at the 50 th percentile of our Peer Group of comparable companies based on achievement of performance objectives. We use a Peer Group consisting of companies in +the medical diagnostic and healthcare industries comparable in size to the Company based on total revenues and market value. +Independent +Compensation Consultants – The Compensation Committee regularly utilizes independent compensation consultants to provide compensation governance, design and benchmarking advice. During 2021, the Compensation Committee engaged Pay Governance +as its independent consultant. +Recoupment Policy – The Company maintains a +compensation recoupment or “clawback” policy, under which we will seek to recover excess compensation paid to an executive if our financial statements are restated due to misconduct by that +executive. +31 +Table of Contents +No Repricing – Our LTIP prohibits both the repricing and repurchase of underwater stock options or other equity awards without stockholder +approval. +No Perquisites – As a general matter, we do not +provide executives with any perquisites that are not offered to all employees of the Company. +Risk Review Process +– We periodically assess the risks associated with our compensation programs. +No Hedging - Our policy prohibits Directors and NEOs +from engaging in hedging activities with respect to our stock. +No Pledging – Our Directors and NEOs are not permitted to pledge our stock. +Confidentiality/Non-Compete Agreements – Our NEOs are subject to confidentiality and non-compete agreements. +Realizable Pay vs. TSR +To ensure that our executive compensation program and compensation levels are consistent with our pay-for-performance philosophy, we evaluated the degree of alignment between our former CEO’s total realizable pay (“RP”) versus our total shareholder returns (“TSR”) over the prior +three fiscal years (2019 to 2021) relative to our Peer Group. The graph below shows the comparison of our three-year TSR and RP relative to our Peer Group. +Dr. Tang’s compensation for 2019 to 2021 each year includes base salary, incentive cash bonus and all other +compensation reported in the SCT. Equity awards are valued using the closing stock price on December 31, 2021 for each company in our Peer Group. Restricted stock and restricted unit awards are valued by multiplying the number of shares or +units by the applicable closing stock price. The number of restricted units included in the calculations for Dr. Tang reflects a payout based on the Company’s currently expected performance against the applicable performance measures for +those awards. Option awards are valued as the difference between the closing stock price on December 31, 2021 and the exercise price multiplied by the number of option shares granted during the period. An option award with an exercise price +greater than the closing stock price on December 31, 2021 is valued at $0. +As indicated by the graphical display of this RP +versus performance analysis relative to peers, there was reasonable alignment between our TSR performance (which is only one perspective in assessing our performance) and the RP for our CEO relative to our Peer Group companies. This analysis +confirms the strong link between pay and performance embedded in our compensation program. +Realizable Pay vs. SCT +Compensation +As described further below, we believe long-term equity awards are a key incentive for our executives to drive the +Company’s long-term growth and align the interests of our executives with those of our stockholders. The SCT includes the estimated value of long-term incentive equity awards at the time of grant based on the accounting valuation determined +under Financial Accounting Standards Board ASC Topic 718 (“FASB ASC Topic 718”). The actual value of these awards that may be realizable by our executives may vary from these accounting-based estimates depending on the Company’s +financial and stock performance and can differ significantly from what is reported in the SCT. +32 +Table of Contents +A comparison of the realizable value of long-term equity incentive awards as of +December 31, 2021 against the values reported in the SCT indicates how compensation outcomes may be impacted by our performance. Such a comparison also shows the degree of alignment between our stock performance and the level of compensation +provided to executives. +The table below compares the compensation values reported in the SCT and the value of RP for the +compensation awarded during the three-year period 2019 to 2021 for our former CEO, Dr. Tang. +Our former CEO’s RP for the three years 2019–2021 of $6.5 million is 20% below his $8.2 million SCT compensation for the +same period. This shows a close alignment between actual pay and performance versus expectations as reflected in the aggregate SCT values for the last three years. +Pay vs. Other Company Measures of Performance +While TSR is a common measure of performance that is often used to evaluate a company’s compensation practices, we consider other +performance measures to be, at times, more reflective of the success of our business and more important as an incentive to focus our leaders on key priorities. It is important to recognize that TSR can be extremely volatile. TSR can be, and often +is, influenced by a variety of macro-economic factors that are outside the control of our executives. The following summarizes our one-year TSR during the period 2014 to 2021: +2014 +2015 +2016 +2017 +2018 +2019 +2020 +2021 +TSR +61% +(37%) +36% +115% +(38%) +(31%) +32% +(18%) +The foregoing price changes were not solely tied to our underlying performance. For example, our stock +price declined in 2015 and 2018 even though we achieved record financial performance with substantial growth and strong profitability in those years. +As a result, while our executive compensation opportunities do not follow a linear relationship with TSR, the pay realizable to our +executives (as noted above for our former CEO) should and does demonstrate a clear relationship with both TSR and financial results. We have tried to align our executive compensation with performance results that are part of our overall business +strategy that we believe will drive stock price improvement and increased value for our stockholders over the longer term. +Say-on-Pay Results in 2021 and the Company’s Response +At our 2021 Annual Meeting, stockholders were asked to vote on an advisory (non-binding) basis +on the compensation paid to our NEOs for 2020. We obtained strong stockholder support for our NEO compensation for 2020 with approximately 95% of stockholder votes cast in favor of our +“Say-on-Pay” or SOP resolution. Even with this overwhelmingly positive response, we continued our historical approach to contact certain of our major +stockholders in order to continue to understand their views regarding our compensation practices. Overall, we attempted to contact stockholders who, in the aggregate, beneficially held approximately 94.9% of our outstanding Common Stock. As a +general matter, our stockholders either did not respond or indicated that they saw no need to meet with us at that time. Feedback that we have received over the past several years has consistently supported our historical compensation +33 +Table of Contents +designs and practices and for this reason we have made limited changes. As noted above, however, we recognize the importance of aligning executive rewards with the experience of shareholders, and +so for PRU awards granted in 2021, we added a payout modifier based on how our TSR compares with peers over the 2021 to 2023 performance cycle. +We believe our stockholder engagement has been and continues to be beneficial for the Company and our stockholders. The feedback we +received reaffirms that the compensation changes we made in recent years were responsive to stockholder concerns and our executive compensation is strongly aligned with performance. Based on this feedback, no material changes to our executive +compensation program were made, although the Board intends to consider the specific stockholder feedback received in making future compensation decisions. We also intend to continue ongoing dialogue with our stockholders to ensure that our executive +compensation programs are well understood by all stakeholders and that we remain responsive to stockholder concerns. +Compensation Risk Assessment +Management periodically conducts a risk assessment of the Company’s compensation policies and practices, including its executive +compensation program. In its review, management considers the attributes of the Company’s policies and practices and other factors, including: +• +The mix of fixed and variable compensation opportunities; +• +The balance between annual and long-term performance opportunities; +• +The corporate and individual performance objectives established for annual and long-term incentive compensation; +• +The internal controls and procedures in place to mitigate risks facing the Company, including the Company’s +“clawback” policy and stock ownership guidelines; and +• +The risk that unintended consequences could result from various aspects of the Company’s compensation policies and +practices. +Based on its consideration of the foregoing, management believes that the Company’s policies and +practices are designed with the appropriate balance of risk and reward in relation to the Company’s overall business strategy and do not incentivize employees to take unnecessary or excessive risks. The Company has also concluded that any risks +arising from the Company’s compensation policies and practices are not reasonably likely to have a material adverse effect on the Company. +COMPENSATION PHILOSOPHY +The primary objectives of our compensation program for executive officers are to: +Set compensation opportunities at levels sufficient to attract and retain high quality executives, to motivate them to contribute to our success and to +reward them for performance. +Ensure the compensation opportunities provided align the interests of executives with the interests of our stockholders. +Focus our executives on both short and longer-term individual and Company priorities established by the Board and appropriately reward them for +performance against these objectives. +The total direct compensation provided to each executive consists of an annual base salary, an annual +incentive cash bonus and long-term incentive equity awards. The amount of the incentive cash bonus and the size of annual incentive equity awards are variable and depend on an executive’s and the Company’s achievement of predetermined +financial and other objectives. As a result, a substantial portion of each executive’s annual compensation is based on performance. +34 +Table of Contents +BENCHMARKING +Among various other internal and external considerations, the Compensation Committee uses the practices +and policies at other comparable medical diagnostic and healthcare companies as one piece of context in annually assessing the reasonableness and appropriateness of our executive compensation programs. With the assistance of Pay Governance, an +independent compensation consultant engaged by the Compensation Committee, we annually review and select a Peer Group of companies using criteria primarily based on industry and company size. +Based on advice from Pay Governance, the Compensation Committee modified the Peer Group used for benchmark purposes to (i) increase the +size of the peer group from 15 to 20 companies, (ii) remove 8 of the companies from the prior year’s Peer Group and (iii) add 13 new companies to the current Peer Group. This revision ensured that our peer group, which was last revised in 2018, +is comprised of similarly sized companies relevant to our business (healthcare supplies, tools and services companies with particular focus on diagnostics) and reflective of the market in which we compete for executive talent. The following provides +information about the Peer Group used by the Compensation Committee in assessing the competitiveness of executive compensation (all dollars in millions): +Company 1 +FY2021 Revenue 2 +Primary Industry +AngioDynamics, Inc. +$ +291 +Health Care Equipment +AtriCure, Inc. +$ +274 +Health Care Equipment +Atrion Corporation +$ +165 +Health Care Supplies +Avanos Medical, Inc. +$ +745 +Health Care Supplies +BioLife Solutions, Inc. +$ +119 +Health Care Supplies +Cerus Corporation +$ +131 +Health Care Supplies +CONMED Corporation +$ +1,011 +Health Care Equipment +Fluidigm Corporation +$ +131 +Life Sciences Tools and Services +Haemonetics Corporation +$ +870 +Health Care Supplies +Heska Corporation +$ +254 +Health Care Equipment +Lantheus Holdings, Inc. +$ +425 +Health Care Supplies +Meridian Bioscience, Inc. +$ +318 +Health Care Supplies +Merit Medical Systems, Inc. +$ +1,075 +Health Care Supplies +Mesa Laboratories, Inc. +$ +134 +Health Care Equipment +NanoString Technologies, Inc. +$ +145 +Life Sciences Tools and Services +Natus Medical Incorporated +$ +473 +Health Care Equipment +Neogen Corporation +$ +468 +Health Care Supplies +Quanterix Corporation +$ +111 +Life Sciences Tools and Services +Quidel Corporation +$ +1,699 +Health Care Supplies +Surmodics, Inc. +$ +105 +Health Care Equipment +Summary Statistics: +25th Percentile +$ +133 +Median +$ +283 +75th Percentile +$ +541 +OraSure Technologies, Inc. +$234 +Health Care Supplies +Percentile Rank +41% +1. +Data collected from Standard & Poor’s Capital I.Q. database. +2. +All data as of each company’s most recent fiscal year end. +35 +Table of Contents +The Compensation Committee seeks to set total direct compensation opportunity levels +for each executive near the fiftieth (50 th ) percentile of amounts paid by the Peer Group of companies for performance consistent with the Company’s target financial and other business plans +for the applicable year. Use of the fiftieth (50 th ) percentile is intended as a market-based reference and not as a strict target or limit. As a result, the total direct compensation opportunity +and the value of specific compensation components for individual executives may fall below or exceed the fiftieth (50 th ) percentile depending on the experience and individual performance of the +executive, the criticality of his or her role, the executive’s contribution to our business, and other factors. +In preparing +its 2021 competitive assessment of executive compensation, Pay Governance compared the compensation of our NEOs with the pay practices of similar roles at companies within the Peer Group and using data for comparable positions reported in the 2021 +Radford Global Life Sciences Survey. Since compensation market data can be volatile from year to year, the Compensation Committee considers both samples to ensure a thorough understanding of the competitive market. +2021 EXECUTIVE COMPENSATION COMPONENTS +Overview +Our compensation program consists of the following components: +Compensation +Form of +Compensation +Purpose +Base +Salary +Cash +Base salaries provide fixed compensation +necessary to attract and retain key executives. +Annual Incentive Bonus Awards +Cash +Annual incentive bonus awards provide +performance-based incentives to our executives to achieve both Company-wide financial and strategic goals and the executives’ individual performance objectives. +Long-Term +Incentive Awards +Performance-Vested +Restricted Units (PRU) +and Time-Vested +Restricted Stock (RS) +The largest component of our executive +compensation is paid in equity. Annual LTIP awards for the NEOs consist of 50% PRUs and 50% time-vested RS in order to provide a strong link between pay and performance. +Benefits +401(k) Plan +Health and Welfare +Benefits +Retirement and health and welfare benefits +provide a complete compensation package that is competitive with the market and addresses the needs of all employees and their families, including our executives. +Employment +Agreements +Cash severance and +accelerated equity vesting +Severance and accelerated equity vesting are +provided to our executive officers in order to ensure continued focus on the strategic matters of the Company during potentially uncertain times. +Pay Mix +We follow a pay-for-performance approach to executive +compensation, with a significant portion of our executives’ compensation consisting of annual incentive cash bonuses and long-term equity awards that are based on the executives’ and the Company’s achievement of predetermined +performance objectives. +36 +Table of Contents +The following charts illustrate the relative proportion of 2021 base salaries compared +to the performance-based elements of our executive compensation for Dr. Tang and the other NEOs (except for Mr. Cuca who resigned in September 2021 and did not receive any performance-based compensation prior to his departure). +Approximately 77% of Dr. Tang’s aggregate +compensation and 64% of the other NEOs’ aggregate compensation for 2021 +consisted of performance-based compensation. +Compensation Components in Detail +2021 Base Salaries +Annual base salaries paid in 2021 to our NEOs were established by the Compensation Committee at the beginning of 2021 based on a review +of the Company’s performance and the individual contributions of each officer compared to pre-established performance objectives for 2020. The Compensation Committee also considered the Company’s +budget for expected salary adjustments and salary levels for comparable roles in the annual benchmarking review prepared by the Committee’s independent compensation consultant. +Based on these factors, the Compensation Committee approved an annual base salary increase for our senior management averaging +approximately 4.6%. Individual salary increases for 2021 were determined by using the following guidelines: +Performance Rating +Merit Increase Range +Outstanding +5.0% - 7.0% +Exceeds Requirements +3.0% - 4.0% +Meets Requirements +2.0% - 2.5% +Does Not Consistently Meet +1.0% – 1.5% +Does Not Meet Requirements +0% +In evaluating Dr. Tang’s and the Company’s performance, the Compensation Committee +recognized the strategic accomplishments achieved during 2020, including the Company’s response to and overall strong revenue performance during the first year of the COVID-19 pandemic, the Company’s +progress in developing COVID-19 products, the Company’s acquisition of UrSure and the integration of Diversigen. +37 +Table of Contents +In view of the foregoing, the Compensation Committee determined that Dr. Tang +should receive an Outstanding performance rating for 2020 as a reflection of the mix of achievements during 2020. The remaining NEOs were evaluated based on individual objectives established for their respective positions. +As a result of these performance ratings, the Compensation Committee approved the 2021 salary levels set forth below for the NEOs. +Dr. Tang’s salary reflected a combined merit plus performance adjustment of 7.0% in recognition of his Outstanding performance rating. +NEO +2020 +Performance +Rating +2020 Salary +2021 +Salary +% +Increase +Stephen S. Tang, Ph.D. +Former President and Chief Executive Officer +Outstanding +$624,225 +$667,921 +7.00% +Scott Gleason +Interim CFO, Senior Vice President, Corporate Communications & Investor +Relations +N/A +N/A +$400,000 1 +N/A +Roberto Cuca +Former Chief Financial Officer +Outstanding +$439,205 +$461,165 2 +5.00% +Agnieszka Gallagher +Executive Vice President, General Counsel, Chief Compliance Officer +N/A +N/A +$465,000 1 +N/A +Jack E. Jerrett +Former Senior Vice President, General Counsel and Chief Compliance Officer +Meets +$415,358 +$423,665 +2.00% +Kathleen G. Weber +President, Molecular Solutions +Outstanding +$365,650 +$416,246 3 +13.84% +1 Represents annualized salary for Mr. Gleason and Ms. Gallagher because they joined the Company in May 2021 and November 2021, respectively and, therefore, were employed for only a portion of +2021. +2 Represents annualized salary for Mr. Cuca because he resigned from his employment +with the Company in September 2021 and was, therefore, employed for only a portion of 2021. +3 Represents a 7% merit increase plus $25,000 as a result of a market-based compensation adjustment. +2021 Annual Incentive Cash Bonuses +Annual cash bonuses are included as part of executive compensation because the Compensation Committee and Board believe that a +significant portion of each executive’s compensation should be structured as a variable incentive focused on short-term priorities relating to both the overall performance of the Company and the individual contributions of the executive. On an +annual basis, the Compensation Committee has adopted, with approval of the Board, an incentive plan (the “Incentive Plan”), which is intended to be the principal vehicle for incentive cash bonus awards. +When establishing the terms of the Incentive Plan, the Compensation Committee and the Board evaluate which funding objectives will +provide the most appropriate incentives for our NEOs to improve our annual financial performance. In recent years, bonus pool funding has been based solely on the achievement of annual financial objectives. Strategic objectives may also be (and in +the past have been) used in combination with annual financial objectives where there is greater financial uncertainty facing the Company and the Compensation Committee and the Board desires to incentivize our NEOs to take near-term strategic steps +required to drive annual financial growth and stability. In general, the Compensation Committee and the Board will choose those funding objectives, whether they be financial, strategic, or a combination thereof, which in their judgement provide the +most appropriate incentive for management to drive improved financial performance on a year-over-year basis. +38 +Table of Contents +Where funding is based on the achievement of financial objectives, if the Company +meets the Target levels for all funding objectives, the pool is initially funded at 100% of the aggregate projected bonuses for all participants in the Incentive Plan adjusted to reflect a normal range or mix of performance assessments (i.e., +Outstanding, Exceeds, Meets, Does Not Meet), which increases or decreases the total amount of individual bonuses to be paid to participants. Unless circumstances require otherwise, the pool generally is initially funded at 50% of the aggregate +projected bonuses if all of the Threshold levels are met and at 100% of the aggregate projected bonuses if all of the Target levels are met. High and Maximum objective levels may also be set, which would result in funding up to 150% and 200%, +respectively, of the aggregate projected bonuses. A linear interpolation of the amount of funding for each target objective is made where a particular performance is between the pre-established performance +levels. To the extent the performance level for a funding objective is below the Threshold level, generally there is no funding for that particular objective. +The amount of the cash bonus pool is determined by the Compensation Committee and recommended for Board approval. The Compensation +Committee and Board also retain discretion to increase or decrease the size of the pool in order to reflect differences in the mix of actual performance assessments of the participants or market conditions affecting the Company or other factors. +However, the Compensation Committee and Board have limited their ability to make discretionary bonus pool adjustments to +/- 10% of the pool size otherwise determined pursuant to the funding formula under the Incentive Plan. The cash bonus pool is +used to pay bonuses not only to the Company’s NEOs, but also to all other officers and certain higher-level employees of the Company and its subsidiaries. +Individual payments from the bonus pool to executives are generally calculated using a formula that considers the size of the bonus +pool, the executive’s achievement of individual performance objectives, the number of individuals participating in the Incentive Plan at the time bonuses are awarded and the executive’s target bonus percentage. Bonuses are paid based on an +assessment of each executive’s performance for the applicable year, using targets expressed as a percentage of the executive officer’s annual base salary. +If an executive officer has met or exceeded his or her individual performance objectives and/or the Company’s expectations for the +applicable year, he or she may be eligible to receive up to 150% of his or her target bonus, depending on the size of the bonus pool. The Compensation Committee and Board retain the discretion to adjust an individual executive’s performance +evaluation and to increase or decrease the bonus paid to such individual to reflect the specific contributions of that executive, the Company’s overall performance, market conditions or other circumstances. The following guidelines are used to +determine the multiple of an executive’s target bonus, or individual performance factor, to be used to calculate a bonus payout based on the executive’s performance rating for the applicable year: +Performance Rating +% Target Bonus +Outstanding +125%-150% +Exceeds +101% - 175% +Meets +100% +Does Not Meet +0% +The Compensation Committee recommends for Board approval any bonus award for the CEO based on an +assessment of the Company’s overall performance. The CEO recommends individual awards for the other executive officers for approval by the Compensation Committee based on an assessment of each executive’s performance against his or her +applicable individual performance objectives. The Compensation Committee and Board have the right, in their sole discretion, to reject any or all of the recommended bonus awards, even if the bonus pool has been funded and any or all applicable +performance criteria have been satisfied, based on the business conditions of the Company or other factors deemed relevant by the Compensation Committee or the Board. +In establishing the 2021 Incentive Plan, the Board and Compensation Committee decided that the amount of bonus pool funding should be +based on the achievement of one financial objective: consolidated revenues. +Under the 2021 Incentive Plan, Threshold, Target and +Maximum performance levels were established for the financial objective to be used to fund the bonus pool. The Target levels for the objective were set at the performance reflected in our Operating Plan or budget for 2021. The Threshold levels were +set at 91% of the Target levels and the Maximum levels were set at 114% of the Target levels. +39 +Table of Contents +The following sets forth the financial objectives and potential bonus pool funding +amounts (dollars in millions) under the 2021 Incentive Plan: +Financial Objectives +Threshold +Target +Maximum +Consolidated Net Revenues +$210.4 +$231.3 +$263.2 +Incentive Plan Pool Funding (% of Target) +50% +100% +200% +As indicated above, the maximum pool funding under the 2021 Incentive Plan (assuming no discretionary +adjustment) is $9.2 million. During 2021, we recorded revenues totaling $233.7 million. This revenue level fell below the Maximum performance level, but above the Target performance level, resulting in +pro-rated pool funding of 101% of the target or $4.9 million. +The final bonus pool +amount was approved by the Compensation Committee and the full Board and was used to pay bonuses to the Company’s NEOs and other members of our management team. Based on an assessment of each participant’s performance as well as the +Company’s overall performance during 2021, the Compensation Committee recommended, and the Board approved, a 10% discretionary downward adjustment under the 2021 Incentive Plan funding formula. The specific target payouts for NEO bonuses for +2021 (expressed as a percentage of annual base salary) are shown below: +Title +Target Payout +Opportunities +Chief Executive Officer +85% +Chief +Financial Officer (and Chief Operating +Officer) +50% +Executive Vice President and General Counsel +40% +Senior Vice President +35% +In January 2022, the Compensation Committee authorized the payout of individual bonus awards to +executive officers from the bonus pool for 2021 based on the target bonus amounts described above and an assessment of each officer’s performance during 2021 against pre-established performance objectives +(except for Dr. Tang whose assessment was based on the Company’s overall performance). The calculation of individual bonus awards was based on a formula that adjusted the foregoing target payments for both the executives’ individual +performance during 2021 and the degree to which the final approved bonus pool funding exceeded the Target funding amounts under the plan formula. +In evaluating Dr. Tang‘s and the Company‘s performance, the Compensation Committee recognized that management delivered +strong revenue performance in 2021. Consolidated revenues were $233.7 million in 2021, representing a 36% increase over 2020. The Compensation Committee noted that this increase was primarily driven by increased sales across all product lines +except sales of the Company’s International HIV self-test, and included the launch its InteliSwab ® COVID-19 Rapid Test which contributed first time +revenues of $22.7 million despite significant challenges in operations and scale up that prohibited the Company from meeting all of its goals in this area. Total molecular products and services revenues reached $143.6 million during 2021, +an increase of 35% from 2020, and included almost $54 million in sales of oral fluid sample collection devices for COVID-19 molecular testing. The Compensation Committee further noted that although the +Company exceeded its revenue targets, the Company did not meet other important objectives specifically related to InteliSwab scale up. +In view of the foregoing, the Compensation Committee determined that Dr. Tang should receive a “low meets” performance +rating for 2021. The remaining NEOs were evaluated based on individual objectives established for their respective positions. +Using +these performance ratings, the Compensation Committee next considered individual performance factors to adjust the bonuses for Dr. Tang, the other NEOs and the other participants in the 2021 Incentive Plan to reflect their performance +assessments for 2021. As a final step, the Compensation Committee adjusted the bonuses further by a pool funding factor reflecting the amount by which pool funding exceeded Target funding amounts under the plan formula. +40 +Table of Contents +Using the approach described above, a final 2021 incentive cash bonus was calculated +for Dr. Tang, representing approximately 60% of his target bonus, as follows: +2020 Base +Salary +Target +Bonus% +2021 Individual +Performance Factor +2021 +Bonus +X +X += +$667,921 +85% +60% +$340,640 +This same formula was used to calculate the 2021 bonus awards for all other NEOs, as follows: +2021 Bonus Payments +NEO +2021 +Salary +Bonus +Target +(% +Salary) +2021 Performance +Rating +Original +Performance +Rating +Adjusted +2021 +Performance +Factor 1 +2021 Bonus +Stephen S. Tang, Ph.D. +Former President and Chief Executive Officer +$667,921 +85% +Low Meets +60% +N/A +$340,640 +Scott Gleason +Interim CFO, Senior Vice President, Corporate Communications & Investor +Relations +$400,000 +35% +Exceeds +140% +130% +$182,000 +Agnieszka Gallagher +Executive Vice President, General Counsel, Chief Compliance Officer +$465,000 +45% +High Meets +115% +N/A +$240,638 +Jack E. Jerrett +Former Senior Vice President, General Counsel and Chief Compliance Officer +$423,665 +40% +N/A 2 +N/A 1 +N/A 1 +$169,466 +Kathleen G. Weber +President, Molecular Solutions +$416,246 +40% +Outstanding +150% +140% +$233,098 +1 Based on an assessment of each participant’s performance as well as the Company’s overall performance during 2021, the Compensation Committee recommended, and the Board approved, a 10% +discretionary downward adjustment under the 2021 Incentive Plan funding formula to certain members of the executive team, including the NEOs, who did not have existing contractual agreements related to the 2021 bonus. +2 Pursuant to his retirement agreement, Mr. Jerrett received an incentive cash bonus for 2021 under +the 2021 Incentive Plan. +2021 Long-Term Incentive Equity Awards +An additional way that we promote the long-term growth of the Company and align the interests of our executives with those of our +stockholders is by compensating executives with equity in the Company that vests over a multi-year period. To accomplish this, the Compensation Committee administers the Company’s LTIP pursuant to which grants of time-vested restricted shares +(RS) and performance-vested restricted units (PRUs) are made to executive officers. +41 +Table of Contents +Incentive equity awards under the LTIP are made on an annual basis, and are +discretionary and subject to approval by the Compensation Committee and/or the Board. Awards to individual participants under the LTIP are based on an evaluation of a number of factors, including: +• +Performance of the participant for the applicable year; +• +The participant’s level of responsibilities and relative contribution to the Company’s business; +• +A competitive assessment of awards at Peer Group companies; +• +History of equity awards to the participant; and +• +Other factors deemed relevant by the Compensation Committee and/or the Board. +Each participant’s individual performance for the applicable year is evaluated against his or her individual performance objectives +for that year, except for our CEO who is evaluated based on total Company performance. A “Meets Expectations” performance is typically the threshold requirement to receive an equity award under the LTIP. Awards below this performance level +may be considered on an exception basis at the discretion of the Compensation Committee and/or the Board. +The value of potential +incentive equity awards that could have been granted in 2021 under the LTIP (expressed as a percentage of annual base salary) based on performance during 2020, are summarized below: +2021 LTIP Award Ranges (% of salary) +Performance +Position +Lower End +Target +Maximum +President/CEO +250 +% +300 +% +350 +% +CFO +105 +% +140 +% +175 +% +EVP +95 +% +125 +% +155 +% +Business Unit Leads and General Counsel +95 +% +125 +% +155 +% +Other SVPs +70 +% +100 +% +130 +% +The percentages set forth above were established at levels that the Compensation Committee believed +represented an appropriate long-term incentive compensation value for each executive, based on the results of the benchmarking review prepared by its independent consultant. Once the aggregate dollar value of an award has been established by +applying the Compensation Committee approved award percentage to a participant’s base salary, the value is converted into shares or units based on a valuation of the restricted stock and restricted unit portions of the award using the average +of the high and low stock price on the grant date as reported on the Nasdaq Stock Market. +Under the LTIP, 50% of an +executive’s total equity award consists of PRUs that will not vest until three years after the grant date and only if certain performance measures are met during that three-year period. The awards made in 2021 incorporate one performance +metric: cumulative revenues during the three-year period beginning with 2021, and are further subject to a modifier of up to +/- 15% based on relative TSR against the TSRs of companies included in the Peer Group used by the Board and Committee for +executive compensation benchmarking purposes. +OraSure Relative TSR Performance vs Peer Group +PRU Payout Modifier +P25 or lower +-15% +P50 +0% +P75 or higher ++15% +* intermediate results are interpolated on a straight line basis +The remaining 50% of each executive’s incentive equity award consists of grants of time-vested RS that vest in equal annual +installments over a three-year period. These vesting restrictions serve to promote the Company’s long-term growth by restricting executives’ ability to realize short-term gains from their awards. The Compensation Committee believes the +42 +Table of Contents +terms of its incentive equity awards to executives are competitive with the terms of equity awards offered at comparable medical diagnostics and healthcare companies. +The structure of the equity awards reflects market-based good governance practices as well as historical input from our stockholders +reflecting that a meaningful portion of the equity awards should have performance-based vesting. We believe 50% is a meaningful portion and is consistent with or exceeds the performance orientation of our Peer Group. +The adoption of performance-based vesting conditions with a three-year service requirement for 50% of an executive’s annual equity +award substantially strengthens the link between pay and performance and creates an appropriate long-term incentive for our executives. At the same time, the use of time-based vesting conditions for the +remaining 50% of each award achieves the equally important goal of share ownership/accumulation that directly promotes alignment with stockholders and +further supports executive retention. Overall, the Compensation Committee and Board believe that this approach represents a balanced performance-based approach to our executive compensation program that is appropriate for our Company, directly +responds to feedback from our stockholders, and is consistent with executive pay governance best practices. +Equity awards are +generally made by the Compensation Committee each year as part of the normal annual compensation cycle. The awards for a particular year generally occur in late January or early February of the following year after the Company’s full year +financial results are known and performance evaluations for the executive officers have been prepared. Equity awards approved by the Compensation Committee for the CEO are then reviewed and approved by the Board. In addition to the annual equity +awards, the Compensation Committee may approve equity awards for newly hired officers or in recognition of an executive’s promotion or expansion of responsibilities. These latter grants may have vesting or other terms that differ from the terms +generally approved for annual equity awards. Notwithstanding the terms of the LTIP, equity awards are made at the discretion of the Compensation Committee or Board. +Effective February 1, 2021, the Compensation Committee approved equity awards for the NEOs under the LTIP based on the performance +evaluations of such officers for 2020, as summarized below. A description of the basis for each of the NEO’s 2020 performance evaluation is set forth above under the Section entitled, “2021 Base Salaries,” in this CD&A. +The following summarizes the equity awards provided to the NEOs during 2021: +Executive Officer +2020 +Performance +Assessment +Time Vested +Restricted Stock +Performance-Vested +Restricted Units +Non-Qualified +Stock Options +Award Value +(% of Base Salary) +Stephen S. Tang, Ph.D. +Former President and Chief Executive Officer +Outstanding +73,342 Shs +73,342 Shs +N/A +366% +Scott Gleason 1 +Interim CFO, Senior Vice President, +Corporate Communications & Investor Relations +N/A +20,439 Shs +20,439 Shs +N/A +100% +Roberto Cuca +Chief Financial Officer +Outstanding +24,706 Shs +24,706 Shs +N/A +175% +Agnieszka Gallagher 2 +Executive Vice President, General +Counsel, Chief Compliance Officer +N/A +52,534 Shs +0 Shs +113,448 Shs +215% +Jack E. Jerrett +Former Senior Vice President General Counsel, Chief Compliance Officer and +Secretary +Meets +16,689 Shs +16,689 Shs +N/A +125% +Kathleen G. Weber +President, Molecular Solutions +Outstanding +18,218 Shs +18,218 Shs +N/A +155% +43 +Table of Contents +1 Mr. Gleason received an onboarding equity award when he joined the company in May 2021 +consisting of 50% time-vested RS and 50% PRUs, with terms substantially the same as the terms of awards made to the Company’s other executives in February 2021. The indicated amount reflects the aggregate grant date fair value of the award on +May 17, 2021. +2 Ms. Gallagher received an onboarding equity award when she joined the +company in November 2021 consisting of $250,000 of time-vested RS, with cliff vesting occurring five years after date of grant; $250,000 time-vested RS vesting in equal amounts over three years, and $500,000 of stock options vesting over four years. +2019 PRU Payout in 2021 +Pay Out Under 2019 PRUs . The PRU portion of equity awards made to executives in early 2019 based on performance during 2018 did +not vest until three years after the grant date, based 50% on the achievement of a three-year product revenue compound annual growth rate (“CAGR”) target and 50% based on a one-year IBIT target. The +three-year service period for these PRUs expired on February 1, 2022. The following table summarizes the potential range of shares that could be delivered based upon the degree of achievement of the applicable performance measures: +Achievement Level of +Applicable Performance Target +Percentage of PRUs +To Become +Vested +80% +50% +90% +75% +100% +100% +110% +125% +120% +150% +For the 2019 PRUs, Company performance exceeded the three-year product revenue CAGR target by more than +120% and fell short of the one-year IBIT performance measure. This resulted in a maximum payout of 150% on shares associated with the three-year product revenue CAGR measurement and no payout on shares +associated with the one-year IBIT measurement. The following summarizes the three-year revenue CAGR and one-year IBIT targets for the 2019 PRUs, our performance against +these targets and the resulting number of shares delivered to the NEOs upon settlement of the PRUs: +Performance Target +Actual Performance +% of Target +% Vested +CAGR +9.79% +21.13% +216% +150% +IBIT +$27.1 million +$20.2 million +75% +0% +Final Vesting +75% +2019 PRU’s Target and Actual Payout +CAGR Target +(# of shs) +CAGR Actual +(# of shs) +IBIT Target +(# of shs) +IBIT Actual +(# of shs) +Stephen S. Tang, Ph.D. +23,936 +35,904 +23,936 +0 +Scott Gleason 1 +N/A +N/A +N/A +N/A +Roberto Cuca 1 +N/A +N/A +N/A +N/A +Agnieszka Gallagher 1 +N/A +N/A +N/A +N/A +Jack E. Jerrett 2 +9,262 +13,893 +9,262 +0 +Kathleen G. Weber +6,514 +9,771 +6,514 +0 +1 Mr. Cuca, Mr. Gleason and Ms. Gallagher did not receive any 2019 +PRU’s because they joined the Company after these awards were made. +2 Under +the terms of Mr. Jerrett’s retirement agreement, PRUs granted to Mr. Jerrett but unvested as of his retirement date of December 31, 2021 continue to vest without the employment requirement. +44 +Table of Contents +OTHER COMPENSATION +We provide minimal additional benefits outside of our primary elements of compensation, as follows: +Retirement Programs +All of our U.S. employees, including executive officers, are eligible to participate in our 401(k) profit sharing plan (the “401(k) +Plan”). We make matching contributions for participants on a dollar-for-dollar basis up to $4,000 per year. Our subsidiary DNA Genotek, which is located in Canada, +offers a registered retirement plan to its employees, which similarly allows employee contributions for retirement savings, with matching contributions by DNA Genotek of up to CAD $4,000 per year. +The Company also maintains the OraSure Technologies, Inc. Deferred Compensation Plan (the “Deferred Compensation Plan”) for +the benefit of the Company’s highly compensated employees, including all of the NEOs, and its non-employee Directors. The Deferred Compensation Plan allows participants to defer up to 100% of their annual +base salaries (or fees in the case of non-employee Directors) and up to 100% of annual incentive cash bonuses and, upon vesting, restricted shares of the Company’s Common Stock awarded to the participant. +The Company may also make discretionary contributions to the participants’ accounts that vest over one or more years as determined by the Company, as well as upon death, disability or a change of control. Since the Deferred Compensation Plan +was put in place, the Company has made no discretionary contributions. Participants may elect to receive distributions of deferred amounts on a specified date, separation from service, a change of control, disability and/or death. A further +description of these benefits is set forth in the Section entitled “Nonqualified Deferred Compensation.” +Perquisites and Other Compensation +As a general matter, the Compensation Committee and Board do not believe that executive officers should be treated differently than +other employees by receiving special perquisites unrelated to our general compensation program. Therefore, our healthcare, disability, and other insurance programs and benefits are the same for all eligible employees, including executive officers. +Executive officers generally do not receive any additional perquisites, except for Ms. Weber who receives certain benefits under her employment agreement in connection with her international assignment at our Canadian subsidiary, DNA Genotek, +Inc. A further description of these benefits is set forth in the Section entitled, “Employment Agreements and Potential Payments Upon Termination or Change of Control.” +Potential Payments Upon Termination or Change of Control Pursuant to Employment Agreements +The Company has entered into employment agreements with each of the NEOs. In addition to the compensation elements discussed above, +these agreements provide for post-employment severance payments and benefits in the event of termination of employment by the Company without “cause” or by the executive for “good reason” and provide enhanced severance payments +upon such terminations in connection with a “change of control” of the Company. The terms of these arrangements are discussed in more detail under the Section entitled, “Employment Agreements and Potential Payments Upon Termination or +Change of Control,” in this Proxy Statement. The Compensation Committee believes that these arrangements are generally consistent with industry practice at the Peer Group companies, provide an incentive to the applicable executive to remain +with the Company, and serve to align the interests of stockholders and the executives in the event of a change of control of the Company. +Accounting and Tax Treatment of Compensation. +In approving the amount and form of compensation for the NEOs, the +Compensation Committee considers all elements of the cost to the Company of providing such compensation, including accounting and tax implications. In particular, it considers the potential impact of Section 162(m) of the Internal Revenue Code +(the “Code”), which disallows a tax deduction for any publicly-held corporation for individual compensation exceeding $1 million in any taxable year for certain covered employees. Notwithstanding these deductibility limitations, the +Compensation Committee intends to maintain flexibility to pay compensation that is not entirely deductible when the best interests of the Company would make that advisable. +45 +Table of Contents +Compensation Recoupment Policy +The Board has adopted a compensation recoupment or “clawback” policy, applicable to all officers subject to Section 16 of +the Exchange Act. Under this policy, the Company will pursue recoupment of any excess compensation, including incentive cash bonuses, restricted awards, stock options or other compensation, which was awarded to a covered officer based on financial +statements of the Company where such statements are required to be restated as a result of the gross negligence, intentional misconduct or fraud of the covered officer. In addition to recoupment, the Company shall take such other remedial actions +deemed necessary against a covered employee, including recommending disciplinary actions up to and including termination and other available remedies. The recovery period for recoupment of any compensation is up to three fiscal years preceding the +date on which the Company is required to prepare and file the restated financial statements. This policy has been proactively adopted in advance of final guidance under Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection +Act of 2010 (“the Dodd-Frank Act”) and will be amended to conform with this Section when final guidance is available. +CEO Pay Ratio +As required by applicable law and SEC regulations, we are providing the following information about the +relationship of the median of the annual total compensation of our employees and the annual total compensation of Stephen S. Tang, Ph.D., our former President and CEO. +For the 2021 fiscal year, (i) the median of the annual total compensation of all employees of the Company (other than +Dr. Tang) and its subsidiaries was $58,959; and (ii) the annual total compensation of Dr. Tang, as reported in the SCT included immediately after this CD&A, was $2,959,781. Based on this information, for 2021 the ratio of the +annual total compensation of Dr. Tang, our President and CEO, to the median of the annual total compensation for employees was 50 to 1. +To identify the median of the annual total compensation of all our employees, as well as to determine the annual total compensation of +our median employee, we took the following steps: +• +We determined that, as of December 31, 2021, our world-wide employee population consisted of 736 people. +• +To identify the “median employee” from our employee population, we compared the amount of salary, wages, +overtime, commissions and bonuses of our employees as reflected in our payroll records. In making this determination, we did not annualize the compensation of employees who were hired in 2021 but did not work for us for the entire fiscal year. Since +we do not widely distribute annual equity awards to our employees, such awards were excluded from our compensation measure. +• +Once we identified our median employee, we combined all of the elements of this employee’s compensation for 2021 in +accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K, resulting in the annual total compensation as described above. +46 +Table of Contents +COMPENSATION +TABLES +SUMMARY +COMPENSATION TABLE +The following table summarizes the compensation of our CEO and the other NEOs, for the fiscal years +ended December 31, 2021, 2020 and 2019: +Name & Principal +Position +Year +Salary +($) +Bonus +($) +Stock +Awards 3,4 +($) +Option +Awards +($) +Non- +Equity +Incentive +Plan +Compen- +sation 5 +($) +Change in +Pension Value +and Nonqualified +Deferred +Compensation +Earnings +($) +All other +Compen- +sation 6 +($) +Total +($) +Stephen S. Tang, Ph.D. +2021 +$ +667,921 +— +$ +1,946,860 +— +$ +341,000 +— +$ +4,000 +$ +2,959,781 +Former President and Chief +2020 +$ +624,225 +— +$ +1,218,000 +— +$ +1,239,196 +— +$ +4,000 +$ +3,085,421 +Executive Officer +2019 +$ +609,000 +— +$ +1,242,996 +— +$ +258,825 +— +$ +4,000 +$ +2,114,821 +Scott Gleason +2021 +$ +178,846 +1 +— +$ +424,620 +— +$ +182,000 +— +$ +2,077 +$ +787,544 +Interim CFO, Senior Vice +President, +2020 +— +— +— +— +— +— +— +— +Corporate Communications +& +2019 +— +— +— +— +— +— +— +— +Investor Relations +Roberto Cuca +2021 +$ +381,475 +1 +— +— +— +— +— +$ +4,000 +$ +385,476 +Former Chief +Financial Officer +2020 +$ +439,205 +— +$ +686,522 +— +$ +493,886 +— +$ +4,000 +$ +1,623,613 +2019 +$ +426,413 +— +$ +639,102 +— +$ +132,188 +— +$ +4,000 +$ +1,201,703 +Agnieszka Gallagher +2021 +$ +26,827 +1 +— +$ +500,000 +$ +500,000 +$ +240,638 +— +— +$ +1,267,466 +Executive Vice President, +2020 +— +— +— +— +— +— +— +— +General Counsel and +2019 +— +— +— +— +— +— +— +— +Chief Compliance Officer +Jack E. Jerrett +2021 +$ +423,665 +1 +$ +169,466 +2 +$ +855,013 +— +— +— +$ +4,000 +$ +1,452,144 +Former Senior Vice +President, +2020 +$ +415,358 +— +$ +513,207 +— +287,428 +— +$ +4,000 +$ +1,219,993 +General Counsel and +2019 +$ +380,152 +— +$ +480,976 +— +93,137 +— +$ +4,000 +$ +958,265 +Chief Compliance Officer +Kathleen G. Weber +2021 +$ +416,246 +— +$ +483,596 +— +$ +233,098 +— +$ +465,898 +$ +1,598,838 +President, Molecular +Solutions +2020 +$ +365,650 +— +$ +465,940 +— +$ +354,242 +— +$ +524,121 +$ +1,709,953 +2019 +$ +355,000 +— +$ +338,272 +— +$ +88,040 +— +$ +342,773 +$ +1,124,085 +1 +The 2021 salaries shown for Mr. Gleason and Ms. Gallagher represent the amounts paid after they joined the +Company on May 17, 2021 and November 29, 2021, respectively. The 2021 salary shown for Mr. Cuca represents the amount paid to Mr. Cuca during his service with the Company prior to his resignation date of September 17, 2021. +The 2021 salary shown for Mr. Jerrett represents the amount paid to Mr. Jerrett during his service with the Company prior to his retirement date of December 31, 2021. +2 +The amount for Mr. Jerrett represents the cash bonus paid under the terms of his retirement agreement. +3 +The indicated amounts reflect the aggregate grant date fair value of RS and PRU awards made to the NEOs during the +applicable year, computed in accordance with FASB ASC Topic 718. The value of the PRUs reflect the assumption that 100% of target will be achieved for each of the performance measures reflected in the terms of the PRUs. Certain assumptions used in +the calculation of the indicated amounts are set forth for the applicable year of award in footnote 12 to the Company’s audited consolidated financial statements for the year ended December 31, 2021, included in the Company’s Annual +Report on Form 10-K filed with the SEC on March 1, 2022 (the “2021 10-K Report”). The maximum grant-date fair value of the PRU awards made in 2021, +assuming the highest level of performance measures will be achieved (120% of target resulting in a 150% payout), are as follows: Mr. Gleason, $336,927; Ms. Weber $300,324; and Mr. Jerrett, $275,118. Pursuant to his Transition +Agreement, 50% of the PRU awards made in 2021 to Dr. Tang will vest at 100% of target on the eighth day following his termination date of March 31, 2022, representing a grant-date fair value of $403,014. +4 +The amount indicated for Mr. Jerrett for 2021 also includes compensation resulting from the acceleration of +unvested RS upon his retirement in the amount of $412,004 and value of unvested PRU which will continue to vest without the employment requirements in the amount of $774,697 +5 +The indicated amounts reflect incentive cash bonuses paid to the NEOs pursuant to an Incentive Plan, based on +performance during the applicable year. For a description of incentive cash bonus payments for performance during 2021, see the Section entitled, “2021 Annual Incentive Cash Bonuses,” in the CD&A. +6 +The indicated amounts of $4,000 or $2,077 reflect cash contributed to a 401(k) profit sharing plan as an +employer-matching contribution, which was offered to U.S. employees of the Company during each of the indicated years. The amount indicated for Ms. Weber in 2019 represents $4,000 in matching contributions to a 401(k) profit sharing plan, +$14,347 for the reimbursement of moving expenses, $68,900 representing a monthly living expense allowance as a result of Ms. Weber’s promotion to head our Molecular Solutions business and relocation to Ottawa, Canada, $10,113 for +reimbursement of tax preparation fees, and $245,413 in tax equalization payments representing the amount by which Ms. Weber’s Canadian income tax liability exceeds her U.S. income tax liability. Ms. Weber’s 2020 amount represents +$4,000 in matching contributions to a 401(k) profit sharing plan, $68,900 representing a monthly living expense allowance, $15,177 for reimbursement of tax preparation fees, and $436,044 in tax equalization payments. Ms. Weber’s 2021 +amount represents $4,000 in matching contributions to a 401(k) profit sharing plan, $68,900 representing a monthly living expense allowance, $18,079 for reimbursement of tax preparation fees, and $374,919 in tax equalization payments. +47 +Table of Contents +GRANTS OF PLAN-BASED +AWARDS +The following table summarizes information concerning possible incentive cash bonuses and possible and +actual RS and PRU awards for the NEOs during the fiscal year ended December 31, 2021: +Estimated Possible Payouts +Under Non-Equity Incentive +Plan Awards 2 +Estimated Possible Payouts Under +Equity Incentive Plan Awards 3 +Name +Grant +Date +Threshold +($) +Target +($) +Maximum +($) +Threshold +(# Shs.) +Target +(# Shs.) +Maximum +(# Shs.) +All other +Stock +Awards: +Number +of Shares +of Stock +or +Units 4 +(#Shs.) +All other +Option +Awards: +Number +of +Securities +Underlying +Options +(#Shs.) +Exercise +of Base +Price of +Option +awards +($/Sh) +Grant +Date +Fair +Value +of +Stock +Awards 5 +($) +Stephen S. Tang, +Ph.D. +2/1/2021 1 +— +— +— +— +— +— +73,342 +RS +— +— +$1,140,831 +Former President +and +2/1/2021 1 +— +— +— +— +— +— +73,342 +PRU +— +— +$806,029 +Chief Executive +Officer +N/A +$283,866 +$567,733 +$851,599 +50,163 +RS +60,195 +RS +70,228 +RS +— +— +— +N/A +N/A +— +— +— +50,163 +PRU +60,195 PRU +70,228 +PRU +— +— +— +N/A +Scott Gleason +5/21/2021 1 +— +— +— +— +— +— +20,439 +RS +— +— +$199,996 +Interim CFO, +Senior Vice President, Corporate Communications & Investor Relations +5/21/2021 1 +— +— +— +— +— +— +20,439 +PRU +— +— +$224,625 +N/A +$70,000 +$140,000 +$210,000 +N/A +N/A +N/A +— +— +— +N/A +N/A +N/A +N/A +N/A +— +— +— +N/A +Roberto +Cuca +2/1/2021 1 +— +— +— +— +— +— +24,706 +RS +— +— +$384,301 +Former Chief +Financial Officer +2/1/2021 1 +— +— +— +— +— +— +24,706 +PRU +— +— +$271,519 +N/A +$115,291 +$230,583 +$345,874 +14,824 +RS +19,765 +RS +24,706 +RS +— +— +— +N/A +N/A +— +— +— +14,824 +PRU +19,765 PRU +24,706 +PRU +— +— +— +N/A +Agnieszka Gallagher +11/29/2021 1 +— +— +— +— +— +— +52,534 +RS +— +— +$499,992 +Executive Vice President, +11/29/2021 1 +— +— +— +— +— +— +113,448 +$9.52 +$1,079,741 +General Counsel and +N/A +$104,625 +$209,250 +$313,875 +N/A +N/A +N/A +— +— +— +N/A +Chief Compliance Officer +N/A +N/A +N/A +N/A +— +— +— +N/A +Jack E. +Jerrett +2/1/2021 1 +— +— +— +— +— +— +16,689 +RS +— +— +$259,597 +Former Senior Vice +President, +2/1/2021 1 +— +— +— +— +— +— +16,689 +PRU +— +— +$183,412 +General Counsel, +and +N/A +$84,733 +$169,466 +$254,199 +12,684 +RS +16,689 +RS +20,694 +RS +— +— +— +N/A +Chief Compliance Officer +N/A +— +— +— +12,684 +PRU +16,689 PRU +20,694 +PRU +— +— +— +N/A +Kathleen G. Weber +2/1/2021 1 +— +— +— +— +— +— +18,218 +RS +— +— +$283,380 +President, Molecular Solutions +2/1/2021 1 +— +— +— +— +— +— +18,218 +PRU +— +— +$200,216 +N/A +$83,249 +$166,498 +$249,748 +11,166 +RS +14,692 +RS +18,218 +RS +— +— +— +N/A +N/A +— +— +— +11,166 +PRU +14,692 PRU +18,218 +PRU +— +— +— +N/A +1 +Annual incentive equity awards to NEOs consisted of a combination of time-vested RS and PRUs that were granted in 2021 +pursuant to the LTIP based on performance during 2020. Annual equity awards made during 2021 were approved by the Compensation Committee effective on February 1, 2021. For a description of these equity awards and their terms, see the Section +entitled, “2020 Long-Term Incentive Awards,” in the CD&A. Awards granted to Mr. Gleason and Ms. Gallagher represent on-boarding awards. Mr. Gleason’s awards were granted with +terms substantially similar to the annual incentive equity awards granted to the other NEOs in 2021 pursuant to the LTIP based on performance during 2020. However, Ms. Gallagher was awarded two restricted stock awards, one with a three-year +vesting schedule and another with a five-year cliff vesting schedule. Ms. Gallagher was also granted nonqualified stock options, vesting and exercisable over a four year period, with one-fourth of the +options vesting on the first anniversary date of the grant and remainder vesting ratably on a monthly basis over the remaining 36 months. Mr. Cuca forfeited his 2021 LTIP awards as a result of his resignation in September 2021. +2 +The indicated amounts represent potential incentive cash bonus payments to the NEOs under the 2021 Incentive Plan. On +January 27, 2022, bonus payments under the 2021 Incentive Plan were approved by the Compensation Committee for the NEOs, based on performance during 2021. The Threshold and Target amounts assume the executive receives 50% and 100% of his or her +target bonus and that the aggregate bonus pool is funded at 50% and 100% for each performance objective in the 2021 Incentive Plan, respectively. The Maximum amounts assume that the recipient receives 150% of his or her target bonus based on +performance for 2021 and that the bonus pool is funded at 200% or the Maximum level for each performance objective in the 2021 Incentive Plan. Although he retired in December 2021, Mr. Jerrett’s 2021 bonus amount was paid under the 2021 +Incentive Plan pursuant to the terms of his retirement agreement. A further description of the payments approved under the 2021 Incentive Plan is set forth in the Section entitled, “2021 Annual Incentive Cash Bonuses,” in the CD&A. +Mr. Cuca forfeited his cash bonus award under the 2021 Incentive Plan as a result of his resignation in September 2021. +3 +The indicated amounts represent the potential number of shares which could have been granted to the NEOs in 2021 in the +form of RS and PRUs pursuant to the LTIP, based on performance during 2020. The individual share numbers for each potential award were calculated by dividing 50% of the long-term incentive targets for each NEO set forth in the LTIP by the mean +between the high and low sales price of the Common Stock as reported by Nasdaq on the date of grant. The number of shares corresponding to the PRUs were calculated based on the assumption that 100% of target is achieved for each of the performance +measures set forth in the terms of such PRU awards. The actual number of shares received upon vesting of the PRUs could vary from 50% to 200% of target depending on the degree to which the performance measures are achieved. +4 +The indicated amounts represent the actual number of shares of RS or PRUs granted to the NEOs in 2021 under the LTIP, +based on performance during 2020. A further description of these equity awards and their terms is set forth in the Section entitled, “2021 Long-Term Incentive Awards,” in the CD&A. +5 +The indicated amounts represent the grant date fair value calculated in accordance with FASB ASC Topic 718. +48 +Table of Contents +OUTSTANDING EQUITY AWARDS AT +DECEMBER 31, 2021 +The following table summarizes information regarding unexercised stock options and unvested RS and PRUs +held by the NEOs as of December 31, 2021: +Option Awards 1 +Stock Awards 1 +Name +Number of +Securities +Underlying +Unexercised +Options +(#) +Exercisable +Number of +Securities +Underlying +Unexercised +Options 2 +(#) +Unexercisable +Equity +Incentive +Plan +Awards: +Number of +Securities +Underlying +Unexercised +Unearned +Options (#) +Option +Exercise +Price +($/Sh.) +Option +Expiration +Date +Number of +Shares or +Units of +Stock +That +Have +Not +Vested 2 (#) +Market +Value of +Shares or +Units of +Stock +That +Have Not +Vested 9 ($) +Equity +Incentive +Plan +Awards: +Number of +Unearned +Shares, +Units or +Other +Rights +that +Have Not +Vested 2 (#) +Equity +Incentive +Plan +Awards: +Market +or Payout +Value of +Unearned +Shares, +Units +or +other +Rights +That +Have Not +Vested 9 ($) +Stephen S. Tang, Ph.D. Former President and Chief Executive Officer +— +— +— +— +— +18,558 3(a) +$161,269 +— +— +— +— +— +— +— +15,957 3(b) +$138,666 +— +— +— +— +— +— +— +42,499 3(c) +$369,316 +— +— +— +— +— +— +— +36,671 3(d) +$318,671 +— +— +— +— +— +— +— +— +— +35,904 3(e) +$312,006 +— +— +— +— +— +— +— +16,999 3(f) +$147,721 +— +— +25,499 3(g) +$221,586 +— +— +— +— +— +— +— +36,671 3(h) +$318,671 +Scott Gleaon +Interim CFO, Senior Vice President, Corporate Communications & Investor +Relations +— +— +— +— +— +20,439 4(a) +$177,615 +— +— +— +— +— +— +— +— +— +26,267 4(b) +$228,260 +— +— +— +— +— +— +— +— +— +— +— +— +— +— +— +— +— +— +Agnieszka Gallagher Executive Vice President, General Counsel and Chief Compliance Officer +— +113,448 +— +$9.52 +11/29/2031 +— +— +— +— +— +— +— +— +— +— +— +26,267 8 (a) +$228,260 +26,267 8 (b) +$228,260 +Jack E. Jerrett +Former Senior Vice President, General Counsel, and Chief Compliance Officer +6,407 +— +— +$5.71 +2/3/2024 +— +— +— +— +13,650 +— +— +$9.31 +2/3/2025 +— +— +— +— +— +— +— +— +— +— +— +13,893 7(a) +$120,730 +— +— +— +— +— +— +— +14,326 7(b) +$124,493 +— +— +— +— +— +— +— +21,488 7(c) +$186,731 +— +— +— +— +— +— +— +16,689 7(d) +$145,027 +Kathleen Weber +President, Molecular Solutions +4,129 +— +— +$5.71 +2/3/2024 +— +— +— +— +10,404 +— +— +$9.31 +2/3/2025 +— +— +— +— +— +— +— +— +— +4,343 6(a) +$37,741 +— +— +— +— +— +— +— +21,677 6(b) +$188,373 +— +— +— +— +— +— +— +18,218 6(c) +$158,314 +— +— +— +— +— +— +— +— +— +9,771 6(d) +$84,910 +— +— +— +— +— +— +— +13,006 6(e) +$113,022 +— +— +— +— +— +— +— +19,508 6(f) +$169,525 +— +— +— +— +— +— +— +18,218 6(g) +$158,314 +1 +The table does not include RS and PRUs awarded to the NEOs in February 2022 pursuant to the LTIP in respect of +performance during 2021. +2 +Stock options vest over four years, with the first 25% vesting on the first anniversary of the grant date and the +remaining 75% vesting on a monthly basis over the next three years following the first anniversary of the grant date. Grants of RS vest over a three-year period, with one-third vesting on the first anniversary +of the grant date, a second third vesting on the second anniversary and the final third vesting on the third anniversary. PRUs will not vest until three years from the grant date and only if certain performance measures are met during the three-year +service period. +49 +Table of Contents +3 +The indicated RS, and PRUs vest as follows: +(a) +18,558 restricted shares on April 8, 2022 pursuant to the terms of Dr. Tang’s transition agreement; +(b) +15,957 restricted shares on February 1, 2022 +(c) +28,333 restricted shares on February 1, 2022, and 14,166 shares on March 31, 2022 pursuant to the terms of +Dr. Tang’s transition agreement; +(d) +36,671 restricted shares on April 8, 2022, pursuant to the terms of Dr. Tang’s transition agreement; +(e) +35,904 PRUs cliff vesting on February 1, 2022, provided performance metrics have been achieved. This grant also +included 23,936 PRUs which have been forfeited as the related performance metric was not achieved; +(f) +16,999 PRUs vest on April 8, 2022, pursuant to the terms of Dr. Tang’s transition agreement; +(g) +25,499 PRUs vest on April 8, 2022, pursuant to the terms of Dr. Tang’s transition agreement; and +(h) +36,671 PRUs vest on April 8, 2022, pursuant to the terms of Dr. Tang’s transition agreement. +4 +The indicated RS and PRUs vest as follows: +(a) +6,813 restricted shares on May 21, 2022, 2023, and 2024; and +(b) +20,439 PRUs cliff vesting on May 21, 2024, provided performance metrics have been achieved. +5 +The indicated RS and PRUs vest as follows: +(a) +4,691 restricted shares on May 11, 2022, and 4,690 restricted shares on May 11, 2023; +(b) +6,590 restricted shares on February 1, 2022, 6,589 restricted shares on February 1, 2023, and 6,590 +restricted shares on February 1, 2024; +(c) +5,628 PRUs cliff vesting on May 11, 2023, provided performance metrics have been achieved; +(d) +8,442 PRUs cliff vesting on May 11, 2023, provided performance metrics have been achieved; and +(e) +19,769 PRUs cliff vesting on February 1, 2024, provided performance metrics have been achieved. +6 +The indicated RS and PRUs vest as follows: +(a) +4,343 restricted shares on February 1, 2022; +(b) +10,838 restricted shares on February 1, 2022, and 10,839 restricted shares on February 1, 2023; +(c) +6,073 restricted shares on February 1, 2022, 6,072 restricted share on February 1, 2023, and 6,073 shares on +February 1, 2024; +(d) +9,771 PRUs cliff vesting on February 1, 2022, provided performance metrics have been achieved. This grant also +included 6,514 PRUs which have been forfeited because the related performance metric was not achieved; +(e) +13,006 PRUs cliff vesting on February 1, 2023, provided performance metrics have been achieved; +(f) +19,508 PRUs cliff vesting on February 1, 2023, provided performance metrics have been achieved; and +(g) +18,218 PRUs cliff vesting on February 1, 2024, provided performance metrics have been achieved. +7 +The indicated RS and PRUs vest as follows: +(a) +13,893 PRUs cliff vesting on February 1, 2022, provided performance metrics have been achieved. This grant also +included 9,262 PRUs which have been forfeited because the related performance metric was not achieved; +(b) +14,326 PRUs cliff vesting on February 1, 2023, provided performance metrics have been achieved; +(c) +21,488 PRUs cliff vesting on February 1, 2023, provided performance metrics have been achieved; and +(d) +16,689 PRUs cliff vesting on February 1, 2024, provided performance metrics have been achieved. +8 +The indicated RS and PRUs vest as follows: +(a) +26,267 restricted shares cliff vesting on November 29, 2026; and +(b) +8,756 restricted shares on November 29, 2022, 8,755 restricted shares on November 29, 2023, and 8,756 +restricted shares on November 29, 2024. +9 +The indicated values were determined by multiplying the number of unvested shares of RS and unvested PRUs shown in this +table by $8.69 per share, the closing price of the Company’s Common Stock as reported by Nasdaq on December 31, 2021. +50 +Table of Contents +OPTION EXERCISES AND STOCK VESTED +The following table summarizes information with respect to the exercise of stock options and vesting of +RS for each of the NEOs during the fiscal year ended December 31, 2021: +Option Awards +Stock Awards 1 +Name +Number +of +Shares +Acquired +on +Exercise +(#) +Value +Realized +on +Exercise 2 +($) +Number +Of Shares +Acquired +on +Vesting +(#) +Value +Realized +on +Vesting 3 +($) +Stephen S. Tang, Ph.D. +— +— +44,290 +$ +688,929 +Former President and Chief Executive Officer +Roberto Cuca +— +— +27,702 +$ +369,575 +Former Chief Financial Officer +Scott +Gleason +— +— +— +$ +— +Interim CFO, Senior Vice President, +Corporate +Communications & Investor Relations +Agniezska Gallagher +— +— +— +$ +— +Executive +Vice President, General Counsel, and Chief Compliance Officer +Jack E. Jerrett +— +— +74,336 +$ +841,274 +4 +Former +Senior Vice President, General Counsel, and Chief Compliance Officer +Kathleen Weber +— +— +23,856 +$ +371,079 +President, Molecular Solutions +1 +Includes the vesting of restricted stock awards and performance-vested restricted units. +2 +The indicated amount represents the number of shares acquired upon the exercise of the options multiplied by the +difference between the market value of the Company’s Common Stock on the applicable exercise date and the option exercise price. +3 +The indicated amounts were calculated by multiplying the number of restricted shares and performance-vested restricted +shares acquired upon vesting by the market value of the Company’s Common Stock on the applicable vesting date. The market value was determined by calculating the mean between the high and low sales prices of the Common Stock as reported by +Nasdaq on the vesting date. +4 +The unvested portions of all awards of time-vested RS granted to Mr. Jerrett that were outstanding and unvested as +of his retirement date vested in full on his retirement date pursuant to his retirement agreement. +RETIREMENT BENEFITS +The NEOs are eligible to participate in our 401(k) Plan on the same terms and conditions applicable to +other employees. For a further description of the terms of the 401(k) Plan, see the Section entitled, “Retirement Programs,” in the CD&A. +NONQUALIFIED DEFERRED +COMPENSATION +The OraSure Technologies, Inc. Deferred Compensation Plan (the “Plan”) is a non-qualified deferred compensation plan designed to provide deferred compensation benefits to a select group of the Company’s highly compensated employees, including all of the NEOs, and to non-employee members of the Board. +51 +Table of Contents +The Plan allows for deferrals by participants of up to 100% of their annual base +salaries (or in the case of non-employee Directors, 100% of fees payable under the Company’s Non-Employee Director Compensation Policy), up to 100% of annual +incentive cash bonuses and, upon vesting, restricted shares of the Company’s Common Stock and shares received in respect of PRUs awarded under the LTIP. The Company may also make discretionary contributions to the accounts of employees +participating in the Plan. Cash balances in participants’ accounts may be invested in a list of investment options that are similar to the fund choices offered in the Company’s 401(k) plan. Participants will be permitted to sell vested +shares in their accounts, subject to compliance with the Company’s Insider Trading Policy and applicable securities laws, and invest the proceeds of any such sale in the investment options available under the Plan. Participants will be 100% +vested in their accounts and the restricted shares they defer, except that Company contributions will vest over one or more years as determined by the Company. In the event of death, disability or change of control, a participant will become 100% +vested in any then unvested Company contributions. +A Participant may elect to receive a distribution from his or her account upon a +specified date, separation from service, change of control, disability and/or death. Distributions will be made in a lump sum or installments, as allowed under the Plan. +Amounts contributed to a participant’s account through elective deferrals or through the Company’s discretionary contributions +are generally not subject to income tax, and the Company does not receive a deduction until they are distributed pursuant to the Plan. +However, cash deferrals are subject to the Federal Insurance Contributions Act Tax imposed at the time of deferral (the “FICA +tax”). Deferrals of restricted shares and shares received in respect of PRUs are subject to the FICA tax at the time the shares vest, but are not subject to income tax, and the Company does not receive the deduction until the shares are +distributed pursuant to the Plan. The Company may amend or terminate the Plan at any time in accordance with applicable law. +None +of the Company’s NEO’s participated in the Plan during 2021. +52 +Table of Contents +EMPLOYMENT AGREEMENTS AND POTENTIAL PAYMENTS UPON +TERMINATION OR CHANGE OF CONTROL +Employment Agreements +Dr. Tang +We have entered into employment agreements with all of our NEOs. We believe such agreements are necessary to attract and retain critical +talent, and are in-line with market practices. The following summary describes certain of the material terms of the employment arrangements with Dr. Tang, our former CEO, and the other NEOs. As previously +noted, Dr. Tang’s employment with the Company ended on March 31, 2022. +In January 2018, we entered into an +employment agreement with Dr. Tang in connection with his appointment as the Company’s President and CEO, effective April 1, 2018. Under the agreement, Dr. Tang would receive (i) an annual base salary of at least $565,000, +(ii) an annual cash bonus opportunity under the Company’s annual Incentive Plan with a bonus target of at least 85% of his base salary and (iii) annual equity awards under the Company’s LTIP ranging from at least 150%-250% of his base salary, with a target of 200%. Dr. Tang received a sign-on cash bonus of $230,000 and an award of 37,116 shares of time-vested RS subject to vesting +on the fifth anniversary of Dr. Tang’s date of employment. +Under the terms of Dr. Tang’s employment agreement, +upon the termination of Dr. Tang’s employment for any reason, Dr. Tang would have been entitled to receive his salary through the date of termination and any bonus approved by the Board or the Compensation Committee prior to the date +of termination but not yet paid. In the case of a termination upon his death or disability or by the Company without Cause, or in the case of a unilateral termination by Dr. Tang or a termination by Dr. Tang for good reason where in either +case the termination were to occur after June 30 of any year, Dr. Tang would have also received a cash bonus for the year of termination prorated through the date of termination. In addition, in the event of termination for good reason or +without Cause (which would have included the Company’s failure to renew the agreement) and not during a change of control period, Dr. Tang would have received additional severance in the form of a lump sum amount equivalent to 18 months of +his annual salary plus reimbursement of the costs of continuation coverage under the Company’s health plans (if Dr. Tang elects coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985) for a period of 18 months after the +date of termination. In the event of termination for good reason or without Cause (which would have included the Company’s failure to renew the agreement) and during a change of control period, Dr. Tang would have received a lump sum +amount equivalent to 36 months of his annual salary and reimbursement of continuation coverage under the Company’s health plan for 36 months. If Dr. Tang was a “specified employee” within the meaning of Code Section 409A at +the time of the termination of his employment and any of the foregoing payments would subject him to any tax, interest or penalty under Code Section 409A or regulation thereunder, then the payment shall not be made until the first day which is +at least six months after the date of termination of his employment. +Under the terms of his agreement, all stock awards granted to +Dr. Tang were required to immediately vest (i) in the event of a change of control or (ii) if Dr. Tang’s employment was terminated for good reason by Dr. Tang or by the Company without Cause during a change of control +period, and 50% of such stock awards would vest in the event Dr. Tang’s employment was terminated for good reason by Dr. Tang or by the Company without cause during any period other than a change of control period. +On December 31, 2021, the Board of Directors approved the termination of Dr. Tang’s employment agreement without cause, +effective as of March 31, 2022. On January 2, 2022, the Company and Dr. Tang entered into a Transition Agreement (the “Transition Agreement”) providing the terms of the cessation of Dr. Tang’s employment with the +Company, which superseded much of Dr. Tang’s employment agreement. During the remaining period of his service (the “Transition Period”), Dr. Tang continued to serve as the Company’s President and Chief Executive Officer +and assisted in the orderly transition of his duties to other Company personnel. +In connection with the cessation of his service +and subject to Dr. Tang’s compliance with the terms of the Transition Agreement and his execution of a general release, the Transition Agreement provides that Dr. Tang will receive the following payments, right and benefits: +• +Dr. Tang will be paid a lump sum severance payment equal to 18 months’ of base salary, plus an amount equal to +his target annual bonus; +53 +Table of Contents +• +50% of Dr. Tang’s outstanding time-based restricted stock awards will vest at the end of the Transition +Period; +• +50% of Dr. Tang’s unvested PRUs for performance periods that ended on or prior to December 31, 2021 will +vest based on actual performance at the end of the Transition Period; +• +50% of Dr. Tang’s unvested PRUs for performance periods scheduled to end after December 31, 2021 will +vest based on target performance at the end of the Transition Period; +• +Dr. Tang will be granted an award of restricted stock with a grant date fair value of $834,909. This award +represents 50% of the 2022 annual equity award otherwise issuable to Dr. Tang under the Company’s long-term incentive program and will vest at the end of the Transition Period; +• +Dr. Tang will receive a pro-rata 2022 annual bonus of $141,933 paid at the +end of the Transition Period; and +• +Dr. Tang will have the opportunity to purchase continued coverage under the Company’s group health plan until +he becomes eligible for Medicare, with the first 18 months of such coverage subsidized by the Company to the same extent as the Company subsidizes the cost of active employee coverage. +In addition, the Transition Agreement confirms that Dr. Tang’s 2021 annual bonus will be $341,000. While the Transition +Agreement supersedes most of Dr. Tang’s employment agreement with the Company, the above-described payments, rights and benefits are substantially similar to the severance benefits contemplated by that employment agreement in respect of a +termination without cause thereunder. +The Transition Agreement also includes customary cooperation and non-disparagement provisions and an affirmation by Dr. Tang of his confidentiality, non-solicitation and non-competition +obligations to the Company. +Mr. Cuca +In May 2018, we entered into an employment agreement with Mr. Cuca, pursuant to which Mr. Cuca would receive (i) an +annual base salary of at least $415,000, (ii) a target bonus opportunity under the Company’s annual Incentive Plan of 50% of his base salary, and (iii) annual equity awards under the Company’s long-term incentive policy ranging from +105% to 175% of his base salary (with a target of 140%). Mr. Cuca also received an onboarding equity award having an aggregate value of $435,750. This award consisted of 50% time-vested RS and 50% PRUs with terms substantially the same as the +terms of awards made to the Company’s other executives in February 2018. On August 27, 2021, Mr. Cuca notified the Company of his decision to resign effective September 17, 2021. Pursuant to the terms of his May 2018 employment +agreement, upon his resignation, Mr. Cuca was eligible to receive all salary payable to him through the date of his resignation. +Ms. Weber +In January 2019, we entered into an employment agreement with Ms. Weber, in connection with her move to Canada to head our +Molecular Solutions business unit. Effective as of December 31, 2021, Ms. Weber’s employment agreement with the Company was amended and she was named President of Molecular Solutions. Pursuant to the amended employment agreement, +Ms. Weber will receive (i) an annual base salary of at least $471,000, (ii) a target bonus opportunity under the Company’s annual Incentive Plan of at least 50% of her base salary, and (iii) annual equity awards under the +Company’s long-term incentive policy ranging from 125% to 150% of her base salary (with a target of 125%). In addition, Ms. Weber is entitled to receive benefits typical of international assignments, including: +• +Legal services paid by the Company for visas and work permits for Ms. Weber and her husband; +• +Relocation expenses reimbursed up to $10,000; +• +A housing allowance of up to $3,438 per month; +• +Tax equalization payments to the extent Ms. Weber’s Canadian income tax liability exceeds the income tax she +would have paid in the United States; +• +Reimbursement for tax preparation services; +• +An annual expense allowance of $3,544; +54 +Table of Contents +• +Home leave reimbursement for Ms. Weber and her husband to travel to the United States twice during each 12-month period; and +• +Reimbursement for repatriation expenses for Ms. Weber and her husband to relocate back to the United States at the +end of her assignment. +In the event of Ms. Weber’s relocation to the United States, which is planned to occur on or +before December 31, 2022, such benefits shall be deemed to be terminated with respect to the period beginning immediately after the date she relocates; provided that the foregoing termination shall not affect the Company’s obligation to +provide such benefits to the extent related to the period on or prior to Ms. Weber’s relocation. +Mr. Gleason +On July 8, 2021, we entered in a Severance Benefit agreement with Mr. Gleason to provide Mr. Gleason with certain +compensation in the event that his employment is terminated by us without cause or by him for good reason during a one-year period following the date of a change of control. In the event of a termination +by us without cause, or by him with good reason following the one-year period after a change of control, in exchange for Mr. Gleason’s release of claims against the Company and a covenant not to sue, +we will provide him with an amount equal to one year of his base salary as in effect immediately prior to his termination. Such severance payment is to be paid out to Mr. Gleason in substantially equal installments during the one-year period commencing upon his termination date in accordance with our normal payroll practices. +Ms. Gallagher +On November 29, 2021, we entered into an employment agreement with Ms. Gallagher to serve as our Executive Vice President, +General Counsel, Chief Compliance Officer and Secretary. Pursuant to the terms of her agreement, Ms. Gallagher will receive (i) an annual base salary of $465,000, (ii) a target bonus opportunity under the Company’s annual Incentive +Plan of at least 45% of her base salary, and (iii) annual equity awards under the Company’s long-term incentive policy ranging from 95% to 155% of her base salary (with a target of 125%). Ms. Gallagher also received an onboarding +equity award having an aggregate value of $1,000,000, consisting of (i) 25% time vested restricted stock, vesting five years after the grant date (ii) 25% time vested restricted stock, vesting in equal amounts over the three years following the +grant date, and (iii) 50% options to purchase the Company’s common stock with 25% of those options vesting one year after the first grant of such award and the remaining 75% vesting on a monthly basis over the next three years following the +first anniversary of the grant date. +Termination and Severance Benefits +The termination and severance provisions in the employment agreements for each of the NEOs, with the exception of Mr. Gleason, +whose Severance Benefit agreement is described above, are substantially similar. The agreements provide that upon the termination of the NEO’s employment for any reason, the NEO will be entitled to receive his or her salary through the date of +termination and any bonus approved by the Board or the Compensation Committee prior to the date of termination but not yet paid. In the case of a termination upon death or disability or by the employee where in either case the termination occurs +after June 30 of any year, the NEO will also receive a cash bonus for the year of termination prorated through the date of termination. In addition, if termination is for good reason or without cause (which includes the Company’s failure +to renew the agreement) and does not occur during a change of control period (defined under the agreements as the period beginning 60 days prior to and ending 18 months after a change of control, defined under the agreements as a change of a nature +that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A under the Exchange Act), the NEO would receive additional severance in the form of a lump sum amount equivalent to a designated number of months of his +or her annual salary plus reimbursement of the costs of continuation coverage under the Company’s health plans (if the NEO elects coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA)) for 12 months, after the date +of termination. If, however, termination is for good reason or without cause (which includes the Company’s failure to renew the agreement) and occurs during a change of control period, the NEO will receive a lump sum amount equivalent to a +designated number of months of his or her annual salary and reimbursement of continuation coverage under the Company’s health plan for the shorter of either 24 months or the date the NEO is no longer eligible for COBRA. Upon termination in the +event of a change of control, termination good reason, or termination without cause during a change of control period, all +55 +Table of Contents +equity awards granted to the NEO on or after the effective date of their employment agreement would immediately vest. In the event the NEO’s employment is terminated for death or disability, +for good reason, or without cause during any period other than a change of control period, then 50% of the NEO’s outstanding awards shall, to the extent unvested, immediately vest. If the NEO is a “specified employee” within the +meaning of Code Section 409A at the time of the termination of his or her employment and any of the foregoing payments would subject him or her to any tax, interest or penalty under Code Section 409A or regulation thereunder, then the +payment shall not be made until the first day which is at least six months after the date of termination of his employment. +Mses. +Weber and Gallagher will be entitled to receive severance equal to 12 months of their annual salary if they are terminated for good reason or without cause, but they will receive 24 months of their annual salary if such termination occurs during a +change of control period. Mr. Jerrett was entitled to the same benefits under his employment agreement. +Retirement Agreement with +Mr. Jerrett +On November 9, 2021, we entered into a retirement agreement with Mr. Jerrett, our former Senior Vice +President, General Counsel and Chief Compliance Officer, providing for the terms of Mr. Jerrett’s retirement from the Company effective December 31, 2021. Mr. Jerrett agreed to serve as a consultant to the Company during the +transition to its new Senior Vice President, General Counsel and Chief Compliance officer from December 31, 2021 through February 28, 2022. Mr. Jerrett and the Company agreed that no severance or other amounts are payable in +connection with Mr. Jerrett’s resignation under his employment agreement, except as provided in the retirement agreement. Pursuant to the retirement agreement, Mr. Jerrett received a total amount equal to $423,665, equivalent to 12 +months of salary paid in equal installments on each of the Company’s regularly scheduled payroll dates beginning 30 days after retirement and continuing for twelve months thereafter. Mr. Jerrett’s unvested portions of all options to +purchase the Company’s common stock and all awards of time vested restricted stock outstanding and unvested prior to the retirement vested in full on his retirement date and all awards of PRUs granted to Mr. Jerrett prior to his retirement +and which are outstanding and unvested as of his retirement, shall vest in full three years after the applicable grant date for such PRUs in accordance with the terms of the relevant agreement pursuant to which such PRUs were granted. Additionally, +Mr. Jerrett received his normal annual equity award in 2022 for performance during 2021, consisting of an aggregate grant date value at least equal to his annual target bonus of 125% of base salary under the LTIP, which consisted of 50% +restricted stock and 50% PRUs and was awarded at the same time as the annual 2022 LTIP awards were granted to other Company senior executives. Mr. Jerrett’s 2021 bonus payment under our annual bonus plan shall be equal to 40% of his base +salary, subject to adjustment to reflect the actual bonus pool funding under the bonus plan approved by the Board. Mr. Jerrett remains subject to the confidential and proprietary information obligations under his confidentiality agreement dated +April 1, 2004. The retirement agreement contains an indefinite non-disparagement obligation. +56 +Table of Contents +The following table provides estimates of the potential severance and other +post-termination benefits the NEOs would receive assuming their employment was terminated as of December 31, 2021: +Name +Benefit +Voluntary +Termination +or +Termination +for Cause 1 +Termination +for Death +or Disability 2 +Termination +for Good +Reason or +Without +Cause Not +Within +Change of +Control +Period 2 +Voluntary +Termination +after Change of +Control (only for +Mr. Jerrett), or +Termination +for +Good Reason or +Without Cause +Within Change of +Control Period 2 +Stephen S . Tang Ph. D. 3 +Former President +and Chief Executive Officer +Salary Continuation +Bonus +Accelerated Option Vesting +Accelerated Restricted Stock/Unit Vesting +Health Care Benefits +Total +— +— +$ +1,001,882 +$ +2,003,763 +567,733 +$ +341,000 +$ +567,733 +$ +567,733 +— +— +— +— +— +$ +3,382,930 +$ +1,691,465 +$ +3,382,930 +— +— +$ +29,343 +$ +29,343 +567,733 +$ +3,723,930 +$ +3,290,423 +$ +5,983,769 +Scott Gleason +Interim CFO, Senior Vice President, Corporate Communications & Investor Relations +Salary Continuation +Bonus +Accelerated Option Vesting +Accelerated Restricted Stock/Unit Vesting +Health Care Benefits +Total +— +— +— +$ +400,000 +— +— +— +— +— +— +— +— +— +$ +355,230 +— +$ +355,230 +— +— +— +— +$ +— +$ +355,230 +$ +— +$ +755,230 +Agniezska Gallagher +Executive Vice President, +General Counsel, and +Chief Compliance Officer +Salary Continuation +Bonus +Accelerated Option Vesting +Accelerated Restricted Stock/Unit Vesting +Health Care Benefits +Total +— +— +$ +465,000 +$ +930,000 +209,250 +$ +240,638 +$ +209,250 +$ +209,250 +— +— +— +— +— +$ +456,520 +$ +228,260 +$ +456,520 +— +— +$ +37,814 +$ +37,814 +209,250 +$ +697,158 +$ +940,324 +$ +1,633,584 +Jack E. Jerrett +Former Senior Vice President, General Counsel, and Chief Compliance Officer +Salary Continuation +Bonus +Accelerated Option Vesting +Accelerated Restricted Stock/Unit Vesting +Health Care Benefits +Total +— +— +423,665 +$ +847,330 +— +169,466 +169,466 +169,466 +— +— +— +— +— +$ +617,225 +308,612 +$ +617,225 +— +— +29,088 +29,088 +$ +— +$ +786,691 +$ +930,831 +$ +1,663,109 +Kathleen G. Weber +President, Molecular +Salary Continuation +Bonus +Accelerated Option Vesting +Accelerated Restricted Stock/Unit Vesting +Health Care Benefits +Total +— +— +$ +416,246 +$ +832,492 +$ +166,498 +$ +233,098 +$ +166,498 +$ +166,498 +— +— +— +— +— +$ +938,503 +$ +469,251 +$ +938,503 +— +— +$ +37,824 +$ +37,824 +$ +166,498 +$ +1,171,601 +$ +1,089,819 +$ +1,975,317 +1 +In the event of a unilateral termination by Ms. Weber or Ms. Gallagher after June 30, they would receive +a prorated bonus for the year in which termination occurs. +2 +The indicated values for the accelerated vesting of stock options reflect (i) the number of option shares which +would vest on an accelerated basis, multiplied by (ii) the excess, if any, of the $8.69 per share closing price for the Company’s Common Stock, as reported by Nasdaq on December 31, 2021, over the applicable exercise price for each +option. As of December 31, 2021, the exercise price of Ms. Gallagher stock options is less than the $8.69 closing price. The indicated values for the accelerated vesting of RS and PRUs reflect the $8.69 per share closing price on +December 31, 2021 multiplied by the number of shares which would vest on an accelerated basis (assuming, in the case of PRUs, that the applicable performance measures for the PRUs are met at 100% of target). +3 +Dr. Tang’s employment with the Company ended on March 31, 2022 and as of that date, he is no longer entitled to +the potential payments set forth in this table. +57 +Table of Contents +STOCK AWARD PLAN INFORMATION +The following table provides +information as of December 31, 2021 about the shares of Common Stock that may be issued upon the exercise of options under the OraSure Technologies, Inc. Stock Award Plan (the “Stock Award Plan” or the “Plan”). Additional +grants of equity compensation may only be made under the Stock Award Plan. +Plan Category +Number of Securities to be +Issued Upon Exercise of +Outstanding Options +(a) +Weighted- +Average Exercise +Price of Outstanding +Options +(b) +Number of Securities +Remaining Available for +Future Issuance +Under +Equity Compensation Plans +(Excluding Securities +Reflected in Column (a)) +(c) +Equity compensation plans approved by security holders +1,409,596 +$10.73 +4,735,550 +Equity compensation plans not approved by security holders +— +— +— +Total +1,409,596 +4,735,550 +1 +Represents shares remaining available for future issuance as of December 31, 2021 under the Stock Award Plan. +DIRECTOR COMPENSATION +ANNUAL +FEES +Under our Non-Employee Director Compensation Policy +(“Director Policy”), non-employee members of the Board receive fixed annual fees for service on the Board and Committees of the Board during 2021, as set forth below. The fees were paid quarterly in +arrears. +Position +Annual Fee +Board Member (Base Fee) +$ +55,000 +Board Chairman (Additional Fee) +$ +25,000 +Audit Chairman +$ +20,000 +Compensation Chairman +$ +20,000 +Nominating & Corporate Governance Chairman +$ +20,000 +Non-Chairman Committee member +$ +5,000 +Each non-employee Director has the option to receive shares of +the Company’s Common Stock in lieu of cash fees, as described above. Prior to the end of each calendar year, each non-employee Director shall make an annual election with respect to cash fees for the +following calendar year, indicating whether he or she elects to receive the fees in cash, or in Company Common Stock in lieu of the cash fees. If no election has been made as of the first day of the year, the +non-employee Director shall receive all fees in cash, as set forth above, or, if a previous election has been made to receive Common Stock in lieu of the cash fees, such election shall remain in effect for +subsequent calendar years until such election is changed by the completion, signature and delivery to the Company of a new election form. Each newly elected or appointed non-employee Director shall make an +election prior to, or within 30 days of, his or her initial appointment or election to the Board, for the remainder of the year of such appointment or election, whether to receive the fees in cash or in Common Stock. +In the event an election is made by a non-employee Director to receive Common Stock in lieu of +cash fees, such Director shall automatically be granted on the applicable fee payment date a number of shares of Common Stock having an aggregate fair market value equal to the aggregate amount of such +non-employee Director’s cash fee for such fiscal quarter, determined by dividing (A) the aggregate amount of the fee by (B) the average of the high and low sales price of the Company’s +Common Stock as reported on Nasdaq on the applicable fee payment date (rounded down to the nearest whole share) (the “Quarterly Grant”). Non-employee Directors are permitted to direct the Company to +withhold shares of stock in order to pay tax withholding obligations arising upon the receipt of a Quarterly Grant. +58 +Table of Contents +INITIAL AND ANNUAL EQUITY +AWARDS +Upon joining the Board, non-employee Directors receive an +initial grant of restricted shares of the Company’s Common Stock having an aggregate value of $100,000 (the “Initial Grant”). The Initial Grant will cliff vest two (2) years after the Director joins the Board. In addition, non-employee Directors will receive an annual grant of restricted shares (the “Annual Grant”) on the date of the Company’s Annual Meeting of Stockholders, which will vest on or prior to the +Company’s next Annual Meeting of Stockholders. The value of Annual Grants for Board members are as follows: +Board Position +Award Grant Value +Board Member (Base) +$105,000 +Board Chairman (Additional Value) +$ 25,000 +The dollar value of each Initial Grant and Annual Grant is converted into restricted stock by dividing +the above values by the average of the high and low sales prices of the Company’s Common Stock, as reported on the Nasdaq Stock Market, on the grant date. Non-employee Directors are permitted to direct +the Company to withhold restricted stock in order to pay tax withholding obligations arising upon the vesting of such shares. +EQUITY AWARD TERMS +Each Initial Grant, Annual Grant and Quarterly Grant shall be made under the terms of the Company’s +Stock Award Plan or a successor plan and will be subject to the terms and conditions of such plan and the applicable award agreement. +Any unvested restricted stock granted to non-employee Directors will vest in their entirety +immediately upon the occurrence of a “change of control” of the Company. A “change of control” means a change of control that would be required to be reported under the Exchange Act, as amended, and would be deemed to have +occurred at such time as (i) any person, or more than one person acting as a group within the meaning of Section 409A of the Code, acquires ownership of stock of the Company that, together with stock held by such person or group, +constitutes more than 50 percent of the total fair market value or total voting power of the stock of the Company; (ii) any person, or more than one person acting as a group within the meaning of Section 409A of the Code, acquires (or +has acquired during the 12-month period ending on the date of the most recent acquisition) ownership of stock of the Company possessing 30 percent or more of the total voting power of the Company’s +stock; (iii) a majority of the members of the Board is replaced during any 12-month period by Directors whose appointment or election is not endorsed by a majority of the members of the Board before the +date of the appointment or election; or (iv) a person, or more than one person acting as a group within the meaning of Section 409A of the Code, acquires (or has acquired during the 12-month period +ending on the date of the most recent acquisition) assets from the Company that have a total gross fair market value equal to or more than 40 percent of the total gross fair market value of all the assets of the Company immediately before such +acquisition or acquisitions. In addition, if a non-employee Director leaves the Board for any reason other than a change of control, prior to the end of the vesting period for the Annual Grant of restricted +stock, such award shall immediately vest on a pro-rata basis based on the actual duration of such Director’s service to the Board during such vesting period. +DEFERRED COMPENSATION +Non-employee Directors are permitted to defer all or a portion +of the fees and grants of restricted stock under the Company’s Non-Qualified Deferred Compensation Plan, on terms similar to those applicable to our officers. +59 +Table of Contents +DIRECTOR COMPENSATION DURING +2021 +The following table summarizes information related to compensation of +non-employee Directors during the fiscal year ended December 31, 2021: +Name 1, 2 +Fees +Earned +or Paid +in Cash 3 +($) +Stock +Awards 4 +($) +Option +Awards +($) +Non-Equity +Incentive Plan +Compensation +($) +Change in +Pension +Value and +Nonqualified +Deferred +Compensation +Earnings +All Other +Compensation +($) +Total ($) +Mara G. Aspinall +$ +80,000 +$ +105,002 +— +— +— +— +$ +185,002 +Michael Celano +$ +90,000 +$ +129,997 +— +— +— +— +$ +219,997 +James A. Datin +— +$ +170,007 +— +— +— +— +$ +170,007 +Eamonn P. Hobbs +$ +80,000 +$ +105,002 +— +— +— +— +$ +185,002 +Ronny B. Lancaster +$ +80,000 +$ +105,002 +— +— +— +— +$ +185,002 +David J. Shulkin, M.D. +$ +65,000 +$ +105,002 +— +— +— +— +$ +170,002 +Lelio Marmora +$ +65,000 +$ +105,002 +— +— +— +— +$ +170,002 +Nancy Gagliano, M.D. +$ +8,616 +$ +104,996 +— +— +— +— +$ +113,612 +Anne Whitaker +$ +8,616 +$ +104,996 +— +— +— +— +$ +113,612 +1 +Because Dr. Tang was an officer of the Company, he was not entitled to any separate compensation for service on +the Board or any Committee thereof and has not been included in this table. Dr. Gagliano and Ms. Whitaker became Directors in November 2021. Dr. Tang’s service as a director ended on March 31, 2022. +2 +Non-employee Directors held the following number of unvested shares of +restricted stock (“RS”) and stock options (“SOs”) at December 31, 2020: Ms. Aspinall: 10,952 RS; Mr. Celano: 13,559 RS; Mr. Datin: 10,952 RS; Mr. Hobbs: 10,952 RS; Mr. Lancaster: 10,952 RS; +Dr. Shulkin: 10,952 RS; Mr. Marmora: 10,952 RS; Dr. Gagliano: 10,563 RS; and Ms. Whitaker: 10,563 RS . The aggregate number of stock options and restricted shares held by Dr. Tang are set forth in the table in the Section +entitled, “Outstanding Equity Awards,” in this Proxy Statement. +3 +Mr. Datin elected to receive his board fees in shares of the Company’s Common Stock in lieu of cash fees in +accordance with the Director compensation policy described above. +4 +The indicated amounts reflect the aggregate grant date fair value of restricted stock awards made to non-employee Directors during 2021, computed in accordance with FASB ASC Topic 718. The indicated amounts for Dr. Gagliano and Ms. Whitaker include their onboarding awards of RS when they joined the Board. +60 +Table of Contents +PROPOSALS REQUIRING YOUR VOTE +PROPOSAL +NO. 1. ELECTION OF DIRECTORS +Background +At the Annual Meeting, you will be asked to vote on the election of two Directors. A majority of the independent members of the Board +have nominated Eamonn P. Hobbs and David J. Shulkin, M.D., for election as Class I Directors, for terms expiring at the Annual Meeting of Stockholders in 2025. +We do not know of anything that would preclude any nominee from serving. However, should any nominee for any reason become unable or +unwilling to serve as a Director, the persons named in the enclosed Proxy Card will vote the shares represented by each Proxy for such substitute nominee as the Board may approve. +Each of the nominees for election as Directors is currently a member of our Board and has consented to continue to serve if re-elected to the Board. Mr. Hobbs joined the Board in 2016 and serves as a member of the Compensation Committee and Chairman of the Nominating and Corporate Governance Committee. Dr. Shulkin joined the +Board in 2020 and serves as a member of the Audit Committee and Nominating and Corporate Governance Committee. +Any vacancy that +occurs on the Board that results from an increase in the number of Directors may be filled by the affirmative vote of a majority of the Directors then in office, and any other vacancy on the Board may be filled by the affirmative vote of a majority +of the Directors then in office, even though less than a quorum of the Board, or by a sole remaining Director. +Certain information +with respect to each person nominated for election as a Director and each person whose term of office as a Director will continue after the Annual Meeting, including the particular experience, qualifications, attributes and skills they possess that +led to the conclusion that they should serve as a Director, is set forth below. +Name +Principal Occupation +Age +Director +Since +Class II (Directors Whose Terms Expire in 2023): +Mara +G. Aspinall +Managing Member, Health Catalysts Group LLC and Managing Director, Blue Stone Venture Partners +59 +2017 +Ronny B. Lancaster +Former Senior Vice President for Federal Government Relations of +Assurant, Inc. +70 +2003 +Anne C. Whitaker +Managing Partner of Anne Whitaker Group, LLC +54 +2021 +Class III (Directors Whose Terms Expire in 2024): +Michael Celano +Chief Financial Officer, Larimar Therapeutics +63 +2006 +James A. Datin +President & Chief Executive Officer, BioAgilytix Labs LLC +59 +2019 +Nancy J. Gagliano, M.D. +Managing Director, Granite Healthcare Advisors +62 +2021 +Lelio Marmora +President, The Management Lab +55 +2020 +Class I (Nominees For Terms Expiring in 2025): +Eamonn P. Hobbs +President of Hobbs Medical Ventures, LLC +63 +2016 +David J. Shulkin, M.D. +President and Chief Executive Officer, Shulkin Solutions, Inc. +62 +2020 +61 +Table of Contents +Eamonn P. Hobbs +Independent Director +Director since: 2016 +Class I Nominee +Term Expires: 2025 +Age: 63 +Other Current +Public Company +Directorships: None +Eamonn P. Hobbs joined the Board in 2016. Mr. Hobbs serves as President of Hobbs Medical Ventures, LLC, a consulting company he +founded in the healthcare field. From December 2020, he co-founded and serves as President and CEO of Syncromune, Inc. a company that is developing a new immunotherapy for metastatic solid tumor cancers. From +March 2018 to August 2020, he co-founded and served as Chairman of the Board and CEO of ImmunSYS, Inc. a company that is developing a new immunotherapy for late stage metastatic prostate cancer. From December +2016 to June 2017, Mr. Hobbs served as President and CEO of Digital Cognition Technologies, Inc., an early stage medical device company. From July 2014 to January 2016, Mr. Hobbs served as the President and Chief Executive Officer of +Antares Pharma, Inc., a specialty pharmaceutical company focused on self-injection pharmaceutical products and technologies. He also served on the Antares board of directors from 2009 to 2016. From 2009 to 2013, Mr. Hobbs served as President +and Chief Executive Officer, and from 2008 to 2013 was a member of the board of directors, of Delcath Systems, Inc., a specialty pharmaceutical and medical device public company specializing in cancer treatment. Prior to Delcath Systems, Inc., +Mr. Hobbs served as President and Chief Executive Officer of AngioDynamics, Inc., a company he co-founded in 1988 as a division of +E-Z-EM, Inc. which grew into a leading medical technology public company with a highly diverse product line. From 1988 to 2004, Mr. Hobbs also served as Executive +Vice President of Business Development of E-Z-EM, Inc., a Nasdaq-traded company. Before joining AngioDynamics, Mr. Hobbs was Director of Marketing and Product +Development at NAMIC; founder, President and Chief Executive Officer of Hobbs Medical, Inc.; and a Product Development Engineer at Cook Incorporated. Mr. Hobbs received a B.S. in Plastics Engineering with a Biomaterials emphasis at the +University of Massachusetts (Lowell). Mr. Hobbs has served on the Board of Directors of the Medical Device Manufacturers Association since 2009. +Skills and Qualifications leading to conclusion that he should serve on the Board: +•  Executive-level management experience as CEO of several public companies. +•  Extensive +experience in the medical device, pharmaceutical and combination products industries. +•  Extensive experience managing operations in a cost-effective, efficient manner. +•  Experience +with governance and policy development for the medical device industry. +David J. Shulkin, M.D. +Independent Director +Director since: 2020 +Class I Nominee +Term Expires: 2025 +Age: 62 +Other Current +Public Company +Directorships: 1 +David J. Shulkin, M.D. joined the Board in 2020. Since 2018, he has served as President and Chief Executive Officer of Shulkin +Solutions, Inc., a company that promotes innovation in healthcare and advocates for veterans and underserved populations. From July 2015 through March 2018, Dr. Shulkin served in various capacities at the U.S. Department of Veterans Affairs +(the “VA”), including as Secretary of the VA from February 2017 to March 2018 and as Under Secretary for Health from July 2015 to February 2017. Prior to his tenure at the VA, he served in executive leadership positions at Morristown +Medical Center, Beth Israel Medical Center, Temple University Hospital, Drexel University School of Medicine, Doctor Quality, Inc. and the University of Pennsylvania Health System and Hospital of the University of Pennsylvania. Dr. Shulkin +received a B.A. from Hampshire College and his M.D. from the Medical College of Pennsylvania (Drexel College of Medicine). He also completed residencies in Internal Medicine at Yale University School of Medicine and University of Pittsburgh School +of Medicine, was a Fellow in General Medicine at the University of Pittsburgh School of Medicine and was a Robert Wood Johnson Foundation Clinical Scholar at the University of Pennsylvania School of Medicine. Dr. Shulkin is certified by the +American Board of Internal Medicine. He currently serves on the Board of CareMax, Inc. +Skills and Qualifications leading to conclusion that he should serve on the Board: +•  Expertise +in medical matters and public health. +•  Expertise in government affairs. +•  Executive-level management experience. +62 +Table of Contents +Mara G. Aspinall +Independent Director +Director since: 2017 +Class II Director +Term Expires: 2023 +Age: 59 +Other Current +Public Company +Directorships: 4 +Mara G. Aspinall joined the Board in June 2017. Since 2014, she has served as the Managing Member of Health Catalysts +Group, a consulting firm that focuses on growth of life science and technology companies. Ms. Aspinall has also served as Managing Director of BlueStone Venture Partners, a venture capital firm dedicated to investing in life sciences and +healthcare related companies. Prior to these positions, Ms. Aspinall served as President and CEO, Global Head of Roche Tissue Diagnostics/Ventana Medical Systems, a division of The Roche Group that provides tissue-based cancer diagnostic +instruments, products and services. Prior to that, she founded and served as CEO and Director of On-Q-ity, Inc., a diagnostic research company focused on improving +cancer treatment through the capture of circulating tumor cells in a patient’s blood. Ms. Aspinall also spent 12 years with Genzyme Corporation, serving as President of the Genzyme Genetics division, a leading provider of esoteric and +genetic tests for the reproductive, oncology and personalized medicine markets, and as President of the Genzyme Pharmaceuticals division, a custom pharmaceutical intermediates provider. Ms. Aspinall began her career as a management consultant +with Bain & Company. Ms. Aspinall holds an M.B.A. from Harvard Business School and a B.A. in International Relations from Tufts University. Ms. Aspinall is certified in Cybersecurity Oversight from Carnegie Mellon University. +Ms. Aspinall previously served on the Board at Safeguard Scientific and currently serves on the Boards of Castle Biosciences, Inc., Abcam Plc, Allscripts Healthcare Solutions, Inc. and DA32 Life Sciences Acquisition Corp. +Skills and +Qualifications leading to conclusion that she should serve on the Board: +•  Executive-level experience as a CEO. +•  Executive +experience in the life sciences industry. +•  Extensive experience in molecular diagnostics. +Ronny B. Lancaster +Independent Director +Director since: 2003 +Class II Director +Term Expires: 2023 +Age : 70 +Other Current +Public Company +Directorships : None +Ronny B. Lancaster became a member of the Board in May 2003. From September 2005 to December 2018, Mr. Lancaster served as Senior +Vice President, Federal Government Relations of Assurant, Inc., a provider of specialty insurance and insurance-related products and services. Prior to that, Mr. Lancaster served as Chief Operating Officer of the Morehouse School of Medicine, +Executive Assistant to the Secretary and Principal Deputy Assistant Secretary for Planning and Evaluation at the U.S. Department of Health and Human Services, General Counsel of Hamilton Enterprises, Inc., Senior Washington Representative for Blue +Cross/Blue Shield Association, and Chief of the Division of Fee-For-Service Plans at the U.S. Office of Personnel Management. Mr. Lancaster received a B.A. in +Economics from the Catholic University of America, an M.B.A. from the Wharton School of the University of Pennsylvania, and a J.D. from The Georgetown University Law Center. He is admitted to the Bars of Pennsylvania and the District of Columbia. +Mr. Lancaster previously served on the board of directors of Immucor, Inc. +Skills and Qualifications leading to conclusion that he should serve on the Board: +•  Expertise +in government affairs and political matters. +•  Extensive medical and healthcare experience. +•  Legal +training. +63 +Table of Contents +Anne C. Whitaker +Independent Director +Director since: 2021 +Class II Director +Term Expires: 2023 +Age: 54 +Other Current +Public Company +Directorships: 3 +Anne C. Whitaker became a member of the Board in November 2021 and serves on the Audit Committee. Ms. Whitaker is a seasoned +healthcare executive and director with more than 30 years of experience and a proven track record as an executive of building and leading high-performance teams. Ms. Whitaker currently serves as Managing Partner of Anne Whitaker Group, +LLC, a board and private equity advisory firm, and is the current Chairperson of the Board of Aerami Therapeutics, a private life science company. Prior to taking the Chair role at Aerami, she served as the CEO from October 2018 to November 2020 and +as a director from July 2018. She also serves as an independent director on the boards of three public companies including Faron Pharmaceuticals, a development stage pharma company; Caladrius, a development stage biotech company; and Mallinckrodt, a +specialty pharmaceutical company. In addition to her board work, she is an active industry advisor to private equity and venture capital funds in the U.S. and Europe. Ms. Whitaker started her healthcare career with The Upjohn Company selling +pharmaceuticals. She subsequently transitioned to GlaxoSmithKline PLC, where she spent 19 years and rose in the commercial ranks from a sales representative to become a Senior Vice President, Business Unit Head for the Cardiovascular, Metabolic, and +Urology franchises in 2009. She joined Sanofi SA in 2011 as the President of the North America Pharmaceutical Region. Anne served as the CEO and President of Synta Pharmaceuticals, Inc. in 2014 and 2015. She joined Bausch Health as an Executive Vice +President and Company Group Chairman for the Branded Pharmaceuticals segment in mid-2015. From February 2017 until April 2018, she served as the CEO and President of Novoclem Therapeutics, Inc. +Ms. Whitaker holds a Bachelor of Science degree in chemistry from the University of North Alabama. +Skills and Qualifications leading to conclusion that she should serve on the Board: +•  Executive-level management experience. +•  Extensive +experience in the life sciences industry. +•  Seasoned public company director. +Michael Celano +Independent Director +Director since: 2006 +Class III Director +Term Expires: 2024 +Age: 63 +Other Current +Public Company +Directorships: None +Michael Celano became a member of the Board in October 2006 and has served as the Company’s Chairman of the Board since April +2018. Mr. Celano has served as the Chief Financial Officer of Larimar Therapeutics since May 2020. From July 2016 to May 2019 Mr. Celano served as Chief Financial Officer and then Chief Operating Officer of Recro Pharma, Inc. Between 2015 +and June 2016 Mr. Celano was self-employed providing consulting services to healthcare companies. Prior to that, Mr. Celano served as the Chief Financial Officer of Kensey Nash Corporation, a biomaterials company from 2009 to 2012. From +2007 to 2008, Mr. Celano also served as Chief Financial Officer for BioRexis Pharmaceutical Corporation, a biopharmaceutical company. Before joining BioRexis, Mr. Celano served as a partner with KPMG LLP, where he was co-leader of its National Life Science Practice. Mr. Celano also was co-leader of the Life Science Practice for Arthur Andersen before he joined KPMG. Mr. Celano +holds a B.S. in Accounting from St. Joseph’s University. +Skills and Qualifications leading to conclusion that he should serve on the Board: +•  Long career in public accounting focused in the life sciences area. +•  Life +sciences industry operating company experience. +•  Accounting and financial expertise. +•  Extensive +business experience. +64 +Table of Contents +James A. Datin +Independent Director +Director since: 2019 +Class III Director +Term Expires: 2024 +Age: 59 +Other Current +Public Company +Directorships: None +James A. Datin became a member of the Board in August 2019. Since November 2013, Mr. Datin has served as President & +Chief Executive Officer of BioAgilytix Labs, LLC, a leading global bioanalytical contract research organization. From September 2005 to July 2013, Mr. Datin served as Executive Vice President and Managing Director at Safeguard Scientifics, +Inc., a company focused on providing capital and advice to technology driven businesses in healthcare, financial services and digital media. Prior to that time, Mr. Datin served as Chief Executive Officer of Touchpoint Solutions, Inc., a remote +management and monitoring company serving the medical, imaging, print, retail and other industries. He has also held senior leadership positions at Dendrite International, Inc., GlaxoSmithKline PLC, the Isuta Holdings Group of companies, Baxter and +other companies. Mr. Datin currently serves on the Boards of the North Carolina Biotechnology Center, and serves on the Advisory Board of Marshall University School of Business. He previously served on the Boards of FSD Pharma Inc., Clarient, +Inc., Intralinks Holdings, Inc. and NuPathe Inc. Mr. Datin received a B.B.A. at Marshall University, an M.B.A. at the University of New Haven and an Advanced Management Degree at The Wharton School at The University of Pennsylvania. +Skills and +Qualifications leading to conclusion that he should serve on the Board: +•  Extensive life science and business experience. +•  Executive +leadership experience. +•  Strong M&A background. +•  Operations +and financial experience. +Lelio Marmora +Independent Director +Director since: 2006 +Class III Director +Term Expires: 2024 +Age: 55 +Other Current +Public Company +Directorships: None +Lelio Marmora became a member of the Board in June 2020. Since June 2020, he has served as the President of the Management +Lab. Prior to that, Mr. Marmora served as Executive Director of Unitaid in Geneva, Switzerland, from 2014 to 2020, overseeing a portfolio of $1.5 billion in 100 countries. Prior to Unitaid, Mr. Marmora was Director for Africa and the +Middle East at the Global Fund to Fight AIDS, TB and Malaria, overseeing a $4 billion portfolio. He also served as head of the Fund’s Latin America and the Caribbean Department. Earlier in his career, Mr. Marmora served in various +capacities at a range of international organizations, including the World Bank, the Inter-American Development Bank and the United Nations Development Program, managing modernization of the State programs. Mr. Marmora graduated from the +Université Panthéon-Assas (Paris II) with a Master’s degree in International Law and Administration of International Organizations. +Skills and +Qualifications leading to conclusion that he should serve on the Board: +•  Extensive experience in international public health. +•  Expertise +in public funding. +•  Executive leadership experience. +65 +Table of Contents +Nancy J. Gagliano, M.D. +Director +Director since: 2021 +Class III Director +Term Expires: 2024 +Age: 62 +Other Current +Public Company +Directorships: None +Please see the section above entitled “Executive Officers” for a biographical description of Dr. Gagliano. +Skills and +Qualifications leading to conclusion that she should serve on the Board: +•  Extensive medical and healthcare experience. +•  Executive +leadership experience. +•  Strong background managing public health programs. +66 +Table of Contents +Vote Required; Board Recommendation +If a quorum is present, each nominee will be elected if he or she receives a majority of the votes cast by shares present in person or by +Proxy and entitled to vote at the Annual Meeting. Shares voted in person or represented by proxy which are not voted for a nominee (by voting no or abstaining) will have the effect of voting against the nominee. Broker +non-votes will have no effect on the required vote. In the absence of instructions to the contrary, shares of Common Stock represented by properly executed Proxies will be voted for the nominees, each of whom +has consented to be named and to serve if elected. +Your Board recommends that you vote FOR the election of the Director nominees. +PROPOSAL NO. 2. RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +Background +The Audit Committee of the Board of Directors has approved the reappointment of KPMG LLP (“KPMG”) as our independent +registered public accounting firm for the 2022 fiscal year. The Audit Committee has also recommended that the Board submit the appointment of KPMG for ratification by stockholders at the Annual Meeting. Although action by the stockholders on this +matter is not legally required, the Audit Committee and the Board believe it is appropriate to seek stockholder ratification of this appointment in light of the important role played by the independent registered public accounting firm in reporting +on the Company’s consolidated financial statements. If this appointment is not ratified by stockholders, the Audit Committee may reconsider its appointment of KPMG for the 2022 fiscal year or in the future. +One or more representatives of KPMG are expected to attend the Annual Meeting electronically. They will have an opportunity to make a +statement and will be available to respond to appropriate questions. +Vote Required; Board Recommendation +Ratification of the appointment of KPMG requires the affirmative vote of a majority of shares present in person or by Proxy and entitled +to vote at the Annual Meeting. Shares voted in person or represented by Proxy which are not voted for this ratification (by voting no or abstaining) will have the effect of voting against this proposal. In the absence of instructions to the +contrary, shares of Common Stock represented by properly executed Proxies will be voted for ratification of the appointment of KPMG as our independent registered public accounting firm for the 2022 fiscal year. +Your Board recommends that the stockholders vote FOR ratification of the appointment of KPMG. +PROPOSAL NO. 3. ADVISORY (NON-BINDING) VOTE TO APPROVE EXECUTIVE COMPENSATION +Background +Section 14A of the Exchange Act, enacted pursuant to the Dodd-Frank Act, requires that stockholders be given the opportunity to +vote to approve, on an advisory (non-binding) basis, no less frequently than once every three years, the compensation of our NEOs. Based on feedback received at our 2017 Annual Meeting, the Board determined +that such a vote will continue to be held on an annual basis until the next advisory vote on frequency. +The vote on the resolution +recommended below is not intended to address any specific element of compensation, but rather relates to the overall compensation of our NEOs. As described more fully under the CD&A Section of this Proxy Statement and the related tables and +narrative, our compensation program is performance-based and is designed to pay executives for performance by offering rewards for the achievement of pre-determined objectives. In addition, our program is +designed to align the interests of executives with the interests of our stockholders, provide long-term incentives and set compensation at levels sufficiently competitive to attract, retain and motivate high quality executives, and meet strong +corporate governance principles. You are urged to carefully review the CD&A Section of this Proxy Statement which contains a detailed discussion of our executive compensation program, including the 2021 compensation of our NEOs. +67 +Table of Contents +Compensation Program Features +As described more fully in the CD&A, there are many important features to our compensation program that illustrate our commitment to pay-for-performance and good corporate governance. A summary of some of the more significant of these features is set forth below: +•  Compensation is market driven and performance-based. +•  Total compensation targeted at 50 th +percentile of Peer Group. +•  Balanced mix of cash/equity, fixed/variable, short-term/long-term compensation +components. +•  Use of peer company benchmarking. +•  Threshold financial performance objectives for annual bonus pool funding meet or exceed +fiscal performance for the prior fiscal year. +•  Compensation recoupment policy. +•  Equity awards provide long-term incentive with three year vesting. +•  No hedging or pledge of our Common Stock. +•  50% of annual equity is performance-based vesting. +•  Robust stockholder outreach on compensation/governance matters. +Vote Required; Board Recommendation +If a quorum is present, the affirmative vote of a majority of shares present, in person or by Proxy and entitled to vote at the Annual +Meeting, is required to approve, on an advisory (non-binding) basis, the compensation paid to NEOs. Shares voted in person or represented by Proxy which are not voted for approval of our executive compensation +(by voting no or abstaining) will have the effect of voting against this proposal. Broker non-votes will not count toward the determination of whether this proposal is approved and will have no impact on the +vote. In the absence of instructions to the contrary, shares of Common Stock represented by properly executed Proxies will be voted for approval of our executive compensation, as disclosed in this Proxy Statement. Because this stockholder vote is +advisory, it will not be binding on the Company or the Board of Directors. However, the Compensation Committee and Board will take into account the outcome of the vote when considering future executive compensation programs and arrangements. +Based on the foregoing, the Board is requesting that stockholders vote on the following resolution: +RESOLVED , that the compensation paid to the Company’s named executive officers, as disclosed in the Compensation Discussion +and Analysis, compensation tables and narrative discussion, is hereby APPROVED. +Your Board recommends that the stockholders vote FOR the approval +of our executive compensation as described in the preceding resolution. +PROPOSAL NO. 4. AMENDMENT AND RESTATEMENT OF STOCK AWARD PLAN +General +Effective September 29, 2000, in connection with the merger of Epitope and STC Technologies, Inc. into the Company (the “Merger”), the +Company adopted the Epitope, Inc. 2000 Stock Award Plan, which was subsequently renamed the OraSure Technologies, Inc. Stock Award Plan (the “Stock Award Plan” or the “Plan”). +The Board has approved and recommended for submission to stockholders an amendment and restatement of the Stock Award Plan to increase in the number of +shares of Common Stock authorized for grant under the Plan. A description of the proposed Amendment and Restatement of the Stock Award Plan are set forth below. +Amendment and Restatement of Stock Award Plan +In order to enable the Company to continue to attract qualified officers, employees, directors and outside advisors, and to compensate +these individuals in a manner that is competitive with compensation provided by other +68 +Table of Contents +medical diagnostic and healthcare companies, the Board has determined that additional shares of Common Stock are needed to be available for grants under the Plan. In addition, the Board wants to +ensure that sufficient shares are available, if needed, to provide retention or other equity awards in connection with potential acquisitions or other business development activities. In determining the amount of the increase to our share reserve +under the Stock Award Plan, the Board and Compensation Committee considered a number of factors, including the following: +• +Shares Available for Grant . Currently, a maximum of 5,668,183 shares of our common stock may be granted under the +Stock Award Plan. As of April 1, 2022, 2,121,685 shares remained available for grant under the Stock Award Plan. The proposed amendment and restatement of the Stock Award Plan would increase the number of shares available for grant under the +Amended and Restated Stock Award Plan by 1,500,000 shares, bringing the total that will be available to be granted under the Amended and Restated Stock Award Plan to 3,621,685 . As of April 1, 2022, no benefits or amounts relating to the +additional 1,500,000 shares have been received by, or allocated to, any individuals. +• +Shares Underlying Outstanding Awards . As of April 1, 2022, under the Stock Award Plan there were: +(a) +2,121,685 shares of the Company’s Common Stock remaining available for grant under the Plan as stock options or +other equity awards; +(b) +1,895,836 stock options issued and outstanding, with a weighted-average exercise price of $10.18 per share and a +weighted average remaining contractual term of 7.39 years; +(c) +1,508,499 restricted shares issued and unvested, with a weighted-average grant date fair value of $9.27 per share; and +(d) +863,767 performance restricted units issued and unvested, with a weighted-average grant date for value of $8.64 per +share. +• +Overhang . As of April 1, 2022, our overhang is 8.1%. For this purpose we calculated overhang as (i) +2,121,685 shares remaining available for grant, plus (ii) 1,895,836 stock options issued and outstanding, plus (iii) 1,508,499 restricted shares issued and unvested, plus (iv) 863,767 performance restricted units issued and unvested, divided by +72,069,000 weighted average number of shares outstanding, plus (i) 2,121,685 shares remaining available for grant, plus (ii) 1,895,836 stock options issued and outsanding, plus (iii) 1,508,499 restricted shares issued and unvested, plus (iv) 863,767 +performance restricted units issued and unvested. +• +Burn Rate . Burn rate measures our usage of shares for the Stock Award Plan as a percentage of the total +outstanding shares of our Common Stock. For 2021 and 2020, our burn rates were 1.4% and 2.0%, respectively. The rates were calculated by dividing the number of options, restricted shares and performance restricted stock units that were granted +during the year, by the weighted average number of shares outstanding during the year. Our average annual burn rate over this period was 1.7%. +• +Forecasted Grants . Our Board anticipates that the proposed share increase under the Amended and Restated Stock +Award Plan, based on currently projected share use, will be sufficient for the granting of equity awards under the Amended and Restated Stock Award Plan for approximately one additional year, i.e. for grants through 2023. The forecasted projected +share use assumes we will awards (less cancellations and forfeitures) based on our historical averages. Despite the projected share use described above, future circumstances and business needs may result in a significant increase in projected +awards. +Accordingly, subject to stockholder approval, the Board approved an Amendment and Restatement of the +Stock Award Plan to increase the number of shares to be authorized for grant under the Plan by 1,500,000 shares. As a result of this increase there will be a total of 3,621,685 shares available in the Stock Award Plan for future issuance on and +after April 1, 2022, subject to stockholder approval. A copy of the Amendment and Restatement of the Stock Award Plan reflecting this amendment is attached as Exhibit A to this Proxy Statement. +Summary of Amended and Restated Stock Award Plan +A summary description of certain terms and provisions of the Stock Award Plan, as amended, follows. Defined terms that are not otherwise defined herein +are as defined in the Plan. To the extent the description below differs from the text of the Stock Award Plan, the text of the Plan will control. +Purpose . The purpose of the Stock Award Plan is to promote and advance the interests of the Company and its stockholders by enabling the Company +to attract, retain, and reward employees, outside advisors, and Directors of the +69 +Table of Contents +Company and any subsidiaries. The Stock Award Plan is intended to strengthen the mutuality of interests between employees, advisors, and Directors and the Company’s stockholders by offering equity-based incentives to promote the long-term growth, profitability and financial success of the Company. +Eligibility . The Stock Award Plan provides for stock-based awards (“Awards”) to +(i) employees of the Company and any subsidiaries, (ii) members of advisory committees or other consultants to the Company or its subsidiaries (“Advisors”), and (iii) non-employee +Directors of the Company. Persons who help the Company raise money by selling securities or who promote or maintain a market for the Company’s securities are not eligible to participate in the Stock Award Plan as Advisors. In addition, only +Advisors who, in the judgment of the Compensation Committee of the Board (the “Committee”), are or will be contributors to the long-term success of the Company, will be eligible to receive Awards (as defined below). As of April 1, +2022, the Company and its subsidiaries had 810 employees, zero Advisors and nine non-employee Directors, all of whom are eligible to receive Awards under the Plan. +The Stock Award Plan will continue in effect until February 21, 2027 or until the Plan is otherwise terminated by the Board. Termination or +expiration of the Plan will not affect outstanding Awards. +Administration of the Stock Award Plan . The Committee administers the Stock Award +Plan and determines the persons who are to receive Awards and the types, amounts, and terms of Awards. For example, the Committee may determine the exercise price, the form of payment of the exercise price, the number of shares subject to an Award, +and the date or dates on which an Award becomes exercisable. The Committee may delegate to one or more officers of the Company the authority to determine the recipients of and the types, amounts and terms of Awards granted to participants who are +not subject to the reporting requirements of Section 16(a) of the Securities Exchange Act of 1934, as amended. It is our policy that Awards made by the Committee for the Company’s CEO are also reviewed and approved by the full Board. The +Stock Award Plan permits the Board to amend, suspend or terminate the Plan or any portion of the Plan. +Shares Subject to the Stock Award +Plan . If the Amendment is approved by our stockholders at our 2022 Annual Meeting, there will be 3,621,685 shares available for issuance under the Stock Award Plan as of April 1, 2022. Any shares granted in connection with restricted +awards, performance awards or other stock-based awards will be counted against this limit on the basis of one and a half shares for every one share granted in connection with such Awards. +If an Award under the Plan is cancelled or expires for any reason prior to becoming fully vested or exercised or is settled in cash in lieu of shares, +or is exchanged for other Awards under the Plan, then all shares covered by such Awards will be made available for future Awards under the Plan. Shares retained or reacquired by the Company in payment of an option price or in satisfaction of a +withholding tax obligation in connection with any Award, shares repurchased by the Company with option proceeds and shares covered by a stock appreciation right, to the extent the stock appreciation right is exercised and settled in shares and +whether or not shares are actually issued to the participant, will not be made available for future Awards under the Plan. In the event of a change in the Company’s capitalization affecting the Common Stock, including a stock dividend, stock +split, recapitalization, merger, consolidation, split-up, combination or exchange of shares or other form of reorganization, the Committee shall make such proportionate adjustments as it may determine, in its +sole discretion to be appropriate as a result of such change, to the aggregate number of shares for which Awards may be granted under the Plan, the maximum number of shares which may be sold or awarded to any participant, the number of shares +covered by each outstanding Award, and the price per share in respect of outstanding Awards. +Awards . Awards that may be granted under the +Stock Award Plan include stock options, stock appreciation rights, restricted awards, performance awards, and other stock-based awards. The following is a brief summary of the various types of Awards that may +be granted under the Plan. +Stock Options . Options granted under the Stock Award Plan may be either incentive stock options +(“ISOs”), a tax-favored form of Award meeting the requirements of Section 422 of the Code, as amended, or nonqualified options (“NQOs”), which are not entitled to special tax +treatment. The Stock Award Plan limits the maximum term of any option granted to a period not longer than ten years from the date of grant. The exercise price of any option granted under the Plan may not be less than 100% of the fair market value of +the Common Stock on the date of grant, except that in the case of an option granted to holders of 10% or more of the Company’s voting securities, the exercise price may not be less than 110% of the fair market value of the Common Stock on the +date of grant. +70 +Table of Contents +The agreement evidencing the grant of a stock option (the “Option Agreement”) will specify, +as determined by the Committee, the time or times when the option is exercisable, in whole or in part, and the extent to which the option remains exercisable after the option holder ceases to be an employee, Advisor or nonemployee Director of the +Company. The Option Agreement may, in the discretion of the Committee, provide whether the option will become fully exercisable upon the death, disability or retirement of the option holder or upon a change in control of the Company. As a general +matter, the option holder may not transfer an option except by testamentary will or the laws of descent and distribution. An option may be exercised by payment of the exercise price in cash or, at the discretion of the Committee, with previously +held shares of Common Stock or share equivalents, with proceeds from the sale of shares subject to the option or in any combination of the foregoing. +Options granted to employees under the Stock Award Plan generally vest over four years, with 25% of the grant vesting on the first anniversary of the +grant date and the remaining 75% vesting ratably on a monthly basis over the next three years. Options granted to non-employee Directors in the past have generally vested ratably on a monthly basis over either +a 12 or 24-month period, depending on the type of grant. Options granted under the Plan generally provide for accelerated vesting upon a “change in control.” The Committee may provide for different +vesting for any option granted under the Plan. Our general practice is that in no event may options for more than 500,000 shares of Common Stock be granted to any individual under the Stock Award Plan during any fiscal year period. +Stock Appreciation Rights . A recipient of stock appreciation rights (“SARs”) will receive, upon exercise, a payment (in cash or in +shares of Common Stock) based on the increase in the fair market value of a share of Common Stock between the date of grant and the date of exercise. SARs may be granted in connection with options or other Awards granted under the Stock Award Plan +or may be granted as independent Awards. The Plan limits the maximum term for the exercise of a SAR to a period not longer than ten years from the date of grant. In no event may SARs for more than 500,000 shares of Common Stock be granted to any +individual under the Plan during any fiscal year period. +Restricted Awards . Restricted Awards may take the form of restricted shares or +restricted units. Restricted shares are shares of Common Stock that may be subject to forfeiture if the recipient terminates employment or service as an Advisor or non-employee Director during a specified +period (the “Restriction Period”). Stock certificates representing restricted shares are issued in the name of the recipient, but are held by the Company until the expiration of the Restriction Period. From the date of issuance of +restricted shares, the recipient is entitled to the rights of a stockholder with respect to the shares, including voting and dividend rights. Any right to receive dividends on restricted shares shall be subject to the same forfeiture requirements +applicable to the restricted shares. Restricted units are Awards that entitle the recipient to receive a share of Common Stock or the fair market value of a share at some future date, which similarly may be subject to forfeiture if the recipient +terminates employment or service as an Advisor or non-employee Director during the applicable Restriction Period. Unvested Restricted Awards may not be sold, assigned, transferred, pledged, encumbered or +otherwise transferred, voluntarily or involuntarily, by the recipient. +At the expiration of the Restriction Period, payment with respect to +restricted units is made in an amount equal to the fair market value of the number of shares of Common Stock covered by the restricted units. Payment may be in cash, unrestricted shares of Common Stock, or any other form approved by the Committee. +Restricted Awards that are subject to forfeiture based solely on continued employment or passage of time shall vest over a period of at least three years, subject to certain exceptions set forth in the Stock Award Plan. +Performance Awards. Performance Awards are designated in units equivalent in value to a share of Common Stock. A Performance Award is subject to +forfeiture if or to the extent that the Company, a subsidiary, an operating group, or the recipient, as specified by the Committee in the Award, fails to meet performance goals established for a designated performance period, which must have a +duration of at least one year. Performance Awards earned by attaining performance goals are paid at the end of a performance period in cash, shares of Common Stock, or any other form approved by the Committee. The number of shares of Common Stock +issuable with respect to Performance Awards granted to any individual executive officer may not exceed 150,000 shares for any calendar year. +Other Stock-Based Awards . The Committee may grant other Awards that involve payments or grants of shares of Common Stock or are measured by or in +relation to shares of Common Stock. +Change in Control . The Committee, in its discretion, may provide in any Award agreement that in the +event of a “change in control” of the Company, (i) all, or a specified portion of, Awards requiring exercise will become fully and immediately +71 +Table of Contents +exercisable, notwithstanding any other limitations on exercise; (ii) all, or a specified portion of, Awards subject to restrictions will become fully vested; and/or (iii) all, or a +specified portion of, Awards subject to performance goals will be deemed to have been fully earned. The Committee, in its discretion, may include change in control provisions in some Award agreements and not in others, may include different change +in control provisions in different Award agreements, and may include change in control provisions for some Awards or some participants and not for others. A “change in control” generally is defined to take place when disclosure of such a +change would be required by the proxy rules promulgated by the SEC or when: +• +any person, or more than one person acting as a group within the meaning of Section 409A of the Code and the +regulations issued thereunder, acquires ownership of stock of the Company that, together with stock held by such person or group, constitutes more than 50 percent of the total fair market value or total voting power of the stock of the Company; +• +any person, or more than one person acting as a group within the meaning of Code Section 409A and the regulations +issued thereunder, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition) ownership of stock of the Company possessing 30 percent or more of the total +voting power of the Company’s stock; +• +a majority of the members of the Board is replaced during any 12-month period by +directors whose appointment or election is not endorsed by a majority of the members of the Board before the date of the appointment or election; or +• +a person, or more than one person acting as a group within the meaning of Code Section 409A and the regulations +issued thereunder, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition) assets from the Company that have a total gross fair market value equal to or more +than 40 percent of the total gross fair market value of all the assets of the Company immediately before such acquisition or acquisitions. +No Repricing or Exchanges . Stockholder approval of an action is required if (i) such action would increase the number of shares of +Common Stock subject to the Plan, (ii) such action would result in the repricing, replacement or repurchase of out-of-the money options, stock appreciation rights +or other Awards, (iii) such action would result in an Award becoming fully vested, exercisable or earned in the event of a change in control prior to the consummation of the change in control or (iv) such approval is required by law or +regulation or the rules of a stock exchange or over-the-counter trading system. Since the Merger, neither the Board nor the Committee has taken any action that resulted +in the repricing, replacement or repurchase of out-of-the-money Options, SARs or other Awards. +Federal Income Tax Consequences . The following discussion summarizes the principal anticipated federal income tax consequences of Awards granted +under the Stock Award Plan, to participants and to the Company. The following information is only a summary and does not address all aspects of taxation that may be relevant to a particular participant in light of his or her personal circumstances. +Participants should consult with their own tax advisors with respect to the tax consequences inherent in the ownership and exercise of the awards and the ownership and disposition of any underlying securities. The summary does not address the +effects of other federal taxes (including possible “golden parachute” excise taxes) or taxes imposed under state, local or foreign tax laws. Tax laws are subject to change. Under Section 162(m), the Company cannot deduct compensation +paid to certain covered employees in excess of $1 million per year. +Incentive Stock Options . A recipient of an option does not +recognize taxable income upon the grant or exercise of an ISO. If no disposition of shares occurs within two years from the date of grant or within one year from the date of exercise, then (a) upon the sale of the shares, any amount realized in +excess of the exercise price is taxed to the option recipient as long-term capital gain and any loss sustained will be a long-term capital loss, and (b) no deduction is allowed to the Company for federal +income tax purposes. For purposes of computing alternative minimum taxable income, an ISO is treated as an NQO. +If shares of Common Stock acquired +upon the exercise of an ISO are disposed of prior to the expiration of the two-year and one-year holding periods described above (a “disqualifying +disposition”), then (a) the recipient will recognize ordinary income in the year of disposition in an amount equal to the excess (if any) of the fair market value of the shares at exercise (or, if less, the amount realized on a sale of the +shares) over the exercise price thereof and (b) the Company would be entitled to deduct such amount. Any further gain realized is taxed as a short-term or long-term capital gain, as applicable, and does not result in any deduction for the +Company. +72 +Table of Contents +Nonqualified Options . No income is recognized by an option recipient at the time an NQO is +granted. Upon exercise, (a) ordinary income is recognized by the option recipient in an amount equal to the difference between the exercise price and the fair market value of the shares on the date of exercise and (b) the Company receives +a tax deduction for the same amount. Upon disposition of the shares, appreciation or depreciation in the value of the shares after the date of exercise is treated as a short-term or long-term capital gain or loss, as applicable, and will not result in any deduction to the Company. +Stock +Appreciation Rights . The grant of a SAR to a participant will not cause the recognition of income by the participant. Upon exercise of a SAR, the participant will recognize ordinary income equal to the amount of cash payable to the participant +plus the fair market value of any shares of Common Stock delivered to the participant. The Company will be entitled to a deduction equal to the amount of ordinary income recognized by the participant in connection with the exercise of a SAR. +Restricted Awards and Performance Awards . Generally, a participant will not recognize any income upon issuance of a Restricted Award or +Performance Award that is subject to forfeiture. Generally, a participant will recognize ordinary income upon the vesting of Restricted Awards or Performance Awards in an amount equal to the amount of cash payable to the participant plus the fair +market value of shares of Common Stock delivered to the participant. Dividends paid with respect to Awards during the Restriction Period will be subject to the same restrictions and will be taxable as ordinary income to the participant when, and if, +the restrictions lapse. However, a participant may elect to recognize compensation income upon the grant of restricted shares, based on the fair market value of the shares of Common Stock subject to the Award at the date of grant. If a participant +makes such an election, dividends paid with respect to the restricted shares will not be treated as compensation, but rather as dividend income at the time when the restricted shares vest. The Company will be entitled to a deduction equal to the +amount of ordinary income recognized by the participant. If a participant who receives an Award of restricted shares makes the special election described above, the Company will not be entitled to deduct dividends paid with respect to the restricted +shares. When shares of common stock or cash with respect to restricted unit Awards are delivered to the participant, the value of the shares or cash is then taxable to the participant as ordinary income and the Company will be entitled to a +deduction equal to the amount of ordinary income recognized by the participant. +New Plan Benefits . All awards to executive officers in +future periods are made at the discretion of the Compensation Committee and our Board. Therefore, the benefits and amounts that will be received or allocated under the Plan to such persons are not determinable at this time. +Vote Required; Board Recommendation +Assuming that a quorum is present, the affirmative vote of the holders of a majority of the shares of Common Stock present, in person or +by Proxy at the Annual Meeting, is required for approval of the proposed Amendment. Shares voted in person or represented by a Proxy which are not voted for approval of the Amendment (by voting no or abstaining) will have the effect of voting +against this proposal. Shares as to which a broker or other nominee has indicated on a duly executed and returned Proxy or otherwise advised us that it lacks voting authority will have no effect on the vote for this proposal. +Your Board recommends that stockholders vote FOR approval of the Company’s Amended and Restated Stock Award Plan. +DELINQUENT SECTION 16(A) REPORTS +Section 16(a) of the +Exchange Act requires our directors and executive officers, and any persons who beneficially own more than 10% of a registered class of our equity securities, to file reports of securities ownership and changes in such ownership with the SEC. +Officers, directors and greater than ten percent stockholders are also required by SEC rules to furnish us with copies of all Section 16(a) forms they file. Based solely on a review of the Company’s records and written +representations by the persons required to file such reports, management believes that all filing requirements of Section 16(a) were satisfied with respect to the 2021 fiscal year, except for (i) one Form 4 for Eamonn P. Hobbs filed +on May 20, 2021 and (ii) one Form 4 for Nancy J. Gagliano, M.D., M.B.A. filed on November 23, 2021, both of which were filed late due to administrative error. +73 +Table of Contents +ANNUAL REPORT +Our Annual Report to +Stockholders for the year ended December 31, 2021 accompanies this Proxy Statement. Following receipt of a written request, we will provide, without charge, a copy of our Annual Report on Form 10-K for +the year ended December 31, 2021, as filed with the SEC (including a list briefly describing the exhibits thereto), to any record holder or beneficial owner of our Common Stock on March 23, 2022, the record date for the Annual Meeting, or +to any person who subsequently becomes such a record holder or beneficial owner. Requests should be directed to the attention of the Corporate Secretary of the Company at our address set forth in the Notice of Annual Meeting of Stockholders +immediately preceding this Proxy Statement. +DEADLINE FOR STOCKHOLDER PROPOSALS +You may +submit proposals for inclusion in the proxy materials for the Company’s 2023 Annual Meeting of Stockholders. Any such proposals must meet the stockholder eligibility and other requirements imposed by rules issued by the SEC and must be received +by the Company at 220 East First Street, Bethlehem, Pennsylvania 18015, Attention: Corporate Secretary, in accordance with Rule 14a-8 promulgated under the Exchange Act, not later than December 9, 2022. +In addition, our Bylaws provide that a stockholder proposal must meet certain predetermined requirements in order to be considered +at the Annual Meeting. These requirements are separate from, and in addition to, the requirements discussed above to have the stockholder proposal included in the proxy materials pursuant to the SEC’s rules and regulations. In order to be +considered, a stockholder’s proposal must be made in writing to the Company’s Secretary and must be delivered to or received at our principal executive offices not less than ninety (90) days nor more than one hundred twenty +(120) days prior to the meeting. Accordingly, in order to submit a notice of nomination for the 2023 Annual Meeting, notice must be delivered to or received at our principal executive offices between January 17, 2023 and February 16, +2023. However, if less than one hundred (100) days’ notice or prior public disclosure of the date of the meeting is given or made to stockholders, notice by the stockholder to be timely must be so received no later than the close of +business on the tenth (10 th ) day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made, whichever first occurs. The notice to the +Secretary must set forth, with respect to each matter the stockholder proposes to bring before the meeting, a brief description of the matter and the reasons for considering that matter at the Annual Meeting. The notice must also include, as to the +stockholder giving the notice and the beneficial owner, if any, on whose behalf notice of the proposed business is made: (i) the name and address of the stockholder and such beneficial owner; (ii) any material interest of such stockholder +and such beneficial holder in such business; (iii) the class and number of shares of capital stock of the Company which are held of record or beneficially owned by the stockholder and such beneficial owner and any other direct or indirect +pecuniary or economic interest in any capital stock of the Company of such stockholder and such beneficial owner, including without limitation, any derivative instrument, swap, option, warrant, short interest, hedge, profit sharing arrangement or +borrowed or loaned shares; (iv) a representation that such stockholder intends to appear in person or by proxy at the meeting to propose the business described in its notice; and (v) any other information relating to such business matter +that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder. To the +extent the Board of Directors or the SEC, or a court of competent jurisdiction, deems these Bylaw provisions to be inconsistent with the right of stockholders to request inclusion of a proposal in the Company’s proxy materials pursuant to Rule 14a-8 promulgated under the Exchange Act, such rule shall prevail. +The SEC has promulgated rules +relating to the exercise of discretionary voting authority under proxies solicited by the Board. If a stockholder intends to present a proposal at our 2023 Annual Meeting without inclusion of that proposal in the Company’s proxy materials and +written notice of the proposal is not received by the Secretary of the Company by February 21, 2023 (the date that is 45 days before the one-year anniversary of the date on which the Company first sent +its proxy materials for the Annual Meeting), or if the Company meets other requirements of the applicable SEC rules and regulations, the proxies solicited by the Board for use at the 2023 Annual Meeting will confer discretionary authority to vote on +the proposal should it then be raised at the 2023 Annual Meeting. +BY ORDER OF THE BOARD OF DIRECTORS +Agnieszka M. Gallagher +Secretary +April 7, 2022 +74 +Table of Contents +EXHIBIT A +AMENDED AND RESTATED +ORASURE TECHNOLOGIES, +INC. 2000 STOCK AWARD PLAN +75 +Table of Contents +ORASURE TECHNOLOGIES, INC. +STOCK AWARD PLAN +ARTICLE 1 +ESTABLISHMENT AND PURPOSE +(Amended and Restated +Effective as of April 1, 2022) +Establishment . Epitope, Inc. established this Plan as the Epitope, Inc. 2000 Stock Award +Plan, effective as of February 15, 2000, and the Plan was approved by shareholders of Epitope, Inc. at the 2000 annual shareholders meeting. Effective September 29, 2000, in connection with the merger of Epitope, Inc. with and into OraSure +Technologies, Inc., the name of the Plan was changed to the OraSure Technologies, Inc. 2000 Stock Award Plan and the Plan was adopted as a stock award plan of OraSure Technologies, Inc. The Plan was amended and restated, subject to shareholder +approval, effective May 16, 2006. The Plan was amended further, subject to shareholder approval, effective May 13, 2008. The Plan again was amended and restated in its entirety, subject to shareholder approval, effective May 17, 2011 +and February 12, 2013. The Plan was amended further, subject to shareholder approval, effective May 22, 2014. The Plan was again amended and restated in its entirety, subject to shareholder approval, effective May 16, 2017. The Plan +was further amended and restated in its entirety, subject to shareholder approval, effective April 2, 2020. +1.1 +Purpose . The purpose of the Plan is to promote and advance the interests of Corporation and its shareholders by enabling Corporation to attract, retain, and reward employees, outside advisors, and directors of Corporation and its +subsidiaries. It is also intended to strengthen the mutuality of interests between such employees, advisors, and directors and Corporation’s shareholders. The Plan is designed to meet this intent by offering stock options and other equity-based +incentive awards, thereby providing a proprietary interest in pursuing the long-term growth, profitability, and financial success of Corporation. +ARTICLE 2 +DEFINITIONS +2.1 Defined Terms . For purposes of the Plan, the following terms have the meanings set forth below: +“ Advisor ” means a natural person who is a consultant to or member of an Advisory Committee of Corporation or a +Subsidiary, who provides bona fide services to Corporation and who is neither an employee of Corporation or a Subsidiary nor a Non-Employee Director. “Advisor” excludes any person who provides +services to Corporation in connection with the offer or sale of securities in a capital raising transaction or to promote or maintain a market for Corporation’s securities, and any other person excluded from the class of persons to whom +securities may be offered pursuant to a registration statement on Form S-8 or any successor form of registration statement. +“ Advisory Committee ” means a scientific advisory committee to Corporation or a Subsidiary. +“ Award ” means an award or grant made to a Participant of Options, Stock Appreciation Rights, Restricted Awards, +Performance Awards, or Other Stock-Based Awards pursuant to the Plan. +“ Award Agreement ” means an agreement +as described in Section 6.4. +“ Board ” means the Board of Directors of Corporation. +“ Change in Control ” means, unless otherwise provided in the applicable Award Agreement, a change of control of a +nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A pursuant to the Exchange Act; provided, however, that a change of control shall only be deemed to have occurred at such time as (i) any +person, or more than one person acting as a group within the meaning of Section 409A of the Code, acquires ownership of stock of the Corporation that, together with stock held by such person or group, constitutes more than 50 percent of +the total fair market value or total voting power of the stock of the Corporation; (ii) any person, or more than one person acting as a group within the meaning of Section 409A of the Code, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition) ownership of stock of the Corporation possessing 30 percent or more of the total voting power of the Corporation’s stock; (iii) a +majority of the members of the Board is +76 +Table of Contents +replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board before the date of +the appointment or election; or (iv) a person, or more than one person acting as a group within the meaning of Section 409A of the Code, acquires (or has acquired during the 12-month period ending on +the date of the most recent acquisition) assets from the Corporation that have a total gross fair market value equal to or more than 40 percent of the total gross fair market value of all the assets of the Corporation immediately before such +acquisition or acquisitions. +“ Code ” means the Internal Revenue Code of 1986, as amended and in effect from +time to time, or any successor thereto, together with rules, regulations, and interpretations promulgated thereunder. Where the context so requires, any reference to a particular Code section will be construed to refer to the successor provision to +such Code section. +“ Committee ” means the committee appointed by the Board to administer the Plan as +provided in Article 3 of the Plan. +“ Common Stock ” means the Common Stock, par value $0.000001 per share, of +Corporation or any security of Corporation issued in substitution, in exchange, or in lieu of such stock. +“ Continuing +Restriction ” means a Restriction contained in Sections 6.7, 6.8, and 15.4 of the Plan and any other Restrictions expressly designated by the Committee in an Award Agreement as a Continuing Restriction. +“ Corporation ” means OraSure Technologies, Inc., a Delaware corporation, or any successor corporation. As to +awards granted or other action taken prior to September 29, 2000, “Corporation” includes Epitope, Inc., as predecessor to OraSure Technologies, Inc. +“ Disability ” means the condition of being “disabled” within the meaning of Section 422(c)(6) of +the Code. However, the Committee may change the foregoing definition of “Disability” or may adopt a different definition for purposes of specific Awards. +“ Exchange Act ” means the Securities Exchange Act of 1934, as amended and in effect from time to time, or any +successor statute. Where the context so requires, any reference to a particular section of the Exchange Act, or to any rule promulgated under the Exchange Act, shall be construed to refer to successor provisions to such section or rule. +“ Fair Market Value ” means with respect to Common Stock, on a particular day, without regard to any restrictions +(other than a restriction which, by its terms, will never lapse): +(1) if the Common Stock is at the time listed or admitted to +trading on any stock exchange, the mean between the highest and lowest prices of the Common Stock on the date in question on the principal national securities exchange on which it is then listed or admitted to trading. If no reported sale of Common +Stock takes place on the date in question on the principal exchange, then the reported closing asked price of the Common Stock on such date on the principal exchange shall be determinative of “Fair Market Value;” +(2) if the Common Stock is not at the time listed or admitted to trading on a stock exchange, the mean between the highest reported +asked price and lowest reported bid price of the Common Stock on the date in question in the over-the-counter market, as such prices are reported in a publication of +general circulation selected by the Committee and regularly reporting the market price of Common Stock in such market; or +(3) if +the Common Stock is not listed or admitted to trading on any stock exchange or traded in the over-the-counter market, an amount as determined in good faith by the +Committee and which shall comply with Section 409A of the Code. +“ Incentive Stock Option ” or +“ ISO ” means any Option granted pursuant to the Plan that is intended to be and is specifically designated in its Award Agreement as an “incentive stock option” within the meaning of Section 422 of the Code. +“ Non-Employee Director ” means a member of the Board who is not an +employee of Corporation or any Subsidiary. +77 +Table of Contents +“ Nonqualified Option ” or “ NQSO ” means any +Option granted pursuant to the Plan that is not an Incentive Stock Option. +“ Option ” means an ISO or an +NQSO. +“ Other Stock-Based Award ” means an Award as defined in Section 11.1. +“ Participant ” means an employee of Corporation or a Subsidiary, an Advisor, or a +Non-Employee Director who is granted an Award under the Plan. +“ Performance +Award ” means an Award granted pursuant to the provisions of Article 10 of the Plan, the Vesting of which is contingent on performance attainment. +“ Performance Cycle ” means a designated performance period pursuant to the provisions of Section 10.3 of the +Plan. +“ Performance Goal ” means a designated performance objective pursuant to the provisions of +Section 10.4 of the Plan. +“ Plan ” means this OraSure Technologies, Inc. 2000 Stock Award Plan, as set +forth herein and as it may be amended from time to time. +“ Reporting Person ” means a Participant who is +subject to the reporting requirements of Section 16(a) of the Exchange Act. +“ Restricted Award ” means a +Restricted Share or a Restricted Unit granted pursuant to Article 9 of the Plan. +“ Restricted Share ” means +an Award described in Section 9.1(a) of the Plan. +“ Restricted Unit ” means an Award of units +representing Shares described in Section 9.1(b) of the Plan. +“ Restriction ” means a provision in the +Plan or in an Award Agreement which limits the exercisability or transferability, or which governs the forfeiture, of an Award or the Shares, cash, or other property payable pursuant to an Award. +“ Retirement ” means: +(a) For Participants who are employees, retirement from active employment with Corporation and its Subsidiaries at or after age 50, or +such earlier retirement date as approved by the Committee for purposes of the Plan; +(b) For Participants who are Non-Employee Directors, termination of membership on the Board after attaining age 50, or such earlier retirement date as approved by the Committee for purposes of the Plan; and +(c) For Participants who are Advisors, termination of service as an Advisor after attaining age 50, or such earlier retirement date as +approved by the Committee for purposes of the Plan. +However, the Committee may change the foregoing definition of +“Retirement” or may adopt a different definition for purposes of specific Awards. +“ Share ” means a +share of Common Stock. +“ Stock Appreciation Right ” or “ SAR ” means an Award to +benefit from the appreciation of Common Stock granted pursuant to the provisions of Article 8 of the Plan. +“ Subsidiary ” means any “subsidiary corporation” of Corporation within the meaning of Section 424 +of the Code, namely any corporation in which Corporation directly or indirectly controls 50 percent or more of the total combined voting power of all classes of stock having voting power. +78 +Table of Contents +“ Ten Percent Shareholder ” means a person who on any given date +owns, either directly or indirectly (taking into account the attribution rules contained in Section 424(d) of the Code), stock possessing more than 10 percent of the total combined voting power of all classes of stock of the Corporation or +any Subsidiary under Section 424(f) of the Code. +“ Vest ” or “ Vested ” means: +(a) In the case of an Award that requires exercise, to be or to become immediately and fully exercisable and free of all +Restrictions (other than Continuing Restrictions); +(b) In the case of an Award that is subject to forfeiture, to be or to become +nonforfeitable, freely transferable, and free of all Restrictions (other than Continuing Restrictions); +(c) In the case of an Award +that is required to be earned by attaining specified Performance Goals, to be or to become earned and nonforfeitable, freely transferable, and free of all Restrictions (other than Continuing Restrictions); or +(d) In the case of any other Award as to which payment is not dependent solely upon the exercise of a right, election, exercise, or +option, to be or to become immediately payable and free of all Restrictions (except Continuing Restrictions). +2.2 Gender and +Number . Except where otherwise indicated by the context, any masculine or feminine terminology used in the Plan shall also include the opposite gender; and the definition of any term in Section 2.1 in the singular shall also include the +plural, and vice versa. +ARTICLE 3 +ADMINISTRATION +3.1 +General . Except as provided in Section 3.7, the Plan will be administered by a Committee composed as described in Section 3.2. +3.2 Composition of the Committee . The Committee will be appointed by the Board from among its members in a number and with such +qualifications as will meet the independence and other requirements for (i) approval by a committee pursuant to Rule 16b-3 under the Exchange Act, (ii) establishing, administering and certifying +performance goals pursuant to Section 162(m) of the Code and (iii) trading or listing securities on the securities exchange or association on which the Common Stock is then traded or listed. The Board may from time to time remove members +from, or add members to, the Committee. Vacancies on the Committee, however caused, will be filled by the Board. The initial members of the Committee will be the members of Corporation’s existing Executive Compensation Committee. The Board may +at any time replace the Executive Compensation Committee with another Committee. In the event that the Executive Compensation Committee ceases to satisfy the requirements of Rule 16b-3, Section 162(m) of +the Code or a securities exchange or association described above in 3.2(iii), the Board will appoint another Committee satisfying such requirements. +3.3 Authority of the Committee . The Committee will have full power and authority (subject to such orders or resolutions as may be +issued or adopted from time to time by the Board) to administer the Plan in its sole discretion, including the authority to: +(a) +Construe and interpret the Plan and any Award Agreement; +(b) +Promulgate, amend, and rescind rules and procedures relating to the implementation of the Plan; +(c) +With respect to employees and Advisors: +(i) +Select the employees and Advisors who shall be granted Awards; +(ii) +Determine the number and types of Awards to be granted to each such Participant; +(iii) +Determine the number of Shares, or Share equivalents, to be subject to each Award; +(iv) +Determine the option price, purchase price, base price, or similar feature for any Award; and +(v) +Determine all the terms and conditions of all Award Agreements, consistent with the requirements of the Plan. +79 +Table of Contents +Decisions of the Committee, or any delegate as permitted by the Plan, shall be final, +conclusive, and binding on all Participants. +3.4 Action by the Committee . A majority of the members of the Committee will +constitute a quorum for the transaction of business. Action approved by a majority of the members present at any meeting at which a quorum is present, or action in writing by all the members of the Committee, will be the valid acts of the Committee. +3.5 Delegation . Notwithstanding the foregoing, the Committee may delegate to one or more officers of Corporation the +authority to determine the recipients, types, amounts, and terms of Awards granted to Participants who are not Reporting Persons or “covered employees” within the meaning of Section 162(m) of the Code. +3.6 Liability of Committee Members . No member of the Committee will be liable for any action or determination made in good faith +with respect to the Plan, any Award, or any Participant. +3.7 Awards to Non-Employee +Directors . The Board or Committee may grant Awards from time to time to Non-Employee Directors. +3.8 Costs of Plan . The costs and expenses of administering the Plan will be borne by Corporation. +ARTICLE 4 +DURATION OF THE PLAN AND SHARES +SUBJECT TO THE PLAN +4.1 Duration of the Plan . This amendment and restatement of the Plan is effective April 4, +2020. The Plan shall remain in full force and effect until February 21, 2027, or the date it is terminated by the Board. The Board shall have the power to amend, suspend or terminate the Plan as provided in Article 14. Termination of the Plan +under Article 14 shall not affect Awards outstanding under the Plan at the time of termination. +4.2 Shares Subject to the +Plan . +4.2.1 General . The shares which may be made subject to Awards under the Plan are Shares of Common Stock, which may +be either authorized and unissued Shares or reacquired Shares. No fractional Shares may be issued under the Plan. +4.2.2 Number +of Shares; Limits . +(a) The maximum number of Shares for which Awards may be granted under the Plan on or after April 1, +2022, is 3,621,685 Shares, plus any Shares that become available as the result of the cancellation or expiration of any Award, subject to adjustment for changes in capitalization affecting the Corporation’s Common Stock pursuant to +Section 13.2 of the Plan. Any Shares granted in connection with Options and Stock Appreciation Rights shall be counted against this limit on the basis of one Share for each Share subject to such Option or Stock Appreciation Right. Any Shares +granted in connection with Restricted Awards, Performance Awards or Other Stock-Based Awards shall be counted against this limit on the basis of one and a half Shares for every one Share granted in connection with such Awards. +(b) The maximum number of Shares that may be issued pursuant to paragraph (a) above on or after April 1, 2022, pursuant to +Incentive Stock Options, is 3,621,685. Shares, subject to adjustment for changes in capitalization affecting the Corporation’s Common Stock pursuant to Section 13.2 of the Plan. +4.2.3 Availability of Shares for Future Awards . If an Award under the Plan is canceled or expires for any reason prior to having +been fully Vested or exercised by a Participant or is settled in cash in lieu of Shares or is exchanged for other Awards, all Shares covered by such Awards will be made available for future Awards under the Plan. In no event shall the following be +made available for future awards under the Plan: (a) Shares retained or reacquired by the Corporation in payment of an option price or satisfaction of a withholding tax obligation by a Participant in connection with any Award, (b) Shares +repurchased by the Corporation with Option proceeds and (c) Shares covered by an SAR, to the extent the SAR is exercised and settled in Shares and whether or not Shares are actually issued to the Participant upon exercise of the SAR. +80 +Table of Contents +ARTICLE 5 +ELIGIBILITY +5.1 Employees +and Advisors . Officers and other employees of Corporation and any Subsidiaries (who may also be directors of Corporation or a Subsidiary) and Advisors who, in the Committee’s judgment, are or will be contributors to the long-term success of +Corporation will be eligible to receive Awards under the Plan. +5.2 Non-Employee +Directors . All Non-Employee Directors will be eligible to receive Awards as provided in Section 3.7 of the Plan. +ARTICLE 6 +AWARDS +6.1 Types of Awards . The types of Awards that may be granted under the Plan are: +(a) +Options governed by Article 7 of the Plan; +(b) +Stock Appreciation Rights governed by Article 8 of the Plan; +(c) +Restricted Awards governed by Article 9 of the Plan; +(d) +Performance Awards governed by Article 10 of the Plan; and +(e) +Other Stock-Based Awards or combination awards governed by Article 11 of the Plan. +In the discretion of the Committee, any Award may be granted alone, in addition to, or in tandem with other Awards under the Plan. +6.2 General . Subject to the limitations of the Plan, the Committee may cause Corporation to grant Awards to such Participants, at +such times, of such types, in such amounts, for such periods, with such option prices, purchase prices, or base prices, and subject to such terms, conditions, limitations, and restrictions as the Committee, in its discretion, deems appropriate. +Awards may be granted as additional compensation to a Participant or in lieu of other compensation to such Participant. A Participant may receive more than one Award and more than one type of Award under the Plan. +6.3 Nonuniform Determinations . The Committee’s determinations under the Plan or under one or more Award Agreements, +including without limitation, (a) the selection of Participants to receive Awards, (b) the type, form, amount, and timing of Awards, (c) the terms of specific Award Agreements, and (d) elections and determinations made by the +Committee with respect to exercise or payments of Awards, need not be uniform and may be made by the Committee selectively among Participants and Awards, whether or not Participants are similarly situated. +6.4 Award Agreements . Each Award will be evidenced by a written Award Agreement between Corporation and the Participant. Award +Agreements may, subject to the provisions of the Plan, contain any provision approved by the Committee. +6.5 Provisions Governing +All Awards . All Awards will be subject to the following provisions: +(a) Alternative Awards . If any Awards are designated +in their Award Agreements as alternative to each other, the exercise of all or part of one Award automatically will cause an immediate equal (or pro rata) corresponding termination of the other alternative Award or Awards. +(b) Rights as Shareholders . No Participant will have any rights of a shareholder with respect to Shares subject to an Award until +such Shares are issued in the name of the Participant. +(c) Employment Rights . Neither the adoption of the Plan nor the +granting of any Award will confer on any person the right to continued employment with Corporation or any Subsidiary or the right to remain as a director of Corporation or a member of any Advisory Committee, as the case may be, nor will it interfere +in any way with the right of Corporation or a Subsidiary to terminate such person’s employment or to remove such person as an Advisor or as a director at any time for any reason or for no reason, with or without cause. +81 +Table of Contents +(d) Termination of Employment . The terms and conditions under which an Award +may be exercised or will continue to Vest, if at all, after a Participant’s termination of employment or service as an Advisor or as a Non-Employee Director will be determined by the Committee and +specified in the applicable Award Agreement. +(e) Change in Control . The Committee, in its discretion, may provide in any +Award Agreement that in the event of a Change in Control of the Corporation: +(i) All, or a specified portion of, Awards requiring +exercise will become fully and immediately exercisable, notwithstanding any other limitations on exercise; +(ii) All, or a specified +portion of, Awards subject to Restrictions will become fully Vested; and +(iii) All, or a specified portion of, Awards subject to +Performance Goals will be deemed to have been fully earned. +The Committee, in its discretion, may include Change in Control +provisions in some Award Agreements and not in others, may include different Change in Control provisions in different Award Agreements, and may include Change in Control provisions for some Awards or some Participants and not for others. +(f) Service Periods . At the time of granting Awards, the Committee may specify, by resolution or in the Award Agreement, the +period or periods of service performed or to be performed by the Participant in connection with the grant of the Award. +6.6 Tax +Withholding . +(a) General . Corporation will have the right to deduct from any settlement, including the delivery or +Vesting of Shares, made under the Plan any federal, state, or local taxes of any kind required by law to be withheld with respect to such payments or to take such other action as may be necessary in the opinion of Corporation to satisfy all +obligations for the payment of such taxes. The recipient of any payment or distribution under the Plan will make arrangements satisfactory to Corporation for the satisfaction of any such withholding tax obligations. Corporation will not be required +to make any such payment or distribution under the Plan until such obligations are satisfied. +(b) Stock Withholding . The +Committee, in its sole discretion, may permit a Participant to satisfy all or a part of the withholding tax obligations incident to the settlement of an Award involving payment or delivery of Shares to the Participant by having Corporation withhold +a portion of the Shares that would otherwise be issuable to the Participant. Such Shares will be valued based on their Fair Market Value on the date the tax withholding is required to be made. Any stock withholding with respect to a Reporting Person +will be subject to such limitations as the Committee may impose to comply with the requirements of the Exchange Act. Notwithstanding the foregoing, Reporting Persons shall be permitted to elect to satisfy all or a portion of the withholding tax +obligations incident to the settlement of an Award involving payment or delivery of Shares to such Participant by having Corporation withhold a portion of the Shares that would otherwise be issuable to the Participant. +6.7 Annulment of Awards . Any Award Agreement may provide that the grant of an Award payable in cash is provisional until cash is +paid in settlement thereof or that grant of an Award payable in Shares is provisional until the Participant becomes entitled to the Shares in settlement thereof. In the event the employment (or service as an Advisor or membership on the Board) of a +Participant is terminated for cause (as defined below), any Award that is provisional will be annulled as of the date of such termination for cause. For the purpose of this Section 6.7, the term “for cause” has the meaning set forth +in the Participant’s employment agreement, if any, or otherwise means any discharge (or removal) for material or flagrant violation of the policies and procedures of Corporation or for other job performance or conduct which is materially +detrimental to the best interests of Corporation, as determined by the Committee. +6.8 Engaging in Competition With +Corporation . Any Award Agreement may provide that, if a Participant terminates employment with Corporation or a Subsidiary for any reason whatsoever, and within 18 months after the date thereof accepts employment with any competitor of (or +otherwise engages in competition with) Corporation, the Committee, in its sole discretion, may require such Participant to return to Corporation the economic value of any Award that is realized or obtained (measured at the date of exercise, Vesting, +or payment) by such Participant at any time during the period beginning on the date that is six months prior to the date of such Participant’s termination of employment with Corporation. +82 +Table of Contents +ARTICLE 7 +OPTIONS +7.1 Types of +Options . Options granted under the Plan may be in the form of Incentive Stock Options or Nonqualified Options. The grant of each Option and the Award Agreement governing each Option will identify the Option as an ISO or an NQSO. In the event the +Code is amended to provide for tax-favored forms of stock options other than or in addition to Incentive Stock Options, the Committee may grant Options under the Plan meeting the requirements of such forms of +options. +7.2 General . Options will be subject to the terms and conditions set forth in Article 6 and this Article 7 and may +contain such additional terms and conditions, not inconsistent with the express provisions of the Plan, as the Committee (or the Board with respect to Awards to Non-Employee Directors) deems desirable. +7.3 Option Price . Each Award Agreement for Options will state the option exercise price per Share of Common Stock purchasable +under the Option, which will not be less than 100 percent (100%) of the Fair Market Value of a Share on the date of grant for all Options (ISOs or NQSOs); provided, however, that in the case of any ISO granted to a Ten Percent Shareholder, the +option exercise price per Share shall not be less than 110 percent (110%) of the Fair Market Value of a Share on the date of grant +7.4 Option Term . The Award Agreement for each Option will specify the term of each Option, which shall have a specified period +during which the Option may be exercised which is no longer than ten years, as determined by the Committee. +7.5 Time of +Exercise . The Award Agreement for each Option will specify, as determined by the Committee: +(a) The time or times when the +Option will become exercisable and whether the Option will become exercisable in full or in graduated amounts over a period specified in the Award Agreement; +(b) Such other terms, conditions, and restrictions as to when the Option may be exercised as determined by the Committee; and +(c) The extent, if any, to which the Option will remain exercisable after the Participant ceases to be an employee, Advisor, or director +of Corporation or a Subsidiary. +An Award Agreement for an Option may, in the discretion of the Committee, provide whether, and to +what extent, the Option will become immediately and fully exercisable (i) in the event of the death, Disability, or Retirement of the Participant, or (ii) upon the occurrence of a Change in Control of Corporation. +7.6 Method of Exercise . The Award Agreement for each Option will specify the method or methods of payment acceptable upon +exercise of an Option. An Award Agreement may provide that the option price is payable in full in cash or, at the discretion of the Committee: +(a) In previously acquired Shares (including Restricted Shares); +(b) By surrendering outstanding Awards under the Plan denominated in Shares or in Share-equivalent units; +(c) By delivery (in a form approved by the Committee) of an irrevocable direction to a securities broker acceptable to the Committee: +(i) To sell Shares subject to the Option and to deliver all or a part of the sales proceeds to Corporation in payment of all or a +part of the option price and withholding taxes due; or +(ii) To pledge Shares subject to the Option to the broker as security for a +loan and to deliver all or a part of the loan proceeds to Corporation in payment of all or a part of the option price and withholding taxes due; or +(d) In any combination of the foregoing or in any other form approved by the Committee. +83 +Table of Contents +If Restricted Shares are surrendered in full or partial payment of an Option price, a +corresponding number of the Shares issued upon exercise of the Option will be Restricted Shares subject to the same Restrictions as the surrendered Restricted Shares. +7.7 Special Rules for Incentive Stock Options . In the case of an Option designated as an Incentive Stock Option, the terms of the +Option and the Award Agreement must be in conformance with the statutory and regulatory requirements specified in Section 422 of the Code, as in effect on the date such ISO is granted. ISOs may be granted only to employees of Corporation or a +Subsidiary. ISOs may not be granted under the Plan after February 21, 2027, unless the ten-year limitation of Section 422(b)(2) of the Code is removed or extended. +7.8 Restricted Shares . In the discretion of the Committee, the Shares issuable upon exercise of an Option may be Restricted +Shares if so provided in the Award Agreement. +7.9 Limitation on Number of Shares Subject to Options . In no event may Options +for more than 500,000 Shares be granted to any individual under the Plan during any fiscal year period. +ARTICLE 8 +STOCK APPRECIATION RIGHTS +8.1 +General . Stock Appreciation Rights will be subject to the terms and conditions set forth in Article 6 and this Article 8 and may contain such additional terms and conditions, not inconsistent with the express terms of the Plan, as the +Committee (or the Board with respect to Awards to Non-Employee Directors) deems desirable. +8.2 Nature of Stock Appreciation Right . A Stock Appreciation Right is an Award entitling a Participant to receive an amount equal +to the excess (or if the Committee determines at the time of grant, a portion of the excess) of the Fair Market Value of a Share of Common Stock on the date of exercise of the SAR over the base price, as described below, on the date of grant of the +SAR, multiplied by the number of Shares with respect to which the SAR has been exercised. The base price will be designated by the Committee in the Award Agreement for the SAR and shall be not less than 100 percent (100%) of the Fair Market +Value of a Share on the grant date of the SAR. +8.3 Exercise . A Stock Appreciation Right may be exercised by a Participant in +accordance with procedures established by the Committee. The Committee may also provide that an SAR will be automatically exercised on one or more specified dates or upon the satisfaction of one or more specified conditions. In the case of SARs +granted to Reporting Persons, exercise of the SAR will be limited by the Committee to the extent required to comply with the applicable requirements of Rule 16b-3 under the Exchange Act. +8.4 Term . The Award Agreement for each SAR shall have a specified period during which the SAR may be exercised, which is no +longer than ten years, as determined by the Committee. +8.5 Form of Payment . Payment upon exercise of a Stock Appreciation +Right may be made in cash, in installments, in Shares, or in any combination of the foregoing, or in any other form as the Committee determines. +8.6 Limitation on Number of Shares Subject to SARs . In no event may SARs for more than 500,000 Shares be granted to any +individual under the Plan during any fiscal year period. +ARTICLE 9 +RESTRICTED AWARDS +9.1 +Types of Restricted Awards . Restricted Awards granted under the Plan may be in the form of either Restricted Shares or Restricted Units. +(a) Restricted Shares . A Restricted Share is an Award of Shares transferred to a Participant subject to such terms and conditions +as the Committee deems appropriate, including, without limitation, restrictions on the sale, assignment, transfer, or other disposition of such Restricted Shares and may include a requirement that the Participant forfeit such Restricted Shares back +to Corporation upon termination of Participant’s employment (or service as an Advisor or Non-Employee Director) for specified reasons within a specified period of time or upon other conditions, as set +forth in the +84 +Table of Contents +Award Agreement for such Restricted Shares. Each Participant receiving a Restricted Share will be issued a stock certificate in respect of such Shares, registered in the name of such Participant, +or such certificate, registered in the name of such Participant, will be placed in a restricted stock account (including an electronic account) with a transfer agent. If such certificate is issued to the Participant, the Participant will be required +to execute a stock power in blank with respect to the Shares evidenced by such certificate, and such certificate and the stock power will be held in custody by Corporation until the Restrictions thereon will have lapsed. +(b) Restricted Units . A Restricted Unit is an Award to receive a Share or the Fair Market Value of a Share at some date in the +future, which is granted to a Participant subject to such terms and conditions as the Committee deems appropriate, and may include a requirement that the Participant forfeit such Restricted Units upon termination of Participant’s employment (or +service as an Advisor or Non-Employee Director) for specified reasons within a specified period of time or upon other conditions, as set forth in the Award Agreement for such Restricted Units. +9.2 General . Restricted Awards will be subject to the terms and conditions of Article 6 and this Article 9 and may contain such +additional terms and conditions, not inconsistent with the express provisions of the Plan, as the Committee (or the Board with respect to Awards to Non-Employee Directors) deems desirable. +9.3 Restriction Period . Restricted Awards will provide that such Awards, and the Shares subject to such Awards, may not be +transferred, and may provide that, in order for a Participant to Vest in such Awards, the Participant must remain in the employment (or remain as an Advisor or Non-Employee Director) of Corporation or its +Subsidiaries, subject to relief for reasons specified in the Award Agreement, for a period commencing on the date of the Award and ending on such later date or dates as the Committee designates at the time of the Award (the “Restriction +Period”). During the Restriction Period, a Participant may not sell, assign, transfer, pledge, encumber, or otherwise dispose of Shares received under or governed by a Restricted Award grant. The Committee, in its sole discretion, may provide +for the lapse of restrictions in installments during the Restriction Period; provided that a Restricted Award with a Restriction Period based solely on continued employment or passage of time may not permit the lapse of all restrictions over a total +period less than three (3) years (subject to three (3) one year installments) after the date of the Award, except in the case of (a) Restricted Awards to Non-Employee Directors or Advisors, +(b) Restricted Awards granted upon the commencement of a Participant’s employment with the Corporation, (c) Restricted Awards which, in the aggregate, cover not more than 5% of the number of Shares available for Awards under the Plan +under Section 4.2.2(a) (determined without regard to any other limits set forth in Section 4.2.2(b) or (c)), or (d) restrictions which lapse (i) upon the death or Disability of the Participant, (ii) upon the retirement of +the Participant, (iii) as may be required pursuant to an employment agreement between the Participant and the Corporation or (iv) upon a Change in Control. Upon expiration of the applicable Restriction Period (or lapse of Restrictions +during the Restriction Period where the Restrictions lapse in installments) the Participant shall be entitled to settlement of the Restricted Award or portion thereof, as the case may be. Although Restricted Awards will usually Vest based on +continued employment (or service as an Advisor or Non-Employee Director) and Performance Awards under Article 10 shall usually Vest based on attainment of Performance Goals, the Committee, in its discretion, +may condition Vesting of Restricted Awards on attainment of Performance Goals as well as continued employment (or service as an Advisor or Non-Employee Director). In such case, the Restriction Period for such +a Restricted Award will include the period prior to satisfaction of the Performance Goals. +9.4 Forfeiture . If a Participant +ceases to be an employee, Advisor of Corporation or a Subsidiary or Non-Employee Director during the Restriction Period for any reason other than reasons which may be specified in an Award Agreement (such as +death, Disability, or Retirement), the Award Agreement may require that all non-Vested Restricted Awards previously granted to the Participant be forfeited and returned to Corporation. +9.5 Settlement of Restricted Awards . +(a) Restricted Shares . Upon Vesting of a Restricted Share Award, the legend on such Shares will be removed and the +Participant’s stock power, if any, will be returned and the Shares will no longer be Restricted Shares. The Committee may also, in its discretion, permit a Participant to receive, in lieu of unrestricted Shares at the conclusion of the +Restriction Period, payment in cash, installments, or in any other manner or combination of such methods as the Committee, in its sole discretion, determines. +(b) Restricted Units . Upon Vesting of a Restricted Unit Award, a Participant will be entitled to receive payment for Restricted +Units in an amount equal to the aggregate Fair Market Value of the Shares covered by such Restricted Units at +85 +Table of Contents +the expiration of the Applicable Restriction Period. Payment in settlement of a Restricted Unit will be made as soon as practicable following the conclusion of the applicable Restriction Period +in cash, in installments, in Shares equal to the number of Restricted Units, or in any other manner or combination of such methods as the Committee, in its sole discretion, determines, subject to the applicable restrictions contained in +Section 409A of the Code. +9.6 Rights as a Shareholder . A Participant will have, with respect to unforfeited Shares +received under a grant of Restricted Shares, all the rights of a shareholder of Corporation, including the right to vote the Shares and the right to receive any cash dividends. The right to receive cash dividends on Restricted Shares shall be +subject to the Restrictions applicable to the Restricted Shares. Stock dividends issued with respect to Restricted Shares will be treated as additional Shares covered by the grant of Restricted Shares and will also be subject to the same +Restrictions. +ARTICLE 10 +PERFORMANCE +AWARDS +10.1 General . Performance Awards will be subject to the terms and conditions set forth in Article 6 and this +Article 10 and may contain such other terms and conditions not inconsistent with the express provisions of the Plan, as the Committee (or the Board with respect to Awards to Non-Employee Directors) deems +desirable. +10.2 Nature of Performance Awards . A Performance Award is an Award of units (with each unit having a value +equivalent to one Share) granted to a Participant subject to such terms and conditions as the Committee deems appropriate, including, without limitation, the requirement that the Participant forfeit such Performance Award or a portion thereof in the +event specified performance criteria are not met within a designated period of time. +10.3 Performance Cycles . For each +Performance Award, the Committee will designate a performance period (the “Performance Cycle”) with a duration of at least one (1) year, as may be determined by the Committee in its discretion within which specified Performance Goals +are to be attained. There may be several Performance Cycles in existence at any one time and the duration of Performance Cycles may differ from each other. +10.4 Performance Goals . The Committee will establish Performance Goals for each Performance Cycle on the basis of such criteria +and to accomplish such objectives as the Committee may from time to time select. Performance Goals may be based on performance criteria for Corporation, a Subsidiary, or an operating group, or based on a Participant’s individual performance. +Performance Goals may include objective and subjective criteria. During any Performance Cycle, the Committee may adjust the Performance Goals for such Performance Cycle as it deems equitable in recognition of unusual or nonrecurring events affecting +Corporation, changes in applicable tax laws or accounting principles, or such other factors as the Committee may determine. +10.5 +Determination of Awards . As soon as practicable after the end of a Performance Cycle, the Committee will determine the extent to which Performance Awards have been earned on the basis of performance in relation to the established Performance +Goals. +10.6 Timing and Form of Payment . Settlement of earned Performance Awards will be made to the Participant as soon as +practicable after the expiration of the Performance Cycle and the Committee’s determination under Section 10.5, in the form of cash, installments, Shares, or any combination of the foregoing or in any other form as the Committee +determines. +10.7 Performance Goals for Executive Officers . The performance goals for Performance Awards granted to executive +officers of Corporation may relate to corporate performance, business unit performance, or a combination of both. +(a) Corporate +performance goals will be based on financial performance goals related to the performance of Corporation as a whole and may include one or more measures related to earnings, profitability, efficiency, or return to stockholders such as earnings per +share, operating profit, stock price, costs of production, or other measures. +(b) Business unit performance goals will be based on +a combination of financial goals and strategic goals related to the performance of an identified business unit for which a Participant has responsibility. Strategic goals for a business unit may include one or a combination of objective factors +relating to success in implementing strategic plans or initiatives, +86 +Table of Contents +introductory products, constructing facilities, or other identifiable objectives. Financial goals for a business unit may include the degree to which the business unit achieves one or more +objective measures related to its revenues, earnings, profitability, efficiency, operating profit, costs of production, or other measures. +(c) Any corporate or business unit goals may be expressed as absolute amounts or as ratios or percentages. Success may be measured +against various standards, including budget targets, improvement over prior periods, and performance relative to other companies, business units, or industry groups. +10.8 Award Limitations . The maximum number of Shares issuable with respect to Performance Awards granted to any individual +executive officer may not exceed 150,000 Shares for any calendar year. +ARTICLE 11 +OTHER STOCK-BASED AND COMBINATION AWARDS +11.1 Other Stock-Based Awards . The Committee (or the Board with respect to Awards to +Non-Employee Directors) may grant other Awards under the Plan pursuant to which Shares are or may in the future be acquired, or Awards denominated in or measured by Share equivalent units, including Awards +valued using measures other than the market value of Shares. Such Other Stock-Based Awards may be granted either alone, in addition to, or in tandem with, any other type of Award granted under the Plan. +11.2 Combination Awards . The Committee may also grant Awards under the Plan in tandem or combination with other Awards or in +exchange of Awards, or in tandem or combination with, or as alternatives to, grants or rights under any other employee plan of Corporation, including the plan of any acquired entity. No action authorized by this section may reduce the amount of any +existing benefits or change the terms and conditions thereof without the Participant’s consent. +ARTICLE 12 +DEFERRAL ELECTIONS +The +Committee may permit a Participant to elect to defer receipt of the payment of cash or the delivery of Shares that would otherwise be due to such Participant by virtue of the exercise, earn-out, or Vesting of +an Award made under the Plan. If any such election is permitted, the Committee will establish rules and procedures for such payment deferrals, including, but not limited to: (a) payment or crediting of reasonable interest on such deferred +amounts credited in cash or (b) the payment or crediting of dividend equivalents in respect of deferrals credited in Share equivalent units. Such deferrals, if permitted, shall to the extent possible, comply with Section 409A of the Code +and the regulations and other guidance promulgated thereunder. +ARTICLE 13 +ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, ETC. +13.1 Plan Does Not Restrict Corporation . The existence of the Plan and the Awards granted hereunder will not affect or restrict +in any way the right or power of the Board or the shareholders of Corporation to make or authorize any adjustment, recapitalization, reorganization, or other change in Corporation’s capital structure or its business, any merger or consolidation +of the Corporation, any issue of bonds, debentures, preferred or prior preference stocks ahead of or affecting Corporation’s capital stock or the rights thereof, the dissolution or liquidation of Corporation or any sale or transfer of all or +any part of its assets or business, or any other corporate act or proceeding. +13.2 Adjustments by the Committee . In the +event of any change in capitalization affecting the Common Stock of Corporation, such as a stock dividend, stock split, recapitalization, merger, consolidation, split-up, combination or exchange of shares or +other form of reorganization, or any other change affecting the Common Stock, such proportionate adjustments, if any, as the Committee, in its sole discretion, may deem appropriate to reflect such change, will be made with respect to the aggregate +number of Shares for which Awards in respect thereof may be granted under the Plan, the maximum number of Shares which may be sold or awarded to any Participant, the number of Shares covered by each outstanding Award, and the price per Share in +respect of outstanding Awards. The Committee may also make such adjustments in the number of Shares covered by, and price or other value of any outstanding Awards in the event of a spin-off or other +distribution (other than normal cash dividends), of Corporation assets to shareholders. +87 +Table of Contents +ARTICLE 14 +AMENDMENT AND TERMINATION +The +Board may amend, suspend, or terminate the Plan or any portion of the Plan at any time; provided that no such action may be taken without shareholder approval if (i) such action would increase the number of shares subject to the Plan; +(ii) such action would result in the repricing, replacement or repurchase of out-of-the money Options, Stock Appreciation Rights or other Awards; (iii) such +action would result in an Award being fully Vested, exercisable or earned in the event of a Change in Control prior to the consummation of the Change in Control; or (iv) such approval is required by applicable law or regulation or the +applicable requirements of a stock exchange or over-the-counter stock trading system; provided further that the Board may, in its discretion, determine to submit any +other changes to the Plan to the shareholders for approval; provided further that no amendment, suspension or termination of the Plan may materially and adversely affect the rights of a Participant under any outstanding Award without such +Participant’s consent, unless such action is necessary to ensure a deduction under Section 162(m) of the Code or to avoid the additional tax described in Section 409A of the Code. +ARTICLE 15 +MISCELLANEOUS +15.1 Unfunded Plan . The Plan will be unfunded and Corporation will not be required to segregate any assets that may at any time +be represented by Awards under the Plan. Any liability of Corporation to any person with respect to any Award under the Plan will be based solely upon any contractual obligations that may be effected pursuant to the Plan. No such obligation of +Corporation will be deemed to be secured by any pledge of, or other encumbrance on, any property of Corporation. +15.2 Payments +to Trust . The Committee is authorized (but has no obligation) to cause to be established a trust agreement or several trust agreements whereunder the Committee may make payments of amounts due or to become due to Participants in the Plan. +15.3 Other Corporation Benefit and Compensation Programs . Payments and other benefits received by a Participant under an Award +made pursuant to the Plan will not be deemed a part of a Participant’s regular, recurring compensation for purposes of the termination, indemnity or severance pay law of any state or country and shall not be included in, or have any effect on, +the determination of benefits under any other employee benefit plan or similar arrangement provided by Corporation or a Subsidiary unless expressly so provided by such other plan or arrangements, or except where the Committee expressly determines +that an Award or portion of an Award should be included to accurately reflect competitive compensation practices or to recognize that an Award has been made in lieu of a portion of cash compensation. Awards under the Plan may be made in combination +with or in tandem with, or as alternatives to, grants, awards, or payments under any other Corporation or Subsidiary plans, arrangements, or programs. The Plan notwithstanding, Corporation or any Subsidiary may adopt such other compensation programs +and additional compensation arrangements as it deems necessary to attract, retain, and reward employees and directors for their service with Corporation and its Subsidiaries. +15.4 Securities Law Restrictions . No Shares may be issued under the Plan unless counsel for Corporation is satisfied that such +issuance will be in compliance with applicable federal and state securities laws. Certificates for Shares delivered under the Plan may be subject to such stop-transfer orders and other restrictions as the Committee may deem advisable under the +rules, regulations, and other requirements of the Securities and Exchange Commission, any stock exchange upon which the Common Stock is then listed, and any applicable federal or state securities law. The Committee may cause a legend or legends to +be put on any such certificates to make appropriate reference to such restrictions. +15.5 Governing Law . Except with respect +to references to the Code or federal securities laws, the Plan and all actions taken thereunder shall be governed by and construed in accordance with the laws of the state of Delaware. +ARTICLE 16 +SHAREHOLDER APPROVAL +The Plan, as amended and restated, is expressly subject to the approval of the Plan by the shareholders at the 2022 annual meeting of +Corporation’s shareholders. +88 +Table of Contents +220 EAST FIRST STREET +BETHLEHEM, PA 18015 +VOTE BY INTERNET +Before The Meeting - Go to www.proxyvote.com or scan the QR Barcode above +Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day +before the meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. +During The Meeting - Go to www.virtualshareholdermeeting.com/OSUR2022 +You may attend the Meeting via the Internet and vote during the Meeting. Have the information that is printed in the box marked by the arrow +available and follow the instructions. +VOTE BY PHONE - 1-800-690-6903 +Use any touch-tone telephone to transmit your voting instructions up +until 11:59 P.M. Eastern Time the day before the meeting date. Have your proxy card in hand when you call and then follow the instructions. +VOTE BY MAIL +Mark, +sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. +TO VOTE, MARK BLOCKS BELOW IN BLUE OR +BLACK INK AS FOLLOWS: +D73291-P68950 KEEP THIS PORTION FOR YOUR RECORDS +— — — — — — — — — — — — — +— — — — — — — — — — — — — — — — — — — — +— — — — — — — — — — — — — — — — +THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. +DETACH AND RETURN THIS PORTION ONLY +ORASURE TECHNOLOGIES, INC. +The Board of Directors recommends you vote FOR each of the following +nominees: +1.  ELECTION OF DIRECTORS +Class I (Expiring 2025) +Nominees: +For +Against +Abstain +1a. Eamonn P. Hobbs +☐ +☐ +☐ +1b. David J. Shulkin, M.D. +☐ +☐ +☐ +The Board of Directors recommends you vote FOR items 2, 3 and 4. +For +Against +Abstain +2.  Ratification of Appointment of KPMG LLP as the Independent Registered Public +Accounting Firm for Fiscal Year 2022. +☐ +☐ +☐ +3.  Advisory (Non-Binding) Vote to Approve +Executive Compensation. +☐ +☐ +☐ +4.  Approval of Amendment and Restatement of the Company’s Stock Award Plan to +Increase the Shares Authorized for Issuance Thereunder. +☐ +☐ +☐ +NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor, +administrator, trustee or guardian, please give full title as such. +Signature [PLEASE SIGN WITHIN BOX] +Date +Signature (Joint Owners) +Date +Table of Contents +OraSure Technologies, Inc. +2022 Annual Meeting of Stockholders +Tuesday, May 17, 2022 +Important notice regarding the Internet availability of proxy materials for the +Annual Meeting of Stockholders. +The Notice and Proxy Statement and 2021 Annual Report to Stockholders +are available at www.proxyvote.com. +— — — — — — — — — — — — — +— — — — — — — — — — — — — — — — — — — — +— — — — — — — — — — — — — — — — +D73292-P68950 +PROXY +2022 Annual Meeting of Stockholders +PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS +The undersigned hereby appoints Agnieszka M. Gallagher and Michele Miller, +and either of them, proxies with full power of substitution, to vote all of the shares which the undersigned is entitled to vote at the 2022 Annual Meeting of Stockholders of OraSure Technologies, Inc. (the “Company”), on Tuesday, +May 17, 2022, at 10:00 a.m. (Eastern Time), and at any adjournment or adjournments thereof, with all the powers the undersigned would possess if personally present, with respect to the matters listed on the reverse side. +The shares represented by this Proxy, if properly executed, will be +voted (i) FOR the election of the nominees listed on the reverse side as directors, (ii) FOR the ratification of the appointment of KPMG LLP as the Company’s independent registered public accounting firm for 2022, (iii) FOR approval +of the compensation of the Company’s named executive officers and (iv) FOR approval of an amendment and restatement of the Company’s Stock Award Plan to increase the shares authorized for issuance thereunder. If any other business +properly comes before the meeting, the proxies named above will have discretionary authority to vote thereon in accordance with their best judgment. +PLEASE MARK, DATE, SIGN AND RETURN THE PROXY CARD PROMPTLY. +(Continued and to be marked, dated and signed, on the other side) \ No newline at end of file diff --git a/raw/proxies/0001116463/0001193125-22-098891/proxy_rpt.txt b/raw/proxies/0001116463/0001193125-22-098891/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..baea4c53fb3de4a5e601bcdc105b70a474cc5f3f --- /dev/null +++ b/raw/proxies/0001116463/0001193125-22-098891/proxy_rpt.txt @@ -0,0 +1,9 @@ +TRANSACTIONS WITH RELATED PERSONS +Since January 1, 2021 there have been no transactions with related persons that would require disclosure in this Proxy Statement. +The Audit Committee is required to review and approve in advance all transactions with related persons involving the Company. The Audit Committee may approve a related party transaction if the transaction is on terms comparable to those that could +be obtained in arms’ length dealings with an unrelated third party. The Audit Committee also reviews any public disclosures of a related party transaction contained in our SEC filings. These responsibilities are described in the Audit +Committee’s charter, a copy of which is available on our website at www.orasure.com . +Information regarding employment, severance and retirement agreements between our executive officers and the Company is set forth in the +Section entitled, “Employment Agreements and Potential Payments Upon Termination or Change of Control,” in this Proxy Statement. +25 +Table of Contents \ No newline at end of file diff --git a/raw/proxies/0001116463/0001193125-23-102206/proxy.txt b/raw/proxies/0001116463/0001193125-23-102206/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..8359a4d20cc0c36de3b5d862c57df2f5bad0fb55 --- /dev/null +++ b/raw/proxies/0001116463/0001193125-23-102206/proxy.txt @@ -0,0 +1,4547 @@ +DEF 14A +Table of Contents +DEF 14A false 0001116463 0001116463 2022-01-01 2022-12-31 0001116463 2021-01-01 2021-12-31 0001116463 2020-01-01 2020-12-31 0001116463 osur:StephenS.TangPh.d.Member 2020-01-01 2020-12-31 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2022-01-01 2022-12-31 0001116463 3 2022-01-01 2022-12-31 0001116463 4 2022-01-01 2022-12-31 0001116463 osur:NancyGaglianoM.d.Member 2022-04-01 2022-06-04 0001116463 osur:CarrieEglintonMannerMember 2022-06-05 2022-12-31 0001116463 osur:StephenS.TangPh.d.Member 2022-01-01 2022-03-31 iso4217:USD +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Proxy Statement Pursuant to Section 14(a) +of the Securities Exchange Act of 1934 +(Amendment No. +) +Filed by the Registrant +☒ +Filed by a Party other than the Registrant +☐ +Check the appropriate box: +☐ +Preliminary Proxy Statement +☐ +Confidential, for Use of the Commission Only (as permitted by Rule +14a-6(e)(2)) +☒ +Definitive Proxy Statement +☐ +Definitive Additional Materials +☐ +Soliciting Material Pursuant to +§240.14a-12 +OraSure Technologies, Inc. +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +☒ +No fee required. +☐ +Fee paid previously with preliminary materials +☐ +Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11 +☐ +Check box if any part of the fee is offset as provided by Exchange Act Rule +0-11(a) +Table of Contents +2023 +Proxy Statement +Notice of Annual Meeting of Stockholders +Tuesday, May 16, 2023 ● 12:30 p.m. (Eastern Time) +Table of Contents +Letter to the Stockholders +Carrie Eglinton Manner +Chief Executive Officer (“CEO”) +April 14, 2023 +Dear Fellow Stockholders: +As a Company, we are committed to accelerating the shift in healthcare delivery – connecting people to care wherever they are and increasing access, quality, and affordability of healthcare with effortless solutions in point-of-care and self-testing diagnostics, sample collection innovation and services. +Since my arrival in June, we have been focused on our three-part transformation journey and have delivered significant progress on the priority to Strengthen our Foundation. To this end we had many successes in 2022 including making major improvements in our manufacturing operations to scale InteliSwab ® COVID-19 self-testing while improving gross margins, re-setting our cost structure to potentially achieve cash flow breakeven ahead of schedule, and consolidating our two business units into One OraSure to unlock further efficiencies. These improvements have allowed us to begin generating significant cash in 2023 and have put us on the path to achieving cash flow breakeven for our core business, which is expected by the end of 2024. +Our stronger foundation sets the stage for us to increasingly Elevate our Core business through enhancing our existing product portfolio and launching new innovation. We are making progress in strategic partnerships, as well, and the future could include inorganic expansion opportunities as we look to utilize the cash generated from InteliSwab ® to further Accelerate Profitable Growth. +While we are in the early stages of our strategic transformation, I am increasingly confident in our trajectory for success given our strong strategic position enabling decentralized healthcare, the commitment of our talented team, and the quality of our solutions and their underlying science and technology. Underpinning all of our actions, we will continue to adhere to our mantra of innovating and operating with disciplined execution and accountability. We will be holding our 2023 Annual Meeting of Stockholders (the “Annual Meeting”) of OraSure Technologies, Inc. (the “Company”) on Tuesday, May 16, 2023 at 12:30 p.m. Eastern Time . Once again, this year’s Annual Meeting will be a virtual meeting, conducted as a live webcast. You will be able to attend the Annual Meeting online, vote your shares electronically if you wish, and submit your questions during the meeting by visiting www.virtualshareholdermeeting.com/ OSUR2023 . +On or about April 20, 2023, the Company will mail to its stockholders of record as of March 23, 2023, the record date for the Annual Meeting, a copy of this Proxy Statement, including the Notice of Annual Meeting of Shareholders (the “Notice”) and the proxy card, as well as the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 (the “2022 Annual Report”). At the Annual Meeting, you will be asked to (i) elect one Class II Director to serve on the Board of Directors until the Annual Meeting of Stockholders in 2026; (ii) ratify the appointment of KPMG LLP as our independent registered public accounting firm for the 2023 fiscal year; (iii) approve, by an advisory (non-binding) vote, the compensation of the Company’s named executive officers as disclosed in the proxy materials; (iv) approve, by an advisory (non-binding) vote, the frequency of future stockholder advisory votes on executive compensation; (v) approve an amendment and restatement of the OraSure Technologies, Inc. Stock Award Plan to increase the number of shares to be authorized for grant under the Plan by 3,000,000 shares and require that all awards granted thereunder generally be subject to a minimum vesting period of one year; (vi) to act on a stockholder proposal if properly presented at the Annual Meeting; and (vii) transact such other business as may properly come before the meeting, and any adjournment(s) or postponement(s) thereof. +The Board of Directors has approved a nominee for the Class II Director and recommends that you vote FOR her election to the Board of Directors. In addition, the Board of Directors recommends that you vote FOR the ratification of KPMG LLP’s +Table of Contents +appointment, FOR the approval of the Company’s executive compensation, FOR the approval of holding future advisory votes on executive compensation EVERY YEAR , and FOR the approval of the amendment and restatement of the Company’s Stock Award Plan. The Board of Directors recommends that you vote AGAINST the stockholder proposal. +Your vote is very important, regardless of the number of shares you own. Whether or not you plan to attend the Annual Meeting online, we urge you to submit your vote as soon as possible . You will have the option to vote by telephone, via the internet, or by completing, signing, dating and returning a paper proxy card. Additional details on these options can be found in the Notice sent to you and in the other proxy materials. You may, of course, attend the Annual Meeting online and vote your shares during the meeting regardless of whether you have previously voted by phone, the internet or mail. +Thank you for your cooperation and your ongoing support of, and continued interest in, OraSure Technologies, Inc. +Sincerely yours, +Carrie Eglinton Manner +CEO & President +Table of Contents +NOTICE OF 2023 ANNUAL MEETING OF STOCKHOLDERS +OF ORASURE TECHNOLOGIES, INC. +DATE AND TIME +Tuesday, May 16, 2023 +12:30 p.m. (Eastern Time) +To be held virtually by visiting: +www.virtualshareholdermeeting.com/ OSUR2023 +ITEMS OF BUSINESS +The 2023 Annual Meeting of Stockholders will be held for the following purposes: +• +To elect one (1) Class II Director to serve for a term expiring at the Company’s Annual Meeting of Stockholders in 2026; +• +To ratify the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2023; +• +To approve, by an advisory (non-binding) vote, the compensation of the Company’s named executive officers as disclosed in the Proxy Statement accompanying this Notice; +• +To approve, by an advisory (non-binding) vote, the frequency of future stockholder advisory votes on executive compensation; +• +To approve an amendment and restatement of the Company’s Stock Award Plan to increase the number of shares of Common Stock authorized to be granted under the Plan; +• +To act on a stockholder proposal if properly presented at the Annual Meeting; and +• +To consider such other business as may properly come before the meeting, and any adjournment(s) or postponement(s) thereof. +HOW TO VOTE +Via the Internet . Go to www.proxyvote.com to vote your shares online prior to the Annual Meeting. Have the control number that is printed in your Notice of Internet Availability of Proxy Materials or Proxy Card available and follow the instructions. You may also vote online during the Annual Meeting by going to www.virtualshareholdermeeting.com/ OSUR2023 and following the instructions. +By Phone . Call the toll-free number on your Notice of Internet Availability of Proxy Materials or Proxy Card and follow the prompts. +By Mail . You can vote by mail by requesting a paper copy of the materials, which will include a Proxy Card. Please review your Notice of Internet Availability of Proxy Materials for instructions on how to request a paper copy of the materials. Mark, sign and date your Proxy Card and return it as indicated on the Proxy Card. +NOTICE OF 2023 ANNUAL MEETING OF STOCKHOLDERS OF ORASURE TECHNOLOGIES, INC. +Who Can Vote : Only holders of shares of the Company’s Common Stock of record at the close of business on March 23, 2023 will be entitled to vote at the Annual Meeting of Stockholders and any adjournment(s) or postponement(s) thereof. Additional information is included in the Proxy Statement accompanying this Notice. +A complete list of stockholders entitled to vote at the meeting will be available for examination by any stockholder for any purpose germane to the meeting beginning 10 days before the meeting at the Company’s headquarters at 220 East First Street, Bethlehem, PA 18015 during ordinary business hours. In addition, such list will be available for inspection during the meeting in the virtual meeting room at: www.virtualshareholdermeeting.com/ OSUR2023 . +By Order of the Board of Directors, +Stefano Taucer +Secretary +April 14, 2023 +Table of Contents +Proxy Statement Table of Contents +Proxy Statement Summary +1 +2023 Annual Meeting Information +1 +Proposals for Stockholder Consideration +1 +2022 Performance Highlights +4 +Most Significant Compensation Components +5 +Key Features of our Executive Compensation Program +5 +Questions And Answers About the 2023 Annual Meeting And Voting +6 +Why Did I Receive These Proxy Materials? +6 +What is a Proxy +6 +What is the Record Date and What Does It Mean? +6 +What is the Difference Between a Stockholder of Record and a Stockholder Who Holds Stock in Street Name? +6 +How Can I Vote My Shares for the Annual Meeting? +7 +How Will my Shares Be Voted if I Send In a Proxy +7 +Will My Shares Be Voted if I Do Not Provide My Proxy? +7 +How Many Shares Must Be Present to Hold The Annual Meeting? +8 +How Can I Revoke a Proxy +8 +What Items Will Be Voted On At The Annual Meeting? +8 +Who Will Pay the Cost of this Proxy Solicitation? +8 +How Can I Participate in the Annual Meeting? +8 +What If I Have Technical Difficulties or Trouble ACCESSING The Virtual Meeting +9 +Are Votes Confidential? +9 +Who Counts the Votes? +9 +May Stockholders Ask Questions At The Annual Meeting? +9 +Stock Ownership of Certain Beneficial Owners and Management +10 +Corporate Governance +11 +Board Responsibilities, Operation and Composition +11 +Governance Guidelines and Code of Conduct +11 +Environmental, Social and Governance Issues +12 +Independent Board Chairperson +15 +Director Independence +15 +Oversight of Risk Management +15 +Annual Meeting Attendance and Stockholder Communications +15 +Committees of the Board +16 +Nomination of Directors +18 +Director Qualifications +18 +Insider Trading +19 +Prohibition against Short Sales, Hedging and Pledging +20 +Stock Ownership and Retention Guidelines +20 +Audit Committee Matters +21 +Report of the Audit Committee for the year ended December 31, 2022 +21 +Audit Fees; Audit Related Fees; Tax Fees; all Other Fees +22 +Table of Contents +Compensation Committee Matters +22 +Compensation Processes and Procedures +22 +Annual Performance Evaluations +22 +Role of the Compensation Committee +23 +Role of the CEO +23 +Role of the Compensation Consultant +23 +Compensation Committee Interlocks and Insider Participation +24 +Compensation Committee Report +24 +Executive Officers +25 +Transactions with Related Persons +26 +Compensation Discussion and Analysis +28 +Employment Agreements and Potential Payments Upon Termination or Change of Control +54 +CEO Pay Ratio +60 +Pay Versus Performance +61 +Stock Award Plan Information +65 +Director Compensation +65 +Annual Fees +65 +Initial and Annual Equity Awards +66 +Equity Award Terms +66 +Deferred Compensation +66 +Director Compensation During 2022 +67 +Proposals Requiring Your Vote +68 +Proposal No. 1. Election of Directors +68 +Proposal No. 2. Ratification of Appointment of Independent Registered Public Accounting Firm +72 +Proposal No. 3. Advisory (Non-Binding) Vote to Approve Executive Compensation +72 +Proposal No. 4. Advisory (Non-Binding) Vote to Select the Frequency of Future Stockholder Advisory Votes to Approve the Corporation’s Executive Compensation +73 +Proposal No. 5. Amendment and Restatement of Stock Award Plan +74 +Proposal No. 6. Stockholder Proposal Regarding Greenhouse Gas Reduction Targets +79 +Delinquent Section 16(A) Reports +81 +Annual Report +81 +Deadline for Stockholder Proposals +82 +Table of Contents +PROXY STATEMENT SUMMARY +We are providing these proxy materials to stockholders of OraSure Technologies, Inc., a Delaware corporation (as used herein, “we,” “us,” “our”, “OraSure” or the “Company”), and we are first making available or mailing the materials on or about April 20, 2023, in connection with the Company’s solicitation of proxies (each, a “Proxy”) for use at the Annual Meeting of Stockholders to be held on May 16, 2023 at 12:30 p.m. Eastern Time, and at any adjournment(s) or postponement(s) thereof (the “Annual Meeting”). +As a stockholder, you are invited to participate in the Annual Meeting and are requested to vote on the matters described in this Proxy Statement. The Annual Meeting will be +conducted in a completely virtual manner through a live webcast that you can access online by going to www.virtualshareholdermeeting.com/ OSUR2023 . The webcast will not include a presentation by management. A question and answer session will be provided at the Annual Meeting only for questions that are germane to the matters being discussed and voted on at the meeting. +This summary highlights information contained elsewhere in this Proxy Statement but does not contain all of the information that you should consider. You should read the entire Proxy Statement carefully before voting your shares. +2023 ANNUAL MEETING INFORMATION +• +Date and Time: Tuesday, May 16, 2023 at 12:30 p.m. (ET) +• +Location: Online by visiting www.virtualshareholdermeeting.com/ OSUR2023 +• +Record Date: March 23, 2023 +PROPOSALS FOR STOCKHOLDER CONSIDERATION +Proposals +Board +Recommendation +Page Reference +for More Detail +1.) +Election of one Class II Director +FOR +68 +2.) +Ratification of Appointment of Independent Registered +Public Accounting Firm for 2023 +FOR +72 +3.) +Advisory (Non-Binding) Vote to Approve Executive +Compensation +FOR +72 +4.) +Advisory (Non-Binding) Vote to Select the Frequency of +Future Stockholder Advisory Votes to Approve the +Company’s Executive Compensation +EVERY YEAR +73 +5.) +Approval of Amendment and Restatement of our Stock +Award Plan To Increase the Shares Authorized for +Issuance Thereunder +FOR +74 +6.) +Stockholder Proposal Regarding Greenhouse Gas +Reduction Targets +AGAINST +79 +Proposal No. 1 – Election of Directors +The table below provides summary information about our nominee for Class II Director, whose new term will expire at the 2026 Annual Meeting of Stockholders. The Board of Directors (the “Board”) is recommending that stockholders vote for the Director nominee. +Committee +Memberships 1 +Other +Public +Boards +Name and Principal Occupation +Age +Director +Since +Independent +AC +CC +N& +CG +Mara G. Aspinall +Managing Member, Health Catalysts Group LLC and +Managing Director, Blue Stone Venture Partners +60 +2017 +Yes +C +√ +No +No +1 AC = Audit Committee; CC = Compensation Committee; N&CG = Nominating & Corporate Governance Committee; C = Chairperson; √ = Member. +1 +Table of Contents +Proposal No. 2 – Ratification of Appointment of Independent Registered Public Accounting Firm +Our Audit Committee has selected KPMG LLP (“KPMG”) to be our independent registered public accounting firm for the 2023 fiscal year. The Board believes KPMG is well qualified to serve in this capacity +and is recommending that the engagement of KPMG be ratified by our stockholders. The Board is recommending that stockholders vote for the appointment of KPMG as provided above. +Proposal No. 3 – Advisory (Non-Binding) Vote to Approve Executive Compensation +Our compensation program is designed to focus and reward our executives for balancing both short and long-term priorities. To fulfill this mission, we have adopted a pay-for-performance philosophy that forms the foundation for executive compensation decisions made by our Board and the Compensation Committee of the Board (the “Compensation Committee”). +The Compensation Discussion and Analysis portion of this Proxy Statement (the “CD&A”) contains a detailed description of our executive compensation philosophy and program, the compensation decisions the Board and Compensation Committee have made under that program and the factors considered in making those decisions, focusing on the compensation of our named executive officers (“NEOs”) for the year ended December 31, 2022, who were: +Name +Position(s) +Carrie Eglinton Manner 1 +President and CEO +Nancy J. Gagliano 2 +Former Interim CEO +Stephen S. Tang 3 +Former President and CEO +Kenneth McGrath 4 +Chief Financial Officer +Scott Gleason 5 +Former Interim Chief Financial Officer, Current Senior Vice President Corporate +Communications & Investor Relations +Agnieszka Gallagher 6 +Former Executive Vice President, General Counsel and Chief Compliance Officer +Lisa Nibauer 7 +Former President of Diagnostics +Kathleen G. Weber +Chief Product Officer +1 +Ms. Eglinton Manner was appointed as the President and CEO effective June 4, 2022. +2 +Effective April 1, 2022, Nancy J. Gagliano, M.D., M.B.A. was appointed to replace Dr. Tang as the Company’s Interim CEO. Dr. Gagliano resigned effective June 4, 2022 from her position as the Company’s Interim CEO. +3 +Stephen Tang, Ph.D. served as the Company’s CEO until March 31, 2022. +4 +Mr. McGrath was appointed as the Chief Financial Officer effective August 8, 2022. +5 +Mr. Gleason joined the Company in May 2021 as the Senior Vice President Corporate Communications & Investor Relations and assumed the role of Interim Chief Financial Officer in September 2021. Mr. Gleason served as the Interim Chief Financial Officer until Mr. McGrath’s appointment on August 8, 2022 and served as our Principal Financial Officer until August 10, 2022. On March 15, 2023, Mr. Gleason notified the Company of his resignation, effective May 26, 2023, in order to pursue another opportunity. +6 +Ms. Gallagher resigned effective June 25, 2022. +7 +Ms. Nibauer resigned effective November 11, 2022. +As described further in the CD&A and elsewhere in this Proxy Statement, the following should be considered by stockholders in evaluating the compensation of our NEOs for 2022: +• +OraSure is a diverse and growing business operating in highly competitive and evolving markets; this has proven especially true throughout 2022 given the challenges and opportunities presented by the ongoing COVID-19 pandemic. +• +We achieved record revenue during 2022, with our total company growing at a 36% compound annual growth rate since the pre-pandemic period in 2019. +• +The Compensation Committee applied no positive discretion in determining performance and payouts for our NEOs. +2 +Table of Contents +• +We annually solicit input from our stockholders on executive compensation matters. The 2022 Say-on-Pay results (97% approval), combined with feedback from stockholders, suggest strong support for our programs and policies. +• +We maintain and adhere by a full suite of good governance policies and processes. +The Board is recommending that stockholders vote in favor of the compensation of our NEOs, as described in this Proxy Statement. +Proposal No. 4 – Non-binding Advisory Vote to Select the Frequency of Future Stockholder Advisory Votes to Approve the Corporation’s Executive Compensation +Section 14A of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), provides that every six (6) years we must provide our stockholders with an opportunity to cast a separate advisory (non-binding) vote on the frequency of future advisory votes on executive compensation. Stockholders may indicate whether they would prefer that we conduct future advisory votes every year, every two (2) years or every three (3) years. At our Annual Meeting of Stockholders held in May 2017, a majority of our stockholders cast their vote in favor of holding an advisory vote on executive compensation each year. The Board has determined that an annual advisory vote on executive compensation will permit our stockholders to continue to provide direct input on our executive compensation philosophy and practices as disclosed in our proxy statement each year and is consistent with our efforts to engage in an ongoing dialogue with our stockholders on executive compensation and corporate governance matters. +The Board is recommending that stockholders vote in favor of annual advisory votes to approve the Company’s executive compensation, as described in this Proxy Statement. +Proposal No. 5 – Amendment and Restatement of Stock Award Plan +In order to enable the Company to continue to attract qualified directors, officers, employees and outside advisors, and to compensate these individuals in a manner that is competitive with compensation provided by other medical diagnostic and healthcare companies, the Board has determined that additional shares of Common Stock are needed to be available for grants under the Company’s Stock Award Plan. In addition, the Board wants to ensure that sufficient shares are available, if needed, to provide retention or other equity awards in connection with potential acquisitions or other business development activities. Finally, the Board believes it to be in the best interests of the Company’s stockholders to require a minimum vesting period of one year for all awards granted under the Stock Award Plan. +Accordingly, subject to stockholder approval, the Board approved an amendment and restatement of the OraSure Technologies, Inc. Stock Award Plan (last amended and restated, April 1, 2022) (the “Stock Award Plan” or the “Plan”) to both (i) increase the number of shares to be authorized for grant under the Plan by 3,000,000 shares. As a result of this increase there will be a total of 4,457,131 shares available in the Plan for future issuance on or after March 31, 2023, and (ii) generally require a minimum vesting period of one year for all awards granted under the Plan, subject to stockholder approval. A copy of the Amended and Restated Stock Award Plan reflecting this amendment is attached as Exhibit A to this Proxy Statement. +Proposal No. 6 – Stockholder Proposal Regarding Greenhouse Gas Reduction Targets +Nia Community Foundation, a holder of shares of the Company’s Common Stock with a value in excess of $25,000 for at least one year as of the date hereof, has given notice that, on behalf of Nia Community Foundation, a representative from Nia Impact Capital intends to present for action at the Annual Meeting a proposal requesting the Company issue near and long-term science-based greenhouse gas (“GHG”) reduction targets that are aligned with the Paris Agreement’s ambition of maintaining global temperature rise to 1.5°C and summarize plans to achieve them. +The Company has a shared interest in good environmental stewardship and has made great strides in environmental, social and governance (“ESG”) initiatives as described in greater detail in the Section of this Proxy Statement entitled, “Environmental, Social and Governance Issues.” While we are committed to furthering our sustainability efforts, our strategic priorities and core values guide how we approach fulfilling that commitment. We believe it would be imprudent to commit to the proponent’s requested actions before completing the necessary foundational steps, many of which were underway before we received the proponent’s proposal. As such, we do not believe it is in the Company’s or our stockholders’ best interests to commit to the actions in the proposal at this time, and we recommend a vote against the +3 +Table of Contents +proposal. Additional information regarding this proposal, including the Board’s statement in opposition, can be found in the +“Proposals Requiring Your Vote – Proposal No. 6 – Stockholder Proposal Regarding Greenhouse Gas Reduction Targets” section below. +2022 PERFORMANCE HIGHLIGHTS +Our business previously consisted of two segments: our “Diagnostics” segment, and our “Molecular Solutions” segment. In February 2023, we announced a corporate restructuring to combine the commercial and innovation teams across the two segments into one business unit with sales, marketing, product development and research teams aligned across multiple product portfolios. This change is intended to accelerate innovation, enhance customer experience and result in operational synergies. +We bolstered our management team with the addition of Carrie Eglinton Manner, who brings more than 25 years of healthcare leadership and transformation expertise to the company, as our new Chief Executive Officer and Kenneth McGrath, who joins the Company with over 20 years of financial leadership experience in the healthcare field, as our new Chief Financial Officer. +In 2022, we delivered record revenues, with our total company growing at a 36% compound annual growth rate since the pre-pandemic period in 2019. We achieved significant business milestones that we believe position the Company for growth in 2023 and beyond. +First, we continue to advance our InteliSwab ® COVID-19 test, which received two new federal government contracts. The first procurement contract runs through November 2023; and, under the terms of the award, is estimated to account for 18 million InteliSwab ® COVID-19 tests, with a maximum award of 36 million tests and a guaranteed minimum award of 3.6 million tests. The second contract was awarded for 3.2 million tests in December of 2022. We have also received approval from the U.S. Food and Drug Administration (the “FDA”) for a new packaging and labeling configuration for our InteliSwab ® COVID-19 tests. The packaging changes are expected to drive per-test cost savings of approximately $0.40, which includes the impact from lower shipping costs based upon the smaller packaging configuration which should reduce total truckloads by approximately 50%. We also significantly scaled up manufacturing capacity in the United States for our InteliSwab ® COVID-19 test and have achieved manufacturing capacity targets under our 2021 contract with the United States Department of Defense, in coordination with the United States Department of Health and Human Services. +We also continued to advance our innovation growth strategy in 2022 with the development of several new products in our diagnostics business including our four +newly-launched CE-IVD Colli-Pee ® urine collection products to support growing interest in non-invasive HPV and STI screening diagnostics and liquid biopsy from first-void urine samples. Included among these launches is a product with a proprietary chemistry for cell-free DNA and extra-cellular vesicles for oncology applications. We believe these products will be an important contributor to our future molecular solutions business. +Our consolidated revenues of $387.5 million in 2022 represented a 66% increase over 2021. Net product and services revenues increased 67% when compared to the same period of 2021, largely due to $233.7 million of InteliSwab ® COVID-19 test revenue recorded in 2022, compared to $22.7 million in 2021. Also contributing to the increased revenues were higher sales of our hepatitis C and substance abuse testing products. Declines in sales of our molecular sample collection kits for COVID-19 testing due in part to the reduction in PCR lab testing, lower genomics product revenue, lower laboratory services revenue and a decline in international sales of our HIV products offset these positive drivers of revenue. Other revenues for 2022 were $9.4 million compared to $6.8 million in the same period of 2021. This increase was largely due to increased research and development funding associated with our InteliSwab ® COVID-19 test offset by a decrease in royalty income. +Our consolidated net loss was $17.9 million, or $0.25 per share on a fully diluted basis, compared to a net loss of $23.0 million, or $0.32 per share on a fully diluted basis, for 2021. Results for the full-year 2022 benefitted from the increased revenues in 2022 compared to 2021 offset by the negative impact of $17.1 million of impairment charges taken for idle manufacturing lines and goodwill. There were no similar charges in 2021. 2022 results also included higher spending in operating expenses across all categories. +Cash used in operating activities was $47.2 million compared to $35.4 million used in 2021. This increase reflected the significant investment in inventory purchases in anticipation of future demand of our COVID-19 testing products as well the increase in our accounts receivable balances resulting largely from COVID-19 shipments made toward the end of the fourth quarter of 2022. During 2022 we achieved cash flow breakeven in the third quarter ahead of our previously stated guidance. We ended the year with approximately $110.8 million in cash, cash equivalents, and available-for-sale securities, compared to $170.0 million in 2021. +4 +Table of Contents +MOST SIGNIFICANT COMPENSATION COMPONENTS +We have structured the components of our executive compensation program to be directly tied to the performance of both the Company and our executives and aligned with the best interests of our stockholders. These components consist of the following: +Base Salary +Salaries are based on the individual executive’s position relative to market and the executive’s individual performance and contribution. +Annual Cash Incentive Plan Bonuses +Annual incentive cash bonuses, our OraSure Technologies Incentive Plan (“OTIP”) reflect market-based targets with individual bonus payouts and are contingent upon (i) our achievement of corporate financial and/or strategic objectives, which are used to determine overall bonus pool funding, and (ii) the executive’s individual performance against pre-determined objectives. +Equity Awards under our Long-Term Incentive Policy (“LTIP”) +Long-term incentive equity compensation reflects market-based targets with the value of individual awards contingent upon each executive’s individual performance against pre-determined objectives during the fiscal year prior to award. Fifty percent (50%) of each NEO’s annual LTIP award consists of performance-vested restricted units (“PRUs”) which require achievement of certain financial performance measures selected by the Board and Compensation Committee and the satisfaction of a 3-year service period for vesting of the award. The other fifty percent (50%) consists of time-vested restricted stock (“RS”) which vests in equal installments over a three-year service period. +KEY FEATURES OF OUR EXECUTIVE COMPENSATION PROGRAM +Key features of our compensation program illustrate our commitment to pay-for-performance, the strong alignment of our executives’ interests with those of our stockholders and strong corporate governance. Several of the more significant of these features are summarized below: +• Compensation is market driven with total compensation of our executives targeted at the 50 th percentile of the Company’s peer group (as set forth in the CD&A) (the “Peer Group”). +• Regular stockholder outreach on compensation/ governance matters. +• Compensation is predominantly variable or performance-based. +• Use of a third-party compensation consultant to provide executive compensation market assessment and independent advice on compensation matters. +• Balanced mix of cash/equity, fixed/variable, short- term/long-term compensation components. +• Strong stock ownership/retention requirements for executives and Directors. +• In order to incentivize growth, performance objectives for annual bonus pool funding target key financial measures and/or important strategic goals. +• As a general matter, no perquisites for NEOs that are not offered to all employees of the Company. +• The Board’s discretionary ability to adjust annual incentive bonus pool funding is limited to +/- 10% of pool amount in order to avoid excessive discretionary bonus pool adjustments. In 2022, the Compensation Committee and Board included a condition that the annual incentive bonus pool funding may be further adjusted downward based on profitability and cash liquidity needs of the Company. +• Use of peer company benchmarking. +• Long-term equity incentive awards include 50% PRUs that vest based on (i) three-year cumulative revenue, (ii) three-year relative total stockholder return (“TSR”) and (iii) three years of continued service. +• Compensation recoupment or “clawback” policy, under which we may recover excess compensation paid to an executive if our financial statements are restated. +• No excise tax gross-up in any of our NEO employment agreements and no “single trigger” change-in-control severance in any of our new executive employment agreements. +• No hedging or pledging of our Common Stock. +5 +Table of Contents +QUESTIONS AND ANSWERS ABOUT THE 2023 ANNUAL MEETING AND VOTING +1.   WHY DID I RECEIVE THESE PROXY MATERIALS? +Our Board of Directors (the “Board”) is furnishing proxy materials, including this Proxy Statement, a Proxy Card and the Company’s Annual Report to Stockholders for the year ended December 31, 2022 (the “2022 Annual Report”), to our stockholders in order to solicit proxies to be voted at the Annual Meeting (each, a “Proxy”). On or about April 20, 2023, we will mail a Notice of Internet Availability of Proxy Materials (the “Notice”) to each stockholder at the holder’s address of record, indicating that this Proxy Statement is now available to our stockholders of record entitled to vote at the Annual Meeting. Please carefully review this Proxy for information on the matters to be presented at the Annual Meeting and for instructions on how to vote your shares. Our 2022 Annual Report, including financial statements for such +period, does not constitute any part of the material for the solicitation of proxies, but copies are available to stockholders upon request. +Securities and Exchange Commission (“SEC”) rules permit us to deliver only one copy of the Notice or a single set of proxy materials to multiple stockholders sharing the same address. Upon written or oral request, we will deliver separate Notices and/or copies of our 2022 Annual Report and/or this Proxy Statement to any stockholder at a shared address to which a single copy of the Notice was delivered. Stockholders may notify the Company of their requests by calling or writing us at OraSure Technologies, Inc., 220 East First Street, Bethlehem, Pennsylvania 18015, Attention: Corporate Secretary; (610) 882-1820. +2.   WHAT IS A PROXY +A Proxy is your legal designation of another person to vote the shares of Common Stock you own. That other person is called a “proxy.” If you designate someone as your proxy in a written document, that document also is called a Proxy or a Proxy Card. +Carrie Eglinton Manner and Stefano Taucer, each of whom are officers of the Company, have been designated by the Board of Directors as proxies to vote on behalf of stockholders for the Annual Meeting. +3.   WHAT IS THE RECORD DATE AND WHAT DOES IT MEAN? +The record date for the Annual Meeting is March 23, 2023 (the “record date”). The record date is established by the Board as required by Delaware law. Only stockholders of record at the close of business on the record date are entitled to: +(a) +receive notice of the Annual Meeting; and +(b) +vote at the Annual Meeting and any adjournment(s) or postponement(s) of the meeting. +Each stockholder of record on the record date is entitled to one vote for each share of Common Stock held. +On the record date, there were 75,914,622 shares of our Common Stock outstanding and entitled to vote at the Annual Meeting. +A list of stockholders will be open for examination by any stockholder for any purpose germane to the Annual Meeting for a period of 10 days prior to the meeting at our principal executive offices at 220 East First Street, Bethlehem, PA 18015, and electronically during the Annual Meeting at www.virtualshareholder-meeting.com/ OSUR2023 when you enter the control number provided in the Notice sent to you. +4.   WHAT IS THE DIFFERENCE BETWEEN A STOCKHOLDER OF RECORD AND A STOCKHOLDER WHO HOLDS STOCK IN STREET NAME? +If your shares of stock are registered in your name on the books and records of our transfer agent, Computershare, Inc., you are a stockholder of record. +If your shares of stock are held for you in the name of your broker, bank or other nominee, your shares are held in “street name.” The answer to Question 7 describes brokers’ discretionary voting authority and when your +broker, bank or other nominee is permitted to vote your shares of stock without instructions from you. +It is important that you vote your shares if you are a stockholder of record and, if you hold shares in street name, that you provide appropriate voting instructions to your broker, bank or other nominee as discussed in the answer to Question 7. +6 +Table of Contents +5.   HOW CAN I VOTE MY SHARES FOR THE ANNUAL MEETING? +All stockholders have a choice of voting via the internet, over the telephone or by completing and mailing a paper Proxy Card, as described below. +Voting via the Internet or by Telephone. Stockholders of record desiring to vote online via the internet or by telephone prior to the Annual Meeting, should go to www.proxyvote.com or call the toll free number indicated on the Proxy Card or Notice. You may vote via the internet or by telephone provided you do so by 11:59 p.m. Eastern Time (8:59 p.m. Pacific Time) on May 15, 2023. Stockholders who attend the Annual Meeting via the internet may vote their shares at that time up to and during the Annual Meeting by following the instructions at www.virtualshareholdermeeting.com/ OSUR2023 . +Street name holders may vote via the internet or by telephone if their brokers, banks or other nominees make those methods available. If that is the case, each broker, bank or nominee will include instructions with the Notice or Proxy Statement. +The telephone and internet voting procedures, including the use of control numbers, are designed to +authenticate your identity, to allow you to give your voting instructions and to confirm that your instructions have been recorded properly. +If you vote via the internet, you should understand that you will be responsible for any costs associated with this method of voting, such as usage charges from internet access providers and telephone companies. +Voting by Mail . If you desire to vote prior to the Annual Meeting by mail by using a paper Proxy Card instead of by telephone or via the internet, you will need to follow the instructions in your Notice that will be mailed to you. You will then need to complete, sign, date and return the Proxy Card, as described on the Proxy Card. Street name holders should complete and return the voting card provided by their broker, bank or nominee. +Voting at the Annual Meeting. All stockholders of record may vote online during the Annual Meeting, as described above. Submitting a Proxy via the internet, over the telephone or by mail will not affect your right to withdraw your Proxy and vote during the Annual Meeting. +6.   HOW WILL MY SHARES BE VOTED IF I SEND IN A PROXY +If you are represented by a properly executed Proxy, whether delivered by phone, the internet or mail, your shares will be voted in accordance with your instructions. +If you do not provide instructions with your Proxy, your shares will be voted according to the recommendations of our Board as stated on the Proxy. +7.   WILL MY SHARES BE VOTED IF I DO NOT PROVIDE MY PROXY? +Stockholders of Record : If you are a stockholder of record, your shares will not be voted if you do not provide your Proxy, unless you vote online during the Annual Meeting. It is, therefore, important that you vote your shares. +Street Name Holders : If your shares are held in street name and you do not provide your signed and dated voting instruction form to your bank, broker or other nominee, your shares may be voted by your broker, bank or other nominee but only under certain circumstances. Specifically, under rules of the New York Stock Exchange, which also apply to companies listed on the Nasdaq Stock Exchange (“Nasdaq”), shares held in the name of your broker, bank or other nominee may be voted by your broker, bank or other nominee on certain “routine” matters if you do not provide voting instructions. +At the upcoming Annual Meeting, only the ratification of the selection of KPMG LLP as the Company’s +independent registered public accounting firm is considered a “routine” matter for which brokers, banks or other nominees may vote uninstructed shares. The other proposals to be voted on at our Annual Meeting (specifically, the election of the Director nominee, the advisory vote to approve the compensation of the Company’s NEOs, the advisory vote on the frequency of future stockholder advisory votes on executive compensation and the vote to approve the amendment and restatement of the Company’s Stock Award Plan are not considered “routine”, so the broker, bank or other nominee cannot vote your shares on any of these proposals unless you provide to the broker, bank or other nominee voting instructions for each of these matters. If you do not provide voting instructions on these matters, your shares will not be voted on the matter, which is referred to as a “broker non-vote.” It is, therefore, important that you vote your shares. +7 +Table of Contents +8.   HOW MANY SHARES MUST BE PRESENT TO HOLD THE ANNUAL MEETING? +Your shares are counted as present at the meeting if you attend the meeting and vote online or if you properly return a Proxy by internet, telephone or mail. In order for us to conduct our Annual Meeting, a majority of our outstanding shares of Common Stock as of the record +date, must be present online or by Proxy at the meeting. This is referred to as a quorum. Broker non-votes, votes withheld and abstentions are included in determining whether there are a sufficient number of shares present to constitute a quorum. +9.   HOW CAN I REVOKE A PROXY +You can revoke a Proxy before the completion of voting at the Annual Meeting by: +(a) +Giving written notice to the Corporate Secretary of the Company to revoke your Proxy; or +(b) +Delivering a later-dated Proxy that indicates the change in your vote; or +(c) +Logging on to www.proxyvote.com in the same manner you would to submit your Proxy electronically or calling the telephone number indicated in your Notice, and in each case, following the instructions to revoke or change your vote; or +(d) +Attending the Annual Meeting online and voting, which will automatically cancel any Proxy previously given. Attendance alone will not revoke any Proxy that you have given previously. +If you choose any of the first three methods, you must take the described action no later than 11:59 p.m. Eastern Time (8:59 p.m. Pacific Time) on May 15, 2023. Once voting on a particular matter is completed at the Annual Meeting, you will not be able to revoke your Proxy or change your vote. If your shares are held in street name by a broker or other nominee, you must contact that institution to change or revoke your vote. +10.   WHAT ITEMS WILL BE VOTED ON AT THE ANNUAL MEETING? +At the Annual Meeting, action will be taken on the matters set forth in the accompanying Notice and described in this Proxy Statement. The Board knows of no other matters to be presented for action at the Annual Meeting. +If any other matters do properly come before the Annual Meeting, the persons named in the Proxy Card will have discretionary authority to vote on those matters in accordance with their best judgment. +11.   WHO WILL PAY THE COST OF THIS PROXY SOLICITATION? +Solicitation of Proxies is made on behalf of the Board. The cost of soliciting Proxies will be borne by the Company. In addition to solicitations by e-proxy and/or by mail, certain of our Directors, officers and regular employees may solicit Proxies personally or by telephone or other means without additional compensation. +We have also engaged Morrow Sodali LLC, 333 Ludlow street, 5 th Floor, South Tower, Stamford, CT +06902, and Alliance Advisors, LLC, 200 Broadacres Drive, 3 rd Floor, Bloomfield, NJ 07003, to provide proxy solicitation services at an estimated fee of $7,500 and $15,000 respectively, plus expenses. Arrangements will be made with brokerage firms and other custodians, nominees and fiduciaries to forward solicitation materials to the beneficial owners of stock held of record by such persons, and we will, upon request, reimburse them for their reasonable expenses in so doing. +12.   HOW CAN I PARTICIPATE IN THE ANNUAL MEETING? +This year’s Annual Meeting will be a virtual meeting of stockholders, and will be conducted via live webcast on the Internet. You are entitled to participate in the Annual Meeting only if you were a stockholder of the Company as of the close of business on March 23, 2023, the record date for the meeting, or if you hold a valid Proxy for the Annual Meeting. +You will be able to participate in the Annual Meeting online and submit your questions during the meeting by +visiting https://www.virtualshareholdermeeting.com/ OSUR2023 . To participate in the Annual Meeting, you will need the control number that is included on your Notice, on our Proxy Card or on the instructions that accompanied your proxy materials. The Annual Meeting will begin promptly at 12:30 p.m. Eastern Time, and you should allow ample time to complete the online check-in procedures. +8 +Table of Contents +13.   WHAT IF I HAVE TECHNICAL DIFFICULTIES OR TROUBLE ACCESSING THE VIRTUAL MEETING +If you encounter any difficulties accessing the virtual meeting during the check-in or meeting time, please call +the technical support number that will be posted on the Virtual Shareholder Meeting log in page. +14.   ARE VOTES CONFIDENTIAL? +We will continue our long-standing practice of holding the votes of each stockholder in confidence from Directors, officers and employees, except: (a) as necessary to meet applicable legal requirements and to assert or defend claims for or against the Company; (b) in +the case of a contested proxy solicitation; (c) if a stockholder makes a written comment on the Proxy Card or otherwise communicates his or her vote to the Company; or (d) as needed to allow the independent inspectors of election to certify the results of the vote. +15.   WHO COUNTS THE VOTES? +We will continue, as we have for many years, to retain an independent inspector of election to receive and +tabulate the Proxies and certify the results. These activities will be handled electronically. +16.   MAY STOCKHOLDERS ASK QUESTIONS AT THE ANNUAL MEETING? +Yes. The CEO will answer stockholders’ written questions submitted during the question and answer period of the meeting. Stockholders should confine their questions to matters that relate to the business of the meeting. The CEO will determine which questions are appropriate to answer during the meeting. +We reserve the right to edit or reject any questions we deem profane or otherwise inappropriate. Detailed guidelines for submitting written questions during the meeting are available at www.virtualshareholdermeeting.com/ OSUR2023 . +9 +Table of Contents +STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT +The following table sets forth information, as of the March 23, 2023 record date (except for Dr. Tang, Ms. Gallagher and Ms. Nibauer, each as described below), regarding the beneficial ownership of the Company’s Common Stock by (a) each person who is known by us to be the beneficial owner of more than five percent of the Common Stock outstanding; (b) each Director and nominee for election as Director; (c) each of our executive officers named in the Summary Compensation Table in this Proxy Statement; and (d) all of our Directors, the nominee for election as Director and executive officers as a group. Unless otherwise indicated, the address of each person identified below is c/o OraSure Technologies, Inc., 220 East First Street, Bethlehem, Pennsylvania 18015. +Pursuant to Rule 13d-3 under the Exchange Act, shares of Common Stock which a person has a right to acquire pursuant to the exercise of stock options held by that person that are exercisable within 60 days of March 23, 2023 are deemed to be outstanding for the purpose of computing the ownership percentage of that person, but are not deemed outstanding for computing the ownership percentage of any other person. +Name and Address of +Beneficial Owner +Amount and Nature of +the Beneficial Ownership 1,2 +Percent +of Class +Black Rock, Inc. 3 +55 East 52 nd Street +New York, NY 10055 +13,718,269 +18.1% +The Vanguard Group 4 +100 Vanguard Blvd. +Malvern, PA 19355 +5,129,077 +6.8% +Camber Capital Management, LP 5 +101 Huntington Avenue +Boston, MA 02199 +4,250,000 +5.6% +Carrie Eglinton Manner +1,398,827 +1.8% +Stephen S. Tang, Ph.D. 6 +349,793 +* +Kathleen G. Weber +289,233 +* +Kenneth McGrath +185,512 +* +Agnieszka Gallagher 7 +147,308 +* +Lisa Nibauer 8 +123,479 +* +Mara G. Aspinall +117,218 +* +Scott Gleason +114,634 +* +James Datin +60,925 +* +Nancy Gagliano, M.D. +42,160 +* +Lelio Marmora +30,935 +* +Anne Whitaker +30,563 +* +David J. Shulkin, M.D. +30,550 +* +All Directors, the nominee for election as Director, and executive officers as a group +(13 people) +2,921,137 +3.8% +* +Less than 1%. +1 +Subject to community property laws where applicable, beneficial ownership consists of sole voting and investment power except as otherwise indicated. +2 +Includes shares subject to options exercisable within 60 days of March 23, 2023, as follows: Ms. Weber, 14,533 shares; Ms. Gallagher 56,724; and Ms. Aspinall, 40,000 shares; and all Directors, the nominee for election as Director and executive officers as a group, 111,257 shares. Also includes unvested RS, as follows: Ms. Eglinton Manner, 1,398,827 shares; Ms. Weber, 115,752 shares; Mr. McGrath, 185,512, shares; Mr. Gleason, 92,686 shares; Ms. Aspinall, 20,000 shares; Mr. Datin, 20,000 shares; Dr. Shulkin, 20,000 shares; Mr. Marmora, 20,000 shares; Dr. Gagliano, 10,563 shares; and Ms. Whitaker 30,563 shares; and all Directors, the nominee for election as Director and executive officers as a group, 1,913,903 shares. Does not include unvested PRUs. +10 +Table of Contents +3 +Based on information contained in a Schedule 13G/A filed January 23, 2023. The filing person has sole voting power with respect to 13,341,530 shares and sole dispositive power with respect to all of the indicated shares. +4 +Based on information contained in a Schedule 13G/A filed February 9, 2023. The filing person has shared voting power with respect to 46,749 shares, sole dispositive power with respect to 5,025,049 shares and shared dispositive power with respect to 104,028 shares. +5 +Based on information contained in a Schedule 13G filed February 2, 2023. The filing person has sole voting power with respect to 4,250,000 shares +6 +Dr. Tang’s employment as President and CEO of the Company ended on March 31, 2022. The indicated shares reflect Dr. Tang’s ownership as of his resignation date. +7 +Ms. Gallagher’s employment as Executive Vice President, General Counsel and Chief Compliance Officer of the Company ended on June 25, 2022. The indicated shares reflect Ms. Gallagher’s ownership as of her resignation date. +8 +Ms. Nibauer’s employment as President of Diagnostics of the Company ended on November 11, 2022. The indicated shares reflect Ms. Nibauer’s ownership as of her resignation date. +CORPORATE GOVERNANCE +BOARD RESPONSIBILITIES, OPERATION AND COMPOSITION +The primary responsibility of the Board of Directors is to promote the long-term success of the Company. In fulfilling this role, each Director must exhibit good faith business judgment as to what is in the best interests of the Company. The Board is responsible for establishing broad corporate policies, setting strategic direction and overseeing management. The Company’s management is responsible for the day-to-day operations of the Company. +Currently, the Board is divided into three classes with Class I consisting of two Directors, Class II consisting of two Directors and Class III consisting of three Directors. There are currently seven Directors serving on the Board. The Board has determined that Ms. Whitaker, a current Class II member of the Board, will not stand for re-election at the Annual Meeting, and her service as a member of the Board will end effective as of the Annual Meeting. Accordingly, Ms. Whitaker’s seat shall remain vacant until filled in accordance with our Bylaws. At each annual meeting of stockholders, the nominees for the class of Directors whose term is expiring at that annual meeting are elected for a three-year term. A Director holds office until the annual meeting of stockholders for the year in which his or her term expires or until his or her successor is elected and duly qualified, subject to prior death, resignation, retirement, disqualification or removal. Each nominee for election at our upcoming Annual Meeting currently serves as a Director. +The Board typically holds regular meetings in February, May, August and November of each year, with additional meetings held as needed. The Board’s organizational meeting follows the annual meeting of stockholders. The Board usually meets in executive session at all regularly scheduled meetings. The Board held 15 meetings and acted by written consent on eight occasions during the fiscal year ended December 31, 2022. Each member of the Board attended more than 75 percent of the combined total of meetings of the Board and of the Committees of the Board on which such member served during the period in the year in which he or she served as a Director. +The Board holds four regularly scheduled meetings each year and special meetings as needed. Directors attended greater than 75% of all Board and Committee meetings during 2022. +GOVERNANCE GUIDELINES AND CODE OF CONDUCT +The Board has adopted Corporate Governance Principles which, along with the Charters for each of its Committees and the Company’s Amended and Restated Code of Business Conduct and Ethics, provide a framework for the governance of the Company. The Company’s Corporate Governance Principles address matters such as the responsibilities and composition of the Board, Director independence and the conduct of Board and Committee meetings. The Company’s Amended and Restated Code of Business Conduct and Ethics sets forth guiding principles of business ethics and certain legal requirements applicable to all Company employees, contractors and non-employee Directors. Copies of the current Corporate Governance Principles and Amended and Restated Code of Business Conduct and Ethics are available on the Investor Relations — Corporate Governance section of the Company’s website, https://orasure.gcs-web.com/governance . Upon request, the Company will provide a copy of each policy free of charge to any stockholder. +11 +Table of Contents +If we make substantive amendments to or grant any waiver from the Amended and Restated Code of Business Conduct and Ethics applicable to our directors or executive officers, we will disclose the nature of such amendments or waiver to our stockholders to the extent and in the manner required by applicable exchange listing standards or any other regulation. For conduct involving an executive officer or Board member, only the Board of Directors or the Audit Committee of the Board has the authority to waive a provision of the Amended and Restated Code of Business Conduct and Ethics. Should the Company grant a waiver to its Amended and Restated Code of Business Conduct and Ethics, the Company intends to post notice of the waiver to its website at https://orasure.gcs-web.com/governance . Any waivers granted to the Amended and Restated Code of Business Conduct and Ethics will be available on the website for at least a 12-month period. +We operate under a Code of Business Conduct and Ethics and Corporate Governance Principles, which apply to all employees, contractors and non-employee Board members. +ENVIRONMENTAL, SOCIAL AND GOVERNANCE ISSUES +We believe that conducting our business in a socially, environmentally and ethically responsible manner, and in compliance with applicable legal requirements, is important to our long-term success and the health and well-being of our employees, customers, the communities that we serve and other stakeholders. As a result, ESG issues have become an increasingly important focus for our management team and our Board. +On March 21, 2022, the SEC proposed extensive and comprehensive new rules that, if adopted, would require us to provide detailed climate-related disclosures. These disclosures would include information about material climate-related risks, financial statement disclosures, together with detail relating to our governance of climate-related risks and risk-management processes, the likelihood of those risks having a material impact on our business and financial statements, among others. Additionally, the proposed rules would require us to disclose information about our Scope 1 and Scope 2 greenhouse gas emissions. +Though these changes have not yet been implemented, and their full scope remains unclear, we are focused on remaining apprised of their status, understanding the requirements and planning for any impact they could impose on our business. +ESG Oversight +Historically, ESG issues have been addressed by the management teams in our various companies with the primary focus on regulatory and legal compliance, ethical operations and development of our human capital resources. Material risks in these areas have been regularly reviewed with our Board, either directly or through the Audit Committee. Our management previously formed a cross-functional team to consistently and more formally review ESG issues in order to identify material ESG risks impacting our business and determining appropriate mitigation and corrective strategies. These risks were discussed by the Board in 2022 and will be discussed by the Board at least annually as part of the Board’s oversight of risk management. +In 2022, we released our first “OraSure Cares” ESG report, which provides a snapshot of the many ways that we are preserving the environment, empowering our people, modeling integrity and positively impacting the communities that we serve and in which we are located. A copy of the report may be accessed on our website at www.orasure.com. We intend to issue our second ESG report later in 2023. +Environmental +We endeavor to implement responsible and sustainable environmental practices throughout our organization. Our goal is to eliminate or minimize any harm to our employees, the communities that we serve and the environment. We follow practices to reduce our energy usage and operate more efficiently, including through the use of motion detectors and timers to reduce electricity usage. We also have implemented a Company-wide waste recycling program under which recyclable materials are segregated for removal and appropriate handling. Hazardous and medical waste is also segregated and disposed of in accordance with applicable laws and regulations. +12 +Table of Contents +Formed in 2020, our Sustainability Initiative focuses on identifying additional steps we can take to reduce our carbon footprint, including through the use of solar and renewable energy sources and promoting clean communities and positive environmental stewardship. Some of the key highlights of work completed by our Sustainability Committee include: +1. +Manufacturing programs that reduced our scrap rates from 30% to less than 1% over the course of 2022 resulting in net savings of 3.5 tons of plastic +2. +The purchase of carbon-free energy for our corporate headquarters and some Bethlehem based manufacturing sites +3. +The introduction of an on-site composting program at our Ottawa and Minneapolis locations to reduce material waste +4. +Sponsored company-wide neighborhood and site clean-up events during Earth Day 2022 +5. +Completed Amazon web service migration initiative lowering our digital footprint and using approximately one third less electricity by our servers +6. +Purchased 232 tons of carbon offsets against corporate air travel +7. +Published our 2022 “OraSure Cares” Environmental, Social, and Governance (ESG) report highlighting the Company’s ESG initiatives +Additionally, in 2022, our Sustainability Initiative engaged an advisory firm to create a Greenhouse Gas (“GHG”) Emissions Inventory Report (the “GHG Report”) for our Bethlehem, Pennsylvania sites covering emissions for the 2021 calendar year. The GHG Report, which contains a detailed accounting of our Scope 1, Scope 2 and Scope 3 GHG emissions associated with those sites, provides us with a data-focused foundation for effective management of our GHG emissions. We conducted this study independently given our stated goal of positive environmental stewardship. In 2022, we undertook several programs, which significantly lessened our emissions. +Based upon the results of this study, we concluded that the largest source of emissions associated with our InteliSwab manufacturing process was tied to supplier materials. Consequently, we redesigned the packaging of our InteliSwab COVID-19 Rapid Tests, which we estimate will save 90 tons of plastic and 1,500 tons of paper in addition to reducing required delivery truckloads by approximately 50%. This initiative is estimated to have reduced total CO 2 emissions by 20,000 tons. These numbers are based upon projected InteliSwab volumes as of December 31, 2022. +We consistently examine our operations and strive to find additional ways to lessen our impact on the environment, and our Sustainability Committee remains dedicated to researching, designing and implementing new and innovative ways to reduce our carbon footprint to benefit our employees, the communities that we serve and the environment. The Company is also evaluating proposed U.S. Security and Exchange Commission (SEC) rules issued on March 21, 2022 which could require public companies to disclose certain climate related metrics including greenhouse gas emissions data in the Company’s annual report on form 10-K. Under the current proposed rules, OraSure would be required to make these disclosures as a non-accelerated filer in calendar year 2025 as part of its 2024 annual report filing. Final guidance on these requirements has not been issued by the SEC but is anticipated in calendar year 2023. OraSure believes it is prudent to wait for these rules to be finalized before allocating additional resources to monitor environmental outcomes. +Healthcare +We are committed to improving healthcare and making it more accessible in all parts of the world. For several years, we worked with Population Services International (“PSI”), a leading global health organization, along with UNITAID, the WHO and health officials from several African countries to deploy our Self-Test through the UNITAID-PSI HIV Self-Testing in Africa (“STAR”) project. The OraQuick ® Self-Test has labeling and instructions specifically tailored for each market in which it is sold. The purpose of the STAR project was to generate crucial information about how best to deliver HIV self-testing, how to generate demand for HIV testing in this manner and what the potential public health impact of self-testing will be. Our OraQuick ® Self-Test was chosen by PSI because of its quality, ease-of-use and proven acceptability in lay person testing. The STAR project has largely been completed. +13 +Table of Contents +Social +We believe our employees are our most important resource and are critical to our continued success. The health and safety of our workforce is a critical priority across our organization. We safeguard our people, projects and reputation by striving for zero employee injuries and illnesses, while operating and delivering our work responsibly and sustainably. We provide our employees upfront and ongoing safety training to ensure that safety policies and procedures are +effectively communicated and implemented. Personal protective equipment is provided to those employees where needed for the employees to safely perform their job function. We have formed a Safety Committee consisting of employees from various functional departments to administer our internal safety inspection program, monitor compliance, investigate safety incidents and oversee the effectiveness of our safety procedures and policies. +As part of our compensation philosophy, we believe that we must offer and maintain market competitive compensation and benefits programs for our employees in order to attract and retain superior talent. In addition to competitive base wages, additional programs include annual bonus opportunities, a Company matched 401(k) Plan or other savings plan, healthcare and insurance benefits, health savings and flexible spending accounts, paid time off, family leave, flexible work schedules, and employee assistance programs. +We focus significant attention on attracting and retaining talented and experienced individuals to manage and support our operations, and our management team routinely reviews employee turnover rates at various levels of the organization. Management also reviews employee engagement and satisfaction surveys to monitor employee morale and receive feedback on a variety of issues. +The OraSure family of companies is committed to creating and fostering a diverse, equitable, and inclusive workplace that reflects and contributes to the global communities in which we do business and the customers and partners we serve. This includes all communities impacted by our corporate presence. Our management teams and our employees are expected to exhibit and promote honest, ethical and respectful conduct in the workplace. All of our employees must adhere to a Code of Business Conduct and Ethics that sets standards for appropriate behavior and includes required annual training on preventing, identifying, reporting and stopping any type of unlawful discrimination. We strive to recruit the best people for the job regardless of gender, ethnicity or other protected trait and it is our policy to fully comply with all laws (domestic and foreign) applicable to discrimination in the workplace. We have established a hotline and other communication methods that employees can use to anonymously submit discrimination or other complaints. +We have an active Diversity, Equity and Inclusion Council that strives to drive diversity, equity and inclusion within the workplace. At the end of 2022, the composition of the Board of Directors was 57% female and 43% male while the executive leadership team was 50% female and 50% male. We believe a variety of perspectives are critical to achieving success, and that diversity, equity and inclusion are key drivers to growth-based innovation and profitability. We are committed to creating a culture where all people feel valued, supported, and inspired to be themselves fearlessly, without judgement. We believe that when all voices are heard, we honor and exemplify our core values and best serve our customers and communities. +Governance +Our overall corporate mission is to do good and help solve the world’s greatest health challenges. We believe that our point-of-care and self-testing diagnostics and specimen collection innovation have significantly contributed to public health on a global basis. Through these efforts, we are committed to making a difference in the world of individual and public health by helping to increase access, affordability and quality of care. +In pursuing our mission, we are committed to operating our business in accordance with the highest moral, legal and ethical standards. As previously mentioned, we have adopted an Amended and Restated Code of Business Conduct and Ethics in order to define the high standards under which all members of our Board and all of our employees are expected to operate. We also have an Anti-Corruption Policy, a Policy on Interactions with Healthcare Professionals and other policies which further require honest, ethical and lawful behavior. These policies are part of a broader compliance program designed to ensure that all policies and legal requirements are followed, that we make and sell high-quality products in accordance with applicable regulatory requirements and that we otherwise operate in a responsible, ethical and compliant manner. +14 +Table of Contents +INDEPENDENT BOARD CHAIRPERSON +The positions of Chairman of the Board and CEO of the Company are held by different individuals, with the Chairman being independent of management. +The Board has carefully considered its leadership structure and believes that the Company and its stockholders are best served by having the positions of Chairperson and CEO filled by different individuals. This allows the CEO to, among other things, focus on the Company’s day-to-day business, while allowing the Chairperson to lead the Board in its fundamental role of providing strategic advice and oversight of management. +DIRECTOR INDEPENDENCE +Our Corporate Governance Guidelines require, among other things, that a majority of the members of the Board meet the independence requirements of the SEC and Nasdaq, on which our Common Stock is listed. Each year our Board, with assistance from the Nominating and Corporate Governance Committee, conducts a review of Director independence. The most recent annual review occurred in the first quarter of 2023, during which the Board considered +A majority of our Directors are independent as required under applicable SEC and Nasdaq rules. All standing Board Committees consist of independent Directors. +transactions and relationships, if any, between each Director and any member of such Director’s immediate family and the Company. As a result of this review, the Board determined that Mara G. Aspinall, Dr. Nancy J. Gagliano, M.D., M.B.A., James A. Datin, Lelio Marmora, David J. Shulkin, M.D. and Anne C. Whitaker, are “independent,” as that term is defined in the applicable rules of Nasdaq and the SEC. Ms. Carrie Eglinton Manner was determined by the Board not to be independent because she is serving as an executive officer employed by the Company. Based on the foregoing, the Board of Directors is comprised of a majority of independent Directors. The Audit Committee, the Nominating and Corporate Governance Committee and Compensation Committee of the Board are also comprised solely of independent Directors. +OVERSIGHT OF RISK MANAGEMENT +As part of its oversight of the Company’s operations, the Board and Audit Committee monitor the management of risks by the Company’s executives. The Audit Committee reviews the risks that the Company may face and receives reports from senior management on the nature of these risks and the procedures and processes implemented by processes in place to manage and mitigate such risks. Substantive areas of risk reviewed by the Audit Committee include financial, legal, regulatory, operational, information technology, cybersecurity and employment +The Board and Audit Committee +monitor the major risks facing +the Company and the procedures +and processes implemented by +the management to mitigate +those risks. +matters. The Audit Committee provides a report to the full Board on the matters covered during each of its meetings, including its risk monitoring activities. In addition, senior management provides periodic reports to the full Board on the major risks facing the Company and the processes and procedures in place to manage such risks. Management also conducts a risk assessment of the Company’s compensation policies and practices, including its executive compensation program, as described in greater detail in the Section of this Proxy Statement entitled, “Compensation Committee Matters.” +ANNUAL MEETING ATTENDANCE AND STOCKHOLDER COMMUNICATIONS +The Board has approved a policy concerning Board members’ attendance at our Annual Meeting of Stockholders and a process for security holders to send communications to members of the Board. A description of the Board’s policy on Annual Meeting attendance is provided on our website, at www.orasure.com . As a general matter, each Board member is required to attend each Annual Meeting of Stockholders. Our 2022 Annual Meeting was attended by all members of the Board. +Security holders may communicate with the Board by sending their communications to OraSure Technologies, Inc., 220 East First Street, Bethlehem, Pennsylvania 18015, Attention: Corporate Secretary, fax: (610) 882-2275, email: corporatesecretary@orasure.com . +All Board members are required to attend each Annual Meeting of Stockholders. The entire Board attended the 2022 Annual Meeting. +15 +Table of Contents +COMMITTEES OF THE BOARD +The Board currently has a standing Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee. Members of the Audit Committee, Compensation Committee, and the Nominating and Corporate Governance Committee are each “independent,” as defined in the Exchange Act and Nasdaq rules applicable to such Committees. In addition, the Board has determined that Mara G. Aspinall is an “audit committee financial expert,” as that term is defined by applicable rules of the SEC. Each committee operates pursuant to a written charter, copies of which are available on our website, at www.orasure.com . Additional information on each standing committee is provided below: +AUDIT COMMITTEE +Committee Members*: +Responsibilities: +•  Oversees accounting and financial reporting process, internal controls and audits. +•  Consults with management and the Company’s independent registered public accounting firm on, among other items, matters related to the annual audits, the published financial statements and the accounting principles applied. +•  Appoints, evaluates and retains our independent registered public accounting firm. +•  Responsible for the compensation, termination and oversight of our independent registered public accounting firm. +Mara G. Aspinall (1) +(C, I) +James A. Datin +(I) +Lelio Marmora +(I) +Anne C. Whitaker (2) +(I) +Number of Meetings during +fiscal 2022: 5 +•  Evaluates the independent registered public accounting firm’s qualifications, performance and independence. +•  Approves all services provided by the independent registered public accounting firm. +•  Monitors the Company’s major risk exposures and reviews risk assessment and mitigation policies and determines the appropriate levels and types of insurance policies to be purchased by the Company. +•  Maintains procedures for the receipt, retention and treatment, on a confidential basis, of complaints received by the Company regarding accounting, internal accounting controls or auditing matters, and the confidential, anonymous submissions by employees of concerns regarding questionable accounting or auditing matters. +•  Reviews the Company’s cybersecurity program and risks, as identified by Company management, and the steps that the Company management has taken to protect against threats to the Company’s assets including information systems and data security. +C +– Committee Chairperson +I +– Determined by the Board to be independent under applicable SEC and Nasdaq rules. +(1) +– Determined by the Board to be an audit committee financial expert as defined under applicable SEC Rules. +(2) +– The Board has determined that Ms. Whitaker will not stand for re-election at the Annual Meeting, and her service as a member of the Board will end effective as of the Annual Meeting. +16 +Table of Contents +COMPENSATION COMMITTEE +Committee Members*: +Responsibilities: +•  Oversees compensation for executives and non-employee Directors. +•  Reviews and recommends to the Board for approval the performance criteria, goals and objectives for CEO compensation. +•  In consultation with other independent non-employee Directors, evaluates the CEO’s annual performance. +Mara G. Aspinall +(I) +James A. Datin +(C, I) +David J. Shulkin, M.D. +(I) +Number of Meetings during fiscal 2022: 5 +•  Evaluates and recommends the CEO’s compensation to the Board for approval. +•  In consultation with the CEO, reviews and approves the compensation of other executive officers. +•  Establishes performance measures and goals and evaluates the attainment of such goals under performance-based incentive compensation plans. +•  Reviews compensation and benefits issues relating to the Company. +•  Reviews and recommends for Board approval, the terms of any employment agreements between the Company and each executive officer. +•  Periodically reviews and administers the Company’s Compensation Recoupment Policy for executive officers and non-employee Directors. +•  Reviews compliance with the Company’s Stock Ownership Guidelines. +C +– Committee Chairperson +I +– Determined by the Board to be independent under applicable SEC and Nasdaq rules. +NOMINATING AND CORPORATE GOVERNANCE COMMITTEE +Committee Members: +Responsibilities: +•  Identifies, evaluates and recommends candidates for nomination or re-election to the Board. +•  Reviews and makes recommendations to the Board on the range of skills, qualifications and expertise required for service as a Director. +•  Reviews and recommends for Board approval the appropriate structure of the Board and Board committees. +Nancy J. Gagliano, M.D., M.B.A. +(C, I) +Lelio Marmora +(I) +David J. Shulkin, M.D. +(I) +Number of Meetings during fiscal 2022: 3 +•  Recommends committee assignments and candidates for the position of Chairperson of each committee. +•  Develops and recommends for Board approval Corporate Governance Guidelines and a Code of Business Conduct and Ethics, and procedures for the implementation thereof. +•  Periodically reviews and recommends for Board approval the Board’s leadership structure, including whether the same person should serve as both CEO and Chairperson of the Board. +•  Assists in the development of succession plans for the Company’s CEO and other executives. +•  Assists the Board in evaluating the independence of individual Directors for purposes of Board and committee service. +•  Develops and implements an annual self-evaluation process for the Board and its committees +C +– Committee Chairperson +I +– Determined by the Board to be independent under applicable SEC and Nasdaq rules. +17 +Table of Contents +NOMINATION OF DIRECTORS +Our Bylaws provide that nominations for election to the Board may be made by the Board or by any stockholder entitled to vote for the election of Directors at the Annual Meeting. A stockholder’s notice of nomination must be made in writing to the Company’s Corporate Secretary and must be delivered to or received at our principal executive offices not less than ninety (90) days nor more than one hundred twenty (120) days prior to the meeting. +Stockholders can nominate individuals to serve on the Board by the following procedures described in our Bylaws. +However, in the event that less than one hundred (100) days’ notice or prior public disclosure of the date of the meeting is given or made to stockholders, in order for notice by the stockholder to be timely, notice must be received no later than the close of business on the tenth (10 th ) day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made, whichever first occurs. The notice to the Corporate Secretary must set forth, with respect to the nominee, the name, age, business address, residence address, principal occupation or employment of the person, the class and number of shares of capital stock of the Company which are beneficially owned by the person, and any other information relating to the person that is required to be disclosed in solicitations for proxies for election of Directors pursuant to Regulation 14A under the Exchange Act. The notice must also include, as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination is made: (i) the name and address of the stockholder and such beneficial owner; (ii) the class and number of shares of capital stock of the Company which are held of record or beneficially owned by such stockholder and such beneficial owner and any other direct or indirect pecuniary or economic interest in any capital stock of the Company of such stockholder and beneficial owner, including without limitation, any derivative instrument, swap, option, warrant, short interest, hedge, profit sharing arrangement or borrowed or loaned shares; (iii) a description of any arrangements or understandings between such stockholder and beneficial owner and each proposed nominee and any other person (including their names) pursuant to which the nomination(s) are to be made by such stockholder and such beneficial owner or with respect to actions to be proposed or taken by such nominee if elected as a Director; (iv) a representation that such stockholder intends to appear in person or by proxy at the meeting to nominate the persons named in its notice; and (v) any other information relating to such stockholder and such beneficial owner that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of Directors, or may otherwise be required pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder. We may also require any proposed nominee to furnish such other information as we may reasonably require to determine the eligibility of the proposed nominee to serve as a Director of the Company. +The Nominating and Corporate Governance Committee may also consult with outside advisors or retain search firms to assist in the search for qualified candidates. Candidates recommended by stockholders will be considered by the Nominating and Corporate Governance Committee in the same manner as candidates recommended by other sources, but only if the stockholder makes a recommendation in accordance with the advance notification provisions set forth in the our Bylaws. +DIRECTOR QUALIFICATIONS +The Board considers diversity, including personal factors such as race and gender, and other relevant factors in evaluating Director candidates. In determining whether an incumbent Director will be nominated for re-election, we evaluate the individual’s background, experience and prior service as a Director. +Although there is no formal policy governing Board diversity, the Nominating and Corporate Governance Committee considers diversity as one of many important factors in identifying new candidates for the Board. Such diversity includes personal characteristics such as race and gender as well as diversity in background and skills and experience that relate to our Board’s performance of its responsibilities. The Nominating and Corporate Governance Committee does not assign specific weight to any particular criteria when reviewing candidates and may not apply the same criteria to all prospective nominees. +18 +Table of Contents +As currently constituted, the Board represents a deliberate mix of members who have a deep understanding of our business as well as members who have different skill sets and points of view. The recently adopted listing requirements of Nasdaq requires each listed company to have, or explain why it does not have, two diverse directors on the board, including at least one diverse director who self-identifies as female and at least one diverse director who self-identifies as an underrepresented minority or LGBTQ+. Each term used above and in the matrix below has the meaning given to it in Nasdaq Listing Rule 5605(f). +As a company listed on the Nasdaq Global Select Market, we are required to have, or explain why we do not have, at least one diverse director by December 31, 2023 and at least two diverse directors by December 31, 2025. We currently have five diverse directors on our Board. The matrix below provides certain highlights of the composition of our Board members based on self-identification. +Board Diversity Matrix (As of March 23, 2023) +Total Number of Directors +7 +Female +Male +Non-Binary +Did Not Disclose +Gender +Part I: Gender Identity +Directors +4 +3 +— +— +Part II: Demographic Background +African American or Black +— +— +— +— +Alaskan Native or Native American +1 +— +— +— +Asian +— +— +— +— +Hispanic or Latinx +— +1 +— +— +Native Hawaiian or Pacific +Islander +— +— +— +— +White +3 +2 +— +— +Two or More Races or +Ethnicities +— +— +— +— +LGBTQ+ +— +— +— +— +Did Not Disclose Demographic Background +— +— +— +— +INSIDER TRADING +Our Insider Trading Policy prohibits trading by Directors, executive officers or employees who are in possession of material nonpublic information about the Company. +We have a policy designed to prevent any trading in the Company’s Common Stock or other securities by Directors, executive officers and certain other employees of the Company and its affiliates while such person is in possession of material nonpublic information. The policy prohibits trading in the Company’s securities on the basis of material nonpublic information, requires preapproval of transactions in Company securities for Directors, executive officers and all other employees and establishes regular trading windows after each calendar quarter following the Company’s announcement of its quarterly financial results. +19 +Table of Contents +PROHIBITION AGAINST SHORT SALES, HEDGING AND PLEDGING +We believe it is inappropriate for any employee of the Company or its affiliates or any member of the Board to engage in short-term or speculative transactions involving Company securities, including entering into financial instruments or engaging in other transactions that hedge or offset, or that are designed to hedge or offset, any decrease in the market value of our Common Stock. As a result, our insider trading policy prohibits Directors, executive officers and all other employees from entering into transactions involving our Common Stock, such as short sales, the buying or selling of puts or calls, the purchase of securities on margin, prepaid variable forward contracts, equity swaps, collars, exchange funds and other similar financial instruments. Our policy also prohibits employees and Directors from pledging shares of our Common Stock as collateral. +We have implemented several governance policies related to our Common Stock. Our policies prohibit short-term, speculative transactions in our stock, such as hedging, pledging and short sales. +STOCK OWNERSHIP AND RETENTION GUIDELINES +We have implemented stock ownership and retention guidelines for our CEO, other executives and members of the Board. +The Board has adopted stock ownership and retention guidelines applicable to our President and CEO, our Chief Financial Officer and all of our other executive officers and all non-employee members of the Board. Under these guidelines, the covered individuals must meet the following ownership requirements, as of December 31 of each year, expressed either as a multiple of base salary (in the case of Company officers) or annual cash fees (in the case of non-employee Board members): +Covered Individual +Multiple of Base Salary +or Director Cash Fees +President and CEO +6x +Chief Financial Officer +2x +Other Executive Officers +1x +Non-Employee Directors +3x +Any individual who becomes subject to the guidelines is required to meet the guidelines within five years. Any individual already subject to the guidelines who becomes subject to a higher ownership requirement, due to a promotion, a further amendment to the guidelines or an increase in compensation, is required to meet the new ownership requirement within five years following the effective date of promotion, change in compensation or guideline amendment. In determining whether an individual meets the required ownership requirement, shares owned directly or indirectly, restricted stock (including both time and performance-based) and shares deferred under our deferred compensation plan will be counted. Compliance will be determined as of December 31 of each fiscal year. The guidelines also require each covered individual to retain at least 50% of the net shares acquired upon the exercise of stock options and the vesting of restricted stock until the individual’s holdings of Common Stock equal or exceed the applicable ownership requirement. As of December 31, 2022, some of the covered officers and non-employee Directors were not in compliance with the stock ownership guidelines as they have recently joined the Company. The Company will ensure they are in compliance within five years, which is the guideline. +20 +Table of Contents +AUDIT COMMITTEE MATTERS +REPORT OF THE AUDIT COMMITTEE FOR THE YEAR ENDED DECEMBER 31, 2022 +The information contained in this report shall not be deemed to be “soliciting material” or “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to liability under that Section. This report shall not be deemed “incorporated by reference” into any document filed under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, whether such filing occurs before or after the date hereof, regardless of any general incorporation language in such filing. +The role of the Audit Committee is to assist the Board of Directors in fulfilling its responsibilities to oversee (i) the integrity of the Company’s financial statements, (ii) management’s conduct of the Company’s accounting and financial reporting processes, (iii) the Company’s systems of internal control over financial reporting and disclosure controls and procedures, (iv) the outside auditor’s qualifications, engagement, compensation, independence and performance, (v) the Company’s compliance with legal and regulatory requirements and management of financial and other risks, including insurance review and cybersecurity, (vi) the annual independent audit of the Company’s financial statements and internal control over financial reporting, (vii) the application of the Company’s related person transaction policy and (viii) such other matters as directed by the Board or as set forth in the Audit Committee Charter. The Audit Committee selects the Company’s outside independent registered public accounting firm, and once selected, the outside independent registered public accounting firm reports directly to the Audit Committee. The Audit Committee is responsible for approving both audit and non-audit services to be provided by the outside independent registered public accounting firm. The Audit Committee is composed of four (4) non-employee directors and operates pursuant to a Charter that was last amended and restated by the Board on August 8, 2022 (which can be found on the Company’s website at orasure.gcs-web.com/committee-details/audit-committee ). +Management of the Company is responsible for the preparation, presentation and integrity of the Company’s financial statements, the Company’s accounting and financial reporting principles and internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations. The independent registered public accounting firm is responsible for auditing the Company’s financial statements and expressing an opinion as to their conformity with U.S. generally accepted accounting principles. The Audit Committee’s responsibility is to monitor and review these processes. It is not the Audit Committee’s duty or responsibility to conduct auditing or accounting reviews. +In the performance of its oversight function, the Audit Committee has considered and discussed the audited financial statements with management, which included a discussion of not only the quality, but also the acceptability, of the accounting principles, the reasonableness of significant judgments and the clarity of disclosures in the financial statements. The Audit Committee met with the independent registered public accounting firm, with and without management, to discuss the results of their audit and their judgments regarding the Company’s accounting policies. The Audit Committee has also discussed with the independent registered public accounting firm the matters required to be discussed under applicable standards, including those in Public Company Accounting Oversight Board Auditing Standard No. 1301, as currently in effect. Finally, the Audit Committee has received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the Public Company Accounting Oversight Board as currently in effect, has considered whether the provision of non-audit services by the independent registered public accounting firm to the Company is compatible with maintaining the firm’s independence and has discussed with the independent registered public accounting firm the firm’s independence. +Based upon the reports and discussions described in this report, and subject to the limitations on the role and responsibilities of the Audit Committee referred to above and in the Audit Committee’s Charter, the Audit Committee recommended to the Board that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 for filing with the SEC and selected KPMG LLP as the independent registered public accounting firm for fiscal year 2023. The Board is recommending that stockholders ratify that selection at the Annual Meeting. +Submitted by the Audit Committee of the Company’s Board of Directors: +Mara G. Aspinall, Chairperson +James A. Datin +Lelio Marmora +Anne C. Whitaker +April 14, 2023 +21 +Table of Contents +AUDIT FEES; AUDIT RELATED FEES; TAX FEES; ALL OTHER FEES +The following table presents fees for professional audit services rendered by KPMG LLP (i) for the audits of our annual consolidated financial statements and review of the financial statements in our Quarterly Reports on Form 10-Q for the fiscal years ended December 31, 2022 and 2021, and (ii) for the audits of our internal control over financial reporting as of December 31, 2022 and 2021. The following table also includes fees billed for other services rendered by KPMG: +2022 +2021 +Audit fees 1 +$ +1,475,304 +$ +1,056,643 +Tax fees 2 +$ +258,854 +$ +347,382 +Total fees +$ +1,734,158 +$ +1,404,025 +1 +Includes fees related to the audits of our consolidated annual financial statements, interim reviews of our quarterly financial statements and audits of our internal control over financial reporting for each indicated year and preparation of a written consent for a Registration Statement on Form S-3 in 2022 filed by OraSure Technologies, Inc. +2 +During the fiscal years ended December 31, 2022 and 2021, KPMG was engaged to provide tax compliance, planning and consulting services. +PRE-APPROVAL PROCEDURES +The Audit Committee has adopted a practice of pre-approving all audit and non-audit services provided to the Company by our independent registered public accounting firm. The Chairperson of the Audit Committee has been delegated the authority to pre-approve audit and non-audit services having an aggregate value of up to $50,000 between meetings of the Audit Committee, provided that such pre-approval is communicated to the Audit Committee at its next scheduled meeting. All services by KPMG in 2022 and 2021 were approved in accordance with these practices. +COMPENSATION COMMITTEE MATTERS +The Compensation Committee assists the Board in developing and managing the compensation provided to executive officers of the Company and non-employee members of the Board. The Compensation Committee is responsible for developing and overseeing the implementation of the Company’s compensation philosophy and for setting executive compensation at levels that are sufficiently competitive so that the Company can attract, retain, motivate and reward high quality executives who can contribute to the Company’s success. +COMPENSATION PROCESSES AND PROCEDURES +Compensation for executives is established by the Compensation Committee in accordance with the compensation philosophy established under its charter as set forth in the CD&A Section of this Proxy Statement. In setting executive compensation, the Compensation Committee considers the Company’s and each executive’s performance against previously established objectives, internal pay equity, the compensation practices of the Company’s Peer Group, the Company’s industry position and general industry compensation data. The Compensation Committee periodically retains independent compensation consultants to review our executive compensation practices and to assist in establishing competitive compensation levels for our executives. +ANNUAL PERFORMANCE EVALUATIONS +On an annual basis, the Compensation Committee and other non-employee Directors evaluate the performance of the CEO, based on the overall performance of the Company. The CEO also evaluates the performance of the other NEOs against their respective predetermined performance objectives. Annual performance objectives for the NEOs are established at the beginning of the applicable year and generally include two parts: (1) the Company’s overall target financial objectives, and (2) individual objectives in the functional areas for which the executive is responsible. +Depending on the Company’s overall performance and the extent to which an executive achieves his or her individual objectives for a particular year, the executive will be rated as “Does Not Meet,” “Does Not Consistently Meet,” +22 +Table of Contents +“Meets Expectations,” “Exceeds Expectations” or “Outstanding.” On occasion, a blended rating such as “Meets/Exceeds” or “High Meets” will be used to indicate performance between the foregoing performance rating levels. The Compensation Committee uses the performance ratings and other factors to determine base salary adjustments, incentive cash bonuses and long-term incentive equity awards. Although this approach was also followed in evaluating Ms. Eglinton Manner’s performance for 2022, Ms. Eglinton Manner’s performance assessment was primarily based on the Company’s overall performance. +ROLE OF THE COMPENSATION COMMITTEE +The Compensation Committee is comprised of independent non-employee Directors who oversee our executive compensation program. Each year, the Compensation Committee determines the appropriate level of compensation for all NEOs other than the CEO, and in the case of the CEO, recommends to the Board the appropriate level of compensation for the CEO. As an initial guideline, the Compensation Committee sets the total direct compensation opportunity (base salary, annual incentive bonus target, and long-term incentive equity target) for each of our executive officers within a range around the 50th percentile of comparable medical diagnostics and healthcare companies. The variation of actual pay relative to the market data is dependent on the executive officer’s performance, experience, knowledge, skills, level of responsibility, potential to impact our performance and future success, and the need to retain and motivate strategic talent. +The Compensation Committee generally determines an executive officer’s compensation based upon the objectives of our executive compensation program. The Compensation Committee makes compensation recommendations to the Board for the CEO and approves decisions for the other NEOs after careful review and analysis of appropriate performance information and market compensation data. Compensation for the CEO is approved by the independent members of the Board of Directors. +Beyond determining and recommending (in the case of the CEO) specific compensation for the NEOs, the Compensation Committee works with the executive management team to review and adjust compensation policies and practices to ensure that they remain consistent with the Company’s values and philosophy, support the recruitment and retention of executive talent, and help the Company achieve its business objectives. The Compensation Committee also determines a market-based level of compensation for non-employee Directors. +ROLE OF THE CEO +The CEO provides performance assessments and recommendations to the Compensation Committee on the compensation for each executive of the Company. The CEO’s recommendations are based on her review of each executive’s performance, job responsibilities, importance to our overall business strategy, and our compensation philosophy. Although the CEO’s recommendations are given significant weight, the Compensation Committee retains full discretion when determining compensation. +ROLE OF THE COMPENSATION CONSULTANT +To assist in the review of executive compensation and to obtain information regarding market trends and governance best practices, the Compensation Committee engages independent executive compensation consultants to analyze our executive compensation structure and plan designs, and to assess whether our compensation program is competitive and supports our goal of aligning the interests of our executive officers with those of our stockholders. Such consultants also provide the Compensation Committee with the Peer Group and other market data that is discussed in the CD&A, which the Compensation Committee evaluates when establishing programs and features and determining compensation for executive officers. In connection with its 2022 compensation decisions, the Compensation Committee engaged Pay Governance LLC (“Pay Governance”) to provide market assessments of the target compensation for our executives and consult on the preparation of this Proxy Statement. +The Compensation Committee has the sole authority to approve any independent compensation consultant’s fees and terms of engagement. The Compensation Committee annually reviews its relationship with each consultant to ensure their independence. The process in 2022 included a review of the services Pay Governance provides, the quality of those +23 +Table of Contents +services, and the fees associated with those services during the fiscal year as well as consideration of the factors impacting independence that Nasdaq rules require and a review of Pay Governance’s independence policy. The Compensation Committee concluded that there were no conflicts of interest that prevented Pay Governance from serving as an independent consultant to the Compensation Committee on executive compensation matters. +COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION +Mara G. Aspinall, Michael Celano, James A., Datin, Eamonn P. Hobbs, Ronny B. Lancaster and David J. Shulkin, M.D., each served as members of the Compensation Committee during 2022. Each of Messrs. Celano, Lancaster and Hobbs resigned from the Board, with such resignations effective on November 8, 2022. Mr. Datin has served as Chairperson since Mr. Lancaster’s resignation became effective on November 8, 2022. None of these Directors has served or is currently serving as an officer or employee of the Company, nor have they engaged in any transactions involving the Company which would require disclosure as a transaction with a related person. There are no Compensation Committee interlocks between the Company and any other entity involving the Company’s or such entity’s executive officers or board members. +COMPENSATION COMMITTEE REPORT +The information contained in this report shall not be deemed to be “soliciting material” or “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that Section. This report shall not be deemed to be “incorporated by reference” into any document filed under the Securities Act or the Exchange Act, whether such filing occurs before or after the date hereof, regardless of any general incorporation language in such filing. +The Compensation Committee of OraSure Technologies, Inc. has reviewed and discussed with the Company’s management the CD&A, contained in this Proxy Statement. Based on that review and discussion, the Compensation Committee recommended to the Company’s Board of Directors that the foregoing CD&A be included in the Company’s 2022 Annual Report on Form 10-K Report and Proxy Statement for the 2023 Annual Meeting of Stockholders. +COMPENSATION COMMITTEE: +James A. Datin, Chairperson +Mara G. Aspinall +David J. Shulkin, M.D. +April 14, 2023 +24 +Table of Contents +EXECUTIVE OFFICERS +The table below provides information about the executive officers of the Company as of April 14, 2023. Officers of the Company hold office at the discretion of the Board. +Name +Age +Position +Carrie Eglinton Manner +49 +President and CEO +Kenneth J. McGrath +51 +Chief Financial Officer +Kathleen G. Weber +56 +Chief Product Officer +Carrie Eglinton Manner, CEO and Director +Carrie Eglinton Manner has been our President, CEO and a member of the Board since June 2022. Ms. Eglinton Manner brings more than 25 years of healthcare leadership and transformation expertise to the Company. Prior to joining the Company, Ms. Eglinton Manner was with Quest Diagnostics Inc. from January 2017 until June 2022 where she served as Senior Vice President, Advanced & General Diagnostics Clinical Solutions. In that role, she was responsible for bringing innovative diagnostic solutions to market in the areas of women’s health, neurology, oncology, cardiovascular, metabolic, endocrinology, infectious disease, and immunology testing services, as well as drug monitoring and toxicology. Ms. Eglinton Manner also led Quest’s pharmaceutical services, AmeriPath/Dermpath, and international businesses, as well as their molecular genetics team in pioneering next-generation sequencing innovation. Prior to Quest Diagnostics, Ms. Eglinton Manner served for 20 years in a variety of leadership roles at GE Healthcare, a division of General Electric (GE). Ms. Eglinton Manner has served as a director of Repligen Corporation since June 2020. Ms. Manner received a B.S. degree in mechanical engineering from University of Notre Dame. +Kenneth J. McGrath, Chief Financial Officer +Kenneth J. McGrath has served as our Chief Financial Officer since August 2022. Prior to joining the Company, Mr. McGrath served in various roles at Quest Diagnostics from January 2014 until July 2022, most recently as the Vice President, Finance. While in this position, he led Quest’s financial function for its clinical franchises, R&D, global markets, and information technology groups. Prior to his tenure at Quest, Mr. McGrath spent over 15 years at Johnson & Johnson, serving in various roles, including as the Senior Finance Director of Janssen R&D. Mr. McGrath began his career in 1993 as an engineer at Ford Motor Company. He holds a B.S. in mechanical engineering from the University of Notre Dame and an MBA from the Stephen M. Ross School of Business at the University of Michigan. +Kathleen G. Weber, Chief Product Officer +Kathleen G. Weber has served as our Chief Product Officer since November 2022. Previously, Ms. Weber served as our President of Molecular Solutions since December 2021. Prior to that, Ms. Weber served as our Executive Vice President, Business Unit Leader, Molecular Solutions at DNAG from January 2019 until December 2021 and as our Senior Vice President and General Manager, Consumer Products since joining us in November 2012 until December 2018. Prior to her time at the Company, Ms. Weber served in executive leadership roles at Pfizer, Johnson and Johnson, and Wyeth. Ms. Weber began her career in the finance industry at Chase Manhattan Bank (now known as JP Morgan Chase). Ms. Weber received a B.S. in business administration from Georgetown University and an M.B.A. from New York University’s Stern School of Business. +25 +Table of Contents +TRANSACTIONS WITH RELATED PERSONS +Since January 1, 2022 there have been no transactions with related persons that would require disclosure in this Proxy Statement. The Audit Committee is required to review and approve in advance all transactions with related persons involving the Company. The Audit Committee may approve a related party transaction if the transaction is on terms comparable to those that could be obtained in arms’ length dealings with an unrelated third party. The Audit Committee also reviews any public disclosures of a related party transaction contained in our SEC filings. These responsibilities are described in the Audit Committee’s charter, a copy of which is available on our website at www.orasure.com . +Information regarding employment, severance and retirement agreements between our executive officers and the Company is set forth in the Section entitled, “Employment Agreements and Potential Payments Upon Termination or Change of Control,” in this Proxy Statement. +26 +Table of Contents +COMPENSATION DISCUSSION AND ANALYSIS - TABLE OF CONTENTS +EXECUTIVE SUMMARY +28 +Overview +28 +2022 Performance +28 +2022 Business Highlights +30 +2022 NEO Compensation at a Glance +30 +Pay for Performance +31 +Compensation Governance Practices +32 +Say-on-Pay Results in 2022 and the Company’s Response +33 +Compensation Risk Assessment +33 +COMPENSATION PHILOSOPHY +33 +BENCHMARKING +34 +2022 EXECUTIVE COMPENSATION COMPONENTS +35 +Overview +35 +Pay Mix +35 +Compensation Components in Detail +36 +2022 Bonus Payments +41 +OTHER COMPENSATION +46 +Retirement Programs +46 +Perquisites and Other Compensation +46 +Potential Payments Upon Termination or Change of Control Pursuant to Employment Agreements +46 +Accounting and Tax Treatment of Compensation +46 +Compensation Recoupment Policy +47 +COMPENSATION TABLES - TABLE OF CONTENTS +Summary Compensation Table +48 +Grants of Plan-Based Awards +49 +Outstanding Equity Awards at December 31, 2022 +50 +Option Exercises and Stock Vested +52 +Retirement Benefits +52 +Nonqualified Deferred Compensation +53 +27 +Table of Contents +COMPENSATION DISCUSSION AND ANALYSIS +EXECUTIVE SUMMARY +Overview +This CD&A describes the material elements of the compensation of our NEOs and describes the objectives and principles underlying the Company’s executive compensation program, the compensation decisions we have recently made under this program and the factors we considered in making these decisions. +Our NEOs for 2022 who are covered in this CD&A include: +Name +Position +Carrie Eglinton Manner 1 +President and CEO +Nancy J. Gagliano 2 +Interim CEO +Stephen S. Tang 3 +Former President and CEO +Kenneth McGrath 4 +Chief Financial Officer +Scott Gleason 5 +Former Interim Chief Financial Officer, Current Senior Vice President Corporate Communications & Investor Relations +Agnieszka Gallagher 6 +Former Executive Vice President, General Counsel and Chief Compliance Officer +Lisa Nibauer 7 +Former President of Diagnostics +Kathleen G. Weber +Chief Product Officer +1 +Ms. Eglinton Manner was appointed as the President and CEO effective June 4, 2022. +2 +Effective April 1, 2022, Nancy J. Gagliano, M.D., M.B.A. was appointed to replace Dr. Tang as the Company’s Interim CEO. Dr. Gagliano resigned effective June 4, 2022 from her position as the Company’s Interim CEO. +3 +Dr. Tang served as President and CEO until March 31, 2022. +4 +Mr. McGrath was appointed as the Chief Financial Officer effective August 8, 2022. +5 +Mr. Gleason joined the Company in May 2021 as the Senior Vice President Corporate Communications & Investor Relations and assumed the role of Interim Chief Financial Officer in September 2021. Mr. Gleason served as the interim Chief Financial Officer until Mr. McGrath’s appointment on August 8, 2022 and served as our Principal Financial Officer until August 10, 2022. On March 15, 2023, Mr. Gleason notified the Company of his resignation, effective May 26, 2023, in order to pursue another opportunity. +6 +Ms. Gallagher resigned effective June 25, 2022. +7 +Ms. Nibauer resigned effective November 11, 2022. +2022 Performance +The following charts describe our consolidated financial performance during the last three fiscal years, expressed in dollars (thousands). +28 +Table of Contents +1 2020 operating loss includes $1.1 million of income associated with the change in the fair value of acquisition-related contingent consideration, and $393,000 of transaction costs associated with an acquisition in 2020. 2020 operating loss also reflects a significant investment in research and development activities associated with the development of COVID-19 testing products. 2021 operating loss includes $1.5 million of income associated with the change in the fair value of acquisition-related contingent consideration, a $5.7 million Employee Retention Credit under the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) and also reflects a significant investment to launch our InteliSwab ® rapid COVID-19 test including high inventory scrap expense associated with production and tech transfer issues and marketing and advertising expenses. 2022 operating loss includes a $17.1 million loss on impairment of certain manufacturing lines and goodwill. +In 2022, we delivered record revenue growing 66% over 2021 and at a 36% compound annual growth rate since the pre-pandemic period in 2019. Our growth over 2021 was driven primarily by $233.7 million of InteliSwab ® product sales. During 2022, we won two new federal government contracts to purchase our InteliSwab ® test. Our net loss and operating loss reflect the negative impact of an unfavorable product mix, increased severance costs associated with the termination of several executives, increased headcount, higher legal fees incurred associated with patent infringement, and the impairment charges of $17.1 million. In February we announced a corporate restructuring to combine the commercial and innovation teams across our Diagnostic and Molecular Solutions segments into one business unit, with sales, marketing, product development and research teams aligned across portfolios. This change is intended to accelerate innovation, enhance customer experience and result in operational synergies. +29 +Table of Contents +2022 Business Highlights +Business highlights from 2022 and the principal factors driving our financial performance are summarized below: +•  Total net consolidated revenues for the full year 2022 were $387.5 million, a 66% increase over 2021. +•  Total 2022 product and services revenues for our Diagnostics business were $303.7 million, an increase of 237% over 2021. This includes $233.7 million of InteliSwab ® revenues compared to $22.7 million in 2021. We first began to sell this product in August 2021. +•  Total 2022 product and services revenues for our Molecular Solutions business were $83.8 million, a decrease of 42% from 2021. The biggest contributor to the decline in revenues was lower molecular sample collection kits for COVID-19 sales as a result of the availability of antigen tests, the wider availability of vaccines, and lower public funding for PCR testing, and high inventory levels held by some of our customers. +•  Our Board of Directors explored and evaluated a broad range of strategic alternatives with the goal of maximizing value for stockholders. Ms. Eglinton Manner’s appointment as CEO came in tandem with a decision by the OraSure board to conclude its review of the strategic alternatives and for the Company to move forward under her leadership. Market conditions and the Board of Directors’ belief in the Company’s ability to further build upon recent operational successes with Ms. Eglinton Manner’s leadership were factors in the decision. +•  We recently signed a deal with Quest Diagnostics to serve as the preferred provider of saliva collection kits for Quest’s Genomic Sequencing Services Group’s test offerings. +•  We received FDA approval for a new packaging and labeling configuration for InteliSwab ® . The Company began shipping the new configuration in March 2023. The packaging changes are expected to drive per test cost savings of approximately $0.40 which includes the impact from lower shipping costs based upon the smaller packaging configuration which should reduce total truckloads by approximately 50%. +•  We received two new federal government contracts for InteliSwab ® . The first procurement contract runs through November 2023; and, under the terms of the award, the contract estimate is 18 million InteliSwab ® COVID-19 Rapid Tests, with a maximum award of 36 million tests and a guaranteed minimum award of 3.6 million tests. The second contract was awarded in December 2022 for production of an additional 3.2 million tests. +•  We were chosen as one of a group of manufacturers to win a Connecticut tender that allows the Company to compete for a total award of six million potential InteliSwab ® tests annually. +•  We are evaluating new assays, including infectious disease and respiratory applications, amongst others, to build upon our COVID-19 success, including both internally and externally via strategic partnership. +•  We are pursuing additional 510(k) clearances for the use of our proprietary collection kits in new applications in women’s health and oncology, similar to our recently announced co-clearance with Grifols. +•  Our OraQuick HIV ® Self-Test, in addition to our InteliSwab ® test, is now available for purchase directly via Amazon (in addition to other retailers) with eligibility for Prime free shipping. +2022 NEO Compensation at a Glance +NEO compensation for 2022 was as follows: +• +Base Salary : The base salaries paid to our senior management (including the NEOs) during 2022 increased from 2021 by 3% on average. Salary adjustments for 2022 were based on the performance of each executive and the Company during 2021, the marketplace compensation data provided to the Compensation Committee in 2021 by its compensation consultant and the Company-wide average salary merit increase budget of 3%. Generally, an executive’s annual salary adjustment tended to be at the higher end of the range budgeted by the Company if the executive received a performance rating of “Meets Expectations” or better and such executive’s pre-adjustment salary level was below the 50 th percentile for his or her position as reflected in marketplace and the Peer Group compensation data. +• +Annual Incentive Bonuses : Incentive cash bonus awards for 2022 performance were based on pre-established funding financial goals consistent with our operating plan, together with individual performance results. Payouts determined based on actual performance during 2022 ranged from 100% to 110% of target for each of the NEOs based on a combination of Company and individual results. +30 +Table of Contents +• +Long-Term Incentive Awards : Incentive equity awards granted to the NEOs (except for Ms. Eglinton Manner and Mr. McGrath who received onboarding equity awards) in February 2022 were based on the Company’s financial performance and/or each executive’s performance during 2021, as described under the “2022 Base Salaries” Section, above. The value of the awards ranged from 130% to 145% of each executive’s base salary. The NEOs received equity awards consisting of 50% time-vested RS and 50% PRUs. For the PRUs granted in 2022, a cumulative three-year revenue target for the period 2022-2024 with a relative TSR modifier was established as the performance criteria which was established in January 2023. See further discussion below in this CD&A. +• +Retention Awards: In January 2022, the company granted certain employees, including certain NEOs, retention awards consisting of a cash bonus amount or time-based restricted stock grants. The grants vest over a three-year period starting in January 2023, subject to continued employment with the Company. Mr. Gleason, Ms. Weber, and Ms. Nibauer each received $400,000, $500,000, and $500,000, respectively, of time-based restricted stock awards. +Additional information regarding NEO compensation for 2022 is provided below in this CD&A and in the accompanying tables, including the Summary Compensation Table (“SCT”) set forth below. +Pay for Performance +We follow a pay-for-performance approach in compensating executives. Our program pays executives for performance by rewarding the achievement of predetermined financial and/or strategic objectives. +A significant portion of each NEO’s annual compensation opportunity is provided in variable and long-term compensation that is intended to align such compensation with the long-term interests of our stockholders. Both our annual and long-term compensation are tied to the Company’s overall performance in a variety of ways, including our financial results and share price performance. A further discussion of our pay mix for the NEOs is set forth in the “Pay Mix” Section, below. +One aspect of our compensation program is the use of performance targets to incentivize management to achieve improved financial results on a year-to-year basis. For many years, annual financial objectives have been used to determine the amount of pool funding available to pay individual awards under our annual cash bonus plan. These objectives are generally set at levels intended to incentivize annual financial growth. A combination of financial and strategic objectives may also be considered, and in the past have been used, where the Compensation Committee and the Board desire to incentivize management to meet certain near-term strategic objectives which could help drive improved financial performance in a year with increased financial uncertainty. Each year the Compensation Committee and the Board evaluate whether financial objectives, strategic objectives, or some combination thereof, would provide the most appropriate near-term incentives for our NEOs to achieve improved financial performance. +In addition, for the past several years we have followed a policy of granting annual equity awards to executives that consist of 50% PRUs and 50% time-vested RS. The PRUs will only vest if (i) the NEO remains employed by the Company for three years following the date of grant and (ii) the performance criteria determined by the Compensation Committee and the Board are met. The time-vested RS portion of the award vests in equal annual installments over the three-year period following the grant date, subject to the NEO’s continued employment by the Company. For the PRUs granted in 2022, a cumulative three-year revenue target for the period 2022-2024 with a relative TSR modifier was established as the performance criteria in January 2023. The delay in defining the performance criteria was a result of the board’s exploration and evaluation on the strategic alternatives to maximize shareholder value, the board’s focus on hiring new leadership including the Company’s CEO, Ms. Carrie Eglinton Manner, who joined the company in June 2022 and Mr. McGrath, the Company’s CFO, who joined the company in August 2022, the complexity in forecasting COVID related revenues due to the volatility in demand, and the change in the strategic direction of the Company under the leadership of its new CEO. As a result, the performance stock units granted in 2022 do not have a grant date fair value as of December 31, 2022 in accordance with U.S. GAAP accounting, ASC Topic 718, Compensation – Stock Compensation . +We believe the performance targets in the PRUs and the three-year service periods applicable to both the RS and PRU awards complement the short-term incentives in our annual bonus plan. We also believe the combination of the structure of our annual bonus plan and the structure of our equity award policy appropriately incentivize management to deliver substantially improved financial performance both on an annual basis and over a longer term period and help drive long-term growth in stockholder value. +31 +Table of Contents +The Compensation Committee applied no positive discretion in determining performance and payouts for our NEOs. +Compensation Governance Practices +We are committed to maintaining good corporate governance and practices. As a result, and in response to input from stockholders, the Compensation Committee and the Board have adopted a number of changes over the past several years to specifically respond to stockholder concerns and better align our compensation program with performance. The most significant of these changes was the adoption of PRUs for 50% of the value of annual long-term equity awards for our executives. These changes and certain other important aspects of our compensation practices are summarized below: +Performance Mix – The vast majority of our NEOs’ compensation is performance-based. For example, for our NEOs other than our former CEO, 55% of their aggregate annual compensation consists of performance-based compensation. +Diversified and Performance Based Portfolio – Our executive compensation consists of a mix of cash/equity, fixed/ variable and short-term/long-term compensation. +Performance Vested Equity – 50% of our NEOs’ annual equity awards consist of PRUs that will not vest until three years after the grant date and only if certain performance measures are met during the three-year period. +Long-Term Focus – Equity awards are subject to long-term vesting requirements, with time-vested RS vesting over 3 years. PRUs also vest only after three years. Structuring our equity awards in this manner helps align the interests of our executives with the long-term interests of our stockholders. +Target Bonus Objectives – Our annual bonus pool is funded based on the achievement of annual financial objectives, strategic objectives or a combination thereof, in order to incentivize management to achieve improved financial performance on a year-over-year basis. +Limited Bonus Pool Discretion – The aggregate bonus pool funding for annual cash bonuses is determined pursuant to a plan funding formula tied to the Company’s achievement of specific financial objectives. The Board and Compensation Committee can make discretionary adjustments to the pool, but such adjustments are limited to +/- 10% of the pool amount determined under the plan’s self-funding formula. In 2022, the Compensation Committee and Board included a condition that the annual incentive bonus pool funding may be further adjusted downward based on profitability and cash liquidity needs of the Company. +Balanced Performance Metrics – Variable compensation is based on a combination of corporate and individual performance, measured over varying timeframes to help ensure balanced incentives for executives. +Change-in-Control Severance and Tax Gross Ups – Our policy is that employment agreements with our executives provide for “double trigger” change-in-control severance rather than “single trigger” change-in-control severance and do not provide for a 280G income tax gross up. +Strong Stock Ownership and Retention Conditions – We have implemented stock ownership requirements of six (6) times salary for our President and CEO, two (2) times salary for our Chief Financial Officer and one (1) times salary for other NEOs. +Prudent Benchmarking – The total compensation paid to our executives is targeted at the 50 th percentile of our Peer Group of comparable companies based on achievement of performance objectives. We use a Peer Group consisting of companies in the medical diagnostic and healthcare industries comparable in size to the Company based on total revenues and market value. +Independent Compensation Consultants – The Compensation Committee regularly utilizes independent compensation consultants to provide compensation governance, design and benchmarking advice. During 2022, the Compensation Committee engaged Pay Governance as its independent consultant. +Recoupment Policy – The Company maintains a compensation recoupment or “clawback” policy, under which we will seek to recover excess compensation paid to an executive if our financial statements are restated due to misconduct by that executive. +No Repricing – Our LTIP prohibits both the repricing and repurchase of underwater stock options or other equity awards without stockholder approval. +No Perquisites – As a general matter, we do not provide executives with any perquisites that are not offered to all employees of the Company. +Risk Review Process – We periodically assess the risks associated with our compensation programs. +32 +Table of Contents +No Hedging – Our policy prohibits Directors and NEOs from engaging in hedging activities with respect to our stock. +No Pledging – Our Directors and NEOs are not permitted to pledge our stock. +Confidentiality/Non-Compete Agreements – Our NEOs are subject to confidentiality and non-compete agreements. +Say-on-Pay Results in 2022 and the Company’s Response +At our 2022 Annual Meeting, stockholders were asked to vote on an advisory (non-binding) basis on the compensation paid to our NEOs for 2021. We obtained strong stockholder support for our NEO compensation for 2021 with approximately 97% of stockholder votes cast in favor of our “Say-on-Pay” or SOP resolution. We routinely solicit feedback from our large institutional investors and index funds on corporate governance issues. Feedback that we have received over the past several years has consistently supported our historical compensation designs and practices and for this reason we have made limited changes. +We believe our stockholder engagement has been and continues to be beneficial for the Company and our stockholders. The feedback we received reaffirms that the compensation changes we made in recent years were responsive to stockholder concerns and our executive compensation is strongly aligned with performance. Based on this feedback, no material changes to our executive compensation program were made, although the Board intends to consider the specific stockholder feedback received in making future compensation decisions. We also intend to continue ongoing dialogue with our stockholders to ensure that our executive compensation programs are well understood by all stakeholders and that we remain responsive to stockholder concerns. +Compensation Risk Assessment +Management periodically conducts a risk assessment of the Company’s compensation policies and practices, including its executive compensation program. In its review, management considers the attributes of the Company’s policies and practices and other factors, including: +• +The mix of fixed and variable compensation opportunities; +• +The balance between annual and long-term performance opportunities; +• +The corporate and individual performance objectives established for annual and long-term incentive compensation; +• +The internal controls and procedures in place to mitigate risks facing the Company, including the Company’s “clawback” policy and stock ownership guidelines; and +• +The risk that unintended consequences could result from various aspects of the Company’s compensation policies and practices. +Based on its consideration of the foregoing, management believes that the Company’s policies and practices are designed with the appropriate balance of risk and reward in relation to the Company’s overall business strategy and do not incentivize employees to take unnecessary or excessive risks. The Company has also concluded that any risks arising from the Company’s compensation policies and practices are not reasonably likely to have a material adverse effect on the Company. +COMPENSATION PHILOSOPHY +The primary objectives of our compensation program for executive officers are to: +Set compensation opportunities at levels sufficient to attract and retain high quality executives, to motivate them to contribute to our success and to reward them for performance. +Ensure the compensation opportunities provided align the interests of executives with the interests of our stockholders. +Focus our executives on both short and longer-term individual and Company priorities established by the Board and appropriately reward them for performance against these objectives. +33 +Table of Contents +The total direct compensation provided to each executive consists of an annual base salary, an annual incentive cash bonus and long-term incentive equity awards. The amount of the incentive cash bonus and the size of annual incentive equity awards are variable and depend on an executive’s and the Company’s achievement of predetermined financial and other objectives. As a result, a substantial portion of each executive’s annual compensation is based on performance. +BENCHMARKING +Among various other internal and external considerations, the Compensation Committee uses the practices and policies at other comparable medical diagnostic and healthcare companies as one piece of context in annually assessing the reasonableness and appropriateness of our executive compensation programs. With the assistance of Pay Governance, an independent compensation consultant engaged by the Compensation Committee, we annually review and select a Peer Group of companies using criteria primarily based on industry and company size. +No changes were made to the peer group during 2022. The following table provides information about the Peer Group used by the Compensation Committee in assessing the competitiveness of executive compensation (all dollars in millions): +Company 1,2 +FY2022 Revenue 2 +Primary Industry +AngioDynamics, Inc. +$ +316 +Health Care Equipment +AtriCure, Inc. +$ +330 +Health Care Equipment +Atrion Corporation +$ +184 +Health Care Supplies +Avanos Medical, Inc. +$ +820 +Health Care Supplies +BioLife Solutions, Inc. 3 +$ +155 +Life Sciences Tools and Services +Cerus Corporation +$ +162 +Health Care Supplies +CONMED Corporation +$ +1,045 +Health Care Equipment +Haemonetics Corporation +$ +993 +Health Care Supplies +Heska Corporation +$ +257 +Health Care Equipment +Lantheus Holdings, Inc. +$ +935 +Health Care Supplies +Meridian Bioscience, Inc. +$ +333 +Health Care Supplies +Merit Medical Systems, Inc. +$ +1,151 +Health Care Supplies +Mesa Laboratories, Inc. +$ +184 +Health Care Equipment +NanoString Technologies, Inc. +$ +127 +Life Sciences Tools and Services +Neogen Corporation +$ +527 +Health Care Supplies +Quanterix Corporation +$ +106 +Life Sciences Tools and Services +Standard BioTools Inc. +$ +98 +Life Sciences Tools and Services +Surmodics, Inc. +$ +100 +Health Care Equipment +Summary Statistics: +25th Percentile +$ +157 +Median +$ +287 +75th Percentile +$ +747 +OraSure Technologies, Inc. +$ +387 +Health Care Supplies +Percentile Rank +66% +1 +Data collected from Standard & Poor’s Capital I.Q. database. +2 +Excludes Natus Medical and Quidel due to recent M&A activity in 2022. Fluidigm rebranded to Standard BioTools. +3 +Reflects most recently available four quarters of revenue; full FY2022 revenue not available as of 3/15/2023. +The Compensation Committee seeks to set total direct compensation opportunity levels for each executive near the fiftieth (50 th ) percentile of amounts paid by the Peer Group of companies for performance consistent with the Company’s target financial and other business plans for the applicable year. Use of the fiftieth (50 th ) percentile is intended as a market-based reference and not as a strict target or limit. As a result, the total direct compensation opportunity and the value of specific compensation components for individual executives may fall below or exceed the fiftieth (50 th ) percentile depending on the experience and individual performance of the executive, the criticality of his or her role, the executive’s contribution to our business, and other factors. +34 +Table of Contents +In preparing its 2022 competitive assessment of executive compensation, Pay Governance compared the compensation of our NEOs with the pay practices of similar roles at companies within the Peer Group and using data for comparable positions reported in the 2021 Radford Global Life Sciences Survey. Since compensation market data can be volatile from year to year, the Compensation Committee considers both samples to ensure a thorough understanding of the competitive market. +2022 EXECUTIVE COMPENSATION COMPONENTS +Overview +Our compensation program consists of the following components: +Compensation +Form of +Compensation +Purpose +Base Salary +Cash +Base salaries provide fixed compensation necessary to attract and retain key executives. +Annual Incentive Bonus Awards +Cash +Annual incentive bonus awards provide performance-based incentives to our executives to achieve both Company-wide financial and strategic goals and the executives’ individual performance objectives. +Long-Term Incentive Awards +Performance-Vested Restricted Units (PRU) and Time-Vested Restricted Stock (RS) +The largest component of our executive compensation is paid in equity. Annual LTIP awards for the NEOs consist of 50% PRUs and 50% time-vested RS in order to provide a strong link between pay and performance. +Benefits +401(k) Plan +Health and Welfare Benefits +Retirement and health and welfare benefits provide a complete compensation package that is competitive with the market and addresses the needs of all employees and their families, including our executives. +Employment Agreements +Cash severance and accelerated equity vesting +Severance and accelerated equity vesting are provided to our executive officers upon qualifying terminations only in order to ensure continued focus on the strategic matters of the Company during potentially uncertain times. +Pay Mix +We follow a pay-for-performance approach to executive compensation, with a significant portion of our executives’ compensation consisting of annual incentive cash bonuses and long-term equity awards that are based on the executives’ and the Company’s achievement of predetermined performance objectives. +35 +Table of Contents +The following charts illustrate the relative proportion of 2022 base salaries compared to the performance-based elements of our executive compensation for Ms. Eglinton Manner and the other NEOs. +Approximately 85% of Ms. Eglinton Manner’s aggregate compensation and 55% of the other NEOs’ aggregate +compensation for 2022 consisted of performance-based compensation. +Compensation Components in Detail +2022 Base Salaries +Annual base salaries paid in 2022 to our NEOs were established by the Compensation Committee at the beginning of 2022 based on a review of the Company’s performance and the individual contributions of each officer compared to pre-established performance objectives for 2021. The Compensation Committee also considered the Company’s budget for expected salary adjustments and salary levels for comparable roles in the annual benchmarking review prepared by the Committee’s independent compensation consultant. +Based on these factors, the Compensation Committee approved an annual base salary increase for our senior management averaging approximately 3%. Individual salary increases for 2022 were determined by using the following guidelines: +Performance Rating +Merit Increase Range +Outstanding +5.0% - 7.0% +Exceeds Requirements +3.0% - 4.0% +Meets Requirements +2.0% - 2.5% +Does Not Consistently Meet +1.0% - 1.5% +Does Not Meet Requirements +0% +The NEOs were evaluated based on individual objectives established for their respective positions. +36 +Table of Contents +As a result of these performance ratings, the Compensation Committee approved the 2022 salary levels set forth below for the NEOs. +NEO +2021 +Performance +Rating +2021 +Salary +2022 +Salary +% +Increase +Carrie Eglinton Manner +President and CEO +N/A +N/A +$700,000 1 +N/A +Nancy J. Gagliano +Interim CEO +N/A +N/A +$670,000 2 +N/A +Stephen S. Tang, Ph.D. +Former President and CEO +Low Meets +$667,921 +$667,921 +0% +Kenneth McGrath +Chief Financial Officer +N/A +N/A +$475,000 1 +N/A +Scott Gleason +Interim Chief Financial Officer, Senior Vice President, Corporate +Communications & Investor +Relations +Exceeds +$400,000 3 +$416,000 +4% +Agnieszka Gallagher +Former Executive Vice President, General Counsel, Chief Compliance Officer +High Meets +$465,000 3 +$465,000 +0% +Lisa Nibauer +Former President of Diagnostics +Outstanding +$422,300 +$460,000 4 +9% +Kathleen G. Weber +Chief Product Officer +Outstanding +$416,246 +$460,000 4 +11% +1 +Represents annualized salary for Ms. Eglinton Manner and Mr. McGrath because they joined the Company in June 2022 and August 2022, respectively. +2 +Represents annualized salary for Dr. Gagliano who was appointed as Interim CEO in April 2022 and resigned from the her position effective June 2022. +3 +Represents annualized salary for Mr. Gleason and Ms. Gallagher because they joined the Company in May 2021 and November 2021, respectively and, therefore, were employed for only a portion of 2021. Furthermore, Mr. Gleason’s salary includes the supplemental stipend he received while performing Interim CFO duties. +4 +Represents a 3% merit increase plus adjustments in salary related to the promotion of Ms. Nibauer and Ms. Weber to President of the Diagnostic and Molecular Business Units, respectively. +2022 Annual Incentive Cash Bonuses +Annual cash bonuses are included as part of executive compensation because the Compensation Committee and Board believe that a significant portion of each executive’s compensation should be structured as a variable incentive focused on short-term priorities relating to both the overall performance of the Company and the individual contributions of the executive. On an annual basis, the Compensation Committee has adopted, with approval of the Board, the OraSure Technologies Incentive Plan (“OTIP”), which is intended to be the principal vehicle for incentive cash bonus awards. +When establishing the terms of the OTIP, the Compensation Committee and the Board evaluate which funding objectives will provide the most appropriate incentives for our NEOs to improve our annual financial performance. In recent years, bonus pool funding has been based solely on the achievement of annual financial objectives. Strategic objectives may also be (and in the past have been) used in combination with annual financial objectives where there is greater financial uncertainty facing the Company and the Compensation Committee and the Board desires to incentivize our NEOs to take near-term strategic steps required to drive annual financial growth and stability. In general, the Compensation Committee and the Board will choose those funding objectives, whether they be financial, strategic, or a combination thereof, which in their judgement provide the most appropriate incentive for management to drive improved financial performance on a year-over-year basis. +37 +Table of Contents +Where funding is based on the achievement of financial objectives, if the Company meets the Target levels for all funding objectives, the pool is initially funded at 100% of the aggregate projected bonuses for all participants in the Incentive Plan adjusted to reflect a normal range or mix of performance assessments (i.e., Outstanding, Exceeds, Meets, Does Not Meet), which increases or decreases the total amount of individual bonuses to be paid to participants. Unless circumstances require otherwise, the pool generally is initially funded at 50% of the aggregate projected bonuses if all of the Threshold levels are met and at 100% of the aggregate projected bonuses if all of the Target levels are met. High and Maximum objective levels may also be set, which would result in funding up to 150% and 200%, respectively, of the aggregate projected bonuses. A linear interpolation of the amount of funding for each target objective is made where a particular performance is between the pre-established performance levels. To the extent the performance level for a funding objective is below the Threshold level, generally there is no funding for that particular objective. +The amount of the cash bonus pool is determined by the Compensation Committee and recommended for Board approval. The Compensation Committee and Board also retain discretion to increase or decrease the size of the pool in order to reflect differences in the mix of actual performance assessments of the participants or market conditions affecting the Company or other factors. However, the Compensation Committee and Board have limited their ability to make discretionary bonus pool adjustments to +/- 10% of the pool size otherwise determined pursuant to the funding formula under the Incentive Plan. In 2022, the Compensation Committee and Board included an additional condition that payout may be further adjusted downward based on profitability and cash liquidity needs of the Company. +The cash bonus pool is used to pay bonuses not only to the Company’s NEOs, but also to all other officers and certain higher-level employees of the Company and its subsidiaries. +Individual payments from the bonus pool to executives are generally calculated using a formula that considers the size of the bonus pool, the executive’s achievement of individual performance objectives, the number of individuals participating in the Incentive Plan at the time bonuses are awarded and the executive’s target bonus percentage. Bonuses are paid based on an assessment of each executive’s performance for the applicable year, using targets expressed as a percentage of the executive officer’s annual base salary. +If an executive officer has met or exceeded his or her individual performance objectives and/or the Company’s expectations for the applicable year, he or she may be eligible to receive up to 120% of his or her target bonus, depending on the size of the bonus pool. The Compensation Committee and Board retain the discretion to adjust an individual executive’s performance evaluation and to increase or decrease the bonus paid to such individual to reflect the specific contributions of that executive, the Company’s overall performance, market conditions or other circumstances. The following guidelines are used to determine the multiple of an executive’s target bonus, or individual performance factor, to be used to calculate a bonus payout based on the executive’s performance rating for the applicable year: +Performance Rating +% Target Bonus +Outstanding +110% - 120% +Exceeds +100% - 110% +Meets +90 - 105% +Needs Improvement +0% - 90% +Unsatisfactory +0% +The Compensation Committee recommends for Board approval any bonus award for the CEO based on an assessment of the Company’s overall performance. The CEO recommends individual awards for the other executive officers for approval by the Compensation Committee based on an assessment of each executive’s performance against his or her applicable individual performance objectives. The Compensation Committee and Board have the right, in their sole discretion, to reject any or all of the recommended bonus awards, even if the bonus pool has been funded and any or all applicable performance criteria have been satisfied, based on the business conditions of the Company or other factors deemed relevant by the Compensation Committee or the Board. +In establishing the 2022 OTIP, the Board and Compensation Committee decided that the amount of bonus pool funding should be based on the achievement of three financial objectives: consolidated revenues, adjusted operating income, and an executive team additional factor, which impacts the Company’s NEOs, other officers, and certain high-level employees, based on relative share performance compared to the NASDAQ Healthcare index. Our adjusted +38 +Table of Contents +operating income is defined as our U.S. GAAP operating income adjusted for certain non-cash or non-recurring expenditures including: stock compensation, amortization of acquisition-related intangible assets, inventory reserves for excess levels, impairment loss, transformation-related expenses, severance expense associated with executives, strategic alternative costs, governmental grant accounting, and the change in fair value of acquisition-related contingent consideration. +Under the 2022 Incentive Plan, Threshold, Target and Maximum performance levels were established for the financial objective to be used to fund the bonus pool. The Target levels for the objective were set at the performance reflected in our Operating Plan or budget for 2022. The Threshold levels were set at a range of 73%-80% of the Target levels and the Maximum levels were set at 118%-130% of the Target levels. +The following sets forth the financial objectives and potential bonus pool funding amounts (dollars in millions) under the 2022 Incentive Plan: +Financial Objectives/Weight +Threshold +Target +Maximum +Actual +% +Payout +Consolidated Net Revenues (50%) +$310.0 +$387.6-$426.5 +$503.9 +$387.5 +99.97% +Pool funding $ (% of Target) +$2.3 (80%) +$2.85 (100%) +$5.7 (200%) +Adjusted Operating Income (50%) +$10.2 +$37.6 - $61.7 +$100.6 +$21.7 +88.42% +Pool funding $ (% of Target) +$2.3 (80%) +$2.85M (100%) +$5.7M (200%) +Relative Share Performance (RSP) factor +See below ++10% +Calculated Final Payout +104.2% +Actual Final Payout +100% +As noted above, an additional RSP factor for the executive team was established. The RSP would further impact the bonuses of the Company’s NEOs, other officers, and certain high-level employees based on a comparison of the Company’s relative stock performance to the relative Nasdaq Healthcare performance from June 6, 2022 to December 31, 2022, the period under the leadership of Ms. Eglinton Manner, as depicted in the table below. +Relative Share Performance factor +Bonus Impact +Relative performance -10% compared to the NASDAQ Healthcare Index from June 6 to December 31, 2022 +-10% of total bonus +Relative performance +10% / -10% compared to the NASDAQ Healthcare Index from June 6 to December 31, 2022 +0% impact +Relative performance +10% compared to the NASDAQ Healthcare Index from June 6 to December 31, 2022 ++10% of total bonus +During 2022, we recorded revenues totaling $387.5 million and adjusted operating income of $21.7 million. The revenue level delivered almost exactly at the lower range of the Target performance level. The adjusted operating income fell below the Target performance level but above the Threshold performance level. The Company’s stock performance during the period of June 6, 2022 to December 31, 2022 exceeded by more than 10% of the related performance of the NASDAQ Healthcare index during the same period. Adding 10% to the executive bonus pool would have resulted in a payout of 104.2% of Target. Due to the Company’s performance, no adjustment was made to the bonus pool, and funding amounted to 100% of target or $5.7 million. +39 +Table of Contents +The final bonus pool amount was approved by the Compensation Committee and the full Board and was used to pay bonuses to the Company’s NEOs and other members of our management team. The specific target payouts for NEO bonuses for 2022 (expressed as a percentage of annual base salary) are shown below: +Title +Target Payout +Opportunities +(% of Salary) +CEO +100% +Chief Financial Officer, Chief Product Officer, Business Unit President +50% +Executive Vice President and General Counsel +45% +Senior Vice President +35% +In January 2023, the Compensation Committee authorized the payout of individual bonus awards to executive officers from the bonus pool for 2022 based on the target bonus amounts described above and an assessment of each officer’s performance during 2022 against pre-established performance objectives (except for Ms. Eglinton Manner whose assessment was based on the Company’s overall performance). The calculation of individual bonus awards was based on a formula that adjusted the foregoing target payments for both the executives’ individual performance during 2022 and the degree to which the final approved bonus pool funding exceeded the Target funding amounts under the plan formula. +In evaluating Ms. Eglinton Manner’s and the Company’s performance, the Compensation Committee recognized that management executed the first part of its strategic transformation, delivering record revenue performance along with the turnaround to positive profitability in the second half of 2022. Consolidated revenues were $387.5 million in 2022, representing a 66% increase over 2021. The Compensation Committee noted that this increase was primarily driven by increased sales of its InteliSwab ® COVID-19 Rapid Test, while also growing its core diagnostics (non-InteliSwab ® ) portfolio 4%, which more than offset its molecular solutions revenue decline. With an imperative to ramp-up manufacturing of InteliSwab ® for the year, the company improved quality yield for the product and increased its gross margin more than 30 percentage points through the course of the year. Additionally, the company built upon the strength of its government contracts, winning 2 additional federal RFPs for InteliSwab ® in 2022. The Compensation Committee further noted that the company delivered positive cash flow from operations a quarter earlier than it had guided – in Q3 vs. Q4 of 2022. Furthermore, the company strengthened its foundation organizationally by restructuring from two business units into One OraSure, hiring and retaining a strong executive leadership team, eliminating redundancy at all levels, driving efficiency while eliminating waste, and cutting significant operating cost overall. +In view of the foregoing, the Compensation Committee determined that Ms. Eglinton Manner should receive a Exceeds performance rating for 2022. The remaining NEOs were evaluated based on individual objectives established for their respective positions. +Using these performance ratings, the Compensation Committee next considered individual performance factors to adjust the bonuses for Ms. Eglinton Manner, the other NEOs and the other participants in the 2022 Incentive Plan to reflect their performance assessments for 2022. As a final step, the Compensation Committee adjusted the bonuses further by a pool funding factor reflecting the amount by which pool funding exceeded Target funding amounts under the plan formula. +Using the approach described above, a final 2022 incentive cash bonus was calculated for Ms. Eglinton Manner, representing approximately 110% of her target bonus, as follows: +2022 Annualized +Base Salary +Target +Bonus% +2022 Individual +Performance +Factor +2022 +Bonus 1 +X +X += +$700,000 +100% +110% +$770,000 +1 +Ms. Eglinton Manner’s bonus was not prorated in accordance with her employment agreement. +40 +Table of Contents +This same formula was used to calculate the 2022 bonus awards for all other NEOs, as follows: +2022 Bonus Payments +NEO 1 +2022 +Salary +Bonus +Target +(% Salary) +2022 +Performance +Rating +2022 +Individual +Performance +Factor +2022 +Bonus +Kenneth McGrath +Chief Financial Officer +$475,000 +50% +Exceeds +110% +$261,250 +Scott Gleason +Interim Chief Financial Officer, Senior Vice President, Corporate Communications & Investor Relations +$335,000 +35% +Meets +100% +$117,250 +Agnieszka Gallagher +Former Executive Vice President, General Counsel, Chief Compliance Officer +$465,000 +45% +N/A +N/A +$209,250 +Lisa Nibauer +Former President of Diagnostics +$460,000 +50% +N/A +N/A +$198,493 +Kathleen G. Weber +Chief Product Officer +$460,000 +50% +Meets +105% +$241,500 +1 +Dr. Gagliano and Dr. Tang were not eligible to receive a 2022 bonus award. Bonuses received by Ms. Gallagher and Ms. Nibauer were paid in accordance with their respective separation agreements +2022 Long-Term Incentive Equity Awards +An additional way that we promote the long-term growth of the Company and align the interests of our executives with those of our stockholders is by compensating executives with equity in the Company that vests over a multi-year period and in part only on achievement against certain performance expectations. To accomplish this, the Compensation Committee administers the Company’s LTIP pursuant to which grants of time-vested restricted shares (RS) and performance-vested restricted units (PRUs) are made to executive officers. +Incentive equity awards under the LTIP are made on an annual basis, and are discretionary and subject to approval by the Compensation Committee and/or the Board. Awards to individual participants under the LTIP are based on an evaluation of a number of factors, including: +• +Performance of the participant for the applicable year; +• +The participant’s level of responsibilities and relative contribution to the Company’s business; +• +A competitive assessment of awards at Peer Group companies; +• +History of equity awards to the participant; and +• +Other factors deemed relevant by the Compensation Committee and/or the Board. +Each participant’s individual performance for the applicable year is evaluated against his or her individual performance objectives for that year, except for our CEO who is evaluated based on total Company performance. A “Meets Expectations” performance is typically the threshold requirement to receive an equity award under the LTIP. Awards below this performance level may be considered on an exception basis at the discretion of the Compensation Committee and/or the Board. +41 +Table of Contents +The value of potential incentive equity awards that could have been granted in 2022 under the LTIP (expressed as a percentage of annual base salary) based on performance during 2021, are summarized below: +2022 LTIP Award Ranges (% of salary) +Performance +Position +Lower End +Target +Maximum +President/CEO +Market +Assessment +300 +% +350 +% +Chief Financial Officer +105 +% +140 +% +175 +% +EVP, Business Unit Presidents, General Counsel +95 +% +125 +% +155 +% +Other SVPs +70 +% +100 +% +130 +% +The percentages set forth above were established at levels that the Compensation Committee believed represented an appropriate long-term incentive compensation value for each executive, based on the results of the benchmarking review prepared by its independent consultant. Once the aggregate dollar value of an award has been established by applying the Compensation Committee approved award percentage to a participant’s base salary, the value is converted into shares or units based on a valuation of the restricted stock and restricted unit portions of the award using the average of the high and low stock price on the grant date as reported on the Nasdaq Stock Market. +Under the LTIP, 50% of an executive’s total equity award consists of PRUs that will not vest until three years after the grant date and only if certain performance measures are met during that three-year period. The awards approved for grant by the compensation committee in 2022 incorporate one performance metric: cumulative revenues during the three-year period beginning with 2022, and are further subject to a modifier of +/- 15% based on relative TSR against the TSR of the NASDAQ Healthcare Index used by the Board and Committee for executive compensation benchmarking purposes. As discussed above, the metrics for the 2022 awards were established and approved by the compensation committee in January 2023. The delay in defining the performance criteria was a result of the board’s exploration and evaluation on the strategic alternatives to maximize shareholder value, the board’s focus on hiring new leadership including the Company’s CEO, Ms. Carrie Eglinton Manner, who joined the company in June 2022 and Mr. McGrath, the Company’s CFO, who joined the company in August 2022, the complexity in forecasting COVID related revenues due to the volatility in demand, and the change in the strategic direction of the Company under the leadership of its new CEO. As a result, the performance stock units granted in 2022 do not have a grant date fair value as of December 31, 2022 in accordance with U.S. GAAP accounting, ASC Topic 718, Compensation – Stock Compensation. +OraSure Relative TSR Performance vs NASDAQ +Healthcare Index TSR +PRU Payout Modifier 1 +Less than 85% +85% +85% - 90%, inclusive +Equal to the Relative TSR +90% - 110%, exclusive +100% +110% - 115%, inclusive +Equal to the Relative TSR +Greater than 115% +115% +1 +To the extent the relative TSR falls in between 85% and 90%, or between 110% and 115%, the TSR modifier shall be determined using linear interpolation. +The remaining 50% of each executive’s incentive equity award consists of grants of time-vested RS that vest in equal annual installments over a three-year period. These vesting restrictions serve to promote the Company’s long-term growth by restricting executives’ ability to realize short-term gains from their awards. The Compensation Committee believes the terms of its incentive equity awards to executives are competitive with the terms of equity awards offered at comparable medical diagnostics and healthcare companies. +The structure of the equity awards reflects market-based good governance practices as well as historical input from our stockholders reflecting that a meaningful portion of the equity awards should have performance-based vesting. We believe 50% is a meaningful portion and is consistent with or exceeds the performance orientation of our Peer Group. +42 +Table of Contents +The adoption of performance-based vesting conditions with a three-year service requirement for 50% of an executive’s annual equity award substantially strengthens the link between pay and performance and creates an appropriate long-term incentive for our executives. At the same time, the use of time-based vesting conditions for the remaining 50% of each award achieves the equally important goal of share ownership/accumulation that directly promotes alignment with stockholders and further supports executive retention. +Overall, the Compensation Committee and Board believe that our approach represents a balanced performance-based approach to our executive compensation program that is appropriate for our Company, directly responds to feedback from our stockholders, and is consistent with executive pay governance best practices. +Equity awards are generally made by the Compensation Committee each year as part of the normal annual compensation cycle. The awards for a particular year generally occur in late January, early February, or early March of the following year after the Company’s full year financial results are known and performance evaluations for the executive officers have been prepared. Equity awards approved by the Compensation Committee for the CEO are then reviewed and approved by the Board. In addition to the annual equity awards, the Compensation Committee may approve equity awards for newly hired officers or in recognition of an executive’s promotion or expansion of responsibilities. These latter grants may have vesting or other terms that differ from the terms generally approved for annual equity awards. Notwithstanding the terms of the LTIP, equity awards are made at the discretion of the Compensation Committee or Board. +Effective February 1, 2022, the Compensation Committee approved equity awards for the NEOs under the LTIP based on the performance evaluations of such officers for 2021, as summarized below. A description of the basis for each of the NEO’s 2021 performance evaluation is set forth above under the Section entitled, “2022 Base Salaries,” in this CD&A. +The following summarizes the equity awards provided to the NEOs during 2022 under the LTIP: +Executive Officer +2021 +Performance +Assessment +Time Vested +Restricted Stock +Performance-Vested +Restricted Units 5 +Carrie Eglinton Manner 1 President and CEO +N/A +325,932 Shs +325,932 Shs +Nancy J. Gagliano 2 Interim CEO +N/A +114,074 Shs +N/A Shs +Stephen S. Tang, Ph.D. Former President and CEO 3 +Low Meets +94,234 Shs +N/A +Kenneth McGrath 4 Chief Financial Officer +N/A +131,883 Shs +N/A +Scott Gleason +Interim Chief Financial Officer, Senior Vice President, Corporate Communications & Investor Relations +Exceeds +29,345 Shs +29,345 Shs +Agnieszka Gallagher Former Executive Vice President, General Counsel, Chief Compliance Officer +High Meets +38,050 Shs +38,050 Shs +Lisa Nibauer +Former President of Diagnostics +Outstanding +34,556 Shs +34,556 Shs +Kathleen G. Weber Chief Product Officer +Outstanding +34,061 Shs +34,061 Shs +1 +Ms. Eglinton Manner received an onboarding equity award when she joined the company in June 2022 consisting of $4,000,000 in time-vested restricted shares with cliff vesting occurring on the second anniversary of her commencement date, “Make Whole Award”; $1,600,000 time-vested restricted shares vesting in equal amounts over three years, and $1,600,000. PRUs, with terms substantially the same as the terms of awards made to the Company’s other executives in February 2022. The table above does not include Ms. Eglinton Manner’s Make Whole Award which consisted of 814,830 shs. +2 +Dr. Gagliano received, as part of her Interim CEO agreement, a sign-on equity grant consisting of $100,000 of fully vested shares and $670,000 of restricted stock units which vest in equal monthly installments beginning on April 30, 2022, subject to continued employment as Interim CEO. Dr. Gagliano vested in 24,815 units of the 99,259 restricted stock units granted prior to her resignation as Interim CEO in June 2022, and accordingly, 74,444 units of her restricted stock unit award were forfeited. +3 +Dr. Tang received, in accordance with his Transition Agreement, $834,909 restricted shares which vests on the eighth day following his termination date. +4 +Mr. McGrath received an onboarding equity award when he joined the company in August 2022 consisting of $400,000 in time-vested restricted shares vesting in equal amounts over three years. +43 +Table of Contents +5 +As discussed above, the performance metrics for the 2022 LTIP awards were not defined and approved by the Compensation Committee until January 2023, and as such have no grant date fair value as of December 31, 2022 in accordance ASC 718 and are not included in the tables below with the exception of Ms. Gallagher and Ms. Nibauer who vested in the awards under the terms of their separation agreements. +2022 Retention Awards +In January 2022, the company granted certain employees, including certain NEOs, retention awards consisting of a cash bonus amount or time-based restricted stock grants. The grants vest over a three-year period starting in January 2023, subject to continued employment with the Company. Mr. Gleason, Ms. Nibauer, and Ms. Weber each received retention awards in the form of time-based restricted stock grants as summarized below: +Executive Officer +Time Vested +Restricted Stock +Scott Gleason +Interim Chief Financial Officer, Senior Vice President, Corporate Communications & Investor Relations +29,345 Shs +Lisa Nibauer +Former President of Diagnostics +34,556 Shs +Kathleen G. Weber +Chief Product Officer +34,061 Shs +2020 PRU Payout in 2022 +Pay Out Under 2020 PRUs . The PRU portion of equity awards made to executives in early 2020 based on performance during 2019 did not vest until three years after the grant date, based 60% on the achievement of a three- year product revenue compound annual growth rate (“CAGR”) target and 40% based on a one-year IBIT target. The three-year service period for these PRUs expired on February 1, 2023. The following table summarizes the potential range of shares that could be delivered based upon the degree of achievement of the applicable performance measures: +Achievement Level of +Applicable Performance +Target +Percentage of IBIT- +based PRUs To +Become Vested +Percentage of CAGR- +based PRUs To +Become Vested +80% +50% +50% +100% +100% +100% +120% +100% +200% +44 +Table of Contents +For the 2020 PRUs, Company performance exceeded the three-year product revenue CAGR target and the one-year IBIT target by more than 120%. This resulted in a maximum payout of 200% on shares associated with the three-year product revenue CAGR measurement and 100% on shares associated with the one-year IBIT measurement. The following summarizes the three-year revenue CAGR and one-year IBIT targets for the 2020 PRUs, our performance against these targets and the resulting number of shares delivered to the NEOs upon settlement of the PRUs: +Performance Target +Actual Performance +% of Target +% Vested +CAGR +20% +38% +140% +200% +IBIT +$(5.8) million +$(4.8) million +122% +100% +Final Vesting +160% +2020 PRU’s Target and Actual Payout +CAGR Target +(# of shs) +CAGR Actual +(# of shs) +IBIT Target +(# of shs) +IBIT Actual +(# of shs) +Carrie Eglinton Manner 1 +N/A +N/A +N/A +N/A +Nancy J. Gagliano 1 +N/A +N/A +N/A +N/A +Stephen S. Tang, Ph.D. 2 +50,998 +25,499 +33,998 +16,999 +Kenneth McGrath 1 +N/A +N/A +N/A +N/A +Scott Gleason 1 +N/A +N/A +N/A +N/A +Agnieszka Gallagher 1 +N/A +N/A +N/A +N/A +Lisa Nibauer 2 +8,442 +4,221 +5,628 +2,814 +Kathleen G. Weber +19,508 +39,016 +13,006 +13,006 +1 +Ms. Eglinton Manner, Dr. Gagliano, Mr. McGrath, Mr. Gleason and Ms. Gallagher did not receive any 2020 PRU’s because they joined the Company after these awards were made. +2 +In accordance with Dr. Tang’s transition agreement and Ms. Nibauer’s separation agreement, 50% of shares vested at Target and the remaining 50% were forfeited. +45 +Table of Contents +OTHER COMPENSATION +We provide minimal additional benefits outside of our primary elements of compensation, as follows: +Retirement Programs +All of our U.S. employees, including executive officers, are eligible to participate in our 401(k) profit sharing plan (the “401(k) Plan”). We make matching contributions for participants on a dollar-for-dollar basis up to $4,000 per year. Our subsidiary DNA Genotek, which is located in Canada, offers a registered retirement plan to its employees, which similarly allows employee contributions for retirement savings, with matching contributions by DNA Genotek of up to CAD $4,000 per year. +The Company also maintains the OraSure Technologies, Inc. Deferred Compensation Plan (the “Deferred Compensation Plan”) for the benefit of the Company’s highly compensated employees, including all of the NEOs, and its non-employee Directors. The Deferred Compensation Plan allows participants to defer up to 100% of their annual base salaries (or fees in the case of non-employee Directors) and up to 100% of annual incentive cash bonuses and, upon vesting, restricted shares of the Company’s Common Stock awarded to the participant. The Company may also make discretionary contributions to the participants’ accounts that vest over one or more years as determined by the Company, as well as upon death, disability or a change of control. Since the Deferred Compensation Plan was put in place, the Company has made no discretionary contributions. Participants may elect to receive distributions of deferred amounts on a specified date, separation from service, a change of control, disability and/or death. A further description of these benefits is set forth in the Section entitled “Nonqualified Deferred Compensation.” +Perquisites and Other Compensation +As a general matter, the Compensation Committee and Board do not believe that executive officers should be treated differently than other employees by receiving special perquisites unrelated to our general compensation program. Therefore, our healthcare, disability, and other insurance programs and benefits are the same for all eligible employees, including executive officers. Executive officers generally do not receive any additional perquisites, except for Ms. Weber who receives certain benefits under her employment agreement in connection with her international assignment at our Canadian subsidiary, DNA Genotek, Inc. A further description of these benefits is set forth in the Section entitled, “Employment Agreements and Potential Payments Upon Termination or Change of Control.” +Potential Payments Upon Termination or Change of Control Pursuant to Employment Agreements +The Company has entered into employment agreements with each of the NEOs. In addition to the compensation elements discussed above, these agreements provide for post-employment severance payments and benefits in the event of termination of employment by the Company without “cause” or by the executive for “good reason” and provide enhanced severance payments upon such terminations in connection with a “change of control” of the Company. The terms of these arrangements are discussed in more detail under the Section entitled, “Employment Agreements and Potential Payments Upon Termination or Change of Control,” in this Proxy Statement. The Compensation Committee believes that these arrangements are generally consistent with industry practice at the Peer Group companies, provide an incentive to the applicable executive to remain with the Company, and serve to align the interests of stockholders and the executives in the event of a change of control of the Company. +Accounting and Tax Treatment of Compensation +In approving the amount and form of compensation for the NEOs, the Compensation Committee considers all elements of the cost to the Company of providing such compensation, including accounting and tax implications. In particular, it considers the potential impact of Section 162(m) of the Internal Revenue Code (the “Code”), which disallows a tax deduction for any publicly-held corporation for individual compensation exceeding $1 million in any taxable year for certain covered employees. Notwithstanding these deductibility limitations, the Compensation Committee intends to maintain flexibility to pay compensation that is not entirely deductible when the best interests of the Company would make that advisable. +46 +Table of Contents +Compensation Recoupment Policy +The Board has adopted a compensation recoupment or “clawback” policy, applicable to all officers subject to Section 16 of the Exchange Act. Under this policy, the Company will pursue recoupment of any excess compensation, including incentive cash bonuses, restricted awards, stock options or other compensation, which was awarded to a covered officer based on financial statements of the Company where such statements are required to be restated as a result of the gross negligence, intentional misconduct or fraud of the covered officer. In addition to recoupment, the Company shall take such other remedial actions deemed necessary against a covered employee, including recommending disciplinary actions up to and including termination and other available remedies. The recovery period for recoupment of any compensation is up to three fiscal years preceding the date on which the Company is required to prepare and file the restated financial statements. This policy has been proactively adopted in advance of final guidance under Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“the Dodd-Frank Act”) and will be amended to conform with this Section when final guidance is available. +47 +Table of Contents +COMPENSATION TABLES +SUMMARY COMPENSATION TABLE +The following table summarizes the compensation of our CEO and the other NEOs, for the fiscal years ended December 31, 2022, 2021 and 2020: +Name & Principal +Position +Year +Salary +($) +Bonus +($) +Stock +Awards 4 +($) +Option +Awards +($) +Non- +Equity +Incentive +Plan +Compen- +sation 6 +($) +Change in +Pension Value +and Nonqualified +Deferred +Compensation +Earnings +($) +All other +Compen- +sation 7 +($) +Total +($) +Carrie Eglinton Manner +2022 +$ +376,923 +1 +— +$ +5,600,000 +— +$ +770,000 +— +— +$ +6,746,923 +President and Chief Executive Officer +2021 +— +— +— +— +— +— +— +— +2020 +— +— +— +— +— +— +— +— +Nancy Gagliano, M.D. +2022 +$ +170,292 +1 +— +$ +770,000 +5 +— +— +— +— +$ +940,292 +Former Interim Chief Executive Officer +2021 +— +— +— +— +— +— +— +— +2020 +— +— +— +— +— +— +— +— +Stephen S. Tang, Ph.D. +2022 +$ +360,981 +— +$ +834,913 +— +— +— +$ +1,573,614 +$ +2,769,508 +Former President and +2021 +$ +667,921 +— +$ +1,946,860 +— +$ +341,000 +— +$ +4,000 +$ +2,959,781 +Chief Executive Officer +2020 +$ +624,225 +— +$ +1,218,000 +— +$ +1,239,196 +— +$ +4,000 +$ +3,085,421 +Ken McGrath +2022 +$ +173,558 +1 +— +$ +400,000 +— +$ +261,250 +— +$ +4,000 +$ +838,808 +Chief Financial Officer +2021 +— +— +— +— +— +— +— +— +2020 +— +— +— +— +— +— +— +— +Scott Gleason +2022 +$ +416,000 +— +$ +659,996 +— +$ +117,250 +— +$ +4,000 +$ +1,197,246 +Former Interim Chief Financial Officer, +2021 +$ +178,846 +2 +— +$ +424,620 +— +$ +182,000 +— +$ +2,077 +$ +787,543 +Senior Vice President, Corporate +Communications & Investor Relations +2020 +— +— +— +— +— +— +— +— +Agnieszka Gallagher +2022 +$ +268,321 +— +$ +674,246 +— +$ +209,250 +— +$ +678,250 +$ +1,830,067 +Former Executive Vice President, +2021 +$ +26,827 +2 +— +$ +500,000 +500,000 +$ +240,638 +— +— +$ +1,267,465 +General Counsel and Chief Compliance +Officer +2020 +— +— +— +— +— +— +— +— +Kathleen G. Weber +2022 +$ +460,000 +— +$ +801,778 +— +$ +241,500 +— +$ +189,366 +$ +1,692,644 +Chief Product Officer +2021 +$ +416,246 +— +$ +483,596 +— +$ +233,098 +— +$ +418,505 +$ +1,551,445 +2020 +$ +365,650 +— +$ +465,940 +— +$ +354,242 +— +$ +524,121 +$ +1,709,953 +Lisa Nibauer +2022 +$ +414,516 +— +$ +1,112,330 +— +$ +198,493 +— +$ +4,000 +$ +1,729,339 +Former President, Diagnostics +2021 +$ +422,300 +— +$ +524,767 +— +$ +236,488 +— +$ +4,000 +$ +1,187,555 +Business Unit +2020 +$ +160,385 +3 +— +$ +500,000 +— +$ +340,464 +— +$ +54,000 +$ +1,054,849 +1 +The 2022 salary shown for Ms. Eglinton Manner represents the amount paid to Ms. Eglinton Manner after she joined the Company on June 4, 2022, the 2022 salary shown for Dr. Gagliano represent the amount paid to Dr. Gagliano after she joined the Company on April 1, 2022, and the 2022 salary shown for Mr. McGrath represent the amount paid to Mr. McGrath after he joined the Company on August 8, 2022. +2 +The 2021 salaries shown for Mr. Gleason and Ms. Gallagher represent the amounts paid after they joined the Company on May 17, 2021 and November 29, 2021, respectively. +3 +The 2020 salary show for Ms. Nibauer represents the amount paid to Ms. Nibauer after she joined the Company on May 11, 2020. +4 +The indicated amounts reflect the aggregate grant date fair value of RS and PRU awards made to the NEOs during the applicable year, computed in accordance with FASB ASC Topic 718. The value of the PRUs reflect the assumption that 100% of target will be achieved for each of the performance measures reflected in the terms of the PRUs. Certain assumptions used in the calculation of the indicated amounts are set forth for the applicable year of award in footnote 11 to the Company’s audited consolidated financial statements for the year ended December 31, 2022, included in the Company’s Annual Report on Form 10-K filed with the SEC on March 3, 2023 (the “2022 10-K Report”). The maximum grant-date fair value of the PRU awards made in 2021, assuming the highest level of performance measures will be achieved (120% of target resulting in a 150% payout), are as follows: Mr. Gleason, $336,927 and Ms. Weber $300,324. Pursuant to his Transition Agreement, 50% of the PRU awards made in 2021 to Dr. Tang vested at 100% of target on the eighth day following his termination date of March 31, 2022, representing a grant-date fair value of $403,014. The indicated amount for Ms. Eglinton Manner includes her Make Whole Award of $4,000,000. The above table does not include the grant of 2022 PRU awards as the metrics were not finalized until 2023 and, accordingly, the grant-date fair value of the 2022 PRUs was not determined as of December 31, 2022. +5 +Dr. Gagliano received, as part of her Interim CEO agreement, a sign-on equity grant consisting of $100,000 of fully vested shares (14,815 shares) and $670,000 of restricted stock units (99,259 restricted stock units) which vest in equal monthly installments beginning on April 30, 2022, subject to continued employment as Interim CEO. Dr. Gagliano vested in 24,815 units of the 99,259 restricted stock units granted prior to her resignation as Interim CEO in June 2022, and accordingly, 74,444 units of her restricted stock unit award were forfeited. +6 +The indicated amounts reflect incentive cash bonuses paid to the NEOs pursuant to an Incentive Plan, based on performance during the applicable year. For a description of incentive cash bonus payments for performance during 2022, see the Section entitled, “2022 Annual Incentive Cash Bonuses,” in the CD&A. +48 +Table of Contents +7 +The indicated amounts of $4,000 or $2,077 reflect cash contributed to a 401(k) profit sharing plan as an employer-matching contribution, which was offered to U.S. employees of the Company during each of the indicated years. Ms. Nibauer’s 2020 amount represents $4,000 in matching contributions to a 401(k) profit sharing plan and $50,000 sign-on bonus; Ms. Weber’s 2020 amount represents $4,000 in matching contributions to a 401(k) profit sharing plan, $68,900 representing a monthly living expense allowance, $15,177 for reimbursement of tax preparation fees, and $436,044 in tax equalization payments. Ms. Weber’s 2021 amount represents $4,000 in matching contributions to a 401(k) profit sharing plan, $68,900 representing a monthly living expense allowance, $18,079 for reimbursement of tax preparation fees, and $327,526 in tax equalization payments. Ms. Weber’s 2022 amount represents $4,000 in matching contributions to a 401(k) profit sharing plan, $55,008 representing a monthly living expense allowance, $17,699 for reimbursement of tax preparation fees, and $110,637 in tax equalization payments. Mr. Tang’s 2022 amounts represent $4,000 of in matching contributions to a 401(k) profit sharing plan and $1,569,614 of severance. Ms. Gallagher’s 2022 amounts represent $4,000 of in matching contributions to a 401(k) profit sharing plan and $674,250 of severance. +GRANTS OF PLAN-BASED AWARDS +The following table summarizes information concerning possible incentive cash bonuses and possible and actual RS and PRU awards for the NEOs during the fiscal year ended December 31, 2022: +Estimated Possible Payouts +Under Non-Equity Incentive +Plan Awards 2 +Estimated Possible Payouts Under +Equity Incentive Plan Awards 3 +Name & Principle +Position +Grant +Date +Threshold +($) +Target +($) +Maximum +($) +Threshold +(# Shs.) +Target +(# Shs.) +Maximum +(# Shs.) +All other Stock +Awards: +Number +of Shares +of Stock +or Units 4 +(#Shs.) +All other +Option +Awards: +Number +of +Securities +Underlying +Options +(#Shs.) +Exercise +of Base +Price of +Option +awards +($/Sh) +Grant +Date +Fair +Value of +Stock +Awards 5 +($) +Carrie Eglinton Manner +6/4/2022 1 +— +— +— +— +— +— +1,140,762 +RS +— +— +$5,600,000 +President and Chief Executive +N/A +$350,000 +$700,000 +$1,050,000 +N/A +N/A +N/A +— +— +— +N/A +Officer +Nancy Gagliano, M.D. +4/1/2022 1 +— +— +— +— +— +— +114,074 +RS +— +— +$770,000 6 +Former Interim Chief Executive Officer +Stephen S. Tang, Ph.D. +2/1/2022 1 +— +— +— +— +— +— +94,234 +RS +— +— +$834,913 +Former President and Chief +Executive Officer +Ken McGrath +8/8/2022 1 +— +— +— +— +— +— +131,883 +RS +— +— +$400,000 +Chief Financial Officer +N/A +$118,750 +$237,500 +$356,250 +N/A +N/A +N/A +— +— +— +N/A +Scott Gleason +1/5/2022 1 +— +— +— +— +— +— +29,345 +RS +— +— +$399,999 +Former Interim Chief Financial +2/1/2022 1 +— +— +— +— +— +— +48,721 +RS +— +— +$259,997 +Officer, Senior Vice President, +N/A +$58,625 +$117,250 +$175,875 +16,433 +RS +23,476 +RS +30,519 +RS +— +— +— +N/A +Communications & Investor Relations +N/A +— +— +— +16,433 +PRU +23,476 +PRU +30,519 +PRU +— +— +— +N/A +Agnieszka Gallagher +2/1/2022 1 +— +— +— +— +— +— +38,050 +RS +— +— +$337,123 +Former Executive Vice President, +2/1/2022 1 +— +— +— +— +— +— +38,050 +PRU +— +— +$337,123 +General Counsel and Chief +N/A +$104,625 +$209,250 +$313,875 +24,929 +RS +32,802 +RS +40,674 +RS +— +— +— +N/A +Compliance Officer +N/A +— +— +— +24,929 +PRU +32,802 +PRU +40,674 +PRU +— +— +— +N/A +Kathleen G. Weber +1/5/2022 1 +— +— +— +— +— +— +60,901 +RS +— +— +$499,997 +Chief Product Officer +2/1/2022 1 +— +— +— +— +— +— +34,061 +RS +— +— +$301,780 +N/A +$115,000 +$230,000 +$345,000 +24,661 +RS +32,449 +RS +40,237 +RS +— +— +— +N/A +N/A +— +— +— +24,661 +PRU +32,449 +PRU +40,237 +PRU +— +— +— +N/A +Lisa Nibauer +1/5/2022 1 +— +— +— +— +— +— +60,901 +RS +— +— +$499,997 +Former President, Diagnostics +2/1/2022 1 +— +— +— +— +— +— +34,556 +RS +— +— +$306,166 +Business Unit +2/1/2022 1 +— +— +— +— +— +— +34,556 +PRU +— +— +$306,166 +N/A +$115,000 +$230,000 +$345,000 +24,661 +RS +32,449 +RS +40,237 +RS +— +— +— +N/A +N/A +— +— +— +24,661 +PRU +32,449 +PRU +40,237 +PRU +— +— +— +N/A +1 +Annual incentive equity awards to NEOs consisted of a combination of time-vested RS and PRUs that were granted in 2022 pursuant to the LTIP based on performance during 2021. Annual equity awards made during 2022 were approved by the Compensation Committee effective on February 1, 2022. For a description of these equity awards and their terms, see the Section entitled, “2022 Long-Term Incentive Awards,” in the CD&A. Awards granted to Ms. Eglinton Manner represent on-boarding awards and were granted with terms substantially similar to the annual incentive equity awards granted to the other NEOs in 2022 pursuant to the LTIP based on performance during 2021. Ms. Eglinton Manner was also awarded a “make whole” award of restricted shares that vest in full upon the second anniversary of her commencement of employment. Awards granted to Dr. Gagliano represent on-boarding awards under her Interim-CEO agreement. Awards granted to Mr. McGrath represent on-boarding awards and were granted with terms substantially similar to the annual incentive equity awards granted to the other NEOs in 2022 pursuant to the LTIP based on performance during 2021. Awards granted on 1/5/2022 to Mr. Gleason, Ms, Weber, and Ms. Nibauer represent retention grants of time-vested restricted stock awards that vest equally over a three-year period during continued employment. +49 +Table of Contents +2 +The indicated amounts represent potential incentive cash bonus payments to the NEOs under the 2022 Incentive Plan. On February 9, 2023 and February 10, 2023, bonus payments under the 2022 Incentive Plan were approved by the Compensation Committee for the NEOs (except for Ms. Eglinton Manner) and for Ms. Eglinton Manner, respectively, in each case based on performance during 2022. The Threshold and Target amounts assume the executive receives 50% and 100% of his or her target bonus and that the aggregate bonus pool is funded at 50% and 100% for each performance objective in the 2022 Incentive Plan, respectively. The Maximum amounts assume that the recipient receives 150% of his or her target bonus based on performance for 2022 and that the bonus pool is funded at 200% or the Maximum level for each performance objective in the 2022 Incentive Plan. A further description of the payments approved under the 2022 Incentive Plan is set forth in the Section entitled, “2022 Annual Incentive Cash Bonuses,” in the CD&A. +3 +The indicated amounts represent the potential number of shares which could have been granted to the NEOs in 2022 in the form of RS and PRUs pursuant to the LTIP, based on performance during 2021. The individual share numbers for each potential award were calculated by dividing 50% of the long-term incentive targets for each NEO set forth in the LTIP by the mean between the high and low sales price of the Common Stock as reported by Nasdaq on the date of grant. The number of shares corresponding to the PRUs were calculated based on the assumption that 100% of target is achieved for each of the performance measures set forth in the terms of such PRU awards. The actual number of shares received upon vesting of the PRUs could vary from 50% to 200% of target depending on the degree to which the performance measures are achieved. +4 +The indicated amounts represent the actual number of shares of RS or PRUs granted to the NEOs in 2022 under the LTIP, based on performance during 2021. A further description of these equity awards and their terms is set forth in the Section entitled, “2022 Long-Term Incentive Awards,” in the CD&A. 2022 shares also include time vested restricted stock awards granted as retention grants for Mr. Gleason, Ms. Weber, and Ms. Nibauer. +5 +The indicated amounts represent the grant date fair value calculated in accordance with FASB ASC Topic 718. PRU’s granted in 2022 to Ms. Eglinton Manner, Mr. Gleason, and Ms. Weber have no grant date fair value as of 12/31/2022. In accordance with FASB ASC Topic 718 grant date fair value cannot be determined until associated performance metrics are defined and approved by the Company’s compensation committee and communicated to the grant recipient. See further discussion above. +6 +Dr. Gagliano received, as part of her Interim CEO agreement, a sign-on equity grant consisting of $100,000 of fully vested shares (14,815 shares) and $670,000 of restricted stock units (99,259 restricted stock units) which vest in equal monthly installments beginning on April 30, 2022, subject to continued employment as Interim CEO. Dr. Gagliano vested in 24,815 units of the 99,259 restricted stock units granted prior to her resignation as Interim CEO in June 2022, and accordingly, 74,444 units of her restricted stock unit award were forfeited. +OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2022 +The following table summarizes information regarding unexercised stock options and unvested RS and PRUs held by the NEOs as of December 31, 2022: +Option Awards 1 +Stock Awards 1 +Name +Number of +Securities +Underlying +Unexercised +Options +(#) +Exercisable +Number of +Securities +Underlying +Unexercised +Options 2 +(#) +Unexercisable +Equity +Incentive +Plan +Awards: +Number of +Securities +Underlying +Unexercised +Unearned +Options (#) +Option +Exercise +Price +($/Sh.) +Option +Expiration +Date +Number of +Shares or +Units of +Stock +That +Have +Not +Vested 2 (#) +Market +Value of +Shares or +Units of +Stock +That +Have Not +Vested 8 ($) +Equity +Incentive +Plan +Awards: +Number of +Unearned +Shares, +Units or +Other +Rights +that +Have Not +Vested 2 (#) +Equity +Incentive +Plan +Awards: +Market +or Payout +Value of +Unearned +Shares, +Units or +other +Rights +That +Have Not +Vested 8 ($) +Carrie Eglinton Manner +— +— +— +— +— +814,830 3(a) +$3,927,481 +— +— +President and Chief +— +— +— +— +— +325,932 3(b) +$1,570,992 +— +— +Executive Officer +— +— +— +— +— +— +— +— +— +Nancy Gagliano +— +— +— +— +— +10,563 4(a) +50,914 +— +— +Interim Chief Executive +Officer +— +— +— +— +— +— +— +— +— +Scott Gleaon +— +— +— +— +— +13,626 5(a) +$ 65,677 +— +— +Former Interim CFO, +— +— +— +— +— +48,721 5(b) +$ 234,835 +— +— +Senior Vice President +Corporate +— +— +— +— +— +29,345 5(c) +$ 141,443 +— +— +Communications & +Investor Relations +— +— +— +— +— +— +— +24,936 5(d) +$120,189 +Agnieszka Gallagher +— +56,724 +— +$9.52 +11/29/2031 +— +— +— +— +Former Executive Vice +President, General +Counsel and Chief +Compliance Officer +— +— +— +— +— +— +— +— +— +— +— +— +— +— +— +— +— +— +— +— +— +— +— +— +— +— +50 +Table of Contents +Option Awards 1 +Stock Awards 1 +Name +Number of +Securities +Underlying +Unexercised +Options +(#) +Exercisable +Number of +Securities +Underlying +Unexercised +Options 2 +(#) +Unexercisable +Equity +Incentive +Plan +Awards: +Number of +Securities +Underlying +Unexercised +Unearned +Options (#) +Option +Exercise +Price +($/Sh.) +Option +Expiration +Date +Number of +Shares or +Units of +Stock +That +Have +Not +Vested 2 (#) +Market +Value of +Shares or +Units of +Stock +That +Have Not +Vested 8 ($) +Equity +Incentive +Plan +Awards: +Number of +Unearned +Shares, +Units or +Other +Rights +that +Have Not +Vested 2 (#) +Equity +Incentive +Plan +Awards: +Market +or Payout +Value of +Unearned +Shares, +Units or +other +Rights +That +Have Not +Vested 8 ($) +Kenneth McGrath +— +— +— +— +— +131,883 6(a) +$635,676 +— +— +Chief Financial Officer +— +— +— +— +— +— +— +— +— +— +— +— +— +— +— +— +— +— +Kathleen Weber +4,129 +— +— +$5.71 +2/3/2024 +— +— +— +— +President, Molecular +Solutions +10,404 +— +— +$9.31 +2/3/2025 +— +— +— +— +— +— +— +— +— +10,839 7(a) +$52,244 +— +— +— +— +— +— +— +12,145 7(b) +$58,539 +— +— +— +— +— +— +— +60,901 7(c) +$293,543 +— +— +— +— +— +— +— +34,061 7(d) +$164,174 +— +— +— +— +— +— +— +— +— +13,006 7(e) +$62,689 +— +— +— +— +— +— +— +39,016 7(f) +$188,057 +— +— +— +— +— +— +— +22,226 7(g) +$107,129 +1 +The table does not include RS and PRUs awarded to the NEOs in February 2023 pursuant to the LTIP in respect of performance during 2022. +2 +Stock options vest over four years, with the first 25% vesting on the first anniversary of the grant date and the remaining 75% vesting on a monthly basis over the next three years following the first anniversary of the grant date. Grants of RS vest over a three-year period, with one-third vesting on the first anniversary of the grant date, a second third vesting on the second anniversary and the final third vesting on the third anniversary. PRUs will not vest until three years from the grant date and only if certain performance measures are met during the three-year service period. +3 +The indicated RSs vest as follows: +(a) +814,830 restricted shares cliff vest on June 4, 2024; and +(b) +108,644 restricted shares each on June 4, 2023, June 4, 2024, and June 4, 2025, respectively. +4 +The indicated RSs vest as follows: +(a) +10,563 restricted shares cliff vest on November 8, 2023. +5 +The indicated RS and PRUs vest as follows: +(a) +6,813 restricted shares each on May 21, 2023 and May 21, 2024; +(b) +16,240 restricted shares on January 5, 2023, 16,241 restricted shares on January 5, 2024, and 16,240 restricted shares on January 5, 2025; +(c) +9,782 restricted shares on February 1, 2023, 9,781 restricted shares on February 1, 2024, and 9,782 restricted shares on February 1, 2025; +(d) +24,936 PRUs cliff vesting on May 21, 2024, provided performance metrics have been achieved. +6 +The indicated RSs vest as follows: +(a) +43,961 restricted shares each on August 8, 2023, August 8, 2024, and August 8, 2025. +7 +The indicated RS and PRUs vest as follows: +(a) +10,839 restricted shares on February 1, 2023; +(b) +6,072 restricted shares on February 1, 2023, and 6,073 shares on February 1, 2024; +(c) +20,300 restricted shares on January 5, 2023, 20,301 restricted shares on January 5, 2024, and 20,300 restricted share on January 5, 2025; +(d) +11,354 restricted shares on February 1, 2023, 11,353 restricted shares on February 1, 2024, and 11,354 restricted share on February 1, 2025; +(d) +9,771 PRUs cliff vesting on February 1, 2022, provided performance metrics have been achieved. This grant also included 6,514 PRUs which have been forfeited because the related performance metric was not achieved; +(e) +13,006 PRUs cliff vesting on February 1, 2023, provided performance metrics have been achieved; +(f) +39,016 PRUs cliff vesting on February 1, 2023, provided performance metrics have been achieved; and +(g) +22,226 PRUs cliff vesting on February 1, 2024, provided performance metrics have been achieved. +8 +The indicated values were determined by multiplying the number of unvested shares of RS and unvested PRUs shown in this table by $4.82 per share, the closing price of the Company’s Common Stock as reported by Nasdaq on December 31, 2022. +51 +Table of Contents +OPTION EXERCISES AND STOCK VESTED +The following table summarizes information with respect to the exercise of stock options and vesting of RS for each of the NEOs during the fiscal year ended December 31, 2022: +Option Awards +Stock Awards 1 +Name +Number +of +Shares +Acquired +on +Exercise +(#) +Value +Realized +on +Exercise 2 +($) +Number +of Shares +Acquired +on +Vesting +(#) +Value +Realized +on +Vesting 3 +($) +Carrie Eglinton Manner +— +— +— +— +President and Chief Executive Officer +Nancy Gagliano, M.D. +— +— +39,630 +$ +216,529 +Former Interim Chief Executive Officer +Stephen S. Tang, Ph.D. +— +— +335,216 +$ +2,563,876 +4 +Former President and Chief Executive +Officer +Ken McGrath +— +— +— +— +Chief Financial Officer +Scott Gleason +— +— +6,813 +$ +37,676 +Former Interim Chief Financial Officer, +Senior Vice President, Communications & +Investor Relations +Agnieszka Gallagher +— +— +64,317 +$ +178,319 +4 +Former Executive Vice President, General Counsel and Chief Compliance Officer +Kathleen G. Weber +— +— +31,025 +$ +274,882 +Chief Product Officer +Lisa Nibauer +— +— +102,143 +$ +540,045 +4 +Former President, Diagnostics Business Unit +1 +Includes the vesting of restricted stock awards and performance-vested restricted units. +2 +The indicated amount represents the number of shares acquired upon the exercise of the options multiplied by the difference between the market value of the Company’s Common Stock on the applicable exercise date and the option exercise price. +3 +The indicated amounts were calculated by multiplying the number of restricted shares and performance-vested restricted shares acquired upon vesting by the market value of the Company’s Common Stock on the applicable vesting date. The market value was determined by calculating the mean between the high and low sales prices of the Common Stock as reported by Nasdaq on the vesting date. +4 +The unvested portions of all awards of time-vested RS and PRUs granted to Dr. Tang, Ms. Gallagher, and Ms. Nibauer that were outstanding and unvested as of their termination dates 50% vested pursuant to the individual Transition or Separation agreement. 50% of the unvested PRUs vested at Target regardless of expected performance outcome. The remining 50% of unvested RS and PRUs where forfeited. +RETIREMENT BENEFITS +The NEOs are eligible to participate in our 401(k) Plan on the same terms and conditions applicable to other employees. For a further description of the terms of the 401(k) Plan, see the Section entitled, “Retirement Programs,” in the CD&A. +52 +Table of Contents +NONQUALIFIED DEFERRED COMPENSATION +The OraSure Technologies, Inc. Deferred Compensation Plan (the “Plan”) is a non-qualified deferred compensation plan designed to provide deferred compensation benefits to a select group of the Company’s highly compensated employees, including all of the NEOs, and to non-employee members of the Board. +The Plan allows for deferrals by participants of up to 100% of their annual base salaries (or in the case of non-employee Directors, 100% of fees payable under the Company’s Non-Employee Director Compensation Policy), up to 100% of annual incentive cash bonuses and, upon vesting, restricted shares of the Company’s Common Stock and shares received in respect of PRUs awarded under the LTIP. The Company may also make discretionary contributions to the accounts of employees participating in the Plan. Cash balances in participants’ accounts may be invested in a list of investment options that are similar to the fund choices offered in the Company’s 401(k) plan. Participants will be permitted to sell vested shares in their accounts, subject to compliance with the Company’s Insider Trading Policy and applicable securities laws, and invest the proceeds of any such sale in the investment options available under the Plan. Participants will be 100% vested in their accounts and the restricted shares they defer, except that Company contributions will vest over one or more years as determined by the Company. In the event of death, disability or change of control, a participant will become 100% vested in any then unvested Company contributions. +A Participant may elect to receive a distribution from his or her account upon a specified date, separation from service, change of control, disability and/or death. Distributions will be made in a lump sum or installments, as allowed under the Plan. +Amounts contributed to a participant’s account through elective deferrals or through the Company’s discretionary contributions are generally not subject to income tax, and the Company does not receive a deduction until they are distributed pursuant to the Plan. +However, cash deferrals are subject to the Federal Insurance Contributions Act Tax imposed at the time of deferral (the “FICA tax”). Deferrals of restricted shares and shares received in respect of PRUs are subject to the FICA tax at the time the shares vest, but are not subject to income tax, and the Company does not receive the deduction until the shares are distributed pursuant to the Plan. The Company may amend or terminate the Plan at any time in accordance with applicable law. +None of the Company’s NEO’s participated in the Plan during 2022. +53 +Table of Contents +EMPLOYMENT AGREEMENTS AND POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL +Employment Agreements +We have entered into employment agreements with all of our NEOs. We believe such agreements are necessary to attract and retain critical talent, and are in-line with market practices. The following summary describes certain of the material terms of the employment arrangements with Ms. Eglinton Manner, and the other NEOs. +Ms. Eglinton Manner +In May 2022, we entered into an employment agreement with Ms. Eglinton Manner in connection with her appointment as the Company’s President and CEO, effective June 4, 2022. Under the agreement, Ms. Eglinton Manner would receive (i) an annual base salary of at least $700,000, (ii) an annual cash bonus opportunity under the Company’s annual Incentive Plan with a bonus target of at least 100% of her base salary, (iii) a restricted stock (or restricted stock unit) award for a number of shares of the Company’s common stock determined by dividing $4,000,000 by the average closing price of the Company’s common stock for the 20 trading days immediately preceding the grant date (the “Trailing Average Price”), which award will vest on the second anniversary of the effective date and is intended to replace compensation from her prior employer that Ms. Eglinton Manner will forfeit to accept employment with the Company, (iv) a restricted stock (or restricted stock unit) award for a number of shares of the Company’s common stock determined by dividing $1,600,000 by the Trailing Average Price, which award will vest in three equal annual installments, on the first three anniversaries of the effective Date, and (v) a performance-based restricted stock unit award for a target number of shares of the Company’s common stock determined by dividing $1,600,000 by the Trailing Average Price, which award will be subject to the same vesting and performance conditions as are applicable to the 2022 performance-based restricted stock unit awards granted to the Company’s other executive officers. The agreement also provides that the Company will reimburse Ms. Eglinton Manner for reasonable car service fees incurred to commute between her home and the Company’s offices and, subject to the Company’s policies, other reasonable and necessary expenses incurred in the course of her employment. +Under the terms of Ms. Eglinton Manner’s employment agreement, upon the termination of Ms. Eglinton Manner’s employment due to death, disability, her unilateral termination without good reason (as such term is defined in her employment agreement), or the Company’s termination for cause (as such term is defined in her employment agreement), Ms. Eglinton Manner will be entitled to receive her salary through the date of termination. In the case of a termination upon her death, disability, or her unilateral termination without good reason, Ms. Eglinton Manner will be entitled to receive any annual bonus that has been earned, but not yet paid with respect to a year ending prior to the date of termination. In the case of a termination upon her death or disability or a unilateral termination by Ms. Eglinton Manner without good reason where in either case the termination were to occur after June 30 of any year, Ms. Eglinton Manner will also be entitled to receive a cash bonus for the year of termination prorated through the date of termination. +In addition, in the event of termination for good reason or without cause and not during a change of control period (as defined in her employment agreement), Ms. Eglinton Manner will be entitled to receive additional severance in the form of (i) a lump sum amount equivalent to 18 months of her annual salary (or 24 months if such termination occurs during a change of control period) period plus reimbursement of the costs of continuation coverage under the Company’s health plans (if Ms. Eglinton Manner elects coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985) for a period of 18 months after the date of termination and (ii) a lump sum cash payment equal to 150% (or 200% if such termination occurs during a change of control period) of her target bonus amount for the applicable calendar year in which such termination occurs. If Ms. Eglinton Manner is a “specified employee” within the meaning of Code Section 409A at the time of the termination of his employment and any of the foregoing payments would subject him to any tax, interest or penalty under Code Section 409A or regulation thereunder, then the payment shall not be made until the first day which is at least six months after the date of termination of his employment. +Under the terms of her agreement, all equity awards subject to time-based vesting conditions granted to Ms. Eglinton Manner were required to immediately vest if Ms. Eglinton Manner’s employment was terminated for good reason by Ms. Eglinton Manner or by the Company without cause during a change of control period, and 50% of such equity awards would vest in the event Ms. Eglinton Manner’s employment was terminated for good reason by Ms. Eglinton Manner or by the Company without cause during any period other than a change of control period, provided that 50% of +54 +Table of Contents +any equity awards subject to performance-based vesting conditions would remain eligible to vest if such termination occurs not in connection with a change of control (or 100%, in the case of a termination during a change of control period). +Dr. Tang +In January 2018, we entered into an employment agreement with Dr. Tang in connection with his appointment as the Company’s President and CEO, effective April 1, 2018. Under the agreement, Dr. Tang would receive (i) an annual base salary of at least $565,000, (ii) an annual cash bonus opportunity under the Company’s annual Incentive Plan with a bonus target of at least 85% of his base salary and (iii) annual equity awards under the Company’s LTIP ranging from at least 150%-250% of his base salary, with a target of 200%. Dr. Tang received a sign-on cash bonus of $230,000 and an award of 37,116 shares of time-vested RS subject to vesting on the fifth anniversary of Dr. Tang’s date of employment. +Under the terms of Dr. Tang’s employment agreement, upon the termination of Dr. Tang’s employment for any reason, Dr. Tang would have been entitled to receive his salary through the date of termination and any bonus approved by the Board or the Compensation Committee prior to the date of termination but not yet paid. In the case of a termination upon his death or disability or by the Company without cause, or in the case of a unilateral termination by Dr. Tang or a termination by Dr. Tang for good reason where in either case the termination were to occur after June 30 of any year, Dr. Tang would have also received a cash bonus for the year of termination prorated through the date of termination. In addition, in the event of termination for good reason or without cause (which would have included the Company’s failure to renew the agreement) and not during a change of control period, Dr. Tang would have received additional severance in the form of a lump sum amount equivalent to 18 months of his annual salary plus reimbursement of the costs of continuation coverage under the Company’s health plans (if Dr. Tang elects coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985) for a period of 18 months after the date of termination. In the event of termination for good reason or without cause (which would have included the Company’s failure to renew the agreement) and during a change of control period, Dr. Tang would have received a lump sum amount equivalent to 36 months of his annual salary and reimbursement of continuation coverage under the Company’s health plan for 36 months. If Dr. Tang was a “specified employee” within the meaning of Code Section 409A at the time of the termination of his employment and any of the foregoing payments would subject him to any tax, interest or penalty under Code Section 409A or regulation thereunder, then the payment shall not be made until the first day which is at least six months after the date of termination of his employment. +Under the terms of his agreement, all stock awards granted to Dr. Tang were required to immediately vest (i) in the event of a change of control or (ii) if Dr. Tang’s employment was terminated for good reason by Dr. Tang or by the Company without cause during a change of control period, and 50% of such stock awards would vest in the event Dr. Tang’s employment was terminated for good reason by Dr. Tang or by the Company without cause during any period other than a change of control period. +On December 31, 2021, the Board of Directors approved the termination of Dr. Tang’s employment agreement without cause, effective as of March 31, 2022. On January 2, 2022, the Company and Dr. Tang entered into a Transition Agreement (the “Transition Agreement”) providing the terms of the cessation of Dr. Tang’s employment with the Company, which superseded much of Dr. Tang’s employment agreement. During the remaining period of his service (the “Transition Period”), Dr. Tang continued to serve as the Company’s President and CEO and assisted in the orderly transition of his duties to other Company personnel. +In connection with the cessation of his service and subject to Dr. Tang’s compliance with the terms of the Transition Agreement and his execution of a general release, the Transition Agreement provides that Dr. Tang will receive the following payments, right and benefits: +• +Dr. Tang will be paid a lump sum severance payment equal to 18 months’ of base salary, plus an amount equal to his target annual bonus; +• +50% of Dr. Tang’s outstanding time-based restricted stock awards will vest at the end of the Transition Period; +• +50% of Dr. Tang’s unvested PRUs for performance periods that ended on or prior to December 31, 2021 will vest based on actual performance at the end of the Transition Period; +• +50% of Dr. Tang’s unvested PRUs for performance periods scheduled to end after December 31, 2021 will vest based on target performance at the end of the Transition Period; +55 +Table of Contents +• +Dr. Tang will be granted an award of restricted stock with a grant date fair value of $834,909. This award represents 50% of the 2022 annual equity award otherwise issuable to Dr. Tang under the Company’s long-term incentive program and will vest at the end of the Transition Period; +• +Dr. Tang will receive a pro-rata 2022 annual bonus of $141,933 paid at the end of the Transition Period; and +• +Dr. Tang will have the opportunity to purchase continued coverage under the Company’s group health plan until he becomes eligible for Medicare, with the first 18 months of such coverage subsidized by the Company to the same extent as the Company subsidizes the cost of active employee coverage. +In addition, the Transition Agreement confirms that Dr. Tang’s 2021 annual bonus will be $341,000. While the Transition Agreement supersedes most of Dr. Tang’s employment agreement with the Company, the above-described payments, rights and benefits are substantially similar to the severance benefits contemplated by that employment agreement in respect of a termination without cause thereunder. +The Transition Agreement also includes customary cooperation and non-disparagement provisions and an affirmation by Dr. Tang of his confidentiality, non-solicitation and non-competition obligations to the Company. +Dr. Gagliano +In March 2022, we entered into an employment agreement with Dr. Gagliano in connection with her appointment as the Company’s Interim CEO, effective April 1, 2022. Under the agreement, Dr. Gagliano will receive (i) a monthly base salary of $55,833.33 per month, (ii) a one-time award of fully vested shares of the Company’s common stock equal to $100,000 divided by the average of the high and low trading prices of the Company’s common stock on the Nasdaq Stock Market on the grant date, and (iii) a one-time restricted stock unit award with a grant date fair value of $670,000 (the “RSUs”). The RSUs will vest in twelve equal monthly installments (with the first installment vesting on April 30, 2022 and subsequent installments vesting on the last day of the following eleven calendar months), subject to Dr. Gagliano’s continued employment as Interim CEO through the applicable vesting dates. Upon termination of Dr. Gagliano’s employment, the Company’s only obligations to her in respect of her employment as Interim CEO will then be (a) payment of any base salary earned, but not yet paid, as of the date of such termination, (b) issuance of shares in respect of any RSUs vested, but not yet settled, as of the date of such termination, (c) payment for any reimbursable expenses incurred, but not yet reimbursed, through the date of such termination, and (d) indemnification for her acts and omissions as an officer of the Company. Dr. Gagliano’s employment agreement was terminated on June 4, 2022 upon the appointment of our CEO, Ms. Eglinton Manner. +Mr. McGrath +In August 2022, we entered into an employment agreement with Mr. McGrath, pursuant to which Mr. McGrath would receive (i) an annual base salary of at least $475,000, (ii) a target bonus opportunity under the Company’s annual Incentive Plan of 50% of his base salary, and (iii) 131,883 shares of restricted common stock of the Company, which amount was determined by dividing $400,000 by the average closing price of the Company’s common stock for the twenty (20) trading days immediately preceding Mr. McGrath’s commencement of employment. Such award will vest in three equal annual installments, on the first three anniversaries of Mr. McGrath’s commencement of employment, subject in each case to his continued service through the applicable vesting date. +If Mr. McGrath’s employment ceases due to a termination by the Company without cause or his resignation with good reason (as such terms are defined in his agreement), then, subject to his timely execution and non-revocation of a release of claims, he will receive: (i) payment of any otherwise earned but unpaid annual bonus for the preceding year, (ii) a lump sum cash payment equal to (x) 12 months of his annual base salary, plus (y) his target annual bonus amount, (iii) subsidized COBRA premiums for 12 months, (iv) accelerated vesting of 50% of outstanding and otherwise unvested time-based equity awards and (v) an opportunity to earn 50% of outstanding performance-based equity awards, based on actual performance through the end of the applicable performance period. +The severance payments and benefits described above will be provided if the applicable termination of Mr. McGrath’s employment does not occur within a change of control period (as defined in Mr. McGrath’s employment agreement). If Mr. McGrath’s employment ceases due to a termination by the Company without cause or his resignation with good reason, in either case during a change of control period, then in lieu of the above described severance +56 +Table of Contents +payments and benefits and subject to his timely execution and non-revocation of a release of claims, Mr. McGrath will instead receive: (i) payment of any otherwise earned but unpaid annual bonus for the preceding year, (ii) a lump sum cash payment equal to (x) 24 months of his annual base salary, plus (y) his target annual bonus amount, (iii) subsidized COBRA premiums for 18 months, (iv) accelerated vesting of all outstanding and otherwise unvested time-based equity awards and (v) an opportunity to earn all outstanding performance-based equity awards, based on actual performance through the end of the applicable performance period (but at not less than the target level of performance, if such severance event occurs after the change of control). +Pursuant to the agreement, Mr. McGrath agreed to be restricted from (i) competing with the Company or its affiliates and (ii) soliciting their employees and customers, in each case during his employment and for 18 months thereafter. +Ms. Weber +In January 2019, we entered into an employment agreement with Ms. Weber, in connection with her move to Canada to head our Molecular Solutions business unit. Effective as of December 31, 2021, Ms. Weber’s employment agreement with the Company was amended and she was named President of Molecular Solutions. We promoted Ms. Weber again as our Chief Product Officer, effective November 14, 2022. Pursuant to the amended employment agreement, Ms. Weber will receive (i) an annual base salary of at least $471,000, (ii) a target bonus opportunity under the Company’s annual Incentive Plan of at least 50% of her base salary, and (iii) annual equity awards under the Company’s long-term incentive policy ranging from 125% to 150% of her base salary (with a target of 125%). In addition, Ms. Weber is entitled to receive benefits typical of international assignments, including: +• +Legal services paid by the Company for visas and work permits for Ms. Weber and her husband; +• +Relocation expenses reimbursed up to $10,000; +• +A housing allowance of up to $3,438 per month; +• +Tax equalization payments to the extent Ms. Weber’s Canadian income tax liability exceeds the income tax she would have paid in the United States; +• +Reimbursement for tax preparation services; +• +An annual expense allowance of $3,544; +• +Home leave reimbursement for Ms. Weber and her husband to travel to the United States twice during each 12-month period; and +• +Reimbursement for repatriation expenses for Ms. Weber and her husband to relocate back to the United States at the end of her assignment. +If Ms. Weber’s employment ceases due to a termination by the Company without cause or her resignation with good reason (as such terms are defined in her agreement), then, subject to her timely execution and non-revocation of a release of claims, she will receive: (i) any bonus that has been approved by the Board or Compensation Committee prior to the date of termination but not yet paid, (ii) a lump sum cash payment equal to (x) 12 months of her annual base salary, plus (y) her target annual bonus amount, (iii) subsidized COBRA premiums for 12 months, and (iv) accelerated vesting of 50% of outstanding and otherwise unvested equity awards. +The severance payments and benefits described above will be provided if the applicable termination of Ms. Weber’s employment does not occur within the change of control period (as defined in her employment agreement0. If Ms. Weber’s employment ceases due to a termination by the Company without cause or her resignation with good reason, in either case during a change of control period, then in lieu of the above described severance payments and benefits and subject to her timely execution and non-revocation of a release of claims, Ms. Weber will instead receive: (i) any bonus that has been approved by the Board or Compensation Committee prior to the date of termination but not yet paid, (ii) a lump sum cash payment equal to (x) 24 months of her annual base salary, plus (y) her target annual bonus amount, (iii) subsidized COBRA premiums for 24 months, and (iv) accelerated vesting of all outstanding and otherwise unvested equity awards. +57 +Table of Contents +Such benefits ceased upon Ms. Weber’s relocation to the United States in 2022, except for the tax equalization payments and reimbursement for tax preparation services, which she is entitled to receive until she files her tax return for 2022 (as such benefits relate to the period on or prior to Ms. Weber’s relocation). +Mr. Gleason +On July 8, 2021, we entered in a Severance Benefit agreement with Mr. Gleason to provide Mr. Gleason with certain compensation in the event that his employment is terminated by us without cause or by him for good reason during a one-year period following the date of a change of control. In the event of a termination by us without cause, or by him with good reason following the one-year period after a change of control, in exchange for Mr. Gleason’s release of claims against the Company and a covenant not to sue, we will provide him with an amount equal to one year of his base salary as in effect immediately prior to his termination. Such severance payment is to be paid out to Mr. Gleason in substantially equal installments during the one-year period commencing upon his termination date in accordance with our normal payroll practices. On March 15, 2023, Mr. Gleason notified the Company of his resignation from the Company, effective May 26, 2023. +Ms. Gallagher +On November 29, 2021, we entered into an employment agreement with Ms. Gallagher to serve as our Executive Vice President, General Counsel, Chief Compliance Officer and Secretary. Pursuant to the terms of her agreement, Ms. Gallagher was entitled to receive (i) an annual base salary of $465,000, (ii) a target bonus opportunity under the Company’s annual Incentive Plan of at least 45% of her base salary, and (iii) annual equity awards under the Company’s long-term incentive policy ranging from 95% to 155% of her base salary (with a target of 125%). Ms. Gallagher also received an onboarding equity award having an aggregate value of $1,000,000, consisting of (i) 25% time vested restricted stock, vesting five years after the grant date (ii) 25% time vested restricted stock, vesting in equal amounts over the three years following the grant date, and (iii) 50% options to purchase the Company’s common stock with 25% of those options vesting one year after the first grant of such award and the remaining 75% vesting on a monthly basis over the next three years following the first anniversary of the grant date. +If Ms. Gallagher’s employment ceases due to a termination by the Company without cause or her resignation with good reason (as such terms are defined in her agreement), then, subject to her timely execution and non-revocation of a release of claims, she will receive: (i) payment of any otherwise earned but unpaid annual bonus for the preceding year, (ii) a lump sum cash payment equal to (x) 12 months of her annual base salary, plus (y) her target annual bonus amount, (iii) subsidized COBRA premiums for 12 months, and (iv) accelerated vesting of 50% of outstanding and otherwise unvested equity awards. +On June 3, 2022, Ms. Gallagher notified the Company of her termination of her employment with the Company with Good Reason (as defined in her employment agreement) related to Company organizational changes. Ms. Gallagher departed the Company on June 25, 2022. In connection with such departure, we entered into a release agreement with Ms. Gallagher on June 28, 2022, which entitled her to the payment of the severance and benefits described above. +Ms. Nibauer +On May 11, 2020, we entered into an employment agreement with Ms. Nibauer to serve as our Executive Vice President, Executive Vice President, Business Unit Leader, Infectious Disease. Pursuant to the terms of her agreement, Ms. Nibauer was entitled to receive (i) an annual base salary of $410,000, (ii) a target bonus opportunity under the Company’s annual Incentive Plan of at least 45% of her base salary, and (iii) annual equity awards under the Company’s long-term incentive policy ranging from 95% to 155% of her base salary (with a target of 125%). Ms. Nibauer also received an onboarding equity award having an aggregate value of $500,000, consisting of (i) 50% time vested restricted stock, vesting five years after the grant date and (ii) 50% performance vested restricted units. +In addition, effective December 31, 2021, we promoted Ms. Nibauer to the role of President of Diagnostics. In connection with the changes in her duties, the Board on December 31, 2021 approved the following modifications of Ms. Nibauer’s compensation, effective as of January 1, 2022: (i) annual base salary was increased from $422,000 to $460,000, (ii) annual bonus target was increased from 40% to 50% of base salary and (iii) long-term incentive award target was increased from 125% to 150% of base salary. +If Ms. Nibauer’s employment ceases due to a termination by the Company without cause or her resignation with good reason (as such terms are defined in her agreement), then, subject to her timely execution and non-revocation of a +58 +Table of Contents +release of claims, she will receive: (i)a lump sum cash payment equal to (x) 12 months of her annual base salary, plus (y) her target annual bonus amount, (ii) subsidized COBRA premiums for 12 months, and (iii) accelerated vesting of 50% of outstanding and otherwise unvested equity awards. +The severance payments and benefits described above will be provided if the applicable termination of Ms. Nibauer’s employment does not occur within the change of control period (as defined in her employment agreement). If Ms. Nibauer’s employment ceases due to a termination by the Company without cause or her resignation with good reason, in either case during a change of control period, then in lieu of the above described severance payments and benefits and subject to her timely execution and non-revocation of a release of claims, Ms. Nibauer will instead receive: (i) a lump sum cash payment equal to (x) 24 months of her annual base salary, plus (y) her target annual bonus amount, (ii) subsidized COBRA premiums for 24 months, and (iii) accelerated vesting of all outstanding and otherwise unvested equity awards. +On November 4, 2022, we entered into a separation agreement with Ms. Nibauer pursuant to which she was entitled to receive the following severance benefits: (i) a lump sum payment of $690,000, (ii) pro-rated 2022 annual bonus equal to the product of (a) $198,493 and (b) incentive pool funding percentage established by the Compensation Committee, (iii) subsidized COBRA premiums for 12 months, and (iv) accelerated vesting of 56,663 shares of unvested restricted stock on the date the release agreement becomes irrevocable and the issuance of 34,197 shares of Company’s Common Stock in respect of otherwise unvested performance-based restricted stock units within 30 days after the date the release agreement becomes irrevocable. +Termination and Severance Benefits +The following table provides estimates of the potential severance and other post-termination benefits the NEOs would receive assuming their employment was terminated as of December 31, 2022 (or, in the case of our NEOs terminated employment prior to December 31, 2022, amounts they actually received in connection with such termination): +Name +Benefit +Voluntary +Termination +or +Termination +for Cause 1 +Termination +for Death +or Disability 2 +Termination +for Good +Reason or +Without +Cause Not +Within +Change of +Control +Period 2 +Voluntary +Termination +after Change of +Control, or +Termination for +Good Reason or +Without Cause +Within Change of +Control Period 2 +Carrie Eglinton Manner +President and Chief Executive Officer +Salary Continuation +Bonus +Accelerated Option Vesting +Accelerated Restricted Stock/Unit Vesting +Health Care Benefits +Total +— +— +$ +1,050,000 +$ +1,400,000 +700,000 +$ +770,000 +$ +1,050,000 +$ +1,400,000 +— +— +— +— +— +$ +7,069,465 +$ +7,069,465 +$ +7,069,465 +— +— +$ +25,086 +$ +25,086 +700,000 +$ +7,839,465 +$ +9,194,551 +$ +9,894,551 +Scott Gleason +Former Interim CFO, Senior Vice President, Corporate +Communications & Investor Relations +Salary Continuation +Bonus +Accelerated Option Vesting +Accelerated Restricted Stock/Unit Vesting +Health Care Benefits +Total +— +— +— +$ +335,000 +— +— +— +— +— +— +— +— +— +$ +681,914 +— +$ +681,914 +— +— +— +— +— +$ +681,914 +— +$ +1,016,914 +Kenneth McGrath +Chief Financial Officer +Salary Continuation +Bonus +Accelerated Option Vesting +Accelerated Restricted Stock/Unit Vesting +Health Care Benefits +Total +— +— +$ +475,000 +$ +950,000 +237,500 +$ +261,250 +$ +237,500 +$ +237,500 +— +— +— +— +— +$ +635,676 +$ +317,838 +$ +635,676 +— +— +$ +25,810 +$ +25,810 +237,500 +$ +896,926 +$ +1,056,148 +$ +1,848,986 +Kathleen G. Weber +Chief Product Officer +Salary Continuation +Bonus +Accelerated Option Vesting +Accelerated Restricted Stock/Unit Vesting +Health Care Benefits +Total +— +— +460,000 +$ +920,000 +230,000 +241,500 +230,000 +230,000 +— +— +— +— +— +$ +977,202 +488,601 +$ +977,202 +— +— +36,180 +36,180 +$ +230,000 +$ +1,218,702 +$ +1,214,781 +$ +2,163,382 +1 +In the event of a unilateral termination by Ms. Weber after June 30, she would receive a prorated bonus for the year in which termination occurs. +2 +The indicated values for the accelerated vesting of stock options reflect (i) the number of option shares which would vest on an accelerated basis, multiplied by (ii) the excess, if any, of the $4.82 per share closing price for the Company’s Common Stock, as reported by Nasdaq on December 31, 2022, over the applicable exercise price for each option. The indicated values for the accelerated vesting of RS and PRUs reflect the $4.82 per share closing price on December 31, 2022 multiplied by the number of shares which would vest on an accelerated basis (assuming, in the case of PRUs, that the applicable performance measures for the PRUs are met at 100% of target). +59 +Table of Contents +CEO PAY RATIO +As required by applicable law and SEC regulations, we are providing the following information about the relationship of the median of the annual total compensation of our employees and the annual total compensation of Carrie Eglinton Manner, our President and CEO, which has been annualized for 2022. +For the 2022 fiscal year, (i) the median of the annual total compensation of all employees of the Company (other than Ms. Eglinton Manner) and its subsidiaries was $61,098; and (ii) the annual total compensation of Ms. Eglinton Manner, as reported in the SCT included immediately after this CD&A (and annualized to reflect the partial year of employment), was $7,070,001. Based on this information, for 2022 the ratio of the annual total compensation of Ms. Eglinton Manner, our President and CEO, to the median of the annual total compensation for employees was 116 to 1. +We understand that the CEO pay ratio is intended to provide greater transparency to annual CEO pay and how it compares to the pay of the median employee. As such, we are providing a supplemental ratio that compares the CEO’s regular annual pay, excluding the special one-time “Make Whole Award”, to the pay of the median-paid employee as we believe that this supplemental ratio reflects a more representative comparison. The resulting supplemental CEO pay ratio is 48 to 1. +To identify the median of the annual total compensation of all our employees, as well as to determine the annual total compensation of our median employee, we took the following steps: +• +We determined that, as of December 31, 2022, our world-wide employee population consisted of 812 people. +• +To identify the “median employee” from our employee population, we compared the amount of salary, wages, overtime, commissions and bonuses of our employees as reflected in our payroll records. In making this determination, we did not annualize the compensation of employees who were hired in 2022 but did not work for us for the entire fiscal year. Since we do not widely distribute annual equity awards to our employees, such awards were excluded from our compensation measure. +• +Once we identified our median employee, we combined all of the elements of this employee’s compensation for 2022 in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K, resulting in the annual total compensation as described above. +60 +Table of Contents +PAY VERSUS PERFORMANCE +The information below presents the relationship between the compensation of the Company’s named executive officer and certain performance measures in accordance with Item 402(v) of Regulation +S-K. +For a discussion of the Company’s compensation programs and pay for performance philosophy, please refer to the section captioned “Compensation Discussion and Analysis,” above. +Fiscal Year 2022 Pay versus Performance Table +Summary Compensation Table +Total +Compensation Actually Paid +Value of Initial Fixed +$100 Investment +Based On: +Fiscal +Year +Carrie +Eglinton +Manner +($) +1 +Nancy +Gagliano, +M.D. +($) +2 +Stephen +S. Tang, +Ph.D. +($) +3 +Carrie +Eglinton +Manner +($) +4 +Nancy +Gaglianio, +M.D. +($) +4 +Stephen +S. Tang, +Ph.D. +($) +4 +Average +Summary +Compensation +Table Total for +Non-PEO NEOs +($) +5 +Average +Compensation +Actually Paid +to +Non-PEO NEOs +($) +6 +Total +Stockholder +Return +($) +7 +Peer Group +Total +Stockholder +Return +($) +8 +Net Loss +(in +thousands) +($) +9 +Total +Revenue +(millions) +($) +10 +2022 +6,746,923 +940,292 +2,769,508 +6,645,396 +347,561 +714,651 +1,457,621 +751,486 +60.02 +99.31 +( 17,934 +) +387.5 +2021 +— +— +2,959,781 +— +— +2,697,616 +1,088,815 +808,537 +108.22 +125.43 +( 22,998 +) +233.7 +2020 +— +— +3,085,421 +— +— +3,888,690 +1,601,825 +1,595,129 +131.82 +130.04 +( 14,922 +) +171.7 +1 +During fiscal year 2022, Ms. Eglinton Manner was appointed as our President and CEO effective June 4, 2022. Dr. Gagliano resigned effective June 4, 2022 from her position as the Company’s interim CEO. +2 +During fiscal year 2022, Dr. Gagliano was appointed as our Interim CEO effective April 1, 2022 following Dr. Tang’s termination on March 31, 2022. +3 +During fiscal years 2022, 2021 and 2020, Dr. Tang served as our President and CEO for all or a portion of the year. Dr. Tang’s employment with the Company as CEO ended on March 31, 2022. +4 +Represents amounts of “compensation actually paid” to each of our CEO’s in each of 2022, 2021, and 2020 as computed in accordance with Item 402(v) of Regulation +S-K, +not the actual amount of compensation earned by or paid to each of our CEO’s during fiscal year 2022. The table below reflects the adjustments made from the amounts reported in the “Total” column of the Summary Compensation Table for each year to calculate the amounts set forth in “Compensation Actually Paid to PEO” column in the table above. +Carrie Eglinton +Manner +2022 ($) +Nancy +Gagliano, M.D. +2022 ($) +Stephen S. Tang, Ph.D. +2022 ($) +2021($) +(a) +2020 ($) +(a) +Summary Compensation Table Total +6,746,923 +940,292 +2,769,508 +2,959,781 +3,085,421 +Grant Date Fair Value of Option Awards and Stock Awards Granted in Fiscal Year +( 5,600,000 +) +( 770,000 +) +b +( 834,913 +) +( 1,946,860 +) +( 1,218,000 +) +Fair Value at Fiscal +Year-End +of Outstanding and Unvested Option Awards and Stock Awards Granted in Fiscal Year +5,498,473 +— +— +1,337,758 +1,799,376 +Change in Fair Value of Outstanding and Unvested Option Awards and Stock Awards Granted in Prior Fiscal Years +— +( 40,879 +) +— +132,795 +237,531 +Fair Value at Vesting of Option Awards and Stock Awards Granted in Fiscal Year That Vested During Fiscal Year +— +218,148 +664,350 +— +— +Change in Fair Value as of Vesting Date of Option Awards and Stock Awards Granted in Prior Fiscal Years For Which Applicable Vesting Conditions Were Satisfied During Fiscal Year +— +— +( 1,387,479 +) +214,142 +( 15,638 +) +Fair Value as of Prior Fiscal +Year-End +of Option Awards and Stock Awards Granted in Prior Fiscal Years That Failed to Meet Applicable Vesting Conditions During Fiscal Year +— +— +( 496,815 +) +— +— +Compensation Actually Paid to PEOs +6,645,396 +347,561 +714,651 +2,697,616 +3,888,690 +(a) +The fair values of time-based equity awards and performance-based restricted share units granted in 2020 are based on the closing price of the Company’s common shares as reported on the NASDAQ on the relevant valuation date. Performance-based restricted share units granted in 2021 were valued on the relevant valuation date using a Monte Carlo simulation model in accordance with the provisions of ASC Topic 718 +61 +Table of Contents +using the following assumptions: (A) for valuations as of December 31, 2021, a risk free interest rate of 0.73% and share price volatility of 75.82%, for valuations on December 31, 2022, a risk free interest rate of 4.67% and share price volatility of 60.57%.” Note that the reference to valuations on December 31, 2022 is appropriate as this relates to the valuation of the 2021 PRUs as of December 31, 2022. +(b) +Dr. Gagliano received, as part of her Interim CEO agreement, a sign-on equity grant consisting of $100,000 of fully vested shares (14,815 shares) and $670,000 of restricted stock units (99,259 restricted stock units) which vest in equal monthly installments beginning on April 30, 2022, subject to continued employment as Interim CEO. Dr. Gagliano vested in 24,815 units of the 99,259 restricted stock units granted prior to her resignation as Interim CEO in June 2022, and accordingly, 74,444 units of her restricted stock unit award were forfeited. +5 +Our +Non-PEO +NEOs includes the individuals indicated in the table below for each fiscal year: +Year +Non-PEO NEOs +2022 +Kathleen Weber, Lisa Nibauer, Agnieszka Gallagher, Scott Gleason +2021 +Kathleen Weber, Jack Jerrett, Roberto Cuca, Agnieszka Gallagher, Scott Gleason +2020 +Kathleen Weber, Jack Jerrett, Roberto Cuca, Anthony Zezzo, Lisa Nibauer +6 +Represents amounts of average “compensation actually paid” as computed in accordance with Item 402(v) of Regulation +S-K, +not the actual average amount of compensation earned by or paid to the Company’s named executive officers, except for Dr. Tang with respect to fiscal years 2022, 2021, and 2020 and Mses. Gagliano and Eglinton Manner with respect to fiscal year 2022. The table below reflects the adjustments made from the amounts reported in the “Total” column of the Summary Compensation Table for the named executive officers as a group (excluding Dr. Tang and Mses. Gagliano and Eglinton Manner, as applicable) each year to calculate the amounts set forth in “Compensation Actually Paid to +non-PEO +NEOs” column in the table above, using the same methodology as set forth in footnote 4, above. +NEO Averages +2022($) +2021 +($) +(a) +2020 +($) +(a) +Summary Compensation Table Total +1,457,621 +1,088,815 +1,601,825 +Grant Date Fair Value of Option Awards and Stock Awards Granted in Fiscal Year +( 729,670 +) +( 552,646 +) +( 766,909 +) +Fair Value at Fiscal +Year-End +of Outstanding and Unvested Option Awards and Stock Awards Granted in Fiscal Year +293,934 +353,108 +625,180 +Change in Fair Value of Outstanding and Unvested Option Awards and Stock Awards Granted in Prior Fiscal Years +( 102,310 +) +43,223 +59,438 +Fair Value at Vesting of Option Awards and Stock Awards Granted in Fiscal Year That Vested During Fiscal Year +85,437 +29,005 +80,708 +Change in Fair Value as of Vesting Date of Option Awards and Stock Awards Granted in Prior Fiscal Years For Which Applicable Vesting Conditions Were Satisfied During Fiscal Year +( 103,440 +) +59,492 +( 5,113 +) +Fair Value as of Prior Fiscal +Year-End +of Option Awards and Stock Awards Granted in Prior Fiscal Years That Failed to Meet Applicable Vesting Conditions During Fiscal Year +( 150,086 +) +( 212,460 +) +— +Compensation Actually Paid to NEOs +751,486 +808,537 +1,595,129 +(a) +The fair values of time-based equity awards and performance-based restricted share units granted in 2020 are based on the closing price of the Company’s common shares as reported on the NASDAQ on the relevant valuation date. Performance-based restricted share units granted in 2021 were valued on the relevant valuation date using a Monte Carlo simulation model in accordance with the provisions of ASC Topic 718 using the following assumptions: (A) for valuations on December 31, 2021, a risk free interest rate of 0.73% and share price volatility of 75.82%. The fair value of +non-qualified +stock options granted to Ms. Gallagher as of December 31, 2021 were valued using a Black Scholes model in accordance with the provision of ASC Topic 718 using the following assumptions: an expected term of 2 years, a risk-free interest rate of 0.73%, a dividend yield of 0% and share price volatility of 75.82%. +7 +For the relevant fiscal year, represents the cumulative total shareholder return (TSR) of OraSure Technologies, Inc. for the measurement periods ending on December 31 of each of 2022, 2021, and 2020, respectively. +8 +For the relevant fiscal year, represents the cumulative total shareholder return (TSR) of NASDAQ Health Care Index for the measurement periods ending on December 31 of each of 2022, 2021, and 2020, respectively. +9 +Reflects GAAP “Net Income (Loss)” in the Company’s Consolidated Statement of Operations included in the Company’s Annual Report on Form +10-K +for each of the years ended December 31, 2022, 2021, and 2020. +10 +Represents “Net Revenues” in the Company’s Consolidated Statement of Operations included in the Company’s Annual Report on Form +10-K +for each of the years ended December 31, 2022, 2021, and 2020. +Relationship Between Compensation Actually Paid and Financial Performance +As described in more detail in the section “Executive Compensation – Compensation Discussion and Analysis,” while the Company utilizes several performance measures to align executive compensation with Company performance, +62 +Table of Contents +all of those Company measures are not presented in the Pay versus Performance table above. Moreover, the Company’s executive compensation program includes components designed to incentivize long-term performance, and therefore does not specifically align the Company’s performance measures with compensation that is actually paid (as computed in accordance with Item 402(v) of Regulation +S-K) +for a particular year. In accordance with Item 402(v) of Regulation +S-K, +the following graphs illustrate the relationship across the Company’s last three completed fiscal years between the amounts disclosed in the Pay Versus Performance Table, above, as “Compensation Actually Paid” to the Company’s First PEO, Second PEO, and Third PEO respectively, and the “Average Compensation Actually Paid” to the Company’s +non-PEO +named executive officers and Total Stockholder Return, Peer Group Total Stockholder Return, Net Income (Loss) and Total Revenue. +63 +Table of Contents +Tabular List of Performance Measures +The following table lists the financial performance measures that the Company considers to be the most important financial performance measures used by the Company to link compensation actually paid to its named executive officers for the most recently completed fiscal year to performance of the Company. +Important Financial Performance Measures +Net Revenues +Adjusted Operating Income +Income Before Interest and Taxes +Stock Price +64 +Table of Contents +STOCK AWARD PLAN INFORMATION +The following table provides information as of December 31, 2022 about the shares of Common Stock that may be issued upon the exercise of options under the OraSure Technologies, Inc. Stock Award Plan (the “Stock Award Plan” or the “Plan”). Additional grants of equity compensation may only be made under the Stock Award Plan. +Plan Category +Number of Securities to be +Issued Upon Exercise of +Outstanding Options +(a) +Weighted- +Average Exercise +Price of Outstanding +Options +(b) +Number of Securities +Remaining Available for +Future Issuance Under +Equity Compensation Plans +(Excluding Securities +Reflected in Column (a)) +(c) +Equity compensation plans approved by +security holders +1,757,810 +$10.25 +3,920,836 1 +Equity compensation plans not approved by +security holders +— +— +— +Total +1,757,810 +3,920,836 +1 +Represents shares remaining available for future issuance as of December 31, 2022 under the Stock Award Plan. +DIRECTOR COMPENSATION +ANNUAL FEES +Under our Non-Employee Director Compensation Policy (“Director Policy”), non-employee members of the Board receive fixed annual fees for service on the Board and Committees of the Board during 2022, as set forth below. The fees were paid quarterly in arrears. +Position +Annual Fee +Board Member (Base Fee) +$ +55,000 +Board Chairperson (Additional Fee) +$ +25,000 +Audit Chairperson +$ +20,000 +Compensation Chairperson +$ +20,000 +Nominating & Corporate Governance Chairperson +$ +20,000 +Non-Chairperson Committee member +$ +5,000 +Each non-employee Director has the option to receive shares of the Company’s Common Stock in lieu of cash fees, as described above. Prior to the end of each calendar year, each non-employee Director shall make an annual election with respect to cash fees for the following calendar year, indicating whether he or she elects to receive the fees in cash, or in Company Common Stock in lieu of the cash fees. If no election has been made as of the first day of the year, the non-employee Director shall receive all fees in cash, as set forth above, or, if a previous election has been made to receive Common Stock in lieu of the cash fees, such election shall remain in effect for subsequent calendar years until such election is changed by the completion, signature and delivery to the Company of a new election form. Each newly elected or appointed non-employee Director shall make an election prior to, or within 30 days of, his or her initial appointment or election to the Board, for the remainder of the year of such appointment or election, whether to receive the fees in cash or in Common Stock. +In the event an election is made by a non-employee Director to receive Common Stock in lieu of cash fees, such Director shall automatically be granted on the applicable fee payment date a number of shares of Common Stock having an aggregate fair market value equal to the aggregate amount of such non-employee Director’s cash fee for such fiscal quarter, determined by dividing (A) the aggregate amount of the fee by (B) the average of the high and low sales price of the Company’s Common Stock as reported on Nasdaq on the applicable fee payment date (rounded down to the nearest whole share) (the “Quarterly Grant”). Non-employee Directors are permitted to direct the Company to withhold shares of stock in order to pay tax withholding obligations arising upon the receipt of a Quarterly Grant. +65 +Table of Contents +INITIAL AND ANNUAL EQUITY AWARDS +Upon joining the Board, non-employee Directors receive an initial grant of restricted shares of the Company’s Common Stock having an aggregate value of $100,000 (the “Initial Grant”). The Initial Grant will cliff vest two (2) years after the Director joins the Board. In addition, non-employee Directors will receive an annual grant of restricted shares (the “Annual Grant”) on the date of the Company’s Annual Meeting of Stockholders, which will vest on or prior to the Company’s next Annual Meeting of Stockholders. The value of Annual Grants for Board members are as follows: +Board Position +Award Grant Value +Board Member (Base) +$105,000 +Board Chairperson (Additional Value) +$ 25,000 +The dollar value of each Initial Grant and Annual Grant is converted into restricted stock by dividing the above values by the average of the high and low sales prices of the Company’s Common Stock, as reported on the Nasdaq Stock Market, on the grant date. Non-employee Directors are permitted to direct the Company to withhold restricted stock in order to pay tax withholding obligations arising upon the vesting of such shares. +EQUITY AWARD TERMS +Each Initial Grant, Annual Grant and Quarterly Grant shall be made under the terms of the Company’s Stock Award Plan or a successor plan and will be subject to the terms and conditions of such plan and the applicable award agreement. +Any unvested restricted stock granted to non-employee Directors will vest in their entirety immediately upon the occurrence of a “change of control” of the Company. A “change of control” means a change of control that would be required to be reported under the Exchange Act, as amended, and would be deemed to have occurred at such time as (i) any person, or more than one person acting as a group within the meaning of Section 409A of the Code, acquires ownership of stock of the Company that, together with stock held by such person or group, constitutes more than 50 percent of the total fair market value or total voting power of the stock of the Company; (ii) any person, or more than one person acting as a group within the meaning of Section 409A of the Code, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition) ownership of stock of the Company possessing 30 percent or more of the total voting power of the Company’s stock; (iii) a majority of the members of the Board is replaced during any 12-month period by Directors whose appointment or election is not endorsed by a majority of the members of the Board before the date of the appointment or election; or (iv) a person, or more than one person acting as a group within the meaning of Section 409A of the Code, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition) assets from the Company that have a total gross fair market value equal to or more than 40 percent of the total gross fair market value of all the assets of the Company immediately before such acquisition or acquisitions. In addition, if a non-employee Director leaves the Board for any reason other than a change of control, prior to the end of the vesting period for the Annual Grant of restricted stock, such award shall immediately vest on a pro-rata basis based on the actual duration of such Director’s service to the Board during such vesting period. +DEFERRED COMPENSATION +Non-employee Directors are permitted to defer all or a portion of the fees and grants of restricted stock under the Company’s Non-Qualified Deferred Compensation Plan, on terms similar to those applicable to our officers. +66 +Table of Contents +DIRECTOR COMPENSATION DURING 2022 +The following table summarizes information related to compensation of non-employee Directors during the fiscal year ended December 31, 2022: +Name 1, 2 +Fees +Earned +or Paid +in Cash 3 +($) +Stock +Awards 4 +($) +Option +Awards +($) +Non-Equity +Incentive Plan +Compensation +($) +Change in +Pension +Value and +Nonqualified +Deferred +Compensation +Earnings +All Other +Compensation +($) +Total ($) +Mara G. Aspinall +$ +86,494 +$ +204,998 +— +— +— +— +$ +291,492 +Michael Celano +$ +76,694 +$ +130,000 +— +— +— +— +$ +206,693 +James A. Datin +— +$ +172,190 +— +— +— +— +$ +172,190 +Eamonn P. Hobbs +$ +68,172 +$ +105,000 +— +— +— +— +$ +173,172 +Ronny B. Lancaster +$ +68,172 +$ +105,000 +— +— +— +— +$ +173,172 +David J. Shulkin, M.D. +$ +65,000 +$ +105,000 +— +— +— +— +$ +170,000 +Lelio Marmora +$ +65,000 +$ +105,000 +— +— +— +— +$ +170,000 +Nancy Gagliano, M.D. +$ +60,000 +$ +770,000 +5 +— +— +— +— +$ +830,000 +Anne Whitaker +$ +60,000 +$ +105,000 +— +— +— +— +$ +165,000 +1 +Because Ms. Eglinton Manner was an officer of the Company, she was not entitled to any separate compensation for service on the Board or any Committee thereof and has not been included in this table. On August 8, 2022, and in connection with the Company’s strategic transformation, each of Michael Celano, Ronny Lancaster, and Eamonn Hobbs, resigned from the Board, with such resignations to effective November 8, 2022. +2 +Non-employee Directors held the following number of unvested shares of restricted stock (“RS”) at December 31, 2022: Ms. Aspinall: 20,000 RS; Mr. Datin: 20,000 RS; Dr. Shulkin: 20,000 RS; Mr. Marmora: 20,000 RS; Dr. Gagliano: 10,563 RS; and Ms. Whitaker: 30,563 RS . The aggregate number of stock options and restricted shares held by Ms. Eglinton Manner are set forth in the table in the Section entitled, “Outstanding Equity Awards,” in this Proxy Statement. +3 +Mr. Datin elected to receive his board fees in shares of the Company’s Common Stock in lieu of cash fees in accordance with the Director compensation policy described above. The awards granted to Dr. Gagliano were made pursuant to her Interim CEO agreement. +4 +The indicated amounts reflect the aggregate grant date fair value of restricted stock awards made to non-employee Directors during 2022, computed in accordance with FASB ASC Topic 718. +5 +Dr. Gagliano received, as part of her Interim CEO agreement, a sign-on equity grant consisting of $100,000 of fully vested shares (14,815 shares) and $670,000 of restricted stock units (99,259 restricted stock units) which vest in equal monthly installments beginning on April 30, 2022, subject to continued employment as Interim CEO. Dr. Gagliano vested in 24,815 units of the 99,259 restricted stock units granted prior to her resignation as Interim CEO in June 2022, and accordingly, 74,444 units of her restricted stock unit award were forfeited. +67 +Table of Contents +PROPOSALS REQUIRING YOUR VOTE +PROPOSAL NO. 1. ELECTION OF DIRECTORS +Background +At the Annual Meeting, you will be asked to vote on the election of one Director. A majority of the independent members of the Board have nominated Mara G. Aspinall for election as the Class II Director, for a term expiring at the Annual Meeting of Stockholders in 2026. The Board has determined that Ms. Whitaker, a current Class II member of the Board, will not stand for re-election at the Annual Meeting, and her service as a member of the Board will end effective as of the Annual Meeting. Accordingly, Ms. Whitaker’s seat shall remain vacant until filled in accordance with our Bylaws, as described below. We extend our deepest gratitude to Ms. Whitaker for her distinguished service to the Board. +We do not know of anything that would preclude the nominee from serving. However, should the nominee for any reason become unable or unwilling to serve as a Director, the persons named in the enclosed Proxy Card will vote the shares represented by each Proxy for such substitute nominee as the Board may approve. +The nominee for election as Director is currently a member of our Board and has consented to continue to serve if re-elected to the Board. Ms. Aspinall joined the Board in 2017 and serves as a member of the Compensation Committee and Chairperson of the Audit Committee. +Any vacancy that occurs on the Board that results from an increase in the number of Directors may be filled by the affirmative vote of a majority of the Directors then in office, and any other vacancy on the Board may be filled by the affirmative vote of a majority of the Directors then in office, even though less than a quorum of the Board, or by a sole remaining Director. +Certain information with respect to each person nominated for election as a Director and each person whose term of office as a Director will continue after the Annual Meeting, including the particular experience, qualifications, attributes and skills they possess that led to the conclusion that they should serve as a Director, is set forth below. +Name +Principal Occupation +Age +Director +Since +Class II (Director Whose Terms Expire in 2023): +Mara G. Aspinall +Managing Member, Health Catalysts Group LLC and Managing Director, Blue Stone Venture Partners +60 +2017 +Class III (Directors Whose Terms Expire in 2024): +James A. Datin +President & CEO, BioAgilytix Labs LLC +60 +2019 +Nancy J. Gagliano, M.D. +Managing Director, Granite Healthcare Advisors +63 +2021 +Lelio Marmora +President, The Management Lab +56 +2020 +Class I (Nominees For Terms Expiring in 2025): +Carrie Eglinton Manner +President and CEO, OraSure Technologies, Inc. +49 +2022 +David J. Shulkin, M.D. +President and CEO, Shulkin Solutions, Inc. +63 +2020 +68 +Table of Contents +Mara G. Aspinall +Independent Director +Director since: 2017 +Class II Nominee +Term Expires: 2023 +Age: 60 +Other Current +Public Company +Directorships: 3 +Mara G. Aspinall joined the Board in June 2017 and serves as the chair of the Audit Committee and as a member the Compensation Committee. Since 2014, she has served as the Managing Member of Health Catalysts Group, a consulting firm that focuses on growth of life science and technology companies. Ms. Aspinall has also served as Managing Director of BlueStone Venture Partners, a venture capital firm dedicated to investing in life sciences and healthcare related companies. Prior to these positions, Ms. Aspinall served as President and CEO, Ventana Medical Systems / Global Head of Roche Tissue Diagnostics, a division of The Roche Group that provides tissue-based cancer diagnostic instruments, products and services. Prior to that, she co-founded and served as CEO and Director of On-Q-ity, Inc., a diagnostic research company focused on improving cancer treatment through the capture of circulating tumor cells in a patient’s blood. Ms. Aspinall also spent 12 years with Genzyme Corporation, serving as President of the Genzyme Genetics division, a leading provider of esoteric and genetic tests for the reproductive, oncology and personalized medicine markets, and as President of the Genzyme Pharmaceuticals division, a custom pharmaceutical intermediates manufacturer. Ms. Aspinall began her career as a management consultant with Bain & Company. Ms. Aspinall holds an M.B.A. from Harvard Business School and a B.A. in International Relations from Tufts University. Ms. Aspinall is certified in Cybersecurity Oversight from Carnegie Mellon University. Ms. Aspinall previously served on the board of directors at Safeguard Scientific and currently serves on the board of directors of Castle Biosciences, Inc., Abcam Plc, and DA32 Life Sciences Acquisition Corp. +Skills and Qualifications leading to conclusion that she should serve on the Board: +•  Executive-level experience as a CEO. +•  Executive experience in the life sciences industry. +•  Extensive experience in molecular diagnostics. +James A. Datin +Independent Director +Director since: 2019 +Class III Director +Term Expires: 2024 +Age: 60 +Other Current +Public Company +Directorships: None +James A. Datin became a member of the Board in August 2019 and serves on the Audit Committee and as chair of the Compensation Committee. From November 2013 to June 2022, Mr. Datin has served as President and CEO of BioAgilytix Labs, LLC, a leading global bioanalytical contract research organization, and as a member of its board of directors until December 2022. From September 2005 to July 2013, Mr. Datin served as Executive Vice President and Managing Director at Safeguard Scientifics, Inc., a company focused on providing capital and advice to technology driven businesses in healthcare, financial services and digital media. Prior to that time, Mr. Datin served as CEO of Touchpoint Solutions, Inc., a remote management and monitoring company serving the medical, imaging, print, retail and other industries. He has also held senior leadership positions at Dendrite International, Inc., GlaxoSmithKline PLC, the Isuta Holdings Group of companies, Baxter and other companies. Mr. Datin has served on the Advisory Board of Marshall University School of Business since 2013 and on the board of North Carolina Biotechnology Center as a member since 2017. He previously served on the boards of directors of FSD Pharma Inc., Life Sciences Pennsylvania and NovaSom, Inc. Mr. Datin received a B.B.A. at Marshall University, an M.B.A. at the University of New Haven and an Advanced Management Degree at The Wharton School at The University of Pennsylvania. +Skills and Qualifications leading to conclusion that he should serve on the Board: +•  Extensive life science and business experience. +•  Executive leadership experience. +•  Strong M&A background. +•  Operations and financial experience. +69 +Table of Contents +Nancy J. Gagliano, M.D. +Independent Director +Director since: 2021 +Class III Director +Term Expires: 2024 +Age: 63 +Other Current +Public Company +Directorships: None +Nancy J. Gagliano, M.D., M.B.A., became a board member in November 2021 and is the chair of the Nominating and Corporate Governance Committee. Dr. Gagliano also served as interim CEO from March to June 2022. Dr. Gagliano has more than 35 years of experience as a senior healthcare physician executive and practicing physician in internal medicine. Dr. Gagliano most recently served as an executive leader of the National Institute of Health’s RADx Tech, Rapid Acceleration of Diagnostics program from May 2020 to November 2021. In this position she has helped oversee over one billion dollars of sponsored programs to bring millions of new COVID-19 tests to market. Prior to her work for the National Institute of Health, Dr. Gagliano was the Chief Medical Officer of Culbert Healthcare Solutions from September 2016 to May 2020, providing strategic guidance on healthcare consulting services. Before joining Culbert Healthcare, Dr. Gagliano spent six years with CVS Health holding senior leadership positions including as the Chief Medical Officer of Minute Clinic, and as a Senior Vice President overseeing key programs such as the enterprise smoking cessation program and the development of the company’s telemedicine program. Prior to her leadership roles at CVS Health, Dr. Gagliano was a practicing internal medicine physician and held numerous leadership positions at Massachusetts General Hospital and Massachusetts General Physicians Organization. Dr. Gagliano holds an M.D. from Harvard Medical School, an MBA from Northeastern University, and a Bachelor’s of Science Degree from Union College in Computer Science and Biology. +Skills and Qualifications leading to conclusion that she should serve on the Board: +•  Extensive medical and healthcare experience. +•  Executive leadership experience. +•  Strong background managing public health programs. +Lelio Marmora +Independent Director +Director since: 2020 +Class III Director +Term Expires: 2024 +Age: 56 +Other Current +Public Company +Directorships: None +Lelio Marmora became a member of the Board in June 2020 and serves on the Audit Committee and the Nominating and Corporate Governance Committee. Since June 2020, he has served as the President of the Management Lab. Prior to that, Mr. Marmora served as Executive Director of Unitaid in Geneva, Switzerland, from 2014 to 2020, overseeing a portfolio of $1.5 billion in 100 countries. Prior to Unitaid, Mr. Marmora was a member of the board of directors for The Global Fund to Fight AIDS, Tuberculosis and Malaria from 2016 to 2019, overseeing a $4 billion portfolio. Earlier in his career, Mr. Marmora served in various capacities at a range of international organizations, including the World Bank, the Inter-American Development Bank and the United Nations Development Program, managing modernization of the State programs. Mr. Marmora graduated from the Universite Pantheon-Assas (Paris II) with a Master’s degree in International Law and Administration of International Organizations. +Skills and Qualifications leading to conclusion that he should serve on the Board: +•  Extensive experience in international public health. +•  Expertise in public funding. +•  Executive leadership experience. +70 +Table of Contents +Carrie Eglinton Manner +Director +Director since: 2022 +Class I Director +Term Expires: 2025 +Age: 49 +Other Current +Public Company +Directorships: 1 +For biographical information on Ms. Eglinton Manner, see the Section entitled, “Executive Officers,” in this Proxy Statement. +Skills and Qualifications leading to conclusion that he should serve on the Board: +•  Extensive experience in the healthcare industry. +•  Extensive experience managing business operations in areas such as diagnostic imaging, lab services and medical devices. +•  Extensive leadership experience. +David J. Shulkin, M.D. +Independent Director +Director since: 2020 +Class I Director +Term Expires: 2025 +Age: 63 +Other Current +Public Company +Directorships: 2 +David J. Shulkin, M.D. joined the Board in April 2020 and serves on the Compensation Committee and the Nominating and Corporate Governance Committee. Since 2018, he has served as President and CEO of Shulkin Solutions, Inc., a company that promotes innovation in healthcare and advocates for veterans and underserved populations. From July 2015 through March 2018, Dr. Shulkin served in various capacities at the U.S. Department of Veterans Affairs (the “VA”), including as Secretary of the VA from February 2017 to March 2018 and as Under Secretary for Health from July 2015 to February 2017. Prior to his tenure at the VA, he served in executive leadership positions at Morristown Medical Center, Beth Israel Medical Center, Temple University Hospital, Drexel University School of Medicine, Doctor Quality, Inc. and the University of Pennsylvania Health System and Hospital of the University of Pennsylvania. Dr. Shulkin received a B.A. from Hampshire College and his M.D. from the Medical College of Pennsylvania (Drexel College of Medicine). He also completed residencies in Internal Medicine at Yale University School of Medicine and University of Pittsburgh School of Medicine, was a Fellow in General Medicine at the University of Pittsburgh School of Medicine and was a Robert Wood Johnson Foundation Clinical Scholar at the University of Pennsylvania School of Medicine. Dr. Shulkin is certified by the American Board of Internal Medicine. He currently serves on the board of directors of CareMax, Inc. and of Cactus Acquisition Corp. 1 Ltd. +Skills and Qualifications leading to conclusion that he should serve on the Board: +•  Expertise in medical matters and public health. +•  Expertise in government affairs. +•  Executive-level management experience. +71 +Table of Contents +Vote Required; Board Recommendation +If a quorum is present, the nominee will be elected if she receives a majority of the votes cast by shares present in person or by Proxy and entitled to vote on the election of directors. This means that the nominee shall be elected to the Board if the votes validly cast “for” such nominee’s election exceed the votes validly cast “against” such nominee’s election. Abstention and broker non-votes will have no effect on the required vote. In the absence of instructions to the contrary, shares of Common Stock represented by properly executed Proxies will be voted for the nominee, who has consented to be named and to serve if elected. +Your Board recommends that you vote FOR the election of the Director nominee. +PROPOSAL NO. 2. RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +Background +The Audit Committee of the Board of Directors has approved the reappointment of KPMG LLP (“KPMG”) as our independent registered public accounting firm for the 2023 fiscal year. The Audit Committee has also recommended that the Board submit the appointment of KPMG for ratification by stockholders at the Annual Meeting. Although action by the stockholders on this matter is not legally required, the Audit Committee and the Board believe it is appropriate to seek stockholder ratification of this appointment in light of the important role played by the independent registered public accounting firm in reporting on the Company’s consolidated financial statements. If this appointment is not ratified by stockholders, the Audit Committee may reconsider its appointment of KPMG for the 2023 fiscal year or in the future. +One or more representatives of KPMG are expected to attend the Annual Meeting electronically. They will have an opportunity to make a statement and will be available to respond to appropriate questions. +Vote Required; Board Recommendation +Ratification of the appointment of KPMG requires the affirmative vote of a majority of shares present in person or by proxy and entitled to vote on this proposal. Abstentions will have the effect of voting against this proposal. Broker non-votes, if any, will have no effect on this proposal. In the absence of instructions to the contrary, shares of Common Stock represented by properly executed Proxies will be voted for ratification of the appointment of KPMG as our independent registered public accounting firm for the 2023 fiscal year. +Your Board recommends that the stockholders vote FOR ratification of the appointment of KPMG. +PROPOSAL NO. 3. ADVISORY (NON-BINDING) VOTE TO APPROVE EXECUTIVE COMPENSATION +Background +Section 14A of the Exchange Act, enacted pursuant to the Dodd-Frank Act, requires that stockholders be given the opportunity to vote to approve, on an advisory (non-binding) basis, no less frequently than once every three years, the compensation of our NEOs. Based on feedback received at our 2017 Annual Meeting, the Board determined that such a vote will continue to be held on an annual basis until the next advisory vote on frequency. +The vote on the resolution recommended below is not intended to address any specific element of compensation, but rather relates to the overall compensation of our NEOs. As described more fully under the CD&A Section of this Proxy Statement and the related tables and narrative, our compensation program is performance-based and is designed to pay executives for performance by offering rewards for the achievement of pre-determined objectives. In addition, our program is designed to align the interests of executives with the interests of our stockholders, provide long-term incentives and set compensation at levels sufficiently competitive to attract, retain and motivate high quality executives, and meet strong corporate governance principles. You are urged to carefully review the CD&A Section of this Proxy Statement which contains a detailed discussion of our executive compensation program, including the 2022 compensation of our NEOs. +72 +Table of Contents +Compensation Program Features +As described more fully in the CD&A, there are many important features to our compensation program that illustrate our commitment to pay-for-performance and good corporate governance. A summary of some of the more significant of these features is set forth below: +•  Compensation is market driven and performance -based. +•  Total compensation targeted at 50 th percentile of Peer Group. +•  Balanced mix of cash/equity, fixed/variable, short-term/ long-term compensation components. +•  Use of peer company benchmarking. +•  Threshold financial performance objectives for annual bonus pool funding meet or exceed fiscal performance for the prior fiscal year. +•  Compensation recoupment policy. +•  Equity awards provide long-term incentive with three year vesting. +•  No hedging or pledge of our Common Stock. +•  50% of annual equity is performance-based vesting. +•  Robust stockholder outreach on compensation/ governance matters. +Vote Required; Board Recommendation +If a quorum is present, the affirmative vote of a majority of shares present, in person or by Proxy and entitled to vote on this proposal, is required to approve, on an advisory (non-binding) basis, the compensation paid to NEOs. Abstentions will have the effect of voting against this proposal. Broker non-votes will not count toward the determination of whether this proposal is approved and will have no impact on the vote. In the absence of instructions to the contrary, shares of Common Stock represented by properly executed Proxies will be voted for approval of our executive compensation, as disclosed in this Proxy Statement. Because this stockholder vote is advisory, it will not be binding on the Company or the Board of Directors. However, the Compensation Committee and Board will take into account the outcome of the vote when considering future executive compensation programs and arrangements. +Based on the foregoing, the Board is requesting that stockholders vote on the following resolution: +“ RESOLVED , that the compensation paid to the Company’s named executive officers, as disclosed in the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED.” +Your Board recommends that the stockholders vote FOR the approval of our executive compensation as described in the preceding resolution. +PROPOSAL NO. 4. ADVISORY (NON-BINDING) VOTE TO SELECT THE FREQUENCY OF FUTURE STOCKHOLDER ADVISORY VOTES TO APPROVE THE CORPORATION’S EXECUTIVE COMPENSATION +As required under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, our Board of Directors is also submitting for stockholder consideration a proposal to determine, on an advisory basis, whether future stockholder advisory votes to approve the compensation paid to our named executive officers should be sought annually, every two years or every three years. This advisory vote must be solicited from our stockholders at least once every six years. At the last vote held at the 2017 annual meeting of stockholders, stockholders overwhelmingly voted for an annual advisory vote on executive compensation, and the Board of Directors approved this choice. +The subject of this proposal is a non-binding advisory resolution. Accordingly, the resolution will not have any binding legal effect and may not be construed as overruling a decision by the Company or the Board of Directors or to create or imply any change to the fiduciary duties of the Board of Directors. However, the Board of Directors intends to take the results of the vote on this proposal into account in its decision regarding the frequency with which the Company submits say-on-pay proposals to stockholders in the future. +The Board of Directors values the importance of receiving regular input from our stockholders on important matters such as the compensation of the Corporation’s executive officers. We appreciate the past support and approval of +73 +Table of Contents +employee incentive programs by our stockholders. Accordingly, as indicated below, the Board of Directors recommends that you vote for a frequency of annually for future stockholder advisory votes to approve the compensation of the Corporation’s named executive officers. +The enclosed proxy card gives you four choices on voting on this item. In addition to considering whether future stockholder advisory votes to approve the compensation of the Company’s named executive officers should occur annually, every two years, or three years, you also may choose to abstain from voting on this item. +Please note that you are not voting to approve or disapprove the Board of Director’s recommendation on this item. +Vote Required; Board Recommendation +Abstentions will have the effect of voting against this proposal. Broker non-votes will not count toward the determination of whether this proposal is approved and will have no impact on the vote. In the absence of instructions to the contrary, shares of Common Stock represented by properly executed Proxies will be voted for annual advisory votes on compensation. The frequency receiving the most for votes will be considered the frequency preferred by stockholders. The affirmative vote of a majority of shares present, in person or by proxy and entitled to vote is required to approve this proposal. Because this stockholder vote is advisory, it will not be binding on the Company or the Board of Directors. However, the Compensation Committee and Board will take into account the outcome of the vote, but may decide that it is in the best interests of our stockholders and the Company to hold an advisory vote more or less frequently than the frequency receiving the most votes from stockholders. +Based on the foregoing, the Board is requesting that stockholders vote on the following resolution: +“RESOLVED , that the stockholders determine on an advisory basis, whether the preferred frequency of an advisory vote on the executive compensation of the Company’s Name Executive Officers as set forth in the Company’s proxy statement should be every year.” +Your Board recommends that the stockholders vote in favor of holding an advisory vote on executive compensation EVERY YEAR. +PROPOSAL NO. 5. AMENDMENT AND RESTATEMENT OF STOCK AWARD PLAN +General +Effective September 29, 2000, in connection with the merger of Epitope and STC Technologies, Inc. into the Company (the “Merger”), the Company adopted the Epitope, Inc. 2000 Stock Award Plan, which was subsequently renamed the OraSure Technologies, Inc. Stock Award Plan (the “Stock Award Plan” or the “Plan”). +The Board has approved and recommended for submission to stockholders an amendment and restatement of the Stock Award Plan to both increase in the number of shares of Common Stock authorized for grant under the Plan and generally require a minimum vesting period of one year for all awards granted under the Plan. A description of the proposed Amendment and Restatement of the Stock Award Plan are set forth below. +Amendment and Restatement of Stock Award Plan +In order to enable the Company to continue to attract qualified officers, employees, directors and outside advisors, and to compensate these individuals in a manner that is competitive with compensation provided by other medical diagnostic and healthcare companies, the Board has determined that additional shares of Common Stock are needed to be available for grants under the Plan. In addition, the Board wants to ensure that sufficient shares are available, if needed, to provide retention or other equity awards in connection with potential acquisitions or other business development activities. In determining the amount of the increase to our share reserve under the Stock Award Plan, the Board and Compensation Committee considered a number of factors, including the following: +• +Shares Available for Grant . Currently, a maximum of 7,168,183 shares of our common stock may be granted under the Stock Award Plan. As of March 31 2023, 1,457,131 shares remained available for grant under the Stock Award Plan. The proposed amendment and restatement of the Stock Award Plan would increase the number of +74 +Table of Contents +shares available for grant under the Amended and Restated Stock Award Plan by 3,000,000 shares, bringing the total that will be available to be granted under the Amended and Restated Stock Award Plan to 4,457,131 shares. As of March 31, 2023, no benefits or amounts relating to the additional 5,000,000 shares have been received by, or allocated to, any individuals. +• +Shares Underlying Outstanding Awards . As of March 31, 2023, under the Stock Award Plan there were: +(a) +1,457,131 shares of the Company’s Common Stock remaining available for grant under the Plan as stock options or other equity awards; +(b) +2,175,507 stock options issued and outstanding, with a weighted-average exercise price of $9.18 per share and a weighted average remaining contractual term of 6.97 years; +(c) +2,838,840 restricted shares issued and unvested, with a weighted-average grant date fair value of $6.02 per share; and +(d) +1,067,888 performance restricted units issued and unvested, with a weighted-average grant date for value of $6.06 per share. +• +Overhang . As of March 31 2023, our overhang is 9.35%. For this purpose we calculated overhang as (i) 1,457,131 shares remaining available for grant, plus (ii) 2,175,507 stock options issued and outstanding, plus (iii) 2,838,840 restricted shares issued and unvested, plus (iv) 1,067,888 performance restricted units issued and unvested, divided by 73,111,603 weighted average number of shares outstanding, plus (i) 1,457,131 shares remaining available for grant, plus (ii) 2,175,507 stock options issued and outstanding, plus (iii) 2,838,840 restricted shares issued and unvested, plus (iv) 1,067,888 performance restricted units issued and unvested. +• +Burn Rate . Burn rate measures our usage of shares for the Stock Award Plan as a percentage of the total outstanding shares of our Common Stock. For 2022 and 2021, our burn rates were 5.7% and 1.4%, respectively. The rates were calculated by dividing the number of options, restricted shares and performance restricted stock units that were granted during the year, by the weighted average number of shares outstanding during the year. Our average annual burn rate over this period was 3.6%. +• +Forecasted Grants . Our Board anticipates that the proposed share increase under the Amended and Restated Stock Award Plan, based on currently projected share use, will be sufficient for the granting of equity awards under the Amended and Restated Stock Award Plan for approximately one additional year, i.e. for grants through 2024. The forecasted projected share use assumes we will make awards (less cancellations and forfeitures) based on our historical averages. Despite the projected share use described above, future circumstances and business needs may result in a significant increase in projected awards. +Accordingly, subject to stockholder approval, the Board approved an Amendment and Restatement of the Stock Award Plan to increase the number of shares to be authorized for grant under the Plan by 3,000,000 shares. As a result of this increase there will be a total of 4,457,131 shares available in the Stock Award Plan for future issuance on and after March 31, 2023, subject to stockholder approval. A copy of the Amendment and Restatement of the Stock Award Plan reflecting this amendment is attached as Exhibit A to this Proxy Statement. +In addition, the Board believes it to be in the best interests of the Company and its stockholders to require a minimum vesting period of one year for all awards granted under the Plan, subject to limited carve-outs. Such a requirement would ensure the Plan remains market competitive while also preventing excessive dilution to stockholders. Accordingly, subject to stockholder approval, the Board approved, in connection with the Amendment and Restatement of the Stock Award Plan, a requirement that all awards granted thereunder be subject to a minimum one-year vesting period, subject to limited carve-outs. +Summary of Amended and Restated Stock Award Plan +A summary description of certain terms and provisions of the Stock Award Plan, as amended, follows. Defined terms that are not otherwise defined herein are as defined in the Plan. To the extent the description below differs from the text of the Stock Award Plan, the text of the Plan will control. +Purpose . The purpose of the Stock Award Plan is to promote and advance the interests of the Company and its stockholders by enabling the Company to attract, retain, and reward employees, outside advisors, and Directors of the +75 +Table of Contents +Company and any subsidiaries. The Stock Award Plan is intended to strengthen the mutuality of interests between employees, advisors, and Directors and the Company’s stockholders by offering equity-based incentives to promote the long-term growth, profitability and financial success of the Company. +Eligibility . The Stock Award Plan provides for stock-based awards (“Awards”) to (i) employees of the Company and any subsidiaries, (ii) members of advisory committees or other consultants to the Company or its subsidiaries (“Advisors”), and (iii) non-employee Directors of the Company. Persons who help the Company raise money by selling securities or who promote or maintain a market for the Company’s securities are not eligible to participate in the Stock Award Plan as Advisors. In addition, only Advisors who, in the judgment of the Compensation Committee of the Board (the “Committee”), are or will be contributors to the long-term success of the Company, will be eligible to receive Awards (as defined below). As of March 31, 2023, the Company and its subsidiaries had 763 employees, 0 Advisors and 6 non-employee Directors, all of whom are eligible to receive Awards under the Plan. +The Stock Award Plan will continue in effect until February 21, 2027 or until the Plan is otherwise terminated by the Board. Termination or expiration of the Plan will not affect outstanding Awards. +Administration of the Stock Award Plan . The Committee administers the Stock Award Plan and determines the persons who are to receive Awards and the types, amounts, and terms of Awards. For example, the Committee may determine the exercise price, the form of payment of the exercise price, the number of shares subject to an Award, and the date or dates on which an Award becomes exercisable. The Committee may delegate to one or more officers of the Company the authority to determine the recipients of and the types, amounts and terms of Awards granted to participants who are not subject to the reporting requirements of Section 16(a) of the Securities Exchange Act of 1934, as amended. It is our policy that Awards made by the Committee for the Company’s CEO are also reviewed and approved by the full Board. The Stock Award Plan permits the Board to amend, suspend or terminate the Plan or any portion of the Plan. Notwithstanding the foregoing, Awards granted under the Plan are subject to a minimum vesting period of one year following the date of grant of the Award, provided, that Awards representing 5% of the shares authorized for issuance under the Plan may be subject to a shorter vesting period, and further that the Committee shall retain authority to accelerate vesting or exercisability upon the death, disability or retirement of the participant or upon a change in control of the Company, or as may be required pursuant to an employment agreement. +Shares Subject to the Stock Award Plan . If the Amendment is approved by our stockholders at our 2023 Annual Meeting, there will be 4,457,131 shares available for issuance under the Stock Award Plan as of March 31, 2023. Any shares granted in connection with restricted awards, performance awards or other stock-based awards will be counted against this limit on the basis of one and a half shares for every one share granted in connection with such Awards. +If an Award under the Plan is cancelled or expires for any reason prior to becoming fully vested or exercised or is settled in cash in lieu of shares, or is exchanged for other Awards under the Plan, then all shares covered by such Awards will be made available for future Awards under the Plan. Shares retained or reacquired by the Company in payment of an option price or in satisfaction of a withholding tax obligation in connection with any Award, shares repurchased by the Company with option proceeds and shares covered by a stock appreciation right, to the extent the stock appreciation right is exercised and settled in shares and whether or not shares are actually issued to the participant, will not be made available for future Awards under the Plan. In the event of a change in the Company’s capitalization affecting the Common Stock, including a stock dividend, stock split, recapitalization, merger, consolidation, split-up, combination or exchange of shares or other form of reorganization, the Committee shall make such proportionate adjustments as it may determine, in its sole discretion to be appropriate as a result of such change, to the aggregate number of shares for which Awards may be granted under the Plan, the maximum number of shares which may be sold or awarded to any participant, the number of shares covered by each outstanding Award, and the price per share in respect of outstanding Awards. +Awards . Awards that may be granted under the Stock Award Plan include stock options, stock appreciation rights, restricted awards, performance awards, and other stock-based awards. The following is a brief summary of the various types of Awards that may be granted under the Plan. +Stock Options . Options granted under the Stock Award Plan may be either incentive stock options (“ISOs”), a tax-favored form of Award meeting the requirements of Section 422 of the Code, as amended, or nonqualified options (“NQOs”), which are not entitled to special tax treatment. The Stock Award Plan limits the maximum term of any option granted to a period not longer than ten years from the date of grant. The exercise price of any option granted under the +76 +Table of Contents +Plan may not be less than 100% of the fair market value of the Common Stock on the date of grant, except that in the case of an option granted to holders of 10% or more of the Company’s voting securities, the exercise price may not be less than 110% of the fair market value of the Common Stock on the date of grant. +The agreement evidencing the grant of a stock option (the “Option Agreement”) will specify, as determined by the Committee, the time or times when the option is exercisable, in whole or in part, and the extent to which the option remains exercisable after the option holder ceases to be an employee, Advisor or nonemployee Director of the Company. The Option Agreement may, in the discretion of the Committee, provide whether the option will become fully exercisable upon the death, disability or retirement of the option holder or upon a change in control of the Company. As a general matter, the option holder may not transfer an option except by testamentary will or the laws of descent and distribution. An option may be exercised by payment of the exercise price in cash or, at the discretion of the Committee, with previously held shares of Common Stock or share equivalents, with proceeds from the sale of shares subject to the option or in any combination of the foregoing. +Options granted to employees under the Stock Award Plan generally vest over four years, with 25% of the grant vesting on the first anniversary of the grant date and the remaining 75% vesting ratably on a monthly basis over the next three years. Options granted to non-employee Directors in the past have generally vested ratably on a monthly basis over either a 12- or 24-month period, depending on the type of grant. Options granted under the Plan generally provide for accelerated vesting upon a “change in control.” The Committee may provide for different vesting for any option granted under the Plan. In no event may options for more than 500,000 shares of Common Stock be granted to any individual under the Stock Award Plan during any fiscal year period. +Stock Appreciation Rights . A recipient of stock appreciation rights (“SARs”) will receive, upon exercise, a payment (in cash or in shares of Common Stock) based on the increase in the fair market value of a share of Common Stock between the date of grant and the date of exercise. SARs may be granted in connection with options or other Awards granted under the Stock Award Plan or may be granted as independent Awards. The Plan limits the maximum term for the exercise of a SAR to a period not longer than ten years from the date of grant. In no event may SARs for more than 500,000 shares of Common Stock be granted to any individual under the Plan during any fiscal year period. +Restricted Awards . Restricted Awards may take the form of restricted shares or restricted units. Restricted shares are shares of Common Stock that may be subject to forfeiture if the recipient terminates employment or service as an Advisor or non-employee Director during a specified period (the “Restriction Period”). Stock certificates representing restricted shares are issued in the name of the recipient, but are held by the Company until the expiration of the Restriction Period. From the date of issuance of restricted shares, the recipient is entitled to the rights of a stockholder with respect to the shares, including voting and dividend rights. Any right to receive dividends on restricted shares shall be subject to the same forfeiture requirements applicable to the restricted shares. Restricted units are Awards that entitle the recipient to receive a share of Common Stock or the fair market value of a share at some future date, which similarly may be subject to forfeiture if the recipient terminates employment or service as an Advisor or non-employee Director during the applicable Restriction Period. Unvested Restricted Awards may not be sold, assigned, transferred, pledged, encumbered or otherwise transferred, voluntarily or involuntarily, by the recipient. +At the expiration of the Restriction Period, payment with respect to restricted units is made in an amount equal to the fair market value of the number of shares of Common Stock covered by the restricted units. Payment may be in cash, unrestricted shares of Common Stock, or any other form approved by the Committee. +Performance Awards . Performance Awards are designated in units equivalent in value to a share of Common Stock. A Performance Award is subject to forfeiture if or to the extent that the Company, a subsidiary, an operating group, or the recipient, as specified by the Committee in the Award, fails to meet performance goals established for a designated performance period, which must have a duration of at least one year. Performance Awards earned by attaining performance goals are paid at the end of a performance period in cash, shares of Common Stock, or any other form approved by the Committee. The number of shares of Common Stock issuable with respect to Performance Awards granted to any individual executive officer may not exceed 150,000 shares for any calendar year. +Other Stock-Based Awards . The Committee may grant other Awards that involve payments or grants of shares of Common Stock or are measured by or in relation to shares of Common Stock. +77 +Table of Contents +Change in Control . The Committee, in its discretion, may provide in any Award agreement that in the event of a “change in control” of the Company, (i) all, or a specified portion of, Awards requiring exercise will become fully and immediately exercisable, notwithstanding any other limitations on exercise; (ii) all, or a specified portion of, Awards subject to restrictions will become fully vested; and/or (iii) all, or a specified portion of, Awards subject to performance goals will be deemed to have been fully earned. The Committee, in its discretion, may include change in control provisions in some Award agreements and not in others, may include different change in control provisions in different Award agreements, and may include change in control provisions for some Awards or some participants and not for others. A “change in control” generally is defined to take place when disclosure of such a change would be required by the proxy rules promulgated by the SEC or when: +• +any person, or more than one person acting as a group within the meaning of Section 409A of the Code and the regulations issued thereunder, acquires ownership of stock of the Company that, together with stock held by such person or group, constitutes more than 50 percent of the total fair market value or total voting power of the stock of the Company; +• +any person, or more than one person acting as a group within the meaning of Code Section 409A and the regulations issued thereunder, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition) ownership of stock of the Company possessing 30 percent or more of the total voting power of the Company’s stock; +• +a majority of the members of the Board is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board before the date of the appointment or election; or +• +a person, or more than one person acting as a group within the meaning of Code Section 409A and the regulations issued thereunder, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition) assets from the Company that have a total gross fair market value equal to or more than 40 percent of the total gross fair market value of all the assets of the Company immediately before such acquisition or acquisitions. +No Repricing or Exchanges . Stockholder approval of an action is required if (i) such action would increase the number of shares of Common Stock subject to the Plan, (ii) such action would result in the repricing, replacement or repurchase of out-of-the money options, stock appreciation rights or other Awards, (iii) such action would result in an Award becoming fully vested, exercisable or earned in the event of a change in control prior to the consummation of the change in control or (iv) such approval is required by law or regulation or the rules of a stock exchange or over-the-counter trading system. Since the Merger, neither the Board nor the Committee has taken any action that resulted in the repricing, replacement or repurchase of out-of-the-money Options, SARs or other Awards. +Federal Income Tax Consequences . The following discussion summarizes the principal anticipated federal income tax consequences of Awards granted under the Stock Award Plan, to participants and to the Company. The following information is only a summary and does not address all aspects of taxation that may be relevant to a particular participant in light of his or her personal circumstances. Participants should consult with their own tax advisors with respect to the tax consequences inherent in the ownership and exercise of the awards and the ownership and disposition of any underlying securities. The summary does not address the effects of other federal taxes (including possible “golden parachute” excise taxes) or taxes imposed under state, local or foreign tax laws. Tax laws are subject to change. Under Section 162(m), the Company cannot deduct compensation paid to certain covered employees in excess of $1 million per year. +Incentive Stock Options . A recipient of an option does not recognize taxable income upon the grant or exercise of an ISO. If no disposition of shares occurs within two years from the date of grant or within one year from the date of exercise, then (a) upon the sale of the shares, any amount realized in excess of the exercise price is taxed to the option recipient as long-term capital gain and any loss sustained will be a long-term capital loss, and (b) no deduction is allowed to the Company for federal income tax purposes. For purposes of computing alternative minimum taxable income, an ISO is treated as an NQO. +If shares of Common Stock acquired upon the exercise of an ISO are disposed of prior to the expiration of the two-year and one-year holding periods described above (a “disqualifying disposition”), then (a) the recipient will recognize ordinary income in the year of disposition in an amount equal to the excess (if any) of the fair market value of the shares +78 +Table of Contents +at exercise (or, if less, the amount realized on a sale of the shares) over the exercise price thereof and (b) the Company would be entitled to deduct such amount. Any further gain realized is taxed as a short-term or long-term capital gain, as applicable, and does not result in any deduction for the Company. +Nonqualified Options . No income is recognized by an option recipient at the time an NQO is granted. Upon exercise, (a) ordinary income is recognized by the option recipient in an amount equal to the difference between the exercise price and the fair market value of the shares on the date of exercise and (b) the Company receives a tax deduction for the same amount. Upon disposition of the shares, appreciation or depreciation in the value of the shares after the date of exercise is treated as a short-term or long-term capital gain or loss, as applicable, and will not result in any deduction to the Company. +Stock Appreciation Rights . The grant of a SAR to a participant will not cause the recognition of income by the participant. Upon exercise of a SAR, the participant will recognize ordinary income equal to the amount of cash payable to the participant plus the fair market value of any shares of Common Stock delivered to the participant. The Company will be entitled to a deduction equal to the amount of ordinary income recognized by the participant in connection with the exercise of a SAR. +Restricted Awards and Performance Awards . Generally, a participant will not recognize any income upon issuance of a Restricted Award or Performance Award that is subject to forfeiture. Generally, a participant will recognize ordinary income upon the vesting of Restricted Awards or Performance Awards in an amount equal to the amount of cash payable to the participant plus the fair market value of shares of Common Stock delivered to the participant. Dividends paid with respect to Awards during the Restriction Period will be subject to the same restrictions and will be taxable as ordinary income to the participant when, and if, the restrictions lapse. However, a participant may elect to recognize compensation income upon the grant of restricted shares, based on the fair market value of the shares of Common Stock subject to the Award at the date of grant. If a participant makes such an election, dividends paid with respect to the restricted shares will not be treated as compensation, but rather as dividend income at the time when the restricted shares vest. The Company will be entitled to a deduction equal to the amount of ordinary income recognized by the participant. If a participant who receives an Award of restricted shares makes the special election described above, the Company will not be entitled to deduct dividends paid with respect to the restricted shares. When shares of common stock or cash with respect to restricted unit Awards are delivered to the participant, the value of the shares or cash is then taxable to the participant as ordinary income and the Company will be entitled to a deduction equal to the amount of ordinary income recognized by the participant. +New Plan Benefits . All awards to executive officers in future periods are made at the discretion of the Compensation Committee and our Board. Therefore, the benefits and amounts that will be received or allocated under the Plan to such persons are not determinable at this time. +Vote Required; Board Recommendation +If a quorum is present, the affirmative vote of a majority of shares present, in person or by proxy and entitled to vote on this proposal, is required for approval of the proposed Amendment. Abstentions will have the effect of voting against this proposal. Broker non-votes will have no effect on the vote for this proposal. +Your Board recommends that stockholders vote FOR approval of the Company’s Amended and Restated Stock Award Plan. +PROPOSAL NO. 6. STOCKHOLDER PROPOSAL REGARDING GREENHOUSE GAS REDUCTION TARGETS +Nia Community Foundation, a holder of shares of the Company’s Common Stock with a value in excess of $25,000 for at least one year as of the date hereof, has given notice that, on behalf of Nia Community Foundation, a representative from Nia Impact Capital intends to present a stockholder proposal for action at the Annual Meeting. +79 +Table of Contents +STOCKHOLDER PROPOSAL +Whereas : The Intergovernmental Panel on Climate Change has advised that greenhouse gas (GHG) emissions must be halved by 2030 and reach net zero by 2050 in order to limit global warming to 1.5 degrees Celsius and avoid the worst impacts of climate change. Every incremental increase in temperature above 1.5°C will entail increasingly severe physical, transition, and systemic risks for companies and investors alike. +As OraSure Technologies (“OraSure” or “the Company”) noted in its 2022 10-K, natural disasters attributable to climate change may disrupt the operations of the Company’s manufacturing facilities, computer systems, and cybersecurity. OraSure also operates in numerous countries and U.S. states where climate regulations are in effect or under consideration, making near and long-term preparations to comply with such regulations critical. +OraSure does not report its Scope 1, 2, or 3 emissions or have third-party validated near or long-term GHG reduction targets aligned with holding warming to 1.5°C. Investors and companies representing $52 trillion in assets overwhelmingly support government-required climate disclosure by public companies, with investors looking for science-based targets (SBTs) as indication of companies’ commitment to climate risk mitigation. 1 Over 4,000 business and financial institutions have established SBTs or net zero commitments through the Science Based Target Initiative (SBTi). +Investors seek increased disclosure of how companies are addressing the climate crisis and planning to transition their business models to ones that align with limiting warming to 1.5°C. To assist companies in developing viable transition plans, groups including We Mean Business, CDP, State Street Global Advisors, and the Task Force on Climate-Related Disclosures have provided guidance. +OraSure is asked to take additional action to comprehensively address its climate impact and mitigate both the physical risks to its operations and the transition risks associated with new regulations and a global shift to a clean energy economy. Proponents believe adopting 1.5°C-aligned science-based targets for its full carbon footprint supported by a transition plan will help the Company achieve these goals. +Resolved , Shareholders request OraSure Technologies, within a year, issue near and long-term science-based GHG reduction targets aligned with the Paris Agreement’s ambition of maintaining global temperature rise to 1.5°C and summarize plans to achieve them. The targets should cover the Company’s full range of operational and supply chain emissions. +Supporting Statement: In assessing targets, we recommend, at management’s discretion: +• +Consideration of approaches used by advisory groups like SBTi; +• +Development of a transition plan that shows how the Company plans to meet its goals, taking into consideration criteria used by advisory groups and investors; and +• +Consideration of supporting targets for renewable energy, energy efficiency, and other measures deemed appropriate by management. +(1) https://theinvestoragenda.org/wp-content/uploads/2021/09/2021-Global-Investor-Statement-to-Governments- +on-the-Climate-Crisis.pdf +BOARD OF DIRECTORS’ STATEMENT IN OPPOSITION TO PROPOSAL NO. 6 +After careful consideration, the Board recommends a vote AGAINST this proposal, as we believe that its prescriptive approach is not in the best interest of the Company and its stockholders at this time, particularly in light of the actions OraSure is already taking to address climate change and sustainability. +We recognize the importance of addressing climate change, and we have taken a number of steps on our journey towards creating a more sustainable future for our company. However, we believe that we should approach addressing the challenges posed to our business by climate change in a responsible way, rooted in data and realistic expectations. +Over the past several years, OraSure has taken several actions to improve our understanding and management of climate-related matters, as well as our commitment to addressing them. Formed in 2020, our sustainability initiative +80 +Table of Contents +focuses on identifying additional steps we can take to reduce our carbon footprint, including through the use of solar and renewable energy sources. In 2022, we engaged an advisory firm to create a Greenhouse Gas (“GHG”) Emissions Inventory Report (the “GHG Report”) for our Bethlehem, Pennsylvania sites covering emissions for the 2021 calendar year. The GHG Report, which contains a detailed accounting of our Scope 1, Scope 2 and Scope 3 GHG emissions associated with those sites, provides us with a data-focused foundation for effective management of our GHG emissions. As a part of our sustainability initiative and with the findings from our GHG Report, we launched several initiatives to significantly lessen our environmental impact. We have redesigned the packaging of our InteliSwab ® COVID-19 Rapid Tests, which we believe will save 90 tons of plastic and 1,500 tons of paper in addition to reducing required delivery truckloads by 53% based on our estimated product volumes. Several measures have reduced scrap rates across our product lines, resulting in a net savings of 7,000 lbs. of plastics. In addition to using carbon-free energy for our corporate headquarters, we have purchased carbon offsets to compensate for Company air travel. We consistently examine our operations and strive to find additional ways to reduce our impact on the environment. +We recognize that the work to create a more sustainable future is ongoing. We are also assessing opportunities to work with our suppliers and manufacturers and to improve the energy efficiency of various products to help inform our approach to GHG emission reduction. We believe these actions will allow us to make more informed and responsible decisions about how to prioritize our efforts and allocate our resources in the future. Such engagements and assessments take time. In 2023, we will release our Environmental, Social and Governance Report, which will contain additional information about our efforts to manage our environmental impact. +While we are committed to furthering our sustainability efforts, our core values guide how we approach fulfilling that commitment. As such, we believe it would be irresponsible to commit to the proponent’s requested actions before completing the necessary foundational steps, many of which were underway before we received the proponent’s proposal. As such, we do not believe it is in the Company’s or our stockholders’ best interests to commit to the actions in the proposal at this time, and we recommend a vote against the proposal. +Your Board recommends that the stockholders vote AGAINST the approval of the stockholder proposal. +DELINQUENT SECTION 16(A) REPORTS +Section 16(a) of the Exchange Act requires our directors and executive officers, and any persons who beneficially own more than 10% of a registered class of our equity securities, to file reports of securities ownership and changes in such ownership with the SEC. Officers, directors and greater than ten percent stockholders are also required by SEC rules to furnish us with copies of all Section 16(a) forms they file. Based solely on a review of the Company’s records and written representations by the persons required to file such reports, management believes that all filing requirements of Section 16(a) were satisfied with respect to the 2022 fiscal year, except for (i) one Form 4 for Kenneth J. McGrath filed on August 15, 2022, (ii) one Form 4 for Nancy J. Gagliano, M.D., M.B.A., filed on August 22, 2022, and (iii) one Form 4 for Mara G. Aspinall filed on August 31, 2022, each of which was due to administrative delay. +ANNUAL REPORT +Our Annual Report to Stockholders for the year ended December 31, 2022 accompanies this Proxy Statement. Following receipt of a written request, we will provide, without charge, a copy of our Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the SEC (including a list briefly describing the exhibits thereto), to any record holder or beneficial owner of our Common Stock on March 23, 2023, the record date for the Annual Meeting, or to any person who subsequently becomes such a record holder or beneficial owner. Requests should be directed to the attention of the Corporate Secretary of the Company at our address set forth in the Notice of Annual Meeting of Stockholders immediately preceding this Proxy Statement. +81 +Table of Contents +DEADLINE FOR STOCKHOLDER PROPOSALS +You may submit proposals for inclusion in the proxy materials for the Company’s 2024 Annual Meeting of Stockholders. Any such proposals must meet the stockholder eligibility and other requirements imposed by rules issued by the SEC and must be received by the Company at 220 East First Street, Bethlehem, Pennsylvania 18015, Attention: Corporate Secretary, in accordance with Rule 14a-8 promulgated under the Exchange Act, not later than December 16, 2023. +In addition, our Bylaws provide that a stockholder proposal must meet certain predetermined requirements in order to be considered at the Annual Meeting. These requirements are separate from, and in addition to, the requirements discussed above to have the stockholder proposal included in the proxy materials pursuant to the SEC’s rules and regulations. In order to be considered, a stockholder’s proposal must be made in writing to the Company’s Secretary and must be delivered to or received at our principal executive offices not less than ninety (90) days nor more than one hundred twenty (120) days prior to the meeting. However, if less than one hundred (100) days’ notice or prior public disclosure of the date of the meeting is given or made to stockholders, notice by the stockholder to be timely must be so received no later than the close of business on the tenth (10 th ) day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made, whichever first occurs. The notice to the Secretary must set forth, with respect to each matter the stockholder proposes to bring before the meeting, a brief description of the matter and the reasons for considering that matter at the Annual Meeting. The notice must also include, as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf notice of the proposed business is made: (i) the name and address of the stockholder and such beneficial owner; (ii) any material interest of such stockholder and such beneficial holder in such business; (iii) the class and number of shares of capital stock of the Company which are held of record or beneficially owned by the stockholder and such beneficial owner and any other direct or indirect pecuniary or economic interest in any capital stock of the Company of such stockholder and such beneficial owner, including without limitation, any derivative instrument, swap, option, warrant, short interest, hedge, profit sharing arrangement or borrowed or loaned shares; (iv) a representation that such stockholder intends to appear in person or by proxy at the meeting to propose the business described in its notice; and (v) any other information relating to such business matter that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder. To the extent the Board of Directors or the SEC, or a court of competent jurisdiction, deems these Bylaw provisions to be inconsistent with the right of stockholders to request inclusion of a proposal in the Company’s proxy materials pursuant to Rule 14a-8 promulgated under the Exchange Act, such rule shall prevail. To comply with the universal proxy rules, stockholders who intend to solicit proxies for the 2024 Annual Meeting in support of director nominees other than the Company’s nominees must provide notice by the same deadline noted herein to submit notice of mattes for consideration at an annual meeting. Such notice must comply with the additional requirements of Rule 14a-19(b). +The SEC has promulgated rules relating to the exercise of discretionary voting authority under proxies solicited by the Board. If a stockholder intends to present a proposal at our 2024 Annual Meeting without inclusion of that proposal in the Company’s proxy materials and written notice of the proposal is not received by the Secretary of the Company by February 29, 2024 (the date that is 45 days before the one-year anniversary of the date on which the Company first sent its proxy materials for the Annual Meeting), or if the Company meets other requirements of the applicable SEC rules and regulations, the proxies solicited by the Board for use at the 2024 Annual Meeting will confer discretionary authority to vote on the proposal should it then be raised at the 2024 Annual Meeting. +BY ORDER OF THE BOARD OF DIRECTORS +Stefano Taucer +Secretary +April 14, 2023 +82 +Table of Contents +EXHIBIT A +AMENDED AND RESTATED +ORASURE TECHNOLOGIES, INC. 2000 STOCK AWARD PLAN +1 +Table of Contents +ORASURE TECHNOLOGIES, INC. +STOCK AWARD PLAN +ARTICLE 1 +ESTABLISHMENT AND PURPOSE +(Amended and Restated Effective as of March 31, 2023) +Establishment . Epitope, Inc. established this Plan as the Epitope, Inc. 2000 Stock Award Plan, effective as of February 15, 2000, and the Plan was approved by shareholders of Epitope, Inc. at the 2000 annual shareholders meeting. Effective September 29, 2000, in connection with the merger of Epitope, Inc. with and into OraSure Technologies, Inc., the name of the Plan was changed to the OraSure Technologies, Inc. 2000 Stock Award Plan and the Plan was adopted as a stock award plan of OraSure Technologies, Inc. The Plan was amended and restated, subject to shareholder approval, effective May 16, 2006. The Plan was amended further, subject to shareholder approval, effective May 13, 2008. The Plan again was amended and restated in its entirety, subject to shareholder approval, effective May 17, 2011 and February 12, 2013. The Plan was amended further, subject to shareholder approval, effective May 22, 2014. The Plan was again amended and restated in its entirety, subject to shareholder approval, effective May 16, 2017, April 2, 2020 and April 1, 2022. +1.1 Purpose . The purpose of the Plan is to promote and advance the interests of Corporation and its shareholders by enabling Corporation to attract, retain, and reward employees, outside advisors, and directors of Corporation and its subsidiaries. It is also intended to strengthen the mutuality of interests between such employees, advisors, and directors and Corporation’s shareholders. The Plan is designed to meet this intent by offering stock options and other equity-based incentive awards, thereby providing a proprietary interest in pursuing the long-term growth, profitability, and financial success of Corporation. +ARTICLE 2 +DEFINITIONS +2.1 Defined Terms . For purposes of the Plan, the following terms have the meanings set forth below: +“ Advisor ”‘ means a natural person who is a consultant to or member of an Advisory Committee of Corporation or a Subsidiary, who provides bona fide services to Corporation and who is neither an employee of Corporation or a Subsidiary nor a Non-Employee Director. “Advisor” excludes any person who provides services to Corporation in connection with the offer or sale of securities in a capital raising transaction or to promote or maintain a market for Corporation’s securities, and any other person excluded from the class of persons to whom securities may be offered pursuant to a registration statement on Form S-8 or any successor form of registration statement. +“ Advisory Committee ” means a scientific advisory committee to Corporation or a Subsidiary. +“ Award ”‘ means an award or grant made to a Participant of Options, Stock Appreciation Rights, Restricted Awards, Performance Awards, or Other Stock-Based Awards pursuant to the Plan. +“ Award Agreement ” means an agreement as described in Section 6.4. +“ Board ” means the Board of Directors of Corporation. +“ Change in Control ” means, unless otherwise provided in the applicable Award Agreement, a change of control of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A pursuant to the Exchange Act; provided, however, that a change of control shall only be deemed to have occurred at such time as (i) any person, or more than one person acting as a group within the meaning of Section 409A of the Code, acquires ownership of stock of the Corporation that, together with stock held by such person or group, constitutes more than 50 percent of the total fair market value or total voting power of the stock of the Corporation; (ii) any person, or more than one person acting as a group within the meaning of Section 409A of the Code, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition) ownership of stock of the Corporation possessing 30 percent or more of the total voting power of the Corporation’s stock; (iii) a majority of the members of the Board is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the +2 +Table of Contents +members of the Board before the date of the appointment or election; or (iv) a person, or more than one person acting as a group within the meaning of Section 409A of the Code, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition) assets from the Corporation that have a total gross fair market value equal to or more than 40 percent of the total gross fair market value of all the assets of the Corporation immediately before such acquisition or acquisitions. +“ Code ” means the Internal Revenue Code of 1986, as amended and in effect from time to time, or any successor thereto, together with rules, regulations, and interpretations promulgated thereunder. Where the context so requires, any reference to a particular Code section will be construed to refer to the successor provision to such Code section. +“ Committee ” means the committee appointed by the Board to administer the Plan as provided in Article 3 of the Plan. +“ Common Stock ” means the Common Stock, par value $0.000001 per share, of Corporation or any security of Corporation issued in substitution, in exchange, or in lieu of such stock. +“ Continuing Restriction ” means a Restriction contained in Sections 6.7, 6.8, and 15.4 of the Plan and any other Restrictions expressly designated by the Committee in an Award Agreement as a Continuing Restriction. +“ Corporation ” means OraSure Technologies, Inc., a Delaware corporation, or any successor corporation. As to awards granted or other action taken prior to September 29, 2000, “Corporation” includes Epitope, Inc., as predecessor to OraSure Technologies, Inc. +“ Disability ” means the condition of being “disabled” within the meaning of Section 422(c)(6) of the Code. However, the Committee may change the foregoing definition of “Disability” or may adopt a different definition for purposes of specific Awards. +“ Exchange Act ” means the Securities Exchange Act of 1934, as amended and in effect from time to time, or any successor statute. Where the context so requires, any reference to a particular section of the Exchange Act, or to any rule promulgated under the Exchange Act, shall be construed to refer to successor provisions to such section or rule. +“ Fair Market Value ” means with respect to Common Stock, on a particular day, without regard to any restrictions (other than a restriction which, by its terms, will never lapse): +(1) if the Common Stock is at the time listed or admitted to trading on any stock exchange, the mean between the highest and lowest prices of the Common Stock on the date in question on the principal national securities exchange on which it is then listed or admitted to trading. If no reported sale of Common Stock takes place on the date in question on the principal exchange, then the reported closing asked price of the Common Stock on such date on the principal exchange shall be determinative of “Fair Market Value;” +(2) if the Common Stock is not at the time listed or admitted to trading on a stock exchange, the mean between the highest reported asked price and lowest reported bid price of the Common Stock on the date in question in the over-the-counter market, as such prices are reported in a publication of general circulation selected by the Committee and regularly reporting the market price of Common Stock in such market; or +(3) if the Common Stock is not listed or admitted to trading on any stock exchange or traded in the over-the-counter market, an amount as determined in good faith by the Committee and which shall comply with Section 409A of the Code. +“ Incentive Stock Option ” or “ ISO ” means any Option granted pursuant to the Plan that is intended to be and is specifically designated in its Award Agreement as an “incentive stock option” within the meaning of Section 422 of the Code. +“ Minimum Vesting Period ” means the one-year period following the date of grant of an Award. +3 +Table of Contents +“ Non-Employee Director ” means a member of the Board who is not an employee of Corporation or any Subsidiary. +“ Nonqualified Option ” or “ NQSO ” means any Option granted pursuant to the Plan that is not an Incentive Stock Option. +“ Option ” means an ISO or an NQSO. +“ Other Stock-Based Award ” means an Award as defined in Section 11.1. +“ Participant ” means an employee of Corporation or a Subsidiary, an Advisor, or a Non-Employee Director who is granted an Award under the Plan. +“ Performance Award ” means an Award granted pursuant to the provisions of Article 10 of the Plan, the Vesting of which is contingent on performance attainment. +“ Performance Cycle ” means a designated performance period pursuant to the provisions of Section 10.3 of the Plan. +“ Performance Goal ” means a designated performance objective pursuant to the provisions of Section 10.4 of the Plan. +“ Plan ” means this OraSure Technologies, Inc. 2000 Stock Award Plan, as set forth herein and as it may be amended from time to time. +“ Reporting Person ” means a Participant who is subject to the reporting requirements of Section 16(a) of the Exchange Act. +“ Restricted Award ” means a Restricted Share or a Restricted Unit granted pursuant to Article 9 of the Plan. +“ Restricted Share ” means an Award described in Section 9.1(a) of the Plan. +“ Restricted Unit ” means an Award of units representing Shares described in Section 9.1(b) of the Plan. +“ Restriction ” means a provision in the Plan or in an Award Agreement which limits the exercisability or transferability, or which governs the forfeiture, of an Award or the Shares, cash, or other property payable pursuant to an Award. +“ Retirement ” means: +(a) For Participants who are employees, retirement from active employment with Corporation and its Subsidiaries at or after age 50, or such earlier retirement date as approved by the Committee for purposes of the Plan; +(b) For Participants who are Non-Employee Directors, termination of membership on the Board after attaining age 50, or such earlier retirement date as approved by the Committee for purposes of the Plan; and +(c) For Participants who are Advisors, termination of service as an Advisor after attaining age 50, or such earlier retirement date as approved by the Committee for purposes of the Plan. +However, the Committee may change the foregoing definition of “Retirement” or may adopt a different definition for purposes of specific Awards. +“ Share ” means a share of Common Stock. +“ Stock Appreciation Right ” or “ SAR ” means an Award to benefit from the appreciation of Common Stock granted pursuant to the provisions of Article 8 of the Plan. +4 +Table of Contents +“ Subsidiary ” means any “subsidiary corporation” of Corporation within the meaning of Section 424 of the Code, namely any corporation in which Corporation directly or indirectly controls 50 percent or more of the total combined voting power of all classes of stock having voting power. +“ Ten Percent Shareholder ” means a person who on any given date owns, either directly or indirectly (taking into account the attribution rules contained in Section 424(d) of the Code), stock possessing more than 10 percent of the total combined voting power of all classes of stock of the Corporation or any Subsidiary under Section 424(f) of the Code. +“ Vest ” or “ Vested ” means: +(a) In the case of an Award that requires exercise, to be or to become immediately and fully exercisable and free of all Restrictions (other than Continuing Restrictions); +(b) In the case of an Award that is subject to forfeiture, to be or to become nonforfeitable, freely transferable, and free of all Restrictions (other than Continuing Restrictions); +(c) In the case of an Award that is required to be earned by attaining specified Performance Goals, to be or to become earned and nonforfeitable, freely transferable, and free of all Restrictions (other than Continuing Restrictions); or +(d) In the case of any other Award as to which payment is not dependent solely upon the exercise of a right, election, exercise, or option, to be or to become immediately payable and free of all Restrictions (except Continuing Restrictions). +2.2 Gender and Number . Except where otherwise indicated by the context, any masculine or feminine terminology used in the Plan shall also include the opposite gender; and the definition of any term in Section 2.1 in the singular shall also include the plural, and vice versa. +ARTICLE 3 +ADMINISTRATION +3.1 General . Except as provided in Section 3.7, the Plan will be administered by a Committee composed as described in Section 3.2. +3.2 Composition of the Committee . The Committee will be appointed by the Board from among its members in a number and with such qualifications as will meet the independence and other requirements for (i) approval by a committee pursuant to Rule 16b-3 under the Exchange Act, (ii) establishing, administering and certifying performance goals pursuant to Section 162(m) of the Code and (iii) trading or listing securities on the securities exchange or association on which the Common Stock is then traded or listed. The Board may from time to time remove members from, or add members to, the Committee. Vacancies on the Committee, however caused, will be filled by the Board. The initial members of the Committee will be the members of Corporation’s existing Executive Compensation Committee. The Board may at any time replace the Executive Compensation Committee with another Committee. In the event that the Executive Compensation Committee ceases to satisfy the requirements of Rule 16b-3, Section 162(m) of the Code or a securities exchange or association described above in 3.2(iii), the Board will appoint another Committee satisfying such requirements. +3.3 Authority of the Committee . The Committee will have full power and authority (subject to such orders or resolutions as may be issued or adopted from time to time by the Board) to administer the Plan in its sole discretion, including the authority to: +(a) +Construe and interpret the Plan and any Award Agreement; +(b) +Promulgate, amend, and rescind rules and procedures relating to the implementation of the Plan; +(c) +With respect to employees and Advisors: +(i) +Select the employees and Advisors who shall be granted Awards; +(ii) +Determine the number and types of Awards to be granted to each such Participant; +5 +Table of Contents +(iii) +Determine the number of Shares, or Share equivalents, to be subject to each Award; +(iv) +Determine the option price, purchase price, base price, or similar feature for any Award; and +(v) +Determine all the terms and conditions of all Award Agreements, consistent with the requirements of the Plan. +Decisions of the Committee, or any delegate as permitted by the Plan, shall be final, conclusive, and binding on all Participants. +3.4 Action by the Committee . A majority of the members of the Committee will constitute a quorum for the transaction of business. Action approved by a majority of the members present at any meeting at which a quorum is present, or action in writing by all the members of the Committee, will be the valid acts of the Committee. +3.5 Delegation . Notwithstanding the foregoing, the Committee may delegate to one or more officers of Corporation the authority to determine the recipients, types, amounts, and terms of Awards granted to Participants who are not Reporting Persons or “covered employees” within the meaning of Section 162(m) of the Code. +3.6 Liability of Committee Members . No member of the Committee will be liable for any action or determination made in good faith with respect to the Plan, any Award, or any Participant. +3.7 Awards to Non-Employee Directors . The Board or Committee may grant Awards from time to time to Non-Employee Directors. +3.8 Costs of Plan . The costs and expenses of administering the Plan will be borne by Corporation. +3.9 Minimum Vesting Period . The vesting period for each Award granted under the Plan must be at least equal to the Minimum Vesting Period; provided, however, nothing in this Section 3.9 shall limit the Committee’s authority to accelerate vesting or exercisability upon a Change in Control, or upon the death, Disability or retirement of the Participant, or as may be required pursuant to an employment agreement between the Participant and the Corporation; provided, however, notwithstanding the foregoing, up to 5% of the Shares authorized for issuance under the Plan may be utilized for Awards with a vesting period that is less than the Minimum Vesting Period (each such Award, an “Excepted Award”). Notwithstanding the foregoing, in addition to Excepted Awards, the Committee may grant Awards that vest (or permit previously granted Awards to vest) within the Minimum Vesting Period (i) if such Awards are granted as substitute Awards in replacement of other Awards (or awards previously granted by an entity being acquired (or assets of which are being acquired)) that were scheduled to vest within the Minimum Vesting Period or (ii) if such Awards are being granted in connection with an elective deferral of cash compensation that, absent a deferral election, otherwise would have been paid to the grantee within the Minimum Vesting Period. +ARTICLE 4 +DURATION OF THE PLAN AND SHARES SUBJECT TO THE PLAN +4.1 Duration of the Plan . This amendment and restatement of the Plan is effective March 31, 2023. The Plan shall remain in full force and effect until February 21, 2027, or the date it is terminated by the Board. The Board shall have the power to amend, suspend or terminate the Plan as provided in Article 14. Termination of the Plan under Article 14 shall not affect Awards outstanding under the Plan at the time of termination. +4.2 Shares Subject to the Plan . +4.2.1 General . The shares which may be made subject to Awards under the Plan are Shares of Common Stock, which may be either authorized and unissued Shares or reacquired Shares. No fractional Shares may be issued under the Plan. +4.2.2 Number of Shares; Limits . +(a) The maximum number of Shares for which Awards may be granted under the Plan on or after March 31, 2023, is 4,457,131 Shares, plus any Shares that become available as the result of the cancellation or expiration of any Award, subject to adjustment for changes in capitalization affecting the Corporation’s Common Stock pursuant to Section 13.2 of +6 +Table of Contents +the Plan. Any Shares granted in connection with Options and Stock Appreciation Rights shall be counted against this limit on the basis of one Share for each Share subject to such Option or Stock Appreciation Right. Any Shares granted in connection with Restricted Awards, Performance Awards or Other Stock-Based Awards shall be counted against this limit on the basis of one and a half Shares for every one Share granted in connection with such Awards. +(b) The maximum number of Shares that may be issued pursuant to paragraph (a) above on or after March 31, 2023, pursuant to Incentive Stock Options, is 4,457,131. Shares, subject to adjustment for changes in capitalization affecting the Corporation’s Common Stock pursuant to Section 13.2 of the Plan. +4.2.3 Availability of Shares for Future Awards . If an Award under the Plan is canceled or expires for any reason prior to having been fully Vested or exercised by a Participant or is settled in cash in lieu of Shares or is exchanged for other Awards, all Shares covered by such Awards will be made available for future Awards under the Plan. In no event shall the following be made available for future awards under the Plan: (a) Shares retained or reacquired by the Corporation in payment of an option price or satisfaction of a withholding tax obligation by a Participant in connection with any Award, (b) Shares repurchased by the Corporation with Option proceeds and (c) Shares covered by an SAR, to the extent the SAR is exercised and settled in Shares and whether or not Shares are actually issued to the Participant upon exercise of the SAR. +ARTICLE 5 +ELIGIBILITY +5.1 Employees and Advisors . Officers and other employees of Corporation and any Subsidiaries (who may also be directors of Corporation or a Subsidiary) and Advisors who, in the Committee’s judgment, are or will be contributors to the long-term success of Corporation will be eligible to receive Awards under the Plan. +5.2 Non-Employee Directors . All Non-Employee Directors will be eligible to receive Awards as provided in Section 3.7 of the Plan. +ARTICLE 6 +AWARDS +6.1 Types of Awards . The types of Awards that may be granted under the Plan are: +(a) +Options governed by Article 7 of the Plan; +(b) +Stock Appreciation Rights governed by Article 8 of the Plan; +(c) +Restricted Awards governed by Article 9 of the Plan; +(d) +Performance Awards governed by Article 10 of the Plan; and +(e) +Other Stock-Based Awards or combination awards governed by Article 11 of the Plan. +In the discretion of the Committee, any Award may be granted alone, in addition to, or in tandem with other Awards under the Plan. +6.2 General . Subject to the limitations of the Plan, the Committee may cause Corporation to grant Awards to such Participants, at such times, of such types, in such amounts, for such periods, with such option prices, purchase prices, or base prices, and subject to such terms, conditions, limitations, and restrictions as the Committee, in its discretion, deems appropriate. Awards may be granted as additional compensation to a Participant or in lieu of other compensation to such Participant. A Participant may receive more than one Award and more than one type of Award under the Plan. +6.3 Nonuniform Determinations . The Committee’s determinations under the Plan or under one or more Award Agreements, including without limitation, (a) the selection of Participants to receive Awards, (b) the type, form, amount, and timing of Awards, (c) the terms of specific Award Agreements, and (d) elections and determinations made by the Committee with respect to exercise or payments of Awards, need not be uniform and may be made by the Committee selectively among Participants and Awards, whether or not Participants are similarly situated. +7 +Table of Contents +6.4 Award Agreements . Each Award will be evidenced by a written Award Agreement between Corporation and the Participant. Award Agreements may, subject to the provisions of the Plan, contain any provision approved by the Committee. +6.5 Provisions Governing All Awards . All Awards will be subject to the following provisions: +(a) Alternative Awards . If any Awards are designated in their Award Agreements as alternative to each other, the exercise of all or part of one Award automatically will cause an immediate equal (or pro rata) corresponding termination of the other alternative Award or Awards. +(b) Rights as Shareholders . No Participant will have any rights of a shareholder with respect to Shares subject to an Award until such Shares are issued in the name of the Participant. +(c) Employment Rights . Neither the adoption of the Plan nor the granting of any Award will confer on any person the right to continued employment with Corporation or any Subsidiary or the right to remain as a director of Corporation or a member of any Advisory Committee, as the case may be, nor will it interfere in any way with the right of Corporation or a Subsidiary to terminate such person’s employment or to remove such person as an Advisor or as a director at any time for any reason or for no reason, with or without cause. +(d) Termination of Employment . The terms and conditions under which an Award may be exercised or will continue to Vest, if at all, after a Participant’s termination of employment or service as an Advisor or as a Non-Employee Director will be determined by the Committee and specified in the applicable Award Agreement. +(e) Change in Control . The Committee, in its discretion, may provide in any Award Agreement that in the event of a Change in Control of the Corporation: +(i) +All, or a specified portion of, Awards requiring exercise will become fully and immediately exercisable, notwithstanding any other limitations on exercise; +(ii) +All, or a specified portion of, Awards subject to Restrictions will become fully Vested; and +(iii) +All, or a specified portion of, Awards subject to Performance Goals will be deemed to have been fully earned. +The Committee, in its discretion, may include Change in Control provisions in some Award Agreements and not in others, may include different Change in Control provisions in different Award Agreements, and may include Change in Control provisions for some Awards or some Participants and not for others. +(f) Service Periods . At the time of granting Awards, the Committee may specify, by resolution or in the Award Agreement, the period or periods of service performed or to be performed by the Participant in connection with the grant of the Award. +6.6 Tax Withholding . +(a) General . Corporation will have the right to deduct from any settlement, including the delivery or Vesting of Shares, made under the Plan any federal, state, or local taxes of any kind required by law to be withheld with respect to such payments or to take such other action as may be necessary in the opinion of Corporation to satisfy all obligations for the payment of such taxes. The recipient of any payment or distribution under the Plan will make arrangements satisfactory to Corporation for the satisfaction of any such withholding tax obligations. Corporation will not be required to make any such payment or distribution under the Plan until such obligations are satisfied. +(b) Stock Withholding . The Committee, in its sole discretion, may permit a Participant to satisfy all or a part of the withholding tax obligations incident to the settlement of an Award involving payment or delivery of Shares to the Participant by having Corporation withhold a portion of the Shares that would otherwise be issuable to the Participant. Such Shares will be valued based on their Fair Market Value on the date the tax withholding is required to be made. Any stock withholding with respect to a Reporting Person will be subject to such limitations as the Committee may impose to comply with the requirements of the Exchange Act. Notwithstanding the foregoing, Reporting Persons shall be permitted +8 +Table of Contents +to elect to satisfy all or a portion of the withholding tax obligations incident to the settlement of an Award involving payment or delivery of Shares to such Participant by having Corporation withhold a portion of the Shares that would otherwise be issuable to the Participant. +6.7 Annulment of Awards . Any Award Agreement may provide that the grant of an Award payable in cash is provisional until cash is paid in settlement thereof or that grant of an Award payable in Shares is provisional until the Participant becomes entitled to the Shares in settlement thereof. In the event the employment (or service as an Advisor or membership on the Board) of a Participant is terminated for cause (as defined below), any Award that is provisional will be annulled as of the date of such termination for cause. For the purpose of this Section 6.7, the term “for cause” has the meaning set forth in the Participant’s employment agreement, if any, or otherwise means any discharge (or removal) for material or flagrant violation of the policies and procedures of Corporation or for other job performance or conduct which is materially detrimental to the best interests of Corporation, as determined by the Committee. +6.8 Engaging in Competition With Corporation . Any Award Agreement may provide that, if a Participant terminates employment with Corporation or a Subsidiary for any reason whatsoever, and within 18 months after the date thereof accepts employment with any competitor of (or otherwise engages in competition with) Corporation, the Committee, in its sole discretion, may require such Participant to return to Corporation the economic value of any Award that is realized or obtained (measured at the date of exercise, Vesting, or payment) by such Participant at any time during the period beginning on the date that is six months prior to the date of such Participant’s termination of employment with Corporation. +ARTICLE 7 +OPTIONS +7.1 Types of Options . Options granted under the Plan may be in the form of Incentive Stock Options or Nonqualified Options. The grant of each Option and the Award Agreement governing each Option will identify the Option as an ISO or an NQSO. In the event the Code is amended to provide for tax-favored forms of stock options other than or in addition to Incentive Stock Options, the Committee may grant Options under the Plan meeting the requirements of such forms of options. +7.2 General . Options will be subject to the terms and conditions set forth in Article 6 and this Article 7 and may contain such additional terms and conditions, not inconsistent with the express provisions of the Plan, as the Committee (or the Board with respect to Awards to Non-Employee Directors) deems desirable. +7.3 Option Price . Each Award Agreement for Options will state the option exercise price per Share of Common Stock purchasable under the Option, which will not be less than 100 percent (100%) of the Fair Market Value of a Share on the date of grant for all Options (ISOs or NQSOs); provided, however, that in the case of any ISO granted to a Ten Percent Shareholder, the option exercise price per Share shall not be less than 110 percent (110%) of the Fair Market Value of a Share on the date of grant +7.4 Option Term . The Award Agreement for each Option will specify the term of each Option, which shall have a specified period during which the Option may be exercised which is no longer than ten years, as determined by the Committee. +7.5 Time of Exercise . The Award Agreement for each Option will specify, as determined by the Committee: +(a) The time or times when the Option will become exercisable and whether the Option will become exercisable in full or in graduated amounts over a period specified in the Award Agreement; +(b) Such other terms, conditions, and restrictions as to when the Option may be exercised as determined by the Committee; and +(c) The extent, if any, to which the Option will remain exercisable after the Participant ceases to be an employee, Advisor, or director of Corporation or a Subsidiary. +An Award Agreement for an Option may, in the discretion of the Committee, provide whether, and to what extent, the Option will become immediately and fully exercisable (i) in the event of the death, Disability, or Retirement of the Participant, or (ii) upon the occurrence of a Change in Control of Corporation. +9 +Table of Contents +7.6 Method of Exercise . The Award Agreement for each Option will specify the method or methods of payment acceptable upon exercise of an Option. An Award Agreement may provide that the option price is payable in full in cash or, at the discretion of the Committee: +(a) In previously acquired Shares (including Restricted Shares); +(b) By surrendering outstanding Awards under the Plan denominated in Shares or in Share-equivalent units; +(c) By delivery (in a form approved by the Committee) of an irrevocable direction to a securities broker acceptable to the Committee: +(i) +To sell Shares subject to the Option and to deliver all or a part of the sales proceeds to Corporation in payment of all or a part of the option price and withholding taxes due; or +(ii) +To pledge Shares subject to the Option to the broker as security for a loan and to deliver all or a part of the loan proceeds to Corporation in payment of all or a part of the option price and withholding taxes due; or +(d) In any combination of the foregoing or in any other form approved by the Committee. +If Restricted Shares are surrendered in full or partial payment of an Option price, a corresponding number of the Shares issued upon exercise of the Option will be Restricted Shares subject to the same Restrictions as the surrendered Restricted Shares. +7.7 Special Rules for Incentive Stock Options . In the case of an Option designated as an Incentive Stock Option, the terms of the Option and the Award Agreement must be in conformance with the statutory and regulatory requirements specified in Section 422 of the Code, as in effect on the date such ISO is granted. ISOs may be granted only to employees of Corporation or a Subsidiary. ISOs may not be granted under the Plan after February 21, 2027, unless the ten-year limitation of Section 422(b)(2) of the Code is removed or extended. +7.8 Restricted Shares . In the discretion of the Committee, the Shares issuable upon exercise of an Option may be Restricted Shares if so provided in the Award Agreement. +7.9 Limitation on Number of Shares Subject to Options . In no event may Options for more than 500,000 Shares be granted to any individual under the Plan during any fiscal year period. +ARTICLE 8 +STOCK APPRECIATION RIGHTS +8.1 General . Stock Appreciation Rights will be subject to the terms and conditions set forth in Article 6 and this Article 8 and may contain such additional terms and conditions, not inconsistent with the express terms of the Plan, as the Committee (or the Board with respect to Awards to Non-Employee Directors) deems desirable. +8.2 Nature of Stock Appreciation Right . A Stock Appreciation Right is an Award entitling a Participant to receive an amount equal to the excess (or if the Committee determines at the time of grant, a portion of the excess) of the Fair Market Value of a Share of Common Stock on the date of exercise of the SAR over the base price, as described below, on the date of grant of the SAR, multiplied by the number of Shares with respect to which the SAR has been exercised. The base price will be designated by the Committee in the Award Agreement for the SAR and shall be not less than 100 percent (100%) of the Fair Market Value of a Share on the grant date of the SAR. +8.3 Exercise . A Stock Appreciation Right may be exercised by a Participant in accordance with procedures established by the Committee. The Committee may also provide that an SAR will be automatically exercised on one or more specified dates or upon the satisfaction of one or more specified conditions. In the case of SARs granted to Reporting Persons, exercise of the SAR will be limited by the Committee to the extent required to comply with the applicable requirements of Rule 16b-3 under the Exchange Act. +8.4 Term . The Award Agreement for each SAR shall have a specified period during which the SAR may be exercised, which is no longer than ten years, as determined by the Committee. +10 +Table of Contents +8.5 Form of Payment . Payment upon exercise of a Stock Appreciation Right may be made in cash, in installments, in Shares, or in any combination of the foregoing, or in any other form as the Committee determines. +8.6 Limitation on Number of Shares Subject to SARs . In no event may SARs for more than 500,000 Shares be granted to any individual under the Plan during any fiscal year period. +ARTICLE 9 +RESTRICTED AWARDS +9.1 Types of Restricted Awards . Restricted Awards granted under the Plan may be in the form of either Restricted Shares or Restricted Units. +(a) Restricted Shares . A Restricted Share is an Award of Shares transferred to a Participant subject to such terms and conditions as the Committee deems appropriate, including, without limitation, restrictions on the sale, assignment, transfer, or other disposition of such Restricted Shares and may include a requirement that the Participant forfeit such Restricted Shares back to Corporation upon termination of Participant’s employment (or service as an Advisor or Non-Employee Director) for specified reasons within a specified period of time or upon other conditions, as set forth in the Award Agreement for such Restricted Shares. Each Participant receiving a Restricted Share will be issued a stock certificate in respect of such Shares, registered in the name of such Participant, or such certificate, registered in the name of such Participant, will be placed in a restricted stock account (including an electronic account) with a transfer agent. If such certificate is issued to the Participant, the Participant will be required to execute a stock power in blank with respect to the Shares evidenced by such certificate, and such certificate and the stock power will be held in custody by Corporation until the Restrictions thereon will have lapsed. +(b) Restricted Units . A Restricted Unit is an Award to receive a Share or the Fair Market Value of a Share at some date in the future, which is granted to a Participant subject to such terms and conditions as the Committee deems appropriate, and may include a requirement that the Participant forfeit such Restricted Units upon termination of Participant’s employment (or service as an Advisor or Non-Employee Director) for specified reasons within a specified period of time or upon other conditions, as set forth in the Award Agreement for such Restricted Units. +9.2 General . Restricted Awards will be subject to the terms and conditions of Article 6 and this Article 9 and may contain such additional terms and conditions, not inconsistent with the express provisions of the Plan, as the Committee (or the Board with respect to Awards to Non-Employee Directors) deems desirable. +9.3 Restriction Period . Restricted Awards will provide that such Awards, and the Shares subject to such Awards, may not be transferred, and may provide that, in order for a Participant to Vest in such Awards, the Participant must remain in the employment (or remain as an Advisor or Non-Employee Director) of Corporation or its Subsidiaries, subject to relief for reasons specified in the Award Agreement, for a period commencing on the date of the Award and ending on such later date or dates as the Committee designates at the time of the Award (the “Restriction Period”). During the Restriction Period, a Participant may not sell, assign, transfer, pledge, encumber, or otherwise dispose of Shares received under or governed by a Restricted Award grant. The Committee, in its sole discretion, may provide for the lapse of restrictions in installments during the Restriction Period. Upon expiration of the applicable Restriction Period (or lapse of Restrictions during the Restriction Period where the Restrictions lapse in installments) the Participant shall be entitled to settlement of the Restricted Award or portion thereof, as the case may be. Although Restricted Awards will usually Vest based on continued employment (or service as an Advisor or Non-Employee Director) and Performance Awards under Article 10 shall usually Vest based on attainment of Performance Goals, the Committee, in its discretion, may condition Vesting of Restricted Awards on attainment of Performance Goals as well as continued employment (or service as an Advisor or Non-Employee Director). In such case, the Restriction Period for such a Restricted Award will include the period prior to satisfaction of the Performance Goals. +9.4 Forfeiture . If a Participant ceases to be an employee, Advisor of Corporation or a Subsidiary or Non-Employee Director during the Restriction Period for any reason other than reasons which may be specified in an Award Agreement (such as death, Disability, or Retirement), the Award Agreement may require that all non-Vested Restricted Awards previously granted to the Participant be forfeited and returned to Corporation. +11 +Table of Contents +9.5 Settlement of Restricted Awards . +(a) Restricted Shares . Upon Vesting of a Restricted Share Award, the legend on such Shares will be removed and the Participant’s stock power, if any, will be returned and the Shares will no longer be Restricted Shares. The Committee may also, in its discretion, permit a Participant to receive, in lieu of unrestricted Shares at the conclusion of the Restriction Period, payment in cash, installments, or in any other manner or combination of such methods as the Committee, in its sole discretion, determines. +(b) Restricted Units . Upon Vesting of a Restricted Unit Award, a Participant will be entitled to receive payment for Restricted Units in an amount equal to the aggregate Fair Market Value of the Shares covered by such Restricted Units at the expiration of the Applicable Restriction Period. Payment in settlement of a Restricted Unit will be made as soon as practicable following the conclusion of the applicable Restriction Period in cash, in installments, in Shares equal to the number of Restricted Units, or in any other manner or combination of such methods as the Committee, in its sole discretion, determines, subject to the applicable restrictions contained in Section 409A of the Code. +9.6 Rights as a Shareholder . A Participant will have, with respect to unforfeited Shares received under a grant of Restricted Shares, all the rights of a shareholder of Corporation, including the right to vote the Shares and the right to receive any cash dividends. The right to receive cash dividends on Restricted Shares shall be subject to the Restrictions applicable to the Restricted Shares. Stock dividends issued with respect to Restricted Shares will be treated as additional Shares covered by the grant of Restricted Shares and will also be subject to the same Restrictions. +ARTICLE 10 +PERFORMANCE AWARDS +10.1 General . Performance Awards will be subject to the terms and conditions set forth in Article 6 and this Article 10 and may contain such other terms and conditions not inconsistent with the express provisions of the Plan, as the Committee (or the Board with respect to Awards to Non-Employee Directors) deems desirable. +10.2 Nature of Performance Awards . A Performance Award is an Award of units (with each unit having a value equivalent to one Share) granted to a Participant subject to such terms and conditions as the Committee deems appropriate, including, without limitation, the requirement that the Participant forfeit such Performance Award or a portion thereof in the event specified performance criteria are not met within a designated period of time. +10.3 Performance Cycles . For each Performance Award, the Committee will designate a performance period (the “Performance Cycle”) with a duration of at least one (1) year, as may be determined by the Committee in its discretion within which specified Performance Goals are to be attained. There may be several Performance Cycles in existence at any one time and the duration of Performance Cycles may differ from each other. +10.4 Performance Goals . The Committee will establish Performance Goals for each Performance Cycle on the basis of such criteria and to accomplish such objectives as the Committee may from time to time select. Performance Goals may be based on performance criteria for Corporation, a Subsidiary, or an operating group, or based on a Participant’s individual performance. Performance Goals may include objective and subjective criteria. During any Performance Cycle, the Committee may adjust the Performance Goals for such Performance Cycle as it deems equitable in recognition of unusual or nonrecurring events affecting Corporation, changes in applicable tax laws or accounting principles, or such other factors as the Committee may determine. +10.5 Determination of Awards . As soon as practicable after the end of a Performance Cycle, the Committee will determine the extent to which Performance Awards have been earned on the basis of performance in relation to the established Performance Goals. +10.6 Timing and Form of Payment . Settlement of earned Performance Awards will be made to the Participant as soon as practicable after the expiration of the Performance Cycle and the Committee’s determination under Section 10.5, in the form of cash, installments, Shares, or any combination of the foregoing or in any other form as the Committee determines. +10.7 Performance Goals for Executive Officers . The performance goals for Performance Awards granted to executive officers of Corporation may relate to corporate performance, business unit performance, or a combination of both. +12 +Table of Contents +(a) Corporate performance goals will be based on financial performance goals related to the performance of Corporation as a whole and may include one or more measures related to earnings, profitability, efficiency, or return to stockholders such as earnings per share, operating profit, stock price, costs of production, or other measures. +(b) Business unit performance goals will be based on a combination of financial goals and strategic goals related to the performance of an identified business unit for which a Participant has responsibility. Strategic goals for a business unit may include one or a combination of objective factors relating to success in implementing strategic plans or initiatives, introductory products, constructing facilities, or other identifiable objectives. Financial goals for a business unit may include the degree to which the business unit achieves one or more objective measures related to its revenues, earnings, profitability, efficiency, operating profit, costs of production, or other measures. +(c) Any corporate or business unit goals may be expressed as absolute amounts or as ratios or percentages. Success may be measured against various standards, including budget targets, improvement over prior periods, and performance relative to other companies, business units, or industry groups. +10.8 Award Limitations . The maximum number of Shares issuable with respect to Performance Awards granted to any individual executive officer may not exceed 150,000 Shares for any calendar year. +ARTICLE 11 +OTHER STOCK-BASED AND COMBINATION AWARDS +11.1 Other Stock-Based Awards . The Committee (or the Board with respect to Awards to Non-Employee Directors) may grant other Awards under the Plan pursuant to which Shares are or may in the future be acquired, or Awards denominated in or measured by Share equivalent units, including Awards valued using measures other than the market value of Shares. Such Other Stock-Based Awards may be granted either alone, in addition to, or in tandem with, any other type of Award granted under the Plan. +11.2 Combination Awards . The Committee may also grant Awards under the Plan in tandem or combination with other Awards or in exchange of Awards, or in tandem or combination with, or as alternatives to, grants or rights under any other employee plan of Corporation, including the plan of any acquired entity. No action authorized by this section may reduce the amount of any existing benefits or change the terms and conditions thereof without the Participant’s consent. +ARTICLE 12 +DEFERRAL ELECTIONS +The Committee may permit a Participant to elect to defer receipt of the payment of cash or the delivery of Shares that would otherwise be due to such Participant by virtue of the exercise, earn-out, or Vesting of an Award made under the Plan. If any such election is permitted, the Committee will establish rules and procedures for such payment deferrals, including, but not limited to: (a) payment or crediting of reasonable interest on such deferred amounts credited in cash or (b) the payment or crediting of dividend equivalents in respect of deferrals credited in Share equivalent units. Such deferrals, if permitted, shall to the extent possible, comply with Section 409A of the Code and the regulations and other guidance promulgated thereunder. +ARTICLE 13 +ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, ETC. +13.1 Plan Does Not Restrict Corporation . The existence of the Plan and the Awards granted hereunder will not affect or restrict in any way the right or power of the Board or the shareholders of Corporation to make or authorize any adjustment, recapitalization, reorganization, or other change in Corporation’s capital structure or its business, any merger or consolidation of the Corporation, any issue of bonds, debentures, preferred or prior preference stocks ahead of or affecting Corporation’s capital stock or the rights thereof, the dissolution or liquidation of Corporation or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding. +13.2 Adjustments by the Committee . In the event of any change in capitalization affecting the Common Stock of Corporation, such as a stock dividend, stock split, recapitalization, merger, consolidation, split-up, combination or exchange of shares or other form of reorganization, or any other change affecting the Common Stock, such proportionate +13 +Table of Contents +adjustments, if any, as the Committee, in its sole discretion, may deem appropriate to reflect such change, will be made with respect to the aggregate number of Shares for which Awards in respect thereof may be granted under the Plan, the maximum number of Shares which may be sold or awarded to any Participant, the number of Shares covered by each outstanding Award, and the price per Share in respect of outstanding Awards. The Committee may also make such adjustments in the number of Shares covered by, and price or other value of any outstanding Awards in the event of a spin-off or other distribution (other than normal cash dividends), of Corporation assets to shareholders. +ARTICLE 14 +AMENDMENT AND TERMINATION +The Board may amend, suspend, or terminate the Plan or any portion of the Plan at any time; provided that no such action may be taken without shareholder approval if (i) such action would increase the number of shares subject to the Plan; (ii) such action would result in the repricing, replacement or repurchase of out-of-the money Options, Stock Appreciation Rights or other Awards; (iii) such action would result in an Award being fully Vested, exercisable or earned in the event of a Change in Control prior to the consummation of the Change in Control; or (iv) such approval is required by applicable law or regulation or the applicable requirements of a stock exchange or over-the-counter stock trading system; provided further that the Board may, in its discretion, determine to submit any other changes to the Plan to the shareholders for approval; provided further that no amendment, suspension or termination of the Plan may materially and adversely affect the rights of a Participant under any outstanding Award without such Participant’s consent, unless such action is necessary to ensure a deduction under Section 162(m) of the Code or to avoid the additional tax described in Section 409A of the Code. +ARTICLE 15 +MISCELLANEOUS +15.1 Unfunded Plan . The Plan will be unfunded and Corporation will not be required to segregate any assets that may at any time be represented by Awards under the Plan. Any liability of Corporation to any person with respect to any Award under the Plan will be based solely upon any contractual obligations that may be effected pursuant to the Plan. No such obligation of Corporation will be deemed to be secured by any pledge of, or other encumbrance on, any property of Corporation. +15.2 Payments to Trust . The Committee is authorized (but has no obligation) to cause to be established a trust agreement or several trust agreements whereunder the Committee may make payments of amounts due or to become due to Participants in the Plan. +15.3 Other Corporation Benefit and Compensation Programs . Payments and other benefits received by a Participant under an Award made pursuant to the Plan will not be deemed a part of a Participant’s regular, recurring compensation for purposes of the termination, indemnity or severance pay law of any state or country and shall not be included in, or have any effect on, the determination of benefits under any other employee benefit plan or similar arrangement provided by Corporation or a Subsidiary unless expressly so provided by such other plan or arrangements, or except where the Committee expressly determines that an Award or portion of an Award should be included to accurately reflect competitive compensation practices or to recognize that an Award has been made in lieu of a portion of cash compensation. Awards under the Plan may be made in combination with or in tandem with, or as alternatives to, grants, awards, or payments under any other Corporation or Subsidiary plans, arrangements, or programs. The Plan notwithstanding, Corporation or any Subsidiary may adopt such other compensation programs and additional compensation arrangements as it deems necessary to attract, retain, and reward employees and directors for their service with Corporation and its Subsidiaries. +15.4 Securities Law Restrictions . No Shares may be issued under the Plan unless counsel for Corporation is satisfied that such issuance will be in compliance with applicable federal and state securities laws. Certificates for Shares delivered under the Plan may be subject to such stop-transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations, and other requirements of the Securities and Exchange Commission, any stock exchange upon which the Common Stock is then listed, and any applicable federal or state securities law. The Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions. +15.5 Governing Law . Except with respect to references to the Code or federal securities laws, the Plan and all actions taken thereunder shall be governed by and construed in accordance with the laws of the state of Delaware. +14 +Table of Contents +ARTICLE 16 +SHAREHOLDER APPROVAL +The Plan, as amended and restated, is expressly subject to the approval of the Plan by the shareholders at the 2023 annual meeting of Corporation’s shareholders. +15 +Table of Contents +ORASURE TECHNOLOGIES, INC. 220 EAST FIRST STREET BETHLEHEM, PA 18015 +SCAN TO +VIEW MATERIALS & VOTE w +VOTE BY INTERNET +Before The Meeting - Go to www.proxyvote.com or scan the QR Barcode above +Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. +During The Meeting - Go to www.virtualshareholdermeeting.com/OSUR2023 +You may attend the Meeting via the Internet and vote during the Meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions. +VOTE BY PHONE - 1-800-690-6903 +Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the meeting date. Have your proxy card in hand when you call and then follow the instructions. +VOTE BY MAIL +Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. +TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: +V04065-P87412 KEEP THIS PORTION FOR YOUR RECORDS +THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY +ORASURE TECHNOLOGIES, INC. +The Board of Directors recommends you vote FOR the following nominee: +1. ELECTION OF DIRECTOR +Class II (Expiring 2026) +Nominee: For Against Abstain +1a. Mara G. Aspinall +The Board of Directors recommends you vote FOR items 2, 3, and 5 and vote 1 YEAR for item number 4. For Against Abstain +2. Ratification of Appointment of KPMG LLP as the Independent Registered Public Accounting Firm for Fiscal Year 2023. +3. Advisory (Non-Binding) Vote to Approve Executive Compensation. +1 Year 2 Years 3 Years Abstain +4. Advisory (Non-Binding) Vote to Select the Frequency of Future Stockholder Advisory Votes to Approve the Company’s Executive Compensation. +For Against +Abstain +5. Approval of Amendment and Restatement of the Company’s Stock Award Plan to Increase the Shares Authorized for Issuance Thereunder. +The Board of Directors recommends you vote AGAINST item 6. +6. Stockholder proposal requiring the Company to issue near and long term greenhouse gas reduction targets within a year. +NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. +Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date +Table of Contents +OraSure Technologies, Inc. 2023 Annual Meeting of Stockholders Tuesday, May 16, 2023 +Important notice regarding the Internet availability of proxy materials for the Annual Meeting of Stockholders. +The Notice and Proxy Statement and 2022 Annual Report to Stockholders are available at www.proxyvote.com. +V04066-P87412 +PROXY +2023 Annual Meeting of Stockholders +PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS +The undersigned hereby appoints Stefano Taucer and Carrie Eglinton Manner, and either of them, proxies with full power of substitution, to vote all of the shares which the undersigned is entitled to vote at the 2023 Annual Meeting of Stockholders of OraSure Technologies, Inc. (the “Company”), on Tuesday, May 16, 2023, at 12:30 p.m. (Eastern Time), +and at any adjournment or adjournments thereof, with all the powers the undersigned would possess if personally present, with respect to the matters listed on the reverse side. +The shares represented by this Proxy, if properly executed, will be voted (i) FOR the election of the nominee listed on the reverse side as a Class II director, (ii) FOR the ratification of the appointment of KPMG LLP as the Company’s independent registered public accounting firm for 2023, (iii) FOR advisory (non-binding) votes to approve the compensation of the Company’s named executive officers, (iv) Advisory (non-binding) vote for future stockholder advisory votes to approve the Company’s executive compensation 1 YEAR, (v) FOR approval of an amendment and restatement of the Company’s Stock Award Plan to increase the shares authorized for issuance thereunder, and (vi) AGAINST the stockholder proposal requiring the Company to issue near and long term greenhouse gas reduction targets within a year. If any other business properly comes before the meeting, the proxies named above will have discretionary authority to vote thereon in accordance with their best judgment. +PLEASE MARK, DATE, SIGN AND RETURN THE PROXY CARD PROMPTLY. +(Continued and to be marked, dated and signed, on the other side) \ No newline at end of file diff --git a/raw/proxies/0001116463/0001193125-23-102206/proxy_rpt.txt b/raw/proxies/0001116463/0001193125-23-102206/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..a4ee8e0cada09da6a968b60ff0e3492225717bf0 --- /dev/null +++ b/raw/proxies/0001116463/0001193125-23-102206/proxy_rpt.txt @@ -0,0 +1,5 @@ +TRANSACTIONS WITH RELATED PERSONS +Since January 1, 2022 there have been no transactions with related persons that would require disclosure in this Proxy Statement. The Audit Committee is required to review and approve in advance all transactions with related persons involving the Company. The Audit Committee may approve a related party transaction if the transaction is on terms comparable to those that could be obtained in arms’ length dealings with an unrelated third party. The Audit Committee also reviews any public disclosures of a related party transaction contained in our SEC filings. These responsibilities are described in the Audit Committee’s charter, a copy of which is available on our website at www.orasure.com . +Information regarding employment, severance and retirement agreements between our executive officers and the Company is set forth in the Section entitled, “Employment Agreements and Potential Payments Upon Termination or Change of Control,” in this Proxy Statement. +26 +Table of Contents \ No newline at end of file diff --git a/raw/proxies/0001116463/0001564590-20-016101/proxy.txt b/raw/proxies/0001116463/0001564590-20-016101/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..e957ab4f8353199d523a7d0c1f8d88018f57bbbe --- /dev/null +++ b/raw/proxies/0001116463/0001564590-20-016101/proxy.txt @@ -0,0 +1,4279 @@ +DEF 14A +1 +osur-def14a_20200519.htm +DEF 14A +osur-def14a_20200519.htm +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Proxy Statement Pursuant to Section 14(a) +of the Securities Exchange Act of 1934 +(Amendment No. ) +Filed by the Registrant ☒ Filed by a Party other than the Registrant ☐ +Check the appropriate box: +☐ +Preliminary Proxy Statement +☐ +Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +☒ +Definitive Proxy Statement +☐ +Definitive Additional Materials +☐ +Soliciting Material Pursuant to §240.14a-12 +OraSure Technologies, Inc. +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +☒ +No fee required. +☐ +Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. +(1) +Title of each class of securities to which transaction applies: +(2) +Aggregate number of securities to which transaction applies: +(3) +Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): +(4) +Proposed maximum aggregate value of transaction: +(5) +Total fee paid: +☐ +Fee paid previously with preliminary materials. +☐ +Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. +(1) +Amount Previously Paid: +(2) +Form, Schedule or Registration Statement No.: +(3) +Filing Party: +(4) +Date Filed: +2020 +Proxy Statement +Notice of Annual Meeting of Stockholders +Tuesday, May 19, 2020 ● 10:00 a.m. (Eastern Time) +Letter to the Stockholders +Stephen S. Tang, Ph.D. +President and +Chief Executive Officer +April 9, 2020 +Dear Fellow Stockholders: +You are cordially invited to attend the 2020 Annual Meeting of Stockholders (the “Annual Meeting”) to be held on Tuesday, May 19, 2020 at 10:00 a.m. Eastern Time . Once again, this year’s Annual Meeting will be a completely virtual meeting, conducted as a live webcast. You will be able to attend the Annual Meeting online, vote your shares electronically if you wish, and submit your questions during the meeting by visiting www.virtualshareholdermeeting.com/OSUR2020 . +Pursuant to the Securities and Exchange Commission (“SEC”) rule allowing companies to furnish proxy materials to their stockholders over the internet, a Notice of Internet Availability of Proxy Materials (the “Notice”) was sent to stockholders on or about April 9, 2020. The Notice contains information on how to access copies of the proxy materials and vote your shares. +At the Annual Meeting, you will be asked to (i) elect two Class II Directors to serve on the Board of Directors until the Annual Meeting of Stockholders in 2023; (ii) ratify the appointment of KPMG LLP as our independent registered public accounting firm for the 2020 fiscal year; (iii) approve, by an advisory (non-binding) vote, the compensation of the Company’s named executive officers as disclosed in the proxy materials, (iv) approve an amendment and restatement of the OraSure Technologies, Inc. Stock Award Plan (the “Stock Award Plan” or “Plan”) to increase the number of shares of Common Stock authorized to be granted under the Plan; and (v) transact such other business as may properly come before the meeting, and any adjournment(s) or postponement(s) thereof. +The Board of Directors has approved the nominees for Class II Directors and recommends that you vote FOR their election to the Board of Directors. In addition, the Board of Directors recommends that you vote FOR the ratification of KPMG LLP’s appointment, FOR the approval of the Company’s executive compensation, and FOR the Amended and Restated Stock Award Plan. +Your vote is very important, regardless of the number of shares you own . Whether or not you plan to attend the Annual Meeting online, we urge you to submit your vote as soon as possible . You will have the option to vote by telephone, via the internet, or by completing, signing, dating and returning a paper Proxy Card. Additional details on these options can be found in the Notice sent to you and in the other proxy materials. You may, of course, attend the Annual Meeting online and vote your shares during the meeting regardless of whether you have previously voted by phone, the internet or mail. +Thank you for your cooperation, your ongoing support of, and continued interest in, OraSure Technologies, Inc. +Sincerely yours, +Stephen S. Tang, Ph.D. +President and Chief Executive Officer +NOTICE OF 2020 ANNUAL MEETING OF STOCKHOLDERS +OF ORASURE TECHNOLOGIES, INC. +DATE AND TIME +Tuesday May 19, 2020 +10:00 a.m. (Eastern Time) +To be held virtually by visiting +www.virtualshareholdermeeting.com/OSUR2020 +ITEMS OF BUSINESS +The 2020 Annual Meeting of Stockholders will be held for the following purposes: +• To elect two (2) Class II Directors, each to serve for a term expiring at the Company’s Annual Meeting of Stockholders in 2023; +• To ratify the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2020; +• To approve, by an advisory (non-binding) vote, the compensation of the Company’s named executive officers as disclosed in the Proxy Statement accompanying this Notice; +• To approve an amendment and restatement of the Company’s Stock Award Plan to increase the number of shares of Common Stock authorized to be granted under the Plan; and +• To consider such other business as may properly come before the meeting, and any adjournment(s) or postponement(s) thereof. +HOW TO VOTE +Via the Internet . Go to www.proxyvote.com to vote your shares online prior to the Annual Meeting. Have the control number that is printed in your Notice of Internet Availability of Proxy Materials or Proxy Card available and follow the instructions. You may also vote online during the Annual Meeting by going to www.virtualshareholdermeeting.com/OSUR2020 and following the instructions. +By Phone . Call the toll-free number on your Notice of Internet Availability of Proxy Materials or Proxy Card and follow the prompts. +By Mail . You can vote by mail by requesting a paper copy of the materials, which will include a Proxy Card. Please review your Notice of Internet Availability of Proxy Materials for instructions on how to request a paper copy of the materials. Mark, sign and date your Proxy Card and return it as indicated on the Proxy Card. +Who Can Vote : Only holders of shares of the Company’s Common Stock of record at the close of business on March 27, 2020 will be entitled to vote at the Annual Meeting of Stockholders and any adjournment(s) or postponement(s) thereof. Additional information is included in the Proxy Statement accompanying this Notice. +By Order of the Board of Directors, +Jack E. Jerrett +Secretary +April 9, 2020 +Proxy Statement Table of Contents +Proxy Statement Summary +1 +2020 Annual Meeting Information +1 +Proposals for Stockholder Consideration +1 +Most Significant Compensation Components +3 +Key Features of our Executive Compensation Program +3 +2019 Performance Highlights +4 +Questions and Answers About the 2020 Annual Meeting and Voting +5 +Why Did I Receive These Proxy Materials? +5 +What Is a Proxy? +5 +What Is the Record Date and What Does It Mean? +5 +What Is the Difference Between a Stockholder of Record and a Stockholder Who Holds Stock in Street Name? +6 +How Can I Vote My Shares for the Annual Meeting? +6 +How Will My Shares Be Voted If I Send In a Proxy? +6 +Will My Shares Be Voted If I Do Not Provide My Proxy? +7 +How Many Shares Must Be Present To Hold the Annual Meeting? +7 +How Can I Revoke a Proxy? +7 +What Items Will Be Voted On At The Annual Meeting? +7 +Who Will Pay The Cost of This Proxy Solicitation? +7 +How Can I Participate in The Annual Meeting? +8 +What if I Have Technical Difficulties or Trouble Accessing the Virtual Meeting? +8 +Are Votes Confidential? +8 +Who Counts The Votes? +8 +May Stockholders Ask Questions at the Annual Meeting? +8 +Stock Ownership of Certain Beneficial Owners and Management +9 +Corporate Governance +10 +Board Responsibilities, Operation and Composition +10 +Governance Guidelines and Code of Conduct +10 +Independent Board Chairman +11 +Director Independence +11 +Oversight of Risk Management +11 +Annual Meeting Attendance and Stockholder Communications +11 +Committees of the Board +12 +Nomination of Directors +14 +Director Qualifications +14 +Insider Trading +15 +Prohibition Against Short Sales, Hedging and Pledging +15 +Stock Ownership and Retention Guidelines +15 +Audit Committee Matters +16 +Report of the Audit Committee for Year Ended December 31, 201 9 +16 +Audit Fees; Audit-Related Fees; Tax Fees; All Other Fees +17 +Pre-Approval Procedures +17 +Compensation Committee Matters +17 +Compensation Processes and Procedures +17 +Annual Performance Evaluations +17 +Role of the Compensation Committee +18 +Role of the CEO +18 +Role of the Compensation Consultant +18 +Tally Sheets +19 +Compensation Committee Interlocks and Insider Participation +19 +Compensation Committee Report +19 +Executive Officers +20 +Transactions with Related Persons +21 +Compensation Discussion Analysis – Table of Contents +23 +Compensation Discussion and Analysis +24 +Executive Summary +24 +Compensation Philosophy +31 +Benchmarking +31 +2019 Executive Compensation Components +33 +Other Compensation +45 +CEO Pay Ratio +46 +Compensation Tables +47 +Employment Agreements and Potential Payments Upon Termination or Change of Control +53 +Stock Award Plan Information +56 +Director Compensation +56 +Annual Fees +56 +Initial Equity Awards +57 +Equity Award Terms +57 +Deferred Compensation +57 +Director Compensation During 2019 +58 +Proposals Requiring Your Vote +59 +Proposal No. 1 – Election of Directors +59 +Background +59 +Vote Required; Board Recommendation +64 +Proposal No. 2 – Ratification of Appointment of Independent Registered Public Accounting Firm +64 +Background +64 +Vote Required; Board Recommendation +64 +Proposal No. 3 – Advisory (Non-Binding) Vote To Approve Executive Compensation +65 +Background +65 +Compensation Program Features +65 +Vote Required; Board Recommendation +65 +Proposal No. 4 – Amendment and Restatement of Stock Award Plan +66 +General +66 +Amendment of the Stock Award Plan +66 +Summary of the Amended and Restated Plan +67 +Vote Required for Approval; Board Recommendation +70 +Annual Report +71 +Deadline for Stockholder Proposals +71 +PROXY STAT EMENT SUMMARY +We are providing these proxy materials to stockholders of OraSure Technologies, Inc., a Delaware corporation (as used herein, “we,” “us,” “our” or the “Company”), in connection with the Company’s solicitation of proxies (each, a “Proxy”) for use at the Annual Meeting of Stockholders to be held on May 19, 2020, at 10:00 a.m. Eastern Time, and at any adjournment(s) or postponement(s) thereof (the “Annual Meeting”). +As a stockholder, you are invited to participate in the Annual Meeting and are requested to vote on the matters described in this Proxy Statement. The Annual Meeting will be conducted in a completely virtual manner through a live +webcast that you can access online by going to www.virtualshareholdermeeting.com/OSUR2020 . The webcast will not include a presentation by management. A question and answer session will be provided at the Annual Meeting only for questions that are germane to the matters being discussed and voted on at the meeting. +This summary highlights information contained elsewhere in this Proxy Statement, but does not contain all of the information that you should consider. You should read the entire Proxy Statement carefully before voting your shares . +2020 ANNUAL MEETING INFORMATION +• +Date and Time: Tuesday, May 19, 2020 at 10:00 a.m. (ET) +• +Location: Online by visiting www.virtualshareholdermeeting.com/OSUR2020 +• +Record Date: March 27, 2020 +PROPOSALS FOR STOCKHOLDER CONSIDERATION +Proposals +Board +Recommendation +Page Reference +for More Detail +1.) +Election of two Class II Directors +FOR EACH NOMINEE +59 +2.) +Ratification of Appointment of Independent +Registered Public Accounting Firm for 2020 +FOR +64 +3.) +Advisory (Non-Binding) Vote to Approve +Executive Compensation +FOR +65 +4.) +Amendment and Restatement of Stock Award Plan +FOR +66 +Proposal No. 1 – Election of Directors +The table below provides summary information about each of our nominees for Class II Directors, whose new terms will expire at the 2023 Annual Meeting of Stockholders. The Board is recommending that stockholders vote for each Director nominee. +Aradhana Sarin, M.D. joined our Board as a Class II Director in 2018. Dr. Sarin recently informed us that she has decided to leave the Board so that she can focus on her responsibilities as Chief Financial Officer at Alexion Pharmaceuticals. As a result, Dr. Sarin will not stand for re-election at the Annual Meeting with the other Class II Directors. The Board and the Company would like to thank Dr. Sarin for her many contributions as a member of the Board and wish her well in her future endeavors. +Committee +Memberships 1 +Other +Name and Principal Occupation +Age +Director +Since +Independent +AC +CC +N& +GC +Public +Boards +Mara G. Aspinall +President and Chief Executive Officer of Health Catalysts Group +57 +2017 +Yes +√ +√ +Yes +1 +Ronny B. Lancaster +Former Senior Vice President for Federal Government Relations of Assurant, Inc. +68 +2003 +Yes +√ +√ +No +1 +AC = Audit Committee; CC = Compensation Committee; N&GC = Nominating & Corporate Governance Committee; C = Chairman; Ö = Member. +Proposal No. 2 – Ratification of Appointment of Independent Registered Public Accounting Firm +Our Audit Committee has selected KPMG LLP (“KPMG”) to be our independent registered public accounting firm for the 2020 fiscal year. The Board +believes KPMG is well qualified to serve in this capacity and is recommending that the engagement of KPMG be ratified by our stockholders. +Proposal No. 3 – Advisory (Non-Binding) Vote to Approve Executive Compensation +Our business is diverse and growing, and we operate in extremely competitive markets around the world. It takes commitment from all of the talented people throughout our Company, and especially our executive team, to manage the many facets of our business. +We have designed our compensation program to enable us to attract, retain and motivate our executives and reward them for achieving our objectives and delivering value to stockholders over the long-term. Therefore, we are asking our stockholders to approve, by an advisory (non-binding) vote, the compensation of our named executive officers (“NEOs”) as described in this Proxy Statement. +Our compensation program is designed to focus and reward our executives for balancing both short and long-term priorities. To fulfill this mission, we have adopted a +pay-for-performance philosophy that forms the foundation for executive compensation decisions made by our Board and the Compensation Committee of the Board (the “Compensation Committee”). In addition, our compensation decisions are designed to align the interests of our executives with the interests of our stockholders and incorporate strong corporate governance principles. +The Compensation Discussion and Analysis portion of this Proxy Statement (the “CD&A”) contains a detailed description of our executive compensation philosophy and program, the compensation decisions the Board and Compensation Committee have made under that program and the factors considered in making those decisions, focusing on the compensation of our NEOs for the year ended December 31, 2019, who were: +Stephen S. Tang, Ph.D., President and Chief Executive Officer (“CEO”) +Roberto Cuca, Chief Financial Officer (“CFO”) +Anthony Zezzo, II, Executive Vice President, Business Unit Leader, Infectious Disease +Kathleen G. Weber, Executive Vice President, Business Unit Leader, Molecular Solutions 1 +Jack E. Jerrett, Senior Vice President, General Counsel and Chief Compliance Officer +___________________________ +1 Ms. Weber was appointed as Executive Vice President, Business Unit Leader, Molecular Solutions, at the Company’s +subsidiary, DNA Genotek, Inc. (“DNAG”), effective as of January 1, 2019. +At our 2019 Annual Meeting, 97% of the votes cast approved the compensation paid to our NEOs for the 2018 fiscal year, as disclosed in our 2019 Proxy Statement. The Board and Compensation Committee take seriously the results of each “say-on-pay” (“SOP”) vote and the views of our stockholders regarding executive compensation. Accordingly, as has been our practice following each SOP vote, we conducted an outreach effort to contact our stockholders in order to obtain their views on the reasons for the vote and to solicit their input on our compensation practices. As part of that effort, we attempted to contact stockholders who, in the aggregate, beneficially owned +approximately 34% of our outstanding Common Stock to discuss our compensation practices. The stockholders we contacted generally either did not respond or indicated that there was no need to meet with them at this time. We believe this reaction, coupled with the strong positive SOP vote at the 2019 Annual Meeting, confirms that the structure of our compensation program is strongly supported by our stockholders. The CD&A provides further information on our outreach effort, which we intend to continue. The Board is recommending that stockholders vote in favor of the compensation of our NEOs as described in this Proxy Statement. +2 +Proposal No. 4 – Amendment and Restatement of Stock Award Plan +In order to enable the Company to continue to attract qualified directors, officers, employees and outside advisors, and to compensate these individuals in a manner that is competitive with compensation provided by other medical diagnostic and healthcare companies, the Board has determined that additional shares of Common Stock are needed to be available for grants under the Company’s Stock Award Plan. In addition, the Board wants to ensure that sufficient shares are available, if needed, to provide retention or other equity awards in connection with potential acquisitions or other business development activities. +Accordingly, subject to stockholder approval, the Board approved an amendment and restatement of the OraSure Technologies, Inc. Stock Award Plan (last amended and restated, February 21, 2017) (the “Stock Award Plan” or the “Plan”) to increase the number of shares to be authorized for grant under the Plan by 5,000,000 shares. As a result of this increase there will be a total of 5,668,183 shares available in the Stock Award Plan on or after April 4, 2020, subject to stockholder approval. A copy of the Amended and Restated Stock Award Plan reflecting this amendment is attached as Exhibit A to this Proxy Statement. +MOST SIGNIFICANT COMPENSATION COMPONENTS +We believe that all components of our executive compensation program are strongly tied to performance of both the Company and our executives and are aligned with the best interests of our stockholders. These components consist of the following: +Base Salary +Salaries are based on the individual executive’s position relative to market and the executive’s individual performance and contribution. +Annual Cash Incentive Plan Bonuses +Annual incentive cash bonuses reflect market-based targets and are contingent upon (i) our achievement of corporate financial objectives, which are used to determine overall bonus pool funding, and (ii) the executive’s individual performance against pre-determined objectives, for such executive, which are used to determine individual bonus payouts. +Equity Awards under our Long-Term Incentive Policy (“LTIP”) +Long-term incentive equity compensation reflects market-based targets with the value of individual awards contingent upon each executive’s individual performance against pre-determined objectives during the fiscal year prior to award. Fifty percent (50%) of each NEO’s annual LTIP award consists of performance-vested restricted units (“PRUs”) which require achievement of certain financial performance metrics selected by the Board and Compensation Committee and the satisfaction of a 3-year service period for vesting of the award. The other fifty percent (50%) consists of time-vested restricted stock (“RS”). +KEY FEATURES OF OUR EXECUTIVE COMPENSATION PROGRAM +Key features of our compensation program illustrate our commitment to pay-for-performance, the strong alignment of our executives’ interests with those of our stockholders and strong corporate governance. Several of the more significant of these features are summarized below: +• +Compensation is market driven with total compensation of our executives targeted at the 50 th percentile of the Peer Group. +• +Regular stockholder outreach on compensation/ governance matters. +● +Compensation is predominantly variable or performance-based. +• +Use of a third-party compensation consultant to provide independent advice on compensation matters. +● +Balanced mix of cash/equity, fixed/variable, short-term/long-term compensation components. +• +Strong stock ownership/retention requirements for executives. +3 +• +In order to incentivize growth, performance objectives for annual bonus pool funding target key financial measures and/or important strategic goals. +● +No economic perquisites for NEOs. +• +The Board’s discretionary ability to adjust annual incentive bonus pool funding is limited to +/- 10% of pool amount in order to avoid excessive discretionary bonus pool adjustments. +• +Use of peer company benchmarking and tally sheets. +• +Long-term equity incentive awards include 50% PRUs that vest only if (i) a three-year compound average growth rate for product revenues and/or a one-year earnings per share (“EPS”) or income before income taxes (“IBIT”) target is met and (ii) a three-year service period is satisfied. +• +Compensation recoupment policy. +• +No excise tax gross-up in any of our NEO employment agreements and no “single trigger” change-in-control severance in any of our new executive employment agreements, including our CEO’s and CFO’s agreements. +• +No hedging or pledging of our Common Stock. +2019 PERFORMANCE HIGHLIGHTS +Our 2019 performance was mixed as we successfully advanced several significant strategic priorities while we continued to see both positive and negative trends in our business throughout the year. We believe that compensation awarded to executives for 2019 was closely aligned with our performance. +We advanced our innovation growth strategy in 2019 with the acquisitions of two leading microbiome laboratory service providers, CoreBiome, Inc. (“CoreBiome”) and Diversigen, Inc. (“Diversigen”). We also acquired the manufacturer of a proprietary first-void urine collection product, Novosanis NV (“Novosanis”). These acquisitions increased our product and service offerings and enabled us to address new market opportunities, which we expect will contribute to our future growth. We also completed the sale of our cryosurgical systems product line in order to better align with our long-term strategy and focus our resources on higher priority growth opportunities. +During 2019, we also received several important regulatory approvals, including a generic 510(k) clearance from the U.S. Food and Drug Administration (“FDA”) for our Oragene ® saliva DNA collection kit, an FDA 510(k) clearance of our rapid Ebola test, and approval from the World Health Organization (“WHO”) for the use of our prequalified OraQuick ® HIV professional and self-test products for pediatric testing. These approvals are important accomplishments that improved the competitive positioning for these products. +Our consolidated net revenues of $154.6 million in 2019 represented a 15% decline from 2018, but this decline was +caused by three factors: (i) lower genomic revenues and royalty income resulting from changes in the promotional strategy and purchasing patterns by the leading ancestry testing firms in the consumer genomics market, (ii) the divestiture of our cryosurgical systems business in August and (iii) a reduction in research funding from the Biomedical Advanced Research and Development Authority (“BARDA”) related to our rapid Ebola test and a rapid Zika test. +Despite these declines, there were several positives in our performance which illustrate the underlying strength of our business. For example, the overall growth in our infectious disease testing business was driven largely by the continued strong performance of our OraQuick ® HIV self-test product, which delivered a 15% revenue increase in 2019 compared to 2018. Our domestic HCV business also delivered an 8% increase in revenues compared to the prior year period, reflecting the impact of additional funding and new testing programs. +On the molecular front, our microbiome business delivered a robust 91% increase in revenues due to higher product sales and the addition of laboratory service revenues resulting from our acquisitions of CoreBiome and Diversigen. We also saw underlying strength in sub-markets within genomics outside of ancestry testing, such as disease risk management, which have helped offset the decline in genomic product sales that we saw in 2019. +We generated $9.8 million in cash from operations in 2019 and we ended 2019 with approximately $190 million in cash and short-term investments on our balance sheet, which we can use for our future growth. +We +4 +QUESTIONS AND ANSWERS ABOUT THE 2020 ANNUAL MEETING AND VOTING +1. WHY DID I RECEIVE THESE PROXY MATERIALS? +Our Board of Directors (the “Board”) is furnishing proxy materials, including this Proxy Statement, a Proxy Card and the Company’s Annual Report to Stockholders for the year ended December 31, 2019 (the “2019 Annual Report”), to our stockholders in order to solicit proxies to be voted at the Annual Meeting (each, a “Proxy”). Each stockholder can access these documents on the internet in accordance with the rules and regulations of the SEC. On or about April 9, 2020, we mailed a Notice of Internet Availability of Proxy Materials (the “Notice”) to each stockholder at the holder’s address of record, indicating that this Proxy Statement is now available to our stockholders of record entitled to vote at the Annual Meeting. +SEC rules permit us to deliver only one copy of the Notice or a single set of proxy materials to multiple stockholders sharing the same address. Upon written or oral request, we will deliver separate Notices and/or copies of our 2019 Annual Report and/or this Proxy Statement to any stockholder at a shared address to which a single copy of the Notice was delivered. Stockholders may notify the +Company of their requests by calling or writing us at OraSure Technologies, Inc., 220 East First Street, Bethlehem, Pennsylvania 18015, Attention: Corporate Secretary; (610) 882-1820. +All stockholders and beneficial holders have the ability to access a copy of our proxy materials on the internet at the website referred to in the Notice. Stockholders will not receive printed copies of the proxy materials unless they request those copies . The Notice also instructs stockholders as to how to submit a Proxy through the internet. If you would like to receive a paper or e-mail copy of your proxy materials, you should follow the instructions for requesting such materials included in the Notice. We will pay the entire cost of preparing, assembling, printing, mailing and distributing these proxy materials and soliciting votes. If you choose to access the proxy materials and/or vote over the internet, you are responsible for any internet access charges you may incur. +2. WHAT IS A PROXY? +A Proxy is your legal designation of another person to vote the shares of Common Stock you own. That other person is called a “proxy.” If you designate someone as your proxy in a written document, that document also is called a Proxy or a Proxy Card. +Jack E. Jerrett and Michele Miller, each of whom are officers of the Company, have been designated as proxies by the Board of Directors for the Annual Meeting. +3. WHAT IS THE RECORD DATE AND WHAT DOES IT MEAN? +The record date for the Annual Meeting is March 27, 2020 (the “record date”). The record date is established by the Board as required by Delaware law. Only stockholders of record at the close of business on the record date are entitled to: +(a) +receive notice of the Annual Meeting; and +(b) +vote at the meeting and any adjournment(s) or postponement(s) of the meeting. +Each stockholder of record on the record date is entitled to one vote for each share of Common Stock held. On the record date, there were 62,748,088 shares of our Common +Stock outstanding and entitled to vote at the Annual Meeting. +A list of stockholders will be open for examination by any stockholder for any purpose germane to the Annual Meeting for a period of 10 days prior to the meeting at our principal executive offices at 220 East First Street, Bethlehem, PA 18015, and electronically during the Annual Meeting at www.virtualshareholdermeeting.com/OSUR2020 when you enter the control number provided in the Notice sent to you. +5 +4. WHAT IS THE DIFFERENCE BETWEEN A STOCKHOLDER OF RECORD AND A STOCKHOLDER WHO HOLDS STOCK IN STREET NAME? +If your shares of stock are registered in your name on the books and records of our transfer agent, Computershare, Inc., you are a stockholder of record. +If your shares of stock are held for you in the name of your broker, bank or other nominee, your shares are held in street name. The answer to Question 7 describes brokers’ discretionary voting authority and when your broker, bank or +other nominee is permitted to vote your shares of stock without instructions from you. +It is important that you vote your shares if you are a stockholder of record and, if you hold shares in street name, that you provide appropriate voting instructions to your broker, bank or other nominee as discussed in the answer to Question 7. +5. HOW CAN I VOTE MY SHARES FOR THE ANNUAL MEETING? +All stockholders have a choice of voting via the internet, over the telephone or by completing and mailing a paper Proxy Card, as described below. +Voting via the Internet or by Telephone . Stockholders of record desiring to vote online via the internet or by telephone prior to the Annual Meeting, should go to www.proxyvote.com or call the toll free number indicated on the Proxy Card or Notice. You may vote via the internet or by telephone provided you do so by 11:59 p.m. Eastern Time (8:59 p.m. Pacific Time) on May 18, 2020. Stockholders who attend the Annual Meeting via the internet may vote their shares at that time up to and during the Annual Meeting by following the instructions at www.virtualshareholdermeeting.com/OSUR2020 . +Street name holders may vote via the internet or by telephone if their brokers, banks or other nominees make those methods available. If that is the case, each broker, bank or nominee will include instructions with the Notice or Proxy Statement. +The telephone and internet voting procedures, including the use of control numbers, are designed to authenticate your identity, to allow you to give your voting instructions and +to confirm that your instructions have been recorded properly. +If you vote via the internet, you should understand that you will be responsible for any costs associated with this method of voting, such as usage charges from internet access providers and telephone companies. +Voting by Mail . If you desire to vote prior to the Annual Meeting by using a paper Proxy Card instead of by telephone or via the internet, you will need to either print a copy of the Proxy Card from the website indicated in your Notice or follow the instructions in your Notice to request that a paper copy be sent to you. You will then need to complete, sign, date and return the Proxy Card, as described on the Proxy Card. Street name holders should complete and return the voting card provided by their broker, bank or nominee. +Voting at the Annual Meeting . All stockholders of record may vote online during the Annual Meeting, as described above. Submitting a Proxy via the internet, over the telephone or by mail will not affect your right to withdraw your Proxy and vote during the Annual Meeting. +6. HOW WILL MY SHARES BE VOTED IF I SEND IN A PROXY? +If you are represented by a properly executed Proxy, whether delivered by phone, the internet or mail, your shares will be voted in accordance with your instructions. +If you do not provide instructions with your Proxy, your shares will be voted according to the recommendations of our Board as stated on the Proxy. +6 +7. WILL MY SHARES BE VOTED IF I DO NOT PROVIDE MY PROXY? +Stockholders of Record : If you are a stockholder of record, your shares will not be voted if you do not provide your Proxy, unless you vote online during the Annual Meeting. It is, therefore, important that you vote your shares. +Street Name Holders : If your shares are held in street name and you do not provide your signed and dated voting instruction form to your bank, broker or other nominee, your shares may be voted by your broker, bank or other nominee but only under certain circumstances. Specifically, under rules of the NASDAQ Stock Exchange (“NASDAQ”), shares held in the name of your broker, bank or other nominee may be voted by your broker, bank or other nominee on certain “routine” matters if you do not provide voting instructions. +At the upcoming Annual Meeting, only the ratification of the selection of KPMG LLP as the Company’s independent +registered public accounting firm is considered a “routine” matter for which brokers, banks or other nominees may vote uninstructed shares. The other proposals to be voted on at our Annual Meeting (specifically, the election of Director nominees, the advisory vote to approve the compensation of the Company’s NEO’s and approval of our Amended and Restated Stock Award Plan) are not considered “routine” under NASDAQ rules, so the broker, bank or other nominee cannot vote your shares on any of these proposals unless you provide to the broker, bank or other nominee voting instructions for each of these matters. If you do not provide voting instructions on these matters, your shares will not be voted on the matter, which is referred to as a “broker non-vote.” It is, therefore, important that you vote your shares. +8. HOW MANY SHARES MUST BE PRESENT TO HOLD THE ANNUAL MEETING? +Your shares are counted as present at the meeting if you attend the meeting and vote online or if you properly return a Proxy by internet, telephone or mail. In order for us to conduct our Annual Meeting, a majority of our outstanding shares of Common Stock as of the March 27, 2020 record +date, must be present online or by Proxy at the meeting. This is referred to as a quorum. Broker non-votes, votes withheld and abstentions are included in determining whether there are a sufficient number of shares present to constitute a quorum. +9. HOW CAN I REVOKE A PROXY? +You can revoke a Proxy before the completion of voting at the Annual Meeting by: +(a) +Giving written notice to the Corporate Secretary of the Company to revoke your Proxy; or +(b) +Delivering a later-dated Proxy that indicates the change in your vote; or +(c) +Logging on to www.proxyvote.com in the same manner you would to submit your Proxy electronically or calling the telephone number indicated in your Notice, and in each case, following the instructions to revoke or change your vote; or +(d) +Attending the Annual Meeting online and voting, which will automatically cancel any Proxy previously given. Attendance alone will not revoke any Proxy that you have given previously. +If you choose any of the first three methods, you must take the described action no later than 11:59 p.m. Eastern Time (8:59 p.m. Pacific Time) on May 18, 2020. Once voting on a particular matter is completed at the Annual Meeting, you will not be able to revoke your Proxy or change your vote. If your shares are held in street name by a broker or other nominee, you must contact that institution to change or revoke your vote. +10. WHAT ITEMS WILL BE VOTED ON AT THE ANNUAL MEETING? +At the Annual Meeting, action will be taken on the matters set forth in the accompanying Notice and described in this Proxy Statement. The Board knows of no other matters to be presented for action at the Annual Meeting. +If any other matters do properly come before the Annual Meeting, the persons named in the Proxy Card will have discretionary authority to vote on those matters in accordance with their best judgment. +11. WHO WILL PAY THE COST OF THIS PROXY SOLICITATION? +Solicitation of Proxies is made on behalf of the Board. The cost of soliciting Proxies will be borne by the Company. In addition to solicitations by e-proxy and/or by mail, certain +of our Directors, officers and regular employees may solicit Proxies personally or by telephone or other means without additional compensation. +7 +We have also engaged Morrow Sodali LLC, 470 West Ave., Stamford, CT 06902, to provide proxy solicitation services at an estimated fee of $7,500 plus expenses. Arrangements will be made with brokerage firms and other custodians, nominees and fiduciaries to forward solicitation materials to the beneficial owners of stock held of record by such persons, and we will, upon request, reimburse them for their reasonable expenses in so doing. +12. HOW CAN I PARTICIPATE IN THE ANNUAL MEETING? +This year’s Annual Meeting will be a completely virtual meeting of stockholders, and will be conducted via live webcast on the Internet. You are entitled to participate in the Annual Meeting only if you were a stockholder of the Company as of the close of business on March 27, 2020, the record date for the meeting, or if you hold a valid Proxy for the Annual Meeting. +You will be able to participate in the Annual Meeting online and submit your questions during the meeting by +visiting www.virtualshareholdermeeting.com/OSUR2020. To participate in the Annual Meeting, you will need the control number that is included on your Notice, on our proxy card or on the instructions that accompanied your proxy materials. The Annual Meeting will begin promptly at 10:00 a.m. Eastern Time, and you should allow ample time to complete the online check-in procedures. +13 . WHAT IF I HAVE TECHNICAL DIFFICULTIES OR TROUBLE VIEWING THE VIRTUAL MEETING +We have technicians ready to assist you with any technical difficulties during the virtual Annual Meeting. If you encounter any difficulties accessing the virtual meeting +or during the meeting, please call one of the following numbers: +Domestic: (800) 586-1548 +International: (303) 562-9288 +14. ARE VOTES CONFIDENTIAL? +We will continue our long-standing practice of holding the votes of each stockholder in confidence from Directors, officers and employees, except: (a) as necessary to meet applicable legal requirements and to assert or defend claims for or against the Company; (b) in the case of a contested +proxy solicitation; (c) if a stockholder makes a written comment on the Proxy Card or otherwise communicates his or her vote to the Company; or (d) as needed to allow the independent inspectors of election to certify the results of the vote. +15. WHO COUNTS THE VOTES? +We will continue, as we have for many years, to retain an independent inspector of election to receive and tabulate +the Proxies and certify the results. These activities will be handled electronically. +16. MAY STOCKHOLDERS ASK QUESTIONS AT THE ANNUAL MEETING? +Yes. The Chairman of the Board will answer stockholders’ written questions submitted during the question and answer period of the meeting. Stockholders should confine their questions to matters that relate to the business of the meeting. The Chairman will determine which questions are appropriate to answer during the meeting. +We reserve the right to edit or reject any questions we deem profane or otherwise inappropriate. Detailed +guidelines for submitting written questions during the meeting are available at www.virtualshareholdermeeting.com/OSUR2020 . +8 +STOCK OWNERSHIP OF CERTAIN BEN EFICIAL OWNERS AND MANAGEMENT +The following table sets forth information, as of March 27, 2020, regarding the beneficial ownership of the Company’s Common Stock by (a) each person who is known by us to be the beneficial owner of more than five percent of the Common Stock outstanding; (b) each Director and nominee for election as Director; (c) each of our executive officers named in the Summary Compensation Table in this Proxy Statement; and (d) all of our Directors and executive officers as a group. Unless otherwise indicated, the address of each person identified below is c/o OraSure Technologies, Inc., 220 East First Street, Bethlehem, Pennsylvania 18015. +Pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), shares of Common Stock which a person has a right to acquire pursuant to the exercise of stock options held by that person that are exercisable within 60 days of March 27, 2020 are deemed to be outstanding for the purpose of computing the ownership percentage of that person, but are not deemed outstanding for computing the ownership percentage of any other person. +Name and Address of +Beneficial Owner +Amount and Nature of +the Beneficial Ownership 1,2 +Percent +of Class +Black Rock, Inc. 3 +40 East 52 nd Street +New York, NY 10022 +9,852,763 +15.9% +Renaissance Technologies, LLC 4 +800 Third Avenue +New York, NY 10022 +4,189,813 +6.8% +The Vanguard Group 5 +100 Vanguard Blvd. +Malvern, PA 19355 +3,915,124 +6.3% +Wellington Management Group 6 +280 Congress Street +Boston, MA 02210 +3,578,821 +5.8% +Dimensional Fund Advisors 7 +Building One, 6300 Bee Cave Road +Austin, TX 78746 +3,315,416 +5.4% +American Capital Management, Inc. 8 +551 Madison Ave., Suite 902 +New York, NY 10022 +3,158,570 +5.1% +Anthony Zezzo II +* +Stephen S. Tang, Ph.D. +* +Jack E. Jerrett +* +Kathleen G. Weber +* +Michael Celano +* +Eamonn P. Hobbs +* +Charles W. Patrick +* +Mara Aspinall +* +Roberto Cuca +* +Aradhana Sarin, M.D. +* +Ronny B. Lancaster +* +James A. Datin +* +David J. Shulkin, M.D. +* +All Directors and executive officers as a group +(13 people) +1,344,020 +2.1% +__________________ +* +Less than 1% +1 +Subject to community property laws where applicable, beneficial ownership consists of sole voting and investment power except as otherwise indicated. +2 Includes shares subject to options exercisable within 60 days of March 27, 2020, as follows: Mr. Zezzo, 121,333 shares; Mr. Jerrett, 20,057 shares; Ms. Weber, 14,533 shares; Mr. Celano, 40,000 shares; Mr. Hobbs, 40,000 shares; Ms. Aspinall, 40,000 shares; and Dr. Sarin, 40,000 shares; and all Directors and executive officers as a group, 338,333 shares. Also includes unvested RS, as follows: Mr. Zezzo, 51,047 shares; Dr. Tang, 154,028 shares; Mr. Jerrett, 51,080 shares; Ms. Weber, 43,870 shares; Mr. Celano, 15,330 shares; Mr. Hobbs, 12,382 shares; Mr. Patrick, 12,382 shares; Ms. Aspinall, 12,382 shares; Mr. Cuca, 73,863 shares; shares; Dr. Sarin, 12,382 shares; Mr. Lancaster, 12,382 shares; and Mr. Datin, 13,432 shares; and all Directors and executive officers as a group, 461,539 shares. Does not include unvested PRUs. +9 +3 +Based on information contained in a Schedule 13G/A filed February 4, 2020. The filing person has sole voting power with respect to 9,715,576 shares and sole dispositive power with respect to all of the indicated shares. +4 +Based on information contained in a Schedule 13G/A filed February 13, 2020. The filing persons have sole voting power with respect to 4,156,716 shares, sole dispositive power with respect to 4,157,489 shares and shared dispositive power with respect to 32,324 shares. +5 Based on information contained in a schedule 13G/A filed February 12, 2020. The filing person has sole voting power with respect to 58,654 shares, shared voting power with respect to 4,900 shares, sole dispositive power with respect to 3,858,361 shares and shared dispositive power with respect to 56,763 shares. +6 +Based on information contained in a Schedule 13G filed January 28, 2020. The filing person has shared voting power with respect to 3,044,411 shares and shared dispositive power with respect to all of the indicated shares. +7 +Based on information contained in a Schedule 13G filed February 12, 2020. The filing person has sole voting power with respect to 3,146,907 shares and sole dispositive power with respect to all of the indicated shares. +8 +Based on information contained in a Schedule 13G filed February 20, 2020. The filing person has sole voting with respect to 8,090 shares and sole dispositive power with respect to all of the indicated shares. +CORPORATE GOVERNANCE +BOARD RESPONSIBILITIES, OPERATION AND COMPOSITION +The primary responsibility of the Board of Directors is to promote the long-term success of the Company. In fulfilling this role, each Director must exhibit good faith business judgment as to what is in the best interests of the Company. The Board is responsible for establishing broad corporate policies, setting strategic direction and overseeing management. The Company’s management is responsible for the day-to-day operations of the Company. +The Board is divided into three classes with each class consisting of one-third of the total number of Directors on the Board. There are currently eight Directors serving on the Board. At each Annual Meeting of Stockholders, the nominees for the class of Directors whose term is expiring at that annual meeting are elected for a three-year term. A Director holds office until the Annual Meeting of Stockholders for the year in which his or her term expires or until his or her successor is elected and duly qualified, subject to prior death, resignation, retirement, disqualification or removal. Each nominee for election at the Annual Meeting currently serves as a Director. +The Board typically holds regular meetings in February, May, August and November of each year, with special meetings held as needed. The Board’s organizational meeting follows the Annual Meeting of Stockholders. The Board meets in executive session at all regularly scheduled meetings. The Board held 13 meetings and acted by written consent on one occasion during the fiscal year ended December 31, 2019. Each member of the board attended more than 75 percent of the combined total of meetings of the Board and of the Committees of the Board on which such member served during the period in the year in which he or she served as a Director. +The Board holds four regularly scheduled meetings each year and special meetings as needed. Directors attended greater than 75% of all Board and Committee meetings during 2019. +GOVERNANCE GUIDELINES AND CODE OF CONDUCT +The Board has adopted Corporate Governance Principles which, along with the Charters for each of its Committees and the Company’s Code of Business Conduct and Ethics, provide a framework for the governance of the Company. The Company’s Corporate Governance Principles address matters such as the responsibilities and composition of the Board, Director independence and the conduct of Board and Committee meetings. The Company’s Code of Business Conduct and Ethics sets forth guiding principles of business ethics and certain legal requirements applicable to all Company employees and non-employee Directors. Copies of the current Corporate Governance Principles and Code of Business Conduct and Ethics are available on the Company’s website, www.orasure.com . +We operate under a Code of Business Conduct and Ethics and Corporate Governance Principles, which apply to all employees and non-employee Board members. +10 +INDEPENDENT BOARD CHAIRMAN +The positions of Chairman of the Board and CEO of the Company are held by different individuals, with the Chairman being independent of management. +Currently, the Company’s Chief Executive Officer does not hold the position of Chairman of the Board as the Company believes it is appropriate for the Board to be led by an individual who is independent of management. The Board has carefully considered its leadership structure and believes at this time that the Company and its stockholders are best served by having the positions of Chairman and Chief Executive Officer filled by different individuals. This allows the Chief Executive Officer to, among other things, focus on the Company’s day-to-day business, while allowing the Chairman to lead the Board in its fundamental role of providing strategic advice and oversight of management. In the future, however, the Board may reconsider whether its Chief Executive Officer should also serve as Board Chairman or may elect to rotate the position of Board Chairman to other independent Directors. +DIRECTOR INDEPENDENCE +Our Corporate Governance Guidelines require, among other things, that a majority of the members of the Board meet the independence requirements of the SEC and NASDAQ, on which our Common Stock is listed. Each year our Board, with assistance from the Nominating and Corporate Governance Committee, conducts a review of Director independence. The most recent annual review occurred in the first quarter of 2020, during which the Board considered transactions and relationships, if any, between each Director and any member of such Director’s immediate family +A majority of our Directors are independent as required under applicable SEC and NASDAQ rules. All standing Board Committees consist of independent Directors. +and the Company. As a result of this review, the Board determined that Mara Aspinall, Michael Celano, James A. Datin, Eamonn P. Hobbs, Ronny B. Lancaster, Charles W. Patrick, Aradhana Sarin, M.D. and David J. Shulkin, M.D., are “independent,” as that term is defined in the applicable rules of NASDAQ and the SEC. Stephen S. Tang, Ph.D., was determined by the Board not to be independent because he is currently an executive officer employed by the Company. Based on the foregoing, the Board of Directors is comprised of a majority of independent Directors. All standing Committees of the Board are also comprised solely of independent Directors. +OVERSIGHT OF RISK MANAGEMENT +As part of its oversight of the Company’s operations, the Board and Audit Committee monitor the management of risks by the Company’s executives. The Audit Committee reviews the risks that the Company may face and receives reports from senior management on the nature of these risks and the procedures and processes in place to manage and mitigate such risks. Substantive areas of risk reviewed by the Audit Committee include financial, legal, regulatory, operational, information technology, cybersecurity and employment matters. The Audit Committee provides a report to the full Board on the matters covered during each of its meetings, including +The Board and Audit Committee monitor the major risks facing the Company and the procedures and processes implemented by management to mitigate those risks. +its risk monitoring activities. In addition, senior management provides periodic reports to the full Board on the major risks facing the Company and the processes and procedures in place to manage such risks. Management also conducts a risk assessment of the Company’s compensation policies and practices, including its executive compensation program, as described in greater detail in the Section of this Proxy Statement entitled, “Compensation Committee Matters.” +ANNUAL MEETING ATTENDANCE AND STOCKHOLDER COMMUNICATIONS +The Board has approved a policy concerning Board members’ attendance at our Annual Meeting of Stockholders and a process for security holders to send communications to members of the Board. A description of the Board’s policy on annual meeting attendance is provided on our website, at www.orasure.com . As a general matter, each Board member is required to attend each Annual Meeting of Stockholders. Our 2019 Annual Meeting was attended by all members of the Board. +Security holders may communicate with the Board by sending their communications to OraSure Technologies, Inc., 220 East First Street, Bethlehem, Pennsylvania 18015, Attention: Corporate Secretary, fax: (610) 882-2275, email: corporatesecretary@orasure.com . +11 +All Board members are required to attend each Annual Meeting of Stockholders. The entire Board attended the 2019 Annual Meeting. +COMMITTEES OF THE BOARD +The Board currently has a standing Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee. Members of these committees are each “independent,” as defined in the Exchange Act and NASDAQ rules applicable to such Committees. In addition, the Board has determined that Michael Celano is an “audit committee financial expert,” as that term is defined by applicable rules of the SEC. Each committee operates pursuant to a written charter, copies of which are available on our website, at www.orasure.com . Additional information on each standing committee is provided below: +AUDIT COMMITTEE +Committee Members:* +Responsibilities: +• Oversees accounting and financial reporting process, internal controls and audits. +• Consults with management and the Company’s independent registered public accounting firm on, among other items, matters related to the annual audits, the published financial statements and the accounting principles applied. +• Appoints, evaluates and retains our independent registered public accounting firm. +• Responsible for the compensation, termination and oversight of our independent registered public accounting firm. +• Evaluates the independent registered public accounting firm’s qualifications, performance and independence. +• Approves all services provided by the independent registered public accounting firm. +• Monitors the Company’s major risk exposures and reviews risk assessment and mitigation policies. +• Maintains procedures for the receipt, retention and treatment, on a confidential basis, of complaints received by the Company regarding accounting, internal accounting controls or auditing matters, and the confidential, anonymous submissions by employees of concerns regarding questionable accounting or auditing matters. +Aradhana Sarin, M.D. +(C, I) +Mara G. Aspinall +(I) +Michael Celano +( , I) +James A. Datin +(I) +Charles W. Patrick +(I) +David J. Shulkin, M.D.* +(I) +Number of Meetings during +fiscal 2019: 8 +C – Committee Chair +– Determined by the Board to be an audit committee financial expert as defined under applicable SEC Rules. +I – Determined by the Board to be independent under applicable SEC and NASDAQ rules. +*- In February 2019, Eamonn P. Hobbs left the Audit Committee and joined the Nominating and Corporate Governance Committee, where he currently serves as Chairman. In August 2019, Mr. Datin was appointed as a Director and a member of the Audit Committee and Compensation Committee. In April 2020, Dr. Shulkin was appointed as a Class I Director and a member of the Audit Committee and Nominating and Corporate Governance Committee. Ms. Aspinall will be appointed as Chairman of the Audit Committee upon Dr. Sarin’s resignation immediately prior to the Annual Meeting. +12 +COMPENSATION COMMITTEE +Committee Members: +Responsibilities: +• Oversees compensation for executives and non-employee Directors. +• Reviews and recommends to the Board for approval the performance criteria and goals and objectives for CEO compensation. +• In consultation with other independent non-employee Directors, evaluates the CEO’s annual performance. +• Evaluates and recommends to the Board for approval the CEO’s compensation. +• In consultation with the CEO, reviews and approves the compensation of other executive officers. +• Establishes performance measures and goals and evaluates the attainment of such goals under performance-based incentive compensation plans. +• Reviews compensation and benefits issues relating to the Company. +• Reviews and recommends for Board approval, the terms of any employment or retirement agreements between the Company and each executive officer. +• Periodically reviews and administers the Company’s Compensation Recoupment Policy for executive officers and non-employee Directors. +• Reviews compliance with the Company’s Stock Ownership Guidelines. +Ronny B. Lancaster +(C, I) +Mara G. Aspinall +(I) +Michael Celano +(I) +James A. Datin +(I) +Eamonn P. Hobbs +(I) +Number of Meetings during +fiscal 2019: 6 +NOMINATING AND CORPORATE GOVERNANCE COMMITTEE +Committee Members: +Responsibilities: +• Identifies, evaluates and recommends candidates for nomination or re-election to the Board. +• Reviewsand makes recommendations to the Board on the range of skills, qualifications and expertise required for service as a Director. +• Reviewsand recommends for Board approval the appropriate structure of the Board. +• Reviews and recommends for Board approval the appropriate structure of Board committees, and recommends committee assignments and candidates for the position of Chairman of each committee. +• Develops and recommends for Board approval a set of Corporate Governance Guidelines and a Code of Business Conduct and Ethics, and procedures for the implementation thereof. +• Periodically reviews and recommends for Board approval the Board’s leadership structure, including whether the same person should serve as both CEO and Chairman of the Board. +• Assists in the development of succession plans for the Company’s CEO and other executives. +• Assists the Board in evaluating the independence of individual Directors for purposes of Board and committee service. +• Develops and implements an annual self-evaluation process for the Board and its committees +Eamonn P. Hobbs* +(C, I) +Ronny B. Lancaster +(I) +Charles W. Patrick +(I) +Aradhana Sarin, M.D. +(I) +David J. Shulkin, M.D.* +(I) +Number of Meetings during +fiscal 2019: 4 +C – Committee Chair +– Determined by the Board to be an audit committee financial expert as defined under applicable SEC Rules. +I – Determined by the Board to be independent under applicable SEC and NASDAQ rules. +* – Mr. Hobbs joined the Nominating and Corporate Governance Committee and was appointed as Chairman of the Committee in February 2019. In August 2019, Mr. Datin was appointed as a Director and a member of the Audit Committee and Compensation Committee. In April 2020, Dr. Shulkin was appointed as a Director and a member of the Audit Committee and Nominating and Corporate Governance Committee. +13 +NOMINATION OF DIRECTORS +Our Bylaws provide that nominations for election to the Board may be made by the Board or by any stockholder entitled to vote for the election of Directors at the Annual Meeting. A stockholder’s notice of nomination must be made in writing to the Company’s Corporate Secretary and must be delivered to or received at our principal executive offices not less than ninety (90) days nor more than one hundred twenty (120) days prior to the meeting. However, in the event that less than one hundred +Stockholders can nominate individuals to serve on the Board by following the procedures described in the Company’s Bylaws. +(100) days’ notice or prior public disclosure of the date of the meeting is given or made to stockholders, in order for notice by the stockholder to be timely, notice must be received no later than the close of business on the tenth (10 th ) day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made, whichever first occurs. The notice to the Corporate Secretary must set forth, with respect to the nominee, the name, age, business address, residence address, principal occupation or employment of the person, the class and number of shares of capital stock of the Company which are beneficially owned by the person, and any other information relating to the person that is required to be disclosed in solicitations for proxies for election of Directors pursuant to Regulation 14A under the Exchange Act. The notice must also include, as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination is made: (i) the name and address of the stockholder and such beneficial owner; (ii) the class and number of shares of capital stock of the Company which are held of record or beneficially owned by such stockholder and such beneficial owner and any other direct or indirect pecuniary or economic interest in any capital stock of the Company of such stockholder and beneficial owner, including without limitation, any derivative instrument, swap, option, warrant, short interest, hedge, profit sharing arrangement or borrowed or loaned shares; (iii) a description of any arrangements or understandings between such stockholder and beneficial owner and each proposed nominee and any other person (including their names) pursuant to which the nomination(s) are to be made by such stockholder and such beneficial owner or with respect to actions to be proposed or taken by such nominee if elected as a Director; (iv) a representation that such stockholder intends to appear in person or by proxy at the meeting to nominate the persons named in its notice; and (v) any other information relating to such stockholder and such beneficial owner that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of Directors, or may otherwise be required pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder. We may also require any proposed nominee to furnish such other information as we may reasonably require to determine the eligibility of the proposed nominee to serve as a Director of the Company. +The Nominating and Corporate Governance Committee may also consult with outside advisors or retain search firms to assist in the search for qualified candidates. Candidates recommended by stockholders will be considered by the Nominating and Corporate Governance Committee in the same manner as candidates recommended by other sources, but only if the stockholder makes a recommendation in accordance with the advance notification provisions set forth in the Company’s Bylaws. +DIRECTOR QUALIFICATIONS +The Board considers diversity, including personal factor such as race and gender, and other relevant factors in evaluating Director candidates. In determining whether incumbent Directors will be nominated for re-election, we evaluate the individual’s background, experience and prior service as a Director. +Although there is no formal policy governing Board diversity, the Nominating and Corporate Governance Committee considers diversity as one of many factors in identifying new candidates for the Board. Such diversity includes personal characteristics such as race and gender as well as diversity in background and skills and experience that relate to our Board’s performance of its responsibilities. The Nominating and Corporate Governance Committee does not assign specific weight to any particular criteria when reviewing candidates and may not apply the same criteria to all prospective nominees. +14 +INSIDER TRADING +Our Insider Trading Policy prohibits trading by Directors, executive officers or employees who are in possession of material nonpublic information about the Company. +We have a policy designed to prevent any trading in the Company’s Common Stock or other securities by Directors, executive officers and all other employees of the Company and its affiliates while such person is in possession of material nonpublic information. The policy prohibits trading in the Company’s securities on the basis of material nonpublic information, requires preapproval of transactions in Company securities for Directors, executive officers and all other employees and establishes regular trading windows after each calendar quarter following the Company’s announcement of its quarterly financial results. +PROHIBITION AGAINST SHORT SALES, HEDGING AND PLEDGING +We believe it is inappropriate for any employee of the Company or its affiliates or any member of the Board to engage in short-term or speculative transactions involving Company securities, including entering into financial instruments or engaging in other transactions that hedge or offset, or that are designed to hedge or offset, any decrease in the market value of our Common Stock. As a result, our insider trading policy prohibits Directors, executive officers and all other employees from entering into transactions involving our Common Stock, such as short sales, the buying or selling of puts or calls, the purchase of securities on margin, prepaid variable forward contracts, equity swaps, collars, exchange funds and other similar financial instruments. Our policy also prohibits employees and Directors from pledging shares of our Common Stock as collateral. +We have implemented several governance policies related to our Common Stock. Our policies prohibit short-term, speculative transactions in our stock, such as hedging, pledging and short sales. +STOCK OWNERSHIP AND RETENTION GUIDELINES +We have implemented stock ownership and retention guidelines for our CEO, other executives and members of the Board. +The Board has adopted stock ownership and retention guidelines applicable to our President and CEO, our CFO and all of our other executive officers and all non-employee members of the Board. Under these guidelines, the covered individuals must meet the following ownership requirements, expressed either as a multiple of base salary (in the case of Company officers) or annual cash fees (in the case of non-employee Board members): +Covered Individual +Multiple of Base Salary +or Director Fees +President and Chief Executive Officer +6x +Chief Financial Officer +2x +Other Executive Officers +1x +Non-Employee Directors +3x +Any individual who becomes subject to the guidelines is required to meet the guidelines within five years. Any individual already subject to the guidelines who becomes subject to a higher ownership requirement, due to a promotion, a further amendment to the guidelines or an increase in compensation, is required to meet the new ownership requirement within five years following the effective date of promotion, change in compensation or guideline amendment. In determining whether an individual meets the required ownership requirement, shares owned directly or indirectly, restricted stock (including both time and performance-based) and shares deferred under our deferred compensation plan will be counted. Compliance will be determined as of December 31 of each fiscal year. The guidelines also require each covered individual to retain at least 50% of the net shares acquired upon the exercise of stock options and the vesting of restricted stock until the individual’s holdings of Common Stock equal or exceed the applicable ownership requirement. As of December 31, 2019, all covered officers and non-employee Directors were in compliance with the stock ownership guidelines. +15 +AUDIT COMMITTEE MATTERS +REPORT OF THE AUDIT COMMITTEE FOR THE YEAR ENDED DECEMBER 31, 2019 +The information contained in this report shall not be deemed to be “soliciting material” or “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to liability under that Section. This report shall not be deemed “incorporated by reference” into any document filed under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, whether such filing occurs before or after the date hereof, regardless of any general incorporation language in such filing. +The role of the Audit Committee is to assist the Board of Directors in fulfilling its responsibilities to oversee management’s conduct of the Company’s financial reporting process, including monitoring (1) the participation of management and the outside independent registered public accounting firm in the financial reporting process, (2) the Company’s systems of internal accounting and financial controls, (3) the annual independent audit of the Company’s financial statements and (4) the qualifications, independence and performance of the outside independent registered public accounting firm. The Audit Committee selects the Company’s outside independent registered public accounting firm, and once selected, the outside independent registered public accounting firm reports directly to the Audit Committee. The Audit Committee is responsible for approving both audit and non-audit services to be provided by the outside independent registered public accounting firm. The Audit Committee is composed of five (5) non-employee directors and operates pursuant to a Charter that was last amended and restated by the Board on February 20, 2018 (which can be found on the Company’s website at www.orasure.com ). +Management of the Company is responsible for the preparation, presentation and integrity of the Company’s financial statements, the Company’s accounting and financial reporting principles and internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations. The independent registered public accounting firm is responsible for auditing the Company’s financial statements and expressing an opinion as to their conformity with U.S. generally accepted accounting principles. The Audit Committee’s responsibility is to monitor and review these processes. It is not the Audit Committee’s duty or responsibility to conduct auditing or accounting reviews. +In the performance of its oversight function, the Audit Committee has considered and discussed the audited financial statements with management, which included a discussion of not only the quality, but also the acceptability, of the accounting principles, the reasonableness of significant judgments and the clarity of disclosures in the financial statements. The Audit Committee met with the independent registered public accounting firm, with and without management, to discuss the results of their audit and their judgments regarding the Company’s accounting policies. The Audit Committee has also discussed with the independent registered public accounting firm the matters required to be discussed under applicable standards, including those in Public Company Accounting Oversight Board Auditing Standard No. 1301, as currently in effect. Finally, the Audit Committee has received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the Public Company Accounting Oversight Board as currently in effect, has considered whether the provision of non-audit services by the independent registered public accounting firm to the Company is compatible with maintaining the firm’s independence and has discussed with the independent registered public accounting firm the firm’s independence. +Based upon the reports and discussions described in this report, and subject to the limitations on the role and responsibilities of the Audit Committee referred to above and in the Audit Committee’s Charter, the Audit Committee recommended to the Board that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 for filing with the SEC and selected KPMG LLP as the independent registered public accounting firm for fiscal year 2020. The Board is recommending that stockholders ratify that selection at the Annual Meeting. +Submitted by the Audit Committee of the Company’s Board of Directors: +Aradhana Sarin, M.D., Chairman +Mara G. Aspinall +Michael Celano +James A. Datin +Charles W. Patrick +February 25, 2020 +16 +AUDIT FEES; AUDIT RELATED FEES; TAX FEES; ALL OTHER FEES +The following table presents fees for professional audit services rendered by KPMG LLP (i) for the audits of our annual consolidated financial statements and review of the financial statements in our Quarterly Reports on Form 10-Q for the fiscal years ended December 31, 2019 and 2018, and (ii) for the audits of our internal control over financial reporting as of December 31, 2019 and 2018. The following table also includes fees billed for other services rendered by KPMG: +2019 +2018 +Audit fees 1 +$1,095,750 +$749,000 +Audit-related fees 2 +$201,000 +$217,335 +Tax fees 3 +$216,512 +$272,224 +Total fees +$1,513,262 +$1,238,559 +1 +Includes fees related to the audits of our consolidated annual financial statements, interim reviews of our quarterly financial statements and audits of our internal control over financial reporting for each indicated year and procedures related to several business combination transactions which occurred in 2019. +2 +Includes fees for due diligence related to several acquisitions in 2019 and 2018 and fees for preparation of a written consent for a Universal Shelf Registration Statement on Form S-3 in 2018. +3 +During the fiscal years ended December 31, 2019 and 2018, KPMG was engaged to provide tax compliance, planning and consulting services. +PRE-APPROVAL PROCEDURES +The Audit Committee has adopted a general practice of pre-approving all audit and non-audit services provided to the Company by our independent registered public accounting firm. The Chairman of the Audit Committee has been delegated the authority to pre-approve audit and non-audit services having an aggregate value of up to $50,000 between meetings of the Audit Committee, provided that such pre-approval is communicated to the Audit Committee at its next scheduled meeting. All services by KPMG in 2019 and 2018 were approved in accordance with these practices. +COMPENSATION COMMITTEE MATTERS +The Compensation Committee assists the Board in developing and managing the compensation provided to executive officers of the Company and non-employee members of the Board. The Compensation Committee is responsible for developing and overseeing the implementation of the Company’s compensation philosophy and for setting executive compensation at levels that are sufficiently competitive so that the Company can attract, retain, motivate and reward high quality executives who can contribute to the Company’s success. +COMPENSATION PROCESSES AND PROCEDURES +Compensation for executives is established by the Compensation Committee in accordance with the compensation philosophy established under its charter as set forth in the CD&A Section of this Proxy Statement. In setting executive compensation, the Compensation Committee considers the Company’s and each executive’s performance against previously established objectives, internal pay equity, the compensation practices of the Company’s peer group (as set forth in the CD&A) (“Peer Group”), the Company’s industry position and general industry compensation data. The Compensation Committee periodically retains independent compensation consultants to review our executive compensation practices and to assist in establishing competitive compensation levels for our executives. +ANNUAL PERFORMANCE EVALUATIONS +On an annual basis, the Compensation Committee and other non-employee Directors evaluate the performance of the CEO, based on the overall performance of the Company. The CEO also evaluates the performance of the other NEOs against their respective predetermined performance objectives. Annual performance objectives for the NEOs are established at the beginning of the applicable year and generally include two parts: (1) the Company’s overall target financial objectives, and (2) individual objectives in the functional areas for which the executive is responsible. For each NEO, these objectives are then weighted to reflect their relative importance to the Company and the executive’s functional responsibilities. +17 +Depending on the Company’s overall performance and the extent to which an executive achieves his or her individual objectives for a particular year, the executive will be rated as “Does Not Meet,” “Does Not Consistently Meet,” “Meets Expectations,” “Exceeds Expectations” or “Outstanding.” On occasion, a blended rating such as “Meets/Exceeds” or “High Meets” will be used to indicate performance between the foregoing performance rating levels. The Compensation Committee uses the performance ratings and other factors to determine base salary adjustments, incentive cash bonuses and long-term incentive equity awards. Although this approach was also followed in evaluating Dr. Tang’s performance for 2019, Dr. Tang’s performance assessment is primarily based on the Company’s overall performance. +ROLE OF THE COMPENSATION COMMITTEE +The Compensation Committee is comprised of independent non-employee Directors who oversee our executive compensation program. Each year, the Compensation Committee determines or recommends (in the case of the CEO) the appropriate level of compensation for all NEOs. As an initial guideline, the Compensation Committee sets the total direct compensation opportunity (base salary, annual incentive bonus target, and long-term incentive equity target) for each of our executive officers within a range around the 50th percentile of comparable medical diagnostics and healthcare companies. The variation of actual pay relative to the market data is dependent on the executive officer’s performance, experience, knowledge, skills, level of responsibility, potential to impact our performance and future success, and the need to retain and motivate strategic talent. +The Compensation Committee generally determines an executive officer’s compensation based upon the objectives of our executive compensation program. The Compensation Committee makes compensation recommendations to the Board for the CEO and approves decisions for the other NEOs after careful review and analysis of appropriate performance information and market compensation data. Compensation for the CEO is approved by the independent members of the Board of Directors. +Beyond determining and recommending (in the case of the CEO) specific compensation for the NEOs, the Compensation Committee works with the executive management team to review and adjust compensation policies and practices to ensure that they remain consistent with the Company’s values and philosophy, support the recruitment and retention of executive talent, and help the Company achieve its business objectives. The Compensation Committee also determines a market-based level of compensation for non-employee Directors. +ROLE OF THE CEO +The CEO provides performance assessments and recommendations to the Compensation Committee on the compensation for each executive of the Company. The CEO’s recommendations are based on his review of each executive’s performance, job responsibilities, importance to our overall business strategy, and our compensation philosophy. Although the CEO’s recommendations are given significant weight, the Compensation Committee retains full discretion when determining compensation. +ROLE OF THE COMPENSATION CONSULTANT +To assist in the review of executive compensation and to obtain information regarding market trends and governance best practices, the Compensation Committee engages independent executive compensation consultants to analyze our executive compensation structure and plan designs, and to assess whether our compensation program is competitive and supports our goal of aligning the interests of our executive officers with those of our stockholders. Such consultants also provide the Compensation Committee with the Peer Group and other market data that is discussed in the CD&A, which the Compensation Committee evaluates when establishing programs and features and determining compensation for executive officers. In connection with its 2019 compensation decisions, the Compensation Committee engaged Pay Governance LLC (“Pay Governance”) to provide market assessments of the target compensation for our executives, assist in updating the Peer Group information that we use for compensation benchmarking purposes, provide a market assessment of compensation for non-employee members of the Board, and consult on the preparation of this Proxy Statement. +The Compensation Committee has the sole authority to approve any independent compensation consultant’s fees and terms of engagement. The Compensation Committee annually reviews its relationship with each consultant to ensure their independence. The process in 2019 included a review of the services Pay Governance provides, the quality of those services, and the fees associated with those services during the fiscal year as well as consideration of the factors impacting independence that NASDAQ rules require and a review of Pay Governance’s independence policy. The Compensation Committee concluded that there were no conflicts of interest that prevented Pay Governance from serving as an independent consultant to the Compensation Committee on executive compensation matters. +18 +TALLY SHEETS +In determining annual compensation for our executives, the Compensation Committee reviews tally sheets for each executive. Tally sheets set forth the dollar amounts of all components of each executive’s current compensation, including salary, incentive cash bonus awards, incentive equity awards, potential termination payments and other benefits deemed relevant by the Compensation Committee. These tally sheets allow the Compensation Committee to review how a change in the amount of each compensation component affects each executive’s total compensation and to consider each executive’s compensation in the aggregate. Included in each tally sheet is the estimated amount of severance and other benefits payable to the executive under various termination scenarios. Tally sheets are utilized by the Compensation Committee to establish aggregate compensation for our executives which the Compensation Committee believes to be reasonable. +COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION +Mara G. Aspinall, Michael Celano, James A., Datin, Eamonn P. Hobbs and Ronny B. Lancaster each served as members of the Compensation Committee during 2019, with Mr. Lancaster serving as Chairman. None of these Directors has served or is currently serving as an officer or employee of the Company, nor have they engaged in any transactions involving the Company which would require disclosure as a transaction with a related person. There are no Compensation Committee interlocks between the Company and any other entity involving the Company’s or such entity’s executive officers or board members. +COMPENSATION COMMITTEE REPORT +The information contained in this report shall not be deemed to be “soliciting material” or “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that Section. This report shall not be deemed to be “ incorporated by reference” into any document filed under the Securities Act or the Exchange Act, whether such filing occurs before or after the date hereof, regardless of any general incorporation language in such filing. +The Compensation Committee of OraSure Technologies, Inc. has reviewed and discussed with the Company’s management the Compensation Discussion and Analysis, contained in this Proxy Statement. Based on that review and discussion, the Compensation Committee recommended to the Company’s Board of Directors that the foregoing Compensation Discussion and Analysis be included in the Company’s 2019 Annual Report on Form 10-K Report and Proxy Statement for the 2020 Annual Meeting of Stockholders. +COMPENSATION COMMITTEE: +Ronny B. Lancaster, Chairman +Mara G. Aspinall +Michael Celano +James A. Datin +Eamonn P. Hobbs +March 30, 2020 +19 +EXECUTIVE OFFICERS +The table below provides information about the executive officers of the Company as of March 27, 2020. Officers of the Company hold office at the discretion of the Board. +Name 1 +Age +Position +Stephen S. Tang +59 +President and Chief Executive Officer +Roberto Cuca +52 +Chief Financial Officer +Anthony Zezzo II +66 +Executive Vice President, Business Unit Leader, Infectious Disease +Kathleen G. Weber +53 +Executive Vice President, Business Unit Leader, Molecular Solutions +Jack E. Jerrett +61 +Senior Vice President, General Counsel and Chief Compliance Officer +Michele Miller +46 +Vice President, Finance, Controller and Assistant Secretary +_________________ +1 Michael Reed, Ph.D., who served as the Company’s Senior Vice President, Research and Development and Chief Science Officer and was an executive officer during 2019, left the Company in February 2020. +Stephen S. Tang, Ph.D., President and Chief Executive Officer +Stephen S. Tang, Ph.D., became a member of the Board in April 2011 and served as the Company’s Chairman until he became the Company’s President and CEO on April 1, 2018. From January 2008 to March 2018, Dr. Tang served as President and Chief Executive Officer of the University City Science Center, an urban research park and business incubator owned by over thirty leading universities, medical schools and health networks in the greater Philadelphia, Pennsylvania area. Prior to his tenure at the University City Science Center, Dr. Tang held senior management and business development positions with several firms in the life sciences industry, including Olympus America, Inc., Millennium Cell Inc. and A.T. Kearney Inc. Dr. Tang holds a B.S. degree in Chemistry from The College of William and Mary, an M.S. and Ph.D. in Chemical Engineering from Lehigh University and an M.B.A. from The Wharton School of Business at the University of Pennsylvania. +Roberto Cuca, Chief Financial Officer +Roberto Cuca joined the Company in May 2018, initially serving as Senior Advisor until his appointment as the Company’s Chief Financial Officer in June 2018. Prior to joining the Company, Mr. Cuca served as Senior Vice President and Chief Financial Officer of Trevena, Inc., a clinical stage biopharmaceutical company, where he led the finance and investor relations functions and worked with senior management to establish and execute overall corporate strategy. Prior to his tenure with Trevana, Mr. Cuca held various leadership positions in the finance organization of Endo Health Solutions Inc., a pharmaceutical company, including Treasurer and Senior Vice President, Finance, where he was responsible for capital raises and cash management, mergers, acquisitions and licensing transactions, tax planning and compliance, and risk management. Before he joined Endo, Mr. Cuca served as the Director, Corporate and Business Development at moksha8 Pharmaceuticals, Inc., an emerging markets-focused pharmaceutical company, and as an equity analyst covering U.S. pharmaceutical companies at J.P. Morgan Chase & Co. Mr. Cuca received an M.B.A. from The Wharton School of the University of Pennsylvania, a Juris Doctor from Cornell Law School, and an A.B. from Princeton University. Mr. Cuca is also a CFA Charterholder. +20 +Anthony Zezzo II, Executive Vice President, Business Unit Leader, Infectious Disease +Mr. Zezzo has been the Company’s Executive Vice President, Business Unit Leader, Infectious Disease since January 2017 and prior to that he served as Executive Vice President, Marketing and Sales since January 2011. From 2004 to December 2010, Mr. Zezzo was Vice President, North American Sales and Marketing at the Ortho-Clinical Diagnostics Division of Johnson & Johnson. Prior to that time, Mr. Zezzo held a series of sales and marketing positions of increasing responsibility within Johnson & Johnson. Mr. Zezzo received his B.A. in Political Science from Grove City College. +Kathleen G. Weber, Executive Vice President, Business Unit Leader, Molecular Solutions +DNA Genotek, Inc. +Kathleen G. Weber has served as the Executive Vice President, Business Unit Leader, Molecular Solutions at DNAG since January 1, 2019. Prior to that, she served as the Senior Vice President and General Manager, Consumer Products at the Company since November 2012. Prior to her time at OraSure, Ms. Weber has served in executive leadership roles at Pfizer, Johnson and Johnson, and Wyeth. Ms. Weber began her career in the finance industry at Chase Manhattan Bank (now known as JP Morgan Chase). Ms. Weber received a B.S. in business administration from Georgetown University and an M.B.A. from New York University’s Stern School of Business. +Jack E. Jerrett, Senior Vice President, General Counsel and Chief Compliance Officer +Mr. Jerrett has been the Company’s Senior Vice President, General Counsel and Chief Compliance Officer since February 2020. He served as Senior Vice President and General Counsel since February 2003 and served as Vice President and General Counsel since November 2000. He has also served as the Company’s Secretary since February 2001. Prior to joining the Company, Mr. Jerrett worked as an Associate at Morgan, Lewis & Bockius and held positions of increasing legal responsibilities with companies in the transportation and energy industries. Mr. Jerrett received his B.S. in Accounting from Villanova University and his J.D. from the Villanova University School of Law. He is a member of the Pennsylvania Bar and the American and Pennsylvania Bar Associations. +Michele Miller, Vice President, Finance and Controller +Michele Miller has been the Company’s Vice President, Finance and Controller since October 2018 and served as the Company’s Director, Financial Reporting since December 2011 and as Manager, Financial Reporting since August 2007. Prior to joining the Company, Ms. Miller served as Manager, Financial Reporting at Knoll, Inc. and as an accountant with Beard Miller Company and Ernst & Young. Ms. Miller received her B.S. in Accounting from Bloomsburg University and is a licensed Certified Public Accountant, a Chartered Global Management Accountant, and a member of the Pennsylvania and American Institutes of Certified Public Accountants. +TRANSACTIONS WITH RELATED PERSONS +Since January 1, 2019, there have been no transactions with related persons that would require disclosure in this Proxy Statement. The Audit Committee is required to review and approve in advance all transactions with related persons involving the Company. The Audit Committee may approve a related party transaction if the transaction is on terms +21 +comparable to those that could be obtained in arms’ length dealings with an unrelated third party. The Audit Committee also reviews any public disclosures of a related party transaction contained in our SEC filings. These responsibilities are described in the Audit Committee’s charter, a copy of which is available on our website at www.orasure.com . +Information regarding employment, severance and retirement agreements between our executive officers and the Company is set forth in the Section entitled, “Employment Agreements and Potential Payments Upon Termination or Change of Control,” in this Proxy Statement. +22 +Compensation Discussion and Analysis - Table of Contents +EXECUTIVE SUMMARY +24 +Overview +24 +Our Performance in 2019 +24 +2019 Business Highlights in Detail +25 +2019 NEO Compensation at a Glance +26 +Pay for Performance +27 +Compensation Governance Practices +27 +Realizable Pay vs. TSR +28 +Realizable Pay vs. SCT Compensation +29 +Pay vs. Other Company Measures of Performance +30 +Say-on-Pay Results in 2019 and the Company’s Response +30 +Compensation Risk Assessment +31 +COMPENSATION PHILOSOPHY +31 +BENCHMARKING +31 +2019 EXECUTIVE COMPENSATION COMPONENTS +33 +Overview +33 +Pay Mix +33 +Compensation Components in Detail +34 +OTHER COMPENSATION +45 +Retirement Programs +45 +Perquisites and Other Compensation +45 +Potential Payments Upon Termination or Change of Control Pursuant to Employment Agreements +45 +Accounting and Tax Treatment of Compensation +46 +Compensation Recoupment Policy +46 +CEO PAY RATIO +46 +Compensation Tables – Table of Contents +Summary Compensation Table +47 +Grants of Plan-Based Awards +48 +Outstanding Equity Awards at December 31, 2019 +49 +Option Exercises and Stock Vested +51 +Retirement Benefits +51 +Nonqualified Deferred Compensation +51 +23 +COMPENSATION DISCUSSION AND ANALYSIS +EXECUTIVE SUMMARY +Overview +This Compensation Discussion and Analysis, or CD&A, describes the material elements of the compensation of our NEOs and describes the objectives and principles underlying the Company’s executive compensation program, the compensation decisions we have recently made under this program and the factors we considered in making these decisions. +Our NEOs for 2019 who are covered in this CD&A include: +Name +Position +Stephen S. Tang, Ph.D. +President and Chief Executive Officer +Roberto Cuca +Chief Financial Officer +Anthony Zezzo, II +Executive Vice President, Business Unit Leader, Infectious Disease +Kathleen G. Weber +Executive Vice President, Business Unit Leader, Molecular Solutions +Jack E. Jerrett 1 +Senior Vice President, General Counsel and Chief Compliance Officer +_________________ +1 Mr. Jerrett was appointed as the Company’s Chief Compliance Officer in February 2020. +Our Performance in 2019 +The following charts describe our consolidated financial performance during the last three fiscal years, expressed in dollars (thousands). +24 +__________ +1 2017 operating income includes a $12.5 million gain related to a litigation settlement. 2018 operating income includes $9.6 million in executive transition costs and $1.2 million in transaction costs associated with two acquisitions. 2019 operating income includes a $10.1 million gain related to the sale of the Company’s cryosurgical systems business, $664,000 of income associated with the change in the fair value of acquisition-related contingent consideration, and $1.8 million of transaction costs associated with the acquisitions in 2019. +Our 2019 consolidated revenues and operating income were negatively impacted by changes in promotional strategy and purchasing patterns by the leading ancestry testing firms in the consumer genomics market, the sale of our cryosurgical business in the summer of 2019 and a reduction in federal funding related to two development projects. Offsetting these declines were strong contributions from our OraQuick ® HIV Self-Test, increased domestic sales of our OraQuick ® HCV test, and higher revenues generated from our microbiome product and services business. +2019 Business Highlights in Detail +Business highlights from 2019 and the principal factors driving our financial performance are summarized below: +• We delivered on our innovation growth strategy with the acquisition of two leading microbiome laboratory service providers, CoreBiome and Diversigen. +• We further advanced our strategy with the acquisition of Novosanis, a manufacturer of proprietary technology for the collection of first-void urine samples. +• We completed the sale of our cryosurgical systems product line in order to better align with our long-term strategy and focus on higher priority growth opportunities. +• The lower consolidated net revenues for 2019 compared to 2018 were caused by market changes in the consumer genomics market, the sale of our cryosurgical business and reduced federal funding due to the completion of two development projects. +• Partially offsetting the revenue declines in 2019 was a 15% revenue increase in sales in our OraQuick® HIV Self-Test in international markets. +• Domestic sales of our OraQuick ® HCV product grew 8% compared to the prior year, reflecting the impacts of additional funding and new testing programs. +• Our microbiome revenues grew 91% compared to the prior year due to higher product sales and the addition of microbiome laboratory service revenues resulting from our acquisitions of CoreBiome and Diversigen. +• We generated $9.8 million in cash from operations in 2019. +• Aggregate cash and cash equivalents and short-term investments approximated $190 million at year end. +25 +2019 NEO Compensation at a Glance +NEO compensation for 2019 was as follows: +• +Base Salary : The base salaries paid to our senior management (including the NEOs) during 2019 increased from 2018 by 2.8% on average. Salary adjustments for 2019 were based on the performance of each executive and the Company during 2018, the marketplace compensation data provided to the Compensation Committee in 2018 by its compensation consultant and the Company-wide average salary merit increase budget of 3.0%. Generally, an executive’s annual salary adjustment tended to be at the higher end of the range budgeted by the Company if the executive received a performance rating of “Meets Expectations” or better and such executive’s pre-adjustment salary level was below the 50 th percentile for his or her position as reflected in marketplace and the Peer Group’s compensation data. The increase in Dr. Tang’s base salary reflects a merit increase of 2.75% plus an additional adjustment to move his salary closer to the 50 th percentile based on the Peer Group benchmarking data. Additional detail on these salaries is provided in the “2019 Base Salaries” Section, below. +NEO +2018 Performance Rating +2018 Salary +2019 Salary +Change (%) +Stephen S. Tang, Ph.D. +High Meets +$ +565,000 +$ +609,000 +7.79% +Roberto Cuca +High Meets +$ +415,000 +$ +426,413 +2.75% +Anthony Zezzo II +Meets +$ +408,512 +$ +418,726 +2.50% +Kathleen G. Weber +High Meets +$ +341,695 +$ +355,000 +3.89% +Jack E. Jerrett +High Meets +$ +369,977 +$ +380,152 +2.75% +• +Annual Incentive Bonuses : Incentive cash bonus awards for 2019 performance ranged from 45% to 70% of target for each of the NEOs. The bonus amounts were substantially below the applicable targets for Dr. Tang and the other NEOs, primarily due to the financial performance of the Company, as described under “2019 Business Highlights in Detail” Section, above. The Company failed to achieve the Threshold target for the consolidated revenue objective established for bonus pool funding under the 2019 Incentive Plan. This resulted in bonus payments well below target for each of the NEOs. Bonus payments at these levels reflect our performance, but also provide some recognition for progress made in 2019 toward achieving the Company’s long-term innovation growth strategy, the strong performances of the Company’s HIV Self-Test and microbiome businesses during 2019 and each executive’s individual performance in responding to various challenges. Additional detail on these bonus payments is provided in the “2019 Annual Incentive Cash Bonuses” Section, below. +Actual 2019 Bonus Payments +NEO +2019 +Performance +Rating +2019 Target +(% Salary) +($) +(% Salary) +(% Target) +Stephen S. Tang, Ph.D. +Meets +85% +$ +258,825 +43% +50% +Roberto Cuca +High Meets +50% +$ +132,188 +31% +62% +Anthony Zezzo II +Low Meets +40% +$ +75,371 +18% +45% +Kathleen G. Weber +High Meets +40% +$ +88,040 +25% +62% +Jack E. Jerrett +Exceeds +35% +$ +93,137 +25% +70% +• +Long-Term Incentive Awards : Incentive equity awards granted to Dr. Tang and the other NEOs in February 2019 were based on the Company’s financial performance, as described under the “2019 Base Salaries” Section, below, and/or each executive’s performance during 2018. The value of the awards ranged from 99% to 220% of each executive’s base salary, as shown below. The NEOs received equity awards consisting of 50% time-vested RS and 50% PRUs. +2019 Equity Awards +NEO +2018 +Performance Rating +Target Range +(% Salary) +($) +(% Salary) +Stephen S. Tang, Ph.D. +High Meets +150%-250% +$ +1,243,000 +220% +Roberto Cuca +High Meets +105%-175% +$ +639,100 +154% +Anthony Zezzo II +Meets +95%-155% +$ +510,641 +125% +Kathleen G. Weber +High Meets +70%-115% 1 +$ +338,278 +99% +Jack E. Jerrett +High Meets +70%-130% +$ +480,970 +130% +26 +1 During 2018, Ms. Weber served as Senior Vice President, General Manager, Consumer Products and, accordingly, her 2019 LTIP award reflected the potential value range of a Senior Vice President . +Additional information regarding NEO compensation for 2019 is provided below in this CD&A and in the accompanying tables, including the Summary Compensation Table (“SCT”) set forth below. +Pay for Performance +We follow a pay-for-performance approach in compensating executives. Our program pays executives for performance by rewarding the achievement of predetermined financial and/or strategic objectives. +A significant portion of each NEO’s compensation is paid out in variable and long-term compensation that is intended to align such compensation with the long-term interests of our stockholders. Both our annual and long-term compensation are tied to the Company’s overall performance in a variety of ways, including our financial results and share price performance. A further discussion of our pay mix for the NEOs is set forth in the “Pay Mix” Section, below. +One aspect of our compensation program is the use of performance targets to incentivize management to achieve improved financial results on a year-to-year basis. For the past several years, annual financial objectives have been used to determine the amount of pool funding available to pay individual awards under our annual bonus plan. These objectives are generally set at levels intended to incentivize annual financial growth. A combination of financial and strategic objectives may also be considered, and in the past have been used, where the Compensation Committee and the Board desire to incentivize management to meet certain near-term strategic objectives which could help drive improved financial performance in a year with increased financial uncertainty. Each year the Compensation Committee and the Board evaluate whether financial objectives, strategic objectives, or some combination thereof, would provide the most appropriate near-term incentives for our NEOs to achieve improved financial performance. +In addition, for the past several years we have followed a policy of granting annual equity awards to executives that consist of 50% PRUs and 50% time-vested RS. The PRUs will only vest if (i) the NEO remains employed by the Company for three years following the date of grant and (ii) the performance criteria determined by the Committee and the Board are met. For the PRUs granted in 2019, a compound annual growth rate (“CAGR”) target for consolidated product and service revenues for the three-year period 2019-2021 and a one-year income before income taxes (“IBIT”) target for the fiscal year 2019 were established as the performance criteria. The time-vested RS portion of the award vests in equal annual installments over the three-year period following the grant date, subject to the NEO’s continued employment by the Company. +We believe the performance targets and three-year service period applicable to PRUs complement the short-term incentives in our annual bonus plan. We also believe the combination of the structure of our annual bonus plan and the structure of our equity award policy appropriately incentivize management to deliver substantially improved financial performance both on an annual basis and over a longer term period and help drive long-term growth in stockholder value. +Compensation Governance Practices +We are committed to maintaining good corporate governance and practices. As a result, and in response to input from stockholders, the Compensation Committee and the Board have adopted a number of changes over the past several years to specifically respond to stockholder concerns and better align our compensation program with performance. The most significant of these changes was the adoption of PRUs for 50% of the value of annual long-term equity awards for our executives. These changes and other aspects of our compensation practices are summarized below: +Performance Mix – The vast majority of our NEOs’ compensation is performance-based. For example, approximately 71% of Dr. Tang’s 2019 annual compensation opportunity consists of an incentive cash bonus and equity award, both of which are performance-based and varying with some combination of financial, strategic and/or share price performance. For the other NEOs, 58% of their aggregate annual compensation consists of performance-based compensation. +Diversified and Performance Based Portfolio – Our executive compensation consists of a mix of cash/equity, fixed/variable and short-term/long-term compensation. +Performance Vested Equity – 50% of our NEOs’ annual equity awards consist of PRUs that will not vest until three years after the grant date and only if certain performance measures are met during the three-year period. +27 +Long-Term Focus – Equity awards are subject to long-term vesting requirements, with time-vested RS vesting over 3 years. PRUs also vest only after three years. Structuring our equity awards in this manner helps align the interests of our executives with the long-term interests of our stockholders. +Target Bonus Objectives – Our annual bonus pool is funded based on the achievement of annual financial objectives, strategic objectives or a combination thereof, in order to incentivize management to achieve improved financial performance on a year-over-year basis. +Limited Bonus Pool Discretion – The aggregate bonus pool funding for annual cash bonuses is determined pursuant to a plan funding formula tied to the Company’s achievement of specific financial objectives. The Board and Compensation Committee can make discretionary adjustments to the pool, but such adjustments are limited to +/– 10% of the pool amount determined under the plan’s self-funding formula. +Balanced Performance Metrics – Variable compensation is based on a combination of corporate and individual performance, measured over varying timeframes to help ensure balanced incentives for executives. +Change-in-Control Severance and Tax Gross Ups – Our policy is that employment agreements with our executives provide for “double trigger” change-in-control severance rather than “single trigger” change-in-control severance and do not provide for a 280G income tax gross up. +Strong Stock Ownership and Retention Conditions – We have implemented stock ownership requirements of six (6) times salary for our President and CEO, two (2) times salary for our CFO and one (1) times salary for other NEOs. +Prudent Benchmarking – The total compensation paid to our executives is targeted at the 50 th percentile of our Peer Group of comparable companies based on achievement of performance objectives. We use a Peer Group consisting of companies in the medical diagnostic and healthcare industries comparable in size to the Company based on total revenues and market value. +Tally Sheets – The Compensation Committee reviews tally sheets as part of making individual compensation determinations. +Independent Compensation Consultants – The Compensation Committee regularly utilizes independent compensation consultants to provide compensation advice, including competitive assessments of our program compared to compensation paid to executives at the Peer Group of comparable medical diagnostic and healthcare companies. During 2019, the Compensation Committee engaged Pay Governance as its independent consultant. +Recoupment Policy – The Company maintains a compensation recoupment or “clawback” policy, under which we will seek to recover excess compensation paid to an executive if our financial statements are restated due to misconduct by that executive. +No Repricing – Our LTIP prohibits both the repricing and repurchase of underwater stock options or other equity awards without stockholder approval. +No Perquisites – We do not provide executives with any perquisites that are not offered to all employees of the Company. +Risk Review Process – We periodically assess the risks associated with our compensation programs. +No Hedging – Our policy prohibits Directors and NEOs from engaging in hedging activities with respect to our stock. +No Pledging – Our Directors and NEOs are not permitted to pledge our stock. +Confidentiality/Non–Compete Agreements – Our NEOs are subject to confidentiality and non-compete agreements . +Realizable Pay vs. TSR +To ensure that our executive compensation program and compensation levels are consistent with our pay-for-performance philosophy, we evaluated the degree of alignment between our CEO’s total realizable pay versus our TSR over the prior three fiscal years (2017 to 2019) relative to our Peer Group. The graph below shows the comparison of our three-year TSR and “realizable pay” relative to our Peer Group. +28 +Realizable pay for our CEO consists of Dr. Tang’s compensation for 2019 and 2018, the year he joined the Company and the compensation of Douglas A. Michels, the Company’s former CEO, for 2017. Compensation includes base salary, incentive cash bonus and all other compensation reported in the Summary Compensation Table. Equity awards are valued using the closing stock price on December 31, 2019 for each company in our Peer Group, except for Genomic Health where a November 2019 closing price was used due to the acquisition of that company. Restricted stock and restricted unit awards are valued by multiplying the number of shares or units by the applicable closing stock price. The number of restricted units included in the calculations for Dr. Tang reflects a payout based on the Company’s currently expected performance against the applicable performance measures for those awards. Option awards are valued as the difference between the closing stock price on December 31, 2019 and the exercise price multiplied by the number of option shares granted during the period. An option award with an exercise price greater than the closing stock price on December 31, 2019 is valued at $0. +As indicated by the graphical display of this realizable pay versus performance analysis relative to peers, there is a close relationship between our TSR performance and the realizable pay for our CEO relative to the relationship seen in our Peer Group. This analysis confirms the strong link between pay and performance embedded in our compensation program. +Realizable Pay vs. SCT Compensation +As described further below, we believe long-term equity awards are a key incentive for our executives to drive the Company’s long-term growth and align the interests of our executives with those of our stockholders. The SCT includes the estimated value of long-term incentive equity awards at the time of grant based on the accounting valuation determined under ASC 718. The actual value of these awards that may be realizable by our executives may vary from the estimates depending on the Company’s financial and stock performance and often differs significantly from what is reported in the SCT. +A comparison of the realizable value of long-term equity incentive awards as of December 31, 2019 against the values reported in the SCT indicates how compensation outcomes may be impacted by our performance. Such a comparison also shows the degree of alignment between our stock performance and the level of compensation provided to executives. +The table below compares the compensation values reported in the SCT and the value of realizable pay (“RP”) for the compensation awarded during the three-year period 2017 to 2019 and includes the compensation for our CEO, Dr. Tang for 2019 and 2018 and the compensation of our former CEO, Mr. Michels, for 2017. +29 +Our CEO’s RP for the three years 2017–2019 of $6.8 million is 11% below the CEO’s SCT compensation for the same period. This shows a strong link between pay and performance as our (8.5%) TSR for the last three years decreased the value of our CEO’s RP for that period. +Pay vs. Other Company Measures of Performance +While TSR is a common measure of performance that is often used to evaluate a company’s compensation practices, we consider other performance measures to be, at times, more reflective of the success of our business and more important as an incentive to focus our leaders on key priorities. It is important to recognize that our TSR can be extremely volatile, as evidenced by the substantial movements in our stock price during the past several years. Our TSR can be, and often is, influenced by a variety of macro-economic factors that are outside the control of our executives. Specifically, in 2013 our stock price declined 12%, but rose 61% in 2014. Our stock price declined again by 37% in 2015 and rose 36% in 2016. More recently, our stock price rose 115% in 2017 and then declined 38% in 2018, followed by a 31% decline in 2019. These price changes were not solely tied to our underlying performance. For example, our stock price declined in 2015 and 2018 even though we achieved record financial performance with substantial growth and strong profitability in those years. +As a result, while our executive compensation opportunities do not follow a linear relationship with TSR, the pay realizable to our executives (as noted above for our CEO) should and does demonstrate a clear relationship with both TSR and financial results. We have tried to align our executive compensation with performance results that are part of our overall business strategy that we believe will drive stock price improvement and increased value for our stockholders over the longer term. +When establishing and evaluating our executive compensation program generally, and performance-based incentive plans in particular, we believe that TSR alone will not always immediately account for the value of our accomplishments and, in many cases, it may take time for the impact of our strategic and other accomplishments to be fully reflected in the value of our stock. Thus, while obviously important, TSR is only one of several factors we consider in making compensation decisions for our executives. +Pay Comparison $20,000,000 $15,503,935 $15,000,000 $4,648,636 $10,000,000 $8,426,767 $4,849,264 $1,333,088 $1,890,774 $1,641,826 $5,000,000 $838,697 $4,364,208 $4,364,208 Total Cash + All Other Stock Options Restricted Stock PSUs +Say-on-Pay Results in 2019 and the Company’s Response +At our 2019 Annual Meeting, stockholders were asked to vote on an advisory (non-binding) basis on the compensation paid to our NEOs for 2018. We obtained strong stockholder support for our NEO compensation for 2018 with approximately 97% of stockholder votes cast in favor of our “say-on-pay” or SOP resolution. Even with this overwhelmingly positive response, we continued our historical approach to contact certain of our major stockholders in order to continue to understand their concerns, if any, regarding our compensation practices. Overall, we attempted to contact stockholders who, in the aggregate, beneficially held approximately 34% of our outstanding Common Stock. As a general matter, our stockholders either did not respond or indicated that they saw no need to meet with us despite having done so in the past. We believe these stockholders responded in this manner because they are strongly supportive of our executive compensation practices. As a result, we made no further changes to our executive compensation program following the SOP vote at the 2019 Annual Meeting. +We believe our stockholder engagement has been and continues to be beneficial for the Company and our stockholders. The feedback we received reaffirms that the compensation changes we made in recent years were responsive to stockholder concerns and our executive compensation is strongly aligned with performance. The Board intends to +30 +continue ongoing dialogue with our stockholders to ensure our executive compensation programs are well understood by all stakeholders and that we continue to be responsive to stockholder concerns. +Compensation Risk Assessment +Management periodically conducts a risk assessment of the Company’s compensation policies and practices, including its executive compensation program. In its review, management considers the attributes of the Company’s policies and practices and other factors, including: +• +The mix of fixed and variable compensation opportunities; +• +The balance between annual and long-term performance opportunities; +• +The corporate and individual performance objectives established for annual and long-term incentive compensation; +• +The internal controls and procedures in place to mitigate risks facing the Company, including the Company’s “clawback” policy and stock ownership guidelines; and +• +The risk that unintended consequences could result from various aspects of the Company’s compensation policies and practices. +Based on its consideration of the foregoing, management believes that the Company’s policies and practices are designed with the appropriate balance of risk and reward in relation to the Company’s overall business strategy and do not incentivize employees to take unnecessary or excessive risks. The Company has also concluded that any risks arising from the Company’s compensation policies and practices are not reasonably likely to have a material adverse effect on the Company. +COMPENSATION PHILOSOPHY +The primary objectives of our compensation program for executive officers are to: +Set compensation opportunities at levels sufficient to attract and retain high quality executives, to motivate them to contribute to our success and to reward them for performance. +Ensure the compensation opportunities provided align the interests of executives with the interests of our stockholders. +Focus our executives on both short and longer-term individual and Company priorities established by the Board and appropriately reward them for performance against these objectives. +The total direct compensation provided to each executive consists of an annual base salary, an annual incentive cash bonus and long-term incentive equity awards. The amount of the incentive cash bonus and the size of annual incentive equity awards are variable and depend on an executive’s and the Company’s achievement of predetermined financial and other objectives. As a result, a substantial portion of each executive’s annual compensation is based on performance. +BENCHMARKING +We believe it is useful to regularly compare our compensation program against compensation paid to executives at other comparable medical diagnostic and healthcare companies. With the assistance of Pay Governance, an independent compensation consultant engaged by the Compensation Committee, an updated Peer Group of companies was selected using criteria based on industry, revenues and market capitalization and a competitive assessment of our executive compensation was prepared. +The Compensation Committee seeks to set total direct compensation opportunity levels for each executive near the fiftieth (50 th ) percentile of amounts paid by the Peer Group of companies for performance consistent with the Company’s target financial and other business plans for the applicable year. Use of the fiftieth (50 th ) percentile is intended as a market-based reference and not as an absolute target. As a result, the total direct compensation opportunity and the value of specific compensation components for individual executives may fall below or exceed the fiftieth (50 th ) percentile depending +31 +on the experience and individual performance of the executive, the criticality of his or her role, the executive’s contribution to our business, and other factors. +Based on advice from Pay Governance, the Compensation Committee decided not to make changes to the Peer Group most recently used for benchmark purposes. The following provides information about the Peer Group used by the Compensation Committee in setting executive compensation and how we compare to these companies (all dollars in millions): +Peer Company 1 +FY 2019 Revenue 2 +12/31/19 Market +Capitalization +Business 3 +Anika Therapeutics, Inc. +$ +115 +$ +740 +Biotechnology +AtriCure, Inc. +$ +231 +$ +1,286 +Healthcare Equipment +Atrion Corporation +$ +155 +$ +1,394 +Healthcare Supplies +Cardiovascular Systems, Inc. +$ +264 +$ +1,710 +Healthcare Equipment +Endologix, Inc. +$ +143 +$ +28 +Healthcare Supplies +Enzo Biochem, Inc. +$ +80 +$ +125 +Healthcare Services +Fluidigm Corporation +$ +117 +$ +242 +Life Sciences Tools and Services +Genomic Health, Inc. 4 +$ +442 +$ +2,385 +Biotechnology +Harvard Bioscience, Inc. +$ +116 +$ +116 +Life Sciences Tools and Services +Lantheus Holdings, Inc. +$ +347 +$ +805 +Healthcare Supplies +Luminex Corporation +$ +335 +$ +1,043 +Life Sciences Tools and Services +Meridian Bioscience, Inc. +$ +197 +$ +418 +Healthcare Supplies +NeoGenomics, Inc. +$ +409 +$ +3,054 +Life Sciences Tools and Services +Quidel Corporation +$ +535 +$ +3,125 +Healthcare Supplies +RTI Surgical Holdings, Inc. +$ +299 +$ +202 +Healthcare Supplies +STAAR Surgical Company +$ +142 +$ +1,567 +Healthcare Supplies +FY 2019 Revenue 1 +12/31/19 Market +Capitalization +25 th Percentile +$136 +$ 232 +Median +$214 +$ 924 +75 th Percentile +$338 +$1,603 +OraSure Technologies, Inc. +$155 +$ 496 +Percentile Rank +40% +35% +Source: Standard & Poor’s Capital I.Q. +1 This Peer Group represents the same group of companies used by the Compensation Committee in benchmarking our 2018 executive compensation. +2 +Reflects revenue reported for fiscal year 2019. +3 +Reflects Global Industry Classification Standard sub-industry designation. +4 Revenue for Genomic Health, Inc. reflects revenues for the 12-months ended 9/30/2019 and market cap as of 11/7/2019 due to the acquisition of the company by Exact Sciences. +In preparing its 2019 competitive assessment of executive compensation, Pay Governance compared the compensation of our NEOs with a 50/50 blend of proxy data from the Peer Group and data for each NEO position from the 2019 Radford Global Life Sciences Survey. Since compensation market data can be volatile from year to year, the Compensation Committee believes a blend of specific Peer Group proxy data and broader survey data better reflect market trends. +Based on its review of the Pay Governance assessment, the Compensation Committee decided not to make any changes to our executive compensation program. +32 +2019 EXECUTIVE COMPENSATION COMPONENTS +Overview +Our compensation program consists of the following components: +Compensation +Form of +Compensation +Purpose +Base Salary +Cash +Base salaries provide fixed compensation necessary to attract and retain key executives. +Annual Incentive Bonus Awards +Cash +Annual incentive bonus awards provide performance-based incentives to our executives to achieve both Company-wide financial and strategic goals and the executives’ individual performance objectives. +Long-Term Incentive Awards +Performance-Vested +Restricted Units and +Time-Vested Restricted +Stock +The largest component of our executive compensation is paid in equity. Annual LTIP awards for the NEOs consist of 50% PRUs and 50% time-vested RS in order to provide a strong link between pay and performance. +Benefits +401(k) Plan +Health and Welfare +Benefits +Retirement and health and welfare benefits provide a complete compensation package that is competitive with the market and addresses the needs of all employees and their families, including our executives. +Employment Agreements +Cash severance and +accelerated equity vesting +Severance and accelerated equity vesting are provided to our executive officers in order to ensure continued focus on the strategic matters of the Company during potentially uncertain times. +Pay Mix +We follow a pay-for-performance approach to executive compensation, with a significant portion of our executives’ compensation consisting of annual incentive cash bonuses and long-term equity awards that are based on the executives’ and the Company’s achievement of predetermined performance objectives. +The following charts illustrate the relative proportion of 2019 base salaries compared to the performance-based elements of our executive compensation for Dr. Tang and the other NEOs. +33 +Approximately 71% of Dr. Tang’s aggregate compensation and 58% of the other NEOs’ aggregate compensation for 2019 consisted of performance-based compensation. +Compensation Components in Detail +2019 Base Salaries +Annual base salaries paid in 2019 to our NEOs were established by the Compensation Committee at the beginning of 2019 based on a review of the Company’s performance and the individual contributions of each officer compared to pre-established performance objectives for 2018. The Compensation Committee also considered the Company’s budget for expected salary adjustments, salary levels paid at the Peer Group companies and recommendations provided by the compensation consultant engaged to assist the Compensation Committee. +Based on these factors, the Compensation Committee approved an annual base salary increase for our senior management averaging approximately 2.8%. This was below our Company-wide budgeted average salary increase of 3.0%. Individual salary increases for 2019 were determined by using the following guidelines: +Performance Rating +Merit Increase Range +Outstanding +5.0% - 7.0% +Exceeds Requirements +3.0% - 4.0% +Meets Requirements +2.0% - 2.5% +Does Not Consistently Meet +1.0% – 1.5% +Does Not Meet Requirements +0% +34 +In evaluating Dr. Tang’s and the Company’s performance during 2018, the Compensation Committee recognized the successful leadership transition to a new CEO and CFO and the completion of an updated long-term strategy focused on innovation and growth. The Compensation Committee also noted the record 2018 net consolidated revenues of $181.7 million, our continued strong profitability, the generation of $39.1 million in cash for the year and our strong cash position at year end. Finally, the Compensation Committee recognized the substantial completion of two strategic acquisitions of CoreBiome, Inc. and Novosanis, N.V., which both closed during the first week of January 2019, as evidence of initial progress in executing against our new growth strategy. +In view of the foregoing, the Compensation Committee determined that Dr. Tang should receive a High Meets performance rating for 2018. The remaining NEOs were evaluated based on individual objectives established for their positions and the determinations regarding their performance ratings for 2018 are set forth below. As a result of these performance ratings, the Compensation Committee approved the 2019 salary levels set forth below for the NEOs. Dr. Tang’s new salary reflected a 2.75% merit increase in view of his High Meets performance rating and an additional adjustment to bring his salary more in line with the 50 th percentile of Peer Group benchmarking data provided by Pay Governance to the Compensation Committee. +NEO +2018 Performance +2018 +Performance +Rating +2018 Salary +2019 +Salary +% +Increase +Stephen S. Tang, Ph.D. +President and Chief +Executive Officer +• Strong corporate performance, including record revenues and continued strong profitability. +• Successful CEO transition. +High Meets +$565,000 1 +$609,000 +7.79% +Roberto Cuca +Chief Financial Officer +• Strong corporate performance, including record revenues and continued strong profitability. +• Successful transition into CFO role. +• Strong management of financial planning, reporting and accounting. +• Maintenance of strong investor base. +• Assistance in business development activities. +• Support for updated long-term business strategy. +High Meets +$415,000 1 +$426,413 +2.75% +Anthony Zezzo II +Executive Vice +President, Business +Unit Leader, +Infectious Disease +• Mixed achievement of sales goals. +• Oversight of infectious disease sales and marketing functions. +• Support for updated long-term business strategy. +• 93% increase in international OraQuick ® HIV revenues for 2018. +Meets +$408,512 +$418,726 +2.50% +35 +NEO +2018 Performance +2018 +Performance +Rating +2018 Salary +2019 +Salary +% +Increase +Kathleen G. Weber +Executive Vice +President, Business +Unit Leader, +Molecular Solutions +• Led development and implementation of Board approved strategy update. +• Completed transition to new position as head of molecular business unit. +• Met budget for HIV OTC business. +• Supported business development activities. +High Meets +$341,695 +$355,000 +3.89% +Jack E. Jerrett +Senior Vice President +General Counsel and Chief Compliance Officer +• Oversight of global legal function. +• Leadership in successfully completing two acquisitions +• Assistance in evaluating various business development opportunities. +• Assistance on numerous important commercial matters. +● Ongoing advice and counsel to the Board and senior management. +High Meets +$369,977 +$380,152 +2.75% +1 Represents annualized salary amounts for Dr. Tang and Mr. Cuca because they were employed for only a portion of 2018. +2019 Annual Incentive Cash Bonuses +Annual cash bonuses are included as part of executive compensation because the Compensation Committee and Board believes that a significant portion of each executive’s compensation should be structured as a variable incentive focused on short-term priorities relating to both the overall performance of the Company and the individual contributions of the executive. On an annual basis, the Compensation Committee has adopted, with approval of the Board, an incentive plan (the “Incentive Plan”), which is intended to be the principal vehicle for incentive cash bonus awards. +When establishing the terms of the Incentive Plan, the Compensation Committee and the Board evaluate which funding objectives will provide the most appropriate incentives for our NEOs to improve our annual financial performance. In recent years, bonus pool funding has been based solely on the achievement of annual financial objectives. Strategic objectives may also be (and in the past have been) used in combination with annual financial objectives where there is greater financial uncertainty facing the Company and the Compensation Committee and the Board desires to incentivize our NEOs to take near-term strategic steps required to drive annual financial growth and stability. In general, the Compensation Committee and the Board will choose those funding objectives, whether they be financial, strategic, or a combination thereof, which in their judgement provide the most appropriate incentive for management to drive improved financial performance on a year-over-year basis. +Where funding is based on the achievement of financial objectives, if the Company meets the Target levels for all funding objectives, the pool is initially funded at 100% of the aggregate projected bonuses for all participants in the Incentive Plan adjusted to reflect a normal range or mix of performance assessments (i.e., Outstanding, Exceeds, Meets, Does Not Meet), which increases or decreases the total amount of individual bonuses to be paid to participants. Unless circumstances require otherwise, the pool generally is initially funded at 50% of the aggregate projected bonuses if all of the Threshold +36 +levels are met and at 150% of the aggregate projected bonuses if all of the High levels are met. If the Company achieves a Maximum performance level for all objectives, the pool can be initially funded up to 200% of the aggregate projected bonuses. A linear interpolation of the amount of funding for each target objective is made where a particular performance is between the pre-established performance levels. To the extent the performance level for a funding objective is below the Threshold level, generally there is no funding for that particular objective. The Compensation Committee and the Board have some limited discretion to increase funding to recognize unique market conditions and extraordinary circumstances. +The amount of the cash bonus pool is determined by the Compensation Committee and recommended for Board approval. The Compensation Committee and Board also retain discretion to increase or decrease the size of the pool in order to reflect differences in the mix of actual performance assessments of the participants or market conditions affecting the Company or other factors. However, the Compensation Committee and Board have limited their ability to make discretionary bonus pool adjustments to +/- 10% of the pool size otherwise determined pursuant to the funding formula under the Incentive Plan. The cash bonus pool is used to pay bonuses not only to the Company’s NEOs, but also to all other officers and certain higher-level employees of the Company and its subsidiary, DNA Genotek. +Individual payments from the bonus pool to executives are generally calculated using a formula that considers the size of the bonus pool, the executive’s achievement of individual performance objectives, the number of individuals participating in the plan at the time bonuses are awarded and the executive’s target bonus percentage. Bonuses are paid based on an assessment of each executive’s performance for the applicable year, using targets expressed as a percentage of the executive officer’s annual base salary. +If an executive officer has met or exceeded his or her individual performance objectives and/or the Company’s expectations for the applicable year, he or she may be eligible to receive up to 150% of his or her target bonus, depending on the size of the bonus pool. The Compensation Committee and Board retain the discretion to adjust an individual executive’s performance evaluation and to increase or decrease the bonus paid to such individual to reflect the specific contributions of that executive, the Company’s overall performance, market conditions or other circumstances. +The Compensation Committee recommends for Board approval any bonus award for the CEO based on an assessment of the Company’s overall performance. The CEO recommends individual awards for the other executive officers for approval by the Compensation Committee based on an assessment of each executive’s performance against his or her applicable individual performance objectives. The Compensation Committee and Board have the right, in their sole discretion, to reject any or all of the recommended bonus awards, even if the bonus pool has been funded and any or all applicable performance criteria have been satisfied, based on the business conditions of the Company or other factors deemed relevant by the Compensation Committee or the Board. +In establishing the 2019 Incentive Plan, the Board and Compensation Committee decided that the amount of bonus pool funding should be based on the achievement of both financial and strategic objectives. Specific financial objectives were established for consolidated revenues and operating income and the Board also established four strategic initiatives for purposes of pool funding. These initiatives focused on either the advancement of strategic transactions or significant commercial milestones that the Board believed would help drive growth in the Company’s business. +In early 2019, the Company disclosed that a large consumer genetics customer had changed its promotional strategy and, as a result, reduced its projected purchases for 2019, thereby lowering the Company’s projected revenues for the year. The Board structured the financial objectives and added the strategic initiatives to take account of this unexpected event while at the same time providing an appropriate incentive for management to take steps necessary to drive growth in the remainder of the Company’s business. +Under the 2019 Incentive Plan, Threshold, Target, High and Maximum performance levels were established for each of the financial objectives to be used to fund the bonus pool. In past years, the Threshold level represented the Company’s actual performance for the prior year and the Target level represented performance reflected in the Company’s operating plan, or budget, as adopted by the Board for the plan year. In order to recognize the impact of the large consumer genomics customer’s change in purchasing strategy and still provide a reasonable incentive for management, the Board adopted a Target performance level that represented modest growth from 2018, and a Threshold level somewhat below the Target. Consistent with past practice, the High and Maximum performance levels were set at 105% and 110%, respectively, of the Target performance levels. +In past years, the objectives for consolidated revenue and operating income were weighted equally for purposes of determining bonus pool funding. However, based on feedback from our stockholders, the Board decided that it would be appropriate to provide a greater incentive for revenue growth in the 2019 Incentive Plan. Accordingly, the financial objectives were given equal weight for performance at the Threshold and Target performance levels, and a higher weight +37 +was given to the revenue objective for performance at the High and Maximum performance levels. The relative weighting assigned to the performance objectives wa s expressed as a percentage of the maximum pool funding amount, which would equal 200% of the aggregate target bonuses for all participants in the 2019 Incentive Plan (the “Maximum Funding Amount”), assuming a historically normal range or mix of individual performance assessments for those participants (i.e. Outstanding, Exceeds, Meets or Does Not Meet). The Board also decided that at least one strategic initiative must be achieved in order for the pool to receive 100% of the funding amount for a specific financial performance level. If no strategic initiativ es were achieved, the funding for a performance level would be discounted to 90%. +The following sets forth the financial objectives and strategic initiatives, the relative weighting of the financial objectives as described above (expressed as a percentage of the Maximum Funding Amount) and the applicable adjustment percentage (“Adjustment Percentage”) applied for achievement of the strategic initiatives (dollars in millions): +Financial Objectives +Threshold +Target +High +Maximum +Consolidated Revenue +(Weighting) +$167.8 +(12.5%) +$184.5 +(25%) +$193.7 +(50%) +$202.9 +(75%) +Operating Income +(Weighting) +$ 15.7 +(12.5%) +$ 16.6 +(25%) +$ 16.6 +(25%) +$ 16.6 +(25%) +Strategic Initiatives +Initiatives : +• Win Ancestry arbitration or convert Ancestry to Customer. +• Complete new acquisition with $16.3 million or more in annual revenues. +• Divest non-strategic business line. +• Sell at least $2.5 million more OraQuick ® HIV Self-Tests than reflected in 2019 budget. +Adjustment Percentages (“A”) : +-90% if no Strategic Initiative achieved. +-100% if at least one Strategic Initiative achieved. +The following sets forth the potential and actual bonus pool funding for the financial objectives at each performance level after application of the applicable Adjustment Percentage for achievement of the strategic initiatives established under the 2019 Incentive Plan (dollars in millions): +Objective +Threshold +Target +High +Maximum +Actual +Consolidated Revenues +$ +167.8 +$ +184.5 +$ +193.7 +$ +202.9 +$ +158.2 +Payouts % of Max +A % x 12.5% +A % x 25% +A % x 50% +A % x 75% +100% x 0 +- No Strat. +$ +890,000 +$ +1.8 +$ +3.6 +$ +5.3 +- At Least One Strat. +$ +989,000 +$ +2.0 +$ +4.0 +$ +5.9 +Operating Income +$ +15.7 +$ +16.6 +$ +16.6 +$ +16.6 +$ +20.7 +Payouts as % of Max. +A% x 12.5% +A% x 25% +A% x 25% +A% x 25% +100% x 25% +- No Strat. +$ +890,000 +$ +1.8 +$ +1.8 +$ +1.8 +$ +2.0 +- At Least One Strat. +$ +1.0 +$ +2.0 +$ +2.0 +$ +2.0 +$ +2.0 +Strategic Initiatives +Sale of cryosurgical systems business resulted in achievement of one Strategic +Initiative and a 100% Adjustment Percentage +During 2019, we reported consolidated net revenues totaling $154.6 million, which fell below the Threshold performance level, resulting in no funding for that objective. The Company’s 2019 consolidated net operating income was $20.7 million after eliminating the impact of the Diversigen acquisition which occurred in late 2019 and excluding transaction expenses relating to successfully completed acquisitions. This amount exceeded the Target performance level, resulting in funding of $2.0 million for that objective. As a result, the aggregate pool funding under the 2019 Incentive Plan was calculated to be $2.0 million. +The final bonus pool amount was approved by the full Board and used to pay bonuses to the Company’s NEOs and other members of our management team. The specific target payouts for NEO bonuses for 2019 (expressed as a percentage of annual base salary) are shown below: +38 +Title +Target Payout Opportunities +Chief Executive Officer +85% +Chief Financial Officer (and Chief Operating +Officer) +50% +Executive Vice President +40% +Senior Vice President +35% +In January 2020, the Compensation Committee authorized the payout of individual bonus awards to executive officers from the bonus pool for 2019 based on the target bonus amounts described above and an assessment of each officer’s performance during 2019 against pre-established performance objectives (except for Dr. Tang whose assessment was based on the Company’s overall performance). The calculation of individual bonus awards was based on a formula that adjusted the foregoing target payments for both the executives’ individual performance during 2019 and the degree to which the final approved bonus pool funding exceeded the Target under the plan funding formula. +In evaluating Dr. Tang’s and the Company’s performance, the Compensation Committee recognized the significant strategic accomplishments achieved during 2019 with the acquisitions of CoreBiome, Diversigen and Novosanis and the strategic divestiture of the Company’s cryosurgical systems business. Although 2019 revenues came in below expectations, the Compensation Committee recognized that was driven largely by developments outside of management’s control within the consumer genomics market, the strategic divestiture of the Company’s cryosurgical business and the reduced federal funding associated with the development of the Company’s Ebola and Zika tests. Finally, the Compensation Committee recognized the underlying strength in the Company’s business, as evidenced by the continued strong performance of its OraQuick ® HIV Self-Test product line, increased domestic HCV sales, and the strong growth delivered by the Company’s microbiome products and services business. +In view of the foregoing, the Compensation Committee determined that Dr. Tang should receive a Meets performance rating for 2019 as a reflection of the mix of achievements during the year. The remaining NEOs were evaluated based on individual objectives established for their respective positions. +Using these performance ratings, the Compensation Committee next considered individual performance factors to adjust the bonuses for Dr. Tang, the other NEOs and the other participants in the 2019 Incentive Plan to reflect their performance assessments for 2019. As a final step, the Compensation Committee adjusted the bonuses further by a pool funding factor reflecting the amount by which pool funding exceeded Target under the plan formula. +Using the approach described above, a final 2019 incentive cash bonus of $258,825 was calculated for Dr. Tang, representing approximately 50% of his target bonus, as follows: +2019 Base +Target +2019 Individual Performance +2019 Pool Funding +2019 +Salary +X +Bonus % +X +Factor +X +Factor += +Bonus +$609,000 +85% +100% +50% +$258,825 +39 +This same formula was used to calculate the 2019 bonus awards for all other NEOs, as follows: +2019 Bonus Payments +NEO +2019 Salary +Bonus Target +(% Salary) +2019 Performance Assessment and Rating +Individual 2019 Performance Factor +2019 Pool Funding Factor +2019 Bonus +Stephen S. Tang, Ph.D. +President and Chief Executive Officer +$609,000 +85% +Meets +• Advancement of long-term innovation growth strategy through completion of three acquisitions. +• Disposition of cryosurgical systems business which advances strategy and allows better focus on high priority growth opportunities. +• Continued aggressive pursuit of potential acquisitions related to the Company’s core business and strategic priorities. +• Responded to challenges in consumer genomics market while supporting underlying strengths of the business. +• Continued building a global organization with culture that empowers decision making by management. +100% +50% +$258,875 +Roberto Cuca +Chief Financial Officer +$426,413 +50% +High Meets +• Strong management of financial planning, reporting and accounting. +• Maintenance of strong investor base. +• Assistance in business development activities. +• Support for updated long-term business strategy. +124% +50% +$132,188 +40 +NEO +2019 Salary +Bonus Target +(% Salary) +2019 Performance Assessment and Rating +Individual 2019 Performance Factor +2019 Pool Funding Factor +2019 Bonus +Anthony Zezzo II +Executive Vice President, Business Unit Leader, Infectious Disease +$418,726 +40% +Low Meets +• Mixed achievement of sales goals. +• Oversight of infectious disease sales and marketing functions. +• Support for updated long-term business strategy. +• Moderate growth in infectious disease testing revenue. +• 15% increase in international OraQuick ® HIV revenue for 2019. +• 8% growth in domestic HCV revenue for 2019. +90% +50% +$75,371 +Kathleen G. Weber +Executive Vice President, Business Unit Leader, Molecular Solutions +$355,000 +40% +High Meets +• Implemented significant organizational changes in molecular business unit to prepare for future growth. +• Continued implementation of global organizations. +• Assisted in completing three acquisitions and startup of microbiome services business. +• Led response to genomic market changes. +124% +50% +$88,040 +41 +NEO +2019 Salary +Bonus Target +(% Salary) +2019 Performance Assessment and Rating +Individual 2019 Performance Factor +2019 Pool Funding Factor +2019 Bonus +Jack E. Jerrett +Senior Vice President, General Counsel and Chief Compliance Officer +$380,152 +35% +Exceeds +• Oversight of global legal function. +• Leadership in completing three acquisitions and divestiture of cryosurgical systems business. +• Assistance in evaluating various +business development opportunities. +• Assistance on numerous important commercial matters. +• Ongoing advice and counsel to the Board and senior management. +140% +50% +$93,137 +2019 Long-Term Incentive Equity Awards +An additional way that we promote the long-term growth of the Company and align the interests of our executives with those of our stockholders is by compensating executives with equity in the Company that vests over a multi-year period. To accomplish this, the Compensation Committee administers the Company’s LTIP (Long-Term Incentive Policy), pursuant to which grants of time-vested restricted shares and performance-vested restricted units are made to executive officers. +Incentive equity awards under the LTIP are made on an annual basis, and are discretionary and subject to approval by the Compensation Committee and/or the Board. Awards to individual participants under the LTIP are based on an evaluation of a number of factors, including: +• +Performance of the participant for the applicable year; +• +The participant’s level of responsibilities and relative contribution to the Company’s business; +• +A competitive assessment of awards at Peer Group companies; +• +History of equity awards to the participant; and +• +Other factors deemed relevant by the Compensation Committee and/or the Board. +Each participant’s individual performance for the applicable year is evaluated against his or her individual performance objectives for that year, except for Dr. Tang who is evaluated based on total Company performance. A “Meets Expectations” performance is typically the threshold requirement to receive an equity award under the LTIP. Awards below this performance level may be considered on an exception basis at the discretion of the Compensation Committee and/or the Board. +The value of potential incentive equity awards that could have been granted in 2019 under the LTIP (expressed as a percentage of annual base salary) based on performance during 2018, are summarized below: +2019 LTIP Award Ranges +Performance +Position +Lower End +Target +Maximum +President/CEO +150% +200% +250% +CFO +105% +140% +175% +EVP +95% +125% +155% +SVP and General Counsel +70% +100% +130% +Other SVPs +70% +90% +115% +42 +The percentages set forth above were established at levels that the Compensation Committee believed represented an appropriate long-term incentive compensation value for each executive, based on the results of a competitive assessment of long-term incentive awards at the Peer Group companies. Once the aggregate dollar value of an award has been established by applying the Compensation Committee approved award percentage to a participant’s base salary, the value is converted into shares or units based on a valuation of the restricted stock and restricted unit portions of the award using the average of the high and low stock price on the grant date as reported on the NASDAQ Stock Market. +In February 2019, the range of percentages set forth above for annual incentive equity awards were increased by the Compensation Committee for Dr. Tang, the Company’s President and CEO from 150%/200%/250% to 200%/250%/300% and for Mr. Jerrett, the Company’s Senior Vice President and General Counsel from 70%/100%/130% to 95%/125%/155%, based on recommendations to the Compensation Committee from Pay Governance, in order to bring the ranges more closely in line with market levels. The new percentage ranges were effective beginning with the incentive equity awards made in 2020 for performance during 2019. +Under the LTIP, 50% of an executive’s total equity award consists of PRUs that will not vest until three years after the grant date and only if certain performance measures are met during that three-year period. The awards made in 2019 incorporate two performance metrics: (i) a compound annual growth rate (“CAGR”) for consolidated product revenues during the three-year period beginning with the year in which the award was made and (ii) a one-year income before income tax (“IBIT”), performance measure followed by a further two-year vesting requirement. The remaining 50% of each executive’s incentive equity award consists of grants of time-vested RS that vest in equal annual installments over a three-year period. These vesting restrictions serve to promote the Company’s long-term growth by restricting executives’ ability to realize short-term gains from their awards. The Compensation Committee believes the terms of its incentive equity awards to executives are competitive with the terms of equity awards offered at comparable medical diagnostics and healthcare companies. +The structure of the equity awards reflects market-based good governance practices as well as input from our stockholders, several of whom advocated that a meaningful portion of the equity awards should have performance-based vesting. We believe 50% is a meaningful portion and is consistent with or exceeds the performance orientation of our Peer Group. In addition, although some stockholders have mentioned TSR as a possible performance target, most of the stockholders we have contacted in recent years indicated that other measures such as financial or operational objectives would also be appropriate. The Board decided to use consolidated net product revenue and IBIT targets because they are important for our business, especially as we continue improving our profitability, and because of the Board’s belief that these measures will directly influence the performance of our stock price over time. As discussed above, the Board does not believe that the use of TSR as a performance metric in the long-term incentive plan is appropriate at this time, although the choice of performance metrics will be reviewed each year. +The adoption of performance-based vesting conditions with a three-year service requirement for 50% of an executive’s annual equity award substantially strengthens the link between pay and performance and creates an appropriate long-term incentive for our executives. At the same time, the use of time-based vesting conditions for the remaining 50% of each award achieves the equally important goal of share ownership/accumulation that directly promotes alignment with stockholders and further supports executive retention. Overall, the Compensation Committee and Board believe that this approach represents a balanced performance-based approach to our executive compensation program that is appropriate for our Company, directly responds to feedback from our stockholders, and is consistent with executive pay governance best practices. +Equity awards are generally made by the Compensation Committee each year as part of the normal annual compensation cycle. The awards for a particular year generally occur in late January or early February of the following year after the Company’s full year financial results are known and performance evaluations for the executive officers have been prepared. Equity awards approved by the Compensation Committee for the CEO are then reviewed and approved by the Board. In addition to the annual equity awards, the Compensation Committee may approve equity awards for newly hired officers or in recognition of an executive’s promotion or expansion of responsibilities. These latter grants may have vesting or other terms that differ from the terms generally approved for annual equity awards. Notwithstanding the terms of the LTIP, equity awards are made at the discretion of the Compensation Committee or Board. +Effective February 1, 2019, the Compensation Committee approved equity awards for the NEOs under the LTIP based on the performance evaluations of such officers for 2018, as summarized below. A description of the basis for each of the NEO’s 2018 performance evaluation is set forth above under the Section entitled, “2019 Base Salaries,” in this CD&A. +43 +The following summarizes the equity awards provided to the NEOs during 2019: +Executive Officer +2018 +Performance +Assessment +Time Vested +Restricted Stock +Performance-Vested +Restricted Units +Award Value +(% of Base Salary) +Stephen S. Tang, Ph.D. +President and Chief +Executive Officer +High Meets +47,872 Shs +47,872 Shs +220% +Roberto Cuca +Chief Financial Officer +High Meets +24,614 Shs +24,614 Shs +154% +Anthony Zezzo II +Executive Vice +President, Business Unit +Leader, Infectious Disease +Meets +19,667 Shs +19,666 Shs +125% +Kathleen G. Weber +Executive Vice President, +Business Unit Leader, +Molecular Solutions +High Meets +13,028 Shs +13,028 Shs +99% 1 +Jack E. Jerrett +Senior Vice President +General Counsel, Chief Compliance Officer and Secretary +High Meets +18,524 Shs +18,524 Shs +130% +_____________ +1 During 2018, Ms. Weber served as Senior Vice President, General Manager, Consumer Products and, accordingly, her 2019 LTIP award reflected the potential value range of a Senior Vice President, as described above. +Compensation Developments in 2020 +Pay Out Under 2017 PRUs . The PRU portion of equity awards made to executives in early 2017 based on performance during 2016 did not vest until three years after the grant date and only if a three-year product revenue CAGR target and/or a one-year EPS target were met. The three-year service period for these PRUs expired on February 1, 2020. Under the terms of the PRUs, the number of shares that paid in settlement depended on the degree to which the performance revenue CAGR and EPS measures were met. The following table summarizes the potential range of shares that could be delivered based upon the degree of achievement of the applicable performance measures: +Achievement Level of +Applicable Performance Target +Percentage of PRUs +To Become Vested +80% +50% +90% +75% +100% +100% +110% +125% +120% +150% +For the 2017 PRUs, Company performance exceeded both of the applicable performance measures by more than 120%, thereby resulting in the maximum payout of 150% under the foregoing table. The following summarizes the three-year revenue CAGR and one-year EPS targets for the 2017 PRUs, our performance against these targets and the resulting number of shares delivered to the NEOs upon settlement of the PRUs: +Performance Target +Actual Performance +% of Target +% Vested +CAGR +8.7% +15.4% +177% +150% +EPS +$0.34 +$0.51 +150% +150% +44 +2017 PRU’s Target and Actual Payout +CAGR Target +(# of shs) +CAGR Actual +(# of shs) +EPS Target +(# of shs) +EPS Actual +(# of shs) +Stephen S. Tang, Ph.D. +N/A +N/A +N/A +N/A +Roberto Cuca +N/A +N/A +N/A +N/A +Anthony Zezzo II +11,040 +16,560 +11,040 +16,560 +Kathleen G. Weber +6,825 +10,238 +6,825 +10,238 +Jack E. Jerrett +7,462 +11,193 +7,463 +11,195 +OTHER C OMPENSATION +We provide minimal additional benefits outside of our primary elements of compensation, as follows: +Retirement Programs +All of our U.S. employees, including executive officers, are eligible to participate in our 401(k) profit sharing plan (the “401(k) Plan”). We make matching contributions for participants on a dollar-for-dollar basis up to $4,000 per year. Payments of employer-provided benefits accrued for a 401(k) Plan participant will be made upon retirement or upon termination of employment prior to retirement, provided certain vesting conditions have been met by the participant prior to termination. Our subsidiary DNA Genotek, which is located in Canada, offers a registered retirement plan to its employees, which similarly allows employee contributions for retirement savings, with matching contributions by DNA Genotek of up to CAD $2,000 per year in 2019 and CAD $4,000 per year beginning in 2020. +The Company also maintains the OraSure Technologies, Inc. Deferred Compensation Plan (the “Deferred Compensation Plan”) for the benefit of the Company’s highly compensated employees, including all of the NEOs, and its non-employee Directors. The Deferred Compensation Plan allows participants to defer up to 100% of their annual base salaries (or fees in the case of non-employee Directors) and up to 100% of annual incentive cash bonuses and, upon vesting, restricted shares of the Company’s Common Stock awarded to the participant. The Company may also make discretionary contributions to the participants’ accounts that vest over one or more years as determined by the Company, as well as upon death, disability or a change of control. Since the Deferred Compensation Plan was put in place, the Company has made no discretionary contributions. Participants may elect to receive distributions of deferred amounts on a specified date, separation from service, a change of control, disability and/or death. +Perquisites and Other Compensation +As a general matter, the Compensation Committee and Board do not believe that executive officers should be treated differently than other employees by receiving special perquisites unrelated to our general compensation program. Therefore, our healthcare, disability, and other insurance programs and benefits are the same for all eligible employees, including executive officers. Executive officers do not receive any additional perquisites. +Potential Payments Upon Termination or Change of Control Pursuant to Employment Agreements +The Company has entered into employment agreements with each of the NEOs. In addition to the compensation elements discussed above, these agreements provide for post-employment severance payments and benefits in the event of termination of employment by the Company without “cause” or by the executive for “good reason” and provide enhanced severance payments upon such terminations in connection with a “change of control” of the Company. The terms of these arrangements are discussed in more detail under the Section entitled, “Employment Agreements and Potential Payments Upon Termination or Change of Control,” in this Proxy Statement. The Compensation Committee believes that these arrangements are generally consistent with industry practice at the Peer Group companies, provide an incentive to the applicable executive to remain with the Company, and serve to align the interests of stockholders and the executives in the event of a change of control of the Company. +45 +Accounting and Tax Treat ment of Compensation. +In approving the amount and form of compensation for the NEOs, the Compensation Committee considers all elements of the cost to the Company of providing such compensation, including accounting and tax implications. In particular, it considers the potential impact of Section 162(m) of the Internal Revenue Code, which disallows a tax deduction for any publicly-held corporation for individual compensation exceeding $1 million in any taxable year for certain covered employees. Historically, there had been an exemption that permitted qualified “performance-based compensation” to be exempt from this $1 million cap on deductibility. Under the Tax Cuts and Jobs Act (the “Tax Act”), this performance-based compensation exemption was eliminated. Thus, bonuses paid under the LTIP will be subject to the cap on deductibility described above. Notwithstanding the Tax Act, the Compensation Committee intends to maintain flexibility to pay compensation that is not entirely deductible when the best interests of the Company would make that advisable. +Compensation Recoupment Policy +The Board has adopted a compensation recoupment or “clawback” policy, applicable to all officers subject to Section 16 of the Exchange Act. Under this policy, the Company will pursue recoupment of any excess compensation, including incentive cash bonuses, restricted awards, stock options or other compensation, which was awarded to a covered officer based on financial statements of the Company where such statements are required to be restated as a result of the gross negligence, intentional misconduct or fraud of the covered officer. In addition to recoupment, the Company shall take such other remedial actions deemed necessary against a covered employee, including recommending disciplinary actions up to and including termination and other available remedies. The recovery period for recoupment of any compensation is up to three fiscal years preceding the date on which the Company is required to prepare and file the restated financial statements. This policy has been proactively adopted in advance of final guidance under Section 954 of the Dodd-Frank Act and will be amended to conform with this Section when final guidance is available. +CEO Pay Ratio +As required by applicable law and SEC regulations, we are providing the following information about the relationship of the median of the annual total compensation of our employees and the annual total compensation of Stephen S. Tang, Ph.D., our President and CEO. +For the 2019 fiscal year, (i) the median of the annual total compensation of all employees of the Company (other than Dr. Tang) and its subsidiaries was $76,909; and (ii) the annual total compensation of Dr. Tang, as reported in the Summary Compensation Table included immediately after this CD&A, was $2,114,821. Based on this information, for 2019 the ratio of the annual total compensation of Dr. Tang, our President and CEO, to the median of the annual total compensation for employees was 27 to 1. +To identify the median of the annual total compensation of all our employees, as well as to determine the annual total compensation of our median employee, we took the following steps: +• +We determined that, as of December 31, 2019, our world-wide employee population consisted of 463 people. +• +To identify the “median employee” from our employee population, we compared the amount of salary, wages, overtime, commissions and bonuses of our employees as reflected in our payroll records. In making this determination, we did not annualize the compensation of employees who were hired in 2019 but did not work for us for the entire fiscal year. Since we do not widely distribute annual equity awards to our employees, such awards were excluded from our compensation measure. +• +Once we identified our median employee, we combined all of the elements of this employee’s compensation for 2019 in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K, resulting in the annual total compensation as described above. +46 +COMPENSATION TABLES +SUMMAR Y COMPENSATION TABLE +The following table summarizes the compensation of our CEO and the other NEOs, for the fiscal years ended December 31, 2019, 2018 and 2017: +Name & Principal +Position +Year +Salary +($) +Bonus +($) +Stock +Awards 3 +($) +Option +Awards +($) +Non- +Equity +Incentive +Plan +Compen- +sation 4 +($) +Change in +Pension Value +and Nonqualified +Deferred +Compensation +Earnings +($) +All other +Compen- +sation 5 +($) +Total +($) +Stephen S. Tang, Ph.D. +2019 +$ +609,000 +— +$ +1,242,996 +— +$ +258,825 +— +$ +4,000 +$ +2,114,821 +President and Chief +2018 +$ +412,885 +1 +$ +230,000 +2 +$ +623,363 +— +$ +818,346 +— +$ +15,000 +$ +2,099,594 +Executive Officer +Roberto Cuca +2019 +$ +426,413 +— +$ +639,102 +— +$ +132,188 +— +$ +4,000 +$ +1,201,703 +Chief Financial Officer +2018 +$ +263,365 +1 +— +$ +435,758 +— +$ +353,580 +— +— +$ +1,052,703 +Anthony Zezzo II +2019 +$ +418,726 +— +$ +510,641 +— +$ +75,371 +— +— +$ +1,004,738 +Executive Vice President, +2018 +$ +408,359 +— +$ +420,519 +— +$ +232,035 +— +— +$ +1,060,913 +Business Unit Leader +2017 +$ +400,333 +— +$ +391,691 +— +$ +272,341 +— +— +$ +1,064,365 +Infectious Disease +Kathleen G. Weber +2019 +$ +355,000 +— +$ +338,272 +— +$ +88,040 +— +87,247 +$ +868,559 +Executive Vice President, +2018 +$ +341,695 +— +$ +346,666 +— +$ +203,787 +— +4,000 +$ +896,148 +Business Unit Leader, +2017 +$ +330,140 +— +$ +242,152 +— +$ +288,873 +— +4,000 +$ +865,165 +Molecular Solutions +Jack E. Jerrett +2019 +$ +380,152 +— +$ +480,976 +— +$ +93,137 +— +$ +4,000 +$ +958,265 +Senior Vice President, +2018 +$ +369,804 +— +$ +379,004 +— +$ +220,654 +— +$ +4,000 +$ +973,462 +General Counsel and +2017 +$ +360,800 +— +$ +264,761 +— +$ +290,567 +— +$ +4,000 +$ +920,128 +Chief Compliance Officer +____________________________________ +1 +The 2018 salaries shown for Dr. Tang and Mr. Cuca represent the amounts paid to these executives after they joined the Company on April 1, 2018 and May 7, 2018, respectively. +2 The indicated amount represents an onboarding cash bonus paid to Dr. Tang pursuant to the terms of his employment agreement. +3 +The indicated amounts reflect the aggregate grant date fair value of RS and PRU awards made to the NEOs during the applicable year, computed in accordance with Financial Accounting Standards Board (“FASB”) ASC Topic 718. The value of the PRUs reflect the assumption that 100% of target will be achieved for each of the performance measures reflected in the terms of the PRUs. Certain assumptions used in the calculation of the indicated amounts are set forth for the applicable year of award in footnote 12 to the Company’s audited consolidated financial statements for the year ended December 31, 2019, included in the Company’s Annual Report on Form 10-K filed with the SEC on March 2, 2020 (the “2019 10-K Report”). The maximum grant-date fair value of the PRU awards made in 2019, assuming the highest level of performance measures will be achieved (120% of target resulting in a 150% payout), are as follows: Dr. Tang, $932,247; Mr. Cuca, $479,340; Mr. Zezzo, $382,984; Ms. Weber $253,704; and Mr. Jerrett, $360,732. +4 +The indicated amounts reflect incentive cash bonuses paid to the NEOs pursuant to an Incentive Plan, based on performance during the applicable year. For a description of incentive cash bonus payments for performance during 2019, see the Section entitled, “2019 Annual Incentive Cash Bonuses,” in the CD&A. +5 +The indicated amounts reflect $4,000 in cash contributed to a 401(k) profit sharing plan as an employer-matching contribution, which was offered to U.S. employees of the Company during each of the indicated years. The amount indicated for Ms. Weber in 2019 represents $4,000 in cash contributed to a 401(k) profit sharing plan as an employer-matching contribution, $14,347 for the reimbursement of moving expenses, and $68,900 representing a monthly living expense allowance as a result of Ms. Weber’s promotion to head our Molecular Solutions business and relocation to Ottawa, Canada. The amount indicated for Dr. Tang in 2018 represents the reimbursement of legal fees he incurred in connection with the review and negotiation of his employment agreement with the Company. +47 +GRANTS OF PLAN-BASED AWARDS +The following table summarizes information concerning possible incentive cash bonuses and possible and actual RS and PRU awards for the NEOs during the fiscal year ended December 31, 2019: +Estimated Possible Payouts +Under Non-Equity Incentive +Plan Awards 2 +Estimated Possible Payouts Under +Equity Incentive Plan Awards 3 +Name +Grant +Date +Threshold +($) +Target +($) +Maximum +($) +Threshold +(# Shs.) +Target +(# Shs.) +Maximum +(# Shs.) +All other +Stock +Awards: +Number +of Shares +of Stock +or Units 4 +(#Shs.) +All other +Option +Awards: +Number +of +Securities +Underlying +Options +(#Shs.) +Exercise +of Base +Price of +Option +awards +($/Sh) +Grant +Date +Fair +Value of +Stock +Awards 5 +($) +Stephen S. Tang, Ph.D. +2/1/2019 1 +— +— +— +— +— +— +47,872 +RS +— +— +$ +621,498 +President and +2/1/2019 1 +— +— +— +— +— +— +47,872 +PRU +— +— +$ +621,498 +Chief Executive Officer +N/A +$ +258,825 +$ +517,650 +$ +1,552,950 +32,640 +RS +43,520 +RS +54,400 +RS +— +— +— +N/A +N/A +— +— +— +32,640 +PRU +43,520 +PRU +54,400 +PRU +— +— +— +N/A +Roberto Cuca +2/1/2019 1 +— +— +— +— +— +— +24,614 +RS +— +— +$ +319,551 +Chief Financial Officer +2/1/2019 1 +— +— +— +— +— +— +24,614 +PRU +— +— +$ +319,551 +N/A +$ +106,603 +$ +213,207 +$ +639,620 +16,782 +RS +22,376 +RS +27,970 +RS +— +— +— +N/A +N/A +— +— +— +16,782 +PRU +22,376 +PRU +27,970 +PRU +— +— +— +N/A +Anthony Zezzo II +2/1/2019 1 +— +— +— +— +— +— +19,667 +RS +— +— +$ +255,327 +Executive Vice President +2/1/2019 1 +— +— +— +— +— +— +19,666 +PRU +— +— +$ +255,314 +Business Unit Leader, +N/A +$ +83,745 +$ +167,490 +$ +502,471 +14,947 +RS +19,667 +RS +24,386 +RS +— +— +— +N/A +Infectious Disease +N/A +— +— +— +14,947 +PRU +19,667 +PRU +24,386 +PRU +— +— +— +N/A +Kathleen G. Weber +2/1/2019 1 +— +— +— +— +— +— +13,028 +RS +— +— +$ +169,136 +Executive Vice President +2/1/2019 1 +— +— +— +— +— +— +13,028 +PRU +— +— +$ +169,136 +Business Unit Leader, +N/A +$ +71,000 +$ +142,000 +$ +426,000 +12,502 +RS +16,450 +RS +20,398 +RS +— +— +— +N/A +Molecular Solutions +N/A +— +— +— +12,502 +PRU +16,450 +PRU +20,398 +PRU +— +— +— +N/A +Jack E. Jerrett +2/1/2019 1 +— +— +— +— +— +— +18,524 +RS +— +— +$ +240,488 +Senior Vice President, +2/1/2019 1 +— +— +— +— +— +— +18,524 +PRU +— +— +$ +240,488 +General Counsel, and +N/A +$ +66,527 +$ +133,053 +$ +399,160 +9,974 +RS +14,249 +RS +18,524 +RS +— +— +— +N/A +Chief Compliance Officer +N/A +— +— +— +9,974 +PRU +14,249 +PRU +18,524 +PRU +— +— +— +N/A +_________________________________ +1 Annual incentive equity awards to NEOs consisted of a combination of time-vested RS and PRUs that were granted in 2019 pursuant to the LTIP based on performance during 2018. Annual equity awards made during 2019 were approved by the Compensation Committee effective on February 1, 2019. For a description of these equity awards and their terms, see the Section entitled, “2019 Long-Term Incentive Awards,” in the CD&A. +2 +The indicated amounts represent potential incentive cash bonus payments to the NEOs under the 2019 Incentive Plan. On January 27, 2020, bonus payments under the 2019 Incentive Plan were approved by the Compensation Committee for the NEOs, based on performance during 2019. The Threshold and Target amounts assume the executive receives 50% and 100% of his or her target bonus and that the aggregate bonus pool is funded at 50% and 100% for each performance objective in the 2019 Incentive Plan, respectively. The Maximum amounts assume that the recipient receives 150% of his or her target bonus based on performance for 2019 and that the bonus pool is funded at 200% or the Maximum level for each performance objective in the 2019 Incentive Plan. A further description of the payments approved under the 2019 Incentive Plan is set forth in the Section entitled, “2019 Annual Incentive Cash Bonuses,” in the CD&A. +3 +The indicated amounts represent the potential number of shares which could have been granted to the NEOs in 2019 in the form of RS and PRUs pursuant to the LTIP, based on performance during 2018. The individual share numbers for each potential award were calculated by dividing 50% of the long-term incentive targets for each NEO set forth in the LTIP by the mean between the high and low sales price of the Common Stock as reported by NASDAQ on the date of grant. The number of shares corresponding to the PRUs were calculated based on the assumption that 100% of target is achieved for each of the performance measures set forth in the terms of such PRU awards. The actual number of shares received upon vesting of the PRUs could vary from 50% to 150% of target depending on the degree to which the performance measures are achieved. +4 +The indicated amounts represent the actual number of shares of RS or PRUs granted to the NEOs in 2019 under the LTIP, based on performance during 2018. A further description of these equity awards and their terms is set forth in the Section entitled, “2019 Long-Term Incentive Awards,” in the CD&A. +5 +The indicated amounts represent the grant date fair value calculated in accordance with FASB ASC Topic 718. +48 +OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2019 +The following table summarizes information regarding unexercised stock options and unvested RS and PRUs held by the NEOs as of December 31, 2019: +Option Awards 1 +Stock Awards 1 +Name +Number of +Securities +Underlying +Unexercised +Options +(#) +Exercisable +Number of +Securities +Underlying +Unexercised +Options 2 +(#) +Unexercisable +Equity +Incentive +Plan +Awards: +Number of +Securities +Underlying +Unexercised +Unearned +Options (#) +Option +Exercise +Price +($/Sh.) +Option +Expiration +Date +Number of +Shares or +Units of +Stock +That +Have +Not +Vested 2 (#) +Market +Value of +Shares or +Units of +Stock +That +Have Not +Vested 8 ($) +Equity +Incentive +Plan +Awards: +Number of +Unearned +Shares, +Units or +Other +Rights +that +Have Not +Vested 2 (#) +Equity +Incentive +Plan +Awards: +Market +or Payout +Value of +Unearned +Shares, +Units or +other +Rights +That +Have Not +Vested 8 ($) +Stephen S. Tang, Ph.D. +— +— +— +— +— +— +— +— +— +President and Chief +— +— +— +— +— +37,116 +3(a) +$ +298,041 +— +— +Executive Officer +— +— +— +— +— +47,872 +3(b) +$ +384,412 +— +— +— +— +— +— +— +— +— +23,936 +3(c) +$ +192,206 +Roberto Cuca +— +— +— +— +— +9,546 +4(a) +$ +76,654 +— +— +Chief Financial Officer +— +— +— +— +— +24,614 +4(b) +$ +197,650 +— +— +— +— +— +— +— +— +— +10,740 +4(c) +$ +86,242 +— +— +— +— +— +— +— +7,160 +4(d) +$ +57,495 +— +— +— +— +— +— +— +12,307 +4(e) +$ +98,825 +Anthony Zezzo II +36,204 +— +— +$ +11.30 +2/1/2022 +— +— +— +— +Executive Vice President, +32,921 +— +— +$ +7.05 +2/1/2023 +— +— +— +— +Business Unit Leader, +10,427 +— +— +$ +5.71 +2/3/2024 +— +— +— +— +Infectious Disease +41,781 +— +— +$ +9.31 +2/3/2025 +— +— +— +— +— +— +— +— +— +7,359 +5(a) +$ +59,093 +— +— +— +— +— +— +— +6,476 +5(b) +$ +52,002 +— +— +— +— +— +— +— +19,667 +5(c) +$ +157,926 +— +— +— +— +— +— +— +— +— +16,560 +5(d) +$ +132,977 +— +— +— +— +— +— +— +16,560 +5(d) +$ +132,977 +— +— +— +— +— +— +— +7,286 +5(e) +$ +58,507 +— +— +— +— +— +— +— +4,857 +5(f) +$ +39,002 +— +— +— +— +— +— +— +9,833 +5(g) +$ +78,959 +Kathleen Weber +4,129 +— +— +$ +5.71 +2/3/2024 +— +— +— +— +Executive Vice +10,404 +— +— +$ +9.31 +2/3/2025 +— +— +— +— +President, Molecular +— +— +— +— +— +4,550 +6(a) +$ +36,537 +— +— +Solutions +— +— +— +— +— +5,338 +6(b) +$ +42,864 +— +— +— +— +— +— +— +13,028 +6(c) +$ +104,615 +— +— +— +— +— +— +— +— +— +10,238 +6(d) +$ +82,211 +— +— +— +— +— +— +— +10,238 +6(d) +$ +82,211 +— +— +— +— +— +— +— +6,006 +6(e) +$ +48,228 +— +— +— +— +— +— +— +4,004 +6(f) +$ +32,152 +— +— +— +— +— +— +— +6,514 +6(g) +$ +52,307 +Jack E. Jerrett +6,407 +— +— +$ +5.71 +2/3/2024 +— +— +— +— +Senior Vice President, +13,650 +— +— +$ +9.31 +2/3/2025 +— +— +— +— +General Counsel, and +— +— +— +— +— +4,974 +7(a) +$ +39,941 +— +— +Chief Compliance Officer +— +— +— +— +— +5,836 +7(b) +$ +46,863 +— +— +— +— +— +— +— +18,524 +7(c) +$ +148,748 +— +— +— +— +— +— +— +— +— +11,193 +7(d) +$ +89,880 +— +— +— +— +— +— +— +11,194 +7(e) +$ +89,888 +— +— +— +— +— +— +— +6,567 +7(f) +$ +52,733 +— +— +— +— +— +— +— +4,377 +7(g) +$ +35,147 +— +— +— +— +— +— +— +9,262 +7(h) +$ +74,374 +49 +1 +The table does not include RS and PRUs awarded to the NEOs in February 2020 pursuant to the LTIP in respect of performance during 2019. +2 +Stock options vest over four years, with the first 25% vesting on the first anniversary of the grant date and the remaining 75% vesting on a monthly basis over the next three years following the first anniversary of the grant date. Grants of RS vest over a three-year period, with one-third vesting on the first anniversary of the grant date, a second third vesting on the second anniversary and the final third vesting on the third anniversary. PRUs will not vest until three years from the grant date and only if certain performance measures are met during the three-year service period. +3 +The indicated stock options, RS, and PRUs vest as follows: +(a) +37,116 restricted shares cliff vesting on April 1, 2023; +(b) +15,957 restricted shares on February 1, 2020, 15,958 shares on February 1, 2021, and 15,957 shares on February 1, 2022; and +(c) +23,936 PRUs cliff vesting on February 1, 2022, provided performance metrics have been achieved. This grant also included 23,936 PRUs which will not vest on February 1, 2022 as the related performance metric was not achieved. +4 +The indicated RS and PRUs vest as follows: +(a) +4,773 restricted shares on May 7, 2020 and 2021; +(b) +8,205 restricted shares on February 1, 2020, 8,204 restricted shares on February 1, 2021, and 8,205 restricted shares on February 1, 2022; +(c) +10,740 PRUs cliff vesting on May 7, 2021, provided performance metrics have been achieved; +(d) +7,160 PRUs cliff vesting on May 7, 2021, provided performance metrics have been achieved; and +(e) +12,307 PRUs cliff vesting on February 1, 2022, provided performance metrics have been achieved. This grant also included 12,307 PRUs which have been forfeited because the related performance metric was not achieved. +5 +The indicated RS and PRUs vest as follows: +(a) +7,359 restricted shares on February 1, 2020; +(b) +3,238 restricted shares on February 1, 2020 and 2021; +(c) +6,556 restricted shares on February 1, 2020, 6,555 restricted shares on February 1, 2021, and 6,556 restricted shares on February 1, 2022; +(d) +16,560 PRUs cliff vesting on February 1, 2020, provided performance metrics have been achieved; +(e) +7,286 PRUs cliff vesting on February 1, 2021, provided performance metrics have been achieved; +(f) +4,857 PRUs cliff vesting on February 1, 2021, provided performance metrics have been achieved; and +(g) +9,833 PRUs cliff vesting on February 1, 2022, provided performance metrics have been achieved. This grant also included 9,833 PRUs which have been forfeited because the related performance metric was not achieved. +6 +The indicated RS and PRUs vest as follows: +(a) +4,550 restricted shares on February 1, 2020; +(b) +2,669 restricted shares on February 1, 2020 and February 1, 2021; +(c) +4,343 restricted shares on February 1, 2020, 4,342 restricted shares on February 1, 2021, and 4,343 restricted shares on February 1, 2022; +(d) +10,238 PRUs cliff vesting on February 1, 2020, provided performance metrics have been achieved; +(e) +6,006 PRUs cliff vesting on February 1, 2021, provided performance metrics have been achieved; +(f) +4,004 PRUs cliff vesting on February 1, 2020, provided performance metrics have been achieved; and +(g) +6,514 PRUs cliff vesting on February 1, 2022, provided performance metrics have been achieved. This grant also included 6,514 PRUs which have been forfeited because the related performance metric was not achieved. +7 +The indicated RS and PRUs vest as follows: +(a) +4,974 restricted shares on February 1, 2020; +(b) +2,918 restricted shares on February 1, 2020 and 2021; +(c) +6,175 restricted shares on February 1, 2020, 6,174 restricted shares on February 1, 2021, and 6,175 restricted shares on February 1, 2021; +(d) +11,193 PRUs cliff vesting on February 1, 2020, provided performance metrics have been achieved; +(e) +11,194 PRUs cliff vesting on February 1, 2020, provided performance metrics have been achieved; +(f) +6,567 PRUs cliff vesting on February 1, 2021, provided performance metrics have been achieved; +(g) +4,377 PRUs cliff vesting on February 1, 2021, provided performance metrics have been achieved; and +(h) +9,262 PRUs cliff vesting on February 1, 2022, provided performance metrics have been achieved. This grant also included 9,262 PRUs which have been forfeited because the related performance metric was not achieved. +8 +The indicated values were determined by multiplying the number of unvested shares of RS and unvested PRUs shown in this table by $8.03 per share, the closing price of the Company’s Common Stock as reported by NASDAQ on December 31, 2019. +50 +OPTION EXERCISES AND STOCK VESTED +The following table summarizes information with respect to the exercise of stock options and vesting of RS for each of the NEOs during the fiscal year ended December 31, 2019: +Option Awards +Stock Awards 1 +Name +Number +of Shares +Acquired +on +Exercise +(#) +Value +Realized +on +Exercise 2 +($) +Number +Of Shares +Acquired +on +Vesting +(#) +Value +Realized +on +Vesting 3 +($) +Stephen S. Tang, Ph.D. +16,667 +$ +46,168 +— +$ +— +President and Chief Executive Officer +Roberto Cuca +— +— +4,774 +$ +46,976 +Chief Financial Officer +Anthony Zezzo II +— +— +69,594 +$ +903,504 +Executive Vice President, Business Unit +Leader, Infectious Disease +Kathleen Weber +— +— +57,086 +$ +741,119 +Executive Vice President, Molecular Solutions +Jack E. Jerrett +— +— +51,986 +$ +674,908 +Senior Vice President, General Counsel, and Chief Compliance Officer +1 Includes the vesting of restricted stock awards and performance-vested restricted units. +2 The indicated amounts represent the number of shares acquired upon exercise of the options multiplied by the difference between the market value of the Company’s Common Stock on the applicable exercise date and the option exercise price. +3 +The indicated amounts were calculated by multiplying the number of restricted shares and performance-vested restricted shares acquired upon vesting by the market value of the Company’s Common Stock on the applicable vesting date. The market value was determined by calculating the mean between the high and low sales prices of the Common Stock as reported by NASDAQ on the vesting date. +RETIREMENT BENEFITS +The NEOs are eligible to participate in our 401(k) Plan on the same terms and conditions applicable to other employees. For a further description of the terms of the 401(k) Plan, see the Section entitled, “Retirement Programs,” in the CD&A. +NONQUALIFIED DEFERRED COMPENSATION +The OraSure Technologies, Inc. Deferred Compensation Plan (the “Plan”) is a non-qualified deferred compensation plan designed to provide deferred compensation benefits to a select group of the Company’s highly compensated employees, including all of the NEOs, and to non-employee members of the Board. +The Plan allows for deferrals by participants of up to 100% of their annual base salaries (or in the case of non-employee Directors, 100% of fees payable under the Company’s Non-Employee Director Compensation Policy), up to 100% of annual incentive cash bonuses and, upon vesting, restricted shares of the Company’s Common Stock and shares received in respect of performance-vested restricted units awarded under the LTIP. The Company may also make discretionary contributions to the accounts of employees participating in the Plan. Cash balances in participants’ accounts may be invested in a list of investment options that are similar to the fund choices offered in the Company’s 401(k) plan. Participants will be permitted to sell vested shares in their accounts, subject to compliance with the Company’s Insider Trading Policy and applicable securities laws, and invest the proceeds of any such sale in the investment options available under the Plan. Participants will be 100% vested in their accounts and the restricted shares they defer, except that Company contributions will vest over one or more years as determined by the Company. In the event of death, disability or change of control, a participant will become 100% vested in any then unvested Company contributions. +51 +A Participant may elect to receive a distribution from his or her account upon a specified date, separation from service, change of control, disability and/or death. Distributions will be made in a lump sum or installments, as allowed under the Plan. +Amounts contributed to a participant’s account through elective deferrals or through the Company’s discretionary contributions are generally not subject to income tax, and the Company does not receive a deduction until they are distributed pursuant to the Plan. +However, cash deferrals are subject to the Federal Insurance Contributions Act Tax imposed at the time of deferral (the “FICA tax”). Deferrals of restricted shares and shares received in respect of performance-vested restricted units are subject to the FICA tax at the time the shares vest, but are not subject to income tax, and the Company does not receive the deduction until the shares are distributed pursuant to the Plan. The Company may amend or terminate the Plan at any time in accordance with applicable law. +None of the Company’s NEO’s participated in the Plan during 2019. +52 +EMPLOYMENT AGREEME NTS AND POTENTIAL PAYME NTS UPON TERMINATION OR CHANGE OF CONTROL +Employment Agreements +We have entered into employment agreements with all of our NEOs. We believe such agreements are necessary to attract and retain critical talent, and are in-line with market practices. The following summary describes the material terms of the employment arrangements with Dr. Tang and the other NEOs. +In January 2018, we entered into an employment agreement with Dr. Tang in connection with his appointment as the Company’s new President and CEO, effective April 1, 2018. Under the agreement, Dr. Tang will receive (i) an annual base salary of at least $565,000, (ii) an annual cash bonus opportunity under the Company’s annual Incentive Plan with a bonus target of at least 85% of his base salary and (iii) annual equity awards under the Company’s LTIP ranging from at least 150%-250% of his base salary, with a target of 200%. Dr. Tang also received a sign-on cash bonus of $230,000 and an award of 37,116 shares of time-vested RS. The award of RS will vest on the fifth anniversary of Dr. Tang’s date of employment. Upon a termination of employment, Dr. Tang’s agreement provides for certain post-employment severance and other benefits, as described below. +Dr. Tang’s employment agreement will terminate upon his death or disability. In addition, Dr. Tang may unilaterally terminate his employment at any time and for any reason upon 90 days written notice to the Company or for “good reason” (as defined below). Dr. Tang’s employment agreement can also be terminated by the Company for “Cause” (as defined below) or without “Cause.” +As used in Dr. Tang’s agreement, the term “good reason” means (i) a material breach of the agreement by the Company, (ii) a material diminution in Dr. Tang’s base compensation or authority, duties or responsibilities (following a change of control, such a diminution shall occur if Dr. Tang no longer functions as the sole chief executive officer of the successor organization), (iii) a material change in Dr. Tang’s reporting relationship from the Board to another employee of the Company (following a change of control, such a diminution shall occur if Dr. Tang no longer reports to the board of directors of a public company), or (iv) a material change in Dr. Tang’s job location. +A “change of control” generally is defined to take place when disclosure of such a change would be required by the proxy rules promulgated by the SEC or when: +• +any person, or more than one person acting as a group within the meaning of Section 409A of the Internal Revenue Code (the “Code”) and the regulations issued thereunder, acquires ownership of stock of the Company that, together with stock held by such person or group, constitutes more than 50 percent of the total fair market value or total voting power of the stock of the Company; +• +any person, or more than one person acting as a group within the meaning of Code Section 409A and the regulations issued thereunder, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition) ownership of stock of the Company possessing 30 percent or more of the total voting power of the Company’s stock; +• +a majority of the members of the Board is replaced during any 12-month period by Directors whose appointment or election is not endorsed by a majority of the members of the Board before the date of the appointment or election; or +• +a person, or more than one person acting as a group within the meaning of Code Section 409A and the regulations issued thereunder, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition) assets from the Company that have a total gross fair market value equal to or more than 40 percent of the total gross fair market value of all the assets of the Company immediately before such acquisition or acquisitions. +A “change of control period” is the period which begins 60 days prior to the occurrence of a change of control and ends 18 months thereafter. +“Cause” is defined as (i) the willful and continued failure by Dr. Tang to substantially perform his duties as provided in the agreement after a written demand for substantial performance is delivered to Dr. Tang by the Board, and Dr. Tang’s failure to comply with such demand within a reasonable time; (ii) the engaging by Dr. Tang in gross misconduct or gross negligence materially injurious to the Company; (iii) the commission of any act in direct competition with or materially detrimental to the best interests of the Company; or (iv) Dr. Tang’ conviction of having committed a felony. +53 +Upon the termination of Dr. Tang’s employment for any reason, Dr. Tang will be entitled to receive his salary through the date of termination and any bonus approved by the Board or the Compensation Committee prior to the date of termination but not yet paid. In the case of a termination upon his death or disability or by the Company without Cause, or in the case of a unilateral termination by Dr. Tang or a termination by Dr. Tang for good reason where in either case the termination occurs after June 30 of any year, Dr. Tang will also receive a cash bonus for the year of termination prorated through the date of termination. In addition, if termination is for good reason or without Cause (which includes the Company’s failure to renew the agreement) and does not occur during a change of control period, Dr. Tang would receive additional severance in the form of a lump sum amount equivalent to 18 months of his annual salary plus reimbursement of the costs of continuation coverage under the Company’s health plans (if Dr. Tang elects coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985) for a period of 18 months after the date of termination. If, however, termination is for good reason or without Cause (which includes the Company’s failure to renew the agreement) and occurs during a change of control period, Dr. Tang will receive a lump sum amount equivalent to 36 months of his annual salary and reimbursement of continuation coverage under the Company’s health plan for 36 months. If Dr. Tang is a “specified employee” within the meaning of Code Section 409A at the time of the termination of his employment and any of the foregoing payments would subject him to any tax, interest or penalty under Code Section 409A or regulation thereunder, then the payment shall not be made until the first day which is at least six months after the date of termination of his employment. +All stock awards granted to Dr. Tang are required to immediately vest (i) in the event of a change of control or (ii) if Dr. Tang’s employment is terminated for good reason by Dr. Tang or by the Company without Cause during a change of control period, and 50% of such stock awards shall vest in the event Dr. Tang’s employment is terminated for good reason by Dr. Tang or by the Company without Cause during any period other than a change of control period. +In May 2018, we entered into an employment agreement with Mr. Cuca, pursuant to which Mr. Cuca will receive (i) an annual base salary of at least $415,000, (ii) a target bonus opportunity under the Company’s annual incentive plan of 50% of his base salary, and (iii) annual equity awards under the Company’s long-term incentive policy ranging from 105% to 175% of his base salary (with a target of 140%). Mr. Cuca also received an onboarding equity award having an aggregate value of $435,750. This award consisted of 50% time-vested RS and 50% PRUs. The terms of Mr. Cuca’s award are substantially the same as the terms of awards made to the Company’s other executives in February 2018. +The termination and severance provisions in the employment agreements for Mr. Cuca and the other NEOs are substantially similar to Dr. Tang’s employment agreement, with the following exceptions: Mr. Jerrett is entitled to receive severance equivalent to 12 months of his annual salary, rather than 18 months, in the event of a termination for good reason or without Cause where such termination does not occur during a change of control period and he will be entitled to receive severance equivalent to 24 months of his annual salary, rather than the 36 months, if Mr. Jerrett terminates his agreement after a change of control or a termination for good reason or without Cause occurs during a change of control period. Mr. Zezzo and Ms. Weber will also be entitled to receive severance equal to 12 months of their annual salary if he or she is terminated for good reason or without Cause, but he or she will receive 24 months of his or her annual salary if such termination occurs during a change of control period. In the employment agreements with Messrs. Zezzo and Jerrett, the term “good reason” also includes a material diminution of the budget over which the executive exercises control and a change of control period begins upon the occurrence of a change of control. Finally, neither Mr. Zezzo nor Mr. Jerrett shall be entitled to a prorated bonus in the event of a unilateral termination by either executive after June 30 of the applicable year. +54 +The following table provides estimates of the potential severance and other post-termination benefits the NEOs would receive assuming their employment was terminated as of December 31, 2019: +Name +Benefit +Voluntary +Termination +or +Termination +for Cause 1 +Termination +for Death +or Disability 2 +Termination +for Good +Reason or +Without +Cause Not +Within +Change of +Control +Period 2 +Voluntary +Termination +after Change of +Control (only for +Mr. Jerrett), or +Termination for +Good Reason or +Without Cause +Within Change of +Control Period 2 +Stephen S. Tang, Ph.D. +Salary Continuation +— +— +$ +913,500 +$ +1,827,000 +President +Bonus +$ +517,650 +$ +258,825 +$ +517,650 +$ +517,650 +and Chief Executive Officer +Accelerated Option Vesting +— +— +— +— +Accelerated Restricted Stock/Unit Vesting +— +$ +1,066,866 +$ +533,433 +$ +1,066,866 +Health Care Benefits +— +— +$ +37,618 +$ +37,618 +Total +$ +517,650 +$ +1,325,691 +$ +2,002,201 +$ +3,449,134 +Roberto Cuca +Salary Continuation +— +— +$ +639,620 +$ +1,279,239 +Chief Financial Officer +Bonus +$ +213,207 +$ +132,188 +$ +213,207 +$ +213,207 +Accelerated Option Vesting +— +— +— +— +Accelerated Restricted Stock/Unit Vesting +— +$ +586,945 +$ +293,472 +$ +586,945 +Health Care Benefits +— +— +$ +3,456 +$ +3,456 +Total +$ +213,207 +$ +719,133 +$ +1,149,755 +$ +2,082,847 +Anthony Zezzo II +Salary Continuation +— +— +$ +418,726 +$ +837,452 +Executive Vice President, +Bonus +— +$ +75,371 +$ +167,490 +$ +167,490 +Business Unit Leader, +Accelerated Option Vesting +— +— +— +— +Infectious Disease +Accelerated Restricted Stock/Unit Vesting +— +$ +682,245 +$ +341,122 +$ +682,245 +Health Care Benefits +— +— +$ +4,687 +$ +4,687 +Total +$ +— +$ +757,616 +$ +932,025 +$ +1,691,874 +Kathleen G. Weber +Salary Continuation +— +— +$ +355,000 +$ +710,000 +Executive Vice President, +Bonus +$ +142,000 +$ +88,040 +$ +142,000 +$ +142,000 +Business Unit Leader +Accelerated Option Vesting +— +— +— +— +Molecular Solutions +Accelerated Restricted Stock/Unit Vesting +— +$ +462,544 +$ +231,272 +$ +462,544 +Health Care Benefits +— +— +$ +37,266 +$ +37,266 +Total +$ +142,000 +$ +550,584 +$ +765,538 +$ +1,351,810 +Jack E. Jerrett +Salary Continuation +— +— +$ +380,152 +$ +760,304 +Senior Vice President, +Bonus +— +$ +93,137 +$ +133,053 +$ +133,053 +General Counsel, and +Accelerated Option Vesting +— +— +— +— +Chief Compliance Officer +Accelerated Restricted Stock/Unit Vesting +— +$ +574,450 +$ +287,225 +$ +574,450 +Health Care Benefits +— +— +$ +28,660 +$ +28,660 +Total +— +$ +667,587 +$ +829,090 +$ +1,496,467 +1 +In the event of a unilateral termination by Dr. Tang, Mr. Cuca, or Ms. Weber after June 30, they would receive a prorated bonus for the year in which termination occurs. +2 The indicated values for the accelerated vesting of stock options reflect (i) the number of option shares which would vest on an accelerated basis, multiplied by (ii) the excess, if any, of the $8.03 per share closing price for the Company’s Common Stock, as reported by NASDAQ on December 31, 2019, over the applicable exercise price for each option. The indicated values for the accelerated vesting of RS and PRUs reflect the $8.03 per share closing price on December 31, 2019 multiplied by the number of shares which would vest on an accelerated basis (assuming, in the case of PRUs, that the applicable performance measures for the PRUs are met at 100% of target). +55 +Stock Award PLAN INFORMATION +The following table provides information as of December 31, 2019 about the shares of Common Stock that may be issued upon the exercise of options under the OraSure Technologies, Inc. Stock Award Plan (the “Stock Award Plan” or the “Plan”). Additional grants of equity compensation may only be made under the Stock Award Plan. +Plan Category +Number of Securities to be +Issued Upon Exercise of +Outstanding Options +(a) +Weighted- +Average Exercise +Price of Outstanding +Options +(b) +Number of Securities +Remaining Available for +Future Issuance Under +Equity Compensation Plans +(Excluding Securities +Reflected in Column (a)) +(c) +Equity compensation plans approved by +security holders +1,192,935 +$ +10.71 +2,534,296 +1 +Equity compensation plans not approved by +security holders +— +— +— +Total +1,192,935 +2,534,296 +1 +Represents shares remaining available for future issuance as of December 31, 2019 under the Stock Award Plan. +DIRECTOR COMPENSATION +ANNUAL FEES +Under our Non-Employee Director Compensation Policy (“Director Policy”), non-employee members of the Board receive fixed annual fees for service on the Board and Committees of the Board during 2019, as set forth below. The fees were paid quarterly in arrears. +Position +Annual Fee +Board Member (Base Fee) +$ +55,000 +Board Chairman (Additional Fee) +$ +25,000 +Audit Chairman +$ +20,000 +Compensation Chairman +$ +20,000 +Nominating & Corporate Governance Chairman +$ +20,000 +Non-Chairman Committee member +$ +5,000 +Each non-employee Director has the option to receive shares of the Company’s Common Stock in lieu of cash fees, as described above. Prior to the end of each calendar year, each non-employee Director shall make an annual election with respect to cash fees for the following calendar year, indicating whether he or she elects to receive the fees in cash, or in Company Common Stock in lieu of the cash fees. If no election has been made as of the first day of the year, the non-employee Director shall receive all fees in cash, as set forth above, or, if a previous election has been made to receive Common Stock in lieu of the cash fees, such election shall remain in effect for subsequent calendar years until such election is changed by the completion, signature and delivery to the Company of a new election form. Each newly elected or appointed non-employee Director shall make an election prior to, or within 30 days of, his or her initial appointment or election to the Board, for the remainder of the year of such appointment or election, whether to receive the fees in cash or in Common Stock. +In the event an election is made by a non-employee Director to receive Common Stock in lieu of cash fees, such Director shall automatically be granted on the applicable fee payment date a number of shares of Common Stock having an aggregate fair market value equal to the aggregate amount of such non-employee Director’s cash fee for such fiscal quarter, determined by dividing (A) the aggregate amount of the fee by (B) the average of the high and low sales price of the Company’s Common Stock as reported on the NASDAQ Stock Exchange on the applicable fee payment date (rounded down to the nearest whole share) (the “Quarterly Grant”). Non-employee Directors are permitted to direct the Company to withhold shares of stock in order to pay tax withholding obligations arising upon the receipt of a Quarterly Grant. +56 +INITIAL AND ANNUAL EQUITY AWARDS +Upon joining the Board, non-employee Directors receive an initial grant of restricted shares of the Company’s Common Stock having an aggregate value of $100,000 (the “Initial Grant”). The Initial Grant will cliff vest two (2) years after the Director joins the Board. In addition, non-employee Directors will receive an annual grant of restricted shares (the “Annual Grant”) on the date of the Company’s Annual Meeting of Stockholders, which will vest on or prior to the Company’s next Annual Meeting of Stockholders. The value of Annual Grants for Board members are as follows: +Board Position +Award Grant Value +Board Member (Base) +$105,000 +Board Chairman (Additional Value) +$ 25,000 +The dollar value of each Initial Grant and Annual Grant is converted into restricted stock by dividing the above values by the average of the high and low sales prices of the Company’s Common Stock, as reported on the NASDAQ Stock Market, on the grant date. Non-employee Directors are permitted to direct the Company to withhold restricted stock in order to pay tax withholding obligations arising upon the vesting of such shares. +EQUITY AWARD TERMS +Each Initial Grant, Annual Grant and Quarterly Grant shall be made under the terms of the Company’s Stock Award Plan or a successor plan and will be subject to the terms and conditions of such plan and the applicable award agreement. +Any unvested restricted stock granted to non-employee Directors will vest in their entirety immediately upon the occurrence of a “change of control” of the Company. A “change of control” means a change of control that would be required to be reported under the Securities Exchange Act of 1934, as amended, and would be deemed to have occurred at such time as (i) any person, or more than one person acting as a group within the meaning of Section 409A of the Code, acquires ownership of stock of the Company that, together with stock held by such person or group, constitutes more than 50 percent of the total fair market value or total voting power of the stock of the Company; (ii) any person, or more than one person acting as a group within the meaning of Section 409A of the Code, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition) ownership of stock of the Company possessing 30 percent or more of the total voting power of the Company’s stock; (iii) a majority of the members of the Board is replaced during any 12-month period by Directors whose appointment or election is not endorsed by a majority of the members of the Board before the date of the appointment or election; or (iv) a person, or more than one person acting as a group within the meaning of Section 409A of the Code, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition) assets from the Company that have a total gross fair market value equal to or more than 40 percent of the total gross fair market value of all the assets of the Company immediately before such acquisition or acquisitions. In addition, if a non-employee Director leaves the Board for any reason other than a change of control, prior to the end of the vesting period for the Annual Grant of restricted stock, such award shall immediately vest on a pro-rata basis based on the actual duration of such Director’s service to the Board during such vesting period. +DEFERRED COMPENSATION +Non-employee Directors are permitted to defer all or a portion of the fees and grants of restricted stock under the Company’s Non-Qualified Deferred Compensation Plan, on terms similar to those applicable to our officers. +57 +DIRECTOR COMPENSATION DURING 2019 +The following table summarizes information related to compensation of non-employee Directors during the fiscal year ended December 31, 2019: +Name 1, 2 +Fees +Earned +or Paid +in Cash 3 +($) +Stock +Awards 4 +($) +Option +Awards +($) +Non-Equity +Incentive Plan +Compensation +($) +Change in +Pension +Value and +Nonqualified +Deferred +Compensation +Earnings +All Other +Compensation +($) +Total ($) +Mara G. Aspinall +$ +65,000 +$ +104,999 +— +— +— +— +$ +169,999 +Michael Celano +$ +90,000 +$ +129,998 +— +— +— +— +$ +219,998 +James A. Datin +$ +24,976 +$ +100,001 +— +$ +124,977 +Eamonn P. Hobbs +$ +78,306 +$ +104,999 +— +— +— +— +$ +183,305 +Ronny B. Lancaster +$ +80,000 +$ +104,999 +— +— +— +— +$ +184,999 +Charles W. Patrick +$ +66,764 +$ +104,999 +— +— +— +— +$ +171,763 +Aradhana Sarin, M.D. +$ +80,000 +$ +104,999 +— +— +— +— +$ +184,999 +David J. Shulkin, M.D. +— +— +— +— +— +— +— +1 +Because Dr. Tang is an officer of the Company, he is not entitled to any separate compensation for service on the Board or any Committee thereof and has not been included in this table. Mr. Datin became a Director in August 2019 and Dr. Shulkin became a Director in April 2020. +2 +Non-employee Directors held the following number of unvested shares of restricted stock (“RS”) and stock options (“SOs”) at December 31, 2019: Ms. Aspinall: 12,382 RS; Mr. Celano: 15,330 RS; 6,667 SOs; Mr. Hobbs: 12,382 RS; Mr. Lancaster: 12,382 RS; Mr. Patrick: 12,382 RS; Dr. Sarin: 12,382 RS; 1,667 SOs and Mr. Datin: 13,432 RS. The aggregate number of stock options and restricted shares held by Dr. Tang are set forth in the table in the Section entitled, “Outstanding Equity Awards,” in this Proxy Statement. +3 +The indicated amounts earned by Dr. Sarin were deferred into the Company’s Nonqualified Deferred Compensation plan and no cash payments were made. +4 +The indicated amounts reflect the aggregate grant date fair value of restricted stock awards made to non-employee Directors during 2019, computed in accordance with FAS ASC Topic 718. +58 +PROPOSALS REQUI RING YOUR VOTE +PROPOSAL NO. 1. ELECTION OF DIRECTORS +Background +At the Annual Meeting, you will be asked to vote on the election of two Directors. A majority of the independent members of the Board have nominated Mara G. Aspinall and Ronny B. Lancaster for election as Class II Directors, for terms expiring at the Annual Meeting of Stockholders in 2023. +We do not know of anything that would preclude any nominee from serving. However, should any nominee for any reason become unable or unwilling to serve as a Director, the persons named in the enclosed Proxy Card will vote the shares represented by each Proxy for such substitute nominee as the Board may approve. +Aradhana Sarin, M.D. joined our Board as a Class II Director in 2018. Dr. Sarin recently informed us that she has decided to leave the Board so that she can focus on her responsibilities as Chief Financial Officer at Alexion Pharmaceuticals. As a result, Dr. Sarin will not stand for re-election at the Annual Meeting with the other Class II Directors. The Board and the Company would like to thank Dr. Sarin for her many contributions as a member of the Board and wish her well in her future endeavors. +Each of the nominees for election as Directors is presently a member of our Board and has consented to continue to serve if re-elected to the Board. Ms. Aspinall joined the Board in 2017 and serves as a member of the Audit Committee and Compensation Committee. Mr. Lancaster joined the Board in 2003 and serves as the Chairman of the Compensation Committee and as a member of the Nominating and Corporate Governance Committee. +Any vacancy that occurs on the Board that results from an increase in the number of Directors may be filled by the affirmative vote of a majority of the Directors then in office, and any other vacancy on the Board may be filled by the affirmative vote of a majority of the Directors then in office, even though less than a quorum of the Board, or by a sole remaining Director. +Certain information with respect to each person nominated for election as a Director and each person whose term of office as a Director will continue after the Annual Meeting, including the particular experience, qualifications, attributes and skills they possess that led to the conclusion that they should serve as a Director, is set forth below. +Name +Principal Occupation +Age +Director +Since +Class I (Directors Whose Terms Expire in 2022): +Eamonn P. Hobbs +President of Hobbs Medical Ventures, LLC +61 +2016 +David J. Shulkin, MD +President and Chief Executive Officer, Shulkin Solutions, Inc. +60 +2020 +Stephen S. Tang, Ph.D. +President and Chief Executive Officer, OraSure Technologies, Inc. +59 +2011 +Class II (Nominees With Terms Expiring in 2023): +Mara G. Aspinall +President & Chief Executive Officer, Health Catalysts Group +57 +2017 +Ronny B. Lancaster +Former Senior Vice President for Federal Government Relations of +Assurant, Inc. +68 +2003 +Class III (Directors Whose Terms Expire in 2021): +Michael Celano +Chief Financial Officer, The Columbus Organization +61 +2006 +Charles W. Patrick +Principal, Patrick Consulting +65 +2006 +James A. Datin +President & Chief Executive Officer, BioAgilytix Labs LLC +54 +2019 +59 +Eamonn P. Hobbs +Independent Director +Director since: 2016 +Class I Director +Term Expires: 2022 +Age : 61 +Other Current +Public Company +Directorships : None +Eamonn P. Hobbs joined the Board in 2016. Mr. Hobbs serves as President of Hobbs Medical Ventures, LLC, a consulting company he founded in the healthcare field. In March 2018, he co-founded and serves as Chairman of the Board and CEO of ImmunSYS, Inc. a company that is developing a new immunotherapy for late stage metastatic prostate cancer. From December 2016 to June 2017, Mr. Hobbs served as President and CEO of Digital Cognition Technologies, Inc., an early stage medical device company. From July 2014 to January 2016, Mr. Hobbs served as the President and Chief Executive Officer of Antares Pharma, Inc., a specialty pharmaceutical company focused on self-injection pharmaceutical products and technologies. He also served on the Antares board of directors from 2009 to 2016. From 2009 to 2013, Mr. Hobbs served as President and Chief Executive Officer, and from 2008 to 2013 was a member of the board of directors, of Delcath Systems, Inc., a specialty pharmaceutical and medical device public company specializing in cancer treatment. Prior to Delcath Systems, Inc., Mr. Hobbs served as President and Chief Executive Officer of AngioDynamics, Inc., a company he co-founded in 1988 as a division of E-Z-EM, Inc. which grew into a leading medical technology public company with a highly diverse product line. From 1988 to 2004, Mr. Hobbs also served as Executive Vice President of Business Development of E-Z-EM, Inc., a NASDAQ-traded company. Before joining AngioDynamics, Mr. Hobbs was Director of Marketing and Product Development at NAMIC; founder, President and Chief Executive Officer of Hobbs Medical, Inc.; and a Product Development Engineer at Cook Incorporated. Mr. Hobbs received a B.S. in Plastics Engineering with a Biomaterials emphasis at the University of Massachusetts (Lowell). Mr. Hobbs has served on the Board of Directors of the Medical Device Manufacturers Association since 2009. +Skills and Qualifications leading to conclusion that he should serve on the Board: +• Executive-level management experience as CEO of several public companies. +• Extensive experience in the medical device, pharmaceutical and combination products industries. +• Extensive experience managing operations in a cost-effective, efficient manner. +• Experience with governance and policy development for the medical device industry. +David J. Shulkin, M.D. +Independent Director +Director since: 2020 +Class I Director +Term Expires: 2022 +Age : 60 +Other Current +Public Company +Directorships : None +David J. Shulkin, M.D. joined the Board in 2020. Since 2018, he has served as President and Chief Executive Officer of Shulkin Solutions, Inc., a company that promotes innovation in healthcare and advocates for veterans and underserved populations. From 2015 through 2018, Dr. Shulkin served in various capacities at the U.S. Department of Veterans Affairs (the “VA”), including as Secretary of the VA from 2017 to 2018 and as Under Secretary for Health from 2015 to 2017. Prior to his tenure at the VA, he served in executive leadership positions at Morristown Medical Center, Beth Israel Medical Center, Temple University Hospital, Drexel University School of Medicine, Doctor Quality, Inc. and the University of Pennsylvania Health System and Hospital of the University of Pennsylvania. Dr. Shulkin received a B.A. from Hampshire College and his M.D. from the Medical College of Pennsylvania. He also completed residencies in Internal Medicine at Yale University School of Medicine and University of Pittsburgh School of Medicine, was a Fellow in General Medicine at the University of Pittsburgh School of Medicine and was a Robert Wood Johnson Foundation Clinical Scholar at the University of Pennsylvania School of Medicine. He is certified by the American Board of Internal Medicine. +Skills and Qualifications leading to conclusion that he should serve on the Board: +• Expertise in medical matters and public health. +• Expertise in government affairs. +. +• Executive-level management experience. +60 +Stephen S. Tang, Ph.D. +Director +Director since: 2011 +Class I Director +Term Expires: 2019 +Age : 59 +Other Current +Public Company +Directorships : None +For biographical information on Dr. Tang, see the Section entitled, “Executive Officers,” in this Proxy Statement. +Skills and Qualifications leading to conclusion that he should serve on the Board: +• Extensive business experience, particularly in the life sciences industry. +• Experience with strategic and business development matters. +• Executive-level management experience. +Mara G. Aspinall +Independent Director +Director since: 2017 +Class II Nominee +Term Expires: 2020 +Age : 57 +Other Current +Public Company +Directorships : 2 +Mara G. Aspinall joined the Board in June 2017. Since 2014, she has served as the President and Chief Executive Officer of Health Catalysts Group, a consulting firm that focuses on growth of early stage life science and technology companies. Ms. Aspinall is also Managing Director of BlueStone Venture Partners, a venture capital firm dedicated to investing in life sciences and healthcare related companies. Prior to these positions, Ms. Aspinall served as President and CEO, Global Head of Roche Tissue Diagnostics/Ventana Medical Systems, a division of The Roche Group that provides tissue-based cancer diagnostic instruments, products and services. Prior to that, she founded and served as CEO and Director of On-Q-ity, Inc., a diagnostic research company focused on improving cancer treatment through the capture of circulating tumor cells in a patient’s blood. Ms. Aspinall also spent 12 years with Genzyme Corporation, serving as President of the Genzyme Genetics division, a leading provider of esoteric and genetic tests for the reproductive, oncology and personalized medicine markets, and as President of the Genzyme Pharmaceuticals division, a custom pharmaceutical intermediates provider. Ms. Aspinall began her career as a management consultant with Bain & Company. Ms. Aspinall holds an M.B.A from Harvard Business School and a B.A. in International Relations from Tufts University. Ms. Aspinall previously served on the Board at Safeguard Scientific and currently serves on the Boards of Abcam Plc and Allscripts. +Skills and Qualifications leading to conclusion that she should serve on the Board: +• Executive level experience as a CEO. +• Executive experience in the life sciences industry. +• Extensive experience in molecular diagnostics. +61 +Ronny B. Lancaster +Independent Director +Director since: 2003 +Class II Nominee +Term Expires: 2020 +Age : 68 +Other Current +Public Company +Directorships : None +Ronny B. Lancaster became a member of the Board in May 2003. From September 2005 to December 2018, Mr. Lancaster served as Senior Vice President, Federal Government Relations of Assurant, Inc., a provider of specialty insurance and insurance-related products and services. Prior to that, Mr. Lancaster served as Chief Operating Officer of the Morehouse School of Medicine, Executive Assistant to the Secretary and Principal Deputy Assistant Secretary for Planning and Evaluation at the U.S. Department of Health and Human Services, General Counsel of Hamilton Enterprises, Inc., Senior Washington Representative for Blue Cross/Blue Shield Association, and Chief of the Division of Fee-For-Service Plans at the U.S. Office of Personnel Management. Mr. Lancaster received a B.A. in Economics from the Catholic University of America, an M.B.A. from the Wharton School of the University of Pennsylvania, and a J.D. from The Georgetown University Law Center. He is admitted to the Bars of Pennsylvania and the District of Columbia. Mr. Lancaster previously served on the board of directors of Immucor, Inc. +Skills and Qualifications leading to conclusion that he should serve on the Board: +• Expertise in government affairs and political matters. +• Extensive medical and healthcare experience. +• Legal training. +Aradhana M. Sarin, M.D. +Independent Director +Director since: 2018 +Class II Director +Term Expires: 2020 +Age : 45 +Other Current +Public Company +Directorships : None +Aradhana Sarin, M.D. became a member of the Board in January 2018. Since February 2019, Dr. Sarin has served as the Executive Vice President, Chief Financial Officer for Alexion Pharmaceuticals, a global biopharmaceutical company. Prior to that, since joining Alexion in November 2017, she served as Executive Vice President, Chief Strategy and Business Officer; and Senior Vice President, Head of Corporate Business Development and Strategy. Prior to her tenure at Alexion, Dr. Sarin served as the Managing Director of Healthcare Corporate & Investment Banking at Citi Global Banking, focusing on clients in the diagnostics, life sciences and biopharmaceutical sectors. Earlier in her career, Dr. Sarin also held various other positions in the investment banking industry, including with UBS and JP Morgan. Prior to her career in investment banking, Dr. Sarin spent two years as a medical resident practicing in both India and Africa. Dr. Sarin received her M.B.A. from Stanford Business School and obtained her medical training from the University of Delhi in India. +Skills and Qualifications leading to conclusion that she should serve on the Board: +• Extensive experience in the healthcare and life sciences sectors. +• Scientific and medical background and experience. +• Extensive experience at global financial institutions, involving M&A and equity and debt financing transactions. +• Extensive knowledge of global healthcare systems. +62 +Michael Celano +Independent Director +Director since: 2006 +Class III Director +Term Expires: 2021 +Age : 61 +Other Current Public Company Directorships : None +Michael Celano became a member of the Board in October 2006 and has served as the Company’s Chairman of the Board since April 2018. Mr. Celano has served as the Chief Financial Officer of The Columbus Group since January 2020. From January 2018 to May 2019, Mr. Celano served as the Chief Operating Officer of Recro Pharma, Inc. and from July 2016 to January 2018, Mr. Celano served as Chief Financial Officer. Between 2015 and June 2016 Mr. Celano was self-employed providing consulting services to healthcare companies. From 2013 to 2015, Mr. Celano served as Chief Financial Officer of DrugScan, Inc. a clinical laboratory services company. Prior to that, Mr. Celano served as the Chief Financial Officer of Kensey Nash Corporation, a biomaterials company from 2009 to 2012. From 2007 to 2008, Mr. Celano also served as Chief Financial Officer for BioRexis Pharmaceutical Corporation, a biopharmaceutical company. Before joining BioRexis, Mr. Celano served as a partner with KPMG LLP, where he was co-leader of its National Life Science Practice. Mr. Celano also was co-leader of the Life Science Practice for Arthur Andersen before he joined KPMG. Mr. Celano previously served on the Board of Directors of Performance Health, a consumer health care product manufacturing company from 2015 to 2016. Mr. Celano holds a B.S. in Accounting from St. Joseph’s University. +Skills and Qualifications leading to conclusion that he should serve on the Board: +• Long career in public accounting focused in the life sciences area. +● Life sciences industry operating company experience. +• Accounting and financial expertise. +• Extensive business experience. +James A. Datin +Independent Director +Director since: 2019 +Class III Director +Term Expires: 2021 +Age : 54 +Other Current Public Company Directorships : 1 +James A. Datin became a member of the Board in August 2019. Since November 2013, Mr. Datin has served as President & Chief Executive Officer of BioAgilytix Labs, LLC, a leading global bioanalytical contract research organization. From September 2005 to July 2013, Mr. Datin served as Executive Vice President and Managing Director at Safeguard Scientifics, Inc., a company focused on providing capital and advice to technology driven businesses in healthcare, financial services and digital media. Prior to that time, Mr. Datin served as Chief Executive Officer of Touchpoint Solutions, Inc., a remote management and monitoring company serving the medical, imaging, print, retail and other industries. He has also held senior leadership positions at Dendrite International, Inc., GlaxoSmithKline PLC, the Isuta Holdings Group of companies, Baxter and other companies. Mr. Datin currently serves on the Board of FSD Pharma and previously served on the Boards of Clarient, Inc., Intralinks Holdings, Inc. and NuPathe Inc. Mr. Datin received a B.B.A. at Marshall University, an M.B.A. at the University of New Haven and an Advanced Management Degree at The Wharton School at The University of Pennsylvania. +Skills and Qualifications leading to conclusion that he should serve on the Board: +● Extensive life science and business experience. +● Executive leadership experience. +● Strong M&A background. +● Operations and financial experience. +63 +Charles W. Patrick +Independent Director +Director since: 2006 +Class III Director +Term Expires: 2021 +Age : 65 +Other Current Public Company Directorships : None +Charles W. Patrick became a member of the Board in January 2006. Since 2000, Mr. Patrick has served as Principal of Patrick Consulting, a management consulting firm that helps diagnostic, medical device and technology companies develop sales, marketing and distribution strategies. From 2001 through 2011, Mr. Patrick also served as the President and Co-owner of ADS Golf, Inc. Prior to that time, he served as the President and Chief Executive Officer of CallNexus, Inc., a provider of virtual call center services, and Vice President of Sales and Marketing for Biosite, Inc., a medical diagnostics company, where he had primary responsibility for developing and achieving Biosite’s strategic sales, marketing and distribution objectives. Prior to his time at Biosite, Mr. Patrick served as World Wide Group Marketing Manager and held several other sales and marketing positions for the Diagnostics Division of Abbott Laboratories. Mr. Patrick also previously served on the board of directors for DiaDexus, Inc., Accumentrics, Inc. and Seamless Medical Systems, Inc. Mr. Patrick received his undergraduate degree from the University of Central Florida. +Skills and Qualifications leading to conclusion that he should serve on the Board: +• Extensive sales and marketing background. +• More than 40 years of experience in the medical diagnostics industry. +• Entrepreneurial skills. +Vote Required; Board Recommendation +If a quorum is present, each nominee will be elected if he or she receives a majority of the votes cast by shares present in person or by Proxy and entitled to vote at the Annual Meeting. Shares voted in person or represented by proxy which are not voted for a nominee (by voting no or abstaining) will have the effect of voting against the nominee. Broker non-votes will have no effect on the required vote. In the absence of instructions to the contrary, shares of Common Stock represented by properly executed Proxies will be voted for the nominees, each of whom has consented to be named and to serve if elected. +Your Board recommends that you vote FOR the election of the Director nominees. +PROPOSAL NO. 2. RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC +ACCOUNTING FIRM +Background +The Audit Committee of the Board of Directors has approved the reappointment of KPMG LLP (“KPMG”) as our independent registered public accounting firm for the 2020 fiscal year. The Audit Committee has also recommended that the Board submit the appointment of KPMG for ratification by stockholders at the Annual Meeting. Although action by the stockholders on this matter is not legally required, the Audit Committee and the Board believe it is appropriate to seek stockholder ratification of this appointment in light of the important role played by the independent registered public accounting firm in reporting on the Company’s consolidated financial statements. If this appointment is not ratified by stockholders, the Audit Committee may reconsider its appointment of KPMG for the 2020 fiscal year or in the future. +One or more representatives of KPMG are expected to attend the Annual Meeting electronically. They will have an opportunity to make a statement and will be available to respond to appropriate questions. +64 +Vote Required; Boa rd Recommendation +Ratification of the appointment of KPMG requires the affirmative vote of a majority of shares present in person or by Proxy and entitled to vote at the Annual Meeting. Shares voted in person or represented by Proxy which are not voted for this ratification (by voting no or abstaining) will have the effect of voting against this proposal. In the absence of instructions to the contrary, shares of Common Stock represented by properly executed Proxies will be voted for ratification of the appointment of KPMG as our independent registered public accounting firm for the 2020 fiscal year. +Your Board recommends that the stockholders vote FOR ratification of the appointment of KPMG. +PROPOSAL NO. 3. ADVISORY (NON-BINDING) VOTE TO APPROVE EXECUTIVE COMPENSATION +Background +Section 14A of the Exchange Act, enacted pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank Act”), requires that stockholders be given the opportunity to vote to approve, on an advisory (non-binding) basis, no less frequently than once every three years, the compensation of our NEOs. Based on feedback received at our 2017 Annual Meeting, the Board determined that such a vote will continue to be held on an annual basis until the next advisory vote on frequency. +The vote on the resolution recommended below is not intended to address any specific element of compensation, but rather relates to the overall compensation of our NEOs. As described more fully under the CD&A Section of this Proxy Statement and the related tables and narrative, our compensation program is performance-based and is designed to pay executives for performance by offering rewards for the achievement of pre-determined objectives. In addition, our program is designed to align the interests of executives with the interests of our stockholders, provide long-term incentives and set compensation at levels sufficiently competitive to attract, retain and motivate high quality executives, and meet strong corporate governance principles. You are urged to carefully review the CD&A Section of this Proxy Statement which contains a detailed discussion of our executive compensation program, including the 2019 compensation of our NEOs. +Compensation Program Features +As described more fully in the CD&A, there are many important features to our compensation program that illustrate our commitment to pay-for-performance and good corporate governance. A summary of some of the more significant of these features is set forth below: +• +Compensation is market driven and performance-based. +• +Total compensation targeted at 50 th percentile of Peer Group. +• +Balanced mix of cash/equity, fixed/variable, short-term/long-term compensation components. +• +Use of peer company benchmarking and tally sheets. +• +Threshold financial performance objectives for annual bonus pool funding meet or exceed fiscal performance for the prior fiscal year. +• +Compensation recoupment policy. +• +Equity awards provide long-term incentive with three year vesting. +• +No hedging or pledge of our Common Stock. +• +50% of annual equity is performance-vested. +• +Robust stockholder outreach on compensation/governance matters. +Vote Required; Board Recommendation +If a quorum is present, the affirmative vote of a majority of shares present, in person or by Proxy and entitled to vote at the Annual Meeting, is required to approve, on an advisory (non-binding) basis, the compensation paid to NEOs. Shares voted in person or represented by Proxy which are not voted for approval of our executive compensation (by voting no or abstaining) will have the effect of voting against this proposal. Broker non-votes will not count toward the determination of whether this proposal is approved and will have no impact on the vote. In the absence of instructions to the contrary, shares of Common Stock represented by properly executed Proxies will be voted for approval of our executive compensation, as disclosed in this Proxy Statement. Because this stockholder vote is advisory, it will not be binding on the Company or the Board of Directors. However, the Compensation Committee and Board will take into account the outcome of the vote when considering future executive compensation programs and arrangements. +65 +Based on the foregoing, the Board is requesting that stockholders vote on the following resolution: +RESOLVED , that the compensation paid to the Company’s named executive officers, as disclosed in the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED. +Your Board recommends that the stockholders vote FOR the approval of our executive compensation as described in the preceding resolution. +PROPOSAL NO. 4. AMENDMENT AND RESTATEMENT OF STOCK AWARD PLAN +General +Effective September 29, 2000, in connection with the merger of Epitope and STC Technologies, Inc. into the Company (the “Merger”), the Company adopted the Epitope, Inc. 2000 Stock Award Plan, which was subsequently renamed the OraSure Technologies, Inc. Stock Award Plan (the “Stock Award Plan” or the “Plan”). +Since the Merger, the Company’s Stock Award Plan has been amended several times to increase the number of authorized shares, subject to stockholder approval, and to make certain additional amendments. Under the terms of the Plan, as of April 4, 2020, there were: +(a) +668,183 shares of the Company’s Common Stock remaining available for grant under the Plan as stock options or other equity awards; +(b) +1,660,489 stock options issued and outstanding, with a weighted-average exercise price of $9.64 per share and a weighted average remaining contractual term of 6.9 years; +(c) +755,237 restricted shares issued and unvested, with a weighted-average grant date fair value of $9.37 per share; and +(d) +637,030 restricted units issued and unvested, with a weighted-average grant date for value of $11.16 per share. +In light of the foregoing, the Board has approved and recommended for submission to stockholders an amendment and restatement of the Stock Award Plan to increase in the number of shares of Common Stock authorized for grant under the Plan. A description of the proposed amendment and terms of the Stock Award Plan are set forth below. +Amendment of Stock Award Plan. +In order to enable the Company to continue to attract and retain qualified Directors, officers, employees and outside advisors and to compensate its Directors, officers, employees and advisors in a manner that is competitive with compensation provided by other medical diagnostic companies, the Board has determined that additional shares of Common Stock would need to be authorized for grants under the Stock Award Plan. The Board believes that the proposed increase in the number of shares is necessary for retaining the flexibility to grant equity-based compensation at optimal levels to motivate and reward the Company’s Directors, officers, employees and advisors for their contributions to the success of the Company and the growth in the value of our stock. In addition, the Board wants to ensure that sufficient shares are available if needed to provide retention or other equity awards in connection with potential acquisitions or other business development activities. +Accordingly, subject to stockholder approval, the Board approved an amendment and restatement of the Stock Award Plan to increase the number of authorized shares by 5,000,000 shares (the “Amendment”). If the Amendment is approved by the stockholders, there will be a total of 5,668,183 shares available under the Stock Award Plan on or after April 4, 2020. The Stock Award Plan provides that any shares granted pursuant to the Plan as “full value” shares (i.e. restricted awards, performance awards or other stock-based awards) shall be counted against the total available shares on the basis of one and a half shares for every such “full value” share granted. In approving the Amendment, the Board considered various aspects of the Stock Award Plan, including the number of shares subject to outstanding awards, the number of shares that remain available for future awards under the Plan, the Company’s historic grant rates, the cost of issuing additional shares, the impact of share dilution on existing stockholders, and the central role of equity compensation in our executive compensation program, as described more fully in the CD&A section of this Proxy Statement. +66 +Our Board recognizes the impact of dilution on our stockholders and has evaluated this share request very carefully in the context of the need to motivate, retain and ensure our leadership team is focused on our strategic and long-term growth priorities. Equity is an important component of a compensation program that aligns with our strategy of achieving long-term sustainable growth. The shares of Common Stock being requested for approval pursuant to the Amendment represent approximately 8.03 % of the fully diluted shares of our Common Stock as of March 31, 2020. Our Board believes that the increase in shares of Common Stock available for issuance to employees represents a reasonable amount of potential equity dilution given our strategic, human capital and long-term growth priorities. +Because grants of future awards are based on a number of factors, including the achievement of both business and individual performance goals, the Board cannot currently predict the rate at which shares will become subject to future grants. However, the Board determined that the proposed increase in authorized shares will meet the Company’s needs under the Stock Award Plan for the foreseeable future. A copy of the Amended and Restated Stock Award Plan is attached to this Proxy Statement as Exhibit A. +Summary of Amended and Restated Plan +A summary description of certain terms and provisions of the Stock Award Plan follows. Defined terms that are not otherwise defined herein are as defined in the Plan. +Purpose +The purpose of the Stock Award Plan is to promote and advance the interests of the Company and its stockholders by enabling the Company to attract, retain, and reward employees, outside advisors, and Directors of the Company and any subsidiaries. The Stock Award Plan is intended to strengthen the mutuality of interests between employees, advisors, and Directors and the Company’s stockholders by offering equity‑based incentives to promote the long-term growth, profitability and financial success of the Company. +Eligibility +The Stock Award Plan provides for stock‑based awards (“Awards”) to (i) employees of the Company and any subsidiaries, if any (ii) members of advisory committees or other consultants to the Company or its subsidiaries (“Advisors”), and (iii) non-employee Directors of the Company. Persons who help the Company raise money by selling securities or who promote or maintain a market for the Company's securities are not eligible to participate in the Stock Award Plan as Advisors. In addition, only Advisors who, in the judgment of the Compensation Committee of the Board (the “Committee”), are or will be contributors to the long-term success of the Company, will be eligible to receive Awards (as defined below). As of March 27, 2020, the Company and its subsidiaries had 475 employees and seven (7) non-employee Directors, all of whom are eligible to receive Awards under the Plan. +Administration of the Stock Award Plan +The Committee administers the Stock Award Plan and determines the persons who are to receive Awards and the types, amounts, and terms of Awards. For example, the Committee may determine the exercise price, the form of payment of the exercise price, the number of shares subject to an Award, and the date or dates on which an Award becomes exercisable. The Committee may delegate to one or more officers of the Company the authority to determine the recipients of and the types, amounts and terms of Awards granted to participants who are not subject to the reporting requirements of Section 16(a) of the Securities Exchange Act of 1934, as amended. Awards made by the Committee for the Company’s Chief Executive Officer are also reviewed and approved by the full Board. +The Stock Award Plan will continue in effect until February 21, 2027 or until the Plan is otherwise terminated by the Board. Termination or expiration of the Plan will not affect outstanding Awards. +The Stock Award Plan permits the Board to amend, suspend or terminate the Plan or any portion of the Plan. Stockholder approval is required if (i) any such action would increase the number of shares of Common Stock subject to the Plan, (ii) such action would decrease the price at which Awards may be granted, (iii) such action would result in an Award becoming fully vested, exercisable or earned in the event of a change in control prior to the consummation of the change in control or (iv) such approval is required by law or regulation or the rules of a stock exchange or over-the-counter trading system. +67 +Awards +Awards that may be granted under the Stock Award Plan include stock options, stock appreciation rights, restricted awards, performance awards, and other stock‑based awards. The following is a brief summary of the various types of Awards that may be granted under the Plan. +Stock Options . Options granted under the Stock Award Plan may be either incentive stock options ("ISOs"), a tax-favored form of Award meeting the requirements of Section 422 of the Internal Revenue Code, as amended, or nonqualified options (“NQOs”), which are not entitled to special tax treatment. The Stock Award Plan limits the maximum term of any option granted to a period not longer than ten years from the date of grant. The exercise price of any option granted under the Plan may not be less than 100% of the fair market value of the Common Stock on the date of grant, except that in the case of an option granted to holders of 10% or more of the Company’s voting securities, the exercise price may not be less than 110% of the fair market value of the Common Stock on the date of grant. +The agreement evidencing the grant of a stock option (the “Option Agreement”) will specify, as determined by the Committee, the time or times when the option is exercisable, in whole or in part, and the extent to which the option remains exercisable after the option holder ceases to be an employee, Advisor or nonemployee Director of the Company. The Option Agreement may, in the discretion of the Committee, provide whether the option will become fully exercisable upon the death, disability or retirement of the option holder or upon a change in control of the Company. As a general matter, the option holder may not transfer an option except by testamentary will or the laws of descent and distribution. An option may be exercised by payment of the exercise price in cash or, at the discretion of the Committee, in any combination of cash, previously held shares of Common Stock or share equivalents, or with proceeds from the sale of shares subject to the option. +A “change in control” generally is defined to take place when disclosure of such a change would be required by the proxy rules promulgated by the SEC or when: +• +any person, or more than one person acting as a group within the meaning of Section 409A of the Internal Revenue Code (the “Code”) and the regulations issued thereunder, acquires ownership of stock of the Company that, together with stock held by such person or group, constitutes more than 50 percent of the total fair market value or total voting power of the stock of the Company; +• +any person, or more than one person acting as a group within the meaning of Code Section 409A and the regulations issued thereunder, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition) ownership of stock of the Company possessing 30 percent or more of the total voting power of the Company’s stock; +• +a majority of the members of the Board is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board before the date of the appointment or election; or +• +a person, or more than one person acting as a group within the meaning of Code Section 409A and the regulations issued thereunder, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition) assets from the Company that have a total gross fair market value equal to or more than 40 percent of the total gross fair market value of all the assets of the Company immediately before such acquisition or acquisitions. +Options granted to employees under the Stock Award Plan generally vest over four years, with 25% of the grant vesting on the first anniversary of the grant date and the remaining 75% vesting ratably on a monthly basis over the next three years. Options granted to non-employee Directors in the past have generally vested ratably on a monthly basis over either a 12 or 24-month period, depending on the type of grant. Options granted under the Plan generally provide for accelerated vesting upon a “change in control.” The Committee may provide for different vesting for any option granted under the Plan. +In no event may options for more than 500,000 shares of Common Stock be granted to any individual under the Stock Award Plan during any fiscal year period. +Stock Appreciation Rights . A recipient of stock appreciation rights ("SARs”) will receive, upon exercise, a payment (in cash or in shares of Common Stock) based on the increase in the fair market value of a share of Common Stock between the date of grant and the date of exercise. SARs may be granted in connection with options or other Awards granted under the Stock Award Plan or may be granted as independent Awards. The Plan limits the maximum term for the exercise of a +68 +SAR to a period not longer than ten years from the date of grant. In no event may SARs for more than 500,000 shares of Common Stock be granted to any individual under the Plan during any fiscal year period. +Restricted Awards . Restricted Awards may take the form of restricted shares or restricted units. Restricted shares are shares of Common Stock that may be subject to forfeiture if the recipient terminates employment or service as an Advisor or non-employee Director during a specified period (the “Restriction Period”). Stock certificates representing restricted shares are issued in the name of the recipient, but are held by the Company until the expiration of the Restriction Period. From the date of issuance of restricted shares, the recipient is entitled to the rights of a stockholder with respect to the shares, including voting and dividend rights. Any right to receive dividends on restricted shares shall be subject to the same forfeiture requirements applicable to the restricted shares. Restricted units are Awards that entitle the recipient to receive a share of Common Stock or the fair market value of a share at some future date, which similarly may be subject to forfeiture if the recipient terminates employment or service as an Advisor or non-employee Director during the applicable Restriction Period. Unvested Restricted Awards may not be sold, assigned, transferred, pledged, encumbered or otherwise transferred, voluntarily or involuntarily, by the recipient. +At the expiration of the Restriction Period, payment with respect to restricted units is made in an amount equal to the fair market value of the number of shares of Common Stock covered by the restricted units. Payment may be in cash, unrestricted shares of Common Stock, or any other form approved by the Committee. Restricted Awards that are subject to forfeiture based solely on continued employment or passage of time shall vest over a period of at least three years, subject to certain exceptions set forth in the Stock Award Plan. +Performance Awards . Performance Awards are designated in units equivalent in value to a share of Common Stock. A Performance Award is subject to forfeiture if or to the extent that the Company, a subsidiary, an operating group, or the recipient, as specified by the Committee in the Award, fails to meet performance goals established for a designated performance period, which must have a duration of at least one year. Performance Awards earned by attaining performance goals are paid at the end of a performance period in cash, shares of Common Stock, or any other form approved by the Committee. The number of shares of Common Stock issuable with respect to Performance Awards granted to any individual executive officer may not exceed 150,000 shares for any calendar year. +Other Stock-Based Awards . The Committee may grant other Awards that involve payments or grants of shares of Common Stock or are measured by or in relation to shares of Common Stock. +No Repricing or Exchanges. Since the Merger, neither the Board nor the Committee has taken any action that resulted in the repricing, replacement or repurchase of out-of-the-money Options, SARs or other Awards. No such action can be taken under the Stock Award Plan without the approval of our stockholders. +Shares Subject to the Stock Award Plan +If the Amendment is approved by our stockholders at our 2020 Annual Meeting, there will be 5,668,183 shares available for issuance under the Stock Award Plan as of April 4, 2020. If an Award under the Plan is cancelled or expires for any reason prior to becoming fully vested or exercised or is settled in cash in lieu of shares, or is exchanged for other Awards under the Plan, then all shares covered by such Awards will be made available for future Awards under the Plan. In the event of a change in the Company’s capitalization affecting the Common Stock, including a stock dividend, stock split, recapitalization, merger, consolidation, split-up, combination or exchange of shares or other form of reorganization, the Committee shall make such proportionate adjustments as it may determine, in its sole discretion to be appropriate as a result of such change, to the aggregate number of shares for which Awards may be granted under the Plan, the maximum number of shares which may be sold or awarded to any participant, the number of shares covered by each outstanding Award, and the price per share in respect of outstanding Awards. +Federal Income Tax Consequences +The following discussion summarizes the principal anticipated federal income tax consequences of Awards granted under the Stock Award Plan, to participants and to the Company. +Incentive Stock Options . A recipient of an option does not recognize taxable income upon the grant or exercise of an ISO. If no disposition of shares occurs within two years from the date of grant or within one year from the date of exercise, then (a) upon the sale of the shares, any amount realized in excess of the exercise price is taxed to the option recipient as long‑term capital gain and any loss sustained will be a long-term capital loss, and (b) no deduction is allowed to the Company +69 +for federal income tax purposes. For purposes of computing alternative minimum taxable income, an ISO is treated as an NQO. +If shares of Common Stock acquired upon the exercise of an ISO are disposed of prior to the expiration of the two‑year and one‑year holding periods described above, then (a) the recipient will recognize ordinary income in the year of disposition in an amount equal to the excess (if any) of the fair market value of the shares at exercise (or, if less, the amount realized on a sale of the shares) over the exercise price thereof and (b) the Company would be entitled to deduct such amount. Any further gain realized is taxed as a short-term or long-term capital gain, as applicable, and does not result in any deduction for the Company. Any disqualifying disposition as described above will generally avoid the alternative minimum tax consequences of the exercise of an ISO. +Nonqualified Options . No income is recognized by an option recipient at the time an NQO is granted. Upon exercise, (a) ordinary income is recognized by the option recipient in an amount equal to the difference between the exercise price and the fair market value of the shares on the date of exercise and (b) the Company receives a tax deduction for the same amount. Upon disposition of the shares, appreciation or depreciation in the value of the shares after the date of exercise is treated as a short‑term or long‑term capital gain or loss, as applicable, and will not result in any deduction to the Company. +Payment of Exercise Price in Share s . The Committee may permit participants to pay all or a portion of the exercise price for an option using previously acquired shares of Common Stock. If an option is exercised and payment is made in previously held shares (held for six months or longer), there is no taxable gain or loss to the participant other than any gain recognized as a result of the exercise of the option, as described above. +Stock Appreciation Rights . The grant of a SAR to a participant will not cause the recognition of income by the participant. Upon exercise of a SAR, the participant will recognize ordinary income equal to the amount of cash payable to the participant plus the fair market value of any shares of Common Stock delivered to the participant. The Company will be entitled to a deduction equal to the amount of ordinary income recognized by the participant in connection with the exercise of a SAR. +Restricted Awards and Performance Awards . Generally, a participant will not recognize any income upon issuance of a Restricted Award or Performance Award that is subject to forfeiture. Generally, a participant will recognize ordinary income upon the vesting of Restricted Awards or Performance Awards in an amount equal to the amount of cash payable to the participant plus the fair market value of shares of Common Stock delivered to the participant. Dividends paid with respect to Awards during the Restriction Period will be subject to the same restrictions and will be taxable as ordinary income to the participant when, and if, the restrictions lapse. However, a participant may elect to recognize compensation income upon the grant of restricted shares, based on the fair market value of the shares of Common Stock subject to the Award at the date of grant. If a participant makes such an election, dividends paid with respect to the restricted shares will not be treated as compensation, but rather as dividend income at the time when the restricted shares vest. The Company will be entitled to a deduction equal to the amount of ordinary income recognized by the participant. If a participant who receives an Award of restricted shares makes the special election described above, the Company will not be entitled to deduct dividends paid with respect to the restricted shares. +Limitation on Deductibility of Certain Compensation . Section 162(m) of the Internal Revenue Code generally makes nondeductible to the Company taxable compensation paid to a single individual in excess of $1 million in any calendar year if the individual is the Chief Executive Officer or one of the next four highest-paid executive officers. +Vote Required f or Approval; Board Recommendation +Assuming that a quorum is present, the affirmative vote of the holders of a majority of the shares of Common Stock present, in person or by Proxy at the Annual Meeting, is required for approval of the proposed Amendment. Shares voted in person or represented by a Proxy which are not voted for approval of the Amendment (by voting no or abstaining) will have the effect of voting against this proposal. Shares as to which a broker or other nominee has indicated on a duly executed and returned Proxy or otherwise advised us that it lacks voting authority will have no effect on the vote for this proposal. +Your Board recommends that stockholders vote FOR approval of the Company’s Amended and Restated Stock Award Plan. +70 +ANNUAL REPORT +Our Annual Report to Stockholders for the year ended December 31, 2019 accompanies this Proxy Statement. Following receipt of a written request, we will provide, without charge, a copy of our Annual Report on Form 10-K for the year ended December 31, 2019, as filed with the SEC (including a list briefly describing the exhibits thereto), to any record holder or beneficial owner of our Common Stock on March 27, 2020, the record date for the Annual Meeting, or to any person who subsequently becomes such a record holder or beneficial owner. Requests should be directed to the attention of the Corporate Secretary of the Company at our address set forth in the Notice of Annual Meeting of Stockholders immediately preceding this Proxy Statement. +DEADLINE FOR STOCKHOLDER PROPOSALS +You may submit proposals for inclusion in the proxy materials for the Company’s 2021 Annual Meeting of Stockholders. Any such proposals must meet the stockholder eligibility and other requirements imposed by rules issued by the SEC and must be received by the Company at 220 East First Street, Bethlehem, Pennsylvania 18015, Attention: Corporate Secretary, in accordance with Rule 14a-8 promulgated under the Exchange Act, not later than December 11, 2020. +In addition, our Bylaws provide that a stockholder proposal must meet certain predetermined requirements in order to be considered at the Annual Meeting. These requirements are separate from, and in addition to, the requirements discussed above to have the stockholder proposal included in the proxy materials pursuant to the SEC’s rules and regulations. In order to be considered, a stockholder’s proposal must be made in writing to the Company’s Secretary and must be delivered to or received at our principal executive offices not less than ninety (90) days nor more than one hundred twenty (120) days prior to the meeting. However, if less than one hundred (100) days’ notice or prior public disclosure of the date of the meeting is given or made to stockholders, notice by the stockholder to be timely must be so received no later than the close of business on the tenth (10 th ) day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made, whichever first occurs. The notice to the Secretary must set forth, with respect to each matter the stockholder proposes to bring before the meeting, a brief description of the matter and the reasons for considering that matter at the Annual Meeting. The notice must also include, as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf notice of the proposed business is made: (i) the name and address of the stockholder and such beneficial owner; (ii) any material interest of such stockholder and such beneficial holder in such business; (iii) the class and number of shares of capital stock of the Company which are held of record or beneficially owned by the stockholder and such beneficial owner and any other direct or indirect pecuniary or economic interest in any capital stock of the Company of such stockholder and such beneficial owner, including without limitation, any derivative instrument, swap, option, warrant, short interest, hedge, profit sharing arrangement or borrowed or loaned shares; (iv) a representation that such stockholder intends to appear in person or by proxy at the meeting to propose the business described in its notice; and (v) any other information relating to such business matter that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder. To the extent the Board of Directors or the SEC, or a court of competent jurisdiction, deems these Bylaw provisions to be inconsistent with the right of stockholders to request inclusion of a proposal in the Company’s proxy materials pursuant to Rule 14a-8 promulgated under the Exchange Act, such rule shall prevail. +The SEC has promulgated rules relating to the exercise of discretionary voting authority under proxies solicited by the Board. If a stockholder intends to present a proposal at our 2021 Annual Meeting without inclusion of that proposal in the Company’s proxy materials and written notice of the proposal is not received by the Secretary of the Company by February 24, 2021 (the date that is 45 days before the one-year anniversary of the date on which the Company first sent its proxy materials for the Annual Meeting), or if the Company meets other requirements of the applicable SEC rules and regulations, the proxies solicited by the Board for use at the 2021 Annual Meeting will confer discretionary authority to vote on the proposal should it then be raised at the 2021 Annual Meeting. +BY ORDER OF THE BOARD OF DIRECTORS +Jack E. Jerrett +Secretary +April 9, 2020 +71 +EXHIBIT A +ORASURE TECHNOLOGIES, INC. +STOCK AWARD PLAN +ARTICLE 1 +ESTABLISHMENT AND PURPOSE +(Amended and Restated Effective as of April 4, 2020) +Establishment . Epitope, Inc. established this Plan as the Epitope, Inc. 2000 Stock Award Plan, effective as of February 15, 2000, and the Plan was approved by shareholders of Epitope, Inc. at the 2000 annual shareholders meeting. Effective September 29, 2000, in connection with the merger of Epitope, Inc. with and into OraSure Technologies, Inc., the name of the Plan was changed to the OraSure Technologies, Inc. 2000 Stock Award Plan and the Plan was adopted as a stock award plan of OraSure Technologies, Inc. The Plan was amended and restated, subject to shareholder approval, effective May 16, 2006. The Plan was amended further, subject to shareholder approval, effective May 13, 2008. The Plan again was amended and restated in its entirety, subject to shareholder approval, effective May 17, 2011 and February 12, 2013. The Plan was amended further, subject to shareholder approval, effective May 22, 2014. The Plan was again amended and restated in its entirety, subject to shareholder approval, effective May 16, 2017. +1.1 Purpose . The purpose of the Plan is to promote and advance the interests of Corporation and its shareholders by enabling Corporation to attract, retain, and reward employees, outside advisors, and directors of Corporation and its subsidiaries. It is also intended to strengthen the mutuality of interests between such employees, advisors, and directors and Corporation’s shareholders. The Plan is designed to meet this intent by offering stock options and other equity-based incentive awards, thereby providing a proprietary interest in pursuing the long-term growth, profitability, and financial success of Corporation. +ARTICLE 2 +DEFINITIONS +2.1 Defined Terms . For purposes of the Plan, the following terms have the meanings set forth below: +“ Advisor ” means a natural person who is a consultant to or member of an Advisory Committee of Corporation or a Subsidiary, who provides bona fide services to Corporation and who is neither an employee of Corporation or a Subsidiary nor a Non-Employee Director. “Advisor” excludes any person who provides services to Corporation in connection with the offer or sale of securities in a capital raising transaction or to promote or maintain a market for Corporation’s securities, and any other person excluded from the class of persons to whom securities may be offered pursuant to a registration statement on Form S-8 or any successor form of registration statement. +“ Advisory Committee ” means a scientific advisory committee to Corporation or a Subsidiary. +“ Award ” means an award or grant made to a Participant of Options, Stock Appreciation Rights, Restricted Awards, Performance Awards, or Other Stock-Based Awards pursuant to the Plan. +“ Award Agreement ” means an agreement as described in Section 6.4. +“ Board ” means the Board of Directors of Corporation. +“ Change in Control ” means, unless otherwise provided in the applicable Award Agreement, a change of control of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A pursuant to the Exchange Act; provided, however, that a change of control shall only be deemed to have occurred at such time as (i) any person, or more than one person acting as a group within the meaning of Section 409A of the Code, acquires ownership of stock of the Corporation that, together with stock held by such person or group, constitutes more than 50 percent of the total fair market value or total voting power of the stock of the Corporation; (ii) any person, or more than one person acting as a group within the meaning of Section 409A of the Code, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition) ownership of stock of the Corporation possessing 30 percent or more of the total voting power of the Corporation’s stock; (iii) a majority of the members of the Board is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the +72 +Board before the date of the appointment or election; or (iv) a person, or more than one person acting as a group within the meaning of Section 409A of the Code, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition) assets from the Corporation that have a total gross fair market value equal to or more than 40 percent of the total gross fair market value of all the assets of the Corporation immediately before such acquisition or acquisitions. +“ Code ” means the Internal Revenue Code of 1986, as amended and in effect from time to time, or any successor thereto, together with rules, regulations, and interpretations promulgated thereunder. Where the context so requires, any reference to a particular Code section will be construed to refer to the successor provision to such Code section. +“ Committee ” means the committee appointed by the Board to administer the Plan as provided in Article 3 of the Plan. +“ Common Stock ” means the Common Stock, par value $0.000001 per share, of Corporation or any security of Corporation issued in substitution, in exchange, or in lieu of such stock. +“ Continuing Restriction ” means a Restriction contained in Sections 6.7, 6.8, and 15.4 of the Plan and any other Restrictions expressly designated by the Committee in an Award Agreement as a Continuing Restriction. +“ Corporation ” means OraSure Technologies, Inc., a Delaware corporation, or any successor corporation. As to awards granted or other action taken prior to September 29, 2000, “Corporation” includes Epitope, Inc., as predecessor to OraSure Technologies, Inc. +“ Disability ” means the condition of being “disabled” within the meaning of Section 422(c)(6) of the Code. However, the Committee may change the foregoing definition of “Disability” or may adopt a different definition for purposes of specific Awards. +“ Exchange Act ” means the Securities Exchange Act of 1934, as amended and in effect from time to time, or any successor statute. Where the context so requires, any reference to a particular section of the Exchange Act, or to any rule promulgated under the Exchange Act, shall be construed to refer to successor provisions to such section or rule. +“ Fair Market Value ” means with respect to Common Stock, on a particular day, without regard to any restrictions (other than a restriction which, by its terms, will never lapse): +(1) if the Common Stock is at the time listed or admitted to trading on any stock exchange, the mean between the highest and lowest prices of the Common Stock on the date in question on the principal national securities exchange on which it is then listed or admitted to trading. If no reported sale of Common Stock takes place on the date in question on the principal exchange, then the reported closing asked price of the Common Stock on such date on the principal exchange shall be determinative of “Fair Market Value;” +(2) if the Common Stock is not at the time listed or admitted to trading on a stock exchange, the mean between the highest reported asked price and lowest reported bid price of the Common Stock on the date in question in the over-the-counter market, as such prices are reported in a publication of general circulation selected by the Committee and regularly reporting the market price of Common Stock in such market; or +(3) if the Common Stock is not listed or admitted to trading on any stock exchange or traded in the over-the-counter market, an amount as determined in good faith by the Committee and which shall comply with Section 409A of the Code. +“ Incentive Stock Option ” or “ ISO ” means any Option granted pursuant to the Plan that is intended to be and is specifically designated in its Award Agreement as an “incentive stock option” within the meaning of Section 422 of the Code. +“ Non-Employee Director ” means a member of the Board who is not an employee of Corporation or any Subsidiary. +“ Nonqualified Option ” or “ NQSO ” means any Option granted pursuant to the Plan that is not an Incentive Stock Option. +“ Option ” means an ISO or an NQSO . +“ Other Stock-Based Award ” means an Award as defined in Section 11.1. +“ Participant ” means an employee of Corporation or a Subsidiary, an Advisor, or a Non-Employee Director who is granted an Award under the Plan. +73 +“ Performance Award ” means an Award granted pursuant to the provisions of Article 10 of the Plan, the Vesting of which is contingent on performance attainment. +“ Performance Cycle ” means a designated performance period pursuant to the provisions of Section 10.3 of the Plan. +“ Performance Goal ” means a designated performance objective pursuant to the provisions of Section 10.4 of the Plan. +“ Plan ” means this OraSure Technologies, Inc. 2000 Stock Award Plan, as set forth herein and as it may be amended from time to time. +“ Reporting Person ” means a Participant who is subject to the reporting requirements of Section 16(a) of the Exchange Act. +“ Restricted Award ” means a Restricted Share or a Restricted Unit granted pursuant to Article 9 of the Plan. +“ Restricted Share ” means an Award described in Section 9.1(a) of the Plan. +“ Restricted Unit ” means an Award of units representing Shares described in Section 9.1(b) of the Plan. +“ Restriction ” means a provision in the Plan or in an Award Agreement which limits the exercisability or transferability, or which governs the forfeiture, of an Award or the Shares, cash, or other property payable pursuant to an Award. +“ Retirement ” means: +(a) For Participants who are employees, retirement from active employment with Corporation and its Subsidiaries at or after age 50, or such earlier retirement date as approved by the Committee for purposes of the Plan; +(b) For Participants who are Non-Employee Directors, termination of membership on the Board after attaining age 50, or such earlier retirement date as approved by the Committee for purposes of the Plan; and +(c) For Participants who are Advisors, termination of service as an Advisor after attaining age 50, or such earlier retirement date as approved by the Committee for purposes of the Plan. +However, the Committee may change the foregoing definition of “Retirement” or may adopt a different definition for purposes of specific Awards. +“ Share ” means a share of Common Stock. +“ Stock Appreciation Right ” or “ SAR ” means an Award to benefit from the appreciation of Common Stock granted pursuant to the provisions of Article 8 of the Plan. +“ Subsidiary ” means any “subsidiary corporation” of Corporation within the meaning of Section 424 of the Code, namely any corporation in which Corporation directly or indirectly controls 50 percent or more of the total combined voting power of all classes of stock having voting power. +“ Ten Percent Shareholder ” means a person who on any given date owns, either directly or indirectly (taking into account the attribution rules contained in Section 424(d) of the Code), stock possessing more than 10 percent of the total combined voting power of all classes of stock of the Corporation or any Subsidiary under Section 424(f) of the Code. +“ Vest ” or “ Vested ” means: +(a) In the case of an Award that requires exercise, to be or to become immediately and fully exercisable and free of all Restrictions (other than Continuing Restrictions); +(b) In the case of an Award that is subject to forfeiture, to be or to become nonforfeitable, freely transferable, and free of all Restrictions (other than Continuing Restrictions); +74 +(c) In the case of an Award that is required to be earned by attaining specified Performance Goals, to be or to become earned and nonforfeitable, freely transferable, and free of all Restrictions (other than Continuing Restrictions); or +(d) In the case of any other Award as to which payment is not dependent solely upon the exercise of a right, election, exercise, or option, to be or to become immediately payable and free of all Restrictions (except Continuing Restrictions). +2.2 Gender and Number . Except where otherwise indicated by the context, any masculine or feminine terminology used in the Plan shall also include the opposite gender; and the definition of any term in Section 2.1 in the singular shall also include the plural, and vice versa. +ARTICLE 3 +ADMINISTRATION +3.1 General . Except as provided in Section 3.7, the Plan will be administered by a Committee composed as described in Section 3.2. +3.2 Composition of the Committee . The Committee will be appointed by the Board from among its members in a number and with such qualifications as will meet the independence and other requirements for (i) approval by a committee pursuant to Rule 16b-3 under the Exchange Act, (ii) establishing, administering and certifying performance goals pursuant to Section 162(m) of the Code and (iii) trading or listing securities on the securities exchange or association on which the Common Stock is then traded or listed. The Board may from time to time remove members from, or add members to, the Committee. Vacancies on the Committee, however caused, will be filled by the Board. The initial members of the Committee will be the members of Corporation’s existing Executive Compensation Committee. The Board may at any time replace the Executive Compensation Committee with another Committee. In the event that the Executive Compensation Committee ceases to satisfy the requirements of Rule 16b-3, Section 162(m) of the Code or a securities exchange or association described above in 3.2(iii), the Board will appoint another Committee satisfying such requirements. +3.3 Authority of the Committee . The Committee will have full power and authority (subject to such orders or resolutions as may be issued or adopted from time to time by the Board) to administer the Plan in its sole discretion, including the authority to: +(a) +Construe and interpret the Plan and any Award Agreement; +(b) Promulgate, amend, and rescind rules and procedures relating to the implementation of the Plan; +(c) +With respect to employees and Advisors: +(i) +Select the employees and Advisors who shall be granted Awards; +(ii) +Determine the number and types of Awards to be granted to each such Participant; +(iii) +Determine the number of Shares, or Share equivalents, to be subject to each Award; +(iv) +Determine the option price, purchase price, base price, or similar feature for any Award; and +(v) Determine all the terms and conditions of all Award Agreements, consistent with the requirements of the Plan. +Decisions of the Committee, or any delegate as permitted by the Plan, shall be final, conclusive, and binding on all Participants. +3.4 Action by the Committee . A majority of the members of the Committee will constitute a quorum for the transaction of business. Action approved by a majority of the members present at any meeting at which a quorum is present, or action in writing by all the members of the Committee, will be the valid acts of the Committee. +3.5 Delegation . Notwithstanding the foregoing, the Committee may delegate to one or more officers of Corporation the authority to determine the recipients, types, amounts, and terms of Awards granted to Participants who are not Reporting Persons or “covered employees” within the meaning of Section 162(m) of the Code. +3.6 Liability of Committee Members . No member of the Committee will be liable for any action or determination made in good faith with respect to the Plan, any Award, or any Participant. +3.7 Awards to Non-Employee Directors . The Board or Committee may grant Awards from time to time to Non-Employee +75 +Directors. +3.8 Costs of Plan . The costs and expenses of administering the Plan will be borne by Corporation. +ARTICLE 4 +DURATION OF THE PLAN AND SHARES SUBJECT TO THE PLAN +4.1 Duration of the Plan . This amendment and restatement of the Plan is effective April 4, 2020 . The Plan shall remain in full force and effect until February 21, 2027, or the date it is terminated by the Board. The Board shall have the power to amend, suspend or terminate the Plan as provided in Article 14. Termination of the Plan under Article 14 shall not affect Awards outstanding under the Plan at the time of termination. +4.2 Shares Subject to the Plan . +4.2.1 General . The shares which may be made subject to Awards under the Plan are Shares of Common Stock, which may be either authorized and unissued Shares or reacquired Shares. No fractional Shares may be issued under the Plan. +4.2.2 Number of Shares; Limits . +(a) The maximum number of Shares for which Awards may be granted under the Plan on or after April 4, 2020, is 5,668,183 Shares, plus any Shares that become available as the result of the cancellation or expiration of any Award, subject to adjustment for changes in capitalization affecting the Corporation’ s Common Stock pursuant to Section 13.2 of the Plan. Any Shares granted in connection with Options and Stock Appreciation Rights shall be counted against this limit on the basis of one Share for each Share subject to such Option or Stock Appreciation Right. Any Shares granted in connection with Restricted Awards, Performance Awards or Other Stock-Based Awards shall be counted against this limit on the basis of one and a half Shares for every one Share granted in connection with such Awards. +(b) The maximum number of Shares that may be issued pursuant to paragraph (a) above on or after April 4, 2020, pursuant to Incentive Stock Options, is 5,668,183. Shares, subject to adjustment for changes in capitalization affecting the Corporation’s Common Stock pursuant to Section 13.2 of the Plan. +4.2.3 Availability of Shares for Future Awards . If an Award under the Plan is canceled or expires for any reason prior to having been fully Vested or exercised by a Participant or is settled in cash in lieu of Shares or is exchanged for other Awards, all Shares covered by such Awards will be made available for future Awards under the Plan. In no event shall the following be made available for future awards under the Plan: (a) Shares retained or reacquired by the Corporation in payment of an option price or satisfaction of a withholding tax obligation by a Participant in connection with any Award, (b) Shares repurchased by the Corporation with Option proceeds and (c) Shares covered by an SAR, to the extent the SAR is exercised and settled in Shares and whether or not Shares are actually issued to the Participant upon exercise of the SAR. +ARTICLE 5 +ELIGIBILITY +5.1 Employees and Advisors . Officers and other employees of Corporation and any Subsidiaries (who may also be directors of Corporation or a Subsidiary) and Advisors who, in the Committee’s judgment, are or will be contributors to the long-term success of Corporation will be eligible to receive Awards under the Plan. +5.2 Non-Employee Directors . All Non-Employee Directors will be eligible to receive Awards as provided in Section 3.7 of the Plan. +ARTICLE 6 +AWARDS +6.1 Types of Awards . The types of Awards that may be granted under the Plan are: +(a) +Options governed by Article 7 of the Plan; +(b) +Stock Appreciation Rights governed by Article 8 of the Plan; +(c) +Restricted Awards governed by Article 9 of the Plan; +76 +(d) +Performance Awards governed by Article 10 of the Plan; and +(e) +Other Stock-Based Awards or combination awards governed by Article 11 of the Plan. +In the discretion of the Committee, any Award may be granted alone, in addition to, or in tandem with other Awards under the Plan. +6.2 General . Subject to the limitations of the Plan, the Committee may cause Corporation to grant Awards to such Participants, at such times, of such types, in such amounts, for such periods, with such option prices, purchase prices, or base prices, and subject to such terms, conditions, limitations, and restrictions as the Committee, in its discretion, deems appropriate. Awards may be granted as additional compensation to a Participant or in lieu of other compensation to such Participant. A Participant may receive more than one Award and more than one type of Award under the Plan. +6.3 Nonuniform Determinations . The Committee’s determinations under the Plan or under one or more Award Agreements, including without limitation, (a) the selection of Participants to receive Awards, (b) the type, form, amount, and timing of Awards, (c) the terms of specific Award Agreements, and (d) elections and determinations made by the Committee with respect to exercise or payments of Awards, need not be uniform and may be made by the Committee selectively among Participants and Awards, whether or not Participants are similarly situated. +6.4 Award Agreements . Each Award will be evidenced by a written Award Agreement between Corporation and the Participant. Award Agreements may, subject to the provisions of the Plan, contain any provision approved by the Committee. +6.5 Provisions Governing All Awards . All Awards will be subject to the following provisions: +(a) Alternative Awards . If any Awards are designated in their Award Agreements as alternative to each other, the exercise of all or part of one Award automatically will cause an immediate equal (or pro rata) corresponding termination of the other alternative Award or Awards. +(b) Rights as Shareholders . No Participant will have any rights of a shareholder with respect to Shares subject to an Award until such Shares are issued in the name of the Participant. +(c) Employment Rights . Neither the adoption of the Plan nor the granting of any Award will confer on any person the right to continued employment with Corporation or any Subsidiary or the right to remain as a director of Corporation or a member of any Advisory Committee, as the case may be, nor will it interfere in any way with the right of Corporation or a Subsidiary to terminate such person’s employment or to remove such person as an Advisor or as a director at any time for any reason or for no reason, with or without cause. +(d) Termination of Employment . The terms and conditions under which an Award may be exercised or will continue to Vest, if at all, after a Participant’s termination of employment or service as an Advisor or as a Non-Employee Director will be determined by the Committee and specified in the applicable Award Agreement. +(e) Change in Control . The Committee, in its discretion, may provide in any Award Agreement that in the event of a Change in Control of the Corporation: +(i) All, or a specified portion of, Awards requiring exercise will become fully and immediately exercisable, notwithstanding any other limitations on exercise; +(ii) All, or a specified portion of, Awards subject to Restrictions will become fully Vested; and +(iii) All, or a specified portion of, Awards subject to Performance Goals will be deemed to have been fully earned. +The Committee, in its discretion, may include Change in Control provisions in some Award Agreements and not in others, may include different Change in Control provisions in different Award Agreements, and may include Change in Control provisions for some Awards or some Participants and not for others. +(f) Service Periods . At the time of granting Awards, the Committee may specify, by resolution or in the Award Agreement, the period or periods of service performed or to be performed by the Participant in connection with the grant of the Award. +77 +6.6 Tax Withholding . +(a) General . Corporation will have the right to deduct from any settlement, including the delivery or Vesting of Shares, made under the Plan any federal, state, or local taxes of any kind required by law to be withheld with respect to such payments or to take such other action as may be necessary in the opinion of Corporation to satisfy all obligations for the payment of such taxes. The recipient of any payment or distribution under the Plan will make arrangements satisfactory to Corporation for the satisfaction of any such withholding tax obligations. Corporation will not be required to make any such payment or distribution under the Plan until such obligations are satisfied. +(b) Stock Withholding . The Committee, in its sole discretion, may permit a Participant to satisfy all or a part of the withholding tax obligations incident to the settlement of an Award involving payment or delivery of Shares to the Participant by having Corporation withhold a portion of the Shares that would otherwise be issuable to the Participant. Such Shares will be valued based on their Fair Market Value on the date the tax withholding is required to be made. Any stock withholding with respect to a Reporting Person will be subject to such limitations as the Committee may impose to comply with the requirements of the Exchange Act. Notwithstanding the foregoing, Reporting Persons shall be permitted to elect to satisfy all or a portion of the withholding tax obligations incident to the settlement of an Award involving payment or delivery of Shares to such Participant by having Corporation withhold a portion of the Shares that would otherwise be issuable to the Participant. +6.7 Annulment of Awards . Any Award Agreement may provide that the grant of an Award payable in cash is provisional until cash is paid in settlement thereof or that grant of an Award payable in Shares is provisional until the Participant becomes entitled to the Shares in settlement thereof. In the event the employment (or service as an Advisor or membership on the Board) of a Participant is terminated for cause (as defined below), any Award that is provisional will be annulled as of the date of such termination for cause. For the purpose of this Section 6.7, the term “for cause” has the meaning set forth in the Participant’s employment agreement, if any, or otherwise means any discharge (or removal) for material or flagrant violation of the policies and procedures of Corporation or for other job performance or conduct which is materially detrimental to the best interests of Corporation, as determined by the Committee. +6.8 Engaging in Competition With Corporation . Any Award Agreement may provide that, if a Participant terminates employment with Corporation or a Subsidiary for any reason whatsoever, and within 18 months after the date thereof accepts employment with any competitor of (or otherwise engages in competition with) Corporation, the Committee, in its sole discretion, may require such Participant to return to Corporation the economic value of any Award that is realized or obtained (measured at the date of exercise, Vesting, or payment) by such Participant at any time during the period beginning on the date that is six months prior to the date of such Participant’s termination of employment with Corporation. +ARTICLE 7 +OPTIONS +7.1 Types of Options . Options granted under the Plan may be in the form of Incentive Stock Options or Nonqualified Options. The grant of each Option and the Award Agreement governing each Option will identify the Option as an ISO or an NQSO. In the event the Code is amended to provide for tax-favored forms of stock options other than or in addition to Incentive Stock Options, the Committee may grant Options under the Plan meeting the requirements of such forms of options. +7.2 General . Options will be subject to the terms and conditions set forth in Article 6 and this Article 7 and may contain such additional terms and conditions, not inconsistent with the express provisions of the Plan, as the Committee (or the Board with respect to Awards to Non-Employee Directors) deems desirable. +7.3 Option Price . Each Award Agreement for Options will state the option exercise price per Share of Common Stock purchasable under the Option, which will not be less than 100 percent (100%) of the Fair Market Value of a Share on the date of grant for all Options (ISOs or NQSOs); provided, however, that in the case of any ISO granted to a Ten Percent Shareholder, the option exercise price per Share shall not be less than 110 percent (110%) of the Fair Market Value of a Share on the date of grant +7.4 Option Term . The Award Agreement for each Option will specify the term of each Option, which shall have a specified period during which the Option may be exercised which is no longer than ten years, as determined by the Committee. +7.5 Time of Exercise . The Award Agreement for each Option will specify, as determined by the Committee: +(a) The time or times when the Option will become exercisable and whether the Option will become exercisable in full or in graduated amounts over a period specified in the Award Agreement; +(b) Such other terms, conditions, and restrictions as to when the Option may be exercised as determined by the +78 +Committee; and +(c) The extent, if any, to which the Option will remain exercisable after the Participant ceases to be an employee, Advisor, or director of Corporation or a Subsidiary. +An Award Agreement for an Option may, in the discretion of the Committee, provide whether, and to what extent, the Option will become immediately and fully exercisable (i) in the event of the death, Disability, or Retirement of the Participant, or (ii) upon the occurrence of a Change in Control of Corporation. +7.6 Method of Exercise . The Award Agreement for each Option will specify the method or methods of payment acceptable upon exercise of an Option. An Award Agreement may provide that the option price is payable in full in cash or, at the discretion of the Committee: +(a) In previously acquired Shares (including Restricted Shares); +(b) By surrendering outstanding Awards under the Plan denominated in Shares or in Share-equivalent units; +(c) By delivery (in a form approved by the Committee) of an irrevocable direction to a securities broker acceptable to the Committee: +(i) To sell Shares subject to the Option and to deliver all or a part of the sales proceeds to Corporation in payment of all or a part of the option price and withholding taxes due; or +(ii) To pledge Shares subject to the Option to the broker as security for a loan and to deliver all or a part of the loan proceeds to Corporation in payment of all or a part of the option price and withholding taxes due; or +(d) In any combination of the foregoing or in any other form approved by the Committee. +If Restricted Shares are surrendered in full or partial payment of an Option price, a corresponding number of the Shares issued upon exercise of the Option will be Restricted Shares subject to the same Restrictions as the surrendered Restricted Shares. +7.7 Special Rules for Incentive Stock Options . In the case of an Option designated as an Incentive Stock Option, the terms of the Option and the Award Agreement must be in conformance with the statutory and regulatory requirements specified in Section 422 of the Code, as in effect on the date such ISO is granted. ISOs may be granted only to employees of Corporation or a Subsidiary. ISOs may not be granted under the Plan after February 21, 2027, unless the ten-year limitation of Section 422(b)(2) of the Code is removed or extended. +7.8 Restricted Shares . In the discretion of the Committee, the Shares issuable upon exercise of an Option may be Restricted Shares if so provided in the Award Agreement. +7.9 Limitation on Number of Shares Subject to Options . In no event may Options for more than 500,000 Shares be granted to any individual under the Plan during any fiscal year period. +ARTICLE 8 +STOCK APPRECIATION RIGHTS +8.1 General . Stock Appreciation Rights will be subject to the terms and conditions set forth in Article 6 and this Article 8 and may contain such additional terms and conditions, not inconsistent with the express terms of the Plan, as the Committee (or the Board with respect to Awards to Non-Employee Directors) deems desirable. +8.2 Nature of Stock Appreciation Right . A Stock Appreciation Right is an Award entitling a Participant to receive an amount equal to the excess (or if the Committee determines at the time of grant, a portion of the excess) of the Fair Market Value of a Share of Common Stock on the date of exercise of the SAR over the base price, as described below, on the date of grant of the SAR, multiplied by the number of Shares with respect to which the SAR has been exercised. The base price will be designated by the Committee in the Award Agreement for the SAR and shall be not less than 100 percent (100%) of the Fair Market Value of a Share on the grant date of the SAR. +8.3 Exercise . A Stock Appreciation Right may be exercised by a Participant in accordance with procedures established by the Committee . The Committee may also provide that an SAR will be automatically exercised on one or more specified dates or upon +79 +the satisfaction of one or more specified conditions. In the case of SARs granted to Reporting Persons, exercise of the SAR will be limited by the Committee to the extent required to comply with the applicable requirements of Rule 16b-3 under the Exchange Act. +8.4 Term . The Award Agreement for each SAR shall have a specified period during which the SAR may be exercised, which is no longer than ten years, as determined by the Committee. +8.5 Form of Payment . Payment upon exercise of a Stock Appreciation Right may be made in cash, in installments, in Shares, or in any combination of the foregoing, or in any other form as the Committee determines. +8.6 Limitation on Number of Shares Subject to SARs . In no event may SARs for more than 500,000 Shares be granted to any individual under the Plan during any fiscal year period. +ARTICLE 9 +RESTRICTED AWARDS +9.1 Types of Restricted Awards . Restricted Awards granted under the Plan may be in the form of either Restricted Shares or Restricted Units. +(a) Restricted Shares . A Restricted Share is an Award of Shares transferred to a Participant subject to such terms and conditions as the Committee deems appropriate, including, without limitation, restrictions on the sale, assignment, transfer, or other disposition of such Restricted Shares and may include a requirement that the Participant forfeit such Restricted Shares back to Corporation upon termination of Participant’s employment (or service as an Advisor or Non-Employee Director) for specified reasons within a specified period of time or upon other conditions, as set forth in the Award Agreement for such Restricted Shares. Each Participant receiving a Restricted Share will be issued a stock certificate in respect of such Shares, registered in the name of such Participant, or such certificate, registered in the name of such Participant, will be placed in a restricted stock account (including an electronic account) with a transfer agent. If such certificate is issued to the Participant, the Participant will be required to execute a stock power in blank with respect to the Shares evidenced by such certificate, and such certificate and the stock power will be held in custody by Corporation until the Restrictions thereon will have lapsed. +(b) Restricted Units . A Restricted Unit is an Award to receive a Share or the Fair Market Value of a Share at some date in the future, which is granted to a Participant subject to such terms and conditions as the Committee deems appropriate, and may include a requirement that the Participant forfeit such Restricted Units upon termination of Participant’s employment (or service as an Advisor or Non-Employee Director) for specified reasons within a specified period of time or upon other conditions, as set forth in the Award Agreement for such Restricted Units. +9.2 General . Restricted Awards will be subject to the terms and conditions of Article 6 and this Article 9 and may contain such additional terms and conditions, not inconsistent with the express provisions of the Plan, as the Committee (or the Board with respect to Awards to Non-Employee Directors) deems desirable. +9.3 Restriction Period . Restricted Awards will provide that such Awards, and the Shares subject to such Awards, may not be transferred, and may provide that, in order for a Participant to Vest in such Awards, the Participant must remain in the employment (or remain as an Advisor or Non-Employee Director) of Corporation or its Subsidiaries, subject to relief for reasons specified in the Award Agreement, for a period commencing on the date of the Award and ending on such later date or dates as the Committee designates at the time of the Award (the “Restriction Period”). During the Restriction Period, a Participant may not sell, assign, transfer, pledge, encumber, or otherwise dispose of Shares received under or governed by a Restricted Award grant. The Committee, in its sole discretion, may provide for the lapse of restrictions in installments during the Restriction Period; provided that a Restricted Award with a Restriction Period based solely on continued employment or passage of time may not permit the lapse of all restrictions over a total period less than three (3) years (subject to three (3) one year installments) after the date of the Award, except in the case of (a) Restricted Awards to Non-Employee Directors or Advisors, (b) Restricted Awards granted upon the commencement of a Participant’s employment with the Corporation, (c) Restricted Awards which, in the aggregate, cover not more than 5% of the number of Shares available for Awards under the Plan under Section 4.2.2(a) (determined without regard to any other limits set forth in Section 4.2.2(b) or (c)), or (d) restrictions which lapse (i) upon the death or Disability of the Participant, (ii) upon the retirement of the Participant, (iii) as may be required pursuant to an employment agreement between the Participant and the Corporation or (iv) upon a Change in Control. Upon expiration of the applicable Restriction Period (or lapse of Restrictions during the Restriction Period where the Restrictions lapse in installments) the Participant shall be entitled to settlement of the Restricted Award or portion thereof, as the case may be. Although Restricted Awards will usually Vest based on continued employment (or service as an Advisor or Non-Employee Director) and Performance Awards under Article 10 shall usually Vest based on attainment of Performance Goals, the Committee, in its discretion, may condition Vesting of Restricted Awards on attainment of Performance Goals as well as continued employment (or service as an Advisor or Non-Employee Director). In such case, the Restriction Period for such a Restricted Award will include the period prior to satisfaction of the Performance +80 +Goals. +9.4 Forfeiture . If a Participant ceases to be an employee, Advisor of Corporation or a Subsidiary or Non-Employee Director during the Restriction Period for any reason other than reasons which may be specified in an Award Agreement (such as death, Disability, or Retirement), the Award Agreement may require that all non-Vested Restricted Awards previously granted to the Participant be forfeited and returned to Corporation. +9.5 Settlement of Restricted Awards . +(a) Restricted Shares . Upon Vesting of a Restricted Share Award, the legend on such Shares will be removed and the Participant’s stock power, if any, will be returned and the Shares will no longer be Restricted Shares. The Committee may also, in its discretion, permit a Participant to receive, in lieu of unrestricted Shares at the conclusion of the Restriction Period, payment in cash, installments, or in any other manner or combination of such methods as the Committee, in its sole discretion, determines. +(b) Restricted Units . Upon Vesting of a Restricted Unit Award, a Participant will be entitled to receive payment for Restricted Units in an amount equal to the aggregate Fair Market Value of the Shares covered by such Restricted Units at the expiration of the Applicable Restriction Period. Payment in settlement of a Restricted Unit will be made as soon as practicable following the conclusion of the applicable Restriction Period in cash, in installments, in Shares equal to the number of Restricted Units, or in any other manner or combination of such methods as the Committee, in its sole discretion, determines, subject to the applicable restrictions contained in Section 409A of the Code . +9.6 Rights as a Shareholder . A Participant will have, with respect to unforfeited Shares received under a grant of Restricted Shares, all the rights of a shareholder of Corporation, including the right to vote the Shares and the right to receive any cash dividends. The right to receive cash dividends on Restricted Shares shall be subject to the Restrictions applicable to the Restricted Shares. Stock dividends issued with respect to Restricted Shares will be treated as additional Shares covered by the grant of Restricted Shares and will also be subject to the same Restrictions. +ARTICLE 10 +PERFORMANCE AWARDS +10.1 General . Performance Awards will be subject to the terms and conditions set forth in Article 6 and this Article 10 and may contain such other terms and conditions not inconsistent with the express provisions of the Plan, as the Committee (or the Board with respect to Awards to Non-Employee Directors) deems desirable. +10.2 Nature of Performance Awards . A Performance Award is an Award of units (with each unit having a value equivalent to one Share) granted to a Participant subject to such terms and conditions as the Committee deems appropriate, including, without limitation, the requirement that the Participant forfeit such Performance Award or a portion thereof in the event specified performance criteria are not met within a designated period of time. +10.3 Performance Cycles . For each Performance Award, the Committee will designate a performance period (the “Performance Cycle”) with a duration of at least one (1) year, as may be determined by the Committee in its discretion within which specified Performance Goals are to be attained. There may be several Performance Cycles in existence at any one time and the duration of Performance Cycles may differ from each other. +10.4 Performance Goals . The Committee will establish Performance Goals for each Performance Cycle on the basis of such criteria and to accomplish such objectives as the Committee may from time to time select. Performance Goals may be based on performance criteria for Corporation, a Subsidiary, or an operating group, or based on a Participant’s individual performance. Performance Goals may include objective and subjective criteria. During any Performance Cycle, the Committee may adjust the Performance Goals for such Performance Cycle as it deems equitable in recognition of unusual or nonrecurring events affecting Corporation, changes in applicable tax laws or accounting principles, or such other factors as the Committee may determine. +10.5 Determination of Awards . As soon as practicable after the end of a Performance Cycle, the Committee will determine the extent to which Performance Awards have been earned on the basis of performance in relation to the established Performance Goals. +10.6 Timing and Form of Payment . Settlement of earned Performance Awards will be made to the Participant as soon as practicable after the expiration of the Performance Cycle and the Committee’s determination under Section 10.5, in the form of cash, installments, Shares, or any combination of the foregoing or in any other form as the Committee determines. +10.7 Performance Goals for Executive Officers . The performance goals for Performance Awards granted to executive +81 +officers of Corporation may relate to corporate performance, business unit performance, or a combination of both. +(a) Corporate performance goals will be based on financial performance goals related to the performance of Corporation as a whole and may include one or more measures related to earnings, profitability, efficiency, or return to stockholders such as earnings per share, operating profit, stock price, costs of production, or other measures. +(b) Business unit performance goals will be based on a combination of financial goals and strategic goals related to the performance of an identified business unit for which a Participant has responsibility. Strategic goals for a business unit may include one or a combination of objective factors relating to success in implementing strategic plans or initiatives, introductory products, constructing facilities, or other identifiable objectives. Financial goals for a business unit may include the degree to which the business unit achieves one or more objective measures related to its revenues, earnings, profitability, efficiency, operating profit, costs of production, or other measures. +(c) Any corporate or business unit goals may be expressed as absolute amounts or as ratios or percentages. Success may be measured against various standards, including budget targets, improvement over prior periods, and performance relative to other companies, business units, or industry groups. +10.8 Award Limitations . The maximum number of Shares issuable with respect to Performance Awards granted to any individual executive officer may not exceed 150,000 Shares for any calendar year. +ARTICLE 11 +OTHER STOCK-BASED AND COMBINATION AWARDS +11.1 Other Stock-Based Awards . The Committee (or the Board with respect to Awards to Non-Employee Directors) may grant other Awards under the Plan pursuant to which Shares are or may in the future be acquired, or Awards denominated in or measured by Share equivalent units, including Awards valued using measures other than the market value of Shares . Such Other Stock-Based Awards may be granted either alone, in addition to, or in tandem with, any other type of Award granted under the Plan. +11.2 Combination Awards . The Committee may also grant Awards under the Plan in tandem or combination with other Awards or in exchange of Awards, or in tandem or combination with, or as alternatives to, grants or rights under any other employee plan of Corporation, including the plan of any acquired entity. No action authorized by this section may reduce the amount of any existing benefits or change the terms and conditions thereof without the Participant’s consent. +ARTICLE 12 +DEFERRAL ELECTIONS +The Committee may permit a Participant to elect to defer receipt of the payment of cash or the delivery of Shares that would otherwise be due to such Participant by virtue of the exercise, earn-out, or Vesting of an Award made under the Plan. If any such election is permitted, the Committee will establish rules and procedures for such payment deferrals, including, but not limited to: (a) payment or crediting of reasonable interest on such deferred amounts credited in cash or (b) the payment or crediting of dividend equivalents in respect of deferrals credited in Share equivalent units. Such deferrals, if permitted, shall to the extent possible, comply with Section 409A of the Code and the regulations and other guidance promulgated thereunder. +ARTICLE 13 +ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, ETC. +13.1 Plan Does Not Restrict Corporation . The existence of the Plan and the Awards granted hereunder will not affect or restrict in any way the right or power of the Board or the shareholders of Corporation to make or authorize any adjustment, recapitalization, reorganization, or other change in Corporation’s capital structure or its business, any merger or consolidation of the Corporation, any issue of bonds, debentures, preferred or prior preference stocks ahead of or affecting Corporation’s capital stock or the rights thereof, the dissolution or liquidation of Corporation or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding. +13.2 Adjustments by the Committee . In the event of any change in capitalization affecting the Common Stock of Corporation, such as a stock dividend, stock split, recapitalization, merger, consolidation, split-up, combination or exchange of shares or other form of reorganization, or any other change affecting the Common Stock, such proportionate adjustments, if any, as the Committee, in its sole discretion, may deem appropriate to reflect such change, will be made with respect to the aggregate number of Shares for which Awards in respect thereof may be granted under the Plan, the maximum number of Shares which may be sold or awarded to any Participant, the number of Shares covered by each outstanding Award, and the price per Share in respect of outstanding +82 +Awards. The Committee may also make such adjustments in the number of Shares covered by, and price or other value of any outstanding Awards in the event of a spin-off or other distribution (other than normal cash dividends), of Corporation assets to shareholders. +ARTICLE 14 +AMENDMENT AND TERMINATION +The Board may amend, suspend, or terminate the Plan or any portion of the Plan at any time; provided that no such action may be taken without shareholder approval if (i) such action would increase the number of shares subject to the Plan; (ii) such action would result in the repricing, replacement or repurchase of out-of-the money Options, Stock Appreciation Rights or other Awards; (iii) such action would result in an Award being fully Vested, exercisable or earned in the event of a Change in Control prior to the consummation of the Change in Control; or (iv) such approval is required by applicable law or regulation or the applicable requirements of a stock exchange or over-the-counter stock trading system; provided further that the Board may, in its discretion, determine to submit any other changes to the Plan to the shareholders for approval; provided further that no amendment, suspension or termination of the Plan may materially and adversely affect the rights of a Participant under any outstanding Award without such Participant’s consent, unless such action is necessary to ensure a deduction under Section 162(m) of the Code or to avoid the additional tax described in Section 409A of the Code. +ARTICLE 15 +MISCELLANEOUS +15.1 Unfunded Plan . The Plan will be unfunded and Corporation will not be required to segregate any assets that may at any time be represented by Awards under the Plan. Any liability of Corporation to any person with respect to any Award under the Plan will be based solely upon any contractual obligations that may be effected pursuant to the Plan. No such obligation of Corporation will be deemed to be secured by any pledge of, or other encumbrance on, any property of Corporation. +15.2 Payments to Trust . The Committee is authorized (but has no obligation) to cause to be established a trust agreement or several trust agreements whereunder the Committee may make payments of amounts due or to become due to Participants in the Plan. +15.3 Other Corporation Benefit and Compensation Programs . Payments and other benefits received by a Participant under an Award made pursuant to the Plan will not be deemed a part of a Participant’s regular, recurring compensation for purposes of the termination , indemnity or severance pay law of any state or country and shall not be included in, or have any effect on, the determination of benefits under any other employee benefit plan or similar arrangement provided by Corporation or a Subsidiary unless expressly so provided by such other plan or arrangements, or except where the Committee expressly determines that an Award or portion of an Award should be included to accurately reflect competitive compensation practices or to recognize that an Award has been made in lieu of a portion of cash compensation. Awards under the Plan may be made in combination with or in tandem with, or as alternatives to, grants, awards, or payments under any other Corporation or Subsidiary plans, arrangements, or programs. The Plan notwithstanding, Corporation or any Subsidiary may adopt such other compensation programs and additional compensation arrangements as it deems necessary to attract, retain, and reward employees and directors for their service with Corporation and its Subsidiaries. +15.4 Securities Law Restrictions . No Shares may be issued under the Plan unless counsel for Corporation is satisfied that such issuance will be in compliance with applicable federal and state securities laws. Certificates for Shares delivered under the Plan may be subject to such stop-transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations, and other requirements of the Securities and Exchange Commission, any stock exchange upon which the Common Stock is then listed, and any applicable federal or state securities law. The Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions. +15.5 Governing Law . Except with respect to references to the Code or federal securities laws, the Plan and all actions taken thereunder shall be governed by and construed in accordance with the laws of the state of Delaware. +ARTICLE 16 +SHAREHOLDER APPROVAL +The Plan , as amended and restated, is expressly subject to the approval of the Plan by the shareholders at the 2020 annual meeting of Corporation’s shareholders. +83 +220 EAST FIRST STREET +BETHLEHEM, PA 18015 +VOTE BY INTERNET +Before The Meeting - Go to www.proxyvote.com or scan the QR Barcode above +Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. +During The Meeting - Go to www.virtualshareholdermeeting.com/OSUR2020 +You may attend the Meeting via the Internet and vote during the Meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions. +VOTE BY PHONE - 1-800-690-6903 +Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the meeting date. Have your proxy card in hand when you call and then follow the instructions. +VOTE BY MAIL +Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. +TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: +E38313-P03935 KEEP THIS PORTION FOR YOUR RECORDS +THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. +DETACH AND RETURN THIS PORTION ONLY +ORASURE TECHNOLOGIES, INC. +The Board of Directors recommends you vote FOR each of the following nominees: +1. +ELECTION OF DIRECTORS +Class II (Expiring 2023) +Nominees: +For +Against +Abstain +1a. Mara G. Aspinall +☐ +☐ +☐ +1b. Ronny B. Lancaster +☐ +☐ +☐ +The Board of Directors recommends you vote FOR items 2 and 3. +For +Against +Abstain +2. +Ratification of Appointment of KPMG LLP as the Independent Registered Public Accounting Firm for Fiscal Year 2020. +☐ +☐ +☐ +3. +Advisory (Non-Binding) Vote to Approve Executive Compensation. +☐ +☐ +☐ +4. +Amendment to the Company’s Stock Award Plan. +☐ +☐ +☐ +Mark Here for Address Changes or Comments SEE REVERSE +☐ +NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. +Signature [PLEASE SIGN WITHIN BOX] +Date +Signature (Joint Owners) +Date +OraSure Technologies, Inc. +2020 Annual Meeting of Stockholders +Tuesday, May 19, 2020 +Important notice regarding the Internet availability of proxy materials for the +Annual Meeting of Stockholders. +The Notice and Proxy Statement and 2019 Annual Report to Stockholders +are available at www.proxyvote.com. +E38314-P03935 +PROXY +2020Annual Meeting of Stockholders +PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS +The undersigned hereby appoints Jack E. Jerrett and Michele Miller, and each of them, proxies with full power of substitution, to vote all of the shares which the undersigned is entitled to vote at the 2020 Annual Meeting of Stockholders of OraSure Technologies, Inc. (the “Company”), on Tuesday, May 19, 2020, at 10:00 a.m. (Eastern Time), and at any adjournment or adjournments thereof, with all the powers the undersigned would possess if personally present, with respect to the matters listed on the reverse side. +The shares represented by this Proxy, if properly executed, will be voted (i) FOR the election of the nominees listed on the reverse side as directors, (ii) FOR the ratification of the appointment of KPMG LLP as the Company’s independent registered public accounting firm for 2020, (iii) FOR approval of the compensation of the Company’s named executive officers, and (iv) FOR approval of the Company’s Amended and Restated Stock Award Plan. If any other business properly comes before the meeting, the proxies named above will have discretionary authority to vote thereon in accordance with their best judgment. +PLEASE MARK, DATE, SIGN AND RETURN THE PROXY CARD PROMPTLY. +Address Changes/Comments: +(If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.) +(Continued and to be marked, dated and signed, on the other side) \ No newline at end of file diff --git a/raw/proxies/0001116463/0001564590-20-016101/proxy_rpt.txt b/raw/proxies/0001116463/0001564590-20-016101/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..0a4c5285a76b772869bb6271ebece4d05f3d1029 --- /dev/null +++ b/raw/proxies/0001116463/0001564590-20-016101/proxy_rpt.txt @@ -0,0 +1,6 @@ +TRANSACTIONS WITH RELATED PERSONS +Since January 1, 2019, there have been no transactions with related persons that would require disclosure in this Proxy Statement. The Audit Committee is required to review and approve in advance all transactions with related persons involving the Company. The Audit Committee may approve a related party transaction if the transaction is on terms +21 +comparable to those that could be obtained in arms’ length dealings with an unrelated third party. The Audit Committee also reviews any public disclosures of a related party transaction contained in our SEC filings. These responsibilities are described in the Audit Committee’s charter, a copy of which is available on our website at www.orasure.com . +Information regarding employment, severance and retirement agreements between our executive officers and the Company is set forth in the Section entitled, “Employment Agreements and Potential Payments Upon Termination or Change of Control,” in this Proxy Statement. +22 \ No newline at end of file diff --git a/raw/proxies/0001116463/0001564590-21-018169/proxy.txt b/raw/proxies/0001116463/0001564590-21-018169/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..1d970795a8c101d20119c6bde7eaa5468b758a5a --- /dev/null +++ b/raw/proxies/0001116463/0001564590-21-018169/proxy.txt @@ -0,0 +1,4043 @@ +DEF 14A +1 +osur-def14a_20210518.htm +DEF 14A +osur-def14a_20210518.htm +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Proxy Statement Pursuant to Section 14(a) +of the Securities Exchange Act of 1934 +(Amendment No. ) +Filed by the Registrant ☒ Filed by a Party other than the Registrant ☐ +Check the appropriate box: +☐ +Preliminary Proxy Statement +☐ +Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +☒ +Definitive Proxy Statement +☐ +Definitive Additional Materials +☐ +Soliciting Material Pursuant to §240.14a-12 +OraSure Technologies, Inc. +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +☒ +No fee required. +☐ +Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. +(1) +Title of each class of securities to which transaction applies: +(2) +Aggregate number of securities to which transaction applies: +(3) +Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): +(4) +Proposed maximum aggregate value of transaction: +(5) +Total fee paid: +☐ +Fee paid previously with preliminary materials. +☐ +Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. +(1) +Amount Previously Paid: +(2) +Form, Schedule or Registration Statement No.: +(3) +Filing Party: +(4) +Date Filed: +2021 +Proxy Statement +Notice of Annual Meeting of Stockholders +Tuesday, May 18, 2021 ● 10:00 a.m. (Eastern Time) +Letter to the Stockholders +Stephen S. Tang, Ph.D. +President and +Chief Executive Officer +April 8, 2021 +Dear Fellow Stockholders: +You are cordially invited to attend the 2021 Annual Meeting of Stockholders (the “Annual Meeting”) to be held on Tuesday, May 18, 2021 at 10:00 a.m. Eastern Time . Once again, this year’s Annual Meeting will be a completely virtual meeting, conducted as a live webcast. You will be able to attend the Annual Meeting online, vote your shares electronically if you wish, and submit your questions during the meeting by visiting www.virtualshareholdermeeting.com/OSUR2021 . +Pursuant to the Securities and Exchange Commission (“SEC”) rule allowing companies to furnish proxy materials to their stockholders over the internet, a Notice of Internet Availability of Proxy Materials (the “Notice”) was sent to stockholders on or about April 8, 2021. The Notice contains information on how to access copies of the proxy materials and vote your shares. +At the Annual Meeting, you will be asked to (i) elect three Class III Directors to serve on the Board of Directors until the Annual Meeting of Stockholders in 2024; (ii) ratify the appointment of KPMG LLP as our independent registered public accounting firm for the 2021 fiscal year; (iii) approve, by an advisory (non-binding) vote, the compensation of the Company’s named executive officers as disclosed in the proxy materials; and (iv) transact such other business as may properly come before the meeting, and any adjournment(s) or postponement(s) thereof. +The Board of Directors has approved the nominees for Class III Directors and recommends that you vote FOR their election to the Board of Directors. In addition, the Board of Directors recommends that you vote FOR the ratification of KPMG LLP’s appointment, and FOR the approval of the Company’s executive compensation. +Your vote is very important, regardless of the number of shares you own . Whether or not you plan to attend the Annual Meeting online, we urge you to submit your vote as soon as possible . You will have the option to vote by telephone, via the internet, or by completing, signing, dating and returning a paper Proxy Card. Additional details on these options can be found in the Notice sent to you and in the other proxy materials. You may, of course, attend the Annual Meeting online and vote your shares during the meeting regardless of whether you have previously voted by phone, the internet or mail. +Thank you for your cooperation and your ongoing support of, and continued interest in, OraSure Technologies, Inc. +Sincerely yours, +Stephen S. Tang, Ph.D. +President and Chief Executive Officer +NOTICE OF 2021 ANNUAL MEETING OF STOCKHOLDERS +OF ORASURE TECHNOLOGIES, INC. +DATE AND TIME +Tuesday May 18, 2021 +10:00 a.m. (Eastern Time) +To be held virtually by visiting +www.virtualshareholdermeeting.com/OSUR2021 +ITEMS OF BUSINESS +The 2021 Annual Meeting of Stockholders will be held for the following purposes: +• To elect three (3) Class III Directors, each to serve for a term expiring at the Company’s Annual Meeting of Stockholders in 2024; +• To ratify the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2021; +• To approve, by an advisory (non-binding) vote, the compensation of the Company’s named executive officers as disclosed in the Proxy Statement accompanying this Notice; and +• To consider such other business as may properly come before the meeting, and any adjournment(s) or postponement(s) thereof. +HOW TO VOTE +Via the Internet . Go to www.proxyvote.com to vote your shares online prior to the Annual Meeting. Have the control number that is printed in your Notice of Internet Availability of Proxy Materials or Proxy Card available and follow the instructions. You may also vote online during the Annual Meeting by going to www.virtualshareholdermeeting.com/OSUR2021 and following the instructions. +By Phone . Call the toll-free number on your Notice of Internet Availability of Proxy Materials or Proxy Card and follow the prompts. +By Mail . You can vote by mail by requesting a paper copy of the materials, which will include a Proxy Card. Please review your Notice of Internet Availability of Proxy Materials for instructions on how to request a paper copy of the materials. Mark, sign and date your Proxy Card and return it as indicated on the Proxy Card. +Who Can Vote : Only holders of shares of the Company’s Common Stock of record at the close of business on March 26, 2021 will be entitled to vote at the Annual Meeting of Stockholders and any adjournment(s) or postponement(s) thereof. Additional information is included in the Proxy Statement accompanying this Notice. +By Order of the Board of Directors, +Jack E. Jerrett +Secretary +April 8, 2021 +Proxy Statement Table of Contents +Proxy Statement Summary +1 +2021 Annual Meeting Information +1 +Proposals for Stockholder Consideration +1 +2020 Performance Highlights +3 +Most Significant Compensation Components +3 +Key Features of our Executive Compensation Program +4 +Questions and Answers About the 2021 Annual Meeting and Voting +5 +Why Did I Receive These Proxy Materials? +5 +What Is a Proxy? +5 +What Is the Record Date and What Does It Mean? +5 +What Is the Difference Between a Stockholder of Record and a Stockholder Who Holds Stock in Street Name? +6 +How Can I Vote My Shares for the Annual Meeting? +6 +How Will My Shares Be Voted If I Send In a Proxy? +6 +Will My Shares Be Voted If I Do Not Provide My Proxy? +7 +How Many Shares Must Be Present To Hold the Annual Meeting? +7 +How Can I Revoke a Proxy? +7 +What Items Will Be Voted On At The Annual Meeting? +7 +Who Will Pay The Cost of This Proxy Solicitation? +7 +How Can I Participate in The Annual Meeting? +8 +What if I Have Technical Difficulties or Trouble Accessing the Virtual Meeting? +8 +Are Votes Confidential? +8 +Who Counts The Votes? +8 +May Stockholders Ask Questions at the Annual Meeting? +8 +Stock Ownership of Certain Beneficial Owners and Management +9 +Corporate Governance +10 +Board Responsibilities, Operation and Composition +10 +Governance Guidelines and Code of Conduct +10 +Environmental, Social and Governance Issues +10 +Independent Board Chairman +12 +Director Independence +12 +Oversight of Risk Management +13 +Annual Meeting Attendance and Stockholder Communications +13 +Committees of the Board +13 +Nomination of Directors +16 +Director Qualifications +16 +Insider Trading +17 +Prohibition Against Short Sales, Hedging and Pledging +17 +Stock Ownership and Retention Guidelines +17 +Audit Committee Matters +18 +Report of the Audit Committee for Year Ended December 31, 2020 +18 +Audit Fees; Audit-Related Fees; Tax Fees; All Other Fees +19 +Pre-Approval Procedures +19 +Compensation Committee Matters +19 +Compensation Processes and Procedures +19 +Annual Performance Evaluations +19 +Role of the Compensation Committee +20 +Role of the CEO +20 +Role of the Compensation Consultant +20 +Compensation Committee Interlocks and Insider Participation +21 +Compensation Committee Report +21 +Executive Officers +22 +Transactions with Related Persons +24 +Delinquent Section 16(a) Reports +24 +Compensation Discussion and Analysis – Table of Contents +25 +Compensation Discussion and Analysis +26 +Executive Summary +26 +Compensation Philosophy +33 +Benchmarking +34 +2020 Executive Compensation Components +35 +Other Compensation +44 +CEO Pay Ratio +45 +Compensation Tables +46 +Employment Agreements and Potential Payments Upon Termination or Change of Control +53 +Stock Award Plan Information +57 +Director Compensation +57 +Annual Fees +57 +Initial and Annual Equity Awards +58 +Equity Award Terms +58 +Deferred Compensation +58 +Director Compensation During 2020 +59 +Proposals Requiring Your Vote +60 +Proposal No. 1 – Election of Directors +60 +Background +60 +Vote Required; Board Recommendation +65 +Proposal No. 2 – Ratification of Appointment of Independent Registered Public Accounting Firm +65 +Background +65 +Vote Required; Board Recommendation +65 +Proposal No. 3 – Advisory (Non-Binding) Vote To Approve Executive Compensation +65 +Background +65 +Compensation Program Features +66 +Vote Required; Board Recommendation +66 +Annual Report +66 +Deadline for Stockholder Proposals +66 +PROXY STAT EMENT SUMMARY +We are providing these proxy materials to stockholders of OraSure Technologies, Inc., a Delaware corporation (as used herein, “we,” “us,” “our”, “OraSure” or the “Company”), in connection with the Company’s solicitation of proxies (each, a “Proxy”) for use at the Annual Meeting of Stockholders to be held on May 18, 2021 at 10:00 a.m. Eastern Time, and at any adjournment(s) or postponement(s) thereof (the “Annual Meeting”). +As a stockholder, you are invited to participate in the Annual Meeting and are requested to vote on the matters described in this Proxy Statement. The Annual Meeting will be conducted in a completely virtual manner through a live +webcast that you can access online by going to www.virtualshareholdermeeting.com/OSUR2021 . The webcast will not include a presentation by management. A question and answer session will be provided at the Annual Meeting only for questions that are germane to the matters being discussed and voted on at the meeting. +This summary highlights information contained elsewhere in this Proxy Statement, but does not contain all of the information that you should consider. You should read the entire Proxy Statement carefully before voting your shares . +2021 ANNUAL MEETING INFORMATION +• +Date and Time: Tuesday, May 18, 2021 at 10:00 a.m. (ET) +• +Location: Online by visiting www.virtualshareholdermeeting.com/OSUR2021 +• +Record Date: March 26, 2021 +PROPOSALS FOR STOCKHOLDER CONSIDERATION +Proposals +Board +Recommendation +Page Reference +for More Detail +1.) +Election of three Class III Directors +FOR EACH NOMINEE +60 +2.) +Ratification of Appointment of Independent +Registered Public Accounting Firm for 2021 +FOR +65 +3.) +Advisory (Non-Binding) Vote to Approve +Executive Compensation +FOR +65 +Proposal No. 1 – Election of Directors +The table below provides summary information about each of our nominees for Class III Directors, whose new terms will expire at the 2024 Annual Meeting of Stockholders. The Board is recommending that stockholders vote for each Director nominee. +Committee +Memberships 1 +Other +Name and Principal Occupation +Age +Director +Since +Independent +AC +CC +N& +CG +Public +Boards +Michael Celano 2 +Chief Financial Officer, Larimar Therapeutics, Inc. +62 +2006 +Yes +√ +√ +No +James A. Datin +President and Chief Executive Officer, BioAgilytix Labs, LLC +58 +2019 +Yes +√ +√ +Yes +Lelio Marmora +President, The Management Lab +54 +2020 +Yes +√ +√ +No +1 +AC = Audit Committee; CC = Compensation Committee; N&CG = Nominating & Corporate Governance Committee; C = Chairman; Ö = Member. +2 Mr. Celano is Chairman of our Board of Directors. +1 +Proposal No. 2 – Ratification of Appointment of Independent Registered Public Accounting Firm +Our Audit Committee has selected KPMG LLP (“KPMG”) to be our independent registered public accounting firm for the 2021 fiscal year. The Board believes KPMG is well qualified to serve in this capacity and is +recommending that the engagement of KPMG be ratified by our stockholders. The Board is recommending that stockholders vote for the appointment of KPMG as provided above. +Proposal No. 3 – Advisory (Non-Binding) Vote to Approve Executive Compensation +Our compensation program is designed to focus and reward our executives for balancing both short and long-term priorities. To fulfill this mission, we have adopted a pay-for-performance philosophy that forms the foundation for executive compensation decisions made by our Board and the Compensation Committee of the Board (the “Compensation Committee”). +The Compensation Discussion and Analysis portion of this Proxy Statement (the “CD&A”) contains a detailed description of our executive compensation philosophy and program, the compensation decisions the Board and Compensation Committee have made under that program and the factors considered in making those decisions, focusing on the compensation of our named executive officers (“NEOs”) for the year ended December 31, 2020, who were: +Stephen S. Tang, Ph.D., President and Chief Executive Officer (“CEO”) +Roberto Cuca, Chief Financial Officer (“CFO”) +Lisa Nibauer, Executive Vice President, Business Unit Leader, Diagnostics 1 +Kathleen G. Weber, Executive Vice President, Business Unit Leader, Molecular Solutions +Jack E. Jerrett, Senior Vice President, General Counsel and Chief Compliance Officer +Anthony Zezzo, II, Former Executive Vice President, Business Unit Leader, Infectious Disease 1 +____________________ +1 Ms. Nibauer was appointed as the Company’s Executive Vice President, Business Unit Leader, Diagnostics, effective as of May 11, 2020, replacing Anthony Zezzo, II who retired effective as of June 30, 2020. +As described further in the CD&A and elsewhere in this Proxy Statement, the following should be considered by stockholders in evaluating the compensation of our NEOs for 2020: +• +OraSure is a diverse and growing business operating in highly competitive and evolving markets; this was especially true in 2020 given the challenges and opportunities presented by the COVID-19 pandemic. +• +We annually solicit input from our stockholders on executive compensation matters. The 2020 Say-on-Pay results (94% approval), combined with feedback from stockholders, suggest strong support for our programs and policies. +• +We maintain a full suite of good governance policies and processes. +• +We achieved strong financial performance during 2020 despite the challenges posed by the COVID-19 pandemic. +• +We made no COVID-19 related adjustments to our 2020 incentive bonus plan or performance-vested restricted unit (“PRUs”) performance measures and the Compensation Committee applied no positive discretion in determining performance and payouts for our NEOs. +The Board is recommending that stockholders vote in favor of the compensation of our NEOs, as described in this Proxy Statement. +2 +2020 PERFORMANCE HIGHLIGHTS +Despite the negative impact the COVID-19 pandemic had on our core businesses, we delivered a strong year in 2020. New COVID related revenues generated by our Molecular Solutions business unit, coupled with increased international HIV sales, more than offset a decline in our core diagnostics business and our core molecular business caused by the COVID pandemic. We believe that compensation awarded for 2020 was closely aligned with our performance. +During 2020, we actively engaged with several laboratories and researchers to demonstrate the effectiveness of several of our existing collection products for use with molecular COVID-19 testing. As a result, our molecular collection kits have been included in eight Emergency Use Authorizations (“EUA”) granted by the U.S. Food and Drug Administration (“FDA”) to certain of our customers. Separately, we received EUAs for two of our collection devices which will allow them to be used for unsupervised collection at home or in a healthcare setting when used as part of an approved or validated COVID-19 test. We also made significant progress in the development of a new COVID-19 rapid antigen test and a lab-based oral fluid antibody test during the year, which we believe could generate significant future revenues once the applicable EUAs have been obtained. +We continued to advance our innovation growth strategy in 2020 with the acquisition of UrSure, Inc. This company develops laboratory and rapid tests to measure an individual’s adherence to HIV medication, including pre-exposure prophylaxis, or PrEP, a daily medication to prevent HIV. We believe these products will be an important contributor to our future diagnostics business. +Our consolidated revenues of $171.7 million in 2020 represented an 11% increase over 2019. This was largely driven by sales of collection devices for molecular COVID-19 testing and growth in sales of our HIV Self-Test primarily in Africa. Our total molecular product and services revenues were $102.8 million during 2020, an increase of 45% from 2019. This increase included almost $50 million in sales of oral fluid sample collection devices for COVID-19 molecular testing. International sales of our HIV diagnostic products grew 16% for the year, largely driven by a 24% increase in HIV Self-Test sales in Africa. +We generated cash from operations of $5.8 million in 2020 and we ended the year with approximately $257 million in cash and short-term investments on our balance sheet, which we can use for future investment and growth. +MOST SIGNIFICANT COMPENSATION COMPONENTS +We have structured the components of our executive compensation program to be directly tied to the performance of both the Company and our executives and aligned with the best interests of our stockholders. These components consist of the following: +Base Salary +Salaries are based on the individual executive’s position relative to market and the executive’s individual performance and contribution. +Annual Cash Incentive Plan Bonuses +Annual incentive cash bonuses reflect market-based targets and are contingent upon (i) our achievement of corporate financial and/or strategic objectives, which are used to determine overall bonus pool funding, and (ii) the executive’s individual performance against pre-determined objectives, for such executive, which are used to determine individual bonus payouts. +Equity Awards under our Long-Term Incentive Policy (“LTIP”) +Long-term incentive equity compensation reflects market-based targets with the value of individual awards contingent upon each executive’s individual performance against pre-determined objectives during the fiscal year prior to award. Fifty percent (50%) of each NEO’s annual LTIP award consists of PRUs which require achievement of certain financial performance measures selected by the Board and Compensation Committee and the satisfaction of a 3-year service period for vesting of the award. The other fifty percent (50%) consists of time-vested restricted stock (“RS”) which vests in equal installments over a three-year service period. +3 +KEY FEATURES OF OUR EXECUTIVE COMPENSATION PROGRAM +Key features of our compensation program illustrate our commitment to pay-for-performance, the strong alignment of our executives’ interests with those of our stockholders and strong corporate governance. Several of the more significant of these features are summarized below: +• +Compensation is market driven with total compensation of our executives targeted at the 50 th percentile of the Peer Group. +• +Regular stockholder outreach on compensation/ governance matters. +• +Compensation is predominantly variable or performance-based. +• +Use of a third-party compensation consultant to provide executive compensation market assessment and independent advice on compensation matters. +• +Balanced mix of cash/equity, fixed/variable, short-term/long-term compensation components. +• +Strong stock ownership/retention requirements for executives and Directors. +• +In order to incentivize growth, performance objectives for annual bonus pool funding target key financial measures and/or important strategic goals. +• +• +As a general matter, no perquisites for NEOs that are not offered to all employees of the Company. +• +The Board’s discretionary ability to adjust annual incentive bonus pool funding is limited to +/- 10% of pool amount in order to avoid excessive discretionary bonus pool adjustments. +• +Use of peer company benchmarking. +• +Long-term equity incentive awards include 50% PRUs that vest only if (i) a three-year compound average growth rate for revenues and/or a one-year earnings per share (“EPS”) or income before income taxes (“IBIT”) target is met and (ii) a three-year service period is satisfied. +• +Compensation recoupment policy. +• +No excise tax gross-up in any of our NEO employment agreements and no “single trigger” change-in-control severance in any of our new executive employment agreements, including our CEO’s and CFO’s agreements. +• +No hedging or pledging of our Common Stock. +4 +QUESTIONS AND ANSWERS AB OUT THE 20 21 ANNUAL MEETING AND VOTING +1. WHY DID I RECEIVE THESE PROXY MATERIALS? +Our Board of Directors (the “Board”) is furnishing proxy materials, including this Proxy Statement, a Proxy Card and the Company’s Annual Report to Stockholders for the year ended December 31, 2020 (the “2020 Annual Report”), to our stockholders in order to solicit proxies to be voted at the Annual Meeting (each, a “Proxy”). Each stockholder can access these documents on the internet in accordance with the rules and regulations of the SEC. On or about April 8, 2021, we mailed a Notice of Internet Availability of Proxy Materials (the “Notice”) to each stockholder at the holder’s address of record, indicating that this Proxy Statement is now available to our stockholders of record entitled to vote at the Annual Meeting. +SEC rules permit us to deliver only one copy of the Notice or a single set of proxy materials to multiple stockholders sharing the same address. Upon written or oral request, we will deliver separate Notices and/or copies of our 2020 Annual Report and/or this Proxy Statement to any stockholder at a shared address to which a single copy of the Notice was delivered. Stockholders may notify the +Company of their requests by calling or writing us at OraSure Technologies, Inc., 220 East First Street, Bethlehem, Pennsylvania 18015, Attention: Corporate Secretary; (610) 882-1820. +All stockholders and beneficial holders have the ability to access a copy of our proxy materials on the internet at the website referred to in the Notice. Stockholders will not receive printed copies of the proxy materials unless they request those copies . The Notice also instructs stockholders as to how to submit a Proxy through the internet. If you would like to receive a paper or e-mail copy of your proxy materials, you should follow the instructions for requesting such materials included in the Notice. We will pay the entire cost of preparing, assembling, printing, mailing and distributing these proxy materials and soliciting votes. If you choose to access the proxy materials and/or vote over the internet, you are responsible for any internet access charges you may incur. +2. WHAT IS A PROXY? +A Proxy is your legal designation of another person to vote the shares of Common Stock you own. That other person is called a “proxy.” If you designate someone as your proxy in a written document, that document also is called a Proxy or a Proxy Card. +Jack E. Jerrett and Michele Miller, each of whom are officers of the Company, have been designated as proxies by the Board of Directors for the Annual Meeting. +3. WHAT IS THE RECORD DATE AND WHAT DOES IT MEAN? +The record date for the Annual Meeting is March 26, 2021 (the “record date”). The record date is established by the Board as required by Delaware law. Only stockholders of record at the close of business on the record date are entitled to: +(a) +receive notice of the Annual Meeting; and +(b) +vote at the Annual Meeting and any adjournment(s) or postponement(s) of the meeting. +Each stockholder of record on the record date is entitled to one vote for each share of Common Stock held. On the record date, there were 72,646,480 shares of our Common +Stock outstanding and entitled to vote at the Annual Meeting. +A list of stockholders will be open for examination by any stockholder for any purpose germane to the Annual Meeting for a period of 10 days prior to the meeting at our principal executive offices at 220 East First Street, Bethlehem, PA 18015, and electronically during the Annual Meeting at www.virtualshareholdermeeting.com/OSUR2021 when you enter the control number provided in the Notice sent to you. +5 +4. WHAT IS THE DIFFERENCE BETWEEN A STOCKHOLDER OF RECORD AND A STOCKHOLDER WHO HOLDS STOCK IN STREET NAME? +If your shares of stock are registered in your name on the books and records of our transfer agent, Computershare, Inc., you are a stockholder of record. +If your shares of stock are held for you in the name of your broker, bank or other nominee, your shares are held in street name. The answer to Question 7 describes brokers’ discretionary voting authority and when your broker, bank or +other nominee is permitted to vote your shares of stock without instructions from you. +It is important that you vote your shares if you are a stockholder of record and, if you hold shares in street name, that you provide appropriate voting instructions to your broker, bank or other nominee as discussed in the answer to Question 7. +5. HOW CAN I VOTE MY SHARES FOR THE ANNUAL MEETING? +All stockholders have a choice of voting via the internet, over the telephone or by completing and mailing a paper Proxy Card, as described below. +Voting via the Internet or by Telephone . Stockholders of record desiring to vote online via the internet or by telephone prior to the Annual Meeting, should go to www.proxyvote.com or call the toll free number indicated on the Proxy Card or Notice. You may vote via the internet or by telephone provided you do so by 11:59 p.m. Eastern Time (8:59 p.m. Pacific Time) on May 17, 2021. Stockholders who attend the Annual Meeting via the internet may vote their shares at that time up to and during the Annual Meeting by following the instructions at www.virtualshareholdermeeting.com/OSUR2021 . +Street name holders may vote via the internet or by telephone if their brokers, banks or other nominees make those methods available. If that is the case, each broker, bank or nominee will include instructions with the Notice or Proxy Statement. +The telephone and internet voting procedures, including the use of control numbers, are designed to authenticate your identity, to allow you to give your voting instructions and +to confirm that your instructions have been recorded properly. +If you vote via the internet, you should understand that you will be responsible for any costs associated with this method of voting, such as usage charges from internet access providers and telephone companies. +Voting by Mail . If you desire to vote prior to the Annual Meeting by mail by using a paper Proxy Card instead of by telephone or via the internet, you will need to either print a copy of the Proxy Card from the website indicated in your Notice or follow the instructions in your Notice to request that a paper copy be sent to you. You will then need to complete, sign, date and return the Proxy Card, as described on the Proxy Card. Street name holders should complete and return the voting card provided by their broker, bank or nominee. +Voting at the Annual Meeting . All stockholders of record may vote online during the Annual Meeting, as described above. Submitting a Proxy via the internet, over the telephone or by mail will not affect your right to withdraw your Proxy and vote during the Annual Meeting. +6. HOW WILL MY SHARES BE VOTED IF I SEND IN A PROXY? +If you are represented by a properly executed Proxy, whether delivered by phone, the internet or mail, your shares will be voted in accordance with your instructions. +If you do not provide instructions with your Proxy, your shares will be voted according to the recommendations of our Board as stated on the Proxy. +6 +7. WILL MY SHARES BE VOTED IF I DO NOT PROVIDE MY PROXY? +Stockholders of Record : If you are a stockholder of record, your shares will not be voted if you do not provide your Proxy, unless you vote online during the Annual Meeting. It is, therefore, important that you vote your shares. +Street Name Holders : If your shares are held in street name and you do not provide your signed and dated voting instruction form to your bank, broker or other nominee, your shares may be voted by your broker, bank or other nominee but only under certain circumstances. Specifically, under rules of the NASDAQ Stock Exchange (“NASDAQ”), shares held in the name of your broker, bank or other nominee may be voted by your broker, bank or other nominee on certain “routine” matters if you do not provide voting instructions. +At the upcoming Annual Meeting, only the ratification of the selection of KPMG LLP as the Company’s independent registered public accounting firm is considered a “routine” matter for which brokers, banks or other nominees may vote uninstructed shares. The other proposals to be voted on at our Annual Meeting (specifically, the election of Director nominees and the advisory vote to approve the compensation of the Company’s NEOs are not considered “routine” under NASDAQ rules, so the broker, bank or other nominee cannot vote your shares on either of these proposals unless you provide to the broker, bank or other nominee voting instructions for each of these matters. If you do not provide voting instructions on these matters, your shares will not be voted on the matter, which is referred to as a “broker non-vote.” It is, therefore, important that you vote your shares. +8. HOW MANY SHARES MUST BE PRESENT TO HOLD THE ANNUAL MEETING? +Your shares are counted as present at the meeting if you attend the meeting and vote online or if you properly return a Proxy by internet, telephone or mail. In order for us to conduct our Annual Meeting, a majority of our outstanding shares of Common Stock as of the March 26, 2021 record +date, must be present online or by Proxy at the meeting. This is referred to as a quorum. Broker non-votes, votes withheld and abstentions are included in determining whether there are a sufficient number of shares present to constitute a quorum. +9. HOW CAN I REVOKE A PROXY? +You can revoke a Proxy before the completion of voting at the Annual Meeting by: +(a) +Giving written notice to the Corporate Secretary of the Company to revoke your Proxy; or +(b) +Delivering a later-dated Proxy that indicates the change in your vote; or +(c) +Logging on to www.proxyvote.com in the same manner you would to submit your Proxy electronically or calling the telephone number indicated in your Notice, and in each case, following the instructions to revoke or change your vote; or +(d) +Attending the Annual Meeting online and voting, which will automatically cancel any Proxy previously given. Attendance alone will not revoke any Proxy that you have given previously. +If you choose any of the first three methods, you must take the described action no later than 11:59 p.m. Eastern Time (8:59 p.m. Pacific Time) on May 17, 2021. Once voting on a particular matter is completed at the Annual Meeting, you will not be able to revoke your Proxy or change your vote. If your shares are held in street name by a broker or other nominee, you must contact that institution to change or revoke your vote. +10. WHAT ITEMS WILL BE VOTED ON AT THE ANNUAL MEETING? +At the Annual Meeting, action will be taken on the matters set forth in the accompanying Notice and described in this Proxy Statement. The Board knows of no other matters to be presented for action at the Annual Meeting. +If any other matters do properly come before the Annual Meeting, the persons named in the Proxy Card will have discretionary authority to vote on those matters in accordance with their best judgment. +11. WHO WILL PAY THE COST OF THIS PROXY SOLICITATION? +Solicitation of Proxies is made on behalf of the Board. The cost of soliciting Proxies will be borne by the Company. In addition to solicitations by e-proxy and/or by mail, certain of our Directors, officers and regular employees may solicit +Proxies personally or by telephone or other means without additional compensation. +7 +We have also engaged Morrow Sodali LLC, 470 West Ave., Stamford, CT 06902, to provide proxy solicitation services at an estimated fee of $7,500 plus expenses. Arrangements will be made with brokerage firms and other +custodians, nominees and fiduciaries to forward solicitation materials to the beneficial owners of stock held of record by such persons, and we will, upon request, reimburse them for their reasonable expenses in so doing. +12. HOW CAN I PARTICIPATE IN THE ANNUAL MEETING? +This year’s Annual Meeting will be a completely virtual meeting of stockholders, and will be conducted via live webcast on the Internet. You are entitled to participate in the Annual Meeting only if you were a stockholder of the Company as of the close of business on March 26, 2021, the record date for the meeting, or if you hold a valid Proxy for the Annual Meeting. +You will be able to participate in the Annual Meeting online and submit your questions during the meeting by +visiting www.virtualshareholdermeeting.com/OSUR2021. To participate in the Annual Meeting, you will need the control number that is included on your Notice, on our proxy card or on the instructions that accompanied your proxy materials. The Annual Meeting will begin promptly at 10:00 a.m. Eastern Time, and you should allow ample time to complete the online check-in procedures. +13 . WHAT IF I HAVE TECHNICAL DIFFICULTIES OR TROUBLE VIEWING THE VIRTUAL MEETING +We have technicians ready to assist you with any technical difficulties during the virtual Annual Meeting. If you encounter any difficulties accessing the virtual meeting +or during the meeting, please call one of the following numbers: +Toll-Free: (844) 986-0822 +International: (303) 562-9302 +14. ARE VOTES CONFIDENTIAL? +We will continue our long-standing practice of holding the votes of each stockholder in confidence from Directors, officers and employees, except: (a) as necessary to meet applicable legal requirements and to assert or defend claims for or against the Company; (b) in the case of a contested +proxy solicitation; (c) if a stockholder makes a written comment on the Proxy Card or otherwise communicates his or her vote to the Company; or (d) as needed to allow the independent inspectors of election to certify the results of the vote. +15. WHO COUNTS THE VOTES? +We will continue, as we have for many years, to retain an independent inspector of election to receive and tabulate +the Proxies and certify the results. These activities will be handled electronically. +16. MAY STOCKHOLDERS ASK QUESTIONS AT THE ANNUAL MEETING? +Yes. The Chairman of the Board will answer stockholders’ written questions submitted during the question and answer period of the meeting. Stockholders should confine their questions to matters that relate to the business of the meeting. The Chairman will determine which questions are appropriate to answer during the meeting. +We reserve the right to edit or reject any questions we deem profane or otherwise inappropriate. Detailed +guidelines for submitting written questions during the meeting are available at www.virtualshareholdermeeting.com/OSUR2021 . +8 +STOCK OWNERSHIP OF CERTAIN BEN EFICIAL OWNERS AND MANAGEMENT +The following table sets forth information, as of the March 26, 2021 record date, (except for Mr. Zezzo, as described below), regarding the beneficial ownership of the Company’s Common Stock by (a) each person who is known by us to be the beneficial owner of more than five percent of the Common Stock outstanding; (b) each Director and nominee for election as Director; (c) each of our executive officers named in the Summary Compensation Table in this Proxy Statement; and (d) all of our Directors and executive officers as a group. Unless otherwise indicated, the address of each person identified below is c/o OraSure Technologies, Inc., 220 East First Street, Bethlehem, Pennsylvania 18015. +Pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), shares of Common Stock which a person has a right to acquire pursuant to the exercise of stock options held by that person that are exercisable within 60 days of March 26, 2021 are deemed to be outstanding for the purpose of computing the ownership percentage of that person, but are not deemed outstanding for computing the ownership percentage of any other person. +Name and Address of +Beneficial Owner +Amount and Nature of +the Beneficial Ownership 1,2 +Percent +of Class +Black Rock, Inc. 3 +55 East 52 nd Street +New York, NY 10055 +11,031,726 +15.2% +The Vanguard Group 4 +100 Vanguard Blvd. +Malvern, PA 19355 +4,964,223 +6.8% +American Capital Management, Inc. 5 +551 Madison Ave., Suite 902 +New York, NY 10022 +4,308,685 +5.9% +Managed Account Advisors, LLC 6 +101 Hudson Street, 9th Floor +Jersey City, NJ 073302 +3,949,904 +5.4% +Stephen S. Tang, Ph.D. +260,201 +* +Jack E. Jerrett +164,932 +* +Lisa Nibauer +33,840 +* +Kathleen G. Weber +128,167 +* +Michael Celano +106,942 +* +Eamonn P. Hobbs +74,355 +* +Mara Aspinall +66,760 +* +Roberto Cuca +108,838 +* +Ronny B. Lancaster +23,830 +* +James A. Datin +18,331 +* +David J. Shulkin, M.D. +15,542 +* +Lelio Marmora +7,015 +* +Anthony Zezzo II 7 +205,674 +* +All Directors and executive officers as a group +(14 people) +1,268,258 +1.7% +_______________________ +* +Less than 1% +1 +Subject to community property laws where applicable, beneficial ownership consists of sole voting and investment power except as otherwise indicated. +2 Includes shares subject to options exercisable within 60 days of March 26, 2021, as follows: Mr. Jerrett, 20,057 shares; Ms. Weber, 14,533 shares; Mr. Celano, 40,000 shares; Mr. Hobbs, 40,000 shares; and Ms. Aspinall, 40,000 shares; and all Directors and executive officers as a group, 191,537 shares. Also includes unvested RS, as follows: Dr. Tang, 130,007 shares; Mr. Cuca, 56,645 shares; Mr. Jerrett, 40,564 shares; Ms. Nibauer 33,840 shares; Ms. Weber, 39,895 shares; Mr. Celano, 8,143 shares; Mr. Hobbs, 6,577 shares; Ms. Aspinall, 6,577 shares;; shares; Mr. Lancaster, 6,577 shares; Mr. Datin, 6,577 shares; Dr. Shulkin, 15,542 shares; and Mr. Marmora 7,015 shares; and all Directors and executive officers as a group, 366,399 shares. Does not include unvested PRUs. +3 +Based on information contained in a Schedule 13G filed January 25, 2021. The filing person has sole voting power with respect to 10,897,737 shares and sole dispositive power with respect to all of the indicated shares. +4 +Based on information contained in a Schedule 13G/A filed February 10, 2021. The filing person has shared voting power with respect to 126,983 shares, sole dispositive power with respect to 4,778,824 shares and shared dispositive power with respect to 185,399 shares. +5 +Based on information contained in a Schedule 13G filed February 16, 2021. The filing person has sole voting with respect to 18,828 shares and sole dispositive power with respect to all of the indicated shares. +9 +6 +Based on information contained in a Schedule 13G filed February 3, 2021. The filing person has sole dispositive power with respect to 3,941,924 shares and shared dispositive power with respect to 7,980 shares. +7 Mr. Zezzo, who served as the Company’s Executive Vice President, Business Unit Leader, Infectious Disease retired on June 30, 2020. The indicated shares reflect Mr. Zezzo’s ownership as of his retirement date and do not include a RS award granted with immediate vesting on February 1, 2021, net of shares withheld to cover taxes, for 5,175 shares or PRUs vested on February 1, 2021, net of shares withheld to cover taxes, for 4,900 shares. +CORPORATE GOVERNANCE +BOARD RESPONSIBILITIES, OPERATION AND COMPOSITION +The primary responsibility of the Board of Directors is to promote the long-term success of the Company. In fulfilling this role, each Director must exhibit good faith business judgment as to what is in the best interests of the Company. The Board is responsible for establishing broad corporate policies, setting strategic direction and overseeing management. The Company’s management is responsible for the day-to-day operations of the Company. +The Board is divided into three classes with each class consisting of one-third of the total number of Directors on the Board. There are currently eight Directors serving on the Board. At each annual meeting of stockholders, the nominees for the class of Directors whose term is expiring at that annual meeting are elected for a three-year term. A Director holds office until the annual meeting of stockholders for the year in which his or her term expires or until his or her successor is elected and duly qualified, subject to prior death, resignation, retirement, disqualification or removal. Each nominee for election at our upcoming Annual Meeting currently serves as a Director. +The Board typically holds regular meetings in February, May, August and November of each year, with special meetings held as needed. The Board’s organizational meeting follows the annual meeting of stockholders. The Board usually meets in executive session at all regularly scheduled meetings. The Board held 14 meetings and acted by written consent on three occasions during the fiscal year ended December 31, 2020. Each member of the Board attended more than 75 percent of the combined total of meetings of the Board and of the Committees of the Board on which such member served during the period in the year in which he or she served as a Director. +The Board holds four regularly scheduled meetings each year and special meetings as needed. Directors attended greater than 75% of all Board and Committee meetings during 2020. +GOVERNANCE GUIDELINES AND CODE OF CONDUCT +The Board has adopted Corporate Governance Principles which, along with the Charters for each of its Committees and the Company’s Code of Business Conduct and Ethics, provide a framework for the governance of the Company. The Company’s Corporate Governance Principles address matters such as the responsibilities and composition of the Board, Director independence and the conduct of Board and Committee meetings. The Company’s Code of Business Conduct and Ethics sets forth guiding principles of business ethics and certain legal requirements applicable to all Company employees and non-employee Directors. Copies of the current Corporate Governance Principles and Code of Business Conduct and Ethics are available on the Company’s website, www.orasure.com . +We operate under a Code of Business Conduct and Ethics and Corporate Governance Principles, which apply to all employees and non-employee Board members. +Environmental, Social and Governance Issues +We believe that conducting our business in a socially, environmentally and ethically responsible manner, and in compliance with applicable legal requirements, is important to our long-term success and the health and well-being of our employees, customers, the communities that we serve and other stakeholders. As a result, environmental, social and governance (“ESG”) issues have become an increasingly important focus for our management team and our Board. +ESG Oversight +Historically, ESG issues have been addressed by the management teams in our various companies with the primary focus on regulatory and legal compliance, ethical operations and development of our human capital resources. Material risks in these areas have been regularly reviewed with our Board, either directly or through the Audit Committee. Beginning +10 +in 2021, our management will be forming a cross functional team to review ESG issues more formally in order to identify material ESG risks impacting our business and determining appropriate mitigation and corrective strategies. These risks will be discussed with our Board beginning in 2021 and at least annually thereafter as part of the Board’s oversight of risk management. +Environmental +We endeavor to implement responsible and sustainable environmental practices throughout our organization. Our goal is to eliminate or minimize any harm to our employees, the communities that we serve and the environment. +We follow practices to reduce our energy usage and operate more efficiently, including through the use of motion detectors and timers to reduce electricity usage. We also have implemented a Company-wide waste recycling program under which recyclable materials are segregated for removal and appropriate handling. Hazardous and medical waste is also segregated and disposed of in accordance with applicable laws and regulations. +During 2020, our management team formed a Sustainability Committee to focus on identifying additional steps we can take to reduce our carbon footprint, including through the use of solar and renewable energy sources and promoting clean communities by encouraging the use of bicycles and public transportation by our employees to commute to work. +Social +We believe our employees are among our most important resources and are critical to our continued success. The health and safety of our workforce is a critical priority across our organization. We safeguard our people, projects and reputation by striving for zero employee injuries and illnesses, while operating and delivering our work responsibly and sustainably. We provide our employees upfront and ongoing safety training to ensure that safety policies and procedures are effectively communicated and implemented. Personal protective equipment is provided to those employees where needed for the employees to safely perform their job function. We have formed a Safety Committee consisting of employees from various functional departments to administer our internal safety inspection program, investigate safety incidents and oversee the effectiveness of our safety procedures and policies. +During 2020, in response to the COVID-19 pandemic, we implemented safety protocols and new procedures to protect our employees, our subcontractors and our customers. These protocols include complying with social distancing and other health and safety standards as required by federal, state and local government agencies, taking into consideration guidelines from the Centers for Disease Control and Prevention and other public health authorities. In addition, we modified the way we conduct many aspects of our business to reduce the number of in-person interactions. For example, we significantly expanded the use of virtual interactions in all aspects of our business, including customer facing activities, and we eliminated or substantially reduced the need for our employees to travel. Many of our administrative and operational functions during this time have required modification as well, including much of our workforce working remotely. +As part of our compensation philosophy, we believe that we must offer and maintain market competitive compensation and benefits programs for our employees in order to attract and retain superior talent. In addition to competitive base wages, additional programs include annual bonus opportunities, a Company matched 401(k) Plan or other savings plan, healthcare and insurance benefits, health savings and flexible spending accounts, paid time off, family leave, flexible work schedules, and employee assistance programs. +We focus significant attention on attracting and retaining talented and experienced individuals to manage and support our operations, and our management team routinely reviews employee turnover rates at various levels of the organization. Management also reviews employee engagement and satisfaction surveys to monitor employee morale and receive feedback on a variety of issues. +The OraSure family of companies is committed to creating and fostering a diverse, equitable, and inclusive workplace that reflects and contributes to the global communities in which we do business and the customers and partners we serve. This includes all communities impacted by our corporate presence. Our management teams and all of our employees are expected to exhibit and promote honest, ethical and respectful conduct in the workplace. All of our employees must adhere to a Code of Business Conduct and Ethics that sets standards for appropriate behavior and includes required annual training on preventing, identifying, reporting and stopping any type of unlawful discrimination. We strive to recruit the best people for the job regardless of gender, ethnicity or other protected trait and it is our policy to fully comply with all laws (domestic and foreign) applicable to discrimination in the workplace. We have established a hotline and other communication methods that employees can use to anonymously submit discrimination or other complaints. +11 +We have an active Diversity, Equity and Inclusion Council that strives to drive diversity, equity and inclusion within the workplace. At OraSure, we believe a variety of perspectives are critical to achieving success, and that diversity, equity and inclusion are key drivers to growth-based innovation and profitability. We are committed to creat ing a culture where all people feel valued, supported, and inspired to be themselves fearlessly, without judgement. We believe that when all voices are heard, we honor and exemplify our core values and best serve our customers and communities. +Governance +Our overall corporate mission is to do good and help solve the world’s greatest health challenges. We are committed to making a difference in the world of individual and public health by enabling access to discovery and diagnostics. Our innovative diagnostic and specimen collection devices have significantly contributed to public health on a global basis. +In pursuing our mission, we are committed to operating our business in accordance with the highest moral, legal and ethical standards. As previously mentioned, we have adopted a Code of Business Conduct and Ethics in order to define the high standards under which all members of our Board and all of our employees are expected to operate. We also have an Anti-Corruption Policy, a Policy on Interactions with Healthcare Professionals and other policies which further require honest, ethical and lawful behavior. These policies are part of a broader compliance program designed to ensure that all policies and legal requirements are followed, that we make and sell high-quality products in accordance with applicable regulatory requirements and that we otherwise operate in a responsible, ethical and compliant manner. +INDEPENDENT BOARD CHAIRMAN +The positions of Chairman of the Board and CEO of the Company are held by different individuals, with the Chairman being independent of management. +Currently, the Company’s Chief Executive Officer does not hold the position of Chairman of the Board as the Company believes it is appropriate for the Board to be led by an individual who is independent of management. The Board has carefully considered its leadership structure and believes at this time that the Company and its stockholders are best served by having the positions of Chairman and Chief Executive Officer filled by different individuals. This allows the Chief Executive Officer to, among other things, focus on the Company’s day-to-day business, while allowing the Chairman to lead the Board in its fundamental role of providing strategic advice and oversight of management. In the future, however, the Board may reconsider whether its Chief Executive Officer should also serve as Board Chairman or may elect to rotate the position of Board Chairman to other independent Directors. +DIRECTOR INDEPENDENCE +Our Corporate Governance Guidelines require, among other things, that a majority of the members of the Board meet the independence requirements of the SEC and NASDAQ, on which our Common Stock is listed. Each year our Board, with assistance from the Nominating and Corporate Governance Committee, conducts a review of Director independence. The most recent annual review occurred in the first quarter of 2021, during which the Board considered transactions and relationships, if any, between each Director and any member of such Director’s immediate family +A majority of our Directors are independent as required under applicable SEC and NASDAQ rules. All standing Board Committees consist of independent Directors. +and the Company. As a result of this review, the Board determined that Mara Aspinall, Michael Celano, James A. Datin, Eamonn P. Hobbs, Ronny B. Lancaster, Lelio Marmora and David J. Shulkin, M.D., are “independent,” as that term is defined in the applicable rules of NASDAQ and the SEC. Stephen S. Tang, Ph.D., was determined by the Board not to be independent because he is currently an executive officer employed by the Company. Based on the foregoing, the Board of Directors is comprised of a majority of independent Directors. All standing Committees of the Board are also comprised solely of independent Directors. +12 +OVERSIGHT OF RISK MANAGEMENT +As part of its oversight of the Company’s operations, the Board and Audit Committee monitor the management of risks by the Company’s executives. The Audit Committee reviews the risks that the Company may face and receives reports from senior management on the nature of these risks and the procedures and processes in place to manage and mitigate such risks. Substantive areas of risk reviewed by the Audit Committee include financial, legal, regulatory, operational, information technology, cybersecurity and employment matters. The Audit Committee provides a report to the full Board on the matters covered during each of its meetings, including +The Board and Audit Committee monitor the major risks facing the Company and the procedures and processes implemented by management to mitigate those risks. +its risk monitoring activities. In addition, senior management provides periodic reports to the full Board on the major risks facing the Company and the processes and procedures in place to manage such risks. Management also conducts a risk assessment of the Company’s compensation policies and practices, including its executive compensation program, as described in greater detail in the Section of this Proxy Statement entitled, “Compensation Committee Matters.” +ANNUAL MEETING ATTENDANCE AND STOCKHOLDER COMMUNICATIONS +The Board has approved a policy concerning Board members’ attendance at our Annual Meeting of Stockholders and a process for security holders to send communications to members of the Board. A description of the Board’s policy on annual meeting attendance is provided on our website, at www.orasure.com . As a general matter, each Board member is required to attend each Annual Meeting of Stockholders. Our 2020 Annual Meeting was attended by all members of the Board. +Security holders may communicate with the Board by sending their communications to OraSure Technologies, Inc., 220 East First Street, Bethlehem, Pennsylvania 18015, Attention: Corporate Secretary, fax: (610) 882-2275, email: corporatesecretary@orasure.com . +All Board members are required to attend each Annual Meeting of Stockholders. The entire Board attended the 2020 Annual Meeting. +COMMITTEES OF THE BOARD +The Board currently has a standing Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee. Members of these committees are each “independent,” as defined in the Exchange Act and NASDAQ rules applicable to such Committees. In addition, the Board has determined that Michael Celano is an “audit committee financial expert,” as that term is defined by applicable rules of the SEC. Each committee operates pursuant to a written charter, copies of which are available on our website, at www.orasure.com . Additional information on each standing committee is provided below: +13 +AUDIT COMMITTEE +Committee Members*: +Responsibilities: +• Oversees accounting and financial reporting process, internal controls and audits. +• Consults with management and the Company’s independent registered public accounting firm on, among other items, matters related to the annual audits, the published financial statements and the accounting principles applied. +• Appoints, evaluates and retains our independent registered public accounting firm. +• Responsible for the compensation, termination and oversight of our independent registered public accounting firm. +• Evaluates the independent registered public accounting firm’s qualifications, performance and independence. +• Approves all services provided by the independent registered public accounting firm. +• Monitors the Company’s major risk exposures and reviews risk assessment and mitigation policies. +• Maintains procedures for the receipt, retention and treatment, on a confidential basis, of complaints received by the Company regarding accounting, internal accounting controls or auditing matters, and the confidential, anonymous submissions by employees of concerns regarding questionable accounting or auditing matters. +Mara G. Aspinall +(C, I) +Michael Celano +( ,I) +James A. Datin +(I) +Lelio Marmora +(I) +David J. Shulkin, M.D. +(I) +Number of Meetings during +fiscal 2020: 10 +C – Committee Chair +– Determined by the Board to be an audit committee financial expert as defined under applicable SEC Rules. +I – Determined by the Board to be independent under applicable SEC and NASDAQ rules. +* - In April 2020, Dr. Shulkin was appointed as a Class I Director and a member of the Audit Committee and Nominating and Corporate Governance Committee. Ms. Aspinall was appointed as Chairman of the Audit Committee in May 2020. In June 2020, Mr. Marmora was appointed as a Director and a member of the Audit Committee and Nominating and Corporate Governance Committee. +COMPENSATION COMMITTEE +Committee Members: +Responsibilities: +• Oversees compensation for executives and non-employee Directors. +• Reviews and recommends to the Board for approval the performance criteria and goals and objectives for CEO compensation. +• In consultation with other independent non-employee Directors, evaluates the CEO’s annual performance. +• Evaluates and recommends to the Board for approval the CEO’s compensation. +• In consultation with the CEO, reviews and approves the compensation of other executive officers. +• Establishes performance measures and goals and evaluates the attainment of such goals under performance-based incentive compensation plans. +• Reviews compensation and benefits issues relating to the Company. +• Reviews and recommends for Board approval, the terms of any employment or retirement agreements between the Company and each executive officer. +• Periodically reviews and administers the Company’s Compensation Recoupment Policy for executive officers and non-employee Directors. +• Reviews compliance with the Company’s Stock Ownership Guidelines. +Ronny B. Lancaster +(C, I) +Mara G. Aspinall +(I) +Michael Celano +(I) +James A. Datin +(I) +Eamonn P. Hobbs +(I) +Number of Meetings during +fiscal 2020: 8 +14 +NOMINATING AND CORPORATE GOVERNANCE COMMITTEE +Committee Members*: +Responsibilities: +• Identifies, evaluates and recommends candidates for nomination or re-election to the Board. +• Reviewsand makes recommendations to the Board on the range of skills, qualifications and expertise required for service as a Director. +• Reviewsand recommends for Board approval the appropriate structure of the Board. +• Reviews and recommends for Board approval the appropriate structure of Board committees, and recommends committee assignments and candidates for the position of Chairman of each committee. +• Develops and recommends for Board approval a set of Corporate Governance Guidelines and a Code of Business Conduct and Ethics, and procedures for the implementation thereof. +• Periodically reviews and recommends for Board approval the Board’s leadership structure, including whether the same person should serve as both CEO and Chairman of the Board. +• Assists in the development of succession plans for the Company’s CEO and other executives. +• Assists the Board in evaluating the independence of individual Directors for purposes of Board and committee service. +• Develops and implements an annual self-evaluation process for the Board and its committees +Eamonn P. Hobbs +(C, I) +Ronny B. Lancaster +(I) +Lelio Marmora +(I) +David J. Shulkin, M.D. +(I) +Number of Meetings during +fiscal 2020: 4 +C – Committee Chair +I – Determined by the Board to be independent under applicable SEC and NASDAQ rules. +* - In April 2020, Dr. Shulkin was appointed as a Director and a member of the Audit Committee and Nominating and Corporate Governance Committee. In June 2020, Mr. Marmora was appointed as a Director and a member of the Audit Committee and Nominating and Corporate Governance Committee. +15 +NOMINATION OF DIRECTORS +Our Bylaws provide that nominations for election to the Board may be made by the Board or by any stockholder entitled to vote for the election of Directors at the Annual Meeting. A stockholder’s notice of nomination must be made in writing to the Company’s Corporate Secretary and must be delivered to or received at our principal executive offices not less than ninety (90) days nor more than one hundred twenty (120) days prior to the meeting. However, in the event that less than one hundred +Stockholders can nominate individuals to serve on the Board by following the procedures described in the Company’s Bylaws. +(100) days’ notice or prior public disclosure of the date of the meeting is given or made to stockholders, in order for notice by the stockholder to be timely, notice must be received no later than the close of business on the tenth (10 th ) day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made, whichever first occurs. The notice to the Corporate Secretary must set forth, with respect to the nominee, the name, age, business address, residence address, principal occupation or employment of the person, the class and number of shares of capital stock of the Company which are beneficially owned by the person, and any other information relating to the person that is required to be disclosed in solicitations for proxies for election of Directors pursuant to Regulation 14A under the Exchange Act. The notice must also include, as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination is made: (i) the name and address of the stockholder and such beneficial owner; (ii) the class and number of shares of capital stock of the Company which are held of record or beneficially owned by such stockholder and such beneficial owner and any other direct or indirect pecuniary or economic interest in any capital stock of the Company of such stockholder and beneficial owner, including without limitation, any derivative instrument, swap, option, warrant, short interest, hedge, profit sharing arrangement or borrowed or loaned shares; (iii) a description of any arrangements or understandings between such stockholder and beneficial owner and each proposed nominee and any other person (including their names) pursuant to which the nomination(s) are to be made by such stockholder and such beneficial owner or with respect to actions to be proposed or taken by such nominee if elected as a Director; (iv) a representation that such stockholder intends to appear in person or by proxy at the meeting to nominate the persons named in its notice; and (v) any other information relating to such stockholder and such beneficial owner that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of Directors, or may otherwise be required pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder. We may also require any proposed nominee to furnish such other information as we may reasonably require to determine the eligibility of the proposed nominee to serve as a Director of the Company. +The Nominating and Corporate Governance Committee may also consult with outside advisors or retain search firms to assist in the search for qualified candidates. Candidates recommended by stockholders will be considered by the Nominating and Corporate Governance Committee in the same manner as candidates recommended by other sources, but only if the stockholder makes a recommendation in accordance with the advance notification provisions set forth in the Company’s Bylaws. +DIRECTOR QUALIFICATIONS +The Board considers diversity, including personal factor such as race and gender, and other relevant factors in evaluating Director candidates. In determining whether incumbent Directors will be nominated for re-election, we evaluate the individual’s background, experience and prior service as a Director. +Although there is no formal policy governing Board diversity, the Nominating and Corporate Governance Committee considers diversity as one of many factors in identifying new candidates for the Board. Such diversity includes personal characteristics such as race and gender as well as diversity in background and skills and experience that relate to our Board’s performance of its responsibilities. Currently, of the eight Directors on the Board, one is a woman, one is African-American and one is Chinese-American. The Nominating and Corporate Governance Committee does not assign specific weight to any particular criteria when reviewing candidates and may not apply the same criteria to all prospective nominees. +16 +INSIDER TRADING +Our Insider Trading Policy prohibits trading by Directors, executive officers or employees who are in possession of material nonpublic information about the Company. +We have a policy designed to prevent any trading in the Company’s Common Stock or other securities by Directors, executive officers and certain other employees of the Company and its affiliates while such person is in possession of material nonpublic information. The policy prohibits trading in the Company’s securities on the basis of material nonpublic information, requires preapproval of transactions in Company securities for Directors, executive officers and all other employees and establishes regular trading windows after each calendar quarter following the Company’s announcement of its quarterly financial results. +PROHIBITION AGAINST SHORT SALES, HEDGING AND PLEDGING +We believe it is inappropriate for any employee of the Company or its affiliates or any member of the Board to engage in short-term or speculative transactions involving Company securities, including entering into financial instruments or engaging in other transactions that hedge or offset, or that are designed to hedge or offset, any decrease in the market value of our Common Stock. As a result, our insider trading policy prohibits Directors, executive officers and all other employees from entering into transactions involving our Common Stock, such as short sales, the buying or selling of puts or calls, the purchase of securities on margin, prepaid variable forward contracts, equity swaps, collars, exchange funds and other similar financial instruments. Our policy also prohibits employees and Directors from pledging shares of our Common Stock as collateral. +We have implemented several governance policies related to our Common Stock. Our policies prohibit short-term, speculative transactions in our stock, such as hedging, pledging and short sales. +STOCK OWNERSHIP AND RETENTION GUIDELINES +We have implemented stock ownership and retention guidelines for our CEO, other executives and members of the Board. +The Board has adopted stock ownership and retention guidelines applicable to our President and CEO, our CFO and all of our other executive officers and all non-employee members of the Board. Under these guidelines, the covered individuals must meet the following ownership requirements, expressed either as a multiple of base salary (in the case of Company officers) or annual cash fees (in the case of non-employee Board members): +Covered Individual +Multiple of Base Salary +or Director Fees +President and Chief Executive Officer +6x +Chief Financial Officer +2x +Other Executive Officers +1x +Non-Employee Directors +3x +Any individual who becomes subject to the guidelines is required to meet the guidelines within five years. Any individual already subject to the guidelines who becomes subject to a higher ownership requirement, due to a promotion, a further amendment to the guidelines or an increase in compensation, is required to meet the new ownership requirement within five years following the effective date of promotion, change in compensation or guideline amendment. In determining whether an individual meets the required ownership requirement, shares owned directly or indirectly, restricted stock (including both time and performance-based) and shares deferred under our deferred compensation plan will be counted. Compliance will be determined as of December 31 of each fiscal year. The guidelines also require each covered individual to retain at least 50% of the net shares acquired upon the exercise of stock options and the vesting of restricted stock until the individual’s holdings of Common Stock equal or exceed the applicable ownership requirement. As of December 31, 2020, all covered officers and non-employee Directors were in compliance with the stock ownership guidelines. +17 +AUDIT COMMITTEE MATTERS +REPORT OF THE AUDIT COMMITTEE FOR THE YEAR ENDED DECEMBER 31, 2020 +The information contained in this report shall not be deemed to be “soliciting material” or “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to liability under that Section. This report shall not be deemed “incorporated by reference” into any document filed under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, whether such filing occurs before or after the date hereof, regardless of any general incorporation language in such filing. +The role of the Audit Committee is to assist the Board of Directors in fulfilling its responsibilities to oversee management’s conduct of the Company’s financial reporting process, including monitoring (1) the participation of management and the outside independent registered public accounting firm in the financial reporting process, (2) the Company’s systems of internal accounting and financial controls, (3) the annual independent audit of the Company’s financial statements and (4) the qualifications, independence and performance of the outside independent registered public accounting firm. The Audit Committee selects the Company’s outside independent registered public accounting firm, and once selected, the outside independent registered public accounting firm reports directly to the Audit Committee. The Audit Committee is responsible for approving both audit and non-audit services to be provided by the outside independent registered public accounting firm. The Audit Committee is composed of five (5) non-employee directors and operates pursuant to a Charter that was last amended and restated by the Board on May 18, 2020 (which can be found on the Company’s website at www.orasure.com ). +Management of the Company is responsible for the preparation, presentation and integrity of the Company’s financial statements, the Company’s accounting and financial reporting principles and internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations. The independent registered public accounting firm is responsible for auditing the Company’s financial statements and expressing an opinion as to their conformity with U.S. generally accepted accounting principles. The Audit Committee’s responsibility is to monitor and review these processes. It is not the Audit Committee’s duty or responsibility to conduct auditing or accounting reviews. +In the performance of its oversight function, the Audit Committee has considered and discussed the audited financial statements with management, which included a discussion of not only the quality, but also the acceptability, of the accounting principles, the reasonableness of significant judgments and the clarity of disclosures in the financial statements. The Audit Committee met with the independent registered public accounting firm, with and without management, to discuss the results of their audit and their judgments regarding the Company’s accounting policies. The Audit Committee has also discussed with the independent registered public accounting firm the matters required to be discussed under applicable standards, including those in Public Company Accounting Oversight Board Auditing Standard No. 1301, as currently in effect. Finally, the Audit Committee has received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the Public Company Accounting Oversight Board as currently in effect, has considered whether the provision of non-audit services by the independent registered public accounting firm to the Company is compatible with maintaining the firm’s independence and has discussed with the independent registered public accounting firm the firm’s independence. +Based upon the reports and discussions described in this report, and subject to the limitations on the role and responsibilities of the Audit Committee referred to above and in the Audit Committee’s Charter, the Audit Committee recommended to the Board that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 for filing with the SEC and selected KPMG LLP as the independent registered public accounting firm for fiscal year 2021. The Board is recommending that stockholders ratify that selection at the Annual Meeting. +Submitted by the Audit Committee of the Company’s Board of Directors: +Mara G. Aspinall, Chairman +Michael Celano +James A. Datin +Lelio Marmora +David J. Shulkin, M.D. +February 26, 2021 +18 +AUDIT FEES; AUDIT RELATED FEES; TAX FEES; ALL OTHER FEES +The following table presents fees for professional audit services rendered by KPMG LLP (i) for the audits of our annual consolidated financial statements and review of the financial statements in our Quarterly Reports on Form 10-Q for the fiscal years ended December 31, 2020 and 2019, and (ii) for the audits of our internal control over financial reporting as of December 31, 2020 and 2019. The following table also includes fees billed for other services rendered by KPMG: +2020 +2019 +Audit fees 1 +$ +1,231,138 +$ +1,095,750 +Audit-related fees 2 +$ +50,000 +$ +201,000 +Tax fees 3 +$ +250,408 +$ +216,512 +Total fees +$ +1,531,546 +$ +1,513,262 +1 +Includes fees related to the audits of our consolidated annual financial statements, interim reviews of our quarterly financial statements and audits of our internal control over financial reporting for each indicated year and procedures related to business combination transactions which occurred in 2020 and 2019. Includes fees for the preparation of a comfort letter for a stock offering under a shelf registration in 2020 and preparation of a written consent for a Registration Statement on Form S-8 in 2020 related to the OraSure Technologies, Inc. Stock Award Plan. +2 +Includes fees for due diligence related to several acquisitions in 2020 and 2019. +3 +During the fiscal years ended December 31, 2020 and 2019, KPMG was engaged to provide tax compliance, planning and consulting services. +PRE-APPROVAL PROCEDURES +The Audit Committee has adopted a general practice of pre-approving all audit and non-audit services provided to the Company by our independent registered public accounting firm. The Chairman of the Audit Committee has been delegated the authority to pre-approve audit and non-audit services having an aggregate value of up to $50,000 between meetings of the Audit Committee, provided that such pre-approval is communicated to the Audit Committee at its next scheduled meeting. All services by KPMG in 2020 and 2019 were approved in accordance with these practices. +COMPENSATION COMMITTEE MATTERS +The Compensation Committee assists the Board in developing and managing the compensation provided to executive officers of the Company and non-employee members of the Board. The Compensation Committee is responsible for developing and overseeing the implementation of the Company’s compensation philosophy and for setting executive compensation at levels that are sufficiently competitive so that the Company can attract, retain, motivate and reward high quality executives who can contribute to the Company’s success. +COMPENSATION PROCESSES AND PROCEDURES +Compensation for executives is established by the Compensation Committee in accordance with the compensation philosophy established under its charter as set forth in the CD&A Section of this Proxy Statement. In setting executive compensation, the Compensation Committee considers the Company’s and each executive’s performance against previously established objectives, internal pay equity, the compensation practices of the Company’s peer group (as set forth in the CD&A) (“Peer Group”), the Company’s industry position and general industry compensation data. The Compensation Committee periodically retains independent compensation consultants to review our executive compensation practices and to assist in establishing competitive compensation levels for our executives. +ANNUAL PERFORMANCE EVALUATIONS +On an annual basis, the Compensation Committee and other non-employee Directors evaluate the performance of the CEO, based on the overall performance of the Company. The CEO also evaluates the performance of the other NEOs against their respective predetermined performance objectives. Annual performance objectives for the NEOs are established at the beginning of the applicable year and generally include two parts: (1) the Company’s overall target financial objectives, and (2) individual objectives in the functional areas for which the executive is responsible. +19 +Depending on the Company’s overall performance and the extent to which an executive achieves his or her individual objectives for a particular year, the executive will be rated as “Does Not Meet,” “Does Not Consistently Meet,” “Meets Expectations,” “Exceeds Expectations” or “Outstanding.” On occasion, a blended rating such as “Meets/Exceeds” or “High Meets” will be used to indicate performance between the foregoing performance rating levels. The Compensation Committee uses the performance ratings and other factors to determine base salary adjustments, incentive cash bonuses and long-term incentive equity awards. Although this approach was also followed in evaluating Dr. Tang’s performance for 2020, Dr. Tang’s performance assessment is primarily based on the Company’s overall performance. +ROLE OF THE COMPENSATION COMMITTEE +The Compensation Committee is comprised of independent non-employee Directors who oversee our executive compensation program. Each year, the Compensation Committee determines or recommends (in the case of the CEO) the appropriate level of compensation for all NEOs. As an initial guideline, the Compensation Committee sets the total direct compensation opportunity (base salary, annual incentive bonus target, and long-term incentive equity target) for each of our executive officers within a range around the 50th percentile of comparable medical diagnostics and healthcare companies. The variation of actual pay relative to the market data is dependent on the executive officer’s performance, experience, knowledge, skills, level of responsibility, potential to impact our performance and future success, and the need to retain and motivate strategic talent. +The Compensation Committee generally determines an executive officer’s compensation based upon the objectives of our executive compensation program. The Compensation Committee makes compensation recommendations to the Board for the CEO and approves decisions for the other NEOs after careful review and analysis of appropriate performance information and market compensation data. Compensation for the CEO is approved by the independent members of the Board of Directors. +Beyond determining and recommending (in the case of the CEO) specific compensation for the NEOs, the Compensation Committee works with the executive management team to review and adjust compensation policies and practices to ensure that they remain consistent with the Company’s values and philosophy, support the recruitment and retention of executive talent, and help the Company achieve its business objectives. The Compensation Committee also determines a market-based level of compensation for non-employee Directors. +ROLE OF THE CEO +The CEO provides performance assessments and recommendations to the Compensation Committee on the compensation for each executive of the Company. The CEO’s recommendations are based on his review of each executive’s performance, job responsibilities, importance to our overall business strategy, and our compensation philosophy. Although the CEO’s recommendations are given significant weight, the Compensation Committee retains full discretion when determining compensation. +ROLE OF THE COMPENSATION CONSULTANT +To assist in the review of executive compensation and to obtain information regarding market trends and governance best practices, the Compensation Committee engages independent executive compensation consultants to analyze our executive compensation structure and plan designs, and to assess whether our compensation program is competitive and supports our goal of aligning the interests of our executive officers with those of our stockholders. Such consultants also provide the Compensation Committee with the Peer Group and other market data that is discussed in the CD&A, which the Compensation Committee evaluates when establishing programs and features and determining compensation for executive officers. In connection with its 2020 compensation decisions, the Compensation Committee engaged Pay Governance LLC (“Pay Governance”) to provide market assessments of the target compensation for our executives and consult on the preparation of this Proxy Statement. +The Compensation Committee has the sole authority to approve any independent compensation consultant’s fees and terms of engagement. The Compensation Committee annually reviews its relationship with each consultant to ensure their independence. The process in 2020 included a review of the services Pay Governance provides, the quality of those services, and the fees associated with those services during the fiscal year as well as consideration of the factors impacting independence that NASDAQ rules require and a review of Pay Governance’s independence policy. The Compensation Committee concluded that there were no conflicts of interest that prevented Pay Governance from serving as an independent consultant to the Compensation Committee on executive compensation matters. +20 +COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION +Mara G. Aspinall, Michael Celano, James A., Datin, Eamonn P. Hobbs and Ronny B. Lancaster each served as members of the Compensation Committee during 2020, with Mr. Lancaster serving as Chairman. None of these Directors has served or is currently serving as an officer or employee of the Company, nor have they engaged in any transactions involving the Company which would require disclosure as a transaction with a related person. There are no Compensation Committee interlocks between the Company and any other entity involving the Company’s or such entity’s executive officers or board members. +COMPENSATION COMMITTEE REPORT +The information contained in this report shall not be deemed to be “soliciting material” or “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that Section. This report shall not be deemed to be “ incorporated by reference” into any document filed under the Securities Act or the Exchange Act, whether such filing occurs before or after the date hereof, regardless of any general incorporation language in such filing. +The Compensation Committee of OraSure Technologies, Inc. has reviewed and discussed with the Company’s management the Compensation Discussion and Analysis, contained in this Proxy Statement. Based on that review and discussion, the Compensation Committee recommended to the Company’s Board of Directors that the foregoing Compensation Discussion and Analysis be included in the Company’s 2020 Annual Report on Form 10-K Report and Proxy Statement for the 2021 Annual Meeting of Stockholders. +COMPENSATION COMMITTEE: +Ronny B. Lancaster, Chairman +Mara G. Aspinall +Michael Celano +James A. Datin +Eamonn P. Hobbs +March 28, 2021 +21 +EXECUTIVE OFFICERS +The table below provides information about the executive officers of the Company as of March 26, 2021. Officers of the Company hold office at the discretion of the Board. +Name 1 +Age +Position +Stephen S. Tang +60 +President and Chief Executive Officer +Roberto Cuca +53 +Chief Financial Officer +Lisa Nibauer +53 +Executive Vice President, Business Unit Leader, Diagnostics +Kathleen G. Weber +54 +Executive Vice President, Business Unit Leader, Molecular Solutions +Jack E. Jerrett +62 +Senior Vice President, General Counsel and Chief Compliance Officer +Michele Miller +47 +Vice President, Finance, Controller and Assistant Secretary +____________________ +1 Anthony Zezzo II, who served as the Company’s Executive Vice President, Business Unit Leader, Infectious Disease and was an executive officer during 2020, left the Company in June 2020. Ms. Nibauer joined the Company in May 2020. +Stephen S. Tang, Ph.D., President and Chief Executive Officer +Stephen S. Tang, Ph.D., became a member of the Board in April 2011 and served as the Company’s Chairman until he became the Company’s President and CEO on April 1, 2018. From January 2008 to March 2018, Dr. Tang served as President and Chief Executive Officer of the University City Science Center, an urban research park and business incubator owned by over thirty leading universities, medical schools and health networks in the greater Philadelphia, Pennsylvania area. Prior to his tenure at the University City Science Center, Dr. Tang held senior management and business development positions with several firms in the life sciences industry, including Olympus America, Inc., Millennium Cell Inc. and A.T. Kearney Inc. Dr. Tang holds a B.S. degree in Chemistry from The College of William and Mary, an M.S. and Ph.D. in Chemical Engineering from Lehigh University and an M.B.A. from The Wharton School of Business at the University of Pennsylvania. +Roberto Cuca, Chief Financial Officer +Roberto Cuca joined the Company in May 2018, initially serving as Senior Advisor until his appointment as the Company’s Chief Financial Officer in June 2018. Prior to joining the Company, Mr. Cuca served as Senior Vice President and Chief Financial Officer of Trevena, Inc., a clinical stage biopharmaceutical company, where he led the finance and investor relations functions and worked with senior management to establish and execute overall corporate strategy. Prior to his tenure with Trevana, Mr. Cuca held various leadership positions in the finance organization of Endo Health Solutions Inc., a pharmaceutical company, including Treasurer and Senior Vice President, Finance, where he was responsible for capital raises and cash management, mergers, acquisitions and licensing transactions, tax planning and compliance, and risk management. Before he joined Endo, Mr. Cuca served as the Director, Corporate and Business Development at moksha8 Pharmaceuticals, Inc., an emerging markets-focused pharmaceutical company, and as an equity analyst covering U.S. pharmaceutical companies at J.P. Morgan Chase & Co. Mr. Cuca received an M.B.A. from The Wharton School of the University of Pennsylvania, a Juris Doctor from Cornell Law School, and an A.B. from Princeton University. Mr. Cuca is also a CFA Charterholder. +22 +Lisa Nibauer, Executive Vice President, Business Unit Leader, Diagnostics +Lisa Nibauer joined the Company as Executive Vice President, Business Unit Leader, Diagnostics in May 2020. Prior to that, Ms. Nibauer spent eight years at BD Becton Dickinson, Inc. (“BD”), most recently as VP/GM, Global Medication Delivery Solutions. In that role, she had general management responsibility for $1.6 billion in annual revenue and a team of over 300 people globally and was also accountable for the Global Marketing function for the largest business unit in BD. Prior to that, Ms. Nibauer held the positions at BD of VP/GM, Global PreAnalytical Systems Business & Global Marketing and Senior Director, Global Blood Collection Acquisition Platform. Prior to joining BD, she held general management, sales and marketing positions with increasing responsibilities at Adlens Beacon Inc., Schering-Plough Consumer Healthcare (Bayer), General Mills, Elf Atochem, and ICI (now part of AstraZeneca, Henkel and AkzoNobel). Ms. Nibauer earned an M.B.A. from the UCLA Anderson School of Management and a B.S. in Chemical Engineering from Lehigh University. +Kathleen G. Weber, Executive Vice President, Business Unit Leader, Molecular Solutions +DNA Genotek, Inc. +Kathleen G. Weber has served as the Executive Vice President, Business Unit Leader, Molecular Solutions at DNAG since January 1, 2019. Prior to that, she served as the Senior Vice President and General Manager, Consumer Products at the Company since November 2012. Prior to her time at OraSure, Ms. Weber served in executive leadership roles at Pfizer, Johnson and Johnson, and Wyeth. Ms. Weber began her career in the finance industry at Chase Manhattan Bank (now known as JP Morgan Chase). Ms. Weber received a B.S. in business administration from Georgetown University and an M.B.A. from New York University’s Stern School of Business. +Jack E. Jerrett, Senior Vice President, General Counsel and Chief Compliance Officer +Mr. Jerrett has been the Company’s Senior Vice President, General Counsel and Chief Compliance Officer since February 2020. He served as Senior Vice President and General Counsel since February 2003 and served as Vice President and General Counsel since November 2000. He has also served as the Company’s Secretary since February 2001. Prior to joining the Company, Mr. Jerrett worked as an Associate at Morgan, Lewis & Bockius and held positions of increasing legal responsibilities with companies in the transportation and energy industries. Mr. Jerrett received his B.S. in Accounting from Villanova University and his J.D. from the Villanova University School of Law. He is a member of the Pennsylvania Bar and the American and Pennsylvania Bar Associations. +Michele Miller, Vice President, Finance and Controller +Michele Miller has been the Company’s Vice President, Finance and Controller since October 2018 and served as the Company’s Director, Financial Reporting since December 2011 and as Manager, Financial Reporting since August 2007. Prior to joining the Company, Ms. Miller served as Manager, Financial Reporting at Knoll, Inc. and as an accountant with Beard Miller Company and Ernst & Young. Ms. Miller received her B.S. in Accounting from Bloomsburg University and is a licensed Certified Public Accountant, a Chartered Global Management Accountant, and a member of the Pennsylvania and American Institutes of Certified Public Accountants. +23 +TRANSACTIONS WITH RE LATED PERSONS +Since January 1, 2020 there have been no transactions with related persons that would require disclosure in this Proxy Statement. The Audit Committee is required to review and approve in advance all transactions with related persons involving the Company. The Audit Committee may approve a related party transaction if the transaction is on terms comparable to those that could be obtained in arms’ length dealings with an unrelated third party. The Audit Committee also reviews any public disclosures of a related party transaction contained in our SEC filings. These responsibilities are described in the Audit Committee’s charter, a copy of which is available on our website at www.orasure.com . +Information regarding employment, severance and retirement agreements between our executive officers and the Company is set forth in the Section entitled, “Employment Agreements and Potential Payments Upon Termination or Change of Control,” in this Proxy Statement. +Delinquent section 16( a ) reports +Section 16(a) of the Exchange Act requires that our executive officers and Directors and persons who own more than ten percent of our Common Stock (collectively, “Reporting Persons”) file reports of ownership and changes in ownership with the SEC. Reporting Persons are required by the SEC’s regulations to furnish us with copies of all Section 16(a) forms they file. +As a matter of practice, our administrative staff assists each of the Reporting Persons who are employees and Directors of the Company in preparing initial reports of ownership and reports of changes in beneficial ownership and filing such reports with the SEC and the NASDAQ. Based solely on a review of the copies of forms filed by or on behalf of the Reporting Persons and on written representations (if any) from each of the Reporting Persons, we believe that all Reporting Persons complied on a timely basis with all applicable filing requirements with respect to the year 2020, except for Kathleen Weber, the Company’s Executive Vice President, Business Unit Leader, Molecular Solutions. Due to an administrative error, a Form 4 required in connection with the sale of vested restricted stock by Ms. Weber under a 10b5-1 sales plan on December 23, 2020 was filed on January 4, 2021. +24 +Compensation Discussion and Analysis - Table of Contents +EXECUTIVE SUMMARY +26 +Overview +26 +2020 Performance +26 +2020 Business Highlights +27 +2020 NEO Compensation at a Glance +28 +Pay for Performance +29 +Compensation Governance Practices +30 +Realizable Pay vs. TSR +31 +Realizable Pay vs. SCT Compensation +31 +Pay vs. Other Company Measures of Performance +32 +Say-on-Pay Results in 2020 and the Company’s Response +32 +Compensation Risk Assessment +33 +COMPENSATION PHILOSOPHY +33 +BENCHMARKING +34 +2020 EXECUTIVE COMPENSATION COMPONENTS +35 +Overview +35 +Pay Mix +35 +Compensation Components in Detail +36 +OTHER COMPENSATION +44 +Retirement Programs +44 +Perquisites and Other Compensation +44 +Potential Payments Upon Termination or Change of Control Pursuant to Employment Agreements +44 +Accounting and Tax Treatment of Compensation +45 +Compensation Recoupment Policy +45 +CEO PAY RATIO +45 +Compensation Tables – Table of Contents +Summary Compensation Table +46 +Grants of Plan-Based Awards +47 +Outstanding Equity Awards at December 31, 2020 +49 +Option Exercises and Stock Vested +51 +Retirement Benefits +51 +Nonqualified Deferred Compensation +52 +25 +COMPENSATION DISCUSSION AND ANALYSIS +EXECUTIVE SUMMARY +Overview +This Compensation Discussion and Analysis, or CD&A, describes the material elements of the compensation of our NEOs and describes the objectives and principles underlying the Company’s executive compensation program, the compensation decisions we have recently made under this program and the factors we considered in making these decisions. +Our NEOs for 2020 who are covered in this CD&A include: +Name +Position +Stephen S. Tang, Ph.D. +President and Chief Executive Officer +Roberto Cuca +Chief Financial Officer +Lisa Nibauer +Executive Vice President, Business Unit Leader, Diagnostics +Kathleen G. Weber +Executive Vice President, Business Unit Leader, Molecular Solutions +Jack E. Jerrett +Senior Vice President, General Counsel and Chief Compliance Officer +Anthony Zezzo, II 1 +Former Executive Vice President, Business Unit Leader, Infectious Disease +_________________ +1 Mr. Zezzo retired from the Company in June 2020 and was replaced by Ms. Nibauer who joined the Company in May 2020. +2020 Per formance +The following charts describe our consolidated financial performance during the last three fiscal years, expressed in dollars (thousands). +26 +__________ +1 2018 operating income includes $9.6 million in executive transition costs and $1.2 million in transaction costs associated with two acquisitions. 2019 operating income includes a $10.1 million gain related to the sale of the Company’s cryosurgical systems business, $664,000 of income associated with the change in the fair value of acquisition-related contingent consideration, and $1.8 million of transaction costs associated with the acquisitions in 2019. 2020 operating loss includes $1.1 million of income associated with the change in the fair value of acquisition-related contingent consideration, and $393,000 of transaction costs associated an acquisition in 2020. 2020 operating loss also reflects a significant investment in research and development activities associated with the development of COVID-19 testing products. +Despite the negative impact of the COVID-19 pandemic on our core business, we delivered a strong financial performance during 2020. Our consolidated net revenues for the year rose 11% over 2019. This included a 45% increase in revenues from our Molecular Solutions business unit. This increase was primarily the result of almost $50 million in sales of sample collection devices for COVID-19 molecular testing. Sales of our international HIV products also rose 16% from 2019, driven primarily by higher sales of our HIV self-test in Africa. These increases more than offset declines in other parts of our business caused by the COVID-19 pandemic. As a result, we made no COVID-19 related adjustments to the funding objectives for our 2020 incentive bonus plan or PRU performance measures and the Compensation Committee applied no positive discretion in determining performance and payouts for our NEOs. +2020 Business Highlights +Business highlights from 2020 and the principal factors driving our financial performance are summarized below: +• Total net consolidated revenues for the full year 2020 were $171.7 million, an 11% increase over 2019. +• Total 2020 product and services revenues for our Molecular Solutions business were $102.8 million, an increase of 45% over 2019. +• Full year 2020 international sales of our HIV products grew 16% over 2019. +• During 2020, our Molecular Solutions business generated almost $50 million in sales of sample collection devices for COVID-19 molecular testing. This revenue, along with the growth in international HIV sales, more than offset the negative impact of the COVID-19 pandemic on our other businesses. +• Our molecular sample collection kits were included in eight Emergency Use Authorizations (“EUAs”) granted by the U.S. Food and Drug Administration (“FDA”) to our customers for use in COVID-19 testing. +• We separately obtained EUAs for two of our molecular collection devices for use in COVID-19 testing and these devices received interim authorization for use in COVID-19 testing in Canada. +27 +• We completed development and initiated the EUA process for our laboratory-based oral fluid COVID-19 antibody assay and made substantial progress towards the development of a rapid COVID-19 antigen test. +• We began to substantially expand our manufacturing capacity in order to enable us to meet the expected significant demand for our new COVID-19 assays and molecular collection devices for COVID-19 testing. +• We completed the acquisition of UrSure, Inc. which adds the capability to develop and commercialize products that measure adherence to HIV medications, including pre-exposure prophylaxis or PrEP, the daily medication to prevent HIV, and anti-retroviral medications to suppress HIV. +• In response to the COVID-19 pandemic, we implemented a number of safety protocols and modified the way we do business in order to protect our employees, subcontractors and customers. +• We established a Diversity, Equity and Inclusion Council in order to help drive diversity, equity and inclusion throughout our organization. +• We established a Sustainability Committee to focus on steps we can take to reduce our carbon footprint and environmental impact on the communities we serve. +2020 NEO Compensation at a Glance +NEO compensation for 2020 was as follows: +• +Base Salary : The base salaries paid to our senior management (including the NEOs) during 2020 increased from 2019 by 3.3% on average. Salary adjustments for 2020 were based on the performance of each executive and the Company during 2019, the marketplace compensation data provided to the Compensation Committee in 2019 by its compensation consultant and the Company-wide average salary merit increase budget of 3.0%. Generally, an executive’s annual salary adjustment tended to be at the higher end of the range budgeted by the Company if the executive received a performance rating of “Meets Expectations” or better and such executive’s pre-adjustment salary level was below the 50 th percentile for his or her position as reflected in marketplace and the Peer Group compensation data. The increase in Dr. Tang’s base salary reflects a merit increase of 2.5%. Additional detail on these salaries is provided in the “2020 Base Salaries” Section, below. +NEO +2019 Performance Rating +2019 Salary +2020 Salary +Change (%) +Stephen S. Tang, Ph.D. +Meets +$ +609,000 +$ +624,225 +2.50% +Roberto Cuca +High Meets +$ +426,413 +$ +439,205 +3.00% +Lisa Nibauer 1 +N/A +N/A +$ +410,000 +N/A +Kathleen G. Weber +High Meets +$ +355,000 +$ +365,650 +3.00% +Jack E. Jerrett 2 +Exceeds +$ +380,152 +$ +415,358 +9.26% +Anthony Zezzo, II 3 +Low Meets +$ +418,726 +$ +418,726 +0.00% +____________ +1 Ms. Nibauer joined the Company in May 2020 and the 2020 salary reflects her annualized salary for the full year. +2 Mr. Jerrett’s 2020 salary reflects a 4% merit increase plus a $20,000 adjustment to reflect his assumption of additional responsibilities as the Company’s Chief Compliance Officer in early 2020. +3 Mr. Zezzo retired from the Company in June 2020 and was replaced by Ms. Nibauer. The 2020 salary reflects his annualized salary for the full year. +• +Annual Incentive Bonuses : Incentive cash bonus awards for 2020 performance ranged from 173% to 242% 1 of target for each of the NEOs. The bonus amounts were above the applicable targets for Dr. Tang and the other NEOs, primarily due to the strong financial performance of the Company, despite significant challenges caused by the COVID-19 pandemic, as described under “2020 Business Highlights in Detail” Section, above. Additional detail on these bonus payments is provided in the “2020 Annual Incentive Cash Bonuses” Section, below. +Actual 2020 Bonus Payments +NEO +2020 +Performance +Rating +2020 Target +(% Salary) +($) +(% Salary) +(% Target) +Stephen S. Tang, Ph.D. +Outstanding +85% +$ +1,239,196 +199% +234% +Roberto Cuca +Outstanding +50% +$ +493,886 +112% +225% +Lisa Nibauer 1 +Exceeds +40% +$ +340,464 +83% +208% +Kathleen G. Weber +Outstanding +40% +$ +354,242 +97% +242% +Jack E. Jerrett +Meets +40% +$ +287,428 +69% +173% +Anthony Zezzo, II +N/A 2 +40% +$ +289,758 +69% +173% +28 +___________________ +1 Ms. Nibauer also received a sign-on bonus of $50,000 when she joined the Company in May 2020. +2 Pursuant to his retirement agreement, Mr. Zezzo’s bonus payment under the 2020 Incentive Plan was equal to 40% of his base salary, subject to adjustment to reflect the actual bonus pool funding approved by the Board. +• +Long-Term Incentive Awards : Incentive equity awards granted to Dr. Tang and the other NEOs (except for Ms. Nibauer who received an onboarding equity award) in February 2020 were based on the Company’s financial performance and/or each executive’s performance during 2019, as described under the “2020 Base Salaries” Section, below. The value of the awards ranged from 119% to 200% of each executive’s base salary, as shown below. The NEOs received equity awards consisting of 50% time-vested RS and 50% PRUs. +2020 Equity Awards +NEO +2019 +Performance Rating +Target Range +(% Salary) +($) +(% Salary) +Stephen S. Tang, Ph.D. +Meets +150%-250% +$ +1,218,000 +200% +Roberto Cuca +High Meets +105%-175% +$ +686,525 +161% +Lisa Nibauer 1 +N/A +95%-155% +$ +499,995 +122% +Kathleen G. Weber +High Meets +95%-155% +$ +465,938 +131% +Jack E. Jerrett +Exceeds +95%-155% +$ +513,205 +135% +Anthony Zezzo, II +Low Meets +95%-155% +$ +497,237 +119% +_______________________ +1 Ms. Nibauer received an onboarding equity award when she joined the company in May 2020 consisting of 50% time-vested RS and 50% PRUs, with terms substantially the same as the terms of awards made to the Company’s other executives in February 2020. The indicated amount reflects the aggregate grant date fair value of the award on May 11, 2020. +Additional information regarding NEO compensation for 2020 is provided below in this CD&A and in the accompanying tables, including the Summary Compensation Table (“SCT”) set forth below. +Pay for Performance +We follow a pay-for-performance approach in compensating executives. Our program pays executives for performance by rewarding the achievement of predetermined financial and/or strategic objectives. +A significant portion of each NEO’s compensation is paid out in variable and long-term compensation that is intended to align such compensation with the long-term interests of our stockholders. Both our annual and long-term compensation are tied to the Company’s overall performance in a variety of ways, including our financial results and share price performance. A further discussion of our pay mix for the NEOs is set forth in the “Pay Mix” Section, below. +One aspect of our compensation program is the use of performance targets to incentivize management to achieve improved financial results on a year-to-year basis. For many years, annual financial objectives have been used to determine the amount of pool funding available to pay individual awards under our annual cash bonus plan. These objectives are generally set at levels intended to incentivize annual financial growth. A combination of financial and strategic objectives may also be considered, and in the past have been used, where the Compensation Committee and the Board desire to incentivize management to meet certain near-term strategic objectives which could help drive improved financial performance in a year with increased financial uncertainty. Each year the Compensation Committee and the Board evaluate whether financial objectives, strategic objectives, or some combination thereof, would provide the most appropriate near-term incentives for our NEOs to achieve improved financial performance. +In addition, for the past several years we have followed a policy of granting annual equity awards to executives that consist of 50% PRUs and 50% time-vested RS. The PRUs will only vest if (i) the NEO remains employed by the Company for three years following the date of grant and (ii) the performance criteria determined by the Committee and the Board are met. For the PRUs granted in 2020, a compound annual growth target for consolidated net revenues for the three-year period 2020-2022 and a one-year income before income taxes (“IBIT”) target for the fiscal year 2020 were established as the performance criteria. The time-vested RS portion of the award vests in equal annual installments over the three-year period following the grant date, subject to the NEO’s continued employment by the Company. +29 +We believe the performance targets in the PRUs and the three-year service periods applicable to both the RS and PRU awards complement the short-term incentives in our annual bonus plan. We also believe the combination of the structure of our annual bonus plan and the structure of our equity award policy appropriately incentivize management to deliver substantially improved financial performance both on an annual basis and over a longer term period and help drive long-term growth in stockholder value. +As noted above, despite the significant pandemic-related impact on our business, we made no COVID-19 adjustments to the funding objectives for our 2020 incentive bonus plan or PRU performance measures and the Compensation Committee applied no positive discretion in determining performance and payouts for our NEOs. +Compensation Governance Practices +We are committed to maintaining good corporate governance and practices. As a result, and in response to input from stockholders, the Compensation Committee and the Board have adopted a number of changes over the past several years to specifically respond to stockholder concerns and better align our compensation program with performance. The most significant of these changes was the adoption of PRUs for 50% of the value of annual long-term equity awards for our executives. These changes and certain other important aspects of our compensation practices are summarized below: +Performance Mix – The vast majority of our NEOs’ compensation is performance-based. For example, approximately 80% of Dr. Tang’s 2020 annual compensation opportunity consists of an incentive cash bonus and equity award, both of which are performance-based and varying with some combination of financial, strategic and/or share price performance. For the other NEOs (other than Mr. Zezzo), 66% of their aggregate annual compensation consists of performance-based compensation. +Diversified and Performance Based Portfolio – Our executive compensation consists of a mix of cash/equity, fixed/variable and short-term/long-term compensation. +Performance Vested Equity – 50% of our NEOs’ annual equity awards consist of PRUs that will not vest until three years after the grant date and only if certain performance measures are met during the three-year period. +Long-Term Focus – Equity awards are subject to long-term vesting requirements, with time-vested RS vesting over 3 years. PRUs also vest only after three years. Structuring our equity awards in this manner helps align the interests of our executives with the long-term interests of our stockholders. +Target Bonus Objectives – Our annual bonus pool is funded based on the achievement of annual financial objectives, strategic objectives or a combination thereof, in order to incentivize management to achieve improved financial performance on a year-over-year basis. +Limited Bonus Pool Discretion – The aggregate bonus pool funding for annual cash bonuses is determined pursuant to a plan funding formula tied to the Company’s achievement of specific financial objectives. The Board and Compensation Committee can make discretionary adjustments to the pool, but such adjustments are limited to +/– 10% of the pool amount determined under the plan’s self-funding formula. +Balanced Performance Metrics – Variable compensation is based on a combination of corporate and individual performance, measured over varying timeframes to help ensure balanced incentives for executives. +Change-in-Control Severance and Tax Gross Ups – Our policy is that employment agreements with our executives provide for “double trigger” change-in-control severance rather than “single trigger” change-in-control severance and do not provide for a 280G income tax gross up. This policy was most recently followed in the employment agreement for Lisa Nibauer, who was hired as the new head of our Diagnostics business unit in May 2020. +Strong Stock Ownership and Retention Conditions – We have implemented stock ownership requirements of six (6) times salary for our President and CEO, two (2) times salary for our CFO and one (1) times salary for other NEOs. +Prudent Benchmarking – The total compensation paid to our executives is targeted at the 50 th percentile of our Peer Group of comparable companies based on achievement of performance objectives. We use a Peer Group consisting of companies in the medical diagnostic and healthcare industries comparable in size to the Company based on total revenues and market value. +Independent Compensation Consultants – The Compensation Committee regularly utilizes independent compensation consultants to provide compensation governance, design and benchmarking advice. During 2020, the Compensation Committee engaged Pay Governance as its independent consultant. +Recoupment Policy – The Company maintains a compensation recoupment or “clawback” policy, under which we will seek to recover excess compensation paid to an executive if our financial statements are restated due to misconduct by that executive. +30 +No Repricing – Our LTIP prohibits both the repricing and repurchase of underwater stock options or other equity awards without stockholder approval. +No Perquisites – As a general matter, we do not provide executives with any perquisites that are not offered to all employees of the Company. +Risk Review Process – We periodically assess the risks associated with our compensation programs. +No Hedging - Our policy prohibits Directors and NEOs from engaging in hedging activities with respect to our stock. +No Pledging – Our Directors and NEOs are not permitted to pledge our stock. +Confidentiality/Non-Compete Agreements – Our NEOs are subject to confidentiality and non-compete agreements. +Realizable Pay vs. TSR +To ensure that our executive compensation program and compensation levels are consistent with our pay-for-performance philosophy, we evaluated the degree of alignment between our CEO’s total realizable pay versus our TSR over the prior three fiscal years (2018 to 2020) relative to our Peer Group. The graph below shows the comparison of our three-year TSR and “realizable pay” relative to our Peer Group. +Dr. Tang’s compensation for each year includes base salary, incentive cash bonus and all other compensation reported in the Summary Compensation Table. Equity awards are valued using the closing stock price on December 31, 2020 for each company in our Peer Group. Restricted stock and restricted unit awards are valued by multiplying the number of shares or units by the applicable closing stock price. The number of restricted units included in the calculations for Dr. Tang reflects a payout based on the Company’s currently expected performance against the applicable performance measures for those awards. Option awards are valued as the difference between the closing stock price on December 31, 2020 and the exercise price multiplied by the number of option shares granted during the period. An option award with an exercise price greater than the closing stock price on December 31, 2020 is valued at $0. +As indicated by the graphical display of this realizable pay versus performance analysis relative to peers, there is reasonable alignment between our TSR performance (which is only one perspective in assessing our performance) and the realizable pay for our CEO relative to our Peer Group companies. This analysis confirms the strong link between pay and performance embedded in our compensation program. +Realizable Pay vs. SCT Compensation +As described further below, we believe long-term equity awards are a key incentive for our executives to drive the Company’s long-term growth and align the interests of our executives with those of our stockholders. The SCT includes the estimated value of long-term incentive equity awards at the time of grant based on the accounting valuation determined under ASC 718. The actual value of these awards that may be realizable by our executives may vary from these accounting-based estimates depending on the Company’s financial and stock performance and can differ significantly from what is reported in the SCT. +31 +A comparison of the realizable value of long-term equity incentive awards as of December 31, 2020 against the values reported in the SCT indicates how compensation outcomes may be impacted by our performance. Such a comparison also shows the degree of alignment between our stock performance and the level of compensation provided to executives. +The table below compares the compensation values reported in the SCT and the value of realizable pay (“RP”) for the compensation awarded during the three-year period 2018 to 2020 for our CEO, Dr. Tang. +Our CEO’s RP for the three years 2018–2020 of $7.5 million is 3% above the CEO’s $7.3 million SCT compensation for the same period. This shows a close alignment between actual pay and performance versus expectations as reflected in the aggregate STC values for the last three years. +Pay vs. Other Company Measures of Performance +While TSR is a common measure of performance that is often used to evaluate a company’s compensation practices, we consider other performance measures to be, at times, more reflective of the success of our business and more important as an incentive to focus our leaders on key priorities. It is important to recognize that our TSR can be extremely volatile, as evidenced by the substantial movements in our stock price during the past several years. Our TSR can be, and often is, influenced by a variety of macro-economic factors that are outside the control of our executives. The following summarizes our one-year TSR during the period 2013-2020: +2013 +2014 +2015 +2016 +2017 +2018 +2019 +2020 +TSR +(12%) +61% +(37%) +36% +115% +(38%) +(31%) +32% +The foregoing price changes were not solely tied to our underlying performance. For example, our stock price declined in 2015 and 2018 even though we achieved record financial performance with substantial growth and strong profitability in those years. +As a result, while our executive compensation opportunities do not follow a linear relationship with TSR, the pay realizable to our executives (as noted above for our CEO) should and does demonstrate a clear relationship with both TSR and financial results. We have tried to align our executive compensation with performance results that are part of our overall business strategy that we believe will drive stock price improvement and increased value for our stockholders over the longer term. +When establishing and evaluating our executive compensation program generally, and performance-based incentive plans in particular, we believe that TSR alone will not always immediately account for the value of our accomplishments and, in many cases, it may take time for the impact of our strategic and other accomplishments to be fully reflected in the value of our stock. Thus, while obviously important, TSR is only one of several factors we consider in making compensation decisions for our executives. +Say-on-Pay Results in 2020 and the Company’s Response +At our 2020 Annual Meeting, stockholders were asked to vote on an advisory (non-binding) basis on the compensation paid to our NEOs for 2019. We obtained strong stockholder support for our NEO compensation for 2019 with approximately 94% of stockholder votes cast in favor of our “say-on-pay” or SOP resolution. Even with this overwhelmingly +32 +positive response, we continued our historical approach to contact certain of our major stockholders in order to continue to understand their views regarding our compensation practices. Overall, we attempted to contact stockholders who, in the aggregate, beneficially held approximately 36% of our outstanding Common Stock. As a general matter, our stockholders either did not respond or indicated that they saw no need to meet with us despite having done so in the past. One stockholder we met with supported the compensation changes made over the past several years and indicated there was good alignment of management goals and compensation. This stockholder also believed that the use of more equity compensation and TSR as a performance measure should be considered by the Board in order to further align our executive compensation with the interests of stockholders. +We believe our stockholder engagement has been and continues to be beneficial for the Company and our stockholders. The feedback we received reaffirms that the compensation changes we made in recent years were responsive to stockholder concerns and our executive compensation is strongly aligned with performance. Based on this feedback, no material changes to our executive compensation program were made, although the Board intends to consider the specific feedback received in making future compensation decisions. We also intend to continue ongoing dialogue with our stockholders to ensure that our executive compensation programs are well understood by all stakeholders and that we remain responsive to stockholder concerns. +Compensation Risk Assessment +Management periodically conducts a risk assessment of the Company’s compensation policies and practices, including its executive compensation program. In its review, management considers the attributes of the Company’s policies and practices and other factors, including: +• +The mix of fixed and variable compensation opportunities; +• +The balance between annual and long-term performance opportunities; +• +The corporate and individual performance objectives established for annual and long-term incentive compensation; +• +The internal controls and procedures in place to mitigate risks facing the Company, including the Company’s “clawback” policy and stock ownership guidelines; and +• +The risk that unintended consequences could result from various aspects of the Company’s compensation policies and practices. +Based on its consideration of the foregoing, management believes that the Company’s policies and practices are designed with the appropriate balance of risk and reward in relation to the Company’s overall business strategy and do not incentivize employees to take unnecessary or excessive risks. The Company has also concluded that any risks arising from the Company’s compensation policies and practices are not reasonably likely to have a material adverse effect on the Company. +COMPENSATION PHILOSOPHY +The primary objectives of our compensation program for executive officers are to: +Set compensation opportunities at levels sufficient to attract and retain high quality executives, to motivate them to contribute to our success and to reward them for performance. +Ensure the compensation opportunities provided align the interests of executives with the interests of our stockholders. +Focus our executives on both short and longer-term individual and Company priorities established by the Board and appropriately reward them for performance against these objectives. +The total direct compensation provided to each executive consists of an annual base salary, an annual incentive cash bonus and long-term incentive equity awards. The amount of the incentive cash bonus and the size of annual incentive equity awards are variable and depend on an executive’s and the Company’s achievement of predetermined financial and other objectives. As a result, a substantial portion of each executive’s annual compensation is based on performance. +33 +BENCHMARKING +We believe it is useful to regularly compare our compensation program against compensation paid to executives at other comparable medical diagnostic and healthcare companies. With the assistance of Pay Governance, an independent compensation consultant engaged by the Compensation Committee, we have selected a Peer Group of companies using criteria based on industry, revenues and market capitalization and a competitive assessment of our executive compensation was prepared. +The Compensation Committee seeks to set total direct compensation opportunity levels for each executive near the fiftieth (50 th ) percentile of amounts paid by the Peer Group of companies for performance consistent with the Company’s target financial and other business plans for the applicable year. Use of the fiftieth (50 th ) percentile is intended as a market-based reference and not as a strict target or limit. As a result, the total direct compensation opportunity and the value of specific compensation components for individual executives may fall below or exceed the fiftieth (50 th ) percentile depending on the experience and individual performance of the executive, the criticality of his or her role, the executive’s contribution to our business, and other factors. +Based on advice from Pay Governance, the Compensation Committee decided not to make changes to the Peer Group most recently used for benchmark purposes. The following provides information about the Peer Group used by the Compensation Committee in setting executive compensation and how we compare to these companies (all dollars in millions): +Peer Company 1 +FY 2020Revenue 2 +12/31/20 Market +Capitalization +Primary Industry +Anika Therapeutics, Inc. +$ +128 +$ +643 +Biotechnology +AtriCure, Inc. +$ +207 +$ +2,506 +Healthcare Equipment +Atrion Corporation +$ +148 +$ +1,175 +Healthcare Supplies +Cardiovascular Systems, Inc. +$ +237 +$ +1,756 +Healthcare Equipment +Endologix, Inc. 3 +N/A +N/A +Healthcare Supplies +Enzo Biochem, Inc. +$ +76 +$ +121 +Healthcare Services +Fluidigm Corporation +$ +138 +$ +445 +Life Sciences Tools and Services +Harvard Bioscience, Inc. +$ +102 +$ +167 +Life Sciences Tools and Services +Lantheus Holdings, Inc. +$ +339 +$ +902 +Healthcare Supplies +Luminex Corporation +$ +417 +$ +1,076 +Life Sciences Tools and Services +Meridian Bioscience, Inc. +$ +254 +$ +806 +Healthcare Supplies +NeoGenomics, Inc. +$ +444 +$ +5,978 +Life Sciences Tools and Services +Quidel Corporation 4 +$ +1,662 +$ +7,557 +Healthcare Supplies +Surgalign Holdings, Inc. 5 +$ +298 +$ +175 +Healthcare Supplies +STAAR Surgical Company +$ +163 +$ +3,652 +Healthcare Supplies +FY 2020Revenue 1 +12/31/20 Market +Capitalization +25 th Percentile +$141 +$ 494 +Median +$222 +$ 989 +75 th Percentile +$329 +$2,319 +OraSure Technologies, Inc. +$172 +$ 759 +Percentile Rank +40% +36% +1 Data collected from Standard & Poor’s Capital I.Q. database. +2 FY2020 data is not yet available for Anika Therapeutics, Harvard Bioscience and Surgalign Holdings. Reflects last twelve months revenue as of September 30, 2020. +3 Endologix was delisted from NASDAQ effective August 2020, therefore FY2020 financials are not available. +4 Quidel reflects record revenue in 2020, fueled by strong demand for its coronavirus tests. +5 RTI Surgical Holdings acquired Holo Surgical and changed its name to Surgalign Holdings. +34 +In preparing its 2020 competitive assessment of executive compensation, Pay Governance compared the compensation of our NEOs with a 50/50 blend of proxy data from the Peer Group and data for each NEO position from the 2020 Radford Global Life Sciences Survey. Since compensation market data can be volatile from year to year, the Compensation Committee believes a blend of specific Peer Group proxy data and broader survey data better reflect market trends and practices. +Based on its review of the Pay Governance assessment, the Compensation Committee decided not to make any changes to our executive compensation program. +2020 EXECUTIVE COMPENSATION COMPONENTS +Overview +Our compensation program consists of the following components: +Compensation +Form of +Compensation +Purpose +Base Salary +Cash +Base salaries provide fixed compensation necessary to attract and retain key executives. +Annual Incentive Bonus Awards +Cash +Annual incentive bonus awards provide performance-based incentives to our executives to achieve both Company-wide financial and strategic goals and the executives’ individual performance objectives. +Long-Term Incentive Awards +Performance-Vested +Restricted Units and +Time-Vested Restricted +Stock +The largest component of our executive compensation is paid in equity. Annual LTIP awards for the NEOs consist of 50% PRUs and 50% time-vested RS in order to provide a strong link between pay and performance. +Benefits +401(k) Plan +Health and Welfare +Benefits +Retirement and health and welfare benefits provide a complete compensation package that is competitive with the market and addresses the needs of all employees and their families, including our executives. +Employment Agreements +Cash severance and +accelerated equity vesting +Severance and accelerated equity vesting are provided to our executive officers in order to ensure continued focus on the strategic matters of the Company during potentially uncertain times. +Pay Mix +We follow a pay-for-performance approach to executive compensation, with a significant portion of our executives’ compensation consisting of annual incentive cash bonuses and long-term equity awards that are based on the executives’ and the Company’s achievement of predetermined performance objectives. +The following charts illustrate the relative proportion of 2020 base salaries compared to the performance-based elements of our executive compensation for Dr. Tang and the other NEOs (except for Mr. Zezzo). +35 +Approximately 80% of Dr. Tang’s aggregate compensation and 66% of the other NEOs’ aggregate compensation for 2020 consisted of performance-based compensation. +Compensation Components in Detail +2020 Base Salaries +Annual base salaries paid in 2020 to our NEOs were established by the Compensation Committee at the beginning of 2020 based on a review of the Company’s performance and the individual contributions of each officer compared to pre-established performance objectives for 2019. The Compensation Committee also considered the Company’s budget for expected salary adjustments, salary levels paid at the Peer Group companies and recommendations provided by the compensation consultant engaged to assist the Compensation Committee. +Based on these factors, the Compensation Committee approved an annual base salary increase for our senior management averaging approximately 3.3%. This was consistent with our Company-wide budgeted average salary increase of 3.0%. Individual salary increases for 2020 were determined by using the following guidelines: +Performance Rating +Merit Increase Range +Outstanding +5.0% - 7.0% +Exceeds Requirements +3.0% - 4.0% +Meets Requirements +2.0% - 2.5% +Does Not Consistently Meet +1.0% – 1.5% +Does Not Meet Requirements +0% +In evaluating Dr. Tang’s and the Company’s performance, the Compensation Committee recognized the significant strategic accomplishments achieved during 2019 with the acquisitions of CoreBiome, Diversigen and Novosanis and the strategic divestiture of the Company’s cryosurgical systems business. Although 2019 revenues came in below expectations, the Compensation Committee recognized that was driven largely by developments outside of management’s control within the consumer genomics market, the strategic divestiture of the Company’s cryosurgical business and the reduced federal funding associated with the development of the Company’s Ebola and Zika tests. Finally, the Compensation Committee recognized the underlying strength in the Company’s business, as evidenced by the continued strong +36 +performance of its OraQuick ® HIV Self-Test product line, increased domestic HCV sales, and the strong growth delivered by the Company’s microbiome products and services business. +In view of the foregoing, the Compensation Committee determined that Dr. Tang should receive a Meets performance rating for 2019 as a reflection of the mix of achievements during the year. The remaining NEOs were evaluated based on individual objectives established for their respective positions. +As a result of these performance ratings, the Compensation Committee approved the 2020 salary levels set forth below for the NEOs. Dr. Tang’s new salary reflected a 2.5% merit increase in view of his Meets performance rating. +NEO +2019 +Performance +Rating +2019 Salary +2020 +Salary +% +Increase +Stephen S. Tang, Ph.D. +President and Chief +Executive Officer +Meets +$609,000 +$624,225 +2.50% +Roberto Cuca +Chief Financial Officer +High Meets +$426,413 +$439,205 +3.00% +Lisa Nibauer +Executive Vice +President, Business +Unit Leader, Diagnostics +N/A +N/A +$ 410,000 1 +N/A +Kathleen G. Weber +Executive Vice +President, Business +Unit Leader, +Molecular Solutions +High Meets +$355,000 +$365,650 +3.00% +Jack E. Jerrett +Senior Vice President +General Counsel and Chief Compliance Officer +Exceeds +$380,152 +$415,358 2 +9.26% +Anthony Zezzo, II +Former Executive Vice President, Business Unit Leader, Infectious Disease +Low Meets +$418,726 +$418,726 3 +0.00% +1 Represents annualized salary for Ms. Nibauer because she joined the company in May 2020 and, therefore, employed for only a portion of 2020. +2 Represents a 4% merit increase plus a $20,000 adjustment as a result of Mr. Jerrett assuming responsibility as the Company’s Chief Compliance Officer in early 2020. +3 Represents annualized salary for Mr. Zezzo because he retired in June 2020 and was, therefore, employed for only a portion of 2020. +2020 Annual Incentive Cash Bonuses +Annual cash bonuses are included as part of executive compensation because the Compensation Committee and Board believes that a significant portion of each executive’s compensation should be structured as a variable incentive focused on short-term priorities relating to both the overall performance of the Company and the individual contributions of the executive. On an annual basis, the Compensation Committee has adopted, with approval of the Board, an incentive plan (the “Incentive Plan”), which is intended to be the principal vehicle for incentive cash bonus awards. +When establishing the terms of the Incentive Plan, the Compensation Committee and the Board evaluate which funding objectives will provide the most appropriate incentives for our NEOs to improve our annual financial performance. In recent years, bonus pool funding has been based solely on the achievement of annual financial objectives. Strategic objectives may also be (and in the past have been) used in combination with annual financial objectives where there is greater financial uncertainty facing the Company and the Compensation Committee and the Board desires to incentivize our NEOs to take near-term strategic steps required to drive annual financial growth and stability. In general, the Compensation Committee and the Board will choose those funding objectives, whether they be financial, strategic, or a combination thereof, which in their judgement provide the most appropriate incentive for management to drive improved financial performance on a year-over-year basis. +37 +Where funding is based on the achievement of financial objectives, if the Company meets the Target levels for all funding objectives, the pool is initially funded at 100% of the aggregate projected bonuses for all participants in the Incentive Plan adjusted to reflect a normal range or mix of performance assessments (i.e., Outstanding, Exceeds, Meets, Does Not Meet), which increases or decreases the total amount of individual bonuses to be paid to participants. Unless circumstances require otherwise, the pool generally is initially funded at 50% of the aggregate projected bonuses if all of the Threshold levels are met and at 100% of the aggregate projected bonuses if all of the Target levels are met. High and Maximum objective levels may also be set, which would result in funding up to 150% and 200%, respectively, of the aggregate projected bonuses. A linear interpolation of the amount of funding for each target objective is made where a particular performance is between the pre-established performance levels. To the extent the performance level for a funding objective is below the Threshold level, generally there is no funding for that particular objective. +The amount of the cash bonus pool is determined by the Compensation Committee and recommended for Board approval. The Compensation Committee and Board also retain discretion to increase or decrease the size of the pool in order to reflect differences in the mix of actual performance assessments of the participants or market conditions affecting the Company or other factors. However, the Compensation Committee and Board have limited their ability to make discretionary bonus pool adjustments to +/- 10% of the pool size otherwise determined pursuant to the funding formula under the Incentive Plan. The cash bonus pool is used to pay bonuses not only to the Company’s NEOs, but also to all other officers and certain higher-level employees of the Company and its subsidiaries. +Individual payments from the bonus pool to executives are generally calculated using a formula that considers the size of the bonus pool, the executive’s achievement of individual performance objectives, the number of individuals participating in the Incentive Plan at the time bonuses are awarded and the executive’s target bonus percentage. Bonuses are paid based on an assessment of each executive’s performance for the applicable year, using targets expressed as a percentage of the executive officer’s annual base salary. +If an executive officer has met or exceeded his or her individual performance objectives and/or the Company’s expectations for the applicable year, he or she may be eligible to receive up to 150% of his or her target bonus, depending on the size of the bonus pool. The Compensation Committee and Board retain the discretion to adjust an individual executive’s performance evaluation and to increase or decrease the bonus paid to such individual to reflect the specific contributions of that executive, the Company’s overall performance, market conditions or other circumstances. The following guidelines are used to determine the multiple of an executive’s target bonus, or individual performance factor, to be used to calculate a bonus payout based on the executive’s performance rating for the applicable year: +Performance Rating +% Target Bonus +Outstanding +125%-150% +Exceeds +101% - 175% +Meets +100% +Does Not Meet +0% +The Compensation Committee recommends for Board approval any bonus award for the CEO based on an assessment of the Company’s overall performance. The CEO recommends individual awards for the other executive officers for approval by the Compensation Committee based on an assessment of each executive’s performance against his or her applicable individual performance objectives. The Compensation Committee and Board have the right, in their sole discretion, to reject any or all of the recommended bonus awards, even if the bonus pool has been funded and any or all applicable performance criteria have been satisfied, based on the business conditions of the Company or other factors deemed relevant by the Compensation Committee or the Board. +In establishing the 2020 Incentive Plan, the Board and Compensation Committee decided that the amount of bonus pool funding should be based on the achievement of two financial objectives. Specific financial objectives were established for consolidated revenues and operating loss. +Under the 2020 Incentive Plan, Threshold, Target and Maximum performance levels were established for the financial objectives to be used to fund the bonus pool. The Target levels for each objective were set at the performance reflected in our Operating Plan or budget for 2020. The Threshold levels were set at 90% of the Target levels and the Maximum levels were set at 110% of the Target levels. It is important to note that these performance levels were selected before the impact of the COVID-19 pandemic was known or could be reasonably predicted. +Based on feedback from our stockholders, the Board decided that it would be appropriate to provide a greater incentive for revenue growth in the 2020 Incentive Plan. Accordingly, a Maximum performance level was established only for the consolidated revenue objective. As a result, additional bonus pool funding could only be provided if revenues +38 +exceeded the Target performance level. No additional pool funding would be provided for exceeding the Target for the operating loss objective. +The following sets forth the financial objectives and potential bonus pool funding amounts (dollars in millions) under the 2020 Incentive Plan: +Financial Objectives +Threshold +Target +Maximum +2020 Revenue 1 +% of Target +Pool Funding +$143.1 +90% +$0.825 +$159.0 +100% +$1.7 +$174.9 +110% +$5.0 +2020 Operating Loss 2 +% of Target +Pool Funding +$(6.4) +90% +$0.825 +$(5.8) +100% +$1.7 +___ +___________ +1 Revenues exclude the financial impact of acquisitions or divestitures during 2020. +2 Operating Loss excludes the financial impact of (1) acquisitions or divestitures during 2020, (ii) any change in value of contingent acquisition consideration and (iii) unrealized gains/losses on our non-qualified deferred compensation plan. +As indicated above, the maximum pool funding under the 2020 Incentive Plan (assuming no discretionary adjustment) is $6.7 million. During 2020, we recorded revenues for purposes of the Incentive Plan totaling $170.9 million after eliminating revenues from the UrSure, Inc. (“UrSure”) acquisition which occurred in mid-2020. This revenue level fell below the Maximum performance level, but above the Target performance level, resulting in pro-rated pool funding of $4.2 million for that objective. The Company’s 2020 operating loss for purposes of the Incentive Plan was $(4.8) million after eliminating the impact of the UrSure acquisition and certain other adjustments. This amount exceeded the Target performance level, and resulted in funding of $1.7 million for that objective. As a result, the aggregate pool funding under the 2020 Incentive Plan was calculated to be $5.9 million. +The final bonus pool amount was approved by the Compensation Committee and the full Board and was used to pay bonuses to the Company’s NEOs and other members of our management team. Neither the Compensation Committee nor the Board elected to make any discretionary adjustments under the 2020 Incentive Plan funding formula. The specific target payouts for NEO bonuses for 2020 (expressed as a percentage of annual base salary) are shown below: +Title +Target Payout Opportunities +Chief Executive Officer +85% +Chief Financial Officer (and Chief Operating +Officer) +50% +Executive Vice President and General Counsel +40% +Senior Vice President +35% +In January 2021, the Compensation Committee authorized the payout of individual bonus awards to executive officers from the bonus pool for 2020 based on the target bonus amounts described above and an assessment of each officer’s performance during 2020 against pre-established performance objectives (except for Dr. Tang whose assessment was based on the Company’s overall performance). The calculation of individual bonus awards was based on a formula that adjusted the foregoing target payments for both the executives’ individual performance during 2020 and the degree to which the final approved bonus pool funding exceeded the Target funding amounts under the plan formula. +In evaluating Dr. Tang‘s and the Company‘s performance, the Compensation Committee recognized that management delivered strong financial performance in 2020 despite the negative impact of the COVID-19 pandemic on our core businesses. Consolidated revenues were $171.7 million in 2020, representing an 11% increase over 2019. The Compensation Committee noted that this increase was primarily driven by sales of our existing collection devices for molecular COVID-19 testing and growth in sales of our HIV Self-Test in Africa. Total molecular products and services revenues reached a record high of $102.8 million during 2020, an increase of 45% from 2019, and included almost $50 million in sales of oral fluid sample collection devices for COVID-19 molecular testing. The Compensation Committee further noted the significant progress made in the development of a new COVID-19 rapid antigen test and a laboratory-based oral fluid SARS-CoV-2 antibody test during 2020, which we believe can generate significant future revenues after appropriate regulatory authorizations are received. Finally, the Compensation Committee noted the continued progress against the Company’s innovation growth strategy with the acquisition of UrSure in 2020. This company develops laboratory and rapid tests to measure an individual’s adherence to HIV medication, including pre-exposure prophylaxis, or PrEP, a daily medication to prevent HIV. We believe these products will be an important contributor to our future Diagnostics business. +39 +In view of the foregoing, and especially in light of the unusual and significant challenges presented by the COVID-19 pandemic, the Compensation Committee determined that Dr. Tang should receive an Outstanding performance rating for 2020 as a reflection of the many achievements during the year. The remaining NEOs were evaluated based on individual objectives established for their respective positions. +Using these performance ratings, the Compensation Committee next considered individual performance factors to adjust the bonuses for Dr. Tang, the other NEOs and the other participants in the 2020 Incentive Plan to reflect their performance assessments for 2020. As a final step, the Compensation Committee adjusted the bonuses further by a pool funding factor reflecting the amount by which pool funding exceeded Target funding amounts under the plan formula. +Using the approach described above, a final 2020 incentive cash bonus was calculated for Dr. Tang, representing approximately 234% of his target bonus, as follows: +2020 Base +Target +2020 Individual Performance +2020 Pool Funding +2020 +Salary +X +Bonus % +X +Factor +X +Factor += +Bonus +$624,225 +85% +135% +173% +$1,239,196 +This same formula was used to calculate the 2020 bonus awards for all other NEOs, as follows: +2020 Bonus Payments +NEO +2020 Salary +Bonus Target +(% Salary) +2020 Performance Rating +Individual 2020 Performance Factor +2020 Pool Funding Factor +2020 Bonus +Stephen S. Tang, Ph.D. +President and Chief Executive Officer +$644,225 +85% +Outstanding +135% +173% +$1,239,196 +Roberto Cuca +Chief Financial Officer +$439,205 +50% +Outstanding +130% +173% +$493,886 +Lisa Nibauer +Executive Vice President, Business Unit Leader, Diagnostics +$410,000 +40% +Exceeds +120% +173% +$340,464 +Kathleen G. Weber +Executive Vice President, Business Unit Leader, Molecular Solutions +$365,650 +40% +Outstanding +140% +173% +$354,242 +Jack E. Jerrett +Senior Vice President, General Counsel and Chief Compliance Officer +$415,358 +40% +Meets +100% +173% +$287,428 +Anthony Zezzo, II +Former Executive Vice President, Business Unit Leader, Infectious Disease +$418,726 +40% +N/A 1 +N/A 1 +173% +$289,758 +1 Pursuant to his retirement agreement, Mr. Zezzo received an incentive cash bonus for 2020 under the 2020 Incentive Plan. +40 +2020 Long-Term Incentive Equity Awards +An additional way that we promote the long-term growth of the Company and align the interests of our executives with those of our stockholders is by compensating executives with equity in the Company that vests over a multi-year period. To accomplish this, the Compensation Committee administers the Company’s LTIP (Long-Term Incentive Policy), pursuant to which grants of time-vested restricted shares and performance-vested restricted units are made to executive officers. +Incentive equity awards under the LTIP are made on an annual basis, and are discretionary and subject to approval by the Compensation Committee and/or the Board. Awards to individual participants under the LTIP are based on an evaluation of a number of factors, including: +• +Performance of the participant for the applicable year; +• +The participant’s level of responsibilities and relative contribution to the Company’s business; +• +A competitive assessment of awards at Peer Group companies; +• +History of equity awards to the participant; and +• +Other factors deemed relevant by the Compensation Committee and/or the Board. +Each participant’s individual performance for the applicable year is evaluated against his or her individual performance objectives for that year, except for Dr. Tang who is evaluated based on total Company performance. A “Meets Expectations” performance is typically the threshold requirement to receive an equity award under the LTIP. Awards below this performance level may be considered on an exception basis at the discretion of the Compensation Committee and/or the Board. +The value of potential incentive equity awards that could have been granted in 2020 under the LTIP (expressed as a percentage of annual base salary) based on performance during 2019, are summarized below: +2020 LTIP Award Ranges (% of salary) +Performance +Position +Lower End +Target +Maximum +President/CEO +150% +200% +250% +CFO +105% +140% +175% +EVP +95% +125% +155% +SVP and General Counsel +95% +125% +155% +Other SVPs +70% +90% +115% +The percentages set forth above were established at levels that the Compensation Committee believed represented an appropriate long-term incentive compensation value for each executive, based on the results of a competitive assessment of long-term incentive awards at the Peer Group companies. Once the aggregate dollar value of an award has been established by applying the Compensation Committee approved award percentage to a participant’s base salary, the value is converted into shares or units based on a valuation of the restricted stock and restricted unit portions of the award using the average of the high and low stock price on the grant date as reported on the NASDAQ Stock Market. +In January 2020, the range of percentages set forth above for annual incentive equity awards were increased by the Compensation Committee for Dr. Tang, the Company’s President and CEO to 250%/300%/350%, based on recommendations to the Compensation Committee from Pay Governance, in order to bring the range more closely in line with market levels. The new percentage ranges were effective beginning with the incentive equity awards made in 2021 for performance during 2020. +Under the LTIP, 50% of an executive’s total equity award consists of PRUs that will not vest until three years after the grant date and only if certain performance measures are met during that three-year period. The awards made in 2020 incorporate two performance metrics: (i) a compound annual growth rate (“CAGR”) for consolidated revenues during the three-year period beginning with the year in which the award was made and (ii) a one-year income before income tax +41 +(“IBIT”), performance measure followed by a further two-year vesting requirement. Because increased revenues are believed to be more directly tied to increased stockholder value, the Compensation Committee decided to consider a stronger incentive to drive revenues by tying 30% of the PRUs to the revenue CAGR performance measure and 20% of the PRUs to the IBIT performance measure. The remaining 50% of each executive’s incentive equity award consists of grants of time-vested RS that vest in equal annual installments over a three-year period. These vesting restrictions serve to promote the Company’s long-term growth by restricting executives’ ability to realize short-term gains from their awards. The Compensation Committee believes the terms of its incentive equity awards to executives are competitive with the terms of equity awards offered at comparable medical diagnostics and healthcare companies. +The structure of the equity awards reflects market-based good governance practices as well as input from our stockholders, several of whom advocated that a meaningful portion of the equity awards should have performance-based vesting. We believe 50% is a meaningful portion and is consistent with or exceeds the performance orientation of our Peer Group. In addition, although some stockholders have mentioned TSR as a possible performance target, most of the stockholders we have contacted in recent years indicated that other measures such as financial or operational objectives would also be appropriate. The Board decided to use consolidated revenue and IBIT targets because they are important for our business, especially as we continue improving our profitability, and because of the Board’s belief that these measures will directly influence the performance of our stock price over time. As discussed above, the Board does not believe that the use of TSR as a performance measure in the long-term incentive plan is appropriate at this time, although the choice of performance measures will be reviewed each year. +The adoption of performance-based vesting conditions with a three-year service requirement for 50% of an executive’s annual equity award substantially strengthens the link between pay and performance and creates an appropriate long-term incentive for our executives. At the same time, the use of time-based vesting conditions for the remaining 50% of each award achieves the equally important goal of share ownership/accumulation that directly promotes alignment with stockholders and further supports executive retention. Overall, the Compensation Committee and Board believe that this approach represents a balanced performance-based approach to our executive compensation program that is appropriate for our Company, directly responds to feedback from our stockholders, and is consistent with executive pay governance best practices. +Equity awards are generally made by the Compensation Committee each year as part of the normal annual compensation cycle. The awards for a particular year generally occur in late January or early February of the following year after the Company’s full year financial results are known and performance evaluations for the executive officers have been prepared. Equity awards approved by the Compensation Committee for the CEO are then reviewed and approved by the Board. In addition to the annual equity awards, the Compensation Committee may approve equity awards for newly hired officers or in recognition of an executive’s promotion or expansion of responsibilities. These latter grants may have vesting or other terms that differ from the terms generally approved for annual equity awards. Notwithstanding the terms of the LTIP, equity awards are made at the discretion of the Compensation Committee or Board. +Effective February 1, 2020, the Compensation Committee approved equity awards for the NEOs under the LTIP based on the performance evaluations of such officers for 2019, as summarized below. A description of the basis for each of the NEO’s 2019 performance evaluation is set forth above under the Section entitled, “2020 Base Salaries,” in this CD&A. +42 +The following summarizes the equity awards provided to the NEOs during 2020: +Executive Officer +2019 +Performance +Assessment +Time Vested +Restricted Stock +Performance-Vested +Restricted Units +Award Value +(% of Base Salary) +Stephen S. Tang, Ph.D. +President and Chief +Executive Officer +Meets +84,997 Shs +84,996 Shs +200% +Roberto Cuca +Chief Financial Officer +High Meets +47,908 Shs +47,908 Shs +161% +Lisa Nibauer 1 +Executive Vice +President, Business Unit +Leader, Diagnostics +N/A +14,071 Shs +14,070 Shs +122% +Kathleen G. Weber +Executive Vice President, +Business Unit Leader, +Molecular Solutions +High Meets +32,516 Shs +32,514 Shs +131% +Jack E. Jerrett +Senior Vice President +General Counsel, Chief Compliance Officer and Secretary +Exceeds +35,813 Shs +35,814 Shs +135% +Anthony Zezzo, II +Former Executive Vice President, Business Unit Leader, Infectious Disease +Low Meets +34,698 Shs +34,700 Shs +119% +_____________ +1 Ms. Nibauer received an onboarding equity award when she joined the Company in May 2020. +Compensation Developments in 2021 +Pay Out Under 2018 PRUs . The PRU portion of equity awards made to executives in early 2018 based on performance during 2017 did not vest until three years after the grant date, based 50% on the achievement of a three-year product revenue CAGR target and 50% based on a one-year IBIT target. The three-year service period for these PRUs expired on February 1, 2021. The following table summarizes the potential range of shares that could be delivered based upon the degree of achievement of the applicable performance measures: +Achievement Level of +Applicable Performance Target +Percentage of PRUs +To Become Vested +80% +50% +90% +75% +100% +100% +110% +125% +120% +150% +For the 2018 PRUs, Company performance fell short of the three-year product revenue CAGR target and exceeded the one-year IBIT performance measure by more than 120%. This resulted in no payout on shares associated with the three-year product revenue CAGR measurement and in the maximum payout of 150% on shares associated with the one-year IBIT measurement. The following summarizes the three-year revenue CAGR and one-year IBIT targets for the 2018 PRUs, our performance against these targets and the resulting number of shares delivered to the NEOs upon settlement of the PRUs: +Performance Target +Actual Performance +% of Target +% Vested +CAGR +8.50% +(0.07)% +(0.88)% +0% +IBIT +$33.7 million +$44.4 million +132% +150% +Final Vesting +75% +43 +2018 PRU’s Target and Actual Payout +CAGR Target +(# of shs) +CAGR Actual +(# of shs) +IBIT Target +(# of shs) +IBIT Actual +(# of shs) +Stephen S. Tang, Ph.D. 1 +N/A +N/A +N/A +N/A +Roberto Cuca 1 +N/A +N/A +N/A +N/A +Lisa Nibauer 1 +N/A +N/A +N/A +N/A +Kathleen G. Weber +4,004 +0 +4,004 +6,006 +Jack E. Jerrett +4,377 +0 +4,378 +6,567 +Anthony Zezzo, II 2 +4,857 +0 +4,857 +7,286 +___________ +1 Dr. Tang, Mr. Cuca and Ms. Nibauer did not receive any 2018 PRU’s because they joined the Company after these awards were made. +2 Under the terms of Mr. Zezzo’s retirement agreement, PRUs granted to Mr. Zezzo but unvested as of his retirement date of June 30, 2020 continue to vest without the employment requirement. +OTHER C OMPENSATION +We provide minimal additional benefits outside of our primary elements of compensation, as follows: +Retirement Programs +All of our U.S. employees, including executive officers, are eligible to participate in our 401(k) profit sharing plan (the “401(k) Plan”). We make matching contributions for participants on a dollar-for-dollar basis up to $4,000 per year. Payments of employer-provided benefits accrued for a 401(k) Plan participant will be made upon retirement or upon termination of employment prior to retirement, provided certain vesting conditions have been met by the participant prior to termination. Our subsidiary DNA Genotek, which is located in Canada, offers a registered retirement plan to its employees, which similarly allows employee contributions for retirement savings, with matching contributions by DNA Genotek of up to CAD $4,000 per year in 2020. +The Company also maintains the OraSure Technologies, Inc. Deferred Compensation Plan (the “Deferred Compensation Plan”) for the benefit of the Company’s highly compensated employees, including all of the NEOs, and its non-employee Directors. The Deferred Compensation Plan allows participants to defer up to 100% of their annual base salaries (or fees in the case of non-employee Directors) and up to 100% of annual incentive cash bonuses and, upon vesting, restricted shares of the Company’s Common Stock awarded to the participant. The Company may also make discretionary contributions to the participants’ accounts that vest over one or more years as determined by the Company, as well as upon death, disability or a change of control. Since the Deferred Compensation Plan was put in place, the Company has made no discretionary contributions. Participants may elect to receive distributions of deferred amounts on a specified date, separation from service, a change of control, disability and/or death. A further description of these benefits is set forth in the Section entitled “Nonqualified Deferred Compensation.” +Perquisites and Other Compensation +As a general matter, the Compensation Committee and Board do not believe that executive officers should be treated differently than other employees by receiving special perquisites unrelated to our general compensation program. Therefore, our healthcare, disability, and other insurance programs and benefits are the same for all eligible employees, including executive officers. Executive officers generally do not receive any additional perquisites, except for Ms. Weber who receives certain benefits under her employment agreement in connection with her international assignment at our Canadian subsidiary, DNA Genotek, Inc. A further description of these benefits is set forth in the Section entitled, “Employment Agreements and Potential Payments Upon Termination or Change of Control.” +Potential Payments Upon Termination or Change of Control Pursuant to Employment Agreements +The Company has entered into employment agreements with each of the NEOs. In addition to the compensation elements discussed above, these agreements provide for post-employment severance payments and benefits in the event of termination of employment by the Company without “cause” or by the executive for “good reason” and provide enhanced severance payments upon such terminations in connection with a “change of control” of the Company. The terms of these arrangements are discussed in more detail under the Section entitled, “Employment Agreements and Potential Payments Upon Termination or Change of Control,” in this Proxy Statement. The Compensation Committee believes that these arrangements are generally consistent with industry practice at the Peer Group companies, provide an incentive to the +44 +applicable executive to remain with the Company, and serve to align the interests of stockholders and the executives in the event of a change of control of the Company. +Accounting and Tax Treatment of Compensation. +In approving the amount and form of compensation for the NEOs, the Compensation Committee considers all elements of the cost to the Company of providing such compensation, including accounting and tax implications. In particular, it considers the potential impact of Section 162(m) of the Internal Revenue Code, which disallows a tax deduction for any publicly-held corporation for individual compensation exceeding $1 million in any taxable year for certain covered employees. Historically, there had been an exemption that permitted qualified “performance-based compensation” to be exempt from this $1 million cap on deductibility. Under the Tax Cuts and Jobs Act (the “Tax Act”), this performance-based compensation exemption was eliminated. Thus, bonuses paid under the LTIP will be subject to the cap on deductibility described above. Notwithstanding the Tax Act, the Compensation Committee intends to maintain flexibility to pay compensation that is not entirely deductible when the best interests of the Company would make that advisable. +Compensation Recoupment Policy +The Board has adopted a compensation recoupment or “clawback” policy, applicable to all officers subject to Section 16 of the Exchange Act. Under this policy, the Company will pursue recoupment of any excess compensation, including incentive cash bonuses, restricted awards, stock options or other compensation, which was awarded to a covered officer based on financial statements of the Company where such statements are required to be restated as a result of the gross negligence, intentional misconduct or fraud of the covered officer. In addition to recoupment, the Company shall take such other remedial actions deemed necessary against a covered employee, including recommending disciplinary actions up to and including termination and other available remedies. The recovery period for recoupment of any compensation is up to three fiscal years preceding the date on which the Company is required to prepare and file the restated financial statements. This policy has been proactively adopted in advance of final guidance under Section 954 of the Dodd-Frank Act and will be amended to conform with this Section when final guidance is available. +CEO Pay Ratio +As required by applicable law and SEC regulations, we are providing the following information about the relationship of the median of the annual total compensation of our employees and the annual total compensation of Stephen S. Tang, Ph.D., our President and CEO. +For the 2020 fiscal year, (i) the median of the annual total compensation of all employees of the Company (other than Dr. Tang) and its subsidiaries was $62,735; and (ii) the annual total compensation of Dr. Tang, as reported in the Summary Compensation Table included immediately after this CD&A, was $3,085,421. Based on this information, for 2020 the ratio of the annual total compensation of Dr. Tang, our President and CEO, to the median of the annual total compensation for employees was 49 to 1. +To identify the median of the annual total compensation of all our employees, as well as to determine the annual total compensation of our median employee, we took the following steps: +• +We determined that, as of December 31, 2020, our world-wide employee population consisted of 579 people. +• +To identify the “median employee” from our employee population, we compared the amount of salary, wages, overtime, commissions and bonuses of our employees as reflected in our payroll records. In making this determination, we did not annualize the compensation of employees who were hired in 2020 but did not work for us for the entire fiscal year. Since we do not widely distribute annual equity awards to our employees, such awards were excluded from our compensation measure. +• +Once we identified our median employee, we combined all of the elements of this employee’s compensation for 2020 in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K, resulting in the annual total compensation as described above. +45 +COMPENSATION TABLES +SUMMAR Y COMPENSATION TABLE +The following table summarizes the compensation of our CEO and the other NEOs, for the fiscal years ended December 31, 2020, 2019 and 2018: +Name & Principal +Position +Year +Salary +($) +Bonus +($) +Stock +Awards 3,4 +($) +Option +Awards +($) +Non- +Equity +Incentive +Plan +Compen- +sation 5 +($) +Change in +Pension Value +and Nonqualified +Deferred +Compensation +Earnings +($) +All other +Compen- +sation 6 +($) +Total +($) +Stephen S. Tang, Ph.D. +2020 +$ +624,225 +— +$ +1,218,000 +— +$ +1,239,196 +— +$ +4,000 +$ +3,085,421 +President and Chief +2019 +$ +609,000 +— +$ +1,242,996 +— +$ +258,825 +— +$ +4,000 +$ +2,114,821 +Executive Officer +2018 +$ +412,885 +1 +$ +230,000 +2 +$ +623,363 +— +$ +818,346 +— +$ +15,000 +$ +2,099,594 +Roberto Cuca +2020 +$ +439,205 +— +$ +686,522 +— +$ +493,886 +— +$ +4,000 +$ +1,623,613 +Chief Financial Officer +2019 +$ +426,413 +— +$ +639,102 +— +$ +132,188 +— +$ +4,000 +$ +1,201,703 +2018 +$ +263,365 +1 +— +$ +435,758 +— +$ +353,580 +— +— +$ +1,052,703 +Lisa Nibauer +2020 +$ +160,385 +1 +$ +50,000 +2 +$ +499,995 +— +$ +340,464 +— +$ +4,000 +$ +1,054,844 +Executive Vice President, +2019 +— +— +— +— +— +— +— +— +Business Unit Leader +2018 +— +— +— +— +— +— +— +— +Diagnostics +Kathleen G. Weber +2020 +$ +365,650 +— +$ +465,940 +— +$ +354,242 +— +399,468 +$ +1,585,300 +Executive Vice President, +2019 +$ +355,000 +— +$ +338,272 +— +$ +88,040 +— +342,773 +$ +1,124,085 +Business Unit Leader, +2018 +$ +341,695 +— +$ +346,666 +— +$ +203,787 +— +4,000 +$ +896,148 +Molecular Solutions +Jack E. Jerrett +2020 +$ +415,358 +— +$ +513,207 +— +$ +287,428 +— +$ +4,000 +$ +1,219,993 +Senior Vice President, +2019 +$ +380,152 +— +$ +480,976 +— +$ +93,137 +— +$ +4,000 +$ +958,265 +General Counsel and +2018 +$ +369,804 +— +$ +379,004 +— +$ +220,654 +— +$ +4,000 +$ +973,462 +Chief Compliance Officer +Anthony Zezzo, II +2020 +$ +248,820 +1 +$ +289,758 +$ +1,668,881 +— +— +— +$ +193,258 +$ +2,400,718 +Former Executive Vice President, +2019 +$ +418,726 +— +$ +510,641 +— +$ +75,371 +— +— +$ +1,004,738 +Business Unit Leader, +2018 +$ +408,359 +— +$ +420,519 +— +$ +232,035 +— +— +$ +1,060,913 +Infectious Disease +____________________________________ +1 +The 2018 salaries shown for Dr. Tang and Mr. Cuca represent the amounts paid to Dr. Tang and Mr. Cuca after they joined the Company on April 1, 2018 and May 7, 2018, respectively. The 2020 salary shown for Ms. Nibauer represents the amount paid to Ms. Nibauer after she joined the Company on May 11, 2020. The 2020 salary shown for Mr. Zezzo represents the amount paid to Mr. Zezzo during his service with the Company prior to his retirement date of June 30, 2020. +2 The indicated amounts represent the onboarding cash bonuses paid to Dr. Tang and Ms. Nibauer pursuant to the terms of their respective employment agreements. The amount for Mr. Zezzo represents the cash bonus paid under the terms of his retirement agreement. +3 +The indicated amounts reflect the aggregate grant date fair value of RS and PRU awards made to the NEOs during the applicable year, computed in accordance with Financial Accounting Standards Board (“FASB”) ASC Topic 718. The value of the PRUs reflect the assumption that 100% of target will be achieved for each of the performance measures reflected in the terms of the PRUs. Certain assumptions used in the calculation of the indicated amounts are set forth for the applicable year of award in footnote 11 to the Company’s audited consolidated financial statements for the year ended December 31, 2020, included in the Company’s Annual Report on Form 10-K filed with the SEC on March 1, 2021 (the “2020 10-K Report”). The maximum grant-date fair value of the PRU awards made in 2020, assuming the highest level of performance measures will be achieved (120% of target resulting in a 150% payout), are as follows: Dr. Tang, $913,494; Mr. Cuca, $514,891; Ms. Nibauer, $374,983; Ms. Weber $349,444; Mr. Jerrett, $384,911; and Mr. Zezzo $372,928. +4 The amount indicated for Mr. Zezzo for 2020 includes compensation resulting from the acceleration of unvested RS upon his retirement in the amount of $518,425 and value of unvested PRU which will continue to vest without the employment requirements in the amount of $590,218. +5 +The indicated amounts reflect incentive cash bonuses paid to the NEOs pursuant to an Incentive Plan, based on performance during the applicable year. For a description of incentive cash bonus payments for performance during 2020, see the Section entitled, “2020 Annual Incentive Cash Bonuses,” in the CD&A. +6 +The indicated amounts of $4,000 reflect cash contributed to a 401(k) profit sharing plan as an employer-matching contribution, which was offered to U.S. employees of the Company during each of the indicated years. The amount indicated for Dr. Tang in 2018 represents the reimbursement of legal fees he incurred in connection with the review and negotiation of his employment agreement with the Company. The amount indicated for Ms. Weber in 2019 represents $4,000 in matching contributions to a 401(k) profit sharing plan, $14,347 for the reimbursement of moving expenses, $68,900 representing a monthly living expense allowance as a result of Ms. Weber’s promotion to head our Molecular Solutions business and relocation to Ottawa, Canada, $10,113 for reimbursement of tax preparation fees, and $245,413 in tax equalization payments representing the amount by which Ms. Weber’s Canadian income tax liability exceeds her U.S. income tax liability. Ms. Weber’s 2020 amount represents $4,000 in matching contributions to a 401(k) profit sharing plan, $68,900 representing a monthly living expense allowance, $20,725 for reimbursement of tax preparation fees, and $305,843 in tax equalization payments. The amount indicated for Mr. Zezzo in 2020 represents severance payments made in accordance with Mr. Zezzo’s retirement agreement. +46 +GRANTS OF PLAN-BASED AWARDS +The following table summarizes information concerning possible incentive cash bonuses and possible and actual RS and PRU awards for the NEOs during the fiscal year ended December 31, 2020: +Estimated Possible Payouts +Under Non-Equity Incentive +Plan Awards 2 +Estimated Possible Payouts Under +Equity Incentive Plan Awards 3 +Name +Grant +Date +Threshold +($) +Target +($) +Maximum +($) +Threshold +(# Shs.) +Target +(# Shs.) +Maximum +(# Shs.) +All other +Stock +Awards: +Number +of Shares +of Stock +or Units 4 +(#Shs.) +All other +Option +Awards: +Number +of +Securities +Underlying +Options +(#Shs.) +Exercise +of Base +Price of +Option +awards +($/Sh) +Grant +Date +Fair +Value of +Stock +Awards 5 +($) +Stephen S. Tang, Ph.D. +2/1/2020 1 +— +— +— +— +— +— +84,997 +RS +— +— +$ +609,004 +President and +2/1/2020 1 +— +— +— +— +— +— +84,996 +PRU +— +— +$ +608,996 +Chief Executive Officer +N/A +$ +265,296 +$ +530,591 +$ +795,887 +63,747 +RS +84,997 +RS +106,246 +RS +— +— +— +N/A +N/A +— +— +— +63,747 +PRU +84,997 +PRU +106,246 +PRU +— +— +— +N/A +Roberto Cuca +2/1/2020 1 +— +— +— +— +— +— +47,908 +RS +— +— +$ +343,261 +Chief Financial Officer +2/1/2020 1 +— +— +— +— +— +— +47,908 +PRU +— +— +$ +343,261 +N/A +$ +109,801 +$ +219,603 +$ +329,404 +31,244 +RS +41,659 +RS +52,074 +RS +— +— +— +N/A +N/A +— +— +— +31,244 +PRU +41,659 +PRU +52,074 +PRU +— +— +— +N/A +Lisa Nibauer +5/11/2020 1 +— +— +— +— +— +— +14,071 +RS +— +— +$ +250,006 +Executive Vice President +5/11/2020 1 +— +— +— +— +— +— +14,070 +PRU +— +— +$ +249,989 +Business Unit Leader, +N/A +$ +82,000 +$ +164,000 +$ +246,000 +N/A +N/A +N/A +— +— +— +N/A +Diagnostics +N/A +— +— +— +N/A +N/A +N/A +— +— +— +N/A +Kathleen G. Weber +2/1/2020 1 +— +— +— +— +— +— +32,516 +RS +— +— +$ +232,977 +Executive Vice President +2/1/2020 1 +— +— +— +— +— +— +32,514 +PRU +— +— +$ +232,963 +Business Unit Leader, +N/A +$ +73,130 +$ +146,260 +$ +219,390 +23,535 +RS +30,967 +RS +38,398 +RS +— +— +— +N/A +Molecular Solutions +N/A +— +— +— +23,535 +PRU +30,967 +PRU +38,398 +PRU +— +— +— +N/A +Jack E. Jerrett +2/1/2020 1 +— +— +— +— +— +— +35,813 +RS +— +— +$ +256,600 +Senior Vice President, +2/1/2020 1 +— +— +— +— +— +— +35,814 +PRU +— +— +$ +256,607 +General Counsel, and +N/A +$ +83,072 +$ +166,143 +$ +249,215 +25,202 +RS +33,161 +RS +41,119 +RS +— +— +— +N/A +Chief Compliance Officer +N/A +— +— +— +25,202 +PRU +33,161 +PRU +41,119 +PRU +— +— +— +N/A +Anthony Zezzo, II +2/1/2020 1 +— +— +— +— +— +— +34,698 +RS +— +— +$ +248,611 +Former Executive Vice President +2/1/2020 1 +— +— +— +— +— +— +34,700 +PRU +— +— +$ +248,626 +Business Unit Leader, +N/A +$ +83,745 +$ +167,490 +$ +251,236 +27,759 +RS +36,525 +RS +45,291 +RS +— +— +— +N/A +Infectious Disease +N/A +27,759 +PRU +36,525 +PRU +45,291 +PRU +— +— +— +N/A +_________________________________ +1 Annual incentive equity awards to NEOs consisted of a combination of time-vested RS and PRUs that were granted in 2020 pursuant to the LTIP based on performance during 2019. Annual equity awards made during 2020 were approved by the Compensation Committee effective on February 1, 2020. For a description of these equity awards and their terms, see the Section entitled, “2019 Long-Term Incentive Awards,” in the CD&A. Awards granted to Ms. Nibauer represent on-boarding awards received per her employment agreement. These shares were granted with terms substantially similar to the annual incentive equity awards granted to the other NEOs in 2020 pursuant to the LTIP based on performance during 2019. +2 +The indicated amounts represent potential incentive cash bonus payments to the NEOs under the 2020 Incentive Plan. On January 27, 2021, bonus payments under the 2020 Incentive Plan were approved by the Compensation Committee for the NEOs, based on performance during 2020. The Threshold and Target amounts assume the executive receives 50% and 100% of his or her target bonus and that the aggregate bonus pool is funded at 50% and 100% for each performance objective in the 2020 Incentive Plan, respectively. The Maximum amounts assume that the recipient receives 150% of his or her target bonus based on performance for 2020 and that the bonus pool is funded at 200% or the Maximum level for each performance objective in the 2020 Incentive Plan. Although he retired in June 2020, Mr. Zezzo’s 2020 bonus amount was paid under the 2020 Incentive Plan pursuant to the terms of his retirement agreement. A further description of the payments approved under the 2020 Incentive Plan is set forth in the Section entitled, “2020 Annual Incentive Cash Bonuses,” in the CD&A. +3 +The indicated amounts represent the potential number of shares which could have been granted to the NEOs in 2020 in the form of RS and PRUs pursuant to the LTIP, based on performance during 2019. The individual share numbers for each potential award were calculated by dividing 50% of the long-term incentive targets for each NEO set forth in the LTIP by the mean between the high and low sales price of the Common Stock as reported by NASDAQ on the date of grant. The number of shares corresponding to the PRUs were calculated based on the assumption that 100% of target is +47 +achieved for each of the performance measures set forth in the terms of such PRU awards. The actual number of shares received upon vesting of the PRUs could vary from 50% to 150% of target depending on the degree to which the performance measures are achieved. +4 +The indicated amounts represent the actual number of shares of RS or PRUs granted to the NEOs in 2020 under the LTIP, based on performance during 2019. A further description of these equity awards and their terms is set forth in the Section entitled, “2020 Long-Term Incentive Awards,” in the CD&A. +5 +The indicated amounts represent the grant date fair value calculated in accordance with FASB ASC Topic 718. +48 +OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2020 +The following table summarizes information regarding unexercised stock options and unvested RS and PRUs held by the NEOs as of December 31, 2020: +Option Awards 1 +Stock Awards 1 +Name +Number of +Securities +Underlying +Unexercised +Options +(#) +Exercisable +Number of +Securities +Underlying +Unexercised +Options 2 +(#) +Unexercisable +Equity +Incentive +Plan +Awards: +Number of +Securities +Underlying +Unexercised +Unearned +Options (#) +Option +Exercise +Price +($/Sh.) +Option +Expiration +Date +Number of +Shares or +Units of +Stock +That +Have +Not +Vested 2 (#) +Market +Value of +Shares or +Units of +Stock +That +Have Not +Vested 9 ($) +Equity +Incentive +Plan +Awards: +Number of +Unearned +Shares, +Units or +Other +Rights +that +Have Not +Vested 2 (#) +Equity +Incentive +Plan +Awards: +Market +or Payout +Value of +Unearned +Shares, +Units or +other +Rights +That +Have Not +Vested 9 ($) +Stephen S. Tang, Ph.D. +— +— +— +— +— +37,116 +3(a) +$ +392,873 +— +— +President and Chief +— +— +— +— +— +31,915 +3(b) +$ +337,820 +— +— +Executive Officer +— +— +— +— +— +84,997 +3(c) +$ +899,693 +— +— +— +— +— +— +— +— +— +23,936 +3(d) +$ +253,363 +— +— +— +— +— +— +— +33,998 +3(e) +$ +359,869 +— +— +— +— +— +— +— +50,998 +3(f) +$ +539,814 +Roberto Cuca +— +— +— +— +— +4,773 +4(a) +$ +50,522 +— +— +Chief Financial Officer +— +— +— +— +— +16,409 +4(b) +$ +173,689 +— +— +— +— +— +— +— +47,908 +4(c) +$ +507,106 +— +— +— +— +— +— +— +— +— +10,740 +4(d) +$ +113,683 +— +— +— +— +— +— +— +12,307 +4(e) +$ +130,270 +— +— +— +— +— +— +— +19,163 +4(f) +$ +202,840 +— +— +— +— +— +— +— +28,745 +4(g) +$ +304,266 +Lisa Nibauer +— +— +— +— +— +14,071 +5(a) +$ +148,942 +— +— +Executive Vice President, +— +— +— +— +— +— +— +5,628 +5(d) +$ +59,572 +Business Unit Leader, +— +— +— +— +— +— +— +8,442 +5(e) +$ +89,359 +Diagnostics +— +— +— +— +— +— +— +— +— +Kathleen Weber +4,129 +— +— +$ +5.71 +2/3/2024 +— +— +— +— +Executive Vice President +10,404 +— +— +$ +9.31 +2/3/2025 +— +— +— +— +Business Unit Leader, +— +— +— +— +— +2,669 +6(a) +$ +28,251 +— +— +Molecular Solutions +— +— +— +— +— +8,685 +6(b) +$ +91,931 +— +— +— +— +— +— +— +32,516 +6(c) +$ +344,182 +— +— +— +— +— +— +— +— +— +6,006 +6(d) +$ +63,574 +— +— +— +— +— +— +— +6,514 +6(d) +$ +68,951 +— +— +— +— +— +— +— +13,006 +6(e) +$ +137,669 +— +— +— +— +— +— +— +19,508 +6(f) +$ +206,492 +Jack E. Jerrett +6,407 +— +— +$ +5.71 +2/3/2024 +— +— +— +— +Senior Vice President, +13,650 +— +— +$ +9.31 +2/3/2025 +— +— +— +— +General Counsel, and +— +— +— +— +— +2,918 +7(a) +$ +30,887 +— +— +Chief Compliance Officer +— +— +— +— +— +12,349 +7(b) +$ +130,714 +— +— +— +— +— +— +— +35,813 +7(c) +$ +379,081 +— +— +— +— +— +— +— +— +— +6,567 +7(d) +$ +69,512 +— +— +— +— +— +— +— +9,262 +7(e) +$ +98,038 +— +— +— +— +— +— +— +14,326 +7(f) +$ +151,641 +— +— +— +— +— +— +— +21,488 +7(g) +$ +227,450 +Anthony Zezzo, II +— +— +— +— +— +— +— +7,286 +8(a) +$ +77,122 +Former Executive Vice President +— +— +— +— +— +— +— +9,833 +8(b) +$ +104,082 +Business Unit Leader, +— +— +— +— +— +— +— +13,880 +8(c) +$ +146,920 +Infectious Disease +— +— +— +— +— +— +— +20,820 +8(d) +$ +220,380 +49 +1 +The table does not include RS and PRUs awarded to the NEOs in February 2021 pursuant to the LTIP in respect of performance during 2020. +2 +Stock options vest over four years, with the first 25% vesting on the first anniversary of the grant date and the remaining 75% vesting on a monthly basis over the next three years following the first anniversary of the grant date. Grants of RS vest over a three-year period, with one-third vesting on the first anniversary of the grant date, a second third vesting on the second anniversary and the final third vesting on the third anniversary. PRUs will not vest until three years from the grant date and only if certain performance measures are met during the three-year service period. +3 +The indicated RS, and PRUs vest as follows: +(a) +37,116 restricted shares cliff vesting on April 1, 2023; +(b) +15,958 restricted shares on February 1, 2021, and 15,957 shares on February 1, 2022 +(c) +28,332 restricted shares on February 1, 2021, 28,333 shares on February 1, 2022, and 28,332 shares on February 1, 2023; +(d) +23,936 PRUs cliff vesting on February 1, 2022, provided performance metrics have been achieved. This grant also included 23,936 PRUs which have been forfeited as the related performance metric was not achieved; +(e) +33,998 PRUs cliff vest on February 1, 2023 provided performance metrics have been achieved; and +(f) +50,998 PRUs cliff vest on February 1, 2023 provided performance metrics have been achieved. +4 +The indicated RS and PRUs vest as follows: +(a) +4,773 restricted shares on May 7, 2021; +(b) +8,204 restricted shares on February 1, 2021, and 8,205 restricted shares on February 1, 2022; +(c) +15,969 restricted shares on February 1, 2021, 15,970 restricted shares on February 1, 2022, and 15,969 restricted shares on February 1, 2023; +(d) +10,740 PRUs cliff vesting on May 7, 2021, provided performance metrics have been achieved. This grant also includes 7,160 PRUs which have been forfeited as the related performance metric was not achieved; +(e) +12,307 PRUs cliff vesting on February 1, 2022, provided performance metrics have been achieved. This grant also included 12,307 PRUs which have been forfeited because the related performance metric was not achieved; +(f) +19,163 PRUs cliff vesting on February 1, 2023, provided performance metrics have been achieved; and +(g) +28,745 PRUs cliff vesting on February 1, 2023, provided performance metrics have been achieved. +5 +The indicated RS and PRUs vest as follows: +(a) +4,690 restricted shares on May 11, 2021, 4,691 restricted shares on May 11, 2022, and 4,690 restricted shares on May 11, 2023; +(b) +5,628 PRUs cliff vesting on May 11, 2023, provided performance metrics have been achieved; and +(c) +8,442 PRUs cliff vesting on May 11, 2023, provided performance metrics have been achieved. +6 +The indicated RS and PRUs vest as follows: +(a) +2,669 restricted shares on February 1, 2021; +(b) +4,342 restricted shares on February 1, 2021, and 4,343 restricted shares on February 1, 2022; +(c) +10,839 restricted shares on February 1, 2021, 10,838 restricted shares on February 1, 2022, and 10,839 restricted shares on February 1, 2023; +(d) +6,006 PRUs cliff vesting on February 1, 2021, provided performance metrics have been achieved. This grant also included 4,004 PRUs which have been forfeited because the related performance metric was not achieved; +(e) +6,514 PRUs cliff vesting on February 1, 2022, provided performance metrics have been achieved. This grant also included 6,514 PRUs which have been forfeited because the related performance metric was not achieved; +(f) +13,006 PRUs cliff vesting on February 1, 2023, provided performance metrics have been achieved; and +(g) +19,508 PRUs cliff vesting on February 1, 2023, provided performance metrics have been achieved. +7 +The indicated RS and PRUs vest as follows: +(a) +2,918 restricted shares on February 1, 2021; +(b) +6,174 restricted shares on February 1, 2021, and 6,175 restricted shares on February 1, 2021; +(c) +11,938 restricted shares on February 1, 2021, 11,937 restricted shares on February 1, 2022, and 11,938 restricted shares on February 1, 2023; +(d) +6,567 PRUs cliff vesting on February 1, 2021, provided performance metrics have been achieved. This grant also includes 4,377 PRUs which have been forfeited because the related performance metric was not achieved; +(e) +9,262 PRUs cliff vesting on February 1, 2022, provided performance metrics have been achieved. This grant also included 9,262 PRUs which have been forfeited because the related performance metric was not achieved; +(f) +14,326 PRUs cliff vesting on February 1, 2023, provided performance metrics have been achieved; and +(g) +21,488 PRUs cliff vesting on February 1, 2023, provided performance metrics have been achieved. +8 +The indicated RS and PRUs vest as follows: +(a) +7,286 PRUs cliff vesting on February 1, 2021, provided performance metrics have been achieved. This grant also includes 4,857 PRUs which have been forfeited because the related performance metrics was not achieved; +(b) +9,833 PRUS cliff vesting on February 1, 2022, provided performance metrics have been achieved. This grant also included 9,833 PRUs which have been forfeited because the related performance metric was not achieved; +(c) +13,880 PRUs cliff vesting on February 1, 2023, provided performance metrics have been achieved; and +(d) +20,820 PRUs cliff vesting on February 1, 2023, provided performance metrics have been achieved. +9 The indicated values were determined by multiplying the number of unvested shares of RS and unvested PRUs shown in this table by $10.59 per share, the closing price of the Company’s Common Stock as reported by NASDAQ on December 31, 2020. +50 +OPTION EXERCISES AND STOCK VESTED +The following table summarizes information with respect to the exercise of stock options and vesting of RS for each of the NEOs during the fiscal year ended December 31, 2020: +Option Awards +Stock Awards 1 +Name +Number +of Shares +Acquired +on +Exercise +(#) +Value +Realized +on +Exercise 2 +($) +Number +Of Shares +Acquired +on +Vesting +(#) +Value +Realized +on +Vesting 3 +($) +Stephen S. Tang, Ph.D. +— +— +15,957 +$ 114,332 +President and Chief Executive Officer +Roberto Cuca +— +— +12,978 +$ 135,610 +Chief Financial Officer +Lisa Nibauer +— +— +— +$ — +Executive Vice President, Business Unit +Leader, Diagnostics +Kathleen Weber +— +— +32,038 +$ 229,552 +Executive Vice President, Business Unit +Leader, Molecular Solutions +Jack E. Jerrett +— +— +36,455 +$ 261,200 +Senior Vice President, General Counsel, and Chief Compliance Officer +Anthony Zezzo, II +121,333 +$ +730,780 +55,566 +$ +520,039 +4 +Former Executive Vice President, Business Unit +Leader, Infectious Disease +1 Includes the vesting of restricted stock awards and performance-vested restricted units. +2 The indicated amount represents the number of shares acquired upon the exercise of the options multiplied by the difference between the market value of the Company’s Common Stock on the applicable exercise date and the option exercise price. +3 +The indicated amounts were calculated by multiplying the number of restricted shares and performance-vested restricted shares acquired upon vesting by the market value of the Company’s Common Stock on the applicable vesting date. The market value was determined by calculating the mean between the high and low sales prices of the Common Stock as reported by NASDAQ on the vesting date. +4 The unvested portions of all awards of time-vested RS granted to Mr. Zezzo prior to May 1, 2020 and that were outstanding and unvested as of his retirement date vested in full on his retirement date pursuant to his retirement agreement. +RETIREMENT BENEFITS +The NEOs are eligible to participate in our 401(k) Plan on the same terms and conditions applicable to other employees. For a further description of the terms of the 401(k) Plan, see the Section entitled, “Retirement Programs,” in the CD&A. +51 +NONQUALIFIED DEFERRED COMPENSATION +The OraSure Technologies, Inc. Deferred Compensation Plan (the “Plan”) is a non-qualified deferred compensation plan designed to provide deferred compensation benefits to a select group of the Company’s highly compensated employees, including all of the NEOs, and to non-employee members of the Board. +The Plan allows for deferrals by participants of up to 100% of their annual base salaries (or in the case of non-employee Directors, 100% of fees payable under the Company’s Non-Employee Director Compensation Policy), up to 100% of annual incentive cash bonuses and, upon vesting, restricted shares of the Company’s Common Stock and shares received in respect of performance-vested restricted units awarded under the LTIP. The Company may also make discretionary contributions to the accounts of employees participating in the Plan. Cash balances in participants’ accounts may be invested in a list of investment options that are similar to the fund choices offered in the Company’s 401(k) plan. Participants will be permitted to sell vested shares in their accounts, subject to compliance with the Company’s Insider Trading Policy and applicable securities laws, and invest the proceeds of any such sale in the investment options available under the Plan. Participants will be 100% vested in their accounts and the restricted shares they defer, except that Company contributions will vest over one or more years as determined by the Company. In the event of death, disability or change of control, a participant will become 100% vested in any then unvested Company contributions. +A Participant may elect to receive a distribution from his or her account upon a specified date, separation from service, change of control, disability and/or death. Distributions will be made in a lump sum or installments, as allowed under the Plan. +Amounts contributed to a participant’s account through elective deferrals or through the Company’s discretionary contributions are generally not subject to income tax, and the Company does not receive a deduction until they are distributed pursuant to the Plan. +However, cash deferrals are subject to the Federal Insurance Contributions Act Tax imposed at the time of deferral (the “FICA tax”). Deferrals of restricted shares and shares received in respect of performance-vested restricted units are subject to the FICA tax at the time the shares vest, but are not subject to income tax, and the Company does not receive the deduction until the shares are distributed pursuant to the Plan. The Company may amend or terminate the Plan at any time in accordance with applicable law. +None of the Company’s NEO’s participated in the Plan during 2020. +52 +EMPLOYMENT AGREEME NTS AND POTENTIAL PAYME NTS UPON TERMINATION OR CHANGE OF CONTROL +Employment Agreements +We have entered into employment agreements with all of our NEOs. We believe such agreements are necessary to attract and retain critical talent, and are in-line with market practices. The following summary describes certain of the material terms of the employment arrangements with Dr. Tang and the other NEOs. +In January 2018, we entered into an employment agreement with Dr. Tang in connection with his appointment as the Company’s President and CEO, effective April 1, 2018. Under the agreement, Dr. Tang will receive (i) an annual base salary of at least $565,000, (ii) an annual cash bonus opportunity under the Company’s annual Incentive Plan with a bonus target of at least 85% of his base salary and (iii) annual equity awards under the Company’s LTIP ranging from at least 150%-250% of his base salary, with a target of 200%. Dr. Tang also received a sign-on cash bonus of $230,000 and an award of 37,116 shares of time-vested RS. The award of RS will vest on the fifth anniversary of Dr. Tang’s date of employment. Upon a termination of employment, Dr. Tang’s agreement provides for certain post-employment severance and other benefits, as described below. +Dr. Tang’s employment agreement will terminate upon his death or disability. In addition, Dr. Tang may unilaterally terminate his employment at any time and for any reason upon 90 days written notice to the Company or for “good reason” (as defined below). Dr. Tang’s employment agreement can also be terminated by the Company for “Cause” (as defined below) or without “Cause.” +As used in Dr. Tang’s agreement, the term “good reason” means (i) a material breach of the agreement by the Company, (ii) a material diminution in Dr. Tang’s base compensation or authority, duties or responsibilities (following a change of control, such a diminution shall occur if Dr. Tang no longer functions as the sole chief executive officer of the successor organization), (iii) a material change in Dr. Tang’s reporting relationship from the Board to another employee of the Company (following a change of control, such a diminution shall occur if Dr. Tang no longer reports to the board of directors of a public company), or (iv) a material change in Dr. Tang’s job location. +A “change of control” generally is defined to take place when disclosure of such a change would be required by the proxy rules promulgated by the SEC or when: +• +any person, or more than one person acting as a group within the meaning of Section 409A of the Internal Revenue Code (the “Code”) and the regulations issued thereunder, acquires ownership of stock of the Company that, together with stock held by such person or group, constitutes more than 50 percent of the total fair market value or total voting power of the stock of the Company; +• +any person, or more than one person acting as a group within the meaning of Code Section 409A and the regulations issued thereunder, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition) ownership of stock of the Company possessing 30 percent or more of the total voting power of the Company’s stock; +• +a majority of the members of the Board is replaced during any 12-month period by Directors whose appointment or election is not endorsed by a majority of the members of the Board before the date of the appointment or election; or +• +a person, or more than one person acting as a group within the meaning of Code Section 409A and the regulations issued thereunder, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition) assets from the Company that have a total gross fair market value equal to or more than 40 percent of the total gross fair market value of all the assets of the Company immediately before such acquisition or acquisitions. +A “change of control period” is the period which begins 60 days prior to the occurrence of a change of control and ends 18 months thereafter. +“Cause” is defined as (i) the willful and continued failure by Dr. Tang to substantially perform his duties as provided in the agreement after a written demand for substantial performance is delivered to Dr. Tang by the Board, and Dr. Tang’s failure to comply with such demand within a reasonable time; (ii) the engaging by Dr. Tang in gross misconduct or gross negligence materially injurious to the Company; (iii) the commission of any act in direct competition with or materially detrimental to the best interests of the Company; or (iv) Dr. Tang’ conviction of having committed a felony. +53 +Upon the termination of Dr. Tang’s employment for any reason, Dr. Tang will be entitled to receive his salary through the date of termination and any bonus approved by the Board or the Compensation Committee prior to the date of termination but not yet paid. In the case of a termination upon his death or disability or by the Company without Cause, or in the case of a unilateral termination by Dr. Tang or a termination by Dr. Tang for good reason where in either case the termination occurs after June 30 of any year, Dr. Tang will also receive a cash bonus for the year of termination prorated through the date of termination. In addition, if termination is for good reason or without Cause (which includes the Company’s failure to renew the agreement) and does not occur during a change of control period, Dr. Tang would receive additional severance in the form of a lump sum amount equivalent to 18 months of his annual salary plus reimbursement of the costs of continuation coverage under the Company’s health plans (if Dr. Tang elects coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985) for a period of 18 months after the date of termination. If, however, termination is for good reason or without Cause (which includes the Company’s failure to renew the agreement) and occurs during a change of control period, Dr. Tang will receive a lump sum amount equivalent to 36 months of his annual salary and reimbursement of continuation coverage under the Company’s health plan for 36 months. If Dr. Tang is a “specified employee” within the meaning of Code Section 409A at the time of the termination of his employment and any of the foregoing payments would subject him to any tax, interest or penalty under Code Section 409A or regulation thereunder, then the payment shall not be made until the first day which is at least six months after the date of termination of his employment. +All stock awards granted to Dr. Tang are required to immediately vest (i) in the event of a change of control or (ii) if Dr. Tang’s employment is terminated for good reason by Dr. Tang or by the Company without Cause during a change of control period, and 50% of such stock awards shall vest in the event Dr. Tang’s employment is terminated for good reason by Dr. Tang or by the Company without Cause during any period other than a change of control period. +In May 2018, we entered into an employment agreement with Mr. Cuca, pursuant to which Mr. Cuca will receive (i) an annual base salary of at least $415,000, (ii) a target bonus opportunity under the Company’s annual incentive plan of 50% of his base salary, and (iii) annual equity awards under the Company’s long-term incentive policy ranging from 105% to 175% of his base salary (with a target of 140%). Mr. Cuca also received an onboarding equity award having an aggregate value of $435,750. This award consisted of 50% time-vested RS and 50% PRUs with terms substantially the same as the terms of awards made to the Company’s other executives in February 2018. +In January 2019, we entered into an employment agreement with Ms. Weber, in connection with here move to Canada to head our Molecular Solutions business unit. Pursuant to this agreement, Ms. Weber will receive (i) an annual base salary of at least $355,000, (ii) a target bonus opportunity under the Company’s annual incentive plan of at least 40% of her base salary, and (iii) annual equity awards under the Company’s long-term incentive policy ranging from 95% to 155% of her base salary (with a target of 125%). In addition, Ms. Weber is entitled to receive benefits typical of international assignments, including: +• +Legal services paid by the Company for visas and work permits for Ms. Weber and her husband; +• +Relocation expenses reimbursed up to $10,000; +• +A housing allowance of up to $3,065 per month; +• +Tax equalization payments to the extent Ms. Weber’s Canadian income tax liability exceeds the income tax she would have paid in the United States; +• +Reimbursement for tax preparation services; +• +An annual expense allowance of $3,544; +• +Home leave reimbursement for Ms. Weber and her husband to travel to the United States twice during each 12-month period; and +• +Reimbursement for repatriation expenses for Ms. Weber and her husband to relocate back to the United States at the end of her assignment. +In May 2020, we entered into an employment agreement with Ms. Nibauer, pursuant to which Ms. Nibauer will receive (i) an annual base salary of at least $410,000, (ii) a target bonus opportunity under the Company’s annual incentive plan of at least 40% of her base salary (with a minimum bonus for 2020 of at least $80,000), and (iii) annual equity awards under the Company’s long-term incentive policy ranging from 95% to 155% of her base salary (with a target of 125%). Ms. Nibauer also received a $50,000 sign-on bonus and an onboarding equity award having an aggregate value of $500,000. This award consisted of 50% time-vested RS and 50% PRUs, with terms substantially the same as the terms of awards made to the Company’s other executives in February 2020. +54 +The termination and severance provisions in the employment agreements for Mr. Cuca and the other NEOs are substantially similar to Dr. Tang’s employment agreement, with the following exceptions: Mr. Jerrett is entitled to receive severance equivalent to 12 months of his annual salary, rather than 18 months, in the event of a termination for good reason or without Cause where such termination does not occur during a change of control period and he will be entitled to receive severance equivalent to 24 months of his annual salary, rather than the 36 months, if Mr. Jerrett terminates his agreement after a change of control or a termination for good reason or without Cause occurs during a change of control period. Ms. Weber and Ms. Nibauer will also be entitled to receive severance equal to 12 months of their annual salary if she is terminated for good reason or without Cause, but he or she will receive 24 months of his or her annual salary if such termination occurs during a change of control period. In the employment agreement with Mr. Jerrett, the term “good reason” also includes a material diminution of the budget over which the executive exercises control and a change of control period begins upon the occurrence of a change of control. Finally, Mr. Jerrett is not entitled to a prorated bonus in the event of a unilateral termination by either executive after June 30 of the applicable year. +Retirement Agreement +On May 1, 2020, we entered into a retirement agreement with Mr. Zezzo, our former Executive Vice President, Business Unit Leader, Infectious Disease, which provided that during the period from May 1, 2020 to June 30, 2020, his retirement date (the Transition Period”), he would continue to perform his duties and assist the Company in the transition of his duties and responsibilities to his successor, Ms. Nibauer. Upon his retirement and subject to his execution of a general release, Mr. Zezzo became entitled to (i) an amount equal to $418,726 (12 months of salary) in the form of salary continuation following the retirement date, (ii) full vesting on the retirement date of the unvested portions of all option awards and time-vested RS, in each case, granted to him prior to May 1, 2020 and outstanding as of his retirement date, (iii) full vesting three years after the applicable grant date of all PRUs granted to him prior to May 1, 2020 and outstanding as of his retirement date, subject to the satisfaction of the relevant performance measures applicable to such PRUs, in accordance with the original terms of the relevant award agreement, but without the requirement that Mr. Zezzo continue to be employed by the Company after his retirement date, (iv) a normal annual equity award in 2021 for his performance during 2020 pursuant to the LTIP, with a grant date value at least equal to 125% of his base salary but pro-rated based on the number of days he remained employed during 2020, with the RS portion (50%) of the award vesting on the grant date and the PRU portion (50%) vesting three years after the grant date, subject to the satisfaction of performance measures determined by the Board, but without the requirement that he continue to be employed by the Company after his retirement date, and (v) a bonus payment under the 2020 Incentive Plan equal to 40% of his base salary, subject to adjustment to reflect the actual bonus pool funding approved by the Board. Mr. Zezzo remains subject to the confidential and proprietary information obligations under his confidentiality agreement dated January 3, 2011. The retirement agreement contains an indefinite non-disparagement obligation. +55 +The following table provides estimates of the potential severance and other post-termination benefits the NEOs would receive assuming their employment was terminated as of December 31, 2020: +Name +Benefit +Voluntary +Termination +or +Termination +for Cause 1 +Termination +for Death +or Disability 2 +Termination +for Good +Reason or +Without +Cause Not +Within +Change of +Control +Period 2 +Voluntary +Termination +after Change of +Control (only for +Mr. Jerrett), or +Termination for +Good Reason or +Without Cause +Within Change of +Control Period 2 +Stephen S. Tang, Ph.D. +Salary Continuation +— +— +$ +936,338 +$ +1,872,675 +President +Bonus +$ +530,591 +$ +1,239,196 +$ +530,591 +$ +530,591 +and Chief Executive Officer +Accelerated Option Vesting +— +— +— +— +Accelerated Restricted Stock/Unit Vesting +— +$ +3,036,794 +$ +1,518,397 +$ +3,036,794 +Health Care Benefits +— +— +$ +28,139 +$ +28,139 +Total +$ +530,591 +$ +4,275,990 +$ +3,013,465 +$ +5,468,199 +Roberto Cuca +Salary Continuation +— +— +$ +658,808 +$ +1,317,615 +Chief Financial Officer +Bonus +$ +219,603 +$ +493,886 +$ +219,603 +$ +219,603 +Accelerated Option Vesting +— +— +— +— +Accelerated Restricted Stock/Unit Vesting +— +$ +1,650,540 +$ +825,270 +$ +1,650,540 +Health Care Benefits +— +— +$ +3,456 +$ +3,456 +Total +$ +219,603 +$ +2,144,426 +$ +1,707,137 +$ +3,191,214 +Lisa Nibauer +Salary Continuation +— +— +$ +410,000 +$ +820,000 +Executive Vice President, +Bonus +164,000 +$ +340,464 +$ +164,000 +$ +164,000 +Business Unit Leader, +Accelerated Option Vesting +— +— +— +— +Diagnostics +Accelerated Restricted Stock/Unit Vesting +— +$ +297,872 +$ +148,936 +$ +297,872 +Health Care Benefits +— +— +$ +3,451 +$ +3,451 +Total +$ +164,000 +$ +638,336 +$ +726,387 +$ +1,285,323 +Kathleen G. Weber +Salary Continuation +— +— +$ +365,650 +$ +731,300 +Executive Vice President, +Bonus +$ +146,260 +$ +354,242 +$ +146,260 +$ +146,260 +Business Unit Leader +Accelerated Option Vesting +— +— +— +— +Molecular Solutions +Accelerated Restricted Stock/Unit Vesting +— +$ +1,031,191 +$ +515,595 +$ +1,031,191 +Health Care Benefits +— +— +$ +36,180 +$ +36,180 +Total +$ +146,260 +$ +1,385,433 +$ +1,063,685 +$ +1,944,931 +Jack E. Jerrett +Salary Continuation +— +— +$ +415,358 +$ +830,716 +Senior Vice President, +Bonus +— +$ +287,428 +$ +166,143 +$ +166,143 +General Counsel, and +Accelerated Option Vesting +— +— +— +— +Chief Compliance Officer +Accelerated Restricted Stock/Unit Vesting +— +$ +1,208,521 +$ +604,261 +$ +1,208,521 +Health Care Benefits +— +— +$ +27,883 +$ +27,883 +Total +— +$ +1,495,949 +$ +1,213,645 +$ +2,233,263 +1 +In the event of a unilateral termination by Dr. Tang, Mr. Cuca, Ms. Weber or Ms. Nibauer after June 30, they would receive a prorated bonus for the year in which termination occurs. +2 The indicated values for the accelerated vesting of stock options reflect (i) the number of option shares which would vest on an accelerated basis, multiplied by (ii) the excess, if any, of the $10.59 per share closing price for the Company’s Common Stock, as reported by NASDAQ on December 31, 2020, over the applicable exercise price for each option. The indicated values for the accelerated vesting of RS and PRUs reflect the $10.59 per share closing price on December 31, 2019 multiplied by the number of shares which would vest on an accelerated basis (assuming, in the case of PRUs, that the applicable performance measures for the PRUs are met at 100% of target). +56 +Stock Award PLAN INFORMATION +The following table provides information as of December 31, 2020 about the shares of Common Stock that may be issued upon the exercise of options under the OraSure Technologies, Inc. Stock Award Plan (the “Stock Award Plan” or the “Plan”). Additional grants of equity compensation may only be made under the Stock Award Plan. +Plan Category +Number of Securities to be +Issued Upon Exercise of +Outstanding Options +(a) +Weighted- +Average Exercise +Price of Outstanding +Options +(b) +Number of Securities +Remaining Available for +Future Issuance Under +Equity Compensation Plans +(Excluding Securities +Reflected in Column (a)) +(c) +Equity compensation plans approved by +security holders +1,231,993 +$ +10.12 +5,595,732 +1 +Equity compensation plans not approved +by security holders +— +— +— +Total +1,231,993 +5,595,732 +1 +Represents shares remaining available for future issuance as of December 31, 2020 under the Stock Award Plan. +DIRECTOR COMPENSATION +ANNUAL FEES +Under our Non-Employee Director Compensation Policy (“Director Policy”), non-employee members of the Board receive fixed annual fees for service on the Board and Committees of the Board during 2020, as set forth below. The fees were paid quarterly in arrears. +Position +Annual Fee +Board Member (Base Fee) +$ +55,000 +Board Chairman (Additional Fee) +$ +25,000 +Audit Chairman +$ +20,000 +Compensation Chairman +$ +20,000 +Nominating & Corporate Governance Chairman +$ +20,000 +Non-Chairman Committee member +$ +5,000 +Each non-employee Director has the option to receive shares of the Company’s Common Stock in lieu of cash fees, as described above. Prior to the end of each calendar year, each non-employee Director shall make an annual election with respect to cash fees for the following calendar year, indicating whether he or she elects to receive the fees in cash, or in Company Common Stock in lieu of the cash fees. If no election has been made as of the first day of the year, the non-employee Director shall receive all fees in cash, as set forth above, or, if a previous election has been made to receive Common Stock in lieu of the cash fees, such election shall remain in effect for subsequent calendar years until such election is changed by the completion, signature and delivery to the Company of a new election form. Each newly elected or appointed non-employee Director shall make an election prior to, or within 30 days of, his or her initial appointment or election to the Board, for the remainder of the year of such appointment or election, whether to receive the fees in cash or in Common Stock. +In the event an election is made by a non-employee Director to receive Common Stock in lieu of cash fees, such Director shall automatically be granted on the applicable fee payment date a number of shares of Common Stock having an aggregate fair market value equal to the aggregate amount of such non-employee Director’s cash fee for such fiscal quarter, determined by dividing (A) the aggregate amount of the fee by (B) the average of the high and low sales price of the Company’s Common Stock as reported on the NASDAQ Stock Exchange on the applicable fee payment date (rounded down to the nearest whole share) (the “Quarterly Grant”). Non-employee Directors are permitted to direct the Company to withhold shares of stock in order to pay tax withholding obligations arising upon the receipt of a Quarterly Grant. +57 +INITIAL AND ANNUAL EQUITY AWARDS +Upon joining the Board, non-employee Directors receive an initial grant of restricted shares of the Company’s Common Stock having an aggregate value of $100,000 (the “Initial Grant”). The Initial Grant will cliff vest two (2) years after the Director joins the Board. In addition, non-employee Directors will receive an annual grant of restricted shares (the “Annual Grant”) on the date of the Company’s Annual Meeting of Stockholders, which will vest on or prior to the Company’s next Annual Meeting of Stockholders. The value of Annual Grants for Board members are as follows: +Board Position +Award Grant Value +Board Member (Base) +$105,000 +Board Chairman (Additional Value) +$ 25,000 +The dollar value of each Initial Grant and Annual Grant is converted into restricted stock by dividing the above values by the average of the high and low sales prices of the Company’s Common Stock, as reported on the NASDAQ Stock Market, on the grant date. Non-employee Directors are permitted to direct the Company to withhold restricted stock in order to pay tax withholding obligations arising upon the vesting of such shares. +EQUITY AWARD TERMS +Each Initial Grant, Annual Grant and Quarterly Grant shall be made under the terms of the Company’s Stock Award Plan or a successor plan and will be subject to the terms and conditions of such plan and the applicable award agreement. +Any unvested restricted stock granted to non-employee Directors will vest in their entirety immediately upon the occurrence of a “change of control” of the Company. A “change of control” means a change of control that would be required to be reported under the Securities Exchange Act of 1934, as amended, and would be deemed to have occurred at such time as (i) any person, or more than one person acting as a group within the meaning of Section 409A of the Code, acquires ownership of stock of the Company that, together with stock held by such person or group, constitutes more than 50 percent of the total fair market value or total voting power of the stock of the Company; (ii) any person, or more than one person acting as a group within the meaning of Section 409A of the Code, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition) ownership of stock of the Company possessing 30 percent or more of the total voting power of the Company’s stock; (iii) a majority of the members of the Board is replaced during any 12-month period by Directors whose appointment or election is not endorsed by a majority of the members of the Board before the date of the appointment or election; or (iv) a person, or more than one person acting as a group within the meaning of Section 409A of the Code, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition) assets from the Company that have a total gross fair market value equal to or more than 40 percent of the total gross fair market value of all the assets of the Company immediately before such acquisition or acquisitions. In addition, if a non-employee Director leaves the Board for any reason other than a change of control, prior to the end of the vesting period for the Annual Grant of restricted stock, such award shall immediately vest on a pro-rata basis based on the actual duration of such Director’s service to the Board during such vesting period. +DEFERRED COMPENSATION +Non-employee Directors are permitted to defer all or a portion of the fees and grants of restricted stock under the Company’s Non-Qualified Deferred Compensation Plan, on terms similar to those applicable to our officers. +58 +DIRECTOR COMPENSATION DURING 2020 +The following table summarizes information related to compensation of non-employee Directors during the fiscal year ended December 31, 2020: +Name 1, 2 +Fees +Earned +or Paid +in Cash 3 +($) +Stock +Awards 4 +($) +Option +Awards +($) +Non-Equity +Incentive Plan +Compensation +($) +Change in +Pension +Value and +Nonqualified +Deferred +Compensation +Earnings +All Other +Compensation +($) +Total ($) +Mara G. Aspinall +$ +74,274 +$ +105,002 +— +— +— +— +$ +179,276 +Michael Celano +$ +90,000 +$ +130,003 +— +— +— +— +$ +220,003 +James A. Datin +— +$ +169,998 +— +— +— +— +$ +169,998 +Eamonn P. Hobbs +$ +80,000 +$ +105,002 +— +— +— +— +$ +185,002 +Ronny B. Lancaster +$ +80,000 +$ +105,002 +— +— +— +— +$ +185,002 +David J. Shulkin, M.D. +$ +47,667 +$ +205,006 +— +— +— +— +$ +252,673 +Lelio Marmora +$ +37,917 +$ +99,999 +— +— +— +— +$ +137,916 +1 +Because Dr. Tang is an officer of the Company, he is not entitled to any separate compensation for service on the Board or any Committee thereof and has not been included in this table. Dr. Shulkin became a Director in April 2020 and Mr. Marmora became a Director in June 2020. +2 +Non-employee Directors held the following number of unvested shares of restricted stock (“RS”) and stock options (“SOs”) at December 31, 2020: Ms. Aspinall: 6,577 RS; Mr. Celano: 8,143 RS; Mr. Datin: 6,577 RS; Mr. Hobbs: 6,577 RS; Mr. Lancaster: 6,577 RS; Dr. Shulkin: 15,542 RS; and Mr. Marmora: 7,015 RS. The aggregate number of stock options and restricted shares held by Dr. Tang are set forth in the table in the Section entitled, “Outstanding Equity Awards,” in this Proxy Statement. +3 +Mr. Datin elected to receive his board fees in shares of the Company’s Common Stock in lieu of cash fees in accordance with the Director compensation policy described above. +4 +The indicated amounts reflect the aggregate grant date fair value of restricted stock awards made to non-employee Directors during 2020, computed in accordance with FAS ASC Topic 718. The indicated amounts for Dr. Shulkin and Mr. Marmora include their onboarding awards of RS when they joined the Board. The amount for Dr. Shulkin also includes his annual award of RS. +59 +PROPOSALS REQUI RING YOUR VOTE +PROPOSAL NO. 1. ELECTION OF DIRECTORS +Background +At the Annual Meeting, you will be asked to vote on the election of three Directors. A majority of the independent members of the Board have nominated Michael Celano, James A. Datin and Lelio Marmora for election as Class III Directors, for terms expiring at the Annual Meeting of Stockholders in 2024. +We do not know of anything that would preclude any nominee from serving. However, should any nominee for any reason become unable or unwilling to serve as a Director, the persons named in the enclosed Proxy Card will vote the shares represented by each Proxy for such substitute nominee as the Board may approve. +Each of the nominees for election as Directors is presently a member of our Board and has consented to continue to serve if re-elected to the Board. Mr. Celano joined the Board in 2006, is the Chairman of the Board and serves as a member of the Audit Committee and Compensation Committee. Mr. Datin joined the Board in 2019 and serves as a member of the Audit Committee and Compensation Committee. Mr. Marmora joined the board in 2020 and serves as a member of the Audit Committee and the Nominating and Corporate Governance Committee. +Any vacancy that occurs on the Board that results from an increase in the number of Directors may be filled by the affirmative vote of a majority of the Directors then in office, and any other vacancy on the Board may be filled by the affirmative vote of a majority of the Directors then in office, even though less than a quorum of the Board, or by a sole remaining Director. +Certain information with respect to each person nominated for election as a Director and each person whose term of office as a Director will continue after the Annual Meeting, including the particular experience, qualifications, attributes and skills they possess that led to the conclusion that they should serve as a Director, is set forth below. +Name +Principal Occupation +Age +Director +Since +Class I (Directors Whose Terms Expire in 2022): +Eamonn P. Hobbs +President of Hobbs Medical Ventures, LLC +62 +2016 +David J. Shulkin, MD +President and Chief Executive Officer, Shulkin Solutions, Inc. +61 +2020 +Stephen S. Tang, Ph.D. +President and Chief Executive Officer, OraSure Technologies, Inc. +60 +2011 +Class II (Directors Whose Terms Expire in 2023): +Mara G. Aspinall +Managing Member, Health Catalysts Group +58 +2017 +Ronny B. Lancaster +Former Senior Vice President for Federal Government Relations of +Assurant, Inc. +69 +2003 +Class III (Nominees With Terms Expiring in 2024): +Michael Celano +Chief Financial Officer, Larimar Therapeutics +62 +2006 +James A. Datin +President & Chief Executive Officer, BioAgilytix Labs LLC +58 +2019 +Lelio Marmora +President, The Management Lab +54 +2020 +60 +Eamonn P. Hobbs +Independent Director +Director since: 2016 +Class I Director +Term Expires: 2022 +Age : 62 +Other Current +Public Company +Directorships : None +Eamonn P. Hobbs joined the Board in 2016. Mr. Hobbs serves as President of Hobbs Medical Ventures, LLC, a consulting company he founded in the healthcare field. From December 2020, he co-founded and serves as Chairman of the Board and CEO of Syncromune, Inc. a company that is developing a new immunotherapy for metastatic solid tumor cancers. From March 2018 to September 2020, he co-founded and served as Chairman of the Board and CEO of ImmunSYS, Inc. a company that is developing a new immunotherapy for late stage metastatic prostate cancer. From December 2016 to June 2017, Mr. Hobbs served as President and CEO of Digital Cognition Technologies, Inc., an early stage medical device company. From July 2014 to January 2016, Mr. Hobbs served as the President and Chief Executive Officer of Antares Pharma, Inc., a specialty pharmaceutical company focused on self-injection pharmaceutical products and technologies. He also served on the Antares board of directors from 2009 to 2016. From 2009 to 2013, Mr. Hobbs served as President and Chief Executive Officer, and from 2008 to 2013 was a member of the board of directors, of Delcath Systems, Inc., a specialty pharmaceutical and medical device public company specializing in cancer treatment. Prior to Delcath Systems, Inc., Mr. Hobbs served as President and Chief Executive Officer of AngioDynamics, Inc., a company he co-founded in 1988 as a division of E-Z-EM, Inc. which grew into a leading medical technology public company with a highly diverse product line. From 1988 to 2004, Mr. Hobbs also served as Executive Vice President of Business Development of E-Z-EM, Inc., a NASDAQ-traded company. Before joining AngioDynamics, Mr. Hobbs was Director of Marketing and Product Development at NAMIC; founder, President and Chief Executive Officer of Hobbs Medical, Inc.; and a Product Development Engineer at Cook Incorporated. Mr. Hobbs received a B.S. in Plastics Engineering with a Biomaterials emphasis at the University of Massachusetts (Lowell). Mr. Hobbs has served on the Board of Directors of the Medical Device Manufacturers Association since 2004. +Skills and Qualifications leading to conclusion that he should serve on the Board: +• Executive-level management experience as CEO of several public companies. +• Extensive experience in the medical device, pharmaceutical and combination products industries. +• Extensive experience managing operations in a cost-effective, efficient manner. +• Experience with governance and policy development for the medical device industry. +David J. Shulkin, M.D. +61 +Independent Director +Director since: 2020 +Class I Director +Term Expires: 2022 +Age : 61 +Other Current +Public Company +Directorships : 1 +David J. Shulkin, M.D. joined the Board in 2020. Since 2018, he has served as President and Chief Executive Officer of Shulkin Solutions, Inc., a company that promotes innovation in healthcare and advocates for veterans and underserved populations. From 2015 through 2018, Dr. Shulkin served in various capacities at the U.S. Department of Veterans Affairs (the “VA”), including as Secretary of the VA from 2017 to 2018 and as Under Secretary for Health from 2015 to 2017. Prior to his tenure at the VA, he served in executive leadership positions at Morristown Medical Center, Beth Israel Medical Center, Temple University Hospital, Drexel University School of Medicine, Doctor Quality, Inc. and the University of Pennsylvania Health System and Hospital of the University of Pennsylvania. Dr. Shulkin received a B.A. from Hampshire College and his M.D. from the Medical College of Pennsylvania (Drexel College of Medicine). He also completed residencies in Internal Medicine at Yale University School of Medicine and University of Pittsburgh School of Medicine, was a Fellow in General Medicine at the University of Pittsburgh School of Medicine and was a Robert Wood Johnson Foundation Clinical Scholar at the University of Pennsylvania School of Medicine. Dr. Shulkin is certified by the American Board of Internal Medicine. He currently serves on the Board of Deerfield Healthcare Technology Acquisitions Corp. +Skills and Qualifications leading to conclusion that he should serve on the Board: +• Expertise in medical matters and public health. +• Expertise in government affairs. +. +• Executive-level management experience. +Stephen S. Tang, Ph.D. +Director +Director since: 2011 +Class I Director +Term Expires: 2019 +Age : 60 +Other Current +Public Company +Directorships : None +For biographical information on Dr. Tang, see the Section entitled, “Executive Officers,” in this Proxy Statement. +Skills and Qualifications leading to conclusion that he should serve on the Board: +• Extensive business experience, particularly in the life sciences industry. +• Experience with strategic and business development matters. +• Executive-level management experience. +Mara G. Aspinall +Independent Director +Director since: 2017 +Class II Nominee +Term Expires: 2020 +Age : 57 +Other Current +Public Company +Directorships : 2 +Mara G. Aspinall joined the Board in June 2017. Since 2014, she has served as the Managing Member of Health Catalysts Group, a consulting firm that focuses on growth of early stage life science and technology companies. Ms. Aspinall is also Managing Director of BlueStone Venture Partners, a venture capital firm dedicated to investing in life sciences and healthcare related companies. Prior to these positions, Ms. Aspinall served as President and CEO, Global Head of Roche Tissue Diagnostics/Ventana Medical Systems, a division of The Roche Group that provides tissue-based cancer diagnostic instruments, products and services. Prior to that, she founded and served as CEO and Director of On-Q-ity, Inc., a diagnostic research company focused on improving cancer treatment through the capture of circulating tumor cells in a patient’s blood. Ms. Aspinall also spent 12 years with Genzyme Corporation, serving as President of the Genzyme Genetics division, a leading provider of esoteric and genetic tests for the reproductive, oncology and personalized medicine markets, and as President of the Genzyme Pharmaceuticals division, a custom pharmaceutical intermediates provider. Ms. Aspinall began her career as a management consultant with Bain & Company. Ms. Aspinall holds an M.B.A. from Harvard Business School and a B.A. in International Relations from Tufts University. Ms. Aspinall is certified in Cybersecurity Oversight from Carnegie Mellon University. Ms. Aspinall previously served on the Board at Safeguard Scientific and currently serves on the Boards of Abcam Plc, Allscripts Healthcare and Castle Biosciences. +Skills and Qualifications leading to conclusion that she should serve on the Board: +• Executive level experience as a CEO. +• Executive experience in the life sciences industry. +• Extensive experience in molecular diagnostics. +62 +Ronny B. Lancaster +Independent Director +Director since: 2003 +Class II Nominee +Term Expires: 2020 +Age : 69 +Other Current +Public Company +Directorships : None +Ronny B. Lancaster became a member of the Board in May 2003. From September 2005 to December 2018, Mr. Lancaster served as Senior Vice President, Federal Government Relations of Assurant, Inc., a provider of specialty insurance and insurance-related products and services. Prior to that, Mr. Lancaster served as Chief Operating Officer of the Morehouse School of Medicine, Executive Assistant to the Secretary and Principal Deputy Assistant Secretary for Planning and Evaluation at the U.S. Department of Health and Human Services, General Counsel of Hamilton Enterprises, Inc., Senior Washington Representative for Blue Cross/Blue Shield Association, and Chief of the Division of Fee-For-Service Plans at the U.S. Office of Personnel Management. Mr. Lancaster received a B.A. in Economics from the Catholic University of America, an M.B.A. from the Wharton School of the University of Pennsylvania, and a J.D. from The Georgetown University Law Center. He is admitted to the Bars of Pennsylvania and the District of Columbia. Mr. Lancaster previously served on the board of directors of Immucor, Inc. +Skills and Qualifications leading to conclusion that he should serve on the Board: +• Expertise in government affairs and political matters. +• Extensive medical and healthcare experience. +• Legal training. +Michael Celano +Independent Director +Director since: 2006 +Class III Director +Term Expires: 2024 +Age : 62 +Other Current Public Company Directorships : None +Michael Celano became a member of the Board in October 2006 and has served as the Company’s Chairman of the Board since April 2018. Mr. Celano has served as the Chief Financial Officer of Larimar Therapeutics since May 2020. Mr. Celano served as the Chief Operating Officer of Recro Pharma, Inc. between July 2016 and May 2019, Mr. Celano served as its Chief Financial Officer. Between 2015 and June 2016 Mr. Celano was self-employed providing consulting services to healthcare companies. Prior to that, Mr. Celano served as the Chief Financial Officer of Kensey Nash Corporation, a biomaterials company from 2009 to 2012. From 2007 to 2008, Mr. Celano also served as Chief Financial Officer for BioRexis Pharmaceutical Corporation, a biopharmaceutical company. Before joining BioRexis, Mr. Celano served as a partner with KPMG LLP, where he was co-leader of its National Life Science Practice. Mr. Celano also was co-leader of the Life Science Practice for Arthur Andersen before he joined KPMG. Mr. Celano holds a B.S. in Accounting from St. Joseph’s University. +Skills and Qualifications leading to conclusion that he should serve on the Board: +• Long career in public accounting focused in the life sciences area. +• Life sciences industry operating company experience. +• Accounting and financial expertise. +• Extensive business experience. +63 +James A. Datin +Independent Director +Director since: 2019 +Class III Director +Term Expires: 2024 +Age : 58 +Other Current Public Company Directorships : 1 +James A. Datin became a member of the Board in August 2019. Since November 2013, Mr. Datin has served as President & Chief Executive Officer of BioAgilytix Labs, LLC, a leading global bioanalytical contract research organization. From September 2005 to July 2013, Mr. Datin served as Executive Vice President and Managing Director at Safeguard Scientifics, Inc., a company focused on providing capital and advice to technology driven businesses in healthcare, financial services and digital media. Prior to that time, Mr. Datin served as Chief Executive Officer of Touchpoint Solutions, Inc., a remote management and monitoring company serving the medical, imaging, print, retail and other industries. He has also held senior leadership positions at Dendrite International, Inc., GlaxoSmithKline PLC, the Isuta Holdings Group of companies, Baxter and other companies. Mr. Datin currently serves on the Boards of FSD Pharma, the North Carolina Biotechnology Center, and serves on the Advisory Board of Marshall University School of Business. He previously served on the Boards of Clarient, Inc., Intralinks Holdings, Inc. and NuPathe Inc. Mr. Datin received a B.B.A. at Marshall University, an M.B.A. at the University of New Haven and an Advanced Management Degree at The Wharton School at The University of Pennsylvania. +Skills and Qualifications leading to conclusion that he should serve on the Board: +● Extensive life science and business experience. +● Executive leadership experience. +● Strong M&A background. +● Operations and financial experience. +Lelio Marmora +Independent Director +Director since: 2006 +Class III Director +Term Expires: 2024 +Age : 54 +Other Current Public Company Directorships : None +Lelio Marmora became a member of the Board in June 2020. Since June 2020, he has served as the President of the Management Lab. Prior to that, Mr. Marmora served as Executive Director of Unitaid in Geneva, Switzerland, from 2014 to 2020, overseeing a portfolio of $1.5 billion in 100 countries. Prior to Unitaid, Mr. Marmora was Director for Africa and the Middle East at the Global Fund to Fight AIDS, TB and Malaria, overseeing a $4 billion portfolio. He also served as head of the Fund’s Latin America and the Caribbean Department. Earlier in his career, Mr. Marmora served in various capacities at a range of international organizations, including the World Bank, the Inter-American Development Bank and the United Nations Development Program, managing modernization of the State programs. Mr. Marmora graduated from the Université Panthéon-Assas (Paris II) with a Masters degree in International Law and Administration of International Organizations. +Skills and Qualifications leading to conclusion that he should serve on the Board: +• Extensive experience in international public health. +• Expertise in public funding. +• Executive leadership experience. +64 +Vote Required; Boa rd Recommendation +If a quorum is present, each nominee will be elected if he or she receives a majority of the votes cast by shares present in person or by Proxy and entitled to vote at the Annual Meeting. Shares voted in person or represented by proxy which are not voted for a nominee (by voting no or abstaining) will have the effect of voting against the nominee. Broker non-votes will have no effect on the required vote. In the absence of instructions to the contrary, shares of Common Stock represented by properly executed Proxies will be voted for the nominees, each of whom has consented to be named and to serve if elected. +Your Board recommends that you vote FOR the election of the Director nominees. +PROPOSAL NO. 2. RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC +ACCOUNTING FIRM +Background +The Audit Committee of the Board of Directors has approved the reappointment of KPMG LLP (“KPMG”) as our independent registered public accounting firm for the 2021 fiscal year. The Audit Committee has also recommended that the Board submit the appointment of KPMG for ratification by stockholders at the Annual Meeting. Although action by the stockholders on this matter is not legally required, the Audit Committee and the Board believe it is appropriate to seek stockholder ratification of this appointment in light of the important role played by the independent registered public accounting firm in reporting on the Company’s consolidated financial statements. If this appointment is not ratified by stockholders, the Audit Committee may reconsider its appointment of KPMG for the 2021 fiscal year or in the future. +One or more representatives of KPMG are expected to attend the Annual Meeting electronically. They will have an opportunity to make a statement and will be available to respond to appropriate questions. +Vote Required; Board Recommendation +Ratification of the appointment of KPMG requires the affirmative vote of a majority of shares present in person or by Proxy and entitled to vote at the Annual Meeting. Shares voted in person or represented by Proxy which are not voted for this ratification (by voting no or abstaining) will have the effect of voting against this proposal. In the absence of instructions to the contrary, shares of Common Stock represented by properly executed Proxies will be voted for ratification of the appointment of KPMG as our independent registered public accounting firm for the 2021 fiscal year. +Your Board recommends that the stockholders vote FOR ratification of the appointment of KPMG. +PROPOSAL NO. 3. ADVISORY (NON-BINDING) VOTE TO APPROVE EXECUTIVE COMPENSATION +Background +Section 14A of the Exchange Act, enacted pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank Act”), requires that stockholders be given the opportunity to vote to approve, on an advisory (non-binding) basis, no less frequently than once every three years, the compensation of our NEOs. Based on feedback received at our 2017 Annual Meeting, the Board determined that such a vote will continue to be held on an annual basis until the next advisory vote on frequency. +The vote on the resolution recommended below is not intended to address any specific element of compensation, but rather relates to the overall compensation of our NEOs. As described more fully under the CD&A Section of this Proxy Statement and the related tables and narrative, our compensation program is performance-based and is designed to pay executives for performance by offering rewards for the achievement of pre-determined objectives. In addition, our program is designed to align the interests of executives with the interests of our stockholders, provide long-term incentives and set compensation at levels sufficiently competitive to attract, retain and motivate high quality executives, and meet strong corporate governance principles. You are urged to carefully review the CD&A Section of this Proxy Statement which contains a detailed discussion of our executive compensation program, including the 2020 compensation of our NEOs. +65 +Compensation Pr ogram Features +As described more fully in the CD&A, there are many important features to our compensation program that illustrate our commitment to pay-for-performance and good corporate governance. A summary of some of the more significant of these features is set forth below: +• +Compensation is market driven and performance-based. +• +Total compensation targeted at 50 th percentile of Peer Group. +• +Balanced mix of cash/equity, fixed/variable, short-term/long-term compensation components. +• +Use of peer company benchmarking. +• +Threshold financial performance objectives for annual bonus pool funding meet or exceed fiscal performance for the prior fiscal year. +• +Compensation recoupment policy. +• +Equity awards provide long-term incentive with three year vesting. +• +No hedging or pledge of our Common Stock. +• +50% of annual equity is performance-vested. +• +Robust stockholder outreach on compensation/governance matters. +Vote Required; Board Recommendation +If a quorum is present, the affirmative vote of a majority of shares present, in person or by Proxy and entitled to vote at the Annual Meeting, is required to approve, on an advisory (non-binding) basis, the compensation paid to NEOs. Shares voted in person or represented by Proxy which are not voted for approval of our executive compensation (by voting no or abstaining) will have the effect of voting against this proposal. Broker non-votes will not count toward the determination of whether this proposal is approved and will have no impact on the vote. In the absence of instructions to the contrary, shares of Common Stock represented by properly executed Proxies will be voted for approval of our executive compensation, as disclosed in this Proxy Statement. Because this stockholder vote is advisory, it will not be binding on the Company or the Board of Directors. However, the Compensation Committee and Board will take into account the outcome of the vote when considering future executive compensation programs and arrangements. +Based on the foregoing, the Board is requesting that stockholders vote on the following resolution: +RESOLVED , that the compensation paid to the Company’s named executive officers, as disclosed in the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED. +Your Board recommends that the stockholders vote FOR the approval of our executive compensation as described in the preceding resolution. +ANNUAL REPORT +Our Annual Report to Stockholders for the year ended December 31, 2020 accompanies this Proxy Statement. Following receipt of a written request, we will provide, without charge, a copy of our Annual Report on Form 10-K for the year ended December 31, 2020, as filed with the SEC (including a list briefly describing the exhibits thereto), to any record holder or beneficial owner of our Common Stock on March 26, 2021, the record date for the Annual Meeting, or to any person who subsequently becomes such a record holder or beneficial owner. Requests should be directed to the attention of the Corporate Secretary of the Company at our address set forth in the Notice of Annual Meeting of Stockholders immediately preceding this Proxy Statement. +DEADLINE FOR STOCKHOLDER PROPOSALS +You may submit proposals for inclusion in the proxy materials for the Company’s 2022 Annual Meeting of Stockholders. Any such proposals must meet the stockholder eligibility and other requirements imposed by rules issued by the SEC and must be received by the Company at 220 East First Street, Bethlehem, Pennsylvania 18015, Attention: Corporate Secretary, in accordance with Rule 14a-8 promulgated under the Exchange Act, not later than December 9, 2021. +66 +In addition, our Bylaws provide that a stockholder proposal must meet certain predetermined requirements in order to be considered at the Annual Meeting. These requirements are separate from, and in addition to, the requirements discussed above to have the stockholder proposal included in the proxy materials pursuant to the SEC’s rules and regulations. In order to be considered, a stockholder’s proposal must be made in writing to the Company’s Secretary and must be delivered to or received at our principal executive offices not less than ninety (90) days nor more than one hundred twenty (120) days prior to the meeting. However, if less than one hundred (100) days’ notice or prior public disclosure of the date of the meeting is given or made to stockholders, notice by the stockholder to be timely must be so received no later than the close of business on the tenth (10 th ) day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made, whichever first occurs. The notice to the Secretary must set forth, with respect to each matter the stockholder proposes to bring before the meeting, a brief description of the matter and the reasons for considering that matter at the Annual Meeting. The notice must also include, as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf notice of the proposed business is made: (i) the name and address of the stockholder and such beneficial owner; (ii) any material interest of such stockholder and such beneficial holder in such business; (iii) the class and number of shares of capital stock of the Company which are held of record or beneficially owned by the stockholder and such beneficial owner and any other direct or indirect pecuniary or economic interest in any capital stock of the Company of such stockholder and such beneficial owner, including without limitation, any derivative instrument, swap, option, warrant, short interest, hedge, profit sharing arrangement or borrowed or loaned shares; (iv) a representation that such stockholder intends to appear in person or by proxy at the meeting to propose the business described in its notice; and (v) any other information relating to such business matter that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder. To the extent the Board of Directors or the SEC, or a court of competent jurisdiction, deems these Bylaw provisions to be inconsistent with the right of stockholders to request inclusion of a proposal in the Company’s proxy materials pursuant to Rule 14a-8 promulgated under the Exchange Act, such rule shall prevail. +The SEC has promulgated rules relating to the exercise of discretionary voting authority under proxies solicited by the Board. If a stockholder intends to present a proposal at our 2022 Annual Meeting without inclusion of that proposal in the Company’s proxy materials and written notice of the proposal is not received by the Secretary of the Company by February 22, 2022 (the date that is 45 days before the one-year anniversary of the date on which the Company first sent its proxy materials for the Annual Meeting), or if the Company meets other requirements of the applicable SEC rules and regulations, the proxies solicited by the Board for use at the 2022 Annual Meeting will confer discretionary authority to vote on the proposal should it then be raised at the 2022 Annual Meeting. +BY ORDER OF THE BOARD OF DIRECTORS +Jack E. Jerrett +Secretary +April 8, 2021 +67 +220 EAST FIRST STREET +BETHLEHEM, PA 18015 +VOTE BY INTERNET +Before The Meeting - Go to www.proxyvote.com or scan the QR Barcode above +Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. +During The Meeting - Go to www.virtualshareholdermeeting.com/OSUR2021 +You may attend the Meeting via the Internet and vote during the Meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions. +VOTE BY PHONE - 1-800-690-6903 +Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the meeting date. Have your proxy card in hand when you call and then follow the instructions. +VOTE BY MAIL +Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. +TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: +E38313-P03935 KEEP THIS PORTION FOR YOUR RECORDS +THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. +DETACH AND RETURN THIS PORTION ONLY +ORASURE TECHNOLOGIES, INC. +The Board of Directors recommends you vote FOR each of the following nominees: +1. +ELECTION OF DIRECTORS +Class III (Expiring 2024) +Nominees: +For +Against +Abstain +1a. Michael Celano +☐ +☐ +☐ +1b. James A. Datin +☐ +☐ +☐ +1c. Lelio Marmora +☐ +☐ +☐ +The Board of Directors recommends you vote FOR items 2 and 3. +For +Against +Abstain +2. +Ratification of Appointment of KPMG LLP as the Independent Registered Public Accounting Firm for Fiscal Year 2021. +☐ +☐ +☐ +3. +Advisory (Non-Binding) Vote to Approve Executive Compensation. +☐ +☐ +☐ +Mark Here for Address Changes or Comments SEE REVERSE +☐ +NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. +Signature [PLEASE SIGN WITHIN BOX] +Date +Signature (Joint Owners) +Date +OraSure Technologies, Inc. +2021 Annual Meeting of Stockholders +Tuesday, May 18, 2021 +Important notice regarding the Internet availability of proxy materials for the +Annual Meeting of Stockholders. +The Notice and Proxy Statement and 2020 Annual Report to Stockholders +are available at www.proxyvote.com. +E38314-P03935 +PROXY +2021 Annual Meeting of Stockholders +PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS +The undersigned hereby appoints Jack E. Jerrett and Michele Miller, and each of them, proxies with full power of substitution, to vote all of the shares which the undersigned is entitled to vote at the 2021 Annual Meeting of Stockholders of OraSure Technologies, Inc. (the “Company”), on Tuesday, May 18, 2021, at 10:00 a.m. (Eastern Time), and at any adjournment or adjournments thereof, with all the powers the undersigned would possess if personally present, with respect to the matters listed on the reverse side. +The shares represented by this Proxy, if properly executed, will be voted (i) FOR the election of the nominees listed on the reverse side as directors, (ii) FOR the ratification of the appointment of KPMG LLP as the Company’s independent registered public accounting firm for 2021, and (iii) FOR approval of the compensation of the Company’s named executive officers. If any other business properly comes before the meeting, the proxies named above will have discretionary authority to vote thereon in accordance with their best judgment. +PLEASE MARK, DATE, SIGN AND RETURN THE PROXY CARD PROMPTLY. +Address Changes/Comments: +(If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.) +(Continued and to be marked, dated and signed, on the other side) \ No newline at end of file diff --git a/raw/proxies/0001116463/0001564590-21-018169/proxy_rpt.txt b/raw/proxies/0001116463/0001564590-21-018169/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..8f98a19271d15a29e0d7cd3e8b0a70084a86ed4f --- /dev/null +++ b/raw/proxies/0001116463/0001564590-21-018169/proxy_rpt.txt @@ -0,0 +1,2 @@ +Transactions with Related Persons +24 \ No newline at end of file diff --git a/raw/proxies/0001503274/0001047469-18-003319/proxy.txt b/raw/proxies/0001503274/0001047469-18-003319/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..d3ec6462c476bb85470314f49f299cfd1b184e8d --- /dev/null +++ b/raw/proxies/0001503274/0001047469-18-003319/proxy.txt @@ -0,0 +1,1694 @@ +DEF 14A +1 +a2235416zdef14a.htm +DEF 14A +Use these links to rapidly review the document +TABLE OF CONTENTS +Table of Contents +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Proxy +Statement Pursuant to Section 14(a) of +the Securities Exchange Act of 1934 (Amendment No. ) +Filed by the Registrant ý +Filed by a Party other than the Registrant o +Check the appropriate box: +o +Preliminary Proxy Statement +o +Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +ý +Definitive Proxy Statement +o +Definitive Additional Materials +o +Soliciting Material under §240.14a-12 +Quanterix Corporation +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +ý +No fee required. +o +Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. +(1) +Title of each class of securities to which transaction applies: +(2) +Aggregate number of securities to which transaction applies: +(3) +Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): +(4) +Proposed maximum aggregate value of transaction: +(5) +Total fee paid: +o +Fee paid previously with preliminary materials. +o +Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration +statement number, or the Form or Schedule and the date of its filing. +(1) +Amount Previously Paid: +(2) +Form, Schedule or Registration Statement No.: +(3) +Filing Party: +(4) +Date Filed: +Table of Contents +April 30, 2018 +To +Our Stockholders: +You +are cordially invited to attend the 2018 annual meeting of stockholders of Quanterix Corporation to be held at 2:00 p.m. ET on Wednesday, June 13, 2018 at the offices +of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. at One Financial Center, Boston, MA 02111. +Details +regarding the meeting, the business to be conducted at the meeting, and information about Quanterix Corporation that you should consider when you vote your shares are described +in the accompanying proxy statement. +At +the annual meeting, two persons will be elected to our board of directors. In addition, we will ask stockholders to ratify the selection of Ernst & Young LLP as our +independent registered public accounting firm for our fiscal year ending December 31, 2018. The board of directors recommends the approval of each of these proposals. Such other business will +be transacted as may properly come before the annual meeting. +Under +Securities and Exchange Commission rules that allow companies to furnish proxy materials to stockholders over the Internet, we have elected to deliver our proxy materials to the +majority of our stockholders over the Internet. This delivery process allows us to provide stockholders with the information they need, while at the same time conserving natural resources and lowering +the cost of delivery. On April 30, 2018, we intend to begin sending to our stockholders a Notice of Internet Availability of Proxy Materials (the "Notice") containing instructions on how to +access our proxy statement for our 2018 Annual Meeting of Stockholders and our 2017 annual report to stockholders. The Notice also provides instructions on how to vote online or by telephone and how +to receive a paper copy of the proxy materials by mail. +We +hope you will be able to attend the annual meeting. Whether you plan to attend the annual meeting or not, it is important that you cast your vote either in person or by proxy. You may +vote over the Internet as well as by telephone or by mail. When you have finished reading the proxy statement, you are urged to vote in accordance with the instructions set forth in the proxy +statement. We encourage you to vote by proxy so that your shares will be represented and voted at the meeting, whether or not you can attend. +Thank +you for your continued support of Quanterix Corporation. We look forward to seeing you at the annual meeting. +Sincerely, +/s/ E. KEVIN HRUSOVSKY +E. Kevin Hrusovsky +Chairman, President and Chief Executive Officer +Table of Contents +QUANTERIX CORPORATION +113 Hartwell Avenue +Lexington, Massachusetts 02421 +April 30, 2018 +NOTICE OF 2018 ANNUAL MEETING OF STOCKHOLDERS +TIME: 2:00 p.m. ET +DATE: +Wednesday, June 13, 2018 +PLACE: +Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., One Financial Center, Boston, MA 02111 +PURPOSES: +1. To +elect two directors to serve three-year terms expiring in 2021; +2. To +ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2018; +and +3. To +transact such other business that is properly presented at the annual meeting and any adjournments or postponements thereof. +WHO +MAY VOTE: +You +may vote if you were the record owner of Quanterix Corporation common stock at the close of business on April 20, 2018. A list of stockholders of record will be available at +the annual meeting and, during the 10 days prior to the annual meeting, at our principal executive offices located at 113 Hartwell Avenue, Lexington, Massachusetts 02421. +All +stockholders are cordially invited to attend the annual meeting. Whether you plan to attend the annual meeting or not, we urge you to vote by following the +instructions in the Notice of Internet Availability of Proxy Materials that you previously received and submit your proxy by the Internet, telephone or mail in order to ensure the presence of a +quorum. You may change or revoke your proxy at any time before it is voted at the meeting. +BY ORDER OF THE BOARD OF DIRECTORS +/s/ BRIAN P. KEANE +Brian P. Keane +General Counsel and Secretary +Table of Contents +TABLE OF CONTENTS +PAGE +Important Information About the Annual Meeting and Voting +3 +Security Ownership of Certain Beneficial Owners and Management +8 +Management and Corporate Governance +12 +Executive Officer and Director Compensation +23 +Equity Compensation Plan Information +27 +Report of Audit Committee +28 +Section 16(a) Beneficial Ownership Reporting Compliance +29 +Certain Relationships and Related Person Transactions +29 +Election of Directors +34 +Ratification of the Appointment of the Independent Registered Public Accounting +Firm +35 +Corporate Code of Conduct and Ethics +37 +Other Matters +37 +Stockholder Proposals and Nominations For Director +37 +i +Table of Contents +QUANTERIX CORPORATION +113 Hartwell Avenue +Lexington, Massachusetts 02421 +PROXY STATEMENT FOR QUANTERIX CORPORATION +2018 ANNUAL MEETING OF STOCKHOLDERS +TO BE HELD ON JUNE 13, 2018 +This proxy statement, along with the accompanying Notice of 2018 Annual Meeting of Stockholders, contains information about the 2018 annual meeting of +stockholders of Quanterix Corporation, including any adjournments or postponements of the annual meeting. We are holding the annual meeting at 2:00 p.m. ET on Wednesday, June 13, 2018 at +the offices of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. located at One Financial Center, Boston, MA 02111. +In +this proxy statement, we refer to Quanterix Corporation as "Quanterix," "the Company," "we" and "us." +This +proxy statement relates to the solicitation of proxies by our board of directors for use at the annual meeting. +On +or about April 30, 2018, we intend to begin sending the Important Notice Regarding the Availability of Proxy Materials to stockholders entitled to vote at the annual meeting. +IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE +STOCKHOLDER MEETING TO BE HELD ON JUNE 13, 2018 +This proxy statement and our 2017 annual report to stockholders are available for viewing, printing and downloading at +www.investorvote.com/qtrx. To view these materials, please have your 12-digit control number(s) available that appears on your Notice or proxy card. On this website, you can also elect to receive +future distributions of our proxy statements and annual reports to stockholders by electronic delivery. +Additionally, you can find a copy of our Annual Report on Form 10-K, which includes our financial statements, for the fiscal year ended December 31, +2017 on the website of the Securities and Exchange Commission, or the SEC, at www.sec.gov , or in the "SEC Filings" section of +the "Financial Information" section of the "Investors" section of our website at www.quanterix.com. You may also obtain a printed copy of our Annual Report on Form 10-K, including our financial +statements, free of charge, from us by sending a written request to: Quanterix Corporation, Attn: Investor Relations, 113 Hartwell Avenue, Lexington, Massachusetts 02421. Exhibits will be +provided upon written request and payment of an appropriate processing fee. +2 +Table of Contents +IMPORTANT INFORMATION ABOUT THE ANNUAL MEETING AND VOTING +Why is the Company Soliciting My Proxy? +Our board of directors is soliciting your proxy to vote at the 2018 annual meeting of stockholders to be held at the offices of Mintz, Levin, +Cohn, Ferris, Glovsky and Popeo, P.C. located at One Financial Center, Boston, MA 02111, on Wednesday, June 13, 2018, at 2:00 p.m. ET, and any adjournments or postponements of the +meeting, which we refer to as the annual meeting. This proxy +statement, along with the accompanying Notice of Annual Meeting of Stockholders, summarizes the purposes of the meeting and the information you need to know to vote at the annual meeting. +We +have made available to you on the Internet or have sent you this proxy statement, the Notice of Annual Meeting of Stockholders, the proxy card and a copy of our Annual Report on +Form 10-K for the fiscal year ended December 31, 2017 because you owned shares of our common stock on the record date. We intend to commence distribution of the Important Notice +Regarding the Availability of Proxy Materials, which we refer to throughout this proxy statement as the Notice, and, if applicable, proxy materials to stockholders on or about April 30, 2018. +Why Did I Receive a Notice in the Mail Regarding the Internet Availability of Proxy Materials Instead +of a Full Set of Proxy Materials? +As permitted by the rules of the U.S. Securities and Exchange Commission, or the SEC, we may furnish our proxy materials to our stockholders by +providing access to such documents on the Internet, rather than mailing printed copies of these materials to each stockholder. Most stockholders will not receive printed copies of the proxy materials +unless they request them. We believe that this process should expedite stockholders' receipt of proxy materials, lower the costs of the annual meeting and help to conserve natural resources. If you +received a Notice by mail or electronically, you will not receive a printed or email copy of the proxy materials, unless you request one by following the instructions included in the Notice. Instead, +the Notice instructs you as to how you may access and review all of the proxy materials and submit your proxy on the Internet. If you requested a paper copy of the proxy materials, you may authorize +the voting of your shares by following the instructions on the proxy card, in addition to the other methods of voting described in this proxy statement. +Who Can Vote? +Only stockholders who owned our common stock at the close of business on April 20, 2018 are entitled to vote at the annual meeting. On +this record date, there were 21,958,025 shares of our common stock outstanding and entitled to vote. Our common stock is our only class of voting stock. +You +do not need to attend the annual meeting to vote your shares. Shares represented by valid proxies, received in time for the annual meeting and not revoked prior to the annual +meeting, will be voted at the annual meeting. For instructions on how to change or revoke your proxy, see "May I Change or Revoke My Proxy?" below. +How Many Votes Do I Have? +Each share of our common stock that you own entitles you to one vote. +How Do I Vote? +Whether you plan to attend the annual meeting or not, we urge you to vote by proxy. All shares represented by valid proxies that we receive +through this solicitation, and that are not revoked, will be voted in accordance with your instructions on the proxy card or as instructed via Internet or telephone. You may specify whether your +shares should be voted for or withheld for each nominee for director and whether your shares should be voted for, against or abstain with respect the other proposal. If you +3 +Table of Contents +properly +submit a proxy without giving specific voting instructions, your shares will be voted in accordance with the board of director's recommendations as noted below. Voting by proxy will not +affect your right to attend the annual meeting. If your shares are registered directly in your name through our stock transfer agent, Computershare Trust Company N.A., or you have stock certificates +registered in your name, you may vote: +• By Internet or by +telephone. Follow the instructions included in the Notice or, if you received printed materials, in the proxy card to vote over the Internet or +by telephone. +• By mail. If you received a proxy +card by mail, you can vote by mail by completing, signing, dating and returning the proxy card as instructed on the card. If you sign the proxy card but do not specify how you want your shares voted, +they will be voted in accordance with the board of director's recommendations as noted below. +• In person at the meeting. If you +attend the meeting, you may deliver a completed proxy card in person or you may vote by completing a ballot, which will be available at the meeting. +Telephone and Internet voting facilities for stockholders of record will be available 24 hours a day and will close at 1:00 a.m. ET on +June 13, 2018. +If +your shares are held in "street name" (held in the name of a bank, broker or other holder of record), you will receive instructions from the holder of record. You must follow the +instructions of the holder of record in order for your shares to be voted. Telephone and Internet voting also will be offered to stockholders owning shares through certain banks and brokers. If your +shares are not registered in your own name and you plan to vote your shares in person at the annual meeting, you should contact your broker or agent to obtain a legal proxy or broker's proxy card and +bring it to the annual meeting in order to vote. +How Does the Board of Directors Recommend That I Vote on the Proposals? +The board of directors recommends that you vote as follows: +• " FOR " the election of the nominees for director; and +• " FOR " the ratification of the appointment of Ernst & Young LLP as our independent +registered public accounting firm for our fiscal year ending December 31, 2018. +If +any other matter is presented at the annual meeting, your proxy provides that your shares will be voted by the proxy holder listed in the proxy in accordance with his best judgment. +At the time this proxy statement was first made available, we knew of no matters that needed to be acted on at the annual meeting, other than those discussed in this proxy statement. +May I Change or Revoke My Proxy? +If you give us your proxy, you may change or revoke it at any time before the annual meeting. You may change or revoke your proxy in any one of +the following ways: +• if you received a proxy card, by signing a new proxy card with a date later than your previously delivered proxy and submitting it as +instructed above; +• by re-voting by Internet or by telephone as instructed above; +• by notifying our Corporate Secretary in writing before the annual meeting that you have revoked your proxy; or +• by attending the annual meeting in person and voting in person. Attending the annual meeting in person will not in and of itself revoke a +previously submitted proxy. You must specifically request at the annual meeting that it be revoked. +4 +Table of Contents +Your +most current vote, whether by telephone, Internet or proxy card is the one that will be counted. +What if I Receive More Than One Notice or Proxy Card? +You may receive more than one Notice or proxy card if you hold shares of our common stock in more than one account, which may be in registered +form or held in street name. Please vote in the manner described above under "How Do I Vote?" for each account to ensure that all of your shares are voted. +Will My Shares be Voted if I Do Not Vote? +If your shares are registered in your name or if you have stock certificates, they will not be counted if you do not vote as described above +under "How Do I Vote?" If your shares are held in street name and you do not provide voting instructions to the bank, broker or other nominee that holds your shares as described above, the bank, +broker or other nominee that holds your shares has the authority to vote your unvoted shares only on the ratification of the appointment of our independent registered public accounting firm without +receiving instructions from you. Therefore, we encourage you to provide voting instructions to your bank, broker or other nominee. This ensures your shares will be voted at the annual meeting and in +the manner you desire. A "broker non-vote" will occur if your broker cannot vote your shares on a particular matter because it has not received instructions from you and does not have discretionary +voting authority on that matter or because your broker chooses not to vote on a matter for which it does have discretionary voting authority. +What Vote is Required to Approve Each Proposal and How are Votes Counted? +Proposal 1: Elect Directors +The two nominees for director who receive the most votes (also known as a "plurality" of the votes cast) will be elected. You may vote either FOR all of the nominees, WITHHOLD your vote from all of the +nominees or WITHHOLD your vote from any one or more of the nominees. Votes that are withheld will not be included in the vote tally for the election of the directors. Brokerage firms do not have authority to vote customers' unvoted shares held by the +firms in street name for the election of the directors. As a result, any shares not voted by a customer will be treated as a broker non-vote. Such broker non-votes will have no effect on the results of this vote. +5 +Table of Contents +Proposal 2: Ratify Appointment of Independent Registered Public Accounting Firm +The affirmative vote of a majority of the shares cast affirmatively or negatively for this proposal is required to ratify the appointment of +our independent registered public accounting firm. Abstentions will have no effect on the results of this vote. Brokerage firms have authority to vote customers' unvoted shares held by the firms in street name on this proposal. If a broker does not +exercise this authority, such broker non-votes will have no effect on the results of this vote. We are not required to obtain the approval of our stockholders to select our independent registered public accounting firm. However, if our stockholders +do not ratify the selection of Ernst & Young LLP as our independent registered public accounting firm for 2018, the audit committee of our board of directors will reconsider its appointment. +Is Voting Confidential? +We will keep all the proxies, ballots and voting tabulations private. We only let our Inspector of Election, Computershare Trust Company, N.A., +examine these documents. Management will not know how you voted on a specific proposal unless it is necessary to meet legal requirements. We will, however, forward to management any written comments +you make on the proxy card or that you otherwise provide. +Where Can I Find the Voting Results of the Annual Meeting? +The preliminary voting results will be announced at the annual meeting, and we will publish preliminary, or final results if available, in a +Current Report on Form 8-K within four business days of the annual meeting. If final results are unavailable at the time we file the Form 8-K, then we will file an amended report on +Form 8-K to disclose the final voting results within four business days after the final voting results are known. +What Are the Costs of Soliciting these Proxies? +We will pay all of the costs of soliciting these proxies. Our directors and employees may solicit proxies in person or by telephone, fax or +email. We will pay these employees and directors no additional compensation for these services. We will ask banks, brokers and other institutions, nominees and fiduciaries to forward these proxy +materials to their principals and to obtain authority to execute proxies. We will then reimburse them for their expenses. +What Constitutes a Quorum for the Annual Meeting? +The presence, in person or by proxy, of the holders of a majority of the voting power of all outstanding shares of our common stock entitled to +vote at the annual meeting is necessary to constitute a quorum at the annual meeting. Votes of stockholders of record who are present at the annual meeting in person or by proxy, abstentions, and +broker non-votes are counted for purposes of determining whether a quorum exists. +6 +Table of Contents +Attending the Annual Meeting +The annual meeting will be held at 2:00 p.m. ET on Wednesday, June 13, 2018 at the offices of Mintz, Levin, Cohn, Ferris, Glovsky +and Popeo P.C. located at the meeting site. When you arrive at One Financial Center, signs will direct you to the appropriate meeting rooms. You need not attend the annual meeting in order to vote. +Householding of Annual Disclosure Documents +SEC rules concerning the delivery of annual disclosure documents allow us or your broker to send a single Notice or, if applicable, a single set +of our proxy materials to any household at which two or more of our stockholders reside, if we or your broker believe that the stockholders are members of the same family. This practice, referred to +as "householding," benefits both you and us. It reduces the volume of duplicate information received at your household and helps to reduce our expenses. The rule applies to our Notices, annual +reports, proxy statements and information statements. Once you receive notice from your broker or from us that communications to your address will be "householded," the practice will continue until +you are otherwise notified or until you revoke your consent to the practice. Stockholders who participate in householding will continue to have access to and utilize separate proxy voting +instructions. +If +your household received a single Notice or, if applicable, a single set of proxy materials this year, but you would prefer to receive your own copy, please contact our transfer agent, +Computershare Trust Company, N.A., by calling their toll free number, 1-800-736-3001. +If +you do not wish to participate in "householding" and would like to receive your own Notice or, if applicable, set of our proxy materials in future years, follow the instructions +described below. Conversely, if you share an address with another stockholder and together both of you would like to receive only a single Notice or, if applicable, set of proxy materials, follow +these instructions: +• If your shares are registered in your own name, please contact our transfer agent, Computershare Trust Company, N.A., and inform them of your +request by calling them at 1-800-736-3001 or writing them at Computershare Trust Company, N.A., P.O. Box 505000, Louisville, KY 40233-5000. +• If a broker or other nominee holds your shares, please contact the broker or other nominee directly and inform them of your request. Be sure to +include your name, the name of your brokerage firm and your account number. +Electronic Delivery of Company Stockholder Communications +Most stockholders can elect to view or receive copies of future proxy materials over the Internet instead of receiving paper copies in the mail. +You +can choose this option and save the Company the cost of producing and mailing these documents by: +• following the instructions provided on your Notice or proxy card; +• following the instructions provided when you vote over the Internet; or +• going to www.computershare.com and logging into the Investor Center to follow the instructions provided. +7 +Table of Contents +SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT +The following table sets forth certain information with respect to the beneficial ownership of our common stock as of April 20, 2018 for +(a) the executive officers named in the Summary Compensation Table on page 23 of this proxy statement, (b) each of our directors and director nominees, (c) all of our current +directors and executive officers as a group and (d) each stockholder known by us to own beneficially more than 5% of our common stock. Beneficial ownership is determined in accordance with the +rules of the SEC and includes voting or investment power with respect to the securities. We deem shares of common stock that may be acquired by an individual or group within 60 days of +April 20, 2018 pursuant to the exercise of options, warrants or the vesting of restricted stock units to be outstanding for the purpose of computing the percentage ownership of such individual +or group, but are not deemed to be outstanding for the purpose of computing the percentage ownership of any other person shown in the table. Except as indicated in footnotes to this table, we believe +that the stockholders named in this table have sole voting and investment power with respect to all shares of common stock shown to be beneficially owned by them based on information provided to +us by these stockholders. Percentage of ownership is based on 21,958,025 shares of common stock outstanding on April 20, 2018. +Shares Beneficially +Owned(1) +Name and Address of Beneficial Owner +Number +Percent +Principal Stockholders +ARCH Venture Partners and affiliated funds(1) +8755 West Higgins Avenue, Suite 1025 +Chicago, IL 60631 +3,949,685 +18.0 +% +Bain Capital Ventures Entities(2) +200 Clarendon Street +Boston, MA 02116 +2,136,085 +9.7 +% +bioMérieux SA(3) +376 Chemin de l'Orme, 69280 +Marcy l'Étoile, France +2,055,632 +9.4 +% +Flagship Ventures Fund 2004, L.P.(4) +55 Cambridge Parkway, Suite 800E +Cambridge, MA 02142 +2,030,495 +9.2 +% +Entities affiliated with Fidelity Investments(5) +245 Summer Street +Boston, MA 02210 +1,204,471 +5.5 +% +Directors and Named Executive Officers +E. Kevin Hrusovsky(6) +991,202 +4.5 +% +Douglas G. Cole, M.D.(7) +0 +* +John M. Connelly(8) +0 +* +Keith L. Crandell(9) +3,949,685 +18.0 +% +Marijn Dekkers, Ph.D.(10) +87,100 +* +Martin Madaus, Ph.D.(11) +311,137 +1.4 +% +Paul M. Meister(12) +23,335 +* +David Walt, Ph.D.(13) +1,215,500 +5.5 +% +Joseph Driscoll(14) +134,606 +* +David C. Duffy, Ph.D.(15) +130,839 +* +All directors and current executive officers as a group ( 14 persons)(16) +7,180,428 +31.6 +% +* Represents +beneficial ownership of less than 1% of the outstanding shares of our common stock. +8 +Table of Contents +(1) Based +on a Schedule 13G filed by ARCH Venture Fund VI, L.P. ("ARCH Venture Fund VI"); ARCH Venture Fund VIII Overage, L.P. ("AVF VIII Overage"); +ARCH Venture Partners VI, L.P. ("AVP VI LP"); ARCH Venture Partners VI, LLC ("AVP VI LLC"); ARCH Venture Partners VIII, LLC ("AVP VIII LLC"); and Keith +Crandell ("Crandell"), Clinton Bybee ("Bybee") and Robert Nelsen ("Nelsen") (collectively, the "Managing Directors" and individually, each a "Managing Director") with the SEC on February 2, +2018, which reported ownership as of December 31, 2017. ARCH Venture Fund VI is the record owner of 2,412,001 shares of common stock, which includes 10,333 shares of common stock issuable upon +the exercise of warrants (the "ARCH VI Shares") and AVF VIII Overage is the record holder of 1,537,684 shares of common stock (the "ARCH Overage Shares"; combined with ARCH VI Shares, the "Arch +Shares") as of December 31, 2017. AVP VI LP, as the sole general partner of ARCH Venture Fund VI, may be deemed to beneficially own the AVF VI Shares. AVP VI LLC, as the +sole general partner of AVP VI LP, may be deemed to beneficially own the AVF VI Shares. AVP VIII LLC, as the sole general partner of AVF VIII Overage, may be deemed beneficially +own the ARCH VIII Overage Shares. As managing directors of AVP VI LLC and AVP VIII LLC, each Managing Director may also be deemed to share the power to direct the disposition and vote of +the ARCH Shares. The Managing Directors disclaim beneficial ownership of the ARCH Shares, except to the extent of any pecuniary interest therein. +(2) Based +on a Schedule 13G filed by (1) Bain Capital Venture Fund 2005, L.P. ("Fund 2005"), (2) BCIP Associates III, LLC ("BCIP +III"), and (3) BCIP Associates III-B, LLC ("BCIP III-B" and together with Fund 2005 and BCIP III, the "Bain Capital Entities") with the SEC on February 14, 2018, which reported +ownership as of December 31, 2017. Bain Capital Venture Investors, LLC, a Delaware limited liability company ("BCVI"), is the general partner of Bain Capital Venture Partners +2005, L.P. ("BCVP"), which is the general partner of Fund 2005. Boylston Coinvestors, LLC ("Boylston"), is the managing partner of (i) BCIP Associates III ("BCIPA III"), which is +the manager of BCIP III, and (ii) BCIP Associates III-B ("BCIPA III-B"), which is the manager of BCIP III-B. The governance, investment strategy and decision-making process with respect to the +investments held by all of the Bain Capital Entities is directed by the Executive Committee of BCVI, which consists of Michael A. Krupka and Ajay Agarwal. As a result, BCVI and Messrs. Krupka +and Agarwal may be deemed to share voting and dispositive power with respect to all of the shares of common stock held by all of the Reporting Persons. As of December 31, 2017, Fund 2005 held +1,865,010 shares of common stock, which includes 8,931 shares of common stock issuable upon the exercise of warrants, BCIP III held 265,727 shares of common stock, which includes and 1,272 shares of +common stock issuable upon the exercise of warrants, and BCIP III-B held 5,348 shares of common stock, which includes 25 shares of common stock issuable upon the exercise of warrants. As a result of +the foregoing, the Bain Capital Entities may collectively be deemed to beneficially own in the aggregate 2,136,085 shares of common stock. +(3) Based +on a Schedule 13G filed by bioMérieux SA ("bioMérieux") with the SEC on February 14, 2018, which reported +ownership as of December 31, 2017. The board of directors of bioMérieux consists of Jean-Luc Belingard, Alexandre Mérieux, Alain Mérieux, +Marie-Hélène Habert, Michele Palladino, Philippe Gillet, Agnès Lemarchand, Philippe Archinard, and Harold Boël, who have shared investment +and voting control with respect to the shares held by bioMérieux and may exercise such control only with the support of the majority of the members of the board of directors of +bioMérieux. No individual member of the board of directors of bioMérieux is deemed to hold any beneficial ownership or reportable pecuniary interest in the shares held by +bioMérieux. +(4) Based +on a Schedule 13G filed by Flagship Ventures Fund 2004, L.P. ("Fund 2004"), Flagship Ventures General Partner LLC ("Fund 2004 GP"), +Noubar B. Afeyan, Ph.D. ("Dr. Afeyan"), and Edwin M. Kania, Jr. ("Mr. Kania") with the SEC on February 14, 2018, which reported ownership as of December 31, 2017. As the +general partner of Fund 2004, Fund 2004 GP may be deemed to +9 +Table of Contents +beneficially +own shares of common stock directly held by Fund 2004. Messrs. Afeyan and Kania, as Managers of Fund 2004 GP, may be deemed to beneficially own shares of common stock +beneficially owned by Fund 2004 GP. Douglas G. Cole, M.D., a member of our board of directors, is a managing partner of Flagship Pioneering and a member of the Flagship Ventures General +Partner LLC ("GP"), the sole general partner of Fund 2004. Dr. Cole does not have either voting or investment control over Fund 2004's shares and he disclaims beneficial ownership of +such shares, except to the extent of his pecuniary interest therein. +(5) Based +on the Schedule 13G filed by FMR LLC and its affiliates with the SEC on February 13, 2018. Abigail P. Johnson is a Director, the Chairman +and the Chief Executive Officer of FMR LLC. Members of the Johnson family, including Abigail P. Johnson, are the predominant owners, directly or through trusts, of Series B voting common +shares of FMR LLC, representing 49% of the voting power of FMR LLC. The Johnson family group and all other Series B stockholders have entered into a stockholders' voting agreement +under which all Series B voting common shares will be voted in accordance with the majority vote of Series B voting common shares. Accordingly, through their ownership of voting common +shares and the execution of the stockholders' voting agreement, members of the Johnson family may be deemed, under the Investment Company Act of 1940, to form a controlling group with respect +to FMR LLC. Neither FMR LLC nor Abigail P. Johnson has the sole power to vote or direct the voting of the shares owned directly by the various investment companies registered under the +Investment Company Act ("Fidelity Funds") advised by Fidelity Management & Research Company ("FMR Co"), a wholly owned subsidiary of FMR LLC, which power resides with the Fidelity Funds' +Boards of Trustees. Fidelity Management & Research Company carries out the voting of the shares under written guidelines established by the Fidelity Funds' Boards of Trustees. +(6) Consists +of 893,972 shares of common stock and 97,230 shares of common stock issuable upon the exercise of stock options exercisable within 60 days of +April 20, 2018 held by Mr. Hrusovsky. +(7) Dr. Cole +is a managing partner of Flagship Pioneering but has no voting or investment power with respect to the securities described in footnote 4. +(8) Mr. Connolly +is a senior advisor for Bain Capital Ventures but has no voting or investment power with respect to the securities described in footnote 2. +(9) Consists +of securities held by ARCH Fund VI and ARCH Fund Overage as set forth in footnote 1. Mr. Crandell disclaims beneficial ownership of such shares +except to the extent of his pecuniary interest therein, if any. +(10) Consists +of 77,378 shares of common stock and 9,722 shares of common stock issuable upon the exercise of stock options exercisable within 60 days of +April 20, 2018 held by Dr. Dekkers. +(11) Consists +of 86,171 shares of common stock issuable upon the exercise of stock options exercisable within 60 days of April 20, 2018 held by +Mr. Madaus and 224,966 shares of common stock held by a trust for which Mr. Madaus is a trust advisor who shares voting and investment power over the shares held by the trust. +(12) Consists +of 23,335 shares of common stock issuable upon the exercise of stock options exercisable within 60 days of April 20, 2018 held by +Mr. Meister. Does not include 120,035 shares of common stock held by Woburn Abbey March 2009 Trust, U.D.T. March 31, 2009 as Mr. Meister does not have voting or investment power +over the shares held by the trust. +(13) Consists +of 1,215,500 shares of common stock held by Dr. Walt. Does not include 200,684 shares of common stock held by The David R. Walt 2008 Irrevocable +Family Trust (the "Walt Trust"), of which his spouse is trustee and has sole voting and investment power over the shares held by the Walt Trust. +10 +Table of Contents +(14) Consists +of 134,606 shares of common stock issuable upon the exercise of stock options exercisable within 60 days of April 20, 2018 held by +Mr. Driscoll. +(15) Consists +of 31,113 shares of common stock and 99,726 shares of common stock issuable upon the exercise of stock options exercisable within 60 days of +April 20, 2018 held by Dr. Duffy. +(16) See +footnotes 6 through 15. Also includes an aggregate of 46,671 shares of common stock and 290,353 shares of common stock issuable upon the exercise of stock +options exercisable within 60 days of April 20, 2018 held by Ernest Orticerio, our Senior Vice President, Finance and Corporate Development, Bruce Bal, our Vice President of Operations +Service and Quality, Mark Roskey, Ph.D., our Senior Vice President and General Manager of Applications and Reagents, and Dawn Mattoon, our Senior Vice President, Strategic Marketing and Assay +Technologies. +11 +Table of Contents +MANAGEMENT AND CORPORATE GOVERNANCE +The Board of Directors +Our restated certificate of incorporation and our restated bylaws provide that our business is to be managed by or under the direction of our +board of directors. Our board of directors is divided into three classes for purposes of election. One class is elected at each annual meeting of stockholders to serve for a three-year term. Our board +of directors currently consists of eight members, classified into three classes as follows: (1) John M. Connolly and Martin D. Madaus, Ph.D. constitute +Class I with a term ending at the 2018 annual meeting; (2) Douglas G. Cole, M.D., Marijn Dekkers, Ph.D. and David R. Walt, Ph.D. constitute Class II with a term ending at +the 2019 annual meeting; and (3) E. Kevin Hursovsky, Keith L. Crandell and Paul M. Meister constitute Class III with a term ending at the 2020 annual meeting. +On +April 19, 2018, our board of directors accepted the recommendation of the nominating and governance committee and voted to nominate John M. Connolly and Martin D. Madaus, Ph.D. +for election at the annual meeting for a term of three years to serve until the 2021 annual meeting of stockholders, and until their respective successors have been elected and qualified. +Set +forth below are the names of the persons nominated as directors and directors whose terms do not expire this year, their ages, their offices in the Company, if any, their principal +occupations or employment for at least the past five years, the length of their tenure as directors and the names of other public companies in which such persons hold or have held directorships during +the past five years, as of April 1, 2018. Additionally, information about the specific experience, qualifications, attributes or skills that led to our board of directors' conclusion at the +time of filing of this proxy statement that each person listed below should serve as a director is set forth below: +Name +Age +Position with the Company +Douglas G. Cole, M.D.(2) +57 +Director +John M. Connolly(3) +65 +Director +Keith L. Crandell(1)(2) +57 +Director +Marijn Dekkers, Ph.D.(3) +60 +Director +E. Kevin Hrusovsky +56 +Chairman, President and Chief Executive Officer +Martin D. Madaus, Ph.D.(1)(3) +58 +Director +Paul M. Meister(1) +65 +Director +David R. Walt, Ph.D.(2) +65 +Director +(1) Member +of our audit committee +(2) Member +of our compensation committee +(3) Member +of our nominating and governance committee +Our +Board of Directors has reviewed the materiality of any relationship that each of our directors has with Quanterix Corporation, either directly or indirectly. Based upon this review, +our Board has determined that the following members of the Board are "independent directors" as defined by The Nasdaq Stock Market: Douglas G. Cole, M.D., John M. Connolly, Keith L. Crandell, Marijn +Dekkers, Ph.D., Martin D. Madaus, Ph.D., Paul M. Meister and David R. Walt, Ph.D. +E. Kevin Hrusovsky has been a member of our board of directors and our Chairman since June 2014 and our President and Chief Executive +Officer since January 2015. Prior to joining us, Mr. Hrusovsky served as Senior Vice President of PerkinElmer, Inc., a publicly traded company that produces analytical instruments, +genetic testing and diagnostic tools, medical imaging components, software, instruments and consumables for multiple end markets from February 2012 to May 2013 and served as President of the Life +Sciences and Technology business unit of PerkinElmer, Inc. from +12 +Table of Contents +November +2011 to May 2013. From May 2013 through September 2013, he served as a consultant to PerkinElmer. Previously, Mr. Hrusovsky served as Chief Executive Officer and President of Caliper +Life Sciences, Inc., a life sciences company that developed and sold lab automation equipment, from July 2003 to November 2011 when it was acquired by PerkinElmer, Inc. Prior to that, he +served as Chief Executive Officer and President of Zymark, a company that provided laboratory automation, robotics, and liquid handling solutions, and Director of International Business, Agricultural +Chemical Division, and President of the Pharmaceutical Division for FMC Corporation, a publicly traded chemical manufacturing company. He also held several management positions at E.I. DuPont de +Nemours, a publicly traded chemical manufacturing company. Mr. Hrusovsky serves on the boards of directors of several private companies, including BioreclamationIVT, LLC, Cellaria, Cell +Signaling Technology, Inc., 908 Devices Inc., and Solect Energy Development, LLC., and is the founder of the Powering Precision Health Summit, an executive think tank of +researchers, scientists, physicians and innovators focused on the latest research on new biomarkers that have the potential to advance personalized medicine. Mr. Hrusovsky also serves on the +Educational Board of the Massachusetts Biotech Council, the Advisory Committee for the Center for Biomedical Engineering at Brown University, the Association for Laboratory Automation, the JALA +Editorial Board and the Strategy Committee of Children's Hospital Boston. He formerly served on the boards of SynapDx Corp., SeraCare, Caliper Life Sciences, Xenogen—XGEN and Alliant +Medical Technology. He was selected as the 2013 Entrepreneur of the Year from Ohio State University and holds an Honorary Doctorate degree from Framingham State University for contributions in life +sciences and personal medicine. Mr. Hrusovsky has a B.S. in mechanical engineering from Ohio State University and an M.B.A. from Ohio University. Our board of directors has concluded that +Mr. Hrusovsky possesses specific attributes that qualify him +to serve as a member of our board of directors, including the perspective and experience he brings as our President and Chief Executive Officer, which provides our board with historic knowledge, +operational expertise and continuity. +Douglas G. Cole, M.D. has served as a member of our board of directors since June 2007. Dr. Cole is a managing partner of venture +firm Flagship Pioneering, where he has focused on life science investments since 2001. He currently serves on the board of directors of Editas Medicine, Inc., a public biopharmaceutical +company. He also serves on the boards of directors of several private biopharmaceutical and diagnostics companies, including Denali Therapeutics, Inc., Ensemble Therapeutics Corporation, KSQ +Therapeutics, Inc. and Torque Therapeutics, Inc. In the past five years, Dr. Cole has served on the boards of the following public biopharmaceutical companies: Agios +Pharmaceuticals, Inc., Concert Pharmaceuticals, Inc., Receptos, Inc., which was acquired by Celgene, Inc., Tetraphase Pharmaceuticals, Inc. and of the following +private biopharmaceutical companies: Avedro, Inc., Moderna Therapeutics, Resolvyx Pharmaceuticals, Inc., Selecta Biosciences, Inc., Seventh Sense Biosystems, Inc. and Syros +Pharmaceuticals Inc. Dr. Cole has a B.A. in English from Dartmouth College and an M.D. from the University of Pennsylvania School of Medicine. Our board of directors has concluded that +Dr. Cole possesses specific attributes that qualify him to serve as a member of our board of directors, including his substantial experience as an investor in emerging biopharmaceutical and +life sciences companies as well as his experience serving on the board of directors for several biopharmaceutical companies. +John M. Connolly has served as a member of our board of directors since December 2012. Since December 2015, Mr. Connolly has served +as a senior advisor for Bain Capital Ventures, a venture capital firm he joined in 2009. Mr. Connolly was previously a managing director at Bain Capital Ventures from September 2009 to January +2015. Mr. Connolly also served as Interim Chief Executive Officer of Education Holdings 1, Inc. from May 2012 to September 2012, Interim President and Chief Executive Officer of The +Princeton Review from March 2011 to April 2012, Chairman of the board of directors of EDGAR Online, Inc. from March 2011 to August 2012 and Interim President and Chief Executive Officer of +EDGAR Online, Inc. from September 2010 to March 2011. Prior to that, Mr. Connolly served as President and Chief Executive Officer of M|C Communications, Inc., a +leading +13 +Table of Contents +provider +of continuing medical education in the United States, from March 2007 to July 2009, and as Chairman of the board of directors of M|C Communications, Inc. from August +2009 to August 2010. Prior to that, from March 2004 to March 2007, Mr. Connolly served as President and Chief Executive Officer of Institutional Stockholder Services Inc., which provides +proxy voting, corporate governance, compliance, and risk management solutions. Education Holdings 1, Inc. filed a voluntary chapter 11 bankruptcy petition in January 2013. +Mr. Connolly has a B.A. from St. Norbert College and an Executive Education Degree from the Executive Education Program at INSEAD which is located in Fontainebleau, France. Our board of +directors has concluded that Mr. Connolly possesses specific attributes that qualify him to serve as a member of our board of directors, including his substantial +experience as an investor in emerging companies as well as his significant managerial and corporate governance experience. +Keith L. Crandell has served as a member of our board of directors since June 2007. Since July 1994, Mr. Crandell has served as a +managing director of ARCH Venture Partners, a venture capital firm focused on early-stage technology companies. He serves on the board of directors of Adesto Technologies Corporation, a +publicly-traded provider of application-specific and ultra-low power non-volatile memory products. He is also a director of several private companies and he also serves as a director of the Illinois +Venture Capital Association. Mr. Crandell has a B.S. degree in chemistry and mathematics from St. Lawrence University, an M.S. degree in chemistry from the University of Texas at +Arlington and an M.B.A. from the University of Chicago. Our board of directors has concluded that Mr. Crandell possesses specific attributes that qualify him to serve as a member of our board +of directors, including his financial expertise and his substantial experience as an investor in emerging companies. +Marijn Dekkers, Ph.D. has served as a member of our board of directors since March 2017. He is the founder and Chairman of Novalis +LifeSciences LLC, an investment and advisory firm for the life science industry. Since April 2016, he has served as Chairman of the board of directors of Unilever. From 2010 to 2016, +Dr. Dekkers was Chief Executive Officer of Bayer AG in Leverkusen, Germany. From 2000 to 2002, he was the Chief Operating Officer at Thermo Electron Corporation (later renamed Thermo Fisher +Scientific Inc.). In 2002, he became Thermo Fisher's President and Chief Executive Officer, where he served until 2009. Dr. Dekkers began his career in 1985 as a research scientist at +General Electric, gaining experience in various units of the company before joining AlliedSignal (subsequently Honeywell International) in 1995. Dr. Dekkers currently serves on the board of +directors of General Electric and Unilever N.V. He holds a degree in chemistry from Radboud University in Nijmegen, the Netherlands, and a Ph.D. in chemical engineering from the University of +Eindhoven. Our board of directors has concluded that Dr. Dekkers possesses specific attributes that qualify him to serve as a member of our board of directors, including his substantial +experience leading commercial stage healthcare companies and his significant corporate governance experience. +Martin D. Madaus, Ph.D. has served as a member of our board of directors since November 2010. Dr. Madaus previously served as our +Executive Chairman from November 2010 to June 2014, as our Chief Executive Officer from October 2011 to July 2012 and as our President from June 2011 to July 2012. Since June 2014, Dr. Madaus +is serving as Chairman and Chief Executive Officer at Ortho-Clinical Diagnostics, Inc., a diagnostics company that makes products and diagnostic equipment for blood testing. Previously, +Dr. Madaus was the Chairman, President and Chief Executive Officer of Millipore Corporation (MIL), a life sciences company serving the bioscience research and biopharmaceutical manufacturing +industry, from January 2005 to July 2010, when Millipore was acquired by Merck KGaA. From July 2009 to May 2015, Dr. Madaus served as a member of the board of directors of Mettler Toledo +International, a manufacturer of scales and analytical instruments. Dr. Madaus received a Doctor of Veterinary Medicine from the University of Munich in Germany and a Ph.D. in Veterinary +Medicine from the Veterinary School of Hanover in Germany. Dr. Madaus has extensive public and private company board experience and our board of directors has concluded that +14 +Table of Contents +Dr. Madaus +possesses specific attributes that qualify him to serve as a member of our board of directors, including his substantial knowledge of and managerial experience in the diagnostics +industry. +Paul M. Meister has served as a member of our board of directors since September 2013. Mr. Meister has been President of +MacAndrews & Forbes since 2014. He is also Co-Founder of Liberty Lane Partners, LLC, a private investment company with investments in healthcare, technology, and distribution-related +industries, and Perspecta Trust, a trust company that provides trust and investment services. From 2010 to 2014, Mr. Meister served as Chief Executive Officer of inVentiv Health (now known as +Syneos Health, Inc.), a leading provider of commercial, consulting and clinical research services to the pharmaceutical and biotech industries, and as its Chairman from 2010 to 2014. From 2006 +to 2007, he was Chairman of the board of directors of Thermo Fisher Scientific Inc., a provider of products and services to businesses and institutions in the field of science, which was formed +by the merger of Fisher Scientific International Inc. and Thermo Electron Corporation in November 2006. Mr. Meister was Vice Chairman of Fisher Scientific International Inc. from +2001 to 2006, and served as its Chief Financial Officer from 1991 to 2001. Fisher Scientific International provided products and services to research, healthcare, industrial, educational and +government markets. Mr. Meister is a member of the board of directors of Scientific Games Corporation, which provides customized, end-to-end solutions to the gaming industry, since 2012; +Revlon, a global beauty trendsetter in the world of color cosmetics and hair care, since June 2016 and also the Company's Director of Products Corporation since January 2018 and Executive Vice +Chairman since January 2018; LKQ Corporation, a global distributor of vehicle products, since 1999; and vTv Therapeutics Inc., a clinical stage biopharmaceutical company focusing on treatments +for alzheimers disease and diabetes, since 2015. Mr. Meister is Co-Chair of the University of Michigan's Life Sciences Institute External Advisory Board and Chair of the Provost's Advisory +Committee. Mr. Meister has an M.B.A. from Northwestern University and a B.A. from the University of Michigan. Our board of directors has concluded that Mr. Meister possesses specific +attributes that qualify him to serve as a member of our board of directors, including his financial and investment expertise and his extensive knowledge of the life sciences industry. +David R. Walt, Ph.D. has served as a member of our board of directors since April 2007. Dr. Walt was our founding scientist and +serves as chairman of our scientific advisory board. Dr. Walt currently serves as a faculty member at Harvard Medical School in the Department of Pathology at the Brigham and Women's Hospital +and is a core faculty member of the Wyss Institute for Biologically Inspired Engineering. He is also a Howard Hughes Medical Institute Professor. He previously served as University Professor, +Professor of Biomedical Engineering, Professor of Genetics, Professor of Neuroscience, Professor of Cell and MolecularBiology, and Professor of Oral Medicine at Tufts University, from 1981-2017. +Dr. Walt was also the founding scientist of Illumina, Inc. and served as a member of the board of its directors from 1998-2016 and now serves as chairman of its scientific advisory +board. He was also a founder and currently serves as a member of the board of directors of Ultivue, Inc., and Arbor, Inc., and serves as a member of the board of directors of +Exicure, Inc. He has received numerous national and international awards and honors for his fundamental and applied work in the field of optical sensors, microwell arrays and single molecule +detection. He is a member of the U.S. National Academy of Engineering, U.S. National Academy of Medicine, American Academy of Arts and Sciences, a fellow of the American Institute for Medical and +Biological Engineering, a fellow of the National Academy of Inventors, and a fellow of the American Association for the Advancement +of Science. Dr. Walt has a B.S. in Chemistry from the University of Michigan and a Ph.D. in Chemical Biology from Stony Brook University. Our board of directors has concluded that +Dr. Walt possesses specific attributes that qualify him to serve as a member of our board of directors, including his experience in developing life sciences companies and his expertise in +chemistry, diagnostics technologies and biomedical engineering. +15 +Table of Contents +Committees of the Board of Directors and Meetings +Meeting Attendance. During the fiscal year ended December 31, 2017, our board of directors met seven times and acted by +written consent on +five occasions. During the fiscal year ended December 31, 2017, the various committees of the board of directors met a total of seven times and acted by written consent on seven occasions. No +director attended fewer than 75% of the total number of meetings of the board and of committees of the board on which he or she served during fiscal 2017. Our board of directors has adopted a policy +under which each member of the board is encouraged but not required to attend each annual meeting of our stockholders. +Audit Committee. Our audit committee met four times during fiscal 2017. This committee currently has three members, Paul M. +Meister (Chairman), +Martin Madaus, Ph.D. and Keith L. Crandell. Our audit committee's role and responsibilities are set forth in the audit committee's written charter and include: +• selecting a firm to serve as the independent registered public accounting firm to audit our financial statements; +• ensuring the independence of the independent registered public accounting firm; +• discussing the scope and results of the audit with the independent registered public accounting firm, and reviewing, with management and that +firm, our interim and year-end operating results; +• establishing procedures for employees to anonymously submit concerns about questionable accounting or audit matters; +• considering the effectiveness of our internal controls and, if any, our internal audit function; +• reviewing material related-party transactions or those that require disclosure; and +• approving or, as permitted, pre-approving all audit and non-audit services to be performed by the independent registered public accounting +firm. +Except +as noted below, all members of the audit committee satisfy the current independence standards promulgated by the Securities and Exchange Commission and by The Nasdaq Stock Market, +as such standards apply specifically to members of audit committees. Our board of directors has determined that Paul M. Meister is an "audit committee financial expert," as the Securities and Exchange +Commission has defined that term in Item 407 of Regulation S-K. Keith L. Crandell is an affiliate of ARCH Venture Partners, which beneficially owns approximately 18.0% of our common +stock prior to this offering. Accordingly, he currently does not meet the independence requirements of Rule 10A-3 of the Exchange Act and is serving on the audit committee pursuant to an +exemption that allows him to serve for no longer than one year after the consummation of our initial public offering. Please also see the report of the audit committee set forth elsewhere in this +proxy statement. +A +copy of the audit committee's written charter is publicly available on our website at www.quanterix.com. +Compensation Committee. Our compensation committee acted by written consent one time during fiscal 2017. This committee +currently has three members, +Keith L. Crandell (Chairman), Douglas G. Cole, M.D. and David R. Walt, Ph.D. Our compensation committee's role and responsibilities are set forth in the compensation committee's written charter and +includes: +• reviewing and approving, or recommending that our board of directors approve, the compensation of our executive officers; +• reviewing and recommending to our board of directors the compensation of our directors; +16 +Table of Contents +• reviewing and recommending to our board of directors the terms of any compensatory agreements with our executive officers; +• administering our stock and 2017 Equity Incentive Plan and 2007 Stock Option and Grant Plan, as amended; +• reviewing and approving, or making recommendations to our board of directors with respect to, incentive compensation and equity plans; and +• reviewing all overall compensation policies and practices. +The +compensation committee is also responsible for the determination of the compensation of our chief executive officer, and shall conduct its decision making process with respect to +that issue without the chief executive officer present. Our board of directors has determined that all members of the compensation committee qualify as "independent" under the definition promulgated +by The Nasdaq Stock Market. +The +compensation committee has the authority to retain or obtain the advice of such compensation consultants, legal counsel, experts and other advisors as it may deem appropriate in its +sole discretion. The compensation committee is directly responsible for the appointment, compensation and oversight of its consultants, legal counsel, experts and advisors and has sole authority to +approve their fees and retention terms, and the Company shall provide funding for such fees and related expenses. Before selecting any such consultant, legal counsel, expert or advisor, the +compensation committee must consider the following independence factors: +• The provision of other services to the Company by the entity that employs the consultant, legal counsel, expert or advisor. +• The amount of fees received from the Company by the entity that employs the consultant, legal counsel, expert or advisor as a percentage of the +total revenue of such entity. +• The policies and procedures of the entity that employs the consultant, legal counsel, expert or advisor that are designed to prevent conflicts +of interest. +• Any business or personal relationship of the consultant, legal counsel, expert or advisor with a member of the compensation committee or an +executive officer of the company. +• Any of our stock owned by the consultant, legal counsel, expert or advisor. +• Any business or personal relationship the consultant, legal counsel, expert or advisor has with an executive officer of the company. +The +compensation committee did not retain a compensation consultant for fiscal 2017. The compensation committee has engaged Pay Governance as an independent advisor to the compensation +committee providing executive compensation consulting services for fiscal 2018. Pay Governance was engaged by and reports to the compensation committee. Pay Governance is not expected to provide any +services to the Company other than executive compensation consulting services during fiscal 2018. In compliance with the SEC and the corporate governance rules of The Nasdaq Stock Market, Pay +Governance has provided the compensation committee with a letter addressing each of the six independence factors noted above. Their responses affirm the independence of Pay Governance and the +partners, consultants, and employees who service the compensation committee on executive compensation matters and governance issues. +A +copy of the compensation committee's written charter is publicly available on our website at www.quanterix.com. +Nominating and Governance Committee. Our nominating and governance committee, or "nominating committee") did not meet during +fiscal 2017 and has +three members, Marijn Dekkers, +17 +Table of Contents +Ph.D. +(Chairman), Martin Madaus, Ph.D. and John M. Connolly. Our board of directors has determined that all members of the nominating committee qualify as independent under the definition promulgated +by The Nasdaq Stock Market. The nominating committee's responsibilities are set forth in the nominating committee's written charter and include: +• identifying and recommending candidates for membership on our board of directors; +• recommending directors to serve on board committees; +• reviewing and recommending our corporate governance guidelines and policies; +• reviewing proposed waivers of the code of conduct for directors and executive officers; +• evaluating, and overseeing the process of evaluating, the performance of our board of directors and individual directors; and +• assisting our board of directors on corporate governance matters. +Generally, +our nominating committee considers candidates recommended by stockholders as well as from other sources such as other directors or officers, third party search firms or other +appropriate sources. Once identified, the nominating committee will evaluate a candidate's qualifications in accordance with our Nominating and Governance Committee Policy Regarding Qualifications of +Directors appended to our nominating committee's written charter. Threshold criteria include: personal integrity and sound judgment, business and professional skills and experience, independence, +knowledge of our industry, possible conflicts of interest, diversity, the extent to which the candidate would fill a present need on the board of directors, and concern for the long-term interests of +our stockholders. Our nominating committee has not adopted a formal diversity policy in connection with the consideration of director nominations or the selection of nominees. However, the nominating +committee will consider issues of diversity among its members in identifying and considering nominees +for director, and strive where appropriate to achieve a diverse balance of backgrounds, perspectives, experience, age, gender, ethnicity and country of citizenship on the board and its committees. +If +a stockholder wishes to propose a candidate for consideration as a nominee for election to the Board, it must follow the procedures described in our restated bylaws and in +"Stockholder Proposals and Nominations For Director" at the end of this proxy statement. In general, persons recommended by stockholders will be considered in accordance with our Policy on Stockholder +Recommendation of Candidates for Election as Directors appended to our nominating committee's written charter. Any such recommendation should be made in writing to the nominating committee, care of +our Corporate Secretary at our principal office and should be accompanied by the following information concerning each recommending stockholder and the beneficial owner, if any, on whose behalf the +nomination is made: +• all information relating to such person that would be required to be disclosed in a proxy statement; +• certain biographical and share ownership information about the stockholder and any other proponent, including a description of any derivative +transactions in our securities; +• a description of certain arrangements and understandings between the proposing stockholder and any beneficial owner and any other person in +connection with such stockholder nomination; and +• a statement whether or not either such stockholder or beneficial owner intends to deliver a proxy statement and form of proxy to holders of +voting shares sufficient to carry the proposal. +18 +Table of Contents +The +recommendation must also be accompanied by the following information concerning the proposed nominee: +• certain biographical information concerning the proposed nominee; +• all information concerning the proposed nominee required to be disclosed in solicitations of proxies for election of directors; +• certain information about any other security holder of the Company who supports the proposed nominee; +• a description of all relationships between the proposed nominee and the recommending stockholder or any beneficial owner, including any +agreements or understandings regarding the nomination; and +• additional disclosures relating to stockholder nominees for directors, including completed questionnaires and disclosures required by our +restated bylaws. +A +copy of the nominating committee's written charter, including its appendices, is publicly available on our website at www.quanterix.com . +Pricing Committee. In connection with our initial public offering, our board of directors established a pricing committee that +consisted of Douglas +G. Cole, M.D., Keith L. Crandell and Paul M. Meister, and met three times in fiscal 2017. The pricing committee was authorized to approve the initial public +offering price, the amount of the discounts and/or commissions granted to the underwriters and the number of shares of our common stock to be offered in the initial public offering. +Compensation Committee Interlocks and Insider Participation +Our compensation committee has three members, Keith L. Crandell (Chairman), Douglas G. Cole, M.D. and David R. Walt, Ph.D. None of the +members of our compensation committee has at any time during the prior three years been one of our officers or employees. None of our executive officers currently serves, or in the past fiscal year +has served, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on our board of directors or compensation committee. For a +description of transactions between us and members of our compensation committee and affiliates of such members, please see "Certain Relationships and Related Person Transactions." +Board Leadership Structure and Role in Risk Oversight +Our board of directors does not have a policy regarding the separation of the roles of Chief Executive Officer and Chairman of the board of +directors, as our board of directors believes it is in the best interest of the Company to make that determination based on the position and direction of the Company and the membership of the board of +directors. Our board of directors has determined that having an employee director serve as Chairman is in the best interest of our stockholders at this time because of the efficiencies achieved in +having the role of Chief Executive Officer and Chairman combined, and because the detailed knowledge of our day-to-day operations and business that the Chief Executive Officer possesses greatly +enhances the decision-making processes of our board of directors as a whole. We have a strong governance structure in place, including independent directors, to ensure the powers and duties of the +dual role are handled responsibly. We do not have a lead independent director. +The +Chairman of the board of directors and the other members of the board of directors work in concert to provide oversight of our management and affairs. Our board of directors +encourages communication among its members and between management and the board of directors to facilitate productive working relationships. Working with the other members of the board of directors, +our +19 +Table of Contents +Chairman +also strives to ensure that there is an appropriate balance and focus among key board responsibilities such as strategic development, review of operations and risk oversight. +Risk +is inherent with every business, and how well a business manages risk can ultimately determine its success. Our board of directors is actively involved in oversight of risks that +could affect the Company. This oversight is conducted primarily by our full board of directors, which has responsibility for general oversight of risks. For example, in determining whether and under +what circumstances we will engage in financing transactions or enter into licensing, collaboration or similar arrangements, the board of directors is involved in our management of risks related to our +financial condition or of the risks inherent in product development and commercialization. +As +part of its oversight, our board of directors receives reports by each committee chair regarding the committee's considerations and actions. In particular, the audit committee is +responsible for discussing the adequacy of our risk management activities with management and our independent registered public accounting firm. The audit committee's primary emphasis is financial +risk. In addition, the compensation committee is responsible for considering whether our compensation programs and practices are reasonably likely to have a material adverse effect on us. +At +each of its meetings, the board of directors receives business updates from various members of management. These updates may identify matters that have emerged within that member of +management's scope of responsibility that involve operational, financial, legal or regulatory risks and, in these cases, the board of directors provides guidance to management. Our board of directors +believes that full and open communication between management and the board of directors is essential for effective risk management and oversight. +Stockholder Communications to the Board +Generally, stockholders who have questions or concerns should contact our Investor Relations department at ir@quanterix.com. However, any +stockholders who wish to address questions regarding our business directly with our board of directors, or any individual director, should direct his or her questions in writing to the Chairman of the +Board at 113 Hartwell Avenue, Lexington, MA 02421 or using the "IR Contacts" page of our website at http://ir.quanterix.com/contact-ir. Communications will be distributed to the board of directors, or +to any individual director or directors as appropriate, depending on the facts and circumstances outlined in the communications. Items that are unrelated to the duties and responsibilities of the +board may be excluded, such as: +• junk mail and mass mailings; +• resumes and other forms of job inquiries; +• surveys; and +• solicitations or advertisements. +In +addition, any material that is unduly hostile, threatening, or illegal in nature may be excluded, in which case it will be made available to any outside director upon request. +20 +Table of Contents +Executive Officers +The following table sets forth certain information regarding our executive officers who are not also directors, as of April 1, 2018. We +have entered into agreements with our executive officers, and all of them are at-will employees. +Name +Age +Position(s) with the Company +Joseph Driscoll +53 +Chief Financial Officer +Ernest Orticerio +54 +Senior Vice President, Finance and Corporate Development +Bruce Bal +59 +Vice President of Operations, Service and Quality +David C. Duffy, Ph.D. +46 +Senior Vice President, Research & Development and Chief Technology Officer +Mark T. Roskey, Ph.D. +58 +Senior Vice President and General Manager of Applications and Reagents +Dawn R. Mattoon, Ph.D. +45 +Senior Vice President, Strategic Marketing and Assay Technology +Joseph Driscoll has been our Chief Financial Officer since April 2017. Prior to that, Mr. Driscoll served as Chief Financial +Officer of Verscend Technologies, Inc., a healthcare data analytics company, from October 2016 to April 2017. From March 2012 to October 2016, he served as the Chief Financial Officer, Senior +Vice President and Treasurer of PC Connection, Inc., an IT solutions provider, where he also served as the company's Principal Financial and Accounting Officer. From September 2006 to March +2012, Mr. Driscoll served as the Chief Financial Officer of Summer Infant, Inc., a consumer products company, where he also served as the company's Treasurer and Principal Accounting +Officer. From May 2001 to September 2006, Mr. Driscoll served as a Vice President of Finance and Chief Financial Officer of ACT Electronics, Inc., an electronics contract manufacturer. +From May 2000 to May 2001, Mr. Driscoll served as Vice President of Finance at PCI, Inc., a marketing software company. From April 1997 to May 2000, he served as a Vice President of +Finance and Chief Financial Officer of Safety 1st, Inc. He joined Safety 1st Inc. in April 1997 as Controller and served as the Chief Financial Officer from September 1998 to May 2000. +From September 1993 to April 1997, Mr. Driscoll served as an Assistant Corporate Controller and Director of Financial Reporting at Staples, Inc., an office supply retailer. From July +1986 to February 1992, Mr. Driscoll served as an Audit Manager of KPMG Peat Marwick, a national accounting firm. From February 1992 to September 1993, Mr. Driscoll served as Corporate +Controller of E-II Holdings, Inc., a diversified holding company. He is a licensed Certified Public Accountant, and holds a B.S. in Accounting from Boston College. +Ernest Orticerio has been our Senior Vice President, Finance and Business Development since April 2017. Prior to that he served as Vice +President, Chief Financial Officer from May 2016 to March 2017, Vice President, Chief Financial Officer and Vice President of Operations from January 2013 to April 2016, and our Chief Financial +Officer from January 2012 to December 2012. Prior to joining us, he served in a number of accounting, finance and operations capacities with Millipore Corporation, a publicly traded global life +science tools and services company, including as Vice President, Finance—International and Corporate Operations from July 2009 to July 2011, Vice President Finance—Corporate +Operations from January 2008 to June 2009, Vice President, Finance—Global Operations from July 2005 to December 2007, and Vice President, Global Customer Service from January 2004 to June +2005. He started his career with McDonald's Corporation, a publicly traded leading global food service retailer, holding a number of progressive accounting and finance positions supporting operations, +marketing and real estate functions. He has a B.S. in business administration from Bryant College. +Bruce Bal has been our Vice President of Operations, Service and Quality since May 2016. Prior to joining Quanterix, Mr. Bal served +as Vice President of Operations at PerkinElmer, a leading provider of instruments and reagents to the human and environmental health markets, following the acquisition of Caliper Life Sciences where +he held the role of Senior Vice President of Operations from November 2011 to May 2016. Mr. Bal joined Caliper Life Sciences, a leading provider of drug discovery and life sciences research +solutions for the pharmaceutical and biotechnology industries, following the +21 +Table of Contents +acquisition +of Zymark, where he served as Vice President of R&D and Operations from April 1997 to July 2003. He worked as Director of Operations in the Biotechnology Division of FMC Corporation, a +diversified chemical company with leading positions in agricultural, industrial and consumer markets, from 1995 to 1997. Between 1981 and 1993, Mr. Bal held a range of management positions at +DuPont, a global leader in providing a wide range of innovative products and services for multiple global markets, and was general manager of United States Pollution Control, Inc. +Mr. Bal holds a B.S. in Chemical Engineering from the University of Wisconsin and an M.B.A. from Loyola University, Louisiana. +David C. Duffy, Ph.D. is Senior Vice President, Research & Development, and has been our Chief Technology Officer since March 2013. +Prior to this role, Dr. Duffy served as our Vice President, Research from November 2011 to February 2013, and Senior Director, Platform Research from July 2007 to October 2011. Prior to joining +us, Dr. Duffy served as Director, Pharmacomer Technology at Surface Logix, Inc., a biomedical development company. Prior to that, Dr. Duffy was a Senior Scientist at Gamera +Bioscience Corporation, a developer of automated biotechnology test equipment, from December 1998 to January 2000. Previously, Dr. Duffy was a postdoctoral research fellow in the Department of +Chemistry and Chemical Biology at Harvard University. He was the first Sir Alan Wilson Research Fellow of Emmanuel College, University of Cambridge. Dr. Duffy has a Ph.D. in physical chemistry +from the Department of Chemistry at the University of Cambridge, and B.A. and M.A. degrees in Natural Sciences from the University of Cambridge. +Mark T. Roskey, Ph.D. , has been our Senior Vice President and General Manager of Applications and Reagents since September 2014. Prior to +joining us, Dr. Roskey served as Vice President and General Manager of the America's Sales and Service organization in PerkinElmer's Life Science and Technologies Division from December 2011 to +September 2014. PerkinElmer is a global life science company. Prior to PerkinElmer, Dr. Roskey served as Senior Vice President of Biology Research and Development at Caliper Life +Sciences, Inc. from March 2009 to November 2011 when it was acquired by PerkinElmer. At Caliper Life Sciences, Inc., Dr. Roskey served as Senior Vice President of Applied Biology +Research from 2008 to 2011 and Vice President of Worldwide Marketing from July 2003 to 2008. Prior to that, Dr. Roskey served as Vice President of Worldwide Marketing for Zymark Corporation, a +laboratory automation company, from December 2001 to August 2003 when it was acquired by Caliper Life Sciences, Inc. Prior to that, Dr. Roskey served as Director of Marketing at Applied +Biosystems, Inc. Dr. Roskey completed a postdoctoral fellowship in molecular immunobiology at the Harvard Medical School and has a Ph.D. in microbiology from the University of Notre Dame +and a B.S. in biology from Framingham State University. +Dawn R. Mattoon, Ph.D. , has been our Senior Vice President of Strategic Marketing and Assay Technologies since February 2018. Dawn +completed both her Ph.D. and postdoctoral work at Yale University, studying tyrosine kinase signaling pathways. Following her postdoctoral fellowship in 2004 she joined Invitrogen, where she was +recognized as one of the company's best new scientists in 2005. Dawn went on to serve in a variety of leadership roles in R&D, Program & Portfolio Management, Strategy, and General Management +as Invitrogen evolved to become Life Technologies with the acquisition of Applied Biosystems in 2008, and the subsequent acquisition by Thermo Fisher in 2013. Until her departure from Thermo Fisher in +2014 Dawn also served on global leadership teams focused on mentoring and developing female leaders. Dawn served as the Vice President for Product Development at Cell Signaling Technologies, a leading +antibody provider, from July 2014 to February 2018, when she transitioned to her current role with Quanterix. +22 +Table of Contents +EXECUTIVE OFFICER AND DIRECTOR COMPENSATION +Summary Compensation Table +The following table shows the total compensation paid or accrued during the fiscal year ended December 31, 2017, to our Chief Executive +Officer and President and our two next most highly compensated executive officers who earned more than $100,000 during the fiscal year ended December 31, 2017, and were serving as executive +officers as of such date. +Name and Principal Position +Year +Salary +($) +Bonus +($)(1) +Option +Awards +($)(2) +All Other +Compensation +($) +Total ($) +E. Kevin Hrusovsky +2017 +426,978 +276,682 +1,430,000 +— +2,133,660 +Chairman, President and +2016 +411,000 +137,500 +— +— +548,500 +Chief Executive Officer +Joseph Driscoll(3) +2017 +201,923 +96,923 +1,367,526 +— +1,666,372 +Chief Financial Officer +David C. Duffy, Ph.D. +2017 +222,343 +76,708 +212,881 +— +511,932 +Senior Vice President, Research & +Development and Chief Technology +Officer +(1) Amounts +for 2017 represent cash bonuses earned for the 12-month period from January 1, 2017 to December 31, 2017, and exclude payments made in 2017 for +2016 bonuses. Amount for 2016 represents cash bonus earned for the 12-month period from January 1, 2016 to December 31, 2016, and excludes payments made in 2016 for 2015 bonus. +(2) These +amounts represent the aggregate grant date fair value for option awards granted during our fiscal year ended December 31, 2017, computed in accordance +with FASB ASC Topic 718. A discussion of the assumptions used in determining grant date fair value may be found in Note 2 to our consolidated financial statements for the year ended +December 31, 2017. +(3) Mr. Driscoll +began his employment with us on April 24, 2017. +Narrative Disclosure to Summary Compensation Table +E. Kevin Hrusovsky +We entered into an agreement with Mr. Hrusovsky with respect to his service as President and Chief Executive Officer on January 1, +2015. Under the terms of the agreement, Mr. Hrusovsky received a one-time signing bonus of $250,000 and was entitled to an initial annual base salary of $400,000. His current base salary is +$429,520. Under the agreement, Mr. Hrusovsky is eligible to receive an annual bonus of up to 45% of his base salary based on the compensation committee's assessment of his and the Company's +performance against goals established by the committee. For 2017, our compensation committee awarded Mr. Hrusovsky a discretionary bonus of $276,682. In connection with his employment, in +February 2015 Mr. Hrusovsky was granted 781,060 shares of restricted stock. The shares underlying this grant vest, subject to continued service, as follows: (1) with respect to 168,246 +of the shares, 25% of the shares vested on July 1, 2015, with the remainder vesting over the next three years in equal monthly installments on the first day of each succeeding calendar month +thereafter, (2) with respect to 549,113 of the shares, 25% of the shares vested on September 1, 2015, with the remainder vesting over the next three years in equal monthly installments +on the first day of each succeeding calendar month thereafter and (3) 63,701 shares vest based upon the achievement of certain milestones. +23 +Table of Contents +Pursuant +to the agreement, Mr. Hrusovsky is entitled to continuation of his then-current base salary and health insurance benefits for six months in the event we terminate his +employment without Cause, as defined in the agreement, or Mr. Hrusovsky terminates his employment with us for Good Reason, as defined in the agreement, subject to Mr. Hrusovsky's +execution of a release satisfactory to us following such termination. If such termination occurs within 12 months of the sale of the Company, he is entitled to continuation of his then-current +base salary and health insurance benefits for 12 months. If we terminate his employment without Cause, his employment terminates due to his death or disability or he terminates his employment +with us for Good Reason within three months prior to the end of a year, he is entitled to a pro rata portion of his bonus. In addition, Mr. Hrusovsky has entered into an employee +non-competition, non-solicitation, confidentiality and assignment agreement pursuant to which he has agreed (1) not to engage in any competitive business for six months following his +termination of employment with us (12 months if the termination is within 12 months of the sale of the Company), (2) not to solicit our employees, customers or suppliers for six +months following his termination of employment with us (12 months if the termination is within 12 months of the sale of the Company) and (3) to assign any inventions conceived or +developed during the course of his employment with us. +Joseph Driscoll +We entered into an agreement with Mr. Driscoll with respect to his service as Chief Financial Officer on April 8, 2017. Under the +terms of the agreement, Mr. Driscoll was entitled to an initial annual base salary of $300,000. His current base salary is $309,000, and he is eligible to receive an annual bonus of up to 40% +of his base salary based on his performance and our business conditions in the sole discretion of our board of directors. In connection with his employment, Mr. Driscoll was granted an option +to purchase up to 300,162 shares of our common stock at an exercise price of $8.6778 per share, which was the fair market value on the date of grant, and an option to purchase up to 10,976 shares of +our common stock at an exercise price of $9.417 per share, which was the fair market value on the date of grant. These options were to vest as to 25% of the shares on April 24, 2018, with the +remainder vesting over the subsequent three years in equal monthly installments. However, in connection with the closing of our initial public offering, 33% of the shares became vested and the +remaining shares will vest in equal monthly installments over the remainder of the four-year term. In addition, Mr. Driscoll has entered into an employee non-solicitation, confidentiality and +assignment agreement pursuant to which he has agreed (1) not to solicit our employees, customers or suppliers for one year following termination of his employment and (2) to assign any +inventions conceived or developed during the course of his employment with us. +David C. Duffy, Ph.D. +We do not currently have a written employment agreement with Dr. Duffy. Dr. Duffy's current base salary is $232,875, and he is +eligible to receive an annual bonus of up to 25% of his base salary based on his performance and our business conditions in the sole discretion of our board of directors. In addition, Dr. Duffy +has entered into an employee non-competition, non-solicitation, confidentiality and assignment agreement pursuant to which he has agreed (1) not to engage in any business with certain +competitors for one year following his voluntary termination of employment with us, (2) not to solicit our employees, customers or suppliers for one year following voluntary termination of his +employment and (3) to assign any inventions conceived or developed during the course of his employment with us. +24 +Table of Contents +Outstanding Equity Awards at 2017 Fiscal Year-End +The following table shows grants of stock options and grants of unvested stock awards outstanding on the last day of the fiscal year ended +December 31, 2017, including both awards subject to performance conditions and non-performance-based awards, to each of the executive officers named in the Summary Compensation Table. +Option Awards(1) +Stock Awards(1) +Name +Number of +Securities +Underlying +Unexercised +Options (#) +Exercisable +Number of +Securities +Underlying +Unexercised +Options (#) +Unexercisable +Option +Exercise +Price +($) +Option +Expiration +Date +Number of +Shares or +Units of +Stock That +Have Not +Vested +(#) +Market +Value of +Shares or +Units of +Stock That +Have Not +Vested +($)(2) +Equity +Incentive +Plan +Awards: +Number of +Unearned +Shares, +Units or +Other +Rights That +Have Not +Vested +(#) +Equity +Incentive +Plan +Awards: +Market or +Payout +Value of +Unearned +Shares, +Units or +Other +Rights That +Have Not +Vested +($)(2) +E. Kevin Hrusovsky, +— +— +— +— +9,864 +(3) +$ +211,780 +— +— +Chairman, President +— +— +— +— +127,516 +(4) +$ +2,737,769 +39,812 +(4) +$ +854,764 +and Chief Executive +— +311,138 +(5) +$ +8.16 +3/31/2027 +— +— +— +— +Officer +Joseph Driscoll, +104,621 +(6) +197,101 +(6) +$ +8.68 +6/2/2027 +— +— +— +— +Chief Financial Officer +4,242 +(7) +6,734 +(7) +$ +9.42 +8/31/2027 +— +— +— +— +David C. Duffy, Ph.D, +15,556 +(8) +— +$ +1.93 +7/6/2021 +— +— +— +— +Senior Vice President, +31,113 +(9) +— +$ +2.28 +2/3/2022 +— +— +— +— +Research & +15,556 +(10) +— +$ +2.89 +5/21/2023 +— +— +— +— +Development +4,076 +(11) +591 +(11) +$ +2.96 +7/8/2024 +— +— +— +— +and Chief Technology +15,754 +(12) +10,341 +(12) +$ +3.12 +9/22/2025 +— +— +— +— +Officer +— +(13) +46,318 +(13) +$ +8.16 +3/31/2027 +— +— +— +— +(1) Each +of the outstanding equity awards in the table above was granted pursuant to our 2007 Stock Option and Grant Plan, as amended, or our 2017 Employee, Director and +Consultant Equity Incentive Plan. +(2) The +market value of the stock awards is determined by multiplying the number of shares by $21.47, the closing price of our common stock on the Nasdaq Global Market +on December 31, 2017, the last day of our fiscal year. +(3) On +December 2, 2014, Mr. Hrusovsky was granted 78,912 shares of restricted stock in connection with his service as our Chairman. The shares underlying +this grant vest, subject to continued service, as follows: 25% of the shares vested on July 1, 2015, with the remainder vesting over the next three years in equal monthly installments on the +first day of each succeeding calendar month thereafter. Upon the sale of the Company, the vesting is accelerated such that no more than 25% of the shares shall remain unvested. If Mr. Hrusovsky +is terminated without Cause (as defined in his employment agreement) or he terminates his service for Good Reason (as defined in his employment agreement) within 12 months following a sale of +the Company, all of the unvested shares will become vested. +(4) On +February 13, 2015, Mr. Hrusovsky was granted 781,060 shares of restricted stock in connection with his appointment as our President and Chief +Executive Officer. The shares underlying this grant vest, subject to continued service, as follows: (i) with respect to 168,246 of the shares, 25% of the shares vested on July 1, 2015, +with the remainder vesting over the next three years in equal monthly installments on the first day of each succeeding calendar month thereafter, (ii) with respect to 549,113 of the shares, 25% +of the shares vested on September 1, 2015, with the remainder vesting over the next three years in equal monthly installments on the first day of each succeeding calendar month thereafter and +(iii) 63,701 shares vest based upon the achievement of certain milestones. Upon the sale of the Company, the vesting is accelerated such that no more than 25% of the shares shall remain +unvested. If Mr. Hrusovsky is terminated without Cause (as defined in his employment agreement) or he terminates his service for Good Reason (as defined in his employment agreement) within +12 months following a sale of the Company, all of the unvested shares will become vested. +(5) Represents +an option to purchase shares of our common stock granted on March 31, 2017. The shares underlying this option vest, subject to continued service, +as follows: 25% of the shares vest on March 31, 2018, with the remainder vesting over the next three years in equal monthly installments on the last day of each succeeding calendar month +thereafter. +25 +Table of Contents +(6) Represents +an option to purchase shares of our common stock granted on June 2, 2017. The shares underlying this option vest, subject to continued service, as +follows: 25% of the shares vest on April 24, 2018, with the remainder vesting over the next three years in equal monthly installments on the last day of each succeeding calendar month +thereafter Upon completion of our initial public offering (IPO), the initial vesting schedule was accelerated such that 33% vested on the closing of the IPO and the remainder vest in equal monthly +installments on the last day of each succeeding calendar month thereafter over the period immediately following the IPO and ending on March 31, 2021. +(7) Represents +an option to purchase shares of our common stock granted on August 31, 2017. The shares underlying this option vest, subject to continued service, +as follows: 25% of the shares vest on April 24, 2018, with the remainder vesting over the next three years in equal monthly installments on the last day of each succeeding calendar month +thereafter Upon completion of our initial public offering (IPO), the initial vesting schedule was accelerated such that 33% vested on the closing of the IPO and the remainder vest in equal monthly +installments on the last day of each succeeding calendar month thereafter over the period immediately following the IPO and ending on March 31, 2021. +(8) Represents +an option to purchase shares of our common stock granted on July 6, 2011. All shares vested as follows: 25% of the shares vested on July 6, +2012, with the remainder vesting over the next three years in equal monthly installments on the last day of each succeeding calendar month thereafter. +(9) Represents +an option to purchase shares of our common stock granted on February 3, 2012. All shares vested as follows: 25% of the shares vested on +February 3, 2013, with the remainder vesting over the next three years in equal monthly installments on the last day of each succeeding calendar month thereafter. +(10) Represents +an option to purchase shares of our common stock granted on May 21, 2013. All shares vested as follows: 25% of the shares vested on May 21, +2014, with the remainder vesting over the next three years in equal monthly installments on the last day of each succeeding calendar month thereafter. +(11) Represents +an option to purchase shares of our common stock granted on July 8, 2014. The shares underlying this option vest, subject to continued service, as +follows: 25% of the shares vest on July 8, 2015, with the remainder vesting over the next three years in equal monthly installments on the last day of each succeeding calendar month thereafter. +(12) Represents +an option to purchase shares of our common stock granted on September 22, 2015. The shares underlying this option vest, subject to continued +service, as follows: 25% of the shares vest on September 22, 2016, with the remainder vesting over the next three years in equal monthly installments on the last day of each succeeding calendar +month thereafter. +(13) Represents +an option to purchase shares of our common stock granted on March 31, 2017. The shares underlying this option vest, subject to continued service, +as follows: 25% of the shares vest on March 31, 2018, with the remainder vesting over the next three years in equal monthly installments on the last day of each succeeding calendar month +thereafter. +Director Compensation +The following table shows the total compensation paid or accrued during the fiscal year ended December 31, 2017 to each of our current +and former non-employee directors. Directors who are employed by us are not compensated for their service on our board of directors. +Name +Fees +Earned or +Paid in +Cash +($) +Option +Awards +($)(1) +All Other +Compensation +($) +Total +($) +Douglas G. Cole, M.D. +— +— +— +— +John M. Connolly +— +— +— +— +Keith L. Crandell +— +— +— +— +Marijn Dekkers, Ph.D. +18,750 +(2) +$ +136,196 +(3) +— +$ +154,946 +Martin D. Madaus, Ph.D. +25,000 +(2) +— +— +25,000 +Paul M. Meister +25,000 +(2) +— +— +25,000 +Dennis Sandstedt(4) +— +— +— +— +David R. Walt, Ph.D. +25,000 +(2) +— +— +25,000 +(1) These +amounts represent the aggregate grant date fair value of options granted to each director in the fiscal year ended December 31, 2017, computed in +accordance with FASB ASC Topic 718. A discussion of the assumptions used in determining grant date fair value may be found in Note 8 to +26 +Table of Contents +our +consolidated financial statements for the year ended December 31, 2017. The following table shows the aggregate number of stock options held by each of our non-employee directors as of +December 31, 2017. +Name +Aggregate +Number of +Shares +Subject to +Stock +Options +Marijn Dekkers, Ph.D. +31,113 +Martin D. Madaus, Ph.D. +86,172 +Paul M. Meister +23,335 +(2) Our +practice in recent years has been to pay each non-employee director who is not affiliated with our major stockholders an annual retainer of $25,000. +Dr. Dekkers joined the Board on March 31, 2017. +(3) In +connection with his appointment as a director, on March 31, 2017, Dr. Dekkers was granted an option to purchase 31,113 shares of our common stock at +an exercise price of $8.16 per share, which was the fair market value on the date of grant. This option vests as to 25% of the shares on March 31, 2018, with the remainder vesting over the +subsequent three years in equal monthly installments. +(4) Mr. Sandstedt +was a director in 2017, but resigned as of November 6, 2017. +We +reimburse in full each non-employee director for all reasonable out-of-pocket expenses incurred in attending each meeting of our board of directors or its committees. Directors may be +reimbursed for travel, food, lodging and other expenses directly related to their service as directors. Directors are also entitled to the protection provided by their indemnification agreements, and +the indemnification provisions in our restated certificate of incorporation and restated by-laws. +EQUITY COMPENSATION PLAN INFORMATION +The following table provides certain aggregate information with respect to all of our equity compensation plans in effect as of +December 31, 2017. +(a) +(b) +(c) +Plan category +Number of securities to be +issued upon exercise of +outstanding options, +warrants and rights +Weighted-average exercise +price of outstanding options, +warrants and rights +Number of securities +remaining available for +future issuance under equity +compensation plans +(excluding securities +reflected in column (a)) +Equity compensation plans approved by security holders(1) +2,249,843 +$ +6.05 +1,650,156 +Equity compensation plans not approved by security holders +— +— +— +Total +2,249,843 +$ +6.05 +1,650,156 +(1) These +plans consist of our 2017 Employee, Director and Consultant Equity Incentive Plan, our 2007 Stock Option and Grant Plan, as Amended, and our 2017 Employee +Stock Purchase Plan. +27 +Table of Contents +REPORT OF AUDIT COMMITTEE +The audit committee of the board of directors, which consists entirely of directors who meet the independence and experience requirements of The +Nasdaq Stock Market, has furnished the following report: +The +audit committee assists the Board in overseeing and monitoring the integrity of our financial reporting process, compliance with legal and regulatory requirements and the quality of +internal and external audit processes. This committee's role and responsibilities are set forth in our charter adopted by the board of directors, which is available on our website at www.quanterix.com . +This committee reviews and reassesses our charter annually and recommends any changes to the board of directors for approval. The +audit committee is responsible for overseeing our overall financial reporting process, and for the appointment, compensation, retention, and oversight of the work of Ernst & Young LLP. +In +fulfilling its responsibilities for the financial statements for fiscal year ended December 31, 2017, the audit committee took the following actions: +• Reviewed and discussed the audited financial statements for the fiscal year ended December 31, 2017 with management and Ernst & +Young LLP, our independent registered public accounting firm; +• Discussed with Ernst & Young LLP the matters required to be discussed in accordance with Auditing Standard No. 16- Communications with +Audit Committees ; and +• Received written disclosures and the letter from Ernst & Young LLP regarding its independence as required by applicable +requirements of the Public Company Accounting Oversight Board regarding Ernst & Young LLP's communications with the audit committee and the audit committee further discussed with +Ernst & Young LLP their independence. The audit committee also considered the status of pending litigation, taxation matters and other areas of oversight relating to the financial +reporting and audit process that the committee determined appropriate. +Based +on the audit committee's review of the audited financial statements and discussions with management and Ernst & Young LLP, the audit committee recommended to the +board of directors that the audited financial statements be included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017 for filing with the SEC. +Members of the Audit Committee: +Paul M. Meister ( Chairman ) +Keith L. Crandell +Martin D. Madaus, Ph.D. +28 +Table of Contents +SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE +Section 16(a) of the Exchange Act requires the Company's officers and directors, and persons who beneficially own 10% or greater of a +registered class of the Company's equity securities, to file reports of ownership on Form 3 and reports of changes in ownership on Form 4 or Form 5 with the SEC. Such officers, +directors and 10% or greater stockholders are also required by SEC rules to furnish the Company with copies of all Section 16(a) forms they file. To our knowledge, based solely on a review of +our records and representations made by our directors and officers regarding their filing obligations, all reports which were required to be filed pursuant to Section 16(a) of the Securities +Exchange Act of 1934, as amended, were filed on a timely basis, except that one report, covering one transaction, was inadvertently filed late by the Company on behalf of Ernest Orticerio. +CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS +Since January 1, 2017, we have engaged in the following transactions with our directors, executive officers and holders of more than 5% +of our common stock, which we refer to as our principal stockholders, and affiliates or immediate family members of our directors, executive officers and principal stockholders. We believe that all of +these transactions were on terms as favorable as could have been obtained from unrelated third parties. +Some +of our directors are or were recently affiliated with our principal stockholders as indicated in the table below: +Director +Affiliation with principal stockholder +Keith L. Crandell +Managing Director of ARCH Venture Partners VI, LLC, the ultimate general partner of ARCH Venture Fund VI, L.P., and Managing Director of ARCH Venture Partners VIII, LLC, the general partner of ARCH Venture +Fund VIII Overage, L.P. +Douglas G. Cole, M.D. +Managing Partner of Flagship Pioneering and a member of Flagship Ventures General Partner LLC, the sole general partner of Flagship Ventures Fund 2004, L.P. +John M. Connolly +Senior Advisor to Bain Capital Ventures, the ultimate general partner of Bain Capital Venture Fund 2005, L.P., BCIP Associates III, LLC and BCIP Associates III-B, LLC. +Participation in Our Initial Public Offering +In December 2017, we issued an aggregate of 4,916,480 shares of our common stock at a purchase price of $15.00 per share, which included 641,280 +shares of common stock issued upon exercise by the underwriters of their option to purchase additional shares. Gross proceeds from the offering were approximately $73 million, prior to +deducting underwriting discounts and commissions and offering expenses payable by the Company. +29 +Table of Contents +The +table below sets forth the aggregate number of common shares issued to our directors, executive officers or holders of more than 5% of our capital stock, or an affiliate or immediate +family member thereof, at the time of the transaction: +Shares +Aggregate +Purchase Price +David R. Walt, Ph.D. +200,000 +$ +3,000,000 +Marijn Dekkers, Ph.D. +40,000 +$ +600,000 +E. Kevin Hrusovsky +34,000 +$ +510,000 +Arch Venture Fund VIII Overage +266,000 +$ +3,990,000 +Cormorant Global Healthcare Fund, LP +100,000 +$ +1,500,000 +Trinitas Innovation-Q Investment Co., Ltd. +55,000 +$ +825,000 +Series D-1 Preferred Stock Financing +In June 2017, we issued an aggregate of 2,113,902 shares of our Series D-1 preferred stock at $4.021 per share for an aggregate purchase +price of approximately $8.5 million, which we refer to as the Series D-1 preferred stock financing. Each share of our Series D-1 preferred stock converted automatically into +0.3111 shares of our common stock immediately prior to the completion of our initial public offering on December 11, 2017. +The +following table summarizes the Series D-1 preferred stock purchased by our directors, executive officers and principal stockholders. +Name of Purchaser +Number of Shares +of Series D-1 +Preferred Stock +Purchased +Aggregate +Purchase +Price +Marijn Dekkers, Ph.D.(1) +248,694 +$ +999,999 +(1) Dr. Dekkers +is a director of the Company. +License Agreement with Tufts University +We entered into a License Agreement with Tufts University pursuant to which we obtained an exclusive, worldwide license to research, develop, +commercialize, use, make, or have made, import or have imported, distribute or have distributed, offer or have offered, and sell or have sold products and services covered by patent rights to the +Simoa technology owned by Tufts, as well as a non-exclusive license to related know-how. The rights licensed to us are for all fields of use and are sublicensable for a fee. One of our directors and +our founding scientist, David R. Walt, Ph.D. previously served as University Professor, Professor of Biomedical Engineering, Professor of Genetics, Professor of Neuroscience, Professor of Cell and +Molecular Biology, and Professor of Oral Medicine at +Tufts University. Under that agreement, we are required to pay Tufts University royalties on all net sales of products and services as well as a portion of any sublicensing revenues. Tufts University +pays a portion of the royalties received from us to Dr. Walt, the amount of which is controlled solely by Tufts University. +Registration Rights +Pursuant to our registration rights agreement to which certain of our principal stockholders, directors and their affiliates are parties, the +holders of 15,481,262 shares of common stock are entitled to registration rights with respect to the shares of common stock held by them. These shares include the shares held (and shares issuable upon +the exercise of warrants held) by ARCH Venture Partners and affiliated funds, Bain Capital Venture entities, Flagship Ventures Fund 2005, L.P., bioMerieux SA +30 +Table of Contents +and +our directors Marijn Dekkers, Ph.D. and David R. Walt, Ph.D., and an affiliate of our director Paul M. Meister. +Under +our registration rights agreement, holders of registrable shares can demand that we file a registration statement or request that their shares be included on a registration +statement that we are otherwise filing, in either case, registering the resale of their shares of common stock. The registration rights will terminate at the earlier of the closing of a Change of +Control Event, as such term is defined in our restated certificate of incorporation, (b) such time as Rule 144 under the Securities Act or another similar exemption under the Securities +Act is available for the sale of all of such registrable shares without limitation during a three-month period without registration (and without the requirement for us to be in compliance with the +current public information required under Rule 144(c)(1)), or (3) the fifth anniversary of the completion of our initial public offering. +Demand Registration Rights. Following the date that is 180 days after the date of our initial public offering, the holders +of a majority of +the registrable shares may require us to file a registration statement under the Securities Act at our expense, subject to certain exceptions, with respect to the resale of their registrable +shares having an aggregate offering price (net of underwriting discounts and commissions, if any) of at least $5 million, and we are required to use our reasonable best efforts to effect the +registration. The holders of a majority of the registrable shares may require us to effect up to +two such demand registrations for the holders of registrable shares as a group. In the event we are required to effect such a demand registration, we may not effect any other registration of +securities for sale for our own account (other than a registration effected solely to implement an employee benefit plan or in certain business combination transactions) within 120 days +following the effective date of the demand registration. +We +are also required to use our reasonable best efforts to qualify and remain qualified to register securities pursuant to a registration statement on Form S-3 under the +Securities Act. Any holder or holders of registrable shares anticipated to have an aggregate sale price (net of underwriting discounts and commissions, if any) in excess of $1 million will have +the right to require us to file, at our expense, an unlimited number of registration statements on Form S-3 for the registrable shares held by such requesting holder or holders, and we are +required to use our reasonable best efforts to effect such registrations. +Piggyback Registration Rights. If we propose to register any of our securities under the Securities Act for sale to the public +(except with respect +to registration statements on Form S-4, Form S-8 or another form not available for registering the registrable shares for sale to the public), the holders of registrable shares are +entitled to notice of such registration and to request that we include registrable shares for resale on such registration statement, subject to the right of any underwriter to limit the number of +shares included in such registration. +We +will pay all registration expenses, other than underwriting fees, commissions or discounts, related to any demand or piggyback registration, including up to $50,000 of fees and +disbursements of counsel for the holders of registrable shares. The Registration Rights Agreement contains customary cross-indemnification provisions, pursuant to which we are obligated to indemnify +the selling stockholders in the event of misstatements or omissions in the registration statement attributable to us and they are obligated to indemnify us for misstatements or omissions attributable +to them. +Agreements with Directors +On March 20, 2017, we entered into a letter agreement with our director Marijn Dekkers, Ph.D. pursuant to which Dr. Dekkers agreed +to serve as a member of our board of directors. Pursuant to the letter agreement, we granted Dr. Dekkers an option to purchase 100,000 shares of our common stock vesting over four years. In +addition, we agreed to provide Dr. Dekkers with the opportunity to participate in any private placement financing transaction we entered into prior to completion of this +31 +Table of Contents +offering +on the same terms as other investors in such transaction. We also agreed to pay Dr. Dekkers compensation of $25,000 per year for service on our board of directors and to reimburse +Dr. Dekkers for his reasonable out-of-pocket expenses in attending board and committee meetings. We also agreed to provide indemnification of Dr. Dekkers pursuant to our certificate of +incorporation, an indemnification agreement and our director and officer insurance. +On +August 7, 2013, we entered into a letter agreement with our director Paul M. Meister pursuant to which Mr. Meister agreed to serve as a member of our board of directors. +Pursuant to the letter agreement, we granted Mr. Meister an option to purchase 75,000 shares of our common stock vesting over four years. We also agreed to pay Mr. Meister compensation +of $25,000 per year for service on our board of directors and to reimburse Mr. Meister for his reasonable out-of-pocket expenses in attending board and committee meetings. We also agreed to +provide indemnification of Mr. Meister pursuant to our certificate of incorporation, an indemnification agreement and our director and officer insurance. +On +January 1, 2014, we entered into a letter agreement with our director David Walt, Ph.D. pursuant to which we agreed to pay Dr. Walt compensation of $25,000 per year for +service on our board of directors, commencing as of January 1, 2014 and for so long as he continues to serve as a non-employee member of our board of directors, and to reimburse Dr. Walt +for his reasonable out-of-pocket expenses in attending board and committee meetings. +Indemnification Agreements with Officers and Directors and Directors' and Officers' Liability Insurance +We have entered into indemnification agreements with each of our executive officers and directors. The indemnification agreements, our restated +certificate of incorporation and our restated bylaws require us to indemnify our directors to the fullest extent not prohibited by Delaware law. Subject to certain limitations, our restated bylaws +also require us to advance expenses incurred by our directors and officers. +Our +2007 Stock Option and Grant Plan, as amended, also provides that our directors will not be liability for any act, omission, interpretation, construction or determination made in good +faith in connection with the plan, and the members of our board of directors and any committee administering the plan will be entitled to indemnification and reimbursement by us in respect of any +claim, loss, damage or expense (including reasonable attorneys' fees) arising or resulting therefrom to the fullest extent permitted by law and/or under any directors' and officers' liability +insurance coverage which may be in effect from time to time. +We +also maintain a general liability insurance policy which covers certain liabilities of directors and officers of our company arising out of claims based on acts or omissions in their +capacities as directors or officers. +Policies and Procedures for Related Party Transactions +Pursuant to its charter, our audit committee is responsible for reviewing and approving, prior to our entry into any such transaction, all +transactions reportable by us under Item 404 of Regulation S-K in which we are a participant and in which any parties related to us, including our executive officers, our directors, +beneficial owners of more than 5% of our securities, immediate family members of the foregoing persons and any other persons whom our board of directors determines may be considered related persons +under Item 404 of Regulation S-K, has or is expected to have a direct or indirect material interest. +In +reviewing and approving such transactions, the audit committee will obtain, or will direct our management to obtain on its behalf, all information that the committee believes to be +relevant and +32 +Table of Contents +important +to a review of the transaction prior to its approval. Following receipt of the necessary information, a discussion will be held of the relevant factors if deemed to be necessary by the +committee prior to approval. If a discussion is not deemed to be necessary, approval may be given by written consent of the committee. This approval authority may also be delegated to the chair of the +audit committee in some circumstances. No related person transaction will be entered into prior to the completion of these procedures. +The +audit committee or its chair, as the case may be, will approve only those related person transactions that are determined to be in, or not inconsistent with, the best interests of us +and our stockholders, taking into account all available facts and circumstances as the committee or the chair determines in good faith to be necessary in accordance with principles of Delaware law +generally applicable to directors of a Delaware corporation. These facts and circumstances will typically include, but not be limited to, the benefits of the transaction to us; the impact on a +director's independence in the event the related person is a director, an immediate family member of a director or an entity in which a director is a partner, stockholder or executive officer; the +availability of other sources for comparable products or services; the terms of the transaction; and the terms of comparable transactions that would be available to unrelated third parties or to +employees generally. No member of the audit +committee will participate in any review, consideration or approval of any related person transaction with respect to which the member or any of his or her immediate family members has an interest. +33 +Table of Contents +ELECTION OF DIRECTORS +(Notice Item 1) +On April 19, 2018 our board of directors nominated John M. Connolly and Martin D. Madaus, Ph.D. for election at the annual meeting. Our +board of directors currently consists of eight members, classified into three classes as follows: (i) John M. Connolly and Martin D. Madaus, Ph.D. constitute Class I with a term which +expires at the upcoming annual meeting; (ii) Douglas G. Cole, M.D., Marijn Dekkers, Ph.D., and David R. Walt, Ph.D. constitute Class II with a term ending at the 2019 annual meeting of +stockholders; and (iii) E. Kevin Hrusovsky, Keith L. Crandell and Paul M. Meister constitute Class III with a term ending at the 2020 annual meeting of stockholders. At each annual +meeting of stockholders, directors are elected for a full term of three years to succeed those directors whose terms are expiring. +Our +board of directors has voted to nominate John M. Connolly and Martin D. Madaus, Ph.D. for election at the annual meeting as Class I directors for a term of three years +to serve until the 2021 Annual Meeting of Stockholders, and until their respective successors are elected and qualified. The Class II directors (Douglas G. Cole, M.D., Marijn Dekkers, Ph.D. and +David R. Walt, Ph.D.) and the Class III directors (E. Kevin Hrusovsky, Keith L. Crandell and Paul M. Meister) will serve until the annual meetings of stockholders to be held in 2019 and 2020, +respectively, and until their respective successors have been elected and qualified. +Unless +authority to vote for any of these nominees is withheld, the shares represented by the enclosed proxy will be voted FOR the +election of John M. Connolly and Martin D. Madaus, Ph.D. as directors. In the event that either nominee becomes unable or unwilling to serve, the shares represented by the enclosed proxy will be voted +for the election of such other person as the board of directors may recommend in that nominee's place. We have no reason to believe that either nominee will be unable or unwilling to serve as a +director. +A +plurality of the shares voted FOR each nominee is required to elect each nominee as a director. +THE BOARD OF DIRECTORS RECOMMENDS THE ELECTION OF JOHN M. CONNOLLY AND MARTIN D. MADAUS, PH.D. AS DIRECTORS, AND PROXIES SOLICITED BY THE BOARD WILL BE VOTED IN FAVOR THEREOF +UNLESS A STOCKHOLDER HAS INDICATED OTHERWISE ON THE PROXY. +34 +Table of Contents +RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +(Notice Item 2) +The audit committee has appointed Ernst & Young LLP as our independent registered public accounting firm, to audit our financial +statements for the fiscal year ending December 31, 2018. The board of directors proposes that the stockholders ratify this appointment. +Ernst & Young LLP audited our financial statements for the fiscal years ended December 31, 2017 and 2016. We expect that representatives of Ernst & Young LLP will be +present at the annual meeting, will be able to make a statement if they so desire, and will be available to respond to appropriate questions. +In +deciding to appoint Ernst & Young LLP, the audit committee reviewed auditor independence issues and existing commercial relationships with Ernst & +Young LLP and concluded that Ernst & Young LLP has no commercial relationship with the Company that would impair its independence for the fiscal year ending December 31, +2018. +The +following table presents fees for professional audit services rendered by Ernst & Young LLP, our independent registered public accounting firm, for the audit of our +annual financial statements for the years ended December 31, 2017 and 2016, and fees billed for other services rendered by Ernst & Young LLP during those periods. +2017 +2016 +Audit fees:(1) +$ +1,498,921 +$ +330,272 +Tax fees:(2) +$ +48,295 +22,000 +Total +$ +1,547,216 +$ +352,272 +(1) Audit +fees consisted of audit work performed in the preparation of financial statements, as well as work generally only the independent registered public accounting +firm can reasonably be expected to provide, such as statutory audits. +(2) Tax +fees consist principally of assistance with matters related to tax compliance and reporting and tax consulting services primarily related to international tax +planning strategies. +Policy on Audit Committee Pre-Approval of Audit and Permissible Non-audit Services of Independent Public +Accountant +Consistent with SEC policies regarding auditor independence, the audit committee has responsibility for appointing, setting compensation and +overseeing the work of our independent registered public accounting firm. In recognition of this responsibility, the audit committee has established a policy to pre-approve all audit and permissible +non-audit services provided by our independent registered public accounting firm; provided however, that de minimis non-audit services may instead be approved in accordance with applicable SEC rules. +Prior +to engagement of an independent registered public accounting firm for the next year's audit, management will submit an aggregate of services expected to be rendered during that +year for each of four categories of services to the Audit Committee for approval. +1. Audit services include audit work performed in the preparation of financial statements, as well as work that generally +only an independent registered public accounting firm can reasonably be expected to provide, including comfort letters, statutory audits, and attest services and consultation regarding financial +accounting and/or reporting standards. +35 +Table of Contents +2. Audit-Related services are for assurance and related services that are traditionally performed by an independent +registered public accounting firm, including due diligence related to mergers and acquisitions, employee benefit plan audits, and special procedures required to meet certain regulatory requirements. +3. Tax services include all services performed by an independent registered public accounting firm's tax personnel except +those services specifically related to the audit of the financial statements, and includes fees in the areas of tax compliance, tax planning, and tax advice. +4. Other Fees are those associated with services not captured in the other categories. The Company generally does not +request such services from our independent registered public accounting firm. +Prior +to engagement, the Audit Committee pre-approves these services by category of service. The fees are budgeted and the Audit Committee requires our independent registered public +accounting firm and management to report actual fees versus the budget periodically throughout the year by category of service. During the year, circumstances may arise when it may become necessary to +engage our independent registered public accounting firm for additional services not contemplated in the original pre-approval. In those instances, the Audit Committee requires specific pre-approval +before engaging our independent registered public accounting firm. +The +audit committee may delegate pre-approval authority to one or more of its members. The member to whom such authority is delegated must report, for informational purposes only, any +pre-approval decisions to the audit committee at its next scheduled meeting. +In +the event the stockholders do not ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm, the audit committee will reconsider +its appointment. +The +affirmative vote of a majority of the shares cast affirmatively or negatively at the annual meeting is required to ratify the appointment of the independent registered public +accounting firm. +THE BOARD OF DIRECTORS RECOMMENDS A VOTE TO RATIFY THE APPOINTMENT OF ERNST & YOUNG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM, AND +PROXIES SOLICITED BY THE BOARD WILL BE VOTED IN FAVOR OF SUCH RATIFICATION UNLESS A STOCKHOLDER INDICATES OTHERWISE ON THE PROXY. +36 +Table of Contents +CORPORATE CODE OF CONDUCT AND ETHICS +We have adopted a corporate code of conduct and ethics that applies to all of our employees, including our chief executive officer and chief +financial and accounting officers. The text of the code of conduct and ethics is posted on our website at www.quanterix.com and will be made available to stockholders without charge, upon request, in +writing to the Corporate Secretary at 113 Hartwell Avenue, Lexington, Massachusetts 02421. Disclosure regarding any amendments to, or waivers from, provisions of the code that apply to our directors, +principal executive officer or principal financial officer will be included in a Current Report on Form 8-K within four business days following the date of the amendment or waiver, unless +website posting or the issuance of a press release of such amendments or waivers is then permitted by the rules of The Nasdaq Stock Market. +OTHER MATTERS +The board of directors knows of no other business which will be presented to the annual meeting. If any other business is properly brought +before the annual meeting, proxies will be voted in accordance with the judgment of the persons named therein. +STOCKHOLDER PROPOSALS AND NOMINATIONS FOR DIRECTOR +To be considered for inclusion in the proxy statement relating to our 2019 annual meeting of stockholders, we must receive stockholder proposals +(other than for director nominations) no later than December 31, 2018. To be considered for presentation at the 2019 annual meeting, although not included in the proxy statement, proposals +(including director nominations that are not requested to be included in our proxy statement) must be received earlier than February 13, 2019 and no later than March 15, 2019. Proposals +that are not received in a timely manner will not be voted on at the 2019 Annual Meeting. If a proposal is received on time, the proxies that management solicits for the meeting may still exercise +discretionary voting authority on the proposal under circumstances consistent with the proxy rules of the SEC. All stockholder proposals should be marked for the attention of Secretary, Quanterix +Corporation, 113 Hartwell Avenue, Lexington, Massachusetts 02421. +Lexington, +Massachusetts +April 30, 2018 +37 +MMMMMMMMMMMM . Quanterix Corporation Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. q PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q Proposals — The Board of Directors recommends a vote FOR all the nominees listed and FOR Proposal 2. 1. Election of Class I Directors + For Withhold For Withhold 01 - John M. Connolly 02 - Martin D. Madaus ForAgainst Abstain 2. Ratification of the appointment of Ernst & Young LLP as the independent registered public accounting firm for the year ending December 31, 2018 Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title. Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box. + 1 U P X 3 7 6 5 3 9 2 02TWYB MMMMMMMMM B A Annual Meeting Proxy Card X IMPORTANT ANNUAL MEETING INFORMATION +. q PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q Proxy — Quanterix Corporation Notice of 2018 Annual Meeting of Stockholders Meeting to be held at One Financial Center, Boston, MA 02111 Proxy Solicited by the Board of Directors for the 2018 Annual Meeting – June 13, 2018 E. Kevin Hrusovsky and Joseph Driscoll, or any of them, each with the power of substitution, are hereby authorized to represent and vote the shares of the undersigned, with all the powers which the undersigned would possess if personally present, at the 2018 Annual Meeting of Stockholders of Quanterix Corporation to be held on Wednesday, June 13, 2018 or at any postponement or adjournment thereof. Shares represented by this proxy will be voted as directed by the stockholder. If no such directions are indicated, the Proxies will have authority to vote such shares in accordance with the recommendations of the Board of Directors FOR the nominees for election as director and FOR Proposal 2. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting. (Items to be voted appear on reverse side.) \ No newline at end of file diff --git a/raw/proxies/0001503274/0001047469-18-003319/proxy_rpt.txt b/raw/proxies/0001503274/0001047469-18-003319/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..65c3c99fb602bf5410fc435fffb60742d31eca4d --- /dev/null +++ b/raw/proxies/0001503274/0001047469-18-003319/proxy_rpt.txt @@ -0,0 +1,171 @@ +CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS +Since January 1, 2017, we have engaged in the following transactions with our directors, executive officers and holders of more than 5% +of our common stock, which we refer to as our principal stockholders, and affiliates or immediate family members of our directors, executive officers and principal stockholders. We believe that all of +these transactions were on terms as favorable as could have been obtained from unrelated third parties. +Some +of our directors are or were recently affiliated with our principal stockholders as indicated in the table below: +Director +Affiliation with principal stockholder +Keith L. Crandell +Managing Director of ARCH Venture Partners VI, LLC, the ultimate general partner of ARCH Venture Fund VI, L.P., and Managing Director of ARCH Venture Partners VIII, LLC, the general partner of ARCH Venture +Fund VIII Overage, L.P. +Douglas G. Cole, M.D. +Managing Partner of Flagship Pioneering and a member of Flagship Ventures General Partner LLC, the sole general partner of Flagship Ventures Fund 2004, L.P. +John M. Connolly +Senior Advisor to Bain Capital Ventures, the ultimate general partner of Bain Capital Venture Fund 2005, L.P., BCIP Associates III, LLC and BCIP Associates III-B, LLC. +Participation in Our Initial Public Offering +In December 2017, we issued an aggregate of 4,916,480 shares of our common stock at a purchase price of $15.00 per share, which included 641,280 +shares of common stock issued upon exercise by the underwriters of their option to purchase additional shares. Gross proceeds from the offering were approximately $73 million, prior to +deducting underwriting discounts and commissions and offering expenses payable by the Company. +29 +Table of Contents +The +table below sets forth the aggregate number of common shares issued to our directors, executive officers or holders of more than 5% of our capital stock, or an affiliate or immediate +family member thereof, at the time of the transaction: +Shares +Aggregate +Purchase Price +David R. Walt, Ph.D. +200,000 +$ +3,000,000 +Marijn Dekkers, Ph.D. +40,000 +$ +600,000 +E. Kevin Hrusovsky +34,000 +$ +510,000 +Arch Venture Fund VIII Overage +266,000 +$ +3,990,000 +Cormorant Global Healthcare Fund, LP +100,000 +$ +1,500,000 +Trinitas Innovation-Q Investment Co., Ltd. +55,000 +$ +825,000 +Series D-1 Preferred Stock Financing +In June 2017, we issued an aggregate of 2,113,902 shares of our Series D-1 preferred stock at $4.021 per share for an aggregate purchase +price of approximately $8.5 million, which we refer to as the Series D-1 preferred stock financing. Each share of our Series D-1 preferred stock converted automatically into +0.3111 shares of our common stock immediately prior to the completion of our initial public offering on December 11, 2017. +The +following table summarizes the Series D-1 preferred stock purchased by our directors, executive officers and principal stockholders. +Name of Purchaser +Number of Shares +of Series D-1 +Preferred Stock +Purchased +Aggregate +Purchase +Price +Marijn Dekkers, Ph.D.(1) +248,694 +$ +999,999 +(1) Dr. Dekkers +is a director of the Company. +License Agreement with Tufts University +We entered into a License Agreement with Tufts University pursuant to which we obtained an exclusive, worldwide license to research, develop, +commercialize, use, make, or have made, import or have imported, distribute or have distributed, offer or have offered, and sell or have sold products and services covered by patent rights to the +Simoa technology owned by Tufts, as well as a non-exclusive license to related know-how. The rights licensed to us are for all fields of use and are sublicensable for a fee. One of our directors and +our founding scientist, David R. Walt, Ph.D. previously served as University Professor, Professor of Biomedical Engineering, Professor of Genetics, Professor of Neuroscience, Professor of Cell and +Molecular Biology, and Professor of Oral Medicine at +Tufts University. Under that agreement, we are required to pay Tufts University royalties on all net sales of products and services as well as a portion of any sublicensing revenues. Tufts University +pays a portion of the royalties received from us to Dr. Walt, the amount of which is controlled solely by Tufts University. +Registration Rights +Pursuant to our registration rights agreement to which certain of our principal stockholders, directors and their affiliates are parties, the +holders of 15,481,262 shares of common stock are entitled to registration rights with respect to the shares of common stock held by them. These shares include the shares held (and shares issuable upon +the exercise of warrants held) by ARCH Venture Partners and affiliated funds, Bain Capital Venture entities, Flagship Ventures Fund 2005, L.P., bioMerieux SA +30 +Table of Contents +and +our directors Marijn Dekkers, Ph.D. and David R. Walt, Ph.D., and an affiliate of our director Paul M. Meister. +Under +our registration rights agreement, holders of registrable shares can demand that we file a registration statement or request that their shares be included on a registration +statement that we are otherwise filing, in either case, registering the resale of their shares of common stock. The registration rights will terminate at the earlier of the closing of a Change of +Control Event, as such term is defined in our restated certificate of incorporation, (b) such time as Rule 144 under the Securities Act or another similar exemption under the Securities +Act is available for the sale of all of such registrable shares without limitation during a three-month period without registration (and without the requirement for us to be in compliance with the +current public information required under Rule 144(c)(1)), or (3) the fifth anniversary of the completion of our initial public offering. +Demand Registration Rights. Following the date that is 180 days after the date of our initial public offering, the holders +of a majority of +the registrable shares may require us to file a registration statement under the Securities Act at our expense, subject to certain exceptions, with respect to the resale of their registrable +shares having an aggregate offering price (net of underwriting discounts and commissions, if any) of at least $5 million, and we are required to use our reasonable best efforts to effect the +registration. The holders of a majority of the registrable shares may require us to effect up to +two such demand registrations for the holders of registrable shares as a group. In the event we are required to effect such a demand registration, we may not effect any other registration of +securities for sale for our own account (other than a registration effected solely to implement an employee benefit plan or in certain business combination transactions) within 120 days +following the effective date of the demand registration. +We +are also required to use our reasonable best efforts to qualify and remain qualified to register securities pursuant to a registration statement on Form S-3 under the +Securities Act. Any holder or holders of registrable shares anticipated to have an aggregate sale price (net of underwriting discounts and commissions, if any) in excess of $1 million will have +the right to require us to file, at our expense, an unlimited number of registration statements on Form S-3 for the registrable shares held by such requesting holder or holders, and we are +required to use our reasonable best efforts to effect such registrations. +Piggyback Registration Rights. If we propose to register any of our securities under the Securities Act for sale to the public +(except with respect +to registration statements on Form S-4, Form S-8 or another form not available for registering the registrable shares for sale to the public), the holders of registrable shares are +entitled to notice of such registration and to request that we include registrable shares for resale on such registration statement, subject to the right of any underwriter to limit the number of +shares included in such registration. +We +will pay all registration expenses, other than underwriting fees, commissions or discounts, related to any demand or piggyback registration, including up to $50,000 of fees and +disbursements of counsel for the holders of registrable shares. The Registration Rights Agreement contains customary cross-indemnification provisions, pursuant to which we are obligated to indemnify +the selling stockholders in the event of misstatements or omissions in the registration statement attributable to us and they are obligated to indemnify us for misstatements or omissions attributable +to them. +Agreements with Directors +On March 20, 2017, we entered into a letter agreement with our director Marijn Dekkers, Ph.D. pursuant to which Dr. Dekkers agreed +to serve as a member of our board of directors. Pursuant to the letter agreement, we granted Dr. Dekkers an option to purchase 100,000 shares of our common stock vesting over four years. In +addition, we agreed to provide Dr. Dekkers with the opportunity to participate in any private placement financing transaction we entered into prior to completion of this +31 +Table of Contents +offering +on the same terms as other investors in such transaction. We also agreed to pay Dr. Dekkers compensation of $25,000 per year for service on our board of directors and to reimburse +Dr. Dekkers for his reasonable out-of-pocket expenses in attending board and committee meetings. We also agreed to provide indemnification of Dr. Dekkers pursuant to our certificate of +incorporation, an indemnification agreement and our director and officer insurance. +On +August 7, 2013, we entered into a letter agreement with our director Paul M. Meister pursuant to which Mr. Meister agreed to serve as a member of our board of directors. +Pursuant to the letter agreement, we granted Mr. Meister an option to purchase 75,000 shares of our common stock vesting over four years. We also agreed to pay Mr. Meister compensation +of $25,000 per year for service on our board of directors and to reimburse Mr. Meister for his reasonable out-of-pocket expenses in attending board and committee meetings. We also agreed to +provide indemnification of Mr. Meister pursuant to our certificate of incorporation, an indemnification agreement and our director and officer insurance. +On +January 1, 2014, we entered into a letter agreement with our director David Walt, Ph.D. pursuant to which we agreed to pay Dr. Walt compensation of $25,000 per year for +service on our board of directors, commencing as of January 1, 2014 and for so long as he continues to serve as a non-employee member of our board of directors, and to reimburse Dr. Walt +for his reasonable out-of-pocket expenses in attending board and committee meetings. +Indemnification Agreements with Officers and Directors and Directors' and Officers' Liability Insurance +We have entered into indemnification agreements with each of our executive officers and directors. The indemnification agreements, our restated +certificate of incorporation and our restated bylaws require us to indemnify our directors to the fullest extent not prohibited by Delaware law. Subject to certain limitations, our restated bylaws +also require us to advance expenses incurred by our directors and officers. +Our +2007 Stock Option and Grant Plan, as amended, also provides that our directors will not be liability for any act, omission, interpretation, construction or determination made in good +faith in connection with the plan, and the members of our board of directors and any committee administering the plan will be entitled to indemnification and reimbursement by us in respect of any +claim, loss, damage or expense (including reasonable attorneys' fees) arising or resulting therefrom to the fullest extent permitted by law and/or under any directors' and officers' liability +insurance coverage which may be in effect from time to time. +We +also maintain a general liability insurance policy which covers certain liabilities of directors and officers of our company arising out of claims based on acts or omissions in their +capacities as directors or officers. +Policies and Procedures for Related Party Transactions +Pursuant to its charter, our audit committee is responsible for reviewing and approving, prior to our entry into any such transaction, all +transactions reportable by us under Item 404 of Regulation S-K in which we are a participant and in which any parties related to us, including our executive officers, our directors, +beneficial owners of more than 5% of our securities, immediate family members of the foregoing persons and any other persons whom our board of directors determines may be considered related persons +under Item 404 of Regulation S-K, has or is expected to have a direct or indirect material interest. +In +reviewing and approving such transactions, the audit committee will obtain, or will direct our management to obtain on its behalf, all information that the committee believes to be +relevant and +32 +Table of Contents +important +to a review of the transaction prior to its approval. Following receipt of the necessary information, a discussion will be held of the relevant factors if deemed to be necessary by the +committee prior to approval. If a discussion is not deemed to be necessary, approval may be given by written consent of the committee. This approval authority may also be delegated to the chair of the +audit committee in some circumstances. No related person transaction will be entered into prior to the completion of these procedures. +The +audit committee or its chair, as the case may be, will approve only those related person transactions that are determined to be in, or not inconsistent with, the best interests of us +and our stockholders, taking into account all available facts and circumstances as the committee or the chair determines in good faith to be necessary in accordance with principles of Delaware law +generally applicable to directors of a Delaware corporation. These facts and circumstances will typically include, but not be limited to, the benefits of the transaction to us; the impact on a +director's independence in the event the related person is a director, an immediate family member of a director or an entity in which a director is a partner, stockholder or executive officer; the +availability of other sources for comparable products or services; the terms of the transaction; and the terms of comparable transactions that would be available to unrelated third parties or to +employees generally. No member of the audit +committee will participate in any review, consideration or approval of any related person transaction with respect to which the member or any of his or her immediate family members has an interest. +33 +Table of Contents \ No newline at end of file diff --git a/raw/proxies/0001503274/0001047469-19-003500/proxy.txt b/raw/proxies/0001503274/0001047469-19-003500/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..cba01d69951fe367e0fa6fc68f73bfba75fe4977 --- /dev/null +++ b/raw/proxies/0001503274/0001047469-19-003500/proxy.txt @@ -0,0 +1,1674 @@ +DEF 14A +1 +a2238962zdef14a.htm +DEF 14A +Use these links to rapidly review the document +TABLE OF CONTENTS +Table of Contents +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Proxy +Statement Pursuant to Section 14(a) of +the Securities Exchange Act of 1934 (Amendment No. ) +Filed by the Registrant ý +Filed by a Party other than the Registrant o +Check the appropriate box: +o +Preliminary Proxy Statement +o +Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +ý +Definitive Proxy Statement +o +Definitive Additional Materials +o +Soliciting Material under §240.14a-12 +Quanterix Corporation +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +ý +No fee required. +o +Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. +(1) +Title of each class of securities to which transaction applies: +(2) +Aggregate number of securities to which transaction applies: +(3) +Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): +(4) +Proposed maximum aggregate value of transaction: +(5) +Total fee paid: +o +Fee paid previously with preliminary materials. +o +Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration +statement number, or the Form or Schedule and the date of its filing. +(1) +Amount Previously Paid: +(2) +Form, Schedule or Registration Statement No.: +(3) +Filing Party: +(4) +Date Filed: +Table of Contents +June 5, 2019 +To +Our Stockholders: +You +are cordially invited to attend the 2019 annual meeting of stockholders of Quanterix Corporation to be held at 10:00 a.m. ET on Thursday, July 25, 2019 at our offices, +located at 900 Middlesex Turnpike, Building 1, Billerica, Massachusetts 01821. +Details +regarding the meeting, the business to be conducted at the meeting, and information about Quanterix Corporation that you should consider when you vote your shares are described +in the accompanying proxy statement. +At +the annual meeting, three persons will be elected to our board of directors. In addition, we will ask stockholders to ratify the appointment of Ernst & Young LLP as our +independent registered public accounting firm for our fiscal year ending December 31, 2019. The board of directors recommends the approval of each of these proposals. Such other business will +be transacted as may properly come before the annual meeting. +Under +Securities and Exchange Commission rules that allow companies to furnish proxy materials to stockholders over the Internet, we have elected to deliver our proxy materials to the +majority of our stockholders over the Internet. This delivery process allows us to provide stockholders with the information they need, while at the same time conserving natural resources and lowering +the cost of delivery. On or about June 6, 2019, we intend to begin sending to our stockholders a Notice of Internet Availability of Proxy Materials (the "Notice") containing instructions on how +to access our proxy statement for our 2019 Annual Meeting of Stockholders and our 2018 annual report to stockholders. The Notice also provides instructions on how to vote online or by telephone and +how to receive a paper copy of the proxy materials by mail. +We +hope you will be able to attend the annual meeting. Whether you plan to attend the annual meeting or not, it is important that you cast your vote either in person or by proxy. You may +vote over the Internet as well as by telephone or by mail. When you have finished reading the proxy statement, you are urged to vote in accordance with the instructions set forth in the proxy +statement. We encourage you to vote by proxy so that your shares will be represented and voted at the meeting, whether or not you can attend. +Thank +you for your continued support of Quanterix Corporation. We look forward to seeing you at the annual meeting. +Sincerely, +/s/ E. KEVIN HRUSOVSKY +E. Kevin Hrusovsky +Chairman, President and Chief Executive Officer +Table of Contents +QUANTERIX CORPORATION +900 Middlesex Turnpike +Billerica, Massachusetts 01821 +June 5, 2019 +NOTICE OF 2019 ANNUAL MEETING OF STOCKHOLDERS +TIME: 10:00 a.m. ET +DATE: +Thursday, July 25, 2019 +PLACE: +Quanterix Corporation, 900 Middlesex Turnpike, Building 1, Billerica, Massachusetts 01821 +PURPOSES: +1. To +elect three directors to serve three-year terms expiring in 2022; +2. To +ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2019; +and +3. To +transact such other business that is properly presented at the annual meeting and any adjournments or postponements thereof. +WHO +MAY VOTE: +You +may vote if you were the record owner of Quanterix Corporation common stock at the close of business on June 3, 2019. A list of stockholders of record will be available at the +annual meeting and, during the 10 days prior to the annual meeting, at our principal executive offices, located at 900 Middlesex Turnpike, Building 1, Billerica, Massachusetts 01821. +All +stockholders are cordially invited to attend the annual meeting. Whether you plan to attend the annual meeting or not, we urge you to vote by following the +instructions in the Notice of Internet Availability of Proxy Materials that you previously received and submit your proxy by the Internet, telephone or mail in order to ensure the presence of a +quorum. You may change or revoke your proxy at any time before it is voted at the meeting. +BY ORDER OF THE BOARD OF DIRECTORS +/s/ BRIAN P. KEANE +Brian P. Keane +General Counsel and Secretary +Table of Contents +TABLE OF CONTENTS +Page +Important Information About the Annual Meeting and Voting +1 +Security Ownership of Certain Beneficial Owners and Management +7 +Management and Corporate Governance +10 +Executive Officer and Director Compensation +21 +Equity Compensation Plan Information +26 +Report of Audit Committee +27 +Section 16(a) Beneficial Ownership Reporting Compliance +28 +Certain Relationships and Related Person Transactions +29 +Election of Directors +34 +Ratification of the Appointment of the Independent Registered Public Accounting +Firm +35 +Corporate Code of Conduct and Ethics +37 +Other Matters +37 +Stockholder Proposals and Nominations for Director +37 +Table of Contents +QUANTERIX CORPORATION +900 Middlesex Turnpike +Billerica, Massachusetts 01821 +PROXY STATEMENT FOR QUANTERIX CORPORATION +2019 ANNUAL MEETING OF STOCKHOLDERS +TO BE HELD ON JULY 25, 2019 +This proxy statement, along with the accompanying Notice of 2019 Annual Meeting of Stockholders, contains information about the 2019 annual meeting of +stockholders of Quanterix Corporation, including any adjournments or postponements of the annual meeting. We are holding the annual meeting at 10:00 a.m. ET on Thursday, July 25, 2019 at +our offices, located at 900 Middlesex Turnpike, Building 1, Billerica, Massachusetts 01821. +In +this proxy statement, we refer to Quanterix Corporation as "Quanterix," "the Company," "we" and "us." +This +proxy statement relates to the solicitation of proxies by our board of directors for use at the annual meeting. +On +or about June 6, 2019, we intend to begin sending the Important Notice Regarding the Availability of Proxy Materials to stockholders entitled to vote at the annual meeting. +IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE +STOCKHOLDER MEETING TO BE HELD ON JULY 25, 2019 +This proxy statement and our 2018 annual report to stockholders are available for viewing, printing and downloading at +www.investorvote.com/qtrx. To view these materials, please have your 15-digit control number(s) available that appears on your Notice or proxy card. On this website, you can also elect to receive +future distributions of our proxy statements and annual reports to stockholders by electronic delivery. +Additionally, you can find a copy of our Annual Report on Form 10-K, which includes our financial statements, for the fiscal year ended December 31, +2018 on the website of the Securities and Exchange Commission, or the SEC, at www.sec.gov , or in the "SEC Filings" section of +the "Financial Information" section of the "Investors" section of our website at www.quanterix.com. You may also obtain a printed copy of our Annual Report on Form 10-K, including our financial +statements, free of charge, from us by sending a written request to: Quanterix Corporation, Attn: Investor Relations, 900 Middlesex Turnpike, Building 1, Billerica, Massachusetts 01821. +Exhibits will be provided upon written request and payment of an appropriate processing fee. +IMPORTANT INFORMATION ABOUT THE ANNUAL MEETING AND VOTING +Why is the Company Soliciting My Proxy? +Our board of directors is soliciting your proxy to vote at the 2019 annual meeting of stockholders to be held at our offices, located at 900 +Middlesex Turnpike, Building 1, Billerica, Massachusetts 01821, on Thursday, July 25, 2019, at 10:00 a.m. ET, and any adjournments or postponements of the meeting, which we refer to as +the annual meeting. This proxy statement, along with the accompanying Notice of Annual Meeting of Stockholders, summarizes the purposes of the meeting and the information you need to know to vote at +the annual meeting. +We +have made available to you on the Internet or have sent you this proxy statement, the Notice of Annual Meeting of Stockholders, the proxy card and a copy of our Annual Report on +Form 10-K for the fiscal year ended December 31, 2018 because you owned shares of our common stock on the record date. We intend to commence distribution of the Important Notice +Regarding the Availability of Proxy Materials, which we refer to throughout this proxy statement as the Notice, and, if applicable, proxy materials to stockholders on or about June 6, 2019. +Table of Contents +Why Did I Receive a Notice in the Mail Regarding the Internet Availability of Proxy Materials Instead +of a Full Set of Proxy Materials? +As permitted by the rules of the U.S. Securities and Exchange Commission, or the SEC, we may furnish our proxy materials to our stockholders by +providing access to such documents on the Internet, rather than mailing printed copies of these materials to each stockholder. Most stockholders will not receive printed copies of the proxy materials +unless they request them. We believe that this process should expedite stockholders' receipt of proxy materials, lower the costs of the annual meeting and help to conserve natural resources. If you +received a Notice by mail or electronically, you will not receive a printed or email copy of the proxy materials, unless you request one by following the instructions included in the Notice. Instead, +the Notice instructs you as to how you may access and review all of the proxy materials and submit your proxy on the Internet. If you requested a paper copy +of the proxy materials, you may authorize the voting of your shares by following the instructions on the proxy card, in addition to the other methods of voting described in this proxy statement. +Who Can Vote? +Only stockholders who owned our common stock at the close of business on June 3, 2019 are entitled to vote at the annual meeting. On this +record date, there were 24,896,311 shares of our common stock outstanding and entitled to vote. Our common stock is our only class of voting stock. +You +do not need to attend the annual meeting to vote your shares. Shares represented by valid proxies, received in time for the annual meeting and not revoked prior to the annual +meeting, will be voted at the annual meeting. For instructions on how to change or revoke your proxy, see "May I Change or Revoke My Proxy?" below. +How Many Votes Do I Have? +Each share of our common stock that you own entitles you to one vote. +How Do I Vote? +Whether you plan to attend the annual meeting or not, we urge you to vote by proxy. All shares represented by valid proxies that we receive +through this solicitation, and that are not revoked, will be voted in accordance with your instructions on the proxy card or as instructed via Internet or telephone. You may specify whether your +shares should be voted for or withheld for each nominee for director and whether your shares should be voted for, against or abstain with respect to the other proposal. If you properly submit a proxy +without giving specific voting instructions, your shares will be voted in accordance with the board of director's recommendations as noted below. Voting by proxy will not affect your right to attend +the annual meeting. If your shares are registered +directly in your name through our stock transfer agent, Computershare Trust Company N.A., or you have stock certificates registered in your name, you may vote: +• By Internet or by +telephone. Follow the instructions included in the Notice or, if you received printed materials, in the proxy card to vote over the Internet or +by telephone. +• By mail. If you received a proxy +card by mail, you can vote by mail by completing, signing, dating and returning the proxy card as instructed on the card. If you sign the proxy card but do not specify how you want your shares voted, +they will be voted in accordance with the board of director's recommendations as noted below. +• In person at the meeting. If you +attend the meeting, you may deliver a completed proxy card in person or you may vote by completing a ballot, which will be available at the meeting. +2 +Table of Contents +Telephone and Internet voting facilities for stockholders of record will be available 24 hours a day and will close at 1:00 a.m. ET on +July 25, 2019. +If +your shares are held in "street name" (held in the name of a bank, broker or other holder of record), you will receive instructions from the holder of record. You must follow the +instructions of the holder of record in order for your shares to be voted. Telephone and Internet voting also will be offered to stockholders owning shares through certain banks and brokers. If your +shares are not registered in your own name and you plan to vote your shares in person at the annual meeting, you should contact your broker or agent to obtain a legal proxy or broker's proxy card and +bring it to the annual meeting in order to vote. +How Does the Board of Directors Recommend That I Vote on the Proposals? +The board of directors recommends that you vote as follows: +• " FOR " the election of the three nominees for director; and +• " FOR " the ratification of the appointment of Ernst & Young LLP as our independent +registered public accounting firm for our fiscal year ending December 31, 2019. +If +any other matter is presented at the annual meeting, your proxy provides that your shares will be voted by the proxy holder listed in the proxy in accordance with his best judgment. +At the time this proxy statement was first made available, we knew of no matters that needed to be acted on at the annual meeting, other than those discussed in this proxy statement. +May I Change or Revoke My Proxy? +If you give us your proxy, you may change or revoke it at any time before the annual meeting. You may change or revoke your proxy in any one of +the following ways: +• if you received a proxy card, by signing a new proxy card with a date later than your previously delivered proxy and submitting it as +instructed above; +• by re-voting by Internet or by telephone as instructed above; +• by notifying our Corporate Secretary in writing before the annual meeting that you have revoked your proxy; or +• by attending the annual meeting in person and voting in person. Attending the annual meeting in person will not in and of itself revoke a +previously submitted proxy. You must specifically request at the annual meeting that it be revoked. +Your +most current vote, whether by telephone, Internet or proxy card is the one that will be counted. +What if I Receive More Than One Notice or Proxy Card? +You may receive more than one Notice or proxy card if you hold shares of our common stock in more than one account, which may be in registered +form or held in street name. Please vote in the manner described above under "How Do I Vote?" for each account to ensure that all of your shares are voted. +Will My Shares be Voted if I Do Not Vote? +If your shares are registered in your name or if you have stock certificates, they will not be counted if you do not vote as described above +under "How Do I Vote?" If your shares are held in street name and you do not provide voting instructions to the bank, broker or other nominee that holds +3 +Table of Contents +your +shares as described above, the bank, broker or other nominee that holds your shares has the authority to vote your unvoted shares only on the ratification of the appointment of our independent +registered public accounting firm without receiving instructions from you. Therefore, we encourage you to provide voting instructions to your bank, broker or other nominee. This ensures your shares +will be voted at the annual meeting and in the manner you desire. A "broker non-vote" will occur if your broker cannot vote your shares on a particular matter because it has not received instructions +from you and does not have discretionary voting authority on that matter or because your broker chooses not to vote on a matter for which it does have discretionary voting authority. +What Vote is Required to Approve Each Proposal and How are Votes Counted? +Proposal 1: Elect Directors +The three nominees for director who receive the most votes (also known as a "plurality" of the votes cast) will be elected. You may vote either FOR all of the nominees, WITHHOLD your vote from all of the +nominees or WITHHOLD your vote from any one or more of the nominees. Votes that are withheld will not be included in the vote tally for the election of the directors. Brokerage firms do not have authority to vote customers' unvoted shares held by the +firms in street name for the election of the directors. As a result, any shares not voted by a customer will be treated as a broker non-vote. Such broker non-votes will have no effect on the results of this vote. +Proposal 2: Ratify Appointment of Independent Registered Public Accounting Firm +The affirmative vote of a majority of the votes cast affirmatively or negatively for this proposal is required to ratify the +appointment of our independent registered public accounting firm. Abstentions will have no effect on the results of this vote. Brokerage firms have authority to vote customers' unvoted shares held by the firms in street name on this proposal. If a +broker does not exercise this authority, such broker non-votes will have no effect on the results of this vote. We are not required to obtain the approval of our stockholders to appoint our independent registered public accounting firm. However, if +our stockholders do not ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for 2019, the audit committee of our board of directors will reconsider its appointment. +Is Voting Confidential? +We will keep all the proxies, ballots and voting tabulations private. We only let our Inspector of Election, Computershare Trust Company, N.A., +examine these documents. Management will not know how you voted on a specific proposal unless it is necessary to meet legal requirements. We will, however, forward to management any written comments +you make on the proxy card or that you otherwise provide. +4 +Table of Contents +Where Can I Find the Voting Results of the Annual Meeting? +The preliminary voting results will be announced at the annual meeting, and we will publish preliminary results, or final results if available, +in a Current Report on Form 8-K within four business days of the annual meeting. If final results are unavailable at the time we file the Form 8-K, then we will file an amended Current +Report on Form 8-K to disclose the final voting results within four business days after the final voting results are known. +What Are the Costs of Soliciting these Proxies? +We will pay all of the costs of soliciting these proxies. Our directors and employees may solicit proxies in person or by telephone, fax or +email. We will pay these employees and directors no additional compensation for these services. We will ask banks, brokers and other institutions, nominees and fiduciaries to forward these proxy +materials to their principals and to obtain authority to execute proxies. We will then reimburse them for their expenses. +What Constitutes a Quorum for the Annual Meeting? +The presence, in person or by proxy, of the holders of a majority of the voting power of all outstanding shares of our common stock entitled to +vote at the annual meeting is necessary to constitute a quorum at the annual meeting. Votes of stockholders of record who are present at the annual meeting in person or by proxy, abstentions, and +broker non-votes are counted for purposes of determining whether a quorum exists. +Attending the Annual Meeting +The annual meeting will be held at 10:00 a.m. ET on Thursday, July 25, 2019 at our offices, located at 900 Middlesex Turnpike, +Building 1, Billerica, Massachusetts 01821. When you arrive, +signs will direct you to the appropriate meeting rooms. You need not attend the annual meeting in order to vote. +Householding of Annual Disclosure Documents +SEC rules concerning the delivery of annual disclosure documents allow us or your broker to send a single Notice or, if applicable, a single set +of our proxy materials to any household at which two or more of our stockholders reside, if we or your broker believe that the stockholders are members of the same family. This practice, referred to +as "householding," benefits both you and us. It reduces the volume of duplicate information received at your household and helps to reduce our expenses. The rule applies to our Notices, annual +reports, proxy statements and information statements. Once you receive notice from your broker or from us that communications to your address will be "householded," the practice will continue until +you are otherwise notified or until you revoke your consent to the practice. Stockholders who participate in householding will continue to have access to and utilize separate proxy voting +instructions. +If +your household received a single Notice or, if applicable, a single set of proxy materials this year, but you would prefer to receive your own copy, please contact our transfer agent, +Computershare Trust Company, N.A., by calling their toll free number, 1-800-736-3001. +If +you do not wish to participate in "householding" and would like to receive your own Notice or, if applicable, set of our proxy materials in future years, follow the instructions +described below. Conversely, if you share an address with another stockholder and together both of you would like to receive only a single Notice or, if applicable, set of proxy materials, follow +these instructions: +• If your shares are registered in your own name, please contact our transfer agent, Computershare Trust Company, N.A., and inform them of your +request by calling them +5 +Table of Contents +at 1-800-736-3001 +or writing them at Computershare Trust Company, N.A., P.O. Box 505000, Louisville, KY 40233-5000. +• If a broker or other nominee holds your shares, please contact the broker or other nominee directly and inform them of your request. Be sure to +include your name, the name of your brokerage firm and your account number. +Electronic Delivery of Company Stockholder Communications +Most stockholders can elect to view or receive copies of future proxy materials over the Internet instead of receiving paper copies in the mail. +You +can choose this option and save the Company the cost of producing and mailing these documents by: +• following the instructions provided on your Notice or proxy card; +• following the instructions provided when you vote over the Internet; or +• going to www.computershare.com and logging into the Investor Center to follow the instructions provided. +6 +Table of Contents +SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT +The following table sets forth certain information with respect to the beneficial ownership of our common stock as of May 15, 2019 for +(a) the executive officers named in the Summary Compensation Table on page 21 of this proxy statement, (b) each of our directors and director nominees, (c) all of our +current directors and executive officers as a group and (d) each stockholder known by us to own beneficially more than 5% of our common stock. Beneficial ownership is determined in accordance +with the rules of the SEC and includes voting or investment power with respect to the securities. We deem shares of common stock that may be acquired by an individual or group within 60 days of +May 15, 2019 pursuant to the exercise of options, warrants or the vesting of restricted stock units to be outstanding for the purpose of computing the percentage ownership of such individual or +group, but are not deemed to be outstanding for the purpose of computing the percentage ownership of any other person shown in the table. Except as indicated in footnotes to this table, we believe +that the stockholders named in this table have sole voting and investment power with respect to all shares of common stock shown to be beneficially owned by them based on information provided to us by +these +stockholders. Percentage of ownership is based on 22,608,199 shares of common stock outstanding on May 15, 2019. +Shares Beneficially +Owned(1) +Name and Address of Beneficial Owner +Number +Percent +Principal Stockholders +ARCH Venture Partners and affiliated funds(1) +8755 West Higgins Avenue, Suite 1025 +Chicago, IL 60631 +3,949,684 +17.5 +% +Bain Capital Ventures Entities(2) +200 Clarendon Street +Boston, MA 02116 +2,136,085 +9.4 +% +bioMérieux SA(3) +376 Chemin de l'Orme, +69280 Marcy l'Étoile, France +2,055,632 +9.1 +% +Flagship Ventures Fund 2004, L.P.(4) +55 Cambridge Parkway, Suite 800E +Cambridge, MA 02142 +2,030,495 +9.0 +% +Directors, Director Nominees and Named Executive Officers +E. Kevin Hrusovsky(5) +1,146,482 +5.0 +% +Douglas G. Cole, M.D.(6) +10,170 +* +John M. Connolly(7) +12,870 +* +Keith L. Crandell(8) +3,960,356 +17.5 +% +Marijn Dekkers, Ph.D.(9) +137,916 +* +Martin D. Madaus, Ph.D.(10) +322,028 +1.4 +% +Sarah E. Hlavinka +— +— +Paul M. Meister(11) +34,092 +* +David Walt, Ph.D.(12) +1,225,670 +5.4 +% +Dawn R. Mattoon, Ph.D.(13) +25,826 +* +Jackson Streeter, M.D. +— +— +All directors and current executive officers as a group ( 13 persons)(14) +7,178,438 +30.8 +% +* Represents +beneficial ownership of less than 1% of the outstanding shares of our common stock. +(1) Based +on a Schedule 13G/A filed by ARCH Venture Fund VI, L.P. ("ARCH Venture Fund VI"); ARCH Venture Fund VIII Overage, L.P. ("AVF VIII +Overage"); ARCH Venture Partners VI, L.P. +7 +Table of Contents +("AVP +VI LP"); ARCH Venture Partners VI, LLC ("AVP VI LLC"); ARCH Venture Partners VIII, LLC ("AVP VIII LLC"); and Keith Crandell ("Crandell"), Clinton Bybee +("Bybee") and Robert Nelsen ("Nelsen") (collectively, the "Managing Directors" and individually, each a "Managing Director") with the SEC on February 14, 2019, which reported ownership as of +December 31, 2018. ARCH Venture Fund VI is the record owner of 2,412,000 shares of common stock, which includes 10,333 shares of common stock issuable upon the exercise of warrants (the "ARCH +VI Shares") and AVF VIII Overage is the record holder of 1,537,684 shares of common stock (the "ARCH Overage Shares"; combined with ARCH VI Shares, the "Arch Shares") as of December 31, 2018. +AVP VI LP, as the sole general partner of ARCH Venture Fund VI, may be deemed to beneficially own the AVF VI Shares. AVP VI LLC, as the sole general partner of AVP VI LP, may be +deemed to beneficially own the AVF VI Shares. AVP VIII LLC, as the sole general partner of AVF VIII Overage, may be deemed beneficially own the ARCH Overage Shares. As managing directors of AVP +VI LLC and AVP VIII LLC, each Managing Director may also be deemed to share the power to direct the disposition and vote of the ARCH Shares. The Managing Directors disclaim beneficial +ownership of the ARCH Shares, except to the extent of any pecuniary interest therein. +(2) Based +on a Schedule 13G filed by (1) Bain Capital Venture Fund 2005, L.P. ("Fund 2005"), (2) BCIP Associates III, LLC ("BCIP +III"), and (3) BCIP Associates III-B, LLC ("BCIP III-B" and together with Fund 2005 and BCIP III, the "Bain Capital Entities") with the SEC on February 14, 2018, which reported +ownership as of December 31, 2017. Bain Capital Venture Investors, LLC, a Delaware limited liability company ("BCVI"), is the general partner of Bain Capital Venture Partners +2005, L.P. ("BCVP"), which is the general partner of Fund 2005. Boylston Coinvestors, LLC ("Boylston"), is the managing partner of (i) BCIP Associates III ("BCIPA III"), which is +the manager of BCIP III, and (ii) BCIP Associates III-B ("BCIPA III-B"), which is the manager of BCIP III-B. The governance, investment strategy and decision-making process with respect to the +investments held by all of the Bain Capital Entities is directed by the Executive Committee of BCVI, which consists of Michael A. Krupka and Ajay Agarwal. As a result, BCVI and Messrs. Krupka +and Agarwal may be deemed to share voting and dispositive power with respect to all of the shares of common stock held by all of the Reporting Persons. As of December 31, 2017, Fund 2005 held +1,865,010 shares of common stock, which includes 8,931 shares of common stock issuable upon the exercise of warrants, BCIP III held 265,727 shares of common stock, which includes and 1,272 shares of +common stock issuable upon the exercise of warrants, and BCIP III-B held 5,348 shares of common stock, which includes 25 shares of common stock issuable upon the exercise of warrants. As a result of +the foregoing, the Bain Capital Entities may collectively be deemed to beneficially own in the aggregate 2,136,085 shares of common stock. +(3) Based +on a Schedule 13G filed by bioMérieux SA ("bioMérieux") with the SEC on February 14, 2018, which reported +ownership as of December 31, 2017. The board of directors of bioMérieux consists of Jean-Luc Belingard, Alexandre Mérieux, Alain Mérieux, +Marie-Hélène Habert, Michele Palladino, Philippe Gillet, Agnès Lemarchand, Philippe Archinard, and Harold Boël, who have shared investment +and voting control with respect to the shares held by bioMérieux and may exercise such control only with the support of the majority of the members of the board of directors of +bioMérieux. No individual member of the board of directors of bioMérieux is deemed to hold any beneficial ownership or reportable pecuniary interest in the shares held by +bioMérieux. +(4) Based +on a Schedule 13G filed by Flagship Ventures Fund 2004, L.P. ("Fund 2004"), Flagship Ventures General Partner LLC ("Fund 2004 GP"), +Noubar B. Afeyan, Ph.D. ("Dr. Afeyan"), and Edwin M. Kania, Jr. ("Mr. Kania") with the SEC on February 14, 2018, which reported ownership as of December 31, 2017. As the +general partner of Fund 2004, Fund 2004 GP may be deemed to beneficially own shares of common stock directly held by Fund 2004. Messrs. Afeyan and Kania, as Managers of Fund +2004 GP, may be deemed to beneficially own shares of common stock +8 +Table of Contents +beneficially +owned by Fund 2004 GP. Douglas G. Cole, M.D., a member of our board of directors, is a managing partner of Flagship Pioneering and a member of the Flagship Ventures General +Partner LLC ("GP"), the sole general partner of Fund 2004. Dr. Cole does not have either voting or investment control over Fund 2004's shares and he disclaims beneficial ownership of +such shares, except to the extent of his pecuniary interest therein. +(5) Consists +of 951,180 shares of common stock (which includes 39,815 shares of restricted stock subject to performance-based vesting), 181,480 shares of common stock +issuable upon the exercise of stock options exercisable within 60 days of May 15, 2019 and 13,822 shares of common stock issuable upon the vesting of RSUs within 60 days of +May 15, 2019 held by Mr. Hrusovsky. +(6) Consists +of 2,270 shares of common stock and 7,900 shares of common stock issuable upon the exercise of stock options exercisable within 60 days of +May 15, 2019 held by Dr. Cole. Dr. Cole is a managing partner of Flagship Pioneering but has no voting or investment power with respect to the securities described in footnote 4. +(7) Consists +of 4,970 shares of common stock and 7,900 shares of common stock issuable upon the exercise of stock options exercisable within 60 days of +May 15, 2019 held by Mr. Connolly. Mr. Connolly is a senior advisor for Bain Capital Ventures but has no voting or investment power with respect to the securities described in +footnote 2. +(8) See +footnote 1. Also includes 2,772 shares of common stock and 7,900 shares of common stock issuable upon the exercise of stock options exercisable within +60 days of May 15, 2019 held by Mr. Crandell. Mr. Crandell disclaims beneficial ownership of the securities described in footnote 1 except to the extent of his pecuniary +interest therein, if any. +(9) Consists +of 119,648 shares of common stock and 18,268 shares of common stock issuable upon the exercise of stock options exercisable within 60 days of +May 15, 2019 held by Dr. Dekkers. +(10) Consists +of 2,991 shares of common stock held by Dr. Madaus, 94,071 shares of common stock issuable upon the exercise of stock options exercisable within +60 days of May 15, 2019 held by Dr. Madaus and 224,966 shares of common stock held by a trust for which Dr. Madaus is a trust advisor who shares voting and investment power +over the shares held by the trust. +(11) Consists +of 2,857 shares of common stock and 31,235 shares of common stock issuable upon the exercise of stock options exercisable within 60 days of +May 15, 2019 held by Mr. Meister. Does not include 120,035 shares of common stock held by Woburn Abbey March 2009 Trust, U.D.T. March 31, 2009 as Mr. Meister does not have +voting or investment power over the shares held by the trust. +(12) Consists +of 1,217,770 shares of common stock and 7,900 shares of common stock issuable upon the exercise of stock options exercisable within 60 days of +May 15, 2019 held by Dr. Walt. Does not include 200,684 shares of common stock held by The David R. Walt 2008 Irrevocable Family Trust (the "Walt Trust"), of which his spouse is trustee +and has sole voting and investment power over the shares held by the Walt Trust. +(13) Consists +of 3,290 shares of common stock, 21,800 shares of common stock issuable upon the exercise of stock options exercisable within 60 days of +May 15, 2019, and 736 shares of common stock issuable upon the vesting of RSUs within 60 days of May 15, 2019 held by Dr. Mattoon. +(14) See +footnotes 5 through 13. Also includes an aggregate of 36,673 shares of common stock, 265,830 shares of common stock issuable upon the exercise of stock options +exercisable within 60 days of May 15, 2019 and 525 shares of common stock issuable upon the vesting of RSUs within 60 days of May 15, 2019 held by David C. Duffy, Ph.D., +our Senior Vice President, Research & Development and Chief Technology Officer, Mark T. Roskey, Ph.D., our Senior Vice President, Commercial and Accelerator, and Amol Chaubal, our Chief +Financial Officer. +9 +Table of Contents +MANAGEMENT AND CORPORATE GOVERNANCE +The Board of Directors +Our restated certificate of incorporation and our restated bylaws provide that our business is to be managed by or under the direction of our +board of directors. Our board of directors is divided into three classes for purposes of election. One class is elected at each annual meeting of stockholders to serve for a three-year term. Our board +of directors currently consists of eight members, classified into three classes as follows: (1) Douglas G. Cole, M.D., Marijn Dekkers, Ph.D. and David R. Walt, Ph.D. constitute Class II +with a term ending at the 2019 annual meeting; (2) Keith L. Crandell, E. Kevin Hursovsky and Paul M. Meister constitute Class III with a term ending at the 2020 annual meeting; and +(3) John M. Connolly and Martin D. Madaus, Ph.D. constitute Class I with a term ending at the 2021 annual meeting. Sarah E. Hlavinka has been nominated for election at the 2019 annual +meeting, along with Dr. Dekkers and Dr. Walt, to serve as the Class II directors. +Our +board of directors accepted the recommendation of the nominating and governance committee and voted to nominate Marijn Dekkers, Ph.D., Sarah E. Hlavinka and David R. Walt, Ph.D. for +election at the annual meeting for a term of three years to serve until the 2022 annual meeting of stockholders, and until their respective successors have been elected and qualified. +Set +forth below are the names of the persons nominated as directors and directors whose terms do not expire this year, their ages, their offices in the Company, if any, their principal +occupations or employment for at least the past five years, the length of their tenure as directors and the names of other public companies in which such persons hold or have held directorships during +the past five years, as of May 15, 2019. Additionally, information about the specific experience, qualifications, attributes or skills that led to our board of directors' conclusion at the time +of filing of this proxy statement that each person listed below should serve as a director is set forth below: +Name +Age +Position with the Company +E. Kevin Hrusovsky +58 +Chairman, President and Chief Executive Officer +John M. Connolly(1)(3) +67 +Director +Keith L. Crandell(2) +59 +Director +Marijn Dekkers, Ph.D.(3) +61 +Director +Sarah E. Hlavinka +54 +Director Nominee +Martin D. Madaus, Ph.D.(1)(3) +59 +Director +Paul M. Meister(1) +66 +Director +David R. Walt, Ph.D.(2) +66 +Director +(1) Member +of our audit committee +(2) Member +of our compensation committee +(3) Member +of our nominating and governance committee +Our +board of directors has reviewed the materiality of any relationship that each of our directors and director nominees has with Quanterix Corporation, either directly or indirectly. +Based upon this review, our board of directors has determined that the following directors and director nominees are "independent directors" as defined by The Nasdaq Stock Market: Douglas G. Cole, +M.D., John M. Connolly, Keith L. Crandell, Marijn Dekkers, Ph.D., Sarah E. Hlavinka, Martin D. Madaus, Ph.D., Paul M. Meister and David R. Walt, Ph.D. +E. Kevin Hrusovsky has been a member of our board of directors and our Chairman since June 2014 and our President and Chief Executive +Officer since January 2015. Prior to joining us, Mr. Hrusovsky served as Senior Vice President of PerkinElmer, Inc., a publicly traded company that produces analytical instruments, +genetic testing and diagnostic tools, medical imaging components, +10 +Table of Contents +software, +instruments and consumables for multiple end markets, from February 2012 to May 2013 and served as President of the Life Sciences and Technology business unit of PerkinElmer, Inc. +from November 2011 to May 2013. From May 2013 through September 2013, he served as a consultant to PerkinElmer. Previously, Mr. Hrusovsky served as Chief Executive Officer and President of +Caliper Life Sciences, Inc., a life sciences company that developed and sold lab automation equipment, from July 2003 to November 2011 when it was acquired by PerkinElmer, Inc. Prior to +that, he served as Chief +Executive Officer and President of Zymark, a company that provided laboratory automation, robotics, and liquid handling solutions, and Director of International Business, Agricultural Chemical +Division, and President of the Pharmaceutical Division for FMC Corporation, a publicly traded chemical manufacturing company. He also held several management positions at E.I. DuPont de Nemours, a +publicly traded chemical manufacturing company. Mr. Hrusovsky serves on the boards of directors of several private companies, including BioreclamationIVT, LLC, Cellaria, Cell Signaling +Technology, Inc., 908 Devices Inc., and Solect Energy Development, LLC, and is the founder of the Powering Precision Health Summit, an executive think tank of researchers, +scientists, physicians and innovators focused on the latest research on new biomarkers that have the potential to advance personalized medicine. Mr. Hrusovsky also serves on the Educational +Board of the Massachusetts Biotech Council, the Advisory Committee for the Center for Biomedical Engineering at Brown University, the Association for Laboratory Automation, the JALA Editorial Board +and the Strategy Committee of Children's Hospital Boston. He formerly served on the boards of SynapDx Corp., SeraCare, Caliper Life Sciences, Xenogen—XGEN and Alliant Medical Technology. +He was selected as the 2013 Entrepreneur of the Year from Ohio State University and holds an Honorary Doctorate degree from Framingham State University for contributions in life sciences and personal +medicine. Mr. Hrusovsky has a B.S. in mechanical engineering from Ohio State University and an M.B.A. from Ohio University. Our board of directors has concluded that Mr. Hrusovsky +possesses specific attributes that qualify him to serve as a member of our board of directors, including the perspective and experience he brings as our President and Chief Executive Officer, which +provides our board with historic knowledge, operational expertise and continuity. +John M. Connolly has served as a member of our board of directors since December 2012. Since December 2015, Mr. Connolly has served +as a senior advisor for Bain Capital Ventures, a venture capital firm he joined in 2009. Mr. Connolly was previously a managing director at Bain Capital Ventures from September 2009 to January +2015. Mr. Connolly also served as Interim Chief Executive Officer of Education Holdings 1, Inc. from May 2012 to September 2012, Interim President and Chief Executive Officer of The +Princeton Review from March 2011 to April 2012, Chairman of the board of directors of EDGAR Online, Inc. from March 2011 to August 2012 and Interim President and Chief Executive Officer of +EDGAR Online, Inc. from September 2010 to March 2011. Prior to that, Mr. Connolly served as President and Chief Executive Officer of M--C Communications, Inc., a leading provider +of continuing medical education in the United States, from March 2007 to July 2009, and as Chairman of the board of directors of M--C Communications, Inc. from August 2009 to August 2010. Prior +to that, from March 2004 to March 2007, Mr. Connolly served as President and Chief Executive Officer of Institutional Stockholder Services Inc., which provides proxy voting, corporate +governance, compliance, and risk management solutions. Education Holdings 1, Inc. filed a voluntary chapter 11 bankruptcy petition in January 2013. Mr. Connolly has a B.A. from +St. Norbert College and an Executive Education Degree from the Executive Education Program at INSEAD which is located in Fontainebleau, France. Our board of directors has concluded that +Mr. Connolly possesses specific attributes that qualify him to serve as a member of our board of directors, including his substantial experience as an investor in emerging companies as well as +his significant managerial and corporate governance experience. +Keith L. Crandell has served as a member of our board of directors since June 2007. Since July 1994, Mr. Crandell has served as a +managing director of ARCH Venture Partners, a venture capital firm focused on early-stage technology companies. He serves on the board of directors of Adesto +11 +Table of Contents +Technologies +Corporation, a publicly traded provider of application-specific and ultra-low power non-volatile memory products, and of Twist Bioscience Corporation, a publicly traded synthetic biology +company. He is also a director of several private companies and he also serves as a director of the Illinois Venture Capital Association. Mr. Crandell has a B.S. degree in chemistry and +mathematics from St. Lawrence University, an M.S. degree in chemistry from the University of Texas at Arlington and an M.B.A. from the University of Chicago. Our board of directors has +concluded that Mr. Crandell possesses specific attributes that qualify him to serve as a member of our board of directors, including his financial expertise and his substantial experience as an +investor in emerging companies. +Marijn Dekkers, Ph.D. has served as a member of our board of directors since March 2017. He is the founder and Chairman of Novalis +LifeSciences LLC, an investment and advisory firm for the life science industry. Since April 2016, he has served as Chairman of the board of directors of Unilever. From 2010 to 2016, +Dr. Dekkers was Chief Executive Officer of Bayer AG in Leverkusen, Germany. From 2000 to 2002, he was the Chief Operating Officer at Thermo Electron Corporation (later renamed Thermo Fisher +Scientific Inc.). In 2002, he became Thermo Fisher's President and Chief Executive Officer, where he served until 2009. Dr. Dekkers began his career in 1985 as a research scientist at +General Electric Company. He holds a degree in chemistry from Radboud University in Nijmegen, the Netherlands, and a Ph.D. in chemical engineering from the University of Eindhoven. Our board of +directors has concluded that Dr. Dekkers possesses specific attributes that qualify him to serve as a member of our board of directors, including his substantial experience leading commercial +stage healthcare companies and his significant corporate governance experience. +Sarah E. Hlavinka has been nominated by our board of directors for election at the annual meeting. Since August 2018, Ms. Hlavinka +has served as Senior Vice President, General Counsel and Secretary of Itron, Inc., a publicly-traded technology and services company focused on critical infrastructure solutions. Prior to +joining Itron, from January 2017 to July 2018, Ms. Hlavinka served as Executive Vice President, General Counsel and Secretary of Xerox Corporation, a publicly-traded document management systems +and solutions company. Prior to joining Xerox Corporation, from September 2007 to January 2017, Ms. Hlavinka served as Executive Vice President, General Counsel and Secretary of ABM Industries +Incorporated, a publicly-traded integrated facility services provider. Ms. Hlavinka holds a J.D. from the University of Texas School of Law and a B.A. in history from Texas A&M University. Our +board of directors has concluded that Ms. Hlavinka possesses specific attributes that qualify her to serve as a member of our board of directors, including her significant experience as a +senior executive of global companies operating in a variety of industries and her substantial expertise in corporate governance and risk management. +Martin D. Madaus, Ph.D. has served as a member of our board of directors since November 2010. Dr. Madaus previously served as our +Executive Chairman from November 2010 to June 2014, as our Chief Executive Officer from October 2011 to July 2012 and as our President from June 2011 to July 2012. Since February 2019, he has served +as Operating Executive to The Carlyle Group, a multinational private equity, alternative asset management and financial services corporation. From June 2014 to February 2019, Dr. Madaus served +as Chairman and Chief Executive Officer at Ortho-Clinical Diagnostics, Inc., a diagnostics company that makes products and diagnostic equipment for blood +testing. Previously, Dr. Madaus was the Chairman, President and Chief Executive Officer of Millipore Corporation (MIL), a life sciences company serving the bioscience research and +biopharmaceutical manufacturing industry, from January 2005 to July 2010, when Millipore was acquired by Merck KGaA. From July 2009 to May 2015, Dr. Madaus served as a member of the board of +directors of Mettler Toledo International, a manufacturer of scales and analytical instruments. Dr. Madaus received a Doctor of Veterinary Medicine from the University of Munich in Germany and +a Ph.D. in Veterinary Medicine from the Veterinary School of Hanover in Germany. Dr. Madaus has extensive public and private company board experience and our board of directors has concluded +that Dr. Madaus possesses +12 +Table of Contents +specific +attributes that qualify him to serve as a member of our board of directors, including his substantial knowledge of and managerial experience in the diagnostics industry. +Paul M. Meister has served as a member of our board of directors since September 2013. Mr. Meister is Co-Founder, and since 2008, +Chief Executive Officer, of Liberty Lane Partners, LLC, a private investment company with diverse investments in healthcare, technology and distribution-related industries, and is Vice Chairman +and Co-Founder of Perspecta Trust, a New Hampshire-based trust company. Mr. Meister served as President of MacAndrews & Forbes from 2014 to 2018. Mr. Meister also served as +Executive Vice Chairman of Revlon, Inc., a leading beauty products company, on an interim basis from January 2018 to November 2018, when the Chief Executive Officer of Revlon, Inc. +resigned. Mr. Meister previously served as Chairman and Chief Executive Officer of inVentiv Health (now known as Syneos Health, Inc.), a provider of commercial, consulting and clinical +research services to the pharmaceutical and biotech industries, from 2010 to 2015. Mr. Meister was Chairman of Thermo Fisher Scientific, Inc., a scientific instruments equipment and +supplies company, from November 2006 to April 2007. He was previously Vice Chairman of Fisher Scientific International, Inc., a predecessor of Thermo Fisher Scientific, Inc., from 2001 +to 2006, and Chief Financial Officer of Fisher Scientific International, Inc. from 1991 to 2001. Prior to joining Fisher Scientific International, Inc., Mr. Meister held executive +positions with the Henley Group, Wheelabrator Technologies and Abex, Inc. Mr. Meister has served as a director of Scientific Games Corporation, which provides customized, end-to-end +solutions to the gaming industry, since 2012. He also previously served as a director of LKQ Corporation, a distributor of vehicle products, from 1999 to 2018, and vTv Therapeutics, Inc., a +clinical-stage biopharmaceutical company, from 2015 to 2018 and Revlon, Inc. from 2016 to 2019. Mr. Meister is Co-Chair of the University of Michigan's Life Sciences Institute External +Advisory Board and Chair of the Provost's Advisory Committee. Mr. Meister has an M.B.A. from Northwestern University and a B.A. from the University of Michigan. Our board of directors has +concluded that Mr. Meister possesses specific attributes that qualify him to serve as a member of our board of directors, including his financial and investment expertise and his extensive +knowledge of the life sciences industry. +David R. Walt, Ph.D. has served as a member of our board of directors since April 2007. Dr. Walt was our founding scientist and +serves as chairman of our scientific advisory board. Dr. Walt currently serves as Hansjörg Wyss Professor of Biologically Inspired Engineering and Professor of Pathology at +Harvard Medical School in the Department of Pathology at the Brigham and Women's Hospital and is a core +faculty member of the Wyss Institute for Biologically Inspired Engineering. He is also a Howard Hughes Medical Institute Professor. He previously served as University Professor, Professor of +Chemistry, Professor of Biomedical Engineering, Professor of Genetics, Professor of Neuroscience, Professor of Cell and Molecular Biology, and Professor of Oral Medicine at Tufts University, from +1981-2017. Dr. Walt was also the founding scientist of Illumina, Inc. and served as a member of the board of its directors from 1998-2016. He served on the board of directors of Cerulean +Pharma Inc. (which was acquired by Daré Bioscience, Inc.) from August 2016 to July 2017. Dr. Walt was also a founder and currently serves as a member of the board +of directors of Ultivue, Inc., Arbor Biotechnologies, Inc. and Sherlock Biosciences, Inc. and serves as a member of the board of directors of Exicure, Inc. He has received +numerous national and international awards and honors for his fundamental and applied work in the field of optical sensors, microwell arrays and single molecule detection. He is a member of the U.S. +National Academy of Engineering, U.S. National Academy of Medicine, American Academy of Arts and Sciences, a fellow of the American Institute for Medical and Biological Engineering, a fellow of the +National Academy of Inventors, and a fellow of the American Association for the Advancement of Science. Dr. Walt has a B.S. in Chemistry from the University of Michigan and a Ph.D. in Chemical +Biology from Stony Brook University. Our board of directors has concluded that Dr. Walt possesses specific attributes that qualify him to serve as a member of our board of directors, including +his experience in developing life sciences companies and his expertise in chemistry, diagnostics technologies and biomedical engineering. +13 +Table of Contents +There are no family relationships between or among any of our directors or director nominees. The principal occupation and employment during the past five years +of each of our directors and director nominees was carried on, in each case except as specifically identified above, with a corporation or organization that is not a parent, subsidiary or other +affiliate of us. There is no arrangement or understanding between any of our directors or nominees and any other person or persons pursuant to which he or she is to be selected as a director or +nominee. +There +are no legal proceedings to which any of our directors is a party adverse to us or any of our subsidiaries or in which any such person has a material interest adverse to us or any +of our subsidiaries. +Committees of the Board of Directors and Meetings +Meeting Attendance. During the fiscal year ended December 31, 2018, our board of directors met four times and acted by +written consent on four +occasions. During the fiscal year ended December 31, 2018, the various committees of the board of directors met a total of six times and acted by written consent on five occasions. No director +attended fewer than 75% of the total number of meetings of the board and of committees of the board on which such director served during fiscal 2018. Our board of directors has adopted a policy under +which each member of the board is encouraged but not required to attend each annual meeting of our stockholders. The directors did not attend our 2018 annual meeting of stockholders. +Audit Committee. Our audit committee met four times and acted by written consent on one occasion during the fiscal year ended +December 31, +2018. This committee currently has three members, Paul M. Meister (Chairman), John M. Connolly and Martin D. Madaus, Ph.D. Our audit committee's role and responsibilities are set forth in the audit +committee's written charter and include: +• selecting a firm to serve as the independent registered public accounting firm to audit our financial statements; +• ensuring the independence of the independent registered public accounting firm; +• discussing the scope and results of the audit with the independent registered public accounting firm, and reviewing, with management and that +firm, our interim and year-end operating results; +• establishing procedures for employees to anonymously submit concerns about questionable accounting or audit matters; +• considering the effectiveness of our internal controls and, if any, our internal audit function; +• reviewing material related-party transactions or those that require disclosure; and +• approving or, as permitted, pre-approving all audit and non-audit services to be performed by the independent registered public accounting +firm. +Except +as noted below, all members of the audit committee satisfy the current independence standards promulgated by the Securities and Exchange Commission, or the SEC, and by The Nasdaq +Stock Market, as such standards apply specifically to members of audit committees. Our board of directors has determined that Paul M. Meister is an "audit committee financial expert," as the SEC has +defined that term in Item 407 of Regulation S-K. +A +copy of the audit committee's written charter is publicly available on our website at www.quanterix.com. +Compensation Committee. Our compensation committee met two times and acted by written consent on three occasions during the +fiscal year ended +December 31, 2018. This committee currently has three members, Keith L. Crandell (Chairman), Douglas G. Cole, M.D. and David R. Walt, Ph.D. +14 +Table of Contents +Our +compensation committee's role and responsibilities are set forth in the compensation committee's written charter and includes: +• reviewing and approving, or recommending that our board of directors approve, the compensation of our executive officers; +• reviewing and recommending to our board of directors the compensation of our directors; +• reviewing and recommending to our board of directors the terms of any compensatory agreements with our executive officers; +• administering our 2017 Employee, Director and Consultant Equity Incentive Plan, 2007 Stock Option and Grant Plan, as amended, and 2017 Employee +Stock Purchase Plan; +• reviewing and approving, or making recommendations to our board of directors with respect to, incentive compensation and equity plans; and +• reviewing all overall compensation policies and practices. +The +compensation committee is also responsible for the determination of the compensation of our chief executive officer, and will conduct its decision making process with respect to that +issue without the chief executive officer present. Our board of directors has determined that all members of the compensation committee qualify as "independent" under the definition promulgated by The +Nasdaq Stock Market. +The +compensation committee has the authority to retain or obtain the advice of such compensation consultants, legal counsel, experts and other advisors as it may deem appropriate in its +sole discretion. The compensation committee is directly responsible for the appointment, compensation and oversight of its consultants, legal counsel, experts and advisors and has sole authority to +approve their fees and retention terms, and the Company will provide funding for such fees and related expenses. Before selecting any such consultant, legal counsel, expert or advisor, the +compensation committee must consider the following independence factors: +• The provision of other services to the Company by the entity that employs the consultant, legal counsel, expert or advisor. +• The amount of fees received from the Company by the entity that employs the consultant, legal counsel, expert or advisor as a percentage of the +total revenue of such entity. +• The policies and procedures of the entity that employs the consultant, legal counsel, expert or advisor that are designed to prevent conflicts +of interest. +• Any business or personal relationship of the consultant, legal counsel, expert or advisor with a member of the compensation committee or an +executive officer of the company. +• Any of our stock owned by the consultant, legal counsel, expert or advisor. +• Any business or personal relationship the consultant, legal counsel, expert or advisor has with an executive officer of the company. +The +compensation committee engaged Pay Governance as an independent advisor to the compensation committee providing executive compensation consulting services for the fiscal year ended +December 31, 2018 and for the fiscal year ending December 31, 2019. Pay Governance was engaged by and reports to the compensation committee. Pay Governance is not expected to provide any +services to the Company other than executive compensation consulting services during the fiscal year ending December 31, 2019. In compliance with the SEC and the corporate governance rules of +The Nasdaq Stock Market, Pay Governance has provided the compensation committee with a letter addressing each of the six independence factors noted above. Their responses affirm the independence of +Pay +15 +Table of Contents +Governance +and the partners, consultants, and employees who service the compensation committee on executive compensation matters and governance issues. +A +copy of the compensation committee's written charter is publicly available on our website at www.quanterix.com. +Nominating and Governance Committee. Our nominating and governance committee, or "nominating committee", acted by written +consent on one occasion +during the fiscal year ended December 31, 2018 and has three members, Marijn Dekkers, Ph.D. (Chairman), John M. Connolly and Martin D. Madaus, Ph.D. Our board of directors has determined that +all members of the nominating committee qualify as independent under the definition promulgated by The Nasdaq Stock Market. The nominating committee's responsibilities are set forth in the nominating +committee's written charter and include: +• identifying and recommending candidates for membership on our board of directors; +• recommending directors to serve on board committees; +• reviewing and recommending our corporate governance guidelines and policies; +• reviewing proposed waivers of the code of conduct for directors and executive officers; +• evaluating, and overseeing the process of evaluating, the performance of our board of directors and individual directors; and +• assisting our board of directors on corporate governance matters. +Generally, +our nominating committee considers candidates recommended by stockholders as well as from other sources such as other directors or officers, third party search firms or other +appropriate sources. Once identified, the nominating committee will evaluate a candidate's qualifications in accordance with our Nominating and Governance Committee Policy Regarding Qualifications of +Directors appended to our nominating committee's written charter. Threshold criteria include: personal integrity and sound judgment, business and professional skills and experience, independence, +knowledge of our industry, possible conflicts of interest, diversity, the extent to which the candidate would fill a present need on the board of directors, and concern for the long-term interests of +our stockholders. Our nominating committee has not adopted a formal diversity policy in connection with the consideration of director nominations or the selection of nominees. However, the nominating +committee will consider issues of diversity among its members in identifying and considering nominees for director, and strive where appropriate to achieve a diverse balance of backgrounds, +perspectives, experience, age, gender, ethnicity and country of citizenship on the board and its committees. +If +a stockholder wishes to propose a candidate for consideration as a nominee for election to the Board, it must follow the procedures described in our restated bylaws and in +"Stockholder Proposals +and Nominations For Director" at the end of this proxy statement. In general, persons recommended by stockholders will be considered in accordance with our Policy on Shareholder Recommendation of +Candidates for Election as Directors appended to our nominating committee's written charter. Any such recommendation should be made in writing to the nominating committee, care of our Corporate +Secretary at our principal office and should be accompanied by the following information concerning each recommending stockholder and the beneficial owner, if any, on whose behalf the nomination is +made: +• all information relating to such person that would be required to be disclosed in a proxy statement; +• certain biographical and share ownership information about the stockholder and any other proponent, including a description of any derivative +transactions in our securities; +16 +Table of Contents +• a description of certain arrangements and understandings between the proposing stockholder and any beneficial owner and any other person in +connection with such stockholder nomination; and +• a statement whether or not either such stockholder or beneficial owner intends to deliver a proxy statement and form of proxy to holders of +voting shares sufficient to carry the proposal. +The +recommendation must also be accompanied by the following information concerning the proposed nominee: +• certain biographical information concerning the proposed nominee; +• all information concerning the proposed nominee required to be disclosed in solicitations of proxies for election of directors; +• certain information about any other security holder of the Company who supports the proposed nominee; +• a description of all relationships between the proposed nominee and the recommending stockholder or any beneficial owner, including any +agreements or understandings regarding the nomination; and +• additional disclosures relating to stockholder nominees for directors, including completed questionnaires and disclosures required by our +restated bylaws. +A +copy of the nominating committee's written charter, including its appendices, is publicly available on our website at www.quanterix.com . +Compensation Committee Interlocks and Insider Participation +Our compensation committee has three members, Keith L. Crandell (Chairman), Douglas G. Cole, M.D. and David R. Walt, Ph.D. None of the +members of our compensation committee has at any time during the prior three years been one of our officers or employees. None of our executive officers currently serves, or in the past fiscal year +has served, as a member of the board of +directors or compensation committee of any entity that has one or more executive officers serving on our board of directors or compensation committee. For a description of transactions between us and +members of our compensation committee and affiliates of such members, please see "Certain Relationships and Related Person Transactions." +Board Leadership Structure and Role in Risk Oversight +Our board of directors does not have a policy regarding the separation of the roles of Chief Executive Officer and Chairman of the board of +directors, as our board of directors believes it is in the best interest of the Company to make that determination based on the position and direction of the Company and the membership of the board of +directors. Our board of directors has determined that having an employee director serve as Chairman is in the best interest of our stockholders at this time because of the efficiencies achieved in +having the role of Chief Executive Officer and Chairman combined, and because the detailed knowledge of our day-to-day operations and business that the Chief Executive Officer possesses greatly +enhances the decision-making processes of our board of directors as a whole. We have a strong governance structure in place, including independent directors, to ensure the powers and duties of the +dual role are handled responsibly. Martin D. Madaus, Ph.D. serves as our lead independent director. +The +Chairman of the board of directors, the lead independent director and the other members of the board of directors work in concert to provide oversight of our management and affairs. +Our board of directors encourages communication among its members and between management and the board of +17 +Table of Contents +directors +to facilitate productive working relationships. Working with the other members of the board of directors, our Chairman also strives to ensure that there is an appropriate balance and focus +among key board responsibilities such as strategic development, review of operations and risk oversight. +Risk +is inherent with every business, and how well a business manages risk can ultimately determine its success. Our board of directors is actively involved in oversight of risks that +could affect the Company. This oversight is conducted primarily by our full board of directors, which has responsibility for general oversight of risks. For example, in determining whether and under +what circumstances we will engage in financing transactions or enter into licensing, collaboration or similar arrangements, the board of directors is involved in our management of risks related to our +financial condition or of the risks inherent in product development and commercialization. +As +part of its oversight, our board of directors receives reports by each committee chair regarding the committee's considerations and actions. In particular, the audit committee is +responsible for discussing the adequacy of our risk management activities with management and our independent registered public accounting firm. The audit committee's primary emphasis is financial +risk. In addition, the compensation committee is responsible for considering whether our compensation programs and practices are reasonably likely to have a material adverse effect on us. +At +each of its meetings, the board of directors receives business updates from various members of management. These updates may identify matters that have emerged within that member of +management's scope of responsibility that involve operational, financial, legal or regulatory risks and, in these cases, the board of directors provides guidance to management. Our board of directors +believes that full and open communication between management and the board of directors is essential for effective risk management and oversight. +Stockholder Communications to the Board +Generally, stockholders who have questions or concerns should contact our Investor Relations department at ir@quanterix.com. However, any +stockholders who wish to address questions regarding our business directly with our board of directors, or any individual director, should direct his or her questions in writing to the Chairman of the +Board at 900 Middlesex Turnpike, Building 1, Billerica, Massachusetts 01821 or using the "IR Contacts" page of our website at http://ir.quanterix.com/contact-ir. Communications will be distributed to +the board of directors, or to any individual director or directors as appropriate, depending on the facts and circumstances outlined in the communications. Items that are unrelated to the duties and +responsibilities of the board may be excluded, such as: +• junk mail and mass mailings; +• resumes and other forms of job inquiries; +• surveys; and +• solicitations or advertisements. +In +addition, any material that is unduly hostile, threatening, or illegal in nature may be excluded, in which case it will be made available to any outside director upon request. +18 +Table of Contents +Executive Officers +The following table sets forth certain information regarding our executive officers who are not also directors, as of May 15, 2019. We +have entered into agreements with our executive officers, and all of them are at-will employees. +Name +Age +Position(s) with the Company +Amol Chaubal +43 +Chief Financial Officer +David C. Duffy, Ph.D. +48 +Senior Vice President, Research & Development and Chief Technology Officer +Dawn R. Mattoon, Ph.D. +46 +Senior Vice President, Research Products +Mark T. Roskey, Ph.D. +59 +Senior Vice President, Commercial and Accelerator +Jackson Streeter, M.D. +57 +Senior Vice President, Corporate Development and Strategy +Amol Chaubal has been our Chief Financial Officer since April 2019. Prior to joining us, Mr. Chaubal served as the Chief Financial +Officer of Global Operations at Smith & Newphew plc, a global medical technology company, from October 2017 to April 2019. Prior to his time at Smith & Nephew plc, he +served as Corporate Vice President and Head of Finance for the Clinical Research Services business segment at PAREXEL International Corporation from June 2015 to October 2017. Between May 2013 and May +2015, Mr. Chaubal served as CFO North America and later Regional Chief Operating Officer at Brookfield Renewable Energy Group, which is part of Brookfield Asset Management Inc. Prior to +joining Brookfield, Mr. Chaubal was CFO North America at Novartis AG, where he spent 11 years in positions of increasing responsibility across Switzerland, Canada, and the United States. +He has an M.B.A. (with distinction) from INSEAD (France). He began his career at Procter & Gamble Company after completing Masters degree in Chemical Engineering from the Indian Institute of +Technology, Mumbai. +David C. Duffy, Ph.D. is Senior Vice President, Research & Development, and has been our Chief Technology Officer since March 2013. +Prior to this role, Dr. Duffy served as our Vice President, Research from November 2011 to February 2013, and Senior Director, Platform Research from July 2007 to October 2011. Prior to joining +us, Dr. Duffy served as Director, Pharmacomer Technology at Surface Logix, Inc., a biomedical development company. Prior to that, Dr. Duffy was a Senior Scientist at Gamera +Bioscience Corporation, a developer of automated biotechnology test equipment, from December 1998 to January 2000. Previously, Dr. Duffy was a postdoctoral research fellow in the Department of +Chemistry and Chemical Biology at Harvard University. He was the first Sir Alan Wilson Research Fellow of Emmanuel College, University of Cambridge. Dr. Duffy has a Ph.D. in physical chemistry +from the Department of Chemistry at the University of Cambridge, and B.A. and M.A. degrees in Natural Sciences from the University of Cambridge. +Dawn R. Mattoon, Ph.D. , has been our Senior Vice President, Research Products since March 2019 and served as Senior Vice President of +Strategic Marketing and Assay Technologies from February 2018 to March 2019. Dr. Mattoon completed both her Ph.D. and postdoctoral work at Yale University, studying tyrosine kinase signaling +pathways. Following her postdoctoral fellowship in 2004, she joined Invitrogen, where she was recognized as one of the company's best new scientists in 2005. Dr. Mattoon went on to serve in a +variety of leadership roles in R&D, Program & Portfolio Management, Strategy, and General Management as Invitrogen evolved to become Life Technologies with the acquisition of Applied Biosystems +in 2008, and was subsequently acquired by Thermo Fisher in 2013. Until her departure from Thermo Fisher in 2014, Dr. Mattoon also served on global leadership teams focused on mentoring and +developing female leaders. Dr. Mattoon served as the Vice President for Product Development at Cell Signaling Technologies, a leading antibody provider, from July 2014 to February 2018, when +she transitioned to her current role with Quanterix. +19 +Table of Contents +Mark T. Roskey, Ph.D. , has been our Senior Vice President, Commercial and Accelerator since March 2019 and served as Senior Vice President +and General Manager of Applications and Reagents from September 2014 to March 2019. Prior to joining us, Dr. Roskey served as Vice President and General Manager of the America's Sales and +Service organization in PerkinElmer's Life Science and Technologies Division from December 2011 to September 2014. PerkinElmer is a global life science company. Prior to PerkinElmer, Dr. Roskey +served as Senior Vice President of Biology Research and Development at Caliper Life Sciences, Inc. from March 2009 to November 2011, when it was acquired by PerkinElmer. At Caliper Life +Sciences, Inc., Dr. Roskey served as Senior Vice President of Applied Biology Research from 2008 to 2011 and Vice President of Worldwide Marketing from July 2003 to 2008. Prior to that, +Dr. Roskey served as Vice President of Worldwide Marketing for Zymark Corporation, a laboratory automation company, from December 2001 to August 2003 when it was acquired by Caliper Life +Sciences, Inc. Prior to that, Dr. Roskey served as Director of Marketing at Applied Biosystems, Inc. Dr. Roskey completed a postdoctoral fellowship in molecular +immunobiology at the Harvard Medical School and has a Ph.D. in microbiology from the University of Notre Dame and a B.S. in biology from Framingham State University. +Jackson Streeter, M.D. has been our Senior Vice President, Corporate Development and Strategy, since November 2018. From March 2016 to +November 2018, Dr. Streeter was the CEO and Executive Director of the Florida Technology Seed Capital Fund, a seed stage venture fund investing in companies commercializing technologies +developed from State of Florida universities, colleges or research institutes. Since inception, the fund has created over 50 companies with private investment matching Florida state funding at a 9:1 +ratio. From January 2010 to March 2016, Dr. Streeter served as the CEO and Chief Medical Officer of Banyan Biomarkers. During his time the company received over $110 million in contracts +and grants with the NIH and Department of Defense and raised $20 million in private capital for the development of a first ever blood test for traumatic brain injury, which received FDA +clearance in February 2018. Prior to serving as CEO of Banyan Biomarkers, Dr. Streeter founded and served as CEO for PhotoThera, Inc. where he raised over $120 million in private +capital and was responsible for the design and management of five U.S. and international clinical trials for the treatment of stroke. He was also the co-founder of American Veterinary Laser, which was +acquired in a private transaction. Dr. Streeter is the inventor of over twenty patents and author on multiple scientific +publications. Dr. Streeter has served on the following boards and executive committees: Florida Research Consortium, Governor's Life Science Task Force for the State of Florida, FBI counter +terrorism south east working group, Walter H. Coulter Center Committee at the University of Miami, Department of Defense Grey Team in Afghanistan, Sid Martin Biotechnology Incubator advisory board and +the Gainesville Chamber of Commerce Board of Directors. Dr. Streeter served as an Officer in the U.S. Navy, completing a general surgery internship at Naval Regional Medical Center Portsmouth, +Virginia and then primary Flight School at Naval Air Station Pensacola, Florida. During his military service, he was the first Naval Flight Surgeon selected as a TOPGUN staff instructor, served on +several overseas deployments and was awarded the Navy Achievement Medal and the Navy Commendation Medal. He earned his B.S. degree in Biology from the University of Nevada Reno and his M.D. from the +University of Nevada School of Medicine. +20 +Table of Contents +EXECUTIVE OFFICER AND DIRECTOR COMPENSATION +Summary Compensation Table +The following table shows the total compensation paid or accrued during the fiscal years ended December 31, 2018 and December 31, +2017, to our Chief Executive Officer and President and our two next most highly compensated executive officers who earned more than $100,000 during the fiscal year ended December 31, 2018 and +were serving as executive officers as of such date. +Name and Principal Position +Year +Salary +($) +Bonus +($)(1) +Stock +Awards +($)(2) +Option +Awards +($)(2) +All Other +Compensation +($)(3) +Total ($) +E. Kevin Hrusovsky +2018 +497,857 +609,377 +4,440,000 +— +346 +5,547,580 +Chairman, President and +2017 +426,978 +276,682 +1,430,000 +— +2,133,660 +Chief Executive Officer +Dawn R. Mattoon, Ph.D.(4) +2018 +239,077 +133,986 +368,042 +558,215 +3,102 +1,302,422 +Senior Vice President, +Research Products +Jackson Streeter, M.D.(5) +2018 +41,538 +20,769 +464,442 +409,357 +1,246 +937,352 +Senior Vice President, Corporate +Development and Strategy +(1) Amounts +for 2018 represent cash bonuses earned for the 12-month period from January 1, 2018 to December 31, 2018, and exclude payments made in 2018 for +2017 bonuses. Amounts for 2017 represent cash bonuses earned for the 12-month period from January 1, 2017 to December 31, 2017, and exclude payments made in 2017 for 2016 bonuses. +(2) These +amounts represent the aggregate grant date fair value for restricted stock unit awards (RSUs) and option awards granted during our fiscal year ended +December 31, 2018, computed in accordance with FASB ASC Topic 718. A discussion of the assumptions used in determining grant date fair value for the option awards may be found in Note 2 +to our consolidated financial statements for the year ended December 31, 2018. +(3) Amounts +represent the dollar value of matching contributions to the qualified 401(k) plan. +(4) Dr. Mattoon +joined Quanterix on February 23, 2018. +(5) Dr. Streeter +joined Quanterix on November 12, 2018. +Narrative Disclosure to Summary Compensation Table +E. Kevin Hrusovsky +We entered into an agreement with Mr. Hrusovsky with respect to his service as President and Chief Executive Officer on January 1, +2015. Under the terms of the agreement, Mr. Hrusovsky received a one-time signing bonus of $250,000 and was entitled to an initial annual base salary of $400,000. His current base salary is +$536,000. Under the agreement, Mr. Hrusovsky is eligible to receive an annual bonus of up to 85% of his base salary based on the compensation committee's assessment of his and the Company's +performance against goals established by the committee. For 2018, our compensation committee awarded Mr. Hrusovsky a discretionary bonus of $609,377. In connection with his employment, in +February 2015 Mr. Hrusovsky was granted 781,060 shares of restricted stock. The shares underlying this grant vest, subject to continued service, as follows: (1) with respect to 168,246 +of the shares, 25% of the shares vested on July 1, 2015, with the remainder vesting over the next three years in equal monthly installments on the first day of each succeeding calendar month +thereafter, (2) with respect to 549,113 of the shares, 25% of the shares vested on September 1, 2015, with the +21 +Table of Contents +remainder +vesting over the next three years in equal monthly installments on the first day of each succeeding calendar month thereafter and (3) 63,701 shares vest based upon the achievement of +certain milestones. +Pursuant +to the agreement, Mr. Hrusovsky is entitled to continuation of his then-current base salary and health insurance benefits for six months in the event we terminate his +employment without Cause, as defined in the agreement, or Mr. Hrusovsky terminates his employment with us for Good Reason, as defined in the agreement, subject to Mr. Hrusovsky's +execution of a release satisfactory to us following such termination. If such termination occurs within 12 months of the sale of the Company, he is entitled to continuation of his then-current +base salary and health insurance benefits for 12 months. If we terminate his employment without Cause, his employment terminates due to his death or disability or he terminates his employment +with us for Good Reason within three months prior to the end of a year, he is entitled to a pro rata portion of his bonus. In addition, Mr. Hrusovsky has entered into an employee +non-competition, non-solicitation, confidentiality and assignment agreement pursuant to which he has agreed (1) not to engage in any competitive business for six months following his +termination of employment with us (12 months if the termination is within 12 months of the sale of the Company), (2) not to solicit our employees, customers or suppliers for six +months following his termination of employment with us (12 months if the termination is within 12 months of the sale of the Company) and (3) to assign any inventions conceived or +developed during the course of his employment with us. +Dawn R. Mattoon, Ph.D. +We entered into an agreement with Dr. Mattoon with respect to her service as Senior Vice President, Strategic Marketing & Assay +Operations on February 1, 2018. In March 2019, her title was changed to Senior Vice President, Research Products. Under the terms of the agreement, Dr. Mattoon was entitled to an initial +annual base salary of $280,000. Her current base salary is $320,000. Dr. Mattoon is also eligible to receive an annual bonus of up to 40% of her then-current base salary based on her +performance and our business conditions in the sole discretion of our board of directors. Pursuant to the agreement, Dr. Mattoon was granted an option to purchase up to 40,000 shares of our +common stock at an exercise price of $22.12 per share, which was the fair market value on the date she began her employment with us (February 23, 2018). She was also granted 10,000 RSUs. The +option and RSUs vested as to 25% of the shares on February 23, 2019, with the remainder vesting over the subsequent three years in equal monthly installments. In addition, Dr. Mattoon +has entered into an employee non-solicitation, confidentiality and assignment agreement pursuant to which she has agreed (1) not to solicit our employees, customers or suppliers for one year +following voluntary termination of her employment and (2) to assign any inventions conceived or developed during the course of her employment with us. +Jackson Streeter, M.D. +We entered into an agreement with Dr. Streeter with respect to his service as Senior Vice President, Corporate Development and Strategy +on October 22, 2018. Under the terms of the agreement, Dr. Streeter was entitled to an initial annual base salary of $300,000. Dr. Streeter is also eligible to receive an annual +bonus of up to 50% of his then-current base salary based on his performance and our business conditions in the sole discretion of our board of directors. Pursuant to the agreement, Dr. Streeter +was granted an option to purchase up to 66,143 shares of our common stock at an exercise price of $16.33 per share, which was the fair market value on the date he began his employment with us +(November 12, 2018). He was also granted 28,441 RSUs. The option and RSUs will vest as to 25% of the shares on November 12, 2019, with the remainder vesting over the subsequent three +years in equal monthly installments. In addition, Dr. Streeter has entered into an employee non-competition, non-solicitation, confidentiality and assignment agreement pursuant to +22 +Table of Contents +which +he has agreed (1) not to engage in any business with certain competitors for one year following his voluntary termination of employment with us, (2) not to solicit our employees, +customers or suppliers for one year following voluntary termination of his employment and (3) to assign any inventions conceived or developed during the course of his employment with us. +Outstanding Equity Awards at 2018 Fiscal Year-End +The following table shows grants of stock options and grants of unvested stock awards outstanding on the last day of the fiscal year ended +December 31, 2018, including both awards subject to performance conditions and non-performance-based awards, to each of the executive officers named in the Summary Compensation Table. +Option Awards(1) +Stock Awards(1) +Name +Number of +Securities +Underlying +Unexercised +Options (#) +Exercisable +Number of +Securities +Underlying +Unexercised +Options (#) +Unexercisable +Option +Exercise +Price +($) +Option +Expiration +Date +Number of +Shares or +Units of +Stock That +Have Not +Vested +(#) +Market +Value of +Shares or +Units of +Stock That +Have Not +Vested +($)(2) +Equity +Incentive +Plan +Awards: +Number of +Unearned +Shares, +Units or +Other +Rights That +Have Not +Vested +(#) +Equity +Incentive +Plan +Awards: +Market or +Payout +Value of +Unearned +Shares, +Units or +Other +Rights That +Have Not +Vested +($)(2) +E. Kevin Hrusovsky +— +— +— +— +— +— +39,815 +(3) +729,013 +Chairman, President +142,594 +(4) +168,544 +(4) +$ +8.16 +3/31/2027 +— +— +— +— +and Chief Executive +— +— +— +— +225,000 +(5) +4,119,750 +— +— +Officer +Dawn R. Mattoon, Ph.D. +— +40,000 +(6) +$ +22.12 +2/23/2028 +— +— +— +— +Senior Vice President, +— +— +— +— +10,000 +(6) +183,100 +Research Products +— +26,181 +(7) +$ +19.12 +5/10/2028 +— +— +— +— +— +— +— +— +7,680 +(7) +140,621 +— +— +Jackson Streeter, M.D. +— +66,143 +(8) +$ +16.33 +11/12/2028 +— +— +— +— +Senior Vice President, +— +— +— +— +28,441 +(8) +520,755 +— +— +Corporate Development +and Strategy +(1) Each +of the outstanding equity awards in the table above was granted pursuant to our 2007 Stock Option and Grant Plan, as amended, or our 2017 Employee, Director and +Consultant Equity Incentive Plan. +(2) The +market value of the stock awards is determined by multiplying the number of shares by $18.31, the closing price of our common stock on the Nasdaq Global Market +on December 31, 2018, the last day of our fiscal year. +(3) On +February 13, 2015, Mr. Hrusovsky was granted 781,060 shares of restricted stock in connection with his appointment as our President and Chief +Executive Officer. The shares underlying this grant vest, subject to continued service, as follows: (i) with respect to 168,246 of the shares, 25% of the shares vested on July 1, 2015, +with the remainder vesting over the next three years in equal monthly installments on the first day of each succeeding calendar month thereafter, (ii) with respect to 549,113 of the shares, 25% +of the shares vested on September 1, 2015, with the remainder vesting over the next three years in equal monthly installments on the first day of each succeeding calendar month thereafter and +(iii) 63,701 shares vest based upon the achievement of certain milestones. Upon the sale of the Company, the vesting is accelerated such that no more than 25% of the shares shall remain +unvested. If Mr. Hrusovsky is terminated without Cause (as defined in his employment agreement) or he terminates his service for Good Reason (as defined in his employment agreement) within +12 months following a sale of the Company, all of the unvested shares will become vested. +(4) Represents +an option to purchase shares of our common stock granted on March 31, 2017. The shares underlying this option vest, subject to continued service, +as follows: 25% of the shares vested on March 31, 2018, with the remainder vesting over the next three years in equal monthly installments on the last day of each succeeding calendar month +thereafter. +(5) On +August 7, 2018, Mr. Hrusovsky was granted 300,000 RSUs. The RSUs vest upon continued service and vested as to 50,000 shares on August 31, +2018, and vest with respect to 6,250 shares at the end of each month thereafter for 40 months. +23 +Table of Contents +(6) On +February 23, 2018, Dr. Mattoon was granted (i) an option to purchase 40,000 shares of our common stock and (ii) 10,000 RSUs. The +shares underlying the option and RSUs vest, subject to continued service, as follows: 25% of the shares vested on February 23, 2019, with the remainder vesting over the next three years in +equal monthly installments on the last day of each calendar month thereafter. +(7) On +May 10, 2018, Dr. Mattoon was granted (i) an option to purchase 26,181 shares of our common stock and (ii) 7,680 RSUs. The shares +underlying the option and RSUs vest, subject to continued service, as follows: 25% of the shares vested on May 10, 2019, with the remainder vesting over the next three years in equal monthly +installments on the last day of each calendar month thereafter. +(8) On +November 12, 2018, Dr. Streeter was granted (i) an option to purchase 66,143 shares of our common stock and (ii) 28,441 RSUs. The +shares underlying the option and RSUs vest, subject to continued service, as follows: 25% of the shares vest on November 12, 2019, with the remainder vesting over the next three years in equal +monthly installments on the last day of each calendar month thereafter. +Director Compensation +The following table shows the total compensation paid or accrued during the fiscal year ended December 31, 2018 to each of our +non-employee directors. Directors who are employed by us are not compensated for their service on our board of directors. +Name +Fees +Earned or +Paid in +Cash +($) +Stock +Awards +($)(1) +Option +Awards +($)(1) +All Other +Compensation +($) +Total +($) +Douglas G. Cole, M.D. +41,000 +33,596 +40,062 +— +114,658 +John M. Connolly +40,000 +33,596 +40,062 +— +113,658 +Keith L. Crandell +54,500 +33,596 +40,062 +— +128,158 +Marijn Dekkers, Ph.D. +45,000 +33,596 +40,062 +— +118,658 +Martin D. Madaus, Ph.D. +57,500 +33,596 +40,062 +— +131,158 +Paul M. Meister +55,000 +33,596 +40,062 +— +128,658 +David R. Walt, Ph.D. +41,000 +33,596 +40,062 +— +114,658 +(1) These +amounts represent the aggregate grant date fair value for RSUs and option awards granted to each director in the fiscal year ended December 31, 2018, +computed in accordance with FASB ASC Topic 718. A discussion of the assumptions used in determining grant date fair value for the option awards may be found in Note 2 to our consolidated +financial statements for the year ended December 31, 2018. The following table shows the aggregate number of stock options held by each of our non-employee directors as of December 31, +2018. +Name +Aggregate +Number +of Shares +Subject +to Stock +Options +Douglas G. Cole, M.D. +7,900 +John M. Connolly +7,900 +Keith L. Crandell +7,900 +Marijn Dekkers, Ph.D. +39,013 +Martin D. Madaus, Ph.D. +94,071 +Paul M. Meister +31,235 +David R. Walt, Ph.D. +7,900 +Our +current non-employee director compensation policy provides for the annual payment of: $35,000 to each of our nonemployee directors, or $55,000 in the case of the chair; $7,500 to +each member of our audit committee, or $20,000 in the case of the chair; $6,000 to each member of our +24 +Table of Contents +compensation +committee, or $12,000 in the case of the chair; and $5,000 to each member of our nominating and governance committee, or $10,000 in the case of the chair; in each case quarterly in +arrears. Each non-employee director may elect to receive this annual payment in the form of common stock in lieu of cash. +Our +current non-employee director compensation policy also provides that each non-employee director be granted, on the first trading day of each fiscal year, (1) a non-qualified +stock option exercisable for 7,900 shares of common stock and (2) 2,270 restricted stock units (each restricted stock unit relating to one share of common stock). The annual stock options and +restricted stock units vest in full on December 31 of the year in which such awards were granted, provided that the non-employee director is a director of the Company on the applicable vesting +date. +In +addition, each new non-employee director receives under the policy (1) a non-qualified stock option grant exercisable for 15,800 shares of common stock and (2) 4,540 +restricted stock units (each restricted stock unit relating to one share of common stock) upon his or her initial election or appointment. The initial stock options vest over three years from the date +of grant, with one third vesting on the first anniversary of the applicable grant date and the remainder vesting over the following two years in 24 successive equal monthly installments at the end of +each month until the third anniversary of such grant date, provided that the non-employee director is a director of the Company on the applicable vesting date. The restricted stock units granted to +each new non-employee director vest over a three-year period, with one third vesting on each of the first, second, and third anniversaries of the applicable grant date, provided that the non-employee +director is a director of the Company on the applicable vesting date. +We +reimburse in full each non-employee director for all reasonable out-of-pocket expenses incurred in attending each meeting of our board of directors or its committees. Directors may be +reimbursed for travel, food, lodging and other expenses directly related to their service as directors. Directors are also entitled to the protection provided by their indemnification agreements, and +the indemnification provisions in our restated certificate of incorporation and restated bylaws. +25 +Table of Contents +EQUITY COMPENSATION PLAN INFORMATION +The following table provides certain aggregate information with respect to all of our equity compensation plans in effect as of +December 31, 2018. +(c) +(a) +(b) +Number of securities +remaining available for +future issuance under equity +compensation plans +(excluding securities +reflected in column (a)) +Plan category +Number of securities +to be issued upon +exercise of outstanding +options, warrants +and rights +Weighted-average +exercise price +of outstanding +options, warrants +and rights +Equity compensation plans approved by security holders(1) +2,476,911 +$ +9.65 +4,393 +Equity compensation plans not approved by security holders +— +— +— +Total +2,476,911 +$ +9.65 +4,393 +(1) These +plans consist of our 2017 Employee, Director and Consultant Equity Incentive Plan (the "2017 Plan"), our 2007 Stock Option and Grant Plan, as amended, and our +2017 Employee Stock Purchase Plan (the "ESPP"). Does not include an additional 894,761 shares of common stock reserved for future issuance under the 2017 Plan effective January 1, 2019 by +operation of the 2017 Plan's "evergreen" provision and an additional 223,690 shares of common stock reserved for future issuance under the ESPP effective January 1, 2019 by operation of the +ESPP's "evergreen" provision. +26 +Table of Contents +REPORT OF AUDIT COMMITTEE +The audit committee of the board of directors, which consists entirely of directors who meet the independence and experience requirements of The +Nasdaq Stock Market, has furnished the following report: +The +audit committee assists the board of directors in overseeing and monitoring the integrity of our financial reporting process, compliance with legal and regulatory requirements and +the quality of internal and external audit processes. This committee's role and responsibilities are set forth in our charter adopted by the board of directors, which is available on our website at www.quanterix.com . This committee reviews and reassesses our charter annually and recommends any changes to the board of directors for approval. The +audit committee is responsible for overseeing our overall financial reporting process, and for the appointment, compensation, retention, and oversight of the work of Ernst & Young LLP. +In fulfilling its responsibilities for the financial statements for the fiscal year ended December 31, 2018, the audit committee took the following +actions: +• Reviewed and discussed the audited financial statements for the fiscal year ended December 31, 2018 with management and Ernst & +Young LLP, our independent registered public accounting firm; +• Discussed with Ernst & Young LLP the matters required to be discussed in accordance with Auditing Standard +No. 1301— Communications with Audit Committees ; and +• Received written disclosures and the letter from Ernst & Young LLP regarding its independence as required by applicable +requirements of the Public Company Accounting Oversight Board regarding Ernst & Young LLP's communications with the audit committee and the audit committee further discussed with +Ernst & Young LLP their independence. The audit committee also considered the status of pending litigation, taxation matters and other areas of oversight relating to the financial +reporting and audit process that the committee determined appropriate. +Based +on the audit committee's review of the audited financial statements and discussions with management and Ernst & Young LLP, the audit committee recommended to the +board of directors that the audited financial statements be included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018 for filing with the SEC. +Members of the Audit Committee: +Paul M. Meister ( Chairman ) +John M. Connolly +Martin D. Madaus, Ph.D. +27 +Table of Contents +SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE +Section 16(a) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, requires the Company's officers and directors, and +persons who beneficially own 10% or greater of a registered class of the Company's equity securities, to file reports of ownership on Form 3 and reports of changes in ownership on Form 4 +or Form 5 with the SEC. Such officers, directors and 10% or greater stockholders are also required by SEC rules to furnish the Company with copies of all Section 16(a) forms they file. +To our knowledge, based solely on a review of our records and representations made by our directors and officers regarding their filing obligations, all reports which were required to be filed +pursuant to Section 16(a) of the Exchange Act in 2018 were filed on a timely basis. +28 +Table of Contents +CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS +Since January 1, 2017, we have engaged in the following transactions with our directors, director nominees, executive officers and +holders of more than 5% of our common stock, which we refer to as our principal stockholders, and affiliates or immediate family members of our directors, executive officers and principal +stockholders. We believe that all of these transactions were on terms as favorable as could have been obtained from unrelated third parties. +Some +of our directors are or were recently affiliated with our principal stockholders as indicated below: +Director +Affiliation with principal stockholder +Keith L. Crandell +Managing Director of ARCH Venture Partners VI, LLC, the ultimate general partner of ARCH Venture Fund VI, L.P., and Managing Director of ARCH Venture Partners VIII, LLC, the general partner +of ARCH Venture Fund VIII Overage, L.P. +Douglas G. Cole, M.D. +Managing Partner of Flagship Pioneering and a member of Flagship Ventures General Partner LLC, the sole general partner of Flagship Ventures Fund 2004, L.P. +John M. Connolly +Senior Advisor to Bain Capital Ventures, the ultimate general partner of Bain Capital Venture Fund 2005, L.P., BCIP Associates III, LLC and BCIP Associates III-B, +LLC. +Participation in Our Initial Public Offering +In December 2017, we issued an aggregate of 4,916,480 shares of our common stock at a purchase price of $15.00 per share, which included 641,280 +shares of common stock issued upon exercise by the underwriters of their option to purchase additional shares. Gross proceeds from the offering were approximately $73 million, prior to +deducting underwriting discounts and commissions and offering expenses payable by the Company. +The +table below sets forth the aggregate number of shares of our common stock issued to our directors, executive officers or holders of more than 5% of our capital stock, or an affiliate +or immediate family member thereof, at the time of the transaction: +Shares +Aggregate +Purchase Price +David R. Walt, Ph.D. +200,000 +$ +3,000,000 +Marijn Dekkers, Ph.D. +40,000 +$ +600,000 +E. Kevin Hrusovsky +34,000 +$ +510,000 +Arch Venture Fund VIII Overage +266,000 +$ +3,990,000 +Cormorant Global Healthcare Fund, LP +100,000 +$ +1,500,000 +Trinitas Innovation-Q Investment Co., Ltd. +55,000 +$ +825,000 +Series D-1 Preferred Stock Financing +In June 2017, we issued an aggregate of 2,113,902 shares of our Series D-1 preferred stock at $4.021 per share for an aggregate purchase +price of approximately $8.5 million, which we refer to as the Series D-1 preferred stock financing. Each share of our Series D-1 preferred stock converted automatically into +0.3111 shares of our common stock immediately prior to the completion of our initial public offering on December 11, 2017. +29 +Table of Contents +The +following table summarizes the Series D-1 preferred stock purchased by our directors, executive officers and principal stockholders. +Name of Purchaser +Number of Shares +of Series D-1 +Preferred Stock +Purchased +Aggregate +Purchase +Price +Marijn Dekkers, Ph.D.(1) +248,694 +$ +999,999 +(1) Dr. Dekkers +is a director of the Company. +License Agreement with Tufts University +We entered into a License Agreement with Tufts University pursuant to which we obtained an exclusive, worldwide license to research, develop, +commercialize, use, make, or have made, import or have imported, distribute or have distributed, offer or have offered, and sell or have sold products and services covered by patent rights to the +Simoa technology owned by Tufts University, as well as a non-exclusive license to related know-how. The rights licensed to us are for all fields of use and are sublicensable for a fee. One of our +directors and our founding scientist, David R. Walt, Ph.D. previously served as University Professor, Professor of Biomedical Engineering, Professor of Genetics, Professor of Neuroscience, Professor +of Cell and Molecular Biology, and Professor of Oral Medicine at Tufts University. Under that agreement, we are required to pay Tufts University royalties on all net sales of products and services as +well as a portion of any sublicensing revenues. Tufts University pays a portion of the royalties received from us to Dr. Walt, the amount of which is controlled solely by Tufts University. +Registration Rights +Pursuant to our registration rights agreement to which certain of our principal stockholders, directors and their affiliates are parties, the +holders of certain shares of common stock and warrants to purchase shares of our common stock are entitled to registration rights with respect to the shares of common stock held by them. These shares +include the shares held (and shares issuable upon the exercise of warrants held) by ARCH Venture Partners and affiliated funds, Bain Capital Venture entities, Flagship Ventures Fund 2005, L.P., +and our directors Marijn Dekkers, Ph.D. and David R. Walt, Ph.D., and an affiliate of our director Paul M. Meister. See "Security Ownership of Certain Beneficial Owners and Management." +Under +our registration rights agreement, holders of registrable shares can demand that we file a registration statement or request that their shares be included on a registration +statement that we are otherwise filing, in either case, registering the resale of their shares of common stock. The registration rights will terminate at the earlier of the closing of a Change of +Control Event, as such term is defined in our restated certificate of incorporation, (b) such time as Rule 144 under the Securities Act of 1933, as amended, or the Securities Act, or +another similar exemption under the Securities Act is available for the sale of all of such registrable shares without limitation during a three-month period without registration (and without the +requirement for us to be in compliance with the current public information required under Rule 144(c)(1)), or (3) the fifth anniversary of the completion of our initial public offering. +Demand Registration Rights. The holders of a majority of the registrable shares may require us to file a registration +statement under the +Securities Act at our expense, subject to certain exceptions, with respect to the resale of their registrable shares having an aggregate offering price (net of underwriting discounts and commissions, +if any) of at least $5 million, and we are required to use our reasonable best efforts to effect the registration. The holders of a majority of the registrable shares may require us to effect +up to two such demand registrations for the holders of registrable shares as a group. In the +30 +Table of Contents +event +we are required to effect such a demand registration, we may not effect any other registration of securities for sale for our own account (other than a registration effected solely to implement +an employee benefit plan or in certain business combination transactions) within 120 days following the effective date of the demand registration. +We +are also required to use our reasonable best efforts to qualify and remain qualified to register securities pursuant to a registration statement on Form S-3 under the +Securities Act. Any holder or holders of registrable shares anticipated to have an aggregate sale price (net of underwriting discounts and commissions, if any) in excess of $1 million will have +the right to require us to file, at our expense, an unlimited number of registration statements on Form S-3 for the registrable shares held by such requesting holder or holders, and we are +required to use our reasonable best efforts to effect such registrations. +Piggyback Registration Rights. If we propose to register any of our securities under the Securities Act for sale to the public +(except with respect +to registration statements on Form S-4, Form S-8 or another form not available for registering the registrable shares for sale to the public), the holders of registrable shares are +entitled to notice of such registration and to request that we include registrable shares for resale on such registration statement, subject to the right of any underwriter to limit the number of +shares included in such registration. The requisite holders of these "piggyback" registration rights have waived their rights in connection with the filing of our registration statement on +Form S-3 (File No. 333-230399). +We +will pay all registration expenses, other than underwriting fees, commissions or discounts, related to any demand or piggyback registration, including up to $50,000 of fees and +disbursements of counsel for the holders of registrable shares. The Registration Rights Agreement contains customary cross-indemnification provisions, pursuant to which we are obligated to indemnify +the selling stockholders in the event of misstatements or omissions in the registration statement attributable to us and they are obligated to indemnify us for misstatements or omissions attributable +to them. +Agreements with Directors +On March 20, 2017, we entered into a letter agreement with our director Marijn Dekkers, Ph.D. pursuant to which Dr. Dekkers agreed +to serve as a member of our board of directors. Pursuant to the letter agreement, we granted Dr. Dekkers an option to purchase 100,000 shares of our common stock vesting over four years. In +addition, we agreed to provide Dr. Dekkers with the opportunity to participate in any private placement financing transaction we entered into prior to completion of our initial public offering +on the same terms as other investors in such transaction. We also agreed to pay Dr. Dekkers compensation of $25,000 per year for service on our board of directors and to reimburse +Dr. Dekkers for his reasonable out-of-pocket expenses in attending board and committee meetings. We also agreed to provide indemnification of Dr. Dekkers pursuant to our certificate of +incorporation, an indemnification agreement and our director and officer insurance. This agreement terminated upon adoption of our non-employee director compensation policy in 2018. +On +August 7, 2013, we entered into a letter agreement with our director Paul M. Meister pursuant to which Mr. Meister agreed to serve as a member of our board of directors. +Pursuant to the letter agreement, we granted Mr. Meister an option to purchase 75,000 shares of our common stock vesting over four years. We also agreed to pay Mr. Meister compensation +of $25,000 per year for service on our board of directors and to reimburse Mr. Meister for his reasonable out-of-pocket expenses in attending board and committee meetings. We also agreed to +provide indemnification of Mr. Meister pursuant to our certificate of incorporation, an indemnification agreement and our director and officer insurance. This agreement terminated upon adoption +of our non-employee director compensation policy in 2018. +31 +Table of Contents +On +January 1, 2014, we entered into a letter agreement with our director David Walt, Ph.D. pursuant to which we agreed to pay Dr. Walt compensation of $25,000 per year for +service on our board of directors, commencing as of January 1, 2014 and for so long as he continues to serve as a non-employee member of our board of directors, and to reimburse Dr. Walt +for his reasonable out-of-pocket expenses in attending board and committee meetings. This agreement terminated upon adoption of our non-employee director compensation policy in 2018. +Indemnification Agreements with Officers and Directors and Directors' and Officers' Liability Insurance +We have entered into indemnification agreements with each of our executive officers and directors. The indemnification agreements, our restated +certificate of incorporation and our restated bylaws require us to indemnify our directors to the fullest extent not prohibited by Delaware law. Subject to certain limitations, our restated bylaws +also require us to advance expenses incurred by our directors and officers. +Our +2017 Employee, Director and Consultant Equity Incentive Plan and our 2007 Stock Option and Grant Plan, as amended, also provide that our directors (and in the case of the 2017 plan, +our employees) will not be liable for any act, omission, interpretation, construction or determination made in good faith in connection with the respective plan, and the members of our board of +directors and any committee administering the plan will be entitled to indemnification and reimbursement by us in respect of any claim, loss, damage or expense (including reasonable attorneys' fees) +arising or resulting therefrom to the fullest extent permitted by law and/or under any directors' and officers' liability insurance coverage which may be in effect from time to time. +We +also maintain a general liability insurance policy which covers certain liabilities of directors and officers of our company arising out of claims based on acts or omissions in their +capacities as directors or officers. +Policies and Procedures for Related Party Transactions +Pursuant to its charter, our audit committee is responsible for reviewing and approving, prior to our entry into any such transaction, all +transactions reportable by us under Item 404 of Regulation S-K in which we are a participant and in which any parties related to us, including our executive officers, our directors, +beneficial owners of more than 5% of our securities, immediate family members of the foregoing persons and any other persons whom our board of directors determines may be considered related persons +under Item 404 of Regulation S-K, has or is expected to have a direct or indirect material interest. +In +reviewing and approving such transactions, the audit committee will obtain, or will direct our management to obtain on its behalf, all information that the committee believes to be +relevant and important to a review of the transaction prior to its approval. Following receipt of the necessary information, a discussion will be held of the relevant factors if deemed to be necessary +by the committee prior to approval. If a discussion is not deemed to be necessary, approval may be given by +written consent of the committee. This approval authority may also be delegated to the chair of the audit committee in some circumstances. No related person transaction will be entered into prior to +the completion of these procedures. +The +audit committee or its chair, as the case may be, will approve only those related person transactions that are determined to be in, or not inconsistent with, the best interests of us +and our stockholders, taking into account all available facts and circumstances as the committee or the chair determines in good faith to be necessary in accordance with principles of Delaware law +generally applicable to directors of a Delaware corporation. These facts and circumstances will typically include, but not be limited to, the benefits of the transaction to us; the impact on a +director's independence in +32 +Table of Contents +the +event the related person is a director, an immediate family member of a director or an entity in which a director is a partner, stockholder or executive officer; the availability of other sources +for comparable products or services; the terms of the transaction; and the terms of comparable transactions that would be available to unrelated third parties or to employees generally. No member of +the audit committee will participate in any review, consideration or approval of any related person transaction with respect to which the member or any of his or her immediate family members has an +interest. +33 +Table of Contents +ELECTION OF DIRECTORS +(Notice Item 1) +Our board of directors nominated Marijn Dekkers, Ph.D., Sarah E. Hlavinka and David R. Walt, Ph.D. for election at the annual meeting. +Our board of directors currently consists of eight members, classified into three classes as follows: (1) Douglas G. Cole, M.D., Marijn Dekkers, Ph.D., and David R. Walt, Ph.D. +constitute Class II with a term ending at the upcoming annual meeting of stockholders; (2) E. Kevin Hrusovsky, Keith L. Crandell and Paul M. Meister constitute Class III with a +term ending at the 2020 annual meeting of stockholders; and (3) John M. Connolly and Martin D. Madaus, Ph.D. constitute Class I with a term which expires at the 2021 annual meeting of +stockholders. At each annual meeting of stockholders, directors are elected for a full term of three years to succeed those directors whose terms are expiring. +Our +board of directors has voted to nominate Marijn Dekkers, Ph.D., Sarah E. Hlavinka and David R. Walt, Ph.D. for election at the annual meeting as Class II directors for a term +of three years to serve until the 2022 annual meeting of stockholders, and until their respective successors are elected and qualified. The Class III directors (E. Kevin Hrusovsky, Keith L. +Crandell and Paul M. Meister) and the Class I directors (John M. Connolly and Martin D. Madaus, Ph.D.) will serve until the annual meetings of stockholders to be held in 2020 and 2021, +respectively, and until their respective successors have been elected and qualified. +Unless +authority to vote for any of these nominees is withheld, the shares represented by the enclosed proxy will be voted FOR the +election of Marijn Dekkers, Ph.D., Sarah E. Hlavinka and David R. Walt, Ph.D. as directors. In the event that any of the nominees becomes unable or unwilling to serve, the shares represented by +the enclosed proxy will be voted for the election of such other person as the board of directors may recommend in that nominee's place. We have no reason to believe that any of the nominees will be +unable or unwilling to serve as a director. +A +plurality of the shares voted FOR each nominee is required to elect each nominee as a director. +THE BOARD OF DIRECTORS RECOMMENDS THE ELECTION OF MARIJN DEKKERS, PH.D., SARAH E. HLAVINKA AND DAVID R. WALT, PH.D. AS DIRECTORS, AND PROXIES SOLICITED BY THE BOARD WILL BE +VOTED IN FAVOR THEREOF UNLESS A STOCKHOLDER HAS INDICATED OTHERWISE ON THE PROXY. +34 +Table of Contents +RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT +REGISTERED PUBLIC ACCOUNTING FIRM +(Notice Item 2) +The audit committee has appointed Ernst & Young LLP as our independent registered public accounting firm, to audit our financial +statements for the fiscal year ending December 31, 2019. The board of directors proposes that the stockholders ratify this appointment. Ernst & Young LLP audited our financial +statements for the fiscal years ended December 31, 2018 and +2017. We expect that representatives of Ernst & Young LLP will be present at the annual meeting, will be able to make a statement if they so desire, and will be available to respond to +appropriate questions. +In +deciding to appoint Ernst & Young LLP, the audit committee reviewed auditor independence issues and existing commercial relationships with Ernst & +Young LLP and concluded that Ernst & Young LLP has no commercial relationship with the Company that would impair its independence for the fiscal year ending December 31, +2019. +The +following table presents fees for professional audit services rendered by Ernst & Young LLP, our independent registered public accounting firm, for the audit of our +annual financial statements for the years ended December 31, 2018 and 2017, and fees billed for other services rendered by Ernst & Young LLP during those periods. +2018 +2017 +Audit fees:(1) +$ +892,738 +$ +1,498,921 +Tax fees:(2) +$ +59,523 +$ +48,295 +Total +$ +952,261 +$ +1,547,216 +(1) Audit +fees consisted of audit work performed in the preparation of financial statements, as well as work generally only the independent registered public accounting +firm can reasonably be expected to provide, such as statutory audits. +(2) Tax +fees consist principally of assistance with matters related to tax compliance and reporting and tax consulting services primarily related to international tax +planning strategies. +Policy on Audit Committee Pre-Approval of Audit and Permissible Non-audit Services of Independent Public +Accountant +Consistent with SEC policies regarding auditor independence, the audit committee has responsibility for appointing, setting compensation and +overseeing the work of our independent registered public accounting firm. In recognition of this responsibility, the audit committee has established a policy to pre-approve all audit and permissible +non-audit services provided by our independent registered public accounting firm; provided however, that de minimis non-audit services may instead be approved in accordance with applicable SEC rules. +Prior +to engagement of an independent registered public accounting firm for the next year's audit, management will submit an aggregate of services expected to be rendered during that +year for each of four categories of services to the audit committee for approval. +1. Audit services include audit work performed in the preparation of financial statements, as well as work that generally +only an independent registered public accounting firm can reasonably be expected to provide, including comfort letters, statutory audits, and attest services and consultation regarding financial +accounting and/or reporting standards. +35 +Table of Contents +2. Audit-Related services are for assurance and related services that are traditionally performed by an independent +registered public accounting firm, including due diligence related to mergers and acquisitions, employee benefit plan audits, and special procedures required to meet certain regulatory requirements. +3. Tax services include all services performed by an independent registered public accounting firm's tax personnel except +those services specifically related to the audit of the financial statements, and includes fees in the areas of tax compliance, tax planning, and tax advice. +4. Other Fees are those associated with services not captured in the other categories. The Company generally does not +request such services from our independent registered public accounting firm. +Prior +to engagement, the audit committee pre-approves these services by category of service. The fees are budgeted and the audit committee requires our independent registered public +accounting firm and management to report actual fees versus the budget periodically throughout the year by category of service. During the year, circumstances may arise when it may become necessary to +engage our independent registered public accounting firm for additional services not contemplated in the original pre-approval. In those instances, the audit committee requires specific pre-approval +before engaging our independent registered public accounting firm. +The +audit committee may delegate pre-approval authority to one or more of its members. The member to whom such authority is delegated must report, for informational purposes only, any +pre-approval decisions to the audit committee at its next scheduled meeting. +In +the event the stockholders do not ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm, the audit committee will reconsider +its appointment. +The +affirmative vote of a majority of the votes cast affirmatively or negatively for this proposal is required to ratify the appointment of the independent registered public accounting +firm. +THE BOARD OF DIRECTORS RECOMMENDS A VOTE TO RATIFY THE APPOINTMENT OF ERNST & YOUNG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM, AND +PROXIES SOLICITED BY THE BOARD WILL BE VOTED IN FAVOR OF SUCH RATIFICATION UNLESS A STOCKHOLDER INDICATES OTHERWISE ON THE PROXY. +36 +Table of Contents +CORPORATE CODE OF CONDUCT AND ETHICS +We have adopted a corporate code of conduct and ethics that applies to all of our employees, including our chief executive officer and chief +financial and accounting officers. The text of the code of conduct and ethics is posted on our website at www.quanterix.com and will be made available to stockholders without charge, upon request, in +writing to the Corporate Secretary at 900 Middlesex Turnpike, Building 1, Billerica, Massachusetts 01821. Disclosure regarding any amendments to, or waivers from, provisions of the code that apply to +our directors, principal executive officer or principal financial officer will be included in a Current Report on Form 8-K within four business days following the date of the amendment or +waiver, unless website posting or the issuance of a press release of such amendments or waivers is then permitted by the rules of The Nasdaq Stock Market. +OTHER MATTERS +The board of directors knows of no other business which will be presented to the annual meeting. If any other business is properly brought +before the annual meeting, proxies will be voted in accordance with the judgment of the persons named therein. +STOCKHOLDER PROPOSALS AND NOMINATIONS FOR DIRECTOR +To be considered for inclusion in the proxy statement relating to our 2020 annual meeting of stockholders, we must receive stockholder proposals +(other than for director nominations) no later than February 7, 2020. To be considered for presentation at the 2020 annual meeting, although not included in the proxy statement, proposals +(including director nominations that are not requested to be included in our proxy statement) must be received no earlier than March 27, 2020 and no later than April 26, 2020. Proposals +that are not received in a timely manner will not be voted on at the 2020 annual meeting. If a proposal is received on time, the proxies that management solicits for the meeting may still exercise +discretionary voting authority on the proposal under circumstances consistent with the proxy rules of the SEC. All stockholder proposals should be marked for the attention of Secretary, Quanterix +Corporation, 900 Middlesex Turnpike, Building 1, Billerica, Massachusetts 01821. +Billerica, +Massachusetts +June 5, 2019 +37 +MMMMMMMMMMMM MMMMMMMMMMMMMMM C123456789 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000004 ENDORSEMENT_LINE______________ SACKPACK_____________ Your vote matters – here’s how to vote! You may vote online or by phone instead of mailing this card. Votes submitted electronically must be MR A SAMPLE DESIGNATION (IF ANY) ADD 1 ADD 2 ADD 3 ADD 4 ADD 5 ADD 6 received by 1:00 a.m., Eastern Time, on July 25, 2019. Online GIof ntoo welwewct.rinovneicstvoortviontge,.com/QTRX delete QR code and control # or scan the QR code — login details are located in the shaded bar below. Phone Call toll free 1-800-652-VOTE (8683) within the USA, US territories and Canada Save paper, time and money! Sign up for electronic delivery at www.investorvote.com/QTRX Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. q IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q + 1. Election of Class II Directors for a three-year term expiring in 2022: For Withhold For Withhold For Withhold 01 - Marijn Dekkers, Ph.D. 02 - Sarah E. Hlavinka 03 - David R. Walt, Ph.D. ForAgainst Abstain 2. Ratification of the appointment of Ernst & Young LLP as the independent registered public accounting firm for the fiscal year ending December 31, 2019. Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title. Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box. MMMMMMM C 1234567890 J N T 2 2 7 4 2 MR A SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE 140 CHARACTERS) MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND + 3 1 D V 4 032WQD MMMMMMMMM B Authorized Signatures — This section must be completed for your vote to count. Please date and sign below. A Proposals — The Board of Directors recommends a vote FOR all the nominees listed and FOR Proposal 2. 2019 Annual Meeting Proxy Card1234 5678 9012 345 +2019 Annual Meeting Admission Ticket 2019 Annual Meeting of Quanterix Corporation Stockholders July 25, 2019 10:00 AM ET Quanterix Corporation 900 Middlesex Turnpike, Building 1 Billerica, MA 01821 Upon arrival, please present this admission ticket and photo identification at the registration desk. Important notice regarding the Internet availability of proxy materials for the Annual Meeting of Stockholders. The material is available at: www.investorvote.com/QTRX q IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q + Notice of 2019 Annual Meeting of Stockholders Proxy Solicited by Board of Directors for Annual Meeting — July 25, 2019 E. Kevin Hrusovsky and Amol Chaubal, or any of them, each with the power of substitution, are hereby authorized to represent and vote the shares of the undersigned, with all the powers which the undersigned would possess if personally present, at the Annual Meeting of Stockholders of Quanterix Corporation to be held on July 25, 2019 or at any postponement or adjournment thereof. Shares represented by this proxy will be voted as directed by the stockholder. If no such directions are indicated, the Proxies will have authority to vote FOR the election of the nominees as directors and FOR Proposal 2. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting. (Items to be voted appear on reverse side) Change of Address — Please print new address below. Comments — Please print your comments below. + C Non-Voting Items Quanterix Corporation Small steps make an impact. Help the environment by consenting to receive electronic delivery, sign up at www.investorvote.com/QTRX \ No newline at end of file diff --git a/raw/proxies/0001503274/0001047469-19-003500/proxy_rpt.txt b/raw/proxies/0001503274/0001047469-19-003500/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..0944b020ea28817b61ddb99c0c2bb9a6b8421cf3 --- /dev/null +++ b/raw/proxies/0001503274/0001047469-19-003500/proxy_rpt.txt @@ -0,0 +1,172 @@ +CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS +Since January 1, 2017, we have engaged in the following transactions with our directors, director nominees, executive officers and +holders of more than 5% of our common stock, which we refer to as our principal stockholders, and affiliates or immediate family members of our directors, executive officers and principal +stockholders. We believe that all of these transactions were on terms as favorable as could have been obtained from unrelated third parties. +Some +of our directors are or were recently affiliated with our principal stockholders as indicated below: +Director +Affiliation with principal stockholder +Keith L. Crandell +Managing Director of ARCH Venture Partners VI, LLC, the ultimate general partner of ARCH Venture Fund VI, L.P., and Managing Director of ARCH Venture Partners VIII, LLC, the general partner +of ARCH Venture Fund VIII Overage, L.P. +Douglas G. Cole, M.D. +Managing Partner of Flagship Pioneering and a member of Flagship Ventures General Partner LLC, the sole general partner of Flagship Ventures Fund 2004, L.P. +John M. Connolly +Senior Advisor to Bain Capital Ventures, the ultimate general partner of Bain Capital Venture Fund 2005, L.P., BCIP Associates III, LLC and BCIP Associates III-B, +LLC. +Participation in Our Initial Public Offering +In December 2017, we issued an aggregate of 4,916,480 shares of our common stock at a purchase price of $15.00 per share, which included 641,280 +shares of common stock issued upon exercise by the underwriters of their option to purchase additional shares. Gross proceeds from the offering were approximately $73 million, prior to +deducting underwriting discounts and commissions and offering expenses payable by the Company. +The +table below sets forth the aggregate number of shares of our common stock issued to our directors, executive officers or holders of more than 5% of our capital stock, or an affiliate +or immediate family member thereof, at the time of the transaction: +Shares +Aggregate +Purchase Price +David R. Walt, Ph.D. +200,000 +$ +3,000,000 +Marijn Dekkers, Ph.D. +40,000 +$ +600,000 +E. Kevin Hrusovsky +34,000 +$ +510,000 +Arch Venture Fund VIII Overage +266,000 +$ +3,990,000 +Cormorant Global Healthcare Fund, LP +100,000 +$ +1,500,000 +Trinitas Innovation-Q Investment Co., Ltd. +55,000 +$ +825,000 +Series D-1 Preferred Stock Financing +In June 2017, we issued an aggregate of 2,113,902 shares of our Series D-1 preferred stock at $4.021 per share for an aggregate purchase +price of approximately $8.5 million, which we refer to as the Series D-1 preferred stock financing. Each share of our Series D-1 preferred stock converted automatically into +0.3111 shares of our common stock immediately prior to the completion of our initial public offering on December 11, 2017. +29 +Table of Contents +The +following table summarizes the Series D-1 preferred stock purchased by our directors, executive officers and principal stockholders. +Name of Purchaser +Number of Shares +of Series D-1 +Preferred Stock +Purchased +Aggregate +Purchase +Price +Marijn Dekkers, Ph.D.(1) +248,694 +$ +999,999 +(1) Dr. Dekkers +is a director of the Company. +License Agreement with Tufts University +We entered into a License Agreement with Tufts University pursuant to which we obtained an exclusive, worldwide license to research, develop, +commercialize, use, make, or have made, import or have imported, distribute or have distributed, offer or have offered, and sell or have sold products and services covered by patent rights to the +Simoa technology owned by Tufts University, as well as a non-exclusive license to related know-how. The rights licensed to us are for all fields of use and are sublicensable for a fee. One of our +directors and our founding scientist, David R. Walt, Ph.D. previously served as University Professor, Professor of Biomedical Engineering, Professor of Genetics, Professor of Neuroscience, Professor +of Cell and Molecular Biology, and Professor of Oral Medicine at Tufts University. Under that agreement, we are required to pay Tufts University royalties on all net sales of products and services as +well as a portion of any sublicensing revenues. Tufts University pays a portion of the royalties received from us to Dr. Walt, the amount of which is controlled solely by Tufts University. +Registration Rights +Pursuant to our registration rights agreement to which certain of our principal stockholders, directors and their affiliates are parties, the +holders of certain shares of common stock and warrants to purchase shares of our common stock are entitled to registration rights with respect to the shares of common stock held by them. These shares +include the shares held (and shares issuable upon the exercise of warrants held) by ARCH Venture Partners and affiliated funds, Bain Capital Venture entities, Flagship Ventures Fund 2005, L.P., +and our directors Marijn Dekkers, Ph.D. and David R. Walt, Ph.D., and an affiliate of our director Paul M. Meister. See "Security Ownership of Certain Beneficial Owners and Management." +Under +our registration rights agreement, holders of registrable shares can demand that we file a registration statement or request that their shares be included on a registration +statement that we are otherwise filing, in either case, registering the resale of their shares of common stock. The registration rights will terminate at the earlier of the closing of a Change of +Control Event, as such term is defined in our restated certificate of incorporation, (b) such time as Rule 144 under the Securities Act of 1933, as amended, or the Securities Act, or +another similar exemption under the Securities Act is available for the sale of all of such registrable shares without limitation during a three-month period without registration (and without the +requirement for us to be in compliance with the current public information required under Rule 144(c)(1)), or (3) the fifth anniversary of the completion of our initial public offering. +Demand Registration Rights. The holders of a majority of the registrable shares may require us to file a registration +statement under the +Securities Act at our expense, subject to certain exceptions, with respect to the resale of their registrable shares having an aggregate offering price (net of underwriting discounts and commissions, +if any) of at least $5 million, and we are required to use our reasonable best efforts to effect the registration. The holders of a majority of the registrable shares may require us to effect +up to two such demand registrations for the holders of registrable shares as a group. In the +30 +Table of Contents +event +we are required to effect such a demand registration, we may not effect any other registration of securities for sale for our own account (other than a registration effected solely to implement +an employee benefit plan or in certain business combination transactions) within 120 days following the effective date of the demand registration. +We +are also required to use our reasonable best efforts to qualify and remain qualified to register securities pursuant to a registration statement on Form S-3 under the +Securities Act. Any holder or holders of registrable shares anticipated to have an aggregate sale price (net of underwriting discounts and commissions, if any) in excess of $1 million will have +the right to require us to file, at our expense, an unlimited number of registration statements on Form S-3 for the registrable shares held by such requesting holder or holders, and we are +required to use our reasonable best efforts to effect such registrations. +Piggyback Registration Rights. If we propose to register any of our securities under the Securities Act for sale to the public +(except with respect +to registration statements on Form S-4, Form S-8 or another form not available for registering the registrable shares for sale to the public), the holders of registrable shares are +entitled to notice of such registration and to request that we include registrable shares for resale on such registration statement, subject to the right of any underwriter to limit the number of +shares included in such registration. The requisite holders of these "piggyback" registration rights have waived their rights in connection with the filing of our registration statement on +Form S-3 (File No. 333-230399). +We +will pay all registration expenses, other than underwriting fees, commissions or discounts, related to any demand or piggyback registration, including up to $50,000 of fees and +disbursements of counsel for the holders of registrable shares. The Registration Rights Agreement contains customary cross-indemnification provisions, pursuant to which we are obligated to indemnify +the selling stockholders in the event of misstatements or omissions in the registration statement attributable to us and they are obligated to indemnify us for misstatements or omissions attributable +to them. +Agreements with Directors +On March 20, 2017, we entered into a letter agreement with our director Marijn Dekkers, Ph.D. pursuant to which Dr. Dekkers agreed +to serve as a member of our board of directors. Pursuant to the letter agreement, we granted Dr. Dekkers an option to purchase 100,000 shares of our common stock vesting over four years. In +addition, we agreed to provide Dr. Dekkers with the opportunity to participate in any private placement financing transaction we entered into prior to completion of our initial public offering +on the same terms as other investors in such transaction. We also agreed to pay Dr. Dekkers compensation of $25,000 per year for service on our board of directors and to reimburse +Dr. Dekkers for his reasonable out-of-pocket expenses in attending board and committee meetings. We also agreed to provide indemnification of Dr. Dekkers pursuant to our certificate of +incorporation, an indemnification agreement and our director and officer insurance. This agreement terminated upon adoption of our non-employee director compensation policy in 2018. +On +August 7, 2013, we entered into a letter agreement with our director Paul M. Meister pursuant to which Mr. Meister agreed to serve as a member of our board of directors. +Pursuant to the letter agreement, we granted Mr. Meister an option to purchase 75,000 shares of our common stock vesting over four years. We also agreed to pay Mr. Meister compensation +of $25,000 per year for service on our board of directors and to reimburse Mr. Meister for his reasonable out-of-pocket expenses in attending board and committee meetings. We also agreed to +provide indemnification of Mr. Meister pursuant to our certificate of incorporation, an indemnification agreement and our director and officer insurance. This agreement terminated upon adoption +of our non-employee director compensation policy in 2018. +31 +Table of Contents +On +January 1, 2014, we entered into a letter agreement with our director David Walt, Ph.D. pursuant to which we agreed to pay Dr. Walt compensation of $25,000 per year for +service on our board of directors, commencing as of January 1, 2014 and for so long as he continues to serve as a non-employee member of our board of directors, and to reimburse Dr. Walt +for his reasonable out-of-pocket expenses in attending board and committee meetings. This agreement terminated upon adoption of our non-employee director compensation policy in 2018. +Indemnification Agreements with Officers and Directors and Directors' and Officers' Liability Insurance +We have entered into indemnification agreements with each of our executive officers and directors. The indemnification agreements, our restated +certificate of incorporation and our restated bylaws require us to indemnify our directors to the fullest extent not prohibited by Delaware law. Subject to certain limitations, our restated bylaws +also require us to advance expenses incurred by our directors and officers. +Our +2017 Employee, Director and Consultant Equity Incentive Plan and our 2007 Stock Option and Grant Plan, as amended, also provide that our directors (and in the case of the 2017 plan, +our employees) will not be liable for any act, omission, interpretation, construction or determination made in good faith in connection with the respective plan, and the members of our board of +directors and any committee administering the plan will be entitled to indemnification and reimbursement by us in respect of any claim, loss, damage or expense (including reasonable attorneys' fees) +arising or resulting therefrom to the fullest extent permitted by law and/or under any directors' and officers' liability insurance coverage which may be in effect from time to time. +We +also maintain a general liability insurance policy which covers certain liabilities of directors and officers of our company arising out of claims based on acts or omissions in their +capacities as directors or officers. +Policies and Procedures for Related Party Transactions +Pursuant to its charter, our audit committee is responsible for reviewing and approving, prior to our entry into any such transaction, all +transactions reportable by us under Item 404 of Regulation S-K in which we are a participant and in which any parties related to us, including our executive officers, our directors, +beneficial owners of more than 5% of our securities, immediate family members of the foregoing persons and any other persons whom our board of directors determines may be considered related persons +under Item 404 of Regulation S-K, has or is expected to have a direct or indirect material interest. +In +reviewing and approving such transactions, the audit committee will obtain, or will direct our management to obtain on its behalf, all information that the committee believes to be +relevant and important to a review of the transaction prior to its approval. Following receipt of the necessary information, a discussion will be held of the relevant factors if deemed to be necessary +by the committee prior to approval. If a discussion is not deemed to be necessary, approval may be given by +written consent of the committee. This approval authority may also be delegated to the chair of the audit committee in some circumstances. No related person transaction will be entered into prior to +the completion of these procedures. +The +audit committee or its chair, as the case may be, will approve only those related person transactions that are determined to be in, or not inconsistent with, the best interests of us +and our stockholders, taking into account all available facts and circumstances as the committee or the chair determines in good faith to be necessary in accordance with principles of Delaware law +generally applicable to directors of a Delaware corporation. These facts and circumstances will typically include, but not be limited to, the benefits of the transaction to us; the impact on a +director's independence in +32 +Table of Contents +the +event the related person is a director, an immediate family member of a director or an entity in which a director is a partner, stockholder or executive officer; the availability of other sources +for comparable products or services; the terms of the transaction; and the terms of comparable transactions that would be available to unrelated third parties or to employees generally. No member of +the audit committee will participate in any review, consideration or approval of any related person transaction with respect to which the member or any of his or her immediate family members has an +interest. +33 +Table of Contents \ No newline at end of file diff --git a/raw/proxies/0001503274/0001047469-20-002697/proxy.txt b/raw/proxies/0001503274/0001047469-20-002697/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..526ed27c9deb4e90993d7a38e024188b9fafa679 --- /dev/null +++ b/raw/proxies/0001503274/0001047469-20-002697/proxy.txt @@ -0,0 +1,1633 @@ +DEF 14A +1 +a2241440zdef14a.htm +DEF 14A +Use these links to rapidly review the document +TABLE OF CONTENTS +Table of Contents +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Proxy +Statement Pursuant to Section 14(a) of +the Securities Exchange Act of 1934 (Amendment No. ) +Filed by the Registrant ý +Filed by a Party other than the Registrant o +Check the appropriate box: +o +Preliminary Proxy Statement +o +Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +ý +Definitive Proxy Statement +o +Definitive Additional Materials +o +Soliciting Material under §240.14a-12 +Quanterix Corporation +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +ý +No fee required. +o +Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. +(1) +Title of each class of securities to which transaction applies: +(2) +Aggregate number of securities to which transaction applies: +(3) +Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): +(4) +Proposed maximum aggregate value of transaction: +(5) +Total fee paid: +o +Fee paid previously with preliminary materials. +o +Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration +statement number, or the Form or Schedule and the date of its filing. +(1) +Amount Previously Paid: +(2) +Form, Schedule or Registration Statement No.: +(3) +Filing Party: +(4) +Date Filed: +Table of Contents +April 29, 2020 +To +Our Stockholders: +You +are cordially invited to attend the 2020 annual meeting of stockholders of Quanterix Corporation to be held at 10:00 a.m. ET on Thursday, June 25, 2020 at our offices, +located at 900 Middlesex Turnpike, Building 1, Billerica, Massachusetts 01821. We currently intend to hold the annual meeting in person. However, we are actively monitoring developments with +regard to the coronavirus, or COVID-19, +pandemic and it is possible that the annual meeting may be held by means of remote communication. In the event it is not possible or advisable to hold the annual meeting in person, we will announce +alternative arrangements for the meeting as promptly as practicable. +Details +regarding the meeting, the business to be conducted at the meeting, and information about Quanterix Corporation that you should consider when you vote your shares are described +in the accompanying proxy statement. Details on how to participate in the meeting will be available at www.investorvote.com/qtrx . +At +the annual meeting, three persons will be elected to our board of directors to serve three-year terms expiring in 2023. In addition, we will ask stockholders to ratify the appointment +of Ernst & Young LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2020. Our board of directors recommends the approval of each of +these proposals. Such other business will be transacted as may properly come before the annual meeting. +Under +Securities and Exchange Commission rules that allow companies to furnish proxy materials to stockholders over the Internet, we have elected to deliver our proxy materials to the +majority of our stockholders over the Internet. This delivery process allows us to provide stockholders with the information they need, while at the same time conserving natural resources and lowering +the cost of delivery. On or about May 1, 2020, we intend to begin sending to our stockholders a Notice of Internet Availability of Proxy Materials (the "Notice") containing instructions on how +to access our proxy statement for our 2020 Annual Meeting of Stockholders and our 2019 annual report to stockholders. The Notice also provides instructions on how to vote online or by telephone and +how to receive a paper copy of the proxy materials by mail. +We +hope you will be able to attend the annual meeting. Whether you plan to attend the annual meeting or not, it is important that you cast your vote either in person or by proxy. You may +vote over the Internet as well as by telephone or by mail. When you have finished reading the proxy statement, you are urged to vote in accordance with the instructions set forth in the proxy +statement. We encourage you to vote by proxy so that your shares will be represented and voted at the meeting, whether or not you can attend. +Thank +you for your continued support of Quanterix Corporation. We look forward to seeing you at the annual meeting. +Sincerely, +/s/ E. KEVIN HRUSOVSKY +E. Kevin Hrusovsky +Chairman, President and Chief Executive Officer +Table of Contents +QUANTERIX CORPORATION +900 Middlesex Turnpike +Billerica, Massachusetts 01821 +April 29, 2020 +NOTICE OF 2020 ANNUAL MEETING OF STOCKHOLDERS +TIME: 10:00 a.m. ET +DATE: +Thursday, June 25, 2020 +PLACE: +Quanterix Corporation, 900 Middlesex Turnpike, Building 1, Billerica, Massachusetts 01821* +PURPOSES: +1. To +elect three directors to serve three-year terms expiring in 2023; +2. To +ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2020; +and +3. To +transact such other business that is properly presented at the annual meeting and any adjournments or postponements thereof. +WHO +MAY VOTE: +You +may vote if you were the record owner of Quanterix Corporation common stock at the close of business on April 28, 2020. A list of stockholders of record will be available at +the annual meeting and, during the 10 days prior to the annual meeting, at our principal executive offices, located at 900 Middlesex Turnpike, Building 1, Billerica, Massachusetts 01821. +All +stockholders are cordially invited to attend the annual meeting. Whether you plan to attend the annual meeting or not, we urge you to vote by following the +instructions in the Notice of Internet Availability of Proxy Materials that you previously received and submit your proxy by the Internet, telephone or mail in order to ensure the presence of a +quorum. You may change or revoke your proxy at any time before it is voted at the meeting. +BY ORDER OF THE BOARD OF DIRECTORS +/s/ JOHN FRY +John Fry +General Counsel and Secretary +* We +currently intend to hold the annual meeting in person. However, we are actively monitoring developments with regard to the coronavirus, or COVID-19, pandemic and it +is possible that the annual meeting may be held by means of remote communication. In the event it is not possible or advisable to hold the annual meeting in person, we will announce alternative +arrangements for the meeting as promptly as practicable. Details on how to participate will be available at www.investorvote.com/qtrx . +Table of Contents +TABLE OF CONTENTS +Page +Important Information About the Annual Meeting and Voting +1 +Security Ownership of Certain Beneficial Owners and Management +7 +Management and Corporate Governance +10 +Executive Officer and Director Compensation +20 +Equity Compensation Plan Information +26 +Report of Audit Committee +27 +Certain Relationships and Related Person Transactions +28 +Election of Directors +31 +Ratification of the Appointment of the Independent Registered Public Accounting +Firm +32 +Corporate Code of Conduct and Ethics +34 +Other Matters +34 +Stockholder Proposals and Nominations for Director +34 +Table of Contents +QUANTERIX CORPORATION +900 Middlesex Turnpike +Billerica, Massachusetts 01821 +PROXY STATEMENT FOR QUANTERIX CORPORATION +2020 ANNUAL MEETING OF STOCKHOLDERS +TO BE HELD ON JUNE 25, 2020 +This proxy statement, along with the accompanying Notice of 2020 Annual Meeting of Stockholders, contains information about the 2020 annual meeting of +stockholders of Quanterix Corporation, including any adjournments or postponements of the annual meeting. We are holding the annual meeting at 10:00 a.m. ET on Thursday, June 25, 2020 at +our offices, located at 900 Middlesex Turnpike, Building 1, Billerica, Massachusetts 01821. We currently intend to hold the annual meeting in person. However, we are actively monitoring developments +regarding the COVID-19 pandemic and it is possible that the annual meeting may be held by means of remote communication. In the event it is not possible or advisable to hold the annual meeting in +person, we will announce alternative arrangements for the meeting as promptly as practicable. Details on how to participate will be available on our website at www.investorvote.com/qtrx . +In +this proxy statement, we refer to Quanterix Corporation as "Quanterix," "the Company," "we" and "us." +This +proxy statement relates to the solicitation of proxies by our board of directors for use at the annual meeting. +On +or about May 1, 2020, we intend to begin sending the Important Notice Regarding the Availability of Proxy Materials to stockholders entitled to vote at the annual meeting. +IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE +STOCKHOLDER MEETING TO BE HELD ON JUNE 25, 2020 +This proxy statement and our 2019 annual report to stockholders are available for viewing, printing and downloading at +www.investorvote.com/qtrx. To view these materials, please have your 15-digit control number(s) available that appears on your Notice or proxy card. On this website, you can also elect to receive +future distributions of our proxy statements and annual reports to stockholders by electronic delivery. +Additionally, you can find a copy of our Annual Report on Form 10-K, which includes our financial statements, for the fiscal year ended December 31, +2019 on the website of the Securities and Exchange Commission (the "SEC") at www.sec.gov , or in the "SEC Filings" section of the +"Financial Information" section of the "Investors" section of our website at www.quanterix.com. You may also obtain a printed copy of our Annual Report on Form 10-K, including our financial +statements, free of charge, from us by sending a written request to: Quanterix Corporation, Attn: Investor Relations, 900 Middlesex Turnpike, Building 1, Billerica, Massachusetts 01821. +Exhibits will be provided upon written request and payment of an appropriate processing fee. +IMPORTANT INFORMATION ABOUT THE ANNUAL MEETING AND VOTING +Why is the Company Soliciting My Proxy? +Our board of directors is soliciting your proxy to vote at the 2020 annual meeting of stockholders to be held at our offices, located at 900 +Middlesex Turnpike, Building 1, Billerica, Massachusetts 01821, on Thursday, June 25, 2020, at 10:00 a.m. ET, and any adjournments or postponements of the meeting, which we refer to as +the annual meeting. This proxy statement, along with the accompanying Notice of Annual Meeting of Stockholders, summarizes the purposes of the meeting and the information you need to know to vote at +the annual meeting. +Table of Contents +We +have made available to you on the Internet or have sent you this proxy statement, the Notice of Annual Meeting of Stockholders, the proxy card and a copy of our Annual Report on +Form 10-K for the fiscal year ended December 31, 2019 because you owned shares of our common stock on the record date. We intend to commence distribution of the Important Notice +Regarding the Availability of Proxy Materials, which we refer to throughout this proxy statement as the Notice, and, if applicable, proxy materials to stockholders on or about May 1, 2020. +Why Did I Receive a Notice in the Mail Regarding the Internet Availability of Proxy Materials Instead +of a Full Set of Proxy Materials? +As permitted by the rules of the SEC, we may furnish our proxy materials to our stockholders by providing access to such documents on the +Internet, rather than mailing printed copies of these materials to each stockholder. Most stockholders will not receive printed copies of the proxy materials unless they request them. We believe that +this process should expedite stockholders' receipt of proxy materials, lower the costs of the annual meeting and help to conserve natural resources. If you received a Notice by mail or electronically, +you will not receive a printed or email copy of the proxy materials, unless you request one by following the instructions included in the Notice. Instead, the Notice instructs you as to how you may +access and review all of the proxy materials and submit your proxy on the Internet. If you requested a paper copy of the proxy materials, you may authorize the +voting of your shares by following the instructions on the proxy card, in addition to the other methods of voting described in this proxy statement. +Who Can Vote? +Only stockholders who owned our common stock at the close of business on April 28, 2020 are entitled to vote at the annual meeting. On +this record date, there were 28,306,866 shares of our common stock outstanding and entitled to vote. Our common stock is our only class of voting stock. +You +do not need to attend the annual meeting to vote your shares. Shares represented by valid proxies, received in time for the annual meeting and not revoked prior to the annual +meeting, will be voted at the annual meeting. For instructions on how to change or revoke your proxy, see "May I Change or Revoke My Proxy?" below. +How Many Votes Do I Have? +Each share of our common stock that you own entitles you to one vote. +How Do I Vote? +Whether you plan to attend the annual meeting or not, we urge you to vote by proxy. All shares represented by valid proxies that we receive +through this solicitation, and that are not revoked, will be voted in accordance with your instructions on the proxy card or as instructed via Internet or telephone. You may specify whether your +shares should be voted for or withheld for each nominee for director and whether your shares should be voted for, against or abstain with respect to the other proposal. If you properly submit a proxy +without giving specific voting instructions, your shares will be voted in accordance with the board of director's recommendations as noted below. Voting by proxy will not affect your right to attend +the annual meeting. If your shares are registered +directly in your name through our stock transfer agent, Computershare Trust Company N.A., or you have stock certificates registered in your name, you may vote: +• By Internet or by +telephone. Follow the instructions included in the Notice or, if you received printed materials, in the proxy card to vote over the Internet or +by telephone. +2 +Table of Contents +• By mail. If you received a proxy +card by mail, you can vote by mail by completing, signing, dating and returning the proxy card as instructed on the card. If you sign the proxy card but do not specify how you want your shares voted, +they will be voted in accordance with the board of director's recommendations as noted below. +• In person at the meeting. If you +attend the meeting, you may deliver a completed proxy card in person or you may vote by completing a ballot, which will be available at the meeting. +Telephone and Internet voting facilities for stockholders of record will be available 24 hours a day and will close at 1:00 a.m. ET on June 25, +2020. +If +your shares are held in "street name" (held in the name of a bank, broker or other holder of record), you will receive instructions from the holder of record. You must follow the +instructions of the holder of record in order for your shares to be voted. Telephone and Internet voting also will be offered to stockholders owning shares through certain banks and brokers. If your +shares are not registered in your own name and you plan to vote your shares in person at the annual meeting, you should contact your broker or agent to obtain a legal proxy or broker's proxy card and +bring it to the annual meeting in order to vote. +How Does the Board of Directors Recommend That I Vote on the Proposals? +The board of directors recommends that you vote as follows: +• " FOR " the election of the three nominees for director; and +• " FOR " the ratification of the appointment of Ernst & Young LLP as our independent +registered public accounting firm for our fiscal year ending December 31, 2020. +If +any other matter is presented at the annual meeting, your proxy provides that your shares will be voted by the proxy holder listed in the proxy in accordance with the proxy holder's +best judgment. At the time this proxy statement was first made available, we knew of no matters that needed to be acted on at the annual meeting, other than those discussed in this proxy statement. +May I Change or Revoke My Proxy? +If you give us your proxy, you may change or revoke it at any time before the annual meeting. You may change or revoke your proxy in any one of +the following ways: +• if you received a proxy card, by signing a new proxy card with a date later than your previously delivered proxy and submitting it as +instructed above; +• by re-voting by Internet or by telephone as instructed above; +• by notifying our Corporate Secretary in writing before the annual meeting that you have revoked your proxy; or +• by attending the annual meeting in person and voting in person. Attending the annual meeting in person will not in and of itself revoke a +previously submitted proxy. You must specifically request at the annual meeting that it be revoked. +Your +most current vote, whether by telephone, Internet or proxy card is the one that will be counted. +What if I Receive More Than One Notice or Proxy Card? +You may receive more than one Notice or proxy card if you hold shares of our common stock in more than one account, which may be in registered +form or held in street name. Please vote in the +3 +Table of Contents +manner +described above under "How Do I Vote?" for each account to ensure that all of your shares are voted. +Will My Shares Be Voted if I Do Not Vote? +If your shares are registered in your name or if you have stock certificates, they will not be counted if you do not vote as described above +under "How Do I Vote?" If your shares are held in street name and you do not provide voting instructions to the bank, broker or other nominee that holds your shares as described above, the bank, +broker or other nominee that holds your shares has the authority to vote your unvoted shares only on the ratification of the appointment of our independent registered public accounting firm without +receiving instructions from you. Therefore, we encourage you to provide voting instructions to your bank, broker or other nominee. This ensures your shares will be voted at the annual meeting and in +the manner you desire. A "broker non-vote" will occur if your broker cannot vote your shares on a particular matter because it has not received instructions from you and does not have discretionary +voting authority on that matter or because your broker chooses not to vote on a matter for which it does have discretionary voting authority. +What Vote is Required to Approve Each Proposal and How are Votes Counted? +Proposal 1: Elect Directors +The three nominees for director who receive the most votes (also known as a "plurality" of the votes cast) will be elected. You may vote either FOR all of the nominees, WITHHOLD your vote from all of the +nominees or WITHHOLD your vote from any one or more of the nominees. Votes that are withheld will not be included in the vote tally for the election of the directors. Brokerage firms do not have authority to vote customers' unvoted shares held by the +firms in street name for the election of the directors. As a result, any shares not voted by a customer will be treated as a broker non-vote. Such broker non-votes will have no effect on the results of this vote. +Proposal 2: Ratify Appointment of Independent Registered Public Accounting Firm +The affirmative vote of a majority of the votes cast affirmatively or negatively for this proposal is required to ratify the +appointment of our independent registered public accounting firm. Abstentions will have no effect on the results of this vote. Brokerage firms have authority to vote customers' unvoted shares held by the firms in street name on this proposal. If a +broker does not exercise this authority, such broker non-votes will have no effect on the results of this vote. We are not required to obtain the approval of our stockholders to appoint our independent registered public accounting firm. However, if +our stockholders do not ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for 2020, the audit committee of our board of directors will reconsider its appointment. +4 +Table of Contents +Is Voting Confidential? +We will keep all the proxies, ballots and voting tabulations private. We only let our Inspector of Election, Computershare Trust Company, N.A., +examine these documents. Management will not know how you voted on a specific proposal unless it is necessary to meet legal requirements. We will, however, forward to management any written comments +you make on the proxy card or that you otherwise provide. +Where Can I Find the Voting Results of the Annual Meeting? +The preliminary voting results will be announced at the annual meeting, and we will publish preliminary results, or final results if available, +in a Current Report on Form 8-K within four business days of the annual meeting. If final results are unavailable at the time we file the Form 8-K, then we will file an amended Current +Report on Form 8-K to disclose the final voting results within four business days after the final voting results are known. +What Are the Costs of Soliciting these Proxies? +We will pay all of the costs of soliciting these proxies. Our directors and employees may solicit proxies in person or by telephone, fax or +email. We will pay these employees and directors no additional compensation for these services. We will ask banks, brokers and other institutions, nominees and fiduciaries to forward these proxy +materials to their principals and to obtain authority to execute proxies. We will then reimburse them for their expenses. +What Constitutes a Quorum for the Annual Meeting? +The presence, in person or by proxy, of the holders of a majority of the voting power of all outstanding shares of our common stock entitled to +vote at the annual meeting is necessary to constitute a quorum at the annual meeting. Votes of stockholders of record who are present at the annual meeting in person or by proxy, abstentions, and +broker non-votes are counted for purposes of determining whether a quorum exists. +When/Where is the Annual Meeting Being Held? +The annual meeting will be held at 10:00 a.m. ET on Thursday, June 25, 2020 at our offices, located at 900 Middlesex Turnpike, +Building 1, Billerica, Massachusetts 01821. When you +arrive, signs will direct you to the appropriate meeting rooms. You need not attend the annual meeting in order to vote. +What Happens if a Change to the Annual Meeting is Necessary Due to COVID-19? +We are sensitive to public health and travel risks and concerns related to the COVID-19 pandemic, and may announce alternative arrangements for +the annual meeting, including holding the annual meeting by means of remote communication. If we take this step, we will announce the changes in advance. Details on how to participate will be +available at www.investorvote.com/qtrx . A meeting held by remote means will have no impact on stockholders' ability to provide their proxy by using the +internet or telephone or by completing, signing, dating and mailing their proxy card as discussed above. As always, we encourage you to vote your shares prior to the annual meeting. +Householding of Annual Disclosure Documents +SEC rules concerning the delivery of annual disclosure documents allow us or your broker to send a single Notice or, if applicable, a single set +of our proxy materials to any household at which two or more of our stockholders reside, if we or your broker believe that the stockholders are members of the +5 +Table of Contents +same +family. This practice, referred to as "householding," benefits both you and us. It reduces the volume of duplicate information received at your household and helps to reduce our expenses. The +rule applies to our Notices, annual reports, proxy statements and information statements. Once you receive notice from your broker or from us that communications to your address will be "householded," +the practice will continue until you are otherwise notified or until you revoke your consent to the practice. Stockholders who participate in householding will continue to have access to and utilize +separate proxy voting instructions. +If +your household received a single Notice or, if applicable, a single set of proxy materials this year, but you would prefer to receive your own copy, please contact our transfer agent, +Computershare Trust Company, N.A., by calling their toll free number, 1-800-736-3001. +If +you do not wish to participate in "householding" and would like to receive your own Notice or, if applicable, set of our proxy materials in future years, follow the instructions +described below. Conversely, if you share an address with another stockholder and together both of you would like to receive only a single Notice or, if applicable, set of proxy materials, follow +these instructions: +• If your shares are registered in your own name, please contact our transfer agent, Computershare Trust Company, N.A., and inform them of your +request by calling them at 1-800-736-3001 or writing them at Computershare Trust Company, N.A., P.O. Box 505000, Louisville, KY 40233-5000. +• If a broker or other nominee holds your shares, please contact the broker or other nominee directly and inform them of your request. Be sure to +include your name, the name of your brokerage firm and your account number. +Electronic Delivery of Company Stockholder Communications +Most stockholders can elect to view or receive copies of future proxy materials over the Internet instead of receiving paper copies in the mail. +You +can choose this option and save the Company the cost of producing and mailing these documents by: +• following the instructions provided on your Notice or proxy card; +• following the instructions provided when you vote over the Internet; or +• going to www.computershare.com and logging into the Investor Center to follow the instructions provided. +6 +Table of Contents +SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT +The following table sets forth certain information with respect to the beneficial ownership of our common stock as of April 1, 2020, for +(a) the executive officers named in the Summary Compensation Table on page 20 of this proxy statement, (b) each of our directors and director nominees, (c) all of our +current directors and executive officers as a group and (d) each stockholder known by us to own beneficially more than 5% of our common stock. Beneficial ownership is determined in accordance +with the rules of the SEC and includes voting or investment power with respect to the securities. We deem shares of common stock that may be acquired by an individual or group within 60 days of +April 1, 2020 pursuant to the exercise of options, warrants or the vesting of restricted stock units to be outstanding for the purpose of computing the percentage ownership of such individual +or group, but are not deemed to be outstanding for the purpose of computing the percentage ownership of any other person shown in the table. Except as indicated in footnotes to this table, we believe +that the stockholders named in this table have sole voting and investment power with respect to all shares of common stock shown to be beneficially owned by them based on information provided to us by +these +stockholders. Percentage of ownership is based on 28,286,819 shares of common stock outstanding on April 1, 2020. +Shares Beneficially +Owned(1) +Name and Address of Beneficial Owner +Number +Percent +Principal Stockholders +ARCH Venture Partners and affiliated funds (1) +8755 West Higgins Avenue, Suite 1025 +Chicago, IL 60631 +3,949,684 +14.0 +% +Gilder, Gagnon, Howe & Co. LLC(2) +475 10 th Avenue +New York, NY 10018 +3,345,194 +11.8 +% +Bain Capital Ventures Entities(3) +200 Clarendon Street +Boston, MA 02116 +2,136,085 +7.6 +% +T. Rowe Price Associates, Inc.(4) +100 E. Pratt Street +Baltimore, MD 21202 +1,444,434 +5.1 +% +Directors, Director Nominees and Named Executive Officers +E. Kevin Hrusovsky(5) +1,251,182 +4.4 +% +John M. Connolly(6) +23,040 +* +Keith L. Crandell(7) +3,972,525 +14.0 +% +Marijn Dekkers, Ph.D.(8) +162,992 +* +Martin D. Madaus, Ph.D.(9) +265,013 +* +Sarah E. Hlavinka +1,272 +* +Paul M. Meister(10) +46,601 +* +David R. Walt, Ph.D.(11) +1,289,904 +4.6 +% +Amol Chaubal(12) +24,782 +* +John Fry +— +— +All directors and current executive officers as a group ( 13 persons)(14) +7,407,587 +25.4 +% +* Represents +beneficial ownership of less than 1% of the outstanding shares of our common stock. +(1) Based +on a Schedule 13G/A filed by ARCH Venture Fund VI, L.P. ("ARCH Venture Fund VI"); ARCH Venture Fund VIII Overage, L.P. ("AVF VIII +Overage"); ARCH Venture Partners VI, L.P. ("AVP VI LP"); ARCH Venture Partners VI, LLC ("AVP VI LLC"); ARCH Venture +7 +Table of Contents +Partners VIII, LLC +("AVP VIII LLC"); and Keith Crandell ("Crandell"), Clinton Bybee ("Bybee") and Robert Nelsen ("Nelsen") (collectively, the "Managing Directors" and +individually, each a "Managing Director") with the SEC on February 13, 2020, which reported ownership as of December 31, 2019. ARCH Venture Fund VI is the record owner of 2,412,000 +shares of common stock (the "ARCH VI Shares") and AVF VIII Overage is the record holder of 1,537,684 shares of common stock (the "ARCH Overage Shares"; combined with ARCH VI Shares, the "ARCH +Shares"). AVP VI LP, as the sole general partner of ARCH Venture Fund VI, may be deemed to beneficially own the ARCH VI Shares. AVP VI LLC, as the sole general partner of AVP +VI LP, may be deemed to beneficially own the ARCH VI Shares. AVP VIII LLC, as the sole general partner of AVF VIII Overage, may be deemed beneficially own the ARCH Overage Shares. As +managing directors of AVP VI LLC and AVP VIII LLC, each Managing Director may also be deemed to share the power to direct the disposition and vote of the ARCH Shares. The Managing +Directors disclaim beneficial ownership of the ARCH Shares, except to the extent of any pecuniary interest therein. +(2) Based +on a Schedule 13G filed by Gilder, Gagnon, Howe & Co. LLC ("Gilder Gagnon") with the SEC on February 14, 2020, which +reported ownership as of December 31, 2019. Consists of 3,345,194 shares held in customer accounts over which partners and/or employees of Gilder Gagnon have discretionary authority to dispose +of or direct the disposition of the shares. +(3) Based +on a Schedule 13G filed by (1) Bain Capital Venture Fund 2005, L.P. ("Fund 2005"), (2) BCIP Associates III, LLC ("BCIP III") +and (3) BCIP Associates III-B, LLC ("BCIP III-B" and together with Fund 2005 and BCIP III, the "Bain Capital Entities") with the SEC on February 14, 2018, which reported ownership +as of December 31, 2017. Bain Capital Venture Investors, LLC ("BCVI") is the general partner of Bain Capital Venture Partners 2005, L.P. ("BCVP"), which is the general partner of +Fund 2005. Boylston Coinvestors, LLC ("Boylston"), is the managing partner of (i) BCIP Associates III, which is the manager of BCIP III, and (ii) BCIP Associates III-B, which is +the manager of BCIP III-B. The governance, investment strategy and decision-making process with respect to the investments held by all of the Bain Capital Entities is directed by the Executive +Committee of BCVI, which consists of Michael A. Krupka and Ajay Agarwal. As a result, BCVI and Messrs. Krupka and Agarwal may be deemed to share voting and dispositive power with respect to all +of the shares of common stock held by all of the Bain Capital Entities. As of December 31, 2017, Fund 2005 held 1,865,010 shares of common stock, BCIP III held 265,727 shares of common stock, +and BCIP III-B held 5,348 shares of common stock. As a result of the foregoing, the Bain Capital Entities may collectively be deemed to beneficially own in the aggregate 2,136,085 shares of common +stock. +(4) Based +on a Schedule 13G filed by T. Rowe Price Associates, Inc. ("T. Rowe Price") with the SEC on February 14, 2020, which reported ownership as +of December 31, 2019. Of the 1,444,434 shares reported as beneficially owned, T. Rowe Price reports sole voting power with respect to 566,649 of the shares and sole dispositive power with +respect to all 1,444,434 shares. +(5) Consists +of 937,866 shares of common stock (which includes 39,815 shares of restricted stock subject to performance-based vesting), 299,070 shares of common stock +issuable upon the exercise of stock options exercisable within 60 days of April 1, 2020 and 14,246 shares of common stock issuable upon the vesting of restricted stock unit awards +("RSUs") within 60 days of April 1, 2020 held by Mr. Hrusovsky. +(6) Consists +of 7,240 shares of common stock and 15,800 shares of common stock issuable upon the exercise of stock options exercisable within 60 days of +April 1, 2020 held by Mr. Connolly. Mr. Connolly is a senior advisor for Bain Capital Ventures but has no voting or investment power with respect to the securities described in +footnote 3. +8 +Table of Contents +(7) See +footnote 1. Also includes 7,041 shares of common stock and 15,800 shares of common stock issuable upon the exercise of stock options exercisable within +60 days of April 1, 2020 held by Mr. Crandell. Mr. Crandell disclaims beneficial ownership of the securities described in footnote 1 except to the extent of his pecuniary +interest therein, if any. +(8) Consists +of 4,540 shares of common stock, 41,074 shares of common stock issuable upon the exercise of stock options exercisable within 60 days of +April 1, 2020 held by Dr. Dekkers and 117,378 shares of common stock held by Novalis LifeSciences Investments I, L.P. ("Novalis"). Dr. Dekkers has sole voting and +investment control over the shares held by Novalis and has a pecuniary interest in 27,619 of the shares held by Novalis. +(9) Consists +of 8,275 shares of common stock held by Dr. Madaus, 73,172 shares of common stock issuable upon the exercise of stock options exercisable within +60 days of April 1, 2020 held by Dr. Madaus and 183,566 shares of common stock held by a trust for which Dr. Madaus is a trust advisor who shares voting and investment +power over the shares held by the trust. +(10) Consists +of 7,466 shares of common stock and 39,135 shares of common stock issuable upon the exercise of stock options exercisable within 60 days of +April 1, 2020 held by Mr. Meister. Does not include 120,035 shares of common stock held by Woburn Abbey March 2009 Trust, U.D.T. March 31, 2009 as Mr. Meister does not have +voting or investment power over the shares held by the trust. +(11) Consists +of 1,274,104 shares of common stock and 15,800 shares of common stock issuable upon the exercise of stock options exercisable within 60 days of +April 1, 2020 held by Dr. Walt. Does not include 200,684 shares of common stock held by The David R. Walt 2008 Irrevocable Family Trust (the "Walt Trust"), of which Dr. Walt's +spouse is trustee and has sole voting and investment power over the shares held by the Walt Trust. +(12) Consists +of 19,458 shares of common stock issuable upon the exercise of stock options exercisable within 60 days of April 1, 2020 and 5,324 shares of +common stock issuable upon the vesting of RSUs within 60 days of April 1, 2020 held by Mr. Chaubal. +(13) See +footnotes 5 through 12. Also includes an aggregate of 53,012 shares of common stock, 315,170 shares of common stock issuable upon the exercise of stock options +exercisable within 60 days of April 1, 2020 and 2,094 shares of common stock issuable upon the vesting of RSUs within 60 days of April 1, 2020 held by David C. Duffy, +Ph.D., our Senior Vice President, Research & Development and Chief Technology Officer, Mark T. Roskey, Ph.D., our Senior Vice President, Commercial and Accelerator, and Dawn R. Mattoon, Ph.D., +our Senior Vice President, Research Products. +9 +Table of Contents +MANAGEMENT AND CORPORATE GOVERNANCE +The Board of Directors +Our restated certificate of incorporation and our restated bylaws provide that our business is to be managed by or under the direction of our +board of directors. Our board of directors is divided into three classes for purposes of election. One class is elected at each annual meeting of stockholders to serve for a three-year term. Our board +of directors currently consists of eight members, classified into three classes as follows: (1) Keith L. Crandell, E. Kevin Hrusovsky and Paul M. Meister constitute Class III with a term +ending at the 2020 annual meeting; (2) John M. Connolly and Martin D. Madaus, Ph.D. constitute Class I with a term ending at the 2021 annual meeting; and (3) Marijn Dekkers, +Ph.D., Sarah E. Hlavinka and David R. Walt, Ph.D. constitute Class II with a term ending at the 2022 annual meeting. +Our +board of directors accepted the recommendation of the nominating and governance committee and voted to nominate Keith L. Crandell, E. Kevin Hrusovsky and Paul M. Meister for election +at the annual meeting for a term of three years to serve until the 2023 annual meeting of stockholders and until their respective successors have been elected and qualified. +Set +forth below are the names of the persons nominated as directors and directors whose terms do not expire this year, their ages, their offices in the Company, if any, their principal +occupations or employment for at least the past five years, the length of their tenure as directors and the names of other public companies in which such persons hold or have held directorships during +the past five years, as of April 15, 2020. Additionally, information about the specific experience, qualifications, attributes or skills that led to our board of directors' conclusion at the +time of filing of this proxy statement that each person listed below should serve as a director is set forth below: +Name +Age +Position with the Company +E. Kevin Hrusovsky +58 +Chairman, President and Chief Executive Officer +John M. Connolly(1)(3) +67 +Director +Keith L. Crandell(2) +59 +Director +Marijn Dekkers, Ph.D.(2) +62 +Director +Sarah E. Hlavinka(3) +55 +Director +Martin D. Madaus, Ph.D.(1)(3) +60 +Director +Paul M. Meister(1) +67 +Director +David R. Walt, Ph.D.(2) +67 +Director +(1) Member +of our audit committee +(2) Member +of our compensation committee +(3) Member +of our nominating and governance committee +Our +board of directors has reviewed the materiality of any relationship that each of our directors and director nominees has with Quanterix Corporation, either directly or indirectly. +Based upon this review, our board of directors has determined that the following directors and director nominees are "independent directors" as defined by The Nasdaq Stock Market: John M. Connolly, +Keith L. Crandell, Marijn Dekkers, Ph.D., Sarah E. Hlavinka, Martin D. Madaus, Ph.D., Paul M. Meister and David R. Walt, Ph.D. +E. Kevin Hrusovsky has been a member of our board of directors and our Chairman since June 2014 and our President and Chief Executive +Officer since January 2015. Prior to joining us, Mr. Hrusovsky served as Senior Vice President of PerkinElmer, Inc., a publicly traded company that produces analytical instruments, +genetic testing and diagnostic tools, medical imaging components, software, instruments and consumables for multiple end markets, from February 2012 to May 2013 and +10 +Table of Contents +served +as President of the Life Sciences and Technology business unit of PerkinElmer, Inc. from November 2011 to May 2013. From May 2013 through September 2013, he served as a consultant to +PerkinElmer. Previously, Mr. Hrusovsky served as Chief Executive Officer and President of Caliper Life Sciences, Inc., a life sciences company that developed and sold lab automation +equipment, from July 2003 to November 2011 when it was acquired by PerkinElmer, Inc. Prior to that, he served as Chief Executive Officer and President of Zymark, a company that provided +laboratory automation, robotics, and liquid handling solutions, and Director of International Business, Agricultural Chemical Division, and President of the Pharmaceutical Division for FMC +Corporation, a publicly traded chemical manufacturing company. He also held several management positions at E.I. DuPont de Nemours, a publicly traded chemical manufacturing company. +Mr. Hrusovsky serves on the boards of directors of several private companies, including BioreclamationIVT, LLC, Cellaria, Cell Signaling Technology, Inc., 908 Devices Inc., +and Solect Energy Development, LLC, and is the founder of the Powering Precision Health Summit, an executive think tank of researchers, scientists, physicians and innovators focused on the +latest research on new biomarkers that have the potential to advance personalized medicine. Mr. Hrusovsky also serves on the Educational Board of the Massachusetts Biotech Council, the Advisory +Committee for the Center for Biomedical Engineering at Brown University, the Association for Laboratory Automation, the JALA Editorial Board and the Strategy Committee of Children's Hospital Boston. +He formerly served on the boards of SynapDx Corp., SeraCare, Caliper Life Sciences, Xenogen—XGEN and Alliant Medical Technology. He was selected as the 2013 Entrepreneur of the Year from +Ohio State University and holds an Honorary Doctorate degree from Framingham State University for contributions in life sciences and personal medicine. Mr. Hrusovsky has a B.S. in mechanical +engineering from Ohio State University and an M.B.A. from Ohio University. +Mr. Hrusovsky's qualifications for service as a member of our board of directors include his extensive experience in the life science and technology industries, as well as the perspective and +experience he brings as our President and Chief Executive Officer, which provides our board with historic knowledge, operational expertise and continuity. +John M. Connolly has served as a member of our board of directors since December 2012. Since December 2015, Mr. Connolly has served +as a senior advisor for Bain Capital Ventures, a venture capital firm he joined in 2009. Mr. Connolly was previously a managing director at Bain Capital Ventures from September 2009 to January +2015. Mr. Connolly also served as Interim Chief Executive Officer of Education Holdings 1, Inc. from May 2012 to September 2012, Interim President and Chief Executive Officer of The +Princeton Review from March 2011 to April 2012, Chairman of the board of directors of EDGAR Online, Inc. from March 2011 to August 2012 and Interim President and Chief Executive Officer of +EDGAR Online, Inc. from September 2010 to March 2011. Prior to that, Mr. Connolly served as President and Chief Executive Officer of M--C Communications, Inc., a leading provider +of continuing medical education in the United States, from March 2007 to July 2009, and as Chairman of the board of directors of M--C Communications, Inc. from August 2009 to August 2010. Prior +to that, from March 2004 to March 2007, Mr. Connolly served as President and Chief Executive Officer of Institutional Shareholder Services Inc., which provides proxy voting, corporate +governance, compliance, and risk management solutions. Education Holdings 1, Inc. filed a voluntary chapter 11 bankruptcy petition in January 2013. Mr. Connolly has a B.A. from +St. Norbert College and an Executive Education Degree from the Executive Education Program at INSEAD which is located in Fontainebleau, France. Mr. Connolly's qualifications for service +as a member of our board of directors include his substantial experience as an investor in emerging companies as well as his significant managerial and corporate governance experience. +Keith L. Crandell has served as a member of our board of directors since June 2007. Since July 1994, Mr. Crandell has served as a +managing director of ARCH Venture Partners, a venture capital firm focused on early-stage technology companies. He serves on the board of directors of Twist Bioscience Corporation, a publicly traded +synthetic biology company. From 2007 to 2019, he served on the board of directors of Adesto Technologies Corporation, a publicly traded provider of application- +11 +Table of Contents +specific +and ultra-low power non-volatile memory products. He is also a director of several private companies and he also serves as a director of the Illinois Venture Capital Association. +Mr. Crandell has a B.S. degree in chemistry and mathematics from St. Lawrence University, an M.S. degree in chemistry from the University of Texas at Arlington and an M.B.A. from the +University of Chicago. Mr. Crandell's qualifications for service as a member of our board of directors include his financial expertise and his substantial experience as an investor in emerging +companies. +Marijn Dekkers, Ph.D. has served as a member of our board of directors since March 2017. He is the founder and Chairman of Novalis +LifeSciences LLC, an investment and advisory firm for the life science +industry. From 2016 to 2019, Dr. Dekkers was Chairman of the board of directors of Unilever. From 2010 to 2016, Dr. Dekkers was Chief Executive Officer of Bayer AG in Leverkusen, +Germany. From 2000 to 2002, he was the Chief Operating Officer at Thermo Electron Corporation (later renamed Thermo Fisher Scientific Inc.). In 2002, he became Thermo Fisher's President and +Chief Executive Officer, where he served until 2009. Dr. Dekkers began his career in 1985 as a research scientist at General Electric Company. He currently serves as a director of the following +private companies: Cerevel Therapeutics since December 2018, Ginkgo Bioworks since April 2019, and BioQ Pharma since January 2020. He holds a degree in chemistry from Radboud University in Nijmegen, +the Netherlands, and a Ph.D. in chemical engineering from the University of Eindhoven. Dr. Dekkers's qualifications for service as a member of our board of directors include his substantial +experience leading commercial stage healthcare companies and his significant corporate governance experience. +Sarah E. Hlavinka has served as a member of our board of directors since July 2019. Since August 2018, Ms. Hlavinka has served as +Senior Vice President, General Counsel and Secretary of Itron, Inc., a publicly-traded technology and services company focused on critical infrastructure solutions. Prior to joining Itron, from +January 2017 to July 2018, Ms. Hlavinka served as Executive Vice President, General Counsel and Secretary of Xerox Corporation, a publicly-traded document management systems and solutions +company. Prior to joining Xerox Corporation, from September 2007 to January 2017, Ms. Hlavinka served as Executive Vice President, General Counsel and Secretary of ABM Industries Incorporated, +a publicly-traded integrated facility services provider. Ms. Hlavinka holds a J.D. from the University of Texas School of Law and a B.A. in history from Texas A&M University. +Ms. Hlavinka's qualifications for service as a member of our board of directors include her significant experience as a senior executive of global companies operating in a variety of industries +and her substantial expertise in corporate governance and risk management. +Martin D. Madaus, Ph.D. has served as a member of our board of directors since November 2010. Dr. Madaus previously served as our +Executive Chairman from November 2010 to June 2014, as our Chief Executive Officer from October 2011 to July 2012 and as our President from June 2011 to July 2012. Since February 2019, he has served +as Operating Executive to The Carlyle Group, a multinational private equity, alternative asset management and financial services corporation. From June 2014 to February 2019, Dr. Madaus served +as Chairman and Chief Executive Officer at Ortho-Clinical Diagnostics, Inc., a diagnostics company that makes products and diagnostic equipment for blood testing. Previously, Dr. Madaus +was the Chairman, President and Chief Executive Officer of Millipore Corporation (MIL), a life sciences company serving the bioscience research and biopharmaceutical manufacturing industry, from +January 2005 to July 2010, when Millipore was acquired by Merck KGaA. From July 2009 to May 2015, Dr. Madaus served as a member of the board of directors of Mettler Toledo International, a +manufacturer of scales and analytical instruments. Dr. Madaus currently serves as a member of the board of directors of Syneron Candela, a private medical technology company. Dr. Madaus +received a Doctor of Veterinary Medicine from the University of Munich in Germany and a Ph.D. in Veterinary Medicine from the Veterinary School of Hanover in Germany. Dr. Madaus's +qualifications for service as a member of our board of directors include his extensive public and private company board experience and his substantial knowledge of and managerial experience in the +diagnostics industry. +12 +Table of Contents +Paul M. Meister has served as a member of our board of directors since September 2013. Mr. Meister is Co-Founder, and since 2008, +Chief Executive Officer, of Liberty Lane Partners, LLC, a private investment company with diverse investments in healthcare, technology and distribution-related industries, and is Vice Chairman +and Co-Founder of Perspecta Trust, a New Hampshire-based trust company. Mr. Meister served as President of MacAndrews & Forbes from 2014 to 2018. Mr. Meister also served as +Executive Vice Chairman of Revlon, Inc., a leading beauty products company, on an interim basis from January 2018 to November 2018, when the Chief Executive Officer of Revlon, Inc. +resigned. Mr. Meister previously served as Chairman and Chief Executive Officer of inVentiv Health (now known as Syneos Health, Inc.), a provider of commercial, consulting and clinical +research services to the pharmaceutical and biotech industries, from 2010 to 2015. Mr. Meister was Chairman of Thermo Fisher Scientific, Inc., a scientific instruments equipment and +supplies company, from November 2006 to April 2007. He was previously Vice Chairman of Fisher Scientific International, Inc., a predecessor of Thermo Fisher Scientific, Inc., from 2001 +to 2006, and Chief Financial Officer of Fisher Scientific International, Inc. from 1991 to 2001. Prior to joining Fisher Scientific International, Inc., Mr. Meister held executive +positions with the Henley Group, Wheelabrator Technologies and Abex, Inc. Mr. Meister has served as a director of Scientific Games Corporation, which provides customized, end-to-end +solutions to the gaming industry, since 2012, Aptiv PLC, a leading global technology and mobility company primarily serving the automotive sector, since July 2019, Oaktree Acquisition Corp, a +company incorporated for the purpose of effecting a business combination with one or more businesses, since July 2019, and Amneal Pharmaceuticals, Inc., a global pharmaceutical company, since +August 2019. He also previously served as a director of LKQ Corporation, a distributor of vehicle products, from 1999 to 2018, and vTv Therapeutics, Inc., a clinical-stage biopharmaceutical +company, from 2015 to 2018 and Revlon, Inc. from 2016 to 2019. Mr. Meister is Co-Chair of the University of Michigan's Life Sciences Institute External Advisory Board and Chair of the +Provost's Advisory Committee. Mr. Meister has an M.B.A. from Northwestern University and a B.A. from the University of Michigan. Mr. Meister's qualifications for service as a member of +our board of directors include his financial and investment expertise and his extensive knowledge of the life sciences industry. +David R. Walt, Ph.D. was our founding scientist and has served as a member of our board of directors since April 2007. Since 2017, +Dr. Walt has served as Hansjörg Wyss Professor of Biologically Inspired Engineering and Professor of Pathology at Harvard Medical School in the Department of Pathology at the +Brigham and Women's Hospital and as a core faculty member of the Wyss Institute for Biologically Inspired Engineering. He is also a Howard Hughes Medical Institute Professor. He previously served as +University Professor, Professor of Chemistry, Professor of Biomedical Engineering, Professor of Genetics, Professor of Neuroscience, Professor of Cell and Molecular Biology, and Professor of Oral +Medicine at Tufts University, from 1981-2017. Dr. Walt was also the founding scientist of Illumina, Inc. and served as a member of its board of directors from 1998-2016. He served on the +board of directors of Cerulean Pharma Inc. (which was acquired by Daré Bioscience, Inc.) from August 2016 to July 2017. Dr. Walt was also a founder and currently +serves as a member of the board of directors of Ultivue, Inc., Arbor Biotechnologies, Inc., Sherlock Biosciences, Inc., and Vizgen Biosciences and serves as a member of the board +of directors of Exicure, Inc. He has received numerous national and international awards and honors for his fundamental and applied work in the field of optical sensors, microwell arrays and +single molecule detection. He is a member of the U.S. National Academy of Engineering, U.S. National Academy of Medicine, American Academy of Arts and Sciences, a fellow of the American +Institute for Medical and Biological Engineering, a fellow of the National Academy of Inventors, and a fellow of the American Association for the Advancement of Science. Dr. Walt has a B.S. in +Chemistry from the University of Michigan and a Ph.D. in Chemical Biology from Stony Brook University. Dr. Walt's qualifications for service as a member of our board of directors include his +experience in developing life sciences companies and his expertise in chemistry, diagnostics technologies and biomedical engineering. +13 +Table of Contents +There are no family relationships between or among any of our directors or director nominees. The principal occupation and employment during the past five years +of each of our directors and director nominees was carried on, in each case except as specifically identified above, with a corporation or organization that is not a parent, subsidiary or other +affiliate of us. There is no arrangement or understanding between any of our directors or nominees and any other person or persons pursuant to which he or she is to be selected as a director or +nominee. +There +are no legal proceedings to which any of our directors is a party adverse to us or any of our subsidiaries or in which any such person has a material interest adverse to us or any +of our subsidiaries. +Committees of the Board of Directors and Meetings +Meeting Attendance. During the fiscal year ended December 31, 2019, our board of directors met five times and acted by +written consent on +eight occasions. During the fiscal year ended December 31, 2019, the three standing committees of the board of directors met a total of 13 times and acted by written consent on six occasions. +No director attended fewer than 75% of the total number of meetings of the board and of committees of the board on which such director served during fiscal 2019. Our board of directors has adopted a +policy under which each member of the board is encouraged but not required to attend each annual meeting of our stockholders. The non-employee directors did not attend our 2019 annual meeting of +stockholders. +Audit Committee. Our audit committee met five times during the fiscal year ended December 31, 2019. This committee currently +has three +members, Paul M. Meister (Chairman), John M. Connolly and Martin D. Madaus, Ph.D. Our audit committee's role and responsibilities are set forth in the audit committee's written charter and +include: +• selecting a firm to serve as the independent registered public accounting firm to audit our financial statements; +• ensuring the independence of the independent registered public accounting firm; +• discussing the scope and results of the audit with the independent registered public accounting firm, and reviewing, with management and that +firm, our interim and year-end operating results; +• establishing procedures for employees to anonymously submit concerns about questionable accounting or audit matters; +• considering the effectiveness of our internal controls and, if any, our internal audit function; +• reviewing material related-party transactions or those that require disclosure; and +• approving or, as permitted, pre-approving all audit and non-audit services to be performed by the independent registered public accounting +firm. +All +members of the audit committee satisfy the current independence standards promulgated by the SEC, and by The Nasdaq Stock Market, as such standards apply specifically to members of +audit committees. Our board of directors has determined that Paul M. Meister is an "audit committee financial expert," as the SEC has defined that term in Item 407 of Regulation S-K. +A +copy of the audit committee's written charter is publicly available on our website at www.quanterix.com. +Compensation Committee. Our compensation committee met six times and acted by written consent on four occasions during the +fiscal year ended +December 31, 2019. This committee currently has three members, Keith L. Crandell (Chairman), Marijn Dekkers, Ph.D. and David R. Walt, Ph.D. +14 +Table of Contents +Our +compensation committee's role and responsibilities are set forth in the compensation committee's written charter and include: +• reviewing and approving, or recommending that our board of directors approve, the compensation of our executive officers; +• reviewing and recommending to our board of directors the compensation of our directors; +• reviewing and recommending to our board of directors the terms of any compensatory agreements with our executive officers; +• administering our 2017 Employee, Director and Consultant Equity Incentive Plan (the "2017 Plan"), 2007 Stock Option and Grant Plan, as amended, +and 2017 Employee Stock Purchase Plan (the "ESPP"); +• reviewing and approving, or making recommendations to our board of directors with respect to, incentive compensation and equity plans; and +• reviewing compensation policies and practices for all employees to determine whether such policies and practices create risks that are +reasonably likely to have a material adverse effect on the Company. +The +compensation committee is also responsible for the determination of the compensation of our chief executive officer, and conducts its decision making process with respect to that +issue without the chief executive officer present. Our board of directors has determined that all members of the compensation committee qualify as "independent" under the definition promulgated by The +Nasdaq Stock Market. +The +compensation committee has the authority to retain or obtain the advice of such compensation consultants, legal counsel, experts and other advisors as it may deem appropriate in its +sole discretion. The compensation committee is directly responsible for the appointment, compensation and oversight of its consultants, legal counsel, experts and advisors and has sole authority to +approve their fees and retention terms, and the Company will provide funding for such fees and related expenses. +The +compensation committee engaged Pay Governance as an independent advisor to the compensation committee providing executive compensation consulting services for the fiscal year ended +December 31, 2019. Pay Governance was engaged by and reports to the compensation committee. Pay Governance did not provide any services to the Company other than executive compensation +consulting services during the fiscal year ended December 31, 2019. +A +copy of the compensation committee's written charter is publicly available on our website at www.quanterix.com. +Nominating and Governance Committee. Our nominating and governance committee (the "nominating committee"), met two times and +acted by written consent +on two occasions during the fiscal year ended December 31, 2019. This committee has three members, Martin D. Madaus, Ph.D. (Chairman), John M. Connolly and Sarah E. Hlavinka. Our board of +directors has determined that all members of the nominating committee qualify as independent under the definition promulgated by The Nasdaq Stock Market. The nominating committee's responsibilities +are set forth in the nominating committee's written charter and include: +• identifying and recommending candidates for membership on our board of directors; +• recommending directors to serve on board committees; +• reviewing and recommending our corporate governance guidelines and policies; +15 +Table of Contents +• reviewing proposed waivers of the code of conduct for directors and executive officers; +• evaluating, and overseeing the process of evaluating, the performance of our board of directors and individual directors; and +• assisting our board of directors on corporate governance matters. +Generally, +our nominating committee considers candidates recommended by stockholders as well as from other sources such as other directors or officers, third party search firms or other +appropriate sources. Once identified, the nominating committee will evaluate a candidate's qualifications in accordance with our Nominating and Governance Committee Policy Regarding Qualifications of +Directors appended to our nominating committee's written charter. Threshold criteria include: personal integrity and sound judgment, business and professional skills and experience, independence, +knowledge of our industry, possible conflicts of interest, diversity, the extent to which the candidate would fill a present need on the board of directors, and concern for the long-term interests of +our stockholders. Our nominating committee has not adopted a formal diversity policy in connection with the consideration of director nominations or the selection of nominees. However, the nominating +committee will consider issues of diversity among its members in identifying and considering nominees for director, and strive where appropriate to achieve a diverse balance of backgrounds, +perspectives, experience, age, gender, ethnicity and country of citizenship on the board and its committees. +If +a stockholder wishes to propose a candidate for consideration as a nominee for election to the Board, it must follow the procedures described in our restated bylaws and in +"Stockholder Proposals and Nominations For Director" at the end of this proxy statement. In general, persons recommended by stockholders will be considered in accordance with our Policy on Shareholder +Recommendation of Candidates for Election as Directors appended to our nominating committee's written charter. Any such recommendation should be made in writing to the nominating committee, care of +our Corporate Secretary at our principal office and should be accompanied by the following information concerning each recommending stockholder and the beneficial owner, if any, on whose behalf the +nomination is made: +• all information relating to such person that would be required to be disclosed in a proxy statement; +• certain biographical and share ownership information about the stockholder and any other proponent, including a description of any derivative +transactions in our securities; +• a description of certain arrangements and understandings between the proposing stockholder and any beneficial owner and any other person in +connection with such stockholder nomination; and +• a statement whether or not either such stockholder or beneficial owner intends to deliver a proxy statement and form of proxy to holders of +voting shares sufficient to carry the proposal. +The +recommendation must also be accompanied by the following information concerning the proposed nominee: +• certain biographical information concerning the proposed nominee; +• all information concerning the proposed nominee required to be disclosed in solicitations of proxies for election of directors; +• certain information about any other security holder of the Company who supports the proposed nominee; +16 +Table of Contents +• a description of all relationships between the proposed nominee and the recommending stockholder or any beneficial owner, including any +agreements or understandings regarding the nomination; and +• additional disclosures relating to stockholder nominees for directors, including completed questionnaires and disclosures required by our +restated bylaws. +A +copy of the nominating committee's written charter, including its appendices, is publicly available on our website at www.quanterix.com . +Compensation Committee Interlocks and Insider Participation +Our compensation committee has three members, Keith L. Crandell (Chairman), Marijn Dekkers, Ph.D. and David R. Walt, Ph.D. None of the members +of our compensation committee has at any time during the prior three years been one of our officers or employees. None of +our executive officers currently serves, or in the past fiscal year has served, as a member of the board of directors or compensation committee of any entity that has one or more executive officers +serving on our board of directors or compensation committee. For a description of any transactions between us and members of our compensation committee and affiliates of such members, please see +"Certain Relationships and Related Person Transactions." +Board Leadership Structure and Role in Risk Oversight +Our board of directors does not have a policy regarding the separation of the roles of Chief Executive Officer and Chairman of the board of +directors, as our board of directors believes it is in the best interest of the Company to make that determination based on the position and direction of the Company and the membership of the board of +directors. Our board of directors has determined that having an employee director serve as Chairman is in the best interest of our stockholders at this time because of the efficiencies achieved in +having the role of Chief Executive Officer and Chairman combined, and because the detailed knowledge of our day-to-day operations and business that the Chief Executive Officer possesses greatly +enhances the decision-making processes of our board of directors as a whole. We have a strong governance structure in place, including independent directors, to ensure the powers and duties of the +dual role are handled responsibly. Martin D. Madaus, Ph.D. serves as our lead independent director. +The +Chairman of the board of directors, the lead independent director and the other members of the board of directors work in concert to provide oversight of our management and affairs. +Our board of directors encourages communication among its members and between management and the board of directors to facilitate productive working relationships. Working with the other members of +the board of directors, our Chairman also strives to ensure that there is an appropriate balance and focus among key board responsibilities such as strategic development, review of operations and risk +oversight. +Risk +is inherent with every business, and how well a business manages risk can ultimately determine its success. Our board of directors is actively involved in oversight of risks that +could affect the Company. This oversight is conducted primarily by our full board of directors, which has responsibility for general oversight of risks. +As +part of its oversight, our board of directors receives reports by each committee chair regarding the committee's considerations and actions. In particular, the audit committee is +responsible for discussing the adequacy of our risk management activities with management and our independent registered public accounting firm. The audit committee's primary emphasis is financial +risk. In addition, the compensation committee is responsible for considering whether our compensation programs and practices are reasonably likely to have a material adverse effect on us. +17 +Table of Contents +At +each of its meetings, the board of directors receives business updates from various members of management. These updates may identify matters that have emerged within that member of +management's scope of responsibility that involve operational, financial, legal or regulatory risks and, in these cases, the board of directors provides guidance to management. Our board of directors +believes that full and open communication between management and the board of directors is essential for effective risk management and oversight. +Stockholder Communications to the Board +Generally, stockholders who have questions or concerns should contact our Investor Relations department at ir@quanterix.com. However, any +stockholders who wish to address questions regarding our business directly with our board of directors, or any individual director, should direct his or her questions in writing to the Chairman of the +Board at 900 Middlesex Turnpike, Building 1, Billerica, Massachusetts 01821 or using the "IR Contacts" page of our website at http://ir.quanterix.com/contact-ir. Communications will be distributed to +the board of directors, or to any individual director or directors as appropriate, depending on the facts and circumstances outlined in the communications. In general, communications relating to +corporate governance and corporate strategy are more likely to be forwarded than communications relating to personal matters and matters as to which we tend to receive repetitive or duplicative +communications. +Executive Officers +The following table sets forth certain information regarding our executive officers who are not also directors, as of April 15, 2020. We +have entered into agreements with our executive officers, and all of them are at-will employees. +Name +Age +Position(s) with the Company +Amol Chaubal +44 +Chief Financial Officer +David C. Duffy, Ph.D. +49 +Senior Vice President, Research & Development and Chief Technology Officer +John Fry +58 +General Counsel and Secretary +Dawn R. Mattoon, Ph.D. +47 +Senior Vice President, Research Products +Mark T. Roskey, Ph.D. +60 +Senior Vice President, Commercial and Accelerator +Amol Chaubal has been our Chief Financial Officer since April 2019. Prior to joining us, Mr. Chaubal served as the CFO of Global +Operations at Smith & Nephew, a global medical devices company, from October 2017 to April 2019. Prior to his time at Smith & Nephew, he served as Corporate Vice President and Head of +Finance for the Clinical Research Services business at Parexel from June 2015 to October 2017. Between May 2013 and May 2015, Mr. Chaubal served as CFO North America and Regional Chief +Operating Officer at Brookfield Renewable Energy Group, which is part of Brookfield Asset Management. Prior to joining Brookfield, Mr. Chaubal was CFO North America at Novartis AG, where he +spent 11 years in positions of increasing responsibility across Switzerland, Canada, and the United States. He has an M.B.A. (with distinction) from INSEAD (France). He began his career at +Procter & Gamble Company after completing Masters degree in Chemical Engineering from the Indian Institute of Technology, Mumbai. +David C. Duffy, Ph.D. is Senior Vice President, Research & Development, and has been our Chief Technology Officer since +March 2013. Prior to +this role, Dr. Duffy served as our Vice President, Research from November 2011 to February 2013, and Senior Director, Platform Research from July 2007 to October 2011. Prior to joining us, +Dr. Duffy served as Director, Pharmacomer Technology at Surface Logix, Inc., a biomedical development company. Prior to that, Dr. Duffy was a Senior Scientist +at Gamera Bioscience Corporation, a developer of automated biotechnology test equipment, from December 1998 to January 2000. Previously, Dr. Duffy was a postdoctoral research fellow in the +18 +Table of Contents +Department +of Chemistry and Chemical Biology at Harvard University. He was the first Sir Alan Wilson Research Fellow of Emmanuel College, University of Cambridge. Dr. Duffy has a Ph.D. in +physical chemistry from the Department of Chemistry at the University of Cambridge, and B.A. and M.A. degrees in Natural Sciences from the University of Cambridge. +John Fry has been our General Counsel and Secretary since June 2019. Prior to joining us, Mr. Fry served as Senior Vice President, +General Counsel, and Secretary of Analogic Corporation, a global medical and security technology company, from 2007 to 2018. From 2005 to 2007, he was a principal of the law firm Driggs, +Hogg, & Fry Co., L.P.A., where his practice focused primarily on technology and intellectual property law with principal clients including global multinationals in the medical, +consumer electronics and industrial automation industries. From 1995 to April 2005, he held various legal positions at Philips Medical Systems (formerly Marconi Medical Systems and Picker +International), including Senior Corporate Counsel and Intellectual Property Manager and counsel to Philips' computed tomography business. He began his career as an electrical engineer and engineering +manager and is a named inventor on ten U.S. patents. Mr. Fry holds a Juris Doctor degree from Cleveland-Marshall College of Law and M.S. and B.S. degrees in electrical engineering from Case +Western Reserve University. +Dawn R. Mattoon, Ph.D. , has been our Senior Vice President, Research Products since March 2019 and served as Senior Vice President of +Strategic Marketing and Assay Technologies from February 2018 to March 2019. Dr. Mattoon completed both her Ph.D. and postdoctoral work at Yale University, studying tyrosine kinase signaling +pathways. Following her postdoctoral fellowship in 2004, she joined Invitrogen, where she was recognized as one of the company's best new scientists in 2005. Dr. Mattoon went on to serve in a +variety of leadership roles in R&D, Program & Portfolio Management, Strategy, and General Management as Invitrogen evolved to become Life Technologies with the acquisition of Applied Biosystems +in 2008, and was subsequently acquired by Thermo Fisher in 2013. Until her departure from Thermo Fisher in 2014, Dr. Mattoon also served on global leadership teams focused on mentoring and +developing female leaders. Dr. Mattoon served as the Vice President for Product Development at Cell Signaling Technologies, a leading antibody provider, from July 2014 to February 2018, after +which she joined Quanterix. +Mark T. Roskey, Ph.D. , has been our Senior Vice President, Commercial and Accelerator since March 2019 and served as Senior Vice President +and General Manager of Applications and Reagents from September 2014 to March 2019. Prior to joining us, Dr. Roskey served as Vice President and General Manager of the America's Sales and +Service organization in PerkinElmer's Life Science and Technologies Division from December 2011 to September 2014. PerkinElmer is a global life science company. Prior to PerkinElmer, Dr. Roskey +served as Senior Vice President of Biology Research and +Development at Caliper Life Sciences, Inc. from March 2009 to November 2011, when it was acquired by PerkinElmer. At Caliper Life Sciences, Inc., Dr. Roskey served as Senior Vice +President of Applied Biology Research from 2008 to 2011 and Vice President of Worldwide Marketing from July 2003 to 2008. Prior to that, Dr. Roskey served as Vice President of Worldwide +Marketing for Zymark Corporation, a laboratory automation company, from December 2001 to August 2003 when it was acquired by Caliper Life Sciences, Inc. Prior to that, Dr. Roskey served +as Director of Marketing at Applied Biosystems, Inc. Dr. Roskey completed a postdoctoral fellowship in molecular immunobiology at the Harvard Medical School and has a Ph.D. in +microbiology from the University of Notre Dame and a B.S. in biology from Framingham State University. +19 +Table of Contents +EXECUTIVE OFFICER AND DIRECTOR COMPENSATION +Summary Compensation Table +The following table shows the total compensation paid or accrued during the fiscal years ended December 31, 2019 and December 31, +2018, to our President and Chief Executive Officer and our two next most highly compensated executive officers who earned more than $100,000 during the fiscal year ended December 31, 2019 and +were serving as executive officers as of such date. +Name and Principal Position +Year +Salary +($) +Bonus +($)(1) +Stock +Awards +($)(2) +Option +Awards +($)(2) +All Other +Compensation +($)(3) +Total ($) +E. Kevin Hrusovsky +2019 +531,969 +770,024 +1,004,514 +1,314,787 +9,702 +3,630,996 +Chairman, President and +2018 +497,857 +609,377 +4,440,000 +— +346 +5,547,580 +Chief Executive Officer +Amol Chaubal(4) +2019 +253,077 +145,772 +414,479 +525,776 +4,321 +1,343,425 +Chief Financial Officer +John Fry(5) +2019 +192,231 +115,339 +753,367 +618,970 +5,375 +1,685,282 +General Counsel and Secretary +(1) Amounts +for 2018 represent cash bonuses earned for the 12-month period from January 1, 2018 to December 31, 2018, and exclude payments made in 2018 for +2017 bonuses. Amounts for 2019 represent cash bonuses earned for the 12-month period from January 1, 2019 to December 31, 2019, and exclude payments made in 2019 for 2018 bonuses. +(2) These +amounts represent the aggregate grant date fair value for RSUs and option awards granted during such fiscal year, computed in accordance with FASB ASC Topic +718. A discussion of the assumptions used in determining grant date fair value for the option awards may be found in Note 2 to our consolidated financial statements for the year ended +December 31, 2019. +(3) Amounts +represent the dollar value of matching contributions under our qualified 401(k) plan. +(4) Amol +Chaubal joined Quanterix on April 12, 2019. +(5) John +Fry joined Quanterix on June 10, 2019. +Narrative Disclosure to Summary Compensation Table +E. Kevin Hrusovsky +We entered into an agreement with Mr. Hrusovsky with respect to his service as President and Chief Executive Officer on January 1, +2015. Under the terms of the agreement, Mr. Hrusovsky is entitled to receive an annual base salary which is subject to review and adjustment, no less than annually, at the Company's discretion. +Mr. Hrusovsky's 2019 annual base salary was $536,000. Mr. Hrusovsky is eligible to receive an annual bonus with the target amount determined in the discretion of our compensation +committee. Mr. Hrusovky's 2019 target bonus was 100% of his base salary earned during 2019. The amount of his annual bonus is determined by the compensation committee in its discretion, based +on the committee's assessment of his and the Company's performance against goals established annually by the committee. Based on its assessment of Mr. Hrusovsky's performance against these +goals, our compensation committee awarded Mr. Hrusovsky a bonus of $770,024 for service in 2019. Additional information on equity awards granted to Mr. Hrusovsky in 2019 is provided in +"—Outstanding Equity Awards at 2019 Fiscal Year-End" below. +In +connection with his employment, in February 2015, Mr. Hrusovsky was granted 781,060 shares of restricted stock. The shares underlying this grant vest, subject to continued +service, as follows: (1) with respect to 168,246 of the shares, 25% of the shares vested on July 1, 2015, with the remainder +20 +Table of Contents +vesting +over the next three years in equal monthly installments on the first day of each succeeding calendar month thereafter, (2) with respect to 549,113 of the shares, 25% of the shares +vested on September 1, 2015, with the remainder vesting over the next three years in equal monthly installments on the first day of each succeeding calendar month thereafter, (3) 23,886 +shares vested based upon the achievement of certain milestones, and (4) 39,815 shares have not vested. Upon a sale of the Company, the vesting is accelerated such that no more than 25% of the +shares shall remain unvested. If Mr. Hrusovsky is terminated without Cause, as defined in the agreement, or he terminates his service for Good Reason, as defined in the agreement, within +12 months following a sale of the Company, all of the unvested shares will become vested. +Pursuant +to the agreement, Mr. Hrusovsky is entitled to continuation of his then-current base salary and health insurance benefits for six months in the event we terminate his +employment without Cause or Mr. Hrusovsky terminates his employment with us for Good Reason subject to Mr. Hrusovsky's execution of a release satisfactory to us following such +termination. If such termination occurs within 12 months of the sale of the Company, he is entitled to continuation of his then-current base salary and health insurance benefits for +12 months. If we terminate his employment without Cause, his employment +terminates due to his death or disability or he terminates his employment with us for Good Reason within three months prior to the end of a year, he is entitled to a pro rata portion of his bonus. +In +addition, Mr. Hrusovsky has entered into an employee non-competition, non-solicitation, confidentiality and assignment agreement pursuant to which he has agreed (1) not +to engage in any competitive business for six months following his termination of employment with us (12 months if the termination is within 12 months of the sale of the Company), +(2) not to solicit our employees, customers or suppliers for six months following his termination of employment with us (12 months if the termination is within 12 months of the +sale of the Company) and (3) to assign any inventions conceived or developed during the course of his employment with us. +Amol Chaubal +We entered into an agreement with Amol Chaubal with respect to his service as Chief Financial Officer on February 14, 2019, and he began +his employment with us on April 12, 2019. Under the terms of the agreement, Mr. Chaubal was entitled to an initial annual base salary of $350,000, subject to periodic review and +adjustment at the discretion of the Company. Mr. Chaubal is also eligible to receive an annual target bonus of up to 40% of his annual base salary. The actual bonus percentage is discretionary +and is subject to his achievement of metrics and goals established by and agreed to with our Chief Executive Officer. The bonus is also subject to his employment for the full period covered by the +bonus, approval by and adjustment at the discretion of the Company and the board of directors, and the terms of any applicable bonus plan. Based on its assessment of Mr. Chaubal's performance +against these goals, our compensation committee awarded Mr. Chaubal a bonus of $145,772 for service in 2019. Beginning in 2020, Mr. Chaubal is eligible to receive an annual equity grant +subject to approval by the compensation committee and in the same manner as the awards provided to other senior executive officers of the Company. The Company will target a grant date fair value of +the annual equity awards of up to $480,000. +Pursuant +to his agreement, Mr. Chaubal received a sign-on equity award of 62,270 stock options having an exercise price of $22.70 and 18,259 RSUs vesting over four years. +Additional information on this award is provided in "—Outstanding Equity Awards at 2019 Fiscal Year-End", below. +Pursuant +to his agreement, Mr. Chaubal is entitled to continuation of his then-current base salary and health insurance benefits for six months in the event we terminate his +employment without Cause, as defined in the agreement, or Mr. Chaubal terminates his employment with us for Good Reason, as defined in the agreement, subject to Mr. Chaubal's execution +of a release satisfactory to us following +21 +Table of Contents +such +termination. If such termination occurs within 12 months of a Sale Event, as defined in the agreement, he is entitled to continuation of his then-current base salary and health insurance +benefits for 12 months. +In +addition, Mr. Chaubal has entered into an employee non-competition, non-solicitation, confidentiality and assignment agreement pursuant to which he has agreed (1) not to +engage in any business with certain competitors for one year following his voluntary termination of employment with us, (2) not to solicit our employees, customers or suppliers for one year +following voluntary termination of his employment and (3) to assign any inventions conceived or developed during the course of his employment with us. +John Fry +We entered into an agreement with John Fry with respect to his service as General Counsel and Secretary on May 31, 2019, and +Mr. Fry began his employment with us on June 10, 2019. Under the terms of the agreement, Mr. Fry was entitled to an initial annual base salary of $340,000, subject to periodic +review and adjustment at the discretion of the Company. Mr. Fry is also eligible to receive an annual target bonus of up to 50% of his annual base salary. The actual bonus percentage is +discretionary and is subject to his achievement of metrics and goals established by and agreed to with our Chief Executive Officer. The bonus is also subject to his employment for the full period +covered by the bonus, approval by and adjustment at the discretion of the Company and the board of directors, and the terms of any applicable bonus plan. Based on its assessment of Mr. Fry's +performance against these goals, our compensation committee awarded Mr. Fry a bonus of $115,339 for service in 2019. Beginning in 2020, Mr. Fry is eligible to receive an annual equity +grant subject to approval by the compensation committee and in the same manner as the awards provided to other senior executive officers of the Company. The Company will target a grant date fair value +of the annual equity awards of up to $600,000. Pursuant to his agreement, Mr. Fry received a sign-on equity award of 51,770 stock options having an exercise price of $33.48 and 22,502 RSUs +vesting over four years. Additional information on this award is provided in "—Outstanding Equity Awards at 2019 Fiscal Year-End", below. +Pursuant +to his agreement, Mr. Fry is entitled to continuation of his then-current base salary and health insurance benefits for six months in the event we terminate his +employment without Cause, as defined in the agreement, or Mr. Fry terminates his employment with us for Good Reason, as defined in the agreement, subject to Mr. Fry's execution of a +release satisfactory to us following such termination. If such termination occurs within 12 months of a Sale Event, as defined in the agreement, he is entitled to continuation of his +then-current base salary and health insurance benefits for 12 months. In addition, if such termination occurs within 12 months of a Sale Event and 18 months of June 10, +2019, any equity +awards that would have vested within 12 months will vest. In addition, if the severance benefits payable to Mr. Fry following a change in control would otherwise be subject to excise tax +under the "parachute payment" provisions of the Internal Revenue Code, the Company will reduce the payments to the minimum extent necessary to ensure that no portion of such payments is subject to the +excise tax. +In +addition, Mr. Fry has entered into an employee non-competition, non-solicitation, confidentiality and assignment agreement pursuant to which he has agreed (1) not to +engage in any business with certain competitors for one year following his voluntary termination of employment with us, (2) not to solicit our employees, customers or suppliers for one year +following voluntary termination of his employment and (3) to assign any inventions conceived or developed during the course of his employment with us. +22 +Table of Contents +Outstanding Equity Awards at 2019 Fiscal Year-End +The following table shows grants of stock options and grants of unvested stock awards outstanding on the last day of the fiscal year ended +December 31, 2019, including both awards subject to performance conditions and non-performance-based awards, to each of the executive officers named in the Summary Compensation Table. +Option Awards(1) +Stock Awards(1) +Name +Number of +Securities +Underlying +Unexercised +Options (#) +Exercisable +Number of +Securities +Underlying +Unexercised +Options (#) +Unexercisable +Option +Exercise +Price +($) +Option +Expiration +Date +Number of +Shares or +Units of +Stock That +Have Not +Vested +(#) +Market +Value of +Shares or +Units of +Stock That +Have Not +Vested +($)(2) +Equity +Incentive +Plan +Awards: +Number of +Unearned +Shares, +Units or +Other +Rights That +Have Not +Vested +(#) +Equity +Incentive +Plan +Awards: +Market or +Payout +Value of +Unearned +Shares, +Units or +Other +Rights That +Have Not +Vested +($)(2) +E. Kevin Hrusovsky +— +— +— +— +— +— +39,815 +(3) +940,828 +Chairman, President +220,366 +(4) +90,772 +(4) +$ +8.16 +3/31/2027 +— +— +— +— +and Chief Executive +— +— +— +— +150,000 +(5) +3,544,500 +— +— +Officer +— +108,177 +(6) +$ +22.69 +3/12/2029 +— +— +— +— +— +— +— +— +23,800 +(7) +562,394 +— +— +8,331 +(8) +31,669 +(8) +$ +30.45 +8/17/2029 +— +— +— +— +— +— +— +— +8,073 +(9) +190,765 +— +— +Amol Chaubal. +— +62,270 +(10) +$ +22.70 +4/12/2029 +— +— +— +— +Chief Financial Officer +— +— +— +— +18,259 +(10) +431,460 +John Fry +— +51,177 +(11) +$ +33.48 +6/14/2029 +— +— +— +— +General Counsel and +— +— +— +— +22,502 +(11) +531,722 +— +— +Secretary +(1) Each +of the outstanding equity awards in the table above was granted pursuant to our 2007 Stock Option and Grant Plan, as amended, or the 2017 Plan. +(2) The +market value of the stock awards is determined by multiplying the number of shares by $23.63, the closing price of our common stock on The Nasdaq Global Market +on December 31, 2019, the last day of our fiscal year. +(3) On +February 13, 2015, Mr. Hrusovsky was granted 781,060 shares of restricted stock in connection with his appointment as our President and Chief +Executive Officer. The shares underlying this grant vest, subject to continued service, as follows: (i) with respect to 168,246 of the shares, 25% of the shares vested on July 1, 2015, +and the remainder vested over the next three years in equal monthly installments on the first day of each succeeding calendar month thereafter, (ii) with respect to 549,113 of the shares, 25% +of the shares vested on September 1, 2015, and the remainder vested over the next three years in equal monthly installments on the first day of each succeeding calendar month thereafter, +(iii) 23,886 shares vested based upon the achievement of certain milestones and (iv) 39,815 shares have not vested. The restricted stock is subject to accelerated vesting upon certain +events. See "Narrative Disclosure to Summary Compensation Table—E. Kevin Hrusovsky" above for more details. +(4) Represents +an option to purchase 311,138 shares of our common stock granted on March 31, 2017. The shares underlying this option vest, subject to continued +service, as follows: 25% of the shares vested on March 31, 2018, with the remainder vesting over the next three years in equal monthly installments on the last day of each succeeding calendar +month thereafter. +(5) On +August 7, 2018, Mr. Hrusovsky was granted 300,000 RSUs. The RSUs vest upon continued service and vested as to 50,000 shares on August 31, +2018, and vest with respect to 6,250 shares at the end of each month thereafter for 40 months. +(6) Represents +an option to purchase 108,177 shares of our common stock granted on March 12, 2019. The shares underlying this option vest, subject to continued +service, as follows: 25% of the shares vested on March 12, 2020, with the remainder vesting over the next three years in equal monthly installments on the last day of each succeeding calendar +month thereafter. +(7) On +March 12, 2019, Mr. Hrusovsky was granted 31,732 RSUs. The RSUs vest upon continued service and vested as to 1,983 of the shares on March 31, +2019, with the remainder vesting over 45 months in equal monthly installments on the last day of each succeeding calendar month thereafter. +23 +Table of Contents +(8) Represents +an option to purchase 40,000 shares of our common stock granted on August 17, 2019. The shares underlying this option vest upon continued service +and vested as to 4,166 shares immediately upon grant, with the remainder vesting over 43 months in equal monthly installments on the last day of each succeeding calendar month thereafter. +(9) On +August 17, 2019, Mr. Hrusovsky was granted 10,194 RSUs. The RSUs vest upon continued service and vested as to 1,061 shares immediately upon grant, +with the remainder vesting over 43 months in equal monthly installments on the last day of each succeeding calendar month thereafter. +(10) Effective +April 12, 2019, Mr. Chaubal was granted (i) an option to purchase 62,270 shares of our common stock and (ii) 18,259 RSUs. The +shares underlying the option and RSUs vest, subject to continued service, as follows: 25% of the shares vested on April 12, 2020, with the remainder vesting over the next three years in equal +monthly installments on the last day of each calendar month thereafter. The options and RSUs are subject to accelerated vesting upon certain events. See "Narrative Disclosure to Summary Compensation +Table—Amol Chaubal" above for more details. +(11) On +June 14, 2020, Mr. Fry was granted (i) an option to purchase 51,177 shares of our common stock and (ii) 22,502 RSUs. The shares +underlying the option and RSUs vest, subject to continued service, as follows: 25% of the shares vest on June 10, 2020, with the remainder vesting over the next three years in equal monthly +installments on the last day of each calendar month thereafter. The options and RSUs are subject to accelerated vesting upon certain events. See "Narrative Disclosure to Summary Compensation +Table—John Fry" above for more details. +Director Compensation +The following table shows the total compensation paid or accrued during the fiscal year ended December 31, 2019 to each of our +non-employee directors. Directors who are employed by us are not compensated for their service on our board of directors. +Name +Fees +Earned or +Paid in +Cash +($)(1) +Stock +Awards +($)(2) +Option +Awards +($)(2) +All Other +Compensation +($) +Total +($) +John M. Connolly +47,500 +41,405 +51,098 +— +140,003 +Keith L. Crandell +46,976 +41,405 +51,098 +— +139,479 +Marijn Dekkers, Ph.D. +43,582 +41,405 +51,098 +— +136,085 +Sarah E. Hlavinka +16,851 +144,871 +200,648 +— +362,370 +Martin D. Madaus, Ph.D. +69,222 +41,405 +51,098 +— +161,725 +Paul M. Meister +54,958 +41,405 +51,098 +— +147,461 +David R. Walt, Ph.D. +41,000 +41,405 +51,098 +— +133,503 +(1) Keith +Crandell, Sarah Hlavinka, Martin Madaus and Paul Meister elected to receive these fees in the form of common stock in lieu of cash in accordance with our +non-employee director compensation policy. +(2) These +amounts represent the aggregate grant date fair value for RSUs and option awards granted to each director in the fiscal year ended December 31, 2019, +computed in accordance with FASB ASC Topic 718. A discussion of the assumptions used in determining grant date fair value for the option awards may be found in Note 2 to our consolidated +financial statements for the year ended +24 +Table of Contents +December 31, +2019. The following table shows the aggregate number of stock options held by each of our non-employee directors as of December 31, 2019. +Name +Aggregate +Number +of Shares +Subject +to Stock +Options +John M. Connolly +15,800 +Keith L. Crandell +15,800 +Marijn Dekkers, Ph.D. +46,913 +Sarah E. Hlavinka +15,800 +Martin D. Madaus, Ph.D. +89,171 +Paul M. Meister +39,135 +David R. Walt, Ph.D. +15,800 +Our +current non-employee director compensation policy provides for the annual payment of: $35,000 to each of our nonemployee directors, or $55,000 in the case of the chair; $7,500 to +each member of our audit committee, or $20,000 in the case of the chair; $6,000 to each member of our compensation committee, or $12,000 in the case of the chair; and $5,000 to each member of our +nominating and governance committee, or $10,000 in the case of the chair; in each case quarterly in arrears. Each non-employee director may elect to receive these payments in the form of common stock +in lieu of cash. +Our +current non-employee director compensation policy also provides that each non-employee director be granted, on the first trading day of each fiscal year, (1) a non-qualified +stock option exercisable for 7,900 shares of common stock and (2) 2,270 restricted stock units (each restricted stock unit relating to one share of common stock). The annual stock options and +restricted stock units vest in full on December 31 of the year in which such awards were granted, provided that the non-employee director is a director of the Company on the applicable vesting +date. +In +addition, each new non-employee director receives under the policy (1) a non-qualified stock option grant exercisable for 15,800 shares of common stock and (2) 4,540 +restricted stock units (each restricted +stock unit relating to one share of common stock) upon his or her initial election or appointment. The initial stock options vest over three years from the date of grant, with one third vesting on the +first anniversary of the applicable grant date and the remainder vesting over the following two years in 24 successive equal monthly installments at the end of each month until the third anniversary +of such grant date, provided that the non-employee director is a director of the Company on the applicable vesting date. The restricted stock units granted to each new non-employee director vest over +a three-year period, with one third vesting on each of the first, second, and third anniversaries of the applicable grant date, provided that the non-employee director is a director of the Company on +the applicable vesting date. +We +reimburse in full each non-employee director for all reasonable out-of-pocket expenses incurred in attending each meeting of our board of directors or its committees. Directors may be +reimbursed for travel, food, lodging and other expenses directly related to their service as directors. Directors are also entitled to the protection provided by their indemnification agreements, and +the indemnification provisions in our restated certificate of incorporation and restated bylaws. +25 +Table of Contents +EQUITY COMPENSATION PLAN INFORMATION +The following table provides certain aggregate information with respect to all of our equity compensation plans in effect as of +December 31, 2019. +(c) +(a) +(b) +Number of securities +remaining available for +future issuance under equity +compensation plans +(excluding securities +reflected in column (a)) +Plan category +Number of securities +to be issued upon +exercise of outstanding +options, warrants +and rights +Weighted-average +exercise price +of outstanding +options, warrants +and rights +Equity compensation plans approved by security holders(1) +2,507,062 +$ +14.41 +882,715 +(2) +Equity compensation plans not approved by security holders +— +— +— +Total +2,507,062 +$ +14.41 +882,715 +(2) +(1) These +plans consist of the 2017 Plan, our 2007 Stock Option and Grant Plan, as amended, and the "ESPP. +(2) Consists +of 270,143 shares of common stock available under the 2017 Plan and 612,572 shares of common stock available under the ESPP. Does not include an additional +1,126,172 shares of common stock reserved for future issuance under the 2017 Plan effective January 2, 2020 by operation of the 2017 Plan's "evergreen" provision and an additional 281,543 +shares of common stock reserved for future issuance under the ESPP effective January 2, 2020 by operation of the ESPP's "evergreen" provision. +26 +Table of Contents +REPORT OF AUDIT COMMITTEE +The audit committee of the board of directors, which consists entirely of directors who meet the independence and experience requirements of The +Nasdaq Stock Market, has furnished the following report: +The +audit committee assists the board of directors in overseeing and monitoring the integrity of our financial reporting process, compliance with legal and regulatory requirements and +the quality of internal and external audit processes. The audit committee's role and responsibilities are set forth in its charter adopted by the board of directors, which is available on our website +at www.quanterix.com . The audit committee reviews and reassesses its charter annually and recommends any changes to the board of directors for approval. +The audit committee is responsible for overseeing our overall financial reporting process, and for the appointment, compensation, retention, and oversight of the work of Ernst & +Young LLP. In fulfilling its responsibilities for the financial statements for the fiscal year ended December 31, 2019, the audit committee took the following +actions: +• Reviewed and discussed the audited financial statements for the fiscal year ended December 31, 2019 with management and Ernst & +Young LLP, our independent registered public accounting firm; +• Discussed with Ernst & Young LLP the matters required to be discussed in accordance with Auditing Standard +No. 1301— Communications with Audit Committees ; and +• Received written disclosures and the letter from Ernst & Young LLP regarding its independence as required by applicable +requirements of the Public Company Accounting Oversight Board regarding Ernst & Young LLP's communications with the audit committee and the audit committee further discussed with +Ernst & Young LLP their independence. +Based +on the audit committee's review of the audited financial statements and discussions with management and Ernst & Young LLP, the audit committee recommended to the +board of directors that the audited financial statements be included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 for filing with the SEC. +Members of the Audit Committee: +Paul M. Meister ( Chairman ) +John M. Connolly +Martin D. Madaus, Ph.D. +27 +Table of Contents +CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS +Since January 1, 2018, we have engaged in the following transactions with our directors, director nominees, executive officers and +holders of more than 5% of our common stock, which we refer to as our principal stockholders, and affiliates or immediate family members of our directors, executive officers and principal +stockholders. We believe that all of these transactions were on terms as favorable as could have been obtained from unrelated third parties. +Certain +of our current and former directors are affiliated with our principal stockholders as indicated below: +Director +Affiliation with principal stockholder +Keith L. Crandell +Managing Director of ARCH Venture Partners VI, LLC, the ultimate general partner of ARCH Venture Fund VI, L.P., and Managing Director of ARCH Venture Partners VIII, LLC, the general partner +of ARCH Venture Fund VIII Overage, L.P. +Douglas G. Cole, M.D.(1) +Managing Partner of Flagship Pioneering and a member of Flagship Ventures General Partner LLC, the sole general partner of Flagship Ventures Fund 2004, L.P. +John M. Connolly +Senior Advisor to Bain Capital Ventures, the ultimate general partner of Bain Capital Venture Fund 2005, L.P., BCIP Associates III, LLC and BCIP Associates III-B, LLC. +(1) Dr. Cole +did not stand for re-election and ceased serving as a member of our board of directors as of our 2019 Annual Meeting on July 25, 2019. +Flagship Ventures Fund 2004, L.P. is a former principal stockholder. +We +entered into a License Agreement with Tufts University pursuant to which we obtained an exclusive, worldwide license to research, develop, commercialize, use, make, or have made, +import or have imported, distribute or have distributed, offer or have offered, and sell or have sold products and services covered by patent rights to the Simoa technology owned by Tufts University, +as well as a non-exclusive license to related know-how. The rights licensed to us are for all fields of use and are sublicensable for a fee. One of our directors and our founding scientist, David R. +Walt, Ph.D. previously served as University Professor, Professor of Biomedical Engineering, Professor of Genetics, Professor of Neuroscience, Professor of Cell and Molecular Biology, and Professor of +Oral Medicine at Tufts University. Under that agreement, we are required to pay Tufts University royalties on all net sales of products and services as well as a portion of any sublicensing revenues. +During the years ended December 31, 2019 and 2018, we recorded royalty expense of $1.0 million and $0.7 million, respectively, under this agreement. Tufts University pays a +portion of the royalties received from us to Dr. Walt, the amount of which is controlled solely by Tufts University. +Stephen +Hrusovsky, the son of E. Kevin Hrusovsky, our Chairman, President and Chief Executive Officer, serves as our Director, Investor Relations and Business Development. For services +in 2019, he received an aggregate of $156,350 in salary, bonus, and equity awards. +Registration Rights +Pursuant to our registration rights agreement to which certain of our principal stockholders, directors and their affiliates are parties, the +holders of certain shares of common stock and warrants to purchase shares of our common stock are entitled to registration rights with respect to the shares of common stock held by them. These shares +include the shares held (and shares issuable upon the exercise of warrants held) by ARCH Venture Partners and affiliated funds, Bain Capital Venture +28 +Table of Contents +entities, +our directors Marijn Dekkers, Ph.D. and David R. Walt, Ph.D., an affiliate of our director Paul M. Meister, and previously included shares held by Flagship Ventures Fund 2005, L.P. +See "Security Ownership of Certain Beneficial Owners and Management." +Under +our registration rights agreement, holders of registrable shares can demand that we file a registration statement or request that their shares be included on a registration +statement that we are otherwise filing, in either case, registering the resale of their shares of common stock. The registration rights will terminate at the earlier of (a) the closing of a +Change of Control Event, as such term is defined in our restated certificate of incorporation, (b) such time as Rule 144 under the Securities Act of 1933, as amended (the "Securities +Act"), or another similar exemption under the Securities Act is available for the sale of all of such registrable shares without limitation during a three-month period without registration (and +without the requirement for us to be in compliance with the current public information required under Rule 144(c)(1)), or (c) the fifth anniversary of the completion of our initial +public offering. +Demand Registration Rights. The holders of a majority of the registrable shares may require us to file a registration +statement under the +Securities Act at our expense, subject to certain exceptions, with respect to the resale of their registrable shares having an aggregate offering price (net of underwriting discounts and commissions, +if any) of at least $5 million, and we are required to use our reasonable best efforts to effect the registration. The holders of a majority of the registrable shares may require us to effect +up to two such demand registrations for the holders of registrable shares as a group. In the event we are required to effect such a demand registration, we may not effect any other registration of +securities for sale for our own account (other than a registration effected solely to implement an employee benefit plan or in certain business combination transactions) within 120 days +following the effective date of the demand registration. +We +are also required to use our reasonable best efforts to qualify and remain qualified to register securities pursuant to a registration statement on Form S-3 under the +Securities Act. Any holder or holders of registrable shares anticipated to have an aggregate sale price (net of underwriting discounts and commissions, if any) in excess of $1 million will have +the right to require us to file, at our expense, an unlimited number of registration statements on Form S-3 for the registrable shares held by such requesting holder or holders, and we are +required to use our reasonable best efforts to effect such registrations. +Piggyback Registration Rights. If we propose to register any of our securities under the Securities Act for sale to the public +(except with respect +to registration statements on Form S-4, Form S-8 or another form not available for registering the registrable shares for sale to the public), the holders of registrable shares are +entitled to notice of such registration and to request that we include registrable shares for resale on such registration statement, subject to the right of any underwriter to limit the number of +shares included in such registration. The requisite holders of these "piggyback" registration rights have waived their rights in connection with the filing of our registration statement on +Form S-3 (File No. 333-230399). +We +will pay all registration expenses, other than underwriting fees, commissions or discounts, related to any demand or piggyback registration, including up to $50,000 of fees and +disbursements of counsel for the holders of registrable shares. The Registration Rights Agreement contains customary cross-indemnification provisions, pursuant to which we are obligated to indemnify +the selling stockholders in the event of misstatements or omissions in the registration statement attributable to us and they are obligated to indemnify us for misstatements or omissions attributable +to them. +29 +Table of Contents +Indemnification Agreements with Officers and Directors and Directors' and Officers' Liability Insurance +We have entered into indemnification agreements with each of our executive officers and directors. The indemnification agreements, our restated +certificate of incorporation and our restated bylaws require us to indemnify our directors to the fullest extent not prohibited by Delaware law. Subject to certain limitations, our restated bylaws +also require us to advance expenses incurred by our directors and officers. +The +2017 Plan and our 2007 Stock Option and Grant Plan, as amended, also provide that our directors (and in the case of the 2017 Plan, our employees) will not be liable for any act, +omission, interpretation, construction or determination made in good faith in connection with the respective plan, and the members of our board of directors and any committee administering the plan +will be entitled to indemnification and reimbursement by us in respect of any claim, loss, damage or expense (including reasonable attorneys' fees) arising or resulting therefrom to the fullest extent +permitted by law and/or under any directors' and officers' liability insurance coverage which may be in effect from time to time. +We +also maintain a general liability insurance policy which covers certain liabilities of directors and officers of our company arising out of claims based on acts or omissions in their +capacities as directors or officers. +Policies and Procedures for Related Party Transactions +Pursuant to its charter, our audit committee is responsible for reviewing and approving, prior to our entry into any such transaction, all +transactions reportable by us under Item 404 of Regulation S-K in which we are a participant and in which any parties related to us, including our executive officers, our directors, +beneficial owners of more than 5% of our securities, immediate family members of the foregoing persons and any other persons whom our board of directors determines may be considered related persons +under Item 404 of Regulation S-K, has or is expected to have a direct or indirect material interest. +In +reviewing and approving such transactions, the audit committee will obtain, or will direct our management to obtain on its behalf, all information that the committee believes to be +relevant and important to a review of the transaction prior to its approval. Following receipt of the necessary information, a discussion will be held of the relevant factors if deemed to be necessary +by the committee prior to approval. If a discussion is not deemed to be necessary, approval may be given by written consent of the committee. This approval authority may also be delegated to the chair +of the audit committee in some circumstances. No related person transaction will be entered into prior to the completion of these procedures. +The +audit committee or its chair, as the case may be, will approve only those related person transactions that are determined to be in, or not inconsistent with, the best interests of us +and our stockholders, taking into account all available facts and circumstances as the committee or the chair determines in good faith to be necessary in accordance with principles of Delaware law +generally applicable to directors of a Delaware corporation. These facts and circumstances will typically include, but not be limited to, the benefits of the transaction to us; the impact on a +director's independence in the event the related person is a director, an immediate family member of a director or an entity in which a director is a partner, stockholder or executive officer; the +availability of other sources for comparable products or services; the terms of the transaction; and the terms of comparable transactions +that would be available to unrelated third parties or to employees generally. No member of the audit committee will participate in any review, consideration or approval of any related person +transaction with respect to which the member or any of his or her immediate family members has an interest. +30 +Table of Contents +ELECTION OF DIRECTORS +(Notice Item 1) +Our board of directors nominated E. Kevin Hrusovsky, Keith L. Crandell and Paul M. Meister for election at the annual meeting. Our board of +directors currently consists of eight members, classified into three classes as follows: (1) E. Kevin Hrusovsky, Keith L. Crandell and Paul M. Meister constitute Class III with a term +ending at the upcoming 2020 annual meeting of stockholders; (2) John M. Connolly and Martin D. Madaus, Ph.D. constitute Class I with a term ending at the 2021 annual meeting of +stockholders; and (3) Marijn Dekkers, Ph.D., Sarah E. Hlavinka and David R. Walt, Ph.D. constitute Class II with a term ending at the 2022 annual meeting of stockholders. At each annual +meeting of stockholders, directors are elected for a full term of three years to succeed those directors whose terms are expiring. +Upon +the recommendation of our nominating and governance committee, our board of directors has voted to nominate E. Kevin Hrusovsky, Keith L. Crandell and Paul M. Meister for election at +the annual meeting as Class III directors for a term of three years to serve until the 2023 annual meeting of stockholders and until their respective successors are elected and qualified. +Unless +authority to vote for any of these nominees is withheld, the shares represented by the enclosed proxy will be voted FOR the +election of E. Kevin Hrusovsky, Keith L. Crandell and Paul M. Meister as directors. In the event that any of the nominees becomes unable or unwilling to serve, the shares represented by the enclosed +proxy will be voted for the election of such other person as the board of directors may recommend in that nominee's place. We have no reason to believe that any of the nominees will be unable or +unwilling to serve as a director. +A +plurality of the shares voted FOR each nominee is required to elect each nominee as a director. +THE BOARD OF DIRECTORS RECOMMENDS THE ELECTION OF E. KEVIN HRUSOVSKY, KEITH L. CRANDELL AND PAUL M. MEISTER AS DIRECTORS, AND PROXIES SOLICITED BY THE BOARD WILL BE VOTED IN +FAVOR THEREOF UNLESS A STOCKHOLDER HAS INDICATED OTHERWISE ON THE PROXY. +31 +Table of Contents +RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT +REGISTERED PUBLIC ACCOUNTING FIRM +(Notice Item 2) +The audit committee has appointed Ernst & Young LLP as our independent registered public accounting firm, to audit our financial +statements for the fiscal year ending December 31, 2020. The board of directors proposes that the stockholders ratify this appointment. Ernst & Young LLP audited our financial +statements for the fiscal years ended December 31, 2019 and 2018. We expect that representatives of Ernst & Young LLP will be present at the annual meeting, will be able to make a +statement if they so desire and will be available to respond to appropriate questions. +In +deciding to appoint Ernst & Young LLP, the audit committee reviewed auditor independence issues and existing commercial relationships with Ernst & +Young LLP and concluded that Ernst & Young LLP has no commercial relationship with the Company that would impair its independence for the fiscal year ending December 31, +2020. +The +following table presents fees for professional audit services rendered by Ernst & Young LLP, our independent registered public accounting firm, for the audit of our +annual financial statements for the years ended December 31, 2019 and 2018, and fees billed for other services rendered by Ernst & Young LLP during those periods. +2019 +2018 +Audit fees:(1) +$ +1,440,349 +$ +892,738 +Audit-related fees:(2) +$ +326,120 +$ +— +Tax fees:(3) +$ +75,420 +$ +59,523 +Total +$ +1,841,889 +$ +952,261 +(1) Audit +fees consisted of audit work performed in the preparation of financial statements and services in connection with our periodic and current SEC filings and +registration statements, as well as work generally only the independent registered public accounting firm can reasonably be expected to provide, such as statutory audits. +(2) Audit-related +fees consisted of fees for assurance and related services including due diligence in connection with mergers and acquisitions, accounting +consultations, and audits in connection with mergers and acquisitions which are not reported under "Audit Fees." +(3) Tax +fees consist principally of assistance with matters related to tax compliance and reporting and tax consulting services primarily related to international tax +planning strategies. +Policy on Audit Committee Pre-Approval of Audit and Permissible Non-audit Services of Independent Public Accountant +Consistent with SEC policies regarding auditor independence, the audit committee has responsibility for appointing, setting compensation and +overseeing the work of our independent registered public accounting firm. In recognition of this responsibility, the audit committee has established a policy to pre-approve all audit and permissible +non-audit services provided by our independent registered public accounting firm; provided however, that de minimis non-audit services may instead be approved in accordance with applicable SEC rules. +32 +Table of Contents +Prior +to engagement of an independent registered public accounting firm for the next year's audit, management will submit an aggregate of services expected to be rendered during that +year for each of four categories of services to the audit committee for approval. +1. Audit services include audit work performed in the preparation of financial statements, as well as work that generally +only an independent registered public accounting firm can reasonably be expected to provide, including comfort letters, statutory audits and attest services and consultation regarding financial +accounting and/or reporting standards. +2. Audit-Related services are for assurance and related services that are traditionally performed by an independent +registered public accounting firm, including due diligence related to mergers and acquisitions, employee benefit plan audits and special procedures required to meet certain regulatory requirements. +3. Tax services include all services performed by an independent registered public accounting firm's tax personnel except +those services specifically related to the audit of the financial statements, and includes fees in the areas of tax compliance, tax planning and tax advice. +4. Other Fees are those associated with services not captured in the other categories. The Company generally does not +request such services from our independent registered public accounting firm. +Prior +to engagement, the audit committee pre-approves these services by category of service. The fees are budgeted and the audit committee requires our independent registered public +accounting firm and management to report actual fees versus the budget periodically throughout the year by category of service. During the year, circumstances may arise when it may become necessary to +engage our independent registered public accounting firm for additional services not contemplated in the original pre-approval. In those instances, the audit committee requires specific pre-approval +before engaging our independent registered public accounting firm. +The +audit committee may delegate pre-approval authority to one or more of its members. The member to whom such authority is delegated must report, for informational purposes only, any +pre-approval decisions to the audit committee at its next scheduled meeting. +In +the event the stockholders do not ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm, the audit committee will reconsider +its appointment. +The +affirmative vote of a majority of the votes cast affirmatively or negatively for this proposal is required to ratify the appointment of the independent registered public accounting +firm. +THE BOARD OF DIRECTORS RECOMMENDS A VOTE TO RATIFY THE APPOINTMENT OF ERNST & YOUNG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM, AND +PROXIES SOLICITED BY THE BOARD WILL BE VOTED IN FAVOR OF SUCH RATIFICATION UNLESS A STOCKHOLDER INDICATES OTHERWISE ON THE PROXY. +33 +Table of Contents +CORPORATE CODE OF CONDUCT AND ETHICS +We have adopted a corporate code of conduct and ethics that applies to all of our employees, including our chief executive officer and chief +financial and accounting officers. The text of the code of conduct and ethics is posted on our website at www.quanterix.com and will be made available to stockholders without charge, upon request, in +writing to the Corporate Secretary at 900 Middlesex Turnpike, Building 1, Billerica, Massachusetts 01821. Disclosure regarding any amendments to, or waivers from, provisions of the code that apply to +our directors, principal executive officer or principal financial officer will be included in a Current Report on Form 8-K within four business days following the date of the amendment or +waiver, unless website posting or the issuance of a press release of such amendments or waivers is then permitted by the rules of The Nasdaq Stock Market. +OTHER MATTERS +The board of directors knows of no other business which will be presented to the annual meeting. If any other business is properly brought +before the annual meeting, proxies will be voted in accordance with the judgment of the persons named therein. +STOCKHOLDER PROPOSALS AND NOMINATIONS FOR DIRECTOR +To be considered for inclusion in the proxy statement relating to our 2021 annual meeting of stockholders, we must receive stockholder proposals +(other than for director nominations) no later than December 31, 2020. To be considered for presentation at the 2021 annual meeting, although not included in the proxy statement, proposals +(including director nominations that are not requested to be included in our proxy statement) must be received no earlier than February 25, 2021 and no later than March 27, 2021. +Proposals that are not received in a timely manner will not be voted on at the 2021 annual meeting. If a proposal is received on time, the proxies that management solicits for the meeting may still +exercise discretionary voting authority on the proposal under circumstances consistent with the proxy rules of the SEC. All stockholder proposals should be marked for the +attention of Secretary, Quanterix Corporation, 900 Middlesex Turnpike, Building 1, Billerica, Massachusetts 01821. +Billerica, +Massachusetts +April 29, 2020 +34 +MMMMMMMMMMMM C123456789 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000004 ENDORSEMENT_LINE______________ SACKPACK_____________ Your vote matters – here’s how to vote! You may vote online or by phone instead of mailing this card. Votes submitted electronically must be MR A SAMPLE DESIGNATION (IF ANY) ADD 1 ADD 2 ADD 3 ADD 4 ADD 5 ADD 6 received by 1:00 a.m., Eastern Time, on June 25, 2020. Online GIof ntoo welwewct.rinovneicstvoortviontge,.com/QTRX delete QR code and control # or scan the QR code — login details are located in the shaded bar below. Phone Call toll free 1-800-652-VOTE (8683) within the USA, US territories and Canada Save paper, time and money! Sign up for electronic delivery at www.investorvote.com/QTRX Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. q IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q + 1. Election of Class III Directors for a three-year term expiring in 2023: For Withhold For Withhold For Withhold 01 - Keith L. Crandell 02 - E. Kevin Hrusovsky 03 - Paul M. Meister For Against Abstain 2. Ratification of the appointment of Ernst & Young LLP as the independent registered public accounting firm for the fiscal year ending December 31, 2020. Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title. Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box. C 1234567890 J N T MR A SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE 140 CHARACTERS) MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND + 3 1 B V 4 6 1 6 0 2 03962B MMMMMMMMM B Authorized Signatures — This section must be completed for your vote to count. Please date and sign below. A Proposals — The Board of Directors recommends a vote FOR all the nominees listed and FOR Proposal 2. 2020 Annual Meeting Proxy Card1234 5678 9012 345 +2020 Annual Meeting Admission Ticket 2020 Annual Meeting of Quanterix Corporation Stockholders June 25, 2020 10:00 AM ET Quanterix Corporation 900 Middlesex Turnpike, Building 1 Billerica, MA 01821 Upon arrival, please present this admission ticket and photo identification at the registration desk. Important notice regarding the Internet availability of proxy materials for the Annual Meeting of Stockholders. The material is available at: www.investorvote.com/QTRX q IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q + Notice of 2020 Annual Meeting of Stockholders Proxy Solicited by Board of Directors for Annual Meeting — June 25, 2020 E. Kevin Hrusovsky, Amol Chaubal and John Fry, or any of them, each with the power of substitution, are hereby authorized to represent and vote the shares of the undersigned, with all the powers which the undersigned would possess if personally present, at the Annual Meeting of Stockholders of Quanterix Corporation to be held on June 25, 2020 or at any postponement or adjournment thereof. Shares represented by this proxy will be voted as directed by the stockholder. If no such directions are indicated, the Proxies will have authority to vote FOR the election of the nominees as directors and FOR Proposal 2. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting. (Items to be voted appear on reverse side) Change of Address — Please print new address below. Comments — Please print your comments below. + C Non-Voting Items Quanterix Corporation Small steps make an impact. Help the environment by consenting to receive electronic delivery, sign up at www.investorvote.com/QTRX \ No newline at end of file diff --git a/raw/proxies/0001503274/0001047469-20-002697/proxy_rpt.txt b/raw/proxies/0001503274/0001047469-20-002697/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..201480a2e65e160edbdbc5b8c46765658cd9a34b --- /dev/null +++ b/raw/proxies/0001503274/0001047469-20-002697/proxy_rpt.txt @@ -0,0 +1,102 @@ +CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS +Since January 1, 2018, we have engaged in the following transactions with our directors, director nominees, executive officers and +holders of more than 5% of our common stock, which we refer to as our principal stockholders, and affiliates or immediate family members of our directors, executive officers and principal +stockholders. We believe that all of these transactions were on terms as favorable as could have been obtained from unrelated third parties. +Certain +of our current and former directors are affiliated with our principal stockholders as indicated below: +Director +Affiliation with principal stockholder +Keith L. Crandell +Managing Director of ARCH Venture Partners VI, LLC, the ultimate general partner of ARCH Venture Fund VI, L.P., and Managing Director of ARCH Venture Partners VIII, LLC, the general partner +of ARCH Venture Fund VIII Overage, L.P. +Douglas G. Cole, M.D.(1) +Managing Partner of Flagship Pioneering and a member of Flagship Ventures General Partner LLC, the sole general partner of Flagship Ventures Fund 2004, L.P. +John M. Connolly +Senior Advisor to Bain Capital Ventures, the ultimate general partner of Bain Capital Venture Fund 2005, L.P., BCIP Associates III, LLC and BCIP Associates III-B, LLC. +(1) Dr. Cole +did not stand for re-election and ceased serving as a member of our board of directors as of our 2019 Annual Meeting on July 25, 2019. +Flagship Ventures Fund 2004, L.P. is a former principal stockholder. +We +entered into a License Agreement with Tufts University pursuant to which we obtained an exclusive, worldwide license to research, develop, commercialize, use, make, or have made, +import or have imported, distribute or have distributed, offer or have offered, and sell or have sold products and services covered by patent rights to the Simoa technology owned by Tufts University, +as well as a non-exclusive license to related know-how. The rights licensed to us are for all fields of use and are sublicensable for a fee. One of our directors and our founding scientist, David R. +Walt, Ph.D. previously served as University Professor, Professor of Biomedical Engineering, Professor of Genetics, Professor of Neuroscience, Professor of Cell and Molecular Biology, and Professor of +Oral Medicine at Tufts University. Under that agreement, we are required to pay Tufts University royalties on all net sales of products and services as well as a portion of any sublicensing revenues. +During the years ended December 31, 2019 and 2018, we recorded royalty expense of $1.0 million and $0.7 million, respectively, under this agreement. Tufts University pays a +portion of the royalties received from us to Dr. Walt, the amount of which is controlled solely by Tufts University. +Stephen +Hrusovsky, the son of E. Kevin Hrusovsky, our Chairman, President and Chief Executive Officer, serves as our Director, Investor Relations and Business Development. For services +in 2019, he received an aggregate of $156,350 in salary, bonus, and equity awards. +Registration Rights +Pursuant to our registration rights agreement to which certain of our principal stockholders, directors and their affiliates are parties, the +holders of certain shares of common stock and warrants to purchase shares of our common stock are entitled to registration rights with respect to the shares of common stock held by them. These shares +include the shares held (and shares issuable upon the exercise of warrants held) by ARCH Venture Partners and affiliated funds, Bain Capital Venture +28 +Table of Contents +entities, +our directors Marijn Dekkers, Ph.D. and David R. Walt, Ph.D., an affiliate of our director Paul M. Meister, and previously included shares held by Flagship Ventures Fund 2005, L.P. +See "Security Ownership of Certain Beneficial Owners and Management." +Under +our registration rights agreement, holders of registrable shares can demand that we file a registration statement or request that their shares be included on a registration +statement that we are otherwise filing, in either case, registering the resale of their shares of common stock. The registration rights will terminate at the earlier of (a) the closing of a +Change of Control Event, as such term is defined in our restated certificate of incorporation, (b) such time as Rule 144 under the Securities Act of 1933, as amended (the "Securities +Act"), or another similar exemption under the Securities Act is available for the sale of all of such registrable shares without limitation during a three-month period without registration (and +without the requirement for us to be in compliance with the current public information required under Rule 144(c)(1)), or (c) the fifth anniversary of the completion of our initial +public offering. +Demand Registration Rights. The holders of a majority of the registrable shares may require us to file a registration +statement under the +Securities Act at our expense, subject to certain exceptions, with respect to the resale of their registrable shares having an aggregate offering price (net of underwriting discounts and commissions, +if any) of at least $5 million, and we are required to use our reasonable best efforts to effect the registration. The holders of a majority of the registrable shares may require us to effect +up to two such demand registrations for the holders of registrable shares as a group. In the event we are required to effect such a demand registration, we may not effect any other registration of +securities for sale for our own account (other than a registration effected solely to implement an employee benefit plan or in certain business combination transactions) within 120 days +following the effective date of the demand registration. +We +are also required to use our reasonable best efforts to qualify and remain qualified to register securities pursuant to a registration statement on Form S-3 under the +Securities Act. Any holder or holders of registrable shares anticipated to have an aggregate sale price (net of underwriting discounts and commissions, if any) in excess of $1 million will have +the right to require us to file, at our expense, an unlimited number of registration statements on Form S-3 for the registrable shares held by such requesting holder or holders, and we are +required to use our reasonable best efforts to effect such registrations. +Piggyback Registration Rights. If we propose to register any of our securities under the Securities Act for sale to the public +(except with respect +to registration statements on Form S-4, Form S-8 or another form not available for registering the registrable shares for sale to the public), the holders of registrable shares are +entitled to notice of such registration and to request that we include registrable shares for resale on such registration statement, subject to the right of any underwriter to limit the number of +shares included in such registration. The requisite holders of these "piggyback" registration rights have waived their rights in connection with the filing of our registration statement on +Form S-3 (File No. 333-230399). +We +will pay all registration expenses, other than underwriting fees, commissions or discounts, related to any demand or piggyback registration, including up to $50,000 of fees and +disbursements of counsel for the holders of registrable shares. The Registration Rights Agreement contains customary cross-indemnification provisions, pursuant to which we are obligated to indemnify +the selling stockholders in the event of misstatements or omissions in the registration statement attributable to us and they are obligated to indemnify us for misstatements or omissions attributable +to them. +29 +Table of Contents +Indemnification Agreements with Officers and Directors and Directors' and Officers' Liability Insurance +We have entered into indemnification agreements with each of our executive officers and directors. The indemnification agreements, our restated +certificate of incorporation and our restated bylaws require us to indemnify our directors to the fullest extent not prohibited by Delaware law. Subject to certain limitations, our restated bylaws +also require us to advance expenses incurred by our directors and officers. +The +2017 Plan and our 2007 Stock Option and Grant Plan, as amended, also provide that our directors (and in the case of the 2017 Plan, our employees) will not be liable for any act, +omission, interpretation, construction or determination made in good faith in connection with the respective plan, and the members of our board of directors and any committee administering the plan +will be entitled to indemnification and reimbursement by us in respect of any claim, loss, damage or expense (including reasonable attorneys' fees) arising or resulting therefrom to the fullest extent +permitted by law and/or under any directors' and officers' liability insurance coverage which may be in effect from time to time. +We +also maintain a general liability insurance policy which covers certain liabilities of directors and officers of our company arising out of claims based on acts or omissions in their +capacities as directors or officers. +Policies and Procedures for Related Party Transactions +Pursuant to its charter, our audit committee is responsible for reviewing and approving, prior to our entry into any such transaction, all +transactions reportable by us under Item 404 of Regulation S-K in which we are a participant and in which any parties related to us, including our executive officers, our directors, +beneficial owners of more than 5% of our securities, immediate family members of the foregoing persons and any other persons whom our board of directors determines may be considered related persons +under Item 404 of Regulation S-K, has or is expected to have a direct or indirect material interest. +In +reviewing and approving such transactions, the audit committee will obtain, or will direct our management to obtain on its behalf, all information that the committee believes to be +relevant and important to a review of the transaction prior to its approval. Following receipt of the necessary information, a discussion will be held of the relevant factors if deemed to be necessary +by the committee prior to approval. If a discussion is not deemed to be necessary, approval may be given by written consent of the committee. This approval authority may also be delegated to the chair +of the audit committee in some circumstances. No related person transaction will be entered into prior to the completion of these procedures. +The +audit committee or its chair, as the case may be, will approve only those related person transactions that are determined to be in, or not inconsistent with, the best interests of us +and our stockholders, taking into account all available facts and circumstances as the committee or the chair determines in good faith to be necessary in accordance with principles of Delaware law +generally applicable to directors of a Delaware corporation. These facts and circumstances will typically include, but not be limited to, the benefits of the transaction to us; the impact on a +director's independence in the event the related person is a director, an immediate family member of a director or an entity in which a director is a partner, stockholder or executive officer; the +availability of other sources for comparable products or services; the terms of the transaction; and the terms of comparable transactions +that would be available to unrelated third parties or to employees generally. No member of the audit committee will participate in any review, consideration or approval of any related person +transaction with respect to which the member or any of his or her immediate family members has an interest. +30 +Table of Contents \ No newline at end of file diff --git a/raw/proxies/0001503274/0001104659-21-057299/proxy.txt b/raw/proxies/0001503274/0001104659-21-057299/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..a35cb100619a35e0be025594ba93bab8583176ea --- /dev/null +++ b/raw/proxies/0001503274/0001104659-21-057299/proxy.txt @@ -0,0 +1,1110 @@ +DEF 14A +1 +tm212544-1_def14a.htm +DEF 14A +tm212544-1_def14a - none - 5.0625168s +TABLE OF CONTENTS +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Proxy Statement Pursuant to Section 14(a) of +the Securities Exchange Act of 1934 (Amendment No.           ) +Filed by the Registrant ☒ +Filed by a Party other than the Registrant ☐ +Check the appropriate box: +☐ +Preliminary Proxy Statement +☐ +Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +☒ +Definitive Proxy Statement +☐ +Definitive Additional Materials +☐ +Soliciting Material under §240.14a-12 +Quanterix Corporation +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +☒ +No fee required. +☐ +Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. +(1) +Title of each class of securities to which transaction applies: +(2) +Aggregate number of securities to which transaction applies: +(3) +Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): +(4) +Proposed maximum aggregate value of transaction: +(5) +Total fee paid: +☐ +Fee paid previously with preliminary materials. +☐ +Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. +(1) +Amount Previously Paid: +(2) +Form, Schedule or Registration Statement No.: +(3) +Filing Party: +(4) +Date Filed: +TABLE OF CONTENTS +April 29, 2021 +To Our Stockholders: +You are cordially invited to attend the 2021 annual meeting of stockholders of Quanterix Corporation to be held at 10:00 a.m. ET on Thursday, June 24, 2021. As a result of public health considerations, this year’s annual meeting will be conducted solely via live audio webcast on the Internet. You will be able to attend the annual meeting, vote and submit your questions during the annual meeting by visiting http://www.meetingcenter.io/255011196 . You will not be able to attend the annual meeting in person. +Details regarding the meeting, the business to be conducted at the meeting, and information about Quanterix Corporation that you should consider when you vote your shares are described in the accompanying proxy statement. Details on how to participate in the meeting will be available at www.investorvote.com/qtrx . +At the annual meeting, two persons will be elected to our board of directors to serve three-year terms expiring in 2024. In addition, we will ask stockholders to ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2021. Our board of directors recommends the approval of each of these proposals. Such other business will be transacted as may properly come before the annual meeting. +Under Securities and Exchange Commission rules that allow companies to furnish proxy materials to stockholders over the Internet, we have elected to deliver our proxy materials to the majority of our stockholders over the Internet. This delivery process allows us to provide stockholders with the information they need, while at the same time conserving natural resources and lowering the cost of delivery. On or about May 3, 2021, we intend to begin sending to our stockholders a Notice of Internet Availability of Proxy Materials (the “Notice”) containing instructions on how to access our proxy statement for our 2021 Annual Meeting of Stockholders and our 2020 annual report to stockholders. The Notice also provides instructions on how to vote online or by telephone, how to access the virtual annual meeting and how to receive a paper copy of the proxy materials by mail. +We hope you will be able to attend the annual meeting. Whether or not you plan to attend the annual meeting, we hope you will vote promptly. Information about voting methods is set forth in the accompanying proxy statement. +Thank you for your continued support of Quanterix Corporation. We look forward to seeing you at the annual meeting. +Sincerely, +/s/ E. K evin H rusovsky +E . Kevin Hrusovsky +Chairman, President and Chief Executive Officer +TABLE OF CONTENTS +QUANTERIX CORPORATION +900 Middlesex Turnpike +Billerica, Massachusetts 01821 +April 29, 2021 +NOTICE OF 2021 ANNUAL MEETING OF STOCKHOLDERS +TIME: 10:00 a.m. ET +DATE: Thursday, June 24, 2021 +ACCESS: To be admitted to the annual meeting at http://www.meetingcenter.io/255011196 , stockholders must enter the 15-digit control number found on their proxy card, notice of internet availability of proxy materials, or email previously received, and will also need the meeting password: QTRX2021. We encourage you to access the annual meeting prior to the start time. Online access will begin at 9:45 a.m. ET. Stockholders may vote during the annual meeting by following the instructions available on the meeting website during the meeting. +PURPOSES: +1. +To elect two directors to serve three-year terms expiring in 2024; +2. +To ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2021; and +3. +To transact such other business that is properly presented at the annual meeting and any adjournments or postponements thereof. +WHO MAY VOTE: +You may vote if you were the record owner of Quanterix Corporation common stock at the close of business on April 26, 2021. A list of stockholders of record will be available at the annual meeting and, during the 10 days prior to the annual meeting, at our principal executive offices, located at 900 Middlesex Turnpike, Building 1, Billerica, Massachusetts 01821. +All stockholders are cordially invited to attend the annual meeting. Whether you plan to attend the annual meeting or not, we urge you to vote by following the instructions in the Notice of Internet Availability of Proxy Materials that you previously received and submit your proxy by the Internet, telephone or mail in order to ensure the presence of a quorum. You may change or revoke your proxy at any time before it is voted at the meeting. +BY ORDER OF THE BOARD OF DIRECTORS +/s/ J ohn F ry +John Fry +General Counsel and Secretary +TABLE OF CONTENTS +TABLE OF CONTENTS +Page +Important Information About the Annual Meeting and Voting +1 +Security Ownership of Certain Beneficial Owners and Management +7 +Management and Corporate Governance +9 +Executive Officer and Director Compensation +19 +Equity Compensation Plan Information +26 +Report of Audit Committee +27 +Delinquent Section 16(a) Reports +27 +Certain Relationships and Related Person Transactions +28 +Election of Directors +31 +Ratification of the Appointment of the Independent Registered Public Accounting Firm +32 +Corporate Code of Conduct and Ethics +34 +Other Matters +34 +Stockholder Proposals and Nominations for Director +34 +TABLE OF CONTENTS +QUANTERIX CORPORATION +900 Middlesex Turnpike +Billerica, Massachusetts 01821 +PROXY STATEMENT FOR QUANTERIX CORPORATION +2021 ANNUAL MEETING OF STOCKHOLDERS +TO BE HELD ON JUNE 24, 2021 +This proxy statement, along with the accompanying Notice of 2021 Annual Meeting of Stockholders, contains information about the 2021 annual meeting of stockholders of Quanterix Corporation, including any adjournments or postponements of the annual meeting. We are holding the annual meeting at 10:00 a.m. ET on Thursday, June 24, 2021. As a result of public health considerations, this year’s annual meeting will be conducted solely via live audio webcast on the Internet. To be admitted to the annual meeting at http://www.meetingcenter.io/255011196 , stockholders must enter the 15-digit control number found on their proxy card, notice of internet availability of proxy materials, or email previously received, and will also need the meeting password: QTRX2021. We encourage you to access the annual meeting prior to the start time. Online access will begin at 9:45 a.m. ET. Stockholders may vote during the annual meeting by following the instructions available on the meeting website during the meeting. +In this proxy statement, we refer to Quanterix Corporation as “Quanterix,” “the Company,” “we” and “us.” +This proxy statement relates to the solicitation of proxies by our board of directors for use at the annual meeting. +On or about May 3, 2021, we intend to begin sending the Important Notice Regarding the Availability of Proxy Materials to stockholders entitled to vote at the annual meeting. +IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE +STOCKHOLDER MEETING TO BE HELD ON JUNE 24, 2021 +This proxy statement and our 2020 annual report to stockholders are available for viewing, printing and downloading at www.investorvote.com/qtrx. To view these materials, please have your 15-digit control number(s) available that appears on your Notice or proxy card. On this website, you can also elect to receive future distributions of our proxy statements and annual reports to stockholders by electronic delivery. +Additionally, you can find a copy of our Annual Report on Form 10-K, which includes our financial statements, for the fiscal year ended December 31, 2020 on the website of the Securities and Exchange Commission (the “SEC”) at www.sec.gov , or in the “SEC Filings” section of the “Financial Information” section of the “Investors” section of our website at www.quanterix.com. You may also obtain a printed copy of our Annual Report on Form 10-K, including our financial statements, free of charge, from us by sending a written request to: Quanterix Corporation, Attn: Investor Relations, 900 Middlesex Turnpike, Building 1, Billerica, Massachusetts 01821. Exhibits will be provided upon written request and payment of an appropriate processing fee. +IMPORTANT INFORMATION ABOUT THE ANNUAL MEETING AND VOTING +Why is the Company Soliciting My Proxy? +Our board of directors is soliciting your proxy to vote at the 2021 annual meeting of stockholders to be held virtually on Thursday, June 24, 2021, at 10:00 a.m. ET, and any adjournments or postponements of the meeting, which we refer to as the annual meeting. This proxy statement, along with the accompanying Notice of Annual Meeting of Stockholders, summarizes the purposes of the meeting and the information you need to know to vote at the annual meeting. +We have made available to you on the Internet or have sent you this proxy statement, the Notice of Annual Meeting of Stockholders, the proxy card and a copy of our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 because you owned shares of our common stock on the record date. We intend to commence distribution of the Important Notice Regarding the Availability of Proxy Materials, +1 +TABLE OF CONTENTS +which we refer to throughout this proxy statement as the Notice, and, if applicable, proxy materials to stockholders on or about May 3, 2021. +Why Did I Receive a Notice in the Mail Regarding the Internet Availability of Proxy Materials Instead of a Full Set of Proxy Materials? +As permitted by the rules of the SEC, we may furnish our proxy materials to our stockholders by providing access to such documents on the Internet, rather than mailing printed copies of these materials to each stockholder. Most stockholders will not receive printed copies of the proxy materials unless they request them. We believe that this process should expedite stockholders’ receipt of proxy materials, lower the costs of the annual meeting and help to conserve natural resources. If you received a Notice by mail or electronically, you will not receive a printed or email copy of the proxy materials, unless you request one by following the instructions included in the Notice. Instead, the Notice instructs you as to how you may access and review all of the proxy materials and submit your proxy on the Internet. If you requested a paper copy of the proxy materials, you may authorize the voting of your shares by following the instructions on the proxy card, in addition to the other methods of voting described in this proxy statement. +Why Are You Holding a Virtual Annual Meeting? +Due to the continuing public health impact of COVID-19 and to support the health and well-being of our stockholders, this year’s annual meeting will be held in a virtual meeting format only. We have designed our virtual format to enhance, rather than constrain, stockholder access, participation and communication. For example, the virtual format allows stockholders to communicate with us in advance of, and during, the annual meeting so they can ask questions of our board of directors or management, as time permits. +How do I access the Virtual Annual Meeting? +The live audio webcast of the annual meeting will begin promptly at 10:00 a.m. ET. Online access to the audio webcast will open 15 minutes prior to the start of the annual meeting to allow time for you to log-in and test your device’s audio system. You should ensure you have a strong Internet connection wherever you intend to participate in the annual meeting. You should also allow plenty of time to log in and ensure that you can hear streaming audio prior to the start of the annual meeting. To be admitted to the annual meeting at http://www.meetingcenter.io/255011196 , stockholders of record must enter the 15-digit control number found on their proxy card, notice of internet availability of proxy materials, or email previously received, and will also need the meeting password: QTRX2021. +If you are a beneficial owner and hold your shares through an intermediary, such as a bank, broker or nominee, you must register in advance to participate in the annual meeting. To register in advance, you must obtain a legal proxy from the bank, broker or other nominee that holds your shares giving you the right to vote the shares. You must forward a copy of the legal proxy along with your email address to Computershare Trust Company, N.A. (“Computershare”). Requests for registration should be directed to Computershare by email at legalproxy@computershare.com; facsimile at (781) 575-4647; or mail to Computershare, Quanterix Corporation Legal Proxy, P.O. Box 43001, Providence, Rhode Island 02940-3001, and must be received by Computershare no later than 10:00 a.m. ET, on June 21, 2021. Computershare will then register you for attendance at the annual meeting and provide you with confirmation of your registration and instructions on how to attend the meeting by email after Computershare receives your registration materials. +Will I be able to ask questions and have these questions answered during the Virtual Annual Meeting? +Stockholders may submit questions for the annual meeting after logging in. If you wish to submit a question, you may do so by logging into the virtual meeting platform at http://www.meetingcenter.io/255011196 , typing your question into the “Ask a Question” field, and clicking “Submit.” Please submit any questions before the start time of the meeting. Appropriate questions related to the business of the annual meeting (the proposals being voted on) will be answered during the annual meeting, subject to time constraints. +2 +TABLE OF CONTENTS +What Happens if There Are Technical Difficulties during the Annual Meeting? +Beginning 15 minutes prior to, and during, the Annual Meeting, we will have technicians ready to assist you with any technical difficulties you may have accessing the virtual annual meeting, voting at the annual meeting or submitting questions at the annual meeting. If you encounter any difficulties accessing the virtual annual meeting during the check-in or meeting time, please call 1-888-724-2416 (US & Canada) or +1-781-575-2748. +Who Can Vote? +Only stockholders who owned our common stock at the close of business on April 26, 2021 are entitled to vote at the annual meeting. On this record date, there were 36,334,803 shares of our common stock outstanding and entitled to vote. Our common stock is our only class of voting stock. +You do not need to attend the annual meeting to vote your shares. Shares represented by valid proxies, received in time for the annual meeting and not revoked prior to the annual meeting, will be voted at the annual meeting. For instructions on how to change or revoke your proxy, see “May I Change or Revoke My Proxy?” below. +How Many Votes Do I Have? +Each share of our common stock that you own entitles you to one vote. +How Do I Vote? +Whether you plan to attend the annual meeting or not, we urge you to vote by proxy. All shares represented by valid proxies that we receive through this solicitation, and that are not revoked, will be voted in accordance with your instructions on the proxy card or as instructed via Internet or telephone. You may specify whether your shares should be voted for or withheld for each nominee for director and whether your shares should be voted for, against or abstain with respect to the other proposal. If you properly submit a proxy without giving specific voting instructions, your shares will be voted in accordance with the board of directors’ recommendations as noted below. Voting by proxy will not affect your right to attend the annual meeting. If your shares are registered directly in your name through our stock transfer agent, Computershare Trust Company N.A., or you have stock certificates registered in your name, you may vote: +• +By Internet or by telephone. Follow the instructions included in the Notice or, if you received printed materials, in the proxy card to vote over the Internet or by telephone. +• +By mail. If you received a proxy card by mail, you can vote by mail by completing, signing, dating and returning the proxy card as instructed on the card. If you sign the proxy card but do not specify how you want your shares voted, they will be voted in accordance with the board of director’s recommendations as noted below. +• +At the meeting. Stockholders may vote during the Annual Meeting by following the instructions available on the meeting website during the meeting. +Telephone and Internet voting facilities for stockholders of record will be available 24 hours a day and will close at 1:00 a.m. ET on June 24, 2021. +If your shares are held in “street name” (held in the name of a bank, broker or other holder of record), you will receive instructions from the holder of record. You must follow the instructions of the holder of record in order for your shares to be voted. Telephone and Internet voting also will be offered to stockholders owning shares through certain banks and brokers. +How Does the Board of Directors Recommend That I Vote on the Proposals? +The board of directors recommends that you vote as follows: +• +“ FOR ” the election of the two (2) nominees for director; and +• +“ FOR ” the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2021. +3 +TABLE OF CONTENTS +If any other matter is presented at the annual meeting, your proxy provides that your shares will be voted by the proxy holder listed in the proxy in accordance with the proxy holder’s best judgment. At the time this proxy statement was first made available, we knew of no matters that needed to be acted on at the annual meeting, other than those discussed in this proxy statement. +May I Change or Revoke My Proxy? +If you give us your proxy, you may change or revoke it at any time before the annual meeting. You may change or revoke your proxy in any one of the following ways: +• +if you received a proxy card, by signing a new proxy card with a date later than your previously delivered proxy and submitting it as instructed above; +• +by re-voting by Internet or by telephone as instructed above; +• +by notifying our Corporate Secretary in writing before the annual meeting that you have revoked your proxy; or +• +by attending the annual meeting virtually and voting in person. +Your most current vote, whether by telephone, Internet or proxy card is the one that will be counted. +What if I Receive More Than One Notice or Proxy Card? +You may receive more than one Notice or proxy card if you hold shares of our common stock in more than one account, which may be in registered form or held in street name. Please vote in the manner described above under “How Do I Vote?” for each account to ensure that all of your shares are voted. +Will My Shares Be Voted if I Do Not Vote? +If your shares are registered in your name or if you have stock certificates, they will not be counted if you do not vote as described above under “How Do I Vote?” If your shares are held in street name and you do not provide voting instructions to the bank, broker or other nominee that holds your shares as described above, the bank, broker or other nominee that holds your shares has the authority to vote your unvoted shares only on the ratification of the appointment of our independent registered public accounting firm without receiving instructions from you. Therefore, we encourage you to provide voting instructions to your bank, broker or other nominee. This ensures your shares will be voted at the annual meeting and in the manner you desire. A “broker non-vote” will occur if your broker cannot vote your shares on a particular matter because it has not received instructions from you and does not have discretionary voting authority on that matter or because your broker chooses not to vote on a matter for which it does have discretionary voting authority. +What Vote is Required to Approve Each Proposal and How are Votes Counted? +Proposal 1: Elect Directors +The two nominees for director who receive the most votes (also known as a “plurality” of the votes cast) will be elected. You may vote either FOR all of the nominees, WITHHOLD your vote from all of the nominees or WITHHOLD your vote from any one or more of the nominees. Votes that are withheld will not be included in the vote tally for the election of the directors. Brokerage firms do not have authority to vote customers’ unvoted shares held by the firms in street name for the election of the directors. As a result, any shares not voted by a customer will be treated as a broker non-vote. Such broker non-votes will have no effect on the results of this vote. +Proposal 2: Ratify Appointment of Independent Registered Public Accounting Firm +The affirmative vote of a majority of the votes cast affirmatively or negatively for this proposal is required to ratify the appointment of our independent registered public accounting firm. Abstentions +4 +TABLE OF CONTENTS +will have no effect on the results of this vote. Brokerage firms have authority to vote customers’ unvoted shares held by the firms in street name on this proposal. If a broker does not exercise this authority, such broker non-votes will have no effect on the results of this vote. We are not required to obtain the approval of our stockholders to appoint our independent registered public accounting firm. However, if our stockholders do not ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for 2021, the audit committee of our board of directors will reconsider its appointment. +Is Voting Confidential? +We will keep all the proxies, ballots and voting tabulations private. We only let our Inspector of Election, Computershare Trust Company, N.A., examine these documents. Management will not know how you voted on a specific proposal unless it is necessary to meet legal requirements. We will, however, forward to management any written comments you make on the proxy card or that you otherwise provide. +Where Can I Find the Voting Results of the Annual Meeting? +The preliminary voting results will be announced at the annual meeting, and we will publish preliminary results, or final results if available, in a Current Report on Form 8-K within four business days of the annual meeting. If final results are unavailable at the time we file the Form 8-K, then we will file an amended Current Report on Form 8-K to disclose the final voting results within four business days after the final voting results are known. +What Are the Costs of Soliciting these Proxies? +We will pay all of the costs of soliciting these proxies. Our directors and employees may solicit proxies in person or by telephone, fax or email. We will pay these employees and directors no additional compensation for these services. We will ask banks, brokers and other institutions, nominees and fiduciaries to forward these proxy materials to their principals and to obtain authority to execute proxies. We will then reimburse them for their expenses. +What Constitutes a Quorum for the Annual Meeting? +The presence, in person or by proxy, of the holders of a majority of the voting power of all outstanding shares of our common stock entitled to vote at the annual meeting is necessary to constitute a quorum at the annual meeting. Votes of stockholders of record who are present at the annual meeting in person or by proxy, abstentions, and broker non-votes are counted for purposes of determining whether a quorum exists. +Householding of Annual Disclosure Documents +SEC rules concerning the delivery of annual disclosure documents allow us or your broker to send a single Notice or, if applicable, a single set of our proxy materials to any household at which two or more of our stockholders reside, if we or your broker believe that the stockholders are members of the same family. This practice, referred to as “householding,” benefits both you and us. It reduces the volume of duplicate information received at your household and helps to reduce our expenses. The rule applies to our Notices, annual reports, proxy statements and information statements. Once you receive notice from your broker or from us that communications to your address will be “householded,” the practice will continue until you are otherwise notified or until you revoke your consent to the practice. Stockholders who participate in householding will continue to have access to and utilize separate proxy voting instructions. +If your household received a single Notice or, if applicable, a single set of proxy materials this year, but you would prefer to receive your own copy, please contact our transfer agent, Computershare Trust Company, N.A., by calling their toll free number, 1-800-736-3001. +5 +TABLE OF CONTENTS +If you do not wish to participate in “householding” and would like to receive your own Notice or, if applicable, set of our proxy materials in future years, follow the instructions described below. Conversely, if you share an address with another stockholder and together both of you would like to receive only a single Notice or, if applicable, set of proxy materials, follow these instructions: +• +If your shares are registered in your own name, please contact our transfer agent, Computershare Trust Company, N.A., and inform them of your request by calling them at 1-800-736-3001 or writing them at Computershare Trust Company, N.A., P.O. Box 505000, Louisville, KY 40233-5000. +• +If a broker or other nominee holds your shares, please contact the broker or other nominee directly and inform them of your request. Be sure to include your name, the name of your brokerage firm and your account number. +Electronic Delivery of Company Stockholder Communications +Most stockholders can elect to view or receive copies of future proxy materials over the Internet instead of receiving paper copies in the mail. +You can choose this option and save the Company the cost of producing and mailing these documents by: +• +following the instructions provided on your Notice or proxy card; +• +following the instructions provided when you vote over the Internet; or +• +going to www.computershare.com and logging into the Investor Center to follow the instructions provided. +6 +TABLE OF CONTENTS +SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT +The following table sets forth certain information with respect to the beneficial ownership of our common stock as of April 15, 2021, for (a) the executive officers named in the Summary Compensation Table on page 19 of this proxy statement, (b) each of our directors and director nominees, (c) all of our current directors and executive officers as a group and (d) each stockholder known by us to own beneficially more than 5% of our common stock. Beneficial ownership is determined in accordance with the rules of the SEC and includes voting or investment power with respect to the securities. We deem shares of common stock that may be acquired by an individual or group within 60 days of April 15, 2021 pursuant to the exercise of options, warrants or the vesting of restricted stock units (“RSUs”) to be outstanding for the purpose of computing the percentage ownership of such individual or group, but are not deemed to be outstanding for the purpose of computing the percentage ownership of any other person shown in the table. Except as indicated in footnotes to this table, we believe that the stockholders named in this table have sole voting and investment power with respect to all shares of common stock shown to be beneficially owned by them based on information provided to us by these stockholders. Percentage of ownership is based on 36,333,825 shares of common stock outstanding on April 15, 2021. +Shares Beneficially +Owned(1) +Name and Address of Beneficial Owner +Number +Percent +Principal Stockholders +ARCH Venture Partners and affiliated funds(1) +8755 West Higgins Avenue, Suite 1025 +Chicago, IL 60631 +2,270,250 +6.2 % +Gilder, Gagnon, Howe & Co. LLC(2) +475 10 th Avenue +New York, NY 10018 +3,075,251 +8.5 % +Directors, Director Nominees and Named Executive Officers +E. Kevin Hrusovsky(3) +1,300,186 +3.5 % +Keith L. Crandell(4) +2,333,604 +6.4 % +Marijn Dekkers, Ph.D.(5) +16,661 +* +Martin D. Madaus, Ph.D.(6) +201,086 +* +Sarah E. Hlavinka(7) +24,148 +* +Paul M. Meister(8) +58,195 +* +Laurie J. Olson +— +— +David R. Walt, Ph.D.(9) +1,300,074 +3.8 % +Amol Chaubal(10) +50,988 +* +William Geist +— +— +All directors and current executive officers as a group ( 14 persons)(11) +5,758,659 +15.4 % +* +Represents beneficial ownership of less than 1% of the outstanding shares of our common stock. +(1) +ARCH Venture Fund VI, L.P. (“ARCH Venture Fund VI”) is the record owner of 1,386,400 shares of common stock (the “ARCH VI Shares”) and ARCH Venture Fund VIII Overage, L.P. (“AVF VIII Overage”) is the record holder of 883,850 shares of common stock (the “ARCH Overage Shares”; combined with ARCH VI Shares, the “ARCH Shares”). ARCH Venture Partners VI, L.P. (“AVP VI LP”), as the sole general partner of ARCH Venture Fund VI, may be deemed to beneficially own the ARCH VI Shares. ARCH Venture Partners VI, LLC (“AVP VI LLC”), as the sole general partner of AVP VI LP, may be deemed to beneficially own the ARCH VI Shares. ARCH Venture Partners VIII, LLC (“AVP VIII LLC”), as the sole general partner of AVF VIII Overage, may be deemed beneficially own the ARCH Overage Shares. Keith Crandell, Clinton Bybee and Robert Nelsen (collectively, the “Managing +7 +TABLE OF CONTENTS +Directors” and individually, each a “Managing Director”) are managing directors of AVP VI LLC and AVP VIII LLC. Each Managing Director may also be deemed to share the power to direct the disposition and vote of the ARCH Shares. The Managing Directors disclaim beneficial ownership of the ARCH Shares, except to the extent of any pecuniary interest therein. +(2) +Based on a Schedule 13G/A filed by Gilder, Gagnon, Howe & Co. LLC (“Gilder Gagnon”) with the SEC on February 16, 2021, which reported ownership as of December 31, 2020. Consists of 3,075,251 shares held in customer accounts over which partners and/or employees of Gilder Gagnon have discretionary authority to dispose of or direct the disposition of the shares. +(3) +Consists of 859,519 shares of common stock (which includes 39,815 shares of restricted stock subject to performance-based vesting), 424,797 shares of common stock issuable upon the exercise of stock options exercisable within 60 days of April 15, 2021 and 15,870 shares of common stock issuable upon the vesting of RSUs within 60 days of April 15, 2021 held by Mr. Hrusovsky. +(4) +See footnote 1. Also includes 39,654 shares of common stock and 23,700 shares of common stock issuable upon the exercise of stock options exercisable within 60 days of April 15, 2021 held by Mr. Crandell and a trust over which Mr. Crandell has voting and investment power. Mr. Crandell disclaims beneficial ownership of the securities described in footnote 1 except to the extent of his pecuniary interest therein, if any. +(5) +Consists of 6,810 shares of common stock and 9,851 shares of common stock issuable upon the exercise of stock options exercisable within 60 days of April 15, 2021 held by Dr. Dekkers. +(6) +Consists of 12,420 shares of common stock held by Dr. Madaus, 23,700 shares of common stock issuable upon the exercise of stock options exercisable within 60 days of April 15, 2021 held by Dr. Madaus and 164,966 shares of common stock held by a trust for which Dr. Madaus is a trust advisor who shares voting and investment power over the shares held by the trust. +(7) +Consists of 6,164 shares of common stock and 17,984 shares of common stock issuable upon the exercise of stock options exercisable within 60 days of April 15, 2021 held by Ms. Hlavinka. +(8) +Consists of 11,160 shares of common stock and 47,035 shares of common stock issuable upon the exercise of stock options exercisable within 60 days of April 15, 2021 held by Mr. Meister. Does not include 120,035 shares of common stock held by Woburn Abbey March 2009 Trust, U.D.T. March 31, 2009 as Mr. Meister does not have voting or investment power over the shares held by the trust. +(9) +Consists of 1,276,374 shares of common stock and 23,700 shares of common stock issuable upon the exercise of stock options exercisable within 60 days of April 15, 2021 held by Dr. Walt. Does not include 200,684 shares of common stock held by The David R. Walt 2008 Irrevocable Family Trust (the “Walt Trust”), of which Dr. Walt’s spouse is trustee and has sole voting and investment power over the shares held by the Walt Trust. +(10) +Consists of 8,897 shares of common stock, 40,945 shares of common stock issuable upon the exercise of stock options exercisable within 60 days of April 15, 2021 and 1,146 shares of common stock issuable upon the vesting of RSUs within 60 days of April 15, 2021 held by Mr. Chaubal. +(11) +See footnotes 3 through 10. Also includes an aggregate of 58,787 shares of common stock, 410,354 shares of common stock issuable upon the exercise of stock options exercisable within 60 days of April 15, 2021 and 4,576 shares of common stock issuable upon the vesting of RSUs within 60 days of April 15, 2021 held by David C. Duffy, Ph.D., our Senior Vice President, Research & Development and Chief Technology Officer, John Fry, our General Counsel and Secretary, Dawn R. Mattoon, Ph.D., our Senior Vice President, Diagnostics, and Mark T. Roskey, Ph.D., our Senior Vice President, Strategic Partnerships. +8 +TABLE OF CONTENTS +MANAGEMENT AND CORPORATE GOVERNANCE +The Board of Directors +Our restated certificate of incorporation and our restated bylaws provide that our business is to be managed by or under the direction of our board of directors. Our board of directors is divided into three classes for purposes of election. One class is elected at each annual meeting of stockholders to serve for a three-year term. Our board of directors currently consists of eight members, classified into three classes as follows: (1) Martin D. Madaus, Ph.D. and Laurie J. Olson constitute Class I with a term ending at the upcoming 2021 annual meeting; (2) Marijn Dekkers, Ph.D., Sarah E. Hlavinka and David R. Walt, Ph.D. constitute Class II with a term ending at the 2022 annual meeting; and (3) Keith L. Crandell, E. Kevin Hrusovsky and Paul M. Meister constitute Class III with a term ending at the 2023 annual meeting. +Our board of directors accepted the recommendation of the nominating and governance committee and voted to nominate Martin D. Madaus, Ph.D. and Laurie J. Olson for election at the annual meeting for a term of three years to serve until the 2024 annual meeting of stockholders and until their respective successors have been elected and qualified. +Set forth below are the names of the persons nominated as directors and directors whose terms do not expire this year, their ages, their offices in the Company, if any, their principal occupations or employment for at least the past five years, the length of their tenure as directors and the names of other public companies in which such persons hold or have held directorships during the past five years, as of April 15, 2021. Additionally, information about the specific experience, qualifications, attributes or skills that led to our board of directors’ conclusion at the time of filing of this proxy statement that each person listed below should serve as a director is set forth below: +Name +Age +Position with the Company +E. Kevin Hrusovsky +59 +Chairman, President and Chief Executive Officer +Keith L. Crandell(2)(3) +60 +Director +Marijn Dekkers, Ph.D.(2) +63 +Director +Sarah E. Hlavinka(1)(3) +56 +Director +Martin D. Madaus, Ph.D.(1)(3) +61 +Director +Paul M. Meister(1) +68 +Director +Laurie J. Olson +58 +Director +David R. Walt, Ph.D.(2) +68 +Director +(1) +Member of our audit committee +(2) +Member of our compensation committee +(3) +Member of our nominating and governance committee +Our board of directors has reviewed the materiality of any relationship that each of our directors and director nominees has with Quanterix Corporation, either directly or indirectly. Based upon this review, our board of directors has determined that the following directors and director nominees are “independent directors” as defined by The Nasdaq Stock Market: John M. Connolly, Keith L. Crandell, Marijn Dekkers, Ph.D., Sarah E. Hlavinka, Martin D. Madaus, Ph.D., Paul M. Meister, Laurie J. Olson and David R. Walt, Ph.D. +E. Kevin Hrusovsky has been a member of our board of directors and our Chairman since June 2014 and our President and Chief Executive Officer since January 2015. Prior to joining us, Mr. Hrusovsky served as Senior Vice President of PerkinElmer, Inc., a publicly traded company that produces analytical instruments, genetic testing and diagnostic tools, medical imaging components, software, instruments and consumables for multiple end markets, from February 2012 to May 2013 and served as President of the Life Sciences and Technology business unit of PerkinElmer, Inc. from November 2011 to May 2013. From May 2013 through September 2013, he served as a consultant to PerkinElmer. Previously, Mr. Hrusovsky served as Chief Executive Officer and President of Caliper Life Sciences, Inc., a life sciences company that +9 +TABLE OF CONTENTS +developed and sold lab automation equipment, from July 2003 to November 2011 when it was acquired by PerkinElmer, Inc. Prior to that, he served as Chief Executive Officer and President of Zymark, a company that provided laboratory automation, robotics, and liquid handling solutions, and Director of International Business, Agricultural Chemical Division, and President of the Pharmaceutical Division for FMC Corporation, a publicly traded chemical manufacturing company. He also held several management positions at E.I. DuPont de Nemours, a publicly traded chemical manufacturing company. Mr. Hrusovsky serves on the board of directors of 908 Devices Inc., a publicly traded developer of handheld and desktop mass spectrometry devices, and on the boards of several private companies, including BioreclamationIVT, LLC, Cellaria, Cell Signaling Technology, Inc. and Solect Energy Development, LLC, and is the founder of the Powering Precision Health Summit, an executive think tank of researchers, scientists, physicians and innovators focused on the latest research on new biomarkers that have the potential to advance personalized medicine. Mr. Hrusovsky also serves on the Educational Board of the Massachusetts Biotech Council, the Advisory Committee for the Center for Biomedical Engineering at Brown University, the Association for Laboratory Automation, the JALA Editorial Board and the Strategy Committee of Children’s Hospital Boston. He formerly served on the boards of SynapDx Corp., SeraCare, Caliper Life Sciences, Xenogen and Alliant Medical Technology. He was selected as the 2013 Entrepreneur of the Year from Ohio State University and holds an Honorary Doctorate degree from Framingham State University for contributions in life sciences and personal medicine. Mr. Hrusovsky has a B.S. in mechanical engineering from Ohio State University and an M.B.A. from Ohio University. Mr. Hrusovsky’s qualifications for service as a member of our board of directors include his extensive experience in the life science and technology industries, as well as the perspective and experience he brings as our President and Chief Executive Officer, which provides our board with historic knowledge, operational expertise and continuity. +Keith L. Crandell has served as a member of our board of directors since June 2007. Since July 1994, Mr. Crandell has served as a managing director of ARCH Venture Partners, a venture capital firm focused on early-stage technology companies. He serves on the board of directors of Twist Bioscience Corporation, a publicly traded synthetic biology company, and 908 Devices, Inc., a publicly traded developer of handheld and desktop mass spectrometry devices. From 2007 to 2019, he served on the board of directors of Adesto Technologies Corporation, a publicly traded provider of application-specific and ultra-low power non-volatile memory products. He is also a director of several private companies and he also serves as a director of the Illinois Venture Capital Association. Mr. Crandell has a B.S. degree in chemistry and mathematics from St. Lawrence University, an M.S. degree in chemistry from the University of Texas at Arlington and an M.B.A. from the University of Chicago. Mr. Crandell’s qualifications for service as a member of our board of directors include his financial expertise and his substantial experience as an investor in emerging companies. +Marijn Dekkers, Ph.D. has served as a member of our board of directors since March 2017. He is the founder and Chairman of Novalis LifeSciences LLC, an investment and advisory firm for the life science industry. From 2016 to 2019, Dr. Dekkers was Chairman of the board of directors of Unilever. From 2010 to 2016, Dr. Dekkers was Chief Executive Officer of Bayer AG in Leverkusen, Germany. From 2000 to 2002, he was the Chief Operating Officer at Thermo Electron Corporation (later renamed Thermo Fisher Scientific Inc.). In 2002, he became Thermo Fisher’s President and Chief Executive Officer, where he served until 2009. Dr. Dekkers began his career in 1985 as a research scientist at General Electric Company. He currently serves as a director of the following private companies: Cerevel Therapeutics since December 2018, Ginkgo Bioworks since April 2019, and BioQ Pharma since January 2020. He holds a degree in chemistry from Radboud University in Nijmegen, the Netherlands, and a Ph.D. in chemical engineering from the University of Eindhoven. Dr. Dekkers’s qualifications for service as a member of our board of directors include his substantial experience leading commercial stage healthcare companies and his significant corporate governance experience. +Sarah E. Hlavinka has served as a member of our board of directors since July 2019. Since August 2018, Ms. Hlavinka has served as Senior Vice President, General Counsel and Secretary of Itron, Inc., a publicly traded technology and services company focused on critical infrastructure solutions. Prior to joining Itron, from January 2017 to July 2018, Ms. Hlavinka served as Executive Vice President, General Counsel and Secretary of Xerox Corporation, a publicly traded document management systems and solutions company. Prior to joining Xerox Corporation, from September 2007 to January 2017, Ms. Hlavinka served as Executive Vice President, General Counsel and Secretary of ABM Industries Incorporated, a publicly +10 +TABLE OF CONTENTS +traded integrated facility services provider. Ms. Hlavinka serves as a director of Cigna Life Insurance Company of New York. Ms. Hlavinka holds a J.D. from the University of Texas School of Law and a B.A. in history from Texas A&M University. Ms. Hlavinka’s qualifications for service as a member of our board of directors include her significant experience as a senior executive of global companies operating in a variety of industries and her substantial expertise in corporate governance and risk management. +Martin D. Madaus, Ph.D. has served as a member of our board of directors since November 2010. Dr. Madaus previously served as our Executive Chairman from November 2010 to June 2014, as our Chief Executive Officer from October 2011 to July 2012 and as our President from June 2011 to July 2012. Since September 2020, he has served as the Chief Operations Officer of Sherlock Biosciences, Inc., a molecular diagnostics company. He has also served as Operating Executive to The Carlyle Group, a multinational private equity, alternative asset management and financial services corporation, since February 2019. From June 2014 to February 2019, Dr. Madaus served as Chairman and Chief Executive Officer at Ortho-Clinical Diagnostics, Inc., a diagnostics company that makes products and diagnostic equipment for blood testing. Previously, Dr. Madaus was the Chairman, President and Chief Executive Officer of Millipore Corporation (MIL), a life sciences company serving the bioscience research and biopharmaceutical manufacturing industry, from January 2005 to July 2010, when Millipore was acquired by Merck KGaA. Dr. Madaus currently serves as a member of the board of directors of the following private biotechnology companies: Ultivue, Inc., a cancer diagnostics company; Emulate, Inc., a leading provider of organ-on-a-chip technology; and Candela Medical, a medical technology company. Dr. Madaus received a Doctor of Veterinary Medicine from the University of Munich in Germany and a Ph.D. in Veterinary Medicine from the Veterinary School of Hanover in Germany. Dr. Madaus’s qualifications for service as a member of our board of directors include his extensive public and private company board experience and his substantial knowledge of and managerial experience in the diagnostics industry. +Paul M. Meister has served as a member of our board of directors since September 2013. Mr. Meister is Co-Founder, and since 2008, Chief Executive Officer, of Liberty Lane Partners, LLC, a private investment company with diverse investments in healthcare, technology and distribution-related industries, and is Vice Chairman and Co-Founder of Perspecta Trust, a New Hampshire-based trust company. Mr. Meister served as President of MacAndrews & Forbes from 2014 to 2018. Mr. Meister also served as Executive Vice Chairman of Revlon, Inc., a leading beauty products company, on an interim basis from January 2018 to November 2018, when the Chief Executive Officer of Revlon, Inc. resigned. Mr. Meister previously served as Chairman and Chief Executive Officer of inVentiv Health (now known as Syneos Health, Inc.), a provider of commercial, consulting and clinical research services to the pharmaceutical and biotech industries, from 2010 to 2015. Mr. Meister was Chairman of Thermo Fisher Scientific, Inc., a scientific instruments equipment and supplies company, from November 2006 to April 2007. He was previously Vice Chairman of Fisher Scientific International, Inc., a predecessor of Thermo Fisher Scientific, Inc., from 2001 to 2006, and Chief Financial Officer of Fisher Scientific International, Inc. from 1991 to 2001. Prior to joining Fisher Scientific International, Inc., Mr. Meister held executive positions with the Henley Group, Wheelabrator Technologies and Abex, Inc. Mr. Meister has served as a director of Aptiv PLC, a leading global technology and mobility company primarily serving the automotive sector, since July 2019, Oaktree Acquisition Corp II, a company incorporated for the purpose of effecting a business combination with one or more businesses, since 2020, and Amneal Pharmaceuticals, Inc., a global pharmaceutical company, since August 2019. He also previously served as a director of Oaktree Acquisition Corp from July 2019 to 2020, Scientific Games Corporation, which provides customized, end-to-end solutions to the gaming industry, from 2012 to 2020, LKQ Corporation, a distributor of vehicle products, from 1999 to 2018, vTv Therapeutics, Inc., a clinical-stage biopharmaceutical company, from 2015 to 2018 and Revlon, Inc. from 2016 to 2019. Mr. Meister is Co-Chair of the University of Michigan’s Life Sciences Institute External Advisory Board and Chair of the Provost’s Advisory Committee. Mr. Meister has an M.B.A. from Northwestern University and a B.A. from the University of Michigan. Mr. Meister’s qualifications for service as a member of our board of directors include his financial and investment expertise and his extensive knowledge of the life sciences industry. +Laurie J. Olson has served as a member of our board of directors since April 2021. Ms. Olson was employed by Pfizer Inc., a research-based, global pharmaceutical company from 1987 to 2018 in a variety of strategy, marketing and commercial roles. Most recently, she served as Pfizer’s Executive Vice President, Strategy and Commercial Operations and a member of Pfizer’s Executive Leadership Team from 2012 to +11 +TABLE OF CONTENTS +2018. While at Pfizer, she also served as a member of the Pfizer Board of Directors Science and Technology Committee, and as a member of the company’s Business Development, Portfolio, Disclosure, Diversity, and Compliance Committees. Ms. Olson currently serves as a member of the Board of Directors of Karuna Therapeutics, a publicly traded clinical stage biopharmaceutical company committed to developing novel therapies for neuropsychiatric disorders. She is also a member of the Board of Trustees at the Mystic Seaport Museum in Mystic, Connecticut. Ms. Olson received her B.A. in economics from State University of New York at Stony Brook and earned her MBA in marketing from Hofstra University. Ms. Olson’s qualifications for service as a member of our board of directors include her extensive experience as a pharmaceutical executive and expertise in areas including commercial and corporate strategy, the interface between R&D and commercial organizations, and her strong advocacy for workplace diversity, equity, and inclusion. +David R. Walt, Ph.D. was our founding scientist and has served as a member of our board of directors since April 2007. Since 2017, Dr. Walt has served as Hansjörg Wyss Professor of Biologically Inspired Engineering and Professor of Pathology at Harvard Medical School in the Department of Pathology at the Brigham and Women’s Hospital and as a core faculty member of the Wyss Institute for Biologically Inspired Engineering. He is also a Howard Hughes Medical Institute Professor. He previously served as University Professor, Professor of Chemistry, Professor of Biomedical Engineering, Professor of Genetics, Professor of Neuroscience, Professor of Cell and Molecular Biology, and Professor of Oral Medicine at Tufts University, from 1981 to 2017. Dr. Walt was also the founding scientist of Illumina, Inc. and served as a member of its board of directors from 1998 to 2016. He served on the board of directors of Cerulean Pharma Inc. (which was acquired by Daré Bioscience, Inc.) from August 2016 to July 2017. Since 2013, Dr. Walt has served on the board of directors of Exicure, Inc., a publicly traded company that develops therapeutics for immuno-oncology, inflammatory diseases and genetic disorders. Dr. Walt was also a founder and currently serves as a member of the board of directors of Ultivue, Inc., Arbor Biotechnologies, Inc., Sherlock Biosciences, Inc., and Vizgen. He has received numerous national and international awards and honors for his fundamental and applied work in the field of optical sensors, microwell arrays and single molecule detection. He is a member of the U.S. National Academy of Engineering, U.S. National Academy of Medicine, American Academy of Arts and Sciences, a fellow of the American Institute for Medical and Biological Engineering, a fellow of the National Academy of Inventors, and a fellow of the American Association for the Advancement of Science. Dr. Walt has a B.S. in Chemistry from the University of Michigan and a Ph.D. in Chemical Biology from Stony Brook University. Dr. Walt’s qualifications for service as a member of our board of directors include his experience in developing life sciences companies and his expertise in chemistry, diagnostics technologies and biomedical engineering. +There are no family relationships between or among any of our directors or director nominees. The principal occupation and employment during the past five years of each of our directors and director nominees was carried on, in each case except as specifically identified above, with a corporation or organization that is not a parent, subsidiary or other affiliate of us. There is no arrangement or understanding between any of our directors or nominees and any other person or persons pursuant to which he or she is to be selected as a director or nominee. +There are no legal proceedings to which any of our directors is a party adverse to us or any of our subsidiaries or in which any such person has a material interest adverse to us or any of our subsidiaries. +Committees of the Board of Directors and Meetings +Meeting Attendance. During the fiscal year ended December 31, 2020, our board of directors met or acted by written consent ten times. During the fiscal year ended December 31, 2020, the three standing committees of the board of directors met or acted by written consent a total of 21 times. No director attended fewer than 75% of the total number of meetings of the board and of committees of the board on which such director served during fiscal 2020. Our board of directors has adopted a policy under which each member of the board is encouraged but not required to attend each annual meeting of our stockholders. The non-employee directors did not attend our virtual 2020 annual meeting of stockholders. +Audit Committee. Our audit committee met or acted by written consent five times during the fiscal year ended December 31, 2020. This committee currently has three members, Paul M. Meister (Chairman), Sarah E. Hlavinka and Martin D. Madaus, Ph.D. Our audit committee’s role and responsibilities are set forth in the audit committee’s written charter and include: +12 +TABLE OF CONTENTS +• +selecting a firm to serve as the independent registered public accounting firm to audit our financial statements; +• +ensuring the independence of the independent registered public accounting firm; +• +discussing the scope and results of the audit with the independent registered public accounting firm, and reviewing, with management and that firm, our interim and year-end operating results; +• +establishing procedures for employees to anonymously submit concerns about questionable accounting or audit matters; +• +considering the effectiveness of our internal controls and, if any, our internal audit function; +• +reviewing material related-party transactions or those that require disclosure; and +• +approving or, as permitted, pre-approving all audit and non-audit services to be performed by the independent registered public accounting firm. +All members of the audit committee satisfy the current independence standards promulgated by the SEC, and by The Nasdaq Stock Market, as such standards apply specifically to members of audit committees. Our board of directors has determined that Paul M. Meister is an “audit committee financial expert,” as the SEC has defined that term in Item 407 of Regulation S-K. +A copy of the audit committee’s written charter is publicly available on our website at www.quanterix.com. +Compensation Committee. Our compensation committee met or acted by written consent 11 times during the fiscal year ended December 31, 2020. This committee currently has three members, Keith L. Crandell (Chairman), Marijn Dekkers, Ph.D. and David R. Walt, Ph.D. Our compensation committee’s role and responsibilities are set forth in the compensation committee’s written charter and include: +• +reviewing and approving, or recommending that our board of directors approve, the compensation of our executive officers; +• +reviewing and recommending to our board of directors the compensation of our directors; +• +reviewing and recommending to our board of directors the terms of any compensatory agreements with our executive officers; +• +administering our 2017 Employee, Director and Consultant Equity Incentive Plan (the “2017 Plan”), 2007 Stock Option and Grant Plan, as amended (the “2007 Plan”), and 2017 Employee Stock Purchase Plan (the “ESPP”); +• +reviewing and approving, or making recommendations to our board of directors with respect to, incentive compensation and equity plans; and +• +reviewing compensation policies and practices for all employees to determine whether such policies and practices create risks that are reasonably likely to have a material adverse effect on the Company. +The compensation committee is also responsible for the determination of the compensation of our chief executive officer, and conducts its decision making process with respect to that issue without the chief executive officer present. Our board of directors has determined that all members of the compensation committee qualify as “independent” under the definition promulgated by The Nasdaq Stock Market. +The compensation committee has the authority to retain or obtain the advice of such compensation consultants, legal counsel, experts and other advisors as it may deem appropriate in its sole discretion. The compensation committee is directly responsible for the appointment, compensation and oversight of its consultants, legal counsel, experts and advisors and has sole authority to approve their fees and retention terms, and the Company will provide funding for such fees and related expenses. +The compensation committee engaged Pay Governance as an independent advisor to the compensation committee providing executive compensation consulting services for the fiscal year ended December 31, 2020. Pay Governance was engaged by and reports to the compensation committee. Pay Governance did not provide any services to the Company other than executive compensation consulting services during the fiscal year ended December 31, 2020. +13 +TABLE OF CONTENTS +A copy of the compensation committee’s written charter is publicly available on our website at www.quanterix.com. +Nominating and Governance Committee. Our nominating and governance committee (the “nominating committee”), met or acted by written consent five times during the fiscal year ended December 31, 2020. This committee has three members, Martin D. Madaus, Ph.D. (Chairman), Keith L. Crandell and Sarah E. Hlavinka. Our board of directors has determined that all members of the nominating committee qualify as independent under the definition promulgated by The Nasdaq Stock Market. The nominating committee’s responsibilities are set forth in the nominating committee’s written charter and include: +• +identifying and recommending candidates for membership on our board of directors; +• +recommending directors to serve on board committees; +• +reviewing and recommending our corporate governance guidelines and policies; +• +reviewing proposed waivers of the code of conduct for directors and executive officers; +• +evaluating, and overseeing the process of evaluating, the performance of our board of directors and individual directors; and +• +assisting our board of directors on corporate governance matters. +Generally, our nominating committee considers candidates recommended by stockholders as well as from other sources such as other directors or officers, third-party search firms or other appropriate sources. Once identified, the nominating committee will evaluate a candidate’s qualifications in accordance with our Nominating and Governance Committee Policy Regarding Qualifications of Directors appended to our nominating committee’s written charter. Threshold criteria include: personal integrity and sound judgment, business and professional skills and experience, independence, knowledge of our industry, possible conflicts of interest, diversity, the extent to which the candidate would fill a present need on the board of directors, and concern for the long-term interests of our stockholders. Our nominating committee has not adopted a formal diversity policy in connection with the consideration of director nominations or the selection of nominees. However, the nominating committee will consider issues of diversity among its members in identifying and considering nominees for director, and strive where appropriate to achieve a diverse balance of backgrounds, perspectives, experience, age, gender, ethnicity and country of citizenship on the board and its committees. +If a stockholder wishes to propose a candidate for consideration as a nominee for election to the board of directors, it must follow the procedures described in our restated bylaws and in “Stockholder Proposals and Nominations For Director” at the end of this proxy statement. In general, persons recommended by stockholders will be considered in accordance with our Policy on Shareholder Recommendation of Candidates for Election as Directors appended to our nominating committee’s written charter. Any such recommendation should be made in writing to the nominating committee, care of our Corporate Secretary at our principal office and should be accompanied by the following information concerning each recommending stockholder and the beneficial owner, if any, on whose behalf the nomination is made: +• +all information relating to such person that would be required to be disclosed in a proxy statement; +• +certain biographical and share ownership information about the stockholder and any other proponent, including a description of any derivative transactions in our securities; +• +a description of certain arrangements and understandings between the proposing stockholder and any beneficial owner and any other person in connection with such stockholder nomination; and +• +a statement whether or not either such stockholder or beneficial owner intends to deliver a proxy statement and form of proxy to holders of voting shares sufficient to carry the proposal. +The recommendation must also be accompanied by the following information concerning the proposed nominee: +• +certain biographical information concerning the proposed nominee; +• +all information concerning the proposed nominee required to be disclosed in solicitations of proxies for election of directors; +14 +TABLE OF CONTENTS +• +certain information about any other security holder of the Company who supports the proposed nominee; +• +a description of all relationships between the proposed nominee and the recommending stockholder or any beneficial owner, including any agreements or understandings regarding the nomination; and +• +additional disclosures relating to stockholder nominees for directors, including completed questionnaires and disclosures required by our restated bylaws. +A copy of the nominating committee’s written charter, including its appendices, is publicly available on our website at www.quanterix.com . +Compensation Committee Interlocks and Insider Participation +Our compensation committee has three members, Keith L. Crandell (Chairman), Marijn Dekkers, Ph.D. and David R. Walt, Ph.D. None of the members of our compensation committee has at any time during the prior three years been one of our officers or employees. None of our executive officers currently serves, or in the past fiscal year has served, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on our board of directors or compensation committee. For a description of any transactions between us and members of our compensation committee and affiliates of such members, please see “Certain Relationships and Related Person Transactions.” +Board Leadership Structure and Role in Risk Oversight +Our board of directors does not have a policy regarding the separation of the roles of Chief Executive Officer and Chairman of the board of directors, as our board of directors believes it is in the best interest of the Company to make that determination based on the position and direction of the Company and the membership of the board of directors. Our board of directors has determined that having an employee director serve as Chairman is in the best interest of our stockholders at this time because of the efficiencies achieved in having the role of Chief Executive Officer and Chairman combined, and because the detailed knowledge of our day-to-day operations and business that the Chief Executive Officer possesses greatly enhances the decision-making processes of our board of directors as a whole. We have a strong governance structure in place, including independent directors, to ensure the powers and duties of the dual role are handled responsibly. Martin D. Madaus, Ph.D. serves as our lead independent director. +The Chairman of the board of directors, the lead independent director and the other members of the board of directors work in concert to provide oversight of our management and affairs. Our board of directors encourages communication among its members and between management and the board of directors to facilitate productive working relationships. Working with the other members of the board of directors, our Chairman also strives to ensure that there is an appropriate balance and focus among key board responsibilities such as strategic development, review of operations and risk oversight. +Risk is inherent with every business, and how well a business manages risk can ultimately determine its success. The board oversees our risk management processes directly and through its committees. Our management is responsible for risk management on a day-to-day basis. The role of our board and its committees is to oversee the risk management activities of management. They fulfill this duty by discussing with management the policies and practices utilized by management in assessing and managing risks and providing input on those policies and practices. Members of our senior management team attend our quarterly board meetings and are available to address any questions or concerns raised by the board on risk-management and any other matters. In addition, the board regularly receives reports on strategic matters involving our business. Our Audit Committee oversees risk management activities related to financial controls and legal and compliance risks. Our Compensation Committee oversees risk management activities relating to our compensation policies and practices, and our Nominating and Corporate Governance Committee oversees risk management activities relating to board composition and governance-related matters. Each committee reports to the full board on a regular basis, including reports with respect to the committee’s risk oversight activities as appropriate. +15 +TABLE OF CONTENTS +Stockholder Communications to the Board +Generally, stockholders who have questions or concerns should contact our Investor Relations department at ir@quanterix.com. However, any stockholders who wish to address questions regarding our business directly with our board of directors, or any individual director, should direct his or her questions in writing to the Chairman of the Board at 900 Middlesex Turnpike, Building 1, Billerica, Massachusetts 01821 or using the “IR Contacts” page of our website at http://ir.quanterix.com/contact-ir. Communications will be distributed to the board of directors, or to any individual director or directors as appropriate, depending on the facts and circumstances outlined in the communications. In general, communications relating to corporate governance and corporate strategy are more likely to be forwarded than communications relating to personal matters and matters as to which we tend to receive repetitive or duplicative communications. +Executive Officers +The following table sets forth certain information regarding our executive officers who are not also directors, as of April 15, 2021. We have entered into agreements with our executive officers, and all of them are at-will employees. +Name +Age +Position(s) with the Company +Amol Chaubal(1) +45 +Chief Financial Officer +William Geist +52 +Chief Operating Officer +David C. Duffy, Ph.D. +50 +Senior Vice President, Research & Development and Chief Technology Officer +John Fry +59 +General Counsel and Secretary +Dawn R. Mattoon, Ph.D. +48 +Senior Vice President, Diagnostics +Mark T. Roskey, Ph.D. +61 +Senior Vice President, Strategic Partnerships +Shawn Stetson(1) +44 +Interim Chief Financial Officer +(1) +Mr. Chaubal has resigned as Chief Financial Officer, effective May 11, 2021, and Mr. Stetson has been appointed to serve as Interim Chief Financial Officer effective as of such date. +Amol Chaubal has been our Chief Financial Officer since April 2019. On April 14, 2021, Mr. Chaubal notified us of his resignation, effective May 11, 2021. Prior to joining us, Mr. Chaubal served as the CFO of Global Operations at Smith & Nephew, a global medical devices company, from October 2017 to April 2019. Prior to his time at Smith & Nephew, he served as Corporate Vice President and Head of Finance for the Clinical Research Services business at Parexel from June 2015 to October 2017. Between May 2013 and May 2015, Mr. Chaubal served as CFO North America and Regional Chief Operating Officer at Brookfield Renewable Energy Group, which is part of Brookfield Asset Management. Prior to joining Brookfield, Mr. Chaubal was CFO North America at Novartis AG, where he spent 11 years in positions of increasing responsibility across Switzerland, Canada, and the United States. He has an M.B.A. (with distinction) from INSEAD (France). He began his career at Procter & Gamble Company after completing Masters degree in Chemical Engineering from the Indian Institute of Technology, Mumbai. +William Geist has been our Chief Operating Officer since November 2020. Mr. Geist joined Quanterix from Thermo Fisher Scientific, where he worked from July 2015 to November 2020 and served as Vice President, General Manager, Protein & Cell Analysis from January 2020 to November 2020 and Vice President, General Manager, qPCR from July 2015 to December 2019. During this time, his teams developed and commercialized products across a broad range of proteomic and genomic technologies for research and clinical applications. He also served a key leadership role in Thermo Fisher Scientific’s Biosciences Division COVID-19 Task Force. Prior to Thermo Fisher, Mr. Geist held leadership roles with increasing responsibility at QIAGEN (Quanta BioSciences), Affymetrix, and Life Technologies. He holds a B.A. in Biology from Dartmouth College. +David C. Duffy, Ph.D. is Senior Vice President, Research & Development, and has been our Chief Technology Officer since March 2013. Prior to this role, Dr. Duffy served as our Vice President, Research +16 +TABLE OF CONTENTS +from November 2011 to February 2013, and Senior Director, Platform Research from July 2007 to October 2011. Prior to joining us, Dr. Duffy served as Director, Pharmacomer Technology at Surface Logix, Inc., a biomedical development company. Prior to that, Dr. Duffy was a Senior Scientist at Gamera Bioscience Corporation, a developer of automated biotechnology test equipment, from December 1998 to January 2000. Previously, Dr. Duffy was a postdoctoral research fellow in the Department of Chemistry and Chemical Biology at Harvard University. He was the first Sir Alan Wilson Research Fellow of Emmanuel College, University of Cambridge. Dr. Duffy has a Ph.D. in physical chemistry from the Department of Chemistry at the University of Cambridge, and B.A. and M.A. degrees in Natural Sciences from the University of Cambridge. +John Fry has been our General Counsel and Secretary since June 2019. Prior to joining us, Mr. Fry served as Senior Vice President, General Counsel, and Secretary of Analogic Corporation, a global medical and security technology company, from 2007 to 2018. From 2005 to 2007, he was a principal of the law firm Driggs, Hogg, & Fry Co., L.P.A., where his practice focused primarily on technology and intellectual property law with principal clients including global multinationals in the medical, consumer electronics and industrial automation industries. From 1995 to April 2005, he held various legal positions at Philips Medical Systems (formerly Marconi Medical Systems and Picker International), including Senior Corporate Counsel and Intellectual Property Manager and counsel to Philips’ computed tomography business. He began his career as an electrical engineer and engineering manager and is a named inventor on ten U.S. patents. Mr. Fry holds a Juris Doctor degree from Cleveland-Marshall College of Law and M.S. and B.S. degrees in electrical engineering from Case Western Reserve University. +Dawn R. Mattoon, Ph.D. has been our Senior Vice President, Diagnostics since March 2021 and served as our Senior Vice President, Research Products from March 2019 to March 2021. She also served as Senior Vice President of Strategic Marketing and Assay Technologies from February 2018 to March 2019. Dr. Mattoon completed both her Ph.D. and postdoctoral work at Yale University, studying tyrosine kinase signaling pathways. Following her postdoctoral fellowship in 2004, she joined Invitrogen, where she was recognized as one of the company’s best new scientists in 2005. Dr. Mattoon went on to serve in a variety of leadership roles in R&D, Program & Portfolio Management, Strategy, and General Management as Invitrogen evolved to become Life Technologies with the acquisition of Applied Biosystems in 2008, and was subsequently acquired by Thermo Fisher in 2013. Until her departure from Thermo Fisher in 2014, Dr. Mattoon also served on global leadership teams focused on mentoring and developing female leaders. Dr. Mattoon served as the Vice President for Product Development at Cell Signaling Technologies, a leading antibody provider, from July 2014 to February 2018, after which she joined Quanterix. +Mark T. Roskey, Ph.D. has been our Senior Vice President, Strategic Partnerships since March 2021 and served as Senior Vice President, Commercial and Accelerator from March 2019 to March 2021. He also served as Senior Vice President and General Manager of Applications and Reagents from September 2014 to March 2019. Prior to joining us, Dr. Roskey served as Vice President and General Manager of the America’s Sales and Service organization in PerkinElmer’s Life Science and Technologies Division from December 2011 to September 2014. PerkinElmer is a global life science company. Prior to PerkinElmer, Dr. Roskey served as Senior Vice President of Biology Research and Development at Caliper Life Sciences, Inc. from March 2009 to November 2011, when it was acquired by PerkinElmer. At Caliper Life Sciences, Inc., Dr. Roskey served as Senior Vice President of Applied Biology Research from 2008 to 2011 and Vice President of Worldwide Marketing from July 2003 to 2008. Prior to that, Dr. Roskey served as Vice President of Worldwide Marketing for Zymark Corporation, a laboratory automation company, from December 2001 to August 2003 when it was acquired by Caliper Life Sciences, Inc. Prior to that, Dr. Roskey served as Director of Marketing at Applied Biosystems, Inc. Dr. Roskey completed a postdoctoral fellowship in molecular immunobiology at the Harvard Medical School and has a Ph.D. in microbiology from the University of Notre Dame and a B.S. in biology from Framingham State University. +Shawn Stetson will begin serving as our Interim Chief Financial Officer on May 11, 2021. He has served as our Senior Director, Corporate Controller since July 2020 and as our Corporate Controller and Director, Accounting and Finance from June 2019 to July 2020. He served as Associate Director and Corporate Controller of Nightstar Therapeutics, a publicly traded clinical-stage gene therapy company focused on developing and commercializing novel treatments for patients suffering from rare inherited retinal diseases, from March 2019 until its acquisition by Biogen in June 2019. From October 2017 to March 2019, +17 +TABLE OF CONTENTS +he served as Corporate Controller for Novomer, Inc., a leading developer of chemical conversion technology. From February 2012 to October 2017, he served in finance and accounting management roles, including Assistant Controller and Financial Reporting Manager, at Cynosure, Inc., a publicly traded developer and manufacturer of aesthetic and medical treatment systems. Earlier in his career, Mr. Stetson held various positions of increasing responsibility in the audit practice at Ernst & Young, LLP. Mr. Stetson, a certified public accountant, holds a Master of Accounting and Master of Business Administration from Northeastern University and a Bachelor of Arts degree from Bowdoin College. +18 +TABLE OF CONTENTS +EXECUTIVE OFFICER AND DIRECTOR COMPENSATION +Summary Compensation Table +The following table shows the total compensation paid or accrued during the fiscal years ended December 31, 2020 and December 31, 2019, to our President and Chief Executive Officer and our two next most highly compensated executive officers who earned more than $100,000 during the fiscal year ended December 31, 2020 and were serving as executive officers as of such date. +Name and Principal Position +Year +Salary +($) +Bonus +($)(1) +Stock +Awards +($)(2) +Option +Awards +($)(2) +All Other +Compensation +($)(3) +Total ($) +E. Kevin Hrusovsky +Chairman, President and +Chief Executive Officer +2020 +554,286 +769,449 +1,082,557 +1,103,438 +10,667 +3,520,397 +2019 +531,969 +770,024 +1,004,514 +1,314,787 +9,702 +3,630,996 +Amol Chaubal(4) +Chief Financial Officer +2020 +371,188 +330,992 +257,779 +262,742 +4,219 +1,226,920 +2019 +253,077 +145,772 +414,479 +525,776 +4,321 +1,343,425 +William Geist(5) +Chief Operating Officer +2020 +52,308 +530,000 +1,900,936 +— +1,338 +2,484,582 +(1) +Amounts for 2019 represent cash bonuses earned for the 12-month period from January 1, 2019 to December 31, 2019, and exclude payments made in 2019 for 2018 bonuses. Amounts for 2020 represent cash bonuses earned for the 12-month period from January 1, 2020 to December 31, 2020, and exclude payments made in 2020 for 2019 bonuses. The amount for Mr. Geist represents a sign-on bonus, $200,000 of which was paid in 2020 and $330,000 of which was paid in 2021. +(2) +These amounts represent the aggregate grant date fair value for RSUs and option awards granted during such fiscal year, computed in accordance with FASB ASC Topic 718. A discussion of the assumptions used in determining grant date fair value for the option awards may be found in Note 2 to our consolidated financial statements for the year ended December 31, 2020. +(3) +Amounts represent the dollar value of matching contributions under our qualified 401(k) plan. +(4) +Mr. Chaubal joined Quanterix on April 12, 2019. +(5) +Mr. Geist joined Quanterix on November 16, 2020. +Narrative Disclosure to Summary Compensation Table +Annual Base Salary +Base salaries are reviewed annually by our Compensation Committee at or near the beginning of each year, or in connection with the commencement of employment, if later. +The 2020 annual base salaries for Messrs. Hrusvosky, Chaubal and Geist were $552,000, $371,000 and $400,000, respectively. +Performance-Based Cash Bonus Compensation +In addition to base salaries, our named executive officers are eligible to receive annual performance-based cash bonuses. These bonuses are designed to incentivize our executives to achieve specified annual corporate performance objectives and to reward individual achievement toward those objectives. At or near the beginning of the year, the Compensation Committee establishes target bonuses as a percentage of the base salary earned by the executive earned during the year. At the end of the year, the Compensation Committee reviews Company performance against our corporate performance objectives as well as individual performance, and determines the actual bonus payout to be awarded to each of our named executive officers. +For 2020, the target bonuses for Messrs. Hrusovsky and Chaubal were 100% and 40% of their respective base salaries, and the cash bonus awards paid to Messrs. Hrusovsky and Chaubal were $769,449 and $330,992, respectively. +19 +TABLE OF CONTENTS +Mr. Geist joined the Company on November 16, 2020 and was not eligible to receive a performance-based cash bonus for 2020. As an inducement for joining the Company, and in consideration of amounts forfeited by leaving his previous position, Mr. Geist received a one-time cash payment of $530,000, of which $200,000 was payable as soon as practicable following his start date and the balance of which was payable on February 28, 2021. +Long Term Equity Incentive Awards +In addition to a base salary and annual performance-based cash bonus, our named executive officers are eligible to receive long term equity incentive awards. We believe that these awards serve to align the long-term interests of our executives with those of our stockholders and are an important tool for attracting, retaining and motivating executives and other key employees. Long term equity incentive awards are approved by the Compensation Committee at or near the beginning of each year, or in connection with the commencement of employment, if later. Vesting of equity awards is generally tied to continuous service and serves as an additional retention measure. Generally, our long term equity awards vest over a four year period. The exercise price of stock options is no less thant the fair market value of our stock on the date of the award. +In 2020, our Compensation Committee awarded Messrs. Hrusovsky and Chaubal options to purchase 90,992 and 21,666 shares of our common stock, respectively, at an exercise price of $27.76, and 38,997 and 9,286, RSUs, respectively. +Also in 2020, the Compensation Committee awarded Mr. Geist a sign on equity award consisting of 40,045 RSUs vesting over a three-year period beginning on Mr. Geist’s November 16, 2020 start date. +Additional information on equity awards granted to our named executive officers in 2020 is provided in “— Outstanding Equity Awards at 2020 Fiscal Year-End” below. +Agreements with Our Named Executive Officers +Below are descriptions of our employment agreements with each of our named executive officers. +E. Kevin Hrusovsky +We entered into an agreement with Mr. Hrusovsky with respect to his service as President and Chief Executive Officer on January 1, 2015. Under the terms of the agreement, Mr. Hrusovsky is entitled to receive an annual base salary, which is subject to review and adjustment no less than annually, at the Company’s discretion. Mr. Hrusovsky is eligible to receive an annual bonus with the target amount determined in the discretion of our compensation committee. The amount of his annual bonus is determined by the compensation committee in its discretion, based on the committee’s assessment of his and the Company’s performance against goals established annually by the committee. +In connection with his employment, in February 2015, Mr. Hrusovsky was granted 781,060 shares of restricted stock. The shares underlying this grant vest, subject to continued service, as follows: (1) with respect to 168,246 of the shares, 25% of the shares vested on July 1, 2015, with the remainder vesting over the next three years in equal monthly installments on the first day of each succeeding calendar month thereafter, (2) with respect to 549,113 of the shares, 25% of the shares vested on September 1, 2015, with the remainder vesting over the next three years in equal monthly installments on the first day of each succeeding calendar month thereafter, (3) 23,886 shares vested based upon the achievement of certain milestones, and (4) 39,815 shares have not vested. Upon a sale of the Company, the vesting is accelerated such that no more than 25% of the shares shall remain unvested. If Mr. Hrusovsky is terminated without Cause, as defined in the agreement, or he terminates his service for Good Reason, as defined in the agreement, within 12 months following a sale of the Company, all of the unvested shares will become vested. +Pursuant to the agreement, Mr. Hrusovsky is entitled to continuation of his then-current base salary and health insurance benefits for six months in the event we terminate his employment without Cause or Mr. Hrusovsky terminates his employment with us for Good Reason subject to Mr. Hrusovsky’s execution of a release satisfactory to us following such termination. If such termination occurs within 12 months of the sale of the Company, he is entitled to continuation of his then-current base salary and health insurance +20 +TABLE OF CONTENTS +benefits for 12 months. If we terminate his employment without Cause, his employment terminates due to his death or disability or he terminates his employment with us for Good Reason within three months prior to the end of a year, he is entitled to a pro rata portion of his bonus. +In addition, Mr. Hrusovsky has entered into an employee non-competition, non-solicitation, confidentiality and assignment agreement pursuant to which he has agreed (1) not to engage in any competitive business for six months following his termination of employment with us (12 months if the termination is within 12 months of the sale of the Company), (2) not to solicit our employees, customers or suppliers for six months following his termination of employment with us (12 months if the termination is within 12 months of the sale of the Company) and (3) to assign any inventions conceived or developed during the course of his employment with us. +Amol Chaubal +We entered into an agreement with Mr. Chaubal with respect to his service as Chief Financial Officer on February 14, 2019, and he began his employment with us on April 12, 2019. Under the terms of the agreement, Mr. Chaubal is entitled to an annual base salary, which is subject to periodic review and adjustment at the discretion of the Company. Mr. Chaubal is also eligible to receive an annual target bonus of up to 40% of his annual base salary. The actual bonus percentage is discretionary and is subject to his achievement of metrics and goals established by and agreed to with our Chief Executive Officer. The bonus is also subject to his employment for the full period covered by the bonus, approval by and adjustment at the discretion of the Company and the board of directors, and the terms of any applicable bonus plan. Mr. Chaubal is eligible to receive an annual equity grant subject to approval by the compensation committee and in the same manner as the awards provided to other senior executive officers of the Company. The Company will target a grant date fair value of the annual equity awards of up to $480,000. +Pursuant to his agreement, Mr. Chaubal received a sign-on equity award of 62,270 stock options having an exercise price of $22.70 and 18,259 RSUs vesting over four years. Additional information on this award is provided in “— Outstanding Equity Awards at 2020 Fiscal Year-End”, below. +Pursuant to his agreement, Mr. Chaubal is entitled to continuation of his then-current base salary and health insurance benefits for six months in the event we terminate his employment without Cause, as defined in the agreement, or Mr. Chaubal terminates his employment with us for Good Reason, as defined in the agreement, subject to Mr. Chaubal’s execution of a release satisfactory to us following such termination. If such termination occurs within 12 months of a Sale Event, as defined in the agreement, he is entitled to continuation of his then-current base salary and health insurance benefits for 12 months. +In addition, Mr. Chaubal has entered into an employee non-competition, non-solicitation, confidentiality and assignment agreement pursuant to which he has agreed (1) not to engage in any business with certain competitors for one year following his voluntary termination of employment with us, (2) not to solicit our employees, customers or suppliers for one year following voluntary termination of his employment and (3) to assign any inventions conceived or developed during the course of his employment with us. +William Geist +We entered into an agreement with Mr. Geist with respect to his service as Chief Operating Officer on November 9, 2020, and he began employment with us on November 16, 2020. Under the agreement, Mr. Geist’s initial annualized base salary is $400,000. Mr. Geist will be eligible to receive an annual performance bonus beginning with the Company’s 2021 performance year with a bonus target of up to $200,000. Mr. Geist also received a sign-on equity award consisting of 40,045 RSUs. The RSUs will vest over three years, with one-third vesting on the first anniversary of Mr. Geist’s start date and the remainder vesting ratably on a monthly basis over the next two years. Mr. Geist also received a sign-on cash payment of $530,000, with $200,000 payable as soon as practicable after his start date and the balance of $330,000 payable on February 28, 2021. Mr. Geist will also be eligible to receive an annual equity grant as part of the Company’s 2021 long-term equity award cycle, with a target grant date fair value of up to $800,000. In connection with his employment, Mr. Geist will be required to relocate to the Boston, Massachusetts area. To assist in his relocation, the Company will reimburse his reasonable relocation expenses. +21 +TABLE OF CONTENTS +If Mr. Geist’s employment is terminated by the Company without cause or he resigns for good reason, as defined in the agreement, he will receive continued payment of his base salary for twelve months (the “Severance Period”), payment of an amount equal to his annual target bonus for the year of termination, acceleration of unvested equity awards that would have vested during the Severance Period, and health benefits continuation during the Severance Period. If Mr. Geist’s employment is terminated by the Company without cause or he resigns for good reason in connection with a change-in-control, all of his outstanding but unvested equity awards will become fully vested. Receipt of the foregoing termination benefits will be subject to Mr. Geist’s execution of a separation agreement, including certain restrictive covenants and a general release of all claims, in a form acceptable to the Company. +In addition, Mr. Geist has entered into an employee non-competition, non-solicitation, confidentiality and assignment agreement pursuant to which he has agreed (1) not to engage in any competitive business for one year following his voluntary termination of employment with us, (2) not to solicit our employees, customers or suppliers for one year following voluntary termination of his employment and (3) to assign any inventions conceived or developed during the course of his employment with us. +Outstanding Equity Awards at 2020 Fiscal Year-End +The following table shows grants of stock options and grants of unvested stock awards outstanding on the last day of the fiscal year ended December 31, 2020, including both awards subject to performance conditions and non-performance-based awards, to each of the executive officers named in the Summary Compensation Table. +Option Awards(1) +Stock Awards(1) +Name +Number of +Securities +Underlying +Unexercised +Options (#) +Exercisable +Number of +Securities +Underlying +Unexercised +Options (#) +Unexercisable +Option +Exercise +Price +($) +Option +Expiration +Date +Number of +Shares or +Units of +Stock That +Have Not +Vested +(#) +Market +Value of +Shares or +Units of +Stock That +Have Not +Vested +($)(2) +Equity +Incentive +Plan +Awards: +Number of +Unearned +Shares, +Units or +Other +Rights That +Have Not +Vested +(#) +Equity +Incentive +Plan +Awards: +Market or +Payout +Value of +Unearned +Shares, +Units or +Other +Rights That +Have Not +Vested +($)(2) +E. Kevin Hrusovsky +Chairman, President +and Chief Executive +Officer +— +— +— +— +— +— +39,815 (3) +1,851,398 +298,138 (4) +13,000 (4) +$ +8.16 +3/31/2027 +— +— +— +— +— +— +— +— +75,000 (5) +3,487,500 +— +— +49,574 (6) +58,603 (6) +$ +22.69 +3/12/2029 +— +— +— +— +— +— +— +— +15,868 (7) +737,862 +— +— +18,327 (8) +21,673 (8) +$ +30.45 +8/17/2029 +— +— +— +— +— +— +— +— +5,529 (9) +257,099 +— +— +— +90,992 (10) +$ +27.76 +2/18/2030 +— +— +— +— +— +— +— +— +38,997 (10) +1,813,361 +Amol Chaubal. +Chief Financial Officer +28,537 (11) +33,733 (11) +$ +22.70 +4/12/2029 +— +— +— +— +— +— +— +— +10,275 (11) +477,788 +— +21,666 (12) +$ +27.76 +2/18/2030 +— +— +— +— +— +— +— +— +9,286 (12) +431,799 +William Geist +Chief Operating Officer +— +— +— +— +40,045 (13) +1,862,093 +— +— +(1) +Each of the outstanding equity awards in the table above was granted pursuant to the 2007 Plan or the 2017 Plan. +(2) +The market value of the stock awards is determined by multiplying the number of shares by $46.50, the +22 +TABLE OF CONTENTS +closing price of our common stock on The Nasdaq Global Market on December 31, 2020, the last day of our fiscal year. +(3) +On February 13, 2015, Mr. Hrusovsky was granted 781,060 shares of restricted stock in connection with his appointment as our President and Chief Executive Officer. The shares underlying this grant vest, subject to continued service, as follows: (i) with respect to 168,246 of the shares, 25% of the shares vested on July 1, 2015, and the remainder vested over the next three years in equal monthly installments on the first day of each succeeding calendar month thereafter, (ii) with respect to 549,113 of the shares, 25% of the shares vested on September 1, 2015, and the remainder vested over the next three years in equal monthly installments on the first day of each succeeding calendar month thereafter, (iii) 23,886 shares vested based upon the achievement of certain milestones and (iv) 39,815 shares have not vested. The restricted stock is subject to accelerated vesting upon certain events. See “Narrative Disclosure to Summary Compensation Table — E. Kevin Hrusovsky” above for more details. +(4) +Represents an option to purchase 311,138 shares of our common stock granted on March 31, 2017. The shares underlying this option vest, subject to continued service, as follows: 25% of the shares vested on March 31, 2018, with the remainder vesting over the next three years in equal monthly installments on the last day of each succeeding calendar month thereafter. +(5) +On August 7, 2018, Mr. Hrusovsky was granted 300,000 RSUs. The RSUs vest upon continued service and vested as to 50,000 shares on August 31, 2018, and vest with respect to 6,250 shares at the end of each month thereafter for 40 months. +(6) +Represents an option to purchase 108,177 shares of our common stock granted on March 12, 2019. The shares underlying this option vest, subject to continued service, as follows: 25% of the shares vested on March 12, 2020, with the remainder vesting over the next three years in equal monthly installments on the last day of each succeeding calendar month thereafter. +(7) +On March 12, 2019, Mr. Hrusovsky was granted 31,732 RSUs. The RSUs vest upon continued service and vested as to 1,983 of the shares on March 31, 2019, with the remainder vesting over 45 months in equal monthly installments on the last day of each succeeding calendar month thereafter. +(8) +Represents an option to purchase 40,000 shares of our common stock granted on August 17, 2019. The shares underlying this option vest upon continued service and vested as to 4,166 shares immediately upon grant, with the remainder vesting over 43 months in equal monthly installments on the last day of each succeeding calendar month thereafter. +(9) +On August 17, 2019, Mr. Hrusovsky was granted 10,194 RSUs. The RSUs vest upon continued service and vested as to 1,061 shares immediately upon grant, with the remainder vesting over 43 months in equal monthly installments on the last day of each succeeding calendar month thereafter. +(10) +On February 18, 2020, Mr. Hrusovsky was granted (i) an option to purchase 90,992 shares of our common stock and (ii) 38,997 RSUs. The shares underlying the option and RSUs vest, subject to continued service, as follows: 25% of the shares vested on February 18, 2021, with the remainder vesting over the next three years in equal monthly installments on the last day of each calendar month thereafter. +(11) +Effective April 12, 2019, Mr. Chaubal was granted (i) an option to purchase 62,270 shares of our common stock and (ii) 18,259 RSUs. The shares underlying the option and RSUs vest, subject to continued service, as follows: 25% of the shares vested on April 12, 2020, with the remainder vesting over the next three years in equal monthly installments on the last day of each calendar month thereafter. The options and RSUs are subject to accelerated vesting upon certain events. See “Narrative Disclosure to Summary Compensation Table — Amol Chaubal” above for more details. +(12) +On February 18, 2020, Mr. Chaubal was granted (i) an option to purchase 21,666 shares of our common stock and (ii) 9,286 RSUs. The shares underlying the option and RSUs vest, subject to continued service, as follows: 25% of the shares vested on February 18, 2021, with the remainder vesting over the next three years in equal monthly installments on the last day of each calendar month thereafter. +(13) +Effective November 16, 2020, Mr. Geist was granted 40,045 RSUs. The shares underlying the RSUs vest, subject to continued service, as follows: one third of the shares vest on November 16, 2021, with the remainder vesting in 24 equal monthly installments at the end of each month thereafter beginning +23 +TABLE OF CONTENTS +November 30, 2021. The options and RSUs are subject to accelerated vesting upon certain events. See “Narrative Disclosure to Summary Compensation Table — William Geist” above for more details. +Director Compensation +The following table shows the total compensation paid or accrued during the fiscal year ended December 31, 2020 to each of our non-employee directors. Directors who are employed by us are not compensated for their service on our board of directors. +Name +Fees +Earned or +Paid in Cash +($)(1) +Stock +Awards +($)(2) +Option +Awards +($)(2) +All Other +Compensation +($) +Total +($) +John M. Connolly(3) +29,492 +52,482 +563,857 +— +645,831 +Keith L. Crandell +43,950 +52,482 +77,035 +— +173,467 +Marijn Dekkers, Ph.D. +41,000 +52,482 +77,035 +— +170,517 +Sarah E. Hlavinka +41,875 +52,482 +77,035 +— +171,392 +Martin D. Madaus, Ph.D. +72,500 +52,482 +77,035 +— +202,017 +Paul M. Meister +55,000 +52,482 +77,035 +— +184,517 +David R. Walt, Ph.D. +41,000 +52,482 +77,035 +— +170,517 +(1) +Keith L. Crandell, Sarah E. Hlavinka, Martin D. Madaus, Ph.D. and Paul M. Meister elected to receive these fees in the form of common stock in lieu of cash in accordance with our non-employee director compensation policy. +(2) +These amounts represent the aggregate grant date fair value for RSUs and option awards granted to each director in the fiscal year ended December 31, 2020, computed in accordance with FASB ASC Topic 718. A discussion of the assumptions used in determining grant date fair value for the option awards may be found in Note 2 to our consolidated financial statements for the year ended December 31, 2020. The amount shown for Mr. Connolly includes an incremental non-cash expense of $486,822 associated with an extension of the post-separation exercise period of certain vested options related to an administrative error, as computed in accordance with FASB ASC Topic 718. The following table shows the aggregate number of stock options held by each of our non-employee directors as of December 31, 2020: +Name +Aggregate Number of +Shares Subject to +Stock Options +Keith L. Crandell +23,700 +Marijn Dekkers, Ph.D. +54,813 +Sarah E. Hlavinka +23,700 +Martin D. Madaus, Ph.D. +23,700 +Paul M. Meister +47,035 +David R. Walt, Ph.D. +23,700 +(3) +Mr. Connolly resigned from the board on August 14, 2020. +Non-Employee Director Compensation Policy +Our current non-employee director compensation policy provides for the annual payment of: $35,000 to each of our nonemployee directors, or $55,000 in the case of the chair; $7,500 to each member of our audit committee, or $20,000 in the case of the chair; $6,000 to each member of our compensation committee, or $12,000 in the case of the chair; and $5,000 to each member of our nominating and governance committee, or $10,000 in the case of the chair; in each case quarterly in arrears. Each non-employee director may elect to receive these payments in the form of common stock in lieu of cash. +24 +TABLE OF CONTENTS +Our current non-employee director compensation policy also provides that each non-employee director be granted, on the first trading day of each fiscal year, (1) a non-qualified stock option exercisable for 7,900 shares of common stock and (2) 2,270 RSUs (each RSU relating to one share of common stock). The annual stock options and RSUs vest in full on December 31 of the year in which such awards were granted, provided that the non-employee director is a director of the Company on the applicable vesting date. +In addition, each new non-employee director receives under the policy (1) a non-qualified stock option grant exercisable for 15,800 shares of common stock and (2) 4,540 RSUs (each RSU relating to one share of common stock) upon his or her initial election or appointment. The initial stock options vest over three years from the date of grant, with one third vesting on the first anniversary of the applicable grant date and the remainder vesting over the following two years in 24 successive equal monthly installments at the end of each month until the third anniversary of such grant date, provided that the non-employee director is a director of the Company on the applicable vesting date. The RSUs granted to each new non-employee director vest over a three-year period, with one third vesting on each of the first, second, and third anniversaries of the applicable grant date, provided that the non-employee director is a director of the Company on the applicable vesting date. +We reimburse in full each non-employee director for all reasonable out-of-pocket expenses incurred in attending each meeting of our board of directors or its committees. Directors may be reimbursed for travel, food, lodging and other expenses directly related to their service as directors. Directors are also entitled to the protection provided by their indemnification agreements, and the indemnification provisions in our restated certificate of incorporation and restated bylaws. +Stock Ownership Guidelines for Non-Employee Directors and Executive Officers +In order to further align the interests of our non-employee directors and executive officers with the interests of our stockholders and to promote our commitment to sound corporate governance, our board maintains stock ownership guidelines for our non-employee directors and executive officers as follows: +Stock Ownership Guideline +Non-Employee Director +5x annual base cash retainer +CEO +6x annual base salary +Executive Officers Other than CEO +3x annual base salary +Attainment Period +Five years from the later of +• +Appointment/election to applicable position +• +October 9, 2019 +Stock Owned for Purposes of Ownership Guidelines +• +Stock acquired on the open market; +• +Stock acquired through the exercise of options; +• +Restricted stock, RSUs and stock options, whether vested or unvested; and +• +Stock acquired through Company benefit plans. +Holding Requirement +50% of “net of tax” vested shares must be held until the ownership guideline is met. +Administration +The Stock Ownership Guidelines are administered by the Compensation Committee, which evaluates compliance on an annual basis. Non-compliance arising from special circumstances, such as fluctuations in the Company’s stock price, changes in a participant’s compensation, and the personal financial situation of a participant, are reviewed by the Compensation Committee. +As of the date of this proxy statement, all of our non-employee directors and executive officers were in compliance with our stock ownership guidelines. +25 +TABLE OF CONTENTS +EQUITY COMPENSATION PLAN INFORMATION +The following table provides certain aggregate information with respect to all of our equity compensation plans in effect as of December 31, 2020. +(a) +(b) +(c) +Plan category +Number of securities +to be issued upon +exercise of outstanding +options, warrants +and rights +Weighted-average +exercise price +of outstanding +options, warrants +and rights +Number of securities +remaining available for +future issuance under equity +compensation plans +(excluding securities +reflected in column (a)) +Equity compensation plans approved by security holders(1) +2,494,045 +$ +17.73 +1,559,108 (2) +Equity compensation plans not approved by security holders +— +— +— +Total +2,494,045 +$ +17.73 +1,559,108 (2) +(1) +These plans consist of our 2007 Plan, the 2017 Plan and the ESPP. +(2) +Consists of 710,839 shares of common stock available under the 2017 Plan and 848,269 shares of common stock available under the ESPP. Does not include an additional 1,273,501 shares of common stock reserved for future issuance under the 2017 Plan effective January 1, 2021 by operation of the 2017 Plan’s “evergreen” provision and an additional 318,375 shares of common stock reserved for future issuance under the ESPP effective January 1, 2021 by operation of the ESPP’s “evergreen” provision. +26 +TABLE OF CONTENTS +REPORT OF AUDIT COMMITTEE +The audit committee of the board of directors, which consists entirely of directors who meet the independence and experience requirements of The Nasdaq Stock Market, has furnished the following report: +The audit committee assists the board of directors in overseeing and monitoring the integrity of our financial reporting process, compliance with legal and regulatory requirements and the quality of internal and external audit processes. The audit committee’s role and responsibilities are set forth in its charter adopted by the board of directors, which is available on our website at www.quanterix.com . The audit committee reviews and reassesses its charter annually and recommends any changes to the board of directors for approval. The audit committee is responsible for overseeing our overall financial reporting process, and for the appointment, compensation, retention, and oversight of the work of Ernst & Young LLP. In fulfilling its responsibilities for the financial statements for the fiscal year ended December 31, 2020, the audit committee took the following actions: +• +Reviewed and discussed the audited financial statements for the fiscal year ended December 31, 2020 with management and Ernst & Young LLP, our independent registered public accounting firm; +• +Discussed with Ernst & Young LLP the matters required to be discussed in accordance with Auditing Standard No. 1301 —  Communications with Audit Committees ; and +• +Received written disclosures and the letter from Ernst & Young LLP regarding its independence as required by applicable requirements of the Public Company Accounting Oversight Board regarding Ernst & Young LLP’s communications with the audit committee and the audit committee further discussed with Ernst & Young LLP their independence. +Based on the audit committee’s review of the audited financial statements and discussions with management and Ernst & Young LLP, the audit committee recommended to the board of directors that the audited financial statements be included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 for filing with the SEC. +Members of the Audit Committee: +Paul M. Meister ( Chairman ) +Sarah E. Hlavinka +Martin D. Madaus, Ph.D. +DELINQUENT SECTION 16(A) REPORTS +Our records reflect that all reports which were required to be filed with the SEC pursuant to Section 16(a) of the Securities Exchange Act of 1934, as amended, were filed on a timely basis, except that a Form 4 that was due on September 28, 2020 for Kevin Hrusovsky, reporting one transaction, was filed on September 29, 2020 due to an administrative error. +27 +TABLE OF CONTENTS +CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS +Since January 1, 2019, we have engaged in the following transactions with our directors, director nominees, executive officers and holders of more than 5% of our common stock, which we refer to as our principal stockholders, and affiliates or immediate family members of our directors, executive officers and principal stockholders. We believe that all of these transactions were on terms as favorable as could have been obtained from unrelated third parties. +We entered into a License Agreement with Tufts University in 2007, and as amended in 2013, 2017 and 2020, pursuant to which we obtained an exclusive, worldwide license to our core Simoa technology, and have entered into additional license agreements with Tufts to certain related technology (individually and collectively, the “Tufts Licenses”). David R. Walt, Ph.D., one of our directors, our founding scientist and an inventor of the Simoa technology, previously served as a Professor at Tufts University. Under the Tufts Licenses, we are required to pay Tufts University royalties on net sales of licensed products and services as well as a portion of our applicable sublicense revenues. During the years ended December 31, 2020 and 2019, we recorded royalty expense of $1.1 million and $1.0 million, respectively, under the Tufts Licenses. During the year ended December 31, 2020, we also incurred $1.0 million in cost of collaboration and license revenue owed to Tufts relating to sublicensing certain technology under the Tufts Licenses. Tufts University pays a portion of the royalties and license payments received from us to Dr. Walt pursuant to an arrangement between Tufts University and Dr. Walt, the amount of which is determined on a formulaic basis. Dr. Walt has indicated to us that, for the years ended December 31, 2020 and 2019, he received $199,975 and $244,562, respectively, under this arrangement with Tufts University. +Dr. Walt is currently a full Professor and a Principal Investigator at Harvard Medical School and Brigham and Women’s Hospital as well as at the Wyss Institute, institutions affiliated with Harvard University. In 2020, we entered into license agreement (the “Harvard License”) with Brigham and Women’s Hospital relating to a COVID-19 assay developed in a laboratory overseen by Dr. Walt. Dr. Walt receives no payments from Mass General Brigham, Harvard University or these affiliated entities in respect of any payments made by us under the Harvard License. During the year ended December 31, 2020, we recorded royalty expense of approximately $11,400 under the Harvard License. We also sell products and services to laboratories overseen by Dr. Walt. During the years ended December 31, 2020 and 2019, we recorded revenue from these sales of approximately $535,000 and $781,000, respectively. +Stephen Hrusovsky, the son of E. Kevin Hrusovsky, our Chairman, President and Chief Executive Officer, serves as our Director, Investor Relations and Business Development. For services in 2019, he received an aggregate of $156,350 in salary, bonus, and equity awards, and for services in 2020, he received an aggregate of $201,237 in salary, bonus, and equity awards. +Registration Rights +Pursuant to our registration rights agreement to which certain of our principal stockholders, directors and their affiliates are parties, the holders of certain shares of common stock are entitled to registration rights with respect to the shares of common stock held by them. These shares include the shares held by ARCH Venture Partners and affiliated funds, our directors Marijn Dekkers, Ph.D. and David R. Walt, Ph.D., and an affiliate of our director Paul M. Meister. See “Security Ownership of Certain Beneficial Owners and Management.” +Under our registration rights agreement, holders of registrable shares can demand that we file a registration statement or request that their shares be included on a registration statement that we are otherwise filing, in either case, registering the resale of their shares of common stock. The registration rights will terminate at the earlier of (a) the closing of a Change of Control Event, as such term is defined in our restated certificate of incorporation, (b) such time as Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”), or another similar exemption under the Securities Act is available for the sale of all of such registrable shares without limitation during a three-month period without registration (and without the requirement for us to be in compliance with the current public information required under Rule 144(c)(1)), or (c) the fifth anniversary of the completion of our initial public offering. +Demand Registration Rights. The holders of a majority of the registrable shares may require us to file a registration statement under the Securities Act at our expense, subject to certain exceptions, with respect to +28 +TABLE OF CONTENTS +the resale of their registrable shares having an aggregate offering price (net of underwriting discounts and commissions, if any) of at least $5 million, and we are required to use our reasonable best efforts to effect the registration. The holders of a majority of the registrable shares may require us to effect up to two such demand registrations for the holders of registrable shares as a group. In the event we are required to effect such a demand registration, we may not effect any other registration of securities for sale for our own account (other than a registration effected solely to implement an employee benefit plan or in certain business combination transactions) within 120 days following the effective date of the demand registration. +We are also required to use our reasonable best efforts to qualify and remain qualified to register securities pursuant to a registration statement on Form S-3 under the Securities Act. Any holder or holders of registrable shares anticipated to have an aggregate sale price (net of underwriting discounts and commissions, if any) in excess of $1 million will have the right to require us to file, at our expense, an unlimited number of registration statements on Form S-3 for the registrable shares held by such requesting holder or holders, and we are required to use our reasonable best efforts to effect such registrations. +Piggyback Registration Rights. If we propose to register any of our securities under the Securities Act for sale to the public (except with respect to registration statements on Form S-4, Form S-8 or another form not available for registering the registrable shares for sale to the public), the holders of registrable shares are entitled to notice of such registration and to request that we include registrable shares for resale on such registration statement, subject to the right of any underwriter to limit the number of shares included in such registration. +We will pay all registration expenses, other than underwriting fees, commissions or discounts, related to any demand or piggyback registration, including up to $50,000 of fees and disbursements of counsel for the holders of registrable shares. The Registration Rights Agreement contains customary cross-indemnification provisions, pursuant to which we are obligated to indemnify the selling stockholders in the event of misstatements or omissions in the registration statement attributable to us and they are obligated to indemnify us for misstatements or omissions attributable to them. +Indemnification Agreements with Officers and Directors and Directors’ and Officers’ Liability Insurance +We have entered into indemnification agreements with each of our executive officers and directors. The indemnification agreements, our restated certificate of incorporation and our restated bylaws require us to indemnify our directors to the fullest extent not prohibited by Delaware law. Subject to certain limitations, our restated bylaws also require us to advance expenses incurred by our directors and officers. +The 2007 Plan and the 2017 Plan also provide that our directors (and in the case of the 2017 Plan, our employees) will not be liable for any act, omission, interpretation, construction or determination made in good faith in connection with the respective plan, and the members of our board of directors and any committee administering the plan will be entitled to indemnification and reimbursement by us in respect of any claim, loss, damage or expense (including reasonable attorneys’ fees) arising or resulting therefrom to the fullest extent permitted by law and/or under any directors’ and officers’ liability insurance coverage which may be in effect from time to time. +We also maintain a general liability insurance policy which covers certain liabilities of directors and officers of our company arising out of claims based on acts or omissions in their capacities as directors or officers. +Policies and Procedures for Related Party Transactions +Pursuant to its charter, our audit committee is responsible for reviewing and approving, prior to our entry into any such transaction, all transactions reportable by us under Item 404 of Regulation S-K in which we are a participant and in which any parties related to us, including our executive officers, our directors, beneficial owners of more than 5% of our securities, immediate family members of the foregoing persons and any other persons whom our board of directors determines may be considered related persons under Item 404 of Regulation S-K, has or is expected to have a direct or indirect material interest. +In reviewing and approving such transactions, the audit committee will obtain, or will direct our management to obtain on its behalf, all information that the committee believes to be relevant and important +29 +TABLE OF CONTENTS +to a review of the transaction prior to its approval. Following receipt of the necessary information, a discussion will be held of the relevant factors if deemed to be necessary by the committee prior to approval. If a discussion is not deemed to be necessary, approval may be given by written consent of the committee. This approval authority may also be delegated to the chair of the audit committee in some circumstances. No related person transaction will be entered into prior to the completion of these procedures. +The audit committee or its chair, as the case may be, will approve only those related person transactions that are determined to be in, or not inconsistent with, the best interests of us and our stockholders, taking into account all available facts and circumstances as the committee or the chair determines in good faith to be necessary in accordance with principles of Delaware law generally applicable to directors of a Delaware corporation. These facts and circumstances will typically include, but not be limited to, the benefits of the transaction to us; the impact on a director’s independence in the event the related person is a director, an immediate family member of a director or an entity in which a director is a partner, stockholder or executive officer; the availability of other sources for comparable products or services; the terms of the transaction; and the terms of comparable transactions that would be available to unrelated third parties or to employees generally. No member of the audit committee will participate in any review, consideration or approval of any related person transaction with respect to which the member or any of his or her immediate family members has an interest. +30 +TABLE OF CONTENTS +ELECTION OF DIRECTORS +(Notice Item 1) +Our board of directors nominated Martin D. Madaus, Ph.D. and Laurie J. Olson for election at the annual meeting. Our board of directors currently consists of eight members, classified into three classes as follows: (1) Martin D. Madaus, Ph.D. and Laurie J. Olson constitute Class I with a term ending at the upcoming 2021 annual meeting of stockholders; (2) Marijn Dekkers, Ph.D., Sarah E. Hlavinka and David R. Walt, Ph.D. constitute Class II with a term ending at the 2022 annual meeting of stockholders; and (3) E. Kevin Hrusovsky, Keith L. Crandell and Paul M. Meister constitute Class III with a term ending at the 2023 annual meeting of stockholders. At each annual meeting of stockholders, directors are elected for a full term of three years to succeed those directors whose terms are expiring. +Upon the recommendation of our nominating and governance committee, our board of directors has voted to nominate Martin D. Madaus, Ph.D. and Laurie J. Olson for election at the annual meeting as Class I directors for a term of three years to serve until the 2024 annual meeting of stockholders and until their respective successors are elected and qualified. +Unless authority to vote for any of these nominees is withheld, the shares represented by the enclosed proxy will be voted FOR the election of Martin D. Madaus, Ph.D. and Laurie J. Olson as directors. In the event that any of the nominees becomes unable or unwilling to serve, the shares represented by the enclosed proxy will be voted for the election of such other person as the board of directors may recommend in that nominee’s place. We have no reason to believe that any of the nominees will be unable or unwilling to serve as a director. +A plurality of the shares voted FOR each nominee is required to elect each nominee as a director. +THE BOARD OF DIRECTORS RECOMMENDS THE ELECTION OF MARTIN D. MADAUS, PH.D. AND LAURIE J. OLSON AS DIRECTORS, AND PROXIES SOLICITED BY THE BOARD WILL BE VOTED IN FAVOR THEREOF UNLESS A STOCKHOLDER HAS INDICATED OTHERWISE ON THE PROXY. +31 +TABLE OF CONTENTS +RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT +REGISTERED PUBLIC ACCOUNTING FIRM +(Notice Item 2) +The audit committee has appointed Ernst & Young LLP as our independent registered public accounting firm to audit our financial statements for the fiscal year ending December 31, 2021. The board of directors proposes that the stockholders ratify this appointment. Ernst & Young LLP audited our financial statements for the fiscal years ended December 31, 2019 and 2020. We expect that representatives of Ernst & Young LLP will be present at the annual meeting, will be able to make a statement if they so desire and will be available to respond to appropriate questions. +In deciding to appoint Ernst & Young LLP, the audit committee reviewed auditor independence issues and existing commercial relationships with Ernst & Young LLP and concluded that Ernst & Young LLP has no commercial relationship with the Company that would impair its independence for the fiscal year ending December 31, 2021. +The following table presents fees for professional audit services rendered by Ernst & Young LLP, our independent registered public accounting firm, for the audit of our annual financial statements for the years ended December 31, 2019 and 2020, and fees billed for other services rendered by Ernst & Young LLP during those periods. +2019 +2020 +Audit fees:(1) +$ +1,440,349 +$ +1,436,414 +Audit-related fees:(2) +326,120 +$ +— +Tax fees:(3) +75,420 +$ +56,350 +Total +$ +1,841,889 +$ +1,492,764 +(1) +Audit fees consisted of audit work performed in the preparation of financial statements and services in connection with our periodic and current SEC filings and registration statements, as well as work generally only the independent registered public accounting firm can reasonably be expected to provide, such as statutory audits. +(2) +Audit-related fees consisted of fees for assurance and related services including due diligence in connection with mergers and acquisitions, accounting consultations, and audits in connection with mergers and acquisitions which are not reported under “Audit Fees.” +(3) +Tax fees consist principally of assistance with matters related to tax compliance and reporting and tax consulting services primarily related to international tax planning strategies. +Policy on Audit Committee Pre-Approval of Audit and Permissible Non-audit Services of Independent Public Accountant +Consistent with SEC policies regarding auditor independence, the audit committee has responsibility for appointing, setting compensation and overseeing the work of our independent registered public accounting firm. In recognition of this responsibility, the audit committee has established a policy to pre-approve all audit and permissible non-audit services provided by our independent registered public accounting firm; provided however, that de minimis non-audit services may instead be approved in accordance with applicable SEC rules. +Prior to engagement of an independent registered public accounting firm for the next year’s audit, management will submit an aggregate of services expected to be rendered during that year for each of four categories of services to the audit committee for approval. +1. +Audit services include audit work performed in the preparation of financial statements, as well as work that generally only an independent registered public accounting firm can reasonably be expected to provide, including comfort letters, statutory audits and attest services and consultation regarding financial accounting and/or reporting standards. +32 +TABLE OF CONTENTS +2. +Audit-Related services are for assurance and related services that are traditionally performed by an independent registered public accounting firm, including due diligence related to mergers and acquisitions, employee benefit plan audits and special procedures required to meet certain regulatory requirements. +3. +Tax services include all services performed by an independent registered public accounting firm’s tax personnel except those services specifically related to the audit of the financial statements, and includes fees in the areas of tax compliance, tax planning and tax advice. +4. +Other Fees are those associated with services not captured in the other categories. The Company generally does not request such services from our independent registered public accounting firm. +Prior to engagement, the audit committee pre-approves these services by category of service. The fees are budgeted, and the audit committee requires our independent registered public accounting firm and management to report actual fees versus the budget periodically throughout the year by category of service. During the year, circumstances may arise when it may become necessary to engage our independent registered public accounting firm for additional services not contemplated in the original pre-approval. In those instances, the audit committee requires specific pre-approval before engaging our independent registered public accounting firm. +The audit committee may delegate pre-approval authority to one or more of its members. The member to whom such authority is delegated must report, for informational purposes only, any pre-approval decisions to the audit committee at its next scheduled meeting. +In the event the stockholders do not ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm, the audit committee will reconsider its appointment. +The affirmative vote of a majority of the votes cast affirmatively or negatively for this proposal is required to ratify the appointment of the independent registered public accounting firm. +THE BOARD OF DIRECTORS RECOMMENDS A VOTE TO RATIFY THE APPOINTMENT OF ERNST & YOUNG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM, AND PROXIES SOLICITED BY THE BOARD WILL BE VOTED IN FAVOR OF SUCH RATIFICATION UNLESS A STOCKHOLDER INDICATES OTHERWISE ON THE PROXY. +33 +TABLE OF CONTENTS +CORPORATE CODE OF CONDUCT AND ETHICS +We have adopted a corporate code of conduct and ethics that applies to all of our employees, including our chief executive officer and chief financial and accounting officers. The text of the code of conduct and ethics is posted on our website at www.quanterix.com under “Investors — Corporate Governance —  Governance Highlights” and will be made available to stockholders without charge, upon request, in writing to the Corporate Secretary at 900 Middlesex Turnpike, Building 1, Billerica, Massachusetts 01821. Disclosure regarding any amendments to, or waivers from, provisions of the code that apply to our directors, principal executive officer or principal financial officer will be included in a Current Report on Form 8-K within four business days following the date of the amendment or waiver, unless website posting or the issuance of a press release of such amendments or waivers is then permitted by the rules of The Nasdaq Stock Market. +OTHER MATTERS +The board of directors knows of no other business which will be presented to the annual meeting. If any other business is properly brought before the annual meeting, proxies will be voted in accordance with the judgment of the persons named therein. +STOCKHOLDER PROPOSALS AND NOMINATIONS FOR DIRECTOR +To be considered for inclusion in the proxy statement relating to our 2022 annual meeting of stockholders, we must receive stockholder proposals (other than for director nominations) no later than January 3, 2022. To be considered for presentation at the 2022 annual meeting, although not included in the proxy statement, proposals (including director nominations that are not requested to be included in our proxy statement) must be received no earlier than February 24, 2022 and no later than March 26, 2022. Proposals that are not received in a timely manner will not be voted on at the 2022 annual meeting. If a proposal is received on time, the proxies that management solicits for the meeting may still exercise discretionary voting authority on the proposal under circumstances consistent with the proxy rules of the SEC. All stockholder proposals should be marked for the attention of Secretary, Quanterix Corporation, 900 Middlesex Turnpike, Building 1, Billerica, Massachusetts 01821. +Billerica, Massachusetts +April 29, 2021 +34 +TABLE OF CONTENTS +MMMMMMMMMMMM MMMMMMMMMMMMMMM C123456789 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000004 ENDORSEMENT_LINE______________ SACKPACK_____________ 000000000.000000 ext 000000000.000000 ext MMMMMMMMMMR A SAMPLE DESIGNATION (IF ANY) ADD 1 ADD 2 ADD 3 ADD 4 ADD 5 ADD 6 Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outsidethe designated areas. Your vote matters – here’s how to vote! You may vote online or by phone instead of mailing this card. Online Go to www.investorvote.com/QTRX or scan the QR code — login details are located in the shaded bar below. Phone Call toll free 1-800-652-VOTE (8683) within the USA, US territories and Canada Save paper, time and money! Sign up for electronic delivery at www.investorvote.com/QTRX • IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. • 1. Election of Class I Directors for a three-year term expiring in 2024: +For Withhold For Withhold 01 -Martin D. Madaus, Ph.D. 02 -Laurie J. Olson For Against Abstain 2. Ratification of the appointment of Ernst & Young LLP as the independent registered public accounting firm for the fiscal year ending December 31, 2021. Please sign +exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title. Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box. MR A SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE C 1234567890 J N T 140 CHARACTERS) MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND 21BV 503814 MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MMMMMMM + 03GF2B +TABLE OF CONTENTS +2021 Annual Meeting of Quanterix Corporation Stockholders June 24, 2021, 10:00 AM ET This year’s annual meeting will be a virtual meeting via live webcast on the Internet. You will be able to attend the annual meeting, vote and submit your questions during the meeting by visiting www.meetingcenter.io/255011196 and entering the 15 digit control number. The password for this meeting is — QTRX2021. Important notice regarding the Internet availability of proxy materials for the Annual Meeting of Stockholders. The material is available at: www.investorvote.com/QTRX Small steps make an impact. Help the environment by consenting to receive electronic delivery, sign up at www.investorvote.com/QTRX • IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. • Quanterix Corporation + Notice of 2021 Annual Meeting of Stockholders Proxy Solicited by Board of Directors for Annual Meeting — June 24, 2021 E. Kevin Hrusovsky and John Fry, or either of them, each with the power of substitution, are hereby authorized to represent and vote the shares of the undersigned, with all the powers which the undersigned would possess if personally present, at the Annual Meeting of Stockholders of Quanterix Corporation to be held virtually on June 24, 2021 or at any postponement or adjournment thereof. Shares represented +by thisproxy willbe votedasdirected by the stockholder. If no such directions are indicated, the Proxieswill haveauthority to vote FOR the election of the nominees as directors and FOR Proposal 2. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting. (Items to be voted appear on reverse side) Change of Address — Please print new address below. Comments — Please print your comments below. + \ No newline at end of file diff --git a/raw/proxies/0001503274/0001104659-21-057299/proxy_rpt.txt b/raw/proxies/0001503274/0001104659-21-057299/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..b63e6fc3be672605b8d462a6e80637fb2ee941c5 --- /dev/null +++ b/raw/proxies/0001503274/0001104659-21-057299/proxy_rpt.txt @@ -0,0 +1,10 @@ +CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS +Since January 1, 2019, we have engaged in the following transactions with our directors, director nominees, executive officers and holders of more than 5% of our common stock, which we refer to as our principal stockholders, and affiliates or immediate family members of our directors, executive officers and principal stockholders. We believe that all of these transactions were on terms as favorable as could have been obtained from unrelated third parties. +We entered into a License Agreement with Tufts University in 2007, and as amended in 2013, 2017 and 2020, pursuant to which we obtained an exclusive, worldwide license to our core Simoa technology, and have entered into additional license agreements with Tufts to certain related technology (individually and collectively, the “Tufts Licenses”). David R. Walt, Ph.D., one of our directors, our founding scientist and an inventor of the Simoa technology, previously served as a Professor at Tufts University. Under the Tufts Licenses, we are required to pay Tufts University royalties on net sales of licensed products and services as well as a portion of our applicable sublicense revenues. During the years ended December 31, 2020 and 2019, we recorded royalty expense of $1.1 million and $1.0 million, respectively, under the Tufts Licenses. During the year ended December 31, 2020, we also incurred $1.0 million in cost of collaboration and license revenue owed to Tufts relating to sublicensing certain technology under the Tufts Licenses. Tufts University pays a portion of the royalties and license payments received from us to Dr. Walt pursuant to an arrangement between Tufts University and Dr. Walt, the amount of which is determined on a formulaic basis. Dr. Walt has indicated to us that, for the years ended December 31, 2020 and 2019, he received $199,975 and $244,562, respectively, under this arrangement with Tufts University. +Dr. Walt is currently a full Professor and a Principal Investigator at Harvard Medical School and Brigham and Women’s Hospital as well as at the Wyss Institute, institutions affiliated with Harvard University. In 2020, we entered into license agreement (the “Harvard License”) with Brigham and Women’s Hospital relating to a COVID-19 assay developed in a laboratory overseen by Dr. Walt. Dr. Walt receives no payments from Mass General Brigham, Harvard University or these affiliated entities in respect of any payments made by us under the Harvard License. During the year ended December 31, 2020, we recorded royalty expense of approximately $11,400 under the Harvard License. We also sell products and services to laboratories overseen by Dr. Walt. During the years ended December 31, 2020 and 2019, we recorded revenue from these sales of approximately $535,000 and $781,000, respectively. +Stephen Hrusovsky, the son of E. Kevin Hrusovsky, our Chairman, President and Chief Executive Officer, serves as our Director, Investor Relations and Business Development. For services in 2019, he received an aggregate of $156,350 in salary, bonus, and equity awards, and for services in 2020, he received an aggregate of $201,237 in salary, bonus, and equity awards. +Registration Rights +Pursuant to our registration rights agreement to which certain of our principal stockholders, directors and their affiliates are parties, the holders of certain shares of common stock are entitled to registration rights with respect to the shares of common stock held by them. These shares include the shares held by ARCH Venture Partners and affiliated funds, our directors Marijn Dekkers, Ph.D. and David R. Walt, Ph.D., and an affiliate of our director Paul M. Meister. See “Security Ownership of Certain Beneficial Owners and Management.” +Under our registration rights agreement, holders of registrable shares can demand that we file a registration statement or request that their shares be included on a registration statement that we are otherwise filing, in either case, registering the resale of their shares of common stock. The registration rights will terminate at the earlier of (a) the closing of a Change of Control Event, as such term is defined in our restated certificate of incorporation, (b) such time as Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”), or another similar exemption under the Securities Act is available for the sale of all of such registrable shares without limitation during a three-month period without registration (and without the requirement for us to be in compliance with the current public information required under Rule 144(c)(1)), or (c) the fifth anniversary of the completion of our initial public offering. +Demand Registration Rights. The holders of a majority of the registrable shares may require us to file a registration statement under the Securities Act at our expense, subject to certain exceptions, with respect to +28 \ No newline at end of file diff --git a/raw/proxies/0001503274/0001104659-22-053506/proxy.txt b/raw/proxies/0001503274/0001104659-22-053506/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..af75d61589cd692e1ad7869519fbd450c0734b88 --- /dev/null +++ b/raw/proxies/0001503274/0001104659-22-053506/proxy.txt @@ -0,0 +1,2530 @@ +DEF 14A +1 +tm223525-1_def14a.htm +DEF 14A +tm223525-1_def14a - none - 12.8281821s +TABLE OF CONTENTS +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Proxy Statement Pursuant to Section 14(a) of +the Securities Exchange Act of 1934 (Amendment No.     ) +Filed by the Registrant ☒ +Filed by a Party other than the Registrant ☐ +Check the appropriate box: +☐ +Preliminary Proxy Statement +☐ +Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +☒ +Definitive Proxy Statement +☐ +Definitive Additional Materials +☐ +Soliciting Material under §240.14a-12 +Quanterix Corporation +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +☒ +No fee required. +☐ +Fee paid previously with preliminary materials. +☐ +Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11. +TABLE OF CONTENTS +April 29, 2022 +To Our Stockholders: +You are cordially invited to attend the 2022 annual meeting of stockholders of Quanterix Corporation to be held at 10:00 a.m. ET on Thursday, June 23, 2022. As a result of public health considerations, this year’s annual meeting will be conducted solely via live audio webcast on the Internet. You will be able to attend the annual meeting, vote and submit your questions during the annual meeting by visiting meetnow.global/ MD2UGTW. You will not be able to attend the annual meeting in person. +Details regarding the meeting, the business to be conducted at the meeting, and information about Quanterix Corporation that you should consider when you vote your shares are described in the accompanying proxy statement. Details on how to participate in the meeting will be available at www.investorvote.com/qtrx . +At the annual meeting, three persons will be elected to our Board of Directors to serve three-year terms expiring in 2025 (“Proposal No. 1”). In addition, we will ask stockholders to approve the compensation of our named executive officers, as disclosed in this proxy statement (“Proposal No. 2”), to vote on the frequency of holding an advisory vote on the compensation of our named executive officers (“Proposal No. 3”) and to ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2022 (“Proposal No. 4”). Our Board of Directors recommends the approval of each of Proposal Nos. 1, 2 and 4 and a vote for a frequency of voting on executive compensation every year for Proposal No. 3. Such other business will be transacted as may properly come before the annual meeting. +Under Securities and Exchange Commission rules that allow companies to furnish proxy materials to stockholders over the Internet, we have elected to deliver our proxy materials to the majority of our stockholders over the Internet. This delivery process allows us to provide stockholders with the information they need, while at the same time conserving natural resources and lowering the cost of delivery. On or about May 3, 2022, we intend to begin sending to our stockholders a Notice of Internet Availability of Proxy Materials (the “Notice”) containing instructions on how to access our proxy statement for our 2022 Annual Meeting of Stockholders and our 2021 annual report to stockholders. The Notice also provides instructions on how to vote online or by telephone, how to access the virtual annual meeting and how to receive a paper copy of the proxy materials by mail. +We hope you will be able to attend the annual meeting. Whether or not you plan to attend the annual meeting, we hope you will vote promptly. Information about voting methods is set forth in the accompanying proxy statement. +Thank you for your continued support of Quanterix Corporation. +Sincerely, +/s/ MASOUD TOLOUE, PH.D. +Masoud Toloue, Ph.D. +President and Chief Executive Officer +TABLE OF CONTENTS +QUANTERIX CORPORATION +900 Middlesex Turnpike +Billerica, Massachusetts 01821 +April 29, 2022 +NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS +TIME: 10:00 a.m. ET +DATE: Thursday, June 23, 2022 +ACCESS: To be admitted to the annual meeting at meetnow.global/MD2UGTW , stockholders must enter the 15-digit control number found on their proxy card, notice of internet availability of proxy materials, or email previously received. We encourage you to access the annual meeting prior to the start time. Online access will begin at 9:45 a.m. ET. Stockholders may vote during the annual meeting by following the instructions available on the meeting website during the meeting. +PURPOSES: +1. +To elect three directors to serve three-year terms expiring in 2025; +2. +To approve by an advisory vote the compensation of our named executive officers, as disclosed in this proxy statement (“Say-on-Pay”); +3. +To approve by an advisory vote the frequency of holding an advisory vote on compensation of our named executive officers (“Frequency of Say-on-Pay”); +4. +To ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2022; and +5. +To transact such other business that is properly presented at the annual meeting and any adjournments or postponements thereof. +WHO MAY VOTE: +You may vote if you were the record owner of Quanterix Corporation common stock at the close of business on April 28, 2022. A list of stockholders of record will be available at the annual meeting and, during the 10 days prior to the annual meeting, at our principal executive offices, located at 900 Middlesex Turnpike, Building 1, Billerica, Massachusetts 01821. +All stockholders are cordially invited to attend the annual meeting. Whether you plan to attend the annual meeting or not, we urge you to vote by following the instructions in the Notice of Internet Availability of Proxy Materials that you previously received and submit your proxy by the Internet, telephone or mail in order to ensure the presence of a quorum. You may change or revoke your proxy at any time before it is voted at the meeting. +BY ORDER OF THE BOARD OF DIRECTORS +/s/ JOHN FRY +John Fry +General Counsel and Secretary +TABLE OF CONTENTS +TABLE OF CONTENTS +Page +Important Information About the Annual Meeting and Voting +2 +Security Ownership of Certain Beneficial Owners and Management +8 +Management and Corporate Governance +10 +Compensation Discussion and Analysis +19 +Compensation Committee Report +30 +Executive Officer and Director Compensation +31 +Equity Compensation Plan Information +42 +Report of Audit Committee +43 +Delinquent Section 16(a) Reports +44 +Certain Relationships and Related Person Transactions +44 +Proposal No. 1: Election of Directors +47 +Proposal No. 2: Advisory Vote on Approval of Executive Compensation as Disclosed in this Proxy +Statement +48 +Proposal No. 3: Advisory Vote on Approval of the Frequency of Holding an Advisory Vote on the +Compensation of our Named Executive Officers +49 +Proposal No. 4: Ratification of the Appointment of the Independent Registered Public Accounting +Firm +50 +Corporate Code of Conduct and Ethics +52 +Other Matters +52 +Stockholder Proposals and Nominations for Director +52 +i +TABLE OF CONTENTS +QUANTERIX CORPORATION +900 Middlesex Turnpike +Billerica, Massachusetts 01821 +PROXY STATEMENT FOR QUANTERIX CORPORATION +2022 ANNUAL MEETING OF STOCKHOLDERS +TO BE HELD ON JUNE 23, 2022 +This proxy statement, along with the accompanying Notice of 2022 Annual Meeting of Stockholders, contains information about the 2022 annual meeting of stockholders of Quanterix Corporation, including any adjournments or postponements of the annual meeting. We are holding the annual meeting at 10:00 a.m. ET on Thursday, June 23, 2022. As a result of public health considerations, this year’s annual meeting will be conducted solely via live audio webcast on the Internet. To be admitted to the annual meeting at meetnow.global/MD2UGTW , stockholders must enter the 15-digit control number found on their proxy card, notice of internet availability of proxy materials, or email previously received. We encourage you to access the annual meeting prior to the start time. Online access will begin at 9:45 a.m. ET. Stockholders may vote during the annual meeting by following the instructions available on the meeting website during the meeting. +In this proxy statement, we refer to Quanterix Corporation as “Quanterix,” “the Company,” “we” and “us.” +This proxy statement relates to the solicitation of proxies by our Board of Directors for use at the annual meeting. +On or about May 3, 2022, we intend to begin sending the Important Notice Regarding the Availability of Proxy Materials to stockholders entitled to vote at the annual meeting. +IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE +STOCKHOLDER MEETING TO BE HELD ON JUNE 23, 2022 +This proxy statement and our 2021 annual report to stockholders are available for viewing, printing and downloading at www.investorvote.com/qtrx . To view these materials, please have your 15-digit control number(s) available that appears on your Notice or proxy card. On this website, you can also elect to receive future distributions of our proxy statements and annual reports to stockholders by electronic delivery. +Additionally, you can find a copy of our Annual Report on Form 10-K, which includes our financial statements, for the fiscal year ended December 31, 2021 on the website of the Securities and Exchange Commission (the “SEC”) at www.sec.gov , or in the “SEC Filings” section of the “Financial Information” section of the “Investors” section of our website at www.quanterix.com . You may also obtain a printed copy of our Annual Report on Form 10-K, including our financial statements, free of charge, from us by sending a written request to: Quanterix Corporation, Attn: Investor Relations, 900 Middlesex Turnpike, Building 1, Billerica, Massachusetts 01821. Exhibits will be provided upon written request and payment of an appropriate processing fee. +1 +TABLE OF CONTENTS +IMPORTANT INFORMATION ABOUT THE ANNUAL MEETING AND VOTING +Why Is the Company Soliciting My Proxy? +Our Board of Directors is soliciting your proxy to vote at the 2022 annual meeting of stockholders to be held virtually on Thursday, June 23, 2022, at 10:00 a.m. ET, and any adjournments or postponements of the meeting, which we refer to as the annual meeting. This proxy statement, along with the accompanying Notice of Annual Meeting of Stockholders, summarizes the purposes of the meeting and the information you need to know to vote at the annual meeting. +We have made available to you on the Internet or have sent you this proxy statement, the Notice of Annual Meeting of Stockholders, the proxy card and a copy of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 because you owned shares of our common stock on the record date. We intend to commence distribution of the Important Notice Regarding the Availability of Proxy Materials, which we refer to throughout this proxy statement as the Notice, and, if applicable, proxy materials to stockholders on or about May 3, 2022. +Why Did I Receive a Notice in the Mail Regarding the Internet Availability of Proxy Materials Instead of a Full Set of Proxy Materials? +As permitted by the rules of the SEC, we may furnish our proxy materials to our stockholders by providing access to such documents on the Internet, rather than mailing printed copies of these materials to each stockholder. Most stockholders will not receive printed copies of the proxy materials unless they request them. We believe that this process should expedite stockholders’ receipt of proxy materials, lower the costs of the annual meeting and help to conserve natural resources. If you received a Notice by mail or electronically, you will not receive a printed or email copy of the proxy materials, unless you request one by following the instructions included in the Notice. Instead, the Notice instructs you as to how you may access and review all of the proxy materials and submit your proxy on the Internet. If you requested a paper copy of the proxy materials, you may authorize the voting of your shares by following the instructions on the proxy card, in addition to the other methods of voting described in this proxy statement. +Why Are You Holding a Virtual Annual Meeting? +Due to the continuing public health impact of COVID-19 and to support the health and well-being of our stockholders, this year’s annual meeting will be held in a virtual meeting format only. We have designed our virtual format to enhance, rather than constrain, stockholder access, participation and communication. For example, the virtual format allows stockholders to communicate with us in advance of, and during, the annual meeting so they can ask questions of our Board of Directors or management, as time permits. +How Do I Access the Virtual Annual Meeting? +The live audio webcast of the annual meeting will begin promptly at 10:00 a.m. ET. Online access to the audio webcast will open 15 minutes prior to the start of the annual meeting to allow time for you to log-in and test your device’s audio system. You should ensure you have a strong Internet connection wherever you intend to participate in the annual meeting. You should also allow plenty of time to log in and ensure that you can hear streaming audio prior to the start of the annual meeting. To be admitted to the annual meeting at meetnow.global/MD2UGTW, stockholders of record must enter the 15-digit control number found on their proxy card, notice of internet availability of proxy materials, or email previously received. +If you are a beneficial owner and hold your shares through an intermediary, such as a bank, broker or nominee, you must register in advance to participate in the annual meeting. To register in advance, you must obtain a legal proxy from the bank, broker or other nominee that holds your shares giving you the right to vote the shares. You must forward a copy of the legal proxy along with your email address to Computershare Trust Company, N.A. (“Computershare”). Requests for registration should be directed to Computershare by email at legalproxy@computershare.com; facsimile at (781) 575-4647; or mail to Computershare, Quanterix Corporation Legal Proxy, P.O. Box 43001, Providence, Rhode Island 02940-3001, and must be received by Computershare no later than 10:00 a.m. ET, on June 21, 2022. Computershare will then register you for +2 +TABLE OF CONTENTS +attendance at the annual meeting and provide you with confirmation of your registration and instructions on how to attend the meeting by email after Computershare receives your registration materials. +Will I Be Able to Ask Questions and Have these Questions Answered During the Virtual Annual Meeting? +Stockholders may submit questions for the annual meeting after logging in. If you wish to submit a question, you may do so by logging into the virtual meeting platform at meetnow.global/MD2UGTW , typing your question into the “Ask a Question” field, and clicking “Submit.” Please submit any questions before the start time of the meeting. Appropriate questions related to the business of the annual meeting (the proposals being voted on) will be answered during the annual meeting, subject to time constraints. +What Happens if there Are Technical Difficulties During the Annual Meeting? +Beginning 15 minutes prior to, and during, the annual meeting, we will have technicians ready to assist you with any technical difficulties you may have accessing the virtual annual meeting, voting at the annual meeting or submitting questions at the annual meeting. If you encounter any difficulties accessing the virtual annual meeting during the check-in or meeting time, please call 1-888-724-2416 (US & Canada) or +1-781-575-2748. +Who Can Vote? +Only stockholders who owned our common stock at the close of business on April 28, 2022 are entitled to vote at the annual meeting. On this record date, there were 36,899,191 shares of our common stock outstanding and entitled to vote. Our common stock is our only class of voting stock. +You do not need to attend the annual meeting to vote your shares. Shares represented by valid proxies, received in time for the annual meeting and not revoked prior to the annual meeting, will be voted at the annual meeting. For instructions on how to change or revoke your proxy, see “May I Change or Revoke My Proxy?” below. +How Many Votes Do I Have? +Each share of our common stock that you own entitles you to one vote. +How Do I Vote? +Whether you plan to attend the annual meeting or not, we urge you to vote by proxy. All shares represented by valid proxies that we receive through this solicitation, and that are not revoked, will be voted in accordance with your instructions on the proxy card or as instructed via Internet or telephone. You may specify whether your shares should be voted for or withheld for each nominee for director, whether your shares should be voted for one year, two years, three years or abstain with respect to the frequency of voting on the compensation of our named executive officers, and whether your shares should be voted for, against or abstain with respect to each of the other proposals. If you properly submit a proxy without giving specific voting instructions, your shares will be voted in accordance with the Board of Directors’ recommendations as noted below. Voting by proxy will not affect your right to attend the annual meeting. If your shares are registered directly in your name through our stock transfer agent, Computershare Trust Company, N.A., or you have stock certificates registered in your name, you may vote: +• +By Internet or by telephone. Follow the instructions included in the Notice or, if you received printed materials, in the proxy card to vote over the Internet or by telephone. +• +By mail. If you received a proxy card by mail, you can vote by mail by completing, signing, dating and returning the proxy card as instructed on the card. If you sign the proxy card but do not specify how you want your shares voted, they will be voted in accordance with the Board of Directors’ recommendations as noted below. +• +At the meeting. Stockholders may vote during the annual meeting by following the instructions available on the meeting website during the meeting. +3 +TABLE OF CONTENTS +Telephone and Internet voting facilities for stockholders of record will be available 24 hours a day and will close at 11:00 a.m. ET on June 23, 2022. +If your shares are held in “street name” (held in the name of a bank, broker or other holder of record), you will receive instructions from the holder of record. You must follow the instructions of the holder of record in order for your shares to be voted. Telephone and Internet voting also will be offered to stockholders owning shares through certain banks and brokers. +How Does the Board of Directors Recommend that I Vote on the Proposals? +The Board of Directors recommends that you vote as follows: +• +“ FOR ” the election of the three (3) nominees for director; +• +“ FOR ” the compensation of our named executive officers, as disclosed in this proxy statement; +• +“ FOR ” holding an advisory vote on the compensation of our named executive officers every year; and +• +“ FOR ” the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2022. +If any other matter is presented at the annual meeting, your proxy provides that your shares will be voted by the proxy holder listed in the proxy in accordance with the proxy holder’s best judgment. At the time this proxy statement was first made available, we knew of no matters that needed to be acted on at the annual meeting, other than those discussed in this proxy statement. +May I Change or Revoke My Proxy? +If you give us your proxy, you may change or revoke it at any time before the annual meeting. You may change or revoke your proxy in any one of the following ways: +• +if you received a proxy card, by signing a new proxy card with a date later than your previously delivered proxy and submitting it as instructed above; +• +by re-voting by Internet or by telephone as instructed above; +• +by notifying our Corporate Secretary in writing before the annual meeting that you have revoked your proxy; or +• +by attending the annual meeting virtually and voting in person. +Your most current vote, whether by telephone, Internet or proxy card is the one that will be counted. +What if I Receive More than One Notice or Proxy Card? +You may receive more than one Notice or proxy card if you hold shares of our common stock in more than one account, which may be in registered form or held in street name. Please vote in the manner described above under “How Do I Vote?” for each account to ensure that all of your shares are voted. +Will My Shares Be Voted if I Do Not Vote? +If your shares are registered in your name or if you have stock certificates, they will not be counted if you do not vote as described above under “How Do I Vote?” If your shares are held in street name and you do not provide voting instructions to the bank, broker or other nominee that holds your shares as described above, the bank, broker or other nominee that holds your shares has the authority to vote your unvoted shares only on the ratification of the appointment of our independent registered public accounting firm without receiving instructions from you. Therefore, we encourage you to provide voting instructions to your bank, broker or other nominee. This ensures your shares will be voted at the annual meeting and in the manner you desire. A “broker non-vote” will occur if your broker cannot vote your shares on a particular matter because it has not received instructions from you and does not have discretionary voting authority on that matter or because your broker chooses not to vote on a matter for which it does have discretionary voting authority. +4 +TABLE OF CONTENTS +What Vote is Required to Approve Each Proposal and How Are Votes Counted? +Proposal 1: Elect Directors +The three director nominees who receive the most votes (also known as a “plurality” of the votes cast) will be elected. You may vote either FOR all of the nominees, WITHHOLD your vote from all of the nominees or WITHHOLD your vote from any one or more of the nominees. Votes that are withheld will not be included in the vote tally for the election of the directors. Brokerage firms do not have authority to vote customers’ unvoted shares held by the firms in street name for the election of the directors. As a result, any shares not voted by a customer will be treated as a broker non-vote. Such broker non-votes will have no effect on the results of this vote. +Proposal 2: Approve an Advisory Vote on the Compensation of Our Named Executive Officers +The affirmative vote of a majority of the votes cast affirmatively or negatively for this proposal is required to approve, on an advisory basis, the compensation of our named executive officers, as described in this proxy statement. Abstentions will have no effect on the results of this vote. Brokerage firms do not have authority to vote customers’ unvoted shares held by the firms in street name on this proposal. As a result, any shares not voted by a customer will be treated as a broker non-vote. Such broker non-votes will have no effect on the results of this vote. Although the advisory vote is non-binding, the Compensation Committee and our Board of Directors will review the voting results and take them into consideration when making future decisions regarding executive compensation. +Proposal 3: Approve an Advisory Vote on the Frequency of Holding an Advisory Vote on the Compensation of Our Named Executive Officers +The frequency of holding an advisory vote on the compensation of our named executive officers — every year, every two years or every three years — receiving a majority of the votes cast will be the frequency approved by our stockholders. Abstentions will have no effect on the results of this vote. Brokerage firms do not have authority to vote customers’ unvoted shares held by the firms in street name on this proposal. As a result, any shares not voted by a customer will be treated as a broker non-vote. Such broker non-votes will have no effect on the results of this vote. Although the advisory vote is non-binding, the Compensation Committee and our Board of Directors will review the voting results and take them into consideration when determining the frequency of holding an advisory vote on the compensation of our named executive officers for the next six years. +Proposal 4: Ratify Appointment of Independent Registered Public Accounting Firm +The affirmative vote of a majority of the votes cast affirmatively or negatively for this proposal is required to ratify the appointment of our independent registered public accounting firm. Abstentions will have no effect on the results of this vote. Brokerage firms have authority to vote customers’ unvoted shares held by the firms in street name on this proposal. If a broker does not exercise this authority, such broker non-votes will have no effect on the results of this vote. We are not required to obtain the approval of our stockholders to appoint our independent registered public accounting firm. However, if our stockholders do not ratify the appointment of Ernst & Young LLP as our independent +5 +TABLE OF CONTENTS +registered public accounting firm for 2022, the Audit Committee of our Board of Directors will reconsider its appointment. +Is Voting Confidential? +We will keep all the proxies, ballots and voting tabulations private. We only let our Inspector of Election, Computershare Trust Company, N.A., examine these documents. Management will not know how you voted on a specific proposal unless it is necessary to meet legal requirements. We will, however, forward to management any written comments you make on the proxy card or that you otherwise provide. +Where Can I Find the Voting Results of the Annual Meeting? +The preliminary voting results will be announced at the annual meeting, and we will publish preliminary results, or final results if available, in a Current Report on Form 8-K within four business days of the annual meeting. If final results are unavailable at the time we file the Form 8-K, then we will file an amended Current Report on Form 8-K to disclose the final voting results within four business days after the final voting results are known. In addition, we are required to file on a Current Report on Form 8-K no later than the earlier of one hundred fifty calendar days after the annual meeting or sixty calendar days prior to the deadline for submission of stockholder proposals set forth below under the heading “Stockholder Proposals and Nominations for Director” our decision on how frequently we will include a stockholder vote on the compensation of our named executive officers in our proxy materials. +What Are the Costs of Soliciting these Proxies? +We will pay all of the costs of soliciting these proxies. Our directors and employees may solicit proxies in person or by telephone, fax or email. We will pay these employees and directors no additional compensation for these services. We will ask banks, brokers and other institutions, nominees and fiduciaries to forward these proxy materials to their principals and to obtain authority to execute proxies. We will then reimburse them for their expenses. +What Constitutes a Quorum for the Annual Meeting? +The presence, in person or by proxy, of the holders of a majority of the voting power of all outstanding shares of our common stock entitled to vote at the annual meeting is necessary to constitute a quorum at the annual meeting. Votes of stockholders of record who are present at the annual meeting in person or by proxy, abstentions, and broker non-votes are counted for purposes of determining whether a quorum exists. +Householding of Annual Disclosure Documents +SEC rules concerning the delivery of annual disclosure documents allow us or your broker to send a single Notice or, if applicable, a single set of our proxy materials to any household at which two or more of our stockholders reside, if we or your broker believe that the stockholders are members of the same family. This practice, referred to as “householding,” benefits both you and us. It reduces the volume of duplicate information received at your household and helps to reduce our expenses. The rule applies to our Notices, annual reports, proxy statements and information statements. Once you receive notice from your broker or from us that communications to your address will be “householded,” the practice will continue until you are otherwise notified or until you revoke your consent to the practice. Stockholders who participate in householding will continue to have access to and utilize separate proxy voting instructions. +If your household received a single Notice or, if applicable, a single set of proxy materials this year, but you would prefer to receive your own copy, please contact our transfer agent, Computershare Trust Company, N.A., by calling their toll free number, 1-800-736-3001. +If you do not wish to participate in “householding” and would like to receive your own Notice or, if applicable, set of our proxy materials in future years, follow the instructions described below. Conversely, if you share an address with another stockholder and together both of you would like to receive only a single Notice or, if applicable, set of proxy materials, follow these instructions: +6 +TABLE OF CONTENTS +• +If your shares are registered in your own name, please contact our transfer agent, Computershare Trust Company, N.A., and inform them of your request by calling them at 1-800-736-3001 or writing them at Computershare Trust Company, N.A., P.O. Box 505000, Louisville, KY 40233-5000. +• +If a broker or other nominee holds your shares, please contact the broker or other nominee directly and inform them of your request. Be sure to include your name, the name of your brokerage firm and your account number. +Electronic Delivery of Company Stockholder Communications +Most stockholders can elect to view or receive copies of future proxy materials over the Internet instead of receiving paper copies in the mail. +You can choose this option and save the Company the cost of producing and mailing these documents by: +• +following the instructions provided on your Notice or proxy card; +• +following the instructions provided when you vote over the Internet; or +• +going to www.computershare.com and logging into the Investor Center to follow the instructions provided. +7 +TABLE OF CONTENTS +SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT +The following table sets forth certain information with respect to the beneficial ownership of our common stock as of April 15, 2022, for (a) the executive officers named in the Summary Compensation Table on page 31 of this proxy statement, (b) each of our directors and director nominees, (c) all of our current directors and executive officers as a group and (d) each stockholder known by us to own beneficially more than 5% of our common stock. Beneficial ownership is determined in accordance with the rules of the SEC and includes voting or investment power with respect to the securities. We deem shares of common stock that may be acquired by an individual or group within 60 days of April 15, 2022 pursuant to the exercise of options, warrants or the vesting of restricted stock units (“RSUs”) to be outstanding for the purpose of computing the percentage ownership of such individual or group, but are not deemed to be outstanding for the purpose of computing the percentage ownership of any other person shown in the table. Except as indicated in footnotes to this table, we believe that the stockholders named in this table have sole voting and investment power with respect to all shares of common stock shown to be beneficially owned by them based on information provided to us by these stockholders. Percentage of ownership is based on 38,897,756 shares of common stock outstanding on April 15, 2022. +Shares Beneficially +Owned +Name and Address of Beneficial Owner +Number +Percent +Principal Stockholders +Macquarie Group Limited, 50 Martin Place, Sydney, New South Wales, Australia (1) +3,154,600 +8.1 % +Gilder, Gagnon, Howe & Co. LLC, 475 10 th Avenue, New York, NY 10018 (2) +2,835,999 +7.3 % +Blackrock, Inc., 55 East 52 nd Street, New York, NY 10055 (3) +2,456,075 +6.3 +Directors, Director Nominees and Named Executive Officers +E. Kevin Hrusovsky (4) +1,350,774 +3.4 % +Keith L. Crandell (5) +147,681 +* +Martin D. Madaus, Ph.D. (6) +212,341 +* +Sarah E. Hlavinka (7) +43,763 +* +Paul M. Meister (8) +69,681 +* +Laurie J. Olson (9) +7,655 +* +David R. Walt, Ph.D. (10) +1,310,244 +3.4 % +Masoud Toloue, Ph.D. (11) +16,691 +* +Michael A. Doyle +— +— +John Fry (12) +73,874 +* +Dawn R. Mattoon, Ph.D. (13) +63,258 +* +Shawn Stetson (14) +7,705 +* +Amol Chaubal (15) +** +** +William Geist (16) +** +** +All directors and current executive officers as a group ( 10 persons) (17) +3,232,704 +8.2 % +* +Represents beneficial ownership of less than 1% of the outstanding shares of our common stock. +** +Not known to the company. +(1) +Based on a Schedule 13G filed by Macquarie Group Limited and its affiliates with the SEC on February 11, 2022, which reported ownership as of December 31, 2021. The 3,154,600 shares may be deemed beneficially owned by Macquarie Group Limited due to Macquarie Group Limited’s ownership of Macquarie Bank Limited, Macquarie Investment Management Holdings Inc., Macquarie Investment Management Business Trust, Macquarie Investment Management Global Limited, and Ivy Investment Management Company. +(2) +Based on a Schedule 13G/A filed by Gilder, Gagnon, Howe & Co. LLC (“Gilder Gagnon”) with the SEC on February 14, 2022, which reported ownership as of December 31, 2021. Consists of 2,835,999 shares held in customer accounts over which partners and/or employees of Gilder Gagnon have discretionary authority to dispose of or direct the disposition of the shares. +8 +TABLE OF CONTENTS +(3) +Based on a Schedule 13G/A filed by Blackrock, Inc. with the SEC on February 4, 2022, which reported ownership as of December 31, 2021. Includes shares beneficially owned by BlackRock Advisors, LLC, Aperio Group, LLC, BlackRock (Netherlands) B.V., BlackRock Institutional Trust Company, National Association, BlackRock Asset Management Ireland Limited, BlackRock Financial Management, Inc., BlackRock Asset Management Schweiz AG, BlackRock Investment Management, LLC, BlackRock Investment Management (UK) Limited, BlackRock Asset Management Canada Limited, BlackRock Investment Management (Australia) Limited, BlackRock Fund Advisors, and BlackRock Fund Managers Ltd. The filing noted that BlackRock, Inc. is a parent holding company or control person and claims sole dispositive power for 2,456,075 shares and sole voting power for 2,416,271 shares. +(4) +Consists of 847,762 shares of common stock (which includes 39,815 shares of restricted stock subject to performance-based vesting), 498,876 shares of common stock issuable upon the exercise of stock options exercisable within 60 days of April 15, 2022 and 4,136 shares of common stock issuable upon the vesting of RSUs within 60 days of April 15, 2022 held by Mr. Hrusovsky. +(5) +Consists of 116,081 shares of common stock and 31,600 shares of common stock issuable upon the exercise of stock options exercisable within 60 days of April 15, 2022 held by Mr. Crandell and a trust over which Mr. Crandell has voting and investment power. +(6) +Consists of 15,775 shares of common stock held by Dr. Madaus, 31,600 shares of common stock issuable upon the exercise of stock options exercisable within 60 days of April 15, 2022 held by Dr. Madaus and 164,966 shares of common stock held by a trust for which Dr. Madaus is a trust advisor who shares voting and investment power over the shares held by the trust. +(7) +Consists of 12,623 shares of common stock and 31,140 shares of common stock issuable upon the exercise of stock options exercisable within 60 days of April 15, 2022 held by Ms. Hlavinka. +(8) +Consists of 14,746 shares of common stock and 54,935 shares of common stock issuable upon the exercise of stock options exercisable within 60 days of April 15, 2022 held by Mr. Meister. Does not include 120,035 shares of common stock held by Woburn Abbey March 2021 Trust, as Mr. Meister does not have voting or investment power over the shares held by the trust. +(9) +Consists of 6,142 shares of common stock issuable upon the exercise of stock options exercisable within 60 days of April 15, 2022 and 1,513 shares of common stock issuable upon the vesting of RSUs within 60 days of April 15, 2022 held by Ms. Olson. +(10) +Consists of 1,278,644 shares of common stock and 31,600 shares of common stock issuable upon the exercise of stock options exercisable within 60 days of April 15, 2022 held by Dr. Walt. Does not include 200,684 shares of common stock held by The David R. Walt 2008 Irrevocable Family Trust (the “Walt Trust”), of which Dr. Walt’s spouse is trustee and has sole voting and investment power over the shares held by the Walt Trust. +(11) +Consists of 16,691 shares of common stock issuable upon the vesting of RSUs within 60 days of April 15, 2022 held by Dr. Toloue. +(12) +Consists of 15,930 shares of common stock, 56,392 shares of common stock issuable upon the exercise of stock options exercisable within 60 days of April 15, 2022 and 1,552 shares of common stock issuable upon the vesting of RSUs within 60 days of April 15, 2022 held by Mr. Fry. +(13) +Consists of 27,327 shares of common stock, 34,855 shares of common stock issuable upon the exercise of stock options exercisable within 60 days of April 15, 2022 and 1,076 shares of common stock issuable upon the vesting of RSUs within 60 days of April 15, 2022 held by Dr. Mattoon. +(14) +Consists of 1,196 shares of common stock, 5,991 shares of common stock issuable upon the exercise of stock options exercisable within 60 days of April 15, 2022 and 518 shares of common stock issuable upon the vesting of RSUs within 60 days of April 15, 2022 held by Mr. Stetson. Mr. Stetson served as Interim Chief Financial Officer from May 11, 2021 to July 12, 2021. +(15) +Mr. Chaubal served as our Chief Financial Officer until May 11, 2021. +(16) +Mr. Geist served as our Chief Operating Officer until November 12, 2021. +(17) +See footnotes 4 through 12. +9 +TABLE OF CONTENTS +MANAGEMENT AND CORPORATE GOVERNANCE +The Board of Directors +Our restated certificate of incorporation and our restated bylaws provide that our business is to be managed by or under the direction of our Board of Directors. Our Board of Directors is divided into three classes for purposes of election. One class is elected at each annual meeting of stockholders to serve for a three-year term. Our Board of Directors currently consists of eight members, classified into three classes as follows: (1) Martin D. Madaus, Ph.D. and Laurie J. Olson constitute Class I with a term ending at the 2024 annual meeting; (2) Sarah E. Hlavinka, Masoud Toloue, Ph.D. and David R. Walt, Ph.D. constitute Class II with a term ending at the upcoming 2022 annual meeting; and (3) Keith L. Crandell, E. Kevin Hrusovsky and Paul M. Meister constitute Class III with a term ending at the 2023 annual meeting. +Our Board of Directors accepted the recommendation of the Nominating and Governance Committee and voted to nominate Sarah E. Hlavinka, Masoud Toloue, Ph.D. and David R. Walt, Ph.D for election at the annual meeting for a term of three years to serve until the 2025 annual meeting of stockholders and until their respective successors have been elected and qualified. +Set forth below are the names of the persons nominated as directors and directors whose terms do not expire this year, their ages, their offices in the Company, if any, their principal occupations or employment for at least the past five years, the length of their tenure as directors and the names of other public companies in which such persons hold or have held directorships during the past five years, as of April 15, 2022. Additionally, information about the specific experience, qualifications, attributes or skills that led to our Board of Directors’ conclusion at the time of filing of this proxy statement that each person listed below should serve as a director is set forth below: +Name +Age +Position with the Company +E. Kevin Hrusovsky +60 +Executive Chairman of the Board of Directors +Masoud Toloue, Ph.D. +42 +President and Chief Executive Officer and Director +Keith L. Crandell (2)(3) +62 +Director +Sarah E. Hlavinka (1)(3) +57 +Director +Martin D. Madaus, Ph.D. (1)(3) +62 +Director +Paul M. Meister (1) +69 +Director +Laurie J. Olson (2) +59 +Director +David R. Walt, Ph.D. (2) +69 +Director +(1) +Member of our Audit Committee +(2) +Member of our Compensation Committee +(3) +Member of our Nominating and Governance Committee +Our Board of Directors has reviewed the materiality of any relationship that each of our directors and director nominees has with Quanterix Corporation, either directly or indirectly. Based upon this review, our Board of Directors has determined that the following directors and director nominees are “independent directors” as defined by The Nasdaq Stock Market: Keith L. Crandell, Sarah E. Hlavinka, Martin D. Madaus, Ph.D., Paul M. Meister, Laurie J. Olson and David R. Walt, Ph.D. +E. Kevin Hrusovsky has been a member of our Board of Directors since June 2014. He served as Chairman of the Board from June 2014 through April 2022. He has been the Executive Chairman of the Board since April 2022, previously serving as our President and Chief Executive Officer since January 2015. Prior to joining us, Mr. Hrusovsky served as Senior Vice President of PerkinElmer, Inc., a publicly traded company that produces analytical instruments, genetic testing and diagnostic tools, medical imaging components, software, instruments and consumables for multiple end markets, from February 2012 to May 2013 and served as President of the Life Sciences and Technology business unit of PerkinElmer, Inc. from November 2011 to May 2013. From May 2013 through September 2013, he served as a consultant to PerkinElmer. Previously, Mr. Hrusovsky served as Chief Executive Officer and President of Caliper Life +10 +TABLE OF CONTENTS +Sciences, Inc., a life sciences company that developed and sold lab automation equipment, from July 2003 to November 2011 when it was acquired by PerkinElmer, Inc. Prior to that, he served as Chief Executive Officer and President of Zymark, a company that provided laboratory automation, robotics, and liquid handling solutions, and Director of International Business, Agricultural Chemical Division, and President of the Pharmaceutical Division for FMC Corporation, a publicly traded chemical manufacturing company. He also held several management positions at E.I. DuPont de Nemours, a publicly traded chemical manufacturing company. Mr. Hrusovsky serves on the board of directors of 908 Devices Inc., a publicly traded developer of handheld and desktop mass spectrometry devices, and on the boards of several private companies, including Cellaria, da32 Life Science Life Science Acquisition Corp and Solect Energy Development, LLC. Additionally, he is the founder of the Powering Precision Health Summit, an executive think tank of researchers, scientists, physicians and innovators focused on the latest research on new biomarkers that have the potential to advance personalized medicine. Mr. Hrusovsky also serves on the Educational Board of the Massachusetts Biotech Council, the Advisory Committee for the Center for Biomedical Engineering at Brown University, the Association for Laboratory Automation, the JALA Editorial Board and the Strategy Committee of Children’s Hospital Boston. He formerly served on the boards of SynapDx Corp., SeraCare, Caliper Life Sciences, Xenogen, Alliant Medical Technology, Cell Signaling Technology, Inc. and BioreclamationIVT, LLC. He was selected as the 2013 Entrepreneur of the Year from Ohio State University and holds an Honorary Doctorate degree from Framingham State University for contributions in life sciences and personal medicine. Mr. Hrusovsky has a B.S. in mechanical engineering from Ohio State University and an M.B.A. from Ohio University. Mr. Hrusovsky’s qualifications for service as a member of our Board of Directors include his extensive experience in the life science and technology industries, as well as the perspective and experience he brings as our Executive Chairman and his past service as our President and Chief Executive Officer, which provides our Board with historic knowledge, operational expertise and continuity. +Masoud Toloue, Ph.D. has been a member of our Board of Directors and President and Chief Executive Officer since April 2022. He served as President, Quanterix and Diagnostics from June 2021 to April 2022. Prior to joining us, Dr. Toloue served as Senior Vice President, Diagnostics at PerkinElmer during which time he grew the business to over fifty percent of the company’s total revenue. Prior to this role, Dr. Toloue led PerkinElmer’s Applied Genomics division. Dr. Toloue founded and led the next-generation sequencing business at Bioo Scientific until its acquisition by PerkinElmer in 2016. He also co-founded and led Genohub, where he transformed that company from a supplier of next-generation sequencing matching technology to a leading platform provider for managing sequencing projects globally. Dr. Toloue’s qualifications for service as a member of our Board of Directors include his extensive experience in the life science and diagnostics industries, as well as the perspective he brings as our President and Chief Executive Officer. +Keith L. Crandell has served as a member of our Board of Directors since June 2007. Since July 1994, Mr. Crandell has served as a managing director of ARCH Venture Partners, a venture capital firm focused on early-stage technology companies. He serves on the board of directors of Twist Bioscience Corporation, a publicly traded synthetic biology company, 908 Devices, Inc., a publicly traded developer of handheld and desktop mass spectrometry devices and DA32 Life Science Tech Acquisition Corp., a publicly traded blank check company. From 2007 to 2019, he served on the board of directors of Adesto Technologies Corporation, a publicly traded provider of application-specific and ultra-low power non-volatile memory products. He is also a director of several private companies and he also serves as a director of the Illinois Venture Capital Association. Mr. Crandell has a B.S. degree in chemistry and mathematics from St. Lawrence University, an M.S. degree in chemistry from the University of Texas at Arlington and an M.B.A. from the University of Chicago. Mr. Crandell’s qualifications for service as a member of our Board of Directors include his financial expertise and his substantial experience as an investor in emerging companies. +Sarah E. Hlavinka has served as a member of our Board of Directors since July 2019. Ms. Hlavinka has served as General Counsel of Office Depot, LLC since April 2022. In May 2022, Ms. Hlavinka will become Executive Vice President, Chief Legal Officer and Corporate Secretary of The ODP Corporation, the parent company of Office Depot, LLC and a leading, publicly-traded provider of business services, products and digital workplace technology solutions through an integrated B2B distribution platform. From August 2018 to March 2022, Ms. Hlavinka served as Senior Vice President, General Counsel and Secretary of Itron, Inc., a publicly traded technology and services company focused on critical infrastructure +11 +TABLE OF CONTENTS +solutions. Prior to joining Itron, from January 2017 to July 2018, Ms. Hlavinka served as Executive Vice President, General Counsel and Secretary of Xerox Corporation, a publicly traded document management systems and solutions company. Prior to joining Xerox Corporation, from September 2007 to January 2017, Ms. Hlavinka served as Executive Vice President, General Counsel and Secretary of ABM Industries Incorporated, a publicly traded integrated facility services provider. Additionally, Ms. Hlavinka served as a director of Cigna Life Insurance Company of New York from February 2013 through December 31, 2020. Ms. Hlavinka holds a J.D. from the University of Texas School of Law and a B.A. in history from Texas A&M University. Ms. Hlavinka’s qualifications for service as a member of our Board of Directors include her significant experience as a senior executive of global companies operating in a variety of industries and her substantial expertise in corporate governance, mergers and acquisitions, and risk management. +Martin D. Madaus, Ph.D. has served as a member of our Board of Directors since November 2010. Dr. Madaus previously served as our Executive Chairman from November 2010 to June 2014, as our Chief Executive Officer from October 2011 to July 2012 and as our President from June 2011 to July 2012. From September 2020 to April 2021, he has served as the Chief Operations Officer of Sherlock Biosciences, Inc., a molecular diagnostics company. He also serves as Operating Executive to The Carlyle Group, a multinational private equity, alternative asset management and financial services corporation, since February 2019. From June 2014 to February 2019, Dr. Madaus served as Chairman and Chief Executive Officer at Ortho-Clinical Diagnostics, Inc., a diagnostics company that makes products and diagnostic equipment for blood testing. Previously, Dr. Madaus was the Chairman, President and Chief Executive Officer of Millipore Corporation (MIL), a life sciences company serving the bioscience research and biopharmaceutical manufacturing industry, from January 2005 to July 2010, when Millipore was acquired by Merck KGaA. Dr. Madaus currently serves as a member of the board of directors of the following private biotechnology companies: Ultivue, Inc., a cancer diagnostics company; Emulate, Inc., a leading provider of organ-on-a-chip technology; and Candela Medical, a medical technology company, and Unchained Labs, Inc., a life science equipment provider. Dr. Madaus received a Doctor of Veterinary Medicine from the University of Munich in Germany and a Ph.D. in Veterinary Medicine from the Veterinary School of Hanover in Germany. Dr. Madaus’s qualifications for service as a member of our Board of Directors include his extensive public and private company board experience and his substantial knowledge of and managerial experience in the diagnostics industry. +Paul M. Meister has served as a member of our Board of Directors since September 2013. Mr. Meister is a partner in Novalis LifeSciences — a life science focused venture firm and is Co-Founder, and Chief Executive Officer, of Liberty Lane Partners, LLC, a private investment company with diverse investments in healthcare, technology, and distribution-related industries. Mr. Meister served as President of MacAndrews & Forbes from 2014 to 2018. Mr. Meister also served as Executive Vice Chairman of Revlon, Inc., a leading beauty products company, on an interim basis from January 2018 to November 2018, when the Chief Executive Officer of Revlon, Inc. resigned. Mr. Meister previously served as Chairman and Chief Executive Officer of inVentiv Health (now known as Syneos Health, Inc.), a provider of commercial, consulting, and clinical research services to the pharmaceutical and biotech industries, from 2010 to 2015. Mr. Meister was Chairman of Thermo Fisher Scientific, Inc., a scientific instruments equipment and supplies company, from November 2006 to April 2007. He was previously an executive officer of Fisher Scientific International, Inc, a predecessor of Thermo Fisher Scientific, Inc. from 1991 to 2006. Mr. Meister has served as a director of Aptiv PLC, a leading global technology and mobility company primarily serving the automotive sector, since July 2019, Oaktree Acquisitions Corp II, a company incorporated for the purpose of effecting a business combination with one or more businesses, since 2020, and Amneal Pharmaceuticals, Inc., a global pharmaceutical company, since August 2019. He also previously served as a director of Oaktree Acquisitions Corp from July 2019 to 2020, Scientific Games Corporation, which provides customized, end-to-end solutions to the gaming industry, from 2012 to 2020, LKQ Corporation, a distributor of vehicle products, from 1999 to 2018, vTv Therapeutics, Inc., a clinical-stage biopharmaceutical company, from 2015 to 2018 and Revlon, Inc from 2016-2019. Mr. Meister is Co-Chair of the University of Michigan’s Life Sciences Institute Externa Advisory Board and Chair of the Provost’s Advisory Committee. Mr. Meister has an M.B.A. from Northwestern University and a B.A. from the University of Michigan. Mr. Meister’s qualifications for service as a member of our Board of Directors include his financial and investment expertise and his extensive knowledge of the life sciences industry. +12 +TABLE OF CONTENTS +Laurie J. Olson has served as a member of our Board of Directors since April 2021. Ms. Olson was employed by Pfizer Inc., a research-based, global pharmaceutical company from 1987 to 2018, in a variety of strategy, marketing and commercial roles. Most recently, she served as Pfizer’s Executive Vice President, Strategy and Commercial Operations and a member of Pfizer’s Executive Leadership Team from 2012 to 2018. While at Pfizer, she also served as a member of the Pfizer Board of Directors Science and Technology Committee, and as a member of the company’s Business Development, Portfolio, Disclosure, Diversity, and Compliance Committees. Ms. Olson currently serves as a member of the Board of Directors of Karuna Therapeutics, a publicly traded clinical-stage biopharmaceutical company committed to developing novel therapies for neuropsychiatric disorders. She is also a member of the Board of Trustees at the Mystic Seaport Museum in Mystic, Connecticut. Ms. Olson received her B.A. in economics from State University of New York at Stony Brook and earned her M.B.A. in marketing from Hofstra University. Ms. Olson’s qualifications for service as a member of our Board of Directors include her extensive experience as a pharmaceutical executive and expertise in areas including commercial and corporate strategy, the interface between R&D and commercial organizations, and her strong advocacy for workplace diversity, equity, and inclusion. +David R. Walt, Ph.D. was our founding scientist and has served as a member of our Board of Directors since April 2007. Since 2017, Dr. Walt has served as Hansjörg Wyss Professor of Biologically Inspired Engineering and Professor of Pathology at Harvard Medical School in the Department of Pathology at the Brigham and Women’s Hospital and as a core faculty member of the Wyss Institute for Biologically Inspired Engineering. He is also a Howard Hughes Medical Institute Professor. He previously served as University Professor, Professor of Chemistry, Professor of Biomedical Engineering, Professor of Genetics, Professor of Neuroscience, Professor of Cell and Molecular Biology, and Professor of Oral Medicine at Tufts University, from 1981 to 2017. Dr. Walt was also the founding scientist of Illumina, Inc. and served as a member of its board of directors from 1998 to 2016. He served on the board of directors of Cerulean Pharma Inc. (which was acquired by Daré Bioscience, Inc.) from August 2016 to July 2017. From 2013 to 2021, Dr. Walt served on the board of directors of Exicure, Inc., a publicly traded company that develops therapeutics for immuno-oncology, inflammatory diseases and genetic disorders. Dr. Walt was also a founder and currently serves as a member of the board of directors of Ultivue, Inc., Arbor Biotechnologies, Inc., Sherlock Biosciences, Inc., and Vizgen. He has received numerous national and international awards and honors for his fundamental and applied work in the field of optical sensors, microwell arrays and single molecule detection. He is a member of the U.S. National Academy of Engineering, U.S. National Academy of Medicine, American Academy of Arts and Sciences, a fellow of the American Institute for Medical and Biological Engineering, a fellow of the National Academy of Inventors, and a fellow of the American Association for the Advancement of Science. Dr. Walt has a B.S. in Chemistry from the University of Michigan and a Ph.D. in Chemical Biology from Stony Brook University. Dr. Walt’s qualifications for service as a member of our Board of Directors include his experience in developing life sciences companies and his expertise in chemistry, diagnostics technologies, and biomedical engineering. +There are no family relationships between or among any of our directors or director nominees. The principal occupation and employment during the past five years of each of our directors and director nominees was carried on, in each case except as specifically identified above, with a corporation or organization that is not a parent, subsidiary or other affiliate of us. There is no arrangement or understanding between any of our directors or nominees and any other person or persons pursuant to which he or she is to be selected as a director or nominee. +There are no legal proceedings to which any of our directors is a party adverse to us or any of our subsidiaries or in which any such person has a material interest adverse to us or any of our subsidiaries. +Committees of the Board of Directors and Meetings +Meeting Attendance. During the fiscal year ended December 31, 2021, our Board of Directors met or acted by written consent 16 times. During the fiscal year ended December 31, 2021, the three standing committees of the Board of Directors met or acted by written consent a total of 22 times. No director attended fewer than 75% of the total number of meetings of the Board and of committees of the Board on which such director served during fiscal 2021. Our Board of Directors has adopted a policy under which each member of the Board is encouraged but not required to attend each annual meeting of our stockholders. Three directors attended our virtual 2021 annual meeting of stockholders. +13 +TABLE OF CONTENTS +Audit Committee. Our Audit Committee met or acted by written consent six times during the fiscal year ended December 31, 2021. This committee currently has three members, Paul M. Meister (Chairman), Sarah E. Hlavinka and Martin D. Madaus, Ph.D. Our Audit Committee’s role and responsibilities are set forth in the Audit Committee’s written charter and include: +• +selecting a firm to serve as the independent registered public accounting firm to audit our financial statements; +• +ensuring the independence of the independent registered public accounting firm; +• +discussing the scope and results of the audit with the independent registered public accounting firm, and reviewing, with management and that firm, our interim and year-end operating results; +• +establishing procedures for employees to anonymously submit concerns about questionable accounting or audit matters; +• +considering the effectiveness of our internal controls and, if any, our internal audit function; +• +reviewing material related-party transactions or those that require disclosure; +• +approving or, as permitted, pre-approving all audit and non-audit services to be performed by the independent registered public accounting firm; and +• +preparing the audit committee report, required by SEC rules, which is included in the section of this proxy statement titled, “Report of Audit Committee”. +All members of the Audit Committee satisfy the current independence standards promulgated by the SEC, and by The Nasdaq Stock Market, as such standards apply specifically to members of audit committees. Our Board of Directors has determined that Paul M. Meister is an “audit committee financial expert,” as the SEC has defined that term in Item 407 of Regulation S-K. +A copy of the Audit Committee’s written charter is publicly available on our website at www.quanterix.com . +Compensation Committee. Our Compensation Committee met or acted by written consent ten times during the fiscal year ended December 31, 2021. This committee currently has three members, Keith L. Crandell (Chairman), Laurie J. Olson and David R. Walt, Ph.D. Our Compensation Committee’s role and responsibilities are set forth in the Compensation Committee’s written charter and include: +• +reviewing and approving, or recommending that our Board of Directors approve, the compensation of our executive officers; +• +reviewing and recommending to our Board of Directors the compensation of our directors; +• +reviewing and recommending to our Board of Directors the terms of any compensatory agreements with our executive officers; +• +administering our 2017 Employee, Director and Consultant Equity Incentive Plan (the “2017 Plan”), 2007 Stock Option and Grant Plan, as amended (the “2007 Plan”), and 2017 Employee Stock Purchase Plan (the “ESPP”); +• +reviewing and approving, or making recommendations to our Board of Directors with respect to, incentive compensation and equity plans; +• +reviewing compensation policies and practices for all employees to determine whether such policies and practices create risks that are reasonably likely to have a material adverse effect on the Company; and +• +preparing the compensation committee report, required by SEC rules, which is included in the section of this proxy statement titled, “Compensation Committee Report”. +The Compensation Committee is also responsible for the determination of the compensation of our Chief Executive Officer, and conducts its decision making process with respect to that issue without the Chief Executive Officer present. Our Board of Directors has determined that all members of the Compensation Committee qualify as “independent” under the definition promulgated by The Nasdaq Stock Market. +14 +TABLE OF CONTENTS +The Compensation Committee has the authority to retain or obtain the advice of such compensation consultants, legal counsel, experts and other advisors as it may deem appropriate in its sole discretion. The Compensation Committee is directly responsible for the appointment, compensation and oversight of its consultants, legal counsel, experts and advisors and has sole authority to approve their fees and retention terms, and the Company will provide funding for such fees and related expenses. +The Compensation Committee engaged Pay Governance, LLC as an independent advisor to the Compensation Committee providing executive compensation consulting services for the fiscal year ended December 31, 2021. Pay Governance was engaged by and reports to the Compensation Committee. Pay Governance did not provide any services to the Company other than executive compensation consulting services during the fiscal year ended December 31, 2021. +A copy of the Compensation Committee’s written charter is publicly available on our website at www.quanterix.com . +Nominating and Governance Committee. Our Nominating and Governance Committee (the “Nominating Committee”), met or acted by written consent six times during the fiscal year ended December 31, 2021. This committee has three members, Martin D. Madaus, Ph.D. (Chairman), Keith L. Crandell and Sarah E. Hlavinka. Our Board of Directors has determined that all members of the Nominating Committee qualify as independent under the definition promulgated by The Nasdaq Stock Market. The Nominating Committee’s responsibilities are set forth in the Nominating Committee’s written charter and include: +• +identifying and recommending candidates for membership on our Board of Directors; +• +recommending directors to serve on Board committees; +• +reviewing and recommending our corporate governance guidelines and policies; +• +reviewing proposed waivers of the code of conduct for directors and executive officers; +• +evaluating, and overseeing the process of evaluating, the performance of our Board of Directors and individual directors; and +• +assisting our Board of Directors on corporate governance matters. +Generally, our Nominating Committee considers candidates recommended by stockholders as well as from other sources such as other directors or officers, third-party search firms or other appropriate sources. Once identified, the Nominating Committee will evaluate a candidate’s qualifications in accordance with our Nominating and Governance Committee Policy Regarding Qualifications of Directors appended to our Nominating Committee’s written charter. Threshold criteria include: personal integrity and sound judgment, business and professional skills and experience, independence, knowledge of our industry, possible conflicts of interest, diversity, the extent to which the candidate would fill a present need on the Board of Directors, and concern for the long-term interests of our stockholders. Our Nominating Committee has not adopted a formal diversity policy in connection with the consideration of director nominations or the selection of nominees. However, the Nominating Committee will consider issues of diversity among its members in identifying and considering nominees for director, and strive where appropriate to achieve a diverse balance of backgrounds, perspectives, experience, age, gender, ethnicity and country of citizenship on the Board and its committees. +If a stockholder wishes to propose a candidate for consideration as a nominee for election to the Board of Directors, it must follow the procedures described in our restated bylaws and in “Stockholder Proposals and Nominations for Director” at the end of this proxy statement. In general, persons recommended by stockholders will be considered in accordance with our Policy on Shareholder Recommendation of Candidates for Election as Directors appended to our Nominating Committee’s written charter. Any such recommendation should be made in writing to the Nominating Committee, care of our Corporate Secretary at our principal office and should be accompanied by the following information concerning each recommending stockholder and the beneficial owner, if any, on whose behalf the nomination is made: +• +all information relating to such person that would be required to be disclosed in a proxy statement; +15 +TABLE OF CONTENTS +• +certain biographical and share ownership information about the stockholder and any other proponent, including a description of any derivative transactions in our securities; +• +a description of certain arrangements and understandings between the proposing stockholder and any beneficial owner and any other person in connection with such stockholder nomination; and +• +a statement whether or not either such stockholder or beneficial owner intends to deliver a proxy statement and form of proxy to holders of voting shares sufficient to carry the proposal. +The recommendation must also be accompanied by the following information concerning the proposed nominee: +• +certain biographical information concerning the proposed nominee; +• +all information concerning the proposed nominee required to be disclosed in solicitations of proxies for election of directors; +• +certain information about any other security holder of the Company who supports the proposed nominee; +• +a description of all relationships between the proposed nominee and the recommending stockholder or any beneficial owner, including any agreements or understandings regarding the nomination; and +• +additional disclosures relating to stockholder nominees for directors, including completed questionnaires and disclosures required by our restated bylaws. +A copy of the Nominating Committee’s written charter, including its appendices, is publicly available on our website at www.quanterix.com . +Compensation Committee Interlocks and Insider Participation +Our Compensation Committee has three members, Keith L. Crandell (Chairman), Laurie J. Olson and and David R. Walt, Ph.D. During 2021, our former director, Marijn Dekkers, Ph.D., also served on the Compensation Committee. None of the members of our Compensation Committee has at any time during the prior three years been one of our officers or employees. None of our executive officers currently serves, or in the past fiscal year has served, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on our Board of Directors or Compensation Committee. For a description of any transactions between us and members of our Compensation Committee and affiliates of such members, please see “Certain Relationships and Related Person Transactions.” +Board Leadership Structure and Role in Risk Oversight +Our Board of Directors does not have a policy regarding the separation of the roles of Chief Executive Officer and Chairman of the Board of Directors, as our Board of Directors believes it is in the best interest of the Company to make that determination based on the position and direction of the Company and the membership of the Board of Directors. As part of our leadership sucession plan announced in March, 2022, the Board announced that Kevin Hrusovsky, our former Chief Executive Officer will continue to serve as Executive Chairman of the Board of Directors following his departure as Chief Executive Officer. In view of his in-depth knowledge of our strategy, operations and business, our Board of Directors believes that Mr. Hrusovsky’s continued service in the role will greatly enhance the decision making processes of our Board of Directors. Mr. Hrusovsky’s service in the role of Executive Chairman also brings important continuity to our Board of Directors.We have a strong governance structure in place, including independent directors, to ensure the powers and duties of the dual role are handled responsibly. Martin D. Madaus, Ph.D. serves as our lead independent director. +The Executive Chairman of the Board of Directors, the lead independent director, and the other members of the Board of Directors work in concert to provide oversight of our management and affairs. Our Board of Directors encourages communication among its members and between management and the Board of Directors to facilitate productive working relationships. Working with the other members of the +16 +TABLE OF CONTENTS +Board of Directors, our Executive Chairman strives to ensure that there is an appropriate balance and focus among key Board responsibilities such as strategic development, review of operations and risk oversight. +Risk is inherent with every business, and how well a business manages risk can ultimately determine its success. The Board oversees our risk management processes directly and through its committees. Our management is responsible for risk management on a day-to-day basis. The role of our Board and its committees is to oversee the risk management activities of management. They fulfill this duty by discussing with management the policies and practices utilized by management in assessing and managing risks and providing input on those policies and practices. Members of our senior management team attend our quarterly Board meetings and are available to address any questions or concerns raised by the Board on risk-management and any other matters. In addition, the Board regularly receives reports on strategic matters involving our business. Our Audit Committee oversees risk management activities related to financial controls and legal and compliance risks. Our Compensation Committee oversees risk management activities relating to our compensation policies and practices, and our Nominating and Corporate Governance Committee oversees risk management activities relating to Board composition and governance-related matters. Each committee reports to the full Board on a regular basis, and provides reports with respect to the committee’s risk oversight activities as appropriate. +Compensation Risk Assessment +Following a review of our existing compensation policies, including those relating to our named executive officers and to our employees more generally, our Compensation Committee believes that risks arising from our employee compensation policies and practices are not reasonably likely to have a material adverse effect on the Company. In reaching this conclusion, our Compensation Committee believes that compensation-related risk is limited by a number of factors, including the following: +• +Our compensation packages include multiple elements, including fixed and variable compensation, the amount and mix of which is appropriate to an employee’s level and role in the Company. +• +Our variable compensation programs employ a number of different performance metrics (such as metrics that are based on revenue, gross margin, corporate strategic objectives, and individual objectives) that are aligned with our near term and strategic objectives and the interests of our stockholders. We use performance targets that we believe are somewhat aggressive yet achievable without undue risk taking. +• +Our long-term incentive equity awards are designed to align the interests of our management with the interests of our stockholders. +• +We limit the payouts under our annual cash incentive bonus programs to an amount that is appropriate to the recipient’s role in the company. +We believe that, taken as a whole, the various elements of our compensation packages mitigate compensation-related risk by reducing the focus on any single compensation element or performance metric, by encouraging our employees to consider both long and short term goals that are aligned with the interests of our stockholders, and by discouraging excessive risk in order to reach performance goals or to achieve excessive payouts. +Stockholder Communications to the Board +Generally, stockholders who have questions or concerns should contact our Investor Relations department at https://ir.quanterix.com/investor-resources/contact-ir . However, any stockholders who wish to address questions regarding our business directly with our Board of Directors, or any individual director, should direct his or her questions in writing to the Chairman of the Board at 900 Middlesex Turnpike, Building 1, Billerica, Massachusetts 01821 or using the “IR Contacts” page of our website at https://ir.quanterix.com/investor-resources/contact-ir . Communications will be distributed to the Board of Directors, or to any individual director or directors as appropriate, depending on the facts and circumstances outlined in the communications. In general, communications relating to corporate governance and corporate strategy are more likely to be forwarded than communications relating to personal matters and matters as to which we tend to receive repetitive or duplicative communications. +17 +TABLE OF CONTENTS +Executive Officers +The following table sets forth certain information regarding our executive officers as of April 25, 2022. We have entered into agreements with our executive officers, and all of them are at-will employees. +Name +Age +Position(s) with the Company +E. Kevin Hrusovsky +60 +Executive Chairman +Masoud Toloue, Ph.D. +42 +President and Chief Executive Officer +Michael A. Doyle +66 +Chief Financial Officer +John Fry +60 +General Counsel and Secretary +For more information about Mr. Hrusovsky and Dr. Toloue, please refer to “Management and Corporate Governance — Board of Directors” above. +Michael Doyle has been our Chief Financial Officer since July 2021. From September 2007 to April 2021, he served as Chief Financial Officer at Forrester Research, a publicly-traded technology research and consulting company. Prior to Forrester, Mr. Doyle was CFO of EasyLink Services Corporation, a specialty telecommunications provider. Mr. Doyle has over 40 years of finance experience in a variety of companies including Pepsico, Allied Signal, and Dun & Bradstreet. Mr. Doyle holds a BBA in Finance from the University of Notre Dame and a MBA from New York University. +John Fry has been our General Counsel and Secretary since June 2019. Prior to joining us, Mr. Fry served as Senior Vice President, General Counsel, and Secretary of Analogic Corporation, a global medical and security technology company, from 2007 to 2018. From 2005 to 2007, he was a principal of the law firm Driggs, Hogg, & Fry Co., L.P.A., where his practice focused primarily on technology and intellectual property law with principal clients including global multinationals in the medical, consumer electronics and industrial automation industries. From 1995 to April 2005, he held various legal positions at Philips Medical Systems (formerly Marconi Medical Systems and Picker International), including Senior Corporate Counsel and Intellectual Property Manager and counsel to Philips’ computed tomography business. He began his career as an electrical engineer and engineering manager and is a named inventor on ten U.S. patents. Mr. Fry holds a Juris Doctor degree from Cleveland-Marshall College of Law and M.S. and B.S. degrees in electrical engineering from Case Western Reserve University. +18 +TABLE OF CONTENTS +COMPENSATION DISCUSSION AND ANALYSIS +This Compensation Discussion and Analysis describes the principal components of the compensation program for our named executive officers. It should be read in conjunction with the other information contained in this proxy statement. The following executives were our named executive officers for the fiscal year ended December 31, 2021 who were serving at year-end: +Name +Title as of December 31, 2021 +E. Kevin Hrusovsky +President and Chief Executive Officer +Masoud Toloue +President of Quanterix and Diagnostics +Michael Doyle +Chief Financial Officer and Treasurer +John Fry +General Counsel and Secretary +Dawn Mattoon +Senior Vice President, Diagnostics +In addition, our named executive officers for 2021 include Amol Chaubal, who served as our Chief Financial Officer and Treasurer until his resignation on May 11, 2021; Shawn Stetson, who served as our Interim Chief Financial Officer and Treasurer effective upon Mr. Chaubal’s resignation until the appointment of Mr. Doyle on July 12, 2021; and William Geist, who served as our Chief Operating Officer until his separation from the Company on November 12, 2021. +Executive Summary +Fiscal Year 2021 Performance. Our 2021 performance was characterized by robust growth as we continue to advance our ultrasensitive Simoa biomarker detection technology across multiple therapeutic areas. Highlights from 2021 included: +• +Product and Service revenue of $105.3 million, an increase of 53% over the prior year; +• +Product revenue of $81.1 million, an increase of 84% over the prior year; +• +Service and other revenue of $23.6 million, in line with the prior year; +• +Gross margin of 55.8%; +• +Raised $287.5 million in gross proceeds through a successful follow-on offering completed in the first quarter of 2021, with nearly $400 million in cash, cash equivalents, and restricted cash on the balance sheet as of year-end; +• +Our Simoa phospho-Tau 181 (pTau-181) blood test was granted Breakthrough Device designation by the U.S. Food and Drug Administration (the “FDA”) as an aid in diagnostic evaluation of Alzheimer’s disease; +• +The Emergency Use Authorization (the “EUA”) label for our SARS-CoV-2 N Protein Antigen Test was expanded to include testing with nasal swab and saliva samples, and for asymptomatic serial testing with nasal swab samples; +• +Our Simoa HD-X technology and assays were used to measure pTau-217 using antibodies developed by Eli Lilly and Company for its Phase 2 TRAILBLAZER-ALZ study; +• +Instrument installations increased by 32% in 2021 to an aggregate of 708 at year-end; and +• +We welcomed Dr. Toloue, an experienced executive with a high growth track record, as our President of Quanterix and Diagnostics, and after year-end, announced an executive transition in which Mr. Hrusovsky became Executive Chairman and Dr. Toloue became President and Chief Executive Officer on April 25, 2022. +19 +TABLE OF CONTENTS +Compensation Governance Highlights. +What We Do: +What We Don’t Do: +Reward performance according to pre-established performance goals +Pay cash incentives if performance levels fall below pre-determined thresholds +Provide a meaningful portion of the compensation of our Chief Executive Officer and Named Executive Officers through performance-based or at-risk compensation +Permit hedging or pledging of our stock +Establish stock ownership guidelines for our executive officers +Enter into employment agreements that provide for automatic compensation increases or equity grants +The Compensation Committee retains an independent compensation consultant +Provide single trigger change of control benefits +Beginning in 2022, we plan to hold an annual advisory vote on executive compensation +Provide for excessive cash severance +Cap payouts under our compensation plans to discourage inappropriate risk taking by our executives +Provide our executives with golden parachute tax gross-ups +Provide for double-trigger change in control severance provisions +Maintain executive pension plans or other retirement programs that are not generally available to all employees +Compensation Program Overview. Our Compensation Committee strives to design and implement executive compensation programs that attract, retain, and motivate our executives, while aligning our executives’ interests with our business strategy and the interests of our stockholders. +The compensation of our named executive officers in 2021 consisted of three main elements: +Element +Award Vehicle +Guaranteed +vs. At-Risk +Performance +vs. Time-Based +Base Salary +Cash +Guaranteed +Not applicable +Annual Cash Incentive Bonus +Cash +At-Risk +Performance-Based +Long-Term Incentive Equity +Restricted Stock Units (“RSUs”) and Stock Options +At-Risk +Time-Based +2021 Target Pay Mix +Consistent with our philosophy of aligning executive compensation with our short- and long-term performance, and to foster alignment with stockholder interests, our compensation programs are designed to provide a mix of compensation elements. Although we do not have a pre-established policy or target for allocating between the various compensation elements, the allocation is influenced by data from our compensation peer group, our short- and long- term objectives, and factors specific to individual executives. +The following chart depicts the allocation of the compensation elements of our Chief Executive Officer in 2021: +20 +TABLE OF CONTENTS +Notes: The data above reflects the annualized base salary, target amounts for annual cash incentive awards, and value of long term incentive equity awards. It does not reflect the amounts earned or paid out. +Stockholder Advisory Vote on Executive Compensation +Because we were an Emerging Growth Company under SEC rules until December 31, 2021, we have not previously held a non-binding stockholder advisory vote on the compensation of our named executive officers (which we refer to as a Say-on-Pay vote). As described elsewhere in this proxy statement, we +will hold a Say-on-Pay vote with respect to the 2021 compensation of our named executive officers at the Annual Meeting. We also intend to seek Say-on-Pay votes on an annual basis going forward. See “Proposal 2 — Advisory Vote on Approval of Executive Compensation as Disclosed in this Proxy Statement” and “Proposal 3 — Advisory Vote on Approval of the Frequency of Holding an Advisory Vote on the Compensation of our Named Executive Officers” for more information. We value the opinions of our stockholders and will consider the outcome of Say-on-Pay votes when making compensation decisions for our executive officers. +Compensation Overview +Compensation Objectives and Philosophy. The primary objectives of our executive compensation programs are to: +• +attract, retain and motivate the best possible executive talent; +• +ensure executive compensation is aligned with our corporate strategies and business objectives; +• +promote the achievement of key strategic and financial performance measures by linking incentive-based awards to the achievement of measurable corporate and individual performance goals; and +• +align executives’ incentives with the creation of stockholder value. +To achieve these objectives, the Compensation Committee periodically evaluates our executive compensation programs and seeks to set compensation at levels the Compensation Committee believes are necessary to allow us to compete for executive talent with other companies in our industry. +Compensation Process +Role and Authority of the Compensation Committee . The Compensation Committee oversees our executive compensation programs. In this role, the Compensation Committee reviews and approves the compensation of our executive officers. Additional information about the Compensation Committee, including its composition and responsibilities, can be found starting on page 14 of this proxy statement. The Compensation Committee’s practice has been to establish fiscal year base salaries, and to approve annual and long-term incentive awards, on an annual basis. From time-to-time, the Compensation Committee makes other adjustments to individual compensation arrangements due to promotions, changes of responsibilities, or other appropriate circumstances. +Under its charter, the Compensation Committee has delegated authority to award equity grants to the Equity Award Subcommittee of the Compensation Committee (which we refer to as the Equity Award +21 +TABLE OF CONTENTS +Subcommittee). The Equity Award Subcommittee currently consists of Mr. Crandell and Ms. Olson, both of whom qualify as independent directors and non-employee directors under applicable rules. Dr. Walt is not included as a member of the Equity Award Subcommittee in view of certain transactions disclosed under “Certain Relationships and Related Person Transactions” below. +Role of Compensation Consultants . The Compensation Committee retained Pay Governance, LLC (which we refer to as PayGov), as the Compensation Committee’s independent compensation advisor for 2021. Services provided by PayGov included assistance in reviewing trends in executive compensation, selecting our compensation peer group, and designing our executive compensation programs. PayGov also assisted the Compensation Committee in obtaining compensation benchmark data and establishing the target compensation levels of our executive officers. PayGov provides no services to the Company other than those performed on behalf of the Committee. The Compensation Committee considers the independence of its compensation consultant on an annual basis. +Role of Management . The Compensation Committee receives input from our Chief Executive Officer and other members of our senior management team with respect to compensation programs for our executives. The Compensation Committee also receives input from our Chief Executive Officer on the performance of our other executives and on compensation decisions for those executives. The Compensation Committee considers, but is not bound by and does not always accept, the recommendations of our Chief Executive Officer or the other members of our management team with respect to compensation matters. While our Chief Executive Officer and other members of our senior management team typically attend Compensation Committee meetings, the Compensation Committee regularly meets in executive session without management present. Our Chief Executive Officer is not present during voting or deliberations on his compensation. The Compensation Committee also makes compensation decisions with respect to our other executives without them present. +Bases for Our Compensation Policies and Decisions +As a general guideline, the Compensation Committee seeks to establish the target compensation of our executive officers at approximately the median of our peers, assuming that our Company meets the performance targets established for incentive-based programs. An individual executive’s target compensation may be higher or lower than this guideline based on his or her particular background, experience and performance, market factors, and internal equity. These factors are weighed by the Compensation Committee in its judgment, and no one factor takes precedence over the others. +In determining our compensation peer group, the Compensation Committee selects companies that are similar to our Company based on criteria such as industry, market capitalization, revenue and revenue growth, and number of employees. In establishing the fiscal 2021 compensation of our executive officers, the Compensation Committee reviewed our compensation peer group with the assistance of PayGov. The companies in our fiscal 2021 peer group were as follows: +Axonics Modulation Technologies, Inc. +Luminex Corporation +CareDx, Inc. +Meridian Bioscience, Inc. +Castle Biosciences, Inc. +Nanostring Technologies, Inc. +Codexis, Inc. +Natera Inc. +Cryoport Systems, Inc. +Pacific Biosystems of California, Inc. +Fluidigm Corporation +Personalis, Inc. +GenMark Diagnostics, Inc. +Twist Bioscience Corporation +Heska Corporation +Veracyte, Inc. +Elements of our Compensation Program +The primary elements of our executive compensation program are: +• +Base salary; +• +Annual Cash Incentive Bonus Programs; and +22 +TABLE OF CONTENTS +• +Long Term Incentive Equity Programs. +The Compensation Committee has not adopted a formal policy for allocating between short- and long-term compensation, between cash and non-cash compensation, or among the different forms of non-cash compensation. Instead, the Compensation Committee, after reviewing information provided by its compensation consultant and other relevant information, determines what it believes to be the appropriate level and mix of compensation components. +Base Salary +Base salaries provide fixed compensation to our executives. Generally, we believe that executive base salaries should be competitive with salaries for executives in similar positions at comparable companies, including those in our compensation peer group. Base salaries are reviewed at least annually by the Compensation Committee and are adjusted from time to time to realign salaries with market levels after considering factors such as individual roles and responsibilities, performance, experience, market conditions, and information from our compensation consultant. +The 2020 and 2021 base salaries for our named executive officers for the 2021 fiscal year were as follows: +Executive +2020 Base Salary +2021 Base Salary +% Change +E. Kevin Hrusovsky +$ +552,000 +$ +600,000 +9 % +Masoud Toloue (1) +— +$ +525,000 +— +Michael Doyle (2) +— +$ +415,000 +— +John Fry +$ +354,000 +$ +364,000 +3 % +Dawn Mattoon +$ +330,000 +$ +345,000 +5 % +Amol Chaubal (3) +$ +371,000 +$ +415,000 +12 % +Shawn Stetson (4) +$ +198,000 +$ +222,390 +12 % +William Geist (5) +$ +400,000 +$ +400,000 +0 % +(1) +Dr. Toloue joined the Company as President of Quanterix and Diagnostics on June 9, 2021 and became President and Chief Executive Officer on April 25, 2022. +(2) +Mr. Doyle joined the Company as Chief Financial Officer and Treasurer on July 12, 2021. +(3) +Mr. Chaubal served as our Chief Financial Officer and Treasurer until his resignation on May 11, 2021. +(4) +Mr. Stetson served as our Interim Chief Financial Officer and Treasurer from May 11, 2021 through July 12, 2021. Mr. Stetson’s initial annual base salary for 2020 is reflected in the table above. Mr. Stetson’s 2020 base salary was increased to $213,837 in connection with a promotion to Senior Director and Corporate Controller on July 1, 2020. +(5) +Mr. Geist served as our Chief Operating Officer until his separation from the Company on November 12, 2021. +2021 Annual Cash Incentive Bonus Program +Our 2021 Annual Cash Incentive Bonus Program was designed to encourage our executives, including our named executive officers, to achieve specified corporate and individual performance objectives. The annual cash incentive bonus program emphasizes pay for performance and is intended to align executive compensation with the achievement of specified operating results. +The structure of the 2021 Annual Cash Incentive Bonus Program was as follows: +23 +TABLE OF CONTENTS +For each of our named executive officers, the target award was multiplied by a corporate performance factor and an individual performance factor to arrive at the actual award. +2021 Annual Cash Incentive Bonus Program Target Awards . The Compensation Committee sets individual target awards expressed as a percentage of each participant’s annual base salary earned during the year, using the criteria described above for annual base salary. The target awards are reviewed by the Compensation Committee each year, taking into account market data and annual cash incentive levels for comparable positions at companies in our compensation peer group. For the 2021 annual cash incentive bonus program, the Compensation Committee determined that the target incentive opportunities for our named executive officers other than Dr. Mattoon and Mr. Chaubal should not change from the prior year. The target incentive opportunities for Dr. Mattoon and Mr. Chaubal were increased from 45% to 50% and 45% to 55%, respectively, to be more competitive with the market in which the Company recruits for executive talent and with peer companies. The target awards for Dr. Toloue and Mr. Doyle were established in connection with the commencement of their employment. +Target Awards for our named executive officers for the 2021 fiscal year were established as follows: +Executive +2020 Target +Award (% of Base +Salary Earned) +2021 Target +Award (% of Base +Salary Earned) +E. Kevin Hrusovsky +100 % +100 % +Masoud Toloue (1) +— +100 % +Michael Doyle (2) +— +50 % +John Fry +50 % +50 % +Dawn Mattoon +45 % +50 % +Amol Chaubal (3) +45 % +55 % +Shawn Stetson (4) +20 % +20 % +William Geist (5) +50 % +50 % +(1) +Dr. Toloue joined the Company as President of Quanterix and Diagnostics on June 9, 2021 and became President and Chief Executive Officer on April 25, 2022. +(2) +Mr. Doyle joined the Company as Chief Financial Officer and Treasurer on July 12, 2021. +(3) +Mr. Chaubal served as our Chief Financial Officer and Treasurer until his resignation on May 11, 2021. +24 +TABLE OF CONTENTS +(4) +Mr. Stetson served as our Interim Chief Financial Officer and Treasurer from May 11, 2021 through July 12, 2021. +(5) +Mr. Geist served as our Chief Operating Officer until his separation from the Company on November 12, 2021. +2021 Annual Cash Incentive Bonus Program Corporate Performance Factor . The corporate performance factor was determined as the weighted average of 2021 revenue and gross margin for the Company’s research business (excluding extraordinary items) and corporate strategic objectives as established in connection with the adoption of the program on April 6, 2021. Revenue, gross margin, and strategic objectives contributed 60%, 20%, and 20%, respectively, toward the corporate performance factor, and each ranged between 0.5x for a threshold level of achievement and 1.5x for a maximum level of achievement. +Performance factors were calculated on a sliding scale between the threshold, target, and maximum values, as applicable. +The Corporate Performance Factor included strategic objectives related to: +• +Regulatory approvals and advancement of our proprietary biomarker technology related to our neuro diagnostics business; +• +Label expansion on the EUAs for the Company’s COVID-19 antigen test; +• +Development of the Company’s higher sensitivity instrument platform; and +• +Conversion of existing customers to our HD-X instrument platform. +The neuro diagnostics objective was exceeded, the objectives related to the Company’s COVID-19 assays and higher sensitivity instrument platform were met, and the objective related to customer conversion was not satisfied. +The threshold, target, and maximum goals and the associated payout factors for each performance metric, and the actual performance and performance factors with respect to each such metric as applicable to our named executive officers were as follows: +Weight +Threshold +(0.5x) +Target +(1.0x) +Maximum +(1.5x) +Actual +Measure +Weighted Payout +Revenue (1) +60% +$91.8 million +$110.2 million +$128.6 million +$105.3 million +0.87 +0.522 +Gross Margin (1) +20% +52% +56% +60% +55.4% +0.92 +0.185 +Strategic Objectives +20% +2 of 4 +achieved +4 of 4 +achieved +All 4 achieved +and 3 exceed +expectations +3 of 4 +achieved, 1 +exceeded +expectations +0.75 +0.150 +Total +100% +0.86  +As Adjusted +1.0   +(1) +Revenue and gross margin for the Company’s research business, excluding extraordinary items consisting solely of $5.3 million in revenue received in connection with the Rapid Acceleration of Diagnostics (RADx) contract. +The Compensation Committee retained the authority to adjust targets, performance factors and performance awards to take into account other factors such as acquisitions/divestitures, capital raises, peer industry performance and other relevant factors as determined by the Compensation Committee in its sole discretion. In February 2022, the Compensation Committee considered the Company’s performance in 2021, including its performance against the goals and objectives established in connection with the 2021 Annual Cash Incentive Bonus Program described above, as well as other achievements during the year. These other achievements included our successful capital raise, revenue under a contract for which performance had been substantially completed in 2021 but was not recognized until 2022, FDA’s Breakthrough Device +25 +TABLE OF CONTENTS +Designation for our pTau-181 assay, and the strengthening of our management team. Following its review of these other achievements and the Company’s overall positive performance during 2021, the Compensation Committee adjusted the Corporate Performance Factor from 0.86x to 1.0x. +2021 Annual Cash Incentive Bonus Program Individual Performance Factor . The Individual Performance Factor ranged from 0.9x for a minimum level of achievement to 1.1x for a maximum level of achievement. The individual performance factors could not be greater than 1.0x if the corporate performance factor was below 1.0x. Under the terms of the program, the individual performance factor for Mr. Hrusovsky, then our Chief Executive Officer, was fixed at 1.0x. Each of our named executive officers was assigned personal objectives designed to support our corporate goals and objectives and to be consistent with the executive’s roles and responsibilities. +The Individual Performance Factor for each of our named executive officers other than Mr. Stetson was determined by the Compensation Committee based on its assessment of the executive’s individual performance, taking into account the executive’s personal objectives and the recommendation of our Chief Executive Officer (for executives other than himself). For 2021, based on its review of our named executive officers’ respective individual performance, the Compensation Committee established the Personal Performance Factors for our named executive officers as follows: Dr. Toloue 1.0x, Mr. Doyle 1.0x, Mr. Fry 0.95x, and Dr. Mattoon 1.1x. Mr. Doyle established the Personal Performance Factor for Mr. Stetson as 1.05x. +2021 Annual Cash Incentive Program Actual Awards Based on the above, our named executive officers received cash payouts under our 2021 Annual Cash Incentive Bonus Program as follows. Payments were determined based on each individual executive’s base salary earned in 2021: +Executive +Base Salary +Earned in 2021 +($) (1) +Target Award +(% of Base Salary) +Corporate +Performance +Factor +Individual +Performance +Factor +Payment ($) +Kevin Hrusovsky +596,594 +100 % +1.0x +1.0x +596,594 +Masoud Toloue (2) +298,846 +100 % +1.0x +1.0x +298,846 +Michael Doyle (3) +199,519 +50 % +1.0x +1.0x +99,760 +John Fry +364,160 +50 % +1.0x +0.95x +172,976 +Dawn Mattoon +344,491 +50 % +1.0x +1.1x +189,470 +Shawn Stetson (4) +222,226 +20 % +1.0x +1.05x +46,667 +(1) +Represents base salary earned for service in calendar year 2021. +(2) +Dr. Toloue joined the Company as President of Quanterix and Diagnostics on June 9, 2021. Dr. Toloue’s bonus for 2021 was prorated based on his actual base salary earned in 2021. +(3) +Mr. Doyle joined the Company as Chief Financial Officer and Treasurer on July 12, 2021. Mr. Doyle’s bonus for 2021 was prorated based on his actual base salary earned in 2021. +(4) +Mr. Stetson served as our Interim Chief Financial Officer and Treasurer from May 11, 2021 through July 12, 2021. +Messrs. Chaubal and Geist did not receive payments under the 2021 Annual Cash Incentive Bonus Program because they left the Company before year-end. +2021 Long Term Incentive Equity Program +A significant portion of our executive compensation is delivered in the form of long-term equity incentive awards. We believe that equity-based grants provide our executives with a strong link to our long-term performance, create an ownership culture and help to align the interests of our executives and our stockholders. In addition, the vesting feature of the equity grants furthers our goal of executive retention by providing an incentive to our executives to remain in our employ during the vesting period. All grants of equity-based awards to our executives are approved by the Equity Award Subcommittee of the Compensation Committee, and are made pursuant to our 2017 Employee, Director and Consultant Equity +26 +TABLE OF CONTENTS +Incentive Plan. In determining the size of equity-based awards to our executives, the Equity Award Subcommittee considers factors such as scope of responsibility, the applicable executive’s performance, the amount of equity previously awarded to the executive, the vesting of such awards, the recommendations of our Chief Executive Officer and market data provided by the Compensation Committee’s independent consultant. +We have historically granted equity awards in the form of stock options and RSUs. We believe that stock options, which are granted with an exercise price equal to the fair market value of our common stock on the grant date, provide an appropriate long-term incentive for our executives because stock options reward our executives only to the extent our stock price increases over time. Likewise, we believe that RSUs, the value of which tends to be subject to less variation than stock options, encourage our executives to take actions which foster long-term stock price appreciation while also fostering retention. +The Equity Award Subcommittee approved 2021 Long Term Incentive Equity awards for our named executive officers other than Mr. Stetson on February 8, 2021 and for Mr. Stetson on February 10, 2021, as set forth in the following table: +Executive +2020 +Award +Value ($) +2021 Award +Value ($) +Number of +Stock Options +Number of +RSUs +Kevin Hrusovsky +$ +2,100,000 +$ +3,000,000 +42,925 +18,397 +Masoud Toloue (1) +— +— +Michael Doyle (2) +— +— +John Fry +$ +600,000 +$ +600,000 +8,585 +3,679 +Dawn Mattoon +$ +600,000 +$ +600,000 +8,585 +3,679 +Amol Chaubal (3) +$ +500,000 +$ +944,000 +13,507 +5,789 +Shawn Stetson (4) +$ +55,000 +$ +75,000 +831 +554 +William Geist (5) +— +$ +800,000 +11,447 +4,906 +(1) +Dr. Toloue joined the Company as President of Quanterix and Diagnostics on June 9, 2021 and received a sign-on incentive equity award as described below. Dr. Toloue did not receive an award under the 2021 Long Term Incentive Equity Award Program. +(2) +Mr. Doyle joined the Company as Chief Financial Officer and Treasurer on July 12, 2021 and received a sign-on incentive equity award as described below. Mr. Doyle did not receive an award under the 2021 Long Term Incentive Equity Award Program. +(3) +Mr. Chaubal served as our Chief Financial Officer and Treasurer until his resignation on May 11, 2021. +(4) +Mr. Stetson served our Interim Chief Financial Officer and Treasurer from May 11, 2021 through July 12, 2021. +(5) +Mr. Geist served as our Chief Operating Officer until his separation from the Company on November 12, 2021. +The stock options and RSUs granted under the 2021 Long Term Incentive Equity Program vest over a four-year period, with one-fourth of each of the stock options and RSUs vesting on the first anniversary of the grant date and remainder vesting ratably on a monthly basis over the next three years, provided the recipient remains with the Company through the applicable vesting date. Stock options were valued according to their Black-Scholes valuation as of the grant date. For our named executive officers other than Mr. Stetson, the number of stock options and RSUs awarded was determined on a 70% Option / 30% RSU unit ratio. For Mr. Stetson, the number of stock options and RSUs awarded was determined on a 60% Option / 40% RSU unit ratio. The Committee believes that the 70% / 30% unit ratio provides an appropriate balance of incentives for our senior executives, whereas a lower percentage of stock options is appropriate for lower levels in the organization. +27 +TABLE OF CONTENTS +The 2021 Long Term Incentive Equity Awards for Messrs. Hrusovsky and Chaubal were increased from $2.1 million to $3.0 million and $500,000 to $944,000, respectively, to be more competitive with the market in which the Company recruits for executive talent and with companies in our compensation peer group. +Additional detail regarding awards to the named executive officers can be found in the “2021 Fiscal Year Grants of Plan-Based Awards” table and “Outstanding Equity Awards at 2021 Fiscal Year-End” table elsewhere in this proxy statement. +Sign-on Incentive Equity and Cash Awards for Dr. Toloue and Sign-on Incentive Equity Awards for Mr. Doyle +In connection with the commencement of his employment, Dr. Toloue received a sign-on equity award consisting of RSUs having a value of $3.1 million, or 50,703 RSUs, as determined based on the $61.14 closing price of our common stock on April 30, 2021. Dr. Toloue’s sign-on equity award vests over a three-year period, with one-third of the total number of RSUs vesting on the first anniversary of his June 9, 2021, start date and the remainder vesting ratably on a monthly basis over the next two years, provided that he remains with the Company through the applicable vesting date. As further inducement to joining Quanterix and in consideration of amounts forfeited by leaving his prior position, Dr. Toloue received a sign-on cash payment in the amount of $100,000. Dr. Toloue will be required to repay 50% of his sign-on cash payment if he voluntarily terminates his employment with the Company without good reason (as defined in his employment agreement) within one year of his start date. +In connection with the commencement of his employment, Mr. Doyle received a sign-on equity award consisting of stock options and RSUs having an aggregate value of $750,000, with the number of options and RSUs determined based on the $64.44 closing price of our common stock on June 18, 2021. Each of Mr. Doyle’s sign-on stock options and RSUs vest over a four-year period, with one-fourth vesting on the first anniversary of Mr. Doyle’s July 12, 2021, start date and the remainder vesting ratably on a monthly basis over the next three years, provided that he remains with the Company through the applicable vesting date. The stock options were valued according to their Black-Scholes valuation as of Mr. Doyle’s start date. The number of stock options and RSUs awarded was determined on a 70% Option / 30% RSU unit basis, with the total award value equal to $750,000. The exercise price of Mr. Doyle’s stock options is equal to $59.67, the fair market value of our common stock on the date of grant of his sign-on equity award. +Additional Long Term Incentive Equity Award for Mr. Stetson +In consideration of Mr. Stetson’s service as our Interim Chief Financial Officer and Treasurer, Mr. Stetson received an additional long-term incentive equity award consisting of stock options and RSUs having an aggregate value of $150,000, as determined based on the $49.20 closing price of our common stock on May 11, 2021, the date that Mr. Stetson assumed the role of Interim Chief Financial Officer and Treasurer. Each of Mr. Stetson’s stock options and RSUs vest over a four-year period, with one-fourth vesting on May 11, 2022 and the remainder vesting ratably on a monthly basis over the next three years, provided that he remains with the Company through the applicable vesting date. The stock options were valued according to their Black-Scholes valuation as of May 11, 2021. The number of stock options and RSUs awarded was determined on a 70% Option / 30% RSU unit basis, with the total award value equal to $150,000. The exercise price of Mr. Stetson’s stock options is equal to $49.20, the fair market value of our common stock on May 11, 2021. +2022 Executive Leadership Succession Plan +In March, 2022, we announced our executive leadership succession plan. Under the plan, Mr. Hrusovsky, who previously served as our Chairman and Chief Executive Officer, assumed the role of Executive Chairman of our Board of Directors effective April 25, 2022. As Executive Chairman, Hrusovsky will focus on key strategic initiatives, Board evolution and important customer, partner and investor relationships, while transitioning CEO responsibilities to Toloue. As of that same date, Dr. Toloue, who previously served as President of Quanterix and Diagnostics, assumed the role of President and Chief Executive Officer and joined our Board of Directors. +28 +TABLE OF CONTENTS +In connection with Mr. Hrusovsky’s new role, the Compensation Committee approved, and the Company and Mr. Hrusovsky executed, an amended and restated employment agreement effective as of April 25, 2022 and continuing through December 31, 2022. Under the agreement, Mr. Hrusovsky’s annualized base salary was reduced from $600,000 to $400,000. Mr. Hrusovsky also received a target award of $400,000 under the Company’s 2022 Annual Cash Incentive Bonus Program, and a long-term equity incentive equity award, comprised of stock options and RSUs having an aggregate grant-date fair value of $1,400,000 and vesting over a four-year period. The equity award will continue to vest provided that Mr. Hrusovsky continues to provide services to company as an employee, consultant or member of the Board of Directors.Pursuant to this agreement, in the event we terminate him without cause or Mr. Hrusovsky terminates his employment with us for good reason, he is entitled to continuation of his then-current base salary and health insurance benefits for six months. If such termination occurs within 12 months of a sale event, he is entitled to continuation of his then-current base salary and health insurance benefits for 12 months. Mr. Hrusovsky will receive the same sale event equity acceleration provided for other members of the executive management team, and if a sale event is consummated at any time prior to December 31, 2023, and if Mr. Hrusovsky (i) is terminated without cause or he terminates for good reason as Executive Chairman on or prior to December 31, 2023, (ii) is not retained by the Company as Executive Chairman immediately following December 31, 2022, or (iii) is not re-nominated by the Company for re-election as a director on or prior to December 31, 2023, then all of his unvested equity grants shall immediately vest. +In connection with Dr. Toloue’s new role, the Compensation Committee approved, and the Company and Dr. Toloue executed, an amended and restated employment agreement effective as of April 25, 2022. Under the agreement, Dr. Toloue’s annualized base salary was adjusted from $525,000 to $550,000. Dr. Toloue also received a target award of $550,000 under the Company’s 2022 Annual Cash Incentive Bonus Program, and a long-term equity incentive equity award, comprised of stock options and RSUs having an aggregate grant-date fair value of $2,200,000 and vesting over a four-year period. Pursuant to this agreement, in the event we terminate him without cause or Dr. Toloue terminates his employment with us for good reason, he is entitled to continuation of his then-current base salary and health insurance benefits for 12 months, an amount equal to his target bonus for the applicable year and acceleration of vesting of unvested equity that would have vested during the 12-month severance period. If such termination occurs within 90 days prior to, or 12 months following, a change in control, he is also entitled to accelerated vesting of all outstanding but unvested equty awards. +Other Benefits +We provide a broad-based benefit program to our eligible employees. In 2021, we provided the following benefits to our named executive officers on the same basis as our other eligible employees: +• +health insurance; +• +vacation, personal holidays and sick days; +• +life insurance and supplemental life insurance; +• +short-term and long-term disability insurance; and +• +a 401(k) retirement plan. +We believe these benefits are generally consistent with those offered by other companies and specifically with those companies with which we compete for employees. +Severance and Change of Control Benefits +Pursuant to agreements between us and Messrs. Hrusovsky, Toloue, Doyle and Fry, each of these executives is entitled to specified benefits in the event of the termination of their employment under specified circumstances, including termination following a change of control of our Company. We consider these severance and change of control benefits to be an important component of our executive compensation program and consistent with competitive market practice. We believe that providing appropriate severance and change of control benefits helps to attract and retain qualified executives by mitigating the risks associated with leaving a previous employer and accepting a new position with us, and by reducing financial uncertainty associated with an unexpected termination or termination following a change +29 +TABLE OF CONTENTS +of control. We have provided more detailed information about these benefits with respect to our named executive officers, along with estimates of their value under various circumstances, under the caption “Potential Payments Upon Termination or Change of Control” below. +Our practice has been to structure change of control benefits so that cash benefits are paid only if the employment of the executive is terminated or if the executive resigns for good reason during a specified period after a change of control has occurred. For equity awards granted in 2021, vesting in connection with a change of control will occur only if the executive is not provided with a comparable replacement equity award or if the employment of the executive is terminated or if the executive resigns for good reason during a specified period after the change of control (commonly referred to double trigger vesting). +Tax Considerations +The Compensation Committee considers tax and accounting implications in its executive compensation determinations, although in some cases, other important considerations may outweigh tax or accounting considerations, and the Compensation Committee maintains the flexibility to compensate its executive officers in accordance with the Company’s compensation philosophy. +Section 162(m) of the Internal Revenue Code of 1986, as amended, generally places a limit of $1 million on the amount of compensation that we may deduct as a business expense in any year with respect to certain of our most highly paid executive officers, subject to certain transition relief applicable to certain arrangements in place as of November 2, 2017, and not materially modified after such date. While the Compensation Committee considers the deductibility of compensation as one factor in determining executive compensation, the Compensation Committee retains the discretion to award compensation that is not deductible as it believes that it is in the best interests of our stockholders to maintain flexibility in our approach to executive compensation in order to structure a program that we consider to be the most effective in attracting, motivating and retaining key executives. +If accounting standards change, we may revise certain programs to appropriately align accounting expenses of our equity awards with our overall executive compensation philosophy and objectives. +Anti-Hedging and Pledging Policy +Our company policies prohibit Company personnel, including our officers and directors, from entering into any hedging-type transactions with respect to our stock and from pledging our stock. +COMPENSATION COMMITTEE REPORT +The Compensation Committee of our Board of Directors has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K, which appears elsewhere in this proxy statement, with our management. Based on this review and discussion, the Compensation Committee has recommended to our Board of Directors that the Compensation Discussion and Analysis be included in our proxy statement. +Members of the Compensation Committee: +Keith L. Crandell (Chairman) +Laurie Olson +David R. Walt, Ph.D. +30 +TABLE OF CONTENTS +EXECUTIVE OFFICER AND DIRECTOR COMPENSATION +Summary Compensation Table +The following table shows the total compensation paid or accrued during the fiscal years ended December 31, 2021, 2020, and 2019 to (1) our Executive Chairman, who served as our Chief Executive Officer and principal executive officer during 2021, (2) our current Chief Financial Officer, our former Interim Chief Financial Officer, and our former Chief Financial Officer who served as our principal financial officers during 2021, (3) our three next most highly compensated executive officers who earned more than $100,000 during the fiscal year ended December 31, 2021 and were serving as executive officers as of such date, and (4) our former Chief Operating Officer, who would have been one of such three next most highly compensated executive officers but for the fact that he was not an executive officer as of December 31, 2021. +Name and Principal Position +Year +Salary +($) +Bonus +($)(1) +Stock Awards +($)(2) +Non-Equity +Incentive Plan +Compensation +($)(3) +All Other +Compensation +($)(4) +Total ($) +E. Kevin Hrusovsky +Executive Chairman and Former +Chief Executive Officer +2021 +592,628 +— +3,008,520 +596,594 +10,452 +4,208,194 +2020 +554,286 +769,449 +2,185,995 +— +10,667 +3,520,397 +2019 +531,969 +770,024 +2,319,301 +— +9,702 +3,630,996 +Michael A. Doyle (5) +Chief Financial Officer +2021 +183,558 +— +730,786 +99,760 +— +1,014,104 +Shawn Stetson (6) +Former Interim Chief Financial Officer +2021 +221,075 +— +224,904 +46,667 +6,632 +499,278 +2020 +205,029 +60,911 +56,771 +— +6,151 +328,862 +2019 +95,250 +34,480 +112,375 +— +2,700 +244,805 +Amol Chaubal (7) +Former Chief Financial Officer +2021 +156,038 +— +946,711 +— +4,107 +1,106,856 +2020 +371,188 +330,992 +520,521 +— +4,219 +1,226,920 +2019 +253,077 +145,772 +940,255 +— +4,321 +1,343,425 +Masoud Toloue, Ph.D. (8) +President and Chief Executive Officer; Former President of Quanterix and Diagnostics +2021 +278,654 +— +3,061,463 +298,846 +— +3,638,963 +John Fry +General Counsel and Secretary +2021 +362,400 +— +601,736 +172,976 +8,829 +1,145,941 +2020 +354,594 +239,904 +624,637 +— +5,938 +1,225,073 +2019 +192,231 +115,339 +1,372,337 +— +5,375 +1,685,282 +Dawn R. Mattoon, Ph.D. +Senior Vice President, Clinical Diagnostics +2021 +342,631 +— +601,736 +189,470 +8,700 +1,142,537 +2020 +330,917 +239,940 +624,598 +— +9,299 +1,204,754 +2019 +314,462 +190,523 +371,699 +— +8,929 +885,613 +William Geist (9) +Former Chief Operating Officer +2021 +361,539 +— +802,329 +— +756,370 +1,920,238 +2020 +52,308 +530,000 +1,900,936 +— +1,338 +2,484,582 +(1) +Amounts for 2019 represent cash bonuses earned for the 12-month period from January 1, 2019 to December 31, 2019, and exclude payments made in 2019 for 2018 bonuses. Amounts for 2020 represent cash bonuses earned for the 12-month period from January 1, 2020 to December 31, 2020, and exclude payments made in 2020 for 2019 bonuses. The amount for Mr. Geist represents a sign-on bonus, $200,000 of which was paid in 2020 and $330,000 of which was paid in 2021. +(2) +These amounts represent the aggregate grant date fair value for RSUs and option awards granted during such fiscal year, computed in accordance with FASB ASC Topic 718. A discussion of the assumptions used in determining grant date fair value for the option awards may be found in Note 2 to our consolidated financial statements for the year ended December 31, 2021 included in our Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on March 1, 2022. +31 +TABLE OF CONTENTS +(3) +These amounts represent cash amounts paid in 2022 for services in 2021 under the Company’s 2021 Annual Cash Incentive Bonus Plan. +(4) +Except as set forth below, the amounts represent the dollar value of matching contributions under our qualified 401(k) plan. The amount for William Geist in 2021 represents (i) $8,700 of matching contributions under our qualified 401(k) plan and (ii) $23,077 in severance paid in 2021 and $724,593 of accelerated equity vesting pursuant to a severance agreement. +(5) +Mr. Doyle joined Quanterix on July 12, 2021. +(6) +Mr. Stetson joined Quanerix on June 27, 2019. He served as our Interim Chief Financial Officer and Treasurer from May 12, 2021 through July 11, 2021. +(7) +Mr. Chaubal joined Quanterix on April 12, 2019. He departed Quanterix on May 11, 2021. +(8) +Dr. Touloue joined Quanterix as on June 9, 2021. +(9) +Mr. Geist joined Quanerix on November 16, 2020. He departed Quanterix on November 12, 2021. +2021 Fiscal Year Grants of Plan-Based Awards +The following table shows information regarding grants of non-equity incentive plan awards and grants of equity awards that we made during the fiscal year ended December 31 2021 to each of our executive officers named in the Summary Compensation Table. +Name +(a) +Grant +Date +(b) +Estimated Future Payouts Under +Non-Equity Incentive Plan Awards (1) +All Other Stock +Awards: +Number of +Shares of Stock +or Units +(#) (2) +(i) +All Other Option +Awards: Number +of Securities +Underlying +Options +(#) (3) +(j) +Exercise or Base +Price of Option +Awards ($/Sh) +(k) +Grant Date Fair +Value of Stock +and Option +Awards ($) (4) +(l) +Threshold +($) +(c) +Target +($) +(d) +Maximum ($) +(e) +E. Kevin Hrusovsky +— +300,000 +600,000 +900,000 +— +— +— +— +2/8/21 +— +— +— +18,397 +— +— +1,431,103 +2/8/21 +— +— +— +— +42,925 +77.79 +1,577,418 +Michael A. Doyle +— +49,800 +99,760 +164,604 +— +— +— +— +7/12/21 +— +— +— +5,530 +— +— +329,975 +7/12/21 +— +— +— +— +12,904 +59.67 +400,811 +Shawn Stetson +— +22,239 +44,478 +73,389 +— +— +— +— +2/10/21 +— +— +— +554 +— +— +44,032 +2/10/21 +— +— +— +— +831 +79.48 +31,186 +5/11/21 +— +— +— +1,423 +— +— +70,012 +5/11/21 +— +— +— +— +3,321 +49.20 +79,674 +Amol Chaubal +— +114,125 +228,250 +376,613 +— +— +— +— +2/8/21 +— +— +— +5,789 +— +— +450,326 +2/8/21 +— +— +— +— +13,507 +77.79 +496,385 +Masoud Toloue, Ph.D. +— +149,423 +298,846 +493,096 +— +— +— +— +6/9/21 +— +— +— +50,703 +— +— +3,061,463 +John Fry +— +91,000 +182,000 +300,300 +— +— +— +— +2/8/21 +— +— +— +3,679 +— +— +286,189 +2/8/21 +— +— +— +— +8,585 +77.79 +315,546 +Dawn R. Mattoon, Ph.D. +— +86,250 +172,500 +284,625 +— +— +— +— +2/8/21 +— +— +— +3,679 +— +— +286,189 +2/8/21 +— +— +— +— +8,585 +77.79 +315,546 +William Geist +— +86,250 +172,500 +284,625 +— +— +— +— +2/8/21 +— +— +— +4,906 +— +— +381,638 +2/8/21 +— +— +— +— +11,447 +77.79 +420,691 +32 +TABLE OF CONTENTS +(1) +Reflects the potential payouts under the Company’s 2021 Annual Cash Incentive Plan. +(2) +Represents RSUs that vest as to 25% on the first anniversary of the grant date, with the remaining 75% vesting in 36 equal monthly installments at the end of each month thereafter, except for the June 9, 2021 RSU grant to Dr. Toloue which vests as to 1/3 of the shares on June 9, 2022, with the remaining 2/3 vesting in 24 equal monthly installments at the end of each month thereafter. +(3) +Represents non-qualified options that vest as to 25% on the first anniversary of the grant date, with the remaining 75% vesting in 36 equal monthly installments at the end of each month thereafter. +(4) +These amounts represent the aggregate grant date fair value for RSUs and option awards granted during such fiscal year, computed in accordance with FASB ASC Topic 718. A discussion of the assumptions used in determining grant date fair value for the option awards may be found in Note 2 to our consolidated financial statements for the year ended December 31, 2021 included in our Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on March 1, 2022. +Outstanding Equity Awards at 2021 Fiscal Year-End +The following table shows grants of stock options and grants of unvested stock awards outstanding on the last day of the fiscal year ended December 31, 2021, including both awards subject to performance conditions and non-performance-based awards, to each of the executive officers named in the Summary Compensation Table. +Option Awards (1) +Stock Awards (1) +Name +Number of +Securities +Underlying +Unexercised +Options +Exercisable +(#) +Number of +Securities +Underlying +Unexercised +Options +Unexercisable +(#) +Option +Exercise +Price +($) +Option +Expiration +Date +Number of Shares +or Units of Stock +That Have Not +Vested +(#) +Market Value of +Shares or Units of +Stock That Have +Not Vested +($) (2) +Equity +Incentive +Plan +Awards: +Number +of +Unearned +Shares, +Units or +Other +Rights +That +Have Not +Vested +(#) +Equity +Incentive +Plan +Awards: +Market or +Payout +Value of +Unearned +Number of +Shares or +Units or +Other +Rights That +Have Not +Vested ($) +E. Kevin Hrusovsky +Executive Chairman and +Former Chief Executive Officer +— +— +— +— +— +— +39,815 (3) +1,688,156 +311,138 (4) +— +$ +8.16 +3/31/2027 +— +— +— +— +76,610 (5) +31,567 (5) +$ +22.69 +3/12/2029 +— +— +— +— +— +— +— +— +7,936 (5) +336,486 +— +— +28,323 (6) +11,677 (6) +$ +30.45 +8/17/2029 +— +— +— +— +— +— +— +— +2,985 (6) +126,564 +— +— +43,593 (7) +47,399 (7) +$ +27.76 +2/18/2030 +— +— +— +— +— +— +— +— +20,316 (7) +861,398 +— +— +— +42,925 (8) +$ +77.79 +2/8/2031 +— +— +— +— +— +— +— +— +18,397 (8) +780,033 +— +— +Michael A. Doyle +Chief Financial Officer +— +12,904 (9) +$ +59.67 +7/12/2031 +— +— +— +— +— +— +— +— +5,530 (9) +234,472 +— +— +33 +TABLE OF CONTENTS +Option Awards (1) +Stock Awards (1) +Name +Number of +Securities +Underlying +Unexercised +Options +Exercisable +(#) +Number of +Securities +Underlying +Unexercised +Options +Unexercisable +(#) +Option +Exercise +Price +($) +Option +Expiration +Date +Number of Shares +or Units of Stock +That Have Not +Vested +(#) +Market Value of +Shares or Units of +Stock That Have +Not Vested +($) (2) +Equity +Incentive +Plan +Awards: +Number +of +Unearned +Shares, +Units or +Other +Rights +That +Have Not +Vested +(#) +Equity +Incentive +Plan +Awards: +Market or +Payout +Value of +Unearned +Number of +Shares or +Units or +Other +Rights That +Have Not +Vested ($) +Shawn Stetson +Former Interim Chief Financial Officer +3,226 (10) +1,774 (10) +$ +31.91 +7/25/2029 +— +— +— +— +— +— +— +— +567 (10) +24,041 +— +— +881 (7) +972 (7) +$ +27.76 +2/18/2030 +— +— +— +— +— +— +— +— +652 (7) +27,645 +— +— +— +831 (11) +$ +79.48 +2/10/2031 +— +— +— +— +— +— +— +— +554 (11) +23,490 +— +— +— +3,321 (12) +$ +49.20 +5/11/2031 +— +— +— +— +— +— +— +— +1,423 (12) +60,335 +— +— +Amol Chaubal +Former Chief Financial Officer +— +— +— +— +— +— +— +— +Masoud Toloue, Ph.D. +President and Chief Executive +Officer +— +— +— +— +50,073 (13) +2,123,095 +— +— +John Fry +General Counsel and Secretary +33,048 (14) +18,129 (14) +$ +33.48 +6/14/2029 +— +— +— +— +— +— +— +— +7,985 (14) +338,564 +— +— +12,451 (7) +13,549 (7) +$ +27.76 +2/18/2030 +— +— +— +— +— +— +— +— +5,806 (7) +246,174 +— +— +— +8,585 (8) +$ +77.79 +2/8/2031 +— +— +— +— +— +— +— +— +3,679 (8) +155,990 +— +— +Dawn R. Mattoon, Ph.D. +Senior Vice President, Clinical Diagnostics +21,225 (15) +845 (15) +$ +22.12 +2/23/2028 +— +— +— +— +8,361 (16) +2,196 (16) +$ +19.12 +5/10/2028 +— +— +— +— +— +— +— +— +640 (16) +27,136 +14,110 (17) +7,194 (17) +$ +22.69 +3/12/2029 +— +— +— +— +— +— +— +— +2,121 (17) +89,930 +— +— +10,421 (7) +13,549 (7) +$ +27.76 +2/18/2030 +— +— +— +— +— +— +— +— +5,806 (7) +246,174 +— +— +— +8,585 (8) +$ +77.79 +2/8/2031 +— +— +— +— +— +— +— +— +3,679 (8) +155,990 +— +— +William Geist +Former Chief Operating Officer +5,008 (18) +— +$ +77.79 +2/12/2022 +— +— +— +— +34 +TABLE OF CONTENTS +(1) +Each of the outstanding equity awards in the table above was granted pursuant to the 2007 Plan or the 2017 Plan. Unless otherwise noted below, all equity awards vest, subject to continued service, as to 25% on the first anniversary of the grant date and as to the remaining 75% in 36 equal installments on the last day of of each month thereafter. +(2) +The market value of the stock awards is determined by multiplying the number of shares by $42.40, the closing price of our common stock on The Nasdaq Global Market on December 31, 2021, the last day of our fiscal year. +(3) +On February 13, 2015, Mr. Hrusovsky was granted 781,060 RSUs in connection with his appointment as our President and Chief Executive Officer. The shares underlying this grant vest, subject to continued service, as follows: (i) with respect to 168,246 of the shares, 25% of the shares vested on July 1, 2015, and the remainder vested over the next three years in equal monthly installments on the first day of each succeeding calendar month thereafter, (ii) with respect to 549,113 of the shares, 25% of the shares vested on September 1, 2015, and the remainder vested over the next three years in equal monthly installments on the first day of each succeeding calendar month thereafter, (iii) 23,886 shares vested based upon the achievement of certain milestones and (iv) 39,815 shares have not vested. The restricted stock is subject to accelerated vesting upon certain events. See “Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table — E. Kevin Hrusovsky” above for more details. +(4) +On March 31, 2017, Mr. Hrusovsky was granted an option to purchase 311,138 shares of our common stock. +(5) +On March 12, 2019, Mr. Hrusovsky was granted (i) an option to purchase 108,177 shares of our common stock and (ii) 31,732 RSUs. +(6) +On August 17, 2019, Mr. Hrusovsky was granted (i) an option to purchase 40,000 shares of our common stock and (ii) 10,194 RSUs. The shares underlying the option and RSUs vested as to 4,166 shares and 1,061 shares immediately upon grant, respectively, with the remainder vesting over 43 months in equal monthly installments on the last day of each month thereafter. +(7) +On February 18, 2020: (1) Mr. Hrusovsky was granted (i) an option to purchase 90,992 shares of our common stock and (ii) 38,997 RSUs; (2) Mr. Stetson was granted (i) an option to purchase 1,853 shares of our common stock and (ii) 1,235 RSUs; (3) Mr. Fry was granted (i) an option to purchase 26,000 shares of our common stock and (ii) 11,143 RSUs; and (4) Dr. Mattoon was granted (i) an option to purchase 26,000 shares of our common stock and (ii) 11,143 RSUs. +(8) +On February 8, 2021: (1) Mr. Hrusovsky was granted (i) an option to purchase 42,925 shares of our common stock and (ii) 18,397 RSUs; (2) Mr. Fry was granted (i) an option to purchase 8,585 shares of our common stock and (ii) 3,679 RSUs; and (3) Dr. Mattoon was granted (i) an option to purchase 8,585 shares of our common stock and (ii) 3,679 RSUs. +(9) +On July 12, 2021, Mr. Doyle was granted (i) an option to purchase 12,904 shares of our common stock and (ii) 5,530 RSUs. +(10) +On July 25, 2019, Mr. Stetson was granted (i) an option to purchase 5,000 shares of our common stock and (ii) 1,500 RSUs. +(11) +On February 10, 2021, Mr. Stetson was granted (i) an option to purchase 831 shares of our common stock and (ii) 554 RSUs. +(12) +On May 11, 2021, Mr. Stetson was granted (i) an option to purchase 3,321 shares of our common stock and (ii) 1,423 RSUs. +(13) +On June 9, 2022, Dr. Toloue was granted 50,703 RSUs. The shares underlying the RSUs vest, subject to continued service, as follows: one-third of the shares vest on June 9, 2023, with the remainder vesting over the next two years in equal monthly installments on the last day of each calendar month thereafter. +(14) +On June 14, 2019, Mr. Fry was granted (i) an option to purchase 51,177 shares of our common stock and (ii) 22,502 RSUs. +(15) +On February 23, 2018, Dr. Mattoon was granted an option to purchase 40,000 shares of our common stock. +35 +TABLE OF CONTENTS +(16) +On May 10, 2018, Dr. Mattoon was granted (i) an option to purchase 26,181 shares of our common stock and (ii) 7,680 RSUs. +(17) +On March 12, 2019, Dr. Mattoon was granted (i) an option to purchase 24,640 shares of our common stock and (ii) 7,228 RSUs. +(18) +On February 8, 2021, Mr. Geist was granted (i) an option to purchase 11,447 shares of our common stock and (ii) 4,906 RSUs. Mr. Geist separated from the Company on November 12, 2021, and pursuant to his severance arrangement with the Company, the vesting of all equity that would have vested prior to November 12, 2022 was accelerated. +Option Exercises and Stock Vested in 2021 +The following table shows information regarding exercises of options to purchase our common stock and vesting of RSUs held by each executive officer named in the Summary Compensation Table during the fiscal year ended December 31, 2021. +Option Awards +Stock Awards (1) +Name +Number of +Shares +Acquired +on Exercise +(#) +Value +Realized +on Exercise +($) (2) +Number of +Shares +Acquired +on Vesting +(#) +Value Realized +on Vesting +($) (3) +E. Kevin Hrusovsky +— +— +104,157 +6,015,704 +Michael A. Doyle +— +— +— +— +Shawn Stetson +— +— +955 +62,142 +Amol Chaubal +39,197 +1,191,805 +4,420 +339,676 +Masoud Toloue, Ph.D. +— +— +— +— +John Fry +— +— +10,953 +688,778 +Dawn R. Mattoon, Ph.D. +38,920 +1,456,867 +11,553 +721,639 +William Geist +— +— +28,836 +1,329,916 +(1) +Consists of RSUs. +(2) +The value realized represents the difference between the option exercise price and the closing price of our common stock on the date of exercise. Amounts shown in this column do not necessarily represent actual value realized from the sale of the shares acquired upon exercise of options because in many cases the shares are not sold on exercise but continue to be held by the executive officer exercising the option. +(3) +The value realized represents the number of RSUs vested multiplied by the closing price of our common stock on the date of vesting. Amounts shown in this column do not necessarily represent actual value realized from the sale of the shares acquired upon vesting of RSUs because in many cases the shares are not sold upon vesting but continue to be held by the executive officer. +Pension Benefits +We do not have any qualified or non-qualified defined benefit plans. +Nonqualified Deferred Compensation +We do not have any nonqualified defined contribution plans or other deferred compensation plans. +Potential Payments upon Termination or Change-In-Control +We have entered into employment agreements with the named executive officers. These agreements provide for at-will employment and establish the named executive officer’s base salary (subject to adjustment), eligibility to participate in the incentive bonus plan, eligibility for annual long-term equity awards and standard employee benefits. For a more detailed description of the terms of these agreements, see “Compensation Discussion and Analysis” above. +36 +TABLE OF CONTENTS +These agreements also provide for certain severance payments and benefits in connection with the named executive officer’s termination of employment under various circumstances, including in connection with a change in control of the Company. The material terms and conditions of these provisions are summarized below. +E. Kevin Hrusovsky +We entered into an agreement with Mr. Hrusovsky with respect to his service as President and Chief Executive Officer on January 1, 2015. Pursuant to this agreement, Mr. Hrusovsky was entitled to continuation of his then-current base salary and health insurance benefits for six months in the event we terminated his employment without cause or Mr. Hrusovsky terminated his employment with us for good reason. If such termination occured within 12 months of change in control of the Company, he was entitled to continuation of his then-current base salary and health insurance benefits for 12 months. If we terminated his employment without cause, his employment terminated due to his death or disability or he terminated his employment with us for good reason within three months prior to the end of a year, he was entitled to a pro rata portion of his bonus. In connection with our 2022 executive leadership succession plan, effective as of April 25, 2022, we entered into a new agreement with Mr. Hrusovsky with respect to his service as Executive Chairman of the Board. For a description of this agreement see “Compensation Discussion and Analysis — 2022 Executive Leadership Succession Plan” above. +Michael A. Doyle +We entered into an agreement with Mr. Doyle with respect to his service as Chief Financial Officer on June 22, 2021, and he began employment with us on July 12, 2021. Under the agreement, if Mr. Doyle’s employment is terminated by the Company without cause or he resigns for good reason, he will receive continued payment of his base salary for a 12-month severance period, payment of an amount equal to his annual target bonus for the year of termination, acceleration of unvested equity awards that would have vested during the severance period, and health benefits continuation during the severance period. If Mr. Doyle’s employment is terminated by the Company without cause or he resigns for good reason in connection with a change-in-control, in addition to the foregoing, all of his outstanding but unvested equity awards will become fully vested. +Shawn Stetson +Upon termination without cause, Mr. Stetson is entitled to amounts earned under the Company’s 2021 Annual Cash Incentive Bonus Plan. +Masoud Toloue, Ph.D. +We entered into an agreement with Dr. Toloue with respect to his service as President, Quanterix Corporation and Diagnostics on May 11, 2021, and he began employment with us on June 9, 2021. Under this agreement, if Dr. Toloue’s employment was terminated by the Company without cause or he resigned for good reason, he would have received continued payment of his base salary for a 12-month severance period, payment of an amount equal to his annual target bonus for the year of termination, acceleration of any of the unvested portion of his initial equity award that would have vested during the severance period had he remained employed during such time, and health benefits continuation during the severance period. If Dr. Toloue’s employment was terminated by the Company without cause or he resigned for good reason in connection with a change-in-control, in addition to the foregoing, all of his outstanding but unvested equity awards would become fully vested. In connection with our 2022 executive leadership succession plan, effective as of April 25, 2022, we entered into a new agreement with Dr. Toloue with respect to his service as President and Chief Executive Officer. For a description of this agreement see “Compensation Discussion and Analysis — 2022 Executive Leadership Succession Plan” above. +John Fry +We entered into an agreement with John Fry with respect to his service as General Counsel and Secretary on May 31, 2019, and Mr. Fry began his employment with us on June 10, 2019. Pursuant to this agreement, in the event we terminate him without cause or Mr. Fry terminates his employment with us for +37 +TABLE OF CONTENTS +good reason, Mr. Fry is entitled to continuation of his then-current base salary and health insurance benefits for six months and acceleration of vesting of unvested equity for the six-month period. If such termination occurs within 12 months of a change in control, he is entitled to continuation of his then-current base salary and health insurance benefits for 12 months and acceleration of vesting of unvested equity for the six-month period. +Dawn R. Mattoon, Ph.D. +Upon termination without cause, Ms. Mattoon is entitled to amounts earned under the Company’s 2021 Annual Cash Incentive Bonus Plan. +Payments upon a Triggering Event +The following table provides information regarding the amounts payable under the employment agreements described above for termination without cause or by the named executive officer for good reason and assuming the termination occurred on December 31, 2021. +Name +Base Salary +($) +Lump +Sum +Payments +($) +Continuation of +Group Health +Plan Benefits +($) +Non-Equity +Incentive +Plan +Payments +($) +Equity +Incentive +Plan +Payments +($) (1) +Total ($) +E. Kevin Hrusovsky +300,000 +— +7,406 +596,594 +— +904,000 +Michael A. Doyle +415,000 +210,000 +14,813 +99,760 +87,853 +827,426 +Shawn Stetson (2) +— +— +— +46,667 +— +46,667 +Masoud Touloue +525,000 +525,000 +22,797 +298,846 +1,120,250 +2,491,893 +John Fry +182,000 +— +11,398 +172,976 +472,182 +838,556 +Dawn Mattoon +— +— +— +189,470 +— +189,470 +(1) +The value of options that vest due to a triggering event has been calculated by taking the difference of the option exercise price and the closing price of a share of our common stock on December 31, 2021, or $42.40, multiplied by the number of shares underlying options that vest due to the triggering event. The value of RSUs that vest due to a triggering event has been calculated by taking the closing price of a share of our common stock on December 31, 2021, or $42.40, multiplied by the number of shares underlying RSUs that vest due to the triggering event. +(2) +Dr. Mattoon’s and Mr. Stetson’s agreements provide for the specified benefits upon an involuntary termination without cause. The specified benefits are not provided upon the executive’s resignation for good reason. +The following table provides information regarding the amounts payable under the employment agreements described above for termination without cause or by the named executive officer for good reason following a change in control and assuming the termination occurred on December 31, 2021. +Name +Base Salary +($) +Lump +Sum +Payments +($) +Continuation of +Group Health +Plan Benefits +($) +Non-Equity +Incentive +Plan +Payments +($) +Equity +Incentive +Plan +Payments +($) (1) +Total ($) +E. Kevin Hrusovsky +600,000 +— +14,813 +596,594 +— +1,211,407 +Michael A. Doyle +415,000 +210,000 +14,813 +99,760 +234,472 +974,045 +Shawn Stetson (2) +— +— +— +46,667 +— +46,667 +Masoud Touloue +525,000 +525,000 +22,797 +298,846 +2,123,095 +3,494,738 +John Fry +364,000 +— +22,797 +172,976 +472,182 +1,031,955 +Dawn Mattoon (2) +— +— +— +189,470 +— +189,470 +(1) +The value of options that vest due to a triggering event has been calculated by taking the difference of +38 +TABLE OF CONTENTS +the option exercise price and the closing price of a share of our common stock on December 31, 2021, or $42.40, multiplied by the number of shares underlying options that vest due to the triggering event. The value of RSUs that vest due to a triggering event has been calculated by taking the closing price of a share of our common stock on December 31, 2021, or $42.40, multiplied by the number of shares underlying RSUs that vest due to the triggering event. +(2) +Dr. Mattoon’s and Mr. Stetson’s agreements provide for the specified benefits upon an involuntary termination without cause. The specified benefits are not provided upon the executive’s resignation for good reason. +Director Compensation +The following table shows the total compensation paid or accrued during the fiscal year ended December 31, 2021 to each of our non-employee directors and former non-employee directors. Directors who are employed by us are not compensated for their service on our Board of Directors. +Name +Fees Earned +or Paid in +Cash +($) (1) +Stock +Awards +($) (2) +Option +Awards +($) (2) +All Other +Compensation +($) +Total +($) +Keith L. Crandell +51,952 +100,130 +154,292 +— +306,374 +Marijn Dekkers, Ph.D. (3) +41,000 +100,130 +154,292 +— +295,422 +Sarah E. Hlavinka +47,445 +100,130 +154,292 +— +301,867 +Martin D. Madaus, Ph.D. +72,375 +100,130 +154,292 +— +326,797 +Paul M. Meister +54,951 +100,130 +154,292 +— +309,373 +Laurie J. Olson +17,306 +300,321 +497,608 +815,235 +David R. Walt, Ph.D. +41,000 +100,130 +154,292 +— +295,422 +(1) +Keith L. Crandell, Sarah E. Hlavinka, Martin D. Madaus, Ph.D. and Paul M. Meister elected to receive these fees in the form of common stock in lieu of cash in accordance with our non-employee director compensation policy. +(2) +These amounts represent the aggregate grant date fair value for RSUs and option awards granted to each director in the fiscal year ended December 31, 2021, computed in accordance with FASB ASC Topic 718. A discussion of the assumptions used in determining grant date fair value for the option awards may be found in Note 2 to our consolidated financial statements for the year ended December 31, 2021 included in our Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on March 1, 2022. The following table shows the aggregate number of stock options held by each of our non-employee directors as of December 31, 2021: +Name +Aggregate +Number +of Shares +Subject +to Stock +Options +Keith L. Crandell +31,600 +Marijn Dekkers, Ph.D. (3) +7,900 +Sarah E. Hlavinka +31,600 +Martin D. Madaus, Ph.D. +31,600 +Paul M. Meister +54,935 +Laurie J. Olson +15,800 +David R. Walt, Ph.D. +31,600 +(3) +Dr. Dekkers resigned from the Board effective December 31, 2021. +39 +TABLE OF CONTENTS +Non-Employee Director Compensation Policy +Our non-employee director compensation policy that was effective in 2021 (the “2021 Policy”) provided for the annual payment of: $35,000 to each of our nonemployee directors, or $55,000 in the case of the chair; $7,500 to each member of our Audit Committee, or $20,000 in the case of the chair; $6,000 to each member of our Compensation Committee, or $12,000 in the case of the chair; and $5,000 to each member of our Nominating and Governance Committee, or $10,000 in the case of the chair; in each case quarterly in arrears. Each non-employee director could elect to receive these payments in the form of common stock in lieu of cash. The 2021 Policy also provided that each non-employee director be granted, on the first trading day of each fiscal year, (1) a non-qualified stock option exercisable for 7,900 shares of common stock and (2) 2,270 RSUs. The annual stock options and RSUs vest in full on December 31 of the year in which such awards were granted, provided that the non-employee director is a director of the Company on the applicable vesting date. +In addition, under the 2021 Policy each new non-employee director received (1) a non-qualified stock option grant exercisable for 15,800 shares of common stock and (2) 4,540 RSUs upon his or her initial election or appointment. The initial stock options vest over three years from the date of grant, with one third vesting on the first anniversary of the applicable grant date and the remainder vesting over the following two years in 24 successive equal monthly installments at the end of each month until the third anniversary of such grant date, provided that the non-employee director is a director of the Company on the applicable vesting date. The RSUs granted to each new non-employee director vest over a three-year period, with one third vesting on each of the first, second, and third anniversaries of the applicable grant date, provided that the non-employee director is a director of the Company on the applicable vesting date. +Effective January 1, 2022, we amended and restated our non-employee director compensation policy (the “2022 Policy”). The 2022 Policy provides for: the annual payment of: $40,000 to each of our non-employee directors, or $60,000 in the case of the chair; $10,000 to each member of our Audit Committee, or $20,000 in the case of the chair; $7,250 to each member of our Compensation Committee, or $15,000 in the case of the chair; and $5,000 to each member of our Nominating and Governance Committee, or $10,000 in the case of the chair; in each case quarterly in arrears. Each non-employee director may elect to receive these payments in the form of common stock in lieu of cash. +The 2022 Policy also provides that each non-employee director be granted, on the first trading day of each fiscal year, an annual equity award valued at $200,000, rounded to the nearest whole share. This equity award is comprised of (A) 60% non-qualified stock options to purchase common stock at an exercise price equal to the fair market value as of such grant date and (B) 40% RSUs. The number of options is determined on a value basis using the Company’s standard Black-Scholes valuation methodology. The number of RSUs are determined by dividing total value of the RSUs by the fair market value of our common Stock on such grant date. The annual stock options and RSUs vest in full on December 31 of the year in which such awards were granted, provided that the non-employee director is a director of the Company on the applicable vesting date. +In addition, under the 2022 Policy each new non-employee director receives under the policy an award valued at $400,000 upon his or her initial election or appointment. The award is comprised of (A) 60% non-qualified stock options to purchase common stock at an exercise price equal to the fair market value as of such grant date and (B) 40% RSUs. The number of options are determined on a value basis using the Company’s standard Black-Scholes valuation methodology. The number of RSUs are determined by dividing total value of the RSUs by the fair market value of our common Stock on such grant date. The initial stock options vest over three years from the date of grant, with one-third vesting on the first anniversary of the applicable grant date and the remainder vesting over the following two years in 24 successive equal monthly installments at the end of each month until the third anniversary of such grant date, provided that the non-employee director is a director of the Company on the applicable vesting date. The RSUs granted to each new non-employee director vest over a three-year period, with one-third vesting on each of the first, second, and third anniversaries of the applicable grant date, provided that the non-employee director is a director of the Company on the applicable vesting date. +We reimburse in full each non-employee director for all reasonable out-of-pocket expenses incurred in attending each meeting of our Board of Directors or its committees. Directors may be reimbursed for travel, +40 +TABLE OF CONTENTS +food, lodging and other expenses directly related to their service as directors. Directors are also entitled to the protection provided by their indemnification agreements, and the indemnification provisions in our restated certificate of incorporation and restated bylaws. +Stock Ownership Guidelines for Non-Employee Directors and Executive Officers +In order to further align the interests of our non-employee directors and executive officers with the interests of our stockholders and to promote our commitment to sound corporate governance, our Board maintains stock ownership guidelines for our non-employee directors and executive officers as follows: +Stock Ownership Guideline +Non-Employee Director +5x annual base cash retainer +CEO +6x annual base salary +Executive Officers Other than CEO +3x annual base salary +Attainment Period +Five years from the later of +• +Appointment/election to applicable position +• +October 9, 2019 +Stock Owned for Purposes of Ownership Guidelines +• +Stock acquired on the open market; +• +Stock acquired through the exercise of options; +• +Restricted stock, RSUs and stock options, whether vested or unvested; and +• +Stock acquired through Company benefit plans. +Holding Requirement +50% of “net of tax” vested shares must be held until the ownership guideline is met. +Administration +The Stock Ownership Guidelines are administered by the Compensation Committee, which evaluates compliance on an annual basis. Non-compliance arising from special circumstances, such as fluctuations in the Company’s stock price, changes in a participant’s compensation, and the personal financial situation of a participant, are reviewed by the Compensation Committee. +As of the date of this proxy statement, all of our non-employee directors and executive officers were in compliance with our stock ownership guidelines. +41 +TABLE OF CONTENTS +EQUITY COMPENSATION PLAN INFORMATION +The following table provides certain aggregate information with respect to all of our equity compensation plans in effect as of December 31, 2021. +(a) +(b) +(c) +Plan category +Number of +securities to be +issued upon +exercise of +outstanding +options, warrants +and rights +Weighted- +average exercise +price of +outstanding +options, warrants +and rights +Number of securities +remaining available +for future issuance +under equity +compensation plans +(excluding securities +reflected in column (a)) +Equity compensation plans approved by security holders (1) +2,204,813 +$ +16.57 +2,571,667 (2) +Equity compensation plans not approved by security holders +— +— +— +Total +2,204,813 +$ +16.57 +2,571,667 (2) +(1) +These plans consist of our 2007 Plan, the 2017 Plan and the ESPP. +(2) +Consists of 1,434,072 shares of common stock available under the 2017 Plan and 1,137,595 shares of common stock available under the ESPP. Does not include an additional 1,469,428 shares of common stock reserved for future issuance under the 2017 Plan effective January 1, 2022 by operation of the 2017 Plan’s “evergreen” provision and an additional 367,357 shares of common stock reserved for future issuance under the ESPP effective January 1, 2022 by operation of the ESPP’s “evergreen” provision. +42 +TABLE OF CONTENTS +REPORT OF AUDIT COMMITTEE +The Audit Committee of the Board of Directors, which consists entirely of directors who meet the independence and experience requirements of The Nasdaq Stock Market, has furnished the following report: +The Audit Committee assists the Board of Directors in overseeing and monitoring the integrity of our financial reporting process, compliance with legal and regulatory requirements and the quality of internal and external audit processes. The Audit Committee’s role and responsibilities are set forth in its charter adopted by the Board of Directors, which is available on our website at www.quanterix.com . The Audit Committee reviews and reassesses its charter annually and recommends any changes to the Board of Directors for approval. The Audit Committee is responsible for overseeing our overall financial reporting process, and for the appointment, compensation, retention, and oversight of the work of Ernst & Young LLP. In fulfilling its responsibilities for the financial statements for the fiscal year ended December 31, 2021, the Audit Committee took the following actions: +• +Reviewed and discussed the audited financial statements for the fiscal year ended December 31, 2021 with management and Ernst & Young LLP, our independent registered public accounting firm; +• +Discussed with Ernst & Young LLP the matters required to be discussed in accordance with Auditing Standard No. 1301 —  Communications with Audit Committees ; and +• +Received written disclosures and the letter from Ernst & Young LLP regarding its independence as required by applicable requirements of the Public Company Accounting Oversight Board regarding Ernst & Young LLP’s communications with the Audit Committee and the Audit Committee further discussed with Ernst & Young LLP their independence. +Based on the Audit Committee’s review of the audited financial statements and discussions with management and Ernst & Young LLP, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 for filing with the SEC. +Members of the Audit Committee: +Paul M. Meister ( Chairman ) +Sarah E. Hlavinka +Martin D. Madaus, Ph.D. +43 +TABLE OF CONTENTS +DELINQUENT SECTION 16(A) REPORTS +Our records reflect that all reports which were required to be filed with the SEC pursuant to Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), were filed on a timely basis, except for the following: a Form 4 that was due on June 11, 2021 for Masoud Toloue, Ph.D., reporting one transaction, was filed on June 14, 2021, a Form 4 for Dawn R. Mattoon, Ph.D. that was due on June 23, 2021, reporting one transaction, was filed on July 6, 2021, and a Form 4 that was due on September 24, 2021 for David Duffy, reporting one transaction, was filed on October 4, 2021 These late filings were due to administrative errors. +CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS +Since January 1, 2021, we have engaged in the following transactions with our directors, director nominees, executive officers and holders of more than 5% of our common stock, which we refer to as our principal stockholders, and affiliates or immediate family members of our directors, executive officers and principal stockholders. We believe that all of these transactions were on terms as favorable as could have been obtained from unrelated third parties. +We entered into a License Agreement with Tufts University in 2007, and as amended in 2013, 2017 and 2020, pursuant to which we obtained an exclusive, worldwide license to our core Simoa technology, and have entered into additional license agreements with Tufts to certain related technology (individually and collectively, the “Tufts Licenses”). David R. Walt, Ph.D., one of our directors, our founding scientist and an inventor of the Simoa technology, previously served as a Professor at Tufts University. Under the Tufts Licenses, we are required to pay Tufts University royalties on net sales of licensed products and services as well as a portion of our applicable sublicense revenues. During the year ended December 31, 2021, we recorded royalty expense of $1.6 million under the Tufts Licenses. Tufts University pays a portion of the royalties and license payments received from us to Dr. Walt pursuant to an arrangement between Tufts University and Dr. Walt, the amount of which is determined on a formulaic basis. +Dr. Walt is currently a full Professor and a Principal Investigator at Harvard Medical School and Brigham and Women’s Hospital as well as at the Wyss Institute, institutions affiliated with Harvard University. In 2020, we entered into a license agreement (the “Harvard License”) with Brigham and Women’s Hospital relating to a COVID-19 assay developed in a laboratory overseen by Dr. Walt. Dr. Walt receives no payments from Mass General Brigham, Harvard University or these affiliated entities in respect of any payments made by us under the Harvard License. During the year ended December 31, 2021, we recorded royalty expense of approximately $116,344 under the Harvard License. We also sell products and services to laboratories overseen by Dr. Walt and other entities that Dr. Walt is affiliated with. During the year ended December 31, 2021, we recorded revenue from these sales of approximately $619,426. +Stephen Hrusovsky, the son of E. Kevin Hrusovsky, our Executive Chairman of the Board of Directors, serves as our Director, Investor Relations and Business Development. For services in 2021, he received an aggregate of $223,689 in salary, bonus, and equity awards. +Registration Rights +Pursuant to our registration rights agreement to which certain of our principal stockholders, directors and their affiliates are parties, the holders of certain shares of common stock are entitled to registration rights with respect to the shares of common stock held by them. These shares include the shares held by our director David R. Walt, Ph.D. and an affiliate of our director Paul M. Meister. See “Security Ownership of Certain Beneficial Owners and Management.” +Under our registration rights agreement, holders of registrable shares can demand that we file a registration statement or request that their shares be included on a registration statement that we are otherwise filing, in either case, registering the resale of their shares of common stock. The registration rights will terminate at the earlier of (a) the closing of a Change of Control Event, as such term is defined in our restated certificate of incorporation, (b) such time as Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”), or another similar exemption under the Securities Act is available for the sale of all of such registrable shares without limitation during a three-month period without registration (and +44 +TABLE OF CONTENTS +without the requirement for us to be in compliance with the current public information required under Rule 144(c)(1)), or (c) the fifth anniversary of the completion of our initial public offering. +Demand Registration Rights. The holders of a majority of the registrable shares may require us to file a registration statement under the Securities Act at our expense, subject to certain exceptions, with respect to the resale of their registrable shares having an aggregate offering price (net of underwriting discounts and commissions, if any) of at least $5 million, and we are required to use our reasonable best efforts to effect the registration. The holders of a majority of the registrable shares may require us to effect up to two such demand registrations for the holders of registrable shares as a group. In the event we are required to effect such a demand registration, we may not effect any other registration of securities for sale for our own account (other than a registration effected solely to implement an employee benefit plan or in certain business combination transactions) within 120 days following the effective date of the demand registration. +We are also required to use our reasonable best efforts to qualify and remain qualified to register securities pursuant to a registration statement on Form S-3 under the Securities Act. Any holder or holders of registrable shares anticipated to have an aggregate sale price (net of underwriting discounts and commissions, if any) in excess of $1 million will have the right to require us to file, at our expense, an unlimited number of registration statements on Form S-3 for the registrable shares held by such requesting holder or holders, and we are required to use our reasonable best efforts to effect such registrations. +Piggyback Registration Rights. If we propose to register any of our securities under the Securities Act for sale to the public (except with respect to registration statements on Form S-4, Form S-8 or another form not available for registering the registrable shares for sale to the public), the holders of registrable shares are entitled to notice of such registration and to request that we include registrable shares for resale on such registration statement, subject to the right of any underwriter to limit the number of shares included in such registration. +We will pay all registration expenses, other than underwriting fees, commissions or discounts, related to any demand or piggyback registration, including up to $50,000 of fees and disbursements of counsel for the holders of registrable shares. The Registration Rights Agreement contains customary cross-indemnification provisions, pursuant to which we are obligated to indemnify the selling stockholders in the event of misstatements or omissions in the registration statement attributable to us and they are obligated to indemnify us for misstatements or omissions attributable to them. +Indemnification Agreements with Officers and Directors and Directors’ and Officers’ Liability Insurance +We have entered into indemnification agreements with each of our executive officers and directors. The indemnification agreements, our restated certificate of incorporation and our restated bylaws require us to indemnify our directors to the fullest extent not prohibited by Delaware law. Subject to certain limitations, our restated bylaws also require us to advance expenses incurred by our directors and officers. +The 2007 Plan and the 2017 Plan also provide that our directors (and in the case of the 2017 Plan, our employees) will not be liable for any act, omission, interpretation, construction or determination made in good faith in connection with the respective plan, and the members of our Board of Directors and any committee administering the plan will be entitled to indemnification and reimbursement by us in respect of any claim, loss, damage or expense (including reasonable attorneys’ fees) arising or resulting therefrom to the fullest extent permitted by law and/or under any directors’ and officers’ liability insurance coverage which may be in effect from time to time. +We also maintain a general liability insurance policy which covers certain liabilities of directors and officers of our company arising out of claims based on acts or omissions in their capacities as directors or officers. +Policies and Procedures for Related Party Transactions +Pursuant to its charter, our Audit Committee is responsible for reviewing and approving, prior to our entry into any such transaction, all transactions reportable by us under Item 404 of Regulation S-K in which we are a participant and in which any parties related to us, including our executive officers, our directors, beneficial owners of more than 5% of our securities, immediate family members of the foregoing persons and +45 +TABLE OF CONTENTS +any other persons whom our Board of Directors determines may be considered related persons under Item 404 of Regulation S-K, has or is expected to have a direct or indirect material interest. +In reviewing and approving such transactions, the Audit Committee will obtain, or will direct our management to obtain on its behalf, all information that the committee believes to be relevant and important to a review of the transaction prior to its approval. Following receipt of the necessary information, a discussion will be held of the relevant factors if deemed to be necessary by the committee prior to approval. If a discussion is not deemed to be necessary, approval may be given by written consent of the committee. This approval authority may also be delegated to the chair of the Audit Committee in some circumstances. No related person transaction will be entered into prior to the completion of these procedures. +The Audit Committee or its chair, as the case may be, will approve only those related person transactions that are determined to be in, or not inconsistent with, the best interests of us and our stockholders, taking into account all available facts and circumstances as the committee or the chair determines in good faith to be necessary in accordance with principles of Delaware law generally applicable to directors of a Delaware corporation. These facts and circumstances will typically include, but not be limited to, the benefits of the transaction to us; the impact on a director’s independence in the event the related person is a director, an immediate family member of a director or an entity in which a director is a partner, stockholder or executive officer; the availability of other sources for comparable products or services; the terms of the transaction; and the terms of comparable transactions that would be available to unrelated third parties or to employees generally. No member of the Audit Committee will participate in any review, consideration or approval of any related person transaction with respect to which the member or any of his or her immediate family members has an interest. +46 +TABLE OF CONTENTS +PROPOSAL NO. 1 +ELECTION OF DIRECTORS +Our Board of Directors currently consists of eight members, classified into three classes as follows: (1) Martin D. Madaus, Ph.D. and Laurie J. Olson constitute Class I with a term ending at the 2024 annual meeting of stockholders; (2) Sarah E. Hlavinka, Masoud Toloue, Ph.D. and David R. Walt, Ph.D. constitute Class II with a term ending at the upcoming 2022 annual meeting of stockholders; and (3) E. Kevin Hrusovsky, Keith L. Crandell and Paul M. Meister constitute Class III with a term ending at the 2023 annual meeting of stockholders. At each annual meeting of stockholders, directors are elected for a full term of three years to succeed those directors whose terms are expiring. +Upon the recommendation of our Nominating and Governance Committee, our Board of Directors has voted to nominate Sarah E. Hlavinka, Masoud Toloue, Ph.D. and David R. Walt, Ph.D. for election at the annual meeting as Class II directors for a term of three years to serve until the 2025 annual meeting of stockholders and until their respective successors are elected and qualified. +Unless authority to vote for any of these nominees is withheld, the shares represented by the enclosed proxy will be voted FOR the election of Sarah E. Hlavinka, Masoud Toloue, Ph.D. and David R. Walt, Ph.D. as directors. In the event that any of the nominees becomes unable or unwilling to serve, the shares represented by the enclosed proxy will be voted for the election of such other person as the Board of Directors may recommend in that nominee’s place. We have no reason to believe that any of the nominees will be unable or unwilling to serve as a director. +A plurality of the shares voted FOR each nominee is required to elect each nominee as a director. +THE BOARD OF DIRECTORS RECOMMENDS THE ELECTION OF SARAH E. HLAVINKA, MASOUD TOLOUE, PH.D. AND DAVID R. WALT, PH.D. AS DIRECTORS, AND PROXIES SOLICITED BY THE BOARD WILL BE VOTED IN FAVOR THEREOF UNLESS A STOCKHOLDER HAS INDICATED OTHERWISE ON THE PROXY. +47 +TABLE OF CONTENTS +PROPOSAL NO. 2 +ADVISORY VOTE ON APPROVAL OF EXECUTIVE COMPENSATION +AS DISCLOSED IN THIS PROXY STATEMENT +We are seeking your advisory vote as required by the Exchange Act, on the approval of the compensation of our named executive officers as described in the Compensation Discussion and Analysis, the compensation tables and related material contained in this proxy statement. Because your vote is advisory, it will not be binding on our Compensation Committee or our Board of Directors. However, the Compensation Committee and our Board of Directors will review the voting results and take them into consideration when making future decisions regarding executive compensation. +Our compensation philosophy is designed to align each executive’s compensation with Quanterix’s short-term and long-term performance and to provide the compensation and incentives needed to attract, motivate and retain key executives who are crucial to our long-term success. Stockholders are urged to read the Compensation Discussion and Analysis section of this proxy statement, which discusses how our compensation policies and procedures implement our compensation philosophy. The Compensation Committee and our Board of Directors believe that these policies and procedures are effective in implementing our compensation philosophy and in achieving its goals. +In accordance with the rules of the SEC, the following resolution, commonly known as a “say-on-pay” vote, is being submitted for a stockholder vote at the 2022 annual meeting: +“RESOLVED, that the compensation paid to the named executive officers of Quanterix Corporation, as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the compensation tables and the related material disclosed in this proxy statement, is hereby APPROVED.” +The affirmative vote of a majority of the votes cast affirmatively or negatively FOR this proposal is required to approve, on an advisory basis, this resolution. +OUR BOARD OF DIRECTORS RECOMMENDS A VOTE TO APPROVE THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS, AND PROXIES SOLICITED BY OUR BOARD OF DIRECTORS WILL BE VOTED IN FAVOR OF SUCH APPROVAL UNLESS A STOCKHOLDER INDICATES OTHERWISE ON THE PROXY. +48 +TABLE OF CONTENTS +PROPOSAL NO. 3 +ADVISORY VOTE ON APPROVAL OF THE FREQUENCY OF HOLDING AN ADVISORY VOTE ON THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS +We are seeking your input with regard to the frequency of holding future stockholder advisory votes on the compensation of our named executive officers. In particular, we are asking whether the advisory vote on the compensation of our named executive officers (Proposal No. 2) should occur every year, every two years or every three years. Because your vote is advisory, it will not be binding on our Compensation Committee or our Board of Directors. However, the Compensation Committee and our Board of Directors will review the voting results and take them into consideration when making future decisions regarding how frequently it should present the advisory vote on the compensation of our named executive officers to our stockholders. +The Compensation Committee, Board of Directors and management believe that it is appropriate and in our best interests of our stockholders to vote in favor of an annual advisory vote on the compensation of our named executive officers. An advisory vote each year will permit our stockholders to provide annual feedback to us on our compensation policies, practices and compensation awards for our named executive officers. This is consistent with our policy of giving stockholders the opportunity to voice concerns with management or our Board of Directors. An annual advisory vote will give the Board of Directors, the Compensation Committee and management more timely feedback from the stockholders to allow us to evaluate and adjust, when we consider appropriate, the compensation of our named executive officers. If our stockholders approve the recommended frequency of holding the advisory vote once per year, we will implement that frequency without further action by the Board of Directors. +The proxy card provides stockholders with the opportunity to choose among four options (holding the vote every one, two or three years, or abstaining) and, therefore, stockholders will not be voting to approve or disapprove our Board of Directors’ recommendation. The affirmative vote of a majority of the shares voted for this proposal — every year, every two years or every three years — will be the frequency approved, on an advisory basis, by our stockholders. However, because the vote on the frequency of holding future advisory votes on the compensation of our named executive officers is not binding, if none of the frequency options receives a majority vote, the option receiving the greatest number of votes will be considered the frequency preferred by our stockholders. +OUR BOARD OF DIRECTORS RECOMMENDS A VOTE TO APPROVE, ON AN ADVISORY BASIS, THE FREQUENCY OF HOLDING A VOTE ON THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS EVERY YEAR, AND PROXIES SOLICITED BY OUR BOARD OF DIRECTORS WILL BE VOTED IN FAVOR OF SUCH FREQUENCY UNLESS A STOCKHOLDER INDICATES OTHERWISE ON THE PROXY CARD. +49 +TABLE OF CONTENTS +PROPOSAL NO. 4 +RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT +REGISTERED PUBLIC ACCOUNTING FIRM +The Audit Committee has appointed Ernst & Young LLP as our independent registered public accounting firm to audit our financial statements for the fiscal year ending December 31, 2022. The Board of Directors proposes that the stockholders ratify this appointment. Ernst & Young LLP audited our financial statements for the fiscal years ended December 31, 2020 and 2021. We expect that representatives of Ernst & Young LLP will be present at the annual meeting, will be able to make a statement if they so desire and will be available to respond to appropriate questions. +In deciding to appoint Ernst & Young LLP, the Audit Committee reviewed auditor independence issues and existing commercial relationships with Ernst & Young LLP and concluded that Ernst & Young LLP has no commercial relationship with the Company that would impair its independence for the fiscal year ending December 31, 2022. +The following table presents fees for professional audit services rendered by Ernst & Young LLP, our independent registered public accounting firm, for the audit of our annual financial statements for the years ended December 31, 2020 and 2021, and fees billed for other services rendered by Ernst & Young LLP during those periods. +2020 +2021 +Audit fees: (1) +$ +1,436,414 +$ +2,118,350 +Audit-related fees: (2) +— +— +Tax fees: (3) +56,350 +49,350 +Total +$ +1,492,764 +$ +2,167,700 +(1) +Audit fees consisted of audit work performed in the preparation of financial statements and services in connection with our periodic and current SEC filings and registration statements, as well as work generally only the independent registered public accounting firm can reasonably be expected to provide, such as statutory audits. +(2) +Audit-related fees consisted of fees for assurance and related services including due diligence in connection with mergers and acquisitions, accounting consultations, and audits in connection with mergers and acquisitions which are not reported under “Audit Fees.” +(3) +Tax fees consist principally of assistance with matters related to tax compliance and reporting and tax consulting services primarily related to international tax planning strategies. +Policy on Audit Committee Pre-Approval of Audit and Permissible Non-audit Services of Independent Public Accountant +Consistent with SEC policies regarding auditor independence, the Audit Committee has responsibility for appointing, setting compensation and overseeing the work of our independent registered public accounting firm. In recognition of this responsibility, the Audit Committee has established a policy to pre-approve all audit and permissible non-audit services provided by our independent registered public accounting firm; provided however, that de minimis non-audit services may instead be approved in accordance with applicable SEC rules. +Prior to engagement of an independent registered public accounting firm for the next year’s audit, management will submit an aggregate of services expected to be rendered during that year for each of four categories of services to the Audit Committee for approval. +1. +Audit services include audit work performed in the preparation of financial statements, as well as work that generally only an independent registered public accounting firm can reasonably be +50 +TABLE OF CONTENTS +expected to provide, including comfort letters, statutory audits and attest services and consultation regarding financial accounting and/or reporting standards. +2. +Audit-Related services are for assurance and related services that are traditionally performed by an independent registered public accounting firm, including due diligence related to mergers and acquisitions, employee benefit plan audits and special procedures required to meet certain regulatory requirements. +3. +Tax services include all services performed by an independent registered public accounting firm’s tax personnel except those services specifically related to the audit of the financial statements, and includes fees in the areas of tax compliance, tax planning and tax advice. +4. +Other Fees are those associated with services not captured in the other categories. The Company generally does not request such services from our independent registered public accounting firm. +Prior to engagement, the Audit Committee pre-approves these services by category of service. The fees are budgeted, and the Audit Committee requires our independent registered public accounting firm and management to report actual fees versus the budget periodically throughout the year by category of service. During the year, circumstances may arise when it may become necessary to engage our independent registered public accounting firm for additional services not contemplated in the original pre-approval. In those instances, the Audit Committee requires specific pre-approval before engaging our independent registered public accounting firm. +The Audit Committee may delegate pre-approval authority to one or more of its members. The member to whom such authority is delegated must report, for informational purposes only, any pre-approval decisions to the Audit Committee at its next scheduled meeting. +In the event the stockholders do not ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm, the Audit Committee will reconsider its appointment. +The affirmative vote of a majority of the votes cast affirmatively or negatively FOR this proposal is required to ratify the appointment of the independent registered public accounting firm. +THE BOARD OF DIRECTORS RECOMMENDS A VOTE TO RATIFY THE APPOINTMENT OF ERNST & YOUNG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM, AND PROXIES SOLICITED BY THE BOARD WILL BE VOTED IN FAVOR OF SUCH RATIFICATION UNLESS A STOCKHOLDER INDICATES OTHERWISE ON THE PROXY. +51 +TABLE OF CONTENTS +CORPORATE CODE OF CONDUCT AND ETHICS +We have adopted a corporate code of conduct and ethics that applies to all of our employees, including our chief executive officer and chief financial and accounting officers. The text of the code of conduct and ethics is posted on our website at www.quanterix.com under “Investors — Corporate Governance — Governance Highlights” and will be made available to stockholders without charge, upon request, in writing to the Corporate Secretary at 900 Middlesex Turnpike, Building 1, Billerica, Massachusetts 01821. Disclosure regarding any amendments to, or waivers from, provisions of the code that apply to our directors, principal executive officer or principal financial officer will be included in a Current Report on Form 8-K within four business days following the date of the amendment or waiver, unless website posting or the issuance of a press release of such amendments or waivers is then permitted by the rules of The Nasdaq Stock Market. +OTHER MATTERS +The Board of Directors knows of no other business which will be presented to the annual meeting. If any other business is properly brought before the annual meeting, proxies will be voted in accordance with the judgment of the persons named therein. +STOCKHOLDER PROPOSALS AND NOMINATIONS FOR DIRECTOR +To be considered for inclusion in the proxy statement relating to our 2023 annual meeting of stockholders, we must receive stockholder proposals (other than for director nominations) no later than January 4, 2023. To be considered for presentation at the 2023 annual meeting, although not included in the proxy statement, proposals (including director nominations that are not requested to be included in our proxy statement) must be received no earlier than February 23, 2023 and no later than March 25, 2023. Proposals that are not received in a timely manner will not be voted on at the 2023 annual meeting. If a proposal is received on time, the proxies that management solicits for the meeting may still exercise discretionary voting authority on the proposal under circumstances consistent with the proxy rules of the SEC. All stockholder proposals should be marked for the attention of Secretary, Quanterix Corporation, 900 Middlesex Turnpike, Building 1, Billerica, Massachusetts 01821. +Billerica, Massachusetts +April 29, 2022 +52 +TABLE OF CONTENTS +000004MMMMMMMMMENDORSEMENT_LINE______________ SACKPACK_____________MR A SAMPLEDESIGNATION (IF ANY)ADD 1ADD 2ADD 3ADD 4ADD 5ADD 6Using a black ink pen, mark your votes with an X as shown in this example.Please do not write outside the designated areas. MMMMMMMMMMMMMMMMMMMMMMMMMM C123456789000000000.000000 ext000000000.000000 ext000000000.000000 ext000000000.000000 ext000000000.000000 ext000000000.000000 extYour vote matters – here’s how to vote!You may vote online or by phone instead of mailing this card.OnlineGo to www.investorvote.com/QTRXor scan the QR code — login details are located in the shaded bar below.PhoneCall toll free 1-800-652-VOTE (8683) within the USA, US territories and CanadaSave paper, time and money!Sign up for electronic delivery atwww.investorvote.com/QTRX 2022 Annual Meeting Proxy Card1234 5678 9012 345 IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED +ENVELOPE. AProposals — The Board of Directors recommends a vote FOR all the nominees listed, FOR Proposals 2 and 4 and FOR 1 YEAR on Proposal 3.1. Election of Class II Directors for a three-year term expiring in 2025:+ForWithholdForWithholdForWithhold01 - Sarah E. Hlavinka02 - Masoud Toloue, Ph.D.03 - David R. Walt, Ph.D.ForAgainstAbstain1 Year 2 Years 3 Years Abstain2. To approve, by a non-binding advisory vote, the compensation3. To approve, by a non-binding advisory vote, theof our named executive officers, as disclosed in the proxyfrequency of holding an advisory vote onstatement.compensation of our named executive officers.4. Ratification of the appointment of Ernst & Young LLP as theForAgainstAbstainindependent registered public accounting firm for the fiscalyear ending December 31, 2022.BAuthorized Signatures — This section must be completed for your vote to count. Please date and sign below.Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title.Date (mm/dd/yyyy) — Please print date below.Signature 1 — Please keep signature within the box.Signature 2 — Please keep signature within the box. MMMMMMM C 1234567890J N T1 U P X 5 4 1 7 8 7 MR A SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE 140 CHARACTERS) MR A SAMPLE AND MR A SAMPLE ANDMR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND + MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND 03N1TC +TABLE OF CONTENTS +2022 Annual Meeting of Quanterix Corporation StockholdersJune 23, 2022, 10:00 AM ETThis year’s annual meeting will be a virtual meeting via live webcast on the Internet.You will be able to attend the annual meeting, vote and submit your questions during the meeting by visiting meetnow.global/MD2UGTW.The 15 digit control number can be located on the front of the Notice or Proxy Card you received.Important notice regarding the Internet availability of proxy materials for the Annual Meeting of Stockholders.The material is available at: www.investorvote.com/QTRXSmall steps make an impact.Help the environment by consenting to receive electronic delivery, sign up at www.investorvote.com/QTRX IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. Quanterix Corporation+Notice of 2022 Annual Meeting of StockholdersProxy Solicited by Board of Directors for Annual Meeting — June 23, 2022Masoud Toloue, Ph.D., Michael Doyle and John Fry, or each of them, each with the +power of substitution, are hereby authorized to represent and vote the shares of the undersigned, with all the powers which the undersigned would possess if personally present, at the Annual Meeting of Stockholders of Quanterix Corporation to be held virtually on June 23, 2022 or at any postponement or adjournment thereof.Shares represented by this proxy will be voted as directed by the stockholder. If no such directions are indicated, the Proxies will have authority to vote FOR the election of the nominees as directors, FOR Proposals 2 and 4 and FOR 1 YEAR on Proposal 3.In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting.(Items to be voted appear on reverse side)CNon-Voting ItemsChange of Address — Please print new address below.Comments — Please print your comments below. + \ No newline at end of file diff --git a/raw/proxies/0001503274/0001104659-22-053506/proxy_rpt.txt b/raw/proxies/0001503274/0001104659-22-053506/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..fa62d25caeed31ead91397d5bd50cebf685d6b28 --- /dev/null +++ b/raw/proxies/0001503274/0001104659-22-053506/proxy_rpt.txt @@ -0,0 +1,9 @@ +CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS +Since January 1, 2021, we have engaged in the following transactions with our directors, director nominees, executive officers and holders of more than 5% of our common stock, which we refer to as our principal stockholders, and affiliates or immediate family members of our directors, executive officers and principal stockholders. We believe that all of these transactions were on terms as favorable as could have been obtained from unrelated third parties. +We entered into a License Agreement with Tufts University in 2007, and as amended in 2013, 2017 and 2020, pursuant to which we obtained an exclusive, worldwide license to our core Simoa technology, and have entered into additional license agreements with Tufts to certain related technology (individually and collectively, the “Tufts Licenses”). David R. Walt, Ph.D., one of our directors, our founding scientist and an inventor of the Simoa technology, previously served as a Professor at Tufts University. Under the Tufts Licenses, we are required to pay Tufts University royalties on net sales of licensed products and services as well as a portion of our applicable sublicense revenues. During the year ended December 31, 2021, we recorded royalty expense of $1.6 million under the Tufts Licenses. Tufts University pays a portion of the royalties and license payments received from us to Dr. Walt pursuant to an arrangement between Tufts University and Dr. Walt, the amount of which is determined on a formulaic basis. +Dr. Walt is currently a full Professor and a Principal Investigator at Harvard Medical School and Brigham and Women’s Hospital as well as at the Wyss Institute, institutions affiliated with Harvard University. In 2020, we entered into a license agreement (the “Harvard License”) with Brigham and Women’s Hospital relating to a COVID-19 assay developed in a laboratory overseen by Dr. Walt. Dr. Walt receives no payments from Mass General Brigham, Harvard University or these affiliated entities in respect of any payments made by us under the Harvard License. During the year ended December 31, 2021, we recorded royalty expense of approximately $116,344 under the Harvard License. We also sell products and services to laboratories overseen by Dr. Walt and other entities that Dr. Walt is affiliated with. During the year ended December 31, 2021, we recorded revenue from these sales of approximately $619,426. +Stephen Hrusovsky, the son of E. Kevin Hrusovsky, our Executive Chairman of the Board of Directors, serves as our Director, Investor Relations and Business Development. For services in 2021, he received an aggregate of $223,689 in salary, bonus, and equity awards. +Registration Rights +Pursuant to our registration rights agreement to which certain of our principal stockholders, directors and their affiliates are parties, the holders of certain shares of common stock are entitled to registration rights with respect to the shares of common stock held by them. These shares include the shares held by our director David R. Walt, Ph.D. and an affiliate of our director Paul M. Meister. See “Security Ownership of Certain Beneficial Owners and Management.” +Under our registration rights agreement, holders of registrable shares can demand that we file a registration statement or request that their shares be included on a registration statement that we are otherwise filing, in either case, registering the resale of their shares of common stock. The registration rights will terminate at the earlier of (a) the closing of a Change of Control Event, as such term is defined in our restated certificate of incorporation, (b) such time as Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”), or another similar exemption under the Securities Act is available for the sale of all of such registrable shares without limitation during a three-month period without registration (and +44 \ No newline at end of file diff --git a/raw/proxies/0001503274/0001104659-23-045632/proxy.txt b/raw/proxies/0001503274/0001104659-23-045632/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..881df29917202f63f663ab7820cd288093265109 --- /dev/null +++ b/raw/proxies/0001503274/0001104659-23-045632/proxy.txt @@ -0,0 +1,2540 @@ +tm231921-1_nonfiling - none - 8.8125448s +TABLE OF CONTENTS +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Proxy Statement Pursuant to Section 14(a) of +the Securities Exchange Act of 1934 (Amendment No.     ) +Filed by the Registrant ☒ +Filed by a Party other than the Registrant ☐ +Check the appropriate box: +☐ +Preliminary Proxy Statement +☐ +Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +☒ +Definitive Proxy Statement +☐ +Definitive Additional Materials +☐ +Soliciting Material under §240.14a-12 +Quanterix Corporation +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +☒ +No fee required. +☐ +Fee paid previously with preliminary materials. +☐ +Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11. +TABLE OF CONTENTS +April 14, 2023 +To Our Stockholders: +You are cordially invited to attend the 2023 annual meeting of stockholders of Quanterix Corporation to be held at 10:00 a.m. ET on Wednesday, June 7, 2023 at our offices located at 900 Middlesex Turnpike, Building 1, Billerica, MA 01821. If the annual meeting is adjourned for any reason, then proxies submitted may be used at any adjournment of the 2023 annual meeting. +Details regarding the meeting, the business to be conducted at the meeting, and information about Quanterix Corporation that you should consider when you vote your shares are described in the accompanying proxy statement. +At the annual meeting, two persons will be elected to our Board of Directors to serve three-year terms expiring in 2026. In addition, we will ask stockholders to approve by an advisory vote the compensation of our named executive officers, as disclosed in this proxy statement, and to ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2023. Our Board of Directors recommends the approval of each of Proposal Nos. 1, 2 and 3. Such other business will be transacted as may properly come before the annual meeting. +Under Securities and Exchange Commission rules that allow companies to furnish proxy materials to stockholders over the internet, we have elected to deliver our proxy materials to the majority of our stockholders over the internet. This delivery process allows us to provide stockholders with the information they need, while at the same time conserving natural resources and lowering the cost of delivery. On or about April 20, 2023, we intend to begin sending to our stockholders a Notice of Internet Availability of Proxy Materials (the “Notice”) containing instructions on how to access our proxy statement for our 2023 Annual Meeting of Stockholders and our 2022 annual report to stockholders. The Notice also provides instructions on how to vote online or by telephone and how to receive a paper copy of the proxy materials by mail. +We hope you will be able to attend the annual meeting. Whether or not you plan to attend the annual meeting, we hope you will vote promptly. Information about voting methods is set forth in the accompanying proxy statement. +Thank you for your continued support of Quanterix Corporation. +Sincerely, +Masoud Toloue, Ph.D. +President and Chief Executive Officer +TABLE OF CONTENTS +QUANTERIX CORPORATION +900 Middlesex Turnpike +Billerica, Massachusetts 01821 +April 14, 2023 +NOTICE OF 2023 ANNUAL MEETING OF STOCKHOLDERS +TIME: 10:00 a.m. ET +DATE: Wednesday, June 7, 2023 +LOCATION: Quanterix Corporation, 900 Middlesex Turnpike, Building 1, Billerica, MA 01821 +PURPOSES: +1. +To elect two directors to serve three year terms expiring at the annual meeting of stockholders in 2026 or until their successors are duly elected and qualified; +2. +To approve by an advisory vote the compensation of our named executive officers, as disclosed in this proxy statement (“Say-on-Pay”); +3. +To ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2023; and +4. +To transact such other business that is properly presented at the annual meeting and any adjournments or postponements thereof. +WHO MAY VOTE: +You may vote if you were the record owner of Quanterix Corporation common stock at the close of business on April 10, 2023. A list of stockholders of record will be available at the annual meeting and, during the 10 days prior to the annual meeting, at our principal executive offices, located at 900 Middlesex Turnpike, Building 1, Billerica, Massachusetts 01821. +All stockholders are cordially invited to attend the annual meeting. Whether you plan to attend the annual meeting or not, we urge you to vote by following the instructions in the Notice of Internet Availability of Proxy Materials and submit your proxy by the internet, telephone or mail in order to ensure the presence of a quorum. You may change or revoke your proxy at any time before it is voted at the meeting. +BY ORDER OF THE BOARD OF DIRECTORS +Laurie A. Churchill +General Counsel and Secretary +TABLE OF CONTENTS +TABLE OF CONTENTS +Page +Important Information About the Annual Meeting and Voting +2 +Security Ownership of Certain Beneficial Owners and Management +6 +Management and Corporate Governance +9 +Compensation Committee Report +17 +Compensation Discussion and Analysis +18 +Executive Officer and Director Compensation +28 +Equity Compensation Plan Information +41 +Report of Audit Committee +42 +Additional Information Regarding our Independent Registered Public Accounting Firm +43 +Delinquent Section 16(a) Reports +45 +Certain Relationships and Related Person Transactions +46 +Proposal No. 1: Election of Directors +48 +Proposal No. 2: Advisory Vote on Approval of Executive Compensation +49 +Proposal No. 3: Ratification of the Appointment of Independent Registered Public Accounting +Firm +50 +Corporate Code of Conduct and Ethics +51 +Other Matters +51 +Stockholder Proposals and Nominations for Director +51 +TABLE OF CONTENTS +QUANTERIX CORPORATION +900 Middlesex Turnpike +Billerica, Massachusetts 01821 +PROXY STATEMENT FOR +2023 ANNUAL MEETING OF STOCKHOLDERS +TO BE HELD ON JUNE 7, 2023 +This proxy statement, along with the accompanying Notice of 2023 Annual Meeting of Stockholders, contains information about the 2023 annual meeting of stockholders of Quanterix Corporation to be held at 10:00 ET, at our offices located at 900 Middlesex Turnpike, Building 1, Billerica, MA 01821. If the annual meeting is adjourned for any reason, then proxies submitted may be used at any adjournment of the 2023 annual meeting. +In this proxy statement, we refer to Quanterix Corporation as “Quanterix,” “the Company,” “we” and “us.” +This proxy statement relates to the solicitation of proxies by our Board of Directors for use at the annual meeting. +On or about April 20, 2023, we intend to begin sending the Important Notice Regarding the Availability of Proxy Materials to stockholders entitled to vote at the annual meeting. +IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE +STOCKHOLDER MEETING TO BE HELD ON JUNE 7, 2023 +This proxy statement and our 2022 annual report to stockholders are available for viewing, printing and downloading at www.investorvote.com/qtrx . To view these materials, please have your 15-digit control number(s) available that appears on your Notice or proxy card. On this website, you can also elect to receive future distributions of our proxy statements and annual reports to stockholders by electronic delivery. +Additionally, you can find a copy of our Annual Report on Form 10-K, which includes our financial statements, for the fiscal year ended December 31, 2022, on the website of the Securities and Exchange Commission (the “SEC”) at www.sec.gov , or in the “SEC Filings” section of the “Financial Information” section of the “Investors” section of our website at www.quanterix.com . You may also obtain a printed copy of our Annual Report on Form 10-K, including our financial statements, free of charge, from us by sending a written request to: Quanterix Corporation, Attn: Investor Relations, 900 Middlesex Turnpike, Building 1, Billerica, Massachusetts 01821. Exhibits will be provided upon written request and payment of an appropriate processing fee. +TABLE OF CONTENTS +IMPORTANT INFORMATION ABOUT THE ANNUAL MEETING AND VOTING +Why Is the Company Soliciting My Proxy? +Our Board of Directors is soliciting your proxy to vote at the 2023 annual meeting of stockholders to be held on Wednesday, June 7, 2023, at 10:00 a.m. ET, at our office located at 900 Middlesex Turnpike, Building 1, Billerica, MA 01821, and any adjournments or postponements of the meeting, which we refer to as the annual meeting. This proxy statement, along with the accompanying Notice of Annual Meeting of Stockholders, summarizes the purposes of the meeting and the information you need to know to vote at the annual meeting. +We have made available to you on the internet or have sent you this proxy statement, the Notice of Annual Meeting of Stockholders, the proxy card and a copy of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 because you owned shares of our common stock on the record date. We intend to commence distribution of the Important Notice Regarding the Availability of Proxy Materials, which we refer to throughout this proxy statement as the Notice, and, if applicable, proxy materials to stockholders on or about April 20, 2023. +Why Did I Receive a Notice in the Mail Regarding the Internet Availability of Proxy Materials Instead of a Full Set of Proxy Materials? +As permitted by the rules of the SEC, we may furnish our proxy materials to our stockholders by providing access to such documents on the internet, rather than mailing printed copies of these materials to each stockholder. Most stockholders will not receive printed copies of the proxy materials unless they request them. We believe that this process should expedite stockholders’ receipt of proxy materials, lower the costs of the annual meeting and help to conserve natural resources. If you received a Notice by mail or electronically, you will not receive a printed or email copy of the proxy materials unless you request one by following the instructions included in the Notice. Instead, the Notice instructs you as to how you may access and review all of the proxy materials and submit your proxy on the internet. If you requested a paper copy of the proxy materials, you may authorize the voting of your shares by following the instructions on the proxy card, in addition to the other methods of voting described in this proxy statement. +Who Can Vote? +Only stockholders who owned our common stock at the close of business on April 10, 2023 are entitled to vote at the annual meeting. On this record date, there were 37,382,307 shares of our common stock outstanding and entitled to vote. Our common stock is our only class of voting stock. +You do not need to attend the annual meeting to vote your shares. Shares represented by valid proxies, received in time for the annual meeting and not revoked prior to the annual meeting, will be voted at the annual meeting. For instructions on how to change or revoke your proxy, see “May I Change or Revoke My Proxy?” below. +How Many Votes Do I Have? +Each share of our common stock that you own entitles you to one vote. +How Do I Vote? +Whether you plan to attend the annual meeting or not, we urge you to vote by proxy. All shares represented by valid proxies that we receive through this solicitation, and that are not revoked, will be voted in accordance with your instructions on the proxy card or as instructed via internet or telephone. You may specify whether your shares should be voted for or withheld for each nominee for director, and whether your shares should be voted for, voted against or abstain with respect to the advisory vote regarding the compensation of our named executive officers and the ratification of the appointment of our independent auditors. If you properly submit a proxy without giving specific voting instructions, your shares will be voted in accordance with the recommendations of our Board of Directors as noted below. Voting by proxy will +2 +TABLE OF CONTENTS +not affect your right to attend the annual meeting. If your shares are registered directly in your name through our stock transfer agent, Computershare Trust Company, N.A., or you have stock certificates registered in your name, you may vote: +• +By internet or by telephone. Follow the instructions included in the Notice or, if you received printed materials, in the proxy card to vote over the internet or by telephone. +• +By mail. If you received a proxy card by mail, you can vote by mail by completing, signing, dating and returning the proxy card as instructed on the card. If you sign the proxy card but do not specify how you want your shares voted, they will be voted in accordance with the recommendations of our Board of Directors as noted below. +• +At the meeting. Stockholders may vote in person during the annual meeting. +Telephone and internet voting facilities for stockholders of record will be available 24 hours a day and will close at 1:00 a.m. ET on June 7, 2023. +If your shares are held in “street name” (held in the name of a bank, broker or other holder of record), you will receive instructions from the holder of record. You must follow the instructions of the holder of record in order for your shares to be voted. Telephone and internet voting also will be offered to stockholders owning shares through certain banks and brokers. +How Does the Board of Directors Recommend that I Vote on the Proposals? +The Board of Directors recommends that you vote as follows: +• +“ FOR ” the election of the two (2) nominees for director; +• +“ FOR ” the compensation of our named executive officers, as disclosed in this proxy statement; and +• +“ FOR ” the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2023. +If any other matter is presented at the annual meeting, your proxy provides that your shares will be voted by the proxy holder listed in the proxy in accordance with the proxy holder’s best judgment. At the time this proxy statement was first made available, we knew of no matters that needed to be acted on at the annual meeting, other than those discussed in this proxy statement. +May I Change or Revoke My Proxy? +If you give us your proxy, you may change or revoke it at any time before the annual meeting. You may change or revoke your proxy in any one of the following ways: +• +if you received a proxy card, by signing a new proxy card with a date later than your previously delivered proxy and submitting it as instructed above; +• +by re-voting by internet or by telephone as instructed above; +• +by notifying our Corporate Secretary in writing before the annual meeting that you have revoked your proxy; or +• +by attending the annual meeting and voting in person. +Your most current vote, whether by telephone, internet or proxy card, is the one that will be counted. +What if I Receive More than One Notice or Proxy Card? +You may receive more than one Notice or proxy card if you hold shares of our common stock in more than one account, which may be in registered form or held in street name. Please vote in the manner described above under “How Do I Vote?” for each account to ensure that all of your shares are voted. +Will My Shares Be Voted if I Do Not Vote? +If your shares are registered in your name or if you have stock certificates, they will not be counted if you do not vote as described above under “How Do I Vote?” If your shares are held in street name and you +3 +TABLE OF CONTENTS +do not provide voting instructions to the bank, broker or other nominee that holds your shares as described above, the bank, broker or other nominee that holds your shares has the authority to vote your unvoted shares only on the ratification of the appointment of our independent registered public accounting firm without receiving instructions from you. Therefore, we encourage you to provide voting instructions to your bank, broker or other nominee. This ensures your shares will be voted at the annual meeting and in the manner you desire. A “broker non-vote” will occur if your broker cannot vote your shares on a particular matter because it has not received instructions from you and does not have discretionary voting authority on that matter or because your broker chooses not to vote on a matter for which it does have discretionary voting authority. +What Vote is Required to Approve Each Proposal and How Are Votes Counted? +Proposal 1: Elect Directors +The two director nominees who receive the most votes (also known as a “plurality” of the votes cast) will be elected. You may vote either FOR both of the nominees, WITHHOLD your vote from both of the nominees or WITHHOLD your vote from either of the nominees. Votes that are withheld will not be included in the vote tally for the election of the directors. Brokerage firms do not have authority to vote customers’ unvoted shares held by the firms in street name for the election of the directors. As a result, any shares not voted by a customer will be treated as a broker non-vote. Such broker non-votes will have no effect on the results of this vote. +Proposal 2: Approve an Advisory Vote on the Compensation of Our Named Executive Officers +The affirmative vote of a majority of the votes cast affirmatively or negatively for this proposal is required to approve, on an advisory basis, the compensation of our named executive officers, as described in this proxy statement. Abstentions will have no effect on the results of this vote. Brokerage firms do not have authority to vote customers’ unvoted shares held by the firms in street name on this proposal. As a result, any shares not voted by a customer will be treated as a broker non-vote. Such broker non-votes will have no effect on the results of this vote. Although the advisory vote is non-binding, the Compensation Committee of our Board of Directors and our Board of Directors will review the voting results and take them into consideration when making future decisions regarding executive compensation. +Proposal 3: Ratify Appointment +of Independent Registered Public Accounting Firm +The affirmative vote of a majority of the votes cast affirmatively or negatively for this proposal is required to ratify the appointment of our independent registered public accounting firm. Abstentions will have no effect on the results of this vote. Brokerage firms have authority to vote customers’ unvoted shares held by the firms in street name on this proposal. If a broker does not exercise this authority, such broker non-votes will have no effect on the results of this vote. We are not required to obtain the approval of our stockholders to appoint our independent registered public accounting firm. However, if our stockholders do not ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for 2023, the Audit Committee of our Board of Directors will reconsider its appointment. +Where Can I Find the Voting Results of the Annual Meeting? +The preliminary voting results will be announced at the annual meeting, and we will publish preliminary results, or final results if available, in a Current Report on Form 8-K within four business days of the annual meeting. If final results are unavailable at the time we file the Form 8-K, then we will file an amended Current Report on Form 8-K to disclose the final voting results within four business days after the final voting results are known. +4 +TABLE OF CONTENTS +What Are the Costs of Soliciting these Proxies? +We will pay all of the costs of soliciting these proxies. Our directors and employees may solicit proxies in person or by telephone, fax or email. We will not pay these employees and directors any additional compensation for these services. We will ask banks, brokers and other institutions, nominees and fiduciaries to forward these proxy materials to their principals and to obtain authority to execute proxies. We will then reimburse them for their expenses. +What Constitutes a Quorum for the Annual Meeting? +The presence, in person or by proxy, of the holders of a majority of the voting power of all outstanding shares of our common stock entitled to vote at the annual meeting is necessary to constitute a quorum at the annual meeting. Votes of stockholders of record who are present at the annual meeting in person or by proxy, abstentions and broker non-votes are counted for purposes of determining whether a quorum exists. +Householding of Annual Disclosure Documents +SEC rules concerning the delivery of annual disclosure documents allow us or your broker to send a single Notice or, if applicable, a single set of our proxy materials to any household at which two or more of our stockholders reside, if we or your broker believe that the stockholders are members of the same family. This practice, referred to as “householding,” benefits both you and us. It reduces the volume of duplicate information received at your household and helps to reduce our expenses. The rule applies to our Notices, annual reports, proxy statements and information statements. Once you receive notice from your broker or from us that communications to your address will be “householded,” the practice will continue until you are otherwise notified or until you revoke your consent to the practice. Stockholders who participate in householding will continue to have access to and utilize separate proxy voting instructions. +If your household received a single Notice or, if applicable, a single set of proxy materials this year, but you would prefer to receive your own copy, please contact our transfer agent, Computershare Trust Company, N.A., by calling their toll-free number, 1-800-736-3001. +If you do not wish to participate in “householding” and would like to receive your own Notice or, if applicable, set of our proxy materials in future years, follow the instructions described below. Conversely, if you share an address with another stockholder and together both of you would like to receive only a single Notice or, if applicable, set of proxy materials, follow these instructions: +If your shares are registered in your own name, please contact our transfer agent, Computershare Trust Company, N.A., and inform them of your request by calling them at 1-800-736-3001 or writing them at Computershare Trust Company, P.O. Box 43078, Providence, RI, 02940-3078. +If a bank, broker or other nominee holds your shares, please contact the bank, broker or other nominee directly and inform them of your request. +Electronic Delivery of Company Stockholder Communications +Most stockholders can elect to view or receive copies of future proxy materials over the internet instead of receiving paper copies in the mail. +You can choose this option and save the Company the cost of producing and mailing these documents by: +• +following the instructions provided on your Notice or proxy card; +• +following the instructions provided when you vote over the internet; or +• +going to www.computershare.com and logging into the Investor Center to follow the instructions provided. +5 +TABLE OF CONTENTS +SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT +The following table sets forth certain information with respect to the beneficial ownership of our common stock as of March 1, 2023, for (a) the named executive officers in the Summary Compensation Table on page 28 of this proxy statement, (b) each of our directors and director nominees, (c) all of our current directors and executive officers as a group and (d) each stockholder known by us to own beneficially more than 5% of our common stock. +Shares Beneficially +Owned +Name and Address of Beneficial Owner +Number (1) +Percent +5% Stockholders (2) +Camber Capital Management LP and Stephen DuBois (3) +101 Huntington Avenue, Suite 2101 +Boston, MA 02199 +3,425,000 +9.2 % +Blackrock, Inc. (4) +55 East 52 nd Street, +New York, NY 10055 +2,757,350 +7.4 % +Pura Vida Investments, LLC and Efrem Kamen (5) +512 West 22 nd Street, 7 th Floor +New York, NY 10011 +2,080,641 +5.6 % +Directors, Director Nominees and Named Executive Officers +Masoud Toloue, Ph.D. (6) +163,042 +* +Michael A. Doyle (7) +44,603 +* +Brian J. Blaser +— +— +Keith L. Crandell (8) +157,585 +* +Karen A. Flynn +2,148 +* +Sarah E. Hlavinka (9) +64,417 +* +Martin D. Madaus, Ph.D. (10) +308,678 +* +Paul M. Meister (11) +314,145 +* +Laurie J. Olson (12) +20,656 +* +David R. Walt, Ph.D. (13) +1,466,914 +3.9 % +Mark T. Roskey, Ph.D. (14) +132,473 +* +E. Kevin Hrusovsky (15) +848,914 +2.3 % +John Fry (16) +17,901 +* +All directors and current executive officers as a group (10 persons) (17) +2,542,188 +6.8 % +* +Represents beneficial ownership of less than 1% of the outstanding shares of our common stock. +(1) +This table is based upon information supplied by executive officers, directors and principal stockholders and in their filings with the SEC. Beneficial ownership is determined in accordance with the rules of the SEC and includes voting or investment power with respect to the securities. We deem shares of common stock that may be acquired by an individual or group within 60 days of March 1, 2023 pursuant to the exercise of options, warrants or the vesting of restricted stock units (“RSUs”) to be outstanding for the purpose of computing the percentage ownership of such individual or group, but such shares are not deemed to be outstanding for the purpose of computing the percentage ownership of any other person shown in the table. Except as indicated in footnotes to this table, we believe that the stockholders named in this table have sole voting and investment power with respect to all shares of common stock shown to be beneficially owned by them based on information provided to us by these stockholders. Percentage of ownership is based on 37,248,605 shares of common stock outstanding on March 1, 2023. +(2) +This information is based solely upon a review of the Schedule 13G reports or related amendments filed with the SEC with respect to holdings of the Company’s common stock as of December 31, 2022. +6 +TABLE OF CONTENTS +(3) +Based on a Schedule 13G/A filed jointly by Camber Capital Management LP (“Camber Capital”) and Stephen DuBois with the SEC on February 14, 2023, which reported ownership as of December 31, 2022. Camber Capital and Mr. DuBois share voting and dispositive power with respect to all 3,425,000 shares. +(4) +Based on a Schedule 13G/A filed by Blackrock, Inc. with the SEC on January 1, 2023. Includes shares beneficially owned by BlackRock Advisors, LLC, Aperio Group, LLC, BlackRock Institutional Trust Company, National Association, BlackRock Asset Management Ireland Limited, BlackRock Financial Management, Inc., BlackRock Japan Co., Ltd., BlackRock Asset Management Schweiz AG, BlackRock Investment Management, LLC, BlackRock Investment Management (UK) Limited, BlackRock Asset Management Canada Limited, BlackRock Investment Management (Australia) Limited, BlackRock Fund Advisors, and BlackRock Fund Managers Ltd. BlackRock, Inc. is a parent holding company or control person and claims sole dispositive power for 2,757,350 shares and sole voting power for 2,686,620 shares. +(5) +Based on a Schedule 13G/A filed jointly by Pura Vida Investments, LLC and Efrem Kamen with the SEC on February 23, 2023. Such shares are owned by Pura Vida Master Fund, Ltd. (the “Pura Vida Master Fund”) and certain separately managed accounts (the “Managed Accounts,” collectively the “Client Accounts”). Pura Vida Investments, LLC (“PVI”) serves as the investment manager or sub-adviser to the Client Accounts. Mr. Kamen serves as the Managing Member of PVI. By virtue of these relationships, PVI and Mr. Kamen may be deemed to have shared voting and dispositive power with respect to the Shares owned directly by the Pura Vida Master Fund and the Managed Accounts. +(6) +Consists of 127,220 shares of common stock, 23,105 shares of common stock issuable upon the exercise of stock options exercisable within 60 days of March 1, 2023 and 12,717 shares of common stock issuable upon the vesting of RSUs within 60 days of March 1, 2023 held by Dr. Toloue. +(7) +Consists of 31,602 shares of common stock, 9,101 shares of common stock issuable upon the exercise of stock options exercisable within 60 days of March 1, 2023 and 3,900 shares of common stock issuable upon the vesting of RSUs within 60 days of March 1, 2023 held by Mr. Doyle. +(8) +Consists of 121,983 shares of common stock and 35,602 shares of common stock issuable upon the exercise of stock options exercisable within 60 days of March 1, 2023 held by Mr. Crandell and a trust over which Mr. Crandell has voting and investment power. +(9) +Consists of 28,815 shares of common stock and 35,602 shares of common stock issuable upon the exercise of stock options exercisable within 60 days of March 1, 2023 held by Ms. Hlavinka. +(10) +Consists of 18,443 shares of common stock held by Dr. Madaus, 35,602 shares of common stock issuable upon the exercise of stock options exercisable within 60 days of March 1, 2023 held by Dr. Madaus and 254,633 shares of common stock held by a trust for which Dr. Madaus is a trust advisor who shares voting and investment power over the shares held by the trust. +(11) +Consists of 255,208 shares of common stock and 58,937 shares of common stock issuable upon the exercise of stock options exercisable within 60 days of March 1, 2023 held by Mr. Meister. Does not include shares of common stock held by Woburn Abbey March 2021 Trust, as Mr. Meister does not have voting or investment power over the shares held by the trust. +(12) +Consists of 4,181 shares of common stock, 14,962 shares of common stock issuable upon the exercise of stock options exercisable within 60 days of March 1, 2023 and 1,513 shares of common stock issuable upon the vesting of RSUs within 60 days of March 1, 2023 held by Ms. Olson. +(13) +Consists of 1,431,312 shares of common stock and 35,602 shares of common stock issuable upon the exercise of stock options exercisable within 60 days of March 1, 2023 held by Dr. Walt. Does not include shares of common stock held by The David R. Walt 2008 Irrevocable Family Trust (the “Walt Trust”), of which Dr. Walt’s spouse is trustee and has sole voting and investment power over the shares held by the Walt Trust. +(14) +Consists of 19,216 shares of common stock, 110,526 shares of common stock issuable upon the exercise of stock options exercisable within 60 days of March 1, 2023 and 2,731 shares of common stock issuable upon the vesting of RSUs within 60 days of March 1, 2023 held by Dr. Roskey. +(15) +Mr. Hrusovsky served as Chief Executive Officer until April 25, 2022 and as Executive Chairman from April 25, 2022 until August 8, 2022. Consists of 825,810 shares of common stock, 16,173 shares of +7 +TABLE OF CONTENTS +common stock issuable upon the exercise of stock options exercisable within 60 days of March 1, 2023 and 6,931 shares of common stock issuable upon the vesting of RSUs within 60 days of March 1, 2023 held by Mr. Hrusovsky. +(16) +Mr. Fry served as our General Counsel and Secretary until his retirement on August 12, 2022. +(17) +See footnotes 6 through 13. +8 +TABLE OF CONTENTS +MANAGEMENT AND CORPORATE GOVERNANCE +The Board of Directors +Our restated certificate of incorporation and our restated bylaws provide that our business is to be managed by or under the direction of our Board of Directors (our “Board”). Our Board is divided into three classes, with one class elected at each annual meeting of stockholders to serve for a three-year term. Our Board currently consists of nine members, classified as follows: (1) Karen Flynn, Martin Madaus, Ph.D. and Laurie Olson constitute Class I with a term ending at the 2024 annual meeting; (2) Sarah Hlavinka, Masoud Toloue, Ph.D. and David Walt, Ph.D. constitute Class II with a term ending at the 2025 annual meeting; and (3) Brian Blaser, Keith Crandell, and Paul Meister constitute Class III with a term ending at the upcoming 2023 annual meeting. Keith Crandell has informed the Board that he will not stand for re-election at the 2023 annual meeting, and our Board has taken action to reduce the size of our Board to eight members, effective as of the 2023 annual meeting. +Our Board accepted the recommendation of the Nominating and Governance Committee and voted to nominate Brian Blaser and Paul Meister for election at the annual meeting for a term of three years to serve until the 2026 annual meeting of stockholders and until their respective successors have been duly elected and qualified. +Set forth in the table and biographies below are the names of the persons nominated as directors and directors whose terms do not expire this year, their ages, their offices in the Company, if any, their principal occupations or employment for at least the past five years, the length of their tenure as directors and the names of other public companies in which such persons hold or have held directorships during the past five years, as of April 10, 2023. Additionally, information about the specific experience, qualifications, attributes or skills that led to our Board’s conclusion at the time of filing of this proxy statement that each person listed below should serve as a director is described below. +Name +Age +Position with the Company +Masoud Toloue, Ph.D. +42 +President and Chief Executive Officer and Director +Brian J. Blaser (1) +58 +Director +Karen A. Flynn (1)(2) +60 +Director +Sarah E. Hlavinka (2)(3) +58 +Director +Martin D. Madaus, Ph.D. (2)(3) +62 +Chairman of the Board +Paul M. Meister (3) +70 +Director +Laurie J. Olson (1) +60 +Director +David R. Walt, Ph.D. (1) +70 +Director +(1) +Member of our Compensation Committee +(2) +Member of our Nominating and Governance Committee +(3) +Member of our Audit Committee +Our Board reviewed the materiality of any relationship that each of our directors and director nominees has with Quanterix Corporation, either directly or indirectly, including those described under the caption “Certain Relationships and Related Person Transactions” below. Based upon this review, our Board determined that the following directors and director nominees are “independent directors” as defined by The Nasdaq Stock Market: Brian Blaser, Keith Crandell, Karen Flynn, Sarah Hlavinka, Martin Madaus, Ph.D., Paul Meister, Laurie Olson and David Walt, Ph.D. +Masoud Toloue, Ph.D. has served as a member of our Board and as our President and Chief Executive Officer since April 2022. He served as President, Quanterix and Diagnostics from June 2021 to April 2022. Prior to joining us, Dr. Toloue served as Senior Vice President, Diagnostics at PerkinElmer from February 2021 to June 2021 during which time he grew the business to over fifty percent of the company’s total revenue. Prior to this role, Dr. Toloue led PerkinElmer’s Applied Genomics division from August 2016 to June 2021. Dr. Toloue founded and led the next-generation sequencing business at Bioo Scientific until its acquisition +9 +TABLE OF CONTENTS +by PerkinElmer in 2016. He also co-founded and led Genohub, where he transformed that company from a supplier of next-generation sequencing matching technology to a leading platform provider for managing sequencing projects globally. Dr. Toloue holds a doctoral degree in molecular cell biology from the University at Buffalo, where he also earned a B.S. in molecular cell biology, and was a postdoctoral fellow in protein biochemistry at The University of Texas Health Science Center in San Antonio. Dr. Toloue’s qualifications for service as a member of our Board include his extensive experience in the life sciences and diagnostics industries, as well as the perspective he brings as our President and Chief Executive Officer. +Brian J. Blaser has served as a member of our Board since January 2023. Mr. Blaser was employed by Abbott Laboratories, a global medical device company from 2004 to 2019, in a variety of strategy, operational and diagnostic roles. Most recently, he served as Executive Vice President, Diagnostics Products, of Abbott Laboratories where he oversaw the company’s global diagnostics organization, including its core laboratory, point of care, rapid diagnostics and molecular diagnostics businesses. Over his career, he has held leadership positions in operations, finance, and engineering at Johnson & Johnson, Eastman Kodak, and General Motors. Mr. Blaser currently serves on the board of directors for Meridian Bioscience Inc. and as senior advisor to McKinsey & Company. He is Chair of the University of Dayton School of Engineering Advisory Council and Chairman of the Board of Trustees for Cristo-Rey St. Martin College Prep. He is a former member of the board of the Advanced Medical Technology Association (AdvaMed). Mr. Blaser holds a master’s degree in business administration from the Rochester Institute of Technology and a bachelor’s degree in mechanical engineering technology from the University of Dayton. Mr. Blaser’s qualifications for service as a member of our Board include his over twenty-five years of senior leadership experience in the in-vitro diagnostics industry and his extensive experience in leading large, complex organizations in a multinational public company, including operations, supply chain, product development, commercial operations, strategic planning and business development. +Karen A. Flynn has served as a member of our Board since June 2022. Ms. Flynn has been a board member of Catalent, Inc. since September 2022. Ms. Flynn retired in September 2022 from her position as Chief Commercial Officer of Catalent, previously having served Catalent as President, Biologics and Chief Commercial Officer from January 2020 to October 2021. Prior to joining Catalent, she served as the Senior Vice President and Chief Commercial Officer of West Pharmaceutical Services, Inc. from 2016 to 2019, having previously served as that company’s President, Pharmaceutical Packaging Systems since 2014. Ms. Flynn serves in the Hesburgh Women of Impact mentorship program for the University of Notre Dame and is on the Board of Trustees at the Franklin Institute of Philadelphia. She has previously served on the Chester County Economic Development Council Board of Directors, the Downingtown STEM Academy Advisory Board and on the Board of Directors for Recro Pharmaceuticals. Ms. Flynn holds a Master of Science in Business Administration from Boston University, a Master of Science in Engineering from the University of Pennsylvania and a Bachelor of Science in Pre-Professional Studies from the University of Notre Dame. Ms. Flynn’s qualifications for service as a member of our Board include her experience leading high growth businesses and her extensive background in commercial strategy, strategic planning, innovation and quality management. +Sarah E. Hlavinka has served as a member of our Board since 2019. Since July 2022, Ms. Hlavinka has served as Executive Vice President, Chief Legal Officer and Corporate Secretary of The ODP Corporation, the parent company of Office Depot, LLC and a publicly-traded provider of business services, products and digital workplace technology solutions through an integrated B2B distribution platform. From March 2022 to July 2022, Ms. Hlavinka served as Executive Vice President, The ODP Corporation and General Counsel, Office Depot, LLC. From August 2018 to March 2022, Ms. Hlavinka served as Senior Vice President, General Counsel and Secretary of Itron, Inc., a publicly traded technology and services company focused on critical infrastructure solutions. Prior to joining Itron, from January 2017 to July 2018, Ms. Hlavinka served as Executive Vice President, General Counsel and Secretary of Xerox Corporation, a publicly traded document management systems and solutions company. Prior to joining Xerox Corporation, from 2007 to 2017, Ms. Hlavinka served as Executive Vice President, General Counsel and Secretary of ABM Industries Incorporated, a publicly traded integrated facility services provider. Additionally, Ms. Hlavinka served as a director of Cigna Life Insurance Company of New York from 2013 to 2020. Ms. Hlavinka holds a J.D. from the University of Texas School of Law and a B.A. in history from Texas A&M University. Ms. Hlavinka’s qualifications for service as a member of our Board include her significant +10 +TABLE OF CONTENTS +experience as a senior executive of global companies operating in a variety of industries and her substantial expertise in corporate governance, mergers and acquisitions and risk management. +Martin D. Madaus, Ph.D. has served as a member of our Board since 2010 and currently serves as our Chairman. Dr. Madaus previously served as our Executive Chairman from November 2010 to June 2014, as our Chief Executive Officer from October 2011 to July 2012 and as our President from June 2011 to July 2012. From September 2020 to April 2021, he has served as the Chief Operations Officer of Sherlock Biosciences, Inc., a molecular diagnostics company. He also has served as Operating Executive to The Carlyle Group, a multinational private equity, alternative asset management and financial services corporation, since February 2019. From June 2014 to February 2019, Dr. Madaus served as Chairman and Chief Executive Officer at OrthoClinical Diagnostics, Inc., a diagnostics company that makes products and diagnostic equipment for blood testing. Previously, Dr. Madaus was the Chairman, President and Chief Executive Officer of Millipore Corporation, a life sciences company serving the bioscience research and biopharmaceutical manufacturing industry, from 2005 to 2010, when Millipore was acquired by Merck KGaA. Dr. Madaus currently serves as a member of the board of directors of the following private companies: Ultivue, Inc., a cancer diagnostics company; Emulate, Inc., a leading provider of organ-on-a-chip technology; Candela Medical, a medical technology company; and Unchained Labs, Inc., a life science equipment provider. Dr. Madaus received a Doctor of Veterinary Medicine from the University of Munich in Germany and a Ph.D. in Veterinary Medicine from the Veterinary School of Hanover in Germany. Dr. Madaus’s qualifications for service as a member of our Board include his extensive public and private company board experience and his substantial knowledge of and managerial experience in the diagnostics industry. +Paul M. Meister has served as a member of our Board since 2013. Mr. Meister is a partner in Novalis LifeSciences, a life science focused venture firm, and is Co-Founder and Chief Executive Officer of Liberty Lane Partners, LLC, a private investment company with diverse investments in healthcare, technology, and distribution-related industries. Mr. Meister served as President of MacAndrews & Forbes from 2014 to 2018. Mr. Meister also served as Executive Vice Chairman of Revlon, Inc., a leading beauty products company, on an interim basis from January 2018 to November 2018, when the Chief Executive Officer of Revlon, Inc. resigned. Mr. Meister previously served as Chairman and Chief Executive Officer of inVentiv Health (now known as Syneos Health, Inc.), a provider of commercial, consulting, and clinical research services to the pharmaceutical and biotech industries, from 2010 to 2015. Mr. Meister was Chairman of Thermo Fisher Scientific, Inc., a scientific instruments equipment and supplies company, from November 2006 to April 2007. He was previously an executive officer of Fisher Scientific International, Inc, a predecessor of Thermo Fisher Scientific, Inc. from 1991 to 2006. Mr. Meister has served as a director of Aptiv PLC, a leading global technology and mobility company primarily serving the automotive sector, since 2019; Amneal Pharmaceuticals, Inc., a global pharmaceutical company, since 2019; and Oaktree Acquisitions Corp II, a company incorporated for the purpose of effecting a business combination with one or more businesses, since 2020. He also previously served as a director of Oaktree Acquisitions Corp from 2019 to 2020, Scientific Games Corporation, which provides customized, end-to-end solutions to the gaming industry, from 2012 to 2020, LKQ Corporation, a distributor of vehicle products, from 1999 to 2018, vTv Therapeutics, Inc., a clinical-stage biopharmaceutical company, from 2015 to 2018 and Revlon, Inc. from 2016 to 2019. Mr. Meister is Co-Chair of the University of Michigan’s Life Sciences Institute Externa Advisory Board and Chair of the Provost’s Advisory Committee. Mr. Meister has an M.B.A. from Northwestern University and a B.A. from the University of Michigan. Mr. Meister’s qualifications for service as a member of our Board include his financial and investment expertise and his extensive knowledge of the life sciences industry. +Laurie J. Olson has served as a member of our Board since 2021. Ms. Olson was employed by Pfizer Inc., a research-based, global pharmaceutical company from 1987 to 2018, in a variety of strategy, marketing and commercial roles. Most recently, she served as Pfizer’s Executive Vice President, Strategy and Commercial Operations and a member of Pfizer’s Executive Leadership Team from 2012 to 2018. While at Pfizer, she also served as a member of the Pfizer Board of Directors Science and Technology Committee and as a member of the company’s Business Development, Portfolio, Disclosure, Diversity, and Compliance Committees. Ms. Olson currently serves as a member of the Board of Directors of Karuna Therapeutics, a publicly traded clinical-stage biopharmaceutical company committed to developing novel therapies for neuropsychiatric disorders. She is also a member of the Board of Trustees at the Mystic Seaport Museum in Mystic, Connecticut. Ms. Olson received her B.A. in economics from State University of New York at +11 +TABLE OF CONTENTS +Stony Brook and earned her M.B.A. in marketing from Hofstra University. Ms. Olson’s qualifications for service as a member of our Board include her extensive experience as a pharmaceutical executive and expertise in areas including commercial and corporate strategy, the interface between R&D and commercial organizations and her strong advocacy for workplace diversity, equity and inclusion. +David R. Walt, Ph.D. was our founding scientist and has served as a member of our Board since 2007. Since 2017, Dr. Walt has served as Hansjörg Wyss Professor of Biologically Inspired Engineering and Professor of Pathology at Harvard Medical School in the Department of Pathology at the Brigham and Women’s Hospital and as a core faculty member of the Wyss Institute for Biologically Inspired Engineering. He is also a Howard Hughes Medical Institute Professor. He previously served as University Professor, Professor of Chemistry, Professor of Biomedical Engineering, Professor of Genetics, Professor of Neuroscience, Professor of Cell and Molecular Biology, and Professor of Oral Medicine at Tufts University, from 1981 to 2017. Dr. Walt was also the founding scientist of Illumina, Inc. and served as a member of its board of directors from 1998 to 2016. He served on the board of directors of Cerulean Pharma Inc. (which was acquired by Daré Bioscience, Inc.) from 2016 to 2017. From 2013 to 2021, Dr. Walt served on the board of directors of Exicure, Inc., a publicly traded company that develops therapeutics for immuno-oncology, inflammatory diseases and genetic disorders. Dr. Walt was also a founder and currently serves as a member of the board of directors of Arbor Biotechnologies, Inc., Protillion Biosciences, Sherlock Biosciences, Inc., and Vizgen. He has received numerous national and international awards and honors for his fundamental and applied work in the field of optical sensors, microwell arrays and single molecule detection. He is a member of the U.S. National Academy of Engineering, U.S. National Academy of Medicine, American Academy of Arts and Sciences, a fellow of the American Institute for Medical and Biological Engineering, a fellow of the National Academy of Inventors, and a fellow of the American Association for the Advancement of Science. Dr. Walt has a B.S. in Chemistry from the University of Michigan and a Ph.D. in Chemical Biology from Stony Brook University. Dr. Walt’s qualifications for service as a member of our Board include his experience in developing life sciences companies and his expertise in chemistry, diagnostics technologies and biomedical engineering. +There are no family relationships between or among any of our directors or director nominees. The principal occupation and employment during the past five years of each of our directors and director nominees was carried on, in each case except as specifically identified above, with a corporation or organization that is not a parent, subsidiary or other affiliate of us. There is no arrangement or understanding between any of our directors or nominees and any other person or persons pursuant to which he or she is to be selected as a director or nominee. +There are no legal proceedings to which any of our directors is a party adverse to us or any of our subsidiaries or in which any such person has a material interest adverse to us or any of our subsidiaries. +Committees of the Board of Directors and Meetings +Meeting Attendance. During 2022, our Board met or acted by written consent 15 times and the three standing committees of the Board met or acted by written consent a total of 23 times. No director attended fewer than 75% of the total number of meetings of the Board and of committees of the Board on which such director served during 2022. Our Board is encouraged, but not required, to attend each annual meeting of our stockholders. Two directors attended our 2022 annual meeting of stockholders. +Audit Committee. Our Audit Committee met or acted by written consent eight times during 2022. This committee currently has three members, Paul Meister (Chairperson), Sarah Hlavinka and Martin Madaus, Ph.D. Our Audit Committee’s role and responsibilities are set forth in the Audit Committee’s written charter and include: +• +selecting a firm to serve as the independent registered public accounting firm to audit our financial statements; +• +ensuring the independence of the independent registered public accounting firm; +• +discussing the scope and results of the audit with the independent registered public accounting firm, and reviewing, with management and that firm, our interim and year-end operating results; +12 +TABLE OF CONTENTS +• +establishing procedures for employees to anonymously submit concerns about questionable accounting or audit matters; +• +considering the effectiveness of our internal controls and, if any, our internal audit function; +• +reviewing material related party transactions or those that require disclosure; +• +approving or, as permitted, pre-approving all audit and non-audit services to be performed by the independent registered public accounting firm; and +• +preparing the audit committee report, required by SEC rules, which is included in the section of this proxy statement titled, “Report of Audit Committee”. +All members of the Audit Committee satisfy the independence standards promulgated by the SEC, and by The Nasdaq Stock Market, as such standards apply specifically to members of audit committees. Our Board has determined that Paul Meister is an “audit committee financial expert,” as the SEC has defined that term in Item 407 of Regulation S-K. +A copy of the Audit Committee’s written charter is publicly available on our website at www.quanterix.com . +Compensation Committee. Our Compensation Committee met or acted by written consent eight times during 2022. This committee currently has five members, Laurie Olson (Chairperson), Brian Blaser, Keith Crandell, Karen Flynn and David Walt, Ph.D. Our Compensation Committee’s role and responsibilities are set forth in the Compensation Committee’s written charter and include: +• +reviewing and approving, or recommending that our Board approve, the compensation of our executive officers; +• +reviewing and recommending to our Board the compensation of our directors; +• +reviewing and recommending to our Board the terms of any compensatory agreements with our executive officers; +• +administering our 2017 Employee, Director and Consultant Equity Incentive Plan (the “2017 Plan”), 2007 Stock Option and Grant Plan, as amended (the “2007 Plan”), and 2017 Employee Stock Purchase Plan (the “ESPP”); +• +reviewing and approving, or making recommendations to our Board with respect to, incentive compensation and equity plans; +• +reviewing compensation policies and practices for all employees to determine whether such policies and practices create risks that are reasonably likely to have a material adverse effect on the Company; and +• +preparing the compensation committee report, required by SEC rules, which is included in the section of this proxy statement titled, “Compensation Committee Report”. +The Compensation Committee is also responsible for the determination of the compensation of our Chief Executive Officer and conducts its decision-making process with respect to such compensation without the Chief Executive Officer present. Our Board has determined that all members of the Compensation Committee qualify as “independent” under the definition promulgated by The Nasdaq Stock Market. +The Compensation Committee has the authority to retain or obtain the advice of such compensation consultants, legal counsel, experts and other advisors as it may deem appropriate in its sole discretion. The Compensation Committee is directly responsible for the appointment, compensation and oversight of its consultants, legal counsel, experts and advisors and has sole authority to approve their fees and retention terms, and the Company will provide funding for such fees and related expenses. +The Compensation Committee engaged Pay Governance, LLC as an independent advisor to the Compensation Committee to provide executive compensation consulting services for the fiscal year ended December 31, 2022. Pay Governance was engaged by and reports to the Compensation Committee. Pay Governance did not provide any services to the Company other than executive compensation consulting services during the fiscal year ended December 31, 2022. +13 +TABLE OF CONTENTS +A copy of the Compensation Committee’s written charter is publicly available on our website at www.quanterix.com . +Nominating and Governance Committee. Our Nominating and Governance Committee (the “Nominating Committee”) met or acted by written consent six times during 2022. This committee has four members, Sarah Hlavinka (Chairperson), Keith Crandell, Karen Flynn and Martin Madaus, Ph.D. Our Board has determined that all members of the Nominating Committee qualify as independent under the definition promulgated by The Nasdaq Stock Market. The Nominating Committee’s responsibilities are set forth in the Nominating Committee’s written charter and include: +• +identifying and recommending candidates for membership on our Board; +• +recommending directors to serve on Board committees; +• +reviewing and recommending our corporate governance guidelines and policies; +• +reviewing proposed waivers of the code of conduct for directors and executive officers; +• +evaluating, and overseeing the process of evaluating, the performance of our Board and individual directors; and +• +assisting our Board on corporate governance matters. +In 2022, the Nominating Committee proposed, and our Board approved, corporate governance guidelines, which, in conjunction with our restated certificate of incorporation, our restated bylaws, our committee charters and key Board policies, form the framework for our governance. +Generally, our Nominating Committee considers director candidates recommended by stockholders as well as from other sources, such as other directors or officers, third-party search firms or other appropriate sources. Once identified, the Nominating Committee evaluates a candidate’s qualifications in accordance with our Nominating and Governance Committee Policy Regarding Qualifications of Directors, which is appended to our Nominating Committee’s written charter. Threshold criteria include personal integrity and sound judgment, business and professional skills and experience, independence, knowledge of our industry, possible conflicts of interest, diversity, the extent to which the candidate would fill a present need on our Board and concern for the long term interests of our stockholders. Our Nominating Committee has not adopted a formal diversity policy in connection with the consideration of director nominations or the selection of nominees. However, the Nominating Committee will consider issues of diversity among our Board’s members in identifying and considering director nominees and will strive where appropriate to achieve a diverse balance of backgrounds, perspectives, experience, age, gender, ethnicity and country of citizenship on our Board and its committees. A copy of our Board’s diversity matrix, as required by relevant Nasdaq rules, is posted on our website under the “Investors” tab. +A stockholder who wishes to propose a candidate for consideration as a nominee for election to our Board must follow the procedures described in our restated bylaws and in “Stockholder Proposals and Nominations for Director” at the end of this proxy statement. In general, persons recommended by stockholders will be considered in accordance with our Policy on Shareholder Recommendation of Candidates for Election as Directors, which is appended to our Nominating Committee’s written charter. Any such recommendation should be made in writing to the Nominating Committee, care of our Corporate Secretary at our principal office, and should be accompanied by the following information concerning each recommending stockholder and the beneficial owner, if any, on whose behalf the nomination is made: +• +all information relating to such person that would be required to be disclosed in a proxy statement; +• +certain biographical and share ownership information about the stockholder and any other proponent, including a description of any derivative transactions in our securities; +• +a description of certain arrangements and understandings between the proposing stockholder and any beneficial owner and any other person in connection with such stockholder nomination; and +• +a statement whether or not either such stockholder or beneficial owner intends to deliver a proxy statement and form of proxy to holders of voting shares sufficient to carry the proposal. +14 +TABLE OF CONTENTS +The recommendation must also be accompanied by the following information concerning the proposed nominee: +• +certain biographical information concerning the proposed nominee; +• +all information concerning the proposed nominee required to be disclosed in solicitations of proxies for election of directors; +• +certain information about any other security holder of the Company who supports the proposed nominee; +• +a description of all relationships between the proposed nominee and the recommending stockholder or any beneficial owner, including any agreements or understandings regarding the nomination; and +• +additional disclosures relating to stockholder nominees for directors, including completed questionnaires and disclosures required by our restated bylaws. +A copy of the Nominating Committee’s written charter, including its appendices, is publicly available on our website at www.quanterix.com . +Compensation Committee Interlocks and Insider Participation +None of the members of our Compensation Committee has at any time during the prior three years been one of our officers or employees. None of our executive officers currently serves, or in the past fiscal year has served, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on our Board or Compensation Committee. For a description of any transactions between us and members of our Compensation Committee and affiliates of such members, please see “Certain Relationships and Related Person Transactions.” +Board Leadership Structure and Role in Risk Oversight +Our Board of Directors does not have a policy regarding the separation of the roles of Chief Executive Officer and Chairman of the Board, as our Board believes it is in the best interest of the Company to make that determination based on the position and direction of the Company and the membership of our Board. As part of our leadership succession plan announced in March 2022, Kevin Hrusovsky, our former Chairman and Chief Executive Officer, served as Executive Chairman of the Board until his departure in August 2022. Following his departure, Martin Madaus, Ph.D., an independent director under the standards of The Nasdaq Stock Market, was appointed Chairman of our Board. +The Chairman of the Board and the other members of our Board work in concert to provide oversight of our management and affairs. Our Board encourages communication among its members and between management and our Board to facilitate productive working relationships. Working with the other members of our Board, our Chairman strives to ensure that there is an appropriate balance and focus among key Board responsibilities such as strategic development, review of operations and risk oversight. +Risk is inherent with every business, and how well a business manages risk can ultimately determine its success. Our Board oversees our risk management processes directly and through its committees. Our management is responsible for risk management on a day-to-day basis. The role of our Board and its committees is to oversee the risk management activities of management. They fulfill this duty by discussing with management the policies and practices utilized by management in assessing and managing risks and providing input on those policies and practices. Members of our senior management team attend our quarterly Board meetings and are available to address any questions or concerns raised by our Board on risk-management and any other matters. In addition, our Board regularly receives reports on strategic matters involving our business. Our Audit Committee oversees risk management activities related to financial controls and legal and compliance risks. Our Compensation Committee oversees risk management activities relating to our compensation policies and practices, and our Nominating and Corporate Governance Committee oversees risk management activities relating to Board composition and governance-related matters. Each committee reports to our full Board on a regular basis and provides reports with respect to the committee’s risk oversight activities as appropriate. +15 +TABLE OF CONTENTS +Compensation Risk Assessment +Following a review of our compensation policies and practices, our Compensation Committee believes that risks arising from those policies and practices are not reasonably likely to have a material adverse effect on the Company. In reaching this conclusion, our Compensation Committee believes that compensation-related risk is limited by a number of factors, including the following: +• +Our compensation packages include multiple elements, including fixed and variable compensation, the amount and mix of which is appropriate to an employee’s level and role in the Company. +• +Our variable compensation programs employ a number of different performance metrics that are aligned with our near term and strategic objectives and the interests of our stockholders. +• +Our long-term incentive equity awards are designed to align the interests of our employees and management with the interests of our stockholders. +• +We limit the payouts under our annual cash incentive bonus programs to an amount that is appropriate to the recipient’s role in the Company. +We believe that, taken as a whole, the various elements of our compensation packages mitigate compensation-related risk by reducing the focus on any single compensation element or performance metric, by encouraging our employees to consider both long- and short-term goals that are aligned with the interests of our stockholders and by discouraging excessive risk in order to reach performance goals or to achieve excessive payouts. +Stockholder Communications with the Board +Generally, stockholders who have questions or concerns should contact our Investor Relations department at https://ir.quanterix.com/investor-resources/contact-ir . However, any stockholders who wish to address questions regarding our business directly with our Board, or any individual director, should direct his or her questions in writing to the Chairman of the Board at 900 Middlesex Turnpike, Building 1, Billerica, Massachusetts 01821 or using the “IR Contacts” page of our website at https://ir.quanterix.com/investor-resources/contact-ir . Communications will be distributed to our Board, or to any individual director or directors as appropriate, depending on the facts and circumstances outlined in the communications. +Executive Officers +The following table sets forth certain information regarding our executive officers as of April 1, 2023. We have entered into employment agreements with our executive officers. Dr. Toloue is an at-will employee, and Mr. Doyle has an employment agreement with a term that will end no later than March 31, 2024. See “Compensation Discussion & Analysis — Employment Agreements with our Current and Former Chief Executive Officers” and “Potential Payments upon Termination or Change-In-Control” below for additional information about Dr. Toloue’s and Mr. Doyle’s employment agreements. +Name +Age +Positions with the Company +Masoud Toloue, Ph.D. +42 +President and Chief Executive Officer +Michael A. Doyle +67 +Chief Financial Officer and Treasurer +Michael A. Doyle has served as our Chief Financial Officer since July 2021. From September 2007 to April 2021, he served as Chief Financial Officer at Forrester Research, a publicly-traded technology research and consulting company. Prior to Forrester, Mr. Doyle was CFO of EasyLink Services Corporation, a specialty telecommunications provider. Mr. Doyle has over 40 years of finance experience in a variety of companies including Pepsico, Allied Signal, and Dun & Bradstreet. Mr. Doyle holds a BBA in Finance from the University of Notre Dame and an MBA from New York University. +See “The Board of Directors” above for additional information about Dr. Toloue. +16 +TABLE OF CONTENTS +COMPENSATION COMMITTEE REPORT +The Compensation Committee of our Board of Directors has reviewed and discussed the Compensation Discussion and Analysis that appears in this proxy statement, with our management. Based on this review and discussion, the Compensation Committee has recommended to our Board of Directors that the Compensation Discussion and Analysis be included in our proxy statement. +Members of the Compensation Committee: +Laurie J. Olson (Chairperson) +Brian J. Blaser +Keith L. Crandell +Karen A. Flynn +David R. Walt, Ph.D. +17 +TABLE OF CONTENTS +COMPENSATION DISCUSSION AND ANALYSIS +This Compensation Discussion and Analysis describes the principal components of the compensation program for our named executive officers. It should be read in conjunction with the other information contained in this proxy statement. The following executives were our named executive officers for the fiscal year ended December 31, 2022: +Name +Title +Masoud Toloue, Ph.D. (1) +President and Chief Executive Officer +Michael A. Doyle (2) +Chief Financial Officer and Treasurer +E. Kevin Hrusovsky (3) +Former Executive Chairman and Former Chief Executive Officer +Mark T. Roskey, Ph.D. (4) +Chief Science and Collaboration Officer +John Fry (5) +Former General Counsel and Secretary +(1) +Dr. Toloue joined the Company as President of Quanterix and Diagnostics on June 9, 2021 and became President and Chief Executive Officer on April 25, 2022. +(2) +Mr. Doyle joined the Company as Chief Financial Officer and Treasurer on July 12, 2021. +(3) +Mr. Hrusovsky served as Chief Executive Officer until April 25, 2022, and served as Executive Chairman from April 25, 2022 until his separation from the Company on August 8, 2022. +(4) +Dr. Roskey continues to serve as our Chief Science and Collaboration Officer as of the date of this proxy statement but was determined to no longer qualify as an executive officer as of April 7, 2022. +(5) +Mr. Fry served as our General Counsel and Secretary until his retirement on August 12, 2022. +Executive Summary +Restructuring Plan and 2022 Performance +In March 2022, we announced an executive leadership succession plan. Under the plan, Kevin Hrusovsky, who previously served as our Chairman and Chief Executive Officer, assumed the role of Executive Chairman of our Board effective April 25, 2022, and Masoud Toloue, Ph.D., who previously served as President of Quanterix and Diagnostics, assumed the role of President and Chief Executive Officer. +In June 2022, management began a strategic review and top-down assessment of our operations, and in August 2022, we announced a comprehensive plan of restructuring and business re-alignment (the “Restructuring Plan”) designed to fully realize the potential of our technology platforms and to enable us to continue our leadership role in ultrasensitive translational biomarker detection. The changes were intended to improve our cost structure by aligning our expenses with anticipated future revenues. In connection with these changes, we initiated a comprehensive assay redevelopment program with the ultimate objective of improving our ability to manufacture and deliver high-quality assays at scale. We made substantial progress in 2022, and we continue to execute on the Restructuring Plan in 2023. Financial and operational highlights from 2022 included: +• +We made significant progress in the second half of 2022 on our assay redevelopment program, with the program on schedule for completion in 2023. +• +From Q2 2022 through Q4 2022, we had sequential improvements in gross margin due to restructuring efforts. +• +We recorded relatively flat revenue year-over-year, despite the challenges associated with the Restructuring Plan. +• +In Q1 2022, we entered into agreements with a pharmaceutical partner intended to advance Alzheimer’s disease diagnosis and treatment. The agreements provide us access to antibody technology to create pathways for plasma-based biomarkers for use in Alzheimer’s disease and establish a framework for future collaboration. +18 +TABLE OF CONTENTS +• +In Q2 2022, we received funding from the Alzheimer’s Drug Discovery Foundation to accelerate Alzheimer’s disease diagnostic plasma test development. We are collaborating with Amsterdam University Medical Centers on four phases of clinical trials to validate our multi-analyte test. The Phase 1 cohort was completed in Q4 2022 with 1,200 samples. +• +We are participating in the BioHermes trial with the Global Alzheimer’s Platform Foundation. The 17 site and 1,000 early Alzheimer’s patient trial closed in November 2022 and is expected to complete data analysis in Q2 of 2023. This prospective validation trial is expected to support a regulatory filing for FDA clearance of our pTau-181 test. +• +In July 2022, we launched an LDT to quantitatively measure pTau-181 in plasma as an aid in diagnostic evaluation of Alzheimer’s disease, and in January 2023, we launched an LDT to quantitatively measure neurofilament light chain (NfL) in serum as an aid in the evaluation of individuals for possible neurodegenerative conditions or other causes of neuronal or central nervous system damage. +Compensation Governance Highlights +What We Do: +What We Don’t Do: +Reward performance according to pre-established performance goals +Permit hedging or pledging of our stock +Provide a meaningful portion of the compensation of our Chief Executive Officer and named executive officers through performance-based or at-risk compensation +Include automatic compensation increases or equity grants in our employment agreements +Establish stock ownership guidelines for our executive officers +Provide single trigger change of control benefits +The Compensation Committee retains an independent compensation consultant +Provide for excessive cash severance +We hold an annual advisory vote on executive compensation +Provide our executives with golden parachute tax gross-ups +Cap payouts under our compensation plans to discourage inappropriate risk taking by our executives +Maintain executive pension plans or other retirement programs that are not generally available to all employees +Provide for double-trigger change in control severance provisions +Compensation Program Overview +Our Compensation Committee strives to design and implement executive compensation programs that attract, retain, and motivate our executives, while aligning our executives’ interests with our business strategy and the interests of our stockholders. +The compensation of our named executive officers in 2022 consisted of three main elements: +Element +Award Vehicle +Guaranteed +vs. At-Risk +Performance +vs. Time-Based +Base Salary +Cash +Guaranteed +Not applicable +Annual Cash Incentive Bonus +Cash +At-Risk +Performance-Based +Long-Term Incentive Equity +Restricted Stock Units +(“RSUs”) and Stock +Options +At-Risk +Time-Based +2022 Target Pay Mix +Consistent with our philosophy of aligning executive compensation with our short- and long-term performance, and to foster alignment with stockholder interests, our compensation programs are designed +19 +TABLE OF CONTENTS +to provide a mix of compensation elements. Although we do not have a pre-established policy or target for allocating between the various compensation elements, the allocation is influenced by data from our compensation peer group, our short- and long-term objectives and factors specific to individual executives. +The following charts depict the allocation of the compensation elements of our current Chief Executive Officer and Chief Financial Officer in 2022: +Stockholder Advisory Vote on Executive Compensation +Prior to 2022, we were an emerging growth company, and we were not required to have a non-binding stockholder advisory vote on the compensation of our named executive officers (“Say-on-Pay”). At our 2022 Annual Meeting of Stockholders, our stockholders indicated their support for our executive compensation with 91% of the votes cast in favor of our executive compensation program. +Because we value the opinions of our stockholders and believe that good corporate governance should allow stockholders to have a Say-on-Pay every year, at our 2022 Annual Meeting of Stockholders, we recommended our stockholders approve an annual frequency of Say-on-Pay votes, and stockholders approved such recommendation. Accordingly, as described elsewhere in this proxy statement, we are asking stockholders to cast an advisory, non-binding Say-on-Pay vote with respect to the 2022 compensation of our named executive officers at the 2023 Annual Meeting. +Compensation Overview +Compensation Objectives. The primary objectives of our executive compensation programs are to: +• +attract, retain and motivate the best possible executive talent; +• +ensure executive compensation is aligned with our corporate strategies and business objectives; +• +promote the achievement of key strategic and financial performance measures by linking incentive-based awards to the achievement of measurable corporate and individual performance goals; and +• +align executives’ incentives with the creation of stockholder value. +To achieve these objectives, the Compensation Committee periodically evaluates our executive compensation programs and seeks to set compensation at levels the Compensation Committee believes are necessary to allow us to compete for executive talent with other companies in our industry. +Compensation Process +Role and Authority of the Compensation Committee . The Compensation Committee oversees our executive compensation programs. In this role, the Compensation Committee reviews and approves the compensation of our executive officers. Additional information about the Compensation Committee, including its composition and responsibilities, can be found under the caption “Management and Corporate Governance” in this proxy statement. The Compensation Committee’s practice has been to establish fiscal year base salaries and to approve annual and long-term incentive awards, on an annual basis. From time-to-time, the Compensation Committee makes other adjustments to individual compensation arrangements due to promotions, changes of responsibilities or other appropriate circumstances. +20 +TABLE OF CONTENTS +Under its charter, the Compensation Committee has delegated authority to award equity grants to the Equity Award Subcommittee of the Compensation Committee. The Equity Award Subcommittee currently consists of Karen Flynn and Laurie Olson, both of whom qualify as independent directors and non-employee directors under applicable rules. +Role of Compensation Consultants . The Compensation Committee retained Pay Governance, LLC (“PayGov”) as the Compensation Committee’s independent compensation advisor for 2022. Services provided by PayGov included assistance in reviewing trends in executive compensation, selecting our compensation peer group and designing our executive compensation programs. PayGov also assisted the Compensation Committee in obtaining compensation benchmark data and establishing the target compensation levels of our executive officers. PayGov provides no services to the Company other than those performed on behalf of the Compensation Committee. The Compensation Committee considers the independence of its compensation consultant on an annual basis. +Role of Management . The Compensation Committee receives input from our Chief Executive Officer and other members of our senior management team with respect to compensation programs for our executives. The Compensation Committee also receives input from our Chief Executive Officer on the performance of our other executives and on compensation decisions for those executives. The Compensation Committee considers, but is not bound by and does not always accept, the recommendations of our Chief Executive Officer or the other members of our management team with respect to compensation matters. While our Chief Executive Officer and other members of our senior management team typically attend Compensation Committee meetings, the Compensation Committee regularly meets in executive session without management present. Our Chief Executive Officer is not present during voting or deliberations on his compensation. The Compensation Committee also makes compensation decisions with respect to our other executives without them present. +Bases for Our Compensation Policies and Decisions +As a general guideline, the Compensation Committee seeks to establish the target compensation of our executive officers at approximately the median of our peers, assuming that we meet the performance targets established for incentive-based programs. An individual executive’s target compensation may be higher or lower than this guideline based on his or her particular background, experience and performance, market factors and internal equity. These factors are weighed by the Compensation Committee in its judgment, and no one factor takes precedence over the others. +In determining our compensation peer group, the Compensation Committee selects companies that are similar to us based on criteria such as industry, market capitalization, revenue and revenue growth and number of employees. In establishing the fiscal 2022 compensation of our executive officers, the Compensation Committee reviewed our compensation peer group with the assistance of PayGov. The companies in our fiscal 2022 peer group were as follows: +Axonics, Inc. +Meridian Bioscience, Inc. +CareDx, Inc. +Nanostring Technologies, Inc. +Castle Biosciences, Inc. +Natera Inc. +Codexis, Inc. +Pacific Biosystems of California, Inc. +Cryoport Systems, Inc. +Personalis, Inc. +Fluidigm Corporation +Twist Bioscience Corporation +Heska Corporation +Veracyte, Inc. +Elements of our Compensation Program +The primary elements of our executive compensation program are: +• +Base Salary; +• +Annual Cash Incentive Bonus Programs; and +• +Long Term Incentive Equity Programs. +21 +TABLE OF CONTENTS +The Compensation Committee has not adopted a formal policy for allocating between short- and long-term compensation, between cash and non-cash compensation or among the different forms of non-cash compensation. Instead, the Compensation Committee, after reviewing information provided by its compensation consultant and other relevant information, determines what it believes to be the appropriate level and mix of compensation components. +Base Salary +Base salaries provide fixed compensation to our executives. Generally, we believe that executive base salaries should be competitive with salaries for executives in similar positions at comparable companies, including those in our compensation peer group. Base salaries are reviewed at least annually by the Compensation Committee and are adjusted from time to time to realign salaries with market levels after considering factors such as individual roles and responsibilities, performance, experience, market conditions, and information from our compensation consultant. +The 2021 and 2022 base salaries for our 2022 named executive officers were as follows: +Executive +2021 Base Salary +2022 Base Salary +% Change +Masoud Toloue, Ph.D. (1) +$ +525,000 +$ +550,000 +4.8 % +Michael A. Doyle (2) +$ +415,000 +$ +421,000 +1.4 % +E. Kevin Hrusovsky (3) +$ +600,000 +$ +400,000 +-33 % +Mark T. Roskey, Ph.D. +$ +330,000 +$ +355,000 +7.7 % +John Fry (4) +$ +364,000 +$ +375,000 +3 % +(1) +Dr. Toloue joined the Company as President of Quanterix and Diagnostics on June 9, 2021 and became President and Chief Executive Officer on April 25, 2022. His base salary was increased from $525,000 to $550,000 when he became President and Chief Executive Officer on April 25, 2022. +(2) +Mr. Doyle joined the Company as Chief Financial Officer and Treasurer on July 12, 2021. +(3) +Mr. Hrusovsky served as Chief Executive Officer until April 25, 2022 and then as Executive Chairman until his separation from the Company on August 8, 2022. His base salary was decreased from $600,000 to $400,000 when he became Executive Chairman on April 25, 2022. +(4) +Mr. Fry served as our General Counsel and Secretary until his retirement on August 12, 2022. +Annual Cash Incentive Bonus Program +Our Annual Cash Incentive Bonus Program is designed to encourage our executives, including our named executive officers, to achieve specified corporate and individual performance objectives. The Annual Cash Incentive Bonus Program emphasizes pay for performance and is intended to align executive compensation with the achievement of specified operating results. The structure of the 2022 Annual Cash Incentive Bonus Program was determined by the Compensation Committee in April 2022 as follows: +22 +TABLE OF CONTENTS +For each of our named executive officers, the target award is multiplied by a corporate performance factor and an individual performance factor to arrive at the actual award. For the Chief Executive Officer, the individual performance factor can be no greater than 1.0x. +2022 Annual Cash Incentive Bonus Program Target Awards . The Compensation Committee annually sets individual target awards expressed as a percentage of each participant’s base salary earned during the year. The Compensation Committee takes into account market data and annual cash incentive levels for comparable positions at companies in our compensation peer group. For the 2022 annual cash incentive bonus program, the Compensation Committee determined that the target incentive opportunities for our named executive officers should not change from the prior year and were set as follows: +Executive +2022 Target +Award (% of Base +Salary) +Masoud Toloue, Ph.D. +100 % +Michael A. Doyle +50 % +E. Kevin Hrusovsky +100 % +Mark T. Roskey, Ph.D. +50 % +John Fry +50 % +2022 Annual Cash Incentive Bonus Program Corporate Performance Factor . In April 2022, the parameters for the corporate performance factor were adopted as the weighted average of 2022 revenue, 2022 gross margin and certain corporate strategic objectives. Revenue, gross margin, and strategic objectives contributed 40%, 30% and 30%, respectively, toward the corporate performance factor, and each ranged between 0.5x for a threshold level of achievement and 1.5x for a maximum level of achievement. +The strategic objectives approved in April 2022 included: +• +achievements related to manufacturing and technical performance of our products; +• +growth of existing customer revenue; +• +development of our higher sensitivity instrument platform; and +• +milestones related to the launch of laboratory developed tests (“LDTs”). +In June and July of 2022, management conducted an in-depth strategic review and assessment of our operations and cost structure and determined that our ability to scale with quality had not kept up with +23 +TABLE OF CONTENTS +customer demand for our SIMOA technology. Accordingly, on August 8, 2022, we announced the Restructuring Plan described under the caption “Executive Summary-Restructuring Plan and 2022 Performance” above. As part of this plan, the Company began an assay redevelopment program with the ultimate objective of improving its ability to manufacture and deliver high-quality assays at scale. The Restructuring Plan also included the elimination of approximately 25% of our employees and other cost-saving measures. +In addition, in connection with the strategic review, we adopted a number of changes in the way we report gross margin that we believe better reflects the cost of quality and provides better visibility into the progress of our assay redevelopment program. We changed the cost allocation of three departments based on their focused activity on quality and operations. In addition, we began capturing freight costs not billed to customers and recorded as operating expense as an adjustment to the cost of goods sold. Both adjustments resulted in a move of costs from operating expense to cost of goods sold with no impact on the bottom line but with a significant impact to gross margin. +Due to the Restructuring Plan and the gross margin adjustments, our financial goals and business strategies fundamentally changed as of August 2022. Accordingly, based on the corporate performance factor goals approved in April 2022, we would not have paid bonuses for 2022, as shown in the table below: +Weight +Threshold +(0.5x) +Target +(1.0x) +Maximum +(1.5x) +Actual +Measure +Weighted +Payout +Revenue +40% +$122 million +$128 million +$141 million +$105.5 million +0 +0 +Gross Margin +30% +55% +57% +59% +Not comparable +0 +0 +Strategic Objectives +30% +2 of 4 +achieved +4 of 4 +achieved +4 achieved +and 2 exceed +expectations +0 +0 +0 +Total +100% +In light of the fundamental changes in financial goals and business strategy objectives due to the Restructuring Plan and the gross margin adjustments, the Compensation Committee determined that the payment of no bonuses would not reflect the actual performance of management and would not be in the best interests of Quanterix due to executive retention risk. Instead, the Compensation Committee determined that paying a bonus based on performance in Q3 and Q4, particularly in implementing the Restructuring Plan, more accurately reflected management performance and would be essential to ensuring executive retention. +Accordingly, in reviewing 2022 performance, the Compensation Committee considered management’s performance and progress in effectuating the Restructuring Plan. Among the factors considered by the Compensation Committee were: +• +meeting new revenue guidance for the second half of 2022; +• +sequential improvement in gross margin in Q3 and Q4; +• +estimated annualized operating expense savings of approximately $25 million; +• +the significant progress in Q3 and Q4 in the assay redevelopment program; +• +meeting milestones related to other technological developments; +• +the launch of LDTs for both pTau 181 and NfL; and +• +the achievement of other technical and quality improvement goals. +Following its review of these and other achievements and the Company’s overall performance during Q3 and Q4 of 2022, the Compensation Committee approved a corporate performance factor for our executive officers of 0.75x. +2022 Annual Cash Incentive Bonus Program Individual Performance Factor . The individual performance factor for our named executive officers ranged from 0.9x for a minimum level of achievement to 1.1x for a maximum level of achievement; provided, however, that the individual performance factor for Dr. Toloue, our +24 +TABLE OF CONTENTS +Chief Executive Officer, could be no more than 1.0x. Each of our named executive officers was assigned personal objectives designed to support our corporate goals and objectives and to be consistent with the executive’s roles and responsibilities, and, if applicable, such goals were adjusted to reflect the implementation of the Restructuring Plan. +The individual performance factor for each of our named executive officers was determined by the Compensation Committee based on its assessment of the executive’s individual performance, taking into account the executive’s personal objectives and the recommendation of our Chief Executive Officer (for executives other than himself). For 2022, based on its review of our named executive officers’ respective individual performance, the Compensation Committee established the individual performance factors for our named executive officers as follows: Dr. Toloue 1.0x and Mr. Doyle 1.0x. +2022 Annual Cash Incentive Program Actual Awards Based on the above, our named executive officers received cash payouts under our 2022 Annual Cash Incentive Bonus Program as follows. Payments were determined based on each individual executive’s base salary earned in 2022: +Executive +Target Award +(% of Base Salary) +Corporate +Performance +Factor +Individual +Performance +Factor +Payment ($) +Masoud Toloue, Ph.D. +100 % +0.75x +1.0x +$ +412,501 +Michael A. Doyle (1) +50 % +0.75x +1.0x +$ +142,088 +E. Kevin Hrusovsky (2) +100 % +N/A +N/A +N/A +Mark T. Roskey, Ph.D. +50 % +0.75x +1.0x +$ +133,527 +John Fry (3) +50 % +N/A +N/A +N/A +(1) +Mr. Doyle’s payment was reduced by 10% in view of the material weakness in internal controls, as further described in our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on March 6, 2023. +(2) +Mr. Hrusovsky served as Chief Executive Officer until April 25, 2022, and served as Executive Chairman from April 25, 2022 until his separation from the Company on August 8, 2022. He did not receive a payment under the 2022 Annual Cash Incentive Bonus Program. +(3) +Mr. Fry served as General Counsel and Secretary until his separation from the Company on August 12, 2022. He did not receive a payment under the 2022 Annual Cash Incentive Bonus Program. +2022 Long-Term Incentive Equity Program +A significant portion of our executive compensation is delivered in the form of long-term equity incentive awards. We believe that equity-based grants provide our executives with a strong link to our long-term performance, create an ownership culture and help to align the interests of our executives and our stockholders. In addition, the vesting feature of the equity grants furthers our goal of executive retention by providing an incentive to our executives to remain in our employ during the vesting period. All grants of equity-based awards to our executives are approved by the Equity Award Subcommittee of the Compensation Committee and are made pursuant to our 2017 Employee, Director and Consultant Equity Incentive Plan. In determining the size of equity-based awards to our executives, the Equity Award Subcommittee considers factors such as scope of responsibility, the applicable executive’s performance, the amount of equity previously awarded to the executive, the vesting of such awards, the recommendations of our Chief Executive Officer and market data provided by PayGov, the Compensation Committee’s independent consultant. +We have historically granted equity awards in the form of stock options and RSUs. We believe that stock options, which are granted with an exercise price equal to the fair market value of our common stock on the grant date, provide an appropriate long-term incentive for our executives because stock options reward our executives only to the extent our stock price increases over time. Likewise, we believe that RSUs, the value of which tends to be subject to less variability than stock options, encourage our executives to take actions that foster long-term stock price appreciation while also encouraging retention. +25 +TABLE OF CONTENTS +The Equity Award Subcommittee approved 2022 Long Term Incentive Equity awards for our named executive officers in April 2022, as set forth in the following table: +Executive +2022 Award Value ($) +Number of Stock Options +Number of RSUs +Masoud Toloue, Ph.D. +$ +2,000,000 +85,312 +36,562 +Michael A. Doyle +$ +900,000 +31,629 +13,555 +E. Kevin Hrusovsky +$ +1,400,000 +59,718 +25,594 +Mark T. Roskey, Ph.D. +$ +550,000 +19,329 +8,284 +John Fry +$ +600,000 +21,086 +9,037 +The stock options and RSUs granted vest over a four-year period, with one-fourth of each of the stock options and RSUs vesting on the first anniversary of the grant date and the remainder vesting ratably on a monthly basis over the next three years, provided the recipient remains with Quanterix through the applicable vesting date. Stock options were valued according to their Black-Scholes valuation as of the grant date. For our named executive officers, the number of stock options and RSUs awarded was determined on a 70% Option / 30% RSU ratio, which we believe provides an appropriate balance of incentives for our senior executives. +Additional detail regarding awards to the named executive officers can be found in the “Summary Compensation Table,” “2022 Fiscal Year Grants of Plan-Based Awards” table and “Outstanding Equity Awards at 2022 Fiscal Year-End” table elsewhere in this proxy statement. +Other Benefits +We provide a broad-based benefit program to our eligible employees. In 2022, we provided the following benefits to our named executive officers on the same basis as our other eligible employees: +• +health insurance; +• +vacation, personal holidays and sick days; +• +life insurance and supplemental life insurance; +• +short-term and long-term disability insurance; and +• +a 401(k) retirement plan. +We believe these benefits are generally consistent with those offered by other companies and specifically with those companies with which we compete for employees. +Severance and Change of Control Benefits +Pursuant to an agreement between us and Dr. Toloue, he is entitled to specified benefits in the event of the termination of his employment under specified circumstances, including termination following a change of control of the Company. We consider these severance and change of control benefits to be an important component of our executive compensation program and consistent with competitive market practice. We believe that providing appropriate severance and change of control benefits helps to attract and retain qualified executives by mitigating the risks associated with leaving a previous employer and accepting a new position with us, and by reducing financial uncertainty associated with an unexpected termination or termination following a change of control. We have provided more detailed information about these benefits, along with estimates of their value under various circumstances, under the caption “Potential Payments Upon Termination or Change-In-Control” below. +Our practice has been to structure change of control benefits so that cash benefits are paid only if the employment of the executive is terminated or if the executive resigns for good reason during a specified period after a change of control has occurred. Vesting of equity in connection with a change of control will generally only occur if the executive is not provided with a comparable replacement equity award or if the employment of the executive is terminated or if the executive resigns for good reason during a specified period after the change of control (commonly referred to double trigger vesting). +26 +TABLE OF CONTENTS +Tax Considerations +The Compensation Committee considers tax and accounting implications in its executive compensation determinations, although in some cases, other important considerations may outweigh tax or accounting considerations, and the Compensation Committee maintains the flexibility to compensate its executive officers in accordance with our compensation philosophy. +Section 162(m) of the Internal Revenue Code of 1986, as amended, generally places a limit of $1 million on the amount of compensation that we may deduct as a business expense in any year with respect to certain of our most highly paid executive officers, subject to certain transition relief applicable to certain arrangements in place as of November 2, 2017, and not materially modified after such date. While the Compensation Committee considers the deductibility of compensation as one factor in determining executive compensation, the Compensation Committee retains the discretion to award compensation that is not deductible as it believes that it is in the best interests of our stockholders to maintain flexibility in our approach to executive compensation in order to structure a program that we consider to be the most effective in attracting, motivating and retaining key executives. +If accounting standards change, we may revise certain programs to appropriately align accounting expenses of our equity awards with our overall executive compensation philosophy and objectives. +Anti-Hedging and Pledging Policy +Our Company policies prohibit our personnel, including our officers and directors, from entering into any hedging-type transactions with respect to our stock and from pledging our stock. +Employment Agreements with our Current and Former Chief Executive Officers +In March, 2022, we announced our executive leadership succession plan. Under the plan, Mr. Hrusovsky, who previously served as our Chairman and Chief Executive Officer, assumed the role of Executive Chairman of our Board effective April 25, 2022. As Executive Chairman, Mr. Hrusovsky focused on key strategic initiatives, Board evolution and important customer, partner and investor relationships, while transitioning CEO responsibilities to Dr. Toloue. As of that same date, Dr. Toloue, who previously served as President of Quanterix and Diagnostics, assumed the role of President and Chief Executive Officer and joined our Board. +In connection with Dr. Toloue’s new role, the Compensation Committee approved an amended and restated employment agreement with Dr. Toloue effective as of April 25, 2022. Under the agreement, Dr. Toloue’s annualized base salary was adjusted from $525,000 to $550,000. Dr. Toloue also received a target award of $550,000 under the 2022 Annual Cash Incentive Bonus Program and a long-term equity incentive equity award, comprised of stock options and RSUs having an aggregate grant-date fair value of $2,000,000 and vesting over a four-year period. Pursuant to this agreement, in the event we terminate Dr. Toloue’s employment without cause or Dr. Toloue terminates his employment with us for good reason, he is entitled to continuation of his then-current base salary and health insurance benefits for 12 months, an amount equal to his target bonus for the applicable year and acceleration of any of the unvested portion of his initial equity award that would have vested during the severance period had he remained employed during such time. If such termination occurs within 90 days prior to, or 12 months following, a change in control, he is also entitled to accelerated vesting of all outstanding but unvested equity awards. +In connection with Mr. Hrusovsky’s assuming the role of Executive Chairman, the Compensation Committee approved an amended and restated employment agreement with Mr. Hrusovsky effective as of April 25, 2022 and continuing through December 31, 2022. Under the agreement, Mr. Hrusovsky’s annualized base salary was reduced from $600,000 to $400,000. Mr. Hrusovsky also received a target award of $400,000 under the 2022 Annual Cash Incentive Bonus Program and a long-term equity incentive equity award under the 2022 Long Term Incentive Equity Program, comprised of stock options and RSUs having an aggregate grant-date fair value of $1,400,000 and vesting over a four-year period. On August 8, 2022, Mr. Hrusovsky stepped down from his position as Executive Chairman. In connection with his departure, he received (i) continued payment of his base salary for six months; and (ii) continued vesting of the equity awards granted under the 2022 Long Term Incentive Equity Program. See “2022 Long Term Incentive Equity Program” above. +27 +TABLE OF CONTENTS +EXECUTIVE OFFICER AND DIRECTOR COMPENSATION +Summary Compensation Table +The following table shows the total compensation paid or accrued during the fiscal years ended December 31, 2022, 2021, and 2020 to our Chief Executive Officer and our Chief Financial Officer as well as to (1) our former Executive Chairman and Chief Executive Officer, (2) our Chief Science and Collaboration Officer and (3) our former General Counsel and Secretary, each of whom would have been one of the three most highly compensated executive officers but for the fact that he was not serving as an executive officer as of December 31, 2022. +Name and Principal Position +Year +Salary +($) +Bonus +($) (1) +Stock Awards +($) (2) +Option Awards +($) (3) +Non-Equity +Incentive Plan +Compensation +($) (4) +All Other +Compensation +($) (5) +Total +($) +Masoud Toloue, Ph.D. (6) +President and Chief Executive Officer +2022 +541,346 +— +892,113 +1,107,883 +412,501 +3,183 +2,957,026 +2021 +278,654 +— +3,061,463 +— +298,846 +— +3,638,963 +Michael A. Doyle (7) +Chief Financial Officer and Treasurer +2022 +419,847 +— +401,499 +498,485 +142,088 +8,210 +1,470,129 +2021 +183,558 +— +329,975 +400,811 +99,760 +— +1,014,104 +E. Kevin Hrusovsky (8) +Former Executive Chairman and Chief Executive Officer +2022 +361,725 +— +624,494 +775,513 +— +159,791 +1,921,523 +2021 +592,628 +— +1,431,103 +1,577,418 +596,594 +10,452 +4,208,195 +2020 +554,286 +769,449 +1,082,557 +1,103,438 +— +10,667 +3,520,397 +Mark T. Roskey, Ph.D. (9) +Chief Science and Collaboration Officer +2022 +353,360 +— +342,862 +442,524 +133,527 +8,141 +1,280,414 +John Fry (10) +Former General Counsel +and Secretary +2022 +274,326 +— +267,676 +332,323 +— +7,289 +881,614 +2021 +362,400 +— +286,189 +315,546 +172,976 +8,829 +1,145,940 +2020 +354,594 +239,904 +309,330 +315,308 +— +5,938 +1,225,074 +(1) +Amounts represent cash bonuses earned for 2020 and paid in 2021 and exclude payments made in 2020 for 2019 bonuses. +(2) +These amounts represent the aggregate grant date fair value for RSUs granted during such fiscal year. +(3) +These amounts represent the aggregate grant date fair value for option awards granted during such fiscal year, computed in accordance with FASB ASC Topic 718. A discussion of the assumptions used in determining grant date fair value for the option awards may be found in Note 2 to our consolidated financial statements for the year ended December 31, 2022 included in our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on March 6, 2023. +(4) +These amounts represent (i) for 2022, cash amounts paid in 2023 for services in 2022 under the Company’s 2022 Annual Cash Incentive Bonus Plan and (ii) for 2021, cash amounts paid in 2022 for services in 2021 under the Company’s 2021 Annual Cash Incentive Bonus Plan. +(5) +Except as set forth in footnote 7 below with respect to 2022 amounts for Mr. Hrusovsky, the amounts represent the dollar value of matching contributions under our qualified 401(k) plan. +(6) +Dr. Toloue joined Quanterix on June 9, 2021 as President of Quanterix and Diagnostics and became President and Chief Executive Officer on April 25, 2022. +(7) +Mr. Doyle joined Quanterix on July 12, 2021. +(8) +Mr. Hrusovsky served as Chief Executive Officer until April 25, 2022 and as Executive Chairman from April 25, 2022 until August 8, 2022. All Other Compensation for 2022 includes $151,091 in severance payments and subsidized COBRA payments. +(9) +Dr. Roskey continues to serve as our Chief Science and Collaboration Officer as of the date of this proxy statement but was determined to no longer qualify as an executive officer as of April 7, 2022. +(10) +Mr. Fry served as General Counsel and Secretary until August 12, 2022. +28 +TABLE OF CONTENTS +2022 Fiscal Year Grants of Plan-Based Awards +The following table shows information regarding grants of non-equity incentive plan awards and grants of equity awards that we made during the fiscal year ended December 31 2022 to each of our named executive officers. +Name +(a) +Grant +Date +(b) +Estimated Possible Payouts Under +Non-Equity Incentive Plan Awards (1) +All Other Stock +Awards: +Number of +Shares of Stock +or Units (#) (2) +(i) +All Other Option +Awards: Number +of Securities +Underlying +Options (#) (3) +(j) +Exercise or Base +Price of Option +Awards ($/Sh) +(k) +Grant Date Fair +Value of Stock +and Option +Awards ($) (4) +(l) +Threshold +($) (5) +(c) +Target +($) +(d) +Maximum +($) +(e) +Masoud Toloue, Ph.D. +— +0 +550,000 +825,000 +— +— +— +— +4/25/22 +— +— +— +36,562 +— +— +892,113 +4/25/22 +— +— +— +— +85,312 +24.40 +1,107,883 +Michael A. Doyle +— +0 +210,500 +347,325 +— +— +— +— +4/7/22 +— +— +— +13,555 +— +— +401,499 +4/7/22 +— +— +— +— +31,629 +29.62 +498,485 +E. Kevin Hrusovsky +— +0 +400,000 +660,000 +— +— +— +— +4/25/22 +— +— +— +25,594 +— +— +624,494 +4/25/22 +— +— +— +— +59,718 +24.40 +775,513 +Mark T. Roskey, Ph.D. +0 +177,500 +292,875 +— +— +— +— +4/7/22 +— +— +— +8,284 +— +— +245,372 +4/7/22 +— +— +— +— +19,329 +29.62 +304,632 +9/23/22 +— +— +— +11,510 +— +— +97,490 +9/23/22 +— +— +— +— +26,857 +9.67 +137,892 +John Fry +— +0 +187,500 +309,375 +— +— +— +— +4/7/22 +— +— +— +9,037 +— +— +267,676 +4/7/22 +— +— +— +— +21,066 +29.62 +332,323 +(1) +Reflects potential payouts under the Company’s 2022 Annual Cash Incentive Plan. +(2) +Represents RSUs that vest as to 25% on the first anniversary of the grant date, with the remaining 75% vesting in 36 equal monthly installments at the end of each month thereafter. +(3) +Represents non-qualified options that vest as to 25% on the first anniversary of the grant date, with the remaining 75% vesting in 36 equal monthly installments at the end of each month thereafter. +(4) +These amounts represent the aggregate grant date fair value for RSUs and option awards granted during such fiscal year, computed in accordance with FASB ASC Topic 718. A discussion of the assumptions used in determining grant date fair value for the option awards may be found in Note 2 to our consolidated financial statements for the year ended December 31, 2022 included in our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on March 6, 2023. +(5) +Threshold amount is $0 because the individual performance factors under the 2022 Annual Cash Incentive Bonus Program range from 0.0x to 1.1x. +29 +TABLE OF CONTENTS +Outstanding Equity Awards at 2022 Fiscal Year-End +The following table shows grants of stock options and grants of unvested stock awards outstanding on the last day of the fiscal year ended December 31, 2022, including both awards subject to performance conditions and non-performance-based awards, for each of our named executive officers. +Option Awards (1) +Stock Awards (1) +Name +Number of +Securities +Underlying +Unexercised +Options (#) +Exercisable +Number of +Securities +Underlying +Unexercised +Options (#) +Unexercisable +Option +Exercise +Price ($) +Option +Expiration +Date +Number of Shares +or Units of Stock +That Have Not +Vested (#) +Market Value of +Shares or Units of +Stock That Have +Not Vested ($) (2) +Equity +Incentive +Plan +Awards: +Number +of +Unearned +Shares, +Units or +Other +Rights +That +Have Not +Vested (#) +Equity +Incentive +Plan +Awards: +Market or +Payout +Value of +Unearned +Number of +Shares or +Units or +Other +Rights That +Have Not +Vested ($) +Masoud Toloue, Ph.D. +President and Chief Executive +Officer +— +— +— +— +23,946 (3) +331,652 +— +— +— +85,312 (4) +$ +24.40 +4/25/2032 +— +— +— +— +— +— +— +— +36,562 (4) +506,384 +— +— +Michael A. Doyle +Chief Financial Officer and +Treasurer +4,834 (5) +8,070 (5) +$ +59.67 +7/12/2031 +— +— +— +— +— +— +— +— +3,458 (5) +47,893 +— +— +— +31,692 (6) +$ +29.62 +4/7/2032 +— +— +— +— +— +— +— +— +13,555 (6) +187,737 +— +— +E. Kevin Hrusovsky +Former Executive Chairman and Former Chief Executive Officer +— +59,718 (7) +$ +24.40 +4/25/2032 +— +— +— +— +— +— +— +— +25,594 (7) +354,477 +— +— +Mark T. Roskey, Ph.D. +Chief Science and +Collaboration Officer +13,447 (8) +— +$ +2.96 +9/23/2024 +— +— +— +— +22,645 (9) +— +$ +8.16 +3/31/2027 +— +— +— +— +24,311 (10) +— +$ +19.12 +5/10/2028 +— +— +— +— +23,602 (11) +1,038 (11) +$ +22.69 +3/12/2029 +— +— +— +— +— +— +— +— +321 (11) +4,446 +— +— +14,213 (12) +5,287 (12) +$ +27.76 +2/18/2030 +— +— +— +— +— +— +— +— +2,266 (12) +31,384 +— +— +3,760 (13) +4,110 (13) +$ +77.79 +2/8/2031 +— +— +— +— +— +— +— +— +1,760 (13) +24,376 +— +— +— +19,329 (14) +$ +29.62 +4/7/2032 +— +— +— +— +— +— +— +— +8,284 (14) +114,733 +— +— +— +26,857 (15) +$ +9.67 +9/23/2032 +— +— +— +— +— +— +— +— +11,510 (15) +159,413 +— +— +John Fry +Former General Counsel and Secretary (16) +— +— +— +— +— +— +— +— +30 +TABLE OF CONTENTS +(1) +Each of the outstanding equity awards in this table was granted pursuant to the 2007 Plan or the 2017 Plan. Unless otherwise noted below, all equity awards vest, subject to continued service of the officer, as to 25% on the first anniversary of the grant date and as to the remaining 75% in 36 equal installments monthly thereafter. +(2) +The market value of the stock awards is determined by multiplying the number of shares by $13.85, the closing price of our common stock on The Nasdaq Global Market on December 30, 2022, the last trading day of our fiscal year. +(3) +On June 9, 2021, Dr. Toloue was granted 50,703 RSUs. The shares underlying the RSUs vest, subject to continued service of Dr. Toloue, as follows: one-third of the shares vested on June 9, 2022, with the remainder vesting over the next two years in equal monthly installments on the last day of each calendar month thereafter. +(4) +On April 25, 2022, Dr. Toloue was granted (i) an option to purchase 85,312 shares of our common stock and (ii) 36,562 RSUs. +(5) +On July 12, 2021, Mr. Doyle was granted (i) an option to purchase 12,904 shares of our common stock and (ii) 5,530 RSUs. +(6) +On April 7, 2022, Mr. Doyle was granted (i) an option to purchase 31,692 shares of our common stock and (ii) 13,555 RSUs. +(7) +On April 25, 2022, Mr. Hrusovsky was granted (i) an option to purchase 59,718 shares of our common stock and (ii) 25,594 RSUs. +(8) +On September 23, 2014, Dr. Roskey was granted an option to purchase 116,792 shares of our common stock. Except for 13,447 of the options, all of the options have been exercised. +(9) +On March 31, 2017, Dr. Roskey was granted an option to purchase 22,645 shares of our common stock. +(10) +On May 10, 2018, Dr. Roskey was granted an option to purchase 24,311 shares of our common stock. +(11) +On March 12, 2019, Dr. Roskey was granted (i) an option to purchase 24,640 shares of our common stock and (ii) 7,228 RSUs. +(12) +On February 18, 2020, Dr. Roskey was granted (i) an option to purchase 19,500 shares of our common stock and (ii) 8,357 RSUs. +(13) +On February 8, 2021, Dr. Roskey was granted (i) an option to purchase 7,870 shares of our common stock and (ii) 3,373 RSUs. +(14) +On April 7, 2022, Dr. Roskey was granted (i) an option to purchase 19,329 shares of our common stock and (ii) 8,284 RSUs. +(15) +On September 23, 2022, Dr. Roskey was granted (i) an option to purchase 26,857 shares of our common stock and (ii) 11,510 RSUs. +(16) +Mr. Fry retired from Quanterix on August 12, 2022 and had no outstanding equity awards as of December 31, 2022. +Option Exercises and Stock Vested in 2022 +The following table shows information regarding exercises of options to purchase our common stock and vesting of RSUs held by each executive officer named in the Summary Compensation Table during the fiscal year ended December 31, 2022. +31 +TABLE OF CONTENTS +Option Awards +Stock Awards (1) +Name +Number of +Shares +Acquired +on Exercise +(#) +Value Realized +on Exercise +($) (2) +Number of +Shares +Acquired +on Vesting +(#) +Value Realized +on Vesting +($) (3) +Masoud Toloue, Ph.D. +— +— +26,757 +421,544 +Michael A. Doyle +— +— +2,072 +33,688 +E. Kevin Hrusovsky +48,998 +57,328 +18,692 +479,398 +Mark T. Roskey, Ph.D. +81,008 +845,132 +6,114 +130,992 +John Fry +— +— +6,275 +155,523 +(1) +Consists of RSUs. +(2) +The value realized represents the difference between the option exercise price and the closing price of our common stock on the date of exercise. Amounts shown in this column do not necessarily represent actual value realized from the sale of the shares acquired upon exercise of options because in many cases the shares are not sold on exercise but continue to be held by the executive officer exercising the option. +(3) +The value realized represents the number of RSUs vested multiplied by the closing price of our common stock on the date of vesting. Amounts shown in this column do not necessarily represent actual value realized from the sale of the shares acquired upon vesting of RSUs because in many cases the shares are not sold upon vesting but continue to be held by the executive officer. +Pension Benefits +We do not have any qualified or non-qualified defined benefit plans. +Nonqualified Deferred Compensation +We do not have any nonqualified defined contribution plans or other deferred compensation plans. +Potential Payments upon Termination or Change-In-Control +We have entered into employment agreements with our named executive officers. These agreements establish the named executive officer’s base salary (subject to adjustment), eligibility to participate in the incentive bonus plan, eligibility for annual long-term equity awards and standard employee benefits. +Except in the case of Dr. Roskey and in the case of Mr. Doyle’s new agreement (as described below), these agreements also provide for certain severance payments and benefits in connection with the named executive officer’s termination of employment under various circumstances, subject, in each case, to the officer’s execution of a general release of claims, in a form acceptable to the Company, and compliance with certain restrictive covenants. The material terms and conditions of these agreements are summarized below. +Masoud Toloue, Ph.D. +We entered into an agreement with Dr. Toloue with respect to his service as President, Quanterix Corporation and Diagnostics on May 11, 2021, and he began employment with us on June 9, 2021. Under this agreement, if Dr. Toloue’s employment was terminated by the Company without cause or he resigned for good reason, he would have received continued payment of his base salary for a 12-month severance period, payment of an amount equal to his annual target bonus for the year of termination, acceleration of any of the unvested portion of his initial equity award that would have vested during the severance period had he remained employed during such time and health plan benefits continuation during the severance period. If Dr. Toloue’s employment was terminated by the Company without cause or he resigned for good reason in connection with a change-in-control, in addition to the foregoing, all of his outstanding but unvested equity awards would become fully vested. +32 +TABLE OF CONTENTS +In connection with our 2022 executive leadership succession plan, effective as of April 25, 2022, we entered into a new agreement with Dr. Toloue with respect to his service as President and Chief Executive Officer. Pursuant to this agreement, in the event we terminate his employment without cause or Dr. Toloue terminates his employment with us for good reason, he is entitled to continuation of his then-current base salary and health insurance benefits for 12 months, an amount equal to his target bonus for the applicable year and acceleration of any of the unvested portion of his initial equity award that would have vested during the severance period had he remained employed during such time. If such termination occurs within 90 days prior to, or 12 months following, a change in control, he is also entitled to accelerated vesting of all outstanding but unvested equity awards. +Michael A. Doyle +On June 22, 2021, we entered into an agreement with Mr. Doyle with respect to his service as Chief Financial Officer. Under the agreement, if Mr. Doyle’s employment was terminated by the Company without cause or he resigned for good reason, he was entitled to continued payment of his base salary for a 12-month severance period, payment of an amount equal to his annual target bonus for the year of termination, acceleration of his unvested July 2021 equity awards that would have vested during the severance period, and health plan benefits continuation during the severance period. If Mr. Doyle’s employment was terminated by the Company without cause or he resigned for good reason in connection with a change-in-control, in addition to the foregoing, all of his outstanding but unvested equity awards would have become fully vested. This agreement was in place on December 31, 2022. +On March 27, 2023, we entered into an amended and restated agreement with Mr. Doyle in connection with his transition to retirement. Under the terms of the new agreement, Mr. Doyle will continue to serve as our Chief Financial Officer and Treasurer until the appointment of his successor and will thereafter remain employed by us to support our operations until March 31, 2024. His employment is terminable by us only for cause or in the event of his earlier disability or death. There are no payments owing to him under the new agreement for any such termination or in connection with a change in control. +John Fry +On May 31, 2019, we entered into an agreement with John Fry with respect to his service as General Counsel and Secretary. Pursuant to this agreement, in the event we terminated him without cause or Mr. Fry terminated his employment with us for good reason, Mr. Fry was entitled to continuation of his salary and health plan benefits for six months and acceleration of vesting of unvested equity for the six-month period. If such termination occurred within 12 months of a change in control, he was entitled to continuation of his salary and health plan benefits for 12 months and acceleration of vesting of unvested equity for the six-month period. Mr. Fry retired on August 12, 2022. +E. Kevin Hrusovsky +On January 1, 2015, we entered into an agreement with Mr. Hrusovsky with respect to his service as President and Chief Executive Officer. Pursuant to this agreement, Mr. Hrusovsky was entitled to continuation of his then-current base salary and health plan benefits for six months in the event we terminated his employment without cause or Mr. Hrusovsky terminated his employment with us for good reason. If such termination occurred within 12 months of change in control of the Company, he was entitled to continuation of his then-current base salary and health plan benefits for 12 months. If we terminated his employment without cause, his employment terminated due to his death or disability or he terminated his employment with us for good reason within three months prior to the end of a year, he was entitled to a pro rata portion of his bonus. In connection with our 2022 executive leadership succession plan, we entered into an amended and restated agreement with Mr. Hrusovsky, effective as of April 25, 2022, and continuing through December 31, 2022, pursuant to which Mr. Hrusovsky served as Executive Chairman. Under the terms of the new agreement, if Mr. Hrusovsky’s employment was terminated by the Company without cause or he resigned for good reason during the term of the agreement, he would receive continued payment of his base salary for six months or through the remainder of the term (whichever was later) and continued health plan benefits for such period. He was also entitled to be paid a pro-rata portion of his target bonus if he was terminated without cause or due to his death or disability or if he resigned for good reason within +33 +TABLE OF CONTENTS +three months prior to the end of the year to which the bonus related. Additionally, Mr. Hrusovsky was entitled to the same equity acceleration and treatment approved for other members of the executive management team, and if a Company sale event were to be consummated at any time prior to December 31, 2023, and (i) he was terminated without cause or for good reason as Executive Chairman on or prior to December 31, 2023, (ii) he was not retained as Executive Chairman immediately following December 31, 2022 or (iii) he was not re-nominated by the Company for re-election as a director on or prior to December 31, 2023, then all of his unvested equity grants would immediately vest. In addition, if Mr. Hrusovsky’s employment was terminated by the Company without cause or he resigned for good reason within 12 months following a Company sale event, his salary continuation payments and health plan benefits would continue for a period of 12 months after the date of termination. On April 25, 2022, Mr. Hrusovsky also received an equity award of options and RSUs that vests over a four-year period, with one-fourth of each of the stock options and RSUs vesting on the first anniversary of the grant date and the remainder vesting ratably on a monthly basis over the next three years. This award continues to vest regardless of whether Mr. Hrusovsky remains employed by or is providing services to the Company. +On August 7, 2022, we entered into a separation agreement with Mr. Hrusovsky, pursuant to which he stepped down from his position as Executive Chairman as of August 8, 2022. Under the agreement, he received (i) continued payment of his salary for six months and (ii) continued vesting of his April 2022 equity awards. +Payments upon a Triggering Event +The following table provides information regarding the amounts payable under the agreements described above for termination without cause or by the named executive officer for good reason and assuming the termination occurred on December 31, 2022, except in the case of named executive officers whose employment terminated before December 31, 2022, as described below. +Name +Base Salary +($) +Lump +Sum +Bonus +Payments +($) +Continuation of +Group Health +Plan Benefits +($) +Value of +Equity +Awards +($) (1) +Total +($) +Masoud Toloue, Ph.D. +550,000 +550,000 +24,830 +234,010 +1,358,840 +Michael A. Doyle (2) +421,000 +210,500 +16,123 +19,113 +666,736 +E. Kevin Hrusovsky (3) +204,615 +— +7,406 +422,045 +634,067 +John Fry (4) +— +— +— +— +— +(1) +The value of options that vest due to a triggering event has been calculated by taking the difference of the option exercise price and the closing price of a share of our common stock on December 30, 2022, or $13.85, multiplied by the number of shares underlying options that vest due to the triggering event. The value of RSUs that vest due to a triggering event has been calculated by taking the closing price of a share of our common stock on December 30, 2022, or $13.85, multiplied by the number of shares underlying RSUs that vest due to the triggering event. +(2) +Reflects amounts to which Mr. Doyle would have been entitled under his agreement in place on December 31, 2022. +(3) +Actual amounts are included for Mr. Hrusovsky based on his separation from the Company on August 8, 2022. For purposes of this table, the value of Mr. Hrusovsky’s equity awards assumes accelerated vesting due to the triggering event on August 8, 2022 when the closing price of a share of our common stock was $16.49; however, his equity awards will continue to vest over their original terms. +(4) +No amounts are included for Mr. Fry because he retired from the Company on August 12, 2022, and his retirement did not trigger any payments. +The following table provides information regarding the amounts payable under the employment agreements described above for termination without cause or by the named executive officer for good +34 +TABLE OF CONTENTS +reason following a change in control and assuming the termination occurred on December 31, 2022, except in the case of named executive officers whose employment terminated before December 31, 2022, as described below. +Name +Base Salary +($) +Lump +Sum +Bonus +Payments +($) +Continuation of +Group Health +Plan Benefits +($) +Value of +Equity +Awards +($) (1) +Total ($) +Masoud Toloue, Ph.D. +550,000 +550,000 +24,830 +838,036 +1,962,866 +Michael A. Doyle (2) +421,000 +210,500 +16,123 +235,630 +883,253 +E. Kevin Hrusovsky (3) +204,615 +— +7,406 +422,045 +634,067 +John Fry (4) +— +— +— +— +— +(1) +The value of options that vest due to a triggering event has been calculated by taking the difference of the option exercise price and the closing price of a share of our common stock on December 30, 2022, or $13.85, multiplied by the number of shares underlying options that vest due to the triggering event. The value of RSUs that vest due to a triggering event has been calculated by taking the closing price of a share of our common stock on December 30, 2022, or $13.85, multiplied by the number of shares underlying RSUs that vest due to the triggering event. +(2) +Reflects amounts to which Mr. Doyle would have been entitled under his agreement in place on December 31, 2022. +(3) +Actual amounts are included for Mr. Hrusovsky based on his separation from the Company on August 8, 2022. For purposes of this table, the value of Mr. Hrusovsky’s equity awards assumes vesting due to the triggering event; however, his equity awards will continue to vest over their original terms. +(4) +No amounts are included for Mr. Fry because he retired from the Company on August 12, 2022, and his retirement did not trigger any payments. +Pay Ratio Disclosure +As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of Regulation S-K, we are providing the following information about the ratio of the annual total compensation of our “median” employee to the annual total compensation of our Chief Executive Officer, Masoud Toloue, Ph.D., for 2022. +As permitted by SEC rules, we used annual base pay (plus overtime and shift differential pay) and target bonus as the consistently applied compensation measure to compare the total compensation of our employees (excluding our CEO) as of December 31, 2022 and to identify our median employee. We annualized the base pay and target bonus for any permanent employees who commenced work during 2022 or who were on unpaid leave during the year. Additionally, compensation for employees outside of the U.S. was converted to U.S. dollars. Using this approach, we identified our median employee. +We collected annual total compensation data for our median employee for 2022 using the same methodology we used for our named executive officers as disclosed in the Summary Compensation Table above. The annual total compensation of our median employee for 2022 was $137,377, and our CEO’s compensation as reported in the Summary Compensation Table was $2,957,026, resulting in a ratio of 1:22. +This pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on the methodology described above. Given that companies may use a range of methodologies to determine an estimate of their pay ratio, the estimated ratio reported above should not be used as a basis for comparison between companies. +Pay versus Performance Disclosure +As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(v) of Regulation S-K, we are providing information about the relationship between the +35 +TABLE OF CONTENTS +compensation of our current and former principal executive officers (“PEOs”) and other named executive officers and certain Company financial performance measures. +The dollar amounts reported below representing “compensation actually paid” have been calculated in accordance with the requirements of Item 402(v) of Regulation S-K. These figures do not reflect the actual amounts of compensation paid to the officers identified during such fiscal years and are based on equity valuation assumptions required by the SEC, which may not reflect actual amounts realized or realizable at vesting or exercise, as applicable. +Value of Initial Fixed +$100 Investment +Based On: +Year +Summary +Compensation +Table Total for +E. Kevin +Hrusovsky (1) +($) +Summary +Compensation +Table Total for +Masoud +Toloue, +Ph.D. (2) +($) +Compensation +Actually Paid +to E. Kevin +Hrusovsky (1)(3) +($) +Compensation +Actually Paid +to Masoud +Toloue, +Ph.D. (2)(3) +($) +Average +Summary +Compensation +Table Total for +Non-PEO +NEOs (4) +($) +Average +Compensation +Actually Paid +to Non-PEO +NEOs (4)(5) +($) +Total +Share- +holder +Return +($) +Peer +Group +Total +Share- +holder +Return (6) +($) +Net +Income +(Loss) +($ in +millions) +Revenues +($ in +millions) +2022 +1,921,523 2,957,026 ( 3,807,926 ) 1,699,747 1,210,719 ( 470,362 ) 58.61 113.65 ( 96.7 ) 105.5 +2021 +4,208,194 n/a 7,594,456 n/a 1,495,417 217,434 179.43 126.45 ( 57.7 ) 110.6 +2020 +3,520,397 n/a 10,186,102 n/a 1,855,751 3,342,174 196.78 126.42 ( 31.5 ) 86.4 +(1) +Mr. Hrusovsky served as Chief Executive Officer until April 25, 2022 and as Executive Chairman from April 25, 2022 until August 8, 2022. +(2) +Dr. Toloue became President and Chief Executive Officer on April 25, 2022. +(3) +The following adjustments were made to the designated PEO’s compensation to calculate the amounts shown as “compensation actually paid” for the periods indicated: +Year +PEO Name +Summary +Compensation +Table Total +($) +Less Grant +Date Fair +Value of +Equity Awards +Granted +during +Applicable +Year +($) +Plus Year-end +Fair Value of +Equity Awards +Granted +during +Applicable +Year +($) +Plus Change +in Fair Value +as of Year- +end of any +Prior Year +Awards that +Remain +Unvested as +of Year-End +($) +Plus Change +in Fair Value +as of the +Vesting Date +of any Prior +Year Awards +that Vest +during +Applicable +Year +($) +Less Prior Year- +end Fair Value of +Awards Granted +in Prior Year +that Failed to +Meet Vesting +Conditions +during +Applicable Year +($) +Total Equity +Value Reflected +in Compensation +Actually Paid +Calculation +($) +2022 +E. Kevin Hrusovsky 1,921,523 1,400,007 864,173 — ( 372,494 ) 4,821,121 ( 5,729,449 ) +2022 +Masoud Toloue, Ph.D. +2,957,026 1,999,996 1,234,526 ( 323,502 ) ( 168,307 ) — ( 1,257,279 ) +2021 +E. Kevin Hrusovsky 4,208,194 3,008,520 1,726,302 50,554 4,617,926 — 3,386,262 +2020 +E. Kevin Hrusovsky 3,520,397 2,185,995 3,790,803 2,779,333 2,281,563 — 6,665,705 +(4) +The dollar amounts represent the average of the amounts reported for the following named executive officers as a group (excluding our PEOs): +2020 +2021 +2022 +Amol Chaubal +Masoud Toloue, Ph.D. +Michael Doyle +William Geist +Michael Doyle +Mark Roskey, Ph.D. +Amol Chaubal +John Fry +Shawn Stetson +William Geist +Dawn Mattoon +John Fry +36 +TABLE OF CONTENTS +(5) +The following adjustments were made to calculate the amounts shown as “average compensation actually paid” for the periods indicated: +Year +NEO Names +Summary +Compensation +Table Total +(Average) +($) +Less Grant +Date Fair +Value of +Equity Awards +Granted +during +Applicable +Year +(Average) +($) +Plus Year- +end Fair +Value of +Equity Awards +Granted +during +Applicable +Year +(Average) +($) +Plus Change +in Fair Value +as of Year- +end of any +Prior Year +Awards that +Remain +Unvested as +of Year-End +(Average) +($) +Plus Change +in Fair Value +as of the +Vesting Date +of any Prior +Year Awards +that Vest +during +Applicable +Year +(Average) +($) +Less Prior +Year-end +Fair Value of +Awards +Granted in +Prior Year +that Failed to +Meet Vesting +Conditions +during +Applicable +Year +(Average) +($) +Total Equity +Value Reflected +in Average +Compensation +Actually Paid +Calculation +($) +2022 +See footnote (4) +1,210,719 761,790 375,346 ( 118,480 ) ( 132,737 ) 1,043,421 ( 1,681,081 ) +2021 +See footnote (4) +1,495,417 995,666 504,941 3,663 357,701 1,148,621 ( 1,277,982 ) +2020 +See footnote (4) +1,855,751 260,261 1,382,369 266,491 97,824 — 1,486,423 +(6) +The peer group used is the NASDAQ Biotechnology Index, our peer group used for purposes of Item 201(e) of Regulation S-K. +Comparison of “Compensation Actually Paid” to our Total Shareholder Return (“TSR”) +Our TSR was $196.78, $179.43 and $58.61 for the years ended December 31, 2020, 2021, and 2022, respectively. Mr. Hrusovsky’s “compensation actually paid” was $10.2 million, $7.6 million and ($3.8) million for the years ended December 31, 2020, 2021, and 2022, respectively, and Dr. Toloue’s “compensation actually paid” was $1.7 million for the year ended December 31, 2022. The average “compensation actually paid” to our other named executive officers was $3.3 million, $0.2 million and ($0.5) million for the years ended December 31, 2020, 2021, and 2022, respectively. Our TSR has declined from December 31, 2020 to December 31, 2022, and “compensation actually paid” to our principal executive officers and average “compensation actually paid” to our other named executive officers have decreased over the same period. +Comparison of “Compensation Actually Paid” to Net Income (Loss) +Our net loss was approximately $31.5 million in 2020, $57.7 million in 2021 and $96.7 million in 2022. Mr. Hrusovsky’s “compensation actually paid” was $10.2 million, $7.6 million and ($3.8) million for the years ended December 31, 2020, 2021, and 2022, respectively, and Dr. Toloue’s “compensation actually paid” was $1.7 million for the year ended December 31, 2022. The average “compensation actually paid” to our other named executive officers was $3.3 million, $0.2 million and ($0.5) million for the years ended December 31, 2020, 2021, and 2022, respectively. Our net loss has increased over the three years reported, and “compensation actually paid” to our principal executive officers and average “compensation actually paid” to our other named executive officers have correspondingly decreased over the same period. +Comparison of “Compensation Actually Paid” to Company-Selected Measure (Revenues) +Our revenues were approximately $86.4 million in 2020, $110.6 million in 2021 and $105.5 million in 2022. Mr. Hrusovsky’s “compensation actually paid” was $10.2 million, $7.6 million and ($3.8) million for the years ended December 31, 2020, 2021, and 2022, respectively, and Dr. Toloue’s “compensation actually paid” was $1.7 million for the year ended December 31, 2022. The average “compensation actually paid” to our other named executive officers was $3.3 million, $0.2 million and ($0.5) million for the years ended December 31, 2020, 2021, and 2022, respectively. Our revenues increased 28% from 2020 to 2021 and then decreased by 5% from 2021 to 2022, and “compensation actually paid” to our principal executive officers and average “compensation actually paid” to our other named executive officers have decreased each year from 2020 to 2022. +37 +TABLE OF CONTENTS +TSR versus Peer Group TSR +The graph below shows our cumulative TSR over the three-year period ended December 31, 2022 as compared to that of the NASDAQ Biotechnology Index. +TOTAL SHAREHOLDER RETURN* +Between Quanterix Corporation +and the NASDAQ Biotechnology Index +* +$100 invested on 12/31/19 in stock or index, including reinvestment of dividends. Fiscal year ended December 31. +Most Important Financial and Other Performance Measures +We have identified the following financial and other performance measures as being the most important in linking actual compensation paid to executives to our performance for the most recently completed fiscal year: +1. +Revenues +2. +Progress against Restructuring Plan (non-financial performance measure) +As described above in the section captioned “Compensation Discussion and Analysis-Executive Summary- Restructuring Plan and 2022 Performance,” in August 2022, we commenced the Restructuring Plan to fully realize the potential of our technology and execute on operational improvements. As described above in the section captioned “Compensation Discussion and Analysis-Elements of our Compensation Program-Annual Cash Incentive Bonus Program,” the Compensation Committee took into account the progress made by our executives in executing on the Restructuring Plan in the second half of 2022, consistent with the goals of our executive compensation program to incentivize our named executive officers to achieve the Company’s short- and longer-term financial and strategic goals and to create long-term, sustainable value for our stockholders. +38 +TABLE OF CONTENTS +Director Compensation +The following table shows the total compensation paid or accrued during the fiscal year ended December 31, 2022 to each of our non-employee directors. Directors who are employed by us are not compensated for their service on our Board. Mr. Blaser joined our Board on January 6, 2023 and as such did not receive any compensation in 2022. +Name +Fees Earned +or Paid in +Cash ($) (1) +Stock +Awards +($) (2) +Option +Awards +($) (2) +All Other +Compensation +($) +Total +($) +Keith L. Crandell +56,934 +113,150 +86,850 +— +256,934 +Karen A. Flynn (3) +25,731 +220,494 +179,510 +— +425,735 +Sarah E. Hlavinka +56,940 +113,150 +86,850 +— +256,939 +Martin D. Madaus, Ph.D. +75,978 +113,150 +86,850 +— +275,978 +Paul M. Meister +59,976 +113,150 +86,850 +— +259,976 +Laurie J. Olson +50,283 +113,150 +86,850 +— +250,282 +David R. Walt, Ph.D. +47,250 +113,150 +86,850 +— +247,250 +(1) +Keith Crandell, Karen Flynn, Sarah Hlavinka and Paul Meister elected to receive these fees in the form of common stock in lieu of cash in accordance with our non-employee director compensation policy. See “Non-Employee Director Compensation Policy” below. +(2) +These amounts represent the aggregate grant date fair value for RSUs and option awards granted to each director in the fiscal year ended December 31, 2022, computed in accordance with FASB ASC Topic 718. A discussion of the assumptions used in determining grant date fair value for the option awards may be found in Note 2 to our consolidated financial statements for the year ended December 31, 2022 included in our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on March 6, 2023. The following table shows the aggregate number of stock options held by each of our non-employee directors as of December 31, 2022: +Name +Aggregate Number +of Shares Subject +to Stock Options +Keith L. Crandell +35,602 +Karen A. Flynn +19,841 +Sarah E. Hlavinka +35,602 +Martin D. Madaus, Ph.D. +35,602 +Paul M. Meister +58,937 +Laurie J. Olson +19,802 +David R. Walt, Ph.D. +35,602 +(3) +Ms. Flynn joined our Board effective June 3, 2022. +Non-Employee Director Compensation Policy +Effective January 1, 2022, we amended and restated our non-employee director compensation policy (the “2022 Policy”). The 2022 Policy provides for: (A) the annual payment of: $40,000 to each of our non-employee directors, or $60,000 in the case of the Chairman; (B) $10,000 to each member of our Audit Committee, or $20,000 in the case of the chairperson; (C) $7,250 to each member of our Compensation Committee, or $15,000 in the case of the chairperson; and (D) $5,000 to each member of our Nominating and Governance Committee, or $10,000 in the case of the chairperson; in each case quarterly in arrears. Each non-employee director may elect to receive these payments in the form of common stock in lieu of cash. +The 2022 Policy also provides that each non-employee director be granted, on the first trading day of each fiscal year, an annual equity award valued at $200,000, rounded to the nearest whole share. This equity award is comprised of (A) 60% non-qualified stock options to purchase common stock at an exercise +39 +TABLE OF CONTENTS +price equal to the fair market value as of such grant date and (B) 40% RSUs. The number of options is determined using our standard Black-Scholes valuation methodology. The number of RSUs is determined by dividing total value of the RSUs by the fair market value of our common stock on such grant date. The annual stock options and RSUs vest in full on December 31 of the year in which such awards were granted, provided that the non-employee director is still a director on the applicable vesting date. +In addition, under the 2022 Policy, each new non-employee director receives an award valued at $400,000 upon his or her initial election or appointment. The award is comprised of (A) 60% non-qualified stock options to purchase common stock at an exercise price equal to the fair market value as of such grant date and (B) 40% RSUs. The number of options is determined using our standard Black-Scholes valuation methodology. The number of RSUs is determined by dividing total value of the RSUs by the fair market value of our common stock on such grant date. The initial stock options vest over three years from the date of grant, with one-third vesting on the first anniversary of the applicable grant date and the remainder vesting over the following two years in 24 successive equal monthly installments at the end of each month until the third anniversary of such grant date, provided that the non-employee director is still a director on the applicable vesting date. The RSUs granted to each new non-employee director vest over a three-year period, with one-third vesting on each of the first, second and third anniversaries of the applicable grant date, provided that the non-employee director is still a director on the applicable vesting date. +We reimburse in full each non-employee director for all reasonable out-of-pocket expenses incurred in attending each meeting of our Board or its committees. Directors may be reimbursed for travel, food, lodging and other expenses directly related to their service as directors. Directors are also entitled to the protection provided by their indemnification agreements and the indemnification provisions in our restated certificate of incorporation and restated bylaws. +Stock Ownership Guidelines for Non-Employee Directors and Executive Officers +In order to further align the interests of our non-employee directors and executive officers with the interests of our stockholders and to promote our commitment to sound corporate governance, our Board maintains stock ownership guidelines for our non-employee directors and executive officers as follows: +Stock Ownership Guideline +Non-Employee Director +5x annual base cash retainer +CEO +6x annual base salary +Executive Officers Other than CEO +3x annual base salary +Attainment Period +Five years from the later of +• +Appointment/election to applicable position; and +• +October 9, 2019. +Stock Owned for Purposes of Ownership Guidelines +• +Stock acquired on the open market; +• +Stock acquired through the exercise of options; +• +Restricted stock, RSUs and stock options, whether vested or unvested; and +• +Stock acquired through Company benefit plans. +Holding Requirement +50% of “net of tax” vested shares must be held until the ownership guideline is met. +Administration +The stock ownership guidelines are administered by the Compensation Committee, which evaluates compliance on an annual basis. Non-compliance arising from special circumstances, such as fluctuations in the Company’s stock price, changes in a participant’s compensation, and the personal financial situation of a participant, are reviewed by the Compensation Committee. +40 +TABLE OF CONTENTS +EQUITY COMPENSATION PLAN INFORMATION +The following table provides certain aggregate information with respect to all of our equity compensation plans in effect as of December 31, 2022. +(a) +(b) +(c) +Plan category +Number of +securities to be +issued upon +exercise of +outstanding +options, warrants +and rights +Weighted-average +exercise price of +outstanding +options, warrants +and rights +Number of securities +remaining available +for future issuance +under equity +compensation plans +(excluding securities +reflected in column (a)) +Equity compensation plans approved by security holders (1) +3,375,742 (2) +$ +13.41 (2) +3,295,110 (3) +Equity compensation plans not approved by security +holders +— +— +— +Total +3,375,742 (2) +$ +13.41 (2) +3,295,110 (3) +(1) +These plans consist of our 2007 Plan, the 2017 Plan and the ESPP. +(2) +Consists of (i) 2,187,648 outstanding options with a weighted average exercise price of $20.69 per share and (ii) 1,188,094 outstanding RSUs with a weighted average exercise price of $0 per share. +(3) +Consists of 1,847,643 shares of common stock available under the 2017 Plan and 1,447,467 shares of common stock available under the ESPP. Does not include an additional 1,488,696 shares of common stock reserved for future issuance under the 2017 Plan effective January 1, 2023 by operation of the 2017 Plan’s “evergreen” provision and an additional 372,174 shares of common stock reserved for future issuance under the ESPP effective January 1, 2023 by operation of the ESPP’s “evergreen” provision. +41 +TABLE OF CONTENTS +REPORT OF AUDIT COMMITTEE +The Audit Committee of the Board of Directors, which consists entirely of directors who meet the independence and experience requirements of The Nasdaq Stock Market, has furnished the following report: +The Audit Committee assists the Board of Directors in overseeing and monitoring the integrity of our financial reporting process, compliance with legal and regulatory requirements and the quality of internal and external audit processes. The Audit Committee’s role and responsibilities are set forth in its charter adopted by the Board of Directors, which is available on our website at www.quanterix.com . The Audit Committee reviews and reassesses its charter annually and recommends any changes to the Board of Directors for approval. The Audit Committee is responsible for overseeing our overall financial reporting process, and for the appointment, compensation, retention, and oversight of the work of Ernst & Young LLP. In fulfilling its responsibilities for the financial statements for the fiscal year ended December 31, 2022, the Audit Committee took the following actions: +• +Reviewed and discussed the audited financial statements for the fiscal year ended December 31, 2022 with management and Ernst & Young LLP, our independent registered public accounting firm; +• +Discussed with Ernst & Young LLP the matters required to be discussed in accordance with Auditing Standard No. 1301 —  Communications with Audit Committees ; and +• +Received written disclosures and the letter from Ernst & Young LLP regarding its independence as required by applicable requirements of the Public Company Accounting Oversight Board regarding Ernst & Young LLP’s communications with the Audit Committee and the Audit Committee further discussed with Ernst & Young LLP their independence. +Based on the Audit Committee’s review of the audited financial statements and discussions with management and Ernst & Young LLP, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 for filing with the SEC. +Members of the Audit Committee: +Paul M. Meister (Chairperson) +Sarah E. Hlavinka +Martin D. Madaus, Ph.D. +42 +TABLE OF CONTENTS +ADDITIONAL INFORMATION REGARDING OUR +INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +Principal Accounting Fees and Services +The following table presents fees for professional audit services rendered by Ernst & Young LLP, our independent registered public accounting firm, for the audit of our annual financial statements for the years ended December 31, 2021 and 2022 and fees billed for other services rendered by Ernst & Young LLP during those periods. +2021 +2022 +Audit fees (1) +$ +2,118,350 +$ +2,409,600 +Audit-related fees +— +— +Tax fees (2) +49,350 +81,252 +Total +$ +2,167,700 +$ +2,490,852 +(1) +Audit fees consisted of audit work performed in the preparation of financial statements and services in connection with our periodic and current SEC filings and registration statements, as well as work generally only the independent registered public accounting firm can reasonably be expected to provide, such as statutory audits. +(2) +Tax fees consist principally of assistance with matters related to tax compliance and reporting and tax consulting services primarily related to international tax planning strategies. +Pre-Approval Policy +Consistent with SEC policies regarding auditor independence, the Audit Committee has responsibility for appointing, setting compensation and overseeing the work of our independent registered public accounting firm. In recognition of this responsibility, the Audit Committee has established a policy to pre-approve all audit and permissible non-audit services provided by our independent registered public accounting firm; provided however, that de minimis non-audit services may instead be approved in accordance with applicable SEC rules. +Prior to engagement of an independent registered public accounting firm for the next year’s audit, management will submit an aggregate of services expected to be rendered during that year for each of four categories of services to the Audit Committee for approval. +1. +Audit Services include audit work performed in the preparation of financial statements, as well as work that generally only an independent registered public accounting firm can reasonably be expected to provide, including comfort letters, statutory audits and attest services and consultation regarding financial accounting and/or reporting standards. +2. +Audit-Related Services are for assurance and related services that are traditionally performed by an independent registered public accounting firm, including due diligence related to mergers and acquisitions, employee benefit plan audits and special procedures required to meet certain regulatory requirements. +3. +Tax Services include all services performed by an independent registered public accounting firm’s tax personnel except those services specifically related to the audit of the financial statements, and includes fees in the areas of tax compliance, tax planning and tax advice. +4. +Other Fees are those associated with services not captured in the other categories. The Company generally does not request such services from our independent registered public accounting firm. +Prior to engagement, the Audit Committee pre-approves these services by category of service. The fees are budgeted, and the Audit Committee requires our independent registered public accounting firm and management to report actual fees versus the budget periodically throughout the year by category of service. During the year, circumstances may arise when it may become necessary to engage our independent +43 +TABLE OF CONTENTS +registered public accounting firm for additional services not contemplated in the original pre-approval. In those instances, the Audit Committee requires specific pre-approval before engaging our independent registered public accounting firm. +The Audit Committee may delegate pre-approval authority to one or more of its members. The member to whom such authority is delegated must report, for informational purposes only, any pre-approval decisions to the Audit Committee at its next scheduled meeting. +44 +TABLE OF CONTENTS +DELINQUENT SECTION 16(A) REPORTS +Our records reflect that all reports required to be filed with the SEC pursuant to Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), were filed on a timely basis, except for the following: one Form 4 due on July 17, 2022 for Michael Doyle was filed on August 3, 2022 and one Form 4 due on June 8, 2022 for Karen Flynn was filed on June 14, 2022, both due to administrative errors. +45 +TABLE OF CONTENTS +CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS +Since January 1, 2022, we have engaged in the following transactions with our directors, director nominees, executive officers and holders of more than 5% of our common stock, which we refer to as our principal stockholders, and affiliates or immediate family members of our directors, executive officers and principal stockholders. We believe that all of these transactions were on terms as favorable as could have been obtained from unrelated third parties. +We entered into a License Agreement with Tufts University in 2007, as amended in 2013, 2017 and 2020, pursuant to which we obtained an exclusive, worldwide license to our core SIMOA technology, and entered into additional license agreements with Tufts to certain related technology. David R. Walt, Ph.D., one of our directors, founding scientist and an inventor of the SIMOA technology, previously served as a professor at Tufts University. Under these licenses, we are required to pay Tufts University royalties on net sales of licensed products and services as well as a portion of our applicable sublicense revenues. During the year ended December 31, 2022, we recorded royalty expense of $1.4 million under these licenses. Tufts University pays a portion of the royalties and license payments received from us to Dr. Walt pursuant to an arrangement between Tufts University and Dr. Walt, the amount of which is determined on a formulaic basis. +In August 2022, we also entered into a license agreement with Harvard related to immunoassay technology developed by Dr. Walt at Harvard and Brigham and Women’s Hospital. In connection with entering into this agreement, we paid Harvard an upfront fee of $625,000 in 2022. Under this license, we are required to pay Harvard royalties on net sales of licensed products and services as well as a portion of our applicable sublicense revenues. During the year ended December 31, 2022, we recorded no royalty expense under this license. Harvard is obligated to pay a portion of the payments received from us to Dr. Walt pursuant to an arrangement between Harvard and Dr. Walt. +We also sell products and services to laboratories affiliated with Harvard and Brigham and Women’s Hospital that are overseen by Dr. Walt. During the year ended December 31, 2022, we recorded revenue from these sales of approximately $703,000. +In May 2022, we entered into an agreement with UltraDx Limited (“UltraDx”), a company formed by ARCH Venture Partners (“ARCH”). Keith Crandell, one of our directors, is a managing director of ARCH and is a founder of UltraDx. Under this agreement, we agreed to supply HD-X instruments (both fully assembled and disassembled) as well as assays and assay components to UltraDx, and UltraDx has the non-exclusive right to seek Chinese regulatory approval of and to commercialize the HD-X instrument and related assays in the Chinese neurological in the vitro diagnostic market. Under the terms of the agreement, we sold a total of ten fully assembled and disassembled HD-X instruments to UltraDx in June 2022 at a purchase price of approximately $1.9 million. +Stephen Hrusovsky, the son of Kevin Hrusovsky, our former Executive Chairman and former Chief Executive Officer, served as our Director, Investor Relations and Business Development until September 20, 2022. For services in 2022, he received an aggregate of $158,633 in salary, bonus, and equity awards, and upon his separation from Quanterix, he received an aggregate of $37,724 in severance. +Indemnification Agreements with Officers and Directors and Directors’ and Officers’ Liability Insurance +We have entered into indemnification agreements with each of our executive officers and directors. The indemnification agreements, our restated certificate of incorporation and our restated bylaws require us to indemnify our directors to the fullest extent not prohibited by Delaware law. Subject to certain limitations, our restated bylaws also require us to advance expenses incurred by our directors and officers. +The 2007 Plan and the 2017 Plan also provide that our directors (and in the case of the 2017 Plan, our employees) will not be liable for any act, omission, interpretation, construction or determination made in good faith in connection with the respective plan, and the members of our Board and any committee administering the plan will be entitled to indemnification and reimbursement by us in respect of any claim, loss, damage or expense (including reasonable attorneys’ fees) arising or resulting therefrom to the fullest extent permitted by law and/or under any directors’ and officers’ liability insurance coverage which may be in effect from time to time. +46 +TABLE OF CONTENTS +We also maintain a general liability insurance policy which covers certain liabilities of directors and officers of the Company arising out of claims based on acts or omissions in their capacities as directors or officers. +Policies and Procedures for Related Party Transactions +Pursuant to its charter, our Audit Committee is responsible for reviewing and approving, prior to our entry into any such transaction, all transactions reportable by us under Item 404 of Regulation S-K in which we are a participant and in which any parties related to us, including our executive officers, our directors, beneficial owners of more than 5% of our securities, immediate family members of the foregoing persons and any other persons whom our Board determines may be considered related persons under Item 404 of Regulation S-K, has or is expected to have a direct or indirect material interest. +In reviewing and approving such transactions, the Audit Committee will obtain, or will direct our management to obtain on its behalf, all information that the committee believes to be relevant and important to a review of the transaction prior to its approval. Following receipt of the necessary information, a discussion will be held of the relevant factors if deemed to be necessary by the committee prior to approval. If a discussion is not deemed to be necessary, approval may be given by written consent of the committee. This approval authority may also be delegated to the chair of the Audit Committee in some circumstances. No related person transaction will be entered into prior to the completion of these procedures. +The Audit Committee or its chair, as the case may be, will approve only those related person transactions that are determined to be in, or not inconsistent with, the best interests of us and our stockholders, taking into account all available facts and circumstances as the committee or the chair determines in good faith to be necessary in accordance with principles of Delaware law generally applicable to directors of a Delaware corporation. These facts and circumstances will typically include, but not be limited to, the benefits of the transaction to us; the impact on a director’s independence in the event the related person is a director, an immediate family member of a director or an entity in which a director is a partner, stockholder or executive officer; the availability of other sources for comparable products or services; the terms of the transaction; and the terms of comparable transactions that would be available to unrelated third parties or to employees generally. No member of the Audit Committee will participate in any review, consideration or approval of any related person transaction with respect to which the member or any of his or her immediate family members has an interest. +47 +TABLE OF CONTENTS +PROPOSAL NO. 1 +ELECTION OF DIRECTORS +Our Board of Directors currently consists of nine members, classified into three classes as follows: (1) Karen A. Flynn, Martin D. Madaus, Ph.D. and Laurie J. Olson constitute Class I with a term ending at the 2024 annual meeting; (2) Sarah E. Hlavinka, Masoud Toloue, Ph.D. and David R. Walt, Ph.D. constitute Class II with a term ending at the 2025 annual meeting; and (3) Brian J. Blaser, Keith L. Crandell and Paul M. Meister constitute Class III with a term ending at the 2023 annual meeting. Keith L. Crandell has informed the Board that he will not stand for re-election at the upcoming 2023 annual meeting, and our Board has taken action to reduce the size of our Board to eight members, effective as of the 2023 annual meeting. +At each annual meeting of stockholders, directors are elected for a full term of three years to succeed those directors whose terms are expiring. +Upon the recommendation of our Nominating and Governance Committee, our Board of Directors has voted to nominate Brian J. Blaser and Paul M. Meister for election at the annual meeting as Class III directors for a term of three years to serve until the 2026 annual meeting of stockholders and until their respective successors are elected and qualified. +Unless authority to vote for either of these nominees is withheld, the shares represented by the enclosed proxy will be voted FOR the election of Brian J. Blaser and Paul M. Meister as directors. In the event that either of the nominees becomes unable or unwilling to serve, the shares represented by the enclosed proxy will be voted for the election of such other person as the Board of Directors may recommend in that nominee’s place. We have no reason to believe that either of the nominees will be unable or unwilling to serve as a director. +A plurality of the shares voted FOR each nominee is required to elect each nominee as a director. +THE BOARD OF DIRECTORS RECOMMENDS THE ELECTION OF BRIAN J. BLASER AND PAUL M. MEISTER AS DIRECTORS, AND PROXIES SOLICITED BY THE BOARD WILL BE VOTED IN FAVOR THEREOF UNLESS A STOCKHOLDER HAS INDICATED OTHERWISE ON THE PROXY. +48 +TABLE OF CONTENTS +PROPOSAL NO. 2 +ADVISORY VOTE ON APPROVAL OF EXECUTIVE COMPENSATION +We are seeking your advisory vote as required by the Exchange Act on the approval of the compensation of our named executive officers as described in the Compensation Discussion and Analysis, the compensation tables and related material contained in this proxy statement. Because your vote is advisory, it will not be binding on our Compensation Committee or our Board of Directors. However, the Compensation Committee and our Board of Directors will review the voting results and take them into consideration when making future decisions regarding executive compensation. +Our compensation philosophy is designed to align each executive’s compensation with Quanterix’s short-term and long-term performance and to provide the compensation and incentives needed to attract, motivate and retain key executives who are crucial to our long-term success. Stockholders are urged to read the Compensation Discussion and Analysis section of this proxy statement, which discusses how our compensation policies and procedures implement our compensation philosophy. The Compensation Committee and our Board of Directors believe that these policies and procedures are effective in implementing our compensation philosophy and in achieving its goals. +In accordance with the rules of the SEC, the following resolution, commonly known as a “say-on-pay” vote, is being submitted for a stockholder vote at the 2023 annual meeting: +“RESOLVED, that the compensation paid to the named executive officers of Quanterix Corporation, as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the compensation tables and the related material disclosed in this proxy statement, is hereby APPROVED.” +The affirmative vote of a majority of the votes cast affirmatively or negatively for this proposal is required to approve, on an advisory basis, this resolution. +OUR BOARD OF DIRECTORS RECOMMENDS A VOTE TO APPROVE THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS, AND PROXIES SOLICITED BY OUR BOARD OF DIRECTORS WILL BE VOTED IN FAVOR OF SUCH APPROVAL UNLESS A STOCKHOLDER INDICATES OTHERWISE ON THE PROXY. +49 +TABLE OF CONTENTS +PROPOSAL NO. 3 +RATIFICATION OF THE APPOINTMENT OF INDEPENDENT +REGISTERED PUBLIC ACCOUNTING FIRM +The Audit Committee appointed Ernst & Young LLP as our independent registered public accounting firm to audit our financial statements for the fiscal year ending December 31, 2023. The Board of Directors proposes that the stockholders ratify this appointment. Ernst & Young LLP audited our financial statements for the fiscal years ended December 31, 2021 and 2022. We expect that representatives of Ernst & Young LLP will be present at the annual meeting, will be able to make a statement if they so desire and will be available to respond to appropriate questions. +In deciding to appoint Ernst & Young LLP, the Audit Committee reviewed auditor independence issues and existing commercial relationships with Ernst & Young LLP and concluded that Ernst & Young LLP has no commercial relationship with the Company that would impair its independence for the fiscal year ending December 31, 2023. +In the event the stockholders do not ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm, the Audit Committee will reconsider its appointment. +The affirmative vote of a majority of the votes cast affirmatively or negatively for this proposal is required to ratify the appointment of our independent registered public accounting firm. +THE BOARD OF DIRECTORS RECOMMENDS A VOTE TO RATIFY THE APPOINTMENT OF ERNST & YOUNG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM, AND PROXIES SOLICITED BY THE BOARD WILL BE VOTED IN FAVOR OF SUCH RATIFICATION UNLESS A STOCKHOLDER INDICATES OTHERWISE ON THE PROXY. +50 +TABLE OF CONTENTS +CORPORATE CODE OF CONDUCT AND ETHICS +We have adopted a corporate code of conduct and ethics that applies to all of our employees, including our chief executive officer and chief financial and accounting officers. The text of the code of conduct and ethics is posted on our website at www.quanterix.com under “Investors — Corporate Governance — Governance Highlights” and will be made available to stockholders without charge, upon request, in writing to the Corporate Secretary at 900 Middlesex Turnpike, Building 1, Billerica, Massachusetts 01821. Disclosure regarding any amendments to, or waivers from, provisions of the code that apply to our directors, principal executive officer or principal financial officer will be included in a Current Report on Form 8-K within four business days following the date of the amendment or waiver, unless website posting or the issuance of a press release of such amendments or waivers is then permitted by the rules of The Nasdaq Stock Market. +OTHER MATTERS +The Board of Directors knows of no other business which will be presented to the annual meeting. If any other business is properly brought before the annual meeting, proxies will be voted in accordance with the judgment of the persons named therein. +STOCKHOLDER PROPOSALS AND NOMINATIONS FOR DIRECTOR +To be considered for inclusion in the proxy statement relating to our 2024 annual meeting of stockholders, we must receive stockholder proposals (other than for director nominations) no later than December 22, 2023. To be considered for presentation at the 2024 annual meeting, although not included in the proxy statement, proposals (including director nominations that are not requested to be included in our proxy statement) must be received no earlier than February 8, 2024 and no later than March 9, 2024. +In order to comply with the universal proxy rules, stockholders who intend to solicit proxies in support of director nominees other than the Company’s nominees at our 2024 annual meeting of stockholders must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act. Such notice must be received by the date noted above and must also include all information required by our bylaws with respect to director nominations. +Proposals that are not received in a timely manner will not be voted on at the 2024 annual meeting. If a proposal is received on time, the proxies that management solicits for the meeting may still exercise discretionary voting authority on the proposal under circumstances consistent with the proxy rules of the SEC. All stockholder proposals should be marked for the attention of Secretary, Quanterix Corporation, 900 Middlesex Turnpike, Building 1, Billerica, Massachusetts 01821. +Billerica, Massachusetts +April 14, 2023 +51 +TABLE OF CONTENTS +MMMMMMMMM 000004 ENDORSEMENT LINE SACKPACK MR A SAMPLE DESIGNATION (IF ANY) ADD 1 ADD 2 ADD 3 ADD 4 ADD 5 ADD 6 MMMMMMMMMMMM MMMMMMMMMMMMMM C123456789 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext Your vote matters – here’s how to vote! You may vote online or by phone instead of mailing this card. Votes submitted electronically must be received by 1:00 am, Eastern Time, on June 7, 2023. Online Go to www.investorvote.com/QTRX or scan the QR code — login details are located in the shaded bar below. Phone Call toll free 1-800-652-VOTE (8683) within the USA, US territories and Canada Save paper, time and money! Sign up for electronic delivery at Using a black ink pen, mark your votes with an X as shown in this example. www.investorvote.com/QTRX Please do not write outside the designated areas. 2023 Annual Meeting Proxy Card 1234 5678 9012 345 IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. A Proposals — The Board of Directors recommends a vote FOR all nominees and FOR Proposals 2 and 3. + 1. Election of Directors: For Withhold For Withhold 01 - Brian J. Blaser 02 - Paul M. Meister 2. To approve, by a non-binding advisory vote, the compensation of our named executive officers, as disclosed in the proxy statement. For Against Abstain For Against Abstain 3. Ratification of the appointment of Ernst & Young LLP as the independent accounting firm for the fiscal year ending December 31, 2023. B Authorized Signatures — This section must be completed for your vote to count. Please date and sign below. Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title. Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box. C 1234567890 J N T MMMMMMM 1 U P X 5 7 5 6 5 1 MR A SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE + 140 CHARACTERS) MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND 03SHLE +TABLE OF CONTENTS +2023 Annual Meeting Admission Ticket 2023 Annual Meeting of Quanterix Corporation Stockholders June 7, 2023 10:00 AM ET Quanterix Corporation 900 Middlesex Turnpike, Building 1 Billerica, MA 01821 Upon arrival, please present this admission ticket and photo identification at the registration desk. Important notice regarding the Internet availability of proxy materials for the Annual Meeting of Stockholders. The material is available at: www.investorvote.com/QTRX Small steps make an impact. Help the environment by consenting to receive electronic delivery, sign up at www.investorvote.com/QTRX IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. + Quanterix Corporation Notice of 2023 Annual Meeting of Stockholders Proxy Solicited by Board of Directors for Annual Meeting — June 7, 2023 Masoud Toloue, Ph.D. and Laurie Churchill, or each of them, each with the power of substitution, are hereby authorized to represent and vote the shares of the undersigned, with all the powers which the undersigned would possess if personally present, at the Annual Meeting of Stockholders of Quanterix Corporation to be held on June 7, 2023 or at any postponement or adjournment thereof. Shares represented by this proxy will be voted as directed by the stockholder. If no such directions are indicated, the +Proxies will have authority to vote FOR the election of the nominees as directors and FOR Proposals 2 and 3. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting. 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stock, which we refer to as our principal stockholders, and affiliates or immediate family members of our directors, executive officers and principal stockholders. We believe that all of these transactions were on terms as favorable as could have been obtained from unrelated third parties. +We entered into a License Agreement with Tufts University in 2007, as amended in 2013, 2017 and 2020, pursuant to which we obtained an exclusive, worldwide license to our core SIMOA technology, and entered into additional license agreements with Tufts to certain related technology. David R. Walt, Ph.D., one of our directors, founding scientist and an inventor of the SIMOA technology, previously served as a professor at Tufts University. Under these licenses, we are required to pay Tufts University royalties on net sales of licensed products and services as well as a portion of our applicable sublicense revenues. During the year ended December 31, 2022, we recorded royalty expense of $1.4 million under these licenses. Tufts University pays a portion of the royalties and license payments received from us to Dr. Walt pursuant to an arrangement between Tufts University and Dr. Walt, the amount of which is determined on a formulaic basis. +In August 2022, we also entered into a license agreement with Harvard related to immunoassay technology developed by Dr. Walt at Harvard and Brigham and Women’s Hospital. In connection with entering into this agreement, we paid Harvard an upfront fee of $625,000 in 2022. Under this license, we are required to pay Harvard royalties on net sales of licensed products and services as well as a portion of our applicable sublicense revenues. During the year ended December 31, 2022, we recorded no royalty expense under this license. Harvard is obligated to pay a portion of the payments received from us to Dr. Walt pursuant to an arrangement between Harvard and Dr. Walt. +We also sell products and services to laboratories affiliated with Harvard and Brigham and Women’s Hospital that are overseen by Dr. Walt. During the year ended December 31, 2022, we recorded revenue from these sales of approximately $703,000. +In May 2022, we entered into an agreement with UltraDx Limited (“UltraDx”), a company formed by ARCH Venture Partners (“ARCH”). Keith Crandell, one of our directors, is a managing director of ARCH and is a founder of UltraDx. Under this agreement, we agreed to supply HD-X instruments (both fully assembled and disassembled) as well as assays and assay components to UltraDx, and UltraDx has the non-exclusive right to seek Chinese regulatory approval of and to commercialize the HD-X instrument and related assays in the Chinese neurological in the vitro diagnostic market. Under the terms of the agreement, we sold a total of ten fully assembled and disassembled HD-X instruments to UltraDx in June 2022 at a purchase price of approximately $1.9 million. +Stephen Hrusovsky, the son of Kevin Hrusovsky, our former Executive Chairman and former Chief Executive Officer, served as our Director, Investor Relations and Business Development until September 20, 2022. For services in 2022, he received an aggregate of $158,633 in salary, bonus, and equity awards, and upon his separation from Quanterix, he received an aggregate of $37,724 in severance. +Indemnification Agreements with Officers and Directors and Directors’ and Officers’ Liability Insurance +We have entered into indemnification agreements with each of our executive officers and directors. The indemnification agreements, our restated certificate of incorporation and our restated bylaws require us to indemnify our directors to the fullest extent not prohibited by Delaware law. Subject to certain limitations, our restated bylaws also require us to advance expenses incurred by our directors and officers. +The 2007 Plan and the 2017 Plan also provide that our directors (and in the case of the 2017 Plan, our employees) will not be liable for any act, omission, interpretation, construction or determination made in good faith in connection with the respective plan, and the members of our Board and any committee administering the plan will be entitled to indemnification and reimbursement by us in respect of any claim, loss, damage or expense (including reasonable attorneys’ fees) arising or resulting therefrom to the fullest extent permitted by law and/or under any directors’ and officers’ liability insurance coverage which may be in effect from time to time. +46 \ No newline at end of file diff --git a/raw/proxies/0001503274/0001104659-24-047245/proxy.txt b/raw/proxies/0001503274/0001104659-24-047245/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..c79239a55cd3dda01c29db13efb8cd345b9836c4 --- /dev/null +++ b/raw/proxies/0001503274/0001104659-24-047245/proxy.txt @@ -0,0 +1,2372 @@ +tm242735-1_nonfiling - none - 7.7914023s +TABLE OF CONTENTS +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Proxy Statement Pursuant to Section 14(a) of +the Securities Exchange Act of 1934 (Amendment No.     ) +Filed by the Registrant ☒ +Filed by a Party other than the Registrant ☐ +Check the appropriate box: +☐ +Preliminary Proxy Statement +☐ +Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +☒ +Definitive Proxy Statement +☐ +Definitive Additional Materials +☐ +Soliciting Material under §240.14a-12 +Quanterix Corporation +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +☒ +No fee required. +☐ +Fee paid previously with preliminary materials. +☐ +Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11. +TABLE OF CONTENTS +April 15, 2024 +To Our Stockholders: +You are cordially invited to attend the 2024 annual meeting of stockholders of Quanterix Corporation to be held at 10:00 a.m. ET on Monday, June 3, 2024 at our offices located at 900 Middlesex Turnpike, Building 1, Billerica, MA 01821. If the annual meeting is adjourned for any reason, then proxies submitted may be used at any adjournment of the 2024 annual meeting. +Details regarding the meeting, the business to be conducted at the meeting, and information about Quanterix Corporation that you should consider when you vote your shares are described in the accompanying proxy statement. +At the annual meeting, two persons will be elected to our Board of Directors to serve three-year terms expiring in 2027. In addition, we will ask stockholders to approve by an advisory vote the compensation of our named executive officers, as disclosed in this proxy statement, and to ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2024. Our Board of Directors recommends the approval of each of these proposals. Such other business will be transacted as may properly come before the annual meeting. +Under Securities and Exchange Commission rules that allow companies to furnish proxy materials to stockholders over the internet, we have elected to deliver our proxy materials to the majority of our stockholders over the internet. This delivery process allows us to provide stockholders with the information they need, while at the same time conserving natural resources and lowering the cost of delivery. On or about April 15, 2024, we intend to begin sending to our stockholders a Notice of Internet Availability of Proxy Materials (the “Notice”) containing instructions on how to access our proxy statement for our 2024 annual meeting and our 2023 annual report to stockholders. The Notice also provides instructions on how to vote online or by telephone and how to receive a paper copy of the proxy materials by mail. +We hope you will be able to attend the annual meeting. Whether or not you plan to attend the annual meeting, we hope you will vote promptly. Information about voting methods is set forth in the accompanying proxy statement. +Thank you for your continued support of Quanterix Corporation. +Sincerely, +Masoud Toloue, Ph.D. +President and Chief Executive Officer +TABLE OF CONTENTS +QUANTERIX CORPORATION +900 Middlesex Turnpike +Billerica, Massachusetts 01821 +April 15, 2024 +NOTICE OF 2024 ANNUAL MEETING OF STOCKHOLDERS +TIME: 10:00 a.m. ET +DATE: Monday, June 3, 2024 +LOCATION: Quanterix Corporation, 900 Middlesex Turnpike, Building 1, Billerica, MA 01821 +PURPOSES: +1. +To elect two directors to serve three-year terms expiring at the annual meeting of stockholders in 2027 or until their successors are duly elected and qualified; +2. +To approve by an advisory vote the compensation of our named executive officers, as disclosed in this proxy statement (“Say-on-Pay”); +3. +To ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2024; and +4. +To transact such other business that is properly presented at the annual meeting and any adjournments or postponements thereof. +WHO MAY VOTE: +You may vote if you were the record owner of Quanterix Corporation common stock at the close of business on April 5, 2024. A list of stockholders of record will be available at the annual meeting and, during the 10 days prior to the annual meeting, at our principal executive offices, located at 900 Middlesex Turnpike, Building 1, Billerica, Massachusetts 01821. +All stockholders are cordially invited to attend the annual meeting. Whether you plan to attend the annual meeting or not, we urge you to vote by following the instructions in the Notice of Internet Availability of Proxy Materials and submit your proxy by the internet, telephone or mail in order to ensure the presence of a quorum. You may change or revoke your proxy at any time before it is voted at the meeting. +BY ORDER OF THE BOARD OF DIRECTORS +Laurie A. Churchill +General Counsel and Secretary +TABLE OF CONTENTS +TABLE OF CONTENTS +Page +Important Information About the Annual Meeting and Voting +2 +Security Ownership of Certain Beneficial Owners and Management +6 +Management and Corporate Governance +8 +Compensation Committee Report +17 +Compensation Discussion and Analysis +18 +Executive Officer and Director Compensation +28 +Equity Compensation Plan Information +40 +Report of Audit Committee +41 +Additional Information Regarding our Independent Registered Public Accounting Firm +42 +Delinquent Section 16(a) Reports +44 +Certain Relationships and Related Person Transactions +45 +Proposal No. 1: Election of Directors +47 +Proposal No. 2: Advisory Vote on Approval of Executive Compensation +48 +Proposal No. 3: Ratification of the Appointment of Independent Registered Public Accounting +Firm +49 +Corporate Code of Conduct and Ethics +50 +Other Matters +50 +Stockholder Proposals and Nominations for Director +50 +TABLE OF CONTENTS +QUANTERIX CORPORATION +900 Middlesex Turnpike +Billerica, Massachusetts 01821 +PROXY STATEMENT FOR +2024 ANNUAL MEETING OF STOCKHOLDERS +TO BE HELD ON JUNE 3, 2024 +This proxy statement, along with the accompanying Notice of 2024 Annual Meeting of Stockholders, contains information about the 2024 annual meeting of stockholders of Quanterix Corporation to be held at 10:00 a.m. ET, at our offices located at 900 Middlesex Turnpike, Building 1, Billerica, MA 01821. If the annual meeting is adjourned for any reason, then proxies submitted may be used at any adjournment of the 2024 annual meeting. +In this proxy statement, we refer to Quanterix Corporation as “Quanterix,” “the Company,” “we” and “us.” +This proxy statement relates to the solicitation of proxies by our Board of Directors for use at the annual meeting. +On or about April 15, 2024, we intend to begin sending the Important Notice Regarding the Availability of Proxy Materials to stockholders entitled to vote at the annual meeting. +IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE +STOCKHOLDER MEETING TO BE HELD ON JUNE 3, 2024 +This proxy statement and our 2023 annual report to stockholders are available for viewing, printing and downloading at www.investorvote.com/qtrx . To view these materials, please have your 15-digit control number(s) available that appears on your Notice or proxy card. On this website, you can also elect to receive future distributions of our proxy statements and annual reports to stockholders by electronic delivery. +Additionally, you can find a copy of our Annual Report on Form 10-K, which includes our financial statements, for the fiscal year ended December 31, 2023, on the website of the Securities and Exchange Commission (the “SEC”) at www.sec.gov , or in the “SEC Filings” section of the “Financial Information” section of the “Investors” section of our website at www.quanterix.com . You may also obtain a printed copy of our Annual Report on Form 10-K, including our financial statements, free of charge, from us by sending a written request to: Quanterix Corporation, Attn: Investor Relations, 900 Middlesex Turnpike, Building 1, Billerica, Massachusetts 01821. Exhibits will be provided upon written request and payment of an appropriate processing fee. +TABLE OF CONTENTS +IMPORTANT INFORMATION ABOUT THE ANNUAL MEETING AND VOTING +Why Is the Company Soliciting My Proxy? +Our Board of Directors is soliciting your proxy to vote at the 2024 annual meeting of stockholders to be held on Monday, June 3, 2024, at 10:00 a.m. ET, at our office located at 900 Middlesex Turnpike, Building 1, Billerica, MA 01821, and any adjournments or postponements of the meeting, which we refer to as the annual meeting. This proxy statement, along with the accompanying Notice of Annual Meeting of Stockholders, summarizes the purposes of the meeting and the information you need to know to vote at the annual meeting. +We have made available to you on the internet or have sent you this proxy statement, the Notice of Annual Meeting of Stockholders, the proxy card and a copy of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 because you owned shares of our common stock on the record date. We intend to commence distribution of the Important Notice Regarding the Availability of Proxy Materials, which we refer to throughout this proxy statement as the Notice, and, if applicable, proxy materials to stockholders on or about April 15, 2024. +Why Did I Receive a Notice in the Mail Regarding the Internet Availability of Proxy Materials Instead of a Full Set of Proxy Materials? +As permitted by the rules of the SEC, we may furnish our proxy materials to our stockholders by providing access to such documents on the internet, rather than mailing printed copies of these materials to each stockholder. Most stockholders will not receive printed copies of the proxy materials unless they request them. We believe that this process should expedite stockholders’ receipt of proxy materials, lower the costs of the annual meeting and help to conserve natural resources. If you received a Notice by mail or electronically, you will not receive a printed or email copy of the proxy materials unless you request one by following the instructions included in the Notice. Instead, the Notice instructs you as to how you may access and review all of the proxy materials and submit your proxy on the internet. If you requested a paper copy of the proxy materials, you may authorize the voting of your shares by following the instructions on the proxy card, in addition to the other methods of voting described in this proxy statement. +Who Can Vote? +Only stockholders who owned our common stock at the close of business on April 5, 2024 are entitled to vote at the annual meeting. On this record date, there were 38,247,078 shares of our common stock outstanding and entitled to vote. Our common stock is our only class of voting stock. +You do not need to attend the annual meeting to vote your shares. Shares represented by valid proxies, received in time for the annual meeting and not revoked prior to the annual meeting, will be voted at the annual meeting. For instructions on how to change or revoke your proxy, see “May I Change or Revoke My Proxy?” below. +How Many Votes Do I Have? +Each share of our common stock that you own entitles you to one vote. +How Do I Vote? +Whether you plan to attend the annual meeting or not, we urge you to vote by proxy. All shares represented by valid proxies that we receive through this solicitation, and that are not revoked, will be voted in accordance with your instructions on the proxy card or as instructed via internet or telephone. You may specify whether your shares should be voted for or withheld for each nominee for director, and whether your shares should be voted for, voted against or abstain with respect to the advisory vote regarding the compensation of our named executive officers and the ratification of the appointment of our independent auditors. If you properly submit a proxy without giving specific voting instructions, your shares will be voted in accordance with the recommendations of our Board of Directors as noted below. Voting by proxy will +2 +TABLE OF CONTENTS +not affect your right to attend the annual meeting. If your shares are registered directly in your name through our stock transfer agent, Computershare Trust Company, N.A., or you have stock certificates registered in your name, you may vote: +• +By internet or by telephone. Follow the instructions included in the Notice or, if you received printed materials, in the proxy card to vote over the internet or by telephone. +• +By mail. If you received a proxy card by mail, you can vote by mail by completing, signing, dating and returning the proxy card as instructed on the card. If you sign the proxy card but do not specify how you want your shares voted, they will be voted in accordance with the recommendations of our Board of Directors as noted below. +• +At the meeting. Stockholders may vote in person during the annual meeting. +Telephone and internet voting facilities for stockholders of record will be available 24 hours a day and will close at 1:00 a.m. ET on June 3, 2024. +If your shares are held in “street name” (held in the name of a bank, broker or other holder of record), you will receive instructions from the holder of record. You must follow the instructions of the holder of record in order for your shares to be voted. Telephone and internet voting also will be offered to stockholders owning shares through certain banks and brokers. +How Does the Board of Directors Recommend that I Vote on the Proposals? +The Board of Directors recommends that you vote as follows: +• +“ FOR ” the election of the two (2) nominees for director; +• +“ FOR ” the compensation of our named executive officers, as disclosed in this proxy statement; and +• +“ FOR ” the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2024. +If any other matter is presented at the annual meeting, your proxy provides that your shares will be voted by the proxy holder listed in the proxy in accordance with the proxy holder’s best judgment. At the time this proxy statement was first made available, we knew of no matters that needed to be acted on at the annual meeting, other than those discussed in this proxy statement. +May I Change or Revoke My Proxy? +If you give us your proxy, you may change or revoke it at any time before the annual meeting. You may change or revoke your proxy in any one of the following ways: +• +if you received a proxy card, by signing a new proxy card with a date later than your previously delivered proxy and submitting it as instructed above; +• +by re-voting by internet or by telephone as instructed above; +• +by notifying our Corporate Secretary in writing before the annual meeting that you have revoked your proxy; or +• +by attending the annual meeting and voting in person. +Your most current vote, whether by telephone, internet or proxy card, is the one that will be counted. +What if I Receive More than One Notice or Proxy Card? +You may receive more than one Notice or proxy card if you hold shares of our common stock in more than one account, which may be in registered form or held in street name. Please vote in the manner described above under “How Do I Vote?” for each account to ensure that all of your shares are voted. +Will My Shares Be Voted if I Do Not Vote? +If your shares are registered in your name or if you have stock certificates, they will not be counted if you do not vote as described above under “How Do I Vote?” If your shares are held in street name and you +3 +TABLE OF CONTENTS +do not provide voting instructions to the bank, broker or other nominee that holds your shares as described above, the bank, broker or other nominee that holds your shares has the authority to vote your unvoted shares only on the ratification of the appointment of our independent registered public accounting firm without receiving instructions from you. Therefore, we encourage you to provide voting instructions to your bank, broker or other nominee. This ensures your shares will be voted at the annual meeting and in the manner you desire. A “broker non-vote” will occur if your broker cannot vote your shares on a particular matter because it has not received instructions from you and does not have discretionary voting authority on that matter or because your broker chooses not to vote on a matter for which it does have discretionary voting authority. +What Vote is Required to Approve Each Proposal and How Are Votes Counted? +Proposal 1: Elect Directors +The two director nominees who receive the most votes (also known as a “plurality” of the votes cast) will be elected. You may vote either FOR each of the nominees or WITHHOLD your vote from each of the nominees. Votes that are withheld will not be included in the vote tally for the election of the directors. Brokerage firms do not have authority to vote customers’ unvoted shares held by the firms in street name for the election of the directors. As a result, any shares not voted by a customer will be treated as a broker non-vote. Such broker non-votes will have no effect on the results of this vote. +Proposal 2: Approve an Advisory Vote on the Compensation of Our Named Executive Officers +The affirmative vote of a majority of the votes cast affirmatively or negatively for this proposal is required to approve, on an advisory basis, the compensation of our named executive officers, as described in this proxy statement. Abstentions will have no effect on the results of this vote. Brokerage firms do not have authority to vote customers’ unvoted shares held by the firms in street name on this proposal. As a result, any shares not voted by a customer will be treated as a broker non-vote. Such broker non-votes will have no effect on the results of this vote. Although the advisory vote is non-binding, the Compensation Committee of our Board of Directors and our Board of Directors will review the voting results and take them into consideration when making future decisions regarding executive compensation. +Proposal 3: Ratify Appointment +of Independent Registered Public Accounting Firm +The affirmative vote of a majority of the votes cast affirmatively or negatively for this proposal is required to ratify the appointment of our independent registered public accounting firm. Abstentions will have no effect on the results of this vote. Brokerage firms have authority to vote customers’ unvoted shares held by the firms in street name on this proposal. If a broker does not exercise this authority, such broker non-votes will have no effect on the results of this vote. We are not required to obtain the approval of our stockholders to appoint our independent registered public accounting firm. However, if our stockholders do not ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for 2024, the Audit Committee of our Board of Directors will reconsider its appointment. +Where Can I Find the Voting Results of the Annual Meeting? +The preliminary voting results will be announced at the annual meeting, and we will publish preliminary results, or final results if available, in a Current Report on Form 8-K within four business days of the annual meeting. If final results are unavailable at the time we file the Form 8-K, then we will file an amended Current Report on Form 8-K to disclose the final voting results within four business days after the final voting results are known. +4 +TABLE OF CONTENTS +What Are the Costs of Soliciting these Proxies? +We will pay all of the costs of soliciting these proxies. Our directors and employees may solicit proxies in person or by telephone, fax or email. We will not pay these employees and directors any additional compensation for these services. We will ask banks, brokers and other institutions, nominees and fiduciaries to forward these proxy materials to their principals and to obtain authority to execute proxies. We will then reimburse them for their expenses. +What Constitutes a Quorum for the Annual Meeting? +The presence, in person or by proxy, of the holders of a majority of the voting power of all outstanding shares of our common stock entitled to vote at the annual meeting is necessary to constitute a quorum at the annual meeting. Votes of stockholders of record who are present at the annual meeting in person or by proxy, abstentions and broker non-votes are counted for purposes of determining whether a quorum exists. +Householding of Annual Disclosure Documents +SEC rules concerning the delivery of annual disclosure documents allow us or your broker to send a single Notice or, if applicable, a single set of our proxy materials to any household at which two or more of our stockholders reside, if we or your broker believe that the stockholders are members of the same family. This practice, referred to as “householding,” benefits both you and us. It reduces the volume of duplicate information received at your household and helps to reduce our expenses. The rule applies to our Notices, annual reports, proxy statements and information statements. Once you receive notice from your broker or from us that communications to your address will be “householded,” the practice will continue until you are otherwise notified or until you revoke your consent to the practice. Stockholders who participate in householding will continue to have access to and utilize separate proxy voting instructions. +If your household received a single Notice or, if applicable, a single set of proxy materials this year, but you would prefer to receive your own copy, please contact our transfer agent, Computershare Trust Company, N.A., by calling their toll-free number, 1-800-736-3001. +If you do not wish to participate in “householding” and would like to receive your own Notice or, if applicable, set of our proxy materials in future years, follow the instructions described below. Conversely, if you share an address with another stockholder and together both of you would like to receive only a single Notice or, if applicable, set of proxy materials, follow these instructions: +If your shares are registered in your own name, please contact our transfer agent, Computershare Trust Company, N.A., and inform them of your request by calling them at 1-800-736-3001 or writing them at Computershare Trust Company, P.O. Box 43078, Providence, RI, 02940-3078. +If a bank, broker or other nominee holds your shares, please contact the bank, broker or other nominee directly and inform them of your request. +Electronic Delivery of Company Stockholder Communications +Most stockholders can elect to view or receive copies of future proxy materials over the internet instead of receiving paper copies in the mail. +You can choose this option and save the Company the cost of producing and mailing these documents by: +• +following the instructions provided on your Notice or proxy card; +• +following the instructions provided when you vote over the internet; or +• +going to www.computershare.com and logging into the Investor Center to follow the instructions provided. +5 +TABLE OF CONTENTS +SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT +The following table sets forth certain information with respect to the beneficial ownership of our common stock as of March 1, 2024, for (a) the named executive officers in the Summary Compensation Table on page 28 of this proxy statement, (b) each of our directors and director nominees, (c) all of our current directors and executive officers as a group and (d) each stockholder known by us to own beneficially more than 5% of our common stock. +Shares Beneficially +Owned (1) +Name and Address of Beneficial Owner +Number +Percent +5% Stockholders (2) +BlackRock, Inc. (3) +50 Hudson Yards +New York, NY 10001 +3,190,625 +8.4 % +Millenium Management LLC et al. (4) +399 Park Avenue +New York, NY 10022 +2,209,566 +5.8 % +The Vanguard Group (5) +100 Vanguard Blvd. +Malvern, PA 19355 +2,055,033 +5.4 % +Directors, Director Nominees and Named Executive Officers +Masoud Toloue, Ph.D. (6) +299,538 +* +Vandana Sriram +— +— +Brian J. Blaser (7) +16,098 +* +William Donnelly +20,888 +* +Karen A. Flynn (8) +39,438 +* +Sarah E. Hlavinka (9) +87,768 +* +Martin D. Madaus, Ph.D. (10) +328,885 +* +Paul M. Meister (11) +337,496 +* +Laurie J. Olson (12) +43,217 +* +David R. Walt, Ph.D. (13) +1,487,121 +3.9 % +Michael A. Doyle (14) +97,061 +* +All directors and current executive officers as a group (10 persons) (15) +2,660,449 +6.9 % +* +Represents beneficial ownership of less than 1% of the outstanding shares of our common stock. +(1) +This table is based upon information supplied by executive officers, directors and principal stockholders and in their filings with the SEC. Beneficial ownership is determined in accordance with the rules of the SEC and includes voting or investment power with respect to the securities. We deem shares of common stock that may be acquired by an individual or group within 60 days of March 1, 2024 pursuant to the exercise of options or warrants or the vesting of restricted stock units (“RSUs”) to be outstanding for the purpose of computing the percentage ownership of such individual or group, but such shares are not deemed to be outstanding for the purpose of computing the percentage ownership of any other person shown in the table. Except as indicated in footnotes to this table, we believe that the stockholders named in this table have sole voting and investment power with respect to all shares of common stock shown to be beneficially owned by them based on information provided to us by these stockholders. Percentage of ownership is based on 38,121,556 shares of common stock outstanding on March 1, 2024. +(2) +This information is based solely upon a review of the Schedule 13G reports or related amendments filed with the SEC with respect to holdings of the Company’s common stock as of December 31, 2023. +6 +TABLE OF CONTENTS +(3) +Based on a Schedule 13G/A filed by BlackRock, Inc. with the SEC on January 25, 2024. Includes shares beneficially owned by: BlackRock Advisors, LLC; Aperio Group, LLC; BlackRock (Netherlands) B.V.; BlackRock Institutional Trust Company, National Association; BlackRock Asset Management Ireland Limited; BlackRock Financial Management, Inc.; BlackRock Asset Management Schweiz AG; BlackRock Investment Management, LLC; BlackRock Investment Management (UK) Limited; BlackRock Asset Management Canada Limited; BlackRock Investment Management (Australia) Limited; BlackRock Fund Advisors; and BlackRock Fund Managers Ltd. BlackRock, Inc. is a parent holding company or control person and claims sole dispositive power for 3,190,625 shares and sole voting power for 3,111,606 shares. +(4) +Based on a Schedule 13G/A filed jointly by Millenium Management LLC, Millenium Group Management LLC, Integrated Core Strategies (US) LLC and Israel A. Englander with the SEC on January 29, 2024. Millenium Management LLC, Millenium Group Management LLC and Israel A. Englander claim shared dispositive and voting power for 2,209,566 shares. Integrated Core Strategies (US) LLC claims shared dispositive and voting power for 2,082,903 shares. +(5) +Based on a Schedule 13G filed by The Vanguard Group with the SEC on February 13, 2024. The Vanguard Group claims sole dispositive power for 1,991,144 shares, shared dispositive power for 63,889 shares and shared voting power for 33,420 shares. +(6) +Consists of 170,477 shares of common stock, 120,091 shares of common stock issuable upon the exercise of stock options exercisable within 60 days of March 1, 2024 and 8,970 shares of common stock issuable upon the vesting of RSUs within 60 days of March 1, 2024 held by Dr. Toloue. +(7) +Consists of 5,367 shares of common stock and 10,731 shares of common stock issuable upon the exercise of stock options exercisable within 60 days of March 1, 2024 held by Mr. Blaser. +(8) +Consists of 14,640 shares of common stock and 24,798 shares of common stock issuable upon the exercise of stock options exercisable within 60 days of March 1, 2024 held by Ms. Flynn. +(9) +Consists of 40,042 shares of common stock and 47,726 shares of common stock issuable upon the exercise of stock options exercisable within 60 days of March 1, 2024 held by Ms. Hlavinka. +(10) +Consists of 26,526 shares of common stock held by Dr. Madaus, 47,726 shares of common stock issuable upon the exercise of stock options exercisable within 60 days of March 1, 2024 held by Dr. Madaus and 254,633 shares of common stock held by a trust for which Dr. Madaus is a trust advisor who shares voting and investment power over the shares held by the trust. +(11) +Consists of 289,770 shares of common stock and 47,726 shares of common stock issuable upon the exercise of stock options exercisable within 60 days of March 1, 2024 held by Mr. Meister. +(12) +Consists of 10,777 shares of common stock, 30,926 shares of common stock issuable upon the exercise of stock options exercisable within 60 days of March 1, 2024 and 1,514 shares of common stock issuable upon the vesting of RSUs within 60 days of March 1, 2024 held by Ms. Olson. +(13) +Consists of 1,439,395 shares of common stock and 47,726 shares of common stock issuable upon the exercise of stock options exercisable within 60 days of March 1, 2024 held by Dr. Walt. Does not include shares of common stock held by The David R. Walt 2008 Irrevocable Family Trust (the “Walt Trust”), of which Dr. Walt’s spouse is trustee and has sole voting and investment power over the shares held by the Walt Trust. +(14) +Mr. Doyle served as Chief Financial Officer from July 12, 2021 to August 21, 2023 and as Executive Director, Finance from August 21, 2023 until March 31, 2024. Consists of 44,793 shares of common stock, 51,003 shares of common stock issuable upon the exercise of stock options exercisable within 60 days of March 1, 2024 and 1,265 shares of common stock issuable upon the vesting of RSUs within 60 days of March 1, 2024 held by Mr. Doyle. +(15) +See footnotes 6 through 13. +7 +TABLE OF CONTENTS +MANAGEMENT AND CORPORATE GOVERNANCE +The Board of Directors +Our restated certificate of incorporation and our restated bylaws provide that our business is to be managed by or under the direction of our Board of Directors (our “Board”). Our Board is divided into three classes, with one class elected at each annual meeting of stockholders to serve for a three-year term. Our Board currently consists of nine members, classified as follows: (1) Karen Flynn, Martin Madaus, Ph.D. and Laurie Olson constitute Class I with a term ending at the upcoming 2024 annual meeting; (2) Sarah Hlavinka, Masoud Toloue, Ph.D. and David Walt, Ph.D. constitute Class II with a term ending at the 2025 annual meeting; and (3) Brian Blaser, William Donnelly and Paul Meister constitute Class III with a term ending at the 2026 annual meeting. Laurie Olson has informed the Board that she will not stand for re-election at the 2024 annual meeting, and our Board has taken action to reduce the size of our Board to eight members, effective as of the 2024 annual meeting. +Our Board accepted the recommendation of the Nominating and Governance Committee and voted to nominate Karen Flynn and Martin Madaus, Ph.D. for election at the annual meeting for a term of three years to serve until the 2027 annual meeting of stockholders and until their respective successors have been duly elected and qualified. +Set forth in the table and biographies below are the names of the persons nominated as directors and directors whose terms do not expire this year, their ages, their offices in the Company, if any, their principal occupations or employment for at least the past five years, the length of their tenure as directors and the names of other public companies in which such persons hold or have held directorships during the past five years, as of April 1, 2024. Additionally, information about the specific experience, qualifications, attributes or skills that led to our Board’s conclusion at the time of filing of this proxy statement that each person listed below should serve as a director is described below. +Name +Age +Position with the Company +Masoud Toloue, Ph.D. +43 +President and Chief Executive Officer and Director +Brian J. Blaser (1) +59 +Director +William Donnelly (3) +62 +Director +Karen A. Flynn (1)(2) +61 +Director +Sarah E. Hlavinka (2)(3) +59 +Director +Martin D. Madaus, Ph.D. (2)(3) +64 +Chairman of the Board +Paul M. Meister (3) +71 +Director +David R. Walt, Ph.D. (1) +71 +Director +(1) +Member of our Compensation Committee +(2) +Member of our Nominating and Governance Committee +(3) +Member of our Audit Committee +Masoud Toloue, Ph.D. has served as a member of our Board and as our President and Chief Executive Officer since April 2022. He served as President, Quanterix and Diagnostics from June 2021 to April 2022. Prior to joining us, Dr. Toloue served as Senior Vice President, Diagnostics at PerkinElmer from February 2021 to June 2021 during which time he grew the business to over fifty percent of the company’s total revenue. Prior to this role, Dr. Toloue led PerkinElmer’s Applied Genomics division from August 2016 to June 2021. Dr. Toloue founded and led the next-generation sequencing business at Bioo Scientific until its acquisition by PerkinElmer in 2016. He also co-founded and led Genohub, where he transformed that company from a supplier of next-generation sequencing matching technology to a leading platform provider for managing sequencing projects globally. Dr. Toloue holds a doctoral degree in molecular cell biology from the University at Buffalo, where he also earned a B.S. in molecular cell biology, and was a postdoctoral fellow in protein biochemistry at The University of Texas Health Science Center in San Antonio. Dr. Toloue’s qualifications +8 +TABLE OF CONTENTS +for service as a member of our Board include his extensive experience in the life sciences and diagnostics industries, as well as the perspective he brings as our President and Chief Executive Officer. +Brian J. Blaser has served as a member of our Board since January 2023. Mr. Blaser was employed by Abbott Laboratories, a global medical device company from 2004 to 2019, in a variety of strategy, operational and diagnostic roles. Most recently, he served as Executive Vice President, Diagnostics Products, of Abbott Laboratories where he oversaw the company’s global diagnostics organization, including its core laboratory, point of care, rapid diagnostics and molecular diagnostics businesses. Over his career, he has held leadership positions in operations, finance, and engineering at Johnson & Johnson, Eastman Kodak, and General Motors. Mr. Blaser currently serves on the board of directors for Meridian Bioscience Inc. and as senior advisor to McKinsey & Company. He is Chair of the University of Dayton School of Engineering Advisory Council and Chairman of the Board of Trustees for Cristo-Rey St. Martin College Prep. He is a former member of the board of the Advanced Medical Technology Association (AdvaMed). Mr. Blaser holds a master’s degree in business administration from the Rochester Institute of Technology and a bachelor’s degree in mechanical engineering technology from the University of Dayton. Mr. Blaser’s qualifications for service as a member of our Board include his over twenty-five years of senior leadership experience in the in-vitro diagnostics industry and his proven track record of creating foundations of exceptional performance standards, teamwork and accountability. +William P. Donnelly has served as a member of our Board since August 2023. From 2014 to 2018, Mr. Donnelly served as Executive Vice President responsible for finance, investor relations, supply chain and information technology at Mettler-Toledo International Inc. Mr. Donnelly served as Mettler-Toledo’s Chief Financial Officer from 1997 to 2002 and from 2004 to 2014 and as division head of Mettler-Toledo’s product inspection and certain lab businesses from 2002 to 2004. Mr. Donnelly served in various senior financial roles, including chief financial officer, of Elsag Bailey Process Automation, NV from 1993 to 1997. Prior to that, he was an auditor with PricewaterhouseCoopers LLP from 1983 to 1993. Mr. Donnelly has been a director of Ingersoll Rand since May 2017 and was appointed lead director in November 2021. He also has served as a director of TRowe Price since 2023. Mr. Donnelly received a bachelor’s degree in business administration from John Carroll University. Mr. Donnelly’s qualifications for service as a member of our Board include extensive leadership experience with publicly-held industrial and life science companies, including as chief financial officer. +Karen A. Flynn has served as a member of our Board since June 2022. Ms. Flynn retired from her position as Chief Commercial Officer of Catalent, Inc. in September 2022, previously having served Catalent as President, Biologics and Chief Commercial Officer from January 2020 to October 2021. After retirement, Ms. Flynn served on an interim basis as Catalent’s President, Biomodalities from April 2023 to October 2023. Prior to joining Catalent, Ms. Flynn served as the Senior Vice President and Chief Commercial Officer of West Pharmaceutical Services, Inc from 2016 to 2019, having previously served as that company’s President, Pharmaceutical Packaging Systems since 2014. Ms. Flynn has also served on the board of Sotera Health Company since November 2023, is a member of the Board of Trustees of The Franklin Institute, and serves in the Hesburgh Women of Impact mentorship program for the University of Notre Dame. Ms. Flynn is also a director of GermFree Laboratories. Previously, Ms. Flynn was a board member of Catalent from September 2022 to January 2024 and served on the Board of Directors for Recro Pharmaceuticals. Ms. Flynn holds a Master of Science in Business Administration from Boston University, a Master of Science in Engineering from the University of Pennsylvania and a Bachelor of Science in Pre-Professional Studies from the University of Notre Dame. Ms.Flynn’s qualifications for service as a member of our Board include her experience leading high growth businesses and her extensive background in commercial strategy, strategic planning, innovation and quality management. +Sarah E. Hlavinka has served as a member of our Board since 2019. Since 2022, Ms. Hlavinka has served as Executive Vice President, Chief Legal Officer and Corporate Secretary of The ODP Corporation, the parent company of Office Depot, LLC and a publicly-traded provider of business services, products and digital workplace technology solutions through an integrated B2B distribution platform. From August 2018 to March 2022, Ms. Hlavinka served as Senior Vice President, General Counsel and Secretary of Itron, Inc., a publicly traded technology and services company focused on critical infrastructure solutions. Prior to joining Itron, from January 2017 to July 2018, Ms. Hlavinka served as Executive Vice President, General Counsel and Secretary of Xerox Corporation, a publicly traded document management systems and +9 +TABLE OF CONTENTS +solutions company. Prior to joining Xerox Corporation, from 2007 to 2017, Ms. Hlavinka served as Executive Vice President, General Counsel and Secretary of ABM Industries Incorporated, a publicly traded integrated facility services provider. Additionally, Ms. Hlavinka served as a director of Cigna Life Insurance Company of New York from 2013 to 2020. Ms. Hlavinka holds a J.D. from the University of Texas School of Law and a B.A. in history from Texas A&M University. Ms. Hlavinka’s qualifications for service as a member of our Board include her significant experience as a senior executive of global companies operating in a variety of industries and her substantial expertise in corporate governance, mergers and acquisitions and risk management. +Martin D. Madaus, Ph.D. has served as a member of our Board since 2010 and currently serves as our Chairman. Dr. Madaus previously served as our Executive Chairman from November 2010 to June 2014, as our Chief Executive Officer from October 2011 to July 2012 and as our President from June 2011 to July 2012. From September 2020 to April 2021, he served as the Chief Operations Officer of Sherlock Biosciences, Inc., a molecular diagnostics company. He also serves as Operating Executive to The Carlyle Group, a multinational private equity, alternative asset management and financial services corporation, since February 2019. From June 2014 to February 2019, Dr. Madaus served as Chairman and Chief Executive Officer at OrthoClinical Diagnostics, Inc., a diagnostics company that makes products and diagnostic equipment for blood testing. Previously, Dr. Madaus was the Chairman, President and Chief Executive Officer of Millipore Corporation, a life sciences company serving the bioscience research and biopharmaceutical manufacturing industry, from 2005 to 2010, when Millipore was acquired by Merck KGaA. Dr. Madaus currently serves as a member of the board of directors of the following companies: Repligen Corp., a bioprocessing manufacturer, Emulate, Inc., a leading provider of organ-on-a-chip technology; Unchained Labs, Inc., a life science equipment provider, and Syntis Bio, a medical device manufacturer. Dr. Madaus served as a member of the board of directors of Standard Biotools (NASDAQ:LAB) from January 2022 until January 2024 when it was acquired by SomaLogic. Dr. Madaus received a Doctor of Veterinary Medicine from the University of Munich in Germany and a Ph.D. in Veterinary Medicine from the Veterinary School of Hanover in Germany. Dr. Madaus’s qualifications for service as a member of our Board include his extensive public and private company board experience and his substantial knowledge of and managerial experience in the diagnostics industry. +Paul M. Meister has served as a member of our Board since 2013. Mr. Meister is a partner in Novalis LifeSciences, a life science focused venture firm, and is Co-Founder and Chief Executive Officer of Liberty Lane Partners, LLC, a private investment company with diverse investments in healthcare, technology, and distribution-related industries. Mr. Meister served as President of MacAndrews & Forbes from 2014 to 2018. Mr. Meister also served as Executive Vice Chairman of Revlon, Inc., a leading beauty products company, on an interim basis from January 2018 to November 2018, when the Chief Executive Officer of Revlon, Inc. resigned. Mr. Meister previously served as Chairman and Chief Executive Officer of inVentiv Health (now known as Syneos Health, Inc.), a provider of commercial, consulting, and clinical research services to the pharmaceutical and biotech industries, from 2010 to 2015. Mr. Meister was Chairman of Thermo Fisher Scientific, Inc., a scientific instruments equipment and supplies company, from November 2006 to April 2007. He was previously an executive officer of Fisher Scientific International, Inc, a predecessor of Thermo Fisher Scientific, Inc. from 1991 to 2006. Mr. Meister has served as a director of Aptiv PLC, a leading global technology and mobility company primarily serving the automotive sector, since 2019; Amneal Pharmaceuticals, Inc., a global pharmaceutical company, since 2019; and Oaktree Acquisitions Corp II, a company incorporated for the purpose of effecting a business combination with one or more businesses, since 2020. He also previously served as a director of Oaktree Acquisitions Corp from 2019 to 2020, Scientific Games Corporation, which provides customized, end-to-end solutions to the gaming industry, from 2012 to 2020, LKQ Corporation, a distributor of vehicle products, from 1999 to 2018, vTv Therapeutics, Inc., a clinical-stage biopharmaceutical company, from 2015 to 2018 and Revlon, Inc. from 2016 to 2019. Mr. Meister is Co-Chair of the University of Michigan’s Life Sciences Institute External Advisory Board and Chair of the Provost’s Advisory Committee. Mr. Meister has an M.B.A. from Northwestern University and a B.A. from the University of Michigan. Mr. Meister’s qualifications for service as a member of our Board include his financial and investment expertise and his extensive knowledge of the life sciences industry. +David R. Walt, Ph.D. was our founding scientist and has served as a member of our Board since 2007. Since 2017, Dr. Walt has served as Hansjörg Wyss Professor of Biologically Inspired Engineering and Professor of Pathology at Harvard Medical School in the Department of Pathology at the Brigham and +10 +TABLE OF CONTENTS +Women’s Hospital and as a core faculty member of the Wyss Institute for Biologically Inspired Engineering. He is also a Howard Hughes Medical Institute Professor. He previously served as University Professor, Professor of Chemistry, Professor of Biomedical Engineering, Professor of Genetics, Professor of Neuroscience, Professor of Cell and Molecular Biology, and Professor of Oral Medicine at Tufts University, from 1981 to 2017. Dr. Walt was also the founding scientist of Illumina, Inc. and served as a member of its board of directors from 1998 to 2016. He served on the board of directors of Cerulean Pharma Inc. (which was acquired by Daré Bioscience, Inc.) from 2016 to 2017. From 2013 to 2021, Dr. Walt served on the board of directors of Exicure, Inc., a publicly traded company that develops therapeutics for immuno-oncology, inflammatory diseases and genetic disorders. Dr. Walt was also a founder and currently serves as a member of the board of directors of Arbor Biotechnologies, Inc., Protillion Biosciences, Sherlock Biosciences, Inc., and Vizgen. He has received numerous national and international awards and honors for his fundamental and applied work in the field of optical sensors, microwell arrays and single molecule detection. He is a member of the U.S. National Academy of Engineering, U.S. National Academy of Medicine, the American Philosophical Society, American Academy of Arts and Sciences, a fellow of the American Institute for Medical and Biological Engineering, a fellow of the National Academy of Inventors, and a fellow of the American Association for the Advancement of Science. He has been inducted in the US National Inventors Hall of Fame. Dr. Walt has a B.S. in Chemistry from the University of Michigan and a Ph.D. in Chemical Biology from Stony Brook University. Dr. Walt’s qualifications for service as a member of our Board include his experience in developing life sciences companies and his expertise in chemistry, diagnostics technologies and biomedical engineering. +Our Board reviewed the materiality of any relationship that each of our directors and director nominees has with Quanterix Corporation, either directly or indirectly, including those described under the caption “Certain Relationships and Related Person Transactions” below. Based upon this review, our Board determined that the following directors and director nominees are “independent directors” as defined by The Nasdaq Stock Market: Brian Blaser, William Donnelly, Karen Flynn, Sarah Hlavinka, Martin Madaus, Ph.D., Paul Meister, Laurie Olson and David Walt, Ph.D. In addition, the Board determined that Keith Crandell, who served as a director until June 7, 2023, was an “independent director” as defined by The Nasdaq Stock Market. +There are no family relationships between or among any of our directors or director nominees. The principal occupation and employment during the past five years of each of our directors and director nominees was carried on, in each case except as specifically identified above, with a corporation or organization that is not a parent, subsidiary or other affiliate of us. There is no arrangement or understanding between any of our directors or nominees and any other person or persons pursuant to which he or she is to be selected as a director or nominee. +There are no legal proceedings to which any of our directors is a party adverse to us or any of our subsidiaries or in which any such person has a material interest adverse to us or any of our subsidiaries. +Committees of the Board of Directors and Meetings +Meeting Attendance. During 2023, our Board met or acted by written consent twelve times and the three standing committees of the Board met or acted by written consent a total of 35 times. No director attended fewer than 75% of the total number of meetings of the Board and of committees of the Board on which such director served during 2023. Our Board is encouraged, but not required, to attend each annual meeting of our stockholders. Two directors attended our 2023 annual meeting of stockholders. +Audit Committee. Our Audit Committee met or acted by written consent eleven times during 2023. This committee currently has four members, Paul Meister (Chairperson), William Donnelly, Sarah Hlavinka and Martin Madaus, Ph.D. Our Audit Committee’s role and responsibilities are set forth in the Audit Committee’s written charter and include: +• +selecting a firm to serve as the independent registered public accounting firm to audit our financial statements; +• +ensuring the independence of the independent registered public accounting firm; +11 +TABLE OF CONTENTS +• +discussing the scope and results of the audit with the independent registered public accounting firm, and reviewing, with management and that firm, our interim and year-end operating results; +• +establishing procedures for employees to anonymously submit concerns about questionable accounting or audit matters; +• +considering and reviewing with management and the independent auditor the effectiveness of our internal control over financial reporting and, if any, our internal audit function; +• +reviewing significant accounting and reporting issues, including complex or unusual transactions and highly judgmental areas, and recent professional and regulatory pronouncements, and their impact on our financial statements; +• +reviewing, with legal counsel, legal or regulatory matters that could have a significant impact on our financial statements; +• +reviewing material related party transactions or those that require disclosure; +• +approving or, as permitted, pre-approving all audit and non-audit services to be performed by the independent registered public accounting firm; +• +preparing the audit committee report, required by SEC rules, which is included in the section of this proxy statement titled, “Report of Audit Committee”; and +• +overseeing our programs, policies, and procedures related to information security and data protection. +All members of the Audit Committee satisfy the independence standards promulgated by the SEC, and by The Nasdaq Stock Market, as such standards apply specifically to members of audit committees. Our Board has determined that Paul Meister and William Donnelly is each an “audit committee financial expert,” as the SEC has defined that term in Item 407 of Regulation S-K. +A copy of the Audit Committee’s written charter is publicly available on our website at www.quanterix.com . +Compensation Committee. Our Compensation Committee met or acted by written consent twelve times during 2023. This committee currently has four members, Laurie Olson (Chairperson), Brian Blaser, Karen Flynn and David Walt, Ph.D. Our Compensation Committee’s role and responsibilities are set forth in the Compensation Committee’s written charter and include: +• +reviewing and approving, or recommending that our Board approve, the compensation of our executive officers; +• +reviewing and recommending to our Board the compensation of our directors; +• +reviewing and recommending to our Board the terms of any compensatory agreements with our executive officers; +• +administering our 2017 Employee, Director and Consultant Equity Incentive Plan (the “2017 Plan”), 2007 Stock Option and Grant Plan, as amended (the “2007 Plan”), and 2017 Employee Stock Purchase Plan (the “ESPP”); +• +reviewing and approving, or making recommendations to our Board with respect to, incentive compensation and equity plans; +• +reviewing compensation policies and practices for all employees to determine whether such policies and practices create risks that are reasonably likely to have a material adverse effect on the Company; and +• +preparing the compensation committee report, required by SEC rules, which is included in the section of this proxy statement titled, “Compensation Committee Report”. +The Compensation Committee is also responsible for the determination of the compensation of our Chief Executive Officer and conducts its decision-making process with respect to such compensation without the Chief Executive Officer present. Our Board has determined that all members of the Compensation Committee qualify as “independent” under the definition promulgated by The Nasdaq Stock Market. +12 +TABLE OF CONTENTS +The Compensation Committee has the authority to retain or obtain the advice of such compensation consultants, legal counsel, experts and other advisors as it may deem appropriate in its sole discretion. The Compensation Committee is directly responsible for the appointment, compensation and oversight of its consultants, legal counsel, experts and advisors and has sole authority to approve their fees and retention terms, and the Company will provide funding for such fees and related expenses. +The Compensation Committee engaged Pay Governance, LLC as an independent advisor to the Compensation Committee to provide executive compensation consulting services for the fiscal year ended December 31, 2023. Pay Governance was engaged by and reports to the Compensation Committee. Pay Governance did not provide any services to the Company other than executive compensation consulting services during the fiscal year ended December 31, 2023. +A copy of the Compensation Committee’s written charter is publicly available on our website at www.quanterix.com . +Nominating and Governance Committee. Our Nominating and Governance Committee (the “Nominating Committee”), met or acted by written consent eleven times during 2023. This committee has three members, Sarah E. Hlavinka (Chairperson), Karen A. Flynn and Martin D. Madaus, Ph.D. Our Board has determined that all members of the Nominating Committee qualify as independent under the definition promulgated by The Nasdaq Stock Market. The Nominating Committee’s responsibilities are set forth in the Nominating Committee’s written charter and include: +• +identifying and recommending candidates for membership on our Board; +• +recommending directors to serve on Board committees; +• +reviewing and recommending our corporate governance guidelines and policies; +• +reviewing proposed waivers of the code of conduct for directors and executive officers; +• +evaluating, and overseeing the process of evaluating, the performance of our Board and individual directors; and +• +assisting our Board on corporate governance matters. +In 2022, the Nominating Committee proposed, and our Board approved, corporate governance guidelines, which, in conjunction with our restated certificate of incorporation, our restated bylaws, our committee charters and key Board policies, form the framework for our governance. +Generally, our Nominating Committee considers director candidates recommended by stockholders as well as from other sources, such as other directors or officers, third-party search firms or other appropriate sources. Once identified, the Nominating Committee evaluates a candidate’s qualifications in accordance with our Nominating and Governance Committee Policy Regarding Qualifications of Directors, which is appended to our Nominating Committee’s written charter. Threshold criteria include personal integrity and sound judgment, business and professional skills and experience, independence, knowledge of our industry, possible conflicts of interest, diversity, the extent to which the candidate would fill a present need on our Board and concern for the long-term interests of our stockholders. Our Nominating Committee has not adopted a formal diversity policy in connection with the consideration of director nominations or the selection of nominees. However, the Nominating Committee will consider issues of diversity among our Board’s members in identifying and considering director nominees and will strive where appropriate to achieve a diverse balance of backgrounds, perspectives, experience, age, gender, ethnicity and country of citizenship on our Board and its committees. A copy of our Board’s diversity matrix, as required by relevant Nasdaq rules, is posted on our website under the “Investors” tab. +A stockholder who wishes to propose a candidate for consideration as a nominee for election to our Board must follow the procedures described in our restated bylaws and in “Stockholder Proposals and Nominations for Director” at the end of this proxy statement. In general, persons recommended by stockholders will be considered in accordance with our Policy on Shareholder Recommendation of Candidates for Election as Directors, which is appended to our Nominating Committee’s written charter. Any such recommendation should be made in writing to the Nominating Committee, care of our Corporate Secretary +13 +TABLE OF CONTENTS +at our principal office, and should be accompanied by the following information concerning each recommending stockholder and the beneficial owner of our common stock, if any, on whose behalf the nomination is made: +• +all information relating to such person that would be required to be disclosed in a proxy statement filed with the SEC; +• +certain biographical and share ownership information about the stockholder and any other proponent, including a description of any derivative transactions in our securities; +• +a description of certain arrangements and understandings between the proposing stockholder and any beneficial owner and any other person in connection with such stockholder nomination; and +• +a statement whether or not either such stockholder or beneficial owner intends to deliver a proxy statement and form of proxy to holders of voting shares sufficient to carry the proposal. +The recommendation must also be accompanied by the following information concerning the proposed nominee: +• +certain biographical information concerning the proposed nominee; +• +all information concerning the proposed nominee required to be disclosed in solicitations of proxies for election of directors; +• +certain information about any other security holder of the Company who supports the proposed nominee; +• +a description of all relationships between the proposed nominee and the recommending stockholder or any beneficial owner, including any agreements or understandings regarding the nomination; and +• +additional disclosures relating to stockholder nominees for directors, including completed questionnaires and disclosures required by our restated bylaws. +A copy of the Nominating Committee’s written charter, including its appendices, is publicly available on our website at www.quanterix.com . +Compensation Committee Interlocks and Insider Participation +None of the members of our Compensation Committee has at any time during the prior three years been one of our officers or employees. None of our executive officers currently serves, or in the past fiscal year has served, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on our Board or Compensation Committee. For a description of any transactions between us and members of our Compensation Committee and affiliates of such members, please see “Certain Relationships and Related Person Transactions.” +Board Leadership Structure and Role in Risk Oversight +Our Board of Directors does not have a policy regarding the separation of the roles of Chief Executive Officer and Chairman of the Board, as our Board believes it is in the best interest of the Company to make that determination based on the position and direction of the Company and the membership of our Board. Martin Madaus, Ph.D., an independent director under the standards of The Nasdaq Stock Market, currently serves as Chairman of our Board. +The Chairman of the Board and the other members of our Board work in concert to provide oversight of our management and affairs. Our Board encourages communication among its members and between management and our Board to facilitate productive working relationships. Working with the other members of our Board, our Chairman strives to ensure that there is an appropriate balance and focus among key Board responsibilities such as strategic development, review of operations and risk oversight. +Risk is inherent with every business, and how well a business manages risk can ultimately determine its success. Our Board oversees our risk management processes directly and through its committees. Our +14 +TABLE OF CONTENTS +management is responsible for risk management on a day-to-day basis. The role of our Board and its committees is to oversee the risk management activities of management. They fulfill this duty by discussing with management the policies and practices utilized by management in assessing and managing risks and providing input on those policies and practices. Members of our senior management team attend our quarterly Board meetings and are available to address any questions or concerns raised by our Board on risk-management and any other matters. In addition, our Board regularly receives reports on strategic matters involving our business. Our Audit Committee oversees risk management activities related to financial controls, cyber security, and legal and compliance risks, and our full Board receives regular reports from management with respect to cyber security risks. Our Compensation Committee oversees risk management activities relating to our compensation policies and practices, and our Nominating and Corporate Governance Committee oversees risk management activities relating to Board composition and governance-related matters. Each committee reports to our full Board on a regular basis and provides reports with respect to the committee’s risk oversight activities as appropriate. +Board Evaluation Process +Our Board conducts an annual self-evaluation that is intended to assess whether the Board, its committees and their members are functioning effectively and to provide an opportunity to improve performance and effectiveness. As part of the evaluation process for the Board, each director completes a written questionnaire that is designed to solicit feedback on a wide range of topics, including: Board membership and culture; sufficiency of meetings and materials; committees, corporate policies and governance policies; interactions with management; corporate strategy; and risk and risk management. Each standing committee of the Board also completes a questionnaire tailored to the function of the committee. Responses are not attributed to any individual director in order to promote candid feedback. The Nominating and Governance Committee of the Board is charged with overseeing this process and may supplement written evaluations with interviews or other measures designed to solicit feedback. Results of the self-evaluations are reviewed at the Board and committee level and appropriate steps are taken in partnership with management to implement any agreed-upon improvements. +Compensation Risk Assessment +Following a review of our compensation policies and practices, our Compensation Committee believes that risks arising from those policies and practices are not reasonably likely to have a material adverse effect on the Company. In reaching this conclusion, our Compensation Committee believes that compensation-related risk is limited by a number of factors, including the following: +• +Our compensation packages include multiple elements, including fixed and variable compensation, the amount and mix of which is appropriate to an employee’s level and role in the Company. +• +Our variable compensation programs employ a number of different performance metrics that are aligned with our near term and strategic objectives and the interests of our stockholders. +• +Our long-term incentive equity awards are designed to align the interests of our employees and management with the interests of our stockholders. +• +We limit the payouts under our annual cash incentive bonus programs to an amount that is appropriate to the recipient’s role in the Company. +We believe that, taken as a whole, the various elements of our compensation packages mitigate compensation-related risk by reducing the focus on any single compensation element or performance metric, by encouraging our employees to consider both long- and short-term goals that are aligned with the interests of our stockholders and by discouraging excessive risk in order to reach performance goals or to achieve excessive payouts. +Stockholder Communications with the Board +Generally, stockholders who have questions or concerns should contact our Investor Relations department at https://ir.quanterix.com/investor-resources/contact-ir . However, any stockholders who wish to address questions regarding our business directly with our Board, or any individual director, should direct his +15 +TABLE OF CONTENTS +or her questions in writing to the Chairman of the Board at 900 Middlesex Turnpike, Building 1, Billerica, Massachusetts 01821 or using the “IR Contacts” page of our website at https://ir.quanterix.com/investor-resources/contact-ir . Communications will be distributed to our Board, or to any individual director or directors as appropriate, depending on the facts and circumstances outlined in the communications. +Executive Officers +The following table sets forth certain information regarding our executive officers as of April 1, 2024. We have entered into employment agreements with our executive officers. Dr. Toloue and Ms. Sriram are both at-will employees. See “Compensation Discussion & Analysis — Employment Agreements with our Named Executive Officers” and “Potential Payments upon Termination or Change-In-Control” below for additional information about Dr. Toloue’s and Ms. Sriram’s employment agreements. +Name +Age +Positions +Masoud Toloue, Ph.D. +43 +President and Chief Executive Officer +Vandana Sriram +50 +Chief Financial Officer and Treasurer +Vandana Sriram joined Quanterix in August 2023 as Chief Financial Officer. Ms. Sriram served as Senior Vice President of Global Finance at Azenta Life Sciences from September 2021 to August 2023 where she was responsible for the Controllership, FP&A and segment CFO activities as a member of the leadership team. Prior to Azenta, Ms. Sriram served from July 1999 to September 2021 at GE in positions of increasing responsibility and in multiple geographies, most recently as the head of FP&A for GE Aviation, a leading provider of commercial and military jet engines and components. Ms. Sriram graduated with a bachelor’s degree in commerce from Delhi University and is a chartered accountant from the Institute of Chartered Accountants of India. She also graduated from the GE Experience Financial Leadership Program and is a registered CPA. +See “The Board of Directors” above for biographical information about Dr. Toloue. +16 +TABLE OF CONTENTS +COMPENSATION COMMITTEE REPORT +The Compensation Committee of our Board of Directors has reviewed and discussed the Compensation Discussion and Analysis that appears in this proxy statement with our management. Based on this review and discussion, the Compensation Committee has recommended to our Board of Directors that the Compensation Discussion and Analysis be included in our proxy statement. +Members of the Compensation Committee: +Laurie J. Olson (Chairperson) +Brian J. Blaser +Karen A. Flynn +David R. Walt, Ph.D. +17 +TABLE OF CONTENTS +COMPENSATION DISCUSSION AND ANALYSIS +This Compensation Discussion and Analysis describes the principal components of the compensation program for our named executive officers. It should be read in conjunction with the other information contained in this proxy statement. The following executives were our named executive officers for the fiscal year ended December 31, 2023: +Name +Title +Masoud Toloue, Ph.D. (1) +President and Chief Executive Officer +Vandana Sriram (2) +Chief Financial Officer and Treasurer +Michael A. Doyle (3) +Executive Director, Finance and former Chief Financial Officer +(1) +Dr. Toloue joined the Company as President of Quanterix and Diagnostics on June 9, 2021 and became President and Chief Executive Officer on April 25, 2022. +(2) +Ms. Sriram joined the Company as Chief Financial Officer and Treasurer on August 21, 2023. +(3) +Mr. Doyle served as Chief Financial Officer from July 12, 2021 to August 21, 2023 and as Executive Director, Finance from August 21, 2023 until March 31, 2024. +Executive Summary +Fiscal Year 2023 Performance +2023 was a transformational year for Quanterix, punctuated by the completion of our six-quarter restructuring plan that was focused on three core principles: quality, innovation, and positioning Quanterix to unlock the value of the translational markets. Other highlights from 2023 included: +• +2023 total revenue was $122.4 million, a 16% increase from $105.5 million for 2022. +• +Gross margin increased substantially year-over-year. +• +2023 net loss was $32.3 million as compared to $96.7 million for 2022. +• +Net cash usage for 2023 was $17.4 million as compared to $57.7 million for 2022. +• +We launched Lucent Diagnostics, our brand for clinical testing services for healthcare providers in the neurology field. In October 2023, we launched LucentAD p-Tau 217, a new blood-based biomarker laboratory developed test to assist in the evaluation of patients suspected of having or developing Alzheimer’s disease. +Compensation Governance Highlights +What We Do +What We Don’t Do +Reward performance according to pre-established performance goals +Permit hedging or pledging of our stock +Provide a meaningful portion of the compensation of our Chief Executive Officer and named executive officers through performance-based or at-risk compensation +Include automatic compensation increases or equity grants in our employment agreements +Establish stock ownership guidelines for our executive officers +Provide single trigger change of control benefits +The Compensation Committee retains an independent compensation consultant +Provide for excessive cash severance +We hold an annual advisory vote on executive compensation +Provide our executives with golden parachute tax gross-ups +18 +TABLE OF CONTENTS +What We Do +What We Don’t Do +Cap payouts under our compensation plans to discourage inappropriate risk taking by our executives +Maintain executive pension plans or other retirement programs that are not generally available to all employees +Provide for double-trigger change in control severance provisions +Compensation Program Overview +Our Compensation Committee strives to design and implement executive compensation programs that attract, retain, and motivate our executives, while aligning our executives’ interests with our business strategy and the interests of our stockholders. +The compensation of our named executive officers in 2023 consisted of three main elements: +Element +Award Vehicle +Guaranteed +vs. At-Risk +Performance +vs. Time-Based +Base Salary +Cash +Guaranteed +Not applicable +Annual Cash Incentive Bonus +Cash +At-Risk +Performance-Based +Long-Term Incentive Equity +Restricted Stock Units +(“RSUs”) and Stock +Options +At-Risk +Time-Based +2023 Target Pay Mix +Consistent with our philosophy of aligning executive compensation with our short- and long-term performance, and to foster alignment with stockholder interests, our compensation programs are designed to provide a mix of compensation elements. Although we do not have a pre-established policy or target for allocating between the various compensation elements, the allocation is influenced by data from our compensation peer group, our short- and long-term objectives and factors specific to individual executives. +The following charts depict the allocation of the compensation elements of Dr. Toloue, our Chief Executive Officer, and Ms. Sriram, our Chief Financial Officer, in 2023: +Stockholder Advisory Vote on Executive Compensation +At our 2023 annual meeting of stockholders, our stockholders indicated their support for our executive compensation with 99% of the votes cast being in favor of our executive compensation program (“Say-on-Pay”). We value the opinions of our stockholders, and, for that reason, we have a Say-on-Pay every year. As described elsewhere in this proxy statement, we are asking stockholders to cast an advisory, non-binding Say-on-Pay vote with respect to the 2023 compensation of our named executive officers at the 2024 annual meeting. +19 +TABLE OF CONTENTS +Compensation Overview +Compensation Objectives. The primary objectives of our executive compensation programs are to: +• +attract, retain and motivate the best possible executive talent; +• +ensure executive compensation is aligned with our corporate strategies and business objectives; +• +promote the achievement of key strategic and financial performance measures by linking incentive-based awards to the achievement of measurable corporate and individual performance goals; and +• +align executives’ incentives with the creation of stockholder value. +To achieve these objectives, the Compensation Committee periodically evaluates our executive compensation programs and seeks to set compensation at levels the Compensation Committee believes are necessary to allow us to compete for executive talent with other companies in our industry. +Compensation Process +Role and Authority of the Compensation Committee . The Compensation Committee oversees our executive compensation programs. In this role, the Compensation Committee reviews and approves the compensation of our executive officers. Additional information about the Compensation Committee, including its composition and responsibilities, can be found under the caption “Management and Corporate Governance” in this proxy statement. The Compensation Committee’s practice has been to establish fiscal year base salaries and to approve annual and long-term incentive awards, on an annual basis. From time-to-time, the Compensation Committee makes other adjustments to individual compensation arrangements due to promotions, changes of responsibilities or other appropriate circumstances. +Under its charter, the Compensation Committee has delegated authority to award equity grants to the Equity Award Subcommittee of the Compensation Committee. The Equity Award Subcommittee currently consists of Brian Blaser, Karen Flynn and Laurie Olson, all of whom qualify as independent directors and non-employee directors under applicable rules. +Role of Compensation Consultants . The Compensation Committee retained Pay Governance, LLC (“PayGov”) as its independent compensation advisor for 2023. Services provided by PayGov included assistance in reviewing trends in executive compensation, selecting our compensation peer group and designing our executive compensation programs. PayGov also assisted the Compensation Committee in obtaining compensation benchmark data and establishing the target compensation levels of our executive officers. PayGov provides no services to the Company other than those performed on behalf of the Compensation Committee. The Compensation Committee considers the independence of its compensation consultant on an annual basis. +Role of Management . The Compensation Committee receives input from our Chief Executive Officer and other members of our senior management team with respect to compensation programs for our executives. The Compensation Committee also receives input from our Chief Executive Officer on the performance of our other executives and on compensation decisions for those executives. The Compensation Committee considers, but is not bound by and does not always accept, the recommendations of our Chief Executive Officer or the other members of our management team with respect to compensation matters. While our Chief Executive Officer and other members of our senior management team typically attend Compensation Committee meetings, the Compensation Committee regularly meets in executive session without management present. Our Chief Executive Officer is not present during voting or deliberations on his compensation. The Compensation Committee also makes compensation decisions with respect to our other executives without them present. +Bases for Our Compensation Policies and Decisions +As a general guideline, the Compensation Committee seeks to establish the target compensation of our executive officers at or slightly above the median of our peers, assuming that we meet the performance targets established for incentive-based programs. An individual executive’s target compensation may be higher or lower than this guideline based on his or her particular background, experience and performance, market +20 +TABLE OF CONTENTS +factors and internal equity. These factors are weighed by the Compensation Committee in its judgment, and no one factor takes precedence over the others. +In determining our compensation peer group, the Compensation Committee selects companies that are similar to us based on criteria such as industry, market capitalization, revenue and revenue growth and number of employees. In establishing the fiscal 2023 compensation of our executive officers, the Compensation Committee reviewed our compensation peer group with the assistance of PayGov. The companies in our fiscal 2023 peer group were as follows: +Adaptive Biotechnologies +Pacific Biosystems of California, Inc. +Berkeley Lights, Inc. +Personalis, Inc. +Codexis, Inc. +Quantum-Si Incorporated +Cryoport, Inc. +Seer, Inc. +Cytek Biosciences, Inc. +SomaLogic, Inc. +Heska Corporation +Twist Bioscience Corporation +Nanostring Technologies, Inc. +Veracyte, Inc. +Nautilus Biotechnology +Elements of our Compensation Program +The primary elements of our executive compensation program are base salary, annual cash incentive bonus programs and long-term incentive equity programs. +The Compensation Committee has not adopted a formal policy for allocating between short- and long-term compensation, between cash and non-cash compensation or among the different forms of non-cash compensation. Instead, the Compensation Committee, after reviewing information provided by its compensation consultant and other relevant information, determines what it believes to be the appropriate level and mix of compensation components. +Base Salary +Base salaries provide fixed compensation to our executives. Generally, we believe that executive base salaries should be competitive with salaries for executives in similar positions at comparable companies, including those in our compensation peer group. Base salaries are reviewed at least annually by the Compensation Committee and are adjusted from time to time to realign salaries with market levels after considering factors such as individual roles and responsibilities, performance, experience, market conditions, and information from our compensation consultant. +The 2022 and 2023 base salaries for our 2023 named executive officers were as follows: +Executive +2022 Base Salary +2023 Base Salary +% Change +Masoud Toloue, Ph.D. (1) +$ +550,000 +$ +600,000 +9.1 % +Vandana Sriram (2) +— +$ +440,000 +N/A +Michael A. Doyle (3) +$ +421,000 +$ +440,000 +4.5 % +(1) +Dr. Toloue joined the Company as President of Quanterix and Diagnostics on June 9, 2021 and became President and Chief Executive Officer on April 25, 2022. His base salary was increased from $525,000 to $550,000 when he became President and Chief Executive Officer on April 25, 2022. +(2) +Ms. Sriram joined the Company as Chief Financial Officer and Treasurer on August 21, 2023. +(3) +Mr. Doyle served as Chief Financial Officer from July 12, 2021 to August 21, 2023 and as Executive Director, Finance from August 21, 2023 until March 31, 2024. +Annual Cash Incentive Bonus Program +Our Annual Cash Incentive Bonus Program is designed to encourage our executives, including our named executive officers, to achieve specified corporate and individual performance objectives. The Annual +21 +TABLE OF CONTENTS +Cash Incentive Bonus Program emphasizes pay for performance and is intended to align executive compensation with the achievement of specified operating results. The structure of the 2023 Annual Cash Incentive Bonus Program was established by the Compensation Committee as follows: +For each of our named executive officers, the target award is multiplied by a corporate performance factor and an individual performance factor to arrive at the actual award. +2023 Annual Cash Incentive Bonus Program Target Awards . The Compensation Committee annually sets individual target awards expressed as a percentage of each participant’s base salary earned during the year. The Compensation Committee takes into account market data and annual cash incentive levels for comparable positions at companies in our compensation peer group. For the 2023 annual cash incentive bonus program, the Compensation Committee determined that the target incentive opportunities were set as follows for the named executive officers: +Executive +2023 Target +Award (% of Base +Salary) +Masoud Toloue, Ph.D. +100 % +Vandana Sriram +70 % +Michael A. Doyle +50 % +2023 Annual Cash Incentive Bonus Program Corporate Performance Factor . The parameters for the corporate performance factor were adopted as the weighted average of 2023 revenue, 2023 gross margin and certain corporate strategic objectives. Full year 2023 revenue, second half 2023 revenue growth, non-GAAP gross margin, and strategic objectives contributed 30%, 10%, 30% and 30%, respectively, toward the corporate performance factor, and each ranged between 0.5x for a threshold level of achievement, 1.0x for target level of achievement and 1.5x for a maximum level of achievement. Each performance metric was calculated on a sliding scale between the threshold, target and maximum values, as applicable. Non-GAAP gross margin is calculated by including shipping and handling costs for product sales within cost of product revenue instead of within selling, general and administrative expenses. +The strategic objectives included: +• +launch of certain ADVANTAGE Plus assays for neurological indications by the end of 2023; +• +continued development of our higher sensitivity instrument platform; +• +launch of certain new assays by the end of 2023; +22 +TABLE OF CONTENTS +• +limiting cash burn; +• +achievement of certain commercial bookings targets; +• +achievement of revenue targets related to certain strategic initiatives; +• +improved inventory management; and +• +full remediation of the material weaknesses identified in 2023. +We believe that these objectives were established at levels appropriately challenging to attain and required considerable and increasing collective effort on the part of our employees, including our named executive officers, to achieve. +The objectives related to the instrument platform, cash burn, strategic initiative revenues and inventory management were met or exceeded. The objectives related to the launch of ADVANTAGE Plus assays, new assays and commercial bookings were substantially but not fully met. The objective related to full remediation of the material weaknesses was not met. Based on this, the compensation committee scored the achievement of strategic objectives as 5 out of 8 being met. +The threshold, target, and maximum goals and the associated payout factors for each performance metric, and the actual performance and performance factors with respect to each such metric as applicable to our named executive officers were as follows: +Weight +Threshold +(0.5x) +Target +(1.0x) +Maximum +(1.5x) +Actual +Performance +Factor +Weighted +Payout +2023 Revenue ($) (1) +30% +$99.2 million +$103.9 million +$113.4 million +$116.4 million +1.5x +45% +2H 2023 Revenue (% growth) +10% +10% +15% +25% +27% +1.5x +15% +Non-GAAP Gross Margin (2) +30% +33.6% +36.6% +39.6% +51.1% +1.5x +45% +Strategic Objectives +30% +4 of 8 +achieved +5 of 8 +achieved +7 of 8 +achieved +5 of 8 +achieved +1.0x +30% +Total +100% +135% +(1) +2023 revenue excluded certain recurring revenues specified at the time of establishment of the bonus plan. +(2) +For the required GAAP reconciliation and other pertinent information, refer to pages 54 and 55 of our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 29, 2024. +Following its review of these achievements and the Company’s overall performance during 2023, the Compensation Committee approved a corporate performance factor of 1.35x. +2023 Annual Cash Incentive Bonus Program Individual Performance Factor . The individual performance factor for our named executive officers was capped at 1.1x for a maximum level of achievement. Each of our named executive officers was assigned personal objectives designed to support our corporate goals and objectives and to be consistent with the executive’s roles and responsibilities. +The individual performance factor for each of our named executive officers was determined by the Compensation Committee based on its assessment of the executive’s individual performance, taking into account the executive’s personal objectives and the recommendation of our Chief Executive Officer (for executives other than himself). For 2023, based on its review of our named executive officers’ respective individual performance, the Compensation Committee established the individual performance factors for our named executive officers as follows: Dr. Toloue — 1.0x, Ms. Sriram — 1.0x, and Mr. Doyle — 0.556x. +2023 Annual Cash Incentive Program Actual Awards Based on the above, our named executive officers received cash payouts under our 2023 Annual Cash Incentive Bonus Program as follows. Payments were determined based on each individual executive’s base salary earned in 2023: +23 +TABLE OF CONTENTS +Executive +Target Award +(% of Base Salary) +Corporate +Performance +Factor +Individual +Performance +Factor +Payment ($) +Masoud Toloue, Ph.D. +100 % +1.35x +1.0x +$ +810,000 +Vandana Sriram (1) +70 % +1.35x +1.0x +$ +151,511 +Michael A. Doyle (2) +50 % +1.35x +0.556x +$ +165,000 +(1) +Ms. Sriram joined the Company as Chief Financial Officer on August 21, 2023. Her bonus was prorated for her period of employment in 2023. +(2) +Mr. Doyle’s performance factor reflects non-achievement of an objective to fully remediate the material weaknesses in our internal control over financial reporting described in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 29, 2024. +2023 Long-Term Incentive Equity Program +A significant portion of our executive compensation is delivered in the form of long-term equity incentive awards. We believe that equity-based grants provide our executives with a strong link to our long-term performance, create an ownership culture and help to align the interests of our executives and our stockholders. In addition, the vesting feature of the equity grants furthers our goal of executive retention by providing an incentive to our executives to remain in our employ during the vesting period. All grants of equity-based awards to our executives are approved by the Equity Award Subcommittee of the Compensation Committee and are made pursuant to our 2017 Employee, Director and Consultant Equity Incentive Plan. In determining the size of equity-based awards to our executives, the Equity Award Subcommittee considers factors such as scope of responsibility, the applicable executive’s performance, the amount of equity previously awarded to the executive, the vesting of such awards, the recommendations of our Chief Executive Officer, equity award levels for similarly situated executives at our peer companies and other market data provided by PayGov, the Compensation Committee’s independent consultant. +We have historically granted equity awards in the form of stock options and RSUs. We believe that stock options, which are granted with an exercise price equal to the fair market value of our common stock on the grant date, provide an appropriate long-term incentive for our executives because stock options reward our executives only to the extent our stock price increases over time. Likewise, we believe that RSUs, the value of which tends to be subject to less variability than stock options, encourage our executives to take actions that foster long-term stock price appreciation while also encouraging retention. +The Equity Award Subcommittee approved 2023 Long Term Incentive Equity awards for our named executive officers as set forth in the following table: +Executive +2023 Award Value ($) +Number of Stock Options +Number of RSUs +Masoud Toloue, Ph.D. +$ +4,000,000 +259,416 +111,178 +Vandana Sriram (1) +— +— +— +Michael A. Doyle +$ +1,500,000 +31,629 +13,555 +(1) +Ms. Sriram received an initial equity grant upon joining Quanterix in August 2023, which was after the grant of 2023 Long Term Incentive Equity awards. Ms. Sriram’s grant had an award value of $800,000 and was comprised of 29,455 stock options and 12,624 RSUs. +The stock options and RSUs granted vest over a four-year period, with one-fourth of each of the stock options and RSUs vesting on the first anniversary of the grant date and the remainder vesting ratably on a monthly basis over the next three years, provided the recipient remains with Quanterix through the applicable vesting date. Stock options were valued according to their Black-Scholes valuation as of the grant date. For our named executive officers, the number of stock options and RSUs awarded was determined on a 70% Option / 30% RSU ratio, which we believe provides an appropriate balance of incentives for our senior executives. +24 +TABLE OF CONTENTS +Additional detail regarding awards to the named executive officers can be found in the “Summary Compensation Table,” “2023 Fiscal Year Grants of Plan-Based Awards” table and “Outstanding Equity Awards at 2023 Fiscal Year-End” table elsewhere in this proxy statement. +Other Benefits +We provide a broad-based benefit program to our eligible employees. In 2023, we provided the following benefits to our named executive officers on the same basis as our other eligible employees: +• +health insurance; +• +vacation, holidays and sick days; +• +life insurance and supplemental life insurance; +• +short-term and long-term disability insurance; and +• +a 401(k) retirement plan. +We believe these benefits are generally consistent with those offered by other companies and specifically with those companies with which we compete for employees. +Severance and Change of Control Benefits +Dr. Toloue and Ms. Sriram are entitled to specified benefits in the event of the termination of their employment under specified circumstances, including termination following a change of control of the Company. We consider these severance and change of control benefits to be an important component of our executive compensation program and consistent with competitive market practice. We believe that providing appropriate severance and change of control benefits helps to attract and retain qualified executives by mitigating the risks associated with leaving a previous employer and accepting a new position with us, and by reducing financial uncertainty associated with an unexpected termination or termination following a change of control. We have provided more detailed information about these benefits, along with estimates of their value under various circumstances, under the caption “Potential Payments Upon Termination or Change-In-Control” below. +Our practice has been to structure change of control benefits so that cash benefits are paid only if the employment of the executive is terminated or if the executive resigns for good reason during a specified period after a change of control has occurred. Vesting of equity in connection with a change of control will generally only occur if the executive is not provided with a comparable replacement equity award or if the employment of the executive is terminated or if the executive resigns for good reason during a specified period before or after the change of control (commonly referred to double trigger vesting). +Tax Considerations +The Compensation Committee considers tax and accounting implications in its executive compensation determinations, although in some cases, other important considerations may outweigh tax or accounting considerations, and the Compensation Committee maintains the flexibility to compensate its executive officers in accordance with our compensation philosophy. +Section 162(m) of the Internal Revenue Code of 1986, as amended, generally places a limit of $1 million on the amount of compensation that we may deduct as a business expense in any year with respect to certain of our most highly paid executive officers, subject to certain transition relief applicable to certain arrangements in place as of November 2, 2017, and not materially modified after such date. While the Compensation Committee considers the deductibility of compensation as one factor in determining executive compensation, the Compensation Committee retains the discretion to award compensation that is not deductible as it believes that it is in the best interests of our stockholders to maintain flexibility in our approach to executive compensation in order to structure a program that we consider to be the most effective in attracting, motivating and retaining key executives. +If accounting standards change, we may revise certain programs to appropriately align accounting expenses of our equity awards with our overall executive compensation philosophy and objectives. +25 +TABLE OF CONTENTS +Anti-Hedging and Pledging Policy +Our Company policies prohibit our personnel, including our officers and directors, from entering into any hedging-type transactions with respect to our stock and from pledging our stock. +Compensation Clawback Policy +Effective December 1, 2023, our Board adopted a compensation clawback policy in accordance with Section 10D of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and Nasdaq listing standards. The clawback policy applies to our current and former executive officers within the meaning of Rule 10D-1(d) of the Exchange Act. In the event we are required to prepare an accounting restatement due to material noncompliance with any financial reporting requirement under securities laws, including any required accounting restatement to correct an error in previously issued financial statements that is material to the previously issued financial statements, or that corrects an error that is not material to previously issued financial statements but would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period, our policy is to require any such executive officer who received “excess compensation” during the three completed fiscal years preceding the date of preparation of the restatement to repay or forfeit such excess compensation reasonably promptly. “Excess compensation” means any amount of incentive-based compensation (generally, compensation based on stock-price or financial measures) received by such executive officer that exceeds the amount of incentive-based compensation that otherwise would have been received had it been determined based on the applicable accounting restatement, computed without regard to any taxes paid. The clawback policy is administered by our Board. +Employment Agreements with the Current Named Executive Officers +Dr. Toloue joined Quanterix in June 2021 as President of Quanterix and Diagnostics. Effective April 25, 2022, Dr. Toloue assumed the role of President and Chief Executive Officer and joined our Board. In connection with Dr. Toloue’s new role, the Compensation Committee approved an amended and restated employment agreement effective as of April 25, 2022. Under the agreement, Dr. Toloue’s initial annualized base salary was $550,000. Dr. Toloue also was eligible for a target award of 100% of his annual base salary under the 2022 Annual Cash Incentive Bonus Program and he was granted a long-term equity incentive equity award, comprised of stock options and RSUs having an aggregate grant-date fair value of $2,000,000, consisting of 70% stock options and 30% restricted stock units and vesting over a four-year period. Pursuant to this agreement, in the event we terminate Dr. Toloue’s employment without cause or Dr. Toloue terminates his employment with us for good reason, he is entitled to continuation of his then-current base salary and health insurance benefits for twelve months, an amount equal to his target bonus for the applicable year and acceleration of any of the unvested portion of his initial equity award that would have vested during the severance period had he remained employed during such time. If such termination occurs within 90 days prior to, or twelve months following, a change in control, he is also entitled to accelerated vesting of all outstanding but unvested equity awards. In April 2024, the agreement was amended to provide for salary continuation for 24 months if he is terminated without cause, or if he resigns for good reason within the 90-day period immediately preceding or the twelve-month period immediately following a change-in-control. +Ms. Sriram and Quanterix entered into an employment agreement dated August 3, 2023, pursuant to which she joined the company as Chief Financial Officer on August 21, 2023. Under the employment agreement, her initial annualized base salary was $440,000. Ms. Sriram was also eligible to receive an annual performance bonus with a bonus target of 70% of her annual base salary, based on her actual base salary earned during the year. Ms. Sriram also received an initial sign-on equity award of $800,000, consisting of 70% stock options and 30% restricted stock units and vesting over a four-year period. If Ms. Sriram’s employment is terminated by us without cause or she resigns for good reason, she will receive continued payment of her base salary for six months, payment of an amount equal to her prorated annual target bonus for the year of termination, acceleration of the unvested portion of her initial equity award that would have vested on or before August 21, 2024, and health benefits continuation for six months. If Ms. Sriram’s employment is terminated by us without cause or she resigns for good reason within the 90-day period immediately preceding or the twelve-month period immediately following a change of control of the +26 +TABLE OF CONTENTS +Company, in addition to the foregoing she will receive acceleration of vesting for all unvested equity. In April 2024, the agreement was amended to provide for (i) salary continuation for twelve months, (ii) payment of target bonus for the year of termination, (iii) acceleration of vesting of all unvested equity and (iv) continuation of health insurance benefits for twelve months, if she is terminated without cause, or if she resigns for good reason within the 90-day period immediately preceding or the twelve month period immediately following a change-in-control of the Company. +27 +TABLE OF CONTENTS +EXECUTIVE OFFICER AND DIRECTOR COMPENSATION +Summary Compensation Table +The following table shows the total compensation paid or accrued during the fiscal years ended December 31, 2023, 2022 and 2021 to our Chief Executive Officer and Chief Financial Officer and our former Chief Financial Officer and former Executive Director, Finance. +Name and Principal Position +Year +Salary +($) (1) +Bonus +($) +Stock Awards +($) (2) +Option Awards +($) (3) +Non-Equity +Incentive Plan +Compensation +($) (4) +All Other +Compensation +($) (5) +Total +($) +Masoud Toloue, Ph.D. (6) +President and Chief +Executive Officer +2023 +615,385 +— +1,647,658 +2,352,331 +810,000 +9,900 +5,435,274 +2022 +541,346 +— +892,113 +1,107,883 +412,501 +3,183 +2,957,026 +2021 +278,654 +— +3,061,463 +— +298,846 +— +3,638,963 +Vandana Sriram (7) +Chief Financial Officer and +Treasurer +2023 +144,083 +— +307,016 +492,989 +151,511 +3,554 +1,099,153 +Michael A. Doyle (8) +Former Chief Financial +Officer and Former +Executive Director, Finance +2023 +448,297 +— +617,875 +882,124 +165,000 +9,900 +2,123,196 +2022 +419,847 +— +401,499 +498,485 +142,088 +8,210 +1,470,129 +2021 +183,558 +— +329,975 +400,811 +99,760 +— +1,014,104 +(1) +Included in 2023 salary is $21,154 and $11,220 received by Dr. Toloue and by Mr. Doyle, respectively, as a cash payout for accrued vacation time as we transitioned to an unaccrued, unlimited time-off policy for exempt employees in 2023. +(2) +These amounts represent the aggregate grant date fair value for RSUs granted during such fiscal year. +(3) +These amounts represent the aggregate grant date fair value for option awards granted during such fiscal year, computed in accordance with FASB ASC Topic 718. A discussion of the assumptions used in determining grant date fair value for the option awards may be found in Notes 2 and 10 to our consolidated financial statements for the year ended December 31, 2023 included in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 29, 2024. +(4) +These amounts represent: (i) for 2023, cash amounts paid in 2024 for services in 2023 under the Company’s 2023 Annual Cash Incentive Bonus Plan, (ii) for 2022, cash amounts paid in 2023 for services in 2022 under the Company’s 2022 Annual Cash Incentive Bonus Plan and (iii) for 2021, cash amounts paid in 2022 for services in 2021 under the Company’s 2021 Annual Cash Incentive Bonus Plan. +(5) +The amounts represent the dollar value of matching contributions under our qualified 401(k) plan. +(6) +Dr. Toloue joined Quanterix on June 9, 2021 as President of Quanterix and Diagnostics and became President and Chief Executive Officer on April 25, 2022. +(7) +Ms. Sriram joined Quanterix on August 21, 2023 as Chief Financial Officer. +(8) +Mr. Doyle served as Chief Financial Officer from July 12, 2021 to August 21, 2023 and as Executive Director, Finance from August 21, 2023 to March 31, 2024. +28 +TABLE OF CONTENTS +2023 Fiscal Year Grants of Plan-Based Awards +The following table shows information regarding grants of non-equity incentive plan awards and grants of equity awards that we made during the fiscal year ended December 31, 2023 to each of our named executive officers. +Name +(a) +Grant +Date +(b) +Estimated Possible Payouts Under +Non-Equity Incentive Plan Awards (1) +All Other Stock +Awards: +Number of +Shares of Stock +or Units (#) (2) +(i) +All Other Option +Awards: Number +of Securities +Underlying +Options (#) (3) +(j) +Exercise or Base +Price of Option +Awards ($/Sh) +(k) +Grant Date Fair +Value of Stock +and Option +Awards ($) (4) +(l) +Threshold +($) +(c) +Target +($) +(d) +Maximum +($) +(e) +Masoud Toloue, Ph.D. +— +0 +600,000 +990,000 +— +— +— +— +2/2/23 +— +— +— +111,178 +— +— +1,647,658 +2/2/23 +— +— +— +— +259,416 +14.82 +2,352,331 +Vandana Sriram (5) +— +0 +100,858 +166,416 +— +— +— +— +8/21/23 +— +— +— +12,624 +— +— +307,016 +8/21/23 +— +— +— +— +29,455 +24.32 +492,989 +Michael A. Doyle +— +0 +220,000 +363,000 +— +— +— +— +2/2/23 +— +— +— +41,692 +— +— +617,875 +2/2/23 +— +— +— +— +97,281 +14.82 +882,124 +(1) +Reflects potential payouts under the Company’s 2023 Annual Cash Incentive Bonus Program. Amounts are based on individual performance factors with a range from 0.0x to 1.1x and a corporate performance factor with a range from 0.5x to 1.5x under the 2023 Annual Cash Incentive Bonus Program. +(2) +Represents RSUs that vest as to 25% on the first anniversary of the grant date, with the remaining 75% vesting in 36 equal monthly installments thereafter. +(3) +Represents non-qualified options that vest as to 25% on the first anniversary of the grant date, with the remaining 75% vesting in 36 equal monthly installments thereafter. +(4) +These amounts represent the aggregate grant date fair value for RSUs and option awards granted during such fiscal year, computed in accordance with FASB ASC Topic 718. A discussion of the assumptions used in determining grant date fair value for the option awards may be found in Notes 2 and 10 to our consolidated financial statements for the year ended December 31, 2023 included in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 29, 2024. +(5) +Ms. Sriram joined the Company as Chief Financial Officer on August 21, 2023, and her target non-equity incentive plan award is prorated for actual salary earned in 2023. +29 +TABLE OF CONTENTS +Outstanding Equity Awards at 2023 Fiscal Year-End +The following table shows grants of stock options and grants of unvested stock awards outstanding on the last day of the fiscal year ended December 31, 2023, including both awards subject to performance conditions and non-performance-based awards, for each of our named executive officers. +Option Awards (1) +Stock Awards (1) +Name +Number of +Securities +Underlying +Unexercised +Options (#) +Exercisable +Number of +Securities +Underlying +Unexercised +Options (#) +Unexercisable +Option +Exercise +Price ($) +Option +Expiration +Date +Number of Shares +or Units of Stock +That Have Not +Vested (#) +Market Value of +Shares or Units of +Stock That Have +Not Vested ($) (2) +Equity +Incentive +Plan +Awards: +Number +of +Unearned +Shares, +Units or +Other +Rights +That +Have Not +Vested (#) +Equity +Incentive +Plan +Awards: +Market or +Payout +Value of +Unearned +Number of +Shares or +Units or +Other +Rights That +Have Not +Vested ($) +Masoud Toloue, Ph.D. +President and Chief Executive Officer +— +— +— +— +7,050 (3) +192,747 +— +— +37,321 (4) +47,991 (4) +$ +24.40 +4/25/2032 +— +— +— +— +20,573 (4) +562,466 +— +— +— +259,416 (5) +$ +14.82 +2/2/2033 +— +— +— +— +— +— +— +— +111,178 (5) +3,039,607 +— +— +Vandana Sriram +Chief Financial Officer and Treasurer +— +29,455 (6) +$ +24.32 +8/21/2033 +— +— +— +— +— +— +— +— +12,624 (6) +345,140 +— +— +Michael A. Doyle +Former Chief Financial Officer +and Former Executive Director, +Finance +8,050 (7) +4,854 (7) +$ +59.67 +7/12/2031 +— +— +— +— +— +— +— +— +2,078 (7) +56,813 +— +— +13,829 (8) +17,800 (8) +$ +29.62 +4/7/2032 +— +— +— +— +— +— +— +— +7,629 (8) +208,577 +— +— +— +97,281 (9) +$ +14.82 +2/2/2033 +— +— +— +— +— +— +— +— +41,692 (9) +1,139,859 +— +— +(1) +Each of the outstanding equity awards in this table was granted pursuant to the 2017 Plan. Unless otherwise noted below, all equity awards vest, subject to continued service of the officer, as to 25% on the first anniversary of the grant date and as to the remaining 75% in 36 equal installments monthly thereafter. +(2) +The market value of the stock awards is determined by multiplying the number of shares by $27.34, the closing price of our common stock on The Nasdaq Global Market on December 29, 2023, the last trading day of our fiscal year. +(3) +On June 9, 2021, Dr. Toloue was granted 50,703 RSUs. The shares underlying the RSUs vest, subject to continued service of Dr. Toloue, as follows: one-third of the shares vested on June 9, 2022, with the remainder vesting over the next two years in equal monthly installments on the last day of each calendar month thereafter. +(4) +On April 25, 2022, Dr. Toloue was granted (i) an option to purchase 85,312 shares of our common stock and (ii) 36,562 RSUs. +(5) +On February 2, 2023, Dr. Toloue was granted (i) an option to purchase 259,416 shares of our common stock and (ii) 111,178 RSUs. +(6) +On August 21, 2023, Ms. Sriram was granted (i) an option to purchase 29,455 shares of our common stock and (ii) 12,624 RSUs. +30 +TABLE OF CONTENTS +(7) +On July 12, 2021, Mr. Doyle was granted (i) an option to purchase 12,904 shares of our common stock and (ii) 5,530 RSUs. +(8) +On April 7, 2022, Mr. Doyle was granted (i) an option to purchase 31,629 shares of our common stock and (ii) 13,555 RSUs. +(9) +On February 2, 2023, Mr. Doyle was granted (i) an option to purchase 59,718 shares of our common stock and (ii) 25,594 RSUs. +Option Exercises and Stock Vested in 2023 +The following table shows information regarding exercises of options to purchase our common stock and vesting of RSUs held by each of our named executive officers named in the Summary Compensation Table during the fiscal year ended December 31, 2023. +Option Awards +Stock Awards (1) +Name +Number of +Shares +Acquired +on Exercise +(#) +Value Realized +on Exercise +($) (2) +Number of +Shares +Acquired +on Vesting +(#) +Value Realized +on Vesting +($) (2) +Masoud Toloue, Ph.D. +— +— +32,885 +606,053 +Vandana Sriram +— +— +— +— +Michael A. Doyle +— +— +7,306 +129,001 +(1) +Consists of RSUs. +(2) +The value realized represents the number of RSUs vested multiplied by the closing price of our common stock on the date of vesting. Amounts shown in this column do not necessarily represent actual value realized from the sale of the shares acquired upon vesting of RSUs because in many cases the shares are not sold upon vesting but continue to be held by the executive officer. +Pension Benefits +We do not have any qualified or non-qualified defined benefit plans. +Nonqualified Deferred Compensation +We do not have any nonqualified defined contribution plans or other deferred compensation plans. +Potential Payments upon Termination or Change-In-Control +We have entered into employment agreements with our named executive officers. These agreements establish the named executive officer’s base salary (subject to adjustment), eligibility to participate in the incentive bonus plan, eligibility for annual long-term equity awards and standard employee benefits. +Except in the case of Mr. Doyle’s amended and restated agreement (as described below), these agreements also provide for certain severance payments and benefits in connection with the named executive officer’s termination of employment under various circumstances, subject, in each case, to the officer’s execution of a general release of claims, in a form acceptable to the Company, and compliance with certain restrictive covenants. The material terms and conditions of these agreements are summarized below. +Masoud Toloue, Ph.D. +In connection with our 2022 executive leadership succession plan, effective as of April 25, 2022, we entered into an agreement with Dr. Toloue with respect to his service as President and Chief Executive Officer. Pursuant to this agreement, in the event we terminate his employment without cause or Dr. Toloue terminates his employment with us for good reason, he is entitled to continuation of his then-current base salary and health insurance benefits for twelve months, an amount equal to his target bonus for the applicable year and acceleration of any of the unvested portion of his initial equity award that would have +31 +TABLE OF CONTENTS +vested during the severance period had he remained employed during such time. If such termination occurs within 90 days prior to, or twelve months following, a change in control, he is also entitled to accelerated vesting of all outstanding but unvested equity awards. In April 2024, the agreement was amended to provide for salary continuation for 24 months if he is terminated without cause, or if he resigns for good reason within the 90-day period immediately preceding or the twelve-month period immediately following a change-in-control. +Vandana Sriram +On August 3, 2023, we entered into an agreement with Ms. Sriram with respect to her service as Chief Financial Officer. If Ms. Sriram’s employment is terminated by us without cause or she resigns for good reason, she will receive continued payment of her base salary for six months, payment of an amount equal to her prorated annual target bonus for the year of termination, acceleration of the unvested portion of her initial equity award that would have vested on or before August 21, 2024, and health benefits continuation for six months. If Ms. Sriram’s employment is terminated by us without cause or she resigns for good reason within the 90-day period immediately preceding or the twelve-month period immediately following a change of control of the Company, in addition to the foregoing she will receive acceleration of vesting for all unvested equity. In April 2024, the agreement was amended to provide for (i) salary continuation for twelve months, (ii) payment of target bonus for the year of termination, (iii) acceleration of vesting of all unvested equity and (iv) continuation of health insurance benefits for twelve months, if she is terminated without cause, or if she resigns for good reason within the 90-day period immediately preceding or the twelve month period immediately following a change-in-control of the Company. +Michael A. Doyle +On June 22, 2021, we entered into an agreement with Mr. Doyle with respect to his service as Chief Financial Officer. On March 27, 2023, we entered into an amended and restated agreement with Mr. Doyle in connection with his transition to retirement. Under the terms of the March 2023 agreement, Mr. Doyle served as our Chief Financial Officer and Treasurer until the appointment of his successor in August 2023 and remained employed by us to support our operations until March 31, 2024. His employment was terminable by us only for cause or in the event of his earlier disability or death. There were no payments owing to him for any such termination or in connection with a change in control. +Payments upon a Triggering Event +The following table provides information regarding the amounts payable under the agreements described above for termination without cause or by the named executive officer for good reason and assuming the termination occurred on December 31, 2023. +Name +Base Salary +($) +Lump +Sum +Bonus +Payments +($) +Continuation of +Group Health +Plan Benefits +($) +Value of +Equity +Awards +($) (1) +Total +($) +Masoud Toloue, Ph.D. +600,000 +600,000 +28,663 +192,747 +1,421,410 +Vandana Sriram (2) +220,000 +100,858 +14,332 +108,521 +443,711 +Michael A. Doyle +— +— +— +— +— +(1) +The value of options that vest due to a triggering event has been calculated by taking the difference of the option exercise price and the closing price of a share of our common stock on December 29, 2023, or $27.34, multiplied by the number of shares underlying options that vest due to the triggering event. The value of RSUs that vest due to a triggering event has been calculated by taking the closing price of a share of our common stock on December 29, 2023, or $27.34, multiplied by the number of shares underlying RSUs that vest due to the triggering event. +(2) +Ms. Sriram joined the Company as Chief Financial Officer on August 21, 2023, and her lump sum bonus payment is prorated for actual salary earned in 2023. +32 +TABLE OF CONTENTS +The following table provides information regarding the amounts payable under the employment agreements described above for termination without cause or by the named executive officer for good reason following a change in control and assuming the termination occurred on December 31, 2023. +Name +Base Salary +($) +Lump +Sum +Bonus +Payments +($) +Continuation of +Group Health +Plan Benefits +($) +Value of +Equity +Awards +($) (1) +Total +($) +Masoud Toloue, Ph.D. +600,000 +600,000 +28,663 +7,183,801 +8,412,464 +Vandana Sriram (2) +220,000 +100,858 +14,332 +434,094 +769,284 +Michael A. Doyle +— +— +— +— +— +(1) +The value of options that vest due to a triggering event has been calculated by taking the difference of the option exercise price and the closing price of a share of our common stock on December 29, 2023, or $27.34, multiplied by the number of shares underlying options that vest due to the triggering event. The value of RSUs that vest due to a triggering event has been calculated by taking the closing price of a share of our common stock on December 29, 2023, or $27.34, multiplied by the number of shares underlying RSUs that vest due to the triggering event. +(2) +Ms. Sriram joined the Company as Chief Financial Officer on August 21, 2023, and her lump sum bonus payment is prorated for actual salary earned in 2023. +Pay Ratio Disclosure +As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of Regulation S-K, we are providing the following information about the ratio of the annual total compensation of our “median” employee to the annual total compensation of our Chief Executive Officer, Masoud Toloue, Ph.D., for 2023. +As permitted by SEC rules, we used annual base pay (plus overtime and shift differential pay) and target bonus as the consistently applied compensation measure to compare the total compensation of our employees (excluding our CEO) as of December 31, 2023 and to identify our median employee. We annualized the base pay and target bonus for any permanent employees who commenced work during 2023 or who were on unpaid leave during the year. Additionally, compensation for employees outside of the U.S. was converted to U.S. dollars. Using this approach, we identified our median employee. +We collected annual total compensation data for our median employee for 2023 using the same methodology we used for our named executive officers as disclosed in the Summary Compensation Table above. The annual total compensation of our median employee for 2023 was $132,895, and our CEO’s compensation as reported in the Summary Compensation Table was $5,435,274, resulting in a ratio of 1:41. +This pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on the methodology described above. Given that companies may use a range of methodologies to determine an estimate of their pay ratio, the estimated ratio reported above should not be used as a basis for comparison between companies. +Pay versus Performance Disclosure +As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(v) of Regulation S-K, we are providing information about the relationship between the compensation of our current and former principal executive officers (“PEOs”) and other named executive officers and certain Company financial performance measures. +The dollar amounts reported below representing “compensation actually paid” have been calculated in accordance with the requirements of Item 402(v) of Regulation S-K. These figures do not reflect the actual amounts of compensation paid to the officers identified during such fiscal years and are based on equity valuation assumptions required by the SEC, which may not reflect actual amounts realized or realizable at vesting or exercise, as applicable. +33 +TABLE OF CONTENTS +Value of Initial Fixed +$100 Investment +Based On: +Year +Summary +Compensation +Table Total for +E. Kevin +Hrusovsky (1) +($) +Summary +Compensation +Table Total for +Masoud +Toloue, +Ph.D. (2) +($) +Compensation +Actually Paid +to E. Kevin +Hrusovsky (1)(3) +($) +Compensation +Actually Paid +to Masoud +Toloue, +Ph.D. (2)(3) +($) +Average +Summary +Compensation +Table Total for +Non-PEO +NEOs (4) +($) +Average +Compensation +Actually Paid +to Non-PEO +NEOs (4)(5) +($) +Total +Share- +holder +Return +($) +Peer +Group +Total +Share- +holder +Return (6) +($) +Net +Income +(Loss) +($ in +millions) +Revenues +($ in +millions) +2023 +n/a 5,435,274 n/a 10,859,697 1,611,175 3,072,778 115.70 118.87 ( 32.3 ) 122.4 +2022 +1,921,523 2,957,026 ( 3,807,926 ) 1,699,747 1,210,719 ( 470,362 ) 58.61 113.65 ( 96.7 ) 105.5 +2021 +4,208,194 n/a 7,594,456 n/a 1,495,417 217,434 179.43 126.45 ( 57.7 ) 110.6 +2020 +3,520,397 n/a 10,186,102 n/a 1,855,751 3,342,174 196.78 126.42 ( 31.5 ) 86.4 +(1) +Mr. Hrusovsky served as Chief Executive Officer until April 25, 2022 and as Executive Chairman from April 25, 2022 until August 8, 2022. +(2) +Dr. Toloue became President and Chief Executive Officer on April 25, 2022. +(3) +The following adjustments were made to the designated PEO’s compensation to calculate the amounts shown as “compensation actually paid” for the periods indicated: +Year +PEO Name +Summary +Compensation +Table Total +($) +Less Grant +Date Fair +Value of +Equity Awards +Granted +during +Applicable +Year +($) +Plus Year-end +Fair Value of +Equity Awards +Granted +during +Applicable +Year +($) +Plus Change +in Fair Value +as of Year- +end of any +Prior Year +Awards that +Remain +Unvested as +of Year-End +($) +Plus Change +in Fair Value +as of the +Vesting Date +of any Prior +Year Awards +that Vest +during +Applicable +Year +($) +Less Prior Year- +end Fair Value of +Awards Granted +in Prior Year +that Failed to +Meet Vesting +Conditions +during +Applicable Year +($) +Total Equity +Value Reflected +in Compensation +Actually Paid +Calculation +($) +2023 +Masoud Toloue, Ph.D. +5,435,274 3,999,989 7,923,070 1,250,477 250,865 — 5,424,423 +2022 +E. Kevin Hrusovsky 1,921,523 1,400,007 864,173 — ( 372,494 ) 4,821,121 ( 5,729,449 ) +2022 +Masoud Toloue, Ph.D. +2,957,026 1,999,996 1,234,526 ( 323,502 ) ( 168,307 ) — ( 1,257,279 ) +2021 +E. Kevin Hrusovsky 4,208,194 3,008,520 1,726,302 50,554 4,617,926 — 3,386,262 +2020 +E. Kevin Hrusovsky 3,520,397 2,185,995 3,790,803 2,779,333 2,281,563 — 6,665,705 +(4) +The dollar amounts represent the average of the amounts reported for the following named executive officers as a group (excluding our PEOs): +2020 +2021 +2022 +2023 +Amol Chaubal +Masoud Toloue, Ph.D. +Michael Doyle +Michael Doyle +William Geist +Michael Doyle +John Fry +Vandana Sriram +Amol Chaubal +Mark Roskey, Ph.D. +John Fry +William Geist +Dawn Mattoon +Shawn Stetson +(5) +The following adjustments were made to calculate the amounts shown as “average compensation actually paid” for the periods indicated: +34 +TABLE OF CONTENTS +Year +NEO Names +Summary +Compensation +Table Total +(Average) +($) +Less Grant +Date Fair +Value of +Equity Awards +Granted +during +Applicable +Year +(Average) +($) +Plus Year- +end Fair +Value of +Equity Awards +Granted +during +Applicable +Year +(Average) +($) +Plus Change +in Fair Value +as of Year- +end of any +Prior Year +Awards that +Remain +Unvested as +of Year-End +(Average) +($) +Plus Change +in Fair Value +as of the +Vesting Date +of any Prior +Year Awards +that Vest +during +Applicable +Year +(Average) +($) +Less Prior +Year-end +Fair Value of +Awards +Granted in +Prior Year +that Failed to +Meet Vesting +Conditions +during +Applicable +Year +(Average) +($) +Total Equity +Value Reflected +in Average +Compensation +Actually Paid +Calculation +($) +2023 +See footnote (4) +1,611,175 1,150,002 1,935,392 589,183 87,031 — 1,461,603 +2022 +See footnote (4) +1,210,719 761,790 375,346 ( 118,480 ) ( 132,737 ) 1,043,421 ( 1,681,081 ) +2021 +See footnote (4) +1,495,417 995,666 504,941 3,663 357,701 1,148,621 ( 1,277,982 ) +2020 +See footnote (4) +1,855,751 260,261 1,382,369 266,491 97,824 — 1,486,423 +(6) +The peer group used is the NASDAQ Biotechnology Index, our peer group used for purposes of Item 201(e) of Regulation S-K. +Comparison of “Compensation Actually Paid” to our Total Shareholder Return (“TSR”) +Our TSR was $196.78, $179.43, $58.61 and $115.70 for the years ended December 31, 2020, 2021, 2022 and 2023, respectively. Mr. Hrusovsky’s “compensation actually paid” was $10.2 million, $7.6 million and ($3.8) million for the years ended December 31, 2020, 2021, and 2022, respectively, and Dr. Toloue’s “compensation actually paid” was $1.7 million and $10.9 million for the years ended December 31, 2022 and 2023, respectively. The average “compensation actually paid” to our other named executive officers was $3.3 million, $0.2 million, ($0.5) million and $3.1 million for the years ended December 31, 2020, 2021, 2022 and 2023, respectively. Our TSR decreased from December 31, 2020 to December 31, 2022 and then increased from December 31, 2022 to December 31, 2023, and “compensation actually paid” to our principal executive officers and average “compensation actually paid” to our other named executive officers decreased between 2020 and 2022 and then increased in 2023 to a level commensurate with 2020. +Comparison of “Compensation Actually Paid” to Net Income (Loss) +Our net loss was approximately $31.5 million in 2020, $57.7 million in 2021, $96.7 million in 2022 and $32.3 million in 2023. Mr. Hrusovsky’s “compensation actually paid” was $10.2 million, $7.6 million and ($3.8) million for the years ended December 31, 2020, 2021, and 2022, respectively, and Dr. Toloue’s “compensation actually paid” was $1.7 million and $10.9 million for the years ended December 31, 2022 and 2023, respectively. The average “compensation actually paid” to our other named executive officers was $3.3 million, $0.2 million, ($0.5) million and $3.1 million for the years ended December 31, 2020, 2021, 2022 and 2023, respectively. Our net loss increased over the first three years reported and decreased significantly for the last year reported, and “compensation actually paid” to our principal executive officers and average “compensation actually paid” to our other named executive officers decreased between 2020 and 2022 and then increased in 2023 to a level commensurate with 2020. +Comparison of “Compensation Actually Paid” to Company-Selected Measure (Revenues) +Our revenues were approximately $86.4 million in 2020, $110.6 million in 2021, $105.5 million in 2022 and $122.4 million in 2023. Mr. Hrusovsky’s “compensation actually paid” was $10.2 million, $7.6 million and ($3.8) million for the years ended December 31, 2020, 2021, and 2022, respectively, and Dr. Toloue’s “compensation actually paid” was $1.7 million and $10.9 million for the years ended December 31, 2022 and 2023, respectively. The average “compensation actually paid” to our other named executive officers was $3.3 million, $0.2 million, ($0.5) million and $3.1 million for the years ended December 31, 2020, 2021, 2022 and 2023, respectively. Our revenues increased 28% from 2020 to 2021, decreased by 5% from 2021 to 2022 and increased 16% from 2022 to 2023, and “compensation actually paid” to our principal executive officers and average “compensation actually paid” to our other named executive officers decreased between 2020 and 2022 and then increased in 2023 to a level commensurate with 2020. +35 +TABLE OF CONTENTS +TSR versus Peer Group TSR +The graph below shows our cumulative TSR over the four-year period ended December 31, 2023 as compared to that of the NASDAQ Biotechnology Index. +TOTAL SHAREHOLDER RETURN* +Between Quanterix Corporation +and the NASDAQ Biotechnology Index +* +$100 invested on 12/31/19 in stock or index, including reinvestment of dividends. Fiscal year ended December 31. +Most Important Financial and Other Performance Measures +We have identified the following financial and other performance measures as being the most important in linking actual compensation paid to executives to our performance for the most recently completed fiscal year: +1. +Revenues +2. +Non-GAAP gross margin +3. +Strategic objectives +See the section captioned “Compensation Discussion and Analysis-Elements of our Compensation Program-Annual Cash Incentive Bonus Program” for more information about these measures. +36 +TABLE OF CONTENTS +Director Compensation +The following table shows the total compensation paid or accrued during the fiscal year ended December 31, 2023 to each of our non-employee directors. Directors who are employed by us are not compensated for their service on our Board. +Name +Fees Earned +or Paid in +Cash ($) (1) +Stock +Awards +($) (2) +Option +Awards +($) (2) +All Other +Compensation +($) +Total +($) +Brian J. Blaser (3) +45,788 +208,360 +191,640 +— +445,788 +Keith Crandell (4) +22,674 +103,947 +96,057 +— +222,678 +William Donnelly (5) +18,579 +196,888 +203,113 +— +418,580 +Karen A. Flynn +51,625 +103,947 +96,057 +— +251,629 +Sarah E. Hlavinka +59,960 +103,947 +96,057 +— +259,965 +Martin D. Madaus, Ph.D. +75,000 +103,947 +96,057 +— +275,004 +Paul M. Meister +59,960 +103,947 +96,057 +— +259,965 +Laurie J. Olson +55,000 +103,947 +96,057 +— +255,004 +David R. Walt, Ph.D. +47,250 +103,947 +96,057 +— +247,254 +(1) +Keith Crandell, William Donnelly, Sarah Hlavinka and Paul Meister elected to receive these fees in the form of common stock in lieu of cash in accordance with our non-employee director compensation policy. See “Non-Employee Director Compensation Policy” below. +(2) +These amounts represent the aggregate grant date fair value for RSUs and option awards granted to each director in the fiscal year ended December 31, 2023, computed in accordance with FASB ASC Topic 718. For Messrs. Blaser and Donnelly, the amounts represent an equity award with an aggregate value of $400,000 upon their appointment to the Board, and for the other directors, the amounts represent their annual equity award with an aggregate value of $200,000. A discussion of the assumptions used in determining grant date fair value for the option awards may be found in Notes 2 and 10 to our consolidated financial statements for the year ended December 31, 2023 included in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 29, 2024. The following table shows the aggregate number of stock options held by each of our non-employee directors as of December 31, 2023: +Name +Aggregate Number +of Shares Subject +to Stock Options +Brian J. Blaser +24,153 +William Donnelly +12,356 +Karen A. Flynn +31,965 +Sarah E. Hlavinka +47,726 +Martin D. Madaus, Ph.D. +47,726 +Paul M. Meister +47,726 +Laurie J. Olson +31,926 +David R. Walt, Ph.D. +47,726 +(3) +Mr. Blaser joined our Board effective January 6, 2023. +(4) +Mr. Crandell served as a director until June 7, 2023. +(5) +Mr. Donnelly joined our Board effective August 17, 2023. +37 +TABLE OF CONTENTS +Non-Employee Director Compensation Policy +Our non-employee director compensation policy (the “Policy”) effective for 2023 provided for: (A) the annual payment of $40,000 to each of our non-employee directors, or $60,000 in the case of the Chairman or Lead Director; (B) $10,000 to each member of our Audit Committee, or $20,000 in the case of the chairperson; (C) $7,250 to each member of our Compensation Committee, or $15,000 in the case of the chairperson; and (D) $5,000 to each member of our Nominating and Governance Committee, or $10,000 in the case of the chairperson; in each case quarterly in arrears. Each non-employee director may elect to receive these payments in the form of common stock in lieu of cash. +The Policy also provides that each non-employee director be granted, on the first trading day of each fiscal year, an annual equity award valued at $200,000, rounded to the nearest whole share. This equity award is comprised of (A) 60% non-qualified stock options to purchase common stock at an exercise price equal to the fair market value as of such grant date and (B) 40% RSUs. The number of options is determined using our standard Black-Scholes valuation methodology. The number of RSUs is determined by dividing total value of the RSUs by the fair market value of our common stock on such grant date. The annual stock options and RSUs vest in full on December 31 of the year in which such awards were granted, provided that the non-employee director is still a director on the applicable vesting date. +In addition, under the Policy, each new non-employee director receives an award valued at $400,000 upon his or her initial election or appointment. The award is comprised of (A) 60% non-qualified stock options to purchase common stock at an exercise price equal to the fair market value of our common stock as of such grant date and (B) 40% RSUs. The number of options is determined using our standard Black-Scholes valuation methodology. The number of RSUs is determined by dividing total value of the RSUs by the fair market value of our common stock on such grant date. The initial stock options vest over three years from the date of grant, with one-third vesting on the first anniversary of the applicable grant date and the remainder vesting over the following two years in 24 successive equal monthly installments at the end of each month until the third anniversary of such grant date, provided that the non-employee director is still a director on the applicable vesting date. The RSUs granted to each new non-employee director vest over a three-year period, with one-third vesting on each of the first, second and third anniversaries of the applicable grant date, provided that the non-employee director is still a director on the applicable vesting date. +Effective January 1, 2024, the Policy was amended to provide for: (A) the annual payment of $80,000 to the Chairman or Lead Director; and (B) $7,500 to each member of our Compensation Committee. All other terms of the Policy were unchanged. +We reimburse in full each non-employee director for all reasonable out-of-pocket expenses incurred in attending each meeting of our Board or its committees. Directors may be reimbursed for travel, food, lodging and other expenses directly related to their service as directors. Directors are also entitled to the protection provided by their indemnification agreements and the indemnification provisions in our restated certificate of incorporation and restated bylaws. +Stock Ownership Guidelines for Non-Employee Directors and Executive Officers +In order to further align the interests of our non-employee directors and executive officers with the interests of our stockholders and to promote our commitment to sound corporate governance, our Board maintains the following stock ownership guidelines for our non-employee directors and executive officers. For those individuals who have served since October 9, 2019, attainment will be first required as of October 9, 2024. +38 +TABLE OF CONTENTS +Stock Ownership Guideline +Non-Employee Director +5x annual base cash retainer +CEO +6x annual base salary +Executive Officers Other than CEO +3x annual base salary +Attainment Period +Five years from the later of: +• +Appointment/election to applicable position; and +• +October 9, 2019. +Stock Owned for Purposes of Ownership Guidelines +• +Stock acquired on the open market; +• +Stock acquired through the exercise of options; +• +Restricted stock, RSUs and stock options, whether vested or unvested; and +• +Stock acquired through Company benefit plans. +Holding Requirement +50% of “net of tax” vested shares must be held until the ownership guideline is met. +Administration +The stock ownership guidelines are administered by the Compensation Committee, which evaluates compliance on an annual basis. Non-compliance arising from special circumstances, such as fluctuations in the Company’s stock price, changes in a participant’s compensation, and the personal financial situation of a participant, are reviewed by the Compensation Committee. +39 +TABLE OF CONTENTS +EQUITY COMPENSATION PLAN INFORMATION +The following table provides certain aggregate information with respect to all of our equity compensation plans in effect as of December 31, 2023. +(a) +(b) +(c) +Plan category +Number of +securities to be +issued upon +exercise of +outstanding +options, warrants +and rights +Weighted-average +exercise price of +outstanding +options, warrants +and rights +Number of securities +remaining available +for future issuance +under equity +compensation plans +(excluding securities +reflected in column (a)) +Equity compensation plans approved by security holders (1) +4,101,426 (2) +$ +13.27 (2) +3,683,831 (3) +Equity compensation plans not approved by security +holders +— +— +— +Total +4,101,426 (2) +$$ +13.27 (2) +3,683,831 (3) +(1) +These plans consist of our 2007 Plan, the 2017 Plan and the ESPP. +(2) +Consists of (i) 2,773,767 outstanding options with a weighted average exercise price of $19.62 per share and (ii) 1,327,659 outstanding RSUs with a weighted average exercise price of $0 per share. +(3) +Consists of 1,984,697 shares of common stock available under the 2017 Plan and 1,699,134 shares of common stock available under the ESPP. Does not include an additional 1,518,915 shares of common stock reserved for future issuance under the 2017 Plan effective January 1, 2024 by operation of the 2017 Plan’s “evergreen” provision and an additional 379,729 shares of common stock reserved for future issuance under the ESPP effective January 1, 2024 by operation of the ESPP’s “evergreen” provision. +40 +TABLE OF CONTENTS +REPORT OF AUDIT COMMITTEE +The Audit Committee of the Board of Directors, which consists entirely of directors who meet the independence and experience requirements of The Nasdaq Stock Market, has furnished the following report: +The Audit Committee assists the Board of Directors in overseeing and monitoring the integrity of our financial reporting process, compliance with legal and regulatory requirements and the quality of internal and external audit processes. The Audit Committee’s role and responsibilities are set forth in its charter adopted by the Board of Directors, which is available on our website at www.quanterix.com . The Audit Committee reviews and reassesses its charter annually and recommends any changes to the Board of Directors for approval. The Audit Committee is responsible for overseeing our overall financial reporting process, and for the appointment, compensation, retention, and oversight of the work of Ernst & Young LLP. In fulfilling its responsibilities for the financial statements for the fiscal year ended December 31, 2023, the Audit Committee took the following actions: +• +Reviewed and discussed the audited financial statements for the fiscal year ended December 31, 2023 with management and Ernst & Young LLP, our independent registered public accounting firm; +• +Provided oversight of management’s remediation efforts with respect to the four previously-identified material weaknesses in our internal control over financial reporting described in our Annual Report on Form 10-K for the year ended December 31, 2023, of which two were remediated, and discussed such matters with Ernst & Young LLP; +• +Discussed with Ernst & Young LLP the matters required to be discussed in accordance with Auditing Standard No. 1301 —  Communications with Audit Committees ; and +• +Received written disclosures and the letter from Ernst & Young LLP regarding its independence as required by applicable requirements of the Public Company Accounting Oversight Board regarding Ernst & Young LLP’s communications with the Audit Committee and the Audit Committee further discussed with Ernst & Young LLP their independence. +Based on the Audit Committee’s review of the audited financial statements and discussions with management and Ernst & Young LLP, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 for filing with the SEC. +Members of the Audit Committee: +Paul M. Meister (Chairperson) +William P. Donnelly +Sarah E. Hlavinka +Martin D. Madaus, Ph.D. +41 +TABLE OF CONTENTS +ADDITIONAL INFORMATION REGARDING OUR +INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +Principal Accounting Fees and Services +The following table presents fees for professional audit services rendered by Ernst & Young LLP, our independent registered public accounting firm, for the audit of our annual financial statements for the years ended December 31, 2022 and 2023 and fees billed for other services rendered by Ernst & Young LLP during those periods. +2022 +2023 +Audit fees (1) +$ +2,409,600 +$ +2,602,200 +Audit-related fees +— +— +Tax fees (2) +81,252 +147,229 +Other fees (3) +— +2,052 +Total +$ +2,490,852 +$ +2,751,481 +(1) +Audit fees are fees for professional services rendered in connection with the audit of our consolidated financial statements (including an assessment of our internal control over financial reporting) included in Item 8 of our Annual Reports filed on Form 10-K, reviews of our consolidated financial statements included in our Quarterly Reports filed on Form 10-Q and registration statements. +(2) +Tax fees consist principally of assistance with matters related to tax compliance and reporting and tax consulting services primarily related to international tax planning strategies. +(3) +Other fees consist of fees for a subscription to Ernst & Young LLP’s accounting and financial reporting research platform. +Pre-Approval Policy +Consistent with SEC policies regarding auditor independence, the Audit Committee has responsibility for appointing, setting compensation and overseeing the work of our independent registered public accounting firm. In recognition of this responsibility, the Audit Committee has established a policy to pre-approve all audit and permissible non-audit services provided by our independent registered public accounting firm; provided however, that de minimis non-audit services may instead be approved in accordance with applicable SEC rules. +Prior to engagement of an independent registered public accounting firm for the next year’s audit, management will submit an aggregate of services expected to be rendered during that year for each of four categories of services to the Audit Committee for approval. +1. +Audit Services include professional services rendered in connection with the audit of our consolidated financial statements (including an assessment of our internal control over financial reporting) included in Item 8 of our Annual Reports filed on Form 10-K, reviews of our consolidated financial statements included in our Quarterly Reports filed on Form 10-Q, comfort letters, registration statements and consultation regarding financial accounting and/or reporting standards. +2. +Audit-Related Services are for assurance and related services that are traditionally performed by an independent registered public accounting firm, including due diligence related to mergers and acquisitions, employee benefit plan audits and special procedures required to meet certain regulatory requirements. +3. +Tax Services include all services performed by an independent registered public accounting firm’s tax personnel except those services specifically related to the audit of the financial statements, and includes fees in the areas of tax compliance, tax planning and tax advice. +4. +Other Fees are those associated with services not captured in the other categories. +42 +TABLE OF CONTENTS +Prior to engagement, the Audit Committee pre-approves these services by category of service. The fees are budgeted, and the Audit Committee requires our independent registered public accounting firm and management to report actual fees versus the budget periodically throughout the year by category of service. During the year, circumstances may arise when it may become necessary to engage our independent registered public accounting firm for additional services not contemplated in the original pre-approval. In those instances, the Audit Committee requires specific pre-approval before engaging our independent registered public accounting firm. +The Audit Committee may delegate pre-approval authority to one or more of its members. The member to whom such authority is delegated must report, for informational purposes only, any pre-approval decisions to the Audit Committee at its next scheduled meeting. +43 +TABLE OF CONTENTS +DELINQUENT SECTION 16(A) REPORTS +Our records reflect that all reports required to be filed with the SEC pursuant to Section 16(a) of the Exchange Act were filed on a timely basis, except for the following: a Form 4 due on April 11, 2023 for Michael Doyle was filed on May 2, 2023 and a Form 4 for Masoud Toloue due on April 27, 2023 was filed on May 2, 2023, in each case due to administrative delays. +44 +TABLE OF CONTENTS +CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS +Since January 1, 2023, we have engaged in the following transactions with our directors, director nominees, executive officers and holders of more than 5% of our common stock, which we refer to as our principal stockholders, and affiliates or immediate family members of our directors, executive officers and principal stockholders. We believe that all of these transactions were on terms as favorable as could have been obtained from unrelated third parties. +We entered into a License Agreement with Tufts University in 2007, as amended in 2013, 2017 and 2020, pursuant to which we obtained an exclusive, worldwide license to our core SIMOA technology, and entered into additional license agreements with Tufts to certain related technology. David R. Walt, Ph.D., one of our directors, founding scientist and an inventor of the SIMOA technology, previously served as a professor at Tufts University. Under these licenses, we are required to pay Tufts University royalties on net sales of licensed products and services as well as a portion of our applicable sublicense revenues. During the year ended December 31, 2023, we recorded royalty expense of $1.7 million under these licenses. Tufts University pays a portion of the royalties and license payments received from us to Dr. Walt pursuant to an arrangement between Tufts University and Dr. Walt, the amount of which is determined on a formulaic basis. +In August 2022, we also entered into a license agreement with Harvard University related to immunoassay technology developed by Dr. Walt at Harvard and Brigham and Women’s Hospital. In connection with entering into this agreement, we paid Harvard an upfront fee of $625,000 in 2022. Under this license, we are required to pay Harvard royalties on net sales of licensed products and services as well as a portion of our applicable sublicense revenues. During the year ended December 31, 2023, we recorded no royalty expense under this license. Harvard is obligated to pay a portion of the payments received from us to Dr. Walt pursuant to an arrangement between Harvard and Dr. Walt. We also sell products and services to laboratories affiliated with Harvard and Brigham and Women’s Hospital that are overseen by Dr. Walt. During the year ended December 31, 2023, we recorded revenue from these sales of approximately $1.3 million. +In May 2022, we entered into an agreement with UltraDx Limited (“UltraDx”), a company formed by ARCH Venture Partners (“ARCH”). Keith Crandell, who was a director of Quanterix until June 2023, is a managing director of ARCH and is a founder of UltraDx. Under this agreement, we agreed to supply HD-X instruments (both fully assembled and disassembled) as well as assays and assay components to UltraDx, and UltraDx has the non-exclusive right to seek Chinese regulatory approval of and to commercialize the HD-X instrument and related assays in the Chinese neurological in the vitro diagnostic market. The agreement included the payment to us by UltraDx of contingent, non-cash consideration in the form of ordinary shares of UltraDx with a deemed fair value of $1.0 million. The issuance of the shares was contingent on UltraDx completing a preferred share financing under certain qualifying terms and conditions. In the second quarter of 2023, UltraDx completed the qualified preferred share financing and issued us one million ordinary shares. During the year ended December 31, 2023, we recognized $1.8 million of revenue from UltraDx, which includes the one-time revenue from the receipt of the UltraDx shares in the second quarter of 2023. +Indemnification Agreements with Officers and Directors and Directors’ and Officers’ Liability Insurance +We have entered into indemnification agreements with each of our executive officers and directors. The indemnification agreements, our restated certificate of incorporation and our restated bylaws require us to indemnify our directors to the fullest extent not prohibited by Delaware law. Subject to certain limitations, our restated bylaws also require us to advance expenses incurred by our directors and officers. +The 2007 Plan and the 2017 Plan also provide that our directors (and in the case of the 2017 Plan, our employees) will not be liable for any act, omission, interpretation, construction or determination made in good faith in connection with the respective plan, and the members of our Board and any committee administering the plan will be entitled to indemnification and reimbursement by us in respect of any claim, loss, damage or expense (including reasonable attorneys’ fees) arising or resulting therefrom to the fullest extent permitted by law and/or under any directors’ and officers’ liability insurance coverage which may be in effect from time to time. +45 +TABLE OF CONTENTS +We also maintain a general liability insurance policy which covers certain liabilities of directors and officers of the Company arising out of claims based on acts or omissions in their capacities as directors or officers. +Policies and Procedures for Related Party Transactions +Pursuant to its charter, our Audit Committee is responsible for reviewing and approving, prior to our entry into any such transaction, all transactions reportable by us under Item 404 of Regulation S-K in which we are a participant and in which any parties related to us, including our executive officers, our directors, beneficial owners of more than 5% of our securities, immediate family members of the foregoing persons and any other persons whom our Board determines may be considered related persons under Item 404 of Regulation S-K, has or is expected to have a direct or indirect material interest. +In reviewing and approving such transactions, the Audit Committee will obtain, or will direct our management to obtain on its behalf, all information that the committee believes to be relevant and important to a review of the transaction prior to its approval. Following receipt of the necessary information, a discussion will be held of the relevant factors if deemed to be necessary by the committee prior to approval. If a discussion is not deemed to be necessary, approval may be given by written consent of the committee. This approval authority may also be delegated to the chair of the Audit Committee in some circumstances. No related person transaction will be entered into prior to the completion of these procedures. +The Audit Committee or its chair, as the case may be, will approve only those related person transactions that are determined to be in, or not inconsistent with, the best interests of us and our stockholders, taking into account all available facts and circumstances as the committee or the chair determines in good faith to be necessary in accordance with principles of Delaware law generally applicable to directors of a Delaware corporation. These facts and circumstances will typically include, but not be limited to, the benefits of the transaction to us; the impact on a director’s independence in the event the related person is a director, an immediate family member of a director or an entity in which a director is a partner, stockholder or executive officer; the availability of other sources for comparable products or services; the terms of the transaction; and the terms of comparable transactions that would be available to unrelated third parties or to employees generally. No member of the Audit Committee will participate in any review, consideration or approval of any related person transaction with respect to which the member or any of his or her immediate family members has an interest. +46 +TABLE OF CONTENTS +PROPOSAL NO. 1 +ELECTION OF DIRECTORS +Our Board of Directors currently consists of nine members, classified into three classes as follows: (1) Karen A. Flynn, Martin D. Madaus, Ph.D. and Laurie J. Olson constitute Class I with a term ending at the upcoming 2024 annual meeting, (2) Sarah E. Hlavinka, Masoud Toloue, Ph.D. and David R. Walt, Ph.D. constitute Class II with a term ending at the 2025 annual meeting; and (3) Brian J. Blaser, William P. Donnelly and Paul M. Meister constitute Class III with a term ending at the 2026 annual meeting. Laurie J. Olson has informed the Board that she will not stand for re-election at the 2024 annual meeting, and our Board has taken action to reduce the size of our Board to eight members, effective as of the 2024 annual meeting. +At each annual meeting of stockholders, directors are elected for a term of three years to succeed those directors whose terms are expiring. +Upon the recommendation of our Nominating and Governance Committee, our Board of Directors has voted to nominate Karen A. Flynn and Martin D. Madaus, Ph.D. for election at the annual meeting as Class I directors for a term of three years to serve until the 2027 annual meeting of stockholders and until their respective successors are elected and qualified. +Unless authority to vote for either of these nominees is withheld, the shares represented by the enclosed proxy will be voted FOR the election of Karen A. Flynn and Martin D. Madaus, Ph.D. as directors. In the event that any of the nominees becomes unable or unwilling to serve, the shares represented by the enclosed proxy will be voted for the election of such other person as the Board of Directors may recommend in that nominee’s place. We have no reason to believe that any of the nominees will be unable or unwilling to serve as a director. +A plurality of the shares voted FOR each nominee is required to elect each nominee as a director. +THE BOARD OF DIRECTORS RECOMMENDS THE ELECTION OF KAREN A. FLYNN AND MARTIN D. MADAUS, PH.D. AS DIRECTORS, AND PROXIES SOLICITED BY THE BOARD WILL BE VOTED IN FAVOR THEREOF UNLESS A STOCKHOLDER HAS INDICATED OTHERWISE ON THE PROXY. +47 +TABLE OF CONTENTS +PROPOSAL NO. 2 +ADVISORY VOTE ON APPROVAL OF EXECUTIVE COMPENSATION +We are seeking your advisory vote as required by the Exchange Act on the approval of the compensation of our named executive officers as described in the Compensation Discussion and Analysis, the compensation tables and related material contained in this proxy statement. Because your vote is advisory, it will not be binding on our Compensation Committee or our Board of Directors. However, the Compensation Committee and our Board of Directors will review the voting results and take them into consideration when making future decisions regarding executive compensation. +Our compensation philosophy is designed to align each executive’s compensation with Quanterix’s short-term and long-term performance and to provide the compensation and incentives needed to attract, motivate and retain key executives who are crucial to our long-term success. Stockholders are urged to read the Compensation Discussion and Analysis section of this proxy statement, which discusses how our compensation policies and procedures implement our compensation philosophy. The Compensation Committee and our Board of Directors believe that these policies and procedures are effective in implementing our compensation philosophy and in achieving its goals. +In accordance with the rules of the SEC, the following resolution, commonly known as a “say-on-pay” vote, is being submitted for a stockholder vote at the 2024 annual meeting: +“RESOLVED, that the compensation paid to the named executive officers of Quanterix Corporation, as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the compensation tables and the related material disclosed in this proxy statement, is hereby APPROVED.” +The affirmative vote of a majority of the votes cast affirmatively or negatively for this proposal is required to approve, on an advisory basis, this resolution. +OUR BOARD OF DIRECTORS RECOMMENDS A VOTE TO APPROVE THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS, AND PROXIES SOLICITED BY OUR BOARD OF DIRECTORS WILL BE VOTED IN FAVOR OF SUCH APPROVAL UNLESS A STOCKHOLDER INDICATES OTHERWISE ON THE PROXY. +48 +TABLE OF CONTENTS +PROPOSAL NO. 3 +RATIFICATION OF THE APPOINTMENT OF INDEPENDENT +REGISTERED PUBLIC ACCOUNTING FIRM +The Audit Committee appointed Ernst & Young LLP as our independent registered public accounting firm to audit our financial statements for the fiscal year ending December 31, 2024. The Board of Directors proposes that the stockholders ratify this appointment. Ernst & Young LLP audited our financial statements for the fiscal year ended December 31, 2023. We expect that representatives of Ernst & Young LLP will be present at the annual meeting, will be able to make a statement if they so desire and will be available to respond to appropriate questions. +In deciding to appoint Ernst & Young LLP, the Audit Committee reviewed auditor independence issues and existing commercial relationships with Ernst & Young LLP and concluded that Ernst & Young LLP has no commercial relationship with the Company that would impair its independence for the fiscal year ending December 31, 2024. +In the event the stockholders do not ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm, the Audit Committee will reconsider its appointment. +The affirmative vote of a majority of the votes cast affirmatively or negatively for this proposal is required to ratify the appointment of our independent registered public accounting firm. +THE BOARD OF DIRECTORS RECOMMENDS A VOTE TO RATIFY THE APPOINTMENT OF ERNST & YOUNG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM, AND PROXIES SOLICITED BY THE BOARD WILL BE VOTED IN FAVOR OF SUCH RATIFICATION UNLESS A STOCKHOLDER INDICATES OTHERWISE ON THE PROXY. +49 +TABLE OF CONTENTS +CORPORATE CODE OF CONDUCT AND ETHICS +We have adopted a corporate code of conduct and ethics that applies to all of our employees, including our chief executive officer and chief financial and accounting officers. The text of the code of conduct and ethics is posted on our website at www.quanterix.com under “Investors — Corporate Governance — Governance Highlights” and will be made available to stockholders without charge, upon request, in writing to the Corporate Secretary at 900 Middlesex Turnpike, Building 1, Billerica, Massachusetts 01821. Disclosure regarding any amendments to, or waivers from, provisions of the code that apply to our directors, principal executive officer or principal financial officer will be included in a Current Report on Form 8-K within four business days following the date of the amendment or waiver, unless website posting or the issuance of a press release of such amendments or waivers is then permitted by the rules of The Nasdaq Stock Market. +OTHER MATTERS +The Board of Directors knows of no other business which will be presented to the annual meeting. If any other business is properly brought before the annual meeting, proxies will be voted in accordance with the judgment of the persons named therein. +STOCKHOLDER PROPOSALS AND NOMINATIONS FOR DIRECTOR +To be considered for inclusion in the proxy statement relating to our 2025 annual meeting of stockholders, we must receive stockholder proposals (other than for director nominations) no later than December 16, 2024. To be considered for presentation at the 2025 annual meeting, although not included in the proxy statement, proposals (including director nominations that are not requested to be included in our proxy statement) must be received no earlier than February 3, 2025 and no later than March 5, 2025. +In order to comply with the universal proxy rules, stockholders who intend to solicit proxies in support of director nominees other than the Company’s nominees at our 2025 annual meeting of stockholders must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act. Such notice must be received by the date noted above and must also include all information required by our bylaws with respect to director nominations. +Proposals that are not received in a timely manner will not be voted on at the 2025 annual meeting. If a proposal is received on time, the proxies that management solicits for the meeting may still exercise discretionary voting authority on the proposal under circumstances consistent with the proxy rules of the SEC. All stockholder proposals should be marked for the attention of Secretary, Quanterix Corporation, 900 Middlesex Turnpike, Building 1, Billerica, Massachusetts 01821. +Billerica, Massachusetts +April 15, 2024 +50 +TABLE OF CONTENTS +MMMMMMMMMENDORSEMENT_LINE______________ SACKPACK_____________000001MR A SAMPLEDESIGNATION (IF ANY)ADD 1ADD 2ADD 3ADD 4ADD 5ADD 6Using a black ink pen, mark your votes with an X as shown in this example.Please do not write outside the designated areas. MMMMMMMMMMMMMMMMMMMMMMMMMM C123456789000000000.000000 ext000000000.000000 ext000000000.000000 ext000000000.000000 ext000000000.000000 ext000000000.000000 extYour vote matters – here’s how to vote!You may vote online or by phone instead of mailing this card.Votes submitted electronically must be received by 1:00 am, Eastern Time, on June 3, 2024.OnlineGo to www.investorvote.com/QTRXor scan the QR code — login details are located in the shaded bar below.PhoneCall toll free 1-800-652-VOTE (8683) within the USA, US territories and CanadaSave paper, time and money!Sign up for electronic delivery atwww.investorvote.com/QTRX 2024 Annual Meeting Proxy Card1234 5678 9012 345IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.AProposals — The Board of Directors recommends a vote FOR all nominees and FOR Proposals 2 and 3.1. Election of Directors:+ForWithholdForWithhold01 - Karen A. Flynn02 - Martin D. Madaus, Ph.D. 2.To approve, by a non-binding advisory vote, the compensation of our named executive officers, as disclosed in the proxy statement. For Against Abstain For Against Abstain 3. Ratification of the appointment of Ernst & Young LLP as the independent accounting firm for the fiscal year ending December 31, 2024. BAuthorized Signatures — This section must be completed for your vote to count. Please date and sign below.Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title.Date (mm/dd/yyyy) — Please print date below.Signature 1 — Please keep signature within the box.Signature 2 — Please keep signature within the box. MMMMMMM C 1234567890J N T2 2 B V 6 1 1 9 9 5 MR A SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE 140 CHARACTERS) MR A SAMPLE AND MR A SAMPLE ANDMR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND + MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND 03ZGWD +TABLE OF CONTENTS +2024 Annual Meeting Admission Ticket2024 Annual Meeting of Quanterix Corporation StockholdersJune 3, 2024 10:00 AM ETQuanterix Corporation900 Middlesex Turnpike, Building 1Billerica, MA 01821Upon arrival, please present this admission ticket and photo identification at the registration desk.Important notice regarding the Internet availability of proxy materials for the Annual Meeting of Stockholders.The material is available at: www.investorvote.com/QTRXSmall steps make an impact.Help the environment by consenting to receive electronic delivery, sign up at www.investorvote.com/QTRXIF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.Quanterix Corporation+Notice of 2024 Annual Meeting of StockholdersProxy Solicited by Board of Directors for Annual Meeting — June 3, 2024Masoud Toloue, Ph.D. and Laurie Churchill, or each of them, each with the power of substitution, are hereby authorized to represent and vote the shares of the undersigned, with all the powers which the undersigned would possess if personally present, at the Annual Meeting of Stockholders of Quanterix Corporation to be held on June 3, 2024 or at any postponement or adjournment thereof.Shares represented by this proxy will be voted as directed by the stockholder. If no such directions are indicated, the Proxies will have authority to vote FOR the election of the nominees as directors and FOR Proposals 2 and 3.In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting.(Items to be voted appear on reverse side)CNon-Voting ItemsChange of Address — Please print new address below.Comments — Please print your comments below. + +DEF 14A +false +0001503274 +0001503274 +2023-01-01 +2023-12-31 +0001503274 +qtrx:MasoudToloueMember +2023-01-01 +2023-12-31 +0001503274 +qtrx:EKevinHrusovskyMember +2022-01-01 +2022-12-31 +0001503274 +qtrx:MasoudToloueMember +2022-01-01 +2022-12-31 +0001503274 +2022-01-01 +2022-12-31 +0001503274 +qtrx:EKevinHrusovskyMember +2021-01-01 +2021-12-31 +0001503274 +2021-01-01 +2021-12-31 +0001503274 +qtrx:EKevinHrusovskyMember +2020-01-01 +2020-12-31 +0001503274 +2020-01-01 +2020-12-31 +0001503274 +qtrx:EquityAwardsValueInCompensationTableForTheApplicableYearMember 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of our common stock, which we refer to as our principal stockholders, and affiliates or immediate family members of our directors, executive officers and principal stockholders. We believe that all of these transactions were on terms as favorable as could have been obtained from unrelated third parties. +We entered into a License Agreement with Tufts University in 2007, as amended in 2013, 2017 and 2020, pursuant to which we obtained an exclusive, worldwide license to our core SIMOA technology, and entered into additional license agreements with Tufts to certain related technology. David R. Walt, Ph.D., one of our directors, founding scientist and an inventor of the SIMOA technology, previously served as a professor at Tufts University. Under these licenses, we are required to pay Tufts University royalties on net sales of licensed products and services as well as a portion of our applicable sublicense revenues. During the year ended December 31, 2023, we recorded royalty expense of $1.7 million under these licenses. Tufts University pays a portion of the royalties and license payments received from us to Dr. Walt pursuant to an arrangement between Tufts University and Dr. Walt, the amount of which is determined on a formulaic basis. +In August 2022, we also entered into a license agreement with Harvard University related to immunoassay technology developed by Dr. Walt at Harvard and Brigham and Women’s Hospital. In connection with entering into this agreement, we paid Harvard an upfront fee of $625,000 in 2022. Under this license, we are required to pay Harvard royalties on net sales of licensed products and services as well as a portion of our applicable sublicense revenues. During the year ended December 31, 2023, we recorded no royalty expense under this license. Harvard is obligated to pay a portion of the payments received from us to Dr. Walt pursuant to an arrangement between Harvard and Dr. Walt. We also sell products and services to laboratories affiliated with Harvard and Brigham and Women’s Hospital that are overseen by Dr. Walt. During the year ended December 31, 2023, we recorded revenue from these sales of approximately $1.3 million. +In May 2022, we entered into an agreement with UltraDx Limited (“UltraDx”), a company formed by ARCH Venture Partners (“ARCH”). Keith Crandell, who was a director of Quanterix until June 2023, is a managing director of ARCH and is a founder of UltraDx. Under this agreement, we agreed to supply HD-X instruments (both fully assembled and disassembled) as well as assays and assay components to UltraDx, and UltraDx has the non-exclusive right to seek Chinese regulatory approval of and to commercialize the HD-X instrument and related assays in the Chinese neurological in the vitro diagnostic market. The agreement included the payment to us by UltraDx of contingent, non-cash consideration in the form of ordinary shares of UltraDx with a deemed fair value of $1.0 million. The issuance of the shares was contingent on UltraDx completing a preferred share financing under certain qualifying terms and conditions. In the second quarter of 2023, UltraDx completed the qualified preferred share financing and issued us one million ordinary shares. During the year ended December 31, 2023, we recognized $1.8 million of revenue from UltraDx, which includes the one-time revenue from the receipt of the UltraDx shares in the second quarter of 2023. +Indemnification Agreements with Officers and Directors and Directors’ and Officers’ Liability Insurance +We have entered into indemnification agreements with each of our executive officers and directors. The indemnification agreements, our restated certificate of incorporation and our restated bylaws require us to indemnify our directors to the fullest extent not prohibited by Delaware law. Subject to certain limitations, our restated bylaws also require us to advance expenses incurred by our directors and officers. +The 2007 Plan and the 2017 Plan also provide that our directors (and in the case of the 2017 Plan, our employees) will not be liable for any act, omission, interpretation, construction or determination made in good faith in connection with the respective plan, and the members of our Board and any committee administering the plan will be entitled to indemnification and reimbursement by us in respect of any claim, loss, damage or expense (including reasonable attorneys’ fees) arising or resulting therefrom to the fullest extent permitted by law and/or under any directors’ and officers’ liability insurance coverage which may be in effect from time to time. +45 \ No newline at end of file diff --git a/raw/proxies/0001503274/0001104659-25-082586/proxy.txt b/raw/proxies/0001503274/0001104659-25-082586/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..4f1960a3f56c8f1fe18e2743ba6d03eb6c1df266 --- /dev/null +++ b/raw/proxies/0001503274/0001104659-25-082586/proxy.txt @@ -0,0 +1,2821 @@ +tm2521975-3_nonfiling - none - 8.2858282s +TABLE OF CONTENTS +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Proxy Statement Pursuant to Section 14(a) of +the Securities Exchange Act of 1934 (Amendment No.     ) +Filed by the Registrant ☒ +Filed by a Party other than the Registrant ☐ +Check the appropriate box: +☐ +Preliminary Proxy Statement +☐ +Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +☒ +Definitive Proxy Statement +☐ +Definitive Additional Materials +☐ +Soliciting Material under §240.14a-12 +Quanterix Corporation +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +☒ +No fee required. +☐ +Fee paid previously with preliminary materials. +☐ +Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11. +TABLE OF CONTENTS +August 25, 2025 +To Our Stockholders: +You are cordially invited to attend the 2025 annual meeting of stockholders of Quanterix Corporation (including any adjournments or postponements of such meeting, the “Annual Meeting”) to be held virtually via the Internet at 9:00 a.m. ET, on September 23, 2025, at www.cesonlineservices.com/qtrxam_vm. The virtual nature of the Annual Meeting is designed to enable access by more of our stockholders while decreasing the cost of conducting the Annual Meeting in person. To participate in the Annual Meeting, you must pre-register at www.cesonlineservices.com/qtrxam_vm by 9:00 a.m. ET, on September 22, 2025. You will not be able to attend the Annual Meeting in person. If the Annual Meeting is adjourned for any reason, then proxies submitted may be used at any adjournment of the Annual Meeting. +Details regarding the meeting, the business to be conducted at the meeting, and information about Quanterix Corporation that you should consider when you vote your shares are described in the accompanying proxy statement (the “Proxy Statement”). +At the Annual Meeting, stockholders will vote (i) to elect three director nominees to our Board of Directors to serve three-year terms expiring at the annual meeting of stockholders in 2028 or until their successors are duly elected and qualified, (ii) to approve, on an advisory basis, the compensation of the Company’s named executive officers, (iii) to ratify, on an advisory basis, the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2025, (iv) to approve an amendment to our amended and restated certificate of incorporation (our “Charter”) to declassify our Board of Directors, (v) to approve an amendment to our Charter to eliminate the supermajority stockholder vote requirement to amend certain provisions of our Charter and (vi) to approve an amendment to our Charter to eliminate the supermajority stockholder vote requirement for stockholders to amend our restated bylaws. Such other business may be transacted as may properly come before the Annual Meeting. OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE IN ACCORDANCE WITH ITS RECOMMENDATION ON EACH OF THE PROPOSALS USING THE ENCLOSED PROXY CARD. +We hope you will be able to attend the Annual Meeting virtually. Whether or not you plan to attend the Annual Meeting, we hope you will vote promptly. Information about voting methods is set forth in the accompanying Proxy Statement. +Thank you for your continued support of Quanterix Corporation. +Sincerely, +Masoud Toloue, Ph.D. +President and Chief Executive Officer +If you have any questions or need any assistance in voting your shares, please contact our proxy solicitor: +430 Park Avenue, 14 th Floor +New York, New York 10022 +Stockholders Call Toll Free: (800) 662-5200 +Brokers and Banks may call collect: (203) 658-9400 +Email: qtrx@info.sodali.com +TABLE OF CONTENTS +QUANTERIX CORPORATION +900 Middlesex Turnpike +Billerica, Massachusetts 01821 +August 25, 2025 +NOTICE OF 2025 ANNUAL MEETING OF STOCKHOLDERS +TIME: 9:00 a.m. ET +DATE: September 23, 2025 +ACCESS: The 2025 annual meeting of stockholders (including any adjournments or postponements of such meeting, the “Annual Meeting”) of Quanterix Corporation (“Quanterix” or the “Company”) will be held virtually via the Internet at www.cesonlineservices.com/qtrxam_vm. The Annual Meeting will be held solely by means of remote communication via the Internet. There will not be a physical location. Stockholders will be able to virtually attend and to vote at the Annual Meeting via the Annual Meeting website. To participate in the Annual Meeting, you must pre-register at www.cesonlineservices.com/qtrxam_vm by 9:00 a.m. ET, on September 22, 2025. +PURPOSES: At the Annual Meeting, stockholders will vote: +1. +To elect three director nominees to the Company’s Board of Directors (the “Board”) to serve three-year terms expiring at the annual meeting of stockholders in 2028 or until their successors are duly elected and qualified; +2. +To approve, on an advisory basis, the compensation of the Company’s named executive officers; +3. +To ratify, on an advisory basis, the appointment of KPMG LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2025; +4. +To approve an amendment to our amended and restated certificate of incorporation (our “Charter”) to declassify our Board; +5. +To approve an amendment to our Charter to eliminate the supermajority stockholder vote requirement to amend certain provisions of our Charter; +6. +To approve an amendment to our Charter to eliminate the supermajority stockholder vote requirement for stockholders to amend our restated bylaws (our “Bylaws”); and +Stockholders will also transact such other business that is properly presented at the Annual Meeting. +WHO MAY VOTE: +You may vote if you were the record owner of Quanterix Corporation common stock at the close of business on July 31, 2025. A list of stockholders of record will be available during the 10 days prior to the Annual Meeting, at our principal executive offices located at 900 Middlesex Turnpike Building 1, Billerica, Massachusetts 01821. +All stockholders are cordially invited to virtually attend the Annual Meeting. Whether you plan to attend the Annual Meeting virtually or not, we urge you to vote by completing, signing and dating the enclosed proxy card and promptly mailing it in the postage prepaid envelope provided or following the instructions on the enclosed proxy card to vote via the Internet or by telephone. Returning your proxy card will not prevent you from attending the Annual Meeting but will ensure that your vote is counted if you are unable to attend. Even if you submit a vote prior to the Annual Meeting, you will still have an opportunity to change your earlier vote and vote again during the Annual Meeting. +TABLE OF CONTENTS +BY ORDER OF THE BOARD OF DIRECTORS +Laurie A. Churchill +General Counsel and Secretary +If you have any questions or need any assistance in voting your shares, please contact our proxy solicitor: +430 Park Avenue, 14 th Floor +New York, New York 10022 +Stockholders Call Toll Free: (800) 662-5200 +Brokers and Banks may call collect: (203) 658-9400 +Email: qtrx@info.sodali.com +TABLE OF CONTENTS +QUANTERIX CORPORATION +PROXY STATEMENT +FOR THE 2025 ANNUAL MEETING OF STOCKHOLDERS +TO BE HELD ON SEPTEMBER 23, 2025 +TABLE OF CONTENTS +Page +Proxy Summary +5 +Important Information About the Annual Meeting and Voting +10 +Proposal No. 1: Election of Directors +18 +Management and Corporate Governance +20 +Proposal No. 2: Advisory Vote on Approval of Executive Compensation +30 +Compensation Committee Report +31 +Compensation Discussion and Analysis +32 +Executive Officer and Director Compensation +42 +Equity Compensation Plan Information +53 +Security Ownership of Certain Beneficial Owners and Management +54 +Proposal No. 3: Ratification of the Appointment of Independent Registered Public Accounting +Firm +56 +Report of Audit Committee +57 +Delinquent Section 16(a) Reports +58 +Certain Relationships and Related Person Transactions +59 +Proposal No. 4: Approval of an Amendment to our Charter to Declassify our Board +61 +Proposal No. 5: Approval of an Amendment to our Charter to Eliminate the Supermajority Stockholder Vote Requirement to Amend Certain Provisions of our Charter +62 +Proposal No. 6: Approval of an Amendment to our Charter to Eliminate the Supermajority Stockholder Vote Requirement for Stockholders to Amend our Bylaws +62 +Partial Stockholder Approval of Charter Amendment Proposals +64 +Additional Information Regarding our Independent Registered Public Accounting Firm +65 +Corporate Code of Conduct and Ethics +68 +Additional Information +69 +Other Matters +69 +Stockholder Proposals and Nominations for Director +70 +TABLE OF CONTENTS +PROXY SUMMARY +This proxy statement (this “Proxy Statement”), along with the accompanying notice of the 2025 annual meeting of stockholders (the “Notice”), contains information about the 2025 annual meeting of stockholders of Quanterix Corporation (including any adjournments or postponements of such meeting, the “Annual Meeting”) to be held virtually via the Internet at 9:00 a.m. ET, on September 23, 2025, at www.cesonlineservices.com/qtrxam_vm. The Annual Meeting will be held in a virtual meeting format only. If the Annual Meeting is adjourned for any reason, then proxies submitted may be used at any adjournment of the Annual Meeting. +In this Proxy Statement, we refer to Quanterix Corporation as “Quanterix,” “the Company,” “we” and “us.” We refer to our amended and restated certificate of incorporation as our “Charter” and our restated bylaws as our “Bylaws.” +Information About the Annual Meeting +You have received these proxy materials because our Board of Directors (the “Board”) is soliciting your proxy to vote your shares during the Annual Meeting. This summary highlights information contained elsewhere in this Proxy Statement. This summary does not contain all of the information that you should consider in deciding how to vote your shares, and you should read this entire Proxy Statement carefully before voting. +Date and Time: 9:00 a.m. (Eastern Time) on September 23, 2025 +Place: Virtual meeting format, via live webcast. To participate in the Annual Meeting, you must pre-register at www.cesonlineservices.com/qtrxam_vm by 9:00 a.m. ET, on September 22, 2025 +Record Date: July 31, 2025 +Proxy Voting: Whether you plan to attend the Annual Meeting virtually or not, we urge you to vote by completing, signing and dating the enclosed proxy card and promptly mailing it in the postage prepaid envelope provided or following the instructions on the enclosed white proxy card to vote via the Internet or by telephone. Returning your proxy card will not prevent you from attending the Annual Meeting but will ensure that your vote is counted if you are unable to attend. Even if you submit a vote prior to the Annual Meeting, you will still have an opportunity to change your earlier vote and vote again during the Annual Meeting. More information on voting your proxy card and attending the Annual Meeting can be found in this Proxy Statement. +You can find a copy of our 2024 Annual Report, which includes our financial statements, on the website of the Securities and Exchange Commission (the “SEC”) at www.sec.gov , or in the “SEC Filings” section of our website at www.quanterix.com . You may also obtain a printed copy of our 2024 Annual Report, including our financial statements, free of charge, from us by sending a written request to: Quanterix Corporation, Attn: Investor Relations, 900 Middlesex Turnpike, Building 1, Billerica, Massachusetts 01821. Exhibits will be provided upon written request and payment of an appropriate processing fee. +5 +TABLE OF CONTENTS +Matters to be Voted On +At the Annual Meeting, the holders of our common stock, par value $0.001 per share (our “Common Stock”), will be asked to vote upon the following matters: +Board Recommendation +Page +Proposal No. 1 — Election of three director nominees to our Board to serve three-year terms expiring at the annual meeting of stockholders in 2028 or until their successors are duly elected and qualified +FOR EACH OF +OUR BOARD’S +THREE NOMINEES: +Myla Lai-Goldman, M.D.Masoud Toloue, Ph.D. David Walt, Ph.D. +18 +Proposal No. 2 — Approval, on an advisory basis, of the compensation of the Company’s named executive officers +FOR +30 +Proposal No. 3 — Ratification, on an advisory basis, of the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2025 +FOR +56 +Proposal No. 4 — Approval of an amendment to our Charter to declassify our Board +FOR +61 +Proposal No. 5 — Approval of an amendment to our Charter to eliminate the supermajority stockholder vote requirement to amend certain provisions of our Charter; and +FOR +62 +Proposal No. 6 — Approval of an amendment to our Charter to eliminate the supermajority stockholder vote requirement for stockholders to amend our Bylaws. +FOR +62 +6 +TABLE OF CONTENTS +Stockholders of record at the close of business July 31, 2025 (the “Record Date”) are entitled to notice of, and to vote at, the Annual Meeting. +Corporate Governance Highlights +✓ +Independent Chair and CEO roles +✓ +Board comprised of industry leaders with experience in healthcare, diagnostics, research and development, capital markets, M&A and finance and capital management +✓ +Average director tenure of four years +✓ +High levels of director engagement, including all incumbent directors attending at least 75% of Board meetings in 2024 +✓ +Fully independent Audit, Compensation and Nominating and Governance Committees +✓ +Audit Committee comprised of three financial experts, as that term is defined in rules promulgated by the SEC +✓ +Ongoing evaluation of executive compensation strategy, led by the Compensation Committee +✓ +Commitment to governance best practices and emerging trends, led by the Nominating and Governance Committee +✓ +Annual Board and Board committee self-evaluations +✓ +Commitment to proactive stockholder engagement +✓ +No stockholder rights plan +✓ +No stock hedging or pledging permitted by directors and officers +✓ +Stock ownership guidelines applicable to tenured directors and executive officers to ensure long-term investment in the Company +✓ +Annual say-on-pay vote +✓ +Corporate Code of Conducts and Ethics to guide decision-making when conducting the Company’s business and performing day-to-day duties +7 +TABLE OF CONTENTS +Board Highlights +The Board has nominated a slate comprised of three talented directors with skill sets, experiences and professional backgrounds representing perspectives and characteristics that are particularly relevant to Quanterix’s business and strategic objectives, as reflected in their biographies in “Proposal No. 1 — Election of Directors.” +STANDING COMMITTEES +Name +Primary Occupation +Age +Director +Since +Audit +Compensation +Nominating +and +Governance +Masoud Toloue, Ph.D. +Chief Executive Officer, +Quanterix Corporation +45 +2022 +William P. Donnelly +Lead Independent Director, +Ingersoll Rand Former EVP, +Mettler-Toledo International Inc. +64 +2023 +Jeffrey T. Elliott +Former Chief Financial Officer, +Exact Sciences Corp. +47 +2024 +Karen A. Flynn +Former Chief Commercial Officer, +Catalent, Inc. +62 +2022 +Myla Lai-Goldman, M.D. +Former Chief Executive Officer and +President and current Chair of GeneCentric Therapeutics, Inc. +67 +2025 +Ivana Magovčević-Liebisch, Ph.D., J.D. +President and Chief Executive Officer, +Vigil Neuroscience, Inc. +58 +2024 +Paul M. Meister +Co-Founder and Chief Executive Officer, +Liberty Lane Partners, LLC +72 +2013 +Scott Mendel +Former President and +Chief Executive Officer, GenMark Diagnostics, Inc. +58 +2025 +David R. Walt, Ph.D. +Hansjörg Wyss Professor of Biologically +Inspired Engineering and Professor of +Pathology, Harvard Medical School +72 +2017 +Chairperson      +Member +Commitment to Ongoing Stockholder Engagement +Quanterix is committed to having regular and meaningful engagement with our stockholders in order to obtain their insight and perspectives on our business, strategy, executive compensation, corporate governance and other issues that are important to them. Feedback from our investors informs our Board’s deliberations. This collaborative relationship is a key part of our philosophy, and we will continue to seek opportunities to maintain a dialogue with our investors. +Throughout the year, we regularly participate in conferences and other public events where we meet with stockholders and analysts to share our perspectives and solicit their feedback on our performance, strategy and other topics. Feedback and ideas received from these events and meetings are shared with our Board on an ongoing basis. We also engage with our stockholders on an ad hoc basis around quarterly earnings calls, annual meetings of stockholders and other corporate events. +Over the course of 2024, members of our Board and management team met with approximately 12 of our 20 largest investors representing approximately 47% of the outstanding shares of Common Stock as of December 31, 2024. +8 +TABLE OF CONTENTS +The Board regards engagement with stockholders as one of its core responsibilities as fiduciaries, and the Board and management team are committed to building and maintaining meaningful relationships with our investors. We encourage our stockholders to communicate with us to share their perspectives and feedback, which we use to inform and enhance the Board’s deliberations. We maintain several means for stockholders and others to communicate directly with us and to engage, ask questions and provide input: +• +Participation in our annual meetings; +• +Participation in our regular investor engagement activities; and +• +Communication with our Board, non-management members of our Board as a group, or a specific member of our Board (including the Chair of our Board) by sending a written communication addressed to our Corporate Secretary (the “Corporate Secretary”) by mail to Quanterix Corporation, 900 Middlesex Turnpike Building 1, Billerica, Massachusetts 01821. All communications will be reviewed and provided to the members of the Board unless such communications are unsolicited items, sales materials or other routine items or items unrelated to the duties and responsibilities of the Board or are otherwise determined to be frivolous, irrelevant, threatening, illegal or similarly unsuitable. +9 +TABLE OF CONTENTS +IMPORTANT INFORMATION ABOUT THE ANNUAL MEETING AND VOTING +Why is the Company soliciting my proxy? +Our Board is soliciting your proxy to vote at the Annual Meeting. This Proxy Statement, along with the accompanying Notice of Annual Meeting of Stockholders, summarizes the purposes of the meeting and the information you need to know to vote at the Annual Meeting. +We have made available to you on the Internet or have sent you this Proxy Statement, the Notice of Annual Meeting of Stockholders, the proxy card and a copy of our 2024 Annual Report because you were a holder of our Common Stock as of the Record Date. We intend to commence distribution of the Notice, and, if applicable, proxy materials to stockholders on or about August 25, 2025. +What is a proxy? +A proxy is a person or entity ( e.g. , a broker) that you legally designate to vote the shares of Common Stock that you own. If you designate a person or entity as your proxy in a written document, that document is also called a proxy or a proxy card. Our Board has designated Masoud Toloue and Laurie Churchill as the Company’s proxies for the Annual Meeting. +Who may vote at the Annual Meeting? +Only stockholders who owned our Common Stock at the close of business on the Record Date will be entitled to vote at the Annual Meeting. At the close of business on the Record Date, 46,465,915 shares of our Common Stock were outstanding and entitled to vote. Our Common Stock is our only class of voting stock. +You do not need to virtually attend the Annual Meeting to vote your shares. Shares represented by valid proxies, received in time for the Annual Meeting and not revoked prior to the Annual Meeting, will be voted at the Annual Meeting. For instructions on how to change or revoke your proxy, see “ May I change or revoke my proxy? ” below. +Stockholder of Record: Shares Registered in Your Name. If your shares are registered directly in your name with our transfer agent, Computershare Trust Company, N.A., then you are considered the stockholder of record with respect to those shares. As a stockholder of record, you may vote at the Annual Meeting, or vote in advance through the Internet, by telephone or by mail. +Beneficial Owner: Shares Registered in the Name of a Broker. If your shares are held in an account with a broker, then you are the beneficial owner of such shares, which are held in “street name.” As a beneficial owner, you have the right to direct your broker, bank or other nominee on how to vote the shares held in your account, and your broker, bank or other nominee has enclosed or provided voting instructions for you to use in directing it on how to vote your shares. Because the broker, bank or other nominee that holds your shares is the stockholder of record, if you wish to attend the Annual Meeting and vote your shares, you must obtain a valid proxy from the firm that holds your shares giving you the right to vote the shares at the Annual Meeting. +How do I vote and how many votes do I have? +If you are a stockholder of record as of the Record Date, you are entitled to receive notice of, and cast a vote at, the Annual Meeting. Each holder of our Common Stock is entitled to cast one vote on each matter properly brought before the Annual Meeting for each share of our Common Stock that such holder owned of record as of the Record Date. You may submit your proxy before the Annual Meeting in one of the following ways: +• +Vote by Telephone : To vote by telephone, you will need to use the control number provided to you in the materials included with this Proxy Statement and follow the voting instructions as indicated on the enclosed proxy card. +• +Vote via the Internet : To vote via the Internet, you will need to use the control number provided to you in the materials included with this Proxy Statement and follow the additional steps when prompted. +10 +TABLE OF CONTENTS +The steps have been designed to authenticate your identity, allow you to give voting instructions and confirm that those instructions have been recorded properly. +• +Vote by Mail : To vote by mail, you will need to complete, sign and date the accompanying proxy card and return it as soon as possible before the Annual Meeting in the enclosed postage-paid envelope. +Votes submitted through the Internet or by telephone must be received by 11:59 p.m. ET, on September 22, 2025. Submitting your proxy, whether through the Internet, by telephone or by mail will not prevent a stockholder from attending the Annual Meeting, revoking their earlier-submitted proxy and voting in person. If you are not the stockholder of record, please refer to the voting instructions provided by your broker, bank or other nominee to direct it on how to vote your shares. For Proposal No. 1, you may either vote “FOR” or withhold your vote from each nominee to the Board. For Proposal Nos. 2 – 6, you may vote “FOR” or “AGAINST” each such proposal or “ABSTAIN” from voting on each such proposal. Your vote is important. Whether or not you plan to attend the Annual Meeting, we urge you to vote on the enclosed proxy card as soon as possible to ensure that your vote is counted. +If your shares are held in “street name,” you will receive voting instructions from your broker, bank or other nominee. Your broker, bank or other nominee is required to vote those shares in accordance with your instructions. If you do not instruct your broker, bank or other nominee how to vote your shares, then your broker, bank or other nominee will not be able to vote your shares with respect to Proposal Nos. 1, 2, 4, 5 or 6. As Proposal No. 3 is a routine matter, brokers will have discretionary authority (as described below under “ What is a broker non-vote? ”) to vote your shares with respect to Proposal No. 3. We urge you to instruct your broker, bank or other nominee, by following the instructions on the enclosed proxy card, to vote your shares in accordance with our Board’s recommendations on the enclosed proxy card, whether or not you plan to attend the Annual Meeting. +How will shares be voted by the proxy card? +The shares represented by any proxy card that is properly executed and received by the Company prior to or at the Annual Meeting will be voted in accordance with the specifications made on such proxy card. +If you return a validly executed and dated proxy card without indicating how your shares should be voted on one or more matters and you do not revoke your proxy, your proxy will be voted in accordance with the recommendations of our Board as to each such matter. Our Board recommends voting as follows: “ FOR ” the election of the three director nominees recommended by our Board as set forth on the proxy card: Myla Lai-Goldman, M.D., Masoud Toloue, Ph.D. and David Walt, Ph.D. (Proposal No. 1) and “ FOR ” each of the other proposals (Proposal Nos. 2 – 6). +Our Board is not aware of any matters that are expected to come before the Annual Meeting other than those described in this Proxy Statement. If any other matter is presented at the Annual Meeting upon which a vote may be properly taken, shares represented by all proxy cards received by the Company will be voted with respect thereto at the discretion of the persons named as proxies on the enclosed proxy card. +What if I receive more than one proxy card or set of proxy materials from the Company? +If your shares are held in more than one account, you will receive more than one proxy card, and in that case, you can and are urged to vote all of your shares by signing, dating and returning all proxy cards you receive from the Company in the postage-paid envelope provided. If you choose to vote by telephone or via the Internet, please vote using each proxy card you receive to ensure that all of your shares are voted. Only your latest-dated proxy for each account will count. Please sign each proxy card exactly as your name or names appear on such proxy card. For joint accounts, each owner should sign the proxy card. When signing as an executor, administrator, attorney, trustee, guardian or other representative, please print your full name and title on the proxy card. +What happens if I return a proxy card with voting instructions “FOR” fewer than three candidates for Proposal No. 1? +An “under-vote” occurs when a stockholder submits fewer votes “FOR” director nominees than there are director seats up for election. To the extent an under-vote ( i.e. , voting “FOR” with respect to at least one +11 +TABLE OF CONTENTS +and fewer than three nominees on Proposal No. 1) occurs on any stockholder’s proxy card, your shares will only be voted “FOR” those nominees you have so marked and “WITHHOLD” for all other nominees. +How do I attend the Annual Meeting? +In order to virtually attend the Annual Meeting, you (or your authorized representative) must register in advance at www.cesonlineservices.com/qtrxam_vm prior to the deadline of September 22, 2025 at 9:00 a.m. ET. If you were a stockholder of record as of the close of business on the Record Date, you may register to virtually attend the Annual Meeting by accessing www.cesonlineservices.com/qtrxam_vm. Please have your proxy card containing your control number available and follow the instructions to complete your registration request. After registering, you will receive a confirmation email with a link and instructions for accessing the Annual Meeting. Please verify that you have received the confirmation email in advance of the Annual Meeting, including the possibility that it may be in your spam or junk folder. Requests to register to participate in the Annual Meeting must be received no later than 9:00 a.m. ET, on September 22, 2025. +If you do not have your proxy card, you may still register to virtually attend the Annual Meeting by accessing www.cesonlineservices.com/qtrxam_vm, but you will need to provide proof of ownership of our Common Stock as of the Record Date during the registration process. Such proof of ownership may include a statement showing your ownership as of the Record Date. +After registering, you will receive a confirmation email prior to the Annual Meeting with a link and instructions for entering the virtual Annual Meeting. Although the meeting webcast will begin at 9:00 a.m. ET, on September 23, 2025, we encourage you to access the meeting site prior to the start time to allow ample time to log into the meeting webcast and test your computer system. Accordingly, the Annual Meeting site will first be accessible to registered stockholders beginning at 8:30 a.m. ET, on September 23, 2025, the day of the Annual Meeting. +All stockholders who register to virtually attend the Annual Meeting will receive an email prior to the Annual Meeting containing the contact details of technical support in the event that they encounter difficulties accessing the virtual meeting or during the meeting. Stockholders are encouraged to contact technical support if they encounter any technical difficulties with the meeting webcast. In the event of any technical disruptions that prevent the chair from hosting the Annual Meeting within 30 minutes of the date and time set forth above, the meeting may be adjourned or postponed. +If you hold shares in “street name,” you must obtain a “legal proxy” from your broker, bank or other nominee in order to virtually attend the Annual Meeting. +Even if you plan to virtually attend the Annual Meeting, we recommend that you vote by proxy in advance as described below so that your vote will be counted if you later decide not to or become unable to virtually attend the Annual Meeting. +What is the purpose of the Annual Meeting? +At the Annual Meeting, stockholders will act upon the proposals described in this Proxy Statement, set forth below: +1. +Election of three director nominees to our Board to serve three-year terms expiring at the annual meeting of stockholders in 2028 or until their successors are duly elected and qualified; +2. +Approval, on an advisory basis, of the compensation of the Company’s named executive officers; +3. +Ratification, on an advisory basis, of the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2025; +4. +Approval of an amendment to our Charter to declassify our Board; +5. +Approval of an amendment to our Charter to eliminate the supermajority stockholder vote requirement to amend certain provisions of our Charter; and +12 +TABLE OF CONTENTS +6. +Approval of an amendment to our Charter to eliminate the supermajority stockholder vote requirement for stockholders to amend our Bylaws. +In addition, we will consider any other matters that are properly presented for a vote at the Annual Meeting. If any other matter is presented at the Annual Meeting upon which a vote may be properly taken, shares represented by all proxy cards received by the Company will be voted with respect thereto at the discretion of the persons named as proxies on the enclosed proxy card. At the time this Proxy Statement was first made available, we knew of no matters that needed to be acted on at the Annual Meeting, other than those discussed in this Proxy Statement. +What are the Board’s recommendations? +The Board recommends that you vote as follows: +• +“ FOR ” the election of Quanterix’s three nominees for director — Myla Lai-Goldman, M.D., Masoud Toloue, Ph.D. and David Walt, Ph.D. — to our Board to serve three-year terms expiring at the annual meeting of stockholders in 2028 or until their successors are duly elected and qualified; +• +“ FOR ” the approval, on an advisory basis, of the compensation of the Company’s named executive officers; +• +“ FOR ” the ratification, on an advisory basis, of the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2025; +• +“ FOR ” the approval of an amendment to our Charter to declassify our Board; +• +“ FOR ” the approval of an amendment to our Charter to eliminate the supermajority stockholder vote requirement to amend certain provisions of our Charter; and +• +“ FOR ” the approval of an amendment to our Charter to eliminate the supermajority stockholder vote requirement for stockholders to amend our Bylaws. +What vote is required to approve each proposal and how are votes counted? +Proposal +Vote Required for Approval +Effect of Abstentions, Withhold Votes and +Broker Non-Votes +Proposal No. 1 +Election of three director nominees to our Board to serve three-year terms expiring at the annual meeting of stockholders in 2028 or until their successors are duly elected and qualified +The three director nominees who receive the most votes (also known as a “plurality” of the votes cast) will be elected. +Under our recently-amended Bylaws, directors shall be elected by the vote of the majority of the votes cast other than in a contested election of directors, in which case directors shall be elected by a plurality vote. As discussed in detail below in “Proposal No. 1 — Election of Directors,” the election of directors at the Annual Meeting is considered to be a contested election (as defined in our Bylaws), therefore, directors shall be elected by a plurality vote. +A “WITHHOLD” vote will not count either for or against the nominee and will have no effect on the outcome of the election of directors. Broker discretionary voting is not permitted. Broker non-votes, if any, will have no effect on the outcome of this proposal. Votes may not be cumulated. +Proposal No. 2 +Approval, on an advisory basis, of the compensation of the Company’s named executive officers +Requires the affirmative vote of a majority of the votes cast affirmatively or negatively for this proposal. +Although this advisory vote is +Abstentions and broker non-votes (if any) will have no effect on the results of this vote. Broker discretionary voting is not permitted. +13 +TABLE OF CONTENTS +Proposal +Vote Required for Approval +Effect of Abstentions, Withhold Votes and +Broker Non-Votes +non-binding, the Compensation Committee of our Board and our Board will review the voting results and may take them into consideration when making future decisions regarding executive compensation. +Proposal No. 3 +Ratification, on an advisory basis, of the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2025 +Requires the affirmative vote of a majority of the votes cast affirmatively or negatively for this proposal. +We are not required to obtain the approval of our stockholders to appoint our independent registered public accounting firm. However, if our stockholders do not ratify the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2025, the Audit Committee of our Board will reconsider its appointment. +Abstentions will have no effect on the results of this vote. Broker discretionary voting may not be permitted. As the proposal to ratify the appointment of an independent registered public accounting firm is considered a routine matter, broker discretionary voting will be permitted, and there will be no broker non-votes with respect to this matter. +Proposal No. 4 +Approval of an amendment to our Charter to declassify our Board +Requires the affirmative vote of the holders of shares of voting stock of Quanterix representing at least seventy-five percent (75%) of the voting power of all of the then-outstanding shares of the capital stock of Quanterix entitled to vote generally in the election of directors, voting together as a single class. +Abstentions and broker non-votes (if any) will have the effect of a vote “AGAINST” this proposal. Broker discretionary voting is not permitted. +Proposal No. 5 +Approval of an amendment to our Charter to eliminate the supermajority stockholder vote requirement to amend certain provisions of our Charter +Requires the affirmative vote of the holders of shares of voting stock of Quanterix representing at least seventy-five percent (75%) of the voting power of all of the then-outstanding shares of the capital stock of Quanterix entitled to vote generally in the election of directors, voting together as a single class. +Abstentions and broker non-votes (if any) will have the effect of a vote “AGAINST” this proposal. Broker discretionary voting is not permitted. +Proposal No. 6 +Approval of an amendment to our Charter to eliminate the supermajority stockholder vote requirement for stockholders to amend our Bylaws +Requires the affirmative vote of the holders of shares of voting stock of Quanterix representing at least seventy-five percent (75%) of the voting power of all of the then-outstanding shares of the capital stock of Quanterix entitled to vote generally in the election of directors, voting together as a single class. +Abstentions and broker non-votes (if any) will have the effect of a vote “AGAINST” this proposal. Broker discretionary voting is not permitted. +14 +TABLE OF CONTENTS +What is a broker non-vote? +In accordance with the rules of the New York Stock Exchange (which apply to brokers who have record ownership of listed company stock, including stock such as ours that is listed on the Nasdaq Stock Market (“Nasdaq”)), brokers generally have authority to vote on “routine” proposals, such as the ratification of auditors, when they have not received instructions from beneficial owners. However, they are precluded from exercising their voting discretion with respect to the election of directors and other non-routine matters. +A “broker non-vote” occurs if your broker cannot vote your shares on a particular matter because it has not received instructions from you and does not have discretionary voting authority on that matter. +At the Annual Meeting, we expect that brokers will have discretionary authority to vote shares on the ratification, on an advisory basis, of the appointment of KPMG LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2025 (Proposal No. 3). We do not expect that brokers will have discretionary authority on the remainder of the proposals, and therefore broker non-votes may occur as to these other proposals if voting instructions are not provided by beneficial owners. +Will my shares be voted if I do not vote? +If your shares are registered in your name or if you have stock certificates, they will not be counted if you do not vote as described above under “ How do I vote and how many votes do I have? ” If your shares are held in “street name” and you do not provide voting instructions to the broker, bank or other nominee that holds your shares as described above, such firm may not have the authority to vote your shares with respect to any of the proposals. Please see “ What is a broker non-vote? ” for more information. Therefore, we encourage you to provide voting instructions to your broker, bank or other nominee. This ensures your shares will be voted at the Annual Meeting and in the manner you desire. +May I change or revoke my proxy? +A stockholder of record who has given a proxy may change or revoke it at any time before the closing of the polls by the inspector of elections at the Annual Meeting. You may change or revoke your proxy in any one of the following ways: +• +by signing and delivering a proxy card with a date later than that of your previously delivered proxy; +• +by re-voting by Internet or by telephone; +• +by notifying our Corporate Secretary in writing at 900 Middlesex Turnpike Building 1, Billerica, Massachusetts 01821 prior to the date of the Annual Meeting that you have revoked your proxy; or +• +by virtually attending the Annual Meeting and voting online. Simply attending the Annual Meeting without affirmatively voting will not, by itself, revoke your proxy. +Your most current vote, whether by telephone, Internet or proxy card, is the one that will be counted. +Please note, however, that if your shares are held in “street name” and you wish to revoke a proxy, you must contact your broker, bank or other nominee to revoke or change any prior voting instructions. A revocation of a proxy submitted through the Internet or by telephone must be received by 11:59 p.m. ET, on September 22, 2025. A revocation submitted through the mail must be received by the close of business on September 22, 2025 in order to be counted. +Whether or not you plan to attend the Annual Meeting, we urge you to sign, date and return the enclosed proxy card in the postage-paid envelope provided, or vote via the Internet or by telephone as instructed on the proxy card. +May I ask questions at the Annual Meeting and, if so, who will be available to answer? +Yes. We will provide our stockholders the opportunity to ask questions and make statements. The question and answer session will be conducted in accordance with certain Rules of Conduct. These Rules of Conduct will be made available at www.cesonlineservices.com/qtrxam_vm during the Annual Meeting and may include certain procedural requirements. +15 +TABLE OF CONTENTS +What happens if the Annual Meeting is adjourned? +Unless a new record date is fixed, your proxy will still be valid and may be used to vote your shares of Common Stock at the adjourned Annual Meeting. You will still be able to change or revoke your proxy until it is used to vote your shares. +Who counts the votes? +Representatives of First Coast Results, Inc. will count the votes and serve as the independent inspector of election at the Annual Meeting. +What is the deadline for voting? +The deadline for voting by telephone or electronically is 11:59 p.m. ET on September 22, 2025. You may vote your shares during the Annual Meeting by following the instructions provided at www.cesonlineservices.com/qtrxam_vm. +Where can I find the voting results of the Annual Meeting? +Voting results will be tabulated and certified by First Coast Results, Inc., the inspector of elections appointed for the Annual Meeting. The preliminary voting results are expected to be announced at the Annual Meeting. The final results will be tallied by the inspector of elections and we will publish preliminary results, or final results if available, in a Current Report on Form 8-K within four business days of the Annual Meeting. If final results are unavailable at the time we file the Form 8-K, then we will file an amended Current Report on Form 8-K to disclose the final voting results within four business days after the final voting results are known. +Who is soliciting proxies for the Annual Meeting with this Proxy Statement and who is paying for the solicitation? +Our Board, on behalf of the Company, is soliciting your proxy to vote your shares of our Common Stock on all matters scheduled to come before the Annual Meeting, whether or not you attend the Annual Meeting. By completing, signing, dating and returning the enclosed proxy card, or by submitting your proxy and voting instructions via the Internet or by telephone, you are authorizing the proxy holders to vote your shares of our Common Stock at the Annual Meeting as you have instructed. +In addition to these proxy materials, our directors and employees may solicit proxies on behalf of our Board in person, by telephone, by fax, by email or by other means of communication. Directors and employees will not be paid any additional compensation for soliciting proxies. +We will pay for the entire cost of this solicitation. +We have engaged Sodali & Co (“Sodali”) to assist in the solicitation of proxies and related advisory services for the Annual Meeting. We estimate that we will pay Sodali a fee of approximately $100,000, plus reimbursement for certain out-of-pocket fees and expenses. We have also agreed to indemnify Sodali against various liabilities and expenses that relate to or arise out of its solicitation of proxies (subject to certain exceptions). We may incur additional fees if we request additional services. +We will ask banks, brokers and other nominees in whose names shares of our Common Stock are registered to furnish the proxy materials, including the enclosed proxy card, the Notice and the 2024 Annual Report to their principals and to obtain authority to execute proxies. We will then reimburse them for their expenses. +What constitutes a quorum for the Annual Meeting? +The presence, in person or by proxy, of the holders of a majority of the voting power of all outstanding shares of our Common Stock entitled to vote at the Annual Meeting is necessary to constitute a quorum at the Annual Meeting. Votes of stockholders of record who are present at the Annual Meeting in person or by proxy, abstentions and broker non-votes are counted for purposes of determining whether a quorum exists. +16 +TABLE OF CONTENTS +Householding of Annual Disclosure Documents +SEC rules concerning the delivery of annual disclosure documents allow us or your broker, bank or other nominee to send a single Notice or, if applicable, a single set of our proxy materials to any household at which two or more of our stockholders reside, if we or your broker, bank or nominee believe that the stockholders are members of the same family. This practice, referred to as “householding,” benefits both you and us. It reduces the volume of duplicate information received at your household and helps to reduce our expenses. The rule applies to our Notices, annual reports, proxy statements and information statements. Once you receive notice from your broker or from us that communications to your address will be “householded,” the practice will continue until you are otherwise notified or until you revoke your consent to the practice. Stockholders who participate in householding will continue to have access to and utilize separate proxy voting instructions. +If your household received a single Notice or, if applicable, a single set of proxy materials this year, but you would prefer to receive your own copy, please contact the Company’s Investor Relations department at https://ir.quanterix.com/investor-resources/contact-ir. +If you do not wish to participate in “householding” and would like to receive your own Notice or, if applicable, set of our proxy materials in future years, follow the instructions described below. Conversely, if you share an address with another stockholder and together both of you would like to receive only a single Notice or, if applicable, set of proxy materials, follow these instructions: +If your shares are registered in your own name, please contact the Company’s Investor Relations department at https://ir.quanterix.com/investor-resources/contact-ir, and inform them of your request. +If a broker, bank or other nominee holds your shares, please contact such broker, bank or other nominee directly and inform them of your request. +Whom should I contact with questions? +If you have any questions or need any assistance in voting your shares, please contact our proxy solicitor: +430 Park Avenue, 14 th Floor +New York, New York 10022 +Stockholders Call Toll Free: (800) 662-5200 +Brokers and Banks may call collect: (203) 658-9400 +Email: qtrx@info.sodali.com +17 +TABLE OF CONTENTS +PROPOSAL NO. 1 +ELECTION OF DIRECTORS +Our Board of Directors currently consists of nine members, classified as follows: (1) Jeffrey Elliott, Karen Flynn and Scott Mendel constitute Class I with a term ending at the 2027 annual meeting of stockholders (the “2027 Annual Meeting”); (2) Myla Lai-Goldman, M.D., Masoud Toloue, Ph.D. and David Walt, Ph.D. constitute Class II with a term ending at this upcoming 2025 Annual Meeting; and (3) William Donnelly, Ivana Magovčević-Liebisch, Ph.D., J.D. and Paul Meister constitute Class III with a term ending at the 2026 annual meeting of stockholders (the “2026 Annual Meeting”). In connection with the closing of our acquisition of Akoya Biosciences, Inc. (“Akoya”) on July 8, 2025, Martin Madaus, Ph.D. and Sarah Hlavinka resigned from our Board and each committee of the Board on which they served, and the Board appointed former Akoya directors, Scott Mendel and Myla Lai-Goldman, M.D., respectively, to fill the open positions. +Currently at each annual meeting of stockholders, directors are elected for a term of three years to succeed those directors whose terms are expiring. If our stockholders vote to approve Proposal No. 4, then we will initiate a phased-in elimination of the classified structure of our Board, and beginning at our 2028 annual meeting of stockholders (the “2028 Annual Meeting”), each director will be elected for a one-year term. +Upon the recommendation of the Nominating and Governance Committee of the Board of Directors, our Board has voted to nominate Myla Lai-Goldman, M.D., Masoud Toloue, Ph.D. and David Walt, Ph.D. for election at the Annual Meeting as Class II directors for a term of three years to serve until the 2028 Annual Meeting and until their respective successors are elected and qualified or until their earlier resignation or removal. Additional information regarding the Board’s director nominees is set forth below. +Our Bylaws provide that directors shall be elected by the vote of the majority of the votes cast other than in a contested election of directors, as defined in our Bylaws, in which case directors shall be elected by a plurality vote. Under our Bylaws, a contested election of directors occurs when (i) the Secretary of the Company receives a notice that a stockholder has nominated or intends to nominate a person for election to the Board in compliance with the requirements for stockholder nominees for director under the Bylaws and (ii) such nomination notice has not been withdrawn by such stockholder as of the last date on which stockholder nominees for director may be submitted in accordance with the Bylaws. +On each of February 28, 2025 and July 10, 2025, Kent Lake Partners LP (together with its affiliates and associates, “Kent Lake”) provided notice to the Corporate Secretary that Kent Lake intended to nominate three candidates for election to our Board at the Annual Meeting. On August 4, 2025, Kent Lake withdrew the notices provided on February 28, 2025 and July 10, 2025. Because Kent Lake withdrew the Nomination Notice subsequent to the last date on which stockholder nominees for director may be submitted for election at the Annual Meeting in accordance with the Bylaws, the election of directors at the Annual Meeting will be conducted under a plurality vote standard. The three nominees for election to the Board at the Annual Meeting who receive the highest number of affirmative votes properly cast will be elected, provided that a quorum is present at the Annual Meeting. Stockholders are not permitted to cumulate their votes for the election of directors. +Unless authority to vote for any of these nominees is withheld, the shares represented by the enclosed proxy card will be voted FOR the election of Myla Lai-Goldman, M.D., Masoud Toloue, Ph.D. and David Walt, Ph.D. as directors. Each of the Board’s director nominees has consented to being named in this Proxy Statement and agreed to serve if elected. However, if any of the Board’s director nominees is unable to serve or for good cause will not serve as a director, the Board may choose a substitute nominee. If any substitute nominees are designated, we will file an amended proxy statement that, as applicable, identifies the substitute nominees, discloses that such nominees have consented to being named in the revised proxy statement and agreed to serve if elected, and includes certain biographical and other information about such nominees required by the rules of the SEC. The persons named as proxies on the enclosed proxy card will vote for the Company’s remaining nominees and substitute nominees chosen by the Board. +Cooperation Agreement +On August 4, 2025, the Company entered into a cooperation agreement (the “Cooperation Agreement”) with Kent Lake, pursuant to which, among other things, (i) the Company agreed to appoint one new +18 +TABLE OF CONTENTS +independent director by December 1, 2025, which director is to be identified through a comprehensive search process in which both Kent Lake and the Board shall have meaningful participation, (ii) the Company agreed to seek approval at the Annual Meeting to declassify the Board and (iii) Company agreed to take all necessary actions to amend the Bylaws prior to the Annual Meeting to adopt a majority voting standard for uncontested director elections, with a plurality voting standard for contested director elections (which amendment to the Bylaws was approved on August 5, 2025). The Cooperation Agreement also contains mutual non-disparagement and no litigation provisions and certain voting commitment and standstill obligations applicable to Kent Lake. +THE BOARD OF DIRECTORS RECOMMENDS A VOTE “ FOR ” THE ELECTION OF EACH OF THE BOARD’S DIRECTOR NOMINEES — MYLA LAI-GOLDMAN, M.D., MASOUD TOLOUE, PH.D. AND DAVID WALT, PH.D. +19 +TABLE OF CONTENTS +MANAGEMENT AND CORPORATE GOVERNANCE +The Board of Directors +Our Charter and our Bylaws provide that our business is to be managed by or under the direction of our Board of Directors. Our Board is divided into three classes, with one class elected at each annual meeting of stockholders to serve for a three-year term. Our Board currently consists of nine members, classified as follows: (1) Jeffrey Elliott, Karen Flynn and Scott Mendel constitute Class I with a term ending at the 2027 Annual Meeting; (2) Myla Lai-Goldman, M.D., Masoud Toloue, Ph.D. and David Walt, Ph.D. constitute Class II with a term ending at this upcoming 2025 Annual Meeting; and (3) William Donnelly, Ivana Magovčević-Liebisch, Ph.D., J.D. and Paul Meister constitute Class III with a term ending at the 2026 Annual Meeting. In connection with the closing of our acquisition of Akoya on July 8, 2025, Martin Madaus, Ph.D. and Sarah Hlavinka resigned from our Board and each committee of the Board on which they served, and the Board appointed former Akoya directors, Scott Mendel and Myla Lai-Goldman, M.D., respectively, as directors. +Our Board accepted the recommendation of our Nominating Committee and voted to nominate Myla Lai-Goldman, M.D., Masoud Toloue, Ph.D. and David Walt, Ph.D. for election at the Annual Meeting for a term of three years to serve until the 2028 Annual Meeting or until their respective successors have been duly elected and qualified. +Set forth in the table and biographies below are the names of our current directors, their ages, their offices in the Company, if any, their principal occupations or employment for at least the past five years, the length of their tenure as directors and the names of other public companies in which such persons hold or have held directorships during the past five years, as of the Record Date. Additionally, information about the specific experiences, qualifications, attributes or skills that led to our Board’s conclusion at the time of filing of this Proxy Statement that each person listed below should serve as a director is provided below. +Name +Age +Position with Quanterix +Masoud Toloue, Ph.D. +45 +President, Chief Executive Officer and Director +William P. Donnelly (1)(3) +64 +Chair of the Board +Jeffrey T. Elliott (2)(3) +47 +Director +Karen A. Flynn (1)(2) +62 +Director +Myla Lai-Goldman, M.D. +67 +Director +Ivana Magovčević-Liebisch, Ph.D., J.D. (1)(2) +58 +Director +Paul M. Meister (3) +72 +Director +Scott Mendel +58 +Director +David R. Walt, Ph.D. (1) +72 +Director +(1) +Member of our Compensation Committee +(2) +Member of our Nominating and Governance Committee +(3) +Member of our Audit Committee +20 +TABLE OF CONTENTS +Skills Matrix +The following skills matrix illustrates the skills and experiences that the Board believes are important for the Company’s current and future business needs and how such skills are represented by each director. +Knowledge, Skills, and Experience +William +Donnelly +Masoud +Toloue, +Ph.D. +Jeffrey +Elliot +Karen +Flynn +Myla Lai- +Goldman, +M.D. +Ivana +Magovčević- +Liebisch, +Ph.D., J.D. +Paul M. +Meister +Scott +Mendel +David +Walt, +Ph.D. +M&A/ Transactional +• +• +• +• +• +• +• +• +Capital Markets/ Finance +• +• +• +• +• +Healthcare Industry +• +• +• +• +• +• +• +• +• +Other Public Co. Board +• +• +• +• +• +• +• +• +R&D/ Scientific +• +• +• +• +Public Co. Executive +• +• +• +• +• +• +• +• +Legal/ Regulatory +• +• +Corporate Governance +• +• +• +• +• +• +Biographies +Masoud Toloue, Ph.D. has served as a member of our Board and as our President and Chief Executive Officer since April 2022. He served as President, Quanterix and Diagnostics from June 2021 to April 2022. Prior to joining us, Dr. Toloue most recently served as Senior Vice President, Diagnostics at PerkinElmer, Inc. (NYSE: RVTY) (“PerkinElmer”), where he led the diagnostics business from June 2019 to June 2021. During his tenure, he grew the diagnostics segment to account for over fifty percent of the company’s total revenue. Before that, Dr. Toloue led PerkinElmer’s Applied Genomics division from August 2016 to June 2019. Dr. Toloue founded and led the next-generation sequencing business at Bioo Scientific Corporation until its acquisition by PerkinElmer in 2016. He also co-founded and led Genohub Inc., where he transformed the company from a supplier of next-generation sequencing matching technology to a leading platform provider for managing sequencing projects globally. Dr. Toloue holds a doctoral degree in molecular cell biology from the University at Buffalo, where he also earned a Bachelor of Science in molecular cell biology, and was a postdoctoral fellow in protein biochemistry at The University of Texas Health Science Center in San Antonio. Dr. Toloue’s qualifications for service as a member of our Board include his extensive experience in the life sciences and diagnostics industries, as well as the perspective he brings as our President and Chief Executive Officer. +William P. Donnelly has served as a member of our Board since August 2023 and has served as Chair of the Board since March 2025. From 2014 to 2018, Mr. Donnelly served as Executive Vice President responsible for finance, investor relations, supply chain and information technology at Mettler-Toledo International Inc. (NYSE: MTD) (“Mettler-Toledo”). Mr. Donnelly served as Mettler-Toledo’s Chief Financial Officer from 1997 to 2002 and from 2004 to 2014 and as division head of Mettler-Toledo’s product inspection and certain lab businesses from 2002 to 2004. Mr. Donnelly served in various senior financial roles, including Chief Financial Officer, of Elsag Bailey Process Automation, NV from 1993 to 1997. Prior to that, he was an auditor with PricewaterhouseCoopers LLP from 1983 to 1993. Mr. Donnelly has been a director of Ingersoll Rand Inc. (NYSE: IR) since May 2017 and was appointed lead director in November 2021. He has also served as a director of TRowe Price Group, Inc. (Nasdaq: TROW) since 2023. Mr. Donnelly received a bachelor’s degree in business administration from John Carroll University. Mr. Donnelly’s qualifications for service as a member of our Board include his expertise in financial strategy and extensive leadership experience with publicly-held industrial and life science companies, including as Chief Financial Officer. +Jeffrey T. Elliott has served as a member of our Board since August 2024. Since September 2024, Mr. Elliott has served as a consultant to The Boston Consulting Group, Inc. He served as Chief Financial Officer of Exact Sciences Corp. (Nasdaq: EXAS) (“Exact Sciences”) from November 2016 to May 2024 and also as Chief Operating Officer from 2021 to 2023. Prior to his appointment as Chief Financial Officer, Mr. Elliott served as Exact Sciences’ Vice President, Strategy and Business Development from June 2016 to +21 +TABLE OF CONTENTS +November 2016. From 2007 to June 2016, Mr. Elliott was with Robert W. Baird & Co. where he was a senior equity research analyst covering healthcare companies, including those in the diagnostics and life science tools industry. Mr. Elliott has served as a director of Sera Prognostics, Inc. (Nasdaq: SERA) since March 2025. Mr. Elliott earned a bachelor’s degree in business administration from the University of Illinois at Urbana-Champaign and an M.B.A. from the University of Chicago Booth School of Business. Mr. Elliott is a Chartered Financial Analyst charter holder. Mr. Elliott’s qualifications for service as a member of our Board include his knowledge and expertise in financial strategy, notably in the diagnostics sector. +Karen A. Flynn has served as a member of our Board since June 2022. Ms. Flynn retired from her position as Chief Commercial Officer of Catalent, Inc. (NYSE: CTLT) (“Catalent”) in September 2022. Ms. Flynn previously served Catalent as President, Biologics and Chief Commercial Officer from January 2020 to October 2021. After retirement, Ms. Flynn served on an interim basis as Catalent’s President, Biomodalities from April 2023 to October 2023. Prior to joining Catalent, Ms. Flynn served as the Senior Vice President and Chief Commercial Officer of West Pharmaceutical Services, Inc. (NYSE: WST) (“West Pharmaceutical”) from 2016 to 2019, having previously served as the company’s President, Pharmaceutical Packaging Systems since 2014. Ms. Flynn has served as a director of Sotera Health Company (Nasdaq: SHC) since November 2023 and Stevanato Group S.p.A. (NYSE: STVN) since May 2024. She also is a member of the Board of Trustees of The Franklin Institute and serves in the Hesburgh Women of Impact mentorship program for the University of Notre Dame. Ms. Flynn is also a director of GermFree Laboratories, Inc. and of Ascend Advanced Therapies Ltd. Previously, Ms. Flynn served as a director of Catalent from September 2022 to January 2024 and Recro Pharma, Inc. from September 2015 to January 2020. Ms. Flynn holds a Master of Science in business administration from Boston University, a master of science in engineering from the University of Pennsylvania and a Bachelor of Science in pre-professional studies from the University of Notre Dame. Ms. Flynn’s qualifications for service as a member of our Board include her experience leading high growth businesses and her extensive background in commercial strategy, strategic planning, innovation and quality management. +Myla Lai-Goldman, M.D. has served as a member of our Board since July 2025. She served as a member of Akoya’s board of directors from September 2021 to July 2025. Dr. Lai-Goldman is the chair of GeneCentric Therapeutics, Inc., a precision medicine company, where she was a co-founder and previously served as Chief Executive Officer and President since June 2011. She is also managing partner of Personalized Science, LLC, a clinical diagnostic consulting company that she founded in 2008. Additionally, Dr. Lai-Goldman is a Venture Partner of Hatteras Venture Partners, a venture capital firm with a focus on biopharmaceuticals, medical devices, diagnostics and related opportunities in human medicine. Previously, Dr. Lai-Goldman was Chief Executive Officer and Chief Scientific Officer of CancerGuide Diagnostics, Inc. (“CancerGuide Diagnostics”). Before joining CancerGuide Diagnostics, she held various roles, including Executive Vice President, Chief Medical Officer and Chief Scientific Officer, at Laboratory Corporation of America Holdings (NYSE: LH) (“Labcorp”) and its predecessor company, Roche Biomedical Laboratories, Inc. (OTCMKTS: RHHBY). Dr. Lai-Goldman has served as a director of West Pharmaceutical (NYSE: WST), a public pharmaceutical company since 2014, NovoPath Inc. since 2022 and Mercy BioAnalytics, Inc. since 2023. Dr. Lai-Goldman spent more than 18 years at Labcorp where she served on Labcorp’s Executive and Management Committees, with strategic and operations responsibilities for three major genomic laboratories comprising more than 700 people. During her tenure at Labcorp, she led all clinical, scientific and medical activities, including the introduction of more than 400 clinical assays. Her experience includes the development of partnerships, licensing and acquisitions. Dr. Lai-Goldman is board-certified in anatomic and clinical pathology, is a recognized author and speaker on clinical diagnostics, and has substantial leadership experience. Dr. Lai-Goldman holds a Bachelor of Arts in biology with a concentration in ecology from the University of Pennsylvania and a Doctor of Medicine from Columbia University Vagelos College of Physicians and Surgeons. Dr. Lai-Goldman’s qualifications for service as a member of our Board include her extensive experience as a physician, researcher and corporate executive in the clinical laboratory and diagnostics industry. +Ivana Magovčević-Liebisch, Ph.D., J.D. has served as a member of our Board since October 2024. She has served as President and Chief Executive Officer of Vigil Neuroscience, Inc. (Nasdaq: VIGL) (“Vigil”) and as a member of their board of directors since July 2020. Prior to Vigil, Dr. Magovčević-Liebisch was Executive Vice President, Chief Business Officer at Ipsen S.A. (OTCMKTS: IPSEY) (“Ipsen”), a pharmaceutical company, from March 2018 to April 2020, where she led the External Innovation, Business +22 +TABLE OF CONTENTS +Development and Alliance Management functions. Prior to Ipsen, Dr. Magovčević-Liebisch was Executive Vice President, Chief Strategy and Corporate Development Officer at Axcella Health Inc. (OTC: AXL) from May 2017 to March 2018, and Senior Vice President, Head of Global Business Development for the specialty drug business at Teva Pharmaceutical Industries Ltd. (NYSE: TEVA) from March 2013 to May 2017. Dr. Magovčević-Liebisch previously worked at Dyax Corp. (acquired by Shire plc (“Shire”), now Takeda Pharmaceutical Company Limited (NYSE: TAK) (“Takeda”)) from April 2001 to March 2013 in management roles of increasing scope and responsibility, including Executive Vice President and Chief Operating Officer, where she launched the company’s first drug, Kalbitor ® for an orphan indication, hereditary angioedema. Dr. Magovčević-Liebisch began her biopharmaceutical career at Transkaryotic Therapies, Inc. (acquired by Shire, now Takeda), where she was Director of Intellectual Property and Patent Counsel from 1998 to 2001. Dr. Magovčević-Liebisch currently serves as a director of Acrivon Therapeutics, Inc. (Nasdaq: ACRV). Previously, she was the Chairperson of the board of directors of Absci Corporation (Nasdaq: ABSI) and served as a director of Aeglea BioTherapeutics, Inc. (now Spyre Therapeutics, Inc. (Nasdaq: SYRE)) and Applied Genetic Technologies Corporation (acquired by Syncona Ltd., now Beacon Therapeutics Holdings Ltd). Dr. Magovčević-Liebisch is also a trustee of the Boston Museum of Science and of the Boston Ballet, and overseer of Beth Israel Deaconess Medical Center. She received a Bachelor of Arts in biology and chemistry from Wheaton College, a Ph.D. in genetics from Harvard University, and a J.D. in high technology law from Suffolk University Law School. Dr. Magovčević-Liebisch’s qualifications for service as a member of our Board include over 25 years of senior management experience in the biotechnology and pharmaceutical industry. +Paul M. Meister has served as a member of our Board since 2013. Mr. Meister is a partner in Novalis LifeSciences LLC, a life science focused venture firm, and is Co-Founder and Chief Executive Officer of Liberty Lane Partners, LLC, a private investment company with diverse investments in healthcare, technology and distribution-related industries. Mr. Meister served as President of MacAndrews & Forbes Inc. from 2014 to 2018. Mr. Meister also served as Executive Vice Chairman of Revlon, Inc., a leading beauty products company, on an interim basis from January 2018 to November 2018, when the Chief Executive Officer of Revlon, Inc. resigned. Mr. Meister previously served as Chairman and Chief Executive Officer of inVentiv Health Inc. (now known as Syneos Health, Inc.), a provider of commercial, consulting, and clinical research services to the pharmaceutical and biotech industries, from 2010 to 2015. Mr. Meister was Chairman of Thermo Fisher Scientific, Inc. (NYSE: TMO), a scientific instruments equipment and supplies company, from November 2006 to April 2007. He was previously an executive officer of Fisher Scientific International, Inc., a predecessor of Thermo Fisher Scientific, Inc., from 1991 to 2006. Mr. Meister has served as a director of Aptiv PLC (NYSE: APTV), a leading global technology and mobility company primarily serving the automotive sector, since 2019; Amneal Pharmaceuticals, Inc. (Nasdaq: AMRX), a global pharmaceutical company, since 2019; and Oaktree Acquisitions Corp III (Nasdaq: OACCU), a company incorporated for the purpose of effecting a business combination with one or more businesses, since 2024. He also previously served as a director of Oaktree Acquisitions Corp from 2019 to 2020, Oaktree Acquisitions Corp II from 2020 to 2022, Scientific Games Corporation (Nasdaq: LNW), which provides customized, end-to-end solutions to the gaming industry, from 2012 to 2020, LKQ Corporation (Nasdaq: LKQ), a distributor of vehicle products, from 1999 to 2018, vTv Therapeutics, Inc. (Nasdaq: VTV), a clinical-stage biopharmaceutical company, from 2015 to 2018 and Revlon, Inc. from 2016 to 2019. Mr. Meister is Co-Chair of the University of Michigan’s Life Sciences Institute External Advisory Board and Chair of the Provost’s Advisory Committee. Mr. Meister has an M.B.A. from Northwestern University and a B.A. from the University of Michigan. Mr. Meister’s qualifications for service as a member of our Board include his financial and investment expertise and his extensive knowledge of the life sciences industry. +Scott Mendel has served as a member of our Board since July 2025. Mr. Mendel served as a member of Akoya’s board of directors from June 2021 to July 2025, including serving as the Chairman from October 2024 to July 2025. He has over 30 years of financial and operational leadership experience. Mr. Mendel served as President and Chief Executive Officer and a member of the board of directors of GenMark Diagnostics, Inc. (“GenMark”), a molecular diagnostics company, from May 2020 until its acquisition by F. Hoffmann-La Roche Ltd. in April 2021, and as President of GenMark following the acquisition until September 2021. From May 2014 to May 2020, Mr. Mendel also served in various roles of ascending responsibility with GenMark, including as interim Chief Executive Officer, Chief Operating Officer and Chief Financial Officer. Prior to joining GenMark, Mr. Mendel served as the Chief Financial Officer of The Active Network, Inc., a global software as a service (SaaS) company that provides technology to organizers of events and activities, from +23 +TABLE OF CONTENTS +March 2010 through its acquisition by the private-equity firm Vista Equity Partners Management, LLC in December 2013. Prior to joining The Active Network, Mr. Mendel held finance positions at General Electric Company (NYSE: GE) (“General Electric”), a diversified technology, media and financial services company, for over 20 years, including Chief Financial Officer from March 2003 to March 2010 for General Electric’s Healthcare IT division, a leading provider of medical technologies and services. Mr. Mendel has served as a director of Pattern Bioscience, Inc., a rapid pathogen identification and antibiotic susceptibility testing company, since May 2024 and Quantum-Si Incorporated (Nasdaq: QSI), a public protein sequencing company, since May 2023, and previously served as a director of Visby Medical, Inc., a diagnostics company. Mr. Mendel earned a Bachelor of Science in finance from Indiana University and an M.B.A. from Northwestern University’s Kellogg School of Management. Mr. Mendel’s qualifications for service as a member of our Board include his financial expertise and experience in the medical technology industry. +David R. Walt, Ph.D. was our founding scientist and has served as a member of our Board since 2007. Since 2017, Dr. Walt has served as Hansjörg Wyss Professor of Biologically Inspired Engineering and Professor of Pathology at Harvard Medical School in the Department of Pathology at the Brigham and Women’s Hospital and as a core faculty member of the Wyss Institute for Biologically Inspired Engineering. He is also a Howard Hughes Medical Institute Professor. From 1981 to 2017 Dr. Walt served in a variety of positions at Tufts University, including University Professor, Professor of Chemistry, Professor of Biomedical Engineering, Professor of Genetics, Professor of Neuroscience, Professor of Cell and Molecular Biology, and Professor of Oral Medicine. Dr. Walt was also the founding scientist of Illumina, Inc. (Nasdaq: ILMN) and served as a member of its board of directors from 1998 to 2016. From 2013 to 2021, Dr. Walt served as a director of Exicure, Inc. (Nasdaq: XCUR), a publicly traded company that develops therapeutics for immuno-oncology, inflammatory diseases and genetic disorders. Dr. Walt also serves as Co-Founder and director of Arbor Biotechnologies, Inc., Protillion Biosciences and Vizgen, Inc. He has received numerous national and international awards and honors for his fundamental and applied work in the field of optical sensors, microwell arrays and single molecule detection. He recently received the National Medal of Technology and Innovation (NMTI), which the president of the United States bestows on individuals who have made exemplary achievements in science, technology and innovation to strengthen the nation’s well-being. He is a member of the U.S. National Academy of Engineering, U.S. National Academy of Medicine, American Philosophical Society, and American Academy of Arts and Sciences and serves as a fellow of the American Institute for Medical and Biological Engineering, the National Academy of Inventors, and the American Association for the Advancement of Science. He has been inducted into the U.S. National Inventors Hall of Fame. Dr. Walt has a Bachelor of Science in Chemistry from the University of Michigan and a Ph.D. in Chemical Biology from Stony Brook University. Dr. Walt’s qualifications for service as a member of our Board include his extensive experience in developing life sciences companies and his expertise in chemistry, diagnostics technologies and biomedical engineering. +Our Board reviewed the materiality of any relationship that each of our directors and director nominees has with Quanterix Corporation, either directly or indirectly, including those described under the caption “ Certain Relationships and Related Person Transactions ” below. Based upon this review, our Board has determined that each of the following directors and director nominees is “independent” under Nasdaq independence standards: William Donnelly, Jeffrey Elliott, Karen Flynn, Myla Lai-Goldman, M.D., Ivana Magovčević-Liebisch, Ph.D., J.D., Scott Mendel, Paul Meister, and David Walt, Ph.D. In addition, the Board had determined that Sarah Hlavinka and Martin D. Madaus, Ph.D., who each served as a director until July 8, 2025, were “independent” under Nasdaq independence standards. +There are no family relationships between or among any of our directors or director nominees. The principal occupation and employment during the past five years of each of our directors and director nominees was carried on, in each case except as specifically identified above, with a corporation or organization that is not a parent, subsidiary or other affiliate of us. Pursuant to the Amended and Restated Agreement and Plan of Merger, dated April 28, 2025, by and between Quanterix and Akoya, former Akoya directors, Myla Lai-Goldman, M.D. and Scott Mendel, were appointed to replace Sarah Hlavinka and Martin D. Madaus, Ph.D., respectively, as Quanterix directors effective as of July 8, 2025, the closing date of our acquisition of Akoya. +There are no legal proceedings to which any of our directors is a party adverse to us or any of our subsidiaries or in which any such person has a material interest adverse to us or any of our subsidiaries. +24 +TABLE OF CONTENTS +Committees of the Board of Directors and Meetings +Meeting Attendance. During 2024, our Board met or acted by written consent fourteen times and the three standing committees of the Board met or acted by written consent a total of 32 times. All incumbent directors attended at least 75% of meetings of the Board and of committees of the Board on which such director served during 2024. Our Board is encouraged, but not required, to attend each annual meeting of our stockholders. Two directors attended our 2024 annual meeting of stockholders (the “2024 Annual Meeting”). +Audit Committee. The Audit Committee of the Board of Directors (the “Audit Committee”) met or acted by written consent fifteen times during 2024. The committee currently consists of three members: Jeffrey T. Elliott (Chairperson), William P. Donnelly and Paul M. Meister. The Audit Committee’s role and responsibilities are set forth in its written charter and include: +• +selecting a firm to serve as the independent registered public accounting firm to audit the Company’s financial statements; +• +ensuring the independence of the independent registered public accounting firm; +• +discussing the scope and results of the audit with the independent registered public accounting firm and reviewing the Company’s interim and year-end operating results with management and the independent registered public accounting firm; +• +establishing procedures for employees to anonymously submit concerns about questionable accounting or audit matters; +• +considering and reviewing the effectiveness of the Company’s internal controls over financial reporting and internal audit functions, if any, with management and the independent registered public accounting firm; +• +reviewing significant accounting and reporting issues, including complex or unusual transactions and highly judgmental areas, recent professional and regulatory pronouncements, and their impact on the Company’s financial statements; +• +reviewing legal or regulatory matters that could have a significant impact on the Company’s financial statements with legal counsel; +• +reviewing material related party transactions and other related party transactions that require disclosure; +• +approving or, as permitted, pre-approving all audit and non-audit services to be performed by the independent registered public accounting firm; +• +preparing the audit committee report required by SEC rules, which is included in the section of this Proxy Statement titled, “ Report of Audit Committee ”; and +• +overseeing Company programs, policies, and procedures related to information security and data protection. +All members of the Audit Committee satisfy the independence standards promulgated by the SEC and Nasdaq, as such standards apply specifically to members of audit committees. Our Board has determined that William P. Donnelly, Jeffrey T. Elliott, and Paul M. Meister each qualify as an “audit committee financial expert,” as that term is defined in rules promulgated by the SEC. The designation of an “audit committee financial expert” does not impose upon such persons any duties, obligations or liabilities that are greater than those generally imposed on each of them as a member of the Audit Committee and the Board, and such designation does not affect the duties, obligations or liabilities of the Board. +A copy of the Audit Committee’s written charter is publicly available on the Company’s website at www.quanterix.com . +Compensation Committee. The Compensation Committee of the Board of Directors (the “Compensation Committee”) met or acted by written consent six times during 2024. The committee +25 +TABLE OF CONTENTS +currently consists of four members: Karen A. Flynn (Chairperson), William P. Donnelly, Ivana Magovčević-Liebisch, Ph.D., J.D. and David R. Walt, Ph.D. The Compensation Committee’s role and responsibilities are set forth in its written charter and include: +• +reviewing and approving, or making recommendations to our Board with respect to, the compensation and other terms of employment of the Company’s executive officers; +• +overseeing the annual process of evaluation of the performance of the Corporation’s management; +• +reviewing and making recommendations with respect to director compensation and benefits; +• +administering the Company’s 2017 Employee, Director and Consultant Equity Incentive Plan (the “2017 Equity Incentive Plan”), 2007 Stock Option and Grant Plan, as amended (the “2007 Plan”), and 2017 Employee Stock Purchase Plan (the “ESPP”); +• +assisting the Board in establishing appropriate incentive compensation and equity-based plans and administering such plans; +• +reviewing compensation policies and practices for all employees to determine whether such policies and practices create risks that are reasonably likely to have a material adverse effect on the Company; and +• +reviewing and discussing the Compensation Discussion and Analysis (“CD&A”) prepared by management and, based on such review and discussions, recommending to the Board that the CD&A be included in the Corporation’s Annual Report on Form 10-K, proxy statements, or any other applicable filing as required by the SEC. +To qualify as independent to serve on the Company’s Compensation Committee, the Nasdaq listing standards require a director not to accept any consulting, advisory, or other compensatory fee from the Company, other than for service on the Board, and that the Board consider whether a director is affiliated with the Company and, if so, whether such affiliation would impair the director’s judgment as a member of the Company’s Compensation Committee. Our Board has concluded that each of Karen A. Flynn, William P. Donnelly, Ivana Magovčević-Liebisch, Ph.D., J.D. and David R. Walt, Ph.D. qualifies as “independent” under applicable rules and regulations of Nasdaq and the SEC. The Compensation Committee has the authority to retain or obtain the advice of such compensation consultants, legal counsel, experts and other advisors as it may deem appropriate in its sole discretion. The Compensation Committee is directly responsible for the appointment, compensation and oversight of its consultants, legal counsel, experts and advisors and has sole authority to approve their fees and retention terms, and the Company provides funding for such fees and related expenses. +The Compensation Committee retained Pay Governance, LLC (“PayGov”) as its independent compensation consultant for 2024. Services provided by PayGov included assistance in reviewing trends in executive compensation, selecting the Company’s compensation peer group and designing the Company’s executive compensation programs. PayGov also assisted the Compensation Committee in obtaining compensation benchmark data and establishing the target compensation levels of the Company’s executive officers. PayGov provides no services to the Company other than those performed on behalf of the Compensation Committee. The Compensation Committee considers the independence of its compensation consultant on an annual basis. A copy of the Compensation Committee’s written charter is publicly available on the Company’s website at www.quanterix.com . +Nominating and Governance Committee. The Nominating and Governance Committee of the Board of Directors (the “Nominating Committee”) met or acted by written consent 11 times during 2024. The committee consists of three members: Ivana Magovčević-Liebisch, Ph.D., J.D. (Chairperson), Jeffrey T. Elliott and Karen A. Flynn. Our Board has determined that all members of the Nominating Committee qualify as “independent” under the Nasdaq rules. The Nominating Committee’s responsibilities are set forth in its written charter and include: +• +identifying, evaluating and recommending candidates for membership on our Board; +• +evaluating the composition, organization and governance of the Board and its committees, and making recommendations to the Board for approval; +26 +TABLE OF CONTENTS +• +reviewing and recommending guidelines and policies on corporate governance; +• +developing, adopting and overseeing the implementation of a Code of Business Conduct and Ethics for all directors, executive officers and employees of the Corporation; and +• +administering the annual Board performance evaluation process, including conducting surveys of director observations, suggestions and preferences. +In 2022, the Nominating Committee proposed, and our Board approved, corporate governance guidelines, which, in conjunction with our Charter, our Bylaws, our committee charters and key Board policies, form the framework for the Company’s governance. +Generally, the Nominating Committee considers director candidates recommended by stockholders as well as from other sources, such as other directors or officers, third-party search firms or other appropriate sources. Once identified, the Nominating Committee evaluates a candidate’s qualifications in accordance with our Nominating and Governance Committee Policy Regarding Qualifications of Directors, which is appended to the Nominating Committee’s written charter. Threshold criteria include personal integrity and sound judgment, business and professional skills and experience, independence, industry knowledge, possible conflicts of interest, diversity, the extent to which the candidate would fill a present need on our Board, and concern for the long-term interests of our stockholders. The Nominating Committee has not adopted a formal diversity policy in connection with the consideration of director nominations or the selection of nominees. However, the Nominating Committee will consider issues of diversity among our Board in identifying and considering director nominees and will strive where appropriate to achieve a diverse balance of backgrounds, perspectives, experiences, ages, genders, ethnicities and countries of citizenship on our Board and its committees. +A stockholder who wishes to propose a candidate for consideration as a nominee for election to our Board must follow the procedures described in our Bylaws and in “ Stockholder Proposals and Nominations for Director ” at the end of this Proxy Statement. In general, persons recommended by stockholders will be considered in accordance with our Policy on Shareholder Recommendation of Candidates for Election as Directors, which is appended to the Nominating Committee’s written charter. Any such recommendation should be made in writing to the Nominating Committee, care of the Company’s Corporate Secretary at our principal office, and should be accompanied by the following information concerning each recommending stockholder and the beneficial owner of the Company’s Common Stock, if any, on whose behalf the nomination is made: +• +all information relating to such person that would be required to be disclosed in a proxy statement filed with the SEC; +• +certain biographical and share ownership information about the stockholder and any other proponent, including a description of any derivative transactions in the Company’s securities; +• +a description of certain arrangements and understandings between the proposing stockholder and any beneficial owner and any other person in connection with such stockholder nomination; and +• +a statement as to whether such stockholder or beneficial owner intends to deliver a proxy statement and form of proxy to holders of voting shares sufficient to carry the proposal. +The recommendation must also be accompanied by the following information concerning the proposed nominee: +• +certain biographical information; +• +all information required to be disclosed in solicitations of proxies for election of directors; +• +certain information about any other security holder of the Company who supports the proposed nominee; +• +a description of all relationships between the proposed nominee and the recommending stockholder or any beneficial owner, including any agreements or understandings regarding the nomination; and +27 +TABLE OF CONTENTS +• +additional disclosures relating to stockholder nominees for directors, including completed questionnaires and disclosures required by the Bylaws. +A copy of the Nominating Committee’s written charter, including its appendices, is publicly available on the Company’s website at www.quanterix.com. +Compensation Committee Interlocks and Insider Participation +None of the members of our Compensation Committee has been one of our officers or employees at any time during the previous three years. None of our executive officers currently serves, or in the past fiscal year has served, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on our Board or Compensation Committee. For a description of any transactions between us and members of our Compensation Committee and affiliates of such members, please see “ Certain Relationships and Related Person Transactions ” below. +Board Leadership Structure and Role in Risk Oversight +Our Board of Directors does not have a policy regarding the separation of the roles of Chief Executive Officer and Chair of the Board (the “Chair”), as our Board believes it is in the best interest of the Company to make that determination based on the position and direction of the Company and the membership of our Board. William P. Donnelly, an independent director under the Nasdaq listing standards, currently serves as Chair of our Board. The Chair of the Board and the other members of our Board work in concert to provide oversight of our management and affairs. Our Board encourages communication among its members and between management and our Board to facilitate productive working relationships. Working with the other members of our Board, the Chair strives to ensure that there is an appropriate balance and focus among key Board responsibilities such as strategic development, review of operations and risk oversight. +Risk is inherent with every business, and how well a business manages risk can ultimately determine its success. Management is responsible for risk management on a day-to-day basis, with our Board overseeing risk management processes directly and through its committees by evaluating the policies and practices utilized by management in assessing and managing risks and providing input on those policies and practices. Members of our senior management team attend our quarterly Board meetings and are available to address any questions or concerns raised by the Board on risk management and any other matters. In addition, our Board regularly receives reports on strategic matters involving Company business. The Audit Committee oversees risk management activities related to financial controls, cybersecurity, and legal and compliance risks, and our full Board receives regular reports from management with respect to cybersecurity risks. The Compensation Committee oversees risk management activities relating to Company compensation policies and practices, and the Nominating Committee oversees risk management activities relating to Board composition and governance-related matters. Each committee reports to our full Board on a regular basis and provides reports with respect to such committee’s risk oversight activities as appropriate. +Board Evaluation Process +Our Board conducts an annual self-evaluation that is intended to assess whether the Board, its committees and their members are functioning effectively and to provide an opportunity to improve performance and effectiveness. As part of the evaluation process for the Board, each director completes a written questionnaire that is designed to solicit feedback on a wide range of topics, including: Board membership and culture; sufficiency of meetings and materials; committees, corporate policies and governance policies; interactions with management; corporate strategy; and risk and risk management. Each standing committee of the Board also completes a questionnaire tailored to the function of the committee. Responses are not attributed to any individual director in order to promote candid feedback. The Nominating Committee is charged with overseeing this process and may supplement written evaluations with interviews or other measures designed to solicit feedback. The results of the self-evaluations are reviewed by the Board and each committee and appropriate steps are taken in partnership with management to implement any agreed-upon improvements. +28 +TABLE OF CONTENTS +Compensation Risk Assessment +Following a review of our compensation policies and practices, our Compensation Committee believes that risks arising from those policies and practices are not reasonably likely to have a material adverse effect on the Company. In reaching this conclusion, our Compensation Committee believes that compensation-related risk is limited by a number of factors, including the following: +• +Our compensation packages include multiple elements, including fixed and variable compensation, the amount and mix of which is appropriate to an employee’s level and role in Quanterix. +• +Our variable compensation programs employ a number of different performance metrics that are aligned with our near-term and strategic objectives and the interests of our stockholders. +• +Our long-term incentive equity awards are designed to align the interests of our employees and management with the interests of our stockholders. +• +We limit the payouts under our annual cash incentive bonus programs to an amount that is appropriate to the recipient’s role in Quanterix. +We believe that, taken as a whole, the various elements of our compensation packages mitigate compensation-related risk by reducing the focus on any single compensation element or performance metric, by encouraging our employees to consider both long- and short-term goals that are aligned with the interests of our stockholders and by discouraging excessive risk in order to reach performance goals or to achieve excessive payouts. +Stockholder Communications with the Board +Generally, stockholders who have questions or concerns should contact our Investor Relations department at https://ir.quanterix.com/investor-resources/contact-ir . However, any stockholder who wishes to communicate with our Board, non-management members of our Board as a group or a specific member of our Board (including the Chair) may do so by written communication addressed to the attention of the Chair of the Board by mail at 900 Middlesex Turnpike, Building 1, Billerica, Massachusetts 01821 or using the “IR Contacts” page of our website at https://ir.quanterix.com/investor-resources/contact-ir . Communications will be reviewed and distributed to the members of our Board unless such communications are unsolicited items, sales materials or other routine items or items unrelated to the duties and responsibilities of the Board or are otherwise determined to be frivolous, irrelevant, threatening, illegal or similarly unsuitable. +Executive Officers +The following table sets forth the name, age, and position(s) of each of our executive officers as of August 1, 2025. We have entered into employment agreements with our executive officers. Dr. Toloue and Ms. Sriram are both at-will employees. See “ Compensation Discussion & Analysis — Employment Agreements with our Named Executive Officers ” and “ Potential Payments upon Termination or Change of Control ” below for additional information about Dr. Toloue’s and Ms. Sriram’s employment agreements. +Name +Age +Positions +Masoud Toloue, Ph.D. +45 +President and Chief Executive Officer +Vandana Sriram +52 +Chief Financial Officer and Treasurer +See “ The Board of Directors ” above for biographical information about Dr. Toloue. +Vandana Sriram joined Quanterix in August 2023 as Chief Financial Officer. Ms. Sriram served as Senior Vice President of Global Finance at Azenta, Inc. (Nasdaq: AZTA) (“Azenta Life Sciences”) from September 2021 to August 2023, where she was responsible for the Controllership, FP&A and segment Chief Financial Officer activities as a member of the leadership team. Prior to Azenta Life Sciences, Ms. Sriram served in a variety of positions at General Electric of increasing responsibility from July 1999 to September 2021, most recently as the head of FP&A for GE Aerospace (f/k/a GE Aviation), a leading provider of commercial and military jet engines and components. Ms. Sriram graduated with a bachelor’s degree in commerce from Delhi University and is a chartered accountant from the Institute of Chartered Accountants of India. She also graduated from the GE Experience Financial Leadership Program and is a registered certified public accountant. +29 +TABLE OF CONTENTS +PROPOSAL NO. 2 +ADVISORY VOTE ON APPROVAL OF EXECUTIVE COMPENSATION +We are seeking your advisory vote as required by the Securities Exchange Act of 1934, as amended (“Exchange Act”) on the approval of the compensation of our named executive officers as described in the Compensation Discussion and Analysis, the compensation tables and related material contained in this Proxy Statement. Because your vote is advisory, it will not be binding on our Compensation Committee or our Board of Directors. However, the Compensation Committee and our Board of Directors will review the voting results and take them into consideration when making future decisions regarding executive compensation. +Our compensation philosophy is designed to align each executive’s compensation with Quanterix’s short-term and long-term performance and to provide the compensation and incentives needed to attract, motivate and retain key executives who are crucial to our long-term success. Stockholders are urged to read the Compensation Discussion and Analysis section of this Proxy Statement, which discusses how our compensation policies and procedures implement our compensation philosophy. The Compensation Committee and our Board of Directors believe that these policies and procedures are effective in implementing our compensation philosophy and in achieving its goals. +In accordance with the rules of the SEC, the following resolution, commonly known as a “Say-on-Pay” vote, is being submitted for a stockholder vote at the 2025 Annual Meeting: +“RESOLVED, that the compensation paid to the named executive officers of Quanterix Corporation, as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the compensation tables and the related material disclosed in this Proxy Statement, is hereby APPROVED.” +The affirmative vote of a majority of the votes cast affirmatively or negatively for this proposal is required to approve, on an advisory basis, this resolution. +We currently hold our advisory vote to approve the compensation of our named executive officers annually. Stockholders also have an opportunity to cast an advisory vote on the frequency of the Say-on-Pay vote. We expect the next advisory vote on the frequency of the Say-on-Pay vote will be at the 2028 Annual Meeting. +OUR BOARD OF DIRECTORS RECOMMENDS A VOTE “ FOR ” THE APPROVAL OF THE COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS. +30 +TABLE OF CONTENTS +COMPENSATION COMMITTEE REPORT +The Compensation Committee of our Board of Directors has reviewed and discussed the Compensation Discussion and Analysis that appears in this Proxy Statement with our management. Based on this review and discussion, the Compensation Committee has recommended to our Board of Directors that the Compensation Discussion and Analysis be included in our Proxy Statement. +Members of the Compensation Committee: +Karen A. Flynn (Chairperson) +William P. Donnelly +Ivana Magovčević-Liebisch, J.D., Ph.D. +David R. Walt, Ph.D. +31 +TABLE OF CONTENTS +COMPENSATION DISCUSSION AND ANALYSIS +This Compensation Discussion and Analysis describes the principal components of the compensation program for our named executive officers. It should be read in conjunction with the other information contained in this Proxy Statement. The following executives were our named executive officers for the fiscal year ended December 31, 2024: +Name +Title +Masoud Toloue, Ph.D. (1) +President and Chief Executive Officer +Vandana Sriram (2) +Chief Financial Officer and Treasurer +(1) +Dr. Toloue became President and Chief Executive Officer on April 25, 2022. +(2) +Ms. Sriram joined the Company as Chief Financial Officer and Treasurer on August 21, 2023. +Executive Summary +Compensation Governance Highlights +What We Do +What We Don’t Do +Reward performance according to pre-established performance goals +Permit hedging or pledging of our stock +Provide a meaningful portion of the compensation of our Chief Executive Officer and named executive officers through performance-based or at-risk compensation +Include automatic compensation increases or equity grants in our employment agreements +Establish stock ownership guidelines for our executive officers +Provide single trigger change of control benefits +The Compensation Committee retains an independent compensation consultant +Provide for excessive cash severance +We hold an annual advisory vote on executive compensation +Provide our executives with golden parachute tax gross-ups +Cap payouts under our compensation plans to discourage inappropriate risk taking by our executives +Maintain executive pension plans or other retirement programs that are not generally available to all employees +Provide for double-trigger change of control severance provisions +Compensation Program Overview +Our Compensation Committee strives to design and implement executive compensation programs that attract, retain, and motivate our executives, while aligning our executives’ interests with our business strategy and the interests of our stockholders. +The compensation of our named executive officers in 2024 consisted of three main elements: +Element +Award Vehicle +Guaranteed vs. +At-Risk +Performance vs. +Time-Based +Base Salary +Cash +Guaranteed +Not applicable +Annual Cash Incentive Bonus +Cash +At-Risk +Performance-Based +Long-Term Incentive Equity +Restricted Stock Units +(“RSUs”) and Stock +Options +At-Risk +Time-Based +32 +TABLE OF CONTENTS +2024 Target Pay Mix +Consistent with our philosophy of aligning executive compensation with our short- and long-term performance, and to foster alignment with stockholder interests, our compensation programs are designed to provide a mix of compensation elements. Although we do not have a pre-established policy or target for allocating between the various compensation elements, the allocation is influenced by data from our compensation peer group, our short- and long-term objectives and factors specific to individual executives. +The following charts depict the allocation of the compensation elements of Dr. Toloue, our Chief Executive Officer, and Ms. Sriram, our Chief Financial Officer, in 2024: +Stockholder Advisory Vote on Executive Compensation +At the 2024 Annual Meeting, our stockholders indicated their support for our executive compensation with 98% of the votes cast being in favor of our executive compensation program. We value the opinions of our stockholders, and, for that reason, we conduct the Say-on-Pay vote every year. +Compensation Overview +Compensation Objectives. The primary objectives of our executive compensation programs are to: +• +attract, retain and motivate the best possible executive talent; +• +ensure executive compensation is aligned with our corporate strategies and business objectives; +• +promote the achievement of key strategic and financial performance measures by linking incentive-based awards to the achievement of measurable corporate and individual performance goals; and +• +align executives’ incentives with the creation of stockholder value. +To achieve these objectives, the Compensation Committee periodically evaluates our executive compensation programs and seeks to set compensation at levels the Compensation Committee believes are appropriate to allow us to compete for executive talent with other companies in our industry. +Compensation Process +Role and Authority of the Compensation Committee . The Compensation Committee oversees our executive compensation programs. In this role, the Compensation Committee reviews and approves the compensation of our executive officers. Additional information about the Compensation Committee, including its composition and responsibilities, can be found under the caption “ Management and Corporate Governance ” in this Proxy Statement. The Compensation Committee’s practice has been to establish fiscal year base salaries and to approve annual and long-term incentive equity awards, on an annual basis. From time-to-time, the Compensation Committee makes other adjustments to individual compensation arrangements due to promotions, changes of responsibilities or other appropriate circumstances. +The Compensation Committee may form and delegate authority to subcommittees as appropriate, including, but not limited to, a subcommittee composed of one or more members of the Board or officers of the Company to grant stock awards under the Company’s equity incentive plans. Under its charter, the +33 +TABLE OF CONTENTS +Compensation Committee has delegated authority to award equity grants to the Equity Award Subcommittee of the Compensation Committee (the “Equity Award Subcommittee”). The Equity Award Subcommittee currently consists of William Donnelly, Karen Flynn and Ivana Magovčević-Liebisch, Ph.D., J.D., all of whom qualify as independent directors and non-employee directors under applicable rules. +Role of Compensation Consultants . As discussed above, the Compensation Committee retained PayGov as its independent compensation advisor for 2024. Services provided by PayGov included assistance in reviewing trends in executive compensation, selecting our compensation peer group and designing our executive compensation programs. PayGov also assisted the Compensation Committee in obtaining compensation benchmark data and establishing the target compensation levels of our executive officers. PayGov provides no services to us other than those performed on behalf of the Compensation Committee. The Compensation Committee considers the independence of its compensation consultant on an annual basis. +Role of Management . The Compensation Committee receives input from our Chief Executive Officer and other members of our senior management team with respect to compensation programs for our executives. The Compensation Committee also receives input from our Chief Executive Officer on the performance of our other executives and on compensation decisions for those executives. The Compensation Committee considers, but is not bound by and does not always accept, the recommendations of our Chief Executive Officer or the other members of our management team with respect to compensation matters. While our Chief Executive Officer and other members of our senior management team typically attend Compensation Committee meetings, the Compensation Committee regularly meets in executive session without management present. Our Chief Executive Officer is not present during voting or deliberations on his compensation. +Bases for Our Compensation Policies and Decisions +As a general guideline, the Compensation Committee seeks to establish the target compensation of our executive officers at or slightly above the median of our peers, assuming that we meet the performance targets established for incentive-based programs. An individual executive’s target compensation may be higher or lower than this guideline based on his or her particular background, experience and performance, market factors and internal equity. These factors are weighed by the Compensation Committee in its judgment, and no one factor takes precedence over the others. +In determining our compensation peer group, the Compensation Committee selects companies that are similar to us based on criteria such as industry, market capitalization, revenue and revenue growth and number of employees. In establishing the fiscal 2024 compensation of our executive officers, the Compensation Committee reviewed our compensation peer group with the assistance of PayGov. The companies in our peer group for the fiscal year ended December 31, 2024 were as follows: +Adaptive Biotechnologies Corporation +OmniAb, Inc. +Castle Biosciences, Inc. +Pacific Biosciences of California, Inc. +Cryoport, Inc. +Quantum-Si Inc. +Cytek Biosciences, Inc. +Seer, Inc. +Maravai LifeSciences Holdings, Inc. +SomaLogic, Inc. +Mesa Laboratories, Inc. +Twist Bioscience Corporation +Nautilus Biotechnology, Inc. +Veracyte, Inc. +Elements of Our Compensation Program +The primary elements of our executive compensation program are base salary, annual cash incentive bonus programs and long-term incentive equity programs. +The Compensation Committee has not adopted a formal policy for allocating between short- and long-term compensation, between cash and non-cash compensation or among the different forms of non-cash compensation. Instead, the Compensation Committee, after reviewing information provided by its compensation consultant and other relevant information, determines what it believes to be the appropriate level and mix of compensation components. +34 +TABLE OF CONTENTS +Base Salary +Base salaries provide fixed compensation to our executives. Generally, we believe that executive base salaries should be competitive with salaries for executives in similar positions at comparable companies, including those in our compensation peer group. Base salaries are reviewed at least annually by the Compensation Committee and are adjusted from time to time to realign salaries with market levels after considering factors such as individual roles and responsibilities, performance, experience, market conditions, and information from our compensation consultant. The 2023 and 2024 base salaries for our 2024 named executive officers were as follows: +Executive +2023 Base Salary +2024 Base Salary +% Change +Masoud Toloue, Ph.D. +$ +600,000 +$ +650,000 +8.3 % +Vandana Sriram (1) +$ +440,000 +$ +446,160 +1.4 % +(1) +Ms. Sriram joined Quanterix as Chief Financial Officer and Treasurer on August 21, 2023, and her 2024 base salary increase was pro-rated based on her start date. +Annual Cash Incentive Bonus Program +Our Annual Cash Incentive Bonus Program is designed to encourage our executives, including our named executive officers, to achieve specified corporate and individual performance objectives. The Annual Cash Incentive Bonus Program emphasizes pay for performance and is intended to align executive compensation with the achievement of specified operating results. The high-level structure of the 2024 Annual Cash Incentive Bonus Program as established by the Compensation Committee is as follows: +For each of our named executive officers, the target award is multiplied by a corporate performance factor and an individual performance factor to arrive at the actual award. +2024 Annual Cash Incentive Bonus Program Target Awards . The Compensation Committee annually sets individual target awards expressed as a percentage of each participant’s base salary earned during the year. The Compensation Committee takes into account market data and annual cash incentive levels for comparable positions at companies in our compensation peer group. For 2024, the Compensation Committee determined the target incentive opportunities shown below for the named executive officers: +35 +TABLE OF CONTENTS +Executive +2024 Target +Award (% of +Base +Salary) +Masoud Toloue, Ph.D. +100 % +Vandana Sriram +70 % +2024 Annual Cash Incentive Bonus Program Corporate Performance Factor . For 2024, the Compensation Committee approved the calculation of the corporate performance factor based on company performance against specified levels of achievement of revenue, non-GAAP gross margin, cash usage and certain corporate strategic objectives, with each factor weighted at 40%, 20%, 10% and 30%, respectively. The threshold level of achievement for each performance element was set at 0.5x of the target level, and the maximum level of achievement was set at 1.5x of the target level. Each performance metric was calculated on a sliding scale between the threshold, target and maximum values, as applicable. +With respect to the non-GAAP gross margin performance element referenced above, performance is measured for these purposes based on gross margin as adjusted to include shipping and handling costs for product sales within cost of product revenue instead of within selling, general and administrative expenses. Non-GAAP gross margin is a financial measure that we consider significant in our business. For a reconciliation of non-GAAP gross margin to gross margin, please see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Non-GAAP Financial Measures” in the Company’s Annual Report on Form 10-K filed with the SEC for the fiscal year ended December 31, 2024. +The strategic objectives for 2024 were: +• +menu expansion through the launch of new assays; +• +progress towards a new platform launch; +• +achievement of certain commercial bookings targets; +• +achievement of revenue targets related to certain strategic initiatives; and +• +full remediation of material weaknesses. +We believe that the performance targets set by the Compensation Committee were established at levels appropriately challenging to attain and that they required considerable and increasing collective effort on the part of our employees, including our named executive officers, to achieve. +Under the Company’s Annual Cash Incentive Bonus Program, the Compensation Committee has discretion to adjust the calculation of Company performance to take account of unanticipated or non-routine events or transactions to ensure the program appropriately rewards performance and prevents unintended windfalls or penalization to participants. After the end of 2024, the Compensation Committee determined that it was appropriate to adjust the calculation of gross margin performance and cash usage to eliminate the effects of certain non-routine events and developments that were not anticipated when the performance targets were initially set, including, for example, expenses associated with the restatement of our financial statements. These adjustments to gross margin and cash usage performance are reflected in the table below. +The threshold, target, and maximum goals and the associated payout factors for each performance metric, and the actual performance and performance factors with respect to each such metric as applicable to the corporate performance factor were as follows: +Weight +Threshold +(0.5x) +Target +(1.0x) +Maximum +(1.5x) +Actual +Performance +Factor +Weighted +Payout +2024 Revenue ($) +40 % +$135 million +$143.5 million +$159 million +$137.4 million +0.62x +25 % +Non-GAAP Gross +Margin (1) +20 % +55% +59% +239.6% +57% (2) +0.69x +14 % +Cash Usage +10 % +$(30.0) million +$(24.0) million +$(14.0) million +$(25.3) million (2) +0.83x +8 % +Strategic Objectives +30 % +Up to 3% each +Up to 6% each +Up to 9% each +28% +0.95x +29 % +Total +100 % +75 % +36 +TABLE OF CONTENTS +(1) +For a reconciliation to GAAP, excluding the adjustments referred to in footnote (2), and other pertinent information, refer to page 60 of the 2024 Annual Report. +(2) +Reflects adjustments approved by the Compensation Committee to eliminate the effect of certain non-routine events and developments that were not anticipated when the performance targets were initially set, as discussed above. +The Committee reviewed our performance against the metrics set forth above and took note of the numerical result of 75% (or 0.75x). The Committee then took into account that we achieved 12% revenue growth in 2024 in a capital-constrained environment and that our revenue growth outperformed the median 2024 revenue growth of our 2025 proxy peer group, which was 2%, and outperformed the 2024 revenue growth of all but one of our 2025 proxy peers in the life sciences tools and services segment. Additionally, the Compensation Committee considered that our revenue growth was superior to that of certain larger companies in the life sciences tools and services segment, which had growth rates that were predominantly flat to declining. In light of our achievements in 2024 and our overall revenue performance during 2024, the Compensation Committee approved a corporate performance factor of 0.9x. +2024 Annual Cash Incentive Bonus Program Individual Performance Factor . The individual performance factor for our named executive officers was capped at 1.1x for a maximum level of achievement. Each of our named executive officers was assigned personal objectives designed to support our corporate goals and objectives and to be consistent with the executive’s roles and responsibilities. +The individual performance factor for each of our named executive officers was determined by the Compensation Committee based on its assessment of the executive’s individual performance, taking into account the executive’s personal objectives and the recommendation of our Chief Executive Officer (for executives other than himself). For 2024, based on its review of our named executive officers’ respective individual performance, the Compensation Committee established the individual performance factors for our named executive officers as follows: Dr. Toloue — 1.0x and Ms. Sriram — 0.91x. +2024 Annual Cash Incentive Program Actual Awards. Based on the above, our named executive officers received cash payouts under our 2024 Annual Cash Incentive Bonus Program as follows. Payments were determined based on each individual executive’s base salary earned in 2024. +Executive +Target Award +(% of Base Salary) +Corporate +Performance +Factor +Individual +Performance +Factor +Payment ($) +Masoud Toloue, Ph.D. +100 % +0.9x +1.0x +$ +585,000 +Vandana Sriram +70 % +0.9x +0.91x +$ +255,784 +2024 Long-Term Incentive Equity Program +A significant portion of our executive compensation is delivered in the form of long-term incentive equity awards. We believe that equity-based grants provide our executives with a strong link to our long-term performance, create an ownership culture and help to align the interests of our executives and stockholders. In addition, the vesting feature of the equity grants furthers our goal of executive retention by providing an incentive to our executives to remain in our employ during the vesting period. All grants of equity-based awards to our executives are approved by the Equity Award Subcommittee and are made pursuant to our 2017 Equity Incentive Plan. In determining the size of equity-based awards to our executives, the Equity Award Subcommittee considers factors such as scope of responsibility, the applicable executive’s performance, the amount of equity previously awarded to the executive, the vesting of such awards, the recommendations of our Chief Executive Officer, equity award levels for similarly situated executives at our peer companies and other market data provided by PayGov, the Compensation Committee’s independent consultant. +We have historically granted equity awards in the form of stock options and RSUs. We believe that stock options, which are granted with an exercise price equal to the fair market value of our Common Stock on the grant date, provide an appropriate long-term incentive for our executives because stock options reward our executives only to the extent our stock price increases over time. Likewise, we believe that RSUs, the value +37 +TABLE OF CONTENTS +of which tends to be subject to less variability than stock options, encourage our executives to take actions that foster long-term stock price appreciation while also encouraging retention. +The Equity Award Subcommittee approved 2024 Long-Term Incentive Equity awards for our named executive officers as set forth in the following table: +Executive +2024 Approximate +Award Value ($) +Number of Stock +Options +Number of RSUs +Masoud Toloue, Ph.D. +$ +5,200,000 +227,262 +67,532 +Vandana Sriram +$ +1,900,000 +83,038 +24,675 +The stock options and RSUs granted vest over a four-year period, with one-fourth of each of the stock options and RSUs vesting on the first anniversary of the grant date and the remainder vesting ratably on a monthly basis over the next three years, provided the recipient remains with us through the applicable vesting date. Stock options were valued according to their Black-Scholes valuation as of the grant date. For our named executive officers, the number of stock options and RSUs awarded was determined on a 70% Option / 30% RSU ratio, which we believe provides an appropriate balance of incentives for our senior executives. +All awards granted to our named executive officers are granted under a stockholder-approved plan and stock options are granted at an exercise price at or above the closing market price of our Common Stock on the date of grant . Equity awards, including options, are not granted in anticipation of the release of material non-public information , and the release of material non-public information is not timed on the basis of option or equity grant dates. +Additional detail regarding awards to the named executive officers can be found in the “ Summary Compensation Table ,” “ 2024 Fiscal Year Grants of Plan-Based Awards ” table and “ Outstanding Equity Awards at 2024 Fiscal Year-End ” table elsewhere in this Proxy Statement. +Other Benefits +We provide a broad-based benefit program to our eligible employees. In 2024, we provided the following benefits to our named executive officers on the same basis as our other eligible employees: +• +health insurance; +• +vacation, holidays and sick days; +• +life insurance and supplemental life insurance; +• +short-term and long-term disability insurance; and +• +a 401(k) retirement plan. +We believe these benefits are generally consistent with those offered by other companies and specifically with those companies with which we compete for employees. +Severance and Change of Control Benefits +Dr. Toloue and Ms. Sriram are entitled to specified benefits in the event of the termination of their employment under specified circumstances, including termination following a change of control of Quanterix. We consider these severance and change of control benefits to be an important component of our executive compensation program and consistent with competitive market practice. We believe that providing appropriate severance and change of control benefits helps to attract and retain qualified executives by mitigating the risks associated with leaving a previous employer and accepting a new position with us, and by reducing financial uncertainty associated with an unexpected termination or termination following a change of control. We have provided more detailed information regarding these benefits, along with estimates of their value under various circumstances, under the caption “ Potential Payments Upon Termination or Change of Control ” below. Our practice has been to structure change of control benefits so that cash benefits are paid only if the employment of the executive is terminated or if the executive resigns for good reason during specified periods before or after a change of control has occurred. Vesting of equity in connection with a change of control will generally only occur if the executive is not provided with a comparable +38 +TABLE OF CONTENTS +replacement equity award or if the employment of the executive is terminated or if the executive resigns for a reason during a specified period before or after the change of control (commonly referred to as double trigger vesting). +Tax Considerations +The Compensation Committee considers tax and accounting implications in its executive compensation determinations, although in some cases, other important considerations may outweigh tax or accounting considerations, and the Compensation Committee maintains the flexibility to compensate its executive officers in accordance with our compensation philosophy. +Section 162(m) of the Internal Revenue Code of 1986, as amended, generally places a limit of $1 million on the amount of compensation that we may deduct as a business expense in any year with respect to certain of our most highly paid executive officers, subject to certain transition relief applicable to certain arrangements in place as of November 2, 2017, and not materially modified after such date. While the Compensation Committee considers the deductibility of compensation as one factor in determining executive compensation, the Compensation Committee retains the discretion to award compensation that is not deductible as it believes that it is in the best interests of our stockholders to maintain flexibility in our approach to executive compensation in order to structure a program that we consider to be the most effective in attracting, motivating and retaining key executives. +If accounting standards change, we may revise certain programs to appropriately align accounting expenses of our equity awards with our overall executive compensation philosophy and objectives. +Insider Trading Policy +The Company has adopted an insider trading and compliance policy governing the purchase, sale, and other dispositions of its securities by the directors, officers, employees and consultants of the Company and has implemented processes for the Company that it believes are reasonably designed to promote compliance with insider trading laws, rules and regulations, and any applicable listing standards. A copy of this insider trading policy has been filed as Exhibit 19.1 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024. +Anti-Hedging and Pledging Policy +Our insider trading and compliance policy prohibits all directors, officers, employees and consultants of the Company and its subsidiaries from engaging in trading in the Company’s securities on a short-term basis (where any shares of Common Stock purchased in the open market must be held for a minimum of six months and ideally longer); short sales of the Company’s securities; use of the Company’s securities to secure a margin or other loan; transactions in straddles, collars or other similar risk reduction or hedging devices; and transactions in publicly-traded options relating to the Company’s securities ( i.e. , options that are not granted by the Company). +Compensation Clawback Policy +As of December 1, 2023, our Board adopted a compensation clawback policy (the “Clawback Policy”) in accordance with Section 10D of the Exchange Act and Nasdaq listing standards. The Clawback Policy applies to our current and former executive officers within the meaning of Rule 10D-1(d) of the Exchange Act (“Subject Executive Officers”). In the event we are required to prepare an accounting restatement due to material noncompliance with any financial reporting requirement under securities laws, including any required accounting restatement to correct an error in previously issued financial statements that is material to the previously issued financial statements, or that corrects an error that is not material to previously issued financial statements but would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period, our policy is to require any such executive officer who received “excess compensation” during the three completed fiscal years preceding the date of preparation of the restatement to repay or forfeit such excess compensation reasonably promptly. “Excess compensation” means any amount of incentive-based compensation (generally, compensation based on stock price or financial measures) received by such executive officer that exceeds the amount of incentive-based +39 +TABLE OF CONTENTS +compensation that otherwise would have been received had it been determined based on the applicable accounting restatement, computed without regard to any taxes paid. The Clawback Policy is administered by our Board. +In connection with its efforts to remediate a material weakness in its internal control over financial reporting relating to the operating effectiveness of internal controls associated with the accounting for inventory valuation, and while performing closing procedures for the third quarter of 2024, management identified an error related to the capitalization of labor and overhead costs in our inventory balances in prior periods (the “Misstatement”). The error was not caused by any override of controls, misconduct, or fraud. The correction of the Misstatement impacted the previously reported amounts of inventory, cost of product revenue, net loss per common share, and all related financial statement subtotals and totals. As a result of the Misstatement, we restated our audited Consolidated Financial Statements as of December 31, 2023 and 2022, and for each of the three years in the period ended December 31, 2023, restated unaudited Consolidated Financial Statements for the quarterly and year-to-date (as applicable) periods of 2022 and 2023 and restated unaudited Consolidated Financial Statements for the quarters ended March 31, 2024 and June 30, 2024 (collectively, the “Restatement”). We concluded that recovery of erroneously awarded compensation was not required under the Clawback Policy as no excess compensation was paid to any Subject Executive Officer for the fiscal year ended December 31, 2023, the only restatement period covered under the Clawback Policy, because use of the restated figures in the accounting restatement for purposes of calculating incentive-based compensation resulted in the same or slightly higher achievement under relevant financial objectives. In other words, the restated financial performance figures used for calculating incentive-based compensation for the fiscal year ended December 31, 2023 were substantially equivalent and in certain respects slightly higher than the original figures that were initially used for such purposes. +Employment Agreements with the Current Named Executive Officers +Dr. Toloue joined Quanterix in June 2021 as President of Quanterix and Diagnostics. Effective April 25, 2022, Dr. Toloue assumed the role of President and Chief Executive Officer and joined our Board. In connection with Dr. Toloue’s new role, the Compensation Committee approved an amended and restated employment agreement, effective as of April 25, 2022. Under the agreement, Dr. Toloue’s initial annualized base salary was $550,000. Dr. Toloue also was eligible for a target award of 100% of his annual base salary under the 2022 Annual Cash Incentive Bonus Program and he was granted a long-term incentive equity award, comprised of stock options and RSUs having an aggregate grant-date fair value of $2,000,000, consisting of 70% stock options and 30% restricted stock units and vesting over a four-year period. Pursuant to this agreement, in the event we terminate Dr. Toloue’s employment without cause or Dr. Toloue terminates his employment with us for good reason, he is entitled to continuation of his then-current base salary and health insurance benefits for twelve months, an amount equal to his target bonus for the applicable year and acceleration of any of the unvested portion of his initial equity award that would have vested during the severance period had he remained employed during such time. If such termination occurs within 90 days prior to, or twelve months following, a change of control, he is also entitled to accelerated vesting of all outstanding but unvested equity. On April 9, 2024, the agreement was amended to provide for salary continuation for 24 months if he is terminated without cause, or if he resigns for good reason within the 90-day period immediately preceding or the twelve-month period immediately following a change of control of the Company. +Ms. Sriram joined Quanterix in August 2023 as Chief Financial Officer pursuant to an employment agreement entered into on August 3, 2023. Under the employment agreement, her initial annualized base salary was $440,000. Ms. Sriram was also eligible to receive an annual performance bonus with a bonus target of 70% of her annual base salary, based on her actual base salary earned during the year. Ms. Sriram also received an initial sign-on equity award of $800,000, consisting of 70% stock options and 30% restricted stock units and vesting over a four-year period. If Ms. Sriram’s employment is terminated by us without cause or she resigns for good reason, she will receive continued payment of her base salary for six months, payment of an amount equal to her prorated annual target bonus for the year of termination, acceleration of the unvested portion of her initial equity award that would have vested on or before August 21, 2024, and health benefits continuation for six months. If Ms. Sriram’s employment is terminated by us without cause or she resigns for good reason within the 90-day period immediately preceding or the twelve-month period immediately following a change of control, in addition to the foregoing she will receive acceleration of +40 +TABLE OF CONTENTS +vesting for all unvested equity. On April 11, 2024, the agreement was amended to provide for (i) salary continuation for twelve months, (ii) payment of target bonus for the year of termination, (iii) acceleration of vesting of all unvested equity and (iv) continuation of health insurance benefits for twelve months, if she is terminated without cause, or if she resigns for good reason within the 90-day period immediately preceding or the twelve month period immediately following a change of control of the Company. +41 +TABLE OF CONTENTS +EXECUTIVE OFFICER AND DIRECTOR COMPENSATION +Summary Compensation Table +The following table shows the total compensation paid or accrued during the fiscal years ended December 31, 2024, 2023 and 2022 to our Chief Executive Officer and Chief Financial Officer. +Name and Principal Position +Year +Salary +($) (1) +Bonus +($) +Stock +Awards +($) (2) +Option +Awards +($) (3) +Non-Equity +Incentive Plan +Compensation +($) (4) +All Other +Compensation +($) (5) +Total +($) +Masoud Toloue, Ph.D. (6) +President and Chief +Executive Officer +2024 +642,848 +— +1,559,989 +3,639,998 +585,000 +5,192 +6,433,027 +2023 +615,385 +— +1,647,658 +2,352,331 +810,000 +9,900 +5,435,274 +2022 +541,346 +— +892,113 +1,107,883 +412,501 +3,183 +2,957,026 +Vandana Sriram (7) +Chief Financial Officer and Treasurer +2024 +446,222 +— +569,993 +1,329,999 +255,784 +15,525 +2,617,523 +2023 +144,083 +— +307,016 +492,989 +151,511 +3,554 +1,099,153 +(1) +Included in 2023 salary is $21,154 received by Dr. Toloue as a cash payout for accrued vacation time as we transitioned to an unaccrued, unlimited time-off policy for exempt employees in 2023. +(2) +These amounts represent the aggregate grant date fair value for RSUs granted during such fiscal year, computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“FASB ASC Topic 718”). +(3) +These amounts represent the aggregate grant date fair value for option awards granted during such fiscal year, computed in accordance FASB ASC Topic 718. A discussion of the assumptions used in determining grant date fair value for the option awards is included in the notes to our consolidated financial statements for the fiscal year ended December 31, 2024, included in the 2024 Annual Report. +(4) +These amounts represent: (i) for 2024, cash amounts to be paid in 2025 for services in 2024 under our 2024 Annual Cash Incentive Bonus Plan, (ii) for 2023, cash amounts paid in 2024 for services in 2023 under our 2023 Annual Cash Incentive Bonus Plan and (iii) for 2022, cash amounts paid in 2023 for services in 2022 under our 2022 Annual Cash Incentive Bonus Plan. +(5) +The amounts represent the dollar value of matching contributions under Quanterix’s qualified 401(k) plan. +(6) +Dr. Toloue became our President and Chief Executive Officer on April 25, 2022. +(7) +Ms. Sriram joined Quanterix on August 21, 2023 as Chief Financial Officer. +42 +TABLE OF CONTENTS +2024 Fiscal Year Grants of Plan-Based Awards +The following table shows information regarding grants of non-equity incentive plan awards and grants of equity awards that we made during the fiscal year ended December 31, 2024 to each of Quanterix’s named executive officers. +Names +(a) +Grant +Date +(b) +Estimated Possible Payouts Under +Non-Equity Incentive Plan Awards (1) +All Other +Stock +Awards: +Number of +Shares of +Stock or +Units (#) (2) +(i) +All Other +Option +Awards: +Number of +Securities +Underlying +Options (#) (3) +(j) +Exercise +or Base +Price of +Option +Awards +($/sh) +(k) +Grant Date Fair +Value of Stock +and Option +Awards ($) (4) +(l) +Threshold +($) +(c) +Target +($) +(d) +Maximum +($) +(e) +Masoud Toloue, Ph.D. +— +— +650,000 +1,072,500 +— +— +— +— +2/2/24 +— +— +— +67,532 +— +— +1,559,989 +2/2/24 +— +— +— +— +227,262 +23.10 +3,639,998 +Vandana Sriram +— +— +312,312 +515,315 +— +— +— +— +2/2/24 +— +— +— +24,675 +— +— +569,993 +2/2/24 +— +— +— +— +83,038 +23.10 +1,329,999 +(1) +Reflects potential payouts under our 2024 Annual Cash Incentive Bonus Program. Amounts are based on individual performance factors with a range from 0.0x to 1.1x and a corporate performance factor with a range from 0.5x to 1.5x under the 2024 Annual Cash Incentive Bonus Program. +(2) +Represents RSUs that vest as to 25% on the first anniversary of the grant date, with the remaining 75% vesting in 36 equal monthly installments thereafter. +(3) +Represents non-qualified options that vest as to 25% on the first anniversary of the grant date, with the remaining 75% vesting in 36 equal monthly installments thereafter. +(4) +These amounts represent the aggregate grant date fair value for RSUs and option awards granted during such fiscal year, computed in accordance with FASB ASC Topic 718. A discussion of the assumptions used in determining grant date fair value for the option awards is included in the notes to our consolidated financial statements for the fiscal year ended December 31, 2024, included in the 2024 Annual Report. +43 +TABLE OF CONTENTS +Outstanding Equity Awards at 2024 Fiscal Year-End +The following table shows grants of stock options and grants of unvested stock awards outstanding on the last day of the fiscal year ended December 31, 2024, including both awards subject to performance conditions and non-performance-based awards, for each of our named executive officers. +Option Awards (1) +Stock Awards (1) +Names +Number of +Securities +Underlying +Unexercised +Options (#) +Exercisable +Number of +Securities +Underlying +Unexercised +Options (#) +Unexercisable +Option +Exercise +Price ($) +Option +Expiration +Date +Number of +Shares +or Units of +Stock +That Have +Not +Vested (#) +Market +Value of +Shares or +Units of +Stock That +Have +Not Vested +($) (2) +Equity +Incentive +Plan +Awards: +Number +of +Unearned +Shares, +Units or +Other +Rights +That +Have Not +Vested (#) +Equity +Incentive +Plan +Awards: +Market or +Payout +Value of +Unearned +Number of +Shares or +Units or +Other +Rights That +Have Not +Vested ($) +Masoud Toloue, Ph.D. +President and Chief Executive Officer +58,645 (3) +26,667 (3) +24.40 +4/25/2032 +— +— +— +— +— +— +— +— +11,441 (3) +121,618 +— +— +118,894 (4) +140,522 (4) +14.82 +2/2/2033 +— +— +— +— +— +— +— +— +60,224 (4) +640,181 +— +— +— +227,262 (5) +23.10 +2/2/2034 +— +— +— +— +— +— +— +— +67,532 (5) +717,865 +— +— +Vandana Sriram +Chief Financial Officer and Treasurer +9,815 (6) +19,640 (6) +24.32 +8/21/2033 +— +— +— +— +— +— +— +— +8,416 (6) +89,462 +— +— +— +83,038 (7) +23.10 +2/2/2034 +— +— +— +— +— +— +— +— +24,675 (7) +262,295 +— +— +(1) +Each of the outstanding equity awards in this table was granted pursuant to the 2017 Equity Incentive Plan. All equity awards vest, subject to continued service of the officer, as to 25% on the first anniversary of the grant date and as to the remaining 75% in 36 equal installments monthly thereafter. +(2) +The market value of the stock awards is determined by multiplying the number of shares by $10.63, the closing price of our Common Stock on Nasdaq on December 31, 2024, the last trading day of our fiscal year. +(3) +On April 25, 2022, Dr. Toloue was granted (i) an option to purchase 85,312 shares of Quanterix Common Stock and (ii) 36,562 RSUs. +(4) +On February 2, 2023, Dr. Toloue was granted (i) an option to purchase 259,416 shares of our Common Stock and (ii) 111,178 RSUs. +(5) +On February 2, 2024, Dr. Toloue was granted (i) an option to purchase 227,262 shares of our Common Stock and (ii) 67,532 RSUs. +(6) +On August 21, 2023, Ms. Sriram was granted (i) an option to purchase 29,455 shares of our Common Stock and (ii) 12,624 RSUs. +(7) +On February 2, 2024, Ms. Sriram was granted (i) an option to purchase 83,038 shares of our Common Stock and (ii) 24,675 RSUs. +Option Exercises and Stock Vested in 2024 +The following table shows information regarding exercises of options to purchase our Common Stock and vesting of RSUs held by each of our named executive officers named in the Summary Compensation Table during the fiscal year ended December 31, 2024. +44 +TABLE OF CONTENTS +Option Awards +Stock Awards (1) +Name +Number of +Shares +Acquired +on Exercise +(#) +Value Realized +on Exercise +($) (2) +Number of +Shares +Acquired +on Vesting +(#) +Value Realized +on Vesting +($) (2) +Masoud Toloue, Ph.D. +— +— +67,136 +1,275,890 +Vandana Sriram +— +— +4,208 +53,973 +(1) +Consists of RSUs. +(2) +The value realized represents the number of RSUs vested multiplied by the closing price of our Common Stock on the date of vesting. Amounts shown in this column do not necessarily represent actual value realized from the sale of the shares acquired upon vesting of RSUs because in many cases the shares are not sold upon vesting but continue to be held by the executive officer. +Pension Benefits +We do not have any qualified or non-qualified defined benefit plans. +Nonqualified Deferred Compensation +We do not have any nonqualified defined contribution plans or other deferred compensation plans. +Potential Payments upon Termination or Change of Control +We have entered into employment agreements with our named executive officers. These agreements establish the named executive officer’s base salary (subject to adjustment), eligibility to participate in the incentive bonus plan, eligibility for annual long-term incentive equity awards and standard employee benefits. +These agreements also provide for certain severance payments and benefits in connection with the named executive officer’s termination of employment under various circumstances, subject, in each case, to the officer’s execution of a general release of claims, in a form acceptable to us, and compliance with certain restrictive covenants. The material terms and conditions of these agreements are summarized above under “ Employment Agreements with the Current Named Executive Officers ”. +Payments upon a Triggering Event +The following table provides information regarding the amounts payable under the agreements described above for termination without cause or by the named executive officer for good reason and assuming the termination occurred on December 31, 2024. +Name +Base Salary +($) +Lump +Sum +Bonus +Payments +($) +Continuation of +Group Health +Plan Benefits +($) +Value of +Equity +Awards +($) +Total +($) +Masoud Toloue, Ph.D. +650,000 +650,000 +31,109 +— +1,331,109 +Vandana Sriram +223,080 +312,312 +15,555 +— +550,947 +The following table provides information regarding the amounts payable under the employment agreements described above for termination without cause or by the named executive officer for good reason following a change of control and assuming the termination occurred on December 31, 2024. +45 +TABLE OF CONTENTS +Name +Base Salary +($) +Lump +Sum +Bonus +Payments +($) +Continuation of +Group Health +Plan Benefits +($) +Value of +Equity +Awards +($) (1) +Total +($) +Masoud Toloue, Ph.D. +1,300,000 +650,000 +31,109 +1,479,664 +3,460,773 +Vandana Sriram +446,160 +312,312 +31,109 +351,757 +1,141,338 +(1) +The exercise prices of all options held by the named executive officers as of December 31, 2024 were in each case higher than $10.63, the closing price of a share of our Common Stock on December 31, 2024, so such options were ascribed no value. The value of RSUs that would have vested due to a triggering event has been calculated by taking $10.63, the closing price of a share of our Common Stock on December 31, 2024, and multiplying it by the number of shares underlying RSUs that would have vested due to the triggering event. +Pay Ratio Disclosure +As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of Regulation S-K, we are providing the following information about the ratio of the annual total compensation of our “median” employee to the annual total compensation of our Chief Executive Officer, Masoud Toloue, Ph.D., for 2024. +For 2024, we have used the same median employee that was identified for 2023 since there has been no change in our employee population or employee compensation arrangements that we believe would significantly impact our pay ratio disclosure. See our 2024 proxy statement for information regarding the process we utilized to identify our “median employee.” +We collected annual total compensation data for our median employee for 2024 using the same methodology we used for our named executive officers as disclosed in the Summary Compensation Table above. The annual total compensation of our median employee for 2024 was $131,871, and our CEO’s compensation as reported in the Summary Compensation Table was $6,433,027, resulting in a ratio of approximately 1:49. +This pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on the methodology described above. Given that companies may use a range of methodologies to determine an estimate of their pay ratio, the estimated ratio reported above should not be used as a basis for comparison between companies. +Pay versus Performance Disclosure +As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(v) of Regulation S-K, Quanterix is providing information about the relationship between the compensation of Quanterix’s current and former principal executive officers (“PEOs”) and other named executive officers and certain Company financial performance measures. +The dollar amounts reported below representing “compensation actually paid” have been calculated in accordance with the requirements of Item 402(v) of Regulation S-K. These figures do not reflect the actual amounts of compensation paid to the officers identified during such fiscal years and are based on equity valuation assumptions required by the SEC, which may not reflect actual amounts realized or realizable at vesting or exercise, as applicable. +46 +TABLE OF CONTENTS +Value of Initial Fixed +$100 Investment +Based On: +Year +Summary +Compensation +Table Total for +E. Kevin +Hrusovsky (1) +($) +Summary +Compensation +Table Total for +Masoud +Toloue, +Ph.D. (2) +($) +Compensation +Actually Paid +to E. Kevin +Hrusovsky (1)(3) +($) +Compensation +Actually Paid +to Masoud +Toloue, +Ph.D. (2)(3) +($) +Average +Summary +Compensation +Table Total for +Non-PEO +NEOs (4) +($) +Average +Compensation +Actually Paid +to Non-PEO +NEOs (4)(5) +($) +Total +Share- +holder +Return +($) +Peer +Group +Total +Share- +holder +Return (6) +($) +Net +Income +(Loss) +($ in +millions) +Revenues +($ in +millions) +2024 +n/a 6,433,027 n/a 1,346,679 2,617,523 1,200,871 44.99 118.20 ( 38.5 ) 137.4 +2023 +n/a 5,435,274 n/a 10,859,697 1,611,175 3,072,778 115.70 118.87 ( 28.4 )* 122.4 +2022 +1,921,523 2,957,026 ( 3,807,926 ) 1,699,747 1,210,719 ( 470,362 ) 58.61 113.65 ( 99.6 )* 105.5 +2021 +4,208,194 n/a 7,594,456 n/a 1,495,417 217,434 179.43 126.45 ( 55.5 )* 110.6 +2020 +3,520,397 n/a 10,186,102 n/a 1,855,751 3,342,174 196.78 126.42 ( 31.5 ) 86.4 +* +As restated. +(1) +Mr. Hrusovsky served as Chief Executive Officer until April 25, 2022 and as Executive Chairman from April 25, 2022 until August 8, 2022. +(2) +Dr. Toloue became President and Chief Executive Officer on April 25, 2022. +(3) +The following adjustments were made to the designated PEO’s compensation to calculate the amounts shown as “compensation actually paid” for the periods indicated: +Year +PEO Name +Summary +Compensation +Table Total +($) +Less Grant +Date Fair +Value of +Equity Awards +Granted +during +Applicable +Year +($) +Plus Year-end +Fair Value of +Equity Awards +Granted +during +Applicable +Year +($) +Plus Change +in Fair Value +as of Year- +end of any +Prior Year +Awards that +Remain +Unvested as +of Year-End +($) +Plus Change +in Fair Value +as of the +Vesting Date +of any Prior +Year Awards +that Vest +during +Applicable +Year +($) +Less Prior Year- +end Fair Value of +Awards Granted +in Prior Year +that Failed to +Meet Vesting +Conditions +during +Applicable Year +($) +Total Equity +Value Reflected +in Compensation +Actually Paid +Calculation +($) +2024 +Masoud Toloue, Ph.D. +6,433,027 5,199,987 2,420,861 ( 1,990,327 ) ( 316,895 ) — ( 5,086,348 ) +2023 +Masoud Toloue, Ph.D. +5,435,274 3,999,989 7,923,070 1,250,477 250,865 — 5,424,423 +2022 +Masoud Toloue, Ph.D. +2,957,026 1,999,996 1,234,526 ( 323,502 ) ( 168,307 ) — ( 1,257,279 ) +2022 +E. Kevin Hrusovsky 1,921,523 1,400,007 864,173 — ( 372,494 ) 4,821,121 ( 5,729,449 ) +2021 +E. Kevin Hrusovsky 4,208,194 3,008,520 1,726,302 50,554 4,617,926 — 3,386,262 +2020 +E. Kevin Hrusovsky 3,520,397 2,185,996 3,790,803 2,779,333 2,281,563 — 6,665,705 +(4) +The dollar amounts represent the average of the amounts reported for the following named executive officers as a group (excluding Quanterix’s PEOs): +2020 +2021 +2022 +2023 +2024 +Amol Chaubal +Masoud Toloue, Ph.D. +Michael Doyle +Michael Doyle +Vandana Sriram +William Geist +Michael Doyle +John Fry +Vandana Sriram +Amol Chaubal +Mark Roskey, Ph.D. +John Fry +William Geist +Dawn Mattoon +Shawn Stetson +47 +TABLE OF CONTENTS +(5) +The following adjustments were made to calculate the amounts shown as “average compensation actually paid” for the periods indicated: +Year +NEO Names +Summary +Compensation +Table Total +(Average) +($) +Less Grant +Date Fair +Value of +Equity Awards +Granted +during +Applicable +Year +(Average) +($) +Plus Year- +end Fair +Value of +Equity Awards +Granted +during +Applicable +Year +(Average) +($) +Plus Change +in Fair Value +as of Year- +end of any +Prior Year +Awards that +Remain +Unvested as +of Year-End +(Average) +($) +Plus Change +in Fair Value +as of the +Vesting Date +of any Prior +Year Awards +that Vest +during +Applicable +Year +(Average) +($) +Less Prior +Year-end +Fair Value of +Awards +Granted in +Prior Year +that Failed to +Meet Vesting +Conditions +during +Applicable +Year +(Average) +($) +Total Equity +Value Reflected +in Average +Compensation +Actually Paid +Calculation +($) +2024 +See footnote (4) +2,617,523 1,899,992 884,543 ( 226,263 ) ( 174,940 ) — ( 1,416,652 ) +2023 +See footnote (4) +1,611,175 1,150,002 1,935,392 589,183 87,031 — 1,461,603 +2022 +See footnote (4) +1,210,719 761,790 375,346 ( 118,480 ) ( 132,737 ) 1,043,421 ( 1,681,081 ) +2021 +See footnote (4) +1,495,417 995,666 504,941 3,663 357,701 1,148,621 ( 1,277,982 ) +2020 +See footnote (4) +1,855,751 260,261 1,382,396 266,491 97,824 — 1,486,423 +(6) +The peer group used is the NASDAQ Biotechnology Index, our peer group used for purposes of Item 201(e) of Regulation S-K. +Comparison of “Compensation Actually Paid” to our Total Shareholder Return (“TSR”) +Our TSR was $196.78, $179.43, $58.61, $115.70 and $44.99 for the fiscal years ended December 31, 2020, 2021, 2022, 2023 and 2024, respectively. Mr. Hrusovsky’s “compensation actually paid” was $10.2 million, $7.6 million and $(3.8) million for the fiscal years ended December 31, 2020, 2021, and 2022, respectively, and Dr. Toloue’s “compensation actually paid” was $1.7 million, $10.9 million and $1.3 million for the fiscal years ended December 31, 2022, 2023 and 2024, respectively. The average “compensation actually paid” to our other named executive officers was $3.3 million, $0.2 million, $(0.5) million, $3.1 million and $1.2 million for the fiscal years ended December 31, 2020, 2021, 2022, 2023 and 2024, respectively. Our TSR decreased from December 31, 2020 to December 31, 2022, increased from December 31, 2022 to December 31, 2023, and decreased from December 31, 2023 to December 31, 2024, and “compensation actually paid” to our principal executive officers and average “compensation actually paid” to our other named executive officers decreased between 2020 and 2022, increased in 2023 to a level commensurate with 2020 and decreased significantly from 2023 to 2024. +Comparison of “Compensation Actually Paid” to Net Income (Loss) +Our net loss was approximately $31.5 million in 2020, $55.5 million in 2021, $99.6 million in 2022, $28.4 million in 2023 and $38.5 million in 2024. Mr. Hrusovsky’s “compensation actually paid” was $10.2 million, $7.6 million and $(3.8) million for the fiscal years ended December 31, 2020, 2021 and 2022, respectively, and Dr. Toloue’s “compensation actually paid” was $1.7 million, $10.9 million and $1.3 million for the fiscal years ended December 31, 2022, 2023 and 2024, respectively. The average “compensation actually paid” to our other named executive officers was $3.3 million, $0.2 million, $(0.5) million, $3.1 million and $1.2 million for the fiscal years ended December 31, 2020, 2021, 2022, 2023 and 2024, respectively. Our net loss increased over the first three years reported, decreased significantly for the fourth year reported and increased in 2024, and “compensation actually paid” to our principal executive officers and average “compensation actually paid” to our other named executive officers decreased between 2020 and 2022, increased in 2023 to a level commensurate with 2020 and decreased significantly from 2023 to 2024. +Comparison of “Compensation Actually Paid” to Company-Selected Measure (Revenues) +Our revenues were approximately $86.4 million in 2020, $110.6 million in 2021, $105.5 million in 2022, $122.4 million in 2023 and $137.4 million in 2024. Mr. Hrusovsky’s “compensation actually paid” was $10.2 million, $7.6 million and $(3.8) million for the fiscal years ended December 31, 2020, 2021, and 2022, +48 +TABLE OF CONTENTS +respectively, and Dr. Toloue’s “compensation actually paid” was $1.7 million, $10.9 million and $1.3 million for the fiscal years ended December 31, 2022, 2023 and 2024, respectively. The average “compensation actually paid” to our other named executive officers was $3.3 million, $0.2 million, $(0.5) million, $3.1 million and $1.2 million for the fiscal years ended December 31, 2020, 2021, 2022, 2023 and 2024, respectively. Our revenues increased 28% from 2020 to 2021, decreased 5% from 2021 to 2022, increased by 16% from 2022 to 2023 and increased by 12% from 2023 to 2024, and “compensation actually paid” to our principal executive officers and average “compensation actually paid” to our other named executive officers decreased between 2020 and 2022, increased in 2023 to a level commensurate with 2020 and decreased significantly from 2023 to 2024. +TSR versus Peer Group TSR +The graph below shows our cumulative TSR over the four-year period ended December 31, 2024 as compared to that of the NASDAQ Biotechnology Index. +TOTAL SHAREHOLDER RETURN* +Between Quanterix Corporation +and the NASDAQ Biotechnology Index +* +$100 invested on 12/31/19 in stock or index, including reinvestment of dividends. Fiscal year ended December 31. +Most Important Financial and Other Performance Measures +We have identified the following financial and other performance measures as being the most important in linking actual compensation paid to executives to our performance for the most recently completed fiscal year: +1. +Revenues +2. +Non-GAAP gross margin +3. +Strategic objectives +With respect to the non-GAAP gross margin performance measure referenced above, performance is measured for these purposes based on gross margin as adjusted to include shipping and handling costs for product sales within cost of product revenue instead of within selling, general and administrative expenses. For a reconciliation of non-GAAP gross margin to gross margin, please see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Non-GAAP Financial Measures” in the Company’s Annual Report on Form 10-K filed with the SEC for the fiscal year ended December 31, 2024. In addition, please see the section captioned “ Compensation Discussion and Analysis-Elements of our Compensation Program-Annual Cash Incentive Bonus Program ” for more information about these measures. +49 +TABLE OF CONTENTS +Director Compensation +The following table shows the total compensation paid or accrued during the fiscal year ended December 31, 2024 to each of our non-employee directors. Directors who are employed by us are not compensated for their service on our Board. +Name +Fees Earned +or Paid in +Cash ($) (6) +Stock +Awards +($) (7) +Option +Awards +($) (7) +All Other +Compensation +($) +Total +($) +Brian J. Blaser (1) +16,216 +120,000 +80,000 +— +216,216 +William P. Donnelly +51,269 +120,000 +80,000 +— +251,269 +Jeffrey T. Elliott (2) +15,968 +240,000 +160,000 +— +415,968 +Karen A. Flynn +56,813 +120,000 +80,000 +— +256,813 +Sarah E. Hlavinka (3) +59,969 +120,000 +80,000 +— +259,969 +Martin D. Madaus, Ph.D. (3) +95,000 +120,000 +80,000 +— +295,000 +Ivana Magovčević-Liebisch, Ph.D., J.D. (4) +11,747 +240,000 +160,000 +— +411,747 +Paul M. Meister +59,969 +120,000 +80,000 +— +259,969 +Laurie J. Olson (5) +23,375 +120,000 +80,000 +— +223,375 +David R. Walt, Ph.D. +47,500 +120,000 +80,000 +— +247,500 +(1) +Mr. Blaser resigned from our Board, effective May 3, 2024. +(2) +Mr. Elliot was appointed to our Board, effective August 19, 2024. +(3) +Ms. Hlavinka and Dr. Madaus resigned from our Board, effective July 8, 2025. +(4) +Dr. Magovčević-Liebisch was appointed to our Board, effective October 2, 2024. +(5) +Ms. Olson resigned from our Board, effective June 3, 2024. +(6) +Mr. Donnelly, Ms. Hlavinka and Mr. Meister elected to receive these fees in the form of our Common Stock in lieu of cash in accordance with our non-employee director compensation policy. See the section titled “ Non-Employee Director Compensation Policy ” below. +(7) +These amounts represent the aggregate grant date fair value for RSUs and option awards granted to each director in the fiscal year ended December 31, 2024, computed in accordance with FASB ASC Topic 718. For Mr. Elliott and Dr. Magovčević-Liebisch, the amounts represent an equity award with an aggregate value of $400,000 upon their appointment to the Board, and for the other directors, the amounts represent their annual equity award with an aggregate value of $200,000. A discussion of the assumptions used in determining grant date fair value for the option awards is included in the notes to our consolidated financial statements for the fiscal year ended December 31, 2024, included in the 2024 Annual Report. The following table shows the aggregate number of stock options held by each of our non-employee directors as of December 31, 2024: +Name +Aggregate Number +of Shares Subject +to Stock Options +William P. Donnelly +18,768 +Jeffrey T. Elliott +25,908 +Karen A. Flynn +38,377 +Sarah E. Hlavinka +54,138 +Martin D. Madaus, Ph.D. +54,138 +Ivana Magovčević-Liebisch, Ph.D., J.D. +27,689 +Paul M. Meister +54,138 +David R. Walt, Ph.D. +54,138 +50 +TABLE OF CONTENTS +Non-Employee Director Compensation Policy +Our non-employee director compensation policy (the “Policy”) effective for 2024 provided for: (A) the annual payment of $40,000 to each of our non-employee directors, or $80,000 in the case of the Chair or Lead Director of the Board; (B) $10,000 to each member of our Audit Committee, or $20,000 in the case of the chairperson of the committee; (C) $7,500 to each member of our Compensation Committee, or $15,000 in the case of the chairperson of the committee; and (D) $5,000 to each member of our Nominating Committee, or $10,000 in the case of the chairperson of the committee; in each case quarterly in arrears. Each non-employee director may elect to receive these payments in the form of our Common Stock in lieu of cash. +The Policy also provides that each non-employee director be granted, on the first trading day of each fiscal year, an annual equity award valued at $200,000, rounded to the nearest whole share. This equity award is comprised of (A) 60% non-qualified stock options to purchase our Common Stock at an exercise price equal to the fair market value as of such grant date and (B) 40% RSUs. The number of options is determined using our standard Black-Scholes valuation methodology. The number of RSUs is determined by dividing total value of the RSUs by the fair market value of our Common Stock on such grant date. The annual stock options and RSUs vest in full on December 31 of the year in which such awards were granted, provided that the non-employee director is still a director on the applicable vesting date. +In addition, under the Policy, each new non-employee director receives an award valued at $400,000 upon his or her initial election or appointment. The award is comprised of (A) 60% non-qualified stock options to purchase our Common Stock at an exercise price equal to the fair market value of our Common Stock as of such grant date and (B) 40% RSUs. The number of options is determined using our standard Black-Scholes valuation methodology. The number of RSUs is determined by dividing total value of the RSUs by the fair market value of our Common Stock on such grant date. The initial stock options vest over three years from the date of grant, with one-third vesting on the first anniversary of the applicable grant date and the remainder vesting over the following two years in 24 successive equal monthly installments at the end of each month until the third anniversary of such grant date, provided that the non-employee director is still a director on the applicable vesting date. The RSUs granted to each new non-employee director vest over a three-year period, with one-third vesting on each of the first, second and third anniversaries of the applicable grant date, provided that the non-employee director is still a director on the applicable vesting date +Effective January 1, 2025, the Policy was amended to provide for the annual payment of $50,000 to each of our non-employee directors, or $95,000 in the case of the Chair or Lead Director of the Board. All other terms of the Policy were unchanged. +We reimburse in full each non-employee director for all reasonable out-of-pocket expenses incurred in attending each meeting of our Board or its committees. Directors may be reimbursed for travel, food, lodging and other expenses directly related to their service as directors. Directors are also entitled to the protection provided by their indemnification agreements and the indemnification provisions in our Charter and Bylaws. +Stock Ownership Guidelines for Non-Employee Directors and Executive Officers +In order to further align the interests of our non-employee directors and executive officers with the interests of our stockholders and to promote our commitment to sound corporate governance, our Board maintains the following stock ownership guidelines for our non-employee directors and executive officers. For those individuals who have served since October 9, 2019, attainment was first required as of October 9, 2024, and all such individuals were in compliance as of such date. +51 +TABLE OF CONTENTS +Stock Ownership Guideline +Non-Employee Director +5x annual base cash retainer +CEO +6x annual base salary +Executive Officers Other than CEO +3x annual base salary +Attainment Period +Five years from the later of +• +Appointment/election to applicable position; and +• +October 9, 2019. +Stock Owned for Purposes of Ownership Guidelines +• +Stock acquired on the open market; +• +Stock acquired through the exercise of options; +• +Restricted stock, RSUs and stock options, whether vested or unvested; and +• +Stock acquired through Company benefit plans. +Holding Requirement +50% of “net of tax” vested shares must be held until the ownership guideline is met. +Administration +The stock ownership guidelines are administered by the Compensation Committee, which evaluates compliance on an annual basis. Non-compliance arising from special circumstances, such as fluctuations in our stock price, changes in a participant’s compensation, and the personal financial situation of a participant, are reviewed by the Compensation Committee. +52 +TABLE OF CONTENTS +EQUITY COMPENSATION PLAN INFORMATION +The following table provides certain aggregate information with respect to all of our equity compensation plans in effect as of December 31, 2024. +(a) +(b) +(c) +Plan category +Number of +securities to be +issued upon +exercise of +outstanding +options, warrants +and rights +Weighted-average +exercise price of +outstanding +options, warrants +and rights +Number of securities +remaining available for +future issuance under +equity compensation +plans (excluding +securities reflected in +column (a)) +Equity compensation plans approved by security holders (1) +4,680,740 (2) +$ +15.18 (2) +4,235,498 (3) +Equity compensation plans not approved by security +holders +— +— +— +Total +4,680,740 (2) +$ +15.18 (2) +4,235,498 (3) +(1) +These plans consist of our 2007 Plan, the 2017 Equity Incentive Plan and the ESPP. +(2) +Consists of (i) 3,564,855 outstanding options with a weighted average exercise price of $19.94 per share and (ii) 1,115,885 outstanding RSUs with a weighted average exercise price of $0 per share. +(3) +Consists of 2,234,283 shares of our Common Stock available under the 2017 Equity Incentive Plan and 2,001,215 shares of our Common Stock available under the ESPP. Does not include an additional 1,542,913 shares of our Common Stock reserved for future issuance under the 2017 Equity Incentive Plan effective January 1, 2024 by operation of the 2017 Equity Incentive Plan’s “evergreen” provision and an additional 385,728 shares of our Common Stock reserved for future issuance under the ESPP effective January 1, 2024 by operation of the ESPP’s “evergreen” provision. +53 +TABLE OF CONTENTS +SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT +The following table sets forth certain information with respect to the beneficial ownership of our Common Stock as of July 31, 2025, for (a) the named executive officers in the Summary Compensation Table on page 42 of this Proxy Statement, (b) each of our directors and director nominees, (c) all of our current directors and executive officers as a group and (d) each stockholder known by us to own beneficially more than 5% of our Common Stock. +Name and Address of Beneficial Owner +Number of Shares +Beneficially Owned +Percentage of Shares +Beneficially Owned (1) +5% and Greater Stockholders (2) +Entities affiliated with Ameriprise Financial, Inc. (3) +3,715,238 +8.0 % +Entities affiliated with Portolan Capital Management, LLC (4) +2,963,397 +6.4 % +Entities affiliated with BlackRock, Inc. (5) +2,843,760 +6.1 % +Entities affiliated with The Vanguard Group (6) +2,525,679 +5.4 % +Named Executive Officers and Directors +Masoud Toloue, Ph.D. (7) +621,944 +1.3 % +Vandana Sriram (8) +59,803 +* +William P. Donnelly (9) +148,050 +* +Jeffrey T. Elliott (10) +13,310 +* +Karen A. Flynn (11) +64,782 +* +Myla Lai-Goldman, M.D. (12) +2,940 +* +Ivana Magovčević-Liebisch, Ph.D., J.D +— +— +Scott Mendel (13) +4,189 +* +Paul M. Meister (14) +355,982 +* +David R. Walt, Ph.D. (15) +1,915,784 +4.1 % +All directors and current executive officers as a group +(10 persons) (16) +3,186,784 +6.8 % +* +Represents beneficial ownership of less than 1% of the outstanding shares of our Common Stock. +(1) +This table is based upon information supplied by executive officers, directors and principal stockholders and in their filings with the SEC. Beneficial ownership is determined in accordance with the rules of the SEC and includes voting or investment power with respect to the securities. Quanterix deems shares of Common Stock that may be acquired by an individual or group within 60 days of July 31, 2025 pursuant to the exercise of options or warrants or the vesting of RSUs to be outstanding for the purpose of computing the percentage ownership of such individual or group, but such shares are not deemed to be outstanding for the purpose of computing the percentage ownership of any other person shown in the table. Except as indicated in footnotes to this table, Quanterix believes that the stockholders named in this table have sole voting and investment power with respect to all shares of our Common Stock shown to be beneficially owned by them based on information provided to Quanterix by these stockholders. Percentage of ownership is based on 46,465,915 shares of our Common Stock outstanding on July 31, 2025. +(2) +This information is based solely upon a review of the Schedule 13G reports or related amendments filed with the SEC with respect to holdings of Quanterix Common Stock. +54 +TABLE OF CONTENTS +(3) +Based on a Schedule 13G filed by Ameriprise Financial, Inc. and affiliated entities with the SEC on February 14, 2025. The address for Ameriprise Financial, Inc. is 145 Ameriprise Financial Center, Minneapolis, MN 55474. The address for Alliance Bernstein L.P. is 501 Commerce Street, Nashville, TN 37203. +(4) +Based on a Schedule 13G/A filed by Portolan Capital Management, LLC and George McCabe, the Manager of Portolan Capital Management, LLC, with the SEC on November 13, 2024. The address for Portolan Capital Management, LLC is 2 International Place, Boston, MA 02110. +(5) +Based on a Schedule 13G/A filed by BlackRock, Inc. with the SEC on January 25, 2024. Includes shares beneficially owned by: BlackRock Advisors, LLC; Aperio Group, LLC; BlackRock (Netherlands) B.V.; BlackRock Institutional Trust Company, National Association; BlackRock Asset Management Ireland Limited; BlackRock Financial Management, Inc.; BlackRock Asset Management Schweiz AG; BlackRock Investment Management, LLC; BlackRock Investment Management (UK) Limited; BlackRock Asset Management Canada Limited; BlackRock Investment Management (Australia) Limited; BlackRock Fund Advisors; and BlackRock Fund Managers Ltd. BlackRock, Inc. is a parent holding company or control person and claims sole dispositive power for 3,190,625 shares and sole voting power for 3,111,606 shares. The address for BlackRock, Inc. is 50 Hudson Yards, New York, NY 10001. +(6) +Based on a Schedule 13G filed by The Vanguard Group with the SEC on February 13, 2024. The Vanguard Group claims sole dispositive power for 1,991,144 shares, shared dispositive power for 63,889 shares and shared voting power for 33,420 shares. The address for The Vanguard Group is 100 Vanguard Blvd., Malvern, PA 19355. +(7) +Consists of 283,395 shares of our Common Stock, 330,344 shares of our Common Stock issuable upon the exercise of stock options exercisable within 60 days of July 31, 2025 and 8,205 shares of our Common Stock issuable upon the vesting of RSUs within 60 days of July 31, 2025 held by Dr. Toloue. +(8) +Consists of 10,055 shares of our Common Stock, 48,194 shares of our Common Stock issuable upon the exercise of stock options exercisable within 60 days of July 31, 2025 and 1,554 shares of our Common Stock issuable upon the vesting of RSUs within 60 days of July 31, 2025 held by Ms. Sriram. +(9) +Consists of 130,343 shares of our Common Stock, 14,989 shares of our Common Stock issuable upon the exercise of stock options exercisable within 60 days of July 31, 2025 and 2,718 shares of our Common Stock issuable upon the vesting of RSUs within 60 days of July 31, 2025 held by Mr. Donnelly. +(10) +Consists of 9,355 shares of our common stock issuable upon the exercise of stock options exercisable within 60 days of July 31, 2025 and 3,955 shares of our common stock issuable upon the vesting of RSUs within 60 days of July 31, 2025 held by Mr. Elliott. +(11) +Consists of 26,405 shares of our Common Stock and 38,377 shares of our Common Stock issuable upon the exercise of stock options exercisable within 60 days of July 31, 2025 held by Ms. Flynn. +(12) +Consists of 2,940 shares of our Common Stock held by Dr. Lai-Goldman. +(13) +Consists of 4,189 shares of our Common Stock held by Mr. Mendel. +(14) +Consists of 301,844 shares of our Common Stock and 54,138 shares of our Common Stock issuable upon the exercise of stock options exercisable within 60 days of July 31, 2025 held by Mr. Meister. +(15) +Consists of 1,861,646 shares of our Common Stock and 54,138 shares of our Common Stock issuable upon the exercise of stock options exercisable within 60 days of July 31, 2025 held by Dr. Walt. Does not include shares of our Common Stock held by The David R. Walt 2008 Irrevocable Family Trust (the “Walt Trust”), of which Dr. Walt’s spouse is trustee and has sole voting and investment power over the shares held by the Walt Trust. +(16) +See footnotes 7 through 15. +55 +TABLE OF CONTENTS +PROPOSAL NO. 3 +RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +The Audit Committee appointed KPMG LLP as our independent registered public accounting firm to audit our financial statements for the fiscal year ending December 31, 2025. The Board of Directors proposes that the stockholders ratify this appointment. Ernst & Young LLP audited our financial statements for the fiscal year ended December 31, 2024 and prior years. See “ Additional Information Regarding Our Independent Registered Public Accounting Firm ” below for additional information regarding our change in auditors. We expect that representatives of KPMG LLP and Ernst & Young LLP will be present at the Annual Meeting, will be able to make a statement if they so desire and will be available to respond to appropriate questions. +In deciding to appoint KPMG LLP, the Audit Committee reviewed auditor independence issues and existing commercial relationships with KPMG LLP and concluded that KPMG LLP has no commercial relationship with the Company that would impair its independence for the fiscal year ending December 31, 2025. +In the event the stockholders do not ratify the appointment of KPMG LLP as our independent registered public accounting firm, the Audit Committee will reconsider its appointment. +The affirmative vote of a majority of the votes cast affirmatively or negatively for this proposal is required to ratify the appointment of our independent registered public accounting firm. +THE BOARD OF DIRECTORS RECOMMENDS A VOTE “ FOR ” THE RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR OUR FISCAL YEAR ENDING DECEMBER 31, 2025. +56 +TABLE OF CONTENTS +REPORT OF AUDIT COMMITTEE +The Audit Committee of the Board of Directors, which consists entirely of directors who meet the Nasdaq independence and experience requirements, has furnished the following report: +The Audit Committee assists the Board of Directors in overseeing and monitoring the integrity of the Company’s financial reporting process, compliance with legal and regulatory requirements and the quality of internal and external audit processes. The Audit Committee’s role and responsibilities are set forth in its charter adopted by the Board of Directors, which is available on our website at www.quanterix.com . The Audit Committee reviews and reassesses its charter annually and recommends any changes to the Board of Directors for approval. The Audit Committee is responsible for overseeing our overall financial reporting process, and for the appointment, compensation, retention, and oversight of the work of Ernst & Young LLP (“EY”). In fulfilling its responsibilities for the financial statements for the fiscal year ended December 31, 2024, the Audit Committee took the following actions: +• +reviewed and discussed the audited financial statements for the fiscal year ended December 31, 2024 with management and EY, our independent registered public accounting firm; +• +discussed with EY the matters required to be discussed in accordance with Auditing Standard No. 1301 —  Communications with Audit Committees ; and +• +received written disclosures and a letter from EY regarding its independence as required by the Public Company Accounting Oversight Board regarding its communications with the Audit Committee. The Audit Committee and EY further discussed EY’s independence. +Based on the Audit Committee’s review of the audited financial statements and discussions with management and EY, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024 for filing with the SEC. +Members of the Audit Committee: +William P. Donnelly +Jeffrey T. Elliott +Sarah E. Hlavinka* +Martin D. Madaus, Ph.D.* +Paul M. Meister +* +Sarah E. Hlavinka and Martin D. Madaus, Ph.D. were members of the Audit Committee until they resigned from the Board and its committees effective on July 8, 2025, the closing date of the Company’s acquisition of Akoya. +57 +TABLE OF CONTENTS +DELINQUENT SECTION 16(A) REPORTS +Our records reflect that all reports required to be filed with the SEC pursuant to Section 16(a) of the Exchange Act were filed on a timely basis; except for the following: (i) a gift of 1,000 shares of our Common Stock by David Walt to a family member on October 12, 2022 that was required to have been reported on a Form 5 by February 14, 2023 was not timely filed, (ii) a gift of 1,000 shares of our Common Stock by David Walt to a family member on March 9, 2023 that was required to have been reported on a Form 4 by March 13, 2023 was not timely filed, and (iii) the purchase of 47,000 shares of our Common Stock by David Walt on August 20, 2024 that was required to have been reported on a Form 4 by August 22, 2024 was not timely filed. All such transactions were reported on a Form 4 filed by David Walt on September 17, 2024. +58 +TABLE OF CONTENTS +CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS +Since January 1, 2024, we have engaged in the following transactions with our directors, executive officers and holders of more than 5% of our Common Stock, which we refer to as our principal stockholders, and affiliates, immediate family members, or other related entities of our directors, executive officers and principal stockholders. We believe that all of these transactions were on terms as favorable as could have been obtained from unrelated third parties. +We entered into a license agreement with Tufts University in 2007, as amended in 2013, 2017 and 2020, pursuant to which we obtained an exclusive, worldwide license to our core SIMOA technology, and have entered into additional license agreements with Tufts to certain related technology. David R. Walt, Ph.D., one of our directors, founding scientist and an inventor of the SIMOA technology, previously served as a professor at Tufts University. Under these licenses, we are required to pay Tufts University royalties on net sales of licensed products and services as well as a portion of our applicable sublicense revenues. During the year ended December 31, 2024, we recorded royalty expense of approximately $2.1 million under these licenses. Tufts University pays a portion of the royalties and license payments received from us to Dr. Walt pursuant to an arrangement between Tufts University and Dr. Walt, the amount of which is determined on a formulaic basis. +In August 2022, we entered into a license agreement with Harvard University related to immunoassay technology developed by Dr. Walt at Harvard and Brigham and Women’s Hospital. In connection with entering into this agreement, we paid Harvard an upfront fee of $625,000 in 2022. Under this license, we are required to pay Harvard royalties on net sales of licensed products and services as well as a portion of our applicable sublicense revenues. During the year ended December 31, 2024, we recorded no royalty expense under this license. Harvard is obligated to pay a portion of the payments received from us to Dr. Walt pursuant to an arrangement between Harvard and Dr. Walt. We also sell products and services to laboratories affiliated with Harvard and Brigham and Women’s Hospital that are overseen by Dr. Walt. During the year ended December 31, 2024, we recorded revenue from these sales of approximately $2.2 million. +Indemnification Agreements with Officers and Directors and Directors’ and Officers’ Liability Insurance +We have entered into indemnification agreements with each of our executive officers and directors. The indemnification agreements, our Charter and our Bylaws require us to indemnify our directors to the fullest extent not prohibited by Delaware law. Subject to certain limitations, our Bylaws also require us to advance expenses incurred by our directors and officers. +The 2007 Plan and the 2017 Equity Incentive Plan also provide that our directors (and in the case of the 2017 Equity Incentive Plan, our employees) will not be liable for any act, omission, interpretation, construction or determination made in good faith in connection with the respective plan, and the members of our Board and any committee administering the plan will be entitled to indemnification and reimbursement by us in respect of any claim, loss, damage or expense (including reasonable attorneys’ fees) arising or resulting therefrom to the fullest extent permitted by law and/or under any directors’ and officers’ liability insurance coverage which may be in effect from time to time. +We also maintain a general liability insurance policy which covers certain liabilities of directors and officers of the Company arising out of claims based on acts or omissions in their capacities as directors or officers. +Policies and Procedures for Related Party Transactions +Pursuant to its charter, our Audit Committee is responsible for reviewing and approving, prior to our entry into any such transaction, all transactions reportable by us under Item 404 of Regulation S-K in which we are a participant and in which any parties related to us, including our executive officers, our directors, beneficial owners of more than 5% of our securities, immediate family members of the foregoing persons and any other persons whom our Board determines may be considered related persons under Item 404 of Regulation S-K, has or is expected to have a direct or indirect material interest. +In reviewing and approving such transactions, the Audit Committee will obtain, or will direct our management to obtain on its behalf, all information that the Audit Committee believes to be relevant and +59 +TABLE OF CONTENTS +important to a review of the transaction prior to its approval. Following receipt of the necessary information, a discussion will be held of the relevant factors if deemed to be necessary by the Audit Committee prior to approval. If a discussion is not deemed to be necessary, approval may be given by written consent of the Audit Committee. This approval authority may also be delegated to the chair of the Audit Committee in some circumstances. No related person transaction will be entered into prior to the completion of these procedures. +The Audit Committee or its chair, as the case may be, will approve only those related person transactions that are determined to be in, or not inconsistent with, the best interests of us and our stockholders, taking into account all available facts and circumstances as the Audit Committee or the chair determines in good faith to be necessary in accordance with principles of Delaware law generally applicable to directors of a Delaware corporation. These facts and circumstances will typically include, but not be limited to, the benefits of the transaction to us; the impact on a director’s independence in the event the related person is a director, an immediate family member of a director or an entity in which a director is a partner, stockholder or executive officer; the availability of other sources for comparable products or services; the terms of the transaction; and the terms of comparable transactions that would be available to unrelated third parties or to employees generally. No member of the Audit Committee will participate in any review, consideration or approval of any related person transaction with respect to which the member or any of his or her immediate family members has an interest. +60 +TABLE OF CONTENTS +PROPOSAL NO. 4 +APPROVAL OF AN AMENDMENT TO OUR CHARTER TO DECLASSIFY OUR BOARD +Overview +As part of our continuous evaluation of corporate governance practices, our Board regularly reviews our governing documents and considers possible changes that are in the best interests of the Company and our stockholders. While we believe our current governance structure has served our stockholders well, having considered feedback from our stockholders and current governance best practices, we have decided that it is in the best interests of the Company and our stockholders to transition to a declassified board structure. This decision follows over a year of engagement with our stockholders after the 2024 Annual Meeting and numerous discussions by our Board about our corporate governance practices and our stockholders’ views on such practices. +Proposal +This Proposal No. 4 seeks to provide for a phased-in elimination of our classified board structure, which, when complete, would result in all directors standing for election annually for one-year terms. Currently, our Charter provides that the Board is divided into three classes, with members of each class serving for staggered three-year terms. +After considering the advantages and disadvantages of the classification of the Board at this time, our Board has approved, and recommends that stockholders approve, amendments to our Charter to eliminate the classified board structure and provide for annual election of directors, to be phased in as follows: (1) at the Annual Meeting, stockholders will have the opportunity to vote on the proposed Charter amendment that would implement phased-in declassification, with the Board recommending and soliciting in favor of the passage of the Charter amendment; (2) if such Charter amendment is approved at the Annual Meeting, then the directors to be elected at our 2026 Annual Meeting and thereafter will be elected to one-year terms expiring at the following annual meeting of stockholders; (3) directors elected prior to the 2026 Annual Meeting will serve out their remaining terms, including the directors standing for election at this Annual Meeting for three-year terms expiring at the 2028 Annual Meeting. As a result, beginning with the election of directors at the 2028 Annual Meeting, all directors will be up for election to serve for one-year terms, and the classification of the Board will terminate. In addition, the proposed Charter amendment will provide, consistent with Delaware law, that as long as the Board is classified (that is, until the election of directors to be held at the 2028 Annual Meeting), directors may be removed only for cause. +The proposed Amended and Restated Certificate of Incorporation (the “Amended and Restated Charter”), marked to show all changes proposed to Article SIXTH of the Charter under this Proposal No. 4 against the current text of the Charter, is attached to this Proxy Statement as Appendix A. We would file the Amended and Restated Charter (subject to revision as described under “Partial Stockholder Approval of Charter Amendment Proposals” if our stockholders do not approve each of Proposal Nos. 4, 5 and 6 at the Annual Meeting) promptly following the Annual Meeting if our stockholders approve this Proposal No. 4. Certain conforming changes will be required to be made to our Bylaws, contingent upon the effectiveness of the proposed Amended and Restated Charter. If this Proposal No. 4 is approved, the Board will adopt the conforming changes to the Bylaws (which do not require stockholder approval), with such changes as the Board may approve consistent with the Amended and Restated Charter. +For the reasons discussed above, the Board believes it is in the best interests of the Company and our stockholders at this time to implement a phased-in elimination of the classified structure of our Board. +Vote Required for Approval +The affirmative vote of at least 75% of the voting power of the then-outstanding shares of voting stock of the Company is required to approve this Proposal No. 4. If this Proposal No. 4 is approved by the requisite stockholder vote, then the proposed Amended and Restated Charter (subject to revision as described under “Partial Stockholder Approval of Charter Amendment Proposals”) will be filed. +61 +TABLE OF CONTENTS +THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE PROPOSAL TO AMEND OUR CHARTER TO DECLASSIFY OUR BOARD. +PROPOSAL NO. 5 +APPROVAL OF AN AMENDMENT TO OUR CHARTER TO ELIMINATE THE SUPERMAJORITY STOCKHOLDER VOTE REQUIREMENT TO AMEND CERTAIN PROVISIONS OF OUR CHARTER +PROPOSAL NO. 6 +APPROVAL OF AN AMENDMENT TO OUR CHARTER TO ELIMINATE THE SUPERMAJORITY STOCKHOLDER VOTE REQUIREMENT FOR STOCKHOLDERS TO AMEND OUR BYLAWS +Overview +Our Board is committed to best-in-class corporate governance and regularly considers and implements governance improvements. As part of this effort, our Board has determined that amending the Company’s Charter to eliminate the supermajority stockholder vote requirement to amend certain provisions of our Charter and for stockholders to amend our Bylaws are in the best interests of the Company and its stockholders. +In making this determination, our Board carefully considered the advantages and disadvantages of supermajority stockholder vote requirements. Supermajority stockholder vote requirements are intended to facilitate corporate governance stability by requiring broad stockholder consensus to effect certain changes. However, evolving corporate governance practices have come to view provisions such as those we propose to eliminate as conflicting with principles of good corporate governance — their elimination in a company’s organizational documents increases a board’s accountability to stockholders and provides stockholders with greater ability to participate in the governance of a company. +The Board has determined that, unless otherwise required by Delaware law, the appropriate voting standard to replace the supermajority stockholder vote requirements referenced above is a majority of the shares outstanding. Our Board believes that adopting this standard in place of the supermajority stockholder vote currently required to amend certain provisions of our Charter and for stockholders to amend our Bylaws balances the opportunity for stockholders to participate meaningfully in the governance of the Company with the desire to protect the interests of all stockholders from action that may be in the interest of only a small percentage of stockholders. +Accordingly, the Board has unanimously adopted and is submitting for stockholder approval amendments to our Charter that would eliminate the supermajority stockholder vote requirement to amend certain provisions of our Charter and for stockholders to amend our Bylaws. +Proposal No. 5 +Current Stockholder Vote Requirement +Article TENTH of our Charter provides that the affirmative vote of the holders of the holders of at least 75% of the voting power of the then-outstanding shares of voting stock of the Company shall be required to amend, alter or repeal, or adopt any provision inconsistent with, Articles FIFTH (management), SIXTH (election and removal of directors), SEVENTH (amendment of our Bylaws), EIGHTH (indemnification), NINTH (limitation of liability), TENTH (amendment of our Charter), ELEVENTH (issuance of rights respecting stock) or TWELFTH (exclusive forum) of the Charter. +Text and Legal Effect of the Proposed Amendment +If this Proposal No. 5 is approved, Article TENTH of the Charter will be amended to reduce the stockholder vote requirement for amendment, alteration or repeal, or adoption of the referenced provisions of the Charter to an affirmative vote of a majority of the voting power of the then-outstanding shares of voting stock of the Company, which is the lowest approval standard permitted by the Delaware General Corporation Law. +62 +TABLE OF CONTENTS +The proposed Amended and Restated Charter, marked to show all changes proposed to Article TENTH of the Charter under this Proposal No. 5 against the current text of the Charter, is attached to this Proxy Statement as Appendix A. We would file the Amended and Restated Charter (subject to revision as described under “Partial Stockholder Approval of Charter Amendment Proposals” if our stockholders do not approve each of Proposal Nos. 4, 5 and 6 at the Annual Meeting) promptly following the Annual Meeting if our stockholders approve this Proposal No. 5. The current provisions of Article TENTH of the Charter and the proposed amendment to Article TENTH of the Charter described above are qualified in their entirety by reference to the actual text as set forth in Appendix A. +Vote Required for Approval +The affirmative vote of at least 75% of the voting power of the then-outstanding shares of voting stock of the Company is required to approve this Proposal No. 5. If this Proposal No. 5 is approved by the requisite stockholder vote, then the proposed Amended and Restated Charter (subject to revision as described under “Partial Stockholder Approval of Charter Amendment Proposals”) will be filed. +THE BOARD RECOMMENDS A VOTE “ FOR ” THE APPROVAL OF AN AMENDMENT TO OUR CHARTER TO ELIMINATE THE SUPERMAJORITY STOCKHOLDER VOTE REQUIREMENT TO AMEND CERTAIN PROVISIONS OF OUR CHARTER. +Proposal No. 6 +Current Stockholder Vote Requirement +Article SEVENTH of our Charter provides that the affirmative vote of the holders of at least 75% of the voting power of the then-outstanding shares of voting stock of the Company shall be required for the stockholders to adopt, amend or repeal any provision of the Bylaws of the Company. +Text and Legal Effect of the Proposed Amendment +If this Proposal No. 6 is approved, Article SEVENTH of the Charter will be amended to reduce the stockholder vote requirement for adoption, amendment or repeal of any provision of the Bylaws to an affirmative vote of a majority of the voting power of the then-outstanding shares of voting stock of the Company. +The proposed Amended and Restated Charter, marked to show all changes proposed to Article SEVENTH of the Charter under this Proposal No. 6 against the current text of the Charter, is attached to this Proxy Statement as Appendix A. We would file the Amended and Restated Charter (subject to revision as described under “Partial Stockholder Approval of Charter Amendment Proposals” if our stockholders do not approve each of Proposal Nos. 4, 5 and 6 at the Annual Meeting) promptly following the Annual Meeting if our stockholders approve this Proposal No. 6. The current provisions of Article SEVENTH of the Charter and the proposed amendment to Article SEVENTH of the Charter described above are qualified in their entirety by reference to the actual text as set forth in Appendix A. +Vote Required for Approval +The affirmative vote of at least 75% of the voting power of the then-outstanding shares of voting stock of the Company is required to approve this Proposal No. 6. If this Proposal No. 6 is approved by the requisite stockholder vote, then the proposed Amended and Restated Charter (subject to revision as described under “Partial Stockholder Approval of Charter Amendment Proposals”) will be filed. +THE BOARD RECOMMENDS A VOTE “ FOR ” THE APPROVAL OF AN AMENDMENT TO OUR CHARTER TO ELIMINATE THE SUPERMAJORITY STOCKHOLDER VOTE REQUIREMENT FOR STOCKHOLDERS TO AMEND OUR BYLAWS. +63 +TABLE OF CONTENTS +PARTIAL STOCKHOLDER APPROVAL OF CHARTER AMENDMENT PROPOSALS +We are submitting, and the Board unanimously recommends that you vote “FOR”, three separate proposals to amend our Charter: Proposal No. 4 to declassify our Board, Proposal No. 5 to eliminate the supermajority stockholder vote requirement to amend certain provisions of our Charter and Proposal No. 6 to eliminate the supermajority stockholder vote requirement for stockholders to amend our Bylaws. If all Board-recommended Charter amendment proposals (Proposal Nos. 4, 5 and 6) are approved by our stockholders, all of the changes reflected in the proposed Amended and Restated Charter attached to this Proxy Statement as Appendix A will be made. However, approval of each of Proposal Nos. 4, 5 and 6 is not contingent on approval of one or both of the others, and if only one or two of Proposal Nos. 4, 5 and 6 are approved at the Annual Meeting, amendments to our Charter reflected in Appendix A will be made as follows: +• +Amendment to Article SIXTH, paragraphs B, C and E will be made as set forth in Appendix A only if Proposal No. 4 is approved by our stockholders; +• +Amendment to Article TENTH will be made as set forth in Appendix A only if Proposal No. 5 is approved by our stockholders; +• +Amendment to Article SEVENTH will be made as set forth in Appendix A only if Proposal No. 6 is approved by our stockholders; and +• +All other amendments set forth in Appendix A will be made if any of Proposal Nos. 4, 5 and 6 is approved by our stockholders. +64 +TABLE OF CONTENTS +ADDITIONAL INFORMATION REGARDING OUR +INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +Change in Auditors +For the fiscal year ended December 31, 2024 and prior years, EY served as our independent registered public accounting firm. On May 9, 2025, we dismissed EY as our independent registered public accounting firm. This change in our independent registered public accounting firm was approved by the Audit Committee following a competitive request for proposal process with several independent registered public accounting firms, including EY. On May 9, 2025, the Audit Committee approved the appointment of KPMG LLP as the Company’s new independent registered public accounting firm for the fiscal year ending December 31, 2025. +The reports of EY on our consolidated financial statements as of and for the fiscal years ended December 31, 2024 and 2023 did not contain an adverse opinion or a disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope, or accounting principles. Further, during the fiscal years ended December 31, 2024 and 2023 and the subsequent interim period through May 9, 2025, there were (i) no disagreements (as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions to Item 304 of Regulation S-K) between us and EY on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreement, if not resolved to the satisfaction of EY, would have caused EY to make reference to the subject matter of such disagreement in its reports on the consolidated financial statements for such years, and (ii) except as set forth below, no reportable events as that term is defined in Item 304(a)(1)(v) of Regulation S-K. +Each of EY’s reports on our internal control over financial reporting as of December 31, 2024 and 2023 contained an adverse opinion, specifically, that we did not maintain effective internal control over financial reporting as of the end of the period covered by such report due to the effect of certain material weaknesses described in such reports. These material weaknesses, which we have disclosed in our annual reports previously filed with the SEC, are summarized below. +In the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (the “2023 Annual Report”) management disclosed that material weaknesses relating to its internal controls related to the valuation of inventory, including excess and obsolescence reserves (the “Inventory Valuation MW”) and the accounting for property and equipment, net (the “Property and Equipment MW”) continued to exist as of December 31, 2023, and EY’s report on our internal control over financial reporting as of December 31, 2023 contained an adverse opinion, due to these material weaknesses. +Subsequent to the issuance of the 2023 Annual Report, we identified an error related to the capitalization of labor and overhead costs in our inventory balances, which caused a misstatement (the “Misstatement”) of our previously issued audited consolidated financial statements as of December 31, 2023 and 2022 and for each of the three years in the period ended December, 31 2023 and the unaudited consolidated financial statements for the quarterly and year-to-date (as applicable) periods ended March 31, 2022, June 30, 2022, September 30, 2022, March 31, 2023, June 30, 2023, September 30, 2023, March 31, 2024 and June 30, 2024 (the “Restatement Periods”). Management concluded this error was material to our financial statements and required restatement of the financial statements for the Restatement Periods. +Amendment No. 1 to our Annual Report on Form 10-K/A for the fiscal year ended December 31, 2023 (the “2023 Amended Annual Report”) disclosed that the Misstatement was a result of a newly identified design deficiency associated with the Inventory Valuation MW, and EY’s report on our internal control over financial reporting as of December 31, 2023 included in the 2023 Amended Annual Report contained an adverse opinion on our internal control over financial reporting, due to the material weaknesses that were previously described in the 2023 Annual Report and the additional design deficiency related to the capitalization of labor and overhead costs impacting inventory valuation. +Our 2024 Annual Report disclosed the remediation of the Property and Equipment MW. However, as of December 31, 2024, the Inventory Valuation MW, including the additional control design deficiency described above, was not remediated and we identified an additional material weakness in the operating effectiveness of our internal controls associated with the accounting for Accelerator Laboratory revenue, a +65 +TABLE OF CONTENTS +component of service and other revenue (collectively, the “2024 Material Weaknesses”). EY’s report on our internal control over financial reporting as of December 31, 2024 contained an adverse opinion on our internal control over financial reporting, due to the 2024 Material Weaknesses. Our Audit Committee discussed the material weaknesses referred to above with EY. +Principal Accounting Fees and Services +The following table presents fees for professional audit services rendered by EY for the audit of our annual financial statements for the fiscal years ended December 31, 2023 and 2024 and fees billed for other services rendered by EY during those periods, all of which were approved by the Audit Committee in accordance with its established policies and procedures. +2023 +2024 +Audit fees (1) +$ +2,602,200 +$ +3,731,300 +Audit-related fees (2) +— +13,000 +Tax fees (3) +147,229 +89,556 +Other fees (4) +2,052 +8,287 +Total +$ +2,751,481 +$ +3,842,043 +(1) +Audit fees are fees for professional services rendered in connection with the audit of our consolidated financial statements (including an assessment of our internal control over financial reporting) included in Item 8 of our Annual Reports filed on Form 10-K, reviews of our consolidated financial statements included in our Quarterly Reports filed on Form 10-Q and registration statements. During 2024, these fees included audit services associated with the restatement of our previously filed financial statements. +(2) +Audit-related fees are fees for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements and are not reported under “Audit Fees”, including due diligence and accounting consultations in connection with proposed mergers and acquisitions. +(3) +Tax fees consist primarily of assistance with matters related to tax compliance and reporting and tax consulting services primarily related to international tax planning strategies. +(4) +Other fees consist of fees for a subscription to EY’s accounting and financial reporting research platform. +Pre-Approval Policy +Consistent with SEC policies regarding auditor independence, the Audit Committee has responsibility for appointing, setting compensation and overseeing the work of our independent registered public accounting firm. In recognition of this responsibility, the Audit Committee has established a policy to pre-approve all audit and permissible non-audit services provided by our independent registered public accounting firm; provided however, that de minimis non-audit services may instead be approved in accordance with applicable SEC rules. +Prior to engagement of an independent registered public accounting firm for the next year’s audit, management will submit an aggregate of services expected to be rendered during that year for each of four categories of services to the Audit Committee for approval. +1. +Audit Services include professional services rendered in connection with the audit of our consolidated financial statements (including an assessment of our internal control over financial reporting) included in Item 8 of our Annual Reports filed on Form 10-K, reviews of our consolidated financial statements included in our Quarterly Reports filed on Form 10-Q, comfort letters, registration statements and consultation regarding financial accounting and/or reporting standards. +2. +Audit-Related Services are for assurance and related services that are traditionally performed by an independent registered public accounting firm, including due diligence related to mergers and acquisitions, employee benefit plan audits and special procedures required to meet certain regulatory requirements. +66 +TABLE OF CONTENTS +3. +Tax Services include all services performed by an independent registered public accounting firm’s tax personnel except those services specifically related to the audit of the financial statements, and includes fees in the areas of tax compliance, tax planning and tax advice. +4. +Other Fees are those associated with services not captured in the other categories. +Prior to engagement, the Audit Committee pre-approves these services by category of service. The fees are budgeted, and the Audit Committee requires our independent registered public accounting firm and management to report actual fees versus the budget periodically throughout the year by category of service. During the year, circumstances may arise when it may become necessary to engage our independent registered public accounting firm for additional services not contemplated in the original pre-approval. In those instances, the Audit Committee requires specific pre-approval before engaging our independent registered public accounting firm. +The Audit Committee may delegate pre-approval authority to one or more of its members. The member to whom such authority is delegated must report, for informational purposes only, any pre-approval decisions to the Audit Committee at its next scheduled meeting. +67 +TABLE OF CONTENTS +CORPORATE CODE OF CONDUCT AND ETHICS +We have adopted a corporate code of conduct and ethics that applies to all of our employees, including our chief executive officer and chief financial and accounting officers. The text of the code of conduct and ethics is posted on our website at www.quanterix.com under “Investors — Corporate Governance —  Governance Highlights” and will be made available to stockholders without charge, upon request, in writing to the Corporate Secretary at 900 Middlesex Turnpike, Building 1, Billerica, Massachusetts 01821. Disclosure regarding any amendments to, or waivers from, provisions of the code that apply to our directors, principal executive officer or principal financial officer will be included in a Current Report on Form 8-K within four business days following the date of the amendment or waiver, unless website posting or the issuance of a press release of such amendments or waivers is then permitted by Nasdaq rules. +68 +TABLE OF CONTENTS +ADDITIONAL INFORMATION +Stockholder List +Stockholders of record at the close of business on July 31, 2025 are entitled to notice of, and to vote at, the Annual Meeting. Such stockholders are encouraged to submit an enclosed proxy card, even if their shares were sold after such date. A list of stockholders of record will be available during the 10 days prior to the Annual Meeting, at our principal executive offices located at 900 Middlesex Turnpike Building 1, Billerica, Massachusetts 01821. +Available Information +The Company intends to file a definitive proxy statement on Schedule 14A, an accompanying proxy card and other relevant documents with the SEC in connection with the solicitation of proxies from the Company’s stockholders for the Annual Meeting. STOCKHOLDERS OF THE COMPANY ARE STRONGLY ENCOURAGED TO READ THE COMPANY’S DEFINITIVE PROXY STATEMENT (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO) AND ALL OTHER DOCUMENTS FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION . Stockholders may obtain a copy of the definitive proxy statement, an accompanying proxy card, any amendments or supplements to the definitive proxy statement and other documents filed by the Company with the SEC at no charge at the SEC’s website at www.sec.gov. Copies will also be available at no charge on the Company’s investor relations website at ir.quanterix.com or by contacting the Company’s Investor Relations department at https://ir.quanterix.com/investor-resources/contact-ir as soon as reasonably practicable after such materials are electronically filed with, or furnished to, the SEC. +Incorporation By Reference +To the extent this Proxy Statement is incorporated by reference into any other filing by us under the Securities Act of 1933, as amended, or the Exchange Act, the “Report of the Audit Committee” will not be deemed incorporated unless specifically provided otherwise in such filing, to the extent permitted by the rules of the SEC. Such section shall also not be deemed to be “soliciting material” or to be “filed” with the SEC. Website references and links to other materials are for convenience only, and the content and information contained on or connected to our website is not incorporated by reference into this Proxy Statement and should not be considered part of this Proxy Statement or any other filing that we make with the SEC. +Forward-Looking Statements +This Proxy Statement contains certain forward-looking statements within the meaning of the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act. These forward-looking statements relate to events or results that may occur in the future, including, but not limited to, the Company’s future costs of solicitation, record or meeting dates, compensation arrangements or structure, the composition of the Board, future stockholder engagement, and the Company’s strategy. These forward-looking statements are subject to certain risks and uncertainties posed by many factors that could cause actual events to differ materially from those anticipated by such forward-looking statements, and speak only as of the date of this Proxy Statement. In some cases, you can identify forward-looking statements by the following words: “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “ongoing,” “potential,” “predict,” “project,” “should,” “will,” “would,” or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. We undertake no obligation to revise any forward-looking statement in order to reflect events or circumstances that might subsequently arise, except as required by applicable law. Readers are cautioned not to place undue reliance on these forward-looking statements, which apply only as of the date of this Proxy Statement. +OTHER MATTERS +The Board of Directors knows of no other business which will be presented to the Annual Meeting. If any other business is properly brought before the Annual Meeting, proxies will be voted in accordance with the judgment of the persons named therein. +69 +TABLE OF CONTENTS +STOCKHOLDER PROPOSALS AND NOMINATIONS FOR DIRECTOR +Stockholder proposals submitted pursuant to Rule 14a-8 under the Exchange Act and intended to be presented at our 2026 Annual Meeting, must be received by us not later than April 27, 2026 in order to be considered for inclusion in our proxy materials for that meeting. If we hold the 2026 Annual Meeting on a date that is more than 30 days from the anniversary of the Annual Meeting, any stockholder proposal must be received a reasonable time before we begin to print and send our proxy materials. Any such stockholder proposal submitted, including any accompanying supporting statement, may not exceed 500 words, as per Rule 14a-8(d) of the Exchange Act. +Any director nominations or stockholder proposals submitted outside of the processes of Rule 14a-8 of the Exchange Act, which a stockholder intends to bring forth at the Company’s 2026 Annual Meeting, will be untimely unless they are received between May 26, 2026 and June 25, 2026 in accordance with our Bylaws. +In order to comply with the universal proxy rules, stockholders who intend to solicit proxies in support of director nominees other than the Company’s nominees at the 2026 Annual Meeting must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act. Such notice must be received by July 25, 2026. If we hold the 2026 Annual Meeting on a date that is more than 30 days from the anniversary of the Annual Meeting, such notice must be received by the later of 60 calendar days prior to the date of the 2026 Annual Meeting or the 10th calendar day following the day on which public announcement of the date of the 2026 Annual Meeting is first made by the Company. Any notice to solicit proxies in support of director nominees other than the Company’s nominees must also include all information required by our Bylaws with respect to director nominations. +Proposals that are not received in a timely manner will not be voted on at the 2026 Annual Meeting. If a proposal is received on time, the proxies that management solicits for the meeting may still exercise discretionary voting authority on the proposal under circumstances consistent with the SEC proxy rules. All stockholder proposals should be marked for the attention of the Secretary, Quanterix Corporation, 900 Middlesex Turnpike, Building 1, Billerica, Massachusetts 01821. +70 +TABLE OF CONTENTS +APPENDIX A +AMENDED AND RESTATED CERTIFICATE OF INCORPORATION +OF +QUANTERIX CORPORATION +(Pursuant to Sections 242 and 245 of the +General Corporation Law of the State of Delaware) +Quanterix Corporation, a corporation organized and existing under the laws of the State of Delaware (the “Corporation”), hereby certifies as follows: +The Certificate of Incorporation of the Corporation was filed with the Secretary of State of the State of Delaware on April 25, 2007 under the name “Digital Genomics, Inc.” A Restated Certificate of Incorporation was filed on June 18, 2007 with the Secretary of State of the State of Delaware and thereafter a Certificate of Amendment to the Restated Certificate of Incorporation was filed with the Secretary of State of the State of Delaware on August 22, 2007 to change the name of the Corporation to Quanterix Corporation. A Restated Certificate of Incorporation was filed with the Secretary of State of the State of Delaware on June 2, 2017. A Certificate of Correction was filed with the Secretary of State of the State of Delaware on December 1, 2017. Thereafter, a Certificate of Amendment was filed with the Secretary of State of the State of Delaware on December 4, 2017. This Restated Certificate of Incorporation restates, integrates and further amends the Corporation’s Restated Certificate of Incorporation, as corrected and amended. +This Amended and Restated Certificate of Incorporation was duly adopted by written consent of the directors and stockholders of the Corporation in accordance with the applicable provisions of Sections 242 and 245 of the General Corporation Law of the State of Delaware. +The text of the Corporation’s Restated Certificate of Incorporation, as corrected and amended, is hereby further amended and restated to read in full as follows: +RESTATED CERTIFICATE OF INCORPORATION +OF +QUANTERIX CORPORATION +FIRST: The name of the corporation is Quanterix Corporation (the “Corporation”). +SECOND: The address of the registered office of the Corporation in the State of Delaware is 1209 Orange Street in the City of Wilmington, County of New Castle, Delaware 19801. The name of its registered agent at such address is The Corporation Trust Company. +THIRD: The purpose of the Corporation is to engage in any lawful act or activity or carry on any business for which corporations may be organized under the Delaware General Corporation Law or any successor statute. +FOURTH: +A. Designation and Number of Shares . +The total number of shares of all classes of stock which the Corporation shall have the authority to issue is 125,000,000 shares, consisting of 120,000,000 shares of common stock, par value $0.001 per share (the “Common Stock”), and 5,000,000 shares of preferred stock, par value $0.001 per share (the “Preferred Stock”). +The number of authorized shares of Common Stock or Preferred Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the voting power of all of the then-outstanding shares of capital stock of the +A-1 +TABLE OF CONTENTS +Corporation entitled to vote thereon, without a vote of the holders of the Preferred Stock, or of any series thereof, unless a vote of any such holders is required pursuant to the terms of any Preferred Stock designation. +B. Preferred Stock . +1. Shares of Preferred Stock may be issued in one or more series at such time or times and for such consideration as the Board of Directors of the Corporation (the “Board of Directors”) may determine. +2. Authority is hereby expressly granted to the Board of Directors to fix from time to time, by resolution or resolutions providing for the establishment and/or issuance of any series of Preferred Stock, the designation and number of the shares of such series and the powers, preferences and rights of such series, and the qualifications, limitations or restrictions thereof, to the fullest extent such authority may be conferred upon the Board of Directors under the Delaware General Corporation Law. Without limiting the generality of the foregoing, the resolutions providing for issuance of any series of Preferred Stock may provide that such series shall be superior or rank equally or be junior to the Preferred Stock of any other series to the extent permitted by law. +C. Common Stock . +1. Dividends . Dividends may be declared and paid on the Common Stock from funds lawfully available therefor if, as and when determined by the Board of Directors in their sole discretion, subject to provisions of law, any provision of this Restated Certificate of Incorporation, as amended from time to time, and subject to the relative rights and preferences of any shares of Preferred Stock authorized, issued and outstanding hereunder. The term “Restated Certificate of Incorporation” as used herein shall mean the Restated Certificate of Incorporation of the Corporation as amended from time to time. +2. Voting . The holders of the Common Stock are entitled to one vote for each share held; provided , however , that, except as otherwise required by law, holders of Common Stock shall not be entitled to vote on any amendment to this Restated Certificate of Incorporation (including any certificate of designation relating to Preferred Stock) that relates solely to the terms of one or more outstanding series of Preferred Stock if the holders of such affected series are entitled, either separately or together as a class with the holders of one or more other such series, to vote thereon by law or pursuant to this Restated Certificate of Incorporation (including any certificate of designation relating to Preferred Stock). +FIFTH: The following provisions are inserted for the management of the business and the conduct of the affairs of the Corporation, and for further definition, limitation and regulation of the powers of the Corporation and of its directors and stockholders: +A. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors. In addition to the powers and authority expressly conferred upon them by statute or by this Restated Certificate of Incorporation or the Bylaws of the Corporation as in effect from time to time, the directors are hereby empowered to exercise all such powers and do all such acts and things as may be exercised or done by the Corporation. +B. The directors of the Corporation need not be elected by written ballot unless the Bylaws so provide. +C. Subject to the rights of the holders of shares of any series of Preferred Stock then outstanding, any action required or permitted to be taken by the stockholders of the Corporation may be effected only at a duly called annual or special meeting of stockholders of the Corporation and not by written consent. +D. Special meetings of the stockholders of the Corporation may be called only by the Board of Directors acting pursuant to a resolution adopted by a majority of the Whole Board. For the purposes of this Restated Certificate of Incorporation, the term “Whole Board” shall mean the total number of authorized directors whether or not there exist any vacancies in previously authorized directorships. +A-2 +TABLE OF CONTENTS +Business transacted at any special meeting of stockholders shall be limited to matters relating to the purpose or purposes stated in the notice of meeting. +SIXTH: +A. Subject to the rights of the holders of shares of any series of Preferred Stock then outstanding to elect additional directors under specified circumstances, the number of directors shall be fixed from time to time exclusively by the Board of Directors pursuant to a resolution adopted by a majority of the Whole Board. +B. Subject to the rights of the holders of shares of any series of Preferred Stock then outstanding to elect additional directors under specified circumstances, until the election of directors at the annual meeting of stockholders to be held in 2028, the Board of Directors of the Corporation shall be divided into three classes, with the term of office of the first class to expire expiring at the first annual meeting of stockholders following the initial classification of directors to be held in 2027 , the term of office of the second class to expire expiring at the second annual meeting of stockholders following the initial classification of directors to be held in 2028 , and the term of office of the third class to expire expiring at the third annual meeting of stockholders following the initial classification of directors. At each annual meeting of stockholders, directors elected to succeed those to be held in 2026. The directors whose terms expire , other than directors elected by the holders of shares of any series of Preferred Stock under specified circumstances, at each such meeting shall be elected for a term of office to expire at the third one year, expiring the earlier of (i) the succeeding annual meeting of stockholders after their or (ii) the election and until their successors are duly elected and qualified. The Board of Directors is authorized to assign members of the Board already in office to such classes as it may determine at the time the classification of the Board of Directors pursuant to this Restated Certificate of Incorporation becomes effective. qualification of such director’s successor or such director’s earlier death, resignation, retirement, disqualification or removal. +C. Subject to the rights of the holders of shares of any series of Preferred Stock then outstanding, newly created directorships resulting from any increase in the authorized number of directors or any vacancies in the Board of Directors resulting from death, resignation, retirement, disqualification, removal from office or other cause shall, unless otherwise required by law or by resolution of the Board of Directors, be filled only by a majority vote of the directors then in office even though less than a quorum, or by a sole remaining director, and not by stockholders , and . Prior to the annual meeting of stockholders to be held in 2028, directors so chosen shall serve for a term expiring at the annual meeting of stockholders at which the term of office of the class to which they have been chosen expires or until such director’s successor shall have been duly elected and qualified. Following the annual meeting of stockholders to be held in 2028, directors so chosen shall serve for a term expiring at the next annual meeting of stockholders or until such director’s successor shall have been duly elected and qualified. No decrease in the authorized number of directors shall shorten the term of any incumbent director. +D. Advance notice of stockholder nominations for the election of directors and of business to be brought by stockholders before any meeting of the stockholders of the Corporation shall be given in the manner provided in the Bylaws of the Corporation. +E. Subject to the rights of the holders of shares of any series of Preferred Stock then outstanding, any director, or the entire Board of Directors, may be removed from office at any time only for cause and only by the affirmative vote of the holders of at least seventy-five percent (75%) of the voting power of all of the then-outstanding shares of capital stock of the Corporation entitled to vote at an election of directors, voting together as a single class , with or without cause; provided, however, that until the election of directors at the annual meeting of stockholders to be held in 2028, such removal may be only for cause . +SEVENTH: The Board of Directors is expressly empowered to adopt, amend or repeal the Bylaws of the Corporation. Any adoption, amendment or repeal of the Bylaws of the Corporation by the Board of Directors shall require the approval of a majority of the Whole Board. The stockholders shall also have power to adopt, amend or repeal the Bylaws of the Corporation; provided, that in addition to any vote of the holders of any class or series of stock of the Corporation required by law or by this Restated Certificate of +A-3 +TABLE OF CONTENTS +Incorporation, the affirmative vote of the holders of at least seventy-five percent (75%) a majority of the voting power of all of the then outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required for the stockholders to adopt, amend or repeal any provision of the Bylaws of the Corporation ; provided, however, that if the Board of Directors recommends that stockholders approve such adoption, amendment or repeal, such adoption, amendment or repeal shall only require, in addition to any vote of the holders of any class or series of the capital stock of the Corporation required by law or by the Restated Certificate of Incorporation, the affirmative vote of the holders of the majority of the voting power of all of the then outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class. . +EIGHTH: +A. Each person who was or is made a party or is threatened to be made a party to or is otherwise involved (including, without limitation, as a witness) in any action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he is or was a director or an officer of the Corporation or is or was serving at the request of the Corporation as a director, officer, or trustee of another corporation, or of a partnership, joint venture, trust or other enterprise, including service with respect to an employee benefit plan (hereinafter an “Indemnitee”), whether the basis of such proceeding is alleged action in an official capacity as a director, officer or trustee or in any other capacity while serving as a director, officer or trustee, shall be indemnified and held harmless by the Corporation to the fullest extent permitted by the Delaware General Corporation Law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than such law permitted the Corporation to provide prior to such amendment), against all expense, liability and loss (including attorneys’ fees, judgments, fines, ERISA excise taxes or penalties and amounts paid in settlement) reasonably incurred or suffered by such Indemnitee in connection therewith; provided, however, that, except as provided in Paragraph C of this Article EIGHTH with respect to proceedings to enforce rights to indemnification or an advancement of expenses or as otherwise required by law, the Corporation shall not be required to indemnify or advance expenses to any such Indemnitee in connection with a proceeding (or part thereof) initiated by such Indemnitee unless such proceeding (or part thereof) was authorized by the Board of Directors of the Corporation. +B. In addition to the right to indemnification conferred in Paragraph A of this Article EIGHTH, an Indemnitee shall also have the right to be paid by the Corporation the expenses (including attorney’s fees) incurred in defending any such proceeding in advance of its final disposition; provided, however, that, if the Delaware General Corporation Law requires, an advancement of expenses incurred by an Indemnitee in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such Indemnitee, including, without limitation, service to an employee benefit plan) shall be made only upon delivery to the Corporation of an undertaking, by or on behalf of such Indemnitee, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal that such Indemnitee is not entitled to be indemnified for such expenses under this Paragraph B or otherwise. +C. If a claim under Paragraph A or B of this Article EIGHTH is not paid in full by the Corporation within sixty (60) days after a written claim has been received by the Corporation, except in the case of a claim for an advancement of expenses, in which case the applicable period shall be twenty (20) days, the Indemnitee may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim. To the fullest extent permitted by law, if successful in whole or in part in any such suit, or in a suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the Indemnitee shall also be entitled to be paid the expenses of prosecuting or defending such suit. In (i) any suit brought by the Indemnitee to enforce a right to indemnification hereunder (but not in a suit brought by the Indemnitee to enforce a right to an advancement of expenses) it shall be a defense that, and (ii) in any suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the Corporation shall be entitled to recover such expenses upon a final adjudication that, the Indemnitee has not met any applicable standard for indemnification set forth in the Delaware General Corporation Law. Neither the failure of the Corporation (including its directors who are not parties to such action, a committee +A-4 +TABLE OF CONTENTS +of such directors, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such suit that indemnification of the Indemnitee is proper in the circumstances because the Indemnitee has met the applicable standard of conduct set forth in the Delaware General Corporation Law, nor an actual determination by the Corporation (including its directors who are not parties to such action, a committee of such directors, independent legal counsel, or its stockholders) that the Indemnitee has not met such applicable standard of conduct, shall create a presumption that the Indemnitee has not met the applicable standard of conduct or, in the case of such a suit brought by the Indemnitee, be a defense to such suit. In any suit brought by the Indemnitee to enforce a right to indemnification or to an advancement of expenses hereunder, or brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the burden of proving that the Indemnitee is not entitled to be indemnified, or to such advancement of expenses, under this Article EIGHTH or otherwise shall be on the Corporation. +D. The rights to indemnification and to the advancement of expenses conferred in this Article EIGHTH shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, the Corporation’s Certificate of Incorporation as amended from time to time, the Corporation’s Bylaws, any agreement, any vote of stockholders or disinterested directors or otherwise. +E. The Corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the Delaware General Corporation Law. +F. The Corporation may, to the extent authorized from time to time by the Board of Directors, grant rights to indemnification and to the advancement of expenses to any employee or agent of the Corporation to the fullest extent of the provisions of this Article EIGHTH with respect to the indemnification and advancement of expenses of directors and officers of the Corporation. +G. The rights conferred upon Indemnitees in this Article EIGHTH shall be contract rights and such rights shall continue as to an Indemnitee who has ceased to be a director, officer, employee, agent or trustee and shall inure to the benefit of the Indemnitee’s heirs, executors and administrators. Any amendment, alteration or repeal of this Article EIGHTH that adversely affects any right of an Indemnitee or its successors shall be prospective only and shall not limit, eliminate or impair any such right with respect to any proceeding involving any occurrence or alleged occurrence of any action or omission to act that took place prior to any such amendment, alteration or repeal. +H. If any word, clause, provision or provisions of this Article EIGHTH shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (i) the validity, legality and enforceability of the remaining provisions of this Article EIGHTH (including, without limitation, each portion of any section of this Article EIGHTH containing any such provision held to be invalid, illegal or unenforceable, that is not itself held to be invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby; and (ii) to the fullest extent possible, the provisions of this Article EIGHTH (including, without limitation, each such portion of any section of this Article EIGHTH containing any such provision held to be invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable. +NINTH: No director shall be personally liable to the Corporation or its stockholders for any monetary damages for breaches of fiduciary duty as a director; provided that this provision shall not eliminate or limit the liability of a director, to the extent that such liability is imposed by applicable law, (i) for any breach of the director’s duty of loyalty to the Corporation or its stockholders; (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; (iii) under Section 174 or successor provisions of the Delaware General Corporation Law; or (iv) for any transaction from which the director derived an improper personal benefit. No amendment to or repeal of this provision shall apply to or have any effect on the liability or alleged liability of any director for or with respect to any acts or omissions of such director occurring prior to such amendment or repeal. If the Delaware General Corporation Law is amended to authorize corporate action further eliminating or limiting the personal +A-5 +TABLE OF CONTENTS +liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the Delaware General Corporation Law, as so amended. All references in this Article NINTH to a director shall also be deemed to refer to any such director acting in his or her capacity as a Continuing Director (as defined in Article ELEVENTH). +TENTH: The Corporation reserves the right to amend or repeal any provision contained in this Restated Certificate of Incorporation in the manner prescribed by the Delaware General Corporation Law and all rights conferred upon stockholders are granted subject to this reservation; provided that in addition to the vote of the holders of any class or series of stock of the Corporation required by law or by this Restated Certificate of Incorporation, the affirmative vote of the holders of shares of voting stock of the Corporation representing at least seventy-five percent (75%) a majority of the voting power of all of the then outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required to amend, alter or repeal, or adopt any provision inconsistent with, Articles FIFTH, SIXTH, SEVENTH, EIGHTH, NINTH, this Article TENTH and Articles ELEVENTH and TWELFTH of this Restated Certificate of Incorporation. +ELEVENTH: The Board of Directors is expressly authorized to cause the Corporation to issue rights pursuant to Section 157 of the Delaware General Corporation Law and, in that connection, to enter into any agreements necessary or convenient for such issuance, and to enter into other agreements necessary and convenient to the conduct of the business of the Corporation. Any such agreement may include provisions limiting, in certain circumstances, the ability of the Board of Directors of the Corporation to redeem the securities issued pursuant thereto or to take other action thereunder or in connection therewith unless there is a specified number or percentage of Continuing Directors then in office. Pursuant to Section 141(a) of the Delaware General Corporation Law, the Continuing Directors shall have the power and authority to make all decisions and determinations, and exercise or perform such other acts, that any such agreement provides that such Continuing Directors shall make, exercise or perform. For purposes of this Article ELEVENTH and any such agreement, the term, “Continuing Directors,” shall mean (1) those directors who were members of the Board of Directors of the Corporation at the time the Corporation entered into such agreement and any director who subsequently becomes a member of the Board of Directors, if such director’s nomination for election to the Board of Directors is recommended or approved by the majority vote of the Continuing Directors then in office or (2) such members of the Board of Directors designated in, or in the manner provided in, such agreement as Continuing Directors. +TWELFTH: Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the Corporation to the Corporation or the Corporation’s stockholders, (iii) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law or the Corporation’s Certificate of Incorporation or Bylaws, or (iv) any action asserting a claim against the Corporation governed by the internal affairs doctrine. Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the Corporation shall be deemed to have notice of and consented to the provisions of this Article TWELFTH. +[Remainder of page intentionally left blank.] +A-6 +TABLE OF CONTENTS +IN WITNESS WHEREOF, this Restated Certificate of Incorporation, which restates and integrates and further amends the provisions of the Certificate of Incorporation, as amended, of this Corporation, and which has been duly adopted in accordance with Sections 242 and 245 of the Delaware General Corporation Law, has been duly executed by its duly authorized Executive Chairman, President and Chief Executive Officer this      day of            , 20   . +QUANTERIX CORPORATION +By: +Kevin Hrusovsky Masoud Toloue +Executive Chairman, President and Chief Executive Officer +A-7 +TABLE OF CONTENTS +Quanterix Corporationc/o Corporate Election ServicesP. O. Box 1150Pittsburgh, PA 15230-1150VOTE B Y INTERNETPlease have your proxy card available whenyou access the website www.cesvote.comand follow the simple directions that will bepresented to you.VOTE B Y MA I LPlease mark, sign and date your proxy card andreturn it in the postage-paid envelope providedor return it to: Corporate Election Services,P.O. Box 1150, Pittsburgh, PA 15230.IMPORTANT: PLEASE COMPLETE, SIGN, DATE AND MAIL THIS PROXY CARD TODAY!QUANTERIX CORPORATIONTHIS PROXY CARD IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORSMasoud Toloue, Ph.D. and Laurie Churchill, or each of them, each with the power of substitution, are hereby authorized to representand vote the shares of the undersigned, with all the powers which the undersigned would possess if personally present, at theAnnual Meeting of Stockholders of Quanterix Corporation to be held on September 23, 2025 or at any postponement oradjournment thereof.SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE STOCKHOLDER. THIS PROXY, WHENPROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN. IF NO SUCH DIRECTIONS AREINDICATED, THE PROXIES WILL HAVE AUTHORITY TO VOTE, IN ACCORDANCE WITH THE BOARD OF DIRECTORS’RECOMMENDATIONS, “FOR ALL” THE NOMINEES IN PROPOSAL 1, “FOR” PROPOSALS 2, 3, 4, 5 AND 6, AND, TO THEEXTENT AUTHORIZED UNDER RULE 14A-4(C) UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, IN THEDISCRETION OF THE PROXIES NAMED HEREIN OR THEIR SUBSTITUTES WITH RESPECT TO SUCH OTHERBUSINESS AS MAY PROPERLY COME BEFORE THE MEETING. ONLY STOCKHOLDERS OF RECORD ONJULY 31, 2025 MAY VOTE AT THE MEETING.SignatureDateTitle or AuthoritySignature if Held JointlyNOTE: Please sign exactly as name(s) appear(s) hereon. When signing asattorney, executor, administrator or other fiduciary, please give full title assuch. Joint owners should each sign personally. All holders must sign. If acorporation or partnership, please sign in full corporate or partnership nameby authorized officer.If submitting your proxy by mail, please sign and date the card below and fold and detach card at perforation before mailing. Control Number (Continued and to be marked on the other side)PROXY CARD +TABLE OF CONTENTS +Quanterix CorporationAnnual Meeting of Stockholderswww.[•]September 23, 20259:00 a.m. Eastern Daylight TimeIf you have any questions, require assistance in voting your proxy card,or need additional copies of the Company’s proxy materials, please contact our proxy solicitor:430 Park Avenue, 14th FloorNew York, New York 10022Stockholders Call Toll Free: (800) 662-5200Brokers, Banks, Trustees and Other Nominees Call Collect: (203) 658-9400Email: QTRX@info.sodali.comQuanterix Corporation Proxy CardThe Board of Directors recommends a vote “FOR ALL” the following nominees listed in Proposal 1 below.1. Election of three director nominees to our Board to serve three-year terms expiring at the annual meeting of stockholders in 2028 or until theirsuccessors are duly elected and qualified.Nominees: 1. Myla Lai-Goldman, M.D. 2. Masoud Toloue, Ph.D. 3. David R. Walt, Ph.D. FOR ALL WITHHOLD ALL FOR ALL EXCEPT**To withhold authority to vote for individual nominee(s), write their name(s) or number(s) on the line below.The Board of Directors recommends a vote “FOR” Proposals 2, 3, 4, 5 and 6.2. Approval, on an advisory basis, of the compensation of the Company’s named executive officers. FOR AGAINST ABSTAIN3. Ratification, on an advisory basis, of the appointment of KPMG, LLP as the Company’s independent public accounting firm for the fiscal yearending December 31, 2025. FOR AGAINST ABSTAIN4. Approval of an amendment to our Charter to declassify our Board. FOR AGAINST ABSTAIN5. Approval of an amendment to our Charter to eliminate the supermajority stockholder vote requirement to amend certain provisions ofour Charter. FOR AGAINST ABSTAIN6. Approval of an amendment to our Charter to eliminate the supermajority stockholder vote requirement for stockholders to amend our Bylaws. 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principal stockholders. We believe that all of these transactions were on terms as favorable as could have been obtained from unrelated third parties. +We entered into a license agreement with Tufts University in 2007, as amended in 2013, 2017 and 2020, pursuant to which we obtained an exclusive, worldwide license to our core SIMOA technology, and have entered into additional license agreements with Tufts to certain related technology. David R. Walt, Ph.D., one of our directors, founding scientist and an inventor of the SIMOA technology, previously served as a professor at Tufts University. Under these licenses, we are required to pay Tufts University royalties on net sales of licensed products and services as well as a portion of our applicable sublicense revenues. During the year ended December 31, 2024, we recorded royalty expense of approximately $2.1 million under these licenses. Tufts University pays a portion of the royalties and license payments received from us to Dr. Walt pursuant to an arrangement between Tufts University and Dr. Walt, the amount of which is determined on a formulaic basis. +In August 2022, we entered into a license agreement with Harvard University related to immunoassay technology developed by Dr. Walt at Harvard and Brigham and Women’s Hospital. In connection with entering into this agreement, we paid Harvard an upfront fee of $625,000 in 2022. Under this license, we are required to pay Harvard royalties on net sales of licensed products and services as well as a portion of our applicable sublicense revenues. During the year ended December 31, 2024, we recorded no royalty expense under this license. Harvard is obligated to pay a portion of the payments received from us to Dr. Walt pursuant to an arrangement between Harvard and Dr. Walt. We also sell products and services to laboratories affiliated with Harvard and Brigham and Women’s Hospital that are overseen by Dr. Walt. During the year ended December 31, 2024, we recorded revenue from these sales of approximately $2.2 million. +Indemnification Agreements with Officers and Directors and Directors’ and Officers’ Liability Insurance +We have entered into indemnification agreements with each of our executive officers and directors. The indemnification agreements, our Charter and our Bylaws require us to indemnify our directors to the fullest extent not prohibited by Delaware law. Subject to certain limitations, our Bylaws also require us to advance expenses incurred by our directors and officers. +The 2007 Plan and the 2017 Equity Incentive Plan also provide that our directors (and in the case of the 2017 Equity Incentive Plan, our employees) will not be liable for any act, omission, interpretation, construction or determination made in good faith in connection with the respective plan, and the members of our Board and any committee administering the plan will be entitled to indemnification and reimbursement by us in respect of any claim, loss, damage or expense (including reasonable attorneys’ fees) arising or resulting therefrom to the fullest extent permitted by law and/or under any directors’ and officers’ liability insurance coverage which may be in effect from time to time. +We also maintain a general liability insurance policy which covers certain liabilities of directors and officers of the Company arising out of claims based on acts or omissions in their capacities as directors or officers. +Policies and Procedures for Related Party Transactions +Pursuant to its charter, our Audit Committee is responsible for reviewing and approving, prior to our entry into any such transaction, all transactions reportable by us under Item 404 of Regulation S-K in which we are a participant and in which any parties related to us, including our executive officers, our directors, beneficial owners of more than 5% of our securities, immediate family members of the foregoing persons and any other persons whom our Board determines may be considered related persons under Item 404 of Regulation S-K, has or is expected to have a direct or indirect material interest. +In reviewing and approving such transactions, the Audit Committee will obtain, or will direct our management to obtain on its behalf, all information that the Audit Committee believes to be relevant and +59 \ No newline at end of file diff --git a/raw/proxies/0001503274/0001104659-26-048166/proxy.txt b/raw/proxies/0001503274/0001104659-26-048166/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..20fdf9ecf903d892e2187a722930ee7f6c6d9d53 --- /dev/null +++ b/raw/proxies/0001503274/0001104659-26-048166/proxy.txt @@ -0,0 +1,3076 @@ +tm269763-1_nonfiling - none - 10.2284499s +TABLE OF CONTENTS +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Proxy Statement Pursuant to Section 14(a) of +the Securities Exchange Act of 1934 (Amendment No.     ) +Filed by the Registrant ☒ +Filed by a Party other than the Registrant ☐ +Check the appropriate box: +☐ +Preliminary Proxy Statement +☐ +Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +☒ +Definitive Proxy Statement +☐ +Definitive Additional Materials +☐ +Soliciting Material under §240.14a-12 +Quanterix Corporation +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +☒ +No fee required. +☐ +Fee paid previously with preliminary materials. +☐ +Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11. +TABLE OF CONTENTS +April 24, 2026 +To Our Stockholders: +You are cordially invited to attend the 2026 annual meeting of stockholders of Quanterix Corporation (including any adjournments or postponements of such meeting, the “Annual Meeting”) to be held virtually via the Internet at 10:00 a.m. ET, on June 9, 2026, at meetnow.global/QTRX2026 . The virtual nature of the Annual Meeting is designed to enable access by more of our stockholders while decreasing the cost of conducting the Annual Meeting in person. To participate in the Annual Meeting, you must pre-register at meetnow.global/QTRX2026 by 10:00 a.m. ET, on June 9, 2026. You will not be able to attend the Annual Meeting in person. If the Annual Meeting is adjourned for any reason, then proxies submitted may be used at any adjournment of the Annual Meeting. +Details regarding the meeting, the business to be conducted at the meeting, and information about Quanterix Corporation that you should consider when you vote your shares are described in the accompanying proxy statement (the “Proxy Statement”). +At the Annual Meeting, stockholders will vote (i) to elect two director nominees to our Board of Directors, each to serve a one-year term expiring at the 2027 annual meeting of stockholders (the “2027 Annual Meeting”) or until their successors are duly elected and qualified, (ii) to approve, on an advisory basis, the compensation of the Company’s named executive officers, (iii) to ratify, on an advisory basis, the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2026, and (iv) to approve the Company’s Amended and Restated 2017 Employee, Director and Consultant Equity Incentive Plan. Stockholders may also transact such other business as may properly come before the Annual Meeting. OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE IN ACCORDANCE WITH ITS RECOMMENDATION ON EACH OF THE PROPOSALS USING THE ENCLOSED PROXY CARD. +We hope you will be able to attend the Annual Meeting virtually. Whether or not you plan to attend the Annual Meeting, we hope you will vote promptly. Information about voting methods is set forth in the accompanying Proxy Statement. +Thank you for your continued support of Quanterix Corporation. +Sincerely, +Everett Cunningham +President and Chief Executive Officer +TABLE OF CONTENTS +QUANTERIX CORPORATION +900 Middlesex Turnpike +Billerica, Massachusetts 01821 +April 24, 2026 +NOTICE OF 2026 ANNUAL MEETING OF STOCKHOLDERS +TIME: 10:00 a.m. ET +DATE: June 9, 2026 +ACCESS: The 2026 annual meeting of stockholders (including any adjournments or postponements of such meeting, the “Annual Meeting”) of Quanterix Corporation (“Quanterix” or the “Company”) will be held virtually via the Internet at meetnow.global/QTRX2026 . The Annual Meeting will be held solely by means of remote communication via the Internet. There will not be a physical location. Stockholders will be able to virtually attend and to vote at the Annual Meeting via the Annual Meeting website. To participate in the Annual Meeting, you must pre-register at meetnow.global/QTRX2026 by 10:00 a.m. ET on June 9, 2026. +PURPOSES: At the Annual Meeting, stockholders will vote: +1. +To elect two director nominees to the Company’s Board of Directors (the “Board”) each to serve a one-year term expiring at the 2027 Annual Meeting or until their successors are duly elected and qualified; +2. +To approve, on an advisory basis, the compensation of the Company’s named executive officers; +3. +To ratify, on an advisory basis, the appointment of KPMG LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2026; +4. +To approve the amendment and restatement of the Company’s 2017 Employee, Director and Consultant Equity Incentive Plan; and +5. +To transact such other business that is properly presented at the Annual Meeting and any adjournments or postponements thereof. +WHO MAY VOTE: +You may vote if you were the record owner of Quanterix common stock at the close of business on April 14, 2026. A list of stockholders of record will be available during the Annual Meeting and 10 days prior to the Annual Meeting, at our principal executive offices located at 900 Middlesex Turnpike, Building 1, Billerica, Massachusetts 01821. +All stockholders are cordially invited to virtually attend the Annual Meeting. Whether you plan to attend the Annual Meeting virtually or not, we urge you to vote by completing, signing and dating the enclosed proxy card and promptly mailing it in the postage prepaid envelope provided or following the instructions on the enclosed proxy card to vote via the Internet or by telephone. Returning your proxy card will not prevent you from attending the Annual Meeting but will ensure that your vote is counted if you are unable to attend. Even if you submit a vote prior to the Annual Meeting, you will still have an opportunity to change your earlier vote and vote again during the Annual Meeting. +BY ORDER OF THE BOARD OF DIRECTORS +Daniel S. Char +Chief Legal Officer and Corporate Secretary +TABLE OF CONTENTS +QUANTERIX CORPORATION +PROXY STATEMENT +FOR THE 2026 ANNUAL MEETING OF STOCKHOLDERS +TO BE HELD ON JUNE 9, 2026 +TABLE OF CONTENTS +Page +Proxy Summary +4 +Important Information About the Annual Meeting and Voting +5 +Proposal No. 1: Election of Directors +12 +Management and Corporate Governance +13 +Proposal No. 2: Advisory Vote on Approval of Executive Compensation +24 +Compensation Committee Report +25 +Compensation Discussion and Analysis +26 +Executive Officer and Director Compensation +38 +Equity Compensation Plan Information +50 +Security Ownership of Certain Beneficial Owners and Management +51 +Proposal No. 3: Ratification of the Appointment of Independent Registered Public Accounting +Firm +53 +Report of Audit Committee +54 +Delinquent Section 16(a) Reports +55 +Certain Relationships and Related Person Transactions +56 +Proposal No. 4: Approval of an amendment and restatement of the Company’s 2017 Employee, Director and Consultant Equity Incentive Plan +58 +Additional Information Regarding our Independent Registered Public Accounting Firm +67 +Corporate Code of Conduct and Ethics +70 +Additional Information +71 +Other Matters +71 +Stockholder Proposals and Nominations for Director +72 +Appendix A — Amended and Restated 2017 Employee, Director and Consultant Equity Incentive +Plan +A-1 +TABLE OF CONTENTS +PROXY SUMMARY +This proxy statement (this “Proxy Statement”), along with the accompanying notice of the 2026 annual meeting of stockholders (the “Notice”), contains information about the 2026 annual meeting of stockholders of Quanterix Corporation (including any adjournments or postponements of such meeting, the “Annual Meeting”) to be held virtually via the Internet at 10:00 a.m. ET on June 9, 2026 at meetnow.global/QTRX2026 . The Annual Meeting will be held in a virtual meeting format only. If the Annual Meeting is adjourned for any reason, then proxies submitted may be used at any adjournment of the Annual Meeting. +In this Proxy Statement, we refer to Quanterix Corporation as “Quanterix,” “the Company,” “we” and “us.” We refer to our amended and restated certificate of incorporation as our “Charter” and our restated bylaws as our “Bylaws.” +Information About the Annual Meeting +You have received these proxy materials because our Board of Directors (the “Board”) is soliciting your proxy to vote your shares during the Annual Meeting. This summary highlights information contained elsewhere in this Proxy Statement. This summary does not contain all of the information that you should consider in deciding how to vote your shares, and you should read the entire Proxy Statement carefully before voting. +Date and Time: 10:00 a.m. (Eastern Time) on June 9, 2026 +Place: Virtual meeting format, via live webcast. To participate in the Annual Meeting, you must pre- register at meetnow.global/QTRX2026 by 10:00 a.m. ET on June 9, 2026. +Record Date: April 14, 2026 +Proxy Voting: Whether you plan to attend the Annual Meeting virtually or not, we urge you to vote by completing, signing and dating the enclosed proxy card and promptly mailing it in the postage prepaid envelope provided or following the instructions on the enclosed proxy card to vote via the Internet or by telephone. Returning your proxy card will not prevent you from attending the Annual Meeting but will ensure that your vote is counted if you are unable to attend. Even if you submit a vote prior to the Annual Meeting, you will still have an opportunity to change your earlier vote and vote again during the Annual Meeting. More information on voting your proxy card and attending the Annual Meeting can be found in this Proxy Statement. +You can find a copy of our annual report on Form 10-K for the fiscal year ended December 31, 2025 (the “2025 Annual Report”), which includes our financial statements, on the website of the Securities and Exchange Commission (the “SEC”) at www.sec.gov , or in the “SEC Filings” section of our website at www.quanterix.com . You may also obtain a printed copy of our 2025 Annual Report, including our financial statements, free of charge, from us by sending a written request to Quanterix Corporation, Attn: Investor Relations, 900 Middlesex Turnpike, Building 1, Billerica, Massachusetts 01821. Exhibits will be provided upon written request and payment of an appropriate processing fee. +4 +TABLE OF CONTENTS +IMPORTANT INFORMATION ABOUT THE ANNUAL MEETING AND VOTING +Why is the Company soliciting my proxy? +Our Board is soliciting your proxy to vote at the Annual Meeting. This Proxy Statement, along with the accompanying Notice, summarizes the purposes of the meeting and the information you need to know to vote at the Annual Meeting. +We have made available to you on the Internet or have sent you this Proxy Statement, the Notice, the proxy card and a copy of our 2025 Annual Report because you were a holder of a share of the Company’s common stock, par value $0.001 per share (“Common Stock”) as of April 14, 2026 (the “Record Date”). We intend to commence distribution of the Notice, and, if applicable, proxy materials to stockholders on or about April 24, 2026. +What is a proxy? +A proxy is a person or entity ( e.g. , a broker) that you legally designate to vote the shares of Common Stock that you own. If you designate a person or entity as your proxy in a written document, that document is also called a proxy or a proxy card. Our Board has designated Everett Cunningham and Daniel Char as the Company’s proxies for the Annual Meeting. +Who may vote at the Annual Meeting? +Only stockholders who owned our Common Stock at the close of business on the Record Date will be entitled to vote at the Annual Meeting. At the close of business on the Record Date, 47,064,988 shares of our Common Stock were outstanding and entitled to vote. Our Common Stock is our only class of voting stock. +You do not need to virtually attend the Annual Meeting to vote your shares. Shares represented by valid proxies, received in time for the Annual Meeting and not revoked prior to the Annual Meeting, will be voted at the Annual Meeting. For instructions on how to change or revoke your proxy, see “ May I change or revoke my proxy? ” below. +Stockholder of Record: Shares Registered in Your Name. If your shares are registered directly in your name with our transfer agent, Computershare Trust Company, N.A. (“Computershare”), then you are considered the stockholder of record with respect to those shares. As a stockholder of record, you may vote at the Annual Meeting, or vote in advance through the Internet, by telephone or by mail. +Beneficial Owner: Shares Registered in the Name of a Broker. If your shares are held in an account with a broker, then you are the beneficial owner of such shares, which are held in “street name.” As a beneficial owner, you have the right to direct your broker, bank or other nominee on how to vote the shares held in your account, and your broker, bank or other nominee has enclosed or provided voting instructions for you to use in directing it on how to vote your shares. Because the broker, bank or other nominee that holds your shares is the stockholder of record, if you wish to attend the Annual Meeting and vote your shares, you must obtain a valid proxy from the firm that holds your shares giving you the right to vote the shares at the Annual Meeting. +How do I vote and how many votes do I have? +If you are a stockholder of record as of the Record Date, you are entitled to receive notice of, and cast a vote at, the Annual Meeting. Each holder of our Common Stock is entitled to cast one vote on each matter properly brought before the Annual Meeting for each share of our Common Stock that such holder owned of record as of the Record Date. You may submit your proxy before the Annual Meeting in one of the following ways: +• +Vote by Telephone : To vote by telephone, you will need to use the control number provided to you in the materials included with this Proxy Statement and follow the voting instructions as indicated on the enclosed proxy card. +5 +TABLE OF CONTENTS +• +Vote via the Internet : To vote via the Internet, you will need to use the control number provided to you in the materials included with this Proxy Statement, go to www.investorvote.com/QTRX and follow the additional steps when prompted. The steps have been designed to authenticate your identity, allow you to give voting instructions and confirm that those instructions have been recorded properly. +• +Vote by Mail : To vote by mail, you will need to complete, sign and date the accompanying proxy card and return it as soon as possible before the Annual Meeting in the enclosed postage-paid envelope. +Votes submitted through the Internet or by telephone must be received by 11:59 p.m. ET, on June 8, 2026. A vote submitted through the mail must be received by the close of business on June 8, 2026. Submitting your proxy, whether through the Internet, by telephone or by mail will not prevent a stockholder from attending the Annual Meeting, revoking their earlier-submitted proxy and voting in person. If you are not the stockholder of record, please refer to the voting instructions provided by your broker, bank or other nominee to direct it on how to vote your shares. For all Proposals, you may vote “FOR” or “AGAINST” each proposal or “ABSTAIN” from voting on each such proposal. Your vote is important. +Whether or not you plan to attend the Annual Meeting, we urge you to vote on the enclosed proxy card as soon as possible to ensure that your vote is counted. +If your shares are held in “street name,” you will receive voting instructions from your broker, bank or other nominee. Your broker, bank or other nominee is required to vote those shares in accordance with your instructions. If you do not instruct your broker, bank or other nominee how to vote your shares, then your broker, bank or other nominee will not be able to vote your shares with respect to Proposal Nos. 1, 2, or 4. As Proposal No. 3 is a routine matter, brokers will have discretionary authority (as described below under “ What is a broker non-vote? ”) to vote your shares with respect to Proposal No. 3. We urge you to instruct your broker, bank or other nominee, by following the instructions on the enclosed proxy card, to vote your shares in accordance with our Board’s recommendations on the enclosed proxy card, whether or not you plan to attend the Annual Meeting. +How will shares be voted by the proxy card? +The shares represented by any proxy card that is properly executed and received by the Company prior to or at the Annual Meeting will be voted in accordance with the specifications made on such proxy card. +If you return a validly executed and dated proxy card without indicating how your shares should be voted on one or more matters and you do not revoke your proxy, your proxy will be voted in accordance with the recommendations of our Board as to each such matter. Our Board recommends voting as follows: “ FOR ” the election of the two director nominees recommended by our Board as set forth on the proxy card: William P. Donnelly and Ivana Magovčević-Liebisch, Ph.D., J.D. (Proposal No. 1) and “ FOR ” each of the other proposals (Proposal Nos. 2 to 4). +Our Board is not aware of any matters that are expected to come before the Annual Meeting other than those described in this Proxy Statement. If any other matter is presented at the Annual Meeting upon which a vote may be properly taken, shares represented by all proxy cards received by the Company will be voted with respect thereto at the discretion of the persons named as proxies on the enclosed proxy card. +What if I receive more than one proxy card or set of proxy materials from the Company? +If your shares are held in more than one account, you will receive more than one proxy card, and in that case, you can and are urged to vote all of your shares by signing, dating and returning all proxy cards you receive from the Company in the postage-paid envelope provided. If you choose to vote by telephone or via the Internet, please vote using each proxy card you receive to ensure that all of your shares are voted. Only your latest-dated proxy for each account will count. Please sign each proxy card exactly as your name or names appear on such proxy card. For joint accounts, each owner should sign the proxy card. When signing as an executor, administrator, attorney, trustee, guardian or other representative, please print your full name and title on the proxy card. +6 +TABLE OF CONTENTS +What happens if I return a proxy card with voting instructions “FOR” fewer than two candidates for Proposal No. 1? +An “under-vote” occurs when a stockholder submits fewer votes “FOR” director nominees than there are director seats up for election. To the extent an under-vote ( i.e. , voting “FOR” with respect to only one nominee on Proposal No. 1) occurs on any stockholder’s proxy card, your shares will only be voted “FOR” the nominee you have so marked. +How do I attend the Annual Meeting? +In order to virtually attend the Annual Meeting, you (or your authorized representative) must register in advance at meetnow.global/QTRX2026 prior to the deadline of June 9, 2026 at 10:00 a.m. ET. If you were a stockholder of record as of the close of business on the Record Date, you may register to virtually attend the Annual Meeting by accessing meetnow.global/QTRX2026 . Please have your proxy card containing your control number available and follow the instructions to complete your registration request. After registering, you will receive a confirmation email with a link and instructions for accessing the Annual Meeting. Please verify that you have received the confirmation email in advance of the Annual Meeting, including the possibility that it may be in your spam or junk folder. Requests to register to participate in the Annual Meeting must be received no later than 10:00 a.m. ET, on June 9, 2026 +If you do not have your proxy card, you may still register to virtually attend the Annual Meeting by accessing meetnow.global/QTRX2026 but you will need to provide proof of ownership of our Common Stock as of the Record Date during the registration process. Such proof of ownership may include a statement showing your ownership as of the Record Date. After registering, you will receive a confirmation email prior to the Annual Meeting with a link and instructions for entering the virtual Annual Meeting. Although the meeting webcast will begin at 10:00 a.m. ET, on June 9, 2026, we encourage you to access the meeting site prior to the start time to allow ample time to log into the meeting webcast and test your computer system. Accordingly, the Annual Meeting site will first be accessible to registered stockholders beginning at 10:00 a.m. ET, on June 9, 2026, the day of the Annual Meeting. +All stockholders who register to virtually attend the Annual Meeting will receive an email prior to the Annual Meeting containing the contact details of technical support in the event that they encounter difficulties accessing the virtual meeting or during the meeting. Stockholders are encouraged to contact technical support if they encounter any technical difficulties with the meeting webcast. In the event of any technical disruptions that prevent the chair from hosting the Annual Meeting within 30 minutes of the date and time set forth above, the meeting may be adjourned or postponed. +If you hold shares in “street name,” you must obtain a “legal proxy” from your broker, bank or other nominee in order to virtually attend the Annual Meeting. +Even if you plan to virtually attend the Annual Meeting, we recommend that you vote by proxy in advance as described above so that your vote will be counted if you later decide not to or become unable to virtually attend the Annual Meeting. +What is the purpose of the Annual Meeting? +At the Annual Meeting, stockholders will act upon the proposals described in this Proxy Statement, set forth below: +1. +Election of two director nominees to our Board each to serve a one-year term expiring at the 2027 Annual Meeting or until their successors are duly elected and qualified; +2. +Approval, on an advisory basis, of the compensation of the Company’s named executive officers; +3. +Ratification, on an advisory basis, of the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2026; and +4. +Approval of the amendment and restatement of the Company’s 2017 Employee, Director and Consultant Equity Incentive Plan. +7 +TABLE OF CONTENTS +In addition, we will consider any other matters that are properly presented for a vote at the Annual Meeting. If any other matter is presented at the Annual Meeting upon which a vote may be properly taken, shares represented by all proxy cards received by the Company will be voted with respect thereto at the discretion of the persons named as proxies on the enclosed proxy card. At the time this Proxy Statement was first made available, we knew of no matters that needed to be acted on at the Annual Meeting, other than those discussed in this Proxy Statement. +What are the Board’s recommendations? +The Board recommends that you vote as follows: +• +“ FOR ” the election of Quanterix’s two nominees for director — William P. Donnelly and Ivana Magovčević-Liebisch, Ph.D., J.D. — to our Board each to serve a one-year term expiring at the 2027 Annual Meeting or until their successors are duly elected and qualified; +• +“ FOR ” the approval, on an advisory basis, of the compensation of the Company’s named executive officers; +• +“ FOR ” the ratification, on an advisory basis, of the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2026; and +• +“ FOR ” the approval of the amendment and restatement of the Company’s 2017 Employee, Director and Consultant Equity Incentive Plan. +What vote is required to approve each proposal and how are votes counted? +Proposal +Vote Required for Approval +Effect of Abstentions, Withhold Votes and Broker Non-Votes +Proposal No. 1 +Election of two director nominees to our Board to serve one-year terms expiring at the 2027 Annual Meeting or until their successors are duly elected and qualified +Under our Bylaws, directors shall be elected by the vote of a majority of the votes cast other than in a contested election of directors, in which case directors shall be elected by a plurality vote. +Requires the affirmative vote of a majority of the votes cast affirmatively or negatively for this proposal. +Abstentions and broker non-votes, if any, will have no effect on the outcome of this proposal. Broker discretionary voting is not permitted. Votes may not be cumulated. +Proposal No. 2 +Approval, on an advisory basis, of the compensation of the Company’s named executive officers +Requires the affirmative vote of a majority of the votes cast affirmatively or negatively for this proposal. +Although the advisory vote is non-binding, the Compensation Committee of our Board and our Board will review the voting results and may take them into consideration when making future decisions regarding executive compensation. +Abstentions and broker non- votes (if any) will have no effect on the results of this vote. Broker discretionary voting is not permitted. +Proposal No. 3 +Ratification, on an advisory basis, of the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2026 +Requires the affirmative vote of a majority of the votes cast affirmatively or negatively for this proposal. +We are not required to obtain the approval of our stockholders to +Abstentions will have no effect on the results of this vote. As the proposal to ratify the appointment of an independent registered public accounting firm is considered a routine matter, broker discretionary voting is +8 +TABLE OF CONTENTS +Proposal +Vote Required for Approval +Effect of Abstentions, Withhold Votes and Broker Non-Votes +appoint our independent registered public accounting firm. However, if our stockholders do not ratify the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2026, the Audit Committee of our Board will reconsider its appointment. +permitted, and no broker non votes are expected on this proposal. +Proposal No. 4 +Approval of the amendment and restatement of the Company’s 2017 Employee, Director and Consultant Equity Incentive Plan +Requires the affirmative vote of a majority of the votes cast affirmatively or negatively for this proposal. +Abstentions and broker non- votes (if any) will have no effect on the results of this vote. Broker discretionary voting is not permitted. +What is a broker non-vote? +In accordance with the rules of the New York Stock Exchange (which apply to brokers who have record ownership of listed company stock, including stock such as ours that is listed on the Nasdaq Stock Market (“Nasdaq”)), brokers generally have authority to vote on “routine” proposals, such as the ratification of auditors, when they have not received instructions from beneficial owners. However, they are precluded from exercising their voting discretion with respect to the election of directors and other non-routine matters. +A “broker non-vote” occurs if your broker cannot vote your shares on a particular matter because it has not received instructions from you and does not have discretionary voting authority on that matter. +At the Annual Meeting, we expect that brokers will have discretionary authority to vote shares on the ratification, on an advisory basis, of the appointment of KPMG LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2026 (Proposal No. 3). We do not expect that brokers will have discretionary authority on the remainder of the proposals and therefore broker non-votes may occur as to these other proposals if voting instructions are not provided by beneficial owners. +Will my shares be voted if I do not vote? +If your shares are registered in your name or if you have stock certificates, they will not be counted if you do not vote as described above under “ How do I vote and how many votes do I have? ” If your shares are held in “street name” and you do not provide voting instructions to the broker, bank or other nominee that holds your shares as described above, such firm may not have the authority to vote your shares with respect to one or more of the proposals. Please see “ What is a broker non-vote? ” for more information. Therefore, we encourage you to provide voting instructions to your broker, bank or other nominee. This ensures your shares will be voted at the Annual Meeting and in the manner you desire. +May I change or revoke my proxy? +A stockholder of record who has given a proxy may change or revoke it at any time before the closing of the polls by the inspector of elections at the Annual Meeting. You may change or revoke your proxy in any one of the following ways: +• +by signing and delivering a proxy card with a date later than that of your previously delivered proxy; +• +by re-voting by Internet or by telephone; +• +by notifying our Corporate Secretary in writing at 900 Middlesex Turnpike, Building 1, Billerica, Massachusetts 01821 prior to the date of the Annual Meeting that you have revoked your proxy; or +• +by virtually attending the Annual Meeting and voting online. Simply attending the Annual Meeting without affirmatively voting will not, by itself, revoke your proxy. +9 +TABLE OF CONTENTS +Your most current vote, whether by telephone, Internet or proxy card, is the one that will be counted. +Please note, however, that if your shares are held in “street name” and you wish to revoke a proxy, you must contact your broker, bank or other nominee to revoke or change any prior voting instructions. A revocation of a proxy submitted through the Internet or by telephone must be received by 11:59 p.m. ET, on June 8, 2026. A revocation submitted through the mail must be received by the close of business on June 8, 2026, in order to be counted. +Whether or not you plan to attend the Annual Meeting, we urge you to sign, date and return the enclosed proxy card in the postage-paid envelope provided, or vote via the Internet or by telephone as instructed on the proxy card. +May I ask questions at the Annual Meeting and, if so, who will be available to answer? +Yes. We will provide our stockholders with the opportunity to ask questions and make statements. The question-and-answer session will be conducted in accordance with certain rules of conduct. These rules of conduct will be made available at meetnow.global/QTRX2026 during the Annual Meeting and may include certain procedural requirements. +What happens if the Annual Meeting is adjourned? +Unless a new record date is fixed, your proxy will still be valid and may be used to vote your shares of Common Stock at the adjourned Annual Meeting. You will still be able to change or revoke your proxy until it is used to vote your shares. +Who counts the votes? +Representatives of Computershare will count the votes and serve as the independent inspector of election at the Annual Meeting. +What is the deadline for voting? +The deadline for voting by telephone or electronically is 11:59 p.m. ET on June 8, 2026. The deadline for voting through the mail is the close of business on June 8, 2026. You may vote your shares during the Annual Meeting by following the instructions provided at meetnow.global/QTRX2026 . +Where can I find the voting results of the Annual Meeting? +Voting results will be tabulated and certified by Computershare the inspector of elections appointed for the Annual Meeting. The preliminary voting results are expected to be announced at the Annual Meeting. The final results will be tallied by the inspector of elections, and we will publish preliminary results, or final results if available, in a Current Report on Form 8-K within four business days following the Annual Meeting. If final results are unavailable at the time we file the Form 8-K, then we will file an amended Current Report on Form 8-K to disclose the final voting results within four business days after the final voting results are known. +Who is soliciting proxies for the Annual Meeting with this Proxy Statement and who is paying for the solicitation? +Our Board, on behalf of the Company, is soliciting your proxy to vote your shares of Common Stock on all matters scheduled to come before the Annual Meeting, whether or not you attend the Annual Meeting. By completing, signing, dating and returning the enclosed proxy card, or by submitting your proxy and voting instructions via the Internet or by telephone, you are authorizing the proxy holders to vote your shares of our Common Stock at the Annual Meeting as you have instructed. +In addition to these proxy materials, our directors and employees may solicit proxies on behalf of our Board in person, by telephone, by fax, by email or by other means of communication. Directors and employees will not be paid any additional compensation for soliciting proxies. +10 +TABLE OF CONTENTS +We will ask banks, brokers and other nominees in whose names shares of our Common Stock are registered to furnish the proxy materials, including the proxy card, the Notice and the 2025 Annual Report to their principals and to obtain authority to execute proxies, and will reimburse them for their expenses. +What constitutes a quorum for the Annual Meeting? +The presence, in person or by proxy, of the holders of a majority of the voting power of all outstanding shares of our Common Stock, entitled to vote at the Annual Meeting, is necessary to constitute a quorum at the Annual Meeting. Votes of stockholders of record who are present at the Annual Meeting in person or by proxy, abstentions and broker non-votes are counted for purposes of determining whether a quorum exists. +Householding of Annual Disclosure Documents +SEC rules concerning the delivery of annual disclosure documents allow us or your broker, bank or other nominee to send a single notice or, if applicable, a single set of our proxy materials to any household at which two or more of our stockholders reside, if we or your broker, bank or nominee believe that the stockholders are members of the same family. This practice, referred to as “householding,” benefits both you and us. It reduces the volume of duplicate information received at your household and helps to reduce our expenses. The rule applies to our notices, annual reports, proxy statements and information statements. Once you receive notice from your broker or from us that communications to your address will be “householded,” the practice will continue until you are otherwise notified or until you revoke your consent to the practice. Stockholders who participate in householding will continue to have access to and utilize separate proxy voting instructions. +If your household received a single Notice or, if applicable, a single set of proxy materials this year, but you would prefer to receive your own copy, please contact the Company’s Investor Relations department at https://ir.quanterix.com/investor-resources/contact-ir. If you would prefer to receive separate copies of the proxy materials either now or in the future, please contact the Company’s Investor Relations department at the Company’s offices at Quanterix Corporation, 900 Middlesex Turnpike, Bldg. 1, Billerica, MA 01821 or at (617) 301-9400. Upon written or oral request, the Company will provide a separate copy of the proxy materials. +If you do not wish to participate in “householding” and would like to receive your own Notice or, if applicable, set of our proxy materials in future years, follow the instructions described below. Conversely, if you share an address with another stockholder and together both of you would like to receive only a single Notice or, if applicable, set of proxy materials, follow these instructions: +If your shares are registered in your own name, please contact the Company’s Investor Relations department at https://ir.quanterix.com/investor-resources/contact-ir, and inform them of your request. +If a broker, bank or other nominee holds your shares, please contact such broker, bank or other nominee directly and inform them of your request. +Whom should I contact with questions? +If you have any questions or need any assistance in voting your shares, please contact Investor Relations at ir@quanterix.com . +11 +TABLE OF CONTENTS +PROPOSAL NO. 1 +ELECTION OF DIRECTORS +Our Board of Directors currently consists of nine members, classified as follows: (1) Jeffrey T. Elliott, Karen A. Flynn, Scott Mendel and Alan Sachs, M.D., Ph.D. constitute Class I with a term ending at the 2027 Annual Meeting; (2) Everett Cunningham, Myla Lai-Goldman, M.D., and Garret M. Hampton, Ph.D. constitute Class II with a term ending at the 2028 annual meeting of stockholders (the “2028 Annual Meeting”); and (3) William P. Donnelly and Ivana Magovčević-Liebisch, Ph.D., J.D. constitute Class III with a term ending at the upcoming Annual Meeting. At the 2025 annual meeting of stockholders, our stockholders approved an amendment to our Charter to eliminate the classified structure of our Board. Beginning with the upcoming Annual Meeting, the director nominees in each class will be elected for a one-year term, and beginning at our 2028 Annual Meeting, all directors will be elected for a one-year term. +Upon the recommendation of the Nominating and Governance Committee of the Board of Directors, our Board has voted to nominate William P. Donnelly and Ivana Magovčević-Liebisch, Ph.D., J.D. for election at the Annual Meeting as Class III directors for a term of one year to serve until the 2027 Annual Meeting and until their respective successors are elected and qualified or until their earlier resignation or removal. Additional information regarding the Board’s director nominees is set forth below. +Our Bylaws provide that directors shall be elected by the vote of a majority of the votes cast, other than in a contested election of directors, as defined in our Bylaws, in which case directors shall be elected by a plurality vote. The election of the two director nominees in Proposal 1 is not a contested election of directors because no stockholder has nominated a person for election to the Board at the Annual Meeting. +Unless authority to vote for any of these nominees is withheld or the shares represented by the proxy are voted AGAINST a nominee, the shares represented by the proxy will be voted FOR the election of William P. Donnelly and Ivana Magovčević-Liebisch, Ph.D., J.D. Each of the Board’s director nominees has consented to being named in this Proxy Statement and agreed to serve if elected. However, if any of the Board’s director nominees is unable to serve or for good cause will not serve as a director, the Board may choose a substitute nominee. If any substitute nominees are designated, we will file an amended proxy statement that, as applicable, identifies the substitute nominees, discloses that such nominees have consented to being named in the revised proxy statement and agreed to serve if elected, and includes certain biographical and other information about such nominees required by the rules of the SEC. The persons named as proxies on the enclosed proxy card will vote for the Company’s remaining nominees and substitute nominees chosen by the Board. +THE BOARD OF DIRECTORS RECOMMENDS A VOTE “ FOR ” THE ELECTION OF EACH OF THE BOARD’S DIRECTOR NOMINEES — WILLIAM P. DONNELLY AND IVANA MAGOVČEVIĆ-LIEBISCH, PH.D., J.D. +12 +TABLE OF CONTENTS +MANAGEMENT AND CORPORATE GOVERNANCE +The Board of Directors +Our Charter and our Bylaws provide that our business is to be managed by or under the direction of our Board of Directors. Our Board currently consists of nine members, classified as follows: (1) Jeffrey T. Elliott, Karen A. Flynn, Scott Mendel and Alan Sachs, M.D., Ph.D. constitute Class I with a term ending at the 2027 Annual Meeting; (2) Everett Cunningham, Myla Lai-Goldman, M.D., and Garret M. Hampton, Ph.D. constitute Class II with a term ending at the 2028 Annual Meeting; and (3) William P. Donnelly and Ivana Magovčević-Liebisch, Ph.D., J.D. constitute Class III with a term ending at the upcoming Annual Meeting. +Our Board accepted the recommendation of our Nominating Committee and voted to nominate William P. Donnelly and Ivana Magovčević-Liebisch, Ph.D., J.D. for election at the Annual Meeting for a term of one year to serve until the 2027 Annual Meeting and thereafter until their respective successors have been duly elected and qualified. +Set forth in the table and biographies below are the names of our current directors, their ages, their offices in the Company, if any, their principal occupations or employment for at least the past five years, the length of their tenure as directors and the names of other public companies in which such persons hold or have held directorships during the past five years, as of the Record Date. Additionally, information about the specific experiences, qualifications, attributes or skills that led to our Board’s conclusion at the time of filing of this Proxy Statement that each person listed below should serve as a director is provided below. +Name +Age +Position with Quanterix +Everett Cunningham +59 +President, Chief Executive Officer and Director +William P. Donnelly +64 +Chair of the Board +Jeffrey T. Elliott (2)(3) +48 +Lead Independent Director +Karen A. Flynn (1)(2) +63 +Director +Myla Lai-Goldman, M.D. (2) +68 +Director +Garret M. Hampton, Ph.D. (1)(3) +60 +Director +Ivana Magovčević-Liebisch, Ph.D., J.D. (1)(2) +58 +Director +Scott Mendel (3) +59 +Director +Alan Sachs, M.D., Ph.D. (1) +65 +Director +(1) +Member of our Compensation Committee +(2) +Member of our Nominating and Governance Committee +(3) +Member of our Audit Committee +13 +TABLE OF CONTENTS +Skills Matrix +The following skills matrix illustrates the skills and experiences that the Board believes are important for the Company’s current and future business needs and how such skills are represented by each director. +Knowledge, Skills, and +Experience +William P. +Donnelly +Everett +Cunningham +Jeffrey T. +Elliott +Karen A. +Flynn +Mya-Lai- +Goldman, +M.D +Garret M. +Hampton, +Ph.D. +Ivana +Magovčević +Liebisch, +Ph.D., J.D. +Scott +Mendel +Alan +Sachs, +M.D., +Ph.D. +M&A / Transactional +• +• +• +• +• +• +• +• +• +Capital Markets / Finance +• +• +• +• +Healthcare Industry +• +• +• +• +• +• +• +• +• +Other Public Co. Board +• +• +• +• +• +• +• +• +R&D / Scientific +• +• +• +• +Public Co. Executive +• +• +• +• +• +• +• +• +• +Legal / Regulatory +• +• +Corporate Governance +• +• +• +• +• +• +• +• +• +Biographies +Everett Cunningham has served as a member of our Board and as our President and Chief Executive Officer since January 2026. Mr. Cunningham served as Chief Commercial Officer of Illumina Inc., a global leader in DNA sequencing and array-based technologies, where he led the company’s global commercial strategy and execution, from June 2024 to January 2026. Prior to this, from October 2021 to June 2024, he was Chief Commercial Officer at Exact Sciences Corp., a leading provider of tests for cancer prevention, early detection and screening, where he oversaw the company’s marketing, sales, and customer service functions. Prior to Exact Sciences, Mr. Cunningham was President and Chief Executive Officer of GE Healthcare’s Canadian and United States division from June 2019 to October 2021. Earlier in his career, he spent over 20 years holding various senior leadership roles at Quest Diagnostics, GE Healthcare, and Pfizer. Mr. Cunningham currently serves on the boards of Arvinas and Visby Medical. He holds a B.S. in economics from Northwestern University. Mr. Cunningham’s qualifications for service as a member of our Board include his extensive experience in the life sciences and diagnostics industries, as well as the perspective he brings as our President and Chief Executive Officer. +William P. Donnelly has served as a member of our Board since August 2023 and has served as Chair of the Board since March 2025. He also served as Executive Director from November 2025 through January 2026. From 2014 to 2018, Mr. Donnelly served as Executive Vice President responsible for finance, investor relations, supply chain and information technology at Mettler-Toledo International Inc. Mr. Donnelly served as Mettler-Toledo’s Chief Financial Officer from 1997 to 2002 and from 2004 to 2014 and as division head of Mettler-Toledo’s product inspection and certain lab businesses from 2002 to 2004. Earlier in his career, Mr. Donnelly served in various senior financial roles, including Chief Financial Officer, of Elsag Bailey Process Automation, NV and was an auditor with PricewaterhouseCoopers LLP. Mr. Donnelly has been a director of Ingersoll Rand Inc. since May 2017 and was appointed lead director in November 2021. He has also served as a director of TRowe Price Group, Inc. since 2023. Mr. Donnelly received a B.S. in business administration from John Carroll University. Mr. Donnelly’s qualifications for service as a member of our Board include his expertise in financial strategy and extensive leadership experience with publicly-held industrial and life science companies, including as chief financial officer. +Jeffrey T. Elliott has served as a member of our Board since August 2024 and has served as Lead Independent Director since November 2025. Since September 2024, Mr. Elliott has served as a consultant to The Boston Consulting Group, Inc. He served as Chief Financial Officer of Exact Sciences Corp., a leading global supplier of precision instruments and services, from November 2016 to May 2024 and also as Chief Operating Officer from 2021 to 2023. Prior to his appointment as Chief Financial Officer, Mr. Elliott served as Exact Sciences’ Vice President, Strategy and Business Development. Earlier in his career, Mr. Elliott was with Robert W. Baird & Co. where he was a senior equity research analyst covering healthcare companies, +14 +TABLE OF CONTENTS +including those in the diagnostics and life science tools industry. Mr. Elliott has served as a director of Sera Prognostics, Inc. since March 2025. Mr. Elliott earned a B.S. in business administration from the University of Illinois at Urbana-Champaign and an M.B.A. from the University of Chicago Booth School of Business. Mr. Elliott is a Chartered Financial Analyst. Mr. Elliott’s qualifications for service as a member of our Board include his knowledge and expertise in financial strategy, notably in the diagnostics sector. +Karen A. Flynn has served as a member of our Board since June 2022. Ms. Flynn retired from her position as Chief Commercial Officer of Catalent, Inc.in September 2022. Ms. Flynn previously served Catalent as President, Biologics and Chief Commercial Officer from January 2020 to October 2021. After retirement, Ms. Flynn served on an interim basis as Catalent’s President, Biomodalities from April 2023 to October 2023. Prior to joining Catalent, Ms. Flynn served as the Senior Vice President and Chief Commercial Officer of West Pharmaceutical Services, Inc., having previously served as the company’s President, Pharmaceutical Packaging Systems. Ms. Flynn has served as a director of Stevanato Group S.p.A. since May 2024, Sotera Health Company since November 2023, GermFree Laboratories, Inc. since February 2024 and Ascend Advanced Therapeutics Ltd. since May 2025. She also is a member of the Board of Trustees of The Franklin Institute and serves in the Hesburgh Women of Impact mentorship program for the University of Notre Dame. Previously, Ms. Flynn served as a director of Catalent from September 2022 to January 2024. Ms. Flynn holds an M.S. in business administration from Boston University, an M.S. in Engineering from the University of Pennsylvania and a Bachelor of Science in Pre-Professional Studies from the University of Notre Dame. Ms. Flynn’s qualifications for service as a member of our Board include her experience leading high growth businesses and her extensive background in commercial strategy, strategic planning, innovation and quality management. +Garret M. Hampton, Ph.D. has served as a member of our Board of Directors since November 2025. Dr. Hampton served as President of the Clinical Sequencing and Oncology Division at Thermo Fisher Scientific from June 2020 to September 2024, driving the adoption of disruptive, “next-day” rapid NGS-based oncology testing to enable therapy selection. Before that, Dr. Hampton was Senior Vice President, Clinical Genomics at Illumina Inc., a leading the development of oncology, reproductive health and rare genetic disease products and driving the development of in vitro diagnostics (IVD) in Oncology and Prenatal Testing, from January 2017 to January 2020. Prior to his roles in molecular diagnostics, Dr. Hampton held multiple executive leadership roles in Genentech and Roche, Celgene, and Novartis. In these roles, he led clinical biomarker research and development, enabling the success of multiple drug programs. At Genentech and Roche, he built and led the company’s global translational sciences capabilities. Before transitioning to industry, Dr. Hampton was Assistant Professor of Medicine at the University of California at San Diego, with a joint appointment at the Ludwig Institute of Cancer Research. His research on the genetic changes in cancer development at UC San Diego, and subsequent roles in industry, led to the publication of over 150 peer-reviewed articles with 14,000 lifetime citations. Dr. Hampton has served as a director at Ideaya Biosciences Inc., a clinical stage oncology company, since May 2020 and a member of the Dean’s Advisory Council at UC San Diego’s School of Biological Sciences. Dr. Hampton also serves as an advisor to several biotech companies focused on oncology, multiomics and artificial intelligence. Dr. Hampton received his M.A. and B.A. at Trinity College and his Ph.D. in Statistical and Biometric Geneticsat University College London and the Imperial Cancer Research Fund, London. Dr. Hampton’s qualifications for service as a member of our Board include his extensive experience as a genetics researcher and corporate executive in oncology and diagnostic sectors. +Myla Lai-Goldman, M.D. has served as a member of our Board since July 2025. She served as a member of Akoya Biosciences, Inc.’s (“Akoya”) board of directors from September 2021 to July 2025, when it was acquired by Quanterix. Dr. Lai-Goldman has served since June 2011 as the Chair of the board of directors of GeneCentric Therapeutics, Inc., a precision medicine company, where she was a co-founder and previously served as Chief Executive Officer and President. She is also managing partner of Personalized Science, LLC, a clinical diagnostic consulting company that she founded in 2008. Additionally, Dr. Lai-Goldman is a Venture Partner of Hatteras Venture Partners, a venture capital firm with a focus on biopharmaceuticals, medical devices, diagnostics and related opportunities in human medicine. Previously, Dr. Lai-Goldman was Chief Executive Officer and Chief Scientific Officer of CancerGuide Diagnostics, Inc. Before joining CancerGuide Diagnostics, she held various roles, including Executive Vice President, Chief Medical Officer and Chief Scientific Officer, at Laboratory Corporation of America Holdings (“Labcorp”) and its predecessor company, Roche Biomedical Laboratories, Inc. Dr. Lai-Goldman has served as a +15 +TABLE OF CONTENTS +director of West Pharmaceutical, a public pharmaceutical company since 2014, NovoPath Inc. since 2022 and Mercy BioAnalytics, Inc. since 2023. Dr. Lai-Goldman spent more than 18 years at Labcorp where she served on Labcorp’s Executive and Management Committees, with strategic and operations responsibilities for three major genomic laboratories comprising more than 700 people. During her tenure at Labcorp, she led all clinical, scientific and medical activities, including the introduction of more than 400 clinical assays. Her experience includes the development of partnerships, licensing and acquisitions. Dr. Lai-Goldman is board-certified in anatomic and clinical pathology, is a recognized author and speaker on clinical diagnostics, and has substantial leadership experience. Dr. Lai-Goldman holds a B.A. in biology with a concentration in ecology from the University of Pennsylvania and an M.D. from Columbia University Vagelos College of Physicians and Surgeons. Dr. Lai-Goldman’s qualifications for service as a member of our Board include her extensive experience as a physician, researcher and corporate executive in the clinical laboratory and diagnostics industry. +Ivana Magovčević-Liebisch, Ph.D., J.D. has served as a member of our Board since October 2024. Dr Magovčević-Liebisch has served as the President and Chief Executive Officer at Draig Therapeutics since November 2025. She served as President and Chief Executive Officer of Vigil Neuroscience, Inc. and as a member of its board of directors from July 2020 to November 2025. Prior to Vigil, Dr. Magovčević-Liebisch was Executive Vice President, Chief Business Officer at Ipsen S.A., a pharmaceutical company, from March 2018 to April 2020, where she led the external innovation, business development and alliance management functions. Prior to Ipsen, Dr. Magovčević-Liebisch was Executive Vice President, Chief Strategy and Corporate Development Officer at Axcella Health Inc., and Senior Vice President, Head of Global Business Development for the specialty drug business at Teva Pharmaceutical Industries Ltd. Earlier in her career, Dr. Magovčević-Liebisch worked at Dyax Corp., now Takeda Pharmaceutical Company Limited, in management roles of increasing scope and responsibility, including Executive Vice President and Chief Operating Officer, where she launched the company’s first drug, Kalbitor ® for an orphan indication, hereditary angioedema. Dr. Magovčević-Liebisch began her biopharmaceutical career at Transkaryotic Therapies, Inc., where she was Director of Intellectual Property and Patent Counsel. Dr. Magovčević-Liebisch has served as a director of Acrivon Therapeutics, Inc. since February 2024. Previously, she was a director and the Chairperson of the board of directors of Absci Corporation from August 2020 to June 2023 and served as a director of Aeglea BioTherapeutics, Inc. (now Spyre Therapeutics, Inc.) from March 2018 to November 2023 and Applied Genetic Technologies Corporation (acquired by Syncona Ltd., now Beacon Therapeutics Holdings Ltd.) from June 2014 to April 2022. Dr. Magovčević-Liebisch is also a trustee of the Boston Museum of Science and of the Boston Ballet, and overseer of Beth Israel Deaconess Medical Center. She received a B.A. in biology and chemistry from Wheaton College, a Ph.D. in genetics from Harvard University, and a J.D. in high technology law from Suffolk University Law School. Dr. Magovčević-Liebisch’s qualifications for service as a member of our Board include over 25 years of senior management experience in the biotechnology and pharmaceutical industry. +Scott Mendel has served as a member of our Board since July 2025. Mr. Mendel served as a member of Akoya’s board of directors from June 2021 until its acquisition by Quanterix in July 2025, including serving as the Chairman from October 2024 to July 2025. He has over 30 years of financial and operational leadership experience. Mr. Mendel served as President and Chief Executive Officer and a member of the board of directors of GenMark Diagnostics, Inc., a molecular diagnostics company, from May 2020 until its acquisition by F. Hoffmann-La Roche Ltd. in April 2021, and as President of GenMark following the acquisition until September 2021. From May 2014 to May 2020, Mr. Mendel served in various roles of ascending responsibility with GenMark, including as interim Chief Executive Officer, Chief Operating Officer and Chief Financial Officer. Prior to joining GenMark, Mr. Mendel served as the Chief Financial Officer of The Active Network, Inc., a global software as a service company that provides technology to organizers of events and activities. Prior to joining The Active Network, Mr. Mendel held finance positions at General Electric Company, a diversified technology, media and financial services company, for over 20 years, including Chief Financial Officer for General Electric’s Healthcare IT division, a leading provider of medical technologies and services. Mr. Mendel has served as a director of Pattern Bioscience, Inc., a rapid pathogen identification and antibiotic susceptibility testing company, since May 2024 and Quantum-Si Incorporated, a public protein sequencing company, since May 2023, and previously served as a director of Visby Medical, Inc., a diagnostics company, from January 2022 to May 2024. Mr. Mendel earned a B.S. in finance from Indiana University and an M.B.A. from Northwestern University’s Kellogg School of +16 +TABLE OF CONTENTS +Management. Mr. Mendel’s qualifications for service as a member of our Board include his financial expertise and experience in the medical technology industry. +Alan Sachs, M.D., Ph.D. has served as a member of our Board of Directors since November 2025. He served as Chief Scientific Officer and Chief Medical Officer of Thermo Fisher Scientific from January 2016 to June 2024, where he led strategic initiatives to drive growth through investments that enabled customers to accelerate life sciences research, address complex analytical challenges, enhance patient diagnostics, and improve laboratory productivity. Prior to Thermo Fisher Scientific, he was Chief Scientific Officer at Life Technologies from January 2012 until its acquisition by Thermo Fisher Scientific in 2014. Earlier in his career, Dr. Sachs spent a decade at Merck Research Laboratories, where he was Vice President of Exploratory and Translational Sciences. During his tenure, he built and led the global RNA Therapeutics Department, oversaw the Rosetta Inpharmatics group, and directed the Department of Molecular Profiling. Before joining Merck, Dr. Sachs was an Associate Professor of Molecular and Cell Biology at the University of California, Berkeley, following his appointment as a Whitehead Institute Fellow. He has also served on the boards of directors of Imago BioSciences and Odyssey Thera, as well as on the scientific advisory board of the Allen Institute. Dr. Sachs earned his B.A. in biochemistry from Cornell University and his M.D. and Ph.D. from Stanford University School of Medicine. Dr. Sachs’s qualifications for service as a member of our Board include his leadership and scientific contributions and executive accomplishments across academia, industry, and global life sciences organizations . +Our Board reviewed the materiality of any relationship that each of our directors and director nominees has with Quanterix, either directly or indirectly, including those described under the caption “Certain Relationships and Related Person Transactions” below. Based upon this review, our Board has determined that each of the following directors and director nominees is “independent” under Nasdaq independence standards: Jeffrey T. Elliott, Karen A. Flynn, Myla Lai-Goldman, M.D., Garret M. Hampton, Ph.D., Ivana Magovčević-Liebisch, Ph.D., J.D., Scott Mendel, and Alan Sachs, M.D, Ph.D. In addition, the Board had determined that Paul Meister and David Walt, Ph.D., who each served as a director until November 20, 2025, and Sarah Hlavinka and Martin Madaus, Ph.D., who each served as a director until July 8, 2025 were “independent” under Nasdaq independence standards. Mr. Donnelly is not considered an independent director under the Nasdaq listing rules because he served as Executive Chair from November 20, 2025 to January 19, 2026. Dr. Toloue was not, and Everett Cunningham is not, considered an independent director due to their respective service as the Company’s President and Chief Executive Officer. +There are no family relationships between or among any of our directors or director nominees. The principal occupation and employment during the past five years of each of our directors and director nominees was carried on, in each case except as specifically identified above, with a corporation or organization that is not a parent, subsidiary or other affiliate of Quanterix. +There are no legal proceedings to which any of our directors is a party adverse to us or any of our subsidiaries or in which any such person has a material interest adverse to us or any of our subsidiaries. +Committees of the Board of Directors and Meetings +Meeting Attendance. During 2025, our Board met or acted by written consent 23 times, and the three standing committees of the Board met or acted by written consent a total of 33 times. All incumbent directors attended at least 75% of meetings of the Board and the committees of the Board on which such director served during 2025. Our Board is encouraged, but not required, to attend each annual meeting of our stockholders. +Audit Committee. The Audit Committee of the Board of Directors (the “Audit Committee”) met or acted by written consent 14 times during 2025. The committee currently consists of three members: Jeffrey T. Elliott (Chairperson), Garret M. Hampton, Ph.D. and Scott Mendel. The Audit Committee’s role and responsibilities are set forth in its written charter and include: +• +selecting a firm to serve as the independent registered public accounting firm to audit the Company’s financial statements; +• +ensuring the independence of the independent registered public accounting firm; +17 +TABLE OF CONTENTS +• +discussing the scope and results of the audit with the independent registered public accounting firm and reviewing the Company’s interim and year-end operating results with management and the independent registered public accounting firm; +• +establishing procedures for employees to anonymously submit concerns about questionable accounting or audit matters; +• +considering and reviewing the effectiveness of the Company’s internal controls over financial reporting and internal audit functions, if any, with management and the independent registered public accounting firm; +• +reviewing significant accounting and reporting issues, including complex or unusual transactions and highly judgmental areas, recent professional and regulatory pronouncements, and their impact on the Company’s financial statements; +• +reviewing legal or regulatory matters that could have a significant impact on the Company’s financial statements with legal counsel; +• +reviewing material related party transactions and other related party transactions that require disclosure; +• +approving or, as permitted, pre-approving all audit and non-audit services to be performed by the independent registered public accounting firm; +• +preparing the audit committee report required by SEC rules, which is included in the section of this Proxy Statement titled, “ Report of Audit Committee ”; and +• +overseeing Company programs, policies, and procedures related to information security and data protection. +All members of the Audit Committee satisfy the independence standards promulgated by the SEC and Nasdaq, as such standards apply specifically to members of audit committees. Our Board has determined that Jeffrey T. Elliott qualifies as an “audit committee financial expert,” as that term is defined in rules promulgated by the SEC. The designation of an “audit committee financial expert” does not impose upon such persons any duties, obligations or liabilities that are greater than those generally imposed on the other members of the Audit Committee and the Board, and such designation does not affect the duties, obligations or liabilities of the Board. +A copy of the Audit Committee’s written charter is publicly available on the Company’s website at www.quanterix.com . +Compensation Committee. The Compensation Committee of the Board of Directors (the “Compensation Committee”) met or acted by written consent 11 times during 2025. The committee currently consists of four members: Karen A. Flynn (Chairperson), Garret M. Hampton, Ph.D., Ivana Magovčević- Liebisch, Ph.D., J.D. and Alan Sachs, M.D., Ph.D. The Compensation Committee’s role and responsibilities are set forth in its written charter and include: +• +reviewing and approving, or making recommendations to our Board with respect to, the compensation and other terms of employment of the Company’s executive officers; +• +overseeing the annual process of evaluation of the performance of the Company’s management; +• +reviewing and making recommendations with respect to director compensation and benefits; +• +administering the Company’s 2017 Employee, Director and Consultant Equity Incentive Plan (the “2017 Plan”), Amended and Restated 2025 Inducement Plan (the “2025 Plan”), 2007 Stock Option and Grant Plan, as amended (the “2007 Plan”), and 2017 Employee Stock Purchase Plan (the “ESPP”); +• +assisting the Board in establishing appropriate incentive compensation and equity-based plans and administering such plans; +• +reviewing compensation policies and practices for all employees to determine whether such policies and practices create risks that are reasonably likely to have a material adverse effect on the Company; and +18 +TABLE OF CONTENTS +• +reviewing and discussing the Compensation Discussion and Analysis (“CD&A”) prepared by management and, based on such review and discussions, recommending to the Board that the CD&A be included in the Company’s Annual Report on Form 10-K, proxy statements, or any other applicable filing as required by the SEC. +To qualify as independent to serve on the Company’s Compensation Committee, the Nasdaq listing standards require a director not to accept any consulting, advisory, or other compensatory fee from the Company, other than for service on the Board, and that the Board consider whether a director is affiliated with the Company and, if so, whether such affiliation would impair the director’s judgment as a member of the Company’s Compensation Committee. Our Board has concluded that each of Karen A. Flynn, Garret M. Hampton, Ph.D., Ivana Magovčević-Liebisch, Ph.D., J.D. and Alan Sachs, M.D., Ph.D. qualifies as “independent” under applicable rules and regulations of Nasdaq and the SEC. The Compensation Committee has the authority to retain or obtain the advice of such compensation consultants, legal counsel, experts and other advisors as it may deem appropriate in its sole discretion. The Compensation Committee is directly responsible for the appointment, compensation and oversight of its consultants, legal counsel, experts and advisors and has sole authority to approve their fees and retention terms, and the Company provides funding for such fees and related expenses. +The Compensation Committee retained Pay Governance, LLC (“PayGov”) as its independent compensation consultant for 2025. Services provided by PayGov included assistance in reviewing trends in executive compensation, selecting the Company’s compensation peer group and designing the Company’s executive compensation programs. PayGov also assisted the Compensation Committee in obtaining compensation benchmark data and establishing the target compensation levels of the Company’s executive officers. PayGov provides no services to the Company other than those performed on behalf of the Compensation Committee. The Compensation Committee considers the independence of its compensation consultant on an annual basis. A copy of the Compensation Committee’s written charter is publicly available on the Company’s website at www.quanterix.com . +Nominating and Governance Committee. The Nominating and Governance Committee of the Board of Directors (the “Nominating Committee”) met or acted by written consent eight times during 2025. The committee currently consists of three members: Ivana Magovčević-Liebisch, Ph.D., J.D. (Chairperson), Jeffrey T. Elliott and Karen A. Flynn. Our Board has determined that all members of the Nominating Committee qualify as “independent” under the Nasdaq rules. The Nominating Committee’s responsibilities are set forth in its written charter and include: +• +identifying, evaluating and recommending candidates for membership on our Board; +• +evaluating the composition, organization and governance of the Board and its committees, and making recommendations to the Board for approval; +• +reviewing and recommending guidelines and policies on corporate governance; +• +developing, adopting and overseeing the implementation of a code of business conduct and ethics for all directors, executive officers and employees of the Company; and +• +administering the annual Board performance evaluation process, including conducting surveys of director observations, suggestions and preferences. +In 2022, the Nominating Committee proposed, and our Board approved, corporate governance guidelines, which, in conjunction with our Charter, our Bylaws, our committee charters and key Board policies, form the framework for the Company’s governance. +Generally, the Nominating Committee considers director candidates recommended by stockholders as well as from other sources, such as other directors or officers, third-party search firms or other appropriate sources. Once identified, the Nominating Committee evaluates a candidate’s qualifications in accordance with our Nominating and Governance Committee Policy Regarding Qualifications of Directors, which is appended to the Nominating Committee’s written charter. Threshold criteria include personal integrity and sound judgment, business and professional skills and experience, independence, industry knowledge, possible conflicts of interest, diversity, the extent to which the candidate would fill a present need on our Board, and concern for the long-term interests of our stockholders. The Nominating Committee has not +19 +TABLE OF CONTENTS +adopted a formal diversity policy in connection with the consideration of director nominations or the selection of nominees. However, the Nominating Committee will consider issues of diversity among our Board in identifying and considering director nominees and will strive where appropriate to achieve a diverse balance of backgrounds, perspectives, experiences, ages, genders, ethnicities and countries of citizenship on our Board and its committees. +A stockholder who wishes to propose a candidate for consideration as a nominee for election to our Board must follow the procedures described in our Bylaws and in “ Stockholder Proposals and Nominations for Director ” at the end of this Proxy Statement. In general, persons recommended by stockholders will be considered in accordance with our Policy on Shareholder Recommendation of Candidates for Election as Directors, which is appended to the Nominating Committee’s written charter. Any such recommendation should be made in writing to the Nominating Committee, care of the Company’s Corporate Secretary at our principal office, and should be accompanied by the following information concerning each recommending stockholder and the beneficial owner of the Company’s Common Stock, if any, on whose behalf the nomination is made: +• +all information relating to such person that would be required to be disclosed in a proxy statement filed with the SEC; +• +certain biographical and share ownership information about the stockholder and any other proponent, including a description of any derivative transactions in the Company’s securities; +• +a description of certain arrangements and understandings between the proposing stockholder and any beneficial owner and any other person in connection with such stockholder nomination; and +• +a statement as to whether such stockholder or beneficial owner intends to deliver a proxy statement and form of proxy to holders of voting shares sufficient to carry the proposal. +The recommendation must also be accompanied by the following information concerning the proposed nominee: +• +certain biographical information; +• +all information required to be disclosed in solicitations of proxies for election of directors; +• +certain information about any other security holder of the Company who supports the proposed nominee; +• +a description of all relationships between the proposed nominee and the recommending stockholder or any beneficial owner, including any agreements or understandings regarding the nomination; and +• +additional disclosures relating to stockholder nominees for directors, including completed questionnaires and disclosures required by the Bylaws. +A copy of the Nominating Committee’s written charter, including its appendices, is publicly available on the Company’s website at www.quanterix.com . +Compensation Committee Interlocks and Insider Participation +None of the members of our Compensation Committee has been one of our officers or employees at any time during the previous three years. None of our executive officers currently serves, or in the past fiscal year has served, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on our Board or Compensation Committee. For a description of any transactions between us and members of our Compensation Committee and affiliates of such members, please see “ Certain Relationships and Related Person Transactions ” below. +Board Leadership Structure and Role in Risk Oversight +Our Board of Directors does not have a policy regarding the separation of the roles of Chief Executive Officer and Chair of the Board (the “Chair”), as our Board believes it is in the best interest of the Company to make that determination based on the position and direction of the Company and the membership of +20 +TABLE OF CONTENTS +our Board. William P. Donnelly currently serves as Chair of our Board. From November 20, 2025 to January 19, 2026, when Everett Cunningham was appointed the President and Chief Executive Officer of the Company, Mr. Donnelly served as Executive Chair of the Company. The Chair of the Board and the other members of our Board work in concert to provide oversight of our management and affairs. Our Board encourages communication among its members and between management and our Board to facilitate productive working relationships. Working with the other members of our Board, the Chair strives to ensure that there is an appropriate balance and focus among key Board responsibilities such as strategic development, review of operations and risk oversight. +On November 20, 2025, in connection with Mr. Donnelly’s appointment as Executive Chair, the Board appointed Jeffrey T. Elliott as Lead Director. Under the Company’s Corporate Governance Guidelines, the Board may appoint an independent director as Lead Director in the event the Chair of the Board is not an independent director. The Corporate Governance Guidelines provide that the Lead Director will: +• +chair any meeting of the independent directors in executive session, and any Board meeting if the Chair is not present; +• +serve as a liaison and facilitate communications between other members of the Board and the Chair and/or the CEO; +• +work with the Chair in the preparation of the agenda for each Board meeting and in determining the need for special meetings of the Board; +• +provide the Nominating Committee with input on the selection of new director candidates; +• +in consultation with the members of the Board, determine the frequency and length of Board meetings; +• +subject to the Corporate Governance Guidelines’ general direction that the CEO should speak for the Company, be primarily responsible for monitoring written communications from stockholders and other interested parties; +• +be authorized to call special meetings of the Board, or its independent members or Committees; and +• +otherwise consult with the Chair and/or the CEO on matters relating to corporate governance and Board performance. +Risk is inherent with every business, and how well a business manages risk can ultimately determine its success. Management is responsible for risk management on a day-to-day basis, with our Board overseeing risk management processes directly and through its committees by evaluating the policies and practices utilized by management in assessing and managing risks and providing input on those policies and practices. +Members of our senior management team attend our quarterly Board meetings and are available to address any questions or concerns raised by the Board on risk management and any other matters. In addition, our Board regularly receives reports on strategic matters involving Company business. The Audit Committee oversees risk management activities related to financial controls, cybersecurity, and legal and compliance risks, and our full Board receives regular reports from management with respect to cybersecurity risks. The Compensation Committee oversees risk management activities relating to Company compensation policies and practices, and the Nominating Committee oversees risk management activities relating to Board composition and governance-related matters. Each committee reports to our full Board on a regular basis and provides reports with respect to such committee’s risk oversight activities as appropriate. +Board Evaluation Process +Our Board conducts an annual self-evaluation that is intended to assess whether the Board, its committees and their members are functioning effectively and to provide an opportunity to improve performance and effectiveness. As part of the evaluation process for the Board, each director completes a written questionnaire that is designed to solicit feedback on a wide range of topics, including: Board membership and culture; sufficiency of meetings and materials; committees, corporate policies and governance policies; interactions with management; corporate strategy; and risk and risk management. Each standing committee of the Board also periodically completes a questionnaire tailored to the function +21 +TABLE OF CONTENTS +of the committee. Responses are not attributed to any individual director in order to promote candid feedback. The Nominating Committee is charged with overseeing this process and may supplement written evaluations with interviews or other measures designed to solicit feedback. The results of the self-evaluations are reviewed by the Board and each committee and appropriate steps are taken in partnership with management to implement any agreed-upon improvements. +Compensation Risk Assessment +Following a review of our compensation policies and practices, our Compensation Committee believes that risks arising from those policies and practices are not reasonably likely to have a material adverse effect on the Company. In reaching this conclusion, our Compensation Committee believes that compensation- related risk is limited by a number of factors, including the following: +• +Our compensation packages include multiple elements, including fixed and variable compensation, the amount and mix of which is appropriate to an employee’s level and role in Quanterix. +• +Our variable compensation programs employ a number of different performance metrics that are aligned with our near-term and strategic objectives and the interests of our stockholders. +• +Our long-term incentive equity awards are designed to align the interests of our employees and management with the interests of our stockholders. +• +We limit the payouts under our annual cash incentive bonus programs to an amount that is appropriate to the recipient’s level in Quanterix. +We believe that, taken as a whole, the various elements of our compensation packages mitigate compensation-related risk by reducing the focus on any single compensation element or performance metric, by encouraging our employees to consider both long- and short-term goals that are aligned with the interests of our stockholders and by discouraging excessive risk in order to reach performance goals or to achieve excessive payouts. For more information on our compensation policies and practices, see Compensation Discussion and Analysis below. +Stockholder Communications with the Board +Generally, stockholders who have questions or concerns should contact our Investor Relations department at https://ir.quanterix.com/investor-resources/contact-ir . However, any stockholder who wishes to communicate with our Board, non-management members of our Board as a group or a specific member of our Board (including the Chair) may do so by written communication addressed to the attention of the Chair of the Board by mail at 900 Middlesex Turnpike, Building 1, Billerica, Massachusetts 01821 or using the “IR Contacts” page of our website at https://ir.quanterix.com/investor-resources/contact-ir . Communications will be reviewed and distributed to the members of our Board unless such communications are unsolicited items, sales materials or other routine items or items unrelated to the duties and responsibilities of the Board or are otherwise determined to be frivolous, irrelevant, threatening, illegal or similarly unsuitable. +Executive Officers +The following table sets forth the name, age, and position(s) of each of our current executive officers. We have entered into employment agreements or offer letters with our executive officers. All our executive officers are at-will employees. See “ Compensation Discussion & Analysis — Employment Agreements with our Named Executive Officers ”, “ Employment Agreement with Everett Cunningham ” and “ Potential Payments upon Termination or Change of Control ” below for additional information. +Name +Age +Positions +Everett Cunningham +59 +President and Chief Executive Officer +Daniel Char +65 +Chief Legal Officer and Corporate Secretary +Benjamin Meadows +46 +Chief Commercial Officer +Michael Miller +62 +Chief Operating Officer +Vandana Sriram +52 +Chief Financial Officer and Treasurer +22 +TABLE OF CONTENTS +See “ The Board of Directors — Biographies” above for biographical information about Mr. Cunningham. +Daniel Char joined Quanterix in December 2025 as Chief Legal Officer and Corporate Secretary and has more than 30 years of experience in life science companies, including the development, financing and commercialization of multiple biologics, drugs and medical devices. Mr. Char previously served as the Chief Legal Officer for the global, clinical-stage biopharma company Oculis Holding AG from October 2024 to March 2025. Prior to that, he was the Chief Legal Officer and Corporate Secretary for ImmunoGen, Inc. (“ImmunoGen”), a commercial stage biotech company, from November 2022 until shortly after its acquisition by AbbVie Inc. in May 2024. Prior to joining ImmunoGen, Mr. Char served as General Counsel and Secretary for the clinical stage biotech company Evelo Biosciences, Inc. from 2018 to 2022, which included serving as its Chief Compliance Officer and Data Privacy Officer. Before that, Mr. Char held legal positions of increasing seniority with several biotech and medical device companies, including Smith & Nephew, Targanta Therapeutics, and Biogen. Mr. Char began his career as a corporate associate with Goodwin Procter. Mr. Char holds a B.A. from Tufts University and a J.D. from Harvard Law School. +Benjamin Meadows joined Quanterix in October 2025 as Chief Commercial Officer and brings over 20 years of commercial experience in life sciences, including 10 years in global leadership positions. Mr. Meadows was previously Chief Commercial Officer of Bio X Cell, a market leading company for in vivo antibody products into research programs, from March 2024 to September 2025. Prior to Bio X Cell, from March 2016 to March 2024, he led global sales and customer experience function at LGC Biosearch Technologies where they commercialized high-throughput molecular tools platforms, GMP oligonucleotides for molecular diagnostics and critical component in nucleic acid therapeutics. Mr. Meadows earned a B.S. in biology from Birmingham-Southern College, and an MBA from The George Washington University School of Business. +Michael Miller joined Quanterix in July 2021 as Senior Vice President of Accelerator and Clinical Services and brings over 25 years of experience developing and commercializing products, including over 15 years in the fields of life science research and clinical diagnostics. He was promoted to Chief Operating Officer in May 2024. Mr. Miller was previously Chief Executive Officer of ProterixBio, a company that commercialized novel protein diagnostic tests through its high-complexity CLIA laboratory, from November 2016 to July 2021. Prior to joining ProterixBio in 2007, he held a number of product development and operations positions with BioScale, Inc., Axsun Technologies (now Excelitas Technologies Corp) and Physical Sciences Inc. Mr. Miller earned a B.S. in Mechanical Engineering from the Rensselaer Polytechnic Institute, and an M.S. and Ph.D. in Mechanical Engineering from Stanford University. He is inventor or co-inventor on over 25 issued patents with multiple additional pending patent applications. +Vandana Sriram joined Quanterix in August 2023 as Chief Financial Officer and Treasurer. Ms. Sriram served as Senior Vice President of Global Finance at Azenta, Inc. from September 2021 to August 2023, where she was responsible for the controllership, FP&A and segment chief financial officer activities as a member of the company leadership team. Prior to Azenta, Ms. Sriram served in a variety of positions at General Electric of increasing responsibility from July 1999 to September 2021, most recently as the head of FP&A for GE Aerospace. Ms. Sriram graduated with a B.S. in commerce from Delhi University and is a chartered accountant from the Institute of Chartered Accountants of India. She also graduated from the GE Experience Financial Leadership Program and is a registered certified public accountant. +23 +TABLE OF CONTENTS +PROPOSAL NO. 2 +ADVISORY VOTE ON APPROVAL OF EXECUTIVE COMPENSATION +We are seeking your advisory vote as required by Section 14A of the Securities Exchange Act of 1934, as amended (“Exchange Act”) on the approval of the compensation of our named executive officers as described in the Compensation Discussion and Analysis, the compensation tables and related material contained in this Proxy Statement. Because your vote is advisory, it will not be binding on our Compensation Committee or our Board. However, the Compensation Committee and our Board will review the voting results and take them into consideration when making future decisions regarding executive compensation. +Our compensation philosophy is designed to align each executive’s compensation with Quanterix’s short-term and long-term performance and to provide the compensation and incentives needed to attract, motivate and retain key executives who are crucial to our long-term success. Stockholders are urged to read the Compensation Discussion and Analysis section of this Proxy Statement, which discusses how our compensation policies and procedures implement our compensation philosophy. The Compensation Committee and our Board believe that these policies and procedures are effective in implementing our compensation philosophy and in achieving its goals. +In accordance with the rules of the SEC, the following resolution, commonly known as a “Say-on-Pay” vote, is being submitted for a stockholder vote at the 2026 Annual Meeting: +“RESOLVED, that the compensation paid to the named executive officers of Quanterix Corporation, as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the compensation tables and the related material disclosed in the Proxy Statement, is hereby APPROVED.” +The affirmative vote of a majority of the votes cast affirmatively or negatively for this proposal is required to approve, on an advisory basis, this resolution. +We currently hold our advisory vote to approve the compensation of our named executive officers annually. Stockholders also have an opportunity to cast an advisory vote on the frequency of the Say-on-Pay vote. We expect the next advisory vote on the frequency of the Say-on-Pay vote will be at the 2028 Annual Meeting. +OUR BOARD OF DIRECTORS RECOMMENDS A VOTE “ FOR ” THE APPROVAL OF THE COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS. +24 +TABLE OF CONTENTS +COMPENSATION COMMITTEE REPORT +The Compensation Committee of our Board of Directors has reviewed and discussed the Compensation Discussion and Analysis that appears in this Proxy Statement with our management. Based on this review and discussion, the Compensation Committee has recommended to our Board of Directors that the Compensation Discussion and Analysis be included in our Proxy Statement. +Members of the Compensation Committee: +Karen A. Flynn (Chairperson) +Garret M. Hampton, Ph.D. +Ivana Magovčević-Liebisch, J.D., Ph.D. +Alan Sachs, M.D. Ph.D. +25 +TABLE OF CONTENTS +COMPENSATION DISCUSSION AND ANALYSIS +This Compensation Discussion and Analysis describes the principal components of the compensation program for our named executive officers. It should be read in conjunction with the other information contained in this Proxy Statement. The following executives were our named executive officers for the fiscal year ended December 31, 2025: +Name +Title +Masoud Toloue, Ph.D. (1) +Former President and Chief Executive Officer +Vandana Sriram +Chief Financial Officer and Treasurer +William P. Donnelly (2) +Former Executive Chair +(1) +Dr. Toloue served as President and Chief Executive Officer from April 25, 2022 to January 19, 2026. +(2) +Mr. Donnelly served as Executive Chair from November 20, 2025 to January 19, 2026. +Executive Summary +Compensation Governance Highlights +What We Do +What We Don’t Do +Reward performance according to pre-established performance goals +Provide a meaningful portion of the compensation of our Chief Executive Officer and executive officers through performance-based or at-risk compensation +Establish stock ownership guidelines for our executive officers +The Compensation Committee retains an independent compensation consultant +We hold an annual advisory vote on executive compensation +Cap payouts under our compensation plans to discourage inappropriate risk taking by our executive officers +Provide for double-trigger change of control severance provisions +Permit hedging or pledging of our stock +Include automatic compensation increases or equity grants in our employment agreements +Provide single trigger change of control benefits +Provide for excessive cash severance +Provide our executive officers with golden parachute tax gross-ups +Maintain executive pension plans or other retirement programs that are not generally available to all employees +Allow discounted stock options +Allow liberal share recycling under our equity incentive plans +Compensation Program Overview +Our Compensation Committee strives to design and implement executive compensation programs that attract, retain, and motivate our executives, while aligning our executives’ interests with our business strategy and the interests of our stockholders. +26 +TABLE OF CONTENTS +The compensation of our named executive officers in 2025 consisted of three main elements: +Element +Award Vehicle +Guaranteed vs. +At-Risk +Performance vs. +Time-Based +Base Salary +Cash +Guaranteed +Not applicable +Annual Cash Incentive +Bonus +Cash +At-Risk +Performance-Based +Long-Term Incentive Equity +Restricted Stock Units +(“RSUs”) and Stock +Options +At-Risk +Time-Based +2025 Target Pay Mix +Consistent with our philosophy of aligning executive compensation with our short- and long-term performance, and to foster alignment with stockholder interests, our compensation programs are designed to provide a mix of compensation elements. Although we do not have a pre-established policy or target for allocating between the various compensation elements, the allocation is influenced by data from our compensation peer group, our short- and long-term objectives and factors specific to individual executives. +The following charts depict the allocation of the compensation elements of Dr. Toloue, our former Chief Executive Officer, and Ms. Sriram, our Chief Financial Officer, in 2025. +Stockholder Advisory Vote on Executive Compensation +At the 2025 Annual Meeting, our stockholders indicated their support for our executive compensation with 84% of the votes cast being in favor of our executive compensation program. We value the opinions of our stockholders, and, for that reason, we conduct the Say-on-Pay vote every year. +Compensation Overview +Compensation Objectives. The primary objectives of our executive compensation programs are to: +• +attract, retain and motivate the best possible executive talent; +• +ensure executive compensation is aligned with our corporate strategies and business objectives; +• +promote the achievement of key strategic and financial performance measures by linking incentive- based awards to the achievement of measurable corporate and individual performance goals; and +• +align executives’ incentives with the creation of stockholder value. +To achieve these objectives, the Compensation Committee periodically evaluates our executive compensation programs and seeks to set compensation at levels the Compensation Committee believes are appropriate to allow us to compete for executive talent with other companies in our industry. +Compensation Process +Role and Authority of the Compensation Committee . The Compensation Committee oversees our executive compensation programs. In this role, the Compensation Committee reviews and approves the +27 +TABLE OF CONTENTS +compensation of our executive officers. Additional information about the Compensation Committee, including its composition and responsibilities, can be found under the caption “ Management and Corporate Governance ” in this Proxy Statement. The Compensation Committee’s practice has been to establish fiscal year base salaries and to approve annual cash bonuses and long-term incentive equity awards, on an annual basis. From time- to-time, the Compensation Committee makes other adjustments to individual compensation arrangements due to promotions, changes of responsibilities or other appropriate circumstances. +The Compensation Committee may form and delegate authority to subcommittees as appropriate, including, but not limited to, a subcommittee composed of one or more members of the Board or officers of the Company, to grant stock awards under the Company’s equity incentive plans (other than the 2025 Plan, under which only the Compensation Committee may grant awards). Under its charter, the Compensation Committee has delegated authority to award equity grants to the Equity Award Subcommittee of the Compensation Committee (the “Equity Award Subcommittee”), which has approved equity awards under the proposed amended and restated 2017 Plan when securing the approval of the full Compensation Committee has been administratively challenging. The Equity Award Subcommittee currently consists of Karen A. Flynn and Ivana Magovčević-Liebisch, Ph.D., J.D., each of whom qualify as independent directors and non-employee directors under applicable rules. +Role of Compensation Consultants . As discussed above, the Compensation Committee retained PayGov as its independent compensation advisor for 2025. Services provided by PayGov included assistance in reviewing trends in executive compensation, selecting our compensation peer group and designing our executive compensation programs. PayGov also assisted the Compensation Committee in obtaining compensation benchmark data and establishing the target compensation levels of our executive officers, and structuring the 2017 Plan. PayGov provides no services to us other than those performed on behalf of the Compensation Committee. The Compensation Committee considers the independence of its compensation consultant on an annual basis. +Role of Management . The Compensation Committee receives input from our Chief Executive Officer and other members of our senior management team with respect to compensation programs for our executives. The Compensation Committee also receives input from our Chief Executive Officer on the performance of our other executives and on compensation decisions for those executives. The Compensation Committee considers, but is not bound by and does not always accept, the recommendations of our Chief Executive Officer or the other members of our senior management team with respect to compensation matters. While our Chief Executive Officer and other members of our senior management team typically attend Compensation Committee meetings, the Compensation Committee regularly meets in executive session without management present. Our Chief Executive Officer is not present during voting or deliberations on his compensation. +Bases for Our Compensation Policies and Decisions +As a general guideline, the Compensation Committee seeks to generally establish the target compensation of our executive officers at the median of our peers, assuming that we meet the performance targets established for incentive-based programs. An individual executive’s target compensation may be higher or lower than this guideline based on his or her particular background, experience and performance, market factors, and internal equity. These factors are weighed by the Compensation Committee in its judgment, and no single factor takes precedence over the others. +In determining our compensation peer group, the Compensation Committee selects companies that are similar to us based on criteria such as industry, market capitalization, revenue and revenue growth and number of employees. In establishing the fiscal 2025 compensation of our executive officers, the Compensation +28 +TABLE OF CONTENTS +Committee reviewed our compensation peer group with the assistance of PayGov. The companies in our peer group for the fiscal year ended December 31, 2025 were as follows: +Adaptive Biotechnologies Corporation +OmniAb, Inc. +Castle Biosciences, Inc. +Pacific Biosciences of California, Inc. +Cryoport, Inc. +Quantum-Si Incorporated +Cytek Biosciences, Inc +Standard BioTools Inc. +Maravai LifeSciences Holdings, Inc. +10X Genomics +Mesa Laboratories, Inc. +Twist Bioscience Corporation +Nautilus Biotechnology, Inc. +Veracyte, Inc. +Elements of Our Compensation Program +The primary elements of our executive compensation program are base salary, annual cash incentive bonus and long-term incentive equity. +The Compensation Committee has not adopted a formal policy for allocating between short- and long-term compensation, between cash and non-cash compensation or among the different forms of non-cash compensation. Instead, the Compensation Committee, after reviewing information provided by its compensation consultant and other relevant information, determines what it believes to be the appropriate level and mix of compensation components. +Base Salary +Base salaries provide fixed compensation to our executives. Generally, we believe that executive base salaries should be competitive with salaries for executives in similar positions at comparable companies, including those in our compensation peer group. Base salaries are reviewed at least annually by the Compensation Committee and are adjusted from time to time to realign salaries with market levels after considering factors such as individual roles and responsibilities, performance, experience, market conditions, and information from our compensation consultant. +The 2024 and 2025 base salaries for our 2025 named executive officers were as follows: +Executive +2024 Base Salary +2025 Base Salary +% Change +Masoud Toloue, Ph.D. +$ +650,000 +$ +670,950 +3.2 % +Vandana Sriram +$ +446,160 +$ +462,515 +3.7 % +Willam P. Donnelly (1) +— +$ +19,320 +(1) +Mr. Donnelly’s annual salary was $250,000, and he served as Executive Chair from November 20, 2025 to January 19, 2026. +Annual Cash Incentive Bonus Program +Our Annual Cash Incentive Bonus Program is designed to encourage our executives, including our named executive officers, to achieve specified corporate and individual performance objectives. The Annual Cash Incentive Bonus Program emphasizes pay for performance and is intended to align executive +29 +TABLE OF CONTENTS +compensation with the achievement of specified operating results. The high-level structure of the 2025 Annual Cash Incentive Bonus Program as established by the Compensation Committee is as follows: +For each of our named executive officers, the target award is multiplied by a corporate performance factor and an individual performance factor to arrive at the actual award. +2025 Annual Cash Incentive Bonus Program Target Awards . The Compensation Committee annually sets individual target awards expressed as a percentage of each participant’s base salary earned during the year. The Compensation Committee takes into account market data and annual cash incentive levels for comparable positions at companies in our compensation peer group. For 2025, the Compensation Committee determined the target incentive opportunities shown below for the named executive officers, other than Mr. Donnelly (who did not participate in the 2025 Annual Cash Incentive Program): +Masoud Toloue, Ph.D. +100 % +Vandana Sriram +70 % +2025 Annual Cash Incentive Bonus Program Corporate Performance Factor . For 2025, the Compensation Committee approved the calculation of the corporate performance factor based on Company performance against specified levels of achievement of revenue, non-GAAP gross margin, cash usage and certain corporate strategic objectives, with each factor weighted at 35%, 15%, 10% and 40%, respectively. The threshold level of achievement for each performance element was set at 0.5x of the target level, and the maximum level of achievement was set at 1.5x of the target level. Each performance metric was calculated on a sliding scale between the threshold, target and maximum values, as applicable. +With respect to the non-GAAP gross margin performance element referenced above, performance was measured for these purposes based on gross margin as adjusted to include shipping and handling costs for product sales within cost of product revenue instead of within selling, general and administrative expenses. Non-GAAP gross margin is a financial measure that we consider significant in our business. For a reconciliation of non-GAAP gross margin to gross margin, please see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Non-GAAP Financial Measures” in the Company’s 2025 Annual Report. +The strategic objectives for 2025 were: +• +New Platform launch; +• +Menu expansion through new assays; +30 +TABLE OF CONTENTS +• +Diagnostics revenue enablement; +• +Full remediation of material weakness; and +• +Cost savings operationalized targets +We believe that the performance targets set by the Compensation Committee were established at levels appropriately challenging to attain and that they required considerable and increasing collective effort on the part of our employees, including our named executive officers, to achieve. +Under the Company’s Annual Cash Incentive Bonus Program, the Compensation Committee has discretion to adjust the calculation of Company performance to take account of unanticipated or non- routine events or transactions to ensure the program appropriately rewards performance and prevents unintended windfalls or penalization to participants. +The threshold, target, and maximum goals for each performance metric for 2025 were set initially in the beginning of 2025 as follows: +Weight +Threshold +(0.5x) +Target +(1.0x) +Maximum +(1.5x) +2025 Revenue ($) +35 % +$140 million +$148 million +$156 million +Non-GAAP Gross Margin (1) +15 % +54% +56% +58% +Cash Usage +10 % +$(43.0) million +$(35.0) million +$(27.0) million +Strategic Objectives +40 % +0 +40% +48% +Total +100 % +In mid 2025, the Akoya acquisition was completed. In addition, reductions in federal research funding during 2025 continued to negatively impact spending within the industry and with our research customers that rely on these funding mechanisms. These two factors negatively affected our projected revenues, operating expenses and cash flows for full year 2025. In light of the anticipated significant effects of these factors, which were not fully appreciated or quantified at the beginning of 2025, the Compensation Committee adjusted the corporate performance objectives and associated target levels in August 2025, and these adjusted targets are set forth below, together with the actual levels of performance and associated performance factor and weighted payout. +Weight +Threshold +(0.5x) +Target +(1.0x) +Maximum +(1.5x) +Actual +Performance +Factor +Weighted +Payout +2025 Revenue ($) +35 % +$130 million +$135 million +$145 million +$138.9 million +1.19x +42 % +Non-GAAP Gross +Margin (1) +15 % +45% +47% +49% +47.3% +1.08x +16 % +Cash Balance +10 % +$115 million +$120 million +$125 million +$121.6 million +1.05x +11 % +Strategic Objectives +40 % +0 +40% +48% +37% +0.92x +37 % +Total +100 % +105 % +(1) +For a reconciliation to GAAP, excluding the adjustments referred to in footnote (2), and other pertinent information, refer to page 64 of the in the Company’s 2025 Annual Report. +The Committee reviewed our performance against the metrics set forth above and took note of the numerical result. In light of the downward revision of the targets in August 2025, the Compensation Committee exercised its discretion and approved a corporate performance factor of 95%. +2025 Annual Cash Incentive Bonus Program Individual Performance Factor. The individual performance factor for our executive officers (other than Mr. Donnelly, who did not participate in the 2025 Cash Incentive Bonus Program) was capped at 1.1x for a maximum level of achievement. Each of our executive officers was assigned personal objectives designed to support our corporate goals and objectives and to be consistent with the executive’s roles and responsibilities. +The individual performance factor for each of our executive officers was determined by the Compensation Committee based on its assessment of the executive’s individual performance, taking into +31 +TABLE OF CONTENTS +account the executive’s personal objectives and the recommendation of our Chief Executive Officer (for executives other than himself). For 2025, based on its review of our named executive officers’ respective individual performance, the Compensation Committee established the individual performance factors for our named executive officers as follows: Dr. Toloue — 1.0x and Ms. Sriram — 1.0x. +2025 Annual Cash Incentive Program Actual Awards. Based on the above, our named executive officers (other than Mr. Donnelly) received cash payouts under our 2025 Annual Cash Incentive Bonus Program as follows. Payments were determined based on each individual executive’s base salary earned in 2025. +Executive +Target Award +(% of Base Salary) +Corporate +Performance +Factor +Individual +Performance +Factor +Payment ($) +Masoud Toloue, Ph.D. +100 % +0.95x +1.0x +$ +641,250 +Vandana Sriram +70 % +0.95x +1.0x +$ +309,225 +2025 Long-Term Incentive Equity Program +A significant portion of our executive compensation is delivered in the form of long-term incentive equity awards. We believe that equity-based grants provide our executives with a strong link to our long-term performance, create an ownership culture and help to align the interests of our executives and stockholders. In addition, the vesting feature of the equity grants furthers our goal of executive retention by providing an incentive to our executives to remain in our service during the vesting period. Except for awards under the 2025 Plan, all grants of equity-based awards to our executives are approved by the Compensation Committee or the Equity Award Subcommittee and are made pursuant to our 2017 Plan. Awards under the 2025 Plan are approved by the Compensation Committee. In determining the size of equity-based awards to our executives, the Compensation Committee, the Equity Award Subcommittee and our Board considers factors such as scope of responsibility, the applicable executive’s performance, the amount of equity previously awarded to the executive, the vesting of such awards, the recommendations of our Chief Executive Officer (other than with respect to himself), equity award levels for similarly situated executives at our peer companies and other market data provided by PayGov, the Compensation Committee’s independent consultant. +We have historically granted equity awards in the form of stock options and RSUs. While a large portion of our outstanding stock options currently have exercise prices in excess of the trading price of our Common Stock, we continue to believe that stock options, which are granted with an exercise price equal to the fair market value of our Common Stock on the grant date, provide an appropriate long-term incentive for our executives because stock options reward our executives only to the extent our stock price increases over time. Likewise, we believe that RSUs, the value of which tends to be subject to less variability than stock options, encourage our executives to take actions that foster long-term stock price appreciation while also encouraging retention. +In addition to awards granted under the 2017 Plan, the Compensation Committee has granted equity awards under the 2025 Plan, which is limited to persons who satisfy the standards for inducement grants under Nasdaq Listing Rule 5635(c)(4). The 2025 Plan authorizes the grant of awards covering up to 2,893,465 shares of Company common stock, and provides for grants of stock options, RSUs and other equity awards on terms that are substantially the same as those in the 2017 Plan. +The Compensation Committee or the Equity Award Subcommittee approved 2025 long-term incentive equity awards for Ms. Sriram and the Board approved 2025 long term incentive equity awards for Dr. Toloue and Mr. Donnelly as set forth in the following table: +Executive +2025 Approximate +Award Value ($) +Number of Stock +Options +Number of +RSUs +Masoud Toloue, Ph.D. +$ +3,899,998 +138,790 +454,641 +Vandana Sriram +$ +1,425,002 +50,712 +166,119 +William P. Donnelly (1) +$ +488,110 +85,912 +7,435 +32 +TABLE OF CONTENTS +(1) +The 2025 approximate award value for Mr. Donelly includes $288,109 attributable to 70,091 stock options awarded to Mr. Donnelly for his role as Executive Chairman. The remaining 15,821 options and 7,435 RSUs with an approximate aggregate award value of $200,000 were awarded to Mr. Donnelly for his role as a non-employee director. +The stock options and RSUs granted to Ms. Sriram and Dr. Toloue vest over a four-year period, with one-fourth of each of the stock options and RSUs vesting on the first anniversary of the grant date and the remainder vesting ratably on a monthly basis over the next three years, provided the recipient remains with us through the applicable vesting date. As further described under “Employment Agreements with Named Executive Officers”, any outstanding but unvested portions of Dr. Toloue’s equity awards that would have vested on or prior to April 30, 2026 accelerated and became fully vested and exercisable on the effective date of Dr. Toloue’s separation, pursuant to his separation agreement. The stock options granted to Mr. Donnelly vest over two years in 24 equal installments. Stock options were valued according to their Black-Scholes valuation as of the grant date. For our named executive officers (other than Mr. Donnelly), the number of stock options and RSUs awarded was determined on a 70% Option / 30% RSU ratio, which we believe provides an appropriate balance of incentives for our senior executives. +Except for awards under the 2025 Plan, all awards granted to our named executive officers are granted under a stockholder-approved plan. All stock options are granted at an exercise price at or above the closing market price of our Common Stock on the date of grant. Equity awards, including options, are not granted in anticipation of the release of material non-public information , and the release of material non-public information is not timed on the basis of option or equity grant dates. +Additional detail regarding awards to the named executive officers can be found in the “ Summary Compensation Table ,” “ 2025 Fiscal Year Grants of Plan-Based Awards ” table and “ Outstanding Equity Awards at 2025 Fiscal Year-End ” table elsewhere in this Proxy Statement. +Other Benefits +We provide a broad-based benefit program to our eligible employees. In 2025, we provided the following benefits to our named executive officers, other than Mr. Donnelly, on the same basis as our other eligible employees: +• +health insurance; +• +vacation, holidays and sick days; +• +life insurance and supplemental life insurance; +• +short-term and long-term disability insurance; and +• +a 401(k)-retirement plan. +We believe these benefits are generally consistent with those offered by other companies and specifically with those companies with which we compete for employees. +Severance and Change of Control Benefits +Dr. Toloue was, and Ms. Sriram is, entitled to specified benefits in the event of the termination of their employment under specified circumstances, including termination following a change of control of Quanterix. We consider these severance and change of control benefits to be an important component of our executive compensation program and consistent with competitive market practice. We believe that providing appropriate severance and change of control benefits helps to attract and retain qualified executives by mitigating the risks associated with leaving a previous employer and accepting a new position with us, and by reducing financial uncertainty associated with an unexpected termination or termination following a change of control. We have provided more detailed information regarding these benefits, along with estimates of their value under various circumstances, under the caption “ Potential Payments Upon Termination or Change of Control ” below. Our practice has been to structure change of control benefits so that cash benefits are paid only if the employment of the executive is terminated or if the executive resigns for good reason during +33 +TABLE OF CONTENTS +specified periods before or after a change of control has occurred. Vesting of equity in connection with a change of control will generally only occur if the executive is not provided with a comparable replacement equity award or if the employment of the executive is terminated or if the executive resigns for a good reason during a specified period before or after the change of control (commonly referred to as double trigger vesting). +Tax Considerations +The Compensation Committee considers tax and accounting implications in its executive compensation determinations, although in some cases, other important considerations may outweigh tax or accounting considerations, and the Compensation Committee maintains the flexibility to compensate our executive officers in accordance with our compensation philosophy. +Section 162(m) of the Internal Revenue Code of 1986, as amended, generally places a limit of $1 million on the amount of compensation that we may deduct as a business expense in any year with respect to certain of our most highly paid executive officers, subject to certain transition relief applicable to certain arrangements in place as of November 2, 2017, and not materially modified after such date. While the Compensation Committee considers the deductibility of compensation as one factor in determining executive compensation, the Compensation Committee retains the discretion to award compensation that is not deductible as it believes that it is in the best interests of our stockholders to maintain flexibility in our approach to executive compensation in order to structure a program that we consider to be the most effective in attracting, motivating and retaining key executives. +If accounting standards change, we may revise certain programs to appropriately align accounting expenses of our equity awards with our overall executive compensation philosophy and objectives. +Insider Trading Policy +The Company has adopted an insider trading and compliance policy governing the purchase, sale, and other dispositions of its securities by the directors, officers, employees and consultants of the Company and has implemented processes for the Company that it believes are reasonably designed to promote compliance with insider trading laws, rules and regulations, and any applicable listing standards. A copy of this insider trading policy has been filed as Exhibit 19.1 to the Company’s 2025 Annual Report. +Anti-Hedging and Pledging Policy +Our insider trading and compliance policy prohibits all directors, officers, employees and consultants of the Company and its subsidiaries from engaging in trading in the Company’s securities on a short-term basis (where any shares of Common Stock purchased in the open market must be held for a minimum of six months and ideally longer); short sales of the Company’s securities; use of the Company’s securities to secure a margin or other loan; transactions in straddles, collars or other similar risk reduction or hedging devices; and transactions in publicly-traded options relating to the Company’s securities ( i.e. , options that are not granted by the Company). +Compensation Clawback Policy +As of December 1, 2023, our Board adopted a compensation clawback policy (the “Clawback Policy”) in accordance with Section 10D of the Exchange Act and Nasdaq listing standards. The Clawback Policy applies to our current and former executive officers within the meaning of Rule 10D-1(d) of the Exchange Act. In the event we are required to prepare an accounting restatement due to material noncompliance with any financial reporting requirement under securities laws, including any required accounting restatement to correct an error in previously issued financial statements that is material to the previously issued financial statements, or that corrects an error that is not material to previously issued financial statements but would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period, our policy is to require any such executive officer who received “excess compensation” during the three completed fiscal years preceding the date of preparation of the restatement to repay or forfeit such excess compensation reasonably promptly. “Excess compensation” means any amount of incentive-based compensation (generally, compensation based on stock price or financial measures) received +34 +TABLE OF CONTENTS +by such executive officer that exceeds the amount of incentive-based compensation that otherwise would have been received had it been determined based on the applicable accounting restatement, computed without regard to any taxes paid. The Clawback Policy is administered by our Board. +Employment Agreements with Named Executive Officers +Masoud Toloue +Dr. Toloue joined Quanterix in June 2021 as President of Quanterix and Diagnostics. Effective April 25, 2022, Dr. Toloue assumed the role of President and Chief Executive Officer and joined our Board. In connection with Dr. Toloue’s new role, the Compensation Committee approved an amended and restated employment agreement, effective as of April 25, 2022. Under the agreement, Dr. Toloue’s initial annualized base salary was $550,000. Dr. Toloue also was eligible for a target award of 100% of his annual base salary under the 2022 Annual Cash Incentive Bonus Program and he was granted a long-term incentive equity award, comprised of stock options and RSUs having an aggregate grant-date fair value of $2,000,000, consisting of 70% stock options and 30% restricted stock units and vesting over a four-year period. Dr. Toloue’s employment agreement provided that, in the event we terminate Dr. Toloue’s employment without cause or Dr. Toloue terminates his employment with us for good reason, he would be entitled to continuation of his then-current base salary and health insurance benefits for twelve months, an amount equal to his target bonus for the applicable year and acceleration of any of the unvested portion of his initial equity award that would have vested during the severance period had he remained employed during such time. If such termination occurs within 90 days prior to, or twelve months following, a change of control, he would also be entitled to accelerated vesting of all outstanding but unvested equity. On April 9, 2024, the agreement was amended to provide for salary continuation for 24 months if he is terminated without cause, or if he resigns for good reason within the 90-day period immediately preceding or the twelve-month period immediately following a change of control of the Company. +On January 8, 2026, Dr. Toloue entered into a separation agreement with the Company, pursuant to which his employment as our President and Chief Executive Officer ended and he resigned as a member of our Board effective as of January 19, 2026. In connection with his termination of employment, Dr. Toloue received severance benefits consistent with the termination-without cause provision of his employment agreement described above. In addition, pursuant to the separation agreement, (i) any outstanding but unvested portions of Dr. Toloue’s equity awards that would have vested on or prior to April 30, 2026 accelerated and became fully vested and exercisable on the effective date of Dr. Toloue’s separation, (ii) any RSUs that vested in accordance with the preceding clause were settled within 60 days of such vesting, and (iii) any stock options, to the extend vested, may be exercisable on or prior to December 31, 2026. +Vandana Sriram +Ms. Sriram joined Quanterix in August 2023 as Chief Financial Officer pursuant to an employment agreement entered into on August 3, 2023. Under the employment agreement, her initial annualized base salary was $440,000. Ms. Sriram was also eligible to receive an annual performance bonus with a bonus target of 70% of her annual base salary, based on her actual base salary earned during the year. Ms. Sriram also received an initial sign-on equity award of $800,000, consisting of 70% stock options and 30% restricted stock units and vesting over a four-year period. If Ms. Sriram’s employment is terminated by us without cause or she resigns for good reason, she will receive continued payment of her base salary for six months, payment of an amount equal to her prorated annual target bonus for the year of termination, acceleration of the unvested portion of her initial equity award that would have vested on or before August 21, 2024, and health benefits continuation for six months. If Ms. Sriram’s employment is terminated by us without cause or she resigns for good reason within the 90-day period immediately preceding or the twelve-month period immediately following a change of control, in addition to the foregoing she will receive acceleration of vesting for all unvested equity. On April 11, 2024, the agreement was amended to provide for (i) salary continuation for twelve months, (ii) payment of target bonus for the year of termination, (iii) acceleration of vesting of all unvested equity and (iv) continuation of health insurance benefits for twelve months, if she is terminated without cause, or if she resigns for good reason within the 90-day period immediately preceding or the twelve month period immediately following a change of control of the Company. On +35 +TABLE OF CONTENTS +April 13, 2026.the agreement was amended to provide for (i) salary continuation for nine months and (ii) continuation of health insurance benefits for nine months if she is terminated without cause or if she resigns for good reason. +William P. Donnelly +On November 20, 2025, Mr. Donnelly was appointed Executive Chair of the Company and entered into an employment agreement governing his role as Executive Chair (which position also included the role and responsibilities of the Chair of the Board of Directors). As Executive Chair, Mr. Donnelly reported to the Lead Director and was responsible for providing the Company with strategic and other advice and services upon reasonable request by the Board, including, but not limited to, advice and services related to investor relations, employee relations and execution on operational and strategic initiatives. The employment agreement had an initial term ending on December 31, 2026. +Under his employment agreement, Mr. Donnelly was entitled to receive a salary at the rate of $250,000 per year and an annual grant of non-qualified stock options equal to 0.15% of the shares of Company common stock outstanding on the date of grant, vesting ratably on a monthly basis for 24 months following grant. The first such grant occurred on November 20, 2025. Mr. Donnelly did not receive the second annual grant of stock options contemplated under his employment the agreement because he stepped down as Executive Chair before the first anniversary of his commencement of employment in such role. +Employment Agreement with Everett Cunningham +On January 8, 2026, we entered into an employment agreement with Mr. Cunningham in connection with his appointment as President and Chief Executive Officer effective as of January 19, 2026. Under the agreement, Mr. Cunningham is entitled to an initial annualized base salary of $750,000 and eligibility for an annual performance bonus with an annual bonus target of up to 100% of his base salary. The agreement also provides for a sign-on cash payment of $600,000 payable within 30 days following Mr. Cunningham’s start date. If Mr. Cunningham voluntarily terminates his employment without good reason within one year of the start date, Mr. Cunningham will be required to repay 50% of the sign-on cash payment, and if his employment is terminated for cause within one year of the start date, he will be required to repay the sign-on cash payment in full. +In connection with his appointment, Mr. Cunningham also received long-term equity incentive awards consisting of (a) RSUs covering 1,070,000 shares of Company common stock, subject to time-based vesting (the “Time-Based RSUs”) and (b) RSUs covering 813,750 shares of Company common stock, subject to performance-based vesting (the “Performance-Based RSUs”). The Time-Based RSUs vest in four equal annual installments on each of the first four anniversaries of Mr. Cunningham’s start date. One-fifth of the Performance-Based RSUs will vest on the later of (i) the date that the volume weighted average price of the Company’s common stock on the Nasdaq Global Market (or other applicable national securities exchange) (“VWAP”) equals or exceeds $10 per share for 30 consecutive trading days prior to the second anniversary of Mr. Cunningham’s start date and (ii) the first anniversary of his start date, two-fifths will vest on the later of (i) the date that such VWAP equals or exceeds $15 per share for 30 consecutive trading days prior to the third anniversary of Mr. Cunningham’s start date and (ii) the second anniversary of his start date, and the remaining two-fifths will vest on the later of (i) the date that such VWAP equals or exceeds $20 per share for 30 consecutive trading days prior to the fourth anniversary of Mr. Cunningham’s start date and (ii) the third anniversary of his start date. In the event of a change-in-control (as defined in the agreement) in which the consideration payable to a holder of a share of the Company’s common stock equals or exceeds $10, $15 or $20, the corresponding tranche(s) of the Performance-Based RSUs will vest as of such change-in-control, and if the consideration payable to a holder of a share of the Company’s common stock is between $10 and $15 or between $15 and $20, then vesting shall be determined by straight line interpolation within the applicable tranche. +If Mr. Cunningham’s employment is terminated by the Company without cause or he resigns for good reason, he will receive continued payment of his base salary for 12 months, payment of an amount equal to his annual target bonus for the year of termination, acceleration of any of the unvested portion of the Time-Based RSUs that would have vested during the 12-month severance period, and subsidized health benefits during such severance period. If Mr. Cunningham’s employment is terminated by the Company +36 +TABLE OF CONTENTS +without cause or he resigns for good reason in connection with a change-in-control, Mr. Cunningham’s base salary continuation will last for 24 months, all of his outstanding but unvested equity awards subject to time-based vesting will become fully vested, and his outstanding but unvested Performance-Based RSUs will remain eligible for vesting in connection with such change-in-control. +37 +TABLE OF CONTENTS +EXECUTIVE OFFICER AND DIRECTOR COMPENSATION +Summary Compensation Table +The following table shows the total compensation paid or accrued during the fiscal years ended December 31, 2025, 2024 and 2023 to our named executive officers. +Name and Principal Position +Year +Salary +($) (1) +Bonus +($) +Stock +Awards +($) (2) +Option +Awards +($) (3) +Non-Equity +Incentive Plan +Compensation +($) (4) +All Other +Compensation +($) (5) +Total +($) +Masoud Toloue, Ph.D. +Former President and Chief Executive Officer +2025 +670,950 +1,170,000 +2,729,998 +674,172 +5,625 +5,250,745 +2024 +642,848 +— +1,559,989 +3,639,998 +585,000 +5,192 +6,433,027 +2023 +615,385 +— +1,647,658 +2,352,331 +810,000 +9,900 +5,435,274 +Vandana Sriram (6) +Chief Financial Officer and Treasurer +2025 +462,252 +427,502 +997,500 +309,225 +15,750 +2,212,229 +2024 +446,222 +— +569,993 +1,329,999 +255,784 +15,525 +2,617,523 +2023 +144,083 +— +307,016 +492,989 +151,511 +3,554 +1,099,153 +William P. Donnelly (7) +Former Executive Chair +2025 +19,321 +— +80,001 +408,110 +89,410 +596,842 +(1) +Included in 2023 salary is $21,154 received by Dr. Toloue as a cash payout for accrued vacation time as we transitioned to an unaccrued, unlimited time-off policy in 2023. +(2) +These amounts represent the aggregate grant date fair value for RSUs granted during such fiscal year determined in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“FASB ASC Topic 718”). +(3) +These amounts represent the aggregate grant date fair value for option awards granted during such fiscal year, computed in accordance with FASB ASC Topic 718. A discussion of the assumptions used in determining grant date fair value for the option awards may be found in Note 12 to our consolidated financial statements for the year ended December 31, 2025 included in our 2025 Annual Report. +(4) +These amounts represent: (i) for 2025, cash amounts paid in 2026 for services in 2025 under the Company’s 2025 Annual Cash Incentive Bonus Program, (ii) for 2024, cash amounts paid in 2025 for services in 2024 under the Company’s 2024 Annual Cash Incentive Bonus Program and (iii) for 2023, cash amounts paid in 2024 for services in 2023 under the Company’s 2023 Annual Cash Incentive Bonus Program. +(5) +The amounts represent the dollar value of matching contributions under our qualified 401(k) plan. +(6) +Ms. Sriram joined Quanterix on August 21, 2023 as Chief Financial Officer. +(7) +Mr. Donnelly was appointed Executive Chair on November 20, 2025 and resigned on January 19, 2026. Included in the stock awards column for Mr. Donnelly are RSUs granted for his services as a non-employee director. Included in the option awards column for Mr. Donnelly are options with a grant date fair value of $288,109 for his services as Executive Chairman and options with a grant date fair value of $120,001 for his services as a non-employee director. All other compensation includes $89,410 for services provided as a non employee director received in cash or paid in shares, per his election under the Non-Employee Director Compensation Policy. +38 +TABLE OF CONTENTS +2025 Fiscal Year Grants of Plan-Based Awards +The following table shows information regarding grants of non-equity incentive plan awards and grants of equity awards that we made during the fiscal year ended December 31, 2025, to each of Quanterix’s named executive officers. +Names +(a) +Grant +Date +(b) +Estimated Possible Payouts Under +Non-Equity Incentive Plan Awards (1) +All Other +Stock +Awards: +Number of +Shares of +Stock or +Units (#) (2) +(i) +All Other +Option +Awards: +Number of +Securities +Underlying +Options (#) (3) +(j) +Exercise +or Base +Price of +Option +Awards +($/sh) +(k) +Grant Date Fair +Value of Stock +and Option +Awards ($) (4) +(l) +Threshold +($) +(c) +Target +($) +(d) +Maximum +($) +(e) +Masoud Toloue, Ph.D. +Former President and CEO +— +— +675,000 +1,113,750 +— +— +— +— +2/4/25 +— +— +— +138,790 +— +— +1,170,000 +2/4/25 +— +— +— +— +454,641 +8.43 +2,729,998 +Vandana Sriram +CFO and Treasurer +— +— +325,500 +537,075 +— +— +— +— +2/4/25 +— +— +— +50,712 +— +— +427,502 +2/4/25 +— +— +— +— +166,119 +8.43 +997,500 +William P. Donnelly (5) +Former Executive Chair +1/2/25 +7,435 +— +80,001 +1/2/25 +15,821 +10.76 +120,001 +11/20/25 +— +— +— +— +70,091 +5.91 +288,109 +(1) +Reflects potential payouts under our 2025 Annual Cash Incentive Bonus Program. Amounts are based on individual performance factors with a range from 0.0x to 1.1x and a corporate performance factor with a range from 0.5x to 1.5x. +(2) +For RSUs granted to Dr. Toloue and Ms. Sriram, awards vest as to 25% on the first anniversary of the grant date, with the remaining 75% vesting in 36 equal monthly installments thereafter. For RSUs granted to Mr. Donnelly, awards vest after one year. +(3) +Dr. Toloue and Ms. Sriram’s non-qualified options vest as to 25% on the first anniversary of the grant date, with the remaining 75% vesting in 36 equal monthly installments thereafter. Mr. Donnelly’s non-qualified stock options granted for his service as a non-employee director vest after one year and those granted to him upon his appointment as Executive Chair vest over a two-year period in 24 equal installments. +(4) +These amounts represent the aggregate grant date fair value for RSUs and option awards granted during such fiscal year, computed in accordance with FASB ASC Topic 718. A discussion of the assumptions used in determining grant date fair value for the option awards is included in the notes to our consolidated financial statements, included in the Company’s 2025 Annual Report. +(5) +Mr. Donnelly did not participate in any non-equity incentive plans. On January 2, 2025, 7,435 RSUs and an option to purchase 15,821 shares of our Common Stock were awarded to Mr. Donnelly for his service as a non-employee director. On November 20, 2025, an option to purchase 70,091 shares of our Common Stock was awarded to Mr. Donnelly for his service as Executive Chair. +39 +TABLE OF CONTENTS +Outstanding Equity Awards at 2025 Fiscal Year-End +The following table shows grants of stock options and grants of unvested stock awards outstanding on the last day of the fiscal year ended December 31, 2025, including both awards subject to performance conditions and non-performance-based awards, for each of our named executive officers. +Option Awards (1) +Stock Awards (1) +Names +Number of +Securities +Underlying +Unexercised +Options (#) +Exercisable +Number of +Securities +Underlying +Unexercised +Options (#) +Unexercisable +Option +Exercise +Price ($) +Option +Expiration +Date +Number of +Shares +or Units of +Stock +That Have +Not +Vested (#) +Market +Value of +Shares or +Units of +Stock That +Have +Not Vested +($) (2) +Equity +Incentive +Plan +Awards: +Number of +Unearned +Shares, +Units or +Other +Rights +That +Have Not +Vested (#) +Equity +Incentive +Plan +Awards: +Market or +Payout +Value of +Unearned +Number of +Shares or +Units or +Other +Rights That +Have Not +Vested ($) +Masoud Toloue, Ph.D +Former President and Chief Executive Officer +79,969 (3) +5,343 (3) +24.40 +4/25/2032 +— +— +— +— +— +— +— +— +2,309 (3) +14,685 +— +— +183,742 (4) +75,674 (4) +14.82 +2/2/2033 +— +— +— +— +— +— +— +— +32,432 (4) +206,268 +— +— +104,155 (5) +123,107 (5) +23.10 +2/2/2034 +— +— +— +— +— +— +— +— +36,589 (5) +232,706 +— +— +— +454,641 (6) +8.43 +2/4/2035 +— +— +— +— +— +— +138,790 (6) +882,704 +Vandana Sriram +Chief Financial Officer and Treasurer +17,171 (7) +12,284 (7) +24.32 +8/21/2033 +— +— +— +— +— +— +— +— +5,260 (7) +33,454 +— +— +38,049 (8) +44,989 (8) +23.10 +2/2/2034 +— +— +— +— +— +— +— +— +13,367 (8) +85,014 +— +— +— +166,119 (9) +8.43 +2/4/2035 +— +— +— +— +— +— +— +— +50,712 (9) +322,528 +William P. Donnelly +Former Executive Chair +9,949 (10) +2,407 (10) +23.90 +8/16/2033 +— +— +— +— +— +— +2,802 (10) +17,821 +6,412 (11) +— +27.15 +1/2/2034 +15,821 (12) +— +10.76 +1/2/2035 +2,921 (13) +67,170 (11) +5.91 +11/20/2035 +(1) +Each of the outstanding equity awards in this table was granted pursuant to the 2017 Plan. All equity awards granted to Dr. Toloue and Ms. Sriram vest subject to continued service of the officer, as to 25% of the underlying shares on the first anniversary of the grant date and as to the remaining 75% in 36 equal installments monthly thereafter. The equity awards granted to Mr. Donnelly vest, subject to his continued service: as to stock option granted on August 17, 2023, one-third of the underlying shares on the first anniversary of the grant date and the remaining two-thirds in 24 equal installments monthly thereafter; as to RSUs granted on August 17, 2023, in three equally installments on the first second and third anniversaries of the grant date; as to stock option and RSUs granted on January 2, 2025, on December 31, 2025; and as to stock options granted on November 20, 2025, over a two-year period in 24 equal installments. +40 +TABLE OF CONTENTS +(2) +The market value of the stock awards is determined by multiplying the number of shares by $6.63, the closing price of our Common Stock on Nasdaq on December 31, 2025, the last trading day of our fiscal year. +(3) +On April 25, 2022, Dr. Toloue was granted (i) an option to purchase 85,312 shares of our Common Stock and (ii) 36,562 RSUs. +(4) +On February 2, 2023, Dr. Toloue was granted (i) an option to purchase 259,416 shares of our Common Stock and (ii) 111,178 RSUs. +(5) +On February 2, 2024, Dr. Toloue was granted (i) an option to purchase 227,262 shares of our Common Stock and (ii) 67,532 RSUs. +(6) +On February 4, 2025, Dr. Toloue was granted (i) an option to purchase 454,641 shares of our Common Stock and (ii) 138,790 RSUs. +(7) +On August 21, 2023, Ms. Sriram was granted (i) an option to purchase 29,455 shares of our Common Stock and (ii) 12,624 RSUs. +(8) +On February 2, 2024, Ms. Sriram was granted (i) an option to purchase 83,038 shares of our Common Stock and (ii) 24,675 RSUs. +(9) +On February 2, 2025, Ms. Sriram was granted (i) an option to purchase 166,119 shares of our Common Stock and (ii) 50,712 RSUs. +(10) +On August 17, 2023, Mr. Donnelly, as a non-employee director, was granted (i) an option to purchase 12,356 shares of our Common Stock and (ii) 8,238 RSUs . +(11) +On January 2, 2024, Mr. Donnelly, as a non-employee director, was granted an option to purchase 6,412 shares of our Common Stock. +(12) +On January 2, 2025, Mr. Donnelly, as a non-employee director, was granted an option to purchase 15,821 shares of our Common Stock. +(13) +On November 20, 2025, Mr. Donnelly was granted an option to purchase 70,091 shares of our Common Stock for his service as Executive Chairman. +Option Exercises and Stock Vested in 2025 +The following table shows information regarding exercises of options to purchase our Common Stock and vesting of RSUs held by each of our named executive officers named in the Summary Compensation Table during the fiscal year ended December 31, 2025. +Option Awards +Stock Awards (1) +Name +Number of +Shares +Acquired +on Exercise +(#) +Value Realized +on Exercise +($) (2) +Number of +Shares +Acquired +on Vesting +(#) +Value Realized +on Vesting +($) (2) +Masoud Toloue, Ph.D. +— +— +67,877 +463,362 +Vandana Sriram +— +— +14,464 +105,311 +William P. Donnelly (3) +— +— +10,153 +59,708 +(1) +Consists of RSUs. +(2) +The value realized represents the number of RSUs vested multiplied by the closing price of our Common Stock on the date of vesting. Amounts shown in this column do not necessarily represent actual value realized from the sale of the shares acquired upon vesting of RSUs because in many cases the shares are not sold upon vesting but continue to be held by the executive officer. +(3) +Represents RSUs granted to Mr. Donnelly for his service as a non-employee director. +Pension Benefits +We do not have any qualified or non-qualified defined benefit plans. +41 +TABLE OF CONTENTS +Nonqualified Deferred Compensation +We do not have any nonqualified defined contribution plans or other deferred compensation plans. +Potential Payments upon Termination or Change of Control +We have entered into employment agreements with our named executive officers. These agreements generally establish the named executive officer’s base salary (subject to adjustment), eligibility to participate in the incentive bonus plan, eligibility for annual long-term incentive equity awards and standard employee benefits. +These agreements, other than with respect to Mr. Donnelly, also provide for certain severance payments and benefits in connection with the named executive officer’s termination of employment under various circumstances, subject, in each case, to the officer’s execution of a general release of claims, in a form acceptable to us, and compliance with certain restrictive covenants. The material terms and conditions of these agreements are summarized above under “ Employment Agreements with the Current Named Executive Officers ”. +Mr. Donnelly’s employment agreement did not provide for any benefits payable upon termination of employment, and, therefore, he is not included in the table below. +Payments upon a Triggering Event +The following table provides information regarding the amounts payable under the agreements described above for termination without cause or by the named executive officer for good reason and assuming the termination occurred on December 31, 2025. +Name +Base Salary +($) +Lump Sum +Bonus +Payments +($) +Continuation of +Group Health +Plan Benefits +($) +Value of +Equity +Awards +($) +Total +($) +Masoud Toloue, Ph.D. +675,000 +675,000 +31,109 +— +1,381,109 +Vandana Sriram +232,500 +325,500 +— +— +558,000 +The following table provides information regarding the amounts payable under the employment agreements described above for termination without cause or by the named executive officer for good reason following a change of control and assuming the termination occurred on December 31, 2025. +Name +Base Salary +($) +Lump Sum +Bonus +Payments +($) +Continuation of +Group Health +Plan Benefits +($) +Value of +Equity +Awards +($) (1) +Total +($) +Masoud Toloue, Ph.D. +1,350,000 +675,000 +32,922 +1,336,363 +3,394,285 +Vandana Sriram +465,000 +325,500 +— +440,996 +1,231,496 +(1) +The exercise prices of all options held by the named executive officers as of December 31, 2025 were in each case higher than $6.36, the closing price of a share of our Common Stock on December 31, 2025, so such options were ascribed no value. The value of RSUs that would have vested due to a triggering event has been calculated by taking $6.36, the closing price of a share of our Common Stock on December 31, 2025, and multiplying it by the number of shares underlying RSUs that would have vested due to the triggering event. +Pay Ratio Disclosure +As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of Regulation S-K, we are providing the following information about the ratio of the annual total compensation of our “median” employee to the annual total compensation of our former Chief Executive Officer, Masoud Toloue, Ph.D., for 2025. +42 +TABLE OF CONTENTS +For 2025, we have used the same median employee who was identified for 2023 and 2024 since there has been no change in our employee population or employee compensation arrangements that we believe would significantly impact our pay ratio disclosure. See our 2024 proxy statement for information regarding the process we utilized to identify our “median employee.” +We collected annual total compensation data for our median employee for 2025 using the same methodology we used for our named executive officers as disclosed in the Summary Compensation Table above. The annual total compensation of our median employee for 2025 was $116,868, and our former CEO’s total compensation as reported in the Summary Compensation Table was $5,250,745, resulting in a ratio of approximately 1:44. +This pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on the methodology described above. Given that companies may use a range of methodologies to determine an estimate of their pay ratio, the estimated ratio reported above should not be used as a basis for comparison between companies. +Pay versus Performance Disclosure +As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(v) of Regulation S-K, Quanterix is providing information about the relationship between the compensation of Quanterix’s former principal executive officers (“PEOs”) and other named executive officers and certain Company financial performance measures. +The dollar amounts reported below representing “compensation actually paid” have been calculated in accordance with the requirements of Item 402(v) of Regulation S-K. These figures do not reflect the actual amounts of compensation paid to the officers identified during such fiscal years and are based on equity valuation assumptions required by the SEC, which may not reflect actual amounts realized or realizable at vesting or exercise, as applicable. +Value of Initial Fixed +$100 Investment +Based On: +Year +Summary +Compensation +Table Total for +E. Kevin +Hrusovsky (1) +($) +Summary +Compensation +Table Total for +Masoud +Toloue, +Ph.D. (2) +($) +Compensation +Actually Paid +to E. Kevin +Hrusovsky (1)(3) +($) +Actually Paid +to Masoud +Toloue, +Ph.D. (2)(3) +($) +Average +Summary +Compensation +Table Total +for Non-PEO +NEOs (4) +($) +Average +Compensation Actually +Paid to Non-PEO +NEOs (4)(5) +($) +Total +Share- +holder +Return +($) +Peer +Group +Total +Share- +holder +Return (6) +($) +Net +Income +(Loss) +($ in +millions) +Revenues +($ in +millions) +2025 n/a 5,250,745 n/a 1,312,200 1,403,916 2,807,833 13.68 124.75 ($ 107.2 ) 138.9 +2024 n/a 6,433,027 n/a 1,346,679 2,617,523 1,200,871 22.86 93.49 ( 38.5 ) 137.4 +2023 n/a 5,435,274 n/a 10,859,697 1,611,175 3,072,778 58.80 94.03 ( 28.4 )* 122.4 +2022 1,921,523 2,957,026 ( 3,807,926 ) 1,699,747 1,210,719 ( 470,362 ) 29.78 89.90 ( 99.6 )* 105.5 +2021 4,208,194 n/a 7,594,456 n/a 1,495,417 217,434 91.18 100.02 ( 55.5 )* 110.6 +* +As restated. +(1) +Mr. Hrusovsky served as Chief Executive Officer until April 25, 2022 and as Executive Chairman from April 25, 2022 until August 8, 2022. +(2) +Dr. Toloue became President and Chief Executive Officer on April 25, 2022. +(3) +The following adjustments were made to the designated PEO’s compensation to calculate the amounts shown as “compensation actually paid” for the periods indicated: +43 +TABLE OF CONTENTS +Year +PEO Name +Summary +Compensation +Table Total +($) +Less Grant +Date Fair +Value of +Equity Awards +Granted +during +Applicable +Year +($) +Plus Year-end +Fair Value of +Equity Awards +Granted +during +Applicable +Year +($) +Plus Change +in Fair Value +as of Year- +end of any +Prior Year +Awards that +Remain +Unvested as +of Year-End +($) +Plus Change +in Fair Value +as of the +Vesting Date +of any Prior +Year Awards +that Vest +during +Applicable +Year +($) +Less Prior Year- +end Fair Value of +Awards Granted +in Prior Year +that Failed to +Meet Vesting +Conditions +during +Applicable Year +($) +Total Equity +Value Reflected +in Compensation +Actually Paid +Calculation +($) +2025 +Masoud Toloue, Ph.D. +5,250,745 3,899,998 2,902,256 ( 2,050,826 ) 1,734,724 — ( 3,938,545 ) +2024 +Masoud Toloue, Ph.D. +6,433,027 5,199,987 2,420,861 ( 1,990,327 ) ( 316,895 ) — ( 5,086,348 ) +2023 +Masoud Toloue, Ph.D. +5,435,274 3,999,989 7,923,070 1,250,477 250,865 — 5,424,423 +2022 +Masoud Toloue, Ph.D. +2,957,026 1,999,996 1,234,526 ( 323,502 ) ( 168,307 ) — ( 1,257,279 ) +2022 E. Kevin Hrusovsky 1,921,523 1,400,007 864,173 — ( 372,494 ) 4,821,121 ( 5,729,449 ) +2021 E. Kevin Hrusovsky 4,208,194 3,008,520 1,726,302 50,554 4,617,926 — 3,386,262 +(4) +The dollar amounts represent the average of the amounts reported for the following named executive officers as a group (excluding Quanterix’s PEOs): +2021 +2022 +2023 +2024 +2025 +Masoud Toloue, Ph.D. +Michael Doyle +Michael Doyle +Vandana Sriram +Vandana Sriram +Michael Doyle +John Fry +Vandana Sriram +William P. Donnelly +Amol Chaubal +Mark Roskey, Ph.D. +John Fry +William Geist +Dawn Mattoon +Shawn Stetson +(5) +The following adjustments were made to calculate the amounts shown as “average compensation actually paid” for the periods indicated: +Year +NEO Names +Summary +Compensation +Table Total +(Average) ($) +Less Grant +Date Fair +Value of +Equity Awards +Granted +during +Applicable +Year +(Average) +($) +Plus Year- +end Fair +Value of +Equity Awards +Granted +during +Applicable +Year +(Average) +($) +Plus Change +in Fair Value +as of Year- +end of any +Prior Year +Awards that +Remain +Unvested as +of Year-End +(Average) +($) +Plus Change +in Fair Value +as of the +Vesting Date +of any Prior +Year Awards +that Vest +during +Applicable +Year +(Average) +($) +Less Prior +Year-end +Fair Value of +Awards +Granted in +Prior Year +that Failed to +Meet Vesting +Conditions +during +Applicable +Year +(Average) +($) +Total Equity +Value Reflected +in Average +Compensation +Actually Paid +Calculation +($) +2025 +See footnote (4) +1,403,916 1,913,112 1,358,816 ( 492,233 ) 649,323 — ( 1,073,606 ) +2024 +See footnote (4) +2,617,523 1,899,992 884,543 ( 226,263 ) ( 174,940 ) — ( 1,416,652 ) +2023 +See footnote (4) +1,611,175 1,150,002 1,935,392 589,183 87,031 — 1,461,603 +2022 +See footnote (4) +1,210,719 761,790 375,346 ( 118,480 ) ( 132,737 ) 1,043,421 ( 1,681,081 ) +2021 +See footnote (4) +1,495,417 995,666 504,941 3,663 357,701 1,148,621 ( 1,277,982 ) +(6) +The peer group used is the NASDAQ Biotechnology Index, our peer group used for purposes of Item 201(e) of Regulation S-K. +Comparison of “Compensation Actually Paid” to our Total Shareholder Return (“TSR”) +Our TSR was $91.8, $29.78, $58.80, $22.86, and $13.68 for the fiscal years ended December 31, 2021, 2022, 2023, 2024, and 2025, respectively. Mr. Hrusovsky’s “compensation actually paid” was $7.6 million and $(3.8) million for the fiscal years ended December 31, 2021, and 2022, respectively, and Dr. Toloue’s +44 +TABLE OF CONTENTS +“compensation actually paid” was $1.7 million, $10.9 million, $1.3 million and $1.3 million for the fiscal years ended December 31, 2022, 2023, 2024, and 2025, respectively. The average “compensation actually paid” to our other named executive officers was $0.2 million, $(0.5) million, $3.1 million, $1.2 million, and $2.8 million for the fiscal years ended December 31, 2021, 2022, 2023, 2024 and 2025, respectively. Our TSR decreased from December 31, 2021 to 2022, increased from December 2022 to December 2023 and decreased from December 31, 2023 through December 2025. The “compensation actually paid” to our principal executive officers decreased between 2021 and 2022, increased significantly in 2023, decreased significantly from 2023 to 2024, and decreased in 2025. The average “compensation actually paid” to our other named executive officers decreased between 2021 and 2022, increased significantly in 2023, decreased significantly from 2023 to 2024, and increased in 202.5 +Comparison of “Compensation Actually Paid” to Net Income (Loss) +Our net loss was approximately $55.5 million in 2021, $99.6 million in 2022, $28.4 million in 2023, $38.5 million in 2024, and $107.2 million in 2025. Mr. Hrusovsky’s “compensation actually paid” was $7.6 million and $(3.8) million for the fiscal years ended December 31, 2021 and 2022, respectively, and Dr. Toloue’s “compensation actually paid” was $1.7 million, $10.9 million, $1.3 million, and $1.3 million for the fiscal years ended December 31, 2022, 2023, 2024 and 2025, respectively. The average “compensation actually paid” to our other named executive officers was $0.2 million, $(0.5) million, $3.1 million, $1.2 million and $2.8 million for the fiscal years ended December 31, 2021, 2022, 2023, 2024 and 2025, respectively. Our net loss increased over the first two years reported, decreased significantly for the third year reported and increased again in both 2024 and 2025, and the “compensation actually paid” to our principal executive officers decreased between 2021 and 2022, increased in 2023, decreased significantly from 2023 to 2024, and decreased slightly in 2025. The average “compensation actually paid” to our other named executive officers decreased between 2021 and 2022, increased significantly in 2023, decreased significantly from 2023 to 2024, and increased in 2025. +Comparison of “Compensation Actually Paid” to Company-Selected Measure (Revenues) +Our revenues were approximately $110.6 million in 2021, $105.5 million in 2022, $122.4 million in 2023, $137.4 million in 2024 and $138.9 million in 2025. Mr. Hrusovsky’s “compensation actually paid” was $7.6 million and $(3.8) million for the fiscal years ended December 31, 2021, and 2022, respectively, and Dr. Toloue’s “compensation actually paid” was $1.7 million, $10.9 million, $1.3 million and $1.3 million for the fiscal years ended December 31, 2022, 2023, 2024 and 2025, respectively. The average “compensation actually paid” to our other named executive officers was $0.2 million, $(0.5) million, $3.1 million, $1.2 and $2.8 million for the fiscal years ended December 31, 2021, 2022, 2023, 2024 and 2025, respectively. Our revenues decreased 5% from 2021 to 2022, increased by 16% from 2022 to 2023, increased by 12% from 2023 to 2024 and increased by 1% from 2024 to 2025, and “compensation actually paid” to our principal executive officers decreased between 2021 and 2022, significantly increased in 2023, decreased significantly from 2023 to 2024 and decreased slightly in 2025. The average “compensation actually paid” to our other named executive officers decreased between 2021 and 2022, increased significantly in 2023, decreased significantly from 2023 to 2024, and increased in 2025. +45 +TABLE OF CONTENTS +TSR versus Peer Group TSR +The graph below shows our cumulative TSR over the five-year period ended December 31, 2025, as compared to that of the NASDAQ Biotechnology Index. +TOTAL SHAREHOLDER RETURN* +Between Quanterix Corporation +and the NASDAQ Biotechnology Index +* +$100 invested on 12/31/20 in stock or index, including reinvestment of dividends. Fiscal year ended December 31. +Most Important Financial and Other Performance Measures +We have identified the following financial and other performance measures as being the most important in linking actual compensation paid to executives to our performance for the most recently completed fiscal year: +1. +Revenues +2. +Non-GAAP gross margin +3. +Strategic objectives +With respect to the non-GAAP gross margin performance measure referenced above, performance is measured for these purposes based on gross margin as adjusted to include shipping and handling costs for product sales within cost of product revenue instead of within selling, general and administrative expenses. For a reconciliation of non-GAAP gross margin to gross margin, please see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Non-GAAP Financial Measures” in the Company’s 2025 Annual Report. In addition, please see the section captioned “ Compensation Discussion and Analysis- Elements of our Compensation Program-Annual Cash Incentive Bonus Program ” for more information about these measures. +Director Compensation +The following table shows the total compensation paid or accrued during the fiscal year ended December 31, 2025 to each of our non-employee directors. Directors who are employed by us are not compensated for their service on our Board. Mr. Donnelly served as non-employee Chair of our Board from January 1, 2025 to November 20, 2025, when he was appointed Executive Chair. All compensation paid +46 +TABLE OF CONTENTS +to Mr. Donnelly during 2025, including for his service as non-employee Chair of the Board, is shown in the Summary Compensation Table. As a result, Mr. Donnelly is not included in the Director Compensation Table. +Fees Earned +or Paid in +Cash ($) +Stock +Awards +($) (10) +Option +Awards +($) (10) +All Other +Compensation +($) +Total +($) +Jeffrey T. Elliott +75,368 +80,001 +120,001 +— +275,370 +Karen A. Flynn +70,000 +80,001 +120,001 +— +270,001 +Garret M. Hampton, Ph.D. (1) +7,704 +276,157 +— +— +283,860 +Sarah E. Hlavinka (2)(5) +36,332 +80,001 +120,001 +— +236,333 +Myla Lai-Goldman, M.D. (3)(5) +12,850 +159,995 +239,998 +— +412,842 +Martin D. Madaus, Ph.D (4) +43,986 +80,001 +120,001 +— +243,988 +Ivana Magovčević-Liebisch, Ph.D., J.D. +61,216 +80,001 +120,001 +— +261,217 +Paul M. Meister (5)(6) +54,680 +80,001 +120,001 +— +254,681 +Scott Mendel (5)(7) +25,190 +159,995 +239,998 +— +425,183 +Alan Sachs, M.D., Ph.D. (8) +6,563 +276,157 +— +— +282,719 +David R. Walt, Ph.D. (9) +50,937 +80,001 +120,001 +— +250,939 +(1) +Dr. Hampton was appointed to our Board, effective November 20, 2025. +(2) +Ms. Hlavinka resigned from our Board, effective July 8, 2025. +(3) +Dr. Lai-Goldman was appointed to our Board, effective July 8, 2025. +(4) +Dr. Madaus resigned from our Board, effective July 8, 2025. +(5) +Ms. Hlavinka, Dr. Lai-Goldman, Mr. Meister, and Mr. Mendel elected to receive these fees in the form of our Common Stock in lieu of cash in accordance with our Non-Employee Director Compensation Policy. See the section titled “ Non-Employee Director Compensation Policy ” below. +(6) +Mr. Meister resigned from our Board, effective November 20, 2025. +(7) +Mr. Mendel was appointed to our Board, effective July 8, 2025. +(8) +Dr. Sachs was appointed to our Board, effective November 20, 2025. +(9) +Dr. Walt resigned from our Board, effective November 20, 2025. +(10) +These amounts represent the aggregate grant date fair value for RSUs and option awards granted to each director in the fiscal year ended December 31, 2025, computed in accordance with FASB ASC Topic 718. For Drs. Hampton, Lai-Goldman and Sachs and Mr. Mendel the amounts represent an equity award with an aggregate value of $400,000 upon their appointment to the Board, and for the other directors, the amounts represent their annual equity award with an aggregate value of $200,000. A discussion of the assumptions used in determining grant date fair value for the option awards is included in the notes to our consolidated financial statements in the 2025 Annual Report. +The following table shows the aggregate number of stock options held by each of our non-employee directors as of December 31, 2025: +Name +Aggregate Number +of Shares Subject +to Stock Options +Jeffrey T. Elliott +41,729 +Karen A. Flynn +54,198 +Garret M. Hampton, Ph.D. +— +Sarah E. Hlavinka +— +Myla Lai-Goldman, M.D. +50,758 +Martin D. Madaus, Ph.D. +— +47 +TABLE OF CONTENTS +Name +Aggregate Number +of Shares Subject +to Stock Options +Ivana Magovčević-Liebisch, Ph.D., J.D. +43,510 +Paul M. Meister (1) +54,138 +Scott Mendel +50,758 +Alan Sachs, M.D., Ph.D. +— +David R. Walt, Ph.D. .(1) +69,959 +(1) +These awards remained outstanding and exercisable as of December 31, 2025, as the Board member had not yet reached the 90-day post-termination period; they have since been forfeited. +Non-Employee Director Compensation Policy +Our non-employee director compensation policy (the “Policy”) effective for 2025 provided for: (A) the annual payment of $50,000 to each of our non-employee directors, or $95,000 in the case of the Chair or Lead Director of the Board; (B) $10,000 to each member of our Audit Committee, or $20,000 in the case of the chairperson of the committee; (C) $7,500 to each member of our Compensation Committee, or $15,000 in the case of the chairperson of the committee; and (D) $5,000 to each member of our Nominating Committee, or $10,000 in the case of the chairperson of the committee; in each case quarterly in arrears. Each non-employee director may elect to receive these payments in the form of our Common Stock in lieu of cash. +For 2025, the Policy provided that each non-employee director be granted, on the first trading day of each fiscal year, an annual equity award (an “Annual Non-Employee Director Equity Award”) valued at $200,000, rounded to the nearest whole share. This equity award is comprised of (A) 60% non-qualified stock options to purchase our Common Stock at an exercise price equal to the fair market value as of such grant date and (B) 40% RSUs. The number of options is determined using our standard Black-Scholes valuation methodology. The number of RSUs is determined by dividing total value of the RSUs by the fair market value of our Common Stock on such grant date. The annual stock options and RSUs vest in full on December 31 of the year in which such awards were granted, provided that the non-employee director is still a director on the applicable vesting date. +In addition, under the Policy for 2025, each new non-employee director received an award (an “Initial Non-Director Equity Award”) valued at $400,000 upon his or her initial election or appointment. The award is comprised of (A) 60% non-qualified stock options to purchase our Common Stock at an exercise price equal to the fair market value of our Common Stock as of such grant date and (B) 40% RSUs. The number of options is determined using our standard Black-Scholes valuation methodology. The number of RSUs is determined by dividing total value of the RSUs by the fair market value of our Common Stock on such grant date. The initial stock options vest over three years from the date of grant, with one-third vesting on the first anniversary of the applicable grant date and the remainder vesting over the following two years in 24 successive equal monthly installments at the end of each month until the third anniversary of such grant date, provided that the non-employee director is still a director on the applicable vesting date. The RSUs granted to each new non-employee director vest over a three- year period, with one-third vesting on each of the first, second and third anniversaries of the applicable grant date, provided that the non-employee director is still a director on the applicable vesting date. +Effective November 20, 2025, the Policy was amended to provide for the annual payment of $80,000 to the Lead Director of the Board. Additionally, the Policy was amended to change the equity type and manner for determining the size of Annual Non-Employee Director Equity Awards and Initial Non-Employee Director Equity Awards. Annual Non-Employee Director Equity Awards now are comprised of RSUs covering a number of shares of Common Stock equivalent to 0.05% of the outstanding shares of Common Stock as of the date of grant and vest in full on the first anniversary of the grant date, provided that the non-employee director is still a director on the applicable vesting date. Initial Non-Employee Director Equity Awards now are comprised of RSUs covering a number of shares of Common Stock equivalent to 0.10% of the outstanding shares of Common Stock as of the date of grant and vest over a three-year period, with +48 +TABLE OF CONTENTS +one-third vesting on each of the first, second and third anniversaries of the grant date, provided that the non-employee director is still a director on the applicable vesting date. All other terms of the Policy remain unchanged. +We reimburse in full each non-employee director for all reasonable out-of-pocket expenses incurred in attending meetings of our Board and its committees. Directors may be reimbursed for travel, food, lodging and other expenses directly related to their service as directors. Directors are also entitled to the protection provided by their indemnification agreements and the indemnification provisions in our Charter and Bylaws. +Stock Ownership Guidelines for Non-Employee Directors and Executive Officers +In order to further align the interests of our non-employee directors and executive officers with the interests of our stockholders and to promote our commitment to sound corporate governance, our Board maintains the following stock ownership guidelines for our non-employee directors and executive officers. For those individuals who have served since October 9, 2019, attainment was first required as of October 9, 2024, and all such individuals were in compliance as of such date. On subsequent assessment dates, all applicable individuals have been in compliance with the stock ownership guidelines. +Stock Ownership Guideline +Non-Employee Director +5x annual base cash retainer +CEO +6x annual base salary +Executive officers other than CEO +3x annual base salary +Attainment Period +Five years from the later of +• +Appointment/election to applicable position; and +• +October 9, 2019. +Stock Owned for Purposes of Ownership Guidelines +• +Stock acquired on the open market; +• +Stock acquired through the exercise of options; +• +Restricted stock, RSUs and stock options, whether vested or unvested; and +• +Stock acquired through Company benefit plans. +Holding Requirement +50% of “net of tax” vested shares must be held until the ownership guideline is met. +Administration +The stock ownership guidelines are administered by the Compensation Committee, which evaluates compliance on an annual basis. Non-compliance arising from special circumstances, such as fluctuations in our stock price, changes in a participant’s compensation, and the personal financial situation of a participant, are reviewed by the Compensation Committee. +49 +TABLE OF CONTENTS +EQUITY COMPENSATION PLAN INFORMATION +The following table provides certain aggregate information with respect to all of our equity compensation plans in effect as of December 31, 2025. The table excludes 77,210 shares issuable upon the vesting of certain RSUs previously issued by Akoya and assumed by the Company upon the closing of its merger with Akoya. +(a) +(b) +(c) +Plan category +Number of +securities to be +issued upon +exercise of +outstanding +options, warrants +and rights +Weighted-average +exercise price of +outstanding +options, warrants +and rights +Number of securities +remaining available for +future issuance under +equity compensation +plans (excluding +securities reflected in +column (a)) +Equity compensation plans approved by security holders (1) +6,456,307 (3) +$ +11.25 (3) +3,820,266 (4) +Equity compensation plans not approved by security +holders (2) +144,337 +— +893,465 +Total +6,600,644 (3) +$ +11.25 (3) +4,713,731 (4) +(1) +These plans consist of our 2007 Plan, 2017 Plan and ESPP. +(2) +These plans consist of our 2025 Plan and RSUs granted as one-time inducement awards (outside the 2025 Plan) under Nasdaq Rule 5635(c)(4) following the merger with Akoya. +(3) +Consists of (i) outstanding options to purchase 4,879,819 shares of our Common Stock with a weighted average exercise price of $11.25 per share and (ii) 1,576,488 outstanding RSUs with a weighted average exercise price of $0 per share. +(4) +Consists of 1,605,784 shares of our Common Stock available under the 2017 Plan, 893,465 shares of our Common Stock available under the 2025 Plan, and 2,214,482 shares of our Common Stock available under the ESPP. Does not include an additional 1,869,758 shares of our Common Stock reserved for future issuance under the 2017 Plan effective January 1, 2026 by operation of the 2017 Plan’s annual increase provision and an additional 467,439 shares of our Common Stock reserved for future issuance under the ESPP effective January 1, 2026 by operation of the ESPP’s annual increase provision. +50 +TABLE OF CONTENTS +SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT +The following table sets forth certain information with respect to the beneficial ownership of our Common Stock as of April 15, 2026, for (a) the named executive officers in the Summary Compensation Table on page 38 of this Proxy Statement, (b) each of our directors and director nominees, (c) all of our current directors and executive officers as a group and (d) each stockholder known by us to own beneficially more than 5% of our Common Stock. +Name and Address of Beneficial Owner +Number of Shares +Beneficially Owned +Percentage of Shares +Beneficially Owned (1) +5% and Greater Stockholders (2) +Entities affiliated with Ameriprise Financial, Inc. (3) +4,996,073 +10.6 % +Entities affiliated with Telegraph Hill Partners, L.P. (4) +2,504,648 +5.3 % +Named Executive Officers and Directors +Masoud Toloue, Ph.D. (5) +901,381 +1.9 % +Vandana Sriram (6) +151,218 +* +William P. Donnelly (7) +205,550 +* +Jeffrey T. Elliott (8) +43,037 +* +Karen A. Flynn (9) +88,038 +* +Myla Lai-Goldman, M.D. (10) +6,968 +* +Garret M. Hampton, Ph.D. +— +* +Ivana Magovčević-Liebisch, Ph.D., J.D (11) +35,426 +* +Scott Mendel (12) +12,347 +* +Alan Sachs, M.D., Ph.D. +— +* +All directors and current executive officers as a group +(13 persons) (13) +717,469 +1.5 % +* +Represents beneficial ownership of less than 1% of the outstanding shares of our Common Stock. +(1) +This table is based upon information supplied by executive officers, directors and principal stockholders and in their filings with the SEC. Beneficial ownership is determined in accordance with the rules of the SEC and includes voting or investment power with respect to the securities. Quanterix deems shares of Common Stock that may be acquired by an individual or group within 60 days of April 15, 2026 pursuant to the exercise of options or warrants or the vesting of RSUs to be outstanding for the purpose of computing the percentage ownership of such individual or group, but such shares are not deemed to be outstanding for the purpose of computing the percentage ownership of any other person shown in the table. Except as indicated in footnotes to this table, Quanterix believes that the stockholders named in this table have sole voting and investment power with respect to all shares of our Common Stock shown to be beneficially owned by them based on information provided to Quanterix by these stockholders. Percentage of ownership is based on 47,064,985 shares of our Common Stock outstanding on April 15, 2026. +(2) +This information is based solely upon a review of the Schedule 13G reports or related amendments filed with the SEC with respect to holdings of Quanterix Common Stock. +(3) +Based on a Schedule 13G filed by Ameriprise Financial, Inc. and affiliated entities with the SEC on February 17, 2026. The address for Ameriprise Financial, Inc. is 145 Ameriprise Financial Center, Minneapolis, MN 55474. +(4) +Based on a Schedule 13G filed by Telegraph Hill Partners, L.P and affiliated entities with the SEC on November 17, 2025. The address for Telegraph Hill Partners, L.P is 300 Montgomery Street, Suite 1130, San Francisco, California 94104. +(5) +Consists of 355,018 shares of our Common Stock and 546,363 shares of our Common Stock issuable upon the exercise of stock options exercisable within 60 days of April 15, 2026 held by Dr. Toloue. +51 +TABLE OF CONTENTS +Dr. Toloue is not included in the “all directors and current executive officers as a group” total because he resigned as president and CEO effective January 19, 2026. +(6) +Consists of 28,713 shares of our Common Stock, 118,839 shares of our Common Stock issuable upon the exercise of stock options exercisable within 60 days of April 15, 2026 and 3,666 shares of our Common Stock issuable upon the vesting of RSUs within 60 days of April 15, 2026 held by Ms. Sriram. +(7) +Consists of 154,127 shares of our Common Stock and 51,423 shares of our Common Stock issuable upon the exercise of stock options exercisable within 60 days of April 15, 2026 held by Mr. Donnelly. +(8) +Consists of 11,390 shares of our Common Stock and 31,647 shares of our Common Stock issuable upon the exercise of stock options exercisable within 60 days of April 15, 2026 held by Mr. Elliott. +(9) +Consists of 33,840 shares of our Common Stock and 54,198 shares of our Common Stock issuable upon the exercise of stock options exercisable within 60 days of April 15, 2026 held by Ms. Flynn. +(10) +Consists of 6,968 shares of our Common Stock held by Dr. Lai-Goldman. +(11) +Consists of 4,224 shares of our Common Stock and 31,202 shares of our Common Stock issuable upon the exercise of stock options exercisable within 60 days of April 15, 2026 held by Dr. Magovčević-Liebisch. +(12) +Consists of 12,347 shares of our Common Stock held by Mr. Mendel. +(13) +Consists of 284,131 shares of our Common Stock, 426,296 shares of our Common Stock issuable upon the exercise of stock options exercisable within 60 days of April 15, 2026 and 7,042 shares of our Common Stock issuable upon the vesting of RSUs within 60 days of April 15, 2026. +52 +TABLE OF CONTENTS +PROPOSAL NO. 3 +RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +The Audit Committee appointed KPMG LLP (“KPMG”) as our independent registered public accounting firm to audit our financial statements for the fiscal year ending December 31, 2026. The Board of Directors proposes that the stockholders ratify this appointment. KPMG audited our financial statements for the fiscal year ended December 31, 2025. Ernst & Young LLP (“EY”) audited our financial statements for the fiscal year ended December 31, 2024 and prior years. See “ Additional Information Regarding Our Independent Registered Public Accounting Firm ”. We expect that a representative of KPMG will be present at the Annual Meeting with the opportunity to make a statement, if they desire to do so, and will be available to respond to appropriate questions. +In deciding to appoint KPMG, the Audit Committee reviewed auditor independence issues and existing commercial relationships with KPMG and concluded that KPMG has no commercial relationship with the Company that would impair its independence for the fiscal year ending December 31, 2026. +In the event the stockholders do not ratify the appointment of KPMG as our independent registered public accounting firm, the Audit Committee will reconsider its appointment. +The affirmative vote of a majority of the votes cast affirmatively or negatively for this proposal is required to ratify the appointment of our independent registered public accounting firm. +THE BOARD OF DIRECTORS RECOMMENDS A VOTE “ FOR ” THE RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR OUR FISCAL YEAR ENDING DECEMBER 31, 2026. +53 +TABLE OF CONTENTS +REPORT OF AUDIT COMMITTEE +The Audit Committee of the Board of Directors, which consists entirely of directors who meet the Nasdaq independence and experience requirements, has furnished the following report: +The Audit Committee assists the Board of Directors in overseeing and monitoring the integrity of the Company’s financial reporting process, compliance with legal and regulatory requirements and the quality of internal and external audit processes. The Audit Committee’s role and responsibilities are set forth in its charter adopted by the Board of Directors, which is available on our website at www.quanterix.com . The Audit Committee reviews and reassesses its charter annually and recommends any changes to the Board of Directors for approval. The Audit Committee is responsible for overseeing our overall financial reporting process, and for the appointment, compensation, retention, and oversight of the work of KPMG. In fulfilling its responsibilities for the financial statements for the fiscal year ended December 31, 2025, the Audit Committee took the following actions: +• +reviewed and discussed the audited financial statements for the fiscal year ended December 31, 2025 with management and KPMG, our independent registered public accounting firm; +• +discussed with KPMG the matters required to be discussed by the rules of the Securities and Exchange Commission and by Auditing Standard No. 1301 —  Communications with Audit Committees as adopted by the Public Company Accounting Oversight Board; and +• +received written disclosures and a letter from KPMG regarding its independence as required by the rules of the Public Company Accounting Oversight Board. The Audit Committee and KPMG further discussed KPMG’s independence. +Based on the Audit Committee’s review of the audited financial statements and discussions with management and KPMG, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Company’s 2025 Annual Report. +Members of the Audit Committee: +Jeffrey T. Elliott, +Garret M. Hampton, Ph.D. +Scott Mendel +54 +TABLE OF CONTENTS +DELINQUENT SECTION 16(A) REPORTS +Our records reflect that all reports required to be filed with the SEC pursuant to Section 16(a) of the Exchange Act were filed on a timely basis, except for the following: (i) a Form 4 for Masoud Toloue filed on November 24, 2025 in respect of the withholding of 1,242 shares of Common Stock to cover taxes on the settlement of RSUs which should have been filed by November 18, 2025, (ii) a Form 4 for Vandana Sriram filed on November 24, 2025 in respect of the withholding of 229 shares of Common Stock to cover taxes on the settlement of RSUs which should have been filed by November 18, 2025, (iii) a Form 3 for Alan Sachs filed on December 8, 2025 which should have been filed by November 26, 2025, and (iv) a Form 4 for Alan Sachs filed on December 8, 2025 in respect of the issuance of 46,727 RSUs which should have been filed by November 24, 2025; in each case due to administrative delays. +55 +TABLE OF CONTENTS +CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS +Since January 1, 2025, we have engaged in the following transactions with our directors, executive officers and holders of more than 5% of our Common Stock, which we refer to as our principal stockholders, and affiliates, immediate family members, or other related entities of our directors, executive officers and principal stockholders. We believe that all of these transactions were on terms as favorable as could have been obtained from unrelated third parties. +We entered into a license agreement with Tufts University in 2007, as amended in 2013, 2017 and 2020, pursuant to which we obtained an exclusive, worldwide license to our core SIMOA technology, and have entered into additional license agreements with Tufts University to certain related technology. David R. Walt, Ph.D., one of our former directors, our founding scientist and an inventor of the SIMOA technology, previously served as a professor at Tufts University. Under these licenses, we are required to pay Tufts University royalties on net sales of licensed products and services as well as a portion of our applicable sublicense revenues. During the year ended December 31, 2025, we recorded royalty expense of approximately $2.1 million under these licenses. Tufts University pays a portion of the royalties and license payments received from us to Dr. Walt pursuant to an arrangement between Tufts University and Dr. Walt, the amount of which is determined on a formulaic basis. +In 2022, we entered into a license agreement with Harvard University related to immunoassay technology developed by Dr. Walt at Harvard University and Brigham and Women’s Hospital. Under this license, we are required to pay Harvard University royalties on net sales of licensed products and services as well as a portion of our applicable sublicense revenues. Harvard University is obligated to pay a portion of the payments received from us to Dr. Walt pursuant to an arrangement between Harvard and Dr. Walt, the amount of which is determined on a formulaic basis. During the year ended December 31, 2025, we paid Harvard University $250,000 upon the completion of a commercial milestone but recorded no royalty expense under this license. We also sell products and services to laboratories affiliated with Harvard University and Brigham and Women’s Hospital that are overseen by Dr. Walt. During the year ended December 31, 2025, we recorded revenue from these sales of approximately $1.5 million. +Indemnification Agreements with Officers and Directors and Directors’ and Officers’ Liability Insurance +We have entered into indemnification agreements with each of our executive officers and directors. The indemnification agreements, our Charter and our Bylaws require us to indemnify our directors to the fullest extent not prohibited by Delaware law. Subject to certain limitations, our Bylaws also require us to advance expenses incurred by our directors and officers. +The 2007 Plan, and the 2017 Plan also provide that our directors (and in the case of the 2017 Plan, our employees) will not be liable for any act, omission, interpretation, construction or determination made in good faith in connection with the respective plan, and the members of our Board and any committee administering the plan will be entitled to indemnification and reimbursement by us in respect of any claim, loss, damage or expense (including reasonable attorneys’ fees) arising or resulting therefrom to the fullest extent permitted by law and/or under any directors’ and officers’ liability insurance coverage which may be in effect from time to time. +We also maintain a general liability insurance policy which covers certain liabilities of directors and officers of the Company arising out of claims based on acts or omissions in their capacities as directors or officers. +Policies and Procedures for Related Party Transactions +Pursuant to its charter, our Audit Committee is responsible for reviewing and approving, prior to our entry into any such transaction, all transactions reportable by us under Item 404 of Regulation S-K in which we are a participant and in which any parties related to us, including our executive officers, our directors, beneficial owners of more than 5% of our securities, immediate family members of the foregoing persons and any other persons whom our Board determines may be considered related persons under Item 404 of Regulation S-K, has or is expected to have a direct or indirect material interest. +56 +TABLE OF CONTENTS +In reviewing and approving such transactions, the Audit Committee will obtain, or will direct our management to obtain on its behalf, all information that the Audit Committee believes to be relevant and important to a review of the transaction prior to its approval. Following receipt of the necessary information, a discussion will be held of the relevant factors if deemed to be necessary by the Audit Committee prior to approval. If a discussion is not deemed to be necessary, approval may be given by written consent of the Audit Committee. This approval authority may also be delegated to the chair of the Audit Committee in some circumstances. No related person transaction will be entered into prior to the completion of these procedures. +The Audit Committee or its chair, as the case may be, will approve only those related person transactions that are determined to be in, or not inconsistent with, the best interests of us and our stockholders, taking into account all available facts and circumstances as the Audit Committee or the chair determines in good faith to be necessary in accordance with principles of Delaware law generally applicable to directors of a Delaware corporation. These facts and circumstances will typically include, but not be limited to, the benefits of the transaction to us; the impact on a director’s independence in the event the related person is a director, an immediate family member of a director or an entity in which a director is a partner, stockholder or executive officer; the availability of other sources for comparable products or services; the terms of the transaction; and the terms of comparable transactions that would be available to unrelated third parties or to employees generally. No member of the Audit Committee will participate in any review, consideration or approval of any related person transaction with respect to which the member or any of his or her immediate family members has an interest. +57 +TABLE OF CONTENTS +PROPOSAL NO. 4 +APPROVAL OF AMENDMENT AND RESTATEMENT OF THE COMPANY’S 2017 EMPLOYEE, DIRECTOR AND CONSULTANT EQUITY INCENTIVE PLAN +We are requesting our stockholders to approve the amendment and restatement of the Quanterix Corporation 2017 Employee, Director and Consultant Equity Incentive Plan, or the “2017 Plan,” to implement certain equity compensation best practices and extend the term of the 2017 Plan through June 9, 2031. +The Board of Directors approved the amendment and restatement of the 2017 Plan on April 17, 2026, subject to and effective upon stockholder approval at the Annual Meeting. The 2017 Plan, as amended and restated if this Proposal No. 4 is approved, is described in more detail below. If this Proposal No. 4 is not approved by our stockholders, the amendment and restatement of the 2017 Plan will not become effective, and the 2017 Plan will remain in effect in accordance with its present terms until November 16, 2027, after which date we may no longer grant equity awards under the 2017 Plan. If stockholders do not approve the amendment and restatement of the 2017 Plan, and we do not adopt a new equity incentive plan with stockholder approval at the 2027 Annual Meeting, we may need to consider alternative compensation tools to achieve the objectives for which the 2017 Plan was designed. +The purpose of the amendment and restatement is to implement certain equity compensation best practices and to permit the Company to continue using the 2017 Plan, for an additional four years beyond its current term, to help achieve the Company’s performance, recruiting, retention and incentive goals. We believe that the continued use of the 2017 Plan is essential to our success. Providing long-term incentive compensation opportunities in the form of equity awards aligns the interests of the Company’s employees and directors with the long-term interests of our stockholders, linking compensation to Company performance. The use of equity awards as compensation also allows the Company to conserve cash resources for other important purposes. +As of March 31, 2026, 2,420,675 shares of Common Stock remained available for future awards under the 2017 Plan (assuming shares underlying outstanding awards are earned and vest at the target number of shares). In addition to the 2017 Plan, we may grant incentive equity awards that satisfy the requirements of Nasdaq Listing Rule 5635(c)(4) under the 2025 Plan. As of March 31, 2026, 795,920 shares of Common Stock remained available for future awards under the 2025 Plan, which can only be used for newly hired employees. +Our Board believes that approval of the amendment and restatement of the 2017 Plan is in the best interests of the Company for the reasons discussed below in the section entitled “Reasons Why Stockholders Should Vote FOR the Proposed Amendment and Restatement of the 2017 Plan.” The Board recommends that stockholders vote FOR Proposal No. 4. +The full text of the amended and restated 2017 Plan is attached to this Proxy Statement as Appendix A. +Reasons Why Stockholders Should Vote FOR the Proposed Amendment and Restatement of the 2017 Plan +Our Board recommends a vote “FOR” the amendment and restatement of the 2017 Plan for the reasons set forth below. +Adopting the amendment and restatement of the 2017 Plan is critical for attracting, retaining and incentivizing talented leadership, other employees and directors, which we believe will contribute to our success and enhance long-term stockholder value. +We believe that equity-based incentive awards enhance our value for the benefit of our stockholders by enabling us to attract, retain and reward highly qualified members of our executive leadership team, other key personnel, and directors and by strengthening the mutuality of interests between such individuals and our stockholders. Unless stockholders approve the amendment and restatement of the 2017 Plan, we will not have shares of Common Stock available under the 2017 Plan to grant equity awards to officers, employees and directors of the Company as part of our annual compensation program after November 16, 2027. +58 +TABLE OF CONTENTS +As of March 31, 2026, all stock options issued and outstanding under the 2017 Plan had an exercise price in excess of 150% of the closing price of our Common Stock on such date. The weighted average per share exercise price of such options was $14.52 and the maximum exercise price was $79.48. These substantial levels of underwater stock options reduce the incentive effect of currently outstanding options and present significant challenges to our ability to continue retaining and rewarding talented employees. Quanterix has elected not to pursue an option repricing (which it is currently permitted under the 2017 Plan to implement by means of an option exchange offer), and instead is asking shareholders to approve a modest extension of the term of the 2017 Plan for an additional four years. (Further, as described below, the proposed amendment and restatement of the 2017 Plan eliminates the ability of the plan administrator to effect a stock option repricing without approval of shareholders by means of an option exchange.) +In determining to approve the amendment and restatement of the 2017 Plan, the Board considered our broader equity grant objectives and practices and believes that the amendment and restatement of the 2017 Plan is necessary to permit the Company to continue using the 2017 Plan to achieve the Company’s general performance, retention and incentive goals. Equity awards are intended to motivate high levels of performance and align the interests of our directors, employees and consultants with those of our stockholders by giving directors, employees and consultants the perspective of an owner with an equity stake in the Company and providing a means of recognizing their contributions to the success of the Company. Specifically, the Board considered, among other things, that the market for high caliber, experienced talent in our industry and in our geographic location is extremely competitive. Our ability to grant equity awards is critical to our ability to be competitive and to attract, retain and motivate the talent we need to best position our Company for success. +Accordingly, we are asking our stockholders to approve the amendment and restatement of the 2017 Plan to extend the term of the plan through June 9, 2031. +The amendment and restatement of the 2017 Plan is intended to be reasonable and supported by market data and internal modeling. +Our Board reviewed market, industry and compensation peer group practices and data, as well as internal modeling including our historical share usage levels, recent and current stock plan dilution levels, and the current value of equity awards held by officers, employees and directors based on the current stock price. The Board took into consideration various additional factors including our retention needs and priorities, and the size of equity awards needed for overall compensation levels to remain market competitive particularly in light of the decline in our stock price in recent periods. +“Burn rate” provides a measure of our historical share usage under the 2017 Plan. Our average burn rate over the three years ended December 31, 2025 was 3.8%. We believe this average net burn rate is broadly aligned with peer group practices and supports our request for an amendment and restatement of the 2017 Plan. Further, we intend to continue granting equity awards at generally comparable rates in the future. +We currently anticipate that the shares of Common Stock currently remaining available under the 2017 Plan and the 2025 Plan, together with the remaining annual increase under the 2017 Plan as of January 1, 2027, will be sufficient to meet the Company’s equity compensation needs through fiscal year 2027, based on our historic grant rates and current stock price assumptions. However, it is possible that these shares of Common Stock could last for a shorter period of time depending on a number of factors, including but not necessarily limited to: changes in our overall long-term incentive compensation program, adjustments to targeted award values relative to current levels to address prevailing market conditions and trends, higher than anticipated hiring needs, future acquisitions, and/or a meaningful decline in our stock price. +Without the amendment and restatement of the 2017 Plan, we may be required to develop alternative (including cash-based) incentives. +If the amendment and restatement of the 2017 Plan is not approved, we may be required to resort to (among other things) issuing cash-based long-term incentive awards as a substitute for our annual equity award process after fiscal year 2027 for officers, employees and directors. We do not believe increasing cash compensation to make up for any shortfall in equity compensation would be practicable or advisable, because +59 +TABLE OF CONTENTS +we believe a combination of equity awards and cash compensation provides a more effective compensation strategy than cash alone for attracting, retaining and motivating our officers and employees on a long-term basis and aligning employees’ and stockholders’ interests. In addition, any significant increase in cash compensation in lieu of equity awards could increase our operating expenses and reduce our cash flow from operations, which could harm our ability to invest in and grow our business, and adversely affect our business, financial condition and results of operations. +Historical Plan Award Data +The following table sets forth information regarding historical awards granted during the 2023, 2024 and 2025 fiscal years under the 2017 Plan (no awards were made under the 2025 Plan before fiscal year 2026), and the corresponding burn rate for each of the last three fiscal years. +We calculate burn rate for a fiscal year as the aggregate number of options and RSUs granted in such year net of options and RSU granted and cancelled in such year, divided by the number of shares of Common Stock outstanding as of year-end. Quanterix has historically granted equity incentive awards in a judicious manner and within peer group norms. +Years Ended December 31, +2023 +2024 +2025 +Stock Options Granted +1,249,030 +1,522,251 +2,675,631 +Stock Options Forfeited/Canceled +(429,173 ) +(628,201 ) +(1,334,064 ) +RSUs Granted +828,153 +650,999 +1,352,115 +RSUs Forfeited/Canceled +(263,208 ) +(301,676 ) +(554,764 ) +Shares of Common Stock Outstanding as of Fiscal Year End +37,892,684 +38,543,797 +46,743,938 +Net Annual Burn Rate +3.7 % +3.2 % +4.6 % +Three Year Average Burn Rate +3.8 % +Set forth below, as of March 31, 2026, are the number of shares of Common Stock subject to outstanding options and RSUs pursuant to the 2017 Plan and the aggregate number of shares available for issuance under the 2017 Plan. The closing price of our Common Stock on the Nasdaq Global Market on that date was $3.52 per share. +Shares subject to outstanding options (1) +3,753,162 +Shares subject to outstanding RSUs (2) +3,301,739 +Shares available for issuance +2,420,675 +Overhang (3) +20.1 % +(1) +As of March 31, 2026, options outstanding under the 2017 Plan had a weighted average per share exercise price of $14.52 and a weighted average remaining term of 7.9 years. +(2) +As of March 31, 2026, the weighted average remaining vesting term for RSUs outstanding under the 2017 Plan was 3.0 years. +(3) +Overhang is a measure of potential dilution, which we define as the sum of (i) the number of shares of Common Stock subject to equity awards outstanding (with performance stock unit awards reflected at “target” levels) under a plan, but not exercised or settled, and (ii) the number of shares of Common Stock available to be granted under a plan, divided by (x) the total number of shares of Common Stock outstanding. The figures shown in the table above exclude the 2025 Plan. When the 2025 Plan is included, total shares available for issuance is 3,216,595 and total overhang is 26.3%. +The tables above exclude 77,210 shares issuable upon the vesting of certain RSUs previously issued by Akoya and assumed by the Company upon the closing of its merger with Akoya and 144,337 shares issuable upon the vesting of certain RSUs granted as one-time inducement awards (outside the 2025 Plan) under Nasdaq Rule 5635(c)(4) following the merger with Akoya. +60 +TABLE OF CONTENTS +The 2017 Plan, as Amended and Restated, Contains Key Equity Compensation Best Practices +The 2017 Plan, as amended and restated (subject to stockholder approval), maintains key features of the existing plan and adds new provisions that we believe reflect a broad range of equity compensation and governance best practices. +New features that would be added by the amendment and restatement (subject to stockholder approval) include: +No repricing of awards without stockholder approval. Currently, the 2017 Plan enables the plan administrator to effect a stock option repricing, without separate approval by stockholders, by means of an option exchange program. As proposed to be amended and restated, the plan administrator would not have the authority to reprice options, including by means of an option exchange program, without the approval of stockholders (other than equitable adjustments in connection with certain corporate restructurings or transactions). +Non-Employee Director award limit. As proposed to be amended and restated, the 2017 Plan adds a grant-date fair value limit of $750,000 per year for all awards under the 2017 Plan and all cash compensation provided to non-employee directors (with a limit of $1,000,000 for the calendar year in which a non-employee director is initially elected or appointed to the Board). +Minimum Vesting. Currently, the 2017 Plan does not impose any minimum vesting period for awards made under the plan. As proposed to be amended and restated, the 2017 Plan provides that each equity award will have a minimum vesting period of one year (except that (i) up to 5% of the shares of Common Stock available for issuance under the 2017 Plan could be granted free of such minimum vesting requirement, and (ii) stock awards granted in lieu of cash fees to a non-employee director could be granted free of such minimum vesting requirement and will not count toward such five percent). The 2017 Plan also provides that the plan administrator may accelerate the vesting of an equity award in connection with or following a participant’s death, disability or other termination of service with the Company or the consummation of a corporate transaction, and the 2017 Plan provides for pro-rated vesting of awards (including awards held for less than one year) in the event of a participant’s death or disability. +Dividends payable only upon vesting. Currently, the 2017 Plan does not include any limitation on the payment of dividends under equity awards prior to their vesting, although the Company’s equity award agreements do prohibit the payment of dividends prior to the issuance of shares of Common Stock under such awards. As proposed to be amended and restated, the 2017 Plan provides that dividends will only be payable following the issuance of shares of Common Stock upon the vesting of RSUs or the exercise of options. +Additionally, the 2017 Plan, as amended and restated (subject to stockholder approval), maintains the following existing best practices: +Continued broad-based eligibility for equity awards. We grant equity awards to a large number of our employees and all of our non-employee directors. By doing so, we link employee and director interests with stockholder interests throughout the organization and motivate these individuals to act as owners of the business. +No discounted options or discounted SARs . Stock options and SARs may not be granted with exercise prices lower than the fair market value of the underlying shares on the grant date. +No single-trigger vesting of awards. The 2017 Plan does not have a single-trigger accelerated vesting provision for a change in control. +No automatic grants. The 2017 Plan does not provide for automatic grants to any individual. +No tax gross-ups. The 2017 Plan does not provide for any tax gross-ups. +No liberal share recycling. The 2017 Plan does not provide for “liberal” share recycling; shares of Common Stock tendered to the Company on the exercise of an equity award or withheld to cover taxes do not become available for reissuance. +61 +TABLE OF CONTENTS +No liberal change-in-control definition . The 2017 Plan does not contain a “liberal” change-in-control definition (as articulated by Institutional Shareholder Services). +Stock holding requirements. Although the 2017 Plan does not require employees and directors to hold any shares they receive following vesting or exercise of awards for any specific period of time, the Company maintains robust stock ownership guidelines that apply to executive officers and non-employee directors to further align the interests of such individuals with the interests of our stockholders and to promote our commitment to sound corporate governance. +Summary of the 2017 Plan +This section summarizes material features of the 2017 Plan, as amended and restated, subject to stockholder approval. The summary is qualified in its entirety by reference to the complete text of the amended and restated 2017 Plan, which is attached to this Proxy Statement as Appendix A. +Purpose of the 2017 Plan +The purpose of the 2017 Plan is to encourage ownership of shares by employees and consultants of the Company and its affiliates, and of directors of the Company, in order to attract and retain such people, to induce them to work for the benefit of the Company or of an affiliate and to provide additional incentive for them to promote the success of the Company or of an affiliate. +Administration +The 2017 Plan is administered by the Compensation Committee of the Board, although the Board may exercise any powers and responsibilities assigned to the Compensation Committee at any time. The Board may also delegate its duties and responsibilities to one or more individuals or other committees of our directors, subject to the limitations imposed under the 2017 Plan and applicable law. The actual administrator of the 2017 Plan is referred to as the “plan administrator” in this Proposal No. 4. +Subject to the terms of the 2017 Plan, the plan administrator has the authority to interpret the 2017 Plan and awards under the 2017 Plan and to make all rules and determinations necessary or advisable for the administration of the 2017 Plan. The plan administrator also has the authority to determine which eligible service providers receive awards, to grant awards and to set the terms and conditions of all awards under the 2017 Plan, including any vesting and vesting acceleration provisions, and to amend awards under the 2017 Plan, subject to the conditions and limitations in the 2017 Plan. +Eligibility +Our employees, directors and consultants, and employees and consultants of our subsidiaries, are eligible to receive awards under the 2017 Plan. As of March 31, 2026, approximately 365 employees, 8 non-employee directors and 0 consultants were eligible to receive awards under the 2017 Plan. +Shares Available for Awards +Currently, the total number of shares of Common Stock reserved for issuance under the 2017 Plan equals the sum of (i) 1,042,314 shares, (ii) shares that were subject to awards under the 2007 Plan that are forfeited, expired or cancelled without the delivery of shares of Common Stock or which result in the forfeiture of shares of Common Stock back to the Company on or after November 16, 2017 (up to a maximum of 2,490,290 shares) and (iii) an annual increase on the first day of each fiscal year beginning January 1, 2019 and ending on the second day of fiscal year 2027 equal to an amount equal to the lesser of (x) 4% of the number of shares of Common Stock issued and outstanding on such date and (y) such other amount determined by our Board. If the amendment and restatement of the 2017 Plan is approved by stockholders, the annual increase will be extended through the second day of the 2031 fiscal year. +As of March 31, 2026, there were 30,666 shares subject to awards outstanding under the 2007 Plan that may be returned to the 2017 Plan. +Shares of Common Stock issued under the 2017 Plan may be authorized but unissued shares or shares held by the Company in its treasury, or both. If an award under the 2017 Plan expires, lapses or is terminated, +62 +TABLE OF CONTENTS +surrendered, repurchased, canceled without having been fully exercised or forfeited, any unused shares subject to the award will become available for new grants under the 2017 Plan. Shares of Common Stock tendered to the Company on the exercise of an equity award or withheld to cover taxes do not become available for reissuance. +Director Award Limit +If the amendment and restatement of the 2017 Plan is approved by stockholders, the value of all awards under the 2017 Plan and all cash compensation paid by the Company to any non-employee director for services as a director during any calendar year may not exceed $750,000 (calculated valuing awards based on the grant date fair market value for financial reporting purposes); provided that such amount is $1,000,000 for the calendar year in which a non-employee director is initially elected or appointed to the Board. +Awards +The 2017 Plan provides for the grant of options, stock grants (i.e., restricted and unrestricted stock awards), and other stock-based awards (such as stock appreciation rights (SARs) and restricted stock units (RSUs)). All awards under the 2017 Plan are set forth in award agreements, which detail the terms and conditions of awards, including any applicable vesting and payment terms and post-termination exercise limitations. A brief description of these award types follows. +Options and SARs +Options provide for the purchase of our shares of Common Stock in the future at an exercise price set on the grant date. Options may be either incentive stock options or ISOs (subject to any limitations under the Internal Revenue Code of 1986 (the “Code”)) or nonqualified stock options or NSOs. SARs entitle their holder, upon exercise, to receive from us an amount equal to the appreciation of the shares subject to the award between the grant date and the exercise date. The plan administrator determines the number of shares covered by each option and SAR, the exercise price of each option and SAR and the conditions and limitations applicable to the exercise of each option and SAR. The exercise price of an option or SAR will not be less than 100% of the fair market value of the underlying share on the grant date (or 110% in the case of ISOs granted to certain significant stockholders). The term of an option or SAR may not be longer than ten years (or five years in the case of ISOs granted to certain significant stockholders). +Payment of the exercise price in connection with the exercise of options under the 2017 Plan may be made by cash or check or, in the discretion of the plan administrator, through delivery of shares of our Common Stock that meet specified conditions, by having the Company retain shares equal to the exercise price of the options being exercised, in accordance with a cashless exercise program established with a securities brokerage firm, or any other such lawful consideration as the plan administrator deems suitable, or any combination of the foregoing. +Restricted Stock and RSUs +Restricted stock is an award of nontransferable shares that remain forfeitable unless and until specified conditions are met and which may be subject to a purchase price. RSUs are contractual promises to deliver shares in the future, which may also remain forfeitable unless and until specified conditions are met. The terms and conditions applicable to restricted stock and RSUs will be determined by the plan administrator, subject to the conditions and limitations contained in the 2017 Plan. +Other Awards +Other awards that may be granted under the 2017 Plan include awards of fully vested shares and other awards valued wholly or partially by referring to, or otherwise based on, our Common Stock. The plan administrator will determine the terms and conditions of other stock-based awards, including vesting conditions or events. +63 +TABLE OF CONTENTS +Vesting Criteria +The plan administrator determines the vesting conditions or events for awards, which may include performance criteria. If the amendment and restatement of the 2017 Plan is approved, each equity award will have a minimum vesting period of one year (except that (i) up to 5% of the shares of Common Stock available for issuance under the 2017 Plan could be granted free of such minimum vesting requirement, and (ii) stock awards granted in lieu of cash fees to a non-employee director could be granted free of such minimum vesting requirement and will not count toward such five percent). The 2017 Plan also provides that the plan administrator may accelerate the vesting of an equity award in connection with or following a participant’s death, disability or other termination of service with the Company or the consummation of a corporate transaction, and the 2017 Plan provides for pro-rated vesting of awards (including awards held for less than one year) in the event of a participant’s death or disability. +Dividends and Dividend Equivalents +As proposed to be amended and restated, the 2017 Plan provides that dividends or dividend equivalents will only be payable following the vesting of the shares represented by the award to which such dividends or divided equivalents are attributable. +Certain Transactions +Upon a merger, consolidation or sale of all or substantially all of our assets, the plan administrator has discretion to take any one or more of the following actions pursuant to our 2017 Plan: +• +provide that outstanding options will be continued or substituted for options of the successor corporation; +• +provide that the outstanding options must be exercised within a certain number of days, either to the extent the options are then exercisable, or at the discretion of the plan administrator, any such options being made partially or fully exercisable; +• +terminate outstanding options in exchange for a cash payment of an amount equal to the difference between (a) the consideration payable upon consummation of the corporate transaction to a holder of the number of shares into which such option would have been exercisable to the extent then exercisable, or at the discretion of the plan administrator, any such options being made partially or fully exercisable, and (b) the aggregate exercise price of those options; +• +provide that outstanding stock grants will be continued or substituted for shares of the successor corporation or consideration payable with respect to our outstanding stock in connection with the corporate transaction; and +• +terminate outstanding stock grants in exchange for payment of an amount equal to the consideration payable upon consummation of the corporate transaction to a holder of the same number of shares comprising the stock grant, to the extent the stock grant is no longer subject to any forfeiture or repurchase rights, or at the plan administrator’s discretion, all forfeiture and repurchase rights being waived upon the corporation transaction. +In addition, in the event of certain non-reciprocal transactions with our stockholders, the plan administrator will make equitable adjustments to the 2017 Plan and outstanding awards as it deems appropriate to reflect the transaction. +Plan Amendment and Termination +Our Board may amend or terminate the 2017 Plan at any time; however, no amendment may adversely affect rights under an award outstanding under the 2017 Plan without the consent of the affected participant and stockholder approval will be obtained for any amendment to the extent necessary to comply with applicable laws. If the amendment and restatement of the 2017 Plan is approved, the 2017 Plan will remain in effect until June 9, 2031, unless earlier terminated by our Board or by a vote of our stockholders. No awards may be granted under the 2017 Plan after its termination. +64 +TABLE OF CONTENTS +No Repricings without Stockholder Approval +As proposed to be amended and restated, the plan administrator would not have the authority under the 2017 Plan to reprice options, including by means of an option exchange program, without the approval of stockholders (other than equitable adjustments in connection with certain corporate restructurings or transactions). +Foreign Participants, Clawback Provisions, Transferability +The plan administrator may establish subplans or procedures to address differences in tax or other laws of any specified jurisdiction. All awards will be subject to the Company’s Compensation Clawback Policy and other clawback or recoupment policy as set forth in such clawback policy or the applicable award agreement. Except as the plan administrator may determine or provide in an award agreement, awards under the 2017 Plan are generally non-transferrable, except by will or the laws of descent and distribution or subject to the plan administrator’s consent, and are generally exercisable only by the participant during the participant’s lifetime. +Interests of Certain Persons in the Amendment and Restatement of the 2017 Plan +In considering the recommendation of the Board with respect to the approval of the amendment and restatement of the 2017 Plan, stockholders should be aware that, as discussed above, non-employee directors and executive officers are eligible to receive awards under the amended and restated 2017 Plan. The Board recognizes that approval of this Proposal No. 4 may benefit our non-employee directors and executive officers and their successors. +Federal Income Tax Consequences +The following is a general summary of the federal income tax consequences to us and to U.S. participants for awards granted under the 2017 Plan as of this date. The federal tax laws may change, and the tax consequences for any participant will depend upon his or her individual circumstances. Tax consequences for any particular individual may be different. This summary does not purport to be complete, and does not discuss state, local or non-U.S. tax consequences. +Nonqualified Options. Generally, a participant will not recognize income for federal income tax purposes when they receive a grant of an NSO under the 2017 Plan. Upon exercise of an NSO, the participant will realize ordinary income, and the Company will be entitled to a corresponding deduction for federal income tax purposes, in an amount equal to the difference between the option exercise price and the fair market value of the shares at the time of exercise. +Incentive Stock Options. A participant will not recognize income for federal income tax purposes when they receive a grant of an ISO under the 2017 Plan. When a participant exercises an ISO, the participant will generally not be subject to federal income taxation at the time of exercise, and the Company will not be entitled to a deduction for federal income tax purposes. However, the amount by which the fair market value of the shares at the time of exercise exceeds the option price will be an “item of adjustment” for participants for purposes of the alternative minimum tax, unless the shares are sold or otherwise disposed of in the same year the ISO is exercised. Gain realized by participants on the sale of shares underlying an ISO is taxable at long-term capital gains rates, and no tax deduction is available to the Company, unless the participant disposes of the shares within (i) two years after the date of grant of the option or (ii) within one year of the date the shares were transferred to the participant. If the shares are sold or otherwise disposed of before the end of the one-year and two-year periods specified above, the difference between the option exercise price and the fair market value of the shares on the date of the option’s exercise (or the date of sale, if less) will be taxed at ordinary income rates, and the Company will be entitled to a corresponding deduction for federal income tax purposes to the extent that the participant recognizes ordinary income. +Stock Appreciation Rights. A participant will not recognize income for federal income tax purposes when they receive a grant of a SAR under the 2017 Plan. Generally, upon exercise of the SAR, the fair market value of the shares received, determined on the date of exercise of the SAR, or the amount of cash received in lieu of shares, will be treated as compensation taxable as ordinary income to the participant in the +65 +TABLE OF CONTENTS +year of such exercise. The Company will be entitled to a corresponding deduction for federal income tax purposes. If a participant receives shares of Common Stock upon exercise of a SAR, the taxation of the post-exercise appreciation or depreciation is treated as either a short-term or long-term capital gain or loss, depending upon the length of time the participant held the shares of Common Stock. +Restricted Stock. Generally, a participant will not recognize income for federal income tax purposes when they receive a grant of restricted stock under the 2017 Plan, unless the participant makes a valid election under Section 83(b) of the Code to recognize taxable ordinary income on the date of grant equal to the excess of the fair market value of the shares of restricted stock over the purchase price (if any) of the restricted stock. Absent an election under Section 83(b) of the Code, when restrictions on shares of restricted stock lapse, such that the shares are no longer subject to a substantial risk of forfeiture, the participant generally will recognize ordinary income, and the Company will be entitled to a corresponding deduction for federal income tax purposes, for an amount equal to the difference between the fair market value of the shares on the date such restrictions lapse over the purchase price (if any) for the restricted stock. +Restricted Stock Units. Generally, a participant will not recognize income for federal income tax purposes when they receive a grant of RSUs under the 2017 Plan. When RSUs are settled, whether in cash or shares, the participant will have ordinary income, and the Company will be entitled to a corresponding deduction for federal income tax purposes. In the case of stock units granted to employees or former employees, payroll taxes may be due at the time of vesting even if vesting and settlement of stock units do not occur simultaneously. +Dividend Equivalents. Generally, a participant will not recognize income for federal income tax purposes when they receive a grant of dividend equivalents under the 2017 Plan. When a dividend equivalent is paid, the participant will recognize ordinary income, and the Company will be entitled to a corresponding deduction for federal income tax purposes. +Application of Section 409A of the Code. Section 409A of the Code applies to any awards under the 2017 Plan that are deemed to be deferred compensation. If the requirements of Section 409A of the Code are not met, the recipient may be required to include deferred compensation in taxable income, and additional taxes and interest may be assessed on such amounts. If any awards are subject to Section 409A of the Code, we intend to have the awards comply with Section 409A of the Code. +Limitations on the Company’s Compensation Deduction. Section 162(m) of the Code limits the deduction we may take for otherwise deductible compensation payable to certain current and former executive officers of the Company to the extent the compensation paid to such an officer for the year exceeds $1 million. +New Plan Benefits +The benefits or amounts that may be received or allocated to participants under the 2017 Plan are subject to the discretion of the compensation committee or the Board and are not currently determinable. While we expect that equity awards will be granted under our non-employee director compensation program in the future, such amounts are not determinable at this time. +Board Recommendation +The Board of Directors unanimously recommends a vote “ FOR ” the amendment and restatement of the 2017 Plan. +Vote Required for Approval +The affirmative vote of a majority of the votes cast affirmatively or negatively is required to approve this Proposal No. 4. If this Proposal No. 4 is approved by the requisite stockholder vote, then the proposed amended and restated 2017 Plan will become effective. +66 +TABLE OF CONTENTS +ADDITIONAL INFORMATION REGARDING OUR +INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +Change in Auditors +For the fiscal year ended December 31, 2024 and prior years, EY served as our independent registered public accounting firm. On May 9, 2025, we dismissed EY as our independent registered public accounting firm. This change in our independent registered public accounting firm was approved by the Audit Committee following a competitive request for proposal process with several independent registered public accounting firms, including EY. On May 9, 2025, the Audit Committee approved the appointment of KPMG LLP as the Company’s new independent registered public accounting firm for the fiscal year ending December 31, 2025. +The reports of EY on our consolidated financial statements as of and for the fiscal years ended December 31, 2024 and 2023 did not contain an adverse opinion or a disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope, or accounting principles. Further, during the fiscal years ended December 31, 2024 and 2023 and the subsequent interim period through May 9, 2025, there were (i) no disagreements (as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions to Item 304 of Regulation S-K) between us and EY on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreement, if not resolved to the satisfaction of EY, would have caused EY to make reference to the subject matter of such disagreement in its reports on the consolidated financial statements for such years, and (ii) except as set forth below, no reportable events as that term is defined in Item 304(a)(1)(v) of Regulation S-K. +Each of EY’s reports on our internal control over financial reporting as of December 31, 2024 and 2023 contained an adverse opinion, specifically, that we did not maintain effective internal control over financial reporting as of the end of the period covered by such report due to the effect of certain material weaknesses described in such reports. These material weaknesses, which we have disclosed in our annual reports previously filed with the SEC, are summarized below. +In the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (the “2023 Annual Report”) management disclosed that material weaknesses relating to its internal controls related to the valuation of inventory, including excess and obsolescence reserves (the “Inventory Valuation MW”) and the accounting for property and equipment, net (the “Property and Equipment MW”) continued to exist as of December 31, 2023, and EY’s report on our internal control over financial reporting as of December 31, 2023 contained an adverse opinion, due to these material weaknesses. +Subsequent to the issuance of the 2023 Annual Report, we identified an error related to the capitalization of labor and overhead costs in our inventory balances, which caused a misstatement (the “Misstatement”) of our previously issued audited consolidated financial statements as of December 31, 2023 and 2022 and for each of the three years in the period ended December, 31 2023 and the unaudited consolidated financial statements for the quarterly and year-to-date (as applicable) periods ended March 31, 2022, June 30, 2022, September 30, 2022, March 31, 2023, June 30, 2023, September 30, 2023, March 31, 2024 and June 30, 2024 (the “Restatement Periods”). Management concluded this error was material to our financial statements and required restatement of the financial statements for the Restatement Periods. +Amendment No. 1 to our Annual Report on Form 10-K/A for the fiscal year ended December 31, 2023 (the “2023 Amended Annual Report”) disclosed that the Misstatement was a result of a newly identified design deficiency associated with the Inventory Valuation MW, and EY’s report on our internal control over financial reporting as of December 31, 2023 included in the 2023 Amended Annual Report contained an adverse opinion on our internal control over financial reporting, due to the material weaknesses that were previously described in the 2023 Annual Report and the additional design deficiency related to the capitalization of labor and overhead costs impacting inventory valuation. +Our 2024 Annual Report disclosed the remediation of the Property and Equipment MW. However, as of December 31, 2024, the Inventory Valuation MW, including the additional control design deficiency described above, was not remediated and we identified an additional material weakness in the operating effectiveness of our internal controls associated with the accounting for Accelerator Laboratory revenue, a +67 +TABLE OF CONTENTS +component of service and other revenue (collectively, the “2024 Material Weaknesses”). EY’s report on our internal control over financial reporting as of December 31, 2024 contained an adverse opinion on our internal control over financial reporting, due to the 2024 Material Weaknesses. Our Audit Committee discussed the material weaknesses referred to above with EY. +Principal Accounting Fees and Services +The following table presents fees for professional audit services rendered by KPMG for the audit of our annual financial statements for the fiscal year ended December 31, 2025, and for certain tax services, all of which were approved by the Audit Committee in accordance with its established policies and procedures. The table also includes fees billed for other services rendered by KPMG during 2025 before being appointed as the Company’s auditor (such fees are included in ‘Other fees’ within the following table): +2025 KPMG +Audit fees +$ +2,027,866 +Audit-related fees +— +Tax fees +$ +105,000 +Other fees +$ +281,975 +Total +$ +2,414,841 +Pre-Approval Policy +Consistent with SEC policies regarding auditor independence, the Audit Committee has responsibility for appointing, setting compensation and overseeing the work of our independent registered public accounting firm. In recognition of this responsibility, the Audit Committee has established a policy to pre-approve all audit and permissible non-audit services provided by our independent registered public accounting firm; provided however, that de minimis non-audit services may instead be approved in accordance with applicable SEC rules. +Prior to engagement of an independent registered public accounting firm for the next year’s audit, management will submit an aggregate of services expected to be rendered during that year for each of four categories of services to the Audit Committee for approval. +1. +Audit Services include professional services rendered in connection with the audit of our consolidated financial statements (including an assessment of our internal control over financial reporting) included in Item 8 of our Annual Reports filed on Form 10-K, reviews of our consolidated financial statements included in our Quarterly Reports filed on Form 10-Q, comfort letters, registration statements and consultation regarding financial accounting and/or reporting standards. +2. +Audit-Related Services are for assurance and related services that are traditionally performed by an independent registered public accounting firm, including due diligence related to mergers and acquisitions, employee benefit plan audits and special procedures required to meet certain regulatory requirements. +3. +Tax Services include all services performed by an independent registered public accounting firm’s tax personnel except those services specifically related to the audit of the financial statements, and includes fees in the areas of tax compliance, tax planning and tax advice. +4. +Other Fees are those associated with services not captured in the other categories. +Prior to engagement, the Audit Committee pre-approves these services by category of service. The fees are budgeted, and the Audit Committee requires our independent registered public accounting firm and management to report actual fees versus the budget periodically throughout the year by category of service. During the year, circumstances may arise when it may become necessary to engage our independent registered public accounting firm for additional services not contemplated in the original pre-approval. In those instances, the Audit Committee requires specific pre-approval before engaging our independent registered public accounting firm. +68 +TABLE OF CONTENTS +The Audit Committee may delegate pre-approval authority to one or more of its members. The member to whom such authority is delegated must report, for informational purposes only, any pre-approval decisions to the Audit Committee at its next scheduled meeting. +69 +TABLE OF CONTENTS +CORPORATE CODE OF CONDUCT AND ETHICS +We have adopted a corporate code of conduct and ethics that applies to all of our employees, including our chief executive officer and chief financial and accounting officers. The text of the code of conduct and ethics is posted on our website at www.quanterix.com under “Investors — Corporate Governance —  Governance Highlights” and will be made available to stockholders without charge, upon request, in writing to the Corporate Secretary at 900 Middlesex Turnpike, Building 1, Billerica, Massachusetts 01821. Disclosure regarding any amendments to, or waivers from, provisions of the code that apply to our directors, principal executive officer or principal financial officer will be included in a Current Report on Form 8-K within four business days following the date of the amendment or waiver, unless website posting or the issuance of a press release of such amendments or waivers is then permitted by Nasdaq rules. +70 +TABLE OF CONTENTS +ADDITIONAL INFORMATION +Stockholder List +Stockholders of record at the close of business on April 14, 2025 are entitled to notice of, and to vote at, the Annual Meeting. Such stockholders are encouraged to submit an enclosed proxy card, even if their shares were sold after such date. A list of stockholders of record will be available during the 10 days prior to the Annual Meeting, at our principal executive offices located at 900 Middlesex Turnpike Building 1, Billerica, Massachusetts 01821. +Available Information +The Company intends to file a definitive proxy statement on Schedule 14A, an accompanying proxy card and other relevant documents with the SEC in connection with the solicitation of proxies from the Company’s stockholders for the Annual Meeting. STOCKHOLDERS OF THE COMPANY ARE STRONGLY ENCOURAGED TO READ THE COMPANY’S DEFINITIVE PROXY STATEMENT (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO) AND ALL OTHER DOCUMENTS FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION . Stockholders may obtain a copy of the definitive proxy statement, an accompanying proxy card, any amendments or supplements to the definitive proxy statement and other documents filed by the Company with the SEC at no charge at the SEC’s website at www.sec.gov. Copies will also be available at no charge on the Company’s investor relations website at ir.quanterix.com or by contacting the Company’s Investor Relations department at https://ir.quanterix.com/investor-resources/contact-ir as soon as reasonably practicable after such materials are electronically filed with, or furnished to, the SEC. +Incorporation By Reference +To the extent this Proxy Statement is incorporated by reference into any other filing by us under the Securities Act of 1933, as amended, or the Exchange Act, the “Report of the Audit Committee” will not be deemed incorporated unless specifically provided otherwise in such filing, to the extent permitted by the rules of the SEC. Such section shall also not be deemed to be “soliciting material” or to be “filed” with the SEC. Website references and links to other materials are for convenience only, and the content and information contained on or connected to our website is not incorporated by reference into this Proxy Statement and should not be considered part of this Proxy Statement or any other filing that we make with the SEC. +Forward-Looking Statements +This Proxy Statement contains certain forward-looking statements within the meaning of the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act. These forward-looking statements relate to events or results that may occur in the future, including, but not limited to, the Company’s future costs of solicitation, record or meeting dates, compensation arrangements or structure, the composition of the Board, future stockholder engagement, and the Company’s strategy. These forward-looking statements are subject to certain risks and uncertainties posed by many factors that could cause actual events to differ materially from those anticipated by such forward- looking statements and speak only as of the date of this Proxy Statement. In some cases, you can identify forward-looking statements by the following words: “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “ongoing,” “potential,” “predict,” “project,” “should,” “will,” “would,” or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. We undertake no obligation to revise any forward-looking statement in order to reflect events or circumstances that might subsequently arise, except as required by applicable law. Readers are cautioned not to place undue reliance on these forward-looking statements, which apply only as of the date of this Proxy Statement. +OTHER MATTERS +The Board of Directors knows of no other business which will be presented at the Annual Meeting. If any other business is properly brought before the Annual Meeting, proxies will be voted in accordance with the judgment of the persons named therein. +71 +TABLE OF CONTENTS +STOCKHOLDER PROPOSALS AND NOMINATIONS FOR DIRECTOR +Stockholder proposals submitted pursuant to Rule 14a-8 under the Exchange Act and intended to be presented at our 2027 Annual Meeting, must be received by us no later than December 25, 2026, in order to be considered for inclusion in our proxy materials for that meeting. If we hold the 2027 Annual Meeting on a date that is more than 30 days from the anniversary of the Annual Meeting, any stockholder proposal must be received a reasonable time before we begin to print and send our proxy materials. Any such stockholder proposal submitted, including any accompanying supporting statement, may not exceed 500 words, as per Rule 14a-8(d) of the Exchange Act. +Any director nominations or stockholder proposals submitted outside of the processes of Rule 14a-8 of the Exchange Act, which a stockholder intends to bring forth at the Company’s 2027 Annual Meeting, will be untimely unless they are received between February 9, 2027, and March 11, 2027, in accordance with our Bylaws. +In order to comply with the universal proxy rules, stockholders who intend to solicit proxies in support of director nominees other than the Company’s nominees at the 2027 Annual Meeting must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act. Such notice must be postmarked or transmitted electronically to us by April 10, 2027. If we hold the 2027 Annual Meeting on a date that is more than 30 days from the anniversary of the Annual Meeting, such notice must be received by the later of 60 calendar days prior to the date of the 2027 Annual Meeting or the 10th calendar day following the day on which public announcement of the date of the 2027 Annual Meeting is first made by the Company. Any notice to solicit proxies in support of director nominees other than the Company’s nominees must also include all information required by our Bylaws with respect to director nominations. +Proposals that are not received in a timely manner will not be voted on at the 2027 Annual Meeting. If a proposal is received on time, the proxies that management solicits for the meeting may still exercise discretionary voting authority on the proposal under circumstances consistent with the SEC proxy rules. All stockholder proposals should be marked for the attention of the Secretary, Quanterix Corporation, 900 Middlesex Turnpike, Building 1, Billerica, Massachusetts 01821. +72 +TABLE OF CONTENTS +APPENDIX A +QUANTERIX CORPORATION +AMENDED AND RESTATED 2017 EMPLOYEE, DIRECTOR AND CONSULTANT EQUITY INCENTIVE PLAN +1. DEFINITIONS. +Unless otherwise specified or unless the context otherwise requires, the following terms, as used in this Quanterix Corporation Amended and Restated 2017 Employee, Director and Consultant Equity Incentive Plan, have the following meanings: +Administrator means the Board of Directors, unless it has delegated power to act on its behalf to the Committee, in which case the term “Administrator” means the Committee. +Affiliate means a corporation or other entity which, for purposes of Section 424 of the Code, is a parent or subsidiary of the Company, direct or indirect. +Agreement means an agreement between the Company and a Participant pertaining to a Stock Right and delivered pursuant to the Plan in such form as the Administrator shall approve. +Board of Directors means the Board of Directors of the Company. +Cause means, with respect to a Participant (a) dishonesty with respect to the Company or any Affiliate, (b) insubordination, substantial malfeasance or non feasance of duty, (c) unauthorized disclosure of confidential information, (d) breach by the Participant of any provision of any employment, consulting, advisory, nondisclosure, non-competition or similar agreement between the Participant and the Company or any Affiliate, and (e) conduct substantially prejudicial to the business of the Company or any Affiliate; provided, however, that any provision in an agreement between the Participant and the Company or an Affiliate, which contains a conflicting definition of Cause for termination and which is in effect at the time of such termination, shall supersede this definition with respect to that Participant. The determination of the Administrator as to the existence of Cause will be conclusive on the Participant and the Company. +Code means the United States Internal Revenue Code of 1986, as amended including any successor statute, regulation and guidance thereto. +Committee means the committee of the Board of Directors, if any, to which the Board of Directors has delegated power to act under or pursuant to the provisions of the Plan (or any successor committee). +Common Stock means shares of the Company’s common stock, $0.001 par value per share. +Company means Quanterix Corporation, a Delaware corporation. +Consultant means any natural person who is an advisor or consultant who provides bona fide services to the Company or its Affiliates, provided that such services are not in connection with the offer or sale of securities in a capital raising transaction, and do not directly or indirectly promote or maintain a market for the Company’s or its Affiliates’ securities. +Corporate Transaction means “Corporate Transaction” as defined in Paragraph 24(b). +Disability or Disabled means permanent and total disability as defined in Section 22(e)(3) of the Code. +Employee means any employee of the Company or Garrof an Affiliate (including, without limitation, an employee who is also serving as an officer or director of the Company or of an Affiliate), designated by the Administrator to be eligible to be granted one or more Stock Rights under the Plan. +Effective Date means the “Effective Date” as defined in Paragraph 30. +Exchange Act means the United States Securities Exchange Act of 1934, as amended. +Fair Market Value of a Share of Common Stock means: +A-1 +TABLE OF CONTENTS +(1) If the Common Stock is listed on a national securities exchange or traded in the over the counter market and sales prices are regularly reported for the Common Stock, the closing or, if not applicable, the last price of the Common Stock on the composite tape or other comparable reporting system for the trading day on the applicable date and if such applicable date is not a trading day, the last market trading day prior to such date; +(2) If the Common Stock is not traded on a national securities exchange but is traded on the over the counter market, if sales prices are not regularly reported for the Common Stock for the trading day referred to in clause (1), and if bid and asked prices for the Common Stock are regularly reported, the mean between the bid and the asked price for the Common Stock at the close of trading in the over-the-counter market for the trading day on which Common Stock was traded on the applicable date and if such applicable date is not a trading day, the last market trading day prior to such date; and +(3) If the Common Stock is neither listed on a national securities exchange nor traded in the over the counter market, such value as the Administrator, in good faith, shall determine in compliance with applicable laws. +ISO means an option intended to qualify as an incentive stock option under Section 422 of the Code. +Non Qualified Option means an option which is not intended to qualify as an ISO. +Option means an ISO or Non Qualified Option granted under the Plan. +Participant means an Employee, director or Consultant of the Company or an Affiliate to whom one or more Stock Rights are granted under the Plan. As used herein, “Participant” shall include the Participant’s “Survivors” where the context requires. +Performance Goals means “Performance Goals” as defined in Paragraph 4(e). +Plan means this Amended and Restated Quanterix Corporation 2017 Employee, Director and Consultant Equity Incentive Plan. +Prior Plan means the Quanterix Corporation 2007 Stock Option and Grant Plan, as amended. +Securities Act means the Securities Act of 1933, as amended. +Shares means shares of the Common Stock as to which Stock Rights have been or may be granted under the Plan or any shares of capital stock into which the Shares are changed or for which they are exchanged within the provisions of Paragraph 3 of the Plan. The Shares issued under the Plan may be authorized and unissued shares or shares held by the Company in its treasury, or both. +Stock-Based Award means a grant by the Company under the Plan of an equity award or an equity based award which is not an Option or a Stock Grant. +Stock Grant means a grant by the Company of Shares under the Plan. +Stock Right means a right to Shares or the value of Shares of the Company granted pursuant to the Plan — an ISO, a Non-Qualified Option, a Stock Grant or a Stock-Based Award. +Survivor means a deceased Participant’s legal representatives and/or any person or persons who acquired the Participant’s rights to a Stock Right by will or by the laws of descent and distribution. +2. PURPOSES OF THE PLAN. +The Plan is intended to encourage ownership of Shares by Employees and directors of and certain Consultants to the Company and its Affiliates in order to attract and retain such people, to induce them to work for the benefit of the Company or of an Affiliate and to provide additional incentive for them to promote the success of the Company or of an Affiliate. The Plan provides for the granting and awarding of ISOs (subject to any limitations under the Code), Non Qualified Options, Stock Grants and Stock-Based Awards. +A-2 +TABLE OF CONTENTS +3. SHARES SUBJECT TO THE PLAN. +(a) The number of Shares which may be issued from time to time pursuant to this Plan shall be the sum of: (i) the number of shares of Common Stock that were previously reserved for issuance under the Plan and are subject to outstanding Stock Rights as of the Effective Date; (ii) the number of Shares that remain available for the grant of future Stock Rights under the Plan as of the Effective Date; [(iii) any shares of Common Stock that are represented by awards granted under the Prior Plan that are forfeited, expire or are cancelled without delivery of shares of Common Stock or which result in the forfeiture of shares of Common Stock back to the Company on or after the Effective Date, or the equivalent of such number of Shares after the Administrator, in its sole discretion, has interpreted the effect of any stock split, stock dividend, combination, recapitalization or similar transaction in accordance with Paragraph 24 of this Plan (provided that no more than 2,490,290 shares of Common Stock shall be added to the Plan on or after November 16, 2017 from awards granted under the Prior Plan)]; and (iv) an annual increase on the first day of each fiscal year of the Company during the period beginning in fiscal year 2027, and ending on the second day of fiscal year 2031, equal to the lesser of (A) 4% of the number of outstanding shares of Common Stock on such date, and (B) an amount determined by the Board of Directors. +(b) If an Option ceases to be “outstanding,” in whole or in part (other than by exercise), or if the Company shall reacquire (at not more than its original issuance price) any Shares issued pursuant to a Stock Grant or Stock-Based Award, or if any Stock Right expires or is forfeited, cancelled, or otherwise terminated or results in any Shares not being issued, the unissued or reacquired Shares which were subject to such Stock Right shall again be available for issuance from time to time pursuant to this Plan. Notwithstanding the foregoing, if a Stock Right is exercised, in whole or in part, by tender of Shares or if the Company or an Affiliate’s tax withholding obligation is satisfied by withholding Shares, the number of Shares deemed to have been issued under the Plan for purposes of the limitation set forth in Paragraph 3(a) above shall be the number of Shares that were subject to the Stock Right or portion thereof, and not the net number of Shares actually issued. However, in the case of ISOs, the foregoing provisions shall be subject to any limitations under the Code. +4. ADMINISTRATION OF THE PLAN. +(a) The Administrator of the Plan will be the Board of Directors, except to the extent the Board of Directors delegates its authority to the Committee, in which case the Committee shall be the Administrator. Subject to the provisions of the Plan, the Administrator is authorized to: +(i) Interpret the provisions of the Plan and all Stock Rights and to make all rules and determinations which it deems necessary or advisable for the administration of the Plan; +(ii) Determine which Employees, directors and Consultants shall be granted Stock Rights; +(iii) Determine the number of Shares for which a Stock Right or Stock Rights shall be granted; +(iv) Specify the terms and conditions upon which a Stock Right or Stock Rights may be granted; +(v) Establish, determine, and measure Performance Goals pursuant to Subparagraph (e) below; +(vi) Amend any term or condition of any outstanding Stock Right, other than reducing the exercise price or purchase price or extending the expiration date of an Option, provided that (A) such term or condition as amended is not prohibited by the Plan; (B) any such amendment shall not impair the rights of a Participant under any Stock Right previously granted without such Participant’s consent or in the event of death of the Participant the Participant’s Survivors; and (C) any such amendment shall be made only after the Administrator determines whether such amendment would cause any adverse tax consequences to the Participant, including, but not limited to, the annual vesting limitation contained in Section 422(d) of the Code and described in Paragraph 6(b)(iv) below with respect to ISOs and pursuant to Section 409A of the Code; and +(vii) Adopt any sub-plans applicable to residents of any specified jurisdiction as it deems necessary or appropriate in order to comply with or take advantage of any tax or other laws applicable to the Company, any Affiliate or to Participants or to otherwise facilitate the administration of the +A-3 +TABLE OF CONTENTS +Plan, which sub-plans may include additional restrictions or conditions applicable to Stock Rights or Shares issuable pursuant to a Stock Right; +provided, however, that all such interpretations, rules, determinations, terms and conditions shall be made and prescribed in the context of not causing any adverse tax consequences under Section 409A of the Code and preserving the tax status under Section 422 of the Code of those Options which are designated as ISOs. Subject to the foregoing, the interpretation and construction by the Administrator of any provisions of the Plan or of any Stock Right granted under it shall be final, unless otherwise determined by the Board of Directors, if the Administrator is the Committee. In addition, if the Administrator is the Committee, the Board of Directors may take any action under the Plan that would otherwise be the responsibility of the Committee. +(b) Notwithstanding anything in the Plan to the contrary, the Administrator may not, except pursuant to Paragraph 24, without the approval of the stockholders of the Company, reduce the exercise price per share of outstanding Options or stock appreciation rights or cancel outstanding Options or stock appreciation rights in exchange for cash, Options or stock appreciation rights with an exercise price per share that is less than the exercise price per share of the original Options or stock appreciation rights or other Stock Rights. +(c) Notwithstanding anything in the Plan to the contrary, the value of all Stock Rights awarded under this Plan and all other cash compensation paid by the Company to any non-employee director of the Company in any calendar year for service as a non-employee director shall not exceed $750,000; provided, that such amount shall be $1,000,000 for the calendar year in which the applicable non-employee director is initially elected or appointed to the Board of Directors. For the purpose of this limitation, the value of any Stock Right shall be calculated based on the grant date fair value of such Stock Right for financial reporting purposes. +(d) Each Stock Right shall have a minimum vesting period of one year, provided that up to five percent of the Shares available for issuance under the Plan may be granted free of such minimum vesting requirement. Nothing in this Paragraph 4(d) shall preclude the Administrator from taking action, in its sole discretion, to accelerate the vesting of any Stock Right in connection with or following a Participant’s death, Disability, termination of service with the Company or an Affiliate or the consummation of a Corporate Transaction. Further, nothing in this Paragraph 4(d) shall preclude pro-rata vesting of a Stock Right in the event of a termination of service with the Company or an Affiliate due to death or Disability pursuant to Paragraphs 15, 16, 20 or 21. +(e) The Administrator may condition the vesting or payment of a Stock Right on the achievement of one or more performance measures or goals (“Performance Goals”) set by the Administrator in its discretion. The Administrator shall determine the period during which a Performance Goal must be met and the extent to which a Performance Goal has been attained. In determining the extent to which a Performance Goal has been attained, the Administrator may exclude the effect of unusual or nonrecurring events such as acquisitions, divestitures, restructuring activities, asset write-downs, litigation judgments or settlements, or changes in tax or other laws or accounting principles. +(f) To the extent permitted under applicable law, the Board of Directors or the Committee may allocate all or any portion of its responsibilities and powers to any one or more of its members and may delegate all or any portion of its responsibilities and powers to any other person selected by it. The Board of Directors or the Committee may revoke any such allocation or delegation at any time. Notwithstanding the foregoing, only the Board of Directors or the Committee shall be authorized to grant a Stock Right to any director of the Company or to any “officer” of the Company as defined by Rule 16a-1 under the Exchange Act. +5. ELIGIBILITY FOR PARTICIPATION. +The Administrator will, in its sole discretion, name the Participants in the Plan; provided, however, that each Participant must be an Employee, director or Consultant of the Company or of an Affiliate at the time a Stock Right is granted. Notwithstanding the foregoing, the Administrator may authorize the grant of a Stock Right to a person not then an Employee, director or Consultant of the Company or of an Affiliate; provided, however, that the actual grant of such Stock Right shall be conditioned upon such person +A-4 +TABLE OF CONTENTS +becoming eligible to become a Participant at or prior to the time of the execution of the Agreement evidencing such Stock Right. ISOs may be granted only to Employees who are deemed to be residents of the United States for tax purposes. Non Qualified Options, Stock Grants and Stock-Based Awards may be granted to any Employee, director or Consultant of the Company or an Affiliate. The granting of any Stock Right to any individual shall neither entitle that individual to, nor disqualify him or her from, participation in any other grant of Stock Rights or any grant under any other benefit plan established by the Company or any Affiliate for Employees, directors or Consultants. +6. TERMS AND CONDITIONS OF OPTIONS. +Each Option shall be set forth in writing in an Option Agreement, duly executed by the Company and, to the extent required by law or requested by the Company, by the Participant. The Administrator may provide that Options be granted subject to such terms and conditions, consistent with the terms and conditions specifically required under this Plan, as the Administrator may deem appropriate including, without limitation, subsequent approval by the stockholders of the Company of this Plan or any amendments thereto. The Option Agreements shall be subject to at least the following terms and conditions: +(a) Non Qualified Options: Each Option intended to be a Non Qualified Option shall be subject to the terms and conditions which the Administrator determines to be appropriate and in the best interest of the Company, subject to the following minimum standards for any such Non Qualified Option: +(i) Exercise Price: Each Option Agreement shall state the exercise price (per share) of the Shares covered by each Option, which exercise price shall be determined by the Administrator and shall be at least equal to the Fair Market Value per share of Common Stock on the date of grant of the Option. +(ii) Number of Shares: Each Option Agreement shall state the number of Shares to which it pertains. +(iii) Vesting: Each Option Agreement shall state the date or dates on which it first is exercisable and the date after which it may no longer be exercised, and may provide that the Option rights accrue or become exercisable in installments over a period of months or years, or upon the occurrence of certain performance conditions or the attainment of stated goals or events. +(iv) Additional Conditions: Exercise of any Option may be conditioned upon the Participant’s execution of a Share purchase agreement in a form satisfactory to the Administrator providing for certain protections for the Company and its other stockholders, including requirements that: +A. The Participant’s or the Participant’s Survivors’ right to sell or transfer the Shares may be restricted; and +B. The Participant or the Participant’s Survivors may be required to execute letters of investment intent and must also acknowledge that the Shares will bear legends noting any applicable restrictions. +(v) Term of Option: Each Option shall terminate not more than ten years from the date of the grant or at such earlier time as the Option Agreement may provide. +(b) ISOs: Each Option intended to be an ISO shall be issued only to an Employee who is deemed to be a resident of the United States for tax purposes, and shall be subject to the following terms and conditions, with such additional restrictions or changes as the Administrator determines are appropriate but not in conflict with Section 422 of the Code and relevant regulations and rulings of the Internal Revenue Service: +(i) Minimum standards: The ISO shall meet the minimum standards required of Non Qualified Options, as described in Paragraph 6(a) above, except subsections (i) and (v) thereunder. +(ii) Exercise Price: Immediately before the ISO is granted, if the Participant owns, directly or by reason of the applicable attribution rules in Section 424(d) of the Code: +A. 10% or less of the total combined voting power of all classes of stock of the Company or an Affiliate, the exercise price per share of the Shares covered by each ISO shall not be less than 100% of the Fair Market Value per share of the Common Stock on the date of grant of the Option; or +A-5 +TABLE OF CONTENTS +B. More than 10% of the total combined voting power of all classes of stock of the Company or an Affiliate, the exercise price per share of the Shares covered by each ISO shall not be less than 110% of the Fair Market Value per share of the Common Stock on the date of grant of the Option. +(iii) Term of Option: For Participants who own: +A. 10% or less of the total combined voting power of all classes of stock of the Company or an Affiliate, each ISO shall terminate not more than ten years from the date of the grant or at such earlier time as the Option Agreement may provide; or +B. More than 10% of the total combined voting power of all classes of stock of the Company or an Affiliate, each ISO shall terminate not more than five years from the date of the grant or at such earlier time as the Option Agreement may provide. +(iv) Limitation on Yearly Exercise: The Option Agreements shall restrict the amount of ISOs which may become exercisable in any calendar year (under this or any other ISO plan of the Company or an Affiliate) so that the aggregate Fair Market Value (determined on the date each ISO is granted) of the stock with respect to which ISOs are exercisable for the first time by the Participant in any calendar year does not exceed $100,000. +7. TERMS AND CONDITIONS OF STOCK GRANTS. +Each Stock Grant to a Participant shall state the principal terms in an agreement duly executed by the Company and, to the extent required by law or requested by the Company, by the Participant. The Agreement shall be in a form approved by the Administrator and shall contain terms and conditions which the Administrator determines to be appropriate and in the best interest of the Company, subject to the following minimum standards: +(a) Each Agreement shall state the purchase price per share, if any, of the Shares covered by each Stock Grant, which purchase price shall be determined by the Administrator but shall not be less than the minimum consideration required by the Delaware General Corporation Law, if any, on the date of the grant of the Stock Grant; +(b) Each Agreement shall state the number of Shares to which the Stock Grant pertains; +(c) Each Agreement shall include the terms of any right of the Company to restrict or reacquire the Shares subject to the Stock Grant; and +(d) Each Agreement shall provide that any dividends or other distributions paid with respect to Shares shall be subject to the same restrictions, vesting and payment terms as the Shares to which they are attributable. +8. TERMS AND CONDITIONS OF OTHER STOCK-BASED AWARDS. +The Administrator shall have the right to grant other Stock-Based Awards based upon the Common Stock having such terms and conditions as the Administrator may determine, including, without limitation, the grant of Shares based upon certain conditions, the grant of securities convertible into Shares and the grant of stock appreciation rights, phantom stock awards or stock units. The principal terms of each Stock-Based Award shall be set forth in an agreement, duly executed by the Company and, to the extent required by law or requested by the Company, by the Participant. The Agreement shall be in a form approved by the Administrator and shall contain terms and conditions which the Administrator determines to be appropriate and in the best interest of the Company. Each Agreement shall include the terms of any right of the Company including the right to terminate the Stock-Based Award without the issuance of Shares, the terms of any vesting conditions or events upon which Shares shall be issued. If the Administrator provides in an Agreement that dividend equivalents or similar rights will be paid on any stock units or other Stock-Based Award, the Agreement shall provide that such dividend equivalent or similar rights shall be subject to the same restrictions, vesting and payment terms as the Shares represented by the Stock-Based Award to which they are attributable. Under no circumstances may the Agreement covering stock appreciation +A-6 +TABLE OF CONTENTS +rights (a) have an exercise price (per share) that is less than the Fair Market Value per share of Common Stock on the date of grant or (b) expire more than ten years following the date of grant. +The Company intends that the Plan and any Stock-Based Awards granted hereunder be exempt from the application of Section 409A of the Code or meet the requirements of paragraphs (2), (3) and (4) of subsection (a) of Section 409A of the Code, to the extent applicable, and be operated in accordance with Section 409A so that any compensation deferred under any Stock-Based Award (and applicable investment earnings) shall not be included in income under Section 409A of the Code. Any ambiguities in the Plan shall be construed to effect the intent as described in this Paragraph 8. +9. EXERCISE OF OPTIONS AND ISSUE OF SHARES. +An Option (or any part or installment thereof) shall be exercised by giving written notice to the Company or its designee (in a form acceptable to the Administrator, which may include electronic notice), together with provision for payment of the aggregate exercise price in accordance with this Paragraph for the Shares as to which the Option is being exercised, and upon compliance with any other condition(s) set forth in the Option Agreement. Such notice shall be signed by the person exercising the Option (which signature may be provided electronically in a form acceptable to the Administrator), shall state the number of Shares with respect to which the Option is being exercised and shall contain any representation required by the Plan or the Option Agreement. Payment of the exercise price for the Shares as to which such Option is being exercised shall be made (a) in United States dollars in cash or by check; or (b) at the discretion of the Administrator, through delivery of shares of Common Stock held for at least six months (if required to avoid negative accounting treatment) having a Fair Market Value equal as of the date of the exercise to the aggregate cash exercise price for the number of Shares as to which the Option is being exercised; or (c) at the discretion of the Administrator, by having the Company retain from the Shares otherwise issuable upon exercise of the Option, a number of Shares having a Fair Market Value equal as of the date of exercise to the aggregate exercise price for the number of Shares as to which the Option is being exercised; or (d) at the discretion of the Administrator, in accordance with a cashless exercise program established with a securities brokerage firm, and approved by the Administrator; or (e) at the discretion of the Administrator, by any combination of (a), (b), (c) and (d) above; or (f) at the discretion of the Administrator, by payment of such other lawful consideration as the Administrator may determine. Notwithstanding the foregoing, the Administrator shall accept only such payment on exercise of an ISO as is permitted by Section 422 of the Code. +The Company shall then reasonably promptly deliver the Shares as to which such Option was exercised to the Participant (or to the Participant’s Survivors, as the case may be). In determining what constitutes “reasonably promptly,” it is expressly understood that the issuance and delivery of the Shares may be delayed by the Company in order to comply with any law or regulation (including, without limitation, state securities or “blue sky” laws) which requires the Company to take any action with respect to the Shares prior to their issuance. The Shares shall, upon delivery, be fully paid, non-assessable Shares. +10. PAYMENT IN CONNECTION WITH THE ISSUANCE OF STOCK GRANTS AND STOCK-BASED AWARDS AND ISSUE OF SHARES. +Any Stock Grant or Stock-Based Award requiring payment of a purchase price for the Shares as to which such Stock Grant or Stock-Based Award is being granted shall be made (a) in United States dollars in cash or by check; or (b) at the discretion of the Administrator, through delivery of shares of Common Stock held for at least six months (if required to avoid negative accounting treatment) and having a Fair Market Value equal as of the date of payment to the purchase price of the Stock Grant or Stock-Based Award; or (c) at the discretion of the Administrator, by any combination of (a) and (b) above; or (d) at the discretion of the Administrator, by payment of such other lawful consideration as the Administrator may determine. +The Company shall, when required by the applicable Agreement, reasonably promptly deliver the Shares as to which such Stock Grant or Stock-Based Award was made to the Participant (or to the Participant’s Survivors, as the case may be), subject to any escrow provision set forth in the applicable Agreement. In determining what constitutes “reasonably promptly,” it is expressly understood that the issuance and delivery of the Shares may be delayed by the Company in order to comply with any law or +A-7 +TABLE OF CONTENTS +regulation (including, without limitation, state securities or “blue sky” laws) which requires the Company to take any action with respect to the Shares prior to their issuance. +11. RIGHTS AS A STOCKHOLDER. +No Participant to whom a Stock Right has been granted shall have rights as a stockholder with respect to any Shares covered by such Stock Right except after due exercise of an Option or issuance of Shares as set forth in any Agreement, tender of the aggregate exercise or purchase price, if any, for the Shares being purchased and registration of the Shares in the Company’s share register in the name of the Participant. +12. ASSIGNABILITY AND TRANSFERABILITY OF STOCK RIGHTS. +By its terms, a Stock Right granted to a Participant shall not be transferable by the Participant other than (i) by will or by the laws of descent and distribution, or (ii) as approved by the Administrator in its discretion and set forth in the applicable Agreement provided that no Stock Right may be transferred by a Participant for value. Notwithstanding the foregoing, an ISO transferred except in compliance with clause (i) above shall no longer qualify as an ISO. The designation of a beneficiary of a Stock Right by a Participant, with the prior approval of the Administrator and in such form as the Administrator shall prescribe, shall not be deemed a transfer prohibited by this Paragraph. Except as provided above, during the Participant’s lifetime a Stock Right shall only be exercisable by or issued to such Participant (or his or her legal representative) and shall not be assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) and shall not be subject to execution, attachment or similar process. Any attempted transfer, assignment, pledge, hypothecation or other disposition of any Stock Right or of any rights granted thereunder contrary to the provisions of this Plan, or the levy of any attachment or similar process upon a Stock Right, shall be null and void. +13. EFFECT ON OPTIONS OF TERMINATION OF SERVICE OTHER THAN FOR CAUSE OR DEATH OR DISABILITY. +Except as otherwise provided in a Participant’s Option Agreement, in the event of a termination of service (whether as an Employee, director or Consultant) with the Company or an Affiliate before the Participant has exercised an Option, the following rules apply: +(a) A Participant who ceases to be an Employee, director or Consultant of the Company or of an Affiliate (for any reason other than termination for Cause, Disability, or death for which events there are special rules in Paragraphs 14, 15 and 16, respectively), may exercise any Option granted to him or her to the extent that the Option is exercisable on the date of such termination of service, but only within such term as the Administrator has designated in a Participant’s Option Agreement. +(b) Except as provided in Subparagraph (c) below, or Paragraph 15 or 16, in no event may an Option intended to be an ISO be exercised later than three months after the Participant’s termination of employment. +(c) The provisions of this Paragraph, and not the provisions of Paragraph 15 or 16, shall apply to a Participant who subsequently becomes Disabled or dies after the termination of employment, director status or consultancy; provided, however, in the case of a Participant’s Disability or death within three months after the termination of employment, director status or consultancy, the Participant or the Participant’s Survivors may exercise the Option within one year after the date of the Participant’s termination of service, but in no event after the date of expiration of the term of the Option. +(d) Notwithstanding anything herein to the contrary, if subsequent to a Participant’s termination of employment, termination of director status or termination of consultancy, but prior to the exercise of an Option, the Administrator or the Board of Directors determines that, either prior or subsequent to the Participant’s termination, the Participant engaged in conduct which would constitute Cause, then such Participant shall forthwith cease to have any right to exercise any Option. +(e) A Participant to whom an Option has been granted under the Plan who is absent from the Company or an Affiliate because of temporary disability (any disability other than a Disability as defined in Paragraph 1 hereof), or who is on leave of absence for any purpose, shall not, during the period of any such absence, be deemed, by virtue of such absence alone, to have terminated such Participant’s employment, director status or consultancy with the Company or with an Affiliate, except as the Administrator may +A-8 +TABLE OF CONTENTS +otherwise expressly provide; provided, however, that, for ISOs, any leave of absence granted by the Administrator of greater than ninety days, unless pursuant to a contract or statute that guarantees the right to reemployment, shall cause such ISO to become a Non-Qualified Option on the 181 st day following such leave of absence. +(f) Except as required by law or as set forth in a Participant’s Option Agreement, Options granted under the Plan shall not be affected by any change of a Participant’s status within or among the Company and any Affiliates, so long as the Participant continues to be an Employee, director or Consultant of the Company or any Affiliate. +14. EFFECT ON OPTIONS OF TERMINATION OF SERVICE FOR CAUSE. +Except as otherwise provided in a Participant’s Option Agreement, the following rules apply if the Participant’s service (whether as an Employee, director or Consultant) with the Company or an Affiliate is terminated for Cause prior to the time that all of his or her outstanding Options have been exercised: +(a) All outstanding and unexercised Options as of the time the Participant is notified his or her service is terminated for Cause will immediately be forfeited. +(b) Cause is not limited to events which have occurred prior to a Participant’s termination of service, nor is it necessary that the Administrator’s finding of Cause occur prior to termination. If the Administrator determines, subsequent to a Participant’s termination of service but prior to the exercise of an Option, that either prior or subsequent to the Participant’s termination the Participant engaged in conduct which would constitute Cause, then the right to exercise any Option is forfeited. +15. EFFECT ON OPTIONS OF TERMINATION OF SERVICE FOR DISABILITY. +Except as otherwise provided in a Participant’s Option Agreement: +(a) A Participant who ceases to be an Employee, director or Consultant of the Company or of an Affiliate by reason of Disability may exercise any Option granted to such Participant to the extent that the Option has become exercisable but has not been exercised on the date of the Participant’s termination of service due to Disability; +(b) In the event rights to exercise the Option accrue periodically, a Disabled Participant may exercise any Option granted to such Participant to the extent of a pro rata portion through the date of the Participant’s termination of service due to Disability of any additional vesting rights that would have accrued on the next vesting date had the Participant not become Disabled. The proration shall be based upon the number of days accrued in the current vesting period prior to the date of the Participant’s termination of service due to Disability; +(c) A Disabled Participant may exercise the Option only within the period ending one year after the date of the Participant’s termination of service due to Disability, notwithstanding that the Participant might have been able to exercise the Option as to some or all of the Shares on a later date if the Participant had not been terminated due to Disability and had continued to be an Employee, director or Consultant or, if earlier, within the originally prescribed term of the Option; and +(d) The Administrator shall make the determination both of whether Disability has occurred and the date of its occurrence (unless a procedure for such determination is set forth in another agreement between the Company and such Participant, in which case such procedure shall be used for such determination). If requested, the Participant shall be examined by a physician selected or approved by the Administrator, the cost of which examination shall be paid for by the Company. +16. EFFECT ON OPTIONS OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR CONSULTANT. +Except as otherwise provided in a Participant’s Option Agreement: +(a) In the event of the death of a Participant while the Participant is an Employee, director or Consultant of the Company or of an Affiliate, such Option may be exercised by the Participant’s Survivors to the extent that the Option has become exercisable but has not been exercised on the date of death; +A-9 +TABLE OF CONTENTS +(b) In the event rights to exercise the Option accrue periodically, a deceased Participant’s Survivors may exercise any Option granted to such Participant to the extent of a pro rata portion through the date of death of any additional vesting rights that would have accrued on the next vesting date had the Participant not died. The proration shall be based upon the number of days accrued in the current vesting period prior to the Participant’s date of death; and +(c) If the Participant’s Survivors wish to exercise the Option, they must take all necessary steps to exercise the Option within one year after the date of death of such Participant, notwithstanding that the decedent might have been able to exercise the Option as to some or all of the Shares on a later date if he or she had not died and had continued to be an Employee, director or Consultant or, if earlier, within the originally prescribed term of the Option. +17. EFFECT ON STOCK GRANTS AND STOCK-BASED AWARDS OF TERMINATION OF SERVICE. +In the event of a termination of service (whether as an Employee, director or Consultant) with the Company or an Affiliate for any reason before the Participant has accepted a Stock Grant or a Stock-Based Award and paid the purchase price, if required, such grant shall terminate. +For purposes of this Paragraph 17 and Paragraph 18 below, a Participant to whom a Stock Grant or a Stock-Based Award has been issued under the Plan who is absent from work with the Company or with an Affiliate because of temporary disability (any disability other than a Disability as defined in Paragraph 1 hereof), or who is on leave of absence for any purpose, shall not, during the period of any such absence, be deemed, by virtue of such absence alone, to have terminated such Participant’s employment, director status or consultancy with the Company or with an Affiliate, except as the Administrator may otherwise expressly provide. +In addition, for purposes of this Paragraph 17 and Paragraph 18 below, any change of employment or other service within or among the Company and any Affiliates shall not be treated as a termination of employment, director status or consultancy so long as the Participant continues to be an Employee, director or Consultant of the Company or any Affiliate. +18. EFFECT ON STOCK GRANTS AND STOCK-BASED AWARDS OF TERMINATION OF SERVICE OTHER THAN FOR CAUSE, DEATH OR DISABILITY. +Except as otherwise provided in a Participant’s Agreement, in the event of a termination of service for any reason (whether as an Employee, director or Consultant), other than termination for Cause, Disability or death for which there are special rules in Paragraphs 19, 20 and 21, respectively, before all forfeiture provisions or Company rights of repurchase shall have lapsed, then the Company shall have the right to cancel or repurchase that number of Shares subject to a Stock Grant or Stock-Based Award as to which the Company’s forfeiture or repurchase rights have not lapsed. +19. EFFECT ON STOCK GRANTS AND STOCK-BASED AWARDS OF TERMINATION OF SERVICE FOR CAUSE. +Except as otherwise provided in a Participant’s Agreement, the following rules apply if the Participant’s service (whether as an Employee, director or Consultant) with the Company or an Affiliate is terminated for Cause: +(a) All Shares subject to any Stock Grant or Stock-Based Award that remain subject to forfeiture provisions or as to which the Company shall have a repurchase right shall be immediately forfeited to the Company as of the time the Participant is notified his or her service is terminated for Cause. +(b) Cause is not limited to events which have occurred prior to a Participant’s termination of service, nor is it necessary that the Administrator’s finding of Cause occur prior to termination. If the Administrator determines, subsequent to a Participant’s termination of service, that either prior or subsequent to the Participant’s termination the Participant engaged in conduct which would constitute Cause, then all Shares subject to any Stock Grant or Stock-Based Award that remained subject to forfeiture provisions or as to which the Company had a repurchase right on the date of termination shall be immediately forfeited to the Company. +A-10 +TABLE OF CONTENTS +20. EFFECT ON STOCK GRANTS AND STOCK-BASED AWARDS OF TERMINATION OF SERVICE FOR DISABILITY. +Except as otherwise provided in a Participant’s Agreement, the following rules apply if a Participant ceases to be an Employee, director or Consultant of the Company or of an Affiliate by reason of Disability: to the extent the forfeiture provisions or the Company’s rights of repurchase have not lapsed on the date of Disability, they shall be exercisable; provided, however, that in the event such forfeiture provisions or rights of repurchase lapse periodically, such provisions or rights shall lapse to the extent of a pro rata portion of the Shares subject to such Stock Grant or Stock-Based Award through the date of Disability as would have lapsed had the Participant not become Disabled. The proration shall be based upon the number of days accrued prior to the date of Disability. +The Administrator shall make the determination both as to whether Disability has occurred and the date of its occurrence (unless a procedure for such determination is set forth in another agreement between the Company and such Participant, in which case such procedure shall be used for such determination). If requested, the Participant shall be examined by a physician selected or approved by the Administrator, the cost of which examination shall be paid for by the Company. +21. EFFECT ON STOCK GRANTS AND STOCK-BASED AWARDS OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR CONSULTANT. +Except as otherwise provided in a Participant’s Agreement, the following rules apply in the event of the death of a Participant while the Participant is an Employee, director or Consultant of the Company or of an Affiliate: to the extent the forfeiture provisions or the Company’s rights of repurchase have not lapsed on the date of death, they shall be exercisable; provided, however, that in the event such forfeiture provisions or rights of repurchase lapse periodically, such provisions or rights shall lapse to the extent of a pro rata portion of the Shares subject to such Stock Grant or Stock-Based Award through the date of death as would have lapsed had the Participant not died. The proration shall be based upon the number of days accrued prior to the Participant’s date of death. +22. PURCHASE FOR INVESTMENT. +Unless the offering and sale of the Shares shall have been effectively registered under the Securities Act, the Company shall be under no obligation to issue Shares under the Plan unless and until the following conditions have been fulfilled: +(a) The person who receives a Stock Right shall warrant to the Company, prior to the receipt of Shares, that such person is acquiring such Shares for his or her own account, for investment, and not with a view to, or for sale in connection with, the distribution of any such Shares, in which event the person acquiring such Shares shall be bound by the provisions of the following legend (or a legend in substantially similar form) which shall be endorsed upon the certificate evidencing the Shares issued pursuant to such exercise or such grant: +“The shares represented by this certificate have been taken for investment and they may not be sold or otherwise transferred by any person, including a pledgee, unless (1) either (a) a Registration Statement with respect to such shares shall be effective under the Securities Act of 1933, as amended, or (b) the Company shall have received an opinion of counsel satisfactory to it that an exemption from registration under such Act is then available, and (2) there shall have been compliance with all applicable state securities laws.” +(b) At the discretion of the Administrator, the Company shall have received an opinion of its counsel that the Shares may be issued in compliance with the Securities Act without registration thereunder. +23. DISSOLUTION OR LIQUIDATION OF THE COMPANY. +Upon the dissolution or liquidation of the Company, all Options granted under this Plan which as of such date shall not have been exercised and all Stock Grants and Stock-Based Awards which have not been accepted, to the extent required under the applicable Agreement, will terminate and become null and void; provided, however, that if the rights of a Participant or a Participant’s Survivors have not otherwise terminated and expired, the Participant or the Participant’s Survivors will have the right immediately prior to such dissolution or liquidation to exercise or accept any Stock Right to the extent that the Stock Right is +A-11 +TABLE OF CONTENTS +exercisable or subject to acceptance as of the date immediately prior to such dissolution or liquidation. Upon the dissolution or liquidation of the Company, any outstanding Stock-Based Awards shall immediately terminate unless otherwise determined by the Administrator or specifically provided in the applicable Agreement. +24. ADJUSTMENTS. +Upon the occurrence of any of the following events, a Participant’s rights with respect to any Stock Right granted to him or her hereunder shall be adjusted as hereinafter provided, unless otherwise specifically provided in a Participant’s Agreement: +(a) Stock Dividends and Stock Splits. If (i) the shares of Common Stock shall be subdivided or combined into a greater or smaller number of shares or if the Company shall issue any shares of Common Stock as a stock dividend on its outstanding Common Stock, or (ii) additional shares or new or different shares or other securities of the Company or other non-cash assets are distributed with respect to such shares of Common Stock, each Stock Right and the number of shares of Common Stock deliverable thereunder shall be appropriately increased or decreased proportionately, and appropriate adjustments shall be made including, in the exercise or purchase price per share, to reflect such events. The number of Shares subject to the limitations in Paragraphs 3(a), 3(b) and 4(c) shall also be proportionately adjusted upon the occurrence of such events. +(b) Corporate Transactions. If the Company is to be consolidated with or acquired by another entity in a merger, consolidation, sale of all or substantially all of the Company’s assets or the acquisition of all of the outstanding voting stock of the Company in a single transaction or a series of related transactions other than a transaction to merely change the state of incorporation (a “Corporate Transaction”), the Administrator or the board of directors of any entity assuming the obligations of the Company hereunder (the “Successor Board”), shall, as to outstanding Options, either (i) make appropriate provision for the continuation of such Options by substituting on an equitable basis for the Shares then subject to such Options either the consideration payable with respect to the outstanding shares of Common Stock in connection with the Corporate Transaction or securities of any successor or acquiring entity; or (ii) upon written notice to the Participants, provide that such Options must be exercised (either (A) to the extent then exercisable or, (B) at the discretion of the Administrator, any such Options being made partially or fully exercisable for purposes of this Subparagraph), within a specified number of days of the date of such notice, at the end of which period such Options which have not been exercised shall terminate; or (iii) terminate such Options in exchange for payment of an amount equal to the consideration payable upon consummation of such Corporate Transaction to a holder of the number of shares of Common Stock into which such Option would have been exercisable (either (A) to the extent then exercisable or, (B) at the discretion of the Administrator, any such Options being made partially or fully exercisable for purposes of this Subparagraph) less the aggregate exercise price thereof. For purposes of determining the payments to be made pursuant to clause (iii) above, in the case of a Corporate Transaction the consideration for which, in whole or in part, is other than cash, the consideration other than cash shall be valued at the fair value thereof as determined in good faith by the Board of Directors. +With respect to outstanding Stock Grants, the Administrator or the Successor Board, shall make appropriate provision for the continuation of such Stock Grants on the same terms and conditions by substituting on an equitable basis for the Shares then subject to such Stock Grants either the consideration payable with respect to the outstanding Shares of Common Stock in connection with the Corporate Transaction or securities of any successor or acquiring entity. In lieu of the foregoing, in connection with any Corporate Transaction, the Administrator may provide that, upon consummation of the Corporate Transaction, each outstanding Stock Grant shall be terminated in exchange for payment of an amount equal to the consideration payable upon consummation of such Corporate Transaction to a holder of the number of shares of Common Stock comprising such Stock Grant (to the extent such Stock Grant is no longer subject to any forfeiture or repurchase rights then in effect or, at the discretion of the Administrator, all forfeiture and repurchase rights being waived upon such Corporate Transaction). +In taking any of the actions permitted under this Paragraph 24(b), the Administrator shall not be obligated by the Plan to treat all Stock Rights, all Stock Rights held by a Participant, or all Stock Rights of the same type, identically. +A-12 +TABLE OF CONTENTS +(c) Recapitalization or Reorganization. In the event of a recapitalization or reorganization of the Company other than a Corporate Transaction pursuant to which securities of the Company or of another corporation or other entity are issued with respect to the outstanding shares of Common Stock, a Participant upon exercising an Option or accepting a Stock Grant after the recapitalization or reorganization shall be entitled to receive for the price paid upon such exercise or acceptance if any, the number of replacement securities which would have been received if such Option had been exercised or Stock Grant accepted prior to such recapitalization or reorganization. +(d) Adjustments to Stock-Based Awards. Upon the happening of any of the events described in Subparagraphs (a), (b) or (c) above, any outstanding Stock-Based Award shall be appropriately adjusted to reflect the events described in such Subparagraphs. The Administrator or the Successor Board shall determine the specific adjustments to be made under this Paragraph 24, including, but not limited to, the effect of any Corporate Transaction and, subject to Paragraph 4, its determination shall be conclusive. +(e) Modification of Options. Notwithstanding the foregoing, any adjustments made pursuant to Subparagraph (a), (b) or (c) above with respect to Options shall be made only after the Administrator determines whether such adjustments would (i) constitute a “modification” of any ISOs (as that term is defined in Section 424(h) of the Code) or (ii) cause any adverse tax consequences for the holders of Options, including, but not limited to, pursuant to Section 409A of the Code. If the Administrator determines that such adjustments made with respect to Options would constitute a modification or other adverse tax consequence, it may refrain from making such adjustments, unless the holder of an Option specifically agrees in writing that such adjustment be made and such writing indicates that the holder has full knowledge of the consequences of such “modification” on his or her income tax treatment with respect to the Option. This paragraph shall not apply to the acceleration of the vesting of any ISO that would cause any portion of the ISO to violate the annual vesting limitation contained in Section 422(d) of the Code, as described in Paragraph 6(b)(iv). +25. ISSUANCES OF SECURITIES. +Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares subject to Stock Rights. Except as expressly provided herein, no adjustments shall be made for dividends paid in cash or in property (including without limitation, securities) of the Company prior to any issuance of Shares pursuant to a Stock Right. +26. FRACTIONAL SHARES. +No fractional shares shall be issued under the Plan and the person exercising a Stock Right shall receive from the Company cash in lieu of such fractional shares equal to the Fair Market Value thereof. +27. CONVERSION OF ISOs INTO NON QUALIFIED OPTIONS; TERMINATION OF ISOs. +The Administrator, at the written request of any Participant, may in its discretion take such actions as may be necessary to convert such Participant’s ISOs (or any portions thereof) that have not been exercised on the date of conversion into Non Qualified Options at any time prior to the expiration of such ISOs, regardless of whether the Participant is an Employee of the Company or an Affiliate at the time of such conversion. At the time of such conversion, the Administrator (with the consent of the Participant) may impose such conditions on the exercise of the resulting Non Qualified Options as the Administrator in its discretion may determine, provided that such conditions shall not be inconsistent with this Plan. Nothing in the Plan shall be deemed to give any Participant the right to have such Participant’s ISOs converted into Non Qualified Options, and no such conversion shall occur until and unless the Administrator takes appropriate action. The Administrator, with the consent of the Participant, may also terminate any portion of any ISO that has not been exercised at the time of such conversion. +28. WITHHOLDING. +In the event that any federal, state, or local income taxes, employment taxes, Federal Insurance Contributions Act (“F.I.C.A.”) withholdings or other amounts are required by applicable law or governmental regulation to be withheld from the Participant’s salary, wages or other remuneration in +A-13 +TABLE OF CONTENTS +connection with the issuance of a Stock Right or Shares under the Plan or upon the lapsing of any forfeiture provision or right of repurchase or for any other reason required by law, the Company may withhold from the Participant’s compensation, if any, or may require that the Participant advance in cash to the Company, or to any Affiliate of the Company which employs or employed the Participant, the statutory minimum amount of such withholdings unless a different withholding arrangement, including the use of shares of the Company’s Common Stock or a promissory note, is authorized by the Administrator (and permitted by law). For purposes hereof, the fair market value of the shares withheld for purposes of payroll withholding shall be determined in the manner set forth under the definition of Fair Market Value provided in Paragraph 1 above, as of the most recent practicable date prior to the date of exercise. If the Fair Market Value of the shares withheld is less than the amount of payroll withholdings required, the Participant may be required to advance the difference in cash to the Company or the Affiliate employer. The Administrator in its discretion may condition the exercise of an Option for less than the then Fair Market Value on the Participant’s payment of such additional withholding. +29. NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION. +Each Employee who receives an ISO shall notify the Company in writing immediately after the Employee makes a Disqualifying Disposition of any Shares acquired pursuant to the exercise of an ISO. A Disqualifying Disposition is defined in Section 424(c) of the Code and includes any disposition (including any sale or gift) of such Shares before the later of (a) two years after the date the Employee was granted the ISO, or (b) one year after the date the Employee acquired Shares by exercising the ISO, except as otherwise provided in Section 424(c) of the Code. If the Employee has died before such Shares are sold, these holding period requirements do not apply and no Disqualifying Disposition can occur thereafter. +30. EFFECTIVE DATE AND TERMINATION OF THE PLAN. +The Plan was originally adopted by the Board of Directors of the Company on November 16, 2017 and approved by the stockholders of the Company on November 22, 2017, and it originally became effective on December 11, 2017, upon the completion of the Company’s initial public offering. This amendment and restatement of the Plan was adopted by the Board of Directors of the Company on April 17, 2026, to become effective (the “Effective Date”) as of June 9, 2026 if approved by the stockholders of the Company at the Company’s 2026 annual meeting of shareholders. The Plan will terminate on June 9, 2031, the date which is five years from the date of approval of the amendment and restatement of the Plan by the stockholders of the Company. The Plan may be terminated at an earlier date by vote of the stockholders or the Board of Directors; provided, however, that any such earlier termination shall not affect any Agreements executed prior to the effective date of such termination. Termination of the Plan shall not affect any Stock Rights theretofore granted. +31. AMENDMENT OF THE PLAN AND AGREEMENTS. +The Plan may be amended by the stockholders of the Company. The Plan may also be amended by the Administrator, including, without limitation, to the extent necessary to qualify any or all outstanding Stock Rights granted under the Plan or Stock Rights to be granted under the Plan for favorable federal income tax treatment as may be afforded incentive stock options under Section 422 of the Code (including deferral of taxation upon exercise), and to the extent necessary to qualify the Shares issuable under the Plan for listing on any national securities exchange or quotation in any national automated quotation system of securities dealers; provided that any amendment approved by the Administrator which the Administrator determines is of a scope that requires stockholder approval shall be subject to obtaining such stockholder approval. Any modification or amendment of the Plan shall not, without the consent of a Participant, adversely affect his or her rights under a Stock Right previously granted to him or her. With the consent of the Participant affected, the Administrator may amend outstanding Agreements in a manner which may be adverse to the Participant but which is not inconsistent with the Plan. In the discretion of the Administrator, outstanding Agreements may be amended by the Administrator in a manner which is not adverse to the Participant. Nothing in this Paragraph 31 shall limit the Administrator’s authority to take any action permitted pursuant to Paragraphs 4(g) and 24. +32. EMPLOYMENT OR OTHER RELATIONSHIP. +Nothing in this Plan or any Agreement shall be deemed to prevent the Company or an Affiliate from terminating the employment, director or consultancy status of a Participant, nor to prevent a Participant +A-14 +TABLE OF CONTENTS +from terminating his or her own employment, director or consultancy status or to give any Participant a right to be retained in employment or other service by the Company or any Affiliate for any period of time. +33. SECTION 409A. +If a Participant is a “specified employee” as defined in Section 409A of the Code (and as applied according to procedures of the Company and its Affiliates) as of his separation from service, to the extent any payment under this Plan or pursuant to the grant of a Stock-Based Award constitutes deferred compensation (after taking into account any applicable exemptions from Section 409A of the Code), and to the extent required by Section 409A of the Code, no payments due under this Plan or pursuant to a Stock-Based Award may be made until the earlier of: (i) the first day of the seventh month following the Participant’s separation from service, or (ii) the Participant’s date of death; provided, however, that any payments delayed during this six-month period shall be paid in the aggregate in a lump sum, without interest, on the first day of the seventh month following the Participant’s separation from service. +The Administrator shall administer the Plan with a view toward ensuring that Stock Rights under the Plan that are subject to Section 409A of the Code comply with the requirements thereof and that Options under the Plan be exempt from the requirements of Section 409A of the Code, but neither the Administrator nor any member of the Board of Directors, nor the Company nor any of its Affiliates, nor any other person acting hereunder on behalf of the Company, the Administrator or the Board of Directors shall be liable to a Participant or any Survivor by reason of the acceleration of any income, or the imposition of any additional tax or penalty, with respect to a Stock Right, whether by reason of a failure to satisfy the requirements of Section 409A of the Code or otherwise. +34. INDEMNITY. +Neither the Board of Directors nor the Administrator, nor any members of either, nor any employees of the Company or any parent, subsidiary, or other Affiliate, shall be liable for any act, omission, interpretation, construction or determination made in good faith in connection with their responsibilities with respect to this Plan, and the Company hereby agrees to indemnify the members of the Board of Directors, the members of the Committee, and the employees of the Company and its parent or subsidiaries in respect of any claim, loss, damage, or expense (including reasonable counsel fees) arising from any such act, omission, interpretation, construction or determination to the full extent permitted by law. +35. CLAWBACK. +Notwithstanding anything to the contrary contained in this Plan, the Company may recover from a Participant any compensation received from any Stock Right (whether or not settled) or cause a Participant to forfeit any Stock Right (whether or not vested) in the event that the Company’s Compensation Clawback Policy or other clawback or recoupment policy then in effect is triggered. +36. GOVERNING LAW. +This Plan shall be construed and enforced in accordance with the law of the State of Delaware. +A-15 +TABLE OF CONTENTS +www.investorvote.com/QTRXStep 1: Go to www.investorvote.com/QTRX.Step 2: Click on the icon on the right to view meeting materials.Step 3: Return to the investorvote.com window and follow the instructions on the screen to log in.OnlineGo to www.investorvote.com/QTRXor scan the QR code — login details are located in the shaded bar below.2026 Stockholder Meeting Notice04A64DImportant Notice Regarding the Availability of Proxy Materials for the Quanterix Corporation Stockholder Meeting to be held on June 9, 2026.Under Securities and Exchange Commission rules, you are receiving this notice that the proxy materials for the annual stockholders’ meeting are available on the Internet. Follow the instructions below to view the materials and vote online or request a copy. The items to be voted on at the annual meeting are on the reverse side. Your vote is important! This communication presents only an overview of the more complete proxy materials that are available to you on the Internet. We encourage you to access and review all of the important information contained in the proxy materials before voting. The Proxy Statement and 2025 Annual Report to stockholders are available for viewing, printing and downloading at:Obtaining a Copy of the Proxy Materials – If you want to receive a copy of the proxy materials, you must request one. There is no charge to you for requesting a copy. Please make your request as instructed on the reverse side on or before May 26, 2026 to facilitate timely delivery.2 N O TEasy Online Access — View your proxy materials and vote.When you go online, you can also help the environment by consenting to receive electronic delivery of future materials.Step 4: Make your selections as instructed on each screen for your delivery preferences.Step 5: Vote your shares. +TABLE OF CONTENTS +Here’s how to order a copy of the proxy materials and select delivery preferences: Current and future delivery requests can be submitted using the options below.If you request an email copy, you will receive an email with a link to the current meeting materials.PLEASE NOTE: You must use the number in the shaded bar on the reverse side when requesting a copy of the proxy materials.— Internet – Go to www.investorvote.com/QTRX.— Phone – Call us free of charge at 1-866-641-4276 .— Email – Send an email to investorvote@computershare.com with “Proxy Materials Quanterix Corporation” in the subject line. Include your full name and address, plus the number located in the shaded bar on the reverse side, and state that you want a paper copy of the meeting materials.To facilitate timely delivery, requests for a paper copy of proxy materials must be received by May 26, 2026.Quanterix Corporation’s Annual Meeting of Stockholders will be held on June 9, 2026, at 10:00 AM ETvirtually via the Internet at meetnow.global/QTRX2026. Proposals to be voted on at the meeting are listed below along with the Board of Directors’ recommendations.The Board of Directors recommends a vote FOR all nominees and FOR Proposals 2, 3 and 4.1. Election of Directors:01 - William P. Donnelly 02 - Ivana Magočvcević-Liebisch, Ph.D., J.D.2. To approve, on an advisory basis, the compensation of the Company’s named executive officers.3. To ratify, on an advisory basis, the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2026.4. To approve the amendment and restatement of the Company’s 2017 Employee, Director and Consultant Equity Incentive Plan.PLEASE NOTE – YOU CANNOT VOTE BY RETURNING THIS NOTICE. 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iso4217:USD +Table of Contents +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Proxy Statement Pursuant to Section 14(a) of the +Securities Exchange Act of 1934 +Filed by the Registrant ☑ +Filed by a Party other than the Registrant ☐ +Check the appropriate box: +☐ Preliminary Proxy Statement +☐ Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +☑ Definitive Proxy Statement +☐ Definitive Additional Materials +☐ Soliciting Material Pursuant to §240.14a-12 +CPI Card Group Inc. +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check all boxes that apply): +☑ +No fee required. +☐ +Fee paid previously with preliminary materials. +☐ +Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a6(i)(1) and 0-11. +Table of Contents +10368 West Centennial Road +Littleton, Colorado 80127 +April 8, 2026 +Dear Stockholder: +On behalf of the Board of Directors of CPI Card Group Inc. (the “Company”), you are cordially invited to attend the 2026 Annual Meeting of Stockholders (the “Annual Meeting”) to be held on Thursday, May 21, 2026, at 8:00 a.m. Eastern Time. The Annual Meeting will be a completely virtual meeting of stockholders, which will be conducted online via live webcast. Please see the Notice of Annual Meeting of Stockholders on the next page for more information about how to attend the Annual Meeting virtually. +We have included with this letter a proxy statement that provides you with detailed information about the business to be conducted at the Annual Meeting. In addition, the Company’s 2025 Annual Report, which is being made available to you along with the proxy statement, contains information about the Company and its performance. We encourage you to read these materials carefully. +Whether or not you plan to attend the Annual Meeting, your vote is important, and we encourage you to vote promptly. You may vote your shares through one of the methods described in the accompanying proxy statement. We strongly urge you to vote FOR the nominees proposed by the Board of Directors and in accordance with the recommendations of the Board of Directors on the other proposals by following the voting instructions contained in the proxy statement. +Sincerely, +H. Sanford Riley +John Lowe +Chair of the Board +President, Chief Executive Officer and Director +Table of Contents +CPI CARD GROUP INC. +NOTICE OF ANNUAL MEETING OF STOCKHOLDERS +MAY 21, 2026 8:00 A.M. +(Eastern Time) +To the Stockholders of CPI Card Group Inc.: +The 2026 Annual Meeting of Stockholders will be held virtually on May 21, 2026, at 8:00 a.m. (Eastern Time) via live webcast accessible at www.virtualshareholdermeeting.com/PMTS2026. The purpose of the meeting is to: +1. re-elect the eight director nominees named in the accompanying proxy statement; +2. ratify the appointment of KPMG LLP as our independent registered public accounting firm for 2026; +3. hold an advisory vote to approve named executive officer compensation; and +4. conduct any other business properly brought before the Annual Meeting or any adjournments or postponements thereof. +Voting is limited to stockholders of record at the close of business on March 24, 2026. +YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE VOTE YOUR SHARES OVER THE TELEPHONE, VIA THE INTERNET OR BY COMPLETING, DATING, SIGNING AND RETURNING A PROXY CARD, AS DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT. YOUR PROMPT COOPERATION IS GREATLY APPRECIATED. +By Order of the Board of Directors, +Darren Dragovich +Chief Legal and Compliance Officer and Corporate Secretary +Table of Contents +Notice of Electronic Availability of Proxy Statement and Annual Report +As permitted by rules adopted by the United States Securities and Exchange Commission (the “SEC”), we are making this proxy statement and our Annual Report available to stockholders electronically via the Internet. On or about April 8, 2026, we will mail to most of our stockholders a notice (the “Notice”) containing instructions on how to access this proxy statement and our Annual Report and to vote via the Internet. +The Notice also contains instructions on how to request a printed copy of the proxy materials and to vote by mail. In addition, you may elect to receive future proxy materials in printed form by mail or electronically by e-mail by following the instructions included in the Notice. If you have previously elected to receive our proxy materials electronically, you will continue to receive these materials via e-mail unless you elect otherwise. +Table of Contents +TABLE OF CONTENTS +Page +SUMMARY OF THE ANNUAL MEETING +1 +PROPOSAL NO. 1 ELECTION OF DIRECTORS +5 +DIRECTORS AND CORPORATE GOVERNANCE +6 +Director Nominee Biographical Information and Qualifications +6 +Board Profile +7 +Director Selection Process +7 +Recommendation of Directors by Stockholders +8 +Independence of Directors +8 +Board’s Role in Risk Oversight +9 +Board/Committee Areas of Risk Oversight and Actions +10 +Corporate Governance +10 +Other Board Information +11 +Director Compensation +13 +Security Ownership of Certain Beneficial Owners, Directors and Management +14 +Delinquent Section 16(a) Reports +15 +EXECUTIVE OFFICERS +15 +EXECUTIVE COMPENSATION +17 +2025 NEOs +17 +2025 Business Overview +17 +Summary of Our 2025 Compensation Decisions +18 +Executive Compensation Governance Highlights +20 +2025 Say-on-Pay Vote +20 +Role of the Compensation Committee +20 +Role of the Independent Compensation Consultant +20 +Role of Market Data and the Peer Group +21 +Elements of the 2025 Executive Compensation Program +21 +Termination or Change in Control +25 +Additional Compensation Governance Practices +25 +2025 Summary Compensation Table +27 +Outstanding Equity Awards at 2025 Fiscal Year-End +28 +Employment and Severance Arrangements +29 +Pay vs. Performance +30 +Policies and Practices Related to Grant of Certain Equity Awards Close in Time to Release of Material Nonpublic Information +32 +Equity Compensation Plan Information Table +32 +AUDIT COMMITTEE REPORT +32 +FEES PAID TO INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +33 +PROPOSAL NO. 2 RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +34 +PROPOSAL NO. 3 STOCKHOLDER ADVISORY VOTE TO APPROVE OUR NAMED EXECUTIVE OFFICER COMPENSATION +35 +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +36 +Policies and Procedures for Related Party Transactions +37 +STOCKHOLDER PROPOSALS FOR 2027 ANNUAL MEETING OF STOCKHOLDERS +37 +OTHER MATTERS +38 +Annex A – Reconciliation of Non-GAAP Measures +A-1 +Table of Contents +10368 West Centennial Road +Littleton, Colorado 80127 +SUMMARY OF THE ANNUAL MEETING +This proxy statement contains information related to the 2026 Annual Meeting of Stockholders (the “Annual Meeting”) of CPI Card Group Inc. (referred to herein as the “Company,” “CPI,” “we,” “us” or “our” as the context requires) to be held via live webcast accessible at www.virtualshareholdermeeting.com/PMTS2026. +Why did you provide me with this proxy statement? +We provided you with this proxy statement because the Board of Directors of the Company (the “Board” or the “Board of Directors”) is soliciting, on the Company’s behalf, your proxy to vote at the Annual Meeting and at any postponements or adjournments of the Annual Meeting. This proxy statement summarizes information that is intended to assist you in making an informed vote on the proposals described in this proxy statement. +Who can vote at the Annual Meeting? +Only stockholders of record as of the record date are entitled to vote at the Annual Meeting. The record date to determine stockholders entitled to notice of and to vote at the Annual Meeting is the close of business on March 24, 2026. On the record date, there were 11,458,988 shares of our common stock, par value $0.001 per share (the “Common Stock”), outstanding. Our Common Stock is the only class of voting securities outstanding. +How many shares must be present to conduct the Annual Meeting? +We must have a quorum present virtually or by proxy to conduct the Annual Meeting. A quorum is established when a majority of shares entitled to vote is present virtually or represented by proxy at the Annual Meeting. Abstentions and broker non-votes (as described below) are counted for purposes of determining whether a quorum is present. +What matters are to be voted on at the Annual Meeting? +The agenda for the Annual Meeting is to: +1. elect the eight director nominees named in this proxy statement; +2. ratify the appointment of KPMG LLP as our independent registered public accounting firm for 2026; +3. hold an advisory vote to approve named executive officer compensation (the “Say-on-Pay Proposal”); and +4. conduct any other business properly brought before the Annual Meeting or any adjournments or postponements thereof. +As of the date of this proxy statement, we do not know of any other matters to be presented at the Annual Meeting. If any other matters properly come before the Annual Meeting, however, the persons named as proxies will be authorized to vote or otherwise act in accordance with their judgment. +How does the Board recommend that I vote? +The Board recommends that you vote: +1. FOR the election of each of the director nominees named in this proxy statement; +2. FOR the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for 2026; and +3. FOR the Say-on-Pay Proposal. +1 +Table of Contents +How do I vote at the Annual Meeting? +You may vote via the Internet during the Annual Meeting or by proxy in advance of the Annual Meeting. +Stockholder of Record . If you are a stockholder of record, there are three ways to vote by proxy: +By Internet — You can vote via the Internet by following the instructions on your Notice or proxy card. You will need to use the control number appearing on your proxy card to vote via the Internet. +By Telephone — If you receive or request printed copies of the proxy materials by mail, you will receive a proxy card and you can vote by telephone by following the instructions on your proxy card. You will need to use the control number appearing on your proxy card to vote by telephone. +By Mail — If you receive or request printed copies of the proxy materials by mail, you will receive a proxy card and you can vote by completing, dating and signing the proxy card and returning it in the envelope provided. +Beneficial Owner of Stock . If you hold shares in “street name” through a bank, broker or other nominee, you are considered a “beneficial owner” of stock and you may vote as follows: +By Internet — You can vote via the Internet by following the instructions on your Notice or voting instruction form. The availability of Internet voting may depend on the voting process of the organization that holds your shares. +By Telephone — If you receive or request printed copies of the proxy materials by mail, you will receive a voting instruction form and you can vote by telephone by following the instructions on the voting instruction form. The availability of telephone voting may depend on the voting process of the organization that holds your shares. +By Mail — If you receive or request printed copies of the proxy materials by mail, you will receive a voting instruction form and you can vote by proxy by completing, dating and signing the voting instruction form and returning it in the envelope provided. +Internet and Telephone voting facilities for stockholders of record will be available 24 hours a day. You may vote over the telephone or via the Internet until 11:59 p.m. Eastern Time on May 20, 2026. Even if you plan to attend the Annual Meeting virtually, we recommend that you also submit your proxy or voting instructions as described above so that your vote will be counted if you later decide not to attend the Annual Meeting. +Your proxy will be voted in accordance with your instructions, so long as the instructions are received by the voting deadline. In the case of a proxy card returned by mail, such card must be signed and dated and be actually received before the Annual Meeting. If you vote your shares via the Internet, over the telephone or by executing and returning a proxy card by mail, but you do not provide specific instructions with respect to the proposals, your shares will be voted in accordance with the recommendations of the Board of Directors: FOR each director nominee named in this proxy statement, FOR the ratification of the appointment of KPMG LLP (“KPMG”) as our independent registered public accounting firm for 2026, and FOR the Say-on-Pay Proposal. +As of the date of this proxy statement, we do not know of any matters to be presented at the Annual Meeting except those described in this proxy statement. If any other matters properly come before the Annual Meeting, however, the persons named as proxies will be authorized to vote or otherwise act in accordance with their judgment. +What does it mean if I receive more than one Notice of internet availability, e-mail or set of proxy materials? +You may receive more than one Notice, more than one e-mail or multiple proxy cards or voting instruction forms. For example, if you hold your shares in more than one brokerage account, you may receive a separate Notice, a separate e-mail or a separate voting instruction form for each brokerage account in which you hold shares. Also, if you are a stockholder of record and your shares are registered in more than one name, you may receive more than one Notice, more than one e-mail or more than one proxy card. To vote all of your shares by proxy, you must complete, date, sign and return each proxy card and voting instruction form that you receive, or vote over the telephone or via the Internet the shares represented by each e-mail, proxy card or voting instruction form that you receive. +May I change my vote? +Yes. You may revoke your proxy at any time before it is voted at the Annual Meeting. To change your vote, if you are a stockholder of record, you may submit another later dated proxy over the telephone or via the Internet no later than 11:59 p.m. Eastern Time on May 20, 2026 or by mail so long as it is actually received prior to the Annual Meeting, or by voting your shares during the Annual Meeting (your attendance at the Annual Meeting will not, by itself, revoke your proxy; you must vote at the Annual Meeting to revoke your proxy). If you are a beneficial owner and your shares are held in street name, you may change your vote by submitting new voting instructions to your bank, broker or other nominee, or you may change your vote by attending and voting at the Annual Meeting. +2 +Table of Contents +What happens if my bank or broker holds my shares in “street name” and I do not give any voting instructions? +If you hold your shares in “street name” through a bank, broker or other nominee, such bank, broker or nominee will vote those shares in accordance with your instructions. You should refer to the information provided to you by your bank, broker or nominee to determine how to provide voting instructions. Without instructions from you, a bank, broker or nominee will be permitted to exercise its own voting discretion only with respect to so-called “routine matters” but will not be permitted to exercise voting discretion with respect to “non-routine matters.” The Company believes that the proposal to ratify KPMG’s appointment as the Company’s independent registered public accounting firm for 2026 (Proposal No. 2) is a routine matter on which brokers will be permitted to vote shares on your behalf, even without your instructions. Other than Proposal No. 2, the Company believes that all proposals set forth in this proxy statement are considered non-routine matters, and brokers will thus not be able to vote on your behalf if you have not furnished voting instructions to them. Thus, if you do not give your bank, broker or nominee specific voting instructions with respect to Proposal No. 2, your shares will be voted in such entity’s discretion. If you do not give your bank, broker or nominee specific instructions with respect to the other proposals herein, your shares will not be voted on such proposals. This is called a “broker non-vote.” Shares represented by such broker non-votes will be counted in determining whether a quorum is present but will otherwise have no effect on the non-routine proposals. We urge you to promptly provide your bank, broker or nominee with appropriate voting instructions so that all your shares may be voted at the Annual Meeting. +What vote is required to elect directors and approve the other matters described in this proxy statement? +The Company’s Fourth Amended and Restated By-Laws (the “By-Laws”) require that the directors named in Proposal No. 1 be elected by the majority of votes cast with respect to such director in uncontested elections (the number of shares voted “for” a director nominee must exceed the number of votes cast “against” that nominee). In a contested election (a situation in which the number of nominees exceeds the number of directors to be elected, which we do not expect to occur for the Annual Meeting), the standard for election of directors will be a plurality of the shares represented in person or by proxy at any such meeting and entitled to vote on the election of directors. +The ratification of the appointment of KPMG as our independent registered public accounting firm for 2026 (Proposal No. 2) and the Say-on-Pay Proposal (Proposal No. 3) each require the affirmative vote of the holders of a majority of the shares of Common Stock present in person or represented by proxy at the Annual Meeting and entitled to vote thereon. Stockholders attending the virtual Annual Meeting via webcast are deemed to be present “in person.” +For Proposal No. 1, broker non-votes will be counted as present for purposes of establishing a quorum but are not counted as votes cast and therefore will not affect the outcome of the vote. As stated above, because Proposal No. 2 is considered a routine matter, if you do not give your bank, broker or other nominee specific voting instruction with respect to Proposal No. 2, your shares will be voted in such entity’s discretion, and therefore no broker non-votes are expected on such proposal. Since Proposal No. 3 is a non-routine matter on which brokers are not permitted to vote without your voting instruction, broker non-votes will be counted as present for purposes of establishing a quorum but will not affect the outcome of the vote. +Abstentions will not be voted but will be counted for purposes of determining whether there is a quorum present. Abstentions will have the same effect of a vote “against” a proposal other than the proposal to elect directors (Proposal No. 1), on which they have no effect. +What is the difference between holding shares as a stockholder of record and as a beneficial owner? +If your shares are registered in your name on the Company’s books and records or with our transfer agent, you are the “stockholder of record” of those shares, and this proxy statement and accompanying materials have been provided directly to you by the Company. On the other hand, if you purchased your shares through a brokerage or other financial intermediary, the brokerage or other financial intermediary will automatically put your shares into “street name,” which means that the brokerage or other financial intermediary will hold your shares in its name or another nominee’s name and not in your name, but will keep records showing you as the “beneficial owner.” If you hold shares beneficially in street name, this proxy statement and accompanying materials have been forwarded to you by your broker, bank or other holder of record. +How many votes do I have? +Each share of Common Stock that you hold as of the record date entitles you to one vote, without cumulation, on each matter to be voted upon at the Annual Meeting. +How will the votes be counted at the Annual Meeting? +The votes will be counted by the independent inspector of election appointed for the Annual Meeting. +How will the Company announce the voting results? +The Company will report the final results of the voting at the Annual Meeting in a filing with the SEC on a Current Report on Form 8-K within four business days after the date of the Annual Meeting. +3 +Table of Contents +Who pays for the Company’s solicitation of proxies? +The Board, on behalf of the Company, is soliciting your proxy to vote your shares of Common Stock at our Annual Meeting. The Company will bear the cost of soliciting proxies, including preparing, printing and mailing this proxy statement. Proxies may be solicited personally, or by mail, e-mail or telephone by certain of our directors, officers, employees or representatives. Our directors and employees will not be paid any additional compensation for soliciting proxies. We may reimburse brokerage firms and other persons representing beneficial owners of shares for their out-of-pocket expenses in forwarding solicitation materials to such beneficial owners . +What is “householding” and how does it work? +Under the rules adopted by the SEC, we may deliver a single copy of the proxy materials to one address shared by two or more of our stockholders. This delivery method is referred to as “householding” and can reduce the environmental impact of our Annual Meeting and result in significant cost savings for the Company. To take advantage of this opportunity, we have delivered only one copy of the Notice and proxy materials, if you requested printed versions by mail, this proxy statement and the Annual Report, to multiple stockholders who share an address, unless we received contrary instructions from the impacted stockholders prior to the mailing date. If you would like to either participate in householding or receive separate copies of future proxy materials, please contact Broadridge Financial Solutions, Inc. by calling 1-866-540-7095 or by mail at 51 Mercedes Way, Edgewood, New York 11717, Attention: Householding Department. If you are a beneficial owner of shares held in street name and would like to participate in householding, you may contact the organization that holds your shares. +What do I need for admission to the Annual Meeting and how do I vote at the Annual Meeting? +You are entitled to participate in the Annual Meeting if you were a stockholder as of the close of business on March 24, 2026, the record date. To be admitted to and participate in the Annual Meeting, you must follow the instructions and use the information found on your proxy card, or voting instruction form or Notice. The Annual Meeting will be held in a virtual-only format on Thursday, May 21, 2026 at 8:00 a.m. Eastern Time. The virtual meeting and live webcast can be accessed at www.virtualshareholdermeeting.com/PMTS2026. You will not be able to attend the Annual Meeting in person. +You may vote during the Annual Meeting by using the “VOTE” button found at www.virtualshareholdermeeting.com/PMTS2026 during the Annual Meeting. Whether or not you plan to attend the Annual Meeting, you are encouraged to vote in advance by one of the methods described in this proxy statement. +May stockholders ask questions at the Annual Meeting? +Yes. Stockholders will have the ability to submit questions regarding the proposals during the Annual Meeting via the virtual meeting website. +What if I have technical difficulties or trouble accessing the Annual Meeting? +If you encounter any difficulties while accessing the virtual meeting during the check-in or meeting time, a technical assistance phone number will be made available on the virtual meeting registration page beginning 15 minutes prior to the start time of the Annual Meeting. If there are any technical issues in convening or hosting the meeting, we will promptly post information to our investor relations website at investor.cpicardgroup.com, including information on when the meeting will be reconvened. +4 +Table of Contents +PROPOSAL NO. 1 - ELECTION OF DIRECTORS +Upon the recommendation of our Nominating and Corporate Governance Committee (the “Nominating Committee”), the Board has nominated the eight individuals presently serving as directors, each of whom is listed below to stand for re-election to the Board for a one-year term ending at the annual meeting of stockholders in 2027 and until their successors, if any, are duly elected or appointed. +The Board has determined that each director nominee listed below, other than John Lowe, is an independent director, as further described below in “Directors and Corporate Governance — Independence of Directors.” All of the director nominees listed below have consented to being named in this proxy statement and to serving if elected. However, if any of the below nominees becomes unable or unwilling to serve prior to the date of the Annual Meeting, proxy holders will have discretion and authority to vote for another nominee proposed by our Board. Alternatively, our Board may reduce the number of directors to be elected at the Annual Meeting. +Name +Position +Thomas Furey +Director +John Lowe +Director, President and Chief Executive Officer +Ravi Mallela +Director +Lisa Oleson +Director +Nicholas Peters +Director +H. Sanford Riley +Director and Chairman of the Board +Marc Sheinbaum +Director +Valerie Soranno Keating +Director +THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE RE-ELECTION OF EACH OF THE DIRECTOR NOMINEES NAMED IN THIS PROXY STATEMENT. +5 +Table of Contents +DIRECTORS AND COR POR ATE GOVERNANCE +Director Nominee Biographical Information and Qualifications +Set forth below is a description of the business experience of each director nominee, as well as their relevant qualifications, skills and experiences. Each director nominee listed below is a current director nominated for re-election to the Board for a term expiring at the annual meeting of stockholders in 2027. See “Election of Directors (Proposal No. 1).” +Thomas Furey , 61, has served on our Board of Directors since May 2021. Mr. Furey currently serves as the Chairman and Chief Executive Officer of Sagetech Avionics, Inc. (“Sagetech”), a privately held aerospace electronics company. Sagetech was incorporated in 2019 after a divisional carve out from Sagetech Corporation, for which Mr. Furey held the position of Chief Operating Officer since 2015. From 2014 to 2015, Mr. Furey served as Vice President of Manufacturing and Engineering at Unitec, Inc., a point-of-sale payments equipment company, before which he ran his own operations consultancy firm from 2012 to 2013. From 2004 to 2012, Mr. Furey held various executive positions at Standard Register Company, including Vice President of Manufacturing, Chief Supply Chain Officer and President of Standard Register’s industrial business. From 2001 to 2004, Mr. Furey was in charge of North American operations for Avery Dennison Corporation (NYSE:AVY), a label materials manufacturer. Mr. Furey also held positions of increasing responsibility in manufacturing leadership at AlliedSignal, Inc. (which acquired Honeywell Inc. in 1999 and took its name) from 1994 to 2001 and was selected as the AlliedSignal fellow to the “Leaders for Manufacturing” program at the Massachusetts Institute of Technology (“MIT”) from 1997 to 1999. He began his career as a Naval Flight Officer in the U.S. Navy. Mr. Furey holds a Bachelor of Science degree in Mathematics from the U.S. Naval Academy, a Master of Science degree in Industrial Engineering from California State University Northridge, as well as a Master of Science degree in Mechanical Engineering and a Master of Business Administration degree from MIT. Mr. Furey brings to the Board extensive experience in high volume manufacturing, operations and executive leadership. +John Lowe , 49, was appointed President and Chief Executive Officer of the Company and was appointed to the Board of Directors in January 2024. Prior to that, he served as our Executive Vice President (“EVP”) End-to-End Payment Solutions since December 2022. He served as our Senior Vice President (“SVP”) and General Manager, Secure Card from October 2021 to December 2022. From July 2018 to October 2021, Mr. Lowe served as the Company’s Chief Financial Officer. Prior to joining the Company, Mr. Lowe served as Chief Financial Officer of SquareTwo Financial Corporation, a financial services company, from August 2014 until June 2017. Prior to August 2014, Mr. Lowe held various leadership roles of increasing responsibility at SquareTwo Financial Corporation, including serving as Treasurer, Vice President of Finance and Vice President of External Reporting. Mr. Lowe’s employment with SquareTwo Financial Corporation commenced in 2009. SquareTwo Financial Corporation filed for Chapter 11 bankruptcy protection in March 2017 in connection with a strategic sale of the Company. Mr. Lowe holds a Bachelor of Science degree in both Accounting and Finance from the Virginia Polytechnic Institute and State University. He brings to the Board significant experience in the areas of finance, accounting, investor relations, operations and executive leadership, including over 20 years of experience in the financial services industry. +Ravi Mallela , 56, has served on our Board of Directors since November 2023. From January 2022 to May 2024, he served as Executive Vice President and Chief Financial Officer of National Mortgage Insurance Holdings Inc. (NASDAQ:NMIH), the parent company of National Mortgage Insurance Corporation, a U.S.-based, private mortgage insurance company, and on its Executive Committee. Prior to joining NMIH, Mr. Mallela served as Executive Vice President and Chief Financial Officer, Finance Group, of First Hawaiian, Inc., a bank holding company, and First Hawaiian Bank (NASDAQ:FHB), a financial institution, (together, “First Hawaiian”) from September 2018 until January 2022. Prior to joining First Hawaiian, Mr. Mallela served as Senior Vice President, Head of Finance and Treasury of First Republic Bank (OTC:FRCB) from 2013 to 2018. He holds a Master of Business Administration degree from UCLA Anderson School of Management and a Bachelor of Science degree in Economics from the University of San Francisco. Mr. Mallela has public company executive leadership experience including significant experience in managing finance operations, risk management frameworks, data strategies and technical applications at large and mid-sized financial institutions. +Lisa Oleson , 46, has served on our Board since May 2024. Since 2016, Ms. Oleson has served as the Chief Financial Officer at Tricor Pacific Capital Inc., a Canadian single-family office that makes control investments in middle market companies, commercial real estate, and land development, among other asset classes. Ms. Oleson previously served on the board of directors of Dinoflex Group LP, a manufacturer of premium recycled rubber flooring with distribution across North America from July 2022 to January 2025. Prior to joining Tricor, Ms. Oleson held progressively senior finance roles in financial services, recycling, franchising, and heavy equipment companies. Ms. Oleson is a Chartered Professional Accountant in British Columbia, and holds a Bachelor of Business Administration degree with honors from Laurentian University. Ms. Oleson brings strong finance and accounting skills, as well as diverse operating experience, from her time in various industries. +Nicholas Peters , 53, has served on our Board of Directors since 2007. Mr. Peters is a Managing Member at EXI Investment Partners, a private investment firm that makes control investments in lower middle market companies in the United States. Prior to co-founding EXI Investment Partners, Mr. Peters was a Managing Director at Parallel49 Equity (formerly Tricor Pacific Capital), a private equity firm, which he joined in 2002, and also began serving as Parallel49 Equity’s Chief Financial Officer in 2012. Mr. Peters continues to provide services to Parallel49 Equity in a variety of capacities. Prior to joining Parallel49 Equity, Mr. Peters was a Senior Manager at Arthur Andersen LLP. Mr. Peters serves on the board of several EXI Investment Partners investment companies and previously served on the board of several Parallel49 Equity investment companies. Mr. Peters holds a Bachelor of Science degree in Business Administration from the University of Dayton and is a Certified Public Accountant (inactive). Mr. Peters brings to the Board strong finance, accounting and capital market skills, as well as valuable experience from his oversight of the management and operations of several private equity owned companies. +6 +Table of Contents +H. Sanford “Sandy” Riley , 75, has served on our Board of Directors since May 2023. He served as President and CEO of Richardson Financial Group Limited, a specialized financial services company, from 2003 until January 2026. Previously, he served for 10 years as President and CEO and later Chairman of Investor Group, Inc., one of Canada’s largest mutual fund companies. Mr. Riley has served as a member of the board of directors of Molson Coors (NYSE:TAP) since 2015. In addition, Mr. Riley previously served as a director of Canadian Western Bank (TSX:CWB) from 2011 to 2022, The North West Company (TSX:NWC) from 2002 to 2022, RF Capital Group Inc. from 2018 and 2025, and Manitoba Hydro, where he also served as Chairman of the board of directors, from 2016 to 2018. Mr. Riley is also involved with various community organizations, including serving as Chairman of the University of Winnipeg Foundation, past Chancellor of the University of Winnipeg and past Chairman of the Manitoba Business Council. Mr. Riley holds a J.D. from Osgoode Hall Law School, a Bachelor of Arts degree from Queen’s University and is a Member of the Order of Manitoba and the Order of Canada. He brings extensive board-level experience having served on numerous public company boards and committees in various industries, with leadership in areas of risk management, corporate governance and executive compensation, as well as executive leadership experience in financial services, including such areas as operations, management, strategy and corporate development. +Marc Sheinbaum, 68, has served on our Board of Directors since November 2019. Since January 2017, Mr. Sheinbaum has been an advisor to venture capital firms. From April 2014 to August 2016, he was the President, Chief Executive Officer and a director of Higher One Holdings, Inc. (NYSE:ONE), a payments technology provider for higher education. From February 2007 through March 2013, Mr. Sheinbaum was the Senior Vice President and Chief Executive Officer of Retail, Auto and Education Finance at JPMorgan Chase & Co. (NYSE:JPM). Earlier in his career, Mr. Sheinbaum held positions at GE Capital Corporation and American Express Company (NYSE:AXP), as well as Coopers & Lybrand Management Consulting. Mr. Sheinbaum holds a Bachelor of Science degree in Management Science from State University of New York at Albany and a Master of Business Administration degree from New York University. He brings considerable experience in payments and consumer financial services as well as public company leadership. +Valerie Soranno Keating , 62, has served on our Board of Directors since May 2018. Ms. Soranno Keating has been senior advisor to a number of private equity firms in the U.S. and Europe since 2017. From November 2009 through May 2015, she was the Chief Executive Officer of Barclaycard, the global payments division of Barclays PLC (NYSE:BCS). Before joining Barclays PLC, Ms. Soranno Keating held a variety of executive positions at American Express Company (NYSE:AXP) from May 1993 through May 2009, including President, Travelers Cheques & Prepaid Services, Executive Vice President Global Commercial Services, Executive Vice President Global Merchant Services, Emerging Global Businesses & Network Expansion, and Vice President Corporate Strategic Planning. Ms. Soranno Keating also serves as a director on the boards of other public and private companies, including Engage People Inc., re:Member LLC, and NAW Holdings LLC. She served as a director of FinServ Acquisition Corp. II (Nasdaq: FSRX) from February 2021 to December 2023 and One Main Financial (NYSE: OMF) from June 2018 to June 2025. Ms. Soranno Keating holds a Bachelor of Science degree in Business Administration from Lehigh University. She brings to the Board wide-ranging experience in both executive and board roles across a broad spectrum of payments and related businesses. +Board Profile +Age +Gender +Race/Ethnicity +Director Selection Process +The Board periodically reviews and assesses its composition and takes into consideration factors that impact Board performance and refreshment. The Nominating Committee works with the Board to determine periodically, as appropriate, the desired Board qualifications, expertise and characteristics, and recommends candidates to the Board based on these criteria. In identifying director candidates, the Nominating Committee accepts recommendations from current or former directors, search firms retained by the Nominating Committee to assist in identifying and evaluating potential candidates, stockholders, Company executives and by self-nomination. In evaluating director candidates, regardless of the source of recommendation, the Nominating Committee generally considers factors such as business experience, high ethical standards and integrity, skills, understanding of CPI’s business environment, willingness to devote adequate time to Board duties, and commitments from serving on other boards. The Company’s Corporate Governance Guidelines also provide that the Nominating Committee shall work with the Board to determine eligibility to serve as a director of CPI, which includes weighing the aforementioned factors and evaluating each individual in the context of the membership of the Board as a group, with the objective of having a group that can best perpetuate the success of CPI’s business and represent stockholder interests through the exercise of sound judgment using the Board’s diversity of background and experience in various areas. The Board does not have a specific policy on diversity, but the Company’s Corporate Governance Guidelines provide that, with respect to Board diversity, the Nominating Committee may consider such factors as differences in professional background, education, skill and other individual qualities and attributes that contribute to the total mix of viewpoints and experience represented on the Board. +The Nominating Committee periodically retains a third-party executive search firm to assist in the identification and evaluation of director candidates. +7 +Table of Contents +In determining whether to recommend a director for re-election, the Nominating Committee considers the director’s past attendance at meetings, participation in and contributions to the activities of the Board (including Board committees) and the Company, the director’s adherence to standards of high character and integrity, as well as other qualifications and characteristics set forth in the Nominating Committee charter. +Recommendation of Directors by Stockholders +In accordance with its charter, the Nominating Committee will consider any candidate for election as a director of the Company recommended by any CPI stockholder, provided that the recommending stockholder follows the procedures set forth in Section 2.10(a) of the Company’s By-Laws for nominations by stockholders of persons to serve as directors (except for directors nominated by Parallel49 or the Tricor Family Office, each as defined and described in the paragraph immediately below). The Nominating Committee evaluates director candidates recommended by CPI stockholders (except for Parallel49) in the same manner by which it evaluates other director candidates considered by the Nominating Committee, as described above. +Parallel49 Equity, ULC, through management of Tricor Pacific Capital Partners (Fund IV), LP and Tricor Pacific Capital Partners (Fund IV) US, LP (collectively, “Parallel49”), and Tricor Pacific Capital Inc. (the “Tricor Family Office”) have the right to designate nominees for election to our Board of Directors based on their percentage ownership of our Common Stock. We are party to separate director nomination agreements with each of Parallel49 (the “Parallel49 Director Nomination Agreement”) and the Tricor Family Office (the “Tricor Family Office Director Nomination Agreement”, and together with the Parallel49 Director Nomination Agreement, the “Director Nomination Agreements”). The Parallel49 Director Nomination Agreement provides Parallel49 with the right to designate nominees for election to our Board for so long as Parallel49 collectively beneficially owns 5% or more of the total number of shares of Common Stock then outstanding. The Tricor Family Office Director Nomination Agreement provides the Tricor Family Office the right to nominate individuals for election to our Board for so long as the Tricor Family Office beneficially owns 10% or more of the total number of shares of our Common Stock then outstanding. The number of nominees that Parallel49 is entitled to designate under the Parallel49 Director Nomination Agreement bears the same proportion to the total number of members of our Board as the number of shares of Common Stock beneficially owned by Parallel49 bears to the total number of shares of Common Stock outstanding, rounded up to the nearest whole number. The number of directors that the Tricor Family Office is entitled to nominate under the Tricor Family Office Director Nomination Agreement is based on the percentage of the outstanding Common Stock over which the Tricor Family Office and Parallel49 collectively have direct voting control in relation to the total number of directors then serving on our Board, limited by the greater of the number of directors that Parallel49 is then entitled to nominate or have serving on our Board pursuant to the Parallel49 Director Nomination Rights Agreement. Pursuant to the Director Nomination Agreements, the Company agrees to ensure or use its best efforts to ensure that director nominees of Parallel49 and the Tricor Family Office are included in the Board’s slate of nominees submitted to the stockholders for election at each annual meeting. Thus, the Nominating Committee would not evaluate director candidates nominated by Parallel49 or the Tricor Family Office and make a determination regarding their suitability for nomination in the manner described above. The Nominating Committee reviews the qualifications of director candidates nominated by Parallel49 and the Tricor Family Office, including, at minimum, a background check, a written questionnaire, and other biographical information, to assess the director candidates’ suitability for submission to the stockholders for election to the Board. Refer to “Certain Relationships and Related Party Transactions – Director Nomination Agreements” for a description of Parallel49’s and the Tricor Family Office’s right to designate nominees. +Pursuant to Section 2.10(a) of the By-Laws, nominations of persons for election to the Board at a meeting of stockholders may be made by any stockholder of the Company entitled to vote for the election of directors at such meeting who sends a timely notice in writing to our Corporate Secretary. To be timely, a stockholder’s notice must be delivered to our Corporate Secretary at the Company’s principal executive offices not less than 90 nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting; provided, however, that if the annual meeting is more than 30 days prior to or after the anniversary of the preceding year’s annual meeting, notice by the stockholder must be delivered not later than the close of business on the later of the 90th day prior to such annual meeting or the 10th day following the day on which public announcement of the date of such annual meeting is made by the Company. As set forth in the By-Laws, a stockholder’s notice is required to contain certain prescribed information. +Recommendations or notices relating to director nominations should be sent to CPI Card Group Inc., 10368 West Centennial Road, Littleton, Colorado 80127; Attention: Darren Dragovich, Chief Legal and Compliance Officer and Corporate Secretary. +Independence of Directors +The Company’s Corporate Governance Guidelines provide that a majority of the members of the Board, and each member of the Audit Committee of the Board (the “Audit Committee”), the Compensation Committee of the Board (the “Compensation Committee”) and Nominating Committee, must meet the criteria for independence set forth under applicable law and the rules and standards of any applicable national securities exchange or inter-dealer quotation system (the “Market Rules”). No director qualifies as independent unless the Board determines that the director has no relationship with the Company which would interfere with the exercise of independent judgment in carrying out his or her responsibilities as a director. These independence guidelines are part of our Corporate Governance Guidelines, available on our website at investor.cpicardgroup.com. The Board considers all relevant facts and circumstances of which it is aware in making an independence determination with respect to any director. +The Board has made independence determinations with respect to each of our directors. Based on the Market Rules, the Board has affirmatively determined that each of Mses. Soranno Keating and Oleson, and Messrs. Furey, Mallela, Peters, Riley, and Sheinbaum are independent within the meaning of the Market Rules. Additionally, the Board considered affiliations with the Tricor Family Office when reviewing Ms. Oleson’s independence determination. Mr. Lowe was not deemed independent due to his service as the Company’s President and CEO. +8 +Table of Contents +Board’s Role in Risk Oversight +Risk assessment and oversight are an integral part of our governance and management processes. The Board is responsible for overseeing the development and execution of the Company’s strategic plans and for understanding the associated risks and actions that management is taking to manage and mitigate those risks. Our enterprise risk management process is designed to facilitate the identification, assessment and management of certain key risks that the Company may encounter and which may impact our ability to achieve our strategic objectives. This process includes reviewing for potential short-term risks (monitoring monthly or quarterly) and long-term risks (monitoring annually or longer), and in addition to relying on senior management, also utilizes an internal audit team to help identify and monitor risks and to periodically assess and update the Company’s risk management framework. Members of senior management, including the Chief Executive Officer, Chief Financial Officer and Chief Legal and Compliance Officer, comprise the Enterprise Risk Management Committee and meet regularly to review, rank, assess and prepare mitigation plans for various risks to the Company, including but not limited to: economic and political, market and competitive, financial, operational, technological (including cybersecurity and artificial intelligence), regulatory and compliance, and employment risks. These results of the reviews, assessments and recommendations are reported to the Audit Committee at least bi-annually. The Company also utilizes other risk management techniques such as working with outside advisors to conduct mock identification and response exercises for training purposes and reports significant findings to the Board. +The Chief Executive Officer and other senior management, including the Chief Financial Officer and Chief Legal and Compliance Officer (each of whom report directly to the Chief Executive Officer), may review specific risks with the Board throughout the year, as necessary and appropriate, including as a result of the Chair or the Board requesting more frequent updates or information about specific risks. In reviewing specific risks with the Board, senior management may incorporate reports and presentations from outside advisors and consultants designed to advise with respect to future threats and trends and risk identification, management, and mitigation actions, strategies and processes, as well as to discuss with, and obtain input from, the Board. +Pursuant to its charter, the Audit Committee is responsible for assisting the Board with its oversight of the Company’s policies with respect to risk assessment and risk management and discussing with management the major risk exposures facing the Company, including but not limited to financial, privacy, and security risks, and the steps the Company has taken to monitor and mitigate, where possible, such exposures. No less than annually, the Company’s Chief Executive Officer, Chief Financial Officer, Chief Legal and Compliance Officer, Chief Technology Officer, Chief Accounting Officer and Internal Audit Director, among other select members of the Company’s management, as appropriate, present to the Audit Committee a description of management’s view of the most significant risks facing the Company and participate in discussions with the Audit Committee regarding those risks and any mitigating factors, plans or policies in place to address and monitor such risks. Additionally, the Chief Technology Officer and Chief Legal and Compliance Officer, along with other internal personnel, have primary responsibility for assessing and managing material cybersecurity risks and comprise a management committee that reviews issues and initiatives related to data security and privacy. The committee meets at least quarterly to identify security risks and assess the status of security programs or enhancements and regularly reports findings and recommendations to the Audit Committee on security incidents, policies and procedures, security service requirements and risk mitigation strategies. +While the Audit Committee is charged with primary oversight of risk, the Board and the Board committees oversee risks associated with their principal areas of focus, as summarized below. The committee chairs regularly report to the full Board regarding their risk oversight activities, and the Board regularly reviews and discusses the most significant risks facing the Company and management’s process for identifying, prioritizing and responding to those risks. Depending on the immediacy of the identified risk, the Board may take additional oversight steps, including meeting more frequently to receive updates from management and engaging outside advisors for advice regarding mitigation or remediation of such risks. +9 +Table of Contents +Board/Committee Areas of Risk Oversight and Actions +Full Board +● +Evaluates reports received from management and makes inquiries of management as appropriate +● +Reviews with management material strategic, operational, financial, human capital, cybersecurity, compensation and compliance risks +● +Considers specific risk topics in connection with strategic planning and other matters +● +Manages risk oversight and related activities conducted by Board committees through reports of the committee chairs to the Board +Audit +Committee +● +Assesses periodic management reports on the enterprise risk management process and risks identified through that process +● +Discusses with management the Company’s specific processes for assessing and managing risks, including identifying the Company’s major financial and other enterprise risk exposures and the steps necessary to monitor and control such exposures +● +Assesses periodic management reports on financial and compliance risks, including privacy and data security +● +Oversees the process for receipt, retention, and treatment of reports of suspected violations of the Code of Business Conduct and Ethics, allegations of misconduct by executive officers, fraud or other critical matters and reports periodically to the Board with respect to such reports +● +Meets at least quarterly with the Company’s Chief Legal and Compliance Officer regarding the Company’s ethics and compliance processes and practices +● +Meets periodically with senior management and our independent auditor, KPMG, to review and discuss the external audit plan as well as critical audit matters, among other things, and reports on such meetings to the Board +● +Reviews and approves in advance the scope and the fees of non-audit services of our independent auditors +● +Receives regular updates from the Company’s Director of Internal Audit and approves the Company’s internal audit plan +● +Receives regular updates and periodic assessment reports from the Company’s Chief Technology Officer regarding information security matters, including cybersecurity +Compensation +Committee +● +Oversees the review and evaluation of the risks associated with our compensation policies and practices +● +Reviews the Company’s strategies and policies related to human capital management, including with respect to matters such as employee engagement and talent development +Nominating +Committee +● +Oversees the review and evaluation of the risks associated with our governance structure, policies and processes +● +Oversees the Company’s environmental, social and governance efforts, risks, progress and disclosures +● +Reviews, approves and recommends to the Board updates, as necessary, to our organizational documents, Corporate Governance Guidelines and other governance related policies +Corporate Governance +The Board has approved Corporate Governance Guidelines and a Code of Business Conduct and Ethics, as well as a Code of Conduct for Financial Officers that is applicable to our Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer. Our corporate governance documents, including the Corporate Governance Guidelines, the Code of Business Conduct and Ethics, the Code of Conduct for Financial Officers and committee charters, are available on our website at investor.cpicardgroup.com or in printed form upon request by contacting CPI Card Group Inc. at 10368 West Centennial Road, Littleton, Colorado 80127, Attention: Investor Relations. The Board regularly reviews corporate governance developments and modifies these documents as warranted. Any modifications will be reflected on our website. The information on our website is not part of this proxy statement and is not deemed to be incorporated by reference herein. +10 +Table of Contents +Other Board Information +Leadership Structure of the Board +Sandy Riley serves as Chair of the Board, and John Lowe serves as our Chief Executive Officer (“CEO”). Our Board has decided to maintain separate Chair and CEO roles to allow our CEO to focus on the development and execution of our business strategy, while allowing the Chair to lead the Board in its fundamental role of providing advice to, and independent oversight of, management. The Board recognizes the time, effort and energy that the CEO is required to devote to his position, as well as the commitment required to serve as our Chair. While our By-Laws and Corporate Governance Guidelines do not require that our Chair and CEO positions be separate, the Board believes that having separate positions and having an independent director serve as Chair is the appropriate leadership structure for us at this time. +Board Meetings +In fiscal year 2025, our Board held fourteen meetings. In addition to our Board meetings, our directors attend meetings of committees established by our Board on which they serve. Each of CPI’s directors attended at least 75% of the meetings of our Board and the committees on which he or she served during 2025 that were held when he or she was a director. Each of our directors is expected to attend each meeting of the Board and is strongly encouraged to attend each annual stockholder meeting, as provided in our Corporate Governance Guidelines. The eight directors that were then serving on the Board attended the 2025 annual meeting of stockholders. +Meetings of Non-Employee Directors +In accordance with our Corporate Governance Guidelines, our non-employee directors meet regularly in executive sessions of the Board without management present. Sandy Riley, our Chair of the Board, presides over these executive sessions. In the event that Mr. Riley is not available to lead these meetings, the presiding director is chosen by the non-employee directors in attendance. +Committees of the Board +The Board has three standing committees: the Audit Committee, the Compensation Committee and the Nominating Committee. The Nominating Committee, in conjunction with the Board, regularly evaluates committee composition to enhance the overall governance function of the Board of Directors and to address succession planning needs. The following chart sets forth the directors who currently serve as members of each of the Board committees as of the date of this proxy statement. +Audit +Compensation +Nominating +Directors +Committee +Committee +Committee +Thomas Furey +X +X +John Lowe +Ravi Mallela +X +Lisa Oleson +X +Nicholas Peters +C +X +H. Sanford Riley* +Marc Sheinbaum +C +X +X +Valerie Soranno Keating +X +X +C +* Chair of the Board +“C” Denotes member and chair of committee +“X” Denotes member +Audit Committee +The Audit Committee held ten meetings in 2025. The Board has determined that all of the members of the Audit Committee meet the independence criteria for purposes of serving on an audit committee under the applicable rules of The Nasdaq Stock Market (“Nasdaq”) and Rule 10A-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In addition, our Board has determined that Mr. Sheinbaum qualifies as an “audit committee financial expert,” as such term is defined in Item 407(d)(5) of Regulation S-K. The Audit Committee operates under a written charter setting forth its functions and responsibilities. A copy of the current charter is available on our website at investor.cpicardgroup.com or in printed form upon request. Refer to “Audit Committee Report” for a summary description of the Audit Committee’s functions and responsibilities. +11 +Table of Contents +Compensation Committee +The Compensation Committee held eight meetings in 2025. The Board has determined that all of the members of the Compensation Committee are independent as defined in Nasdaq rules. The Compensation Committee has overall responsibility for approving and evaluating the Company’s director and executive officer compensation plans, policies and programs and reviewing the disclosure of such plans, policies and programs to our stockholders in the Company’s annual proxy statement. The Compensation Committee utilizes an independent compensation consultant to assist it in its duties, and it may delegate certain of its authority to a subcommittee of the Compensation Committee, the CEO or another executive officer, including with respect to matters relating to the compensation of the Company’s employees other than the Company’s CEO and executive officers. The Compensation Committee operates under a written charter setting forth its functions and responsibilities. A copy of the current charter is available on our website at investor.cpicardgroup.com or in printed form upon request. +In consultation with the Company’s management, the Compensation Committee approves the Company’s executive compensation philosophy and oversees and monitors the Company’s executive compensation policies, plans and programs for the executive officers to assess whether they are consistent with the Company’s compensation philosophy and objectives, as well as the long-term interests of the Company’s stockholders. The Compensation Committee also evaluates and makes recommendations to the Board regarding the adequacy and effectiveness of non-employee director compensation. Our human resources executives and staff support the Compensation Committee in its work. These members of management work with compensation consultants (whose engagements have been approved by the Compensation Committee), accountants and legal counsel, as necessary, to implement the Compensation Committee’s decisions, monitor evolving competitive practices and make compensation recommendations to the Compensation Committee. Our human resources management, in conjunction with our independent compensation consultant, develops specific compensation recommendations for executive officers, which are first reviewed by senior management and then presented to the Compensation Committee. The Compensation Committee has final authority to approve, modify or reject such recommendations in its sole discretion and to make its decisions in executive session. The Compensation Committee approves all compensation of our executive officers, including equity awards. +Since 2018, the Compensation Committee has engaged Willis Towers Watson (“WTW”) as its independent compensation consultant. WTW reports directly to the Compensation Committee, including with respect to management’s recommendations of compensation programs and awards. The Compensation Committee has the sole authority to approve the scope and terms of the engagement of WTW and to terminate such engagement. WTW assisted the Compensation Committee with the development of competitive market data, compensation program design and related assessments of the Company’s executive and director compensation levels, evaluation of annual and long-term incentive compensation strategy and compilation and review of total compensation data for the Company’s NEOs (as defined in “Executive Compensation”). +The Compensation Committee has reviewed the independence of WTW in light of SEC rules regarding compensation consultants and has concluded that WTW’s work for the Compensation Committee does not raise any conflict of interest. +Nominating and Corporate Governance Committee +The Nominating Committee held six meetings in 2025. The Board has determined that all of the members of the Nominating Committee are independent as defined in Nasdaq rules. +The Nominating Committee is responsible for, among other things: (i) identifying individuals qualified to become members of the Board, consistent with criteria approved by the Board; (ii) recommending director nominees to the Board for election at the next annual meeting of the stockholders of the Company; (iii) in the event of a vacancy on or an increase in the size of the Board, recommending director nominees to the Board to fill such vacancy or newly established Board seat; (iv) recommending directors to the Board for membership on each committee of the Board; (v) establishing and reviewing annually our Corporate Governance Guidelines and Code of Business Conduct and Ethics; and (vi) overseeing the Company’s environmental, social and governance efforts, progress and disclosures. The Nominating Committee operates under a written charter setting forth its functions and responsibilities. A copy of the current charter is available on our website at investor.cpicardgroup.com or in printed form upon request. +Compensation Committee Interlocks and Insider Participation +None of the members of our Compensation Committee has in the past served as an officer or employee of the Company. None of the members of our Compensation Committee has any relationship requiring disclosure as a related party transaction. None of our executive officers currently serve, or in the past year has served, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on our Board or Compensation Committee. +12 +Table of Contents +Communications to the Board +Stockholders and interested parties can contact the Board or any director or group of directors (including the Chair of the Board or the independent directors) through written communication sent to InvestorRelations@cpicardgroup.com, Attention: Darren Dragovich, Chief Legal and Compliance Officer and Corporate Secretary. Our Corporate Secretary reviews all written communications and forwards to the Board copies of any such correspondence that is directed to the Board that, in the opinion of the Corporate Secretary, deals with the functions of the Board or Board committees or that he otherwise determines requires the Board’s or any Board committee’s attention. Concerns relating to accounting, internal accounting controls or auditing matters are immediately brought to the attention of our Audit Committee Chair, or may be submitted to the Audit Committee Chair in accordance with our Whistleblower Policy (available on our website at investor.cpicardgroup.com), and such concerns will be handled in accordance with procedures established by the Audit Committee with respect to such matters. From time to time, the Board may change the process by which stockholders may communicate with the Board. Any such changes will be reflected in our Corporate Governance Guidelines, which are posted on our website at investor.cpicardgroup.com. +Director Compensation +The components of the non-employee director compensation program design remained unchanged in 2025 from 2024 and consisted of a mix of cash retainers and equity awards in the form of stock-settled restricted stock units (“RSUs”), which are scheduled to vest on the first anniversary of the grant date. While the design of the non-employee director compensation program remained unchanged, the values of the program’s components were modified. After considering the recommendations of WTW based on its review of market data, the annual cash retainer was decreased by $10,000 to $90,000 and the value of annual equity award was increased by $25,000 to $125,000. All cash fees are paid to directors on a quarterly basis unless otherwise indicated and are prorated for any partial service periods. The following table sets forth our compensation program for our non-employee directors in 2025. Employees of the Company do not receive any additional compensation for their service on the Board and, accordingly, Mr. Lowe did not receive compensation as a director during 2025. Please see the “2025 Summary Compensation Table” for the compensation received by Mr. Lowe with respect to 2025. +Compensation Element +Value +Annual Cash Retainer +$ +90,000 +Annual Equity Award +$ +125,000 +Chairman of the Board Annual Cash Fee +$ +50,000 +Committee Chair Annual Cash Fee +$ +15,000 +Committee Member Annual Cash Fee +$ +7,500 +2025 Director Compensation +The following table summarizes the annual compensation that our non-employee directors received with respect to 2025. +Fees +Earned +Stock +Or Paid +Awards +Name +In Cash +(1) (2) +Total +Thomas Furey +$ +105,000 +$ +124,053 +$ +229,053 +Ravi Mallela +$ +97,500 +$ +124,053 +$ +221,553 +Lisa Oleson +$ +97,500 +$ +124,053 +$ +221,553 +Nicholas Peters +$ +112,500 +$ +124,053 +$ +236,553 +H. Sanford Riley +$ +140,000 +$ +124,053 +$ +264,053 +Marc Sheinbaum +$ +120,000 +$ +124,053 +$ +244,053 +Valerie Soranno Keating +$ +120,000 +$ +124,053 +$ +244,053 +(1) The amounts reported in this column represent the grant date fair value of the RSU awards granted to each non-employee director during 2025, calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“FASB Topic 718”) based on the closing stock price on the date of grant. The number of RSUs awarded were determined with reference to the average closing price of our Common Stock for the month in which the date of grant occurred. Each of the non-employee directors received RSUs granted on a quarterly basis with each RSU awarded scheduled to vest one year from the date of grant. See Note 16 of the Company’s audited consolidated financial statements included in our Form 10-K for the fiscal year ended December 31, 2025 for a discussion of the relevant assumptions used in calculating these amounts. Each of the non-employee directors had the following number of outstanding RSUs and no other equity awards outstanding as of December 31, 2025: Mr. Furey, 6,739 RSUs; Mr. Mallela, 6,739 RSUs; Ms. Oleson, 6,739 RSUs; Mr. Peters, 6,739 RSUs; Mr. Riley, 6,739 RSUs; Mr. Sheinbaum, 6,739 RSUs; and Ms. Soranno Keating, 6,739 RSUs. +(2) Effective January 1, 2024 non-employee directors could elect to defer settlement of the RSU awards until a separation from service. If so elected, the awards become Deferred Stock Units (“DSUs”) upon vest until separation of service at which time they are settled in shares of Common Stock equal to the number of DSUs. +13 +Table of Contents +Security Ownership of Certain Beneficial Owners, Directors and Management +The following table sets forth, as of March 24, 2026 (except as indicated below), beneficial ownership, as defined by SEC rules, of our Common Stock. Each of the persons listed below has sole voting and investment power with respect to the beneficially owned shares listed unless otherwise indicated. For purposes of the following table, beneficial ownership is determined in accordance with Exchange Act Rule 13d-3. In calculating the percentage ownership for each shareholder, we assumed that any options owned by an individual exercisable within 60 days of the date of this proxy statement are exercised, but the options owned by any other individual are not exercised. The percentage calculations set forth in the table are based on 11,458,988 shares of Common Stock outstanding on March 24, 2026 rather than based on the percentages set forth in stockholders’ Schedules 13G or 13D, as applicable, filed with the SEC. +Number of +Shares of +Percentage of +Common +Common +Stock +Stock +Owned +Owned +Beneficially +Beneficially +5% Beneficial Owners: +Tricor Pacific Capital Partners (Fund IV), Limited Partnership (1) +1,690,238 +14.8% +Tricor Pacific Capital Partners (Fund IV) US, Limited Partnership (1) +997,683 +8.7% +Tricor Pacific Capital Inc. (2) +2,176,056 +19.0% +Named Executive Officers and Directors: +Thomas Furey (3) +18,977 +* +John Lowe (4) +154,140 +1.3% +Ravi Mallela (3) +12,478 +* +Lisa Oleson (5) +5,452 +* +Nicholas Peters (3) +48,977 +* +H. Sanford Riley (3) +257,786 +2.2% +Marc Sheinbaum (3) +22,856 +* +Valerie Soranno Keating (3) +37,774 +* +Jeffrey Hochstadt (6) +34,782 +* +Toni Thompson (7) +13,471 +* +Total Current Executive Officers and Directors as a Group (16 individuals) (8) +667,739 +5.8% +* +Less than 1% +(1) Based on a Schedule 13G/A filed by Parallel49 on January 14, 2026. Each of Tricor Pacific Capital Partners (Fund IV), LP and Tricor Pacific Capital Partners (Fund IV) US, LP is managed by Parallel49 Equity, ULC, as the general partner. An investment committee of Tricor Pacific Capital Partners (Fund IV), LP and Tricor Pacific Capital Partners (Fund IV) US, LP has the power to vote or dispose of the shares held by such entities. The investment committee is comprised of Bradley Seaman, David Rowntree, J. Trevor Johnstone and Roderick Senft. The address of Parallel49 is c/o Parallel49 Equity, 225 East Deerpath Road, Suite 200, Lake Forest, IL 60045. +(2) Based on a Schedule 13D filed jointly by the Tricor Family Office and Tricor PMT25 Holdings Inc. on December 18, 2025. Tricor PMT25 Holdings Inc. is a wholly-owned subsidiary of, and controlled by, the Tricor Family Office. The Tricor Family Office holds, directly and indirectly, a portfolio of investments (including without limitation the shares of our Common Stock owned by the Tricor Family Office) on behalf of Roderick R. Senft and two trusts for the benefit of him and his family members. All voting and investment decisions relating to the shares of our Common Stock owned by the Tricor Family Office are made by or at the direction of the Tricor Family Office's board of directors, which consists of Mr. Senft and five other members. Mr. Senft disclaims beneficial ownership of the shares of our Common Stock owned by the Tricor Family Office. The address of the Tricor Family Office and Tricor PMT25 Holdings Inc. is 401 West Georgia St, Suite 1858, Vancouver, BC, Canada V6B 5A1. +(3) Includes 4,348 DSUs and 1,072 RSUs. +(4) Includes 87,580 Options and 11,262 RSUs. +(5) Includes 1,072 RSUs. +(6) Includes 7,371 Options and 2,730 RSUs. +(7) Includes 4,408 Options and 1,350 RSUs. +(8) Includes 109,547 Options, 26,088 DSUs and 25,433 RSUs. +14 +Table of Contents +Delinquent Section 16(a) Reports +Section 16(a) of the Securities Exchange Act requires directors, certain officers and all persons who beneficially own more than 10% of our Common Stock to file reports with the SEC with respect to beneficial ownership of and transactions in our securities. We have adopted procedures to assist our directors and executive officers in complying with the Section 16(a) filings. +Based solely upon our review of the copies of the filings that we received with respect to the fiscal year that ended December 31, 2025, and related written representations from certain reporting persons, we believe such filing requirements were timely satisfied except for two reports relating to two transactions, one filed by our affiliated stockholder Parallel49 on Form 4 and one filed by the Tricor Family Office on Form 3, that were filed subsequent to their due date. +EXECUTIVE OFFICERS +Management Transitions +In the first quarter of 2026, the Company announced changes to its senior leadership. Jeffrey Hochstadt, former Chief Financial Officer, ceased serving as Chief Financial Officer effective as of February 13, 2026 and will continue serving the Company through June 30, 2026 as an employee in an advisory capacity to assist the Company in the transition of the Chief Financial Officer role. Concurrently, Terra Grantham was appointed as Interim Chief Financial Officer in addition to her role as Senior Vice President, Enterprise Strategy and Growth. Additionally, in February 2026, Peggy O’Leary was promoted to Chief Commercial Officer, Toni Thompson was promoted to Chief Operating Officer, Rob Dixon was promoted to Chief Digital Officer, and Ernesto Boada was named Chief Technology Officer. +The following table sets forth certain information concerning each of our executive officers, including certain officers who are considered “Named Executive Officers” for purposes of this proxy statement: +Name +Age +Current Position +John Lowe +49 +President, Chief Executive Officer and Director +Donna Abbey Carmignani +50 +Chief Accounting Officer and Controller +Ernesto Boada +54 +Chief Technology Officer +Rob Dixon +43 +Chief Digital Officer +Darren Dragovich +53 +Chief Legal and Compliance Officer and Corporate Secretary +Terra Grantham +55 +Interim Chief Financial Officer +Peggy O'Leary +50 +Chief Commercial Officer +Toni Thompson +64 +Chief Operating Officer +Sonya Vollmer +52 +Chief Human Resources Officer +John Lowe. See “Directors and Corporate Governance” for Mr. Lowe’s biographical information. +Donna Abbey Carmignani has served as our Controller and Chief Accounting Officer since March 2022. Prior to joining the Company, Ms. Abbey provided financial and accounting consulting services to clients in various industries from January 2020 to March 2022. Prior to that, Ms. Abbey held roles of increasing responsibility at The Western Union Company (“Western Union”) (NYSE:WU), a multinational financial services company, from October 2010 to September 2018, including Vice President of Financial Reporting, Governance & Consolidations and Chief of Staff to the Chief Executive Officer. Prior to joining Western Union, Ms. Abbey worked in the audit practice of KPMG, a multinational professional services and accounting firm, from January 2003 to September 2010. Ms. Abbey holds a Bachelor of Science degree in Business Administration from Colorado State University and is a Certified Public Accountant in the State of Colorado. +Ernesto Boada was appointed Chief Technology Officer in February 2026 after joining the Company as Chief Information Officer in October 2024. Previously, Mr. Boada served as Co-Founder and Chief Technology Officer of Sunny Day Fund Solutions Inc., a financial services company specializing in employee savings programs from September 2023 to October 2024, directing the product and technology organizations while driving the modernization of the fintech platform. He served as Senior Vice President of Business Technology and Interim Chief Information Officer at Workday (NASDAQ:WDAY), a software company focused on human capital management, from September 2021 to September 2023 and Chief Technology Officer at Western Union from January 2018 to September 2021. During his career, he has held various leadership responsibilities at Visa, Intuit and Accenture and previously served on the board of directors for Sunny Day Fund and the Western Union Foundation. He currently serves on the board of directors for Coink. Mr. Boada holds a Bachelor of Science degree in Engineering from the Universidad de los Andes Bogotá, Colombia, and a Master of Business Administration degree from George Washington University. +Rob Dixon was appointed Chief Digital Officer in February 2026. Prior to that, Mr. Dixon served as Senior Vice President, Digital and Business Development, since 2024, and as Vice President, Digital and Business Development, from 2022 to 2024. Mr. Dixon served as Director, Product Management and Business Development, from 2019 to 2022. Prior to 2019, Mr. Dixon served in product management roles after joining the Company in 2016. Before joining the Company, Mr. Dixon held various leadership roles in product, portfolio management, and strategy for several companies including NCR Corporation, Fiserv, and TSYS. Mr. Dixon holds a Bachelor of Arts degree in Economics and Business Administration from Ohio University. +15 +Table of Contents +Darren Dragovich was appointed Chief Legal and Compliance Officer and Corporate Secretary in October 2024. Prior to joining the Company, Mr. Dragovich held roles of increasing responsibility at Western Union from June 2003 to October 2024, including most recently serving as Deputy General Counsel from November 2021 to October 2024 and Corporate Secretary from February 2023 to October 2024. Prior to joining Western Union, Mr. Dragovich worked in private practice with the firm Hogan & Hartson LLP (now known as Hogan Lovells) specializing in corporate transactional and securities law. Mr. Dragovich holds a Bachelor of Arts degree in Economics and Master of Arts degree in Organizational Behavior from Stanford University and a Juris Doctor from the University of Virginia School of Law. +Terra Grantham was appointed Interim Chief Financial Officer in February 2026. Ms. Grantham has also served as Senior Vice President, Enterprise Strategy and Growth since October 2025. Prior to that, Ms. Grantham served as Senior Vice President, Financial Planning and Analysis and Strategy where she also had responsibility for Treasury, since 2022, and as Vice President, Strategy and ESG from 2021 to 2022. Prior to 2021, Ms. Grantham served in increasingly senior roles in the Company’s finance, transformation, and strategy organizations. Before joining the Company in 2017, Ms. Grantham served in various roles at Western Union and Unilever, and has over 25 years of experience in senior roles in finance, strategy, and product development. Ms. Grantham received her Bachelor's degree in Economics from Grinnell College and a Master of Business Administration from the University of Michigan at Ann Arbor. +Margaret “Peggy” O’Leary was promoted to Chief Commercial Officer in February 2026 after serving as EVP Prepaid Solutions, Chief Digital and Development Officer since August 2024. She previously served as the Company’s SVP Prepaid Solutions, Chief Development and Digital Officer from January 2024 to August 2024, SVP Prepaid Solutions from December 2022 to January 2024, and VP of Sales for Personalization, Prepaid and Instant Issuance from January 2020 to December 2022. Ms. O’Leary joined CPI in April 2017 as Director of Sales and Client Services for Prepaid Solutions. Prior to joining the Company, Ms. O’Leary served as the Vice President Business Development for Jingit, a payments platform to drive consumer loyalty and engagement, since 2012. Prior to 2012, Ms. O’Leary held a variety of positions with increasing responsibilities including sales management, channel management, sales and client services at companies such as InteliSpend, Maritz, and Hallmark. Ms. O'Leary currently serves on the board of Gift Card Co Pty Ltd, doing business as “Karta.” Ms. O’Leary is a graduate of Hamline University and holds a Bachelor of Arts degree in Psychology. +Toni Thompson was promoted to Chief Operating Officer in February 2026 after serving as EVP Debit and Credit Solutions since August 2024. She joined the Company in August 2023 as SVP of Operations Debit and Credit. Prior to joining the Company, Ms. Thompson worked at RR Donnelley (NYSE:RRD), a leading global provider of multichannel business communications services and marketing solutions from 1999 to 2022, where she served in various executive positions, including as President of Retail Solutions from September 2016 to August 2023 and as SVP Solution Development from June 2013 to September 2016. Throughout her career, Ms. Thompson has held varied executive roles including operations management, business development and IT. Prior to joining RR Donnelley, she held IT leadership roles at Bekins Van Lines and Quick Response Services. Ms. Thompson holds a Bachelor of Arts degree in Business Administration from DePaul University. +Sonya Vollmer has served as our Chief Human Resources Officer since January 2022. Ms. Vollmer joined the Company in February 2021 as Director of Total Rewards and assumed the role of interim Chief Human Resources Officer in August 2021. Prior to joining the Company, Ms. Vollmer held positions of increasing responsibility at Charter Manufacturing Company, a metals manufacturing business, from February 2013 to February 2021, most recently serving as Director of Total Rewards. Prior to 2013, Ms. Vollmer held human resources leadership roles at Rockwell Automation, Teleflex, Inc. and Abbott Laboratories. She also served in consulting roles with Hewitt Associates (now Aon), and her own consulting firm. Ms. Vollmer holds a Bachelor of Arts degree in Economics from the University of Wisconsin-Parkside, and a Master of Business Administration degree from the University of Wisconsin-Milwaukee. +16 +Table of Contents +EXECUTIVE COMPENSATION +The following narrative describes our executive compensation program and the decisions of the Compensation Committee regarding the fiscal year 2025 compensation of our named executive officers (“NEOs”) each of whom served as an executive officer during the 2025 fiscal year. The Company qualifies as a “smaller reporting company” in accordance with Rule 12b-2 of the Exchange Act. For as long as we are a smaller reporting company, we are not required to include a Compensation Discussion and Analysis section in this proxy statement and have elected to comply with the scaled-down executive compensation disclosure requirements. +2025 NEOs +For fiscal year 2025, our NEOs were: +John Lowe +President, Chief Executive Officer and Director +Jeffrey Hochstadt (1) +Former Chief Financial Officer +Toni Thompson +Chief Operating Officer +(1) On February 13, 2026, the Company and Mr. Hochstadt agreed that he would cease serving as Chief Financial Officer effective immediately. Mr. Hochstadt will continue serving the Company through June 30, 2026 as an employee in an advisory capacity to assist the Company in the transition of the Chief Financial Officer role. Upon his June 30, 2026 departure, Mr. Hochstadt will be eligible to receive severance payments and benefits under the Company’s existing U.S. Severance and Change in Control Guidelines (the “Executive Severance Guidelines”), which are described below in “Executive Severance Guidelines”. +2025 Business Overview +Business Highlights +In 2025 we delivered solid sales growth, led by strong growth in our Debit and Credit segment, including contributions from the acquisition of Arroweye Solutions Inc. in May. Certain highlights of our business performance included: +● Total Net Sales (1) of $543.5 million, up 13% year-over year; +● Net Income of $15.0 million, down 23% year-over-year; and +● Adjusted EBITDA (2) of $96.5 million, up 5% year-over-year. +2025 performance ($ in millions) +(1) The term Total Revenue, as defined in the STIP (as defined below), is consistent with “Total Net Sales,” as included in the Company’s consolidated financial statements. +(2) Adjusted EBITDA is not a measurement of financial performance prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). See Annex A hereto for a reconciliation to Net Income, the most directly comparable GAAP financial measure. +17 +Table of Contents +Revenue for the Company in 2025 reflected strong performance from the Debit and Credit business, driven by the addition of Arroweye and higher sales of the Company’s contactless cards and instant issuance solutions. Prepaid sales declined compared to a very strong year in 2024, which included large sales of more complex, higher-value packaging solutions. Net income declined in 2025, impacted by acquisition and integration costs associated with the Arroweye transaction, while Adjusted EBITDA increased, driven by sales growth. The Company significantly increased cash provided by operating activities and Free Cash Flow in 2025 and advanced numerous business and strategic initiatives, including completion of a new state-of-the-art secure card production facility in Indiana and entry into the closed loop prepaid market. We believe we have a strong strategic plan to help our customers win and drive our future growth, supported by three primary growth pillars that underpin our value proposition. These pillars include our proprietary technology platform with a vast reach into the U.S. payments ecosystem, our marketable base of deep and broad relationships across the U.S. payments market, and our proven track record of delivering evolving payment solutions. For further details, we encourage you to review the financial results set forth in our Form 10 K for the fiscal year ended December 31, 2025. +As described in this “Executive Compensation” section, we believe our executive compensation program focuses on performance-based compensation elements and provides alignment with the Company’s financial and strategic priorities as well as stockholder interests. We have structured our compensation design features to incentivize our NEOs and other executive officers to pursue performance that increases stockholder value by rewarding top-line growth, profitability and non-financial business imperatives, and we employ competitive compensation levels to drive the retention, performance and engagement of our executive team, including our NEOs. Further, our programs are designed to incentivize over-achievement of goals by awarding compensation consistent with above-market performance when the Company exceeds its performance goals. +Summary of Our 2025 Compensation Decisions +The principal components of our 2025 executive compensation program consisted of (i) base salary, (ii) short-term incentives delivered in the form of quarterly cash payments and (iii) long-term incentives delivered in the form of equity awards and cash-settled long-term awards . We believe these components provide the appropriate mix of compensation to recruit and retain top-level talent, motivate our executive team to achieve the Company’s near-term financial objectives, and align compensation with stockholder value, all of which incentivize our executive team to continue improving business performance. Part of this strategy involves utilizing a short-term incentive plan (“STIP”) that rewards short-term incentive goal achievement with cash payments, as well as a long-term incentive plan (“LTIP”) which utilizes the Company’s Amended and Restated Omnibus Incentive Plan ("Omnibus Incentive Plan”) to grant equity-based and cash-settled long-term awards. Executives (including NEOs) received grants of cash-settled long-term awards tied to a two-year performance period (“PCAs”) in addition to stock-settled RSUs. +Pursuant to the 2025 LTIP plan design, grants to executive officers, including NEOs, are comprised of RSUs weighted at 67% of the annual target and PCAs weighted at 33% of the annual target, which LTIP target weighting remained the same as 2024. RSUs vest in equal annual installments on the first, second, and third anniversaries of the grant date, respectively. PCAs have a performance period ending on December 31, 2026 and payment of these awards is tied to our total shareholder return (“TSR”) performance relative to the Russell 2000 TSR (“Relative TSR”) and our cumulative free cash flow (“Cumulative Free Cash Flow”) during each fiscal year in the performance period. +The Compensation Committee approves our NEOs’ total compensation (base salary, short-term incentives and long-term incentives). +18 +Table of Contents +● +● +● +● +● +Factors that Guided 2025 Compensation Decisions +● +Our executive compensation philosophy +● +Degree of achievement of key financial goals for 2025 +● +Recommendations of our CEO (other than with respect to his own compensation) +● +Advice of the Compensation Committee’s independent compensation consultant +● +Market pay and governance best practices +● +Historical CPI compensation +2025 Compensation Program and Key Decisions +Base Salary +In December 2024 and February 2025, the Compensation Committee approved increases in base salaries in consideration of our NEOs’ performance, review of competitive market data and internal pay equity: +● +CEO: Mr. Lowe received a base salary increase of 4.0%, effective March 3, 2025. +● +Other NEOs: Mr. Hochstadt received an annual base salary increase of 4.0% and Ms. Thompson received an annual base salary increase of 2.0%, both effective March 3, 2025. +See “Elements of the 2025 Executive Compensation Program — Base Salary” for more information. +2025 Short-Term Incentive Plan (“2025 STIP”) +The 2025 STIP emphasized pay-for-performance and the achievement of critical near-term performance milestones. Under the 2025 STIP, the NEOs were eligible to earn quarterly cash bonus awards based on the achievement of pre-established financial goals (specifically the metrics were based on a weighting of 70% for Adjusted EBITDA and 30% for Net Sales). Each NEO’s individual incentive opportunity is determined by the Compensation Committee following a review of competitive market data and internal pay equity. Mr. Lowe’s STIP target increased by 4.0% over 2024, Mr. Hochstadt’s STIP target increased by 4.0% over 2024, and Ms. Thompson’s STIP target increased by 7.5% over 2024. +Based on the Company’s performance during 2025, the 2025 STIP payouts were 80% of target for the NEOs, which was due to achieving 99.8% of the Revenue target, translating to 98% Revenue payout, and achieving 96.2% of the Adjusted EBITDA target, translating to 72% Adjusted EBITDA payout. +See “Elements of the 2025 Executive Compensation Program — Short-Term Incentives” for more information. +2025 Long-Term Incentive Plan +Throughout 2025, the Compensation Committee granted RSUs quarterly under the Omnibus Incentive Plan to select employees of the Company, including the NEOs. The Compensation Committee granted PCAs that are based on achievement with respect to Relative TSR and Cumulative Free Cash Flow goals over a two-year performance period. These awards were determined in consideration of our NEOs’ performance and a review of competitive market data. +Based on the Company’s performance during the 2024–2025 performance period, the 2024 PCA payouts were 122% of target for the NEOs, which was due to a Relative TSR performance achievement in the 34th percentile and Cumulative Free Cash Flow achievement at 123% of target. The 2024 PCA were paid in March 2026, subject to the applicable NEO’s continued service through the payment date. +See “Elements of the 2025 Executive Compensation Program — Long-Term Incentives” for more information. +19 +Table of Contents +Executive Compensation Governance Highlights +The Compensation Committee reviews on an ongoing basis the Company’s executive compensation practices to evaluate whether they support the Company’s executive compensation philosophy and are aligned with stockholder interests. Our 2025 executive compensation practices include the following, each of which the Compensation Committee believes is supportive of our executive compensation philosophy and the interests of our stockholders: +What We Do +What We Don’t Do +✓ +Deliver a significant portion of compensation through performance-based, at-risk pay +✓ +Maintain a peer group for evaluating competitive market practices +✓ +Set pre-established performance targets designed to be challenging +✓ +Regularly review risks associated with compensation +✓ +Consult with an independent consultant on compensation levels and practices +✓ +Provide no executive perquisites +✓ +Annual say-on-pay vote +X +Provide automatic, annual increases in executive salaries +X +Maintain uncapped executive incentive plans +X +Award single-trigger cash severance in connection with a change in control +X +Re-price stock options without the prior approval of our stockholders +X +Permit hedging or pledging of equity +X +Enter into supplemental executive retirement plans +X +Provide excise tax gross-ups on termination-related payments +2025 Say-on-Pay Vote +In its compensation review process, the Compensation Committee considers whether the Company’s executive compensation program is aligned with the interests of the Company’s stockholders. As part of its review of the Company’s executive compensation program, the Compensation Committee considered the approval by approximately 98% of the votes cast for the Company’s say-on-pay vote at our 2025 Annual Meeting of Stockholders. The Compensation Committee determined that the Company’s executive compensation philosophies and objectives and compensation elements continued to be appropriate and did not make any changes to the Company’s executive compensation program in response to the 2025 say-on-pay vote. +Role of the Compensation Committee +In consultation with the CEO, the Compensation Committee establishes the general policies relating to senior management compensation and oversees the development and administration of such compensation programs. Our human resources executives and staff support the Compensation Committee in its work to implement the Compensation Committee’s decisions, monitor evolving competitive practices and make compensation recommendations to the Compensation Committee. Our human resources management, in conjunction with our independent compensation consultant, develops specific compensation recommendations for senior executives, which are first reviewed by senior management and then presented to the Compensation Committee. The Compensation Committee has final authority to approve, modify or reject these recommendations in its sole discretion. Members of management do not attend the portions of the Compensation Committee meetings relating to their own compensation, and the Compensation Committee regularly conducts executive sessions without management present. The Compensation Committee approves all compensation of our executive officers, including equity awards. +Role of the Independent Compensation Consultant +Since 2018, the Compensation Committee has engaged WTW as its independent compensation consultant. WTW is engaged by and reports directly to the Compensation Committee. The Compensation Committee has the sole authority to approve the scope and terms of the engagement of WTW and to terminate such engagement. In 2025, WTW assisted the Compensation Committee with the development of competitive market data, compensation program design and related assessments of the Company’s executive and director compensation levels, evaluation of short-term and long-term incentive compensation strategy, and compilation and review of total compensation data for the Company’s NEOs and provided ongoing evaluation of the compensation program. +The Compensation Committee has reviewed the independence of WTW in light of SEC rules regarding compensation consultants and has concluded that WTW is independent and its work for the Compensation Committee does not raise any conflict of interest. +20 +Table of Contents +Role of Market Data and the Peer Group +In order to gauge the competitiveness of our compensation program and to provide our NEOs with fair and market-competitive compensation, the Compensation Committee reviewed compensation practices and pay opportunities from general industry survey data as well as from a selection of publicly traded peer companies, as provided by WTW. The Company attempts to position itself to attract and retain qualified senior executives in the face of competitive pressures in its relevant labor markets, and we design our compensation practices with this goal in mind. +Specifically, in 2025, WTW analyzed information regarding the pay practices of a compensation peer group (as described below) to assist the Compensation Committee in determining pay for our CEO and Chief Financial Officer. In addition, the Company analyzed the pay practices of similarly sized general industry companies identified by WTW to assist the Compensation Committee in determining pay for our other executive officers. The compensation data resulting from this analysis was considered by the Compensation Committee in making 2025 executive compensation decisions. +The Compensation Committee reviewed and approved changes to our compensation peer group in 2025 to further align the peer group with the Company’s size and industry focus. The Compensation Committee approved the addition of Priority Technology Holdings, Inc. to our compensation peer group in 2025. The compensation peer group is comprised of companies that meet at least one of the following criteria: +● Similar in size and complexity to CPI (primarily based on revenue and EBITDA); +● In a similar or related technology-oriented industry; or +● In competition with CPI for executive talent. +The following peer group was used to evaluate 2025 executive compensation decisions: +Executive Compensation Peer Group +Axcelis Technologies, Inc +FormFactor, Inc. +Repay Holdings Corporation +Badger Meter, Inc. +International Money Express, Inc. +Veeco Instruments, Inc. +CompoSecure, Inc. +MeridianLink, Inc. +Verra Mobility Corporation +CTS Corporation +Mirion Technologies, Inc. +Vishay Precision Group, Inc. +Ennis, Inc. +Priority Technology Holdings, Inc. +EVERTEC, Inc. +Qualys, Inc. +Elements of the 2025 Executive Compensation Program +Our 2025 executive compensation program consisted of fixed pay and variable pay, including cash and non-cash components. The chart below summarizes the various elements of our 2025 executive compensation program and the objective and key features of each element. +21 +Table of Contents +Objective +Type of +Compensation +Key Features +Base Salary +A standard compensation element in executive compensation packages, offering market competitive fixed compensation to attract and retain talent. +Cash +● +Reflects individual skills, experience, responsibilities and performance over time. +● +Provides a consistent source of income. +Short-Term +Incentive +A cash-based award that encourages executives to focus on specific short-term corporate and/or business unit performance goals. +Cash +● +Performance-based award tied to achievement of critical short-term financial goals and priorities. +● +Pays only if threshold performance levels are met or exceeded. +Long-Term +Incentive — +PCAs +A cash-based award that encourages executives to focus on strong TSR and Cumulative Free Cash Flow performance. +Cash +● +Performance-based award tied to achievement of critical long-term financial goals and priorities. +● +Pays only if threshold performance levels are met or exceeded. +Long-Term +Incentive — +RSUs +Rewards stockholder value creation, enhances executive stock ownership and promotes retention. +Equity +● +At-risk award, with value based exclusively upon the value of our Common Stock. +● +Aligns executive and stockholder interests. +Other Benefits +Provide programs for employees to pursue physical, financial and mental wellbeing through retirement and health and welfare benefits. +Benefit +● +Competitive broad-based benefits available to all employees. +Employment and +Post-Termination +Arrangements +Protects the Company and NEOs during certain termination events, through the use of selective employment agreements, an executive severance and change-in-control policy, and various restrictive covenants. +Benefit +● +Facilitates an orderly transition in the event of management changes. +● +Helps ensure NEOs remain focused on creating sustainable performance in case of risk of job loss. +● +Provides confidentiality, non-compete and non-solicit protections for the Company. +Base Salary +Base salaries established by the Compensation Committee for the Company’s executive officers are intended to reflect each individual’s responsibilities, experience, historical performance and other discretionary factors deemed relevant by the Company and have generally been set at levels deemed necessary to attract and retain individuals with superior talent. Base salaries are also designed to provide executive officers with steady cash flow during the course of the fiscal year that is not contingent on short-term variations in the Company’s operating performance. The base salaries of our NEOs in 2025 are set forth below: +2025 Base Salary +(As of December 31, 2025) +John Lowe +$ +650,000 +Jeffrey Hochstadt +$ +442,000 +Toni Thompson +$ +484,500 +Short-Term Incentives +The Company believes that establishing cash incentive opportunities is an important factor in both attracting and retaining qualified and highly skilled executives and in motivating our executives to achieve the Company’s near-term financial objectives. To achieve these objectives, the Company maintains a quarterly short-term incentive plan with an annual component, or the “STIP.” The quarterly design of the STIP is intended to reward the achievement of critical quarterly financial performance objectives and the annual component is tied to annual financial performance objectives. As such, payments may vary quarter to quarter. +22 +Table of Contents +STIP Target Awards +Target awards for NEOs are determined by the Compensation Committee and may be adjusted from time to time based on market data and internal pay equity review. All awards are paid based on corporate-wide achievement. For 2025, our NEOs were eligible to receive the following target bonus opportunities under the STIP: +Named Executive Officer +% of Base Salary +Target Annual +STIP Payment +Opportunity +John Lowe +100% +$ +650,000 +Jeffrey Hochstadt +82% +$ +364,000 +Toni Thompson +63% +$ +306,000 +2025 STIP Metrics +Under the 2025 STIP, executives (including NEOs) were eligible to earn cash bonuses based on the achievement of the following Company-wide metrics and relative weights: +Description +Metrics +70% based on achievement of Adjusted EBITDA (1) +30% based on achievement of Net Sales (2) +(1) “Adjusted EBITDA” is a financial measure that is not calculated according to GAAP. For purposes of the STIP, we define Adjusted EBITDA as EBITDA (which represents earnings before interest, taxes, depreciation and amortization, all on a continuing operations basis) adjusted for (i) stock compensation expense, (ii) foreign currency changes, (iii) impairments, (iv) restructuring charges, (v) severance and other charges, (vi) loss on debt extinguishment, (vii) amounts related to a sales tax contingency liability, and (viii) other items that are unusual in nature, infrequently occurring or not considered part of core operations. See Annex A hereto for a reconciliation to Net Income, the most directly comparable GAAP financial measure. +(2) The term Net Sales, as defined in the STIP, is consistent with “Total Net Sales,” as included in the Company’s consolidated financial statements, for all references contained herein. +2025 STIP Results +Our STIP Net Sales and Adjusted EBITDA annual goals are broken out on a quarterly basis for purposes of calculating the quarterly STIP payments. To determine payouts, the Company measures performance on both a quarterly and an annual basis. Each quarterly payment is “capped” at 100% of target, amounts that exceed the quarterly cap are subject to a year-end “true-up”. This design was implemented to further enhance the motivational effect of the STIP and provide a continual incentive to improve performance throughout the year and to align to the Company’s annual operating plan and reflect the planned seasonality of our business and operations. +Achievement of performance goals is calculated on the basis of straight-line interpolation between the threshold, target and maximum bonus opportunities for each applicable metric underlying the performance goal. Quarterly and annual achievement under the STIP can range from 0% to 200%, based on Company performance; however, any payment made under the STIP with respect to each quarter is capped at 100% of the quarterly target incentive, with amounts in excess of the cap, up to 200%, payable with the annual payout. The targeted cumulative Adjusted EBITDA metric also serves as a trigger as CPI must achieve the overall Adjusted EBITDA threshold performance in order for any year-end STIP payments to fund . Based on Company performance in 2025, our STIP paid out at 80% of target, primarily due to strong Net Sales performance. +Long-Term Incentives +Together with STIP awards, the LTIP awards are designed to balance the achievement of critical near-term performance objectives with long-term strategic goals and the retention of our high performing executive team. We believe such awards also allow us to continue to recruit top-level talent and align compensation with stockholder value, all of which incentivize our executive team to continue improving our business. Generally, LTIP awards granted by the Company are subject to various conditions, including the executive’s continued service to the Company, time-based vesting conditions, and acceleration of vesting in the event of the executive’s death, termination due to disability, retirement or in connection with a change in control of the Company. +23 +Table of Contents +In 2025, the LTIP plan design remained the same as in 2024, moving the focus away from time-based awards and including a performance-based component to incentivize and align executive performance with key financial metrics beyond stock price alone. Throughout 2025, the Compensation Committee granted RSUs on a quarterly basis under the Omnibus Incentive Plan to select employees of the Company, including the NEOs, valued at 67% of the annual LTIP target, which vest ratably over three years beginning on the first anniversary of the grant date. PCAs, valued at 33% of the annual LTIP target and settled in cash, were awarded to select employees of the Company, including the NEOs, on the last business day of March 2025, with a two-year performance period from January 1, 2025 through December 31, 2026. This award is tied to the Company achieving the midpoint, or P50, of Relative TSR as well as achieving the target Cumulative Free Cash Flow goal established by the Compensation Committee for each fiscal year over the performance period. Because vesting of the PCAs is tied to the Company’s Relative TSR performance, these awards are considered to be stock-based compensation under Financial Accounting Standard Board Accounting Standards Codification Topic 718 (“ASC 718”). In accordance with ASC 718, the 2025 PCAs did not have a grant date fair value for accounting purposes in 2025 because the cumulative performance targets for the Cumulative Free Cash Flow metric were not established in 2025. Thus, the value of these awards is excluded from the 2025 Summary Compensation Table and in accordance with SEC disclosure rules, will be reflected as 2026 compensation in the 2026 Summary Compensation Table. In accordance with ASC 718, the grant date fair value of the 2024 PCAs is included in the 2025 Summary Compensation Table because the cumulative performance targets for the Cumulative Free Cash Flow metric were established in 2025. +Target PCA opportunity for the NEOs awarded in 2025 and expected to be paid in 2027, assuming achievement of the applicable performance metrics and continued service through the payment date, were as follows: +Named Executive Officer +Target PCA Opportunity +John Lowe +$ +825,000 +Jeffrey Hochstadt +$ +189,790 +Toni Thompson +$ +108,900 +24 +Table of Contents +The following table sets forth the details of the RSUs and PCAs granted to our NEOs in 2025 for purposes of ASC 718: +PCA Grant +# RSUs +RSU Grant Date +Date Fair +Named Executive Officer +Grant Date +Granted (1) +Fair Value +Value (2) +John Lowe +2/27/2025 +— +$ +— +$ +949,080 +John Lowe +3/31/2025 +14,375 +419,319 +— +John Lowe +5/30/2025 +18,669 +415,572 +— +John Lowe +8/29/2025 +26,106 +406,731 +— +John Lowe +11/28/2025 +31,180 +421,242 +— +Jeffrey Hochstadt +2/27/2025 +— +$ +— +$ +238,694 +Jeffrey Hochstadt +3/31/2025 +3,306 +96,436 +— +Jeffrey Hochstadt +5/30/2025 +4,294 +95,584 +— +Jeffrey Hochstadt +8/29/2025 +6,005 +93,558 +— +Jeffrey Hochstadt +11/28/2025 +7,172 +96,894 +— +Toni Thompson +2/27/2025 +— +$ +— +$ +105,348 +Toni Thompson +3/31/2025 +1,897 +55,335 +— +Toni Thompson +5/30/2025 +2,464 +54,849 +— +Toni Thompson +8/29/2025 +3,446 +53,689 +— +Toni Thompson +11/28/2025 +4,115 +55,594 +— +(1) The RSUs vest 33.4% on the first anniversary of the grant date, 33.3% on the second anniversary of the grant date and 33.3% on the third anniversary of the grant date, subject to the NEO’s continued employment through the applicable vesting date or as otherwise provided in the underlying award agreement or the applicable NEO’s employment agreement. The RSUs are stock-settled awards. +(2) This column represents the 2024 PCAs that vest at the end of the two-year performance period from the award date and are settled in cash, for which the grant date fair value was recognized in 2025 in accordance with ASC 718 as a result of the establishment in 2025 of the cumulative performance targets for the Cumulative Free Cash Flow metric. The grant date fair value is calculated using a Monte Carlo Simulation as of the grant date. +Other Benefits +The Company maintains the CPI Card Group, Inc. 401(k) Plan (the “401(k) Plan”), which is designed to be a qualified defined contribution plan under the provisions of the Internal Revenue Code, covering substantially all employees who meet certain eligibility requirements. Under the 401(k) Plan, participants may defer their salary subject to statutory limitations and may direct the contributions among various investment accounts. The Company matches 100% of a participant’s first 3% of deferrals and 50% of the next 2% of deferrals. The matching contributions are fully vested at the time of the match. +Termination or Change in Control +Pursuant to their respective employment or post-termination arrangements, each of our NEOs may be entitled to certain payments and benefits in certain termination situations or upon a change in control. We believe that our severance arrangements would help facilitate an orderly transition in the event of changes in management. +Additional Compensation Governance Practices +Compensation Risk Assessment +The Compensation Committee regularly reviews the risk associated with the Company’s compensation programs. As part of this process, the Compensation Committee reviewed a comprehensive risk assessment conducted by WTW in 2019 and, at the time, concluded that our compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on the Company. In 2024, the Compensation Committee discussed with WTW the risk assessment of the Company’s executive compensation programs and any year-over-year changes that could impact the risk assessment. The Compensation Committee and WTW concluded that no program changes were implemented in 2024 that would materially affect the existing risk profile of the Company’s compensation program and that there were no material risks to the Company’s existing executive compensation program. Accordingly, the Compensation Committee and WTW did not recommend any changes the Company’s executive compensation program in 2024 on this basis. In 2025, WTW reviewed changes made to the Company’s executive compensation programs since the 2024 review and reaffirmed the findings of the 2024 study. +25 +Table of Contents +Insider Trading Policy +The Company has an Insider Trading Policy governing the purchase, sale, and/or other dispositions of our securities by directors, officers, employees, agents and consultants, as well as the Company itself, that is designed to promote compliance with insider trading laws, rules and regulations, and applicable listing standards. The Company’s Insider Trading Policy prohibits CPI officers and directors from purchasing financial instruments and engaging in certain transactions designed to hedge against a decrease in the value of the Company’s securities, including short sales, publicly traded options, hedging and monetization transactions, margin sales, pledges of collateral and standing limit orders. A copy of the Insider Trading Policy is included as an exhibit to the Company’s Form 10-K for the year-ended December 31, 2025. +Clawback Policy +On October 9, 2023, the Company approved and adopted a revised clawback policy (the “Clawback Policy”), which describes the circumstances in which CPI will be required to recover, and executive officers will be required to repay or return, erroneously awarded compensation. The Clawback Policy requires the recoupment of compensation received by executive officers (defined within the meaning of Rule 10D-1 under the Exchange Act) during the three fiscal years immediately preceding the date the Company is required to prepare an accounting restatement due to material noncompliance with any financial reporting requirement under the securities laws. Among other things, the Clawback Policy covers incentive-based compensation awarded on the basis of financial measures, including TSR and stock price; requires recovery without regard to culpability; and prohibits the Company from insuring, reimbursing insurance or indemnifying any current or former executive officer against the loss of erroneously awarded compensation. A copy of the Clawback Policy is included as an exhibit to the Company’s Form 10-K for the year-ended December 31, 2025. +Stock Ownership Guidelines +Since 2016, the Company has maintained stock ownership guidelines that apply to our directors and senior executives, including our NEOs. The Company did this to further align the interests of our leaders and the Board of Directors with those of our stockholders and further promote our commitment to sound corporate governance. Under the guidelines, once appointed to their respective role, executives and directors have up to five years to accumulate shares and share equivalents that have a market value equal to or greater than a prescribed multiple of annual salary or annual retainer fees. For directors this multiple is five times the cash portion of the annual retainer, for our CEO this multiple is five times base salary, and for all other executive officers this multiple is two times base salary. +26 +Table of Contents +2025 Summary Compensation Table +The 2025 Summary Compensation Table discloses the compensation information for fiscal year 2025 and, to the extent required by applicable SEC disclosure rules, fiscal year 2024, for the NEOs. +Nonqualified +Non-Equity +Deferred +Incentive Plan +Compensation +All Other +Name and Principal Position +Year +Salary +Bonus +Stock Awards (1) +Option Awards +Compensation (2) +Earnings +Compensation (3) +Total +Named Executive Officers +John Lowe, President, Chief Executive Officer and Director +2025 +$ +648,365 +$ +— +$ +2,611,944 +$ +— +$ +520,000 +$ +— +$ +14,000 +$ +3,794,309 +2024 +$ +621,154 +$ +— +$ +3,102,679 +$ +— +$ +783,125 +$ +— +$ +38,541 +$ +4,545,499 +Jeffrey Hochstadt, Former Chief Financial Officer +2025 +$ +440,888 +$ +— +$ +621,166 +$ +— +$ +291,200 +$ +— +$ +12,411 +$ +1,365,665 +2024 +$ +423,942 +$ +— +$ +371,713 +$ +— +$ +438,550 +$ +— +$ +9,281 +$ +1,243,486 +Toni Thompson, Chief Operating Officer +2025 +$ +484,792 +$ +— +$ +324,815 +$ +— +$ +244,800 +$ +— +$ +14,000 +$ +1,068,407 +2024 +$ +464,455 +$ +— +$ +193,585 +$ +— +$ +356,541 +$ +— +$ +13,953 +$ +1,028,534 +(1) The amounts reported in this column for 2025 represent the grant date fair value of the 2025 RSU awards and 2024 PCAs, and for 2024 represent the grant date fair value of the 2024 RSU awards (and, in the case of Mr. Lowe, 2024 PSU Award), as calculated in accordance with FASB Topic 718. The amount included in the Stock Awards column for Mr. Lowe’s 2024 PSU award is calculated based on the probable satisfaction of the performance conditions for such award as of the date of grant. Under FASB ASC Topic 718, the vesting condition related to Mr. Lowe’s 2024 PSU award is considered a market condition and not a performance condition. Accordingly, there is no grant date fair value below or in excess of the amount reflected in the table above for the 2024 PSUs that could be calculated and disclosed based on achievement of the underlying market condition. Because vesting of the 2024 and 2025 PCAs is tied to the Company’s Relative TSR performance, these awards are considered to be stock-based compensation under ASC 718. In accordance with ASC 718, the 2024 PCAs had a grant date fair value for accounting purposes in 2025 because the cumulative performance targets for the Cumulative Free Cash Flow metric were established in 2025. In accordance with ASC 718, the 2025 PCAs did not have a grant date fair value for accounting purposes in 2025 because the cumulative performance targets for the Cumulative Free Cash Flow metric were not established in 2025, and therefore, the value of the 2025 PCAs is excluded from the 2025 Summary Compensation Table and, in accordance with SEC disclosure rules, will be reflected as 2026 compensation in the 2026 Summary Compensation Table. See Note 16 of the Company’s audited consolidated financial statements included in our Form 10-K for the fiscal year ended December 31, 2025 for a discussion of the relevant assumptions used in calculating these amounts. +(2) Represents performance-based bonuses earned under the Company’s STIP for the applicable year. Please see the section entitled “Elements of the 2025 Executive Compensation Program — Short-Term Incentives” above for further information regarding the 2025 STIP. +(3) All Other Compensation represents: (1) employer matching contributions under the 401(k) Plan that the Company made in 2025 and 2024, (2) with respect to Mr. Lowe in 2024, reimbursement for attorney fees in connection with the negotiation of his employment agreement, and (3) with respect to Ms. Thompson in 2024, a home office stipend. +27 +Table of Contents +Outstanding Equity Awards at 2025 Fiscal Year-End +The Outstanding Equity Awards at 2025 Fiscal Year-End Table discloses the outstanding equity awards held by the NEOs as of December 31, 2025. +Option Awards +Stock Awards +Number of +Number of +Equity Incentive +Equity Incentive +Securities +Securities +Number of +Value of +Plan Awards: +Plan Awards: +Underlying +Underlying +Shares of +Shares of +Number of Unearned +Market or Payout Value +Unexercised +Unexercised +Option +Stock that +Stock that +Shares, Units, or +Of Unearned Shares, Units +Options +Options +Exercise +Option +Grant Date +Have Not +Have Not +Other Rights That +or Other Rights That +Grant Date +(Exercisable) (1) +(Unexercisable) (2) +Price +Expiration +For Stock +Vested (3) +Vested (4) +Have Not Vested +Have Not Vested (6) +Name +For Options +(#) +(#) +($) +Date +Awards +(#) +($) +(#) +($) +John Lowe +7/2/2018 +75,000 +— +$ +1.98 +7/2/2028 +— +— +$ +— +— +$ +— +9/21/2021 +7,885 +— +29.62 +9/21/2028 +— +— +— +— +— +10/5/2021 +253 +— +30.53 +10/5/2028 +— +— +— +— +— +3/31/2023 +603 +— +45.01 +3/31/2030 +— +— +— +— +— +5/31/2023 +1,021 +— +26.61 +5/31/2030 +— +— +— +— +— +— +— +— +— +— +6/9/2023 +3,401 +49,927 +— +— +8/31/2023 +1,302 +— +20.67 +8/31/2030 +8/31/2023 +3,955 +58,059 +— +— +11/30/2023 +1,516 +— +17.79 +11/30/2030 +11/30/2023 +5,650 +82,942 +— +— +— +— +— +— +— +1/25/2024 +40,000 +(7) +587,200 +60,000 +(5) +880,800 +— +— +— +— +— +3/29/2024 +12,938 +189,930 +— +— +— +— +— +— +— +5/31/2024 +9,530 +139,900 +— +— +— +— +— +— +— +8/30/2024 +8,260 +121,257 +— +— +— +— +— +— +— +11/29/2024 +8,122 +119,231 +— +— +— +— +— +— +— +2/27/2024 +— +805,200 +(8) +— +— +— +— +— +— +— +2/27/2025 +— +— +— +825,000 +(9) +— +— +— +— +— +3/31/2025 +14,375 +211,025 +— +— +— +— +— +— +— +5/30/2025 +18,669 +274,061 +— +— +— +— +— +— +— +8/29/2025 +26,106 +383,236 +— +— +— +— +— +— +— +11/28/2025 +31,180 +457,722 +— +— +Jeffrey Hochstadt +5/15/2023 +3,776 +— +$ +27.04 +5/15/2030 +— +— +$ +— +— +$ +— +5/31/2023 +956 +— +26.61 +5/31/2030 +— +— +— +— +— +— +— +— +— +— +6/9/2023 +2,123 +31,166 +— +— +8/31/2023 +1,219 +— +20.67 +8/31/2030 +8/31/2023 +2,468 +36,230 +— +— +11/30/2023 +1,420 +— +17.79 +11/30/2030 +11/30/2023 +3,526 +51,762 +— +— +— +— +— +— +— +3/29/2024 +3,252 +47,739 +— +— +— +— +— +— +— +5/31/2024 +2,396 +35,173 +— +— +— +— +— +— +— +8/30/2024 +2,076 +30,476 +— +— +— +— +— +— +— +11/29/2024 +2,042 +29,977 +— +— +— +— +— +— +— +2/27/2024 +— +202,508 +(8) +— +— +— +— +— +— +— +2/27/2025 +— +— +— +189,790 +(9) +— +— +— +— +— +3/31/2025 +3,306 +48,532 +— +— +— +— +— +— +— +5/30/2025 +4,294 +63,036 +— +— +— +— +— +— +— +8/29/2025 +6,005 +88,153 +— +— +— +— +— +— +— +11/28/2025 +7,172 +105,285 +— +— +Toni Thompson +8/31/2023 +3,414 +— +$ +20.67 +8/31/2030 +— +— +$ +— +— +$ +— +11/30/2023 +994 +— +17.79 +11/30/2030 +— +— +— +— +— +— +— +— +— +— +3/29/2024 +1,434 +21,051 +— +— +— +— +— +— +— +5/31/2024 +1,056 +15,502 +— +— +— +— +— +— +— +8/30/2024 +1,238 +18,174 +— +— +— +— +— +— +— +11/29/2024 +1,216 +17,851 +— +— +— +— +— +— +— +2/27/2024 +— +89,377 +(8) +— +— +— +— +— +— +— +2/27/2025 +— +— +— +108,900 +(9) +— +— +— +— +— +3/31/2025 +1,897 +27,848 +— +— +— +— +— +— +— +5/30/2025 +2,464 +36,172 +— +— +— +— +— +— +— +8/29/2025 +3,446 +50,587 +— +— +— +— +— +— +— +11/28/2025 +4,115 +60,408 +— +— +(1) This column includes non-qualified stock options ( “ Options ” ) that have vested and have not been exercised. +(2) This column includes remaining Options that have not vested as of December 31, 2025. Options generally vest in equal annual installments over a two-year period beginning on the first anniversary of the grant date, subject to continued service through such date or as otherwise provided for in the applicable award agreement. +(3) Except as otherwise indicated, this column includes unvested RSUs. Except where otherwise indicated, RSUs generally vest in equal annual installments over a three-year period beginning on the first anniversary of the grant date, subject to continued service through such date or as otherwise provided for in the applicable award agreement. +(4) This column represents the market value of unvested RSUs, which is based on the $14.68 closing price of a share of our Common Stock on December   31, 2025. +(5) This column represents unvested PSUs granted to Mr. Lowe on January 25, 2024, which will be earned in equal one-third increments upon the attainment of the rolling weighted average closing price of the Company ’ s Common Stock equaling or exceeding each of $35.00, $50.00 and $65.00, in each case, for at least 90 consecutive trading days (each, a “ Stock Price Hurdle ” ) during a five-year performance period commencing on the grant date and continued service through the four-year anniversary of the grant date, or as otherwise provided for in the applicable award agreement. +28 +Table of Contents +(6) This column represents the market value of unvested PSUs and PCAs that remain subject to performance-vesting conditions as of December 31, 2025, which is based on the $14.68 closing price of a share of our Common Stock on December   31, 2025. +(7) Represents unvested RSUs which vest 100% on the fourth anniversary of the grant date, subject to continued service through such date or as otherwise provided for in the applicable award agreement. +(8) Represents the dollar value of 2024 PCAs deemed earned based on achievement of performance-vesting conditions as of December 31, 2025, which remained subject the applicable NEO ’ s continued service through the payment date in March 2026. The grant date set forth in the table above represents the date of approval of the 2024 PCAs, which differs from the later grant date established for purposes of ASC 718 as a result of certain performance targets being established in the subsequent fiscal year. +(9) Represents the dollar value of 2025 PCAs based on target achievement of performance-vesting conditions. Please see the section entitled “ Elements of the 2025 Executive Compensation Program — Long-Term Incentives ” above for further information regarding the vesting conditions applicable to the 2025 PCAs. The grant date set forth in the table above represents the date of approval of the 2025 PCAs, which differs from the later grant date established for purposes of ASC 718 as a result of certain performance targets being established in the subsequent fiscal year. +Employment and Severance Arrangements +Mr. Lowe’s Employment Agreement +Mr. Lowe and the Company entered into an Employment and Non-Competition Agreement effective January 24, 2024 (the “Lowe Employment Agreement”) in connection with his appointment as President and CEO. The Lowe Employment Agreement provides for an initial employment term commencing on January 25, 2024 and ending on February 28, 2029, and will automatically renew for additional one-year terms until terminated by either party. Pursuant to the Lowe Employment Agreement, Mr. Lowe received an initial annual base salary of $625,000 and is eligible for a target annual cash bonus equal to 100% of his base salary, based on the achievement of performance metrics approved by the Compensation Committee. During each calendar year during the employment term, Mr. Lowe will be eligible to receive awards under the Omnibus Incentive Plan, with a target grant date value of at least $2,000,000. In connection with his 2024 promotion, Mr. Lowe received additional long-term incentive awards in the form of (i) PSUs, with respect to 60,000 shares of Common Stock and (ii) RSUs, with respect to 40,000 shares of Common Stock. The Company agreed to reimburse Mr. Lowe for up to $25,000 in reasonable attorneys’ fees incurred by him in connection with the negotiation of the Employment Agreement. +In the event of a termination of his employment with the Company due to his death or disability, by the Company without cause or by Mr. Lowe for good reason (each, a “Qualifying Termination”), subject to his execution and delivery of a release of claims, Mr. Lowe will receive (i) severance payments equal to 1.5 times the sum of Mr. Lowe’s annual base salary and target bonus for the year of the termination, (ii) a pro-rated bonus payment for the year of the termination, based on the Company’s actual performance, (iii) reimbursement for the cost of continuation coverage under the Company’s health and welfare plans for up to 18 months, and (iv) except in the case of a termination due to death or disability, six months of outplacement services. If Mr. Lowe’s Qualifying Termination occurs within 24 months following a change in control of the Company, or if a Qualifying Termination occurs followed by a change in control within six months, then Mr. Lowe will instead receive (i) severance payments equal to two times the sum of Mr. Lowe’s annual base salary and target bonus for the year of the termination, (ii) a pro-rated bonus payment for the year of the termination, based on the Company’s actual performance, (iii) reimbursement for the cost of continuation coverage under the Company’s health and welfare plans for up to 24 months, (iv) except in the case of a termination due to death or disability, six months of outplacement services and (v) his outstanding equity awards will vest in full, based on target performance with respect to any performance-based awards; provided, however, that the PSU awards will only vest to the extent the applicable Stock Price Hurdles have been achieved on or prior to the change in control of the Company. +Mr. Lowe will be subject to certain non-competition and non-solicitation covenants for 18 months following the termination of his employment with the Company for any reason. +Executive Severance Guidelines +On June 22, 2017, the Company adopted the Executive Severance Guidelines, applicable to executive officers of the Company (including NEOs) who are not otherwise parties to individual employment or severance agreements providing for benefits upon a termination of employment. Under the Executive Severance Guidelines, if the employment of an eligible officer is terminated without “cause” or due to a resignation for “good reason,” not in connection with a “change in control” (each as defined in the Executive Severance Guidelines) and subject to the execution, delivery and non-revocation of a release of claims, he or she would be eligible to receive cash severance equal to one times the sum of his or her base salary plus annual bonus target (or 1.5 times the sum of base salary and annual bonus target for a CEO participant). For such a termination occurring within the 24 months following a change in control of the Company, the applicable severance multiple would be increased to 1.5 times for all other eligible officers (or 2.0 times for a CEO participant). In addition, the Company would continue to pay a portion of the cost of medical, dental and vision benefits on behalf of an eligible officer, such that the officer’s contribution would remain as it were for an active officer, for the greater of the severance period or such officer’s eligibility for COBRA continuation coverage, and the Company may provide, in its discretion, up to six months of outplacement services. Mr. Lowe does not participate in the Executive Severance Guidelines as his severance entitlements are governed by the Lowe Employment Agreement as described above. As noted above, on February 13, 2026, the Company and Mr. Hochstadt agreed that he would cease serving as the Company’s Chief Financial Officer effective immediately. Mr. Hochstadt will continue serving the Company through June 30, 2026 as an employee in an advisory capacity to assist the Company in the transition of the Chief Financial Officer role. Upon his June 30, 2026 departure, Mr. Hochstadt will be eligible to receive severance payments and benefits under the Executive Severance Guidelines. +29 +Table of Contents +Pay vs. Performance +Summary +Summary +Compensation +Compensation +Average Summary +Value of Initial +Compensation +Compensation +Actually +Actually +Compensation Table Total +Average Compensation +Fixed $100 Investment +Table Total for +Table Total for +Paid to +Paid to +Table Total for +Actually Paid +Based On: Total +Net Income +Year (1) +Lowe ($) (2) +Scheirman ($) (2) +Lowe ($) (3) +Scheirman ($) (3) +Non-PEO NEOs ($) (2) +for Non-PEO NEOs ($) (3) +Shareholder Return ($) (4) +(in thousands) ($) +2025 +3,794,309 +- +403,598 +- +1,217,036 +781,832 +41 +14,950 +2024 +4,545,499 +5,236,584 +6,422,375 +7,136,835 +1,108,340 +1,240,891 +83 +19,521 +2023 +- +6,072,567 +- +5,292,252 +1,663,181 +1,489,262 +53 +23,985 +(1) The principal executive officers (“PEOs”) and other NEOs for the applicable years were as follows: +2025: John Lowe served as the Company’s PEO, and Jeff Hochstadt and Toni Thompson served as NEOs, for the entirety of 2025. +2024: John Lowe served as the Company’s PEO beginning January 25, 2024 and Scott Scheirman served as the Company’s PEO through his January 25, 2024 retirement. The Company’s other NEOs during 2024 were: Jeff Hochstadt, Toni Thompson, Lane Dubin and Sarah Kilgore. +2023: Scott Scheirman served as the Company’s PEO, and Lane Dubin and John Lowe served as NEOs, for the entirety of 2023. +(2) Amounts reported in this column represent (i) the total compensation reported in the Summary Compensation Table for the applicable year in the case of Mr. Lowe and Mr. Scheirman, as applicable, and (ii) the average of the total compensation reported in the Summary Compensation Table for the applicable year in the case of the other NEOs, including Mr. Lowe for 2023. +(3) To calculate “Compensation Actually Paid” (“CAP”), adjustments were made to the amounts reported in the Summary Compensation Table for the applicable year. A reconciliation of the adjustments for Mr. Lowe, Mr. Scheirman and for the average of the other NEOs is set forth following the footnotes to this table.* +(4) Pursuant to rules of the SEC, the calculation assumes $100 was invested on December 31, 2022 in our Common Stock. Historic stock price performance is not necessarily indicative of future stock price performance. +* Compensation Actually Paid Adjustments (see FN 3 above) +Minus +Plus +Plus (Minus) +Plus +Plus (Minus) +Minus +Plus +Minus +Equals +Change in Fair +Value as of +Fair Value as +Vesting Date of +of Prior Fiscal +Fair Value at +Stock Option and +Year-End of +Fiscal Year-End +Change in Fair +Fair Value at +Stock Awards +Stock Option and +Changes in +Grant Date +of Outstanding +Value of +Vesting of Stock +Granted in +Stock Awards +Fair Value to +Fair Value of +and Unvested +Outstanding and +Option and Stock +Prior Fiscal Years +Granted in Prior +Reflect Excess +Stock Option +Stock Option +Unvested Stock +Awards Granted +for which Applicable +Fiscal Years that +Fair Value +Awards Made in +and Stock +and Stock +Option and Stock +in Fiscal Year +Vesting Conditions +Failed to Meet +Resulting from +Prior Fiscal Years +Summary +Awards Granted +Awards Granted +Awards Granted +that Vested +Were Satisfied +Applicable Vesting +Modifications to +that were Forfeited +Compensation Table +in Fiscal +in Fiscal +in Prior Fiscal +During Fiscal +During Fiscal +Conditions During +Stock Option and +During Current +Compensation +Year +Total ($) (a) +Year ($) (b) +Year ($) (c) +Years ($) (d) +Year ($) (e) +Year ($) (f) +Fiscal Year ($) (g) +Stock Awards ($) (h) +Fiscal Year ($) +Actually Paid ($) +PEO(i) +2025 +3,794,309 +( 2,611,944 ) +1,326,044 +( 2,498,330 ) +805,200 +( 411,681 ) +- +- +- +403,598 +2024 +4,545,499 +( 3,102,679 ) +4,450,139 +334,506 +- +194,910 +- +- +- +6,422,375 +2023 +- +- +- +- +- +- +- +- +- +- +Scott Scheirman(i) +2025 +- +- +- +- +- +- +- +- +- +- +2024 +5,236,584 +- +- +920,077 +- +980,174 +- +- +- +7,136,835 +2023 +6,072,567 +( 4,682,037 ) +3,421,712 +- +- +( 350,800 ) +- +830,810 +- +5,292,252 +Average Other NEOs(i) +2025 +1,217,036 +( 472,991 ) +240,011 +( 173,600 ) +145,943 +( 174,567 ) +- +- +- +781,832 +2024 +1,108,340 +( 239,203 ) +188,815 +130,325 +- +96,271 +- +80,844 +( 124,501 ) +1,240,891 +2023 +1,663,181 +( 897,743 ) +814,865 +- +- +( 91,041 ) +- +- +- +1,489,262 +(a) Represents Total Compensation as reported in the Summary Compensation Table for the indicated fiscal year. With respect to the other NEOs, amounts shown represent averages. +(b) Represents the grant date fair value of the Option awards and stock awards granted during the indicated fiscal year, computed in accordance with the methodology used for financial reporting purposes. +(c) Represents the fair value at fiscal year-end of the Option awards and stock awards granted during the indicated fiscal year, computed in accordance with the methodology used for financial reporting purposes. +(d) Represents the change in fair value during the indicated fiscal year of each option award and stock award that was granted in a prior fiscal year and that remained outstanding and unvested as of the last day of the indicated fiscal year, computed in accordance with the methodology used for financial reporting purposes and, for awards subject to performance-based vesting conditions, based on the probable outcome of such performance-based vesting conditions as of the last day of the fiscal year. +(e) Represents the fair value at vesting of the option awards and stock awards that were granted and vested during the indicated fiscal year, computed in accordance with the methodology used for financial reporting purposes. +30 +Table of Contents +(f) Represents the change in fair value, measured from the prior fiscal year-end to the vesting date, of each option award and stock award that was granted in a prior fiscal year and which vested during the indicated fiscal year, computed in accordance with the methodology used for financial reporting purposes. +(g) Represents the fair value as of the last day of the prior fiscal year of the Option awards and stock awards that were granted in a prior fiscal year and which failed to meet the applicable vesting conditions in the indicated fiscal year, computed in accordance with the methodology used for financial reporting purposes. +(h) Represents the incremental fair value associated with the modification of Mr. Scheirman’s LTIP awards in 2023 and Ms. Kilgore’s outstanding awards in connection with her separation in 2024. +(i) See footnote 1 above for the PEOs included for each year and the other NEOs included in the average for each year. +Relationship Between Pay and Performance +We believe the CAP in each of the years reported above and over the three-year cumulative period are generally reflective of the Compensation Committee’s emphasis on “pay-for-performance”; however, certain non-recurring events related to the Company’s leadership transition in 2024 impacted the presentation of Pay and Performance data as demonstrated in the chart below. Generally, the Company expects the CAP amount will align with fluctuating amounts awarded under the STIP tied to the Company’s financial performance. Due to the leadership transition in 2024, which resulted in certain non-recurring compensation decisions, and inclusion of new NEOs who were not previously disclosed, the changes in CAP for the NEOs over the prior three-year period does not necessarily reflect overall Company performance. The CAP for the PEO position in 2024 was impacted by the grants received by Mr. Lowe in connection with his promotion to President and CEO and Mr. Scheirman’s retention payment. In 2023, amounts awarded under the STIP were below target consistent with Company performance, however the CAP for Mr. Scheirman in 2023 was impacted by the treatment of his equity awards pursuant to a retention agreement related to his planned retirement and transition of his CEO duties. +31 +Table of Contents +Policies and Practices Related to Grant of Certain Equity Awards Close in Time to Release of Material Nonpublic Information +In 2023, the Company instituted a quarterly grant program for equity awards with grants scheduled to coincide with and occur at the end of the month in which the Company has scheduled its quarterly earnings release. The Company did not grant Options during 2025 but has awarded Options in previous years using a quarterly cadence in which equity awards are granted on the last business day of the month in which earnings are announced. Although the Company does not have a specific policy regarding timing of equity awards in relation to the release of material non-public information (“MNPI”), the Company believes its current grant timing practice has the effect of minimizing the risk of granting Options ahead of the release of MNPI, as such equity award grants occur after earnings have been released and during such time as the quarterly trading window is typically open (except for the period following the release of the annual report on Form 10-K). +Equity Compensation Plan Information Table +The following table provides information as of December 31, 2025 with respect to shares of our Common Stock that may be issued under our existing equity compensation plan. +Number of securities +remaining available for +future issuance under +Number of securities to +Weighted average +equity compensation +be issued upon exercise +exercise price of +plans (excluding +of outstanding Options, +outstanding Options, +securities reflected in +warrants and rights +warrants and rights +column (a)) +(a) (#) +(b) ($) +(c) (#) +Equity compensation plans approved by security holders (1) +1,171,727 +(2) +14.98 +(2) +783,837 +Equity compensation plans not approved by security holders +— +— +— +Total +1,171,727 +14.98 +783,837 +(1) All current equity compensation plans have been approved by stockholders. +(2) Consists of (i) 597,934 outstanding Options under the Omnibus Incentive Plan at a weighted average exercise price of $14.98, (ii) 513,793 outstanding RSUs under the Omnibus Incentive Plan and (iii) 60,000 outstanding PSUs under the Omnibus Incentive Plan (assuming the full number of PSUs are earned). Only Options were used in computing the weighted average exercise price. +AUDIT COMMITTEE REPORT +This report of the Audit Committee is required by the SEC and, in accordance with the SEC’s rules, will not be deemed to be part of or incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933, as amended (the “Securities Act”), or under the Exchange Act, except to the extent that the Company specifically incorporates this information by reference, and will not otherwise be deemed “soliciting material” or “filed” under either the Securities Act or the Exchange Act. +The principal purpose of the Audit Committee is to assist the Board in its oversight of (i) the integrity of our accounting and financial reporting processes and the audits of our consolidated financial statements; (ii) our system of disclosure controls and internal control over financial reporting; (iii) our compliance with legal and regulatory requirements; (iv) the qualifications and independence of our independent auditor; (v) the performance of our independent auditor; and (vi) the business practices and ethical standards of the Company. The Audit Committee is responsible for the appointment, compensation, retention and oversight of the Company’s independent auditor. The Audit Committee’s function is more fully described in its charter. +Our management is responsible for the preparation, presentation and integrity of our consolidated financial statements, for the appropriateness of the accounting principles and reporting policies that we use and for establishing and maintaining adequate internal control over financial reporting. KPMG LLP (“KPMG”), our independent registered public accounting firm for 2025, was responsible for performing an independent audit of our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025, and expressing an opinion on the conformity of those financial statements with generally accepted accounting principles. KPMG was also responsible for expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. +32 +Table of Contents +The Audit Committee has reviewed and discussed with management our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025. The Audit Committee has also reviewed and discussed with KPMG the audited consolidated financial statements in such Form 10-K. In addition, the Audit Committee discussed with KPMG those matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (the “PCAOB”) and the SEC. Additionally, KPMG provided to the Audit Committee the written disclosures and the letter required by applicable requirements of the PCAOB regarding KPMG’s communications with the Audit Committee concerning independence, and the Audit Committee has discussed with KPMG its independence from the Company. +Based upon the review and discussions described above, the Audit Committee recommended to the Board that CPI’s audited consolidated financial statements be included in our Annual Report on Form 10-K for the year ended December 31, 2025 for filing with the SEC. +Audit Committee : +Marc Sheinbaum, Chair +Thomas Furey +Ravi Mallela +Valerie Soranno Keating +FEES PAID TO INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +For the years ended December 31, 2025 and 2024, KPMG, our independent registered public accounting firm, billed the approximate fees set forth below. +2025 +2024 +Audit fees (1) +$ +1,752,482 +$ +2,186,885 +Audit-related fees (2) +— +— +Tax fees (3) +355,774 +199,187 +All other fees (4) +— +— +Total fees +$ +2,108,256 +$ +2,386,072 +(1) Audit fees relate to (i) the audit of our annual consolidated financial statements as of and for the years ended December 31, 2025 and 2024, and (ii) interim reviews of the condensed consolidated financial statements included in our Quarterly Reports on Form 10-Q during the years ended December 31, 2025 and 2024. Audit fees in 2024 also include approximately $550,000 related to comfort letters and consents obtained in connection with the offering of our 10.000% Senior Secured Notes due 2029 and a secondary offering of our Common Stock. +(2) These services include attest services related to financial reporting that are not required by statute or regulation. KPMG did not provide services included in this category during the years ended December 31, 2025 and 2024. +(3) For the years ended December 31, 2025 and 2024, tax fees relate primarily to US federal and state tax compliance, planning, and advisory services. +(4) This category includes fees for services that are not included in the above categories. KPMG did not provide services included in this category during the years ended December 31, 2025 and 2024. +The Audit Committee has adopted certain policies and procedures regarding permitted audit and non-audit services and the pre-approval of such services. Each year, the Audit Committee will ratify the types of audit and non-audit services of which management may wish to avail itself, subject to pre-approval of specific services. Each year, the independent registered public accounting firm will submit a pre-approval request, which will list each known and/or anticipated audit and non-audit service for the upcoming calendar year and which will include associated budgeted fees. The Audit Committee will review the requests and approve a list of annual pre-approved non-audit services. Any interim requests for additional non-audit services that were not contained in the annual pre-approval request are pre-approved by the Audit Committee. +All services provided by KPMG during the fiscal year ended December 31, 2025 and 2024 were pre-approved by the Audit Committee. +33 +Table of Contents +PROPOSAL NO. 2 RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +Our Audit Committee has appointed KPMG as our independent registered public accounting firm for the year ending December 31, 2026. A proposal will be presented at the Annual Meeting to ratify this appointment. If the stockholders fail to ratify such selection, another independent registered public accounting firm will be considered by our Audit Committee, but the Audit Committee may nonetheless choose to engage KPMG. Even if the appointment of KPMG is ratified, the Audit Committee, in its discretion, may select a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and its stockholders. We have been advised that a representative of KPMG will be present at the Annual Meeting and will be available to respond to appropriate questions and, if such person chooses to do so, make a statement. +THE BOARD OF DIRECTORS AND THE AUDIT COMMITTEE UNANIMOUSLY RECOMMEND A VOTE FOR RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2026. +34 +Table of Contents +PROPOSAL NO. 3 STOCKHOLDER ADVISORY VOTE TO APPROVE OUR NAMED EXECUTIVE OFFICER COMPENSATION +We are offering our stockholders an opportunity to cast an advisory vote to approve the compensation of our NEOs, as disclosed in this proxy statement, pursuant to Section 14A of the Exchange Act (commonly referred to as a “say-on-pay” vote). The advisory vote to approve executive compensation is not a vote on the Company’s general compensation policies or the compensation of the Company’s Board of Directors. +In making decisions with respect to compensation for our NEOs, the Compensation Committee is guided by a pay-for-performance philosophy. The Compensation Committee believes that a significant portion of each NEO’s total compensation opportunity should vary with achievement of the Company’s annual and long-term financial, operational and strategic goals. In designing the compensation program for our NEOs, the Compensation Committee seeks to achieve the following key objectives: +Motivate Executives . The compensation program should encourage our executive officers to achieve the Company’s annual and long-term goals. +Align Interests with Stockholders . The compensation program should align the interests of our executive officers with those of our stockholders, promoting actions that will have a positive impact on total stockholder return over the long term. +Attract and Retain Talented Executives . The compensation program should provide each executive officer with a total compensation opportunity that is market competitive. This objective is intended to ensure that we are able to attract and retain qualified executives while maintaining an appropriate cost structure for the Company. +We believe our executive compensation is structured in the manner that best serves the interests of the Company and its stockholders. We encourage stockholders to review the “Executive Compensation” section above for a complete discussion of how we determine the pay for our NEOs as well as key accomplishments the executive team achieved during 2025. +Accordingly, we are asking stockholders to approve the following advisory resolution at the Annual Meeting: +RESOLVED, that the stockholders of the Company approve, on an advisory and non-binding basis, the compensation of the Company’s named executive officers, as disclosed in this proxy statement pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Executive Compensation section, the compensation tables and any related material disclosed in this proxy statement. +As an advisory vote, this resolution is not binding on us. However, the Compensation Committee, which is responsible for designing and administering our executive compensation program, values the opinions expressed by our stockholders in their vote on this proposal and will consider the outcome of the vote when making future compensation decisions for our NEOs. We expect to hold this vote on an annual basis for the foreseeable future. +THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL, ON AN ADVISORY BASIS, OF OUR NAMED EXECUTIVE OFFICER COMPENSATION AS DISCLOSED IN THIS PROXY STATEMENT. +35 +Table of Contents +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +The following is a description of transactions since January 1, 2024 to which we have been a party in which the amount involved exceeded or will exceed the lesser of $120,000 or one percent of the average of the Company’s total assets at year-end for the last two completed fiscal years and in which any of our directors, executive officers, beneficial holders of more than 5% of our capital stock or entities affiliated with them (each, a “Related Party”) had or will have a direct or indirect material interest. +Our related party transaction policies and procedures require Related Parties to disclose to our Chief Financial Officer any “interested transaction” (defined as any transaction, arrangement or relationship or series of similar transactions, arrangements or relationships in which (1) the aggregate amount involved in any calendar year will or may be expected to exceed the lesser of (i) $120,000 or (ii) one percent of the average of the Company’s total assets at year end for the last two completed fiscal years, (2) the Company is, was or will be a participant, and (3) any Related Party has, had or will have a direct or indirect material interest) and all material facts with respect thereto. Our Chief Financial Officer will then communicate that information to our Audit Committee. No interested transaction entered into will be executed without the approval or ratification of our Audit Committee. +Registration Rights Agreement +On October 15, 2015, we entered into a registration rights agreement with Parallel49 (the “Parallel49 Registration Rights Agreement”) and on December 4, 2025, we entered into a Registration Rights Agreement Joinder with the Tricor Family Office (the “Joinder” and together with Parallel49 Registration Rights Agreement, the “Registration Rights Agreement”). Parallel49 and the Tricor Family Office are each beneficial holders of more than 5% of our capital stock. Under the Registration Rights Agreement, Parallel49 and the Tricor Family Office are entitled to request that we register shares of our Common Stock on a long-form or short-form registration statement on one or more occasions in the future, provided that we will not be obligated to register such shares within 90 days after the effective date of a registration statement previously filed pursuant to a request under the Registration Rights Agreement and otherwise for up to 60 days from the date of a request under the Registration Rights Agreement in certain circumstances. Parallel49 and the Tricor Family Office also are entitled to participate in certain registered offerings that we may conduct in the future, subject to certain restrictions. We will pay Parallel49’s and the Tricor Family Office’s expenses in connection with the exercise of these rights. The registration rights described in this paragraph apply to (i) shares of our Common Stock held by Parallel49 as of the closing of our initial public offering, (ii) any of our capital stock (or that of our subsidiaries) issued or issuable with respect to the Common Stock described in clause (i) with respect to any dividend, distribution, recapitalization, reorganization or certain other corporate transactions, and (iii) any shares of our Common Stock owned or acquired following the closing of our initial public offering by Parallel49 (collectively, “Registrable Securities”). These registration rights are also for the benefit of any subsequent holder of Registrable Securities; provided that any particular securities will cease to be Registrable Securities when they have been sold in a registered public offering, sold in compliance with Rule 144 under the Securities Act or repurchased by us or our subsidiaries. In September 2021, we filed a registration statement on Form S-3 with respect to the shares of Common Stock held by Parallel49 in compliance with our obligations under the Registration Rights Agreement. +Director Nomination Agreements +On October 15, 2015, we entered into the Parallel49 Director Nomination Agreement that provides Parallel49 the right to designate nominees for election to our Board for so long as Parallel49 collectively beneficially owns 5% or more of the total number of shares of our Common Stock then outstanding. On December 4, 2025, we entered into the Tricor Family Office Director Nomination Agreement that provides the Tricor Family Office the right to nominate individuals for election to our Board for so long as the Tricor Family Office beneficially owns 10% or more of the total number of shares of our Common Stock then outstanding. The number of nominees that Parallel49 is entitled to designate under the Parallel49 Director Nomination Agreement bears the same proportion to the total number of members of our Board as the number of shares of Common Stock beneficially owned by Parallel49 bears to the total number of shares of Common Stock outstanding, rounded up to the nearest whole number. The number of directors that the Tricor Family Office is entitled to nominate under the Tricor Family Office Director Nomination Agreement is based on the percentage of the outstanding Common Stock over which the Tricor Family Office and Parallel49 collectively have direct voting control in relation to the total number of directors then serving on our Board, limited by the greater of the number of directors that Parallel49 is then entitled to nominate or have serving on our Board pursuant to the Parallel49 Director Nomination Rights Agreement. In addition, Parallel49 and the Tricor Family Office are entitled to designate or nominate the replacement for any of its board designees whose board service terminates prior to the end of such designee’s term. Parallel49 and the Tricor Family Office, subject to certain limitations, also have the right to have their designees participate on committees of our Board, subject to compliance with applicable law and stock exchange rules. +36 +Table of Contents +Share Repurchase Agreements +In November 2023, the Company approved a share repurchase program (the “Share Repurchase Program”) to purchase up to $20 million of its Common Stock in open market and privately negotiated transactions. Subsequently, the Company entered into two agreements to repurchase Common Stock held by Tricor Pacific Capital Partners (Fund IV) US, LP (“Tricor US”), pursuant to which the Company agreed to purchase three times the number of shares of the Company’s Common Stock acquired by the Company in the open market from time to time from non-Tricor US holders during the periods commencing on December 6, 2023 and ending March 31, 2024 and commencing April 1, 2024 and ending June 30, 2024, up to an aggregate of 650,000 shares of Common Stock in total (the “Repurchase Agreements”). The Repurchase Agreements provided that such open market purchases would be made pursuant to the Share Repurchase Program. Additionally, the Repurchase Agreements provided that the repurchase price for any shares acquired by the Company from Tricor US would be 98% of the volume weighted average purchase price paid by the Company for all other shares acquired by the Company in the open market pursuant to the Share Repurchase Program during such fiscal quarter. The repurchases from Tricor US took place on April 5, 2024 and July 3, 2024 and were part of the Share Repurchase Program authorization levels. The Repurchase Agreements were approved by the Audit Committee. Additional information can be found in our Current Reports on Form 8-K, dated December 7, 2023 and March 15, 2024, and in our Form 10-K for the year-ended December 31, 2024 filed with the SEC. +Policies and Procedures for Related Party Transactions +Our Board has adopted a written related party transaction policy setting forth the policies and procedures for the review and approval of related party transactions. The policy covers transactions involving the Company in which (1) the aggregate amount involved in any calendar year will or may be expected to exceed the lesser of (i) $120,000, or (ii) one percent (1%) of the average of the Company’s total assets at year end for the last two completed fiscal years, (2) the Company (including any of its subsidiaries(is, was or will be a participant, and (3) any related person has, had or will have a direct or indirect interest (other than solely as a result of being a director or a less than 10% beneficial owner of another entity). For purposes of this policy, a related person is defined as an executive officer, director, nominee for director, or a greater than 5% beneficial owner of our Common Stock, in each case since the beginning of the most recently completed fiscal year, and any immediate family member of or person sharing a household with any of these individuals. All related party transactions must be presented to the Audit Committee for review, consideration and approval. In approving or rejecting any such proposed transaction, the Audit Committee will consider, among other factors, the related party’s relationship to the Company and interest in the transaction, the material facts of the transaction, the benefits to the Company of the transaction, the availability of other sources of comparable products or services (if applicable), whether the transaction is on terms that are comparable to the terms generally available to an unrelated third party, whether the transaction has the potential to impair director independence and whether the transaction constitutes a conflict of interest. +STOCKHOLDER PROPOSALS FOR 2027 ANNUAL MEETING OF STOCKHOLDERS +Stockholders who intend to present proposals at the Company’s annual meeting of stockholders in 2027 pursuant to Rule 14a-8 under the Exchange Act must send notice of their proposal to us so that we receive it no later than December 9, 2026. Stockholders who intend to present proposals at the annual meeting of stockholders in 2027 other than pursuant to Rule 14a-8 must comply with the notice provisions in our By-Laws. The notice provisions in our By-Laws require that, for a proposal to be properly brought before the annual meeting of stockholders in 2027, proper notice of the proposal be received by us not less than 90 days nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting; provided, however that in the event next year’s annual meeting is more than 30 days before or after such anniversary date, notice must be delivered not less than the later of 90 days prior to next year’s annual meeting or the 10th day following the day the Company first publicly announces next year’s annual meeting date. Under these requirements, proposals brought under our By-Laws must be received no earlier than January 21, 2027 and no later than February 20, 2027. +In addition to satisfying the foregoing requirements under the By-Laws, to comply with the universal proxy rules, stockholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must provide notice to the Company that sets forth the information required by Rule 14a-19 under the Exchange Act no later than March 22, 2027. +Stockholder proposals and notices should be addressed to CPI Card Group Inc., 10368 West Centennial Road, Littleton, Colorado 80127; Attention: Darren Dragovich, Chief Legal and Compliance Officer and Corporate Secretary. +37 +Table of Contents +OTHER MATTERS +We know of no other matters to be submitted to the stockholders at the Annual Meeting. If any other matters properly come before the Annual Meeting, persons named in the proxy intend to vote the shares they represent in accordance with their own judgments. +Upon written request by any stockholder entitled to vote at the Annual Meeting, we will promptly furnish, without charge, a copy of the Annual Report on Form 10-K for the fiscal year ended December 31, 2025, which we filed with the SEC, including the financial statements therein. Requests should be sent to InvestorRelations@cpicardgroup.com , Attention: Darren Dragovich, Chief Legal and Compliance Officer and Corporate Secretary. +YOUR VOTE IS IMPORTANT. WE URGE YOU TO VOTE TODAY OVER THE TELEPHONE, VIA THE INTERNET OR BY MAIL. +By Order of the Board of Directors, +Darren Dragovich +Chief Legal and Compliance Officer and Corporate Secretary +38 +Table of Contents +ANNEX A – RECONCILIATION OF NON-GAAP MEASURES +Year Ended December 31, +2025 +2024 +Reconciliation of net income to EBITDA and Adjusted EBITDA: +Net income +$ +14,950 +$ +19,521 +Interest, net (1) +32,466 +34,087 +Income tax expense +6,656 +5,506 +Depreciation and amortization +22,461 +16,420 +EBITDA +$ +76,533 +$ +75,534 +Adjustments to EBITDA: +Stock-based compensation expense +$ +6,963 +$ +8,545 +Acquisition and integration costs (2) +5,954 +— +Restructuring and other charges (3) +3,716 +4,810 +Loss on debt extinguishment (4) +287 +2,987 +Change in revenue recognition (5) +2,929 +— +Equity in losses of unconsolidated affiliates (6) +134 +— +Subtotal of adjustments to EBITDA +$ +19,983 +$ +16,342 +Adjusted EBITDA +$ +96,516 +$ +91,876 +Net income margin (% of Revenue) +2.8% +4.1% +Net income growth (% Change 2025 vs. 2024) +(23.4)% +Adjusted EBITDA margin (% of Revenue) +17.8% +19.1% +Adjusted EBITDA growth (% Change 2025 vs. 2024) +5.1% +(1) The 2024 balance includes the payment of an early redemption premium of $5.8 million related to the redemption of the 8.625% Senior Secured Notes due 2026. +(2) Balance represents acquisition and integration costs related to the Arroweye acquisition that occurred on May 6, 2025. +(3) Balance includes expenses related to executive retention and severance, as well as production facility modernization efforts. +(4) In July 2024, the Company redeemed the entire principal balance of $267.9 million of the 8.625% Senior Secured Notes due 2026 and also repaid in full and terminated a prior Credit Agreement with Wells Fargo Bank, N.A. entered into in March 2021, and expensed the remaining unamortized deferred financing costs. Additionally, the Company redeemed a portion of the 8.625% Senior Secured Notes due 2026 in 2023 and expensed the associated portion of the unamortized deferred financing costs. +(5) In the second quarter of 2025, the Company reassessed certain aspects of its revenue recognition accounting under ASC 606 and prospectively began recognizing revenue for certain contracts at a point-in-time rather than over-time. +(6) On October 7, 2025, the Company entered into a strategic relationship with and acquired a 20% equity interest in Karta (Gift Card Co Pty Ltd), an Australia-based payments technology firm also backed by the Commonwealth Bank of Australia. This balance represents the Company’s equity in Karta’s net losses for the quarter ended December 31, 2025. +A-1 +Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date +TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: +KEEP THIS PORTION FOR YOUR RECORDS +DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. +V89998-P45440 +1a. Thomas Furey +1b. John Lowe +1c. Ravi Mallela +1d. Lisa Oleson +1e. Nicholas Peters +1f. H. Sanford Riley +1g. Marc Sheinbaum +1h. Valerie Soranno Keating +For Against Abstain +For Against Abstain +! ! ! +! ! ! +! ! ! +! ! ! +! ! ! +! ! ! +! ! ! +! ! ! +! ! ! +! ! ! +CPI CARD GROUP INC. +10368 WEST CENTENNIAL ROAD +LITTLETON, COLORADO 80127 +VOTE BY INTERNET +Before The Meeting - Go to www.proxyvote.com or scan the QR Barcode above +Use the Internet to transmit your voting instructions and for electronic delivery of +information. Vote by 11:59 p.m. ET on May 20, 2026. Have your proxy card in hand when +you access the web site and follow the instructions to obtain your records and to create +an electronic voting instruction form. +During The Meeting - Go to www.virtualshareholdermeeting.com/PMTS2026 +You may attend the meeting via the Internet and vote during the meeting. Have the +information that is printed in the box marked by the arrow available and follow the +instructions. +VOTE BY PHONE - 1-800-690-6903 +Use any touch-tone telephone to transmit your voting instructions. Vote by 11:59 p.m. ET on +May 20, 2026. Have your proxy card in hand when you call and then follow the instructions. +VOTE BY MAIL +Mark, sign and date your proxy card and return it in the postage-paid envelope we +have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, +Edgewood, NY 11717. +2. Ratification of KPMG LLP as independent registered public accounting firm for the year ending December 31, 2026. +3. Advisory vote to approve named executive officer compensation. +1. Election of Directors +Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator or other fiduciary, please give full title as such. Joint +owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. +CPI CARD GROUP INC. +The Board of Directors recommends you vote FOR +proposals 1, 2 and 3: +NOTE: The proxy holders will have discretion to vote on such other business as may properly come before the meeting or any adjournment thereof. +Nominees: +SCAN TO +VIEW MATERIALS & VOTEw +V89999-P45440 +Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: +The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com. +CPI CARD GROUP INC. +Annual Meeting of Stockholders +May 21, 2026 8:00 a.m. ET +This proxy is solicited by the Board of Directors +The stockholder(s) hereby appoint(s) each of Darren Dragovich and Terra Grantham as proxy, each with the power to appoint +his or her substitute, and hereby authorize(s) him or her to represent and vote, as designated on the reverse side of this ballot, all +of the shares of common stock of CPI CARD GROUP INC., that the stockholder(s) is/are entitled to vote at the Annual Meeting +of Stockholders to be held virtually at 8:00 a.m. ET on May 21, 2026, at www.virtualshareholdermeeting.com/PMTS2026, and +any adjournment or postponement thereof. +This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this +proxy will be voted in accordance with the Board of Directors' recommendations. +Continued and to be signed on reverse side \ No newline at end of file diff --git a/raw/proxies/0001641614/0001104659-26-040936/proxy_rpt.txt b/raw/proxies/0001641614/0001104659-26-040936/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..7bb2204ae1febd3a785efa1c3b64941ea0981087 --- /dev/null +++ b/raw/proxies/0001641614/0001104659-26-040936/proxy_rpt.txt @@ -0,0 +1,13 @@ +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +The following is a description of transactions since January 1, 2024 to which we have been a party in which the amount involved exceeded or will exceed the lesser of $120,000 or one percent of the average of the Company’s total assets at year-end for the last two completed fiscal years and in which any of our directors, executive officers, beneficial holders of more than 5% of our capital stock or entities affiliated with them (each, a “Related Party”) had or will have a direct or indirect material interest. +Our related party transaction policies and procedures require Related Parties to disclose to our Chief Financial Officer any “interested transaction” (defined as any transaction, arrangement or relationship or series of similar transactions, arrangements or relationships in which (1) the aggregate amount involved in any calendar year will or may be expected to exceed the lesser of (i) $120,000 or (ii) one percent of the average of the Company’s total assets at year end for the last two completed fiscal years, (2) the Company is, was or will be a participant, and (3) any Related Party has, had or will have a direct or indirect material interest) and all material facts with respect thereto. Our Chief Financial Officer will then communicate that information to our Audit Committee. No interested transaction entered into will be executed without the approval or ratification of our Audit Committee. +Registration Rights Agreement +On October 15, 2015, we entered into a registration rights agreement with Parallel49 (the “Parallel49 Registration Rights Agreement”) and on December 4, 2025, we entered into a Registration Rights Agreement Joinder with the Tricor Family Office (the “Joinder” and together with Parallel49 Registration Rights Agreement, the “Registration Rights Agreement”). Parallel49 and the Tricor Family Office are each beneficial holders of more than 5% of our capital stock. Under the Registration Rights Agreement, Parallel49 and the Tricor Family Office are entitled to request that we register shares of our Common Stock on a long-form or short-form registration statement on one or more occasions in the future, provided that we will not be obligated to register such shares within 90 days after the effective date of a registration statement previously filed pursuant to a request under the Registration Rights Agreement and otherwise for up to 60 days from the date of a request under the Registration Rights Agreement in certain circumstances. Parallel49 and the Tricor Family Office also are entitled to participate in certain registered offerings that we may conduct in the future, subject to certain restrictions. We will pay Parallel49’s and the Tricor Family Office’s expenses in connection with the exercise of these rights. The registration rights described in this paragraph apply to (i) shares of our Common Stock held by Parallel49 as of the closing of our initial public offering, (ii) any of our capital stock (or that of our subsidiaries) issued or issuable with respect to the Common Stock described in clause (i) with respect to any dividend, distribution, recapitalization, reorganization or certain other corporate transactions, and (iii) any shares of our Common Stock owned or acquired following the closing of our initial public offering by Parallel49 (collectively, “Registrable Securities”). These registration rights are also for the benefit of any subsequent holder of Registrable Securities; provided that any particular securities will cease to be Registrable Securities when they have been sold in a registered public offering, sold in compliance with Rule 144 under the Securities Act or repurchased by us or our subsidiaries. In September 2021, we filed a registration statement on Form S-3 with respect to the shares of Common Stock held by Parallel49 in compliance with our obligations under the Registration Rights Agreement. +Director Nomination Agreements +On October 15, 2015, we entered into the Parallel49 Director Nomination Agreement that provides Parallel49 the right to designate nominees for election to our Board for so long as Parallel49 collectively beneficially owns 5% or more of the total number of shares of our Common Stock then outstanding. On December 4, 2025, we entered into the Tricor Family Office Director Nomination Agreement that provides the Tricor Family Office the right to nominate individuals for election to our Board for so long as the Tricor Family Office beneficially owns 10% or more of the total number of shares of our Common Stock then outstanding. The number of nominees that Parallel49 is entitled to designate under the Parallel49 Director Nomination Agreement bears the same proportion to the total number of members of our Board as the number of shares of Common Stock beneficially owned by Parallel49 bears to the total number of shares of Common Stock outstanding, rounded up to the nearest whole number. The number of directors that the Tricor Family Office is entitled to nominate under the Tricor Family Office Director Nomination Agreement is based on the percentage of the outstanding Common Stock over which the Tricor Family Office and Parallel49 collectively have direct voting control in relation to the total number of directors then serving on our Board, limited by the greater of the number of directors that Parallel49 is then entitled to nominate or have serving on our Board pursuant to the Parallel49 Director Nomination Rights Agreement. In addition, Parallel49 and the Tricor Family Office are entitled to designate or nominate the replacement for any of its board designees whose board service terminates prior to the end of such designee’s term. Parallel49 and the Tricor Family Office, subject to certain limitations, also have the right to have their designees participate on committees of our Board, subject to compliance with applicable law and stock exchange rules. +36 +Table of Contents +Share Repurchase Agreements +In November 2023, the Company approved a share repurchase program (the “Share Repurchase Program”) to purchase up to $20 million of its Common Stock in open market and privately negotiated transactions. Subsequently, the Company entered into two agreements to repurchase Common Stock held by Tricor Pacific Capital Partners (Fund IV) US, LP (“Tricor US”), pursuant to which the Company agreed to purchase three times the number of shares of the Company’s Common Stock acquired by the Company in the open market from time to time from non-Tricor US holders during the periods commencing on December 6, 2023 and ending March 31, 2024 and commencing April 1, 2024 and ending June 30, 2024, up to an aggregate of 650,000 shares of Common Stock in total (the “Repurchase Agreements”). The Repurchase Agreements provided that such open market purchases would be made pursuant to the Share Repurchase Program. Additionally, the Repurchase Agreements provided that the repurchase price for any shares acquired by the Company from Tricor US would be 98% of the volume weighted average purchase price paid by the Company for all other shares acquired by the Company in the open market pursuant to the Share Repurchase Program during such fiscal quarter. The repurchases from Tricor US took place on April 5, 2024 and July 3, 2024 and were part of the Share Repurchase Program authorization levels. The Repurchase Agreements were approved by the Audit Committee. Additional information can be found in our Current Reports on Form 8-K, dated December 7, 2023 and March 15, 2024, and in our Form 10-K for the year-ended December 31, 2024 filed with the SEC. +Policies and Procedures for Related Party Transactions +Our Board has adopted a written related party transaction policy setting forth the policies and procedures for the review and approval of related party transactions. The policy covers transactions involving the Company in which (1) the aggregate amount involved in any calendar year will or may be expected to exceed the lesser of (i) $120,000, or (ii) one percent (1%) of the average of the Company’s total assets at year end for the last two completed fiscal years, (2) the Company (including any of its subsidiaries(is, was or will be a participant, and (3) any related person has, had or will have a direct or indirect interest (other than solely as a result of being a director or a less than 10% beneficial owner of another entity). For purposes of this policy, a related person is defined as an executive officer, director, nominee for director, or a greater than 5% beneficial owner of our Common Stock, in each case since the beginning of the most recently completed fiscal year, and any immediate family member of or person sharing a household with any of these individuals. All related party transactions must be presented to the Audit Committee for review, consideration and approval. In approving or rejecting any such proposed transaction, the Audit Committee will consider, among other factors, the related party’s relationship to the Company and interest in the transaction, the material facts of the transaction, the benefits to the Company of the transaction, the availability of other sources of comparable products or services (if applicable), whether the transaction is on terms that are comparable to the terms generally available to an unrelated third party, whether the transaction has the potential to impair director independence and whether the transaction constitutes a conflict of interest. \ No newline at end of file diff --git a/raw/proxies/0001641614/0001558370-16-004815/proxy.txt b/raw/proxies/0001641614/0001558370-16-004815/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..c2f8bacb4341714bea088685d3b3fe1e13ec2868 --- /dev/null +++ b/raw/proxies/0001641614/0001558370-16-004815/proxy.txt @@ -0,0 +1,907 @@ +DEF 14A +1 +pmts-20160602xdef14a.htm +DEF 14A +pmts_Current_Folio_DEF14A +Table of Contents +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Proxy Statement Pursuant to Section 14(a) of the +Securities Exchange Act of 1934 +Filed by the Registrant ☑ +Filed by a Party other than the Registrant ☐ +Check the appropriate box: +☐ +Preliminary Proxy Statement +☐ +Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +☑ +Definitive Proxy Statement +☐ +Definitive Additional Materials +☐ +Soliciting Material Pursuant to §240.14a-12 +CPI Card Group Inc. +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +☑ +No fee required. +☐ +Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. +(1) +Title of each class of securities to which transaction applies: +(2) +Aggregate number of securities to which transaction applies: +(3) +Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): +(4) +Proposed maximum aggregate value of transaction: +(5) +Total fee paid: +☐ +Fee paid previously with preliminary materials. +☐ +Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. +(1) +Amount Previously Paid: +(2) +Form, Schedule or Registration Statement No.: +(3) +Filing Party: +(4) +Date Filed: +Persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number. +Table of Contents +10368 West Centennial Road +Littleton, Colorado 80127 +April 25, 2016 +Dear Stockholder: +On behalf of the Board of Directors of CPI Card Group Inc., you are cordially invited to attend the 2016 Annual Meeting of Stockholders (the “Annual Meeting”) to be held on June 2, 2016, at 9:00 a.m. (Mountain Time) at the Hyatt Regency Denver Tech Center, 7800 East Tufts Avenue, Denver, Colorado 80237. +We have included in this letter a proxy statement that provides you with detailed information about the Annual Meeting. We encourage you to read the entire proxy statement carefully. You may also obtain more information about CPI Card Group Inc. from documents we have filed with the Securities and Exchange Commission. +You are being asked at the Annual Meeting to elect directors named in this proxy statement, to ratify the retention of KPMG LLP as our independent registered public accounting firm and to transact any other business properly brought before the meeting. +Whether or not you plan to attend the Annual Meeting, your vote is important, and we encourage you to vote promptly. You may vote your shares through one of the methods described in the enclosed proxy statement. We strongly urge you to read the accompanying proxy statement carefully and to vote FOR the nominees proposed by the Board of Directors and in accordance with the recommendations of the Board of Directors on the other proposals by following the voting instructions contained in the proxy statement. +Sincerely, +/s/ Bradley Seaman +/s/ Steven Montross +Bradley Seaman +Steven Montross +Chairman of the Board +President, Chief Executive Officer and Director +This proxy statement is dated April 25, 2016 and is first being mailed to stockholders on or about April 29, 2016. +Table of Contents +CPI CARD GROUP INC. +NOTICE OF ANNUAL MEETING OF STOCKHOLDERS +JUNE 2, 2016 +9:00 A.M. (Mountain Time) +To the Stockholders of CPI Card Group Inc.: +The 2016 Annual Meeting of Stockholders will be held on June 2, 2016, at 9:00 a.m. (Mountain Time) at the Hyatt Regency Denver Tech Center, 7800 East Tufts Avenue, Denver, Colorado 80237. The purpose of the meeting is to: +1. +elect seven directors; +2. +ratify the retention of KPMG LLP as our independent registered public accounting firm for 2016; and +3. +conduct any other business properly brought before the Annual Meeting or any adjournments or postponements thereof. +Voting is limited to stockholders of record at the close of business on April 15, 2016. A list of stockholders entitled to vote at the meeting, and any postponements or adjournments of the meeting, will be available for examination between the hours of 9:00 a.m. and 5:00 p.m. (Mountain Time) at our headquarters at 10368 West Centennial Road, Littleton, Colorado 80127 during the ten days prior to the Annual Meeting and also at the Annual Meeting. +YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE VOTE YOUR SHARES OVER THE TELEPHONE, VIA THE INTERNET OR BY COMPLETING, DATING, SIGNING AND RETURNING A PROXY CARD, AS DESCRIBED IN THE ENCLOSED PROXY STATEMENT. YOUR PROMPT COOPERATION IS GREATLY APPRECIATED. +By Order of the Board of Directors, +/s/ David Brush +David Brush +Chief Financial Officer and Corporate Secretary +Table of Contents +TABLE OF CONTENTS +Page +SUMMARY OF THE ANNUAL MEETING +2 +ELECTION OF DIRECTORS (PROPOSAL NO. 1) +7 +DIRECTORS AND CORPORATE GOVERNANCE +8 +EXECUTIVE COMPENSATION +18 +AUDIT COMMITTEE REPORT +24 +FEES OF INDEPENDENT ACCOUNTANTS +25 +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +26 +RATIFICATION OF RETENTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PROPOSAL NO. 2) +28 +STOCKHOLDER PROPOSALS FOR 2017 ANNUAL MEETING OF STOCKHOLDERS +29 +OTHER MATTERS +30 +- 1 - +Table of Contents +CPI CARD GROUP INC. +10368 West Centennial Road +Littleton, Colorado 80127 +SUMMARY OF THE ANNUAL MEETING +This proxy statement contains information related to the 2016 Annual Meeting of Stockholders (the “Annual Meeting”) of CPI Card Group Inc. (referred to herein as the “Company,” “CPI,” “we,” “us” or “our” as the context requires) to be held at the Hyatt Regency Denver Tech Center, 7800 East Tufts Avenue, Denver, Colorado 80237, on June 2, 2016, at 9:00 a.m. (Mountain Time). This proxy statement is first being distributed to stockholders on or about April 29, 2016. +Why did you send me this proxy statement? +We sent you this proxy statement because the Board of Directors (the “Board”) of the Company is soliciting your proxy to vote at the Annual Meeting to be held on June 2, 2016, at 9:00 a.m. (Mountain Time) and at any postponements or adjournments of the Annual Meeting. This proxy statement summarizes information that is intended to assist you in making an informed vote on the proposals described in this proxy statement. +Who can vote at the Annual Meeting? +Only stockholders of record as of the record date are entitled to vote at the Annual Meeting. The record date to determine stockholders entitled to notice of and to vote at the Annual Meeting is the close of business on April 15, 2016. On the record date, there were 56,542,116 shares of our common stock, par value $0.001 per share, outstanding. Our common stock is the only class of voting securities outstanding. +How many shares must be present to conduct the Annual Meeting? +We must have a quorum present in person or by proxy to conduct the Annual Meeting. A quorum is established when a majority of shares entitled to vote is present in person or represented by proxy at the Annual Meeting. Abstentions and broker non-votes (as described below) are counted for purposes of determining whether a quorum is present. +What matters are to be voted on at the Annual Meeting? +The agenda for the Annual Meeting is to: +1. +elect seven directors; +2. +ratify the retention of KPMG LLP as our independent registered public accounting firm for 2016; and +3. +conduct any other business properly brought before the Annual Meeting or any adjournments or postponements thereof. +As of the date of this proxy statement, we do not know of any other matters to be presented at the Annual Meeting. If any other matters properly come before the Annual Meeting, however, the persons named as proxies will be authorized to vote or otherwise act in accordance with their judgment. +How does the Board recommend that I vote? +The Board recommends that you vote: +1. +FOR the election of each of CPI’s director nominees named in this proxy statement; and +- 2 - +Table of Contents +2. +FOR the ratification of the retention of KPMG LLP as our independent registered public accounting firm for 2016. +How do I vote at the Annual Meeting? +You may vote in person at the Annual Meeting or by proxy. In addition, if you are a stockholder of record of CPI’s shares, there are three ways to vote by proxy: +· +By Telephone — You can vote by telephone by following the instructions on your proxy card. You will need to use the control number appearing on your Notice or proxy card to vote by telephone; +· +By Internet — You can vote via the Internet by following the instructions on your proxy card. You will need to use the control number appearing on your Notice or proxy card to vote via the Internet; or +· +By Mail — You can vote by completing, dating, signing and returning the proxy card. +If you are a beneficial owner of shares held in street name, you may vote as follows: +· +By Telephone — If you request printed copies of the proxy materials by mail, you will receive a voting instruction form and you may vote by proxy by calling the toll free number found on the voting instruction form. The availability of telephone voting may depend on the voting process of the organization that holds your shares. +· +By Internet — You may vote by proxy via the Internet by visiting www.proxyvote.com and entering the control number found in your Notice. The availability of Internet voting may depend on the voting process of the organization that holds your shares. +· +By Mail — If you request printed copies of the proxy materials by mail, you will receive a voting instruction form and you may vote by proxy by filling out the voting instruction form and returning it in the envelope provided. +If you are a beneficial owner of shares held in street name and wish to vote in person at the Annual Meeting, you must obtain a “legal proxy” from the organization that holds your shares. A legal proxy is a written document that will authorize you to vote your shares held in street name at the Annual Meeting. Please contact the organization that holds your shares for instructions regarding obtaining a legal proxy. You must bring a copy of the legal proxy to the Annual Meeting and ask for a ballot when you arrive. +Telephone and Internet voting facilities for stockholders of record will be available 24 hours a day. You may vote over the telephone or via the Internet until 11:59 p.m. on June 1, 2016. Even if you plan to attend the Annual Meeting in person, we recommend that you also submit your proxy or voting instructions as described above so that your vote will be counted if you later decide not to attend the Annual Meeting in person. +Your proxy will be voted in accordance with your instructions, so long as, in the case of a proxy card returned by mail, such card has been signed and dated. If you vote your shares via the Internet, by telephone or by executing and returning a proxy card by mail but you do not provide specific instructions with respect to the proposals, your shares will be voted FOR the director nominees named in this proxy statement and FOR the ratification of the retention of our independent registered public accounting firm. +As of the date of this proxy statement, we do not know of any matters to be presented at the Annual Meeting except those described in this proxy statement. If any other matters properly come before the Annual Meeting, however, the persons named as proxies will be authorized to vote or otherwise act in accordance with their judgment. +- 3 - +Table of Contents +What does it mean if I receive more than one set of proxy materials? +You may receive more than one set of proxy materials, more than one e-mail or multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you may receive a separate set of proxy materials, a separate e-mail or a separate voting instruction card for each brokerage account in which you hold shares. If you are a stockholder of record and your shares are registered in more than one name, you may receive more than one set of proxy materials, more than one e-mail or more than one proxy card. To vote all of your shares by proxy, you must complete, sign, date and return each proxy card and voting instruction card that you receive or vote over the Internet the shares represented by each set of proxy materials that you receive (unless you have requested and received a proxy card or voting instruction card for the shares represented by one or more of those sets of proxy materials). +May I change my vote? +Yes. You may revoke your proxy at any time before it is voted at the Annual Meeting. To change your vote, if you are a stockholder of record, you may submit another later dated proxy by telephone, Internet or mail or by voting your shares in person at the Annual Meeting (your attendance at the Annual Meeting will not, by itself, revoke your proxy; you must vote in person at the Annual Meeting to revoke your proxy). If you are a beneficial owner and your shares are held in street name, you may change your vote by submitting new voting instructions to your bank, broker, trustee or nominee, or if you have obtained a legal proxy from such entity giving you the right to vote your shares, you may change your vote by attending the Annual Meeting and voting in person. +What vote is required to elect directors and approve the other matters described in this proxy statement? +Because this is an uncontested election, the director nominees must receive the affirmative vote of a majority of the votes cast to be elected (i.e., the number of shares voted “for” a director nominee must exceed the number of votes cast “against” that nominee) (Proposal No. 1). Abstentions and broker non-votes will have no effect on the outcome of the election of directors. +For the ratification of the retention of KPMG LLP as our independent registered public accounting firm (Proposal No. 2), the affirmative vote of the holders of a majority of the shares represented in person or by proxy and entitled to vote on the proposal will be required for approval. Abstentions will not be voted but will be counted for purposes of determining whether there is a quorum. Accordingly, abstentions will have the effect of a negative vote on Proposal No. 2. Broker non-votes will have no effect on Proposal No. 2. For additional information about broker non-votes, see “How do I vote if my bank or broker holds my shares in ‘street name’?” +What is the difference between holding shares as a stockholder of record and as a beneficial owner? +If your shares are registered in your name on the Company’s books and records or with our transfer agent, you are the “stockholder of record” of those shares, and this proxy statement and accompanying materials have been provided directly to you by the Company. On the other hand, if you purchased your shares through a brokerage or other financial intermediary, the brokerage or other financial intermediary will automatically put your shares into “street name” which means that the brokerage or other financial intermediary will hold your shares in its name or another nominee’s name and not in your name, but will keep records showing you as the “beneficial owner.” If you hold shares beneficially in street name, this proxy statement and accompanying materials have been forwarded to you by your broker, bank or other holder of record. +How do I vote if my bank or broker holds my shares in “street name”? +If you hold your shares in “street name” through a bank, broker or other nominee, such bank, broker or nominee will vote those shares in accordance with your instructions. To so instruct your bank, broker or nominee, you should refer to the information provided to you by such entity. Without instructions from you, a bank, broker or nominee will be permitted to exercise its own voting discretion with respect to so-called routine matters (Proposal No. 2 (ratification of auditors)) but will not be permitted to exercise voting discretion with respect to non-routine matters (Proposal No. 1 (director elections)). Thus, if you do not give your bank, broker or nominee specific instructions with respect to Proposal +- 4 - +Table of Contents +No. 2, your shares will be voted in such entity’s discretion. If you do not give your bank, broker or nominee specific instructions with respect to the remaining proposals, your shares will not be voted on such proposals. This is called a “broker non-vote.” Shares represented by such broker non-votes will be counted in determining whether there is a quorum and will have no effect on the non-routine proposals. We urge you to promptly provide your bank, broker or nominee with appropriate voting instructions so that all your shares may be voted at the Annual Meeting. +How many votes do I have? +Each share of common stock that you hold as of the record date entitles you to one vote, without cumulation, on each matter to be voted upon at the Annual Meeting. +How will the votes be counted at the Annual Meeting? +The votes will be counted by the inspector of election appointed for the Annual Meeting. +How will the Company announce the voting results? +The Company will report the final results of the voting at the Annual Meeting in a filing with the SEC on a Current Report on Form 8-K. +Who pays for the Company’s solicitation of proxies? +The Board is soliciting your proxy to vote your shares of common stock at our Annual Meeting. We will bear the cost of soliciting proxies on behalf of the Company, including preparing, printing and mailing this proxy statement. Proxies may be solicited personally, by mail, email or by telephone by certain of our directors, officers, employees or representatives. Our directors and employees will not be paid any additional compensation for soliciting proxies. We may reimburse brokerage firms and other persons representing beneficial owners of shares for their out-of-pocket expenses in forwarding solicitation materials to such beneficial owners. +What is “householding” and how does it work? +Under the rules adopted by the SEC, we may deliver a single set of proxy materials to one address shared by two or more of our stockholders. This delivery method is referred to as “householding” and can result in significant cost savings. To take advantage of this opportunity, we have delivered only one set of proxy materials to multiple stockholders who share an address, unless we received contrary instructions from the impacted stockholders prior to the mailing date. We agree to deliver promptly, upon written or oral request, a separate copy of the proxy materials, as requested, to any stockholder at the shared address to which a single copy of these documents was delivered. If you prefer to receive separate copies of the Notice, proxy statement or annual report, contact Broadridge Financial Solutions, Inc. by calling 1-800-542-1061 or in writing at Broadridge, Householding Department, 51 Mercedes Way, Edgewood, New York 11717. +In addition, if you currently are a stockholder who shares an address with another stockholder and would like to receive only one copy of future notices and proxy materials for your household, you may notify your broker if your shares are held in a brokerage account or you may notify us if you hold registered shares. Registered stockholders may notify us by contacting Broadridge Financial Solutions, Inc. at the above telephone number or address or sending a written request to CPI Card Group Inc., 10368 West Centennial Road, Littleton, Colorado 80127, Attention: Investor Relations. +What do I need for admission to the Annual Meeting? +Attendance at the Annual Meeting or any adjournment or postponement thereof will be limited to record and beneficial stockholders as of the record date (April 15, 2016), individuals holding a valid proxy from a record holder and other persons authorized by the Company. If you are a stockholder of record (or a “recordholder”) your name will be verified against the list of stockholders of record prior to your admittance to the Annual Meeting or any adjournment or postponement thereof. You should be prepared to present photo identification for admission. If you hold your shares in a street name, you will need to provide proof of beneficial ownership on the record date, such as a brokerage account +- 5 - +Table of Contents +statement showing that you owned stock as of the record date, a copy of a voting instruction form provided by your broker, bank or other nominee, or other similar evidence of ownership as of the record date, as well as your photo identification, for admission. If you do not provide photo identification or comply with the other procedures described above, you will not be admitted to the Annual Meeting or any adjournment or postponement thereof. For security reasons, you and your bags may be subject to search prior to your admittance to the Annual Meeting. +Explanatory Note +We are an “ emerging growth company ” as defined in the Jumpstart Our Business Startups Act of 2012 (the “ JOBS Act ” ). For as long as we are an emerging growth company, we will not be required to provide an auditor ’ s attestation report on management ’ s assessment of the effectiveness of our system of internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002, or obtain stockholder approval of any golden parachute payments not previously approved. In addition, because we are an emerging growth company, we are not required to include a Compensation Discussion and Analysis section in this proxy statement and have elected to comply with the scaled-down executive compensation disclosure requirements applicable to emerging growth companies. +We could be an emerging growth company for up to five years from the date of our initial public offering, or until the earliest of (i) the last day of the first fiscal year in which our annual gross revenues exceed $1 billion, (ii) the date that we become a “ large accelerated filer ” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “ Exchange Act ” ), which would occur at the end of the fiscal year during which the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period. Under Section 107(b) of the JOBS Act, emerging growth companies may delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have irrevocably elected not to avail ourselves of this exemption from new or revised accounting standards and, therefore, we are subject to the same new or revised accounting standards as other public companies that are not emerging growth companies. +- 6 - +Table of Contents +ELECTION OF DIRECTORS +(PROPOSAL NO. 1) +Upon the recommendation of our Nominating and Corporate Governance Committee (the “Nominating Committee”), the Board has nominated the seven individuals listed below to stand for election to the Board for a one-year term ending at the annual meeting of stockholders in 2017 or until their successors, if any, are elected or appointed. Our Amended and Restated Certificate of Incorporation and Bylaws provide for the annual election of directors. Each director nominee must receive the affirmative vote of a majority of the votes cast to be elected (i.e., the number of shares voted “for” a director nominee must exceed the number of votes cast “against” that nominee). Unless contrary instructions are given, the shares represented by your proxy will be voted FOR the election of all director nominees. The Board has determined that each director nominee, other than Mr. Montross, is an independent director, as further described below in “Directors and Corporate Governance — Independence of Directors.” +All of the director nominees listed below have consented to being named in this proxy statement and to serve if elected. However, if any nominee becomes unable to serve, proxy holders will have discretion and authority to vote for another nominee proposed by our Board. Alternatively, our Board may reduce the number of directors to be elected at the Annual Meeting. +Name +Position +Diane Fulton +Director +Steven Montross +Director, President and Chief Executive Officer +Douglas Pearce +Director +Robert Pearce +Director +Nicholas Peters +Director +David Rowntree +Director +Bradley Seaman +Chairman of the Board +Biographical information relating to each of the director nominees is set forth below under “Directors and Corporate Governance” and incorporated by reference herein. +THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE ELECTION OF EACH OF CPI’s DIRECTOR NOMINEES NAMED IN THIS PROXY STATEMENT. +PROXIES SOLICITED BY THE BOARD WILL BE VOTED FOR THE ELECTION OF EACH OF CPI’s DIRECTOR NOMINEES NAMED IN THIS PROXY STATEMENT UNLESS STOCKHOLDERS SPECIFY A CONTRARY VOTE. +- 7 - +Table of Contents +DIRECTORS AND CORPORATE GOVERNANCE +Director Biographical Information and Qualifications +Set forth below is a description of the business experience of each director, as well as the specific qualifications, skills and experiences considered by the Nominating Committee and the Board in recommending our slate of director nominees. Each director listed below is nominated for reelection to the Board for a term expiring at the annual meeting of stockholders in 2017. See “Election of Directors (Proposal No. 1).” +Diane Fulton , 62, has served on our Board of Directors since December 2015. Since September 2008, Ms. Fulton has served as the Vice President and Chief Investment Officer of the Vancouver Foundation, Canada’s largest community foundation. Prior to that, Ms. Fulton spent nine years at The University of British Columbia, most recently as the Executive Director, Investments, and 12 years ScotiaMcLeod Inc., a division of Scotia Capital Inc., most recently as Director and Vice President of Corporate Finance. Ms. Fulton currently serves on the boards of directors of Ten Peaks Coffee Company (TSX: TPK) and the University of British Columbia Investment Management Trust and served on the board of directors of Insurance Corporation of British Columbia from 2004 to 2010, and Pacific Northern Gas Limited (TSX: PNG) from 2005 until its acquisition by Altagas Ltd. in 2011. Ms. Fulton also serves as an advisor to the investment committees of the Insurance Corporation of British Columbia and Pacific Blue Cross. Ms. Fulton holds a Masters of Business Administration from York University and a Bachelor’s Degree in Mathematics from the University of Toronto. Ms. Fulton brings to the Board a breadth of finance and investment skills, as well as public company board experience. +Steven Montross , 62, has served as our President and Chief Executive Officer since January 2009. Prior to joining CPI, Mr. Montross was a founding shareholder and Managing Director of FirstLight Financial Corporation, a business which invests senior debt capital in private-equity owned businesses, from 2007 to 2008. Prior to forming FirstLight, Mr. Montross had a 17 year career at General Electric Company where he held positions of increasing responsibility and leadership within GE’s financial service businesses, including a business that financed private-equity owned enterprises. Mr. Montross holds a Bachelor of Business Administration degree from the University of Michigan and a Masters of Business Administration from the Kellogg School of Management at Northwestern University. Mr. Montross brings to the Board extensive executive leadership experience, and, through his position as our Chief Executive Officer, he brings to the Board management’s perspective over a full range of issues affecting the Company. +Douglas Pearce , 63, has served on our Board of Directors since January 2016. Mr. Pearce was the founding Chief Executive Officer and Chief Investment Officer of the British Columbia Investment Management Corporation (bcIMC), one of Canada’s largest institutional money managers. Mr. Pearce led the organization from 1988 until he retired in June 2014. Mr. Pearce has also served as director and Chair of the Canadian Coalition for Good Governance (CCGG), the Pacific Pension Institute (PPI), and the Pension Investment Association of Canada (PIAC). Mr. Pearce was a member of the Faculty Advisory Board at the University Of British Columbia Sauder School Of Business and the Advisory Board at the Forum for Women Entrepreneurs. Mr. Pearce received his Bachelor of Commerce degree from the University of Calgary and is an accredited director in the Institute of Corporate Directors (ICD). Mr. Pearce brings to the Board a wealth of investment and corporate governance experience. +Robert Pearce , 61, has served on our Board of Directors since 2007. Mr. Pearce also serves on the board of directors of Canada Guaranty Mortgage Insurance Company and First American Payments Systems, and as an advisor to NorthCard Inc. Mr. Pearce spent 26 years with BMO Bank of Montreal, from 1980 to 2006, most recently holding the position of Chief Executive Officer and President, Personal and Commercial Client Group. He also served on the board of directors of MasterCard International from 1998 to 2006 and as Chairman of the Canadian Bankers’ Association from 2004 to 2006. Mr. Pearce holds a Bachelor of Arts from the University of Victoria and a Master of Business Administration from the University of British Columbia. Mr. Pearce brings to the Board more than 30 years of operational and leadership experience in the financial services industry, including extensive operating experience in credit card, debit card and prepaid cards in both card issuing and merchant acceptance in Canada and the United States. +Nicholas Peters , 43, has served on our Board of Directors since 2007. Mr. Peters is a Managing Director at Parallel49 Equity (formerly Tricor Pacific Capital) a private equity firm that makes control investments in lower middle market companies in the United States and Canada, which he joined in 2002, and also began serving as Parallel49 Equity’s +- 8 - +Table of Contents +Chief Financial Officer in 2012. Prior to joining Parallel49 Equity, Mr. Peters was a Senior Manager at Arthur Andersen LLP in Chicago. Mr. Peters is the Chairman of BFG Supply Company LLC and Certified Recycling and has served on the board of several other Parallel49 Equity investment companies. Mr. Peters holds a Bachelor of Science degree in Business Administration from the University of Dayton in Ohio. He is a Certified Public Accountant and is affiliated with the American Institute of Certified Public Accountants and the Ohio Society of CPAs. Mr. Peters brings to the Board strong finance and accounting skills, as well as valuable experience from his oversight of the management and operations of several of Parallel49 Equity’s portfolio companies. +David Rowntree , 60, has served on our Board of Directors since 2007. Mr. Rowntree is the President and Chair of Highland West Capital Ltd., a Vancouver-based merchant bank that he founded in July 2012. Mr. Rowntree is one of the founders of Tricor Pacific Capital, where he served as a Managing Director from January 1996 to June 2013. Prior to co-founding Tricor, Mr. Rowntree was a practicing attorney in both public practice and as in-house counsel. Mr. Rowntree is the Chair of Ten Peaks Coffee Company (TSE:TPK). Mr. Rowntree holds a Bachelor of Arts from the University of British Columbia and a Bachelor of Law from the Osgoode Hall Law School in Toronto, Ontario. Mr. Rowntree brings to the Board more than three decades of public and private investment expertise as well as experience in corporate governance, strategic planning and risk mitigation and assessment. +Bradley Seaman , 56, has served on our Board of Directors since 2007 and currently serves as Chairman of the Board. Mr. Seaman has been employed, since August 1999, by Parallel49 Equity. From 1999 through December 2011, Mr. Seaman was Parallel49 Equity’s Managing Director and leader of its U.S. operations, and, since January 2012, has served as its Managing Partner, responsible for leading overall firm operations, strategy, funding and investments. Prior to joining Parallel49 Equity, and from 1990 through July 1999, Mr. Seaman was employed by GE Capital Corporation where he held a number of increasingly senior positions in GE’s Transportation & Industrial Funding and Commercial Finance units, ultimately being promoted to head GE Capital’s transactions origination teams in Ohio, Michigan and Missouri. In 1994, Mr. Seaman was selected to be part of a new group that was established to focus GE Capital’s debt and equity products on the emerging private equity market, and, in that capacity, headed GE’s offices in New York and Chicago. Mr. Seaman is also a member of the board of directors of Steel Dynamics, Inc. (NASDAQ: STLD). Mr. Seaman holds a Bachelor of Science degree in Business Administration from Bowling Green State University and a Master of Business Administration from the University of Dallas. He brings to the Board a comprehensive understanding and experience in the capital markets, management experience, and both operational and corporate governance experience drawn from his involvement in the management and oversight of Parallel49 Equity’s portfolio companies. +Director Selection Process +The Nominating Committee works with the Board to determine periodically, as appropriate, the desired Board qualifications, expertise and characteristics, including such factors as business experience and diversity of experience; and with respect to diversity, the Nominating Committee may consider such factors as differences in professional background, education, skill, and other individual qualities and attributes that contribute to the total mix of viewpoints and experience represented on the Board. +The Nominating Committee and the Board evaluate each individual in the context of the membership of the Board as a group, with the objective of having a group that can best perpetuate the success of the business and represent stockholder interests through the exercise of sound judgment using its diversity of background and experience in the various areas. Each director should be an individual of high character and integrity. In determining whether to recommend a director for re-election, the Nominating Committee also considers the director’s past attendance at meetings, participation in and contributions to the activities of the Board and the Company and other qualifications and characteristics that may be set forth in the Nominating Committee charter. +Recommendation of Directors by Stockholders +In accordance with its charter, the Nominating Committee will consider candidates for election as a director of the Company recommended by any CPI stockholder, provided that the recommending stockholder follows the procedures set forth in Section 2.10 of the Company’s Bylaws for nominations by stockholders of persons to serve as directors. The +- 9 - +Table of Contents +Nominating Committee evaluates such candidates in the same manner by which it evaluates other director candidates considered by the Nominating Committee, as described above. +Pursuant to Section 2.10 of the Bylaws, nominations of persons for election to the Board at a meeting of stockholders may be made by any stockholder of the Company entitled to vote for the election of directors at the meeting who sends a timely notice in writing to our Corporate Secretary. To be timely, a stockholder’s notice must be delivered to, or mailed and received by, our Corporate Secretary at the Company’s principal executive offices not less than 90 nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting; provided, however, that if the annual meeting is more than 30 days prior to or after the anniversary of the preceding year’s annual meeting, notice by the stockholder must be delivered not later than the close of business on the later of the 90th day prior to such annual meeting or the 10th day following the day on which “public announcement” of the date of such annual meeting is made by the Company. For purposes of the Bylaws, “public announcement” means disclosure in a press release reported by the Dow Jones News Service, Associated Press or a comparable national news service or in a document publicly filed by us with the SEC. +The stockholder’s notice or recommendation is required to contain certain prescribed information about each person the stockholder proposes to recommend for election as a director, the stockholder giving notice and the beneficial owner, if any, on whose behalf notice is given. The stockholder’s notice must also include the consent of the person proposed to be nominated and to serve as a director if elected. Recommendations or notices relating to director nominations should be sent to CPI Card Group, 10368 West Centennial Road, Littleton, Colorado 80127; Attention: David Brush, Chief Financial Officer and Corporate Secretary. +Independence of Directors +The Company’s Corporate Governance Guidelines provide that a majority of the members of the Board, and each member of the Audit Committee, Compensation Committee and Nominating Committee, must meet the criteria for independence set forth under applicable law and the NASDAQ Global Select Market (“NASDAQ”) listing standards. No director qualifies as independent unless the Board determines that the director has no direct or indirect material relationship with the Company. These independence guidelines are part of our Corporate Governance Guidelines, available on our website at www.cpicardgroup.com. The Board considers all relevant facts and circumstances of which it is aware in making an independence determination with respect to any director. +The Board has made independence determinations with respect to each of our directors. Based on the NASDAQ independence guidelines, the Board has affirmatively determined that each of Ms. Fulton and Messrs. D. Pearce, R. Pearce, Peters, Rowntree and Seaman are independent within the meaning of NASDAQ rules. +Board’s Role in Risk Oversight +The Company’s management continually monitors the material risks facing the Company. Our enterprise risk management process is designed to facilitate the identification, assessment and management of certain key risks the Company may encounter and which may impact our ability to achieve our strategic objectives. The enterprise risk management process supplements management’s ongoing responsibilities to monitor and address risks by working with risk owners to identify causes of and action plans for certain risks, which then are discussed with senior management. +The Board, with the assistance of the Board committees, is responsible for overseeing such management actions to ensure that material risks affecting the Company are identified and managed appropriately. The Board and the Board committees oversee risks associated with their principal areas of focused, as summarized below: +- 10 - +Table of Contents +Board/Committee Areas of Risk Oversight and Actions +Full Board + Careful evaluation the reports received from management and by making inquiries of management on areas of particular interest to the Board + Reviews with management material strategic, operational, financial, compensation and compliance risks + Considers specific risk topics in connection with strategic planning and other matters + Oversees risk oversight and related activities conducted by the Board committees through reports of the committee chairmen to the Board +Audit Committee + Discusses with management the Company’s process for assessing and managing risks, including the Company’s major financial risk exposures and the steps necessary to monitor and control such exposures + Central oversight of financial and compliance risks + Meets periodically with senior management and our independent auditor, KPMG LLP, and reports on its findings at meetings of the Board + Assesses periodically reports provided by management on risks addressed in the enterprise risk management process and other risks +Compensation Committee + Oversees the review and evaluation of the risks associated with our compensation policies and practices +Nominating Committee + Oversees risks associated with our governance structure and processes + Reviews our organizational documents, Corporate Governance Guidelines and other policies +Corporate Governance +The Board has approved Corporate Governance Guidelines, a Code of Business Conduct and Ethics and a Code of Conduct for Financial Officers. All of our corporate governance documents, including the Corporate Governance Guidelines, the Code of Business Conduct and Ethics, the Code of Conduct for Financial Officers and committee charters, are available on our website at www.cpicardgroup.com or in printed form upon request by contacting CPI Card Group at 10368 West Centennial Road, Littleton, Colorado 80127, Attention: Investor Relations. The Board regularly reviews corporate governance developments and modifies these documents as warranted. Any modifications will be reflected on our website. The information on our website is not part of this proxy statement and is not deemed to be incorporated by reference herein. +Other Board Information +Leadership Structure of the Board +Bradley Seaman serves as our Chairman of the Board, and Steve Montross serves as our Chief Executive Officer. Our Board has decided to maintain separate Chairman and CEO roles to allow our CEO to focus on the execution of our business strategy, growth and development, while allowing the Chairman to lead the Board in its fundamental role of providing advice to, and independent oversight of, management. The Board recognizes the time, effort and energy that the CEO is required to devote to his position in the current business environment, as well as the commitment required to serve +- 11 - +Table of Contents +as our Chairman. While our Bylaws and Corporate Governance Guidelines do not require that our Chairman and CEO positions be separate, the Board believes that having separate positions and having an independent director serve as Chairman is the appropriate leadership structure for us at this time. +Board Meetings +In 2015, our Board held eight meetings. In addition to our Board meetings, our directors attend meetings of committees established by our Board. Each of CPI’s director nominees attended at least 75% of the meetings of our Board and the committees on which he or she served during 2015 that were held when he or she was a director. Our directors are encouraged to attend all annual and special meetings of our stockholders. +Meetings of Non-Employee Directors +In accordance with our Corporate Governance Guidelines, our non-employee directors meet regularly in executive sessions of the Board without management present. Mr. Seaman, our Chairman, presides over these executive sessions. +Committees of the Board +The Board has three standing committees: the Audit Committee, the Compensation Committee and the Nominating Committee. The following chart sets forth the directors who currently serve as members of each of the Board committees as of the date of this proxy statement. +Compensation +Directors +Audit Committee +Committee +Nominating Committee +Diane Fulton +X +Steven Montross +Douglas Pearce +X +X +Robert Pearce +X +C +X +Nicholas Peters +C +X +David Rowntree +X +C +Bradley Seaman* +X +* Chairman of the Board +“C” Denotes member and chairman of committee +“X” Denotes member +Audit Committee +In 2015, the Audit Committee held two meetings. Ms. Fulton joined the Audit Committee upon her appointment to the Board in December 2015, replacing Mr. Seaman, and Mr. Doug Pearce joined the Audit Committee upon his appointment to the Board in January 2016. Each of the members of the Audit Committee is a non-employee director. We believe that each of Ms. Fulton and Messrs. Doug Pearce and Robert Pearce meets the independence criteria for purposes of serving on an audit committee under the NASDAQ Global Select Market Rules and Rule 10A-3 under the Exchange Act. In addition, our board of directors has determined that each of Ms. Fulton and Messrs. Robert Pearce and Doug Pearce qualifies as an “audit committee financial expert,” as such term is defined in Item 407(d)(5) of Regulation S-K. As a newly public company, we are permitted to take advantage of certain transition periods with respect to the independence of our Audit Committee. The NASDAQ Global Select Market Rules and Rule 10A-3 under the Exchange Act provide for a phase-in of the independence requirements for audit committees, requiring one independent director on the date our registration statement became effective, a majority of independent directors within 90 days of such date and a fully independent committee within one year of such date. In accordance with this phase-in schedule, we expect to add additional independent directors to our audit committee in order to satisfy the applicable independence requirements under the rules of the NASDAQ Global Select Market and the SEC prior to the one-year anniversary of the effectiveness of our registration statement. +- 12 - +Table of Contents +Compensation Committee +The Compensation Committee was established in October 2015 in connection with our initial public offering and held one meeting in 2015. The Board has determined that all of the members of the Compensation Committee are independent as defined in NASDAQ Global Select Market rules, including the independence standards applicable to compensation committees. The Compensation Committee has overall responsibility for approving and evaluating director and officer compensation plans, policies and programs of the Company and reviewing the disclosure of such plans, policies and programs to our stockholders in the annual proxy statement. The Compensation Committee utilizes an independent compensation consultant to assist it in its duties. The Compensation Committee operates under a written charter setting forth its functions and responsibilities. A copy of the current charter is available on our website at www.cpicardgroup.com or in printed form upon request. +In consultation with the Company’s management, the Compensation Committee establishes the general policies relating to senior management compensation and oversees the development and administration of such compensation programs. Our human resources executives and staff support the Compensation Committee in its work. These members of management work with compensation consultants whose engagements have been approved by the Compensation Committee, accountants and legal counsel, as necessary, to implement the Compensation Committee’s decisions, to monitor evolving competitive practices and to make compensation recommendations to the Compensation Committee. Our human resources management develops specific compensation recommendations for senior executives, which are first reviewed by senior management and then presented to the Compensation Committee and its independent compensation consultant. The Compensation Committee has final authority to approve, modify or reject the recommendations and to make its decisions in executive session. The Compensation Committee approves all compensation of our executive officers, including equity awards. +In 2015, the Compensation Committee engaged Aon Hewitt as its independent compensation consultant. The consultant reports directly to the Compensation Committee, including with respect to management’s recommendations of compensation programs and awards. The Compensation Committee has the sole authority to approve the scope and terms of the engagement of such compensation consultant and to terminate such engagement. Aon Hewitt has assisted the Compensation Committee with the development of competitive market data and a related assessment of the Company’s executive and director compensation levels, evaluation of annual and long-term incentive compensation strategy and compilation and review of total compensation data for the Company’s Named Executive Officers (as defined in “Executive Compensation”). Other than with respect to consulting on executive and director compensation matters, Aon Hewitt has performed no other services for the Compensation Committee or the Company. +The Compensation Committee has reviewed the independence of Aon Hewitt in light of SEC rules and NASDAQ listing standards regarding compensation consultants and has concluded that Aon Hewitt’s work for the Compensation Committee does not raise any conflict of interest. +Nominating and Corporate Governance Committee +The Nominating Committee was established in October 2015 in connection with our initial public offering and held one meeting in 2015. Mr. Doug Pearce joined the Nominating Committee upon his appointment to the Board in January 2016. Each of the members of the Nominating Committee is independent as defined in NASDAQ Global Select Market rules. +The Nominating Committee is responsible for, among other things: (i) identifying individuals qualified to become members of the Board, consistent with criteria approved by the Board; (ii) recommending director nominees to the Board for election at the next annual meeting of the stockholders of the Company; (iii) in the event of a vacancy on or an increase in the size of the Board, recommending director nominees to the Board to fill such vacancy or newly established Board seat; (iv) recommending directors to the Board for membership on each committee of the Board; and (v) establishing and reviewing annually our Corporate Governance Guidelines and Code of Business Conduct and Ethics. The Nominating Committee operates under a written charter setting forth its functions and responsibilities. A copy of the current charter is available on our website at www.cpicardgroup.com or in printed form upon request. +- 13 - +Table of Contents +Communications to the Board +Stockholders and interested parties can contact the Board (including the Chairman and the independent directors) through written communication sent to CPI Card Group, 10368 West Centennial Road, Littleton, Colorado 80127, Attention: David Brush, Chief Financial Officer and Corporate Secretary. Our Corporate Secretary reviews all written communications and forwards to the Board copies of any such correspondence that is directed to the Board or that, in the opinion of the Corporate Secretary, deals with the functions of the Board or Board committees or that he otherwise determines requires the Board’s or any Board Committee’s attention. Concerns relating to accounting, internal accounting controls or auditing matters are immediately brought to the attention of our internal audit department and handled in accordance with procedures established by the Audit Committee with respect to such matters. From time to time, the Board may change the process by which stockholders may communicate with the Board. Any such changes will be reflected in our Corporate Governance Guidelines, which are posted on our website at www.cpicardgroup.com. +Director Compensation +As described more fully below, the following table summarizes the annual compensation for our non-employee directors during 2015. +2015 DIRECTOR COMPENSATION +Fees +Earned +Or Paid +In Cash +Total +Name +($) +($) +Robert Pearce +$ +100,000 +$ +100,000 +Nicholas Peters +— +— +Bradley Seaman +— +— +James Galliher (1) +$ +100,000 +$ +100,000 +Robert Clarke (1) +$ +100,000 +$ +100,000 +Jonathan Dries (1) +— +— +David Rowntree +— +— +Diane Fulton (2) +$ +8,334 +$ +8,334 +(1) +Messrs. Galliher, Clarke and Dries resigned from our board of directors in August 2015. +(2) +Ms. Fulton joined the Board of Directors in December 2015 and received prorated fees for 2015 services. +Narrative to Director’s Compensation Table +In 2015, our non-employee directors who were not affiliated with the Tricor Funds received an annual cash retainer of $100,000 per year. +Beginning in 2016, we revised our director compensation program to reflect competitive practices and our transition to a publicly traded company. The resulting compensation package for our non-employee directors (other than, our non-employee directors who are affiliated with the Tricor Funds) is set forth in the table below. The Board, at its discretion, may choose to modify current practice relating to compensation of Directors who are affiliated with the Tricor Funds. +- 14 - +Table of Contents +Compensation Element +Value +Retainer +$100,000 (may elect to receive 50% in restricted stock units, vesting 100% on the first anniversary of the award date) +Compensation Committee Chair Fee +$ +15,000 +Audit Committee Chair Fee +$ +20,000 +Nominating Committee Chair Fee +$ +10,000 +Compensation Committee Member Fee +$ +7,500 +Audit Committee Member Fee +$ +10,000 +Nominating Committee Member Fee +$ +5,000 +Security Ownership of Certain Beneficial Owners, Directors and Management +The following table sets forth, as of April 15, 2016 (except as indicated below), beneficial ownership, as defined by SEC rules, of our common stock. Each of the persons listed below has sole voting and investment power with respect to the beneficially owned shares listed unless otherwise indicated. The percentage calculations set forth in the table are based on 56,542,116 shares of common stock outstanding on April 15, 2016 rather than based on the percentages set forth in stockholders’ Schedules 13G or 13D, as applicable, filed with the SEC. Unless otherwise indicated, the address of each beneficial owner is c/o CPI Card Group Inc., 10368 West Centennial Road, Littleton, Colorado 80127. +Number of +Shares of +Percentage of +Common +Common +Stock +Stock +Owned +Owned +Beneficially +Beneficially +5% Beneficial Owners: +Tricor Pacific Capital Partners (Fund IV), Limited Partnership(1) +20,621,843 +36.5% +Tricor Pacific Capital Partners (Fund IV) US, Limited Partnership (1) +12,172,288 +21.5% +Ameriprise Financial, Inc.(2) +2,919,707 +5.2% +Capital World Investors (3) +2,908,502 +5.1% +Named Executive Officers and Directors: +Steven Montross +1,519,143 +2.7% +David Brush +177,664 +* +Lisa Jacoba +49,000 +* +Diane Fulton(4) +4,000 +* +Douglas Pearce +125 +* +Robert Pearce +392,888 +* +Nicholas Peters +–– +–– +David Rowntree +–– +–– +Bradley Seaman +–– +–– +Total Executive Officers and Directors as a Group (14 individuals) +3,002,393 +5.3% +* Less than 1% +(1) +Based on a Schedule 13G filed jointly by Tricor Pacific Capital Partners (Fund IV), Limited Partnership, Tricor Pacific Capital Partners (Fund IV) US, Limited Partnership (collectively, the “Tricor Funds”) and Parallel49 Equity, ULC on February 12, 2016. Each of the Tricor Funds is managed by Parallel49 Equity, ULC, as the general partner. +- 15 - +Table of Contents +Mr. Seaman, Mr. Rowntree, J. Trevor Johnstone and Roderick Senft are the sole members of an investment committee of the Tricor Funds that has the power to vote or dispose of the shares held by the Tricor Funds. Each of Messrs. Seaman, Peters and Rowntree is an officer or member of Tricor and has an indirect pecuniary interest in the shares of common stock held by the Tricor Funds through their respective interests in the Tricor Funds. Each of Messrs. Seaman, Peters and Rowntree expressly disclaims any beneficial ownership of any shares of common stock held by the Tricor Funds. The address of the Tricor Funds is c/o Tricor Pacific Capital, One Westminster Place, Suite 100, Lake F orest, IL 60045. +(2) +Based on a Schedule 13G filed on February 12, 2016. Ameriprise Financial, Inc. (“Ameriprise”) reports shared voting power with respect to 2,882,201 shares and has shared dispositive power with respect to 2,919,707 shares. Columbia Management Investment Advisers, LLC (“Columbia”) has shared voting power with respect to 2,882,201 shares and has shared dispositive power with respect to 2,919,707 shares. Ameriprise, as the parent company of Columbia, may be deemed to beneficially own the shares reported by Columbia. Accordingly, the shares reported by Ameriprise include those shares separately reported by Columbia. The address for Ameriprise is 145 Ameriprise Financial Center, Minneapolis, MN 55474. The address for Columbia is 225 Franklin St. Boston, MA 02110. +(3) +Based on a Schedule 13G filed on February 12, 2016. The address of Capital World Investors is 333 South Hope Street, Los Angeles, CA 90071. +(4) +Includ es 4,000 shares of common stock held by Ms. Fulton’s husband. +Section 16(a) Beneficial Ownership Reporting Compliance +Based upon our review of reports filed with the SEC and written representations that no other reports were required, we believe that all of our directors and executive officers complied with the reporting requirements of Section 16(a) of the Exchange Act during 2015. +- 16 - +Table of Contents +EXECUTIVE OFFICERS +The following table sets forth certain information concerning each of our executive officers: +Name +Age +Position +Steven Montross +62 +President, Chief Executive Officer and Director +David Brush +50 +Chief Financial Officer +Chris Bakke +45 +Chief Accounting Officer +Lisa Jacoba +48 +Chief Human Resources Officer +William Dinker +60 +Executive Vice President +Anna Rossetti +56 +President—CPI Canada +Jerry Dreiling +53 +Vice President Finance, Planning and Operations Support +Nicholas Cahn +52 +Managing Director—CPI Europe +Steven Montross . See “Directors and Corporate Governance” for Mr. Montross’ biographical information. +David Brush has served as our Chief Financial Officer since 2015. From 2013 to 2015, Mr. Brush managed Idris Capital Partners, a financial and operational advisory firm. From 2012 to 2013, Mr. Brush served as Group Executive and President—Power Transmission of Rexnord Corporation, a global industrial business in process and motion control and water management. From 1994 to 2011, Mr. Brush served in various roles at Pactiv Corporation, a multi-national manufacturer of packaging and consumer products, including Vice President and General Manager, Specialty Packaging from 2005 to 2011, Vice President and Treasurer from 2000 to 2005, Vice President Finance, Protective & Flexible Packaging from 1997 to 1999 and multiple finance positions within Specialty Packaging from 1994 to 1996. Prior to joining Pactiv, Mr. Brush was Audit Manager at Price Waterhouse LLC from 1987 to 1994. Mr. Brush received his Bachelor’s degree in Accounting from the University of Northern Iowa. +Chris Bakke has served as our Chief Accounting Officer since March 2016. Mr. Bakke joined the Company in November 2015 as Vice President and Controller. Prior to joining the Company, Mr. Bakke served in various capacities at Western Union from May 2002, most recently as Senior Vice President Global Operations from August 2012 to September 2015. Prior to his time with Western Union, Mr. Bakke served in the Assurance and Advisory Business Services practice at Ernst & Young LLP for eight years. Mr. Bakke holds a Bachelor’s Degree from the University of Colorado at Boulder and is a certified public accountant in the State of Colorado. +Lisa Jacoba has served as our Chief Human Resources Officer since June 2015. From 2006 to 2014, Ms. Jacoba served as Senior Vice President at Western Union in the United States and United Kingdom where she held leadership positions in the human resources function. Prior to that, Ms. Jacoba held various human resources leadership positions at First Data Corporation from 1990 to 2006. Ms. Jacoba received her Bachelor of Science in Human Resources from Bellevue University. +William Dinker has served as our Executive Vice President since August 2015. Prior to that, Mr. Dinker served as the President, CPI EFT Source since the Company’s acquisition of EFT Source, Inc. in September 2014. Prior to our acquisition of EFT Source, Mr. Dinker served as the President and Chief Executive Officer of EFT Source from 1999 to 2014 and as Vice President of Sales of EFT Source from 1989 to 1999. Prior to joining EFT Source, Mr. Dinker held various management positions at Anheuser-Busch working with its distributors. Mr. Dinker holds a Bachelor of Business Administration from Middle Tennessee State University and a Masters of Business Administration from Vanderbilt University. +Anna Rossetti has served as the President of CPI Card Group—Canada since 2008. From 1999 to 2008, Ms. Rossetti held several positions with Giesecke & Devrient (Canada), including President from 2004 to 2008 and Senior Vice President and General Manager from 1999 to 2004. Prior to that, Ms. Rossetti worked with Equifax Canada, Bank of Nova Scotia and Bank of Montreal. Ms. Rossetti received her Bachelor’s degree in Economics with Honors from York University. +Jerry Dreiling has served as our Vice President Finance, Planning and Operations Support since March 2016. Prior to that, Mr. Dreiling served as Vice President and Chief Accounting Officer from August 2011 to March 2016, +- 17 - +Table of Contents +overseeing the Company’s audit and budgeting function. From 2000 to 2011, Mr. Dreiling served as Chief Financial Officer of Picosecond Pulse Labs. From 1990 to 2000, he served in several senior financial roles, including Director of Strategic Financial Planning, and business unit Finance Director at Storage Tek. From 1984 to 1990, he served as an officer at United Bank of Denver. Mr. Dreiling received his Bachelor’s in Business Administration with honors from the University of Northern Colorado and his Master of Business Administration with honors from Regis University. +Nicholas Cahn has served as Managing Director of CPI Europe since 2008. From 2000 to 2008, Mr. Cahn was Director of the Card Division for Oakhill plc and then Managing Director of PCC Services Ltd., prior to its acquisition by CPI in 2008. Prior to this, Mr. Cahn spent 15 years with Group Bull of France, serving as Director of International Sales in the smartcard division in Paris, Smartcard Business Unit Director in London and Vice President of a joint venture with Dai Nippon Printing in Tokyo. Mr. Cahn holds a business studies degree from Thames Valley University and is an alumnus of Bull’s Executive Advanced Management Course and the European Executive Training Program in Japan. +EXECUTIVE COMPENSATION +The following Summary Compensation Table discloses the compensation information for fiscal years 2015 and 2014 for our principal executive officer (“PEO”) and the two most highly compensated executive officers other than the PEO who were serving as executive officers at the end of the last completed fiscal year (the “named executive officers”). Certain updated 2016 compensation and other information is provided in the narrative sections following the Summary Compensation Table. +Summary Compensation Table +Nonqualified +Non-Equity +Deferred +Incentive Plan +Compensation +All Other +Name and Principal Position +Year +Salary +Bonus (1) +Stock Awards (2) +Option Awards (3) +Compensation +Earnings +Compensation (4) +Total +Steven Montross +2015 +$ +484,687 +— +— +$ +1,052,656 +$ +82,025 +— +$ +22,577 +$ +1,641,945 +President and Chief Executive Officer +2014 +$ +415,700 +$ +207,850 +— +— +$ +207,850 +— +$ +22,750 +$ +854,150 +David Brush Chief Financial Officer (5) +2015 +$ +241,875 +— +$ +1,396,096 +$ +323,475 +$ +39,489 +— +$ +9,622 +$ +2,010,557 +Lisa Jacoba Chief Human Resources Officer (5) +2015 +$ +129,000 +— +$ +416,000 +$ +105,555 +$ +24,098 +— +$ +2,400 +$ +677,053 +(1) +This amount represents a special bonus awarded to Mr. Montross in light of his exceptional performance in 2014. In determining this bonus, the board of directors considered the increase in the Company’s EBITDA for the year ended December 31, 2014 as compared to the prior year and the successful completion of the EFT Source acquisition. +(2) +These amounts represent the grant date fair value of restricted stock awards granted to certain of the named executive officers in connection with their initial terms of employment. The values were calculated in accordance with FASB ASC Topic 718. +(3) +These amounts represent the grant date fair value of the stock option awards granted to the named executive officers in connection with the Company’s initial public offering in 2015, calculated in accordance with FASB ASC Topic 718. For a discussion of the assumptions and methodologies used in calculating the grant date fair value of the stock option awards, please see Note 17 to the Company’s consolidated financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015. +(4) +These amounts represent (a) for Mr. Montross, a car allowance and reimbursement for certain commuting expenses in 2014; and a car allowance, reimbursement for certain commuting expenses and matching contributions under the Company’s 401(k) plan in 2015; (b) for Mr. Brush, reimbursement for certain commuting expenses and matching contributions under the Company’s 401(k) plan in 2015; and (c) for Ms. Jacoba, matching contributions under the Company’s 401(k) plan in 2015. +(5) +Mr. Brush and Ms. Jacoba commenced employment with the Company on June 22, 2015 and were not named executive officers in 2014; thus, 2014 compensation information for them is not included in this table. +Base Salaries +Base salaries established for the Company’s executive officers are intended to reflect each individual’s responsibilities, experience, historical performance and other discretionary factors deemed relevant by the Company and have generally been set at levels deemed necessary to attract and retain individuals with superior talent. Base salaries are also designed to provide executive officers with steady cash flow during the course of the fiscal year that is not contingent on short-term variations in the Company’s operating performance. +- 18 - +Table of Contents +Our named executive officers were entitled to the following annual base salaries in 2015 and 2016 (Mr. Montross and Ms. Jacoba each received base salary increases in 2016 based on the competitive positioning of their compensation and their performance): +2015 Base Salary +2016 Base Salary +Named Executive Officer +(Effective April 1, 2015) (1) +(Effective March 1, 2016) +Steven Montross +$ +500,000 +$ +525,000 +David Brush +$ +450,000 +$ +450,000 +Lisa Jacoba +$ +260,000 +$ +265,429 +(1) +Mr. Brush and Ms. Jacoba’s 2015 base salaries were effective as of the commencement of their employment with the Company in 2015. +Annual Incentive Awards +The Company maintains an annual incentive compensation program (the “IC Plan”) to incentivize senior management and other key employees to achieve the short-term financial and non-financial objectives of the company. The annual incentive awards are intended to reward both overall Company and individual performance during the year, and as such, are variable from year to year. The Company believes that establishing cash bonus opportunities is an important factor in both attracting and retaining the services of qualified and highly skilled executives and in motivating our senior management to achieve the Company’s annual objectives. +In 2015, the IC Plan provided for an aggregate threshold bonus pool of $1.75 million, up to a maximum bonus pool of $5.25 million, based upon the Company achieving certain levels of Adjusted EBITDA. Payout of the aggregate target bonus to individual management team members is based upon a variety of factors including the performance of the individual management team members and the achievement of individual objectives. Generally, payouts to individual management team members are based 70% on the achievement of certain levels of Adjusted EBITDA and 30% on the achievement of personal objectives. In 2015, the IC Plan target bonus pool of $1.75 million was partially attained and aggregate payouts under the IC Plan to individual management team members were $0.6 million, with the named executive officers earning the following amounts: Mr. Montross—$82,025; Mr. Brush—$39,489; and Ms. Jacoba—$24,098. Mr. Brush and Ms. Jacoba’s IC Plan bonus payments were prorated based on their employment start date. +For 2016, the IC Plan was replaced by the CPI Card Group Short-Term Incentive Plan (the “STI Plan”). The STI Plan provides for a bonus pool equal to up to $7.0 million for achieving certain levels of Adjusted EBITDA and revenue during the 2016 calendar year. +Long-Term Incentives +Principally in connection with the consummation of the Company’s initial public offering, we granted awards of stock options for 795,450 shares of our common stock in the aggregate under the Omnibus Plan described below, at an exercise price equal to the initial public offering price ($10.00 per share). The options generally will vest 33.4% on the second anniversary of the date of grant and 33.3% on each of the third and fourth anniversaries of the date of grant, subject to other applicable terms and conditions consistent with the Omnibus Plan. +Mr. Brush and Ms. Jacoba received restricted stock awards as part of their new hire employment terms on June 22, 2015. Mr. Brush’s restricted stock award will vest 36% on the first anniversary of the award date and 32% on each of the second and third anniversaries of the award date, provided that he remains employed by the Company as of each applicable vesting date. Ms. Jacoba’s restricted stock award will vest 100% on the first anniversary of the award date, provided that she remains employed by the Company as of the applicable vesting date. +Employee Benefits +The Company maintains the CPI Holdings I, Inc. 401(k) Plan (the “401(k) Plan”), which is a qualified defined-contribution plan under the provisions of the Internal Revenue Code Section 401(k) covering substantially all employees who meet certain eligibility requirements. Under the 401(k) Plan, participants may defer their salary subject to statutory +- 19 - +Table of Contents +limitations and may direct the contributions among various investment accounts. The Company matches 100% of the participant’s first 3% of deferrals and 50% of the next 2% deferral percentage. The Company’s portion is 100% vested at the time of the match. +Mr. Montross’ Employment Agreement +Effective April 22, 2009, Mr. Montross entered into an employment agreement with the Company to serve as President and Chief Executive Officer for a term of five years, plus automatic one-year renewals thereafter unless either party provides notice of intent not to renew the agreement. The agreement provided for an initial base salary of $390,000 per year. In addition, Mr. Montross is entitled to participate in the IC Plan with a target bonus of 50% of his annual base salary (effective for 2016, Mr. Montross’ target bonus was increased to 70% of his annual base salary, as determined by the Compensation Committee). In 2009, Mr. Montross received grants of 1,145,078 restricted shares of common stock and 213 restricted shares of preferred stock and also purchased 199,320 shares of common stock and 425 shares of preferred stock. The Company loaned Mr. Montross $150,000 in the form of notes payable to fund a portion of his investment. As previously disclosed, the remaining balance of this loan was repaid in full by Mr. Montross in August 2015. The Company also agreed to provide a tax gross-up payment of $71,000 in connection with Mr. Montross’ grants of restricted shares of common and preferred stock. Mr. Montross is provided with a reasonable automobile allowance to be approved by the Chairman of the Board. +In the event that Mr. Montross’ employment is terminated by the Company without “Cause,” he resigns for “Good Reason” (each as defined in the agreement) or the Company fails to renew his agreement upon its expiration, Mr. Montross would be entitled to (i) continued monthly payments of his base salary and 1/12th of his estimated annual bonus for a period of 12 months and (ii) a prorated portion of his annual bonus (excluding any portion related to individual objectives), based on the number of full months completed during the fiscal year in which such termination of employment occurs. If Mr. Montross dies or suffers a “Disability” (as defined in the agreement) during the term of the agreement, he or his estate would be entitled to continued base salary and prorated bonus payments for a period of six months. Mr. Montross may resign upon giving no less than 90 days’ notice. +Mr. Montross is subject to certain restrictive covenants, including obligations regarding non-competition and non-solicitation of Company employees and customers, during the term and for a period of two years following any termination of his employment with the Company. +Pursuant to his option award under the Company’s Omnibus Plan (described below) granted in connection with the Company’s initial public offering, Mr. Montross would also be eligible for continued vesting of such award and exercisability through the end of the option term in the event that his employment terminates by reason of an “Approved Retirement.” An “Approved Retirement” is defined in such agreements as Mr. Montross’ “Retirement” (pursuant to the Omnibus Plan, a termination of employment, other than for “Cause” or due to death or “Disability,” on or after the attainment of age 65) with respect to which Mr. Montross adheres to certain additional requirements set forth by the Compensation Committee and the Board of Directors. Such requirements include, but are not limited to, Mr. Montross providing the Compensation Committee with at least nine months’ notice prior to his chosen retirement date, assisting in transitioning a successor to his role and complying with the restrictive covenants described above. These provisions were added to enhance the Company’s succession planning and business continuity processes, if and when such a transition were to take place in the future. +The estimated cash severance payment to Mr. Montross on termination, assuming termination as of December 31, 2015, would have been $750,000 for termination without “Cause,” for “Good Reason” or the Company’s failure to renew the agreement, and $375,000 for a termination due to his death or “Disability” (assuming, in each case, that Mr. Montross’ annual bonus is at the target level). +Mr. Brush’s Employment Agreement +We entered into an employment agreement with Mr. Brush effective June 22, 2015 to serve as our Chief Financial Officer. The initial term of the employment agreement is five years, plus automatic one-year renewals thereafter unless either party provides notice of intent not to renew the agreement. The agreement provides for an initial base salary of $450,000 per year plus an annual target incentive award equal to 50% of his base salary, with a prorated incentive award +- 20 - +Table of Contents +for 2015. Mr. Brush also received an award of 147,664 shares of restricted stock that vests in three annual installments in June 2016, 2017 and 2018 subject to his continued employment through each such vesting date. +Mr. Brush would be entitled to severance benefits if his employment terminates under certain circumstances. In the event of a termination of employment by the Company without “Cause,” Mr. Brush’s resignation of employment for “Good Reason,” a termination of his employment due to his death or “Disability” (each term as defined in the agreement), or the Company fails to renew the agreement upon its expiration, Mr. Brush (or his estate, in the event of his death) would be entitled to (i) continued monthly payments of his base salary and 1/12th of his estimated annual bonus for a period of 12 months, (ii) 12 months of continued vesting of the restricted stock award granted in connection with the commencement of his employment and (iii) pro rata vesting of any other outstanding equity or long-term incentive awards. +Mr. Brush is subject to certain restrictive covenants, including obligations regarding non-competition and non-solicitation of Company employees and customers, during the term and for a period of one year following any termination of his employment with the Company. +The estimated cash severance payment to Mr. Brush on termination, assuming termination as of December 31, 2015, would have been $675,000 for termination without “Cause” or for “Good Reason,” or due to Mr. Brush’s death, “Disability” or the Company’s failure to renew the agreement (assuming that Mr. Brush’s annual bonus is at the target level). Mr. Brush would also receive continued or pro rata vesting of certain equity awards, as described above. +Ms. Jacoba’s Employment Agreement +We entered into an employment agreement with Ms. Jacoba effective June 22, 2015 to serve as our Chief Human Resources Officer. The initial term of the employment agreement is five years, plus automatic one-year renewals thereafter unless either party provides notice of intent not to renew the agreement. The agreement provides for an initial base salary of $260,000 per year plus an annual target incentive award equal to 50% of her base salary, with a prorated incentive award for 2015. Ms. Jacoba also received an award of 44,000 shares of restricted stock that vests in full on June 22, 2016, subject to her continued employment through such date. +Ms. Jacoba would be entitled to severance benefits if her employment terminates under certain circumstances. In the event of a termination of employment by the Company without “Cause,” Ms. Jacoba’s resignation of employment for “Good Reason,” a termination of her employment due to her death or “Disability” (each term as defined in the agreement), or the Company fails to renew the agreement upon its expiration, Ms. Jacoba (or her estate, in the event of her death) would be entitled to (i) continued monthly payments of her base salary and 1/12th of her estimated annual bonus for a period of 12 months, (ii) 12 months of continued vesting of the restricted stock award granted in connection with the commencement of her employment and (iii) pro rata vesting of any other outstanding equity or long-term incentive awards. +Ms. Jacoba is subject to certain restrictive covenants, including obligations regarding non-competition and non-solicitation of Company employees and customers, during the term and for a period of one year following any termination of her employment with the Company. +The estimated cash severance payments to Ms. Jacoba on termination, assuming termination as of December 31, 2015, would have been $390,000 for termination without “Cause” or for “Good Reason,” or due to Ms. Jacoba’s death, “Disability” or the Company’s failure to renew the agreement (assuming that Ms. Jacoba’s annual bonus is at the target level). Ms. Jacoba would also receive continued or pro rata vesting of certain equity awards, as described above. +- 21 - +Table of Contents +Outstanding Equity Awards at 2015 Fiscal Year-End +Option Awards +Stock Awards +Number of +Number of +Securities +Securities +Market +Underlying +Underlying +Number of +Value of +Unexercised +Unexercised +Option +Shares of +Shares of +Options +Options +Exercise +Option +Stock that +Stock that +(Exercisable) +(Unexercisable) +Price +Expiration +Have Not +Have Not +Name +(#) +(#) (1) +($) +Date +Vested (#) +Vested ($) (2) +Steven Montross +— +309,150 +10.00 +10/08/2025 +— +— +David Brush +— +95,000 +10.00 +10/08/2025 +147,664 +(3) +$ +1,574,098 +Lisa Jacoba +— +31,000 +10.00 +10/08/2025 +44,000 +(4) +$ +469,040 +(1) +These awards under the Company’s Omnibus Plan will vest according to the following schedule: (a) 33.4% of the option will vest and become exercisable on October 8, 2017, and (b) 33.3% of the option will vest and become exercisable on each of October 8, 2018 and October 8, 2019, subject to continued service with the Company through each such vesting date. +(2) +The market value of the restricted stock is based on the $10.66 closing price of a share of our common stock on December 31, 2015. +(3) +This restricted stock award will vest according to the following schedule: (a) 36% of the award will vest on June 22, 2016, and (b) 32% of the award will vest on each of June 22, 2017 and June 22, 2018, subject to continued service with the Company through each such vesting date. +(4) +This restricted stock award will vest in full on June 22, 2016, subject to continued service with the Company through such date. +Incentive Plans and Awards +CPI Holdings I, Inc. Amended and Restated 2007 Stock Option Plan +As of December 31, 2015, 462,000 of our common shares were available to be issued pursuant to outstanding stock option awards under the CPI Holdings I, Inc. Amended and Restated 2007 Stock Option Plan (the “Option Plan”), which became effective October 26, 2007. There are no stock option awards held by our named executive officers under the Option Plan. As previously disclosed, upon and following the completion of the Company’s initial public offering, awards outstanding under the Option Plan as of such date remain outstanding, but no additional options will be granted under the Option Plan. +CPI Acquisition, Inc. Phantom Stock Plan +As previously disclosed, in connection with the consummation of the Company’s initial public offering, the CPI Acquisition, Inc. Phantom Stock Plan (the “Phantom Stock Plan”) was terminated (except with respect to participants’ continuing non-competition and non-solicitation obligations) and awards held by employees thereunder were paid out. Participants in the Phantom Stock Plan received phantom preferred units in CPI Acquisition, Inc. and upon redemption were entitled to a cash payment equal to the increase in value of those units above a certain base amount. +Of our named executive officers, only Mr. Montross participated in the Phantom Stock Plan. The amount he received in connection with the Phantom Stock Plan’s termination and the redemption of his award thereunder is set forth below. +Number of Units +Name +Vested (#) +Payout Amount ($) +Steven Montross +30,112 +4,775,832 +- 22 - +Table of Contents +CPI Card Group Inc. Omnibus Incentive Plan +In connection with our initial public offering, we adopted the CPI Card Group Inc. Omnibus Incentive Plan (the “Omnibus Plan”) pursuant to which cash and equity-based incentives (including through an annual incentive program) may be granted to participating employees, directors and consultants. The principal purposes of the Omnibus Plan are to encourage profitability and growth through short-term and long-term incentives that are consistent with our objectives; to give participants an incentive for excellence in individual performance; to promote teamwork among participants; and to give us a significant advantage in attracting and retaining key employees, directors, and consultants. Our Omnibus Plan provides for the grant of incentive stock options within the meaning of Section 422 of the Internal Revenue Code, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance based awards (including performance shares, performance units and performance bonus awards), and other stock or cash-based awards. When considering new grants of share-based or option-based awards, the Company intends to take into account previous grants of such awards. +Equity Compensation Plan Information Table +The following table provides information as of December 31, 2015 with respect to shares of our common stock that may be issued under our existing equity compensation plans. +Number of securities +remaining available for +future issuance under +Number of securities to +Weighted average +equity compensation +be issued upon exercise +exercise price of +plans (excluding +of outstanding options, +outstanding options, +securities reflected in +warrants and rights +warrants and rights +column (a)) +(a) (#) +(b) ($) +(c) (#) +Equity compensation plans approved by security holders (1) +1,257,450 +(2) +6.33 +(2) +3,204,550 +(3) +Equity compensation plans not approved by security holders +– +– +– +Total +1,257,450 +6.33 +3,204,550 +(1) +All current equity compensation plans have been approved by shareholders. +(2) +Consists of (i) 462,000 outstanding options under the Option Plan at an average exercise price of $0.0003; and (ii) 795,450 outstanding options under the Omnibus Plan at an average exercise price of $10.00. +(3) +The Option Plan was discontinued in connection with our initial public offering, and no further grants can be made under the Option Plan. Any shares subject to option awards that are cancelled, forfeited, or lapse under the Option Plan may become available for issuance under the Omnibus Plan. +- 23 - +Table of Contents +AUDIT COMMITTEE REPORT +This report of the Audit Committee is required by the SEC and, in accordance with the SEC’s rules, will not be deemed to be part of or incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933, as amended (the “Securities Act”), or under the Exchange Act, except to the extent that the Company specifically incorporates this information by reference, and will not otherwise be deemed “soliciting material” or “filed” under either the Securities Act or the Exchange Act. +The principal purpose of the Audit Committee is to assist the Board of Directors in its oversight of (i) the integrity of our accounting and financial reporting processes and the audits of our financial statements; (ii) our system of disclosure controls and internal controls over financial reporting; (iii) our compliance with legal and regulatory requirements; (iv) the qualifications and independence of our independent auditor; (v) the performance of our independent auditor; and (vi) the business practices and ethical standards of the Company. The Audit Committee is responsible for the appointment, compensation, retention and oversight of work of the Company’s independent auditor. The Audit Committee’s function is more fully described in its charter. +Our management is responsible for the preparation, presentation and integrity of our financial statements, for the appropriateness of the accounting principles and reporting policies that we use and for establishing and maintaining adequate internal control over financial reporting. KPMG LLP, or KPMG, our independent registered public accounting firm for 2015, was responsible for performing an independent audit of our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2015, and expressing an opinion on the conformity of those financial statements with generally accepted accounting principles. +The Audit Committee has reviewed and discussed with management our audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2015. +The Audit Committee has also reviewed and discussed with KPMG the audited financial statements in the Form 10-K. In addition, the Audit Committee discussed with KPMG those matters required to be discussed under applicable standards of the Public Company Accounting Oversight Board (the “PCAOB”). Additionally, KPMG provided to the Audit Committee the written disclosures and the letter required by applicable requirements of the PCAOB regarding KPMG’s communications with the Audit Committee concerning independence. The Audit Committee also discussed with KPMG its independence from the Company. +Based upon the review and discussions described above, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Form 10-K for filing with the SEC. +Nicholas Peters, Chairman +Diane Fulton +Douglas Pearce +Robert Pearce +- 24 - +Table of Contents +FEES OF INDEPENDENT ACCOUNTANTS +For the years ended December 31, 2015 and 2014, KPMG LLP, our independent registered public accounting firm, billed the approximate fees set forth below: +2015 +2014 +Audit fees(1) +$ +2,265,250 +$ +323,667 +Audit-related fees(2) +— +— +All other fees(3) +— +— +Total fees +$ +2,265,250 +$ +323,667 +(1) +Audit fees relate to (i) the audit of our annual consolidated financial statements as of and for the year ended December 31, 2015, (ii) interim reviews of our quarterly consolidated financial statements as of and for the periods ended March 31, June 30, and September 30, 2015, (iii) re-audits of our consolidated financial statements as of and for the years ended December 31, 2014, 2013, and 2012 related to our initial public offering, (iv) the stand-alone audit of EFT Source, Inc. for the period ended September 2, 2014 also related to our initial public offering, (v) 2015 statutory financial statement audits; and (vi) fees related to comfort letters, consents, and assistance with and review of documents filed with the SEC. +(2) +These services include accounting due diligence and audits in connection with mergers and acquisitions, and attest services related to financial reporting that are not required by statute or regulation. We did not pay KPMG LLP for services included in this category during the years ended December 31, 2015 and 2014. +(3) +This category includes fees for services that are not included in the above categories. We did not pay KPMG LLP for services included in this category during the years ended December 31, 2015 and 2014. +- 25 - +Table of Contents +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +The following is a description of transactions since January 1, 2015 to which we have been a party in which the amount involved exceeded or will exceed $120,000 within any fiscal year and in which any of our directors, executive officers, beneficial holders of more than 5% of our capital stock or entities affiliated with them had or will have a direct or indirect material interest. +Stockholders Agreement +Prior to our initial public offering, the Company was party to a Stockholders Agreement with the Tricor Funds and the other holders of the Company’s capital stock. The Stockholders Agreement set forth certain rights and obligations of the Company’s stockholders with respect to the Company’s board of directors, share transfer restrictions, sale transactions and stock issuances and repurchases. The Stockholders Agreement was terminated in October 2015 in connection with the Company’s initial public offering. +Loans to Executive Officers +In connection with investments in shares of our common and preferred stock by certain of our executive officers, we previously made loans to such officers to fund the purchase of shares. Each of the loans to our executive officers was repaid in full in August 2015 prior to our initial public offering. Information concerning these loans is set forth below. +Aggregate +Amount +Principal +Paid +Amount +During +Interest +Executive Officer +of Loan +2015 +Rate +Steven Montross +$ +225,574 +$ +49,277 +5% per annum +Jerry Dreiling +$ +37,056 +$ +19,333 +5% per annum +Acquisition of EFT Source, Inc. +On September 2, 2014, we acquired all of the outstanding capital stock of EFT Source (now known as CPI Card Group – Tennessee, Inc.). One of our executive officers, William Dinker, together with trusts for the benefit of certain of his family members, owned approximately 75% of EFT Source. Mr. Dinker did not have any relationship with the Company at the time of the acquisition. The purchase price for the acquisition of EFT Source was $68.9 million, consisting of $54.9 million in cash, a $9.0 million subordinated unsecured promissory note (the “Seller Note”) and the issuance of $5.0 million of the Company’s preferred and common stock. The Seller Note bears interest at a rate of 5% per annum and matures on the earlier of (i) September 2, 2016, (ii) twelve months following the consummation of an initial public offering or (iii) the occurrence of certain change of control events. +In connection with the EFT Source acquisition, we entered into an Employment and Non-Competition Agreement with Mr. Dinker. Pursuant to this agreement, if EFT Source achieves certain EBITDA targets prior to December 31, 2016, Mr. Dinker will be entitled to bonus payments in an amount up to $666,667. +Lease of Indiana Facility +We lease our Fort Wayne, Indiana facility from an entity owned by James Galliher, a stockholder and former member of our board of directors who resigned from our board in August 2015. We paid $175,000 under the lease for the year ended December 31, 2015. +Registration Rights Agreement +In connection with our initial public offering, we entered into a registration rights agreement with the Tricor Funds (the “Registration Rights Agreement”). Under the Registration Rights Agreement, the Tricor Funds are entitled to request that we register shares of our common stock on a long-form or short-form registration statement on one or more +- 26 - +Table of Contents +occasions in the future, provided that we will not be obligated to register such shares within 90 days after the effective date of a registration statement previously filed pursuant to a request under the Registration Rights Agreement and otherwise for up to 60 days from the date of a request under the Registration Rights Agreement in certain circumstances. The Tricor Funds also are entitled to participate in certain registered offerings that we may conduct in the future, subject to certain restrictions. We will pay the Tricor Funds’ expenses in connection with the exercise of these rights. The registration rights described in this paragraph apply to (i) shares of our common stock held by the Tricor Funds as of the closing of our initial public offering, (ii) any of our capital stock (or that of our subsidiaries) issued or issuable with respect to the common stock described in clause (i) with respect to any dividend, distribution, recapitalization, reorganization, or certain other corporate transactions, and (iii) any of our common stock owned or acquired following the closing of our initial public offering by the Tricor Funds (“Registrable Securities”). These registration rights are also for the benefit of any subsequent holder of Registrable Securities; provided that any particular securities will cease to be Registrable Securities when they have been sold in a registered public offering, sold in compliance with Rule 144 under the Securities Act or repurchased by us or our subsidiaries. +Director Nomination Agreement +In connection with our initial public offering, we entered into a Director Nomination Agreement with the Tricor Funds that provides the Tricor Funds the right to designate nominees for election to our Board of Directors for so long as the Tricor Funds collectively beneficially own 5% or more of the total number of shares of our common stock then outstanding. The number of nominees that the Tricor Funds are entitled to designate under the Director Nomination Agreement bears the same proportion to the total number of members of our Board of Directors as the number of shares of common stock beneficially owned by the Tricor Funds bears to the total number of shares of common stock outstanding, rounded up to the nearest whole number. In addition, the Tricor Funds shall be entitled to designate the replacement for any of its board designees whose board service terminates prior to the end of such designee’s term regardless of the Tricor Funds’ beneficial ownership at such time. In addition, for so long as the Tricor Funds collectively beneficially own 10% or more of the total number of shares of our common stock then outstanding, the Tricor Funds shall also have the right to have their designees participate on committees of our Board of Directors, subject to compliance with applicable law and stock exchange rules. The Director Nomination Agreement will terminate at such time as the Tricor Funds collectively own less than 5% of our outstanding common stock. +Policies and Procedures for Related Party Transactions +In connection with our initial public offering, our board of directors adopted a written related party transaction policy setting forth the policies and procedures for the review and approval of related party transactions. The policy covers transactions involving us in which the aggregate amount involved exceeds or may be expected to exceed $120,000 and in which a related person has or will have a direct or indirect material interest. For purposes of this policy, a related person is defined as a director, executive officer, nominee for director, or a greater than 5% beneficial owner of our common stock, in each case since the beginning of the most recently completed fiscal year, and any immediate family member of or person sharing a household with any of these individuals. All related party transactions must be presented to the Audit Committee for review, consideration and approval. In approving or rejecting any such proposed transaction, the Audit Committee will consider the material facts of the transaction, including whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances and the extent of the related party’s interest in the transaction. +All related party transactions described in this section were not subject to the approval and review procedures set forth in such policy, as certain transactions were entered into prior to our initial public offering and prior to the adoption of such policy. +- 27 - +Table of Contents +RATIFICATION OF RETENTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +(PROPOSAL NO. 2) +Our Audit Committee has retained KPMG LLP as our independent registered public accounting firm for the year ending December 31, 2016. A proposal will be presented at the Annual Meeting to ratify this retention. Ratification of the retention of our independent registered public accounting firm requires the affirmative vote of the majority of shares present in person or represented by proxy at the Annual Meeting and entitled to vote. If the stockholders fail to ratify such selection, another independent registered public accounting firm will be considered by our Audit Committee, but the Audit Committee may nonetheless choose to engage KPMG LLP. Even if the retention of KPMG LLP is ratified, the Audit Committee in its discretion may select a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and its stockholders. We have been advised that a representative of KPMG LLP will be present at the Annual Meeting and will be available to respond to appropriate questions and, if such person chooses to do so, make a statement. +THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” RATIFICATION OF +THE RETENTION OF KPMG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2016. PROXIES SOLICITED BY THE BOARD WILL BE VOTED FOR THE PROPOSAL UNLESS STOCKHOLDERS SPECIFY A CONTRARY VOTE. +- 28 - +Table of Contents +STOCKHOLDER PROPOSALS FOR 2017 ANNUAL MEETING OF STOCKHOLDERS +Stockholders who intend to present proposals at the Company’s annual meeting of stockholders in 2017 pursuant to Rule 14a-8 under the Exchange Act must send notice of their proposal to us so that we receive it no later than December 30, 2016. Stockholders who intend to present proposals at the annual meeting of stockholders in 2017 other than pursuant to Rule 14a-8 must comply with the notice provisions in our Bylaws. The notice provisions in our Bylaws require that, for a proposal to be properly brought before the annual meeting of stockholders in 2017, proper notice of the proposal be received by us not less than 90 days nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting; provided, however that in the event next year’s annual meeting is more than 30 days before or after such anniversary date, notice must be delivered not less than the later of 90 days prior to next year’s annual meeting or the 10th day following the day the Company first publicly announces next year’s annual meeting date. Under these requirements, the deadline for proposals brought under our Bylaws is March 4, 2017. Stockholder proposals should be addressed to CPI Card Group, 10368 West Centennial Road, Littleton, Colorado 80127; Attention: David Brush, Chief Financial Officer and Corporate Secretary. +- 29 - +Table of Contents +OTHER MATTERS +We know of no other matters to be submitted to the stockholders at the Annual Meeting. If any other matters properly come before the Annual Meeting, persons named in the proxy intend to vote the shares they represent in accordance with their own judgments. +Upon written request by any stockholder entitled to vote at the Annual Meeting, we will promptly furnish, without charge, a copy of the Annual Report on Form 10-K for the fiscal year ended December 31, 2015 which we filed with the SEC, including the financial statements and schedule. If the person requesting the report was not a stockholder of record on April 15, 2016, the request must contain a good faith representation that he or she was a beneficial owner of our common stock at the close of business on that date. Requests should be addressed to CPI Card Group, 10368 West Centennial Road, Littleton, Colorado 80127; Attention: David Brush, Chief Financial Officer and Corporate Secretary. +YOUR VOTE IS IMPORTANT. WE URGE YOU TO VOTE TODAY BY THE TELEPHONE, VIA THE INTERNET OR BY MAIL. +By Order of the Board of Directors, +/s/ David Brush +David Brush +Chief Financial Officer and Corporate Secretary +- 30 - +Table of Contents +If you would like to reduce the costs incurred by our company in mailing proxy 1234567 VOTE BY MAIL 123,456,789,012.12345 TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. The Board of Directors recommends you vote FOR the following: 1. Election of Directors Nominees 01) Diane Fulton For 0 0 0 0 0 0 0 For 0 Against 0 0 0 0 0 0 0 Against 0 Abstain 0 0 0 0 0 0 0 Abstain 0 02) Steven Montross NOTE: Such other business as may properly come before the meeting or any adjournment thereof. 03) Douglas Pearce 04) Robert Pearce 05) Nicholas Peters 06) David Rowntree 07) Bradley Seaman The Board of Directors recommends you vote FOR the following proposal: 2To ratify KPMG LLP as independent registered public accounting firm for the year ending December 31, 2016. Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name, by authorized officer. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date 02 0000000000 1 OF 1 1 2 0000290786_1 R1.0.1.25 SHARES CUSIP # JOB #SEQUENCE # VOTE BY INTERNET - www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 John Sample 234567P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions. 1234567 Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. NAME THE COMPANY NAME INC. - COMMON THE COMPANY NAME INC. - CLASS A THE COMPANY NAME INC. - CLASS B THE COMPANY NAME INC. - CLASS C THE COMPANY NAME INC. - CLASS D THE COMPANY NAME INC. - CLASS E THE COMPANY NAME INC. - CLASS F THE COMPA N Y NAME INC. - 401 K CONTROL # → SHARES123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 x PAGE1 OF 2 CPI CARD GROUP INC. 10368 WEST CENTENNIAL ROAD LITTLETON,CO 80127 Investor Address Line 1 Investor Address Line 2 Investor Address Line 3 Investor Address Line 4 Investor Address Line 5 8 8 8 1 1234 ANYWHERE STREET ANY CITY, ON A1A 1A1 234567 234567 234567 234567 +Table of Contents +Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Form 10-K, Notice & Proxy Statement is/are available at www.proxyvote.com CPI CARD GROUP INC. Annual Meeting of Shareholders June 2, 2016 9:00 AM MDT This proxy is solicited by the Board of Directors The shareholder(s) hereby appoint(s) Steven Montross and David Brush, or either of them, as proxies, each with the power to appoint his substitute, and hereby authorizes them to represent and to vote, as designated on the reverse side of this ballot, all of the shares of common stock of CPI CARD GROUP INC. that the shareholder(s) is/are entitled to vote at the Annual Meeting of Shareholders to be held at 9:00 AM, MDT on June 2, 2016, at the Hyatt Regency Denver Tech Center, 7800 East Tufts Avenue, Denver, Colorado 80237, and any adjournment or postponement thereof. This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted in accordance with the Board of Directors' recommendations. Continued and to be signed on reverse side 0000290786_2 R1.0.1.25 \ No newline at end of file diff --git a/raw/proxies/0001641614/0001558370-16-004815/proxy_rpt.txt b/raw/proxies/0001641614/0001558370-16-004815/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..da39d2e7a236e66f935bfd4a6cfd4e62c07d89cd --- /dev/null +++ b/raw/proxies/0001641614/0001558370-16-004815/proxy_rpt.txt @@ -0,0 +1,46 @@ +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +The following is a description of transactions since January 1, 2015 to which we have been a party in which the amount involved exceeded or will exceed $120,000 within any fiscal year and in which any of our directors, executive officers, beneficial holders of more than 5% of our capital stock or entities affiliated with them had or will have a direct or indirect material interest. +Stockholders Agreement +Prior to our initial public offering, the Company was party to a Stockholders Agreement with the Tricor Funds and the other holders of the Company’s capital stock. The Stockholders Agreement set forth certain rights and obligations of the Company’s stockholders with respect to the Company’s board of directors, share transfer restrictions, sale transactions and stock issuances and repurchases. The Stockholders Agreement was terminated in October 2015 in connection with the Company’s initial public offering. +Loans to Executive Officers +In connection with investments in shares of our common and preferred stock by certain of our executive officers, we previously made loans to such officers to fund the purchase of shares. Each of the loans to our executive officers was repaid in full in August 2015 prior to our initial public offering. Information concerning these loans is set forth below. +Aggregate +Amount +Principal +Paid +Amount +During +Interest +Executive Officer +of Loan +2015 +Rate +Steven Montross +$ +225,574 +$ +49,277 +5% per annum +Jerry Dreiling +$ +37,056 +$ +19,333 +5% per annum +Acquisition of EFT Source, Inc. +On September 2, 2014, we acquired all of the outstanding capital stock of EFT Source (now known as CPI Card Group – Tennessee, Inc.). One of our executive officers, William Dinker, together with trusts for the benefit of certain of his family members, owned approximately 75% of EFT Source. Mr. Dinker did not have any relationship with the Company at the time of the acquisition. The purchase price for the acquisition of EFT Source was $68.9 million, consisting of $54.9 million in cash, a $9.0 million subordinated unsecured promissory note (the “Seller Note”) and the issuance of $5.0 million of the Company’s preferred and common stock. The Seller Note bears interest at a rate of 5% per annum and matures on the earlier of (i) September 2, 2016, (ii) twelve months following the consummation of an initial public offering or (iii) the occurrence of certain change of control events. +In connection with the EFT Source acquisition, we entered into an Employment and Non-Competition Agreement with Mr. Dinker. Pursuant to this agreement, if EFT Source achieves certain EBITDA targets prior to December 31, 2016, Mr. Dinker will be entitled to bonus payments in an amount up to $666,667. +Lease of Indiana Facility +We lease our Fort Wayne, Indiana facility from an entity owned by James Galliher, a stockholder and former member of our board of directors who resigned from our board in August 2015. We paid $175,000 under the lease for the year ended December 31, 2015. +Registration Rights Agreement +In connection with our initial public offering, we entered into a registration rights agreement with the Tricor Funds (the “Registration Rights Agreement”). Under the Registration Rights Agreement, the Tricor Funds are entitled to request that we register shares of our common stock on a long-form or short-form registration statement on one or more +- 26 - +Table of Contents +occasions in the future, provided that we will not be obligated to register such shares within 90 days after the effective date of a registration statement previously filed pursuant to a request under the Registration Rights Agreement and otherwise for up to 60 days from the date of a request under the Registration Rights Agreement in certain circumstances. The Tricor Funds also are entitled to participate in certain registered offerings that we may conduct in the future, subject to certain restrictions. We will pay the Tricor Funds’ expenses in connection with the exercise of these rights. The registration rights described in this paragraph apply to (i) shares of our common stock held by the Tricor Funds as of the closing of our initial public offering, (ii) any of our capital stock (or that of our subsidiaries) issued or issuable with respect to the common stock described in clause (i) with respect to any dividend, distribution, recapitalization, reorganization, or certain other corporate transactions, and (iii) any of our common stock owned or acquired following the closing of our initial public offering by the Tricor Funds (“Registrable Securities”). These registration rights are also for the benefit of any subsequent holder of Registrable Securities; provided that any particular securities will cease to be Registrable Securities when they have been sold in a registered public offering, sold in compliance with Rule 144 under the Securities Act or repurchased by us or our subsidiaries. +Director Nomination Agreement +In connection with our initial public offering, we entered into a Director Nomination Agreement with the Tricor Funds that provides the Tricor Funds the right to designate nominees for election to our Board of Directors for so long as the Tricor Funds collectively beneficially own 5% or more of the total number of shares of our common stock then outstanding. The number of nominees that the Tricor Funds are entitled to designate under the Director Nomination Agreement bears the same proportion to the total number of members of our Board of Directors as the number of shares of common stock beneficially owned by the Tricor Funds bears to the total number of shares of common stock outstanding, rounded up to the nearest whole number. In addition, the Tricor Funds shall be entitled to designate the replacement for any of its board designees whose board service terminates prior to the end of such designee’s term regardless of the Tricor Funds’ beneficial ownership at such time. In addition, for so long as the Tricor Funds collectively beneficially own 10% or more of the total number of shares of our common stock then outstanding, the Tricor Funds shall also have the right to have their designees participate on committees of our Board of Directors, subject to compliance with applicable law and stock exchange rules. The Director Nomination Agreement will terminate at such time as the Tricor Funds collectively own less than 5% of our outstanding common stock. +Policies and Procedures for Related Party Transactions +In connection with our initial public offering, our board of directors adopted a written related party transaction policy setting forth the policies and procedures for the review and approval of related party transactions. The policy covers transactions involving us in which the aggregate amount involved exceeds or may be expected to exceed $120,000 and in which a related person has or will have a direct or indirect material interest. For purposes of this policy, a related person is defined as a director, executive officer, nominee for director, or a greater than 5% beneficial owner of our common stock, in each case since the beginning of the most recently completed fiscal year, and any immediate family member of or person sharing a household with any of these individuals. All related party transactions must be presented to the Audit Committee for review, consideration and approval. In approving or rejecting any such proposed transaction, the Audit Committee will consider the material facts of the transaction, including whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances and the extent of the related party’s interest in the transaction. +All related party transactions described in this section were not subject to the approval and review procedures set forth in such policy, as certain transactions were entered into prior to our initial public offering and prior to the adoption of such policy. +- 27 - +Table of Contents \ No newline at end of file diff --git a/raw/proxies/0001641614/0001558370-17-002760/proxy.txt b/raw/proxies/0001641614/0001558370-17-002760/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..753da61ed2620f23ae2eeb5a2cbf13885eb2bf79 --- /dev/null +++ b/raw/proxies/0001641614/0001558370-17-002760/proxy.txt @@ -0,0 +1,970 @@ +DEF 14A +1 +pmts-20170420xdef14a.htm +DEF 14A +pmts_Current_Folio_DEF14A +Table of Contents +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Proxy Statement Pursuant to Section 14(a) of the +Securities Exchange Act of 1934 +Filed by the Registrant ☑ +Filed by a Party other than the Registrant ☐ +Check the appropriate box: +☐ +Preliminary Proxy Statement +☐ +Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +☑ +Definitive Proxy Statement +☐ +Definitive Additional Materials +☐ +Soliciting Material Pursuant to §240.14a-12 +CPI Card Group Inc. +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +☑ +No fee required. +☐ +Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. +(1) +Title of each class of securities to which transaction applies: +(2) +Aggregate number of securities to which transaction applies: +(3) +Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): +(4) +Proposed maximum aggregate value of transaction: +(5) +Total fee paid: +☐ +Fee paid previously with preliminary materials. +☐ +Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. +(1) +Amount Previously Paid: +(2) +Form, Schedule or Registration Statement No.: +(3) +Filing Party: +(4) +Date Filed: +Persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number. +Table of Contents +10026 West San Juan Way +Littleton, Colorado 80127 +April 20, 2017 +Dear Stockholder: +On behalf of the Board of Directors of CPI Card Group Inc., you are cordially invited to attend the 2017 Annual Meeting of Stockholders (the “Annual Meeting”) to be held on May 25, 2017, at 9:00 a.m. (Mountain Time) at the Hyatt Regency Denver Tech Center, 7800 East Tufts Avenue, Denver, Colorado 80237. +We have included in this letter a proxy statement that provides you with detailed information about the Annual Meeting. We encourage you to read the entire proxy statement carefully. You may also obtain more information about CPI Card Group Inc. from documents we have filed with the Securities and Exchange Commission. +You are being asked at the Annual Meeting to elect directors named in this proxy statement, to ratify the retention of KPMG LLP as our independent registered public accounting firm for 2017 and to transact any other business properly brought before the meeting. +Whether or not you plan to attend the Annual Meeting, your vote is important, and we encourage you to vote promptly. You may vote your shares through one of the methods described in the enclosed proxy statement. We strongly urge you to read the accompanying proxy statement carefully and to vote FOR the nominees proposed by the Board of Directors and in accordance with the recommendations of the Board of Directors on the other proposal by following the voting instructions contained in the proxy statement. +Sincerely, +Bradley Seaman +Steven Montross +Chairman of the Board +President, Chief Executive Officer and Director +This proxy statement is dated April 20, 2017 and is first being mailed to stockholders on or about April 21, 2017. +Table of Contents +CPI CARD GROUP INC. +NOTICE OF ANNUAL MEETING OF STOCKHOLDERS +May 25, 2017 +9:00 A.M. (Mountain Time) +To the Stockholders of CPI Card Group Inc.: +The 2017 Annual Meeting of Stockholders will be held on May 25, 2017, at 9:00 a.m. (Mountain Time) at the Hyatt Regency Denver Tech Center, 7800 East Tufts Avenue, Denver, Colorado 80237. The purpose of the meeting is to: +1. +elect nine directors; +2. +ratify the retention of KPMG LLP as our independent registered public accounting firm for 2017; and +3. +conduct any other business properly brought before the Annual Meeting or any adjournments or postponements thereof. +Voting is limited to stockholders of record at the close of business on April 18, 2016. A list of stockholders entitled to vote at the meeting, and any postponements or adjournments of the meeting, will be available for examination between the hours of 9:00 a.m. and 5:00 p.m. (Mountain Time) at our headquarters at 10026 West San Juan Way, Littleton, Colorado 80127 during the ten days prior to the Annual Meeting and also at the Annual Meeting. +YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE VOTE YOUR SHARES OVER THE TELEPHONE, VIA THE INTERNET OR BY COMPLETING, DATING, SIGNING AND RETURNING A PROXY CARD, AS DESCRIBED IN THE ENCLOSED PROXY STATEMENT. YOUR PROMPT COOPERATION IS GREATLY APPRECIATED. +By Order of the Board of Directors, +Lillian Etzkorn +Chief Financial Officer and Corporate Secretary +Table of Contents +TABLE OF CONTENTS +Page +SUMMARY OF THE ANNUAL MEETING +1 +ELECTION OF DIRECTORS (PROPOSAL NO. 1) +6 +DIRECTORS AND CORPORATE GOVERNANCE +7 +EXECUTIVE COMPENSATION +18 +AUDIT COMMITTEE REPORT +25 +AUDIT FEES +26 +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +27 +RATIFICATION OF RETENTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PROPOSAL NO. 2) +29 +STOCKHOLDER PROPOSALS FOR 2018 ANNUAL MEETING OF STOCKHOLDERS +30 +EXEMPTION FROM TORONTO STOCK EXCHANGE (“TSX”) RULES +30 +OTHER MATTERS +31 +Table of Contents +CPI CARD GROUP INC. +10026 West San Juan Way +Littleton, Colorado 80127 +SUMMARY OF THE ANNUAL MEETING +This proxy statement contains information related to the 2017 Annual Meeting of Stockholders (the “Annual Meeting”) of CPI Card Group Inc. (referred to herein as the “Company,” “CPI,” “we,” “us” or “our” as the context requires) to be held at the Hyatt Regency Denver Tech Center, 7800 East Tufts Avenue, Denver, Colorado 80237, on May 25, 2017, at 9:00 a.m. (Mountain Time). This proxy statement is first being distributed to stockholders on or about April 21, 2017. +Why did you send me this proxy statement? +We sent you this proxy statement because the Board of Directors (the “Board”) of the Company is soliciting your proxy to vote at the Annual Meeting and at any postponements or adjournments of the Annual Meeting. This proxy statement summarizes information that is intended to assist you in making an informed vote on the proposals described in this proxy statement. +Who can vote at the Annual Meeting? +Only stockholders of record as of the record date are entitled to vote at the Annual Meeting. The record date to determine stockholders entitled to notice of and to vote at the Annual Meeting is the close of business on April 18, 2017. On the record date, there were 55,592,024 shares of our common stock, par value $0.001 per share, outstanding. Our common stock is the only class of voting securities outstanding. +How many shares must be present to conduct the Annual Meeting? +We must have a quorum present in person or by proxy to conduct the Annual Meeting. A quorum is established when a majority of shares entitled to vote is present in person or represented by proxy at the Annual Meeting. Abstentions and broker non-votes (as described below) are counted for purposes of determining whether a quorum is present. +What matters are to be voted on at the Annual Meeting? +The agenda for the Annual Meeting is to: +1. +elect nine directors; +2. +ratify the retention of KPMG LLP as our independent registered public accounting firm for 2017; and +3. +conduct any other business properly brought before the Annual Meeting or any adjournments or postponements thereof . +As of the date of this proxy statement, we do not know of any other matters to be presented at the Annual Meeting. If any other matters properly come before the Annual Meeting, however, the persons named as proxies will be authorized to vote or otherwise act in accordance with their judgment. +How does the Board recommend that I vote? +The Board recommends that you vote: +1. +FOR the election of each of CPI’s director nominees named in this proxy statement; and +-1- +Table of Contents +2. +FOR the ratification of the retention of KPMG LLP as our independent registered public accounting firm for 2017. +How do I vote at the Annual Meeting? +You may vote in person at the Annual Meeting or by proxy. In addition, if you are a stockholder of record of CPI’s shares, there are three ways to vote by proxy: +· +By Telephone — You can vote by telephone by following the instructions on your proxy card. You will need to use the control number appearing on your Notice or proxy card to vote by telephone; +· +By Internet — You can vote via the Internet by following the instructions on your proxy card. You will need to use the control number appearing on your Notice or proxy card to vote via the Internet; or +· +By Mail — You can vote by completing, dating, signing and returning the proxy card. +If you are a beneficial owner of shares held in street name, you may vote as follows: +· +By Telephone — If you request printed copies of the proxy materials by mail, you will receive a voting instruction form and you may vote by proxy by calling the toll free number found on the voting instruction form. The availability of telephone voting may depend on the voting process of the organization that holds your shares. +· +By Internet — You may vote by proxy via the Internet by visiting www.proxyvote.com and entering the control number found in your Notice. The availability of Internet voting may depend on the voting process of the organization that holds your shares. +· +By Mail — If you request printed copies of the proxy materials by mail, you will receive a voting instruction form and you may vote by proxy by filling out the voting instruction form and returning it in the envelope provided. +If you are a beneficial owner of shares held in street name and wish to vote in person at the Annual Meeting, you must obtain a “legal proxy” from the organization that holds your shares. A legal proxy is a written document that will authorize you to vote your shares held in street name at the Annual Meeting. Please contact the organization that holds your shares for instructions regarding obtaining a legal proxy. You must bring a copy of the legal proxy to the Annual Meeting and ask for a ballot when you arrive. +Telephone and Internet voting facilities for stockholders of record will be available 24 hours a day. You may vote over the telephone or via the Internet until 11:59 p.m. on May 24, 2017. Even if you plan to attend the Annual Meeting in person, we recommend that you also submit your proxy or voting instructions as described above so that your vote will be counted if you later decide not to attend the Annual Meeting in person. +Your proxy will be voted in accordance with your instructions, so long as, in the case of a proxy card returned by mail, such card has been signed and dated. If you vote your shares via the Internet, by telephone or by executing and returning a proxy card by mail but you do not provide specific instructions with respect to the proposals, your shares will be voted FOR the director nominees named in this proxy statement and FOR the ratification of the retention of our independent registered public accounting firm. +As of the date of this proxy statement, we do not know of any matters to be presented at the Annual Meeting except those described in this proxy statement. If any other matters properly come before the Annual Meeting, however, the persons named as proxies will be authorized to vote or otherwise act in accordance with their judgment. +-2- +Table of Contents +What does it mean if I receive more than one set of proxy materials? +You may receive more than one set of proxy materials, more than one e-mail or multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you may receive a separate set of proxy materials, a separate e-mail or a separate voting instruction card for each brokerage account in which you hold shares. If you are a stockholder of record and your shares are registered in more than one name, you may receive more than one set of proxy materials, more than one e-mail or more than one proxy card. To vote all of your shares by proxy, you must complete, sign, date and return each proxy card and voting instruction card that you receive or vote over the Internet the shares represented by each set of proxy materials that you receive (unless you have requested and received a proxy card or voting instruction card for the shares represented by one or more of those sets of proxy materials). +May I change my vote? +Yes. You may revoke your proxy at any time before it is voted at the Annual Meeting. To change your vote, if you are a stockholder of record, you may submit another later dated proxy by telephone, Internet or mail or by voting your shares in person at the Annual Meeting (your attendance at the Annual Meeting will not, by itself, revoke your proxy; you must vote in person at the Annual Meeting to revoke your proxy). If you are a beneficial owner and your shares are held in street name, you may change your vote by submitting new voting instructions to your bank, broker, trustee or nominee, or if you have obtained a legal proxy from such entity giving you the right to vote your shares, you may change your vote by attending the Annual Meeting and voting in person. +What vote is required to elect directors and approve the other matters described in this proxy statement? +Because this is an uncontested election, the director nominees must receive the affirmative vote of a majority of the votes cast to be elected (i.e., the number of shares voted “for” a director nominee must exceed the number of votes cast “against” that nominee) (Proposal No. 1). Abstentions and broker non-votes will have no effect on the outcome of the election of directors. +For the ratification of the retention of KPMG LLP as our independent registered public accounting firm for 2017 (Proposal No. 2), the affirmative vote of the holders of a majority of the shares represented in person or by proxy and entitled to vote on the proposal will be required for approval. Abstentions will not be voted but will be counted for purposes of determining whether there is a quorum. Accordingly, abstentions will have the effect of a negative vote on Proposal No. 2. Broker non-votes will have no effect on Proposal No. 2. For additional information about broker non-votes, see “How do I vote if my bank or broker holds my shares in ‘street name’?” +What is the difference between holding shares as a stockholder of record and as a beneficial owner? +If your shares are registered in your name on the Company’s books and records or with our transfer agent, you are the “stockholder of record” of those shares, and this proxy statement and accompanying materials have been provided directly to you by the Company. On the other hand, if you purchased your shares through a brokerage or other financial intermediary, the brokerage or other financial intermediary will automatically put your shares into “street name” which means that the brokerage or other financial intermediary will hold your shares in its name or another nominee’s name and not in your name, but will keep records showing you as the “beneficial owner.” If you hold shares beneficially in street name, this proxy statement and accompanying materials have been forwarded to you by your broker, bank or other holder of record. +How do I vote if my bank or broker holds my shares in “street name”? +If you hold your shares in “street name” through a bank, broker or other nominee, such bank, broker or nominee will vote those shares in accordance with your instructions. To so instruct your bank, broker or nominee, you should refer to the information provided to you by such entity. Without instructions from you, a bank, broker or nominee will be permitted to exercise its own voting discretion with respect to so-called routine matters (Proposal No. 2 (ratification of auditors)) but will not be permitted to exercise voting discretion with respect to non-routine matters (Proposal No. 1 (director elections)). Thus, if you do not give your bank, broker or nominee specific instructions with respect to Proposal +-3- +Table of Contents +No. 2, your shares will be voted in such entity’s discretion. If you do not give your bank, broker or nominee specific instructions with respect to Proposal No. 1, your shares will not be voted on such proposal. This is called a “broker non-vote.” Shares represented by such broker non-votes will be counted in determining whether there is a quorum, but will have no effect on the non-routine proposals. We urge you to promptly provide your bank, broker or nominee with appropriate voting instructions so that all your shares may be voted at the Annual Meeting. +How many votes do I have? +Each share of common stock that you hold as of the record date entitles you to one vote, without cumulation, on each matter to be voted upon at the Annual Meeting. +How will the votes be counted at the Annual Meeting? +The votes will be counted by the inspector of election appointed for the Annual Meeting. +How will the Company announce the voting results? +The Company will report the final results of the voting at the Annual Meeting in a filing with the SEC on a Current Report on Form 8-K within four (4) business days of the date of the Annual Meeting. +Who pays for the Company’s solicitation of proxies? +The Board is soliciting your proxy to vote your shares of common stock at our Annual Meeting. We will bear the cost of soliciting proxies on behalf of the Company, including preparing, printing and mailing this proxy statement. Proxies may be solicited personally, by mail, email or by telephone by certain of our directors, officers, employees or representatives. Our directors and employees will not be paid any additional compensation for soliciting proxies. We may reimburse brokerage firms and other persons representing beneficial owners of shares for their out-of-pocket expenses in forwarding solicitation materials to such beneficial owners. +What is “householding” and how does it work? +Under the rules adopted by the SEC, we may deliver a single set of proxy materials to one address shared by two or more of our stockholders. This delivery method is referred to as “householding” and can result in significant cost savings. To take advantage of this opportunity, we have delivered only one set of proxy materials to multiple stockholders who share an address, unless we received contrary instructions from the impacted stockholders prior to the mailing date. We agree to deliver promptly, upon written or oral request, a separate copy of the proxy materials, as requested, to any stockholder at the shared address to which a single copy of these documents was delivered. If you prefer to receive separate copies of the Notice, proxy statement or annual report, contact Broadridge Financial Solutions, Inc. by calling 1-800-542-1061 or in writing at Broadridge, Householding Department, 51 Mercedes Way, Edgewood, New York 11717. +In addition, if you currently are a stockholder who shares an address with another stockholder and would like to receive only one copy of future notices and proxy materials for your household, you may notify your broker if your shares are held in a brokerage account or you may notify us if you hold registered shares. Registered stockholders may notify us by contacting Broadridge Financial Solutions, Inc. at the above telephone number or address or sending a written request to CPI Card Group Inc., 10026 West San Juan Way, Littleton, Colorado 80127, Attention: Investor Relations. +What do I need for admission to the Annual Meeting? +Attendance at the Annual Meeting or any adjournment or postponement thereof will be limited to record and beneficial stockholders as of the record date (April 18, 2017), individuals holding a valid proxy from a record holder and other persons authorized by the Company. If you are a stockholder of record (or a “recordholder”) your name will be verified against the list of stockholders of record prior to your admittance to the Annual Meeting or any adjournment or postponement thereof. You should be prepared to present photo identification for admission. If you hold your shares in a street name, you will need to provide proof of beneficial ownership on the record date, such as a brokerage account +-4- +Table of Contents +statement showing that you owned stock as of the record date, a copy of a voting instruction form provided by your broker, bank or other nominee, or other similar evidence of ownership as of the record date, as well as your photo identification, for admission. If you do not provide photo identification or comply with the other procedures described above, you will not be admitted to the Annual Meeting or any adjournment or postponement thereof. For security reasons, you and your bags may be subject to search prior to your admittance to the Annual Meeting. +Explanatory Note +We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). For as long as we are an emerging growth company, we will not be required to provide an auditor’s attestation report on management’s assessment of the effectiveness of our system of internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002, or obtain stockholder approval of any golden parachute payments not previously approved. In addition, because we are an emerging growth company, we are not required to include a Compensation Discussion and Analysis section in this proxy statement and have elected to comply with the scaled-down executive compensation disclosure requirements applicable to emerging growth companies. +We could be an emerging growth company for up to five years from the date of our initial public offering, or until the earliest of (i) the last day of the first fiscal year in which our annual gross revenues exceed $1 billion, (ii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which would occur at the end of the fiscal year during which the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period. Under Section 107(b) of the JOBS Act, emerging growth companies may delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have irrevocably elected not to avail ourselves of this exemption from new or revised accounting standards and, therefore, we are subject to the same new or revised accounting standards as other public companies that are not emerging growth companies. +-5- +Table of Contents +ELECTION OF DIRECTORS +(PROPOSAL NO. 1) +Upon the recommendation of our Nominating and Corporate Governance Committee (the “Nominating Committee”), the Board has nominated the nine individuals listed below to stand for election to the Board for a one-year term ending at the annual meeting of stockholders in 2018 or until their successors, if any, are elected or appointed. Our Amended and Restated Certificate of Incorporation and Bylaws provide for the annual election of directors. Each director nominee must receive the affirmative vote of a majority of the votes cast to be elected (i.e., the number of shares voted “for” a director nominee must exceed the number of votes cast “against” that nominee). Unless contrary instructions are given, the shares represented by your proxy will be voted FOR the election of all director nominees. The Board has determined that each director nominee, other than Mr. Steven Montross, is an independent director, as further described below in “Directors and Corporate Governance — Independence of Directors.” +All of the director nominees listed below have consented to being named in this proxy statement and to serve if elected. However, if any nominee becomes unable to serve, proxy holders will have discretion and authority to vote for another nominee proposed by our Board. Alternatively, our Board may reduce the number of directors to be elected at the Annual Meeting. +Name +Position +Diane Fulton +Director +Steven Montross +Director, President and Chief Executive Officer +Douglas Pearce +Director +Robert Pearce +Director +Nicholas Peters +Director +David Rowntree +Director +Scott Scheirman +Director +Bradley Seaman +Chairman of the Board +Silvio Tavares +Director +Biographical information relating to each of the director nominees is set forth below under “Directors and Corporate Governance” and incorporated by reference herein. +THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE ELECTION OF EACH OF CPI’s DIRECTOR NOMINEES NAMED IN THIS PROXY STATEMENT. +PROXIES SOLICITED BY THE BOARD WILL BE VOTED FOR THE ELECTION OF EACH OF CPI’s DIRECTOR NOMINEES NAMED IN THIS PROXY STATEMENT UNLESS STOCKHOLDERS SPECIFY A CONTRARY VOTE. +-6- +Table of Contents +DIRECTORS AND CORPORATE GOVERNANCE +Director Biographical Information and Qualifications +Set forth below is a description of the business experience of each director, as well as the specific qualifications, skills and experiences considered by the Nominating Committee and the Board in recommending our slate of director nominees. Each director listed below is nominated for reelection to the Board for a term expiring at the annual meeting of stockholders in 2018. See “Election of Directors (Proposal No. 1).” +Diane Fulton , 63, has served on our Board of Directors since December 2015. From September 2008 to July 2016, Ms. Fulton was the Vice President and Chief Investment Officer of the Vancouver Foundation, Canada’s largest community foundation. Prior to that, Ms. Fulton spent nine years at The University of British Columbia, as the Executive Director, Investments, and 12 years at ScotiaMcLeod Inc., a division of Scotia Capital Inc., most recently as Director and Vice President of Corporate Finance. Ms. Fulton currently serves on the boards of directors of Ten Peaks Coffee Company (TSX: TPK) and the University of British Columbia Investment Management Trust and served on the board of directors of Insurance Corporation of British Columbia from 2004 to 2010, and Pacific Northern Gas Limited (TSX: PNG) from 2005 until its acquisition by Altagas Ltd. in 2011. Ms. Fulton also serves as an advisor to the investment committee of the Insurance Corporation of British Columbia. Ms. Fulton holds a Masters of Business Administration from York University and a Bachelor’s Degree in Mathematics from the University of Toronto and is an accredited director in the Institute of Corporate Directors (ICD). Ms. Fulton brings to the Board a breadth of finance and investment skills, as well as public company board experience. +Steven Montross , 63, has served as our President and Chief Executive Officer since January 2009. Prior to joining CPI, Mr. Montross was a founding shareholder and Managing Director of FirstLight Financial Corporation, a business that invests senior debt capital in private-equity owned businesses, from 2007 to 2008. Prior to forming FirstLight, Mr. Montross had a 17-year career at General Electric Company, where he held positions of increasing responsibility and leadership within GE’s financial service businesses, including a business that financed private equity-owned enterprises. Mr. Montross holds a Bachelor of Business Administration degree from the University of Michigan and a Masters of Business Administration from the Kellogg School of Management at Northwestern University. Mr. Montross brings to the Board extensive executive leadership experience, and, through his position as our Chief Executive Officer, he brings to the Board management’s perspective over a full range of issues affecting the Company. +Douglas Pearce , 64, has served on our Board of Directors since January 2016. Mr. Pearce was the founding Chief Executive Officer and Chief Investment Officer of the British Columbia Investment Management Corporation (bcIMC), one of Canada’s largest institutional money managers. Mr. Pearce led the organization from 1988 until he retired in June 2014. Mr. Pearce has also served as director and Chair of the Canadian Coalition for Good Governance (CCGG), the Pacific Pension Institute (PPI), and the Pension Investment Association of Canada (PIAC). Mr. Pearce was a member of the Faculty Advisory Board at the University Of British Columbia Sauder School Of Business and the Advisory Board at the Forum for Women Entrepreneurs. Mr. Pearce received his Bachelor of Commerce degree from the University of Calgary and is an accredited director in the Institute of Corporate Directors (ICD). Mr. Pearce brings to the Board a wealth of investment and corporate governance experience. +Robert Pearce , 62, has served on our Board of Directors since 2007. Mr. Pearce also serves on the board of directors of Canada Guaranty Mortgage Insurance Company and First American Payments Systems. Mr. Pearce spent 26 years with BMO Bank of Montreal, from 1980 to 2006, most recently holding the position of Chief Executive Officer and President, Personal and Commercial Client Group. He also served on the board of directors of MasterCard International from 1998 to 2006 and as Chairman of the Canadian Bankers’ Association from 2004 to 2006. Mr. Pearce holds a Bachelor of Arts from the University of Victoria and a Master of Business Administration from the University of British Columbia. Mr. Pearce brings to the Board more than 30 years of operational and leadership experience in the financial services industry, including extensive operating experience in credit card, debit card and prepaid cards in both card issuing and merchant acceptance in Canada and the United States. +-7- +Table of Contents +Nicholas Peters , 44, has served on our Board of Directors since 2007. Mr. Peters is a Managing Director at Parallel49 Equity (formerly Tricor Pacific Capital) a private equity firm that makes control investments in lower middle market companies in the United States and Canada, which he joined in 2002, and also began serving as Parallel49 Equity’s Chief Financial Officer in 2012. Prior to joining Parallel49 Equity, Mr. Peters was a Senior Manager at Arthur Andersen LLP in Chicago. Mr. Peters is the Chairman of BFG Supply Company LLC, Questco and Certified Recycling and has served on the board of several other Parallel49 Equity investment companies. Mr. Peters holds a Bachelor of Science degree in Business Administration from the University of Dayton in Ohio. He is a Certified Public Accountant and is affiliated with the American Institute of Certified Public Accountants and the Ohio Society of CPAs. Mr. Peters brings to the Board strong finance and accounting skills, as well as valuable experience from his oversight of the management and operations of several of Parallel49 Equity’s portfolio companies. +David Rowntree , 61, has served on our Board of Directors since 2007. Mr. Rowntree is the President and Chair of Highland West Capital Ltd., a Vancouver-based merchant bank that he founded in July 2012. Mr. Rowntree is one of the founders of Tricor Pacific Capital, where he served as a Managing Director from January 1996 to June 2013. Prior to co-founding Tricor, Mr. Rowntree was a practicing attorney in both public practice and as in-house counsel. Mr. Rowntree is the Chair of Ten Peaks Coffee Company (TSE:TPK). Mr. Rowntree holds a Bachelor of Arts from the University of British Columbia and a Bachelor of Law from the Osgoode Hall Law School in Toronto, Ontario. Mr. Rowntree brings to the Board more than three decades of public and private investment expertise as well as experience in corporate governance, strategic planning and risk mitigation and assessment. +Scott Scheirman , 54, has served on our Board of Directors since October 2016. Mr. Scheirman is the Chief Executive Officer and a co-founder of JKL Ventures LLC, a private investment and strategic advisory firm, a role he has held since February 2014. Prior to JKL Ventures LLC, Mr. Scheirman served as the Executive Vice President and Chief Financial Officer of Western Union (NYSE:WU) from September 2006 to December 2013. Prior to joining Western Union, Mr. Scheirman held a variety of executive leadership and financial officer roles at First Data Corporation (NYSE:FDC), and began his career at Ernst & Young LLP. Mr. Scheirman holds a Bachelor of Science degree in Business Administration with an emphasis in Accounting from the University of Northern Colorado. Mr. Scheirman brings to the Board extensive strategic planning, finance, risk management, international, public company and corporate governance experience. +Bradley Seaman , 57, has served on our Board of Directors since 2007 and currently serves as Chairman of the Board. Mr. Seaman has been employed, since August 1999, by Parallel49 Equity and its predecessor by name, Tricor Pacific Capital. From 1999 through December 2011, Mr. Seaman was Parallel49 Equity’s Managing Director and leader of its U.S. operations, and, since January 2012, has served as its Managing Partner, responsible for leading overall firm operations, strategy, funding and investments. Prior to joining Parallel49 Equity, and from 1990 through July 1999, Mr. Seaman was employed by GE Capital Corporation where he held a number of increasingly senior positions in GE’s Transportation & Industrial Funding and Commercial Finance units. In 1994, Mr. Seaman was selected to be part of a new group that was established to focus GE Capital’s debt and equity products on the emerging private equity market, and, in that capacity, headed GE’s offices in New York and Chicago. Mr. Seaman is also a member of the board of directors of Steel Dynamics, Inc. (NASDAQ: STLD). Mr. Seaman holds a Bachelor of Science degree in Business Administration from Bowling Green State University and a Master of Business Administration from the University of Dallas. He brings to the Board a comprehensive understanding and experience in the capital markets, management experience, and both operational and corporate governance experience drawn from his involvement in the management and oversight of Parallel49 Equity’s portfolio companies. +Silvio Tavares , 45, has served on our Board of Directors since October 2016. Mr. Tavares is the President and Chief Executive Officer of The CardLinx Association, a payments and digital technology trade association, a role he has held since August 2013. Prior to that, Mr. Tavares served as the Senior Vice President, Global Head of Information Products at Visa Inc. (NYSE:V) from May 2012 to August 2013. Before joining Visa, Mr. Tavares was Senior Vice President, General Manager Global Information and Analytics at First Data Corporation (NYSE:FDC) from December 2006 to May 2012. Mr. Tavares holds a Bachelor of Science Degree in Electrical and Computer Engineering from Tufts University, a Master of Business Administration from Boston College and a Juris Doctor from the Boston University School of Law. He brings to the Board over 15 years of operating experience as a payments company executive and CEO as well as extensive relationships and expertise in the payments, banking and technology industries. +-8- +Table of Contents +Director Selection Process +The Nominating Committee works with the Board to determine periodically, as appropriate, the desired Board qualifications, expertise and characteristics, including such factors as business experience and diversity of experience; and with respect to diversity, the Nominating Committee may consider such factors as differences in professional background, education, skill, and other individual qualities and attributes that contribute to the total mix of viewpoints and experience represented on the Board. +The Nominating Committee and the Board evaluate each individual in the context of the membership of the Board as a group, with the objective of having a group that can best perpetuate the success of the business and represent stockholder interests through the exercise of sound judgment using its diversity of background and experience in the various areas. Each director should be an individual of high character and integrity. In determining whether to recommend a director for re-election, the Nominating Committee also considers the director’s past attendance at meetings, participation in and contributions to the activities of the Board and the Company and other qualifications and characteristics that may be set forth in the Nominating Committee charter. +Recommendation of Directors by Stockholders +In accordance with its charter, the Nominating Committee will consider candidates for election as a director of the Company recommended by any CPI stockholder, provided that the recommending stockholder follows the procedures set forth in Section 2.10 of the Company’s Bylaws for nominations by stockholders of persons to serve as directors. The Nominating Committee evaluates such candidates in the same manner by which it evaluates other director candidates considered by the Nominating Committee, as described above. +Pursuant to Section 2.10 of the Bylaws, nominations of persons for election to the Board at a meeting of stockholders may be made by any stockholder of the Company entitled to vote for the election of directors at the meeting who sends a timely notice in writing to our Corporate Secretary. To be timely, a stockholder’s notice must be delivered to, or mailed and received by, our Corporate Secretary at the Company’s principal executive offices not less than 90 nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting; provided, however, that if the annual meeting is more than 30 days prior to or after the anniversary of the preceding year’s annual meeting, notice by the stockholder must be delivered not later than the close of business on the later of the 90th day prior to such annual meeting or the 10th day following the day on which “public announcement” of the date of such annual meeting is made by the Company. For purposes of the Bylaws, “public announcement” means disclosure in a press release reported by the Dow Jones News Service, Associated Press or a comparable national news service or in a document publicly filed by us with the SEC. +The stockholder’s notice or recommendation is required to contain certain prescribed information about each person the stockholder proposes to recommend for election as a director, the stockholder giving notice and the beneficial owner, if any, on whose behalf notice is given. The stockholder’s notice must also include the consent of the person proposed to be nominated and to serve as a director if elected. Recommendations or notices relating to director nominations should be sent to CPI Card Group, 10026 West San Juan Way, Littleton, Colorado 80127; Attention: Lillian Etzkorn, Chief Financial Officer and Corporate Secretary. +Independence of Directors +The Company’s Corporate Governance Guidelines provide that a majority of the members of the Board, and each member of the Audit Committee, Compensation Committee and Nominating Committee, must meet the criteria for independence set forth under applicable law and the NASDAQ Global Select Market (“NASDAQ”) listing standards. No director qualifies as independent unless the Board determines that the director has no direct or indirect material relationship with the Company. These independence guidelines are part of our Corporate Governance Guidelines, available on our website at www.cpicardgroup.com. The Board considers all relevant facts and circumstances of which it is aware in making an independence determination with respect to any director. +-9- +Table of Contents +The Board has made independence determinations with respect to each of our directors. Based on the NASDAQ independence guidelines, the Board has affirmatively determined that each of Ms. Fulton and Messrs. D. Pearce, R. Pearce, Peters, Rowntree, Scheirman, Seaman and Tavares are independent within the meaning of NASDAQ rules. +Board’s Role in Risk Oversight +The Company’s management continually monitors the material risks facing the Company. Our enterprise risk management process is designed to facilitate the identification, assessment and management of certain key risks the Company may encounter and which may impact our ability to achieve our strategic objectives. The enterprise risk management process supplements management’s ongoing responsibilities to monitor and address risks by working with risk owners to identify causes of and action plans for certain risks, which then are discussed with senior management. +The Board, with the assistance of the Board committees, is responsible for overseeing such management actions to ensure that material risks affecting the Company are identified and managed appropriately. The Board and the Board committees oversee risks associated with their principal areas of focused, as summarized below: +Board/Committee Areas of Risk Oversight and Actions +Full Board + Oversight of the enterprise risk management process + Careful evaluation of the reports received from management and by making inquiries of management on areas of particular interest to the Board + Reviews with management material strategic, operational, financial, compensation and compliance risks + Considers specific risk topics in connection with strategic planning and other matters + Oversees risk oversight and related activities conducted by the Board committees through reports of the committee chairmen to the Board +Audit Committee + Discusses with management the Company’s process for assessing and managing risks, including the Company’s major financial risk exposures and the steps necessary to monitor and control such exposures + Central oversight of financial and compliance risks + Meets periodically with senior management and our independent auditor, KPMG LLP, and reports on its findings at meetings of the Board + Assesses periodically reports provided by management on risks addressed in the enterprise risk management process and other risks +Compensation Committee + Oversees the review and evaluation of the risks associated with our compensation policies and practices +Nominating Committee + Oversees risks associated with our governance structure and processes + Reviews our organizational documents, Corporate Governance Guidelines and other policies +-10- +Table of Contents +Corporate Governance +The Board has approved Corporate Governance Guidelines, a Code of Business Conduct and Ethics and a Code of Conduct for Financial Officers. All of our corporate governance documents, including the Corporate Governance Guidelines, the Code of Business Conduct and Ethics, the Code of Conduct for Financial Officers and committee charters, are available on our website at www.cpicardgroup.com or in printed form upon request by contacting CPI Card Group at 10026 West San Juan Way, Littleton, Colorado 80127, Attention: Investor Relations. The Board regularly reviews corporate governance developments and modifies these documents as warranted. Any modifications will be reflected on our website. The information on our website is not part of this proxy statement and is not deemed to be incorporated by reference herein. +Other Board Information +Leadership Structure of the Board +Bradley Seaman serves as our Chairman of the Board, and Steve Montross serves as our Chief Executive Officer. Our Board has decided to maintain separate Chairman and CEO roles to allow our CEO to focus on the execution of our business strategy, growth and development, while allowing the Chairman to lead the Board in its fundamental role of providing advice to, and independent oversight of, management. The Board recognizes the time, effort and energy that the CEO is required to devote to his position in the current business environment, as well as the commitment required to serve as our Chairman. While our Bylaws and Corporate Governance Guidelines do not require that our Chairman and CEO positions be separate, the Board believes that having separate positions and having an independent director serve as Chairman is the appropriate leadership structure for us at this time. +Board Meetings +In 2016, our Board held eight meetings. In addition to our Board meetings, our directors attend meetings of committees established by our Board. Each of CPI’s director nominees attended at least 75% of the meetings of our Board and the committees on which he or she served during 2016 that were held when he or she was a director. Our directors are encouraged to attend all annual and special meetings of our stockholders. Six (6) directors attended the 2016 annual meeting of stockholders. +Meetings of Non-Employee Directors +In accordance with our Corporate Governance Guidelines, our non-employee directors meet regularly in executive sessions of the Board without management present. Mr. Bradley Seaman, our Chairman, presides over these executive sessions. In the event that Mr. Bradley Seaman is not available to lead these meetings, the presiding director is chosen by the non-employee directors in attendance. +-11- +Table of Contents +Committees of the Board +The Board has three standing committees: the Audit Committee, the Compensation Committee and the Nominating Committee. The following chart sets forth the directors who currently serve as members of each of the Board committees as of the date of this proxy statement. +Audit +Compensation +Nominating +Directors +Committee +Committee +Committee +Diane Fulton +X +Steven Montross +Douglas Pearce +X +C +Robert Pearce +X +C +Nicholas Peters +X +David Rowntree +X +X +Scott Scheirman +C +Bradley Seaman* +X +Silvio Tavares +X +* Chairman of the Board +“C” Denotes member and chair of committee +“X” Denotes member +Audit Committee +In 2016, the Audit Committee held eight meetings. Mr. Douglas Pearce joined the Audit Committee upon his appointment to the Board in January 2016. Mr. Scott Scheirman joined the Audit Committee as the Audit Committee Chair upon his appointment to the Board in October 2016, replacing Mr. Nicholas Peters, who resigned from the Audit Committee. Each of the members of the Audit Committee is a non-employee director. We believe that each of Ms. Fulton and Messrs. Doug Pearce, Robert Pearce and Scott Scheirman meets the independence criteria for purposes of serving on an audit committee under the NASDAQ Global Select Market Rules and Rule 10A-3 under the Exchange Act. In addition, our board of directors has determined that each of Ms. Fulton and Messrs. Robert Pearce, Doug Pearce and Scott Scheirman qualifies as an “audit committee financial expert,” as such term is defined in Item 407(d)(5) of Regulation S-K. The Audit Committee operates under a written charter setting forth its functions and responsibilities. A copy of the current charter is available on our website at www.cpicardgroup.com or in printed form upon request. +Compensation Committee +The Compensation Committee held five meetings in 2016. The Board has determined that all of the members of the Compensation Committee are independent as defined in NASDAQ Global Select Market rules, including the independence standards applicable to compensation committees. The Compensation Committee has overall responsibility for approving and evaluating director and officer compensation plans, policies and programs of the Company and reviewing the disclosure of such plans, policies and programs to our stockholders in the annual proxy statement. The Compensation Committee utilizes an independent compensation consultant to assist it in its duties. The Compensation Committee operates under a written charter setting forth its functions and responsibilities. A copy of the current charter is available on our website at www.cpicardgroup.com or in printed form upon request. +In consultation with the Company’s management, the Compensation Committee establishes the general policies relating to senior management compensation and oversees the development and administration of such compensation programs. Our human resources executives and staff support the Compensation Committee in its work. These members of management work with compensation consultants whose engagements have been approved by the Compensation Committee, accountants and legal counsel, as necessary, to implement the Compensation Committee’s decisions, to monitor evolving competitive practices and to make compensation recommendations to the Compensation Committee. Our Human Resources management develops specific compensation recommendations for senior executives, which are first reviewed by senior management and then presented to the Compensation Committee and its independent +-12- +Table of Contents +compensation consultant. The Compensation Committee has final authority to approve, modify or reject the recommendations and to make its decisions in executive session. The Compensation Committee approves all compensation of our executive officers, including equity awards. +Since 2015, the Compensation Committee has engaged Aon Hewitt as its independent compensation consultant. The consultant reports directly to the Compensation Committee, including with respect to management’s recommendations of compensation programs and awards. The Compensation Committee has the sole authority to approve the scope and terms of the engagement of such compensation consultant and to terminate such engagement. Aon Hewitt has assisted the Compensation Committee with the development of competitive market data and a related assessment of the Company’s executive and director compensation levels, evaluation of annual and long-term incentive compensation strategy and compilation and review of total compensation data for the Company’s Named Executive Officers (as defined in “Executive Compensation”). Other than with respect to consulting on executive and director compensation matters, Aon Hewitt has performed no other services for the Compensation Committee or the Company. +The Compensation Committee has reviewed the independence of Aon Hewitt in light of SEC rules and NASDAQ listing standards regarding compensation consultants and has concluded that Aon Hewitt’s work for the Compensation Committee does not raise any conflict of interest. +Nominating and Corporate Governance Committee +The Nominating and Corporate Governance Committee held four meetings in 2016. Messrs. Doug Pearce and Silvio Tavares joined the Nominating and Corporate Governance Committee upon their appointments to the Board in January 2016 and October 2016, respectively. Mr. Douglas Pearce became Chair of the Nominating and Corporate Governance Committee in October 2016, replacing Mr. David Rowntree as Chair. Each of the members of the Nominating Committee is independent as defined in NASDAQ Global Select Market rules. +The Nominating and Corporate Governance Committee is responsible for, among other things: (i) identifying individuals qualified to become members of the Board, consistent with criteria approved by the Board; (ii) recommending director nominees to the Board for election at the next annual meeting of the stockholders of the Company; (iii) in the event of a vacancy on or an increase in the size of the Board, recommending director nominees to the Board to fill such vacancy or newly established Board seat; (iv) recommending directors to the Board for membership on each committee of the Board; and (v) establishing and reviewing annually our Corporate Governance Guidelines and Code of Business Conduct and Ethics. The Nominating and Corporate Governance Committee operates under a written charter setting forth its functions and responsibilities. A copy of the current charter is available on our website at www.cpicardgroup.com or in printed form upon request. +Compensation Committee Interlocks and Insider Participation +None of the members of our Compensation Committee has in the past served as an officer or employee of the Company. None of our executive officers currently serves, or in the past year has served, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on our Board or Compensation Committee. +Communications to the Board +Stockholders and interested parties can contact the Board (including the Chairman and the independent directors) through written communication sent to CPI Card Group, 10026 West San Juan Way, Littleton, Colorado 80127, Attention: Lillian Etzkorn, Chief Financial Officer and Corporate Secretary. Our Corporate Secretary reviews all written communications and forwards to the Board copies of any such correspondence that is directed to the Board or that, in the opinion of the Corporate Secretary, deals with the functions of the Board or Board committees or that she otherwise determines requires the Board’s or any Board Committee’s attention. Concerns relating to accounting, internal accounting controls or auditing matters are immediately brought to the attention of our Audit Committee Chair and handled in accordance with procedures established by the Audit Committee with respect to such matters. From time to time, the Board +-13- +Table of Contents +may change the process by which stockholders may communicate with the Board. Any such changes will be reflected in our Corporate Governance Guidelines, which are posted on our website at www.cpicardgroup.com. +Director Compensation +As described more fully below, the following table summarizes the annual compensation for our non-employee directors during 2016. +2016 DIRECTOR COMPENSATION +Fees +Fees +Earned +Earned +Or Paid +Or Paid +In Cash +In Stock +Total +Name +($) +($) +($) +Diane Fulton (1) +$ +60,000 +$ +70,836 +$ +130,836 +Douglas Pearce (2) +$ +66,250 +$ +66,668 +$ +132,918 +Robert Pearce (1) +$ +78,750 +$ +70,836 +$ +149,586 +Nicholas Peters +— +— +— +David Rowntree +— +— +— +Scott Scheirman (3) +$ +17,500 +$ +37,502 +$ +55,002 +Bradley Seaman +— +— +— +Silvio Tavares (3) +$ +13,750 +$ +37,502 +$ +51,252 +(1) +Ms. Diane Fulton and Mr. Robert Pearce received prorated restricted stock unit awards in March 2016 to cover the period from the start of the fiscal year through the next annual director equity awards in June 2016. In June 2016 they received an additional award as part of their service for the 2016/2017 director compensation period. +(2) +Mr. Douglas Pearce received a prorated restricted stock unit award in March 2016 to cover the period from his appointment to the Board of Directors through the next annual director equity awards in June 2016. In June 2016 he received an additional award as part of his service for the 2016/2017 director compensation period. +(3) +Messrs. Silvio Tavares and Scott Scheirman joined the Board of Directors in October 2016 and received prorated fees for 2016 services. +Narrative to Director’s Compensation Table +In 2016 we revised our director compensation program to reflect competitive practices and our transition to a publicly traded company. The resulting compensation package for our non-employee directors (other than, our non-employee directors who are affiliated with the Tricor Funds) is set forth in the table below. The Board, at its discretion, may choose to modify current practice relating to compensation of non-employee directors who are affiliated with the Tricor Funds. +-14- +Table of Contents +Compensation Element +Value +Retainer +$100,000 (may elect to receive 50% in restricted stock units, vesting 100% on the first anniversary of the award date) +Audit Committee Chair Fee +$ +20,000 +Compensation Committee Chair Fee +$ +15,000 +Nominating Committee Chair Fee +$ +10,000 +Audit Committee Member Fee +$ +10,000 +Compensation Committee Member Fee +$ +7,500 +Nominating Committee Member Fee +$ +5,000 +Security Ownership of Certain Beneficial Owners, Directors and Management +The following table sets forth, as of April 18, 2017 (except as indicated below), beneficial ownership, as defined by SEC rules, of our common stock. Each of the persons listed below has sole voting and investment power with respect to the beneficially owned shares listed unless otherwise indicated. The percentage calculations set forth in the table are based on 55,592,024 shares of common stock outstanding on April 18, 2017 rather than based on the percentages set forth in stockholders’ Schedules 13G or 13D, as applicable, filed with the SEC. Unless otherwise indicated, the address of each beneficial owner is c/o CPI Card Group Inc., 10026 West San Juan Way, Littleton, Colorado 80127. +Number of +Shares of +Percentage of +Common +Common +Stock +Stock +Owned +Owned +Beneficially +Beneficially +5% Beneficial Owners: +Tricor Pacific Capital Partners (Fund IV), Limited Partnership(1) +20,621,843 +37.1% +Tricor Pacific Capital Partners (Fund IV) US, Limited Partnership (1) +12,172,288 +21.9% +Ameriprise Financial, Inc.(2) +3,355,991 +6.0% +Named Executive Officers and Directors: +Steven Montross +1,569,772 +2.8% +David Brush +160,778 +* +Jason Bohrer +— +* +Diane Fulton(3) +10,634 +* +Douglas Pearce +10,532 +* +Robert Pearce +395,522 +* +Nicholas Peters +–– +–– +David Rowntree +–– +–– +Scott Scheirman +–– +–– +Bradley Seaman +–– +–– +Silvio Tavares +25,000 +* +Total Executive Officers and Directors as a Group (18 individuals) +2,569,974 +4.6% +* Less than 1% +-15- +Table of Contents +(1) +Based on a Schedule 13G filed jointly by Tricor Pacific Capital Partners (Fund IV), Limited Partnership, Tricor Pacific Capital Partners (Fund IV) US, Limited Partnership (collectively, the “Tricor Funds”) and Parallel49 Equity, ULC on February 12, 2016. Each of the Tricor Funds is managed by Parallel49 Equity, ULC, as the general partner. Mr. Bradley Seaman, Mr. David Rowntree, J. Trevor Johnstone and Roderick Senft are the sole members of an investment committee of the Tricor Funds that has the power to vote or dispose of the shares held by the Tricor Funds. Each of Messrs. Seaman, Peters and Rowntree is an officer or member of Tricor and has an indirect pecuniary interest in the shares of common stock held by the Tricor Funds through their respective interests in the Tricor Funds. Each of Messrs. Seaman, Peters and Rowntree expressly disclaims any beneficial ownership of any shares of common stock held by the Tricor Funds. The address of the Tricor Funds is c/o Tricor Pacific Capital, One Westminster Place, Suite 100, Lake F orest, IL 60045. +(2) +Based on a Schedule 13G filed on February 10, 2017. Ameriprise Financial, Inc. (“Ameriprise”) reports shared voting power with respect to 3,316,185 shares and has shared dispositive power with respect to 3,355,991 shares. Columbia Management Investment Advisers, LLC (“Columbia”) has shared voting power with respect to 3,316,185 shares and has shared dispositive power with respect to 3,355,991 shares. Ameriprise, as the parent company of Columbia, may be deemed to beneficially own the shares reported by Columbia. Accordingly, the shares reported by Ameriprise include those shares separately reported by Columbia. The address for Ameriprise is 145 Ameriprise Financial Center, Minneapolis, MN 55474. The address for Columbia is 225 Franklin St. Boston, MA 02110. +(3) +Includes 8,000 shares of common stock held by Ms. Fulton’s husband. +Section 16(a) Beneficial Ownership Reporting Compliance +Based upon our review of reports filed with the SEC and written representations that no other reports were required, we believe that all of our directors and executive officers complied with the reporting requirements of Section 16(a) of the Exchange Act during 2016, except that a Form 4 for Douglas Pearce relating to the purchase of 8,300 shares of our common stock was untimely filed on June 15, 2016. +-16- +Table of Contents +EXECUTIVE OFFICERS +The following table sets forth certain information concerning each of our executive officers: +Name +Age +Position +Steven Montross +63 +President, Chief Executive Officer and Director +Jay Arbabha +52 +Chief Technology Officer +Chris Bakke +46 +Chief Accounting Officer +Jason Bohrer +46 +Senior Vice President of Operations +Nicholas Cahn +53 +Managing Director—CPI Europe +Lane Dubin +48 +Senior Vice President, Sales and Marketing +Lillian Etzkorn +48 +Chief Financial Officer +Lisa Jacoba +49 +Chief Human Resources Officer +Anna Rossetti +57 +President—CPI Canada +Steven Montross . See “Directors and Corporate Governance” for Mr. Montross’ biographical information. +Jay Arbabha has served as our Chief Technology Officer since November 2016. From 2014 to 2016, Mr. Arbabha was an IBM Executive Advisor to one of IBM’s largest financial institutions clients. Prior to that role, from 2008 to 2014, Mr. Arbabha was a Technical Fellow, Principal Technologist for the Cyber Solutions Division of the Northrop Grumman. Prior to joining Northrop Grumman, he served from 2003 to 2008 as a Vice President for First Data Corporation. Mr. Arbabha is a graduate of Clarke University in Computer Science/Chemistry and holds a Master of Science in Systems Security Engineering from Stevens Institute of Technology. +Chris Bakke has served as our Chief Accounting Officer since March 2016. Mr. Bakke joined the Company in November 2015 as Vice President and Controller. Prior to joining the Company, Mr. Bakke served in various capacities at Western Union from May 2002, most recently as Senior Vice President Global Operations from August 2012 to September 2015. Prior to his time with Western Union, Mr. Bakke served in the Assurance and Advisory Business Services practice at Ernst & Young LLP for eight years. Mr. Bakke holds a Bachelor’s Degree from the University of Colorado at Boulder and is a certified public accountant in the State of Colorado. +Jason Bohrer has served as our Senior Vice President of Operations since June 2016. Prior to joining the Company, from 2002 to 2016, Mr. Bohrer worked at HID Global, a provider of access control and secure identity solutions, most recently serving as VP, Global Operations from January 2015 to May 2016, VP & Executive Sponsor, Americas & HQ Consolidation from January 2013 to December 2014, and Senior Vice President, Managed Services from January 2011 to December 2012. Prior to joining HID Global, Mr. Bohrer held operations positions at Indala Corp. (formerly Motorola’s smartcard division) and Motorola, Inc. Mr. Bohrer holds a Bachelor’s Degree in Economics from the University of Texas , and was an inaugural member of the University of Chicago’s Executive Institute. +Nicholas Cahn has served as Managing Director of CPI Europe since 2008. From 2000 to 2008, Mr. Cahn was Director of the Card Division for Oakhill plc and then Managing Director of PCC Services Ltd., prior to its acquisition by CPI in 2008. Prior to that, Mr. Cahn spent 15 years with Group Bull of France, serving as Director of International Sales in the smartcard division in Paris, Smartcard Business Unit Director in London and Vice President of a joint venture with Dai Nippon Printing in Tokyo. Mr. Cahn holds a business studies degree from Thames Valley University and is an alumnus of Bull’s Executive Advanced Management Course and the European Executive Training Program in Japan. +Lane Dubin has served as our Senior Vice President, Sales and Marketing since August 2016. Prior to joining the Company, Mr. Dubin served at American Express Company from 1992 to 2015. Most recently, he was the Head of Global Sales at American Express Global Business Travel from 2008 to 2015, and Vice President, Business Development – North America, at American Express Global Business Travel from 2003 to 2008. Prior to these roles, Mr. Dubin held roles with increasing responsibility with American Express including Vice President-Business Development, Financial Education Services for American Express Financial Advisors and Director of Sales and Business Development for Ketera +-17- +Table of Contents +Technologies, a technology start-up incubated by American Express. Mr. Dubin holds a Bachelor’s Degree in Economics and Business Administration from Ursinus College. +Lillian Etzkorn joined as our Chief Financial Officer at the beginning of 2017. Prior to joining the Company, Ms. Etzkorn served in senior roles at Dana Incorporated from 2009 to 2016, most recently as Vice President and Treasurer from 2011 to 2016, and prior to that as Senior Director, Investor Relations from 2009 to 2011. Prior to Dana Incorporated, Ms. Etzkorn spent nineteen years in financial positions of increasing responsibility at Ford Motor Company, including most recently, Controller, Truck Product Development, Ford SUV and Commercial Vehicles from 2008 to 2009, and Director, Investor Relations from 2007 to 2008. Additionally, she held various other significant financial roles in corporate finance, profit and operations analysis and revenue. Ms. Etzkorn received her MBA in Finance from the University of Michigan and her Bachelor’s Degree in Marketing from Eastern Michigan University. +Lisa Jacoba has served as our Chief Human Resources Officer since June 2015. From 2006 to 2014, Ms. Jacoba served as Senior Vice President, Human Resources, and Senior Vice President of Global Talent Management at Western Union in the United States and in the United Kingdom. Prior to Western Union, Ms. Jacoba spent sixteen years in human resources positions of increasing responsibility at First Data Corporation with the most recent position of Senior Vice President Human Resources from 2001-2005. Ms. Jacoba received her Bachelor of Science in Human Resources from Bellevue University. +Anna Rossetti has served as the President of CPI Card Group—Canada since 2008. From 1999 to 2008, Ms. Rossetti held several leadership positions with Giesecke & Devrient (Canada), including President from 2004 to 2008 and Senior Vice President and General Manager from 1999 to 2004. Prior to that, Ms. Rossetti worked with Equifax Canada, Bank of Nova Scotia and Bank of Montreal. Ms. Rossetti received her Bachelor’s Degree in Economics with Honors from York University. +EXECUTIVE COMPENSATION +The following Summary Compensation Table discloses the compensation information for fiscal years 2016 and 2015 for our principal executive officer (“PEO”) and the two most highly compensated executive officers other than the PEO who were serving as executive officers at the end of the last completed fiscal year (collectively, the “named executive officers”). +Summary Compensation Table +Non-Equity +Nonqualified +Incentive +Deferred +Name and +Stock +Option +Plan +Compensation +All Other +Principal Position +Year +Salary +Bonus +Awards (1) +Awards (2) +Compensation +Earnings +Compensation (3) +Total +Steven Montross +2016 +$ +520,192 +$ +— +$ +300,003 +$ +396,000 +$ +— +— +$ +29,427 +$ +1,245,622 +President and Chief Executive Officer +2015 +$ +484,687 +$ +— +$ +— +$ +1,052,656 +$ +82,025 +— +$ +22,577 +$ +1,641,945 +David Brush +2016 +$ +450,000 +$ +— +$ +184,999 +$ +117,920 +$ +— +— +$ +17,674 +$ +770,593 +former Chief Financial Officer (4) +2015 +$ +241,875 +$ +— +$ +1,396,096 +$ +323,475 +$ +39,489 +— +9,622 +$ +2,010,557 +Jason Bohrer, Senior Vice President US Operations (5) +2016 +$ +178,846 +$ +— +$ +— +$ +147,581 +$ +— +— +$ +165,145 +$ +491,572 +(1) +These amounts represent the grant date fair value of restricted stock unit awards granted to Messrs. Montross and Brush in 2016 and a restricted stock award granted to Mr. Brush in 2015 in connection with his initial terms of employment. The values were calculated in accordance with FASB ASC Topic 718. +(2) +These amounts represent the grant date fair value of the stock option awards calculated in accordance with FASB ASC Topic 718. For a discussion of the assumptions and methodologies used in calculating the grant date fair value of the stock option awards, please see Note 17 to the Company’s consolidated financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016. +(3) +These amounts represent (a) for Mr. Montross, a car allowance, reimbursement for certain commuting expenses and matching contributions under the Company’s 401(k) plan (b) for Mr. Brush, reimbursement for certain commuting +-18- +Table of Contents +expenses and matching contributions under the Company’s 401(k) plan; and (c) for Mr. Bohrer, relocation expenses under the Company’s standard executive relocation benefits policy. +(4) +Mr. Brush resigned from employment with the Company as of December 31, 2016. +(5) +Mr. Bohrer commenced employment with the Company on May 16, 2016 and was not a named executive officer in 2015; thus, 2015 compensation information for him is not included in this table. +Base Salaries +Base salaries established for the Company’s executive officers are intended to reflect each individual’s responsibilities, experience, historical performance and other discretionary factors deemed relevant by the Company and have generally been set at levels deemed necessary to attract and retain individuals with superior talent. Base salaries are also designed to provide executive officers with steady cash flow during the course of the fiscal year that is not contingent on short-term variations in the Company’s operating performance. +Our named executive officers were entitled to the following annual base salaries in 2016 and 2017. Messrs. Montross and Bohrer received base salary increases in 2017 based on the competitive positioning of their compensation and their performance: +2016 Base Salary +2017 Base Salary +Named Executive Officer +(Effective April 1, 2016) (1) +(Effective March 1, 2017) +Steven Montross +$ +525,000 +$ +560,000 +David Brush (2) +$ +450,000 +n/a +Jason Bohrer +$ +300,000 +$ +305,000 +(1) +Mr. Bohrer’s 2016 base salary was effective as of the commencement of his employment with the Company in 2016. +(2) +Mr. Brush resigned from employment with the Company on December 31, 2016. +Annual Incentive Awards +The Company maintains an annual short-term incentive plan (the “STIP”) to incentivize senior management and other key employees to achieve the short-term financial and non-financial objectives of the Company. The annual incentive awards are intended to reward both overall Company and individual performance during the year, and as such, are variable from year to year. The Company believes that establishing cash bonus opportunities is an important factor in both attracting and retaining the services of qualified and highly skilled executives and in motivating our senior management to achieve the Company’s annual objectives. +In 2016, the STIP provided for a bonus pool based upon the Company achieving certain levels of Adjusted EBITDA, as described below, and revenue. Given that Company performance was below threshold levels in 2016, no payout under the STIP was made. Payout of the STIP to individual management team members would have been based upon these Company results and the achievement of individual objectives. For 2017, the STIP was further modified to include certain other financial measures as performance goals. +“Adjusted EBITDA” is a financial measure that is not calculated according to U.S. generally accepted accounting principles (“GAAP”). A reconciliation showing how the Company calculates Adjusted EBITDA from net income from continuing operations, the most comparable GAAP measure, may be found in the “Key Performance Indicators” section of the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, filed with the Securities and Exchange Commission on March 2, 2017. +Long-Term Incentives +In 2016, the Company instituted a long-term incentive award practice whereby senior leaders and executives would be eligible to receive annual awards under the Omnibus Plan (described below). In March 2016, the Company made stock option and restricted stock unit grants to senior leaders and executives taking into account both market practices and the 2015 awards made in connection with the initial public offering. The stock option grants generally will vest 33.4% on the second anniversary of the Company’s initial public offering and 33.3% on each of the third and fourth anniversaries +-19- +Table of Contents +of the Company’s initial public offering, subject to other applicable terms and conditions consistent with the Omnibus Plan. The restricted stock units vest on the first anniversary of the date of grant and were in part meant to promote our efforts to retain top executive talent. +Employee Benefits +The Company maintains the CPI Holdings I, Inc. 401(k) Plan (the “401(k) Plan”), which is a qualified defined-contribution plan under the provisions of the Internal Revenue Code Section 401(k) covering substantially all employees who meet certain eligibility requirements. Under the 401(k) Plan, participants may defer their salary subject to statutory limitations and may direct the contributions among various investment accounts. The Company matches 100% of the participant’s first 3% of deferrals and 50% of the next 2% deferral percentage. The Company’s portion is 100% vested at the time of the match. +Employment and Post-Termination Arrangements +Mr. Montross’ Employment Agreement +Effective April 22, 2009, Mr. Montross entered into an employment agreement with the Company to serve as President and Chief Executive Officer for a term of five years, plus automatic one-year renewals thereafter unless either party provides notice of intent not to renew the agreement. The agreement provided for an initial base salary of $390,000 per year. In addition, Mr. Montross is entitled to participate in the STIP with a target bonus of 50% of his annual base salary. Mr. Montross is provided with a reasonable automobile allowance to be approved by the Chairman of the Board. +In the event that Mr. Montross’ employment is terminated by the Company without “Cause,” he resigns for “Good Reason” (each as defined in the agreement) or the Company fails to renew his agreement upon its expiration, Mr. Montross would be entitled to (i) continued monthly payments of his base salary and 1/12th of his estimated annual STIP target bonus for a period of 12 months and (ii) a prorated portion of his annual STIP target bonus (excluding any portion related to individual objectives), based on the number of full months completed during the fiscal year in which such termination of employment occurs. If Mr. Montross dies or suffers a “Disability” (as defined in the agreement) during the term of the agreement, he or his estate would be entitled to continued base salary and prorated bonus payments for a period of six months. Mr. Montross may resign upon giving no less than 90 days’ notice. +Mr. Montross is subject to certain restrictive covenants, including obligations regarding non-competition and non-solicitation of Company employees and customers, during the term and for a period of two years following any termination of his employment with the Company. +Pursuant to his outstanding option award under the Company’s Omnibus Plan, Mr. Montross would also be eligible for continued vesting of such award and exercisability through the end of the option term in the event that his employment terminates by reason of an “Approved Retirement.” An “Approved Retirement” is defined in such agreements as Mr. Montross’ “Retirement” (pursuant to the Omnibus Plan, a termination of employment, other than for “Cause” or due to death or “Disability,” on or after the attainment of age 65) with respect to which Mr. Montross adheres to certain additional requirements set forth by the Compensation Committee and the Board of Directors. Such requirements include, but are not limited to, Mr. Montross providing the Compensation Committee with at least nine months’ notice prior to his chosen retirement date, assisting in transitioning a successor to his role and complying with the restrictive covenants described above. These provisions were added to enhance the Company’s succession planning and business continuity processes, if and when such a transition were to take place in the future. +The estimated cash severance payment to Mr. Montross on termination, assuming a termination as of December 31, 2016, would have been $892,500 for termination without “Cause,” for “Good Reason” or the Company’s failure to renew the agreement, and $446,250 for a termination due to his death or “Disability” (assuming, in each case, that Mr. Montross’ annual bonus is at the target level). +On April 17, 2017, Mr. Montross announced his intention to retire from the Company effective June 30, 2018, and Mr. Montross and the Company agreed to an amendment of the employment agreement. Under the amendment Mr. Montross will continue to serve as President and CEO through the earlier of the date on which the Company appoints a +-20- +Table of Contents +successor President and CEO or December 31, 2017 (the “CEO Transition Date”). On the CEO Transition Date, Mr. Montross will voluntarily resign as President and CEO and from all other director and officer positions he holds with the Company and its affiliates. From the CEO Transition Date through his June 30, 2018 retirement date, Mr. Montross will be employed by the Company in a non-executive capacity. During the period prior to his retirement date, he will assist the Company’s Board with a successful transition of his duties, including transitioning key relationships to other employees, cooperating with the Board in recruiting his successor and providing his successor with business-related transition services. +Through the date of his retirement, the Company will provide Mr. Montross with an annual base salary of $560,000 and the opportunity to earn a bonus under the Company’s 2017 short-term incentive plan, with a target of up to 100% of his base salary. Provided that Mr. Montross satisfies the terms of the amendment, his retirement on June 30, 2018 will be deemed an Approved Retirement, which will allow his outstanding nonqualified stock option awards to continue to vest in accordance with their terms. +The Company also will pay Mr. Montross a succession incentive bonus equal to $560,000, half of which will be payable on the date of his retirement and the remaining portion of which will be payable in equal bi-weekly installments from the date of his retirement through December 31, 2018; provided that he complies with the terms of his employment agreement (including the restrictive covenants therein) and the amendment, and executes a general release of claims against the Company. +If the Company were to terminate Mr. Montross without Cause (or give him Good Reason to terminate employment) before the June 30, 2018 retirement date, the Company would be required to make the payments and provide the benefits described above for an Approved Retirement. +Mr. Brush’s Employment Agreement +We entered into an employment agreement with Mr. Brush, effective June 22, 2015, to serve as our Chief Financial Officer. The initial term of the employment agreement is five years, plus automatic one-year renewals thereafter unless either party provides notice of intent not to renew the agreement. The agreement provides for an initial base salary of $450,000 per year plus an annual target incentive award equal to 50% of his base salary, with a prorated incentive award for 2015. Mr. Brush also received an award of 147,664 shares of restricted stock, one installment of which vested in June 2016 and the remainder of which vests in June 2017 and 2018 subject to his continued employment through each such vesting date. +On December 8, 2016, we entered into an amendment to Mr. Brush’s employment agreement, in connection with Mr. Brush’s previously disclosed announcement in August 2016 of his decision to resign voluntarily from the Company effective December 31, 2016. The amendment provides that Mr. Brush would continue to be employed as the Company’s Chief Financial Officer through such date, and that effective as of January 1, 2017, Mr. Brush would enter into a consulting services agreement with the Company to provide services in a transition and advisory role as a consultant through June 30, 2017, in exchange for a monthly fee of $5,000. The amendment also provides for continued vesting of Mr. Brush’s outstanding equity awards during the consulting period and reaffirms the restrictive covenant and confidentiality obligations set forth in his employment agreement, including obligations regarding non-competition and non-solicitation of Company employees and customers (lasting during the term of his employment and for a period of one year following any termination thereof). +Pursuant to his employment agreement, Mr. Brush would have been entitled to severance benefits if his employment had terminated under certain circumstances. In the event of a termination of employment by the Company without “Cause,” Mr. Brush’s resignation of employment for “Good Reason,” a termination of his employment due to his death or “Disability” (each term as defined in the agreement), or the Company had failed to renew the agreement upon its expiration, Mr. Brush (or his estate, in the event of his death) would have been entitled to (i) continued monthly payments of his base salary and 1/12th of his estimated annual STIP target bonus for a period of 12 months, (ii) 12 months of continued vesting of the restricted stock award granted in connection with the commencement of his employment and (iii) pro rata vesting of any other outstanding equity or long-term incentive awards. However, as Mr. Brush voluntarily resigned (without Good Reason) from employment with the Company as of December 31, 2016, none of the post-termination benefits referenced above were payable to Mr. Brush for a termination as of such date. +-21- +Table of Contents +Mr. Bohrer’s Employment Offer Letter +Mr. Bohrer currently does not have an employment agreement with the Company. Under the terms of his employment offer letter, he receives an initial base salary of $300,000 per year plus an annual target incentive award equal to 50% of his base salary. In addition, on June 1, 2016, Mr. Bohrer received options to purchase 161,291 shares of the Company’s common stock, with an exercise price of $4.20 per share, as part of his new hire employment terms. Mr. Bohrer’s stock options will vest 33.4% on the second anniversary of the date of grant and 33.3% on each of the third and fourth anniversaries of the date of grant, subject to other applicable terms and conditions consistent with the Omnibus Plan. The award date fair value of the option award is reflected in the “Option Awards” column of the Summary Compensation Table. +In connection with his hiring, Mr. Bohrer received standard executive relocation benefits under the Company’s relocation program. All relocation benefits were utilized during 2016 and are reflected in the “All Other Compensation” column of the Summary Compensation Table. +Adoption of Additional Compensation Governance Practices +During 2016 the Company adopted an incentive compensation recoupment policy (“Clawback Policy”). Under the Clawback Policy if the Company is required to restate its financial results because of its material noncompliance with any financial reporting requirement under the securities laws, the Compensation Committee will review all awards or payments of any form of incentive-based compensation made to current and former executive officers of the Company within the three-year period immediately preceding the date on which the Company is required to prepare the restatement. If the Compensation Committee determines that any such incentive awards or payments were based on erroneous data and would have been lower had they been calculated based on the restated results, the Compensation Committee may, to the extent permitted by applicable law, seek to recover for the benefit of the Company the difference between the amounts awarded or paid and the amounts that would have been awarded or paid based on the restated results. These remedies would be in addition to, and not in lieu of, any penalties imposed by law enforcement agencies, regulators or other authorities. For purposes of this policy, “executive officers” of the Company include all persons designated by the Board of Directors as Section 16 reporting officers. +During 2016, the Company also adopted formal executive stock and independent director stock ownership guidelines which apply to senior executives, including our named executive officers, and our independent directors. The Company did this to further align the interests of our leaders and the independent directors with those of our shareholders. Under the guidelines, executives and independent directors have up to 5 five years to accumulate shares and share equivalents that have a market value equal to or greater than a prescribed multiple of annual salary, as outlined below. Given that these guidelines were recently adopted, our executives and independent directors have until 2021 (or five years from appointment to their position) to satisfy the applicable share ownership levels. +Position +Multiple of Salary (1) +Additional Comments +CEO +5x +Shares that count towards the Guideline include those owned outright, restricted stock, restricted stock units, intrinsic value of vested stock option and any deferred stock +CEO Direct Reports and Chief Accounting Officer +2x +Other Executives +1x +Independent Directors +3x +(1) For the independent directors the ownership requirement is 3x the cash portion of their annual fees. +-22- +Table of Contents +Outstanding Equity Awards at 2016 Fiscal Year-End +Option Awards +Stock Awards +Number of +Number of +Market +Securities +Securities +Number of +Value of +Underlying +Underlying +Shares of +Shares of +Unexercised +Unexercised +Option +Stock that +Stock that +Options +Options +Exercise +Option +Have Not +Have Not +(Exercisable) +(Unexercisable) +Price +Expiration +Vested +Vested +Name +(#) +(#) (1) +($) +Date +(#) +($) (2) +Steven Montross +— +309,150 +$ +10.00 +10/8/2025 +— +225,000 +$ +10.00 +10/8/2025 +37,927 +(3) +$ +157,397 +David Brush +— +95,000 +$ +10.00 +10/8/2025 +— +67,000 +$ +10.00 +10/8/2025 +94,864 +(4) +$ +393,686 +23,388 +(3) +$ +97,060 +Jason Bohrer +— +161,291 +$ +4.20 +6/1/2026 +(1) +For Mr. Steven Montross (a) 33.4% of the options will vest and become exercisable on October 8, 2017, and (b) 33.3% of the options will vest and become exercisable on each of October 8, 2018 and October 8, 2019, subject to continued service with the Company through each such vesting date. For Mr. Brush, (a) 33.4% of the options would have vested and become exercisable on October 8, 2017, and (b) 33.3% of the options would have vested and become exercisable on each of October 8, 2018 and October 8, 2019, subject to continued service with the Company through each such vesting date. However, as described above under “Mr. David Brush’s Employment Agreement,” Mr. David Brush will only continue to vest in any outstanding equity awards through June 30, 2017 while he serves as a consultant to the Company. For Mr. Jason Bohrer (a) 33.4% of the options will vest and become exercisable on June 1, 2018, and (b) 33.3% of the options will vest and become exercisable on each of June 1, 2019 and June 1, 2020, subject to continued service with the Company through each such vesting date. +(2) +The market value of the restricted stock and restricted stock units is based on the $4.15 closing price of a share of our common stock on December 31, 2016. +(3) +These restricted stock unit awards vest 100% on March 2, 2017. +(4) +This restricted stock award would have vested according to the following schedule (a) 32% of the award will vest on June 22, 2017 and (b) 32% of the award would have vested on June 22, 2018, subject to Mr. David Brush’s continued service with the Company through each such vesting date. However, as described above under “Mr. David Brush’s Employment Agreement,” Mr. David Brush will only continue to vest in any outstanding equity awards through June 30, 2017 while he serves as a consultant to the Company. +CPI Card Group Inc. Omnibus Incentive Plan +In connection with our initial public offering, we adopted the CPI Card Group Inc. Omnibus Incentive Plan (the “Omnibus Plan”) pursuant to which cash and equity-based incentives (including through an annual incentive program) may be granted to participating employees, directors and consultants. The principal purposes of the Omnibus Plan are to encourage profitability and growth through short-term and long-term incentives that are consistent with our objectives; to give participants an incentive for excellence in individual performance; to promote teamwork among participants; and to give us a significant advantage in attracting and retaining key employees, directors, and consultants. Our Omnibus Plan provides for the grant of incentive stock options within the meaning of Section 422 of the Internal Revenue Code, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance based awards (including performance shares, performance units and performance bonus awards), and other stock or cash-based awards. When considering new grants of share-based or option-based awards, the Company intends to take into account previous grants of such awards. +-23- +Table of Contents +Equity Compensation Plan Information Table +The following table provides information as of December 31, 2016 with respect to shares of our common stock that may be issued under our existing equity compensation plan. +Number of securities +remaining available for +future issuance under +Number of securities to +Weighted average +equity compensation +be issued upon exercise +exercise price of +plans (excluding +of outstanding options, +outstanding options, +securities reflected in +warrants and rights +warrants and rights +column (a)) +(a) (#) +(b) ($) +(c) (#) +Equity compensation plans approved by security holders (1) +1,924,308 +(2) +7.44 +(2) +2,281,135 +(3) +Equity compensation plans not approved by security holders +– +– +– +Total +1,924,308 +7.44 +2,281,135 +(1) +All current equity compensation plans have been approved by shareholders. +(2) +Consists of (i) 216,334 outstanding options under the CPI Holdings I, Inc. Amended and Restated 2007 Stock Option Plan (the “Option Plan”) at an average exercise price of $0.0004; (ii) 1,437,508 outstanding options under the Omnibus Plan at an average exercise price of $8.62; and (iii) 270,466 outstanding restricted stock units under the Omnibus Plan at an average grant date fair value of $7.13. +(3) +The Option Plan was discontinued in connection with our initial public offering, and no further grants can be made under the Option Plan. Any shares subject to option awards that are cancelled, forfeited, or lapse under the Option Plan may become available for issuance under the Omnibus Plan. +-24- +Table of Contents +AUDIT COMMITTEE REPORT +This report of the Audit Committee is required by the SEC and, in accordance with the SEC’s rules, will not be deemed to be part of or incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933, as amended (the “Securities Act”), or under the Exchange Act, except to the extent that the Company specifically incorporates this information by reference, and will not otherwise be deemed “soliciting material” or “filed” under either the Securities Act or the Exchange Act. +The principal purpose of the Audit Committee is to assist the Board of Directors in its oversight of (i) the integrity of our accounting and financial reporting processes and the audits of our financial statements; (ii) our system of disclosure controls and internal controls over financial reporting; (iii) our compliance with legal and regulatory requirements; (iv) the qualifications and independence of our independent auditor; (v) the performance of our independent auditor; and (vi) the business practices and ethical standards of the Company. The Audit Committee is responsible for the appointment, compensation, retention and oversight of work of the Company’s independent auditor. The Audit Committee’s function is more fully described in its charter. +Our management is responsible for the preparation, presentation and integrity of our financial statements, for the appropriateness of the accounting principles and reporting policies that we use and for establishing and maintaining adequate internal control over financial reporting. KPMG LLP, or KPMG, our independent registered public accounting firm for 2016, was responsible for performing an independent audit of our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2016, and expressing an opinion on the conformity of those financial statements with generally accepted accounting principles. +The Audit Committee has reviewed and discussed with management our audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2016. +The Audit Committee has also reviewed and discussed with KPMG the audited financial statements in the Form 10-K. In addition, the Audit Committee discussed with KPMG those matters required to be discussed under applicable standards of the Public Company Accounting Oversight Board (the “PCAOB”). Additionally, KPMG provided to the Audit Committee the written disclosures and the letter required by applicable requirements of the PCAOB regarding KPMG’s communications with the Audit Committee concerning independence. The Audit Committee also discussed with KPMG its independence from the Company. +Based upon the review and discussions described above, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Form 10-K for filing with the SEC. +Scott Scheirman, Chairman +Diane Fulton +Douglas Pearce +Robert Pearce +-25- +Table of Contents +AUDIT FEES +For the years ended December 31, 2016 and 2015, KPMG LLP, our independent registered public accounting firm, billed the approximate fees set forth below: +2016 +2015 +Audit fees (1) +$ +748,593 +$ +2,265,250 +Audit-related fees (2) +19,375 +— +All other fees (3) +— +— +Total fees +$ +767,968 +$ +2,265,250 +(1) +Audit fees relate to (i) the audit of our annual consolidated financial statements as of and for the years ended December 31, 2016 and 2015, (ii) interim reviews of our quarterly consolidated financial statements for the interim periods within the years ended December 31, 2016 and 2015, (iii) 2016 and 2015 statutory financial statement audits; (iv) re-audits of our consolidated financial statements as of and for the years ended December 31, 2014, 2013, and 2012 related to our initial public offering, (v) the stand-alone audit of EFT Source, Inc. for the period ended September 2, 2014 also related to our initial public offering, (vi) accounting consultations, and (vii) fees related to comfort letters, consents, and assistance with and review of documents filed with the SEC. +(2) +These services include accounting due diligence and audits in connection with mergers and acquisitions, and attest services related to financial reporting that are not required by statute or regulation. During the year ended December 31, 2016, audit-related fees were primarily in connection with the adoption of International Financial Reporting Standards for our statutory financial statements. We did not pay KPMG LLP for services included in this category during the year ended December 31, 2015. +(3) +This category includes fees for services that are not included in the above categories. We did not pay KPMG LLP for services included in this category during the years ended December 31, 2016 and 2015. +The Audit Committee has adopted certain policies and procedures regarding permitted audit and non-audit services and the annual pre-approval of such services. Each year, the Audit Committee will ratify the types of audit and non-audit services of which management may wish to avail itself, subject to pre-approval of specific services. Each year, the independent registered public accounting firm will submit a pre-approval request, which will list each known and/or anticipated audit and non-audit service for the upcoming calendar year and which will include associated budgeted fees. The Audit Committee will review the requests and approve a list of annual pre-approved non-audit services. Any additional interim requests for additional non-audit services that were not contained in the annual pre-approval request will be approved by the Audit Committee. +All services provided by KPMG LLP during the fiscal year ended December 31, 2016 were approved by the Audit Committee. +-26- +Table of Contents +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +The following is a description of transactions since January 1, 2016 to which we have been a party in which the amount involved exceeded or will exceed $120,000 within any fiscal year and in which any of our directors, executive officers, beneficial holders of more than 5% of our capital stock or entities affiliated with them had or will have a direct or indirect material interest. +Acquisition of EFT Source, Inc. +On September 2, 2014, we acquired all of the outstanding capital stock of EFT Source (now known as CPI Card Group – Tennessee, Inc.). One of our executive officers, William Dinker, together with trusts for the benefit of certain of his family members, owned approximately 75% of EFT Source. Mr. Dinker did not have any relationship with the Company at the time of the acquisition. The purchase price for the acquisition of EFT Source was $68.9 million, consisting of $54.9 million in cash, a $9.0 million subordinated unsecured promissory note (the “Seller Note”) and the issuance of $5.0 million of the Company’s preferred and common stock. The Seller Note was fully repaid on September 2, 2016 in accordance with the terms of the agreement. Interest on the Seller Note accrued at a rate of 5% per annum and was paid quarterly. +In connection with the EFT Source acquisition, we entered into an Employment and Non-Competition Agreement with Mr. Dinker. Pursuant to this agreement, based on EFT Source achieving certain EBITDA targets during the year ended December 31, 2016, Mr. Dinker earned a bonus of $666,667. +Registration Rights Agreement +In connection with our initial public offering, we entered into a registration rights agreement with the Tricor Funds (the “Registration Rights Agreement”). Under the Registration Rights Agreement, the Tricor Funds are entitled to request that we register shares of our common stock on a long-form or short-form registration statement on one or more occasions in the future, provided that we will not be obligated to register such shares within 90 days after the effective date of a registration statement previously filed pursuant to a request under the Registration Rights Agreement and otherwise for up to 60 days from the date of a request under the Registration Rights Agreement in certain circumstances. The Tricor Funds also are entitled to participate in certain registered offerings that we may conduct in the future, subject to certain restrictions. We will pay the Tricor Funds’ expenses in connection with the exercise of these rights. The registration rights described in this paragraph apply to (i) shares of our common stock held by the Tricor Funds as of the closing of our initial public offering, (ii) any of our capital stock (or that of our subsidiaries) issued or issuable with respect to the common stock described in clause (i) with respect to any dividend, distribution, recapitalization, reorganization, or certain other corporate transactions, and (iii) any of our common stock owned or acquired following the closing of our initial public offering by the Tricor Funds (“Registrable Securities”). These registration rights are also for the benefit of any subsequent holder of Registrable Securities; provided that any particular securities will cease to be Registrable Securities when they have been sold in a registered public offering, sold in compliance with Rule 144 under the Securities Act or repurchased by us or our subsidiaries. +Director Nomination Agreement +In connection with our initial public offering, we entered into a Director Nomination Agreement with the Tricor Funds that provides the Tricor Funds the right to designate nominees for election to our Board of Directors for so long as the Tricor Funds collectively beneficially own 5% or more of the total number of shares of our common stock then outstanding. The number of nominees that the Tricor Funds are entitled to designate under the Director Nomination Agreement bears the same proportion to the total number of members of our Board of Directors as the number of shares of common stock beneficially owned by the Tricor Funds bears to the total number of shares of common stock outstanding, rounded up to the nearest whole number. In addition, the Tricor Funds shall be entitled to designate the replacement for any of its board designees whose board service terminates prior to the end of such designee’s term regardless of the Tricor Funds’ beneficial ownership at such time. In addition, for so long as the Tricor Funds collectively beneficially own 10% or more of the total number of shares of our common stock then outstanding, the Tricor Funds shall also have the right to have their designees participate on committees of our Board of Directors, +-27- +Table of Contents +subject to compliance with applicable law and stock exchange rules. The Director Nomination Agreement will terminate at such time as the Tricor Funds collectively own less than 5% of our outstanding common stock. +Policies and Procedures for Related Party Transactions +In connection with our initial public offering, our board of directors adopted a written related party transaction policy setting forth the policies and procedures for the review and approval of related party transactions. The policy covers transactions involving us in which the aggregate amount involved exceeds or may be expected to exceed $120,000 and in which a related person has or will have a direct or indirect material interest. For purposes of this policy, a related person is defined as a director, executive officer, nominee for director, or a greater than 5% beneficial owner of our common stock, in each case since the beginning of the most recently completed fiscal year, and any immediate family member of or person sharing a household with any of these individuals. All related party transactions must be presented to the Audit Committee for review, consideration and approval. In approving or rejecting any such proposed transaction, the Audit Committee will consider the material facts of the transaction, including whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances and the extent of the related party’s interest in the transaction. +All related party transactions described in this section were not subject to the approval and review procedures set forth in such policy, as certain transactions were entered into prior to our initial public offering and prior to the adoption of such policy. +-28- +Table of Contents +RATIFICATION OF RETENTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +(PROPOSAL NO. 2) +Our Audit Committee has retained KPMG LLP as our independent registered public accounting firm for the year ending December 31, 2017. A proposal will be presented at the Annual Meeting to ratify this retention. Ratification of the retention of our independent registered public accounting firm requires the affirmative vote of the majority of shares present in person or represented by proxy at the Annual Meeting and entitled to vote. If the stockholders fail to ratify such selection, another independent registered public accounting firm will be considered by our Audit Committee, but the Audit Committee may nonetheless choose to engage KPMG LLP. Even if the retention of KPMG LLP is ratified, the Audit Committee in its discretion may select a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and its stockholders. We have been advised that a representative of KPMG LLP will be present at the Annual Meeting and will be available to respond to appropriate questions and, if such person chooses to do so, make a statement. +THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” RATIFICATION OF +THE RETENTION OF KPMG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2017. PROXIES SOLICITED BY THE BOARD WILL BE VOTED FOR THE PROPOSAL UNLESS STOCKHOLDERS SPECIFY A CONTRARY VOTE. +-29- +Table of Contents +STOCKHOLDER PROPOSALS FOR 2018 ANNUAL MEETING OF STOCKHOLDERS +Stockholders who intend to present proposals at the Company’s annual meeting of stockholders in 2018 pursuant to Rule 14a-8 under the Exchange Act must send notice of their proposal to us so that we receive it no later than December 20, 2017. Stockholders who intend to present proposals at the annual meeting of stockholders in 2018 other than pursuant to Rule 14a-8 must comply with the notice provisions in our Bylaws. The notice provisions in our Bylaws require that, for a proposal to be properly brought before the annual meeting of stockholders in 2018, proper notice of the proposal be received by us not less than 90 days nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting; provided, however that in the event next year’s annual meeting is more than 30 days before or after such anniversary date, notice must be delivered not less than the later of 90 days prior to next year’s annual meeting or the 10th day following the day the Company first publicly announces next year’s annual meeting date. Under these requirements, the deadline for proposals brought under our Bylaws is February 24, 2018. Stockholder proposals should be addressed to CPI Card Group, 10026 West San Juan Way, Littleton, Colorado 80127; Attention: Lillian Etzkorn, Chief Financial Officer and Corporate Secretary. +EXEMPTION FROM TORONTO STOCK EXCHANGE (“TSX”) RULES +The Company is an “Eligible International Interlisted Issuer” as such term is defined in the TSX Company Manual (the “Manual”). As an Eligible International Interlisted Issuer, the Company has applied for and received an exemption pursuant to Section 401.1 of the Manual from Sections 461.1 to 461.4 and Section 464 of the Manual, the effect of which is that the Company will not have to comply with certain Canadian requirements relating to majority voting and the annual election of directors. +The Company sought the exemption on the basis that (i) the Company’s primary listing is the NASDAQ Global Select Market; (ii) the Company is incorporated in the State of Delaware; and (iii) less than 25% of trading volume in the Company’s shares was on Canadian marketplaces. The Company will be required to notify the TSX of its continued reliance on the exemption before each successive annual meeting of shareholders. +-30- +Table of Contents +OTHER MATTERS +We know of no other matters to be submitted to the stockholders at the Annual Meeting. If any other matters properly come before the Annual Meeting, persons named in the proxy intend to vote the shares they represent in accordance with their own judgments. +Upon written request by any stockholder entitled to vote at the Annual Meeting, we will promptly furnish, without charge, a copy of the Annual Report on Form 10-K for the fiscal year ended December 31, 2016 which we filed with the SEC, including the financial statements. If the person requesting the report was not a stockholder of record on April 18, 2017, the request must contain a good faith representation that he or she was a beneficial owner of our common stock at the close of business on that date. Requests should be addressed to CPI Card Group, 10026 West San Juan Way, Littleton, Colorado 80127; Attention: Lillian Etzkorn, Chief Financial Officer and Corporate Secretary. +YOUR VOTE IS IMPORTANT. WE URGE YOU TO VOTE TODAY BY THE TELEPHONE, VIA THE INTERNET OR BY MAIL. +By Order of the Board of Directors, +Lillian Etzkorn +Chief Financial Officer and Corporate Secretary +-31- +Table of Contents +If you would like to reduce the costs incurred by our company in mailing proxy 1234567 VOTE BY MAIL 123,456,789,012.12345 TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. The Board of Directors recommends you vote FOR the following: 1. Election of Directors Nominees 01) Diane Fulton For 0 0 0 0 0 0 0 0 0 Against 0 0 0 0 0 0 0 0 0 Abstain 0 0 0 0 0 0 0 0 0 The Board of Directors recommends you vote FOR the following proposal: 2To ratify KPMG LLP as independent registered public accounting firm for the year ending December 31, 2017. For 0 Against 0 Abstain 0 02) Steven Montross 03) Douglas Pearce 04) Robert Pearce NOTE: Such other business as may properly come before the meeting or any adjournment thereof. 05) Nicholas Peters 06) David Rowntree 07) Scott Scheirman 08) Bradley Seaman 09) Silvio Tavares Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name, by authorized officer. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date 02 0000000000 1 OF 1 1 2 0000333158_1 R1.0.1.15 SHARES CUSIP # JOB #SEQUENCE # VOTE BY INTERNET - www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 John Sample 234567P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions. 1234567 Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. NAME THE COMPANY NAME INC. - COMMON THE COMPANY NAME INC. - CLASS A THE COMPANY NAME INC. - CLASS B THE COMPANY NAME INC. - CLASS C THE COMPANY NAME INC. - CLASS D THE COMPANY NAME INC. - CLASS E THE COMPANY NAME INC. - CLASS F THE COMPA N Y NAME INC. - 401 K CONTROL # → SHARES123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 x PAGE1 OF 2 CPI Card Group Inc. 10026 West San Juan Way Littleton, Colorado 80127 Investor Address Line 1 Investor Address Line 2 Investor Address Line 3 Investor Address Line 4 Investor Address Line 5 8 8 8 1 1234 ANYWHERE STREET ANY CITY, ON A1A 1A1 234567 234567 234567 234567 +Table of Contents +Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Form 10-K, Notice & Proxy Statement is/are available at www.proxyvote.com CPI CARD GROUP INC. Annual Meeting of Stockholders May 25, 2017 9:00 AM MDT This proxy is solicited by the Board of Directors The stockholders hereby appoint(s) Steven Montross and Lillian Etzkorn, or either of them, as proxies, each with the power to appoint his or her substitute, and hereby authorizes them to represent and to vote, as designated on the reverse side of this ballot, all of the shares of common stock of CPI CARD GROUP INC. that the stockholders are entitled to vote at the Annual Meeting of Stockholders to be held at 9:00 AM, MDT on May 25, 2017, at the Hyatt Regency Denver Tech Center, 7800 East Tufts Avenue, Denver, Colorado 80237, and any adjournment or postponement thereof. This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted in accordance with the Board of Directors' recommendations. Continued and to be signed on reverse side 0000333158_2 R1.0.1.15 \ No newline at end of file diff --git a/raw/proxies/0001641614/0001558370-17-002760/proxy_rpt.txt b/raw/proxies/0001641614/0001558370-17-002760/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..550a1426f755ce8bc0bc485bfc9fd867ac413403 --- /dev/null +++ b/raw/proxies/0001641614/0001558370-17-002760/proxy_rpt.txt @@ -0,0 +1,17 @@ +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +The following is a description of transactions since January 1, 2016 to which we have been a party in which the amount involved exceeded or will exceed $120,000 within any fiscal year and in which any of our directors, executive officers, beneficial holders of more than 5% of our capital stock or entities affiliated with them had or will have a direct or indirect material interest. +Acquisition of EFT Source, Inc. +On September 2, 2014, we acquired all of the outstanding capital stock of EFT Source (now known as CPI Card Group – Tennessee, Inc.). One of our executive officers, William Dinker, together with trusts for the benefit of certain of his family members, owned approximately 75% of EFT Source. Mr. Dinker did not have any relationship with the Company at the time of the acquisition. The purchase price for the acquisition of EFT Source was $68.9 million, consisting of $54.9 million in cash, a $9.0 million subordinated unsecured promissory note (the “Seller Note”) and the issuance of $5.0 million of the Company’s preferred and common stock. The Seller Note was fully repaid on September 2, 2016 in accordance with the terms of the agreement. Interest on the Seller Note accrued at a rate of 5% per annum and was paid quarterly. +In connection with the EFT Source acquisition, we entered into an Employment and Non-Competition Agreement with Mr. Dinker. Pursuant to this agreement, based on EFT Source achieving certain EBITDA targets during the year ended December 31, 2016, Mr. Dinker earned a bonus of $666,667. +Registration Rights Agreement +In connection with our initial public offering, we entered into a registration rights agreement with the Tricor Funds (the “Registration Rights Agreement”). Under the Registration Rights Agreement, the Tricor Funds are entitled to request that we register shares of our common stock on a long-form or short-form registration statement on one or more occasions in the future, provided that we will not be obligated to register such shares within 90 days after the effective date of a registration statement previously filed pursuant to a request under the Registration Rights Agreement and otherwise for up to 60 days from the date of a request under the Registration Rights Agreement in certain circumstances. The Tricor Funds also are entitled to participate in certain registered offerings that we may conduct in the future, subject to certain restrictions. We will pay the Tricor Funds’ expenses in connection with the exercise of these rights. The registration rights described in this paragraph apply to (i) shares of our common stock held by the Tricor Funds as of the closing of our initial public offering, (ii) any of our capital stock (or that of our subsidiaries) issued or issuable with respect to the common stock described in clause (i) with respect to any dividend, distribution, recapitalization, reorganization, or certain other corporate transactions, and (iii) any of our common stock owned or acquired following the closing of our initial public offering by the Tricor Funds (“Registrable Securities”). These registration rights are also for the benefit of any subsequent holder of Registrable Securities; provided that any particular securities will cease to be Registrable Securities when they have been sold in a registered public offering, sold in compliance with Rule 144 under the Securities Act or repurchased by us or our subsidiaries. +Director Nomination Agreement +In connection with our initial public offering, we entered into a Director Nomination Agreement with the Tricor Funds that provides the Tricor Funds the right to designate nominees for election to our Board of Directors for so long as the Tricor Funds collectively beneficially own 5% or more of the total number of shares of our common stock then outstanding. The number of nominees that the Tricor Funds are entitled to designate under the Director Nomination Agreement bears the same proportion to the total number of members of our Board of Directors as the number of shares of common stock beneficially owned by the Tricor Funds bears to the total number of shares of common stock outstanding, rounded up to the nearest whole number. In addition, the Tricor Funds shall be entitled to designate the replacement for any of its board designees whose board service terminates prior to the end of such designee’s term regardless of the Tricor Funds’ beneficial ownership at such time. In addition, for so long as the Tricor Funds collectively beneficially own 10% or more of the total number of shares of our common stock then outstanding, the Tricor Funds shall also have the right to have their designees participate on committees of our Board of Directors, +-27- +Table of Contents +subject to compliance with applicable law and stock exchange rules. The Director Nomination Agreement will terminate at such time as the Tricor Funds collectively own less than 5% of our outstanding common stock. +Policies and Procedures for Related Party Transactions +In connection with our initial public offering, our board of directors adopted a written related party transaction policy setting forth the policies and procedures for the review and approval of related party transactions. The policy covers transactions involving us in which the aggregate amount involved exceeds or may be expected to exceed $120,000 and in which a related person has or will have a direct or indirect material interest. For purposes of this policy, a related person is defined as a director, executive officer, nominee for director, or a greater than 5% beneficial owner of our common stock, in each case since the beginning of the most recently completed fiscal year, and any immediate family member of or person sharing a household with any of these individuals. All related party transactions must be presented to the Audit Committee for review, consideration and approval. In approving or rejecting any such proposed transaction, the Audit Committee will consider the material facts of the transaction, including whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances and the extent of the related party’s interest in the transaction. +All related party transactions described in this section were not subject to the approval and review procedures set forth in such policy, as certain transactions were entered into prior to our initial public offering and prior to the adoption of such policy. +-28- +Table of Contents \ No newline at end of file diff --git a/raw/proxies/0001641614/0001558370-18-002948/proxy.txt b/raw/proxies/0001641614/0001558370-18-002948/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..9fa58588c2bc60474ac1afcb309763167575af3c --- /dev/null +++ b/raw/proxies/0001641614/0001558370-18-002948/proxy.txt @@ -0,0 +1,1065 @@ +DEF 14A +1 +def14a.htm +DEF 14A +pmts_Current_Folio_DEF14A +Table of Contents +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Proxy Statement Pursuant to Section 14(a) of the +Securities Exchange Act of 1934 +Filed by the Registrant ☑ +Filed by a Party other than the Registrant ☐ +Check the appropriate box: +☐ +Preliminary Proxy Statement +☐ +Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +☑ +Definitive Proxy Statement +☐ +Definitive Additional Materials +☐ +Soliciting Material Pursuant to §240.14a-12 +CPI Card Group Inc. +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +☑ +No fee required. +☐ +Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. +(1) +Title of each class of securities to which transaction applies: +(2) +Aggregate number of securities to which transaction applies: +(3) +Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): +(4) +Proposed maximum aggregate value of transaction: +(5) +Total fee paid: +☐ +Fee paid previously with preliminary materials. +☐ +Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. +(1) +Amount Previously Paid: +(2) +Form, Schedule or Registration Statement No.: +(3) +Filing Party: +(4) +Date Filed: +Persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number. +Table of Contents +10026 West San Juan Way +Littleton, Colorado 80127 +April 13, 2018 +Dear Stockholder: +On behalf of the Board of Directors of CPI Card Group Inc., you are cordially invited to attend the 2018 Annual Meeting of Stockholders (the “Annual Meeting”) to be held on May 31, 2018, at 9:00 a.m. Mountain Time at the Hampton Inn & Suites, 7611 Shaffer Parkway, Littleton, Colorado 80127. +We have included in this letter a proxy statement that provides you with detailed information about the Annual Meeting. We encourage you to read the entire proxy statement carefully. You may also obtain more information about CPI Card Group Inc. from documents we have filed with the Securities and Exchange Commission. +You are being asked at the Annual Meeting to elect directors named in this proxy statement, to ratify the retention of KPMG LLP as our independent registered public accounting firm for 2018 and to transact any other business properly brought before the meeting. +Whether or not you plan to attend the Annual Meeting, your vote is important, and we encourage you to vote promptly. You may vote your shares through one of the methods described in the enclosed proxy statement. We strongly urge you to read the accompanying proxy statement carefully and to vote FOR the nominees proposed by the Board of Directors and in accordance with the recommendations of the Board of Directors on the other proposal by following the voting instructions contained in the proxy statement. +Sincerely, +Bradley Seaman +Scott Scheirman +Chairman of the Board +President, Chief Executive Officer and Director +This proxy statement is dated April 13, 2018 and is first being made available to stockholders via the Internet on, or about April 13, 2018. +Table of Contents +CPI CARD GROUP INC. +NOTICE OF ANNUAL MEETING OF STOCKHOLDERS +May 31, 2018 +9:00 A.M. (Mountain Time) +To the Stockholders of CPI Card Group Inc.: +The 2018 Annual Meeting of Stockholders will be held on May 31, 2018, at 9:00 a.m. (Mountain Time) at the Hampton Inn & Suites, 7611 Shaffer Parkway, Littleton, Colorado 80127. The purpose of the meeting is to: +1. +elect eight directors; +2. +ratify the retention of KPMG LLP as our independent registered public accounting firm for 2018; and +3. +conduct any other business properly brought before the Annual Meeting or any adjournments or postponements thereof. +Voting is limited to stockholders of record at the close of business on April 6, 2018. A list of stockholders entitled to vote at the meeting, and any postponements or adjournments of the meeting, will be available for examination between the hours of 9:00 a.m. and 5:00 p.m. (Mountain Time) at our headquarters at 10026 West San Juan Way, Littleton, Colorado 80127 during the ten days prior to the Annual Meeting and also at the Annual Meeting. +YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE VOTE YOUR SHARES OVER THE TELEPHONE, VIA THE INTERNET OR BY COMPLETING, DATING, SIGNING AND RETURNING A PROXY CARD, AS DESCRIBED IN THE ENCLOSED PROXY STATEMENT. YOUR PROMPT COOPERATION IS GREATLY APPRECIATED. +By Order of the Board of Directors, +Sarah Kilgore +Chief Legal and Compliance Officer and Corporate Secretary +Table of Contents +Notice of Electronic Availability of Proxy Statement and Annual Report +As permitted by rules adopted by the United States Securities and Exchange Commission (the “SEC”), we are making this proxy statement and our Annual Report available to stockholders electronically via the Internet. On or about April 13, 2018, we will mail to most of our stockholders a notice (the “Notice”) containing instructions on how to access this proxy statement and our Annual Report and to vote via the Internet or by telephone. +The Notice also contains instructions on how to request a printed copy of the proxy materials. In addition, you may elect to receive future proxy materials in printed form by mail or electronically by e-mail by following the instructions included in the Notice. If you have previously elected to receive our proxy materials electronically, you will continue to receive these materials via e-mail, unless you elect otherwise. +Table of Contents +TABLE OF CONTENTS +Page +1 +ELECTION OF DIRECTORS (PROPOSAL NO. 1) +6 +DIRECTORS AND CORPORATE GOVERNANCE +7 +Director Biographical Information and Qualifications +7 +Director Selection Process +8 +Recommendation of Directors by Stockholders +9 +Independence of Directors +9 +Board’s Role in Risk Oversight +10 +Corporate Governance +10 +Other Board Information +11 +Director Compensation +13 +Security Ownership of Certain Beneficial Owners, Directors and Management +14 +Section 16(a) Beneficial Ownership Reporting Compliance +15 +EXECUTIVE OFFICERS +16 +EXECUTIVE COMPENSATION +17 +AUDIT COMMITTEE REPORT +26 +AUDIT FEES +27 +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +28 +Policies and Procedures for Related Party Transactions +28 +RATIFICATION OF RETENTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PROPOSAL NO. 2) +29 +STOCKHOLDER PROPOSALS FOR 2019 ANNUAL MEETING OF STOCKHOLDERS +30 +EXEMPTION FROM TORONTO STOCK EXCHANGE (“TSX”) RULES +30 +OTHER MATTERS +31 +Table of Contents +CPI CARD GROUP INC. +10026 West San Juan Way +Littleton, Colorado 80127 +SUMMARY OF THE ANNUAL MEETING +This proxy statement contains information related to the 2018 Annual Meeting of Stockholders (the “Annual Meeting”) of CPI Card Group Inc. (referred to herein as the “Company,” “CPI,” “we,” “us” or “our” as the context requires) to be held at the Hampton Inn & Suites, 7611 Shaffer Parkway, Littleton, Colorado 80127, on May 31, 2018, at 9:00 a.m. (Mountain Time). This proxy statement is first being made available to stockholders via the Internet on or about April 13, 2018. +Why did you send me this proxy statement? +We sent you this proxy statement because the Board of Directors (the “Board”) of the Company is soliciting your proxy to vote at the Annual Meeting and at any postponements or adjournments of the Annual Meeting. This proxy statement summarizes information that is intended to assist you in making an informed vote on the proposals described in this proxy statement. +Who can vote at the Annual Meeting? +Only stockholders of record as of the record date are entitled to vote at the Annual Meeting. The record date to determine stockholders entitled to notice of and to vote at the Annual Meeting is the close of business on April 6, 2018. On the record date, there were 11,134,714 shares of our common stock, par value $0.001 per share, outstanding. Our common stock is the only class of voting securities outstanding. +How many shares must be present to conduct the Annual Meeting? +We must have a quorum present in person or by proxy to conduct the Annual Meeting. A quorum is established when a majority of shares entitled to vote is present in person or represented by proxy at the Annual Meeting. Abstentions and broker non-votes (as described below) are counted for purposes of determining whether a quorum is present. +What matters are to be voted on at the Annual Meeting? +The agenda for the Annual Meeting is to: +1. +elect eight directors; +2. +ratify the retention of KPMG LLP as our independent registered public accounting firm for 2018; and +3. +conduct any other business properly brought before the Annual Meeting or any adjournments or postponements thereof. +As of the date of this proxy statement, we do not know of any other matters to be presented at the Annual Meeting. If any other matters properly come before the Annual Meeting, however, the persons named as proxies will be authorized to vote or otherwise act in accordance with their judgment. +How does the Board recommend that I vote? +The Board recommends that you vote: +1. +FOR the election of each of CPI’s director nominees named in this proxy statement; and +-1- +Table of Contents +2. +FOR the ratification of the retention of KPMG LLP as our independent registered public accounting firm for 2018. +How do I vote at the Annual Meeting? +You may vote in person at the Annual Meeting or by proxy. In addition, if you are a stockholder of record of CPI’s shares, there are three ways to vote by proxy: +· +By Telephone—You can vote by telephone by following the instructions on your proxy card. You will need to use the control number appearing on your Notice or proxy card to vote by telephone; +· +By Internet—You can vote via the Internet by following the instructions on your proxy card. You will need to use the control number appearing on your Notice or proxy card to vote via the Internet; or +· +By Mail—You can vote by completing, dating, signing and returning the proxy card. +If you are a beneficial owner of shares held in street name, you may vote as follows: +· +By Telephone—If you request printed copies of the proxy materials by mail, you will receive a voting instruction form and you may vote by proxy by calling the toll free number found on the voting instruction form. The availability of telephone voting may depend on the voting process of the organization that holds your shares. +· +By Internet—You may vote by proxy via the Internet by visiting [www.proxyvote.com] and entering the control number found in your Notice. The availability of Internet voting may depend on the voting process of the organization that holds your shares. +· +By Mail—If you request printed copies of the proxy materials by mail, you will receive a voting instruction form and you may vote by proxy by filling out the voting instruction form and returning it in the envelope provided. +If you are a beneficial owner of shares held in street name and wish to vote in person at the Annual Meeting, you must obtain a “legal proxy” from the organization that holds your shares. A legal proxy is a written document that will authorize you to vote your shares held in street name at the Annual Meeting. Please contact the organization that holds your shares for instructions regarding obtaining a legal proxy. You must bring a copy of the legal proxy to the Annual Meeting and ask for a ballot when you arrive. +Telephone and Internet voting facilities for stockholders of record will be available 24 hours a day. You may vote over the telephone or via the Internet until 11:59 p.m. on May 30, 2018. Even if you plan to attend the Annual Meeting in person, we recommend that you also submit your proxy or voting instructions as described above so that your vote will be counted if you later decide not to attend the Annual Meeting in person. +Your proxy will be voted in accordance with your instructions, so long as, in the case of a proxy card returned by mail, such card has been signed and dated. If you vote your shares via the Internet, by telephone or by executing and returning a proxy card by mail but you do not provide specific instructions with respect to the proposals, your shares will be voted FOR the director nominees named in this proxy statement and FOR the ratification of the retention of our independent registered public accounting firm. +As of the date of this proxy statement, we do not know of any matters to be presented at the Annual Meeting except those described in this proxy statement. If any other matters properly come before the Annual Meeting, however, the persons named as proxies will be authorized to vote or otherwise act in accordance with their judgment. +-2- +Table of Contents +What does it mean if I receive more than one Notice of internet availability of proxy materials? +You may receive more than one Notice, more than one e-mail or multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you may receive a separate Notice, a separate e-mail or a separate voting instruction card for each brokerage account in which you hold shares. If you are a stockholder of record and your shares are registered in more than one name, you may receive more than one Notice, more than one e‑mail or more than one proxy card. To vote all of your shares by proxy, you must complete, sign, date and return each proxy card and voting instruction card that you receive or vote over the Internet the shares represented by each Notice that you receive (unless you have requested and received a proxy card or voting instruction card for the shares represented by one or more Notices). +May I change my vote? +Yes. You may revoke your proxy at any time before it is voted at the Annual Meeting. To change your vote, if you are a stockholder of record, you may submit another later dated proxy by telephone, Internet or mail or by voting your shares in person at the Annual Meeting (your attendance at the Annual Meeting will not, by itself, revoke your proxy; you must vote in person at the Annual Meeting to revoke your proxy). If you are a beneficial owner and your shares are held in street name, you may change your vote by submitting new voting instructions to your bank, broker, trustee or nominee, or if you have obtained a legal proxy from such entity giving you the right to vote your shares, you may change your vote by attending the Annual Meeting and voting in person. +What vote is required to elect directors and approve the other matters described in this proxy statement? +Because this is an uncontested election, the director nominees must receive the affirmative vote of a majority of the votes cast to be elected (i.e., the number of shares voted “for” a director nominee must exceed the number of votes cast “against” that nominee) (Proposal No. 1). Abstentions and broker non-votes will have no effect on the outcome of the election of directors. +For the ratification of the retention of KPMG LLP as our independent registered public accounting firm for 2018 (Proposal No. 2), the affirmative vote of the holders of a majority of the shares represented in person or by proxy and entitled to vote on the proposal will be required for approval. Abstentions will not be voted but will be counted for purposes of determining whether there is a quorum. Accordingly, abstentions will have the effect of a negative vote on Proposal No. 2. Brokers have discretion to vote on the ratification of our independent registered public accounting firm and, as such, no votes on Proposal No. 2 will be considered broker non-votes. For additional information about broker non-votes, see “How do I vote if my bank or broker holds my shares in ‘street name’?” +What is the difference between holding shares as a stockholder of record and as a beneficial owner? +If your shares are registered in your name on the Company’s books and records or with our transfer agent, you are the “stockholder of record” of those shares, and this proxy statement and accompanying materials have been provided directly to you by the Company. On the other hand, if you purchased your shares through a brokerage or other financial intermediary, the brokerage or other financial intermediary will automatically put your shares into “street name” which means that the brokerage or other financial intermediary will hold your shares in its name or another nominee’s name and not in your name, but will keep records showing you as the “beneficial owner.” If you hold shares beneficially in street name, this proxy statement and accompanying materials have been forwarded to you by your broker, bank or other holder of record. +How do I vote if my bank or broker holds my shares in “street name”? +If you hold your shares in “street name” through a bank, broker or other nominee, such bank, broker or nominee will vote those shares in accordance with your instructions. To so instruct your bank, broker or nominee, you should refer to the information provided to you by such entity. Without instructions from you, a bank, broker or nominee will be permitted to exercise its own voting discretion with respect to so-called routine matters (Proposal No. 2 (ratification of auditors)) but will not be permitted to exercise voting discretion with respect to non-routine matters (Proposal No. 1 +-3- +Table of Contents +(director elections)). Thus, if you do not give your bank, broker or nominee specific instructions with respect to Proposal No. 2, your shares will be voted in such entity’s discretion. If you do not give your bank, broker or nominee specific instructions with respect to Proposal No. 1, your shares will not be voted on such proposal. This is called a “broker non-vote.” Shares represented by such broker non-votes will be counted in determining whether there is a quorum, but will have no effect on Proposal No. 1. We urge you to promptly provide your bank, broker or nominee with appropriate voting instructions so that all your shares may be voted at the Annual Meeting. +How many votes do I have? +Each share of common stock that you hold as of the record date entitles you to one vote, without cumulation, on each matter to be voted upon at the Annual Meeting. +How will the votes be counted at the Annual Meeting? +The votes will be counted by the inspector of election appointed for the Annual Meeting. +How will the Company announce the voting results? +The Company will report the final results of the voting at the Annual Meeting in a filing with the SEC on a Current Report on Form 8-K within four (4) business days of the date of the Annual Meeting. +Who pays for the Company’s solicitation of proxies? +The Board is soliciting your proxy to vote your shares of common stock at our Annual Meeting. We will bear the cost of soliciting proxies on behalf of the Company, including preparing, printing and mailing this proxy statement. Proxies may be solicited personally, by mail, email or by telephone by certain of our directors, officers, employees or representatives. Our directors and employees will not be paid any additional compensation for soliciting proxies. We may reimburse brokerage firms and other persons representing beneficial owners of shares for their out-of-pocket expenses in forwarding solicitation materials to such beneficial owners. +What is “householding” and how does it work? +Under the rules adopted by the SEC, we may deliver a single Notice to one address shared by two or more of our stockholders. This delivery method is referred to as “householding” and can result in significant cost savings. To take advantage of this opportunity, we have delivered only one Notice to multiple stockholders who share an address, unless we received contrary instructions from the impacted stockholders prior to the mailing date. We agree to deliver promptly, upon written or oral request, a separate copy of the Notice, as requested, to any stockholder at the shared address to which a single copy of the Notice was delivered. If you prefer to receive separate copies of the Notice, contact Broadridge Financial Solutions, Inc. by calling 1-800-542-1061 or in writing at Broadridge, Householding Department, 51 Mercedes Way, Edgewood, New York 11717. +In addition, if you currently are a stockholder who shares an address with another stockholder and would like to receive only one copy of future Notices for your household, you may notify your broker if your shares are held in a brokerage account or you may notify us if you hold registered shares. Registered stockholders may notify us by contacting Broadridge Financial Solutions, Inc. at the above telephone number or address or sending a written request to CPI Card Group Inc., 10026 West San Juan Way, Littleton, Colorado 80127, Attention: Investor Relations. +What do I need for admission to the Annual Meeting? +Attendance at the Annual Meeting or any adjournment or postponement thereof will be limited to record and beneficial stockholders as of the record date (April 6, 2018), individuals holding a valid proxy from a record holder and other persons authorized by the Company. If you are a stockholder of record, your name will be verified against the list of stockholders of record prior to your admittance to the Annual Meeting or any adjournment or postponement thereof. You should be prepared to present photo identification for admission. If you hold your shares in a street name, you will need +-4- +Table of Contents +to provide proof of beneficial ownership on the record date, such as a brokerage account statement showing that you owned stock as of the record date, a copy of a voting instruction form provided by your broker, bank or other nominee, or other similar evidence of ownership as of the record date, as well as your photo identification, for admission. If you do not provide photo identification or comply with the other procedures described above, you will not be admitted to the Annual Meeting or any adjournment or postponement thereof. For security reasons, you and your bags may be subject to search prior to your admittance to the Annual Meeting. +Explanatory Note +We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). For as long as we are an emerging growth company, we will not be required to provide an auditor’s attestation report on management’s assessment of the effectiveness of our system of internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002, or obtain stockholder approval of any golden parachute payments not previously approved. In addition, because we are an emerging growth company, we are not required to include a Compensation Discussion and Analysis section in this proxy statement and have elected to comply with the scaled-down executive compensation disclosure requirements applicable to emerging growth companies. +We could be an emerging growth company for up to five years from the date of our initial public offering, or until the earliest of (i) the last day of the first fiscal year in which our annual gross revenues exceed $1 billion, (ii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which would occur at the end of the fiscal year during which the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period. Under Section 107(b) of the JOBS Act, emerging growth companies may delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have irrevocably elected not to avail ourselves of this exemption from new or revised accounting standards and, therefore, we are subject to the same new or revised accounting standards as other public companies that are not emerging growth companies. +On December 20, 2017, we effected a 1-for-5 reverse stock split of our common stock (the “Reverse Stock Split”). All references to numbers of shares of our common stock in this Proxy Statement reflect this Reverse Stock Split. +-5- +Table of Contents +ELECTION OF DIRECTORS +(PROPOSAL NO. 1) +Diane Fulton, who has served on our Board since 2015, will retire from the Board upon the expiration of her term at the Annual Meeting. The Board would like to thank Ms. Fulton for her dedicated service to the Company. A new nominee, Valerie Soranno Keating, has been nominated to fill the vacancy created by Ms. Fulton’s retirement. +Upon the recommendation of our Nominating and Corporate Governance Committee (the “Nominating Committee”), the Board has nominated the eight individuals listed below to stand for election to the Board for a one-year term ending at the annual meeting of stockholders in 2019 or until their successors, if any, are elected or appointed. Our Certificate of Incorporation and Bylaws provide for the annual election of directors. Each director nominee must receive the affirmative vote of a majority of the votes cast to be elected (i.e., the number of shares voted “for” a director nominee must exceed the number of votes cast “against” that nominee). Unless contrary instructions are given, the shares represented by your proxy will be voted FOR the election of all director nominees. The Board has determined that each director nominee, other than Mr. Scott Scheirman, is an independent director, as further described below in “Directors and Corporate Governance—Independence of Directors.” +All of the director nominees listed below have consented to being named in this proxy statement and to serve if elected. However, if any nominee becomes unable to serve, proxy holders will have discretion and authority to vote for another nominee proposed by our Board. Alternatively, our Board may reduce the number of directors to be elected at the Annual Meeting. +Name +Position +Douglas Pearce +Director +Robert Pearce +Director +Nicholas Peters +Director +David Rowntree +Director +Scott Scheirman +Director, President and Chief Executive Officer +Bradley Seaman +Chairman of the Board +Valerie Soranno Keating +New Director Nominee +Silvio Tavares +Director +Biographical information relating to each of the director nominees is set forth below under “Directors and Corporate Governance” and incorporated by reference herein. +THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE ELECTION OF EACH OF CPI’s DIRECTOR NOMINEES NAMED IN THIS PROXY STATEMENT. +PROXIES SOLICITED BY THE BOARD WILL BE VOTED FOR THE ELECTION OF EACH OF CPI’s DIRECTOR NOMINEES NAMED IN THIS PROXY STATEMENT UNLESS STOCKHOLDERS SPECIFY A CONTRARY VOTE. +-6- +Table of Contents +DIRECTORS AND CORPORATE GOVERNANCE +Director Biographical Information and Qualifications +Set forth below is a description of the business experience of each director nominee, as well as the specific qualifications, skills and experiences considered by the Nominating Committee and the Board in recommending our slate of director nominees. Each of the nominees currently serves as a director of the Company, except for Ms. Soranno Keating, who is a new nominee. Each nominee listed below is nominated for election to the Board for a term expiring at the annual meeting of stockholders in 2019. See “Election of Directors (Proposal No. 1).” +Douglas Pearce , 65, has served on our Board of Directors since January 2016. Mr. Pearce was the founding Chief Executive Officer and Chief Investment Officer of the British Columbia Investment Management Corporation (bcIMC), one of Canada’s largest institutional money managers. Mr. Pearce led the organization from 1988 until he retired in June 2014. Mr. Pearce has also served as director and Chair of the Canadian Coalition for Good Governance (CCGG), the Pacific Pension Institute (PPI), and the Pension Investment Association of Canada (PIAC). Mr. Pearce was a member of the Faculty Advisory Board at the University Of British Columbia Sauder School Of Business and the Advisory Board at the Forum for Women Entrepreneurs. Mr. Pearce received his Bachelor of Commerce degree from the University of Calgary and is an accredited director in the Institute of Corporate Directors (ICD). Mr. Pearce brings to the Board a wealth of investment and corporate governance experience. +Robert Pearce , 63, has served on our Board of Directors since 2007. Mr. Pearce also serves on the board of directors of Canada Guaranty Mortgage Insurance Company, First American Payments Systems and First National Financial LP. Mr. Pearce spent 26 years with BMO Bank of Montreal, from 1980 to 2006, most recently holding the position of President and Chief Executive Officer, Personal and Commercial Client Group. He also served on the board of directors of MasterCard International from 1998 to 2006 and as Chairman of the Canadian Bankers’ Association from 2004 to 2006. Mr. Pearce holds a Bachelor of Arts from the University of Victoria and a Master of Business Administration from the University of British Columbia. Mr. Pearce brings to the Board more than 30 years of operational and leadership experience in the financial services industry, including extensive operating experience in credit card, debit card and prepaid cards in both card issuing and merchant acceptance in Canada and the United States. +Nicholas Peters , 45 has served on our Board of Directors since 2007. Mr. Peters is a Managing Director at Parallel49 Equity (formerly Tricor Pacific Capital) a private equity firm that makes control investments in lower middle market companies in the United States and Canada, which he joined in 2002, and also began serving as Parallel49 Equity’s Chief Financial Officer in 2012. Prior to joining Parallel49 Equity, Mr. Peters was a Senior Manager at Arthur Andersen LLP in Chicago. Mr. Peters is the Chairman of BFG Supply Company LLC, Questco and Certified Recycling and has served on the board of several other Parallel49 Equity investment companies. Mr. Peters holds a Bachelor of Science degree in Business Administration from the University of Dayton in Ohio. He is a Certified Public Accountant and is affiliated with the American Institute of Certified Public Accountants and the Ohio Society of CPAs. Mr. Peters brings to the Board strong finance and accounting skills, as well as valuable experience from his oversight of the management and operations of several of Parallel49 Equity’s portfolio companies. +David Rowntree , 62, has served on our Board of Directors since 2007. Mr. Rowntree is the President and Chair of Highland West Capital Ltd., a Vancouver-based merchant bank that he founded in July 2012. Mr. Rowntree is one of the founders of Tricor Pacific Capital, where he served as a Managing Director from January 1996 to June 2013. Prior to co-founding Tricor, Mr. Rowntree was a practicing attorney in both public practice and as in-house counsel. Mr. Rowntree is the Chair of Ten Peaks Coffee Company (TSE:TPK). Mr. Rowntree holds a Bachelor of Arts from the University of British Columbia and a Bachelor of Law from the Osgoode Hall Law School in Toronto, Ontario. Mr. Rowntree brings to the Board more than three decades of public and private investment expertise as well as experience in corporate governance, strategic planning and risk mitigation and assessment. +Scott Scheirman, 55 , has served as our President and Chief Executive Officer since October 2017 and on our Board of Directors since October 2016. Prior to joining the Company, Mr. Scheirman served as the Chief Executive Officer and a co-founder of JKL Ventures LLC, a private investment and strategic advisory firm since February 2014. Prior to JKL Ventures LLC, Mr. Scheirman served as the Executive Vice President and Chief Financial Officer of Western Union +-7- +Table of Contents +(NYSE:WU) from September 2006 to December 2013. Prior to Western Union, Mr. Scheirman held a variety of executive leadership and financial officer roles at First Data Corporation (NYSE:FDC), Western Union’s former parent company, and began his career at Ernst & Young LLP. Mr. Scheirman holds a Bachelor of Science degree in Business Administration with an emphasis in Accounting from the University of Northern Colorado. Mr. Scheirman brings to the Board extensive strategic planning, finance, risk management, international, public company and corporate governance experience, and through his position as our Chief Executive Officer, he brings to the Board management’s perspective with respect to the Company. +Bradley Seaman, 58, has served on our Board of Directors since 2007 and currently serves as Chairman of the Board. Mr. Seaman has been employed, since August 1999, by Parallel49 Equity and its predecessor by name, Tricor Pacific Capital. From 1999 through December 2011, Mr. Seaman was Parallel49 Equity’s Managing Director and leader of its U.S. operations, and, since January 2012, has served as its Managing Partner, responsible for leading overall firm operations, strategy, funding and investments. Prior to joining Parallel49 Equity, and from 1990 through July 1999, Mr. Seaman was employed by GE Capital Corporation where he held a number of increasingly senior positions in GE’s Transportation & Industrial Funding and Commercial Finance units. In 1994, Mr. Seaman was selected to be part of a new group that was established to focus GE Capital’s debt and equity products on the emerging private equity market, and, in that capacity, headed GE’s offices in New York and Chicago. Mr. Seaman is also a member of the board of directors of Steel Dynamics, Inc. (NASDAQ: STLD). Mr. Seaman holds a Bachelor of Science degree in Business Administration from Bowling Green State University and a Master of Business Administration from the University of Dallas. He brings to the Board a comprehensive understanding and experience in the capital markets, management experience, and both operational and corporate governance experience drawn from his involvement in the management and oversight of Parallel49 Equity’s portfolio companies. +Valerie Soranno Keating , 54, is a new nominee and was nominated to serve on our Board of Directors on April 9, 2018. Ms. Soranno Keating has been senior advisor to a number of private equity firms in the U.S. and Europe since 2017. From November 2009 through May 2015 she was the Chief Executive Officer of Barclaycard, the global payments division of Barclays PLC (NYSE:BCS), with $60 billion in assets and over 30 million customers throughout the U.S., Europe and South Africa. Before joining Barclays, Ms. Soranno Keating held a variety of executive positions at American Express Company (NYSE:AXP) from May 1993 through May 2009 including President, Travelers Cheques & Prepaid Services, Executive Vice President Global Commercial Services, Executive Vice President Global Merchant Services, Emerging Global Businesses & Network Expansion, and Vice President Corporate Strategic Planning. Ms. Soranno Keating holds a Bachelor of Science Degree in Business Administration from Lehigh University. She brings to the Board over 20 years of experience in both executive and board roles across a broad spectrum of payments and-related businesses. Ms. Soranno Keating brings to the board over 25 years of experience in the payments industry. +Silvio Tavares , 46, has served on our Board of Directors since October 2016. Mr. Tavares is the President and Chief Executive Officer of The CardLinx Association, a payments and digital technology trade association, a role he has held since August 2013. Prior to that, Mr. Tavares served as the Senior Vice President, Global Head of Information Products at Visa Inc. (NYSE:V) from May 2012 to August 2013. Before joining Visa, Mr. Tavares was Senior Vice President, General Manager Global Information and Analytics at First Data Corporation (NYSE:FDC) from December 2006 to May 2012. Mr. Tavares holds a Bachelor of Science Degree in Electrical and Computer Engineering from Tufts University, a Master of Business Administration from Boston College and a Juris Doctor from the Boston University School of Law. He brings to the Board over 15 years of operating experience as a payments company executive and CEO as well as extensive relationships and expertise in the payments, banking and technology industries. +Director Selection Process +The Nominating Committee works with the Board to determine periodically, as appropriate, the desired Board qualifications, expertise and characteristics, including such factors as business experience and diversity of experience; and with respect to diversity, the Nominating Committee may consider such factors as differences in professional background, education, skill, and other individual qualities and attributes that contribute to the total mix of viewpoints and experience represented on the Board. +-8- +Table of Contents +The Nominating Committee and the Board evaluate each individual in the context of the membership of the Board as a group, with the objective of having a group that can best perpetuate the success of the business and represent stockholder interests through the exercise of sound judgment using its diversity of background and experience in the various areas. Each director should be an individual of high character and integrity. In determining whether to recommend a director for re-election, the Nominating Committee also considers the director’s past attendance at meetings, participation in and contributions to the activities of the Board and the Company and other qualifications and characteristics that may be set forth in the Nominating Committee charter. +Recommendation of Directors by Stockholders +In accordance with its charter, the Nominating Committee will consider candidates for election as a director of the Company recommended by any CPI stockholder, provided that the recommending stockholder follows the procedures set forth in Section 2.10 of the Company’s Bylaws for nominations by stockholders of persons to serve as directors. The Nominating Committee evaluates such candidates in the same manner by which it evaluates other director candidates considered by the Nominating Committee, as described above. +Pursuant to Section 2.10 of the Bylaws, nominations of persons for election to the Board at a meeting of stockholders may be made by any stockholder of the Company entitled to vote for the election of directors at the meeting who sends a timely notice in writing to our Corporate Secretary. To be timely, a stockholder’s notice must be delivered to, or mailed and received by, our Corporate Secretary at the Company’s principal executive offices not less than 90 nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting; provided, however, that if the annual meeting is more than 30 days prior to or after the anniversary of the preceding year’s annual meeting, notice by the stockholder must be delivered not later than the close of business on the later of the 90th day prior to such annual meeting or the 10th day following the day on which “public announcement” of the date of such annual meeting is made by the Company. For purposes of the Bylaws, “public announcement” means disclosure in a press release reported by the Dow Jones News Service, Associated Press or a comparable national news service or in a document publicly filed by us with the SEC. +The stockholder’s notice or recommendation is required to contain certain prescribed information about each person the stockholder proposes to recommend for election as a director, the stockholder giving notice and the beneficial owner, if any, on whose behalf notice is given. The stockholder’s notice must also include the consent of the person proposed to be nominated and to serve as a director if elected. Recommendations or notices relating to director nominations should be sent to CPI Card Group, 10026 West San Juan Way, Littleton, Colorado 80127; Attention: Sarah Kilgore, Chief Legal and Compliance Officer and Corporate Secretary. +Independence of Directors +The Company’s Corporate Governance Guidelines provide that a majority of the members of the Board, and each member of the Audit Committee, Compensation Committee and Nominating Committee, must meet the criteria for independence set forth under applicable law and NASDAQ listing standards. No director qualifies as independent unless the Board determines that the director has no direct or indirect material relationship with the Company. These independence guidelines are part of our Corporate Governance Guidelines, available on our website at www.cpicardgroup.com. The Board considers all relevant facts and circumstances of which it is aware in making an independence determination with respect to any director. +The Board has made independence determinations with respect to each of our directors. Based on the NASDAQ independence guidelines, the Board has affirmatively determined that each of Mses. Fulton and Soranno Keating and Messrs. D. Pearce, R. Pearce, Peters, Rowntree, Seaman and Tavares are independent within the meaning of NASDAQ rules. +-9- +Table of Contents +Board’s Role in Risk Oversight +The Company’s management continually monitors the material risks facing the Company. Our enterprise risk management process is designed to facilitate the identification, assessment and management of certain key risks the Company may encounter and which may impact our ability to achieve our strategic objectives. The enterprise risk management process supplements management’s ongoing responsibilities to monitor and address risks by working with risk owners to identify causes of and action plans for certain risks, which then are discussed with senior management. +The Board, with the assistance of the Board committees, is responsible for overseeing such management actions to ensure that material risks affecting the Company are identified and managed appropriately. The Board and the Board committees oversee risks associated with their principal areas of focused, as summarized below: +Board/Committee Areas of Risk Oversight and Actions +Full Board + Oversight of the enterprise risk management process + Careful evaluation of the reports received from management and by making inquiries of management on areas of particular interest to the Board + Reviews with management material strategic, operational, financial, compensation and compliance risks + Considers specific risk topics in connection with strategic planning and other matters + Oversees risk oversight and related activities conducted by the Board committees through reports of the committee chairs to the Board +Audit Committee + Discusses with management the Company’s process for assessing and managing risks, including the Company’s major financial risk exposures and the steps necessary to monitor and control such exposures + Central oversight of financial and compliance risks + Meets periodically with senior management and our independent auditor, KPMG LLP, and reports on its findings at meetings of the Board + Assesses periodically reports provided by management on risks addressed in the enterprise risk management process and other risks +Compensation Committee + Oversees the review and evaluation of the risks associated with our compensation policies and practices +Nominating Committee + Oversees risks associated with our governance structure and processes + Reviews our organizational documents, Corporate Governance Guidelines and other policies +Corporate Governance +The Board has approved Corporate Governance Guidelines, a Code of Business Conduct and Ethics and a Code of Conduct for Financial Officers. All of our corporate governance documents, including the Corporate Governance Guidelines, the Code of Business Conduct and Ethics, the Code of Conduct for Financial Officers and committee charters, are available on our website at www.cpicardgroup.com or in printed form upon request by contacting CPI Card Group at +-10- +Table of Contents +10026 West San Juan Way, Littleton, Colorado 80127, Attention: Investor Relations. The Board regularly reviews corporate governance developments and modifies these documents as warranted. Any modifications will be reflected on our website. The information on our website is not part of this proxy statement and is not deemed to be incorporated by reference herein. +Other Board Information +Leadership Structure of the Board +Bradley Seaman serves as our Chairman of the Board, and Scott Scheirman serves as our President and Chief Executive Officer. Our Board has decided to maintain separate Chairman and CEO roles to allow our CEO to focus on the development and execution of our business strategy and leading the Company, while allowing the Chairman to lead the Board in its fundamental role of providing advice to, and independent oversight of, management. The Board recognizes the time, effort and energy that the CEO is required to devote to his position in the current business environment, as well as the commitment required to serve as our Chairman. While our Bylaws and Corporate Governance Guidelines do not require that our Chairman and CEO positions be separate, the Board believes that having separate positions and having an independent director serve as Chairman is the appropriate leadership structure for us at this time. +Board Meetings +In 2017, our Board held five meetings. The board also held numerous ad-hoc meetings throughout the year to focus on executive transition activities and company performance. In addition to our Board meetings, our directors attend meetings of committees established by our Board. Each of CPI’s incumbent directors attended at least 75% of the meetings of our Board and the committees on which such nominee served during 2017. Our directors are encouraged to attend all annual and special meetings of our stockholders. All of our incumbent directors attended the 2017 annual meeting of stockholders. +Meetings of Non-Employee Directors +In accordance with our Corporate Governance Guidelines, our non-employee directors meet regularly in executive sessions of the Board without management present. Mr. Bradley Seaman, our Chairman, presides over these executive sessions. In the event that Mr. Bradley Seaman is not available to lead these meetings, the presiding director is chosen by the non-employee directors in attendance. +Committees of the Board +The Board has three standing committees: the Audit Committee, the Compensation Committee and the Nominating Committee. The following chart sets forth the directors who currently serve as members of each of the Board committees as of the date of this proxy statement. +Audit +Compensation +Nominating +Directors +Committee +Committee +Committee +Diane Fulton +X +Douglas Pearce +X +C +Robert Pearce +X +C +Nicholas Peters +X +David Rowntree +X +X +Scott Scheirman +Bradley Seaman* +X +Silvio Tavares +C +X +* Chairman of the Board +“C” Denotes member and chair of committee +“X” Denotes member +-11- +Table of Contents +Audit Committee +In 2017, the Audit Committee held nine meetings. Mr. Scheirman left the Audit Committee upon his appointment as CEO of the Company in October 2017, and Mr. Tavares joined the Audit Committee at such time as its chair. Each of the members of the Audit Committee is a non-employee director. We believe that each of Ms. Fulton and Messrs. Doug Pearce, Robert Pearce and Silvio Tavares meets the independence criteria for purposes of serving on an audit committee under the applicable NASDAQ rules and Rule 10A-3 under the Exchange Act. In addition, our board of directors has determined that each of Ms. Fulton and Messrs. Robert Pearce, Doug Pearce and Silvio Tavares qualifies as an “audit committee financial expert,” as such term is defined in Item 407(d)(5) of Regulation S-K. The Audit Committee operates under a written charter setting forth its functions and responsibilities. A copy of the current charter is available on our website at www.cpicardgroup.com or in printed form upon request. +Compensation Committee +The Compensation Committee held seven meetings in 2017. The Board has determined that all of the members of the Compensation Committee are independent as defined in NASDAQ rules, including the independence standards applicable to compensation committees. The Compensation Committee has overall responsibility for approving and evaluating director and officer compensation plans, policies and programs of the Company and reviewing the disclosure of such plans, policies and programs to our stockholders in the annual proxy statement. The Compensation Committee utilizes an independent compensation consultant to assist it in its duties. The Compensation Committee operates under a written charter setting forth its functions and responsibilities. A copy of the current charter is available on our website at www.cpicardgroup.com or in printed form upon request. +In consultation with the Company’s management, the Compensation Committee establishes the general policies relating to senior management compensation and oversees the development and administration of such compensation programs. Our human resources executives and staff support the Compensation Committee in its work. These members of management work with compensation consultants whose engagements have been approved by the Compensation Committee, accountants and legal counsel, as necessary, to implement the Compensation Committee’s decisions, to monitor evolving competitive practices and to make compensation recommendations to the Compensation Committee. Our human resources management develops specific compensation recommendations for senior executives, which are first reviewed by senior management and then presented to the Compensation Committee and its independent compensation consultant. The Compensation Committee has final authority to approve, modify or reject the recommendations and to make its decisions in executive session. The Compensation Committee approves all compensation of our executive officers, including equity awards. +Since 2015, the Compensation Committee has engaged Aon Hewitt as its independent compensation consultant. The consultant reports directly to the Compensation Committee, including with respect to management’s recommendations of compensation programs and awards. The Compensation Committee has the sole authority to approve the scope and terms of the engagement of such compensation consultant and to terminate such engagement. Aon Hewitt has assisted the Compensation Committee with the development of competitive market data and related assessments of the Company’s executive and director compensation levels, evaluation of annual and long-term incentive compensation strategy and compilation and review of total compensation data for the Company’s Named Executive Officers (as defined in “Executive Compensation”). Other than with respect to consulting on executive and director compensation matters, Aon Hewitt has performed no other services for the Compensation Committee or the Company. +The Compensation Committee has reviewed the independence of Aon Hewitt in light of SEC rules and NASDAQ listing standards regarding compensation consultants and has concluded that Aon Hewitt’s work for the Compensation Committee does not raise any conflict of interest. +Nominating and Corporate Governance Committee +The Nominating Committee held five meetings in 2017. Each of the members of the Nominating Committee is independent as defined in NASDAQ rules. +-12- +Table of Contents +The Nominating Committee is responsible for, among other things: (i) identifying individuals qualified to become members of the Board, consistent with criteria approved by the Board; (ii) recommending director nominees to the Board for election at the next annual meeting of the stockholders of the Company; (iii) in the event of a vacancy on or an increase in the size of the Board, recommending director nominees to the Board to fill such vacancy or newly established Board seat; (iv) recommending directors to the Board for membership on each committee of the Board; and (v) establishing and reviewing annually our Corporate Governance Guidelines and Code of Business Conduct and Ethics. The Nominating Committee operates under a written charter setting forth its functions and responsibilities. A copy of the current charter is available on our website at www.cpicardgroup.com or in printed form upon request. +Compensation Committee Interlocks and Insider Participation +None of the members of our Compensation Committee has in the past served as an officer or employee of the Company. None of our executive officers currently serves, or in the past year has served, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on our Board or Compensation Committee. +Communications to the Board +Stockholders and interested parties can contact the Board (including the Chairman and the independent directors) through written communication sent to CPI Card Group, 10026 West San Juan Way, Littleton, Colorado 80127, Attention: Sarah Kilgore, Chief Legal and Compliance Officer and Corporate Secretary. Our Corporate Secretary reviews all written communications and forwards to the Board copies of any such correspondence that is directed to the Board or that, in the opinion of the Corporate Secretary, deals with the functions of the Board or Board committees or that she otherwise determines requires the Board’s or any Board Committee’s attention. Concerns relating to accounting, internal accounting controls or auditing matters are immediately brought to the attention of our Audit Committee Chair and handled in accordance with procedures established by the Audit Committee with respect to such matters. From time to time, the Board may change the process by which stockholders may communicate with the Board. Any such changes will be reflected in our Corporate Governance Guidelines, which are posted on our website at www.cpicardgroup.com. +Director Compensation +As described more fully below, the following table summarizes the annual compensation for our non-employee directors during 2017. +2017 DIRECTOR COMPENSATION +Fees +Fees +Earned +Earned +Or Paid +Or Paid +Name +In Cash +In Stock (1) +Total +($) +($) +($) +Diane Fulton +$ +62,534 +$ +50,000 +$ +112,534 +Douglas Pearce +$ +69,814 +$ +50,000 +$ +119,814 +Robert Pearce +$ +77,534 +$ +50,000 +$ +127,534 +Nicholas Peters +— +David Rowntree +— +Scott Scheirman (2) +$ +53,338 +$ +50,000 +$ +103,338 +Bradley Seaman +— +Silvio Tavares +$ +60,838 +$ +50,000 +$ +110,838 +(1) On May 25, 2017, each non-employee director not affiliated with Parallel 49 received fees paid in stock represented by grants of restricted stock units (“RSUs”), which vest on the first anniversary of the award date. The amounts shown reflect the grant date fair value computed in accordance with FASB ASC 718. The grant date fair value of Mr. Scheirman’s RSU award is also reported in the Summary Compensation Table. +-13- +Table of Contents +As of December 31, 2017, each director held the following number of unvested RSUs: +· +Ms. Fulton—5,000 RSUs; +· +Mr. D. Pearce—5,000 RSUs; +· +Mr. R. Pearce—5,000 RSUs; +· +Mr. Scheirman—5,000 RSUs; and +· +Mr. Tavares—5,000 RSUs. +(2) Mr. Scheirman served as a non-employee director until his appointment as President and Chief Executive Officer of the Company on October 5, 2017. The cash fees paid to Mr. Scheirman through September 30, 2017 for his service as a non-employee director prior to October 5, 2017 are reported in this table. Such fees are also reported in the Summary Compensation Table, as is the compensation Mr. Scheirman received for his service as President and Chief Executive Officer on and after October 5, 2017. +Narrative to Director’s Compensation Table +The following sets forth our compensation package for our non-employee directors (other than, our non-employee directors who are affiliated with Parallel 49). +Compensation Element +Value +Retainer +$100,000 +(50% received in cash and +50% received in +restricted stock units, +vesting 100% on the +first anniversary of +the award date) +Audit Committee Chair Fee +$ +20,000 +Compensation Committee Chair Fee +$ +15,000 +Nominating Committee Chair Fee +$ +10,000 +Audit Committee Member Fee +$ +10,000 +Compensation Committee Member Fee +$ +7,500 +Nominating Committee Member Fee +$ +5,000 +Security Ownership of Certain Beneficial Owners, Directors and Management +The following table sets forth, as of April 6, 2018 (except as indicated below), beneficial ownership, as defined by SEC rules, of our common stock (reflecting the impact of the Reverse Stock Split). Each of the persons listed below has sole voting and investment power with respect to the beneficially owned shares listed unless otherwise indicated. For purposes of the following table, beneficial ownership is determined in accordance with Exchange Act Rule 13d-3. The percentage calculations set forth in the table are based on 11,134,714 shares of common stock outstanding on April 6, 2018 rather than based on the percentages set forth in stockholders’ Schedules 13G or 13D, as applicable, filed with the +-14- +Table of Contents +SEC. Unless otherwise indicated, the address of each beneficial owner is c/o CPI Card Group Inc., 10026 West San Juan Way, Littleton, Colorado 80127. +Number of +Shares of +Percentage of +Common +Common +Stock +Stock +Owned +Owned +Beneficially +Beneficially +5% Beneficial Owners: +Tricor Pacific Capital Partners (Fund IV), Limited Partnership (1) +4,124,368 +37.0% +Tricor Pacific Capital Partners (Fund IV) US, Limited Partnership (1) +2,434,457 +21.9% +Named Executive Officers, Directors, and Nominees: +Steven Montross (2) +349,636 +3.1% +Robert Pearce (3) +86,392 +* +Lillian Etzkorn (4) +16,092 +* +Silvio Tavares (3) +11,241 +* +Lane Dubin (5) +10,230 +* +Diane Fulton (3) (6) +9,415 +* +Douglas Pearce (3) +9,394 +* +Scott Scheirman (3) +6,241 +* +Nicholas Peters +— +— +David Rowntree +— +— +Bradley Seaman +— +— +Valerie Soranno Keating +— +— +Total Executive Officers and Directors as a Group (18 individuals) (7) +615,845 +5.5% +* Less than 1% +(1) +Based on a Schedule 13G filed jointly by Tricor Pacific Capital Partners (Fund IV), Limited Partnership, Tricor Pacific Capital Partners (Fund IV) US, Limited Partnership (collectively, the “Tricor Funds”) and Parallel49 Equity, ULC on February 12, 2016, as adjusted to give effect to the Reverse Stock Split. Each of the Tricor Funds is managed by Parallel49 Equity, ULC, as the general partner. Mr. Bradley Seaman, Mr. David Rowntree, J. Trevor Johnstone and Roderick Senft are the sole members of an investment committee of the Tricor Funds that has the power to vote or dispose of the shares held by the Tricor Funds. Each of Messrs. Seaman, Peters and Rowntree is an officer or member of Tricor and has an indirect pecuniary interest in the shares of common stock held by the Tricor Funds through their respective interests in the Tricor Funds. Each of Messrs. Seaman, Peters and Rowntree expressly disclaims any beneficial ownership of any shares of common stock held by the Tricor Funds. The address of the Tricor Funds is c/o Tricor Pacific Capital, One Westminster Place, Suite 100, Lake F orest, IL 60045. +(2) +Includes vested options to purchase 35,682 shares of common stock. Mr. Montross retired from the position of President and Chief Executive Officer with the Company as of October 4, 2017. The information regarding Mr. Montross’ beneficial ownership is based solely on his Section 16 filings through his Form 4 filed on March 6, 2017. +(3) +Includes 5,000 restricted stock units vesting within 60 days of April 6, 2018. +(4) +Includes vested options to purchase 16,092 shares of common stock. +(5) +Includes vested options to purchase 9,595 shares of common stock. +(6) +Includes 1,600 shares of common stock held by Ms. Fulton’s husband. +(7) +Includes an aggregate of 87,173 options to purchase common stock that are vested or will vest within 60 days of April 6, 2018 and 25,000 restricted stock units vesting within 60 days of April 6, 2018. +Section 16(a) Beneficial Ownership Reporting Compliance +Based upon our review of reports filed with the SEC and written representations that no other reports were required, we believe that all of our directors and executive officers complied with the reporting requirements of Section 16(a) of the Exchange Act during 2017. +-15- +Table of Contents +EXECUTIVE OFFICERS +The following table sets forth certain information concerning each of our executive officers: +Name +Age +Position +Scott Scheirman +55 +President, Chief Executive Officer and Director +Jason Bohrer +47 +Senior Vice President and General Manager, Secure Card Solutions +Nicholas Cahn +54 +Managing Director—CPI Europe +Lane Dubin +49 +Senior Vice President and General Manager, Prepaid and Instant Issuance +Lillian Etzkorn +49 +Chief Financial Officer +Lisa Jacoba +50 +Chief Human Resources Officer +Sarah Kilgore +50 +Chief Legal and Compliance Officer +Kevin O’Brien +38 +Chief Accounting Officer +Anna Rossetti +58 +President—CPI Canada +Scott Scheirman. See “Directors and Corporate Governance” for Mr. Scheirman’s biographical information. +Jason Bohrer has served as our Senior Vice President and General Manager, Secure Card Solutions, since January 2018. Mr. Bohrer joined the Company as Senior Vice President of Operations in June 2016. Prior to joining the Company, from 2002 to 2016, Mr. Bohrer worked at HID Global, a provider of access control and secure identity solutions, most recently serving as VP, Global Operations from January 2015 to May 2016, VP & Executive Sponsor, Americas & HQ Consolidation from January 2013 to December 2014, and Senior Vice President, Managed Services from January 2011 to December 2012. Prior to joining HID Global, Mr. Bohrer held operations positions at Indala Corp. (formerly Motorola’s smartcard division) and Motorola, Inc. Mr. Bohrer holds a Bachelor’s Degree in Economics from the University of Texas , and was an inaugural member of the University of Chicago’s Executive Institute. +Nicholas Cahn has served as Managing Director of CPI Europe since 2008. From 2000 to 2008, Mr. Cahn was Director of the Card Division for Oakhill plc and then Managing Director of PCC Services Ltd., prior to its acquisition by CPI in 2008. Prior to that, Mr. Cahn spent 15 years with Group Bull of France, serving as Director of International Sales in the smartcard division in Paris, Smartcard Business Unit Director in London and Vice President of a joint venture with Dai Nippon Printing in Tokyo. Mr. Cahn holds a business studies degree from Thames Valley University and is an alumnus of Bull’s Executive Advanced Management Course and the European Executive Training Program in Japan. +Lane Dubin has served as our Senior Vice President and General Manager, Prepaid and Instant Issuance since January 2018. Mr. Dubin joined the Company as Senior Vice President, Sales and Marketing in August 2016. Prior to joining the Company, Mr. Dubin served at American Express Company from 1992 to 2015. Most recently, he was the Head of Global Sales at American Express Global Business Travel from 2008 to 2015, and Vice President, Business Development—North America, at American Express Global Business Travel from 2003 to 2008. Prior to these roles, Mr. Dubin held roles with increasing responsibility with American Express including Vice President-Business Development, Financial Education Services for American Express Financial Advisors and Director of Sales and Business Development for Ketera Technologies, a technology start-up incubated by American Express. Mr. Dubin holds a Bachelor’s Degree in Economics and Business Administration from Ursinus College. +Lillian Etzkorn has served as our Chief Financial Officer since January 2017. Prior to joining the Company, Ms. Etzkorn served in senior roles at Dana Incorporated from 2009 to 2016, most recently as Vice President and Treasurer from 2011 to 2016, and prior to that as Senior Director, Investor Relations from 2009 to 2011. Prior to Dana Incorporated, Ms. Etzkorn spent nineteen years in financial positions of increasing responsibility at Ford Motor Company, including most recently, Controller, Truck Product Development, Ford SUV and Commercial Vehicles from 2008 to 2009, and Director, Investor Relations from 2007 to 2008. Additionally, she held various other significant financial roles in corporate finance, profit and operations analysis and revenue. Ms. Etzkorn received her MBA in Finance from the University of Michigan and her Bachelor’s Degree in Marketing from Eastern Michigan University. +Lisa Jacoba has served as our Chief Human Resources Officer since June 2015. From 2006 to 2014, Ms. Jacoba served as Senior Vice President, Human Resources, and Senior Vice President of Global Talent Management at Western +-16- +Table of Contents +Union in the United States and in the United Kingdom. Prior to Western Union, Ms. Jacoba spent sixteen years in human resources positions of increasing responsibility at First Data Corporation with the most recent position of Senior Vice President Human Resources from 2001-2005. Ms. Jacoba received her Bachelor of Science in Human Resources from Bellevue University. +Sarah Kilgore has served as our Chief Legal and Compliance Officer since December 2017. Prior to joining the Company, Ms. Kilgore was Of Counsel with Moye White LLP, a law firm based in Denver since June 2017. Prior to Moye White LLP, Ms. Kilgore founded and provided legal services through Kilgore Legal Group, LLC from December 2011 through June 2015. Prior to establishing Kilgore Legal Group, LLC, Ms. Kilgore served as Associate General Counsel, Governance and Securities for Western Union from 2006 to 2011. Additionally, she held various legal positions at First Data Corporation and AT&T Corp., and was in private practice with Sherman & Howard LLC. Ms. Kilgore earned her Juris Doctor degree from the University of Michigan Law School and received her Bachelor’s Degree in Business Administration from Michigan State University. +Kevin O’Brien has served as the Company’s Chief Accounting Officer since April 1, 2018. Mr. O’Brien joined the Company in March 2016 as Director of Corporate Accounting and SEC Reporting. Prior to joining the Company, Mr. O’Brien served as the Director of Financial Reporting and Compliance of Sports Authority, Inc., a sporting goods retailer, from 2014 to 2016. From 2011 to 2014, Mr. O’Brien served as the Assistant Controller of CIBER, Inc., an information technology and services company. Prior to joining CIBER, Inc., Mr. O’Brien was a Senior Audit Manager at Deloitte & Touche LLP from 2002 to 2011. Mr. O’Brien holds both a Bachelor of Arts degree and Master of Science degree in Accounting from the University of Colorado and is a Certified Public Accountant in the State of Colorado. +Anna Rossetti has served as the President of CPI Card Group—Canada since 2008. From 1999 to 2008, Ms. Rossetti held several leadership positions with Giesecke & Devrient (Canada), including President from 2004 to 2008 and Senior Vice President and General Manager from 1999 to 2004. Prior to that, Ms. Rossetti worked with Equifax Canada, Bank of Nova Scotia and Bank of Montreal. Ms. Rossetti received her Bachelor’s Degree in Economics with Honors from York University. +EXECUTIVE COMPENSATION +The following Summary Compensation Table discloses the compensation information for fiscal years 2017 and 2016 (for individuals who were named executive officers in such year) for our current principal executive officer (“PEO”), our former PEO and the two most highly compensated executive officers other than the PEO who were serving as executive officers at the end of the last completed fiscal year (collectively, the “named executive officers”). +Summary Compensation Table +Nonqualified +Non-Equity +Deferred +Incentive Plan +Compensation +All Other +Name and Principal Position +Year +Salary +Bonus (1) +Stock Awards (2) +Option Awards (3) +Compensation (4) +Earnings +Compensation (5) +Total +Scott Scheirman, President and Chief Executive Officer (6) +2017 +$ +132,692 +$ +— +$ +50,000 +$ +501,746 +$ +154,808 +— +$ +78,968 +$ +918,214 +Steven Montross +2017 +$ +607,116 +$ +— +$ +— +$ +— +$ +— +— +$ +87,675 +$ +694,791 +Former President and Chief Executive Officer (7) +2016 +$ +520,192 +$ +— +$ +300,003 +$ +396,000 +$ +— +— +$ +29,427 +$ +1,245,622 +Lillian Etzkorn, Chief Financial Officer (8) +2017 +$ +394,231 +$ +261,193 +$ +153,720 +$ +261,701 +$ +— +— +$ +42,134 +$ +1,112,979 +Lane Dubin, SVP and General Manager, Prepaid and Instant Issuance (9) +2017 +$ +328,282 +$ +58,935 +$ +39,803 +$ +100,999 +$ +— +— +$ +10,813 +$ +538,832 +(1) +These amounts represent (a) for Ms. Etzkorn, the first of two installments of a retention payment, equal to $61,192, and payment of a sign-on cash award of $200,000; and (b) for Mr. Dubin, the first installment of a retention payment. +(2) +For 2017, this amount represents the grant date fair value of restricted stock unit awards granted to Mr. Scheirman, Ms. Etzkorn and Mr. Dubin. The values were calculated in accordance with FASB ASC Topic 718. Mr. Scheirman’s restricted stock unit award was granted in connection with his service in 2017, prior to October 5, 2017, as a non-employee director of the Company, and the grant date fair value of such award is also reported in the Director Compensation Table. +(3) +These amounts represent the grant date fair value of the stock option awards calculated in accordance with FASB ASC Topic 718. For a discussion of the assumptions and methodologies used in calculating the grant date fair value +-17- +Table of Contents +of the stock option awards, please see Note 15 to the Company’s consolidated financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017. +(4) +For Mr. Scheirman, this amount represents the payment made under the STIP for the 2017 plan year. Pursuant to his employment agreement, Mr. Scheirman was guaranteed an STIP payment at his target amount with respect to 2017, prorated based on his start date. No other STIP participants received a payout for the 2017 plan year. +(5) +For 2017, these amounts represent (a) for Mr. Scheirman, reimbursement for certain living expenses, legal support for finalization of his employment agreement during his transition into the CEO role and $53,338 in cash fees paid to Mr. Scheirman through September 30, 2017 for his service in 2017, prior to October 5, 2017, as a non-employee director of the Company (this amount is also reported in the Director Compensation Table); (b) for Mr. Montross, a car allowance, reimbursement for certain commuting expenses, $50,000 in reimbursement for outplacement services, reimbursement for certain expenses incurred in connection with Mr. Montross’ retirement and matching contributions under the Company’s 401(k) plan; (c) for Ms. Etzkorn, $37,719 in relocation expenses under the Company’s standard executive relocation benefits policy (including $11,724 in tax gross-ups with respect to this benefit) and matching contributions under the Company’s 401(k) plan; and (d) for Mr. Dubin, matching contributions under the Company’s 401(k) plan. +(6) +Mr. Scheirman commenced employment and was appointed as President and CEO of the Company as of October 5, 2017 and was not a named executive officer in 2016; thus, 2016 compensation for him is not included in this table. Mr. Scheirman’s total compensation for 2017 includes certain amounts received in connection with his service as a non-employee director of the Company in 2017 prior to October 5, 2017: (a) the grant date fair value of his restricted stock unit award (described in footnote 2 to this table), and (b) the cash fees paid to Mr. Scheirman through September 30, 2017 (described in footnote 5 to this table). +(7) +Mr. Montross retired from the position of President and CEO with the Company as of October 4, 2017 and will remain a non-executive employee of the Company through June 30, 2018. The details of Mr. Montross’s employment terms are described further below under the section “Employment and Post-Termination Arrangements.” +(8) +Ms. Etzkorn commenced employment with the Company on January 1, 2017 and was not a named executive officer in 2016; thus, 2016 compensation for her is not included in this table. +(9) +Mr. Dubin commenced employment with the Company on August 15, 2016 and was not a named executive officer in 2016; thus, 2016 compensation information for him is not included in this table. +Base Salaries +Base salaries established for the Company’s executive officers are intended to reflect each individual’s responsibilities, experience, historical performance and other discretionary factors deemed relevant by the Company and have generally been set at levels deemed necessary to attract and retain individuals with superior talent. Base salaries are also designed to provide executive officers with steady cash flow during the course of the fiscal year that is not contingent on short-term variations in the Company’s operating performance. +Our named executive officers were entitled to the following annual base salaries in 2017 and 2018: +2017 Base Salary +2018 Base Salary (3) +Named Executive Officer +(Effective March 1, 2017) (4) +(Effective March 11, 2018) +Scott Scheirman (1) +$ +575,000 +$ +575,000 +Steven Montross (2) +$ +560,000 +$ +560,000 +Lillian Etzkorn +$ +410,000 +$ +430,500 +Lane Dubin +$ +329,063 +$ +345,516 +(1) +Mr. Scheirman did not receive a base salary increase in 2018 given his recent hire date with the Company. +(2) +Mr. Montross retired from the position of CEO with the Company as of October 4, 2017. Per Mr. Montross’s amended employment agreement, he will remain a non-executive employee of the Company through June 30, 2018. +(3) +Ms. Etzkorn and Mr. Dubin received base salary increases in 2018 based on the competitive positioning of their compensation and their performance. +(4) +Mr. Scheirman’s 2017 base salary was effective on October 4, 2017, the date he was appointed CEO of the Company. +-18- +Table of Contents +Annual Incentive Awards +The Company maintains an annual short-term incentive plan (the “STIP”) to incentivize senior management and other key employees to achieve the short-term financial and non-financial objectives of the Company. The annual incentive awards are intended to reward both overall Company and individual performance during the year, and as such, are variable from year to year. The Company believes that establishing cash bonus opportunities is an important factor in both attracting and retaining the services of qualified and highly skilled executives and in motivating our senior management to achieve the Company’s annual objectives. +In 2017, the STIP provided for a bonus pool based upon the Company achieving certain levels of Adjusted EBITDA and Adjusted Free Cash Flow, as described below, and Revenue. Given that Company performance was below threshold levels in 2017, no payout under the STIP was made. Payout of the STIP to individual management team members would have been based upon these Company results and the achievement of individual objectives. For 2018, the STIP will continue to include these same financial measures as performance goals. +“Adjusted EBITDA” is a financial measure that is not calculated according to U.S. generally accepted accounting principles (“GAAP”). A reconciliation showing how the Company calculates Adjusted EBITDA from net (loss) income, the most comparable GAAP measure, may be found in Exhibit E to the Company’s Form 8-K press release filing with financial results for the year ended December 31, 2017, filed with the Securities and Exchange Commission on March 12, 2018. +“Adjusted Free Cash Flow ” is a financial measure that is not calculated according to U.S. GAAP. We define Adjusted Free Cash Flow as cash flow from operations less capital expenditures, and adjusted for the following cash items: interest, income taxes, litigation and related charges incurred in connection with certain patent and shareholder litigation, and restructuring and other charges. This measure does not represent funds available for investment or other discretionary uses since it does not deduct cash used to service our debt. +Long-Term Incentives +Since 2016, the Company has maintained a long-term incentive award practice whereby senior leaders and executives may receive annual awards under the Omnibus Plan (described below). In March 2017, the Company made awards of nonqualified stock options, restricted stock units and cash performance units to senior leaders and executives, including certain of the named executive officers. The stock option grants generally will vest 33.4% on the first anniversary of the grant date and 33.3% on each of the second and third anniversaries of the grant date. The restricted stock units generally will vest on the third anniversary of the grant date. The cash performance units, which the Company granted for the first time in 2017, are performance-based awards that will settle in cash, in an amount between 50% and 200% of the target award value, based on the performance of the Company’s stock price during each of three performance sub-periods (from the grant date through each of the first, second and third anniversaries of the grant date). The final payouts will be made in cash with respect to approximately one-third of the cash performance units at the end of each performance sub-period. The first tranche of cash performance units vested on March 22, 2018 and paid out at 50% of the target award value, given the decline in the stock price of the Company between the grant and vest date. +The awards described above are all subject to other applicable terms and conditions consistent with the Omnibus Plan. +Cash and Equity Retention Awards +In connection with the Company’s appointment of Mr. Scheirman as its new President and Chief Executive Officer, in September 2017 the Company awarded nonqualified stock options and cash retention bonuses to the Company’s executive officers and other employees, including Ms. Etzkorn and Mr. Dubin, in lieu of the annual long-term incentive awards that would otherwise have been made in the first quarter of 2018. The goal of these awards was to align interests of senior leaders and executives with those of the newly appointed President and Chief Executive Officer. The stock option grants generally will vest 33.4% on the first anniversary of the grant date and 33.3% on each of the second and third anniversaries of the grant date. Under the terms of the retention bonuses, the recipients had to remain with the Company +-19- +Table of Contents +and in good performance standing through each of the applicable payment dates. 50% of the retention bonus was paid on December 7, 2017 and the remaining 50% was paid on April 3, 2018. +Employee Benefits +The Company maintains the CPI Holdings I, Inc. 401(k) Plan (the “401(k) Plan”), which is a qualified defined-contribution plan under the provisions of the Internal Revenue Code Section 401(k) covering substantially all employees who meet certain eligibility requirements. Under the 401(k) Plan, participants may defer their salary subject to statutory limitations and may direct the contributions among various investment accounts. The Company matches 100% of the participant’s first 3% of deferrals and 50% of the next 2% of deferrals. The Company’s portion is 100% vested at the time of the match. +Employment and Post-Termination Arrangements +Mr. Scheirman’s Employment Agreement +On September 25, 2017, Mr. Scheirman entered into an employment agreement with the Company to serve as President and Chief Executive Officer, effective October 5, 2017, for a term ending on March 31, 2021, plus automatic one-year renewals thereafter unless either party provides notice of intent not to renew the agreement. The agreement provides for an initial base salary of $575,000 per year. In addition, Mr. Scheirman is entitled to participate in the STIP with a target bonus of 100% of his annual base salary. For 2017, Mr. Scheirman’s STIP payout was guaranteed at 100% of his annual base salary (prorated based on his start date), and for 2018, the agreement provides that Mr. Scheirman’s STIP payout will be no less than 80% of his annual base salary. Mr. Scheirman also received a nonqualified stock option grant with respect to 280,000 shares of the Company’s common stock, which will vest in approximately equal annual installments over a three-year period, subject to Mr. Scheirman’s continued employment. +Mr. Scheirman received temporary support for commuting expenses associated with his employment with the Company and also reimbursement for legal expenses associated with finalizing his employment agreement. +In the event that Mr. Scheirman’s employment is terminated by the Company without “Cause,” he resigns for “Good Reason” (each as defined in the agreement), separates employment due to death or disability or the Company fails to renew his agreement upon its expiration, Mr. Scheirman would be entitled to (i) continued monthly payments of his base salary and his annual STIP target bonus for a period of eighteen months; (ii) a prorated portion of his annual STIP bonus, based on the number of full months completed during the fiscal year in which such termination of employment occurs and based on final Company performance for the STIP year; (iii) accelerated vesting of any outstanding equity awards that would have otherwise vested in the next twelve months following the termination (for performance-based awards, vesting will be based on actual performance determined at the end of the performance period); (iv) the cost of COBRA coverage for his health coverage then in effect, less the employee contribution for an active employee, for the severance period; and (v) up to six months of outplacement services. +In the event that Mr. Scheirman experiences a termination event as described above within six months prior to or two years following a change in control, Mr. Scheirman will receive the benefits described in the foregoing paragraph, except that the severance and COBRA continuation benefits in items (i) and (iv) above would be extended from eighteen to twenty-four months, and his outstanding equity awards would vest in full (with any performance-based awards vesting at the target level of performance). +Mr. Scheirman is subject to certain restrictive covenants, including obligations regarding non-competition and non-solicitation of Company employees and customers, during the term and for a period of eighteen months following any termination of his employment with the Company. +The estimated cash severance payment to Mr. Scheirman on termination, assuming a termination as of December 31, 2017, would have been $897,913 for termination without “Cause,” for “Good Reason,” for the Company’s failure to renew the agreement, or termination due to his death or “Disability.” +-20- +Table of Contents +Mr. Montross’ Employment Agreement +Effective April 22, 2009, Mr. Montross entered into an employment agreement with the Company to serve as President and Chief Executive Officer for a term of five years, plus automatic one-year renewals thereafter unless either party provides notice of intent not to renew the agreement. The agreement provided for an initial base salary of $390,000 per year. In addition, Mr. Montross is entitled to participate in the STIP with a target bonus of 50% of his annual base salary. Mr. Montross is provided with a reasonable automobile allowance to be approved by the Chairman of the Board. +In the event that Mr. Montross’ employment is terminated by the Company without “Cause,” he resigns for “Good Reason” (each as defined in the agreement) or the Company fails to renew his agreement upon its expiration, Mr. Montross would be entitled to (i) continued monthly payments of his base salary and 1/12th of his estimated annual STIP target bonus for a period of 12 months and (ii) a prorated portion of his annual STIP target bonus (excluding any portion related to individual objectives), based on the number of full months completed during the fiscal year in which such termination of employment occurs. If Mr. Montross dies or suffers a “Disability” (as defined in the agreement) during the term of the agreement, he or his estate would be entitled to continued base salary and prorated bonus payments for a period of six months. Mr. Montross may resign upon giving no less than 90 days’ notice. +Mr. Montross is subject to certain restrictive covenants, including obligations regarding non-competition and non-solicitation of Company employees and customers, during the term and for a period of two years following any termination of his employment with the Company. +Pursuant to his outstanding option award under the Company’s Omnibus Plan, Mr. Montross would also be eligible for continued vesting of such award and exercisability through the end of the option term in the event that his employment terminates by reason of an “Approved Retirement.” An “Approved Retirement” is defined in such agreements as Mr. Montross’ “Retirement” (pursuant to the Omnibus Plan, a termination of employment, other than for “Cause” or due to death or “Disability,” on or after the attainment of age 65) with respect to which Mr. Montross adheres to certain additional requirements set forth by the Compensation Committee and the Board of Directors. Such requirements include, but are not limited to, Mr. Montross providing the Compensation Committee with at least nine months’ notice prior to his chosen retirement date, assisting in transitioning a successor to his role and complying with the restrictive covenants described above. These provisions were added to enhance the Company’s succession planning and business continuity processes. +As previously disclosed, on April 17, 2017, Mr. Montross announced his intention to retire from the Company effective June 30, 2018, and Mr. Montross and the Company agreed to an amendment of the employment agreement. Under the amendment, Mr. Montross agreed to continue to serve as President and CEO through the earlier of the date on which the Company appointed a successor President and CEO or December 31, 2017. As noted above, Mr. Scheirman was appointed as President and Chief Executive Officer on October 5, 2017, and Mr. Montross resigned as President and CEO and from all other director and officer positions he held with the Company and its affiliates. Through his June 30, 2018 retirement date, Mr. Montross will continue to be employed by the Company in a non-executive capacity. During the period prior to his retirement date, he will assist the Company’s Board with a successful transition of his duties, including transitioning key relationships to other employees, cooperating with the Board in recruiting his successor and providing his successor with business-related transition services. +Through the date of his retirement, the Company will provide Mr. Montross with an annual base salary of $560,000. Mr. Montross also had the opportunity to earn a bonus under the 2017 STIP, with a target of up to 100% of his base salary. However, based on Company performance, no bonuses were payable under the 2017 STIP. Mr. Montross is not eligible to participate in the STIP in 2018. Provided that Mr. Montross satisfies the terms of the amendment, his retirement on June 30, 2018 will be deemed an Approved Retirement, which will allow his outstanding nonqualified stock option awards to continue to vest and be exercisable in accordance with their original terms. +The Company also will pay Mr. Montross a succession incentive bonus equal to $560,000, half of which will be payable on the date of his retirement and the remaining portion of which will be payable in equal bi-weekly installments from the date of his retirement through December 31, 2018; provided that he complies with the terms of his employment agreement (including the restrictive covenants therein) and the amendment, and executes a general release of claims against the Company. +-21- +Table of Contents +If the Company were to terminate Mr. Montross without Cause (or give him Good Reason to terminate employment) before the June 30, 2018 retirement date, the Company would be required to make the payments and provide the benefits described above for an Approved Retirement. +The estimated cash severance payment to Mr. Montross on termination, assuming a termination as of December 31, 2017, would have been $1,120,000 for termination without “Cause,” for “Good Reason” or the Company’s failure to renew the agreement, and $560,000 for a termination due to his death or “Disability” (assuming, in each case, that Mr. Montross’ annual bonus is at the target level). +Ms. Etzkorn’s Employment Agreement +On April 11, 2017, Ms. Etzkorn entered into an employment agreement with the Company to serve as Chief Financial Officer, effective January 1, 2017, for a term ending on December 31, 2019, plus automatic one-year renewals thereafter unless either party provides notice of intent not to renew the agreement. The agreement provides for an initial base salary of $410,000 per year. In addition, Ms. Etzkorn is entitled to participate in the STIP with a target bonus of 50% of her annual base salary. In connection with the commencement of her employment, Ms. Etzkorn also received (a) a sign-on cash award of $200,000, paid in two equal installments in January and July 2017, (b) a nonqualified stock option grant with respect to 48,276 shares of the Company’s common stock, vesting in approximately equal annual installments over a three-year period, and (c) a grant of 7,320 restricted stock units, which will vest on the third anniversary of the grant date, in each case, subject to Ms. Etzkorn’s continued employment. +In connection with her hiring, Ms. Etzkorn received standard executive relocation benefits under the Company’s relocation program. All relocation benefits were utilized during 2017 and are reflected in the “All Other Compensation” column of the Summary Compensation Table. +In the event that Ms. Etzkorn’s employment is terminated by the Company without “Cause,” she resigns for “Good Reason” (each as defined in the agreement), separates employment due to death or disability or the Company fails to renew her agreement upon its expiration, Ms. Etzkorn would be entitled to (i) continued monthly payments of her base salary for a period of twelve months; (ii) a prorated portion of her annual STIP bonus, based on the number of full months completed during the fiscal year in which such termination of employment occurs and based on final Company performance for the STIP year; (iii) accelerated vesting of a prorated portion of any outstanding equity awards based on the number of days she was an active employee during the vesting period (for performance-based awards, vesting will be based on actual performance determined at the end of the performance period); and (iv) the cost of COBRA coverage for her health coverage then in effect health, less the employee contribution for an active employee, for the severance period. +In the event that Ms. Etzkorn experiences a termination event as described above within two years following a change in control, Ms. Etzkorn will receive the benefits described in the foregoing paragraph, except that all of her outstanding equity awards would vest in full (with any performance-based awards vesting at the target level of performance). +Ms. Etzkorn is subject to certain restrictive covenants, including obligations regarding non-competition and non-solicitation of Company employees and customers, during the term and for a period of twelve months following any termination of her employment with the Company. +The estimated cash severance payment to Ms. Etzkorn on termination, assuming a termination as of December 31, 2017, would have been $420,834 for termination without “Cause,” for “Good Reason,” for the Company’s failure to renew the agreement, or termination due to her death or “Disability.” +Mr. Dubin’s Employment Offer Letter +Mr. Dubin currently does not have an employment agreement with the Company. Under the terms of his employment offer letter, he receives an initial base salary of $325,000 per year plus an annual target incentive award equal to 60% of his base salary. In addition, on September 1, 2016, Mr. Dubin received (a) a nonqualified stock option award with respect to 22,500 shares of the Company’s common stock, and (b) an award of 3,712 restricted stock units, each +-22- +Table of Contents +vesting in approximately equal annual installments over a four-year period, and in each case, subject to Mr. Dubin’s continued employment. The equity awards are subject to other applicable terms and conditions consistent with the Omnibus Plan. Mr. Dubin’s offer letter does not provide for any severance benefits, however, upon a termination of his employment as of December 31, 2017, Mr. Dubin would have been eligible to receive an estimated $552,417 in cash severance upon a termination without “cause” or for “good reason” pursuant to our Executive Severance Guidelines, as summarized below. +Executive Severance Guidelines +As previously disclosed, on June 21, 2017, the Company adopted guidelines governing executive severance (“Executive Severance Guidelines”), applicable to U.S.-based officers and named executive officers of the Company who are not otherwise parties to individual employment or severance agreements providing for benefits upon a termination of employment. Under the Executive Severance Guidelines, if the employment of an eligible officer is terminated without “cause” or due to a resignation for “good reason,” not in connection with a “change in control” (each as defined in the Executive Severance Guidelines) and subject to the execution, delivery and non-revocation of a release of claims, he or she would be eligible to receive cash severance equal to one times the sum of his or her base salary plus annual bonus target. The Company’s Chief Executive Officer would receive 1.5 times the sum of base salary and annual bonus target; however, Mr. Scheirman is party to an individual agreement and thus, the Executive Severance Guidelines do not apply to him. For such a termination occurring within the 24 months following a change in control, the applicable severance multiple would be increased to 2.0 times (for the Chief Executive Officer) and 1.5 times (for all other eligible officers). In addition, the Company would continue to pay for the portion of the cost of medical, dental and vision benefits that it paid on behalf of an eligible officer for the greater of the severance period or such officer’s eligibility for COBRA continuation coverage, and the Company may provide, in its discretion, up to six months of outplacement services. +Additional Compensation Governance Practices +During 2016, the Company adopted an incentive compensation recoupment policy (“Clawback Policy”). Under the Clawback Policy if the Company is required to restate its financial results because of its material noncompliance with any financial reporting requirement under the securities laws, the Compensation Committee will review all awards or payments of any form of incentive-based compensation made to current and former executive officers of the Company within the three-year period immediately preceding the date on which the Company is required to prepare the restatement. If the Compensation Committee determines that any such incentive awards or payments were based on erroneous data and would have been lower had they been calculated based on the restated results, the Compensation Committee may, to the extent permitted by applicable law, seek to recover for the benefit of the Company the difference between the amounts awarded or paid and the amounts that would have been awarded or paid based on the restated results. These remedies would be in addition to, and not in lieu of, any penalties imposed by law enforcement agencies, regulators or other authorities. For purposes of this policy, “executive officers” of the Company include all persons designated by the Board of Directors as Section 16 reporting officers. +Since 2016, the Company also has maintained executive stock and independent director stock ownership guidelines which apply to senior executives, including our named executive officers, and our independent directors. The Company did this to further align the interests of our leaders and the independent directors with those of our shareholders. Under the guidelines, executives and independent directors have up to five years to accumulate shares and share equivalents that have a market value equal to or greater than a prescribed multiple of annual salary, as outlined below. Given that these guidelines were recently adopted, our executives and independent directors have until 2021 (or five years from appointment to their position, whichever is later) to satisfy the applicable share ownership levels. +Position +Multiple of Salary (1) +Additional Comments +CEO +5x +Shares that count towards the guidelines include those owned outright, restricted stock, restricted stock units, intrinsic value of vested stock options and any deferred stock +CEO Direct Reports and Chief Accounting Officer +2x +Other Executives +1x +Independent Directors +3x +(1) For the independent directors the ownership requirement is 3x the cash portion of their annual fees. +-23- +Table of Contents +Outstanding Equity Awards at 2017 Fiscal Year-End +Option Awards +Stock Awards +Number of +Number of +Market +Securities +Securities +Number of +Value of +Underlying +Underlying +Shares of +Shares of +Unexercised +Unexercised +Option +Stock that +Stock that +Options +Options +Exercise +Option +Have Not +Have Not +(Exercisable) +(Unexercisable) +Price +Expiration +Vested +Vested +Name +(#) +(#) (1) +($) +Date +(#) +($) (6) +Scott Scheirman +— +280,000 +$ +5.25 +9/25/2027 +5,000 +(2) +$ +18,350 +Steven Montross +20,652 +41,178 +$ +50.00 +10/8/2025 +15,030 +29,970 +$ +50.00 +10/8/2025 +Lillian Etzkorn +— +25,000 +$ +5.25 +9/25/2027 +— +48,276 +$ +21.00 +1/3/2027 +7,320 +(3) +$ +26,864 +Lane Dubin +— +25,000 +$ +5.25 +9/25/2027 +— +11,885 +$ +21.75 +3/22/2027 +5,625 +16,875 +$ +27.60 +9/1/2026 +1,830 +(4) +$ +6,716 +2,784 +(5) +$ +10,217 +(1) +For Mr. Scheirman, (a) 33.4% of the options will vest and become exercisable on September 25, 2018, and (b) 33.3% of the options will vest and become exercisable on each of September 25, 2019 and September 25, 2020, subject to continued service with the Company through each such vesting date. For Mr. Montross, 33.3% of the options will vest and become exercisable on each of October 8, 2018 and October 8, 2019, following his “Approved Retirement” on June 30, 2018 (as defined in his award agreements). For Ms. Etzkorn’s options expiring September 25, 2027, (a) 33.4% of the options will vest and become exercisable on September 25, 2018, and (b) 33.3% of the options will vest and become exercisable on each of September 25, 2019 and September 25, 2020, subject to continued service with the Company through each such vesting date. For Ms. Etzkorn’s options expiring January 3, 2027, (a) 33.4% of the options vested on January 3, 2018, and (b) 33.3% of the options will vest and become exercisable on each of January 3, 2019 and January 3, 2020, subject to continued service with the Company through each such vesting date. For Mr. Dubin’s options expiring March 22, 2027, (a) 33.4% of the options vested on March 22, 2018, and (b) 33.3% of the options will vest and become exercisable on each of March 22, 2019 and March 22, 2020, subject to continued service with the Company through each such vesting date. For Mr. Dubin’s options expiring September 1, 2026, (a) 25% of the options vested on September 1, 2017, and (b) 25% of the options will vest and become exercisable on each of September 1, 2018, September 1, 2019 and September 1, 2020, subject to continued service with the Company through each such vesting date. +(2) +100% of Mr. Scheirman’s restricted stock unit award (granted in connection with his service in 2017 as a non-employee director of the Company) will vest on May 25, 2018, subject to continued service with the Company through the vesting date. +(3) +100% of Ms. Etzkorn’s restricted stock unit award will vest on January 3, 2020, subject to continued service with the Company through the vesting date. +(4) +100% of Mr. Dubin’s restricted stock unit award will vest on March 22, 2020, subject to continued service with the Company through the vesting date. +(5) +Mr. Dubin’s restricted stock unit award vests as follows: (a) 25% of the award vested on September 1, 2017, and (b) 25% of the award will vest on each of September 1, 2018, September 1, 2019 and September 1, 2020, subject to continued service with the Company through the vesting date. +(6) +The market value of the restricted stock units is based on the $3.67 closing price of a share of our common stock on December 29, 2017. +-24- +Table of Contents +CPI Card Group Inc. Omnibus Incentive Plan +In connection with our initial public offering, we adopted the CPI Card Group Inc. Omnibus Incentive Plan (the “Omnibus Plan”) pursuant to which cash and equity-based incentives (including through an annual incentive program) may be granted to participating employees, directors and consultants. The principal purposes of the Omnibus Plan are to encourage profitability and growth through short-term and long-term incentives that are consistent with our objectives; to give participants an incentive for excellence in individual performance; to promote teamwork among participants; and to give us a significant advantage in attracting and retaining key employees, directors, and consultants. Our Omnibus Plan provides for the grant of incentive stock options within the meaning of Section 422 of the Internal Revenue Code, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance based awards (including performance shares, performance units and performance bonus awards), and other stock or cash-based awards. When considering new grants of share-based or option-based awards, the Company intends to take into account previous grants of such awards. As previously disclosed, on September 25, 2017, the Board adopted, and stockholders approved, an amendment and restatement of the Omnibus Plan, which, among other things, increased the number of shares available for grant thereunder by 400,000 (as adjusted to reflect the Reverse Stock Split) and extended the term of the Omnibus Plan through September 25, 2027. +Equity Compensation Plan Information Table +The following table provides information as of December 31, 2017 with respect to shares of our common stock that may be issued under our existing equity compensation plan. +Number of securities +remaining available for +future issuance under +Number of securities to +Weighted average +equity compensation +be issued upon exercise +exercise price of +plans (excluding +of outstanding options, +outstanding options, +securities reflected in +warrants and rights +warrants and rights +column (a)) +(a) (#) +(b) ($) +(c) (#) +Equity compensation plans approved by security holders (1) +993,587 +(2) +16.95 +(2) +175,134 +(3) +Equity compensation plans not approved by security holders +— +— +— +Total +993,587 +16.95 +175,134 +(1) +All current equity compensation plans have been approved by shareholders. +(2) +Consists of (i) 6,600 outstanding options under the CPI Holdings I, Inc. Amended and Restated 2007 Stock Option Plan (the “Option Plan”) at an average exercise price of $0.002; (ii) 937,310 outstanding options under the Omnibus Plan at an average exercise price of $17.11; and (iii) 49,677 outstanding restricted stock units under the Omnibus Plan at an average grant date fair value of $16.20. +(3) +The Option Plan was discontinued in connection with our initial public offering, and no further grants can be made under the Option Plan. Any shares subject to option awards that are cancelled, forfeited, or lapse under the Option Plan may become available for issuance under the Omnibus Plan. +-25- +Table of Contents +AUDIT COMMITTEE REPORT +This report of the Audit Committee is required by the SEC and, in accordance with the SEC’s rules, will not be deemed to be part of or incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933, as amended (the “Securities Act”), or under the Exchange Act, except to the extent that the Company specifically incorporates this information by reference, and will not otherwise be deemed “soliciting material” or “filed” under either the Securities Act or the Exchange Act. +The principal purpose of the Audit Committee is to assist the Board of Directors in its oversight of (i) the integrity of our accounting and financial reporting processes and the audits of our financial statements; (ii) our system of disclosure controls and internal controls over financial reporting; (iii) our compliance with legal and regulatory requirements; (iv) the qualifications and independence of our independent auditor; (v) the performance of our independent auditor; and (vi) the business practices and ethical standards of the Company. The Audit Committee is responsible for the appointment, compensation, retention and oversight of work of the Company’s independent auditor. The Audit Committee’s function is more fully described in its charter. +Our management is responsible for the preparation, presentation and integrity of our financial statements, for the appropriateness of the accounting principles and reporting policies that we use and for establishing and maintaining adequate internal control over financial reporting. KPMG LLP, or KPMG, our independent registered public accounting firm for 2017, was responsible for performing an independent audit of our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2017, and expressing an opinion on the conformity of those financial statements with generally accepted accounting principles. +The Audit Committee has reviewed and discussed with management our audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2017. +The Audit Committee has also reviewed and discussed with KPMG the audited financial statements in the Form 10-K. In addition, the Audit Committee discussed with KPMG those matters required to be discussed under applicable standards of the Public Company Accounting Oversight Board (the “PCAOB”). Additionally, KPMG provided to the Audit Committee the written disclosures and the letter required by applicable requirements of the PCAOB regarding KPMG’s communications with the Audit Committee concerning independence. The Audit Committee also discussed with KPMG its independence from the Company. +Based upon the review and discussions described above, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Form 10-K for filing with the SEC. +Silvio Tavares, Chairman +Diane Fulton +Douglas Pearce +Robert Pearce +-26- +Table of Contents +AUDIT FEES +For the years ended December 31, 2017 and 2016, KPMG LLP, our independent registered public accounting firm, billed the approximate fees set forth below: +2017 +2016 +Audit fees (1) +$ +740,352 +$ +748,593 +Audit-related fees (2) +— +19,375 +Tax fees (3) +346,911 +— +All other fees (4) +— +— +Total fees +$ +1,087,263 +$ +767,968 +(1) +Audit fees relate to (i) the audit of our annual consolidated financial statements as of and for the years ended December 31, 2017 and 2016, (ii) interim reviews of our quarterly consolidated financial statements for the interim periods within the years ended December 31, 2017 and 2016, (iii) 2017 and 2016 statutory financial statement audits; (iv) and accounting consultations. +(2) +These services include attest services related to financial reporting that are not required by statute or regulation. During the year ended December 31, 2016, audit-related fees were primarily in connection with the adoption of International Financial Reporting Standards for our statutory financial statements. +(3) +For the year ended December 31, 2017, tax fees relate to federal and state tax compliance and for services in connection with a research and development tax credit study. +(4) +This category includes fees for services that are not included in the above categories. We did not pay KPMG LLP for services included in this category during the years ended December 31, 2017 and 2016. +The Audit Committee has adopted certain policies and procedures regarding permitted audit and non-audit services and the annual pre-approval of such services. Each year, the Audit Committee will ratify the types of audit and non-audit services of which management may wish to avail itself, subject to pre-approval of specific services. Each year, the independent registered public accounting firm will submit a pre-approval request, which will list each known and/or anticipated audit and non-audit service for the upcoming calendar year and which will include associated budgeted fees. The Audit Committee will review the requests and approve a list of annual pre-approved non-audit services. Any additional interim requests for additional non-audit services that were not contained in the annual pre-approval request will be approved by the Audit Committee. +All services provided by KPMG LLP during the fiscal year ended December 31, 2017 were approved by the Audit Committee. +-27- +Table of Contents +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +The following is a description of transactions since January 1, 2017 to which we have been a party in which the amount involved exceeded or will exceed $120,000 within any fiscal year and in which any of our directors, nominee for director, executive officers, beneficial holders of more than 5% of our capital stock or entities affiliated with them had or will have a direct or indirect material interest. +Registration Rights Agreement +In connection with our initial public offering, we entered into a registration rights agreement with the Tricor Funds (the “Registration Rights Agreement”). Under the Registration Rights Agreement, the Tricor Funds are entitled to request that we register shares of our common stock on a long-form or short-form registration statement on one or more occasions in the future, provided that we will not be obligated to register such shares within 90 days after the effective date of a registration statement previously filed pursuant to a request under the Registration Rights Agreement and otherwise for up to 60 days from the date of a request under the Registration Rights Agreement in certain circumstances. The Tricor Funds also are entitled to participate in certain registered offerings that we may conduct in the future, subject to certain restrictions. We will pay the Tricor Funds’ expenses in connection with the exercise of these rights. The registration rights described in this paragraph apply to (i) shares of our common stock held by the Tricor Funds as of the closing of our initial public offering, (ii) any of our capital stock (or that of our subsidiaries) issued or issuable with respect to the common stock described in clause (i) with respect to any dividend, distribution, recapitalization, reorganization, or certain other corporate transactions, and (iii) any of our common stock owned or acquired following the closing of our initial public offering by the Tricor Funds (“Registrable Securities”). These registration rights are also for the benefit of any subsequent holder of Registrable Securities; provided that any particular securities will cease to be Registrable Securities when they have been sold in a registered public offering, sold in compliance with Rule 144 under the Securities Act or repurchased by us or our subsidiaries. +Director Nomination Agreement +In connection with our initial public offering, we entered into a Director Nomination Agreement with the Tricor Funds that provides the Tricor Funds the right to designate nominees for election to our Board of Directors for so long as the Tricor Funds collectively beneficially own 5% or more of the total number of shares of our common stock then outstanding. The number of nominees that the Tricor Funds are entitled to designate under the Director Nomination Agreement bears the same proportion to the total number of members of our Board of Directors as the number of shares of common stock beneficially owned by the Tricor Funds bears to the total number of shares of common stock outstanding, rounded up to the nearest whole number. In addition, the Tricor Funds shall be entitled to designate the replacement for any of its board designees whose board service terminates prior to the end of such designee’s term regardless of the Tricor Funds’ beneficial ownership at such time. In addition, for so long as the Tricor Funds collectively beneficially own 10% or more of the total number of shares of our common stock then outstanding, the Tricor Funds shall also have the right to have their designees participate on committees of our Board of Directors, subject to compliance with applicable law and stock exchange rules. The Director Nomination Agreement will terminate at such time as the Tricor Funds collectively own less than 5% of our outstanding common stock. +Policies and Procedures for Related Party Transactions +In connection with our initial public offering, our board of directors adopted a written related party transaction policy setting forth the policies and procedures for the review and approval of related party transactions. The policy covers transactions involving us in which the aggregate amount involved exceeds or may be expected to exceed $120,000 and in which a related person has or will have a direct or indirect material interest. For purposes of this policy, a related person is defined as a director, executive officer, nominee for director, or a greater than 5% beneficial owner of our common stock, in each case since the beginning of the most recently completed fiscal year, and any immediate family member of or person sharing a household with any of these individuals. All related party transactions must be presented to the Audit Committee for review, consideration and approval. In approving or rejecting any such proposed transaction, the Audit Committee will consider the material facts of the transaction, including whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances and the extent of the related party’s interest in the transaction. +-28- +Table of Contents +RATIFICATION OF RETENTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +(PROPOSAL NO. 2) +Our Audit Committee has retained KPMG LLP as our independent registered public accounting firm for the year ending December 31, 2018. A proposal will be presented at the Annual Meeting to ratify this retention. Ratification of the retention of our independent registered public accounting firm requires the affirmative vote of the majority of shares present in person or represented by proxy at the Annual Meeting and entitled to vote. If the stockholders fail to ratify such selection, another independent registered public accounting firm will be considered by our Audit Committee, but the Audit Committee may nonetheless choose to engage KPMG LLP. Even if the retention of KPMG LLP is ratified, the Audit Committee in its discretion may select a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and its stockholders. We have been advised that a representative of KPMG LLP will be present at the Annual Meeting and will be available to respond to appropriate questions and, if such person chooses to do so, make a statement. +THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” RATIFICATION OF +THE RETENTION OF KPMG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2018. PROXIES SOLICITED BY THE BOARD WILL BE VOTED FOR THE PROPOSAL UNLESS STOCKHOLDERS SPECIFY A CONTRARY VOTE. +-29- +Table of Contents +STOCKHOLDER PROPOSALS FOR 2019 ANNUAL MEETING OF STOCKHOLDERS +Stockholders who intend to present proposals at the Company’s annual meeting of stockholders in 2019 pursuant to Rule 14a-8 under the Exchange Act must send notice of their proposal to us so that we receive it no later than December 14, 2018. Stockholders who intend to present proposals at the annual meeting of stockholders in 2019 other than pursuant to Rule 14a-8 must comply with the notice provisions in our Bylaws. The notice provisions in our Bylaws require that, for a proposal to be properly brought before the annual meeting of stockholders in 2019, proper notice of the proposal be received by us not less than 90 days nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting; provided, however that in the event next year’s annual meeting is more than 30 days before or after such anniversary date, notice must be delivered not less than the later of 90 days prior to next year’s annual meeting or the 10th day following the day the Company first publicly announces next year’s annual meeting date. Under these requirements, the deadline for proposals brought under our Bylaws is March 2, 2019. Stockholder proposals should be addressed to CPI Card Group, 10026 West San Juan Way, Littleton, Colorado 80127; Attention: Sarah Kilgore, Chief Legal and Compliance Officer and Corporate Secretary. +EXEMPTION FROM TORONTO STOCK EXCHANGE (“TSX”) RULES +The Company is an “Eligible International Interlisted Issuer” as such term is defined in the TSX Company Manual (the “Manual”). As an Eligible International Interlisted Issuer, the Company has applied for and received an exemption pursuant to Section 401.1 of the Manual from Sections 461.1 to 461.4 and Section 464 of the Manual, the effect of which is that the Company will not have to comply with certain Canadian requirements relating to majority voting and the annual election of directors. +The Company sought the exemption on the basis that (i) the Company’s primary listing is the NASDAQ Capital Market; (ii) the Company is incorporated in the State of Delaware; and (iii) less than 25% of trading volume in the Company’s shares was on Canadian marketplaces. The Company is required to notify the TSX of its continued reliance on the exemption before each successive annual meeting of shareholders. +-30- +Table of Contents +OTHER MATTERS +We know of no other matters to be submitted to the stockholders at the Annual Meeting. If any other matters properly come before the Annual Meeting, persons named in the proxy intend to vote the shares they represent in accordance with their own judgments. +Upon written request by any stockholder entitled to vote at the Annual Meeting, we will promptly furnish, without charge, a copy of our Annual Report on Form 10-K for the fiscal year ended December 31, 2017 which we filed with the SEC, including the financial statements. If the person requesting the report was not a stockholder of record on April 6, 2018, the request must contain a good faith representation that he or she was a beneficial owner of our common stock at the close of business on that date. Requests should be addressed to CPI Card Group, 10026 West San Juan Way, Littleton, Colorado 80127; Attention: Sarah Kilgore, Chief Legal and Compliance Officer and Corporate Secretary. +YOUR VOTE IS IMPORTANT. WE URGE YOU TO VOTE TODAY BY THE TELEPHONE, VIA THE INTERNET OR BY MAIL. +By Order of the Board of Directors, +Sarah Kilgore +Chief Legal and Compliance Officer and Corporate Secretary +-31- +Table of Contents +If you would like to reduce the costs incurred by our company in mailing proxy materials, Use any touch-tone telephone to transmit your voting instructions up until 11:59 proxy card in hand when you call and then follow the instructions. John Sample 234567 VOTE BY MAIL 1234567 123,456,789,012.12345 TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. The Board of Directors recommends you vote FOR the following: 1. Election of Directors Nominees Douglas Pearce For 0 0 0 0 0 0 0 0 For 0 Against 0 0 0 0 0 0 0 0 Against 0 Abstain 0 0 0 0 0 0 0 0 Abstain 0 1) 2) Robert Pearce NOTE: Such other business as may properly come before the meeting or any adjournment thereof. 3) Nicholas Peters 4) David Rowntree 5) Scott Scheirman 6) Bradley Seaman 7) Valerie Soranno Keating 8) Silvio Tavares The Board of Directors recommends you vote FOR the following proposal: 2To ratify KPMG LLP as independent registered public accounting firm for the year ending December 31, 2018. Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name, by authorized officer. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date 02 0000000000 1 OF 1 1 2 0000376527_1 R1.0.1.17 SHARES CUSIP # JOB #SEQUENCE # VOTE BY INTERNET - www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. VOTE BY PHONE - 1-800-690-6903 P.M. Eastern Time the day before the cut-off date or meeting date. Have your 234567 1234567 Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. NAME THE COMPANY NAME INC. - COMMON THE COMPANY NAME INC. - CLASS A THE COMPANY NAME INC. - CLASS B THE COMPANY NAME INC. - CLASS C THE COMPANY NAME INC. - CLASS D THE COMPANY NAME INC. - CLASS E THE COMPANY NAME INC. - CLASS F THE COMPA N Y NAME INC. - 401 K CONTROL # → SHARES123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 x PAGE1 OF 2 CPI Card Group Inc. 10026 West San Juan Way Littleton, Colorado 80127 Investor Address Line 1 Investor Address Line 2 Investor Address Line 3 Investor Address Line 4 Investor Address Line 5 8 8 8 1 1234 ANYWHERE STREET ANY CITY, ON A1A 1A1 234567 234567 234567 +Table of Contents +Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Form 10-K and Notice & Proxy Statement are available at www.proxyvote.com CPI CARD GROUP INC. Annual Meeting of Stockholders May 31, 2018 9:00 AM MDT This proxy is solicited by the Board of Directors The stockholders hereby appoint(s) Sarah Kilgore as proxy, with the power to appoint his or her substitute, and hereby authorizes them to represent and to vote, as designated on the reverse side of this ballot, all of the shares of common stock of CPI CARD GROUP INC. that the stockholders are entitled to vote at the Annual Meeting of Stockholders to be held at 9:00 AM, MDT on May 31, 2018, at the Hampton Inn & Suites, 7611 Shaffer Parkway Littleton, Colorado 80127, and any adjournment or postponement thereof. This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted in accordance with the Board of Directors' recommendations. Continued and to be signed on reverse side 0000376527_2 R1.0.1.17 \ No newline at end of file diff --git a/raw/proxies/0001641614/0001558370-18-002948/proxy_rpt.txt b/raw/proxies/0001641614/0001558370-18-002948/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..9c43be9d94022980f47c6eacea498629ecdd2e10 --- /dev/null +++ b/raw/proxies/0001641614/0001558370-18-002948/proxy_rpt.txt @@ -0,0 +1,10 @@ +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +The following is a description of transactions since January 1, 2017 to which we have been a party in which the amount involved exceeded or will exceed $120,000 within any fiscal year and in which any of our directors, nominee for director, executive officers, beneficial holders of more than 5% of our capital stock or entities affiliated with them had or will have a direct or indirect material interest. +Registration Rights Agreement +In connection with our initial public offering, we entered into a registration rights agreement with the Tricor Funds (the “Registration Rights Agreement”). Under the Registration Rights Agreement, the Tricor Funds are entitled to request that we register shares of our common stock on a long-form or short-form registration statement on one or more occasions in the future, provided that we will not be obligated to register such shares within 90 days after the effective date of a registration statement previously filed pursuant to a request under the Registration Rights Agreement and otherwise for up to 60 days from the date of a request under the Registration Rights Agreement in certain circumstances. The Tricor Funds also are entitled to participate in certain registered offerings that we may conduct in the future, subject to certain restrictions. We will pay the Tricor Funds’ expenses in connection with the exercise of these rights. The registration rights described in this paragraph apply to (i) shares of our common stock held by the Tricor Funds as of the closing of our initial public offering, (ii) any of our capital stock (or that of our subsidiaries) issued or issuable with respect to the common stock described in clause (i) with respect to any dividend, distribution, recapitalization, reorganization, or certain other corporate transactions, and (iii) any of our common stock owned or acquired following the closing of our initial public offering by the Tricor Funds (“Registrable Securities”). These registration rights are also for the benefit of any subsequent holder of Registrable Securities; provided that any particular securities will cease to be Registrable Securities when they have been sold in a registered public offering, sold in compliance with Rule 144 under the Securities Act or repurchased by us or our subsidiaries. +Director Nomination Agreement +In connection with our initial public offering, we entered into a Director Nomination Agreement with the Tricor Funds that provides the Tricor Funds the right to designate nominees for election to our Board of Directors for so long as the Tricor Funds collectively beneficially own 5% or more of the total number of shares of our common stock then outstanding. The number of nominees that the Tricor Funds are entitled to designate under the Director Nomination Agreement bears the same proportion to the total number of members of our Board of Directors as the number of shares of common stock beneficially owned by the Tricor Funds bears to the total number of shares of common stock outstanding, rounded up to the nearest whole number. In addition, the Tricor Funds shall be entitled to designate the replacement for any of its board designees whose board service terminates prior to the end of such designee’s term regardless of the Tricor Funds’ beneficial ownership at such time. In addition, for so long as the Tricor Funds collectively beneficially own 10% or more of the total number of shares of our common stock then outstanding, the Tricor Funds shall also have the right to have their designees participate on committees of our Board of Directors, subject to compliance with applicable law and stock exchange rules. The Director Nomination Agreement will terminate at such time as the Tricor Funds collectively own less than 5% of our outstanding common stock. +Policies and Procedures for Related Party Transactions +In connection with our initial public offering, our board of directors adopted a written related party transaction policy setting forth the policies and procedures for the review and approval of related party transactions. The policy covers transactions involving us in which the aggregate amount involved exceeds or may be expected to exceed $120,000 and in which a related person has or will have a direct or indirect material interest. For purposes of this policy, a related person is defined as a director, executive officer, nominee for director, or a greater than 5% beneficial owner of our common stock, in each case since the beginning of the most recently completed fiscal year, and any immediate family member of or person sharing a household with any of these individuals. All related party transactions must be presented to the Audit Committee for review, consideration and approval. In approving or rejecting any such proposed transaction, the Audit Committee will consider the material facts of the transaction, including whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances and the extent of the related party’s interest in the transaction. +-28- +Table of Contents \ No newline at end of file diff --git a/raw/proxies/0001641614/0001558370-19-002943/proxy.txt b/raw/proxies/0001641614/0001558370-19-002943/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..bbee657562d9a3adc6c813e0866625c5b7d4ac16 --- /dev/null +++ b/raw/proxies/0001641614/0001558370-19-002943/proxy.txt @@ -0,0 +1,1038 @@ +DEF 14A +1 +def14a.htm +DEF 14A +pmts_Current_Folio_DEF14A +Table of Contents +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Proxy Statement Pursuant to Section 14(a) of the +Securities Exchange Act of 1934 +Filed by the Registrant ☑ +Filed by a Party other than the Registrant ☐ +Check the appropriate box: +☐ +Preliminary Proxy Statement +☐ +Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +☑ +Definitive Proxy Statement +☐ +Definitive Additional Materials +☐ +Soliciting Material Pursuant to §240.14a-12 +CPI Card Group Inc. +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +☑ +No fee required. +☐ +Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. +(1) +Title of each class of securities to which transaction applies: +(2) +Aggregate number of securities to which transaction applies: +(3) +Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): +(4) +Proposed maximum aggregate value of transaction: +(5) +Total fee paid: +☐ +Fee paid previously with preliminary materials. +☐ +Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. +(1) +Amount Previously Paid: +(2) +Form, Schedule or Registration Statement No.: +(3) +Filing Party: +(4) +Date Filed: +Persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number. +Table of Contents +10026 West San Juan Way +Littleton, Colorado 80127 +April 12, 2019 +Dear Stockholder: +On behalf of the Board of Directors of CPI Card Group Inc., you are cordially invited to attend the 2019 Annual Meeting of Stockholders (the “Annual Meeting”) to be held on May 30, 2019, at 8:00 a.m. Mountain Time at the Hampton Inn & Suites, 7611 Shaffer Parkway, Littleton, Colorado 80127. +We have included in this letter a proxy statement that provides you with detailed information about the Annual Meeting. We encourage you to read the entire proxy statement carefully. You may also obtain more information about CPI Card Group Inc. from documents we have filed with the Securities and Exchange Commission. +You are being asked at the Annual Meeting to elect directors named in this proxy statement, to ratify the retention of KPMG LLP as our independent registered public accounting firm for 2019 and to transact any other business properly brought before the meeting. +Whether or not you plan to attend the Annual Meeting, your vote is important, and we encourage you to vote promptly. You may vote your shares through one of the methods described in the enclosed proxy statement. We strongly urge you to read the accompanying proxy statement carefully and to vote FOR the nominees proposed by the Board of Directors and in accordance with the recommendations of the Board of Directors on the other proposal by following the voting instructions contained in the proxy statement. +Sincerely, +Bradley Seaman +Scott Scheirman +Chairman of the Board +President, Chief Executive Officer and Director +This proxy statement is dated April 12, 2019 and is first being made available to stockholders via the Internet on, or about April 12, 2019. +Table of Contents +CPI CARD GROUP INC. +NOTICE OF ANNUAL MEETING OF STOCKHOLDERS +May 30, 2019 +8:00 A.M. (Mountain Time) +To the Stockholders of CPI Card Group Inc.: +The 2019 Annual Meeting of Stockholders will be held on May 30, 2019, at 8:00 a.m. (Mountain Time) at the Hampton Inn & Suites, 7611 Shaffer Parkway, Littleton, Colorado 80127. The purpose of the meeting is to: +1. +elect six directors; +2. +ratify the retention of KPMG LLP as our independent registered public accounting firm for 2019; and +3. +conduct any other business properly brought before the Annual Meeting or any adjournments or postponements thereof. +Voting is limited to stockholders of record at the close of business on April 5, 2019. A list of stockholders entitled to vote at the meeting, and any postponements or adjournments of the meeting, will be available for examination between the hours of 9:00 a.m. and 5:00 p.m. (Mountain Time) at our headquarters at 10026 West San Juan Way, Littleton, Colorado 80127 during the ten days prior to the Annual Meeting and also at the Annual Meeting. +YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE VOTE YOUR SHARES OVER THE TELEPHONE, VIA THE INTERNET OR BY COMPLETING, DATING, SIGNING AND RETURNING A PROXY CARD, AS DESCRIBED IN THE ENCLOSED PROXY STATEMENT. YOUR PROMPT COOPERATION IS GREATLY APPRECIATED. +By Order of the Board of Directors, +Sarah Kilgore +Chief Legal and Compliance Officer and Corporate Secretary +Table of Contents +Notice of Electronic Availability of Proxy Statement and Annual Report +As permitted by rules adopted by the United States Securities and Exchange Commission (the “SEC”), we are making this proxy statement and our Annual Report available to stockholders electronically via the Internet. On or about April 12, 2019, we will mail to most of our stockholders a notice (the “Notice”) containing instructions on how to access this proxy statement and our Annual Report and to vote via the Internet or by telephone. +The Notice also contains instructions on how to request a printed copy of the proxy materials. In addition, you may elect to receive future proxy materials in printed form by mail or electronically by e-mail by following the instructions included in the Notice. If you have previously elected to receive our proxy materials electronically, you will continue to receive these materials via e-mail, unless you elect otherwise. +Table of Contents +TABLE OF CONTENTS +Page +SUMMARY OF THE ANNUAL MEETING +1 +ELECTION OF DIRECTORS (PROPOSAL NO. 1) +6 +DIRECTORS AND CORPORATE GOVERNANCE +7 +Director Biographical Information and Qualifications +7 +Director Selection Process +8 +Recommendation of Directors by Stockholders +8 +Independence of Directors +9 +Board’s Role in Risk Oversight +9 +Corporate Governance +10 +Other Board Information +10 +Director Compensation +13 +Security Ownership of Certain Beneficial Owners, Directors and Management +15 +Section 16(a) Beneficial Ownership Reporting Compliance +16 +EXECUTIVE OFFICERS +17 +EXECUTIVE COMPENSATION +18 +AUDIT COMMITTEE REPORT +27 +AUDIT FEES +28 +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +29 +Policies and Procedures for Related Party Transactions +29 +RATIFICATION OF RETENTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PROPOSAL NO. 2) +31 +STOCKHOLDER PROPOSALS FOR 2019 ANNUAL MEETING OF STOCKHOLDERS +32 +EXEMPTION FROM TORONTO STOCK EXCHANGE (“TSX”) RULES +32 +OTHER MATTERS +33 +Table of Contents +CPI CARD GROUP INC. +10026 West San Juan Way +Littleton, Colorado 80127 +SUMMARY OF THE ANNUAL MEETING +This proxy statement contains information related to the 2019 Annual Meeting of Stockholders (the “Annual Meeting”) of CPI Card Group Inc. (referred to herein as the “Company,” “CPI,” “we,” “us” or “our” as the context requires) to be held at the Hampton Inn & Suites, 7611 Shaffer Parkway, Littleton, Colorado 80127, on May 30, 2019, at 8:00 a.m. (Mountain Time). This proxy statement is first being made available to stockholders via the Internet on or about April 12, 2019. +Why did you send me this proxy statement? +We sent you this proxy statement because the Board of Directors (the “Board”) of the Company is soliciting your proxy to vote at the Annual Meeting and at any postponements or adjournments of the Annual Meeting. This proxy statement summarizes information that is intended to assist you in making an informed vote on the proposals described in this proxy statement. +Who can vote at the Annual Meeting? +Only stockholders of record as of the record date are entitled to vote at the Annual Meeting. The record date to determine stockholders entitled to notice of and to vote at the Annual Meeting is the close of business on April 5, 2019. On the record date, there were 11,160,537 shares of our common stock, par value $0.001 per share, outstanding. Our common stock is the only class of voting securities outstanding. +How many shares must be present to conduct the Annual Meeting? +We must have a quorum present in person or by proxy to conduct the Annual Meeting. A quorum is established when a majority of shares entitled to vote is present in person or represented by proxy at the Annual Meeting. Abstentions and broker non-votes (as described below) are counted for purposes of determining whether a quorum is present. +What matters are to be voted on at the Annual Meeting? +The agenda for the Annual Meeting is to: +1. +elect six directors; +2. +ratify the retention of KPMG LLP as our independent registered public accounting firm for 2019; and +3. +conduct any other business properly brought before the Annual Meeting or any adjournments or postponements thereof. +As of the date of this proxy statement, we do not know of any other matters to be presented at the Annual Meeting. If any other matters properly come before the Annual Meeting, however, the persons named as proxies will be authorized to vote or otherwise act in accordance with their judgment. +How does the Board recommend that I vote? +The Board recommends that you vote: +1. +FOR the election of each of CPI’s director nominees named in this proxy statement; and +-1- +Table of Contents +2. +FOR the ratification of the retention of KPMG LLP as our independent registered public accounting firm for 2019. +How do I vote at the Annual Meeting? +You may vote in person at the Annual Meeting or by proxy. In addition, if you are a stockholder of record of CPI’s shares, there are three ways to vote by proxy: +· +By Telephone — You can vote by telephone by following the instructions on your proxy card. You will need to use the control number appearing on your Notice or proxy card to vote by telephone; +· +By Internet — You can vote via the Internet by following the instructions on your proxy card. You will need to use the control number appearing on your Notice or proxy card to vote via the Internet; or +· +By Mail — You can vote by completing, dating, signing and returning the proxy card. +If you are a beneficial owner of shares held in street name, you may vote as follows: +· +By Telephone — If you request printed copies of the proxy materials by mail, you will receive a voting instruction form and you may vote by proxy by calling the toll free number found on the voting instruction form. The availability of telephone voting may depend on the voting process of the organization that holds your shares. +· +By Internet — You may vote by proxy via the Internet by visiting www.proxyvote.com and entering the control number found in your Notice. The availability of Internet voting may depend on the voting process of the organization that holds your shares. +· +By Mail — If you request printed copies of the proxy materials by mail, you will receive a voting instruction form and you may vote by proxy by filling out the voting instruction form and returning it in the envelope provided. +If you are a beneficial owner of shares held in street name and wish to vote in person at the Annual Meeting, you must obtain a “legal proxy” from the organization that holds your shares. A legal proxy is a written document that will authorize you to vote your shares held in street name at the Annual Meeting. Please contact the organization that holds your shares for instructions regarding obtaining a legal proxy. You must bring a copy of the legal proxy to the Annual Meeting and ask for a ballot when you arrive. +Telephone and Internet voting facilities for stockholders of record will be available 24 hours a day. You may vote over the telephone or via the Internet until 11:59 p.m. on May 29, 2019. Even if you plan to attend the Annual Meeting in person, we recommend that you also submit your proxy or voting instructions as described above so that your vote will be counted if you later decide not to attend the Annual Meeting in person. +Your proxy will be voted in accordance with your instructions, so long as, in the case of a proxy card returned by mail, such card has been signed and dated. If you vote your shares via the Internet, by telephone or by executing and returning a proxy card by mail but you do not provide specific instructions with respect to the proposals, your shares will be voted FOR the director nominees named in this proxy statement and FOR the ratification of the retention of our independent registered public accounting firm. +As of the date of this proxy statement, we do not know of any matters to be presented at the Annual Meeting except those described in this proxy statement. If any other matters properly come before the Annual Meeting, however, the persons named as proxies will be authorized to vote or otherwise act in accordance with their judgment. +-2- +Table of Contents +What does it mean if I receive more than one Notice of internet availability of proxy materials? +You may receive more than one Notice, more than one e-mail or multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you may receive a separate Notice, a separate e-mail or a separate voting instruction card for each brokerage account in which you hold shares. If you are a stockholder of record and your shares are registered in more than one name, you may receive more than one Notice, more than one e-mail or more than one proxy card. To vote all of your shares by proxy, you must complete, sign, date and return each proxy card and voting instruction card that you receive or vote over the Internet the shares represented by each Notice that you receive (unless you have requested and received a proxy card or voting instruction card for the shares represented by one or more Notices). +May I change my vote? +Yes. You may revoke your proxy at any time before it is voted at the Annual Meeting. To change your vote, if you are a stockholder of record, you may submit another later dated proxy by telephone, Internet or mail or by voting your shares in person at the Annual Meeting (your attendance at the Annual Meeting will not, by itself, revoke your proxy; you must vote in person at the Annual Meeting to revoke your proxy). If you are a beneficial owner and your shares are held in street name, you may change your vote by submitting new voting instructions to your bank, broker, trustee or nominee, or if you have obtained a legal proxy from such entity giving you the right to vote your shares, you may change your vote by attending the Annual Meeting and voting in person. +What vote is required to elect directors and approve the other matters described in this proxy statement? +Because this is an uncontested election, the director nominees must receive the affirmative vote of a majority of the votes cast to be elected (i.e., the number of shares voted “for” a director nominee must exceed the number of votes cast “against” that nominee) (Proposal No. 1). Abstentions and broker non-votes will have no effect on the outcome of the election of directors. +For the ratification of the retention of KPMG LLP as our independent registered public accounting firm for 2019 (Proposal No. 2), the affirmative vote of the holders of a majority of the shares represented in person or by proxy and entitled to vote on the proposal will be required for approval. Abstentions will not be voted but will be counted for purposes of determining whether there is a quorum. Accordingly, abstentions will have the effect of a negative vote on Proposal No. 2. Brokers have discretion to vote on the ratification of our independent registered public accounting firm and, as such, no votes on Proposal No. 2 will be considered broker non-votes. For additional information about broker non-votes, see “How do I vote if my bank or broker holds my shares in ‘street name’?” +What is the difference between holding shares as a stockholder of record and as a beneficial owner? +If your shares are registered in your name on the Company’s books and records or with our transfer agent, you are the “stockholder of record” of those shares, and this proxy statement and accompanying materials have been provided directly to you by the Company. On the other hand, if you purchased your shares through a brokerage or other financial intermediary, the brokerage or other financial intermediary will automatically put your shares into “street name” which means that the brokerage or other financial intermediary will hold your shares in its name or another nominee’s name and not in your name, but will keep records showing you as the “beneficial owner.” If you hold shares beneficially in street name, this proxy statement and accompanying materials have been forwarded to you by your broker, bank or other holder of record. +How do I vote if my bank or broker holds my shares in “street name”? +If you hold your shares in “street name” through a bank, broker or other nominee, such bank, broker or nominee will vote those shares in accordance with your instructions. To so instruct your bank, broker or nominee, you should refer to the information provided to you by such entity. Without instructions from you, a bank, broker or nominee will be permitted to exercise its own voting discretion with respect to so-called routine matters (Proposal No. 2 (ratification of auditors)) but will not be permitted to exercise voting discretion with respect to non-routine matters (Proposal No. 1 +-3- +Table of Contents +(director elections)). Thus, if you do not give your bank, broker or nominee specific instructions with respect to Proposal No. 2, your shares will be voted in such entity’s discretion. If you do not give your bank, broker or nominee specific instructions with respect to Proposal No. 1, your shares will not be voted on such proposal. This is called a “broker non-vote.” Shares represented by such broker non-votes will be counted in determining whether there is a quorum, but will have no effect on the non-routine proposals. We urge you to promptly provide your bank, broker or nominee with appropriate voting instructions so that all your shares may be voted at the Annual Meeting. +How many votes do I have? +Each share of common stock that you hold as of the record date entitles you to one vote, without cumulation, on each matter to be voted upon at the Annual Meeting. +How will the votes be counted at the Annual Meeting? +The votes will be counted by the inspector of election appointed for the Annual Meeting. +How will the Company announce the voting results? +The Company will report the final results of the voting at the Annual Meeting in a filing with the SEC on a Current Report on Form 8-K within four (4) business days of the date of the Annual Meeting. +Who pays for the Company’s solicitation of proxies? +The Board is soliciting your proxy to vote your shares of common stock at our Annual Meeting. We will bear the cost of soliciting proxies on behalf of the Company, including preparing, printing and mailing this proxy statement. Proxies may be solicited personally, by mail, email or by telephone by certain of our directors, officers, employees or representatives. Our directors and employees will not be paid any additional compensation for soliciting proxies. We may reimburse brokerage firms and other persons representing beneficial owners of shares for their out-of-pocket expenses in forwarding solicitation materials to such beneficial owners. +What is “householding” and how does it work? +Under the rules adopted by the SEC, we may deliver a single Notice to one address shared by two or more of our stockholders. This delivery method is referred to as “householding” and can result in significant cost savings. To take advantage of this opportunity, we have delivered only one Notice to multiple stockholders who share an address, unless we received contrary instructions from the impacted stockholders prior to the mailing date. We agree to deliver promptly, upon written or oral request, a separate copy of the Notice, as requested, to any stockholder at the shared address to which a single copy of the Notice was delivered. If you prefer to receive separate copies of the Notice, contact Broadridge Financial Solutions, Inc. by calling 1-800-542-1061 or in writing at Broadridge, Householding Department, 51 Mercedes Way, Edgewood, New York 11717. +In addition, if you currently are a stockholder who shares an address with another stockholder and would like to receive only one copy of future Notices for your household, you may notify your broker if your shares are held in a brokerage account or you may notify us if you hold registered shares. Registered stockholders may notify us by contacting Broadridge Financial Solutions, Inc. at the above telephone number or address or sending a written request to CPI Card Group Inc., 10026 West San Juan Way, Littleton, Colorado 80127, Attention: Investor Relations. +What do I need for admission to the Annual Meeting? +Attendance at the Annual Meeting or any adjournment or postponement thereof will be limited to record and beneficial stockholders as of the record date (April 5, 2019), individuals holding a valid proxy from a record holder and other persons authorized by the Company. If you are a stockholder of record, your name will be verified against the list of stockholders of record prior to your admittance to the Annual Meeting or any adjournment or postponement thereof. You should be prepared to present photo identification for admission. If you hold your shares in a street name, you will need +-4- +Table of Contents +to provide proof of beneficial ownership on the record date, such as a brokerage account statement showing that you owned stock as of the record date, a copy of a voting instruction form provided by your broker, bank or other nominee, or other similar evidence of ownership as of the record date, as well as your photo identification, for admission. If you do not provide photo identification or comply with the other procedures described above, you will not be admitted to the Annual Meeting or any adjournment or postponement thereof. For security reasons, you and your bags may be subject to search prior to your admittance to the Annual Meeting. +Explanatory Note +We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). For as long as we are an emerging growth company, we will not be required to provide an auditor’s attestation report on management’s assessment of the effectiveness of our system of internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002, or obtain stockholder approval of any golden parachute payments not previously approved. In addition, because we are an emerging growth company, we are not required to include a Compensation Discussion and Analysis section in this proxy statement and have elected to comply with the scaled-down executive compensation disclosure requirements applicable to emerging growth companies. +We could be an emerging growth company for up to five years from the date of our initial public offering, or until the earliest of (i) the last day of the first fiscal year in which our annual gross revenues exceed $1.07 billion, (ii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which would occur at the end of the fiscal year during which the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period. Under Section 107(b) of the JOBS Act, emerging growth companies may delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have irrevocably elected not to avail ourselves of this exemption from new or revised accounting standards and, therefore, we are subject to the same new or revised accounting standards as other public companies that are not emerging growth companies. +-5- +Table of Contents +ELECTION OF DIRECTORS +PROPOSAL NO. 1 +Upon the recommendation of our Nominating and Corporate Governance Committee (the “Nominating Committee”), the Board has nominated the six individuals listed below to stand for election to the Board for a one-year term ending at the annual meeting of stockholders in 2020 or until their successors, if any, are elected or appointed. Our Certificate of Incorporation and Bylaws provide for the annual election of directors. Each director nominee must receive the affirmative vote of a majority of the votes cast to be elected (i.e., the number of shares voted “for” a director nominee must exceed the number of votes cast “against” that nominee). Unless contrary instructions are given, the shares represented by your proxy will be voted FOR the election of all director nominees. The Board has determined that each director nominee, other than Mr. Scott Scheirman, is an independent director, as further described below in “Directors and Corporate Governance — Independence of Directors.” +All of the director nominees listed below have consented to being named in this proxy statement and to serve if elected. However, if any nominee becomes unable to serve, proxy holders will have discretion and authority to vote for another nominee proposed by our Board. Alternatively, our Board may reduce the number of directors to be elected at the Annual Meeting. +Name +Position +Douglas Pearce +Director +Robert Pearce +Director +Nicholas Peters +Director +Scott Scheirman +Director, President and Chief Executive Officer +Bradley Seaman +Chairman of the Board +Valerie Soranno Keating +Director +Biographical information relating to each of the director nominees is set forth below under “Directors and Corporate Governance” and incorporated by reference herein. +THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE ELECTION OF EACH OF CPI’s DIRECTOR NOMINEES NAMED IN THIS PROXY STATEMENT. +PROXIES SOLICITED BY THE BOARD WILL BE VOTED FOR THE ELECTION OF EACH OF CPI’s DIRECTOR NOMINEES NAMED IN THIS PROXY STATEMENT UNLESS STOCKHOLDERS SPECIFY A CONTRARY VOTE. +-6- +Table of Contents +DIRECTORS AND CORPORATE GOVERNANCE +Director Biographical Information and Qualifications +Set forth below is a description of the business experience of each director, as well as the specific qualifications, skills and experiences considered by the Nominating Committee and the Board in recommending our slate of director nominees. Each director listed below is nominated for reelection to the Board for a term expiring at the annual meeting of stockholders in 2020. See “Election of Directors (Proposal No. 1).” +Douglas Pearce , 66, has served on our Board of Directors since January 2016. Mr. Pearce was the founding Chief Executive Officer and Chief Investment Officer of the British Columbia Investment Management Corporation (bcIMC), one of Canada’s largest institutional money managers. Mr. Pearce led the organization from 1988 until he retired in June 2014. Since 2016, Mr. Pearce has served on the board of directors of the Guardian of New Zealand Superannuation Fund. Mr. Pearce has also served as director and Chair of the Canadian Coalition for Good Governance (CCGG), the Pacific Pension Institute (PPI), and the Pension Investment Association of Canada (PIAC). Mr. Pearce was a member of the Faculty Advisory Board at the University Of British Columbia Sauder School Of Business and the Advisory Board at the Forum for Women Entrepreneurs. Mr. Pearce received his Bachelor of Commerce degree from the University of Calgary and is an accredited director in the Institute of Corporate Directors (ICD). Mr. Pearce brings to the Board a wealth of investment and corporate governance experience. +Robert Pearce , 64, has served on our Board of Directors since 2007. Mr. Pearce also serves on the board of directors of Canada Guaranty Mortgage Insurance Company, First American Payments Systems and First National Financial LP. Mr. Pearce spent 26 years with BMO Bank of Montreal, from 1980 to 2006, most recently holding the position of President and Chief Executive Officer, Personal and Commercial Client Group. He also served on the board of directors of MasterCard International from 1998 to 2006 and as Chairman of the Canadian Bankers’ Association from 2004 to 2006. Mr. Pearce holds a Bachelor of Arts from the University of Victoria and a Master of Business Administration from the University of British Columbia. Mr. Pearce brings to the Board more than 30 years of operational and leadership experience in the financial services industry, including extensive operating experience in credit card, debit card and prepaid cards in both card issuing and merchant acceptance in Canada and the United States. +Nicholas Peters , 46 has served on our Board of Directors since 2007. Mr. Peters is a Managing Director at Parallel49 Equity (formerly Tricor Pacific Capital) a private equity firm that makes control investments in lower middle market companies in the United States and Canada, which he joined in 2002, and also began serving as Parallel49 Equity’s Chief Financial Officer in 2012. Prior to joining Parallel49 Equity, Mr. Peters was a Senior Manager at Arthur Andersen LLP in Chicago. Mr. Peters is the Chairman of BFG Supply Company LLC, the Questco Companies and Certified Recycling and serves on the board of several other Parallel49 Equity investment companies. Mr. Peters holds a Bachelor of Science degree in Business Administration from the University of Dayton in Ohio. He is a Certified Public Accountant and is affiliated with the American Institute of Certified Public Accountants and the Ohio Society of CPAs. Mr. Peters brings to the Board strong finance and accounting skills, as well as valuable experience from his oversight of the management and operations of several of Parallel49 Equity’s portfolio companies. +Scott Scheirman, 56 , has served as our President and Chief Executive Officer since October 2017 and on our Board of Directors since October 2016. Prior to joining the Company, Mr. Scheirman served as the Chief Executive Officer and a co-founder of JKL Ventures LLC, a private investment and strategic advisory firm since February 2014. Prior to JKL Ventures LLC, Mr. Scheirman served as the Executive Vice President and Chief Financial Officer of Western Union (NYSE:WU) from September 2006 to December 2013. Prior to joining Western Union, Mr. Scheirman held a variety of executive leadership and financial officer roles at First Data Corporation (NYSE:FDC), and began his career at Ernst & Young LLP. Mr. Scheirman holds a Bachelor of Science degree in Business Administration with an emphasis in Accounting from the University of Northern Colorado. Mr. Scheirman brings to the Board extensive strategic planning, finance, risk management, international, public company and corporate governance experience, and through his position as our Chief Executive Officer, he brings to the Board management’s perspective over a full range of issues affecting the Company. +-7- +Table of Contents +Bradley Seaman, 59, has served on our Board of Directors since 2007 and currently serves as Chairman of the Board. Mr. Seaman has been employed, since August 1999, by Parallel49 Equity and its predecessor by name, Tricor Pacific Capital. From 1999 through December 2011, Mr. Seaman was Parallel49 Equity’s Managing Director and leader of its U.S. operations, and, since January 2012, has served as its Managing Partner, responsible for leading overall firm operations, strategy, funding and investments. Prior to joining Parallel49 Equity, and from 1990 through July 1999, Mr. Seaman was employed by GE Capital Corporation where he held a number of increasingly senior positions in GE’s Transportation & Industrial Funding and Commercial Finance units. In 1994, Mr. Seaman was selected to be part of a new group that was established to focus GE Capital’s debt and equity products on the emerging private equity market, and, in that capacity, headed GE’s offices in New York and Chicago. Mr. Seaman is also a member of the board of directors of Steel Dynamics, Inc. (NASDAQ: STLD). Mr. Seaman holds a Bachelor of Science degree in Business Administration from Bowling Green State University and a Master of Business Administration from the University of Dallas. He brings to the Board a comprehensive understanding and experience in the capital markets, management experience, and both operational and corporate governance experience drawn from his involvement in the management and oversight of Parallel49 Equity’s portfolio companies. +Valerie Soranno Keating , 55, has served on our Board of Directors since May 2018. Ms. Soranno Keating has been senior advisor to a number of private equity firms in the U.S. and Europe since 2017. From November 2009 through May 2015 she was the Chief Executive Officer of Barclaycard, the global payments division of Barclays PLC (NYSE:BCS), with $60 billion in assets and over 30 million customers throughout the U.S., Europe and South Africa. Before joining Barclays, Ms. Soranno Keating held a variety of executive positions at American Express Company (NYSE:AXP) from May 1993 through May 2009 including President, Travelers Cheques & Prepaid Services, Executive Vice President Global Commercial Services, Executive Vice President Global Merchant Services, Emerging Global Businesses & Network Expansion, and Vice President Corporate Strategic Planning. Ms. Soranno Keating also serves on the board of directors of One Main Financial (NYSE:OMF), a consumer lending business. Ms. Soranno Keating holds a Bachelor of Science Degree in Business Administration from Lehigh University. She brings to the Board over 20 years of experience in both executive and board roles across a broad spectrum of payments and-related businesses. Ms. Soranno Keating brings to the board over 25 years of experience in the payments industry. +Director Selection Process +The Nominating Committee works with the Board to determine periodically, as appropriate, the desired Board qualifications, expertise and characteristics, including such factors as business experience and diversity of experience; and with respect to diversity, the Nominating Committee may consider such factors as differences in professional background, education, skill, and other individual qualities and attributes that contribute to the total mix of viewpoints and experience represented on the Board. +The Nominating Committee and the Board evaluate each individual in the context of the membership of the Board as a group, with the objective of having a group that can best perpetuate the success of the business and represent stockholder interests through the exercise of sound judgment using its diversity of background and experience in the various areas. Each director should be an individual of high character and integrity. In determining whether to recommend a director for re-election, the Nominating Committee also considers the director’s past attendance at meetings, participation in and contributions to the activities of the Board and the Company and other qualifications and characteristics that may be set forth in the Nominating Committee charter. +Recommendation of Directors by Stockholders +In accordance with its charter, the Nominating Committee will consider candidates for election as a director of the Company recommended by any CPI stockholder, provided that the recommending stockholder follows the procedures set forth in Section 2.10 of the Company’s Bylaws for nominations by stockholders of persons to serve as directors. The Nominating Committee evaluates such candidates in the same manner by which it evaluates other director candidates considered by the Nominating Committee, as described above. +Pursuant to Section 2.10 of the Bylaws, nominations of persons for election to the Board at a meeting of stockholders may be made by any stockholder of the Company entitled to vote for the election of directors at the meeting +-8- +Table of Contents +who sends a timely notice in writing to our Corporate Secretary. To be timely, a stockholder’s notice must be delivered to, or mailed and received by, our Corporate Secretary at the Company’s principal executive offices not less than 90 nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting; provided, however, that if the annual meeting is more than 30 days prior to or after the anniversary of the preceding year’s annual meeting, notice by the stockholder must be delivered not later than the close of business on the later of the 90th day prior to such annual meeting or the 10th day following the day on which “public announcement” of the date of such annual meeting is made by the Company. For purposes of the Bylaws, “public announcement” means disclosure in a press release reported by the Dow Jones News Service, Associated Press or a comparable national news service or in a document publicly filed by us with the SEC. +The stockholder’s notice or recommendation is required to contain certain prescribed information about each person the stockholder proposes to recommend for election as a director, the stockholder giving notice and the beneficial owner, if any, on whose behalf notice is given. The stockholder’s notice must also include the consent of the person proposed to be nominated and to serve as a director if elected. Recommendations or notices relating to director nominations should be sent to CPI Card Group, 10026 West San Juan Way, Littleton, Colorado 80127; Attention: Sarah Kilgore, Chief Legal and Compliance Officer and Corporate Secretary. +Independence of Directors +The Company’s Corporate Governance Guidelines provide that a majority of the members of the Board, and each member of the Audit Committee, Compensation Committee and Nominating Committee, must meet the criteria for independence set forth under applicable law and NASDAQ listing standards. No director qualifies as independent unless the Board determines that the director has no direct or indirect material relationship with the Company. These independence guidelines are part of our Corporate Governance Guidelines, available on our website at www.cpicardgroup.com. The Board considers all relevant facts and circumstances of which it is aware in making an independence determination with respect to any director. +The Board has made independence determinations with respect to each of our directors. Based on the NASDAQ independence guidelines, the Board has affirmatively determined that each of Ms. Soranno Keating and Messrs. D. Pearce, R. Pearce, Peters, and Seaman are independent within the meaning of NASDAQ rules. +Board’s Role in Risk Oversight +The Company’s management continually monitors the material risks facing the Company. Our enterprise risk management process is designed to facilitate the identification, assessment and management of certain key risks the Company may encounter and which may impact our ability to achieve our strategic objectives. The enterprise risk management process supplements management’s ongoing responsibilities to monitor and address risks by working with risk owners to identify causes of and action plans for certain risks, which then are discussed with senior management. +The Board, with the assistance of the Board committees, is responsible for overseeing such management actions to ensure that material risks affecting the Company are identified and managed appropriately. The Board and the Board committees oversee risks associated with their principal areas of focused, as summarized below: +-9- +Table of Contents +Board/Committee Areas of Risk Oversight and Actions +Careful evaluation of the reports received from management and by making inquiries of management on areas of particular interest to the Board +Reviews with management material strategic, operational, financial, compensation and compliance risks +Considers specific risk topics in connection with strategic planning and other matters +Oversees risk oversight and related activities conducted by the Board committees through reports of the committee chairmen to the Board +Full Board + Oversight of the enterprise risk management process + Evaluation of the reports received from management and by making inquiries of management on areas of particular interest to the Board + Reviews with management material strategic, operational, financial, compensation and compliance risks + Considers specific risk topics in connection with strategic planning and other matters + Oversees risk oversight and related activities conducted by the Board committees through reports of the committee chairmen to the Board +Audit Committee + Discusses with management the Company’s process for assessing and managing risks, including the Company’s major financial risk exposures and the steps necessary to monitor and control such exposures + Central oversight of financial and compliance risks + Meets periodically with senior management and our independent auditor, KPMG LLP, and reports on its findings at meetings of the Board + Assesses periodically reports provided by management on risks addressed in the enterprise risk management process and other risks +Compensation Committee + Oversees the review and evaluation of the risks associated with our compensation policies and practices +Nominating Committee + Oversees risks associated with our governance structure and processes + Reviews our organizational documents, Corporate Governance Guidelines and other policies +Corporate Governance +The Board has approved Corporate Governance Guidelines, a Code of Business Conduct and Ethics and a Code of Conduct for Financial Officers. Our corporate governance documents, including the Corporate Governance Guidelines, the Code of Business Conduct and Ethics, the Code of Conduct for Financial Officers and committee charters, are available on our website at www.cpicardgroup.com or in printed form upon request by contacting CPI Card Group at 10026 West San Juan Way, Littleton, Colorado 80127, Attention: Investor Relations. The Board regularly reviews corporate governance developments and modifies these documents as warranted. Any modifications will be reflected on our website. The information on our website is not part of this proxy statement and is not deemed to be incorporated by reference herein. +Other Board Information +Leadership Structure of the Board +Bradley Seaman serves as our Chairman of the Board, and Scott Scheirman serves as our Chief Executive Officer. Our Board has decided to maintain separate Chairman and CEO roles to allow our CEO to focus on the execution of our +-10- +Table of Contents +business strategy, growth and development, while allowing the Chairman to lead the Board in its fundamental role of providing advice to, and independent oversight of, management. The Board recognizes the time, effort and energy that the CEO is required to devote to his position in the current business environment, as well as the commitment required to serve as our Chairman. While our Bylaws and Corporate Governance Guidelines do not require that our Chairman and CEO positions be separate, the Board believes that having separate positions and having an independent director serve as Chairman is the appropriate leadership structure for us at this time. +Board Meetings +In 2018, our Board held twelve meetings. In addition to our Board meetings, our directors attend meetings of committees established by our Board. Each of CPI’s director nominees attended at least 75% of the meetings of our Board and the committees on which he or she served during 2018 that were held when he or she was a director. Our directors are encouraged to attend all annual and special meetings of our stockholders. All of our directors attended the 2018 annual meeting of stockholders. +Meetings of Non-Employee Directors +In accordance with our Corporate Governance Guidelines, our non-employee directors meet regularly in executive sessions of the Board without management present. Mr. Bradley Seaman, our Chairman, presides over these executive sessions. In the event that Mr. Bradley Seaman is not available to lead these meetings, the presiding director is chosen by the non-employee directors in attendance. +Committees of the Board +The Board has three standing committees: the Audit Committee, the Compensation Committee and the Nominating Committee. The following chart sets forth the directors who currently serve as members of each of the Board committees as of the date of this proxy statement. +Audit +Compensation +Nominating +Directors +Committee +Committee +Committee +Douglas Pearce +X +C +Robert Pearce +C +X +Nicholas Peters +C +X +Scott Scheirman +Bradley Seaman* +X +Valerie Soranno Keating +X +X +* Chairman of the Board +“C” Denotes member and chair of committee +“X” Denotes member +Audit Committee +In 2018, the Audit Committee held twelve meetings. Each of the members of the Audit Committee is a non-employee director. We believe that each of Ms. Soranno Keating and Messrs. Doug Pearce and Robert Pearce meets the independence criteria for purposes of serving on an audit committee under the applicable NASDAQ rules and Rule 10A-3 under the Exchange Act. In addition, our board of directors has determined that each of Messrs. Robert Pearce and Doug Pearce qualifies as an “audit committee financial expert,” as such term is defined in Item 407(d)(5) of Regulation S-K. The Audit Committee operates under a written charter setting forth its functions and responsibilities. A copy of the current charter is available on our website at www.cpicardgroup.com or in printed form upon request. +-11- +Table of Contents +Compensation Committee +The Compensation Committee held eight meetings in 2018. The Board has determined that all of the members of the Compensation Committee are independent as defined in NASDAQ rules, including the independence standards applicable to compensation committees. The Compensation Committee has overall responsibility for approving and evaluating director and officer compensation plans, policies and programs of the Company and reviewing the disclosure of such plans, policies and programs to our stockholders in the annual proxy statement. The Compensation Committee utilizes an independent compensation consultant to assist it in its duties. The Compensation Committee operates under a written charter setting forth its functions and responsibilities. A copy of the current charter is available on our website at www.cpicardgroup.com or in printed form upon request. +In consultation with the Company’s management, the Compensation Committee establishes the general policies relating to senior management compensation and oversees the development and administration of such compensation programs. Our human resources executives and staff support the Compensation Committee in its work. These members of management work with compensation consultants whose engagements have been approved by the Compensation Committee, accountants and legal counsel, as necessary, to implement the Compensation Committee’s decisions, to monitor evolving competitive practices and to make compensation recommendations to the Compensation Committee. Our human resources management develops specific compensation recommendations for senior executives, which are first reviewed by senior management and then presented to the Compensation Committee and its independent compensation consultant. The Compensation Committee has final authority to approve, modify or reject the recommendations and to make its decisions in executive session. The Compensation Committee approves all compensation of our executive officers, including equity awards. +In 2018, Compensation Committee engaged Willis Towers Watson as its independent compensation consultant. The consultant reports directly to the Compensation Committee, including with respect to management’s recommendations of compensation programs and awards. The Compensation Committee has the sole authority to approve the scope and terms of the engagement of such compensation consultant and to terminate such engagement. Willis Towers Watson assisted the Compensation Committee with the development of competitive market data and related assessments of the Company’s executive and director compensation levels, evaluation of annual and long-term incentive compensation strategy and compilation and review of total compensation data for the Company’s Named Executive Officers (as defined in “Executive Compensation”). Other than with respect to consulting on executive and director compensation matters, Willis Towers Watson has performed no other services for the Compensation Committee and limited consulting services for the Company which the Compensation Committee has determined do not impair Willis Towers Watson’s independence. +The Compensation Committee has reviewed the independence of Willis Towers Watson in light of SEC rules and NASDAQ listing standards regarding compensation consultants and has concluded that Willis Towers Watson’s work for the Compensation Committee does not raise any conflict of interest. +Nominating and Corporate Governance Committee +The Nominating Committee held five meetings in 2018. Each of the members of the Nominating Committee is independent as defined in NASDAQ rules. +The Nominating Committee is responsible for, among other things: (i) identifying individuals qualified to become members of the Board, consistent with criteria approved by the Board; (ii) recommending director nominees to the Board for election at the next annual meeting of the stockholders of the Company; (iii) in the event of a vacancy on or an increase in the size of the Board, recommending director nominees to the Board to fill such vacancy or newly established Board seat; (iv) recommending directors to the Board for membership on each committee of the Board; and (v) establishing and reviewing annually our Corporate Governance Guidelines and Code of Business Conduct and Ethics. The Nominating Committee operates under a written charter setting forth its functions and responsibilities. A copy of the current charter is available on our website at www.cpicardgroup.com or in printed form upon request. +-12- +Table of Contents +Compensation Committee Interlocks and Insider Participation +None of the members of our Compensation Committee has in the past served as an officer or employee of the Company. None of our executive officers currently serves, or in the past year has served, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on our Board or Compensation Committee. +Communications to the Board +Stockholders and interested parties can contact the Board (including the Chairman and the independent directors) through written communication sent to CPI Card Group, 10026 West San Juan Way, Littleton, Colorado 80127, Attention: Sarah Kilgore, Chief Legal and Compliance Officer and Corporate Secretary. Our Corporate Secretary reviews all written communications and forwards to the Board copies of any such correspondence that is directed to the Board or that, in the opinion of the Corporate Secretary, deals with the functions of the Board or Board committees or that she otherwise determines requires the Board’s or any Board Committee’s attention. Concerns relating to accounting, internal accounting controls or auditing matters are immediately brought to the attention of our Audit Committee Chair and handled in accordance with procedures established by the Audit Committee with respect to such matters. From time to time, the Board may change the process by which stockholders may communicate with the Board. Any such changes will be reflected in our Corporate Governance Guidelines, which are posted on our website at www.cpicardgroup.com. +Director Compensation +As described more fully below, the following table summarizes the annual compensation for our non-employee directors during 2018. +2018 DIRECTOR COMPENSATION +Fees +Fees +Earned +Earned +Or Paid +Or Paid +In Cash +In Stock (1) +Total +Name +($) +($) +($) +Diane Fulton (2) +$ +30,000 +$ +— +$ +30,000 +Douglas Pearce +$ +70,000 +$ +50,000 +$ +120,000 +Robert Pearce +$ +77,500 +$ +50,000 +$ +127,500 +Nicholas Peters (5) +— +— +— +David Rowntree (3) (5) +— +— +— +Bradley Seaman (5) +— +— +— +Silvio Tavares (4) +$ +56,250 +$ +50,000 +$ +106,250 +Valerie Soranno Keating +$ +46,250 +$ +50,000 +$ +96,250 +(1) On May 31, 2018, each non-employee director not nominated by Tricor Pacific Capital Partners (Fund IV), Limited Partnership, and Tricor Pacific Capital Partners (Fund IV) US, Limited Partnership (collectively, the “Tricor Funds”) received fees paid in stock represented by grants of restricted stock units (“RSUs”), which vest on the first anniversary of the award date. The amounts shown reflect the grant date fair value computed in accordance with FASB ASC 718. +As of December 31, 2018, each director held the following number of unvested RSUs: +• Ms. Fulton - 0 RSUs; +• Ms. Soranno Keating – 18,797 RSUs; +• Mr. D. Pearce – 18,797 RSUs; +• Mr. R. Pearce – 18,797 RSUs; and +• Mr. Tavares – 0 RSUs. +(2) Effective upon the expiration of her term on May 31, 2018, Diane Fulton retired from the Board. +-13- +Table of Contents +(3) Effective as of June 15, 2018, David Rowntree resigned from the Board. +(4) Effective as of July 17, 2018, Silvio Tavares resigned from the Board. +(5) Directors nominated by the Tricor Funds, which are managed by Parallel49 Equity, ULC, did not receive compensation, consistent with past practice. Refer to “Certain Relationships and Related Party Transactions - Director Nomination Agreement” for a description of the Tricor Funds’ right to designate nominees. +Narrative to Director’s Compensation Table +The following sets forth our compensation package for our non-employee directors. In early 2019, the disinterested members of the Board determined that it is in the best interests of the Company and its shareholders to compensate directors nominated by the Tricor Funds consistent with the other non-employee directors. The Company does not pay a management fee to the Tricor Funds. +Compensation Element +Value +Retainer +$ +100,000 +(1) +Audit Committee Chair Fee +$ +20,000 +Compensation Committee Chair Fee +$ +15,000 +Nominating Committee Chair Fee +$ +10,000 +Audit Committee Member Fee +$ +10,000 +Compensation Committee Member Fee +$ +7,500 +Nominating Committee Member Fee +$ +5,000 +(1) 50% received in cash and 50% received in restricted stock units, vesting 100% on the first anniversary of the award date. +-14- +Table of Contents +Security Ownership of Certain Beneficial Owners, Directors and Management +The following table sets forth, as of April 5, 2019 (except as indicated below), beneficial ownership, as defined by SEC rules, of our common stock. Each of the persons listed below has sole voting and investment power with respect to the beneficially owned shares listed unless otherwise indicated. For purposes of the following table, beneficial ownership is determined in accordance with Exchange Act Rule 13d-3. The percentage calculations set forth in the table are based on 11,160,537 shares of common stock outstanding on April 5, 2019 rather than based on the percentages set forth in stockholders’ Schedules 13G or 13D, as applicable, filed with the SEC. Unless otherwise indicated, the address of each beneficial owner is c/o CPI Card Group Inc., 10026 West San Juan Way, Littleton, Colorado 80127. +Number of +Shares of +Percentage of +Common +Common +Stock +Stock +Owned +Owned +Beneficially +Beneficially +5% Beneficial Owners: +Tricor Pacific Capital Partners (Fund IV), Limited Partnership (1) +4,124,368 +37.0% +Tricor Pacific Capital Partners (Fund IV) US, Limited Partnership (1) +2,434,457 +21.8% +Named Executive Officers and Directors: +Jason Bohrer (2) +41,746 +* +Lane Dubin (3) +28,826 +* +Douglas Pearce (4) +28,191 +* +Scott Scheirman (5) +99,575 +* +Robert Pearce (6) +105,189 +* +Nicholas Peters +— +* +Bradley Seaman +— +* +Valerie Soranno Keating (7) +18,797 +* +Total Executive Officers and Directors as a Group (14 individuals) (8) +372,691 +3.3% +* Less than 1% +(1) +Based on a Schedule 13G filed jointly by the Tricor Funds and Parallel49 Equity, ULC on February 12, 2016, as adjusted to give effect to the Reverse Stock Split. Each of the Tricor Funds is managed by Parallel49 Equity, ULC, as the general partner. Mr. Bradley Seaman, Mr. David Rowntree, J. Trevor Johnstone and Roderick Senft are the sole members of an investment committee of the Tricor Funds that has the power to vote or dispose of the shares held by the Tricor Funds. Each of Messrs. Seaman and Peters is an officer or member of the Tricor Funds and has an indirect pecuniary interest in the shares of common stock held by the Tricor Funds through their respective interests in the Tricor Funds. Each of Messrs. Seaman and Peters expressly disclaims any beneficial ownership of any shares of common stock held by the Tricor Funds. The address of the Tricor Funds is c/o Parallel49 Equity, 225 East Deerpath Road, Suite 200, Lake Forest, IL 60045. +(2) +Includes an aggregate of 36,032 options to purchase common stock that are vested or will vest within 60 days of April 5, 2019. +(3) +Includes an aggregate of 27,528 options to purchase common stock that are vested or will vest within 60 days of April 5, 2019. +(4) +Includes 18,797 of restricted stock units vesting within 60 days of April 5, 2019. +(5) +Includes an aggregate of 93,334 options to purchase common stock that are vested or will vest within 60 days of April 5, 2019. +(6) +Includes 18,797 of restricted stock units vesting within 60 days of April 5, 2019. +(7) +Includes 18,797 of restricted stock units vesting within 60 days of April 5, 2019. +(8) +Includes an aggregate of 189,977 options to purchase common stock that are vested or will vest within 60 days of April 5, 2019 and 56,391 restricted stock units vesting within 60 days of April 5, 2019. +-15- +Table of Contents +Section 16(a) Beneficial Ownership Reporting Compliance +Based upon our review of reports filed with the SEC and written representations that no other reports were required, we believe that all of our directors and executive officers complied with the reporting requirements of Section 16(a) of the Exchange Act during 2018. +-16- +Table of Contents +EXECUTIVE OFFICERS +The following table sets forth certain information concerning each of our executive officers: +Name +Age +Position +Scott Scheirman +56 +President, Chief Executive Officer and Director +Jason Bohrer +48 +Senior Vice President and General Manager, Secure Card Solutions +Guy DiMaggio +49 +Senior Vice President and General Manager, Personalization +Lane Dubin +50 +Senior Vice President and General Manager, Prepaid and Instant Issuance +Rob Grant +58 +Vice President and Chief Information Officer +John Lowe +42 +Chief Financial Officer +Lisa Jacoba +51 +Chief Human Resources Officer +Sarah Kilgore +51 +Chief Legal and Compliance Officer +Kevin O’Brien +39 +Chief Accounting Officer +Scott Scheirman. See “Directors and Corporate Governance” for Mr. Scheirman’s biographical information. +Jason Bohrer has served as our Senior Vice President and General Manager, Secure Card Solutions, since January 2018. Mr. Bohrer joined the Company as Senior Vice President of Operations in June 2016. Prior to joining the Company, from 2002 to 2016, Mr. Bohrer worked at HID Global, a provider of access control and secure identity solutions, most recently serving as VP, Global Operations from January 2015 to May 2016, VP & Executive Sponsor, Americas & HQ Consolidation from January 2013 to December 2014, and Senior Vice President, Managed Services from January 2011 to December 2012. Prior to joining HID Global, Mr. Bohrer held operations positions at Indala Corp. (formerly Motorola’s smartcard division) and Motorola, Inc. Mr. Bohrer holds a Bachelor’s Degree in Economics from the University of Texas, and was an inaugural member of the University of Chicago’s Executive Institute. +Guy DiMaggio has served as our Senior Vice President and General Manager of Personalization since July 2018. Mr. DiMaggio is a financial services executive with over 20 years of experience building and leading world-class operations and customer service teams. Prior to joining the Company, he was the SVP and Head of Operations for iPayment Inc from 2013 to 2018, responsible for leading all client support and relationship management in the merchant acquiring / card processing industry. Prior to iPayment, Mr. DiMaggio served as the SVP of Integration and Indirect Business Channel for Vantiv from 2010 to 2012. He also spent nearly a decade in executive roles with increasing responsibility working globally for Western Union from 2001 to 2010, including Vice President of Operations for Europe, Middle East, Africa, Asia, & Pacific. Mr. DiMaggio earned his MBA from the University of Denver Daniels College of Business and he holds a Bachelor’s Degree in Communications from Shippensburg University in Pennsylvania. +Lane Dubin has served as our Senior Vice President and General Manager, Prepaid and Instant Issuance since January 2018. Mr. Dubin joined the Company as Senior Vice President, Sales and Marketing in August 2016. Prior to joining the Company, Mr. Dubin served at American Express Company from 1992 to 2015. Most recently, he was the Head of Global Sales at American Express Global Business Travel from 2008 to 2015, and Vice President, Business Development – North America, at American Express Global Business Travel from 2003 to 2008. Prior to these roles, Mr. Dubin held roles with increasing responsibility with American Express including Vice President-Business Development, Financial Education Services for American Express Financial Advisors and Director of Sales and Business Development for Ketera Technologies, a technology start-up incubated by American Express. Mr. Dubin holds a Bachelor’s Degree in Economics and Business Administration from Ursinus College. +Rob Grant has served as our Vice President and Chief Information Officer since April 2018. Prior to joining the Company, Mr. Grant served as Vice President of Global Technology and Cyber Security of Crocs, a Colorado-based footwear company from February of 2013 through April of 2018. Additionally, he has held various senior leadership positions with Newmont Mining, IHS, and JD Edwards. Mr. Grant holds a Bachelor’s degree in Organizational Communications from the University of Northern Colorado. +-17- +Table of Contents +John Lowe has served as our Chief Financial Officer since July 2018. Prior to joining the Company, John served as Chief Financial Officer of SquareTwo Financial Corporation from August 2014 until June 2017. Prior to August 2014, Mr. Lowe held various leadership roles at SquareTwo Financial Corporation, including serving as Treasurer, Vice President of Finance, Vice President of External Reporting and Director of Technical Accounting. Mr. Lowe’s employment with SquareTwo Financial commenced in 2009. SquareTwo Financial Corporation filed for Chapter 11 bankruptcy protection in March 19, 2017 in connection with a strategic sale of the Company. Mr. Lowe holds a Bachelor of Science degree in both Accounting and Finance from the Virginia Polytechnic Institute and State University and is a Certified Public Accountant in the State of Colorado. Mr. Lowe is also a Chartered Financial Analyst. +Lisa Jacoba has served as our Chief Human Resources Officer since June 2015. From 2006 to 2014, Ms. Jacoba served as Senior Vice President, Human Resources, and Senior Vice President of Global Talent Management at Western Union in the United States and in the United Kingdom. Prior to Western Union, Ms. Jacoba spent sixteen years in human resources positions of increasing responsibility at First Data Corporation with the most recent position of Senior Vice President Human Resources from 2001-2005. Ms. Jacoba received her Bachelor of Science in Human Resources from Bellevue University. +Sarah Kilgore has served as our Chief Legal and Compliance Officer since December 2017. Prior to joining the Company, Ms. Kilgore was Of Counsel with Moye White LLP, a law firm based in Denver since June 2017. Prior to Moye White LLP, Ms. Kilgore founded and provided legal services through Kilgore Legal Group, LLC from 2011 through 2015. Prior to establishing Kilgore Legal Group, LLC, Ms. Kilgore served as Associate General Counsel, Governance and Securities for Western Union from 2006 to 2011. Prior to her role at Western Union, she held various legal positions at First Data Corporation and AT&T Corp., and was a corporate attorney in private practice. Ms. Kilgore earned her Juris Doctor degree from the University of Michigan Law School and received her Bachelor’s Degree in Business Administration from Michigan State University. +Kevin O’Brien has served as the Company’s Chief Accounting Officer since April 1, 2018. Mr. O’Brien joined the Company in March 2016 as Director of Corporate Accounting and SEC Reporting. Prior to joining the Company, Mr. O’Brien served as the Director of Financial Reporting and Compliance of Sports Authority, Inc., a sporting goods retailer, from 2014 to 2016. From 2011 to 2014, Mr. O’Brien served as the Assistant Controller of CIBER, Inc., an information technology and services company. Prior to joining CIBER, Inc., Mr. O’Brien was a Senior Audit Manager at Deloitte & Touche LLP from 2002 to 2011. Mr. O’Brien holds both a Bachelor of Arts degree and Master of Science degree in Accounting from the University of Colorado and is a Certified Public Accountant in the State of Colorado. +EXECUTIVE COMPENSATION +The following Summary Compensation Table discloses the compensation information for fiscal years 2018 and 2017 (for individuals who were named executive officers in such year) for our principal executive officer (“PEO”) and the two most highly compensated executive officers other than the PEO who were serving as executive officers at the end of the last completed fiscal year (collectively, the “named executive officers”). +Summary Compensation Table +Nonqualified +Non-Equity +Deferred +Incentive Plan +Compensation +All Other +Name and Principal Position +Year +Salary +Bonus (1) +Stock Awards (2) +Option Awards (3) +Compensation (4) +Earnings +Compensation (5) +Total +Scott Scheirman, President and Chief Executive Officer (6) +2018 +$ +575,000 +$ +690,000 +$ +— +$ +— +$ +1,086,175 +— +$ +11,000 +$ +2,362,175 +2017 +$ +132,692 +$ +— +$ +50,000 +$ +501,746 +$ +154,808 +— +$ +78,968 +$ +918,214 +Jason Bohrer, SVP and GM, Secure Card +2018 +$ +316,731 +$ +199,522 +$ +— +$ +— +$ +292,970 +— +$ +11,000 +$ +820,223 +2017 +$ +304,039 +$ +45,522 +$ +30,950 +$ +88,510 +$ +— +— +$ +20,052 +$ +489,073 +Lane Dubin, SVP and GM, Prepaid and Instant Issuance +2018 +$ +341,719 +$ +231,935 +$ +— +$ +— +$ +401,861 +— +$ +17,239 +$ +992,754 +2017 +$ +328,282 +$ +58,935 +$ +39,803 +$ +100,999 +$ +— +— +$ +10,813 +$ +538,832 +(1) +For 2018, these amounts include (a) a prepaid retention payment described below under “Cash and Equity Retention Awards and Agreements - 2019 Retention Agreements”, and (b) for Messrs. Bohrer and Dubin, the second installment of their retention payments described below under “Cash and Equity Retention Awards Agreements - 2017 Equity +-18- +Table of Contents +Awards and Retention Agreements.” For 2017, these amounts represent the first installment of Messrs. Bohrer and Dubin’s 2017 retention payments. +(2) +These amounts represent the grant date fair value of restricted stock unit awards granted. The values were calculated in accordance with FASB ASC Topic 718. +(3) +These amounts represent the grant date fair value of the stock option awards calculated in accordance with FASB ASC Topic 718. For a discussion of the assumptions and methodologies used in calculating the grant date fair value of the stock option awards, please see Note 15 to the Company’s consolidated financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018. +(4) +These amounts include (a) the following payments under the Company’s short-term incentive plan for the 2018 plan year: Mr. Scheirman- $1,086,175; Mr. Bohrer- $277,296; and Mr. Dubin- $381,709, (b) the following payments made in 2018 under the 2017 Cash Performance Unit long-term incentive awards: Mr. Bohrer- $15,674; and Mr. Dubin- $20,152, and (c) for Mr. Scheirman in 2017, this amount represents the payment made under the STIP for the 2017 plan year. Pursuant to his employment agreement, Mr. Scheirman was guaranteed a STIP payment at his target amount with respect to 2017, prorated based on his start date. No other STIP participants received a payout for the 2017 plan year. +(5) +For 2018, these amounts include (a) matching contributions under the Company’s 401(k) plan, and (b) for Mr. Dubin, dividend equivalents paid in cash upon the vesting of the first tranche of his September 1, 2016 RSU award and a cash payout of earned but unpaid time-off in excess of the Company’s new policy limits implemented in 2018. As part of the transition of the new time-off policy limits in 2018, all employees of the Company were entitled to a cash payout of any time they had accrued in excess of the new limits. For 2017, these amounts include (a) matching contributions under the Company’s 401(k) plan, and (b) for Mr. Scheirman, reimbursement for certain living expenses, legal support for finalization of his employment agreement during his transition into the CEO role and $53,338 in cash fees paid to Mr. Scheirman through September 30, 2017 for his service in 2017, prior to October 5, 2017, as a non-employee director of the Company, and (b) for Mr. Bohrer, relocation expenses related to his joining the Company in 2016. +(6) +Mr. Scheirman’s total compensation for 2017 includes $53,338 received in connection with his service as a non-employee director of the Company in 2017 prior to October 5, 2017 and comprised of the following components: (a) the grant date fair value of his restricted stock unit award (described in footnote 2 to this table), and (b) the cash fees paid to Mr. Scheirman through September 30, 2017. The remainder of the 2017 fees includes reimbursement for certain living expenses and legal support for finalization of his employment agreement during his transition into the CEO role. +Base Salaries +Base salaries established for the Company’s executive officers are intended to reflect each individual’s responsibilities, experience, historical performance and other discretionary factors deemed relevant by the Company and have generally been set at levels deemed necessary to attract and retain individuals with superior talent. Base salaries are also designed to provide executive officers with steady cash flow during the course of the fiscal year that is not contingent on short-term variations in the Company’s operating performance. +Our named executive officers were entitled to the following annual base salaries in 2018 and 2019: +2018 Base Salary +2019 Base Salary +% +Named Executive Officer +(Effective March 11, 2018) +(Effective March 10, 2019) +Increase +Scott Scheirman +$ +575,000 +$ +592,250 +3.0% +Jason Bohrer +$ +320,250 +$ +329,858 +3.0% +Lane Dubin +$ +345,516 +$ +355,881 +3.0% +Annual Incentive Awards +The Company maintains an annual short-term incentive plan (the “STIP”) to incentivize senior management and other key employees to achieve the short-term financial and non-financial objectives of the Company. The annual incentive awards are intended to reward both overall Company and individual performance during the year, and as such, are variable from year to year. The Company believes that establishing cash bonus opportunities is an important factor in both attracting and retaining the services of qualified and highly skilled executives and in motivating our senior management to achieve the Company’s annual objectives. +-19- +Table of Contents +In 2018, the Compensation Committee approved annual incentive awards under the STIP based upon the Company achieving certain levels of Adjusted EBITDA and Adjusted Free Cash Flow, as described below, and Revenue. Note that the term Revenue as defined in the STIP is consistent with “Total Net Sales”, as included in the Company’s consolidated financial statements, for all references contained herein. For 2018 the Company significantly exceeded the targets as established by the Compensation Committee across each of these metrics. Payout of the STIP to individual management team members was based upon these Company results and the achievement of individual objectives. +“Adjusted EBITDA” is a financial measure that is not calculated according to U.S. generally accepted accounting principles (“GAAP”). A reconciliation showing how the Company calculates Adjusted EBITDA from net (loss) income, the most comparable GAAP measure, may be found in Exhibit E to the Company’s Form 8-K press release filing with financial results for the year ended December 31, 2018, filed with the Securities and Exchange Commission on March 6, 2019. +“Adjusted Free Cash Flow” is a financial measure that is not calculated according to U.S. GAAP. We define Adjusted Free Cash Flow as cash flow from operations less capital expenditures, and adjusted for the following cash items: interest, income taxes, litigation and related charges incurred in connection with certain patent and shareholder litigation, and restructuring and other charges. This measure does not represent funds available for investment or other discretionary uses since it does not deduct cash used to service our debt. +Long-Term Incentives +Prior to 2019, the Company maintained a long-term incentive award practice whereby senior leaders and executives may receive annual awards under the Omnibus Plan (described below). In October 2018, the Company announced its intention to suspend the use of incentives under the Omnibus Plan (see “Cash and Equity Retention Awards and Agreements - 2019 Executive Incentive Plan” below). +The March 22, 2017 long-term incentive award consisted of nonqualified stock options, restricted stock units (RSU’s) and cash performance units. The cash performance units are performance-based awards and settle in cash, in an amount between 50% and 200% of the target award value, based on the performance of the Company’s stock price during each of three performance sub-periods (from the grant date through each of the first, second and third anniversaries of the grant date). The final payouts will be made in cash with respect to approximately one-third of the cash performance units at the end of each performance sub-period. The first tranche of cash performance units vested on March 22, 2018 and the second tranche vested on March 22, 2019 and each paid out at 50% of the target award value, given the stock price performance of the Company between the grant and vest date. +The awards described above are all subject to other applicable terms and conditions consistent with the Omnibus Plan. +Cash and Equity Retention Awards and Agreements +2017 Equity Awards and Retention Agreements +In connection with the Company’s appointment of Mr. Scheirman as its new President and Chief Executive Officer, in September 2017, the Company awarded nonqualified stock options and cash retention bonuses to the Company’s executive officers and other employees, including Messrs. Bohrer and Dubin, in lieu of the annual long-term incentive awards that would otherwise have been made in the first quarter of 2018. The goal of these awards was to align interests of senior leaders and executives with those of the newly appointed President and Chief Executive Officer. The stock option grants generally will vest 33.4% on the first anniversary of the grant date and 33.3% on each of the second and third anniversaries of the grant date. Under the terms of the retention bonuses, the recipients had to remain with the Company and in good performance standing through each of the applicable payment dates. 50% of each award was paid on December 7, 2017 and the remaining 50% was paid on April 3, 2018. +-20- +Table of Contents +2019 Executive Incentive Plan +In October, 2018, the Compensation Committee determined that the use of equity compensation is currently ineffective and continuing to make equity awards at that time would be too dilutive to shareholders. As a result, the Compensation Committee suspended cash, equity and incentive awards grants under the company’s Omnibus Plan during 2019 and adopted a new 2019 Executive Incentive Plan (“EIP”) in order to continue to retain and motivate an executive leadership team which had significantly improved the Company’s business performance over the prior twelve months. The EIP terminates on December 31, 2019 unless earlier terminated by the Company or extended pursuant to the approval of the Compensation Committee. +The EIP provides a means of rewarding persons designated as participants under the EIP (currently the Company’s named executive officers and other key employees) with incentive payments based on the Company’s achievement of certain quarterly and annual performance goals under the EIP with respect to the 2019 calendar year. The Company developed, and the Compensation Committee approved, the quarterly and annual performance goals, which are subject to the Compensation Committee’s discretion. The performance goals are based upon the Company achieving certain levels of Adjusted EBITDA, Adjusted Free Cash Flow and Revenue, consistent with the STIP (see “Annual Incentive Awards” above). Eighty percent of a participant’s total incentive opportunity may be earned under the EIP on a quarterly basis throughout the year, and twenty percent of a participant’s total incentive opportunity may be earned under the EIP on an annual basis. Payouts for these incentives can range from 0% to 200%, based on Company performance. +2019 Retention Agreements +Also in October, 2018, the Compensation Committee determined that the Company should enter into retention agreements (“Retention Agreements”) with the Company’s named executive officers and other key employees. Under the terms of each Retention Agreement, each recipient is entitled to a cash payment (“Retention Payment”) of a specified amount. The Retention Payments were paid on November 16, 2018. +Under the Retention Agreements, in the event a recipient of a Retention Payment voluntarily terminates his or her employment without Good Reason (as defined in each Retention Agreement), or the Company terminates such recipient’s employment for Cause (as defined in each Retention Agreement), in either case, before March 13, 2020 (the “Retention Date”), then such recipient will be required to promptly repay to the Company, in any event no later than ten (10) days following such termination, an amount equal to the Retention Payment reduced by all taxes the Company actually withholds therefrom. A recipient will not be required to repay a Retention Payment in the event of termination of employment due to death or disability, by the Company without Cause or by the recipient for Good Reason prior to the Retention Date. +Employee Benefits +The Company maintains the CPI Holdings I, Inc. 401(k) Plan (the “401(k) Plan”), which is a qualified defined-contribution plan under the provisions of the Internal Revenue Code Section 401(k) covering substantially all employees who meet certain eligibility requirements. Under the 401(k) Plan, participants may defer their salary subject to statutory limitations and may direct the contributions among various investment accounts. The Company matches 100% of the participant’s first 3% of deferrals and 50% of the next 2% of deferrals. The Company’s portion is 100% vested at the time of the match. +Employment and Post-Termination Arrangements +Mr. Scheirman’s Employment Agreement +On September 25, 2017, Mr. Scheirman entered into an employment agreement with the Company to serve as President and Chief Executive Officer, effective October 5, 2017, for a term ending on March 31, 2021, plus automatic one-year renewals thereafter unless either party provides notice of intent not to renew the agreement. The agreement provides for an initial base salary of $575,000 per year. In addition, Mr. Scheirman is entitled to participate in the STIP with a target bonus of 100% of his annual base salary. For 2017, Mr. Scheirman’s STIP payout was guaranteed at 100% of his annual base salary (prorated based on his start date), and for 2018, the agreement provides that Mr. Scheirman’s +-21- +Table of Contents +STIP payout will be no less than 80% of his annual base salary. Mr. Scheirman also received a nonqualified stock option grant with respect to 280,000 shares of the Company’s common stock, which will vest in approximately equal annual installments over a three-year period, subject to Mr. Scheirman’s continued employment. +Mr. Scheirman received temporary support for commuting expenses associated with his employment with the Company and also reimbursement for legal expenses associated with finalizing his employment agreement. +In the event that Mr. Scheirman’s employment is terminated by the Company without “Cause,” he resigns for “Good Reason” (each as defined in the agreement), separates employment due to death or disability or the Company fails to renew his agreement upon its expiration, Mr. Scheirman would be entitled to (i) continued monthly payments of his base salary and his annual STIP target bonus for a period of eighteen months; (ii) a prorated portion of his annual STIP bonus, based on the number of full months completed during the fiscal year in which such termination of employment occurs and based on final Company performance for the STIP year; (iii) accelerated vesting of any outstanding equity awards that would have otherwise vested in the next twelve months following the termination (for performance-based awards, vesting will be based on actual performance determined at the end of the performance period); (iv) the cost of COBRA coverage for his health coverage then in effect, less the employee contribution for an active employee, for the severance period; and (v) up to six months of outplacement services. +In the event that Mr. Scheirman experiences a termination event as described above within six months prior to or two years following a change in control, Mr. Scheirman will receive the benefits described in the foregoing paragraph, except that the severance and COBRA continuation benefits in items (i) and (iv) above would be extended from eighteen to twenty-four months, and his outstanding equity awards would vest in full (with any performance-based awards vesting at the target level of performance). +Mr. Scheirman is subject to certain restrictive covenants, including obligations regarding non-competition and non-solicitation of Company employees and customers, during the term and for a period of eighteen months following any termination of his employment with the Company. +In October 2018, Mr. Scheirman became a participant in the EIP. As a participant in the EIP, Mr. Scheirman’s quarterly incentive opportunity is equal to $207,000 per quarter and his annual incentive opportunity is equal to $207,000. Payout is based on quarterly and annual Company performance goals for 2019. See “Cash and Equity Retention Awards and Agreements – 2019 Executive Incentive Plan ” for a description of the EIP. +Also in October 2018, Mr. Scheirman entered into a Retention Agreement with the Company. Pursuant to Mr. Scheirman’s Retention Agreement, Mr. Scheirman was paid $690,000 on November 16, 2018, and must repay that amount to the Company in the event he voluntarily terminates his employment without Good Reason (as defined in the Retention Agreement), or the Company terminates his employment for Cause (as defined in the Employment Agreement), in either case before March 13, 2020. See “Cash and Equity Retention Awards and Agreements – 2019 Retention Agreements” for a description of the Retention Agreements. +The estimated cash severance payment to Mr. Scheirman on termination, assuming a termination as of December 31, 2018, would have been $1,752,443 for termination without “Cause,” for “Good Reason,” for the Company’s failure to renew the agreement, or termination due to his death or “Disability.” +Mr. Bohrer’s Employment Offer Letter +Mr. Bohrer does not have an employment agreement with the Company. Under the terms of his employment offer letter, he receives an initial base salary of $300,000 per year plus an annual target incentive award equal to 50% of his base salary. In addition, on June 1, 2016, Mr. Bohrer received a nonqualified stock option award with respect to 32,258 shares of the Company’s common stock. Mr. Bohrer’s stock options will vest 33.4% on the second anniversary of the date of grant and 33.3% on each of the third and fourth anniversaries, subject to other applicable terms and conditions consistent with the Omnibus Plan. Mr. Bohrer’s offer letter does not provide for any severance benefits, however, upon a termination of his employment as of December 31, 2018, Mr. Bohrer would have been eligible to receive an estimated $506,760 in +-22- +Table of Contents +cash severance upon a termination without “cause” or for “good reason” pursuant to our Executive Severance Guidelines, as summarized below. +In October 2018, Mr. Bohrer became a participant in the EIP. As a participant in the EIP, Mr. Bohrer’s quarterly incentive opportunity is equal to $46,200 per quarter and his annual incentive opportunity is equal to $46,200. Payout is based on quarterly and annual Company performance goals for 2019. See “Cash and Equity Retention Awards and Agreements – 2019 Executive Incentive Plan ” for a description of the EIP. Participation in the EIP replaces the 50% target incentive award identified in Mr. Bohrer’s employment offer letter. +Also in October 2019, Mr. Bohrer entered into a Retention Agreement with the Company. Pursuant to Mr. Bohrer’s Retention Agreement, Mr. Bohrer was paid $154,000 on November 16, 2018, and must repay that amount to the Company in the event he voluntarily terminates his employment without Good Reason (as defined in the Retention Agreement), or the Company terminates his employment for Cause (as defined in the Retention Agreement), in either case before March 13, 2020. See “Cash and Equity Retention Awards and Agreements – 2019 Retention Agreements” for a description of the Retention Agreements. +Mr. Dubin’s Employment Offer Letter +Mr. Dubin does not have an employment agreement with the Company. Under the terms of his employment offer letter, he receives an initial base salary of $325,000 per year plus an annual target incentive award equal to 60% of his base salary. In addition, on September 1, 2016, Mr. Dubin received (a) a nonqualified stock option award with respect to 22,500 shares of the Company’s common stock, and (b) an award of 3,712 restricted stock units, each vesting in approximately equal annual installments over a four-year period, and in each case, subject to Mr. Dubin’s continued employment. The equity awards are subject to other applicable terms and conditions consistent with the Omnibus Plan. Mr. Dubin’s offer letter does not provide for any severance benefits, however, upon a termination of his employment as of December 31, 2018, Mr. Dubin would have been eligible to receive an estimated $579,210 in cash severance upon a termination without “cause” or for “good reason” pursuant to our Executive Severance Guidelines, as summarized below. +In October 2018, Mr. Dubin became a participant in the EIP. As a participant in the EIP, Mr. Dubin’s quarterly incentive opportunity is equal to $51,800 per quarter and his annual incentive opportunity is equal to $51,800. Payout is based on quarterly and annual Company performance goals for 2019. See “Cash and Equity Retention Awards and Agreements – 2019 Executive Incentive Plan ” for a description of the EIP. Participation in the EIP replaces the 60% target incentive award identified in Mr. Dubin’s employment offer letter. +Also in October 2019, Mr. Dubin entered into a Retention Agreement with the Company. Pursuant to Mr. Dubin’s Retention Agreement, Mr. Dubin was paid $173,000 on November 13, 2018, and must repay that amount to the Company in the event he voluntarily terminates his employment without Good Reason (as defined in the Retention Agreement), or the Company terminates his employment for Cause (as defined in the Retention Agreement), in either case before March 13, 2020. See “Cash and Equity Retention Awards and Agreements – 2019 Retention Agreements” for a description of the Retention Agreements. +Executive Severance Guidelines +On June 21, 2017, the Company adopted guidelines governing executive severance (“Executive Severance Guidelines”), applicable to officers and named executive officers of the Company who are not otherwise parties to individual employment or severance agreements providing for benefits upon a termination of employment. Under the Executive Severance Guidelines, if the employment of an eligible officer is terminated without “cause” or due to a resignation for “good reason,” not in connection with a “change in control” (each as defined in the Executive Severance Guidelines) and subject to the execution, delivery and non-revocation of a release of claims, he or she would be eligible to receive cash severance equal to one times the sum of his or her base salary plus annual bonus target. The Company’s Chief Executive Officer would receive 1.5 times the sum of base salary and annual bonus target; however, Mr. Scheirman is party to an individual agreement and thus, the Executive Severance Guidelines do not apply to him. For such a termination occurring within the 24 months following a change in control, the applicable severance multiple would be increased to 2.0 times (for the Chief Executive Officer) and 1.5 times (for all other eligible officers). In addition, the +-23- +Table of Contents +Company would continue to pay a portion of the cost of medical, dental and vision benefits on behalf of an eligible officer, such that the officer’s contribution would remain as it were for an active officer, for the greater of the severance period or such officer’s eligibility for COBRA continuation coverage, and the Company may provide, in its discretion, up to six months of outplacement services. +Additional Compensation Governance Practices +During 2016, the Company adopted an incentive compensation recoupment policy (“Clawback Policy”). Under the Clawback Policy if the Company is required to restate its financial results because of its material noncompliance with any financial reporting requirement under the securities laws, the Compensation Committee will review all awards or payments of any form of incentive-based compensation made to current and former executive officers of the Company within the three-year period immediately preceding the date on which the Company is required to prepare the restatement. If the Compensation Committee determines that any such incentive awards or payments were based on erroneous data and would have been lower had they been calculated based on the restated results, the Compensation Committee may, to the extent permitted by applicable law, seek to recover for the benefit of the Company the difference between the amounts awarded or paid and the amounts that would have been awarded or paid based on the restated results. These remedies would be in addition to, and not in lieu of, any penalties imposed by law enforcement agencies, regulators or other authorities. For purposes of this policy, “executive officers” of the Company include all persons designated by the Board of Directors as Section 16 reporting officers. +Since 2016, the Company also has maintained formal executive stock and independent director stock ownership guidelines which apply to senior executives, including our named executive officers, and our independent directors. The Company did this to further align the interests of our leaders and the independent directors with those of our shareholders. Under the guidelines, executives and independent directors have up to five years to accumulate shares and share equivalents that have a market value equal to or greater than a prescribed multiple of annual salary, as outlined below. Given that these guidelines were recently adopted, our executives and independent directors have until 2021 (or five years from appointment to their position, whichever is later) to satisfy the applicable share ownership levels. +Position +Multiple of Salary (1) +Additional Comments +CEO +5x +Shares that count towards the guidelines include those owned outright, restricted stock, restricted stock units, intrinsic value of vested stock option and any deferred stock +CEO Direct Reports and Chief Accounting Officer +2x +Other Executives +1x +Independent Directors +3x +(1) For the independent directors the ownership requirement is 3x the cash portion of their annual fees. +-24- +Table of Contents +Outstanding Equity Awards at 2018 Fiscal Year-End +Option Awards +Stock Awards +Number of +Number of +Market +Securities +Securities +Number of +Value of +Underlying +Underlying +Shares of +Shares of +Unexercised +Unexercised +Option +Stock that +Stock that +Options +Options +Exercise +Option +Have Not +Have Not +(Exercisable) +(Unexercisable) +Price +Expiration +Vested +Vested +Name +(#) +(#) (1) +($) +Date +(#) +($) (5) +Scott Scheirman +93,334 +186,666 +$ +5.25 +9/25/2027 +Jason Bohrer +10,774 +21,484 +$ +21.00 +6/1/2026 +6,166 +3,078 +$ +21.75 +3/22/2027 +8,350 +16,650 +$ +5.25 +9/25/2027 +1,423 +(2) +$ +3,259 +Lane Dubin +11,250 +11,250 +$ +27.60 +9/1/2026 +7,928 +3,957 +$ +21.75 +3/22/2027 +8,350 +16,650 +$ +5.25 +9/25/2027 +1,856 +(3) +$ +4,250 +1,830 +(4) +$ +4,191 +(1) +For Mr. Scheirman, (a) 33.4% of the options vested and became exercisable on September 25, 2018, and (b) 33.3% of the options will vest and become exercisable on each of September 25, 2019 and September 25, 2020, subject to continued service with the Company through each such vesting date. For Mr. Bohrer’s options expiring June 1, 2026, (a) 25% of the options vested and became exercisable on each of June 1, 2017, and June 1, 2018, and (b) 25% of the options will vest and become exercisable on each of June 1, 2019 and June 1, 2020, subject to continued service with the Company through each such vesting date. For Mr. Bohrer’s options expiring March 22, 2027, (a) 33.4% of the options vested and became exercisable on March 22, 2018, and (b) 33.3% of the options will vest and become exercisable on each of March 22, 2019 and March 22, 2020, subject to continued service with the Company through each such vesting date. For Mr. Bohrer’s options expiring September 25, 2027, (a) 33.4% of the options vested and became exercisable on September 25, 2018, and (b) 33.3% of the options will vest and become exercisable on each of September 25, 2019 and September 25, 2020, subject to continued service with the Company through each such vesting date. For Mr. Dubin’s options expiring September 1, 2026, (a) 25% of the options vested and became exercisable on each of September 1, 2017, and September 1, 2018, and (b) 25% of the options will vest and become exercisable on each of September 1, 2019 and September 1, 2020, subject to continued service with the Company through each such vesting date. For Mr. Dubin’s options expiring March 22, 2027, (a) 33.4% of the options vested and became exercisable on March 22, 2018, and (b) 33.3% of the options will vest and become exercisable on each of March 22, 2019 and March 22, 2020, subject to continued service with the Company through each such vesting date. For Mr. Dubin’s options expiring September 25, 2027, (a) 33.4% of the options vested and became exercisable on September 25, 2018, and (b) 33.3% of the options will vest and become exercisable on each of September 25, 2019 and September 25, 2020, subject to continued service with the Company through each such vesting date. +(2) +100% of Mr. Bohrer’s restricted stock unit award will vest on March 22, 2020, subject to continued service with the Company through the vesting date. +(3) +100% of Mr. Dubin’s restricted stock unit award will vest on March 22, 2020, subject to continued service with the Company through the vesting date. +(4) +Mr. Dubin’s restricted stock unit award vests as follows: (a) 25% of the award vested on each of September 1, 2017 and September 1, 2018, and (b) 25% of the award will vest on each of September 1, 2019 and September 1, 2020, subject to continued service with the Company through the vesting date. +(5) +The market value of the restricted stock units is based on the $2.29 closing price of a share of our common stock on December 31, 2018. +CPI Card Group Inc. Omnibus Incentive Plan +In connection with our initial public offering, we adopted the CPI Card Group Inc. Omnibus Incentive Plan (the “Omnibus Plan”) pursuant to which cash and equity-based incentives (including through an annual incentive program) +-25- +Table of Contents +may be granted to participating employees, directors and consultants. The principal purposes of the Omnibus Plan are to encourage profitability and growth through short-term and long-term incentives that are consistent with our objectives; to give participants an incentive for excellence in individual performance; to promote teamwork among participants; and to give us a significant advantage in attracting and retaining key employees, directors, and consultants. Our Omnibus Plan provides for the grant of incentive stock options within the meaning of Section 422 of the Internal Revenue Code, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance based awards (including performance shares, performance units and performance bonus awards), and other stock or cash-based awards. When considering new grants of share-based or option-based awards, the Company intends to take into account previous grants of such awards. As previously disclosed, on September 25, 2017, the Board adopted, and stockholders approved, an amendment and restatement of the Omnibus Plan, which, among other things, increased the number of shares available for grant thereunder by 400,000 (as adjusted to reflect the Reverse Stock Split) and extended the term of the Omnibus Plan through September 25, 2027. +Equity Compensation Plan Information Table +The following table provides information as of December 31, 2018 with respect to shares of our common stock that may be issued under our existing equity compensation plan. +Number of securities +remaining available for +future issuance under +Number of securities to +Weighted average +equity compensation +be issued upon exercise +exercise price of +plans (excluding +of outstanding options, +outstanding options, +securities reflected in +warrants and rights +warrants and rights +column (a)) +(a) (#) +(b) ($) +(c) (#) +Equity compensation plans approved by security holders (1) +985,876 +(2) +14.28 +(2) +156,917 +(3) +Equity compensation plans not approved by security holders +— +– +– +Total +985,876 +14.28 +156,917 +(1) +All current equity compensation plans have been approved by shareholders. +(2) +Consists of (i) 6,600 outstanding options under the CPI Holdings I, Inc. Amended and Restated 2007 Stock Option Plan (the “Option Plan”) at an average exercise price of $0.002; (ii) 910,627 outstanding options under the Omnibus Plan at an average exercise price of $14.99; and (iii) 68,649 outstanding restricted stock units under the Omnibus Plan at an average grant date fair value of $6.25. +(3) +The Option Plan was discontinued in connection with our initial public offering, and no further grants can be made under the Option Plan. Any shares subject to option awards that are cancelled, forfeited, or lapse under the Option Plan may become available for issuance under the Omnibus Plan. +-26- +Table of Contents +AUDIT COMMITTEE REPORT +This report of the Audit Committee is required by the SEC and, in accordance with the SEC’s rules, will not be deemed to be part of or incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933, as amended (the “Securities Act”), or under the Exchange Act, except to the extent that the Company specifically incorporates this information by reference, and will not otherwise be deemed “soliciting material” or “filed” under either the Securities Act or the Exchange Act. +The principal purpose of the Audit Committee is to assist the Board of Directors in its oversight of (i) the integrity of our accounting and financial reporting processes and the audits of our financial statements; (ii) our system of disclosure controls and internal controls over financial reporting; (iii) our compliance with legal and regulatory requirements; (iv) the qualifications and independence of our independent auditor; (v) the performance of our independent auditor; and (vi) the business practices and ethical standards of the Company. The Audit Committee is responsible for the appointment, compensation, retention and oversight of work of the Company’s independent auditor. The Audit Committee’s function is more fully described in its charter. +Our management is responsible for the preparation, presentation and integrity of our financial statements, for the appropriateness of the accounting principles and reporting policies that we use and for establishing and maintaining adequate internal control over financial reporting. KPMG LLP, or KPMG, our independent registered public accounting firm for 2018, was responsible for performing an independent audit of our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2018, and expressing an opinion on the conformity of those financial statements with generally accepted accounting principles. +The Audit Committee has reviewed and discussed with management our audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2018. +The Audit Committee has also reviewed and discussed with KPMG the audited financial statements in the Form 10-K. In addition, the Audit Committee discussed with KPMG those matters required to be discussed under applicable standards of the Public Company Accounting Oversight Board (the “PCAOB”). Additionally, KPMG provided to the Audit Committee the written disclosures and the letter required by applicable requirements of the PCAOB regarding KPMG’s communications with the Audit Committee concerning independence. The Audit Committee also discussed with KPMG its independence from the Company. +Based upon the review and discussions described above, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Form 10-K for filing with the SEC. +Robert Pearce, Chairman +Valerie Soranno Keating +Douglas Pearce +-27- +Table of Contents +AUDIT FEES +For the years ended December 31, 2018 and 2017, KPMG LLP, our independent registered public accounting firm, billed the approximate fees set forth below: +2018 +2017 +Audit fees (1) +$ +665,005 +$ +740,352 +Audit-related fees (2) +— +— +Tax fees (3) +209,210 +346,911 +All other fees (4) +— +— +Total fees +$ +874,215 +$ +1,087,263 +(1) +Audit fees relate to (i) the audit of our annual consolidated financial statements as of and for the years ended December 31, 2018 and 2017, (ii) interim reviews of our quarterly consolidated financial statements for the interim periods within the years ended December 31, 2018 and 2017, (iii) 2017 statutory financial statement audits; (iv) and accounting consultations. +(2) +These services include attest services related to financial reporting that are not required by statute or regulation. We did not pay KPMG LLP for services included in this category during the years ended December 31, 2018 and 2017. +(3) +For the years ended December 31, 2018 and 2017, tax fees relate primarily to U.S. federal and state tax compliance, and for services in connection with research and development tax credit studies. +(4) +This category includes fees for services that are not included in the above categories. We did not pay KPMG LLP for services included in this category during the years ended December 31, 2018 and 2017. +The Audit Committee has adopted certain policies and procedures regarding permitted audit and non-audit services and the annual pre-approval of such services. Each year, the Audit Committee will ratify the types of audit and non-audit services of which management may wish to avail itself, subject to pre-approval of specific services. Each year, the independent registered public accounting firm will submit a pre-approval request, which will list each known and/or anticipated audit and non-audit service for the upcoming calendar year and which will include associated budgeted fees. The Audit Committee will review the requests and approve a list of annual pre-approved non-audit services. Any additional interim requests for additional non-audit services that were not contained in the annual pre-approval request will be approved by the Audit Committee. +All services provided by KPMG LLP during the fiscal year ended December 31, 2018 were approved by the Audit Committee. +-28- +Table of Contents +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +The following is a description of transactions since January 1, 2018 to which we have been a party in which the amount involved exceeded or will exceed the lesser of $120,000 or one percent of the average of the Company’s total assets at year-end for the last two completed fiscal years and in which any of our directors, executive officers, beneficial holders of more than 5% of our capital stock or entities affiliated with them had or will have a direct or indirect material interest. +Registration Rights Agreement +In connection with our initial public offering, we entered into a registration rights agreement with the Tricor Funds (the “Registration Rights Agreement”). Under the Registration Rights Agreement, the Tricor Funds are entitled to request that we register shares of our common stock on a long-form or short-form registration statement on one or more occasions in the future, provided that we will not be obligated to register such shares within 90 days after the effective date of a registration statement previously filed pursuant to a request under the Registration Rights Agreement and otherwise for up to 60 days from the date of a request under the Registration Rights Agreement in certain circumstances. The Tricor Funds also are entitled to participate in certain registered offerings that we may conduct in the future, subject to certain restrictions. We will pay the Tricor Funds’ expenses in connection with the exercise of these rights. The registration rights described in this paragraph apply to (i) shares of our common stock held by the Tricor Funds as of the closing of our initial public offering, (ii) any of our capital stock (or that of our subsidiaries) issued or issuable with respect to the common stock described in clause (i) with respect to any dividend, distribution, recapitalization, reorganization, or certain other corporate transactions, and (iii) any of our common stock owned or acquired following the closing of our initial public offering by the Tricor Funds (“Registrable Securities”). These registration rights are also for the benefit of any subsequent holder of Registrable Securities; provided that any particular securities will cease to be Registrable Securities when they have been sold in a registered public offering, sold in compliance with Rule 144 under the Securities Act or repurchased by us or our subsidiaries. +Director Nomination Agreement +In connection with our initial public offering, we entered into a Director Nomination Agreement with the Tricor Funds that provides the Tricor Funds the right to designate nominees for election to our Board of Directors for so long as the Tricor Funds collectively beneficially own 5% or more of the total number of shares of our common stock then outstanding. The number of nominees that the Tricor Funds are entitled to designate under the Director Nomination Agreement bears the same proportion to the total number of members of our Board of Directors as the number of shares of common stock beneficially owned by the Tricor Funds bears to the total number of shares of common stock outstanding, rounded up to the nearest whole number. In addition, the Tricor Funds shall be entitled to designate the replacement for any of its board designees whose board service terminates prior to the end of such designee’s term regardless of the Tricor Funds’ beneficial ownership at such time. In addition, for so long as the Tricor Funds collectively beneficially own 10% or more of the total number of shares of our common stock then outstanding, the Tricor Funds shall also have the right to have their designees participate on committees of our Board of Directors, subject to compliance with applicable law and stock exchange rules. The Director Nomination Agreement will terminate at such time as the Tricor Funds collectively own less than 5% of our outstanding common stock. Nicolas Peters and Bradley Seaman have been designated by the Tricor Funds as nominees to be included in the Company’s proxy statement commencing in 2016. +Policies and Procedures for Related Party Transactions +Our board of directors has adopted a written related party transaction policy setting forth the policies and procedures for the review and approval of related party transactions. The policy covers transactions involving us in which the aggregate amount involved exceeds or may be expected to exceed the lesser of $120,000 or one percent of the average of the Company’s total assets at year-end for the last two completed fiscal years and in which a related person has or will have a direct or indirect material interest. For purposes of this policy, a related person is defined as a director, executive officer, nominee for director, or a greater than 5% beneficial owner of our common stock, in each case since the beginning of the most recently completed fiscal year, and any immediate family member of or person sharing a household with any of these individuals. All related party transactions must be presented to the Audit Committee for review, consideration and +-29- +Table of Contents +approval. In approving or rejecting any such proposed transaction, the Audit Committee will consider the material facts of the transaction, including whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances and the extent of the related party’s interest in the transaction. +-30- +Table of Contents +RATIFICATION OF RETENTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +PROPOSAL NO. 2 +Our Audit Committee has retained KPMG LLP as our independent registered public accounting firm for the year ending December 31, 2019. A proposal will be presented at the Annual Meeting to ratify this retention. Ratification of the retention of our independent registered public accounting firm requires the affirmative vote of the majority of shares present in person or represented by proxy at the Annual Meeting and entitled to vote. If the stockholders fail to ratify such selection, another independent registered public accounting firm will be considered by our Audit Committee, but the Audit Committee may nonetheless choose to engage KPMG LLP. Even if the retention of KPMG LLP is ratified, the Audit Committee in its discretion may select a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and its stockholders. We have been advised that a representative of KPMG LLP will be present at the Annual Meeting and will be available to respond to appropriate questions and, if such person chooses to do so, make a statement. +THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” RATIFICATION OF +THE RETENTION OF KPMG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2019. PROXIES SOLICITED BY THE BOARD WILL BE VOTED FOR THE PROPOSAL UNLESS STOCKHOLDERS SPECIFY A CONTRARY VOTE +-31- +Table of Contents +STOCKHOLDER PROPOSALS FOR 2020 ANNUAL MEETING OF STOCKHOLDERS +Stockholders who intend to present proposals at the Company’s annual meeting of stockholders in 2020 pursuant to Rule 14a-8 under the Exchange Act must send notice of their proposal to us so that we receive it no later than December 14, 2019. Stockholders who intend to present proposals at the annual meeting of stockholders in 2020 other than pursuant to Rule 14a-8 must comply with the notice provisions in our Bylaws. The notice provisions in our Bylaws require that, for a proposal to be properly brought before the annual meeting of stockholders in 2020, proper notice of the proposal be received by us not less than 90 days nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting; provided, however that in the event next year’s annual meeting is more than 30 days before or after such anniversary date, notice must be delivered not less than the later of 90 days prior to next year’s annual meeting or the 10th day following the day the Company first publicly announces next year’s annual meeting date. Under these requirements, the deadline for proposals brought under our Bylaws is March 1, 2020. Stockholder proposals should be addressed to CPI Card Group, 10026 West San Juan Way, Littleton, Colorado 80127; Attention: Sarah Kilgore, Chief Legal and Compliance Officer and Corporate Secretary. +EXEMPTION FROM TORONTO STOCK EXCHANGE (“TSX”) RULES +The Company is an “Eligible International Interlisted Issuer” as such term is defined in the TSX Company Manual (the “Manual”). As an Eligible International Interlisted Issuer, the Company has applied for and received an exemption pursuant to Section 401.1 of the Manual from Sections 461.1 to 461.4 and Section 464 of the Manual, the effect of which is that the Company will not have to comply with certain Canadian requirements relating to majority voting and the annual election of directors. +The Company sought the exemption on the basis that (i) the Company’s primary listing is the NASDAQ Capital Market; (ii) the Company is incorporated in the State of Delaware; and (iii) less than 25% of trading volume in the Company’s shares was on Canadian marketplaces. The Company is required to notify the TSX of its continued reliance on the exemption before each successive annual meeting of shareholders. +-32- +Table of Contents +OTHER MATTERS +We know of no other matters to be submitted to the stockholders at the Annual Meeting. If any other matters properly come before the Annual Meeting, persons named in the proxy intend to vote the shares they represent in accordance with their own judgments. +Upon written request by any stockholder entitled to vote at the Annual Meeting, we will promptly furnish, without charge, a copy of the Annual Report on Form 10-K for the fiscal year ended December 31, 2018 which we filed with the SEC, including the financial statements. If the person requesting the report was not a stockholder of record on April 5, 2019, the request must contain a good faith representation that he or she was a beneficial owner of our common stock at the close of business on that date. Requests should be addressed to CPI Card Group, 10026 West San Juan Way, Littleton, Colorado 80127; Attention: Sarah Kilgore, Chief Legal and Compliance Officer and Corporate Secretary. +YOUR VOTE IS IMPORTANT. WE URGE YOU TO VOTE TODAY BY THE TELEPHONE, VIA THE INTERNET OR BY MAIL. +By Order of the Board of Directors, +Sarah Kilgore +Chief Legal and Compliance Officer and Corporate Secretary +-33- +VOTE BY INTERNET - www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. CPI Card Group Inc. 10026 West San Juan Way Littleton, Colorado 80127 ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. The Board of Directors recommends you vote FOR the following: 1. Election of Directors Nominees For 0 0 0 0 0 0 For 0 Against 0 0 0 0 0 0 Against 0 Abstain 0 0 0 0 0 0 Abstain 0 1) Douglas Pearce 2) Robert Pearce 3) Nicholas Peters 4) Scott Scheirman 5) Bradley Seaman 6) Valerie Soranno Keating The Board of Directors recommends you vote FOR the following proposal: 2To ratify KPMG LLP as independent registered public accounting firm for the year ending December 31, 2019. NOTE: Such other business as may properly come before the meeting or any adjournment thereof. Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name, by authorized officer. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date 0000407552_1 R1.0.1.18 +Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Form 10-K and Notice & Proxy Statement are available at www.proxyvote.com CPI CARD GROUP INC. Annual Meeting of Stockholders May 30, 2019 8:00 AM MDT This proxy is solicited by the Board of Directors The stockholders hereby appoint(s) Sarah Kilgore as proxy, with the power to appoint his or her substitute, and hereby authorizes them to represent and to vote, as designated on the reverse side of this ballot, all of the shares of common stock of CPI CARD GROUP INC. that the stockholders are entitled to vote at the Annual Meeting of Stockholders to be held at 8:00 AM, MDT on May 30, 2019, at the Hampton Inn & Suites, 7611 Shaffer Parkway Littleton, Colorado 80127, and any adjournment or postponement thereof. This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted in accordance with the Board of Directors' recommendations. Continued and to be signed on reverse side 0000407552_2 R1.0.1.18 \ No newline at end of file diff --git a/raw/proxies/0001641614/0001558370-19-002943/proxy_rpt.txt b/raw/proxies/0001641614/0001558370-19-002943/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..3fce8be2df91c3287a73203a52dfa8a75e3cb9c0 --- /dev/null +++ b/raw/proxies/0001641614/0001558370-19-002943/proxy_rpt.txt @@ -0,0 +1,13 @@ +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +The following is a description of transactions since January 1, 2018 to which we have been a party in which the amount involved exceeded or will exceed the lesser of $120,000 or one percent of the average of the Company’s total assets at year-end for the last two completed fiscal years and in which any of our directors, executive officers, beneficial holders of more than 5% of our capital stock or entities affiliated with them had or will have a direct or indirect material interest. +Registration Rights Agreement +In connection with our initial public offering, we entered into a registration rights agreement with the Tricor Funds (the “Registration Rights Agreement”). Under the Registration Rights Agreement, the Tricor Funds are entitled to request that we register shares of our common stock on a long-form or short-form registration statement on one or more occasions in the future, provided that we will not be obligated to register such shares within 90 days after the effective date of a registration statement previously filed pursuant to a request under the Registration Rights Agreement and otherwise for up to 60 days from the date of a request under the Registration Rights Agreement in certain circumstances. The Tricor Funds also are entitled to participate in certain registered offerings that we may conduct in the future, subject to certain restrictions. We will pay the Tricor Funds’ expenses in connection with the exercise of these rights. The registration rights described in this paragraph apply to (i) shares of our common stock held by the Tricor Funds as of the closing of our initial public offering, (ii) any of our capital stock (or that of our subsidiaries) issued or issuable with respect to the common stock described in clause (i) with respect to any dividend, distribution, recapitalization, reorganization, or certain other corporate transactions, and (iii) any of our common stock owned or acquired following the closing of our initial public offering by the Tricor Funds (“Registrable Securities”). These registration rights are also for the benefit of any subsequent holder of Registrable Securities; provided that any particular securities will cease to be Registrable Securities when they have been sold in a registered public offering, sold in compliance with Rule 144 under the Securities Act or repurchased by us or our subsidiaries. +Director Nomination Agreement +In connection with our initial public offering, we entered into a Director Nomination Agreement with the Tricor Funds that provides the Tricor Funds the right to designate nominees for election to our Board of Directors for so long as the Tricor Funds collectively beneficially own 5% or more of the total number of shares of our common stock then outstanding. The number of nominees that the Tricor Funds are entitled to designate under the Director Nomination Agreement bears the same proportion to the total number of members of our Board of Directors as the number of shares of common stock beneficially owned by the Tricor Funds bears to the total number of shares of common stock outstanding, rounded up to the nearest whole number. In addition, the Tricor Funds shall be entitled to designate the replacement for any of its board designees whose board service terminates prior to the end of such designee’s term regardless of the Tricor Funds’ beneficial ownership at such time. In addition, for so long as the Tricor Funds collectively beneficially own 10% or more of the total number of shares of our common stock then outstanding, the Tricor Funds shall also have the right to have their designees participate on committees of our Board of Directors, subject to compliance with applicable law and stock exchange rules. The Director Nomination Agreement will terminate at such time as the Tricor Funds collectively own less than 5% of our outstanding common stock. Nicolas Peters and Bradley Seaman have been designated by the Tricor Funds as nominees to be included in the Company’s proxy statement commencing in 2016. +Policies and Procedures for Related Party Transactions +Our board of directors has adopted a written related party transaction policy setting forth the policies and procedures for the review and approval of related party transactions. The policy covers transactions involving us in which the aggregate amount involved exceeds or may be expected to exceed the lesser of $120,000 or one percent of the average of the Company’s total assets at year-end for the last two completed fiscal years and in which a related person has or will have a direct or indirect material interest. For purposes of this policy, a related person is defined as a director, executive officer, nominee for director, or a greater than 5% beneficial owner of our common stock, in each case since the beginning of the most recently completed fiscal year, and any immediate family member of or person sharing a household with any of these individuals. All related party transactions must be presented to the Audit Committee for review, consideration and +-29- +Table of Contents +approval. In approving or rejecting any such proposed transaction, the Audit Committee will consider the material facts of the transaction, including whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances and the extent of the related party’s interest in the transaction. +-30- +Table of Contents \ No newline at end of file diff --git a/raw/proxies/0001641614/0001558370-20-003836/proxy.txt b/raw/proxies/0001641614/0001558370-20-003836/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..862ca60c0c1287f0382daed53205b51a9ee6d94f --- /dev/null +++ b/raw/proxies/0001641614/0001558370-20-003836/proxy.txt @@ -0,0 +1,952 @@ +DEF 14A +1 +tmb-20200527xdef14a.htm +DEF 14A +pmts_Current_Folio_DEF14A +Table of Contents +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Proxy Statement Pursuant to Section 14(a) of the +Securities Exchange Act of 1934 +Filed by the Registrant ☑ +Filed by a Party other than the Registrant ☐ +Check the appropriate box: +☐ +Preliminary Proxy Statement +☐ +Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +☑ +Definitive Proxy Statement +☐ +Definitive Additional Materials +☐ +Soliciting Material Pursuant to §240.14a-12 +CPI Card Group Inc. +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +☑ +No fee required. +☐ +Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. +(1) +Title of each class of securities to which transaction applies: +(2) +Aggregate number of securities to which transaction applies: +(3) +Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): +(4) +Proposed maximum aggregate value of transaction: +(5) +Total fee paid: +☐ +Fee paid previously with preliminary materials. +☐ +Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. +(1) +Amount Previously Paid: +(2) +Form, Schedule or Registration Statement No.: +(3) +Filing Party: +(4) +Date Filed: +Persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number. +Table of Contents +10026 West San Juan Way, Suite 200 +Littleton, Colorado 80127 +April 13, 2020 +Dear Stockholder: +On behalf of the Board of Directors of CPI Card Group Inc. (the “Company”), you are cordially invited to attend the 2020 Annual Meeting of Stockholders (the “Annual Meeting”) to be held on May 27, 2020, at 8:00 a.m. Mountain Time at 10026 West San Juan Way, Littleton, CO 80127 or by means of remote communication (please see the Notice of Annual Meeting of Stockholders on the next page for more information). +We have included in this letter a proxy statement that provides you with detailed information about the Annual Meeting. We encourage you to read the entire proxy statement carefully. You may also obtain more information about CPI Card Group Inc. from documents we have filed with the Securities and Exchange Commission. +You are being asked at the Annual Meeting to elect directors named in this proxy statement, to ratify the retention of KPMG LLP as our independent registered public accounting firm for 2020 and to transact any other business properly brought before the meeting. +Whether or not you plan to attend the Annual Meeting, your vote is important, and we encourage you to vote promptly. You may vote your shares through one of the methods described in the enclosed proxy statement. We strongly urge you to read the accompanying proxy statement carefully and to vote FOR the nominees proposed by the Board of Directors and in accordance with the recommendations of the Board of Directors on the other proposal by following the voting instructions contained in the proxy statement. +Sincerely, +Bradley Seaman +Scott Scheirman +Chairman of the Board +President, Chief Executive Officer and Director +This proxy statement is dated April 13, 2020 and is first being made available to stockholders via the Internet on, or about April 13, 2020. +Table of Contents +CPI CARD GROUP INC. +NOTICE OF ANNUAL MEETING OF STOCKHOLDERS +MAY 27, 2020 +8:00 A.M (Mountain Time) +To the Stockholders of CPI Card Group Inc.: +The 2020 Annual Meeting of Stockholders will be held on May 27, 2020, at 8:00 a.m. (Mountain Time) at 10026 West San Juan Way, Littleton, CO 80127. Because of the uncertainties surrounding the impact of the COVID-19 pandemic, the Company is considering the possibility that the Annual Meeting may be held solely by means of remote communication. If we take this step, we will announce the decision to do so in advance of the Annual Meeting, and details on how to participate in the webcast will be set forth in a press release to be issued by the Company and available at https://investor.cpicardgroup.com, and the Company will file the announcement with the U.S. Securities and Exchange Commission. The purpose of the meeting is to: +1. +elect six directors; +2. +ratify the retention of KPMG LLP as our independent registered public accounting firm for 2020; and +3. +conduct any other business properly brought before the Annual Meeting or any adjournments or postponements thereof. +Voting is limited to stockholders of record at the close of business on April 3, 2020. +YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE VOTE YOUR SHARES OVER THE TELEPHONE, VIA THE INTERNET OR BY COMPLETING, DATING, SIGNING AND RETURNING A PROXY CARD, AS DESCRIBED IN THE ENCLOSED PROXY STATEMENT. YOUR PROMPT COOPERATION IS GREATLY APPRECIATED. +By Order of the Board of Directors, +Sarah Kilgore +Chief Legal and Compliance Officer and Corporate Secretary +Table of Contents +Notice of Electronic Availability of Proxy Statement and Annual Report +As permitted by rules adopted by the United States Securities and Exchange Commission (the “SEC”), we are making this proxy statement and our Annual Report available to stockholders electronically via the Internet. On or about April 13, 2020, we will mail to most of our stockholders a notice (the “Notice”) containing instructions on how to access this proxy statement and our Annual Report and to vote via the Internet or by telephone. +The Notice also contains instructions on how to request a printed copy of the proxy materials. In addition, you may elect to receive future proxy materials in printed form by mail or electronically by e-mail by following the instructions included in the Notice. If you have previously elected to receive our proxy materials electronically, you will continue to receive these materials via e-mail unless you elect otherwise. +Table of Contents +TABLE OF CONTENTS +Page +SUMMARY OF THE ANNUAL MEETING +1 +ELECTION OF DIRECTORS (PROPOSAL NO. 1) +6 +DIRECTORS AND CORPORATE GOVERNANCE +7 +Director Biographical Information and Qualifications +7 +Director Selection Process +8 +Recommendation of Directors by Stockholders +8 +Independence of Directors +9 +Board’s Role in Risk Oversight +10 +Corporate Governance +11 +Other Board Information +11 +Director Compensation +14 +Security Ownership of Certain Beneficial Owners, Directors and Management +15 +EXECUTIVE OFFICERS +16 +EXECUTIVE COMPENSATION +17 +AUDIT COMMITTEE REPORT +27 +AUDIT FEES +28 +RATIFICATION OF RETENTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PROPOSAL NO. 2) +29 +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +30 +Policies and Procedures for Related Party Transactions +30 +STOCKHOLDER PROPOSALS FOR 2021 ANNUAL MEETING OF STOCKHOLDERS +32 +OTHER MATTERS +33 +Table of Contents +CPI CARD GROUP INC. +10026 West San Juan Way, Suite 200 +Littleton, Colorado 80127 +SUMMARY OF THE ANNUAL MEETING +This proxy statement contains information related to the 2020 Annual Meeting of Stockholders (the “Annual Meeting”) of CPI Card Group Inc. (referred to herein as the “Company,” “CPI,” “we,” “us” or “our” as the context requires) to be held at 10026 West San Juan Way, Littleton, CO 80127, on May 27, 2020, at 8:00 a.m. (Mountain Time). Because of the uncertainties surrounding the impact of the COVID-19 pandemic, the Company is considering the possibility that the Annual Meeting may be held solely by means of remote communication. If we take this step, we will announce the decision to do so in advance of the Annual Meeting, and details on how to participate in the webcast will be set forth in a press release to be issued by the Company and available at https://investor.cpicardgroup.com, and the Company will file the announcement with the U.S. Securities and Exchange Commission. This proxy statement is first being made available to stockholders via the Internet on or about April 13, 2020. +Why did you send me this proxy statement? +We sent you this proxy statement because the Board of Directors (the “Board”) of the Company is soliciting your proxy to vote at the Annual Meeting and at any postponements or adjournments of the Annual Meeting. This proxy statement summarizes information that is intended to assist you in making an informed vote on the proposals described in this proxy statement. +Who can vote at the Annual Meeting? +Only stockholders of record as of the record date are entitled to vote at the Annual Meeting. The record date to determine stockholders entitled to notice of and to vote at the Annual Meeting is the close of business on April 3, 2020. On the record date, there were 11,229,819 shares of our common stock, par value $0.001 per share, outstanding. Our common stock is the only class of voting securities outstanding. +How many shares must be present to conduct the Annual Meeting? +We must have a quorum present in person or by proxy to conduct the Annual Meeting. A quorum is established when a majority of shares entitled to vote is present in person or represented by proxy at the Annual Meeting. Abstentions and broker non-votes (as described below) are counted for purposes of determining whether a quorum is present. +What matters are to be voted on at the Annual Meeting? +The agenda for the Annual Meeting is to: +1. +elect six directors; +2. +ratify the retention of KPMG LLP as our independent registered public accounting firm for 2020; and +3. +conduct any other business properly brought before the Annual Meeting or any adjournments or postponements thereof. +As of the date of this proxy statement, we do not know of any other matters to be presented at the Annual Meeting. If any other matters properly come before the Annual Meeting, however, the persons named as proxies will be authorized to vote or otherwise act in accordance with their judgment. +-1- +Table of Contents +How does the Board recommend that I vote? +The Board recommends that you vote: +1. +FOR the election of each of CPI’s director nominees named in this proxy statement; and +2. +FOR the ratification of the retention of KPMG LLP as our independent registered public accounting firm for 2020. +How do I vote at the Annual Meeting? +You may vote in person at the Annual Meeting or by proxy. In addition, if you are a stockholder of record of CPI’s shares, there are three ways to vote by proxy: +· +By Telephone — You can vote by telephone by following the instructions on your proxy card. You will need to use the control number appearing on your Notice or proxy card to vote by telephone; +· +By Internet — You can vote via the Internet by following the instructions on your proxy card. You will need to use the control number appearing on your Notice or proxy card to vote via the Internet; or +· +By Mail — You can vote by completing, dating, signing and returning the proxy card. +If you are a beneficial owner of shares held in street name, you may vote as follows: +· +By Telephone — If you request printed copies of the proxy materials by mail, you will receive a voting instruction form and you may vote by proxy by calling the toll free number found on the voting instruction form. The availability of telephone voting may depend on the voting process of the organization that holds your shares. +· +By Internet — You may vote by proxy via the Internet by visiting www.proxyvote.com and entering the control number found in your Notice. The availability of Internet voting may depend on the voting process of the organization that holds your shares. +· +By Mail — If you request printed copies of the proxy materials by mail, you will receive a voting instruction form and you may vote by proxy by filling out the voting instruction form and returning it in the envelope provided. +If you are a beneficial owner of shares held in street name and wish to vote in person at the Annual Meeting, you must obtain a “legal proxy” from the organization that holds your shares. A legal proxy is a written document that will authorize you to vote your shares held in street name at the Annual Meeting. Please contact the organization that holds your shares for instructions regarding obtaining a legal proxy. You must bring a copy of the legal proxy to the Annual Meeting and ask for a ballot when you arrive. +Telephone and Internet voting facilities for stockholders of record will be available 24 hours a day. You may vote over the telephone or via the Internet until 11:59 p.m. on May 26, 2020. Even if you plan to attend the Annual Meeting in person, we recommend that you also submit your proxy or voting instructions as described above so that your vote will be counted if you later decide not to attend the Annual Meeting in person. +Your proxy will be voted in accordance with your instructions, so long as, in the case of a proxy card returned by mail, such card has been signed and dated. If you vote your shares via the Internet, by telephone or by executing and returning a proxy card by mail but you do not provide specific instructions with respect to the proposals, your shares will be voted FOR the director nominees named in this proxy statement and FOR the ratification of the retention of our independent registered public accounting firm. +-2- +Table of Contents +As of the date of this proxy statement, we do not know of any matters to be presented at the Annual Meeting except those described in this proxy statement. If any other matters properly come before the Annual Meeting, however, the persons named as proxies will be authorized to vote or otherwise act in accordance with their judgment. +What does it mean if I receive more than one Notice of internet availability of proxy materials? +You may receive more than one Notice, more than one e-mail or multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you may receive a separate Notice, a separate e-mail or a separate voting instruction card for each brokerage account in which you hold shares. If you are a stockholder of record and your shares are registered in more than one name, you may receive more than one Notice, more than one e-mail or more than one proxy card. To vote all of your shares by proxy, you must complete, sign, date and return each proxy card and voting instruction card that you receive or vote over the Internet the shares represented by each Notice that you receive (unless you have requested and received a proxy card or voting instruction card for the shares represented by one or more Notices). +May I change my vote? +Yes. You may revoke your proxy at any time before it is voted at the Annual Meeting. To change your vote, if you are a stockholder of record, you may submit another later dated proxy by telephone, Internet or mail or by voting your shares in person at the Annual Meeting (your attendance at the Annual Meeting will not, by itself, revoke your proxy; you must vote in person at the Annual Meeting to revoke your proxy). If you are a beneficial owner and your shares are held in street name, you may change your vote by submitting new voting instructions to your bank, broker, trustee or nominee, or if you have obtained a legal proxy from such entity giving you the right to vote your shares, you may change your vote by attending the Annual Meeting and voting in person. +How do I vote if my bank or broker holds my shares in “street name”? +If you hold your shares in “street name” through a bank, broker or other nominee, such bank, broker or nominee will vote those shares in accordance with your instructions. To so instruct your bank, broker or nominee, you should refer to the information provided to you by such entity. Without instructions from you, a bank, broker or nominee will be permitted to exercise its own voting discretion with respect to so-called routine matters (Proposal No. 2 (ratification of auditors)) but will not be permitted to exercise voting discretion with respect to non-routine matters (Proposal No. 1 (director elections)). Thus, if you do not give your bank, broker or nominee specific voting instructions with respect to Proposal No. 2, your shares will be voted in such entity’s discretion. If you do not give your bank, broker or nominee specific instructions with respect to Proposal No. 1, your shares will not be voted on such proposal. This is called a “broker non-vote.” Shares represented by such broker non-votes will be counted in determining whether there is a quorum, but will have no effect on the non-routine proposals. We urge you to promptly provide your bank, broker or nominee with appropriate voting instructions so that all your shares may be voted at the Annual Meeting. +What vote is required to elect directors and approve the other matters described in this proxy statement? +The Company’s Second Amended and Restated By-Laws (the “By-Laws”) require that directors be elected by the majority of votes cast with respect to such director in uncontested elections (the number of shares voted “for” a director nominee must exceed the number of votes cast “against” that nominee with abstentions and broker non-votes not counted as votes “for” or “against”). In a contested election (a situation in which the number of nominees exceeds the number of directors to be elected), the standard for election of directors will be a plurality of the shares represented in person or by proxy at any such meeting and entitled to vote on the election of directors. +For the ratification of the retention of KPMG LLP as our independent registered public accounting firm for 2020 (Proposal No. 2), the affirmative vote of the holders of a majority of the shares represented in person or by proxy and entitled to vote on the proposal will be required for approval. Abstentions will not be voted but will be counted for purposes of determining whether there is a quorum. Accordingly, abstentions will have the effect of a negative vote on Proposal No. 2. As stated immediately above, because Proposal No. 2 is a routine matter, if you do not give your bank, broker or nominee specific voting instructions with respect to Proposal No. 2, your shares will be voted in such entity’s discretion. +-3- +Table of Contents +What is the difference between holding shares as a stockholder of record and as a beneficial owner? +If your shares are registered in your name on the Company’s books and records or with our transfer agent, you are the “stockholder of record” of those shares, and this proxy statement and accompanying materials have been provided directly to you by the Company. On the other hand, if you purchased your shares through a brokerage or other financial intermediary, the brokerage or other financial intermediary will automatically put your shares into “street name,” which means that the brokerage or other financial intermediary will hold your shares in its name or another nominee’s name and not in your name, but will keep records showing you as the “beneficial owner.” If you hold shares beneficially in street name, this proxy statement and accompanying materials have been forwarded to you by your broker, bank or other holder of record. +How many votes do I have? +Each share of common stock that you hold as of the record date entitles you to one vote, without cumulation, on each matter to be voted upon at the Annual Meeting. +How will the votes be counted at the Annual Meeting? +The votes will be counted by the inspector of election appointed for the Annual Meeting. +How will the Company announce the voting results? +The Company will report the final results of the voting at the Annual Meeting in a filing with the SEC on a Current Report on Form 8-K within four (4) business days of the date of the Annual Meeting. +Who pays for the Company’s solicitation of proxies? +The Board is soliciting your proxy to vote your shares of common stock at our Annual Meeting. The Company will bear the cost of soliciting proxies, including preparing, printing and mailing this proxy statement. Proxies may be solicited personally, by mail, email or by telephone by certain of our directors, officers, employees or representatives. Our directors and employees will not be paid any additional compensation for soliciting proxies. We may reimburse brokerage firms and other persons representing beneficial owners of shares for their out-of-pocket expenses in forwarding solicitation materials to such beneficial owners. +What is “householding” and how does it work? +Under the rules adopted by the SEC, we may deliver a single mailing with the Notice to one address shared by two or more of our stockholders. This delivery method is referred to as “householding” and can result in significant cost savings. To take advantage of this opportunity, we have delivered only one mailing Notice to multiple stockholders who share an address, unless we received contrary instructions from the impacted stockholders prior to the mailing date. +What do I need for admission to the Annual Meeting? +Attendance at the Annual Meeting or any adjournment or postponement thereof will be limited to record and beneficial stockholders as of the record date (April 3, 2020), individuals holding a valid proxy from a record holder and other persons authorized by the Company. If you are a stockholder of record, your name will be verified against the list of stockholders of record prior to your admittance to the Annual Meeting or any adjournment or postponement thereof. You should be prepared to present photo identification for admission. If you hold your shares in street name, you will need to provide proof of beneficial ownership on the record date, such as a brokerage account statement showing that you owned stock as of the record date, a copy of a voting instruction form provided by your broker, bank or other nominee, or other similar evidence of ownership as of the record date, as well as your photo identification, for admission. If you do not provide photo identification or comply with the other procedures described above, you will not be admitted to the Annual Meeting or any adjournment or postponement thereof. For security reasons, you and your bags may be subject to search prior to your admittance to the Annual Meeting. +-4- +Table of Contents +Explanatory Note +We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). We can qualify as an emerging growth company for up to five years from the date of our initial public offering, which is through December 31, 2020, and subject to certain other requirements. In addition, the Company qualifies as a “smaller reporting company” in accordance with Rule 12b-2 of the Securities Exchange Act of 1934. For as long as we are an emerging growth company or a smaller reporting company, we will not be required to provide an auditor’s attestation report on management’s assessment of the effectiveness of our system of internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002. In addition, because we are an emerging growth company and a smaller reporting company, we are not required to include a Compensation Discussion and Analysis section in this proxy statement and have elected to comply with the scaled-down executive compensation disclosure requirements, as applicable. +On December 20, 2017, we effected a 1-for-5 reverse stock split of our common stock (the “Reverse Stock Split”). All references to numbers of shares of our common stock in this Proxy Statement reflect this Reverse Stock Split. +-5- +Table of Contents +ELECTION OF DIRECTORS +PROPOSAL NO. 1 +Douglas Pearce, who has served on our Board since 2016, will retire from the Board upon the expiration of his term at the Annual Meeting. The Board would like to thank Mr. Pearce for his dedicated service to the Company. +Upon the recommendation of our Nominating and Corporate Governance Committee (the “Nominating Committee”), the Board has nominated the six individuals listed below to stand for election to the Board for a one-year term ending at the annual meeting of stockholders in 2021 or until their successors, if any, are elected or appointed. Our Third Amended and Restated Certificate of Incorporation and our By-Laws provide for the annual election of directors. Each director nominee must receive the affirmative vote of a majority of the votes cast in order to be elected (i.e., the number of votes cast “for” a director nominee must exceed the number of votes cast “against” that nominee, and abstentions and broker non-votes will not be counted as votes “for” or “against” a nominee). Unless contrary instructions are given, the shares represented by your proxy will be voted FOR the election of all director nominees. The Board has determined that each director nominee, other than Mr. Scott Scheirman, is an independent director, as further described below in “Directors and Corporate Governance — Independence of Directors.” +All of the director nominees listed below have consented to being named in this proxy statement and to serving if elected. However, if any of the below nominees becomes unable or unwilling to serve prior to the date of the Annual Meeting, proxy holders will have discretion and authority to vote for another nominee proposed by our Board. Alternatively, our Board may reduce the number of directors to be elected at the Annual Meeting. +Name +Position +Robert Pearce +Director +Nicholas Peters +Director +Scott Scheirman +Director, President and Chief Executive Officer +Bradley Seaman +Chairman of the Board +Marc Sheinbaum +Director +Valerie Soranno Keating +Director +Biographical information relating to each of the director nominees is set forth below under “Directors and Corporate Governance” and incorporated by reference herein. +THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE ELECTION OF EACH OF CPI’s DIRECTOR NOMINEES NAMED IN THIS PROXY STATEMENT. +PROXIES SOLICITED BY THE BOARD WILL BE VOTED FOR THE ELECTION OF EACH OF CPI’s DIRECTOR NOMINEES NAMED IN THIS PROXY STATEMENT UNLESS STOCKHOLDERS SPECIFY A CONTRARY VOTE. +-6- +Table of Contents +DIRECTORS AND CORPORATE GOVERNANCE +Director Biographical Information and Qualifications +Set forth below is a description of the business experience of each director, as well as the specific qualifications, skills and experiences considered by the Nominating Committee and the Board in recommending our slate of director nominees. Each director listed below is nominated for reelection to the Board for a term expiring at the annual meeting of stockholders in 2021. See “Election of Directors (Proposal No. 1).” +Robert Pearce , 65, has served on our Board of Directors since 2007. Mr. Pearce also serves on the board of directors of Canada Guaranty Mortgage Insurance Company, First American Payment Systems, First National Financial LP and Duo Bank of Canada. Mr. Pearce spent 26 years with BMO Bank of Montreal, from 1980 to 2006, most recently holding the position of President and Chief Executive Officer, Personal and Commercial Client Group. He also served on the board of directors of MasterCard International from 1998 to 2006 and as Chairman of the Canadian Bankers’ Association from 2004 to 2006. Mr. Pearce holds a Bachelor of Arts from the University of Victoria and a Master of Business Administration from the University of British Columbia. Mr. Pearce brings to the Board more than 30 years of operational and leadership experience in the financial services industry, including extensive operating experience in credit card, debit card and prepaid cards in both card issuing and merchant acceptance in Canada and the United States. +Nicholas Peters , 47, has served on our Board of Directors since 2007. Mr. Peters is a Managing Director at Parallel49 Equity (formerly Tricor Pacific Capital) a private equity firm that makes control investments in lower middle market companies in the United States and Canada, which he joined in 2002, and also began serving as Parallel49 Equity’s Chief Financial Officer in 2012. Prior to joining Parallel49 Equity, Mr. Peters was a Senior Manager at Arthur Andersen LLP in Chicago. Mr. Peters is the Chairman of the Questco Companies and Certified Recycling and serves on the board of several other Parallel49 Equity investment companies. Mr. Peters holds a Bachelor of Science degree in Business Administration from the University of Dayton in Ohio. He is a Certified Public Accountant and is affiliated with the American Institute of Certified Public Accountants and the Ohio Society of CPAs. Mr. Peters brings to the Board strong finance and accounting skills, as well as valuable experience from his oversight of the management and operations of several of Parallel49 Equity’s portfolio companies. +Scott Scheirman, 57 , has served as our President and Chief Executive Officer since October 2017 and on our Board of Directors since October 2016. Prior to joining the Company, Mr. Scheirman served as the Chief Executive Officer and a co-founder of JKL Ventures LLC, a private investment and strategic advisory firm since February 2014. Prior to JKL Ventures LLC, Mr. Scheirman served as the Executive Vice President and Chief Financial Officer of Western Union (NYSE:WU) from September 2006 to December 2013. Prior to joining Western Union, Mr. Scheirman held a variety of executive leadership and financial officer roles at First Data Corporation (NYSE:FDC), and began his career at Ernst & Young LLP. Mr. Scheirman holds a Bachelor of Science degree in Business Administration with an emphasis in Accounting from the University of Northern Colorado. Mr. Scheirman brings to the Board extensive strategic planning, finance, risk management, international, public company and corporate governance experience, and through his position as our Chief Executive Officer, he brings to the Board management’s perspective over a full range of issues affecting the Company. +Bradley Seaman, 60, has served on our Board of Directors since 2007 and currently serves as Chairman of the Board. Mr. Seaman has been employed, since August 1999, by Parallel49 Equity and its predecessor by name, Tricor Pacific Capital. From 1999 through December 2011, Mr. Seaman was Parallel49 Equity’s Managing Director and leader of its U.S. operations, and, since January 2012, has served as its Managing Partner, responsible for leading overall firm operations, strategy, funding and investments. Prior to joining Parallel49 Equity, and from 1990 through July 1999, Mr. Seaman was employed by GE Capital Corporation where he held a number of increasingly senior positions in GE’s Transportation & Industrial Funding and Commercial Finance units. In 1994, Mr. Seaman was selected to be part of a new group that was established to focus GE Capital’s debt and equity products on the emerging private equity market, and, in that capacity and in his last role before leaving GE Capital, he headed GE’s offices in New York and Chicago. Mr. Seaman is also a member of the board of directors of Steel Dynamics, Inc. (NASDAQ: STLD). Mr. Seaman holds a Bachelor of Science degree in Business Administration from Bowling Green State University and a Master of Business Administration from the University of Dallas. He brings to the Board a comprehensive understanding and experience in the capital markets, +-7- +Table of Contents +management experience, and both operational and corporate governance experience drawn from his involvement in the management and oversight of Parallel49 Equity’s portfolio companies. +Marc Sheinbaum , 62, has served on our Board of Directors since 2019. Since 2017, Mr. Sheinbaum has been an advisor to venture capital and private equity firms. From 2014 to 2016, he was the President, Chief Executive Officer and a Director of Higher One Holdings, Inc. (NYSE: ONE), a payments technology provider for higher education. From 2007 through 2013, Mr. Sheinbaum was the Senior Vice President and Chief Executive Officer of Retail, Auto and Education Finance at JPMorgan Chase & Co. (NYSE: JPM). Earlier in his career, Mr. Sheinbaum held positions at GE Capital Corporation and American Express Company (NYSE: AXP), as well as Coopers & Lybrand Management Consulting. Mr. Sheinbaum holds a Bachelor of Science degree in Management Science from State University of New York at Albany and a Masters in Business Administration from New York University. He brings over 30 years of experience in payments and consumer financial services, public company leadership and turnaround situations. +Valerie Soranno Keating , 56, has served on our Board of Directors since May 2018. Ms. Soranno Keating has been senior advisor to a number of private equity firms in the U.S. and Europe since 2017. From November 2009 through May 2015 she was the Chief Executive Officer of Barclaycard, the global payments division of Barclays PLC (NYSE:BCS), with $60 billion in assets and over 30 million customers throughout the U.S., Europe and South Africa. Before joining Barclays, Ms. Soranno Keating held a variety of executive positions at American Express Company (NYSE:AXP) from May 1993 through May 2009 including President, Travelers Cheques & Prepaid Services, Executive Vice President Global Commercial Services, Executive Vice President Global Merchant Services, Emerging Global Businesses & Network Expansion, and Vice President Corporate Strategic Planning. Ms. Soranno Keating also serves on the board of directors of One Main Financial (NYSE:OMF), a consumer lending business. Ms. Soranno Keating holds a Bachelor of Science Degree in Business Administration from Lehigh University. She brings to the Board over 20 years of experience in both executive and board roles across a broad spectrum of payments and-related businesses. Ms. Soranno Keating brings to the board over 25 years of experience in the payments industry. +Director Selection Process +The Nominating Committee works with the Board to determine periodically, as appropriate, the desired Board qualifications, expertise and characteristics, and recommends candidates to the Board based on these criteria. In identifying director candidates, the Nominating Committee accepts recommendations from current or former directors, search firms retained by the Nominating Committee to assist in identifying and evaluating potential candidates, stockholders, Company executives and by self-nomination. The Board does not have specific requirements for eligibility to serve as a director of CPI, nor does it have a specific policy on diversity. However, in evaluating director candidates, regardless of how recommended, the Nominating Committee generally considers such factors as business experience, high ethical standards and integrity, skills, understanding of CPI’s business environment, willingness to devote adequate time to Board duties and, with respect to diversity, the Nominating Committee considers such factors as differences in professional background, education, experiences, characteristics, skills and other individual qualities and attributes that contribute to the total mix of viewpoints and experience represented on the Board. +In determining whether to recommend a director for re-election, the Nominating Committee considers the director’s past attendance at meetings, participation in and contributions to the activities of the Board and the Company, the director’s adherence to standards of high character and integrity, as well as other qualifications and characteristics set forth in the Nominating Committee charter. +Recommendation of Directors by Stockholders +In accordance with its charter, the Nominating Committee will consider any candidate for election as a director of the Company recommended by any CPI stockholder, provided that the recommending stockholder follows the procedures set forth in Section 2.10(b) of the Company’s By-Laws for nominations by stockholders of persons to serve as directors (except for directors nominated by the Tricor Funds (defined below), as described in the paragraph immediately below). The Nominating Committee does not have a formal policy with regard to the consideration of director candidates recommended by stockholders, and the Board believes that it is appropriate not to have such a policy given that the charter of the Nominating Committee provides that the Nominating Committee shall review and evaluate all potential director +-8- +Table of Contents +candidates submitted by CPI stockholders and sets forth the factors that the Nominating Committee shall consider in evaluating all director nominees. The Nominating Committee thus evaluates director candidates recommended by CPI stockholders (except for the Tricor Funds) in the same manner by which it evaluates other director candidates considered by the Nominating Committee, as described above. +Two of our stockholders, Tricor Pacific Capital Partners (Fund IV), LP and Tricor Pacific Capital Partners (Fund IV) US, LP (together, the “Tricor Funds”), have the right to collectively designate nominees for election to our Board of Directors for so long as the Tricor Funds collectively beneficially own 5% or more of the total number of shares of our common stock then outstanding, pursuant to a Director Nomination Agreement entered into between the Company and the Tricor Funds in connection with our initial public offering. The number of nominees that the Tricor Funds are entitled to designate under the Director Nomination Agreement bears the same proportion to the total number of members of our Board of Directors as the number of shares of common stock beneficially owned by the Tricor Funds bears to the total number of shares of common stock outstanding, rounded up to the nearest whole number. Pursuant to the Director Nomination Agreement, the Company agrees to use its best efforts to ensure that director nominees of the Tricor Funds are included in the Board’s slate of nominees submitted to the stockholders for election at each annual meeting. Thus, the Nominating Committee would not evaluate directors candidates nominated by the Tricor Funds and make a determination regarding their suitability for nomination in the manner described above. Refer to “Certain Relationships and Related Party Transactions - Director Nomination Agreement” for a description of the Tricor Funds’ right to designate nominees. +Pursuant to Section 2.10(b) of the By-Laws, nominations of persons for election to the Board at a meeting of stockholders may be made by any stockholder of the Company entitled to vote for the election of directors at the meeting who sends a timely notice in writing to our Corporate Secretary. To be timely, a stockholder’s notice must be delivered to, or mailed and received by, our Corporate Secretary at the Company’s principal executive offices not less than 90 nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting; provided, however, that if the annual meeting is more than 30 days prior to or after the anniversary of the preceding year’s annual meeting, notice by the stockholder must be delivered not later than the close of business on the later of the 90th day prior to such annual meeting or the 10th day following the day on which “public announcement” of the date of such annual meeting is made by the Company. For purposes of the By-Laws, “public announcement” means disclosure in a press release reported by the Dow Jones News Service, Associated Press or a comparable national news service or in a document publicly filed by us with the SEC. +The stockholder’s notice or recommendation is required to contain certain prescribed information about each person the stockholder proposes to recommend for election as a director, the stockholder giving notice and the beneficial owner, if any, on whose behalf notice is given. The stockholder’s notice must also include the consent of the person proposed to be nominated and to serve as a director if elected. Recommendations or notices relating to director nominations should be sent to CPI Card Group Inc., 10026 West San Juan Way, Suite 200, Littleton, Colorado 80127; Attention: Sarah Kilgore, Chief Legal and Compliance Officer and Corporate Secretary. +Independence of Directors +The Company’s Corporate Governance Guidelines provide that a majority of the members of the Board, and each member of the Audit Committee, Compensation Committee and Nominating Committee, must meet the criteria for independence set forth under applicable law and the rules and standards of applicable national securities exchanges and inter-dealer quotation systems (the “Market Rules”). No director qualifies as independent unless the Board determines that the director has no relationship with the Company which would interfere with the exercise of independent judgment in carrying out his or her responsibilities as a director. These independence guidelines are part of our Corporate Governance Guidelines, available on our website at www.cpicardgroup.com. The Board considers all relevant facts and circumstances of which it is aware in making an independence determination with respect to any director. +The Board has made independence determinations with respect to each of our directors. Based on the Market Rules, the Board has affirmatively determined that each of Ms. Soranno Keating and Messrs. D. Pearce, R. Pearce, Peters, Seaman and Sheinbaum are independent within the meaning of the Market Rules. +-9- +Table of Contents +Board’s Role in Risk Oversight +The Company’s management continually monitors the material risks facing the Company. Our enterprise risk management process is designed to facilitate the identification, assessment and management of certain key risks the Company may encounter and which may impact our ability to achieve our strategic objectives. The enterprise risk management function supplements management’s ongoing responsibilities to monitor and address risks by providing for a process by which risk owners identify causes of and action plans for certain risks, which then are discussed with senior management. +The Board regularly reviews and discusses the most significant risks facing the Company and management’s process for identifying, prioritizing and responding to those risks. The Board has also delegated risk oversight authority to its committees. Pursuant to its charter, the Audit Committee is responsible for oversight of the Company’s policies with respect to risk assessment and risk management and discussing with management the major risk exposures facing the Company and the steps the Company has taken to monitor and control such exposures. Periodically, the Company’s Chief Executive Officer, Chief Financial Officer, Chief Legal and Compliance Officer, Chief Technology Officer, Chief Accounting Officer and Internal Audit Director, among other select members of the Company’s management, present to the Audit Committee a description of management’s view of the most significant risks facing the Company and participate in discussions with the Audit Committee regarding those risks and any mitigating factors, plans or policies in place to address and monitor such risks. +While the Audit Committee is charged with primary oversight of risk, the Board and the Board committees oversee risks associated with their principal areas of focus, as summarized below: +Board/Committee Areas of Risk Oversight and Actions +Full Board + Oversees the enterprise risk management process + Evaluates reports received from management and makes inquiries of management on areas of particular interest to the Board + Reviews with management material strategic, operational, financial, compensation and compliance risks + Considers specific risk topics in connection with strategic planning and other matters + Manages risk oversight and related activities conducted by Board committees through reports of the committee chairmen to the Board +Audit Committee + Discusses with management the Company’s process for assessing and managing risks, including identifying the Company’s major financial risk exposures and the steps necessary to monitor and control such exposures + Oversees financial and compliance risks + Meets periodically with senior management and our independent auditor, KPMG LLP, and reports on such meetings to the Board + Assesses periodic management reports on risks, including those addressed in the enterprise risk management process +Compensation Committee + Oversees the review and evaluation of the risks associated with our compensation policies and practices +Nominating and Corporate Governance Committee + Oversees risks associated with our governance structure and processes + Reviews our organizational documents, Corporate Governance Guidelines and other policies +-10- +Table of Contents +Corporate Governance +The Board has approved Corporate Governance Guidelines, a Code of Business Conduct and Ethics and a Code of Conduct for Financial Officers. Our corporate governance documents, including the Corporate Governance Guidelines, the Code of Business Conduct and Ethics, the Code of Conduct for Financial Officers and committee charters, are available on our website at www.cpicardgroup.com or in printed form upon request by contacting CPI Card Group at 10026 West San Juan Way, Suite 200, Littleton, Colorado 80127, Attention: Investor Relations. The Board regularly reviews corporate governance developments and modifies these documents as warranted. Any modifications will be reflected on our website. The information on our website is not part of this proxy statement and is not deemed to be incorporated by reference herein. +Other Board Information +Leadership Structure of the Board +Bradley Seaman serves as our Chairman of the Board, and Scott Scheirman serves as our Chief Executive Officer. Our Board has decided to maintain separate Chairman and CEO roles to allow our CEO to focus on the development and execution of our business strategy, while allowing the Chairman to lead the Board in its fundamental role of providing advice to, and independent oversight of, management. The Board recognizes the time, effort and energy that the CEO is required to devote to his position in the current business environment, as well as the commitment required to serve as our Chairman. While our By-Laws and Corporate Governance Guidelines do not require that our Chairman and CEO positions be separate, the Board believes that having separate positions and having an independent director serve as Chairman is the appropriate leadership structure for us at this time. +Board Meetings +In 2019, our Board held nine meetings. In addition to our Board meetings, our directors attend meetings of committees established by our Board. Each of CPI’s directors attended at least 75% of the meetings of our Board and the committees on which he or she served during 2019 that were held when he or she was a director, except for Douglas Pearce, who attended just over 70% of such meetings. Each of our directors is expected to attend each meeting of the Board and is strongly encouraged to attend each annual stockholder meeting, as provided in our Corporate Governance Guidelines (available on our website at www.cpicardgroup.com). All of our directors attended the 2019 annual meeting of stockholders. +Meetings of Non-Employee Directors +In accordance with our Corporate Governance Guidelines, our non-employee directors meet regularly in executive sessions of the Board without management present. Mr. Bradley Seaman, our Chairman, presides over these executive sessions. In the event that Mr. Bradley Seaman is not available to lead these meetings, the presiding director is chosen by the non-employee directors in attendance. +-11- +Table of Contents +Committees of the Board +The Board has three standing committees: the Audit Committee, the Compensation Committee and the Nominating Committee. The following chart sets forth the directors who currently serve as members of each of the Board committees as of the date of this proxy statement. +Audit +Compensation +Nominating +Directors +Committee +Committee +Committee +Douglas Pearce +X +C +Robert Pearce +C +X +Nicholas Peters +C +X +Scott Scheirman +Bradley Seaman* +X +Marc Sheinbaum +X +Valerie Soranno Keating +X +X +* Chairman of the Board +“C” Denotes member and chair of committee +“X” Denotes member +Audit Committee +In 2019, the Audit Committee held eight meetings. Each of the members of the Audit Committee is a non-employee director. The Audit Committee is established in accordance with the Exchange Act, and we believe that each of Ms. Soranno Keating and Messrs. D. Pearce, R. Pearce and Sheinbaum meets the independence criteria for purposes of serving on an audit committee under the applicable OTCQX® Best Market rules and Rule 10A-3 under the Exchange Act. In addition, our board of directors has determined that each of Messrs. R. Pearce and Sheinbaum qualifies as an “audit committee financial expert,” as such term is defined in Item 407(d)(5) of Regulation S-K. The Audit Committee operates under a written charter setting forth its functions and responsibilities. A copy of the current charter is available on our website at www.cpicardgroup.com or in printed form upon request. +Compensation Committee +The Compensation Committee held nine meetings in 2019. The Board has determined that all of the members of the Compensation Committee are independent as defined in OTCQX® Best Market rules. The Compensation Committee has overall responsibility for approving and evaluating director and officer compensation plans, policies and programs of the Company and reviewing the disclosure of such plans, policies and programs to our stockholders in the annual proxy statement. The Compensation Committee utilizes an independent compensation consultant to assist it in its duties. The Compensation Committee operates under a written charter setting forth its functions and responsibilities. A copy of the current charter is available on our website at www.cpicardgroup.com or in printed form upon request. +In consultation with the Company’s management, the Compensation Committee establishes the general policies relating to senior management compensation and oversees the development and administration of such compensation programs. Our human resources executives and staff support the Compensation Committee in its work. These members of management work with compensation consultants (whose engagements have been approved by the Compensation Committee), accountants and legal counsel, as necessary, to implement the Compensation Committee’s decisions, monitor evolving competitive practices and make compensation recommendations to the Compensation Committee. Our human resources management develops specific compensation recommendations for senior executives, which are first reviewed by senior management and then presented to the Compensation Committee and its independent compensation consultant. The Compensation Committee has final authority to approve, modify or reject the recommendations in its sole discretion and to make its decisions in executive session. The Compensation Committee approves all compensation of our executive officers, including equity awards. +-12- +Table of Contents +Since 2018, the Compensation Committee has engaged Willis Towers Watson as its independent compensation consultant. The consultant reports directly to the Compensation Committee, including with respect to management’s recommendations of compensation programs and awards. The Compensation Committee has the sole authority to approve the scope and terms of the engagement of such compensation consultant and to terminate such engagement. Willis Towers Watson assisted the Compensation Committee with the development of competitive market data, compensation program design and related assessments of the Company’s executive and director compensation levels, evaluation of annual and long-term incentive compensation strategy and compilation and review of total compensation data for the Company’s Named Executive Officers (as defined in “Executive Compensation”). Other than with respect to consulting on executive and director compensation matters, Willis Towers Watson has performed no other services for the Compensation Committee, and limited consulting services for the Company which the Compensation Committee has determined do not impair Willis Towers Watson’s independence. +The Compensation Committee has reviewed the independence of Willis Towers Watson in light of SEC rules regarding compensation consultants and has concluded that Willis Towers Watson’s work for the Compensation Committee does not raise any conflict of interest. +Nominating and Corporate Governance Committee +The Nominating Committee held four meetings in 2019. Each of the members of the Nominating Committee is independent as defined in the OTCQX® Best Market rules. +The Nominating Committee is responsible for, among other things: (i) identifying individuals qualified to become members of the Board, consistent with criteria approved by the Board; (ii) recommending director nominees to the Board for election at the next annual meeting of the stockholders of the Company; (iii) in the event of a vacancy on or an increase in the size of the Board, recommending director nominees to the Board to fill such vacancy or newly established Board seat; (iv) recommending directors to the Board for membership on each committee of the Board; and (v) establishing and reviewing annually our Corporate Governance Guidelines and Code of Business Conduct and Ethics. The Nominating Committee operates under a written charter setting forth its functions and responsibilities. A copy of the current charter is available on our website at www.cpicardgroup.com or in printed form upon request. +Mr. Sheinbaum, who was appointed as a member of the Board in November 2019, was recommended to the Nominating Committee by a third-party executive search firm. +Compensation Committee Interlocks and Insider Participation +None of the members of our Compensation Committee has in the past served as an officer or employee of the Company. None of the members of our Compensation Committee has any relationship requiring disclosure as a related party transaction. None of our executive officers currently serves, or in the past year has served, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on our Board or Compensation Committee. +Communications to the Board +Stockholders and interested parties can contact the Board (including the Chairman and the independent directors) through written communication sent to CPI Card Group, 10026 West San Juan Way, Suite 200, Littleton, Colorado 80127, Attention: Sarah Kilgore, Chief Legal and Compliance Officer and Corporate Secretary. Our Corporate Secretary reviews all written communications and forwards to the Board copies of any such correspondence that is directed to the Board or that, in the opinion of the Corporate Secretary, deals with the functions of the Board or Board committees or that she otherwise determines requires the Board’s or any Board Committee’s attention. Concerns relating to accounting, internal accounting controls or auditing matters are immediately brought to the attention of our Audit Committee Chair and handled in accordance with procedures established by the Audit Committee with respect to such matters. From time to time, the Board may change the process by which stockholders may communicate with the Board. Any such changes will be reflected in our Corporate Governance Guidelines, which are posted on our website at www.cpicardgroup.com. +-13- +Table of Contents +Director Compensation +As described more fully below, the following table summarizes the annual compensation for our non-employee directors during 2019. +2019 DIRECTOR COMPENSATION +Fees +Earned +Or Paid +In Cash +Name +($) +Douglas Pearce (1) +$ +95,000 +Robert Pearce (1) +$ +101,875 +Nicholas Peters (2) +$ +60,000 +Bradley Seaman (2) +$ +— +Marc Sheinbaum (1) (3) +$ +27,500 +Valerie Soranno Keating (1) +$ +90,000 +(1) In early 2019, the disinterested members of the Board, taking into account considerations provided by Willis Towers Watson, determined that it was in the best interests of the Company to end the use of equity in the Board compensation package and move to an all cash program. This is consistent with the general form of compensation provided to officers of the Company and further limits dilution of stockholder ownership. Prior to this action, the Unaffiliated Directors (defined below) received half of their retainer fees in restricted stock units (“RSUs”) with a one-year vesting term. The RSUs were awarded at the time of the 2018 annual stockholder meeting, and therefore the last director RSU award was made in May 2018 and provided a portion of the director compensation through May 2019. These values are not included in the table above as they were awarded in 2018. +(2) In early 2019, the disinterested members of the Board determined that it is in the best interests of the Company and its stockholders to compensate directors nominated by the Tricor Funds consistent with the other non-employee directors. The Company does not pay a management fee to the Tricor Funds. Refer to “Certain Relationships and Related Party Transactions - Director Nomination Agreement” for a description of the Tricor Funds’ right to designate nominees. Following this change, Mr. Peters received compensation in 2019 and Mr. Seaman declined compensation for 2019. +(3) Mr. Sheinbaum was appointed to the Board of Directors on November 14, 2019. +Narrative to Director’s Compensation Table +The following sets forth our compensation package for our non-employee directors. +Compensation Element +Value +Retainer (1) +$ +100,000 +Audit Committee Chair Fee +$ +20,000 +Compensation Committee Chair Fee +$ +15,000 +Nominating Committee Chair Fee +$ +10,000 +Audit Committee Member Fee +$ +10,000 +Compensation Committee Member Fee +$ +7,500 +Nominating Committee Member Fee +$ +5,000 +(1) Prior to 2019, 50% of the $100,000 Retainer was awarded as RSUs with a one-year vesting term, and 50% was awarded in cash. Beginning in June 2019, the Company moved to an all cash compensation model. See footnote (1) to the 2019 Director Compensation table. +Fees are paid quarterly. +-14- +Table of Contents +Security Ownership of Certain Beneficial Owners, Directors and Management +The following table sets forth, as of April 3, 2020 (except as indicated below), beneficial ownership, as defined by SEC rules, of our common stock. Each of the persons listed below has sole voting and investment power with respect to the beneficially owned shares listed unless otherwise indicated. For purposes of the following table, beneficial ownership is determined in accordance with Exchange Act Rule 13d-3. The percentage calculations set forth in the table are based on 11,229,819 shares of common stock outstanding on April 3 2020 rather than based on the percentages set forth in stockholders’ Schedules 13G or 13D, as applicable, filed with the SEC. Unless otherwise indicated, the address of each beneficial owner is c/o CPI Card Group Inc., 10026 West San Juan Way, Suite 200, Littleton, Colorado 80127. +Number of +Shares of +Percentage of +Common +Common +Stock +Stock +Owned +Owned +Beneficially +Beneficially +5% Beneficial Owners: +Tricor Pacific Capital Partners (Fund IV), Limited Partnership (1) +4,124,368 +36.7 +% +Tricor Pacific Capital Partners (Fund IV) US, Limited Partnership (1) +2,434,457 +21.7 +% +Named Executive Officers and Directors: +Guy DiMaggio (2) +8,350 +* +Lane Dubin (3) +48,961 +* +Douglas Pearce +28,191 +* +Scott Scheirman (4) +192,908 +1.7 +% +Marc Sheinbaum +— +* +Robert Pearce +105,189 +* +Nicholas Peters +30,000 +* +Bradley Seaman +— +* +Valerie Soranno Keating +18,797 +* +Total Executive Officers and Directors as a Group (14 individuals) (5) +489,133 +4.2 +% +* Less than 1% +(1) +Based on a Schedule 13G filed jointly by the Tricor Funds, and Parallel49 Equity, ULC on February 12, 2016, as adjusted to give effect to the Reverse Stock Split. Each of the Tricor Funds is managed by Parallel49 Equity, ULC, as the general partner. Mr. Bradley Seaman, Mr. David Rowntree, J. Trevor Johnstone and Roderick Senft are the sole members of an investment committee of the Tricor Funds that has the power to vote or dispose of the shares held by the Tricor Funds. Each of Messrs. Seaman and Peters is an officer or member of the Tricor Funds and has an indirect pecuniary interest in the shares of common stock held by the Tricor Funds through their respective interests in the Tricor Funds. Each of Messrs. Seaman and Peters expressly disclaims any beneficial ownership of any shares of common stock held by the Tricor Funds. The address of the Tricor Funds is c/o Parallel49 Equity, 225 East Deerpath Road, Suite 200, Lake Forest, IL 60045. +(2) +Includes an aggregate of 8,350 options to purchase common stock that are vested or will vest within 60 days of April 3, 2020. +(3) +Includes an aggregate of 45,435 options to purchase common stock that are vested or will vest within 60 days of April 3, 2020. +(4) +Includes an aggregate of 186,667 options to purchase common stock that are vested or will vest within 60 days of April 3, 2020. +(5) +Includes an aggregate of 295,938 options to purchase common stock that are vested or will vest within 60 days of April 3, 2020. +* Less than 1% +· +-15- +Table of Contents +EXECUTIVE OFFICERS +The following table sets forth certain information concerning each of our executive officers: +Name +Age +Position +Scott Scheirman +57 +President, Chief Executive Officer and Director +Guy DiMaggio +50 +Senior Vice President and General Manager, Secure Card +Lane Dubin +51 +Senior Vice President and General Manager, Personalization, Prepaid and Instant Issuance +Lori Frasier +53 +Chief Human Resources Officer +Sarah Kilgore +52 +Chief Legal and Compliance Officer +John Lowe +43 +Chief Financial Officer +Kevin O’Brien +40 +Chief Accounting Officer +Beth Williams +44 +Chief Technology Officer +Scott Scheirman. See “Directors and Corporate Governance” for Mr. Scheirman’s biographical information. +Guy DiMaggio has served as a Senior Vice President and General Manager since July 2018. Mr. DiMaggio is a financial services executive with over 20 years of experience building and leading world-class operations and customer service teams. Prior to joining the Company, he was the SVP and Head of Operations for iPayment Inc. from 2013 to 2018, responsible for leading all client support and relationship management in the merchant acquiring / card processing industry. Prior to iPayment, Mr. DiMaggio served as the SVP of Integration and Indirect Business Channel for Vantiv from 2010 to 2012. He also spent nearly a decade in executive roles with increasing responsibility working globally for Western Union from 2001 to 2010, including Vice President of Operations for Europe, Middle East, Africa, Asia, & Pacific. Mr. DiMaggio earned a Masters of Business Administration from the University of Denver Daniels College of Business and he holds a Bachelor’s Degree in Communications from Shippensburg University in Pennsylvania. +Lane Dubin has served as a Senior Vice President and General Manager since January 2018. Mr. Dubin joined the Company as Senior Vice President, Sales and Marketing in August 2016. Prior to joining the Company, Mr. Dubin served at American Express Company from 1992 to 2015. Most recently, he was the Head of Global Sales at American Express Global Business Travel from 2008 to 2015, and Vice President, Business Development – North America, at American Express Global Business Travel from 2003 to 2008. Prior to these roles, Mr. Dubin held roles with increasing responsibility with American Express including Vice President-Business Development, Financial Education Services for American Express Financial Advisors and Director of Sales and Business Development for Ketera Technologies, a technology start-up incubated by American Express. Mr. Dubin holds a Bachelor’s Degree in Economics and Business Administration from Ursinus College. +Lori Frasier has served as our Chief Human Resources Officer since October 2019. Prior to joining the Company, Ms. Frasier served as Senior Vice President of Strategy and Performance Management for Key Equipment Finance, a division of KeyBank N.A., since September 2013. In that role, Ms. Frasier was responsible for strategic planning, marketing and communications, employee development initiatives, client insights, new product development, sales performance and analysis and enterprise project management. Ms. Frasier joined KeyBank in 2003 as Senior Vice President of Global Human Resources and was promoted to Senior Vice President of Strategic Services in 2009. Prior to joining KeyBank, she held various positions of increasing responsibility in human resources and operations at First Data/Western Union. Frasier earned a Bachelor’s Degree in Business Administration from the University of Colorado at Denver and Master of Business Administration from the University of Denver Daniels College of Business. She has also completed the University of Michigan’s Continuing Education, Strategic Human Resource Planning Program. +Sarah Kilgore has served as our Chief Legal and Compliance Officer since December 2017. Prior to joining the Company, Ms. Kilgore was Of Counsel with Moye White LLP, a law firm based in Denver since June 2017. Prior to Moye White LLP, Ms. Kilgore founded and provided legal services through Kilgore Legal Group, LLC from 2011 through 2015. Prior to establishing Kilgore Legal Group, LLC, Ms. Kilgore served as Associate General Counsel, Governance and Securities for Western Union from 2006 to 2011. Prior to her role at Western Union, she held various legal positions at First Data Corporation and AT&T Corp., and was a corporate attorney in private practice. Ms. Kilgore earned her Juris +-16- +Table of Contents +Doctor degree from the University of Michigan Law School and received her Bachelor’s Degree in Business Administration from Michigan State University. +John Lowe has served as our Chief Financial Officer since July 2018. Prior to joining the Company, John served as Chief Financial Officer of SquareTwo Financial Corporation from August 2014 until June 2017. Prior to August 2014, Mr. Lowe held various leadership roles at SquareTwo Financial Corporation, including serving as Treasurer, Vice President of Finance, Vice President of External Reporting and Director of Technical Accounting. Mr. Lowe’s employment with SquareTwo Financial commenced in 2009. SquareTwo Financial Corporation filed for Chapter 11 bankruptcy protection in March 19, 2017 in connection with a strategic sale of the Company. Mr. Lowe holds a Bachelor of Science degree in both Accounting and Finance from the Virginia Polytechnic Institute and State University and is a Certified Public Accountant in the State of Colorado. Mr. Lowe is also a Chartered Financial Analyst. +Kevin O’Brien has served as the Company’s Chief Accounting Officer since April 1, 2018. Mr. O’Brien joined the Company in March 2016 as Director of Corporate Accounting and SEC Reporting. Prior to joining the Company, Mr. O’Brien served as the Director of Financial Reporting and Compliance of Sports Authority, Inc., a sporting goods retailer, from 2014 to 2016. From 2011 to 2014, Mr. O’Brien served as the Assistant Controller of CIBER, Inc., an information technology and services company. Prior to joining CIBER, Inc., Mr. O’Brien was a Senior Audit Manager at Deloitte & Touche LLP from 2002 to 2011. Mr. O’Brien holds both a Bachelor of Arts degree and Master of Science degree in Accounting from the University of Colorado and is a Certified Public Accountant in the State of Colorado. +Beth Williams has served as our Chief Technology Officer since January 2020, and she previously served in roles with CPI as Technology Director, Instant Issuance and Prepaid from January 2018 to January 2020, and as Director of Personalization Solutions from 2016-2017. Prior to joining CPI, Ms. Williams served in various leadership roles at EFT Source, Inc., including Chief Information Officer and Software Development Manager and Lead Software Developer from 2007 to 2015. Prior to 2007, Ms. Williams held a variety of positions of increasing responsibility, including programming, web and software development, and analysis at KeyBank, Deloitte Consulting, NFIB, PIC (Sygen international subsidiary) and Vanderbilt University Medical Center. Ms. Williams holds a Bachelor of Business Administration - MIS from Ohio University. +EXECUTIVE COMPENSATION +The following Summary Compensation Table discloses the compensation information for fiscal years 2019 and 2018 (for individuals who were named executive officers in such year) for our principal executive officer (“PEO”) and the two most highly compensated executive officers other than the PEO who were serving as executive officers at the end of the last completed fiscal year (collectively, the “named executive officers”). +Summary Compensation Table +Nonqualified +Non-Equity +Deferred +Incentive Plan +Compensation +All Other +Name and Principal Position +Year +Salary +Bonus (1) +Stock Awards +Option Awards +Compensation (2) +Earnings +Compensation (3) +Total +Scott Scheirman, President, Chief Executive Officer and Director (6) +2019 +$ +588,270 +$ +710,700 +$ +— +$ +— +$ +1,747,080 +— +$ +4,423 +$ +3,050,473 +2018 +$ +575,000 +$ +690,000 +$ +— +$ +— +$ +1,086,175 +— +$ +11,000 +$ +2,362,175 +Guy DiMaggio, SVP and GM, Secure Card (4) +2019 +$ +330,769 +$ +305,700 +$ +— +$ +— +$ +400,271 +— +$ +10,700 +$ +1,047,440 +Lane Dubin, SVP and GM, Card@Once, Personalization and Prepaid +2019 +$ +359,619 +$ +404,200 +$ +— +$ +— +$ +437,020 +— +$ +12,035 +$ +1,212,874 +2018 +$ +341,719 +$ +231,935 +$ +— +$ +— +$ +401,861 +— +$ +17,239 +$ +992,754 +(1) +For 2019, these amounts include (a) a prepaid retention payment described below under “Cash and Equity Retention Awards and Agreements - 2020 Retention Agreements,” (b) for Mr. Dubin, a retention payment described below under “Mr. Dubin’s Employment Offer Letter,” and (c) for Mr. DiMaggio, a bonus award associated with his terms of employment with the Company described below under “Mr. DiMaggio’s Employment Offer Letter.” For 2018, these amounts represent (a) prepaid retention payments described below under “Cash and Equity Retention Awards and Agreements – 2019 Retention Agreements,” and (b) for Mr. Dubin, the second installment of his retention payment described below under “Cash and Equity Retention Awards Agreements – 2017 Equity Awards and Retention Agreements.” +-17- +Table of Contents +(2) +These amounts include (a) the following payments under the Company’s executive incentive plan for the 2019 plan year: Mr. Scheirman- $1,747,080; Mr. DiMaggio- $400,271; and Mr. Dubin- $416,928, (b) for Mr. Dubin, a $20,092 payment made in 2019 under the 2017 Cash Performance Unit long-term incentive awards, (c) the following payments under the Company’s short-term incentive plan for the 2018 plan year: Mr. Scheirman- $1,086,175; and Mr. Dubin- $381,709, and (d) for Mr. Dubin, a $20,152 payment made in 2018 under the 2017 Cash Performance Unit Long-term incentive awards. +(3) +For 2019, these amounts include (a) matching contributions under the Company’s 401(k) plan, and (b) for Mr. Dubin, dividend equivalents paid in cash upon the vesting of the second tranche of his September 1, 2016 RSU award. For 2018, these amounts include (a) matching contributions under the Company’s 401(k) plan, and (b) for Mr. Dubin, dividend equivalents paid in cash upon the vesting of the second tranche of his September 1, 2016 RSU award and a cash payout of earned but unpaid time-off in excess of the Company’s new policy limits implemented in 2018. As part of the transition of the new time-off policy limits in 2018, all employees of the Company were entitled to a cash payout of any time they had accrued in excess of the new limits. +(4) +Mr. DiMaggio was not a named executive officer in 2018 and thus his 2018 compensation information is not included in this table. +Base Salaries +Base salaries established for the Company’s executive officers are intended to reflect each individual’s responsibilities, experience, historical performance and other discretionary factors deemed relevant by the Company and have generally been set at levels deemed necessary to attract and retain individuals with superior talent. Base salaries are also designed to provide executive officers with steady cash flow during the course of the fiscal year that is not contingent on short-term variations in the Company’s operating performance. +Our named executive officers were entitled to the following annual base salaries in 2019 and 2020: +2019 Base Salary +2020 Base Salary +% +Named Executive Officer (1) +(Effective March 10, 2019) +(Effective March 8, 2020) +Increase +Scott Scheirman +$ +592,250 +$ +592,250 +0.0% +Guy DiMaggio +$ +325,000 +$ +375,000 +15.4% +Lane Dubin +$ +355,882 +$ +409,000 +14.9% +(1) +Messrs. DiMaggio and Dubin received base increases effective November 4, 2019 associated with added responsibilities as a result of a reorganization of the Company’s operations. Mr. Scheirman received an increase in his 2020 short-term incentive plan target in lieu of a merit increase, thus increasing the portion of his pay which is directly tied to Company performance. +Annual Incentive Awards +The Company maintains an annual short-term incentive plan (the “STIP”) to incentivize senior management and other key employees to achieve the short-term financial and non-financial objectives of the Company. The annual incentive awards are intended to reward both overall Company and individual performance during the year, and, as such, are variable from year to year. The Company believes that establishing cash bonus opportunities is an important factor in both attracting and retaining the services of qualified and highly skilled executives and in motivating our senior management to achieve the Company’s annual objectives. +In 2019, the Compensation Committee approved annual incentive awards under the STIP based upon the Company achieving certain levels of Adjusted EBITDA and Adjusted Free Cash Flow, as described below, and Revenue. Note that the term Revenue, as defined in the STIP, is consistent with “Total Net Sales,” as included in the Company’s consolidated financial statements, for all references contained herein. For 2019, the Company significantly exceeded the financial targets established by the Compensation Committee across each of these metrics. Payout of the STIP to individual management team members was based upon these Company results and the achievement of individual objectives. +-18- +Table of Contents +“Adjusted EBITDA” is a financial measure that is not calculated according to U.S. generally accepted accounting principles (“GAAP”). A reconciliation showing how the Company calculates Adjusted EBITDA from net (loss) income, the most comparable GAAP measure, may be found in Exhibit E to the Company’s Form 8-K press release filing with financial results for the year ended December 31, 2019, filed with the Securities and Exchange Commission on March 9, 2020. +“Adjusted Free Cash Flow” is a financial measure that is not calculated according to U.S. GAAP. We define Adjusted Free Cash Flow as cash flow from operations less cash capital expenditures, and adjusted for the following cash items: interest, income taxes, litigation and related charges incurred in connection with certain patent and stockholder litigation, restructuring and other charges, and other significant unusual and non-recurring events. This measure does not represent funds available for investment or other discretionary uses since it does not deduct cash used to service our debt. +Long-Term Incentives +Prior to 2019, the Company maintained a long-term incentive award practice whereby senior leaders and executives may receive annual awards under the Omnibus Plan (described below). In October 2018, the Company announced its intention to suspend the use of incentives under the Omnibus Plan (see “Cash and Equity Retention Awards and Agreements - 2019 Executive Incentive Plan” below). +The March 22, 2017 long-term incentive award consisted of nonqualified stock options, RSUs and cash performance units. The cash performance units are performance-based awards and settle in cash, in an amount between 50% and 200% of the target award value, based on the performance of the Company’s stock price during each of three performance sub-periods (from the grant date through each of the first, second and third anniversaries of the grant date). The final payouts will be made in cash with respect to approximately one-third of the cash performance units at the end of each performance sub-period. The second tranche of cash performance units vested on March 22, 2019 and the third tranche vested on March 22, 2020 and each paid out at 50% of the target award value, given the stock price performance of the Company between the grant and vest date. +The awards described above are all subject to other applicable terms and conditions consistent with the Omnibus Plan. +Cash and Equity Retention Awards and Agreements +2017 Equity Awards and Retention Agreements +In connection with the Company’s appointment of Mr. Scheirman as its new President and Chief Executive Officer, in September 2017, the Company awarded nonqualified stock options and cash retention bonuses to the Company’s executive officers and other employees, including Mr. Dubin, in lieu of the annual long-term incentive awards that would otherwise have been made in the first quarter of 2018. The goal of these awards was to align interests of senior leaders and executives with those of the newly appointed President and Chief Executive Officer. The stock option grants generally will vest 33.4% on the first anniversary of the grant date and 33.3% on each of the second and third anniversaries of the grant date. Under the terms of the retention bonuses, the recipients had to remain with the Company and in good performance standing through each of the applicable payment dates. 50% of each award was paid on December 7, 2017 and the remaining 50% was paid on April 3, 2018. +2019 Executive Incentive Plan +In October, 2018, the Compensation Committee determined that the use of equity compensation is currently ineffective and continuing to make equity awards at that time would be too dilutive to stockholders. As a result, the Compensation Committee suspended cash, equity and incentive awards grants under the company’s Omnibus Plan during 2019 and adopted a new 2019 Executive Incentive Plan (“2019 EIP”) in order to continue to retain and motivate an executive leadership team which had significantly improved the Company’s business performance over the prior twelve months. The 2019 EIP had a one-year term and expired on December 31, 2019. +-19- +Table of Contents +The 2019 EIP provided a means of rewarding persons designated as participants under the 2019 EIP (the Company’s named executive officers and other key employees) with incentive payments based on the Company’s achievement of certain quarterly and annual performance goals under the 2019 EIP with respect to the 2019 calendar year. The Company developed, and the Compensation Committee approved, the quarterly and annual performance goals, which were subject to the Compensation Committee’s discretion. The performance goals were based upon the Company achieving certain levels of Adjusted EBITDA, Adjusted Free Cash Flow and Revenue, consistent with the STIP (see “Annual Incentive Awards” above). Eighty percent of a participant’s total incentive opportunity was earned under the 2019 EIP on a quarterly basis throughout the year, and twenty percent of a participant’s total incentive opportunity was earned under the 2019 EIP on an annual basis. Payouts for these incentives can range from 0% to 200%, based on Company performance. +2020 Executive Short-Term Incentive Plan +In September, 2019, the Compensation Committee determined that the structure of the 2019 EIP was effective at retaining and motivating the leadership team, which continued to significantly improve the Company’s business performance over the prior twelve months. As such, the Committee adopted a similar program in 2020, the Executive Short-Term Incentive Plan (“EIP”). The terms of the EIP are consistent with the 2019 EIP and allow for quarterly and annual payments provided certain levels of Adjusted EBITDA, Adjusted Free Cash Flow and Net Sales (formerly “Revenue”) are achieved. The EIP renews annually unless earlier terminated by the Company. +2019 Retention Agreements +In October, 2018, the Compensation Committee determined that the Company should enter into retention agreements (“2019 Retention Agreements”) with the Company’s named executive officers and other key employees. Under the terms of each 2019 Retention Agreement, each recipient is entitled to a cash payment (“2019 Retention Payment”) of a specified amount. The 2019 Retention Payments were paid on November 16, 2018. +Under the 2019 Retention Agreements, in the event a recipient of a Retention Payment had voluntarily terminated his or her employment without Good Reason (as defined in each Retention Agreement), or the Company had terminated such recipient’s employment for Cause (as defined in each Retention Agreement), in either case, before March 13, 2020 (the “2019 Retention Date”), then such recipient would have been required to promptly repay to the Company, in any event no later than ten (10) days following such termination, an amount equal to the 2019 Retention Payment reduced by all taxes the Company actually withheld therefrom. A recipient would not be required to repay a 2019 Retention Payment in the event of termination of employment (i) due to death or disability, (ii) by the Company without Cause or (iii) by the recipient for Good Reason prior to the 2019 Retention Date. +2020 Retention Agreements +In September, 2019, the Compensation Committee determined that the Company should again enter into retention agreements (“2020 Retention Agreements”) with the Company’s named executive officers and other key employees. Under the terms of each 2020 Retention Agreement, each recipient is entitled to a cash payment (“2020 Retention Payment”) of a specified amount. The 2020 Retention Payments to executive officers were paid on October 18, 2019. Upon their appointment of expanded duties, amendments were made to Messrs. DiMaggio’s and Dubin’s 2020 Retention Agreements, which provided for additional 2020 Retention Payments paid on November 7, 2019 and are subject to the same terms and conditions of the 2020 Retention Payments made on October 18, 2019. +Under the 2020 Retention Agreements, in the event a recipient of a 2020 Retention Payment voluntarily terminates his or her employment without Good Reason (as defined in each 2020 Retention Agreement), or the Company terminates such recipient’s employment for Cause (as defined in each 2020 Retention Agreement), in either case, before March 15, 2021 (the “2020 Retention Date”), then such recipient will be required to promptly repay to the Company, in any event no later than ten (10) days following such termination, an amount equal to the gross 2020 Retention Payment. A recipient will not be required to repay a 2020 Retention Payment in the event of termination of employment (i) due to death or disability, (ii) by the Company without Cause or (iii) by the recipient for Good Reason prior to the 2020 Retention Date. +-20- +Table of Contents +Employee Benefits +The Company maintains the CPI Holdings I, Inc. 401(k) Plan (the “401(k) Plan”), which is a qualified defined-contribution plan under the provisions of the Internal Revenue Code Section 401(k), covering substantially all employees who meet certain eligibility requirements. Under the 401(k) Plan, participants may defer their salary subject to statutory limitations and may direct the contributions among various investment accounts. The Company matches 100% of the participant’s first 3% of deferrals and 50% of the next 2% of deferrals. The Company’s portion is 100% vested at the time of the match. +Employment and Post-Termination Arrangements +Mr. Scheirman’s Employment Agreement +On September 25, 2017, Mr. Scheirman entered into an employment agreement (the “CEO Employment Agreement”) with the Company to serve as President and Chief Executive Officer, effective October 5, 2017, for a term ending on March 31, 2021, plus automatic one-year renewals thereafter unless either party provides notice of intent not to renew the agreement. The CEO Employment Agreement provides for an initial base salary of $575,000 per year. In addition, Mr. Scheirman is entitled to participate in the STIP with a target bonus of 100% of his annual base salary. +Mr. Scheirman also received a nonqualified stock option grant with respect to 280,000 shares of the Company’s common stock, which will vest in approximately equal annual installments over a three-year period, subject to Mr. Scheirman’s continued employment. +Mr. Scheirman received temporary support for commuting expenses associated with his employment with the Company and also reimbursement for legal expenses associated with finalizing his employment agreement. +Under the terms of the CEO Employment Agreement, in the event that Mr. Scheirman’s employment is terminated by the Company without Cause, he resigns for Good Reason (each as defined in the CEO Employment Agreement), separates employment due to death or disability or the Company fails to renew his agreement upon its expiration, Mr. Scheirman would be entitled to (i) continued monthly payments of his base salary and his annual STIP target bonus for a period of eighteen months; (ii) a prorated portion of his annual STIP bonus based on the number of full months completed during the fiscal year in which such termination of employment occurs and based on final Company performance for the STIP year; (iii) accelerated vesting of any outstanding equity awards that would have otherwise vested in the next twelve months following the termination (for performance-based awards, vesting will be based on actual performance determined at the end of the performance period); (iv) the cost of COBRA coverage for his health coverage then in effect, less the employee contribution for an active employee, for the severance period; and (v) up to six months of outplacement services. +In the event that Mr. Scheirman experiences a termination event as described above within six months prior to or two years following a Change in Control (as defined in the CEO Employment Agreement) of the Company, Mr. Scheirman will receive the benefits described in the foregoing paragraph, except that the severance and COBRA continuation benefits in items (i) and (iv) above would be extended from eighteen to twenty-four months, and his outstanding equity awards would vest in full (with any performance-based awards vesting at the target level of performance). +Mr. Scheirman is subject to certain restrictive covenants in the CEO Employment Agreement, including obligations regarding non-competition and non-solicitation of Company employees and customers during the term of his employment and for a period of eighteen months following any termination of his employment with the Company. +In September 2019, Mr. Scheirman became a participant in the EIP. Additionally, the Company’s Compensation Committee determined at its February 25, 2020 meeting that in lieu of a base increase, Mr. Scheirman’s EIP target would be further increased, thus increasing the amount of Mr. Scheirman’s compensation that is tied to Company performance. As a participant in the EIP, Mr. Scheirman’s quarterly incentive opportunity is equal to $227,220 per quarter and his annual incentive opportunity is equal to $227,220. Payout is based on quarterly and annual Company performance goals for +-21- +Table of Contents +2020. See “Cash and Equity Retention Awards and Agreements – 2020 Executive Incentive Plan” for a description of the EIP. Participation in the EIP replaces the 100% target incentive award identified in the CEO Employment Agreement. +In October 2018, Mr. Scheirman entered into a 2019 Retention Agreement with the Company. Pursuant to his 2019 Retention Agreement, Mr. Scheirman was paid $690,000 on November 16, 2018, and would have been required to repay that amount, net of taxes, to the Company in the event he voluntarily terminated his employment without Good Reason (as defined in his 2019 Retention Agreement), or the Company terminated his employment for Cause, in either case before March 13, 2020. See “Cash and Equity Retention Awards and Agreements – 2019 Retention Agreements” for a description of the Retention Agreements. +Additionally, in October 2019, Mr. Scheirman entered into a 2020 Retention Agreement with the Company. Pursuant to his 2020 Retention Agreement, Mr. Scheirman was paid $710,700 on October 18, 2019, and must repay that amount to the Company in the event he voluntarily terminates his employment without Good Reason (as defined in his 2020 Retention Agreement), or the Company terminates his employment for Cause, in either case before March 15, 2021. See “Cash and Equity Retention Awards and Agreements – 2020 Retention Agreements” for a description of the Retention Agreements. +The estimated cash severance payment to Mr. Scheirman on termination, assuming a termination as of December 31, 2019, would have been $2,467,827 (inclusive of $11,952 in COBRA insurance coverage and outplacement services valued at $15,000) for termination without “Cause,” for “Good Reason,” for the Company’s failure to renew the agreement, or termination due to his death or “Disability.” +Mr. DiMaggio’s Employment Offer Letter +Mr. DiMaggio does not have an employment agreement with the Company. Under the terms of his employment offer letter, he received an initial base salary of $300,000 per year plus an annual target incentive award equal to 50% of his base salary. Mr. DiMaggio’s offer letter also provided for a cash sign-on bonus of $200,000 payable in two installments with $120,000 paid on his one-year anniversary and $80,000 payable on his two-year anniversary. In addition, on August 1, 2018, Mr. DiMaggio received a nonqualified stock option award with respect to 25,000 shares of the Company’s common stock. Mr. DiMaggio’s stock options will vest 33.4% on the first anniversary of the date of grant and 33.3% on each of the second and third anniversaries, subject to other applicable terms and conditions consistent with the Omnibus Plan. Mr. DiMaggio’s offer letter does not provide for any severance benefits, however, upon a termination of his employment as of December 31, 2019, Mr. DiMaggio would have been eligible to receive an estimated $635,646 in cash severance (inclusive of $6,821 in COBRA insurance coverage and outplacement services valued at $15,000) upon a termination without “cause” or for “good reason,” pursuant to our Executive Severance Guidelines, as summarized below. +In September 2019, Mr. DiMaggio became a participant in the EIP. As a participant in the EIP, Mr. DiMaggio’s quarterly incentive opportunity is equal to $55,000 per quarter and his annual incentive opportunity is equal to $55,000. Payout is based on quarterly and annual Company performance goals for 2020. See “Cash and Equity Retention Awards and Agreements – 2020 Executive Incentive Plan” for a description of the EIP. Participation in the EIP replaces the 50% target incentive award identified in Mr. DiMaggio’s employment offer letter. +Also in September 2019, Mr. DiMaggio entered into a 2020 Retention Agreement with the Company. Additionally, the Company’s Compensation Committee determined in October 2019 that Mr. DiMaggio’s 2020 Retention Payment would be further increased to reflect his expanded responsibilities as SVP and GM of Secure Card, and he entered into a supplemental 2020 Retention Agreement in November 2019. Pursuant to Mr. DiMaggio’s 2020 Retention Agreements, Mr. DiMaggio was paid $159,700 on October 18, 2019 and $26,000 on November 7, 2019, and must repay those amounts to the Company, in the event he voluntarily terminates his employment without Good Reason (as defined in his 2020 Retention Agreement), or the Company terminates his employment for Cause (as defined in his 2020 Retention Agreement), in either case before March 15, 2021. See “Cash and Equity Retention Awards and Agreements – 2020 Retention Agreements” for a description of the Retention Agreements. +-22- +Table of Contents +Mr. Dubin’s Employment Offer Letter +Mr. Dubin does not have an employment agreement with the Company. Under the terms of his employment offer letter, he received an initial base salary of $325,000 per year plus an annual target incentive award equal to 60% of his base salary. In addition, on September 1, 2016, Mr. Dubin received (a) a nonqualified stock option award with respect to 22,500 shares of the Company’s common stock, and (b) an award of 3,712 restricted stock units, each vesting in approximately equal annual installments over a four-year period, and in each case, subject to Mr. Dubin’s continued employment. The equity awards are subject to other applicable terms and conditions consistent with the Omnibus Plan. Mr. Dubin’s offer letter does not provide for any severance benefits, however, upon a termination of his employment as of December 31, 2019, Mr. Dubin would have been eligible to receive an estimated $705,483 in cash severance (inclusive of $16,008 in COBRA insurance coverage and outplacement services valued at $15,000) upon a termination without “cause” or for “good reason” pursuant to our Executive Severance Guidelines, as summarized below. +In May 2018, Mr. Dubin entered into a one-year retention agreement with the Company. Pursuant to this retention agreement, Mr. Dubin was paid $200,000 in April 2019. +In September 2019, Mr. Dubin became a participant in the EIP. As a participant in the EIP, Mr. Dubin’s quarterly incentive opportunity is equal to $61,360 per quarter and his annual incentive opportunity is equal to $61,360. Payout is based on quarterly and annual Company performance goals for 2020. See “Cash and Equity Retention Awards and Agreements – 2020 Executive Incentive Plan” for a description of the EIP. Participation in the EIP replaces the 60% target incentive award identified in Mr. Dubin’s employment offer letter. +In October 2018, Mr. Dubin entered into a 2019 Retention Agreement with the Company. Pursuant to Mr. Dubin’s 2019 Retention Agreement, Mr. Dubin was paid $173,000 on November 13, 2018, and would have been required to repay that amount, net of taxes, to the Company in the event he voluntarily terminated his employment without Good Reason (as defined in his 2019 Retention Agreement), or the Company terminated his employment for Cause (as defined in his 2019 Retention Agreement), in either case before March 13, 2020. See “Cash and Equity Retention Awards and Agreements – 2019 Retention Agreements” for a description of the Retention Agreements. +In September 2019, Mr. Dubin entered into a 2020 Retention Agreement with the Company. Additionally, the Company’s Compensation Committee determined in October 2019 that Mr. Dubin’s 2020 Retention Payment would be further increased to reflect his expanded responsibilities as SVP and GM of Card@Once, Personalization and Prepaid, and he entered into a supplemental 2020 Retention Agreement in November 2019. Pursuant to Mr. Dubin’s 2020 Retention Agreements, Mr. Dubin was paid $178,200 on October 18, 2019 and $26,000 on November 7, 2019, and must repay those amounts to the Company in the event he voluntarily terminates his employment without Good Reason (as defined in his 2020 Retention Agreement), or the Company terminates his employment for Cause (as defined in his 2020 Retention Agreement), in either case before March 15, 2021. See “Cash and Equity Retention Awards and Agreements – 2020 Retention Agreements” for a description of the Retention Agreements. +Executive Severance Guidelines +On June 21, 2017, the Company adopted guidelines governing executive severance (“Executive Severance Guidelines”), applicable to officers and named executive officers of the Company who are not otherwise parties to individual employment or severance agreements providing for benefits upon a termination of employment. Under the Executive Severance Guidelines, if the employment of an eligible officer is terminated without “cause” or due to a resignation for “good reason,” not in connection with a “change in control” (each as defined in the Executive Severance Guidelines) and subject to the execution, delivery and non-revocation of a release of claims, he or she would be eligible to receive cash severance equal to one times the sum of his or her base salary plus annual bonus target. The Company’s Chief Executive Officer would receive 1.5 times the sum of base salary and annual bonus target; however, Mr. Scheirman is party to an individual agreement and thus, the Executive Severance Guidelines do not apply to him. For such a termination occurring within the 24 months following a change in control of the company, the applicable severance multiple would be increased to 2.0 times (for the Chief Executive Officer) and 1.5 times (for all other eligible officers). In addition, the Company would continue to pay a portion of the cost of medical, dental and vision benefits on behalf of an eligible officer, such that the officer’s contribution would remain as it were for an active officer, for the greater of the +-23- +Table of Contents +severance period or such officer’s eligibility for COBRA continuation coverage, and the Company may provide, in its discretion, up to six months of outplacement services. +Additional Compensation Governance Practices +The Company has had an incentive compensation recoupment policy in place since 2016 (“Clawback Policy”). Under the Clawback Policy, if the Company is required to restate its financial results because of its material noncompliance with any financial reporting requirement under applicable securities laws, the Compensation Committee will review all awards or payments of any form of incentive-based compensation made to current and former executive officers of the Company within the three-year period immediately preceding the date on which the Company is required to prepare the restatement. If the Compensation Committee determines that any such incentive awards or payments were based on erroneous data and would have been lower had they been calculated based on the restated results, the Compensation Committee may, to the extent permitted by applicable law, seek to recover, for the benefit of the Company, the difference between the amounts awarded or paid and the amounts that would have been awarded or paid based on the restated results, as determined by the Compensation Committee. These remedies would be in addition to, and not in lieu of, any penalties imposed by law enforcement agencies, regulators or other authorities. For purposes of this policy, “executive officers” of the Company include all persons designated by the Board of Directors as Section 16 reporting officers. +In February 2020, the Company adopted a Prohibited Transactions Policy, which prohibits CPI officers and directors from purchasing financial instruments and engaging in certain transactions designed to hedge against a decrease in the value of the Company’s securities, including short sales, publicly traded options, hedging and monetization transactions, margin sales, pledges of collateral and standing limit orders. +Since 2016, the Company also has maintained formal executive stock and independent director stock ownership guidelines that apply to senior executives, including our named executive officers, and our independent directors (“Unaffiliated Directors”) who are not affiliated with Parallel49 Equity, ULC (formerly known as Tricor Pacific Capital and an affiliate of the Tricor Funds (“Parallel49”). The Company did this to further align the interests of our leaders and the Unaffiliated Directors with those of our stockholders. Under the guidelines, executives and independent directors have up to five years to accumulate shares and share equivalents that have a market value equal to or greater than a prescribed multiple of annual salary or of annual retainer fees (in the case of a director), as outlined below. While our executives and Unaffiliated Directors have until 2021 (or five years from appointment to their position, whichever is later) to satisfy the applicable share ownership levels, given the decline in the Company’s stock price the individuals subject to these guidelines have not made meaningful progress towards meeting the guidelines. Management and the Compensation Committee will be reviewing the guidelines during 2020 and determining an appropriate course of action. +Position +Multiple of Salary or Retainer (1) +Additional Comments +CEO +5x +Shares that count towards the guidelines include those owned outright, restricted stock, restricted stock units, intrinsic value of any vested stock option and any deferred stock +CEO Direct Reports and Chief Accounting Officer +2x +Other Executives +1x +Unaffiliated Directors +3x +(1) For the Unaffiliated Directors, the ownership requirement is 3x their annual retainer. +-24- +Table of Contents +Outstanding Equity Awards at 2019 Fiscal Year-End +Option Awards +Stock Awards +Number of +Number of +Market +Securities +Securities +Number of +Value of +Underlying +Underlying +Shares of +Shares of +Unexercised +Unexercised +Option +Stock that +Stock that +Options +Options +Exercise +Option +Have Not +Have Not +(Exercisable) +(Unexercisable) +Price +Expiration +Vested +Vested +Name +(#) +(#) (1) +($) +Date +(#) +($) (3) +Scott Scheirman +186,667 +93,333 +$ +5.25 +9/25/2027 +Guy DiMaggio +8,350 +16,650 +$ +2.11 +8/1/2028 +Lane Dubin +16,875 +5,625 +$ +27.60 +9/1/2026 +928 +(2) +835 +11,885 +— +$ +21.75 +3/22/2027 +16,675 +8,325 +$ +5.25 +9/25/2027 +(1) +For Mr. Scheirman, (a) 33.4% of the options vested and became exercisable on September 25, 2018, (b) 33.3% of the options vested and became exercisable on September 25, 2019, and (c) 33.3% of the options will vest and become exercisable on September 25, 2020, subject to continued service with the Company through each such vesting date. For Mr. DiMaggio’s options expiring August 1, 2028, (a) 33.4% of the options vested and became exercisable on August 1, 2019, and (b) 33.3% of the options will vest and become exercisable on each of August 1, 2020 and August 1, 2021, subject to continued service with the Company through each such vesting date. For Mr. Dubin’s options expiring September 1, 2026, (a) 25% of the options vested and became exercisable on each of September 1, 2017, September 1, 2018, and September 1, 2019, and (b) 25% of the options will vest and become exercisable on September 1, 2020, subject to continued service with the Company through each such vesting date. For Mr. Dubin’s options expiring March 22, 2027, (a) 33.4% of the options vested and became exercisable on March 22, 2018, (b) 33.3% of the options vested and became exercisable on September 25, 2019, and (c) 33.3% of the options vested and became exercisable on March 22, 2020. For Mr. Dubin’s options expiring September 25, 2027, (a) 33.4% of the options vested and became exercisable on September 25, 2018, (b) 33.3% of the options vested and became exercisable on September 25, 2019, and (c) 33.3% of the options will vest and become exercisable on September 25, 2020, subject to continued service with the Company through each such vesting date. +(2) +Mr. Dubin’s restricted stock unit award vests as follows: (a) 25% of the award vested on each of September 1, 2017, September 1, 2018 and September 1, 2019, and (b) 25% of the award will vest on September 1, 2020, subject to continued service with the Company through the vesting date. +(3) +The market value of the restricted stock units is based on the $0.90 closing price of a share of our common stock on December 31, 2019. +CPI Card Group Inc. Omnibus Incentive Plan +In connection with our initial public offering, we adopted the CPI Card Group Inc. Omnibus Incentive Plan (the “Omnibus Plan”) pursuant to which cash and equity-based incentives (including through an annual incentive program) may be granted to participating employees, directors and consultants. The principal purposes of the Omnibus Plan are to encourage profitability and growth through short-term and long-term incentives that are consistent with our objectives; to give participants an incentive for excellence in individual performance; to promote teamwork among participants; and to give us a significant advantage in attracting and retaining key employees, directors, and consultants. Our Omnibus Plan provides for the grant of incentive stock options within the meaning of Section 422 of the Internal Revenue Code, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance based awards (including performance shares, performance units and performance bonus awards), and other stock or cash-based awards. When considering new grants of share-based or option-based awards, the Company intends to take into account previous grants of such awards. As previously disclosed, on September 25, 2017, the Board adopted, and stockholders approved, an amendment and restatement of the Omnibus Plan, which, among other things, increased the number of shares available for grant thereunder by 400,000 (as adjusted to reflect the Reverse Stock Split) and extended the term of the Omnibus Plan through September 25, 2027. +-25- +Table of Contents +Equity Compensation Plan Information Table +The following table provides information as of December 31, 2019 with respect to shares of our common stock that may be issued under our existing equity compensation plan. +Number of securities +remaining available for +future issuance under +Number of securities to +Weighted average +equity compensation +be issued upon exercise +exercise price of +plans (excluding +of outstanding options, +outstanding options, +securities reflected in +warrants and rights +warrants and rights +column (a)) +(a) (#) +(b) ($) +(c) (#) +Equity compensation plans approved by security holders (1) +800,431 +(2) +14.91 +(2) +278,199 +(3) +Equity compensation plans not approved by security holders +— +– +– +Total +800,431 +14.91 +278,199 +(1) +All current equity compensation plans have been approved by stockholders. +(2) +Consists of (i) 793,084 outstanding options under the Omnibus Plan at an average exercise price of $14.91; and (ii) 7,347 outstanding restricted stock units under the Omnibus Plan. Only options were used in computing the weighted average exercise price. +(3) +The CPI Holdings I, Inc. Amended and Restated 2007 Stock Option Plan (the “Option Plan”) was discontinued in connection with our initial public offering. As of December 31, 2019, there were no outstanding shares remaining, and no further grants can be made under the Option Plan. +-26- +Table of Contents +AUDIT COMMITTEE REPORT +This report of the Audit Committee is required by the SEC and, in accordance with the SEC’s rules, will not be deemed to be part of or incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933, as amended (the “Securities Act”), or under the Exchange Act, except to the extent that the Company specifically incorporates this information by reference, and will not otherwise be deemed “soliciting material” or “filed” under either the Securities Act or the Exchange Act. +The principal purpose of the Audit Committee is to assist the Board of Directors in its oversight of (i) the integrity of our accounting and financial reporting processes and the audits of our financial statements; (ii) our system of disclosure controls and internal controls over financial reporting; (iii) our compliance with legal and regulatory requirements; (iv) the qualifications and independence of our independent auditor; (v) the performance of our independent auditor; and (vi) the business practices and ethical standards of the Company. The Audit Committee is responsible for the appointment, compensation, retention and oversight of work of the Company’s independent auditor. The Audit Committee’s function is more fully described in its charter. +Our management is responsible for the preparation, presentation and integrity of our financial statements, for the appropriateness of the accounting principles and reporting policies that we use and for establishing and maintaining adequate internal control over financial reporting. KPMG LLP (“KPMG”), our independent registered public accounting firm for 2019, was responsible for performing an independent audit of our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2019, and expressing an opinion on the conformity of those financial statements with generally accepted accounting principles. +The Audit Committee has reviewed and discussed with management our audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2019. The Audit Committee has also reviewed and discussed with KPMG the audited financial statements in such Form 10-K. In addition, the Audit Committee discussed with KPMG those matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (the “PCAOB”) and the SEC. Additionally, KPMG provided to the Audit Committee the written disclosures and the letter required by applicable requirements of the PCAOB regarding KPMG’s communications with the Audit Committee concerning independence, and the Audit Committee has discussed with KPMG its independence from the Company. +Based upon the review and discussions described above, the Audit Committee recommended to the Board that CPI’s audited financial statements be included in our Annual Report on Form 10-K for the year ended December 31, 2019 for filing with the SEC. +Robert Pearce, Chairman +Douglas Pearce +Marc Sheinbaum +Valerie Soranno Keating +-27- +Table of Contents +AUDIT FEES +For the years ended December 31, 2019 and 2018, KPMG LLP, our independent registered public accounting firm, billed the approximate fees set forth below: +2019 +2018 +Audit fees (1) +$ +733,326 +$ +665,005 +Audit-related fees (2) +— +— +Tax fees (3) +269,425 +209,210 +All other fees (4) +— +— +Total fees +$ +1,002,751 +$ +874,215 +(1) +Audit fees relate to (i) the audit of our annual consolidated financial statements as of and for the years ended December 31, 2019 and 2018, and (ii) interim reviews of our quarterly consolidated financial statements for the interim periods within the years ended December 31, 2019 and 2018. +(2) +These services include attest services related to financial reporting that are not required by statute or regulation. We did not pay KPMG LLP for services included in this category during the years ended December 31, 2019 and 2018. +(3) +For the years ended December 31, 2019 and 2018, tax fees relate primarily to U.S. federal and state tax compliance, and for services in connection with research and development tax credit studies, transfer pricing analysis, and tax consulting for business dispositions. +(4) +This category includes fees for services that are not included in the above categories. We did not pay KPMG LLP for services included in this category during the years ended December 31, 2019 and 2018. +The Audit Committee has adopted certain policies and procedures regarding permitted audit and non-audit services and the pre-approval of such services. Each year, the Audit Committee will ratify the types of audit and non-audit services of which management may wish to avail itself, subject to pre-approval of specific services. Each year, the independent registered public accounting firm will submit a pre-approval request, which will list each known and/or anticipated audit and non-audit service for the upcoming calendar year and which will include associated budgeted fees. The Audit Committee will review the requests and approve a list of annual pre-approved non-audit services. Any additional interim requests for additional non-audit services that were not contained in the annual pre-approval request will be approved by the Audit Committee. +All services provided by KPMG LLP during the fiscal year ended December 31, 2019 and 2018 were approved by the Audit Committee. +-28- +Table of Contents +RATIFICATION OF RETENTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +PROPOSAL NO. 2 +Our Audit Committee has retained KPMG LLP as our independent registered public accounting firm for the year ending December 31, 2020. A proposal will be presented at the Annual Meeting to ratify this retention. Ratification of the retention of our independent registered public accounting firm requires the affirmative vote of the majority of shares present in person or represented by proxy at the Annual Meeting and entitled to vote. If the stockholders fail to ratify such selection, another independent registered public accounting firm will be considered by our Audit Committee, but the Audit Committee may nonetheless choose to engage KPMG LLP. Even if the retention of KPMG LLP is ratified, the Audit Committee in its discretion may select a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and its stockholders. We have been advised that a representative of KPMG LLP will be present at the Annual Meeting and will be available to respond to appropriate questions and, if such person chooses to do so, make a statement. +THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” RATIFICATION OF +THE RETENTION OF KPMG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2020. PROXIES SOLICITED BY THE BOARD WILL BE VOTED FOR THE PROPOSAL UNLESS STOCKHOLDERS SPECIFY A CONTRARY VOTE +-29- +Table of Contents +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +The following is a description of transactions since January 1, 2018 to which we have been a party in which the amount involved exceeded or will exceed the lesser of $120,000 or one percent of the average of the Company’s total assets at year-end for the last two completed fiscal years and in which any of our directors, executive officers, beneficial holders of more than 5% of our capital stock or entities affiliated with them had or will have a direct or indirect material interest. +Registration Rights Agreement +In connection with our initial public offering, we entered into a registration rights agreement with the Tricor Funds (the “Registration Rights Agreement”). Under the Registration Rights Agreement, the Tricor Funds are entitled to request that we register shares of our common stock on a long-form or short-form registration statement on one or more occasions in the future, provided that we will not be obligated to register such shares within 90 days after the effective date of a registration statement previously filed pursuant to a request under the Registration Rights Agreement and otherwise for up to 60 days from the date of a request under the Registration Rights Agreement in certain circumstances. The Tricor Funds also are entitled to participate in certain registered offerings that we may conduct in the future, subject to certain restrictions. We will pay the Tricor Funds’ expenses in connection with the exercise of these rights. The registration rights described in this paragraph apply to (i) shares of our common stock held by the Tricor Funds as of the closing of our initial public offering, (ii) any of our capital stock (or that of our subsidiaries) issued or issuable with respect to the common stock described in clause (i) with respect to any dividend, distribution, recapitalization, reorganization, or certain other corporate transactions, and (iii) any of our common stock owned or acquired following the closing of our initial public offering by the Tricor Funds (“Registrable Securities”). These registration rights are also for the benefit of any subsequent holder of Registrable Securities; provided that any particular securities will cease to be Registrable Securities when they have been sold in a registered public offering, sold in compliance with Rule 144 under the Securities Act or repurchased by us or our subsidiaries. +Director Nomination Agreement +In connection with our initial public offering, we entered into a Director Nomination Agreement with the Tricor Funds that provides the Tricor Funds the right to designate nominees for election to our Board of Directors for so long as the Tricor Funds collectively beneficially own 5% or more of the total number of shares of our common stock then outstanding. The number of nominees that the Tricor Funds are entitled to designate under the Director Nomination Agreement bears the same proportion to the total number of members of our Board of Directors as the number of shares of common stock beneficially owned by the Tricor Funds bears to the total number of shares of common stock outstanding, rounded up to the nearest whole number. In addition, the Tricor Funds shall be entitled to designate the replacement for any of its board designees whose board service terminates prior to the end of such designee’s term regardless of the Tricor Funds’ beneficial ownership at such time. In addition, for so long as the Tricor Funds collectively beneficially own 10% or more of the total number of shares of our common stock then outstanding, the Tricor Funds shall also have the right to have their designees participate on committees of our Board of Directors, subject to compliance with applicable law and stock exchange rules. The Director Nomination Agreement will terminate at such time as the Tricor Funds collectively own less than 5% of our outstanding common stock. Nicholas Peters and Bradley Seaman have been designated by the Tricor Funds as nominees to be included in the Company’s proxy statement commencing in 2016. +Policies and Procedures for Related Party Transactions +Our board of directors has adopted a written related party transaction policy setting forth the policies and procedures for the review and approval of related party transactions. The policy covers transactions involving us in which the aggregate amount involved exceeds or may be expected to exceed the lesser of $120,000 or one percent of the average of the Company’s total assets at year-end for the last two completed fiscal years and in which a related person has or will have a direct or indirect material interest. For purposes of this policy, a related person is defined as a director, executive officer, nominee for director, or a greater than 5% beneficial owner of our common stock, in each case since the beginning of the most recently completed fiscal year, and any immediate family member of or person sharing a household with any of these individuals. All related party transactions must be presented to the Audit Committee for review, consideration and +-30- +Table of Contents +approval. In approving or rejecting any such proposed transaction, the Audit Committee will consider the material facts of the transaction, including whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances and the extent of the related party’s interest in the transaction. +-31- +Table of Contents +STOCKHOLDER PROPOSALS FOR 2021 ANNUAL MEETING OF STOCKHOLDERS +Stockholders who intend to present proposals at the Company’s annual meeting of stockholders in 2021 pursuant to Rule 14a-8 under the Exchange Act must send notice of their proposal to us so that we receive it no later than December 18, 2020. Stockholders who intend to present proposals at the annual meeting of stockholders in 2021 other than pursuant to Rule 14a-8 must comply with the notice provisions in our By-Laws. The notice provisions in our By-Laws require that, for a proposal to be properly brought before the annual meeting of stockholders in 2021, proper notice of the proposal be received by us not less than 90 days nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting; provided, however that in the event next year’s annual meeting is more than 30 days before or after such anniversary date, notice must be delivered not less than the later of 90 days prior to next year’s annual meeting or the 10th day following the day the Company first publicly announces next year’s annual meeting date. Under these requirements, the deadline for proposals brought under our By-Laws is February 26, 2021. Stockholder proposals should be addressed to CPI Card Group, 10026 West San Juan Way, Suite 200, Littleton, Colorado 80127; Attention: Sarah Kilgore, Chief Legal and Compliance Officer and Corporate Secretary. +-32- +Table of Contents +OTHER MATTERS +We know of no other matters to be submitted to the stockholders at the Annual Meeting. If any other matters properly come before the Annual Meeting, persons named in the proxy intend to vote the shares they represent in accordance with their own judgments. +Upon written request by any stockholder entitled to vote at the Annual Meeting, we will promptly furnish, without charge, a copy of the Annual Report on Form 10-K for the fiscal year ended December 31, 2019 which we filed with the SEC, including the financial statements. If the person requesting the report was not a stockholder of record on April 3, 2020, the request must contain a good faith representation that he or she was a beneficial owner of our common stock at the close of business on that date. Requests should be addressed to CPI Card Group, 10026 West San Juan Way, Suite 200, Littleton, Colorado 80127; Attention: Sarah Kilgore, Chief Legal and Compliance Officer and Corporate Secretary. +YOUR VOTE IS IMPORTANT. WE URGE YOU TO VOTE TODAY BY THE TELEPHONE, VIA THE INTERNET OR BY MAIL. +By Order of the Board of Directors, +Sarah Kilgore +Chief Legal and Compliance Officer and Corporate Secretary +-33- +Table of Contents +If you would like to reduce the costs incurred by our company in mailing proxy materials, Use any touch-tone telephone to transmit your voting instructions. Vote by 11:59 P.M. ET Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, 123,456,789,012.12345 TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. The Board of Directors recommends you vote FOR the following: 1. Election of Directors Nominees 1A) Robert Pearce For 0 0 0 0 0 0 For 0 Against 0 0 0 0 0 0 Against 0 Abstain 0 0 0 0 0 0 Abstain 0 1B) Nicholas Peters NOTE: Such other business as may properly come before the meeting or any adjournment thereof. 1C) Scott Scheirman *Due to concerns relating to the public health impact of the coronavirus outbreak (COVID-19) and related travel, the 2020 Annual Meeting may be held by means of remote communication (i.e., a virtual-only meeting). If this is determined, we will announce the decision in advance, and will provide details on how to participate. 1D) Bradley Seaman 1E) Marc Sheinbaum 1F) Valerie Soranno Keating The Board of Directors recommends you vote FOR the following proposal: 2To ratify KPMG LLP as independent registered public accounting firm for the year ending December 31, 2020. Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name, by authorized officer. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date 02 0000000000 1 OF 1 1 2 0000456619_1 R1.0.1.18 SHARES CUSIP # JOB #SEQUENCE # VOTE BY INTERNET - www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information. Vote by 11:59 P.M. ET on 05/26/2020. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. VOTE BY PHONE - 1-800-690-6903 on 05/26/2020. Have your proxy card in hand when you call and then follow the instructions. John Sample 234567VOTE BY MAIL 1234567 1234567NY 11717. NAME THE COMPANY NAME INC. - COMMON THE COMPANY NAME INC. - CLASS A THE COMPANY NAME INC. - CLASS B THE COMPANY NAME INC. - CLASS C THE COMPANY NAME INC. - CLASS D THE COMPANY NAME INC. - CLASS E THE COMPANY NAME INC. - CLASS F THE COMPA N Y NAME INC. - 401 K CONTROL # → SHARES123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 x PAGE1 OF 2 CPI Card Group Inc. 10026 West San Juan Way Suite 200 Littleton, Colorado 80127 Investor Address Line 1 Investor Address Line 2 Investor Address Line 3 Investor Address Line 4 Investor Address Line 5 8 8 8 1 1234 ANYWHERE STREET ANY CITY, ON A1A 1A1 234567 234567 234567 234567 +Table of Contents +Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Form 10-K and Notice & Proxy Statement are available at www.proxyvote.com CPI CARD GROUP INC. Annual Meeting of Stockholders May 27, 2020 8:00 AM MDT This proxy is solicited by the Board of Directors The stockholder(s) hereby appoint(s) Sarah Kilgore as proxy, with the power to appoint his or her substitute, and hereby authorize(s) them to represent and to vote, as designated on the reverse side of this ballot, all of the shares of common stock of CPI CARD GROUP INC. that the stockholder(s) are entitled to vote at the Annual Meeting of Stockholders to be held at 8:00 AM, MDT on May 27, 2020, at 10026 W. San Juan Way, Littleton, Colorado 80127 or by means of remote communication, and any adjournment or postponement thereof. This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted in accordance with the Board of Directors' recommendations. Continued and to be signed on reverse side 0000456619_2 R1.0.1.18 \ No newline at end of file diff --git a/raw/proxies/0001641614/0001558370-20-003836/proxy_rpt.txt b/raw/proxies/0001641614/0001558370-20-003836/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..865742d239795adedfdaa1aa9191c17a7d78fb05 --- /dev/null +++ b/raw/proxies/0001641614/0001558370-20-003836/proxy_rpt.txt @@ -0,0 +1,13 @@ +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +The following is a description of transactions since January 1, 2018 to which we have been a party in which the amount involved exceeded or will exceed the lesser of $120,000 or one percent of the average of the Company’s total assets at year-end for the last two completed fiscal years and in which any of our directors, executive officers, beneficial holders of more than 5% of our capital stock or entities affiliated with them had or will have a direct or indirect material interest. +Registration Rights Agreement +In connection with our initial public offering, we entered into a registration rights agreement with the Tricor Funds (the “Registration Rights Agreement”). Under the Registration Rights Agreement, the Tricor Funds are entitled to request that we register shares of our common stock on a long-form or short-form registration statement on one or more occasions in the future, provided that we will not be obligated to register such shares within 90 days after the effective date of a registration statement previously filed pursuant to a request under the Registration Rights Agreement and otherwise for up to 60 days from the date of a request under the Registration Rights Agreement in certain circumstances. The Tricor Funds also are entitled to participate in certain registered offerings that we may conduct in the future, subject to certain restrictions. We will pay the Tricor Funds’ expenses in connection with the exercise of these rights. The registration rights described in this paragraph apply to (i) shares of our common stock held by the Tricor Funds as of the closing of our initial public offering, (ii) any of our capital stock (or that of our subsidiaries) issued or issuable with respect to the common stock described in clause (i) with respect to any dividend, distribution, recapitalization, reorganization, or certain other corporate transactions, and (iii) any of our common stock owned or acquired following the closing of our initial public offering by the Tricor Funds (“Registrable Securities”). These registration rights are also for the benefit of any subsequent holder of Registrable Securities; provided that any particular securities will cease to be Registrable Securities when they have been sold in a registered public offering, sold in compliance with Rule 144 under the Securities Act or repurchased by us or our subsidiaries. +Director Nomination Agreement +In connection with our initial public offering, we entered into a Director Nomination Agreement with the Tricor Funds that provides the Tricor Funds the right to designate nominees for election to our Board of Directors for so long as the Tricor Funds collectively beneficially own 5% or more of the total number of shares of our common stock then outstanding. The number of nominees that the Tricor Funds are entitled to designate under the Director Nomination Agreement bears the same proportion to the total number of members of our Board of Directors as the number of shares of common stock beneficially owned by the Tricor Funds bears to the total number of shares of common stock outstanding, rounded up to the nearest whole number. In addition, the Tricor Funds shall be entitled to designate the replacement for any of its board designees whose board service terminates prior to the end of such designee’s term regardless of the Tricor Funds’ beneficial ownership at such time. In addition, for so long as the Tricor Funds collectively beneficially own 10% or more of the total number of shares of our common stock then outstanding, the Tricor Funds shall also have the right to have their designees participate on committees of our Board of Directors, subject to compliance with applicable law and stock exchange rules. The Director Nomination Agreement will terminate at such time as the Tricor Funds collectively own less than 5% of our outstanding common stock. Nicholas Peters and Bradley Seaman have been designated by the Tricor Funds as nominees to be included in the Company’s proxy statement commencing in 2016. +Policies and Procedures for Related Party Transactions +Our board of directors has adopted a written related party transaction policy setting forth the policies and procedures for the review and approval of related party transactions. The policy covers transactions involving us in which the aggregate amount involved exceeds or may be expected to exceed the lesser of $120,000 or one percent of the average of the Company’s total assets at year-end for the last two completed fiscal years and in which a related person has or will have a direct or indirect material interest. For purposes of this policy, a related person is defined as a director, executive officer, nominee for director, or a greater than 5% beneficial owner of our common stock, in each case since the beginning of the most recently completed fiscal year, and any immediate family member of or person sharing a household with any of these individuals. All related party transactions must be presented to the Audit Committee for review, consideration and +-30- +Table of Contents +approval. In approving or rejecting any such proposed transaction, the Audit Committee will consider the material facts of the transaction, including whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances and the extent of the related party’s interest in the transaction. +-31- +Table of Contents \ No newline at end of file diff --git a/raw/proxies/0001641614/0001558370-21-004203/proxy.txt b/raw/proxies/0001641614/0001558370-21-004203/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..6eb57b2d35459f1b8e735a157a5de585c2e7ea49 --- /dev/null +++ b/raw/proxies/0001641614/0001558370-21-004203/proxy.txt @@ -0,0 +1,1690 @@ +DEF 14A +1 +tmb-20210527xdef14a.htm +DEF 14A +Table of Contents +F +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Proxy Statement Pursuant to Section 14(a) of the +Securities Exchange Act of 1934 +Filed by the Registrant ☑ +Filed by a Party other than the Registrant ☐ +Check the appropriate box: +☐ +Preliminary Proxy Statement +☐ +Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +☑ +Definitive Proxy Statement +☐ +Definitive Additional Materials +☐ +Soliciting Material Pursuant to §240.14a-12 +CPI Card Group Inc. +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +☑ +No fee required. +☐ +Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. +(1) +Title of each class of securities to which transaction applies: +(2) +Aggregate number of securities to which transaction applies: +(3) +Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): +(4) +Proposed maximum aggregate value of transaction: +(5) +Total fee paid: +☐ +Fee paid previously with preliminary materials. +☐ +Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. +(1) +Amount Previously Paid: +(2) +Form, Schedule or Registration Statement No.: +(3) +Filing Party: +(4) +Date Filed: +Table of Contents +10368 West Centennial Road +Littleton, Colorado 80127 +April 13, 2021 +Dear Stockholder: +On behalf of the Board of Directors of CPI Card Group Inc. (the “Company”), you are cordially invited to attend the 2021 Annual Meeting of Stockholders (the “Annual Meeting”) to be held on Thursday, May 27, 2021, at 8:00 a.m. Mountain Time. Due to public health concerns regarding the COVID-19 pandemic, the Annual Meeting will be a completely virtual meeting of stockholders, which will be conducted online via live webcast. Please see the Notice of Annual Meeting of Stockholders on the next page for more information about how to attend the Annual Meeting virtually. +We have included with this letter a proxy statement that provides you with detailed information about the business to be conducted at the Annual Meeting. In addition, the Company’s 2020 Annual Report, which is being made available to you along with the proxy statement, contains information about the Company and its performance. We encourage you to read these materials carefully. +Whether or not you plan to attend the Annual Meeting, your vote is important, and we encourage you to vote promptly. You may vote your shares through one of the methods described in the accompanying proxy statement. We strongly urge you to vote FOR the nominees proposed by the Board of Directors and in accordance with the recommendations of the Board of Directors on the other proposals by following the voting instructions contained in the proxy statement. +Sincerely, +Bradley Seaman +Scott Scheirman +Chairman of the Board +President, Chief Executive Officer and Director +Table of Contents +CPI CARD GROUP INC. +NOTICE OF ANNUAL MEETING OF STOCKHOLDERS +MAY 27, 2021 +8:00 A.M. (Mountain Time) +To the Stockholders of CPI Card Group Inc.: +The 2021 Annual Meeting of Stockholders will be held virtually on May 27, 2021, at 8:00 a.m. (Mountain Time) via live webcast accessible at www.virtualshareholdermeeting.com/PMTS2021. The purpose of the meeting is to: +1. e lect the seven director nominees named in the accompanying proxy statement ; +2. ratify the appointment of KPMG LLP as our independent registered public accounting firm for 2021; +3. hold an advisory vote to approve named executive officer compensation; +4. hold an advisory vote to approve the frequency of the stockholder vote on named executive officer compensation; +5. hold a vote to approve an amendment and restatement of the CPI Card Group Inc. Omnibus Incentive Plan to increase the total number of shares of the Company’s common stock reserved and available for issuance under the Omnibus Incentive Plan and to make other administrative changes; +6. hold a vote of the Company’s “disinterested” stockholders to approve an amendment to the CPI Card Group Inc. Omnibus Incentive Plan to increase the maximum number of shares of the Company’s common stock issuable to “Insiders” thereunder from 10% to 15% of the number of then issued and outstanding shares of the Company’s common stock; and +7. conduct any other business properly brought before the Annual Meeting or any adjournments or postponements thereof. +Voting is limited to stockholders of record at the close of business on April 1, 2021. +YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE VOTE YOUR SHARES OVER THE TELEPHONE, VIA THE INTERNET OR BY COMPLETING, DATING, SIGNING AND RETURNING A PROXY CARD, AS DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT. YOUR PROMPT COOPERATION IS GREATLY APPRECIATED. +By Order of the Board of Directors, +Sarah Kilgore +Chief Legal and Compliance Officer and Corporate Secretary +Table of Contents +Notice of Electronic Availability of Proxy Statement and Annual Report +As permitted by rules adopted by the United States Securities and Exchange Commission (the “SEC”), we are making this proxy statement and our Annual Report available to stockholders electronically via the Internet. On or about April 13, 2021, we will mail to most of our stockholders a notice (the “Notice”) containing instructions on how to access this proxy statement and our Annual Report and to vote via the Internet. +The Notice also contains instructions on how to request a printed copy of the proxy materials and to vote by mail. In addition, you may elect to receive future proxy materials in printed form by mail or electronically by e-mail by following the instructions included in the Notice. If you have previously elected to receive our proxy materials electronically, you will continue to receive these materials via e-mail unless you elect otherwise. +Table of Contents +TABLE OF CONTENTS +Page +SUMMARY OF THE ANNUAL MEETING +1 +ELECTION OF DIRECTORS (PROPOSAL NO. 1) +6 +DIRECTORS AND CORPORATE GOVERNANCE +7 +Director Biographical Information and Qualifications +7 +Director Selection Process +8 +Recommendation of Directors by Stockholders +8 +Independence of Directors +9 +Board’s Role in Risk Oversight +9 +Board/Committee Areas of Risk Oversight and Actions +10 +Corporate Governance +10 +Other Board Information +10 +Director Compensation +12 +Security Ownership of Certain Beneficial Owners, Directors and Management +13 +EXECUTIVE OFFICERS +15 +EXECUTIVE COMPENSATION +16 +Business Highlights +16 +Impact of COVID-19 +17 +Summary of Our 2020 Compensation Decisions +17 +Executive Compensation Governance Highlights +19 +Stockholder Input on Executive Compensation +19 +Role of the Compensation Committee +19 +Role of the Independent Compensation Consultant +19 +Role of Market Data and the Peer Group +20 +Elements of the 2020 Executive Compensation Program +21 +Stockholder Equity Compensation Related Proposals +23 +Other Benefits +24 +Termination or Change in Control +24 +Additional Compensation Governance Practices +24 +2020 Summary Compensation Table +26 +Employment and Post-Termination Arrangements +27 +Equity Compensation Plan Information Table +29 +AUDIT COMMITTEE REPORT +29 +AUDIT FEES +30 +RATIFICATION OF RETENTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PROPOSAL NO. 2) +31 +STOCKHOLDER ADVISORY VOTE TO APPROVE OUR NAMED EXECUTIVE OFFICER COMPENSATION (PROPOSAL NO. 3) +32 +STOCKHOLDER ADVISORY VOTE ON THE FREQUENCY OF THE STOCKHOLDER VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION (PROPOSAL NO. 4) +33 +APPROVAL OF AN AMENDMENT AND RESTATEMENT OF THE CPI CARD GROUP INC. OMNIBUS INCENTIVE PLAN TO INCREASE THE AVAILABLE SHARES AND MAKE OTHER ADMINISTRATIVE CHANGES (PROPOSAL NO. 5) +34 +APPROVAL OF AN AMENDMENT TO THE CPI CARD GROUP INC. OMNIBUS INCENTIVE PLAN TO INCREASE THE ANNUAL LIMIT APPLICABLE TO INSIDERS (PROPOSAL NO. 6) +40 +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +44 +Policies and Procedures for Related Party Transactions +44 +STOCKHOLDER PROPOSALS FOR 2022 ANNUAL MEETING OF STOCKHOLDERS +45 +DELINQUENT SECTION 16(A) REPORTS +45 +OTHER MATTERS +46 +ANNEX A: GAAP TO NON-GAAP RECONCILIATION +A-1 +ANNEX B: AMENDED AND RESTATED OMNIBUS INCENTIVE PLAN +B-1 +Table of Contents +C PI CARD GROUP INC. +10368 West Centennial Road +Littleton, Colorado 80127 +SUMMARY OF THE ANNUAL MEETING +This proxy statement contains information related to the 2021 Annual Meeting of Stockholders (the “Annual Meeting”) of CPI Card Group Inc. (referred to herein as the “Company,” “CPI,” “we,” “us” or “our” as the context requires) to be held via live webcast accessible at www.virtualshareholdermeeting.com/PMTS2021. This proxy statement is first being made available to stockholders via the Internet on or about April 13, 2021. +Why did you send me this proxy statement? +We sent you this proxy statement because the Board of Directors of the Company (the “Board”) is soliciting , on the Company’s behalf, your proxy to vote at the Annual Meeting and at any postponements or adjournments of the Annual Meeting. This proxy statement summarizes information that is intended to assist you in making an informed vote on the proposals described in this proxy statement. +Who can vote at the Annual Meeting? +Only stockholders of record as of the record date are entitled to vote at the Annual Meeting. The record date to determine stockholders entitled to notice of and to vote at the Annual Meeting is the close of business on April 1, 2021. On the record date, there were 11,230,482 shares of our common stock, par value $0.001 per share, outstanding. Our common stock is the only class of voting securities outstanding. +How many shares must be present to conduct the Annual Meeting? +We must have a quorum present virtually or by proxy to conduct the Annual Meeting. A quorum is established when a majority of shares entitled to vote is present virtually or represented by proxy at the Annual Meeting. Abstentions and broker non-votes (as described below) are counted for purposes of determining whether a quorum is present. +What matters are to be voted on at the Annual Meeting? +The agenda for the Annual Meeting is to: +1. elect the seven director nominees named in this proxy statement ; +2. ratify the appointment of KPMG LLP as our independent registered public accounting firm for 2021; +3. hold an advisory vote to approve named executive officer compensation (the “Say-on-Pay Proposal”); +4. hold an advisory vote to approve the frequency of the stockholder vote on named executive officer compensation (the “Say-on-Frequency Proposal”); +5. hold a vote to approve an amendment and restatement of the CPI Card Group Inc. Omnibus Incentive Plan (the “Omnibus Plan”) to increase the total number of shares of the Company’s common stock reserved and available for issuance under the Omnibus Plan and to make other administrative changes (the “Amendment and Restatement of the Omnibus Plan Proposal”); +6. hold a vote of the Company’s “disinterested” (as defined below) stockholders to approve an amendment to the Omnibus Plan to increase the maximum number of shares of the Company’s common stock issuable to “Insiders” thereunder from 10% to 15% of the number of then issued and outstanding shares of the Company’s common stock (the “Insider Participation Limit Proposal”); and +7. conduct any other business properly brought before the Annual Meeting or any adjournments or postponements thereof. +As of the date of this proxy statement, we do not know of any other matters to be presented at the Annual Meeting. If any other matters properly come before the Annual Meeting, however, the persons named as proxies will be authorized to vote or otherwise act in accordance with their judgment. +1 +Table of Contents +Why is the vote on the Insider Participation Limit Proposal limited to only the Company’s disinterested stockholders, and what is the definition of “disinterested”? +The terms of the Company’s Omnibus Plan provide that certain provisions of the Omnibus Plan may not be amended without stockholder approval in accordance with the Toronto Stock Exchange (the “TSX”) Company Manual, including the section of the Omnibus Plan which the Insider Participation Limit Proposal would amend. Such section provides that the maximum number of shares that may be issuable to Insiders at any point in time under the Omnibus Plan and any other share compensation arrangement of the Company shall not exceed ten percent (10%) of the number of then issued and outstanding shares of the Company’s common stock. The Insider Participation Limit Proposal would change this ten percent (10%) threshold to fifteen percent (15%). The TSX Company Manual provides that approval of the Insider Participation Limit Proposal requires the affirmative vote of a majority of the “disinterested” stockholder votes cast. +“Disinterested” means those Company stockholders (and the shares held by such stockholders) who are not Insiders (meaning directors, corporate officers, executive officers or controlling stockholders). Only the votes of disinterested stockholders will be counted in determining whether the Insider Participation Limit Proposal is approved. +How does the Board recommend that I vote? +The Board recommends that you vote: +1. FOR the election of each of the director nominees named in this proxy statement; +2. FOR the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for 2021; +3. FOR the Say-on-Pay Proposal; +4. for ONE YEAR on the Say-on-Frequency Proposal; +5. FOR the Amendment and Restatement of the Omnibus Plan Proposal; and +6. FOR the Insider Participation Limit Proposal. +How do I vote at the Annual Meeting? +You may vote via the Internet during the Annual Meeting or by proxy in advance of the Annual Meeting. If you are a stockholder of record, there are three ways to vote by proxy: +● By Telephone — If you request printed copies of the proxy materials by mail, you will receive a proxy card and you can vote by telephone by following the instructions on your proxy card. You will need to use the control number appearing on your proxy card to vote by telephone. +● By Internet — You can vote via the Internet by following the instructions on your Notice or proxy card. You will need to use the control number appearing on your Notice or proxy card to vote via the Internet. +● By Mail — If you request printed copies of the proxy materials by mail, you will receive a proxy card and you can vote by completing, dating and signing the proxy card and returning it in the envelope provided. +2 +Table of Contents +If you are a beneficial owner of shares held in “street name ” through a bank, broker or other nominee, you may vote as follows: +● By Telephone — If you request printed copies of the proxy materials by mail, you will receive a voting instruction form and you can vote by telephone by following the instructions on the voting instruction form. The availability of telephone voting may depend on the voting process of the organization that holds your shares. +● By Internet — You can vote via the Internet by following the instructions on your Notice or voting instruction form . The availability of Internet voting may depend on the voting process of the organization that holds your shares. +● By Mail — If you request printed copies of the proxy materials by mail, you will receive a voting instruction form and you can vote by proxy by completing, dating and signing the voting instruction form and returning it in the envelope provided. +Telephone and Internet voting facilities for stockholders of record will be available 24 hours a day. You may vote over the telephone or via the Internet until 11:59 p.m. Eastern Time on May 26, 2021. Even if you plan to attend the Annual Meeting virtually, we recommend that you also submit your proxy or voting instructions as described above so that your vote will be counted if you later decide not to attend the Annual Meeting. +Your proxy will be voted in accordance with your instructions, so long as, in the case of a proxy card returned by mail, such card has been signed and dated and is received before the Annual Meeting. If you vote your shares via the Internet, over the telephone or by executing and returning a proxy card by mail but you do not provide specific instructions with respect to the proposals, your shares will be voted FOR each director nominee named in this proxy statement , for ONE YEAR on the Say-on-Frequency Proposal and FOR each of the other proposals set forth in this proxy statement. +As of the date of this proxy statement, we do not know of any matters to be presented at the Annual Meeting except those described in this proxy statement. If any other matters properly come before the Annual Meeting, however, the persons named as proxies will be authorized to vote or otherwise act in accordance with their judgment. +What does it mean if I receive more than one Notice of internet availability, e-mail or set of proxy materials? +You may receive more than one Notice, more than one e-mail or multiple proxy cards or voting instruction forms. For example, if you hold your shares in more than one brokerage account, you may receive a separate Notice, a separate e-mail or a separate voting instruction form for each brokerage account in which you hold shares. Also, if you are a stockholder of record and your shares are registered in more than one name, you may receive more than one Notice, more than one e-mail or more than one proxy card. To vote all of your shares by proxy, you must complete, date , sign and return each proxy card and voting instruction form that you receive , or vote over the telephone or via the Internet the shares represented by each Notice , e-mail or proxy card or voting instruction form that you receive. +May I change my vote? +Yes. You may revoke your proxy at any time before it is voted at the Annual Meeting. To change your vote, if you are a stockholder of record, you may submit another later dated proxy over the telephone or via the Internet no later than 11:59 Eastern Time on May 26, 2021 or by mail such that it is received prior to the Annual Meeting , or by voting your shares during the Annual Meeting (your attendance at the Annual Meeting will not, by itself, revoke your proxy; you must vote at the Annual Meeting to revoke your proxy). If you are a beneficial owner and your shares are held in street name, you may change your vote by submitting new voting instructions to your bank, broker or other nominee, or you may change your vote by attending and voting at the Annual Meeting. +What happens if my bank or broker holds my shares in “street name” and I do not give any voting instructions? +If you hold your shares in “street name” through a bank, broker or other nominee, such bank, broker or nominee will vote those shares in accordance with your instructions. To so instruct your bank, broker or nominee, you should refer to the information provided to you by such entity. Without instructions from you, a bank, broker or nominee will be permitted to exercise its own voting discretion only with respect to so-called “routine matters” but will not be permitted to exercise voting discretion with respect to “non-routine matters.” The Company believes that the proposal to ratify KPMG LLP’s appointment as the Company’s independent registered public accounting firm for 2021 (Proposal No. 2) is a routine matter on which brokers will be permitted to vote shares on your behalf, even without your instructions. Other than Proposal No. 2, the Company believes that all proposals set forth in this proxy statement are not considered routine matters, and brokers will thus not be able to vote on your behalf if you have not furnished voting instructions to them. Thus, if you do not give your bank, broker or nominee specific voting instructions with respect to Proposal No. 2, your shares will be voted in such entity’s discretion. If you do not give your bank, broker or nominee specific instructions with respect to the other proposals herein, your shares will not be voted on such proposals. This is called a “broker non-vote.” Shares represented by such broker non-votes will be counted in determining whether there is a quorum, but will have no effect on the non-routine proposals. We urge you to promptly provide your bank, broker or nominee with appropriate voting instructions so that all your shares may be voted at the Annual Meeting. +3 +Table of Contents +What vote is required to elect directors and approve the other matters described in this proxy statement? +The Company’s Second Amended and Restated By-Laws (the “By-Laws”) require that directors be elected by the majority of votes cast with respect to such director in uncontested elections (the number of shares voted “for” a director nominee must exceed the number of votes cast “against” that nominee with abstentions and broker non-votes having no effect). In a contested election (a situation in which the number of nominees exceeds the number of directors to be elected), the standard for election of directors will be a plurality of the shares represented virtually or by proxy at any such meeting and entitled to vote on the election of directors. +For the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for 2021 (Proposal No. 2), the Say-on-Pay Proposal (Proposal No. 3) and the Amendment and Restatement of the Omnibus Plan Proposal (Proposal No. 5), the affirmative vote of the holders of a majority of the shares represented virtually or by proxy and entitled to vote on the proposal will be required for approval. For the Say-on-Frequency Proposal (Proposal No. 4) , the frequency that receives the most votes will be the frequency recommended by stockholders. For the Insider Participation Limit Proposal (Proposal No. 6), the affirmative vote of a majority of the “disinterested” shares represented virtually or by proxy and entitled to vote on the proposal will be required for approval. +Abstentions will not be voted but will be counted for purposes of determining whether there is a quorum. Accordingly, abstentions will have the effect of a vote “against” Proposals Nos. 2, 3, 5 and 6, and broker non-votes will have no effect on Proposals No. 3 , 5 and 6. As stated above, because Proposal No. 2 is a routine matter, if you do not give your bank, broker or other nominee specific voting instructions with respect to Proposal No. 2, your shares will be voted in such entity’s discretion , and no broker non-votes are expected on such proposal. With respect to Proposal No. 4, abstentions and broker non-votes have no effect on the determination of which voting frequency receives the highest number of affirmative votes cast. +What is the difference between holding shares as a stockholder of record and as a beneficial owner? +If your shares are registered in your name on the Company’s books and records or with our transfer agent, you are the “stockholder of record” of those shares, and this proxy statement and accompanying materials have been provided directly to you by the Company. On the other hand, if you purchased your shares through a brokerage or other financial intermediary, the brokerage or other financial intermediary will automatically put your shares into “street name,” which means that the brokerage or other financial intermediary will hold your shares in its name or another nominee’s name and not in your name, but will keep records showing you as the “beneficial owner.” If you hold shares beneficially in street name, this proxy statement and accompanying materials have been forwarded to you by your broker, bank or other holder of record. +How many votes do I have? +Each share of common stock that you hold as of the record date entitles you to one vote, without cumulation, on each matter to be voted upon at the Annual Meeting. +How will the votes be counted at the Annual Meeting? +The votes will be counted by the independent inspector of election appointed for the Annual Meeting. +How will the Company announce the voting results? +The Company will report the final results of the voting at the Annual Meeting in a filing with the SEC on a Current Report on Form 8-K within four (4) business days after the date of the Annual Meeting. +Who pays for the Company’s solicitation of proxies? +The Board, on behalf of the Company, is soliciting your proxy to vote your shares of common stock at our Annual Meeting. The Company will bear the cost of soliciting proxies, including preparing, printing and mailing this proxy statement. Proxies may be solicited personally, or by mail, e-mail or telephone by certain of our directors, officers, employees or representatives. Our directors and employees will not be paid any additional compensation for soliciting proxies. We may reimburse brokerage firms and other persons representing beneficial owners of shares for their out-of-pocket expenses in forwarding solicitation materials to such beneficial owners . +4 +Table of Contents +What is “householding” and how does it work? +Under the rules adopted by the SEC, we may deliver a single copy of the Notice or proxy materials to one address shared by two or more of our stockholders. This delivery method is referred to as “householding” and can reduce the environmental impact of our Annual Meeting and result in significant cost savings for the Company. To take advantage of this opportunity, we have delivered only one copy of the Notice and, if you requested printed versions by mail, this proxy statement and the Annual Report, to multiple stockholders who share an address, unless we received contrary instructions from the impacted stockholders prior to the mailing date. If you would like to either participate in householding or receive separate copies future proxy materials, please contact Broadridge ICS by mail at Broadridge ICS, Householding Department, 51 Mercedes Way, Edgewood, New York, 11717, or by phone at (800) 542-1061. If you are a beneficial owner of shares held in street name and would like to participate in householding, you may contact the organization that holds your shares. +What do I need for admission to the Annual Meeting and how do I vote at the Annual Meeting? +You are entitled to participate in the Annual Meeting if you were a stockholder as of the close of business on April 1, 2021, the record date. To be admitted to and participate in the Annual Meeting, you must follow the instructions and use the information found on your proxy card, voting instruction form or Notice. The Annual Meeting will be held in a virtual-only format on Thursday, May 27 , 2021 at 8:00 a.m. Mountain Time. The virtual meeting and live webcast can be accessed at www.virtualshareholdermeeting.com/PMTS2021. You will not be able to attend the Annual Meeting in person. +You may vote during the Annual Meeting by following the instructions available at www.virtualshareholdermeeting.com/PMTS2021 during the Annual Meeting. Whether or not you plan to attend the Annual Meeting, you are encouraged to vote in advance by one of the methods described in this proxy statement. +May stockholders ask questions at the Annual Meeting ? +Yes. Stockholders will have the ability to submit questions during the Annual Meeting via the virtual meeting website. As part of the Annual Meeting, we will hold a live Q&A session, during which we intend to answer all questions submitted during the meeting in accordance with the Annual Meeting’s Rules of Conduct which are pertinent to the Company and the meeting matters, as time permits. +What if I have technical difficulties or trouble accessing the Annual Meeting? +Beginning 30 minutes prior to the start of and during the Annual Meeting, you may contact 844-976-0738 for technical assistance. +5 +Table of Contents +PROPOSAL NO. 1 +ELECTION OF DIRECTORS +Upon the recommendation of our Nominating and Corporate Governance Committee (the “Nominating Committee”), the Board has nominated the seven individuals listed below to stand for election to the Board for a one-year term ending at the annual meeting of stockholders in 2022 and until their successors, if any, are duly elected or appointed. Our Third Amended and Restated Certificate of Incorporation and our By-Laws provide for the annual election of directors. Each director nominee must receive the affirmative vote of a majority of the votes cast in order to be elected (i.e., the number of votes cast “for” a director nominee must exceed the number of votes cast “against” that nominee, and abstentions and broker non-votes will not be counted as votes “for” or “against” a nominee). Unless contrary instructions are given, the shares represented by your proxy will be voted FOR the election of all director nominees. The Board has determined that each director nominee, other than Mr. Scott Scheirman, is an independent director, as further described below in “Directors and Corporate Governance — Independence of Directors.” +All of the director nominees listed below have consented to being named in this proxy statement and to serving if elected. However, if any of the below nominees becomes unable or unwilling to serve prior to the date of the Annual Meeting, proxy holders will have discretion and authority to vote for another nominee proposed by our Board. Alternatively, our Board may reduce the number of directors to be elected at the Annual Meeting. +Name +Position +Thomas Furey +Director Nominee +Robert Pearce +Director +Nicholas Peters +Director +Scott Scheirman +Director, President and Chief Executive Officer +Bradley Seaman +Chairman of the Board +Marc Sheinbaum +Director +Valerie Soranno Keating +Director +Biographical information relating to each of the director nominees is set forth below under “Directors and Corporate Governance.” +THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THE DIRECTOR NOMINEES NAMED IN THIS PROXY STATEMENT. +6 +Table of Contents +DIRECTORS AND CORPORATE GOVERNANCE +Director Biographical Information and Qualifications +Set forth below is a description of the business experience of each director and nominee, as well as the specific qualifications, skills and experiences considered by the Nominating Committee and the Board in recommending our slate of director nominees. Each director listed below , except for Thomas Furey, is a current director nominated for reelection to the Board for a term expiring at the annual meeting of stockholders in 2022. See “Election of Directors (Proposal No. 1).” +Thomas Furey , 56, currently serves as the Chairman and Chief Executive Officer of Sagetech Avionics, Inc. (“Sagetech”) a privately held aerospace electronics company. Sagetech was incorporated in 2019 after a divisional carve out from Sagetech Corporation, for which Mr. Furey held the position of Chief Operating Officer since 2015. From 2014 to 2015, Mr. Furey served as Vice President of manufacturing and engineering at Unitec, Inc., a point-of-sale payments equipment company, before which he ran his own operations consultancy firm from 2012-2013. From 2004 to 2012, Mr. Furey held various executive positions at Standard Register Company, including Vice President of manufacturing, Chief Supply Chain Officer and President of Standard Register’s industrial business. From 2001 to 2004, Mr. Furey was in charge of North American operations for Avery Dennison Corporation (NYSE:AVY), a label materials manufacturer. Mr. Furey also held positions of increasing responsibility in manufacturing leadership at AlliedSignal, Inc. (which acquired Honeywell Inc. in 1999 and took its name) from 1994 to 2001 and was selected as the AlliedSignal fellow to the “Leaders for Manufacturing” program at the Massachusetts Institute of Technology (“MIT”) from 1997-1999. He began his career as a Naval Flight Officer in the U.S. Navy. Mr. Furey holds a Bachelor of Science degree in mathematics from the U.S. Naval Academy, a Master of Science degree in Industrial Engineering from California State University Northridge, as well as a Master of Science degree in Mechanical Engineering and a Master of Business Administration degree from MIT. Mr. Furey brings to the Board extensive experience in high volume manufacturing, operations and executive leadership. +Robert Pearce , 66, has served on our Board of Directors since 2007. Mr. Pearce also serves on the board of directors of Canada Guaranty Mortgage Insurance Company, First American Payment Systems, First National Financial LP and Duo Bank of Canada. Mr. Pearce spent 26 years with BMO Bank of Montreal, from 1980 to 2006, most recently holding the position of President and Chief Executive Officer, Personal and Commercial Client Group. He also served on the board of directors of MasterCard International from 1998 to 2006 and as Chairman of the Canadian Bankers’ Association from 2004 to 2006. Mr. Pearce holds a Bachelor of Arts degree from the University of Victoria and a Master of Business Administration degree from the University of British Columbia. Mr. Pearce brings to the Board extensive operational and leadership experience in the financial services industry, including extensive operating experience in credit card, debit card and prepaid cards in both card issuing and merchant acceptance in Canada and the United States. +Nicholas Peters , 48, has served on our Board of Directors since 2007. Mr. Peters is a Managing Director at Parallel49 Equity (formerly Tricor Pacific Capital) , a private equity firm that makes control investments in lower middle market companies in the United States and Canada, which he joined in 2002, and also began serving as Parallel49 Equity’s Chief Financial Officer in 2012. Prior to joining Parallel49 Equity, Mr. Peters was a Senior Manager at Arthur Andersen LLP in Chicago. Mr. Peters is the Chairman of the Questco Companies and Certified Recycling and serves on the board of several other Parallel49 Equity investment companies as well as non-Parallel49 Equity investment companies. Mr. Peters holds a Bachelor of Science degree in Business Administration from the University of Dayton in Ohio. He is a Certified Public Accountant and is affiliated with the American Institute of Certified Public Accountants and the Ohio Society of CPAs. Mr. Peters brings to the Board strong finance and accounting skills, as well as valuable experience from his oversight of the management and operations of several of Parallel49 Equity’s investment companies. +Scott Scheirman, 58 , has served as our President and Chief Executive Officer since October 2017 and on our Board of Directors since October 2016. Prior to joining the Company, Mr. Scheirman served as the Chief Executive Officer and a co-founder of JKL Ventures LLC, a private investment and strategic advisory firm , since February 2014. Prior to JKL Ventures LLC, Mr. Scheirman served as the Executive Vice President and Chief Financial Officer of The Western Union Company (“Western Union”) (NYSE:WU) from September 2006 to December 2013. Prior to joining Western Union, Mr. Scheirman held a variety of executive leadership and financial officer roles at First Data Corporation (NYSE:FDC), and began his career at Ernst & Young LLP. Mr. Scheirman holds a Bachelor of Science degree in Business Administration with an emphasis in Accounting from the University of Northern Colorado. Mr. Scheirman brings to the Board extensive strategic planning, finance, risk management, international, public company and corporate governance experience, and through his position as our Chief Executive Officer, he brings to the Board management’s perspective over a full range of issues affecting the Company. +Bradley Seaman, 61, has served on our Board of Directors since 2007 and currently serves as Chairman of the Board. Mr. Seaman has been employed, since August 1999, by Parallel49 Equity (formerly Tricor Pacific Capital ), a private equity firm that makes control investments in lower middle market companies in the United States and Canada. From 1999 through December 2011, Mr. Seaman served as Parallel49 Equity’s Managing Director and leader of its U.S. operations, and, since January 2012, has served as its Managing Partner, responsible for leading overall firm operations, strategy, funding and investments. Prior to joining Parallel49 Equity, from 1990 through July 1999, Mr. Seaman was employed by GE Capital Corporation (“GE Capital”) where he held a number of increasingly senior positions in GE Capital’s Transportation & Industrial Funding and Commercial Finance units. In 1994, Mr. Seaman was selected to be part of a new group that was established to focus GE Capital’s debt and equity products on the emerging private equity market, and, in that capacity and in his last role before leaving GE Capital, he headed GE Capital’s offices in New York and Chicago. Mr. Seaman is also a member of the board of directors of Steel Dynamics, Inc. (Nasdaq:STLD). Mr. Seaman holds a Bachelor of Science degree in Business Administration from Bowling Green State University and a Master of Business Administration degree from the University of Dallas. He +7 +Table of Contents +brings to the Board a comprehensive understanding of and experience in capital markets and management and has operational and corporate governance experience drawn from his involvement in the management and oversight of Parallel49 Equity’s investment companies. +Marc Sheinbaum, 63, has served on our Board of Directors since 2019. Since 2017, Mr. Sheinbaum has been an advisor to venture capital and private equity firms. From 2014 to 2016, he was the President, Chief Executive Officer and a Director of Higher One Holdings, Inc. (NYSE:ONE), a payments technology provider for higher education. From 2007 through 2013, Mr. Sheinbaum was the Senior Vice President and Chief Executive Officer of Retail, Auto and Education Finance at JPMorgan Chase & Co. (NYSE:JPM). Earlier in his career, Mr. Sheinbaum held positions at GE Capital Corporation and American Express Company (NYSE:AXP), as well as Coopers & Lybrand Management Consulting. Mr. Sheinbaum holds a Bachelor of Science degree in Management Science from State University of New York at Albany and a Master of Business Administration degree from New York University. He brings considerable experience in payments and consumer financial services as well as public company leadership. +Valerie Soranno Keating , 57, has served on our Board of Directors since May 2018. Ms. Soranno Keating has been senior advisor to a number of private equity firms in the U.S. and Europe since 2017. From November 2009 through May 2015 , she was the Chief Executive Officer of Barclaycard, the global payments division of Barclays PLC (NYSE:BCS), with $60 billion in assets and over 30 million customers throughout the U.S., Europe and South Africa. Before joining Barclays, Ms. Soranno Keating held a variety of executive positions at American Express Company (NYSE:AXP) from May 1993 through May 2009 , including President, Travelers Cheques & Prepaid Services, Executive Vice President Global Commercial Services, Executive Vice President Global Merchant Services, Emerging Global Businesses & Network Expansion, and Vice President Corporate Strategic Planning. Ms. Soranno Keating also serves on the board of directors of One Main Financial (NYSE:OMF), a consumer lending business. Ms. Soranno Keating holds a Bachelor of Science degree in Business Administration from Lehigh University. She brings to the Board wide-ranging experience in both executive and board roles across a broad spectrum of payments and related businesses. +Director Selection Process +The Nominating Committee works with the Board to determine periodically, as appropriate, the desired Board qualifications, expertise and characteristics, and recommends candidates to the Board based on these criteria. In identifying director candidates, the Nominating Committee accepts recommendations from current or former directors, search firms retained by the Nominating Committee to assist in identifying and evaluating potential candidates, stockholders, Company executives and by self-nomination. The Board does not have specific requirements for eligibility to serve as a director of CPI, nor does it have a specific policy on diversity. However, in evaluating director candidates, regardless of the source of recommendation, the Nominating Committee generally considers factors such as business experience, high ethical standards and integrity, skills, understanding of CPI’s business environment, willingness to devote adequate time to Board duties and, with respect to diversity, the Nominating Committee considers factors such as differences in professional background, education, experiences, characteristics, skills and other individual qualities and attributes that contribute to the total mix of viewpoints and experience represented on the Board. +In determining whether to recommend a director for re-election, the Nominating Committee considers the director’s past attendance at meetings, participation in and contributions to the activities of the Board and the Company, the director’s adherence to standards of high character and integrity, as well as other qualifications and characteristics set forth in the Nominating Committee charter. +The Nominating Committee periodically retains a third-party executive search firm to assist in the identification and evaluation of director candidates. Mr. Furey, whom the Board has nominated to stand for election to the Board at the Annual Meeting, was recommended to the Nominating Committee by a third-party executive search firm. +Recommendation of Directors by Stockholders +In accordance with its charter, the Nominating Committee will consider any candidate for election as a director of the Company recommended by any CPI stockholder, provided that the recommending stockholder follows the procedures set forth in Section 2.10(b) of the Company’s By-Laws for nominations by stockholders of persons to serve as directors (except for directors nominated by the Tricor Funds (defined below), as described in the paragraph immediately below). The Nominating Committee evaluates director candidates recommended by CPI stockholders (except for the Tricor Funds) in the same manner by which it evaluates other director candidates considered by the Nominating Committee, as described above. +Two of our stockholders, Tricor Pacific Capital Partners (Fund IV), LP and Tricor Pacific Capital Partners (Fund IV) US, LP (together, the “Tricor Funds”), have the right to collectively designate nominees for election to our Board of Directors for so long as the Tricor Funds collectively beneficially own 5% or more of the total number of shares of our common stock then outstanding, pursuant to a Director Nomination Agreement entered into between the Company and the Tricor Funds in connection with our initial public offering. The number of nominees that the Tricor Funds are entitled to designate under the Director Nomination Agreement bears the same proportion to the total number of members of our Board of Directors as the number of shares of common stock beneficially owned by the Tricor Funds bears to the total number of shares of common stock outstanding, rounded up to the nearest whole number. Pursuant to the Director Nomination Agreement, the Company agrees to use its best efforts to ensure that director nominees of the Tricor Funds are included in the Board’s slate of nominees submitted to the stockholders for election at each annual meeting. Thus, the Nominating Committee would not evaluate director candidates nominated by the Tricor Funds and make a determination regarding their suitability for nomination in the manner described above. Refer to “Certain Relationships and Related Party Transactions - Director Nomination Agreement” for a description of the Tricor Funds’ right to designate nominees. +8 +Table of Contents +Pursuant to Section 2.10(b) of the By-Laws, nominations of persons for election to the Board at a meeting of stockholders may be made by any stockholder of the Company entitled to vote for the election of directors at the meeting who sends a timely notice in writing to our Corporate Secretary. To be timely, a stockholder’s notice must be delivered to our Corporate Secretary at the Company’s principal executive offices not less than 90 nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting; provided, however, that if the annual meeting is more than 30 days prior to or after the anniversary of the preceding year’s annual meeting, notice by the stockholder must be delivered not later than the close of business on the later of the 90th day prior to such annual meeting or the 10th day following the day on which public announcement of the date of such annual meeting is made by the Company. +The stockholder’s notice or recommendation is required to contain certain prescribed information about each person the stockholder proposes to nominate or recommend for election as a director, the stockholder giving notice and the beneficial owner, if any, on whose behalf notice is given. The stockholder’s notice must also include the consent of the person proposed to be nominated and to serve as a director if elected. Recommendations or notices relating to director nominations should be sent to CPI Card Group Inc., 10368 West Centennial Road, Littleton, Colorado 80127; Attention: Sarah Kilgore, Chief Legal and Compliance Officer and Corporate Secretary. +Independence of Directors +The Company’s Corporate Governance Guidelines provide that a majority of the members of the Board, and each member of the Audit Committee, Compensation Committee and Nominating Committee, must meet the criteria for independence set forth under applicable law and the rules and standards of applicable national securities exchanges and inter-dealer quotation systems (the “Market Rules”). No director qualifies as independent unless the Board determines that the director has no relationship with the Company which would interfere with the exercise of independent judgment in carrying out his or her responsibilities as a director. These independence guidelines are part of our Corporate Governance Guidelines, available on our website at investor.cpicardgroup.com. The Board considers all relevant facts and circumstances of which it is aware in making an independence determination with respect to any director. +The Board has made independence determinations with respect to each of our directors. Based on the Market Rules, the Board has affirmatively determined that each of Ms. Soranno Keating and Messrs. Furey, Pearce, Peters, Seaman and Sheinbaum are independent within the meaning of the Market Rules. In addition, Mr. Jorg Schneewind served as a director from September 2020 through January 2021 and the Board affirmatively determined that he was independent within the meaning of the Market Rules. +Board’s Role in Risk Oversight +The Company’s management continually monitors the material risks facing the Company. Our enterprise risk management process is designed to facilitate the identification, assessment and management of certain key risks that the Company may encounter and which may impact our ability to achieve our strategic objectives. The enterprise risk management function supplements management’s ongoing responsibilities to monitor and address risks by providing for a process by which risk owners identify causes of and action plans for certain risks, which then are discussed with senior management. +Consistent with, and an example of, this approach, at the onset of the COVID-19 pandemic and regularly thereafter, the Board received reports from management relating to risks faced by the Company due to the pandemic, as well as the Company’s response to those risks. The risk areas included the health and safety of our employees, our ability to remain open and operational to meet the needs of our customers in providing essential financial services to their customers, our ability to respond to a broader economic downturn and the continuity of our supply chain. As the pandemic continues, our Board remains focused on the evolving nature of the risks to our business and the Company’s ability to respond to these risks effectively. +Pursuant to its charter, the Audit Committee is responsible for oversight of the Company’s policies with respect to risk assessment and risk management and discussing with management the major risk exposures facing the Company and the steps the Company has taken to monitor and control such exposures. Periodically, the Company’s Chief Executive Officer, Chief Financial Officer, Chief Legal and Compliance Officer, Chief Technology Officer, Chief Accounting Officer and Internal Audit Director, among other select members of the Company’s management, present to the Audit Committee a description of management’s view of the most significant risks facing the Company and participate in discussions with the Audit Committee regarding those risks and any mitigating factors, plans or policies in place to address and monitor such risks. +While the Audit Committee is charged with primary oversight of risk, the Board and the Board committees oversee risks associated with their principal areas of focus, as summarized below . The committee chairs regularly report to the full Board regarding their risk oversight activities, and the Board regularly reviews and discusses the most significant risks facing the Company and management’s process for identifying, prioritizing and responding to those risks. +9 +Table of Contents +Board/Committee Areas of Risk Oversight and Actions +Full Board +● Evaluates reports received from management and makes inquiries of management as appropriate +● Reviews with management material strategic, operational, financial, human capital, compensation and compliance risks +● Considers specific risk topics in connection with strategic planning and other matters +● Manages risk oversight and related activities conducted by Board committees through reports of the committee chairs to the Board +Audit Committee +● Assesses periodic management reports on the enterprise risk management process and risks identified through that process +● +Discusses with management the Company’s specific processes for assessing and managing risks, including identifying the Company’s major financial risk exposures and the steps necessary to monitor and control such exposures +● Assesses periodic management reports on financial and compliance risks +● Meets periodically with senior management and our independent auditor, KPMG LLP, and reports on such meetings to the Board +Compensation Committee +● Oversees the review and evaluation of the risks associated with our compensation policies and practices +Nominating and Corporate Governance Committee +● Oversees the review and evaluation of the risks associated with our governance structure, policies and processes +● Reviews, approves and recommends to the Board (where appropriate) updates, as necessary, to our organizational documents, Corporate Governance Guidelines and other governance related policies +Corporate Governance +The Board has approved Corporate Governance Guidelines and a Code of Business Conduct and Ethics , as well as a Code of Conduct for Financial Officers that is applicable to our Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer. Our corporate governance documents, including the Corporate Governance Guidelines, the Code of Business Conduct and Ethics, the Code of Conduct for Financial Officers and committee charters, are available on our website at investor.cpicardgroup.com or in printed form upon request by contacting CPI Card Group Inc. at 10368 West Centennial Road, Littleton, Colorado 80127, Attention: Investor Relations. The Board regularly reviews corporate governance developments and modifies these documents as warranted. Any modifications will be reflected on our website. The information on our website is not part of this proxy statement and is not deemed to be incorporated by reference herein. +Other Board Information +Leadership Structure of the Board +Bradley Seaman serves as our Chairman of the Board, and Scott Scheirman serves as our Chief Executive Officer (“CEO”). Our Board has decided to maintain separate Chairman and CEO roles to allow our CEO to focus on the development and execution of our business strategy, while allowing the Chairman to lead the Board in its fundamental role of providing advice to, and independent oversight of, management. The Board recognizes the time, effort and energy that the CEO is required to devote to his position in the current business environment as well as the commitment required to serve as our Chairman. While our By-Laws and Corporate Governance Guidelines do not require that our Chairman and CEO positions be separate, the Board believes that having separate positions and having an independent director serve as Chairman is the appropriate leadership structure for us at this time. +Board Meetings +In fiscal year 2020, our Board held ten meetings. In addition to our Board meetings, our directors attend meetings of committees established by our Board on which they serve . Each of CPI’s directors attended at least 75% of the meetings of our Board and the committees on which he or she served during 2020 that were held when he or she was a director. Each of our directors is expected to +10 +Table of Contents +attend each meeting of the Board and is strongly encouraged to attend each annual stockholder meeting, as provided in our Corporate Governance Guidelines. All of our directors attended the 2020 annual meeting of stockholders. +Meetings of Non-Employee Directors +In accordance with our Corporate Governance Guidelines, our non-employee directors meet regularly in executive sessions of the Board without management present. Mr. Bradley Seaman, our Chairman, presides over these executive sessions. In the event that Mr. Seaman is not available to lead these meetings, the presiding director is chosen by the non-employee directors in attendance. +Committees of the Board +The Board has three standing committees: the Audit Committee, the Compensation Committee and the Nominating Committee. The following chart sets forth the directors who currently serve as members of each of the Board committees as of the date of this proxy statement. +Audit +Compensation +Nominating +Directors +Committee +Committee +Committee +Robert Pearce +C +X +Nicholas Peters +C +X +Scott Scheirman +Bradley Seaman* +X +Marc Sheinbaum +X +X +Valerie Soranno Keating +X +C +* Chairman of the Board +“C” Denotes member and chair of committee +“X” Denotes member +Audit Committee +The Audit Committee held eight meetings in 2020. The Board has determined that all of the members of the Audit Committee meet the independence criteria for purposes of serving on an audit committee under the applicable OTCQX® Best Market rules and Rule 10A-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In addition, our Board has determined that Mr. Pearce qualifies as an “audit committee financial expert,” as such term is defined in Item 407(d)(5) of Regulation S-K. The Audit Committee operates under a written charter setting forth its functions and responsibilities. A copy of the current charter is available on our website at investor.cpicardgroup.com or in printed form upon request. Refer to “Audit Committee Report” for a summary description of the Audit Committee’s functions and responsibilities. +Compensation Committee +The Compensation Committee held eight meetings in 2020. The Board has determined that all of the members of the Compensation Committee are independent as defined in OTCQX® Best Market rules. The Compensation Committee has overall responsibility for approving and evaluating director and officer compensation plans, policies and programs of the Company and reviewing the disclosure of such plans, policies and programs to our stockholders in the Company’s annual proxy statement. The Compensation Committee utilizes an independent compensation consultant to assist it in its duties, and it may delegate certain of its authority to a subcommittee of the Compensation Committee, the CEO or another executive officer, including with respect to matters relating to the compensation of the Company’s employees other than the Company’s CEO and executive officers. The Compensation Committee operates under a written charter setting forth its functions and responsibilities. A copy of the current charter is available on our website at investor.cpicardgroup.com or in printed form upon request. +In consultation with the Company’s management, the Compensation Committee establishes the general policies relating to senior management compensation and oversees the development and administration of such compensation programs. Our human resources executives and staff support the Compensation Committee in its work. These members of management work with compensation consultants (whose engagements have been approved by the Compensation Committee), accountants and legal counsel, as necessary, to implement the Compensation Committee’s decisions, monitor evolving competitive practices and make compensation recommendations to the Compensation Committee. Our human resources management, in conjunction with our independent compensation consultant, develops specific compensation recommendations for senior executives, which are first reviewed by senior management and then presented to the Compensation Committee. The Compensation Committee has final authority to approve, modify or reject the recommendations in its sole discretion and to make its decisions in executive session. The Compensation Committee approves all compensation of our executive officers, including equity awards. +Since 2018, the Compensation Committee has engaged Willis Towers Watson (“WTW”) as its independent compensation consultant. The compensation consultant reports directly to the Compensation Committee, including with respect to management’s recommendations of compensation programs and awards. The Compensation Committee has the sole authority to approve the scope and terms of the engagement of WTW and to terminate such engagement. WTW assisted the Compensation Committee with the +11 +Table of Contents +development of competitive market data, compensation program design and related assessments of the Company’s executive and director compensation levels, evaluation of annual and long-term incentive compensation strategy and compilation and review of total compensation data for the Company’s Named Executive Officers (as defined in “Executive Compensation”). The Company paid WTW approximately $66,500 for the executive and director compensation consulting services described above in 2020. Additionally, Company management decided to engage WTW to provide other professional consulting services in 2020 primarily related to health and welfare (unrelated to executive compensation) in an amount totaling approximately $175,000. +The Compensation Committee has reviewed the independence of WTW in light of SEC rules regarding compensation consultants and has concluded that Willis Towers Watson’s work for the Compensation Committee does not raise any conflict of interest. +Nominating and Corporate Governance Committee +The Nominating Committee held five meetings in 2020. The Board has determined that all of the members of the Nominating Committee are independent as defined in the OTCQX® Best Market rules. +The Nominating Committee is responsible for, among other things: (i) identifying individuals qualified to become members of the Board, consistent with criteria approved by the Board; (ii) recommending director nominees to the Board for election at the next annual meeting of the stockholders of the Company; (iii) in the event of a vacancy on or an increase in the size of the Board, recommending director nominees to the Board to fill such vacancy or newly established Board seat; (iv) recommending directors to the Board for membership on each committee of the Board; and (v) establishing and reviewing annually our Corporate Governance Guidelines and Code of Business Conduct and Ethics. The Nominating Committee operates under a written charter setting forth its functions and responsibilities. A copy of the current charter is available on our website at investor.cpicardgroup.com or in printed form upon request. +Compensation Committee Interlocks and Insider Participation +None of the members of our Compensation Committee has in the past served as an officer or employee of the Company. None of the members of our Compensation Committee has any relationship requiring disclosure as a related party transaction. None of our executive officers currently serves, or in the past year has served, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on our Board or Compensation Committee. +Communications to the Board +Stockholders and interested parties can contact the Board or any director or group of directors (including the Chairman and the independent directors) through written communication sent to CPI Card Group Inc., 10368 West Centennial Road, Littleton, Colorado 80127, Attention: Sarah Kilgore, Chief Legal and Compliance Officer and Corporate Secretary. Our Corporate Secretary reviews all written communications and forwards to the Board copies of any such correspondence that is directed to the Board or that, in the opinion of the Corporate Secretary, deals with the functions of the Board or Board committees or that she otherwise determines requires the Board’s or any Board Committee’s attention. Concerns relating to accounting, internal accounting controls or auditing matters are immediately brought to the attention of our Audit Committee Chair, or may be submitted to the Audit Committee Chair in accordance with our Whistleblower Policy (available on our website), and such concerns will be handled in accordance with procedures established by the Audit Committee with respect to such matters. From time to time, the Board may change the process by which stockholders may communicate with the Board. Any such changes will be reflected in our Corporate Governance Guidelines, which are posted on our website at investor.cpicardgroup.com. +Director Compensation +The following sets forth our compensation package for our non-employee directors, which did not change as compared to the 2019 director compensation program. Consistent with the 2019 director compensation program, 2020 director fees were paid quarterly in cash. +Compensation Element +Value +Retainer +$ +100,000 +Audit Committee Chair Fee +$ +20,000 +Compensation Committee Chair Fee +$ +15,000 +Nominating Committee Chair Fee +$ +10,000 +Audit Committee Member Fee +$ +10,000 +Compensation Committee Member Fee +$ +7,500 +Nominating Committee Member Fee +$ +5,000 +12 +Table of Contents +The following table summarizes the annual compensation for our non-employee directors during 2020. Mr. Scheirman, our President and Chief Executive Officer, does not receive any additional compensation for his service on the Board. Please see the “2020 Summary Compensation Table” for a summary of the compensation received by Mr. Scheirman with respect to 2020. +2020 DIRECTOR COMPENSATION +Fees +Earned +Or Paid +In Cash +Name +($) +Douglas Pearce (1) +$ +60,000 +Robert Pearce +$ +127,500 +Nicholas Peters +$ +120,000 +Jorg Schneewind (2) +$ +52,500 +Bradley Seaman (3) +$ +— +Marc Sheinbaum +$ +112,500 +Valerie Soranno Keating +$ +117,500 +(1) +Mr. Douglas Pearce did not stand for re-election at the 2020 annual meeting of stockholders and, accordingly, the fees reported in this table reflect fees earned during his period of service on the Board. +(2) +Mr. Schneewind joined the Board on September 15, 2020 and, accordingly, the fees reported in this table reflect fees earned during his period of service on the Board. +(3) +Mr. Seaman declined compensation for 2020. +Security Ownership of Certain Beneficial Owners, Directors and Management +The following table sets forth, as of April 1, 2021 (except as indicated below), beneficial ownership, as defined by SEC rules, of our common stock. Each of the persons listed below has sole voting and investment power with respect to the beneficially owned shares listed unless otherwise indicated. For purposes of the following table, beneficial ownership is determined in accordance with Exchange Act Rule 13d-3. The percentage calculations set forth in the table are based on 11,230,482 shares of common stock outstanding on April 1, 2021 rather than based on the percentages set forth in stockholders’ Schedules 13G or 13D, as applicable, filed with the SEC . +Number of +Shares of +Percentage of +Common +Common +Stock +Stock +Owned +Owned +Beneficially +Beneficially +5% Beneficial Owners: +Tricor Pacific Capital Partners (Fund IV), Limited Partnership (1) +4,124,368 +36.7 +% +Tricor Pacific Capital Partners (Fund IV) US, Limited Partnership (1) +2,434,457 +21.7 +% +Named Executive Officers and Directors: +Thomas Furey +— +— +Robert Pearce +105,189 +* +Nicholas Peters +30,000 +* +Scott Scheirman (2) +286,241 +2.5 +% +Bradley Seaman +— +— +Marc Sheinbaum +1,879 +* +Valerie Soranno Keating +18,797 +* +Guy DiMaggio (3) +16,675 +* +John Lowe (4) +50,025 +* +Total Executive Officers and Directors as a Group (14 individuals) (5) +616,546 +5.3 +% +* Less than 1% +(1) +Based on a Schedule 13G filed jointly by the Tricor Funds, and Parallel49 Equity, ULC on February 12, 2016, as adjusted to give effect to the 1-for-5 reverse stock split we completed on December 20, 2017. Each of the Tricor Funds is managed by Parallel49 Equity, ULC, as the general partner. An investment committee of the Tricor Funds has the power to vote or dispose of the shares held by the Tricor Funds. The investment committee is comprised of Mr. Bradley Seaman, Mr. David Rowntree, J. Trevor Johnstone and Roderick Senft. Each of Messrs. Seaman and Peters is an officer or member of the Tricor Funds and has an indirect pecuniary interest in the shares of common stock held by the Tricor Funds through their respective interests in the Tricor Funds. Each of Messrs. Seaman and Peters expressly disclaims any beneficial ownership of any shares of common stock held by the Tricor Funds. The address of the Tricor Funds is c/o Parallel49 Equity, 225 East Deerpath Road, Suite 200, Lake Forest, IL 60045. +13 +Table of Contents +(2) +Includes an aggregate of 280,000 options to purchase common stock that are vested or will vest within 60 days of April 1, 2021. +(3) +Includes an aggregate of 16,675 options to purchase common stock that are vested or will vest within 60 days of April 1, 2021. +(4) +Includes an aggregate of 50,025 options to purchase common stock that are vested or will vest within 60 days of April 1, 2021. +(5) +Includes an aggregate of 449,000 options to purchase common stock that are vested or will vest within 60 days of April 1, 2021. +14 +Table of Contents +EXECUTIVE OFFICERS +The following table sets forth certain information concerning each of our executive officers: +Name +Age +Position +Scott Scheirman +58 +President, Chief Executive Officer and Director +Guy DiMaggio +51 +Senior Vice President and General Manager, Secure Card +Lane Dubin +52 +Senior Vice President and General Manager, Personalization, Prepaid and Instant Issuance +Lori Frasier +54 +Chief Human Resources Officer +Sarah Kilgore +53 +Chief Legal and Compliance Officer and Corporate Secretary +John Lowe +44 +Chief Financial Officer +Kevin O’Brien +41 +Chief Accounting Officer +Beth Williams +45 +Chief Technology Officer +Scott Scheirman. See “Directors and Corporate Governance” for Mr. Scheirman’s biographical information. +Guy DiMaggio has served as a Senior Vice President and General Manager since July 2018. Mr. DiMaggio is a financial services executive with over 20 years of experience building and leading world-class operations and customer service teams. Prior to joining the Company, he was the SVP and Head of Operations for iPayment Inc. , a financial transaction and processing services company, from 2013 to 2018, responsible for leading all client support and relationship management in the merchant acquiring / card processing industry. Prior to iPayment Inc., Mr. DiMaggio served as the Senior Vice President of Integration and Indirect Business Channel for Vantiv (now known as Worldpay, Inc.) from 2010 to 2012. He also spent nearly a decade in executive roles of increasing responsibility working globally for Western Union from 2001 to 2010, including Vice President of Operations for Europe, Middle East, Africa, Asia & Pacific. Mr. DiMaggio earned a Master of Business Administration degree from the University of Denver Daniels College of Business and he holds a Bachelor’s Degree in Communications from Shippensburg University in Pennsylvania. +Lane Dubin has served as a Senior Vice President and General Manager since January 2018. Mr. Dubin joined the Company as Senior Vice President, Sales and Marketing in August 2016. Prior to joining the Company, Mr. Dubin served at American Express Company from 1992 to 2015. Most recently, he was the Head of Global Sales at American Express Global Business Travel from 2008 to 2015, and Vice President, Business Development – North America, at American Express Global Business Travel from 2003 to 2008. Prior to these roles, Mr. Dubin held roles of increasing responsibility with American Express, including Vice President-Business Development, Financial Education Services for American Express Financial Advisors and Director of Sales and Business Development for Ketera Technologies, a technology start-up incubated by American Express. Mr. Dubin holds a Bachelor of Arts degree in Economics and Business Administration from Ursinus College. +Lori Frasier has served as our Chief Human Resources Officer since October 2019. Prior to joining the Company, Ms. Frasier served as Senior Vice President of Strategy and Performance Management for Key Equipment Finance, a division of KeyBank N.A. (“KeyBank”), a retail banking company, since September 2013. In that role, Ms. Frasier was responsible for strategic planning, marketing and communications, employee development initiatives, client insights, new product development, sales performance and analysis and enterprise project management. Ms. Frasier joined KeyBank in 2003 as Senior Vice President of Global Human Resources and was promoted to Senior Vice President of Strategic Services in 2009. Prior to joining KeyBank, she held various positions of increasing responsibility in human resources and operations at First Data/Western Union. Ms. Frasier earned a Bachelor’s Degree in Business Administration from the University of Colorado at Denver and Master of Business Administration degree from the University of Denver Daniels College of Business. She has also completed the University of Michigan’s Continuing Education, Strategic Human Resources Planning Program. +Sarah Kilgore has served as our Chief Legal and Compliance Officer and Corporate Secretary since December 2017. Prior to joining the Company, Ms. Kilgore was Of Counsel with Moye White LLP, a law firm based in Denver , since June 2017. Prior to Moye White LLP, Ms. Kilgore founded and provided legal services through Kilgore Legal Group, LLC from 2011 through 2015. Prior to establishing Kilgore Legal Group, LLC, Ms. Kilgore served as Associate General Counsel, Governance and Securities for Western Union from 2006 to 2011. Prior to her role at Western Union, she held various legal positions at First Data Corporation and AT&T Corp., and was a corporate attorney in private practice. Ms. Kilgore earned her Juris Doctor degree from the University of Michigan Law School and received her Bachelor’s Degree in Business Administration from Michigan State University. +John Lowe has served as our Chief Financial Officer since July 2018. Prior to joining the Company, Mr. Lowe served as Chief Financial Officer of SquareTwo Financial Corporation , a financial services company, from August 2014 until June 2017. Prior to August 2014, Mr. Lowe held various leadership roles at SquareTwo Financial Corporation, including serving as Treasurer, Vice President of Finance, Vice President of External Reporting and Director of Technical Accounting. Mr. Lowe’s employment with SquareTwo Financial Corporation commenced in 2009. SquareTwo Financial Corporation filed for Chapter 11 bankruptcy protection in March 2017 in connection with a strategic sale of the Company. Mr. Lowe holds a Bachelor of Science degree in both Accounting and Finance from the Virginia Polytechnic Institute and State University and is a Certified Public Accountant in the State of Colorado. Mr. Lowe is also a Chartered Financial Analyst. +15 +Table of Contents +Kevin O’Brien has served as our Chief Accounting Officer since April 2018. Mr. O’Brien joined the Company in March 2016 as Director of Corporate Accounting and SEC Reporting. Prior to joining the Company, Mr. O’Brien served as the Director of Financial Reporting and Compliance at Sports Authority, Inc., a sporting goods retailer, from 2014 to 2016. From 2011 to 2014, Mr. O’Brien served as the Assistant Controller of CIBER, Inc., an information technology and services company. Prior to joining CIBER, Inc., Mr. O’Brien was a Senior Audit Manager at Deloitte & Touche LLP from 2002 to 2011. Mr. O’Brien holds both a Bachelor of Arts degree and Master of Science degree in Accounting from the University of Colorado and is a Certified Public Accountant in the State of Colorado. +Beth Williams has served as our Chief Technology Officer since January 2020, and she previously served in roles with CPI as Technology Director, Instant Issuance and Prepaid from January 2018 to January 2020, and as Director of Personalization Solutions from 2016 to 2017. Prior to joining CPI, Ms. Williams served in various leadership roles at EFT Source, Inc., including Chief Information Officer and Software Development Manager and Lead Software Developer from 2007 to 2015. Prior to 2007, Ms. Williams held a variety of positions of increasing responsibility, including programming, web and software development and analysis at KeyBank, Deloitte Consulting, NFIB, PIC (Sygen international subsidiary) and Vanderbilt University Medical Center. Ms. Williams holds a Bachelor of Business Administration - MIS from Ohio University. +EXECUTIVE COMPENSATION +The following narrative describes our executive compensation program and the decisions of the Compensation Committee of the Board regarding the fiscal year 2020 compensation of our named executive officers. The Company qualifies as a “smaller reporting company” in accordance with Rule 12b-2 of the Exchange Act . For as long as we are a smaller reporting company, we are not required to include a Compensation Discussion and Analysis section in this proxy statement and have elected to comply with the scaled-down executive compensation disclosure requirements . +2020 Named Executive Officers +For fiscal year 2020, our named executive officers (“NEOs”) were: +Scott Scheirman +President, Chief Executive Officer and Director +Guy DiMaggio +Senior Vice President and General Manager, Secure Card +John Lowe +Chief Financial Officer +2020 Business Overview +Business Highlights +Our executive team was pivotal in delivering the Company’s strong financial performance in 2020, including: +● Total Net Sales of $312.2 million, up 12% year-over year; +● Net Income of $16.1 million, up 415% year-over-year; +● Adjusted EBITDA (1) of $57.5 million, up 53% year-over-year; +● Cash Flow from Operations of $22.0 million, up 675% year-over-year; and +● Total stockholder return (“TSR”) of 388%. (2) +Additional highlights of 2020 performance ($ in millions) +(1) +Adjusted EBITDA is not a measurement of financial performance prepared in accordance with GAAP. See Annex A hereto for a reconciliation to Net Income, the most directly comparable GAAP financial measure. +(2) +Calculated as the change in CPI stock price from December 31, 2019 through December 31, 2020. +16 +Table of Contents +(3) +The term Net Sales, as defined in the STIP, is consistent with “Total Net Sales,” as included in the Company’s consolidated financial statements. +Our 2020 results represented a continuation of the Company’s strong financial improvements in each of 2018 and 2019. Such results and improvements contributed to our ability to successfully refinance the Company’s existing indebtedness and enhance its liquidity position through a private offering of senior secured notes and entering into a new revolving credit facility in March 2021. We believe the achievement of these milestones is tied to our executive team’s focus on delivering against our strategic plan and continuing to execute on our four key strategies: deep customer focus; market-leading quality products and customer service; continuous innovation; and a market-competitive business model. +We encourage you to review the financial results set forth in our Form 10-K for the fiscal year ended December 31, 2020. +As described in this “Executive Compensation” section, we believe our compensation program focuses on performance-based compensation elements and provides alignment with the Company’s financial and strategic priorities as well as stockholder interests. We have structured our compensation design features to incentivize our NEOs and other executive officers to pursue performance that increases stockholder value by rewarding top-line growth, profitability and non-financial business imperatives, and we employ competitive compensation levels to drive the retention, performance and engagement of our executive team, including our NEOs. Further, our programs incentivize over-achievement of goals by awarding above-market compensation when the Company exceeds its performance goals, as we did in 2020. +We believe including equity awards as a significant component of our compensation program will allow us to continue to (i) incentivize our executive team to continue improving the business, (ii) promote retention of our high performing executive team and facilitate recruiting of additional top-level talent, (iii) align compensation with stockholder value and (iv) be consistent with market practices. Because of the limited shares currently available for awards under our Omnibus Plan, however, we believe it is necessary to modify the Omnibus Plan to make additional shares available for awards to our executive team, as described in Stockholder Proposals Nos. 5 and 6. See Stockholder Proposal Nos. 5 and 6 for further information. +Impact of COVID-19 +Our Company demonstrated resilience in its response to the ever-evolving landscape presented by the COVID-19 pandemic, while maintaining focus on the health and safety of our employees, our ability to continue to provide essential products and services to our customers and the stability of our supply chain. We took immediate action to develop a pandemic preparedness plan based on federal, state and local guidelines, which we expand and refine as necessary in response to new developments and information. Our pandemic preparedness plan includes health screening, mask wearing, hygiene and enhanced cleaning protocols, visitor protocols, social distancing and remote working where possible, response protocols for sick or exposed employees, communications and training for our workforce, and management oversight through reporting and tracking tools. Many protocols are tailored to the operations in each of our facilities. The Company recognized the commitment and continued hard work of our on-site employees in numerous ways, including: +● Paid multiple cash recognition bonuses throughout 2020; +● Awarded additional paid time off in early January 2021 in recognition of the impact of COVID-19 on employee paid time off in 2020; +● Paid employee compensation for downtime associated with enhanced cleaning and shift staggering to avoid excessive contact between shifts; and +● As vaccinations have become available, provide a cash incentive for employees to receive the COVID-19 vaccine. +We continue to extend gratitude to our employees for their dedication and commitment to safety and serving our customers through these unprecedented times. +We established the executive compensation targets for 2020 early in the year, before the implications of the COVID-19 pandemic were fully understood. Despite the challenges presented by the pandemic, we did not make any executive compensation target adjustments during the year. As illustrated in the “Business Highlights” section above, the Company achieved strong financial results in 2020, and, based on these results, our 2020 STIP paid out at above-target-incentive levels. +Summary of Our 2020 Compensation Decisions +The Compensation Committee makes all decisions regarding our NEOs’ total compensation (base salary, short-term incentives, and long-term incentives). +● +● +● +● +● +● +Factors that Guided 2020 Compensation Decisions +● +Our executive compensation philosophy +● +Degree of achievement of key financial goals for 2020 +● +Recommendations of our CEO (other than with respect to his own compensation) +17 +Table of Contents +● +Advice of the Compensation Committee’s independent compensation consultant +● +Market pay and governance best practices +● +Historical CPI compensation +2020 Compensation Program Changes and Key Decisions +Base Salary +In February 2020, the Compensation Committee approved the following merit increases for fiscal year 2020 in consideration of our NEOs’ performance, review of competitive market data and internal pay equity: +● +CEO : Mr. Scheirman received a 10% increase in his 2020 short-term incentive plan target in lieu of a base salary increase, thus increasing the portion of his pay which is at-risk and directly tied to Company performance. The net increase in his target cash opportunity (base salary + short-term incentive plan target) was 6.2%. +● +Other NEOs : Mr. Lowe received a base salary increase of 5%, effective March 8, 2020. Mr. DiMaggio did not receive a base salary increase in 2020 as he received a 15.4% base salary increase in November 2019 associated with his change in responsibilities as a result of a reorganization of the Company’s operations. +2020 Short-Term Incentive Plan (“2020 STIP”) +The 2020 STIP emphasizes pay-for-performance and the achievement of critical near-term performance milestones. Under the 2020 STIP, the NEOs were eligible to earn quarterly cash bonus awards based on the achievement of pre-established financial goals (specifically, Adjusted EBITDA, Net Sales and Adjusted Free Cash Flow metrics). Each NEO’s individual incentive opportunity is determined by the Compensation Committee following a review of competitive market data and internal pay equity. Based on the Company’s 2020 performance, the 2020 STIP payouts ranged from 178% to 185% of target for the NEOs, reflecting strong above-target performance during 2020. +See “Elements of the 2020 Executive Compensation Program — Short-Term Incentives” for more information. +October 2020 Long-Term Incentive Awards +On October 2, 2020, the Compensation Committee approved our 2020 long-term incentive program, which included a combination of restricted stock units (“RSUs”) and time-based cash retention awards (the “Retention Awards”). The 2020 RSUs represent our first grant of equity-denominated long-term incentives, (other than equity awards associated with initial offers of employment) to the NEOs since 2017 and reflect the Compensation Committee’s desire to return to an equity-based program that further aligns the interests of our NEOs with our stockholders. This represents a change from our compensation program designs in 2018 and 2019, which were primarily cash-based to help manage our annual share usage and stockholder dilution levels. Nevertheless, the number of RSUs we awarded under our 2020 long-term incentive program was limited by the significant share usage that would have been required to deliver grant date fair values that would provide market-competitive levels of long-term incentive compensation and the limited remaining shares available for awards under the Omnibus Plan. +See “Elements of the 2020 Executive Compensation Program — Long-Term Incentives” for more information. +Compensation Peer Group +The Compensation Committee reviewed and affirmed our compensation peer group in 2020, which is comprised of companies that meet at least one of the following criteria: +● +Similar in size and complexity to CPI (primarily based on revenue and EBITDA); +● +In a similar or related technology-oriented industry; or +● +In competition with CPI for executive talent. +See “ Role of Market Data and the Peer Group” for more information. +18 +Table of Contents +Executive Compensation Governance Highlights +The Compensation Committee reviews on an ongoing basis the Company’s executive compensation practices to evaluate whether they support the Company’s executive compensation philosophy and are aligned with stockholder interests. Our 2020 executive compensation practices include the following, each of which the Compensation Committee believes is supportive of our executive compensation philosophy and the interests of our stockholders: +What We Do +What We Don’t Do +✓ +Deliver a significant portion of compensation through performance-based, at-risk pay +✓ +Maintain a peer group for evaluating competitive market practices +✓ +Set pre-established performance targets designed to be challenging +✓ +Regularly review risks associated with compensation +✓ +Consult with an independent consultant on compensation levels and practices +✓ +Provide no executive perquisites +✓ +Maintain a clawback policy +X +Provide automatic, annual increases in executive salaries +X +Maintain uncapped executive incentive plans +X +Award single-trigger cash severance in connection with a change in control +X +Re-price stock options without the prior approval of our stockholders +X +Permit hedging or pledging of equity +X +Enter into supplemental executive retirement plans +X +Provide excise tax gross-ups on termination-related payments +Stockholder Input on Executive Compensation +Beginning on December 31, 2020, the Company was no longer an Emerging Growth Company for purposes of SEC reporting. We continue to qualify as a Smaller Reporting Company and are thus required to hold a say-on-pay and a say-on-frequency vote regarding the compensation of our NEOs. The Say-on-Pay Proposal is included in this proxy statement as Proposal No. 3, and the Say-on-Frequency Proposal is included in this proxy statement as Proposal No. 4. We believe holding an annual advisory say-on-pay vote will foster useful and frequent communication with our stockholders on the Company’s NEO compensation practices and program. +Role of the Compensation Committee +In consultation with the Company’s Chief Executive Officer, the Compensation Committee establishes the general policies relating to senior management compensation and oversees the development and administration of such compensation programs. Our human resources executives and staff support the Compensation Committee in its work to implement the Compensation Committee’s decisions, monitor evolving competitive practices and make compensation recommendations to the Compensation Committee. Our human resources management, in conjunction with our independent compensation consultant, develops specific compensation recommendations for senior executives, which are first reviewed by senior management and then presented to the Compensation Committee. The Compensation Committee has final authority to approve, modify or reject these recommendations in its sole discretion. Members of management do not attend the portions of the Compensation Committee meetings relating to their own compensation, and the Compensation Committee regularly conducts executive sessions without management present. The Compensation Committee approves all compensation of our executive officers, including equity awards. +Role of the Independent Compensation Consultant +Since 2018, the Compensation Committee has engaged WTW as its independent compensation consultant. WTW is engaged by and reports directly to the Compensation Committee. The Compensation Committee has the sole authority to approve the scope and terms of the engagement of WTW and to terminate such engagement. In 2020, WTW assisted the Compensation Committee with the development of competitive market data, compensation program design and related assessments of the Company’s executive and +19 +Table of Contents +director compensation levels, evaluation of short-term and long-term incentive compensation strategy and compilation and review of total compensation data for the Company’s NEOs. +The Compensation Committee has reviewed the independence of WTW in light of SEC rules regarding compensation consultants and has concluded that WTW is independent and its work for the Compensation Committee does not raise any conflict of interest. +Role of Market Data and the Peer Group +In order to gauge the competitiveness of our compensation program and to provide our NEOs with fair and market-competitive compensation, the Company reviewed compensation practices and pay opportunities from general industry survey data as well as from a selection of publicly traded peer companies. The Company attempts to position itself to attract and retain qualified senior executives in the face of competitive pressures in its relevant labor markets, and we design our compensation practices with this goal in mind. +Specifically, in 2020, the Company analyzed information regarding the pay practices of a compensation peer group (as described below) to assist the Compensation Committee in determining pay for our Chief Executive Officer and Chief Financial Officer. In addition, the Company analyzed the pay practices of similarly sized general industry companies in the WTW Executive Compensation Database to assist the Compensation Committee in determining pay for our other executive officers. The compensation data resulting from this analysis was considered by the Compensation Committee in making 2020 executive compensation decisions. +In 2020, we worked with WTW to review and validate our peer group. In compiling our peer group, we engaged in a multi-faceted analysis that identified companies: +● Similar in size and complexity to CPI (primarily based on revenue and EBITDA); +● In a similar or related technology-oriented industry; +● In competition with CPI for executive talent. +The Compensation Committee approved the following peer group for 2020: +Executive Compensation Peer Group +Altium Limited +FormFactor, Inc. +Lattice Semiconductor Corporation +Cass Information Systems, Inc. +GreenSky, Inc. +PRGX Global, Inc. +Consumer Portfolio Services, Inc. +Inphi Corporation +SigmaTron International, Inc. +DSP Group, Inc. +Inseego Corp. +USA Technologies, Inc. +EVERTEC, Inc. +Key Tronic Corporation +20 +Table of Contents +Elements of the 2020 Executive Compensation Program +Our 2020 executive compensation program consisted of fixed pay and variable pay, including cash and non-cash components. The chart below summarizes the various elements of CPI’s 2020 executive compensation program and the objective and key features of each element: +Objective +Type of +Compensation +Key Features +Base Salary +A standard compensation element in executive compensation packages, offering market competitive fixed compensation to attract and retain talent +Cash +● +Reflects individual skills, experience, responsibilities and performance over time +● +Provides a consistent source of income +Short-Term Incentive +A cash-based award that encourages executives to focus on specific short-term corporate and/or business unit performance goals +Cash +● +Performance-based award tied to achievement of critical short-term financial goals and priorities +● +Pays only if threshold performance levels are met or exceeded +Long-Term Incentive — +RSUs +Rewards long-term stockholder value creation, enhances executive stock ownership and promotes retention +Equity +● +At-risk element as value fluctuates based on value of the Company’s common stock +● Aligns executive and stockholder interests +Long-Term Incentive —Retention Cash +A cash-based award that emphasizes executive retention and contributes to competitive compensation levels during a period of stock price volatility and equity constraints +Cash +● +Promotes retention and reflects confidence in and validation of the executive team +● +Helps reduce the annual share utilization rate and manage dilution +Other Benefits +Provide programs for employees to pursue physical and financial wellbeing through retirement and health and welfare benefits +Benefit +● +Competitive broad-based benefits available to all employees +Employment and Post-Termination Arrangements +Protects the Company and NEOs during certain termination events, through the use of a CEO employment agreement, an executive severance and change-in-control policy, and various restrictive covenants +Benefit +● +Facilitates an orderly transition in the event of management changes +● +Helps ensure NEOs remain focused on creating sustainable performance in case of risk of job loss +● +Provides confidentiality, non-compete and non-solicit protections for the Company +Base Salary +Base salaries established for the Company’s executive officers are intended to reflect each individual’s responsibilities, experience, historical performance and other discretionary factors deemed relevant by the Company and have generally been set at levels deemed necessary to attract and retain individuals with superior talent. Base salaries are also designed to provide executive officers with steady cash flow during the course of the fiscal year that is not contingent on short-term variations in the Company’s operating performance. The base salaries of our NEOs in 2019 and 2020 are set forth below. +21 +Table of Contents +Our NEOs were entitled to the following annual base salaries in 2019 and 2020: +2019 Base Salary +2020 Base Salary +(As of December 31, 2019) +(As of December 31, 2020) +% Increase +Scott Scheirman (1) +$ +592,250 +$ +592,250 +0.0% +Guy DiMaggio (2) +$ +375,000 +$ +375,000 +0.0% +John Lowe +$ +330,687 +$ +347,221 +5.0% +(1) +Mr. Scheirman received a 10% increase in his 2020 short-term incentive plan target in lieu of a base salary increase, thus increasing the portion of his pay which is directly tied to Company performance. The net increase in his target cash opportunity (base salary + short-term incentive plan target) was 6.2%. +(2) +Mr. DiMaggio did not receive a base salary increase in 2020 as he received a 15.4% base salary increase in November 2019 associated with his change in responsibilities as a result of a reorganization of the Company’s operations. +Short-Term Incentives +The Company believes that establishing cash incentive opportunities is an important factor in both attracting and retaining qualified and highly skilled executives and in motivating our executives to achieve the Company’s financial objectives. To achieve these objectives, the Company maintains a quarterly short-term incentive plan, or the “STIP.” The quarterly design of the STIP is intended to reward the achievement of critical quarterly financial performance objectives. As such, payments may vary quarter to quarter. +To determine payouts under the STIP, the Company measures performance for each metric on both a quarterly and a cumulative basis. Each quarterly payment is “capped” at 125% of target, amounts that exceed the quarterly cap are subject to a year-end “true-up,” and each quarterly award is eligible for a “catch-up” payment for cumulative performance to-date. This design was implemented to further enhance the motivational effect of the STIP and provide a continual incentive to improve performance throughout the year. +Under the 2020 STIP, executives were eligible to earn quarterly cash bonuses based on the achievement of the following metrics: +u +Description +Metrics +50% based on achievement of Adjusted EBITDA (1) +30% based on achievement of Net Sales (2) +20% based on achievement of Adjusted Free Cash Flow (3) +Corporate Executive Measurement +100% based on company-wide achievement +Business Unit Executive (General Manager) Measurement +50% based on company-wide achievement +50% based on Business Unit achievement +(1) +“Adjusted EBITDA” is a financial measure that is not calculated according to U.S. generally accepted accounting principles (“GAAP”). For purposes of the STIP, we define Adjusted EBITDA as EBITDA (which represents earnings before interest, taxes, depreciation and amortization, all on a continuing operations basis) adjusted for litigation and related charges incurred in connection with certain patent and stockholder litigation; stock-based compensation expense; estimated sales tax expense (benefit); restructuring and other charges; loss on Revolving Credit Facility termination; foreign currency gain or loss; litigation settlement gain; and other items that are unusual in nature, infrequently occurring or not considered part of our core operations, which, for 2020, were limited and immaterial. +(2) +The term Net Sales, as defined in the STIP, is consistent with “Total Net Sales,” as included in the Company’s consolidated financial statements, for all references contained herein. +(3) +“Adjusted Free Cash Flow” is a financial measure that is not calculated according to U.S. GAAP. We define Adjusted Free Cash Flow as cash flow from operations less cash capital expenditures, and adjusted for the following cash items: interest; income taxes; litigation and related charges incurred in connection with certain patent and stockholder litigation; restructuring and other charges; and other significant unusual and non-recurring events. This measure does not represent funds available for investment or other discretionary uses since it does not deduct cash used to service our debt. +22 +Table of Contents +Our annual STIP Net Sales, Adjusted EBITDA and Adjusted Free Cash Flow goals are defined on a quarterly basis for purposes of calculating the quarterly STIP payments. The quarterly goals align to the Company’s annual operating plan and reflect the planned seasonality of our business and operations. Achievement of performance goals is calculated on the basis of straight-line interpolation between the threshold, target and maximum bonus opportunities for each applicable metric underlying the performance goal. Quarterly and cumulative payouts under the STIP can range from 0% to 200%, based on Company performance; however, any payment made under the STIP with respect to the first three quarters is capped at one-hundred twenty-five (125%) of the quarterly target incentive. The targeted cumulative Adjusted EBITDA metric also serves as a trigger as CPI must achieve the overall Adjusted EBITDA threshold performance in order for any year-end STIP payments to fund. +Actual 2020 Payouts +Despite the significant unforeseen global impact of COVID-19, no adjustments were made to the financial performance targets under our 2020 STIP, and 2020 STIP awards were based on goals established prior to the pandemic. Based on strong Company performance in 2020, our 2020 STIP paid out at above-target-incentive levels. Messrs. Scheirman, DiMaggio and Lowe received 2020 STIP payments of $2,017,714, $508,475, and $481,118, respectively. +Long-Term Incentives +On October 2, 2020, the Compensation Committee approved long-term incentive awards in the form of RSUs and Retention Awards. The October 2020 RSUs represent our first grant of equity-denominated awards (other than equity awards associated with initial offers of employment) to the NEOs since 2017. Beginning in 2018, the Compensation Committee suspended the use of equity awards because they were viewed as an ineffective compensation vehicle in light of the Company’s stock price and dilutive impact on stockholder value. In addition, based on the Company’s stock volatility and standard methodology for valuing equity awards, the Omnibus Plan lacked a sufficient number of available shares to make market-competitive equity awards. Due to a number of factors, the Compensation Committee delayed requesting stockholder approval of an increase in shares to the Omnibus Plan until this year. See the section “Stockholder Equity Compensation Related Proposals” below for further discussion. As the Company’s performance and stock price have improved, the Compensation Committee supports a return to the market practice of granting equity-based long-term incentive awards to its executives, as evidenced by the award of RSUs as a portion of the long-term incentive awards in 2020. We believe such awards promote retention of our high performing executive team, allow us to continue to recruit top-level talent and align compensation with stockholder value, all of which incentivize our executive team to continue improving our business. +Together with STIP awards, the RSUs and Retention Awards are designed to balance the achievement of critical near-term performance objectives with long-term strategic goals and the retention of key executives. +October 2020 Awards +The following table sets forth the details of the RSUs and Retention Awards granted to our NEOs in October 2020: +# RSUs +Granted (1) +RSU Grant Date +Fair Value +Retention +Awards (2) +Aggregate +Value +Scott Scheirman +54,757 +$116,085 +$562,215 +$678,300 +Guy DiMaggio +13,796 +$29,248 +$141,652 +$170,900 +John Lowe +13,126 +$27,827 +$134,773 +$162,600 +(1) +RSUs vest into shares of the Company’s common stock on the second anniversary of the grant date, subject to the NEO’s continued employment through the vesting date. +(2) +Under the terms of the Retention Awards, in the event the recipient voluntarily terminates his or her employment without Good Reason or the Company terminates the recipient’s employment for Cause (each as defined in the Retention Award agreement), in either case, before March 15, 2022 (the “Retention Date”), then such recipient will be required to promptly repay to the Company, in any event no later than ten (10) days following such termination, an amount equal to the Retention Award. A recipient will not be required to repay a Retention Award in the event of termination of employment due to death or disability, by the Company without Cause or by the recipient for Good Reason prior to the Retention Date. Similar Retention Awards were granted in 2019 and vested in March 2021. +Stockholder Equity Compensation Related Proposals +The Compensation Committee believes that it is important for the Company to return to a long-term incentive program that consists largely or entirely of equity-based awards. Such an equity-based incentive program would (i) enable the Company to attract and retain a high performing executive team, (ii) incentivize behaviors which support the best interests of the Company and its stockholders, (iii) align business performance with compensation and (iv) be consistent with market practice. Unfortunately, the current limited share availability and Insider equity award limit in the Omnibus Plan do not allow us to return to a market standard equity-based long-term +23 +Table of Contents +incentive program as part of our executive compensation, which is why we are seeking stockholder approval to make additional shares available for award under our Omnibus Plan (see Stockholder Proposal No. 5) and to increase the limit on equity awards that can be made to Insiders (see Stockholder Proposal No. 6). +Several key goals guiding our planned transition to an equity-based compensation model include: +● Further aligning executive compensation with total stockholder returns; +● Reviewing benchmark long-term incentive plan practices provided by our compensation consultant and conforming to such practices where appropriate; and +● Rewarding an executive team that has delivered strong stockholder returns in the past few years. +The Compensation Committee believes that given improvements in the last few years in business performance and stock price and the executive team’s achievement of key milestones, including the recent refinancing of the Company’s indebtedness, it is in the Company’s and the stockholders’ best interests to begin to transition to a more market competitive equity-based long-term incentive program during 2021. +Other Benefits +The Company maintains the CPI Holdings I, Inc. 401(k) Plan (the “401(k) Plan”), which is designed to be a qualified defined-contribution plan under the provisions of the Internal Revenue Code (the “Code”), covering substantially all employees who meet certain eligibility requirements. Under the 401(k) Plan, participants may defer their salary subject to statutory limitations and may direct the contributions among various investment accounts. The Company matches 100% of the participant’s first 3% of deferrals and 50% of the next 2% of deferrals. The matching contributions are fully vested at the time of the match. +Termination or Change in Control +Pursuant to their respective employment or post-termination arrangements, each of our NEOs is entitled to certain payments and benefits in certain termination situations or upon a change in control. We believe that our severance arrangements would help facilitate an orderly transition in the event of changes in management. For further discussion of severance payments and benefits, see “ Employment and Post-Termination Arrangements. ” +Additional Compensation Governance Practices +Compensation Risk Assessment +The Compensation Committee regularly reviews the risk associated with the Company’s compensation programs. As part of this process, the Compensation Committee reviewed a comprehensive risk assessment conducted by WTW in 2019 and, at the time, concluded that our compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on the Company. In 2020, the Compensation Committee discussed with WTW any year-over-year changes that could impact the risk assessment. The Compensation Committee and WTW concluded that no program changes were implemented in 2020 that would materially affect the existing risk profile of the Company’s compensation programs, and that several of our current practices effectively mitigate risk and promote performance. +Prohibited Transactions Policy +In February 2020, the Company adopted a Prohibited Transactions Policy, which prohibits CPI officers and directors from purchasing financial instruments and engaging in certain transactions designed to hedge against a decrease in the value of the Company’s securities, including short sales, publicly traded options, hedging and monetization transactions, margin sales, pledges of collateral and standing limit orders. +Clawback Policy +The Company has had an incentive compensation recoupment policy in place since 2016 (the “Clawback Policy”). Under the Clawback Policy, if the Company is required to restate its financial results because of its material noncompliance with any financial reporting requirement under applicable securities laws, the Compensation Committee will review all awards or payments of any form of incentive-based compensation (including cash and equity) made to current and former executive officers of the Company within the three-year period immediately preceding the date on which the Company is required to prepare the restatement. If the Compensation Committee determines that any such incentive awards or payments were based on erroneous data and would have been lower had they been calculated based on the restated results, the Compensation Committee may, to the extent permitted by applicable law, seek to recover, for the benefit of the Company, the difference between the amounts awarded or paid and the amounts that would have been awarded or paid based on the restated results, as determined by the Compensation Committee. These remedies would be in addition to, and not in lieu of, any penalties imposed by law enforcement agencies, regulators or other authorities. For purposes of this policy, “executive officers” of the Company include all persons designated by the Board as Section 16 reporting officers. +24 +Table of Contents +Stock Ownership Guidelines +Since 2016, the Company has maintained formal executive stock and independent director stock ownership guidelines that apply to senior executives, including our NEOs, and our independent directors (“Unaffiliated Directors”) who are not affiliated with Parallel49 Equity, ULC (formerly known as Tricor Pacific Capital and an affiliate of the Tricor Funds (“Parallel49”)). The Company did this to further align the interests of our leaders and the Unaffiliated Directors with those of our stockholders, and further promote our commitment to sound corporate governance. +Under the guidelines, executives and Unaffiliated Directors have up to five years to accumulate shares and share equivalents that have a market value equal to or greater than a prescribed multiple of annual salary or annual retainer fees, as applicable and as outlined below. While our executives and Unaffiliated Directors have until 2021 (or five years from appointment to their position, whichever is later) to satisfy the applicable share ownership levels, given the historical volatility in the Company’s stock price and the Compensation Committee’s decision not to include equity awards as long-term incentives for 2018 and 2019 and to make limited long-term incentive equity awards in 2020, management and the Compensation Committee have been monitoring progress against these guidelines and will determine an appropriate course of action. +The table below reflects the current ownership guidelines: +Position +Multiple of Salary +or Retainer +Chief Executive Officer +5x salary +CEO Direct Reports and Chief Accounting Officer +2x salary +Other Executives +1x salary +Unaffiliated Directors +3x retainer +The types of ownership arrangements counted towards the guidelines are: shares owned outright; restricted stock; RSUs; intrinsic value of any vested stock options and any deferred stock. +25 +Table of Contents +2020 Summary Compensation Table +The 2020 Summary Compensation Table discloses the compensation information for fiscal year 2020 and, to the extent required by applicable SEC disclosure rules, fiscal year 2019 for our principal executive officer (“PEO”) and the two most highly compensated executive officers other than the PEO who were serving as executive officers at the end of the last completed fiscal year. +Nonqualified +Non-Equity +Deferred +Incentive Plan +Compensation +All Other +Name and Principal Position +Year +Salary (1) +Bonus (2) +Stock Awards (3) +Option Awards +Compensation (4) +Earnings +Compensation (5) +Total +Scott Scheirman, President, Chief Executive Officer and Director +2020 +$ +615,029 +$ +562,215 +$ +116,085 +$ +— +$ +2,017,714 +— +$ +11,400 +$ +3,322,443 +2019 +$ +588,270 +$ +710,700 +$ +— +$ +— +$ +1,747,080 +— +$ +4,423 +$ +3,050,473 +Guy DiMaggio, SVP and GM, Secure Card +2020 +$ +389,423 +$ +221,652 +$ +29,248 +$ +— +$ +508,475 +— +$ +11,400 +$ +1,160,198 +2019 +$ +330,769 +$ +305,700 +$ +— +$ +— +$ +400,271 +— +$ +10,700 +$ +1,047,440 +John Lowe, Chief Financial Officer (6) +2020 +$ +356,761 +$ +254,773 +$ +27,827 +$ +— +$ +481,118 +— +$ +11,400 +$ +1,131,879 +(1) +Due to the timing of our bi-weekly payroll calendar, during 2020 we had 27 pay periods instead of 26. Thus, all employees received actual base pay compensation that was above their stated annual base salary. +(2) +For 2020, these amounts include (a) a prepaid retention award described under “Long-Term Incentives” and (b) for Messrs. DiMaggio and Lowe, bonus awards associated with the terms of their employment with the Company, described below under “Mr. DiMaggio’s Employment Offer Letter” and “Mr. Lowe’s Employment Offer Letter.” For 2019, these amounts represent (a) prepaid retention award granted during 2019 and which were subject to repayment in the event the NEO voluntarily terminated employment without “good reason” or the Company had terminated the NEO’s employment for “cause,” in either case, before March 15, 2021 and (b) for Mr. DiMaggio, a bonus award associated with the terms of his employment with the Company, described below under “Mr. DiMaggio’s Employment Offer Letter.” +(3) +These amounts represent the grant date fair value of the RSU awards as calculated in accordance with FASB Topic 718, valued based on the closing stock price on the date of grant. +(4) +Represents payments under the STIP for the applicable year. +(5) +Represents matching contributions under the Company’s 401 (k) plan. +(6) +Mr. Lowe was not a named executive officer in 2019 and thus his 2019 compensation information is not included in this table. +Outstanding Equity Awards at 2020 Fiscal Year-End +Option Awards +Stock Awards +Number of +Number of +Market +Securities +Securities +Number of +Value of +Underlying +Underlying +Shares of +Shares of +Unexercised +Unexercised +Option +Stock that +Stock that +Options +Options +Exercise +Option +Have Not +Have Not +(Exercisable) +(Unexercisable) +Price +Expiration +Vested +Vested +Name +(#) +(#) (1) +($) +Date +(#) (2) +($) (3) +Scott Scheirman +280,000 +— +$ +5.25 +9/25/2027 +54,757 +$ +240,383 +Guy DiMaggio +16,675 +8,325 +$ +2.11 +8/1/2028 +13,796 +$ +60,564 +John Lowe +50,025 +24,975 +$ +1.98 +7/2/2028 +13,126 +$ +57,623 +(1) +For Mr. DiMaggio, (a) 33.4% of the options vested and became exercisable on August 1, 2019, (b) 33.3% of the options vested and became exercisable on August 1, 2020, and (c) 33.3% of the options will vest and become exercisable on August 1, 2021, subject to continued service with the Company through such vesting date. For Mr. Lowe, (a) 33.4% of the options vested and became exercisable on July 2, 2019, (b) 33.3% of the options vested and became exercisable on July 2, 2020, and (c) 33.3% of the options will vest and become exercisable on July 2, 2021, subject to continued service with the Company through such vesting date. +(2) +The RSU awards will vest 100% on October 2, 2022, subject to continued service with the Company through such vesting date. +(3) +The market value of the RSUs is based on the $4.39 closing price of a share of our common stock on December 31, 2020. +26 +Table of Contents +Employment and Post-Termination Arrangements +Mr. Scheirman’s Employment Agreement +On September 25, 2017, Mr. Scheirman entered into an employment agreement (the “CEO Employment Agreement”) with the Company to serve as President and Chief Executive Officer, effective October 5, 2017, for a term ending on March 31, 2021, plus automatic one-year renewals thereafter unless either party provides notice of intent not to renew the agreement. The CEO Employment Agreement provides for an initial base salary of $575,000 per year. +Under the terms of the CEO Employment Agreement, in the event that Mr. Scheirman’s employment is terminated by the Company without Cause, he resigns for Good Reason (each as defined in the CEO Employment Agreement), separates employment due to death or disability or the Company fails to renew his agreement upon its expiration, Mr. Scheirman would be entitled to (i) continued monthly payments of his base salary and his annual STIP target bonus for a period of eighteen months; (ii) a prorated portion of his STIP bonus based on the number of full months completed during the fiscal year in which such termination of employment occurs and based on final Company performance for the STIP year; (iii) accelerated vesting of any outstanding equity awards that would have otherwise vested in the next twelve months following the termination (for performance-based awards, vesting will be based on actual performance determined at the end of the performance period); (iv) the cost of COBRA coverage for his health coverage then in effect, less the employee contribution for an active employee, for the severance period; and (v) up to six months of outplacement services. The estimated cash severance payment to Mr. Scheirman on termination, assuming a termination as of December 31, 2020, would have been $2,619,208 (inclusive of $11,682 in COBRA insurance coverage and outplacement services valued at $15,000) for termination without “Cause,” for “Good Reason,” for the Company’s failure to renew the agreement, or termination due to his death or disability. +In the event that Mr. Scheirman experiences a termination event as described above within six months prior to or two years following a Change in Control (as defined in the CEO Employment Agreement) of the Company, Mr. Scheirman will receive the benefits described in the foregoing paragraph, except that the severance and COBRA continuation benefits in items (i) and (iv) above would be extended from eighteen to twenty-four months, and his outstanding equity awards would vest in full (with any performance-based awards vesting at the target level of performance). The estimated cash severance payment to Mr. Scheirman on termination in connection with a Change in Control, assuming a termination as of December 31, 2020, would have been $3,487,277 (inclusive of $15,576 in COBRA insurance coverage and outplacement services valued at $15,000). +Mr. Scheirman is subject to certain restrictive covenants in the CEO Employment Agreement, including obligations regarding non-competition and non-solicitation of Company employees and customers during the term of his employment and for a period of eighteen months following any termination of his employment with the Company. +Mr. Scheirman, along with the other NEOs and executive officers, participates in the STIP whereby a significant portion of his total compensation is directly tied to Company performance. To further align Mr. Scheirman’s compensation with Company performance, the Company’s Compensation Committee determined in February 2020 that in lieu of a base increase, Mr. Scheirman’s 2020 STIP target would be increased. As a participant in the 2020 STIP, Mr. Scheirman’s 2020 quarterly incentive opportunity was equal to $227,220 per quarter and his annual incentive opportunity was equal to $227,220. Payouts were based on quarterly and annual Company performance goals for 2020. See “Elements of the 2020 Executive Compensation Program – Short-Term Incentives” for a description of the 2020 STIP. +In October 2019, Mr. Scheirman entered into a retention agreement with the Company pursuant to which Mr. Scheirman was paid $710,700 on October 18, 2019. Mr. Scheirman would have been required to repay that amount, net of taxes, to the Company in the event he voluntarily terminated his employment without “good reason” or the Company terminated his employment for “cause,” in either case before March 15, 2021. +As described above, in October 2020, Mr. Scheirman entered into a retention agreement with the Company pursuant to which he was paid $562,215 on October 22, 2020, and must repay that amount to the Company in the event he voluntarily terminates his employment without “good reason” or the Company terminates his employment for ”cause,” in either case before March 15, 2022. +Mr. DiMaggio’s Employment Offer Letter +Mr. DiMaggio does not have an employment agreement with the Company. Under the terms of his employment offer letter, he received an initial base salary of $300,000 per year. Mr. DiMaggio’s offer letter also provided for a cash sign-on bonus of $200,000 payable in two installments with $120,000 paid on his one-year anniversary and $80,000 payable on his two-year anniversary. Mr. DiMaggio’s offer letter does not provide for any severance benefits, however, upon a termination of his employment as of December 31, 2020, Mr. DiMaggio would have been eligible to receive an estimated $672,116 in cash severance (inclusive of $7,116 in COBRA insurance coverage and outplacement services valued at $15,000) upon a termination without “cause” or for “good reason,” pursuant to our Executive Severance Guidelines, as summarized below. Also, pursuant to the Executive Severance Guidelines, the estimated cash severance payment to Mr. DiMaggio on termination in connection with a Change in Control (as defined in the Omnibus Plan), assuming a termination as of December 31, 2020, would have been $997,116 (inclusive of $7,116 in COBRA insurance coverage and outplacement services valued at $15,000). +27 +Table of Contents +Mr. DiMaggio, along with the other NEOs and executive officers, participates in the STIP whereby a significant portion of his total compensation is directly tied to Company performance. As a participant in the 2020 STIP, Mr. DiMaggio’s 2020 quarterly incentive opportunity was equal to $55,000 per quarter and his annual incentive opportunity was equal to $55,000. Payouts were based on quarterly and annual Company performance goals for 2020. See “Elements of the 2020 Executive Compensation Program – Short-Term Incentives” for a description of the 2020 STIP. +In September 2019, Mr. DiMaggio entered into a retention agreement with the Company pursuant to which Mr. DiMaggio was paid $185,700 in 2019. Mr. DiMaggio would have been required to repay that amount, net of taxes, to the Company in the event he voluntarily terminated his employment without “good reason” or the Company terminated his employment for “cause,” in either case before March 15, 2021. +As discussed above, in October 2020, Mr. DiMaggio entered into a retention agreement with the Company pursuant to which Mr. DiMaggio was paid $141,652 on October 22, 2020, and must repay that amount to the Company in the event he voluntarily terminates his employment without “good reason” or the Company terminates his employment for “cause,” in either case before March 15, 2022. +Mr. Lowe’s Employment Offer Letter +Mr. Lowe does not have an employment agreement with the Company. Under the terms of his employment offer letter, he received an initial base salary of $325,000 per year. Mr. Lowe’s offer letter also provided for a cash sign-on bonus of $200,000 payable in two installments with $80,000 paid on or about December 31, 2018 and $120,000 payable on his two-year anniversary. Mr. Lowe’s offer letter does not provide for any severance benefits, however, upon a termination of his employment as of December 31, 2020, Mr. Lowe would have been eligible to receive an estimated $650,528 in cash severance (inclusive of $17,407 in COBRA insurance coverage and outplacement services valued at $15,000) upon a termination without “cause” or for “good reason” pursuant to our Executive Severance Guidelines, as summarized below. Also, pursuant to the Executive Severance Guidelines, the estimated cash severance payment to Mr. Lowe on termination in connection with a Change in Control (as defined in the Omnibus Plan), assuming a termination as of December 31, 2020, would have been $959,589 (inclusive of $17,407 in COBRA insurance coverage and outplacement services valued at $15,000). +Mr. Lowe, along with the other NEOs and executive officers, participates in the STIP whereby a significant portion of his total compensation is directly tied to Company performance. As a participant in the 2020 STIP, Mr. Lowe’s 2020 quarterly incentive opportunity was equal to $54,180 per quarter and his annual incentive opportunity was equal to $54,180. Payouts were based on quarterly and annual Company performance goals for 2020. See “Elements of the 2020 Executive Compensation Program – Short-Term Incentives” for a description of the STIP. +In September 2019, Mr. Lowe entered into a retention agreement with the Company pursuant to which Mr. Lowe was paid $180,300. Mr. Lowe would have been required to repay that amount, net of taxes, to the Company in the event he voluntarily terminated his employment without “good reason” or the Company terminated his employment for “cause,” in either case before March 15, 2021. +As discussed above, in October 2020, Mr. Lowe entered into a retention agreement with the Company pursuant to which Mr. Lowe was paid $134,773 on October 22, 2020, and must repay that amount to the Company in the event he voluntarily terminates his employment without “good reason” or the Company terminates his employment for “cause,” in either case before March 15, 2022. +Executive Severance Guidelines +On June 22, 2017, the Company adopted guidelines governing executive severance (“Executive Severance Guidelines”), applicable to officers and NEOs of the Company who are not otherwise parties to individual employment or severance agreements providing for benefits upon a termination of employment. Under the Executive Severance Guidelines, if the employment of an eligible officer is terminated without “cause” or due to a resignation for “good reason,” not in connection with a “change in control” (each as defined in the Executive Severance Guidelines) and subject to the execution, delivery and non-revocation of a release of claims, he or she would be eligible to receive cash severance equal to one times the sum of his or her base salary plus annual bonus target (or 1.5 times the sum of base salary and annual bonus target for a CEO participant). For such a termination occurring within the 24 months following a change in control of the Company, the applicable severance multiple would be increased to 1.5 times for all other eligible officers (or 2.0 times for a CEO participant). In addition, the Company would continue to pay a portion of the cost of medical, dental and vision benefits on behalf of an eligible officer, such that the officer’s contribution would remain as it were for an active officer, for the greater of the severance period or such officer’s eligibility for COBRA continuation coverage, and the Company may provide, in its discretion, up to six months of outplacement services. Each of Messrs. DiMaggio and Lowe are subject to the Executive Severance Guidelines, while Mr. Scheirman is excluded from the Executive Severance Guidelines due to the severance provisions in the CEO Employment Agreement. +28 +Table of Contents +Equity Compensation Plan Information Table +The following table provides information as of December 31, 2020 with respect to shares of our common stock that may be issued under our existing equity compensation plan. +Number of securities +remaining available for +future issuance under +Number of securities to +Weighted average +equity compensation +be issued upon exercise +exercise price of +plans (excluding +of outstanding options, +outstanding options, +securities reflected in +warrants and rights +warrants and rights +column (a)) +(a) (#) +(b) ($) +(c) (#) +Equity compensation plans approved by security holders (1) +886,373 +(2) +6.44 +(2) +185,113 +(3) +Equity compensation plans not approved by security holders +— +– +– +Total +886,373 +6.44 +185,113 +(1) +All current equity compensation plans have been approved by stockholders. +(2) +Consists of (i) 706,372 outstanding options under the Omnibus Plan at an average exercise price of $6.44; and (ii) 180,001 outstanding restricted stock units under the Omnibus Plan. Only options were used in computing the weighted average exercise price. +(3) +The CPI Holdings I, Inc. Amended and Restated 2007 Stock Option Plan (the “Option Plan”) was discontinued in connection with our initial public offering. As of December 31, 2020, there were no outstanding shares remaining, and no further grants can be made under the Option Plan. +AUDIT COMMITTEE REPORT +This report of the Audit Committee is required by the SEC and, in accordance with the SEC’s rules, will not be deemed to be part of or incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933, as amended (the “Securities Act”), or under the Exchange Act, except to the extent that the Company specifically incorporates this information by reference, and will not otherwise be deemed “soliciting material” or “filed” under either the Securities Act or the Exchange Act. +The principal purpose of the Audit Committee is to assist the Board in its oversight of (i) the integrity of our accounting and financial reporting processes and the audits of our financial statements; (ii) our system of disclosure controls and internal controls over financial reporting; (iii) our compliance with legal and regulatory requirements; (iv) the qualifications and independence of our independent auditor; (v) the performance of our independent auditor; and (vi) the business practices and ethical standards of the Company. The Audit Committee is responsible for the appointment, compensation, retention and oversight of work of the Company’s independent auditor. The Audit Committee’s function is more fully described in its charter. +Our management is responsible for the preparation, presentation and integrity of our financial statements, for the appropriateness of the accounting principles and reporting policies that we use and for establishing and maintaining adequate internal control over financial reporting. KPMG LLP (“KPMG”), our independent registered public accounting firm for 2020, was responsible for performing an independent audit of our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2020, and expressing an opinion on the conformity of those financial statements with generally accepted accounting principles. +The Audit Committee has reviewed and discussed with management our audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2020. The Audit Committee has also reviewed and discussed with KPMG the audited financial statements in such Form 10-K. In addition, the Audit Committee discussed with KPMG those matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (the “PCAOB”) and the SEC. Additionally, KPMG provided to the Audit Committee the written disclosures and the letter required by applicable requirements of the PCAOB regarding KPMG’s communications with the Audit Committee concerning independence, and the Audit Committee has discussed with KPMG its independence from the Company. +Based upon the review and discussions described above, the Audit Committee recommended to the Board that CPI’s audited financial statements be included in our Annual Report on Form 10-K for the year ended December 31, 2020 for filing with the SEC. +Robert Pearce, Chairman +Marc Sheinbaum +Valerie Soranno Keating +29 +Table of Contents +FEES PAID TO INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +For the years ended December 31, 2020 and 2019, KPMG LLP, our independent registered public accounting firm, billed the approximate fees set forth below: +2020 +2019 +Audit fees (1) +$ +975,943 +$ +733,326 +Audit-related fees (2) +— +— +Tax fees (3) +246,500 +269,425 +All other fees (4) +— +— +Total fees +$ +1,222,443 +$ +1,002,751 +(1) +Audit fees relate to (i) the audit of our annual consolidated financial statements as of and for the years ended December 31, 2020 and 2019, and (ii) interim reviews of our quarterly consolidated financial statements for the interim periods within the years ended December 31, 2020 and 2019. In addition, audit fees in 2020 related to comfort letters issued in connection with the Company’s debt refinancing, and additional audit procedures as the Company was no longer considered an emerging growth company. +(2) +These services include attest services related to financial reporting that are not required by statute or regulation. We did not pay KPMG LLP for services included in this category during the years ended December 31, 2020 and 2019. +(3) +For the years ended December 31, 2020 and 2019, tax fees relate primarily to U.S. federal and state tax compliance, and for services in connection with research and development tax credit studies, transfer pricing analysis, and tax consulting for business dispositions. Tax fees in 2020 also related to compliance and refund filings in connection with the CARES Act. +(4) +This category includes fees for services that are not included in the above categories. We did not pay KPMG LLP for services included in this category during the years ended December 31, 2020 and 2019. +The Audit Committee has adopted certain policies and procedures regarding permitted audit and non-audit services and the pre-approval of such services. Each year, the Audit Committee will ratify the types of audit and non-audit services of which management may wish to avail itself, subject to pre-approval of specific services. Each year, the independent registered public accounting firm will submit a pre-approval request, which will list each known and/or anticipated audit and non-audit service for the upcoming calendar year and which will include associated budgeted fees. The Audit Committee will review the requests and approve a list of annual pre-approved non-audit services. Any additional interim requests for additional non-audit services that were not contained in the annual pre-approval request are pre-approved by the Audit Committee. +All services provided by KPMG LLP during the fiscal year ended December 31, 2020 and 2019 were pre-approved by the Audit Committee. +30 +Table of Contents +PROPOSAL NO. 2 +RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +Our Audit Committee has appointed KPMG LLP as our independent registered public accounting firm for the year ending December 31, 2021. A proposal will be presented at the Annual Meeting to ratify this appointment. If the stockholders fail to ratify such selection, another independent registered public accounting firm will be considered by our Audit Committee, but the Audit Committee may nonetheless choose to engage KPMG LLP. Even if the appointment of KPMG LLP is ratified, the Audit Committee in its discretion may select a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and its stockholders. We have been advised that a representative of KPMG LLP will be present at the Annual Meeting and will be available to respond to appropriate questions and, if such person chooses to do so, make a statement. +THE BOARD AND THE AUDIT COMMITTEE UNANIMOUSLY RECOMMEND A VOTE FOR RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 202 1. +31 +Table of Contents +PROPOSAL NO. 3 +STOCKHOLDER ADVISORY VOTE TO APPROVE OUR named EXECUTIVE officer COMPENSATION +We are offering our stockholders an opportunity to cast an advisory vote to approve the compensation of our NEOs, as disclosed in this proxy statement, pursuant to Section 14A of the Exchange Act (commonly referred to as a “say-on-pay” vote). The advisory vote to approve executive compensation is not a vote on the Company’s general compensation policies or the compensation of the Company’s Board of Directors. +In making decisions with respect to compensation for our NEOs, the Compensation Committee is guided by a pay-for-performance philosophy. The Compensation Committee believes that a significant portion of each NEO’s total compensation opportunity should vary with achievement of the Company’s annual and long-term financial, operational and strategic goals. In designing the compensation program for our NEOs, the Compensation Committee seeks to achieve the following key objectives: +Motivate Executives . The compensation program should encourage our executive officers to achieve the Company’s annual and long-term goals. +Align Interests with Stockholders . The compensation program should align the interests of our executive officers with those of our stockholders, promoting actions that will have a positive impact on total stockholder return over the long term. +Attract and Retain Talented Executives . The compensation program should provide each executive officer with a total compensation opportunity that is market competitive. This objective is intended to ensure that we are able to attract and retain qualified executives while maintaining an appropriate cost structure for the Company. +We believe our executive compensation is structured in the manner that best serves the interests of the Company and its stockholders. We encourage stockholders to review the “EXECUTIVE COMPENSATION” section above for a complete discussion of how we determine the pay for our NEOs as well as key accomplishments the executive team achieved during 2020. +Accordingly, we are asking stockholders to approve the following advisory resolution at the Annual Meeting: +RESOLVED, that the stockholders of the Company approve, on an advisory and non-binding basis, the compensation of the Company’s named executive officers, as disclosed in this proxy statement pursuant to the compensation disclosure rules of the Securities and Exchange Commission , including the Executive Compensation section, the compensation tables and any related material disclosed in this proxy statement.” +As an advisory vote, this resolution is not binding on us. However, the Compensation Committee, which is responsible for designing and administering our executive compensation program, values the opinions expressed by our stockholders in their vote on this proposal and will consider the outcome of the vote when making future compensation decisions for our NEOs. We expect to hold this vote on an annual basis for the foreseeable future. +THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE +FOR APPROVAL, ON AN ADVISORY BASIS, OF OUR NAMED EXECUTIVE +OFFICER COMPENSATION AS DISCLOSED IN THIS PROXY STATEMENT. +32 +Table of Contents +PROPOSAL NO. 4 +STOCKHOLDER ADVISORY VOTE on the frequency of the stockholder vote on named executive officer compensation +Pursuant to Section 14 of the Exchange Act, we are offering our stockholders an opportunity to cast an advisory vote on the frequency of the non-binding stockholder advisory vote to approve NEO compensation. The options are to hold the advisory vote to approve NEO compensation every year, every two years or every three years. This advisory vote on the frequency of the “say-on-pay” vote is required to be held at least once every six years. +The Board of Directors is recommending that the frequency of the stockholder advisory vote on NEO compensation be every year. This recommendation reflects our commitment to strong corporate governance and accountability to our stockholders. We believe holding an annual advisory vote will foster useful and frequent communication with our stockholders by allowing our stockholders to annually express their views on the Company’s NEO compensation practices and programs. +As an advisory vote, the outcome of the vote on this resolution is not binding on the Company. However, the Board of Directors values the opinions expressed by our stockholders, and will take into consideration the outcome of the vote when determining the frequency of the stockholder advisory vote on NEO compensation. +While the Board of Directors recommends an annual advisory vote to approve NEO compensation, the proxy card provides stockholders with four choices with respect to this proposal: (1) one year; (2) two years; (3) three years; or (4) abstaining from voting on the proposal. +THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT AN ADVISORY +VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION BE HELD EVERY ONE +YEAR . +33 +Table of Contents +PROPOSAL NO. 5 +APPROVAL OF AN AMENDMENT AND RESTATEMENT OF THE CPI CARD GROUP INC. OMNIBUS INCENTIVE PLAN TO INCREASE THE AVAILABLE SHARES AND MAKE OTHER ADMINISTRATIVE CHANGES +The Board and management believe it is important that an amendment and restatement (the “Amended and Restated Omnibus Plan”) of the Omnibus Plan be approved at the Annual Meeting. +As of the Record Date, there were approximately 185,113 shares of Company common stock that remained available for future issuances under the Omnibus Plan (representing 1.6% of the Company’s issued and outstanding common stock). Given the limited number of shares that currently remain available under the Omnibus Plan, the Board and management believe it is important to increase the available shares under the Omnibus Plan by one million shares in order to allow the Company to continue to be able to make awards of long-term incentives, which we believe are critical for attracting, motivating, rewarding and retaining a talented management team that will contribute to our success. These incentives are also deemed critical in aligning compensation with stockholder returns. As of the Record Date, the number of shares issuable under the Omnibus Plan is 1,200,000 shares, representing 10.7% of the Company’s issued and outstanding common stock. If the Amended and Restated Omnibus Plan is approved, the number of shares issuable under the Amended and Restated Omnibus Plan will be 2,200,000, representing 19.6% of the Company’s issued and outstanding common stock as of the Record Date. See the section below “Historical Equity Awards” for additional measurements of stockholder dilution and Omnibus Plan overhang. The Amended and Restated Omnibus Plan would also extend the term of the Omnibus Plan from September 25, 2027 to May 27, 2031, limit the number of shares subject to options and SARs granted during any fiscal year to any participant to 1,500,000 and make certain other administrative changes, such as the deletion of the provisions previously included to comply with the performance-based compensation exemption under Section 162(m) of the Code. +At the Annual Meeting, stockholders are also being asked to increase the cap on awards that may be granted to “Insiders” of the Company, as defined in the TSX Company Manual for the purpose of security-based compensation arrangements. Under the TSX Company Manual, “Insiders” consist of our corporate officers, executive officers, directors and the Tricor Funds. Under the TSX Company Manual, because such Insiders have an interest in the proposal to increase the award cap, Insiders are prohibited from voting on such proposal. Accordingly, the proposal to increase the award cap is being presented to stockholders separately as Proposal No. 6 and the approval of this Proposal No. 5 will not constitute an approval of Proposal No. 6 with respect to the increase in the award cap for Insider awards. Please see Proposal No. 6 for further information regarding the increase in the Insider award cap. +Historical Equity Awards +The following table sets forth the number of restricted stock units and stock options that have been granted under the Omnibus Plan to NEOs and the other individuals and groups indicated since the inception of the Omnibus Plan. +Restricted +Stock +Name and Position +Stock Units +Options +Scott Scheirman, President, Chief Executive Officer +60,998 (1) +280,000 +Guy DiMaggio, SVP and GM, Secure Card +13,796 +25,000 +John Lowe, Chief Financial Officer +13,126 +75,000 +All current executive officers (2) +133,454 +482,300 +All current non-employee directors +45,408 +— +All current employees (other than current executive officers) +75,684 +224,072 +(1) +Includes 6,241 restricted stock units awarded to Mr. Scheirman when he was a non-employee director and prior to becoming Chief Executive Officer of the Company. +(2) +Includes awards to Messrs. Scheirman, DiMaggio and Lowe. +As of the Record Date, 180,001 restricted stock units and 706,372 stock options are currently issued and outstanding under the Omnibus Plan, which underlying shares of Company common stock represent approximately 7.9% of the Company’s issued and outstanding common stock. +The following table summarizes the utilization rate (being the total number of restricted stock units and stock options granted under the Omnibus Incentive Plan during the applicable fiscal year divided by the weighted average number of shares of Company common stock outstanding for the applicable fiscal year) in respect of the Omnibus Plan for the past three years: +Fiscal Year +RSUs Utilization Rate +Stock Options Utilization Rate +2020 +1.6% +0% +2019 +0% +0% +2018 +0.7% +1.4% +34 +Table of Contents +A common measure of equity plan stockholder dilution is the overhang rate, which is calculated as the sum of (i) the total outstanding awards plus (ii) the shares available for award, divided by the sum of (x) the total outstanding awards plus (y) the shares available for award plus the total shares of outstanding company stock. The Omnibus Plan overhang rate as of the Record Date is 8.7%. The overhang rate under the Amended and Restated Omnibus Plan would be 15.6%, inclusive of the additional one million share increase proposal. +Description of the Amended and Restated Omnibus Plan +We originally adopted the Omnibus Plan in connection with our initial public offering, pursuant to which cash and equity-based incentives (including through an annual incentive program) may be granted to participating employees, directors and consultants. The principal purposes of the Amended and Restated Omnibus Plan are to encourage profitability and growth through short-term and long-term incentives that are consistent with our objectives; to give participants an incentive for excellence in individual performance; to promote teamwork among participants; and to give us a significant advantage in attracting and retaining key employees, directors and consultants. The Amended and Restated Omnibus Plan provides for the grant of incentive stock options within the meaning of Section 422 of the Code, nonqualified stock options, stock appreciation rights (“SARs”), restricted shares, restricted stock units, performance-based awards (including performance shares, performance units and performance bonus awards), and other stock or cash-based awards. +A summary of the Amended and Restated Omnibus Plan is set forth below. This summary of the Amended and Restated Omnibus Plan is qualified by reference to the full text of the Amended and Restated Omnibus Plan, which has been included as Annex B and is incorporated by reference herein. +Administration . The Amended and Restated Omnibus Plan is administered by the Board or by a committee that the Board designates for this purpose (referred to below as the plan administrator). Currently, the Compensation Committee of the Board administers the Omnibus Plan. The plan administrator has the power to determine the terms of the awards granted under the Amended and Restated Omnibus Plan, including the exercise price, the number of shares subject to each award, and the exercisability of the awards. The plan administrator also has the full power to determine the persons to whom and the time or times at which awards will be made and to make all other determinations and take all other actions advisable for the administration of the Amended and Restated Omnibus Plan. +Eligibility for Participation. Certain employees, consultants, and directors are eligible to be granted awards under the Amended and Restated Omnibus Plan, other than incentive stock options, which may be granted only to employees. As of April 9, 2021, all of our approximately 1,000 employees, including eight executive officers and five non-employee directors, would have been eligible to receive awards under the Amended and Restated Omnibus Plan if selected by the plan administrator for participation; however, consistent with market practices, we have historically limited awards under the Omnibus Plan to our executive officers, non-employee directors and senior levels of Company management. +Shares Available for Awards . Subject to capitalization adjustments as provided in the Amended and Restated Omnibus Plan, the number of shares of the Company's common stock reserved and available for issuance thereunder is the sum of (i) 1,200,000 shares, consisting of 800,000 shares originally reserved under the Omnibus Plan as of October 8, 2015, the date of the effectiveness of the registration statement for the Company's initial public offering, and 400,000 additional shares originally reserved under the Omnibus Plan as of September 25, 2017, less any shares issued under the Omnibus Plan on or prior to, or subject to outstanding awards as of, the date of the Board's adoption of the Amended and Restated Omnibus Plan, plus (ii) an additional 1,000,000 shares to be added to the share reserve if this Amended and Restated Omnibus Plan is approved by stockholders. Under the Omnibus Plan, 400,000 shares may be issued subject to incentive stock option awards. As of the Record Date, the number of shares issuable under the Omnibus Plan is 1,200,000 shares, representing 10.7% of the Company’s issued and outstanding common stock. If the Amended and Restated Omnibus Plan is approved, the number of shares issuable under the Amended and Restated Omnibus Plan will be 2,200,000, representing 19.6% of the Company’s issued and outstanding common stock as of the Record Date. See the section above “Historical Equity Awards” for additional measurements of stockholder dilution and Omnibus Plan overhang. The closing price of a share of Company common stock on the Record Date was $14.75 per share, as reported on the OTC Markets Group Inc. +Award Limits . The maximum number of shares issuable pursuant to awards under the Amended and Restated Omnibus Plan and any other share compensation arrangement we maintain within a one-year period to any one participant in the Amended and Restated Omnibus Plan, will not exceed 5% of the total number of issued and outstanding shares of our common stock on the grant date of such awards, on a non-diluted basis. The maximum number of shares that may be issued to all Insiders (as defined in the Toronto Stock Exchange Company Manual for the purpose of security-based compensation arrangements) within any one-year period, and issuable to Insiders at any point in time under the Amended and Restated Omnibus Plan and any other share compensation arrangement we maintain will not exceed 10% of the total number of then-issued and outstanding shares of our common stock, increased to 15% if Proposal No. 6 is approved by our disinterested stockholders at the Annual Meeting. In addition, subject to the foregoing limits, the aggregate number of shares subject to options and SARs granted during any fiscal year to any participant shall not exceed, subject to capitalization adjustments as provided in the Amended and Restated Omnibus Plan, one and a half million (1,500,000) shares. Under the terms of the Amended and Restated Omnibus Plan, the aggregate grant date fair market value of shares subject to awards granted during any fiscal year to any non-employee director, when taken together with any cash fees paid to such non-employee director during the fiscal year (in each case, with respect to his or her service as a non-employee director), will not exceed $500,000; provided, however, that this limit will not apply to any awards a non-employee director elects to receive at fair market value in lieu of all or a portion of such non-employee director’s compensation. +35 +Table of Contents +Stock Options . Under the Amended and Restated Omnibus Plan, the plan administrator may grant participants incentive stock options, which qualify for special tax treatment in the United States, as well as non-qualified stock options. The plan administrator will establish the duration of each option at the time it is granted, with a maximum duration of 10 years from the grant date, reduced to five years in the case of an incentive stock option granted to a ten percent (10%) stockholder of the Company’s common stock (within the meaning of Code Section 422(b)(6)). Each option’s term is subject to earlier expiration pursuant to the applicable provisions in the Amended and Restated Omnibus Plan and the award agreement. The plan administrator may also establish vesting performance requirements that must be met prior to the exercise of options. If on the date an outstanding option would expire, the exercise of the option would violate applicable securities laws or any insider trading policy maintained by the Company, the expiration date applicable to the option will be extended (except to the extent that such extension would violate Section 409A of the Code), to a date that is 30 calendar days after the date that the exercise of the option would no longer violate applicable securities laws or any such insider trading policy. +Stock option grants must have an exercise price that is equal to or greater than the fair market value of our common stock on the date of grant. Stock option grants may include provisions that permit the option holder to exercise all or part of the holder's vested options, or to satisfy withholding tax liabilities, by tendering shares of our common stock already owned by the option holder with a fair market value equal to the exercise price. +Unless the applicable award agreement provides otherwise, in the event that the employment or service of a participant with the Company and all affiliates thereof terminates for any reason other than cause, retirement, disability, or death, (i) options granted to such participant, to the extent that they are exercisable at the time of such termination, will remain exercisable until the date that is ninety (90) days after such termination, on which date they will expire, and (ii) options granted to such participant, to the extent that they were not exercisable at the time of such termination, will expire at the close of business on the date of such termination. Unless the applicable award agreement provides otherwise, the ninety (90) day period post-termination exercise period will be extended to one (1) year after the date of such termination in the event of the participant’s death during such ninety (90) day period. Unless the applicable award agreement provides otherwise, in the event that the employment or service of a participant with the Company and all affiliates thereof terminates on account of retirement, disability or the death of the participant, (i) options granted to such participant, to the extent that they were exercisable at the time of such termination, will remain exercisable until the date that is one (1) year after such termination, on which date they will expire and (ii) options granted to such participant, to the extent that they were not exercisable at the time of such termination, will expire at the close of business on the date of such termination. In the event of the termination of a participant’s employment or service for cause, all outstanding options granted to such participant will expire at the commencement of business on the date of such termination. +SARs . The plan administrator may also grant SARs, which will be exercisable upon the occurrence of certain contingent events. SARs entitle the holder upon exercise to receive an amount in any combination of cash and shares of the Company's common stock (as determined by the plan administrator) equal in value to the excess of the fair market value of the shares covered by the SARs on the date of exercise over the exercise price of the right. Any SAR must be granted with an exercise price that is equal to or greater than the fair market value of our common stock on the date of grant. The term of each free standing SAR (an SAR granted alone and independent of another award) will be fixed by the plan administrator, but no free standing SAR will be exercisable more than ten (10) years after the date such right is granted. The term of each related SAR (an SAR granted with all or part of any option granted under the Amended and Restated Omnibus Plan) will be the term of the option to which it relates, but no related SAR will be exercisable more than ten (10) years after the date such SAR is granted. +In the event of the termination of employment or service with the Company and all affiliates thereof of a participant who has been granted one or more free standing SARs, such rights will be exercisable at such time or times and subject to such terms and conditions as shall be determined by the plan administrator in the applicable award agreement. In the event of the termination of employment or service with the Company and all affiliates thereof of a participant who has been granted one or more related SARs, such rights will be exercisable at such time or times and subject to such terms and conditions as set forth in the related options. +Restricted Shares . The plan administrator may also grant restricted shares, which are shares of common stock that vest in accordance with the terms and conditions established by the plan administrator. The plan administrator will determine in the award agreement whether the participant will be entitled to vote the restricted shares and/or receive dividends on such shares. +Restricted Stock Units. Restricted stock units represent the right to receive shares of the Company's common stock at a specified date in the future, subject to forfeiture of such right. If the restricted stock unit has not been forfeited, then on the date specified in the restricted stock unit grant, the Company must deliver to the holder of the restricted stock unit, unrestricted shares of our common stock, which will be freely transferable. +Performance-Based Awards . Performance-based awards are denominated in shares of our common stock, stock units, or cash, and are linked to the satisfaction of performance criteria established by the plan administrator. +Performance Goals. The plan administrator may establish performance goals that may be used to determine the grant, vesting or payment of an award under the Amended and Restated Omnibus Plan and which may be based on one or more of the following criteria: (i) earnings before interest and taxes; (ii) earnings before interest, taxes, depreciation and amortization; (iii) net operating profit after tax; (iv) cash flow; (v) revenue; (vi) net revenues; (vii) sales; (viii) days sales outstanding; (ix) scrap rates; (x) income; (xi) net income; (xii) operating income; (xiii) net operating income; (xiv) operating margin; (xv) earnings; (xvi) earnings per share; (xvii) return on equity; (xviii) return on investment; (xix) return on capital; (xx) return on assets; (xxi) return on net assets; (xxii) total stockholder return; (xxiii) economic profit; (xxiv) market share; (xxv) appreciation in the fair market value, book value or other measure of value of the Company’s +36 +Table of Contents +common stock; (xxvi) expense or cost control; (xxvii) working capital; (xxviii) volume or production; (xxix) new products; (xxx) customer satisfaction; (xxxi) brand development; (xxxii) employee retention or employee turnover; (xxxiii) employee satisfaction or engagement; (xxxiv) environmental, health or other safety goals; (xxxv) individual performance; (xxxvi) strategic objective milestones; (xxxvii) days inventory outstanding; (xxxviii) any combination of, or, as applicable, a specified increase or decrease in, any of the foregoing or (xxxix) any other goal selected by the plan administrator, whether or not listed in the Amended and Restated Omnibus Plan. Where applicable, the performance goals may be expressed in terms of attaining a specified level of the particular criteria or the attainment of a percentage increase or decrease in the particular criteria, and may be applied to one or more of the Company or an affiliate thereof, or a division or strategic business unit of the Company, or may be applied to the performance of the Company relative to a market index, a group of other companies or a combination thereof, all as determined by the plan administrator. The performance goals may include a threshold level of performance below which no payment shall be made (or no vesting shall occur), levels of performance at which specified payments shall be made (or specified vesting shall occur), and a maximum level of performance above which no additional payment shall be made (or at which full vesting shall occur). In establishing a performance goal or determining the achievement of a performance goal, the plan administrator may provide that achievement of the applicable performance goals may be amended or adjusted to include or exclude components of any performance goal, including, without limitation, foreign exchange gains and losses, asset write-downs, acquisitions and divestitures, change in fiscal year, unbudgeted capital expenditures, special charges such as restructuring or impairment charges, debt refinancing costs, extraordinary or noncash items, unusual, infrequently occurring, nonrecurring or one-time events affecting the Company or its financial statements or changes in law or accounting principles. Performance goals will be subject to such other special rules and conditions as the plan administrator may establish at any time. +Change in Control Provisions. In connection with the grant of an award, the plan administrator may provide for the treatment of such award in the event of a change in control of the Company, including that, in the event of an involuntary termination of an executive's employment by the Company in connection with a change in control, any outstanding awards that are unexercisable or otherwise unvested will become fully vested and/or immediately exercisable. +Amendment and Termination. The Board may alter, amend, modify, or terminate the Amended and Restated Omnibus Plan at any time, provided that the approval of our stockholders will be obtained for any amendment to the Amended and Restated Omnibus Plan that requires stockholder approval under the rules of the stock exchange(s) on which our common stock is then listed or in accordance with other applicable law, including, but not limited to, an increase in the number of shares of our common stock reserved for issuance, a reduction in the exercise price of options or other entitlements, an extension of the maximum term of any award, an increase to the maximum number of shares that may be issued to “Insiders” (as defined in the Toronto Stock Exchange Company Manual for the purpose of security-based compensation arrangements) or an amendment that grants the Board additional powers to amend the Amended and Restated Omnibus Plan. In addition, no modification of an award will, without the prior written consent of the participant, adversely alter or impair any rights or obligations under any award already granted under the Amended and Restated Omnibus Plan unless the Board expressly reserved the right to do so at the time of the award. +Transfer of Awards. No purported sale, assignment, mortgage, hypothecation, transfer, charge, pledge, encumbrance, gift, transfer in trust (voting or other) or other disposition of, or creation of a security interest in or lien on, any award or any agreement or commitment to do any of the foregoing by any holder thereof in violation of the provisions of the Amended and Restated Omnibus Plan or an award agreement will be valid, except with the prior written consent of the plan administrator, which consent may be granted or withheld in the sole discretion of the plan administrator. Any purported transfer of an award or any economic benefit or interest therein in violation of the Amended and Restated Omnibus Plan or an award agreement will be null and void ab initio, and will not create any obligation or liability of the Company, and any person purportedly acquiring any award or any economic benefit or interest therein transferred in violation of the Amended and Restated Omnibus Plan or an award agreement will not be entitled to be recognized as a holder of such shares. Unless otherwise determined by the plan administrator in accordance with the provisions of the immediately preceding sentence, an option may be exercised, during the lifetime of the participant, only by the participant or, during any period during which the participant is under a legal disability, by the participant’s guardian or legal representative. +Certain U.S. Federal Income Tax Effects +The following is a brief summary of certain United States federal income tax consequences generally arising with respect to awards under the Amended and Restated Omnibus Plan. This discussion does not address all aspects of the United States federal income tax consequences of participating in the Amended and Restated Omnibus Plan that may be relevant to participants in light of their personal investment or tax circumstances and does not discuss any state, local or non-United States tax consequences of participating in the Amended and Restated Omnibus Plan. Each participant is advised to consult his or her particular tax advisor concerning the application of the United States federal income tax laws to such participant’s particular situation, as well as the applicability and effect of any state, local or non-United States tax laws before taking any actions with respect to any awards. +Nonqualified Stock Options. An optionee subject to United States federal income tax will generally not recognize taxable income for United States federal income tax purposes upon the grant of a nonqualified stock option. Rather, at the time of exercise of the nonqualified stock option, the optionee will recognize ordinary income, and the Company or employer subsidiary will be entitled to a deduction subject to the limitations under Section 162(m) of the Code, in an amount equal to the excess of the fair market value of the shares on the date of exercise over the exercise price. If the shares acquired upon the exercise of a nonqualified stock option are later sold or exchanged, then the difference between the amount received upon such sale or exchange and the fair market value of such shares on the date of such exercise will generally be taxable as long-term or short-term capital gain or loss, depending upon the length of time such shares were held by the optionee. +37 +Table of Contents +Incentive Stock Options. An optionee subject to United States federal income tax will generally not recognize taxable income for United States federal income tax purposes upon the grant of an incentive stock option (within the meaning of Section 422 of the Code) and neither the Company nor the employer subsidiary will be entitled to a deduction at that time. An optionee will not recognize income (except for purposes of the alternative minimum tax) upon exercise of an incentive stock option. If the shares acquired by exercise of an incentive stock option are held for the longer of two years from the date the option was granted and one year from the date it was exercised, any gain or loss arising from a subsequent disposition of those shares will be taxed as long-term capital gain or loss, and neither the Company nor the employer subsidiary will be entitled to any deduction. If, however, those shares are disposed of within the above-described period, then in the year of that disposition the optionee will recognize compensation taxable as ordinary income equal to the excess of the lesser of (1) the amount realized upon that disposition, and (2) the excess of the fair market value of those shares on the date of exercise over the exercise price, and the Company or employer subsidiary will be entitled to a corresponding deduction, subject to the limitations under Section 162(m) of the Code. +SARs. A participant subject to United States federal income tax who is granted a SAR will not recognize ordinary income for United States federal income tax purposes upon receipt of the SAR. At the time of exercise, however, the participant will recognize ordinary income equal to the value of any cash received and the fair market value on the date of exercise of any shares received. Neither the Company nor the or employer subsidiary will be entitled to a deduction upon the grant of a SAR, but generally will be entitled to a deduction for the amount of income the participant recognizes upon the participant's exercise of the SAR, subject to the limitations under Section 162(m) of the Code. The participant's tax basis in any shares received will be the fair market value on the date of exercise and, if the shares are later sold or exchanged, then the difference between the amount received upon such sale or exchange and the fair market value of the shares on the date of exercise will generally be taxable as long-term or short-term capital gain or loss depending upon the length of time such shares were held by the participant. +Restricted Shares. A participant subject to United States federal income tax generally will not be taxed upon the grant of a restricted share award, but rather will recognize ordinary income for United States federal income tax purposes in an amount equal to the fair market value of the shares at the time the restricted shares are no longer subject to a substantial risk of forfeiture (within the meaning of the Code). The Company or employer subsidiary generally will be entitled to a deduction at the time when, and in the amount that, the participant recognizes ordinary income on account of the lapse of the restrictions, subject to the limitations under Section 162(m) of the Code. A participant's tax basis in the shares will equal his or her fair market value at the time the restrictions lapse, and the participant's holding period for capital gains purposes will begin at that time. Any cash dividends paid on the shares before the restrictions lapse will be taxable to the participant as additional compensation (and not as dividend income). Under Section 83(b) of the Code, a participant may elect to recognize ordinary income at the time the restricted shares are awarded in an amount equal to their fair market value at that time, notwithstanding the fact that such shares are subject to restrictions and a substantial risk of forfeiture. If such an election is made, no additional taxable income will be recognized by such participant at the time the restrictions lapse, the participant will have a tax basis in the restricted shares equal to their fair market value on the grant date, and the participant's holding period for capital gains purposes will begin at that time. The Company or employer subsidiary generally will be entitled to a tax deduction at the time when, and to the extent that, ordinary income is recognized by such participant, subject to the limitations under Section 162(m) of the Code. +Restricted Stock Units . A participant subject to United States federal income tax who is granted a restricted stock unit will not recognize ordinary income for United States federal income tax purposes upon the receipt of the restricted stock unit, but rather will recognize ordinary income in an amount equal to the fair market value of the shares at the time the shares of our common stock are delivered to the participant, and the Company or employer subsidiary will have a corresponding deduction at that time, subject to the limitations under Section 162(m) of the Code. +Other Share-Based and Other Cash-Based Awards. In the case of other share-based and other cash-based awards, depending on the form of the award, a participant subject to United States federal income tax will not be taxed upon the grant of such an award, but, rather, will recognize ordinary income for United States federal income tax purposes when such an award vests or otherwise is free of restrictions. In any event, the Company or employer subsidiary will be entitled to a deduction at the time when, and in the amount that, a participant recognizes ordinary income. +Section 162(m) of the Code. Section 162(m) of the Code generally limits to $1 million the amount that a publicly held corporation is allowed each year to deduct for the compensation paid to the corporation’s chief executive officer, chief financial officer and certain of the corporation’s current and former executive officers. +New Plan Benefits. The plan administrator has the discretion to grant awards under the Amended and Restated Omnibus Plan and, therefore, it is not possible as of the date of this proxy statement to determine future awards that will be received by participants under the Amended and Restated Omnibus Plan. +As discussed above, the Amended and Restated Omnibus Plan is being submitted for approval by our stockholders at the Annual Meeting. If our stockholders approve this proposal, the Amended and Restated Omnibus Plan will become effective as of the date on which the Amended and Restated Omnibus Plan is approved by stockholders, and awards may be granted under the Amended and Restated Omnibus Plan. If this Proposal does not pass, we believe it may have a significant negative impact on the Company’s ability to attract, engage and retain key executives that are critical to the Company’s future success. We believe this will be the case as equity-based compensation is typically a key component to an executive’s pay package and without this increase in available shares under the plan we will be restricted in our ability to award equity-based compensation to our key executives. +38 +Table of Contents +THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE +APPROVAL OF AN AMENDMENT AND RESTATEMENT OF THE CPI CARD GROUP INC. +OMNIBUS INCENTIVE PLAN TO INCREASE THE AVAILABLE SHARES AND MAKE OTHER +ADMINISTRATIVE CHANGES. +39 +Table of Contents +PROPOSAL NO. 6 +APPROVAL OF AN AMENDMENT TO THE CPI CARD GROUP INC. OMNIBUS INCENTIVE PLAN TO INCREASE THE ANNUAL LIMIT APPLICABLE TO INSIDERS +The Board and management believe it is important that an amendment to the Omnibus Plan be approved at the Annual Meeting. Under the terms of the Omnibus Plan, there is a cap on awards that may be granted to “Insiders” of the Company, as defined in the TSX Company Manual for the purpose of security-based compensation arrangements. Under the TSX Company Manual, “Insiders” consist of our corporate officers, executive officers, directors and the Tricor Funds. +Under the Omnibus Plan, the maximum number of shares that may be issued to all “Insiders” (as defined in the Toronto Stock Exchange Company Manual for the purpose of security-based compensation arrangements) within any one-year period, and issuable to Insiders at any point in time under the Omnibus Plan and any other share compensation arrangement we maintain will not exceed 10% of the total number of then-issued and outstanding shares of our common stock (the “Insider limit”). Based on the number of shares issued and outstanding as of the Record Date and considering prior awards granted to Insiders, the number of additional shares that we are able to grant to Insiders is limited to approximately 520,000 shares. We are thus asking stockholders who are not Insiders (“disinterested stockholders”) to approve an increase in the Insider limit to 15% of the total number of then-issued and outstanding shares of our common stock. Under the TSX Company Manual, because Insiders have an interest in this Proposal to increase the Insider limit, Insiders are prohibited from voting on this Proposal, and this Proposal may only be approved by a majority of the disinterested stockholders voting. Based on the number of shares issued and outstanding as of the Record Date and considering prior awards granted to Insiders, if this Proposal is approved, then the number of shares that we will be able to grant to Insiders will increase from approximately 520,000 shares to 1,080,000 shares. +The Board and management believe it is important to increase the Insider award limit in order to allow the Company to continue to be able to make awards of long-term incentives. On October 2, 2020, the Compensation Committee approved long-term incentive awards in the form of restricted stock units, which represented our first grant of equity-denominated awards (other than equity awards associated with initial offers of employment) to the NEOs since 2017, and reflects the Compensation Committee’s desire to return to an equity-based program that provides direct alignment to stockholder interests and share price. This also represents a change from our ongoing compensation program designs in 2018 and 2019, which were primarily cash-denominated. The Board believes that an equity-based program is critical for attracting, motivating, rewarding and retaining a talented management team that will contribute to our success. By increasing the Insider limit, the Board will have a pool of shares available that it can use to grant equity awards to senior management as well as Board members that will enable us to continue to attract, retain and incentivize participants. Importantly, we are not asking stockholders to amend the annual director compensation limit, which provides that the aggregate grant date fair market value of shares subject to awards granted during any fiscal year to any non-employee director, when taken together with any cash fees paid to such non-employee director during the fiscal year (in each case, with respect to his or her service as a non-employee director), will not exceed $500,000. +At the Annual Meeting, stockholders are also being asked to approve an increase in the available shares under the Omnibus Plan, extend the term of the Omnibus Plan and to make certain other administrative changes, as described in Proposal 5. Accordingly, the proposal to increase the available shares under the Omnibus Plan is being presented to stockholders separately as Proposal No. 5 and the approval of this Proposal No. 6 will not constitute an approval of Proposal No. 5 with respect to the increase in the available shares under the Omnibus Plan. Please see Proposal No. 5 for further information regarding the increase in the available shares under the Omnibus Plan. +Description of the Omnibus Plan +We originally adopted the Omnibus Plan in connection with our initial public offering, pursuant to which cash and equity-based incentives (including through an annual incentive program) may be granted to participating employees, directors and consultants. The principal purposes of the Omnibus Plan are to encourage profitability and growth through short-term and long-term incentives that are consistent with our objectives; to give participants an incentive for excellence in individual performance; to promote teamwork among participants; and to give us a significant advantage in attracting and retaining key employees, directors, and consultants. The Omnibus Plan provides for the grant of incentive stock options within the meaning of Section 422 of the Code, nonqualified stock options, SARs, restricted shares, restricted stock units, performance-based awards (including performance shares, performance units and performance bonus awards), and other stock or cash-based awards. +A summary of certain terms of the Omnibus Plan, as contemplated to be amended and restated if Proposal No. 5 is adopted by our stockholders, is set forth below. Please see Proposal No. 5 for a more detailed summary of the Amended and Restated Omnibus Plan. This summary of the Amended and Restated Omnibus Plan is qualified by reference to the full text of the Amended and Restated Omnibus Plan, which has been included as Annex B and is incorporated by reference herein, and which also reflects the amendment to the Omnibus Plan contemplated by this Proposal. +40 +Table of Contents +Administration. The Amended and Restated Omnibus Plan is administered by the Board or by a committee that the Board designates for this purpose (referred to below as the plan administrator). Currently, the Compensation Committee of the Board administers the Omnibus Plan. The plan administrator has the power to determine the terms of the awards granted under the Amended and Restated Omnibus Plan, including the exercise price, the number of shares subject to each award, and the exercisability of the awards. The plan administrator also has the full power to determine the persons to whom and the time or times at which awards will be made and to make all other determinations and take all other actions advisable for the administration of the Amended and Restated Omnibus Plan. +Eligibility for Participation . Certain employees, consultants, and directors are eligible to be granted awards under the Amended and Restated Omnibus Plan, other than incentive stock options, which may be granted only to employees. As of April 9, 2021, approximately 1,000 employees, including eight executive officers and five non-employee directors, would have been eligible to receive awards under the Amended and Restated Omnibus Plan if selected by the plan administrator for participation; however, consistent with market practices, we have historically limited awards under the Omnibus Plan to our executive officers, non-employee directors and senior levels of Company management. +Shares Available for Awards. Subject to capitalization adjustments as provided in the Amended and Restated Omnibus Plan, the number of shares of the Company's common stock reserved and available for issuance thereunder is the sum of (i) 1,200,000 shares, consisting of 800,000 shares originally reserved under the Omnibus Plan as of October 8, 2015, the date of the effectiveness of the registration statement for the Company's initial public offering, and 400,000 additional shares originally reserved under the Omnibus Plan as of September 25, 2017, less any shares issued under the Omnibus Plan on or prior to, or subject to outstanding awards as of, the date of the Board's adoption of the Amended and Restated Omnibus Plan, plus (iii) an additional 1,000,000 shares to be added to the share reserve if Proposal No. 5 is approved by stockholders. The closing price of a share of Company common stock on the Record Date was $14.75 per share, as reported on the OTC Markets Group Inc. +Award Limits. The maximum number of shares issuable pursuant to awards under the Amended and Restated Omnibus Plan and any other share compensation arrangement we maintain within a one-year period to any one participant in the Amended and Restated Omnibus Plan, will not exceed 5% of the total number of issued and outstanding shares of our common stock on the grant date of such awards, on a non-diluted basis. The maximum number of shares that may be issued to all Insiders within any one-year period, and issuable to Insiders at any point in time under the Amended and Restated Omnibus Plan and any other share compensation arrangement we maintain will not exceed 10% of the total number of then-issued and outstanding shares of our common stock, increased to 15% if this Proposal is approved by our disinterested stockholders at the Annual Meeting. In addition, subject to the foregoing limits, the aggregate number of shares subject to options and SARs granted during any fiscal year to any participant shall not exceed, subject to capitalization adjustments as provided in the Amended and Restated Omnibus Plan, one and a half million (1,500,000) shares. Under the terms of the Amended and Restated Omnibus Plan, the aggregate grant date fair market value of shares subject to awards granted during any fiscal year to any non-employee director, when taken together with any cash fees paid to such non-employee director during the fiscal year (in each case, with respect to his or her service as a non-employee director), will not exceed $500,000; provided, however, that this limit will not apply to any awards a non-employee director elects to receive at fair market value in lieu of all or a portion of such non-employee director’s compensation. +Change in Control Provisions. In connection with the grant of an award, the plan administrator may provide for the treatment of such award in the event of a change in control of the Company, including that, in the event of an involuntary termination of an executive's employment by the Company in connection with a change in control, any outstanding awards that are unexercisable or otherwise unvested will become fully vested and/or immediately exercisable. +Amendment and Termination. The Board may alter, amend, modify, or terminate the Amended and Restated Omnibus Plan at any time, provided that the approval of our stockholders will be obtained for any amendment to the Amended and Restated Omnibus Plan that requires stockholder approval under the rules of the stock exchange(s) on which our common stock is then listed or in accordance with other applicable law, including, but not limited to, an increase in the number of shares of our common stock reserved for issuance, a reduction in the exercise price of options or other entitlements, an extension of the maximum term of any award, an increase to the maximum number of shares that may be issued to Insiders (as defined in the Toronto Stock Exchange Company Manual for the purpose of security-based compensation arrangements) or an amendment that grants the Board additional powers to amend the Amended and Restated Omnibus Plan. In addition, no modification of an award will, without the prior written consent of the participant, adversely alter or impair any rights or obligations under any award already granted under the Amended and Restated Omnibus Plan unless the Board expressly reserved the right to do so at the time of the award. +Transfer of Awards. No purported sale, assignment, mortgage, hypothecation, transfer, charge, pledge, encumbrance, gift, transfer in trust (voting or other) or other disposition of, or creation of a security interest in or lien on, any award or any agreement or commitment to do any of the foregoing by any holder thereof in violation of the provisions of the Amended and Restated Omnibus Plan or an award agreement will be valid, except with the prior written consent of the plan administrator, which consent may be granted or withheld in the sole discretion of the plan administrator. Any purported transfer of an award or any economic benefit or interest therein in violation of the Amended and Restated Omnibus Plan or an award agreement will be null and void ab initio, and will not create any obligation or liability of the Company, and any person purportedly acquiring any award or any economic benefit or interest therein transferred in violation of the Amended and Restated Omnibus Plan or an award agreement will not be entitled to be recognized as a holder of such shares. Unless otherwise determined by the plan administrator in accordance with the provisions of the immediately preceding sentence, an option may be exercised, during the lifetime of the participant, only by the participant or, during any period during which the participant is under a legal disability, by the participant’s guardian or legal representative. +41 +Table of Contents +Certain U.S. Federal Income Tax Effects +The following is a brief summary of certain United States federal income tax consequences generally arising with respect to awards under the Amended and Restated Omnibus Plan. This discussion does not address all aspects of the United States federal income tax consequences of participating in the Amended and Restated Omnibus Plan that may be relevant to participants in light of their personal investment or tax circumstances and does not discuss any state, local or non-United States tax consequences of participating in the Amended and Restated Omnibus Plan. Each participant is advised to consult his or her particular tax advisor concerning the application of the United States federal income tax laws to such participant’s particular situation, as well as the applicability and effect of any state, local or non-United States tax laws before taking any actions with respect to any awards. +Nonqualified Stock Options. An optionee subject to United States federal income tax will generally not recognize taxable income for United States federal income tax purposes upon the grant of a nonqualified stock option. Rather, at the time of exercise of the nonqualified stock option, the optionee will recognize ordinary income, and the Company or employer subsidiary will be entitled to a deduction subject to the limitations under Section 162(m) of the Code, in an amount equal to the excess of the fair market value of the shares on the date of exercise over the exercise price. If the shares acquired upon the exercise of a nonqualified stock option are later sold or exchanged, then the difference between the amount received upon such sale or exchange and the fair market value of such shares on the date of such exercise will generally be taxable as long-term or short-term capital gain or loss, depending upon the length of time such shares were held by the optionee. +Incentive Stock Options. An optionee subject to United States federal income tax will generally not recognize taxable income for United States federal income tax purposes upon the grant of an incentive stock option (within the meaning of Section 422 of the Code) and neither the Company nor the employer subsidiary will be entitled to a deduction at that time. An optionee will not recognize income (except for purposes of the alternative minimum tax) upon exercise of an incentive stock option. If the shares acquired by exercise of an incentive stock option are held for the longer of two years from the date the option was granted and one year from the date it was exercised, any gain or loss arising from a subsequent disposition of those shares will be taxed as long-term capital gain or loss, and neither the Company nor the employer subsidiary will be entitled to any deduction. If, however, those shares are disposed of within the above-described period, then in the year of that disposition the optionee will recognize compensation taxable as ordinary income equal to the excess of the lesser of (1) the amount realized upon that disposition, and (2) the excess of the fair market value of those shares on the date of exercise over the exercise price, and the Company or employer subsidiary will be entitled to a corresponding deduction, subject to the limitations under Section 162(m) of the Code. +SARs. A participant subject to United States federal income tax who is granted a SAR will not recognize ordinary income for United States federal income tax purposes upon receipt of the SAR. At the time of exercise, however, the participant will recognize ordinary income equal to the value of any cash received and the fair market value on the date of exercise of any shares received. Neither the Company nor the employer subsidiary will be entitled to a deduction upon the grant of a SAR, but generally will be entitled to a deduction for the amount of income the participant recognizes upon the participant's exercise of the SAR, subject to the limitations under Section 162(m) of the Code. The participant's tax basis in any shares received will be the fair market value on the date of exercise and, if the shares are later sold or exchanged, then the difference between the amount received upon such sale or exchange and the fair market value of the shares on the date of exercise will generally be taxable as long-term or short-term capital gain or loss depending upon the length of time such shares were held by the participant. +Restricted Shares. A participant subject to United States federal income tax generally will not be taxed upon the grant of a restricted share award, but rather will recognize ordinary income for United States federal income tax purposes in an amount equal to the fair market value of the shares at the time the restricted shares are no longer subject to a substantial risk of forfeiture (within the meaning of the Code). The Company or employer subsidiary generally will be entitled to a deduction at the time when, and in the amount that, the participant recognizes ordinary income on account of the lapse of the restrictions, subject to the limitations under Section 162(m) of the Code. A participant's tax basis in the shares will equal his or her fair market value at the time the restrictions lapse, and the participant's holding period for capital gains purposes will begin at that time. Any cash dividends paid on the shares before the restrictions lapse will be taxable to the participant as additional compensation (and not as dividend income). Under Section 83(b) of the Code, a participant may elect to recognize ordinary income at the time the restricted shares are awarded in an amount equal to their fair market value at that time, notwithstanding the fact that such shares are subject to restrictions and a substantial risk of forfeiture. If such an election is made, no additional taxable income will be recognized by such participant at the time the restrictions lapse, the participant will have a tax basis in the restricted shares equal to their fair market value on the grant date, and the participant's holding period for capital gains purposes will begin at that time. The Company or employer subsidiary generally will be entitled to a tax deduction at the time when, and to the extent that, ordinary income is recognized by such participant, subject to the limitations under Section 162(m) of the Code. +Restricted Stock Units. A participant subject to United States federal income tax who is granted a restricted stock unit will not recognize ordinary income for United States federal income tax purposes upon the receipt of the restricted stock unit, but rather will recognize ordinary income in an amount equal to the fair market value of the shares at the time the shares of our common stock are delivered to the participant, and the Company or employer subsidiary will have a corresponding deduction at that time, subject to the limitations under Section 162(m) of the Code. +Other Share-Based and Other Cash-Based Awards. In the case of other share-based and other cash-based awards, depending on the form of the award, a participant subject to United States federal income tax will not be taxed upon the grant of such an award, but, rather, will recognize ordinary income for United States federal income tax purposes when such an award vests or otherwise +42 +Table of Contents +is free of restrictions. In any event, the Company or employer subsidiary will be entitled to a deduction at the time when, and in the amount that, a participant recognizes ordinary income. +Section 162(m) of the Code. Section 162(m) of the Code generally limits to $1 million the amount that a publicly held corporation is allowed each year to deduct for the compensation paid to the corporation’s chief executive officer, chief financial officer and certain of the corporation’s current and former executive officers. +New Plan Benefits and Historical Equity Awards +The plan administrator has the discretion to grant awards under the Amended and Restated Omnibus Plan and, therefore, it is not possible as of the date of this proxy statement to determine future awards that will be received by participants under the Amended and Restated Omnibus Plan. Please see Proposal No. 5 for a summary of the number of restricted stock units and stock options that have been granted under the Omnibus Plan to NEOs and the other individuals and groups indicated since the inception of the Omnibus Plan. +As discussed above, this Proposal for increase of the Insider limit is being submitted for approval by our disinterested stockholders at the Annual Meeting. If our disinterested stockholders approve this Proposal, the increase of the Insider limit from 10% to 15% in the Amended and Restated Omnibus Plan will become effective as of the date on which this Proposal is so approved. If this Proposal No. 6 is not approved, then the Board and Compensation Committee will re-evaluate our executive compensation and director compensation program in order to continue to provide compensation to attract, retain and motivate our executive officers and directors. +If this Proposal does not pass, we believe it may have a significant negative impact on the Company’s ability to attract, engage and retain key executives that are critical to the Company’s future success. We believe this will be the case as equity-based compensation is typically a key component to an executive’s pay package and without this increase in the Insider limit we will be restricted in our ability to award equity-based compensation to our key executives. +THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR +THE APPROVAL OF AN AMENDMENT TO THE CPI CARD GROUP INC. OMNIBUS +INCENTIVE PLAN TO INCREASE THE INSIDER LIMIT FROM 10% TO 15%. +43 +Table of Contents +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +The following is a description of transactions since January 1, 2019 to which we have been a party in which the amount involved exceeded or will exceed the lesser of $120,000 or one percent of the average of the Company’s total assets at year-end for the last two completed fiscal years and in which any of our directors, executive officers, beneficial holders of more than 5% of our capital stock or entities affiliated with them had or will have a direct or indirect material interest. +Registration Rights Agreement +In connection with our initial public offering, we entered into a registration rights agreement with the Tricor Funds (the “Registration Rights Agreement”). Under the Registration Rights Agreement, the Tricor Funds are entitled to request that we register shares of our common stock on a long-form or short-form registration statement on one or more occasions in the future, provided that we will not be obligated to register such shares within 90 days after the effective date of a registration statement previously filed pursuant to a request under the Registration Rights Agreement and otherwise for up to 60 days from the date of a request under the Registration Rights Agreement in certain circumstances. The Tricor Funds also are entitled to participate in certain registered offerings that we may conduct in the future, subject to certain restrictions. We will pay the Tricor Funds’ expenses in connection with the exercise of these rights. The registration rights described in this paragraph apply to (i) shares of our common stock held by the Tricor Funds as of the closing of our initial public offering, (ii) any of our capital stock (or that of our subsidiaries) issued or issuable with respect to the common stock described in clause (i) with respect to any dividend, distribution, recapitalization, reorganization, or certain other corporate transactions, and (iii) any of our common stock owned or acquired following the closing of our initial public offering by the Tricor Funds (“Registrable Securities”). These registration rights are also for the benefit of any subsequent holder of Registrable Securities; provided that any particular securities will cease to be Registrable Securities when they have been sold in a registered public offering, sold in compliance with Rule 144 under the Securities Act or repurchased by us or our subsidiaries. +Director Nomination Agreement +In connection with our initial public offering, we entered into a Director Nomination Agreement with the Tricor Funds that provides the Tricor Funds the right to designate nominees for election to our Board for so long as the Tricor Funds collectively beneficially own 5% or more of the total number of shares of our common stock then outstanding. The number of nominees that the Tricor Funds are entitled to designate under the Director Nomination Agreement bears the same proportion to the total number of members of our Board as the number of shares of common stock beneficially owned by the Tricor Funds bears to the total number of shares of common stock outstanding, rounded up to the nearest whole number. In addition, the Tricor Funds shall be entitled to designate the replacement for any of its board designees whose board service terminates prior to the end of such designee’s term regardless of the Tricor Funds’ beneficial ownership at such time. In addition, for so long as the Tricor Funds collectively beneficially own 10% or more of the total number of shares of our common stock then outstanding, the Tricor Funds shall also have the right to have their designees participate on committees of our Board, subject to compliance with applicable law and stock exchange rules. The Director Nomination Agreement will terminate at such time as the Tricor Funds collectively own less than 5% of our outstanding common stock. Nicholas Peters and Bradley Seaman have been designated by the Tricor Funds as nominees to be included in the Company’s proxy statement commencing in 2016. +Policies and Procedures for Related Party Transactions +Our Board has adopted a written related party transaction policy setting forth the policies and procedures for the review and approval of related party transactions. The policy covers transactions involving us in which the aggregate amount involved exceeds or may be expected to exceed the lesser of $120,000 or one percent of the average of the Company’s total assets at year-end for the last two completed fiscal years and in which a related person has or will have a direct or indirect material interest. For purposes of this policy, a related person is defined as a director, executive officer, nominee for director, or a greater than 5% beneficial owner of our common stock, in each case since the beginning of the most recently completed fiscal year, and any immediate family member of or person sharing a household with any of these individuals. All related party transactions must be presented to the Audit Committee for review, consideration and approval. In approving or rejecting any such proposed transaction, the Audit Committee will consider the material facts of the transaction, including whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances and the extent of the related party’s interest in the transaction. +44 +Table of Contents +STOCKHOLDER PROPOSALS FOR 2022 ANNUAL MEETING OF STOCKHOLDERS +Stockholders who intend to present proposals at the Company’s annual meeting of stockholders in 2022 pursuant to Rule 14a - 8 under the Exchange Act must send notice of their proposal to us so that we receive it no later than December 14, 2021. Stockholders who intend to present proposals at the annual meeting of stockholders in 2022 other than pursuant to Rule 14a-8 must comply with the notice provisions in our By-Laws. The notice provisions in our By-Laws require that, for a proposal to be properly brought before the annual meeting of stockholders in 2022, proper notice of the proposal be received by us not less than 90 days nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting; provided, however that in the event next year’s annual meeting is more than 30 days before or after such anniversary date, notice must be delivered not less than the later of 90 days prior to next year’s annual meeting or the 10th day following the day the Company first publicly announces next year’s annual meeting date. Under these requirements, the deadline for proposals brought under our By-Laws is February 26, 2022. Stockholder proposals should be addressed to CPI Card Group Inc., 10368 West Centennial Road, Littleton, Colorado 80127; Attention: Sarah Kilgore, Chief Legal and Compliance Officer and Corporate Secretary. +Delinquent Section 16(a) Reports +Section 16(a) of the Exchange Act requires directors, executive officers and certain persons who beneficially own more than 10% of CPI’s common stock (“Reporting Persons”) to file certain reports with the SEC concerning their beneficial ownership of CPI’s common stock. Because of the complex nature of these reports, CPI files them on behalf of executive officers and directors. To our knowledge, based solely on our review of the Section 16(a) reports filed electronically with the SEC, we believe that all Reporting Persons were in compliance with all Section 16(a) filing requirements with respect to the year ended December 31, 2020, except that a Form 3 for Mr. Schneewind was inadvertently filed late. We filed such Form 3 with the SEC on Mr. Schneewind’s behalf on January 29, 2021. +45 +Table of Contents +OTHER MATTERS +We know of no other matters to be submitted to the stockholders at the Annual Meeting. If any other matters properly come before the Annual Meeting, persons named in the proxy intend to vote the shares they represent in accordance with their own judgments. +Upon written request by any stockholder entitled to vote at the Annual Meeting, we will promptly furnish, without charge, a copy of the Annual Report on Form 10-K for the fiscal year ended December 31, 2020 which we filed with the SEC, including the financial statements. If the person requesting the report was not a stockholder of record on April 1, 2021, the request must contain a good faith representation that he or she was a beneficial owner of our common stock at the close of business on that date. Requests should be addressed to CPI Card Group, 10368 West Centennial Road, Littleton, Colorado 80127; Attention: Sarah Kilgore, Chief Legal and Compliance Officer and Corporate Secretary. +YOUR VOTE IS IMPORTANT. WE URGE YOU TO VOTE TODAY OVER THE TELEPHONE, VIA THE INTERNET OR BY MAIL. +By Order of the Board of Directors, +Sarah Kilgore +Chief Legal and Compliance Officer and Corporate Secretary +46 +Table of Contents +Annex A +Year Ended December 31, +2020 +2019 +Reconciliation of net income (loss) from continuing operations (GAAP) to EBITDA and Adjusted EBITDA +(dollars in thousands) +(dollars in thousands) +Net income (loss) from continuing operations +$ +16,190 +$ +(4,993) +Interest expense, net +25,397 +24,891 +Income tax (benefit) expense +(3,305) +3,474 +Depreciation and amortization +16,827 +17,251 +EBITDA +$ +55,109 +$ +40,623 +Adjustments to EBITDA +Litigation and related charges (1) +— +46 +Sales tax expense (2) +926 +584 +Stock-based compensation expense +136 +250 +Restructuring and other charges (3) +1,269 +720 +Loss on Revolving Credit Facility termination (4) +92 +— +Litigation settlement gain (5) +— +(6,000) +Foreign currency (gain) loss (6) +7 +1,335 +Subtotal of adjustments to EBITDA +2,430 +(3,065) +Adjusted EBITDA +$ +57,539 +$ +37,558 +Net income (% change 2020 vs. 2019) +415.2% +Adjusted EBITDA growth (% change 2020 vs. 2019) +53.2% +Note that the table in this annex is presented on a continuing operations basis. +(1) +Represents net legal costs incurred in connection with certain patent and stockholder litigation. +(2) +The Company revised its prior period financial statements to adjust immaterial items, primarily due to estimated sales tax expense relating to 2017 through 2020. Refer to Note 2 of the Form 10-K for the year ended December 31, 2020 for an explanation of the immaterial prior period adjustments. +(3) +Represents restructuring severance charges. +(4) +The Company terminated the Revolving Credit Facility during the first quarter of 2020 and expensed the remaining unamortized deferred financing costs. +(5) +During the second quarter of 2019, the Company recognized in operating income a $6.0 million gain related to the cash settlement of litigation. +(6) +Foreign currency loss includes the release of the cumulative translation adjustment from the balance sheet to the statement of operations, done in connection with the disposition of the Company’s Canadian subsidiary in 2019. +A-1 +Table of Contents +Annex B +CPI CARD GROUP INC. +OMNIBUS INCENTIVE PLAN +(as amended and restated effective September 25 [ ] , 2017 2021 ) +Section 1. General. +The name of the Plan is the CPI Card Group Inc. Omnibus Incentive Plan, as amended and restated (the “ Plan ”). The Plan intends to: ( i ) encourage the profitability and growth of the Company through short-term and long-term incentives that are consistent with the Company’s objectives; ( ii ) give Participants an incentive for excellence in individual performance; ( iii ) promote teamwork among Participants; and ( iv ) give the Company a significant advantage in attracting and retaining key Employees, Directors and Consultants. To accomplish such purposes, the Plan provides that the Company may grant Options, Stock Appreciation Rights, Restricted Shares, Restricted Stock Units, Performance-Based Awards (including performance-based Restricted Shares and Restricted Stock Units), Other Share-Based Awards, Other Cash-Based Awards or any combination of the foregoing. +Section 2. Definitions. +For purposes of the Plan, the following terms shall be defined as set forth below: +(a) “ Administrator ” means the Board, or, if and to the extent the Board does not administer the Plan, the Committee appointed by the Board to administer the Plan in accordance with Section 3 of the Plan. +(b) “ Affiliate ” means a Person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the Person specified. An entity shall be deemed an Affiliate of the Company for purposes of this definition only for such periods as the requisite ownership or control relationship is maintained. +(a) “ Approval Date” means the date on which the Plan is approved by the Company’s shareholders. +(c) “ Articles of Incorporation ” means the articles of incorporation of the Company, as may be amended and/or restated from time to time. +(d) “ Award ” means any Option, Stock Appreciation Right, Restricted Share, Restricted Stock Unit, Performance-Based Award, Other Share- Based Award or Other Cash-Based Award granted under the Plan. +(e) “ Award Agreement ” means any written agreement, contract or other instrument or document evidencing an Award. +(f) “ Bylaws ” means the bylaws of the Company, as may be amended and/or restated from time to time. +(g) “ Beneficial Owner ” (or any variant thereof) has the meaning defined in Rule 13d-3 under the Exchange Act. +(h) “ Board ” means the Board of Directors of the Company. +(i) “ Cause ” shall have the meaning assigned to such term in any individual employment, severance, or similar agreement or Award Agreement with the Participant or, if no such agreement exists or the agreement does not define “Cause,” Cause means ( i ) the refusal or neglect of the Participant to perform substantially his or her employment-related duties, ( ii ) the Participant’s personal dishonesty, incompetence, willful misconduct or breach of fiduciary duty, ( iii ) the Participant’s commission, conviction of or entering a plea of guilty or nolo contendere to a crime constituting a felony or his or her willful violation of any applicable law (other than a traffic violation or other offense or violation outside of the course of employment which in no way adversely affects the Company and its Subsidiaries or their reputation or the ability of the Participant to perform his or her employment-related duties or to represent the Company or any Subsidiary of the Company that employs such Participant), ( iv ) the Participant’s failure to reasonably cooperate, following a request to do so by the Company, in any internal or governmental investigation of the Company or any of its Subsidiaries or ( v ) the Participant’s material breach of any written covenant or agreement with the Company or any of its Subsidiaries not to disclose any information pertaining to the Company or such Subsidiary or not to compete or interfere with the Company or such Subsidiary. +B-1 +Table of Contents +(j) “ Change in Capitalization ” means any ( i ) merger, consolidation, reclassification, recapitalization, spin-off, spin-out, repurchase or other reorganization or corporate transaction or event, ( ii ) extraordinary dividend (whether in the form of cash, Common Stock or other property), stock split or reverse stock split, ( iii ) combination or exchange of shares, ( iv ) other change in corporate structure or ( v ) payment of any other distribution, which, in any such case, the Administrator determines, in its sole discretion, affects the Shares such that an adjustment pursuant to Section 5 of the Plan is appropriate. +(k) “ Change in Control ” shall be deemed to have occurred if an event set forth in any one of the following paragraphs shall have occurred following the Effective Date: +(i) any Person, other than ( A ) Tricor Pacific Capital Partners (Fund IV), LP, a British Columbia limited partnership and Tricor Pacific Capital Partners (Fund IV) US, LP, a Delaware limited partnership, and their respective Affiliates and successors, or ( B ) the Company or a trustee or other fiduciary holding securities under an employee benefit plan of the Company, is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing more than fifty percent (50%) of the combined voting power of the Company’s then outstanding securities, excluding any Person who becomes such a Beneficial Owner in connection with a transaction described in clause ( A ) of paragraph ( iii ) below or any acquisition directly from the Company; or +(ii) the following individuals cease for any reason to constitute a majority of the number of Directors then serving on the Board: individuals who, during any period of two (2) consecutive years, constitute the Board and any new Director (other than a Director whose initial assumption of office is in connection with an actual or threatened election contest, including, but not limited to, a consent solicitation, relating to the election of Directors of the Company) whose appointment or election by the Board or nomination for election by the Company’s shareholders was approved or recommended by a vote of at least two-thirds (2/3) of the Directors then still in office who either were Directors at the beginning of the two (2) year period or whose appointment, election or nomination for election was previously so approved or recommended; or +(iii) there is consummated a merger or consolidation of the Company or any Subsidiary thereof with any other corporation, other than a merger or consolidation ( A ) that results in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least fifty percent (50%) of the combined voting power of the voting securities of the Company (or such surviving entity) outstanding immediately after such merger or consolidation, and ( B ) immediately following which the individuals who comprise the Board immediately prior thereto constitute at least a majority of the Board of the entity surviving such merger or consolidation or, if the Company or the entity surviving such merger is then a subsidiary, the ultimate parent thereof; or +(iv) there is consummated an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets, other than ( A ) a sale or disposition by the Company of all or substantially all of the Company’s assets to an entity, at least fifty percent (50%) of the combined voting power of the voting securities of which are owned by shareholders of the Company following the completion of such transaction in substantially the same proportions as their ownership of the Company immediately prior to such sale or ( B ) a sale or disposition of all or substantially all of the Company’s assets immediately following which the individuals who comprise the Board immediately prior thereto constitute at least a majority of the board of directors of the entity to which such assets are sold or disposed or, if such entity is a subsidiary, the ultimate parent thereof. +For each Award that constitutes deferred compensation under Code Section 409A, a Change in Control shall be deemed to have occurred under the Plan with respect to such Award only if a change in the ownership or effective control of the Company or a change in ownership of a substantial portion of the assets of the Company shall also be deemed to have occurred under Code Section 409A. +Notwithstanding the foregoing, a “Change in Control” shall not be deemed to have occurred by virtue of the consummation of any transaction or series of integrated transactions immediately following which the holders of Common Stock immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in an entity which owns all or substantially all of the assets of the Company immediately following such transaction or series of transactions. +(l) “ Change in Control Price ” shall have the meaning set forth in Section 12 of the Plan. +(m) “ Code ” means the Internal Revenue Code of 1986, as amended from time to time, or any successor thereto. Any reference in the Plan to any section of the Code shall be deemed to include any regulations or other interpretative guidance under such section, and any amendments or successor provisions to such section, regulations or guidance. +B-2 +Table of Contents +(n) “ Committee ” means any committee or subcommittee the Board may appoint to administer the Plan. Subject to the discretion of the Board, the Committee shall be composed entirely of individuals who meet the qualifications of a “non-employee director” within the meaning of Rule 16b-3 under the Exchange Act and any other qualifications required by the applicable stock exchange on which the Common Stock is traded. With respect to the approval and payment of any Award intended to be “qualified performance-based compensation” under Code Section 162(m), the Committee shall be composed entirely of individuals each of whom is considered to be an “outside director” within the meaning of Code Section 162(m). If at any time or to any extent the Board shall not administer the Plan, then the functions of the Administrator specified in the Plan shall be exercised by the Committee. Except as otherwise provided in the Company’s Articles of Incorporation or Bylaws, any action of the Committee with respect to the administration of the Plan shall be taken by a majority vote at a meeting at which a quorum is duly constituted or unanimous written consent of the Committee’s members. +(o) “ Common Stock ” means the common stock, par value $0.001 per share, of the Company. +(p) “ Company ” means CPI Card Group Inc., a Delaware corporation (or any successor corporation, except as the term “Company” is used in the definition of “Change in Control” above). +(q) “Consultant” means, solely with respect to Canadian residents, a person, other than an Employee, Executive Officer or non-employee Director, that: ( i ) is engaged to provide services to the Company or an Affiliate thereof, other than services provided in relation to a distribution, for an initial, renewable or extended period of twelve months or more; ( ii ) provides the services under a written contract with the Company or an Affiliate thereof; and ( iii ) spends or will spend a significant amount of time and attention on the affairs and business of the Company or an Affiliate thereof, and includes: ( 1 ) for an individual Consultant, a corporation of which the individual Consultant is an employee or shareholder, and a partnership of which the individual Consultant is an employee or partner; and ( 2 ) for a Consultant that is not an individual, an employee, executive officer or director of the Consultant, provided that the individual employee, executive officer, or director spends a significant amount of time and attention on the affairs and business of the Company or an Affiliate thereof. +Notwithstanding the foregoing, and solely with respect to non-Canadian residents, “ Consultant ” means any consultant or independent contractor of the Company or an Affiliate thereof, in each case, who is not an Employee, Executive Officer or non-employee Director. +(b) “ Covered Employee ” shall have the meaning set forth in Code Section 162(m). +(r) “ Disability ” shall have the meaning assigned to such term in any individual employment, severance, or similar agreement or Award Agreement with the Participant or, if no such agreement exists or the agreement does not define “Disability,” Disability means, with respect to any Participant, that such Participant ( i ) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, or ( ii ) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering Employees of the Company or an Affiliate thereof. +(s) “ Director ” means any individual who is a member of the Board on or after the Effective Date. +(t) “ Effective Date ” shall have the meaning set forth in Section 19 of the Plan. +(u) “ Eligible Recipient ” means: ( i ) an Employee; ( ii ) a non-employee Director; or ( iii ) a Consultant, in each case, who has been selected as an eligible recipient under the Plan by the Administrator. Notwithstanding the foregoing, to the extent required to avoid the imposition of additional taxes under Code Section 409A, “ Eligible Recipient ” means: an ( 1 ) Employee; ( 2 ) a non-employee Director; or ( 3 ) a Consultant, in each case, of the Company or a Subsidiary thereof, who has been selected as an eligible recipient under the Plan by the Administrator. +(v) “ Employee ” shall mean an employee of the Company or an Affiliate thereof, as described in Treasury Regulation Section 1.421-1(h), including an Executive Officer or Director who is also treated as an employee. +(w) “ Exchange Act ” means the Securities Exchange Act of 1934, as amended from time to time. +(x) “Executive Officer” means each Participant who is an executive officer (within the meaning of Rule 3b-7 under the Exchange Act) of the Company. +B-3 +Table of Contents +(y) “ Exercise Price ” means, with respect to any Award under which the holder may purchase Shares, the price per share at which a holder of such Award granted hereunder may purchase Shares issuable upon exercise of such Award. +(z) “ Fair Market Value ” as of a particular date shall mean: ( i ) if the Common Stock is admitted to trading on a national securities exchange, the fair market value of a Share on any date shall be the closing sale price reported for such share on such exchange on such date or, if no sale was reported on such date, on the last day preceding such date on which a sale was reported; ( ii ) if the Shares are not then listed on a national securities exchange, the average of the highest reported bid and lowest reported asked prices for the Shares as reported by the National Association of Securities Dealers, Inc. Automated Quotations System for the last preceding date on which there was a sale of such stock in such market; or ( iii ) if the Shares are not then listed on a national securities exchange or traded in an over-the-counter market or the value of such Shares is not otherwise determinable, such value as determined by the Committee in good faith and in a manner not inconsistent with Code Section 409A. +(aa) “ Free Standing Rights ” shall have the meaning set forth in Section 8(a) of the Plan. +(bb) “ Incentive Stock Option ” means an Option that is intended to satisfy the requirements applicable to an “incentive stock option” described in Code Section 422. +(c) “ Initial Public Offering ” means an initial public offering of the Company’s Common Stock pursuant to an effective registration statement filed with the U.S. Securities and Exchange Commission. +(cc) “ Insider” means an insider of the Company as defined in the TSX Company Manual for the purpose of security-based compensation arrangements. +(dd) “ Nonqualified Stock Option ” means an Option that is not intended to be an Incentive Stock Option. +(ee) “ Option ” means an option to purchase Shares granted pursuant to Section 7 of the Plan. +(ff) “ Other Cash-Based Award ” means a cash Award granted to a Participant under Section 11 of the Plan, including cash awarded as a bonus or upon the attainment of Performance Goals or otherwise as permitted under the Plan. +(gg) “ Other Share-Based Award ” means a right or other interest granted to a Participant under the Plan that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to, Common Stock, including, but not limited to, unrestricted Shares or dividend equivalents, each of which may be subject to the attainment of Performance Goals or a period of continued employment or other terms or conditions as permitted under the Plan. +(hh) “ Original Effective Date ” shall have the meaning set forth in Section 19 of the Plan. +(ii) “ Participant ” means any Eligible Recipient selected by the Administrator, pursuant to the Administrator’s authority provided for in Section 3 of the Plan, to receive grants of Options, Stock Appreciation Rights, Restricted Shares, Restricted Stock Units, Other Share-Based Awards, Other Cash-Based Awards or any combination of the foregoing, and, upon his or her death, his or her successors, heirs, executors and administrators, as the case may be, solely with respect to any Awards outstanding at the date of the Eligible Recipient’s death. +(jj) “ Performance-Based Award ” means any Award granted under the Plan that is subject to one or more Performance Goals. +(kk) “ Performance Goals ” means performance goals that may be used to determine the grant, vesting or payment of an Award under the Plan and which may be based on one or more of the following criteria: ( i ) earnings before interest and taxes; ( ii ) earnings before interest, taxes, depreciation and amortization; ( iii ) net operating profit after tax; ( iv ) cash flow; ( v ) revenue; ( vi ) net revenues; ( vii ) sales; ( viii ) days sales outstanding; ( ix ) scrap rates; ( x ) income; ( xi ) net income; ( xii ) operating income; ( xiii ) net operating income; ( xiv ) operating margin; ( xv ) earnings; ( xvi ) earnings per share; ( xvii ) return on equity; ( xviii ) return on investment; ( xix ) return on capital; ( xx ) return on assets; ( xxi ) return on net assets; ( xxii ) total shareholder return; ( xxiii ) economic profit; ( xxiv ) market share; ( xxv ) appreciation in the fair market value, book value or other measure of value of the Company’s Common Stock; ( xxvi ) expense or cost control; ( xxvii ) working capital; ( xxviii ) volume or production; ( xxix ) new products; ( xxx ) customer satisfaction; ( xxxi ) brand development; ( xxxii ) employee retention or employee turnover; ( xxxiii ) employee satisfaction or engagement; ( xxxiv ) environmental, health or other safety goals; ( xxxv ) individual performance; ( xxxvi ) strategic objective milestones; ( xxxvii ) days inventory outstanding; ( xxxviii ) any combination of, or, as applicable, a specified increase or decrease in, any of the foregoing or (xxxix) any other goal selected by the Committee, whether or not listed herein . Where applicable, the Performance Goals may be expressed in terms of attaining a specified level of the particular criteria or the attainment of a percentage increase or decrease in the particular criteria, and may be applied to one or more of the Company or an Affiliate thereof, or a division or strategic business unit of the Company, or may be applied to the +B-4 +Table of Contents +performance of the Company relative to a market index, a group of other companies or a combination thereof, all as determined by the Committee. The Performance Goals may include a threshold level of performance below which no payment shall be made (or no vesting shall occur), levels of performance at which specified payments shall be made (or specified vesting shall occur), and a maximum level of performance above which no additional payment shall be made (or at which full vesting shall occur). With respect to Awards that are intended to be “qualified performance-based compensation” under Code Section 162(m), each of the foregoing Performance Goals shall be subject to certification by the Committee; provided, however, that at the time such an Award is granted In establishing a Performance Goal or determining the achievement of a Performance Goal , the Committee may specify any reasonable definition of the provide that achievement of the applicable Performance Goals it uses. Such definitions may provide for equitable adjustments to the Performance Goals in recognition of unusual or non-recurring may be amended or adjusted to include or exclude components of any Performance Goal, including, without limitation, foreign exchange gains and losses, asset write-downs, acquisitions and divestitures, change in fiscal year, unbudgeted capital expenditures, special charges such as restructuring or impairment charges, debt refinancing costs, extraordinary or noncash items, unusual, infrequently occurring, nonrecurring or one-time events affecting the Company or an Affiliate thereof or the its financial statements of the Company or an Affiliate thereof, in response to changes in applicable laws or regulations, or to account for items of gain, loss or expense determined to be unusual in nature, infrequent in occurrence or unusual in nature and infrequent in occurrence or related to the disposal of a segment of a business or related to a change in or changes in law or accounting principles (in each case, to the extent not inconsistent with Code Section 162(m), if applicable) . Performance Goals shall be subject to such other special rules and conditions as the Committee may establish at any time . +(ll) “ Person ” shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term shall not include ( i ) the Company or any Subsidiary thereof, ( ii ) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any Subsidiary thereof, ( iii ) an underwriter temporarily holding securities pursuant to an offering of such securities, or ( iv ) a corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of stock of the Company. +(mm) “ Prior Plan ” means the CPI Holdings, I, Inc. Amended and Restated 2007 Stock Option Plan, as amended from time to time. +(nn) “ Related Rights ” shall have the meaning set forth in Section 8(a) of the Plan. +(oo) “ Restricted Shares ” means an Award of Shares granted pursuant to Section 9 of the Plan subject to certain restrictions that lapse at the end of a specified period or periods. +(pp) “ Restricted Stock Unit ” means a notional account established pursuant to an Award granted to a Participant, as described in Section 10 of the Plan, that is ( i ) valued solely by reference to Shares, ( ii ) subject to restrictions specified in the Award Agreement, and ( iii ) payable in cash or in Shares (as specified in the Award Agreement). The Restricted Stock Units awarded to the Participant will vest according to the time-based criteria or Performance Goals criteria specified in the Award Agreement. +(qq) “ Restricted Period ” means the period of time determined by the Administrator during which an Award or a portion thereof is subject to restrictions or, as applicable, the period of time within which performance is measured for purposes of determining whether an Award has been earned. +(rr) “ Retirement ” means a termination of a Participant’s employment, other than for Cause and other than by reason of death or Disability, on or after the attainment of age 65. +(ss) “ Rule 16b-3 ” shall have the meaning set forth in Section 3(a) of the Plan. +(tt) “ Shares ” means shares of Common Stock reserved for issuance under the Plan, as adjusted pursuant to the Plan, and any successor (pursuant to a merger, consolidation or other reorganization) security. +(uu) “ Stock Appreciation Right ” means the right pursuant to an Award granted under Section 8 of the Plan to receive an amount equal to the excess, if any, of ( i ) the aggregate Fair Market Value, as of the date such Award or portion thereof is surrendered, of the Shares covered by such Award or such portion thereof, over ( ii ) the aggregate Exercise Price of such Award or such portion thereof. +B-5 +Table of Contents +(vv) “ Subsidiary ” means, with respect to any Person, as of any date of determination, any other Person as to which such first Person owns or otherwise controls, directly or indirectly, more than fifty percent (50%) of the voting shares or other similar interests or a sole general partner interest or managing member or similar interest of such other Person. An entity shall be deemed a Subsidiary of the Company for purposes of this definition only for such periods as the requisite ownership or control relationship is maintained. Notwithstanding the foregoing, in the case of an Incentive Stock Option or any determination relating to an Incentive Stock Option, “ Subsidiary ” means a corporation that is a subsidiary of the Company within the meaning of Code Section 424(f). +Section 3. Administration. +(a) The Plan shall be administered by the Administrator and shall be administered in accordance with the requirements of Code Section 162(m) (but only to the extent necessary and desirable to maintain qualification of Awards under the Plan under Code Section 162(m)) and, to the extent applicable, the TSX Company Manual and Rule 16b-3 under the Exchange Act (“Rule 16b-3”) , in each case, to the extent applicable . +(b) Pursuant to the terms of the Plan, the Administrator, subject, in the case of any Committee, to any restrictions on the authority delegated to it by the Board, shall have the power and authority, without limitation: +(i) to select those Eligible Recipients who shall be Participants; +(ii) to determine whether and to what extent Options, Stock Appreciation Rights, Restricted Shares, Restricted Stock Units, Other Share-Based Awards, Other Cash-Based Awards or a combination of any of the foregoing, are to be granted hereunder to Participants; +(iii) to determine the number of Shares to be covered by each Award granted hereunder; +(iv) to determine the terms and conditions, not inconsistent with the terms of the Plan, of each Award granted hereunder, including, but not limited to, ( A ) the restrictions applicable to Restricted Shares and Restricted Stock Units and the conditions under which restrictions applicable to such Restricted Shares and Restricted Stock Units shall lapse, ( B ) the Performance Goals and periods applicable to Awards, if any, ( C ) the Exercise Price of each Award, ( D ) the vesting schedule applicable to each Award, ( E ) the number of Shares subject to each Award and ( F ) subject to the requirements of Code Section 409A (to the extent applicable), any amendments to the terms and conditions of outstanding Awards, including, but not limited to, extending the exercise period of such Awards and accelerating the vesting schedule of such Awards; +(v) to determine the terms and conditions, not inconsistent with the terms of the Plan, which shall govern all written instruments evidencing Options, Stock Appreciation Rights, Restricted Shares, Restricted Stock Units or Other Share-Based Awards, Other Cash- Based Awards or any combination of the foregoing granted hereunder; +(vi) to determine the Fair Market Value; +(vii) to determine the duration and purpose of leaves of absence which may be granted to a Participant without constituting termination of the Participant’s employment for purposes of Awards granted under the Plan; +(viii) to adopt, alter and repeal such administrative rules, guidelines and practices governing the Plan as it shall from time to time deem advisable; +(ix) to reconcile any inconsistency in, correct any defect in and/or supply any omission in the Plan, any Award Agreement or other instrument or agreement relating to the Plan or an Award granted under the Plan; and +(x) to construe and interpret the terms and provisions of the Plan and any Award issued under the Plan (and any Award Agreement relating thereto), and to otherwise supervise the administration of the Plan and to exercise all powers and authorities either specifically granted under the Plan or necessary and advisable in the administration of the Plan. +(c) All decisions made by the Administrator pursuant to the provisions of the Plan shall be final, conclusive and binding on all persons, including the Company and the Participants. No member of the Board or the Committee, or any officer or employee of the Company or any Subsidiary thereof acting on behalf of the Board or the Committee, shall be personally liable for any action, omission, determination, or interpretation taken or made in good faith with respect to the Plan, and all members of the Board or the Committee and each and any officer or employee of the Company and of any Subsidiary thereof acting on their behalf shall, to the maximum extent permitted by law, be fully indemnified and protected by the Company in respect of any such action, omission, determination or interpretation. +B-6 +Table of Contents +Section 4. Shares Reserved for Issuance Under the Plan. +(a) Subject to Section 5 of the Plan, the number of Shares that are reserved and available for issuance pursuant to Awards granted under the Plan is the sum of (i) eight-hundred one million and two hundred thousand (1,200,000) Shares, consisting of eight hundred thousand (800,000) Shares originally reserved under the Plan as of the Original Effective Date and four hundred thousand (400,000) additional Shares originally reserved under the Plan as of September 25, 2017 , less any Shares issued under the Plan on or prior to, or subject to outstanding Awards as of, the Effective Date, plus (ii) all Shares that are or become available for issuance due to forfeitures under the Prior Plan, plus (iii) an additional four-hundred thousand (400,000 one million (1,000,000 ) Shares added to the reserve as of the Effective Date. The maximum number of Shares that may be issued pursuant to Options intended to be Incentive Stock Options is four-hundred thousand four hundred thousand (400,000). +(b) The number of Shares which may be issuable pursuant to Awards under the Plan and any other share compensation arrangement of the Company within a one-year period to any one Participant, shall not exceed five percent (5%) of the total number of issued and outstanding shares of Common Stock on the grant date of such Award, on a non-diluted basis. +(c) The maximum number of Shares which may be ( i ) issued to Insiders within any one-year period; and ( ii ) issuable to Insiders at any point in time under the Plan and any other share compensation arrangement of the Company shall not exceed ten fifteen percent ( 10 15 %) of the number of then issued and outstanding shares of Common Stock. +(d) Subject to Section 4(b) or Section 4(c), as applicable, the aggregate Awards number of Shares subject to Options or Stock Appreciation Rights granted during any fiscal year to any Participant shall not exceed, subject to adjustment as provided in Section 5 of the Plan: ( i ) three-hundred thousand (300,000) Shares subject to Options or Stock Appreciation Rights, ( ii ) two-hundred thousand (200,000) Shares subject to Restricted Shares, Restricted Stock Units or Other Share-Based Awards (other than Stock Appreciation Rights), to the extent such Awards are intended to be “qualified performance-based compensation” under Code Section 162(m), and ( iii ) $5,000,000 with respect to Other Cash-Based Awards, to the extent such Awards are intended to be “qualified performance-based compensation” under Code Section 162(m) Section 5 of the Plan, one and a half million (1,500,000) Shares . Notwithstanding the foregoing, the aggregate grant date Fair Market Value of Shares subject to Awards granted during any fiscal year to any non-employee Director, when taken together with any cash fees paid to such non-employee Director during the fiscal year (in each case, with respect to his or her service as a non-employee Director), shall not exceed $500,000; provided, however , that this limit shall not apply to any Awards a non-employee Director elects to receive at Fair Market Value in lieu of all or a portion of such non-employee Director’s compensation. +(e) Shares issued under the Plan may, in whole or in part, be authorized but unissued Shares or Shares that shall have been or may be reacquired by the Company in the open market, in private transactions or otherwise. Any Shares subject to an Award under the Plan that, after the Effective Date, are forfeited, canceled, settled or otherwise terminated without a distribution of Shares to a Participant will thereafter be deemed to be available for Awards. In applying the immediately preceding sentence, if ( i ) Shares otherwise issuable or issued in respect of, or as part of, any Award are withheld to cover taxes, such Shares shall be treated as having been issued under the Plan and shall not be available for issuance under the Plan, ( ii ) Shares otherwise issuable or issued in respect of, or as part of, any Award of Options or Stock Appreciation Rights are withheld to cover the Exercise Price, such Shares shall be treated as having been issued under the Plan and shall not be available for issuance under the Plan, and ( iii ) any Share-settled Stock Appreciation Rights are exercised, the aggregate number of Shares subject to such Stock Appreciation Rights shall be deemed issued under the Plan and shall not be available for issuance under the Plan. +Section 5. Equitable Adjustments. +In the event of any Change in Capitalization, an equitable substitution or proportionate adjustment shall be made, in each case, as may be determined by the Administrator, in its sole discretion, in ( i ) the aggregate number of Shares reserved for issuance under the Plan and the maximum number of Shares that may be subject to Awards granted to any Participant in any calendar or fiscal year, ( ii ) the kind, number and Exercise Price subject to outstanding Options and Stock Appreciation Rights granted under the Plan, provided, however , that any such substitution or adjustment with respect to Options and Stock Appreciation Rights shall occur in accordance with the requirements of Code Section 409A, and ( iii ) the kind, number and purchase price of Shares subject to outstanding Restricted Shares or Other Share-Based Awards granted under the Plan, in each case as may be determined by the Administrator, in its sole discretion; provided , however , that any fractional Shares resulting from the adjustment shall be eliminated. Such other equitable substitutions or adjustments shall be made as may be determined by the Administrator, in its sole discretion. Without limiting the generality of the foregoing, in connection with a Change in Capitalization, the Administrator may provide, in its sole discretion, for the cancellation of any outstanding Award granted hereunder in exchange for payment in cash or other property having an aggregate Fair Market Value of the Shares covered by such Award, reduced by the aggregate Exercise Price or purchase price thereof, if any. Notwithstanding anything contained in the Plan to the contrary, any adjustment with respect to an Incentive Stock Option due to an adjustment or substitution described in this Section 5 shall comply with the rules of Code Section 424(a), and in no event shall any adjustment be made which would render any Incentive Stock Option granted hereunder to be disqualified as an incentive stock option for purposes of Code Section 422. The Administrator’s determinations pursuant to this Section 5 shall be final, binding and conclusive. +B-7 +Table of Contents +Section 6. Eligibility. +The Participants under the Plan shall be selected from time to time by the Administrator, in its sole discretion, from among Eligible Recipients. +Section 7. Options. +(a) General. The Committee may, in its sole discretion, grant Options to Participants. Solely with respect to Participants who are Employees, the Committee may grant Incentive Stock Options, Nonqualified Stock Options or a combination of both. With respect to all other Participants, the Committee may grant only Nonqualified Stock Options. Each Participant who is granted an Option shall enter into an Award Agreement with the Company, containing such terms and conditions as the Administrator shall determine, in its sole discretion, which Award Agreement shall specify whether the Option is an Incentive Stock Option or a Nonqualified Stock Option and shall set forth, among other things, the Exercise Price of the Option, the term of the Option and provisions regarding exercisability of the Option granted thereunder. The provisions of each Option need not be the same with respect to each Participant. More than one Option may be granted to the same Participant and be outstanding concurrently hereunder. Options granted under the Plan shall be subject to the terms and conditions set forth in this Section 7 and shall contain such additional terms and conditions, not inconsistent with the terms of the Plan, as the Administrator shall deem desirable and set forth in the applicable Award Agreement. The prospective recipient of an Option shall not have any rights with respect to such Award, unless and until such recipient has received an Award Agreement and, if required by the Administrator in the Award Agreement, executed and delivered a fully executed copy thereof to the Company, within a period of sixty (60) days (or such other period as the Administrator may specify) after the award date. +(b) Limits on Incentive Stock Options . If the Administrator grants Incentive Stock Options, then to the extent that the aggregate fair market value of Shares with respect to which Incentive Stock Options are exercisable for the first time by any individual during any calendar year (under all plans of the Company) exceeds $100,000, such Options will be treated as Nonqualified Stock Options to the extent required by Code Section 422. +(c) Exercise Price. The Exercise Price of Shares purchasable under an Option shall be determined by the Administrator in its sole discretion at the time of grant; provided, however , that ( i ) in no event shall the Exercise Price of an Option be less than one hundred percent (100%) of the Fair Market Value of the Common Stock on the date of grant, and ( ii ) no Incentive Stock Option granted to a ten percent (10%) shareholder of the Company’s Common Stock (within the meaning of Code Section 422(b)(6)) shall have an Exercise Price per share less than one-hundred ten percent (110%) of the Fair Market Value of a Share on such date. +(d) Option Term. The maximum term of each Option shall be fixed by the Administrator, but in no event shall ( i ) an Option be exercisable more than ten (10) years after the date such Option is granted, and ( ii ) an Incentive Stock Option granted to a ten percent (10%) shareholder of the Company’s Common Stock (within the meaning of Code Section 422(b)(6)) be exercisable more than five (5) years after the date such Option is granted. Each Option’s term is subject to earlier expiration pursuant to the applicable provisions in the Plan and the Award Agreement. Notwithstanding the foregoing, the Administrator shall have the authority to accelerate the exercisability of any outstanding Option at such time and under such circumstances as the Administrator, in its sole discretion, deems appropriate. +(e) Exercisability. Each Option shall be exercisable at such time or times and subject to such terms and conditions, including the attainment of pre-established Performance Goals, as shall be determined by the Administrator in the applicable Award Agreement. The Administrator may also provide that any Option shall be exercisable only in installments, and the Administrator may waive such installment exercise provisions at any time, in whole or in part, based on such factors as the Administrator may determine in its sole discretion. Notwithstanding anything to the contrary contained herein, an Option may not be exercised for a fraction of a share. Notwithstanding any contrary provision herein, if, on the date an outstanding Option would expire, the exercise of the Option, including by a “net exercise” or “cashless” exercise, would violate applicable securities laws or any insider trading policy maintained by the Company from time to time, the expiration date applicable to the Option will be extended, except to the extent such extension would violate Code Section 409A, to a date that is thirty (30) calendar days after the date the exercise of the Option would no longer violate applicable securities laws or any such insider trading policy. +(f) Method of Exercise. Options may be exercised in whole or in part by giving written notice of exercise to the Company specifying the number of Shares to be purchased, accompanied by payment in full of the aggregate Exercise Price of the Shares so purchased in cash or its equivalent, as determined by the Administrator. As determined by the Administrator, in its sole discretion, with respect to any Option or category of Options, payment in whole or in part may also be made ( i ) by means of consideration received under any cashless exercise procedure approved by the Administrator (including the withholding of Shares otherwise issuable upon exercise), ( ii ) in the form of unrestricted Shares already owned by the Participant which have a Fair Market Value on the date of surrender equal to the aggregate Exercise Price of the Shares as to which such Option shall be exercised, ( iii ) any other form of consideration approved by the Administrator and permitted by applicable law or ( iv ) any combination of the foregoing. In determining which methods a Participant may utilize to pay the Exercise Price, the Administrator may consider such factors as it determines are appropriate; provided, however , that with respect to Incentive +B-8 +Table of Contents +Stock Options, all such discretionary determinations shall be made by the Administrator at the time of grant and specified in the Award Agreement. +(g) Rights as Shareholder. A Participant shall have no rights to dividends or any other rights of a shareholder with respect to the Shares subject to an Option until the Participant has given written notice of the exercise thereof, has paid in full for such Shares and has satisfied the requirements of Section 15 of the Plan. +(h) Termination of Employment or Service . +(i) Unless the applicable Award Agreement provides otherwise, in the event that the employment or service of a Participant with the Company and all Affiliates thereof shall terminate for any reason other than Cause, Retirement, Disability, or death, ( A ) Options granted to such Participant, to the extent that they are exercisable at the time of such termination, shall remain exercisable until the date that is ninety (90) days after such termination, on which date they shall expire, and ( B ) Options granted to such Participant, to the extent that they were not exercisable at the time of such termination, shall expire at the close of business on the date of such termination. The ninety (90) day period described in this Section 7(h)(i) shall be extended to one (1) year after the date of such termination in the event of the Participant’s death during such ninety (90) day period. Notwithstanding the foregoing, no Option shall be exercisable after the expiration of its term. +(ii) Unless the applicable Award Agreement provides otherwise, in the event that the employment or service of a Participant with the Company and all Affiliates thereof shall terminate on account of Retirement, Disability or the death of the Participant, ( A ) Options granted to such Participant, to the extent that they were exercisable at the time of such termination, shall remain exercisable until the date that is one (1) year after such termination, on which date they shall expire and ( B ) Options granted to such Participant, to the extent that they were not exercisable at the time of such termination, shall expire at the close of business on the date of such termination. Notwithstanding the foregoing, no Option shall be exercisable after the expiration of its term. +(iii) In the event of the termination of a Participant’s employment or service for Cause, all outstanding Options granted to such Participant shall expire at the commencement of business on the date of such termination. +(iv) For purposes of this Section 7(h) , Options that are not exercisable solely due to a blackout period shall be considered exercisable. +(v) Other Change in Employment Status. An Option may be affected, both with regard to vesting schedule and termination, by leaves of absence, changes from full-time to part-time employment, partial disability or other changes in the employment status or service of a Participant, as evidenced in a Participant’s Award Agreement. +(i) Change in Control . Notwithstanding anything herein to the contrary, upon a Change in Control, all outstanding Options shall be subject to Section 12 of the Plan. +Section 8. Stock Appreciation Rights. +(a) General. Stock Appreciation Rights may be granted either alone (“ Free Standing Rights ”) or in conjunction with all or part of any Option granted under the Plan (“ Related Rights ”). Related Rights may be granted either at or after the time of the grant of such Option. The Administrator shall determine the Eligible Recipients to whom, and the time or times at which, grants of Stock Appreciation Rights shall be made, the number of Shares to be awarded, the price per Share, and all other conditions of Stock Appreciation Rights. Notwithstanding the foregoing, no Related Right may be granted for more Shares than are subject to the Option to which it relates and any Stock Appreciation Right must be granted with an Exercise Price not less than the Fair Market Value of Common Stock on the date of grant. The provisions of Stock Appreciation Rights need not be the same with respect to each Participant. Stock Appreciation Rights granted under the Plan shall be subject to the following terms and conditions set forth in this Section 8 and shall contain such additional terms and conditions, not inconsistent with the terms of the Plan, as the Administrator shall deem desirable, as set forth in the applicable Award Agreement. +(b) Awards; Rights as Shareholder. The prospective recipient of a Stock Appreciation Right shall not have any rights with respect to such Award, unless and until such recipient has received an Award Agreement and, if required by the Administrator in the Award Agreement, executed and delivered a fully executed copy thereof to the Company, within a period of sixty (60) days (or such other period as the Administrator may specify) after the award date. Participants who are granted Stock Appreciation Rights shall have no rights as shareholders of the Company with respect to the grant or exercise of such rights. +B-9 +Table of Contents +(c) Exercisability . +(i) Stock Appreciation Rights that are Free Standing Rights shall be exercisable at such time or times and subject to such terms and conditions as shall be determined by the Administrator in the applicable Award Agreement. +(ii) Stock Appreciation Rights that are Related Rights shall be exercisable only at such time or times and to the extent that the Options to which they relate shall be exercisable in accordance with the provisions of Section 7 above and this Section 8 of the Plan. +(d) Payment Upon Exercise. +(i) Upon the exercise of a Free Standing Right, the Participant shall be entitled to receive up to, but not more than, that number of Shares, determined using the Fair Market Value, equal in value to the excess of the Fair Market Value as of the date of exercise over the price per share specified in the Free Standing Right multiplied by the number of Shares in respect of which the Free Standing Right is being exercised. +(ii) A Related Right may be exercised by a Participant by surrendering the applicable portion of the related Option. Upon such exercise and surrender, the Participant shall be entitled to receive up to, but not more than, that number of Shares, determined using the Fair Market Value, equal in value to the excess of the Fair Market Value as of the date of exercise over the Exercise Price specified in the related Option multiplied by the number of Shares in respect of which the Related Right is being exercised. Options which have been so surrendered, in whole or in part, shall no longer be exercisable to the extent the Related Rights have been so exercised. +(iii) Notwithstanding the foregoing, the Administrator may determine to settle the exercise of a Stock Appreciation Right in cash (or in any combination of Shares and cash). +(e) Termination of Employment or Service. +(i) In the event of the termination of employment or service with the Company and all Affiliates thereof of a Participant who has been granted one or more Free Standing Rights, such rights shall be exercisable at such time or times and subject to such terms and conditions as shall be determined by the Administrator in the applicable Award Agreement. +(ii) In the event of the termination of employment or service with the Company and all Affiliates thereof of a Participant who has been granted one or more Related Rights, such rights shall be exercisable at such time or times and subject to such terms and conditions as set forth in the related Options. +(f) Term . +(i) The term of each Free Standing Right shall be fixed by the Administrator, but no Free Standing Right shall be exercisable more than ten (10) years after the date such right is granted. +(ii) The term of each Related Right shall be the term of the Option to which it relates, but no Related Right shall be exercisable more than ten (10) years after the date such right is granted. +(g) Change in Control . Notwithstanding anything herein to the contrary, upon a Change in Control, all outstanding Stock Appreciation Rights shall be subject to Section 12 of the Plan. +Section 9. Restricted Shares. +(a) General. Restricted Shares may be issued either alone or in addition to other Awards granted under the Plan. The Administrator shall determine the Eligible Recipients to whom, and the time or times at which, grants of Restricted Shares shall be made; the number of Shares to be awarded; the price, if any, to be paid by the Participant for the acquisition of Restricted Shares; the Restricted Period, if any, applicable to Restricted Shares; the Performance Goals (if any) applicable to Restricted Shares; and all other conditions of the Restricted Shares. If the restrictions, Performance Goals and/or conditions established by the Administrator are not attained, a Participant shall forfeit his or her Restricted Shares in accordance with the terms of the grant. The provisions of the Restricted Shares need not be the same with respect to each Participant. +B-10 +Table of Contents +(b) Awards and Certificates. The prospective recipient of Restricted Shares shall not have any rights with respect to any such Award, unless and until such recipient has received an Award Agreement and, if required by the Administrator in the Award Agreement, executed and delivered a fully executed copy thereof to the Company, within a period of sixty (60) days (or such other period as the Administrator may specify) after the award date. Except as otherwise provided in Section 9(c) of the Plan, ( i ) each Participant who is granted an award of Restricted Shares may, in the Company’s sole discretion, be issued a stock certificate in respect of such Restricted Shares; and ( ii ) any such certificate so issued shall be registered in the name of the Participant, and shall bear an appropriate legend referring to the terms, conditions, and restrictions applicable to any such Award. +The Company may require that the stock certificates, if any, evidencing Restricted Shares granted hereunder be held in the custody of the Company until the restrictions thereon shall have lapsed, and that, as a condition of any award of Restricted Shares, the Participant shall have delivered a stock power, endorsed in blank, relating to the Shares covered by such Award. +Notwithstanding anything in the Plan to the contrary, any Restricted Shares (whether before or after any vesting conditions have been satisfied) may, in the Company’s sole discretion, be issued in uncertificated form pursuant to the customary arrangements for issuing shares in such form. +(c) Restrictions and Conditions. The Restricted Shares granted pursuant to this Section 9 shall be subject to the following restrictions and conditions and any additional restrictions or conditions as determined by the Administrator at the time of grant or thereafter: +(i) The Administrator may, in its sole discretion, provide for the lapse of restrictions in installments and may accelerate or waive such restrictions in whole or in part based on such factors and such circumstances as the Administrator may determine, in its sole discretion, including, but not limited to, the attainment of certain Performance Goals, the Participant’s termination of employment or service as a non-employee Director or Consultant of the Company or an Affiliate thereof, or the Participant’s death or Disability ; provided , however , that with respect to any Award that is intended to be “qualified performance-based compensation” under Code Section 162(m), such discretion may not be exercised to the extent it would cause such Award to fail to be “qualified performance-based compensation” under Code Section 162(m). . +(ii) Except as provided in Section 16 of the Plan or in the Award Agreement, the Participant shall generally have the rights of a shareholder of the Company with respect to Restricted Shares during the Restricted Period. In the Administrator’s discretion and as provided in the applicable Award Agreement, a Participant may be entitled to dividends or dividend equivalents on an Award of Restricted Shares, which will be payable in accordance with the terms of such grant as determined by the Administrator. Certificates for Shares of unrestricted Common Stock may, in the Company’s sole discretion, be delivered to the Participant only after the Restricted Period has expired without forfeiture in respect of such Restricted Shares, except as the Administrator, in its sole discretion, shall otherwise determine. +(iii) The rights of Participants granted Restricted Shares upon termination of employment or service as a non-employee Director or Consultant of the Company or an Affiliate thereof terminates for any reason during the Restricted Period shall be set forth in the Award Agreement. +(d) Change in Control . Notwithstanding anything herein to the contrary, upon a Change in Control, all outstanding Restricted Shares shall be subject to Section 12 of the Plan. +Section 10. Restricted Stock Units. +(a) General. Restricted Stock Units may be issued either alone or in addition to other Awards granted under the Plan. The Administrator shall determine the Eligible Recipients to whom, and the time or times at which, grants of Restricted Stock Units shall be made; the number of Restricted Stock Units to be awarded; the Restricted Period, if any, applicable to Restricted Stock Units; the Performance Goals (if any) applicable to Restricted Stock Units; and all other conditions of the Restricted Stock Units. If the restrictions, Performance Goals and/or conditions established by the Administrator are not attained, a Participant shall forfeit his or her Restricted Stock Units in accordance with the terms of the grant. The provisions of Restricted Stock Units need not be the same with respect to each Participant. +B-11 +Table of Contents +(b) Award Agreement. The prospective recipient of Restricted Stock Units shall not have any rights with respect to any such Award, unless and until such recipient has received an Award Agreement and, if required by the Administrator in the Award Agreement, executed and delivered a fully executed copy thereof to the Company, within a period of sixty (60) days (or such other period as the Administrator may specify) after the award date. +(c) Restrictions and Conditions. The Restricted Stock Units granted pursuant to this Section 10 shall be subject to the following restrictions and conditions and any additional restrictions or conditions as determined by the Administrator at the time of grant or, subject to Code Section 409A, thereafter: +(i) The Administrator may, in its sole discretion, provide for the lapse of restrictions in installments and may accelerate or waive such restrictions in whole or in part based on such factors and such circumstances as the Administrator may determine, in its sole discretion, including, but not limited to, the attainment of certain Performance Goals, the Participant’s termination of employment or service as a non-employee Director or Consultant of the Company or an Affiliate thereof, or the Participant’s death or Disability ; provided , however , that with respect to any Award that is intended to be “qualified performance-based compensation” under Code Section 162(m), such discretion may not be exercised to the extent it would cause such Award to fail to be “qualified performance-based compensation” under Code Section 162(m). . +(ii) Participants holding Restricted Stock Units shall have no voting rights. A Restricted Stock Unit may, at the Administrator’s discretion, carry with it a right to dividend equivalents. Such right would entitle the holder to be credited with an amount equal to all cash dividends paid on one Share while the Restricted Stock Unit is outstanding. The Administrator, in its discretion, may grant dividend equivalents from the date of grant or only after a Restricted Stock Unit is vested. +(iii) The rights of Participants granted Restricted Stock Units upon termination of employment or service as a non-employee Director or Consultant of the Company or an Affiliate thereof terminates for any reason during the Restricted Period shall be set forth in the Award Agreement. +(d) Settlement of Restricted Stock Units . Settlement of vested Restricted Stock Units shall be made to Participants in the form of Shares, unless the Administrator, in its sole discretion, provides for the payment of the Restricted Stock Units in cash (or partly in cash and partly in Shares) equal to the value of the Shares that would otherwise be distributed to the Participant. +(e) Change in Control . Notwithstanding anything herein to the contrary, upon a Change in Control, all outstanding Restricted Stock Units shall be subject to Section 12 of the Plan. +Section 11. Other Share-Based or Cash-Based Awards. +(a) The Administrator is authorized to grant Awards to Participants in the form of Other Share-Based Awards or Other Cash-Based Awards, as deemed by the Administrator to be consistent with the purposes of the Plan and as evidenced by an Award Agreement. The Administrator shall determine the terms and conditions of such Awards, consistent with the terms of the Plan, at the date of grant or thereafter, including any Performance Goals and performance periods. Common Stock or other securities or property delivered pursuant to an Award in the nature of a purchase right granted under this Section 11 shall be purchased for such consideration, paid for at such times, by such methods, and in such forms, including, without limitation, Shares, other Awards, notes or other property, as the Administrator shall determine, subject to any required corporate action. +(a) With respect to Awards that are intended to be “qualified performance-based compensation” under Code Section 162(m), no payment shall be made to a Participant that is or is likely to become a Covered Employee prior to the certification by the Committee that the Performance Goals have been attained. The Committee may establish other rules applicable to such Other Share-Based Awards and the Other Cash-Based Awards; provided , however , that such rules shall be in compliance with Code Section 162(m). +(b) The prospective recipient of an Other Share-Based Award or Other Cash-Based Award shall not have any rights with respect to such Award, unless and until such recipient has received an Award Agreement and, if required by the Administrator in the Award Agreement, executed and delivered a fully executed copy thereof to the Company, within a period of sixty (60) days (or such other period as the Administrator may specify) after the award date. +(c) Notwithstanding anything herein to the contrary, upon a Change in Control, all outstanding Other Share-Based Awards and Other Cash-Based Awards shall be subject to Section 12 of the Plan. +B-12 +Table of Contents +Section 12. Change in Control. +The Administrator may provide in the applicable Award Agreement that an Award will vest on an accelerated basis upon the Participant’s termination of employment or service in connection with a Change in Control or upon the occurrence of any other event that the Administrator may set forth in the Award Agreement. If the Company is a party to an agreement that is reasonably likely to result in a Change in Control, such agreement may provide for: ( i ) the continuation of any Options and Stock Appreciation Rights by the Company, if the Company is the surviving corporation; ( ii ) the assumption of any Options and Stock Appreciation Rights by the surviving corporation or its parent or subsidiary; ( iii ) the substitution by the surviving corporation or its parent or subsidiary of equivalent awards for any Options and Stock Appreciation Rights, provided, however , that any such substitution with respect to Options and Stock Appreciation Rights shall occur in accordance with the requirements of Code Section 409 A; or ( iv ) settlement of any Options and Stock Appreciation Rights for the Change in Control Price (less, to the extent applicable, the per share exercise or grant price), or, if the per share exercise or grant price equals or exceeds the Change in Control Price, such Options and Stock Appreciation Rights shall terminate and be canceled. To the extent that Restricted Shares, Restricted Stock Units or other Awards settle in Shares in accordance with their terms upon a Change in Control, such Shares shall be entitled to receive as a result of the Change in Control transaction the same consideration as the Shares held by shareholders of the Company as a result of the Change in Control transaction. For purposes of this Section 12, “ Change in Control Price ” shall mean the Fair Market Value of a Share upon a Change in Control. To the extent that the consideration paid in any such Change in Control transaction consists all or in part of securities or other non-cash consideration, the value of such securities or other non-cash consideration shall be determined in good faith by the Administrator. +Section 13. Amendment and Termination. +(a) The Board or the Committee may amend, alter or terminate the Plan, but no amendment, alteration, or termination shall be made that would impair the rights of a Participant under any Award theretofore granted without such Participant’s consent. Shareholder approval shall not be required to amend the Plan, including, but not limited to, the following items, subject to any regulatory approvals, including, where required, the approval of the Toronto Stock Exchange: +(i) Amendments of a “housekeeping” nature; +(ii) A change to the vesting provisions of any Awards; +(iii) A change to the termination provisions of any Award that does not entail an extension beyond the original term of the Award; and +(iv) Amendments to the provisions relating to a Change of Control. +(b) Notwithstanding the foregoing, approval of the Company’s shareholders shall be obtained to increase the aggregate Share limit and annual Award limits described in Section 4 and for any amendment that would require such approval in order to satisfy the requirements of Code Section 162(m), any rules of the stock exchange on which the Common Stock is traded or other applicable law. Without limiting the generality of the foregoing, if and for so long as the Company is listed on the Toronto Stock Exchange, the following may not be amended without shareholder approval in accordance with the TSX Company Manual: +(i) An increase in the number of Shares reserved for issuance pursuant to the Plan as set out in Section 4(a); +(ii) Except as provided in Section 5 , a modification of any outstanding Option or Stock Appreciation Right so as to specify a lower Exercise Price or grant price (or a cancellation of an Option or Stock Appreciation Right and substitution of it for an Option or Stock Appreciation Right with a lower Exercise Price or grant price) ; +(iii) Except as provided in Section 5 , a cancellation of an outstanding Option or Stock Appreciation Right whose Exercise Price or grant price is equal to or greater than the current Fair Market Value of a Share and substitution of it for another Award or cash payment; +(iv) An extension of the maximum term of any Award made under the Plan; +(v) An increase in the number of Shares that may be issued to Insiders under the above restriction contained in Section 4(c); or +(vi) An amendment to this Section 13(a) to amend or delete any of the foregoing items or grant additional powers to the Board to amend the Plan or entitlements without shareholder approval. +B-13 +Table of Contents +(c) Subject to the terms and conditions of the Plan, the Administrator may modify, extend or renew outstanding Awards under the Plan, or accept the surrender of outstanding Awards (to the extent not already exercised) and grant new Awards in substitution of them (to the extent not already exercised). +(d) Notwithstanding the foregoing, no alteration, modification or termination of an Award will, without the prior written consent of the Participant, adversely alter or impair any rights or obligations under any Award already granted under the Plan. +Section 14. Unfunded Status of Plan. +The Plan is intended to constitute an “unfunded” plan for incentive compensation. With respect to any payments not yet made to a Participant by the Company, nothing contained herein shall give any such Participant any rights that are greater than those of a general creditor of the Company. +Section 15. Withholding Taxes. +Each Participant shall, no later than the date as of which the value of an Award first becomes includible in the gross income of such Participant for federal, state and/or local income tax purposes, pay to the Company, or make arrangements satisfactory to the Administrator regarding payment of, any federal, state, or local taxes of any kind, domestic or foreign, required by law or regulation to be withheld with respect to the Award. The obligations of the Company under the Plan shall be conditional on the making of such payments or arrangements, and the Company shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to such Participant. Whenever cash is to be paid pursuant to an Award granted hereunder, the Company shall have the right to deduct therefrom an amount sufficient to satisfy any federal, state and local withholding tax requirements related thereto. Whenever Shares are to be delivered pursuant to an Award, the Company shall have the right to require the Participant to remit to the Company in cash an amount sufficient to satisfy any related federal, state and local taxes, domestic or foreign, to be withheld and applied to the tax obligations. With the approval of the Administrator, a Participant may satisfy the foregoing requirement by electing to have the Company withhold from delivery of Shares or by delivering already owned unrestricted shares of Common Stock, in each case, having a value equal to the amount required to be withheld or such other greater amount up to the maximum statutory rate under applicable law, as applicable to such Participant, if such other greater amount would not result in adverse financial accounting treatment, as determined by the Administrator (including in connection with the effectiveness of FASB Accounting Standards Update 2016-09). Fractional share amounts shall be settled in cash. Such an election may be made with respect to all or any portion of the Shares to be delivered pursuant to an Award. The Company may also use any other method of obtaining the necessary payment or proceeds, as permitted by law, to satisfy its withholding obligation with respect to any Option or other Award. +Section 16. Non-United States Employees. +Without amending the Plan, the Administrator may grant Awards to eligible persons residing in non-United States jurisdictions on such terms and conditions different from those specified in the Plan, including the terms of any award agreement or plan, adopted by the Company or any Subsidiary thereof to comply with, or take advantage of favorable tax or other treatment available under, the laws of any non-United States jurisdiction, as may in the judgment of the Administrator be necessary or desirable to foster and promote achievement of the purposes of the Plan and, in furtherance of such purposes the Administrator may make such modifications, amendments, procedures, subplans and the like as may be necessary or advisable to comply with provisions of laws in other countries or jurisdictions in which the Company or its Subsidiaries operates or has employees. +Section 17. Transfer of Awards. +No purported sale, assignment, mortgage, hypothecation, transfer, charge, pledge, encumbrance, gift, transfer in trust (voting or other) or other disposition of, or creation of a security interest in or lien on, any Award or any agreement or commitment to do any of the foregoing (each, a “ Transfer ”) by any holder thereof in violation of the provisions of the Plan or an Award Agreement will be valid, except with the prior written consent of the Administrator, which consent may be granted or withheld in the sole discretion of the Administrator. Any purported Transfer of an Award or any economic benefit or interest therein in violation of the Plan or an Award Agreement shall be null and void ab initio , and shall not create any obligation or liability of the Company, and any person purportedly acquiring any Award or any economic benefit or interest therein transferred in violation of the Plan or an Award Agreement shall not be entitled to be recognized as a holder of such Shares. Unless otherwise determined by the Administrator in accordance with the provisions of the immediately preceding sentence, an Option may be exercised, during the lifetime of the Participant, only by the Participant or, during any period during which the Participant is under a legal disability, by the Participant’s guardian or legal representative. +B-14 +Table of Contents +Section 18. Continued Employment. +The adoption of the Plan shall not confer upon any Eligible Recipient any right to continued employment or service with the Company or an Affiliate thereof, as the case may be, nor shall it interfere in any way with the right of the Company or an Affiliate thereof to terminate the employment or service of any of its Eligible Recipients at any time. +Section 19. Effective Date and Approval Date . +The Plan originally became effective on October 8, 2015 , the date of the effectiveness of the registration statement for the Company’s Initial Public Offering (the “ Original Effective Date ”). The Plan, as amended and restated, is shall be submitted to the shareholders of the Company for approval at the Company’s 2021 annual meeting of shareholders and, if approved, shall become effective as of September 25, 2017, the date of its adoption by the Board on which the Plan was approved by shareholders (the “ Effective Date ”) , subject to approval by the Company’s shareholders . The Plan will be unlimited in duration and, in the event of Plan termination, will remain in effect as long as any Shares awarded under it are outstanding and not fully vested; provided, however , that no Awards will be made under the Plan on or after the tenth anniversary of Effective Date. No Option that is intended to be an Incentive Stock Option may be granted under the Plan until the Approval Date. If the Approval Date does not occur within twelve (12) months after the Effective Date, then no Options that are intended to be Incentive Stock Options may be granted under the Plan. +Section 20. Code Section 409A. +The intent of the parties is that payments and benefits under the Plan comply with Code Section 409A to the extent subject thereto, and, accordingly, to the maximum extent permitted, the Plan shall be interpreted and be administered to be in compliance therewith. Any payments described in the Plan that are due within the “short-term deferral period” as defined in Code Section 409A shall not be treated as deferred compensation unless applicable law requires otherwise. Notwithstanding anything to the contrary in the Plan, to the extent required in order to avoid accelerated taxation and/or tax penalties under Code Section 409A, amounts that would otherwise be payable and benefits that would otherwise be provided pursuant to the Plan during the six (6) month period immediately following the Participant’s termination of employment shall instead be paid on the first business day after the date that is six (6) months following the Participant’s separation from service (or upon the Participant’s death, if earlier). In addition, for purposes of the Plan, each amount to be paid or benefit to be provided to the Participant pursuant to the Plan , which constitute deferred compensation subject to Code Section 409A, shall be construed as a separate identified payment for purposes of Code Section 409A. Nothing contained in the Plan or an Award Agreement shall be construed as a guarantee of any particular tax effect with respect to an Award. The Company does not guarantee that any Awards provided under the Plan will satisfy the provisions of Code Section 409A, and in no event will the Company be liable for any or all portion of any taxes, penalties, interest or other expenses that may be incurred by a Participant on account of any non-compliance with Code Section 409A. +Section 21 Code Section 162(m). +The Committee may not delegate its authority to establish Performance Goals, certify performance against the Performance Goals or take other actions with respect to Awards that are intended to be “qualified performance-based compensation” under Code Section 162(m). Performance Goals with respect to such Awards shall be established in writing before the earlier of ( a ) the ninetieth (90th) day of the performance period or ( b ) the date that twenty-five percent (25%) of the performance period has elapsed. The payment of Awards under the Plan that are subject to the achievement of Performance Goals (including any prorated Awards) shall occur no later than March 15 of the calendar year following the year in which the performance period ends. With respect to Awards intended to be “qualified performance-based compensation” under Code Section 162(m), (i) the Committee shall not have the discretion to pay in excess of the amount earned based on the attainment of the Performance Goals as certified by the Committee and (ii) in determining the amount of the Award earned based on the attainment of the Performance Goals, the Committee may, in its sole discretion, eliminate or reduce the size of such Award in a manner consistent with Code Section 162(m) to the extent the Committee determines that such elimination or reduction is appropriate. +Section 21. Erroneously Awarded Compensation. +The Plan and all Awards issued hereunder shall be subject to any compensation recovery and/or recoupment policy adopted by the Company to comply with applicable law, including, without limitation, the Dodd-Frank Wall Street Reform and Consumer Protection Act, or to comport with good corporate governance practices, as such policies may be amended from time to time. +B-15 +Table of Contents +Section 22. Governing Law and Forum. +The Plan shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to principles of conflicts of law of such state. Except as may otherwise be provided in an Award Agreement, the jurisdiction and venue for any disputes arising under, or any action brought to enforce (otherwise relating to) the Plan or an Award thereunder shall be exclusively in the courts in the State of Colorado, County of Arapahoe or Denver, including the federal courts located therein (should federal jurisdiction exist). The Company and all Participants and beneficiaries hereby submit and consent to said jurisdiction and venue. +B-16 +Table of Contents +VOTE BY INTERNET Before The Meeting - Go to www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information. Vote by 11:59 p.m. Eastern Time on May 26, 2021. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. CPI CARD GROUP INC. 10368 WEST CENTENNIAL ROAD LITTLETON, COLORADO 80127 During The Meeting - Go to www.virtualshareholdermeeting.com/PMTS2021 You may attend the meeting via the Internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions. Vote by 11:59 p.m. Eastern Time on May 26, 2021. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: D47801-P53347 KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. CPI CARD GROUP INC. The Board of Directors recommends you vote FOR proposals 1, 2, 3, 5 and 6, and 1 YEAR for proposal 4: 1. Election of Directors For Against Abstain Nominees: ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! 1 Year 2 Years 3 Years Abstain 1a. Thomas Furey ! ! For ! Against ! Abstain 1b. Robert Pearce 4. Advisory vote on the frequency of the stockholder vote on named executive officer compensation. 1c. Nicholas Peters ! ! ! 5. Vote to approve an amendment and restatement of the CPI Card Group Inc. Omnibus Incentive Plan to increase the total number of shares of common stock reserved and available for issuance under the Omnibus Incentive Plan and to make other administrative changes. 1d. Scott Scheirman 1e. Bradley Seaman 1f. Marc Sheinbaum 6. Vote of CPI Card Group Inc.'s “disinterested” stockholders to approve an amendment to the CPI Card Group Inc. Omnibus Incentive Plan to increase the maximum number of shares of common stock issuable to “Insiders” thereunder from 10% to 15% of the number of then issued and outstanding shares of common stock of CPI Card Group Inc. ! ! ! 1g. Valerie Soranno Keating 2. Ratification of KPMG LLP as independent registered public accounting firm for the year ending December 31, 2021. Advisory vote on named executive officer compensation. 3. NOTE: Such other business as may properly come before the meeting or any adjournment thereof. Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date +Table of Contents +Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice and Proxy Statement and Form 10-K are available at www.proxyvote.com. D47802-P53347 CPI CARD GROUP INC. Annual Meeting of Stockholders May 27, 2021 8:00 AM MDT This proxy is solicited by the Board of Directors The stockholder(s) hereby appoint(s) Sarah Kilgore as proxy, with the power to appoint her substitute, and hereby authorize(s) her to represent and to vote, as designated on the reverse side of this ballot, all of the shares of common stock of CPI CARD GROUP INC. that the stockholder(s) is/are entitled to vote at the Annual Meeting of Stockholders to be held virtually at 8:00 AM, MDT on May 27, 2021, at www.virtualshareholdermeeting.com/PMTS2021, and any adjournment or postponement thereof. This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted in accordance with the Board of Directors' recommendations. Continued and to be signed on reverse side \ No newline at end of file diff --git a/raw/proxies/0001641614/0001558370-21-004203/proxy_rpt.txt b/raw/proxies/0001641614/0001558370-21-004203/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..650eb15f62666f27558b2c933d5a63e9cbe95e77 --- /dev/null +++ b/raw/proxies/0001641614/0001558370-21-004203/proxy_rpt.txt @@ -0,0 +1,10 @@ +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +The following is a description of transactions since January 1, 2019 to which we have been a party in which the amount involved exceeded or will exceed the lesser of $120,000 or one percent of the average of the Company’s total assets at year-end for the last two completed fiscal years and in which any of our directors, executive officers, beneficial holders of more than 5% of our capital stock or entities affiliated with them had or will have a direct or indirect material interest. +Registration Rights Agreement +In connection with our initial public offering, we entered into a registration rights agreement with the Tricor Funds (the “Registration Rights Agreement”). Under the Registration Rights Agreement, the Tricor Funds are entitled to request that we register shares of our common stock on a long-form or short-form registration statement on one or more occasions in the future, provided that we will not be obligated to register such shares within 90 days after the effective date of a registration statement previously filed pursuant to a request under the Registration Rights Agreement and otherwise for up to 60 days from the date of a request under the Registration Rights Agreement in certain circumstances. The Tricor Funds also are entitled to participate in certain registered offerings that we may conduct in the future, subject to certain restrictions. We will pay the Tricor Funds’ expenses in connection with the exercise of these rights. The registration rights described in this paragraph apply to (i) shares of our common stock held by the Tricor Funds as of the closing of our initial public offering, (ii) any of our capital stock (or that of our subsidiaries) issued or issuable with respect to the common stock described in clause (i) with respect to any dividend, distribution, recapitalization, reorganization, or certain other corporate transactions, and (iii) any of our common stock owned or acquired following the closing of our initial public offering by the Tricor Funds (“Registrable Securities”). These registration rights are also for the benefit of any subsequent holder of Registrable Securities; provided that any particular securities will cease to be Registrable Securities when they have been sold in a registered public offering, sold in compliance with Rule 144 under the Securities Act or repurchased by us or our subsidiaries. +Director Nomination Agreement +In connection with our initial public offering, we entered into a Director Nomination Agreement with the Tricor Funds that provides the Tricor Funds the right to designate nominees for election to our Board for so long as the Tricor Funds collectively beneficially own 5% or more of the total number of shares of our common stock then outstanding. The number of nominees that the Tricor Funds are entitled to designate under the Director Nomination Agreement bears the same proportion to the total number of members of our Board as the number of shares of common stock beneficially owned by the Tricor Funds bears to the total number of shares of common stock outstanding, rounded up to the nearest whole number. In addition, the Tricor Funds shall be entitled to designate the replacement for any of its board designees whose board service terminates prior to the end of such designee’s term regardless of the Tricor Funds’ beneficial ownership at such time. In addition, for so long as the Tricor Funds collectively beneficially own 10% or more of the total number of shares of our common stock then outstanding, the Tricor Funds shall also have the right to have their designees participate on committees of our Board, subject to compliance with applicable law and stock exchange rules. The Director Nomination Agreement will terminate at such time as the Tricor Funds collectively own less than 5% of our outstanding common stock. Nicholas Peters and Bradley Seaman have been designated by the Tricor Funds as nominees to be included in the Company’s proxy statement commencing in 2016. +Policies and Procedures for Related Party Transactions +Our Board has adopted a written related party transaction policy setting forth the policies and procedures for the review and approval of related party transactions. The policy covers transactions involving us in which the aggregate amount involved exceeds or may be expected to exceed the lesser of $120,000 or one percent of the average of the Company’s total assets at year-end for the last two completed fiscal years and in which a related person has or will have a direct or indirect material interest. For purposes of this policy, a related person is defined as a director, executive officer, nominee for director, or a greater than 5% beneficial owner of our common stock, in each case since the beginning of the most recently completed fiscal year, and any immediate family member of or person sharing a household with any of these individuals. All related party transactions must be presented to the Audit Committee for review, consideration and approval. In approving or rejecting any such proposed transaction, the Audit Committee will consider the material facts of the transaction, including whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances and the extent of the related party’s interest in the transaction. +44 +Table of Contents \ No newline at end of file diff --git a/raw/proxies/0001641614/0001558370-22-005342/proxy.txt b/raw/proxies/0001641614/0001558370-22-005342/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..1cf0213f76b44b40fdf3e6c5abb3926c39768d8a --- /dev/null +++ b/raw/proxies/0001641614/0001558370-22-005342/proxy.txt @@ -0,0 +1,1419 @@ +DEF 14A +1 +tmb-20220525xdef14a.htm +DEF 14A +Table of Contents +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Proxy Statement Pursuant to Section 14(a) of the +Securities Exchange Act of 1934 +Filed by the Registrant ☑ +Filed by a Party other than the Registrant ☐ +Check the appropriate box: +☐ Preliminary Proxy Statement +☐ Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +☑ Definitive Proxy Statement +☐ Definitive Additional Materials +☐ Soliciting Material Pursuant to §240.14a-12 +CPI Card Group Inc. +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +☑ +No fee required. +☐ +Fee paid previously with preliminary materials. +☐ +Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a6(i)(1) and 0-11. +Table of Contents +10368 West Centennial Road +Littleton, Colorado 80127 +April 13, 2022 +Dear Stockholder: +On behalf of the Board of Directors of CPI Card Group Inc. (the “Company”), you are cordially invited to attend the 2022 Annual Meeting of Stockholders (the “Annual Meeting”) to be held on Wednesday, May 25, 2022, at 8:00 a.m. Mountain Time. The Annual Meeting will be a completely virtual meeting of stockholders, which will be conducted online via live webcast. Please see the Notice of Annual Meeting of Stockholders on the next page for more information about how to attend the Annual Meeting virtually. +We have included with this letter a proxy statement that provides you with detailed information about the business to be conducted at the Annual Meeting. In addition, the Company’s 2021 Annual Report, which is being made available to you along with the proxy statement, contains information about the Company and its performance. We encourage you to read these materials carefully. +Whether or not you plan to attend the Annual Meeting, your vote is important, and we encourage you to vote promptly. You may vote your shares through one of the methods described in the accompanying proxy statement. We strongly urge you to vote FOR the nominees proposed by the Board of Directors and in accordance with the recommendations of the Board of Directors on the other proposals by following the voting instructions contained in the proxy statement. +Sincerely, +Bradley Seaman +Scott Scheirman +Chairman of the Board +President, Chief Executive Officer and Director +Table of Contents +CPI CARD GROUP INC. +NOTICE OF ANNUAL MEETING OF STOCKHOLDERS +MAY 25, 2022 8:00 A.M. +(Mountain Time) +To the Stockholders of CPI Card Group Inc.: +The 2022 Annual Meeting of Stockholders will be held virtually on May 25, 2022, at 8:00 a.m. (Mountain Time) via live webcast accessible at www.virtualshareholdermeeting.com/PMTS2022. The purpose of the meeting is to: +1. elect the seven director nominees named in the accompanying proxy statement; +2. ratify the appointment of KPMG LLP as our independent registered public accounting firm for 2022; +3. hold an advisory vote to approve named executive officer compensation; and +4. conduct any other business properly brought before the Annual Meeting or any adjournments or postponements thereof. +Voting is limited to stockholders of record at the close of business on April 4, 2022. +YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE VOTE YOUR SHARES OVER THE TELEPHONE, VIA THE INTERNET OR BY COMPLETING, DATING, SIGNING AND RETURNING A PROXY CARD, AS DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT. YOUR PROMPT COOPERATION IS GREATLY APPRECIATED. +By Order of the Board of Directors, +Sarah Kilgore +Chief Legal and Compliance Officer and Corporate Secretary +Table of Contents +Notice of Electronic Availability of Proxy Statement and Annual Report +As permitted by rules adopted by the United States Securities and Exchange Commission (the “SEC”), we are making this proxy statement and our Annual Report available to stockholders electronically via the Internet. On or about April 13, 2022, we will mail to most of our stockholders a notice (the “Notice”) containing instructions on how to access this proxy statement and our Annual Report and to vote via the Internet. +The Notice also contains instructions on how to request a printed copy of the proxy materials and to vote by mail. In addition, you may elect to receive future proxy materials in printed form by mail or electronically by e-mail by following the instructions included in the Notice. If you have previously elected to receive our proxy materials electronically, you will continue to receive these materials via e-mail unless you elect otherwise. +Table of Contents +TABLE OF CONTENTS +Page +SUMMARY OF THE ANNUAL MEETING +1 +PROPOSAL NO. 1 ELECTION OF DIRECTORS +5 +DIRECTORS AND CORPORATE GOVERNANCE +6 +Director Nominee Biographical Information and Qualifications +6 +Board Diversity +7 +Director Selection Process +7 +Recommendation of Directors by Stockholders +7 +Independence of Directors +8 +Board’s Role in Risk Oversight +8 +Board/Committee Areas of Risk Oversight and Actions +9 +Corporate Governance +9 +Other Board Information +9 +Director Compensation +11 +Security Ownership of Certain Beneficial Owners, Directors and Management +13 +EXECUTIVE OFFICERS +14 +EXECUTIVE COMPENSATION +15 +2021 NEOs +15 +2021 Business Overview Business Highlights +15 +Additional highlights of 2021 performance ($ in millions) +15 +Summary of Our 2021 Compensation Decisions +16 +Executive Compensation Governance Highlights +18 +2021 Say-on-Pay Vote +18 +Role of the Compensation Committee +18 +Role of the Independent Compensation Consultant +18 +Role of Market Data and the Peer Group +19 +Elements of the 2021 Executive Compensation Program +20 +Base Salary +20 +Short-Term Incentives +21 +Actual 2021 Payouts +22 +Long-Term Incentives +22 +Other Benefits +22 +Termination or Change in Control +22 +Additional Compensation Governance Practices +23 +2021 Summary Compensation Table +23 +Outstanding Equity Awards at 2021 Fiscal Year-End +24 +Employment and Post-Termination Arrangements +25 +Equity Compensation Plan Information Table +26 +AUDIT COMMITTEE REPORT +27 +FEES PAID TO INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +27 +PROPOSAL NO. 2 RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +29 +PROPOSAL NO. 3 STOCKHOLDER ADVISORY VOTE TO APPROVE OUR NAMED EXECUTIVE OFFICER COMPENSATION +30 +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +31 +Policies and Procedures for Related Party Transactions +31 +STOCKHOLDER PROPOSALS FOR 2023 ANNUAL MEETING OF STOCKHOLDERS +32 +OTHER MATTERS +32 +Annex A – Reconciliation of Non-GAAP Measures +A-1 +Table of Contents +CPI CARD GROUP INC. +10368 West Centennial Road +Littleton, Colorado 80127 +SUMMARY OF THE ANNUAL MEETING +This proxy statement contains information related to the 2022 Annual Meeting of Stockholders (the “Annual Meeting”) of CPI Card Group Inc. (referred to herein as the “Company,” “CPI,” “we,” “us” or “our” as the context requires) to be held via live webcast accessible at www.virtualshareholdermeeting.com/PMTS2022. This proxy statement is first being made available to stockholders via the Internet on or about April 13, 2022. +Why did you send me this proxy statement? +We sent you this proxy statement because the Board of Directors of the Company (the “Board”) is soliciting, on the Company’s behalf, your proxy to vote at the Annual Meeting and at any postponements or adjournments of the Annual Meeting. This proxy statement summarizes information that is intended to assist you in making an informed vote on the proposals described in this proxy statement. +Who can vote at the Annual Meeting? +Only stockholders of record as of the record date are entitled to vote at the Annual Meeting. The record date to determine stockholders entitled to notice of and to vote at the Annual Meeting is the close of business on April 4, 2022. On the record date, there were 11,255,466 shares of our common stock, par value $0.001 per share (the “Common Stock”), outstanding. Our Common Stock is the only class of voting securities outstanding. +How many shares must be present to conduct the Annual Meeting? +We must have a quorum present virtually or by proxy to conduct the Annual Meeting. A quorum is established when a majority of shares entitled to vote is present virtually or represented by proxy at the Annual Meeting. Abstentions and broker non-votes (as described below) are counted for purposes of determining whether a quorum is present. +What matters are to be voted on at the Annual Meeting? +The agenda for the Annual Meeting is to: +1. elect the seven director nominees named in this proxy statement; +2. ratify the appointment of KPMG LLP as our independent registered public accounting firm for 2022; +3. hold an advisory vote to approve named executive officer compensation (the “Say-on-Pay Proposal”); and +4. conduct any other business properly brought before the Annual Meeting or any adjournments or postponements thereof. +As of the date of this proxy statement, we do not know of any other matters to be presented at the Annual Meeting. If any other matters properly come before the Annual Meeting, however, the persons named as proxies will be authorized to vote or otherwise act in accordance with their judgment. +How does the Board recommend that I vote? +The Board recommends that you vote: +1. FOR the election of each of the director nominees named in this proxy statement; +2. FOR the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for 2022; and +3. FOR the Say-on-Pay Proposal. +1 +Table of Contents +How do I vote at the Annual Meeting? +You may vote via the Internet during the Annual Meeting or by proxy in advance of the Annual Meeting. If you are a stockholder of record, there are three ways to vote by proxy: +● By Telephone — If you request printed copies of the proxy materials by mail, you will receive a proxy card and you can vote by telephone by following the instructions on your proxy card. You will need to use the control number appearing on your proxy card to vote by telephone. +● By Internet — You can vote via the Internet by following the instructions on your Notice or proxy card. You will need to use the control number appearing on your Notice or proxy card to vote via the Internet. +● By Mail — If you request printed copies of the proxy materials by mail, you will receive a proxy card and you can vote by completing, dating and signing the proxy card and returning it in the envelope provided. +If you are a beneficial owner of shares held in “street name” through a bank, broker or other nominee, you may vote as follows: +● By Telephone — If you request printed copies of the proxy materials by mail, you will receive a voting instruction form and you can vote by telephone by following the instructions on the voting instruction form. The availability of telephone voting may depend on the voting process of the organization that holds your shares. +● By Internet — You can vote via the Internet by following the instructions on your Notice or voting instruction form. The availability of Internet voting may depend on the voting process of the organization that holds your shares. +● By Mail — If you request printed copies of the proxy materials by mail, you will receive a voting instruction form and you can vote by proxy by completing, dating and signing the voting instruction form and returning it in the envelope provided. +Telephone and Internet voting facilities for stockholders of record will be available 24 hours a day. You may vote over the telephone or via the Internet until 11:59 p.m. Eastern Time on May 24, 2022. Even if you plan to attend the Annual Meeting virtually, we recommend that you also submit your proxy or voting instructions as described above so that your vote will be counted if you later decide not to attend the Annual Meeting. +Your proxy will be voted in accordance with your instructions, so long as, in the case of a proxy card returned by mail, such card has been signed and dated and is received before the Annual Meeting. If you vote your shares via the Internet, over the telephone or by executing and returning a proxy card by mail but you do not provide specific instructions with respect to the proposals, your shares will be voted FOR each director nominee named in this proxy statement, FOR the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for 2022 and FOR the Say-on-Pay Proposal. +As of the date of this proxy statement, we do not know of any matters to be presented at the Annual Meeting except those described in this proxy statement. If any other matters properly come before the Annual Meeting, however, the persons named as proxies will be authorized to vote or otherwise act in accordance with their judgment. +What does it mean if I receive more than one Notice of internet availability, e-mail or set of proxy materials? +You may receive more than one Notice, more than one e-mail or multiple proxy cards or voting instruction forms. For example, if you hold your shares in more than one brokerage account, you may receive a separate Notice, a separate e-mail or a separate voting instruction form for each brokerage account in which you hold shares. Also, if you are a stockholder of record and your shares are registered in more than one name, you may receive more than one Notice, more than one e-mail or more than one proxy card. To vote all of your shares by proxy, you must complete, date, sign and return each proxy card and voting instruction form that you receive, or vote over the telephone or via the Internet the shares represented by each Notice, e-mail, proxy card or voting instruction form that you receive. +May I change my vote? +Yes. You may revoke your proxy at any time before it is voted at the Annual Meeting. To change your vote, if you are a stockholder of record, you may submit another later dated proxy over the telephone or via the Internet no later than 11:59 p.m. Eastern Time on May 24, 2022 or by mail such that it is received prior to the Annual Meeting, or by voting your shares during the Annual Meeting (your attendance at the Annual Meeting will not, by itself, revoke your proxy; you must vote at the Annual Meeting to revoke your proxy). If you are a beneficial owner and your shares are held in street name, you may change your vote by submitting new voting instructions to your bank, broker or other nominee, or you may change your vote by attending and voting at the Annual Meeting. +What happens if my bank or broker holds my shares in “street name” and I do not give any voting instructions? +If you hold your shares in “street name” through a bank, broker or other nominee, such bank, broker or nominee will vote those shares in accordance with your instructions. To so instruct your bank, broker or nominee, you should refer to the information provided to you by such entity. Without instructions from you, a bank, broker or nominee will be permitted to exercise its own voting discretion only with respect to so-called “routine matters” but will not be permitted to exercise voting discretion with respect to “non-routine matters.” The +2 +Table of Contents +Company believes that the proposal to ratify KPMG LLP’s appointment as the Company’s independent registered public accounting firm for 2022 (Proposal No. 2) is a routine matter on which brokers will be permitted to vote shares on your behalf, even without your instructions. Other than Proposal No. 2, the Company believes that all proposals set forth in this proxy statement are not considered routine matters, and brokers will thus not be able to vote on your behalf if you have not furnished voting instructions to them. Thus, if you do not give your bank, broker or nominee specific voting instructions with respect to Proposal No. 2, your shares will be voted in such entity’s discretion. If you do not give your bank, broker or nominee specific instructions with respect to the other proposals herein, your shares will not be voted on such proposals. This is called a “broker non-vote.” Shares represented by such broker non-votes will be counted in determining whether there is a quorum, but will have no effect on the non-routine proposals. We urge you to promptly provide your bank, broker or nominee with appropriate voting instructions so that all your shares may be voted at the Annual Meeting. +What vote is required to elect directors and approve the other matters described in this proxy statement? +The Company’s Third Amended and Restated By-Laws (the “By-Laws”) require that directors be elected by the majority of votes cast with respect to such director in uncontested elections (the number of shares voted “for” a director nominee must exceed the number of votes cast “against” that nominee with abstentions and broker non-votes not counted as votes “for” or “against”). In a contested election (a situation in which the number of nominees exceeds the number of directors to be elected, which we do not expect to occur for the Annual Meeting), the standard for election of directors will be a plurality of the shares represented in person or by proxy at any such meeting and entitled to vote on the election of directors. +The ratification of the appointment of KPMG LLP as our independent registered public accounting firm for 2022 (Proposal No. 2) and the Say-on-Pay Proposal (Proposal No. 3) each require the affirmative vote of the holders of a majority of the shares of Common Stock present in person or represented by proxy at the Annual Meeting and entitled to vote thereon. Stockholders attending the virtual Annual Meeting via webcast are deemed to be present “in person.” +Broker non-votes will have no effect on Proposal No. 3 because it is a non-routine matter on which brokers are not permitted to vote without your voting instruction. As stated above, because Proposal No. 2 is a routine matter, if you do not give your bank, broker or other nominee specific voting instruction with respect to Proposal No. 2, your shares will be voted in such entity’s discretion, and no broker non-votes are expected on such proposal. With respect to the proposal to elect directors (Proposal No. 1), broker non-votes are not counted as votes cast and therefore have no effect. +Abstentions will not be voted but will be counted for purposes of determining whether there is a quorum and have the same effect of a vote “against” a proposal other than the proposal to elect directors (Proposal No. 1), on which they have no effect. +What is the difference between holding shares as a stockholder of record and as a beneficial owner? +If your shares are registered in your name on the Company’s books and records or with our transfer agent, you are the “stockholder of record” of those shares, and this proxy statement and accompanying materials have been provided directly to you by the Company. On the other hand, if you purchased your shares through a brokerage or other financial intermediary, the brokerage or other financial intermediary will automatically put your shares into “street name,” which means that the brokerage or other financial intermediary will hold your shares in its name or another nominee’s name and not in your name, but will keep records showing you as the “beneficial owner.” If you hold shares beneficially in street name, this proxy statement and accompanying materials have been forwarded to you by your broker, bank or other holder of record. +How many votes do I have? +Each share of Common Stock that you hold as of the record date entitles you to one vote, without cumulation, on each matter to be voted upon at the Annual Meeting. +How will the votes be counted at the Annual Meeting? +The votes will be counted by the independent inspector of election appointed for the Annual Meeting. +How will the Company announce the voting results? +The Company will report the final results of the voting at the Annual Meeting in a filing with the SEC on a Current Report on Form 8-K within four business days after the date of the Annual Meeting. +Who pays for the Company’s solicitation of proxies? +The Board, on behalf of the Company, is soliciting your proxy to vote your shares of Common Stock at our Annual Meeting. The Company will bear the cost of soliciting proxies, including preparing, printing and mailing this proxy statement. Proxies may be solicited personally, or by mail, e-mail or telephone by certain of our directors, officers, employees or representatives. Our directors and employees will not be paid any additional compensation for soliciting proxies. We may reimburse brokerage firms and other persons representing beneficial owners of shares for their out-of-pocket expenses in forwarding solicitation materials to such beneficial owners . +3 +Table of Contents +What is “householding” and how does it work? +Under the rules adopted by the SEC, we may deliver a single copy of the Notice or proxy materials to one address shared by two or more of our stockholders. This delivery method is referred to as “householding” and can reduce the environmental impact of our Annual Meeting and result in significant cost savings for the Company. To take advantage of this opportunity, we have delivered only one copy of the Notice and, if you requested printed versions by mail, this proxy statement and the Annual Report, to multiple stockholders who share an address, unless we received contrary instructions from the impacted stockholders prior to the mailing date. If you would like to either participate in householding or receive separate copies of future proxy materials, please contact Broadridge Financial Solutions, Inc. by calling 1-866-540-7095 or by mail at 51 Mercedes Way, Edgewood, New York 11717, Attention: Householding Department. If you are a beneficial owner of shares held in street name and would like to participate in householding, you may contact the organization that holds your shares. +What do I need for admission to the Annual Meeting and how do I vote at the Annual Meeting? +You are entitled to participate in the Annual Meeting if you were a stockholder as of the close of business on April 4, 2022, the record date. To be admitted to and participate in the Annual Meeting, you must follow the instructions and use the information found on your proxy card, voting instruction form or Notice. The Annual Meeting will be held in a virtual-only format on Wednesday, May 25, 2022 at 8:00 a.m. Mountain Time. The virtual meeting and live webcast can be accessed at www.virtualshareholdermeeting.com/PMTS2022. You will not be able to attend the Annual Meeting in person. +You may vote during the Annual Meeting by following the instructions available at www.virtualshareholdermeeting.com/PMTS2022 during the Annual Meeting. Whether or not you plan to attend the Annual Meeting, you are encouraged to vote in advance by one of the methods described in this proxy statement. +May stockholders ask questions at the Annual Meeting? +Yes. Stockholders will have the ability to submit questions during the Annual Meeting via the virtual meeting website. During the Annual Meeting, we will hold a live Q&A session, during which we intend to answer all questions submitted during the meeting that are pertinent to the Company and the meeting matters in accordance with the Annual Meeting’s Rules of Conduct and as time permits. +What if I have technical difficulties or trouble accessing the Annual Meeting? +If you encounter any difficulties while accessing the virtual meeting during the check-in or meeting time, a technical assistance phone number will be made available on the virtual meeting registration page beginning 15 minutes prior to the start time of the Annual Meeting. +4 +Table of Contents +PROPOSAL NO. 1 +ELECTION OF DIRECTORS +Upon the recommendation of our Nominating and Corporate Governance Committee (the “Nominating Committee”), the Board has nominated the seven individuals listed below to stand for election to the Board for a one-year term ending at the annual meeting of stockholders in 2023 and until their successors, if any, are duly elected or appointed. Each director nominee must receive the affirmative vote of a majority of the votes cast in order to be elected (i.e., the number of votes cast “for” a director nominee must exceed the number of votes cast “against” that nominee, and abstentions and broker non-votes will not be counted as votes “for” or “against” a nominee). Unless contrary instructions are given, the shares represented by your proxy will be voted FOR the election of all director nominees. The Board has determined that each director nominee, other than Mr. Scott Scheirman, is an independent director, as further described below in “Directors and Corporate Governance — Independence of Directors.” +All of the director nominees listed below have consented to being named in this proxy statement and to serving if elected. However, if any of the below nominees becomes unable or unwilling to serve prior to the date of the Annual Meeting, proxy holders will have discretion and authority to vote for another nominee proposed by our Board. Alternatively, our Board may reduce the number of directors to be elected at the Annual Meeting. +Name +Position +Thomas Furey +Director +Robert Pearce +Director +Nicholas Peters +Director +Scott Scheirman +Director, President and Chief Executive Officer +Bradley Seaman +Chairman of the Board +Marc Sheinbaum +Director +Valerie Soranno Keating +Director +Biographical information relating to each of the director nominees is set forth below under “Directors and Corporate Governance — Director Nominee Biographical Information and Qualifications.” +THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THE DIRECTOR NOMINEES NAMED IN THIS PROXY STATEMENT. +5 +Table of Contents +DIRECTORS AND CORPORATE GOVERNANCE +Director Nominee Biographical Information and Qualifications +Set forth below is a description of the business experience of each director, as well as the specific qualifications, skills and experiences considered by the Nominating Committee and the Board in recommending our slate of director nominees. Each director listed below is a current director nominated for reelection to the Board for a term expiring at the annual meeting of stockholders in 2023. See “Election of Directors (Proposal No. 1).” +Thomas Furey , 57, has served on our Board of Directors since May 2021. Mr. Furey currently serves as the Chairman and Chief Executive Officer of Sagetech Avionics, Inc. (“Sagetech”) a privately held aerospace electronics company. Sagetech was incorporated in 2019 after a divisional carve out from Sagetech Corporation, for which Mr. Furey held the position of Chief Operating Officer since 2015. From 2014 to 2015, Mr. Furey served as Vice President of manufacturing and engineering at Unitec, Inc., a point-of-sale payments equipment company, before which he ran his own operations consultancy firm from 2012 to 2013. From 2004 to 2012, Mr. Furey held various executive positions at Standard Register Company, including Vice President of manufacturing, Chief Supply Chain Officer and President of Standard Register’s industrial business. From 2001 to 2004, Mr. Furey was in charge of North American operations for Avery Dennison Corporation (NYSE:AVY), a label materials manufacturer. Mr. Furey also held positions of increasing responsibility in manufacturing leadership at AlliedSignal, Inc. (which acquired Honeywell Inc. in 1999 and took its name) from 1994 to 2001 and was selected as the AlliedSignal fellow to the “Leaders for Manufacturing” program at the Massachusetts Institute of Technology (“MIT”) from 1997 to 1999. He began his career as a Naval Flight Officer in the U.S. Navy. Mr. Furey holds a Bachelor of Science degree in Mathematics from the U.S. Naval Academy, a Master of Science degree in Industrial Engineering from California State University Northridge, as well as a Master of Science degree in Mechanical Engineering and a Master of Business Administration degree from MIT. Mr. Furey brings to the Board extensive experience in high volume manufacturing, operations and executive leadership. +Robert Pearce , 67, has served on our Board of Directors since 2007. Mr. Pearce also serves on the board of directors of Canada Guaranty Mortgage Insurance Company, First National Financial LP and Duo Bank of Canada. Mr. Pearce spent 26 years with BMO Bank of Montreal, from 1980 to 2006, most recently holding the position of President and Chief Executive Officer, Personal and Commercial Client Group. He also served on the board of directors of MasterCard International from 1998 to 2006 and as Chairman of the Canadian Bankers’ Association from 2004 to 2006. Mr. Pearce holds a Bachelor of Arts degree from the University of Victoria and a Master of Business Administration degree from the University of British Columbia. Mr. Pearce brings to the Board extensive operational and leadership experience in the financial services industry, including extensive operating experience in credit card, debit card and prepaid cards in both card issuing and merchant acceptance in Canada and the United States. +Nicholas Peters , 49, has served on our Board of Directors since 2007. Mr. Peters is a Managing Director at Parallel49 Equity (formerly Tricor Pacific Capital), a private equity firm that makes control investments in lower middle market companies in the United States and Canada, which he joined in 2002, and also began serving as Parallel49 Equity’s Chief Financial Officer in 2012. Prior to joining Parallel49 Equity, Mr. Peters was a Senior Manager at Arthur Andersen LLP in Chicago. Mr. Peters is the Chairman of the Questco Companies and Certified Recycling and serves on the board of several other Parallel49 Equity investment companies as well as non-Parallel49 Equity investment companies. Mr. Peters holds a Bachelor of Science degree in Business Administration from the University of Dayton in Ohio. He is a Certified Public Accountant and is affiliated with the American Institute of Certified Public Accountants and the Ohio Society of CPAs. Mr. Peters brings to the Board strong finance and accounting skills, as well as valuable experience from his oversight of the management and operations of several of Parallel49 Equity’s investment companies. +Scott Scheirman, 59 , has served as our President and Chief Executive Officer since October 2017 and on our Board of Directors since October 2016. Prior to joining the Company, Mr. Scheirman served as the Chief Executive Officer and a co-founder of JKL Ventures LLC, a private investment and strategic advisory firm, since February 2014. Prior to JKL Ventures LLC, Mr. Scheirman served as the Executive Vice President and Chief Financial Officer of The Western Union Company (“Western Union”) (NYSE:WU) from September 2006 to December 2013. Prior to joining Western Union, Mr. Scheirman held a variety of executive leadership and financial officer roles at First Data Corporation (NYSE:FDC) and began his career at Ernst & Young LLP. Mr. Scheirman holds a Bachelor of Science degree in Business Administration with an emphasis in Accounting from the University of Northern Colorado. Mr. Scheirman brings to the Board extensive strategic planning, finance, risk management, international, public company and corporate governance experience, and through his position as our Chief Executive Officer, he brings to the Board management’s perspective over a full range of issues affecting the Company. +Bradley Seaman, 62, has served on our Board of Directors since 2007 and currently serves as Chairman of the Board. Mr. Seaman has been employed, since August 1999, by Parallel49 Equity (formerly Tricor Pacific Capital), a private equity firm that makes control investments in lower middle market companies in the United States and Canada. From 1999 through December 2011, Mr. Seaman served as Parallel49 Equity’s Managing Director and leader of its U.S. operations, and, since January 2012, has served as its Managing Partner, responsible for leading overall firm operations, strategy, funding and investments. Prior to joining Parallel49 Equity, from 1990 through July 1999, Mr. Seaman was employed by GE Capital Corporation (“GE Capital”) where he held a number of increasingly senior positions in GE Capital’s Transportation & Industrial Funding and Commercial Finance units. In 1994, Mr. Seaman was selected to be part of a new group that was established to focus GE Capital’s debt and equity products on the emerging private equity market, and, in that capacity and in his last role before leaving GE Capital, he headed GE Capital’s offices in New York City and Chicago. Mr. Seaman is also a member of the board of directors of Steel Dynamics, Inc. (Nasdaq:STLD). Mr. Seaman holds a Bachelor of Science degree in Business Administration from Bowling Green State University and a Master of Business Administration degree from the University of Dallas. He brings to the Board a comprehensive understanding of and experience in capital markets and management and has operational and corporate governance experience drawn from his involvement in the management and oversight of Parallel49 Equity’s investment companies. +6 +Table of Contents +Marc Sheinbaum, 64, has served on our Board of Directors since November 2019. Since January 2017, Mr. Sheinbaum has been an advisor to venture capital and private equity firms. From April 2014 to August 2016, he was the President, Chief Executive Officer and a director of Higher One Holdings, Inc. (NYSE:ONE), a payments technology provider for higher education. From February 2007 through March 2013, Mr. Sheinbaum was the Senior Vice President and Chief Executive Officer of Retail, Auto and Education Finance at JPMorgan Chase & Co. (NYSE:JPM). Earlier in his career, Mr. Sheinbaum held positions at GE Capital Corporation and American Express Company (NYSE:AXP), as well as Coopers & Lybrand Management Consulting. Mr. Sheinbaum holds a Bachelor of Science degree in Management Science from State University of New York at Albany and a Master of Business Administration degree from New York University. He brings considerable experience in payments and consumer financial services as well as public company leadership. +Valerie Soranno Keating , 58, has served on our Board of Directors since May 2018. Ms. Soranno Keating has been senior advisor to a number of private equity firms in the U.S. and Europe since 2017. From November 2009 through May 2015, she was the Chief Executive Officer of Barclaycard, the global payments division of Barclays PLC (NYSE:BCS), with $60 billion in assets and over 30 million customers throughout the U.S., Europe and South Africa. Before joining Barclays PLC, Ms. Soranno Keating held a variety of executive positions at American Express Company (NYSE:AXP) from May 1993 through May 2009, including President, Travelers Cheques & Prepaid Services, Executive Vice President Global Commercial Services, Executive Vice President Global Merchant Services, Emerging Global Businesses & Network Expansion, and Vice President Corporate Strategic Planning. Ms. Soranno Keating also serves as a director on the boards of other public and private companies, including One Main Financial (NYSE:OMF), FinServ Acquisition Corp. II (Nasdaq:FSRX), Engage People Inc. and Billhighway Management LLC. Ms. Soranno Keating holds a Bachelor of Science degree in Business Administration from Lehigh University. She brings to the Board wide-ranging experience in both executive and board roles across a broad spectrum of payments and related businesses. +Board Diversity +Board Diversity Matrix (As of April 13, 2022) +Total Number of Directors +7 +Part I: Gender Identity +Female +Male +Directors +1 +6 +Part II: Demographic Background +White +1 +6 +In addition to the diversity categories identified above, one of our directors is a military veteran. +Director Selection Process +The Nominating Committee works with the Board to determine periodically, as appropriate, the desired Board qualifications, expertise and characteristics, and recommends candidates to the Board based on these criteria. In identifying director candidates, the Nominating Committee accepts recommendations from current or former directors, search firms retained by the Nominating Committee to assist in identifying and evaluating potential candidates, stockholders, Company executives and by self-nomination. In evaluating director candidates, regardless of the source of recommendation, the Nominating Committee generally considers factors such as business experience, high ethical standards and integrity, skills, understanding of CPI’s business environment and willingness to devote adequate time to Board duties. The Company’s Corporate Governance Guidelines also provide that the Nominating Committee shall work with the Board to determine eligibility to serve as a director of CPI, which includes weighing the aforementioned factors and evaluating each individual in the context of the membership of the Board as a group, with the objective of having a group that can best perpetuate the success of CPI’s business and represent stockholder interests through the exercise of sound judgment using the Board’s diversity of background and experience in various areas. The Board does not have a specific policy on diversity, but the Company’s Corporate Governance Guidelines provide that, with respect to Board diversity, the Nominating Committee may consider such factors as differences in professional background, education, skill and other individual qualities and attributes that contribute to the total mix of viewpoints and experience represented on the Board. +The Nominating Committee periodically retains a third-party executive search firm to assist in the identification and evaluation of director candidates. +In determining whether to recommend a director for re-election, the Nominating Committee considers the director’s past attendance at meetings, participation in and contributions to the activities of the Board (including Board committees) and the Company, the director’s adherence to standards of high character and integrity, as well as other qualifications and characteristics set forth in the Nominating Committee charter. +Recommendation of Directors by Stockholders +In accordance with its charter, the Nominating Committee will consider any candidate for election as a director of the Company recommended by any CPI stockholder, provided that the recommending stockholder follows the procedures set forth in Section 2.10(a) of the Company’s By-Laws for nominations by stockholders of persons to serve as directors (except for directors nominated by the Tricor +7 +Table of Contents +Funds (defined below), as described in the paragraph immediately below). The Nominating Committee evaluates director candidates recommended by CPI stockholders (except for the Tricor Funds) in the same manner by which it evaluates other director candidates considered by the Nominating Committee, as described above. +Two of our stockholders, Tricor Pacific Capital Partners (Fund IV), LP and Tricor Pacific Capital Partners (Fund IV) US, LP (together, the “Tricor Funds”), have the right to collectively designate nominees for election to our Board of Directors for so long as the Tricor Funds collectively beneficially own 5% or more of the total number of shares of Common Stock then outstanding, pursuant to a Director Nomination Agreement entered into between the Company and the Tricor Funds in connection with our initial public offering. The number of nominees that the Tricor Funds are entitled to designate under the Director Nomination Agreement bears the same proportion to the total number of members of our Board of Directors as the number of shares of Common Stock beneficially owned by the Tricor Funds bears to the total number of shares of Common Stock outstanding, rounded up to the nearest whole number. Pursuant to the Director Nomination Agreement, the Company agrees to use its best efforts to ensure that director nominees of the Tricor Funds are included in the Board’s slate of nominees submitted to the stockholders for election at each annual meeting. Thus, the Nominating Committee would not evaluate director candidates nominated by the Tricor Funds and make a determination regarding their suitability for nomination in the manner described above. Refer to “Certain Relationships and Related Party Transactions - Director Nomination Agreement” for a description of the Tricor Funds’ right to designate nominees. +Pursuant to Section 2.10(a) of the By-Laws, nominations of persons for election to the Board at a meeting of stockholders may be made by any stockholder of the Company entitled to vote for the election of directors at such meeting who sends a timely notice in writing to our Corporate Secretary. To be timely, a stockholder’s notice must be delivered to our Corporate Secretary at the Company’s principal executive offices not less than 90 nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting; provided, however, that if the annual meeting is more than 30 days prior to or after the anniversary of the preceding year’s annual meeting, notice by the stockholder must be delivered not later than the close of business on the later of the 90th day prior to such annual meeting or the 10th day following the day on which public announcement of the date of such annual meeting is made by the Company. As set forth in the By-Laws, a stockholder’s notice is required to contain certain prescribed information. +Recommendations or notices relating to director nominations should be sent to CPI Card Group Inc., 10368 West Centennial Road, Littleton, Colorado 80127; Attention: Sarah Kilgore, Chief Legal and Compliance Officer and Corporate Secretary. +Independence of Directors +The Company’s Corporate Governance Guidelines provide that a majority of the members of the Board, and each member of the Audit Committee of the Board (the “Audit Committee”), the Compensation Committee of the Board (the “Compensation Committee”) and Nominating Committee, must meet the criteria for independence set forth under applicable law and the rules and standards of any applicable national securities exchange or inter-dealer quotation system (the “Market Rules”). No director qualifies as independent unless the Board determines that the director has no relationship with the Company which would interfere with the exercise of independent judgment in carrying out his or her responsibilities as a director. These independence guidelines are part of our Corporate Governance Guidelines, available on our website at investor.cpicardgroup.com. The Board considers all relevant facts and circumstances of which it is aware in making an independence determination with respect to any director. +The Board has made independence determinations with respect to each of our directors and director nominees. Based on the Market Rules, the Board has affirmatively determined that each of Ms. Soranno Keating and Messrs. Furey, Pearce, Peters, Seaman and Sheinbaum are independent within the meaning of the Market Rules. In addition, Mr. Jorg Schneewind served as a director from September 2020 through January 2021 and the Board affirmatively determined that he was independent within the meaning of the Market Rules. +Board’s Role in Risk Oversight +The Company’s management continually monitors the material risks facing the Company. Our enterprise risk management process is designed to facilitate the identification, assessment and management of certain key risks that the Company may encounter and which may impact our ability to achieve our strategic objectives. The enterprise risk management function supplements management’s ongoing responsibilities to monitor and address risks by providing for a process by which risk owners identify causes of and action plans for certain risks, which then are discussed with senior management. +Pursuant to its charter, the Audit Committee is responsible for oversight of the Company’s policies with respect to risk assessment and risk management and discussing with management the major risk exposures facing the Company and the steps the Company has taken to monitor and mitigate, where possible, such exposures. Periodically, the Company’s Chief Executive Officer, Chief Financial Officer, Chief Legal and Compliance Officer, Chief Technology Officer, Chief Accounting Officer and Internal Audit Director, among other select members of the Company’s management, as appropriate, present to the Audit Committee a description of management’s view of the most significant risks facing the Company and participate in discussions with the Audit Committee regarding those risks and any mitigating factors, plans or policies in place to address and monitor such risks. +While the Audit Committee is charged with primary oversight of risk, the Board and the Board committees oversee risks associated with their principal areas of focus, as summarized below. The committee chairs regularly report to the full Board regarding their risk oversight activities, and the Board regularly reviews and discusses the most significant risks facing the Company and management’s process for identifying, prioritizing and responding to those risks. +8 +Table of Contents +Board/Committee Areas of Risk Oversight and Actions +● +● +● +Full Board +● +Evaluates reports received from management and makes inquiries of management as appropriate +● +Reviews with management material strategic, operational, financial, human capital, cybersecurity, compensation and compliance risks +● +Considers specific risk topics in connection with strategic planning and other matters +● +Manages risk oversight and related activities conducted by Board committees through reports of the committee chairs to the Board +Audit +Committee +● +Assesses periodic management reports on the enterprise risk management process and risks identified through that process +● +Discusses with management the Company’s specific processes for assessing and managing risks, including identifying the Company’s major financial and other enterprise risk exposures and the steps necessary to monitor and control such exposures +● +Assesses periodic management reports on financial and compliance risks, including privacy and data security +● +Meets at least quarterly with the Company’s Chief Legal and Compliance Officer regarding the Company’s ethics and compliance processes and practices +● +Meets periodically with senior management and our independent auditor, KPMG LLP, to, among other things, review and discuss the external audit plan as well as critical audit matters and reports on such meetings to the Board +● +Receives regular updates from the Company’s Director of Internal Audit and approves the Company’s internal audit plan +● +Receives regular updates from the Company’s Chief Technology Officer regarding information security matters +Compensation +Committee +● +Oversees the review and evaluation of the risks associated with our compensation policies and practices +● +Reviews the Company’s strategies and policies related to human capital management, including with respect to matters such as diversity and inclusion, employee engagement and talent development +Governance +Committee +● +Oversees the review and evaluation of the risks associated with our governance structure, policies and processes +● +Oversees the Company’s environmental, social and governance risks, efforts, progress and disclosures +● +Reviews, approves and recommends to the Board (where appropriate) updates, as necessary, to our organizational documents, Corporate Governance Guidelines and other governance related policies +Corporate Governance +The Board has approved Corporate Governance Guidelines and a Code of Business Conduct and Ethics, as well as a Code of Conduct for Financial Officers that is applicable to our Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer. Our corporate governance documents, including the Corporate Governance Guidelines, the Code of Business Conduct and Ethics, the Code of Conduct for Financial Officers and committee charters, are available on our website at investor.cpicardgroup.com or in printed form upon request by contacting CPI Card Group Inc. at 10368 West Centennial Road, Littleton, Colorado 80127, Attention: Investor Relations. The Board regularly reviews corporate governance developments and modifies these documents as warranted. Any modifications will be reflected on our website. The information on our website is not part of this proxy statement and is not deemed to be incorporated by reference herein. +Other Board Information +Leadership Structure of the Board +Bradley Seaman serves as our Chairman of the Board, and Scott Scheirman serves as our Chief Executive Officer (“CEO”). Our Board has decided to maintain separate Chairman and CEO roles to allow our CEO to focus on the development and execution of our business strategy, while allowing the Chairman to lead the Board in its fundamental role of providing advice to, and independent oversight of, management. The Board recognizes the time, effort and energy that the CEO is required to devote to his position in the current business environment as well as the commitment required to serve as our Chairman. While our By-Laws and Corporate Governance Guidelines do not require that our Chairman and CEO positions be separate, the Board believes that having separate positions and having an independent director serve as Chairman is the appropriate leadership structure for us at this time. +9 +Table of Contents +Board Meetings +In fiscal year 2021, our Board held 14 meetings. In addition to our Board meetings, our directors attend meetings of committees established by our Board on which they serve. Each of CPI’s directors attended at least 75% of the meetings of our Board and the committees on which he or she served during 2021 that were held when he or she was a director. Each of our directors is expected to attend each meeting of the Board and is strongly encouraged to attend each annual stockholder meeting, as provided in our Corporate Governance Guidelines. All of our directors attended the 2021 annual meeting of stockholders. +Meetings of Non-Employee Directors +In accordance with our Corporate Governance Guidelines, our non-employee directors meet regularly in executive sessions of the Board without management present. Mr. Bradley Seaman, our Chairman, presides over these executive sessions. In the event that Mr. Seaman is not available to lead these meetings, the presiding director is chosen by the non-employee directors in attendance. +Committees of the Board +The Board has three standing committees: the Audit Committee, the Compensation Committee and the Nominating Committee. The following chart sets forth the directors who currently serve as members of each of the Board committees as of the date of this proxy statement. +Audit +Compensation +Nominating +Directors +Committee +Committee +Committee +Thomas Furey +X +Robert Pearce +C +X +Nicholas Peters +C +X +Scott Scheirman +Bradley Seaman* +X +Marc Sheinbaum +X +X +Valerie Soranno Keating +X +C +* Chairman of the Board +“C” Denotes member and chair of committee +“X” Denotes member +Audit Committee +The Audit Committee held nine meetings in 2021. The Board has determined that all of the members of the Audit Committee meet the independence criteria for purposes of serving on an audit committee under the applicable rules of The Nasdaq Stock Market (“Nasdaq”) and Rule 10A-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In addition, our Board has determined that Mr. Pearce qualifies as an “audit committee financial expert,” as such term is defined in Item 407(d)(5) of Regulation S-K. The Audit Committee operates under a written charter setting forth its functions and responsibilities. A copy of the current charter is available on our website at investor.cpicardgroup.com or in printed form upon request. Refer to “Audit Committee Report” for a summary description of the Audit Committee’s functions and responsibilities. +Compensation Committee +The Compensation Committee held eight meetings in 2021. The Board has determined that all of the members of the Compensation Committee are independent as defined in Nasdaq rules. The Compensation Committee has overall responsibility for approving and evaluating the Company’s director and executive officer compensation plans, policies and programs and reviewing the disclosure of such plans, policies and programs to our stockholders in the Company’s annual proxy statement. The Compensation Committee utilizes an independent compensation consultant to assist it in its duties, and it may delegate certain of its authority to a subcommittee of the Compensation Committee, the CEO or another executive officer, including with respect to matters relating to the compensation of the Company’s employees other than the Company’s CEO and executive officers. The Compensation Committee operates under a written charter setting forth its functions and responsibilities. A copy of the current charter is available on our website at investor.cpicardgroup.com or in printed form upon request. +In consultation with the Company’s management, the Compensation Committee approves the Company’s executive compensation philosophy and oversees and monitors the Company’s executive compensation policies, plans and programs for the executive officers to assess whether they are consistent with the Company’s compensation philosophy and objectives, as well as the long-term interests of the Company’s stockholders. The Compensation Committee also evaluates and makes recommendations to the Board regarding the adequacy and effectiveness of non-employee director compensation. Our human resources executives and staff support the Compensation Committee in its work. These members of management work with compensation consultants (whose engagements have been approved by the Compensation Committee), accountants and legal counsel, as necessary, to implement the Compensation Committee’s decisions, monitor evolving competitive practices and make compensation recommendations to the Compensation Committee. Our human resources management, in conjunction with our independent compensation consultant, develops specific compensation recommendations for executive officers, which are first reviewed by senior management and then presented to the +10 +Table of Contents +Compensation Committee. The Compensation Committee has final authority to approve, modify or reject such recommendations in its sole discretion and to make its decisions in executive session. The Compensation Committee approves all compensation of our executive officers, including equity awards. +Since 2018, the Compensation Committee has engaged Willis Towers Watson (“WTW”) as its independent compensation consultant. WTW reports directly to the Compensation Committee, including with respect to management’s recommendations of compensation programs and awards. The Compensation Committee has the sole authority to approve the scope and terms of the engagement of WTW and to terminate such engagement. WTW assisted the Compensation Committee with the development of competitive market data, compensation program design and related assessments of the Company’s executive and director compensation levels, evaluation of annual and long-term incentive compensation strategy and compilation and review of total compensation data for the Company’s NEOs (as defined in “Executive Compensation”). The Company paid WTW approximately $177,000 for the executive and director compensation consulting services described above in 2021. Additionally, Company management decided to engage WTW to provide other professional consulting services in 2021 (unrelated to executive compensation) primarily related to health and benefits programs in an amount totaling approximately $165,000. +The Compensation Committee has reviewed the independence of WTW in light of SEC rules regarding compensation consultants and has concluded that WTW’s work for the Compensation Committee does not raise any conflict of interest. +Nominating and Corporate Governance Committee +The Nominating Committee held five meetings in 2021. The Board has determined that all of the members of the Nominating Committee are independent as defined in Nasdaq rules. +The Nominating Committee is responsible for, among other things: (i) identifying individuals qualified to become members of the Board, consistent with criteria approved by the Board; (ii) recommending director nominees to the Board for election at the next annual meeting of the stockholders of the Company; (iii) in the event of a vacancy on or an increase in the size of the Board, recommending director nominees to the Board to fill such vacancy or newly established Board seat; (iv) recommending directors to the Board for membership on each committee of the Board; (v) establishing and reviewing annually our Corporate Governance Guidelines and Code of Business Conduct and Ethics; and (vi) overseeing the Company’s environmental, social and governance efforts, progress and disclosures. The Nominating Committee operates under a written charter setting forth its functions and responsibilities. A copy of the current charter is available on our website at investor.cpicardgroup.com or in printed form upon request. +Compensation Committee Interlocks and Insider Participation +None of the members of our Compensation Committee has in the past served as an officer or employee of the Company. None of the members of our Compensation Committee has any relationship requiring disclosure as a related party transaction. None of our executive officers currently serves, or in the past year has served, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on our Board or Compensation Committee. +Communications to the Board +Stockholders and interested parties can contact the Board or any director or group of directors (including the Chairman and the independent directors) through written communication sent to CPI Card Group Inc., 10368 West Centennial Road, Littleton, Colorado 80127, Attention: Sarah Kilgore, Chief Legal and Compliance Officer and Corporate Secretary. Our Corporate Secretary reviews all written communications and forwards to the Board copies of any such correspondence that is directed to the Board that, in the opinion of the Corporate Secretary, deals with the functions of the Board or Board committees or that she otherwise determines requires the Board’s or any Board committee’s attention. Concerns relating to accounting, internal accounting controls or auditing matters are immediately brought to the attention of our Audit Committee Chair, or may be submitted to the Audit Committee Chair in accordance with our Whistleblower Policy (available on our website), and such concerns will be handled in accordance with procedures established by the Audit Committee with respect to such matters. From time to time, the Board may change the process by which stockholders may communicate with the Board. Any such changes will be reflected in our Corporate Governance Guidelines, which are posted on our website at investor.cpicardgroup.com. +Director Compensation +The following table sets forth our compensation program for our non-employee directors from January 1, 2021 through September 20, 2021, which did not change as compared to the 2020 director compensation program. +Compensation Element (January 1, 2021 – September 20, 2021) +Value +Annual Cash Retainer (1) +$ +100,000 +Annual Audit Committee Chair Fee +$ +20,000 +Annual Compensation Committee Chair Fee +$ +15,000 +Annual Nominating Committee Chair Fee +$ +10,000 +Annual Audit Committee Member Fee +$ +10,000 +Annual Compensation Committee Member Fee +$ +7,500 +Annual Nominating Committee Member Fee +$ +5,000 +11 +Table of Contents +(1) The Company paid the annual cash retainer on a quarterly basis, with payments made at the beginning of each quarter prior to September 21, 2021 pursuant to the director compensation program in effect prior to September 21, 2021. Pursuant to the director compensation program effective September 21, 2021, on October 14, 2021, each director received a prorated portion of the $50,000 annual cash retainer for the remainder of 2021. +Effective as of September 21, 2021, based on the recommendation of the Compensation Committee and its independent compensation consultant, WTW, the Board approved an updated non-employee director compensation program, which is set forth in the table below. +Compensation Element (Effective September 21, 2021) +Value +Annual Cash Retainer (1) +$ +50,000 +Annual Equity Award (2) +$ +100,000 +Chairman of the Board Annual Cash Fee +$ +30,000 +Committee Chair Annual Cash Fee (3) +$ +15,000 +Committee Member Annual Cash Fee (4) +$ +7,500 +(1) The Company paid the annual cash retainer on a quarterly basis, with payments made at the beginning of each quarter prior to September 21, 2021 pursuant to the director compensation program in effect prior to September 21, 2021. Pursuant to the director compensation program effective September 21, 2021, on October 14, 2021, each director received a prorated portion of the $50,000 annual cash retainer for the remainder of 2021. +(2) The annual equity award was made in the form of a grant of restricted stock units (“RSUs”) to each director on September 21, 2021, each of which vests on the 18-month anniversary of the September 21, 2021 award date, subject to the respective director’s continued service through such date or as otherwise provided for in the applicable award agreement. Although the director compensation program approved by the Board effective September 21, 2021 contemplates an equity award with a value of $100,000 on the award date and vesting after a period of 12 months, due to the timing of these grants, the Board approved RSU awards, each with a grant date fair value equal to $150,000 and vesting 18 months from the award date, sized in recognition that the grants represented awards for the period beginning on the grant date and ending on the date of the next annual equity grant, which is expected to occur in the first quarter of 2023. As a result, the number of shares of each grant on September 21, 2021 was determined by dividing $150,000 by the closing stock price on the award date and rounding down to the nearest whole share. Beginning in 2023, equity awards to directors under our director compensation program are expected to be valued at $100,000 on the award date (targeted to be in the first quarter each year) and to vest on the 12-month anniversary of the award date. Each RSU represents the right to receive one share of Common Stock of the Company upon vesting of such RSU. +(3) As of September 21, 2021, the Board approved changing the Board committee chair fees to make them uniform across all Board committees. The Company paid the committee chair fees on a quarterly basis, with payments made at the beginning of each quarter prior to September 21, 2021 pursuant to the director compensation program in effect prior to September 21, 2021. Pursuant to the director compensation program effective September 21, 2021, on October 14, 2021, each committee chair received a prorated portion of the $15,000 committee chair annual cash fee for the remainder of 2021. +(4) As of September 21, 2021, the Board approved changing the Board committee member fees to make them uniform across all Board committees. The Company paid the committee member fees on a quarterly basis, with payments made at the beginning of each quarter prior to September 21, 2021 pursuant to the director compensation program in effect prior to September 21, 2021. Pursuant to the director compensation program effective September 21, 2021, on October 14, 2021, each committee member received a prorated portion of the $7,500 committee member annual cash fee for the remainder of 2021. +The following table summarizes the annual compensation for our non-employee directors during 2021. Mr. Scheirman, our President and Chief Executive Officer, does not receive any additional compensation for his service on the Board. Please see the “2021 Summary Compensation Table” for a summary of the compensation received by Mr. Scheirman with respect to 2021. +2021 DIRECTOR COMPENSATION +Fees +Earned +Or Paid +In Cash +Total +Name +($) +Stock Awards (1) +($) +Thomas Furey (2) +$ +66,875 +$ +149,996 +$ +216,871 +Robert Pearce +$ +113,750 +$ +149,996 +$ +263,746 +Nicholas Peters +$ +108,125 +$ +149,996 +$ +258,121 +Jorg Schneewind (3) +$ +26,250 +$ +— +$ +26,250 +Bradley Seaman +$ +95,000 +$ +149,996 +$ +244,996 +Marc Sheinbaum +$ +102,500 +$ +149,996 +$ +252,496 +Valerie Soranno Keating +$ +108,125 +$ +149,996 +$ +258,121 +12 +Table of Contents +(1) Each then-serving non-employee director was granted RSUs on September 21, 2021, each of which such grants vests on the 18-month anniversary of the September 21, 2021 award date, subject to the respective director’s continued service through such date or as otherwise provided for in the applicable award agreement. The number of shares of each such grant was determined by dividing $150,000 by the closing stock price on the award date and rounding down to the nearest whole share. Each RSU represents the right to receive one share of Common Stock of the Company upon vesting of such RSU. As of December 31, 2021, each of the then-serving non-employee directors had RSUs outstanding and no other equity awards outstanding as of such date, and Mr. Schneewind did not hold any outstanding equity awards as of such date. +(2) Mr. Furey joined the Board on May 27, 2021, and, accordingly, the fees reported in this table reflect fees earned during his period of service on the Board. +(3) Mr. Schneewind resigned as a member of the Board effective January 25, 2021. Because we pay the director cash retainer and committee member fees on a quarterly basis at the beginning of each quarter, on January 7, 2021, Mr. Schneewind received the first quarterly payment of such retainer and of such committee member cash fee for his membership on the Nominating Committee. The total amount of such payments is set forth in this table. +Security Ownership of Certain Beneficial Owners, Directors and Management +The following table sets forth, as of April 4, 2022 (except as indicated below), beneficial ownership, as defined by SEC rules, of our Common Stock. Each of the persons listed below has sole voting and investment power with respect to the beneficially owned shares listed unless otherwise indicated. For purposes of the following table, beneficial ownership is determined in accordance with Exchange Act Rule 13d-3. The percentage calculations set forth in the table are based on 11,255,466 shares of Common Stock outstanding on April 4, 2022 rather than based on the percentages set forth in stockholders’ Schedules 13G or 13D, as applicable, filed with the SEC . +Number of +Shares of +Percentage of +Common +Common +Stock +Stock +Owned +Owned +Beneficially +Beneficially +5% Beneficial Owners: +Tricor Pacific Capital Partners (Fund IV), Limited Partnership (1) +4,124,368 +36.6 +% +Tricor Pacific Capital Partners (Fund IV) US, Limited Partnership (1) +2,434,457 +21.6 +% +Named Executive Officers and Directors: +Thomas Furey +— +— +Robert Pearce +105,189 +* +Nicholas Peters +30,000 +* +Scott Scheirman +286,241 +2.5 +% +Bradley Seaman +— +— +Marc Sheinbaum +1,879 +* +Valerie Soranno Keating +18,797 +* +John Lowe +75,000 +* +Lane Dubin +63,574 +* +Total Executive Officers and Directors as a Group (14 individuals) +613,326 +5.2 +% +* +Less than 1% +(1) Based on a Schedule 13G filed jointly by the Tricor Funds, and Parallel49 Equity, ULC on February 12, 2016, as adjusted to give effect to the 1-for-5 reverse stock split we completed on December 20, 2017. Each of the Tricor Funds is managed by Parallel49 Equity, ULC, as the general partner. An investment committee of the Tricor Funds has the power to vote or dispose of the shares held by the Tricor Funds. The investment committee is comprised of Mr. Bradley Seaman, Mr. David Rowntree, J. Trevor Johnstone and Roderick Senft. Each of Messrs. Seaman and Peters is an officer or member of the Tricor Funds and has an indirect pecuniary interest in the shares of Common Stock held by the Tricor Funds through their respective interests in the Tricor Funds. Each of Messrs. Seaman and Peters expressly disclaims any beneficial ownership of any shares of Common Stock held by the Tricor Funds. The address of the Tricor Funds is c/o Parallel49 Equity, 225 East Deerpath Road, Suite 200, Lake Forest, IL 60045. +13 +Table of Contents +EXECUTIVE OFFICERS +The following table sets forth certain information concerning each of our executive officers: +Name +Age +Position +Scott Scheirman +59 +President, Chief Executive Officer and Director +Donna Abbey +46 +Controller and Chief Accounting Officer +Lane Dubin +53 +Senior Vice President and General Manager, Personalization, Prepaid and Instant Issuance +Sarah Kilgore +54 +Chief Legal and Compliance Officer and Corporate Secretary +John Lowe +45 +Senior Vice President and General Manager, Secure Card +Amintore Schenkel +55 +Chief Financial Officer +Sonya Vollmer +48 +Chief Human Resources Officer +Beth Williams +46 +Chief Technology Officer +Scott Scheirman. See “Directors and Corporate Governance” for Mr. Scheirman’s biographical information. +Donna Abbey has served as our Controller and Chief Accounting Officer since March 2022. Prior to joining the Company Ms. Abbey, provided financial and accounting consulting services to clients in various industries from January 2020 to March 2022. Prior to that, Ms. Abbey held roles of increasing responsibility at Western Union, a multinational financial services company, from October 2010 to September 2018, including Vice President of Financial Reporting, Governance & Consolidations and Chief of Staff to the Chief Executive Officer. Prior to joining Western Union, Ms. Abbey worked in the audit practice of KPMG LLP, a multinational professional services and accounting firm, from January 2003 to September 2010. Ms. Abbey holds a Bachelor of Science degree in Business Administration from Colorado State University and is a Certified Public Accountant in the State of Colorado. +Lane Dubin has served as our Senior Vice President and General Manager of Personalization, Prepaid and Instant Issuance since January 2020. Prior to that, he served as the Company’s Senior Vice President and General Manager of Prepaid and Instant Issuance since January 2018. Mr. Dubin joined the Company as Senior Vice President, Sales and Marketing in August 2016. Prior to joining the Company, Mr. Dubin served at American Express Company from 1992 to 2015. Most recently, he was the Head of Global Sales at American Express Global Business Travel from 2008 to 2015, and Vice President, Business Development – North America, at American Express Global Business Travel from 2003 to 2008. Prior to these roles, Mr. Dubin held roles of increasing responsibility with American Express, including Vice President-Business Development, Financial Education Services for American Express Financial Advisors and Director of Sales and Business Development for Ketera Technologies, a technology start-up incubated by American Express. Mr. Dubin holds a Bachelor of Arts degree in Economics and Business Administration from Ursinus College. +Sarah Kilgore has served as our Chief Legal and Compliance Officer and Corporate Secretary since December 2017. Prior to joining the Company, Ms. Kilgore was Of Counsel with Moye White LLP, a law firm based in Denver, since June 2017. Prior to Moye White LLP, Ms. Kilgore founded and provided legal services through Kilgore Legal Group, LLC from 2011 through 2015. Prior to establishing Kilgore Legal Group, LLC, Ms. Kilgore served as Associate General Counsel, Governance and Securities for Western Union, a multinational financial services company, from 2006 to 2011. Prior to her role at Western Union, she held various legal positions at First Data Corporation and AT&T Corp., and was a corporate attorney in private practice. Ms. Kilgore earned her Juris Doctor degree from the University of Michigan Law School and received her Bachelor’s Degree in Business Administration from Michigan State University. +John Lowe has served as our Senior Vice President and General Manager of Secure Card since October 2021. From July 2018 to October 2021, Mr. Lowe served as the Company’s Chief Financial Officer. Prior to joining the Company, Mr. Lowe served as Chief Financial Officer of SquareTwo Financial Corporation, a financial services company, from August 2014 until June 2017. Prior to August 2014, Mr. Lowe held various leadership roles of increasing responsibility at SquareTwo Financial Corporation, including serving as Treasurer, Vice President of Finance and Vice President of External Reporting. Mr. Lowe’s employment with SquareTwo Financial Corporation commenced in 2009. SquareTwo Financial Corporation filed for Chapter 11 bankruptcy protection in March 2017 in connection with a strategic sale of the Company. Mr. Lowe holds a Bachelor of Science degree in both Accounting and Finance from the Virginia Polytechnic Institute and State University. Mr. Lowe is also a Chartered Financial Analyst. +Amintore Schenkel has served as our Chief Financial Officer since October 2021. Prior to joining the Company, Mr. Schenkel served as Senior Vice President, Chief Accounting Officer & Controller of Western Union, a multinational financial services company, from 2006 to 2020. Additionally, he held a variety of financial roles of increasing responsibility at First Data Corporation from 2001 to 2006. Prior to joining First Data Corporation, Mr. Schenkel was with Ernst & Young for 12 years. Most recently, he served as Managing Member and provided consulting services through InterContinental Advisory and Accounting Services LLC, an entity that he founded in 2020. Mr. Schenkel has over 30 years of executive finance, accounting and operations experience. Mr. Schenkel earned both a Bachelor of Science in Accounting degree and a Master of Accountancy degree from the University of Denver and is a Certified Public Accountant in the State of Colorado. +Sonya Vollmer has served as our Chief Human Resources Officers since January 2022. Ms. Vollmer joined the Company in February 2021 as Director of Total Rewards and assumed the role of interim Chief Human Resources Officer in August 2021. Prior to joining the Company, Ms. Vollmer held positions of increasing responsibility at Charter Manufacturing Company, a metals manufacturing business, from February 2013 to February 2021, most recently serving as Director of Total Rewards. In such position, Ms. Vollmer was +14 +Table of Contents +responsible for managing and overseeing Charter Manufacturing Company’s compensation programs and worked closely with the executive management team to design and implement such compensation programs. Prior to 2013, Ms. Vollmer held human resources leadership roles across a variety of manufacturing companies, including in the healthcare/life sciences, industrial automation and metals industries. She also served in consulting roles with Hewitt Associates (now Aon), and her own consulting firm. Ms. Vollmer holds a Bachelor of Arts degree in Economics from the University of Wisconsin-Parkside, and an Executive Master of Business Administration from the University of Wisconsin-Milwaukee. +Beth Williams has served as our Chief Technology Officer since January 2020, and she previously served in roles with CPI as Technology Director, Instant Issuance and Prepaid from January 2018 to January 2020, and as Director of Personalization Solutions from 2016 to 2017. Prior to joining CPI, Ms. Williams served in various leadership roles at EFT Source, Inc., including Chief Information Officer and Software Development Manager and Lead Software Developer from 2007 to 2015. Prior to 2007, Ms. Williams held a variety of positions of increasing responsibility, including programming, web and software development and analysis at KeyBank, Deloitte Consulting, NFIB, PIC (Sygen international subsidiary) and Vanderbilt University Medical Center. Ms. Williams holds a Bachelor of Business Administration - MIS from Ohio University. +EXECUTIVE COMPENSATION +The following narrative describes our executive compensation program and the decisions of the Compensation Committee regarding the fiscal year 2021 compensation of our NEOs. The Company qualifies as a “smaller reporting company” in accordance with Rule 12b-2 of the Exchange Act. For as long as we are a smaller reporting company, we are not required to include a Compensation Discussion and Analysis section in this proxy statement and have elected to comply with the scaled-down executive compensation disclosure requirements. +2021 NEOs +For fiscal year 2021, our named executive officers (“NEOs”) were: +Scott Scheirman +President, Chief Executive Officer and Director +Lane Dubin +Senior Vice President and General Manager of Personalization, Prepaid and Instant Issuance +John Lowe +Senior Vice President and General Manager, Secure Card +2021 Business Overview +Business Highlights +Our executive team was pivotal in delivering the Company’s strong financial performance in 2021, including: +● Total Net Sales (1) of $375.1 million, up 20% year-over year; +● Net Income of $15.9 million, down 1% year-over-year; +● Adjusted EBITDA (2) of $76.4 million, up 33% year-over-year; and +Additional highlights of 2021 performance ($ in millions) +(1) The term Net Sales, as defined in the STIP (as defined below), is consistent with “Total Net Sales,” as included in the Company’s consolidated financial statements. +(2) Adjusted EBITDA is not a measurement of financial performance prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) . See Annex A hereto for a reconciliation to Net Income, the most directly comparable GAAP financial measure. +In 2021, the Company produced strong results, growing sales across our Secure Card, Personalization, Card@Once® Instant Issuance and Prepaid Debit businesses. Such growth and strong results contributed to our ability to list the Company’s Common Stock on +15 +Table of Contents +The Nasdaq Global Market in August 2021. We were also able to successfully refinance the Company’s existing indebtedness and enhance its liquidity position through a private offering of senior secured notes and entrance into a new revolving credit facility in March 2021. We believe the achievement of these milestones is due to our executive team’s focus on delivering against our strategic plan and continuing to execute on our four key strategies: deep customer focus; market-leading quality products and customer service; continuous innovation; and a market competitive business model. +For further details, we encourage you to review the financial results set forth in our Form 10-K for the fiscal year ended December 31, 2021. +As described in this “Executive Compensation” section, we believe our compensation program focuses on performance-based compensation elements and provides alignment with the Company’s financial and strategic priorities as well as stockholder interests. We have structured our compensation design features to incentivize our NEOs and other executive officers to pursue performance that increases stockholder value by rewarding top-line growth, profitability and non-financial business imperatives, and we employ competitive compensation levels to drive the retention, performance and engagement of our executive team, including our NEOs. Further, our programs are designed to incentivize over-achievement of goals by awarding above-market compensation when the Company exceeds its performance goals, as we did in 2021. +The principal components of our 2021 executive compensation program consisted of (i) base salary, (ii) short-term incentives delivered in the form of cash and (iii) long-term incentives delivered entirely in the form of equity awards. Beginning in 2018, the Compensation Committee suspended the use of equity awards because they were viewed as an ineffective compensation vehicle in light of the Company’s stock price and dilutive impact on stockholder value. In addition, based on the Company’s stock volatility and standard methodology for valuing equity awards, the CPI Card Group Inc. Omnibus Incentive Plan (the “Omnibus Incentive Plan”) lacked a sufficient number of available shares to make market-competitive equity awards. As the Company’s performance and stock price have improved, the Compensation Committee returned to the market practice of granting equity-based long-term incentive awards to its executives, as evidenced by the award of RSUs as a portion of the long-term incentive awards in late 2020, and the stock options (“Options”) and RSUs granted as the exclusive form of long-term incentive awards in September 2021. Additionally, on May 27, 2021, the Company’s stockholders approved an amendment and restatement of the Omnibus Incentive Plan to, among other things, increase the total number of shares of the Company’s Common Stock reserved and available for issuance thereunder by 1,000,000 shares. We believe equity awards promote retention of our high performing executive team, allow us to continue to recruit top-level talent and align compensation with stockholder value, all of which incentivize our executive team to continue improving our business. +Summary of Our 2021 Compensation Decisions +The Compensation Committee makes all decisions regarding our NEOs’ total compensation (base salary, short-term incentives and long-term incentives). +● +● +● +● +● +Factors that Guided 2021 Compensation Decisions +● +Our executive compensation philosophy +● +Degree of achievement of key financial goals for 2021 +● +Recommendations of our CEO (other than with respect to his own compensation) +● +Advice of the Compensation Committee’s independent compensation consultant +● +Market pay and governance best practices +● +Historical CPI compensation +2021 Compensation Program Changes and Key Decisions +Base Salary +In February 2021, the Compensation Committee approved the following increases in base salaries in consideration of our NEOs’ performance, review of competitive market data and internal pay equity: +● +CEO : Mr. Scheirman received a base salary increase of 3.0%, effective March 7, 2021. +● +Other NEOs : Mr. Dubin received a base salary increase of 3.0%, effective March 7, 2021, which was further increased by 15.0%, effective April 4, 2021, in recognition of his change in responsibilities in 2021. Mr. Lowe received a base salary increase of 3.0%, effective March 7, 2021, which was further increased by 17.4%, effective October 5, 2021, in recognition of his change in responsibilities in 2021. +See “Elements of the 2021 Executive Compensation Program — Base Salary” for more information. +16 +Table of Contents +. Specifically, the 20% Free Cash Flow weighting was allocated to the Adjusted EBITDA metric (which increased from 50% to 70%). Each NEO’s individual incentive opportunity is determined by the Compensation Committee following a review of competitive market data and internal pay equity. Mr. Scheirman received a 10.9% increase in his 2021 STIP target (as compared to his 2020 STIP target). Mr. Dubin received an 11.5% increase in his 2021 STIP target (as compared to his 2020 STIP target) on [January 1, 2021] , and an additional 14.6% increase which became effective as of April 1, 2021. Mr. Lowe received an 11.5% increase in his 2021 STIP target (as compared to his 2020 STIP target) on [January 1, 2021] , and an additional 4.6% increase which became effective for the [third]dddddfourth] 4 quarter STIP payment. Such increases in STIP targets for 2021 increased the portion of our NEOs’ pay which was at-risk and directly tied to Company performance. +’s 2021 performance, the 2021 STIP payouts were at 200% of target for the NEOs, reflecting strong above-target performance during 2021. 5 +— Short-Term Incentives” for more information. +September 21, 2021, the Compensation Committee granted equity awards under the Omnibus Incentive Plan to select employees of the Company, including the NEOs. These equity awards were granted 50% in the form of RSUs and 50% in the form of Options, with awards vesting in equal annual installments on the first and second anniversaries of the grant date. In addition, on October 5, 2021, the Compensation Committee approved the grant of additional long-term equity incentive awards in the form of RSUs and Options to Mr. Lowe in connection with his promotion to Senior Vice President and General Manager, Secure Card, with such equity awards also vesting in two equal installments on the first and second anniversaries of the grant date. These awards were determined in consideration of our NEOs’ performance and a review of competitive market data, and the targeted values reflect that we are shifting the timing of our next annual equity grant. As such, we do not expect to make annual equity awards in 2022, and our next annual equity grant is expected to occur in the first quarter of 2023. +— Long-Term Incentives” for more information. +’s 2020 review. The compensation peer group is comprised of companies that meet at least one of the following criteria: +● +EBITDA); +● +● +“ Role of Market Data and the Peer Group” for more information. +2021 Compensation Program Changes and Key Decisions (continued) +2021 Short-Term Incentive Plan (“2021 STIP”) +The 2021 STIP emphasizes pay-for-performance and the achievement of critical near-term performance milestones. Under the 2021 STIP, the NEOs were eligible to earn quarterly cash bonus awards based on the achievement of pre-established financial goals (specifically, 70% Adjusted EBITDA and 30% Net Sales metrics). The 2021 STIP design was refined to eliminate the Free Cash Flow metric that was included in the 2020 STIP in order to incentivize senior management to achieve critical 2021 strategic priorities. Specifically, the 20% Free Cash Flow weighting was allocated to the Adjusted EBITDA metric (which increased from 50% to 70%). Each NEO’s individual incentive opportunity is determined by the Compensation Committee following a review of competitive market data and internal pay equity. Mr. Scheirman received a 10.9% increase in his 2021 STIP target (as compared to his 2020 STIP target). Mr. Dubin received an 11.5% increase in his 2021 STIP target (as compared to his 2020 STIP target) on January 1, 2021, and an additional 14.6% increase which became effective as of April 1, 2021. Mr. Lowe received an 11.5% increase in his 2021 STIP target (as compared to his 2020 STIP target) on January 1, 2021, and an additional 18.2% increase which became effective for the fourth quarter STIP payment. Such increases in STIP targets for 2021 increased the portion of our NEOs’ pay which was at-risk and directly tied to Company performance. +Based on the Company’s strong above-target performance during 2021, the 2021 STIP payouts were at the maximum level of 200% of target for the NEOs. +See “Elements of the 2021 Executive Compensation Program — Short-Term Incentives” for more information. +2021 Long-Term Incentive Awards +On September 21, 2021, the Compensation Committee granted equity awards under the Omnibus Incentive Plan to select employees of the Company, including the NEOs. These equity awards were granted 50% in the form of RSUs and 50% in the form of Options, with awards vesting in equal annual installments on the first and second anniversaries of the grant date. In addition, on October 5, 2021, the Compensation Committee approved the grant of additional long-term equity incentive awards in the form of RSUs and Options to Mr. Lowe in connection with his promotion to Senior Vice President and General Manager, Secure Card, with such equity awards also vesting in two equal installments on the first and second anniversaries of the grant date. These awards were determined in consideration of our NEOs’ performance and a review of competitive market data, and the targeted values reflect that we are shifting the timing of our next annual equity grant. As such, we do not expect to make annual equity awards in 2022, and our next annual equity grant is expected to occur in the first quarter of 2023. +See “Elements of the 2021 Executive Compensation Program — Long-Term Incentives” for more information. +Compensation Peer Group +The Compensation Committee reviewed and affirmed our compensation peer group in 2021 with the only changes being the exclusion of those companies that were acquired since the Compensation Committee’s 2020 review. The compensation peer group is comprised of companies that meet at least one of the following criteria: +● +Similar in size and complexity to CPI (primarily based on revenue and EBITDA); +● +In a similar or related technology-oriented industry; or +● +In competition with CPI for executive talent. +See “ Role of Market Data and the Peer Group” for more information. +17 +Table of Contents +Executive Compensation Governance Highlights +The Compensation Committee reviews on an ongoing basis the Company’s executive compensation practices to evaluate whether they support the Company’s executive compensation philosophy and are aligned with stockholder interests. Our 2021 executive compensation practices include the following, each of which the Compensation Committee believes is supportive of our executive compensation philosophy and the interests of our stockholders: +What We Do +What We Don’t Do +✓ +Deliver a significant portion of compensation through performance-based, at-risk pay +✓ +Maintain a peer group for evaluating competitive market practices +✓ +Set pre-established performance targets designed to be challenging +✓ +Regularly review risks associated with compensation +✓ +Consult with an independent consultant on compensation levels and practices +✓ +Provide no executive perquisites +✓ +Maintain a clawback policy +✓ +Annual say-on-pay vote +X +Provide automatic, annual increases in executive salaries +X +Maintain uncapped executive incentive plans +X +Award single-trigger cash severance in connection with a change in control +X +Re-price stock options without the prior approval of our stockholders +X +Permit hedging or pledging of equity +X +Enter into supplemental executive retirement plans +X +Provide excise tax gross-ups on termination-related payments +2021 Say-on-Pay Vote +In its compensation review process, the Compensation Committee considers whether the Company’s executive compensation program is aligned with the interests of the Company’s stockholders. As part of its review of the Company’s executive compensation program, the Compensation Committee considered the approval by approximately 97% of the votes cast for the Company’s say-on-pay vote at our 2021 Annual Meeting of Stockholders. The Compensation Committee determined that the Company’s executive compensation philosophies and objectives and compensation elements continued to be appropriate and did not make any changes to the Company’s executive compensation program in response to the 2021 say-on-pay vote. However, as noted above, in 2021, the Company reintroduced 100% equity-denominated awards into the Company’s long-term incentive program following stockholder approval to increase the total number of shares of CPI common stock available for issuance under the Omnibus Incentive Plan. This change was made to more closely align the Company’s executives with the interests of our stockholders and reflects the evolution of our long-term incentive pay practices from not granting equity awards in 2018 and 2019, to providing a mix of equity and cash awards in 2020, to 100% of the 2021 long-term incentives delivered as equity. +Role of the Compensation Committee +In consultation with the CEO, the Compensation Committee establishes the general policies relating to senior management compensation and oversees the development and administration of such compensation programs. Our human resources executives and staff support the Compensation Committee in its work to implement the Compensation Committee’s decisions, monitor evolving competitive practices and make compensation recommendations to the Compensation Committee. Our human resources management, in conjunction with our independent compensation consultant, develops specific compensation recommendations for senior executives, which are first reviewed by senior management and then presented to the Compensation Committee. The Compensation Committee has final authority to approve, modify or reject these recommendations in its sole discretion. Members of management do not attend the portions of the Compensation Committee meetings relating to their own compensation, and the Compensation Committee regularly conducts executive sessions without management present. The Compensation Committee approves all compensation of our executive officers, including equity awards. +Role of the Independent Compensation Consultant +Since 2018, the Compensation Committee has engaged WTW as its independent compensation consultant. WTW is engaged by and reports directly to the Compensation Committee. The Compensation Committee has the sole authority to approve the scope and terms of the engagement of WTW and to terminate such engagement. In 2021, WTW assisted the Compensation Committee with the development of competitive market data, compensation program design and related assessments of the Company’s executive and director compensation levels, evaluation of short-term and long-term incentive compensation strategy, and compilation and review of total compensation data for the Company’s NEOs. +18 +Table of Contents +The Compensation Committee has reviewed the independence of WTW in light of SEC rules regarding compensation consultants and has concluded that WTW is independent and its work for the Compensation Committee does not raise any conflict of interest. +Role of Market Data and the Peer Group +In order to gauge the competitiveness of our compensation program and to provide our NEOs with fair and market-competitive compensation, the Compensation Committee reviewed compensation practices and pay opportunities from general industry survey data as well as from a selection of publicly traded peer companies, as provided by WTW. The Company attempts to position itself to attract and retain qualified senior executives in the face of competitive pressures in its relevant labor markets, and we design our compensation practices with this goal in mind. +Specifically, in 2021, WTW analyzed information regarding the pay practices of a compensation peer group (as described below) to assist the Compensation Committee in determining pay for our Chief Executive Officer and Chief Financial Officer. In addition, the Company analyzed the pay practices of similarly sized general industry companies in the WTW Executive Compensation Database to assist the Compensation Committee in determining pay for our other executive officers. The compensation data resulting from this analysis was considered by the Compensation Committee in making 2021 executive compensation decisions. +The Compensation Committee reviewed and affirmed our compensation peer group in 2021, with the only changes being the exclusion of those companies that were acquired since the 2020 review (Inphi Corporation and PRGX Global, Inc). The compensation peer group is comprised of companies that meet at least one of the following criteria: +● Similar in size and complexity to CPI (primarily based on revenue and EBITDA); +● In a similar or related technology-oriented industry; or +● In competition with CPI for executive talent. +Therefore, the Compensation Committee approved the following peer group for 2021 compensation benchmarking purposes: +Executive Compensation Peer Group +Altium Limited +DSP Group, Inc. +Inseego Corp. +Cantaloupe, Inc. (1) +EVERTEC, Inc. +Key Tronic Corporation +Cass Information Systems, Inc. +FormFactor, Inc. +Lattice Semiconductor Corporation +Consumer Portfolio Services, Inc. +GreenSky, Inc. +SigmaTron International, Inc. +(1) Cantaloupe, Inc. was formerly named USA Technologies, Inc. and was included in the Company’s 2020 peer group under such former name. +19 +Table of Contents +Elements of the 2021 Executive Compensation Program +Our 2021 executive compensation program consisted of fixed pay and variable pay, including cash and non-cash components. The chart below summarizes the various elements of CPI’s 2021 executive compensation program and the objective and key features of each element: +Objective +Type of +Compensation +Key Features +Base Salary +A standard compensation element in executive compensation packages, offering market competitive fixed compensation to attract and retain talent +Cash +● +Reflects individual skills, experience, responsibilities and performance over time +● +Provides a consistent source of income +Short-Term +Incentive +A cash-based award that encourages executives to focus on specific short-term corporate and/or business unit performance goals. +Cash +● +Performance-based award tied to achievement of critical short-term financial goals and priorities +● +Pays only if threshold performance levels are met or exceeded +Long-Term +Incentive — +RSUs +Rewards stockholder value creation, enhances executive stock ownership and promotes retention +Equity +● +At-risk award, with value based exclusively upon the value of the Company’s Common Stock +● +Aligns executive and stockholder interests +Long-Term +Incentive — +Options +Rewards stockholder value creation by aligning executive pay with stock price appreciation, enhances executive stock ownership and promotes retention +Equity +● +Performance-based award, with no value unless the Company’s stock price appreciates from the date of grant +● +Aligns executive and stockholder interests +Other Benefits +Provide programs for employees to pursue physical and financial wellbeing through retirement and health and welfare benefits +Benefit +● +Competitive broad-based benefits available to all employees +Employment and +Post-Termination +Arrangements +Protects the Company and NEOs during certain termination events, through the use of a CEO employment agreement, an executive severance and change-in-control policy, and various restrictive covenants +Benefit +● +Facilitates an orderly transition in the event of management changes +● +Helps ensure NEOs remain focused on creating sustainable performance in case of risk of job loss +● +Provides confidentiality, non-compete and nonsolicit protections for the Company +Base Salary +Base salaries established for the Company’s executive officers are intended to reflect each individual’s responsibilities, experience, historical performance and other discretionary factors deemed relevant by the Company and have generally been set at levels deemed necessary to attract and retain individuals with superior talent. Base salaries are also designed to provide executive officers with steady cash flow during the course of the fiscal year that is not contingent on short-term variations in the Company’s operating performance. The base salaries of our NEOs in 2020 and 2021 are set forth below. +Our NEOs were entitled to the following annual base salaries in 2020 and 2021: +2020 Base Salary +2021 Base Salary +Aggregate % +(As of December 31, 2020) +(As of December 31, 2021) +Increase +Scott Scheirman (1) +$ +592,250 +$ +610,018 +3.0% +Lane Dubin (2) +$ +409,000 +$ +484,461 +18.5% +John Lowe (3) +$ +347,221 +$ +420,000 +21.0% +(1) Mr. Scheirman received a base salary increase of 3%, effective March 7, 2021. +20 +Table of Contents +(2) Mr. Dubin received a base salary increase of 3%, effective as of March 7, 2021, as well as an additional base salary increase of 15.0%, effective April 4, 2021, in recognition of his change in responsibilities during 2021. +(3) Mr. Lowe received a base salary increase of 3%, effective as of March 7, 2021, as well as an additional base salary increase of 17.4%, effective October 5, 2021, in recognition of his change in responsibilities during 2021. +Short-Term Incentives +The Company believes that establishing cash incentive opportunities is an important factor in both attracting and retaining qualified and highly skilled executives and in motivating our executives to achieve the Company’s near-term financial objectives. To achieve these objectives, the Company maintains a quarterly short-term incentive plan, or the “STIP.” The quarterly design of the STIP is intended to reward the achievement of critical quarterly financial performance objectives. As such, payments may vary quarter to quarter. +To determine payouts under the STIP, the Company measures performance for each metric on both a quarterly and a cumulative basis. Each quarterly payment is “capped” at 125% of target, amounts that exceed the quarterly cap are subject to a year-end “true-up,” and each quarterly award is eligible for a “catch-up” payment for cumulative performance to-date. This design was implemented to further enhance the motivational effect of the STIP and provide a continual incentive to improve performance throughout the year. +Under the 2021 STIP, executives were eligible to earn quarterly cash bonuses based on the achievement of the following metrics: +Description +Metrics +70% based on achievement of Adjusted EBITDA (1) +30% based on achievement of Net Sales (2) +Corporate Executive Measurement +100% based on Company-wide achievement +Business Unit Executive (General Manager) Measurement +50% based on company-wide achievement +50% based on Business Unit achievement +(1) “Adjusted EBITDA” is a financial measure that is not calculated according to GAAP. For purposes of the STIP, we define Adjusted EBITDA as EBITDA (which represents earnings before interest, taxes, depreciation and amortization, all on a continuing operations basis) adjusted for (i) stock compensation expense, (ii) foreign currency changes, (iii) legal costs incurred with certain patent and shareholder litigation, (iv) impairments, (v) restructuring charges, (vi) executive severance charges, (vii) loss on debt extinguishment, (viii) amounts related to a sales tax contingency liability, and (ix) other items that are unusual in nature, infrequently occurring or not considered part of core operations. +(2) The term Net Sales, as defined in the STIP, is consistent with “Total Net Sales,” as included in the Company’s consolidated financial statements, for all references contained herein. +The 2021 STIP design was refined to eliminate the Free Cash Flow metric that was included in the 2020 STIP in order to incentivize senior management to achieve critical 2021 strategic priorities. Specifically, the 20% Free Cash Flow weighting was allocated to the Adjusted EBITDA metric (which increased from 50% to 70%). +Our annual STIP Net Sales and Adjusted EBITDA goals are defined on a quarterly basis for purposes of calculating the quarterly STIP payments. The quarterly goals align to the Company’s annual operating plan and reflect the planned seasonality of our business and operations. Achievement of performance goals is calculated on the basis of straight-line interpolation between the threshold, target and maximum bonus opportunities for each applicable metric underlying the performance goal. Quarterly and cumulative payouts under the STIP can range from 0% to 200%, based on Company performance; however, any payment made under the STIP with respect to the first three quarters is capped at 125% of the quarterly target incentive. The targeted cumulative Adjusted EBITDA metric also serves as a trigger as CPI must achieve the overall Adjusted EBITDA threshold performance in order for any year-end STIP payments to fund. +In 2021, the Compensation Committee approved a 10.9% increase in Mr. Scheirman’s 2021 STIP target (as compared to his 2020 STIP target). Mr. Dubin received an 11.5% increase in his 2021 STIP target (as compared to his 2020 STIP target) on January 1, 2021, and an additional 14.6% increase which became effective as of April 1, 2021. Mr. Lowe received an 11.5% increase in his 2021 STIP target (as compared to his 2020 STIP target) on January 1, 2021, and an additional 18.2% increase which became effective for the fourth quarter STIP payment. Such increases in STIP targets for 2021 increased the portion of our NEOs’ pay which was at-risk and directly tied to Company performance. For the 2021 performance year, our NEOs were eligible to receive the following target bonus opportunities under the 2021 STIP: +Executive +Target Annual +STIP Payment +Opportunity +Scott Scheirman +$ +1,259,800 +Lane Dubin +$ +382,020 +John Lowe +$ +315,825 +21 +Table of Contents +The target annual STIP payment for Mr. Dubin is prorated to account for his increase in target on April 1, 2021, 20% at his original target and 80% at his increased target. Mr. Lowe’s annual target is also prorated based on his increase effective in the fourth quarter of 2021, 75% at his original target and 25% at his increased target. +Actual 2021 Payouts +Based on strong Company and business unit performance in 2021, our 2021 STIP paid out at maximum levels (i.e., 200% of each NEO’s bonus opportunity). Therefore, Mr. Scheirman, Dubin and Lowe received 2021 STIP payments of $2,519,600, $764,040, and $631,650, respectively (such payments relating to fourth quarter 2021 and annual 2021 performance were made in 2022). +Long-Term Incentives +On September 21, 2021, the Compensation Committee approved the grant of long-term incentive equity awards to each of our NEOs under the Omnibus Incentive Plan, which awards were granted 50% in the form of RSUs and 50% in the form of Options. The RSUs and the Options are each subject to time-based vesting conditions, with the awards vesting in equal installments on the first and second anniversaries of the grant date. The vesting of the RSUs and the Options will accelerate in the event of the executive’s death; termination due to disability; in connection with a change in control of the Company, failure of the Company’s successor to assume the RSUs or Options or convert them to an equivalent value upon substantially the same terms; in connection with a change in control of the Company, a qualifying termination of employment; or, in the case of the RSUs, retirement. While equity awards are typically granted in the first quarter of the year, these grants were made in September 2021, following the approval of amendments to the Omnibus Incentive Plan at the 2021 Annual Meeting of Stockholders. The size of these awards was determined in consideration of our NEOs’ performance and a review of competitive market data and was also in recognition that the grants represented long-term incentive awards for the period beginning on the grant date and ending on the date of the next annual equity grant, expected to occur in the first quarter of 2023. In addition, on October 5, 2021, the Compensation Committee approved the grant of additional long-term equity incentive awards in the form of RSUs and Options for Mr. Lowe in connection with his promotion to Senior Vice President and General Manager, Secure Card, on substantially the same terms as the September 2021 equity award grants described above. +Together with STIP awards, the RSUs and Options are designed to balance the achievement of critical near-term performance objectives with long-term strategic goals and the retention of our high performing executive team. We believe such awards also allow us to continue to recruit top-level talent and align compensation with stockholder value, all of which incentivize our executive team to continue improving our business. +The following table sets forth the details of the RSUs and Options granted to our NEOs in 2021: +Option Grant +Option Grant +# RSUs +RSU Grant Date +# Options +Date Stock +Date Fair +Grant Date +Granted (1) +Fair Value +Granted (1) +Price +Value +Scott Scheirman +9/21/2021 +19,407 +$ +574,835 +32,893 +$ +29.62 +$ +573,175 +Lane Dubin +9/21/2021 +5,270 +$ +156,097 +8,932 +$ +29.62 +$ +155,644 +John Lowe +9/21/2021 +4,652 +$ +137,792 +7,885 +$ +29.62 +$ +137,400 +John Lowe +10/5/2021 +149 +$ +4,549 +253 +$ +30.53 +$ +4,544 +(1) 50% of the RSUs and Options vest on the first anniversary of the grant date and 50% vest on the second anniversary of the grant date, subject to the NEO’s continued employment through the applicable vesting date. The RSUs and Options are both stock-settled awards. +Other Benefits +The Company maintains the CPI Card Group, Inc. 401(k) Plan (the “401(k) Plan”), which is designed to be a qualified defined contribution plan under the provisions of the Internal Revenue Code, covering substantially all employees who meet certain eligibility requirements. Under the 401(k) Plan, participants may defer their salary subject to statutory limitations and may direct the contributions among various investment accounts. The Company matches 100% of a participant’s first 3% of deferrals and 50% of the next 2% of deferrals. The matching contributions are fully vested at the time of the match. +Termination or Change in Control +Pursuant to their respective employment or post-termination arrangements, each of our NEOs may be entitled to certain payments and benefits in certain termination situations or upon a change in control. We believe that our severance arrangements would help facilitate an orderly transition in the event of changes in management. For further discussion of severance payments and benefits, see “ Employment and Post-Termination Arrangements. ” +22 +Table of Contents +Additional Compensation Governance Practices +Compensation Risk Assessment +The Compensation Committee regularly reviews the risk associated with the Company’s compensation programs. As part of this process, the Compensation Committee reviewed a comprehensive risk assessment conducted by WTW in 2019 and, at the time, concluded that our compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on the Company. In 2021, the Compensation Committee discussed with WTW the risk assessment of the Company’s executive compensation programs and any year-over-year changes that could impact the risk assessment. The Compensation Committee and WTW concluded that no program changes were implemented in 2021 that would materially affect the existing risk profile of the Company’s compensation program and that there were no material risks to the Company’s existing executive compensation program. Accordingly, the Compensation Committee and WTW did not recommend any changes the Company’s executive compensation program in 2021 on this basis. +Insider Trading Policy +The Company maintains an Insider Trading Policy, which prohibits CPI officers and directors from purchasing financial instruments and engaging in certain transactions designed to hedge against a decrease in the value of the Company’s securities, including short sales, publicly traded options, hedging and monetization transactions, margin sales, pledges of collateral and standing limit orders. +Clawback Policy +The Company has had an incentive compensation recoupment policy in place since 2016 (the “Clawback Policy”). Under the Clawback Policy, if the Company is required to restate its financial results because of its material noncompliance with any financial reporting requirement under applicable securities laws, the Compensation Committee will review all awards or payments of any form of incentive-based compensation (including cash and equity) made to current and former executive officers of the Company within the three-year period immediately preceding the date on which the Company is required to prepare the restatement. If the Compensation Committee determines that any such incentive awards or payments were based on erroneous data and would have been lower had they been calculated based on the restated results, the Compensation Committee may, to the extent permitted by applicable law, seek to recover, for the benefit of the Company, the difference between the amounts awarded or paid and the amounts that would have been awarded or paid based on the restated results, as determined by the Compensation Committee. These remedies would be in addition to, and not in lieu of, any penalties imposed by law enforcement agencies, regulators or other authorities. For purposes of this policy, “executive officers” of the Company include all persons designated by the Board as Section 16 reporting officers. +Stock Ownership Guidelines +Since 2016, the Company has maintained executive stock and independent director stock ownership guidelines that apply to senior executives, including our NEOs, and our independent directors (“Unaffiliated Directors”) who are not affiliated with Parallel49 Equity, ULC (formerly known as Tricor Pacific Capital and an affiliate of the Tricor Funds (“Parallel49”)). The Company did this to further align the interests of our leaders and the Unaffiliated Directors with those of our stockholders and further promote our commitment to sound corporate governance. +Under the guidelines, executives and Unaffiliated Directors have up to five years to accumulate shares and share equivalents that have a market value equal to or greater than a prescribed multiple of annual salary or annual retainer fees. For our Chief Executive Officer, this multiple is five, for the Chief Executive Officer’s direct reports and the Chief Accounting Officer, this multiple is two, for all other executives, this multiple is one, and for Unaffiliated Directors, this multiplier is three. While our executives and Unaffiliated Directors had until 2021 (or five years from appointment to their position, whichever is later) to satisfy the applicable share ownership levels, given the historical volatility in the Company’s stock price and the Compensation Committee’s decision not to include equity awards as long-term incentives in 2018 and 2019 and to make limited long-term incentive equity awards in 2020, the Compensation Committee is in the process of re-evaluating these stock ownership guidelines. +2021 Summary Compensation Table +The 2021 Summary Compensation Table discloses the compensation information for fiscal year 2021 and, to the extent required by applicable SEC disclosure rules, fiscal year 2020, for the principal executive officer and our two other most highly compensated executive officers who were serving as executive officers at the end of the last completed fiscal year. +Nonqualified +Non-Equity +Deferred +Incentive Plan +Compensation +All Other +Name and Principal Position +Year +Salary (1) +Bonus (2) +Stock Awards (3) +Option Awards (4) +Compensation (5) +Earnings +Compensation (6) +Total +Scott Scheirman, President, Chief Executive Officer and Director +2021 +$ +609,221 +$ +— +$ +574,835 +$ +573,175 +$ +2,519,600 +$ +— +$ +11,600 +$ +4,288,431 +2020 +$ +615,029 +$ +562,215 +$ +116,085 +$ +— +$ +2,017,714 +$ +— +$ +11,400 +$ +3,322,443 +Lane Dubin, SVP and GM, PPD, Perso & II (7) +2021 +$ +468,113 +$ +— +$ +156,097 +$ +155,644 +$ +764,040 +$ +— +$ +11,600 +$ +1,555,494 +John Lowe, SVP and GM, Secure Card +2021 +$ +372,521 +$ +— +$ +142,341 +$ +141,962 +$ +631,650 +$ +— +$ +2,137 +$ +1,290,611 +2020 +$ +356,761 +$ +254,773 +$ +27,827 +$ +— +$ +481,118 +$ +— +$ +11,400 +$ +1,131,879 +23 +Table of Contents +(1) Due to the timing of our bi-weekly payroll calendar, during 2020 we had 27 pay periods instead of 26. Thus, all employees received actual base pay compensation that was above their stated annual base salary. In 2021, we had 26 payrolls. +(2) For 2020, these amounts include (a) a prepaid retention award and (b) for Mr. Lowe, bonus awards associated with the terms of his employment with the Company. +(3) The amounts reported in this column represent the grant date fair value of the RSU awards as calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“FASB Topic 718”), valued based on the closing stock price on the date of grant. +(4) The amounts reported in this column represent the grant date fair value of Option awards, calculated in accordance with FASB Topic 718. See Note 17 of the Company’s audited financial statements included in our Form 10-K for the fiscal year ended December 31, 2021 for a discussion of the relevant assumptions used in calculating these amounts. +(5) Represents performance-based bonuses earned under the Company’s STIP for the applicable year. Please see the section entitled “Elements of the 2021 Executive Compensation Program — Short-Term Incentives” above for further information regarding the 2021 STIP. +(6) Represents matching contributions under the Company’s 401(k) plan. +(7) Mr. Dubin was not an NEO in 2020. +Outstanding Equity Awards at 2021 Fiscal Year-End +Option Awards +Stock Awards +Number of +Securities +Underlying +Unexercised +Options +(Exercisable) +(#) +Number of +Securities +Underlying +Unexercised +Options +(Unexercisable) +(#) (1) +Option +Exercise +Price +($) +Option +Expiration +Date +Number of +Shares or +Units of +Stock that +Have Not +Vested +(#) +Market Value +of Shares +Or Units of +Stock that +Have Not +Vested +($) (5) +Name +Scott Scheirman +280,000 +— +$ +5.25 +9/25/2027 +54,757 +(2) +$ +1,015,742 +— +32,893 +$ +29.62 +9/21/2028 +19,407 +(3) +$ +360,000 +Lane Dubin +22,500 +— +$ +27.60 +9/1/2026 +14,870 +(2) +$ +275,839 +11,885 +— +$ +21.75 +3/22/2027 +5,270 +(3) +$ +97,759 +25,000 +— +$ +5.25 +9/25/2027 +— +8,932 +$ +29.62 +9/21/2028 +John Lowe +75,000 +— +$ +1.98 +7/2/2028 +13,126 +(2) +$ +243,487 +— +7,885 +$ +29.62 +9/21/2028 +4,652 +(3) +$ +86,295 +— +253 +$ +30.53 +10/5/2028 +149 +(4) +$ +2,764 +(1) 50% of these Options will become exercisable on September 21, 2022, and 50% of these Options will become exercisable on September 21, 2023, subject to continued service with the Company through such vesting date, except that with respect to the Option grant for Mr. Lowe with an October 5, 2028 expiration date, 50% of such Options will become exercisable on October 5, 2022, and 50% of such Options will become exercisable on October 5, 2023. +(2) These RSUs will vest 100% on October 2, 2022, subject to continued service with the Company through such vesting date. +(3) These RSU awards will vest 50% on September 21, 2022 and 50% on September 21, 2023, subject to continued service with the Company through such vesting date. +(4) These RSU awards will vest 50% on October 5, 2022 and 50% on October 5, 2023, subject to continued service with the Company through such vesting date. +(5) The market value of the RSUs is based on the $18.55 closing price of a share of our Common Stock on December 31, 2021. +24 +Table of Contents +Employment and Post-Termination Arrangements +Mr. Scheirman’s Employment Agreement +On September 25, 2017, Mr. Scheirman entered into an employment and non-competition agreement (the “CEO Employment Agreement”) with the Company to serve as President and Chief Executive Officer, effective September 25, 2017, for a term ending on March 31, 2021, plus automatic one-year renewals thereafter unless either party provides notice of intent not to renew the agreement. +Under the terms of the CEO Employment Agreement, in the event that Mr. Scheirman’s employment is terminated by the Company without Cause, he resigns for Good Reason (each as defined in the CEO Employment Agreement), separates employment due to death or disability or the Company fails to renew his agreement upon its expiration, Mr. Scheirman would be entitled to (i) a severance payment equal to 1.5 times the sum of Mr. Scheirman’s then-current annual base salary and target bonus for the year of termination, payable in equal installments during the eighteen (18) month period following the termination date; (ii) a prorated portion of his STIP bonus based on the number of full months completed during the fiscal year in which such termination of employment occurs and based on final Company performance for the STIP year, payable at the same time as annual bonuses become payable to other executive employees; (iii) accelerated vesting of any outstanding equity awards that would have otherwise vested in the next twelve months following the termination (for performance-based awards, vesting will be based on actual performance determined at the end of the performance period); (iv) the cost of continuing health and dental coverage under the Company’s plans as then in effect, less the employee contribution for an active employee, for up to eighteen (18) months; and (v) other than in the case of a termination for death or disability, up to six months of outplacement services. The estimated cash severance payment to Mr. Scheirman on termination, assuming a termination as of December 31, 2021, would have been $2,833,790 (inclusive of $14,063 in COBRA insurance coverage and outplacement services valued at $15,000) for termination without “Cause,” for “Good Reason,” for the Company’s failure to renew the agreement, or termination due to his death or disability. +In the event that Mr. Scheirman experiences a termination event as described above within six months prior to or two years following a Change in Control (as defined in the CEO Employment Agreement) of the Company, Mr. Scheirman will receive the benefits described in the foregoing paragraph, except that the severance and COBRA continuation benefits in items (i) and (iv) above would be extended from eighteen to twenty-four months, and his outstanding equity awards would vest in full (with any performance-based awards vesting at the target level of performance). The estimated cash severance payment to Mr. Scheirman on termination in connection with a Change in Control, assuming a termination as of December 31, 2021, would have been $3,773,387 (inclusive of $18,751 in COBRA insurance coverage and outplacement services valued at $15,000). +Mr. Scheirman is subject to certain restrictive covenants in the CEO Employment Agreement, including obligations regarding noncompetition and non-solicitation of Company employees and customers during the term of his employment and for a period of eighteen months following any termination of his employment with the Company. +Mr. Dubin’s Employment Arrangement +Mr. Dubin does not have an employment agreement with the Company. Upon a termination of his employment as of December 31, 2021, Mr. Dubin would have been eligible to receive an estimated $905,510 in cash severance (inclusive of $14,049 in COBRA insurance coverage and outplacement services valued at $15,000) upon a termination without “cause” or for “good reason” pursuant to our Executive Severance Guidelines, as summarized below. Also, pursuant to the Executive Severance Guidelines, the estimated cash severance payment to Mr. Dubin on termination in connection with a Change in Control (as defined in the Omnibus Incentive Plan), assuming a termination as of December 31, 2021, would have been $1,350,766 (inclusive of $21,074 in COBRA insurance coverage and outplacement services valued at $15,000). +Mr. Lowe’s Employment Offer Letter +In connection with his transition to the position of Senior Vice President & General Manager, Secure Card, Mr. Lowe entered into a new offer letter agreement with the Company, dated as of October 1, 2021. This offer letter provides for an annual base salary of $420,000, as well as eligibility for the Company’s STIP and eligibility to receive long-term incentives under the Omnibus Incentive Plan. +Mr. Lowe’s offer letter does not provide for any severance benefits, however, upon a termination of his employment as of December 31, 2021, Mr. Lowe would have been eligible to receive an estimated $806,049 in cash severance (inclusive of $14,049 in COBRA insurance coverage and outplacement services valued at $15,000) upon a termination without “cause” or for “good reason” pursuant to our Executive Severance Guidelines, as summarized below. Also, pursuant to the Executive Severance Guidelines, the estimated cash severance payment to Mr. Lowe on termination in connection with a Change in Control (as defined in the Omnibus Incentive Plan), assuming a termination as of December 31, 2021, would have been $1,201,574 (inclusive of $21,074 in COBRA insurance coverage and outplacement services valued at $15,000). +25 +Table of Contents +Executive Severance Guidelines +On June 22, 2017, the Company adopted guidelines governing executive severance (“Executive Severance Guidelines”), applicable to executive officers and NEOs of the Company who are not otherwise parties to individual employment or severance agreements providing for benefits upon a termination of employment. Under the Executive Severance Guidelines, if the employment of an eligible officer is terminated without “cause” or due to a resignation for “good reason,” not in connection with a “change in control” (each as defined in the Executive Severance Guidelines) and subject to the execution, delivery and non-revocation of a release of claims, he or she would be eligible to receive cash severance equal to one times the sum of his or her base salary plus annual bonus target (or 1.5 times the sum of base salary and annual bonus target for a CEO participant). For such a termination occurring within the 24 months following a change in control of the Company, the applicable severance multiple would be increased to 1.5 times for all other eligible officers (or 2.0 times for a CEO participant). In addition, the Company would continue to pay a portion of the cost of medical, dental and vision benefits on behalf of an eligible officer, such that the officer’s contribution would remain as it were for an active officer, for the greater of the severance period or such officer’s eligibility for COBRA continuation coverage, and the Company may provide, in its discretion, up to six months of outplacement services. Each of Messrs. Dubin and Lowe are subject to the Executive Severance Guidelines, while Mr. Scheirman is excluded from the Executive Severance Guidelines due to the severance provisions in the CEO Employment Agreement. +Equity Compensation Plan Information Table +The following table provides information as of December 31, 2021 with respect to shares of our common stock that may be issued under our existing equity compensation plan. +Number of securities +remaining available for +future issuance under +Number of securities to +Weighted average +equity compensation +be issued upon exercise +exercise price of +plans (excluding +of outstanding Options, +outstanding Options, +securities reflected in +warrants and rights +warrants and rights +column (a)) +(a) (#) +(b) ($) +(c) (#) +Equity compensation plans approved by security holders (1) +1,040,817 +(2) +18.02 +(2) +951,109 +Equity compensation plans not approved by security holders +— +— +— +Total +1,040,817 +18.02 +951,109 +(1) All current equity compensation plans have been approved by stockholders. +(2) Consists of (i) 778,835 outstanding Options under the Omnibus Incentive Plan at an average exercise price of $18.02; and (ii) 261,982 outstanding RSUs under the Omnibus Incentive Plan. Only Options were used in computing the weighted average exercise price. +26 +Table of Contents +AUDIT COMMITTEE REPORT +This report of the Audit Committee is required by the SEC and, in accordance with the SEC’s rules, will not be deemed to be part of or incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933, as amended (the “Securities Act”), or under the Exchange Act, except to the extent that the Company specifically incorporates this information by reference, and will not otherwise be deemed “soliciting material” or “filed” under either the Securities Act or the Exchange Act. +The principal purpose of the Audit Committee is to assist the Board in its oversight of (i) the integrity of our accounting and financial reporting processes and the audits of our financial statements; (ii) our system of disclosure controls and internal control over financial reporting; (iii) our compliance with legal and regulatory requirements; (iv) the qualifications and independence of our independent auditor; (v) the performance of our independent auditor; and (vi) the business practices and ethical standards of the Company. The Audit Committee is responsible for the appointment, compensation, retention and oversight of the Company’s independent auditor. The Audit Committee’s function is more fully described in its charter. +Our management is responsible for the preparation, presentation and integrity of our financial statements, for the appropriateness of the accounting principles and reporting policies that we use and for establishing and maintaining adequate internal control over financial reporting. KPMG LLP (“KPMG”), our independent registered public accounting firm for 2021, was responsible for performing an independent audit of our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2021, and expressing an opinion on the conformity of those financial statements with generally accepted accounting principles. KPMG was also responsible for issuing an attestation report on the effectiveness of our internal control over financial reporting based upon its audit. +The Audit Committee has reviewed and discussed with management our audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2021. The Audit Committee has also reviewed and discussed with KPMG the audited financial statements in such Form 10-K. In addition, the Audit Committee discussed with KPMG those matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (the “PCAOB”) and the SEC. Additionally, KPMG provided to the Audit Committee the written disclosures and the letter required by applicable requirements of the PCAOB regarding KPMG’s communications with the Audit Committee concerning independence, and the Audit Committee has discussed with KPMG its independence from the Company. +Based upon the review and discussions described above, the Audit Committee recommended to the Board that CPI’s audited financial statements be included in our Annual Report on Form 10-K for the year ended December 31, 2021 for filing with the SEC. +Audit Committee : +Robert Pearce, Chairman +Marc Sheinbaum +Valerie Soranno Keating +FEES PAID TO INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +For the years ended December 31, 2021 and 2020, KPMG, our independent registered public accounting firm, billed the approximate fees set forth below: +2021 +2020 +Audit fees (1) +$ +1,761,000 +$ +975,943 +Audit-related fees (2) +— +— +Tax fees (3) +141,157 +246,500 +All other fees (4) +— +— +Total fees +$ +1,902,157 +$ +1,222,443 +(1) Audit fees relate to (i) the audit of our annual consolidated financial statements as of and for the years ended December 31, 2021 and 2020, and (ii) interim reviews of our quarterly consolidated financial statements for the interim periods within the years ended December 31, 2021 and 2020. In addition, audit fees in 2021 related to the initial annual assessment of the effectiveness of our internal control over financial reporting in compliance with the provisions of Section 404 of the Sarbanes-Oxley Act of 2002. Audit fees in 2020 also related to comfort letters issued in connection with the Company’s debt refinancing, and additional audit procedures as the Company was no longer considered an emerging growth company. +(2) These services include attest services related to financial reporting that are not required by statute or regulation. We did not pay KPMG for services included in this category during the years ended December 31, 2021 and 2020. +(3) For the years ended December 31, 2021 and 2020, tax fees relate primarily to U.S. federal and state tax compliance, and for services in connection with research and development tax credit studies, transfer pricing analysis, and tax consulting for business dispositions. Tax fees in 2020 also related to compliance and refund filings in connection with the Coronavirus Aid, Relief, and Economic Security Act. +27 +Table of Contents +(4) This category includes fees for services that are not included in the above categories. We did not pay KPMG for services included in this category during the years ended December 31, 2021 and 2020. +The Audit Committee has adopted certain policies and procedures regarding permitted audit and non-audit services and the pre-approval of such services. Each year, the Audit Committee will ratify the types of audit and non-audit services of which management may wish to avail itself, subject to pre-approval of specific services. Each year, the independent registered public accounting firm will submit a pre-approval request, which will list each known and/or anticipated audit and non-audit service for the upcoming calendar year and which will include associated budgeted fees. The Audit Committee will review the requests and approve a list of annual pre-approved non-audit services. Any interim requests for additional non-audit services that were not contained in the annual pre-approval request are pre-approved by the Audit Committee. +All services provided by KPMG during the fiscal year ended December 31, 2021 and 2020 were pre-approved by the Audit Committee. +28 +Table of Contents +PROPOSAL NO. 2 RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +Our Audit Committee has appointed KPMG LLP as our independent registered public accounting firm for the year ending December 31, 2022. A proposal will be presented at the Annual Meeting to ratify this appointment. If the stockholders fail to ratify such selection, another independent registered public accounting firm will be considered by our Audit Committee, but the Audit Committee may nonetheless choose to engage KPMG LLP. Even if the appointment of KPMG LLP is ratified, the Audit Committee in its discretion may select a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and its stockholders. We have been advised that a representative of KPMG LLP will be present at the Annual Meeting and will be available to respond to appropriate questions and, if such person chooses to do so, make a statement. +THE BOARD OF DIRECTORS AND THE AUDIT COMMITTEE UNANIMOUSLY RECOMMEND A VOTE FOR RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2022. +29 +Table of Contents +PROPOSAL NO. 3 STOCKHOLDER ADVISORY VOTE TO APPROVE OUR NAMED EXECUTIVE OFFICER COMPENSATION +We are offering our stockholders an opportunity to cast an advisory vote to approve the compensation of our NEOs, as disclosed in this proxy statement, pursuant to Section 14A of the Exchange Act (commonly referred to as a “say-on-pay” vote). The advisory vote to approve executive compensation is not a vote on the Company’s general compensation policies or the compensation of the Company’s Board of Directors. +In making decisions with respect to compensation for our NEOs, the Compensation Committee is guided by a pay-for-performance philosophy. The Compensation Committee believes that a significant portion of each NEO’s total compensation opportunity should vary with achievement of the Company’s annual and long-term financial, operational and strategic goals. In designing the compensation program for our NEOs, the Compensation Committee seeks to achieve the following key objectives: +Motivate Executives . The compensation program should encourage our executive officers to achieve the Company’s annual and long-term goals. +Align Interests with Stockholders . The compensation program should align the interests of our executive officers with those of our stockholders, promoting actions that will have a positive impact on total stockholder return over the long term. +Attract and Retain Talented Executives . The compensation program should provide each executive officer with a total compensation opportunity that is market competitive. This objective is intended to ensure that we are able to attract and retain qualified executives while maintaining an appropriate cost structure for the Company. +We believe our executive compensation is structured in the manner that best serves the interests of the Company and its stockholders. We encourage stockholders to review the “Executive Compensation” section above for a complete discussion of how we determine the pay for our NEOs as well as key accomplishments the executive team achieved during 2021. +Accordingly, we are asking stockholders to approve the following advisory resolution at the Annual Meeting: +RESOLVED, that the stockholders of the Company approve, on an advisory and non-binding basis, the compensation of the Company’s named executive officers, as disclosed in this proxy statement pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Executive Compensation section, the compensation tables and any related material disclosed in this proxy statement. +As an advisory vote, this resolution is not binding on us. However, the Compensation Committee, which is responsible for designing and administering our executive compensation program, values the opinions expressed by our stockholders in their vote on this proposal and will consider the outcome of the vote when making future compensation decisions for our NEOs. We expect to hold this vote on an annual basis for the foreseeable future. +THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL, ON AN ADVISORY BASIS, OF OUR NAMED EXECUTIVE OFFICER COMPENSATION AS DISCLOSED IN THIS PROXY STATEMENT. +30 +Table of Contents +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +The following is a description of transactions since January 1, 2020 to which we have been a party in which the amount involved exceeded or will exceed the lesser of $120,000 or one percent of the average of the Company’s total assets at year-end for the last two completed fiscal years and in which any of our directors, executive officers, beneficial holders of more than 5% of our capital stock or entities affiliated with them had or will have a direct or indirect material interest. +Registration Rights Agreement +In connection with our initial public offering, we entered into a registration rights agreement with the Tricor Funds (the “Registration Rights Agreement”). Under the Registration Rights Agreement, the Tricor Funds are entitled to request that we register shares of our Common Stock on a long-form or short-form registration statement on one or more occasions in the future, provided that we will not be obligated to register such shares within 90 days after the effective date of a registration statement previously filed pursuant to a request under the Registration Rights Agreement and otherwise for up to 60 days from the date of a request under the Registration Rights Agreement in certain circumstances. The Tricor Funds also are entitled to participate in certain registered offerings that we may conduct in the future, subject to certain restrictions. We will pay the Tricor Funds’ expenses in connection with the exercise of these rights. The registration rights described in this paragraph apply to (i) shares of our Common Stock held by the Tricor Funds as of the closing of our initial public offering, (ii) any of our capital stock (or that of our subsidiaries) issued or issuable with respect to the Common Stock described in clause (i) with respect to any dividend, distribution, recapitalization, reorganization or certain other corporate transactions, and (iii) any shares of our Common Stock owned or acquired following the closing of our initial public offering by the Tricor Funds (collectively, “Registrable Securities”). These registration rights are also for the benefit of any subsequent holder of Registrable Securities; provided that any particular securities will cease to be Registrable Securities when they have been sold in a registered public offering, sold in compliance with Rule 144 under the Securities Act or repurchased by us or our subsidiaries. In September 2021, we filed a registration statement on Form S-3 with respect to the shares of Common Stock held by the Tricor Funds in compliance with our obligations under the Registration Rights Agreement. +Director Nomination Agreement +In connection with our initial public offering, we entered into a Director Nomination Agreement with the Tricor Funds that provides the Tricor Funds the right to designate nominees for election to our Board for so long as the Tricor Funds collectively beneficially own 5% or more of the total number of shares of our Common Stock then outstanding. The number of nominees that the Tricor Funds are entitled to designate under the Director Nomination Agreement bears the same proportion to the total number of members of our Board as the number of shares of Common Stock beneficially owned by the Tricor Funds bears to the total number of shares of Common Stock outstanding, rounded up to the nearest whole number. In addition, the Tricor Funds shall be entitled to designate the replacement for any of its board designees whose board service terminates prior to the end of such designee’s term regardless of the Tricor Funds’ beneficial ownership at such time. In addition, for so long as the Tricor Funds collectively beneficially own 10% or more of the total number of shares of our Common Stock then outstanding, the Tricor Funds shall also have the right to have their designees participate on committees of our Board, subject to compliance with applicable law and stock exchange rules. The Director Nomination Agreement will terminate at such time as the Tricor Funds collectively own less than 5% of our outstanding Common Stock. Nicholas Peters and Bradley Seaman have been designated by the Tricor Funds as nominees to be included in the Company’s proxy statement commencing in 2016. +Policies and Procedures for Related Party Transactions +Our Board has adopted a written related party transaction policy setting forth the policies and procedures for the review and approval of related party transactions. The policy covers transactions involving us in which the aggregate amount involved in any calendar year will or may be expected to exceed $100,000 and in which a related person has or will have a direct or indirect interest (other than solely as a result of being a director or a less than 10% beneficial owner of another entity). For purposes of this policy, a related person is defined as an executive officer, director, nominee for director, or a greater than 5% beneficial owner of our Common Stock, in each case since the beginning of the most recently completed fiscal year, and any immediate family member of or person sharing a household with any of these individuals. All related party transactions must be presented to the Audit Committee for review, consideration and approval. In approving or rejecting any such proposed transaction, the Audit Committee will consider, among other factors, the related party’s relationship to the Company and interest in the transaction, the material facts of the transaction, the benefits to the Company of the transaction, the availability of other sources of comparable products or services (if applicable), whether the transaction is on terms that are comparable to the terms generally available to an unrelated third party, whether the transaction has the potential to impair director independence and whether the transaction constitutes a conflict of interest. +31 +Table of Contents +STOCKHOLDER PROPOSALS FOR 2023 ANNUAL MEETING OF STOCKHOLDERS +Stockholders who intend to present proposals at the Company’s annual meeting of stockholders in 2023 pursuant to Rule 14a-8 under the Exchange Act must send notice of their proposal to us so that we receive it no later than December 14, 2022. Stockholders who intend to present proposals at the annual meeting of stockholders in 2023 other than pursuant to Rule 14a-8 must comply with the notice provisions in our By-Laws. The notice provisions in our By-Laws require that, for a proposal to be properly brought before the annual meeting of stockholders in 2023, proper notice of the proposal be received by us not less than 90 days nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting; provided, however that in the event next year’s annual meeting is more than 30 days before or after such anniversary date, notice must be delivered not less than the later of 90 days prior to next year’s annual meeting or the 10th day following the day the Company first publicly announces next year’s annual meeting date. Under these requirements, proposals brought under our By-Laws must be received no earlier than January 25, 2023 and no later than February 24, 2023. +In addition to satisfying the foregoing requirements under the By-Laws, to comply with the universal proxy rules (once effective), stockholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must provide notice to the Company that sets forth the information required by Rule 14a-19 under the Exchange Act no later than March 26, 2023. +Stockholder proposals and notices should be addressed to CPI Card Group Inc., 10368 West Centennial Road, Littleton, Colorado 80127; Attention: Sarah Kilgore, Chief Legal and Compliance Officer and Corporate Secretary. +OTHER MATTERS +We know of no other matters to be submitted to the stockholders at the Annual Meeting. If any other matters properly come before the Annual Meeting, persons named in the proxy intend to vote the shares they represent in accordance with their own judgments. +Upon written request by any stockholder entitled to vote at the Annual Meeting, we will promptly furnish, without charge, a copy of the Annual Report on Form 10-K for the fiscal year ended December 31, 2021, which we filed with the SEC, including the financial statements therein. Requests should be addressed to CPI Card Group Inc., 10368 West Centennial Road, Littleton, Colorado 80127; Attention: Sarah Kilgore, Chief Legal and Compliance Officer and Corporate Secretary. +YOUR VOTE IS IMPORTANT. WE URGE YOU TO VOTE TODAY OVER THE TELEPHONE, VIA THE INTERNET OR BY MAIL. +By Order of the Board of Directors, +Sarah Kilgore +Chief Legal and Compliance Officer and Corporate Secretary +32 +Table of Contents +ANNEX A – RECONCILIATION OF NON-GAAP MEASURES +Year Ended December 31, +2021 +2020 +(dollars in thousands) +Reconciliation of net income (GAAP) to EBITDA and Adjusted EBITDA +Net income +$ +15,941 +$ +16,129 +Interest expense, net +30,608 +25,397 +Income tax expense (benefit) +7,881 +(3,305) +Depreciation and amortization +15,098 +16,827 +Net loss from discontinued operations +— +61 +EBITDA +$ +69,528 +$ +55,109 +Adjustments to EBITDA +Sales tax (benefit) expense (1) +(614) +926 +Stock-based compensation expense +1,250 +136 +Severance and other charges (2) +1,250 +1,269 +Loss on debt extinguishment (3) +5,048 +92 +Foreign currency loss (gain) +(15) +7 +Subtotal of adjustments to EBITDA +6,919 +2,430 +Adjusted EBITDA +$ +76,447 +$ +57,539 +Net income margin (% of Net Sales) +4.2 +% +5.2 +% +Net income (decline) (% Change 2021 vs. 2020) +(1.2) +% +Adjusted EBITDA margin (% of Net Sales) +20.4 +% +18.4 +% +Adjusted EBITDA (decline) growth (% Change 2021 vs. 2020) +32.9 +% +(1) Represents estimated sales tax (benefit) expense relating to a contingent liability due to historical activity in certain states where it is probable that the Company will be subject to sales tax plus interest and penalties. During the year ended December 31, 2020, the Company revised its prior period financial statements to adjust immaterial items, primarily due to estimated sales tax expense relating to 2017 through the second quarter of 2020. Refer to Note 2 of the Form 10-K for the year ended December 31, 2021 for an explanation of the immaterial prior period adjustments. +(2) The 2021 amount primarily relates to executive severance charges, and the prior year amounts relate to restructuring severance charges. +(3) The Company terminated and repaid its Senior Credit Facility and First Lien Term Loan during the first quarter of 2021 and expensed the unamortized deferred financing costs and debt discount. Additionally, the Company terminated its previous Revolving Credit Facility during the first quarter of 2020 and expensed the remaining unamortized deferred financing costs. +A-1 +Table of Contents +VIEW MATERIALS & VOTE w SCAN TO CPI CARD GROUP INC. 10368 WEST CENTENNIAL ROAD LITTLETON, COLORADO 80127 VOTE BY INTERNET Before The Meeting - Go to www.proxyvote.com or scan the QR Barcode above Use the Internet to transmit your voting instructions and for electronic delivery of information. Vote by 11:59 p.m. Eastern Time on May 24, 2022. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. During The Meeting - Go to www.virtualshareholdermeeting.com/PMTS2022 You may attend the meeting via the Internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions. Vote by 11:59 p.m. Eastern Time on May 24, 2022. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: D82118-P69098 KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. CPI CARD GROUP INC. The Board of Directors recommends you vote FOR proposals 1, 2 and 3: 1. Election of Directors For Against Abstain Nominees: ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! 1a. Thomas Furey 1b. Robert Pearce 1c. Nicholas Peters 1d. Scott Scheirman 1e. Bradley Seaman 1f. Marc Sheinbaum 1g. Valerie Soranno Keating For Against Abstain ! ! ! ! ! ! 2. Ratification of KPMG LLP as independent registered public accounting firm for the year ending December 31, 2022. 3. Advisory vote to approve named executive officer compensation. NOTE: The proxy holders will have discretion to vote on such other business as may properly come before the meeting or any adjournment thereof. Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date +Table of Contents +Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice and Proxy Statement and Form 10-K are available at www.proxyvote.com. D82119-P69098 CPI CARD GROUP INC. Annual Meeting of Stockholders May 25, 2022 8:00 a.m. Mountain Time This proxy is solicited by the Board of Directors The stockholder(s) hereby appoint(s) each of Sarah Kilgore and Amintore Schenkel as proxy, each with the power to appoint her or his substitute, and hereby authorize(s) her or him to represent and vote, as designated on the reverse side of this ballot, all of the shares of common stock of CPI CARD GROUP INC. that the stockholder(s) is/are entitled to vote at the Annual Meeting of Stockholders to be held virtually at 8:00 a.m. Mountain Time on May 25, 2022, at www.virtualshareholdermeeting.com/PMTS2022, and any adjournment or postponement thereof. This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted in accordance with the Board of Directors' recommendations. Continued and to be signed on reverse side \ No newline at end of file diff --git a/raw/proxies/0001641614/0001558370-22-005342/proxy_rpt.txt b/raw/proxies/0001641614/0001558370-22-005342/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..1697086250a633fda981a6d357f1fd74fd888a71 --- /dev/null +++ b/raw/proxies/0001641614/0001558370-22-005342/proxy_rpt.txt @@ -0,0 +1,10 @@ +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +The following is a description of transactions since January 1, 2020 to which we have been a party in which the amount involved exceeded or will exceed the lesser of $120,000 or one percent of the average of the Company’s total assets at year-end for the last two completed fiscal years and in which any of our directors, executive officers, beneficial holders of more than 5% of our capital stock or entities affiliated with them had or will have a direct or indirect material interest. +Registration Rights Agreement +In connection with our initial public offering, we entered into a registration rights agreement with the Tricor Funds (the “Registration Rights Agreement”). Under the Registration Rights Agreement, the Tricor Funds are entitled to request that we register shares of our Common Stock on a long-form or short-form registration statement on one or more occasions in the future, provided that we will not be obligated to register such shares within 90 days after the effective date of a registration statement previously filed pursuant to a request under the Registration Rights Agreement and otherwise for up to 60 days from the date of a request under the Registration Rights Agreement in certain circumstances. The Tricor Funds also are entitled to participate in certain registered offerings that we may conduct in the future, subject to certain restrictions. We will pay the Tricor Funds’ expenses in connection with the exercise of these rights. The registration rights described in this paragraph apply to (i) shares of our Common Stock held by the Tricor Funds as of the closing of our initial public offering, (ii) any of our capital stock (or that of our subsidiaries) issued or issuable with respect to the Common Stock described in clause (i) with respect to any dividend, distribution, recapitalization, reorganization or certain other corporate transactions, and (iii) any shares of our Common Stock owned or acquired following the closing of our initial public offering by the Tricor Funds (collectively, “Registrable Securities”). These registration rights are also for the benefit of any subsequent holder of Registrable Securities; provided that any particular securities will cease to be Registrable Securities when they have been sold in a registered public offering, sold in compliance with Rule 144 under the Securities Act or repurchased by us or our subsidiaries. In September 2021, we filed a registration statement on Form S-3 with respect to the shares of Common Stock held by the Tricor Funds in compliance with our obligations under the Registration Rights Agreement. +Director Nomination Agreement +In connection with our initial public offering, we entered into a Director Nomination Agreement with the Tricor Funds that provides the Tricor Funds the right to designate nominees for election to our Board for so long as the Tricor Funds collectively beneficially own 5% or more of the total number of shares of our Common Stock then outstanding. The number of nominees that the Tricor Funds are entitled to designate under the Director Nomination Agreement bears the same proportion to the total number of members of our Board as the number of shares of Common Stock beneficially owned by the Tricor Funds bears to the total number of shares of Common Stock outstanding, rounded up to the nearest whole number. In addition, the Tricor Funds shall be entitled to designate the replacement for any of its board designees whose board service terminates prior to the end of such designee’s term regardless of the Tricor Funds’ beneficial ownership at such time. In addition, for so long as the Tricor Funds collectively beneficially own 10% or more of the total number of shares of our Common Stock then outstanding, the Tricor Funds shall also have the right to have their designees participate on committees of our Board, subject to compliance with applicable law and stock exchange rules. The Director Nomination Agreement will terminate at such time as the Tricor Funds collectively own less than 5% of our outstanding Common Stock. Nicholas Peters and Bradley Seaman have been designated by the Tricor Funds as nominees to be included in the Company’s proxy statement commencing in 2016. +Policies and Procedures for Related Party Transactions +Our Board has adopted a written related party transaction policy setting forth the policies and procedures for the review and approval of related party transactions. The policy covers transactions involving us in which the aggregate amount involved in any calendar year will or may be expected to exceed $100,000 and in which a related person has or will have a direct or indirect interest (other than solely as a result of being a director or a less than 10% beneficial owner of another entity). For purposes of this policy, a related person is defined as an executive officer, director, nominee for director, or a greater than 5% beneficial owner of our Common Stock, in each case since the beginning of the most recently completed fiscal year, and any immediate family member of or person sharing a household with any of these individuals. All related party transactions must be presented to the Audit Committee for review, consideration and approval. In approving or rejecting any such proposed transaction, the Audit Committee will consider, among other factors, the related party’s relationship to the Company and interest in the transaction, the material facts of the transaction, the benefits to the Company of the transaction, the availability of other sources of comparable products or services (if applicable), whether the transaction is on terms that are comparable to the terms generally available to an unrelated third party, whether the transaction has the potential to impair director independence and whether the transaction constitutes a conflict of interest. +31 +Table of Contents \ No newline at end of file diff --git a/raw/proxies/0001641614/0001558370-23-005858/proxy.txt b/raw/proxies/0001641614/0001558370-23-005858/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..b69db3a21d32d9f4497aead52dc47bf2ab105473 --- /dev/null +++ b/raw/proxies/0001641614/0001558370-23-005858/proxy.txt @@ -0,0 +1,1566 @@ +DEF 14A +1 +tmb-20230524xdef14a.htm +DEF 14A +Table of Contents +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Proxy Statement Pursuant to Section 14(a) of the +Securities Exchange Act of 1934 +Filed by the Registrant ☑ +Filed by a Party other than the Registrant ☐ +Check the appropriate box: +☐ Preliminary Proxy Statement +☐ Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +☑ Definitive Proxy Statement +☐ Definitive Additional Materials +☐ Soliciting Material Pursuant to §240.14a-12 +CPI Card Group Inc. +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +☑ +No fee required. +☐ +Fee paid previously with preliminary materials. +☐ +Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a6(i)(1) and 0-11. +Table of Contents +10368 West Centennial Road +Littleton, Colorado 80127 +April 13, 2023 +Dear Stockholder: +On behalf of the Board of Directors of CPI Card Group Inc. (the “Company”), you are cordially invited to attend the 2023 Annual Meeting of Stockholders (the “Annual Meeting”) to be held on Wednesday, May 24, 2023, at 8:00 a.m. Mountain Time. The Annual Meeting will be a completely virtual meeting of stockholders, which will be conducted online via live webcast. Please see the Notice of Annual Meeting of Stockholders on the next page for more information about how to attend the Annual Meeting virtually. +We have included with this letter a proxy statement that provides you with detailed information about the business to be conducted at the Annual Meeting. In addition, the Company’s 2022 Annual Report, which is being made available to you along with the proxy statement, contains information about the Company and its performance. We encourage you to read these materials carefully. +Whether or not you plan to attend the Annual Meeting, your vote is important, and we encourage you to vote promptly. You may vote your shares through one of the methods described in the accompanying proxy statement. We strongly urge you to vote FOR the nominees proposed by the Board of Directors and in accordance with the recommendations of the Board of Directors on the other proposals by following the voting instructions contained in the proxy statement. +Sincerely, +Bradley Seaman +Scott Scheirman +Chair of the Board +President, Chief Executive Officer and Director +Table of Contents +CPI CARD GROUP INC. +NOTICE OF ANNUAL MEETING OF STOCKHOLDERS +MAY 24, 2023 8:00 A.M. +(Mountain Time) +To the Stockholders of CPI Card Group Inc.: +The 2023 Annual Meeting of Stockholders will be held virtually on May 24, 2023, at 8:00 a.m. (Mountain Time) via live webcast accessible at www.virtualshareholdermeeting.com/PMTS2023. The purpose of the meeting is to: +1. elect the seven director nominees named in the accompanying proxy statement; +2. ratify the appointment of KPMG LLP as our independent registered public accounting firm for 2023; +3. hold an advisory vote to approve named executive officer compensation; +4. approve an amendment to the Company’s Certificate of Incorporation to reflect new Delaware law provisions regarding officer exculpation; and +5. conduct any other business properly brought before the Annual Meeting or any adjournments or postponements thereof. +Voting is limited to stockholders of record at the close of business on April 3, 2023. +YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE VOTE YOUR SHARES OVER THE TELEPHONE, VIA THE INTERNET OR BY COMPLETING, DATING, SIGNING AND RETURNING A PROXY CARD, AS DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT. YOUR PROMPT COOPERATION IS GREATLY APPRECIATED. +By Order of the Board of Directors, +Sarah Kilgore +Chief Legal and Compliance Officer and Corporate Secretary +Table of Contents +Notice of Electronic Availability of Proxy Statement and Annual Report +As permitted by rules adopted by the United States Securities and Exchange Commission (the “SEC”), we are making this proxy statement and our Annual Report available to stockholders electronically via the Internet. On or about April 13, 2023, we will mail to most of our stockholders a notice (the “Notice”) containing instructions on how to access this proxy statement and our Annual Report and to vote via the Internet. +The Notice also contains instructions on how to request a printed copy of the proxy materials and to vote by mail. In addition, you may elect to receive future proxy materials in printed form by mail or electronically by e-mail by following the instructions included in the Notice. If you have previously elected to receive our proxy materials electronically, you will continue to receive these materials via e-mail unless you elect otherwise. +Table of Contents +TABLE OF CONTENTS +Page +SUMMARY OF THE ANNUAL MEETING +1 +PROPOSAL NO. 1 ELECTION OF DIRECTORS +5 +DIRECTORS AND CORPORATE GOVERNANCE +6 +Director Nominee Biographical Information and Qualifications +6 +Board Diversity +7 +Director Selection Process +7 +Recommendation of Directors by Stockholders +7 +Independence of Directors +8 +Board’s Role in Risk Oversight +8 +Board/Committee Areas of Risk Oversight and Actions +9 +Corporate Governance +10 +Other Board Information +10 +Director Compensation +12 +Security Ownership of Certain Beneficial Owners, Directors and Management +13 +EXECUTIVE OFFICERS +14 +EXECUTIVE COMPENSATION +15 +2022 NEOs +15 +2022 Business Overview Business Highlights +15 +Additional highlights of 2022 performance +16 +Summary of Our 2022 Compensation Decisions +16 +Executive Compensation Governance Highlights +18 +2022 Say-on-Pay Vote +18 +Role of the Compensation Committee +18 +Role of the Independent Compensation Consultant +18 +Role of Market Data and the Peer Group +19 +Elements of the 2022 Executive Compensation Program +19 +Base Salary +20 +Short-Term Incentives +21 +Actual 2022 Payouts +21 +Long-Term Incentives +22 +Other Benefits +22 +Termination or Change in Control +22 +Additional Compensation Governance Practices +22 +2022 Summary Compensation Table +23 +Outstanding Equity Awards at 2022 Fiscal Year-End +23 +Employment and Post-Termination Arrangements +24 +Equity Compensation Plan Information Table +27 +AUDIT COMMITTEE REPORT +28 +FEES PAID TO INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +28 +PROPOSAL NO. 2 RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +30 +PROPOSAL NO. 3 STOCKHOLDER ADVISORY VOTE TO APPROVE OUR NAMED EXECUTIVE OFFICER COMPENSATION +31 +PROPOSAL NO. 4 APPROVAL OF AN AMENDMENT TO THE COMPANY’S CERTIFICATE OF INCORPORATION TO REFLECT NEW DELAWARE LAW PROVISIONS REGARDING OFFICER EXCULPATION +32 +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +33 +Policies and Procedures for Related Party Transactions +33 +STOCKHOLDER PROPOSALS FOR 2024 ANNUAL MEETING OF STOCKHOLDERS +34 +OTHER MATTERS +34 +Annex A – Reconciliation of Non-GAAP Measures +A-1 +Table of Contents +CPI CARD GROUP INC. +10368 West Centennial Road +Littleton, Colorado 80127 +SUMMARY OF THE ANNUAL MEETING +This proxy statement contains information related to the 2023 Annual Meeting of Stockholders (the “Annual Meeting”) of CPI Card Group Inc. (referred to herein as the “Company,” “CPI,” “we,” “us” or “our” as the context requires) to be held via live webcast accessible at www.virtualshareholdermeeting.com/PMTS2023. +Why did you send me this proxy statement? +We sent you this proxy statement because the Board of Directors of the Company (the “Board”) is soliciting, on the Company’s behalf, your proxy to vote at the Annual Meeting and at any postponements or adjournments of the Annual Meeting. This proxy statement summarizes information that is intended to assist you in making an informed vote on the proposals described in this proxy statement. +Who can vote at the Annual Meeting? +Only stockholders of record as of the record date are entitled to vote at the Annual Meeting. The record date to determine stockholders entitled to notice of and to vote at the Annual Meeting is the close of business on April 3, 2023. On the record date, there were 11,424,628 shares of our common stock, par value $0.001 per share (the “Common Stock”), outstanding. Our Common Stock is the only class of voting securities outstanding. +How many shares must be present to conduct the Annual Meeting? +We must have a quorum present virtually or by proxy to conduct the Annual Meeting. A quorum is established when a majority of shares entitled to vote is present virtually or represented by proxy at the Annual Meeting. Abstentions and broker non-votes (as described below) are counted for purposes of determining whether a quorum is present. +What matters are to be voted on at the Annual Meeting? +The agenda for the Annual Meeting is to: +1. elect the seven director nominees named in this proxy statement; +2. ratify the appointment of KPMG LLP as our independent registered public accounting firm for 2023; +3. hold an advisory vote to approve named executive officer compensation (the “Say-on-Pay Proposal”); +4. approve an amendment to the Company’s Certificate of Incorporation to reflect new Delaware law provisions regarding officer exculpation; and +5. conduct any other business properly brought before the Annual Meeting or any adjournments or postponements thereof. +As of the date of this proxy statement, we do not know of any other matters to be presented at the Annual Meeting. If any other matters properly come before the Annual Meeting, however, the persons named as proxies will be authorized to vote or otherwise act in accordance with their judgment. +How does the Board recommend that I vote? +The Board recommends that you vote: +1. FOR the election of each of the director nominees named in this proxy statement; +2. FOR the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for 2023; and +3. FOR the Say-on-Pay Proposal; and +4. FOR the proposed amendment to the Company’s Certificate of Incorporation. +1 +Table of Contents +How do I vote at the Annual Meeting? +You may vote via the Internet during the Annual Meeting or by proxy in advance of the Annual Meeting. If you are a stockholder of record, there are three ways to vote by proxy: +● By Telephone — If you request printed copies of the proxy materials by mail, you will receive a proxy card and you can vote by telephone by following the instructions on your proxy card. You will need to use the control number appearing on your proxy card to vote by telephone. +● By Internet — You can vote via the Internet by following the instructions on your Notice or proxy card. You will need to use the control number appearing on your Notice or proxy card to vote via the Internet. +● By Mail — If you request printed copies of the proxy materials by mail, you will receive a proxy card and you can vote by completing, dating and signing the proxy card and returning it in the envelope provided. +If you are a beneficial owner of shares held in “street name” through a bank, broker or other nominee, you may vote as follows: +● By Telephone — If you request printed copies of the proxy materials by mail, you will receive a voting instruction form and you can vote by telephone by following the instructions on the voting instruction form. The availability of telephone voting may depend on the voting process of the organization that holds your shares. +● By Internet — You can vote via the Internet by following the instructions on your Notice or voting instruction form. The availability of Internet voting may depend on the voting process of the organization that holds your shares. +● By Mail — If you request printed copies of the proxy materials by mail, you will receive a voting instruction form and you can vote by proxy by completing, dating and signing the voting instruction form and returning it in the envelope provided. +Telephone and Internet voting facilities for stockholders of record will be available 24 hours a day. You may vote over the telephone or via the Internet until 11:59 p.m. Eastern Time on May 23, 2023. Even if you plan to attend the Annual Meeting virtually, we recommend that you also submit your proxy or voting instructions as described above so that your vote will be counted if you later decide not to attend the Annual Meeting. +Your proxy will be voted in accordance with your instructions, so long as, in the case of a proxy card returned by mail, such card has been signed and dated and is received before the Annual Meeting. If you vote your shares via the Internet, over the telephone or by executing and returning a proxy card by mail but you do not provide specific instructions with respect to the proposals, your shares will be voted FOR each director nominee named in this proxy statement, FOR the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for 2023, FOR the Say-on-Pay Proposal and FOR the proposed amendment to the Company’s Certificate of Incorporation. +As of the date of this proxy statement, we do not know of any matters to be presented at the Annual Meeting except those described in this proxy statement. If any other matters properly come before the Annual Meeting, however, the persons named as proxies will be authorized to vote or otherwise act in accordance with their judgment. +What does it mean if I receive more than one Notice of internet availability, e-mail or set of proxy materials? +You may receive more than one Notice, more than one e-mail or multiple proxy cards or voting instruction forms. For example, if you hold your shares in more than one brokerage account, you may receive a separate Notice, a separate e-mail or a separate voting instruction form for each brokerage account in which you hold shares. Also, if you are a stockholder of record and your shares are registered in more than one name, you may receive more than one Notice, more than one e-mail or more than one proxy card. To vote all of your shares by proxy, you must complete, date, sign and return each proxy card and voting instruction form that you receive, or vote over the telephone or via the Internet the shares represented by each Notice, e-mail, proxy card or voting instruction form that you receive. +May I change my vote? +Yes. You may revoke your proxy at any time before it is voted at the Annual Meeting. To change your vote, if you are a stockholder of record, you may submit another later dated proxy over the telephone or via the Internet no later than 11:59 p.m. Eastern Time on May 23, 2023 or by mail such that it is received prior to the Annual Meeting, or by voting your shares during the Annual Meeting (your attendance at the Annual Meeting will not, by itself, revoke your proxy; you must vote at the Annual Meeting to revoke your proxy). If you are a beneficial owner and your shares are held in street name, you may change your vote by submitting new voting instructions to your bank, broker or other nominee, or you may change your vote by attending and voting at the Annual Meeting. +What happens if my bank or broker holds my shares in “street name” and I do not give any voting instructions? +If you hold your shares in “street name” through a bank, broker or other nominee, such bank, broker or nominee will vote those shares in accordance with your instructions. To so instruct your bank, broker or nominee, you should refer to the information provided to you by such entity. Without instructions from you, a bank, broker or nominee will be permitted to exercise its own voting discretion only with +2 +Table of Contents +respect to so-called “routine matters” but will not be permitted to exercise voting discretion with respect to “non-routine matters.” The Company believes that the proposal to ratify KPMG LLP’s appointment as the Company’s independent registered public accounting firm for 2023 (Proposal No. 2) is a routine matter on which brokers will be permitted to vote shares on your behalf, even without your instructions. Other than Proposal No. 2, the Company believes that all proposals set forth in this proxy statement are not considered routine matters, and brokers will thus not be able to vote on your behalf if you have not furnished voting instructions to them. Thus, if you do not give your bank, broker or nominee specific voting instructions with respect to Proposal No. 2, your shares will be voted in such entity’s discretion. If you do not give your bank, broker or nominee specific instructions with respect to the other proposals herein, your shares will not be voted on such proposals. This is called a “broker non-vote.” Shares represented by such broker non-votes will be counted in determining whether there is a quorum, but will have no effect on the non-routine proposals (other than Proposal No. 4). We urge you to promptly provide your bank, broker or nominee with appropriate voting instructions so that all your shares may be voted at the Annual Meeting. +What vote is required to elect directors and approve the other matters described in this proxy statement? +The Company’s Third Amended and Restated By-Laws (the “By-Laws”) require that directors be elected by the majority of votes cast with respect to such director in uncontested elections (the number of shares voted “for” a director nominee must exceed the number of votes cast “against” that nominee with abstentions and broker non-votes not counted as votes “for” or “against”). In a contested election (a situation in which the number of nominees exceeds the number of directors to be elected, which we do not expect to occur for the Annual Meeting), the standard for election of directors will be a plurality of the shares represented in person or by proxy at any such meeting and entitled to vote on the election of directors. +The ratification of the appointment of KPMG LLP as our independent registered public accounting firm for 2023 (Proposal No. 2) and the Say-on-Pay Proposal (Proposal No. 3) each require the affirmative vote of the holders of a majority of the shares of Common Stock present in person or represented by proxy at the Annual Meeting and entitled to vote thereon. Stockholders attending the virtual Annual Meeting via webcast are deemed to be present “in person.” The proposed amendment to the Company’s Certificate of Incorporation (Proposal No. 4) requires the affirmative vote of the holders of a majority of the shares of Common Stock entitled to vote generally in the election of directors at the Annual Meeting. +Broker non-votes are not counted as votes cast and therefore have no effect on Proposal No. 1. As stated above, because Proposal No. 2 is a routine matter, if you do not give your bank, broker or other nominee specific voting instruction with respect to Proposal No. 2, your shares will be voted in such entity’s discretion, and no broker non-votes are expected on such proposal. Broker non-votes will have no effect on Proposal No. 3 because it is a non-routine matter on which brokers are not permitted to vote without your voting instruction. Broker non-votes will be counted as present and entitled to vote for purposes of Proposal No. 4 and will therefore have the effect of a negative vote. +Abstentions will not be voted but will be counted for purposes of determining whether there is a quorum and have the same effect of a vote “against” a proposal other than the proposal to elect directors (Proposal No. 1), on which they have no effect. +What is the difference between holding shares as a stockholder of record and as a beneficial owner? +If your shares are registered in your name on the Company’s books and records or with our transfer agent, you are the “stockholder of record” of those shares, and this proxy statement and accompanying materials have been provided directly to you by the Company. On the other hand, if you purchased your shares through a brokerage or other financial intermediary, the brokerage or other financial intermediary will automatically put your shares into “street name,” which means that the brokerage or other financial intermediary will hold your shares in its name or another nominee’s name and not in your name, but will keep records showing you as the “beneficial owner.” If you hold shares beneficially in street name, this proxy statement and accompanying materials have been forwarded to you by your broker, bank or other holder of record. +How many votes do I have? +Each share of Common Stock that you hold as of the record date entitles you to one vote, without cumulation, on each matter to be voted upon at the Annual Meeting. +How will the votes be counted at the Annual Meeting? +The votes will be counted by the independent inspector of election appointed for the Annual Meeting. +How will the Company announce the voting results? +The Company will report the final results of the voting at the Annual Meeting in a filing with the SEC on a Current Report on Form 8-K within four business days after the date of the Annual Meeting. +Who pays for the Company’s solicitation of proxies? +The Board, on behalf of the Company, is soliciting your proxy to vote your shares of Common Stock at our Annual Meeting. The Company will bear the cost of soliciting proxies, including preparing, printing and mailing this proxy statement. Proxies may be solicited personally, or by mail, e-mail or telephone by certain of our directors, officers, employees or representatives. Our directors and employees +3 +Table of Contents +will not be paid any additional compensation for soliciting proxies. We may reimburse brokerage firms and other persons representing beneficial owners of shares for their out-of-pocket expenses in forwarding solicitation materials to such beneficial owners . +What is “householding” and how does it work? +Under the rules adopted by the SEC, we may deliver a single copy of the Notice or proxy materials to one address shared by two or more of our stockholders. This delivery method is referred to as “householding” and can reduce the environmental impact of our Annual Meeting and result in significant cost savings for the Company. To take advantage of this opportunity, we have delivered only one copy of the Notice and, if you requested printed versions by mail, this proxy statement and the Annual Report, to multiple stockholders who share an address, unless we received contrary instructions from the impacted stockholders prior to the mailing date. If you would like to either participate in householding or receive separate copies of future proxy materials, please contact Broadridge Financial Solutions, Inc. by calling 1-866-540-7095 or by mail at 51 Mercedes Way, Edgewood, New York 11717, Attention: Householding Department. If you are a beneficial owner of shares held in street name and would like to participate in householding, you may contact the organization that holds your shares. +What do I need for admission to the Annual Meeting and how do I vote at the Annual Meeting? +You are entitled to participate in the Annual Meeting if you were a stockholder as of the close of business on April 3, 2023, the record date. To be admitted to and participate in the Annual Meeting, you must follow the instructions and use the information found on your proxy card, voting instruction form or Notice. The Annual Meeting will be held in a virtual-only format on Wednesday, May 24, 2023 at 8:00 a.m. Mountain Time. The virtual meeting and live webcast can be accessed at www.virtualshareholdermeeting.com/PMTS2023. You will not be able to attend the Annual Meeting in person. +You may vote during the Annual Meeting by following the instructions available at www.virtualshareholdermeeting.com/PMTS2023 during the Annual Meeting. Whether or not you plan to attend the Annual Meeting, you are encouraged to vote in advance by one of the methods described in this proxy statement. +May stockholders ask questions at the Annual Meeting? +Yes. Stockholders will have the ability to submit questions during the Annual Meeting via the virtual meeting website. During the Annual Meeting, we will hold a live Q&A session, during which we intend to answer all questions submitted during the meeting that are pertinent to the Company and the meeting matters in accordance with the Annual Meeting’s Rules of Conduct and as time permits. +What if I have technical difficulties or trouble accessing the Annual Meeting? +If you encounter any difficulties while accessing the virtual meeting during the check-in or meeting time, a technical assistance phone number will be made available on the virtual meeting registration page beginning 15 minutes prior to the start time of the Annual Meeting. +4 +Table of Contents +PROPOSAL NO. 1 +ELECTION OF DIRECTORS +Upon the recommendation of our Nominating and Corporate Governance Committee (the “Nominating Committee”), the Board has nominated the seven individuals listed below to stand for election to the Board for a one-year term ending at the annual meeting of stockholders in 2024 and until their successors, if any, are duly elected or appointed. Each director nominee must receive the affirmative vote of a majority of the votes cast in order to be elected (i.e., the number of votes cast “for” a director nominee must exceed the number of votes cast “against” that nominee, and abstentions and broker non-votes will not be counted as votes “for” or “against” a nominee). Unless contrary instructions are given, the shares represented by your proxy will be voted FOR the election of all director nominees. The Board has determined that each director nominee, other than Mr. Scott Scheirman, is an independent director, as further described below in “Directors and Corporate Governance — Independence of Directors.” +All of the director nominees listed below have consented to being named in this proxy statement and to serving if elected. However, if any of the below nominees becomes unable or unwilling to serve prior to the date of the Annual Meeting, proxy holders will have discretion and authority to vote for another nominee proposed by our Board. Alternatively, our Board may reduce the number of directors to be elected at the Annual Meeting. +Name +Position +Thomas Furey +Director +Nicholas Peters +Director +H. Sanford Riley +Director Nominee +Scott Scheirman +Director, President and Chief Executive Officer +Bradley Seaman +Chair of the Board +Marc Sheinbaum +Director +Valerie Soranno Keating +Director +Biographical information relating to each of the director nominees is set forth below under “Directors and Corporate Governance — Director Nominee Biographical Information and Qualifications.” +THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THE DIRECTOR NOMINEES NAMED IN THIS PROXY STATEMENT. +5 +Table of Contents +DIRECTORS AND CORPORATE GOVERNANCE +Director Nominee Biographical Information and Qualifications +Set forth below is a description of the business experience of each director nominee, as well as their relevant qualifications, skills and experiences. Each director nominee listed below, other than H. Sanford Riley, is a current director nominated for reelection to the Board for a term expiring at the annual meeting of stockholders in 2024. See “Election of Directors (Proposal No. 1).” +Thomas Furey , 58, has served on our Board of Directors since May 2021. Mr. Furey currently serves as the Chairman and Chief Executive Officer of Sagetech Avionics, Inc. (“Sagetech”), a privately held aerospace electronics company. Sagetech was incorporated in 2019 after a divisional carve out from Sagetech Corporation, for which Mr. Furey held the position of Chief Operating Officer since 2015. From 2014 to 2015, Mr. Furey served as Vice President of manufacturing and engineering at Unitec, Inc., a point-of-sale payments equipment company, before which he ran his own operations consultancy firm from 2012 to 2013. From 2004 to 2012, Mr. Furey held various executive positions at Standard Register Company, including Vice President of manufacturing, Chief Supply Chain Officer and President of Standard Register’s industrial business. From 2001 to 2004, Mr. Furey was in charge of North American operations for Avery Dennison Corporation (NYSE:AVY), a label materials manufacturer. Mr. Furey also held positions of increasing responsibility in manufacturing leadership at AlliedSignal, Inc. (which acquired Honeywell Inc. in 1999 and took its name) from 1994 to 2001 and was selected as the AlliedSignal fellow to the “Leaders for Manufacturing” program at the Massachusetts Institute of Technology (“MIT”) from 1997 to 1999. He began his career as a Naval Flight Officer in the U.S. Navy. Mr. Furey holds a Bachelor of Science degree in Mathematics from the U.S. Naval Academy, a Master of Science degree in Industrial Engineering from California State University Northridge, as well as a Master of Science degree in Mechanical Engineering and a Master of Business Administration degree from MIT. Mr. Furey brings to the Board extensive experience in high volume manufacturing, operations and executive leadership. +Nicholas Peters , 50, has served on our Board of Directors since 2007. Mr. Peters is a Managing Director at Parallel49 Equity (formerly Tricor Pacific Capital), a private equity firm that makes control investments in lower middle market companies in the United States and Canada, which he joined in 2002, and also began serving as Parallel49 Equity’s Chief Financial Officer in 2012. Prior to joining Parallel49 Equity, Mr. Peters was a Senior Manager at Arthur Andersen LLP in Chicago. Mr. Peters is the Chairman of the Questco Companies and serves on the board of several other Parallel49 Equity investment companies as well as non-Parallel49 Equity investment companies. Mr. Peters holds a Bachelor of Science degree in Business Administration from the University of Dayton in Ohio. He is a Certified Public Accountant (inactive) and is affiliated with the American Institute of Certified Public Accountants and the Ohio Society of CPAs. Mr. Peters brings to the Board strong finance and accounting skills, as well as valuable experience from his oversight of the management and operations of several of Parallel49 Equity’s investment companies. +H. Sanford Riley , 72, has served as President and CEO of Richardson Financial Group Limited, a specialized financial services company, since 2003. Prior to this, he served for 10 years as President and CEO and later Chairman of Investor Group, Inc., Canada’s largest mutual fund company. Mr. Riley has served as a member the board of directors of Molson Coors (NYSE: TAP) since 2015 and RF Capital Group Inc. (TSX: RCG) since 2021. In addition, Mr. Riley previously served as a director of Canadian Western Bank (TSX: CWB) from 2011 to 2022, The North West Company (TSX: NWC) from 2002 to 2022, and Manitoba Hydro, where he also served as Chairman of the board of directors from 2016 to 2018. Mr. Riley is also involved with various community organizations, including serving as Chairman of the University of Winnipeg Foundation past Chancellor of the University of Winnipeg and past Chairman of the Manitoba Business Council. Mr. Riley holds a J.D. from Osgoode Hall Law School, a Bachelor of Arts degree from Queen’s University and is a Member of the Order of Manitoba and the Order of Canada. +Scott Scheirman, 60, has served as our President and Chief Executive Officer since October 2017 and on our Board of Directors since October 2016. Prior to joining the Company, Mr. Scheirman served as the Chief Executive Officer and a co-founder of JKL Ventures LLC, a private investment and strategic advisory firm, since February 2014. Prior to JKL Ventures LLC, Mr. Scheirman served as the Executive Vice President and Chief Financial Officer of The Western Union Company (“Western Union”) (NYSE:WU) from September 2006 to December 2013. Prior to joining Western Union, Mr. Scheirman held a variety of executive leadership and financial officer roles at First Data Corporation (NYSE:FDC) and began his career at Ernst & Young LLP. Mr. Scheirman holds a Bachelor of Science degree in Business Administration with an emphasis in Accounting from the University of Northern Colorado. Mr. Scheirman brings to the Board extensive strategic planning, finance, risk management, international, public company and corporate governance experience, and through his position as our Chief Executive Officer, he brings to the Board management’s perspective over a full range of issues affecting the Company. +Bradley Seaman, 63 , has served on our Board of Directors since 2007 and currently serves as Chair of the Board. Mr. Seaman has been employed, since August 1999, by Parallel49 Equity (formerly Tricor Pacific Capital), a private equity firm that makes control investments in lower middle market companies in the United States and Canada. From 1999 through December 2011, Mr. Seaman served as Parallel49 Equity’s Managing Director and leader of its U.S. operations, and, since January 2012, has served as its Managing Partner, responsible for leading overall firm operations, strategy, funding and investments. Prior to joining Parallel49 Equity, from 1990 through July 1999, Mr. Seaman was employed by GE Capital Corporation (“GE Capital”) where he held a number of increasingly senior positions in GE Capital’s Transportation & Industrial Funding and Commercial Finance units. In 1994, Mr. Seaman was selected to be part of a new group that was established to focus GE Capital’s debt and equity products on the emerging private equity market, and, in that capacity and in his last role before leaving GE Capital, he headed GE Capital’s offices in New York City and Chicago. Mr. Seaman is also a member of the board of directors of Steel Dynamics, Inc. (Nasdaq:STLD). Mr. Seaman holds a Bachelor of Science degree in Business Administration from Bowling Green State University and a Master of Business Administration degree from the University of Dallas. He brings to the Board a comprehensive understanding of and experience in capital markets and management and has operational and corporate governance experience drawn from his involvement in the management and oversight of Parallel49 Equity’s investment companies. +6 +Table of Contents +Marc Sheinbaum, 65, has served on our Board of Directors since November 2019. Since January 2017, Mr. Sheinbaum has been an advisor to venture capital and private equity firms. From April 2014 to August 2016, he was the President, Chief Executive Officer and a director of Higher One Holdings, Inc. (NYSE:ONE), a payments technology provider for higher education. From February 2007 through March 2013, Mr. Sheinbaum was the Senior Vice President and Chief Executive Officer of Retail, Auto and Education Finance at JPMorgan Chase & Co. (NYSE:JPM). Earlier in his career, Mr. Sheinbaum held positions at GE Capital Corporation and American Express Company (NYSE:AXP), as well as Coopers & Lybrand Management Consulting. Mr. Sheinbaum holds a Bachelor of Science degree in Management Science from State University of New York at Albany and a Master of Business Administration degree from New York University. He brings considerable experience in payments and consumer financial services as well as public company leadership. +Valerie Soranno Keating , 59, has served on our Board of Directors since May 2018. Ms. Soranno Keating has been senior advisor to a number of private equity firms in the U.S. and Europe since 2017. From November 2009 through May 2015, she was the Chief Executive Officer of Barclaycard, the global payments division of Barclays PLC (NYSE:BCS), with $60 billion in assets and over 30 million customers throughout the U.S., Europe and South Africa. Before joining Barclays PLC, Ms. Soranno Keating held a variety of executive positions at American Express Company (NYSE:AXP) from May 1993 through May 2009, including President, Travelers Cheques & Prepaid Services, Executive Vice President Global Commercial Services, Executive Vice President Global Merchant Services, Emerging Global Businesses & Network Expansion, and Vice President Corporate Strategic Planning. Ms. Soranno Keating also serves as a director on the boards of other public and private companies, including One Main Financial (NYSE:OMF), FinServ Acquisition Corp. II (Nasdaq:FSRX), Engage People Inc. and Billhighway Management LLC. Ms. Soranno Keating holds a Bachelor of Science degree in Business Administration from Lehigh University. She brings to the Board wide-ranging experience in both executive and board roles across a broad spectrum of payments and related businesses. +Board Diversity +Board Diversity Matrix (As of April 13, 2023) +Total Number of Directors +6 +Part I: Gender Identity +Female +Male +Directors +1 +5 +Part II: Demographic Background +White +1 +5 +In addition to the diversity categories identified above, one of our directors is a military veteran. +Director Selection Process +The Nominating Committee works with the Board to determine periodically, as appropriate, the desired Board qualifications, expertise and characteristics, and recommends candidates to the Board based on these criteria. In identifying director candidates, the Nominating Committee accepts recommendations from current or former directors, search firms retained by the Nominating Committee to assist in identifying and evaluating potential candidates, stockholders, Company executives and by self-nomination. In evaluating director candidates, regardless of the source of recommendation, the Nominating Committee generally considers factors such as business experience, high ethical standards and integrity, skills, understanding of CPI’s business environment and willingness to devote adequate time to Board duties. The Company’s Corporate Governance Guidelines also provide that the Nominating Committee shall work with the Board to determine eligibility to serve as a director of CPI, which includes weighing the aforementioned factors and evaluating each individual in the context of the membership of the Board as a group, with the objective of having a group that can best perpetuate the success of CPI’s business and represent stockholder interests through the exercise of sound judgment using the Board’s diversity of background and experience in various areas. The Board does not have a specific policy on diversity, but the Company’s Corporate Governance Guidelines provide that, with respect to Board diversity, the Nominating Committee may consider such factors as differences in professional background, education, skill and other individual qualities and attributes that contribute to the total mix of viewpoints and experience represented on the Board. +The Nominating Committee periodically retains a third-party executive search firm to assist in the identification and evaluation of director candidates. +In determining whether to recommend a director for re-election, the Nominating Committee considers the director’s past attendance at meetings, participation in and contributions to the activities of the Board (including Board committees) and the Company, the director’s adherence to standards of high character and integrity, as well as other qualifications and characteristics set forth in the Nominating Committee charter. +Recommendation of Directors by Stockholders +In accordance with its charter, the Nominating Committee will consider any candidate for election as a director of the Company recommended by any CPI stockholder, provided that the recommending stockholder follows the procedures set forth in Section 2.10(a) of +7 +Table of Contents +the Company’s By-Laws for nominations by stockholders of persons to serve as directors (except for directors nominated by the Tricor Funds (defined below), as described in the paragraph immediately below). The Nominating Committee evaluates director candidates recommended by CPI stockholders (except for the Tricor Funds) in the same manner by which it evaluates other director candidates considered by the Nominating Committee, as described above. +Two of our stockholders, Tricor Pacific Capital Partners (Fund IV), LP and Tricor Pacific Capital Partners (Fund IV) US, LP (together, the “Tricor Funds”), have the right to collectively designate nominees for election to our Board of Directors for so long as the Tricor Funds collectively beneficially own 5% or more of the total number of shares of Common Stock then outstanding, pursuant to a Director Nomination Agreement entered into between the Company and the Tricor Funds in connection with our initial public offering. The number of nominees that the Tricor Funds are entitled to designate under the Director Nomination Agreement bears the same proportion to the total number of members of our Board of Directors as the number of shares of Common Stock beneficially owned by the Tricor Funds bears to the total number of shares of Common Stock outstanding, rounded up to the nearest whole number. Pursuant to the Director Nomination Agreement, the Company agrees to use its best efforts to ensure that director nominees of the Tricor Funds are included in the Board’s slate of nominees submitted to the stockholders for election at each annual meeting. Thus, the Nominating Committee would not evaluate director candidates nominated by the Tricor Funds and make a determination regarding their suitability for nomination in the manner described above. Refer to “Certain Relationships and Related Party Transactions - Director Nomination Agreement” for a description of the Tricor Funds’ right to designate nominees. +Pursuant to Section 2.10(a) of the By-Laws, nominations of persons for election to the Board at a meeting of stockholders may be made by any stockholder of the Company entitled to vote for the election of directors at such meeting who sends a timely notice in writing to our Corporate Secretary. To be timely, a stockholder’s notice must be delivered to our Corporate Secretary at the Company’s principal executive offices not less than 90 nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting; provided, however, that if the annual meeting is more than 30 days prior to or after the anniversary of the preceding year’s annual meeting, notice by the stockholder must be delivered not later than the close of business on the later of the 90th day prior to such annual meeting or the 10th day following the day on which public announcement of the date of such annual meeting is made by the Company. As set forth in the By-Laws, a stockholder’s notice is required to contain certain prescribed information. +Recommendations or notices relating to director nominations should be sent to CPI Card Group Inc., 10368 West Centennial Road, Littleton, Colorado 80127; Attention: Sarah Kilgore, Chief Legal and Compliance Officer and Corporate Secretary. +In February 2023, the Company received a letter from Steamboat Capital Partners Master Fund, LP (“Steamboat”), whose investment manager is a beneficial holder of approximately 5.1% of our outstanding Common Stock, purporting to give notice (the “Notice Letter”) of Steamboat’s intention to nominate a director candidate for election to our Board of Directors at the Annual Meeting. After due consideration, evaluation and consultation with legal counsel, our Board of Directors determined that the Notice Letter was materially deficient and did not meet numerous requirements set forth in the Company’s By-Laws. As a result, the Company does not believe that Steamboat is entitled to nominate a director for election to the Board of Directors at the Annual Meeting. On March 23, 2023, the Company sent to Steamboat a response letter to that effect. Steamboat’s Notice Letter included a statement that Steamboat does not intend to file a proxy statement or engage in a solicitation of proxies in connection with the Annual Meeting, and as of the date of this proxy statement, Steamboat has given no further indication of an intent to solicit proxies for the Annual Meeting. Therefore, the Company does not expect a “solicitation in opposition” as defined under Exchange Act Rule 14a-6(a) at the Annual Meeting. +Independence of Directors +The Company’s Corporate Governance Guidelines provide that a majority of the members of the Board, and each member of the Audit Committee of the Board (the “Audit Committee”), the Compensation Committee of the Board (the “Compensation Committee”) and Nominating Committee, must meet the criteria for independence set forth under applicable law and the rules and standards of any applicable national securities exchange or inter-dealer quotation system (the “Market Rules”). No director qualifies as independent unless the Board determines that the director has no relationship with the Company which would interfere with the exercise of independent judgment in carrying out his or her responsibilities as a director. These independence guidelines are part of our Corporate Governance Guidelines, available on our website at investor.cpicardgroup.com. The Board considers all relevant facts and circumstances of which it is aware in making an independence determination with respect to any director. +The Board has made independence determinations with respect to each of our directors and director nominees. Based on the Market Rules, the Board has affirmatively determined that each of Ms. Soranno Keating, and Messrs. Furey, Pearce, Peters, Riley, Seaman and Sheinbaum are independent within the meaning of the Market Rules. +Board’s Role in Risk Oversight +Risk assessment and oversight are an integral part of our governance and management processes. The Board is responsible for overseeing the development and execution of the Company’s strategic plans and for understanding the associated risks and actions that management is taking to manage and mitigate those risks. Our enterprise risk management process is designed to facilitate the identification, assessment and management of certain key risks that the Company may encounter and which may impact our ability to achieve our strategic objectives. The enterprise risk management function supplements management’s ongoing responsibilities to monitor and address risks by providing for a process by which risk owners identify causes of and action plans for certain risks, which then are discussed with senior management. This process includes reviewing for potential short-term risks (monitoring monthly or quarterly) and long-term risks (monitoring annually or longer). In addition to utilizing an internal audit team to help identify and monitor risks and to +8 +Table of Contents +periodically assess and update the Company’s risk management framework, the Company also utilizes other risk management techniques such as working with outside advisors to conduct mock identification and response exercises for training purposes and reports significant findings to the Board. +The Chief Executive Officer and other senior management, including the Chief Financial Officer and Chief Legal and Compliance Officer (each of whom report directly to the Chief Executive Officer), may review specific risks with the Board throughout the year, as necessary and appropriate, including as a result of the Chair or the Board requesting more frequent updates or information about specific risks. In reviewing specific risks with the Board, senior management may incorporate reports and presentations from outside advisors and consultants designed to advise with respect to future threats and trends and risk identification, management, and mitigation actions, strategies and processes, as well as to discuss with, and obtain input from, the Board. +Pursuant to its charter, the Audit Committee is responsible for oversight of the Company’s policies with respect to risk assessment and risk management and discussing with management the major risk exposures facing the Company and the steps the Company has taken to monitor and mitigate, where possible, such exposures. Periodically, the Company’s Chief Executive Officer, Chief Financial Officer, Chief Legal and Compliance Officer, Chief Technology Officer, Chief Accounting Officer and Internal Audit Director, among other select members of the Company’s management, as appropriate, present to the Audit Committee a description of management’s view of the most significant risks facing the Company and participate in discussions with the Audit Committee regarding those risks and any mitigating factors, plans or policies in place to address and monitor such risks. +While the Audit Committee is charged with primary oversight of risk, the Board and the Board committees oversee risks associated with their principal areas of focus, as summarized below. The committee chairs regularly report to the full Board regarding their risk oversight activities, and the Board regularly reviews and discusses the most significant risks facing the Company and management’s process for identifying, prioritizing and responding to those risks. Depending on the immediacy of the identified risk, the Board may take additional oversight steps, including meeting more frequently to receive updates from management and engaging outside advisors for advice regarding mitigation or remediation of such risks. +Board/Committee Areas of Risk Oversight and Actions +● +● +● +Full Board +● +Evaluates reports received from management and makes inquiries of management as appropriate +● +Reviews with management material strategic, operational, financial, human capital, cybersecurity, compensation and compliance risks +● +Considers specific risk topics in connection with strategic planning and other matters +● +Manages risk oversight and related activities conducted by Board committees through reports of the committee chairs to the Board +Audit +Committee +● +Assesses periodic management reports on the enterprise risk management process and risks identified through that process +● +Discusses with management the Company’s specific processes for assessing and managing risks, including identifying the Company’s major financial and other enterprise risk exposures and the steps necessary to monitor and control such exposures +● +Assesses periodic management reports on financial and compliance risks, including privacy and data security +● +Meets at least quarterly with the Company’s Chief Legal and Compliance Officer regarding the Company’s ethics and compliance processes and practices +● +Meets periodically with senior management and our independent auditor, KPMG LLP, to, among other things, review and discuss the external audit plan as well as critical audit matters and reports on such meetings to the Board +● +Receives regular updates from the Company’s Director of Internal Audit and approves the Company’s internal audit plan +● +Receives regular updates from the Company’s Chief Technology Officer regarding information security matters +Compensation +Committee +● +Oversees the review and evaluation of the risks associated with our compensation policies and practices +● +Reviews the Company’s strategies and policies related to human capital management, including with respect to matters such as diversity and inclusion, employee engagement and talent development +9 +Table of Contents +Governance +Committee +● +Oversees the review and evaluation of the risks associated with our governance structure, policies and processes +● +Oversees the Company’s environmental, social and governance risks, efforts, progress and disclosures +● +Reviews, approves and recommends to the Board (where appropriate) updates, as necessary, to our organizational documents, Corporate Governance Guidelines and other governance related policies +Corporate Governance +The Board has approved Corporate Governance Guidelines and a Code of Business Conduct and Ethics, as well as a Code of Conduct for Financial Officers that is applicable to our Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer. Our corporate governance documents, including the Corporate Governance Guidelines, the Code of Business Conduct and Ethics, the Code of Conduct for Financial Officers and committee charters, are available on our website at investor.cpicardgroup.com or in printed form upon request by contacting CPI Card Group Inc. at 10368 West Centennial Road, Littleton, Colorado 80127, Attention: Investor Relations. The Board regularly reviews corporate governance developments and modifies these documents as warranted. Any modifications will be reflected on our website. The information on our website is not part of this proxy statement and is not deemed to be incorporated by reference herein. +Other Board Information +Leadership Structure of the Board +Bradley Seaman serves as our Chair of the Board, and Scott Scheirman serves as our Chief Executive Officer (“CEO”). Our Board has decided to maintain separate Chair and CEO roles to allow our CEO to focus on the development and execution of our business strategy, while allowing the Chair to lead the Board in its fundamental role of providing advice to, and independent oversight of, management. The Board recognizes the time, effort and energy that the CEO is required to devote to his position in the current business environment as well as the commitment required to serve as our Chair. While our By-Laws and Corporate Governance Guidelines do not require that our Chair and CEO positions be separate, the Board believes that having separate positions and having an independent director serve as Chair is the appropriate leadership structure for us at this time. +Board Meetings +In fiscal year 2022, our Board held 22 meetings. In addition to our Board meetings, our directors attend meetings of committees established by our Board on which they serve. Each of CPI’s directors attended at least 75% of the meetings of our Board and the committees on which he or she served during 2022 that were held when he or she was a director. Each of our directors is expected to attend each meeting of the Board and is strongly encouraged to attend each annual stockholder meeting, as provided in our Corporate Governance Guidelines. All of our directors attended the 2022 annual meeting of stockholders. +Meetings of Non-Employee Directors +In accordance with our Corporate Governance Guidelines, our non-employee directors meet regularly in executive sessions of the Board without management present. Mr. Bradley Seaman, our Chair of the Board, presides over these executive sessions. In the event that Mr. Seaman is not available to lead these meetings, the presiding director is chosen by the non-employee directors in attendance. +Committees of the Board +The Board has three standing committees: the Audit Committee, the Compensation Committee and the Nominating Committee. In an effort to strengthen the Board’s succession planning initiatives and also in connection with the departure of former director Robert Pearce, the Board restructured its committee composition in early 2023. The Nominating Committee, in conjunction with the Board, will continue to evaluate committee composition to enhance the overall governance function of the Board of Directors. The following chart sets forth the directors who currently serve as members of each of the Board committees as of the date of this proxy statement. +Audit +Compensation +Nominating +Directors +Committee +Committee +Committee +Thomas Furey +X +X +Nicholas Peters +C +X +Scott Scheirman +Bradley Seaman* +X +Marc Sheinbaum +C +X +X +Valerie Soranno Keating +X +C +* Chair of the Board +“C” Denotes member and chair of committee +“X” Denotes member +10 +Table of Contents +Audit Committee +The Audit Committee held eight meetings in 2022. The Board has determined that all of the members of the Audit Committee meet the independence criteria for purposes of serving on an audit committee under the applicable rules of The Nasdaq Stock Market (“Nasdaq”) and Rule 10A-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In addition, our Board has determined that Mr. Sheinbaum qualifies as an “audit committee financial expert,” as such term is defined in Item 407(d)(5) of Regulation S-K. The Audit Committee operates under a written charter setting forth its functions and responsibilities. A copy of the current charter is available on our website at investor.cpicardgroup.com or in printed form upon request. Refer to “Audit Committee Report” for a summary description of the Audit Committee’s functions and responsibilities. +Compensation Committee +The Compensation Committee held seven meetings in 2022. The Board has determined that all of the members of the Compensation Committee are independent as defined in Nasdaq rules. The Compensation Committee has overall responsibility for approving and evaluating the Company’s director and executive officer compensation plans, policies and programs and reviewing the disclosure of such plans, policies and programs to our stockholders in the Company’s annual proxy statement. The Compensation Committee utilizes an independent compensation consultant to assist it in its duties, and it may delegate certain of its authority to a subcommittee of the Compensation Committee, the CEO or another executive officer, including with respect to matters relating to the compensation of the Company’s employees other than the Company’s CEO and executive officers. The Compensation Committee operates under a written charter setting forth its functions and responsibilities. A copy of the current charter is available on our website at investor.cpicardgroup.com or in printed form upon request. +In consultation with the Company’s management, the Compensation Committee approves the Company’s executive compensation philosophy and oversees and monitors the Company’s executive compensation policies, plans and programs for the executive officers to assess whether they are consistent with the Company’s compensation philosophy and objectives, as well as the long-term interests of the Company’s stockholders. The Compensation Committee also evaluates and makes recommendations to the Board regarding the adequacy and effectiveness of non-employee director compensation. Our human resources executives and staff support the Compensation Committee in its work. These members of management work with compensation consultants (whose engagements have been approved by the Compensation Committee), accountants and legal counsel, as necessary, to implement the Compensation Committee’s decisions, monitor evolving competitive practices and make compensation recommendations to the Compensation Committee. Our human resources management, in conjunction with our independent compensation consultant, develops specific compensation recommendations for executive officers, which are first reviewed by senior management and then presented to the Compensation Committee. The Compensation Committee has final authority to approve, modify or reject such recommendations in its sole discretion and to make its decisions in executive session. The Compensation Committee approves all compensation of our executive officers, including equity awards. +Since 2018, the Compensation Committee has engaged Willis Towers Watson (“WTW”) as its independent compensation consultant. WTW reports directly to the Compensation Committee, including with respect to management’s recommendations of compensation programs and awards. The Compensation Committee has the sole authority to approve the scope and terms of the engagement of WTW and to terminate such engagement. WTW assisted the Compensation Committee with the development of competitive market data, compensation program design and related assessments of the Company’s executive and director compensation levels, evaluation of annual and long-term incentive compensation strategy and compilation and review of total compensation data for the Company’s NEOs (as defined in “Executive Compensation”). The Company paid WTW approximately $87,000 for the executive and director compensation consulting services described above in 2022. Additionally, Company management decided to engage WTW to provide other professional consulting services in 2022 (unrelated to executive compensation) primarily related to health and benefits programs in an amount totaling approximately $59,000. +The Compensation Committee has reviewed the independence of WTW in light of SEC rules regarding compensation consultants and has concluded that WTW’s work for the Compensation Committee does not raise any conflict of interest. +Nominating and Corporate Governance Committee +The Nominating Committee held six meetings in 2022. The Board has determined that all of the members of the Nominating Committee are independent as defined in Nasdaq rules. +The Nominating Committee is responsible for, among other things: (i) identifying individuals qualified to become members of the Board, consistent with criteria approved by the Board; (ii) recommending director nominees to the Board for election at the next annual meeting of the stockholders of the Company; (iii) in the event of a vacancy on or an increase in the size of the Board, recommending director nominees to the Board to fill such vacancy or newly established Board seat; (iv) recommending directors to the Board for membership on each committee of the Board; (v) establishing and reviewing annually our Corporate Governance Guidelines and Code of Business Conduct and Ethics; and (vi) overseeing the Company’s environmental, social and governance efforts, progress and disclosures. The Nominating Committee operates under a written charter setting forth its functions and responsibilities. A copy of the current charter is available on our website at investor.cpicardgroup.com or in printed form upon request. +11 +Table of Contents +Compensation Committee Interlocks and Insider Participation +None of the members of our Compensation Committee has in the past served as an officer or employee of the Company. None of the members of our Compensation Committee has any relationship requiring disclosure as a related party transaction. None of our executive officers currently serves, or in the past year has served, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on our Board or Compensation Committee. +Communications to the Board +Stockholders and interested parties can contact the Board or any director or group of directors (including the Chair and the independent directors) through written communication sent to CPI Card Group Inc., 10368 West Centennial Road, Littleton, Colorado 80127, Attention: Sarah Kilgore, Chief Legal and Compliance Officer and Corporate Secretary. Our Corporate Secretary reviews all written communications and forwards to the Board copies of any such correspondence that is directed to the Board that, in the opinion of the Corporate Secretary, deals with the functions of the Board or Board committees or that she otherwise determines requires the Board’s or any Board committee’s attention. Concerns relating to accounting, internal accounting controls or auditing matters are immediately brought to the attention of our Audit Committee Chair, or may be submitted to the Audit Committee Chair in accordance with our Whistleblower Policy (available on our website), and such concerns will be handled in accordance with procedures established by the Audit Committee with respect to such matters. From time to time, the Board may change the process by which stockholders may communicate with the Board. Any such changes will be reflected in our Corporate Governance Guidelines, which are posted on our website at investor.cpicardgroup.com. +Director Compensation +In 2021, the Company conducted an extensive review of its overall compensation policies and practices which included compensation paid to its non-employee directors. As a result of the review, in September 2021 the Company revised its director compensation program and modified its cash and non-cash equity compensation elements. These changes included reducing the directors’ annual cash retainer, correspondingly increasing the amount of annual equity award grants and making uniform the annual fees paid for committee membership and chair positions. All cash fees are paid to directors on a quarterly basis unless otherwise indicated and are prorated for any partial service periods. The following table sets forth our compensation program for our non-employee directors in 2022: +Compensation Element +Value +Annual Cash Retainer +$ +50,000 +Annual Equity Award (1) +$ +100,000 +Chairman of the Board Annual Cash Fee +$ +30,000 +Committee Chair Annual Cash Fee +$ +15,000 +Committee Member Annual Cash Fee +$ +7,500 +(1) In connection with the adoption of the revised compensation program effective September 21, 2021, an equity award was granted to each director on that date in the form of a grant of restricted stock units (“RSUs”) which vested on March 21, 2023. Although the director compensation program approved by the Board effective September 21, 2021 contemplates an equity award with an annual value of $100,000 and vesting after a period of 12 months, due to the timing of these grants, the Board approved RSU awards in September 2021, each with a grant date fair value equal to $150,000 and vesting 18 months from the award date, sized in recognition that the grants represented awards for the period beginning on the grant date and ending on the date of the next equity grant. As a result, the number of shares of each grant on September 21, 2021 was determined by dividing $150,000 by the closing stock price on the award date and rounding down to the nearest whole share. Beginning in 2023, equity awards to directors under our director compensation program will be granted quarterly with a grant date fair value of $25,000 and scheduled to vest 12 months from the date of grant. Each RSU represents the right to receive one share of Common Stock of the Company upon vesting of such RSU. +12 +Table of Contents +The following table summarizes the annual compensation for our non-employee directors during 2022. Mr. Scheirman, our President and Chief Executive Officer, does not receive any additional compensation for his service on the Board. Please see the “2022 Summary Compensation Table” for a summary of the compensation received by Mr. Scheirman with respect to 2022. No non-employee directors were granted equity awards in 2022, thus those columns are omitted from the table below. +2022 DIRECTOR COMPENSATION +Fees +Earned +Or Paid +Name +In Cash +Stock Awards (1) +Total +Thomas Furey +$ +57,500 +$ +— +$ +57,500 +Robert Pearce +$ +72,500 +$ +— +$ +72,500 +Nicholas Peters +$ +72,500 +$ +— +$ +72,500 +Bradley Seaman +$ +87,500 +$ +— +$ +87,500 +Marc Sheinbaum +$ +65,000 +$ +— +$ +65,000 +Valerie Soranno Keating +$ +72,500 +$ +— +$ +72,500 +(1) As of December 31, 2022, each of the non-employee directors that served on our Board during 2022 had 5,064 RSUs outstanding and no other equity awards outstanding as of such date. +Security Ownership of Certain Beneficial Owners, Directors and Management +The following table sets forth, as of April 3, 2023 (except as indicated below), beneficial ownership, as defined by SEC rules, of our Common Stock. Each of the persons listed below has sole voting and investment power with respect to the beneficially owned shares listed unless otherwise indicated. For purposes of the following table, beneficial ownership is determined in accordance with Exchange Act Rule 13d-3. The percentage calculations set forth in the table are based on 11,424,628 shares of Common Stock outstanding on April 3, 2023 rather than based on the percentages set forth in stockholders’ Schedules 13G or 13D, as applicable, filed with the SEC . +Number of +Shares of +Percentage of +Common +Common +Stock +Stock +Owned +Owned +Beneficially +Beneficially +5% Beneficial Owners: +Tricor Pacific Capital Partners (Fund IV), Limited Partnership (1) +4,124,368 +36.1 +% +Tricor Pacific Capital Partners (Fund IV) US, Limited Partnership (1) +2,434,457 +21.3 +% +Steamboat Capital Partners, LLC (2) +582,454 +5.1 +% +Named Executive Officers, Directors and Director Nominees: +Thomas Furey +5,064 +* +Nicholas Peters +35,064 +* +H. Sanford Riley +— +* +Scott Scheirman +338,798 +2.9 +% +Bradley Seaman +5,064 +* +Marc Sheinbaum +6,943 +* +Valerie Soranno Keating +23,861 +* +John Lowe +90,096 +* +Lane Dubin +80,569 +* +Total Executive Officers and Directors as a Group (14 individuals) +656,571 +5.4 +% +* +Less than 1% +(1) Based on a Schedule 13G filed jointly by the Tricor Funds, and Parallel49 Equity, ULC on February 12, 2016, as adjusted to give effect to the 1-for-5 reverse stock split we completed on December 20, 2017. Each of the Tricor Funds is managed by Parallel49 Equity, ULC, as the general partner. An investment committee of the Tricor Funds has the power to vote or dispose of the shares held by the Tricor Funds. The investment committee is comprised of Mr. Bradley Seaman, Mr. David Rowntree, J. Trevor Johnstone and Roderick Senft. Each of Messrs. Seaman and Peters is an officer or member of the Tricor Funds and has an indirect pecuniary interest in the shares of Common Stock held by the Tricor Funds through their respective interests in the Tricor Funds. Each of Messrs. Seaman and Peters expressly disclaims any beneficial ownership of any shares of Common Stock held by the Tricor Funds. The address of the Tricor Funds is c/o Parallel49 Equity, 225 East Deerpath Road, Suite 200, Lake Forest, IL 60045. +13 +Table of Contents +(2) Based on a Schedule 13D/A jointly filed by Steamboat Capital Partners, LLC (“Steamboat”) and Mr. Parsa Kiai, the managing member of Steamboat, on April 12, 2023. According to the Schedule 13D/A, as of April 3, 2023 Steamboat and Mr. Kiai may each be deemed to be the beneficial owner of 582,454 shares of Common Stock, each with sole voting power with respect to such shares. According to the Schedule 13D/A, as of April 11, 2023 Steamboat and Mr. Kiai may each have sole investment power with respect to 565,445 shares . The address of each of Steamboat and Mr. Kiai is 31 Old Wagon Road, Old Greenwich, CT 06870. +EXECUTIVE OFFICERS +The following table sets forth certain information concerning each of our executive officers: +Name +Age +Position +Scott Scheirman +60 +President, Chief Executive Officer and Director +Donna Abbey +47 +Chief Accounting Officer and Controller +Lane Dubin +54 +Executive Vice President and Chief Development and Digital Officer +Sarah Kilgore +55 +Chief Legal and Compliance Officer and Corporate Secretary +John Lowe +46 +Executive Vice President, End-to-End Solutions +Peggy O'Leary +47 +Senior Vice President Prepaid Solutions +Amintore Schenkel +56 +Chief Financial Officer and Treasurer +Sonya Vollmer +49 +Chief Human Resources Officer +Beth Williams +47 +Chief Technology Officer +Scott Scheirman. See “Directors and Corporate Governance” for Mr. Scheirman’s biographical information. +Donna Abbey has served as our Controller and Chief Accounting Officer since March 2022. Prior to joining the Company Ms. Abbey provided financial and accounting consulting services to clients in various industries from January 2020 to March 2022. Prior to that, Ms. Abbey held roles of increasing responsibility at Western Union, a multinational financial services company, from October 2010 to September 2018, including Vice President of Financial Reporting, Governance & Consolidations and Chief of Staff to the Chief Executive Officer. Prior to joining Western Union, Ms. Abbey worked in the audit practice of KPMG LLP, a multinational professional services and accounting firm, from January 2003 to September 2010. Ms. Abbey holds a Bachelor of Science degree in Business Administration from Colorado State University and is a Certified Public Accountant in the State of Colorado. +Lane Dubin has served as our Executive Vice President and Chief Development and Digital Officer since December 2022. Prior to that, he served as the Company’s Senior Vice President and General Manager of Personalization, Prepaid and Instant Issuance since January 2020. From January 2018 to December 2019, he served as the Company’s Senior Vice President and General Manager of Prepaid and Instant Issuance. Mr. Dubin joined the Company as Senior Vice President, Sales and Marketing in August 2016. Prior to joining the Company, Mr. Dubin served at American Express Company from 1992 to 2015. Most recently, he was the Head of Global Sales at American Express Global Business Travel from 2008 to 2015, and Vice President, Business Development – North America, at American Express Global Business Travel from 2003 to 2008. Prior to these roles, Mr. Dubin held roles of increasing responsibility with American Express, including Vice President-Business Development, Financial Education Services for American Express Financial Advisors and Director of Sales and Business Development for Ketera Technologies, a technology start-up incubated by American Express. Mr. Dubin holds a Bachelor of Arts degree in Economics and Business Administration from Ursinus College. +Sarah Kilgore has served as our Chief Legal and Compliance Officer and Corporate Secretary since December 2017. Prior to joining the Company, Ms. Kilgore was Of Counsel with Moye White LLP, a law firm based in Denver, since June 2017. Prior to Moye White LLP, Ms. Kilgore founded and provided legal services through Kilgore Legal Group, LLC from 2011 through 2015. Prior to establishing Kilgore Legal Group, LLC, Ms. Kilgore served as Associate General Counsel, Governance and Securities for Western Union, a multinational financial services company, from 2006 to 2011. Prior to her role at Western Union, she held various legal positions at First Data Corporation and AT&T Corp., and was a corporate attorney in private practice. Ms. Kilgore earned her Juris Doctor degree from the University of Michigan Law School and received her Bachelor’s Degree in Business Administration from Michigan State University. +John Lowe has served as our Executive Vice President, End-to End Solutions since December 2022. Prior to that, he served as our Senior Vice President and General Manager of Secure Card since October 2021. From July 2018 to October 2021, Mr. Lowe served as the Company’s Chief Financial Officer. Prior to joining the Company, Mr. Lowe served as Chief Financial Officer of SquareTwo Financial Corporation, a financial services company, from August 2014 until June 2017. Prior to August 2014, Mr. Lowe held various leadership roles of increasing responsibility at SquareTwo Financial Corporation, including serving as Treasurer, Vice President of Finance and Vice President of External Reporting. Mr. Lowe’s employment with SquareTwo Financial Corporation commenced in 2009. SquareTwo Financial Corporation filed for Chapter 11 bankruptcy protection in March 2017 in connection with a strategic sale of the Company. Mr. Lowe holds a Bachelor of Science degree in both Accounting and Finance from the Virginia Polytechnic Institute and State University. Mr. Lowe is also a Chartered Financial Analyst. +Margaret “Peggy” O’Leary has served as our Senior Vice President Prepaid Solutions since December 2022. She previously served as the Company’s Vice President of Sales of Prepaid, Personalization Solutions, and Instant Issuance since January 2020. Ms. O’Leary joined CPI in April 2017 as Director of Sales and Client Services for Prepaid Solutions. Prior to joining the Company, Ms. O’Leary served as the Vice President Business Development for Jingit, a payments platform to drive consumer loyalty and engagement, since 2012. Prior to 2012, Ms. O’Leary held a variety of positions with increasing responsibilities including sales management, channel management, sales and client services at companies such as InteliSpend, Maritz, and Hallmark. Ms. O’Leary is a graduate of Hamline University and holds a Bachelor of Arts degree in Psychology. +14 +Table of Contents +Amintore Schenkel has served as our Chief Financial Officer since October 2021. Prior to joining the Company, Mr. Schenkel served as Senior Vice President, Chief Accounting Officer & Controller of Western Union, a multinational financial services company, from 2006 to 2020. Additionally, he held a variety of financial roles of increasing responsibility at First Data Corporation from 2001 to 2006. Prior to joining First Data Corporation, Mr. Schenkel was with Ernst & Young for 12 years. Most recently, he served as Managing Member and provided consulting services through InterContinental Advisory and Accounting Services LLC, an entity that he founded in 2020. Mr. Schenkel has over 30 years of executive finance, accounting and operations experience. Mr. Schenkel earned both a Bachelor of Science in Accounting degree and a Master of Accountancy degree from the University of Denver and is a Certified Public Accountant in the State of Colorado. +Sonya Vollmer has served as our Chief Human Resources Officer since January 2022. Ms. Vollmer joined the Company in February 2021 as Director of Total Rewards and assumed the role of interim Chief Human Resources Officer in August 2021. Prior to joining the Company, Ms. Vollmer held positions of increasing responsibility at Charter Manufacturing Company, a metals manufacturing business, from February 2013 to February 2021, most recently serving as Director of Total Rewards. Prior to 2013, Ms. Vollmer held human resources leadership roles across a variety of manufacturing companies, including in the healthcare/life sciences, industrial automation and metals industries. She also served in consulting roles with Hewitt Associates (now Aon), and her own consulting firm. Ms. Vollmer holds a Bachelor of Arts degree in Economics from the University of Wisconsin-Parkside, and an Executive Master of Business Administration from the University of Wisconsin-Milwaukee. +Beth Williams has served as our Chief Technology Officer since January 2020, and she previously served in roles with CPI as Technology Director, Instant Issuance and Prepaid from January 2018 to January 2020, and as Director of Personalization Solutions from 2016 to 2017. Prior to joining CPI, Ms. Williams served in various leadership roles at EFT Source, Inc., including Chief Information Officer and Software Development Manager and Lead Software Developer from 2007 to 2015. Prior to 2007, Ms. Williams held a variety of positions of increasing responsibility, including programming, web and software development and analysis at KeyBank, Deloitte Consulting, NFIB, PIC (Sygen international subsidiary) and Vanderbilt University Medical Center. Ms. Williams holds a Bachelor of Business Administration - MIS from Ohio University. +EXECUTIVE COMPENSATION +The following narrative describes our executive compensation program and the decisions of the Compensation Committee regarding the fiscal year 2022 compensation of our named executive officers (“NEOs”). The Company qualifies as a “smaller reporting company” in accordance with Rule 12b-2 of the Exchange Act. For as long as we are a smaller reporting company, we are not required to include a Compensation Discussion and Analysis section in this proxy statement and have elected to comply with the scaled-down executive compensation disclosure requirements. +2022 NEOs +For fiscal year 2022, our NEOs were: +Scott Scheirman +President, Chief Executive Officer and Director +Lane Dubin +Executive Vice President and Chief Development and Digital Officer +John Lowe +Executive Vice President, End-to-End Solutions +2022 Business Overview +Business Highlights +Our executive team was pivotal in delivering the Company’s strong financial performance in 2022, including: +● Total Net Sales (1) of $475.7 million, up 27% year-over year; +● Net Income of $36.5 million, up 129% year-over-year; and +● Adjusted EBITDA (2) of $97.7 million, up 28% year-over-year. +15 +Table of Contents +Additional highlights of 2022 performance ($ in millions) +(1) The term Net Sales, as defined in the STIP (as defined below), is consistent with “Total Net Sales,” as included in the Company’s consolidated financial statements. +(2) Adjusted EBITDA is not a measurement of financial performance prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) . See Annex A hereto for a reconciliation to Net Income, the most directly comparable GAAP financial measure. +In 2022, the Company produced strong results, growing sales across our Debit and Credit segment and our Prepaid Debit segment, including strong sales of our innovative eco-focused cards, expanded distribution of our leading Software-as-a-Service-based instant issuance solution, and continued growth in contactless card delivery, supporting the ongoing conversion to these cards in the U.S. market. We believe the achievement of these results is due to our executive team’s focus on delivering against our strategic plan and continuing to execute on our four key strategies: deep customer focus; market-leading quality products and customer service; continuous innovation; and a market competitive business model. +For further details, we encourage you to review the financial results set forth in our Form 10-K for the fiscal year ended December 31, 2022. +As described in this “Executive Compensation” section, we believe our compensation program focuses on performance-based compensation elements and provides alignment with the Company’s financial and strategic priorities as well as stockholder interests. We have structured our compensation design features to incentivize our NEOs and other executive officers to pursue performance that increases stockholder value by rewarding top-line growth, profitability and non-financial business imperatives, and we employ competitive compensation levels to drive the retention, performance and engagement of our executive team, including our NEOs. Further, our programs are designed to incentivize over-achievement of goals by awarding compensation consistent with above-market performance when the Company exceeds its performance goals, as we did in 2022. +Summary of Our 2022 Compensation Decisions +The principal components of our 2022 executive compensation program consisted of (i) base salary, (ii) short-term incentives delivered in the form of quarterly cash payments and (iii) long-term incentives delivered entirely in the form of equity awards. We believe these components provide the appropriate mix of compensation to recruit and retain top-level talent, motivate our executive team to achieve the Company’s near-term financial objectives, and align compensation with stockholder value, all of which incentivize our executive team to continue improving our business. Part of this strategy involves utilizing a short-term incentive plan (“STIP”) that rewards short-term incentive goal achievement with cash payments, as well as a long-term incentive plan (“LTIP”) which utilizes the Company’s 2021 Omnibus Incentive Plan ("Omnibus Incentive Plan”) to grant stock options (“Options”) and restricted stock units (“RSUs”). +In 2021, the Company conducted an extensive review of its overall compensation policies and practices, which included its executive officer compensation program. As a result of the review, in September 2021 the Company modified its executive compensation program. Prior to this time, the Company had generally ceased using equity awards because they were viewed as an ineffective compensation vehicle in light of the Company’s stock price and dilutive impact on stockholder value and also due to the fact that the Omnibus Incentive Plan lacked a sufficient number of shares to make market-competitive awards. Following an amendment to the Omnibus Plan approved by stockholders in 2021, and as our common stock price improved, the Compensation Committee returned to the market practice of granting equity-based long-term incentive awards to its executives, as evidenced by the award of Options and RSUs in 2020 and 2021 as a portion or all of the long-term incentive awards. +In connection with the adoption of the revised compensation program effective September 21, 2021, an equity award was granted to each executive officer on that date in the form of Options and RSUs, which vest 50% each on the first and second anniversaries of the grant date. Although the executive compensation program contemplates an annual LTIP equity award component, due to the timing of these grants, they were sized in recognition that the grants represented awards for the period beginning on the September 21, 2021 grant date with a vesting event occurring in each of 2022 and 2023 and with the date of the next equity grant occurring in first quarter of 2023. As a result, there were no equity awards granted to the NEOs in 2022, other than promotions and new hires, as the 2021 grant was designed to compensate for 18 months of equity awards. +16 +Table of Contents +The Compensation Committee makes all decisions regarding our NEOs’ total compensation (base salary, short-term incentives and long-term incentives). +● +● +● +● +● +Factors that Guided 2022 Compensation Decisions +● +Our executive compensation philosophy +● +Degree of achievement of key financial goals for 2022 +● +Recommendations of our CEO (other than with respect to his own compensation) +● +Advice of the Compensation Committee’s independent compensation consultant +● +Market pay and governance best practices +● +Historical CPI compensation +2022 Compensation Program Changes and Key Decisions +Base Salary +In February 2022, the Compensation Committee approved the following increases in base salaries in consideration of our NEOs’ performance, review of competitive market data and internal pay equity: +● +CEO : Mr. Scheirman received a base salary increase of 9.8 %, effective March 6, 2022. +● +Other NEOs : Mr. Dubin received a base salary increase of 4 .0%, effective March 6, 2022. Mr. Lowe did not receive a base salary increase in 2022 due to his increase effective October 5, 2021, in recognition of his change in responsibilities in 2021 . +See “Elements of the 2022 Executive Compensation Program — Base Salary” for more information. +2022 Short-Term Incentive Plan (“2022 STIP”) +The 2022 STIP emphasizes pay-for-performance and the achievement of critical near-term performance milestones. Under the 2022 STIP, the NEOs were eligible to earn quarterly cash bonus awards based on the achievement of pre-established financial goals (specifically the metrics were based on a weighting of 70% for Adjusted EBITDA and 30% for Net Sales). Each NEO’s individual incentive opportunity is determined by the Compensation Committee following a review of competitive market data and internal pay equity. Each of the NEOs received an increase in his 2022 STIP target as compared with the 2021 STIP target, with Mr. Scheirman’s target increasing by 9.5%, Mr. Dubin’s target increasing by 6.7% and Mr. Lowe’s target increasing by 13.0%. Such increases in STIP targets for 2022 increased the portion of our NEOs’ pay which was at-risk and directly tied to Company performance. +Based on the Company’s strong above-target performance during 2022, the 2022 STIP payouts were at the maximum level of 200% of target for the NEOs. +See “Elements of the 2022 Executive Compensation Program — Short-Term Incentives” for more information. +2022 Long-Term Incentive Plan +As described above, in connection with the modification to the executive compensation +program in September 2021, awards granted at that time were designed to compensate for +18 months of equity awards. As a result, in 2022, there were no RSUs or Options granted to +the NEOs. +Compensation Peer Group +The Compensation Committee reviewed and affirmed our compensation peer group in 2022 and there were no changes from the prior year. The compensation peer group is comprised of companies that meet at least one of the following criteria: +● +Similar in size and complexity to CPI (primarily based on revenue and EBITDA); +● +In a similar or related technology-oriented industry; or +● +In competition with CPI for executive talent. +See “ Role of Market Data and the Peer Group” for more information. +17 +Table of Contents +Executive Compensation Governance Highlights +The Compensation Committee reviews on an ongoing basis the Company’s executive compensation practices to evaluate whether they support the Company’s executive compensation philosophy and are aligned with stockholder interests. Our 2022 executive compensation practices include the following, each of which the Compensation Committee believes is supportive of our executive compensation philosophy and the interests of our stockholders: +What We Do +What We Don’t Do +✓ +Deliver a significant portion of compensation through performance-based, at-risk pay +✓ +Maintain a peer group for evaluating competitive market practices +✓ +Set pre-established performance targets designed to be challenging +✓ +Regularly review risks associated with compensation +✓ +Consult with an independent consultant on compensation levels and practices +✓ +Provide no executive perquisites +✓ +Maintain a clawback policy +✓ +Annual say-on-pay vote +X +Provide automatic, annual increases in executive salaries +X +Maintain uncapped executive incentive plans +X +Award single-trigger cash severance in connection with a change in control +X +Re-price stock options without the prior approval of our stockholders +X +Permit hedging or pledging of equity +X +Enter into supplemental executive retirement plans +X +Provide excise tax gross-ups on termination-related payments +2022 Say-on-Pay Vote +In its compensation review process, the Compensation Committee considers whether the Company’s executive compensation program is aligned with the interests of the Company’s stockholders. As part of its review of the Company’s executive compensation program, the Compensation Committee considered the approval by approximately 98% of the votes cast for the Company’s say-on-pay vote at our 2022 Annual Meeting of Stockholders. The Compensation Committee determined that the Company’s executive compensation philosophies and objectives and compensation elements continued to be appropriate and did not make any changes to the Company’s executive compensation program in response to the 2022 say-on-pay vote. However, as noted above, in 2021, the Company reintroduced 100% equity-denominated awards into the Company’s long-term incentive program following stockholder approval to increase the total number of shares of CPI common stock available for issuance under the Omnibus Incentive Plan. The 2022 fiscal year represents the first full year of this change to deliver long-term incentives as 100% equity since 2018, and equity awards granted in September 2021 were designed as part of the 2022 compensation program. +Role of the Compensation Committee +In consultation with the CEO, the Compensation Committee establishes the general policies relating to senior management compensation and oversees the development and administration of such compensation programs. Our human resources executives and staff support the Compensation Committee in its work to implement the Compensation Committee’s decisions, monitor evolving competitive practices and make compensation recommendations to the Compensation Committee. Our human resources management, in conjunction with our independent compensation consultant, develops specific compensation recommendations for senior executives, which are first reviewed by senior management and then presented to the Compensation Committee. The Compensation Committee has final authority to approve, modify or reject these recommendations in its sole discretion. Members of management do not attend the portions of the Compensation Committee meetings relating to their own compensation, and the Compensation Committee regularly conducts executive sessions without management present. The Compensation Committee approves all compensation of our executive officers, including equity awards. +Role of the Independent Compensation Consultant +Since 2018, the Compensation Committee has engaged WTW as its independent compensation consultant. WTW is engaged by and reports directly to the Compensation Committee. The Compensation Committee has the sole authority to approve the scope and terms of the engagement of WTW and to terminate such engagement. In 2022, WTW assisted the Compensation Committee with the development of competitive market data, compensation program design and related assessments of the Company’s executive and director compensation levels, evaluation of short-term and long-term incentive compensation strategy, and compilation and review of total compensation data for the Company’s NEOs. +18 +Table of Contents +The Compensation Committee has reviewed the independence of WTW in light of SEC rules regarding compensation consultants and has concluded that WTW is independent and its work for the Compensation Committee does not raise any conflict of interest. +Role of Market Data and the Peer Group +In order to gauge the competitiveness of our compensation program and to provide our NEOs with fair and market-competitive compensation, the Compensation Committee reviewed compensation practices and pay opportunities from general industry survey data as well as from a selection of publicly traded peer companies, as provided by WTW. The Company attempts to position itself to attract and retain qualified senior executives in the face of competitive pressures in its relevant labor markets, and we design our compensation practices with this goal in mind. +Specifically, in 2022, WTW analyzed information regarding the pay practices of a compensation peer group (as described below) to assist the Compensation Committee in determining pay for our Chief Executive Officer. In addition, the Company analyzed the pay practices of similarly sized general industry companies in the WTW Executive Compensation Database to assist the Compensation Committee in determining pay for our other executive officers. The compensation data resulting from this analysis was considered by the Compensation Committee in making 2022 executive compensation decisions. +The Compensation Committee reviewed and affirmed our compensation peer group in 2022The compensation peer group is comprised of companies that meet at least one of the following criteria: +● Similar in size and complexity to CPI (primarily based on revenue and EBITDA); +● In a similar or related technology-oriented industry; or +● In competition with CPI for executive talent. +Therefore, the following peer group was used for 2022 compensation benchmarking purposes: +Executive Compensation Peer Group +Altium Limited +DSP Group, Inc. +Inseego Corp. +Cantaloupe, Inc. +EVERTEC, Inc. +Key Tronic Corporation +Cass Information Systems, Inc. +FormFactor, Inc. +Lattice Semiconductor Corporation +Consumer Portfolio Services, Inc. +GreenSky, Inc. +SigmaTron International, Inc. +Elements of the 2022 Executive Compensation Program +Our 2022 executive compensation program consisted of fixed pay and variable pay, including cash and non-cash components. The chart below summarizes the various elements of CPI’s 2022 executive compensation program and the objective and key features of each element. Although equity awards were not granted to our NEOs in 2022, we have included them in this chart as the 2021 grants were +19 +Table of Contents +sized to include a grant value for 2022 and are viewed by the Compensation Committee to be a component of the 2022 executive compensation program. +Objective +Type of +Compensation +Key Features +Base Salary +A standard compensation element in executive compensation packages, offering market competitive fixed compensation to attract and retain talent +Cash +● +Reflects individual skills, experience, responsibilities and performance over time +● +Provides a consistent source of income +Short-Term +Incentive +A cash-based award that encourages executives to focus on specific short-term corporate and/or business unit performance goals. +Cash +● +Performance-based award tied to achievement of critical short-term financial goals and priorities +● +Pays only if threshold performance levels are met or exceeded +Long-Term +Incentive — +RSUs +Rewards stockholder value creation, enhances executive stock ownership and promotes retention +Equity +● +At-risk award, with value based exclusively upon the value of the Company’s Common Stock +● +Aligns executive and stockholder interests +Long-Term +Incentive — +Options +Rewards stockholder value creation by aligning executive pay with stock price appreciation, enhances executive stock ownership and promotes retention +Equity +● +Performance-based award, with no value unless the Company’s stock price appreciates from the date of grant +● +Aligns executive and stockholder interests +Other Benefits +Provide programs for employees to pursue physical and financial wellbeing through retirement and health and welfare benefits +Benefit +● +Competitive broad-based benefits available to all employees +Employment and +Post-Termination +Arrangements +Protects the Company and NEOs during certain termination events, through the use of selective employment agreements, an executive severance and change-in-control policy, and various restrictive covenants +Benefit +● +Facilitates an orderly transition in the event of management changes +● +Helps ensure NEOs remain focused on creating sustainable performance in case of risk of job loss +● +Provides confidentiality, non-compete and non-solicit protections for the Company +Base Salary +Base salaries established for the Company’s executive officers are intended to reflect each individual’s responsibilities, experience, historical performance and other discretionary factors deemed relevant by the Company and have generally been set at levels deemed necessary to attract and retain individuals with superior talent. Base salaries are also designed to provide executive officers with steady cash flow during the course of the fiscal year that is not contingent on short-term variations in the Company’s operating performance. The base salaries of our NEOs in 2022 and 2021 are set forth below: +2022 Base Salary +2021 Base Salary +Aggregate % +(As of December 31, 2022) +(As of December 31, 2021) +Increase +Scott Scheirman (1) +$ +670,018 +$ +610,018 +9.8% +Lane Dubin (1) +$ +503,839 +$ +484,461 +4.0% +John Lowe (2) +$ +420,000 +$ +420,000 +0.0% +(1) The NEO’s base salary increase was effective March 6, 2022 . +(2) Mr. Lowe did not receive a base salary increase in 2022 due to an increase on October 5, 2021. +20 +Table of Contents +The Compensation Committee annually reviews the base salaries of the Company’s executive officers, including the CEO, and may from time to time make adjustments to these amounts as it deems necessary for the Company to pursue its goal of attracting and retaining key personnel. +Short-Term Incentives +The Company believes that establishing cash incentive opportunities is an important factor in both attracting and retaining qualified and highly skilled executives and in motivating our executives to achieve the Company’s near-term financial objectives. To achieve these objectives, the Company maintains a quarterly short-term incentive plan with an annual component, or the “STIP.” The quarterly design of the STIP is intended to reward the achievement of critical quarterly financial performance objectives and the annual component is tied to annual financial performance objectives. As such, payments may vary quarter to quarter. +To determine payouts under the STIP, the Company measures performance for each metric on both a quarterly and an annual basis. Each quarterly payment is “capped” at 125% of target, amounts that exceed the quarterly cap are subject to a year-end “true-up,” and each quarterly award is eligible for a “catch-up” payment for cumulative performance to-date. This design was implemented to further enhance the motivational effect of the STIP and provide a continual incentive to improve performance throughout the year. +Under the 2022 STIP, executives were eligible to earn quarterly cash bonuses based on the achievement of the following metrics: +Description +Metrics +70% based on achievement of Adjusted EBITDA (1) +30% based on achievement of Net Sales (2) +Corporate Executive Measurement +100% based on Company-wide achievement +(1) “Adjusted EBITDA” is a financial measure that is not calculated according to GAAP. For purposes of the STIP, we define Adjusted EBITDA as EBITDA (which represents earnings before interest, taxes, depreciation and amortization, all on a continuing operations basis) adjusted for (i) stock compensation expense, (ii) foreign currency changes, (iii) impairments, (iv) restructuring charges, (v) severance and other charges, (vi) loss on debt extinguishment, (vii) amounts related to a sales tax contingency liability, and (vii) other items that are unusual in nature, infrequently occurring or not considered part of core operations. +(2) The term Net Sales, as defined in the STIP, is consistent with “Total Net Sales,” as included in the Company’s consolidated financial statements, for all references contained herein. +Our STIP Net Sales and Adjusted EBITDA goals are defined on a quarterly basis for purposes of calculating the quarterly STIP payments. The quarterly goals align to the Company’s annual operating plan and reflect the planned seasonality of our business and operations. Achievement of performance goals is calculated on the basis of straight-line interpolation between the threshold, target and maximum bonus opportunities for each applicable metric underlying the performance goal. Quarterly and annual payouts under the STIP can range from 0% to 200%, based on Company performance; however, any payment made under the STIP with respect to each quarter is capped at 125% of the quarterly target incentive, with amounts in excess of the cap, up to 200%, payable with the annual payout. The targeted cumulative Adjusted EBITDA metric also serves as a trigger as CPI must achieve the overall Adjusted EBITDA threshold performance in order for any year-end STIP payments to fund . +In 2022, the Compensation Committee approved a 9.5% increase in Mr. Scheirman’s 2022 STIP target (as compared to his 2021 STIP target). Mr. Dubin received an 6.7% increase in his 2022 STIP target (as compared to his 2021 STIP target). Mr. Lowe received a 13.0% increase in his 2022 STIP target (as compared to his 2021 STIP target). Such increases in STIP targets for 2022 increased the portion of our NEOs’ pay which was at-risk and directly tied to Company performance. For the 2022 performance year, our NEOs were eligible to receive the following target bonus opportunities under the 2022 STIP: +Executive +Target Annual +STIP Payment +Opportunity +Scott Scheirman +$ +1,379,800 +Lane Dubin +$ +407,680 +John Lowe +$ +357,000 +Actual 2022 Payouts +Based on strong Company performance in 2022, our 2022 STIP paid out at maximum levels under the plan (i.e., 200% of each NEO’s bonus opportunity). Therefore, Messrs. Scheirman, Dubin and Lowe received 2022 STIP payments of $2,759,600, $815,360, and $714,000, respectively (with payments relating to fourth quarter 2022 and annual 2022 performance made in 2023). +21 +Table of Contents +Long-Term Incentives +Together with STIP awards, the long-term incentive equity awards are designed to balance the achievement of critical near-term performance objectives with long-term strategic goals and the retention of our high performing executive team. We believe such awards also allow us to continue to recruit top-level talent and align compensation with stockholder value, all of which incentivize our executive team to continue improving our business. Generally, long-term incentive equity awards granted by the Company are subject to various conditions, including the executive’s continued service to the Company, time-based vesting conditions, and acceleration of vesting in the event of the executive’s death, termination due to disability or in connection with a change in control of the Company. +As discussed above, in connection with the modification to the executive compensation program in September 2021, awards granted at that time were designed to compensate for 18 months of equity awards. As a result, in 2022, there were no RSUs or Options granted to NEOs; thus, the table describing Long-Term Incentives granted in the current year is omitted from this proxy statement. +Other Benefits +The Company maintains the CPI Card Group, Inc. 401(k) Plan (the “401(k) Plan”), which is designed to be a qualified defined contribution plan under the provisions of the Internal Revenue Code, covering substantially all employees who meet certain eligibility requirements. Under the 401(k) Plan, participants may defer their salary subject to statutory limitations and may direct the contributions among various investment accounts. The Company matches 100% of a participant’s first 3% of deferrals and 50% of the next 2% of deferrals. The matching contributions are fully vested at the time of the match. +Termination or Change in Control +Pursuant to their respective employment or post-termination arrangements, each of our NEOs may be entitled to certain payments and benefits in certain termination situations or upon a change in control. We believe that our severance arrangements would help facilitate an orderly transition in the event of changes in management. For further discussion of severance payments and benefits, see “ Employment and Post-Termination Arrangements. ” +Additional Compensation Governance Practices +Compensation Risk Assessment +The Compensation Committee regularly reviews the risk associated with the Company’s compensation programs. As part of this process, the Compensation Committee reviewed a comprehensive risk assessment conducted by WTW in 2019 and, at the time, concluded that our compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on the Company. In 2022, the Compensation Committee discussed with WTW the risk assessment of the Company’s executive compensation programs and any year-over-year changes that could impact the risk assessment. The Compensation Committee and WTW concluded that no program changes were implemented in 2022 that would materially affect the existing risk profile of the Company’s compensation program and that there were no material risks to the Company’s existing executive compensation program. Accordingly, the Compensation Committee and WTW did not recommend any changes the Company’s executive compensation program in 2022 on this basis. +Insider Trading Policy +The Company maintains an Insider Trading Policy, which prohibits CPI officers and directors from purchasing financial instruments and engaging in certain transactions designed to hedge against a decrease in the value of the Company’s securities, including short sales, publicly traded options, hedging and monetization transactions, margin sales, pledges of collateral and standing limit orders. +Clawback Policy +The Company has had an incentive compensation recoupment policy in place since 2016 (the “Clawback Policy”). Under the Clawback Policy, if the Company is required to restate its financial results because of its material noncompliance with any financial reporting requirement under applicable securities laws, the Compensation Committee will review all awards or payments of any form of incentive-based compensation (including cash and equity) made to current and former executive officers of the Company within the three-year period immediately preceding the date on which the Company is required to prepare the restatement. If the Compensation Committee determines that any such incentive awards or payments were based on erroneous data and would have been lower had they been calculated based on the restated results, the Compensation Committee may, to the extent permitted by applicable law, seek to recover, for the benefit of the Company, the difference between the amounts awarded or paid and the amounts that would have been awarded or paid based on the restated results, as determined by the Compensation Committee. These remedies would be in addition to, and not in lieu of, any penalties imposed by law enforcement agencies, regulators or other authorities. For purposes of this policy, “executive officers” of the Company include all persons designated by the Board as Section 16 reporting officers. The Company will review and modify the Clawback Policy as necessary to reflect the final Nasdaq listing rules adopted to implement the compensation recovery requirements under the Dodd-Frank Wall Street Reform Consumer Protection Act. +22 +Table of Contents +Stock Ownership Guidelines +Since 2016, the Company has maintained stock ownership guidelines that apply to our directors and senior executives, including our NEOs. The Company did this to further align the interests of our leaders and the Board of Directors with those of our stockholders and further promote our commitment to sound corporate governance. Under the guidelines, once appointed to their respective role, executives and directors have up to five years to accumulate shares and share equivalents that have a market value equal to or greater than a prescribed multiple of annual salary or annual retainer fees. For directors this multiple is five times the cash portion of the annual retainer, for our Chief Executive Officer this multiple is five times base salary, and for all other executive officers this multiple is two times base salary. +2022 Summary Compensation Table +The 2022 Summary Compensation Table discloses the compensation information for fiscal year 2022 and, to the extent required by applicable SEC disclosure rules, fiscal year 2022, for the principal executive officer and our two other most highly compensated executive officers who were serving as executive officers at the end of the last completed fiscal year. +Nonqualified +Non-Equity +Deferred +Incentive Plan +Compensation +All Other +Name and Principal Position +Year +Salary +Bonus +Stock Awards (1) +Option Awards (2) +Compensation (3) +Earnings +Compensation (4) +Total +Scott Scheirman, President, Chief Executive Officer and Director +2022 +$ +659,634 +$ +— +$ +— +$ +— +$ +2,759,600 +$ +— +$ +12,200 +$ +3,431,434 +2021 +$ +609,221 +$ +— +$ +574,835 +$ +573,175 +$ +2,519,600 +$ +— +$ +11,600 +$ +4,288,431 +Lane Dubin, EVP and Chief Development and Digital Officer (7) +2022 +$ +500,486 +$ +— +$ +— +$ +— +$ +815,360 +$ +— +$ +12,200 +$ +1,328,046 +2021 +$ +468,113 +$ +— +$ +156,097 +$ +155,644 +$ +764,040 +$ +— +$ +11,600 +$ +1,555,494 +John Lowe, EVP, End-to-End Solutions +2022 +$ +420,000 +$ +— +$ +— +$ +— +$ +714,000 +$ +— +$ +12,200 +$ +1,146,200 +2021 +$ +372,521 +$ +— +$ +142,341 +$ +141,962 +$ +631,650 +$ +— +$ +2,137 +$ +1,290,611 +(1) The amounts reported in this column represent the grant date fair value of the RSU awards as calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“FASB Topic 718”), valued based on the closing stock price on the date of grant. The 2021 awards consisted of 50% options and 50% RSUs; the discrepancy in valuation between Stock Awards and Option Awards is due to whole share rounding. +(2) The amounts reported in this column represent the grant date fair value of Option awards, calculated in accordance with FASB Topic 718. See Note 16 of the Company’s audited consolidated financial statements included in our Form 10-K for the fiscal year ended December 31, 2022 for a discussion of the relevant assumptions used in calculating these amounts. +(3) Represents performance-based bonuses earned under the Company’s STIP for the applicable year. Please see the section entitled “Elements of the 2022 Executive Compensation Program — Short-Term Incentives” above for further information regarding the 2022 STIP. +(4) Represents matching contributions under the Company’s 401(k) plan. +Outstanding Equity Awards at 2022 Fiscal Year-End +Option Awards +Stock Awards +Number of +Number of +Securities +Securities +Number of +Value of +Underlying +Underlying +Shares of +Shares of +Unexercised +Unexercised +Option +Stock that +Stock that +Options +Options +Exercise +Option +Have Not +Have Not +(Exercisable) +(Unexercisable) +Price +Expiration +Vested +Vested +Name +(#) +(#) (1) +($) +Date +(#) +($) (4) +Scott Scheirman +280,000 +— +$ +5.25 +9/25/2027 +— +— +16,447 +16,446 +$ +29.62 +9/21/2028 +9,703 +(2) +$ +350,084 +Lane Dubin +22,500 +— +$ +27.60 +9/1/2026 +— +— +11,885 +— +$ +21.75 +3/22/2027 +— +— +25,000 +— +$ +5.25 +9/25/2027 +— +— +4,466 +4,466 +$ +29.62 +9/21/2028 +2,635 +(2) +$ +95,071 +John Lowe +75,000 +— +$ +1.98 +7/2/2028 +— +— +3,943 +3,942 +$ +29.62 +9/21/2028 +2,326 +(2) +$ +83,922 +127 +126 +$ +30.53 +10/5/2028 +74 +(3) +$ +2,670 +(1) The remainder of the Options will become exercisable on September 21, 2023, subject to continued service with the Company through such vesting date, except that with respect to the Option grant for Mr. Lowe with an October 5, 2028 expiration date, the remainder of the Options will become exercisable on October 5, 2023. +23 +Table of Contents +(2) These RSU awards will vest on September 21, 2023, subject to continued service with the Company through such vesting date. +(3) These RSU awards will vest on October 5 , 2023, subject to continued service with the Company through such vesting date. +(4) The market value of the RSUs is based on the $ 36.08 closing price of a share of our Common Stock on December 30, 2022 (the last trading day of 2022) . +Employment and Post-Termination Arrangements +Mr. Scheirman’s Employment Agreement +On September 25, 2017, Mr. Scheirman entered into an employment and non-competition agreement (the “CEO Employment Agreement”) with the Company to serve as President and Chief Executive Officer, effective September 25, 2017, for a term ending on March 31, 2021, plus automatic one-year renewals thereafter unless either party provides notice of intent not to renew the agreement. +Under the terms of the CEO Employment Agreement, in the event that Mr. Scheirman’s employment is terminated by the Company without Cause, he resigns for Good Reason (each as defined in the CEO Employment Agreement), separates employment due to death or disability or the Company fails to renew his agreement upon its expiration, Mr. Scheirman would be entitled to (i) a severance payment equal to 1.5 times the sum of Mr. Scheirman’s then-current annual base salary and target bonus for the year of termination, payable in equal installments during the eighteen (18) month period following the termination date; (ii) a prorated portion of his STIP bonus based on the number of full months completed during the fiscal year in which such termination of employment occurs and based on final Company performance for the STIP year, payable at the same time as annual bonuses become payable to other executive employees; (iii) accelerated vesting of any outstanding equity awards that would have otherwise vested in the next twelve months following the termination (for performance-based awards, vesting will be based on actual performance determined at the end of the performance period); (iv) the cost of continuing health and dental coverage under the Company’s plans as then in effect, less the employee contribution for an active employee, for up to eighteen (18) months; and (v) other than in the case of a termination for death or disability, up to six months of outplacement services. The estimated cash severance payment to Mr. Scheirman on termination, assuming a termination as of December 31, 2022, would have been $3,104,499 (inclusive of $14,772 in COBRA insurance coverage and outplacement services valued at $15,000) for termination without Cause, for Good Reason, for the Company’s failure to renew the agreement, or termination due to his death or disability. +In the event that Mr. Scheirman experiences a termination event as described above within six months prior to or two years following a Change in Control (as defined in the CEO Employment Agreement) of the Company, Mr. Scheirman will receive the benefits described in the foregoing paragraph, except that the severance and COBRA continuation benefits in items (i) and (iv) above would be extended from eighteen to twenty-four months, and his outstanding equity awards would vest in full (with any performance-based awards vesting at the target level of performance). The estimated cash severance payment to Mr. Scheirman on termination in connection with a Change in Control, assuming a termination as of December 31, 2022, would have been $4,134,332 (inclusive of $19,696 in COBRA insurance coverage and outplacement services valued at $15,000). +Mr. Scheirman is subject to certain restrictive covenants in the CEO Employment Agreement, including obligations regarding noncompetition and non-solicitation of Company employees and customers during the term of his employment and for a period of eighteen months following any termination of his employment with the Company. +Mr. Dubin’s Employment Agreement +In connection with Mr. Dubin’s promotion to Executive Vice President and Chief Development and Digital Officer, the Company entered into an employment agreement with Mr. Dubin effective December 13, 2022 and ending on June 30, 2024, unless earlier terminated or extended by the parties (the “EVP Employment Agreement”). Under the EVP Employment Agreement, in the event of a termination of his employment by the Company without Cause (as defined in the EVP Employment Agreement) or by Mr. Dubin (a) for Good Reason (as defined in the EVP Employment Agreement) or (b) other than for Good Reason and effective as of June 30, 2023, December 31, 2023 or June 30, 2024 (each, a “Severance Termination Event”), subject to his execution and delivery of a release of claims, Mr. Dubin will receive (i) severance payments equal to 1.0 times (1.5 times in the case of a Severance Termination Event that occurs within six months prior to or 24 months following a Change in Control (as defined in the EVP Employment Agreement)) the sum of Mr. Dubin’s annual base salary and target bonus for the year of the termination; and (ii) the sum of (y) the Employee’s Quarterly Performance Incentive (as defined in the STIP) for the calendar quarter in which such termination occurs, including any related “catch-up” payment with respect to such quarter as determined in accordance with the STIP and (z) the Annual Performance Incentives determined under the STIP, in each case, based on the Company’s actual performance and pro-rated based on the number of days Mr. Dubin was employed by the Company during such period. Mr. Dubin is also entitled to reimbursement for the cost of up to 18 months of continuation coverage under the Company’s health and welfare plans at active employee rates and six months of outplacement services. +In the case of a termination of employment by the Company without Cause, by Mr. Dubin for Good Reason or by Mr. Dubin other than for Good Reason and effective on or after December 31, 2023, Mr. Dubin is entitled to (1) the continued vesting of any awards granted to Mr. Dubin after December 13, 2022 through the two-year anniversary of the end of the Severance Period (as defined below), and (2) the vested and unexercised portions of any stock option awards held by Mr. Dubin will remain outstanding and exercisable until the earlier of (A) the two-year anniversary of the end of the Severance Period and (B) the original expiration date of the stock option award; and (vi) in the case of a Change in Control, full vesting of his outstanding equity awards, with the performance-based equity awards vesting at the target level of performance. For purposes of the EVP Employment Agreement, “Severance Period” means the shorter of (i) the 12-month period (18-month period in the case of a Severance Termination Event incurred in connection with a Change in Control) commencing on the date of Mr. Dubin’s termination of employment and (ii) the period commencing on the termination date and ending on the date that Mr. +24 +Table of Contents +Dubin violates the Confidentiality, Trade Secret Protection, Unfair Competition, Non-Solicitation, and Invention Assignment Agreement, by and between Mr. Dubin and CPI Card Group-Colorado, Inc., effective as of April 8, 2019 (the “Confidentiality Agreement”). The EVP Employment Agreement extended the restricted period under the Confidentiality Agreement to a period of two years following the cessation of Mr. Dubin’s employment. The Company has the right pursuant to the EVP Employment Agreement to terminate Mr. Dubin’s employment other than for cause upon 60 calendar days written notice; provided that (i) any such termination which would be effective after June 30, 2023 but before December 31, 2023 will be deemed effective as of December 31, 2023, and (ii) any such termination which would otherwise be effective after December 31, 2023 and before June 30, 2024 will be deemed effective as of June 30, 2024. +The estimated cash severance payment to Mr. Dubin on termination, assuming a termination as of December 31, 2022, would have been $948,716 (inclusive of $22,197 in COBRA insurance coverage and outplacement services valued at $15,000) for termination without Cause, for Good Reason, for the Company’s failure to renew the agreement, or termination due to his death or disability and, in each case, not in connection with a Change in Control. +The estimated cash severance payment to Mr. Dubin on termination in connection with a Change in Control, assuming a termination as of December 31, 2022, would have been $1,404,476 (inclusive of $22,197 in COBRA insurance coverage and outplacement services valued at $15,000). +Mr. Lowe’s Employment Offer Letter +The employment offer letter between Mr. Lowe and the Company dated October 1, 2021 from his transition from Chief Financial Officer to the position of Senior Vice President & General Manager, Secure Card, remains in effect. This offer letter provides for an annual base salary as well as eligibility for the Company’s STIP and eligibility to receive long-term incentives under the Omnibus Incentive Plan. In connection with his promotion to Executive Vice President, End-to End Solutions in December 2022, Mr. Lowe received a commensurate increase in base salary and incentives effective as of January 1, 2023. +Mr. Lowe’s offer letter does not provide for any severance benefits, however, upon a termination of his employment as of December 31, 2022, Mr. Lowe would have been eligible to receive an estimated $814,197 in cash severance (inclusive of $22,197 in COBRA insurance coverage and outplacement services valued at $15,000) upon a termination without “cause” or for “good reason” pursuant to our Executive Severance Guidelines, as summarized below. Also, pursuant to the Executive Severance Guidelines, the estimated cash severance payment to Mr. Lowe on termination in connection with a “change in control” (as defined in the Executive Severance Guidelines), assuming a termination as of December 31, 2022, would have been $1,202,697 (inclusive of $22,197 in COBRA insurance coverage and outplacement services valued at $15,000). +Executive Severance Guidelines +On June 22, 2017, the Company adopted guidelines governing executive severance (“Executive Severance Guidelines”), applicable to executive officers and NEOs of the Company who are not otherwise parties to individual employment or severance agreements providing for benefits upon a termination of employment. Under the Executive Severance Guidelines, if the employment of an eligible officer is terminated without “cause” or due to a resignation for “good reason,” not in connection with a “change in control” (each as defined in the Executive Severance Guidelines) and subject to the execution, delivery and non-revocation of a release of claims, he or she would be eligible to receive cash severance equal to one times the sum of his or her base salary plus annual bonus target (or 1.5 times the sum of base salary and annual bonus target for a CEO participant). For such a termination occurring within the 24 months following a change in control of the Company, the applicable severance multiple would be increased to 1.5 times for all other eligible officers (or 2.0 times for a CEO participant). In addition, the Company would continue to pay a portion of the cost of medical, dental and vision benefits on behalf of an eligible officer, such that the officer’s contribution would remain as it were for an active officer, for the greater of the severance period or such officer’s eligibility for COBRA continuation coverage, and the Company may provide, in its discretion, up to six months of outplacement services. Mr. Lowe is subject to the Executive Severance Guidelines, while Messrs. Scheirman and Dubin are excluded from the Executive Severance Guidelines due to the severance provisions in their respective Employment Agreements. +Pay vs. Performance +Value of Initial Fixed $100 +Summary +Compensation +Average Summary +Average Compensation +Investment Based On: +Compensation Table +Actually Paid +Compensation Table Total +Actually Paid +Total +Net Income +Year (1) +Total for PEO ($) (2) +to PEO ($) (3) +for Non-PEO NEOs ($) (2) +for Non-PEO NEOs ($) (3) +Shareholder Return ($) (4) +(in thousands) ($) +2022 +3,431,434 +3,621,040 +1,237,123 +1,286,687 +821.87 +36,540 +2021 +4,288,431 +4,565,532 +1,423,053 +1,672,791 +422.55 +15,941 +(1) Scott Scheirman served as the Company’s PEO and Lane Dubin and John Lowe served as the other NEOs for the entirety of 2022 and 2021. +(2) Amounts reported in this column represent (i) the total compensation reported in the Summary Compensation Table for the applicable year in the case of Mr. Scheirman and (ii) the average of the total compensation reported in the Summary Compensation Table for the applicable year in the case of the other NEOs. +(3) To calculate “Compensation Actually Paid” (“CAP”), adjustments were made to the amounts reported in the Summary Compensation Table for the applicable year. A reconciliation of the adjustments for Mr. Scheirman and for the average of the other NEOs is set forth following the footnotes to this table.* +25 +Table of Contents +(4) Pursuant to rules of the SEC, the comparison assumes $100 was invested on December 31, 2020 in our common stock. Historic stock price performance is not necessarily indicative of future stock price performance. +* Compensation Actually Paid Adjustments (see FN 3 above) +Minus +Plus +Plus (Minus) +Plus +Plus (Minus) +Minus +Equals +Change in Fair +Value as of +Vesting Date of +Fair Value as +Stock Option and +of Prior Fiscal +Fair Value at +Change in Fair +Fair Value at +Stock Awards +Year-End of Stock +Grant Date +Fiscal Year-End +Value of +Vesting of Stock +Granted in +Option and Stock Awards +Fair Value of +of Outstanding and +Outstanding and +Option and Stock +Prior Fiscal Years +Granted in Prior +Stock Option +Unvested Stock +Unvested Stock +Awards Granted +for which Applicable +Fiscal Years that +and Stock +Option and Stock +Option and Stock +in Fiscal Year +Vesting Conditions +Failed to Meet +Summary +Awards Granted +Awards Granted +Awards Granted +that Vested +Were Satisfied +Applicable Vesting +Compensation Table +in Fiscal +in Fiscal +in Prior Fiscal +During Fiscal +During Fiscal +Conditions During +Compensation +Year +Total ($) (a) +Year ($) (b) +Year ($) (c) +Years ($) (d) +Year ($) (e) +Year ($) (f) +Fiscal Year ($) (g) +Actually Paid ($) +Scott Scheirman +2022 +3,431,434 +- +- +321,862 +- +(132,256) +- +3,621,040 +2021 +4,288,431 +(1,148,010) +649,752 +775,359 +- +- +- +4,565,532 +Average Other NEOs(h) +2022 +1,237,123 +- +- +83,413 +- +(33,849) +- +1,286,687 +2021 +1,423,053 +(298,022) +168,734 +198,212 +- +180,814 +- +1,672,791 +(a) Represents Total Compensation as reported in the Summary Compensation Table for the indicated fiscal year. With respect to the other NEOs, amounts shown represent averages. +(b) Represents the grant date fair value of the stock option and stock awards granted during the indicated fiscal year, computed in accordance with the methodology used for financial reporting purposes. +(c) Represents the grant date fair value of the stock option and stock awards granted during the indicated fiscal year, computed in accordance with the methodology used for financial reporting purposes. +(d) Represents the change in fair value during the indicated fiscal year of each option award and stock award that was granted in a prior fiscal year and that remained outstanding and unvested as of the last day of the indicated fiscal year, computed in accordance with the methodology used for financial reporting purposes and, for awards subject to performance-based vesting conditions, based on the probable outcome of such performance-based vesting conditions as of the last day of the fiscal year. +(e) Represents the fair value at vesting of the option awards and stock awards that were granted and vested during the indicated fiscal year, computed in accordance with the methodology used for financial reporting purposes. +(f) Represents the change in fair value, measured from the prior fiscal year-end to the vesting date, of each option award and stock award that was granted in a prior fiscal year and which vested during the indicated fiscal year, computed in accordance with the methodology used for financial reporting purposes. +(g) Represents the fair value as of the last day of the prior fiscal year of the option award and stock awards that were granted in a prior fiscal year and which failed to meet the applicable vesting conditions in the indicated fiscal year, computed in accordance with the methodology used for financial reporting purposes. +(h) See footnote 1 above for the NEOs included in the average for each year. +26 +Table of Contents +Relationship Between Pay and Performance +We believe the CAP in each of the years reported above and over the two-year cumulative period are reflective of the Compensation Committee’s emphasis on “pay-for-performance” as the CAP amount captures the maximum amounts awarded under the STIP that related to the Company’s outstanding financial performance in each year as demonstrated in the chart below. The total CAP amounts for each of the PEO and NEOs fluctuated year-over-year, primarily due to no equity awards being granted in 2022, as the equity awards granted in 2021 were designed to compensate for an 18-month period. +Equity Compensation Plan Information Table +The following table provides information as of December 31, 2022 with respect to shares of our common stock that may be issued under our existing equity compensation plan. +Number of securities +remaining available for +future issuance under +Number of securities to +Weighted average +equity compensation +be issued upon exercise +exercise price of +plans (excluding +of outstanding Options, +outstanding Options, +securities reflected in +warrants and rights +warrants and rights +column (a)) +(a) (#) +(b) ($) +(c) (#) +Equity compensation plans approved by security holders (1) +879,287 +(2) +18.12 +(2) +944,123 +Equity compensation plans not approved by security holders +— +— +— +Total +879,287 +944,123 +(1) All current equity compensation plans have been approved by stockholders. +(2) Consists of (i) 780,623 outstanding Options under the Omnibus Incentive Plan at an average exercise price of $18.12; and (ii) 98,664 outstanding RSUs under the Omnibus Incentive Plan. Only Options were used in computing the weighted average exercise price. +27 +Table of Contents +AUDIT COMMITTEE REPORT +This report of the Audit Committee is required by the SEC and, in accordance with the SEC’s rules, will not be deemed to be part of or incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933, as amended (the “Securities Act”), or under the Exchange Act, except to the extent that the Company specifically incorporates this information by reference, and will not otherwise be deemed “soliciting material” or “filed” under either the Securities Act or the Exchange Act. +The principal purpose of the Audit Committee is to assist the Board in its oversight of (i) the integrity of our accounting and financial reporting processes and the audits of our consolidated financial statements; (ii) our system of disclosure controls and internal control over financial reporting; (iii) our compliance with legal and regulatory requirements; (iv) the qualifications and independence of our independent auditor; (v) the performance of our independent auditor; and (vi) the business practices and ethical standards of the Company. The Audit Committee is responsible for the appointment, compensation, retention and oversight of the Company’s independent auditor. The Audit Committee’s function is more fully described in its charter. +Our management is responsible for the preparation, presentation and integrity of our consolidated financial statements, for the appropriateness of the accounting principles and reporting policies that we use and for establishing and maintaining adequate internal control over financial reporting. KPMG LLP (“KPMG”), our independent registered public accounting firm for 2022, was responsible for performing an independent audit of our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2022, and expressing an opinion on the conformity of those financial statements with generally accepted accounting principles. KPMG was also responsible for expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. +The Audit Committee has reviewed and discussed with management our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2022. The Audit Committee has also reviewed and discussed with KPMG the audited consolidated financial statements in such Form 10-K. In addition, the Audit Committee discussed with KPMG those matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (the “PCAOB”) and the SEC. Additionally, KPMG provided to the Audit Committee the written disclosures and the letter required by applicable requirements of the PCAOB regarding KPMG’s communications with the Audit Committee concerning independence, and the Audit Committee has discussed with KPMG its independence from the Company. +Based upon the review and discussions described above, the Audit Committee recommended to the Board that CPI’s audited consolidated financial statements be included in our Annual Report on Form 10-K for the year ended December 31, 2022 for filing with the SEC. +Audit Committee : +Marc Sheinbaum, Chair +Thomas Furey +Valerie Soranno Keating +FEES PAID TO INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +For the years ended December 31, 2022 and 2021, KPMG, our independent registered public accounting firm, billed the approximate fees set forth below: +2022 +2021 +Audit fees (1) +$ +1,545,878 +$ +1,761,000 +Audit-related fees (2) +— +— +Tax fees (3) +270,971 +141,157 +All other fees (4) +— +— +Total fees +$ +1,816,849 +$ +1,902,157 +(1) Audit fees relate to (i) the audit of our annual consolidated financial statements as of and for the years ended December 31, 2022 and 2021, and (ii) interim reviews of the condensed consolidated financial statements included in our Quarterly Reports on Form 10-Q during the years ended December 31, 2022 and 2021. In addition, audit fees in 2021 related to the initial annual assessment of the effectiveness of our internal control over financial reporting in compliance with the provisions of Section 404 of the Sarbanes-Oxley Act of 2002. +(2) These services include attest services related to financial reporting that are not required by statute or regulation. KPMG did not provide services included in this category during the years ended December 31, 2022 and 2021. +(3) For the years ended December 31, 2022 and 2021, tax fees relate primarily to U.S. federal and state tax compliance, and for services in connection with research and development tax credit studies, transfer pricing analysis, a debt restructuring memorandum, revenue recognition analysis, capitalized interest calculation and a related technical memorandum, sales tax remediation review and tax consulting for business dispositions, transaction costs and foreign supply chain issues. +28 +Table of Contents +(4) This category includes fees for services that are not included in the above categories. KPMG did not provide services included in this category during the years ended December 31, 2022 and 2021. +The Audit Committee has adopted certain policies and procedures regarding permitted audit and non-audit services and the pre-approval of such services. Each year, the Audit Committee will ratify the types of audit and non-audit services of which management may wish to avail itself, subject to pre-approval of specific services. Each year, the independent registered public accounting firm will submit a pre-approval request, which will list each known and/or anticipated audit and non-audit service for the upcoming calendar year and which will include associated budgeted fees. The Audit Committee will review the requests and approve a list of annual pre-approved non-audit services. Any interim requests for additional non-audit services that were not contained in the annual pre-approval request are pre-approved by the Audit Committee. +All services provided by KPMG during the fiscal year ended December 31, 2022 and 2021 were pre-approved by the Audit Committee. +29 +Table of Contents +PROPOSAL NO. 2 RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +Our Audit Committee has appointed KPMG LLP as our independent registered public accounting firm for the year ending December 31, 2023. A proposal will be presented at the Annual Meeting to ratify this appointment. If the stockholders fail to ratify such selection, another independent registered public accounting firm will be considered by our Audit Committee, but the Audit Committee may nonetheless choose to engage KPMG LLP. Even if the appointment of KPMG LLP is ratified, the Audit Committee in its discretion may select a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and its stockholders. We have been advised that a representative of KPMG LLP will be present at the Annual Meeting and will be available to respond to appropriate questions and, if such person chooses to do so, make a statement. +THE BOARD OF DIRECTORS AND THE AUDIT COMMITTEE UNANIMOUSLY RECOMMEND A VOTE FOR RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2023. +30 +Table of Contents +PROPOSAL NO. 3 STOCKHOLDER ADVISORY VOTE TO APPROVE OUR NAMED EXECUTIVE OFFICER COMPENSATION +We are offering our stockholders an opportunity to cast an advisory vote to approve the compensation of our NEOs, as disclosed in this proxy statement, pursuant to Section 14A of the Exchange Act (commonly referred to as a “say-on-pay” vote). The advisory vote to approve executive compensation is not a vote on the Company’s general compensation policies or the compensation of the Company’s Board of Directors. +In making decisions with respect to compensation for our NEOs, the Compensation Committee is guided by a pay-for-performance philosophy. The Compensation Committee believes that a significant portion of each NEO’s total compensation opportunity should vary with achievement of the Company’s annual and long-term financial, operational and strategic goals. In designing the compensation program for our NEOs, the Compensation Committee seeks to achieve the following key objectives: +Motivate Executives . The compensation program should encourage our executive officers to achieve the Company’s annual and long-term goals. +Align Interests with Stockholders . The compensation program should align the interests of our executive officers with those of our stockholders, promoting actions that will have a positive impact on total stockholder return over the long term. +Attract and Retain Talented Executives . The compensation program should provide each executive officer with a total compensation opportunity that is market competitive. This objective is intended to ensure that we are able to attract and retain qualified executives while maintaining an appropriate cost structure for the Company. +We believe our executive compensation is structured in the manner that best serves the interests of the Company and its stockholders. We encourage stockholders to review the “Executive Compensation” section above for a complete discussion of how we determine the pay for our NEOs as well as key accomplishments the executive team achieved during 2022. +Accordingly, we are asking stockholders to approve the following advisory resolution at the Annual Meeting: +RESOLVED, that the stockholders of the Company approve, on an advisory and non-binding basis, the compensation of the Company’s named executive officers, as disclosed in this proxy statement pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Executive Compensation section, the compensation tables and any related material disclosed in this proxy statement. +As an advisory vote, this resolution is not binding on us. However, the Compensation Committee, which is responsible for designing and administering our executive compensation program, values the opinions expressed by our stockholders in their vote on this proposal and will consider the outcome of the vote when making future compensation decisions for our NEOs. We expect to hold this vote on an annual basis for the foreseeable future. +THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL, ON AN ADVISORY BASIS, OF OUR NAMED EXECUTIVE OFFICER COMPENSATION AS DISCLOSED IN THIS PROXY STATEMENT. +31 +Table of Contents +PROPOSAL NO. 4 APPROVAL OF AN AMENDMENT TO THE COMPANY’S CERTIFICATE OF INCORPORATION TO REFLECT NEW DELAWARE LAW PROVISIONS REGARDING OFFICER EXCULPATION +After careful consideration, the Board has unanimously adopted, and recommends that our stockholders approve, an amendment to our Fourth Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”) to provide for the elimination or limitation of monetary liability of certain officers of the Company for certain actions (the “Proposed Amendment”). The Certificate of Incorporation currently limits the monetary liability of our directors in certain circumstances pursuant to, and consistent with, Section 102(b)(7) of the Delaware General Corporation Law (the “DGCL”). Effective August 1, 2022, Section 102(b)(7) of the DGCL was amended to permit a corporation’s certificate of incorporation to include a provision eliminating or limiting monetary liability for certain senior corporate officers for certain breach of fiduciary duty actions. +The Proposed Amendment +In light of this amendment to the DGCL, we are proposing to amend the Certificate of Incorporation to add a provision exculpating certain of the Company’s officers from liability in specific circumstances, as permitted by Delaware law. As amended, Section 102(b)(7) of the DGCL only permits, and our Proposed Amendment would only permit, exculpation for direct claims (as opposed to derivative claims made by stockholders on behalf of the Company) and would not apply to breaches of the duty of loyalty, acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, or any transaction in which the officer derived an improper personal benefit. The rationale for so limiting the scope of liability is to strike a balance between stockholders’ interest in accountability and their interest in the Company being able to attract and retain talented officers to work on its behalf. +If stockholders approve this amendment, the first paragraph of Article SIXTH of the Certificate of Incorporation would be revised as follows (new text is double underlined, deleted text is stricken): +The personal liability of the directors and officers of the Corporation is hereby eliminated to the fullest extent permitted by Section 102(b)(7) of the DGCL. Without limiting the generality of the foregoing, a director or officer shall, to the fullest extent permitted by the DGCL as it now exists or as it may hereafter be amended, not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director , except for or officer, provided that this paragraph shall not eliminate or limit the liability of (i) a director or officer for any breach of the director’s or officer’s duty of loyalty to the Corporation or its stockholders, (ii) a director or officer for acts or omissions not in good faith or that which involve intentional misconduct or a knowing violation of law, or (iii) a director under Section 174 of the DGCL, (iv) a director or officer for any transaction from which the director or officer derived any improper personal benefit or (v) an officer in any action by or in the right of the Corporation . If the DGCL is amended, after approval by the stockholders of this Article SIXTH , to authorize corporate action to further eliminate or limit the personal liability of directors or officers , then the liability of a director or officer of the Corporation shall be eliminated or limited to the fullest extent permitted by the DGCL, as so amended. +Purpose and Effect of the Proposed Amendment +The Board believes that there is a need for directors and officers to remain free of the risk of financial ruin as a result of an unintentional misstep. Therefore, taking into account the narrow class and type of claims for which officers’ liability would be exculpated, and the benefits the Board believes would accrue to the Company and its stockholders in the form of an enhanced ability to attract and retain talented officers, the Board determined that it is in the best interests of the Company and our stockholders to amend the Certificate of Incorporation as described herein. +Effect of Approval +If stockholders approve the Proposed Amendment, we will file with the Secretary of State of the State of Delaware a Certificate of Amendment to the Certificate of Incorporation setting forth the Proposed Amendment, shortly following the Annual Meeting. The Proposed Amendment will become legally effective upon the filing of the Certificate of Amendment with the Secretary of State of the State of Delaware. +THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL, OF THE AMENDMENT TO THE COMPANY’S CERTIFICATE OF INCORPORATION TO REFLECT NEW DELAWARE LAW PROVISIONS REGARDING OFFICER EXCULPATION. +32 +Table of Contents +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +The following is a description of transactions since January 1, 2021 to which we have been a party in which the amount involved exceeded or will exceed the lesser of $120,000 or one percent of the average of the Company’s total assets at year-end for the last two completed fiscal years and in which any of our directors, executive officers, beneficial holders of more than 5% of our capital stock or entities affiliated with them had or will have a direct or indirect material interest. +Registration Rights Agreement +In connection with our initial public offering, we entered into a registration rights agreement with the Tricor Funds (the “Registration Rights Agreement”). Under the Registration Rights Agreement, the Tricor Funds are entitled to request that we register shares of our Common Stock on a long-form or short-form registration statement on one or more occasions in the future, provided that we will not be obligated to register such shares within 90 days after the effective date of a registration statement previously filed pursuant to a request under the Registration Rights Agreement and otherwise for up to 60 days from the date of a request under the Registration Rights Agreement in certain circumstances. The Tricor Funds also are entitled to participate in certain registered offerings that we may conduct in the future, subject to certain restrictions. We will pay the Tricor Funds’ expenses in connection with the exercise of these rights. The registration rights described in this paragraph apply to (i) shares of our Common Stock held by the Tricor Funds as of the closing of our initial public offering, (ii) any of our capital stock (or that of our subsidiaries) issued or issuable with respect to the Common Stock described in clause (i) with respect to any dividend, distribution, recapitalization, reorganization or certain other corporate transactions, and (iii) any shares of our Common Stock owned or acquired following the closing of our initial public offering by the Tricor Funds (collectively, “Registrable Securities”). These registration rights are also for the benefit of any subsequent holder of Registrable Securities; provided that any particular securities will cease to be Registrable Securities when they have been sold in a registered public offering, sold in compliance with Rule 144 under the Securities Act or repurchased by us or our subsidiaries. In September 2021, we filed a registration statement on Form S-3 with respect to the shares of Common Stock held by the Tricor Funds in compliance with our obligations under the Registration Rights Agreement. +Director Nomination Agreement +In connection with our initial public offering, we entered into a Director Nomination Agreement with the Tricor Funds that provides the Tricor Funds the right to designate nominees for election to our Board for so long as the Tricor Funds collectively beneficially own 5% or more of the total number of shares of our Common Stock then outstanding. The number of nominees that the Tricor Funds are entitled to designate under the Director Nomination Agreement bears the same proportion to the total number of members of our Board as the number of shares of Common Stock beneficially owned by the Tricor Funds bears to the total number of shares of Common Stock outstanding, rounded up to the nearest whole number. In addition, the Tricor Funds shall be entitled to designate the replacement for any of its board designees whose board service terminates prior to the end of such designee’s term regardless of the Tricor Funds’ beneficial ownership at such time. In addition, for so long as the Tricor Funds collectively beneficially own 10% or more of the total number of shares of our Common Stock then outstanding, the Tricor Funds shall also have the right to have their designees participate on committees of our Board, subject to compliance with applicable law and stock exchange rules. The Director Nomination Agreement will terminate at such time as the Tricor Funds collectively own less than 5% of our outstanding Common Stock. Nicholas Peters and Bradley Seaman have been designated by the Tricor Funds as nominees for election of directors to our Board commencing in 2016. H. Sanford Riley has been designated by the Tricor Funds to stand as a nominee for the first time at the Annual Meeting. +Policies and Procedures for Related Party Transactions +Our Board has adopted a written related party transaction policy setting forth the policies and procedures for the review and approval of related party transactions. The policy covers transactions involving us in which the aggregate amount involved in any calendar year will or may be expected to exceed $100,000 and in which a related person has or will have a direct or indirect interest (other than solely as a result of being a director or a less than 10% beneficial owner of another entity). For purposes of this policy, a related person is defined as an executive officer, director, nominee for director, or a greater than 5% beneficial owner of our Common Stock, in each case since the beginning of the most recently completed fiscal year, and any immediate family member of or person sharing a household with any of these individuals. All related party transactions must be presented to the Audit Committee for review, consideration and approval. In approving or rejecting any such proposed transaction, the Audit Committee will consider, among other factors, the related party’s relationship to the Company and interest in the transaction, the material facts of the transaction, the benefits to the Company of the transaction, the availability of other sources of comparable products or services (if applicable), whether the transaction is on terms that are comparable to the terms generally available to an unrelated third party, whether the transaction has the potential to impair director independence and whether the transaction constitutes a conflict of interest. +33 +Table of Contents +STOCKHOLDER PROPOSALS FOR 2024 ANNUAL MEETING OF STOCKHOLDERS +Stockholders who intend to present proposals at the Company’s annual meeting of stockholders in 2024 pursuant to Rule 14a-8 under the Exchange Act must send notice of their proposal to us so that we receive it no later than December 15, 2023. Stockholders who intend to present proposals at the annual meeting of stockholders in 2024 other than pursuant to Rule 14a-8 must comply with the notice provisions in our By-Laws. The notice provisions in our By-Laws require that, for a proposal to be properly brought before the annual meeting of stockholders in 2024, proper notice of the proposal be received by us not less than 90 days nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting; provided, however that in the event next year’s annual meeting is more than 30 days before or after such anniversary date, notice must be delivered not less than the later of 90 days prior to next year’s annual meeting or the 10th day following the day the Company first publicly announces next year’s annual meeting date. Under these requirements, proposals brought under our By-Laws must be received no earlier than January 25, 2024 and no later than February 24, 2024. +In addition to satisfying the foregoing requirements under the By-Laws, to comply with the universal proxy rules, stockholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must provide notice to the Company that sets forth the information required by Rule 14a-19 under the Exchange Act no later than March 25, 2024. +Stockholder proposals and notices should be addressed to CPI Card Group Inc., 10368 West Centennial Road, Littleton, Colorado 80127; Attention: Sarah Kilgore, Chief Legal and Compliance Officer and Corporate Secretary. +OTHER MATTERS +We know of no other matters to be submitted to the stockholders at the Annual Meeting. If any other matters properly come before the Annual Meeting, persons named in the proxy intend to vote the shares they represent in accordance with their own judgments. +Upon written request by any stockholder entitled to vote at the Annual Meeting, we will promptly furnish, without charge, a copy of the Annual Report on Form 10-K for the fiscal year ended December 31, 2022, which we filed with the SEC, including the financial statements therein. Requests should be addressed to CPI Card Group Inc., 10368 West Centennial Road, Littleton, Colorado 80127; Attention: Sarah Kilgore, Chief Legal and Compliance Officer and Corporate Secretary. +YOUR VOTE IS IMPORTANT. WE URGE YOU TO VOTE TODAY OVER THE TELEPHONE, VIA THE INTERNET OR BY MAIL. +By Order of the Board of Directors, +Sarah Kilgore +Chief Legal and Compliance Officer and Corporate Secretary +34 +Table of Contents +ANNEX A – RECONCILIATION OF NON-GAAP MEASURES +Year Ended December 31, +2022 +2021 +Reconciliation of net income to EBITDA and Adjusted EBITDA: +Net income +$ +36,540 +$ +15,941 +Interest expense, net +29,616 +30,608 +Income tax expense +12,607 +7,881 +Depreciation and amortization +14,886 +15,098 +EBITDA +$ +93,649 +$ +69,528 +Adjustments to EBITDA: +Sales tax expense (benefit) (1) +$ +18 +$ +(614) +Stock-based compensation expense +3,479 +1,250 +Severance and other charges (2) +— +1,250 +Loss on debt extinguishment (3) +474 +5,048 +Foreign currency loss (gain) +83 +(15) +Subtotal of adjustments to EBITDA +$ +4,054 +$ +6,919 +Adjusted EBITDA +$ +97,703 +$ +76,447 +Net income margin (% of Net sales) +7.7% +4.2% +Net income (% Change 2022 vs. 2021) +129.2% +Adjusted EBITDA margin (% of Net sales) +20.5% +20.4% +Adjusted EBITDA growth (% Change 2022 vs. 2021) +27.8% +(1) Represents estimated sales tax expense (benefit) adjustments relating to a previously accrued contingent liability. +(2) The 2021 amount primarily relates to executive severance charges. +(3) The Company redeemed a portion of the 8.625% Senior Secured Notes in the first and fourth quarters of 2022 and expensed the associated portion of the unamortized deferred financing costs. Additionally, the Company terminated and repaid its Senior Credit Facility and First Lien Term Loan during the first quarter of 2021 and expensed the unamortized deferred financing costs and debt discount. +A-1 +Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date +TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: +KEEP THIS PORTION FOR YOUR RECORDS +DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. +V09293-P89376 +2. Ratification of KPMG LLP as independent registered public accounting firm for the year ending December 31, 2023. +3. Advisory vote to approve named executive officer compensation. +4. Approve an amendment to the Certificate of Incorporation to reflect new Delaware law provisions regarding officer exculpation. +1. Election of Directors +For Against Abstain +! ! ! +! ! ! +! ! ! +! ! ! +! ! ! +! ! ! +! ! ! +Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator or other fiduciary, please give full title as such. Joint +owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. +CPI CARD GROUP INC. +The Board of Directors recommends you vote FOR +proposals 1, 2, 3 and 4: +NOTE: The proxy holders will have discretion to vote on such other business as may properly come before the meeting or any adjournment thereof. +CPI CARD GROUP INC. +10368 WEST CENTENNIAL ROAD +LITTLETON, COLORADO 80127 +For Against Abstain +1c. H. Sanford Riley +1b. Nicholas Peters +1a. Thomas Furey +1f. Marc Sheinbaum +1d. Scott Scheirman +1e. Bradley Seaman +1g. Valerie Soranno Keating +Nominees: +! ! ! +! ! ! +! ! ! +VOTE BY INTERNET +Before The Meeting - Go to www.proxyvote.com or scan the QR Barcode above +Use the Internet to transmit your voting instructions and for electronic delivery of information. +Vote by 11:59 p.m. Eastern Time on May 23, 2023. Have your proxy card in hand when +you access the web site and follow the instructions to obtain your records and to create an +electronic voting instruction form. +During The Meeting - Go to www.virtualshareholdermeeting.com/PMTS2023 +You may attend the meeting via the Internet and vote during the meeting. Have the information +that is printed in the box marked by the arrow available and follow the instructions. +VOTE BY PHONE - 1-800-690-6903 +Use any touch-tone telephone to transmit your voting instructions. Vote by 11:59 p.m. +Eastern Time on May 23, 2023. Have your proxy card in hand when you call and then follow +the instructions. +VOTE BY MAIL +Mark, sign and date your proxy card and return it in the postage-paid envelope we +have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, +Edgewood, NY 11717. +SCAN TO +VIEW MATERIALS & VOTEw +Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: +The Notice and Proxy Statement and Form 10-K are available at www.proxyvote.com. +V09294-P89376 +CPI CARD GROUP INC. +Annual Meeting of Stockholders +May 24, 2023 8:00 a.m. Mountain Time +This proxy is solicited by the Board of Directors +The stockholder(s) hereby appoint(s) each of Sarah Kilgore and Jessica Browne as proxy, each with the power to appoint her +substitute, and hereby authorize(s) her to represent and vote, as designated on the reverse side of this ballot, all of the shares of +common stock of CPI CARD GROUP INC. that the stockholder(s) is/are entitled to vote at the Annual Meeting of Stockholders +to be held virtually at 8:00 a.m. Mountain Time on May 24, 2023, at www.virtualshareholdermeeting.com/PMTS2023, and any +adjournment or postponement thereof. +This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this +proxy will be voted in accordance with the Board of Directors' recommendations. +Continued and to be signed on reverse side \ No newline at end of file diff --git a/raw/proxies/0001641614/0001558370-23-005858/proxy_rpt.txt b/raw/proxies/0001641614/0001558370-23-005858/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..8312f64bf1506ab957e4de4a74b8980b8a5927b1 --- /dev/null +++ b/raw/proxies/0001641614/0001558370-23-005858/proxy_rpt.txt @@ -0,0 +1,10 @@ +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +The following is a description of transactions since January 1, 2021 to which we have been a party in which the amount involved exceeded or will exceed the lesser of $120,000 or one percent of the average of the Company’s total assets at year-end for the last two completed fiscal years and in which any of our directors, executive officers, beneficial holders of more than 5% of our capital stock or entities affiliated with them had or will have a direct or indirect material interest. +Registration Rights Agreement +In connection with our initial public offering, we entered into a registration rights agreement with the Tricor Funds (the “Registration Rights Agreement”). Under the Registration Rights Agreement, the Tricor Funds are entitled to request that we register shares of our Common Stock on a long-form or short-form registration statement on one or more occasions in the future, provided that we will not be obligated to register such shares within 90 days after the effective date of a registration statement previously filed pursuant to a request under the Registration Rights Agreement and otherwise for up to 60 days from the date of a request under the Registration Rights Agreement in certain circumstances. The Tricor Funds also are entitled to participate in certain registered offerings that we may conduct in the future, subject to certain restrictions. We will pay the Tricor Funds’ expenses in connection with the exercise of these rights. The registration rights described in this paragraph apply to (i) shares of our Common Stock held by the Tricor Funds as of the closing of our initial public offering, (ii) any of our capital stock (or that of our subsidiaries) issued or issuable with respect to the Common Stock described in clause (i) with respect to any dividend, distribution, recapitalization, reorganization or certain other corporate transactions, and (iii) any shares of our Common Stock owned or acquired following the closing of our initial public offering by the Tricor Funds (collectively, “Registrable Securities”). These registration rights are also for the benefit of any subsequent holder of Registrable Securities; provided that any particular securities will cease to be Registrable Securities when they have been sold in a registered public offering, sold in compliance with Rule 144 under the Securities Act or repurchased by us or our subsidiaries. In September 2021, we filed a registration statement on Form S-3 with respect to the shares of Common Stock held by the Tricor Funds in compliance with our obligations under the Registration Rights Agreement. +Director Nomination Agreement +In connection with our initial public offering, we entered into a Director Nomination Agreement with the Tricor Funds that provides the Tricor Funds the right to designate nominees for election to our Board for so long as the Tricor Funds collectively beneficially own 5% or more of the total number of shares of our Common Stock then outstanding. The number of nominees that the Tricor Funds are entitled to designate under the Director Nomination Agreement bears the same proportion to the total number of members of our Board as the number of shares of Common Stock beneficially owned by the Tricor Funds bears to the total number of shares of Common Stock outstanding, rounded up to the nearest whole number. In addition, the Tricor Funds shall be entitled to designate the replacement for any of its board designees whose board service terminates prior to the end of such designee’s term regardless of the Tricor Funds’ beneficial ownership at such time. In addition, for so long as the Tricor Funds collectively beneficially own 10% or more of the total number of shares of our Common Stock then outstanding, the Tricor Funds shall also have the right to have their designees participate on committees of our Board, subject to compliance with applicable law and stock exchange rules. The Director Nomination Agreement will terminate at such time as the Tricor Funds collectively own less than 5% of our outstanding Common Stock. Nicholas Peters and Bradley Seaman have been designated by the Tricor Funds as nominees for election of directors to our Board commencing in 2016. H. Sanford Riley has been designated by the Tricor Funds to stand as a nominee for the first time at the Annual Meeting. +Policies and Procedures for Related Party Transactions +Our Board has adopted a written related party transaction policy setting forth the policies and procedures for the review and approval of related party transactions. The policy covers transactions involving us in which the aggregate amount involved in any calendar year will or may be expected to exceed $100,000 and in which a related person has or will have a direct or indirect interest (other than solely as a result of being a director or a less than 10% beneficial owner of another entity). For purposes of this policy, a related person is defined as an executive officer, director, nominee for director, or a greater than 5% beneficial owner of our Common Stock, in each case since the beginning of the most recently completed fiscal year, and any immediate family member of or person sharing a household with any of these individuals. All related party transactions must be presented to the Audit Committee for review, consideration and approval. In approving or rejecting any such proposed transaction, the Audit Committee will consider, among other factors, the related party’s relationship to the Company and interest in the transaction, the material facts of the transaction, the benefits to the Company of the transaction, the availability of other sources of comparable products or services (if applicable), whether the transaction is on terms that are comparable to the terms generally available to an unrelated third party, whether the transaction has the potential to impair director independence and whether the transaction constitutes a conflict of interest. +33 +Table of Contents \ No newline at end of file diff --git a/raw/proxies/0001641614/0001558370-24-006124/proxy.txt b/raw/proxies/0001641614/0001558370-24-006124/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..c375838c17beb0d2030fc74e4b1973c57d041321 --- /dev/null +++ b/raw/proxies/0001641614/0001558370-24-006124/proxy.txt @@ -0,0 +1,1988 @@ +DEF 14A +1 +tmb-20240522xdef14a.htm +DEF 14A +Table of Contents +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Proxy Statement Pursuant to Section 14(a) of the +Securities Exchange Act of 1934 +Filed by the Registrant ☑ +Filed by a Party other than the Registrant ☐ +Check the appropriate box: +☐ Preliminary Proxy Statement +☐ Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +☑ Definitive Proxy Statement +☐ Definitive Additional Materials +☐ Soliciting Material Pursuant to §240.14a-12 +CPI Card Group Inc. +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +☑ +No fee required. +☐ +Fee paid previously with preliminary materials. +☐ +Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a6(i)(1) and 0-11. +Table of Contents +10368 West Centennial Road +Littleton, Colorado 80127 +April 29, 2024 +Dear Stockholder: +On behalf of the Board of Directors of CPI Card Group Inc. (the “Company”), you are cordially invited to attend the 2024 Annual Meeting of Stockholders (the “Annual Meeting”) to be held on Wednesday, May 22, 2024, at 7:00 a.m. Mountain Time. The Annual Meeting will be a completely virtual meeting of stockholders, which will be conducted online via live webcast. Please see the Notice of Annual Meeting of Stockholders on the next page for more information about how to attend the Annual Meeting virtually. +We have included with this letter a proxy statement that provides you with detailed information about the business to be conducted at the Annual Meeting. In addition, the Company’s 2023 Annual Report, which is being made available to you along with the proxy statement, contains information about the Company and its performance. We encourage you to read these materials carefully. +Whether or not you plan to attend the Annual Meeting, your vote is important, and we encourage you to vote promptly. You may vote your shares through one of the methods described in the accompanying proxy statement. We strongly urge you to vote FOR the nominees proposed by the Board of Directors and in accordance with the recommendations of the Board of Directors on the other proposals by following the voting instructions contained in the proxy statement. +Sincerely, +H. Sanford Riley +John Lowe +Chair of the Board +President, Chief Executive Officer and Director +Table of Contents +CPI CARD GROUP INC. +NOTICE OF ANNUAL MEETING OF STOCKHOLDERS +MAY 22, 2024 7:00 A.M. +(Mountain Time) +To the Stockholders of CPI Card Group Inc.: +The 2024 Annual Meeting of Stockholders will be held virtually on May 22, 2024, at 7:00 a.m. (Mountain Time) via live webcast accessible at www.virtualshareholdermeeting.com/PMTS2024. The purpose of the meeting is to: +1. elect the eight director nominees named in the accompanying proxy statement; +2. ratify the appointment of KPMG LLP as our independent registered public accounting firm for 2024; +3. hold an advisory vote to approve named executive officer compensation; and +4. conduct any other business properly brought before the Annual Meeting or any adjournments or postponements thereof. +Voting is limited to stockholders of record at the close of business on April 1, 2024. +YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE VOTE YOUR SHARES OVER THE TELEPHONE, VIA THE INTERNET OR BY COMPLETING, DATING, SIGNING AND RETURNING A PROXY CARD, AS DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT. YOUR PROMPT COOPERATION IS GREATLY APPRECIATED. +By Order of the Board of Directors, +Jessica Browne +Acting Chief Legal and Compliance Officer and Corporate Secretary +Table of Contents +TABLE OF CONTENTS +Page +SUMMARY OF THE ANNUAL MEETING +1 +PROPOSAL NO. 1 ELECTION OF DIRECTORS +5 +DIRECTORS AND CORPORATE GOVERNANCE +6 +Director Nominee Biographical Information and Qualifications +6 +Board Diversity +7 +Director Selection Process +7 +Recommendation of Directors by Stockholders +8 +Independence of Directors +8 +Board’s Role in Risk Oversight +9 +Board/Committee Areas of Risk Oversight and Actions +10 +Corporate Governance +10 +Other Board Information +10 +Director Compensation +13 +Security Ownership of Certain Beneficial Owners, Directors and Management +14 +Delinquent Section 16(a) Reports +14 +EXECUTIVE OFFICERS +15 +EXECUTIVE COMPENSATION +16 +2023 NEOs +16 +2023 Business Overview Business Highlights +16 +Additional highlights of 2023 performance +17 +Summary of Our 2023 Compensation Decisions +17 +Executive Compensation Governance Highlights +19 +2023 Say-on-Pay Vote +19 +Role of the Compensation Committee +19 +Role of the Independent Compensation Consultant +20 +Role of Market Data and the Peer Group +20 +Elements of the 2023 Executive Compensation Program +21 +Base Salary +21 +Short-Term Incentives +22 +Actual 2023 Payouts +22 +Long-Term Incentives +23 +Other Benefits +23 +Termination or Change in Control +23 +Additional Compensation Governance Practices +24 +2023 Summary Compensation Table +24 +Outstanding Equity Awards at 2023 Fiscal Year-End +25 +Employment and Post-Termination Arrangements +26 +Equity Compensation Plan Information Table +30 +AUDIT COMMITTEE REPORT +31 +FEES PAID TO INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +31 +PROPOSAL NO. 2 RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +33 +PROPOSAL NO. 3 STOCKHOLDER ADVISORY VOTE TO APPROVE OUR NAMED EXECUTIVE OFFICER COMPENSATION +34 +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +35 +Policies and Procedures for Related Party Transactions +36 +STOCKHOLDER PROPOSALS FOR 2025 ANNUAL MEETING OF STOCKHOLDERS +37 +OTHER MATTERS +37 +Annex A – Reconciliation of Non-GAAP Measures +A-1 +Table of Contents +10368 West Centennial Road +Littleton, Colorado 80127 +SUMMARY OF THE ANNUAL MEETING +This proxy statement contains information related to the 2024 Annual Meeting of Stockholders (the “Annual Meeting”) of CPI Card Group Inc. (referred to herein as the “Company,” “CPI,” “we,” “us” or “our” as the context requires) to be held via live webcast accessible at www.virtualshareholdermeeting.com/PMTS2024. +Why did you send me this proxy statement? +We sent you this proxy statement because the Board of Directors of the Company (the “Board” or the “Board of Directors”) is soliciting, on the Company’s behalf, your proxy to vote at the Annual Meeting and at any postponements or adjournments of the Annual Meeting. This proxy statement summarizes information that is intended to assist you in making an informed vote on the proposals described in this proxy statement. +Who can vote at the Annual Meeting? +Only stockholders of record as of the record date are entitled to vote at the Annual Meeting. The record date to determine stockholders entitled to notice of and to vote at the Annual Meeting is the close of business on April 1, 2024. On the record date, there were 11,381,451 shares of our common stock, par value $0.001 per share (the “Common Stock”), outstanding. Our Common Stock is the only class of voting securities outstanding. +How many shares must be present to conduct the Annual Meeting? +We must have a quorum present virtually or by proxy to conduct the Annual Meeting. A quorum is established when a majority of shares entitled to vote is present virtually or represented by proxy at the Annual Meeting. Abstentions and broker non-votes (as described below) are counted for purposes of determining whether a quorum is present. +What matters are to be voted on at the Annual Meeting? +The agenda for the Annual Meeting is to: +1. elect the eight director nominees named in this proxy statement; +2. ratify the appointment of KPMG LLP as our independent registered public accounting firm for 2024; +3. hold an advisory vote to approve named executive officer compensation (the “Say-on-Pay Proposal”); and +4. conduct any other business properly brought before the Annual Meeting or any adjournments or postponements thereof. +As of the date of this proxy statement, we do not know of any other matters to be presented at the Annual Meeting. If any other matters properly come before the Annual Meeting, however, the persons named as proxies will be authorized to vote or otherwise act in accordance with their judgment. +How does the Board recommend that I vote? +The Board recommends that you vote: +1. FOR the election of each of the director nominees named in this proxy statement; +2. FOR the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for 2024; and +3. FOR the Say-on-Pay Proposal. +1 +Table of Contents +How do I vote at the Annual Meeting? +You may vote via the Internet during the Annual Meeting or by proxy in advance of the Annual Meeting. +Stockholder of Record . If you are a stockholder of record, there are three ways to vote by proxy: +By Internet — You can vote via the Internet by following the instructions on your proxy card. You will need to use the control number appearing on your proxy card to vote via the Internet. +By Telephone — If you receive or request printed copies of the proxy materials by mail, you will receive a proxy card and you can vote by telephone by following the instructions on your proxy card. You will need to use the control number appearing on your proxy card to vote by telephone. +By Mail — If you receive or request printed copies of the proxy materials by mail, you will receive a proxy card and you can vote by completing, dating and signing the proxy card and returning it in the envelope provided. +Beneficial Owner of Stock . If you hold shares in “street name” through a bank, broker or other nominee, you are considered a “beneficial owner” of stock and you may vote as follows: +By Internet — You can vote via the Internet by following the instructions on your voting instruction form. The availability of Internet voting may depend on the voting process of the organization that holds your shares. +By Telephone — If you receive or request printed copies of the proxy materials by mail, you will receive a voting instruction form and you can vote by telephone by following the instructions on the voting instruction form. The availability of telephone voting may depend on the voting process of the organization that holds your shares. +By Mail — If you receive or request printed copies of the proxy materials by mail, you will receive a voting instruction form and you can vote by proxy by completing, dating and signing the voting instruction form and returning it in the envelope provided. +Internet and Telephone voting facilities for stockholders of record will be available 24 hours a day. You may vote over the telephone or via the Internet until 11:59 p.m. Eastern Time on May 21, 2024. Even if you plan to attend the Annual Meeting virtually, we recommend that you also submit your proxy or voting instructions as described above so that your vote will be counted if you later decide not to attend the Annual Meeting. +Your proxy will be voted in accordance with your instructions, so long as the instructions are received by the voting deadline. In the case of a proxy card returned by mail, such card must be signed and dated and be actually received before the Annual Meeting. If you vote your shares via the Internet, over the telephone or by executing and returning a proxy card by mail, but you do not provide specific instructions with respect to the proposals, your shares will be voted in accordance with the recommendations of the Board of Directors: FOR each director nominee named in this proxy statement, FOR the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for 2024, and FOR the Say-on-Pay Proposal. +As of the date of this proxy statement, we do not know of any matters to be presented at the Annual Meeting except those described in this proxy statement. If any other matters properly come before the Annual Meeting, however, the persons named as proxies will be authorized to vote or otherwise act in accordance with their judgment. +What does it mean if I receive more than one e-mail or set of proxy materials? +You may receive more than one e-mail or multiple proxy cards or voting instruction forms. For example, if you hold your shares in more than one brokerage account, you may receive a separate e-mail or a separate voting instruction form for each brokerage account in which you hold shares. Also, if you are a stockholder of record and your shares are registered in more than one name, you may receive more than one e-mail or more than one proxy card. To vote all of your shares by proxy, you must complete, date, sign and return each proxy card and voting instruction form that you receive, or vote over the telephone or via the Internet the shares represented by each, e-mail, proxy card or voting instruction form that you receive. +May I change my vote? +Yes. You may revoke your proxy at any time before it is voted at the Annual Meeting. To change your vote, if you are a stockholder of record, you may submit another later dated proxy over the telephone or via the Internet no later than 11:59 p.m. Eastern Time on May 21, 2024 or by mail so long as it is actually received prior to the Annual Meeting, or by voting your shares during the Annual Meeting (your attendance at the Annual Meeting will not, by itself, revoke your proxy; you must vote at the Annual Meeting to revoke your proxy). If you are a beneficial owner and your shares are held in street name, you may change your vote by submitting new voting instructions to your bank, broker or other nominee, or you may change your vote by attending and voting at the Annual Meeting. +2 +Table of Contents +What happens if my bank or broker holds my shares in “street name” and I do not give any voting instructions? +If you hold your shares in “street name” through a bank, broker or other nominee, such bank, broker or nominee will vote those shares in accordance with your instructions. You should refer to the information provided to you by your bank, broker or nominee to determine how to provide voting instructions. Without instructions from you, a bank, broker or nominee will be permitted to exercise its own voting discretion only with respect to so-called “routine matters” but will not be permitted to exercise voting discretion with respect to “non-routine matters.” The Company believes that the proposal to ratify KPMG LLP’s appointment as the Company’s independent registered public accounting firm for 2024 (Proposal No. 2) is a routine matter on which brokers will be permitted to vote shares on your behalf, even without your instructions. Other than Proposal No. 2, the Company believes that all proposals set forth in this proxy statement are considered non-routine matters, and brokers will thus not be able to vote on your behalf if you have not furnished voting instructions to them. Thus, if you do not give your bank, broker or nominee specific voting instructions with respect to Proposal No. 2, your shares will be voted in such entity’s discretion. If you do not give your bank, broker or nominee specific instructions with respect to the other proposals herein, your shares will not be voted on such proposals. This is called a “broker non-vote.” Shares represented by such broker non-votes will be counted in determining whether a quorum is present but will otherwise have no effect on the non-routine proposals. We urge you to promptly provide your bank, broker or nominee with appropriate voting instructions so that all your shares may be voted at the Annual Meeting. +What vote is required to elect directors and approve the other matters described in this proxy statement? +The Company’s Third Amended and Restated By-Laws (the “By-Laws”) require that the directors named in Proposal No. 1 be elected by the majority of votes cast with respect to such director in uncontested elections (the number of shares voted “for” a director nominee must exceed the number of votes cast “against” that nominee). In a contested election (a situation in which the number of nominees exceeds the number of directors to be elected, which we do not expect to occur for the Annual Meeting), the standard for election of directors will be a plurality of the shares represented in person or by proxy at any such meeting and entitled to vote on the election of directors. +The ratification of the appointment of KPMG LLP as our independent registered public accounting firm for 2024 (Proposal No. 2) and the Say-on-Pay Proposal (Proposal No. 3) each require the affirmative vote of the holders of a majority of the shares of Common Stock present in person or represented by proxy at the Annual Meeting and entitled to vote thereon. Stockholders attending the virtual Annual Meeting via webcast are deemed to be present “in person.” +Broker non-votes are not counted as votes cast and therefore have no effect on Proposal No. 1. As stated above, because Proposal No. 2 is a routine matter, if you do not give your bank, broker or other nominee specific voting instruction with respect to Proposal No. 2, your shares will be voted in such entity’s discretion, and no broker non-votes are expected on such proposal. Broker non-votes will have no effect on Proposal No. 3 because it is a non-routine matter on which brokers are not permitted to vote without your voting instruction. +Abstentions will not be voted but will be counted for purposes of determining whether there is a quorum present. Abstentions will have the same effect of a vote “against” a proposal other than the proposal to elect directors (Proposal No. 1), on which they have no effect. +What is the difference between holding shares as a stockholder of record and as a beneficial owner? +If your shares are registered in your name on the Company’s books and records or with our transfer agent, you are the “stockholder of record” of those shares, and this proxy statement and accompanying materials have been provided directly to you by the Company. On the other hand, if you purchased your shares through a brokerage or other financial intermediary, the brokerage or other financial intermediary will automatically put your shares into “street name,” which means that the brokerage or other financial intermediary will hold your shares in its name or another nominee’s name and not in your name, but will keep records showing you as the “beneficial owner.” If you hold shares beneficially in street name, this proxy statement and accompanying materials have been forwarded to you by your broker, bank or other holder of record. +How many votes do I have? +Each share of Common Stock that you hold as of the record date entitles you to one vote, without cumulation, on each matter to be voted upon at the Annual Meeting. +How will the votes be counted at the Annual Meeting? +The votes will be counted by the independent inspector of election appointed for the Annual Meeting. +How will the Company announce the voting results? +The Company will report the final results of the voting at the Annual Meeting in a filing with the SEC on a Current Report on Form 8-K within four business days after the date of the Annual Meeting. +3 +Table of Contents +Who pays for the Company’s solicitation of proxies? +The Board, on behalf of the Company, is soliciting your proxy to vote your shares of Common Stock at our Annual Meeting. The Company will bear the cost of soliciting proxies, including preparing, printing and mailing this proxy statement. Proxies may be solicited personally, or by mail, e-mail or telephone by certain of our directors, officers, employees or representatives. Our directors and employees will not be paid any additional compensation for soliciting proxies. We may reimburse brokerage firms and other persons representing beneficial owners of shares for their out-of-pocket expenses in forwarding solicitation materials to such beneficial owners . +What is “householding” and how does it work? +Under the rules adopted by the SEC, we may deliver a single copy of the proxy materials to one address shared by two or more of our stockholders. This delivery method is referred to as “householding” and can reduce the environmental impact of our Annual Meeting and result in significant cost savings for the Company. To take advantage of this opportunity, we have delivered only one copy of the proxy materials, if you requested printed versions by mail, this proxy statement and the Annual Report, to multiple stockholders who share an address, unless we received contrary instructions from the impacted stockholders prior to the mailing date. If you would like to either participate in householding or receive separate copies of future proxy materials, please contact Broadridge Financial Solutions, Inc. by calling 1-866-540-7095 or by mail at 51 Mercedes Way, Edgewood, New York 11717, Attention: Householding Department. If you are a beneficial owner of shares held in street name and would like to participate in householding, you may contact the organization that holds your shares. +What do I need for admission to the Annual Meeting and how do I vote at the Annual Meeting? +You are entitled to participate in the Annual Meeting if you were a stockholder as of the close of business on April 1, 2024, the record date. To be admitted to and participate in the Annual Meeting, you must follow the instructions and use the information found on your proxy card, or voting instruction form. The Annual Meeting will be held in a virtual-only format on Wednesday, May 22, 2024 at 7:00 a.m. Mountain Time. The virtual meeting and live webcast can be accessed at www.virtualshareholdermeeting.com/PMTS2024. You will not be able to attend the Annual Meeting in person. +You may vote during the Annual Meeting by following the instructions available at www.virtualshareholdermeeting.com/PMTS2024 during the Annual Meeting. Whether or not you plan to attend the Annual Meeting, you are encouraged to vote in advance by one of the methods described in this proxy statement. +May stockholders ask questions at the Annual Meeting? +Yes. Stockholders will have the ability to submit questions during the Annual Meeting via the virtual meeting website. During the Annual Meeting, we will hold a live Q&A session, during which we intend to answer all questions submitted during the meeting that are pertinent to the Company and the meeting matters in accordance with the Annual Meeting’s Rules of Conduct and as time permits. +What if I have technical difficulties or trouble accessing the Annual Meeting? +If you encounter any difficulties while accessing the virtual meeting during the check-in or meeting time, a technical assistance phone number will be made available on the virtual meeting registration page beginning 15 minutes prior to the start time of the Annual Meeting. +4 +Table of Contents +PROPOSAL NO. 1 - ELECTION OF DIRECTORS +The Board is currently comprised of seven directors. Upon the recommendation of our Nominating and Corporate Governance Committee (the “Nominating Committee”), the Board has nominated the seven individuals presently serving as directors, each of whom is listed below to stand for re-election to the Board for a one-year term ending at the annual meeting of stockholders in 2025 and until their successors, if any, are duly elected or appointed. +Two of our stockholders, Tricor Pacific Capital Partners (Fund IV), LP and Tricor Pacific Capital Partners (Fund IV) US, LP (together, the “Tricor Funds”), have the right to collectively designate nominees for election to our Board so long as the Tricor Funds collectively beneficially own 5% or more of the total number of shares of Common Stock then outstanding, pursuant to a Director Nomination Agreement, dated as of October 15, 2015, entered into between the Company and the Tricor Funds in connection with our initial public offering (the “Director Nomination Agreement”). The number of nominees that the Tricor Funds are entitled to designate under the Director Nomination Agreement bears the same proportion to the total number of members of our Board as the number of shares of Common Stock beneficially owned by the Tricor Funds bears to the total number of shares of Common Stock outstanding, rounded up to the nearest whole number. For additional information regarding the Director Nomination Agreement, please see the section titled “Certain Relationships and Related Party Transactions - Director Nomination Agreement.” The Tricor Funds notified the Company it is nominating Lisa Oleson as a director. The Company agreed to use its reasonable efforts to include the nominee in these proxy materials. The Board has voted to expand the size of the Board to eight members effective immediately prior to the Annual Meeting. +The Board has determined that each director nominee listed below, other than John Lowe, is an independent director, as further described below in “Directors and Corporate Governance — Independence of Directors.” All of the director nominees listed below have consented to being named in this proxy statement and to serving if elected. However, if any of the below nominees becomes unable or unwilling to serve prior to the date of the Annual Meeting, proxy holders will have discretion and authority to vote for another nominee proposed by our Board. Alternatively, our Board may reduce the number of directors to be elected at the Annual Meeting. +Name +Position +Thomas Furey +Director +John Lowe +Director, President and Chief Executive Officer +Ravi Mallela +Director +Nicholas Peters +Director +H. Sanford Riley +Director and Chairman of the Board +Marc Sheinbaum +Director +Valerie Soranno Keating +Director +Lisa Oleson +Director Nominee* +*Ms.Oleson is nominated to stand for election at the Annual Meeting by the Tricor Funds. +Biographical information relating to each of the director nominees is set forth below under “Directors and Corporate Governance — Director Nominee Biographical Information and Qualifications.” +THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THE DIRECTOR NOMINEES NAMED IN THIS PROXY STATEMENT. +5 +Table of Contents +DIRECTORS AND CORPORATE GOVERNANCE +Director Nominee Biographical Information and Qualifications +Set forth below is a description of the business experience of each director nominee, as well as their relevant qualifications, skills and experiences. Each director nominee listed below, other than Ms. Oleson, is a current director nominated for re-election to the Board for a term expiring at the annual meeting of stockholders in 2025. See “Election of Directors (Proposal No. 1).” +Thomas Furey , 59, has served on our Board of Directors since May 2021. Mr. Furey currently serves as the Chairman and Chief Executive Officer of Sagetech Avionics, Inc. (“Sagetech”), a privately held aerospace electronics company. Sagetech was incorporated in 2019 after a divisional carve out from Sagetech Corporation, for which Mr. Furey held the position of Chief Operating Officer since 2015. From 2014 to 2015, Mr. Furey served as Vice President of manufacturing and engineering at Unitec, Inc., a point-of-sale payments equipment company, before which he ran his own operations consultancy firm from 2012 to 2013. From 2004 to 2012, Mr. Furey held various executive positions at Standard Register Company, including Vice President of manufacturing, Chief Supply Chain Officer and President of Standard Register’s industrial business. From 2001 to 2004, Mr. Furey was in charge of North American operations for Avery Dennison Corporation (NYSE:AVY), a label materials manufacturer. Mr. Furey also held positions of increasing responsibility in manufacturing leadership at AlliedSignal, Inc. (which acquired Honeywell Inc. in 1999 and took its name) from 1994 to 2001 and was selected as the AlliedSignal fellow to the “Leaders for Manufacturing” program at the Massachusetts Institute of Technology (“MIT”) from 1997 to 1999. He began his career as a Naval Flight Officer in the U.S. Navy. Mr. Furey holds a Bachelor of Science degree in Mathematics from the U.S. Naval Academy, a Master of Science degree in Industrial Engineering from California State University Northridge, as well as a Master of Science degree in Mechanical Engineering and a Master of Business Administration degree from MIT. Mr. Furey brings to the Board extensive experience in high volume manufacturing, operations and executive leadership. +John Lowe , 47, was appointed President and Chief Executive Officer of the Company and was appointed to the Board of Directors in January 2024. Prior to that, he served as our Executive Vice President, End-to-End Payment Solutions since December 2022. He served as our Senior Vice President and General Manager, Secure Card from October 2021 to December 2022. From July 2018 to October 2021, Mr. Lowe served as the Company’s Chief Financial Officer. Prior to joining the Company, Mr. Lowe served as Chief Financial Officer of SquareTwo Financial Corporation, a financial services company, from August 2014 until June 2017. Prior to August 2014, Mr. Lowe held various leadership roles of increasing responsibility at SquareTwo Financial Corporation, including serving as Treasurer, Vice President of Finance and Vice President of External Reporting. Mr. Lowe’s employment with SquareTwo Financial Corporation commenced in 2009. SquareTwo Financial Corporation filed for Chapter 11 bankruptcy protection in March 2017 in connection with a strategic sale of the Company. Mr. Lowe holds a Bachelor of Science degree in both Accounting and Finance from the Virginia Polytechnic Institute and State University. He brings to the Board significant experience in the areas of finance, accounting, investor relations, operations and executive leadership, including over 20 years of experience in the financial services industry. +Ravi Mallela , 54 has served on our Board of Directors since November 2023. Since January 2022, he has served as Executive Vice President and Chief Financial Officer of National Mortgage Insurance Holdings Inc. (NASDAQ:NMIH), the parent company of National Mortgage Insurance Corporation, a U.S.-based, private mortgage insurance company, and on its Executive Committee. Prior to joining NMIH, Mr. Mallela served as Executive Vice President and Chief Financial Officer, Finance Group, of First Hawaiian, Inc., a bank holding company, and First Hawaiian Bank (NASDAQ:FHB), a financial institution, (together, “First Hawaiian”) from September 2018 until January 2022. Prior to joining First Hawaiian, Mr. Mallela served as Senior Vice President, Head of Finance and Treasury of First Republic Bank (OTC:FRCB) from 2013 to 2018. He holds an MBA from UCLA Anderson School of Management and a Bachelor of Science degree in Economics from the University of San Francisco. Mr. Mallela has public company executive leadership experience including significant experience in managing finance operations, risk management frameworks, data strategies and technical applications at large and mid-sized financial institutions. +Nicholas Peters , 51, has served on our Board of Directors since 2007. Mr. Peters is a Managing Director at Parallel49 Equity (formerly Tricor Pacific Capital), a private equity firm that makes control investments in lower middle market companies in the United States and Canada, which he joined in 2002, and also began serving as Parallel49 Equity’s Chief Financial Officer in 2012. Prior to joining Parallel49 Equity, Mr. Peters was a Senior Manager at Arthur Andersen LLP in Chicago. Mr. Peters is the Chairman of the Questco Companies and serves on the board of several other Parallel49 Equity investment companies as well as non-Parallel49 Equity investment companies. Mr. Peters holds a Bachelor of Science degree in Business Administration from the University of Dayton in Ohio. He was a Certified Public Accountant (inactive) (“CPA”) and is affiliated with the American Institute of CPAs and the Ohio Society of CPAs. Mr. Peters brings to the Board strong finance and accounting skills, as well as valuable experience from his oversight of the management and operations of several of Parallel49 Equity’s investment companies. +H. Sanford “Sandy” Riley , 73, has served on our Board of Directors since May 2023. He has served as President and CEO of Richardson Financial Group Limited, a specialized financial services company, since 2003. Previously, he served for 10 years as President and CEO and later Chairman of Investor Group, Inc., one of Canada’s largest mutual fund companies. Mr. Riley has served as a member the board of directors of Molson Coors (NYSE:TAP) since 2015 and RF Capital Group Inc. (TSX:RCG) since 2021. In addition, Mr. Riley previously served as a director of Canadian Western Bank (TSX:CWB) from 2011 to 2022, The North West Company (TSX:NWC) from 2002 to 2022, and Manitoba Hydro, where he also served as Chairman of the board of directors from 2016 to 2018. Mr. Riley is also involved with various community organizations, including serving as Chairman of the University of Winnipeg Foundation, past Chancellor of the University of Winnipeg and past Chairman of the Manitoba Business Council. Mr. Riley holds a J.D. from Osgoode Hall Law School, a Bachelor of Arts degree from Queen’s University and is a Member of the Order of Manitoba and the Order of Canada. He brings extensive board-level experience having served on numerous public company boards and committees in various industries, with leadership in areas +6 +Table of Contents +of risk management, corporate governance and executive compensation, as well as executive leadership experience in financial services, including such areas as operations, management, strategy and corporate development. +Marc Sheinbaum, 66, has served on our Board of Directors since November 2019. Since January 2017, Mr. Sheinbaum has been an advisor to venture capital and private equity firms. From April 2014 to August 2016, he was the President, Chief Executive Officer and a director of Higher One Holdings, Inc. (NYSE:ONE), a payments technology provider for higher education. From February 2007 through March 2013, Mr. Sheinbaum was the Senior Vice President and Chief Executive Officer of Retail, Auto and Education Finance at JPMorgan Chase & Co. (NYSE:JPM). Earlier in his career, Mr. Sheinbaum held positions at GE Capital Corporation and American Express Company (NYSE:AXP), as well as Coopers & Lybrand Management Consulting. Mr. Sheinbaum holds a Bachelor of Science degree in Management Science from State University of New York at Albany and a Master of Business Administration degree from New York University. He brings considerable experience in payments and consumer financial services as well as public company leadership. +Valerie Soranno Keating , 60, has served on our Board of Directors since May 2018. Ms. Soranno Keating has been senior advisor to a number of private equity firms in the U.S. and Europe since 2017. From November 2009 through May 2015, she was the Chief Executive Officer of Barclaycard, the global payments division of Barclays PLC (NYSE:BCS), with $60 billion in assets and over 30 million customers throughout the U.S., Europe and South Africa. Before joining Barclays PLC, Ms. Soranno Keating held a variety of executive positions at American Express Company (NYSE:AXP) from May 1993 through May 2009, including President, Travelers Cheques & Prepaid Services, Executive Vice President Global Commercial Services, Executive Vice President Global Merchant Services, Emerging Global Businesses & Network Expansion, and Vice President Corporate Strategic Planning. Ms. Soranno Keating also serves as a director on the boards of other public and private companies, including One Main Financial (NYSE:OMF), FinServ Acquisition Corp. II (Nasdaq: FSRX), Engage People Inc. and Billhighway Management LLC. Ms. Soranno Keating holds a Bachelor of Science degree in Business Administration from Lehigh University. She brings to the Board wide-ranging experience in both executive and board roles across a broad spectrum of payments and related businesses. +Lisa Oleson , 44, is nominated by Tricor Funds to stand for election to our Board of Directors. Since 2016, Ms. Oleson has served as the Chief Financial Officer at Tricor Pacific Capital Inc., a Canadian Single-Family Office that makes control investments in middle market companies, commercial real estate, and land development, among other asset classes. Ms. Oleson currently serves on the board of directors of Dinoflex Group LP, a manufacturer of premium recycled rubber flooring with distribution across North America. Prior to joining Tricor, Ms. Oleson held progressively senior finance roles in financial services, recycling, franchising, and heavy equipment. Ms. Oleson is a CGA CPA in British Columbia, and holds a Bachelor of Business Administration degree with Honors from Laurentian University. Ms. Oleson brings strong finance and accounting skills, as well as diverse operating experience from her time in various industries. +Mr. Scott Scheirman, Mr. Robert Pearce and Mr. Bradley Seaman each served on the Board during 2023. Mr. Scheirman retired from the Board, effective as of January 25, 2024, Mr. Pearce resigned from the Board, effective as of March 22, 2023 and Mr. Seaman resigned from the Board, effective as of June 15, 2023. The Company thanks each of Messrs. Scheirman, Pearce and Seaman for their contributions as directors during their tenure. +Board Diversity +Board Diversity Matrix (As of April 22, 2024) +Total Number of Directors +7 +Part I: Gender Identity +Female +Male +Directors +1 +6 +Part II: Demographic Background +White +1 +5 +Asian +0 +1 +In addition to the diversity categories identified above, one of our directors is a military veteran. +Director Selection Process +The Nominating Committee works with the Board to determine periodically, as appropriate, the desired Board qualifications, expertise and characteristics, and recommends candidates to the Board based on these criteria. In identifying director candidates, the Nominating Committee accepts recommendations from current or former directors, search firms retained by the Nominating Committee to assist in identifying and evaluating potential candidates, stockholders, Company executives and by self-nomination. In evaluating director candidates, regardless of the source of recommendation, the Nominating Committee generally considers factors such as business experience, high ethical standards and integrity, skills, understanding of CPI’s business environment and willingness to devote adequate time to Board duties. The Company’s Corporate Governance Guidelines also provide that the Nominating Committee shall work with the Board to determine eligibility to serve as a director of CPI, which includes weighing the aforementioned factors and evaluating each individual in the context of the membership of the Board as a group, with the objective of having a group that can best perpetuate the +7 +Table of Contents +success of CPI’s business and represent stockholder interests through the exercise of sound judgment using the Board’s diversity of background and experience in various areas. The Board does not have a specific policy on diversity, but the Company’s Corporate Governance Guidelines provide that, with respect to Board diversity, the Nominating Committee may consider such factors as differences in professional background, education, skill and other individual qualities and attributes that contribute to the total mix of viewpoints and experience represented on the Board. +The Nominating Committee periodically retains a third-party executive search firm to assist in the identification and evaluation of director candidates. +In determining whether to recommend a director for re-election, the Nominating Committee considers the director’s past attendance at meetings, participation in and contributions to the activities of the Board (including Board committees) and the Company, the director’s adherence to standards of high character and integrity, as well as other qualifications and characteristics set forth in the Nominating Committee charter. +Recommendation of Directors by Stockholders +In accordance with its charter, the Nominating Committee will consider any candidate for election as a director of the Company recommended by any CPI stockholder, provided that the recommending stockholder follows the procedures set forth in Section 2.10(a) of the Company’s By-Laws for nominations by stockholders of persons to serve as directors (except for directors nominated by the Tricor Funds (defined below), as described in the paragraph immediately below). The Nominating Committee evaluates director candidates recommended by CPI stockholders (except for the Tricor Funds) in the same manner by which it evaluates other director candidates considered by the Nominating Committee, as described above. +As discussed in “Proposal 1 – Election of Directors”, the Tricor Funds have the right to collectively designate nominees for election to our Board of Directors for so long as the Tricor Funds collectively beneficially own 5% or more of the total number of shares of Common Stock then outstanding, pursuant to the Director Nomination Agreement entered into between the Company and the Tricor Funds in connection with our initial public offering. The number of nominees that the Tricor Funds are entitled to designate under the Director Nomination Agreement bears the same proportion to the total number of members of our Board as the number of shares of Common Stock beneficially owned by the Tricor Funds bears to the total number of shares of Common Stock outstanding, rounded up to the nearest whole number. Pursuant to the Director Nomination Agreement, the Company agrees to use its best efforts to ensure that director nominees of the Tricor Funds are included in the Board’s slate of nominees submitted to the stockholders for election at each annual meeting. Thus, the Nominating Committee would not evaluate director candidates nominated by the Tricor Funds and make a determination regarding their suitability for nomination in the manner described above. The Nominating Committee does review the qualifications of director candidates nominated by the Tricor Funds, including, at minimum, a background check, a written questionnaire, and other biographical information, to assess the director candidates’ suitability for submission to the stockholders for election to the Board. Refer to “Proposal 1 – Election of Directors” and “Certain Relationships and Related Party Transactions – Director Nomination Agreement” for a description of the Tricor Funds’ right to designate nominees. +Pursuant to Section 2.10(a) of the By-Laws, nominations of persons for election to the Board at a meeting of stockholders may be made by any stockholder of the Company entitled to vote for the election of directors at such meeting who sends a timely notice in writing to our Corporate Secretary. To be timely, a stockholder’s notice must be delivered to our Corporate Secretary at the Company’s principal executive offices not less than 90 nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting; provided, however, that if the annual meeting is more than 30 days prior to or after the anniversary of the preceding year’s annual meeting, notice by the stockholder must be delivered not later than the close of business on the later of the 90th day prior to such annual meeting or the 10th day following the day on which public announcement of the date of such annual meeting is made by the Company. As set forth in the By-Laws, a stockholder’s notice is required to contain certain prescribed information. +Recommendations or notices relating to director nominations should be sent to CPI Card Group Inc., 10368 West Centennial Road, Littleton, Colorado 80127; Attention: Jessica Browne, Acting Chief Legal and Compliance Officer and Corporate Secretary. +Independence of Directors +The Company’s Corporate Governance Guidelines provide that a majority of the members of the Board, and each member of the Audit Committee of the Board (the “Audit Committee”), the Compensation Committee of the Board (the “Compensation Committee”) and Nominating Committee, must meet the criteria for independence set forth under applicable law and the rules and standards of any applicable national securities exchange or inter-dealer quotation system (the “Market Rules”). No director qualifies as independent unless the Board determines that the director has no relationship with the Company which would interfere with the exercise of independent judgment in carrying out his or her responsibilities as a director. These independence guidelines are part of our Corporate Governance Guidelines, available on our website at investor.cpicardgroup.com. The Board considers all relevant facts and circumstances of which it is aware in making an independence determination with respect to any director. +The Board has made independence determinations with respect to each of our directors and director nominees. Based on the Market Rules, the Board has affirmatively determined that each of Mses. Soranno Keating and Oleson, and Messrs. Furey, Mallela, Peters, Riley, and Sheinbaum are independent within the meaning of the Market Rules. In addition, Messrs. Pearce and Seaman, who served on the Board during 2023, were affirmatively determined to be independent by the Board. Mr. Scheirman, who also served on the Board during 2023, was not deemed independent due to his service as the Company’s president and chief executive officer. +8 +Table of Contents +Board’s Role in Risk Oversight +Risk assessment and oversight are an integral part of our governance and management processes. The Board is responsible for overseeing the development and execution of the Company’s strategic plans and for understanding the associated risks and actions that management is taking to manage and mitigate those risks. Our enterprise risk management process is designed to facilitate the identification, assessment and management of certain key risks that the Company may encounter and which may impact our ability to achieve our strategic objectives. This process includes reviewing for potential short-term risks (monitoring monthly or quarterly) and long-term risks (monitoring annually or longer), and in addition to relying on senior management, also utilizes an internal audit team to help identify and monitor risks and to periodically assess and update the Company’s risk management framework. Members of senior management, including the Chief Executive Officer, Chief Financial Officer and Chief Legal and Compliance Officer, comprise the Enterprise Risk Management Committee and meet regularly to review, rank, assess and prepare mitigation plans for various risks to the Company, including but not limited to: economic and political, market and competitive, financial, operational, technological, regulatory and compliance, and employment risks. These results of the reviews, assessments and recommendations are reported to the Audit Committee bi-annually. The Company also utilizes other risk management techniques such as working with outside advisors to conduct mock identification and response exercises for training purposes and reports significant findings to the Board. +The Chief Executive Officer and other senior management, including the Chief Financial Officer and Chief Legal and Compliance Officer (each of whom report directly to the Chief Executive Officer), may review specific risks with the Board throughout the year, as necessary and appropriate, including as a result of the Chair or the Board requesting more frequent updates or information about specific risks. In reviewing specific risks with the Board, senior management may incorporate reports and presentations from outside advisors and consultants designed to advise with respect to future threats and trends and risk identification, management, and mitigation actions, strategies and processes, as well as to discuss with, and obtain input from, the Board. +Pursuant to its charter, the Audit Committee is responsible for oversight of the Company’s policies with respect to risk assessment and risk management and discussing with management the major risk exposures facing the Company, including but not limited to financial, compliance and security risks, and the steps the Company has taken to monitor and mitigate, where possible, such exposures. Periodically, the Company’s Chief Executive Officer, Chief Financial Officer, Chief Legal and Compliance Officer, Chief Technology Officer, Chief Accounting Officer and Internal Audit Director, among other select members of the Company’s management, as appropriate, present to the Audit Committee a description of management’s view of the most significant risks facing the Company and participate in discussions with the Audit Committee regarding those risks and any mitigating factors, plans or policies in place to address and monitor such risks. Additionally, the Chief Technology Officer and Chief Legal and Compliance Officer, along with other internal personnel, have primary responsibility for assessing and managing material cybersecurity risks and comprise a management committee that reviews issues and initiatives related to data security and privacy. The committee meets at least quarterly to identify security risks and assess the status of security programs or enhancements and regularly reports findings and recommendations to the Audit Committee on security incidents, policies and procedures, security service requirements and risk mitigation strategies. +While the Audit Committee is charged with primary oversight of risk, the Board and the Board committees oversee risks associated with their principal areas of focus, as summarized below. The committee chairs regularly report to the full Board regarding their risk oversight activities, and the Board regularly reviews and discusses the most significant risks facing the Company and management’s process for identifying, prioritizing and responding to those risks. Depending on the immediacy of the identified risk, the Board may take additional oversight steps, including meeting more frequently to receive updates from management and engaging outside advisors for advice regarding mitigation or remediation of such risks. +9 +Table of Contents +Board/Committee Areas of Risk Oversight and Actions +● +● +● +Full Board +● +Evaluates reports received from management and makes inquiries of management as appropriate +● +Reviews with management material strategic, operational, financial, human capital, cybersecurity, compensation and compliance risks +● +Considers specific risk topics in connection with strategic planning and other matters +● +Manages risk oversight and related activities conducted by Board committees through reports of the committee chairs to the Board +Audit +Committee +● +Assesses periodic management reports on the enterprise risk management process and risks identified through that process +● +Discusses with management the Company’s specific processes for assessing and managing risks, including identifying the Company’s major financial and other enterprise risk exposures and the steps necessary to monitor and control such exposures +● +Assesses periodic management reports on financial and compliance risks, including privacy and data security +● +Meets at least quarterly with the Company’s Chief Legal and Compliance Officer regarding the Company’s ethics and compliance processes and practices +● +Meets periodically with senior management and our independent auditor, KPMG LLP, to, among other things, review and discuss the external audit plan as well as critical audit matters and reports on such meetings to the Board +● +Receives regular updates from the Company’s Director of Internal Audit and approves the Company’s internal audit plan +● +Receives regular updates and periodic assessment reports from the Company’s Chief Technology Officer regarding information security matters, including cybersecurity +Compensation +Committee +● +Oversees the review and evaluation of the risks associated with our compensation policies and practices +● +Reviews the Company’s strategies and policies related to human capital management, including with respect to matters such as diversity and inclusion, employee engagement and talent development +Nominating +Committee +● +Oversees the review and evaluation of the risks associated with our governance structure, policies and processes +● +Oversees the Company’s environmental, social and governance risks, efforts, progress and disclosures +● +Reviews, approves and recommends to the Board (where appropriate) updates, as necessary, to our organizational documents, Corporate Governance Guidelines and other governance related policies +Corporate Governance +The Board has approved Corporate Governance Guidelines and a Code of Business Conduct and Ethics, as well as a Code of Conduct for Financial Officers that is applicable to our Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer. Our corporate governance documents, including the Corporate Governance Guidelines, the Code of Business Conduct and Ethics, the Code of Conduct for Financial Officers and committee charters, are available on our website at investor.cpicardgroup.com or in printed form upon request by contacting CPI Card Group Inc. at 10368 West Centennial Road, Littleton, Colorado 80127, Attention: Investor Relations. The Board regularly reviews corporate governance developments and modifies these documents as warranted. Any modifications will be reflected on our website. The information on our website is not part of this proxy statement and is not deemed to be incorporated by reference herein. +Other Board Information +Leadership Structure of the Board +Sandy Riley serves as Chair of the Board, and John Lowe, who was appointed to succeed Scott Scheirman upon Mr. Scheirman’s retirement in January 2024, serves as our Chief Executive Officer (“CEO”). Our Board has decided to maintain separate Chair and CEO roles to allow our CEO to focus on the development and execution of our business strategy, while allowing the Chair to lead the Board in its fundamental role of providing advice to, and independent oversight of, management. The Board recognizes the time, effort and energy that the CEO is required to devote to his position in the current business environment as well as the commitment required to serve as our Chair. While our By-Laws and Corporate Governance Guidelines do not require that our Chair and CEO positions be separate, the Board +10 +Table of Contents +believes that having separate positions and having an independent director serve as Chair is the appropriate leadership structure for us at this time. +Board Meetings +In fiscal year 2023, our Board held fifteen meetings. In addition to our Board meetings, our directors attend meetings of committees established by our Board on which they serve. Each of CPI’s directors attended at least 75% of the meetings of our Board and the committees on which he or she served during 2023 that were held when he or she was a director. Each of our directors is expected to attend each meeting of the Board and is strongly encouraged to attend each annual stockholder meeting, as provided in our Corporate Governance Guidelines. The six directors that were then serving on the Board attended the 2023 annual meeting of stockholders. +Meetings of Non-Employee Directors +In accordance with our Corporate Governance Guidelines, our non-employee directors meet regularly in executive sessions of the Board without management present. Sandy Riley, our Chair of the Board, presides over these executive sessions. In the event that Mr. Riley is not available to lead these meetings, the presiding director is chosen by the non-employee directors in attendance. +Committees of the Board +The Board has three standing committees: the Audit Committee, the Compensation Committee and the Nominating Committee. As part of the Board’s efforts to address succession planning and also in connection with the appointment of new independent directors in 2023, the Board restructured its committee composition. The Nominating Committee, in conjunction with the Board, will continue to evaluate committee composition to enhance the overall governance function of the Board of Directors. The following chart sets forth the directors who currently serve as members of each of the Board committees as of the date of this proxy statement. +Audit +Compensation +Nominating +Directors +Committee +Committee +Committee +Thomas Furey +X +X +John Lowe +Ravi Mallela +X +Nicholas Peters +C +X +H. Sanford Riley* +Marc Sheinbaum +C +X +X +Valerie Soranno Keating +X +X +C +* Chair of the Board +“C” Denotes member and chair of committee +“X” Denotes member +Audit Committee +The Audit Committee held nine meetings in 2023. The Board has determined that all of the members of the Audit Committee meet the independence criteria for purposes of serving on an audit committee under the applicable rules of The Nasdaq Stock Market (“Nasdaq”) and Rule 10A-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In addition, our Board has determined that Mr. Sheinbaum qualifies as an “audit committee financial expert,” as such term is defined in Item 407(d)(5) of Regulation S-K. The Audit Committee operates under a written charter setting forth its functions and responsibilities. A copy of the current charter is available on our website at investor.cpicardgroup.com or in printed form upon request. Refer to “Audit Committee Report” for a summary description of the Audit Committee’s functions and responsibilities. +Compensation Committee +The Compensation Committee held ten meetings in 2023. The Board has determined that all of the members of the Compensation Committee are independent as defined in Nasdaq rules. The Compensation Committee has overall responsibility for approving and evaluating the Company’s director and executive officer compensation plans, policies and programs and reviewing the disclosure of such plans, policies and programs to our stockholders in the Company’s annual proxy statement. The Compensation Committee utilizes an independent compensation consultant to assist it in its duties, and it may delegate certain of its authority to a subcommittee of the Compensation Committee, the CEO or another executive officer, including with respect to matters relating to the compensation of the Company’s employees other than the Company’s CEO and executive officers. The Compensation Committee operates under a written charter setting forth its functions and responsibilities. A copy of the current charter is available on our website at investor.cpicardgroup.com or in printed form upon request. +In consultation with the Company’s management, the Compensation Committee approves the Company’s executive compensation philosophy and oversees and monitors the Company’s executive compensation policies, plans and programs for the executive officers to assess whether they are consistent with the Company’s compensation philosophy and objectives, as well as the long-term interests of the Company’s stockholders. The Compensation Committee also evaluates and makes recommendations to the Board regarding the adequacy and effectiveness of non-employee director compensation. Our human resources executives and staff support the +11 +Table of Contents +Compensation Committee in its work. These members of management work with compensation consultants (whose engagements have been approved by the Compensation Committee), accountants and legal counsel, as necessary, to implement the Compensation Committee’s decisions, monitor evolving competitive practices and make compensation recommendations to the Compensation Committee. Our human resources management, in conjunction with our independent compensation consultant, develops specific compensation recommendations for executive officers, which are first reviewed by senior management and then presented to the Compensation Committee. The Compensation Committee has final authority to approve, modify or reject such recommendations in its sole discretion and to make its decisions in executive session. The Compensation Committee approves all compensation of our executive officers, including equity awards. +Since 2018, the Compensation Committee has engaged Willis Towers Watson (“WTW”) as its independent compensation consultant. WTW reports directly to the Compensation Committee, including with respect to management’s recommendations of compensation programs and awards. The Compensation Committee has the sole authority to approve the scope and terms of the engagement of WTW and to terminate such engagement. WTW assisted the Compensation Committee with the development of competitive market data, compensation program design and related assessments of the Company’s executive and director compensation levels, evaluation of annual and long-term incentive compensation strategy and compilation and review of total compensation data for the Company’s NEOs (as defined in “Executive Compensation”). The Company paid WTW approximately $222,000 for the executive and director compensation consulting services described above in 2023. Additionally, Company management decided to engage WTW to provide other professional consulting services in 2023 (unrelated to executive compensation) primarily related to health and benefits programs in an amount totaling approximately $11,000. +The Compensation Committee has reviewed the independence of WTW in light of SEC rules regarding compensation consultants and has concluded that WTW’s work for the Compensation Committee does not raise any conflict of interest. +Nominating and Corporate Governance Committee +The Nominating Committee held nine meetings in 2023. The Board has determined that all of the members of the Nominating Committee are independent as defined in Nasdaq rules. +The Nominating Committee is responsible for, among other things: (i) identifying individuals qualified to become members of the Board, consistent with criteria approved by the Board; (ii) recommending director nominees to the Board for election at the next annual meeting of the stockholders of the Company; (iii) in the event of a vacancy on or an increase in the size of the Board, recommending director nominees to the Board to fill such vacancy or newly established Board seat; (iv) recommending directors to the Board for membership on each committee of the Board; (v) establishing and reviewing annually our Corporate Governance Guidelines and Code of Business Conduct and Ethics; and (vi) overseeing the Company’s environmental, social and governance efforts, progress and disclosures. The Nominating Committee operates under a written charter setting forth its functions and responsibilities. A copy of the current charter is available on our website at investor.cpicardgroup.com or in printed form upon request. +Compensation Committee Interlocks and Insider Participation +None of the members of our Compensation Committee has in the past served as an officer or employee of the Company. None of the members of our Compensation Committee has any relationship requiring disclosure as a related party transaction. None of our executive officers currently serves, or in the past year has served, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on our Board or Compensation Committee. +Communications to the Board +Stockholders and interested parties can contact the Board or any director or group of directors (including the Chair of the Board or the independent directors) through written communication sent to CPI Card Group Inc., 10368 West Centennial Road, Littleton, Colorado 80127, Attention: Jessica Browne, Acting Chief Legal and Compliance Officer and Corporate Secretary. Our Corporate Secretary reviews all written communications and forwards to the Board copies of any such correspondence that is directed to the Board that, in the opinion of the Corporate Secretary, deals with the functions of the Board or Board committees or that she otherwise determines requires the Board’s or any Board committee’s attention. Concerns relating to accounting, internal accounting controls or auditing matters are immediately brought to the attention of our Audit Committee Chair, or may be submitted to the Audit Committee Chair in accordance with our Whistleblower Policy (available on our website), and such concerns will be handled in accordance with procedures established by the Audit Committee with respect to such matters. From time to time, the Board may change the process by which stockholders may communicate with the Board. Any such changes will be reflected in our Corporate Governance Guidelines, which are posted on our website at investor.cpicardgroup.com. +12 +Table of Contents +Director Compensation +The director compensation program remained unchanged in 2023 from 2022 and consisted of a mix of cash retainers and equity awards in the form of stock-settled restricted stock units, which are scheduled to vest on the first anniversary of the grant date. All cash fees are paid to directors on a quarterly basis unless otherwise indicated and are prorated for any partial service periods. The following table sets forth our compensation program for our non-employee directors in 2023: +Compensation Element +Value +Annual Cash Retainer +$ +50,000 +Annual Equity Award +$ +100,000 +Chairman of the Board Annual Cash Fee +$ +30,000 +Committee Chair Annual Cash Fee +$ +15,000 +Committee Member Annual Cash Fee +$ +7,500 +The following table summarizes the annual compensation for our non-employee directors received during 2023. Mr. Scheirman, our former President and Chief Executive Officer and Director, did not receive any additional compensation for his service on the Board. Please see the “2023 Summary Compensation Table” for a summary of the compensation received by Mr. Scheirman with respect to 2023. As noted above, Messrs. Pearce and Seaman departed the Board in March 2023 and June 2023, respectively, and Messrs. Riley and Mallela joined the Board in May 2023 and November 2023, respectively. Each of these director’s compensation has been prorated to reflect their length of service during 2023 and shown in the table below: +2023 DIRECTOR COMPENSATION +Fees +Earned +Or Paid +Name +In Cash +Stock Awards (1) +Total +Thomas Furey +$ +63,125 +$ +101,239 +$ +164,364 +Ravi Mallela (2) +$ +9,583 +$ +28,233 +$ +37,816 +Robert Pearce (3) +$ +18,125 +$ +— +$ +18,125 +Nicholas Peters +$ +72,500 +$ +101,239 +$ +173,739 +H. Sanford Riley (2) +$ +60,000 +$ +73,017 +$ +133,017 +Bradley Seaman (2) +$ +43,750 +$ +50,041 +$ +93,791 +Marc Sheinbaum +$ +76,875 +$ +101,239 +$ +178,114 +Valerie Soranno Keating +$ +73,750 +$ +101,239 +$ +174,989 +(1) The amounts reported in this column represent the grant date fair value of the RSU awards as calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“FASB Topic 718”), valued based on the closing stock price on the date of grant. The number of shares awarded were determined with reference to the average closing price of the Company’s common stock for the month in which the date of grant occurred. Each of the then-serving non-employee directors received RSU awards granted on a quarterly basis with each RSU awarded scheduled to vest one year from the date of grant. Each of the non-employee directors that served on our Board during 2023 had the following number of outstanding RSUs and no other equity awards outstanding as of December 31, 2023: Mr. Furey, 4,145 RSUs; Mr. Mallela,1,587 RSUs; Mr. Pearce, 0 RSUs; Mr. Peters, 4,145 RSUs; Mr. Riley, 3,518 RSUs; Mr. Seaman, 0 RSUs; Mr. Sheinbaum, 4,145 RSUs; and Ms. Soranno Keating, 4,145 RSUs. +(2) Messrs. Mallela, Seaman and Riley each received fees and stock awards prorated based on a partial year of service as a Directo r. The RSUs awarded to Mr. Seaman in 2023 were forfeited when he departed the board in June 2023. +(3) Mr. Pearce received fees prorated based on a partial year of service as a Director and he stepped down from the Board prior to the award of any non-cash equity compensation in 2023 and thus did not receive any Stock Awards compensation for the year. +13 +Table of Contents +Security Ownership of Certain Beneficial Owners, Directors and Management +The following table sets forth, as of April 22, 2024 (except as indicated below), beneficial ownership, as defined by SEC rules, of our Common Stock. Each of the persons listed below has sole voting and investment power with respect to the beneficially owned shares listed unless otherwise indicated. For purposes of the following table, beneficial ownership is determined in accordance with Exchange Act Rule 13d-3. In calculating the percentage ownership for each shareholder, we assumed that any Options owned by an individual exercisable within 60 days of the date of this proxy statement are exercised, but not the options owned by any other individual. The percentage calculations set forth in the table are based on 11,132,562 shares of Common Stock outstanding on April 22, 2024 rather than based on the percentages set forth in stockholders’ Schedules 13G or 13D, as applicable, filed with the SEC +Number of +Shares of +Percentage of +Common +Common +Stock +Stock +Owned +Owned +Beneficially +Beneficially +5% Beneficial Owners: +Tricor Pacific Capital Partners (Fund IV), Limited Partnership (1) +3,970,737 +35.7% +Tricor Pacific Capital Partners (Fund IV) US, Limited Partnership (1) +2,343,774 +21.1% +Named Executive Officers, Directors and Director Nominees: +Thomas Furey (2) +6,511 +* +Ravi Mallela +— +* +Lisa Oleson +— +* +Nicholas Peters (2) +36,511 +* +H. Sanford Riley (2) +8,320 +* +Scott Scheirman (3) +400,166 +3.5% +Marc Sheinbaum (2) +8,390 +* +Valerie Soranno Keating (2) +25,308 +* +John Lowe (4) +101,221 +* +Lane Dubin (5) +90,781 +* +Total Executive Officers and Directors as a Group (12 individuals) (6) +247,288 +2.2% +* +Less than 1% +(1) Based on a Schedule 13G filed jointly by the Tricor Funds, and Parallel49 Equity, ULC on February 12, 2016, as adjusted to give effect to the 1-for-5 reverse stock split we completed on December 20, 2017 and the share repurchase transaction effective April 5, 2024. Each of the Tricor Funds is managed by Parallel49 Equity, ULC, as the general partner. An investment committee of the Tricor Funds has the power to vote or dispose of the shares held by the Tricor Funds. The investment committee is comprised of Mr. Bradley Seaman, Mr. David Rowntree, J. Trevor Johnstone and Roderick Senft. Mr. Peters is an officer or member of the Tricor Funds and has an indirect pecuniary interest in the shares of Common Stock held by the Tricor Funds through their respective interests in the Tricor Funds. Mr. Peters expressly disclaims any beneficial ownership of any shares of Common Stock held by the Tricor Funds. The address of the Tricor Funds is c/o Parallel49 Equity, 225 East Deerpath Road, Suite 200, Lake Forest, IL 60045. +(2) Includes 820 RSUs. +(3) Includes 331,738 Options and 19,570 RSUs. +(4) Includes 83,951 Options and 4,225 RSUs. +(5) Includes 68,893 Options and 2,990 RSUs. +(6) Includes 110,099 Options and 25,082 RSUs. +Delinquent Section 16(a) Reports +Section 16(a) of the Securities Exchange Act requires directors, certain officers and all persons who beneficially own more than 10 percent of our common stock file reports with the SEC with respect to beneficial ownership of our securities. We have adopted procedures to assist our directors and executive officers in complying with the Section 16(a) filings. +Based upon our review of the copies of the filings that we received with respect to the fiscal year that ended December 31, 2023, or written representations from certain reporting persons, we believe that all reporting persons made all filings required by Section 16(a) in a timely manner. +14 +Table of Contents +EXECUTIVE OFFICERS +In June 2023, Scott Scheirman, the Company’s former CEO, President and Director announced his intention to retire from the Company upon the identification and appointment of his successor. In January 2024, John Lowe, formerly CPI’s EVP, End-to-End Payment Solutions, succeeded Mr. Scheirman as CEO, President and Director. In support of Mr. Lowe’s new duties and responsibilities, there was additional realignment in areas of the Company’s executive leadership. The following table sets forth certain information concerning each of our current executive officers, and former executive officers who are considered “Named Executive Officers” for purposes of this proxy statement: +Name +Age +Position +John Lowe +47 +President, Chief Executive Officer and Director +Donna Abbey Carmignani +48 +Chief Accounting Officer and Controller +Lane Dubin +55 +Former Executive Vice President and Chief Development and Digital Officer +Jeffrey Hochstadt +52 +Chief Financial Officer +Peggy O'Leary +48 +Senior Vice President Prepaid Solutions and Chief Development and Digital Officer +Scott Scheirman +61 +Former President, Chief Executive Officer and Director +Sonya Vollmer +50 +Chief Human Resources Officer +Beth Williams +48 +Chief Technology Officer +John Lowe. See “Directors and Corporate Governance” for Mr. Lowe’s biographical information. +Donna Abbey Carmignani has served as our Controller and Chief Accounting Officer since March 2022. Prior to joining the Company. Ms. Abbey provided financial and accounting consulting services to clients in various industries from January 2020 to March 2022. Prior to that, Ms. Abbey held roles of increasing responsibility at The Western Union Company (“Western Union”) (NYSE:WU), a multinational financial services company, from October 2010 to September 2018, including Vice President of Financial Reporting, Governance & Consolidations and Chief of Staff to the Chief Executive Officer. Prior to joining Western Union, Ms. Abbey worked in the audit practice of KPMG LLP, a multinational professional services and accounting firm, from January 2003 to September 2010. Ms. Abbey holds a Bachelor of Science degree in Business Administration from Colorado State University and is a Certified Public Accountant in the State of Colorado. +Lane Dubin has served as our Executive Vice President and Chief Development and Digital Officer since December 2022 and transitioned to an advisory role in January 2024. Prior to that, he served as the Company’s Senior Vice President and General Manager of Personalization, Prepaid and Instant Issuance since January 2020. From January 2018 to December 2019, he served as the Company’s Senior Vice President and General Manager of Prepaid and Instant Issuance. Mr. Dubin joined the Company as Senior Vice President, Sales and Marketing in August 2016. Prior to joining the Company, Mr. Dubin served at American Express Company (NYSE: AXP) from 1992 to 2015. Most recently, he was the Head of Global Sales at American Express Global Business Travel from 2008 to 2015, and Vice President, Business Development – North America, at American Express Global Business Travel from 2003 to 2008. Prior to these roles, Mr. Dubin held roles of increasing responsibility with American Express, including Vice President-Business Development, Financial Education Services for American Express Financial Advisors and Director of Sales and Business Development for Ketera Technologies, a technology start-up incubated by American Express. Mr. Dubin holds a Bachelor of Arts degree in Economics and Business Administration from Ursinus College. +Jeffrey Hochstadt has served as our Chief Financial Officer since May 2023. Prior to joining the Company, Mr. Hochstadt worked for Western Union (NYSE:WU) from 2006 to 2021 where he held a variety of roles of increasing responsibility including Chief Strategy Officer and Global Head of Financial Planning and Analysis. Prior to joining Western Union, Mr. Hochstadt held numerous financial and strategy roles for First Data Corporation (now Fiserv), Morgan Stanley Capital International, IBM, A.G. Edwards & Sons and Price Waterhouse. Most recently, he served as a Managing Member and provided consulting service through Jazmin LLC and served as a Senior Advisor for Simon Kucher & Partners, a global strategy firm. Mr. Hochstadt graduated with honors from the Olin School of Business at Washington University in St. Louis and received an MBA from the Wharton School of Business at the University of Pennsylvania. +Margaret “Peggy” O’Leary has served as our Senior Vice President Prepaid Solutions since December 2022 and was appointed Chief Development and Digital Officer in January 2024. She previously served as the Company’s Vice President of Sales of Prepaid, Personalization Solutions, and Instant Issuance since January 2020. Ms. O’Leary joined CPI in April 2017 as Director of Sales and Client Services for Prepaid Solutions. Prior to joining the Company, Ms. O’Leary served as the Vice President Business Development for Jingit, a payments platform to drive consumer loyalty and engagement, since 2012. Prior to 2012, Ms. O’Leary held a variety of positions with increasing responsibilities including sales management, channel management, sales and client services at companies such as InteliSpend, Maritz, and Hallmark. Ms. O’Leary is a graduate of Hamline University and holds a Bachelor of Arts degree in Psychology. +Scott Scheirman served as our President and Chief Executive Officer from October 2017 until his retirement in January 2024. Mr. Scheirman was also a member of the Board of Directors from October 2016 until January 2024. Prior to joining the Company, Mr. Scheirman served as the Chief Executive Officer and a co-founder of JKL Ventures LLC, a private investment and strategic advisory firm, since February 2014. Prior to JKL Ventures LLC, Mr. Scheirman served as the Executive Vice President and Chief Financial Officer of Western Union (NYSE:WU) from September 2006 to December 2013. Prior to joining Western Union, Mr. Scheirman held a variety of executive leadership and financial officer roles at First Data Corporation (now Fiserv) and began his career at Ernst & Young LLP. Mr. Scheirman holds a Bachelor of Science degree in Business Administration with an emphasis in Accounting from the University of Northern Colorado. +15 +Table of Contents +Sonya Vollmer has served as our Chief Human Resources Officer since January 2022. Ms. Vollmer joined the Company in February 2021 as Director of Total Rewards and assumed the role of interim Chief Human Resources Officer in August 2021. Prior to joining the Company, Ms. Vollmer held positions of increasing responsibility at Charter Manufacturing Company, a metals manufacturing business, from February 2013 to February 2021, most recently serving as Director of Total Rewards. Prior to 2013, Ms. Vollmer held human resources leadership roles at Rockwell Automation, Teleflex, Inc. and Abbott Laboratories. She also served in consulting roles with Hewitt Associates (now Aon), and her own consulting firm. Ms. Vollmer holds a Bachelor of Arts degree in Economics from the University of Wisconsin-Parkside, and an MBA from the University of Wisconsin-Milwaukee. +Beth Williams has served as our Chief Technology Officer since January 2020, and she previously served in roles with CPI as Technology Director, Instant Issuance and Prepaid from January 2018 to January 2020, and as Director of Personalization Solutions from 2016 to 2017. Prior to joining CPI, Ms. Williams served in various leadership roles at EFT Source, Inc., including Chief Information Officer and Software Development Manager and Lead Software Developer from 2007 to 2015. Prior to 2007, Ms. Williams held a variety of positions of increasing responsibility, including programming, web and software development and analysis at KeyBank, Deloitte Consulting, NFIB, PIC (Sygen international subsidiary) and Vanderbilt University Medical Center. Ms. Williams holds a Bachelor of Business Administration - MIS from Ohio University. +EXECUTIVE COMPENSATION +The following narrative describes our executive compensation program and the decisions of the Compensation Committee regarding the fiscal year 2023 compensation of our named executive officers (“NEOs”) each of whom served in such capacity for the 2023 fiscal year. The Company qualifies as a “smaller reporting company” in accordance with Rule 12b-2 of the Exchange Act. For as long as we are a smaller reporting company, we are not required to include a Compensation Discussion and Analysis section in this proxy statement and have elected to comply with the scaled-down executive compensation disclosure requirements. +2023 NEOs +For fiscal year 2023, our NEOs and the positions each held as of December 31, 2023 were: +Scott Scheirman +President, Chief Executive Officer and Director +Lane Dubin +Executive Vice President and Chief Development and Digital Officer +John Lowe +Executive Vice President, End-to-End Payment Solutions +In June 2023, Scott Scheirman, the Company’s former CEO, President and Director announced his intention to retire from the Company upon the identification and appointment of his successor. In January 2024, John Lowe, formerly the Company’s EVP End-to-End Payment Solutions, succeeded Mr. Scheirman as CEO, President and Director. In January 2024, the Company and Lane Dubin, announced that Mr. Dubin’s employment with the Company would cease on June 30, 2024, the expiration of the employment agreement between the Company and Mr. Dubin dated December 13, 2022. See the “Employment and Post-Termination Arrangements” section below for further information regarding the compensation arrangements entered into in connection with the 2024 management transition. +2023 Business Overview +Business Highlights +2023 was a challenging year for the market, and our financial results reflect the same, as shown below compared to the strong growth we experienced in the prior year: +● Total Net Sales (1) of $444.5 million, down 7% year-over year; +● Net Income of $24.0 million, down 34% year-over-year; and +● Adjusted EBITDA (2) of $89.5 million, down 8% year-over-year. +16 +Table of Contents +2023 performance ($ in millions) +(1) The term Net Sales, as defined in the STIP (as defined below), is consistent with “Total Net Sales,” as included in the Company’s consolidated financial statements. +(2) Adjusted EBITDA is not a measurement of financial performance prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) . See Annex A hereto for a reconciliation to Net Income, the most directly comparable GAAP financial measure. +Sales for the Company in 2023 reflected cautious spending by customers driven by economic uncertainties, banking industry turmoil and a customer focus on reducing inventory levels that accumulated in response to post-pandemic supply chain constraints. The Company’s 2023 financial performance declined primarily across our Debit and Credit segment and our Prepaid Debit segment remained relatively flat compared to the strong results we achieved in 2022. Despite the decline in net income, the Company increased cash provided by operating activities and also advanced numerous business initiatives and executed on our capital allocation goals. We believe in our strategic plan moving forward and continuing to execute on our four key strategies: deep customer focus; market-leading quality payment solutions and customer service; continuous innovation; and a market competitive business model. +For further details, we encourage you to review the financial results set forth in our Form 10-K for the fiscal year ended December 31, 2023, which was filed with the SEC on March 7, 2024. +As described in this “Executive Compensation” section, we believe our compensation program focuses on performance-based compensation elements and provides alignment with the Company’s financial and strategic priorities as well as stockholder interests. We have structured our compensation design features to incentivize our NEOs and other executive officers to pursue performance that increases stockholder value by rewarding top-line growth, profitability and non-financial business imperatives, and we employ competitive compensation levels to drive the retention, performance and engagement of our executive team, including our NEOs. Further, our programs are designed to incentivize over-achievement of goals by awarding compensation consistent with above-market performance when the Company exceeds its performance goals. +Summary of Our 2023 Compensation Decisions +The principal components of our 2023 executive compensation program consisted of (i) base salary, (ii) short-term incentives delivered in the form of quarterly cash payments and (iii) long-term incentives delivered entirely in the form of equity awards. We believe these components provide the appropriate mix of compensation to recruit and retain top-level talent, motivate our executive team to achieve the Company’s near-term financial objectives, and align compensation with stockholder value, all of which incentivize our executive team to continue improving business performance. Part of this strategy involves utilizing a short-term incentive plan (“STIP”) that rewards short-term incentive goal achievement with cash payments, as well as a long-term incentive plan (“LTIP”) which utilizes the Company’s 2021 Omnibus Incentive Plan ("Omnibus Incentive Plan”) to grant stock options (“Options”) and restricted stock units (“RSUs”). As noted above, Mr. Scheirman announced in June 2023 his intention to retire, which led to the decision to incentivize key personnel to remain with the Company for business continuity purposes. Mr. Scheirman also received a modified compensation package, including changes to his equity award schedule, as discussed in more detail below. +In 2023, the Company instituted a quarterly grant program for the LTIP portion of compensation with grants scheduled to coincide with and occur in the month of the Company’s quarterly earnings release. The quarterly timing of the awards was determined in an effort to mitigate the impact of significant volatility in the Company’s stock price over time, which has historically made it difficult to achieve the goal of effectively incentivizing and retaining employees. These grants consisted of RSUs and Options, each of which vest in equal annual installments on the first and second anniversaries of the grant date, respectively. In addition, in connection with the anticipated leadership transition, a special equity award was approved to retain and incentivize executive officers and certain key employees, excluding the Chief Executive Officer. This award was granted in the form of RSUs and made in three separate tranches on June 9, 2023, August 31, 2023, and November 30, 2023. Each tranche of the awards will vest in three equal installments over three years, beginning on the first anniversary of the grant date. To incentivize Mr. Scheirman to remain with the Company to allow for the orderly transition of his duties, Mr. Scheirman received an additional grant on June 9, 2023 in conjunction with the announcement of his intention to retire, which was made in the form of RSUs and Options, vesting 50% on the first anniversary of the grant date and 50% on the second anniversary of the grant date. +17 +Table of Contents +The Compensation Committee makes all decisions regarding our NEOs’ total compensation (base salary, short-term incentives and long-term incentives). +● +● +● +● +● +Factors that Guided 2023 Compensation Decisions +● +Our executive compensation philosophy +● +Degree of achievement of key financial goals for 2023 +● +Anticipation of Company leadership changes +● +Recommendations of our CEO (other than with respect to his own compensation) +● +Advice of the Compensation Committee’s independent compensation consultant +● +Market pay and governance best practices +● +Historical CPI compensation +2023 Compensation Program Changes and Key Decisions +Base Salary +In December 2022 and February 2023, the Compensation Committee approved the following increases in base salaries in consideration of our NEOs’ performance, review of competitive market data and internal pay equity: +● +CEO : Mr. Scheirman received a base salary increase of 4.5%, effective March 1, 2023, approved in February 2023. +● +Other NEOs : In connection with their promotions to the EVP level of the organization, Mr. Dubin received a base salary increase of 20.1%, and. Mr. Lowe received a base salary increase of 19.0%, each effective January 1, 2023, both were approved in December 2022. +See “Elements of the 2023 Executive Compensation Program — Base Salary” for more information. +2023 Short-Term Incentive Plan (“2023 STIP”) +The 2023 STIP emphasizes pay-for-performance and the achievement of critical near-term performance milestones. Under the 2023 STIP, the NEOs were eligible to earn quarterly cash bonus awards based on the achievement of pre-established financial goals (specifically the metrics were based on a weighting of 70% for Adjusted EBITDA and 30% for Net Sales). Each NEO’s individual incentive opportunity is determined by the Compensation Committee following a review of competitive market data and internal pay equity. Messrs. Scheirman’s and Dubin’s targets did not increase from 2022. Mr. Lowe’s target increased by 12.0% over 2022, which reflected his increased responsibilities for revenue as EVP, End-to-End Payment Solutions. +Based on the Company’s performance during 2023, the 2023 STIP payouts were 49.4% of target for the NEOs, primarily due to outsized performance during the first quarter of 2023. +See “Elements of the 2023 Executive Compensation Program — Short-Term Incentives” for more information. +2023 Long-Term Incentive Plan +Throughout 2023, the Compensation Committee granted quarterly equity awards under the Omnibus Incentive Plan to select employees of the Company, including the NEOs. These equity awards were granted in the form of RSUs and Options, with awards vesting in equal annual installments on the first and second anniversaries of the grant date. These awards were determined in consideration of our NEOs’ performance and a review of competitive market data. In addition, a special equity award was approved to retain and incentivize executive officers and certain key employees, excluding the Chief Executive Officer. This award was granted in the form of RSUs and made in three separate tranches on June 9, 2023, August 31, 2023, and November 30, 2023. Each tranche of the award will vest in three equal installments over three years, beginning on the first anniversary of the grant date. Mr. Scheirman received an additional grant on June 9, 2023, in conjunction with the announcement of his intention to retire, which was in the form of RSUs and Options, vesting 50% on the first anniversary of the grant date and 50% on the second anniversary of the grant date. +See “Elements of the 2023 Executive Compensation Program — Long-Term Incentives” for more information. +18 +Table of Contents +Compensation Peer Group +The Compensation Committee reviewed and modified our compensation peer group in 2023, which resulted in removing 10 companies and adding 13 new companies to the peer group. The compensation peer group is comprised of companies that meet at least one of the following criteria: +● +Similar in size and complexity to CPI (primarily based on revenue and EBITDA); +● +In a similar or related technology-oriented industry; or +● +In competition with CPI for executive talent. +See “ Role of Market Data and the Peer Group” for more information. +Executive Compensation Governance Highlights +The Compensation Committee reviews on an ongoing basis the Company’s executive compensation practices to evaluate whether they support the Company’s executive compensation philosophy and are aligned with stockholder interests. Our 2023 executive compensation practices include the following, each of which the Compensation Committee believes is supportive of our executive compensation philosophy and the interests of our stockholders: +What We Do +What We Don’t Do +✓ +Deliver a significant portion of compensation through performance-based, at-risk pay +✓ +Maintain a peer group for evaluating competitive market practices +✓ +Set pre-established performance targets designed to be challenging +✓ +Regularly review risks associated with compensation +✓ +Consult with an independent consultant on compensation levels and practices +✓ +Provide no executive perquisites +✓ +Annual say-on-pay vote +X +Provide automatic, annual increases in executive salaries +X +Maintain uncapped executive incentive plans +X +Award single-trigger cash severance in connection with a change in control +X +Re-price stock options without the prior approval of our stockholders +X +Permit hedging or pledging of equity +X +Enter into supplemental executive retirement plans +X +Provide excise tax gross-ups on termination-related payments +2023 Say-on-Pay Vote +In its compensation review process, the Compensation Committee considers whether the Company’s executive compensation program is aligned with the interests of the Company’s stockholders. As part of its review of the Company’s executive compensation program, the Compensation Committee considered the approval by approximately 99% of the votes cast for the Company’s say-on-pay vote at our 2023 Annual Meeting of Stockholders. The Compensation Committee determined that the Company’s executive compensation philosophies and objectives and compensation elements continued to be appropriate and did not make any changes to the Company’s executive compensation program in response to the 2023 say-on-pay vote. +Role of the Compensation Committee +In consultation with the CEO, the Compensation Committee establishes the general policies relating to senior management compensation and oversees the development and administration of such compensation programs. Our human resources executives and staff support the Compensation Committee in its work to implement the Compensation Committee’s decisions, monitor evolving competitive practices and make compensation recommendations to the Compensation Committee. Our human resources management, in conjunction with our independent compensation consultant, develops specific compensation recommendations for senior executives, which are first reviewed by senior management and then presented to the Compensation Committee. The Compensation Committee has final authority to approve, modify or reject these recommendations in its sole discretion. Members of management do not attend the portions of the Compensation Committee meetings relating to their own compensation, and the Compensation Committee regularly conducts executive sessions without management present. The Compensation Committee approves all compensation of our executive officers, including equity awards. +19 +Table of Contents +Role of the Independent Compensation Consultant +Since 2018, the Compensation Committee has engaged WTW as its independent compensation consultant. WTW is engaged by and reports directly to the Compensation Committee. The Compensation Committee has the sole authority to approve the scope and terms of the engagement of WTW and to terminate such engagement. In 2023, WTW assisted the Compensation Committee with the development of competitive market data, compensation program design and related assessments of the Company’s executive and director compensation levels, evaluation of short-term and long-term incentive compensation strategy, and compilation and review of total compensation data for the Company’s NEOs and provided ongoing evaluation of the compensation program. +The Compensation Committee has reviewed the independence of WTW in light of SEC rules regarding compensation consultants and has concluded that WTW is independent and its work for the Compensation Committee does not raise any conflict of interest. +Role of Market Data and the Peer Group +In order to gauge the competitiveness of our compensation program and to provide our NEOs with fair and market-competitive compensation, the Compensation Committee reviewed compensation practices and pay opportunities from general industry survey data as well as from a selection of publicly traded peer companies, as provided by WTW. The Company attempts to position itself to attract and retain qualified senior executives in the face of competitive pressures in its relevant labor markets, and we design our compensation practices with this goal in mind. +Specifically, in 2023, WTW analyzed information regarding the pay practices of a compensation peer group (as described below) to assist the Compensation Committee in determining pay for our CEO and CFO. WTW also advised the Company with respect to the letter agreement with Mr. Scheirman pertaining to retention compensation adjustments. In addition, the Company analyzed the pay practices of similarly sized general industry companies identified by WTW to assist the Compensation Committee in determining pay for our other executive officers. The compensation data resulting from this analysis was considered by the Compensation Committee in making 2024 executive compensation decisions including the executive leadership transition in early 2024. +The Compensation Committee reviewed and modified our compensation peer group in 2023. WTW made recommendations to update the peer group based on changes in Revenue and EBITDA as well as identifying public companies operating in a similar industry. As a result, 10 companies were removed from and 13 companies were added to the peer group. The compensation peer group is comprised of companies that meet at least one of the following criteria: +● Similar in size and complexity to CPI (primarily based on revenue and EBITDA); +● In a similar or related technology-oriented industry; or +● In competition with CPI for executive talent. +The following peer group was used for 2023 compensation benchmarking purposes: +Executive Compensation Peer Group +Axcelis Technologies, Inc +EVERTEC, Inc. +Qualys, Inc. +Badger Meter, Inc. +FormFactor, Inc. +Repay Holdings Corporation +CompoSecure, Inc. +International Money Express, Inc. +Veeco Instruments, Inc. +CTS Corporation +MeridianLink, Inc. +Verra Mobility Corporation +Ennis, Inc. +Mirion Technologies, Inc. +Vishay Precision Group, Inc. +20 +Table of Contents +Elements of the 2023 Executive Compensation Program +Our 2023 executive compensation program consisted of fixed pay and variable pay, including cash and non-cash components. The chart below summarizes the various elements of CPI’s 2023 executive compensation program and the objective and key features of each element. +Objective +Type of +Compensation +Key Features +Base Salary +A standard compensation element in executive compensation packages, offering market competitive fixed compensation to attract and retain talent +Cash +● +Reflects individual skills, experience, responsibilities and performance over time +● +Provides a consistent source of income +Short-Term +Incentive +A cash-based award that encourages executives to focus on specific short-term corporate and/or business unit performance goals. +Cash +● +Performance-based award tied to achievement of critical short-term financial goals and priorities +● +Pays only if threshold performance levels are met or exceeded +Long-Term +Incentive — +RSUs +Rewards stockholder value creation, enhances executive stock ownership and promotes retention +Equity +● +At-risk award, with value based exclusively upon the value of the Company’s Common Stock +● +Aligns executive and stockholder interests +Long-Term +Incentive — +Options +Rewards stockholder value creation by aligning executive pay with stock price appreciation, enhances executive stock ownership and promotes retention +Equity +● +Performance-based award, with no value unless the Company’s stock price appreciates from the date of grant +● +Aligns executive and stockholder interests +Other Benefits +Provide programs for employees to pursue physical and financial wellbeing through retirement and health and welfare benefits +Benefit +● +Competitive broad-based benefits available to all employees +Employment and +Post-Termination +Arrangements +Protects the Company and NEOs during certain termination events, through the use of selective employment agreements, an executive severance and change-in-control policy, and various restrictive covenants +Benefit +● +Facilitates an orderly transition in the event of management changes +● +Helps ensure NEOs remain focused on creating sustainable performance in case of risk of job loss +● +Provides confidentiality, non-compete and non-solicit protections for the Company +Base Salary +Base salaries established for the Company’s executive officers are intended to reflect each individual’s responsibilities, experience, historical performance and other discretionary factors deemed relevant by the Company and have generally been set at levels deemed necessary to attract and retain individuals with superior talent. Base salaries are also designed to provide executive officers with steady cash flow during the course of the fiscal year that is not contingent on short-term variations in the Company’s operating performance. The base salaries of our NEOs in 2023 and 2022 are set forth below: +2023 Base Salary +2022 Base Salary +Aggregate % +(As of December 31, 2023) +(As of December 31, 2022) +Increase +Scott Scheirman (1) +$ +700,000 +$ +670,018 +4.5% +Lane Dubin (2) +$ +605,000 +$ +503,839 +20.1% +John Lowe (2) +$ +500,000 +$ +420,000 +19.0% +(1) Mr. Scheirman’s base salary increase was effective March 1, 2023. +(2) Mr. Dubin’s and Mr. Lowe’s base salary increases were effective January 1, 2023. +21 +Table of Contents +The Compensation Committee annually reviews the base salaries of the Company’s executive officers, including the CEO, and may from time to time make adjustments to these amounts as it deems necessary for the Company to pursue its goal of attracting and retaining key personnel. +Short-Term Incentives +The Company believes that establishing cash incentive opportunities is an important factor in both attracting and retaining qualified and highly skilled executives and in motivating our executives to achieve the Company’s near-term financial objectives. To achieve these objectives, the Company maintains a quarterly short-term incentive plan with an annual component, or the “STIP.” The quarterly design of the STIP is intended to reward the achievement of critical quarterly financial performance objectives and the annual component is tied to annual financial performance objectives. As such, payments may vary quarter to quarter. +To determine payouts under the STIP, the Company measures performance for each metric on both a quarterly and an annual basis. Each quarterly payment is “capped” at 125% of target, amounts that exceed the quarterly cap are subject to a year-end “true-up,” and each quarterly award is eligible for a “catch-up” payment for cumulative performance to-date. This design was implemented to further enhance the motivational effect of the STIP and provide a continual incentive to improve performance throughout the year. +Under the 2023 STIP, executives were eligible to earn quarterly cash bonuses based on the achievement of the following metrics: +Description +Metrics +70% based on achievement of Adjusted EBITDA (1) +30% based on achievement of Net Sales (2) +Corporate Executive Measurement +100% based on Company-wide achievement +(1) “Adjusted EBITDA” is a financial measure that is not calculated according to GAAP. For purposes of the STIP, we define Adjusted EBITDA as EBITDA (which represents earnings before interest, taxes, depreciation and amortization, all on a continuing operations basis) adjusted for (i) stock compensation expense, (ii) foreign currency changes, (iii) impairments, (iv) restructuring charges, (v) severance and other charges, (vi) loss on debt extinguishment, (vii) amounts related to a sales tax contingency liability, and (viii) other items that are unusual in nature, infrequently occurring or not considered part of core operations. +(2) The term Net Sales, as defined in the STIP, is consistent with “Total Net Sales,” as included in the Company’s consolidated financial statements, for all references contained herein. +Our STIP Net Sales and Adjusted EBITDA goals are defined on a quarterly basis for purposes of calculating the quarterly STIP payments. The quarterly goals align to the Company’s annual operating plan and reflect the planned seasonality of our business and operations. Achievement of performance goals is calculated on the basis of straight-line interpolation between the threshold, target and maximum bonus opportunities for each applicable metric underlying the performance goal. Quarterly and annual payouts under the STIP can range from 0% to 200%, based on Company performance; however, any payment made under the STIP with respect to each quarter is capped at 125% of the quarterly target incentive, with amounts in excess of the cap, up to 200%, payable with the annual payout. The targeted cumulative Adjusted EBITDA metric also serves as a trigger as CPI must achieve the overall Adjusted EBITDA threshold performance in order for any year-end STIP payments to fund . +The Compensation Committee kept Messrs. Scheirman’s and Dubin’s 2023 STIP targets flat as compared to their respective 2022 STIP targets. Mr. Lowe’s 2023 STIP target increased 12.0% over 2022, which reflected an adjustment based on his increasing responsibilities for revenue in connection with his 2022 promotion. For the 2023 performance year, our NEOs were eligible to receive the following target bonus opportunities under the 2023 STIP: +Executive +Target Annual +STIP Payment +Opportunity +Scott Scheirman +$ +1,379,800 +Lane Dubin +$ +408,000 +John Lowe +$ +400,000 +Actual 2023 Payouts +Based on Company performance in 2023, our 2023 STIP paid out at 49.4% of target under the plan overall, primarily due to outsized performance in the first quarter of 2023. Therefore, Messrs. Scheirman, Dubin and Lowe received 2023 STIP payments of $682,173, $201,715, and $197,760, respectively. +22 +Table of Contents +Long-Term Incentives +Together with STIP awards, the long-term incentive equity awards are designed to balance the achievement of critical near-term performance objectives with long-term strategic goals and the retention of our high performing executive team. We believe such awards also allow us to continue to recruit top-level talent and align compensation with stockholder value, all of which incentivize our executive team to continue improving our business. Generally, long-term incentive equity awards granted by the Company are subject to various conditions, including the executive’s continued service to the Company, time-based vesting conditions, and acceleration of vesting in the event of the executive’s death, termination due to disability, retirement or in connection with a change in control of the Company. +Throughout 2023, the Compensation Committee granted equity awards under the Omnibus Incentive Plan comprised of RSUs and Options to select employees of the Company, including the NEOs, on a quarterly basis with such grants scheduled to coincide with and occur in the month of the Company’s quarterly earnings release. In addition, a special equity award was approved to retain and incentivize executive officers and certain key employees, excluding the Chief Executive Officer. As described above, Mr. Scheirman received an additional grant on June 9, 2023 to induce him to remain employed with the Company to support an orderly transition of duties, which was made in the form of RSUs and Options. This award was granted in the form of RSUs and made in three separate tranches on June 9, 2023, August 31, 2023, and November 30, 2023. +The following table sets forth the details of the RSUs and Options granted to our NEOs in 2023: +Option Grant +# RSUs +RSU Grant Date +# Options +Date Stock +Aggregate +Grant Date +Granted +Fair Value +Granted +Price +Value +Scott Scheirman +3/31/2023 +(1) +3,829 +$ +172,343 +5,519 +$ +45.01 +$ +324,250 +Scott Scheirman +5/31/2023 +(1) +7,506 +199,735 +4,667 +26.61 +275,993 +Scott Scheirman +6/9/2023 +(1) +31,633 +728,508 +27,502 +23.03 +1,004,353 +Scott Scheirman +8/31/2023 +(1) +36,778 +760,201 +30,585 +20.67 +1,036,078 +Scott Scheirman +11/30/2023 +(1) +52,538 +934,651 +35,833 +17.79 +1,210,565 +Lane Dubin +3/31/2023 +(1) +889 +$ +40,014 +427 +$ +45.01 +$ +51,767 +Lane Dubin +5/31/2023 +(1) +1,162 +30,921 +723 +26.61 +42,735 +Lane Dubin +6/9/2023 +(2) +7,225 +166,392 +— +— +166,392 +Lane Dubin +8/31/2023 +(1) +1,575 +32,555 +922 +20.67 +44,366 +Lane Dubin +8/31/2023 +(2) +8,400 +173,628 +— +— +173,628 +Lane Dubin +11/30/2023 +(1) +2,249 +40,010 +1,073 +17.79 +51,813 +Lane Dubin +11/30/2023 +(2) +11,999 +213,462 +— +— +213,462 +John Lowe +3/31/2023 +(1) +1,257 +$ +56,578 +603 +$ +45.01 +$ +73,175 +John Lowe +5/31/2023 +(1) +1,642 +43,694 +1,021 +26.61 +60,377 +John Lowe +6/9/2023 +(2) +10,206 +235,044 +— +— +235,044 +John Lowe +8/31/2023 +(1) +2,225 +45,991 +1,302 +20.67 +62,669 +John Lowe +8/31/2023 +(2) +11,866 +245,270 +— +— +245,270 +John Lowe +11/30/2023 +(1) +3,178 +56,537 +1,516 +17.79 +73,213 +John Lowe +11/30/2023 +(2) +16,952 +301,576 +— +— +301,576 +(1) The RSUs and Options vest 50% on the first anniversary of the grant date and 50% on the second anniversary of the grant date, subject to the NEO’s continued employment through the applicable vesting date, or otherwise as provided by the NEO’s employment agreement. The RSUs and Options are both stock-settled awards. +(2) The RSUs vest 33.4% on the first anniversary of the grant date, 33.3% on the second anniversary of the grant date and 33.3% on the third anniversary of the grant date, subject to the NEO’s continued employment through the applicable vesting date. The RSUs are stock-settled awards. +Other Benefits +The Company maintains the CPI Card Group, Inc. 401(k) Plan (the “401(k) Plan”), which is designed to be a qualified defined contribution plan under the provisions of the Internal Revenue Code, covering substantially all employees who meet certain eligibility requirements. Under the 401(k) Plan, participants may defer their salary subject to statutory limitations and may direct the contributions among various investment accounts. The Company matches 100% of a participant’s first 3% of deferrals and 50% of the next 2% of deferrals. The matching contributions are fully vested at the time of the match. +Termination or Change in Control +Pursuant to their respective employment or post-termination arrangements, each of our NEOs may be entitled to certain payments and benefits in certain termination situations or upon a change in control. We believe that our severance arrangements would help facilitate an orderly transition in the event of changes in management. For further discussion of severance payments and benefits, see “ Employment and Post-Termination Arrangements. ” +23 +Table of Contents +Additional Compensation Governance Practices +Compensation Risk Assessment +The Compensation Committee regularly reviews the risk associated with the Company’s compensation programs. As part of this process, the Compensation Committee reviewed a comprehensive risk assessment conducted by WTW in 2019 and, at the time, concluded that our compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on the Company. In 2023, the Compensation Committee discussed with WTW the risk assessment of the Company’s executive compensation programs and any year-over-year changes that could impact the risk assessment. The Compensation Committee and WTW concluded that no program changes were implemented in 2023 that would materially affect the existing risk profile of the Company’s compensation program and that there were no material risks to the Company’s existing executive compensation program. Accordingly, the Compensation Committee and WTW did not recommend any changes the Company’s executive compensation program in 2023 on this basis. +Insider Trading Policy +The Company maintains an Insider Trading Policy, which prohibits CPI officers and directors from purchasing financial instruments and engaging in certain transactions designed to hedge against a decrease in the value of the Company’s securities, including short sales, publicly traded options, hedging and monetization transactions, margin sales, pledges of collateral and standing limit orders. +Clawback Policy +On October 9, 2023, the Company approved and adopted a revised clawback policy (the “Clawback Policy”), which describes the circumstances in which CPI will be required to recover, and executive officers will be required to repay or return, erroneously awarded compensation. The Clawback Policy requires the recoupment of compensation received by executive officers (defined within the meaning of Rule 10D-1 under the Exchange Act) during the three fiscal years immediately preceding the date the Company is required to prepare an accounting restatement due to material noncompliance with any financial reporting requirement under the securities laws. Among other things, the Clawback Policy covers incentive-based compensation awarded on the basis of financial measures, including TSR and stock price; requires recovery without regard to culpability; and prohibits the Company from insuring, reimbursing insurance or indemnifying any current or former executive officer against the loss of erroneously awarded compensation. A copy of the Clawback Policy was included as an exhibit to the Company’s Form 10-K for the year-ended December 31, 2023. +Stock Ownership Guidelines +Since 2016, the Company has maintained stock ownership guidelines that apply to our directors and senior executives, including our NEOs. The Company did this to further align the interests of our leaders and the Board of Directors with those of our stockholders and further promote our commitment to sound corporate governance. Under the guidelines, once appointed to their respective role, executives and directors have up to five years to accumulate shares and share equivalents that have a market value equal to or greater than a prescribed multiple of annual salary or annual retainer fees. For directors this multiple is five times the cash portion of the annual retainer, for our Chief Executive Officer this multiple is five times base salary, and for all other executive officers this multiple is two times base salary. +2023 Summary Compensation Table +The 2023 Summary Compensation Table discloses the compensation information for fiscal year 2023 and, to the extent required by applicable SEC disclosure rules, fiscal year 2022, for the principal executive officer and our two other most highly compensated executive officers who were serving as executive officers at the end of the last completed fiscal year. +Nonqualified +Non-Equity +Deferred +Incentive Plan +Compensation +All Other +Name and Principal Position +Year +Salary +Bonus +Stock Awards (1) +Option Awards (2) +Compensation (3) +Earnings +Compensation (4) +Total +Scott Scheirman, President, Chief Executive Officer and Director (5) +2023 +$ +695,157 +$ +— +$ +3,370,000 +$ +1,312,037 +$ +682,173 +$ +— +$ +13,200 +$ +6,072,567 +2022 +$ +659,634 +$ +— +$ +— +$ +— +$ +2,759,600 +$ +— +$ +12,200 +$ +3,431,434 +Lane Dubin, EVP and Chief Development and Digital Officer +2023 +$ +605,000 +$ +— +$ +696,982 +$ +47,181 +$ +201,715 +$ +— +$ +13,200 +$ +1,564,078 +2022 +$ +500,486 +$ +— +$ +— +$ +— +$ +815,360 +$ +— +$ +12,200 +$ +1,328,046 +John Lowe, EVP, End-to-End Payment Solutions +2023 +$ +500,000 +$ +— +$ +984,689 +$ +66,635 +$ +197,760 +$ +— +$ +13,200 +$ +1,762,284 +2022 +$ +420,000 +$ +— +$ +— +$ +— +$ +714,000 +$ +— +$ +12,200 +$ +1,146,200 +(1) The amounts reported in this column represent the grant date fair value of the RSU awards as calculated in accordance with FASB Topic 718, valued based on the closing stock price on the date of grant. +(2) The amounts reported in this column represent the grant date fair value of Option awards, calculated in accordance with FASB Topic 718. See Note 16 of the Company’s audited consolidated financial statements included in our Form 10-K for the fiscal year ended December 31, 2023 for a discussion of the relevant assumptions used in calculating these amounts. +24 +Table of Contents +(3) Represents performance-based bonuses earned under the Company’s STIP for the applicable year. Please see the section entitled “Elements of the 2023 Executive Compensation Program — Short-Term Incentives” above for further information regarding the 2023 STIP. +(4) Represents matching contributions under the Company’s 401(k) plan. +(5) In connection with the leadership transition and as part of the CEO’s retention arrangement, the requisite service and exercise periods for 2023 LTIP awards granted prior to June 2023 were modified. The incremental fair value associated with the modification of his 2023 LTIP awards was $830,810 and which is reflected in the stock awards and option awards columns. +Outstanding Equity Awards at 2023 Fiscal Year-End +Option Awards +Stock Awards +Number of +Number of +Securities +Securities +Number of +Value of +Underlying +Underlying +Shares of +Shares of +Unexercised +Unexercised +Option +Stock that +Stock that +Options +Options +Exercise +Option +Have Not +Have Not +(Exercisable) +(Unexercisable) +Price +Expiration +Vested +Vested (3) +Name +(#) +(#) +($) +Date +(#) +($) +Scott Scheirman +280,000 +(1) +— +$ +5.25 +2/28/2027 +— +— +32,893 +(1) +— +$ +29.62 +2/28/2027 +— +— +— +2,760 +(2) +$ +45.01 +3/31/2027 +3,829 +$ +73,479 +2,759 +(2) +$ +45.01 +3/31/2028 +— +— +— +2,334 +(2) +$ +26.61 +5/31/2027 +7,506 +$ +144,040 +2,333 +(2) +$ +26.61 +5/31/2028 +— +— +— +13,751 +(2) +$ +23.03 +6/9/2027 +31,633 +$ +607,037 +— +13,751 +(2) +$ +23.03 +6/9/2028 +— +— +— +15,293 +(2) +$ +20.67 +8/31/2027 +36,778 +$ +705,770 +— +15,292 +(2) +$ +20.67 +8/31/2028 +— +— +— +17,917 +(2) +$ +17.79 +11/30/2027 +52,538 +$ +1,008,204 +— +17,916 +(2) +$ +17.79 +11/30/2028 +— +— +Lane Dubin +22,500 +— +$ +27.60 +9/1/2026 +— +— +11,885 +— +$ +21.75 +3/22/2027 +— +— +25,000 +— +$ +5.25 +9/25/2027 +— +— +8,932 +— +$ +29.62 +9/21/2028 +— +$ +— +— +427 +$ +45.01 +3/31/2030 +889 +$ +17,060 +— +723 +$ +26.61 +5/31/2030 +1,162 +$ +22,299 +— +— +— +— +7,225 +$ +138,648 +— +922 +$ +20.67 +8/31/2030 +1,575 +$ +30,224 +— +— +— +— +8,400 +$ +161,196 +— +1,073 +$ +17.79 +11/30/2030 +2,249 +$ +43,158 +— +— +— +— +11,999 +$ +230,261 +John Lowe +75,000 +— +$ +1.98 +7/2/2028 +— +— +7,885 +— +$ +29.62 +9/21/2028 +— +— +253 +— +$ +30.53 +10/5/2028 +— +— +— +603 +$ +45.01 +3/31/2030 +1,257 +$ +24,122 +— +1,021 +$ +26.61 +5/31/2030 +1,642 +$ +31,510 +— +— +— +— +10,206 +$ +195,853 +— +1,302 +$ +20.67 +8/31/2030 +2,225 +$ +42,698 +— +— +— +— +11,866 +$ +227,709 +— +1,516 +$ +17.79 +11/30/2030 +3,178 +$ +60,986 +— +— +— +— +16,952 +$ +325,309 +(1) Pursuant to the terms of the Letter Agreement with Mr. Scheirman (as defined below), the Option expiration date was modified to February 28, 2027. +(2) Pursuant to the terms of the Letter Agreement with Mr. Scheirman (as defined below) the Options granted on each of March 31, 2023, May 31, 2023, June 9, 2023, August 31, 2023, and November 30, 2023 vest and become exercisable ratably over a two-year period from the grant date and expire on the third anniversary of the date of vesting. +(3) Represents RSUs, the market value of which is based on the $19.19 closing price of a share of our Common Stock on December   29, 2023 (the last trading day of 2023). +25 +Table of Contents +Employment and Post-Termination Arrangements +Mr. Scheirman’s Employment Agreement +On September 25, 2017, Mr. Scheirman entered into an employment and non-competition agreement (the “Scheirman Employment Agreement”) with the Company to serve as President and CEO, effective September 25, 2017, for a term ending on March 31, 2021, plus automatic one-year renewals thereafter unless either party provides notice of intent not to renew the agreement. On June 2, 2023, in connection with Mr. Scheirman’s announcement of his intent to retire, the Company and Mr. Scheirman entered into a letter agreement (the “Letter Agreement”) supplementing and amending the terms of the Scheirman Employment Agreement, which provided that Mr. Scheirman would remain employed with the Company through February 28, 2024 (the “Retention Date”). +The Letter Agreement was structured to provide an incentive for Mr. Scheirman to remain employed with the Company through the Retention Date in order to allow for the orderly transition of his duties from the Company. Prior to the Retention Date, Mr. Scheirman continued to serve as the Company’s President and CEO until fully transitioning his duties to Mr. Lowe, who was named the new President and CEO in January 2024. Mr. Scheirman then served as an Executive Advisor through the Retention Date. +The Letter Agreement provided that the aggregate target grant date fair value of equity awards to be granted to Mr. Scheirman in 2023 under the terms of the Employment Agreement were $3,920,000, with the equity awards granted after the date of the Letter Agreement to be 75% in the form of RSUs and 25% in the form of Options. The terms of such awards provided that 50% of the shares subject to the award will vest on the first anniversary of the date of grant, and the remaining 50% of the shares subject to the award will vest on the second anniversary of the date of grant, and the options may be exercised at any time between the date of vesting and the third anniversary of the date of vesting. Prior to the date of the Letter Agreement, Mr. Scheirman received grants of equity awards consistent with his LTIP targets for the first two quarterly award cycles; subsequent to the Letter Agreement, Mr. Scheirman received the remaining fair value of equity awards not already granted in three tranches on June 9, 2023, August 31, 2023 and November 30, 2023. Mr. Scheirman did not participate in the additional retention awards comprised of RSUs and granted to key personnel during 2023 to retain and incentivize them to support the CEO transition. +The Letter Agreement also provided that, subject to his continued employment through the Retention Date and his execution and delivery of a release of claims and his continued compliance with the Letter Agreement and the Employment Agreement and in lieu of the payments and benefits he would otherwise receive upon such a termination of his employment under the Employment Agreement, (A) the Company would pay to Mr. Scheirman an amount equal to $5,000,000; (B) any outstanding and unvested equity awards granted to Mr. Scheirman (including, without limitation, the equity awards granted to him pursuant to the Letter Agreement) will continue to vest in accordance with their original vesting schedules as if he had remained employed with the Company through each applicable vesting date, and any options held by Mr. Scheirman may be exercised at any time between the date of vesting and the third anniversary of the date of vesting; (C) each outstanding and unexercised stock option granted to Mr. Scheirman will, to the extent vested, remain exercisable through the earlier of the original expiration date and February 28, 2027; provided that the options that were not vested on the date of the Letter Agreement will remain exercisable until the third anniversary of the date of vesting; (D) Mr. Scheirman would remain eligible to receive the full amount of his 2023 cash incentive compensation, including quarterly payments and the annual true-up payment, with Mr. Scheirman’s 2023 incentive compensation to be paid based upon actual performance results for 2023, but treating all individual performance goals as having been met at the target level; and (E) the Company will reimburse Mr. Scheirman, on a monthly basis, for the cost of continuing coverage under the Company’s group health and dental benefits plan, and in accordance with the Company’s policies applicable to similarly situated employees, until no later than August 31, 2025. The estimated value of Mr. Scheirman’s continued equity vesting, assuming a termination as of December 31, 2023 and based on our stock price as of December 29, 2023, would have been $3,421,712. +Mr. Scheirman is subject to certain restrictive covenants in the Scheirman Employment Agreement, including obligations regarding noncompetition and non-solicitation of Company employees and customers for a period of eighteen months following termination of his employment with the Company. +Mr. Dubin’s Employment Agreement +In connection with Mr. Dubin’s promotion to Executive Vice President and Chief Development and Digital Officer, the Company entered into an employment agreement with Mr. Dubin effective December 13, 2022 and ending on June 30, 2024, unless earlier terminated or extended by the parties (the “Dubin Employment Agreement”). Under the Dubin Employment Agreement, in the event of a termination of his employment by the Company without Cause (as defined in the Dubin Employment Agreement) or by Mr. Dubin (a) for Good Reason (as defined in the Dubin Employment Agreement) or (b) other than for Good Reason and effective as of June 30, 2023, December 31, 2023 or June 30, 2024 (each, a “Severance Termination Event”), subject to his execution and delivery of a release of claims, Mr. Dubin will receive (i) severance payments equal to 1.0 times (1.5 times in the case of a Severance Termination Event that occurs within six months prior to or 24 months following a Change in Control (as defined in the Dubin Employment Agreement)) the sum of Mr. Dubin’s annual base salary and target bonus for the year of the termination; and (ii) the sum of (y) the Employee’s Quarterly Performance Incentive (as defined in the STIP) for the calendar quarter in which such termination occurs, including any related “catch-up” payment with respect to such quarter as determined in accordance with the STIP and (z) the Annual Performance Incentives determined under the STIP, in each case, based on the Company’s actual performance and pro-rated based on the number of days Mr. Dubin was employed by the Company during such period. Mr. Dubin is also entitled to reimbursement for the cost of up to 18 months of continuation coverage under the Company’s health and welfare plans at active employee rates and six months of outplacement services. On January 24, 2024, the Company and Mr. Dubin agreed that his employment with the Company would cease on June 30, 2024, the expiration of the Dubin Employment Agreement and Mr. Dubin became eligible for severance under the terms of the Dubin Employment Agreement. +26 +Table of Contents +In addition to the compensation described above, Mr. Dubin is entitled to (1) the continued vesting of any awards granted to Mr. Dubin after December 13, 2022 through the two-year anniversary of the end of the Severance Period (as defined below), and (2) the vested and unexercised portions of any stock option awards held by Mr. Dubin will remain outstanding and exercisable until the earlier of (A) the two-year anniversary of the end of the Severance Period and (B) the original expiration date of the stock option award; provided, however, such terms do not apply to the additional retention awards granted to key personnel in connection with the CEO transition. Mr. Dubin will be entitled to receive only those retention awards for which he has continued service through the vesting date with respect to those awards. In the case of a Change in Control prior to termination of his employment, Mr. Dubin is also entitled to full vesting of his outstanding equity awards, with the performance-based equity awards vesting at the target level of performance. +For purposes of the Dubin Employment Agreement, “Severance Period” means the 12-month period (or 18-month period in the case of a Severance Termination Event incurred in connection with a Change in Control) commencing on the date of Mr. Dubin’s termination of employment, unless such period is shortened by a violation of Mr. Dubin’s Confidentiality, Trade Secret Protection, Unfair Competition, Non-Solicitation, and Invention Assignment Agreement, by and between Mr. Dubin and CPI Card Group-Colorado, Inc., effective as of April 8, 2019 (the “Confidentiality Agreement”) after the termination date but prior to its expiration. The Dubin Employment Agreement extended the restricted period under the Confidentiality Agreement to a period of two years following the cessation of Mr. Dubin’s employment. +The estimated cash severance payment to Mr. Dubin on termination, assuming a termination as of December 31, 2023, would have been $1,050,197 (inclusive of $22,197 in COBRA insurance coverage and outplacement services valued at $15,000) for termination without Cause, for Good Reason, for the Company’s failure to renew the agreement, and, in each case, not in connection with a Change in Control. Based on our stock price as of December 29, 2023, the estimated value of Mr. Dubin’s continued equity vesting, assuming a termination as of December 31, 2023 without Cause, for Good Reason, or for the Company’s failure to renew the agreement would have been $145,363. In the event of a termination due to death or disability as of December 31, 2023, the estimated value of Mr. Dubin’s continued equity vesting would have been $675,468. +The estimated cash severance payment to Mr. Dubin on termination in connection with a Change in Control, assuming a termination as of December 31, 2023, would have been $1,556,697 (inclusive of $22,197 in COBRA insurance coverage and outplacement services valued at $15,000). The estimated value of Mr. Dubin’s continued equity vesting, assuming a termination as of December 31, 2023 and based on our stock price as of December 29, 2023, would have been $675,468. +Mr. Lowe’s Employment Agreement +Prior to entering into an Employment and Non-Competition Agreement effective January 24, 2024 between the Company and Mr. Lowe (the “Lowe Employment Agreement”) in connection with his appointment as President, CEO and Director, Mr. Lowe’s employment was subject to an offer letter between Mr. Lowe and the Company dated October 1, 2021. This offer letter provided for an annual base salary as well as eligibility for the Company’s STIP and eligibility to receive long-term incentives under the Omnibus Incentive Plan, which amounts were revised from time to time in connection with various compensation adjustments or promotions. Mr. Lowe’s offer letter did not provide for any severance benefits and he was subject to the Executive Severance Guidelines (described in more detail below), pursuant to which upon a termination of his employment as of December 31, 2023, Mr. Lowe would have been eligible to receive an estimated $937,197 in cash severance (inclusive of $22,197 in COBRA insurance coverage and outplacement services valued at $15,000) upon a termination without “cause” or for “good reason” or $1,387,197 (inclusive of $22,197 in COBRA insurance coverage and outplacement services valued at $15,000) upon a termination following a “change in control.” +The Lowe Employment Agreement provides for an initial employment term commencing on January 25, 2024 and ending on February 28, 2029, and will automatically renew for additional one-year terms until terminated by either party. Pursuant to the Lowe Employment Agreement, Mr. Lowe will receive an initial annual base salary of $625,000 and will be eligible for a target annual cash bonus equal to 100% of his base salary, based on the achievement of performance metrics approved by the Compensation Committee. During each calendar year during the employment term, Mr. Lowe will be eligible to receive awards under the Omnibus Incentive Plan, with a target grant date value of at least $2,000,000. In connection with his promotion, Mr. Lowe received additional long-term incentive awards in the form of (i) performance stock units, with respect to 60,000 shares of Company common stock (the “Promotion PSU Award”) and (ii) RSUs, with respect to 40,000 shares of Company common stock (the “Promotion RSU Award”). The Promotion PSU Award will be earned in equal one-third increments upon the attainment of the rolling weighted average closing price of the Company’s common stock equaling or exceeding each of $35.00, $50.00 and $65.00, in each case, for at least 90 consecutive trading days (the “Stock Price Hurdle”), during the five-year performance period commencing on the grant date. The Promotion RSU Award will vest in full on the four-year anniversary of the grant date. The vesting of both the Promotion PSU Award and the Promotion RSU Award are subject to Mr. Lowe’s continuous employment with the Company or an affiliate through the four-year anniversary of the grant date. The Company agreed to reimburse Mr. Lowe for up to $25,000 in reasonable attorneys’ fees incurred by him in connection with the negotiation of the Employment Agreement. +In the event of a termination of his employment with the Company due to his death or disability, by the Company without cause or by Mr. Lowe for good reason (each, a “Qualifying Termination”), subject to his execution and delivery of a release of claims, Mr. Lowe will receive (i) severance payments equal to 1.5 times the sum of Mr. Lowe’s annual base salary and target bonus for the year of the termination, (ii) a pro-rated bonus payment for the year of the termination, based on the Company’s actual performance, (iii) reimbursement for the cost of continuation coverage under the Company’s health and welfare plans for up to 18 months, and (iv) except in the case of a termination due to death or disability, six months of outplacement services. If Mr. Lowe’s Qualifying Termination occurs within 24 months following a change in control of the Company, then Mr. Lowe will instead receive (i) severance payments equal to two times the sum of Mr. Lowe’s annual base salary and target bonus for the year of the termination, (ii) a pro-rated bonus payment for the year of the termination, based on the Company’s actual performance, (iii) reimbursement for the cost of continuation coverage under the Company’s health and welfare plans for up to 24 months, (iv) except in the case of a termination due to death or disability, six months of outplacement +27 +Table of Contents +services. and (v) his outstanding equity awards will vest in full, based on target performance with respect to any performance-based awards; provided, however, that the Promotion PSU Award will only vest to the extent the applicable Stock Price Hurdles have been achieved on or prior to the change in control of the Company. +Mr. Lowe will be subject to certain non-competition and non-solicitation covenants for 18 months following the termination of his employment with the Company for any reason. +Executive Severance Guidelines +On June 22, 2017, the Company adopted guidelines governing executive severance (“Executive Severance Guidelines”), applicable to executive officers and NEOs of the Company who are not otherwise parties to individual employment or severance agreements providing for benefits upon a termination of employment. Under the Executive Severance Guidelines, if the employment of an eligible officer is terminated without “cause” or due to a resignation for “good reason,” not in connection with a “change in control” (each as defined in the Executive Severance Guidelines) and subject to the execution, delivery and non-revocation of a release of claims, he or she would be eligible to receive cash severance equal to one times the sum of his or her base salary plus annual bonus target (or 1.5 times the sum of base salary and annual bonus target for a CEO participant). For such a termination occurring within the 24 months following a change in control of the Company, the applicable severance multiple would be increased to 1.5 times for all other eligible officers (or 2.0 times for a CEO participant). In addition, the Company would continue to pay a portion of the cost of medical, dental and vision benefits on behalf of an eligible officer, such that the officer’s contribution would remain as it were for an active officer, for the greater of the severance period or such officer’s eligibility for COBRA continuation coverage, and the Company may provide, in its discretion, up to six months of outplacement services. As of December 31, 2023, Mr. Lowe was subject to the Executive Severance Guidelines, while Messrs. Scheirman and Dubin were excluded from the Executive Severance Guidelines due to the severance provisions in their respective Employment Agreements. +Pay vs. Performance +Value of Initial Fixed $100 +Summary +Compensation +Average Summary +Average Compensation +Investment Based On: +Compensation Table +Actually Paid +Compensation Table Total +Actually Paid +Total +Net Income +Year (1) +Total for PEO ($) (2) +to PEO ($) (3) +for Non-PEO NEOs ($) (2) +for Non-PEO NEOs ($) (3) +Shareholder Return ($) (4) +(in thousands) ($) +2023 +6,072,567 +5,292,252 +1,663,181 +1,489,262 +437.13 +23,985 +2022 +3,431,434 +3,621,040 +1,237,123 +1,286,687 +821.87 +36,540 +2021 +4,288,431 +4,565,532 +1,423,053 +1,672,791 +422.55 +15,941 +(1) Scott Scheirman served as the Company’s PEO and Lane Dubin and John Lowe served as the other NEOs for the entirety of 2023, 2022 and 2021. +(2) Amounts reported in this column represent (i) the total compensation reported in the Summary Compensation Table for the applicable year in the case of Mr. Scheirman and (ii) the average of the total compensation reported in the Summary Compensation Table for the applicable year in the case of the other NEOs. +(3) To calculate “Compensation Actually Paid” (“CAP”), adjustments were made to the amounts reported in the Summary Compensation Table for the applicable year. A reconciliation of the adjustments for Mr. Scheirman and for the average of the other NEOs is set forth following the footnotes to this table.* +(4) Pursuant to rules of the SEC, the comparison assumes $100 was invested on December 31, 2020 in our common stock. Historic stock price performance is not necessarily indicative of future stock price performance. +28 +Table of Contents +* Compensation Actually Paid Adjustments (see FN 3 above) +Minus +Plus +Plus (Minus) +Plus +Plus (Minus) +Minus +Plus +Equals +Change in Fair +Value as of +Fair Value as +Vesting Date of +of Prior Fiscal +Fair Value at +Stock Option and +Year-End of +Fiscal Year-End +Change in Fair +Fair Value at +Stock Awards +Stock Option and +Changes in +Grant Date +of Outstanding +Value of +Vesting of Stock +Granted in +Stock Awards +Fair Value to +Fair Value of +and Unvested +Outstanding and +Option and Stock +Prior Fiscal Years +Granted in Prior +Reflect Excess +Stock Option +Stock Option +Unvested Stock +Awards Granted +for which Applicable +Fiscal Years that +Fair Value +and Stock +and Stock +Option and Stock +in Fiscal Year +Vesting Conditions +Failed to Meet +Resulting from +Summary +Awards Granted +Awards Granted +Awards Granted +that Vested +Were Satisfied +Applicable Vesting +Modifications to +Compensation Table +in Fiscal +in Fiscal +in Prior Fiscal +During Fiscal +During Fiscal +Conditions During +Stock Option and +Compensation +Year +Total ($) (a) +Year ($) (b) +Year ($) (c) +Years ($) (d) +Year ($) (e) +Year ($) (f) +Fiscal Year ($) (g) +Stock Awards($) (h) +Actually Paid ($) +Scott Scheirman +2023 +6,072,567 +(4,682,037) +3,421,712 +- +- +(350,800) +- +830,810 +5,292,252 +2022 +3,431,434 +- +- +321,862 +- +(132,256) +- +- +3,621,040 +2021 +4,288,431 +(1,148,010) +649,752 +775,359 +- +- +- +- +4,565,532 +Average Other NEOs(i) +2023 +1,663,181 +(897,743) +814,865 +- +- +(91,041) +- +- +1,489,262 +2022 +1,237,123 +- +- +83,413 +- +(33,849) +- +- +1,286,687 +2021 +1,423,053 +(298,022) +168,734 +198,212 +- +180,814 +- +- +1,672,791 +(a) Represents Total Compensation as reported in the Summary Compensation Table for the indicated fiscal year. With respect to the other NEOs, amounts shown represent averages. +(b) Represents the grant date fair value of the stock option and stock awards granted during the indicated fiscal year, computed in accordance with the methodology used for financial reporting purposes. +(c) Represents the fair value at fiscal year-end of the stock option and stock awards granted during the indicated fiscal year, computed in accordance with the methodology used for financial reporting purposes. +(d) Represents the change in fair value during the indicated fiscal year of each option award and stock award that was granted in a prior fiscal year and that remained outstanding and unvested as of the last day of the indicated fiscal year, computed in accordance with the methodology used for financial reporting purposes and, for awards subject to performance-based vesting conditions, based on the probable outcome of such performance-based vesting conditions as of the last day of the fiscal year. +(e) Represents the fair value at vesting of the option awards and stock awards that were granted and vested during the indicated fiscal year, computed in accordance with the methodology used for financial reporting purposes. +(f) Represents the change in fair value, measured from the prior fiscal year-end to the vesting date, of each option award and stock award that was granted in a prior fiscal year and which vested during the indicated fiscal year, computed in accordance with the methodology used for financial reporting purposes. +(g) Represents the fair value as of the last day of the prior fiscal year of the option award and stock awards that were granted in a prior fiscal year and which failed to meet the applicable vesting conditions in the indicated fiscal year, computed in accordance with the methodology used for financial reporting purposes. +(h) Represents the incremental fair value associated with the modification of Mr. Scheirman’s 2023 LTIP awards. +(i) See footnote 1 above for the NEOs included in the average for each year. +Relationship Between Pay and Performance +We believe the CAP in each of the years reported above and over the three-year cumulative period are generally reflective of the Compensation Committee’s emphasis on “pay-for-performance” as the CAP amount captures the amounts awarded under the STIP that related to the Company’s financial performance in each year as demonstrated in the chart below. The total CAP amounts for each of the PEO and NEOs fluctuated year-over-year, primarily due to fluctuations in equity award grant timing and amounts. No equity awards were granted in 2022 as the equity awards granted in 2021 were designed to compensate for an 18-month period; however, maximum amounts under the STIP were awarded in 2022 and 2021 as a result of the Company’s outstanding financial performance during those years. In 2023, amounts awarded under the STIP were below target consistent with the decline in Company performance and equity +29 +Table of Contents +awards resumed as a component of the NEO’s annual compensation package. The additional equity-based retention awards granted in 2023 in connection with the leadership transition are not expected to be a recurring item for compensation purposes. +Equity Compensation Plan Information Table +The following table provides information as of December 31, 2023 with respect to shares of our common stock that may be issued under our existing equity compensation plan. +Number of securities +remaining available for +future issuance under +Number of securities to +Weighted average +equity compensation +be issued upon exercise +exercise price of +plans (excluding +of outstanding Options, +outstanding Options, +securities reflected in +warrants and rights +warrants and rights +column (a)) +(a) (#) +(b) ($) +(c) (#) +Equity compensation plans approved by security holders (1) +1,622,798 +(2) +18.79 +(2) +111,737 +Equity compensation plans not approved by security holders +— +— +— +Total +1,622,798 +111,737 +(1) All current equity compensation plans have been approved by stockholders. +(2) Consists of (i) 909,438 outstanding Options under the Omnibus Incentive Plan at an average exercise price of $18.79; and (ii) 713,360 outstanding RSUs under the Omnibus Incentive Plan. Only Options were used in computing the weighted average exercise price. +30 +Table of Contents +AUDIT COMMITTEE REPORT +This report of the Audit Committee is required by the SEC and, in accordance with the SEC’s rules, will not be deemed to be part of or incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933, as amended (the “Securities Act”), or under the Exchange Act, except to the extent that the Company specifically incorporates this information by reference, and will not otherwise be deemed “soliciting material” or “filed” under either the Securities Act or the Exchange Act. +The principal purpose of the Audit Committee is to assist the Board in its oversight of (i) the integrity of our accounting and financial reporting processes and the audits of our consolidated financial statements; (ii) our system of disclosure controls and internal control over financial reporting; (iii) our compliance with legal and regulatory requirements; (iv) the qualifications and independence of our independent auditor; (v) the performance of our independent auditor; and (vi) the business practices and ethical standards of the Company. The Audit Committee is responsible for the appointment, compensation, retention and oversight of the Company’s independent auditor. The Audit Committee’s function is more fully described in its charter. +Our management is responsible for the preparation, presentation and integrity of our consolidated financial statements, for the appropriateness of the accounting principles and reporting policies that we use and for establishing and maintaining adequate internal control over financial reporting. KPMG LLP (“KPMG”), our independent registered public accounting firm for 2023, was responsible for performing an independent audit of our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023, and expressing an opinion on the conformity of those financial statements with generally accepted accounting principles. KPMG was also responsible for expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. +The Audit Committee has reviewed and discussed with management our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023. The Audit Committee has also reviewed and discussed with KPMG the audited consolidated financial statements in such Form 10-K. In addition, the Audit Committee discussed with KPMG those matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (the “PCAOB”) and the SEC. Additionally, KPMG provided to the Audit Committee the written disclosures and the letter required by applicable requirements of the PCAOB regarding KPMG’s communications with the Audit Committee concerning independence, and the Audit Committee has discussed with KPMG its independence from the Company. +Based upon the review and discussions described above, the Audit Committee recommended to the Board that CPI’s audited consolidated financial statements be included in our Annual Report on Form 10-K for the year ended December 31, 2023 for filing with the SEC. +Audit Committee : +Marc Sheinbaum, Chair +Thomas Furey +Ravi Mallela +Valerie Soranno Keating +FEES PAID TO INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +For the years ended December 31, 2023 and 2022, KPMG, our independent registered public accounting firm, billed the approximate fees set forth below. Audit-related fees included in the table below for 2022 have been revised from what was included in our 2023 proxy statement to include an additional invoice for $93,932 from KPMG that was received in 2023 for services relating to 2022. +2023 +2022 +Audit fees (1) +$ +1,430,429 +$ +1,545,878 +Audit-related fees (2) +— +93,932 +Tax fees (3) +188,645 +270,971 +All other fees (4) +— +— +Total fees +$ +1,619,074 +$ +1,910,781 +(1) Audit fees relate to (i) the audit of our annual consolidated financial statements as of and for the years ended December 31, 2023 and 2022, and (ii) interim reviews of the condensed consolidated financial statements included in our Quarterly Reports on Form 10-Q during the years ended December 31, 2023 and 2022. +(2) These services include attest services related to financial reporting that are not required by statute or regulation. The fees in 2022 related to due diligence services performed. +(3) For the years ended December 31, 2023 and 2022, tax fees relate primarily to US federal and state tax compliance, planning, and advisory services. +31 +Table of Contents +(4) This category includes fees for services that are not included in the above categories. KPMG did not provide services included in this category during the years ended December 31, 2023 and 2022. +The Audit Committee has adopted certain policies and procedures regarding permitted audit and non-audit services and the pre-approval of such services. Each year, the Audit Committee will ratify the types of audit and non-audit services of which management may wish to avail itself, subject to pre-approval of specific services. Each year, the independent registered public accounting firm will submit a pre-approval request, which will list each known and/or anticipated audit and non-audit service for the upcoming calendar year and which will include associated budgeted fees. The Audit Committee will review the requests and approve a list of annual pre-approved non-audit services. Any interim requests for additional non-audit services that were not contained in the annual pre-approval request are pre-approved by the Audit Committee. +All services provided by KPMG during the fiscal year ended December 31, 2023 and 2022 were pre-approved by the Audit Committee. +32 +Table of Contents +PROPOSAL NO. 2 RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +Our Audit Committee has appointed KPMG LLP as our independent registered public accounting firm for the year ending December 31, 2024. A proposal will be presented at the Annual Meeting to ratify this appointment. If the stockholders fail to ratify such selection, another independent registered public accounting firm will be considered by our Audit Committee, but the Audit Committee may nonetheless choose to engage KPMG LLP. Even if the appointment of KPMG LLP is ratified, the Audit Committee, in its discretion, may select a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and its stockholders. We have been advised that a representative of KPMG LLP will be present at the Annual Meeting and will be available to respond to appropriate questions and, if such person chooses to do so, make a statement. +THE BOARD OF DIRECTORS AND THE AUDIT COMMITTEE UNANIMOUSLY RECOMMEND A VOTE FOR RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2024. +33 +Table of Contents +PROPOSAL NO. 3 STOCKHOLDER ADVISORY VOTE TO APPROVE OUR NAMED EXECUTIVE OFFICER COMPENSATION +We are offering our stockholders an opportunity to cast an advisory vote to approve the compensation of our NEOs, as disclosed in this proxy statement, pursuant to Section 14A of the Exchange Act (commonly referred to as a “say-on-pay” vote). The advisory vote to approve executive compensation is not a vote on the Company’s general compensation policies or the compensation of the Company’s Board of Directors. +In making decisions with respect to compensation for our NEOs, the Compensation Committee is guided by a pay-for-performance philosophy. The Compensation Committee believes that a significant portion of each NEO’s total compensation opportunity should vary with achievement of the Company’s annual and long-term financial, operational and strategic goals. In designing the compensation program for our NEOs, the Compensation Committee seeks to achieve the following key objectives: +Motivate Executives . The compensation program should encourage our executive officers to achieve the Company’s annual and long-term goals. +Align Interests with Stockholders . The compensation program should align the interests of our executive officers with those of our stockholders, promoting actions that will have a positive impact on total stockholder return over the long term. +Attract and Retain Talented Executives . The compensation program should provide each executive officer with a total compensation opportunity that is market competitive. This objective is intended to ensure that we are able to attract and retain qualified executives while maintaining an appropriate cost structure for the Company. +We believe our executive compensation is structured in the manner that best serves the interests of the Company and its stockholders. We encourage stockholders to review the “Executive Compensation” section above for a complete discussion of how we determine the pay for our NEOs as well as key accomplishments the executive team achieved during 2023. +Accordingly, we are asking stockholders to approve the following advisory resolution at the Annual Meeting: +RESOLVED, that the stockholders of the Company approve, on an advisory and non-binding basis, the compensation of the Company’s named executive officers, as disclosed in this proxy statement pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Executive Compensation section, the compensation tables and any related material disclosed in this proxy statement. +As an advisory vote, this resolution is not binding on us. However, the Compensation Committee, which is responsible for designing and administering our executive compensation program, values the opinions expressed by our stockholders in their vote on this proposal and will consider the outcome of the vote when making future compensation decisions for our NEOs. We expect to hold this vote on an annual basis for the foreseeable future. +THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL, ON AN ADVISORY BASIS, OF OUR NAMED EXECUTIVE OFFICER COMPENSATION AS DISCLOSED IN THIS PROXY STATEMENT. +34 +Table of Contents +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +The following is a description of transactions since January 1, 2022 to which we have been a party in which the amount involved exceeded or will exceed the lesser of $120,000 or one percent of the average of the Company’s total assets at year-end for the last two completed fiscal years and in which any of our directors, executive officers, beneficial holders of more than 5% of our capital stock or entities affiliated with them had or will have a direct or indirect material interest. +Registration Rights Agreement +In connection with our initial public offering, we entered into a registration rights agreement with the Tricor Funds (the “Registration Rights Agreement”). Under the Registration Rights Agreement, the Tricor Funds are entitled to request that we register shares of our Common Stock on a long-form or short-form registration statement on one or more occasions in the future, provided that we will not be obligated to register such shares within 90 days after the effective date of a registration statement previously filed pursuant to a request under the Registration Rights Agreement and otherwise for up to 60 days from the date of a request under the Registration Rights Agreement in certain circumstances. The Tricor Funds also are entitled to participate in certain registered offerings that we may conduct in the future, subject to certain restrictions. We will pay the Tricor Funds’ expenses in connection with the exercise of these rights. The registration rights described in this paragraph apply to (i) shares of our Common Stock held by the Tricor Funds as of the closing of our initial public offering, (ii) any of our capital stock (or that of our subsidiaries) issued or issuable with respect to the Common Stock described in clause (i) with respect to any dividend, distribution, recapitalization, reorganization or certain other corporate transactions, and (iii) any shares of our Common Stock owned or acquired following the closing of our initial public offering by the Tricor Funds (collectively, “Registrable Securities”). These registration rights are also for the benefit of any subsequent holder of Registrable Securities; provided that any particular securities will cease to be Registrable Securities when they have been sold in a registered public offering, sold in compliance with Rule 144 under the Securities Act or repurchased by us or our subsidiaries. In September 2021, we filed a registration statement on Form S-3 with respect to the shares of Common Stock held by the Tricor Funds in compliance with our obligations under the Registration Rights Agreement. +Director Nomination Agreement +In connection with our initial public offering, we entered into the Director Nomination Agreement with the Tricor Funds that provides the Tricor Funds the right to designate nominees for election to our Board for so long as the Tricor Funds collectively beneficially own 5% or more of the total number of shares of our Common Stock then outstanding. The number of nominees that the Tricor Funds are entitled to designate under the Director Nomination Agreement bears the same proportion to the total number of members of our Board as the number of shares of Common Stock beneficially owned by the Tricor Funds bears to the total number of shares of Common Stock outstanding, rounded up to the nearest whole number. In addition, the Tricor Funds shall be entitled to designate the replacement for any of its board designees whose board service terminates prior to the end of such designee’s term regardless of the Tricor Funds’ beneficial ownership at such time. In addition, for so long as the Tricor Funds collectively beneficially own 10% or more of the total number of shares of our Common Stock then outstanding, the Tricor Funds shall also have the right to have their designees participate on committees of our Board, subject to compliance with applicable law and stock exchange rules. The Director Nomination Agreement will terminate at such time as the Tricor Funds collectively own less than 5% of our outstanding Common Stock. Nicholas Peters and Bradley Seaman were each designated by the Tricor Funds as nominees to the Board in 2016. Sandy Riley was designated by the Tricor Funds as a nominee in 2023. Lisa Oleson has been designated by the Tricor Funds to stand as a nominee for the first time at the Annual Meeting. +Share Repurchase Agreement +In November 2023, the Company approved a share repurchase program (the “Share Repurchase Program”) to purchase up to $20 million of its Common Stock in open market and privately negotiated transactions. On December 6, 2023, the Company entered into a Stock Repurchase Agreement (the “Initial Agreement”) with Tricor Pacific Capital Partners (Fund IV) US, LP (the “Fund”), pursuant to which the Company has agreed to purchase three times the number of shares of the Company’s Common Stock acquired by the Company in the open market from time to time from non-Fund holders during the period commencing on December 6, 2023 and ending on March 31, 2024, up to a maximum of 325,000 shares of Common Stock. The Initial Agreement provides that such open market purchases will be made pursuant to the Share Purchase Program. Additionally, the Initial Agreement provides that the repurchase price for any shares acquired by the Company from the Fund will be 98% of the volume weighted average purchase price paid by the Company for all other shares acquired by the Company in the open market pursuant to the Share Purchase Program during such period. The repurchase from the Fund took place on April 5, 2024 and will be part of the Share Purchase Program authorization levels. The Initial Agreement was approved by the Audit Committee. Additional information can be found in our Current Report on Form 8-K, dated December 6, 2023, which was filed with the SEC. +35 +Table of Contents +On March 14, 2024, the Company entered into a Stock Repurchase Agreement dated March 11, 2024 (the “Second Agreement”) with the Fund, pursuant to which the Company has agreed to purchase three times the number of shares of the Company’s Common Stock acquired by the Company in the open market from time to time from non-Fund holders during the period commencing on April 1, 2024 and ending on June 30, 2024, up to a maximum of 325,000 shares of Common Stock. The Second Agreement provides that such open market purchases will be made pursuant to the Share Repurchase Program. Additionally, the Second Agreement provides that the repurchase price for any shares acquired by the Company from the Fund will be 98% of the volume weighted average purchase price paid by the Company for all other shares acquired by the Company in the open market pursuant to the Share Purchase Program during such period. It is anticipated that the repurchase from the Fund will take place in early July 2024 and will be part of the Share Purchase Program authorization levels. In the event that the Company enters into any other privately negotiated repurchase transaction with another party prior to June 30, 2024, the Second Agreement also gives the Fund the option to sell to the Company a number of shares equal to three times the number of shares acquired by the Company in such privately negotiated repurchase transaction, at the same price. The Second Agreement was approved by the Audit Committee. Additional information can be found in our Current Report on Form 8-K, dated March 14, 2024, which was filed with the SEC. +Policies and Procedures for Related Party Transactions +Our Board has adopted a written related party transaction policy setting forth the policies and procedures for the review and approval of related party transactions. The policy covers transactions involving us in which the aggregate amount involved in any calendar year will or may be expected to exceed $100,000 and in which a related person has or will have a direct or indirect interest (other than solely as a result of being a director or a less than 10% beneficial owner of another entity). For purposes of this policy, a related person is defined as an executive officer, director, nominee for director, or a greater than 5% beneficial owner of our Common Stock, in each case since the beginning of the most recently completed fiscal year, and any immediate family member of or person sharing a household with any of these individuals. All related party transactions must be presented to the Audit Committee for review, consideration and approval. In approving or rejecting any such proposed transaction, the Audit Committee will consider, among other factors, the related party’s relationship to the Company and interest in the transaction, the material facts of the transaction, the benefits to the Company of the transaction, the availability of other sources of comparable products or services (if applicable), whether the transaction is on terms that are comparable to the terms generally available to an unrelated third party, whether the transaction has the potential to impair director independence and whether the transaction constitutes a conflict of interest. +36 +Table of Contents +STOCKHOLDER PROPOSALS FOR 2025 ANNUAL MEETING OF STOCKHOLDERS +Stockholders who intend to present proposals at the Company’s annual meeting of stockholders in 2025 pursuant to Rule 14a-8 under the Exchange Act must send notice of their proposal to us so that we receive it no later than December 12, 2024. Stockholders who intend to present proposals at the annual meeting of stockholders in 2025 other than pursuant to Rule 14a-8 must comply with the notice provisions in our By-Laws. The notice provisions in our By-Laws require that, for a proposal to be properly brought before the annual meeting of stockholders in 2025, proper notice of the proposal be received by us not less than 90 days nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting; provided, however that in the event next year’s annual meeting is more than 30 days before or after such anniversary date, notice must be delivered not less than the later of 90 days prior to next year’s annual meeting or the 10th day following the day the Company first publicly announces next year’s annual meeting date. Under these requirements, proposals brought under our By-Laws must be received no earlier than January 22, 2025 and no later than February 21, 2025. +In addition to satisfying the foregoing requirements under the By-Laws, to comply with the universal proxy rules, stockholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must provide notice to the Company that sets forth the information required by Rule 14a-19 under the Exchange Act no later than March 23, 2025. +Stockholder proposals and notices should be addressed to CPI Card Group Inc., 10368 West Centennial Road, Littleton, Colorado 80127; Attention: Jessica Browne, Acting Chief Legal and Compliance Officer and Corporate Secretary. +OTHER MATTERS +We know of no other matters to be submitted to the stockholders at the Annual Meeting. If any other matters properly come before the Annual Meeting, persons named in the proxy intend to vote the shares they represent in accordance with their own judgments. +Upon written request by any stockholder entitled to vote at the Annual Meeting, we will promptly furnish, without charge, a copy of the Annual Report on Form 10-K for the fiscal year ended December 31, 2023, which we filed with the SEC, including the financial statements therein. Requests should be addressed to CPI Card Group Inc., 10368 West Centennial Road, Littleton, Colorado 80127; Attention: Jessica Browne, Acting Chief Legal and Compliance Officer and Corporate Secretary. +YOUR VOTE IS IMPORTANT. WE URGE YOU TO VOTE TODAY OVER THE TELEPHONE, VIA THE INTERNET OR BY MAIL. +By Order of the Board of Directors, +Jessica Browne +Acting Chief Legal and Compliance Officer and Corporate Secretary +37 +Table of Contents +ANNEX A – RECONCILIATION OF NON-GAAP MEASURES +Year Ended December 31, +2023 +2022 +Reconciliation of net income to EBITDA and Adjusted EBITDA: +Net income +$ +23,985 +$ +36,540 +Interest, net +26,913 +29,616 +Income tax expense +10,477 +12,607 +Depreciation and amortization +15,931 +14,886 +EBITDA +$ +77,306 +$ +93,649 +Adjustments to EBITDA: +Stock-based compensation expense +$ +7,507 +$ +3,479 +Sales tax (benefit) expense (1) +(70) +18 +Restructuring and other charges (2) +4,531 +— +Loss on debt extinguishment (3) +243 +474 +Foreign currency (gain) loss +(26) +83 +Subtotal of adjustments to EBITDA +$ +12,185 +$ +4,054 +Adjusted EBITDA +$ +89,491 +$ +97,703 +Net income margin (% of Net sales) +5.4% +7.7% +Net income (% Change 2023 vs. 2022) +(34.4)% +Adjusted EBITDA margin (% of Net sales) +20.1% +20.5% +Adjusted EBITDA growth (% Change 2023 vs. 2022) +(8.4)% +(1) Represents estimated sales tax (benefit) expense relating to a contingent liability due to historical activity in certain states where it is probable that the Company will be subject to sales tax plus interest and penalties . +(2) The 2023 amount represents accrued executive retention to be paid in 2024 and costs related to production facility modernization efforts. +(3) The Company redeemed a porti on of the 8.625% Senior Secured Notes in 2023 and 2022 and expensed the associated portion of the unamortized deferred financing costs . +A-1 +Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date +TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: +KEEP THIS PORTION FOR YOUR RECORDS +DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. +V50178-P04630 +2. Ratification of KPMG LLP as independent registered public accounting firm for the year ending December 31, 2024. +3. Advisory vote to approve named executive officer compensation. +1. Election of Directors +For Against Abstain +! ! ! +! ! ! +! ! ! +! ! ! +! ! ! +! ! ! +! ! ! +Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator or other fiduciary, please give full title as such. Joint +owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. +CPI CARD GROUP INC. +The Board of Directors recommends you vote FOR +proposals 1, 2 and 3: +NOTE: The proxy holders will have discretion to vote on such other business as may properly come before the meeting or any adjournment thereof. +CPI CARD GROUP INC. +10368 WEST CENTENNIAL ROAD +LITTLETON, COLORADO 80127 +For Against Abstain +1c. Ravi Mallela +1b. John Lowe +1a. Thomas Furey +1f. Marc Sheinbaum +1d. Nicholas Peters +1e. H. Sanford Riley +1g. Valerie Soranno Keating +1h. Lisa Oleson +Nominees: +! ! ! +! ! ! +! ! ! +VOTE BY INTERNET +Before The Meeting - Go to www.proxyvote.com or scan the QR Barcode above +Use the Internet to transmit your voting instructions and for electronic delivery of information. +Vote by 11:59 p.m. Eastern Time on May 21, 2024. Have your proxy card in hand when +you access the web site and follow the instructions to obtain your records and to create an +electronic voting instruction form. +During The Meeting - Go to www.virtualshareholdermeeting.com/PMTS2024 +You may attend the meeting via the Internet and vote during the meeting. Have the information +that is printed in the box marked by the arrow available and follow the instructions. +VOTE BY PHONE - 1-800-690-6903 +Use any touch-tone telephone to transmit your voting instructions. Vote by 11:59 p.m. +Eastern Time on May 21, 2024. Have your proxy card in hand when you call and then follow +the instructions. +VOTE BY MAIL +Mark, sign and date your proxy card and return it in the postage-paid envelope we +have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, +Edgewood, NY 11717. +SCAN TO +VIEW MATERIALS & VOTEw +Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: +The Notice and Proxy Statement and Form 10-K are available at www.proxyvote.com. +V50179-P04630 +CPI CARD GROUP INC. +Annual Meeting of Stockholders +May 22, 2024 7:00 a.m. Mountain Time +This proxy is solicited by the Board of Directors +The stockholder(s) hereby appoint(s) each of Jeffrey Hochstadt and Jessica Browne as proxy, each with the power to +appoint his or her substitute, and hereby authorize(s) him or her to represent and vote, as designated on the reverse side +of this ballot, all of the shares of common stock of CPI CARD GROUP INC. that the stockholder(s) is/are entitled to vote at +the Annual Meeting of Stockholders to be held virtually at 7:00 a.m. Mountain Time on May 22, 2024, at +www.virtualshareholdermeeting.com/PMTS2024, and any adjournment or postponement thereof. +This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this +proxy will be voted in accordance with the Board of Directors' recommendations. +Continued and to be signed on reverse side \ No newline at end of file diff --git a/raw/proxies/0001641614/0001558370-24-006124/proxy_rpt.txt b/raw/proxies/0001641614/0001558370-24-006124/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..b67b673b7ef3b2b6824056b816f3e2a03ada22df --- /dev/null +++ b/raw/proxies/0001641614/0001558370-24-006124/proxy_rpt.txt @@ -0,0 +1,15 @@ +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +The following is a description of transactions since January 1, 2022 to which we have been a party in which the amount involved exceeded or will exceed the lesser of $120,000 or one percent of the average of the Company’s total assets at year-end for the last two completed fiscal years and in which any of our directors, executive officers, beneficial holders of more than 5% of our capital stock or entities affiliated with them had or will have a direct or indirect material interest. +Registration Rights Agreement +In connection with our initial public offering, we entered into a registration rights agreement with the Tricor Funds (the “Registration Rights Agreement”). Under the Registration Rights Agreement, the Tricor Funds are entitled to request that we register shares of our Common Stock on a long-form or short-form registration statement on one or more occasions in the future, provided that we will not be obligated to register such shares within 90 days after the effective date of a registration statement previously filed pursuant to a request under the Registration Rights Agreement and otherwise for up to 60 days from the date of a request under the Registration Rights Agreement in certain circumstances. The Tricor Funds also are entitled to participate in certain registered offerings that we may conduct in the future, subject to certain restrictions. We will pay the Tricor Funds’ expenses in connection with the exercise of these rights. The registration rights described in this paragraph apply to (i) shares of our Common Stock held by the Tricor Funds as of the closing of our initial public offering, (ii) any of our capital stock (or that of our subsidiaries) issued or issuable with respect to the Common Stock described in clause (i) with respect to any dividend, distribution, recapitalization, reorganization or certain other corporate transactions, and (iii) any shares of our Common Stock owned or acquired following the closing of our initial public offering by the Tricor Funds (collectively, “Registrable Securities”). These registration rights are also for the benefit of any subsequent holder of Registrable Securities; provided that any particular securities will cease to be Registrable Securities when they have been sold in a registered public offering, sold in compliance with Rule 144 under the Securities Act or repurchased by us or our subsidiaries. In September 2021, we filed a registration statement on Form S-3 with respect to the shares of Common Stock held by the Tricor Funds in compliance with our obligations under the Registration Rights Agreement. +Director Nomination Agreement +In connection with our initial public offering, we entered into the Director Nomination Agreement with the Tricor Funds that provides the Tricor Funds the right to designate nominees for election to our Board for so long as the Tricor Funds collectively beneficially own 5% or more of the total number of shares of our Common Stock then outstanding. The number of nominees that the Tricor Funds are entitled to designate under the Director Nomination Agreement bears the same proportion to the total number of members of our Board as the number of shares of Common Stock beneficially owned by the Tricor Funds bears to the total number of shares of Common Stock outstanding, rounded up to the nearest whole number. In addition, the Tricor Funds shall be entitled to designate the replacement for any of its board designees whose board service terminates prior to the end of such designee’s term regardless of the Tricor Funds’ beneficial ownership at such time. In addition, for so long as the Tricor Funds collectively beneficially own 10% or more of the total number of shares of our Common Stock then outstanding, the Tricor Funds shall also have the right to have their designees participate on committees of our Board, subject to compliance with applicable law and stock exchange rules. The Director Nomination Agreement will terminate at such time as the Tricor Funds collectively own less than 5% of our outstanding Common Stock. Nicholas Peters and Bradley Seaman were each designated by the Tricor Funds as nominees to the Board in 2016. Sandy Riley was designated by the Tricor Funds as a nominee in 2023. Lisa Oleson has been designated by the Tricor Funds to stand as a nominee for the first time at the Annual Meeting. +Share Repurchase Agreement +In November 2023, the Company approved a share repurchase program (the “Share Repurchase Program”) to purchase up to $20 million of its Common Stock in open market and privately negotiated transactions. On December 6, 2023, the Company entered into a Stock Repurchase Agreement (the “Initial Agreement”) with Tricor Pacific Capital Partners (Fund IV) US, LP (the “Fund”), pursuant to which the Company has agreed to purchase three times the number of shares of the Company’s Common Stock acquired by the Company in the open market from time to time from non-Fund holders during the period commencing on December 6, 2023 and ending on March 31, 2024, up to a maximum of 325,000 shares of Common Stock. The Initial Agreement provides that such open market purchases will be made pursuant to the Share Purchase Program. Additionally, the Initial Agreement provides that the repurchase price for any shares acquired by the Company from the Fund will be 98% of the volume weighted average purchase price paid by the Company for all other shares acquired by the Company in the open market pursuant to the Share Purchase Program during such period. The repurchase from the Fund took place on April 5, 2024 and will be part of the Share Purchase Program authorization levels. The Initial Agreement was approved by the Audit Committee. Additional information can be found in our Current Report on Form 8-K, dated December 6, 2023, which was filed with the SEC. +35 +Table of Contents +On March 14, 2024, the Company entered into a Stock Repurchase Agreement dated March 11, 2024 (the “Second Agreement”) with the Fund, pursuant to which the Company has agreed to purchase three times the number of shares of the Company’s Common Stock acquired by the Company in the open market from time to time from non-Fund holders during the period commencing on April 1, 2024 and ending on June 30, 2024, up to a maximum of 325,000 shares of Common Stock. The Second Agreement provides that such open market purchases will be made pursuant to the Share Repurchase Program. Additionally, the Second Agreement provides that the repurchase price for any shares acquired by the Company from the Fund will be 98% of the volume weighted average purchase price paid by the Company for all other shares acquired by the Company in the open market pursuant to the Share Purchase Program during such period. It is anticipated that the repurchase from the Fund will take place in early July 2024 and will be part of the Share Purchase Program authorization levels. In the event that the Company enters into any other privately negotiated repurchase transaction with another party prior to June 30, 2024, the Second Agreement also gives the Fund the option to sell to the Company a number of shares equal to three times the number of shares acquired by the Company in such privately negotiated repurchase transaction, at the same price. The Second Agreement was approved by the Audit Committee. Additional information can be found in our Current Report on Form 8-K, dated March 14, 2024, which was filed with the SEC. +Policies and Procedures for Related Party Transactions +Our Board has adopted a written related party transaction policy setting forth the policies and procedures for the review and approval of related party transactions. The policy covers transactions involving us in which the aggregate amount involved in any calendar year will or may be expected to exceed $100,000 and in which a related person has or will have a direct or indirect interest (other than solely as a result of being a director or a less than 10% beneficial owner of another entity). For purposes of this policy, a related person is defined as an executive officer, director, nominee for director, or a greater than 5% beneficial owner of our Common Stock, in each case since the beginning of the most recently completed fiscal year, and any immediate family member of or person sharing a household with any of these individuals. All related party transactions must be presented to the Audit Committee for review, consideration and approval. In approving or rejecting any such proposed transaction, the Audit Committee will consider, among other factors, the related party’s relationship to the Company and interest in the transaction, the material facts of the transaction, the benefits to the Company of the transaction, the availability of other sources of comparable products or services (if applicable), whether the transaction is on terms that are comparable to the terms generally available to an unrelated third party, whether the transaction has the potential to impair director independence and whether the transaction constitutes a conflict of interest. +36 +Table of Contents \ No newline at end of file diff --git a/raw/proxies/0001641614/0001558370-25-004598/proxy.txt b/raw/proxies/0001641614/0001558370-25-004598/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..17dbb8901d98c85e1204f23345dab565ce8bbb04 --- /dev/null +++ b/raw/proxies/0001641614/0001558370-25-004598/proxy.txt @@ -0,0 +1,2561 @@ 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+☐ +Fee paid previously with preliminary materials. +☐ +Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a6(i)(1) and 0-11. +Table of Contents +10368 West Centennial Road +Littleton, Colorado 80127 +April 8, 2025 +Dear Stockholder: +On behalf of the Board of Directors of CPI Card Group Inc. (the “Company”), you are cordially invited to attend the 2025 Annual Meeting of Stockholders (the “Annual Meeting”) to be held on Wednesday, May 21, 2025, at 8:00 a.m. Mountain Time. The Annual Meeting will be a completely virtual meeting of stockholders, which will be conducted online via live webcast. Please see the Notice of Annual Meeting of Stockholders on the next page for more information about how to attend the Annual Meeting virtually. +We have included with this letter a proxy statement that provides you with detailed information about the business to be conducted at the Annual Meeting. In addition, the Company’s 2024 Annual Report, which is being made available to you along with the proxy statement, contains information about the Company and its performance. We encourage you to read these materials carefully. +Whether or not you plan to attend the Annual Meeting, your vote is important, and we encourage you to vote promptly. You may vote your shares through one of the methods described in the accompanying proxy statement. We strongly urge you to vote FOR the nominees proposed by the Board of Directors and in accordance with the recommendations of the Board of Directors on the other proposals by following the voting instructions contained in the proxy statement. +Sincerely, +H. Sanford Riley +John Lowe +Chair of the Board +President, Chief Executive Officer and Director +Table of Contents +CPI CARD GROUP INC. +NOTICE OF ANNUAL MEETING OF STOCKHOLDERS +MAY 21, 2025 8:00 A.M. +(Mountain Time) +To the Stockholders of CPI Card Group Inc.: +The 2025 Annual Meeting of Stockholders will be held virtually on May 21, 2025, at 8:00 a.m. (Mountain Time) via live webcast accessible at www.virtualshareholdermeeting.com/PMTS2025. The purpose of the meeting is to: +1. elect the eight director nominees named in the accompanying proxy statement; +2. ratify the appointment of KPMG LLP as our independent registered public accounting firm for 2025; +3. hold an advisory vote to approve named executive officer compensation; and +4. conduct any other business properly brought before the Annual Meeting or any adjournments or postponements thereof. +Voting is limited to stockholders of record at the close of business on March 27, 2025. +YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE VOTE YOUR SHARES OVER THE TELEPHONE, VIA THE INTERNET OR BY COMPLETING, DATING, SIGNING AND RETURNING A PROXY CARD, AS DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT. YOUR PROMPT COOPERATION IS GREATLY APPRECIATED. +By Order of the Board of Directors, +Darren Dragovich +Chief Legal and Compliance Officer and Corporate Secretary +Table of Contents +Notice of Electronic Availability of Proxy Statement and Annual Report +As permitted by rules adopted by the United States Securities and Exchange Commission (the “SEC”), we are making this proxy statement and our Annual Report available to stockholders electronically via the Internet. On or about April 8 2025, we will mail to most of our stockholders a notice (the “Notice”) containing instructions on how to access this proxy statement and our Annual Report and to vote via the Internet. +The Notice also contains instructions on how to request a printed copy of the proxy materials and to vote by mail. In addition, you may elect to receive future proxy materials in printed form by mail or electronically by e-mail by following the instructions included in the Notice. If you have previously elected to receive our proxy materials electronically, you will continue to receive these materials via e-mail unless you elect otherwise. +Table of Contents +TABLE OF CONTENTS +Page +SUMMARY OF THE ANNUAL MEETING +1 +PROPOSAL NO. 1 ELECTION OF DIRECTORS +5 +DIRECTORS AND CORPORATE GOVERNANCE +6 +Director Nominee Biographical Information and Qualifications +6 +Board Profile +7 +Director Selection Process +7 +Recommendation of Directors by Stockholders +8 +Independence of Directors +8 +Board’s Role in Risk Oversight +9 +Board/Committee Areas of Risk Oversight and Actions +10 +Corporate Governance +10 +Other Board Information +10 +Director Compensation +13 +Security Ownership of Certain Beneficial Owners, Directors and Management +13 +Delinquent Section 16(a) Reports +14 +EXECUTIVE OFFICERS +15 +EXECUTIVE COMPENSATION +17 +2024 NEOs +17 +2024 Business Overview +17 +Summary of Our 2024 Compensation Decisions +18 +Executive Compensation Governance Highlights +20 +2024 Say-on-Pay Vote +20 +Role of the Compensation Committee +20 +Role of the Independent Compensation Consultant +20 +Role of Market Data and the Peer Group +21 +Elements of the 2024 Executive Compensation Program +21 +Termination or Change in Control +25 +Additional Compensation Governance Practices +25 +Former Executive Officer Compensation Arrangements +26 +2024 Summary Compensation Table +27 +Outstanding Equity Awards at 2024 Fiscal Year-End +29 +Employment and Post-Termination Arrangements +31 +Pay vs. Performance +33 +Policies and Practices Related to Grant of Certain Equity Awards Close in Time to Release of Material Nonpublic Information +35 +Equity Compensation Plan Information Table +35 +AUDIT COMMITTEE REPORT +35 +FEES PAID TO INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +36 +PROPOSAL NO. 2 RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +37 +PROPOSAL NO. 3 STOCKHOLDER ADVISORY VOTE TO APPROVE OUR NAMED EXECUTIVE OFFICER COMPENSATION +38 +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +39 +Policies and Procedures for Related Party Transactions +39 +STOCKHOLDER PROPOSALS FOR 2026 ANNUAL MEETING OF STOCKHOLDERS +40 +OTHER MATTERS +40 +Annex A – Reconciliation of Non-GAAP Measures +A-1 +Table of Contents +10368 West Centennial Road +Littleton, Colorado 80127 +SUMMARY OF THE ANNUAL MEETING +This proxy statement contains information related to the 2025 Annual Meeting of Stockholders (the “Annual Meeting”) of CPI Card Group Inc. (referred to herein as the “Company,” “CPI,” “we,” “us” or “our” as the context requires) to be held via live webcast accessible at www.virtualshareholdermeeting.com/PMTS2025. +Why did you provide me with this proxy statement? +We provided you with this proxy statement because the Board of Directors of the Company (the “Board” or the “Board of Directors”) is soliciting, on the Company’s behalf, your proxy to vote at the Annual Meeting and at any postponements or adjournments of the Annual Meeting. This proxy statement summarizes information that is intended to assist you in making an informed vote on the proposals described in this proxy statement. +Who can vote at the Annual Meeting? +Only stockholders of record as of the record date are entitled to vote at the Annual Meeting. The record date to determine stockholders entitled to notice of and to vote at the Annual Meeting is the close of business on March 27, 2025. On the record date, there were 11,265,076 shares of our common stock, par value $0.001 per share (the “Common Stock”), outstanding. Our Common Stock is the only class of voting securities outstanding. +How many shares must be present to conduct the Annual Meeting? +We must have a quorum present virtually or by proxy to conduct the Annual Meeting. A quorum is established when a majority of shares entitled to vote is present virtually or represented by proxy at the Annual Meeting. Abstentions and broker non-votes (as described below) are counted for purposes of determining whether a quorum is present. +What matters are to be voted on at the Annual Meeting? +The agenda for the Annual Meeting is to: +1. elect the eight director nominees named in this proxy statement; +2. ratify the appointment of KPMG LLP as our independent registered public accounting firm for 2025; +3. hold an advisory vote to approve named executive officer compensation (the “Say-on-Pay Proposal”); and +4. conduct any other business properly brought before the Annual Meeting or any adjournments or postponements thereof. +As of the date of this proxy statement, we do not know of any other matters to be presented at the Annual Meeting. If any other matters properly come before the Annual Meeting, however, the persons named as proxies will be authorized to vote or otherwise act in accordance with their judgment. +How does the Board recommend that I vote? +The Board recommends that you vote: +1. FOR the election of each of the director nominees named in this proxy statement; +2. FOR the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for 2025; and +3. FOR the Say-on-Pay Proposal. +1 +Table of Contents +How do I vote at the Annual Meeting? +You may vote via the Internet during the Annual Meeting or by proxy in advance of the Annual Meeting. +Stockholder of Record . If you are a stockholder of record, there are three ways to vote by proxy: +By Internet — You can vote via the Internet by following the instructions on your Notice or proxy card. You will need to use the control number appearing on your proxy card to vote via the Internet. +By Telephone — If you receive or request printed copies of the proxy materials by mail, you will receive a proxy card and you can vote by telephone by following the instructions on your proxy card. You will need to use the control number appearing on your proxy card to vote by telephone. +By Mail — If you receive or request printed copies of the proxy materials by mail, you will receive a proxy card and you can vote by completing, dating and signing the proxy card and returning it in the envelope provided. +Beneficial Owner of Stock . If you hold shares in “street name” through a bank, broker or other nominee, you are considered a “beneficial owner” of stock and you may vote as follows: +By Internet — You can vote via the Internet by following the instructions on your Notice or voting instruction form. The availability of Internet voting may depend on the voting process of the organization that holds your shares. +By Telephone — If you receive or request printed copies of the proxy materials by mail, you will receive a voting instruction form and you can vote by telephone by following the instructions on the voting instruction form. The availability of telephone voting may depend on the voting process of the organization that holds your shares. +By Mail — If you receive or request printed copies of the proxy materials by mail, you will receive a voting instruction form and you can vote by proxy by completing, dating and signing the voting instruction form and returning it in the envelope provided. +Internet and Telephone voting facilities for stockholders of record will be available 24 hours a day. You may vote over the telephone or via the Internet until 11:59 p.m. Eastern Time on May 20, 2025. Even if you plan to attend the Annual Meeting virtually, we recommend that you also submit your proxy or voting instructions as described above so that your vote will be counted if you later decide not to attend the Annual Meeting. +Your proxy will be voted in accordance with your instructions, so long as the instructions are received by the voting deadline. In the case of a proxy card returned by mail, such card must be signed and dated and be actually received before the Annual Meeting. If you vote your shares via the Internet, over the telephone or by executing and returning a proxy card by mail, but you do not provide specific instructions with respect to the proposals, your shares will be voted in accordance with the recommendations of the Board of Directors: FOR each director nominee named in this proxy statement, FOR the ratification of the appointment of KPMG LLP (“KPMG”) as our independent registered public accounting firm for 2025, and FOR the Say-on-Pay Proposal. +As of the date of this proxy statement, we do not know of any matters to be presented at the Annual Meeting except those described in this proxy statement. If any other matters properly come before the Annual Meeting, however, the persons named as proxies will be authorized to vote or otherwise act in accordance with their judgment. +What does it mean if I receive more than one Notice of internet availability, e-mail or set of proxy materials? +You may receive more than one Notice, more than one e-mail or multiple proxy cards or voting instruction forms. For example, if you hold your shares in more than one brokerage account, you may receive a separate Notice, a separate e-mail or a separate voting instruction form for each brokerage account in which you hold shares. Also, if you are a stockholder of record and your shares are registered in more than one name, you may receive more than one Notice, more than one e-mail or more than one proxy card. To vote all of your shares by proxy, you must complete, date, sign and return each proxy card and voting instruction form that you receive, or vote over the telephone or via the Internet the shares represented by each e-mail, proxy card or voting instruction form that you receive. +May I change my vote? +Yes. You may revoke your proxy at any time before it is voted at the Annual Meeting. To change your vote, if you are a stockholder of record, you may submit another later dated proxy over the telephone or via the Internet no later than 11:59 p.m. Eastern Time on May 20, 2025 or by mail so long as it is actually received prior to the Annual Meeting, or by voting your shares during the Annual Meeting (your attendance at the Annual Meeting will not, by itself, revoke your proxy; you must vote at the Annual Meeting to revoke your proxy). If you are a beneficial owner and your shares are held in street name, you may change your vote by submitting new voting instructions to your bank, broker or other nominee, or you may change your vote by attending and voting at the Annual Meeting. +2 +Table of Contents +What happens if my bank or broker holds my shares in “street name” and I do not give any voting instructions? +If you hold your shares in “street name” through a bank, broker or other nominee, such bank, broker or nominee will vote those shares in accordance with your instructions. You should refer to the information provided to you by your bank, broker or nominee to determine how to provide voting instructions. Without instructions from you, a bank, broker or nominee will be permitted to exercise its own voting discretion only with respect to so-called “routine matters” but will not be permitted to exercise voting discretion with respect to “non-routine matters.” The Company believes that the proposal to ratify KPMG’s appointment as the Company’s independent registered public accounting firm for 2025 (Proposal No. 2) is a routine matter on which brokers will be permitted to vote shares on your behalf, even without your instructions. Other than Proposal No. 2, the Company believes that all proposals set forth in this proxy statement are considered non-routine matters, and brokers will thus not be able to vote on your behalf if you have not furnished voting instructions to them. Thus, if you do not give your bank, broker or nominee specific voting instructions with respect to Proposal No. 2, your shares will be voted in such entity’s discretion. If you do not give your bank, broker or nominee specific instructions with respect to the other proposals herein, your shares will not be voted on such proposals. This is called a “broker non-vote.” Shares represented by such broker non-votes will be counted in determining whether a quorum is present but will otherwise have no effect on the non-routine proposals. We urge you to promptly provide your bank, broker or nominee with appropriate voting instructions so that all your shares may be voted at the Annual Meeting. +What vote is required to elect directors and approve the other matters described in this proxy statement? +The Company’s Third Amended and Restated By-Laws (the “By-Laws”) require that the directors named in Proposal No. 1 be elected by the majority of votes cast with respect to such director in uncontested elections (the number of shares voted “for” a director nominee must exceed the number of votes cast “against” that nominee). In a contested election (a situation in which the number of nominees exceeds the number of directors to be elected, which we do not expect to occur for the Annual Meeting), the standard for election of directors will be a plurality of the shares represented in person or by proxy at any such meeting and entitled to vote on the election of directors. +The ratification of the appointment of KPMG as our independent registered public accounting firm for 2025 (Proposal No. 2) and the Say-on-Pay Proposal (Proposal No. 3) each require the affirmative vote of the holders of a majority of the shares of Common Stock present in person or represented by proxy at the Annual Meeting and entitled to vote thereon. Stockholders attending the virtual Annual Meeting via webcast are deemed to be present “in person.” +Broker non-votes are not counted as votes cast and therefore have no effect on Proposal No. 1. As stated above, because Proposal No. 2 is a routine matter, if you do not give your bank, broker or other nominee specific voting instruction with respect to Proposal No. 2, your shares will be voted in such entity’s discretion, and no broker non-votes are expected on such proposal. Broker non-votes will have no effect on Proposal No. 3 because it is a non-routine matter on which brokers are not permitted to vote without your voting instruction. +Abstentions will not be voted but will be counted for purposes of determining whether there is a quorum present. Abstentions will have the same effect of a vote “against” a proposal other than the proposal to elect directors (Proposal No. 1), on which they have no effect. +What is the difference between holding shares as a stockholder of record and as a beneficial owner? +If your shares are registered in your name on the Company’s books and records or with our transfer agent, you are the “stockholder of record” of those shares, and this proxy statement and accompanying materials have been provided directly to you by the Company. On the other hand, if you purchased your shares through a brokerage or other financial intermediary, the brokerage or other financial intermediary will automatically put your shares into “street name,” which means that the brokerage or other financial intermediary will hold your shares in its name or another nominee’s name and not in your name, but will keep records showing you as the “beneficial owner.” If you hold shares beneficially in street name, this proxy statement and accompanying materials have been forwarded to you by your broker, bank or other holder of record. +How many votes do I have? +Each share of Common Stock that you hold as of the record date entitles you to one vote, without cumulation, on each matter to be voted upon at the Annual Meeting. +How will the votes be counted at the Annual Meeting? +The votes will be counted by the independent inspector of election appointed for the Annual Meeting. +How will the Company announce the voting results? +The Company will report the final results of the voting at the Annual Meeting in a filing with the SEC on a Current Report on Form 8-K within four business days after the date of the Annual Meeting. +3 +Table of Contents +Who pays for the Company’s solicitation of proxies? +The Board, on behalf of the Company, is soliciting your proxy to vote your shares of Common Stock at our Annual Meeting. The Company will bear the cost of soliciting proxies, including preparing, printing and mailing this proxy statement. Proxies may be solicited personally, or by mail, e-mail or telephone by certain of our directors, officers, employees or representatives. Our directors and employees will not be paid any additional compensation for soliciting proxies. We may reimburse brokerage firms and other persons representing beneficial owners of shares for their out-of-pocket expenses in forwarding solicitation materials to such beneficial owners . +What is “householding” and how does it work? +Under the rules adopted by the SEC, we may deliver a single copy of the proxy materials to one address shared by two or more of our stockholders. This delivery method is referred to as “householding” and can reduce the environmental impact of our Annual Meeting and result in significant cost savings for the Company. To take advantage of this opportunity, we have delivered only one copy of the Notice and proxy materials, if you requested printed versions by mail, this proxy statement and the Annual Report, to multiple stockholders who share an address, unless we received contrary instructions from the impacted stockholders prior to the mailing date. If you would like to either participate in householding or receive separate copies of future proxy materials, please contact Broadridge Financial Solutions, Inc. by calling 1-866-540-7095 or by mail at 51 Mercedes Way, Edgewood, New York 11717, Attention: Householding Department. If you are a beneficial owner of shares held in street name and would like to participate in householding, you may contact the organization that holds your shares. +What do I need for admission to the Annual Meeting and how do I vote at the Annual Meeting? +You are entitled to participate in the Annual Meeting if you were a stockholder as of the close of business on March 27, 2025, the record date. To be admitted to and participate in the Annual Meeting, you must follow the instructions and use the information found on your proxy card, or voting instruction form or Notice. The Annual Meeting will be held in a virtual-only format on Wednesday, May 21, 2025 at 8:00 a.m. Mountain Time. The virtual meeting and live webcast can be accessed at www.virtualshareholdermeeting.com/PMTS2025. You will not be able to attend the Annual Meeting in person. +You may vote during the Annual Meeting by following the instructions available at www.virtualshareholdermeeting.com/PMTS2025 during the Annual Meeting. Whether or not you plan to attend the Annual Meeting, you are encouraged to vote in advance by one of the methods described in this proxy statement. +May stockholders ask questions at the Annual Meeting? +Yes. Stockholders will have the ability to submit questions regarding the proposals during the Annual Meeting via the virtual meeting website. +What if I have technical difficulties or trouble accessing the Annual Meeting? +If you encounter any difficulties while accessing the virtual meeting during the check-in or meeting time, a technical assistance phone number will be made available on the virtual meeting registration page beginning 15 minutes prior to the start time of the Annual Meeting. If there are any technical issues in convening or hosting the meeting, we will promptly post information to our investor relations website at investor.cpicardgroup.com, including information on when the meeting will be reconvened. +4 +Table of Contents +PROPOSAL NO. 1 - ELECTION OF DIRECTORS +Upon the recommendation of our Nominating and Corporate Governance Committee (the “Nominating Committee”), the Board has nominated the eight individuals presently serving as directors, each of whom is listed below to stand for re-election to the Board for a one-year term ending at the annual meeting of stockholders in 2026 and until their successors, if any, are duly elected or appointed. +The Board has determined that each director nominee listed below, other than John Lowe, is an independent director, as further described below in “Directors and Corporate Governance — Independence of Directors.” All of the director nominees listed below have consented to being named in this proxy statement and to serving if elected. However, if any of the below nominees becomes unable or unwilling to serve prior to the date of the Annual Meeting, proxy holders will have discretion and authority to vote for another nominee proposed by our Board. Alternatively, our Board may reduce the number of directors to be elected at the Annual Meeting. +Name +Position +Thomas Furey +Director +John Lowe +Director, President and Chief Executive Officer +Ravi Mallela +Director +Lisa Oleson +Director +Nicholas Peters +Director +H. Sanford Riley +Director and Chairman of the Board +Marc Sheinbaum +Director +Valerie Soranno Keating +Director +THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THE DIRECTOR NOMINEES NAMED IN THIS PROXY STATEMENT. +5 +Table of Contents +DIRECTORS AND COR POR ATE GOVERNANCE +Director Nominee Biographical Information and Qualifications +Set forth below is a description of the business experience of each director nominee, as well as their relevant qualifications, skills and experiences. Each director nominee listed below is a current director nominated for re-election to the Board for a term expiring at the annual meeting of stockholders in 2026. See “Election of Directors (Proposal No. 1).” +Thomas Furey , 60, has served on our Board of Directors since May 2021. Mr. Furey currently serves as the Chairman and Chief Executive Officer of Sagetech Avionics, Inc. (“Sagetech”), a privately held aerospace electronics company. Sagetech was incorporated in 2019 after a divisional carve out from Sagetech Corporation, for which Mr. Furey held the position of Chief Operating Officer since 2015. From 2014 to 2015, Mr. Furey served as Vice President of Manufacturing and Engineering at Unitec, Inc., a point-of-sale payments equipment company, before which he ran his own operations consultancy firm from 2012 to 2013. From 2004 to 2012, Mr. Furey held various executive positions at Standard Register Company, including Vice President of Manufacturing, Chief Supply Chain Officer and President of Standard Register’s industrial business. From 2001 to 2004, Mr. Furey was in charge of North American operations for Avery Dennison Corporation (NYSE:AVY), a label materials manufacturer. Mr. Furey also held positions of increasing responsibility in manufacturing leadership at AlliedSignal, Inc. (which acquired Honeywell Inc. in 1999 and took its name) from 1994 to 2001 and was selected as the AlliedSignal fellow to the “Leaders for Manufacturing” program at the Massachusetts Institute of Technology (“MIT”) from 1997 to 1999. He began his career as a Naval Flight Officer in the U.S. Navy. Mr. Furey holds a Bachelor of Science degree in Mathematics from the U.S. Naval Academy, a Master of Science degree in Industrial Engineering from California State University Northridge, as well as a Master of Science degree in Mechanical Engineering and a Master of Business Administration degree from MIT. Mr. Furey brings to the Board extensive experience in high volume manufacturing, operations and executive leadership. +John Lowe , 48, was appointed President and Chief Executive Officer of the Company and was appointed to the Board of Directors in January 2024. Prior to that, he served as our Executive Vice President (“EVP”) End-to-End Payment Solutions since December 2022. He served as our Senior Vice President (“SVP”) and General Manager Secure Card from October 2021 to December 2022. From July 2018 to October 2021, Mr. Lowe served as the Company’s Chief Financial Officer. Prior to joining the Company, Mr. Lowe served as Chief Financial Officer of SquareTwo Financial Corporation, a financial services company, from August 2014 until June 2017. Prior to August 2014, Mr. Lowe held various leadership roles of increasing responsibility at SquareTwo Financial Corporation, including serving as Treasurer, Vice President of Finance and Vice President of External Reporting. Mr. Lowe’s employment with SquareTwo Financial Corporation commenced in 2009. SquareTwo Financial Corporation filed for Chapter 11 bankruptcy protection in March 2017 in connection with a strategic sale of the Company. Mr. Lowe holds a Bachelor of Science degree in both Accounting and Finance from the Virginia Polytechnic Institute and State University. He brings to the Board significant experience in the areas of finance, accounting, investor relations, operations and executive leadership, including over 20 years of experience in the financial services industry. +Ravi Mallela , 55, has served on our Board of Directors since November 2023. From January 2022 to May 2024, he served as Executive Vice President and Chief Financial Officer of National Mortgage Insurance Holdings Inc. (NASDAQ:NMIH), the parent company of National Mortgage Insurance Corporation, a U.S.-based, private mortgage insurance company, and on its Executive Committee. Prior to joining NMIH, Mr. Mallela served as Executive Vice President and Chief Financial Officer, Finance Group, of First Hawaiian, Inc., a bank holding company, and First Hawaiian Bank (NASDAQ:FHB), a financial institution, (together, “First Hawaiian”) from September 2018 until January 2022. Prior to joining First Hawaiian, Mr. Mallela served as Senior Vice President, Head of Finance and Treasury of First Republic Bank (OTC:FRCB) from 2013 to 2018. He holds a Master of Business Administration degree from UCLA Anderson School of Management and a Bachelor of Science degree in Economics from the University of San Francisco. Mr. Mallela has public company executive leadership experience including significant experience in managing finance operations, risk management frameworks, data strategies and technical applications at large and mid-sized financial institutions. +Lisa Oleson , 45, has served on our Board since May 2024. Since 2016, Ms. Oleson has served as the Chief Financial Officer at Tricor Pacific Capital Inc., a Canadian single-family office that makes control investments in middle market companies, commercial real estate, and land development, among other asset classes. Ms. Oleson previously served on the board of directors of Dinoflex Group LP, a manufacturer of premium recycled rubber flooring with distribution across North America from July 2022 to January 2025. Prior to joining Tricor, Ms. Oleson held progressively senior finance roles in financial services, recycling, franchising, and heavy equipment companies. Ms. Oleson is a Chartered Professional Accountant in British Columbia, and holds a Bachelor of Business Administration degree with honors from Laurentian University. Ms. Oleson brings strong finance and accounting skills, as well as diverse operating experience, from her time in various industries. +Nicholas Peters , 52, has served on our Board of Directors since 2007. Mr. Peters has served as a Managing Member at EXI Investment Partners since January 2020, a private investment firm that makes control investments in lower middle market companies in the United States. Mr. Peters has also served as a Managing Director at Parallel49 Equity (formerly Tricor Pacific Capital), a private equity firm, since 2002, and as Parallel49 Equity’s Chief Financial Officer since 2012. Prior to joining Parallel49 Equity, Mr. Peters was a Senior Manager at Arthur Andersen LLP. Mr. Peters serves on the board of several EXI Investment Partners and Parallel49 Equity investment companies. Mr. Peters holds a Bachelor of Science degree in Business Administration from the University of Dayton. He is a Certified Public Accountant (inactive) (“CPA”) and is affiliated with the American Institute of CPAs and the Ohio Society of CPAs. Mr. Peters brings to the Board strong finance, accounting and capital market skills, as well as valuable experience from his oversight of the management and operations of several private equity owned companies. +H. Sanford “Sandy” Riley , 74, has served on our Board of Directors since May 2023. He has served as President and CEO of Richardson Financial Group Limited, a specialized financial services company, since 2003. Previously, he served for 10 years as President +6 +Table of Contents +and CEO and later Chairman of Investor Group, Inc., one of Canada’s largest mutual fund companies. Mr. Riley has served as a member of the board of directors of Molson Coors (NYSE:TAP) since 2015 and RF Capital Group Inc. (TSX:RCG) since 2021. In addition, Mr. Riley previously served as a director of Canadian Western Bank (TSX:CWB) from 2011 to 2022, The North West Company (TSX:NWC) from 2002 to 2022, and Manitoba Hydro, where he also served as Chairman of the board of directors, from 2016 to 2018. Mr. Riley is also involved with various community organizations, including serving as Chairman of the University of Winnipeg Foundation, past Chancellor of the University of Winnipeg and past Chairman of the Manitoba Business Council. Mr. Riley holds a J.D. from Osgoode Hall Law School, a Bachelor of Arts degree from Queen’s University and is a Member of the Order of Manitoba and the Order of Canada. He brings extensive board-level experience having served on numerous public company boards and committees in various industries, with leadership in areas of risk management, corporate governance and executive compensation, as well as executive leadership experience in financial services, including such areas as operations, management, strategy and corporate development. +Marc Sheinbaum, 67, has served on our Board of Directors since November 2019. Since January 2017, Mr. Sheinbaum has been an advisor to venture capital and private equity firms. From April 2014 to August 2016, he was the President, Chief Executive Officer and a director of Higher One Holdings, Inc. (NYSE:ONE), a payments technology provider for higher education. From February 2007 through March 2013, Mr. Sheinbaum was the Senior Vice President and Chief Executive Officer of Retail, Auto and Education Finance at JPMorgan Chase & Co. (NYSE:JPM). Earlier in his career, Mr. Sheinbaum held positions at GE Capital Corporation and American Express Company (NYSE:AXP), as well as Coopers & Lybrand Management Consulting. Mr. Sheinbaum holds a Bachelor of Science degree in Management Science from State University of New York at Albany and a Master of Business Administration degree from New York University. He brings considerable experience in payments and consumer financial services as well as public company leadership. +Valerie Soranno Keating , 61, has served on our Board of Directors since May 2018. Ms. Soranno Keating has been senior advisor to a number of private equity firms in the U.S. and Europe since 2017. From November 2009 through May 2015, she was the Chief Executive Officer of Barclaycard, the global payments division of Barclays PLC (NYSE:BCS), with $60 billion in assets and over 30 million customers throughout the U.S., Europe and South Africa. Before joining Barclays PLC, Ms. Soranno Keating held a variety of executive positions at American Express Company (NYSE:AXP) from May 1993 through May 2009, including President, Travelers Cheques & Prepaid Services, Executive Vice President Global Commercial Services, Executive Vice President Global Merchant Services, Emerging Global Businesses & Network Expansion, and Vice President Corporate Strategic Planning. Ms. Soranno Keating also serves as a director on the boards of other public and private companies, including One Main Financial (NYSE:OMF), Engage People Inc. and Billhighway Management LLC. She served as a director of FinServ Acquisition Corp. II (Nasdaq: FSRX) from February 2021 to December 2023. Ms. Soranno Keating holds a Bachelor of Science degree in Business Administration from Lehigh University. She brings to the Board wide-ranging experience in both executive and board roles across a broad spectrum of payments and related businesses. +Board Profile +Age +Gender +Race/Ethnicity +Director Selection Process +The Board periodically reviews and assesses its composition and takes into consideration factors that impact Board performance and refreshment. The Nominating Committee works with the Board to determine periodically, as appropriate, the desired Board qualifications, expertise and characteristics, and recommends candidates to the Board based on these criteria. In identifying director candidates, the Nominating Committee accepts recommendations from current or former directors, search firms retained by the Nominating Committee to assist in identifying and evaluating potential candidates, stockholders, Company executives and by self-nomination. In evaluating director candidates, regardless of the source of recommendation, the Nominating Committee generally considers factors such as business experience, high ethical standards and integrity, skills, understanding of CPI’s business environment and willingness to devote adequate time to Board duties, and commitments from serving on other boards. The Company’s Corporate Governance Guidelines also provide that the Nominating Committee shall work with the Board to determine eligibility to serve as a director of CPI, which includes weighing the aforementioned factors and evaluating each individual in the context of the membership of the Board as a group, with the objective of having a group that can best perpetuate the success of CPI’s business and represent stockholder interests through the exercise of sound judgment using the Board’s diversity of background and experience in various areas. The Board does not have a specific policy on diversity, but the Company’s Corporate Governance Guidelines provide that, with respect to Board diversity, the Nominating Committee may consider such factors as differences in professional background, education, skill and other individual qualities and attributes that contribute to the total mix of viewpoints and experience represented on the Board. +The Nominating Committee periodically retains a third-party executive search firm to assist in the identification and evaluation of director candidates. +7 +Table of Contents +In determining whether to recommend a director for re-election, the Nominating Committee considers the director’s past attendance at meetings, participation in and contributions to the activities of the Board (including Board committees) and the Company, the director’s adherence to standards of high character and integrity, as well as other qualifications and characteristics set forth in the Nominating Committee charter. The Company’s Corporate Governance Guidelines include a policy that provides that a director is not eligible for nomination or election to the Board if he or she reaches the age of 74 prior to the annual meeting of stockholders; provided that in certain circumstances, the Board may grant an exception to a director’s mandatory retirement if, on recommendation of the Nominating Committee, the Board determines that it would be of substantial benefit to the Company for the director to continue to serve after the mandatory retirement date. For the 2025 Annual Meeting, the Board approved an exception to the mandatory retirement age for Mr. Riley. +Recommendation of Directors by Stockholders +In accordance with its charter, the Nominating Committee will consider any candidate for election as a director of the Company recommended by any CPI stockholder, provided that the recommending stockholder follows the procedures set forth in Section 2.10(a) of the Company’s By-Laws for nominations by stockholders of persons to serve as directors (except for directors nominated by the Tricor Funds (defined below), as described in the paragraph immediately below). The Nominating Committee evaluates director candidates recommended by CPI stockholders (except for the Tricor Funds) in the same manner by which it evaluates other director candidates considered by the Nominating Committee, as described above. +Two of our stockholders, Tricor Pacific Capital Partners (Fund IV), LP and Tricor Pacific Capital Partners (Fund IV) US, LP (together, the “Tricor Funds”) have the right to collectively designate nominees for election to our Board of Directors for so long as the Tricor Funds collectively beneficially own 5% or more of the total number of shares of Common Stock then outstanding, pursuant to a Director Nomination Agreement entered into between the Company and the Tricor Funds in connection with our initial public offering (the “Director Nomination Agreement”). The number of nominees that the Tricor Funds are entitled to designate under the Director Nomination Agreement bears the same proportion to the total number of members of our Board as the number of shares of Common Stock beneficially owned by the Tricor Funds bears to the total number of shares of Common Stock outstanding, rounded up to the nearest whole number. Pursuant to the Director Nomination Agreement, the Company agrees to use its best efforts to ensure that director nominees of the Tricor Funds are included in the Board’s slate of nominees submitted to the stockholders for election at each annual meeting. Thus, the Nominating Committee would not evaluate director candidates nominated by the Tricor Funds and make a determination regarding their suitability for nomination in the manner described above. The Nominating Committee reviews the qualifications of director candidates nominated by the Tricor Funds, including, at minimum, a background check, a written questionnaire, and other biographical information, to assess the director candidates’ suitability for submission to the stockholders for election to the Board. Refer to “Certain Relationships and Related Party Transactions – Director Nomination Agreement” for a description of the Tricor Funds’ right to designate nominees. +Pursuant to Section 2.10(a) of the By-Laws, nominations of persons for election to the Board at a meeting of stockholders may be made by any stockholder of the Company entitled to vote for the election of directors at such meeting who sends a timely notice in writing to our Corporate Secretary. To be timely, a stockholder’s notice must be delivered to our Corporate Secretary at the Company’s principal executive offices not less than 90 nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting; provided, however, that if the annual meeting is more than 30 days prior to or after the anniversary of the preceding year’s annual meeting, notice by the stockholder must be delivered not later than the close of business on the later of the 90th day prior to such annual meeting or the 10th day following the day on which public announcement of the date of such annual meeting is made by the Company. As set forth in the By-Laws, a stockholder’s notice is required to contain certain prescribed information. +Recommendations or notices relating to director nominations should be sent to CPI Card Group Inc., 10368 West Centennial Road, Littleton, Colorado 80127; Attention: Darren Dragovich, Chief Legal and Compliance Officer and Corporate Secretary. +Independence of Directors +The Company’s Corporate Governance Guidelines provide that a majority of the members of the Board, and each member of the Audit Committee of the Board (the “Audit Committee”), the Compensation Committee of the Board (the “Compensation Committee”) and Nominating Committee, must meet the criteria for independence set forth under applicable law and the rules and standards of any applicable national securities exchange or inter-dealer quotation system (the “Market Rules”). No director qualifies as independent unless the Board determines that the director has no relationship with the Company which would interfere with the exercise of independent judgment in carrying out his or her responsibilities as a director. These independence guidelines are part of our Corporate Governance Guidelines, available on our website at investor.cpicardgroup.com. The Board considers all relevant facts and circumstances of which it is aware in making an independence determination with respect to any director. +The Board has made independence determinations with respect to each of our directors. Based on the Market Rules, the Board has affirmatively determined that each of Mses. Soranno Keating and Oleson, and Messrs. Furey, Mallela, Peters, Riley, and Sheinbaum are independent within the meaning of the Market Rules. Mr. Lowe was not deemed independent due to his service as the Company’s President and CEO. Scott Scheirman, who served on the Board briefly during 2024 until he was succeeded by Mr. Lowe, was not deemed independent due to his service as the Company’s then-President and CEO. +8 +Table of Contents +Board’s Role in Risk Oversight +Risk assessment and oversight are an integral part of our governance and management processes. The Board is responsible for overseeing the development and execution of the Company’s strategic plans and for understanding the associated risks and actions that management is taking to manage and mitigate those risks. Our enterprise risk management process is designed to facilitate the identification, assessment and management of certain key risks that the Company may encounter and which may impact our ability to achieve our strategic objectives. This process includes reviewing for potential short-term risks (monitoring monthly or quarterly) and long-term risks (monitoring annually or longer), and in addition to relying on senior management, also utilizes an internal audit team to help identify and monitor risks and to periodically assess and update the Company’s risk management framework. Members of senior management, including the Chief Executive Officer, Chief Financial Officer and Chief Legal and Compliance Officer, comprise the Enterprise Risk Management Committee and meet regularly to review, rank, assess and prepare mitigation plans for various risks to the Company, including but not limited to: economic and political, market and competitive, financial, operational, technological (including cybersecurity and artificial intelligence), regulatory and compliance, and employment risks. These results of the reviews, assessments and recommendations are reported to the Audit Committee at least bi-annually. The Company also utilizes other risk management techniques such as working with outside advisors to conduct mock identification and response exercises for training purposes and reports significant findings to the Board. +The Chief Executive Officer and other senior management, including the Chief Financial Officer and Chief Legal and Compliance Officer (each of whom report directly to the Chief Executive Officer), may review specific risks with the Board throughout the year, as necessary and appropriate, including as a result of the Chair or the Board requesting more frequent updates or information about specific risks. In reviewing specific risks with the Board, senior management may incorporate reports and presentations from outside advisors and consultants designed to advise with respect to future threats and trends and risk identification, management, and mitigation actions, strategies and processes, as well as to discuss with, and obtain input from, the Board. +Pursuant to its charter, the Audit Committee is responsible for oversight of the Company’s policies with respect to risk assessment and risk management and discussing with management the major risk exposures facing the Company, including but not limited to financial, compliance and security risks, and the steps the Company has taken to monitor and mitigate, where possible, such exposures. Periodically, the Company’s Chief Executive Officer, Chief Financial Officer, Chief Legal and Compliance Officer, Chief Information Security Officer, Chief Accounting Officer and Internal Audit Director, among other select members of the Company’s management, as appropriate, present to the Audit Committee a description of management’s view of the most significant risks facing the Company and participate in discussions with the Audit Committee regarding those risks and any mitigating factors, plans or policies in place to address and monitor such risks. Additionally, the Chief Information Officer, Chief Information Security Officer, Chief Technology Officer and Chief Legal and Compliance Officer, along with other internal personnel, have primary responsibility for assessing and managing material cybersecurity risks and comprise a management committee that reviews issues and initiatives related to data security and privacy. The committee meets at least quarterly to identify security risks and assess the status of security programs or enhancements and regularly reports findings and recommendations to the Audit Committee on security incidents, policies and procedures, security service requirements and risk mitigation strategies. +While the Audit Committee is charged with primary oversight of risk, the Board and the Board committees oversee risks associated with their principal areas of focus, as summarized below. The committee chairs regularly report to the full Board regarding their risk oversight activities, and the Board regularly reviews and discusses the most significant risks facing the Company and management’s process for identifying, prioritizing and responding to those risks. Depending on the immediacy of the identified risk, the Board may take additional oversight steps, including meeting more frequently to receive updates from management and engaging outside advisors for advice regarding mitigation or remediation of such risks. +9 +Table of Contents +Board/Committee Areas of Risk Oversight and Actions +● +● +● +Full Board +● +Evaluates reports received from management and makes inquiries of management as appropriate +● +Reviews with management material strategic, operational, financial, human capital, cybersecurity, compensation and compliance risks +● +Considers specific risk topics in connection with strategic planning and other matters +● +Manages risk oversight and related activities conducted by Board committees through reports of the committee chairs to the Board +Audit +Committee +● +Assesses periodic management reports on the enterprise risk management process and risks identified through that process +● +Discusses with management the Company’s specific processes for assessing and managing risks, including identifying the Company’s major financial and other enterprise risk exposures and the steps necessary to monitor and control such exposures +● +Assesses periodic management reports on financial and compliance risks, including privacy and data security +● +Oversees the process for receipt, retention, and treatment of reports of suspected violations of the Code of Business Conduct and Ethics, allegations of misconduct by executive officers, fraud or other critical matters and reports periodically to the Board with respect to such reports +● +Meets at least quarterly with the Company’s Chief Legal and Compliance Officer regarding the Company’s ethics and compliance processes and practices +● +Meets periodically with senior management and our independent auditor, KPMG, to review and discuss the external audit plan as well as critical audit matters, among other things, and reports on such meetings to the Board +● +Reviews and approves in advance the scope and the fees of non-audit services of our independent auditors +● +Receives regular updates from the Company’s Director of Internal Audit and approves the Company’s internal audit plan +● +Receives regular updates and periodic assessment reports from the Company’s Chief Information Officer regarding information security matters, including cybersecurity +Compensation +Committee +● +Oversees the review and evaluation of the risks associated with our compensation policies and practices +● +Reviews the Company’s strategies and policies related to human capital management, including with respect to matters such as employee engagement and talent development +Nominating +Committee +● +Oversees the review and evaluation of the risks associated with our governance structure, policies and processes +● +Oversees the Company’s environmental, social and governance efforts, risks, progress and disclosures +● +Reviews, approves and recommends to the Board updates, as necessary, to our organizational documents, Corporate Governance Guidelines and other governance related policies +Corporate Governance +The Board has approved Corporate Governance Guidelines and a Code of Business Conduct and Ethics, as well as a Code of Conduct for Financial Officers that is applicable to our Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer. Our corporate governance documents, including the Corporate Governance Guidelines, the Code of Business Conduct and Ethics, the Code of Conduct for Financial Officers and committee charters, are available on our website at investor.cpicardgroup.com or in printed form upon request by contacting CPI Card Group Inc. at 10368 West Centennial Road, Littleton, Colorado 80127, Attention: Investor Relations. The Board regularly reviews corporate governance developments and modifies these documents as warranted. Any modifications will be reflected on our website. The information on our website is not part of this proxy statement and is not deemed to be incorporated by reference herein. +Other Board Information +Leadership Structure of the Board +Sandy Riley serves as Chair of the Board, and John Lowe, who succeeded Scott Scheirman upon Mr. Scheirman’s retirement in January 2024, serves as our Chief Executive Officer (“CEO”). Our Board has decided to maintain separate Chair and CEO roles to allow +10 +Table of Contents +our CEO to focus on the development and execution of our business strategy, while allowing the Chair to lead the Board in its fundamental role of providing advice to, and independent oversight of, management. The Board recognizes the time, effort and energy that the CEO is required to devote to his position, as well as the commitment required to serve as our Chair. While our By-Laws and Corporate Governance Guidelines do not require that our Chair and CEO positions be separate, the Board believes that having separate positions and having an independent director serve as Chair is the appropriate leadership structure for us at this time. +Board Meetings +In fiscal year 2024, our Board held ten meetings. In addition to our Board meetings, our directors attend meetings of committees established by our Board on which they serve. Each of CPI’s directors attended at least 75% of the meetings of our Board and the committees on which he or she served during 2024 that were held when he or she was a director. Each of our directors is expected to attend each meeting of the Board and is strongly encouraged to attend each annual stockholder meeting, as provided in our Corporate Governance Guidelines. The seven directors that were then serving on the Board and the one director nominee attended the 2024 annual meeting of stockholders. +Meetings of Non-Employee Directors +In accordance with our Corporate Governance Guidelines, our non-employee directors meet regularly in executive sessions of the Board without management present. Sandy Riley, our Chair of the Board, presides over these executive sessions. In the event that Mr. Riley is not available to lead these meetings, the presiding director is chosen by the non-employee directors in attendance. +Committees of the Board +The Board has three standing committees: the Audit Committee, the Compensation Committee and the Nominating Committee. The Nominating Committee, in conjunction with the Board, regularly evaluates committee composition to enhance the overall governance function of the Board of Directors and to address succession planning needs. The following chart sets forth the directors who currently serve as members of each of the Board committees as of the date of this proxy statement. +Audit +Compensation +Nominating +Directors +Committee +Committee +Committee +Thomas Furey +X +X +John Lowe +Ravi Mallela +X +Lisa Oleson +X +Nicholas Peters +C +X +H. Sanford Riley* +Marc Sheinbaum +C +X +X +Valerie Soranno Keating +X +X +C +* Chair of the Board +“C” Denotes member and chair of committee +“X” Denotes member +Audit Committee +The Audit Committee held eight meetings in 2024. The Board has determined that all of the members of the Audit Committee meet the independence criteria for purposes of serving on an audit committee under the applicable rules of The Nasdaq Stock Market (“Nasdaq”) and Rule 10A-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In addition, our Board has determined that Mr. Sheinbaum qualifies as an “audit committee financial expert,” as such term is defined in Item 407(d)(5) of Regulation S-K. The Audit Committee operates under a written charter setting forth its functions and responsibilities. A copy of the current charter is available on our website at investor.cpicardgroup.com or in printed form upon request. Refer to “Audit Committee Report” for a summary description of the Audit Committee’s functions and responsibilities. +Compensation Committee +The Compensation Committee held nine meetings in 2024. The Board has determined that all of the members of the Compensation Committee are independent as defined in Nasdaq rules. The Compensation Committee has overall responsibility for approving and evaluating the Company’s director and executive officer compensation plans, policies and programs and reviewing the disclosure of such plans, policies and programs to our stockholders in the Company’s annual proxy statement. The Compensation Committee utilizes an independent compensation consultant to assist it in its duties, and it may delegate certain of its authority to a subcommittee of the Compensation Committee, the CEO or another executive officer, including with respect to matters relating to the compensation of the Company’s employees other than the Company’s CEO and executive officers. The Compensation Committee operates under a written charter setting forth its functions and responsibilities. A copy of the current charter is available on our website at investor.cpicardgroup.com or in printed form upon request. +11 +Table of Contents +In consultation with the Company’s management, the Compensation Committee approves the Company’s executive compensation philosophy and oversees and monitors the Company’s executive compensation policies, plans and programs for the executive officers to assess whether they are consistent with the Company’s compensation philosophy and objectives, as well as the long-term interests of the Company’s stockholders. The Compensation Committee also evaluates and makes recommendations to the Board regarding the adequacy and effectiveness of non-employee director compensation. Our human resources executives and staff support the Compensation Committee in its work. These members of management work with compensation consultants (whose engagements have been approved by the Compensation Committee), accountants and legal counsel, as necessary, to implement the Compensation Committee’s decisions, monitor evolving competitive practices and make compensation recommendations to the Compensation Committee. Our human resources management, in conjunction with our independent compensation consultant, develops specific compensation recommendations for executive officers, which are first reviewed by senior management and then presented to the Compensation Committee. The Compensation Committee has final authority to approve, modify or reject such recommendations in its sole discretion and to make its decisions in executive session. The Compensation Committee approves all compensation of our executive officers, including equity awards. +Since 2018, the Compensation Committee has engaged Willis Towers Watson (“WTW”) as its independent compensation consultant. WTW reports directly to the Compensation Committee, including with respect to management’s recommendations of compensation programs and awards. The Compensation Committee has the sole authority to approve the scope and terms of the engagement of WTW and to terminate such engagement. WTW assisted the Compensation Committee with the development of competitive market data, compensation program design and related assessments of the Company’s executive and director compensation levels, evaluation of annual and long-term incentive compensation strategy and compilation and review of total compensation data for the Company’s NEOs (as defined in “Executive Compensation”). +The Compensation Committee has reviewed the independence of WTW in light of SEC rules regarding compensation consultants and has concluded that WTW’s work for the Compensation Committee does not raise any conflict of interest. +Nominating and Corporate Governance Committee +The Nominating Committee held seven meetings in 2024. The Board has determined that all of the members of the Nominating Committee are independent as defined in Nasdaq rules. +The Nominating Committee is responsible for, among other things: (i) identifying individuals qualified to become members of the Board, consistent with criteria approved by the Board; (ii) recommending director nominees to the Board for election at the next annual meeting of the stockholders of the Company; (iii) in the event of a vacancy on or an increase in the size of the Board, recommending director nominees to the Board to fill such vacancy or newly established Board seat; (iv) recommending directors to the Board for membership on each committee of the Board; (v) establishing and reviewing annually our Corporate Governance Guidelines and Code of Business Conduct and Ethics; and (vi) overseeing the Company’s environmental, social and governance efforts, progress and disclosures. The Nominating Committee operates under a written charter setting forth its functions and responsibilities. A copy of the current charter is available on our website at investor.cpicardgroup.com or in printed form upon request. +Compensation Committee Interlocks and Insider Participation +None of the members of our Compensation Committee has in the past served as an officer or employee of the Company. None of the members of our Compensation Committee has any relationship requiring disclosure as a related party transaction. None of our executive officers currently serve, or in the past year has served, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on our Board or Compensation Committee. +Communications to the Board +Stockholders and interested parties can contact the Board or any director or group of directors (including the Chair of the Board or the independent directors) through written communication sent to CPI Card Group Inc., 10368 West Centennial Road, Littleton, Colorado 80127, Attention: Darren Dragovich, Chief Legal and Compliance Officer and Corporate Secretary. Our Corporate Secretary reviews all written communications and forwards to the Board copies of any such correspondence that is directed to the Board that, in the opinion of the Corporate Secretary, deals with the functions of the Board or Board committees or that he otherwise determines requires the Board’s or any Board committee’s attention. Concerns relating to accounting, internal accounting controls or auditing matters are immediately brought to the attention of our Audit Committee Chair, or may be submitted to the Audit Committee Chair in accordance with our Whistleblower Policy (available on our website), and such concerns will be handled in accordance with procedures established by the Audit Committee with respect to such matters. From time to time, the Board may change the process by which stockholders may communicate with the Board. Any such changes will be reflected in our Corporate Governance Guidelines, which are posted on our website at investor.cpicardgroup.com. +12 +Table of Contents +Director Compensation +The components of the non-employee director compensation program design remained unchanged in 2024 from 2023 and consisted of a mix of cash retainers and equity awards in the form of stock-settled restricted stock units (“RSUs”), which are scheduled to vest on the first anniversary of the grant date. After considering the recommendations of WTW based on its review of market data, the annual cash retainer was increased by $50,000 to $100,000 and the Chairman of the Board annual cash fee was increased by $20,000 to $50,000, effective January 1, 2024. All cash fees are paid to directors on a quarterly basis unless otherwise indicated and are prorated for any partial service periods. The following table sets forth our compensation program for our non-employee directors in 2024. Employees of the Company do not receive any additional compensation for their service on the Board and, accordingly, neither Mr. Lowe nor Mr. Scheirman received compensation as directors during 2024. Please see the “2024 Summary Compensation Table” for the compensation received by each of Messrs. Lowe and Scheirman with respect to 2024. +Compensation Element +Value +Annual Cash Retainer +$ +100,000 +Annual Equity Award +$ +100,000 +Chairman of the Board Annual Cash Fee +$ +50,000 +Committee Chair Annual Cash Fee +$ +15,000 +Committee Member Annual Cash Fee +$ +7,500 +2024 Director Compensation +The following table summarizes the annual compensation that our non-employee directors received with respect to 2024. +Fees +Earned +Stock +Or Paid +Awards +Name +In Cash +(1) (2) +Total +Thomas Furey +$ +115,000 +$ +110,275 +$ +225,275 +Ravi Mallela +$ +107,500 +$ +110,275 +$ +217,775 +Lisa Oleson (3) +$ +66,667 +$ +84,414 +$ +151,081 +Nicholas Peters +$ +122,500 +$ +110,275 +$ +232,775 +H. Sanford Riley +$ +150,000 +$ +110,275 +$ +260,275 +Marc Sheinbaum +$ +130,000 +$ +110,275 +$ +240,275 +Valerie Soranno Keating +$ +130,000 +$ +110,275 +$ +240,275 +(1) The amounts reported in this column represent the grant date fair value of the RSU awards granted to each non-employee director during 2024, calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“FASB Topic 718”) based on the closing stock price on the date of grant. The number of RSUs awarded were determined with reference to the average closing price of the Company’s common stock for the month in which the date of grant occurred. Each of the non-employee directors received RSUs granted on a quarterly basis with each RSU awarded scheduled to vest one year from the date of grant. Each of the non-employee directors had the following number of outstanding RSUs and no other equity awards outstanding as of December 31, 2024: Mr. Furey, 4,348 RSUs; Mr. Mallela, 4,348 RSUs; Ms. Oleson, 2,900 RSUs; Mr. Peters, 4,348 RSUs; Mr. Riley, 4,348 RSUs; Mr. Sheinbaum, 4,348 RSUs; and Ms. Soranno Keating, 4,348 RSUs. +(2) Effective January 1, 2024 non-employee directors could elect the RSU awards be deferred until separation from service. If so elected, the awards become Deferred Stock Units (“DSUs”) upon vest until separation of service at which time they are settled in shares of Common Stock equal to the number of DSUs. +(3) Ms. Oleson received fees and RSUs prorated based on a partial year of service as a directo r. +Security Ownership of Certain Beneficial Owners, Directors and Management +The following table sets forth, as of April 4, 2025 (except as indicated below), beneficial ownership, as defined by SEC rules, of our Common Stock. Each of the persons listed below has sole voting and investment power with respect to the beneficially owned shares listed unless otherwise indicated. For purposes of the following table, beneficial ownership is determined in accordance with Exchange Act Rule 13d3. In calculating the percentage ownership for each shareholder, we assumed that any options owned by an individual exercisable within 60 days of the date of this proxy statement are exercised, but the options owned by any other individual are not exercised. The percentage calculations set forth in the table are based on 11,281,489 shares of Common Stock outstanding on April 4, 2025 rather than based on the percentages set forth in stockholders’ Schedules 13G or 13D, as applicable, filed with the SEC. +13 +Table of Contents +Number of +Shares of +Percentage of +Common +Common +Stock +Stock +Owned +Owned +Beneficially +Beneficially +5% Beneficial Owners: +Tricor Pacific Capital Partners (Fund IV), Limited Partnership (1) +3,027,160 +26.8% +Tricor Pacific Capital Partners (Fund IV) US, Limited Partnership (1) +1,786,817 +15.8% +Named Executive Officers and Directors: +Thomas Furey (2) +11,724 +* +John Lowe (3) +118,040 +1.0% +Ravi Mallela (2) +4,102 +* +Lisa Oleson (4) +1,652 +* +Nicholas Peters (2) +41,724 +* +H. Sanford Riley (2) +15,533 +* +Marc Sheinbaum (2) +15,603 +* +Valerie Soranno Keating (2) +30,521 +* +Jeffrey Hochstadt (5) +23,245 +* +Toni Thompson (6) +6,224 +* +Scott Scheirman (7) +280,156 +2.4% +Lane Dubin (8) +94,909 +* +Sarah Kilgore (9) +6,933 +* +Total Current Executive Officers and Directors as a Group (15 individuals) (10) +317,295 +2.8% +* +Less than 1% +(1) Based on a Schedule 13G/A filed jointly by the Tricor Funds, and Parallel49 Equity, ULC on November 12, 2024. Each of the Tricor Funds is managed by Parallel49 Equity, ULC, as the general partner. An investment committee of the Tricor Funds has the power to vote or dispose of the shares held by the Tricor Funds. The investment committee is comprised of Bradley Seaman, David Rowntree, J. Trevor Johnstone and Roderick Senft. The address of the Tricor Funds is c/o Parallel49 Equity, 225 East Deerpath Road, Suite 200, Lake Forest, IL 60045. +(2) Includes 1,448 DSUs and 1,067 RSUs. +(3) Includes 86,171 Options and 5,588 RSUs. +(4) Includes 1,067 RSUs. +(5) Includes 6,052 Options and 5,434 RSUs. +(6) Includes 2,204 Options and 531 RSUs. +(7) Includes 255,040 Options and 3,753 RSUs. +(8) Includes 70,465 Options and 1,032 RSUs. +(9) Includes 6,828 Options. +(10) Includes 111,499 Options, 8,688 DSUs and 25,195 RSUs. +Delinquent Section 16(a) Reports +Section 16(a) of the Securities Exchange Act requires directors, certain officers and all persons who beneficially own more than 10% of our Common Stock to file reports with the SEC with respect to beneficial ownership of and transactions in our securities. We have adopted procedures to assist our directors and executive officers in complying with the Section 16(a) filings. +Based solely upon our review of the copies of the filings that we received with respect to the fiscal year that ended December 31, 2024, and related written representations from certain reporting persons, we believe such filing requirements were timely satisfied except for one report that our affiliated stockholders, the Tricor Funds, filed subsequent to its due date. +14 +Table of Contents +EXECUTIVE OFFICERS +Management Transitions +During 2024, the Company experienced changes in its senior leadership, beginning with the retirement of the Company’s former President and CEO, Scott Scheirman. The Company and Mr. Scheirman executed a retention agreement effective through February 2024 while the Company engaged in a thorough process to select the successor for his position. The search process for the CEO position culminated in the appointment of John Lowe, the Company’s then-EVP End-to-End Payment Solutions, as President and CEO effective January 25, 2024. In connection with Mr. Lowe’s promotion, there was realignment in other areas of the Company’s executive leadership throughout 2024. The Company and Lane Dubin, former EVP and Chief Development and Digital Officer, mutually agreed his employment would cease effective June 30, 2024 pursuant to the terms of his employment agreement dated December 13, 2022 (the “Dubin Employment Agreement”). Peggy O’Leary was promoted to SVP Prepaid Solutions, Chief Development and Digital Officer in January 2024 and to EVP Prepaid and Digital Solutions effective August 1, 2024. Toni Thompson joined the Company as SVP Debit and Credit Solutions in August 2023 and was promoted to EVP Debit and Credit Solutions effective August 1, 2024. Sarah Kilgore, former Chief Legal and Compliance Officer and Corporate Secretary transitioned to an executive advisor role in January 2024 and departed the Company effective September 30, 2024. Ernesto Boada and Darren Dragovich each joined the Company in October 2024 as Chief Information Officer and Chief Legal and Compliance Officer and Corporate Secretary, respectively. +The following table sets forth certain information concerning each of our executive officers, including certain officers who are considered “Named Executive Officers” for purposes of this proxy statement: +Name +Age +Current Position +John Lowe +48 +President, Chief Executive Officer and Director +Donna Abbey Carmignani +49 +Chief Accounting Officer and Controller +Ernesto Boada +53 +Chief Information Officer +Darren Dragovich +52 +Chief Legal and Compliance Officer and Corporate Secretary +Jeffrey Hochstadt +53 +Chief Financial Officer +Peggy O'Leary +49 +Executive Vice President Prepaid and Digital Solutions +Toni Thompson +63 +Executive Vice President Debit and Credit Solutions +Sonya Vollmer +51 +Chief Human Resources Officer +John Lowe. See “Directors and Corporate Governance” for Mr. Lowe’s biographical information. +Donna Abbey Carmignani has served as our Controller and Chief Accounting Officer since March 2022. Prior to joining the Company, Ms. Abbey provided financial and accounting consulting services to clients in various industries from January 2020 to March 2022. Prior to that, Ms. Abbey held roles of increasing responsibility at The Western Union Company (“Western Union”) (NYSE:WU), a multinational financial services company, from October 2010 to September 2018, including Vice President of Financial Reporting, Governance & Consolidations and Chief of Staff to the Chief Executive Officer. Prior to joining Western Union, Ms. Abbey worked in the audit practice of KPMG, a multinational professional services and accounting firm, from January 2003 to September 2010. Ms. Abbey holds a Bachelor of Science degree in Business Administration from Colorado State University and is a Certified Public Accountant in the State of Colorado. +Ernesto Boada was appointed Chief Information Officer in October 2024. Previously, Mr. Boada served as Co-Founder and Chief Technology Officer of Sunny Day Fund Solutions Inc., a financial services company specializing in employee savings programs from September 2023 to October 2024, directing the product and technology organizations while driving the modernization of the fintech platform. He served as Senior Vice President of Business Technology and Interim Chief Information Officer at Workday (NASDAQ:WDAY), a software company focused on human capital management, from September 2021 to September 2023 and Chief Technology Officer at Western Union from January 2018 to September 2021. During his career, he has held various leadership responsibilities at Visa, Intuit and Accenture and previously served on the board of directors for Sunny Day Fund and the Western Union Foundation. He currently serves on the board of directors for Coink. Mr. Boada holds a Bachelor of Science degree in Engineering from the Universidad de los Andes Bogotá, Colombia, and a Master of Business Administration degree from George Washington University. +Darren Dragovich was appointed Chief Legal and Compliance Officer and Corporate Secretary in October 2024. Prior to joining the Company, Mr. Dragovich held roles of increasing responsibility at Western Union from June 2003 to October 2024, including most recently serving as Deputy General Counsel from November 2021 to October 2024 and Corporate Secretary from February 2023 to October 2024. Prior to joining Western Union, Mr. Dragovich worked in private practice with the firm Hogan & Hartson LLP (now known as Hogan Lovells) specializing in corporate transactional and securities law. Mr. Dragovich holds a Bachelor of Arts degree in Economics and Master of Arts degree in Organizational Behavior from Stanford University and a Juris Doctor from the University of Virginia. +Jeffrey Hochstadt has served as our Chief Financial Officer since May 2023. Prior to joining the Company, Mr. Hochstadt worked for Western Union from 2006 to 2021 where he held a variety of roles of increasing responsibility including Chief Strategy Officer and Global Head of Financial Planning and Analysis. Prior to joining Western Union, Mr. Hochstadt held numerous financial and strategy roles for First Data Corporation (now Fiserv), Morgan Stanley Capital International, IBM, A.G. Edwards & Sons and Price Waterhouse. Most recently, he served as a Managing Member and provided consulting service through Jazmin LLC and served as a Senior Advisor for Simon Kucher & Partners, a global strategy firm. Mr. Hochstadt graduated from the Olin School of Business at Washington University in St. Louis and received a Master of Business Administration degree from the Wharton School of Business at the University of Pennsylvania. +15 +Table of Contents +Margaret “Peggy” O’Leary was promoted to EVP Prepaid and Digital Solutions from SVP Prepaid Solutions, Chief Development and Digital Officer effective August 2024. She previously served as the Company’s VP of Sales of Prepaid, Personalization Solutions, and Instant Issuance since January 2020. Ms. O’Leary joined CPI in April 2017 as Director of Sales and Client Services for Prepaid Solutions. Prior to joining the Company, Ms. O’Leary served as the Vice President Business Development for Jingit, a payments platform to drive consumer loyalty and engagement, since 2012. Prior to 2012, Ms. O’Leary held a variety of positions with increasing responsibilities including sales management, channel management, sales and client services at companies such as InteliSpend, Maritz, and Hallmark. Ms. O’Leary is a graduate of Hamline University and holds a Bachelor of Arts degree in Psychology. +Toni Thompson was promoted to EVP Debit and Credit Solutions in August 2024. She joined the Company in August 2023 as SVP of Operations Debit and Credit. Prior to joining the Company, Ms. Thompson worked at RR Donnelley (NYSE:RRD), a leading global provider of multichannel business communications services and marketing solutions from 1999 to 2022, where she served in various executive positions, including as President of Retail Solutions from September 2016 to August 2023 and as SVP Solution Development from June 2013 to September 2016. Throughout her career, Ms. Thompson has held varied executive roles including operations management, business development and IT. Prior to joining RR Donnelley, she held IT leadership roles at Bekins Van Lines and Quick Response Services. Ms. Thompson holds a Bachelor of Arts degree in Business Administration from DePaul University. +Sonya Vollmer has served as our Chief Human Resources Officer since January 2022. Ms. Vollmer joined the Company in February 2021 as Director of Total Rewards and assumed the role of interim Chief Human Resources Officer in August 2021. Prior to joining the Company, Ms. Vollmer held positions of increasing responsibility at Charter Manufacturing Company, a metals manufacturing business, from February 2013 to February 2021, most recently serving as Director of Total Rewards. Prior to 2013, Ms. Vollmer held human resources leadership roles at Rockwell Automation, Teleflex, Inc. and Abbott Laboratories. She also served in consulting roles with Hewitt Associates (now Aon), and her own consulting firm. Ms. Vollmer holds a Bachelor of Arts degree in Economics from the University of Wisconsin-Parkside, and a Master of Business Administration degree from the University of Wisconsin-Milwaukee. +16 +Table of Contents +EXECUTIVE COMPENSATION +The following narrative describes our executive compensation program and the decisions of the Compensation Committee regarding the fiscal year 2024 compensation of our named executive officers (“NEOs”) each of whom served as an executive officer for at least a portion of the 2024 fiscal year. The Company qualifies as a “smaller reporting company” in accordance with Rule 12b-2 of the Exchange Act. For as long as we are a smaller reporting company, we are not required to include a Compensation Discussion and Analysis section in this proxy statement and have elected to comply with the scaled-down executive compensation disclosure requirements. Our Executive Compensation presentation for 2024 will include both current executive officers who are NEOs (the “Continuing NEOs”) and former executive officers who would otherwise be considered a NEO if serving as an executive officer at fiscal year-end as required pursuant to SEC executive compensation disclosure rules. +2024 NEOs +For fiscal year 2024, our NEOs were: +John Lowe (1) +President, Chief Executive Officer and Director +Jeffrey Hochstadt (2) +Chief Financial Officer +Toni Thompson (3) +Executive Vice President Debit and Credit Solutions +Scott Scheirman (4) +Former President, Chief Executive Officer and Director +Lane Dubin (5) +Former Executive Vice President and Chief Development and Digital Officer +Sarah Kilgore (6) +Former Chief Legal and Compliance Officer and Corporate Secretary +(1) Mr. Lowe was promoted to President and Chief Executive Officer effective January 25, 2024. +(2) Mr. Hochstadt joined the Company as Chief Financial Officer in May 2023. +(3) Ms. Thompson was promoted to EVP Debit and Credit Solutions effective August 1, 2024. +(4) Mr. Scheirman retired from his role as President, Chief Executive Officer and Director effective January 25, 2024 and served as an executive advisor through February 28, 2024. Mr. Scheirman did not participate in the Company’s annual executive compensation program for NEOs during 2024. Please see “Former Executive Officer Compensation and Arrangements” section below for a discussion of Mr. Scheirman’s 2024 compensation arrangements. +(5) Mr. Dubin departed the Company effective June 30, 2024. Under the Dubin Employment Agreement, Mr. Dubin was entitled to participate in portions of the 2024 executive compensation program prior to his termination date. Please see “Former Executive Officer Compensation and Arrangements” section below for a discussion of Mr. Dubin’s 2024 compensation arrangements. +(6) Ms. Kilgore departed the Company effective September 30, 2024. Similar to Mr. Dubin, Ms. Kilgore participated in only a portion of the Company’s annual executive compensation program during 2024. Please see “Former Executive Officer Compensation and Arrangements” section below for a discussion of Ms. Kilgore’s 2024 compensation arrangements. +2024 Business Overview +Business Highlights +In 2024 we delivered solid sales growth, as our Debit and Credit segment’s return to growth was complemented by a significant increase in sales from our Prepaid Debit segment. Certain highlights of our business performance included: +● Total Net Sales (1) of $480.6 million, up 8.1% year-over year; +● Net Income of $19.5 million, down 18.6% year-over-year, primarily due to debt refinancing costs; and +● Adjusted EBITDA (2) of $91.9 million, up 2.7% year-over-year. +17 +Table of Contents +2024 performance ($ in millions) +(1) The term Net Sales, as defined in the STIP (as defined below), is consistent with “Total Net Sales,” as included in the Company’s consolidated financial statements. +(2) Adjusted EBITDA is not a measurement of financial performance prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) . See Annex A hereto for a reconciliation to Net Income, the most directly comparable GAAP financial measure. +Sales for the Company in 2024 reflected strong performance from the Prepaid Debit business, driven by sales of more complex, higher-value packaging solutions and expansion into new customer verticals, and increased sales of contactless debit and credit cards and personalization services in the Debit and Credit business. Although net income declined, driven by debt refinancing costs, the Company increased Adjusted EBITDA, significantly increased cash provided by operating activities, advanced numerous business initiatives, and executed several key capital allocation activities. We believe we have a strong strategic plan to drive future growth, supported by four key pillars: customer focus; quality and efficiency; innovation and diversification; and people and culture. For further details, we encourage you to review the financial results set forth in our Form 10-K for the fiscal year ended December 31, 2024, which was filed with the SEC on March 4, 2025. +As described in this “Executive Compensation” section, we believe our executive compensation program focuses on performance-based compensation elements and provides alignment with the Company’s financial and strategic priorities as well as stockholder interests. We have structured our compensation design features to incentivize our NEOs and other executive officers to pursue performance that increases stockholder value by rewarding top-line growth, profitability and non-financial business imperatives, and we employ competitive compensation levels to drive the retention, performance and engagement of our executive team, including our NEOs. Further, our programs are designed to incentivize over-achievement of goals by awarding compensation consistent with above-market performance when the Company exceeds its performance goals. +Summary of Our 2024 Compensation Decisions +The principal components of our 2024 executive compensation program consisted of (i) base salary, (ii) short-term incentives delivered in the form of quarterly cash payments and (iii) long-term incentives delivered in the form of equity awards and cash-settled long-term awards . We believe these components provide the appropriate mix of compensation to recruit and retain top-level talent, motivate our executive team to achieve the Company’s near-term financial objectives, and align compensation with stockholder value, all of which incentivize our executive team to continue improving business performance. Part of this strategy involves utilizing a short-term incentive plan (“STIP”) that rewards short-term incentive goal achievement with cash payments, as well as a long-term incentive plan (“LTIP”) which utilizes the Company’s Amended and Restated Omnibus Incentive Plan ("Omnibus Incentive Plan”) to grant equity-based and cash-settled long-term awards. In 2024, the Compensation Committee approved modifications to the LTIP plan design and changed the mix of LTIP awards from previous years, moving from non-qualified stock options (“Options”) to performance-based awards in order to incentivize and align executive performance with key financial metrics beyond stock price alone. Executives received grants of cash-settled long-term awards tied to a two-year performance period (“Performance Cash”) in addition to stock-settled restricted stock units (“RSUs”). The annual target weighting allocated to RSUs was also reduced from prior years to shift more focus to compensation with vesting tied to pre-established performance goals in the form of Performance Cash. Prior to 2024, the LTIP mix was comprised of RSUs and Options, with RSUs weighted at 75% of the annual target and Options weighted at 25% of the annual target, each with a two-year vesting period. +Pursuant to the modified 2024 LTIP plan design, grants to executive officers, including continuing NEOs, are comprised of RSUs weighted at 67% of the annual target and Performance Cash weighted at 33% of the annual target. RSUs vest in equal annual installments on the first, second, and third anniversaries of the grant date, respectively. Performance Cash awards have a performance period ending on December 31, 2025 and payment of these awards is tied to the Company’s Relative Total Shareholder Return (“TSR”) performance against the Russell 2000 TSR and our Cumulative Free Cash Flow during each fiscal year in the performance period. +18 +Table of Contents +In addition to RSUs and Performance Cash, Mr. Lowe also received a separate one-time award of RSUs and stock-settled performance stock units (“PSUs”) with vesting tied to the achievement of certain stock prices over a five-year performance period in connection with his promotion to President and CEO in 2024. +The Compensation Committee approves our NEOs’ total compensation (base salary, short-term incentives and long-term incentives). +● +● +● +● +● +Factors that Guided 2024 Compensation Decisions +● +Our executive compensation philosophy +● +Degree of achievement of key financial goals for 2024 +● +Leadership changes +● +Recommendations of our CEO (other than with respect to his own compensation) +● +Advice of the Compensation Committee’s independent compensation consultant +● +Market pay and governance best practices +● +Historical CPI compensation +2024 Compensation Program Changes and Key Decisions +Base Salary +In January and February 2024, the Compensation Committee approved increases in base salaries in consideration of our NEOs’ performance, review of competitive market data and internal pay equity: +● +CEO: In connection with his promotion to President and CEO, Mr. Lowe received a base salary increase of 25.0%, effective January 25, 2024. +● +Continuing NEOs: Mr. Hochstadt and Ms. Thompson each received an annual base salary increase effective March 4, 2024. Ms. Thompson received an additional adjustment in base salary during 2024 in connection with her promotion on August 1, 2024. +See “Elements of the 2024 Executive Compensation Program — Base Salary” for more information. +2024 Short-Term Incentive Plan (“2024 STIP”) +The 2024 STIP emphasized pay-for-performance and the achievement of critical near-term performance milestones. Under the 2024 STIP, the NEOs were eligible to earn quarterly cash bonus awards based on the achievement of pre-established financial goals (specifically the metrics were based on a weighting of 70% for Adjusted EBITDA and 30% for Net Sales). Each NEO’s individual incentive opportunity is determined by the Compensation Committee following a review of competitive market data and internal pay equity. Mr. Lowe’s STIP target increased by 56.3% over 2023, in connection with his promotion to President and CEO. +Based on the Company’s performance during 2024, the 2024 STIP payouts were 125.3% of target for the Continuing NEOs, primarily due to strong revenue performance against plan. +See “Elements of the 2024 Executive Compensation Program — Short-Term Incentives” for more information. +2024 Long-Term Incentive Plan +Throughout 2024, the Compensation Committee granted RSUs quarterly under the Omnibus Incentive Plan to select employees of the Company, including the Continuing NEOs. The Compensation Committee approved modifications to the mix of LTIP awards to reduce reliance on Options and instead award Performance Cash awards that will be earned based on achievement with respect to Relative TSR and Cumulative Free Cash Flow goals over a two-year performance period. These awards were determined in consideration of our NEOs’ performance and a review of competitive market data. Additionally, Mr. Lowe received a one-time award of RSUs and PSUs as part of his promotion to President and CEO. +See “Elements of the 2024 Executive Compensation Program — Long-Term Incentives” for more information. +19 +Table of Contents +Executive Compensation Governance Highlights +The Compensation Committee reviews on an ongoing basis the Company’s executive compensation practices to evaluate whether they support the Company’s executive compensation philosophy and are aligned with stockholder interests. Our 2024 executive compensation practices include the following, each of which the Compensation Committee believes is supportive of our executive compensation philosophy and the interests of our stockholders: +What We Do +What We Don’t Do +✓ +Deliver a significant portion of compensation through performance-based, at-risk pay +✓ +Maintain a peer group for evaluating competitive market practices +✓ +Set pre-established performance targets designed to be challenging +✓ +Regularly review risks associated with compensation +✓ +Consult with an independent consultant on compensation levels and practices +✓ +Provide no executive perquisites +✓ +Annual say-on-pay vote +X +Provide automatic, annual increases in executive salaries +X +Maintain uncapped executive incentive plans +X +Award single-trigger cash severance in connection with a change in control +X +Re-price stock options without the prior approval of our stockholders +X +Permit hedging or pledging of equity +X +Enter into supplemental executive retirement plans +X +Provide excise tax gross-ups on termination-related payments +2024 Say-on-Pay Vote +In its compensation review process, the Compensation Committee considers whether the Company’s executive compensation program is aligned with the interests of the Company’s stockholders. As part of its review of the Company’s executive compensation program, the Compensation Committee considered the approval by approximately 97.5% of the votes cast for the Company’s say-on-pay vote at our 2024 Annual Meeting of Stockholders. The Compensation Committee determined that the Company’s executive compensation philosophies and objectives and compensation elements continued to be appropriate and did not make any changes to the Company’s executive compensation program in response to the 2024 say-on-pay vote. +Role of the Compensation Committee +In consultation with the CEO, the Compensation Committee establishes the general policies relating to senior management compensation and oversees the development and administration of such compensation programs. Our human resources executives and staff support the Compensation Committee in its work to implement the Compensation Committee’s decisions, monitor evolving competitive practices and make compensation recommendations to the Compensation Committee. Our human resources management, in conjunction with our independent compensation consultant, develops specific compensation recommendations for senior executives, which are first reviewed by senior management and then presented to the Compensation Committee. The Compensation Committee has final authority to approve, modify or reject these recommendations in its sole discretion. Members of management do not attend the portions of the Compensation Committee meetings relating to their own compensation, and the Compensation Committee regularly conducts executive sessions without management present. The Compensation Committee approves all compensation of our executive officers, including equity awards. +Role of the Independent Compensation Consultant +Since 2018, the Compensation Committee has engaged WTW as its independent compensation consultant. WTW is engaged by and reports directly to the Compensation Committee. The Compensation Committee has the sole authority to approve the scope and terms of the engagement of WTW and to terminate such engagement. In 2024, WTW assisted the Compensation Committee with the development of competitive market data, compensation program design and related assessments of the Company’s executive and director compensation levels, evaluation of short-term and long-term incentive compensation strategy, and compilation and review of total compensation data for the Company’s NEOs and provided ongoing evaluation of the compensation program. +The Compensation Committee has reviewed the independence of WTW in light of SEC rules regarding compensation consultants and has concluded that WTW is independent and its work for the Compensation Committee does not raise any conflict of interest. +20 +Table of Contents +Role of Market Data and the Peer Group +In order to gauge the competitiveness of our compensation program and to provide our NEOs with fair and market-competitive compensation, the Compensation Committee reviewed compensation practices and pay opportunities from general industry survey data as well as from a selection of publicly traded peer companies, as provided by WTW. The Company attempts to position itself to attract and retain qualified senior executives in the face of competitive pressures in its relevant labor markets, and we design our compensation practices with this goal in mind. +Specifically, in 2024, WTW analyzed information regarding the pay practices of a compensation peer group (as described below) to assist the Compensation Committee in determining pay for our CEO and CFO. In addition, the Company analyzed the pay practices of similarly sized general industry companies identified by WTW to assist the Compensation Committee in determining pay for our other executive officers. The compensation data resulting from this analysis was considered by the Compensation Committee in making 2024 executive compensation decisions, including the executive leadership transition in early 2024. +The Compensation Committee reviewed and affirmed our compensation peer group in 2024 and no changes were made. The compensation peer group is comprised of companies that meet at least one of the following criteria: +● Similar in size and complexity to CPI (primarily based on revenue and EBITDA); +● In a similar or related technology-oriented industry; or +● In competition with CPI for executive talent. +The following peer group was used to evaluate 2024 executive compensation decisions: +Executive Compensation Peer Group +Axcelis Technologies, Inc +EVERTEC, Inc. +Qualys, Inc. +Badger Meter, Inc. +FormFactor, Inc. +Repay Holdings Corporation +CompoSecure, Inc. +International Money Express, Inc. +Veeco Instruments, Inc. +CTS Corporation +MeridianLink, Inc. +Verra Mobility Corporation +Ennis, Inc. +Mirion Technologies, Inc. +Vishay Precision Group, Inc. +Elements of the 2024 Executive Compensation Program +Our 2024 executive compensation program consisted of fixed pay and variable pay, including cash and non-cash components. The chart below summarizes the various elements of CPI’s 2024 executive compensation program and the objective and key features of each element. +21 +Table of Contents +Objective +Type of +Compensation +Key Features +Base Salary +A standard compensation element in executive compensation packages, offering market competitive fixed compensation to attract and retain talent. +Cash +● +Reflects individual skills, experience, responsibilities and performance over time. +● +Provides a consistent source of income. +Short-Term +Incentive +A cash-based award that encourages executives to focus on specific short-term corporate and/or business unit performance goals. +Cash +● +Performance-based award tied to achievement of critical short-term financial goals and priorities. +● +Pays only if threshold performance levels are met or exceeded. +Long-Term +Incentive — Performance Cash Awards +A cash-based award that encourages executives to focus on strong TSR and Cumulative Free Cash Flow performance. +Cash +● +Performance-based award tied to achievement of critical long-term financial goals and priorities. +● +Pays only if threshold performance levels are met or exceeded. +Long-Term +Incentive — +RSUs +Rewards stockholder value creation, enhances executive stock ownership and promotes retention. +Equity +● +At-risk award, with value based exclusively upon the value of the Company’s Common Stock. +● +Aligns executive and stockholder interests. +Long-Term +Incentive — +PSUs (CEO only) +Rewards stockholder value creation by aligning executive pay with stock price appreciation, enhances executive stock ownership and promotes retention. +Equity +● +Performance-based award, with no value unless the Company’s stock price exceeds specified performance hurdles during the performance period. +● +Aligns executive and stockholder interests. +Other Benefits +Provide programs for employees to pursue physical, financial and mental wellbeing through retirement and health and welfare benefits. +Benefit +● +Competitive broad-based benefits available to all employees. +Employment and +Post-Termination +Arrangements +Protects the Company and NEOs during certain termination events, through the use of selective employment agreements, an executive severance and change-in-control policy, and various restrictive covenants. +Benefit +● +Facilitates an orderly transition in the event of management changes. +● +Helps ensure NEOs remain focused on creating sustainable performance in case of risk of job loss. +● +Provides confidentiality, non-compete and non-solicit protections for the Company. +Base Salary +Base salaries established by the Compensation Committee for the Company’s executive officers are intended to reflect each individual’s responsibilities, experience, historical performance and other discretionary factors deemed relevant by the Company and have generally been set at levels deemed necessary to attract and retain individuals with superior talent. Base salaries are also designed to provide executive officers with steady cash flow during the course of the fiscal year that is not contingent on short-term variations in the Company’s operating performance. The base salaries of our Continuing NEOs in 2024 are set forth below: +2024 Base Salary +(As of December 31, 2024) +John Lowe (1) +$ +625,000 +Jeffrey Hochstadt +$ +425,000 +Toni Thompson +$ +475,000 +(1) Mr. Lowe’s base salary increased 25.0% over 2023 in connection with his promotion to President and CEO. +22 +Table of Contents +Short-Term Incentives +The Company believes that establishing cash incentive opportunities is an important factor in both attracting and retaining qualified and highly skilled executives and in motivating our executives to achieve the Company’s near-term financial objectives. To achieve these objectives, the Company maintains a quarterly short-term incentive plan with an annual component, or the “STIP.” The quarterly design of the STIP is intended to reward the achievement of critical quarterly financial performance objectives and the annual component is tied to annual financial performance objectives. As such, payments may vary quarter to quarter. +STIP Target Awards +Target awards for NEOs are determined by the Compensation Committee and may be adjusted from time to time based on market data and internal pay equity review. The Compensation Committee increased Mr. Lowe’s 2024 STIP target 56.3% over 2023 in connection with his promotion to President and CEO. All awards are paid based on corporate-wide achievement. For 2024, our Continuing NEOs were eligible to receive the following target bonus opportunities under the STIP: +Named Executive Officer +Target Annual +STIP Payment +Opportunity +John Lowe +$ +625,000 +Jeffrey Hochstadt +$ +350,000 +Toni Thompson +$ +284,550 +2024 STIP Metrics +Under the 2024 STIP, executives (including NEOs) were eligible to earn cash bonuses based on the achievement of the following metrics and relative weights: +Description +Metrics +70% based on achievement of Adjusted EBITDA (1) +30% based on achievement of Net Sales (2) +Corporate Executive Measurement +100% based on Company-wide achievement +(1) “Adjusted EBITDA” is a financial measure that is not calculated according to GAAP. For purposes of the STIP, we define Adjusted EBITDA as EBITDA (which represents earnings before interest, taxes, depreciation and amortization, all on a continuing operations basis) adjusted for (i) stock compensation expense, (ii) foreign currency changes, (iii) impairments, (iv) restructuring charges, (v) severance and other charges, (vi) loss on debt extinguishment, (vii) amounts related to a sales tax contingency liability, and (viii) other items that are unusual in nature, infrequently occurring or not considered part of core operations. +(2) The term Net Sales, as defined in the STIP, is consistent with “Total Net Sales,” as included in the Company’s consolidated financial statements, for all references contained herein. +2024 STIP Results +Our STIP Net Sales and Adjusted EBITDA annual goals are broken out on a quarterly basis for purposes of calculating the quarterly STIP payments. To determine payouts, the Company measures performance on both a quarterly and an annual basis. Each quarterly payment is “capped” at 100% of target, amounts that exceed the quarterly cap are subject to a year-end “true-up”. This design was implemented to further enhance the motivational effect of the STIP and provide a continual incentive to improve performance throughout the year and to align to the Company’s annual operating plan and reflect the planned seasonality of our business and operations. +Achievement of performance goals is calculated on the basis of straight-line interpolation between the threshold, target and maximum bonus opportunities for each applicable metric underlying the performance goal. Quarterly and annual achievement under the STIP can range from 0% to 200%, based on Company performance; however, any payment made under the STIP with respect to each quarter is capped at 100% of the quarterly target incentive, with amounts in excess of the cap, up to 200%, payable with the annual payout. The targeted cumulative Adjusted EBITDA metric also serves as a trigger as CPI must achieve the overall Adjusted EBITDA threshold performance in order for any year-end STIP payments to fund . Based on Company performance in 2024, our STIP paid out at 125.3% of target over plan, primarily due to strong Net Sales performance. Please see “2024 Summary Compensation Table--Non-equity Incentive Plan Compensation” for amounts earned by each of the NEOs under the 2024 STIP. +23 +Table of Contents +Long-Term Incentives +Together with STIP awards, the long-term incentive equity awards are designed to balance the achievement of critical near-term performance objectives with long-term strategic goals and the retention of our high performing executive team. We believe such awards also allow us to continue to recruit top-level talent and align compensation with stockholder value, all of which incentivize our executive team to continue improving our business. Generally, long-term incentive equity awards granted by the Company are subject to various conditions, including the executive’s continued service to the Company, time-based vesting conditions, and acceleration of vesting in the event of the executive’s death, termination due to disability, retirement or in connection with a change in control of the Company. +In 2023, the Company instituted a quarterly grant program for the LTIP portion of compensation with grants scheduled to coincide with and occur at the end of the month of the Company’s quarterly earnings release. The quarterly timing of the awards was established in an effort to mitigate the impact of significant volatility in the Company’s stock price over time, which has historically made it difficult to achieve the goal of effectively incentivizing and retaining employees. In 2023, LTIP awards were comprised of quarterly grants of Options valued at 25% of target and RSUs valued at 75% of target. +In 2024, the Compensation Committee approved modifications to the LTIP plan design and changed the mix of LTIP awards from previous years, moving the focus away from time-based awards and adding a performance-based component to incentivize and align executive performance with key financial metrics beyond stock price alone. Throughout 2024, the Compensation Committee granted RSUs on a quarterly basis under the Omnibus Incentive Plan to select employees of the Company, including the Continuing NEOs, valued at 67% of the annual target, which vest ratably over three years beginning on the first anniversary of the grant date. Performance Cash, valued at 33% of the annual target and settled in cash, was awarded to select employees of the Company, including the Continuing NEO’s, on the last business day of March 2024, with a two-year performance period from January 1, 2024 through December 31, 2025. This award is tied to the Company achieving the midpoint, or P50, of Relative TSR against the Russell 2000 as well as achieving the target Cumulative Free Cash Flow goal established by the Compensation Committee for each fiscal year over the performance period. Because vesting of the Performance Cash Awards is tied to the Company’s Relative TSR performance, these awards are considered to be stock-based compensation under ASC 718. In accordance with ASC 718, the Performance Cash awards did not have a grant date fair value for accounting purposes in 2024 because the cumulative performance targets for the Cumulative Free Cash Flow metric was not established in 2024. Thus, the value of these awards is excluded from the 2024 Summary Compensation Table and in accordance with SEC disclosure rules, will be reflected as 2025 compensation in the 2025 Summary Compensation Table. +Target Performance Cash opportunity for the Continuing NEOs awarded in 2024 and expected to be paid in 2026, assuming achievement of the applicable performance metrics and continued service through the payment date, were as follows: +Named Executive Officer +Target Performance +Cash Opportunity +John Lowe +$ +660,000 +Jeffrey Hochstadt +$ +165,990 +Toni Thompson +$ +73,260 +Additionally, in connection with his promotion to President and CEO, Mr. Lowe received one-time awards of RSUs and PSUs in January 2024. The RSUs vest in full on the fourth anniversary of the grant date. The PSUs will be earned in equal one-third increments upon the attainment of the rolling weighted average closing price of the Company’s Common Stock equaling or exceeding each of $35.00, $50.00 and $65.00, in each case, for at least 90 consecutive trading days (each, a “Stock Price Hurdle”), during the five-year performance period commencing on the grant date. +24 +Table of Contents +The following table sets forth the details of the RSUs and PSUs granted to our Continuing NEOs in 2024: +PSU Grant +# RSUs +RSU Grant Date +# PSUs +Date Fair +Aggregate +Grant Date +Granted (1) +Fair Value +Granted (2) +Value (3) +Value +John Lowe +1/25/2024 +40,000 +$ +749,200 +60,000 +$ +875,200 +$ +1,624,400 +John Lowe +3/29/2024 +19,409 +346,645 +— +— +346,645 +John Lowe +5/31/2024 +14,297 +374,438 +— +— +374,438 +John Lowe +8/30/2024 +12,393 +354,936 +— +— +354,936 +John Lowe +11/29/2024 +12,186 +402,260 +— +— +402,260 +Jeffrey Hochstadt +3/29/2024 +4,881 +$ +87,175 +— +$ +— +$ +87,175 +Jeffrey Hochstadt +5/31/2024 +3,595 +94,153 +— +— +94,153 +Jeffrey Hochstadt +8/30/2024 +3,116 +89,242 +— +— +89,242 +Jeffrey Hochstadt +11/29/2024 +3,064 +101,143 +— +— +101,143 +Toni Thompson +3/29/2024 +2,154 +$ +38,470 +— +$ +— +$ +38,470 +Toni Thompson +5/31/2024 +1,587 +41,564 +— +— +41,564 +Toni Thompson +8/30/2024 +1,859 +53,242 +— +— +53,242 +Toni Thompson +11/29/2024 +1,827 +60,309 +— +— +60,309 +(1) Except for the one-time RSU award granted to Mr. Lowe on January 25, 2024, the RSUs vest 33.4% on the first anniversary of the grant date, 33.3% on the second anniversary of the grant date and 33.3% on the third anniversary of the grant date, subject to the NEO’s continued employment through the applicable vesting date or as otherwise provided in the underlying award agreement or employment agreement. Mr. Lowe’s one-time RSU grant vests in full on the fourth anniversary of the grant date. The RSUs are stock-settled awards. +(2) The PSUs are earned in equal one-third increments upon achievement of the applicable Stock Price Hurdle during the five-year performance period commencing on the grant date. +(3) The PSUs were valued based on the accounting grant date fair value using a grant date of January 25, 2024, computed in accordance with FASB Topic 718 , using a Monte Carlo simulation and based on the probable satisfaction of the performance conditions for such award as of the date of grant. +Other Benefits +The Company maintains the CPI Card Group, Inc. 401(k) Plan (the “401(k) Plan”), which is designed to be a qualified defined contribution plan under the provisions of the Internal Revenue Code, covering substantially all employees who meet certain eligibility requirements. Under the 401(k) Plan, participants may defer their salary subject to statutory limitations and may direct the contributions among various investment accounts. The Company matches 100% of a participant’s first 3% of deferrals and 50% of the next 2% of deferrals. The matching contributions are fully vested at the time of the match. +Termination or Change in Control +Pursuant to their respective employment or post-termination arrangements, each of our NEOs may be entitled to certain payments and benefits in certain termination situations or upon a change in control. We believe that our severance arrangements would help facilitate an orderly transition in the event of changes in management. +During 2024, Mr. Dubin and Ms. Kilgore each received severance payments in connection with their separation from the Company pursuant to the Dubin Employment Agreement and, in the case of Ms. Kilgore, the Company’s severance policy, respectively. Mr. Scheirman received a one-time retention bonus of $5 million in accordance with his retention agreement. For further discussion of severance payments and benefits, see “ Employment and Post-Termination Arrangements.” +Additional Compensation Governance Practices +Compensation Risk Assessment +The Compensation Committee regularly reviews the risk associated with the Company’s compensation programs. As part of this process, the Compensation Committee reviewed a comprehensive risk assessment conducted by WTW in 2019 and, at the time, concluded that our compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on the Company. In 2024, the Compensation Committee discussed with WTW the risk assessment of the Company’s executive compensation programs and any year-over-year changes that could impact the risk assessment. The Compensation Committee and WTW concluded that no program changes were implemented in 2024 that would materially affect the existing risk profile of the Company’s compensation program and that there were no material risks to the Company’s existing executive compensation program. Accordingly, the Compensation Committee and WTW did not recommend any changes the Company’s executive compensation program in 2024 on this basis. +25 +Table of Contents +Insider Trading Policy +The Company has an Insider Trading Policy governing the purchase, sale, and/or other dispositions of our securities by directors, officers, employees, agents and consultants, as well as the Company itself, that is designed to promote compliance with insider trading laws, rules and regulations, and applicable listing standards. The Company’s Insider Trading Policy prohibits CPI officers and directors from purchasing financial instruments and engaging in certain transactions designed to hedge against a decrease in the value of the Company’s securities, including short sales, publicly traded options, hedging and monetization transactions, margin sales, pledges of collateral and standing limit orders. A copy of the Insider Trading Policy is included as an exhibit to the Company’s Form 10-K for the year-ended December 31, 2024. +Clawback Policy +On October 9, 2023, the Company approved and adopted a revised clawback policy (the “Clawback Policy”), which describes the circumstances in which CPI will be required to recover, and executive officers will be required to repay or return, erroneously awarded compensation. The Clawback Policy requires the recoupment of compensation received by executive officers (defined within the meaning of Rule 10D-1 under the Exchange Act) during the three fiscal years immediately preceding the date the Company is required to prepare an accounting restatement due to material noncompliance with any financial reporting requirement under the securities laws. Among other things, the Clawback Policy covers incentive-based compensation awarded on the basis of financial measures, including TSR and stock price; requires recovery without regard to culpability; and prohibits the Company from insuring, reimbursing insurance or indemnifying any current or former executive officer against the loss of erroneously awarded compensation. A copy of the Clawback Policy is included as an exhibit to the Company’s Form 10-K for the year-ended December 31, 2024. +Stock Ownership Guidelines +Since 2016, the Company has maintained stock ownership guidelines that apply to our directors and senior executives, including our Continuing NEOs. The Company did this to further align the interests of our leaders and the Board of Directors with those of our stockholders and further promote our commitment to sound corporate governance. Under the guidelines, once appointed to their respective role, executives and directors have up to five years to accumulate shares and share equivalents that have a market value equal to or greater than a prescribed multiple of annual salary or annual retainer fees. For directors this multiple is five times the cash portion of the annual retainer, for our CEO this multiple is five times base salary, and for all other executive officers this multiple is two times base salary. +Former Executive Officer Compensation and Arrangements +As discussed in “ Management Transitions, ” during fiscal 2023 and fiscal 2024, the Company experienced a number of changes in its senior leadership in connection with the retirement of Mr. Scheirman and the corresponding promotion of Mr. Lowe to succeed him as President and CEO. Under SEC rules, any individual serving in the role of Principal Executive Officer at any time during the relevant fiscal year must be included as an NEO. In addition, SEC executive compensation disclosure rules require certain executive officers who transitioned from their roles during the relevant year to be treated as NEOs if they would otherwise be our two other highest-compensated individuals if still serving as an executive officer at fiscal year-end. Due to the temporary nature of the positions of our former Principal Executive Officer and former executive officers categorized as NEOs during 2024, none of these individuals participated in the full annual executive compensation program for 2024. Set forth below is a description of the compensation elements and arrangements for each of these individuals. +Scott Scheirman’s 2024 Compensation +Mr. Scheirman retired as President and CEO of the Company on January 25, 2024 and departed the Company on February 28, 2024. He did not participate in the Company’s annual executive compensation program for NEOs during 2024. As an inducement for Mr. Scheirman to remain employed with the Company through the beginning of 2024 in order to allow the Company to consider potential successors, Mr. Scheirman and the Company entered into a retention agreement dated June 2, 2023 (the “Letter Agreement”), pursuant to which Mr. Scheirman would remain employed through February 28, 2024 (the “Retention Date”). Subject to his continued employment through the Retention Date and his execution and delivery of a release of claims and his continued compliance with the Letter Agreement, Mr. Scheirman received a one-time retention payment equal to $5 million. Please see “ Employment and Post-Termination Arrangements ” for a description of the treatment of Mr. Scheirman’s equity awards and other benefits payable to Mr. Scheirman upon his retirement from the Company. +Mr. Scheirman’s annual base salary for 2024 was $700,000, which was not increased from its 2023 level, and for which he received amounts earned through the Retention Date. Mr. Scheirman did not participate in the STIP and was not eligible for LTIP awards for 2024. Please see the “2024 Summary Compensation Table” for the amounts paid to Mr. Scheirman with respect to the year ended December 31, 2024 . +26 +Table of Contents +Lane Dubin’s 2024 Compensation +Mr. Dubin’s employment was subject to the terms of the Dubin Employment Agreement which terminated on June 30, 2024. In accordance with the agreement, Mr. Dubin received base salary and benefits and was entitled to receive STIP and LTIP awards on the same basis as the other executive officers prior to the termination of his employment on June 30, 2024. Mr. Dubin received RSUs granted in March and May of 2024, as well as a Performance Cash award, in each case consistent with the awards granted to the Continuing NEOs. Pursuant to the Dubin Employment Agreement, these LTIP awards will continue to vest in accordance with their normal vesting schedule or be achieved upon satisfaction of the performance conditions so long as Mr. Dubin fulfills certain obligations related to post-employment restrictive covenants. Please see “ Employment and Post-Termination Arrangements ” for a description of the treatment of Mr. Dubin’s equity awards and other benefits payable to Mr. Dubin in connection with the termination of his employment. +Mr. Dubin’s annual base salary for 2024 was $605,000 and his annual STIP target opportunity was $408,000, neither of which was increased from its 2023 level. Mr. Dubin received amounts earned through June 30, 2024. The table below sets forth the LTIP awards granted to Mr. Dubin in 2024: +# RSUs +RSU Grant Date +Aggregate +Grant Date +Granted (1) +Fair Value +Value +3/29/2024 +1,834 +$ +32,755 +$ +32,755 +5/31/2024 +1,351 +35,383 +35,383 +(1) The RSUs vest 33.4% on the first anniversary of the grant date, 33.3% on the second anniversary of the grant date and 33.3% on the third anniversary of the grant date pursuant to the Dubin Employment Agreement and subject to Mr. Dubin’s satisfaction of certain obligations related to post-employment restrictive covenants. The RSUs are stock-settled awards +Mr. Dubin’s Performance Cash target opportunity for 2024 was $62,370 and is subject to the same performance conditions as the Continuing NEOs. P lease see the “2024 Summary Compensation Table” for the amounts paid to Mr. Dubin with respect to the year ended December 31, 2024 . +Sarah Kilgore’s 2024 Compensation +Ms. Kilgore transitioned to an executive advisor role in January 2024. Ms. Kilgore’s base salary for 2024 was $400,000 and she received salary and benefits through termination of her employment on September 30, 2024. Ms. Kilgore was entitled to receive STIP awards on the same basis as the other executive officers prior to the termination of her employment and her annual STIP target opportunity was $225,000. Ms. Kilgore did not receive LTIP awards for 2024. Please see the “2024 Summary Compensation Table” for the amounts paid to Ms. Kilgore with respect to the year ended December 31, 2024. Please see “ Employment and Post-Termination Arrangements ” for a description of the treatment of Ms. Kilgore’s equity awards in connection with the termination of her employment. +2024 Summary Compensation Table +The 2024 Summary Compensation Table discloses the compensation information for fiscal year 2024 and, to the extent required by applicable SEC disclosure rules, fiscal year 2023, for the principal executive officer and our two other most highly compensated executive officers who were serving as executive officers at the end of the last completed fiscal year. In addition, the table includes our former PEO and two former executives who would have been our two other most highly compensated executive officers other than the PEO at the end of the last completed fiscal year. +Nonqualified +Non-Equity +Deferred +Incentive Plan +Compensation +All Other +Name and Principal Position +Year +Salary +Bonus +Stock Awards (1) +Option Awards (1) +Compensation (2) +Earnings +Compensation +Total +Continuing Named Executive Officers +John Lowe, President, Chief Executive Officer and Director +2024 +$ +621,154 +$ +— +$ +3,102,679 +$ +— +$ +783,125 +$ +— +$ +38,541 +$ +4,545,499 +2023 +$ +500,000 +$ +— +$ +984,689 +$ +66,635 +$ +197,760 +$ +— +$ +13,200 +$ +1,762,284 +Jeffrey Hochstadt, Chief Financial Officer +2024 +$ +423,942 +$ +— +$ +371,713 +$ +— +$ +438,550 +$ +— +$ +9,281 +$ +1,243,486 +Toni Thompson, EVP Debit and Credit Solutions +2024 +$ +464,455 +$ +— +$ +193,585 +$ +— +$ +356,541 +$ +— +$ +13,953 +$ +1,028,534 +Former Executive Officers +Scott Scheirman, Former President, Chief Executive Officer and Director +2024 +$ +134,615 +$ +— +$ +— +$ +— +$ +— +$ +— +$ +5,101,969 +(3) +$ +5,236,584 +2023 +$ +695,157 +$ +— +$ +3,370,000 +$ +1,312,037 +$ +682,173 +$ +— +$ +13,200 +$ +6,072,567 +Lane Dubin, Former EVP and Chief Development and Digital Officer +2024 +$ +318,788 +$ +— +$ +68,138 +$ +— +$ +163,200 +$ +— +$ +549,431 +(4) +$ +1,099,557 +2023 +$ +605,000 +$ +— +$ +696,982 +$ +47,181 +$ +201,715 +$ +— +$ +13,200 +$ +1,564,078 +Sarah Kilgore, Former Chief Legal and Compliance Officer and Corporate Secretary +2024 +$ +312,308 +$ +— +$ +280,881 +(5) +$ +42,493 +(5) +$ +211,444 +$ +— +$ +214,658 +(6) +$ +1,061,784 +27 +Table of Contents +(1) Except as noted in footnote 5 below, the amounts reported in this column represent the grant date fair value of the RSU, PSU and, for 2023, option awards as calculated in accordance with FASB Topic 718. The amount included in the Stock Awards column for Mr. Lowe’s 2024 PSU award is calculated based on the probable satisfaction of the performance conditions for such award as of the date of grant. Under FASB ASC Topic 718, the vesting condition related to Mr. Lowe’s 2024 PSU award is considered a market condition and not a performance condition. Accordingly, there is no grant date fair value below or in excess of the amount reflected in the table above for the 2024 PSUs that could be calculated and disclosed based on achievement of the underlying market condition. Because of vesting of the Performance Cash awards is tied to the Company’s Relative TSR performance, these awards are considered to be stock-based compensation under ASC 718. In accordance with ASC 718, the Performance Cash awards did not have a grant date fair value for accounting purposes in 2024 because the cumulative performance targets for the Cumulative Free Cash Flow metric was not established in 2024. Thus, the value of these awards is excluded from the 2024 Summary Compensation Table and, in accordance with SEC disclosure rules, will be reflected as 2025 compensation in the 2025 Summary Compensation Table. See Note 16 of the Company’s audited consolidated financial statements included in our Form 10-K for the fiscal year ended December 31, 2024 for a discussion of the relevant assumptions used in calculating these amounts. +(2) Represents performance-based bonuses earned under the Company’s STIP for the applicable year. Please see the section entitled “Elements of the 2024 Executive Compensation Program — Short-Term Incentives” above for further information regarding the 2024 STIP. +(3) Includes retention payment of $5,000,000 and $80,769 for accrued unused paid time off. +(4) +Includes cash severance of $467,538 and $46,538 for accrued unused paid time off. +(5) +In connection Ms. Kilgore’s separation from the Company, the requisite service and exercise periods for Ms. Kilgore’s existing LTIP awards granted prior to January 2024 were modified to accelerate vesting and extend the post-termination exercise period. The incremental fair value associated with the modification of her LTIP awards during 2024 was $280,881 for RSU awards and $42,493 for option awards. +(6) +Includes cash severance of $144,231 and $43,077 for accrued unused paid time off. +28 +Table of Contents +Outstanding Equity Awards at 2024 Fiscal Year-End +Option Awards +Stock Awards +Number of +Number of +Equity Incentive +Equity Incentive +Securities +Securities +Number of +Value of +Plan Awards: +Plan Awards: +Underlying +Underlying +Shares of +Shares of +Number of Unearned +Market or Payout Value +Unexercised +Unexercised +Option +Stock that +Stock that +Shares, Units, or +Of Unearned Shares, Units +Options +Options +Exercise +Option +Grant Date +Have Not +Have Not +Other Rights That +or Other Rights That +Grant Date +(Exercisable) (1) +(Unexercisable) (2) +Price +Expiration +For Stock +Vested (3) +Vested (4) +Have Not Vested (5) +Have Not Vested (6) +Name +For Options +(#) +(#) +($) +Date +Awards +(#) +($) +(#) +($) +John Lowe +7/2/2018 +75,000 +— +$ +1.98 +7/2/2028 +— +— +$ +— +— +$ +— +9/21/2021 +7,885 +— +29.62 +9/21/2028 +— +— +— +— +— +10/5/2021 +253 +— +30.53 +10/5/2028 +— +— +— +— +— +3/31/2023 +302 +301 +45.01 +3/31/2030 +3/31/2023 +628 +(7) +18,771 +— +— +5/31/2023 +511 +510 +26.61 +5/31/2030 +5/31/2023 +821 +(8) +24,540 +— +— +— +— +— +— +— +6/9/2023 +6,802 +203,312 +— +— +8/31/2023 +651 +651 +20.67 +8/31/2030 +8/31/2023 +1,112 +(8) +33,238 +— +— +— +— +— +— +— +8/31/2023 +7,910 +236,430 +— +— +11/30/2023 +758 +758 +17.79 +11/30/2030 +11/30/2023 +1,589 +(8) +47,495 +— +— +— +— +— +— +— +11/30/2023 +11,300 +337,757 +— +— +— +— +— +— +— +1/25/2024 +40,000 +(9) +1,195,600 +60,000 +1,793,400 +— +— +— +— +— +3/29/2024 +19,409 +580,135 +— +— +— +— +— +— +— +5/31/2024 +14,297 +427,337 +— +— +— +— +— +— +— +8/30/2024 +12,393 +370,427 +— +— +— +— +— +— +— +11/29/2024 +12,186 +364,240 +— +— +Jeffrey Hochstadt +5/15/2023 +1,888 +1,888 +$ +27.04 +5/15/2030 +5/15/2023 +3,467 +(8) +$ +103,629 +— +$ +— +5/31/2023 +478 +478 +26.61 +5/31/2030 +5/31/2023 +768 +(8) +22,956 +— +— +— +— +— +— +— +6/9/2023 +4,246 +126,913 +— +— +8/31/2023 +610 +609 +20.67 +8/31/2030 +8/31/2023 +1,041 +(8) +31,115 +— +— +— +— +— +— +— +8/31/2023 +4,936 +147,537 +— +— +11/30/2023 +710 +710 +17.79 +11/30/2030 +11/30/2023 +1,488 +(8) +44,476 +— +— +— +— +— +— +— +11/30/2023 +7,052 +210,784 +— +— +— +— +— +— +— +3/29/2024 +4,881 +145,893 +— +— +— +— +— +— +— +5/31/2024 +3,595 +107,455 +— +— +— +— +— +— +— +8/30/2024 +3,116 +93,137 +— +— +— +— +— +— +— +11/29/2024 +3,064 +91,583 +— +— +Toni Thompson +8/31/2023 +1,707 +1,707 +$ +20.67 +8/31/2030 +8/31/2023 +3,174 +(8) +$ +94,871 +— +$ +— +11/30/2023 +497 +497 +17.79 +11/30/2030 +11/30/2023 +1,041 +(8) +31,115 +— +— +— +— +— +— +— +3/29/2024 +2,154 +64,383 +— +— +— +— +— +— +— +5/31/2024 +1,587 +47,435 +— +— +— +— +— +— +— +8/30/2024 +1,859 +55,566 +— +— +— +— +— +— +— +11/29/2024 +1,827 +54,609 +— +— +Scott Scheirman +9/25/2017 +190,000 +(10) +— +$ +5.25 +2/28/2027 +— +— +$ +— +— +$ +— +9/21/2021 +32,893 +(10) +— +29.62 +2/28/2027 +— +— +— +— +— +3/31/2023 +2,760 +(11) +— +45.01 +3/31/2027 +3/31/2023 +1,914 +(7) +57,209 +— +— +3/31/2023 +— +2,759 +45.01 +3/31/2028 +— +— +— +— +— +5/31/2023 +2,334 +(11) +— +26.61 +5/31/2027 +5/31/2023 +3,753 +(8) +112,177 +— +— +5/31/2023 +— +2,333 +26.61 +5/31/2028 +— +— +— +— +— +6/9/2023 +13,751 +(11) +— +23.03 +6/9/2027 +6/9/2023 +15,816 +(8) +472,740 +— +— +6/9/2023 +— +13,751 +23.03 +6/9/2028 +— +— +— +— +— +8/31/2023 +15,293 +(11) +— +20.67 +8/31/2027 +8/31/2023 +18,389 +(8) +549,647 +— +— +8/31/2023 +— +15,292 +20.67 +8/31/2028 +— +— +— +— +— +11/30/2023 +17,917 +(11) +— +17.79 +11/30/2027 +11/30/2023 +26,269 +(8) +785,180 +— +— +11/30/2023 +— +17,916 +17.79 +11/30/2028 +— +— +— +— +— +Lane Dubin +9/1/2016 +22,500 +— +$ +27.60 +9/1/2026 +— +— +$ +— +— +$ +— +3/22/2017 +11,885 +— +21.75 +3/22/2027 +— +— +— +— +— +9/25/2017 +25,000 +(12) +— +5.25 +6/30/2027 +— +— +— +— +— +9/21/2021 +8,932 +(12) +— +29.62 +6/30/2027 +— +— +— +— +— +3/31/2023 +214 +(12) +213 +45.01 +6/30/2027 +3/31/2023 +444 +(7) +13,271 +— +— +5/31/2023 +362 +(12) +361 +26.61 +6/30/2027 +5/31/2023 +581 +(8) +17,366 +— +— +8/31/2023 +461 +(12) +461 +20.67 +6/30/2027 +8/31/2023 +787 +(8) +23,523 +— +— +11/30/2023 +537 +(12) +536 +17.79 +6/30/2027 +11/30/2023 +1,124 +(8) +33,596 +— +— +— +— +— +— +— +3/29/2024 +1,834 +54,818 +— +— +— +— +— +— +— +5/31/2024 +1,351 +40,381 +— +— +Sarah Kilgore +9/21/2021 +4,912 +(13) +— +$ +29.62 +9/30/2027 +— +— +$ +— +— +$ +— +3/31/2023 +135 +(13) +135 +45.01 +9/30/2027 +3/31/2023 +281 +(14) +8,399 +— +— +5/31/2023 +229 +(13) +229 +26.61 +9/30/2027 +5/31/2023 +368 +(14) +11,000 +— +— +— +— +— +— +— +6/9/2023 +3,050 +(14) +91,165 +— +— +8/31/2023 +549 +(13) +548 +20.67 +9/30/2027 +8/31/2023 +937 +(14) +28,007 +— +— +— +— +— +— +— +8/31/2023 +3,546 +(14) +105,990 +— +— +11/30/2023 +639 +(13) +639 +17.79 +9/30/2027 +11/30/2023 +1,339 +(14) +40,023 +— +— +— +— +— +— +— +11/30/2023 +5,068 +(14) +151,483 +— +— +(1) This column includes Options that have vested and have not been exercised. +(2) This column includes remaining Options that have not vested as of December 31, 2024. Options generally vest in equal annual installments over a two-year period beginning on the first anniversary of the grant date, subject to continued service through such date or as otherwise provided for in the applicable award agreement. +(3) This column includes unvested RSUs. Except where otherwise indicated, RSUs generally vest in equal annual installments over a three-year period beginning on the first anniversary of the grant date, subject to continued service through such date or as otherwise provided for in the applicable award agreement. +(4) This column represents the market value of unvested RSUs, which is based on the $29.89 closing price of a share of our Common Stock on December   31, 2024. +(5) This column includes unvested PSUs granted to Mr. Lowe on January 25, 2024, which will be earned in equal one-third increments upon the attainment of each Stock Price Hurdle during a five-year performance period commencing on the grant date and continued +29 +Table of Contents +service through the four-year anniversary of the grant date, or as otherwise provided for in the applicable award agreement. +(6) This column represents the market value of unvested PSUs, which is based on the $29.89 closing price of a share of our Common Stock on December   31, 2024. +(7) Represents RSUs which vested on March 31, 2025. +(8) Represents the unvested portion of RSUs which vest in equal annual installments over a two-year period beginning on the first anniversary of the grant date, subject to continued service through such date or as otherwise provided for in the applicable award agreement. +(9) Represents unvested RSUs which vest 100% on the fourth anniversary of the grant date, subject to continued service through such date or as otherwise provided for in the applicable award agreement. +(10) Pursuant to the terms of the Letter Agreement with Mr. Scheirman, the Option expiration date was modified to February 28, 2027. +(11) Pursuant to the terms of the Letter Agreement with Mr. Scheirman, the Options granted on each of March 31, 2023, May 31, 2023, June 9, 2023, August 31, 2023, and November 30, 2023 vest and become exercisable ratably over a two-year period from the grant date and expire on the third anniversary of the date of vesting. +(12) Pursuant to the terms of the Dubin Employment Agreement, the Option expiration date was modified to June 30, 2027. +(13) Pursuant to the terms of Ms. Kilgore ’ s severance agreement, the Option expiration date was modified to September 30, 2027. +(14) Represents RSUs which vested on March 15, 2025. +30 +Table of Contents +Employment and Post-Termination Arrangements +Mr. Lowe’s Employment Agreement +Mr. Lowe and the Company entered into an Employment and Non-Competition Agreement effective January 24, 2024 (the “Lowe Employment Agreement”) in connection with his appointment as President and CEO. The Lowe Employment Agreement provides for an initial employment term commencing on January 25, 2024 and ending on February 28, 2029, and will automatically renew for additional one-year terms until terminated by either party. Pursuant to the Lowe Employment Agreement, Mr. Lowe will receive an initial annual base salary of $625,000 and will be eligible for a target annual cash bonus equal to 100% of his base salary, based on the achievement of performance metrics approved by the Compensation Committee. During each calendar year during the employment term, Mr. Lowe will be eligible to receive awards under the Omnibus Incentive Plan, with a target grant date value of at least $2,000,000. In connection with his promotion, Mr. Lowe received additional long-term incentive awards in the form of (i) PSUs, with respect to 60,000 shares of Company common stock and (ii) RSUs, with respect to 40,000 shares of Company common stock. The Company agreed to reimburse Mr. Lowe for up to $25,000 in reasonable attorneys’ fees incurred by him in connection with the negotiation of the Employment Agreement. +In the event of a termination of his employment with the Company due to his death or disability, by the Company without cause or by Mr. Lowe for good reason (each, a “Qualifying Termination”), subject to his execution and delivery of a release of claims, Mr. Lowe will receive (i) severance payments equal to 1.5 times the sum of Mr. Lowe’s annual base salary and target bonus for the year of the termination, (ii) a pro-rated bonus payment for the year of the termination, based on the Company’s actual performance, (iii) reimbursement for the cost of continuation coverage under the Company’s health and welfare plans for up to 18 months, and (iv) except in the case of a termination due to death or disability, six months of outplacement services. If Mr. Lowe’s Qualifying Termination occurs within 24 months following a change in control of the Company, or if a Qualifying Termination occurs followed by a change in control within six months, then Mr. Lowe will instead receive (i) severance payments equal to two times the sum of Mr. Lowe’s annual base salary and target bonus for the year of the termination, (ii) a pro-rated bonus payment for the year of the termination, based on the Company’s actual performance, (iii) reimbursement for the cost of continuation coverage under the Company’s health and welfare plans for up to 24 months, (iv) except in the case of a termination due to death or disability, six months of outplacement services and (v) his outstanding equity awards will vest in full, based on target performance with respect to any performance-based awards; provided, however, that the PSU awards will only vest to the extent the applicable Stock Price Hurdles have been achieved on or prior to the change in control of the Company. +Mr. Lowe will be subject to certain non-competition and non-solicitation covenants for 18 months following the termination of his employment with the Company for any reason. +Mr. Scheirman’s Employment Agreement +On September 25, 2017, Mr. Scheirman entered into an employment and non-competition agreement (the “Scheirman Employment Agreement”) with the Company to serve as President and CEO, effective September 25, 2017, for a term ending on March 31, 2021, plus automatic one-year renewals thereafter unless either party provides notice of intent not to renew the agreement. On June 2, 2023, in connection with Mr. Scheirman’s announcement of his intent to retire, the Company and Mr. Scheirman entered into the Letter Agreement supplementing and amending the terms of the Scheirman Employment Agreement, which provided that Mr. Scheirman would remain employed with the Company through the Retention Date of February 28, 2024. +The Letter Agreement was structured to provide an incentive for Mr. Scheirman to remain employed with the Company through the Retention Date in order to allow for the orderly transition of his duties from the Company. Prior to the Retention Date, Mr. Scheirman continued to serve as the Company’s President and CEO until fully transitioning his duties to Mr. Lowe in January 2024. Mr. Scheirman then served as an Executive Advisor through the Retention Date. +The Letter Agreement provided that, subject to his continued employment through the Retention Date and his execution and delivery of a release of claims and his continued compliance with the Letter Agreement and the Employment Agreement and in lieu of the payments and benefits he would otherwise receive upon such a termination of his employment under the Employment Agreement, (A) the Company would pay to Mr. Scheirman an amount equal to $5 million; (B) any outstanding and unvested equity awards granted to Mr. Scheirman (including, without limitation, the equity awards granted to him pursuant to the Letter Agreement) will continue to vest in accordance with their original vesting schedules as if he had remained employed with the Company through each applicable vesting date, and any options held by Mr. Scheirman may be exercised at any time between the date of vesting and the third anniversary of the date of vesting; (C) each outstanding and unexercised stock option granted to Mr. Scheirman will, to the extent vested, remain exercisable through the earlier of the original expiration date and February 28, 2027; provided that the options that were not vested on the date of the Letter Agreement will remain exercisable until the third anniversary of the date of vesting; and (D) the Company will reimburse Mr. Scheirman, on a monthly basis, for the cost of continuing coverage under the Company’s group health and dental benefits plan, and in accordance with the Company’s policies applicable to similarly situated employees, until no later than August 31, 2025. Please see the “2024 Summary Compensation Table” for the cash amounts paid pursuant to the Letter Agreement and the “Outstanding Equity Awards at 2024 Fiscal Year-End” for the value of Mr. Scheirman’s outstanding equity awards as of December 31, 2024. +Mr. Scheirman is subject to certain restrictive covenants in the Scheirman Employment Agreement, including obligations regarding noncompetition and non-solicitation of Company employees and customers for a period of eighteen months following termination of his employment with the Company. +31 +Table of Contents +Mr. Dubin’s Employment Agreement +In connection with Mr. Dubin’s promotion to EVP and Chief Development and Digital Officer, the Company entered into the Dubin Employment Agreement which terminated on June 30, 2024. In connection with his separation and subject to his execution of a release of claims in favor of the Company, under the Dubin Employment Agreement, Mr. Dubin became entitled to (i) severance payments equal to 1.0 times the sum of Mr. Dubin’s annual base salary and target bonus for the year of the termination, payable over the Severance Period (as defined below); and (ii) the sum of (y) the Employee’s Quarterly Performance Incentive (as defined in the STIP) for the calendar quarter in which such termination occurs, including any related “catch-up” payment with respect to such quarter as determined in accordance with the STIP and (z) the Annual Performance Incentives determined under the STIP, in each case, based on the Company’s actual performance and pro-rated based on the number of days Mr. Dubin was employed by the Company during such period. Mr. Dubin is also entitled to reimbursement for the cost of up to 18 months of continuation coverage under the Company’s health and welfare plans at active employee rates and six months of outplacement services. +In addition to the compensation described above, Mr. Dubin is entitled to (1) the continued vesting of any awards granted to Mr. Dubin after December 13, 2022 through the two-year anniversary of the end of the Severance Period, and (2) the vested and unexercised portions of any stock option awards held by Mr. Dubin, which will remain outstanding and exercisable until the earlier of (A) the two-year anniversary of the end of the Severance Period and (B) the original expiration date of the stock option award. These terms did not apply to certain retention awards in the form of RSUs granted in 2023 to key personnel in connection with the CEO transition. Mr. Dubin received shares of Common Stock underlying the portions of such retention RSU awards for which he had continued service through the applicable vesting date in 2024 and forfeited any unvested portion upon termination of his employment. +For purposes of the Dubin Employment Agreement, “Severance Period” means the 12-month period commencing on June 30, 2024, the date of Mr. Dubin’s termination of employment, unless such period is shortened in accordance with Mr. Dubin’s Employment Agreement after the termination date but prior to its expiration. The Dubin Employment Agreement extended the restricted period under Mr. Dubin’s Confidentiality, Trade Secret Protection, Unfair Competition, Non-Solicitation, and Invention Assignment Agreement, by and between Mr. Dubin and CPI Card Group-Colorado, Inc., effective as of April 8, 2019 to a period of two years following the cessation of Mr. Dubin’s employment. +The total cash severance due to Mr. Dubin over the Severance Period, is $1,043,687 (inclusive of $15,687 in COBRA insurance coverage and outplacement services valued at $15,000). Please see the “2024 Summary Compensation Table” for the amounts paid or accrued as of December 31, 2024 pursuant to the Dubin Employment Agreement in connection with Mr. Dubin’s separation and the “Outstanding Equity Awards at 2024 Fiscal Year-End” for the value of Mr. Dubin’s outstanding equity awards as of December 31, 2024. +Ms. Kilgore’s Severance Agreement +Ms. Kilgore served as Chief Legal and Compliance Officer and Corporate Secretary until January 25, 2024, and transitioned to an executive advisor role until September 30, 2024. In connection with this transition, until her termination date, Ms. Kilgore received base salary and STIP payments consistent with her service as an executive officer but did not receive any additional LTIP awards in 2024. Her outstanding LTIP awards as of January 25, 2024 were modified to accelerate vesting and were settled by the Company on March 15, 2025 in the case of RSUs and continue to vest through September 30, 2027 in the case of Options. In connection with her termination, Ms. Kilgore received severance based on the Company’s Executive Severance Guidelines, as described below. The cash severance due to Ms. Kilgore as of September 30, 2024, is $643,405 (inclusive of $6,405 in COBRA insurance coverage and outplacement services valued at $12,000). Ms. Kilgore’s entitlement to severance payments is subject to Ms. Kilgore’s compliance with certain noncompetition and non-solicitation restrictive covenants for a period of two years following termination of her employment with the Company. Please see the “2024 Summary Compensation Table” for the amounts paid or accrued as of December 31, 2024 pursuant to the Executive Severance Guidelines in connection with Ms. Kilgore’s separation and the “Outstanding Equity Awards at 2024 Fiscal Year-End” for the value of Ms. Kilgore’s outstanding equity awards as of December 31, 2024. +Executive Severance Guidelines +On June 22, 2017, the Company adopted guidelines governing executive severance (“Executive Severance Guidelines”), applicable to executive officers and NEOs of the Company who are not otherwise parties to individual employment or severance agreements providing for benefits upon a termination of employment. Under the Executive Severance Guidelines, if the employment of an eligible officer is terminated without “cause” or due to a resignation for “good reason,” not in connection with a “change in control” (each as defined in the Executive Severance Guidelines) and subject to the execution, delivery and non-revocation of a release of claims, he or she would be eligible to receive cash severance equal to one times the sum of his or her base salary plus annual bonus target (or 1.5 times the sum of base salary and annual bonus target for a CEO participant). For such a termination occurring within the 24 months following a change in control of the Company, the applicable severance multiple would be increased to 1.5 times for all other eligible officers (or 2.0 times for a CEO participant). In addition, the Company would continue to pay a portion of the cost of medical, dental and vision benefits on behalf of an eligible officer, such that the officer’s contribution would remain as it were for an active officer, for the greater of the severance period or such officer’s eligibility for COBRA continuation coverage, and the Company may provide, in its discretion, up to six months of outplacement services. +32 +Table of Contents +Pay vs. Performance +Summary +Summary +Compensation +Compensation +Average Summary +Value of Initial +Compensation +Compensation +Actually +Actually +Compensation Table Total +Average Compensation +Fixed $100 Investment +Table Total for +Table Total for +Paid to +Paid to +Table Total for +Actually Paid +Based On: Total +Net Income +Year (1) +Lowe ($) (2) +Scheirman ($) (2) +Lowe ($) (3) +Scheirman ($) (3) +Non-PEO NEOs ($) (2) +for Non-PEO NEOs ($) (3) +Shareholder Return ($) (4) +(in thousands) ($) +2024 +4,545,499 +5,236,584 +6,422,375 +7,136,835 +1,108,340 +1,240,891 +161 +19,521 +2023 +- +6,072,567 +- +5,292,252 +1,663,181 +1,489,262 +103 +23,985 +2022 +- +3,431,434 +- +3,621,040 +1,237,123 +1,286,687 +195 +36,540 +(1) The PEOs and NEOs for the applicable years were as follows: +2024: John Lowe served as the Company’s PEO beginning January 25, 2024 and Scott Scheirman served as the Company’s PEO through his January 25, 2024 retirement. The Company’s other NEOs during 2024 were: Jeff Hochstadt, Toni Thompson, Lane Dubin and Sarah Kilgore. +2023 and 2022: Scott Scheirman served as the Company’s PEO, and Lane Dubin and John Lowe served as NEOs, for the entirety of 2023 and 2022, respectively. +(2) Amounts reported in this column represent (i) the total compensation reported in the Summary Compensation Table for the applicable year in the case of Mr. Lowe and Mr. Scheirman, as applicable, and (ii) the average of the total compensation reported in the Summary Compensation Table for the applicable year in the case of the other NEOs, including Mr. Lowe for 2023 and 2022. +(3) To calculate “Compensation Actually Paid” (“CAP”), adjustments were made to the amounts reported in the Summary Compensation Table for the applicable year. A reconciliation of the adjustments for Mr. Lowe, Mr. Scheirman and for the average of the other NEOs is set forth following the footnotes to this table.* +(4) Pursuant to rules of the SEC, the calculation assumes $100 was invested on December 31, 2021 in our common stock. Historic stock price performance is not necessarily indicative of future stock price performance. +* Compensation Actually Paid Adjustments (see FN 3 above) +Minus +Plus +Plus (Minus) +Plus +Plus (Minus) +Minus +Plus +Minus +Equals +Change in Fair +Value as of +Fair Value as +Vesting Date of +of Prior Fiscal +Fair Value at +Stock Option and +Year-End of +Fiscal Year-End +Change in Fair +Fair Value at +Stock Awards +Stock Option and +Changes in +Grant Date +of Outstanding +Value of +Vesting of Stock +Granted in +Stock Awards +Fair Value to +Fair Value of +and Unvested +Outstanding and +Option and Stock +Prior Fiscal Years +Granted in Prior +Reflect Excess +Stock Option +Stock Option +Unvested Stock +Awards Granted +for which Applicable +Fiscal Years that +Fair Value +Awards Made in +and Stock +and Stock +Option and Stock +in Fiscal Year +Vesting Conditions +Failed to Meet +Resulting from +Prior Fiscal Years +Summary +Awards Granted +Awards Granted +Awards Granted +that Vested +Were Satisfied +Applicable Vesting +Modifications to +that were Forfeited +Compensation Table +in Fiscal +in Fiscal +in Prior Fiscal +During Fiscal +During Fiscal +Conditions During +Stock Option and +During Current +Compensation +Year +Total ($) (a) +Year ($) (b) +Year ($) (c) +Years ($) (d) +Year ($) (e) +Year ($) (f) +Fiscal Year ($) (g) +Stock Awards ($) (h) +Fiscal Year ($) +Actually Paid ($) +John Lowe +2024 +4,545,499 +( 3,102,679 ) +4,450,139 +334,506 +- +194,910 +- +- +- +6,422,375 +2023 +- +- +- +- +- +- +- +- +- +- +2022 +- +- +- +- +- +- +- +- +- +- +Scott Scheirman +2024 +5,236,584 +- +- +920,077 +- +980,174 +- +- +- +7,136,835 +2023 +6,072,567 +( 4,682,037 ) +3,421,712 +- +- +( 350,800 ) +- +830,810 +- +5,292,252 +2022 +3,431,434 +- +- +321,862 +- +( 132,256 ) +- +- +- +3,621,040 +Average Other NEOs(i) +2024 +1,108,340 +( 239,203 ) +188,815 +130,325 +- +96,271 +- +80,844 +( 124,501 ) +1,240,891 +2023 +1,663,181 +( 897,743 ) +814,865 +- +- +( 91,041 ) +- +- +- +1,489,262 +2022 +1,237,123 +- +- +83,413 +- +( 33,849 ) +- +- +- +1,286,687 +(a) Represents Total Compensation as reported in the Summary Compensation Table for the indicated fiscal year. With respect to the other NEOs, amounts shown represent averages. +(b) Represents the grant date fair value of the stock option and stock awards granted during the indicated fiscal year, computed in accordance with the methodology used for financial reporting purposes. +(c) Represents the fair value at fiscal year-end of the stock option and stock awards granted during the indicated fiscal year, computed in accordance with the methodology used for financial reporting purposes. +(d) Represents the change in fair value during the indicated fiscal year of each option award and stock award that was granted in a prior fiscal year and that remained outstanding and unvested as of the last day of the indicated fiscal year, computed in accordance with the methodology used for financial reporting purposes and, for awards subject to performance-based vesting conditions, based on the probable outcome of such performance-based vesting conditions as of the last day of the fiscal year. +(e) Represents the fair value at vesting of the option awards and stock awards that were granted and vested during the indicated fiscal year, computed in accordance with the methodology used for financial reporting purposes. +33 +Table of Contents +(f) Represents the change in fair value, measured from the prior fiscal year-end to the vesting date, of each option award and stock award that was granted in a prior fiscal year and which vested during the indicated fiscal year, computed in accordance with the methodology used for financial reporting purposes. +(g) Represents the fair value as of the last day of the prior fiscal year of the option award and stock awards that were granted in a prior fiscal year and which failed to meet the applicable vesting conditions in the indicated fiscal year, computed in accordance with the methodology used for financial reporting purposes. +(h) Represents the incremental fair value associated with the modification of Mr. Scheirman’s LTIP awards in 2023 and Ms. Kilgore’s outstanding awards in connection with her separation. +(i) See footnote 1 above for the NEOs included in the average for each year. +Relationship Between Pay and Performance +We believe the CAP in each of the years reported above and over the three-year cumulative period are generally reflective of the Compensation Committee’s emphasis on “pay-for-performance”; however, certain non-recurring events related to the Company’s leadership transition in 2024 impacted the presentation of Pay and Performance data as demonstrated in the chart below. Generally, the Company expects the CAP amount will align with fluctuating amounts awarded under the STIP tied to the Company’s financial performance. Due to the leadership transition in 2024, which resulted in certain non-recurring compensation decisions, and inclusion of new NEOs who were not previously disclosed, the changes in CAP for the NEOs over the prior three-year period does not necessarily reflect overall Company performance. In 2023, amounts awarded under the STIP were below target consistent with the decline in Company performance; however, the CAP amounts were higher than the prior year due to equity awards, which resumed as a component of the NEO’s annual compensation package and as retention awards in connection with the leadership transition, after no awards were granted in 2022. The CAP for the PEO position in 2024 was impacted by the grants received by Mr. Lowe in connection with his promotion to President and CEO and Mr. Scheirman’s retention payment. The CAP for Mr. Scheirman in 2023 was impacted by the treatment of his equity awards pursuant to a retention agreement related to his planned retirement and transition of his CEO duties. +34 +Table of Contents +Policies and Practices Related to Grant of Certain Equity Awards Close in Time to Release of Material Nonpublic Information +In 2023, the Company instituted a quarterly grant program for equity awards with grants scheduled to coincide with and occur at the end of the month of the Company’s in which the Company has scheduled its quarterly earnings release. The Company did not grant Options during 2024 but has awarded Options in previous years using a quarterly cadence in which equity awards are granted on the last business day of the month in which earnings are announced. Although the Company does not have a specific policy regarding timing of equity awards in relation to the release of material non-public information (“MNPI”), the Company believes its current grant timing practice has the effect of minimizing the risk of granting Options ahead of the release of MNPI, as such equity award grants occur after earnings have been released and during such time as the quarterly trading window is typically open (except for the period following the release of the annual report on Form 10-K). +Equity Compensation Plan Information Table +The following table provides information as of December 31, 2024 with respect to shares of our common stock that may be issued under our existing equity compensation plan. +Number of securities +remaining available for +future issuance under +Number of securities to +Weighted average +equity compensation +be issued upon exercise +exercise price of +plans (excluding +of outstanding Options, +outstanding Options, +securities reflected in +warrants and rights +warrants and rights +column (a)) +(a) (#) +(b) ($) +(c) (#) +Equity compensation plans approved by security holders (1) +1,437,479 +(2) +20.84 +(2) +866,564 +Equity compensation plans not approved by security holders +— +— +— +Total +1,437,479 +20.84 +866,564 +(1) All current equity compensation plans have been approved by stockholders. +(2) Consists of (i) 781,263 outstanding Options under the Omnibus Incentive Plan at an average exercise price of $20.84, (ii) 596,216 outstanding RSUs and (iii) 60,000 PSUs under the Omnibus Incentive Plan. Only Options were used in computing the weighted average exercise price. +AUDIT COMMITTEE REPORT +This report of the Audit Committee is required by the SEC and, in accordance with the SEC’s rules, will not be deemed to be part of or incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933, as amended (the “Securities Act”), or under the Exchange Act, except to the extent that the Company specifically incorporates this information by reference, and will not otherwise be deemed “soliciting material” or “filed” under either the Securities Act or the Exchange Act. +The principal purpose of the Audit Committee is to assist the Board in its oversight of (i) the integrity of our accounting and financial reporting processes and the audits of our consolidated financial statements; (ii) our system of disclosure controls and internal control over financial reporting; (iii) our compliance with legal and regulatory requirements; (iv) the qualifications and independence of our independent auditor; (v) the performance of our independent auditor; and (vi) the business practices and ethical standards of the Company. The Audit Committee is responsible for the appointment, compensation, retention and oversight of the Company’s independent auditor. The Audit Committee’s function is more fully described in its charter. +Our management is responsible for the preparation, presentation and integrity of our consolidated financial statements, for the appropriateness of the accounting principles and reporting policies that we use and for establishing and maintaining adequate internal control over financial reporting. KPMG LLP (“KPMG”), our independent registered public accounting firm for 2024, was responsible for performing an independent audit of our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2024, and expressing an opinion on the conformity of those financial statements with generally accepted accounting principles. KPMG was also responsible for expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. +The Audit Committee has reviewed and discussed with management our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2024. The Audit Committee has also reviewed and discussed with KPMG the audited consolidated financial statements in such Form 10-K. In addition, the Audit Committee discussed with KPMG those matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (the “PCAOB”) and the SEC. Additionally, KPMG provided to the Audit Committee the written disclosures and the letter required by applicable requirements of +35 +Table of Contents +the PCAOB regarding KPMG’s communications with the Audit Committee concerning independence, and the Audit Committee has discussed with KPMG its independence from the Company. +Based upon the review and discussions described above, the Audit Committee recommended to the Board that CPI’s audited consolidated financial statements be included in our Annual Report on Form 10-K for the year ended December 31, 2024 for filing with the SEC. +Audit Committee : +Marc Sheinbaum, Chair +Thomas Furey +Ravi Mallela +Valerie Soranno Keating +FEES PAID TO INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +For the years ended December 31, 2024 and 2023, KPMG, our independent registered public accounting firm, billed the approximate fees set forth below. +2024 +2023 +Audit fees (1) +$ +2,186,885 +$ +1,430,429 +Audit-related fees (2) +— +— +Tax fees (3) +199,187 +188,645 +All other fees (4) +— +— +Total fees +$ +2,386,072 +$ +1,619,074 +(1) Audit fees relate to (i) the audit of our annual consolidated financial statements as of and for the years ended December 31, 2024 and 2023, and (ii) interim reviews of the condensed consolidated financial statements included in our Quarterly Reports on Form 10-Q during the years ended December 31, 2024 and 2023. Audit fees in 2024 also include approximately $550,000 related to comfort letters and consents obtained in connection with the offering of our 10.000% Senior Secured Notes due 2029 and a secondary offering of our common stock. +(2) These services include attest services related to financial reporting that are not required by statute or regulation. KPMG did not provide services included in this category during the years ended December 31, 2024 and 2023. +(3) For the years ended December 31, 2024 and 2023, tax fees relate primarily to US federal and state tax compliance, planning, and advisory services. +(4) This category includes fees for services that are not included in the above categories. KPMG did not provide services included in this category during the years ended December 31, 2024 and 2023. +The Audit Committee has adopted certain policies and procedures regarding permitted audit and non-audit services and the pre-approval of such services. Each year, the Audit Committee will ratify the types of audit and non-audit services of which management may wish to avail itself, subject to pre-approval of specific services. Each year, the independent registered public accounting firm will submit a pre-approval request, which will list each known and/or anticipated audit and non-audit service for the upcoming calendar year and which will include associated budgeted fees. The Audit Committee will review the requests and approve a list of annual pre-approved non-audit services. Any interim requests for additional non-audit services that were not contained in the annual pre-approval request are pre-approved by the Audit Committee. +All services provided by KPMG during the fiscal year ended December 31, 2024 and 2023 were pre-approved by the Audit Committee. +36 +Table of Contents +PROPOSAL NO. 2 RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +Our Audit Committee has appointed KPMG as our independent registered public accounting firm for the year ending December 31, 2025. A proposal will be presented at the Annual Meeting to ratify this appointment. If the stockholders fail to ratify such selection, another independent registered public accounting firm will be considered by our Audit Committee, but the Audit Committee may nonetheless choose to engage KPMG. Even if the appointment of KPMG is ratified, the Audit Committee, in its discretion, may select a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and its stockholders. We have been advised that a representative of KPMG will be present at the Annual Meeting and will be available to respond to appropriate questions and, if such person chooses to do so, make a statement. +THE BOARD OF DIRECTORS AND THE AUDIT COMMITTEE UNANIMOUSLY RECOMMEND A VOTE FOR RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2025. +37 +Table of Contents +PROPOSAL NO. 3 STOCKHOLDER ADVISORY VOTE TO APPROVE OUR NAMED EXECUTIVE OFFICER COMPENSATION +We are offering our stockholders an opportunity to cast an advisory vote to approve the compensation of our NEOs, as disclosed in this proxy statement, pursuant to Section 14A of the Exchange Act (commonly referred to as a “say-on-pay” vote). The advisory vote to approve executive compensation is not a vote on the Company’s general compensation policies or the compensation of the Company’s Board of Directors. +In making decisions with respect to compensation for our NEOs, the Compensation Committee is guided by a pay-for-performance philosophy. The Compensation Committee believes that a significant portion of each NEO’s total compensation opportunity should vary with achievement of the Company’s annual and long-term financial, operational and strategic goals. In designing the compensation program for our NEOs, the Compensation Committee seeks to achieve the following key objectives: +Motivate Executives . The compensation program should encourage our executive officers to achieve the Company’s annual and long-term goals. +Align Interests with Stockholders . The compensation program should align the interests of our executive officers with those of our stockholders, promoting actions that will have a positive impact on total stockholder return over the long term. +Attract and Retain Talented Executives . The compensation program should provide each executive officer with a total compensation opportunity that is market competitive. This objective is intended to ensure that we are able to attract and retain qualified executives while maintaining an appropriate cost structure for the Company. +We believe our executive compensation is structured in the manner that best serves the interests of the Company and its stockholders. We encourage stockholders to review the “Executive Compensation” section above for a complete discussion of how we determine the pay for our NEOs as well as key accomplishments the executive team achieved during 2024. +Accordingly, we are asking stockholders to approve the following advisory resolution at the Annual Meeting: +RESOLVED, that the stockholders of the Company approve, on an advisory and non-binding basis, the compensation of the Company’s named executive officers, as disclosed in this proxy statement pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Executive Compensation section, the compensation tables and any related material disclosed in this proxy statement. +As an advisory vote, this resolution is not binding on us. However, the Compensation Committee, which is responsible for designing and administering our executive compensation program, values the opinions expressed by our stockholders in their vote on this proposal and will consider the outcome of the vote when making future compensation decisions for our NEOs. We expect to hold this vote on an annual basis for the foreseeable future. +THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL, ON AN ADVISORY BASIS, OF OUR NAMED EXECUTIVE OFFICER COMPENSATION AS DISCLOSED IN THIS PROXY STATEMENT. +38 +Table of Contents +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +The following is a description of transactions since January 1, 2023 to which we have been a party in which the amount involved exceeded or will exceed the lesser of $120,000 or one percent of the average of the Company’s total assets at year-end for the last two completed fiscal years and in which any of our directors, executive officers, beneficial holders of more than 5% of our capital stock or entities affiliated with them had or will have a direct or indirect material interest. +Registration Rights Agreement +In connection with our initial public offering, we entered into a registration rights agreement with the Tricor Funds (the “Registration Rights Agreement”). Under the Registration Rights Agreement, the Tricor Funds are entitled to request that we register shares of our Common Stock on a long-form or short-form registration statement on one or more occasions in the future, provided that we will not be obligated to register such shares within 90 days after the effective date of a registration statement previously filed pursuant to a request under the Registration Rights Agreement and otherwise for up to 60 days from the date of a request under the Registration Rights Agreement in certain circumstances. The Tricor Funds also are entitled to participate in certain registered offerings that we may conduct in the future, subject to certain restrictions. We will pay the Tricor Funds’ expenses in connection with the exercise of these rights. The registration rights described in this paragraph apply to (i) shares of our Common Stock held by the Tricor Funds as of the closing of our initial public offering, (ii) any of our capital stock (or that of our subsidiaries) issued or issuable with respect to the Common Stock described in clause (i) with respect to any dividend, distribution, recapitalization, reorganization or certain other corporate transactions, and (iii) any shares of our Common Stock owned or acquired following the closing of our initial public offering by the Tricor Funds (collectively, “Registrable Securities”). These registration rights are also for the benefit of any subsequent holder of Registrable Securities; provided that any particular securities will cease to be Registrable Securities when they have been sold in a registered public offering, sold in compliance with Rule 144 under the Securities Act or repurchased by us or our subsidiaries. In September 2021, we filed a registration statement on Form S-3 with respect to the shares of Common Stock held by the Tricor Funds in compliance with our obligations under the Registration Rights Agreement. +Director Nomination Agreement +In connection with our initial public offering, we entered into the Director Nomination Agreement with the Tricor Funds that provides the Tricor Funds the right to designate nominees for election to our Board for so long as the Tricor Funds collectively beneficially own 5% or more of the total number of shares of our Common Stock then outstanding. The number of nominees that the Tricor Funds are entitled to designate under the Director Nomination Agreement bears the same proportion to the total number of members of our Board as the number of shares of Common Stock beneficially owned by the Tricor Funds bears to the total number of shares of Common Stock outstanding, rounded up to the nearest whole number. In addition, the Tricor Funds shall be entitled to designate the replacement for any of its board designees whose board service terminates prior to the end of such designee’s term regardless of the Tricor Funds’ beneficial ownership at such time. In addition, for so long as the Tricor Funds collectively beneficially own 10% or more of the total number of shares of our Common Stock then outstanding, the Tricor Funds shall also have the right to have their designees participate on committees of our Board, subject to compliance with applicable law and stock exchange rules. The Director Nomination Agreement will terminate at such time as the Tricor Funds collectively own less than 5% of our outstanding Common Stock. The Tricor Funds designated Nicholas Peters, Sandy Riley and Lisa Oleson as nominees to the Board effective in 2016, 2023 and 2024, respectively. +Share Repurchase Agreements +In November 2023, the Company approved a share repurchase program (the “Share Repurchase Program”) to purchase up to $20 million of its Common Stock in open market and privately negotiated transactions. Subsequently, the Company entered into two agreements to repurchase Common Stock held by Tricor Pacific Capital Partners (Fund IV) US, LP (the “Fund”), pursuant to which the Company agreed to purchase three times the number of shares of the Company’s Common Stock acquired by the Company in the open market from time to time from non-Fund holders during the periods commencing on December 6, 2023 and ending March 31, 2024 and commencing April 1, 2024 and ending June 30, 2024, up to an aggregate of 650,000 shares of Common Stock in total (the “Repurchase Agreements”). The Repurchase Agreements provided that such open market purchases would be made pursuant to the Share Repurchase Program. Additionally, the Repurchase Agreements provided that the repurchase price for any shares acquired by the Company from the Fund would be 98% of the volume weighted average purchase price paid by the Company for all other shares acquired by the Company in the open market pursuant to the Share Repurchase Program during such fiscal quarter. The repurchases from the Fund took place on April 5, 2024 and July 3, 2024 and were part of the Share Repurchase Program authorization levels. The Repurchase Agreements were approved by the Audit Committee. Additional information can be found in our Current Reports on Form 8-K, dated December 6, 2023 and March 14, 2024, and in our Form 10-K for the year-ended December 31, 2024 filed with the SEC. +Policies and Procedures for Related Party Transactions +Our Board has adopted a written related party transaction policy setting forth the policies and procedures for the review and approval of related party transactions. The policy covers transactions involving us in which the aggregate amount involved in any calendar year will or may be expected to exceed $120,000 and in which a related person has or will have a direct or indirect interest (other than solely as a result of being a director or a less than 10% beneficial owner of another entity). For purposes of this policy, a related person is defined as an executive officer, director, nominee for director, or a greater than 5% beneficial owner of our Common Stock, in each case since the beginning of the most recently completed fiscal year, and any immediate family member of or person sharing a +39 +Table of Contents +household with any of these individuals. All related party transactions must be presented to the Audit Committee for review, consideration and approval. In approving or rejecting any such proposed transaction, the Audit Committee will consider, among other factors, the related party’s relationship to the Company and interest in the transaction, the material facts of the transaction, the benefits to the Company of the transaction, the availability of other sources of comparable products or services (if applicable), whether the transaction is on terms that are comparable to the terms generally available to an unrelated third party, whether the transaction has the potential to impair director independence and whether the transaction constitutes a conflict of interest. +STOCKHOLDER PROPOSALS FOR 2026 ANNUAL MEETING OF STOCKHOLDERS +Stockholders who intend to present proposals at the Company’s annual meeting of stockholders in 2026 pursuant to Rule 14a-8 under the Exchange Act must send notice of their proposal to us so that we receive it no later than December 9, 2025. Stockholders who intend to present proposals at the annual meeting of stockholders in 2026 other than pursuant to Rule 14a-8 must comply with the notice provisions in our By-Laws. The notice provisions in our By-Laws require that, for a proposal to be properly brought before the annual meeting of stockholders in 2026, proper notice of the proposal be received by us not less than 90 days nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting; provided, however that in the event next year’s annual meeting is more than 30 days before or after such anniversary date, notice must be delivered not less than the later of 90 days prior to next year’s annual meeting or the 10th day following the day the Company first publicly announces next year’s annual meeting date. Under these requirements, proposals brought under our By-Laws must be received no earlier than January 21, 2026 and no later than February 20, 2026. +In addition to satisfying the foregoing requirements under the By-Laws, to comply with the universal proxy rules, stockholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must provide notice to the Company that sets forth the information required by Rule 14a-19 under the Exchange Act no later than March 23, 2026. +Stockholder proposals and notices should be addressed to CPI Card Group Inc., 10368 West Centennial Road, Littleton, Colorado 80127; Attention: Darren Dragovich, Chief Legal and Compliance Officer and Corporate Secretary. +OTHER MATTERS +We know of no other matters to be submitted to the stockholders at the Annual Meeting. If any other matters properly come before the Annual Meeting, persons named in the proxy intend to vote the shares they represent in accordance with their own judgments. +Upon written request by any stockholder entitled to vote at the Annual Meeting, we will promptly furnish, without charge, a copy of the Annual Report on Form 10-K for the fiscal year ended December 31, 2024, which we filed with the SEC, including the financial statements therein. Requests should be addressed to CPI Card Group Inc., 10368 West Centennial Road, Littleton, Colorado 80127; Attention: Darren Dragovich, Chief Legal and Compliance Officer and Corporate Secretary. +YOUR VOTE IS IMPORTANT. WE URGE YOU TO VOTE TODAY OVER THE TELEPHONE, VIA THE INTERNET OR BY MAIL. +By Order of the Board of Directors, +Darren Dragovich +Chief Legal and Compliance Officer and Corporate Secretary +40 +Table of Contents +ANNEX A – RECONCILIATION OF NON-GAAP MEASURES +Year Ended December 31, +2024 +2023 +Reconciliation of net income to EBITDA and Adjusted EBITDA: +Net income +$ +19,521 +$ +23,985 +Interest, net (1) +34,087 +26,913 +Income tax expense +5,506 +10,477 +Depreciation and amortization +16,420 +15,931 +EBITDA +$ +75,534 +$ +77,306 +Adjustments to EBITDA: +Stock-based compensation expense +$ +8,545 +$ +7,507 +Restructuring and other charges (2) +4,810 +4,531 +Loss on debt extinguishment (3) +2,987 +243 +Sales tax benefit (4) +— +(70) +Foreign currency gain +— +(26) +Subtotal of adjustments to EBITDA +$ +16,342 +$ +12,185 +Adjusted EBITDA +$ +91,876 +$ +89,491 +Net income margin (% of Net sales) +4.1% +5.4% +Net income (% Change 2024 vs. 2023) +(18.6)% +Adjusted EBITDA margin (% of Net sales) +19.1% +20.1% +Adjusted EBITDA growth (% Change 2024 vs. 2023) +2.7% +(1) The balance for the year ended December 31, 2024 includes payment of an early redemption premium of $5.8 million related to the redemption of the 8.625% Senior Secured Notes due 2026. +(2) Represents executive retention and severance costs, as well as costs related to production facility modernization efforts. The balance for the year ended December 31, 2024 includes expenses paid by the Company on behalf of the significant stockholders that entered into an underwriting agreement for the sale of an aggregate of 1,380,000 shares of CPI common stock to the public. +(3) In July 2024, the Company redeemed the entire principal balance of $267.9 million of the 8.625% Senior Secured Notes due 2026 and also repaid in full and terminated a prior Credit Agreement with Wells Fargo Bank, N.A. entered into in March 2021, and expensed the remaining unamortized deferred financing costs. Additionally, the Company redeemed in 2023 a portion of the 8.625% Senior Secured Notes due 2026 and expensed the associated portion of the unamortized deferred financing costs. +(4) Represents estimated sales tax benefit relating to a contingent liability due to historical activity in certain states where it is probable that the Company will be subject to sales tax plus interest and penalties . +A-1 +Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date +TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: +KEEP THIS PORTION FOR YOUR RECORDS +DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. +V65602-P27600 +1a. Thomas Furey +1b. John Lowe +1c. Ravi Mallela +1d. Lisa Oleson +1e. Nicholas Peters +1f. H. Sanford Riley +1g. Marc Sheinbaum +1h. Valerie Soranno Keating +For Against Abstain +For Against Abstain +! ! ! +! ! ! +! ! ! +! ! ! +! ! ! +! ! ! +! ! ! +! ! ! +! ! ! +! ! ! +CPI CARD GROUP INC. +10368 WEST CENTENNIAL ROAD +LITTLETON, COLORADO 80127 +VOTE BY INTERNET +Before The Meeting - Go to www.proxyvote.com or scan the QR Barcode above +Use the Internet to transmit your voting instructions and for electronic delivery of information. +Vote by 11:59 p.m. Eastern Time on May 20, 2025. Have your proxy card in hand when +you access the web site and follow the instructions to obtain your records and to create an +electronic voting instruction form. +During The Meeting - Go to www.virtualshareholdermeeting.com/PMTS2025 +You may attend the meeting via the Internet and vote during the meeting. Have the information +that is printed in the box marked by the arrow available and follow the instructions. +VOTE BY PHONE - 1-800-690-6903 +Use any touch-tone telephone to transmit your voting instructions. Vote by 11:59 p.m. +Eastern Time on May 20, 2025. Have your proxy card in hand when you call and then follow +the instructions. +VOTE BY MAIL +Mark, sign and date your proxy card and return it in the postage-paid envelope we +have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, +Edgewood, NY 11717. +2. Ratification of KPMG LLP as independent registered public accounting firm for the year ending December 31, 2025. +3. Advisory vote to approve named executive officer compensation. +1. Election of Directors +Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator or other fiduciary, please give full title as such. Joint +owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. +CPI CARD GROUP INC. +The Board of Directors recommends you vote FOR +proposals 1, 2 and 3: +NOTE: The proxy holders will have discretion to vote on such other business as may properly come before the meeting or any adjournment thereof. +Nominees: +SCAN TO +VIEW MATERIALS & VOTEw +V65603-P27600 +Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: +The Notice and Proxy Statement and Form 10-K are available at www.proxyvote.com. +CPI CARD GROUP INC. +Annual Meeting of Stockholders +May 21, 2025 8:00 a.m. Mountain Time +This proxy is solicited by the Board of Directors +The stockholder(s) hereby appoint(s) each of Darren Dragovich and Jeffrey Hochstadt as proxy, each with the power to appoint +his substitute, and hereby authorize(s) him to represent and vote, as designated on the reverse side of this ballot, all of the shares +of common stock of CPI CARD GROUP INC. that the stockholder(s) is/are entitled to vote at the Annual Meeting of Stockholders +to be held virtually at 8:00 a.m. Mountain Time on May 21, 2025, at www.virtualshareholdermeeting.com/PMTS2025, and any +adjournment or postponement thereof. +This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this +proxy will be voted in accordance with the Board of Directors' recommendations. +Continued and to be signed on reverse side \ No newline at end of file diff --git a/raw/proxies/0001641614/0001558370-25-004598/proxy_rpt.txt b/raw/proxies/0001641614/0001558370-25-004598/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..ec2e08682140c8ba0529f9e31054b195469e3cc9 --- /dev/null +++ b/raw/proxies/0001641614/0001558370-25-004598/proxy_rpt.txt @@ -0,0 +1,13 @@ +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +The following is a description of transactions since January 1, 2023 to which we have been a party in which the amount involved exceeded or will exceed the lesser of $120,000 or one percent of the average of the Company’s total assets at year-end for the last two completed fiscal years and in which any of our directors, executive officers, beneficial holders of more than 5% of our capital stock or entities affiliated with them had or will have a direct or indirect material interest. +Registration Rights Agreement +In connection with our initial public offering, we entered into a registration rights agreement with the Tricor Funds (the “Registration Rights Agreement”). Under the Registration Rights Agreement, the Tricor Funds are entitled to request that we register shares of our Common Stock on a long-form or short-form registration statement on one or more occasions in the future, provided that we will not be obligated to register such shares within 90 days after the effective date of a registration statement previously filed pursuant to a request under the Registration Rights Agreement and otherwise for up to 60 days from the date of a request under the Registration Rights Agreement in certain circumstances. The Tricor Funds also are entitled to participate in certain registered offerings that we may conduct in the future, subject to certain restrictions. We will pay the Tricor Funds’ expenses in connection with the exercise of these rights. The registration rights described in this paragraph apply to (i) shares of our Common Stock held by the Tricor Funds as of the closing of our initial public offering, (ii) any of our capital stock (or that of our subsidiaries) issued or issuable with respect to the Common Stock described in clause (i) with respect to any dividend, distribution, recapitalization, reorganization or certain other corporate transactions, and (iii) any shares of our Common Stock owned or acquired following the closing of our initial public offering by the Tricor Funds (collectively, “Registrable Securities”). These registration rights are also for the benefit of any subsequent holder of Registrable Securities; provided that any particular securities will cease to be Registrable Securities when they have been sold in a registered public offering, sold in compliance with Rule 144 under the Securities Act or repurchased by us or our subsidiaries. In September 2021, we filed a registration statement on Form S-3 with respect to the shares of Common Stock held by the Tricor Funds in compliance with our obligations under the Registration Rights Agreement. +Director Nomination Agreement +In connection with our initial public offering, we entered into the Director Nomination Agreement with the Tricor Funds that provides the Tricor Funds the right to designate nominees for election to our Board for so long as the Tricor Funds collectively beneficially own 5% or more of the total number of shares of our Common Stock then outstanding. The number of nominees that the Tricor Funds are entitled to designate under the Director Nomination Agreement bears the same proportion to the total number of members of our Board as the number of shares of Common Stock beneficially owned by the Tricor Funds bears to the total number of shares of Common Stock outstanding, rounded up to the nearest whole number. In addition, the Tricor Funds shall be entitled to designate the replacement for any of its board designees whose board service terminates prior to the end of such designee’s term regardless of the Tricor Funds’ beneficial ownership at such time. In addition, for so long as the Tricor Funds collectively beneficially own 10% or more of the total number of shares of our Common Stock then outstanding, the Tricor Funds shall also have the right to have their designees participate on committees of our Board, subject to compliance with applicable law and stock exchange rules. The Director Nomination Agreement will terminate at such time as the Tricor Funds collectively own less than 5% of our outstanding Common Stock. The Tricor Funds designated Nicholas Peters, Sandy Riley and Lisa Oleson as nominees to the Board effective in 2016, 2023 and 2024, respectively. +Share Repurchase Agreements +In November 2023, the Company approved a share repurchase program (the “Share Repurchase Program”) to purchase up to $20 million of its Common Stock in open market and privately negotiated transactions. Subsequently, the Company entered into two agreements to repurchase Common Stock held by Tricor Pacific Capital Partners (Fund IV) US, LP (the “Fund”), pursuant to which the Company agreed to purchase three times the number of shares of the Company’s Common Stock acquired by the Company in the open market from time to time from non-Fund holders during the periods commencing on December 6, 2023 and ending March 31, 2024 and commencing April 1, 2024 and ending June 30, 2024, up to an aggregate of 650,000 shares of Common Stock in total (the “Repurchase Agreements”). The Repurchase Agreements provided that such open market purchases would be made pursuant to the Share Repurchase Program. Additionally, the Repurchase Agreements provided that the repurchase price for any shares acquired by the Company from the Fund would be 98% of the volume weighted average purchase price paid by the Company for all other shares acquired by the Company in the open market pursuant to the Share Repurchase Program during such fiscal quarter. The repurchases from the Fund took place on April 5, 2024 and July 3, 2024 and were part of the Share Repurchase Program authorization levels. The Repurchase Agreements were approved by the Audit Committee. Additional information can be found in our Current Reports on Form 8-K, dated December 6, 2023 and March 14, 2024, and in our Form 10-K for the year-ended December 31, 2024 filed with the SEC. +Policies and Procedures for Related Party Transactions +Our Board has adopted a written related party transaction policy setting forth the policies and procedures for the review and approval of related party transactions. The policy covers transactions involving us in which the aggregate amount involved in any calendar year will or may be expected to exceed $120,000 and in which a related person has or will have a direct or indirect interest (other than solely as a result of being a director or a less than 10% beneficial owner of another entity). For purposes of this policy, a related person is defined as an executive officer, director, nominee for director, or a greater than 5% beneficial owner of our Common Stock, in each case since the beginning of the most recently completed fiscal year, and any immediate family member of or person sharing a +39 +Table of Contents +household with any of these individuals. All related party transactions must be presented to the Audit Committee for review, consideration and approval. In approving or rejecting any such proposed transaction, the Audit Committee will consider, among other factors, the related party’s relationship to the Company and interest in the transaction, the material facts of the transaction, the benefits to the Company of the transaction, the availability of other sources of comparable products or services (if applicable), whether the transaction is on terms that are comparable to the terms generally available to an unrelated third party, whether the transaction has the potential to impair director independence and whether the transaction constitutes a conflict of interest. \ No newline at end of file diff --git a/raw/proxies/0001688476/0001193125-19-094683/proxy.txt b/raw/proxies/0001688476/0001193125-19-094683/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..ba663c9eebacdb09263a8ce55b0d5532ecc367b3 --- /dev/null +++ b/raw/proxies/0001688476/0001193125-19-094683/proxy.txt @@ -0,0 +1,3587 @@ +DEF 14A +1 +d689946ddef14a.htm +DEF 14A +DEF 14A +Table of Contents +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Proxy Statement Pursuant to Section 14(a) of the +Securities Exchange Act of 1934 +(Amendment No. ) +Filed by the +Registrant ☒ Filed by a Party other than +the Registrant ☐ +Check the appropriate box: +☐ +Preliminary Proxy Statement +☐ +Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +☒ +Definitive Proxy Statement +☐ +Definitive Additional Materials +☐ +Soliciting Material Pursuant to §240.14a-12 +Keane Group, Inc. +(Name of the Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +☒ +No fee required. +☐ +Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. +(1) +Title of each class of securities to which transaction applies: +(2) +Aggregate number of securities to which transaction applies: +(3) +Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 +(set forth the amount on which the filing fee is calculated and state how it was determined): +(4) +Proposed maximum aggregate value of transaction: +(5) +Total fee paid: +☐ +Fee paid previously with preliminary materials: +☐ +Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the +previous filing by registration statement number, or the Form or Schedule and the date of its filing. +(1) +Amount Previously Paid: +(2) +Form, Schedule or Registration Statement No.: +(3) +Filing Party: +(4) +Date Filed: +Table of Contents +Notice of 2019 Annual Meeting +Keane Group, Inc. Proxy Statement +ANNUAL +MEETING +Thursday, May 9, 2019 +10:00 A.M. Central Standard Time +The Woodlands Resort +2301 North Millbend Drive +The Woodlands, Texas 77380 +MEETING HOURS +Registration 9:30 A.M. +Meeting 10:00 A.M. +Whether or not you plan to participate in the Annual Meeting in person, please promptly vote your shares by using the Internet or telephone, or if the accompanying +proxy statement was mailed to you, by completing, signing, dating and returning your proxy card as soon as possible in the enclosed postage prepaid envelope. +Table of Contents +Table of Contents +Robert W. Drummond +Chief Executive Officer +1800 Post Oak Boulevard, Suite 450 +Houston, TX 77056 +April 1, 2019 +Dear Keane Group, Inc. Stockholder, +Your board of directors and management cordially invite you to attend our 2019 Annual Meeting of Stockholders, to be held at The Woodlands Resort, located at 2301 North +Millbend Drive, The Woodlands, Texas, 77380 on Thursday, May 9, 2019 at 10:00 A.M. Central Time. +Keane delivered another successful year, advancing our +position as a leading U.S. well completions services provider. During 2018, we generated more than $390 million of adjusted EBITDA, reflecting growth of more than 80 percent. Keane delivered its best safety results to date, fostered and +expanded our relationships with high-quality customers under our dedicated partnership model, invested in efficiency improvements and innovation across our completions offering, generated strong cash flow, extended our track-record of completing and +integrating strategic M&A, and maintained and improved our balance sheet position. At end of 2018, we owned a fleet of approximately 1.4 million hydraulic horsepower in leading shale basins, including the Permian, Marcellus/Utica, Bakken +and SCOOP/STACK. +We generated significant operating cash flow in 2018, enabling us to fund continued growth and return value to shareholders. We implemented a +stock repurchase program and, for the year, bought back approximately $105 million of stock, retiring approximately 8 percent of our outstanding shares. Additionally, our Board authorized three increases in the program’s capacity, +exiting 2018 with $100 million of availability under the stock repurchase program, evidencing our ongoing commitment to capital return for our investors. We’re committed to managing our capital allocation in a manner calculated to optimize +shareholder value. +The environment for U.S. completions services was constructive for much of 2018, however, industry-wide challenges emerged later in the year and +have extended into 2019. Despite a challenging market backdrop, Keane remains focused on what we do best—leading execution and helping our customers win, while proactively managing all aspects of our cost structure. Further supporting our +business are our dedicated agreements, which are unique and serve as the foundation for our mutual through-cycle success with our customer partners. +Regardless of +the shape and pace of recovery in 2019, we are positioned to generate attractive cash flow. We remain bullish on the long-term strength and growth of the U.S. well completions market. With this backdrop, Keane’s ongoing, through-cycle success +will continue to result from our winning formula, including generating leading returns, focusing on technology and efficiency, delivering shareholder value and pursuing and leading consolidation. We will continue to employ this strategy going +forward and beyond, with the help of all the talented Keane employees who dedicate every day to diligently helping our customers be successful. +Your vote is +important to us. Regardless of whether you plan to attend the Annual Meeting, we urge you to promptly vote your shares by using the Internet or telephone, or if the accompanying proxy statement was mailed to you, by completing, signing, dating and +returning your proxy card as soon as possible in the enclosed postage prepaid envelope. Thank you for your continued support and interest in Keane. +Sincerely, +Robert W. Drummond +Chief Executive Officer +2019 Proxy Statement | i +Table of Contents +Notice of 2019 Annual Meeting of Stockholders +May 9, 2019 +10:00 A.M. Central Standard Time +The Woodlands Resort +2301 North Millbend Drive +The Woodlands, Texas 77380 +Dear Stockholders, +You are cordially invited to attend the 2019 Annual Meeting of Stockholders (the “Annual Meeting”) of Keane Group, Inc. (the “Company”). At the +Annual Meeting, our stockholders will be asked to vote on the following proposals: +1. +To elect the twelve individuals named in this Proxy Statement as directors of the Company until the 2020 annual meeting +of stockholders of the Company (the “2020 Annual Meeting”) or, in each case, until his or her earlier death, retirement, resignation or removal from the position of director; +2. +To ratify the appointment of KPMG LLP (“KPMG”) as the Company’s independent registered public accounting +firm and auditor for the financial year ending December 31, 2019 and to authorize the board of directors of the Company, acting through the Audit and Risk Committee, to determine the auditors’ remuneration; +3. +To approve, in an advisory vote, the compensation of our named executive officers; and +4. +To approve an amendment to the Keane Group, Inc. Equity and Incentive Award Plan (the “Equity Plan”). +The board of directors recommends that you vote “FOR” Proposals 1, 2, 3 and 4. The foregoing items, including the votes required in +respect of each, are set forth and more fully described in the accompanying Proxy Statement. +Stockholders of record at the close of business on March 13, 2019 +are entitled to vote at the meeting or any adjournment. If you plan to attend the meeting, you will need to show proof of your stock ownership, such as a recent account statement, letter or proxy from your broker or other intermediary, along with +photo identification. Admission to the meeting will be on a first-come, first-served basis. Registration will begin at 9:30 A.M., and seating will begin at 9:45 A.M. +Your vote is important to us. Whether or not you plan to participate in the Annual Meeting in person, we urge you to promptly vote your shares by using the Internet or +telephone, or if the accompanying proxy statement was mailed to you, by completing, signing, dating and returning your proxy card as soon as possible in the enclosed postage prepaid envelope. +By order of the board of directors +Kevin M. McDonald +Executive Vice President, +General +Counsel & Corporate Secretary +Houston, Texas +April 1, 2019 +Important Notice Regarding the Availability of +Proxy Materials for the Annual Meeting of Stockholders to be held on May 9, 2019: This notice, the Proxy Statement, the proxy card and our Annual Report on Form 10-K for the fiscal year +ended December 31, 2018 (the “2018 10-K”) are available on our website at www.keanegrp.com. +ii | Keane Group, Inc. +Table of Contents +Table of Contents +General Information +1 +Proposal 1 – Election of Directors +5 +Director Information +5 +Director Nominee Biographies +5 +Board of Directors +9 +Board Committees +11 +Corporate Governance +12 +Director Compensation +13 +Proposal 2 – Ratify Appointment of Independent Auditors and Authorize Auditors’ Remuneration +15 +Audit fees +16 +Pre-Approval Policy +16 +Audit Committee Report +17 +Proposal 3 – Advisory Approval of Executive Compensation +18 +Executive Compensation +18 +Our Executive Officers +18 +Compensation Committee Report +19 +Compensation Discussion and Analysis +20 +Executive Compensation Tables +30 +CEO Pay Ratio +38 +Proposal 4 – Amendment to the Keane Group, Inc. Equity and Incentive Award Plan +40 +Other Information +46 +Share Ownership +46 +Related Person Transactions +47 +Section 16(a) Beneficial Ownership Reporting Compliance +49 +Proposals by Stockholders +49 +Householding +49 +2019 Proxy Statement | iii +Table of Contents +GENERAL INFORMATION +In this Proxy Statement, “Keane,” the “Company,” “we,” “us” and “our” refer to Keane Group, Inc., a Delaware +corporation. +This Proxy Statement and proxy card are being made available on behalf of our board of directors, or our “Board,” to all stockholders +beginning on or about April 1, 2019. +Meeting and Voting Information +Annual Meeting: May 9, 2019 at 10:00 A.M. Central Standard Time, The Woodlands Resort, 2301 North Millbend Drive, The Woodlands, Texas 77380. +Agenda +Proposal +Required Approval +Board +Recommendation +1. +Election of Directors. To +elect each of the twelve individuals named in this Proxy Statement until the 2020 Annual Meeting or, in each case, until his or her earlier death, retirement, resignation or removal from the position of director. +Majority of Votes +Cast +FOR each +nominee +2. +Ratify Appointment of Independent +Auditors. To ratify the appointment of KPMG as our independent auditor for the fiscal year ending December 31, 2019 and to authorize the Board of Directors, acting through the Audit and Risk Committee, to determine the auditors’ +remuneration. +Majority of Votes +Cast +FOR +3. +Approve Executive +Compensation. To approve, in an advisory vote, the compensation of our named executive officers. +Majority of Votes +Cast +FOR +4. +Equity Plan Amendment +Vote. To approve an amendment to the Equity Plan. +Majority of Votes +Cast +FOR +Who Can Vote +All registered stockholders +at the close of business on March 13, 2019 (the “Record Date”) have the right to notice of, and to vote, in person or by proxy, at the Annual Meeting. Each share of common stock is entitled to one vote. As of the Record Date, there +were 104,766,746 shares of Keane common stock outstanding and entitled to vote. +Meeting Attendance +If you plan to attend the Annual Meeting in person, you will need to show proof of your stock ownership, such as a recent account statement, letter or proxy from your +broker or other intermediary, along with photo identification. Admission to the meeting will be on a first-come, first-served basis. Registration will begin at 9:30 A.M., and seating will begin at 9:45 A.M. +How to Vote +To ensure your representation at the Annual Meeting, we +request that you grant your proxy to vote on each of the proposals in this Proxy Statement and any other matters that may properly come before the meeting to the persons named in the proxy card by voting in one of the ways described herein no later +than the Voting Deadline (defined below) whether or not you plan to attend. +2019 Proxy Statement | 1 +Table of Contents +Voting Deadline: 11:59 P.M. Eastern Standard Time on May 8, 2019. +Most of our stockholders hold their shares through a broker, bank, trustee or other nominee rather than directly in their own name. As summarized below, there are some +distinctions between shares held of record and those owned beneficially. +Stockholder of Record +If your shares are registered directly in your name with our transfer agent, American Stock Transfer & Trust Company LLC, you are considered, with respect to +those shares, the stockholder of record, and we are sending these proxy materials directly to you. As the stockholder of record, you have the right to grant your voting proxy directly to us or to a third party, or to vote in person at the Annual +Meeting. If you received a printed set of proxy materials by mail, we have enclosed a proxy card for you to use to vote your shares. +Beneficial Owner +If your shares are held in a brokerage account or by a bank, trustee or other nominee, you are considered the beneficial owner of shares held in street name, +and these proxy materials are being forwarded to you on behalf of your broker, bank, trustee or other nominee. As the beneficial owner, you have the right to direct your broker, bank, trustee or other nominee how to vote and you also are invited to +attend the Annual Meeting of Stockholders. If you received a printed set of proxy materials, your broker, bank, trustee or other nominee has enclosed a voting instruction form for you to use in directing the broker, bank, trustee or other nominee +how to vote your shares. +Since a beneficial owner is not the stockholder of record, you may not vote these shares in person at the Annual Meeting unless you obtain +a legal proxy from the broker, bank, trustee or other nominee that holds your shares giving you the right to vote the shares at the Annual Meeting. +See +“Quorum and Voting” as to the effect of broker non-votes. +Quorum and Voting +A majority of the outstanding shares of our common stock present in person or represented by proxy at the Annual Meeting will constitute a quorum for the transaction of +business. Abstentions and broker non-votes will be included in determining whether a quorum is present at the Annual Meeting. A “broker non-vote” occurs +when a nominee (such as a broker) holding shares for a beneficial owner abstains from voting on a particular proposal because the nominee does not have discretionary voting power for that proposal and has not received instructions from the +beneficial owner on how to vote those shares. +If you are a beneficial owner and your broker or other nominee holds your shares in its name (in “street +name”), the broker generally has discretion to vote your shares with respect to “routine” proposals. The only “routine” proposal in this Proxy Statement is Proposal 2. Proposals 1, 3 and 4 are +“non-routine” and your broker may not vote your shares. Accordingly, if you hold your shares in “street name,” your broker will not be able to vote your shares on these matters unless your +broker receives voting instructions from you. +Approval of each proposal will be decided by a simple majority of the votes cast “FOR” or +“AGAINST,” in person or by proxy, provided a quorum is present. Abstentions and broker “non-votes” will not affect the voting results. +The election of each director nominee will be considered and voted upon as a separate proposal. There is no cumulative voting in the election of directors. If the +proposal for the election of a director nominee does not receive the required majority of the votes cast, then the director will not be elected and the position on the Board that would have been filled by the director nominee will become vacant. The +Board has the ability to fill the vacancy upon the recommendation of its Nominating and Corporate Governance Committee, subject to re-election by the Company’s stockholders at the 2020 Annual +Meeting. Abstentions and broker “non-votes” will not affect the voting results. +2 | Keane Group, Inc. +Table of Contents +The chart below summarizes the voting requirements and effects of +broker non-votes and abstentions on the outcome of the vote for the proposals at the Annual Meeting. +Proposal +Required Approval +Broker +Discretionary +Voting Allowed +Broker +Non-Votes +Abstentions +1. Election of Directors +Majority of Votes Cast +No +No effect +No effect +2. Ratify Appointment of Independent +Auditors +Majority of Votes Cast +Yes +N/A +No effect +3. Approve Executive Compensation +Majority of Votes Cast +No +No effect +No effect +4. Equity Plan Amendment Vote +Majority of Votes Cast +No +No effect +No effect +Proxies +A copy of the Proxy Materials +and proxy card are being sent to each stockholder registered in our share register as of the Record Date. Stockholders not registered in our share register as of the Record Date will not be entitled to attend, vote or grant proxies to vote at the +Annual Meeting. Your vote and proxy are being solicited by our board of directors in favor of Kevin M. McDonald or, failing him, Gregory L. Powell (the “Proxy Holders”), for use at the Annual Meeting. +We request that you grant your proxy to vote on each of the proposals in this notice and any other matters that may properly come before the meeting to the Proxy +Holders by completing, signing, dating and returning the proxy card in accordance with the instructions thereon, for receipt by us no later than the Voting Deadline, whether or not you plan to attend. +If you are a registered holder and you properly complete and submit your proxy card in a timely manner, you will be legally designating the individual or individuals +named by you in the proxy card, or if you do not name your proxy or proxies, the Proxy Holders, to vote your shares in accordance with your instructions indicated on the card. If you are a registered stockholder and properly complete and submit your +proxy card in a timely manner without naming your proxy or proxies and you do not indicate how your shares are to be voted, then the Proxy Holders will vote as the board of directors recommends on each proposal and if other matters properly come +before the Annual General Meeting, the Proxy Holders will have your authority to vote your shares in their discretion on such matters. +Revoking Your +Proxy +If you are a registered stockholder, you may revoke your proxy by: +● +writing to the Corporate Secretary at 1800 Post Oak Boulevard, Suite 450, Houston, Texas 77056, such that the revocation is +received no later than the Voting Deadline; or +● +submitting a later dated proxy via mail, to the address specified in the proxy materials, for receipt by us no later than +the Voting Deadline. +If you have revoked your proxy as described above, you may attend and vote in person at the Annual Meeting. +If you are not a registered holder, but you hold your shares through a broker or other nominee, you must follow the instructions provided by your broker or other +nominee if you wish to revoke a previously granted proxy, since attending the Annual Meeting alone will not revoke any proxy. +Multiple Proxy Cards +If you receive multiple proxy cards, this indicates that your shares are held in more than one account, such as two brokerage accounts and are registered in different +names. You should complete and return each of the proxy cards to ensure that all of your shares are voted. +2019 Proxy Statement | 3 +Table of Contents +Cost of Proxy Solicitation +We have retained D.F. King & Co., Inc. to solicit proxies from our stockholders at an estimated fee of $8,500, plus expenses. Some of our directors, officers +and employees may solicit proxies personally, without any additional compensation, electronically, by telephone or by mail. Proxy materials also will be furnished without cost to brokers and other nominees to forward to the beneficial owners of +shares held in their names. All costs of proxy solicitation will be borne by the Company. +Questions +You may call or contact our proxy solicitor, D.F. King & Co., Inc., at (800) 628-8528 or keane@dfking.com, or contact +us care of the Corporate Secretary at 1800 Post Oak Boulevard, Suite 450, Houston, TX 77056 or via telephone at (713) 357-9490 if you have any questions or need directions to be able to attend the meeting and +vote in person. +Please +Vote. Your Vote is Important to Us. +4 | Keane Group, Inc. +Table of Contents +Proposal 1 Election of Directors +The Board of Directors recommends that you vote +“FOR” each nominee for director. +Upon the recommendation of the Nominating and Corporate Governance Committee, the board of directors of the Company has nominated each of the following twelve nominees +to be elected at the Annual Meeting: Lucas Batzer, Robert W. Drummond, Dale Dusterhoft, Marc G.R. Edwards, Christian A. Garcia, Lisa A. Gray, Gary M. Halverson, Shawn Keane, Elmer D. Reed, James C. Stewart, Lenard B. Tessler and Scott Wille. +Each director elected will serve until the 2020 Annual Meeting or, in each case, until his or her earlier death, retirement, resignation or removal from the position of +director. All of our nominees have consented to serve as directors and our board of directors has no reason to believe that any of the nominees will be unable to act as a director. +A director nominee will be re-elected if approved by a simple majority of the votes cast. If you properly submit a proxy card, +but do not indicate how you wish to vote, the Proxy Holders will vote for all of the listed director nominees. +Director +Information +Director Nominee Biographies +Age: 56 +James C. Stewart, Executive Chairman. +Mr. Stewart became the Executive Chairman of Keane in August 2018. He previously served as the Company’s Chief Executive Officer from March 2011 until +August 2018. Prior to joining Keane, from 2007 to 2009, he served as the President and Chief Executive Officer of a privately held international drilling company. From 2006 to 2007, Mr. Stewart served as Vice President of Integrated Drilling +Services for Weatherford International plc, based in London and Dubai, where he created and managed a global business unit that included a 50-rig international land contract drilling group and a global project +management team. Mr. Stewart began his career with Schlumberger Limited, where he held senior leadership positions across the globe over the span of 22 years. Mr. Stewart’s qualifications to serve as Executive Chairman include his +broad leadership experience with oilfield services, as well as his long tenure and successes in the oil and natural gas market. +Age: 58 +Marc G. R. Edwards, Lead Independent Director. +Mr. Edwards has served as a member of Keane’s board of directors since September 2016. Mr. Edwards has served as President and Chief Executive Officer and +as a member of the board of directors of Diamond Offshore Drilling, Inc., a deepwater water drilling contractor, since 2014. He previously spent 30 years at Halliburton Company, where he worked in various roles, most recently as Senior Vice +President of the Completion and Production Division. Mr. Edwards developed an extensive background in the global energy industry during his tenure at Halliburton, which enables him to provide important contributions and a new perspective to our +board of directors. His day-to-day leadership experience gives him invaluable insight regarding the operations of an oilfield services company. +2019 Proxy Statement | 5 +Table of Contents +Age: 35 +Lucas N. Batzer, Director. +Mr. Batzer has served as a member of Keane’s board of directors since March 2016. He currently serves as a Managing Director of Private Equity at Cerberus +Capital Management, L.P. (“Cerberus”), which he joined in August 2009. Prior to joining Cerberus, Mr. Batzer worked as an analyst at The Blackstone Group from 2007 to 2009. He has served on the boards of directors of ABC Group, +two automotive component suppliers, since June 2016. Mr. Batzer’s experience in the private equity industry, board experience and comprehensive knowledge of our business and operational strategy, positions him as an important resource +on our board of directors. +Age: 58 +Robert W. Drummond, Director and Chief Executive Officer. +Mr. Drummond joined Keane in August 2018 as Chief Executive Officer. He holds a B.S. in Petroleum Engineering from the University of Alabama, and during his career +has earned a wealth of experience in positions of leadership across the energy industry. Prior to joining Keane, Mr. Drummond served as the President & Chief Executive Officer of Key Energy Services, Inc. and served for more than 30 +years at Schlumberger Limited in various executive positions, including President of North America, Vice President & General Manager U.S. Land, Vice President of Global Sales, Vice President General Manager U.S. Gulf of Mexico, and +President North American Offshore and Alaska. Mr. Drummond has been a Supervisory Director at Frank’s International N.V. +since May 2017, and sits on the board of directors of the Petroleum Equipment Suppliers Association and the advisory board for the University of Alabama College of +Engineering. He has previously served on the board of directors of the National Ocean Industries Association, the Houston Offshore Energy Center, the Greater Houston Partnership, the API Upstream Committee, and as an Advisory Board Member of the +University of Houston Global Energy Management Institute. Mr. Drummond’s extensive experience in the oil and gas industry makes him uniquely qualified to serve on our board and lead our management team. +Age: 58 +Dale M. Dusterhoft, Director. +Mr. Dusterhoft has served as a member of Keane’s board of directors since March 2016 and currently serves as Chief Executive Officer and as a director of +Trican Well Service L.P. (“Trican”), which he joined at its inception in 1996. He has served on the board of directors of Trican since August 2009. Prior to becoming Chief Executive Officer of Trican, Mr. Dusterhoft was the +Company’s Senior Vice President of Technical Services. Before joining Trican, Mr. Dusterhoft worked for 12 years with a major Canadian pressure pumping company, where he held management positions in Operations, Sales and Engineering. +Mr. Dusterhoft serves on the board of the Alberta Children’s Hospital Foundation and the Calgary Petroleum Club. In addition, Mr. Dusterhoft is a past President of the Canadian Association of Drilling Engineers, the +Canadian +Section of the Society of Petroleum Engineers and a past member of the Industry Advisory Board of the Schulich School of Engineering at the University of Calgary. +Mr. Dusterhoft’s years of leadership and operational experience in large, successful enterprises in the oil industry is valuable to our board of directors’ understanding of the industry. +6 | Keane Group, Inc. +Table of Contents +Age: 55 +Christian A. Garcia, Director. +Mr. Garcia has served as a member of Keane’s board of directors since May 2017. Mr. Garcia currently serves as Executive Vice President and Chief +Financial Officer of Visteon Corporation, a role he has held since October 2016. Previously, Mr. Garcia served in various executive and leadership roles at Halliburton Company, including as Senior Vice President and Acting Chief Financial +Officer. Mr. Garcia has a Bachelor of Science in Business Economics from the University of the Philippines and a Master of Science in Management in Finance from Purdue University, and brings extensive financial and oilfield services experience +to the Company. +Age: 63 +Lisa A. Gray, Director. +Ms. Gray has served as a member of Keane’s board of directors since March 2011. Ms. Gray has served as Vice Chairman of Cerberus Operations and +Advisory Company, LLC (“COAC”) since May 2015, as General Counsel from 2004 to 2017 and currently serves as Senior Legal Officer. Prior to joining Cerberus, she served as Chief Operating Executive and General Counsel for WAM!NET Inc. +from 1996 to 2004. Prior to that, she was a partner at the law firm of Larkin, Hoffman, Daly & Lindgren, Ltd from 1990 to 1996. Prior to that, she was active in several non-profit corporations. +Ms. Gray has over 25 years of experience in the areas of mergers and acquisitions, corporate debt restructuring and corporate governance. Ms. Gray serves as Vice Chairman and General Counsel of COAC, an affiliate of our largest beneficial +owner, and has +extensive experience and familiarity with us. In addition, Ms. Gray has extensive legal and corporate governance skills, which broaden the scope of our board of directors’ +experience. +Age: 60 +Gary M. Halverson, Director. +Mr. Halverson has served as a member of Keane’s board of directors since September 2016. In 2016, Mr. Halverson became a Senior Advisor at First +Reserve, a private equity firm that focuses on energy investments, and in 2018, Mr. Halverson became Non-Executive Chairman of Tri-Point Oil and Gas, an oil and gas +production and process equipment and services company. In January 2019, Mr. Halverson become a Non-Executive Director of Energy Alloys, a distributor of high strength alloys and corrosion resistant alloy +materials. Mr. Halverson was formerly a Partner at 360 Development Partners, a commercial real estate firm from 2016-2018 and Group President of Drilling and Production Systems and Senior Vice President at Cameron International Corporation from +2014 to 2016 prior to its sale to Schlumberger in 2016. He has over 38 years of +industry experience with Cameron, where he worked in various roles across the U.S., Latin America and Asia, including President of Surface Systems between 2005 and 2014, +Vice President and General Manager for Western Hemisphere between 2002 and 2006, General Manager of Latin America between 2001 and 2002 and Director of Sales and Marketing for Asia/Pacific/Middle East between 1993 and 2001. Mr. Halverson +formerly served as Chairman of the Board of Directors of the Petroleum Equipment Suppliers Association, as a director on the board of the General Committee of Special Programs of the American Petroleum Institute, as a director on the board of the +Well Control Institute and was the U.S. delegate to the World Petroleum Congress. Mr. Halverson’s extensive involvement in the oilfield service industry brings a valuable perspective to our Board. +2019 Proxy Statement | 7 +Table of Contents +Age: 52 +Shawn Keane, Director. +Mr. Keane has served as a member of Keane’s board of directors since March 2011. Mr. Keane served as President of Keane from 2008 to 2011 and helped +transition the company into the hydraulic fracturing industry in the Marcellus/Utica Shale. Previously, he served as Keane’s Vice President between 2000 and 2008, and in various management positions from 1983 to 2000, when he began his +employment with Keane & Sons Drilling, Inc., a predecessor entity of Keane. Mr. Keane’s knowledge of our company’s operational history and experience in the oilfield services industry is valuable to our board of +directors’ understanding of our business and financial performance. +Age: 69 +Elmer D. Reed, Director. +Mr. Reed has served as a member of Keane’s board of directors since April 2011. Prior to joining our board of directors, Mr. Reed served as Vice +President, Executive Sales for Select Energy Services from 2010 to 2015 and in various management positions for BJ Services Company from 2003 to 2010, Newpark Drilling Fluids from 2001 to 2003 and Halliburton Energy Services from 1971 to 1999. +Mr. Reed has over 45 years of oilfield service and operational experience. He served as a member of the board of directors of Circle Star Energy, an E&P company, in 2012. Mr. Reed has been active in the Independent Petroleum +Association of America and is a lifetime member of the Society of Petroleum Engineers. He is also a member of Houston Livestock Show and Rodeo and Houston Farm and Ranch, and regularly assists with infrastructure development +projects in South America. Mr. Reed strengthens our board of directors with decades of experience in the oilfield service industry. +Age: 66 +Lenard B. Tessler, Director. +Mr. Tessler has served as a member of Keane’s board of directors since October 2012. Mr. Tessler is currently Vice Chairman and Senior Managing Director +of Cerberus, where he is a member of the Cerberus Capital Management Investment Committee. Prior to joining Cerberus in 2001, Mr. Tessler served as Managing Partner of TGV Partners from 1990 to 2001, a private equity firm which he founded. +Earlier in his career, he was a founding partner of Levine, Tessler, Leichtman & Co., and a founder, Director and Executive Vice President of Walker Energy Partners. Mr. Tessler is currently Lead Director of Albertsons Companies, +and a director of Avon Products, Inc. He is also a Trustee of the New York-Presbyterian Hospital where he is a member of the Investment Committee and the Budget and Finance Committee. Mr. Tessler’s leadership roles at our +largest +beneficial owner, his board service, his extensive experience in financing and private equity investments and his in-depth knowledge +of our company and its acquisition strategy, provide critical skills for our board of directors to oversee our strategic planning and operations. +Age: 37 +Scott Wille, Director. +Mr. Wille has served as a member of Keane’s board of directors since March 2011. Mr. Wille is currently +Co-Head of Private Equity and a Senior Managing Director at Cerberus, which he joined in 2006. Prior to joining Cerberus, Mr. Wille worked in the leveraged finance group at Deutsche Bank Securities Inc. +from 2004 to 2006. Mr. Wille has served as a director of and Albertsons Companies since 2015. Mr. Wille previously served as a director of Remington Outdoor Company, Inc., a designer, manufacturer and marketer of firearms, ammunition and +related products, from 2014 to 2018 and of Tower International, Inc., a manufacturer of engineered structural metal components and assemblies, from 2010 to 2012. Mr. Wille’s experience in the financial and private equity industries, +together with his in-depth knowledge of our company and its +acquisition strategy, are valuable to our board of directors’ understanding of our business and financial performance. +8 | Keane Group, Inc. +Table of Contents +Board of Directors +Family Relationships +None of our officers or directors has any +family relationship with any director or other officer. “Family relationship” for this purpose means any relationship by blood, marriage or adoption, not more remote than first cousin. +Board Composition +Our business and affairs are currently managed +under the board of directors of Keane. Our board of directors has twelve members. Members of the board of directors will be elected at our annual meeting of stockholders to serve for a term of one year or until their successors have been elected and +qualified, subject to prior death, resignation, retirement or removal from office. +Board Meetings +During 2018, the board of directors met seven times, the Audit and Risk Committee met seven times, the Compensation Committee met five times and the Nominating and +Corporate Governance Committee met three times; all of the directors participated, in person or by telephone, in at least 75% of all board of directors and applicable committee meetings. It is our policy that directors are expected to attend each +annual meeting of stockholders. +Director Independence +Our +board of directors has affirmatively determined that Marc G. R. Edwards, Christian A. Garcia, Gary M. Halverson and Elmer D. Reed are independent directors under the applicable rules of the New York Stock Exchange (the +“NYSE”) and as such term is defined in Rule 10A-3(b)(1) under the Securities Exchange Act of 1934 (the “Exchange Act”). +Director Nominations +In obtaining the names of possible director +nominees, our Nominating and Corporate Governance Committee conducts its own inquiries and considers suggestions from other directors, management, stockholders and professional director search firms. The Nominating and Corporate Governance +Committee’s process for evaluating nominees identified in unsolicited recommendations from stockholders is the same as its process for unsolicited recommendations from other sources and is further described in Section 4.01 of the +Company’s Bylaws. However, stockholders desiring to nominate a director candidate at the annual meeting must comply with certain procedures, for more information, please read “Proposals by Stockholders.” +The Nominating and Corporate Governance Committee believes that nominees should possess the highest personal and professional ethics, reputation, integrity and values +and be committed to representing the long-term interests of our stockholders. Directors should have a record of accomplishment in their chosen professional field and demonstrate sound business judgment. Directors must be willing and able to devote +sufficient time to carrying out their duties and responsibilities effectively, including attendance at and participation in board and committee meetings, and should be committed to serve on the board for an extended period of time. The Nominating +and Corporate Governance Committee will consider independence, diversity of viewpoints, backgrounds and experience, including a consideration of gender, ethnicity, race, country of citizenship and age in determining whether a candidate will be an +appropriate fit with, and an asset to, the board of directors. When considering existing directors, the Nominating and Corporate Governance Committee evaluates their history of attendance at board and committee meetings as well as contributions and +effectiveness at such meetings. +2019 Proxy Statement | 9 +Table of Contents +In addition, pursuant to the terms of our bylaws and the Amended and Restated Stockholders’ Agreement, dated as +of July 3, 2017, by and among the company, Keane Investor Holdings, LLC (“Keane Investor”) and the other parties thereto, Keane Investor (or its permitted assignee or designee) has certain rights to designate members to our board of +directors, subject to certain director qualifications, including the rights to: +● +for so long as Keane Investor (or its permitted assignee or designee) has beneficial ownership of more than 35% of the then +outstanding shares of our common stock, appoint a number of individuals equal to one director fewer than 50% of our board of directors (rounded up to the next whole number); +● +for so long as Keane Investor (or its permitted assignee or designee) has beneficial ownership of less than 35% but more +than 20% of our then-outstanding common stock, appoint the greater of (i) three individuals or (ii) 25% of our board of directors (rounded up to the next whole number); +● +for so long as Keane Investor (or its permitted assignee or designee) has beneficial ownership of less than 20% but more +than 15% of our then-outstanding common stock, appoint the greater of (i) two individuals or (ii) 15% of our board of directors (rounded up to the next whole number); and +● +for so long as Keane Investor (or its permitted assignee or designee) has beneficial ownership of less than 15% but more +than 10% of our then-outstanding common stock, appoint one individual to our board of directors. +For additional information, see “Other +Information—Related Party Transactions” in this proxy statement. +Cessation of Controlled Company Status +As of December 6, 2018, Keane Investor no longer holds a majority of our outstanding common stock. As a result, we must comply with all general NYSE corporate +governance standards as we no longer are a “controlled company” within the meaning of the NYSE rules. Our Audit and Risk Committee is fully independent and, as of March 1, 2019, we currently have a majority of independent directors on +each of our Compensation Committee and Nominating and Corporate Governance Committee and expect that we will have fully independent committees as required by the NYSE rules and a majority independent board by the +one-year anniversary of our status change. +Board Leadership Structure +Our board of directors does not have a formal policy on whether the roles of Chief Executive Officer and Chairman of the board of directors should be separate. Until +August 2018, James C. Stewart served as both Chairman and Chief Executive Officer of the Company. However, in August 2018, Robert W. Drummond was appointed Chief Executive Officer, which enabled Mr. Stewart to focus on leadership of the Board and +the strategic direction of the Company and actively engage with stockholders. The Board believes that this leadership structure, along with the role of the Lead Independent Director, provides the best direction for the management team and is ideal +for the Company and its stockholders. +Our corporate governance guidelines provide for the election of one of our directors to serve as Lead +Director. Marc G. R. Edwards currently serves as our Lead Independent Director, and is responsible for serving as a liaison between the Chairman and the non-management directors, approving +meeting agendas and schedules for our board of directors and presiding at executive sessions of the non-management directors and any other board meetings at which the Chairman is not present, among other +responsibilities. Our non-management directors meet regularly in executive sessions at which only non-management directors are present, and the Lead Director chairs +those sessions. +Our board of directors expects to periodically review its leadership structure to ensure that it continues to meet the Company’s needs. +Role of Board in Risk Oversight +While the full board of directors +has the ultimate oversight responsibility for the risk management process, its committees oversee risk in certain specified areas. In particular, our Audit and Risk Committee oversees management of enterprise risks as well as financial risks. Our +Compensation Committee is responsible for overseeing the management of risks relating to our executive compensation plans and arrangements and the incentives created by the compensation awards it administers. Our Compliance Committee is responsible +for overseeing the management of compliance and regulatory +10 | Keane Group, Inc. +Table of Contents +risks facing our company and risks associated with business conduct and ethics. Our Nominating and Corporate Governance Committee oversees risks associated with corporate governance. Pursuant to +our board of directors’ instruction, management regularly reports on applicable risks to the relevant committee or the full board of directors, as appropriate, with additional review or reporting on risks conducted as needed or as requested by +our board of directors and its committees. +Communication with the Board and its Non-Management Members +Persons may communicate with our board of directors by submitting such communication in writing to the attention of Kevin McDonald, Executive Vice President, +in care of the Board of Directors, Keane Group, Inc., 1800 Post Oak Boulevard, Suite 450, Houston, Texas 77056. Persons may communicate with the non-management members of the board of directors by submitting +such communication in writing to Kevin McDonald, Executive Vice President, in care of the non-management members of the Board of Directors, Keane Group, Inc., 1800 Post Oak Boulevard, Suite 450, Houston, Texas +77056. +Board Committees +Our board of +directors has assigned certain of its responsibilities to permanent committees consisting of board members appointed by it. The charter for each committee of our board of directors is available on our website at www.keanegrp.com, by clicking on +“Investors,” then “Corporate Governance,” then “Governance Documents,” then the name of the applicable committee charter. +Name +Audit & Risk +Committee +Compensation +Committee +Compliance +Committee +Nominating & +Corporate +Governance +Committee +Christian A. Garcia* +🌑 +🌑 +Dale M. Dusterhoft +🌑 +🌑 +Elmer D. Reed* +🌑 +🌑 +Gary M. Halverson* +🌑 +🌑 +🌑 +Lisa A. Gray +🌑 +🌑 +Lucas N. Batzer +🌑 +Marc G. R. Edwards* +🌑 +🌑 +🌑 +Shawn Keane +🌑 +🌑 = Chairperson +🌑 = Member +* +Indicates that such director is independent under the applicable rules of the NYSE and as such term is defined in Rule 10A-3(b)(1) under the Exchange Act +Audit and Risk Committee +Our Audit and Risk Committee consists of Marc G. R. Edwards, Christian A. Garcia and Gary M. Halverson, with Christian Garcia serving as chair of the +committee. The committee assists the board in its oversight responsibilities relating to the integrity of our financial statements, our compliance with legal and regulatory requirements (to the extent not otherwise handled by our Compliance +Committee), our independent auditor’s qualifications and independence, and the establishment and performance of our internal audit function and the performance of the independent auditor. Each of Messrs. Garcia, Edwards and Halverson qualify as +independent directors under the corporate governance standards of the rules of the NYSE and the independence requirements of Rule 10A-3 of the Exchange Act. Our board of directors has +2019 Proxy Statement | 11 +Table of Contents +determined that Mr. Garcia qualifies as an “audit committee financial expert” as such term is currently defined in Item 407(d)(5) of +Regulation S-K. Each member of the Audit and Risk Committee is able to read and understand fundamental financial statements, including our balance sheet, statement of operations and cash flows statements. +Our board of directors has adopted a written charter under which the Audit and Risk Committee operates. A copy of the Audit and Risk Committee charter, which +satisfies the applicable standards of the Securities and Exchange Commission (the “SEC”) and the NYSE, is available on our website. +Compensation Committee +Our Compensation Committee consists of +Dale M. Dusterhoft, Marc G. R. Edwards, Gary Halverson, and Elmer Reed, with Gary Halverson serving as chair of the committee. The Compensation Committee is authorized to review our compensation and benefits plans to ensure they meet our +corporate objectives, approve the compensation structure of our executive officers and evaluate our executive officers’ performance and advise on salary, bonus and other incentive and equity compensation. As of December 6, 2018, Keane +Investor no longer holds a majority of our outstanding common stock. As a result, we must comply with all general NYSE corporate governance standards as we no longer are a “controlled company” within the meaning of the NYSE rules. As of +March 1, 2019, we currently have a majority of independent directors on our Compensation Committee and expect that the Compensation Committee will be fully independent by the one-year anniversary of our status change. A copy of the Compensation +Committee charter is available on our website. +Compliance Committee +Our Compliance Committee consists of Lucas N. Batzer, Lisa A. Gray, Shawn Keane and Elmer D. Reed, with Lisa A. Gray serving as chair of the committee. The purpose of +the Compliance Committee is to assist the board in implementing and overseeing our compliance programs, policies and procedures that are designed to respond to the various compliance and regulatory risks facing our company, and monitor our +performance with respect to such programs, policies and procedures. A copy of the charter for the Compliance Committee is available on our website. +Nominating and Corporate Governance Committee +Our Nominating and +Corporate Governance Committee consists of Dale M. Dusterhoft, Marc G. R. Edwards, Christian A. Garcia, Lisa A. Gray and Gary M. Halverson, with Marc G. R. Edwards serving as chair of the committee. The Nominating and Corporate Governance Committee +is primarily concerned with identifying individuals qualified to become members of our board of directors, selecting the director nominees for the next annual meeting of the stockholders, selecting director candidates to fill any vacancies on our +board of directors and developing our corporate governance guidelines and principles. As of December 6, 2018, Keane Investor no longer holds a majority of our outstanding common stock. As a result, we must comply with all general NYSE corporate +governance standards as we no longer are a “controlled company” within the meaning of the NYSE rules. As of March 1, 2019, we currently have a majority of independent directors on our Nominating and Corporate Governance Committee and +expect that the Nominating and Corporate Governance Committee will be fully independent by the one-year anniversary of our status change. A copy of the Nominating and Corporate Governance Committee charter is +available on our website. +Corporate Governance +Code of Business Conduct and Ethics +We have adopted a written +code of business conduct and ethics (“Code of Business Conduct and Ethics”) that applies to all of our employees, officers and directors, including those officers responsible for financial reporting. In addition, our senior financial +officers, including our principal executive officer and principal financial officer, are subject to a written code of ethics for senior financial officers. We have made a current copy of both codes available on our website, www.keanegrp.com and both +are available in print and without charge to any person who sends a written request to our Corporate Secretary at 1800 Post Oak Boulevard, Suite 450, Houston, TX 77056. In addition, we intend to post on our website all disclosures that are required +by law or the NYSE listing standards concerning any amendments to, or waivers from, any provision of either code. +12 | Keane Group, Inc. +Table of Contents +Stockholder Recommendation of Director Nominees +We do not have formal procedures in place by which stockholders may recommend nominees to our board of directors, other than those described in Section 4.01 of the +Company’s Bylaws. +Corporate Governance Guidelines +We +have adopted corporate governance guidelines in accordance with the corporate governance rules of the NYSE, as applicable, that serve as a flexible framework within which our board of directors and its committees operate. These guidelines cover +a number of areas, including the size and composition of the board, board membership criteria and director qualifications, director responsibilities, board agenda, roles of each of the Executive Chairman and Chief Executive Officer, executive +sessions, standing board committees, board member access to management and independent advisors, director communications with third parties, director compensation, director orientation and continuing education, evaluation of senior management and +management succession planning. A copy of our corporate governance guidelines are posted on our website. +Director Compensation +All non-employee members of our board of directors earned or received compensation for service on our board of directors +during fiscal year 2018, as set forth in the table below and as described in the accompanying narrative. +(in dollars) +Name +Fees +Earned or +Paid in +Cash +$ +Stock +Awards +$ (1) +Option +Awards +$ +Non-Equity +Incentive +Plan +Compensation +$ +Change in +Pension Value +and +non- +qualified +Deferred +Compensation +Earnings +$ +All Other +Compensation +$ +Total +Gary M. Halverson +87,500 +152,101 +— +— +— +— +239,601 +Elmer D. Reed +87,500 +152,101 +— +— +— +— +239,601 +Marc G. R. Edwards +112,500 +152,101 +— +— +— +— +264,601 +Christian A. Garcia +105,000 +152,101 +— +— +— +— +257,601 +Lucas N. Batzer +87,500 +— +— +— +— +— +87,500 +Dale M. Dusterhoft +87,500 +— +— +— +— +— +87,500 +James E. Giesler +— +(2) +— +— +— +— +— +— +Lisa A. Gray +87,500 +— +— +— +— +— +87,500 +Shawn Keane +87,500 +— +— +— +— +— +87,500 +Lenard B. Tessler +87,500 +— +— +— +— +— +87,500 +Scott Wille +87,500 +— +— +— +— +— +87,500 +(1) +The number of shares of restricted stock granted to Messrs. Edwards, Garcia, Halverson and Reed was calculated pursuant to +the Director Compensation Plan (as defined below) based on the volume weighted average price of the common stock for the 5-day trading days prior to the grant date. The amount above, however, reflects the +grant date fair value calculated in accordance with ASC 718 (as defined below) of the restricted stock granted in fiscal year 2018. See Note (12) Equity-Based Compensation in our consolidated and combined financial statements, included +in our 2018 10-K, for a discussion of the assumptions used in the valuation of such awards. +(2) +Mr. Geisler resigned from our Board of Directors effective February 26, 2018 and waived his fee for the portion +of the year in which he served. +2019 Proxy Statement | 13 +Table of Contents +As of December 31, 2018, the aggregate number of shares of restricted stock held by each non-employee director was: +Name +Number of Shares +of Restricted Stock (1) +Marc G. R. Edwards +62,816 +Christian A. Garcia +29,681 +Gary M. Halverson +41,983 +Elmer D. Reed +35,042 +(1) +Reflects to the total amount of vested and unvested restricted stock awards held by each director. For each of Messrs. +Edwards, Garcia, Halverson and Reed this includes 10,734 restricted shares granted on August 6, 2018 that will vest in accordance with the Director Compensation Plan (as defined below). For Mr. Edwards this also includes 17,362 shares +granted on October 1, 2016 that will vest on October 1, 2019, for Mr. Garcia this also includes 12,632 shares granted on May 15, 2017 that will vest in equal portions on each of May 15, 2019 and 2020, and for Messrs. +Halverson and Reed this also includes 10,417 shares granted on October 1, 2016 that will vest on October 1, 2019. +Director +Services Agreements +We have entered into Director Services Agreements with each of Marc G. R. Edwards, Christian A. Garcia, Gary M. Halverson and Elmer D. +Reed. The Director Services Agreements provide that each such director serve on an at-will basis until the earlier of disability, death, resignation or removal. +Pursuant to the Director Services Agreement with Mr. Edwards, he serves as our lead independent director and is entitled to receive an annual fee of $100,000 per +year. The Director Services Agreements with Messrs. Halverson, Reed and Garcia provide that each director is entitled to receive an annual fee of $75,000 per year. Mr. Garcia receives an additional annual fee of $20,000 for his service as chair +of the Audit and Risk Committee. +Director Compensation Plan +Commencing in fiscal year 2017, each of the other non-employee members of our board or directors became eligible to receive a +director service fee in the amount of $75,000 per year, which amount was increased to $100,000, effective in the third quarter of 2018, pursuant to the Keane Group, Inc. Non-Employee Director Compensation Plan +(the “Director Compensation Plan”). Further, under the Director Compensation Plan, our Lead Director is entitled to an additional annual cash fee of $10,000 and each independent director serving as the chair of a Committee is entitled to +an additional annual cash fee of $15,000. +Additionally, the Director Compensation Plan provides that each independent director is eligible to receive an annual +equity award. On August 6, 2018, we granted each of Messrs. Edwards, Garcia, Halverson and Reed 10,734 shares of restricted stock under our Equity and Incentive Award Plan. Subject to their continued service with the Company on each +vesting date, the Restricted Stock vests in its entirety on earliest of: (i) the one-year anniversary of the grant date, (ii) the date of the first meeting of the Company’s stockholder at which +directors will be elected in the calendar year following the calendar year in which the grant date occurs, (iii) the date the participant incurs a termination without Cause, (iv) the date of the participant’s death, and (v) the +date of a Change in Control, as such capitalized terms used herein are defined in the Equity Plan. All unvested restricted stock will be forfeited upon a termination of service for any reason other than without Cause or due to the participant’s +death. +Director Stock Ownership Guidelines +We have stock +ownership requirements for all independent, non-employee Directors to further align their interests with our stockholders. As a result, all such Directors are required to own Company common stock, including +unvested restricted stock awards, in an amount equal to or in excess of five (5) times such Directors Annual Director Fee pursuant to the Director Compensation Plan, which shall be determined annually as of the last day of the prior fiscal +year. Each such Director has five years to meet the requirements, measured from the date he or she is first elected to the Board. The Company believes that each independent, non-employee Director is on track +meet such ownership requirements within the requisite five-year period. +14 | Keane Group, Inc. +Table of Contents +Proposal 2 Ratify Appointment of +Independent Auditors and Authorize Auditors’ Remuneration +The Board of Directors recommends that you vote “FOR” this proposal. +The Audit and Risk Committee of the Board of Directors (the “Audit Committee”) of the Company has selected KPMG LLP, an independent registered +public accounting firm, to audit the Company’s financial statements and the effectiveness of internal control over financial reporting for 2019. While the Audit Committee is responsible for appointing, compensating and overseeing the +independent auditors’ work, we are requesting the ratification of the appointment of KPMG as our auditor for 2019 as a matter of good corporate governance. KPMG served as our independent auditor for 2017 and 2018 and the Audit Committee took a +number of factors into consideration in determining whether to reappoint KPMG as the Company’s independent auditor, including KPMG’s historical and recent performance, capabilities and expertise, tenure as the Company’s independent +auditor and familiarity with the Company’s business. We believe the appointment of KPMG is in the best interest of the Company and its stockholders. +Representatives of KPMG are to be present at the Annual Meeting with an opportunity to make a statement if they would like to do so and to be available to respond to +appropriate questions from our stockholders. +The ratification of the appointment of KPMG as our independent auditor for 2019 requires the affirmative vote of a +simple majority of the votes cast. If you properly submit a proxy card but do not indicate how you wish to vote, the Proxy Holders will vote for the proposal. +2019 Proxy Statement | 15 +Table of Contents +Audit Fees +The following table summarizes fees paid or accrued to our independent registered public accounting firm, KPMG, in connection with various services for the years ended +December 31, 2018 and 2017 respectively: +(Thousands of Dollars) +2018 +2017 +Audit Fees (1) +$ +2,792 +$ +1,377 +Audit–Related Fees (2) +220 +983 +Tax Fees (3) +119 +690 +All Other Fees (4) +— +264 +Total +$ +3,131 +$ +3,314 +(1) +Consists of fees for professional services rendered for the audits of our consolidated and combined financial statements +for fiscal years 2018 and 2017 included in our 2018 Form 10-K +(2) +Consists of fees billed for assurance and related services, primarily related to our initial public offering and our +acquisitions of Refinery Specialties, Incorporated in 2018 and RockPile Energy Services, LLC in 2017. +(3) +Consists of fees for professional services rendered by our principal accountant for tax compliance, tax advice, and tax +planning. +(4) +Consists of fees for products and services provided by our principal accountant, other than the services reported under +“audit fees,” “audit-related fees,” and “tax fees.” +Pre-Approval Policy +Our Audit Committee has adopted a policy (the “Pre-Approval +Policy”), that sets forth the procedures and conditions pursuant to which audit and non-audit services proposed to be performed by the independent auditor may be +pre-approved. The Pre-Approval Policy generally provides that we will not engage KPMG to render any audit, audit-related, tax or permissible non-audit service unless the service is either (i) explicitly approved by the Audit Committee (“specific pre-approval”) or (ii) entered into pursuant to +the pre-approval policies and procedures described in the Pre-Approval Policy (“General Pre-Approval”). Unless a type +of service to be provided by KPMG has received General Pre-Approval under the Pre-Approval Policy, it requires specific +pre-approval by the Audit Committee. Any proposed services exceeding pre-approved cost levels or budgeted amounts will also require specific pre-approval. On an annual basis, the Audit Committee reviews and generally pre-approves the services (and related fee levels or budgeted amounts) that may be provided by KPMG +without first obtaining specific pre-approval from our Audit Committee. Our Audit Committee may revise the list of general pre-approved services from time to time, based +on subsequent determinations. +During 2018 and 2017, no services were provided to us by KPMG other than in accordance with the +pre-approval policies and procedures described above. +16 | Keane Group, Inc. +Table of Contents +Audit Committee Report +The Audit Committee represents and assists the board of directors in providing independent, objective oversight of the Company’s accounting functions and internal +control over financial reporting. The Audit Committee acts under a charter which is available on the Company’s website at www.keanegrp.com under “Investors,” then “Corporate Governance,” then “Governance +Documents,” then “Audit and Risk Committee Charter.” The board of directors has determined that each member of the Audit Committee satisfies the requirements of the NYSE as to independence, financial literacy and expertise. +Management is responsible for the Company’s financial statements and the reporting process, including the system of disclosure controls and procedures and internal +control over financial reporting. +KPMG, the Company’s independent registered public accounting firm, is responsible for expressing an opinion on the +conformity of our financial statements with accounting principles generally accepted in the United States and on the effectiveness of the Company’s internal control over financial reporting. +In discharging its oversight role, the Audit Committee has: +● +reviewed and discussed with management the audited financial statements of Keane Group, Inc. as of and for the year ended +December 31, 2018; and +● +discussed with KPMG the matters required to be discussed by Auditing Standard No. 1301, Communications +with Audit Committees, as amended, as adopted by the Public Company Accounting Oversight Board. In addition, the Audit Committee has received the written disclosures and the letter from KPMG required by applicable requirements of the Public +Company Accounting Oversight Board regarding the independent auditor’s communications with the Audit Committee concerning independence, and has discussed with KPMG their independence. +The Audit Committee and the Board of Directors believe that, due to KPMG’s knowledge of the Company and the industry in which the Company operates, it is in the +best interest of the Company and its stockholders to continue the retention of KPMG to serve as the Company’s independent registered public accounting firm. Although the Audit Committee has the sole authority to appoint the independent +registered public accounting firm, the Audit Committee recommends that the board of directors ask the stockholders to ratify the appointment of the independent registered public accounting firm at the 2019 Annual General Meeting. +Based on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited financial statements referred to +above be included in the Annual Report on Form 10-K of Keane Group, Inc. for the year ended December 31, 2018. +The Audit and Risk Committee +Christian A. Garcia, Chair +Marc G.R. Edwards +Gary M. Halverson +2019 Proxy Statement | 17 +Table of Contents +Proposal 3 Advisory Approval of +Executive Compensation +The Board of Directors recommends that you vote “FOR” this proposal. +We are asking our stockholders to approve, on an annual advisory basis, the compensation of our named executive officers (“NEOs”) as disclosed pursuant to +Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion. While this vote is not binding on our Company, the results of the vote on this +proposal will be carefully considered by the board of directors and the Compensation Committee when making future executive compensation decisions. +The text of the +resolution in respect of Proposal 3 is as follows: +“ RESOLVED , that the compensation paid to the Company’s named executive officers, as disclosed +in this Proxy Statement pursuant to the rules of the SEC, including the Compensation Discussion and Analysis, compensation tables and any related narrative discussion is hereby APPROVED.” +We urge you to carefully review the Compensation Discussion and Analysis, or “CD&A,” section in this Proxy Statement, as well as the 2018 Summary +Compensation Table, other compensation tables and related narrative discussion, for more information regarding the compensation of our NEOs. We believe the information in this Proxy Statement demonstrates the successful design and implementation of +a compensation program that aligns stockholders’ and management’s interests. +A simple majority of the votes cast is required to approve this proposal. If +you properly give a proxy but do not indicate how you wish to vote, the persons named on the proxy card, or if you do not name your proxy or proxies, the Proxy Holders, will vote for the proposal. +Executive Compensation +Our Executive Officers +Set forth below is certain information regarding our executive officers, other than the biography of our Executive Chairman and Chief +Executive Officer, which appears under “Proposal 1—Election of Directors—Director Information.” +Name +Age † +Position +James C. Stewart +56 +Executive Chairman +Robert W. Drummond +58 +Chief Executive Officer +Gregory L. Powell +44 +President and Chief Financial Officer +M. Paul DeBonis Jr. +59 +Advisor to the Chairman +Kevin M. McDonald +51 +Executive Vice President, General Counsel & Secretary +† +As of December 31, 2018 +18 | Keane Group, Inc. +Table of Contents +Gregory L. Powell , President and Chief Financial Officer . Mr. Powell has served as Chief Financial +Officer of Keane since March 2011. He previously held the title of Vice President between March 2011 and July 2015, when he became President. Prior to joining Keane, Mr. Powell served as an Operations Executive for Cerberus from +2006 to March 2011. During his tenure at Cerberus, he was responsible for evaluating new investments and partnering with portfolio companies to maximize value creation. Mr. Powell previously served on the board of directors and audit +committee of Tower International, Inc., a manufacturer of engineered structural metal components and assemblies. Prior to joining Cerberus, Mr. Powell spent ten years with General Electric, starting with global leadership training and growing +into various leadership roles in Finance and Mergers and Acquisitions, with his last role being Chief Financial Officer for GE Aviation—Military Systems. +M. Paul DeBonis Jr. , Advisor to the Chairman . Mr. DeBonis became Advisor to the Chairman in September 2018. He previously served as the Company’s +Chief Operating Officer from March 2011 to September 2018. Prior to joining Keane, he served as President of Big Country Energy Services USA LP from May 2010 to May 2011 and as President of Pure Energy Services (USA), Inc. from +June 2005 to May 2010. He previously served as Oilfield Services Marketing Manager at Schlumberger Limited. Mr. DeBonis started his oil and gas career with Dowell Services in the fracturing and cementing departments. He has worked in +several basins throughout the United States and Canada. Mr. DeBonis was a Schlumberger Field Engineer Graduate in 1985. Mr. DeBonis has authored and published two papers related to hydraulic fracturing for the Society of Petroleum +Engineers. +Kevin M. McDonald, Executive Vice President, General Counsel & Secretary . Mr. McDonald has served as +Keane’s Executive Vice President, General Counsel & Secretary since November 2016. Prior to joining Keane, he served in leadership roles at Marathon Oil Corporation from 2012 to 2016, including as Deputy General Counsel of +Corporate Legal Services and Government Relations, Deputy General Counsel of Governance, Compliance & Corporate Services and Assistant General Counsel. He practiced as a partner at the international law firm Fulbright & Jaworski +LLP (now Norton Rose Fulbright LLP) in 2012. Mr. McDonald previously held various counsel positions, including President & Chief Executive Officer and acting General Counsel at Arms of Hope, a +non-profit organization, from 2008 to 2012, Senior Vice President, General Counsel & Chief Compliance Officer at Cooper Industries between from 2006 to 2008, Associate General Counsel at Anadarko +Petroleum from 2006 to 2008 and Managing Counsel (Litigation) at Valero Energy from 2002 to 2004. Mr. McDonald began his career as an associate at Norton Rose Fulbright LLP between 1992 and 2001. +Compensation Committee Report +The +Compensation Committee has reviewed and discussed this CD&A with the Company’s management. Based on the review and discussions, the Compensation Committee has recommended to our board of directors that this CD&A be included in this +Proxy Statement. +The Compensation Committee +Gary Halverson, Chair +Dale M. Dusterhoft +Marc G.R. Edwards +Elmer Reed +2019 Proxy Statement | 19 +Table of Contents +Compensation Discussion & Analysis +This Compensation Discussion & Analysis (“CD&A”) explains our executive compensation program for our named executive officers (“NEOs”) +listed below. This CD&A also describes the Compensation Committee’s process for making pay decisions, as well as its rationale for specific decisions related to the fiscal year ended December 31, 2018 (“fiscal year 2018”). +NEO +Title +James C. Stewart +Executive +Chairman (1) +Robert W. Drummond +Chief Executive Officer (“CEO”) (2) +Gregory L. Powell +President and Chief Financial Officer (“CFO”) +M. Paul DeBonis Jr. +Advisor to the +Chairman (3) +Kevin M. McDonald +Executive Vice President, General Counsel & Secretary +(1) +Mr. Stewart served as the Company’s Chief Executive Officer until August 6, 2018, after which he assumed the role of +Executive Chairman. +(2) +Mr. Drummond joined the Company as our Chief Executive Officer effective August 6, 2018. +(3) +Mr. DeBonis served as the Company’s Chief Operating Officer until September 4, 2018, after which he assumed the role +of Advisor to the Chairman. +Executive Summary +Compensation Practices & Policies +The following +practices and policies in our program promote sound compensation governance and are in the best interests of our stockholders and executives: +What We Do +What We Don’t Do +☑    Emphasis on variable compensation tied to +annual financial performance or long-term stock price performance +☑    Performance-based long-term incentives +dependent upon our performance relative to peers make up 30% of NEO LTI starting in 2019 +☑    Clawback policy that applies to cash and equity compensation +☑    Annual compensation risk assessment +☑    Independent compensation consultant +reporting directly to our Compensation Committee +☑    Stock Ownership Guidelines for each of our +independent, non-employee Directors +☒    Prohibition on option repricing without +shareholder approval +☒    Prohibition on +hedging of Company securities by our executive officers +☒    Prohibition on pledging of Company +securities by our executive officers and directors +☒    No single-trigger +change-in-control severance payments +☒    No excise tax +gross-ups +☒    Limited use of perquisites and supplemental +benefits +2018 Compensation Actions At-A-Glance +The Compensation Committee took the following compensation-related actions for fiscal year 2018: +● +Base Salaries : no changes were made to NEO base salaries during 2018. +● +Annual Incentives: The Compensation Committee adopted an annual bonus program for fiscal year 2018, based on the +achievement of specific Company performance objectives related to EBITDA and EBITDA per fleet. Based on our level of achievement, our Compensation Committee has determined that each of our currently employed NEOs is eligible to receive an amount +under the 2018 Second Amended and Restated Executive Bonus Program equal to 100% of the NEO’s target bonus. +● +Long-Term Incentives: A significant amount of the compensation delivered to the NEOs is in the form of equity. The +NEOs were awarded long-term incentives consisting of a mixture of restricted stock unit awards and stock options. The Compensation Committee believes the use of these equity vehicles creates strong alignment with the Company’s stockholders by +linking NEO compensation closely to stock performance. +20 | Keane Group, Inc. +Table of Contents +What Guides Our Program +Our Compensation Philosophy +Our compensation philosophy is driven +by the following guiding principles: +● +A significant portion of an executive’s total compensation should be variable +(“at-risk”) and linked to the achievement of specific short- and long-term performance objectives. +● +Executives should be compensated through pay elements (base salaries, short and long-term incentives) designed to enhance +stockholder value by incentivizing our executives to work towards goals that drive a suitable rate of return on stockholder investment. +● +Target compensation should be competitive with that being offered to individuals in comparable roles at other companies +with which we compete for talent to ensure we employ the best people to lead the successful implementation of our business plans and to attract the caliber of executive we need to support the long-term growth of our enterprise. +● +Decisions about compensation should be guided by best-practice governance standards and rigorous processes that encourage +prudent decision-making. +The Principal Elements of Pay +Our compensation philosophy is supported by the following principal elements of pay: +Pay Element +How it’s Paid +Purpose +Base Salary +Cash +(Fixed) +Provide a competitive base salary rate relative to similar positions in the market and enable the Company to attract and retain critical executive talent +Annual Incentives +Cash +(Variable) +Reward executives for delivering on annual financial and strategic objectives that contribute to stockholder value creation +Long-Term Incentives +Equity +(Variable) +Provide incentives for executives to execute on longer-term financial and strategic goals that drive stockholder value creation and support the Company’s retention strategy +2019 Proxy Statement | 21 +Table of Contents +Pay Mix +A +majority of NEO total direct compensation for fiscal year 2018 was variable, at approximately 89% for our CEO, and approximately 82% for our other NEOs, including our Executive Chairman. The following charts illustrate the total direct compensation +mix for our CEO and our other NEOs for fiscal year 2018: +CEO +Other NEOs (average) +89% variable +82% Variable +Our Decision-Making Process +The Role of the Compensation Committee +The Compensation +Committee oversees the executive compensation program for our NEOs. The Compensation Committee is comprised of members of our board of directors. The Compensation Committee works very closely with its independent consultant and management to examine +the effectiveness of the Company’s executive compensation program throughout the year. The Compensation Committee evaluates, determines and approves the compensation of our CEO and other executive officers, and to recommend the compensation of +our outside directors. The Compensation Committee administers the Company’s equity plans and has overall responsibility for monitoring of the Company’s executive compensation policies, plans and programs. The Compensation Committee may +delegate its authority relating to non-employee director compensation to a subcommittee consisting of one or more members, when appropriate. Details of the Compensation Committee’s authority and +responsibilities are specified in the committee’s charter which is available on the Company’s website at www.keanegrp.com. +The Role of +Management +Compensation Committee meetings are regularly attended by our Executive Chairman, CEO, CFO and General Counsel. Each of the management attendees +provides the Compensation Committee with his specific expertise and the business and financial context necessary to understand and properly target financial and performance metrics. None of the members of management are present during the +Compensation Committee’s deliberations regarding their own compensation adjustments, but the Company’s independent compensation consultant may participate in those discussions. +The Role of the Independent Consultant +The Compensation +Committee has the full authority to engage compensation consultants and other advisors to assist it in the performance of its responsibilities. Prior to retaining, or seeking advice from, a compensation consultant or other advisor, the Compensation +Committee must consider the independence of such compensation consultant or other advisor. The independent compensation consultant retained by the Compensation Committee reports directly to the Compensation Committee. +22 | Keane Group, Inc. +Table of Contents +In 2017, the Compensation Committee engaged Pearl Meyer & Partners, LLC (“Pearl Meyer”) as its +independent compensation consultant. The Compensation Committee assessed the independence of Pearl Meyer and determined that its work for the Compensation Committee has not raised any conflict of interest. In 2018, Pearl Meyer provided services to +the Compensation Committee, including (i) a refreshed compensation review for the executive officers of the Company, including the NEOs; (ii) an assessment of the Company’s compensation components compared to survey and peer group +data; and (iii) recommendations for total compensation opportunity guidelines (i.e., base salary and annual and long-term incentive targets). Pearl Meyer does not provide any services to the Company or any of its subsidiaries other than the +services provided to the Compensation Committee. +The Role of the Compensation Peer Group +The Compensation Committee strives to set a competitive level of total compensation for each NEO as compared with executives in similar positions at peer companies. For +purposes of setting fiscal year 2018 compensation levels, in conjunction with the recommendation of Pearl Meyer, the Compensation Committee took into account publicly-available data from industry compensation surveys and proxy statements from the +group of peer companies listed below. +Compensation Peer Group +Basic Energy Services, Inc. +Nabors Industries, Ltd. +Precision Drilling Corporation +C&J Energy Services +Noble Corporation, Plc. +ProPetro Holding Corp. +Ensco plc +Oil States International, Inc. +RPC, Inc. +Forum Energy Technologies +Patterson-UTI Energy, +Inc. +Superior Energy Services, Inc. +Helmerich & Payne, Inc. +Pioneer Energy Services Corp. +Transocean Ltd. +The peer companies were selected as potential competitors for executive talent based upon similarity in terms of business focus, +financial size, and peer group overlap. We fell at the 65 th percentile for revenue size relative to this group during 2018, and at the 43 rd +percentile for market cap as of December 31, 2018. +This market data is not the sole determinant in setting executive pay levels. The Compensation Committee +also considers Company and individual performance, the nature of an individual’s role within the Company, and his or her experience and contributions to his or her current role when making its compensation-related decisions. +The 2018 Executive Compensation Program in Detail +Base +Salary +We provide each of our NEOs with a competitive fixed annual base salary. The base salaries for our NEOs are set forth in employment agreements between +the Company and each NEO (the “Executive Employment Agreements”) and are reviewed annually by the Compensation Committee by taking into account the results achieved by each executive, his future potential contributions, scope of +responsibilities and experience, and competitive pay practices. Mr. McDonald’s base salary was reviewed in late 2017 by the Compensation Committee and increased to $400,000. See the section titled “—Executive Employment +Agreements” below for a further discussion regarding the Executive Employment Agreements. +2018 Annual Incentives +Each Executive Employment Agreement provides that the NEO is eligible for an annual bonus. The Executive Employment Agreements with Messrs. Stewart, Drummond, Powell +and DeBonis each provide for a target annual bonus at 100% of base salary for the applicable year, and the Executive Employment Agreement. In addition, Mr. McDonald’s target annual bonus was reviewed in late 2017 by the Compensation +Committee and increased to 100%. +2019 Proxy Statement | 23 +Table of Contents +The Compensation Committee adopted the Annual Executive Bonus Program for Fiscal Year 2018 (the “2018 Executive +Bonus Program”) under the terms of the Company’s Executive Incentive Bonus Plan. The 2018 Executive Bonus Program provides that each NEO is eligible to receive an annual bonus for fiscal year 2018 calculated by multiplying the NEO’s +target bonus by the achieved “Funding Level” based on the Company’s achievement of the following metrics: +Performance Objectives +2018 Performance Metrics +Weighting +Corporate Financial Results +Adjusted EBITDA +50 +% +Corporate Financial Results +Adjusted EBITDA per Fleet Rank +50 +% +The funding amount for the Adjusted EBITDA metric was to be determined as set forth in the table below, which amounts were adjusted in +January 2019 following a review of the Company’s annual performance, industry conditions for the year, and in consultation with its compensation consultant Pearl Meyer whereby the Compensation Committee determined that the threshold level of +EBITDA was initially set at a more challenging level relative to our plan than is typical in our peer group: +Achievement Level +Performance Hurdle +Funding Level +Threshold +$332M +50% +Target +$475M +100% +Stretch Level 1 +$525M +150% +Stretch Level 2 +$575M +200% +Stretch Level 3 +>$575M +Linear incremental bonus increase up to the maximum bonus award provided under the Company’s Executive Incentive Bonus Plan. +The Funding Level would increase on a linear basis between the Threshold, Target and Stretch performance hurdles. +The funding amount for the Annual Adjusted EBITDA Per Fleet Rank metric was to be determined as set forth in the table below: +Annual Adjusted EBITDA +Per Fleet Rank +1 +2 +3 +4 +5 +6 +7 +8 +9 +Funding Level +200 +% +175 +% +150 +% +125 +% +100 +% +75 +% +50 +% +0 +% +0 +% +The Compensation Committee chose to utilize Adjusted EBITDA and Annual Adjusted EBITDA Per Fleet Rank as they are EBTIDA performance is +an important measure of the health of our business and a direct measure of our management team’s ability to generate cash and to operate the business profitably. The addition of the EBITDA per Fleet Rank metric adds a relative metric that not +only holds us accountable for strong performance against peers but also addresses industry cyclicality. +The 2018 Executive Bonus Program was amended during 2018 to +include Mr. Drummond. Pursuant to the Executive Employment Agreement with Mr. Drummond, Mr. Drummond’s bonus is calculated in part based on a contractual amount set forth in the Executive Employment Agreement, which amount is +reflective of the bonus that he forfeited with his prior employer, and the remainder based on the Company’s performance under the 2018 Executive Bonus Program. +24 | Keane Group, Inc. +Table of Contents +For fiscal year 2018, we achieved a level of Adjusted EBITDA of $385 million and an Annual Adjusted EBITDA Per +Fleet Rank of 4. Based on such achievements, our Compensation Committee approved a Funding Level equal to 100% of the target bonus for each participant in the 2018 Executive Bonus Program resulting in the NEO bonus payments set forth in the table +below: +2018 Annual Bonus +James C. Stewart +$1,000,000 +Robert W. Drummond (1) +$ 885,000 +Gregory L. Powell +$ 800,000 +M. Paul DeBonis Jr. +$ 350,000 +Kevin M. McDonald +$ 400,000 +(1) +Pursuant to the Executive Employment Agreement with Mr. Drummond, Mr. Drummond’s bonus is calculated in +part based on a contractual amount set forth in the Executive Employment Agreement, which amount is reflective of the bonus that he forfeited with his prior employer, and the remainder based on the Company’s performance under the 2018 Executive +Bonus Program. +2018 Long-Term Incentives +Long-term equity awards provide a strong link between executive pay and stockholder interests. Our NEOs are eligible to receive long-term equity awards under the +stockholder approved Equity and Incentive Award Plan. For fiscal year 2018, equity awards were granted as a combination of stock options and restricted stock unit awards. +● +Stock options are performance-based awards that provide meaningful incentives for management to execute on the +longer-term financial and strategic growth goals that drive stockholder value creation. This is because they only provide value to the NEOs if the price of the Company’s stock appreciates over time. Specifically, the value of the award depends +on the price of our common stock in the future as compared to the exercise price of the options granted. There can be no assurance that any value will actually be realized under the stock options. +● +Restricted stock unit awards are intended to provide the NEOs with the economic equivalent of a direct ownership +interest in the Company during the vesting period and provide the Company with significant retention security regardless of post-grant stock price volatility. +For fiscal year 2018, the Compensation Committee reviewed market data provided by Pearl Meyer in determining the targeted award levels for each of our NEOs. In order to +help ensure that 2018 award values were properly aligned with the median of our peers, the Compensation Committee approved 2018 awards in two installments. The first installment was approved with a grant date of March 1, 2018 and the second +installment was approved with a grant date of August 6, 2018 following a review of peer group data from 2018 proxy filings provided by Pearl Meyer. +The table +below shows the number of long-term incentive awards granted for fiscal year 2018 for each of the NEOs: +NEO +Stock Option +Awards +Restricted Stock +Unit Awards +Total Grant Date +Value ($) (1) +James C. Stewart +209,809 +181,776 +$ +4,336,851 +Robert W. Drummond +— +407,900 +$ +5,779,943 +Gregory L. Powell +159,780 +138,520 +$ +3,304,337 +M. Paul DeBonis Jr. +56,457 +49,712 +$ +1,165,615 +Kevin M. McDonald +60,685 +52,950 +$ +1,253,908 +(1) +Reflects the grant date fair value calculated in accordance with ASC 718. +The stock options and restricted stock units granted to Messrs. Stewart, Powell, DeBonis and McDonald in fiscal year 2018 will vest in +one-third increments on March 1 of each of 2019, 2020 and 2021 and August 6 of each of 2019, 2020 and 2021, respectively, contingent upon the continued employment of the NEO through each vesting +date. In the event that such NEO’s employment is terminated without Cause, or for Good Reason, within twelve months following a change in control, +2019 Proxy Statement | 25 +Table of Contents +the NEO shall become fully vested in such stock options and restricted stock units, however, if the termination occurs other than following a change in control, such NEO shall become vested in a +portion of such stock options or restricted stock units that would have become vested in the twelve months following such termination. The restricted stock units granted to Mr. Drummond include 161,013 restricted stock units that vested 33% on +December 31, 2018 and will vest 33% on each December 31 of 2019 and 2020, 85,874 restricted stock units that will vest on August 6 of each of 2019 and 2020, and 161,013 units that vest in their entirety on December 31, 2020, +respectively, contingent upon the continued employment of Mr. Drummond through each vesting date. The restricted stock units will become fully vested in the event that Mr. Drummond is terminated without Cause or for Good Reason or +following a change in control. +LTI Changes for 2019 +Beginning in 2019, the Compensation Committee has decided to replace stock options with performance restricted stock unit (“PSU”) awards. For 2019, PSU awards +will comprise 30% of total long-term incentive value for our NEOs, with payout dependent upon total shareholder return (“TSR”) relative to the following group of companies (“Performance Peers”) whom we consider to be direct +competitors for business and investor dollars: +Performance Peer +Group +Basic Energy Services +Liberty Oilfield Services +Quintana Energy Services +C&J Energy Services +Patterson-UTI Energy +RPC, Inc. +FTS International +ProPetro Holding Corp. +Superior Energy Services, Inc. +The performance peer group differs from our compensation benchmarking peer group because not all of our competitors for talent in the +oilfield services industry are direct competitors for business, and not all of the companies in the performance peer group are large enough or provide enough publicly-available compensation data for the purposes of benchmarking compensation +opportunities. +NEOs may earn between 0% and 200% of the number of performance units granted based upon the following performance payout schedule: +Performance Level +Relative TSR Rank +Percent of Target Units +Earned +Maximum +100 th Percentile +200% +Target +60 th Percentile +100% +Threshold +30 th Percentile +25% +Below Threshold +Below 30 th Percentile +0% +For the FY 2019 awards, 50% of the PSUs granted to our NEOs may be earned and vested based upon performance over the first two years of +the performance period (January 1, 2019 – December 31, 2020), and 50% may be earned and vested based upon performance over a full three-year performance period (January 1, 2019 – December 31, 2021). It is the Committee’s intention to +have PSU awards in future years earned based upon performance over a full three-year period. +Executive Employment Agreements +Each currently employed NEO has entered into Executive Employment Agreements with the Company. The Executive Employment Agreements each provide for an initial term that +will expire on March 16, 2019 with respect to Messrs. Stewart, Powell and DeBonis, November 7, 2019 with respect to Mr. McDonald, and May 11, 2021 with respect to Mr. Drummond. The Executive Employment Agreement will +automatically renew for additional one-year periods unless either party provides written notice at least 90 days prior to the end of the then term and, as a result, Messrs. Stewart, Powell and DeBonis’ +Executive Employment Agreements have each been renewed for an additional year. +26 | Keane Group, Inc. +Table of Contents +Pursuant to the Executive Employment Agreements with the currently employed NEOs, in the event of a termination of the +NEO’s employment by us without Cause or due to our non-renewal of the applicable Executive Employment Agreement, or by Messrs. Stewart, Drummond, Powell or McDonald for Good Reason, subject to the +execution of a release, the NEO will be entitled to the following severance benefits: +● +severance payments equal to: +¡ +for Mr. Stewart, two times the sum of his annual base salary, and the lesser of the average of the annual bonuses he +received during the two years prior to termination and his target bonus; +¡ +for Mr. Drummond, two times the sum of his annual base salary and his target bonus for the year in which the +termination occurs; +¡ +for Messrs. Powell and DeBonis, two times his annual base salary; and +¡ +for Mr. McDonald, his annual base salary; +● +for Messrs. Stewart and Powell, a pro rata annual bonus for the year of termination; +● +for Messrs. Drummond and Powell (upon any termination other than death or voluntarily without Good Reason), and +Mr. McDonald, reimbursement of the cost of continuation coverage of group health coverage for up to twelve months following termination. +In +addition, pursuant to the Executive Employment Agreements with Messrs. Stewart and Powell, in the event of his termination of employment due to death or disability, subject to the execution of a release, he or his estate, as applicable, will be +entitled to: +● +severance payments equal to three months of base salary paid for the three-month period following the date of termination; +and +● +a pro rata annual bonus for the year of termination. +For purposes of the Executive Employment Agreements, “Cause” generally means: +● +indictment, conviction or plea of no contest to a felony or any crime involving dishonesty or theft; +● +conduct in connection with employment duties or responsibilities that is fraudulent or unlawful; +● +conduct in connection with employment duties or responsibilities that is grossly negligent and which has a materially +adverse effect on us or our business; +● +willful misconduct or contravention of specific lawful directions related to a material duty or responsibility directed to +be undertaken from our board of directors; +● +material breach of obligations under the applicable Executive Employment Agreement; +● +any acts of dishonesty resulting or intending to result in personal gain or enrichment at our expense; +● +failure to comply with a material policy; or +● +for Mr. Powell, his failure to maintain primary residence in the Houston, Texas metropolitan area. +For purposes of the Executive Employment Agreements, as applicable, “Good Reason” generally means: +● +our failure to cure a material breach of our obligations under the applicable Executive Employment Agreement (in the case +of Mr. Drummond, a material breach by the Company of its obligations under his Executive Employment Agreement); +2019 Proxy Statement | 27 +Table of Contents +● +a material diminution of duties, position or title (in the case of Mr. Stewart, other than any diminution in +connection with the appointment of a new Chairman or Chief Executive Officer if following such appointment Mr. Stewart remains as either Chairman or Chief Executive Officer); +● +a material reduction in base salary (in the case of Mr. Drummond, other than as a result of a less-than-ten-percent (10%) reduction that is part of a reduction applicable to other senior executives and in the case of Mr. McDonald, his target bonus); or +● +a change in office location that increases the NEO’s commute from his principal residence by more than 50 miles. +Other Practices, Policies and Guidelines +Claw Back Policy +On February 23, 2017, our board of +directors adopted the Company’s Compensation Recovery Policy (the “Claw Back Policy”). Pursuant to the Claw Back Policy, in the event of a revision and reissuance of a financial statement previously issued by the Company (an +“Accounting Restatement”), our board of directors in its discretion may determine that the officer will be required to repay all or a portion of the amount of incentive-based compensation received by an officer of the Company that exceeds +the amount of such compensation that such officer otherwise would been received determined based upon the Accounting Restatement. In the event that any such Accounting Restatement is required due to material +non-compliance by the Company with any financial reporting requirement under the securities laws, then an executive officer of the Company will be obligated to repay the amount of incentive-based compensation +received by such executive officer that exceeds the amount of such compensation that the executive officer otherwise would have received determined based upon the Accounting Restatement. The Claw Back Policy applies to any incentive-based +compensation received by an officer of the Company during the three completed fiscal years of the Company immediately preceding the date of the applicable Accounting Restatement. For purposes of the Claw Back Policy, “incentive-based +compensation” means any compensation (whether in cash, common stock, or otherwise) to an officer of the Company, that is granted, earned, vested or for which the amount is determined, wholly or in part, on the attainment by the Company of +(i) any measure that is determined and presented in accordance with the accounting principles used in preparing the Company’s financial statements, (ii) any measure that is derived wholly or in part from such measures, or +(iii) the Company’s stock price and total stockholder return. +Anti-Hedging Policy +We prohibit the NEOs and other executives from engaging in transactions designed to insulate them from changes in the Company’s stock price. Therefore, the Company +has an anti-hedging policy that prohibits our NEOs from entering into transactions that include (without limitation) equity swaps or short sales of our securities, margin accounts or pledges of our securities, and hedges or monetization transactions +involving our securities that are designed to hedge or offset any decrease in the market value of the Company’s securities. In addition, the purchase or sale of puts, calls, options, or other derivative securities based on the Company’s +securities is prohibited under this policy, and borrowing against any account in which our securities are held is prohibited. +Benefits & +Perquisites +Our NEOs also generally participate in other benefit plans on the same terms as all of our other employees. These plans include employee benefit +plans maintained by the Company, including the 401(k) program, the medical insurance and reimbursement program, the group term life insurance program, and the group disability program. +Our NEOs also receive an automobile allowance in the amount of $21,000 per year for Messrs. Stewart, Powell and DeBonis, and $20,400 per year for Messrs. Drummond and +McDonald. +2018 Risk Assessment +Each year, the Company +performs a detailed risk analysis of each of its compensation programs. If warranted, the Compensation Committee will recommend changes to address concerns or considerations raised in the risk review +28 | Keane Group, Inc. +Table of Contents +process. Changes may be recommended for the program design or its oversight and administration in order to mitigate unreasonable risk, if any is determined to exist. The Compensation Committee +has concluded that the Company’s compensation arrangements do not encourage any employees to take unnecessary and excessive risks. We do not believe that any risks arising from our compensation policies and practices are reasonably likely to +have a material adverse effect on the Company. +Compensation Committee Interlocks and Insider Participation +None of the members of the Compensation Committee is or has at any time during the past year been an officer or employee of ours. None of our executive officers serves +as a member of the Compensation Committee or board of directors of any other entity that has an executive officer serving as a member of our board of directors or Compensation Committee. +Impact of Tax and Accounting +We regularly consider the various +tax and accounting implications of our compensation plans. When determining the amount of long-term incentives and equity grants to executives and employees, the compensation costs associated with the grants are reviewed, as required by the +Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“ASC 718”). +Section 162(m) of the Internal Revenue Code (the +“Code”) generally prohibits any publicly held corporation from taking a federal income tax deduction for compensation paid in excess of $1 million in any taxable year to the CEO, the CFO and the next three highest compensated officers +for such year and any employee who was covered under Section 162(m) of the Code in a prior year. The Compensation Committee believes that it is important for it to retain maximum flexibility in designing compensation programs that are in the +best interest of the Company and its stockholders. Therefore, the Compensation Committee, while considering tax deductibility as a factor in determining compensation, may not limit compensation to $1 million in any taxable year if it believes +that the compensation is commensurate with the performance of the covered employee. +2019 Proxy Statement | 29 +Table of Contents +Executive Compensation Tables +Summary Compensation Table +Name and +Principal Position +(a) +Year +(b) +Salary +($) +(c) +Bonus +($) (1) +(d) +Stock +Awards +($) (2) +(e) +Option +Awards +($) (3) +(f) +Non- +Equity +Incentive +Plan +Compensation +($) (4) +(g) +Change in +Pension +Value and +Nonqualified +Deferred +Compensation +Earnings +($) +(h) +All +Other +Compensation +($) (5) +(i) +Total +($) +(j) +James C. Stewart +Executive Chairman* +2018 +1,000,000 +— +2,797,978 +1,538,873 +1,000,000 +— +30,625 +6,367,476 +2017 +813,077 +80,000 +7,065,139 +1,324,629 +3,333,334 +— +45,000 +12,661,179 +2016 +640,000 +133,333 +— +— +1,466,667 +— +30,742 +2,270,742 +Robert W. Drummond +Chief Executive Officer +2018 +292,308 +800,000 +5,779,943 +— +885,000 +— +7,452 +7,764,703 +Gregory L. Powell +President and Chief Financial Officer +2018 +800,000 +— +2,132,334 +1,172,003 +800,000 +— +30,625 +4,934,962 +2017 +571,539 +140,000 +5,825,334 +1,077,362 +2,933,334 +— +39,000 +10,586,569 +2016 +360,000 +233,333 +— +— +1,306,667 +— +29,673 +1,929,673 +M. Paul DeBonis Jr. +Advisor to the Chairman** +2018 +350,000 +— +756,103 +409,512 +350,000 +— +28,842 +1,894,456 +2017 +292,885 +20,000 +2,135,156 +347,998 +1,033,334 +— +45,000 +3,874,373 +2016 +240,000 +33,333 +— +— +466,667 +— +29,223 +769,223 +Kevin M. +McDonald +Executive Vice President, Legal Counsel & Secretary +2018 +400,000 +— +810,892 +443,017 +400,000 +— +30,025 +2,083,934 +2017 +338,750 +— +1,169,372 +497,470 +527,768 +— +38,719 +2,572,079 +* +Prior to August 6, 2018, Mr. Stewart served as the Company’s Chief Executive Officer. +** +Prior to September 4, 2018, Mr. DeBonis served as the Company’s Chief Operating Officer. +(1) +Reflects a monthly retention payment to each of Messrs. Stewart, Powell and DeBonis through June 2017 and a sign on bonus +paid to Mr. Drummond pursuant to his Executive Employment Agreement. +(2) +Reflects the grant date fair value calculated in accordance with ASC 718 of the restricted stock units granted to the NEOs +in each of fiscal years 2018 and 2017 and of the deferred stock awards granted to each of Messrs. Stewart, Powell and DeBonis in fiscal year 2017. See Note 12—Stock- Based Compensation in our audited consolidated and combined financial +statements included in our 2018 10-K for a discussion of the assumptions used in the valuation of such awards. +(3) +Reflects the grant date fair value calculated in accordance with ASC 718 of the stock option granted to the NEOs in each +of fiscal years 2018 and 2017. See Note 12—Stock-Based Compensation in our audited consolidated and combined financial statements included in our 2018 10-K for a discussion of the assumptions used in the +valuation of such awards. +(4) +For fiscal year 2018, these amounts reflects 100% of the annual target bonus for each NEO (other than Mr. Drummond) +payable under our 2018 Executive Bonus Program. For fiscal year 2018, this amount reflects the sign on bonus described in Mr. Drummond’s Executive Employment Agreement. For fiscal year 2017, these amounts reflect (a) bonus payments +earned in fiscal year 2017 under our Value Creation Plan to Messrs. Stewart, Powell and DeBonis and (b) an amount equal to 200% of the annual target bonus for each NEO payable under our 2017 Executive Bonus Program. For the fiscal year ended +December 31, 2016, these amounts reflect (a) bonus payments earned in fiscal year 2016 under our Value Creation Plan and (b) amounts paid to the NEOs under our annual bonus plan for such fiscal year. +30 | Keane Group, Inc. +Table of Contents +(5) +A detailed breakdown of “All Other Compensation” is provided in the table below: +Name +Year +Automobile +Allowance +($) +401(k) Plan +Company +Contribution +($) +Severance +($) +Expenses +($) (a) +Total +($) +James C. Stewart +2018 +21,000 +9,625 +— +— +30,625 +2017 +21,000 +24,000 +— +— +45,000 +2016 +21,000 +9,742 +— +— +30,742 +Robert W. Drummond +2018 +7,452 +— +— +— +7,452 +Gregory L. Powell +2018 +21,000 +9,625 +— +— +30,625 +2017 +21,000 +18,000 +— +— +39,000 +2016 +21,000 +8,673 +— +— +29,673 +M. Paul DeBonis Jr. +2018 +21,000 +7,842 +— +— +28,842 +2017 +21,000 +24,000 +— +— +45,000 +2016 +21,000 +8,223 +— +— +29,223 +Kevin M. McDonald +2018 +20,400 +9,625 +— +— +30,025 +2017 +20,400 +18,319 +— +— +38,719 +2019 Proxy Statement | 31 +Table of Contents +Grants of Plan Based Awards in Fiscal Year 2018 +Estimated Future Payouts +Under Non-Equity Incentive +Plan Awards(1) +Estimated Future Payouts +Under Equity Incentive +Plan +Awards +All +Other +Stock +Awards: +Number +of +Shares +of Stock +All Other +Option +Awards: +Number of +Securities +Underlying +Exercise +or Base +Price of +Option +Grant +Date +Fair +Value +of +Stock +and +Option +Name +Grant +Date +Threshold +($) +Target +($) +Maximum +($)(2) +Threshold +($) +Target +($) +Maximum +($)(2) +or Units +(#)(3) +Options +(#)(4) +Awards +($/Share) +Awards +($)(5) +James C. Stewart +500,000 +1,000,000 +5,000,000 +— +— +— +— +— +— +— +3/1/2018 +— +— +— +— +— +— +152,200 +— +— +2,378,886 +— +— +— +— +— +— +— +179,100 +15.63 +1,331,843 +8/6/2018 +— +— +— +— +— +— +29,576 +— +— +419,092 +— +— +— +— +— +— +— +30,709 +14.17 +207,030 +Robert W. Drummond +— +885,000 +(6) +— +— +— +— +— +— +— +— +8/6/2018 +— +— +— +— +— +— +407,900 +(7) +— +— +5,779,943 +Gregory L. Powell +400,000 +800,000 +5,000,000 +— +— +— +— +— +— +— +3/1/2018 +— +— +— +— +— +— +116,100 +— +— +1,814,643 +— +— +— +— +— +— +— +136,500 +15.63 +1,015,056 +8/6/2018 +— +— +— +— +— +— +22,420 +— +— +317,691 +— +— +— +— +— +— +— +23,280 +14.17 +156,946 +M. Paul DeBonis Jr. +175,000 +350,000 +5,000,000 +— +— +— +— +— +— +— +3/1/2018 +— +— +— +— +— +— +35,400 +— +— +553,302 +— +— +— +— +— +— +— +41,600 +15.63 +309,350 +8/6/2018 +— +— +— +— +— +— +14,312 +— +— +202,801 +— +— +— +— +— +— +— +14,857 +14.17 +100,161 +Kevin M. McDonald +200,000 +400,000 +5,000,000 +— +— +— +— +— +— +— +3/1/2018 +— +— +— +— +— +— +41,500 +— +— +648,645 +— +— +— +— +— +— +— +48,800 +15.63 +362,892 +8/6/2019 +— +— +— +— +— +— +11,450 +— +— +162,247 +— +— +— +— +— +— +— +11,885 +14.17 +80,125 +(1) +Amounts represent the range of annual cash incentive awards the NEO was potentially entitled to receive based on the +achievement of performance goals for fiscal year 2018 under the 2018 Executive Bonus Program as more fully described in “—Compensation Discussion and Analysis—2018 Annual Incentives.” The amounts actually paid are reported in the +Non-Equity Incentive Plan column of the Summary Compensation table. Pursuant to the 2018 Executive Bonus Plan, performance below a specific threshold will result in no payment with respect to that performance +goal. +(2) +Reflects the maximum bonus payable to any executive under the Company’s Executive Incentive Bonus Plan. +(3) +Represents restricted stock units granted to the NEOs, as described in “—Compensation Discussion and +Analysis—2018 Long-Term Incentives.” +(4) +Represent stock options granted to the NEOs, as described in “—Compensation Discussion and Analysis—2018 +Long-Term Incentives.” +(5) +Reflects the grant date fair value as calculated in accordance with ASC 718. Assumptions used in the valuation of +equity-based awards are discussed in “Note 12—Stock-Based Compensation” in our audited consolidated and combined financial statements included in our 2018 10-K. +(6) +Pursuant to the Executive Employment Agreement with Mr. Drummond, Mr. Drummond’s bonus is calculated in +part based on a contractual amount set forth in the Executive Employment Agreement, which amount is reflective of the bonus that he forfeited with his prior employer, and the remainder based on the Company’s performance under the 2018 Executive +Bonus Program. +(7) +Includes 161,013 restricted stock units that are subject to three year vesting, the first 33% of which became vested on +December 31, 2018, and the remaining restricted stock units will become vested on December 31 of each of 2019 and 2020, 85,874 restricted stock units that are subject to two year vesting and will become vested on August 6 of each of +2019 and 2020, and 161,013 units that vest in their entirety on December 31, 2020. +32 | Keane Group, Inc. +Table of Contents +Outstanding Equity Awards at Fiscal Year End 2018 +Option Awards +Stock Unit Awards +Name +Number of +securities +underlying +unexercised +options +(#) +exercisable +Number of +securities +underlying +unexercised +options +(#) +unexercisable +(1) +Equity +incentive +plan +awards: +number of +securities +underlying +unexercised +unearned +options +(#) +Option +exercise +price +($) +Option +expiration +date +Number +of +shares +or units +of stock +that +have not +vested +(#) (2) +Market +value of +shares +or units +of stock that +have not +vested +($) (3) +Equity +incentive +plan +awards: +number of +unearned +shares, +units or +other +rights +that +have +not +vested +(#) +Equity +incentive +plan +awards: +market or +payout +value of +unearned +shares, +units or +other +rights that +have +not +vested +($) (4) +(a) +Grant Date +(b) +(c) +(d) +(e) +(f) +(g) +(h) +(i) +(j) +James C. Stewart +3/7/2017 +— +— +— +— +— +— +— +— +1,975,706 +4/3/3017 +71,629 +143,259 +— +19.00 +4/3/2023 +— +— +— +— +— +— +— +— +— +143,259 +1,171,859 +— +— +3/1/2018 +— +179,100 +— +15.63 +3/1/2024 +— +— +— +— +— +— +— +— +— +152,200 +1,244,996 +— +— +8/6/2018 +— +30,709 +— +14.17 +8/6/2024 +— +— +— +— +— +— +— +— +— +29,576 +241,932 +— +— +Robert W. Drummond +8/6/2018 +— +— +— +— +— +354,229 +2,897,593 +— +— +Gregory L. Powell +3/7/2017 +— +— +— +— +— +— +— +— +1,646,422 +4/3/3017 +58,258 +116,517 +— +19.00 +4/3/2023 +— +— +— +— +— +— +— +— +— +116,517 +953,109 +— +— +3/1/2018 +— +136,500 +— +15.63 +3/1/2024 +— +— +— +— +— +— +— +— +— +116,100 +949,698 +— +— +8/6/2018 +— +23,280 +— +14.17 +8/6/2024 +— +— +— +— +— +— +— +— +— +22,420 +183,396 +— +— +M. Paul DeBonis Jr. +3/7/2017 +— +— +— +— +— +— +— +— +658,569 +4/3/3017 +18,818 +37,636 +— +19.00 +4/3/2023 +— +— +— +— +— +— +— +— +— +37,636 +307,862 +— +— +3/1/2018 +— +41,600 +— +15.63 +3/1/2024 +— +— +— +— +— +— +— +— +— +35,400 +289,572 +— +— +8/6/2018 +— +14,857 +— +14.17 +8/6/2024 +— +— +— +— +— +— +— +— +— +14,312 +117,072 +— +— +Kevin M. McDonald +4/3/3017 +26,900 +53,802 +— +19.00 +4/3/2023 +— +— +— +— +— +— +— +— +— +53,802 +440,100 +— +— +3/1/2018 +— +48,800 +— +15.63 +3/1/2024 +— +— +— +— +— +— +— +— +— +41,500 +339,470 +— +— +8/6/2018 +— +11,885 +— +14.17 +8/6/2024 +— +— +— +— +— +— +— +— +— +11,450 +93,661 +— +— +— +3,539 +(5) +— +— +(6) +— +(7) +— +— +— +— +(1) +Reflects the number of unvested stock options held by the NEO, other than Mr. Drummond. 33% of the April 3, 2017 +stock options became vested and exercisable on each of January 20, 2018 and 2019, and the remaining stock options will become vested and exercisable on January 20, 2020, 33% of each of the March 1, 2018 and August 6, 2018 stock +options became vested and exercisable on March 1, 2019, and the remaining stock options will become vested and exercisable in equal portions on March 1 of each of 2020 and 2021, and will become fully vested and exercisable in the event +that the NEO’s employment terminates without cause or for good reason within twelve months following a change in control. +(2) +Reflects the number of unvested restricted stock units held by the NEO. Other than for Mr. Drummond, 33% of the +April 3, 2017 restricted stock units became vested on each of January 20, 2018 and 2019, and the remaining restricted stock units will become vested on January 20, 2020, 33% of each of the March 1, 2018 and August 6, 2018 +restricted stock units became vested on March 1, 2019, and the remaining restricted stock units will become vested in equal portions on March 1 of each of 2020 and 2021, and will become fully vested in the event that the NEO’s +employment terminates without cause or for good reason within twelve months following a change in control. In the case of Mr. Drummond, 161,013 restricted stock units were subject to three year vesting and the first 33% of these restricted +2019 Proxy Statement | 33 +Table of Contents +stock units became vested on December 31, 2018, and the remaining restricted stock units will become vested on December 31 of each of 2019 and 2020; 85,874 restricted stock units were +subject to two year vesting and will become vested on August 6 of each of 2019 and 2020; and the remaining 161,013 units vest in their entirety on December 31, 2020. +(3) +Based on the closing price per share of our common stock on December 31, 2018 of $8.18. +(4) +Reflects the aggregate value of the stock bonuses that may be issued in shares of common stock under the Deferred Stock +Awards granted to Messrs. Stewart, Powell and DeBonis. Such amounts became vested 50% on January 1, 2018 and were paid in a number of shares of our common stock with a fair market value equal to such amount on February 15, 2018, and 50% on +January 1, 2019 and were paid in a number of shares of our common stock with a fair market value equal to such amount on March 5, 2019, pursuant to an amendment to the Deferred Stock Award Agreements that extended the payment date from +February 15, 2019 to March 5, 2019 so that the payment date would coincide with an open trading window. +(5) +Reflects the number of Class B Units of Keane Investor held by Mr. McDonald. The Class B Units were granted +to Mr. McDonald prior to consummation of our initial public offering (the “IPO”) under a unit-based management compensation program sponsored by the Company prior to the IPO called the Keane Management Holdings LLC Management +Incentive Plan (the “Class B Plan”). In connection with the IPO, the Class B Plan was assigned to and assumed by Keane Investor. The Class B Units represent profit interests in Keane Investor that are solely obligations of +Keane Investor. 50% of the units held by Mr. McDonald became vested on November 7, 2018 and the remainder will vest on November 7, 2019. If Mr. McDonald’s service is terminated without Cause, all unvested units that would +have vested on the next vesting date following termination will vest upon such termination, and the remaining unvested units will remain outstanding for a period of 90 days following termination and will vest if a change in control occurs during +such 90-day period. +(6) +Class B Units have no exercise price. Instead, Mr. McDonald may be entitled to certain cash distributions from +Keane Investor following the distribution of $1,200,000,000 to holders of Class A Units and other Class B Units in Keane Investor. +(7) +Class B Units have no expiration date. +Option Exercises and Stock Vested in Fiscal Year 2018 +The following +table provides information about option awards and stock units that vested, and the value realized on exercise and vesting by our NEOs during 2018. +Option Awards +Stock Units +Name +Number +of +shares +acquired +on +exercise +(#) +Value +realized +on +exercise +($) +Number +of units +acquired +on +vesting +(#) +Value +realized +on +vesting +($) (1) +James C. Stewart +— +— +151,620 +$ +2,473,261 +Robert W. Drummond +— +— +53,671 +$ +439,029 +Gregory L. Powell +— +— +124,917 +$ +2,035,544 +M. Paul DeBonis Jr. +— +— +50,040 +$ +802,666 +Kevin M. McDonald +— +— +26,900 +$ +478,820 +(1) +Calculated by multiplying the number of ordinary shares by the market value of the underlying shares on the date of +vesting. +34 | Keane Group, Inc. +Table of Contents +Potential Payments Upon Termination or Change in Control +The tables below describe and estimate the amounts and benefits that our NEOs would have been entitled to receive upon a termination of their employment in certain +circumstances or, if applicable, upon a change in control, assuming such events occurred as of December 31, 2018, the last day of fiscal year 2018. The estimated payments are not necessarily indicative of the actual amounts any of our NEOs +would have received in such circumstances. The tables exclude compensation amounts accrued through December 31, 2018 that would be paid in the normal course of continued employment, such as accrued but unpaid salary, payment for accrued but +unused vacation and vested account balances under our retirement plans that are generally available to all of our salaried employees. Where applicable, the information in the table uses a price per share for our common stock of $8.18, the closing +price on December 31, 2018 (the “Year-End Closing Price”). Generally, payment of severance benefits to an NEO following termination of employment is subject to the NEO’s timely execution +and non-revocation of a release of claims in favor of the Company. +James C. Stewart +Payments and Benefits +Death or +Disability ($) +For Cause or +Without +Good +Reason ($) +Without +Cause or for +Good Reason, +No +Change in +Control ($) +Without +Cause or for +Good Reason, +Upon or +Following +Change +in +Control ($) +Change in +Control, No +Termination of +Employment ($) +Cash Severance (1) +250,000 +— +4,000,000 +4,000,000 +— +Annual Bonus (2) +1,000,000 +— +1,000,000 +1,000,000 +— +Deferred Stock Award Vesting (3) +— +— +1,975,706 +1,975,706 +1,975,706 +Stock Option Vesting (4) +— +— +0 +(5) +0 +(5) +— +Restricted Stock Unit Vesting (6) +— +— +1,970,549 +4,873,801 +— +Health Benefits +— +— +— +— +— +Total +1,250,000 +— +8,946,255 +11,849,507 +1,975,706 +(1) +Reflects severance payments equal to (i) in the event of Mr. Stewart’s death or disability, three months of +his base salary payable over the three-month period following his termination, or (ii) in the event of a termination of Mr. Stewart’s employment without Cause or for Good Reason, an amount equal to two times the sum of (i) his annual +base salary, and (ii) the lesser of (x) his average annual bonus during the two calendar years prior to his termination of employment, or (y) 100% of his annual base salary, payable over the 24-month period +following his termination. +(2) +Reflects the annual bonus payable to Mr. Stewart for fiscal year 2018 under our 2018 Executive Bonus Program. +(3) +Pursuant to his Deferred Stock Award, Mr. Stewart’s unvested stock bonuses will become fully vested upon a +change in control or upon a termination of his employment without Cause or for Good Reason. +(4) +Pursuant to his Stock Option Award, Mr. Stewart’s unvested stock options will become fully vested in the event +of a termination of his employment without Cause or for Good Reason within twelve months following a change in control. In the event of a termination other than following a change in control, Mr. Stewart shall become vested in those stock +options that would have vested had he remained employed for a period of twelve months following the termination. The amount in the table reflects the aggregate per share value based on the Year-End Closing +Price in excess of the option exercise price. +(5) +The market price of the stock options as of December 31, 2018 was lower than the strike price of the outstanding +options, therefore the value is reflected as $0. +(6) +Pursuant to his Restricted Stock Unit Award, Mr. Stewart’s unvested restricted stock units will become fully +vested in the event of a termination of his employment without Cause or for Good Reason within twelve months following a change in control. In the event of a termination other than following a change in control, Mr. Stewart shall become vested +in those restricted stock units that would have vested had he remained employed for a period of twelve months following the termination. +2019 Proxy Statement | 35 +Table of Contents +Robert W. Drummond +Payments and Benefits +Death or +Disability ($) +For Cause or +Without +Good +Reason ($) +Without +Cause or for +Good Reason, +No +Change in +Control ($) +Without +Cause or for +Good Reason, +Upon or +Following +Change +in +Control ($) +Change in +Control, No +Termination of +Employment ($) +Cash Severance (1) +— +— +3,200,000 +3,200,000 +— +Annual Bonus (2) +— +— +— +— +— +Restricted Stock Unit Vesting (3) +5,019,425 +— +5,019,425 +5,019,425 +— +Health Benefits (4) +— +— +17,238 +17,238 +— +Total +5,019,425 +— +8,236,663 +8,236,663 +— +(1) +Reflects severance payments in the event of a termination of Mr. Drummond’s employment without Cause or for Good +Reason, in an amount equal to two times the sum of (i) his annual base salary, and (ii) his target bonus for the year his termination occurs, payable over the 24-month period following his termination. +(2) +Reflects the annual bonus payable to Mr. Drummond for fiscal year 2018 under our 2018 Executive Bonus Program. +(3) +Pursuant to his Restricted Stock Unit Award, Mr. Drummond’s unvested restricted stock units will become fully +vested in the event of death, disability, or a termination of his employment without Cause or for Good Reason. +(4) +Reflects our payment for the cost of continuation health coverage for Mr. Drummond for twelve months following his +termination. +Gregory L. Powell +Payments and Benefits +Death ($) +Disability ($) +For Cause +or +Without +Good +Reason ($) +Without +Cause or +for Good +Reason, +No Change in +Control ($) +Without +Cause or +for Good +Reason, +Upon or +Following +Change in +Control ($) +Change in +Control, No +Termination +of +Employment ($) +Cash Severance (1) +200,000 +200,000 +— +1,600,000 +1,600,000 +— +Annual Bonus (2) +800,000 +800,000 +— +800,000 +800,000 +— +Deferred Stock Award Vesting (3) +— +— +— +1,646,422 +1,646,422 +1,646,422 +Stock Option Vesting (4) +— +— +— +0 +(5) +0 +(5) +— +Restricted Stock Unit Vesting (6) +— +— +— +1,554,932 +3,820,666 +— +Health Benefits (7) +— +20,443 +— +20,443 +20,443 +— +Total +1,000,000 +1,020,443 +— +5,621,797 +7,887,531 +1,646,422 +(1) +Reflects severance payments equal to (i) in the event of Mr. Powell’s death or disability, three months of +his base salary payable over the three-month period following his termination, or (ii) in the event of a termination of Mr. Powell’s employment without Cause or for Good Reason, an amount equal to two times his annual base salary +payable over the 24 month period following his termination. +(2) +Reflects the annual bonus payable to Mr. Powell for fiscal year 2018 under our 2018 Executive Bonus Program. +(3) +Pursuant to his Deferred Stock Award, Mr. Powell’s unvested stock bonuses will become fully vested upon a change +in control or upon a termination of his employment without Cause or for Good Reason. +(4) +Pursuant to his Stock Option Award, Mr. Powell’s unvested stock options will become fully vested in the event of +a termination of his employment without Cause or for Good Reason within twelve months following a change in control. In the event of a termination other than following a change in control, Mr. Powell shall become vested in those stock options +that would have vested had he remained employed for a period of twelve months following the termination. The amount in the table reflects the aggregate per share value based on the Year-End Closing Price in +excess of the option exercise price. +(5) +The market price of the stock options as of December 31, 2018 was lower than the strike price of the outstanding +options, therefore the value is reflected as $0. +36 | Keane Group, Inc. +Table of Contents +(6) +Pursuant to his Restricted Stock Unit Award, Mr. Powell’s unvested restricted stock units will become fully +vested in the event of a termination of his employment without Cause or for Good Reason within twelve months following a change in control. In the event of a termination other than following a change in control, Mr. Powell shall become vested +in those restricted stock units that would have vested had he remained employed for a period of twelve months following the termination. +(7) +Reflects our payment for the cost of continuation health coverage for Mr. Powell for twelve months following his +termination. +M. Paul DeBonis Jr. +Payments and Benefits +Death or +Disability ($) +For Cause or +Voluntary +Terminations ($) +Without Cause, +No Change in +Control ($) +Without +Cause, +Upon or +Following +Change in +Control ($) +Change in +Control, No +Termination +of +Employment ($) +Cash Severance (1) +— +— +700,000 +700,000 +— +Annual Bonus +— +— +— +— +— +Deferred Stock Award Vesting (2) +— +— +658,569 +658,569 +658,569 +Stock Option Vesting (3) +— +— +0 (4) +0 +(4) +— +Restricted Stock Unit Vesting (5) +— +— +524,698 +1,301,449 +— +Health Benefits +— +— +— +— +— +Total +— +— +1,883,267 +2,660,018 +658,569 +(1) +Reflects severance payments equal to two times Mr. DeBonis’ annual base salary payable over the 24 month period +following his termination in the event of a termination of his employment without Cause. +(2) +Pursuant to his Deferred Stock Award, Mr. DeBonis’ unvested stock bonuses will become fully vested upon a change +in control or upon a termination of his employment without Cause. +(3) +Pursuant to his Stock Option Award, Mr. DeBonis’ unvested stock options will become fully vested in the event of +a termination of his employment without Cause within twelve months following a change in control. In the event of a termination other than following a change in control, Mr. DeBonis shall become vested in those stock options that would have +vested had he remained employed for a period of twelve months following the termination. The amount in the table reflects the aggregate per share value based on the Year-End Closing Price in excess of the +option exercise price. +(4) +The market price of the stock options as of December 31, 2018 was lower than the strike price of the outstanding +options, therefore the value is reflected as $0. +(5) +Pursuant to his Restricted Stock Unit Award, Mr. DeBonis’ unvested restricted stock units will become fully +vested in the event of a termination of his employment without Cause within twelve months following a change in control. In the event of a termination other than following a change in control, Mr. DeBonis shall become vested in those restricted +stock units that would have vested had he remained employed for a period of twelve months following the termination. +2019 Proxy Statement | 37 +Table of Contents +Kevin M. McDonald +Payments and Benefits +Death or +Disability ($) +For Cause or +Without +Good Reason ($) +Without +Cause or for +Good Reason, +No +Change in +Control ($) +Without +Cause or for +Good Reason, +Upon +or +Following +Change in +Control ($) +Change in +Control, No +Termination +of +Employment ($) +Cash Severance (1) +— +— +400,000 +400,000 +— +Annual Bonus +— +— +— +— +— +Stock Option Vesting (2) +— +— +0 +(3) +0 +(3) +— +Restricted Stock Unit Vesting (4) +— +— +660,064 +1,590,482 +— +Class B Unit Vesting (5) +— +— +— +— +— +Health Benefits (6) +— +— +20,443 +20,443 +— +Total +— +— +1,080,507 +2,010,925 +— +(1) +Reflects severance payments equal to Mr. McDonald’s annual base salary payable in a lump sum in the event of a +termination of his employment without Cause or for Good Reason. +(2) +Pursuant to his Stock Option Award, Mr. McDonald’s unvested stock options will become fully vested in the event +of a termination of his employment without Cause or for Good Reason within twelve months following a change in control. In the event of a termination other than following a change in control, Mr. McDonald shall become vested in those stock +options that would have vested had he remained employed for a period of twelve months following the termination. The amount in the table reflects the aggregate per share value based on the Year-End Closing +Price in excess of the option exercise price. +(3) +The market price of the stock options as of December 31, 2018 was lower than the strike price of the outstanding +options, therefore the value is reflected as $0. +(4) +Pursuant to his Restricted Stock Unit Award, Mr. McDonald’s unvested restricted stock units will become fully +vested in the event of a termination of his employment without Cause or for Good Reason within twelve months following a change in control. In the event of a termination other than following a change in control, Mr. McDonald shall become vested +in those restricted stock units that would have vested had he remained employed for a period of twelve months following the termination. +(5) +Pursuant to his Class B Interest Award Agreement, the next tranche of Mr. McDonald’s unvested Class B +Units of Keane Investor Holdings LLC will become vested in the event of a termination of his employment without Cause, and the remaining unvested units will remain outstanding for a period of 90 days following termination and will vest if a change +in control occurs during such 90-day period. The market value of the Class B Units is not determinable, because there is no public market for such units. Therefore, such value, if any, has not been +included herein. +(6) +Reflects our payment for the cost of continuation health coverage for Mr. McDonald for twelve months following his +termination. +CEO Pay Ratio +In accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act and applicable SEC rules, we are providing the following information about the +relationship of our CEO’s compensation to the compensation of all our employees. The purpose of this disclosure is to provide a measure of the equitability of pay within the organization. We believe our compensation philosophy and process yield +an equitable result and our ratio is as follows for 2018: +● +the total compensation of our median employee was $98,499, as calculated pursuant to the same methodology as that used to +determine pay for our CEO in the Summary Compensation Table +● +the total compensation of our CEO, as reported in the Summary Compensation Table, was $8,273,771. +● +the ratio of our CEO’s total compensation to the median employee total compensation was 84.0, to 1 +We believe this pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on our internal records and the +methodology used. To identify our median employee, we compared the year to date Federal Taxable Wages of our employees as of December 31, 2018. We did not exclude any of our employees or make any cost-of-living +38 | Keane Group, Inc. +Table of Contents +adjustments. We had 2,749, employees as of December 31, 2018, all of which were U.S. employees. Similar to our CEO, each of our employees enjoys a comprehensive compensation and benefit package +that we determine by benchmarking to market practices. +Two individuals served in the role of CEO during 2018. We elected to use the compensation of Mr. Drummond, +the active CEO as of December 31, 2018, for purposes of determining the CEO pay ratio. Mr. Drummond became CEO in August 2018. In determining Mr. Drummond’s compensation, we adjusted the compensation reported on the Summary Compensation Table +to reflect his compensation as if he were CEO for the full calendar year, by increasing his base salary as if he were CEO effective January 1, 2018. The base salary used was annualized at the full year CEO rate of $800,000. We did not adjust his +annual incentive award because the amount earned by Mr. Drummond was already adjusted per his new hire agreement to reflect a full year performance incentive, recognizing the partial-year annual incentive opportunity he forfeited at his prior +employer during 2018. For purposes of calculating the CEO Pay Ratio, this resulted in total annual compensation of $8,273,771 for the CEO as opposed to the amount shown on Summary Compensation Table of $7,766,079. +2019 Proxy Statement | 39 +Table of Contents +Proposal 4 Amendment to Keane Group, +Inc. Equity and Incentive Award Plan +The Board of Directors recommends that you vote “FOR” the amendment to the Keane Group, Inc. Equity and Incentive Award Plan. +We are asking our stockholders to approve an amendment to the Keane Group, Inc. Equity and Incentive Award Plan to increase the number of authorized shares available +for issuance under the Plan. +A simple majority of the votes cast is required to approve this proposal. If you properly give a proxy but do not indicate how you +wish to vote, the persons named on the proxy card, or if you do not name your proxy or proxies, the Proxy Holders, will vote for the proposal. +Amendment to Equity Plan +In 2017, the stockholders approved the Keane Group, Inc. Equity and Incentive Award Plan (the “Equity Plan”). The Equity Plan authorized 7,734,601 shares of +the Company’s Common Stock. As of March 28, 2019, of the 7,734,601 shares authorized for issuance under the Equity Plan, there were 2,099,338 shares remaining available for future grants under the Equity Plan. However, this available pool of +shares does not include an additional 700,000 shares we expect to allocate to annual grants for non-executives prior to the annual meeting; following that non-executive grant we will actually have only 1,399,338 shares available for future grant. +The Equity Plan is the only Company equity plan from which shares remain available for future grants. The Compensation Committee of the Board of Directors and the Board itself considers this number to be inadequate to achieve the stated purpose of +the Equity Plan in the future; namely, to promote the long-term financial interests of the Company by: (i) encouraging directors, officers and employees of the Company to acquire an ownership position in the Company; (ii) enhancing the +ability of the Company to attract and retain directors, officers and key employees of outstanding ability; and (iii) providing directors, officers and key employees with an interest in the Company aligned with that of the Company’s +stockholders. +The Board has approved, and stockholders are being asked to approve, an amendment to the Equity Plan (the “Equity Plan Amendment”), to +increase by 4,200,000 the number of authorized shares available for issuance under the Equity Plan – resulting in a total of 11,934,601 shares authorized under the Equity Plan. This increase would result in 6,299,338 shares being available for +future grants, including the number of shares remaining available on March 28, 2019. A summary of current plan balances and the impact of the shares requested in this amendment are summarized in the table below: +Number +Weighted +Average +Exercise +Price +Weighted +Average +Remaining +Term +Number of unvested restricted stock units outstanding +2,298,589 +— +— +Number of unvested performance restricted stock units outstanding +654,802 +— +— +Number of non-qualified stock options outstanding +1,210,207 +$17.13 +4.495 +A. +Total Outstanding +4,163,598 +— +— +B. +Shares Currently Available for Future Grant (1) +2,099,338 +— +— +C. +Additional Shares Requested +4,200,000 +— +— +D. +Total Equity Plan Reserve (A + B + C) +10,462,936 +— +— +E. +Common Shares Outstanding at Record Date +104,766,746 +— +— +Total Equity Plan Reserve as Percent of Common +Shares +(D ÷ E) +10.0 +% +— +— +(1) +Includes 700,000 shares we expect to allocate to non-executive employee annual grants prior to the annual meeting, leaving +only 1,399,340 shares available for future grant at the time of the vote. +40 | Keane Group, Inc. +Table of Contents +Based upon current stock price and current equity incentive compensation mix, we anticipate that this share reserve +will provide sufficient shares for an additional two to four years of equity awards, not including the remaining grants to be made in 2019. +The proposed Equity +Plan Amendment is provided as Appendix A to this Proxy Statement. You should read Appendix A in its entirety, as the following summary of the proposed changes and the Equity Plan is not exhaustive. +Reasons for Seeking Shareholder Approval +The Equity Plan provides for +long-term compensation and incentive opportunities for directors, executives and key employees of the Company and its subsidiaries. The Board believes that the future success of the Company is dependent upon the quality and continuity of management, +and that compensation programs such as restricted stock unit and performance restricted stock unit grants are important in attracting and retaining individuals of superior ability and in motivating their efforts on behalf of the Company. In +addition, in order to provide competitive compensation opportunities that are aligned with our compensation philosophy, the Committee may choose to use long-term cash-based awards in place of equity. +Shareholder approval of the Equity Plan Amendment is required under the rules of the New York Stock Exchange applicable to the Company. If the Equity Plan Amendment is +not approved, the Equity Plan Amendment will not go into effect. Awards may continue to be made under the Equity Plan in accordance with its terms as they existed prior to the Equity Plan Amendment until the shares remaining for Awards under the +Equity Plan are exhausted. +Securities Authorized for Issuance under Equity Compensation Plans +As of March 28, 2019, there were 4,163,598 shares reserved for issuance under the Equity Plan upon the vesting of restricted stock grants and the exercise of +existing option grants. As of March 28, 2019, there were 2,298,589 shares and 1,210,207 shares reserved for issuance under the Equity Plan upon the vesting of restricted stock grants and the exercise of existing option grants, respectively. As +of March 28, 2019, the weighted-average exercise price and the weighted-average remaining term for the Company’s outstanding stock options under all Company equity plans were $17.13 and 4.495 years, respectively. +The following table sets forth information as of March 28, 2019, with respect to compensation plans under which our common stock may be issued: +Plan Category +Number of securities +to be issued upon +exercise of warrants +and rights (a) +Weighted-average +exercise price of +outstanding +rights (b) +Number of securities +remaining available +for equity compensation +plans (excluding +securities reflected in +column (a)) (c) (1) +Equity compensation plans approved by security +holders +1,210,207 +$ +17.13 +2,099,338 +Equity compensation plans not approved by security +holders +— +— +— +Total +$ +(1) +Shares remaining available for issuance under the Equity Plan could be issued in the form of stock options, stock +appreciation rights, stock awards and stock units . +2019 Proxy Statement | 41 +Table of Contents +Description of the Plan +The following summary describes briefly the principal features of the Equity Plan as it is currently in effect, without adjustment for the proposed Equity Plan +Amendment, and is qualified in its entirety by reference to the full text of the Equity Plan and the proposed Equity Plan Amendment, which is provided as Appendix A to this Proxy Statement. +Securities Subject to the Equity Plan . A maximum of 7,734,601 shares of our +common stock may be issued or transferred pursuant to awards under the Equity Plan. The number of shares of our common stock available under the Equity Plan will be reduced by one share for each share issued under an award. The shares of our common +stock covered by the Equity Plan may be treasury shares, authorized but unissued shares or shares purchased in the open market. +In the event of any +termination, expiration, lapse or forfeiture of an award, any shares subject to the award will again be made available for future grants under the Equity Plan. Any shares of restricted stock repurchased by the company at the same price paid for such +shares will be made available for issuance again under the Equity Plan. +Eligibility . All of our employees, consultants, and directors, and employees and consultants of our affiliates, will be eligible to receive awards under the Equity Plan. +Awards under the Equity Plan . The Equity Plan provides that the administrator +may grant or issue stock options, which may be non-qualified stock options (“NQSOs”) or, solely to eligible employees, incentive stock options designed to comply with the applicable provisions of Section 422 of the Internal Revenue Code of +1986, as amended (the “Code”), stock appreciation rights (“SARs”), restricted stock, restricted stock units, deferred stock, performance awards and stock payments, or any combination thereof. The terms and conditions of each +award will be set forth in a separate agreement with the person receiving the award and will indicate the type, terms and conditions of the award. If an incentive stock option is granted to an employee who then owns, directly or by attribution under +the Code, stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or a subsidiary, then the term of the option will not exceed five years, and the option price will be at least 110% of the fair market +value of the shares on the date that the option is granted. +Award Limits . The Equity Plan provides that the maximum aggregate number of shares of common stock subject to all Awards granted to any one employee or consultant in any calendar year, as adjusted, is 1,500,000. The maximum aggregate +number of shares of common stock subject to all Awards granted to any one non-employee director in any calendar year, as adjusted, is 75,000. The maximum amount of any Performance Award granted to a Participant for any calendar year that is payable +solely in cash is $5,000,000. +Vesting and Exercise of Awards . The +applicable award agreement will contain the period during which the right to exercise the award in whole or in part vests, including the events or conditions upon which the vesting of an award may accelerate. No portion of an award which is not +vested at the participant’s termination of employment, termination of directorship or termination of consulting relationship, as applicable, will subsequently become vested, except as may be otherwise provided by the administrator either in the +agreement relating to the award or by action following the grant of the award. +Transferability of +Awards . Awards generally may not be sold, pledged, assigned or transferred in any manner other than by will or by the laws of descent and distribution or, subject to the consent of the administrator, +pursuant to a domestic relations order, unless and until such award has been exercised, or the shares underlying such award have been issued, and all restrictions applicable to such shares have lapsed. Notwithstanding the foregoing, NQSOs may be +transferred without consideration to certain family members and trusts with the administrator’s consent. Awards may be exercised, during the lifetime of the participant, only by the participant or such permitted transferee. +Forfeiture and Claw-Back Provisions . In the event (i) a participant +terminates service with the company prior to a specified date or within a specified time following receipt or exercise of the award, (ii) the company terminates the participant’s service for “cause,” or (iii) the participant engages +in certain competitive activities with the company, the administrator has the right to require the participant to repay any proceeds, gains or other economic benefit actually or constructively received by the participant or to terminate the award. +In addition, all awards (including any proceeds, gains or other +42 | Keane Group, Inc. +Table of Contents +economic benefit actually or constructively received by the participant) may be subject to the provisions of any claw-back policy implemented by the company, including, without limitation, any +claw-back policy adopted to comply with the requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. +Equity Plan Benefits . The future benefits that will be received under the Equity Plan by our current directors, executive officers and all eligible employees are not +currently determinable. +Adjustments for Stock Splits, Recapitalizations, Mergers and Equity +Restructurings . In the event of any recapitalization, reclassification, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off or other transaction that affects our +common stock, the Equity Plan will be equitably adjusted, including the number of available shares, in order to prevent the dilution or enlargement of the benefits or potential benefits intended to be made available under the Equity Plan or with +respect to any award. +Administration of the Equity Plan . The +compensation committee is the administrator of the Equity Plan. Subject to certain limitations, the committee may delegate its authority to grant awards to one or more committees consisting of one or more members of the board of directors or one or +more of our officers. +Amendment and Termination of the Equity Plan . +Our board of directors and the compensation committee may amend the Equity Plan at any time, subject to stockholder approval to the extent required by applicable law or regulation or the listing standards of the market or stock exchange on which our +common stock is at the time primarily traded. +Additionally, stockholder approval will be specifically required to increase the maximum number of shares of +our common stock which may be issued under the Equity Plan, change the eligibility requirements or decrease the exercise price of any outstanding option or stock appreciation right granted under the Equity Plan. The board of directors and the +compensation committee may amend the terms of any award theretofore granted, prospectively or retroactively, however, except as otherwise provided in the Equity Plan, no such amendment will, without the consent of the participant, alter or impair +any rights of the participant under such award without the consent of the participant unless the award itself otherwise expressly so provides. +Our board of +directors and the compensation committee may suspend or terminate the Equity Plan at any time. However, in no event may an award be granted pursuant to the Equity Plan on or after the tenth anniversary of the effective date of the Equity Plan. +Prohibition on Repricing . Except in connection with a corporate transaction +involving the company (including, without limitation, any stock distribution, stock split, extraordinary cash distribution, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination or exchange of shares), the +administrator will not, without the approval of the stockholders, authorize the amendment of any outstanding award to reduce its price per share, including any amendment to reduce the exercise price per share of outstanding options or SARs. +United States Federal Income Tax Aspects of the Equity Plan +Incentive Stock Options . Incentive Stock Options are subject to special federal income tax treatment. No federal income tax is imposed on the optionee upon the grant +or the exercise of an Incentive Stock Option if the optionee does not dispose of the shares acquired pursuant to the exercise within the two-year period beginning on the date the option was granted or within the one-year period beginning on the date +the option was exercised, collectively, the holding period. In such event, we would not be entitled to any deduction for federal income tax purposes in connection with the grant or exercise of the option or the disposition of the shares so acquired. +With respect to an Incentive Stock Option, the difference between the fair market value of the stock on the date of exercise and the exercise price must generally be included in the optionee’s alternative minimum taxable income for the year in +which such exercise occurs. However, if the optionee exercises an Incentive Stock Option and disposes of the shares received in the same year and the amount realized is less than the fair market value of the shares on the date of exercise, then the +amount included in alternative minimum taxable income will not exceed the amount realized over the adjusted basis of the shares. +2019 Proxy Statement | 43 +Table of Contents +Upon disposition of the shares received upon exercise of an Incentive Stock Option after the holding period, any +appreciation of the shares above the exercise price should constitute capital gain. If an optionee disposes of shares acquired pursuant to his or her exercise of an Incentive Stock Option prior to the end of the holding period, the optionee will be +treated as having received, at the time of disposition, compensation taxable as ordinary income. In such event, and subject to the application of Section 162(m) of the Code as discussed below, we may claim a deduction for compensation paid at +the same time and in the same amount as compensation is treated as received by the optionee. The amount treated as compensation is the excess of the fair market value of the shares at the time of exercise (or in the case of a sale in which a loss +would be recognized, the amount realized on the sale if less) over the exercise price; any amount realized in excess of the fair market value of the shares at the time of exercise would be treated as short-term or long-term capital gain, depending +on the holding period of the shares. +Non-Qualified Stock Options and Stock Appreciation Rights . As a general rule, no federal income tax is imposed on the optionee upon the grant of a NQSO such as those under the Equity Plan (whether or not including a Stock Appreciation Right), and we are not entitled to a tax +deduction by reason of such grant. Generally, upon the exercise of a NQSO, the optionee will be treated as receiving compensation taxable as ordinary income in the year of exercise in an amount equal to the excess of the fair market value of the +shares of stock at the time of exercise over the option price paid for such shares. In the case of the exercise of a Stock Appreciation Right, if the optionee receives the appreciation in the Stock Appreciation Right, the cash is compensation income +taxable to the optionee; if the optionee receives the appreciation in the form of stock, the difference between the fair market value of the stock and any amount paid by the optionee for the stock is taxable to the optionee. Upon the exercise of a +NQSO or a Stock Appreciation Right, and subject to the application of Section 162(m) of the Code as discussed below, we may claim a deduction for compensation paid at the same time and in the same amount as compensation income is recognized by +the optionee assuming any federal income tax reporting requirements are satisfied. +Upon a subsequent disposition of the shares received upon exercise of a +NQSO or a Stock Appreciation Right, any difference between the fair market value of the shares at the time of exercise and the amount realized on the disposition would be treated as capital gain or loss. If the shares received upon the exercise of +an option or a Stock Appreciation Right are transferred to the optionee subject to certain restrictions, then the taxable income realized by the optionee, unless the optionee elects otherwise, and our tax deduction (assuming any federal income tax +reporting requirements are satisfied) should be deferred and should be measured at the fair market value of the shares at the time the restrictions lapse. The restriction imposed on officers, directors and 10% stockholders by Section 16(b) of +the Exchange Act, is such a restriction during the period prescribed thereby if other shares have been purchased by such an individual within six months of the exercise of a NQSO or Stock Appreciation Right. +Restricted Stock and Restricted Stock Units . The recipient of a Restricted Stock +Award or Restricted Stock Units will not realize taxable income at the time of grant, and we will not be entitled to a deduction at that time, assuming that the restrictions constitute a substantial risk of forfeiture for federal income tax +purposes. When the risk of forfeiture with respect to the stock subject to the award lapses, the holder will realize ordinary income in an amount equal to the fair market value of the shares of common stock at such time over the amount, if any, paid +for the shares, and subject to Section 162(m) of the Code, we will be entitled to a corresponding deduction. All dividends and distributions (or the cash equivalent thereof) with respect to a Restricted Stock Award paid to the holder before the +risk of forfeiture lapses will also be compensation income to the holder when paid and, subject to Section 162(m) of the Code, deductible as such by us. Notwithstanding the foregoing, the holder of a Restricted Stock Award may elect under +Section 83(b) of the Code to be taxed at the time of grant of the Restricted Stock Award based on the fair market value of the shares of common stock on the date of the award, in which case (1) subject to Section 162(m) of the Code, +we will be entitled to a deduction at the same time and in the same amount, (2) dividends paid to the recipient during the period the forfeiture restrictions apply will be taxable as dividends and will not be deductible by us and (3) there +will be no further federal income tax consequences when the risk of forfeiture lapses. Such election must be made no later than thirty days after the grant of the Restricted Stock Award and is irrevocable. +Performance Awards, Deferred Stock and Stock Payments . An individual who has +been granted a Performance Award, Deferred Stock or a Stock Payment generally will not realize taxable income at the time of grant, and we will not be entitled to a deduction at that time. Whether a Performance Award, Deferred Stock or a Stock +Payment is paid in cash or +44 | Keane Group, Inc. +Table of Contents +shares of common stock, the individual will have taxable compensation, and subject to the application of Section 162(m) of the Code as discussed below, we will have a corresponding +deduction. The measure of such income and deduction will be the amount of any cash paid and the fair market value of any shares of common stock either at the time the Performance Award, Deferred Stock or a Stock Payment is paid or at the time any +restrictions on the shares (including restrictions under Section 16(b) of the Exchange Act) subsequently lapse, depending on the nature, if any, of the restrictions imposed and whether the individual elects to be taxed without regard to any +such restrictions. Any dividend equivalents paid with respect to a Performance Award, Deferred Stock or a Stock Payment prior to the actual issuance of shares under the award will be compensation income to the employee and, subject to the +application of Section 162(m) of the Code as discussed below, deductible as such by us. +Section 162(m) of +the Code . Section 162(m) of the Code precludes a public corporation from taking a deduction for annual compensation in excess of $1 million paid to its chief executive officer, chief financial officer +or any of its three other highest paid officers, and any individual classified as a “covered employee” for purposes of Section 162(m) in a prior year. +Section 409A of the Code . Section 409A of the Code generally provides +that any non-qualified deferred compensation arrangement which does not meet specific requirements regarding (1) timing of payouts, (2) advance election of deferrals or (3) restrictions on acceleration of payouts will result in +immediate taxation of any amounts deferred to the extent not subject to a substantial risk of forfeiture. Failure to comply with Section 409A of the Code may result in the early taxation (plus interest) to the holder of the deferred +compensation and the imposition of a 20% penalty on the holder on such deferred amounts included in the holder’s income. In general, to avoid a violation of Section 409A of the Code, nonqualified deferred compensation amounts may only be +paid out on a separation from service, disability, death, change-in-control, an unforeseen emergency (other than death) or a specified time (all as defined under Section 409A of the Code). Furthermore, an election to defer compensation must be +made in the calendar year prior to performance of services, and any provision for accelerated payout other than for the reasons specified above may cause the amounts deferred to be subject to early taxation and the imposition of the excise tax. It +is our intention that no award under the Equity Plan be “deferred compensation” subject to Section 409A of the Code unless and to the extent that the Compensation Committee determines otherwise. The terms and conditions governing any +awards that the Compensation Committee determines will be subject to Section 409A of the Code will be set forth in an award agreement that will be drafted with the intent to comply with Section 409A of the Code. +The Equity Plan is not qualified under Section 401(a) of the Code. +The +comments set forth in the above paragraphs are only a summary of certain of the United States federal income tax consequences relating to the Equity Plan. No consideration has been given to the effects of state, local or other tax laws on the Equity +Plan or award recipients. +Inapplicability of ERISA +Based upon +current law and published interpretations, we do not believe that the Equity Plan is subject to any of the provisions of the Employee Retirement Income Security Act of 1974, as amended. +2019 Proxy Statement | 45 +Table of Contents +Other Information +Share Ownership +The following table sets +forth information regarding the beneficial ownership of our common stock as of March 13, 2019 by: +● +each person who is known by us to beneficially own 5% or more of our outstanding shares of capital stock; +● +each member of our board of directors; +● +each of our named executive officers; and +● +all of our directors and executive officers as a group. +Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. A person is +also deemed to be a beneficial owner of any securities of which that person has a right to acquire beneficial ownership within 60 days. Unless otherwise indicated, the address for each 5% stockholder, director and executive officer listed below is +c/o Keane Group, Inc., 1800 Post Oak Boulevard, Suite 450, Houston, TX 77056. +Name of Beneficial Owner +Shares +beneficially +owned (1) +Percentage of +common stock +outstanding +5% Stockholders : +Keane Investor Holdings LLC (2)(3) +51,668,175 +49.3 +% +Directors : +James C. Stewart +151,723 +* +Lucas N. Batzer +— +— +Robert W. Drummond +36,218 +* +Dale M. Dusterhoft +— +— +Marc G. R. Edwards +62,816 +* +Christian A. Garcia +29,681 +* +Lisa A. Gray +— +— +Gary M. Halverson +41,983 +* +Shawn Keane +— +— +Elmer D. Reed +35,042 +* +Lenard B. Tessler +— +— +Scott Wille +— +— +Named Executive Officers : +James C. Stewart +151,723 +* +Robert W. Drummond +36,218 +* +Gregory L. Powell +121,108 +* +M. Paul DeBonis Jr. +66,798 +* +Kevin M. McDonald +51,172 +* +All directors and executive officers as a group (2) (15 persons) +533,725 +* +46 | Keane Group, Inc. +Table of Contents +* +Represents less than 1%. +(1) +For each of Messrs. Edwards, Garcia, Halverson and Reed this amount reflects to the total amount of vested and unvested +restricted stock awards held by each director and includes 10,734 restricted shares granted on August 6, 2018 that will vest in accordance with the Director Compensation Plan (as defined above). For Mr. Edwards this also includes 17,362 +shares granted on October 1, 2016 that will vest on October 1, 2019, for Mr. Garcia this also includes 12,632 shares granted on May 15, 2017 that will vest in equal portions on each of May 15, 2019 and 2020, and for Messrs. +Halverson and Reed this also includes 10,417 shares granted on October 1, 2016 that will vest on October 1, 2019. +(2) +Keane Investor is held by a private investor group, including affiliates of Cerberus, members of the Keane family and +certain current members of management. Messrs. Batzer, Tessler, Wille and Ms. Gray are affiliated with Cerberus. Affiliates of Cerberus have indirect economic interests in our common stock through Cerberus’ Class A interests in Keane +Investor. Shawn Keane is affiliated with several of the Keane Parties (as defined below) that own Class A Units in Keane Investor and which, collectively, have indirect economic interests in our outstanding common stock. Several members of our +management, including Messrs. Stewart, Powell, DeBonis and McDonald, hold Class B Units in Keane Investor. As a result, such individuals are entitled to certain cash distributions from Keane Investor. See “Related Person +Transactions.” +(3) +The address for Keane Investor Holdings LLC and Messrs. Batzer, Tessler, Wille and Ms. Gray is c/o Cerberus Capital +Management, L.P., 875 Third Avenue, New York, New York 10022. +Related Person Transactions +Certain Related Party Transactions +We paid COAC, an affiliate of +Cerberus, fees totaling approximately $0.3 million during 2018 for consulting services provided in connection with improving the Company’s operations. We may retain COAC to provide similar services in the future. +Several of our board members are employees of Cerberus, and funds managed by one or more affiliates of Cerberus indirectly own a substantial portion of our equity +through their ownership of Keane Investor. +Policy and Procedures for the Review, Approval or Ratification of Transactions with Related Persons +Prior to the completion of the IPO, our board of directors adopted a written policy (the “Related Party Policy”) and procedures for the review, +approval or ratification of “Related Party Transactions” by the independent members of the Audit Committee. For purposes of the Related Party Policy, a “Related Party Transaction” is any transaction, arrangement or relationship +or series of similar transactions, arrangements or relationships (including the incurrence or issuance of any indebtedness or the guarantee of indebtedness) in which (1) the aggregate amount involved will or may be reasonably expected to exceed +$120,000 in any fiscal year, (2) the Company or any of its subsidiaries is a participant, and (3) any Related Party (as defined herein) has or will have a direct or indirect material interest. +The Related Party Policy defines “Related Party” as any person who is, or, at any time since the beginning of the Company’s last fiscal year, was +(1) an executive officer, director or nominee for election as a director of the Company or any of its subsidiaries, (2) a person with greater than five percent (5%) beneficial interest in the Company, (3) an immediate family +member of any of the individuals or entities identified in (1) or (2) of this paragraph, and (4) any firm, corporation or other entity in which any of the foregoing individuals or entities is employed or is a general partner or +principal or in a similar position or in which such person or entity has a five percent (5%) or greater beneficial interest. Immediate family members (each, a “Family Member”) includes a person’s spouse, parents, stepparents, +children, stepchildren, siblings, mothers- and fathers-in-law, sons- and +daughters-in-law, brothers- and sisters-in-law and anyone residing in such person’s +home, other than a tenant or employee. +Prior to the Company entering into any Related Party Transaction, such Related Party Transaction will be reported to our +General Counsel who will report the same to the Audit Committee. Our General Counsel will conduct an investigation and evaluation of the Related Party Transaction and will report his or her findings to the Audit Committee, including a summary of +material facts. The Audit Committee will review the material facts of all Related Party Transactions which require the Audit Committee’s approval and either approve or disapprove of the Related Party Transaction, subject to the exceptions +described below. If advance notice of a Related Party Transaction has been given to the Audit Committee and it is not possible to convene a meeting of the Audit Committee, then the chairman of the Audit Committee will consider whether the Related +Party Transaction is appropriate and, if it is, will approve the Related Party Transaction, with the Audit +2019 Proxy Statement | 47 +Table of Contents +Committee being asked to ratify the Related Party Transaction at the next regularly scheduled meeting of the Audit Committee. In the event the Audit Committee does not ratify any such Related +Party Transaction, management shall make all reasonable efforts to cancel or annul such Related Party Transaction. In determining whether to approve or ratify a Related Party Transaction, the Audit Committee, or its chairman, as applicable, will +consider all factors it deems appropriate, including the factors listed below in “—Review Criteria.” +Entering into a Related Party Transaction +without the approval or ratification required by the terms of the Related Party Policy is prohibited and a violation of such policy. In the event the company’s directors, executive officers or Chief Accounting Officer become aware of a Related +Party Transaction that was not previously approved or ratified under the Related Party Policy, such person will promptly notify the Audit Committee (or, if it is not practicable for the company to wait for the Audit Committee to consider the matter, +the chairman of the Audit Committee) will consider whether the Related Party Transaction should be ratified or rescinded or other action should be taken, with such review considering all of the relevant facts and circumstances regarding the Related +Party Transaction, including the factors listed below in “—Review Criteria.” The chairman of the Audit Committee will report to the committee at its next regularly scheduled meeting any actions taken under the Related Party Policy +pursuant to the authority delegated in this paragraph. The Audit Committee will also review all of the facts and circumstances pertaining to the failure to report the Related Party Transaction to the Audit Committee and will take, or recommend to +our board of directors, any action the Audit Committee deems appropriate. +No member of the Audit Committee or director of our board will participate in any +discussion or approval of a Related Party Transaction for which he or she is a Related Party, except that the Audit Committee member or board director will provide all material information concerning the Related Party Transaction to the Audit +Committee. +If a Related Party Transaction will be ongoing, the Audit Committee may establish guidelines for the Company’s management to follow in its ongoing +dealings with the Related Party. Thereafter, the Audit Committee, on at least an annual basis, will review and assess ongoing relationships with the Related Party to ensure that they are in compliance with the Audit Committee’s guidelines and +that the Related Party Transaction remains appropriate. +Review Criteria +All Related Party Transactions will be reviewed in accordance with the standards set forth in the Related Party Policy after full disclosure of the Related Party’s +interests in the transaction. As appropriate for the circumstances, the Audit Committee or its chairman, as applicable, will review and consider: +● +the Related Party’s interest in the Related Party Transaction; +● +the terms of the Related Party Transaction, including the approximate dollar value of the amount involved in the Related +Party Transaction and the approximate dollar value of the amount of the Related Party’s interest in the transaction without regard to the amount of any profit or loss; +● +whether the transaction is being undertaken in the ordinary course of business of the Company; +● +whether the transaction with the Related Party is proposed to be, or was, entered into on terms no less favorable to the +Company than terms that could have been reached with an unrelated third party; +● +the purpose of, and the potential benefits to the Company of, the Related Party Transaction; +● +a description of any provisions or limitations imposed as a result of entering into the Related Party Transaction; +● +whether the proposed transaction includes any potential reputational risk issues for the Company which may arise as a +result of or in connection with the Related Party Transaction; +● +whether the proposed transaction would violate any requirements of the Company’s financing or other material +agreements; and +● +any other relevant information regarding the Related Party Transaction or the Related Party. +48 | Keane Group, Inc. +Table of Contents +The Audit Committee, or its chairman, as applicable, may approve or ratify the Related Party Transaction only if the +Audit Committee, or its chairman, as applicable, determines in good faith that, under all of the circumstances, the transaction is fair to the Company. The Audit Committee, in its sole discretion, may impose such conditions as it deems appropriate +on the Company or the Related Party in connection with approval of the Related Party Transaction. +Pre-Approved Related Party Transactions +The Audit Committee has determined that the following transactions will be deemed pre-approved or ratified and will not require +review or approval of the Audit Committee, even if the aggregate amount involved will exceed $120,000, unless otherwise specifically determined by the Audit Committee. +● +Any employment by the Company of an executive officer of the Company or any of its subsidiaries if the related compensation +conforms with our Company’s compensation policies and if the executive officer is not a Family Member of another executive officer or of a director of our board; and +● +Any compensation paid to a director of our board if the compensation is consistent with the Company’s bylaws and any +compensation policies. +Notwithstanding anything to the contrary in the Related Party Policy, in the event the bylaws of the Company require +review by our board of directors and/or approval of a Related Party Transaction, the Audit Committee, and its chairman, will not have the authority to review or approve a Related Party Transaction but will provide a recommendation to our board of +directors for the board’s use in its consideration of a given Related Party Transaction. +Section 16(a) Beneficial +Ownership Reporting Compliance +All of our directors, executive officers and greater than 10% stockholders are required to file initial statements and reports of +changes of ownership of our common stock on Forms 3, 4 and 5 with the SEC. +We have reviewed these reports, including any amendments there to and written +representations from the directors and executive officers. Based upon this review, we believe that no directors, executive officer, or beneficial owner of more than 10% or more of our common stock failed to file a report on a timely basis during +2018. +Proposals by Stockholders +The +Company expects that its 2020 Annual Meeting will be held in May 2020 consistent with the Company’s 2019 Annual Meeting. Stockholders of record who intend to submit a proposal at the annual meeting of stockholders in 2020 must provide written +notice to the Company in accordance with the Company’s Bylaws. Under the Company’s Bylaws, such notice must be received at the Company’s principal executive offices, addressed to the Secretary of the Company, not earlier than +January 10, 2020 nor later than February 9, 2020, which are dates at least 90 days but not more than 120 days in advance of the first anniversary of the date of the Annual Meeting. +Stockholders who intend to submit a proposal at 2020 Annual Meeting and desire that such proposal be included in the proxy materials for such meeting must follow the +procedures prescribed in the Company’s Bylaws and Rule l4a-8 under the Exchange Act. To be eligible for inclusion in the proxy materials, stockholder proposals must be received by the Secretary of the +Company at the Company’s principal executive offices not earlier than January 10, 2020 nor later than February 9, 2020. Stockholders are also advised to review our Bylaws, which contain additional requirements about advance notice of +stockholder proposals and director nominations. +Householding +The SEC permits a single Proxy Statement to be sent to any household at which two or more stockholders reside if they appear to be members of the same family. Each +stockholder continues to receive a separate proxy card. This procedure, referred to as householding, reduces the volume of duplicate information stockholders receive and reduces mailing and printing expenses. A number of brokerage firms have +instituted householding. +2019 Proxy Statement | 49 +Table of Contents +As a result, if you hold your shares through a broker and you reside at an address at which two or more stockholders +reside, you will likely be receiving only one Proxy Statement unless any stockholder at that address has given the broker contrary instructions. However, if any such beneficial stockholder residing at such an address wishes to receive a separate +Proxy Statement in the future, or if any such beneficial stockholder that elected to continue to receive separate Proxy Statement wishes to receive a single Proxy Statement in the future, that stockholder should contact their broker or send a +request to us care of the Corporate Secretary at 1800 Post Oak Boulevard, Suite 450, Houston, Texas 77056. Telephone requests may be directed to (713) 357-9490. We will deliver, promptly upon written or oral +request, a separate copy of this Proxy Statement to a beneficial stockholder at a shared address to which a single copy of the documents was delivered. +50 | Keane Group, Inc. +Table of Contents +Appendix A +Amendment to Equity and Incentive Award Plan +WHEREAS, Keane Group, Inc., a Delaware corporation (the “Company”) previously adopted the Keane Group, +Inc. Equity and Incentive Award Plan (the “Plan”), to provide equity compensation awards to its key employees; and +WHEREAS, the Company desires to +increase the total number of authorized shares to 11,934,601 shares of the Company’s common stock; +NOW THEREFORE, the Company hereby amends +Section 2.1(a) of the Plan as follows: +1. Amendment to Section 2.1(a): +“Subject to Section 11.3 and Section 2.1(b), the aggregate number of shares of Common Stock that may be issued or transferred pursuant to +Awards under the Plan shall be equal to 11,934,601 shares (the “Authorized Shares”).” +2. The remainder of +Section 2.1 and all other sections of the Plan shall remain unchanged. +Table of Contents +ANNUAL MEETING OF STOCKHOLDERS OF +KEANE GROUP, INC. +May 9, +2019 +GO GREEN +e-Consent makes it easy to go paperless. With e-Consent, you can quickly access your proxy material, statements and other +eligible documents online, while reducing costs, clutter and paper waste. Enroll today via www.astfinancial.com to enjoy online access. +NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL : +The Notice of Meeting, the Proxy Statement, the proxy card and our annual report on Form 10-K +for the fiscal year ended December 31, 2018 are available on our website at www.keanegrp.com. +Please sign, date and mail +your +proxy card in the +envelope provided as soon +as possible. +i +Please detach along perforated line and mail in the envelope provided. +i +∎ +00033333333333330400 2 +052418 +THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” PROPOSALS 1, 2, 3 AND 4. +PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR +VOTE IN BLUE OR BLACK INK AS SHOWN HERE ☒ +1.  Election of +Directors +FOR +AGAINST +ABSTAIN +James C. Stewart +☐ +☐ +☐ +Marc G. R. Edwards +☐ +☐ +☐ +Lucas N. Batzer +☐ +☐ +☐ +Robert W. Drummond +☐ +☐ +☐ +Dale M. Dusterhoft +☐ +☐ +☐ +Christian A. Garcia +☐ +☐ +☐ +Lisa A. Gray +☐ +☐ +☐ +Gary M. Halverson +☐ +☐ +☐ +Shawn Keane +☐ +☐ +☐ +Elmer D. Reed +☐ +☐ +☐ +Lenard B. Tessler +☐ +☐ +☐ +Scott Wille +☐ +☐ +☐ +2.  To ratify the appointment of KPMG LLP as our independent auditor for +the fiscal year ending December 31, 2019 and to authorize the Board of Directors, acting through the Audit and Risk Committee, to determine the auditors’ remuneration. +☐ +☐ +☐ +3.  To +approve, in an advisory vote, the compensation of our named executive officers. +☐ +☐ +☐ +To change the address on your account, please check the box at right and indicate your new address in the address space +above. Please note that changes to the registered name(s) on the account may not be submitted via this method. +☐ +4.  To approve the amendment to the Keane Group, Inc. Equity and Incentive Award +Plan. +☐ +☐ +☐ +Signature of Stockholder +Date: +Signature of Stockholder +Date: +∎ +Note:    Please sign exactly as your name or names appear +on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly +authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person. +∎ +Table of Contents +0 ⬛ +KEANE GROUP, INC. +Proxy +for Annual Meeting of Stockholders on May 9, 2019 +Solicited on Behalf of the Board of Directors +The undersigned hereby appoints Kevin M. McDonald and Gregory L. Powell, and each of them, with full power of substitution and power to act +alone, as proxies to vote all the shares of Common Stock which the undersigned would be entitled to vote if personally present and acting at the 2019 Annual Meeting of Stockholders, to be held at The Woodlands Resort, located at 2301 North Millbend +Drive, The Woodlands, Texas, 77380 on Thursday, May 9, 2019 at 10:00 a.m. Central Time, and at any adjournments or postponements thereof, as follows: +(Continued and to be signed on the reverse side.) +⬛ 1.1 +14475 ⬛ \ No newline at end of file diff --git a/raw/proxies/0001688476/0001193125-19-094683/proxy_rpt.txt b/raw/proxies/0001688476/0001193125-19-094683/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..08c681473b91595a0409ec8b35f0c675e1fbea89 --- /dev/null +++ b/raw/proxies/0001688476/0001193125-19-094683/proxy_rpt.txt @@ -0,0 +1,83 @@ +Related Person Transactions +Certain Related Party Transactions +We paid COAC, an affiliate of +Cerberus, fees totaling approximately $0.3 million during 2018 for consulting services provided in connection with improving the Company’s operations. We may retain COAC to provide similar services in the future. +Several of our board members are employees of Cerberus, and funds managed by one or more affiliates of Cerberus indirectly own a substantial portion of our equity +through their ownership of Keane Investor. +Policy and Procedures for the Review, Approval or Ratification of Transactions with Related Persons +Prior to the completion of the IPO, our board of directors adopted a written policy (the “Related Party Policy”) and procedures for the review, +approval or ratification of “Related Party Transactions” by the independent members of the Audit Committee. For purposes of the Related Party Policy, a “Related Party Transaction” is any transaction, arrangement or relationship +or series of similar transactions, arrangements or relationships (including the incurrence or issuance of any indebtedness or the guarantee of indebtedness) in which (1) the aggregate amount involved will or may be reasonably expected to exceed +$120,000 in any fiscal year, (2) the Company or any of its subsidiaries is a participant, and (3) any Related Party (as defined herein) has or will have a direct or indirect material interest. +The Related Party Policy defines “Related Party” as any person who is, or, at any time since the beginning of the Company’s last fiscal year, was +(1) an executive officer, director or nominee for election as a director of the Company or any of its subsidiaries, (2) a person with greater than five percent (5%) beneficial interest in the Company, (3) an immediate family +member of any of the individuals or entities identified in (1) or (2) of this paragraph, and (4) any firm, corporation or other entity in which any of the foregoing individuals or entities is employed or is a general partner or +principal or in a similar position or in which such person or entity has a five percent (5%) or greater beneficial interest. Immediate family members (each, a “Family Member”) includes a person’s spouse, parents, stepparents, +children, stepchildren, siblings, mothers- and fathers-in-law, sons- and +daughters-in-law, brothers- and sisters-in-law and anyone residing in such person’s +home, other than a tenant or employee. +Prior to the Company entering into any Related Party Transaction, such Related Party Transaction will be reported to our +General Counsel who will report the same to the Audit Committee. Our General Counsel will conduct an investigation and evaluation of the Related Party Transaction and will report his or her findings to the Audit Committee, including a summary of +material facts. The Audit Committee will review the material facts of all Related Party Transactions which require the Audit Committee’s approval and either approve or disapprove of the Related Party Transaction, subject to the exceptions +described below. If advance notice of a Related Party Transaction has been given to the Audit Committee and it is not possible to convene a meeting of the Audit Committee, then the chairman of the Audit Committee will consider whether the Related +Party Transaction is appropriate and, if it is, will approve the Related Party Transaction, with the Audit +2019 Proxy Statement | 47 +Table of Contents +Committee being asked to ratify the Related Party Transaction at the next regularly scheduled meeting of the Audit Committee. In the event the Audit Committee does not ratify any such Related +Party Transaction, management shall make all reasonable efforts to cancel or annul such Related Party Transaction. In determining whether to approve or ratify a Related Party Transaction, the Audit Committee, or its chairman, as applicable, will +consider all factors it deems appropriate, including the factors listed below in “—Review Criteria.” +Entering into a Related Party Transaction +without the approval or ratification required by the terms of the Related Party Policy is prohibited and a violation of such policy. In the event the company’s directors, executive officers or Chief Accounting Officer become aware of a Related +Party Transaction that was not previously approved or ratified under the Related Party Policy, such person will promptly notify the Audit Committee (or, if it is not practicable for the company to wait for the Audit Committee to consider the matter, +the chairman of the Audit Committee) will consider whether the Related Party Transaction should be ratified or rescinded or other action should be taken, with such review considering all of the relevant facts and circumstances regarding the Related +Party Transaction, including the factors listed below in “—Review Criteria.” The chairman of the Audit Committee will report to the committee at its next regularly scheduled meeting any actions taken under the Related Party Policy +pursuant to the authority delegated in this paragraph. The Audit Committee will also review all of the facts and circumstances pertaining to the failure to report the Related Party Transaction to the Audit Committee and will take, or recommend to +our board of directors, any action the Audit Committee deems appropriate. +No member of the Audit Committee or director of our board will participate in any +discussion or approval of a Related Party Transaction for which he or she is a Related Party, except that the Audit Committee member or board director will provide all material information concerning the Related Party Transaction to the Audit +Committee. +If a Related Party Transaction will be ongoing, the Audit Committee may establish guidelines for the Company’s management to follow in its ongoing +dealings with the Related Party. Thereafter, the Audit Committee, on at least an annual basis, will review and assess ongoing relationships with the Related Party to ensure that they are in compliance with the Audit Committee’s guidelines and +that the Related Party Transaction remains appropriate. +Review Criteria +All Related Party Transactions will be reviewed in accordance with the standards set forth in the Related Party Policy after full disclosure of the Related Party’s +interests in the transaction. As appropriate for the circumstances, the Audit Committee or its chairman, as applicable, will review and consider: +● +the Related Party’s interest in the Related Party Transaction; +● +the terms of the Related Party Transaction, including the approximate dollar value of the amount involved in the Related +Party Transaction and the approximate dollar value of the amount of the Related Party’s interest in the transaction without regard to the amount of any profit or loss; +● +whether the transaction is being undertaken in the ordinary course of business of the Company; +● +whether the transaction with the Related Party is proposed to be, or was, entered into on terms no less favorable to the +Company than terms that could have been reached with an unrelated third party; +● +the purpose of, and the potential benefits to the Company of, the Related Party Transaction; +● +a description of any provisions or limitations imposed as a result of entering into the Related Party Transaction; +● +whether the proposed transaction includes any potential reputational risk issues for the Company which may arise as a +result of or in connection with the Related Party Transaction; +● +whether the proposed transaction would violate any requirements of the Company’s financing or other material +agreements; and +● +any other relevant information regarding the Related Party Transaction or the Related Party. +48 | Keane Group, Inc. +Table of Contents +The Audit Committee, or its chairman, as applicable, may approve or ratify the Related Party Transaction only if the +Audit Committee, or its chairman, as applicable, determines in good faith that, under all of the circumstances, the transaction is fair to the Company. The Audit Committee, in its sole discretion, may impose such conditions as it deems appropriate +on the Company or the Related Party in connection with approval of the Related Party Transaction. +Pre-Approved Related Party Transactions +The Audit Committee has determined that the following transactions will be deemed pre-approved or ratified and will not require +review or approval of the Audit Committee, even if the aggregate amount involved will exceed $120,000, unless otherwise specifically determined by the Audit Committee. +● +Any employment by the Company of an executive officer of the Company or any of its subsidiaries if the related compensation +conforms with our Company’s compensation policies and if the executive officer is not a Family Member of another executive officer or of a director of our board; and +● +Any compensation paid to a director of our board if the compensation is consistent with the Company’s bylaws and any +compensation policies. +Notwithstanding anything to the contrary in the Related Party Policy, in the event the bylaws of the Company require +review by our board of directors and/or approval of a Related Party Transaction, the Audit Committee, and its chairman, will not have the authority to review or approve a Related Party Transaction but will provide a recommendation to our board of +directors for the board’s use in its consideration of a given Related Party Transaction. \ No newline at end of file diff --git a/raw/proxies/0001688476/0001193125-20-122985/proxy.txt b/raw/proxies/0001688476/0001193125-20-122985/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..b4095bf99be8d39c920816558420425c17e602cc --- /dev/null +++ b/raw/proxies/0001688476/0001193125-20-122985/proxy.txt @@ -0,0 +1,4067 @@ +DEF 14A +1 +d884766ddef14a.htm +DEF 14A +DEF 14A +Table of Contents +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Proxy Statement Pursuant to Section 14(a) of the +Securities Exchange Act of 1934 +(Amendment No. ) +Filed by the +Registrant ☒ Filed by a Party other than the +Registrant ☐ +Check the appropriate box: +☐ +Preliminary Proxy Statement +☐ +Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +☒ +Definitive Proxy Statement +☐ +Definitive Additional Materials +☐ +Soliciting Material Pursuant to §240.14a-12 +NexTier Oilfield Solutions Inc. +(Name of the Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +☒ +No fee required. +☐ +Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. +(1) +Title of each class of securities to which transaction applies: +(2) +Aggregate number of securities to which transaction applies: +(3) +Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing +fee is calculated and state how it was determined): +(4) +Proposed maximum aggregate value of transaction: +(5) +Total fee paid: +☐ +Fee paid previously with preliminary materials: +☐ +Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement +number, or the Form or Schedule and the date of its filing. +(1) +Amount Previously Paid: +(2) +Form, Schedule or Registration Statement No.: +(3) +Filing Party: +(4) +Date Filed: +Table of Contents +Table of Contents +Notice of 2020 Annual Meeting of Stockholders +When +Thursday, June 18, 2020 +at 3:00 p.m. +(Central Time) +Doors open at 2:50 p.m. +Where +NexTier Company +Headquarters +3990 Rogerdale Road +Houston, Texas 77042 +Record Date +Stockholders as of +April 23, 2020 +are entitled to vote +Items of Business +Proposal +Board Voting +Recommendation +Page Reference +(for more detail) +Election of 9 directors +☑ +FOR each nominee +6 +Approval of advisory resolution on executive compensation +☑ +FOR +23 +Ratification of selection of KPMG LLP as our independent registered public accounting firm for 2020 +☑ +FOR +26 +Approval of reverse stock split +☑ +FOR +56 +Stockholders will also transact such other business as may properly come before the Annual Meeting. +Attending the Annual Meeting +In Person. To be admitted, you will be required to present a government-issued photo identification (such as a driver’s license or passport) and proof of share ownership. More information can be found in proxy statement +in the section “Other Information”. If you are a beneficial shareholder (that is, your shares are held in the name of a broker, bank or other holder of record), you will also need to obtain a “legal proxy” from the registered +shareholder to vote at the Annual Meeting. You do not need to attend the Annual Meeting of Stockholders to vote if you submitted your proxy in advance of the meeting. +As part of our precautions regarding the coronavirus or COVID-19, we are planning for the possibility that the +meeting may be held virtually over the Internet. If we take this step, we will announce the decision to do so as soon as practicable before the meeting via a press release and posting details on our website that will also be filed with the SEC as +proxy material. As always, we encourage you to vote your shares prior to the Annual Meeting. +Your Vote Is Very Important. Even if you plan to +attend our Annual Meeting in person, please cast your vote as soon as possible. Make sure to have your proxy card or voting instruction form (VIF) in hand: +Vote by Internet +Call Toll-Free +Vote by Mail +Vote in Person +www.proxyvote.com +Call 1-800-690-6903 +(from the United States and Canada) +Follow the instructions on +your proxy card +Attend our Annual Meeting +and vote by ballot +Submitting your proxy now will not prevent you from voting your shares at the Annual Meeting, as your proxy is revocable at your +option. +Important Notice Regarding the +Availability of Proxy Materials for the Annual Meeting of Stockholders to be held on June 18, 2020: This notice, the Proxy Statement, the proxy card and our 2019 Annual Report to Stockholders, which includes our Annual Report on Form 10-K +for the fiscal year ended December 31, 2019 (the “2019 10-K”) are available on our website at www.nextierofs.com . +By order of the board of directors, +Kevin M. McDonald +Executive Vice President, Chief Administrative Officer & General Counsel +Houston, Texas +April 28, 2020 +2020 Proxy Statement +i +Table of Contents +Table of Contents +Letter to Stockholders +1 +General Information +2 +Proposal 1 – Election of Directors +6 +Nominees +7 +Board of Directors +11 +Board Committees +14 +Director Compensation +15 +Corporate Governance +20 +Proposal 2 – Ratify Appointment of Independent Auditors +23 +Audit fees +24 +Pre-Approval Policy +24 +Audit Committee Report +25 +Proposal 3 – Advisory Approval of Executive Compensation +26 +Executive Officers +27 +Compensation Committee Report +29 +Compensation Discussion and Analysis +30 +Executive Compensation Tables +47 +CEO Pay Ratio +55 +Proposal 4 – Approval of Reverse Stock Split +56 +Other Information +63 +Share Ownership +63 +Related Person Transactions +64 +Delinquent Section 16(a) Reports +66 +Equity Compensation Plan Information +67 +Proposals by Stockholders +67 +Householding +68 +Appendix A – Certificate of Amendment +A-1 +ii +NexTier Oilfield Solutions Inc. +Table of Contents +Letter to Stockholders +Dear Fellow Stockholder, +Our journey through 2019 brought transformational change +for our company. We began the year as one of the largest providers of oil and gas well completion services focused on U.S. land basins. However, even from this position of relative strength, we recognized the need to make proactive adjustments to +accommodate an industry that has been clamoring for consolidation. +We envisioned a future as a more diversified oilfield services company with greater scale, +maintaining a solid financial position with a strong balance sheet, in which our success was bolstered by partnering with high-efficiency customers to produce leading profitability and shareholder returns. Our evolution from Keane Group to NexTier, +through the merger of equals with C&J Energy Services, Inc. was purposefully designed to fit that vision. +As NexTier, we are positioned for continued +advancement of innovation initiatives, with a rich portfolio of proprietary technologies that will drive safety, operational efficiency and sustainability. By providing a larger footprint and broader service offerings, we are better able to serve +our customers in critical growth markets while maintaining our high standards for service quality. NexTier is in a prime position to capitalize on the continual transformation in the industry, creating a niche that provides an even more attractive +investment opportunity for our shareholders. +Macro-economic conditions in 2020 are shaping a challenging environment. We are rising to the challenge by taking +prompt, decisive actions to fortify our solid financial position. We are also streamlining our organization to better align with market demand, including right-sizing of overhead costs, facility consolidation, and variable cost reductions in-line +with macro driven activity declines. +Regardless of the shape and pace of 2020, NexTier is well-positioned as a leader in our highly competitive industry. Our +relentless pursuit of continuous improvement, coupled with a strong portfolio of innovation, positions us to deliver differentiated performance in our operations, provide maximum value to our customers, and generate leading returns for our +shareholders. I’m proud of our 2019 achievements, and I’m truly confident about NexTier’s ability to navigate the cyclical market challenges ahead and emerge as a leader to address the opportunities in 2020 and beyond. +Sincerely, +Robert W. Drummond +President & Chief Executive Officer +2020 Proxy Statement +1 +Table of Contents +GENERAL INFORMATION +We were formed under the name Keane Group, Inc. on October 13, 2016, to be a holding corporation as part of an organizational restructuring of Keane Group +Holdings, LLC and its subsidiaries. On October 31, 2019, we completed a merger transaction with C&J Energy Services, Inc. (“C&J”), a publicly traded Delaware corporation. Pursuant to this transaction, C&J was ultimately +merged with and into our wholly owned merger subsidiary, with our subsidiary continuing as the surviving entity (the “Merger”). On the effective date of the Merger, we changed our name to “NexTier Oilfield Solutions Inc.” We are +making this proxy statement available to you on April 28, 2020 in connection with the solicitation of proxies by our board of directors, or our “Board,” for the NexTier Oilfield Solutions Inc. 2020 Annual Meeting of Stockholders. In +this Proxy Statement, “NexTier,” the “Company,” “we,” “us” and “our” refer to NexTier Oilfield Solutions Inc., a Delaware corporation. +Purpose of the Meeting +The table below +summarizes the proposals that will be voted on, the vote required to approve each item, how votes are counted and how the Board recommends you vote: +Proposal +Required +Approval +Broker +Discretionary +Voting Allowed +Broker +Non-Votes +Abstentions +1.  Election of Directors. To elect each of the nine +individuals named in this Proxy Statement until the 2021 Annual Meeting or, in each case, until his or her earlier death, retirement, resignation or removal from the position of director. +Majority of +Votes Cast +No +No effect +No effect +2.  Ratify Appointment of Independent Auditors. To +ratify the appointment of KPMG as our independent auditor for the fiscal year ending December 31, 2020. +Majority of +Votes Cast +Yes +N/A +No effect +3.  Approve Executive Compensation. To approve, in an +advisory vote, the compensation of our named executive officers. +Majority of +Votes Cast +No +No effect +No effect +4.  Approve Reverse Stock Split. To approve an amendment to +the Company’s certificate of incorporation to effect a reverse stock split of the Company’s common stock, by a ratio of not less than 1-for-5 and not more than 1-for-25, and a proportionate reduction in the number of authorized shares of +common stock (the stock split together with the reduction are referred to herein as the “Reverse Stock Split”), such ratio and the implementation and timing of such Reverse Stock Split to be determined in the discretion of the Board of +Directors of the Company. +Majority of +Shares +Outstanding +No +Against +Against +2 +NexTier Oilfield Solutions Inc. +Table of Contents +Voting Information +Who Can Vote. All registered stockholders at the close of business on April 23, 2020 (the “Record Date”) have the right to notice of, and to vote, +in person or by proxy, at the Annual Meeting. Each share of common stock is entitled to one vote. As of the Record Date, there were 213,735,612 shares of NexTier common stock outstanding and entitled to vote. +Meeting Attendance. Attendance at the meeting is limited to NexTier stockholders as of the record date. If you plan to attend the Annual Meeting in person, you +will need a form of personal identification (such as a driver’s license or passport) along with either your Notice, proxy card or proof of stock ownership to enter the Annual Meeting. If you are a street name stockholder and you wish to attend +the Annual Meeting in person, you will need to provide official documentation (such as a brokerage statement) reflecting your beneficial ownership of NexTier stock as of the Record Date, as well as a valid picture identification (such as a +driver’s license or passport). Admission to the meeting will be on a first-come, first-served basis. Doors will open at 2:50 p.m. Central Time. Please note that no cameras, recording equipment, electronic devices, large bags, briefcases or +packages will be permitted in the Annual Meeting. +COVID-19 Implications. We are monitoring the coronavirus situation closely and if we determine that +holding an in-person annual meeting could pose a risk to the health and safety of our shareholders, employees, and Directors, the Company may decide to instead hold a Virtual Annual Meeting. If we decide to use that format, we will make a public +announcement as soon as practicable prior to the meeting. +In such event, to attend and participate in the Virtual Annual Meeting, stockholders will need to access +the live audio webcast of the meeting. To do so, stockholders of record will need to visit www.virtualshareholdermeeting.com/NEX2020 and use their 16-digit Control Number provided in the Notice to log in to this website, and beneficial owners of +shares held in street name will need to follow the instructions provided by the broker, +bank or other nominee that holds their shares. We would encourage stockholders to log in to this website and access the webcast before the Virtual Annual Meeting’s start time. Further +instructions on how to attend, participate in and vote at the Virtual Annual Meeting, including how to demonstrate your ownership of our stock as of the record date, are available at www.virtualshareholdermeeting.com/NEX2020 using your 16-digit +control number, Please note you will only be able to participate in the meeting using this website if the Company decides to hold a Virtual Annual Meeting, instead of holding an in-person Annual Meeting in Houston, Texas. +Proxy Voting Deadline. 11:59 P.M. Eastern Time on June 17, 2020. +Stockholder of Record. If your shares are registered directly in your name with our transfer agent, American Stock Transfer & Trust Company LLC, you are +considered, with respect to those shares, the stockholder of record, and we are sending these proxy materials directly to you. As the stockholder of record, you have the right to grant your voting proxy directly to us or to a third party, or to vote +in person at the Annual Meeting. +Beneficial Owner. If your shares are held in a brokerage account or by a bank, trustee or other nominee, you are considered +the beneficial owner of shares held in street name, and these proxy materials are being forwarded to you on behalf of your broker, bank, trustee or other nominee. As the beneficial owner, you have the right to direct your broker, bank, trustee or +other nominee how to vote and you also are invited to attend the Annual Meeting of Stockholders. If you received a printed set of proxy materials, your broker, bank, trustee or other nominee has enclosed a voting instruction form (“VIF”) +for you to use in directing the broker, bank, trustee or other nominee how to vote your shares. +Since a beneficial owner is not the stockholder of record, you may +not vote these shares in person at the Annual Meeting unless you obtain a legal proxy from the broker, bank, trustee or other nominee that holds your shares giving you the right to vote the shares at the Annual Meeting. +2020 Proxy Statement +3 +Table of Contents +Proxies. Pursuant to rules adopted by the Securities and Exchange Commission (“SEC”), we have elected to +mail to many of our stockholders a Notice of Internet Availability of Proxy Materials (Notice) instead of a paper copy of the proxy materials. All stockholders receiving the Notice will have the ability to access the proxy materials over the +Internet and receive a paper copy of the proxy materials by mail on request. Instructions on how to access the proxy materials over the Internet or to request a paper copy may be found in the Notice. In addition, the Notice contains instructions on +how you may access proxy materials in printed form by mail or electronically on an ongoing basis. This process has allowed us to expedite our stockholders’ receipt of proxy materials, lower the costs of distribution, and reduce the +environmental impact of our 2020 Annual Meeting. +The Notice of Internet Availability of Proxy Materials is being mailed on or about May 8 to each stockholder +registered in our share register as of the Record Date. Stockholders not registered in our share register as of the Record Date will not be entitled to attend, vote or grant proxies to vote at the Annual Meeting. Your vote and proxy are being +solicited by our board of directors in favor of each of Robert Drummond and Kevin McDonald, with full power of substitution (the “Proxy Holders”), for use at the Annual Meeting. +We request that you grant your proxy to vote on each of the proposals in this notice and any other matters that may properly come before the meeting to the Proxy +Holders by completing, signing, dating and returning the proxy card in accordance with the instructions thereon, for receipt by us no later than the Proxy Voting Deadline, whether or not you plan to attend. +If you are a registered holder and you properly complete and submit your proxy card in a timely manner, you will be legally designating the individual or individuals +named by you in the proxy card, or if you do not name your proxy or proxies, the Proxy Holders, to vote your shares in accordance with your instructions indicated on the card. If you are a registered stockholder and properly complete and submit your +proxy card in a timely manner without naming your proxy or proxies and you do not indicate how your shares +are to be voted, then the Proxy Holders will vote as the board of directors recommends on each proposal and if other matters properly come before the Annual General Meeting, the Proxy Holders +will have your authority to vote your shares in their discretion on such matters. +Revoking Your Proxy. If you are a stockholder of record , you can +revoke your proxy at any time before it is exercised by: +• +Submitting written notice of revocation to NexTier Oilfield Solutions Inc., 3990 Rogerdale Rd, Houston, Texas 77042, Attn: Corporate Secretary, so long as such notice is received no later than 11:59 p.m., Eastern Time, +the day before the Annual Meeting; +• +Voting again by Internet or telephone at a later time before the closing of those voting facilities at 11:59 p.m., Eastern Time, on the day before the Annual Meeting. +• +Submitting a later dated proxy with new voting instructions by mail or through the telephone or Internet voting systems, so long as such notice is received no later than 11:59 p.m., Eastern Time, the day before the +Annual Meeting; or +• +Attending the Annual Meeting and voting your shares in person (attending the Annual Meeting will not by itself have the effect of revoking a previously submitted proxy). +If you are not a registered holder, but you hold your shares through a broker or other nominee , you must follow the instructions provided by your broker or other +nominee if you wish to revoke a previously granted proxy. You may also change your vote or revoke your proxy in person at the Annual Meeting if you obtain a signed proxy from the record holder (broker or other nominee) giving you the right to vote +the shares at the meeting. +Multiple Proxy Cards. If you receive multiple proxy cards, this indicates that your shares are held in more than one account, +such as two brokerage accounts and are registered in different names. You should complete and return each of the proxy cards to ensure that all of your shares are voted. +4 +NexTier Oilfield Solutions Inc. +Table of Contents +Cost of Proxy Solicitation. We have retained D.F. King & Co., Inc. to solicit proxies from our +stockholders at an estimated fee of $8,500, plus expenses. Some of our directors, officers and employees may solicit proxies personally, without any additional compensation, electronically, by telephone or by mail. Proxy materials also will be +furnished without cost to brokers and other nominees to forward to the beneficial owners of shares held in their names. All costs of proxy solicitation will be borne by the Company. +Quorum and Voting. A majority of the outstanding shares of our common stock present in person or represented by proxy at the Annual Meeting will constitute a +quorum for the transaction of business. Abstentions and broker non-votes will be included in determining whether a quorum is present at the Annual Meeting. A “broker non-vote” occurs when a nominee (such as a broker) holding shares +for a beneficial owner abstains from voting on a particular proposal because the nominee does not have discretionary voting power for that proposal and has not received instructions from the beneficial owner on how to vote those shares. +If you are a beneficial owner and your broker or other nominee holds your shares in its name (in +“street name”), the broker generally has discretion to vote your shares with respect to “routine” proposals. The only “routine” proposal in this Proxy Statement is +Proposal 2. Proposals 1, 3 and 4 are “non-routine” and your broker may not vote your shares. Accordingly, if you hold your shares in “street name,” your broker will not be able to vote your shares on these matters unless your +broker receives voting instructions from you. +Approval of Proposals 1, 2 and 3 will be decided by a simple majority of the votes cast “FOR” or +“AGAINST,” in person or by proxy, provided a quorum is present. Abstentions and broker “non-votes” will not affect the voting results. +Approval of Proposal 4 will require the approval of a majority of the outstanding shares of our common stock, in person or by proxy. Abstentions and broker +“non-votes” will have the effect of a vote against Proposal 4. +The election of each director nominee will be considered and voted upon as a separate +proposal. There is no cumulative voting in the election of directors. Abstentions and broker “non-votes” will not affect the voting results. +How to Vote +To ensure your representation at the Annual Meeting, we request that you grant your proxy to vote on each of the proposals in this Proxy Statement and any other matters +that may properly come before the meeting to the persons named in the proxy card by voting in one of the ways described herein no later than the Voting Deadline whether or not you plan to attend. You can vote in any of the following ways: +Vote by Internet +Call Toll-Free +Vote by Mail +Vote in Person +www.proxyvote.com +Call 1-800-690-6903 +(from the United States and Canada) +Follow the instructions on +your proxy card +Attend our Annual Meeting +and vote by ballot +Questions +You +may call or contact our proxy solicitor, D.F. King & Co., Inc., at (866) 751-6310, collect at (212) 269-5550 or NexTier@dfking.com, or contact us care of the Corporate Secretary at 3990 Rogerdale Road, Houston, Texas 77042 or via +telephone at (713) 325-6000 if you have any questions or need directions to be able to attend the meeting and vote in person. +Please Vote. Your Vote is Important to Us. +2020 Proxy Statement +5 +Table of Contents +Proposal 1. Election of Directors +The Board of Directors recommends that you vote “FOR” +each nominee for director. +Our business and affairs are currently managed under the Board of Directors (the “Board”) of NexTier. Under our bylaws, +the Board consists of between 7 and 15 members, as determined by resolution of the Board from time to time. Our Board currently consists of 12 directors, but three of our incumbent directors, Marc G. R. Edwards, John Kennedy and Steven Mueller are +not standing for reelection to the Board. NexTier acknowledges and thanks Messers. Edwards, Kennedy and Mueller for their outstanding service on the Board. The Board, on recommendation of the Nominating and Corporate Governance Committee, reduced +the size of the Board from twelve to nine directors, effective upon the Annual Meeting. Proxies cannot be voted for a greater number of persons than the number of nominees named. +Upon the recommendation of the Nominating and Corporate Governance Committee, the Board has nominated each of the following nine nominees to be elected at the Annual +Meeting: Robert W. Drummond, Stuart Brightman, Gary M. Halverson, Patrick Murray, Amy H. Nelson, Mel G. Riggs, Michael Roemer, James C. Stewart and Scott Wille. Each of the nominees is presently serving as a director. +Each director elected will serve for a term of one year and will hold office until the 2021 Annual Meeting and until his or her respective successor is elected and +qualified, or, in each case, until his or her earlier death, resignation, retirement, disqualification or removal from the position of director. All of our nominees have consented to serve as directors and our board of directors has no reason to +believe that any of the nominees will be unable to act as a director. A director nominee will be re-elected if approved by a simple majority of the votes cast. +6 +NexTier Oilfield Solutions Inc. +Table of Contents +Nominees +Set forth in the following pages is +certain information furnished to us by our director nominees, including information about their individual experience, qualifications, attributes and skills that led our Nominating and Corporate Governance Committee and Board to conclude that they +should serve as directors. +There are no family relationships among any of our directors or executive officers. None of the corporations or other organizations +referenced in the biographical information below is a parent, subsidiary or other affiliate of NexTier. +Robert W. Drummond +Other Public Company Directorships: +Age: 59 +Director since: 2018 +Frank’s International N.V. (since 2017) +Mr. Drummond serves as a director and as NexTier’s President and Chief Executive Officer. He joined Keane Group, Inc. (now known as NexTier +Oilfield Solutions Inc.) in August 2018 as Chief Executive Officer and a member of the Board, and was elected as President in October 2019. Prior to joining Keane, Mr. Drummond served as the President & Chief Executive Officer of Key Energy +Services, Inc. and served for more than 30 years at Schlumberger Limited in various executive positions. Mr. Drummond has been a Supervisory Director at Frank’s International N.V. since May 2017, and sits on the board of directors of the +Petroleum Equipment Suppliers Association and the advisory board for the University of Alabama College of Engineering. He has previously served on the board of directors of the National Ocean Industries Association, the Houston Offshore Energy +Center, the Greater Houston Partnership, the API Upstream Committee, and as an Advisory Board Member of the University of Houston Global Energy Management Institute. +Mr. Drummond brings to our Board a wealth of experience in positions of leadership across the energy industry. +Stuart Brightman +Other Public Company Directorships: +Age: 63 +Director since: 2019 +TETRA Technologies, Inc. (since 2009) +Mr. Brightman has served as a member of the NexTier board of directors since October 2019. He has served as a director of TETRA Technologies, Inc. +(“TETRA”), a diversified oilfield services company, since May 2009. He also served as Chief Executive Officer of TETRA from May 2009 until May 2019, as President of TETRA from May 2009 until February 2018, and as Executive Vice President +and Chief Operating Officer of TETRA from April 2005 to May 2009. Prior to TETRA, Mr. Brightman spent 11 years at Dresser, Inc. (including its successors in interest, “Dresser”), in a variety of leadership roles, during which he was +involved in multiple M&A transactions, internal restructurings and product/market repositionings. He has experience in integration of acquisitions and oversight of operations, engineering, sales and marketing, finance, human resources and +information technology. +Mr. Brightman’s broad oil field services and executive +management experience, and his proven leadership and business capabilities provide an important point of view to our Board. +2020 Proxy Statement +7 +Table of Contents +Gary M. Halverson +Age: 61 +Director since: 2016 +Mr. Halverson has served as a member of NexTier’s board of directors since September 2016. In 2016, Mr. Halverson became a Senior Advisor at +First Reserve, a private equity firm that focuses on energy investments, and a Partner at 360 Development Partners, a commercial real estate firm. Mr. Halverson was formerly Group President of Drilling and Production Systems and Senior Vice +President at Cameron International Corporation from 2014 to 2016 prior to its sale to Schlumberger in 2016. He has over 38 years of industry experience with Cameron, where he worked in various leadership roles across the U.S., Latin America and +Asia. Mr. Halverson currently serves as Chairman of the Board of Directors of the Petroleum Equipment Suppliers Association, as a director on the board of the General Committee of Special Programs of the American Petroleum Institute, as a +director on the board of the Well Control Institute and was the U.S. delegate to the World Petroleum Congress. +Mr. Halverson’s extensive involvement in the oilfield service industry brings a valuable perspective to our Board. +Patrick Murray (Chairman) +Age: 77 +Director since: 2019 +Mr. Murray has served as a member of the NexTier board of directors since October 2019. Mr. Murray retired from Dresser, Inc. (including its successors +in interest, “Dresser”), a manufacturer and marketer of highly engineered equipment for the energy industry, where he had been the Chairman of the Board and Chief Executive Officer since 2001. From 1996 to 2000 he served in a variety of +senior leadership roles with Dresser. Mr. Murray has over 35 years of domestic and international experience in both operational management and financial/business development leadership roles. Mr. Murray also serves on the board of the +World Affairs Council of Dallas Fort Worth, on the board of advisors for the Maguire Energy Institute at the Edwin L. Cox School of Business, Southern Methodist University, and as Chairman of the Board of Regents of Seton Hall University. +Mr. Murray’s brings to his role as a director extensive executive-level management +experience, public board experience and comprehensive knowledge and understanding of the oil and gas industry. +8 +NexTier Oilfield Solutions Inc. +Table of Contents +Amy H. Nelson +Other Public Company Directorships: +Age: 51 +Director since: 2019 +Helix Energy Solutions Group, Inc. (since 2019); +Apache Corporation (since 2014) +Ms. Nelson has served as a member of the NexTier board of directors since October 2019. She is also the president of Greenridge Advisors, LLC, which +she founded in 2007 as an energy services and equipment consulting firm focused on the development, execution, and financing of corporate and product line strategies. Ms. Nelson advises her clients on strategy development, capital allocation, +acquisition evaluation and infrastructure development. Her clients span a broad range of oilfield service, product and geographic markets. Ms. Nelson has been a member of Apache Corporation’s board of directors since 2014, and is a member +of its audit and corporate governance and nominating committees. She also joined the Helix Energy Solutions Group, Inc. board of directors and its audit committee in July of 2019. From 2000 to 2007, Ms. Nelson served as a vice president of SCF +Partners, an oilfield service and equipment-focused private equity firm, where she concentrated on investment strategy, investment execution and portfolio company management. Ms. Nelson has devoted her career to serving companies in the oil and +gas industry. +Ms. Nelson’s experiences have provided her with valuable insight into +corporate strategy, capital allocation, and the assessment and management of risks, including environmental risks, faced by oil and gas companies. This expertise enhances her contributions to the Board. +Mel G. Riggs +Other Public Company Directorships: +Age: 65 +Director since: 2019 +TransAtlantic Petroleum Ltd. (since 2009) +Royale Energy, Inc. (since 2018) +Mr. Riggs has served as a member of NexTier’s board of directors since October 2019. Mr. Riggs has served in senior-level positions of +Clayton Williams and its related companies for 28 years, including his current position as Vice President and Director since May 2017. Clayton Williams Companies is a group of privately held companies involved in oil and natural gas activities, real +estate, and agricultural operations. From March 2015 to April 2017, Mr. Riggs served as President of Clayton Williams Energy, Inc. (“CWEI”), a public exploration and production company that develops and produces oil and natural gas. +From December 2010 until Mach 2015, Mr. Riggs served as Executive Vice President and Chief Operating Officer of CWEI. From 1991 to December 2010, Mr. Riggs served as Senior Vice President—Finance, Secretary, Treasurer, and Chief +Financial Officer of CWEI. Mr. Riggs currently serves as a Director at TransAtlantic Petroleum Ltd. since July 2009 and as a Director and the Chairman of the Board of Royale Energy, Inc. since July 2018. He previously served as a Director of +CWEI from May 1994 until April 2017. Mr. Riggs is a Certified Public Accountant. +Mr. +Riggs has a strong operational background and extensive financial expertise, all of which brings important insights into board oversight, risk management and corporate governance matters. +2020 Proxy Statement +9 +Table of Contents +Michael Roemer +Age: 61 +Director since: 2019 +Mr. Roemer has served as a member of the NexTier board of directors since October 2019. Mr. Roemer also operates his business, Roemer Financial +Consulting, a financial advisory services company that he founded in 2012. He advises closely held businesses with financial advice, focusing on potential merger and acquisitions and exit transactions. Prior to his current role, Mr. Roemer +served as a Partner and Chief Financial Officer of Hammond, Kennedy, Whitney & Company (“HKW”), a private equity firm. In this role, his responsibilities included, among other things, financial and tax reporting, coordinating financial +due diligence of acquisition targets, and working with the HKW team to assess a target’s financial results and the financial management team’s capabilities. He is a licensed CPA with over 35 years’ experience. +Mr. Roemer brings to his service on our Board an extensive background in public accounting and +knowledge of generally accepted accounting principles, combined with his additional experience as the chief financial officer of a private equity firm and his vast experience in financial and accounting matters. +James C. Stewart +Age: 57 +Director since: 2011 +Mr. Stewart joined NexTier in March 2011 as Chairman and Chief Executive Officer and became Executive Chairman in August 2018 until October 31, +2019. Prior to joining NexTier, from 2007 to 2009, he served as the President and Chief Executive Officer of a privately held international drilling company. From 2006 to 2007, Mr. Stewart served as Vice President of Integrated Drilling +Services for Weatherford International plc, based in London and Dubai, where he created and managed a global business unit that included a 50-rig international land contract drilling group and a global project management team. Mr. Stewart began his +career with Schlumberger Limited, where he held senior leadership positions across the globe over the span of 22 years. +Mr. Stewart’s qualifications include his broad leadership experience with oilfield services, as well as his long tenure and successes in the oil and natural gas +market. +Scott Wille +Other Public Company Directorships: +Age: 39 +Director since: 2011 +Albertsons Companies (since 2015) +Mr. Wille has served as a member of NexTier’s board of directors since March 2011. He is currently Co-Head of Private Equity and a Senior Managing +Director at Cerberus, which he joined in 2006. Prior to joining Cerberus, Mr. Wille worked in the leveraged finance group at Deutsche Bank Securities Inc. from 2004 to 2006. Mr. Wille currently serves as a director of the Albertsons +Companies, Inc. the second largest traditional grocery company in the U.S. In addition, Mr. Wille currently serves as a director of Off Lease Only, the largest independent used car dealer in Florida. Mr. Wille previously served as a +director of Remington Outdoor Company, Inc. from February 2014 to March 2018, a designer, manufacturer and marketer of firearms, ammunition and related products and as director of Tower International, Inc., a manufacturer of engineered structural +metal components and assemblies, from September 2010 to October 2012. +Mr. Wille’s +experience in the financial and private equity industries, together with his in-depth knowledge of our company and its acquisition strategy, are valuable to our board of directors’ understanding of our business and financial +performance. +10 +NexTier Oilfield Solutions Inc. +Table of Contents +Board of Directors +Our Directors +The Board is currently composed of 12 directors. The following table +provides summary information about these directors as of April 10, 2020. +Committee Memberships +Name and Principal Occupation +Age +Director +Since +Independent +Audit & +Risk +Committee +Nom. & +Gov. +Committee +Comp. +Committee +Robert Drummond +President and CEO of NexTier +59 +2018 +Stuart Brightman +Retired CEO and President of TETRA Technologies, Inc. +63 +2019 +🌑 +🌑 +🌑 +Marc G. R. Edwards +President and CEO of Diamond Offshore Drilling, Inc. +59 +2016 +🌑 +🌑 +🌑 +Gary M. Halverson +Retired Group President Drilling & Production Systems Cameron +61 +2016 +🌑 +🌑 +🌑 +John Kennedy +Retired President and CEO of Wilson International, Inc. +67 +2019 +🌑 +🌑 +Steven Mueller +Retired President and CEO Southwestern Energy Company +67 +2019 +🌑 +Patrick Murray +Retired President & CEO Dresser, Inc. +77 +2019 +🌑 +Amy H. Nelson +President and Founder of Greenridge Advisors, LLC +51 +2019 +🌑 +🌑 +Mel Riggs +Retired Chief Operating Officer of Clayton Williams Energy, Inc. +65 +2019 +🌑 +🌑 +Michael Roemer +Founder Roemer Financial Consulting +61 +2019 +🌑 +James C. Stewart +Retired Chief Executive Officer of Keane Group, Inc. +57 +2011 +Scott Wille +Co-Head of Private Equity & Senior Managing Director at Cerberus Capital Management, L.P. +39 +2011 += Chairperson +Changes to our Board of Directors Resulting from the Merger +As previously discussed, on October 31, 2019, we completed a Merger with C&J Energy Services, Inc. As part of that merger, six of our then directors resigned, +and six of the directors of C&J joined our Board. From January 1, 2019, until approximately the time of the Merger, the 12 members of our Board were Robert Drummond, Gary M. Halverson, Elmer D. Reed, Marc G. R. Edwards, Christian A. Garcia, +Lucas N. Batzer, Dale M. Dusterhoft, James Stewart, Lisa A. Gray, Shawn Keane, Lenard B. Tessler and Scott Wille. On October 11, 2019, Mr. Garcia resigned because he has accepted a new job with a company that will be a competitor of the +combined company following the merger. He was replaced with Mr. Riggs. Our board of directors had affirmatively determined that Marc G. R. Edwards, Christian A. +2020 Proxy Statement +11 +Table of Contents +Garcia, Gary M. Halverson Elmer D. Reed and Mel G. Riggs were independent directors under the applicable rules of the New York Stock Exchange (the “NYSE”) and as such +term is defined in Rule 10A-3(b)(1) under the Securities Exchange Act of 1934 (the “Exchange Act”). +On October 31, 2019, Messers. Reed, Batzer, +Dusterhoft, Keane and Tessler and Ms. Gray resigned from the Board in connection with the consummation of the Merger, and Messers. Brightman, Kennedy, Mueller, Murray and Roemer and Ms. Nelson joined the Board. +As directors joined and left our Board, our standing committee membership changed as well. Below is a chart reflecting these changes: +Committee Memberships +Name +Audit & Risk +Nominating & +Corporate +Governance +Compensation +Compliance +Robert Drummond +Stuart Brightman +10/31/2019 – Present +10/31/2019 – Present +Marc G. R. Edwards +1/01/2019 – 10/31/2019 +1/01/2019 – Present +1/01/2019 – Present +10/31/2019 – 4/13/2020 +Gary M. Halverson +1/01/2019 – Present +1/01/2019 – Present +2/06/2019 – Present +John Kennedy +10/31/2019 – Present +10/31/2019 – 4/13/2020 +Steven Mueller +10/31/2019 – Present +Patrick Murray +Amy H. Nelson +11/04/2019 – Present +10/31/2019 – 4/13/2020 +Mel Riggs +10/11/2019 – Present +Michael Roemer +11/04/2019 – Present +James C. Stewart +10/31/2019 – 4/13/2020 +Scott Wille +1/01/2019 – 2/06/2019 +Lucas N. Batzer +1/01/2019 – 10/31/2019 +Dale M. Dusterhoft +1/01/2019 – 10/31/2019 +1/01/2019 – 10/31/2019 +Christian A. Garcia +1/01/2019 – 10/11/2019 +2/06/2019 – 10/11/2019 +Lisa A. Gray +1/01/2019 – 10/31/2019 +1/01/2019 – 10/31/2019 +Shawn Keane +1/01/2019 – 2/06/2019 +1/01/2019 – 10/31/2019 +Elmer D. Reed +2/06/2019 – 10/31/2019 +1/01/2019 – 10/31/2019 +Lenard B. Tessler +Attendance at Board and Committee Meetings, Annual Meeting +During 2019, the Board met 11 times. Each member of the Board participated, in person or by telephone, in at least 75% of the aggregate of Board and committee meetings +on which he or she served (during the period that such director served). It is our policy that directors are strongly encouraged to attend each annual meeting of stockholders, and the members of our Board at the time of our 2019 Annual Meeting did +attend. +Director Independence +As a publicly traded company listed on +the NYSE, we are required to comply with the rules and regulations of the NYSE as well as that of the SEC. Prior to December 6, 2018, we were a “controlled company” within the meaning of the NYSE rules, but after a transition period +under the NYSE rules we now have a board of directors with at least a majority of independent directors, as that term is defined by the applicable rules and regulations of the NYSE and SEC. Additionally, each of the Audit & Risk +12 +NexTier Oilfield Solutions Inc. +Table of Contents +Committee, Compensation Committee and Nominating and Corporate Governance Committee is required to be comprised solely of independent directors, with heightened standards applicable to Audit +Committee and Compensation Committee members. +Each year, our Nominating and Corporate Governance Committee evaluates the relationships between the Company and each +director and reports the results of its review to the Board. To be considered “independent,” a director must be affirmatively determined by the Board, at the recommendation of the Nominating and Corporate Governance Committee and after due +deliberation, to have no material relationship with the Company other than as a director. The Nominating and Governance Committee and the Board assess the relationships and other facts and circumstances relevant to director independence on a +case-by-case basis, in each case consistent with the applicable rules and regulations of the NYSE and SEC, and consistent with the Company’s Corporate Governance Guidelines (which can be found on our website at www.nextierofs.com ). +After reviewing all relationships each director has with the Company, including the nature and extent of any business relationships between the Company and such person, +and based on the review and recommendation of the Nominating and Corporate Governance Committee, the Board has affirmatively determined that each of Messrs. Brightman, Edwards, Halverson, Kennedy, Mueller, Murray, Riggs and Roemer and +Ms. Nelson has no material relationships with the Company and, is “independent” under the applicable rules and regulations of the SEC, the NYSE and in accordance with our Corporate Governance Guidelines. In addition to the Board-level +standards for director independence, each member of the Audit Committee meets the heightened independence standards required for audit committee members under the NYSE and SEC rules, and each member of the Compensation Committee meets the heightened +independence standards for compensation committee members under the NYSE rules. +The Board’s independence determinations included a review of the transactions +that occurred since the beginning of 2019 with entities associated with our directors or members of their immediate family. In addition, in making its independence determinations, the Board considered that Mr. Wille is a senior employee of +Cerberus Capital Management, L.P. (together with its affiliates and related funds, “Cerberus”), a stockholder of the Company, and that he was initially designated for nomination to the Board by Cerberus pursuant to a stockholders’ +agreement, which is more fully discussed below. +Director Nominations +In obtaining the names of possible director nominees, our Nominating and Corporate Governance Committee conducts its own inquiries and considers suggestions from other +directors, management, stockholders and professional director search firms. The Nominating and Corporate Governance Committee’s process for evaluating nominees identified in unsolicited recommendations from stockholders is the same as its +process for unsolicited recommendations from other sources and is further described in Section 4.01 of the Company’s Bylaws. However, stockholders desiring to nominate a director candidate at the annual meeting must comply with certain +procedures, for more information, please read “Proposals by Stockholders.” +The Nominating and Corporate Governance Committee believes that nominees +should possess the highest personal and professional ethics, reputation, integrity and values and be committed to representing the long-term interests of our stockholders. Directors should have a record of accomplishment in their chosen professional +field and demonstrate sound business judgment. Directors must be willing and able to devote sufficient time to carrying out their duties and responsibilities effectively, including attendance at and participation in board and committee meetings, and +should be committed to serve on the board for an extended period of time. The Nominating and Corporate Governance Committee will consider independence, diversity of viewpoints, backgrounds and +2020 Proxy Statement +13 +Table of Contents +experience, including a consideration of gender, ethnicity, race, country of citizenship and age in determining whether a candidate will be an appropriate fit with, and an asset to, the board of +directors. When considering existing directors, the Nominating and Corporate Governance Committee evaluates their history of attendance at board and committee meetings as well as contributions and effectiveness at such meetings. +In addition, pursuant to the terms of our Bylaws and the Second Amended and Restated Stockholders’ Agreement, dated as of October 31, 2019, by and among the +company, Keane Investor Holdings, LLC (“Keane Investor”) and the other parties thereto, Keane Investor (or its permitted assignee or designee) has certain rights to designate members to our board of directors, subject to certain director +qualifications, including the rights to: +• +for so long as Keane Investor (or its permitted assignee or designee) has beneficial ownership of more than 12.5% of the +then outstanding shares of our common stock, appoint two individuals; and +• +for so long as Keane Investor (or its permitted assignee or designee) has beneficial ownership of less than 12.5% but more +than 7.5% of our then-outstanding common stock, appoint one individual. +At this time, Mr. Wille and Mr. Stewart are the Keane Investor +appointees. For additional information, see “Other Information—Related Party Transactions” in this proxy statement. +Communication with the +Board and its Non-Management Members +Persons may communicate with our board of directors by submitting such communication in writing to the attention of Kevin +McDonald, General Counsel, in care of the Board of Directors, NexTier Oilfield Solutions Inc., 3990 Rogerdale Road, Houston, Texas 77042. Persons may communicate with the non-management members of the board of directors by submitting such +communication in writing to Kevin McDonald, General Counsel, in care of the non-management members of the Board of Directors, NexTier Oilfield Solutions Inc., 3990 Rogerdale Road, Houston, Texas 77042. +Board Committees +Our Board has assigned certain of its +responsibilities to permanent committees consisting of Board members appointed by it. Prior to April 13, 2020, the Board had four standing committees, the Audit and Risk Committee, the Compensation Committee, the Nominating and Corporate +Governance Committee and the Compliance Committee. The Compliance Committee had been formed to assist in implementing and overseeing certain compliance programs, policies and procedures and to monitor our performance with respect to such programs, +policies and procedures. As part of the Nominating and Corporate Governance Committee’s review of Board, its size and committee functions, it recommended that, in light of the expected reduction of the size of the Board, the Compliance +Committee be dissolved and these oversight activities be absorbed by the other standing committees or the full Board, as applicable. On April 13, 2020, the Board, following the Nominating and Corporate Governance Committee’s +recommendation, dissolved the Compliance Committee as a standing committee. +The charter for each committee listed below is available on our website at +www.nextierofs.com , by clicking on “Investor Relations,” then “Corporate Governance,” then “Board Committees,” then the name of the applicable committee charter. Stockholders may obtain printed copies of any +charter, free of charge, by sending a written request to NexTier Oilfield Solutions Inc. at 3990 Rogerdale Road, Houston, Texas 77042, Attn: Corporate Secretary. +14 +NexTier Oilfield Solutions Inc. +Table of Contents +Audit and Risk Committee +Committee Members: +Number of meetings in 2019: 6 +Michael Roemer (chair) +Amy H. Nelson +Report: page 25 +Gary M. Halverson +Mel G. Riggs +The Audit and Risk Committee assists the board in its oversight responsibilities relating to the integrity of our financial statements, +our compliance with legal and regulatory requirements (to the extent not otherwise handled by our Compliance Committee), our independent auditor’s qualifications and independence, and the establishment and performance of our internal audit +function and the performance of the independent auditor. Our board of directors has determined that Mr. Roemer qualifies as an “audit committee financial expert” as such term is currently defined in Item 407(d)(5) of +Regulation S-K. Each member of the Audit and Risk Committee is able to read and understand fundamental financial statements, including our balance sheet, statement of operations and cash flows statements. +Our board of directors has adopted a written charter under which the Audit and Risk Committee operates. A copy of the Audit and Risk Committee charter, which satisfies +the applicable standards of the SEC and the NYSE, is available on our website. +Compensation Committee +Committee Members: +Number of meetings in 2019: 10 +Gary M. Halverson (chair) +Marc G. R. Edwards +Report: page 29 +Stuart Brightman +John Kennedy +The Compensation Committee is authorized to review our compensation and benefits plans to ensure they meet our corporate objectives, +approve the compensation structure of our executive officers and evaluate our executive officers’ performance and advise on salary, bonus and other incentive and equity compensation. A copy of the Compensation Committee charter is available on +our website. +Nominating and Corporate Governance Committee +Committee Members: +Number of meetings in 2019: 1 +Steven Mueller (chair) +Gary M. Halverson +Stuart Brightman +Marc G. R. Edwards +The Nominating and Corporate Governance Committee is responsible for the oversight of risks relating to corporate governance, Board +organization, membership and structure, succession planning for our senior management team, including our CEO and identifying individuals qualified to become members of our board of directors. A copy of the Nominating and Corporate Governance +Committee charter is available on our website. +Director Compensation +Our director compensation philosophy is designed to fairly and reasonably compensate the Company’s non-employee directors for the time, expertise and effort they +devote to serving the Company and to align the interest of our directors with the long-term interests of our stockholders. The Compensation Committee monitors trends and best practices in, and periodically reviews and assesses the adequacy of, +director compensation and makes recommendations to the Board. The Compensation Committee’s recommendation takes into account our director compensation philosophy, market trends and compensation levels and practices in our peer group, +stockholder feedback, and the advice of the Compensation Committee’s independent compensation consultant, Pearl Meyer. +2020 Proxy Statement +15 +Table of Contents +Director Compensation Components +Annual compensation for our non-employee directors is comprised of cash and equity-based compensation, as set out in the table below. We also reimburse our non-employee +directors for reasonable out-of-pocket expenses associated with travel to and attendance at our Board and committee meetings. We do not pay for meeting attendance or provide any other benefits or perquisites to our non-employee directors. +During the third quarter of 2018, the Compensation Committee reviewed our director compensation program in consultation with Pearl Meyer. Pearl Meyer provides +independent and objective market data and analysis, including as to compensation levels, market trends and best practices, and provides advice and recommendations with respect to the design of the Company’s director compensation program. The +Compensation Committee took into account, among other factors, Pearl Meyer’s input and shareholder feedback through to the say-on-pay shareholder vote in 2017 in determining recommendations to the Board for adjustments to our director +compensation program for 2019. In order to better align our director compensation program with our peers and broader market practices, and also strengthen alignment with the long-term interests of our stockholders, the Compensation Committee +recommended, and the Board unanimously approved the following 2019 non-employee director compensation program: +Compensation Element +2019 Non-Employee Director Compensation Program +Annual Cash Retainer (1) +$100,000 +Annual Equity Award ( 2) +$150,000 +Additional Cash Retainer—Lead Director (1) +$10,000 to the Lead Director (if any) +Additional Cash Retainer—Committee +Chair (1) +$15,000 to each Independent Director serving as a Committee Chair +(1) +The annual cash retainer is paid quarterly in arrears. +(2) +The annual equity retainer is granted on first business day following the annual stockholder meeting, based on the volume +weighted average price of our common stock for the five trading days prior to the grant date, rounded to the nearest full share. The equity retainers are granted as restricted stock awards that vest 100% on the upon the earliest of: (i) the +one-year anniversary of the grant date, (ii) the date of the first meeting of the Company’s stockholder at which directors will be elected in the calendar year following the calendar year in which the grant date occurs, (iii) the date +the director incurs a termination without cause, (iv) the date of the director’s death, and (v) the date of a change in control, subject to continuous service through such vesting date. All unvested restricted stock will be forfeited +upon a termination of service for any reason other than without cause or due to the participant’s death. +Our President and Chief Executive +Officer, Mr. Drummond, does not receive any additional compensation for his service as a director (his compensation as an executive is discussed in CD&A and detailed in “Executive Compensation Tables”). Additionally, one of our +non-employee directors, Mr. Wille, who is employed by one of our stockholders, has declined any equity compensation for his service, and the cash compensation for his service as a director is paid to his employer, pursuant to his +employer’s policy. Until October 31, 2019, Mr. Stewart was an employee of the Company and was not eligible for compensation for his service on the Board. +Additional Compensation Components for Special Committee Members +As part of +our evaluation of strategic transactions, in April 2019 the Board formed a special committee of independent directors (the “Special Committee”), consistent with our prior practice, to evaluate the proposed business combination with C&J +as well as any alternative transactions, in light of Cerberus’ large equity stake in the Company and its representation on the Board, as well as the expectation that in any merger transaction Cerberus would be requested to enter into an +agreement to vote in favor of the transaction and possibly agree to restrictions on its acquisition or disposition of our securities. The Special Committee was composed of Messers. Edwards, Halverson and Garcia, with Mr. Edwards, the +16 +NexTier Oilfield Solutions Inc. +Table of Contents +lead independent director of the Board, serving as Special Committee Chair. In recognition of the additional responsibilities of the members of the Special Committee, each member was eligible to +receive a fee of $15,000 per month (pro-rated for partial months) until the earlier of the closing of a possible transaction, or a determination to not proceed with a transaction, such fee not to exceed $100,000 for each member and an additional +$2,000 per month for the chair of the Special Committee, not to exceed $24,000. +Compensation Components for Certain Newly Appointed Non-Employee Directors +As described in more detail on page 11, upon the closing of the Merger on October 31, 2019, the Board added six new members from the C&J board of +directors. These new members had already received cash compensation for board service through the end of 2019, and equity grants for board service through mid-December (the timing of the annual cycle for equity grants for board service at C&J), +and the applicable portion of such compensation was deemed to apply with respect their service on the Board after Merger through those respective dates. No additional cash or equity compensation was paid to these directors in 2019. The elements of +compensation for those directors included: +Compensation Element +2019 Non-Employee Director Compensation Program +Annual Cash Retainer(1) +$87,500 +Annual Equity Award(2) +$135,000 +Additional Cash Retainer—Chair(1) +$50,000 to the Board Chair +$10,000 to the Audit Committee Chair +$7,500 to the Compensation Committee Chair +$7,500 to the Nominating and Governance Committee Chair +Additional Equity Award—Chair(2) +$50,000 to the Board Chair +$10,000 to the Audit Committee Chair +$7,500 to the Compensation Committee Chair +$7,500 the Nominating and Governance Committee Chair +(1) +The annual cash retainer was paid in January of the applicable compensation year, or if later, a pro-rata portion was paid +promptly after such director joined the board. +(2) +The annual equity retainer was granted in December prior to the applicable compensation year. The equity retainers were +granted as restricted stock awards that vest 100% on the one-year anniversary of the grant date, and so were scheduled to vest during the applicable compensation year subject to the terms and conditions of the applicable award agreement. NexTier +assumed the award agreements as part of the Merger and the awards vested in accordance with their terms. +2020 Proxy Statement +17 +Table of Contents +2019 Director Compensation +Name (3) +Fees Earned or +Paid in Cash ($) (1)(4) +Stock +Awards ($) (2) +Total ($) +Stuart Brightman +— +— +— +Marc G. R. Edwards +232,142 +138,975 +371,117 +Gary M. Halverson +208,500 +138,975 +347,475 +John Kennedy +— +— +— +Steven Mueller +— +— +— +Patrick Murray +— +— +— +Amy Nelson +— +117,605 +117,605 +Mel Riggs +22,283 +— +22,283 +Michael Roemer +— +— +— +Scott Wille +100,000 +— +100,000 +Lucas N. Batzer +83,424 +— +83,424 +Dale M. Dusterhoft +83,424 +— +83,424 +Christian A. Garcia +174,010 +138,975 +312,985 +Lisa A. Gray +83,424 +— +83,424 +Shawn Keane +83,424 +— +83,424 +Elmer D. Reed +83,424 +138,975 +222,399 +Lenard B. Tessler +83,424 +— +83,424 +(1) +Stuart Brightman, John Kennedy, Steven Mueller, Patrick Murray, Amy Nelson and Michael Roemer joined the board on +October 31, 2019 as part of a business combination. They were not paid any cash compensation by the Company or granted any stock awards in 2019. However, Ms. Nelson’s restricted stock award agreement that was granted by C&J on +July 1, 2019 was assumed by the Company. +(2) +The number of shares of restricted stock granted to Messrs. Edwards, Garcia, Halverson and Reed was calculated pursuant to +the director compensation elements (as described above) based on the volume weighted average price of the common stock for the 5-day trading days prior to the grant date. The amount above, however, reflects the grant date fair value calculated in +accordance with ASC 718 (as defined below) of the restricted stock granted in fiscal year 2019. Messers. Brightman, Kennedy, Mueller, Murray and Roemer did not receive any stock grants in 2019, the equity awards related to their 2019 board service +were granted in December of 2018, and thus are not reflected in this table. Ms. Nelson joined the C&J board in July of 2019, and her pro-rata equity award was granted promptly thereafter. +(3) +James Stewart is a Named Executive Officer for 2019, and his compensation for the portion of the year that he was a +non-employee director is reflected in the Summary Compensation Table. Scott Wille is employed by one of our largest stockholders and has declined any equity compensation for his service as a director, and the cash compensation is paid to his +employer pursuant to his employer’s policy. Robert Drummond is an employee of the Company, and therefore does not receive any compensation for his service on the Board. +(4) +Messers. Edwards, Halverson and Garcia were paid for services on the Special Committee in respective aggregate amounts of +$108,800, $96,000 and $84,322. +18 +NexTier Oilfield Solutions Inc. +Table of Contents +As of December 31, 2019, the aggregate number of shares of unvested restricted stock held by each non-employee +director was: +Name +Number of Shares +of Restricted Stock +Stuart Brightman +— +Marc G. R. Edwards +14,629 +Gary M. Halverson +14,629 +John Kennedy +— +Steven Mueller +— +Patrick Murray +— +Amy Nelson +17,553 +Mel Riggs +— +Michael Roemer +— +Scott Wille +— +Lucas N. Batzer +— +Dale M. Dusterhoft +— +Christian A. Garcia +— +Lisa A. Gray +— +Shawn Keane +— +Elmer D. Reed +— +Lenard B. Tessler +— +Director Services Agreements +We have +entered into Director Services Agreements with each of Marc G. R. Edwards, Gary M. Halverson and Mel G. Riggs. The Director Services Agreements provide that each such director serve on an at-will basis until the earlier of disability, death, +resignation or removal. +Stock Ownership Guidelines +We have stock +ownership requirements for (i) all independent, non-employee directors (each an “Independent Director”), and (ii) effective as of October 31, 2019, our Chief Executive Officer and certain other executive officers, including +the Chief Financial Officer, the Chief Operating Officer, if any, the Chief Administrative Officer, and the General Counsel, as well as any President or Executive Vice President reporting directly to the CEO (collectively, the “Executive +Officers”). All Independent Directors are required to own Company common stock in an amount equal to or in excess of three times such Directors Annual Director Fee pursuant to the Director Compensation Plan, which shall be determined annually +as of the last day of the prior fiscal year. Each Independent Director has five years to meet the requirements, measured from the date he or she is first elected to the Board. +By the fifth (5th) anniversary of the later of (a) the date an Executive Officer of the Company begins employment with the Company in such position and +(b) October 31, 2019, each Executive Officer is required to own Company common stock in an amount equal to or in excess either (i) three times the CEO’s annual base salary, if such Executive Officer is the CEO or (ii) for +all other Executive Officers two times such Executive Officer’s annual base salary, which will be determined annually as of the last day of the prior fiscal year of the Company. +The Company believes that each Independent Director and Executive Officer is on track meet such ownership requirements within the requisite five-year period. +2020 Proxy Statement +19 +Table of Contents +Corporate Governance +Board Leadership Structure +Our Board does not have a formal policy on +whether the roles of Chief Executive Officer and Chairman of the board of directors should be separate. If the Chairman is a member of management, the Board also elects a Lead Director who is a non-management director. Currently, Robert W. Drummond +serves as our President & Chief Executive Officer, while Patrick Murray serves as Chairman of the Board. The Board believes that this leadership structure provides the best direction for the management team and is ideal for the Company and +its stockholders. Our non-management directors meet regularly in executive sessions at which only non-management directors are present, and the Chairman leads those sessions. Because Mr. Murray is independent under applicable listing standards +and under our Corporate Governance Guidelines, our Board has not appointed a separate Lead Director. +Our Board expects to periodically review its leadership +structure to ensure that it continues to meet the Company’s needs. +Role of Board in Risk Oversight +Enterprise risk management is a Company-wide initiative that involves the Board and management identifying, assessing and managing risks that could affect our ability +to fulfill our business objectives or execute our corporate strategy. A primary function of our Board is to assist and oversee management in this effort. The Board and its committees conduct this oversight responsibility. The Board’s committees +assist the Board in fulfilling its oversight responsibilities with respect to risks within its areas of responsibilities, as further discussed below. We believe the Board’s role in risk oversight is consistent with the Company’s leadership +structure, with our CEO and other members of senior management having direct responsibility for managing risk exposure and the potential impacts of the many risks that are associated with our business, and the directors involved in providing +oversight of management’s efforts to reduce, mitigate or eliminate the risks that we face. +The primary means by which the Board and its designated committees +oversee our risk management structure and policies is through regular communications with management, specifically including with our General Counsel, our head of internal audit, our CEO and our Chief Financial Officer (“CFO”). In +connection with our regular quarterly Board and committee meetings, the full Board (or the appropriate committee in the case of risks that are under the purview of a particular committee) receives reports from members of senior management on areas +of material risk to the Company, including operational, financial, legal and regulatory, and strategic risks. In addition, upon request, either the full Board or a committee may receive additional reports from those executive officers who are deemed +responsible for particular risks. The chair of each of the committees will also discuss and review significant matters with management outside of the quarterly Board meetings as needed. When a committee receives a separate report, or the chair has +separate discussions, the committee chair may discuss that report with the full Board. +20 +NexTier Oilfield Solutions Inc. +Table of Contents +Environmental Risks +As part of our +commitment to long-term, sustainable value creation, the Board and our executive team are committed to actively monitoring how the Company’s performance, opportunities and strategy are influenced by, and influence, the environment. This review, +which is part of the Company’s general risk management process, includes an evaluation of the Company’s material climate-related risks; all material risks identified in the risk management process are assessed by management and reported to +the Board. +Cybersecurity Risks +To guard against the threat of security +breaches and cyber-attacks, the head of the Company’s IT department manages our cybersecurity initiative, which is focused on protecting and preserving the confidentiality, integrity and continued availability of all information owned by, or in +the care of, the Company. The head of IT works closely with the General Counsel in this effort. +The Audit Committee receives regular reports related to +cybersecurity, privacy and controls. As part of this, the Audit Committee will review the results of periodic exercises and response readiness assessments led by outside advisors who provide a third-party independent assessment of our internal +preparedness. +In addition, our internal audit team will also periodically review and report to the Audit Committee on aspects of cybersecurity as part of its +audits. +2020 Proxy Statement +21 +Table of Contents +People Risks +The Board +and our executive team are committed to promoting a healthy and ethical culture throughout the organization. The Board receives regular reports from the Company’s General Counsel, who serves as Chief Compliance Officer, regarding the +Company’s compliance program. As part of this, the Board regularly reviews all complaints received through the anonymous hotline as well as key data related to ongoing legal proceedings. +The Board also receives regular reports from our senior management team about our other people-related strategies, programs and initiatives, including recruitment, +retention, engagement, training and development, health and safety, talent management and diversity. +Code of Business Conduct and Ethics +We have adopted a written code of business conduct and ethics (the “Code of Business Conduct and Ethics”) that applies to all of our employees, officers and +directors, including those officers responsible for financial reporting. In addition, our senior financial officers, including our principal executive officer and principal financial officer, are subject to a written code of ethics for senior +financial officers. We have made a current copy of both codes available on our website, www.nextierofs.com and both are available in print and without charge to any person who sends a written request to our Corporate Secretary at 3990 +Rogerdale Road, Houston, Texas 77042. In addition, we intend to post on our website all disclosures that are required by law or the NYSE listing standards concerning any amendments to, or waivers from, any provision of either code. +Corporate Governance Guidelines +We have adopted corporate governance +guidelines in accordance with the corporate governance rules of the NYSE, as applicable, that serve as a flexible framework within which our board of directors and its committees operate. These guidelines cover a number of areas, including the +size and composition of the board, board membership criteria and director qualifications, director responsibilities, board agenda, role of the Chief Executive Officer, executive sessions, standing board committees, board member access to management +and independent advisors, director communications with third parties, director compensation, director orientation and continuing education, evaluation of senior management and management succession planning. A copy of our corporate governance +guidelines is posted on our website. +22 +NexTier Oilfield Solutions Inc. +Table of Contents +Proposal 2. Ratify Appointment of +Independent Auditors +The Board of Directors recommends that you vote “FOR” this proposal. +The Audit and Risk Committee of the Board of Directors (the “Audit Committee”) of the Company has +selected KPMG LLP, an independent registered public accounting firm, to audit the Company’s financial statements and the effectiveness of internal control over financial reporting for 2020. While the Audit Committee is responsible for +appointing, compensating and overseeing the independent auditors’ work, we are requesting the ratification of the appointment of KPMG as our auditor for 2020 as a matter of good corporate governance. KPMG served as our independent auditor for +2017, 2018 and 2019 and the Audit Committee took a number of factors into consideration in determining whether to reappoint KPMG as the Company’s independent auditor, including KPMG’s historical and recent performance, capabilities and +expertise, tenure as the Company’s independent auditor and familiarity with the Company’s business. We believe the appointment of KPMG is in the best interest of the Company and its stockholders. +Representatives of KPMG are expected to be present at the Annual Meeting with an opportunity to make a statement if they would like to do so and to be available to +respond to appropriate questions from our stockholders. +The ratification of the appointment of KPMG as our independent auditor for 2020 requires the affirmative +vote of a simple majority of the votes cast. If you properly submit a proxy card but do not indicate how you wish to vote, the Proxy Holders will vote for the proposal. +2020 Proxy Statement +23 +Table of Contents +Audit Fees +The following table summarizes fees paid +or accrued to our independent registered public accounting firm, KPMG, in connection with various services for the years ended December 31, 2019 and 2018 respectively: +2019 +2018 +(Thousands of Dollars) +Audit +Fees (1) +$ +5,451 +$ +2,827 +Audit–Related +Fees (2) +432 +185 +Tax +Fees (3) +1 +119 +All Other +Fees (4) +286 +— +Total +$ +6,170 +$ +3,131 +(1) +Consists of fees for professional services rendered for the audits of our consolidated and combined financial statements +for fiscal years 2019 and 2018 included in our 2019 Form 10-K +(2) +Consists of fees billed for assurance and related services consisting of comfort letters and consents related to other +registration statements filed by the Company during the year. +(3) +Consists of fees for professional services rendered by our principal accountant for tax compliance, tax advice, and tax +planning. +(4) +Consists of fees for products and services provided by our principal accountant, other than the services reported under +“audit fees,” “audit-related fees,” and “tax fees.” +Pre-Approval Policy +Our Audit Committee has adopted a policy (the “Pre-Approval Policy”), that sets forth the procedures and conditions pursuant to which audit and non-audit +services proposed to be performed by the independent auditor may be pre-approved. The Pre-Approval Policy generally provides that we will not engage KPMG to render any audit, audit-related, tax or permissible non-audit service unless the service is +either (i) explicitly approved by the Audit Committee (“specific pre-approval”) or (ii) entered into pursuant to the pre-approval policies and procedures described in the Pre-Approval Policy (“General Pre-Approval”). +Unless a type of service to be provided by KPMG has received General Pre-Approval under the Pre-Approval Policy, it requires specific pre-approval by the Audit Committee. Any proposed services exceeding pre-approved cost levels or budgeted amounts +will also require specific pre-approval. On an annual basis, the Audit Committee reviews and generally pre-approves the services (and related fee levels or budgeted amounts) that may be provided by KPMG without first obtaining specific pre-approval +from our Audit Committee. Our Audit Committee may revise the list of general pre-approved services from time to time, based on subsequent determinations. +During +2019 and 2018, no services were provided to us by KPMG other than in accordance with the pre-approval policies and procedures described above. +24 +NexTier Oilfield Solutions Inc. +Table of Contents +Audit Committee Report +The Audit Committee represents and assists the board of directors in providing independent, objective oversight of the Company’s accounting functions and internal +control over financial reporting. The Audit Committee acts under a charter which is available on the Company’s website at www.nextierofs.com under “Investor Relations,” then “Corporate Governance,” then “Board +Committees,” then “Audit and Risk Committee Charter.” The board of directors has determined that each member of the Audit Committee satisfies the requirements of the NYSE as to independence, financial literacy and expertise. +Management is responsible for the Company’s financial statements and the reporting process, including the system of disclosure controls and procedures and internal +control over financial reporting. +KPMG, the Company’s independent registered public accounting firm, is responsible for expressing an opinion on the +conformity of our financial statements with accounting principles generally accepted in the United States and on the effectiveness of the Company’s internal control over financial reporting. +In discharging its oversight role, the Audit Committee has: +• +reviewed and discussed with management the audited financial statements of NexTier Oilfield Solutions Inc. as of and for +the year ended December 31, 2019; and +• +discussed with KPMG the matters required to be discussed by Auditing Standard No. 1301, Communications with +Audit Committees, as amended, as adopted by the Public Company Accounting Oversight Board. In addition, the Audit Committee has received the written disclosures and the letter from KPMG required by applicable requirements of the Public +Company Accounting Oversight Board regarding the independent auditor’s communications with the Audit Committee concerning independence, and has discussed with KPMG their independence. +The Audit Committee and the Board of Directors believe that, due to KPMG’s knowledge of the Company and the industry in which the Company operates, it is in the +best interest of the Company and its stockholders to continue the retention of KPMG to serve as the Company’s independent registered public accounting firm. Although the Audit Committee has the sole authority to appoint the independent +registered public accounting firm, the Audit Committee recommends that the board of directors ask the stockholders to ratify the appointment of the independent registered public accounting firm at the 2020 Annual General Meeting. +Based on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited financial statements referred to +above be included in the Annual Report on Form 10-K of NexTier Oilfield Solutions Inc. for the year ended December 31, 2019. +The Audit and Risk Committee +Michael Roemer, Chair +Gary M. Halverson +Amy H. Nelson +Mel G. Riggs +2020 Proxy Statement +25 +Table of Contents +Proposal 3. Advisory Approval of +Executive Compensation +The Board of Directors recommends that you vote “FOR” this proposal. +We are asking our stockholders to approve, on an annual advisory basis, the compensation of our named executive +officers (“NEOs”) as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion. While this vote is not binding on our Company, the results of the +vote on this proposal will be carefully considered by the board of directors and the Compensation Committee when making future executive compensation decisions. +The text of the resolution in respect of Proposal 3 is as follows: +“ RESOLVED , that the compensation paid to the Company’s named executive officers, as disclosed in this Proxy Statement pursuant to the rules of the SEC, +including the Compensation Discussion and Analysis, compensation tables and any related narrative discussion is hereby APPROVED.” +We urge you to carefully +review the Compensation Discussion and Analysis, or “CD&A,” section in this Proxy Statement, as well as the 2019 Summary Compensation Table, other compensation tables and related narrative discussion, for more information regarding the +compensation of our NEOs. We believe the information in this Proxy Statement demonstrates the successful design and implementation of a compensation program that aligns stockholders’ and management’s interests. +A simple majority of the votes cast is required to approve this proposal. If you properly give a proxy but do not indicate how you wish to vote, the persons named on +the proxy card, or if you do not name your proxy or proxies, the Proxy Holders, will vote for the proposal. +26 +NexTier Oilfield Solutions Inc. +Table of Contents +Executive Officers +Set forth below is certain +information regarding our executive officers as of April 10, 2020, other than the biography of our President & Chief Executive Officer, which appears under “Proposal 1—Election of Directors—Director +Information.” +Name +Age +Position +Robert W. Drummond +59 +President and Chief Executive Officer +Kenneth Pucheu +42 +Senior Vice President & Chief Financial Officer +Gregory L. Powell +45 +Executive Vice President & Chief Integration Officer +Kevin M. McDonald +53 +Executive Vice President, Chief Administrative Officer & General Counsel +Ian R. Henkes +48 +Senior Vice President – Operations +Phung Ngo-Burns +54 +Chief Accounting Officer +Richard Vaclavik +60 +Senior Vice President, Chief Commercial Officer +Kenneth Pucheu , Senior Vice President and Chief Financial Officer . Mr. Pucheu has served as NexTier’s Senior +Vice President and Chief Financial Officer since December 2019. He joined Keane Group, Inc. (now known as NexTier Oilfield Solutions Inc.) in 2016 as Vice President of Finance. a Mr. Pucheu has 20 years of experience in corporate and +operational finance across the energy industry. Prior to joining Keane, Mr. Pucheu served at Schlumberger Limited for 15 years in various senior-level positions, including Head of Finance for Drilling and Measurements, and Director of Finance +for North America Offshore. Mr. Pucheu earned a B.S. in Accounting from the University of Louisiana at Lafayette. +Gregory L. Powell , Executive Vice +President and Chief Integration Officer . Mr. Powell has served as NexTier’s Executive Vice President and Chief Integration Officer since October 2019. He joined Keane Group, Inc. (now known as NexTier Oilfield Solutions Inc.) in March +2011 as President and Chief Financial Officer. Prior to joining Keane, Mr. Powell worked as an Operating Executive for Cerberus Capital Management L.P. During his tenure, he was responsible for partnering with portfolio companies to maximize +value creation. Mr. Powell has worked across a broad set of businesses including: automotive, consumer products, technology, leasing, building products, and retail. Prior to joining Cerberus, Greg worked for 10 years in various divisions of +General Electric. In his last role with GE, he was the Chief Financial Officer for GE Aviation – Military Systems. +Kevin M. McDonald, Executive Vice +President, Chief Administrative Officer & General Counsel . Mr. McDonald serves as NexTier’s Executive Vice President, Chief Administrative Officer and General Counsel. He joined Keane Group, Inc. (now known as NexTier Oilfield +Solutions Inc.) as Executive Vice President, General Counsel & Secretary in November 2016. Prior to joining Keane, Mr. McDonald served in leadership roles at Marathon Oil Corporation from 2012 to 2016, including as Deputy General +Counsel of Corporate Legal Services and Government Relations, Deputy General Counsel of Governance, Compliance & Corporate Services, and Assistant General Counsel. Mr. McDonald practiced as a partner at the international law firm +Fulbright & Jaworski LLP (now Norton Rose Fulbright LLP) in 2012. Mr. McDonald previously held various counsel positions, including President & Chief Executive Officer and acting General Counsel at Arms of Hope, a nonprofit +organization, from 2008 to 2012, Senior Vice President, General Counsel & Chief Compliance Officer at Cooper Industries from 2006 to 2008, Associate General Counsel at Anadarko Petroleum from 2006 to 2008, and Managing Counsel (Litigation) +at Valero Energy from 2002 to 2004. He began his career as an associate at Norton Rose Fulbright LLP between 1992 and 2001. Mr. McDonald graduated with a BS from Texas A&M University and JD from the University of Texas School of Law. +2020 Proxy Statement +27 +Table of Contents +Ian R. Henkes , Senior Vice President – Operations . Mr. Henkes serves as NexTier’s Senior +Vice President for Operations. He joined Keane Group, Inc. (now known as NexTier Oilfield Solutions Inc.) in February 2016 and was Vice President of South Region until October 2019. Prior to joining Keane, he served as Human Resources Manager for +Schlumberger’s Drilling & Measurements global businesses from August 2014 to February 2016, as Vice President for North America at Pathfinder Energy Services from January 2013 to September 2014, and as Personnel Manager at Pathfinder +Energy Services from September 2012 to December 2012. Prior to joining Pathfinder Energy Services, Mr. Henkes worked in various field, operations, sales, management, and HR positions around the world from 1994 to 2012. Mr. Henkes has +extensive experience in wireline, logging while drilling, and directional drilling operations in North America, Latin America, and northern Europe. +Phung +Ngo-Burns , Chief Accounting Officer . Ms. Ngo-Burns serves as NexTier’s Chief Accounting Officer. She had previously served as Vice President—Integration at the Company from October 2019 to March 2020, and prior to that as +Chief Accounting Officer since 2017. Prior to joining the Company, Ms. Ngo-Burns was as Senior Director with Alvarez and Marsal since 2012. From 2002 to 2012, Ms. Ngo-Burns served as Chief Financial Officer of Ability Holdings, Inc. and +held several executive roles in the finance department of ExpressJet Holdings, Inc., including as Executive Vice President and Chief Financial Officer. Ms. Ngo-Burns brings nearly 30 years of accounting experience to the Company and holds an +M.B.A. from the University of Houston and a B.S. in Business and Accounting from Oklahoma State University. +Richard Vaclavik , Senior Vice President, +Chief Commercial Officer . Mr. Vaclavik serves as NexTier’s Senior Vice President and Chief Commercial Officer. He joined NexTier as Chief Commercial Officer in January 2019. Mr. Vaclavik brings a wealth of oil & gas +experience to our company. He has been in the oil & gas industry for over 35 years and was most recently the Vice-President of US Geozone for Weatherford. Previously, Richard has held executive leadership positions with Roywell as CEO, +Baker Hughes as Vice President of North America Pressure Pumping and Halliburton as Northeast Area Vice President, Region Vice President Gulf of Mexico, and Vice President of Business Development. He has a B.S. in Agricultural Engineering from Texas +A&M University. +28 +NexTier Oilfield Solutions Inc. +Table of Contents +Compensation Committee Report +The Compensation Committee has reviewed and discussed this CD&A with the Company’s management. Based on the review and discussions, the Compensation Committee +has recommended to our board of directors that this CD&A be included in this Proxy Statement. +The Compensation +Committee +Gary Halverson, Chair +Stuart Brightman +Marc G. R. Edwards +John Kennedy +This report shall not be deemed +to be “soliciting material” or to otherwise be considered “filed” with the SEC or be subject to Regulation 14A or 14C (other than as provided in Item 407 of Regulation S-K) or to the liabilities of Section 18 of the +Securities Exchange Act of 1934, as amended, which we refer to as the Exchange Act, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the +extent that we specifically incorporate it by reference into such filing. +2020 Proxy Statement +29 +Table of Contents +Compensation Discussion & Analysis +This Compensation Discussion and Analysis (“CD&A”) focuses on the Company’s 2019 compensation programs, actions and outputs relative to the +Company’s 2019 performance. These compensation decisions reflect the compensation committee’s application of the Company’s compensation philosophy, plan objectives, and performance standards against financial and individual executive +performance through the end of 2019. As of the date of this proxy statement, the Company has experienced significant stock price decline since the end of 2019, consistent with its peer companies and the broader market, due to macro-economic factors +and global concerns about the COVID-19 outbreak. As described further in this CD&A, the Company’s executive compensation programs strongly align realized compensation outcomes with the Company’s absolute and relative stock price +performance. We will determine the near-term outcomes of this year’s stock price performance after the conclusion of 2020, and describe those outcomes in next year’s CD&A. +For the year ended December 31, 2019, our named executive officers (“NEOs”) were: +NEO +Title +Robert W. Drummond +President & Chief Executive Officer (“CEO”) +Kenneth Pucheu +Chief Financial Officer (“CFO”) (1) +Gregory L. Powell +Executive President and Chief Integration Officer (2) +Kevin M. McDonald +Executive Vice President, Chief Administrative Officer & General Counsel +Ian R. Henkes +Senior Vice President – Operations +James C. Stewart +Former Executive Chairman (3) +Jan Kees van Gaalen +Former Chief Financial Officer (4) +(1) +Mr. Pucheu assumed the role of Chief Financial Officer on December 16, 2019. +(2) +Mr. Powell served as the Company’s President & Chief Financial Officer until October 31, 2019, +after which he assumed the role of Executive Vice President & Chief Integration Officer in connection with the Merger (described below). +(3) +Mr. Stewart served as the Company’s Executive Chairman until October 31, 2019. He currently serves on our +board of directors as a non-management director. +(4) +Mr. van Gaalan served as the Company’s Chief Financial Officer from October 31, 2019 to December 13, +2019, after which he separated from service with the Company. +30 +NexTier Oilfield Solutions Inc. +Table of Contents +Executive Summary +Compensation Practices & Policies +The following practices and +policies in our program promote sound compensation governance and are in the best interests of our stockholders and executives: +What We Do +What We Don’t Do +☑ +Emphasis on variable compensation tied to annual financial performance or long-term stock price performance +☑ +Performance-based long-term incentives dependent upon our performance relative to peers makes up an increasing portion of NEO LTI starting in 2019 +☑ +Clawback policy that applies to cash and equity compensation +☑ +Annual compensation risk assessment +☑ +Independent compensation consultant reporting directly to our Compensation Committee +☑ +Stock Ownership Guidelines for each of our Officers and non-employee directors +☑ +Severance and Acceleration of Equity Vesting Conditioned On Restrictive Covenants and Release of Claims +☒ +Prohibition on option repricing without shareholder approval +☒ +Prohibition on hedging of Company securities by our executive officers +☒ +Prohibition on pledging of Company securities by our executive officers and directors +☒ +No single-trigger change-in-control severance payments +☒ +No single-trigger change-in-control equity vesting +☒ +No excise tax gross-ups +☒ +Limited use of perquisites and supplemental benefits +Implications of our Merger with C&J Energy Services +In continuation of our growth through acquisition strategy—which, since 2013 has notably resulted in the growth of the location and scale of our operational +footprint, expansion of our customer base, addition of wireline operations, increase in our pumping capacity and expansion of our hydraulic fracturing operations by more than an additional 1,040,000 hydraulic horsepower—on October 31, +2019, we completed a merger transaction (the “Merger”) with C&J Energy Services, Inc., a publicly traded Delaware corporation (“C&J”). Pursuant to this transaction, C&J was ultimately merged with and into our wholly +owned merger subsidiary, with our subsidiary continuing as the surviving entity. On the effective date of the Merger, we changed our name to “NexTier Oilfield Solutions Inc.” +Executive Leadership Transitions +In connection with the Merger, our +executive team adjusted many of the responsibilities of our corporate leaders to better address the needs of the combined Company. In particular, on the effective date of the Merger, the Company appointed: +• +Mr. van Gaalen, former Chief Financial Officer of C&J, as Executive Vice President and Chief Financial Officer; +• +Mr. Powell, former President and Chief Financial Officer of Keane, as Executive Vice President and Chief Integration +Officer; +• +Kevin McDonald, former Executive Vice President, General Counsel and Secretary of Keane, as Executive Vice President, Chief +Administrative Officer & General Counsel; and +• +Ian Henkes, former Vice President of South Region of Keane, as Senior Vice President, Operations. +2020 Proxy Statement +31 +Table of Contents +Also on the effective date of the Merger, the Company accepted the resignation of Mr. Stewart as Executive +Chairman of the Company. +Mr. Drummond, the Chief Executive Officer of Keane, remains in his role as President and Chief Executive Officer of the Company. +Treatment of Outstanding Equity Awards in the Merger +In connection with the +Merger, equity-based awards of C&J and the Company (other than Company PSUs described below) were generally assumed by the combined Company and converted into obligations with respect to the common stock of the combined Company. With respect +equity awards held by our NEOs, in connection with the Merger: +• +Acceleration of Company PSUs . Each of the performance restricted stock unit (“PSU”) awards held by Messrs. +Drummond, Powell, Stewart and McDonald were amended such that upon the consummation of the Merger, the respective executive officer became fully vested in his PSU award, at the target level of achievement. +• +Company Options, RSUs and RSAs . All options, restricted stock unit (“RSU”) awards and restricted stock +awards with respect to our common stock that were outstanding immediately before the effective time of the Merger continued to be awards in respect of our common stock following the Merger and subject to the same terms and conditions that were +applicable to such awards before the effective time of the Merger. +• +Assumption of C&J RSU Awards : Each C&J RSU award was assumed by the Company and remained subject to the same +terms and conditions as were applicable to such C&J RSU award, but was converted into an award with respect to a number of shares of Company Common Stock equal to the product of (i) the number of shares of C&J common stock subject to +the C&J RSU award immediately prior to the effective time and (ii) the exchange ratio in the Merger. +• +Assumption of C&J Performance Shares . All unvested performance share awards with respect to C&J shares +outstanding immediately prior to the effective time were assumed by the Company and remain subject to the same terms and conditions (including the time-based vesting schedule applicable to such award, but excluding any performance-based vesting +requirements) as were applicable to such C&J performance share award, but were converted into an award with respect to a number of shares of Company common stock (rounded up or down to the nearest whole share) equal to the product of +(i) the number of shares of C&J common stock subject to such C&J performance share award (assuming target performance) and (ii) the exchange ratio in the Merger. +Amended and Restated Employment Agreements +In connection with the Merger, +the Company entered into an amended and restated employment agreement with each of its executive officers, other than Mr. Stewart. Each such amended and restated employment agreement was effective on the closing date of the Merger. Each such +employment agreement, among other things, sets forth the terms of the executive officer’s employment and compensation, and imposes restrictive covenants, including non-solicitation and noncompetition restrictions, for a specified +post-employment period. Each employment agreement also entitles the executive officer to severance benefits depending on the circumstances of the executive officer’s termination of employment, and, with respect to Messrs. Drummond and McDonald, +enhanced severance benefits in the event a qualifying termination occurs within thirty days prior to or two years following a change in control. In connection with the increased severance benefits provided to him, Mr. McDonald agreed to +increase the period of his post-employment non-competition and non-solicitation restrictions to twelve months from six months. +32 +NexTier Oilfield Solutions Inc. +Table of Contents +Bonus Payments +In +connection with the Merger, each executive officer who continued to be employed with the Company or its subsidiaries through the regular payment date for 2019 annual bonuses, were entitled to receive an annual bonus for 2019 consisting of +(i) for the period from January 1, 2019 through October 31, 2019, an annual bonus opportunity in amount determined based on the level of attainment of the applicable performance measures under our annual bonus plan, prorated to +reflect the number of calendar days during such period, and (ii) for the period from November 1, 2019 to December 31, 2019, an annual bonus in amount determined based on the level of attainment of the applicable performance measures +under our annual bonus plan, but not less than 100% of the target amount of such bonus, prorated to reflect the number of calendar days during such period. +Transaction Bonuses +In connection with the Merger and in order to +incentivize our executives to diligently execute on the Merger transaction, we granted transaction bonuses to Messrs. Pucheu and McDonald in the amount of $50,000 and $125,000, respectively, in each case, payable on the first payroll date following +the effective time of the Merger. +Retention Bonuses +In order to +properly incentivize and retain Mr. Pucheu’s services during the transition period following the Merger, the Company granted him a retention bonus in the amount of $100,000, of which $50,000 was contingent upon the attainment of +anticipated run rate synergies in connection with the Merger, payable on the payroll date nine months following the effective time of the Merger, subject to Mr. Pucheu’s continuous employment with the Company through such date. +Special Value Creation Incentive Bonus +In order to properly incentivize and +reward successful integration following the Merger, pursuant to his Executive Employment Agreement, Mr. Powell, as Chief Integration Officer, will be entitled to a Value Creation Bonus (the “Value Creation Bonus”) of $2,600,000 +payable upon certification by the Compensation Committee of $100 million of annualized run-rate synergies achieved in connection with the Merger. +2019 +Compensation Actions At-A-Glance +The Compensation Committee took the following key compensation-related actions for fiscal year 2019: +• +Base Salaries : Following our Merger, on November 4, 2019, the Compensation Committee elected to adjust the base +salaries of several of our executive officers to better align with the median of the combined company’s updated peer group and to reflect the new roles assumed by our executive officers in connection with the Merger and post-Merger leadership +transitions described below. +• +Annual Incentives: The Compensation Committee adopted an annual bonus program for fiscal year 2019, based on the +achievement of specific Company performance objectives related to EBITDA and EBITDA per fleet. In light of our actual level of achievement, our Compensation Committee has determined that each of Robert Drummond, Gregory Powell and Kevin McDonald is +eligible to receive an amount under the 2019 Executive Bonus Program equal to 165% of the NEO’s target bonus. In addition, each of Messrs. Pucheu and Henkes were eligible to receive an amount under the 2019 Management Bonus Program. +2020 Proxy Statement +33 +Table of Contents +• +Long-Term Incentives: The largest single component of compensation granted to our executives is equity compensation. +The executives were awarded long-term incentives consisting of a mixture of RSUs and PSUs. The Compensation Committee believes the use of these equity vehicles creates strong alignment with the Company’s stockholders by linking executive +compensation closely to stock performance. +• +Special Non-Recurring Compensation : In connection with the Merger, the Compensation Committee determined to make +cash transaction and retention awards to certain key employees. These cash awards, although made in 2019, were not part of the ongoing compensation framework for 2019, but rather standalone, non-recurring compensation stemming from exigent +circumstances. +What Guides Our Program +Our Compensation Philosophy +Our compensation +philosophy is driven by the following guiding principles: +• +Pay for performance : a significant portion of an executive’s total compensation should be variable +(“at-risk”) and linked to the achievement of specific short- and long-term performance objectives. +• +Shareholder alignment : executives should be compensated through pay elements (base salaries, short and +long-term incentives) designed to enhance stockholder value by incentivizing our executives to work towards goals that drive return on stockholder investment. +• +Competitiveness : target compensation should be competitive with that being offered to individuals in +comparable roles at other companies with which we compete for talent to ensure we employ the best people to lead the successful implementation of our business plans and to attract the caliber of executive we need to support the long-term growth of +our enterprise. +• +Good governance : decisions about compensation should be guided by best-practice governance standards and +rigorous processes that encourage prudent decision-making. +The Principal Elements of Pay +Our compensation philosophy is supported by the following principal elements of pay: +Pay +Element +How it’s Paid +Purpose +Base Salary +Cash +(Fixed) +Provide a competitive base salary rate relative to similar positions in the market and enable the Company to attract and retain critical executive talent +Annual Incentives +Cash +(Variable) +Reward executives for delivering on annual financial and strategic objectives that contribute to stockholder value creation +Long-Term Incentives +Equity +(Variable) +Provide incentives for executives to execute on longer-term financial and strategic goals that drive stockholder value creation and support the Company’s retention strategy +34 +NexTier Oilfield Solutions Inc. +Table of Contents +Pay Mix +A majority of NEO +total direct compensation for fiscal year 2019 was variable, at approximately 86% for our CEO, and approximately 75% for our other NEOs (other than our Executive Chairman and departed CFO). The following charts illustrate the total direct +compensation mix for our CEO and our other NEOs for fiscal year 2019: +Our Decision-Making Process +The Role +of the Compensation Committee +The Compensation Committee oversees the executive compensation program for our NEOs. The Compensation Committee is comprised of +independent members of our board of directors. The Compensation Committee works very closely with its independent consultant and management to examine the effectiveness of the Company’s executive compensation program throughout the year. The +Compensation Committee evaluates, determines and approves the compensation of our CEO and other executive officers, and to recommend the compensation of our non-employee directors. The Compensation Committee administers the Company’s equity +plans and has overall responsibility for monitoring of the Company’s executive compensation policies, plans and programs. The Compensation Committee may delegate its authority relating to non-employee director compensation to a subcommittee +consisting of one or more members, when appropriate. Details of the Compensation Committee’s authority and responsibilities are specified in the committee’s charter which is available on the Company’s website at +www.nextierofs.com . +The Role of Management +Compensation +Committee meetings are regularly attended by our CEO, CFO, General Counsel and our Senior Vice President of Human Resources. Each of the management attendees provides the Compensation Committee with his specific expertise and the business and +financial context necessary to understand and properly target financial and performance metrics. None of the members of management are present during the Compensation Committee’s deliberations regarding their own compensation adjustments, but +the Company’s independent compensation consultant may participate in those discussions. +The Role of the Independent Consultant +The Compensation Committee has the full authority to engage compensation consultants and other advisors to assist it in the performance of its responsibilities. Prior +to retaining, or seeking advice from, a +2020 Proxy Statement +35 +Table of Contents +compensation consultant or other advisor, the Compensation Committee must consider the independence of such compensation consultant or other advisor. The independent compensation consultant +retained by the Compensation Committee reports directly to the Compensation Committee. +In 2017, the Compensation Committee engaged Pearl Meyer & Partners, +LLC (“Pearl Meyer”) as its independent compensation consultant. The Compensation Committee assessed the independence of Pearl Meyer and determined that its work for the Compensation Committee has not raised any conflict of interest. In +2019, Pearl Meyer provided services to the Compensation Committee, including (i) a refreshed compensation review for the executive officers of the Company, including the NEOs; (ii) an assessment of the Company’s compensation +components compared to survey and peer group data; and (iii) recommendations for total compensation opportunity guidelines (i.e., base salary and annual and long-term incentive targets). Pearl Meyer does not provide any services to the Company +or any of its subsidiaries other than the services provided to the Compensation Committee. +The Role of the Compensation Peer Group +The Compensation Committee strives to set a competitive level of total compensation for each NEO as compared with executives in similar positions at peer companies. For +purposes of setting fiscal year 2019 compensation levels, in conjunction with the recommendation of Pearl Meyer, the Compensation Committee took into account publicly-available data from industry compensation surveys and proxy statements from the +group of peer companies listed below. +Compensation Peer Group +Apergy Corporation +McDermott International +Patterson-UTI Energy +Flowserve Corporation +MRC Global +ProPetro Holding Corp. +FTS International +Nabors Industries, Ltd. +RPC, Inc. +Helmerich & Payne, Inc. +National Oilwell Varco +Superior Energy Services, Inc. +KBR, Inc. +NOW Inc. +TechnipFMC plc +Liberty Oilfield Services +Oceaneering International +The peer companies were selected as potential competitors for executive talent based upon similarity in terms of business focus, +financial size, and peer group overlap. We fell at the 68 th percentile for revenue size relative to this group during 2019, and at the 55 th +percentile for market cap as of December 31, 2019. +This market data is not the sole determinant in setting executive pay levels. The Compensation Committee +also considers Company and individual performance, the nature of an individual’s role within the Company, and his or her experience and contributions to his or her current role when making its compensation-related decisions. +Say-on-Pay Vote and Compensation Actions Taken +In 2019, we received roughly +98% approval on our advisory say-on-pay vote to approve NEO compensation. We considered this as an affirmation that our stockholders support our executive compensation program. We regularly engage in investor outreach to better understand our +investors’ concerns and to solicit feedback on our executive compensation program. Our Board and the Compensation Committee greatly value the benefits of maintaining a dialogue with our stockholders to understand their views on our executive +compensation program and practices. The Compensation Committee intends to consider the outcome of say-on-pay votes when evaluating the design of our programs and is devoted to consistently reviewing and enhancing our programs to ensure continued +alignment with the guiding principles described above. +36 +NexTier Oilfield Solutions Inc. +Table of Contents +The 2019 Executive Compensation Program in Detail +Base Salary +We provide each of our NEOs with a competitive fixed annual +base salary. The base salaries for our NEOs are set forth in employment agreements between the Company and each NEO (the “Executive Employment Agreements”) and are reviewed annually by the Compensation Committee by taking into account the +results achieved by each executive, his future potential contributions, scope of responsibilities and experience, and competitive pay practices. +Following our +Merger, on November 4, 2019, the Compensation Committee elected to adjust the base salaries of several of our executive officers to better align with the median of the combined company’s updated peer group and to reflect the new roles +assumed by our executive officers in connection with the Merger and post-Merger leadership transitions described above. +Name +Base Salary +December 31, +2018 ($) +Base Salary +December 31, +2019 ($) (3) +% Change +Robert W. Drummond +800,000 +1,000,000 +25 +% (1) +Kenneth Pucheu +233,100 +375,000 +61 +% (2) +Gregory L. Powell +800,000 +800,000 +— +Kevin M. McDonald +400,000 +475,000 +19 +% (1) +Ian Henkes +300,000 +375,000 +25 +% (1) +James Stewart +1,000,000 +1,000,000 +— +Jan Kees van Gaalen +500,000 +575,000 +15 +% (1) +(1) +Base salary adjusted in connection with the Merger, effective October 31, 2019 to better align with peer compensation +and reflect prospective post-Merger responsibilities. +(2) +Includes base salary adjustments on February 24, 2019, on October 31, 2019, in connection with the Merger, and effective +December 13, 2019, in connection with Mr. Pucheu’s subsequent appointment as Chief Financial Officer. +(3) +Base salaries presented for Messrs. Stewart and van Gaalen above are terminal base salaries upon termination of +employment. Mr. Stewart terminated service with the Company on October 31, 2019 in connection with the Merger. Mr. van Gaalen terminated his employment with the Company on December 13, 2019. +2019 Annual Incentives +Each Executive Employment Agreement provides that +the NEO is eligible for an annual bonus, for which target is expressed as a percentage of base salary, as set forth in the table below. +Name +Target Bonus +Opportunity as +a Percent of +Base Salary +Target Bonus +Opportunity +($) +Robert W. Drummond (1) +125 +% +1,250,000 +Kenneth Pucheu +75 +% +281,250 +Gregory L. Powell +100 +% +800,000 +Kevin M. McDonald +100 +% +475,000 +Ian Henkes (2) +75 +% +281,250 +James Stewart +100 +% +1,000,000 +Jan Kees van Gaalen +75 +% +431,250 +(1) +Mr. Drummond’s target bonus was adjusted from 100% of base salary to 125% of base salary in connection with the +Merger to better align with peer compensation and reflect prospective post-Merger responsibilities. +(2) +Mr. Henkes’ target bonus opportunity was initially set at 100% of base salary and was adjusted to 75% in connection +with the Merger to better align with members of management of the combined company. +2020 Proxy Statement +37 +Table of Contents +Bonus payments for our NEO’s other than Pucheu, Henkes and van Gaalen were calculated under 2019 Executive Bonus +Program, described below. Bonus payments for Messrs. Pucheu, Henkes were made pursuant to our 2019 Management Bonus Program for non-executive officers since they were not executive officers at the beginning of 2019. Mr. van Gaalen would have +been entitled to bonus calculation based on C&J’s bonus program assumed by the Company, however, Mr. van Gaalen terminated employment prior to the end of the year. +2019 Executive Bonus Program +The Compensation Committee adopted the Annual +Executive Bonus Program for Fiscal Year 2019 (the “2019 Executive Bonus Program”) under the terms of the Company’s Executive Incentive Bonus Plan. The 2019 Executive Bonus Program provides that each NEO is eligible to receive an +annual bonus for fiscal year 2019 calculated by multiplying the NEO’s target bonus by the achieved “Funding Level” based on the Company’s achievement of the following metrics: +Performance Objectives +2019 Performance Metrics (1) +Weighting +Corporate Financial Results +Adjusted EBITDA +50 +% +Corporate Financial Results +Adjusted EBITDA per Fleet Rank +50 +% +(1) +Adjusted EBITDA is a non-GAAP measure. +The funding amount for the Adjusted EBITDA metric was to be determined as set forth in the table below: +Achievement Level +Performance Hurdle +Funding Level +Threshold +$195M +50% +Target +$279M +100% +Stretch Level 1 +$307M +150% +Stretch Level 2 +$335M +200% +Stretch Level 3 +>$335M +Linear incremental bonus increase up to the maximum bonus award provided under the Company’s Executive Incentive Bonus Plan. +The Funding Level increases on a linear basis between the Threshold, Target and Stretch performance hurdles. +Adjusted EBITDA Per Fleet Rank is a relative measure of our operating profitability derived by comparing our Adjusted EBITDA to the earnings of a pool of industry peers +as disclosed in their public disclosures, adjusted for fluid-end capitalization of our peers. The peer comparison group for purposes of calculating Adjusted EBITDA Per Fleet Rank includes: +Adjusted EBITDA Per Fleet Rank Comparison Group +FTS International +Patterson-UTI Energy +RPC, Inc. +Liberty Oilfield Services +ProPetro Holding Corp. +Superior Energy Services, Inc. +C&J Energy Services, Inc. (1) +Quintana Energy Services +(1) +As a result of the Merger, C&J Energy Services, Inc. was considered as part of the Adjusted EBITDA (1) Per Fleet +Rank Comparison Group for the period from January 1, 2019 through the October 31, 2019, but was removed from such peer group for the period from November 1, 2019 through the December 31, 2019. +38 +NexTier Oilfield Solutions Inc. +Table of Contents +The funding amount for the Annual Adjusted EBITDA Per Fleet Rank metric was to be determined as set forth in the table +below: +Annual Adjusted EBITDA Per Fleet +Rank +1 +2 +3 +4 +5 +6 +7 +8 +9 +Funding Level +200 +% +175 +% +150 +% +125 +% +100 +% +75 +% +50 +% +0 +% +0 +% +The Compensation Committee chose to use Adjusted EBITDA because it is a critical measure of the health of our business and a direct +measure of our management team’s ability to generate cash and to operate the business profitably. The addition of the EBITDA per Fleet Rank measure adds a relative metric that not only holds us accountable for strong performance against peers +but also addresses industry cyclicality. +2019 Management Bonus Program +Because Messrs. Pucheu and Henkes were not executive officers at the beginning of 2019, they did not participate in the 2019 Executive Bonus Program. Instead, each such +executive was eligible for annual incentives under the Company’s 2019 Management Bonus Program, which is funded based on Company performance with reference to the achievement of Adjusted EBITDA and Adjusted EBITDA Per Fleet Rank as well as +other factors in the discretion of management. +Effect of Merger Agreement on Annual Incentive Awards +In connection with the Merger, each executive officer of both the Company and C&J who continued to be employed with the Company or its subsidiaries through the +regular payment date for 2019 annual bonuses, was entitled to and received an annual bonus for 2019 consisting of (i) for the period from January 1, 2019 through the October 31, 2019, an annual bonus in an amount determined based on +the level of attainment of the applicable performance measures under annual bonus plan, prorated to reflect the number of calendar days during such period, and (ii) for the period from November 1, 2019 to December 31, 2019, an annual +bonus in amount determined based on the level of attainment of the applicable performance measures under our annual bonus plan, but not less than 100% of the target amount of such bonus, prorated to reflect the number of calendar days during such +period. In addition, executive officers would receive such bonus if the executive officer’s employment is terminated without cause prior to payment of the bonus. +2019 Performance +For the first ten months of 2019 prior to the Merger, we +achieved a level of Adjusted EBITDA of $270 million and an Annual Adjusted EBITDA Per Fleet Rank of 2 (or a weighted average performance of 177.5% of target for such period). For the two months of 2019 following the Merger, we achieved a level +of Adjusted EBITDA of $30 million and an Annual Adjusted EBITDA Per Fleet Rank of 2 (which would have resulted in a weighted average performance of 70% of target for such period, subject to a minimum performance of 100% of target as per the +Merger agreement). +Based on such achievements, our Compensation Committee approved a funding level equal to 165% of the target bonus for each participant in the +2019 Executive Bonus Program and 2019 Management Bonus Program resulting in the NEO bonus payments set forth in the table below: +2019 Annual Bonus +Robert W. Drummond +$ +1,443,750 +Kenneth Pucheu +$ +338,570 +Gregory L. Powell +$ +1,320,000 +Kevin M. McDonald +$ +680,625 +Ian Henkes +$ +489,844 +2020 Proxy Statement +39 +Table of Contents +Transaction Bonuses +In +connection with the Merger and in order to incentivize our executives to diligently execute on the Merger transaction, we granted transaction bonuses to Messrs. Pucheu and McDonald in the amount of $50,000 and $125,000, respectively, in each case, +payable on the first payroll date following the effective time of the Merger. +Retention Bonuses +In order to properly incentivize and retain Mr. Pucheu’s services during the transition period following the Merger, the Company granted him a retention bonus +in the amount of $100,000, of which $50,000 was contingent upon the attainment of anticipated run rate synergies in connection with the Merger, payable on the payroll date nine months following the effective time of the Merger, subject to +Mr. Pucheu’s continuous employment with the Company through such date. +Special Value Creation Incentive Bonus +In order to properly incentivize and reward successful integration following the Merger, pursuant to his Executive Employment Agreement, Mr. Powell, as Chief +Integration Officer, will be entitled to a Value Creation Bonus of $2,600,000 payable upon certification by the Compensation Committee of $100 million of annualized run-rate synergies achieved in connection with the Merger. +2019 Long-Term Incentives +Long-term equity awards provide a strong link +between executive pay and stockholder interests. Our NEOs are eligible to receive long-term equity awards under the stockholder approved Equity and Incentive Award Plan. For fiscal year 2019, equity awards were granted as a combination of RSU awards +and PSU awards. +• +Restricted stock unit (“RSU”) awards are intended to provide the NEOs with the economic equivalent of a +direct ownership interest in the Company during the vesting period and provide the Company with significant retention security regardless of post-grant stock price volatility. +• +Performance restricted stock unit (“PSU”) awards are performance-based awards that provide meaningful +incentives for management to execute on the longer-term financial and strategic growth goals that drive stockholder value creation. These awards only provide value to the NEOs if relative Annual Total Shareholder Return metrics established by the +Compensation Committee are actually achieved over a multi-year period. +For fiscal year 2019, the Compensation Committee reviewed market data +provided by Pearl Meyer in determining the targeted award levels for each of our NEOs. The table below shows the number of long-term incentive awards granted for fiscal year 2019 for each of the NEOs: +Name +Restricted Stock +Unit Awards +Performance +Restricted Stock +Unit Awards +Total Grant Date +Value ($) (1) +Robert W. Drummond +241,791 +103,625 +$ +3,717,367 +Kenneth Pucheu +25,000 +— +$ +301,000 +Gregory L. Powell +193,872 +83,088 +$ +2,980,644 +Kevin M. McDonald +73,793 +31,626 +$ +1,134,519 +Ian Henkes +40,000 +— +$ +481,600 +James C. Stewart +254,477 +109,062 +$ +3,912,406 +Jan Kees van Gaalen +— +— +— +(1) +Reflects the grant date fair value calculated in accordance with ASC 718. +40 +NexTier Oilfield Solutions Inc. +Table of Contents +RSUs will vest ratably on the first three anniversaries of the date of grant, in each case contingent upon the +continued employment of the NEO through each vesting date. +PSUs would have vested as to 50% of such awards based upon performance over the first two years of the +performance period (January 1, 2019 – December 31, 2020), and as to 50% based upon performance over a full three-year performance period (January 1, 2019 – December 31, 2021), contingent upon the continued employment of the NEO +through each vesting date. +PSU vesting would have been dependent upon total shareholder return (“TSR”) relative to the following group of companies +(“Performance Peers”) whom we consider to be direct competitors for business and investor dollars: +Performance Peer Group +FTS International +Patterson-UTI Energy +RPC, Inc. +Liberty Oilfield Services +ProPetro Holding Corp. +U.S. Well Services +Nine Energy Service +Quintana Energy Services +PHLX Oil Services Sector Index +The Compensation Committee reserves the right to adjust or change the TSR Peer Group in good faith as circumstances warrant during the +performance period, provided any such change does not result in an arbitrary increase or decrease in the amount payable under such awards. +The PSU performance peer +group differs from our compensation benchmarking peer group because not all of our competitors for talent in the oilfield services industry are direct competitors for business, and not all of the companies in the performance peer group are large +enough or provide enough publicly-available compensation data for the purposes of benchmarking compensation opportunities. +PSU recipients may earn between 0% and +200% of the number of performance units granted based upon the following performance payout schedule: +Performance Level +Relative TSR Rank +Percent of Target +Units Earned +Maximum +100 th Percentile +200% +Target +60 th Percentile +100% +Threshold +30 th Percentile +25% +Below Threshold +Below 30 th Percentile +0% +It is the Committee’s intention to have PSU awards in future years earned based upon performance over a full three-year period. +Both RSUs and PSUs provided that such awards would become fully vested in the event that the NEO is terminated without Cause or for Good Reason or following a +change in control. +Acceleration of Equity Awards in the Merger +In +connection with the Merger, each of the PSU awards held by Messrs. Drummond, Powell, Stewart and McDonald were amended to provide that, upon the consummation of the Merger, the respective executive officer would become fully vested in his PSU award, +at the target level of achievement. As a result, no PSU awards were outstanding at year end. +2020 Proxy Statement +41 +Table of Contents +In addition, all RSU awards held by Mr. Stewart became fully vested in connection with his separation on the +effective date of the Merger. +LTI Changes for 2020 +Beginning in 2020, +the Compensation Committee has decided to increase their emphasis on PSU awards, which will comprise 50% of total long-term incentive value for Messrs. Drummond, Powell and MacDonald, compared with 30% for such executives in 2019. PSU awards +will comprise 40% of total long-term incentive value for Messrs. Pucheu and Henkes in 2020. +For PSU awards granted in 2020, NEOs may earn between 0% and 200% +of the number of PSUs granted based upon the following performance payout schedule over a three-year period: +Performance Level +Relative TSR Rank +Percent of Target +Units Earned +Maximum +80 th Percentile +200% +Target +50 th Percentile +100% +Threshold +20 th Percentile +25% +Below Threshold +Below 20 th Percentile +0% +Executive Employment Agreements +Each +currently employed NEO has entered into an Executive Employment Agreement with the Company. The Executive Employment Agreements with Messrs. Henkes, McDonald and Drummond each provide for an initial term that will expire on February 1, 2020, +November 7, 2020 and August 6, 2021, respectively. The Executive Employment Agreement will automatically renew for additional one-year periods unless either party provides written notice at least 90 days prior to the end of the then term +and, as a result, Messrs. Henkes’ Executive Employment Agreement has been renewed for an additional year. Mr. Powell’s Executive Employment Agreement, dated as of June 16, 2019, provides for a term equal to the earlier of 18 +months from the effective date or 30 days following the date upon which the Compensation Committee certifies that certain integration goals have been achieved and does not provide for any automatic renewal. Mr. Pucheu’s Executive +Employment Agreement does not provide for an initial term or automatic renewal. +Pursuant to the Executive Employment Agreements with the currently employed NEOs, +in the event of a termination of the NEO’s employment by us without Cause or, in the case of Messrs. Drummond, McDonald and Henkes, due to our non-renewal of the applicable Executive Employment Agreement, or in the case of Mr. Powell, upon +the term end date, or by Messrs. Drummond, McDonald, Powell and Henkes for Good Reason, subject to the execution of a release, the NEO will be entitled to the following severance benefits: +• +severance payments equal to: +¡ +for Messrs. Drummond and McDonald, two times (or three times if the termination occurs within the period beginning 30 +days prior to a change in control and ending on the two year anniversary of the change of control) the sum of his annual base salary and his target bonus for the year in which the termination occurs, payable over two years in equal monthly +installments, beginning on the 60 th day following the termination date; +¡ +for Messrs. Pucheu and Henkes, the sum of his annual salary plus target bonus on the termination date, payable over one +year in equal monthly installments, beginning on the 60 th day following the termination date; +42 +NexTier Oilfield Solutions Inc. +Table of Contents +¡ +for Mr. Powell, $3,000,000 payable over two years in equal monthly installments, beginning on the 30 th day following the termination date; +• +for Messrs. Pucheu, Powell and Henkes, a pro rata annual bonus for the year of termination and for Messrs. Drummond and +McDonald, an amount equal to his target annual bonus for the year of termination and, for Mr. Powell, the Value Creation Bonus, subject to certain conditions; +• +payments with respect to the cost of continuation of coverage of group health coverage: +¡ +for Messrs. Drummond (upon any termination other than death or voluntarily without Good Reason), and +Mr. McDonald, for up to 18 months (36 months if within the period beginning 30 days prior to a change in control and ending on the two-year anniversary of the change of control); +¡ +for Mr. Henkes and Mr. Pucheu, for up to 12 months (18 months if within the period beginning 30 days prior +to a change in control and ending on the one-year anniversary of the change of control); +¡ +for Mr. Powell, for up to twelve months. +In addition, pursuant to the Executive Employment Agreements with each of our NEOs, in the event of his termination of employment due to death or disability, subject to +the execution of a release, he or his estate, as applicable, will be entitled to: +• +for Messrs. Drummond and McDonald, an amount equal to his target annual bonus for such year or, for Messrs. Henkes and +Pucheu, a pro rata annual bonus for the year of termination and, for Mr. Powell, a pro rata annual bonus for the year of termination and, subject to certain conditions, the Value Creation Bonus described further in his Executive Employment +Agreement; and +• +a pro rata payment for unused personal time off. +For purposes of the Executive Employment Agreements, “Cause” generally means: (i) conviction or plea of no contest to a felony or any crime involving +dishonesty or theft; (ii) conduct in connection with employment duties or responsibilities that is fraudulent or unlawful; (iii) conduct in connection with employment duties or responsibilities that is grossly negligent and which has a +materially adverse effect on us or our business; (iv) willful misconduct or contravention of specific lawful directions related to a material duty or responsibility directed to be undertaken from our board of directors; (v) material breach +of obligations under the applicable Executive Employment Agreement, including but not limited to breach of restrictive covenants set forth therein; (vi) any acts of dishonesty resulting or intending to result in personal gain or enrichment at +our expense; (vii) knowing failure to comply with a material policy; or (viii) for Mr. Powell, his failure to maintain primary residence in the Houston, Texas metropolitan area. +For purposes of the Executive Employment Agreements, as applicable, “Good Reason” generally means: +• +our failure to cure a material breach of our obligations under the applicable Executive Employment Agreement (in the case +of Mr. Drummond, a material breach by the Company of its obligations under his Executive Employment Agreement); +• +a material diminution of duties, position or title; +• +a material reduction in base salary (in the case of Mr. Drummond, other than as a result of a less-than- 10% reduction +that is part of an across-the-board reduction that is applicable to all other senior executives of the Company); +• +a material reduction in the budget over which the Executive retains authority; or +• +a change in office location that increases the NEO’s commute from his principal residence by more than 50 miles. +2020 Proxy Statement +43 +Table of Contents +Former NEO Agreements +James Stewart Separation +On October 31, 2019, Mr. Stewart was +deemed terminated without cause and resigned as Executive Chairman of the Company in connection with the Merger. In connection with his separation from service with the Company, Mr. Stewart and the Company entered into a Letter Agreement dated +as of November 11, 2019, providing for, in addition to accrued benefits, (i) severance payments in the amount of $4,000,000, which amount is equal to the sum of two-years of his base salary and target bonus, payable in monthly +installments for a period of two years from his separation date, and (ii) a prorated bonus for calendar year 2019 of the bonus to which he would have otherwise been entitled had he remained employed by the Company through the payment date of +such bonus, payable no later than March 15, 2020. In addition, Mr. Stewart became vested in all unvested stock options, RSUs and PSUs, with an aggregate value of $2,403,449, based on a price per share of common stock of $4.32 as of the +closing of the Merger. Mr. Stewart agreed, as a condition to such payments and benefits, to a release of claims against the Company and certain post-service restrictive covenants following his termination. +Jan Kees van Gaalen Separation +On December 13, 2019, Mr. van +Gaalen resigned as chief financial officer and terminated employment with the Company. In connection with his termination, Mr. van Gaalen became entitled to receive the termination payments and accelerated equity vesting described in his +Executive Employment Agreement with the C&J Spec-Rent Services, Inc., dated September 17, 2018, upon a termination without cause during a “protected period”, including, in addition to accrued benefits, severance payments in the +amount of $4,077,012, which is equal to (i) $3,450,000 representing three (3) times the sum of Mr. van Gaalen’s then-current base salary and target bonus, (ii) $575,000, representing an amount equal to his annual incentive bonus, +at target, (iii) $40,954, representing an amount equal to all COBRA premiums that would be payable for thirty-six months after termination of employment and (iv) $11,058 representing accrued and unused paid time off, in each case payable +in lump sum. Mr. van Gaalen agreed, as a condition to such payments and benefits, to a release of claims and certain post-service restrictive covenants following his termination. +Other Practices, Policies and Guidelines +Claw Back Policy +On February 23, 2017, our board of directors adopted the Company’s Compensation Recovery Policy (the “Claw Back Policy”). Pursuant to the Claw Back +Policy, in the event of a revision and reissuance of a financial statement previously issued by the Company (an “Accounting Restatement”), our board of directors in its discretion may determine that the officer will be required to repay +all or a portion of the amount of incentive-based compensation received by an officer of the Company that exceeds the amount of such compensation that such officer otherwise would been received determined based upon the Accounting Restatement. In +the event that any such Accounting Restatement is required due to material non-compliance by the Company with any financial reporting requirement under the securities laws, then an executive officer of the Company will be obligated to repay the +amount of incentive-based compensation received by such executive officer that exceeds the amount of such compensation that the executive officer otherwise would have received determined based upon the Accounting Restatement. The Claw Back Policy +applies to any incentive-based compensation received by an officer of the Company during the three completed fiscal years of the Company immediately preceding the date of the applicable Accounting Restatement. For purposes of the Claw Back Policy, +“incentive-based compensation” means any compensation (whether in cash, common stock, or otherwise) to an officer of the Company, that is granted, earned, vested or for which the amount is determined, wholly or in part, on the attainment +by the +44 +NexTier Oilfield Solutions Inc. +Table of Contents +Company of (i) any measure that is determined and presented in accordance with the accounting principles used in preparing the Company’s financial statements, (ii) any measure that +is derived wholly or in part from such measures, or (iii) the Company’s stock price and total stockholder return. +Stock Ownership Guidelines +Our Board of Directors has implemented stock ownership guidelines for our non-employee directors and executive officers to foster equity ownership and align the +interests of our non-employee directors and executive officers with our stockholders. Within five years of the later of (a) the date an executive officer commences employment with the Company in such position and (b) October 31, 2019, +our Chief Executive Officer is expected to beneficially own a number of shares at least equal to 300% of his base salary and all other executive officers are expected to beneficially own a number of shares at least equal to 200% of their base +salary. Similarly, within five years of the later of (a) the date such a non-employee director commences service with the Company in such position (including as a result of the determination by the Board that the member has become a +non-employee director) and (b) June 26, 2018, our outside directors are expected to beneficially own a number of shares at least equal to 200% of their annual director’s fee. Additionally, each director and executive officer is +required to hold such shares until such director or executive officer has met the applicable ownership guideline. Each of our executive officers and directors was within the transition period provided for in the stock ownership guidelines, and +therefore in compliance with such guidelines, as of the record date. +Anti-Hedging Policy +We prohibit the NEOs and other executives from engaging in transactions designed to insulate them from changes in the Company’s stock price. Therefore, the Company +has an anti-hedging policy that prohibits our NEOs from entering into transactions that include (without limitation) equity swaps or short sales of our securities, margin accounts or pledges of our securities, and hedges or monetization transactions +involving our securities that are designed to hedge or offset any decrease in the market value of the Company’s securities. In addition, the purchase or sale of puts, calls, options, or other derivative securities based on the Company’s +securities is prohibited under this policy, and borrowing against any account in which our securities are held is prohibited. +Benefits & Perquisites +Our NEOs also generally participate in other benefit plans on the same terms as all of our other employees. These plans include employee benefit plans +maintained by the Company, including the 401(k) program, the medical insurance and reimbursement program, the group term life insurance program, and the group disability program. In addition, each of the NEOs receive an automobile allowance. +2019 Risk Assessment +Each year, the Company performs a detailed risk +analysis of each of its compensation programs. If warranted, the Compensation Committee will recommend changes to address concerns or considerations raised in the risk review process. Changes may be recommended for the program design or its +oversight and administration in order to mitigate unreasonable risk, if any is determined to exist. The Compensation Committee has concluded that the Company’s compensation arrangements do not encourage any employees to take unnecessary and +excessive risks. We do not believe that any risks arising from our compensation policies and practices are reasonably likely to have a material adverse effect on the Company. +2020 Proxy Statement +45 +Table of Contents +Compensation Committee Interlocks and Insider Participation +None of the members of the Compensation Committee is or has at any time during the past year been an officer or employee of ours. None of our executive officers serves +as a member of the Compensation Committee or board of directors of any other entity that has an executive officer serving as a member of our board of directors or Compensation Committee. +Impact of Tax and Accounting +We regularly consider the various tax and +accounting implications of our compensation plans. When determining the amount of long-term incentives and equity grants to executives and employees, the compensation costs associated with the grants are reviewed, as required by the Financial +Accounting Standards Board Accounting Standards Codification Topic 718 (“ASC 718”). +Section 162(m) of the Internal Revenue Code (the +“Code”) generally prohibits any publicly held corporation from taking a federal income tax deduction for compensation paid in excess of $1 million in any taxable year to the CEO, the CFO and the next three highest compensated officers +for such year and any employee who was covered under Section 162(m) of the Code in a prior year. The Compensation Committee believes that it is important for it to retain maximum flexibility in designing compensation programs that are in the +best interest of the Company and its stockholders. Therefore, the Compensation Committee, while considering tax deductibility as a factor in determining compensation, may not limit compensation to $1 million in any taxable year if it believes +that the compensation is commensurate with the performance of the covered employee. +46 +NexTier Oilfield Solutions Inc. +Table of Contents +Executive Compensation Tables +Summary Compensation Table +Name and +Principal Position +Year +Salary +($) +Bonus +($) (1) +Stock +Awards +($) (2) +Option +Awards +($) (3) +Non-Equity +Incentive Plan +Compensation +($) (4) +All Other +Compensation +($) (5) +Total +($) +Robert W. Drummond +President & Chief Executive Officer +2019 +839,231 +— +3,717,367 +— +1,443,750 +30,430 +6,030,778 +2018 +292,308 +800,000 +5,779,943 +— +885,000 +7,452 +7,764,703 +Kenneth Pucheu +Senior Vice +President & Chief Financial Officer +2019 +271,311 +50,000 +301,000 +— +338,570 +6,574 +967,455 +Gregory L. Powell +Executive President and Chief Integration Officer +2019 +803,077 +— +3,980,587 +— +1,320,000 +31,043 +6,134,707 +2018 +800,000 +— +2,132,334 +1,172,003 +800,000 +30,625 +4,934,962 +2017 +571,539 +140,000 +5,825,334 +1,077,362 +2,933,334 +39,000 +10,586,569 +Kevin M. McDonald +Executive Vice President, Chief Administrative Officer & General Counsel +2019 +415,096 +125,000 +1,134,519 +— +680,625 +30,436 +2,385,676 +2018 +400,000 +— +810,892 +443,017 +400,000 +30,025 +2,083,934 +2017 +338,750 +— +1,169,372 +497,470 +527,768 +38,719 +2,572,079 +Ian Henkes +Senior +Vice President – Operations +2019 +314,712 +43,897 +481,600 +— +489,844 +30,301 +1,360,354 +2018 +301,154 +43,897 +271,962 +320,415 +450,000 +30,104 +1,417,532 +2017 +271,154 +— +457,580 +194,662 +484,706 +38,400 +1,446,502 +James C. Stewart +Former Executive Chairman* +2019 +959,231 +— +5,110,664 +— +1,475,000 +28,296 +7,573,191 +2018 +1,000,000 +— +2,797,978 +1,538,873 +1,000,000 +30,625 +6,367,476 +2017 +813,077 +80,000 +7,065,139 +1,324,629 +3,333,334 +45,000 +12,661,179 +Jan Kees van Gaalen +Former +Chief Financial Officer** +2019 +70,481 +155,000 +— +— +— +4,078,489 +4,303,969 +* +Mr. Stewart served as the Company’s Chief Executive Officer until October 31, 2019 and now serves as a non-management +director. See “Compensation Discussion & Analysis — Former NEO Agreements — James Stewart Separation” for a summary of his payments upon termination. +** +Mr. van Gaalen separated from service with the Company on December 13, 2019. See “Compensation Discussion & +Analysis — Former NEO Agreements — Jan Kees van Gaalen Separation” for a summary of his payments upon termination. +(1) +For Messrs. Pucheu and McDonald, these amounts reflect transaction bonuses paid following completion of the Merger. For +Mr. Henkes, reflects a bonus earned in connection with our initial public offering that was payable in February 2019. +(2) +Reflects the grant date fair value calculated in accordance with ASC 718 of the RSUs granted to the NEOs in each of fiscal +years 2019, 2018 and 2017, and the PSUs granted to each of Messrs. Drummond, Powell, McDonald, and Stewart in 2019, assuming target performance and of the deferred stock awards granted to each of Messrs. Stewart and Powell in fiscal year 2017. See +Note 12—Stock- Based Compensation in our audited consolidated and combined financial statements included in our 2019 10-K for a discussion of the assumptions used in the valuation of such awards. The grant date fair value assuming the highest +level of performance conditions were achieved for PSUs, are as follows: Mr. Drummond — $4,755,689; Mr. Pucheu — $301,000; Mr. Powell — $3,813185; Mr. McDonald — $1,451,411; Mr. Henkes — $481,600; Mr. Stewart — +$5,005,208; and Mr. van Gaalen — $0. Each of the PSUs were accelerated in connection with the Merger, assuming target performance. +(3) +Reflects the grant date fair value calculated in accordance with ASC 718 of the stock options granted to the NEOs in each +of fiscal years 2018 and 2017. See Note 12—Stock-Based Compensation in our audited consolidated and combined financial statements included in our 2019 10-K for a discussion of the assumptions used in the valuation of such awards. +(4) +For fiscal year 2019, these amounts reflect 165% of the annual target bonus for each of Messrs. Drummond, Powell, +McDonald and Stewart payable under our 2019 Executive Bonus Program and amounts payable to Messrs. Pucheu and Henkes payable under the 2019 Management Bonus Program. +2020 Proxy Statement +47 +Table of Contents +(5) +A detailed breakdown of “All Other Compensation” is provided in the table below: +Name +Year +Automobile +Allowance +($) +401(k) Plan +Company +Contribution +($) +Severance +($) +Total +($) +Robert W. Drummond +2019 +20,630 +9,800 +— +30,430 +Kenneth Pucheu +2019 +— +6,574 +— +6,574 +Gregory L. Powell +2019 +21,243 +9,800 +— +31,043 +Kevin M. McDonald +2019 +20,636 +9,800 +— +30,436 +Ian Henkes +2019 +20,636 +9,666 +— +30,301 +James C. Stewart +2019 +18,496 +9,800 +— +28,296 +Jan Kees van Gaalen +2019 +1,477 +— +4,077,012 +4,078,489 +48 +NexTier Oilfield Solutions Inc. +Table of Contents +Grants of Plan Based Awards in Fiscal Year 2019 +Estimated Future Payouts Under +Non-Equity Incentive Plan +Awards(1) +Estimated Future Payouts +Under Equity Incentive Plan +Awards(3) +All +Other +Stock +Awards: +Number of +Shares +of Stock +or Units +(#)(4) +All Other +Option +Awards: +Number of +Securities +Underlying +Options +(#) +Exercise +or Base +Price of +Option +Awards +($/Share) +Grant +Date +Fair +Value +of Stock +and +Option +Awards +($)(5) +Name +Grant +Date +Threshold +($) +Target +($) +Maximum +($)(2) +Threshold +(#) +Target +(#) +Maximum +(#) +Robert W. Drummond +— +625,000 +1,250,000 +5,000,000 +— +— +— +— +— +— +— +2/27/2019 +— +— +— +— +— +— +241,791 +— +— +2,679,044 +3/5/2019 +— +— +— +25,906 +103,625 +207,250 +— +— +— +1,038,322 +Kenny Pucheu +140,625 +281,250 +N/A +— +— +— +— +— +— +— +4/8/2019 +— +— +— +— +— +— +25,000 +— +— +301,000 +Gregory L. Powell +400,000 +800,000 +5,000,000 +— +— +— +— +— +— +— +2/27/2019 +— +— +— +— +— +— +193,872 +— +— +2,148,102 +3/5/2019 +— +— +— +20,722 +83,088 +166,176 +832,542 +Kevin M. McDonald +237,500 +475,000 +5,000,000 +— +— +— +— +— +— +— +2/27/2019 +— +— +— +— +— +— +73,793 +— +— +817,626 +3/5/2019 +— +— +— +7,907 +31,626 +63,252 +— +— +— +316,893 +Ian Henkes +140,625 +281,250 +N/A +— +— +— +— +— +— +— +4/8/2019 +— +— +— +— +— +— +40,000 +— +— +481,600 +James C. Stewart +500,000 +1,000,000 +5,000,000 +— +— +— +— +— +— +— +2/27/2019 +— +— +— +— +— +— +254,477 +— +— +2,819,605 +3/5/2019 +— +— +— +27,266 +109,062 +218,124 +1,092,801 +Jan Kees van Gaalen +187,500 +375,000 +750,000 +— +— +— +— +— +— +— +(1) +Amounts represent the range of annual cash incentive awards the NEO was potentially entitled to receive based on the +achievement of performance goals for fiscal year 2019 under the 2019 Executive Bonus Program as more fully described in “—Compensation Discussion and Analysis—2019 Annual Incentives.” The amounts actually paid are reported in the +Non-Equity Incentive Plan column of the Summary Compensation table. Pursuant to the 2019 Executive Bonus Plan, performance below a specific threshold will result in no payment with respect to that performance goal. +(2) +Reflects the maximum bonus payable to each executive under the Company’s Executive Incentive Bonus Plan. No maximum +payment is provided under the Management Bonus Program. +(3) +Represents the potential number of shares associated with the payout opportunity approved by the Compensation Committee +under the PSUs. The potential payouts are performance-based and therefore at risk. If earned, the units are converted to shares based on the attainment of relative TSR rank over the performance period, as described in “—Compensation +Discussion and Analysis—2019 Long-Term Incentives.” +(4) +Represents shares underlying time-based RSUs, which vest ratably on each of the first three anniversaries of the date of +grant. +(5) +Reflects the grant date fair value as calculated in accordance with ASC 718. Assumptions used in the valuation of +equity-based awards are discussed in “Note 12—Stock-Based Compensation” in our audited consolidated and combined financial statements included in our 2019 10-K. With respect to PSUs, assumes target performance. The grant date +fair value of the PSU awards for each of the following NEOs assuming the maximum level of performance conditions were achieved, are as follows: Mr. Drummond — $2,076,645; Mr. Powell — $1,655,084; Mr. McDonald — +$633,785; and Mr. Stewart — $2,185,602. Each of the PSUs were accelerated in connection with the Merger, assuming target performance. +2020 Proxy Statement +49 +Table of Contents +Outstanding Equity Awards at Fiscal Year End 2019 +Option Awards +Stock Unit Awards +Name +Number of +securities +underlying +unexercised +options (#) +exercisable +Number of +securities +underlying +unexercised +options (#) +unexercisable +(1) +Equity +incentive +plan +awards: +number of +securities +underlying +unexercised +unearned +options (#) +Option +exercise +price +($) +Option +expiration +date +Number +of +shares +or units +of stock +that +have not +vested +(#) (2) +Market +value of +shares +or units +of stock +that +have not +vested +($) (3) +Equity +incentive +plan +awards: +number of +unearned +shares, +units or +other +rights that +have not +vested +(#) +Equity +incentive +plan +awards: +market or +payout +value of +unearned +shares, +units or +other +rights that +have not +vested +($) (4) +(a) +Grant Date +(b) +(c) +(d) +(e) +(f) +(g) +(h) +(i) +(j) +Robert Drummond +8/6/2018 +— +— +— +— +— +257,621 +$ +1,726,061 +— +2/27/2019 +— +— +— +— +— +241,791 +$ +1,620,000 +— +Kenneth Pucheu +4/3/2017 +— +— +— +— +— +6,263 +41,962 +— +4/5/2018 +2,612 +5,225 +$ +15.45 +4/5/2024 +— +— +— +— +— +— +— +— +4,445 +$ +29,782 +— +4/8/2019 +— +— +— +— +— +25,000 +167,500 +— +2,353 +(5) +— +(6) +— +(7) +Gregory Powell +4/3/2017 +116,516 +58,259 +$ +19.00 +4/3/2023 +— +— +— +— +— +— +58,259 +$ +390,335 +— +3/1/2018 +45,500 +91,000 +$ +15.63 +3/1/2024 +— +— +— +— +— +— +77,400 +$ +518,580 +— +8/6/2018 +7,760 +15,520 +$ +14.17 +8/6/2024 +— +— +— +— +— +— +14,947 +$ +100,145 +— +2/27/2019 +— +— +— +193,872 +$ +1,298,942 +— +29,412 +(5) +— +(6) +— +(7) +Kevin McDonald +4/3/2017 +53,800 +26,902 +$ +19.00 +4/3/2023 +— +— +— +— +— +— +26,902 +$ +180,243 +— +3/1/2018 +16,266 +32,534 +$ +15.63 +3/1/2024 +— +— +— +— +— +— +27,667 +$ +185,369 +— +8/6/2018 +3,961 +7,924 +$ +14.17 +8/6/2024 +— +— +— +— +— +— +7,634 +$ +51,148 +— +2/27/2019 +— +— +— +73,793 +494,413 +— +5,294 +(5) +— +(6) +— +(7) +Ian Henkes +4/3/2017 +21,052 +10,527 +— +$ +19.00 +4/3/2023 +— +— +— +— +— +— +— +— +10,527 +70,531 +— +3/1/2018 +6,833 +13,667 +— +$ +15.63 +3/1/2024 +— +— +— +— +— +— +— +— +11,600 +77,722 +— +4/8/2019 +— +— +— +— +— +40,000 +268,000 +— +2,353 +(5) +— +(6) +— +(7) +James C. Stewart +4/3/2017 +214,888 +— +$ +19.00 +4/3/2023 +— +— +— +3/1/2018 +179,100 +— +$ +15.63 +3/1/2024 +— +— +— +8/6/2018 +30,709 +— +$ +14.17 +8/6/2024 +— +— +— +35,294 +(5) +— +(6) +— +(7) +Jan Kees van Gaalen +— +— +— +— +— +— +— +— +— +— +(1) +Reflects the number of unvested stock options held by the NEO, other than Mr. Drummond. 33% of the April 3, 2017 +stock options became vested and exercisable on each of January 20, 2018, 2019 and 2020, 33% of each of the March 1, 2018 and August 6, 2018 stock options became vested and exercisable on each of March 1, 2019 and 2020, and the +remaining stock options will become vested and exercisable on March 1, 2021, and will become fully vested and exercisable in the event that the NEO’s employment terminates without cause or for good reason within twelve months following a +change in control, accordingly, the remaining stock options held by Mr. Stewart became vested and exercisable upon their separation from the Company. +50 +NexTier Oilfield Solutions Inc. +Table of Contents +(2) +Reflects the number of unvested RSUs held by the NEO. 33% of the April 3, 2017 RSUs became vested on each of January 20, +2018, 2019 and 2020; 33% of each of the March 1, 2018 and August 6, 2018 RSU became vested on each of March 1, 2019 and 2020, and the remaining RSUs will become vested on March 1, 2021; 33% of the February 27, 2019 RSUs became vested on February 27, +2020 and the remaining RSUs will become vested ratably on each of February 27, 2021 and February 27, 2022; and 33% of the April 8, 2019 RSUs became vested on April 8, 2020 and the remaining RSUs will become vested ratably on each of April 8, 2021 +and April 8, 2022; and in each case will become fully vested in the event that the NEO’s employment terminates without cause or for good reason within twelve months following a change in control. In the case of Mr. Drummond, 161,013 RSUs were +subject to three year vesting and 33% of these RSU became vested on each of December 31, 2018 and 2019, and the remaining RSUs will become vested on December 31, 2020; 85,874 RSUs were subject to two year vesting and 50% of these RSUs vested on +August 6, 2019, and the remaining RSUs will become vested on December 31, 2020; and the remaining 161,013 units vest in their entirety on December 31, 2020. In the case of Mr. Pucheu and Henkes, 33% of the April 5, 2018 RSUs became vested on each of +April 5, 2019 and 2020, and the remaining RSUs will become vested on April 5, 2021. +(3) +Based on the closing price per share of our common stock on December 31, 2019 of $6.70. +(5) +Reflects the number of Class B Units of Keane Investor. The Class B Units were granted prior to consummation of +our initial public offering (the “IPO”) under a unit-based management compensation program sponsored by the Company prior to the IPO called the Keane Management Holdings LLC Management Incentive Plan (the “Class B Plan”). In +connection with the IPO, the Class B Plan was assigned to and assumed by Keane Investor. The Class B Units represent profit interests in Keane Investor that are solely obligations of Keane Investor. All Class B Units under the +Class B Plan have been fully vested. +(6) +Class B Units have no exercise price. Instead, Class B units entitled the holder to certain cash distributions +from Keane Investor following the distribution of $1,200,000,000 to holders of Class A Units and other Class B Units in Keane Investor. +(7) +Class B Units have no expiration date. +Option Exercises and Stock Vested in Fiscal Year 2019 +The following table provides +information about option awards and stock units that vested, and the value realized on exercise and vesting by our NEOs during 2019. +Option Awards +Stock Units +Name +Number of +Shares acquired +on exercise (#) +Value +realized on +exercise +($) +Number of +units acquired +on vesting (#) +Value +realized on +vesting +($) (1) +Robert W. Drummond +— +— +200,233 +$ +1,074,955 +Kenneth Pucheu +— +— +2,222 +$ +26,575 +Gregory L. Powell +— +— +223,863 +$ +1,903,717 +Kevin M. McDonald +— +— +49,275 +$ +344,833 +Ian Henkes +— +— +5,800 +$ +64,786 +James C. Stewart +— +— +730,309 +$ +4,473,232 +Jan Kees van Gaalen +— +— +82,954 +$ +397,948 +(1) +Calculated by multiplying the number of ordinary shares by the market value of the underlying shares on the date of +vesting. +Potential Payments Upon Termination or Change in Control +The tables below describe and estimate the amounts and benefits that our NEOs would have been entitled to receive upon a termination of their employment in certain +circumstances or, if applicable, upon a change in control, assuming such events occurred as of December 31, 2019, the last day of fiscal year 2019. The estimated payments are not necessarily indicative of the actual amounts any of our NEOs +would have received in such circumstances. The tables exclude compensation amounts accrued through December 31, 2019 that would be paid in the normal course of continued employment, such as accrued but unpaid salary, payment for accrued but +unused vacation and vested account balances under our retirement plans that are generally available to all of our salaried employees. Where applicable, the +2020 Proxy Statement +51 +Table of Contents +information in the table uses a price per share for our common stock of $6.70, the closing price on December 31, 2019 (the “Year-End Closing Price”). Generally, payment of +severance benefits to an NEO following termination of employment is subject to the NEO’s timely execution and non-revocation of a release of claims in favor of the Company. +Messrs. Stewart and van Gaalen terminated employment with the Company during 2019. A summary of the actual payments and benefits payable to such former executives in +connection with such terminations is provided above. See “Compensation Discussion & Analysis — Former NEO Agreements”. +Robert W. Drummond +Payments and Benefits +Death or +Disability ($) +For Cause or +Without +Good +Reason ($) +Without +Cause or for +Good Reason, +No Change in +Control ($) +Without +Cause or for +Good Reason, +Upon or +Following +Change in +Control ($) +Change in +Control, No +Termination of +Employment ($) +Cash Severance (1) +— +— +4,500,000 +6,750,000 +— +Annual Bonus (2) +1,250,000 +— +1,250,000 +1,250,000 +— +RSU Vesting (3) +3,346,060 +— +3,346,060 +3,346,060 +— +Health Benefits (4) +— +— +25,857 +51,714 +— +Total +4,596,060 +— +9,121,917 +11,346,060 +— +(1) +Reflects severance payments in the event of a termination of Mr. Drummond’s employment without Cause or for Good +Reason, in an amount equal to two times (or three times if the termination occurs within the period beginning 30 days prior to a change in control and ending on the two year anniversary of the change of control) the sum of (i) his annual base +salary, and (ii) his target bonus for the year his termination occurs, payable over the 24-month period (or 36 months if the termination occurs within the period beginning 30 days prior to a change in control and ending on the two year +anniversary of the change of control) following his termination. +(2) +Reflects the target annual bonus payable to Mr. Drummond for fiscal year 2019 under our 2019 Executive Bonus Program. +(3) +Pursuant to his RSU award, Mr. Drummond’s unvested RSUs will become fully vested in the event of death, +disability, or a termination of his employment without Cause or for Good Reason. +(4) +Reflects our payment for the cost of continuation health coverage for Mr. Drummond for 18 months following his +termination (36 months if the termination occurs within the period beginning 30 days prior to a change in control and ending on the two-year anniversary of the change of control). +Kenneth Pucheu +Payments and Benefits +Death or +Disability ($) +For Cause +($) +Without +Cause, +No +Change in +Control ($) +Without +Cause, +Upon or +Following +Change in +Control ($) +Change in +Control, No +Termination of +Employment ($) +Cash Severance (1) +— +— +656,250 +656,250 +— +Annual Bonus (2) +281,250 +— +281,250 +281,250 +— +Retention Bonus (3) +100,000 +— +100,000 +100,000 +— +Stock Option Vesting (4) +— +— +— +— +— +RSU Vesting (5) +239,244 +— +239,244 +239,244 +— +Health Benefits (6) +— +— +17,795 +26,692 +— +Total +620,494 +— +1,294,539 +1,303,436 +— +(1) +Reflects severance payments in the event of a termination of Mr. Pucheu’s employment without Cause in an amount +equal to the sum of (i) his annual base salary, and (ii) his target bonus for the year his termination occurs, payable over the 12-month period following his termination. +52 +NexTier Oilfield Solutions Inc. +Table of Contents +(2) +Reflects a lump-sum cash payment of a pro rata portion of the annual bonus for the calendar year in which the termination +occurs (based upon the number of days Mr. Pucheu was employed by the Company during the year of termination) in an amount equal to: (1) if the termination occurs on or before June 30 of the year of termination, based on the target +bonus and (2) if the termination occurs on or after July 1 of the year of termination, based on the Company’s actual performance during the calendar year through the termination. In the event that the termination occurs during a +Protected Period (as defined in the employment agreement), the amount of such lump-sum payment will be equal to the Target Bonus for the year of termination, without proration, in either case payable on the 60th day following the Termination Date. +(3) +Reflects payment of retention payment due to Mr. Pucheu, payable upon the next payroll date following a termination +of employment without Cause or in the event of death or disability. +(4) +Pursuant to his Executive Employment Agreement, Mr. Pucheu’s unvested stock options will become fully vested in +the event of a termination of his employment without Cause. The amount in the table reflects the aggregate per share value based on the Year-End Closing Price in excess of the option exercise price. Because the market price of the stock options as +of December 31, 2019 was lower than the strike price of the outstanding options, the value is reflected as $0. +(5) +Pursuant to his Executive Employment Agreement, Mr. Pucheu’s unvested RSUs will become fully vested in the event +of death, disability, or a termination of his employment without Cause. +(6) +Reflects our payment for the cost of continuation health coverage for Mr. Pucheu for twelve months following his +termination (18 months if the termination occurs within the period beginning 30 days prior to a change in control and ending on the one-year anniversary of the change of control). +Gregory L. Powell +Payments and Benefits +Death or +Disability +($) +For +Cause +or Without +Good +Reason ($) +Without +Cause or +for Good +Reason, +No Change in +Control ($) +Without +Cause or +for Good +Reason, +Upon or +Following +Change in +Control ($) +Change in +Control, No +Termination of +Employment ($) +Cash Severance (1) +— +— +3,000,000 +3,000,000 +— +Annual Bonus (2) +800,000 +— +1,320,000 +1,320,000 +— +Value Creation Bonus (3) +— +— +2,600,000 +2,600,000 +— +Stock Option Vesting (4) +— +— +— +— +— +Restricted Stock Unit Vesting (5) +2,308,003 +— +2,308,003 +2,308,003 +— +Health Benefits (6) +— +— +20,443 +20,443 +— +Total +3,108,003 +— +9,248,446 +9,248,446 +— +(1) +Reflects severance payments equal to $3,000,000, payable over the 24-month period following his termination. +(2) +Reflects the pro rata portion of the bonus for the year of termination, if any, to which Mr. Powell would have otherwise +been entitled had Mr. Powell remained employed by the Company through the payment date of such bonus, payable in the same manner and (i) at the same time as if Mr. Powell remained employed through the applicable payment date of such bonus or (ii) +the thirtieth (30th) day after such termination of employment, if later and the Value Creation Bonus, reflecting actual performance in the case of a termination by the Company without Cause or by the executive with Good Reason, and reflecting target +performance in the case of a termination due to death or disability. +(3) +Reflects payout of Value Creation Bonus payable under Mr. Powell’s employment agreement; payable on the thirtieth +(30th) day following such termination, provided that if Mr. Powell’s termination of employment occurs by reason of the expiration of the term of his agreement the Value Creation Bonus will be paid only to extent it has been earned. +(4) +Pursuant to his Executive Employment Agreement, Mr. Powell’s unvested stock options will become fully vested in +the event of a termination of his employment without Cause or for Good Reason. The amount in the table reflects the aggregate per share value based on the Year-End Closing Price in excess of the option exercise price. Because, the market price of +the stock options as of December 31, 2019 was lower than the strike price of the outstanding options, the value is reflected as $0. +(5) +Pursuant to his Executive Employment Agreement, Mr. Powell’s unvested RSUs will become fully vested in the event +of death, disability, or a termination of his employment without Cause or for Good Reason. +(6) +Reflects our payment for the cost of continuation health coverage for Mr. Powell for twelve months following his +termination. +2020 Proxy Statement +53 +Table of Contents +Kevin M. McDonald +Payments and Benefits +Death or +Disability ($) +For Cause or +Without +Good Reason ($) +Without +Cause or for +Good Reason, +No Change in +Control ($) +Without +Cause or for +Good Reason, +Upon or +Following +Change in +Control ($) +Change in +Control, No +Termination of +Employment ($) +Cash Severance (1) +— +— +1,900,000 +2,850,000 +— +Annual Bonus (2) +— +— +475,000 +475,000 +— +Stock Option Vesting (3) +— +— +— +— +— +RSU Vesting (5) +911,173 +— +911,173 +911,173 +— +Health Benefits (6) +— +— +30,665 +61,329 +— +Total +911,173 +— +3,316,838 +4,297,502 +— +(1) +Reflects severance payments in the event of a termination of Mr. McDonald’s employment without Cause or for Good +Reason, in an amount equal to two times (or three times if the termination occurs within the period beginning 30 days prior to a change in control and ending on the two year anniversary of the change of control) the sum of (i) his annual base +salary, and (ii) his target bonus for the year his termination occurs, payable in a lump sum on the 60th day following the Termination Date. +(2) +Reflects the target annual bonus payable to Mr. McDonald for fiscal year 2019 under our 2019 Executive Bonus Program. +(3) +Pursuant to his Executive Employment Agreement, Mr. McDonald’s unvested stock options will become fully vested +in the event of a termination of his employment without Cause or for Good Reason. The amount in the table reflects the aggregate per share value based on the Year-End Closing Price in excess of the option exercise price. Because the market price of +the stock options as of December 31, 2019 was lower than the strike price of the outstanding options, the value is reflected as $0. +(4) +Pursuant to his Executive Employment Agreement, Mr. McDonald’s unvested RSUs will become fully vested in the +event of a termination of his employment without Cause or for Good Reason. +(5) +Reflects our payment for the cost of continuation health coverage for Mr. McDonald for 18 months following his +termination (36 months if the termination occurs within the period beginning 30 days prior to a change in control and ending on the two-year anniversary of the change of control). +Ian Henkes +Payments and Benefits +Death or +Disability ($) +For Cause or +Without +Good Reason ($) +Without +Cause or for +Good Reason, +No Change in +Control ($) +Without +Cause or for +Good Reason, +Upon or +Following +Change in +Control ($) +Change in +Control, No +Termination of +Employment ($) +Cash Severance (1) +— +— +656,250 +656,250 +— +Annual Bonus (2) +489,844 +— +281,250 +281,250 +— +Stock Option Vesting (3) +— +— +— +— +— +RSU Vesting (4) +416,251 +— +416,251 +416,251 +— +Health Benefits (6) +— +— +20,443 +30,665 +— +Total +906,095 +— +1,374,194 +1,384,416 +— +(1) +Reflects severance payments in the event of a termination of Mr. Henkes’ employment without Cause or for Good +Reason in an amount equal to the sum of (i) his annual base salary, and (ii) his target bonus for the year his termination occurs, payable over the 12-month period following his termination. +(2) +Reflects lump sum cash payment of a pro rata portion of the annual bonus for the year of termination in an amount equal +to: (1) if the termination occurs on or before June 30 of the year of termination, based on the target bonus; and (2) if the termination occurs on or after July 1 of the year of termination, then based on the Company’s +actual performance during the calendar year through the termination. If the termination occurs without Cause or for Good Reason during a Protected Period (as defined in the Executive Employment Agreement), the amount of such lump sum payment will be +equal to the target bonus, without proration, in either case payable on the 60th day following the Termination Date. +54 +NexTier Oilfield Solutions Inc. +Table of Contents +(3) +Pursuant to his Executive Employment Agreement, Mr. Henkes’ unvested stock options will become fully vested in +the event of a termination of his employment without Cause or for Good Reason. The amount in the table reflects the aggregate per share value based on the Year-End Closing Price in excess of the option exercise price. Because the market price of the +stock options as of December 31, 2019 was lower than the strike price of the outstanding options, the value is reflected as $0. +(4) +Pursuant to his Executive Employment Agreement, Mr. Henkes’ unvested RSUs will become fully vested in the event +of death, disability, or a termination of his employment without Cause or for Good Reason. +(5) +Reflects our payment for the cost of continuation health coverage for Mr. Henkes for twelve months following his +termination (18 months if the termination occurs within the period beginning 30 days prior to a change in control and ending on the one-year anniversary of the change of control). +CEO Pay Ratio +In accordance with the Dodd-Frank Wall +Street Reform and Consumer Protection Act and applicable SEC rules, we are providing the following information about the relationship of our CEO’s compensation to the compensation of an identified median employee. The purpose of this disclosure +is to provide a measure of the equitability of pay within the organization. We believe our compensation philosophy and process yield an equitable result and our ratio is as follows for 2019: +• +the total compensation of our median employee was $115,735, as calculated pursuant to the same methodology as that used to +determine pay for our CEO in the Summary Compensation Table +• +the total compensation of our CEO, as reported in the Summary Compensation Table, was $6,030,778. +• +the ratio of our CEO’s total compensation to the median employee total compensation was 52.1 to 1. +We did not use the same median employee for 2019 as we did in 2018, because the employee used in 2018 for our pay ratio disclosure is no longer +with the Company. The median employee used in our 2019 pay ratio calculation had substantially similar compensation to the compensation of the employee we used for the 2018 fiscal year pay ratio disclosure, based on the compensation formulation we +used to select the 2018 median employee. As permitted by the SEC regulations, we have omitted 4,469 employees that became our employees in 2019 as the result of the Merger from this year’s calculation. Other than the Merger, we believe there +have been no changes for the 2019 calculation in our employee population or our compensation arrangements that would result in a material change in our pay ratio disclosure or our median employee. We believe the pay ratio is a reasonable estimate +calculated in a manner consistent with SEC rules based on our internal records and the methodology used. For the 2018 median employee determination, we did not exclude any of our employees or make any cost-of-living adjustments. To identify our +median employee, we compared the year to date Federal Taxable Wages of our employees as of December 31, 2018. We had 2,749, employees as of December 31, 2018, all of which were U.S. employees. Similar to our CEO, each of our employees +enjoys a comprehensive compensation and benefit package that we determine by benchmarking to market practices. Because the SEC rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual +total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices, the pay ratio reported by other companies—including +companies in our peer group—may not be comparable to the pay ratio reported above. Other companies may have different employment and compensation practices, different geographic breadth, perform different types of work and may utilize different +methodologies, exclusions, estimates and assumptions in calculating their own pay ratios. This information is being provided for compliance purposes. Neither the Compensation Committee nor management of the Company use the pay ratio measure in +making compensation decisions. +2020 Proxy Statement +55 +Table of Contents +Proposal 4. Approve Reverse Stock +Split. +The Board of Directors recommends that you vote “FOR” this proposal. +The Company is asking shareholders to approve an amendment to the Company’s certificate of incorporation to +affect a reverse stock split of the Company’s common stock with a proportional reduction in the number of authorized shares of common stock (the reverse stock split together with the reduction in authorized shares of common stock are referred +to herein as the “Reverse Stock Split”). The full text of the amendment that shareholders are being asked to approve is attached as Appendix A to this proxy statement. The Board of Directors believes that the Reverse Stock Split, if +implemented, will make the Company’s common stock more attractive to a broader range of institutional and other investors, as the Board of Directors believes that the current market price of the Company’s common stock may affect its +acceptability to certain institutional investors, professional investors and other members of the investing public. +Approval of the proposal would permit (but not +require) the Board of Directors to affect the Reverse Stock Split by a ratio of not less than 1-for-5 and not more than 1-for-25, with the exact ratio to be set within this range as determined by the Board of Directors in its sole discretion. The +exact ratio of the Reverse Stock Split determined by the Board of Directors will be publicly announced by us prior to prior to the effective time of the Reverse Stock Split. We believe that enabling the Board of Directors to set the ratio of the +Reverse Stock Split within the stated range will provide us with the flexibility necessary to implement the Reverse Stock Split in a manner designed to maximize the anticipated benefits for our shareholders. In determining a ratio of the Reverse +Stock Split, if any, following the receipt of shareholder approval, the Board of Directors may consider, among other things, factors such as: +• +the historical trading prices and trading volume of our common stock; +• +the number of shares of our common stock outstanding; +• +the then-prevailing trading price and trading volume of our common stock and the anticipated or actual effect of the +Reverse Stock Split on the trading price and trading volume for our common stock; and +• +prevailing general market and economic conditions. +The Board of Directors reserves the right to elect to not effect a Reverse Stock Split, including any or all proposed ratios for the Reverse Stock Split, if it +determines, in its sole discretion, that the Reverse Stock Split is no longer in the best interests of the Company and our shareholders. +The Reverse Stock Split +would also proportionately reduce the number of authorized shares of common stock. The Reverse Stock Split will not change the number of authorized shares of preferred stock. The Reverse Stock Split will not change the par value of the common stock +or the preferred stock. +The approval of a majority of all issued and outstanding shares of common stock is required to approve this proposal. If you properly give +a proxy but do not indicate how you wish to vote, the persons named on the proxy card, or if you do not name your proxy or proxies, the Proxy Holders, will vote for the proposal. +56 +NexTier Oilfield Solutions Inc. +Table of Contents +Reasons for the Reverse Stock Split Proposal +In evaluating the Reverse Stock Split, the Board of Directors considered that the implementation of the Reverse Stock Split is likely to increase the trading price for +the Company’s common stock as a result of the reduction in the number of shares outstanding. The Board of Directors believes that an increased trading price of the Company’s common stock will improve the marketability and liquidity of the +Company’s common stock, which may facilitate trading in the Company’s common stock. +The Board of Directors believes that the Reverse Stock Split, if +implemented, will make the Company’s common stock more attractive to a broader range of institutional and other investors, as the Board of Directors believes that the current market price of the Company’s common stock may affect its +acceptability to certain institutional investors, professional investors and other members of the investing public. Many brokerage houses and institutional investors have internal policies and practices that either prohibit them from investing in +low-priced stocks or tend to discourage individual brokers from recommending low-priced stocks to their customers. In addition, some of those policies and practices may function to make the processing of trades in low-priced stocks economically +unattractive to brokers. Moreover, because brokers’ commissions on low-priced stocks generally represent a higher percentage of the stock price than commissions on higher-priced stocks, the current average price per share of the Company’s +common stock can result in individual shareholders paying transaction costs representing a higher percentage of their total share value than would be the case if the share price were higher. The Board of Directors believes that, if approved and +implemented, the Reverse Stock Split will make the Company’s common stock a more attractive and cost-effective investment for many investors, which will enhance the liquidity for the holders of the Company’s common stock. +Procedure for Implementing the Reverse Stock Split +The Reverse Stock Split +would become effective upon the filing of a certificate of amendment to our certificate of incorporation with the Secretary of State of the State of Delaware. The exact timing of the filing of the certificate of amendment that will affect the +Reverse Stock Split will be determined by the Board of Directors, in its sole discretion. In no event will we file a certificate of amendment to affect the Reverse Stock Split after June 18, 2021. +Reservation of Right to Abandon Reverse Stock Split +The Board of Directors +reserves the right, notwithstanding shareholder approval of this Reverse Stock Split Proposal and without further action by the shareholders, to elect not to proceed with the Reverse Stock Split if, at any time prior to filing the amendment to our +certificate of incorporation to effect the Reverse Stock Split, or, in the event that the amendment is not effective until a later time, such later time, the Board of Directors, in its sole discretion, determines that it is no longer in the +Company’s best interests and the best interests of our shareholders to proceed with the Reverse Stock Split. If a certificate of amendment effecting the Reverse Stock Split has not been filed with the Secretary of State of the State of Delaware +on or before June 18, 2021, the Board of Directors will be deemed to have abandoned the Reverse Stock Split. +Effect of the Reverse Stock Split on Holders +of Outstanding Common Stock +Depending on the ratio for the Reverse Stock Split determined by the Board of Directors, a minimum of every 5 and a maximum of +every 25 shares of issued common stock will be combined into one new share of common stock. Based on 213,328,528 shares of common stock outstanding as of March 31, 2020, immediately following the Reverse Stock Split we would have approximately +42,665,705 shares of common stock issued and outstanding if the ratio for the Reverse Stock Split is 1-for-5, and approximately 8,533,141 shares of common stock issued and outstanding if the ratio for the Reverse Stock Split is 1-for-25. Any other +ratio selected within such range would result in a number of shares of common stock outstanding of between 42,665,705 and 8,533,141 shares. +2020 Proxy Statement +57 +Table of Contents +The Reverse Stock Split would also proportionately reduce the number of shares of common stock that the Board of +Directors is authorized to issue under our certificate of incorporation. If the Reverse Stock Split is effected, it will reduce the total number of shares of common stock that the Board of Directors is authorized to issue from the current +500,000,000 authorized shares of common stock to 100,000,000 shares of common stock if the ratio for the Reverse Stock Split is 1-for-5, and 20,000,000 shares of common stock if the ratio for the Reverse Stock Split is 1-for-25. Any other ratio for +the Reverse Stock Split selected within such range would result in a number of authorized shares of common stock of between 100,000,000 and 20,000,000 shares. +The +actual number of shares authorized, issued and outstanding after giving effect to the Reverse Stock Split, if implemented, will depend on the ratio for the Reverse Stock Split that is ultimately determined by the Board of Directors and the number of +shares of common stock authorized, issued and outstanding prior to the effectiveness of the Reverse Stock Split. +The Reverse Stock Split will affect all holders of +our common stock uniformly and will not affect any shareholder’s percentage ownership interest in the Company, except that, as described below under “—Fractional Shares,” record holders of common stock otherwise entitled to a +fractional share as a result of the Reverse Stock Split will receive cash in lieu of such fractional share. In addition, the Reverse Stock Split will not affect any shareholder’s proportionate voting power (subject to the treatment of +fractional shares). +The trading price for the Company’s common stock is impacted by a variety of factors, such as the Company’s financial results, market +conditions and the market perception of the Company’s business and the Reverse Stock Split. Although the Board of Directors believes the Reverse Stock Split will increase the trading price for the Company’s common stock, this increase may +not occur. In addition, any increase in trading price may not be sufficient to attract investors or satisfy the investing guidelines or policies of institutional investors or other professional investors. As a result, the trading liquidity of the +Company’s common stock may not improve as a result of the Reverse Stock Split or may be harmed given the reduced number of shares of common stock that will be outstanding. +The Reverse Stock Split may result in some shareholders owning “odd lots” of less than 100 shares of common stock. Odd lot shares may be more difficult to +sell, and brokerage commissions and other costs of transactions in odd lots may be higher than the costs of transactions in “round lots” of even multiples of 100 shares. +After the effective time of the Reverse Stock Split, our common stock will have a new Committee on Uniform Securities Identification Procedures (“CUSIP”) +number, which is a number used to identify our equity securities. After the Reverse Stock Split, we will continue to be subject to the periodic reporting and other requirements of the Exchange Act. +Beneficial Holders of Common Stock (i.e., shareholders who hold in street name) +If you hold your shares through a bank, broker, custodian or other nominee, such banks, broker, custodian or other nominee will be instructed to effect the Reverse +Stock Split for their beneficial holders holding our common stock in street name. However, these banks, brokers, custodians or other nominees may have different procedures than registered shareholders for processing the Reverse Stock Split. +Shareholders who hold shares of our common stock with a bank, broker, custodian or other nominee and who have any questions in this regard are encouraged to contact their banks, brokers, custodians or other nominees. +Registered Holders of Common Stock (i.e., shareholders that are registered on the transfer agent’s books and records) +Shareholders who hold shares electronically in book-entry form with our transfer agent will not need to take further action to receive whole shares of post-Reverse +Stock Split common stock, because the exchange will be automatic. +58 +NexTier Oilfield Solutions Inc. +Table of Contents +Fractional Shares +Fractional shares will not be issued in connection with the Reverse Stock Split. Shareholders of record and shareholders who hold their shares through a bank, broker, +custodian or other nominee who would otherwise hold fractional shares of our common stock as a result of the Reverse Stock Split will be entitled to receive cash (without interest and subject to applicable withholding taxes) in lieu of such +fractional shares. Each such shareholder will be entitled to receive an amount in cash equal to the product of (i) the fraction of one share to which such shareholder would otherwise be entitled, (ii) the number of shares of common stock +combined into one new share of common stock in the Reverse Stock Split and (iii) the closing price of our common stock on the date immediately preceding the effective time of the Reverse Stock Split as reported on the NYSE. +Shareholders should be aware that, under the escheat laws of the various jurisdictions where shareholders reside, where we are domiciled and where the funds will be +deposited, sums due for fractional interests resulting from the Reverse Stock Split that are not timely claimed after the effective time in accordance with applicable law may be required to be paid to the designated agent for each such jurisdiction. +Thereafter, shareholders otherwise entitled to receive such funds may have to seek to obtain them directly from the state to which they were paid. +Accounting +Matters +The amendment to our certificate of incorporation will not affect the par value of our common stock per share, which will remain $0.01 par value per +share. As a result, as of the effective time of the Reverse Stock Split, the stated capital attributable to common stock and the additional paid-in capital on our balance sheet will, in total, not change due to the Reverse Stock Split. However, the +allocation between the stated capital attributable to common stock and the additional paid-in capital on our balance sheet will change because there will be fewer shares of common stock outstanding. The stated capital attributable to common stock +will decrease and, in turn, the stated capital attributable to additional paid-in capital will increase. Further, reported per share net income or loss will be higher because there will be fewer shares of common stock outstanding. +No Dissenters’ Appraisal Rights +Under the Delaware General Corporation +Law, the Company’s shareholders are not entitled to dissenters’ appraisal rights with respect to the Reverse Stock Split, and the Company will not independently provide shareholders with any such right. +Material U.S. Federal Income Tax Consequences of the Reverse Stock Split +The following discussion is a general summary of the anticipated material U.S. federal income tax consequences of the proposed Reverse Stock Split to U.S. Holders of +our common stock and does not purport to be a complete analysis of all potential tax consequences that may be relevant to U.S. Holders. The following discussion is based upon the Code, its legislative history, currently applicable and proposed +Treasury Regulations under the Code and published rulings, judicial decisions, and administrative pronouncements of the IRS, all as currently in effect as of the date of this proxy statement. These authorities may change or be subject to differing +interpretations. Any such change or differing interpretation may be applied retroactively in a manner that could adversely affect a U.S. Holder. Tax consequences under state, local and non-U.S. laws, or federal laws other than those pertaining to +income tax, such as estate and gift tax laws, are not addressed in this proxy statement. Furthermore, the following discussion does not address any tax consequences of transactions effectuated before, after or at the same time as the proposed +Reverse Stock Split, whether or not they are in connection with the proposed Reverse Stock Split. No rulings have been requested or received from the IRS as to the tax consequences of the proposed Reverse Stock Split and there is no intent to seek +any such ruling. +2020 Proxy Statement +59 +Table of Contents +Accordingly, no assurance can be given that the IRS or a court will not take a contrary position to that discussed below regarding the tax consequences of the proposed Reverse Stock Split. +For purposes of this discussion, a “U.S. Holder” is a beneficial owner of our common stock that, for U.S. federal income tax purposes, is or is treated as: +• +an individual who is a citizen or resident of the United States; +• +a corporation (or any other entity or arrangement treated as a corporation for U.S. federal income tax purposes) created or +organized under the laws of the United States, any state thereof, or the District of Columbia; +• +an estate, the income of which is subject to U.S. federal income tax regardless of its source; or +• +a trust if (1) its administration is subject to the primary supervision of a court within the United States and all of +its substantial decisions are subject to the control of one or more “United States persons” (within the meaning of Section 7701(a)(30) of the Code), or (2) it has a valid election in effect under applicable U.S. Treasury +Regulations to be treated as a United States person. +This discussion is limited to U.S. Holders who hold our common stock as a “capital +asset” within the meaning of Section 1221 of the Code (generally, property held for investment). This discussion does not address all U.S. federal income tax consequences relevant to the particular circumstances of a U.S. Holder, including +the impact of the alternative minimum tax or the Medicare contribution tax on net investment income. In addition, it does not address consequences relevant to U.S. Holders that are subject to special rules, including, without limitation: +• +banks, insurance companies, and other financial institutions; +• +real estate investment trusts or regulated investment companies; +• +grantor trusts; +• +tax-exempt organizations or governmental organizations; +• +brokers, dealers or traders in securities or currencies; +• +U.S. Holders that have a functional currency other than the U.S. dollar; +• +shareholders who actually or constructively own 5% or more of our voting stock; +• +U.S. expatriates and former citizens or long-term residents of the United States; +• +persons holding common stock as part of a hedge, straddle or other risk reduction strategy or as part of a conversion +transaction or other integrated investment; +• +persons for whom common stock constitutes “qualified small business stock” within the meaning of +Section 1202 of the Code; +• +“controlled foreign corporations,” “passive foreign investment companies,” and corporations that +accumulate earnings to avoid U.S. federal income tax; +• +S corporations, partnerships or other entities or arrangements treated as partnerships for U.S. federal income tax purposes +(and investors therein); +• +persons subject to special tax accounting rules as a result of any item of gross income with respect to common stock being +taken into account in an “applicable financial statement” (as defined in the Code); +• +persons deemed to sell common stock under the constructive sale provisions of the Code; +60 +NexTier Oilfield Solutions Inc. +Table of Contents +• +persons who hold or receive common stock pursuant to the exercise of any employee stock option or otherwise as +compensation; and +• +tax-qualified retirement plans. +If a partnership (or other entity treated as a partnership for U.S. federal income tax purposes) is the beneficial owner of our common stock, the U.S. federal income +tax treatment of a partner in the partnership will generally depend on the status of the partner, the activities of the partnership, and certain determinations made at the partner level. Accordingly, partnerships (and other entities treated as +partnerships for U.S. federal income tax purposes) holding our common stock and the partners in such entities should consult their own tax advisors regarding the U.S. federal income tax consequences of the proposed Reverse Stock Split to them. +SHAREHOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE APPLICATION OF THE U.S. FEDERAL INCOME TAX LAWS TO THEIR PARTICULAR SITUATIONS AS WELL AS ANY TAX +CONSEQUENCES OF THE PROPOSED REVERSE STOCK SPLIT ARISING UNDER THE U.S. FEDERAL ESTATE OR GIFT TAX LAWS OR UNDER THE LAWS OF ANY STATE, LOCAL OR NON-U.S. TAXING JURISDICTION OR UNDER ANY APPLICABLE INCOME TAX TREATY. +The proposed Reverse Stock Split should constitute a “recapitalization” for U.S. federal income tax purposes pursuant to Section 368(a)(1)(E) of the +Code. As a result, a U.S. Holder generally should not recognize gain or loss upon the proposed Reverse Stock Split for U.S. federal income tax purposes, except with respect to cash received in lieu of a fractional share of our common stock, as +discussed below. A U.S. Holder’s aggregate adjusted tax basis in the shares of our common stock held immediately after the proposed Reverse Stock Split should equal the aggregate adjusted tax basis of the shares of our common stock held +immediately before the Reverse Stock Split (reduced by the amount of such basis that is allocated to any fractional share of our common stock). The U.S. Holder’s holding period in the shares of our common stock held immediately after the +Reverse Stock Split should include the holding period in the shares of our common stock held immediately before the Reverse Stock Split. U.S. Treasury Regulations provide detailed rules for allocating the tax basis and holding period among shares of +common stock which were acquired by a shareholder on different dates and at different prices. U.S. Holders of shares of our common stock acquired on different dates and at different prices should consult their tax advisors regarding the allocation +of the tax basis and holding period among such shares. +A U.S. Holder that, pursuant to the proposed Reverse Stock Split, receives cash in lieu of a fractional +share of our common stock should recognize capital gain or loss in an amount equal to the difference, if any, between the amount of cash received and the portion of the U.S. Holder’s aggregate adjusted tax basis in the shares of our common +stock surrendered that is allocated to such fractional share. Such capital gain or loss will be short term if the pre-reverse split shares were held for one year or less at the effective time of the Reverse Stock Split and long term if held for more +than one year. Long-term capital gains of certain non-corporate taxpayers, including individuals, are generally taxed at preferential rates. The deductibility of capital losses is subject to limitations. +In general, information reporting requirements will apply to any cash received pursuant to the reverse stock split. Payments of cash made in lieu of a fractional share +of our common stock may, under certain circumstances, be subject to backup withholding (currently at a rate of 24%). To avoid backup withholding, each U.S. holder of our common stock should furnish, a correct taxpayer identification number and +certify that it is not subject to backup withholding on IRS Form W-9 (or successor form) or is otherwise exempt from backup withholding and provide appropriate proof of the applicable exemption. Backup withholding is not an additional tax and +amounts withheld will be allowed as a credit against the holder’s U.S. federal income tax liability and may entitle such holder to a refund, provided the required information is timely furnished to the IRS. Holders of our common stock should +consult their own tax advisors regarding the application of the information reporting and backup withholding rules to them. +2020 Proxy Statement +61 +Table of Contents +This preceding discussion does not purport to be a complete analysis or discussion of all the potential tax +consequences of the reverse stock split. Holders of NexTier common stock should consult their tax advisors regarding the specific tax consequences to them of the reverse stock split, including any tax return reporting requirements and the +applicability and effect of U.S. federal, state, local and non-U.S. and other applicable tax laws in light of their particular circumstances. +62 +NexTier Oilfield Solutions Inc. +Table of Contents +Other Information +Share Ownership +The following table sets forth +information regarding the beneficial ownership of our common stock as of April 15, 2020 by: +• +each person who is known by us to beneficially own 5% or more of our outstanding shares of capital stock; +• +each member of our board of directors; +• +each of our named executive officers; and +• +all of our directors and executive officers as a group. +Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. A person is +also deemed to be a beneficial owner of any securities of which that person has a right to acquire beneficial ownership within 60 days. Unless otherwise indicated, the address for each 5% stockholder, director and executive officer listed below is +c/o NexTier Oilfield Solutions Inc., 3990 Rogerdale Road, Houston, Texas 77042. +Name of Beneficial Owner +Shares +Beneficially +Owned +Percentage of +Common Stock +Outstanding +5% Stockholders: +Keane Investor Holdings LLC (1) +47,263,981 +22.2 +% +Blackrock Inc. (2) +10,996,052 +5.2 +% +The Vanguard Group (3) +14,736,271 +6.9 +% +T. Rowe Price Associates, Inc. (4) +12,173,365 +5.7 +% +Directors and Named Executive Officers: +Robert W. Drummond +221,525 +* +Stuart Brightman +55,279 +* +Marc G. R. Edwards +77,445 +* +Gary M. Halverson +56,612 +* +John Kennedy +56,942 +* +Steven Mueller +56,942 +* +Patrick Murray +72,001 +* +Amy Nelson +49,771 +* +Mel Riggs +45,233 +* +Michael Roemer +57,498 +* +James C. Stewart +2,824,723 +1.3 +% +Scott Wille +— +* +Kenneth Pucheu +28,105 +* +Gregory L. Powell +2,112,799 +* +Kevin M. McDonald +247,905 +* +Ian Henkes +209,243 +* +Jan Kees van Gaalen +81,106 +* +All directors and executive officers as a group (2) +(18 persons ) +6,228,431 +2.9 +% +* +Represents less than 1%. +2020 Proxy Statement +63 +Table of Contents +(1) +The address for Keane Investor Holdings LLC and Mr. Wille is c/o Cerberus Capital Management, L.P., 875 Third +Avenue, New York, New York 10022. Keane Investor is held by a private investor group, including affiliates of Cerberus and certain current members of management. Mr. Wille is affiliated with Cerberus and therefore has an indirect economic +interest in the shares held by Keane Investor. +(2) +The information contained in the table and this footnote is based solely on a Schedule 13G, filed with the SEC on +February 7, 2020 by BlackRock, Inc. The filing indicates that as of December 31, 2019, BlackRock, Inc. had sole voting power for 10,996,052 shares and sole dispositive power over 11,382,943 shares. The subsidiaries of BlackRock, Inc. that +acquired shares reported by the BlackRock, Inc. are as follows: BlackRock Advisors, LLC, BlackRock Investment Management (UK) Limited, BlackRock Asset Management Canada Limited, BlackRock Investment Management (Australia) Limited, BlackRock Fund +Advisors, BlackRock Asset Management Ireland Limited, BlackRock Institutional Trust Company, National Association, BlackRock Financial Management, Inc., BlackRock Asset Management Schweiz AG, and BlackRock Investment Management, LLC. The address for +BlackRock, Inc. is 55 East 52nd Street, New York, NY 10055. +(3) +The information contained in the table and this footnote is based solely on a Schedule 13G filed with the SEC on +February 11, 2020, by The Vanguard Group. The filing indicates that as of December 31, 2019, The Vanguard Group, Inc. reported that it had sole voting power for 148,781 shares, shared voting power for 31,199 shares, sole dispositive power +for 14,573,250 shares and shared dispositive power for 163,021 shares. The Vanguard Group, Inc. also reported that (i) Vanguard Fiduciary Trust Company, a wholly owned subsidiary of The Vanguard Group, Inc., is the beneficial owner as a result +of its serving as investment manager of collective trust accounts and (ii) Vanguard Investments Australia, Ltd., a wholly owned subsidiary of The Vanguard Group, Inc., is the beneficial owner as a result of its serving as investment manager of +Australian investment offerings. The address for The Vanguard Group, Inc. is 100 Vanguard Blvd., Malvern, PA 19355. +(4) +The information contained in the table and this footnote is based solely on a Schedule 13G filed with the SEC on +February 14, 2020, by T. Rowe Price Associates, Inc. The filing indicates that as of December 31, 2019, T. Rowe Price Associates, Inc. reported that it had sole voting power for 2,993,602 shares and sole dispositive power for 12,173,365 +shares. The address for T. Rowe Price Associates, Inc. is 100 E. Pratt Street, Baltimore, MD 21202. +Related +Person Transactions +Certain Related Party Transactions +We paid COAC, +an affiliate of Cerberus, fees totaling approximately $4.1 million during 2019 for consulting services provided in connection with improving the Company’s operations. We may retain COAC to provide similar services in the future. +One of our board members is an employee of Cerberus, and funds managed by one or more affiliates of Cerberus indirectly own a substantial portion of our equity through +their ownership of Keane Investor. +Policy and Procedures for the Review, Approval or Ratification of Transactions with Related Persons +Prior to the completion of the IPO, our board of directors adopted a written policy (the “Related Party Policy”) and procedures for the review, approval or +ratification of “Related Party Transactions” by the independent members of the Audit Committee. For purposes of the Related Party Policy, a “Related Party Transaction” is any transaction, arrangement or relationship or series of +similar transactions, arrangements or relationships (including the incurrence or issuance of any indebtedness or the guarantee of indebtedness) in which (1) the aggregate amount involved will or may be reasonably expected to exceed $120,000 in +any fiscal year, (2) the Company or any of its subsidiaries is a participant, and (3) any Related Party (as defined herein) has or will have a direct or indirect material interest. +The Related Party Policy defines “Related Party” as any person who is, or, at any time since the beginning of the Company’s last fiscal year, was +(1) an executive officer, director or nominee for election as a director of the Company or any of its subsidiaries, (2) a person with greater than five percent (5%) beneficial interest in the Company, (3) an immediate family +member of any of the individuals or entities identified in (1) or (2) of this paragraph, and (4) any firm, corporation or other entity in which any +64 +NexTier Oilfield Solutions Inc. +Table of Contents +of the foregoing individuals or entities is employed or is a general partner or principal or in a similar position or in which such person or entity has a five percent (5%) or greater +beneficial interest. Immediate family members (each, a “Family Member”) includes a person’s spouse, parents, stepparents, children, stepchildren, siblings, mothers- and fathers-in-law, sons- and daughters-in-law, brothers- and +sisters-in-law and anyone residing in such person’s home, other than a tenant or employee. +Prior to the Company entering into any Related Party Transaction, +such Related Party Transaction will be reported to our General Counsel who will report the same to the Audit Committee. Our General Counsel will conduct an investigation and evaluation of the Related Party Transaction and will report his or her +findings to the Audit Committee, including a summary of material facts. The Audit Committee will review the material facts of all Related Party Transactions which require the Audit Committee’s approval and either approve or disapprove of the +Related Party Transaction, subject to the exceptions described below. If advance notice of a Related Party Transaction has been given to the Audit Committee and it is not possible to convene a meeting of the Audit Committee, then the chairman of the +Audit Committee will consider whether the Related Party Transaction is appropriate and, if it is, will approve the Related Party Transaction, with the Audit Committee being asked to ratify the Related Party Transaction at the next regularly +scheduled meeting of the Audit Committee. In the event the Audit Committee does not ratify any such Related Party Transaction, management shall make all reasonable efforts to cancel or annul such Related Party Transaction. In determining whether to +approve or ratify a Related Party Transaction, the Audit Committee, or its chairman, as applicable, will consider all factors it deems appropriate, including the factors listed below in “—Review Criteria.” +Entering into a Related Party Transaction without the approval or ratification required by the terms of the Related Party Policy is prohibited and a violation of such +policy. In the event the company’s directors, executive officers or Chief Accounting Officer become aware of a Related Party Transaction that was not previously approved or ratified under the Related Party Policy, such person will promptly +notify the Audit Committee (or, if it is not practicable for the company to wait for the Audit Committee to consider the matter, the chairman of the Audit Committee) will consider whether the Related Party Transaction should be ratified or rescinded +or other action should be taken, with such review considering all of the relevant facts and circumstances regarding the Related Party Transaction, including the factors listed below in “—Review Criteria.” The chairman of the Audit +Committee will report to the committee at its next regularly scheduled meeting any actions taken under the Related Party Policy pursuant to the authority delegated in this paragraph. The Audit Committee will also review all of the facts and +circumstances pertaining to the failure to report the Related Party Transaction to the Audit Committee and will take, or recommend to our board of directors, any action the Audit Committee deems appropriate. +No member of the Audit Committee or director of our board will participate in any discussion or approval of a Related Party Transaction for which he or she is a Related +Party, except that the Audit Committee member or board director will provide all material information concerning the Related Party Transaction to the Audit Committee. +If a Related Party Transaction will be ongoing, the Audit Committee may establish guidelines for the Company’s management to follow in its ongoing dealings with +the Related Party. Thereafter, the Audit Committee, on at least an annual basis, will review and assess ongoing relationships with the Related Party to ensure that they are in compliance with the Audit Committee’s guidelines and that the +Related Party Transaction remains appropriate. +Review Criteria +All +Related Party Transactions will be reviewed in accordance with the standards set forth in the Related Party Policy after full disclosure of the Related Party’s interests in the transaction. As appropriate for the circumstances, the Audit +Committee or its chairman, as applicable, will review and consider: +• +the Related Party’s interest in the Related Party Transaction; +2020 Proxy Statement +65 +Table of Contents +• +the terms of the Related Party Transaction, including the approximate dollar value of the amount involved in the Related +Party Transaction and the approximate dollar value of the amount of the Related Party’s interest in the transaction without regard to the amount of any profit or loss; +• +whether the transaction is being undertaken in the ordinary course of business of the Company; +• +whether the transaction with the Related Party is proposed to be, or was, entered into on terms no less favorable to the +Company than terms that could have been reached with an unrelated third party; +• +the purpose of, and the potential benefits to the Company of, the Related Party Transaction; +• +a description of any provisions or limitations imposed as a result of entering into the Related Party Transaction; +• +whether the proposed transaction includes any potential reputational risk issues for the Company which may arise as a +result of or in connection with the Related Party Transaction; +• +whether the proposed transaction would violate any requirements of the Company’s financing or other material +agreements; and +• +any other relevant information regarding the Related Party Transaction or the Related Party. +The Audit Committee, or its chairman, as applicable, may approve or ratify the Related Party Transaction only if the Audit Committee, or its chairman, as applicable, +determines in good faith that, under all of the circumstances, the transaction is fair to the Company. The Audit Committee, in its sole discretion, may impose such conditions as it deems appropriate on the Company or the Related Party in connection +with approval of the Related Party Transaction. +Pre-Approved Related Party Transactions +The Audit Committee has determined that the following transactions will be deemed pre-approved or ratified and will not require review or approval of the Audit +Committee, even if the aggregate amount involved will exceed $120,000, unless otherwise specifically determined by the Audit Committee. +• +Any employment by the Company of an executive officer of the Company or any of its subsidiaries if the related compensation +conforms with our Company’s compensation policies and if the executive officer is not a Family Member of another executive officer or of a director of our board; and +• +Any compensation paid to a director of our board if the compensation is consistent with the Company’s Bylaws and any +compensation policies. +Notwithstanding anything to the contrary in the Related Party Policy, in the event the Bylaws of the Company require +review by our board of directors and/or approval of a Related Party Transaction, the Audit Committee, and its chairman, will not have the authority to review or approve a Related Party Transaction but will provide a recommendation to our board of +directors for the board’s use in its consideration of a given Related Party Transaction. +Delinquent Section 16(a) Reports +All of our directors, executive officers and greater than 10% stockholders are required to file initial statements and reports of changes of ownership of our common +stock on Forms 3, 4 and 5 with the SEC. +We have reviewed these reports, including any amendments there to and written representations from the directors and +executive officers. Based upon this review, we believe that no directors, executive officer, or beneficial owner of more than 10% or more of our common stock failed to file a report on a +66 +NexTier Oilfield Solutions Inc. +Table of Contents +timely basis during 2019, other than: (i) each of Messers. Edwards, Halverson, Reed and Garcia had one late report reporting their annual director equity grant; (ii) Mr. Pucheu had +a late Form 3 report; and (iii) Mr. Stewart had an amendment to a Form 4 reporting one transaction. +Equity Compensation Plan +Information +On October 31, 2019, the Company (i) amended and restated the Keane Group, Inc. Equity and Incentive Award Plan under the name NexTier +Oilfield Solutions Inc. Equity and Incentive Award Plan (“Equity and Incentive Award Plan”), and (ii) assumed and amended and restated the C&J Energy Services, Inc. 2017 Management Incentive Plan under the name NexTier Oilfield +Solutions Inc. (Former C&J Energy) Management Incentive Plan ( “Management Incentive Plan”, and collectively with the Equity and Incentive Award Plan, the “Equity Award Plans”). As part of the C&J Merger, the Company +assumed the award agreements outstanding under the Management Incentive Plan on the terms set forth in the Merger agreement. Persons eligible to receive awards under the Equity Award Plans include our non-employee directors and our employees. As of +December 31, 2019, there are approximately 5,899,928 shares of its common stock reserved and available for grant under the Equity and Incentive Award Plan and approximately 8,155,054 shares of its common stock reserved and available for grant +under the Management Incentive Plan. +The following table sets forth certain information regarding the Equity Award Plans as of December 31, 2019: +Plan Category +Number of securities +to be issued upon +exercise of +outstanding options, +warrants and +rights +Weighted-average +exercise price of +outstanding +options, warrants +and +rights +Number of securities +remaining available +for future issuance +under equity +compensation +plans +(excluding securities +reflected in Column (A)) +Equity compensation plans approved by security holders +1,193,940 +$ +17.17 +5,899,928 +Equity compensation plans not approved by security holders +549,270 +$ +24.35 +8,155,054 +Total +1,743,210 +$ +19.43 +14,054,982 +Proposals by Stockholders +The Company expects that its 2021 Annual Meeting will be held in June 2021 consistent with the Company’s 2020 Annual Meeting. Stockholders of record who intend to +submit a proposal or a nomination of an individual to serve as a director at the annual meeting of stockholders in 2021 must provide written notice to the Company in accordance with the Company’s Bylaws. Under the Company’s Bylaws, such +notice must be received at the Company’s principal executive offices, addressed to the Secretary of the Company, not earlier than February 18, 2021 nor later than March 20, 2021, which are dates at least 90 days but not more than 120 +days in advance of the first anniversary of the date of the Annual Meeting. Stockholders are also advised to review our Bylaws, which contain additional requirements about advance notice of stockholder proposals and director nominations. +Stockholders who intend to submit a proposal at 2021 Annual Meeting and desire that such proposal be included in the proxy materials for such meeting must follow the +procedures prescribed in the Company’s Bylaws and Rule l4a-8 under the Exchange Act. To be eligible for inclusion in the proxy materials, stockholder proposals must be received by the Secretary of the Company at the Company’s principal +executive offices no later than December 29, 2020. +2020 Proxy Statement +67 +Table of Contents +Householding +The SEC permits a single Proxy Statement to be sent to any household at which two or more stockholders reside if they appear to be members of the same family. Each +stockholder continues to receive a separate proxy card. This procedure, referred to as householding, reduces the volume of duplicate information stockholders receive and reduces mailing and printing expenses. A number of brokerage firms have +instituted householding. +As a result, if you hold your shares through a broker and you reside at an address at which two or more stockholders reside, you will +likely be receiving only one Proxy Statement unless any stockholder at that address has given the broker contrary instructions. However, if any such beneficial stockholder residing at such an address wishes to receive a separate Proxy Statement in +the future, or if any such beneficial stockholder that elected to continue to receive separate Proxy Statement wishes to receive a single Proxy Statement in the future, that stockholder should contact their broker or send a request to us care of the +Corporate Secretary at 3990 Rogerdale Road, Houston, Texas 77042. Telephone requests may be directed to (713) 325-6000. We will deliver, promptly upon written or oral request, a separate copy of this Proxy Statement to a beneficial stockholder +at a shared address to which a single copy of the documents was delivered. +68 +NexTier Oilfield Solutions Inc. +Table of Contents +APPENDIX A +CERTIFICATE OF AMENDMENT +OF +CERTIFICATE OF +INCORPORATION +OF +NEXTIER OILFIELD SOLUTIONS INC. +NexTier Oilfield Solutions Inc. (the “Corporation”), a corporation organized and existing under and by virtue of the +General Corporation Law of the State of Delaware (the “DGCL”), does hereby certify: +FIRST : The name +of the Corporation is NexTier Oilfield Solutions Inc. The name under which the Corporation was originally incorporated was Keane Group, Inc. +SECOND : The Board of Directors (the “Board”) of the Corporation duly adopted resolutions at a meeting of the +Board setting forth this Certificate of Amendment, declaring the advisability of the adoption of this Certificate of Amendment, and directing that this Certificate of Amendment be considered at the annual meeting of the Corporation’s +stockholders. +THIRD : This Certificate of Amendment was duly adopted in accordance with Section 242 of the +DGCL at the annual meeting of stockholders was duly called upon notice in accordance with Section 222 of the DGCL and held on June [18], 2020. +FOURTH : Article IV of the Corporation’s Certificate of Incorporation is hereby amended to restated to read in full +as follows: +“The total number of shares of all classes of stock which the Corporation shall have authority to issue +is [•], 1 consisting of [•] 2 shares of common stock, par value one cent ($0.01) per share (the “Common Stock”), and +(ii) fifty million (50,000,000) shares of preferred stock, par value one cent ($0.01) per share (the “Preferred Stock”). The Board of Directors is hereby expressly authorized, by resolution or resolutions, to provide, out of the +unissued shares of Preferred Stock, for one or more series of Preferred Stock and, with respect to each such series, to fix, without further stockholder approval, the designation, powers, preferences and relative, participating, optional or other +special rights, including voting powers and rights, and the qualifications, limitations or restrictions thereof, of each series of Preferred Stock pursuant to Section 151 of the GCL. +Upon this Certificate of Amendment to the Certificate of Incorporation of the Corporation becoming effective pursuant to the +General Corporation Law of the State of Delaware (the “Effective Time”), each [•] ([•]) 1 shares of Common Stock then issued and outstanding or held by the Corporation as +treasury stock immediately prior to the Effective Time shall, automatically and without any action on the part of the respective holders thereof, be combined and converted into one (1) share of Common Stock. No fractional shares will be issued +and, in lieu thereof, stockholders otherwise entitled to receive a fractional share will instead receive cash for such stockholder’s fractional share on a basis determined by the Board of Directors of the Corporation. Each certificate that +immediately prior to the Effective Time represented shares of Common Stock (an “Old Certificate”) shall thereafter represent that number of shares of Common Stock into which the shares of Common Stock represented by the Old Certificate +shall have been combined, subject to the elimination of fractional share interests as described above.” +1 +To be a number between 150,000,000 and 70,000,000, depending on the final reverse stock split ratio determined +by the Board. +2 +To be a number between 100,000,000 and 20,000,000, depending on the reverse stock split ratio deterrmined by +the Board. +A-1 +Table of Contents +FIFTH : That this Certificate of Amendment shall become effective at +5:00 p.m. (New York Time) on [__], in accordance with the provisions of Sections 103 and 242 of the DGCL. +IN WITNESS +WHEREOF , NexTier Oilfield Solutions Inc. has caused this Certificate to be executed by its duly authorized officer on this [__], 2020. +NEXTIER OILFIELD SOLUTIONS INC. +By: +Name: +Title: +A-2 +Table of Contents +NEXTIER OILFIELD SOLUTIONS INC 3990 ROGERDALE ROAD +HOUSTON, TX 77042 +Investor Address Line 1 Investor Address Line 2 Investor +Address Line 3 Investor Address Line 4 Investor Address Line 5 John Sample 1234 ANYWHERE STREET ANY CITY, ON A1A 1A1 +VOTE BY INTERNET—www.proxyvote.com +Use the Internet to transmit your voting instructions and for electronic delivery of information. Vote by 11:59 P.M. ET on 06/17/2020. Have your proxy card in hand +when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. +ELECTRONIC DELIVERY OF FUTURE +PROXY MATERIALS +If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, +proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that +you agree to receive or access proxy materials electronically in future years. +VOTE BY PHONE—1-800-690-6903 +Use any touch-tone telephone to transmit your voting instructions. Vote by 11:59 P.M. ET +on 06/17/2020. Have your proxy card in hand when you call and then follow the instructions. +VOTE BY MAIL +Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY +11717. +NAME +THE COMPANY NAME INC.—COMMON THE COMPANY NAME +INC.—CLASS A THE COMPANY NAME INC.—CLASS B THE COMPANY NAME INC.—CLASS C THE COMPANY NAME INC.—CLASS D THE COMPANY NAME INC.—CLASS E THE COMPANY NAME INC.—CLASS F THE COMPANY NAME INC.—401 K +CONTROL # → +SHARES 123,456,789,012.12345 123,456,789,012.12345 +123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 +PAGE +1 OF 2 +x +TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: +KEEP THIS PORTION FOR YOUR RECORDS +DETACH AND RETURN THIS PORTION ONLY +THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. +HARES CUSIP # JOB # SEQUENC +# +Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date +The Board of Directors +recommends you vote FOR the following: +1. Election of Directors +Nominees +For Against Abstain +1A Robert W. Drummond +1B Stuart Brightman +1C Gary M. Halverson +1D Patrick Murray +1E Amy H. +Nelson +1F Mel G. Riggs +1G +Michael Roemer +1H James C. Stewart For address change/comments, mark +here. (see reverse for instructions) Yes No Please indicate if you plan to attend this meeting +1I Scott Wille +The Board of Directors recommends you vote FOR proposals 2, 3 and 4. +2. To ratify the appointment of KPMG LLP as our independent auditor for the fiscal year ending December 31, 2020. +3. To approve, in an advisory vote, the compensation of our named executive officers. +4. To approve an amendment to the Company’s certificate of incorporation to effect a reverse stock split of the Company’s common stock, by +a ratio of not less than 1-for-5 and not more than 1-for-25, and +a proportionate reduction in the number of authorized shares of common stock, such ratio and the implementation and timing of such reverse stock split to be determined in the +discretion of the Board of Directors of the Company. +NOTE: Such other business as may properly come before the meeting or any adjournment +thereof. +For Against Abstain +For Against Abstain +0000458097_1 R1.0.1.18 +Please sign exactly as your name(s) appear(s) +hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or +partnership name, by authorized officer. +Table of Contents +Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: +The Annual Report and Notice & Proxy Statement are available at www.proxyvote.com +NEXTIER OILFIELD SOLUTIONS INC Annual Meeting of Stockholders June 18, 2020 3:00 P.M. CST +This proxy is solicited by the Board of Directors +The undersigned hereby appoints Robert +Drummond and Kevin M. McDonald, and each of them, with full power of substitution and power to act alone, as proxies to vote all the shares of Common Stock which the undersigned would be entitled to vote if personally present and acting at the 2020 +Annual Meeting of Stockholders, to be held at the Company’s headquarters, located at 3990 Rogerdale Road, Houston, Texas 77042 on Tuesday, June 18, 2020 at 3:00 p.m. Central Standard Time, and at any adjournments or postponements thereof. +This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted in accordance with the +Board of Directors’ recommendations. +Address change/comments: +(If you +noted any Address Changes and/or Comments above, please mark corresponding box on the reverse side.) +Continued and to be signed on reverse side +0000458097_2 R1.0.1.18 \ No newline at end of file diff --git a/raw/proxies/0001688476/0001193125-20-122985/proxy_rpt.txt b/raw/proxies/0001688476/0001193125-20-122985/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..75cffdc7028d2580bb3405f6cdddb3080ffd7416 --- /dev/null +++ b/raw/proxies/0001688476/0001193125-20-122985/proxy_rpt.txt @@ -0,0 +1,81 @@ +Certain Related Party Transactions +We paid COAC, +an affiliate of Cerberus, fees totaling approximately $4.1 million during 2019 for consulting services provided in connection with improving the Company’s operations. We may retain COAC to provide similar services in the future. +One of our board members is an employee of Cerberus, and funds managed by one or more affiliates of Cerberus indirectly own a substantial portion of our equity through +their ownership of Keane Investor. +Policy and Procedures for the Review, Approval or Ratification of Transactions with Related Persons +Prior to the completion of the IPO, our board of directors adopted a written policy (the “Related Party Policy”) and procedures for the review, approval or +ratification of “Related Party Transactions” by the independent members of the Audit Committee. For purposes of the Related Party Policy, a “Related Party Transaction” is any transaction, arrangement or relationship or series of +similar transactions, arrangements or relationships (including the incurrence or issuance of any indebtedness or the guarantee of indebtedness) in which (1) the aggregate amount involved will or may be reasonably expected to exceed $120,000 in +any fiscal year, (2) the Company or any of its subsidiaries is a participant, and (3) any Related Party (as defined herein) has or will have a direct or indirect material interest. +The Related Party Policy defines “Related Party” as any person who is, or, at any time since the beginning of the Company’s last fiscal year, was +(1) an executive officer, director or nominee for election as a director of the Company or any of its subsidiaries, (2) a person with greater than five percent (5%) beneficial interest in the Company, (3) an immediate family +member of any of the individuals or entities identified in (1) or (2) of this paragraph, and (4) any firm, corporation or other entity in which any +64 +NexTier Oilfield Solutions Inc. +Table of Contents +of the foregoing individuals or entities is employed or is a general partner or principal or in a similar position or in which such person or entity has a five percent (5%) or greater +beneficial interest. Immediate family members (each, a “Family Member”) includes a person’s spouse, parents, stepparents, children, stepchildren, siblings, mothers- and fathers-in-law, sons- and daughters-in-law, brothers- and +sisters-in-law and anyone residing in such person’s home, other than a tenant or employee. +Prior to the Company entering into any Related Party Transaction, +such Related Party Transaction will be reported to our General Counsel who will report the same to the Audit Committee. Our General Counsel will conduct an investigation and evaluation of the Related Party Transaction and will report his or her +findings to the Audit Committee, including a summary of material facts. The Audit Committee will review the material facts of all Related Party Transactions which require the Audit Committee’s approval and either approve or disapprove of the +Related Party Transaction, subject to the exceptions described below. If advance notice of a Related Party Transaction has been given to the Audit Committee and it is not possible to convene a meeting of the Audit Committee, then the chairman of the +Audit Committee will consider whether the Related Party Transaction is appropriate and, if it is, will approve the Related Party Transaction, with the Audit Committee being asked to ratify the Related Party Transaction at the next regularly +scheduled meeting of the Audit Committee. In the event the Audit Committee does not ratify any such Related Party Transaction, management shall make all reasonable efforts to cancel or annul such Related Party Transaction. In determining whether to +approve or ratify a Related Party Transaction, the Audit Committee, or its chairman, as applicable, will consider all factors it deems appropriate, including the factors listed below in “—Review Criteria.” +Entering into a Related Party Transaction without the approval or ratification required by the terms of the Related Party Policy is prohibited and a violation of such +policy. In the event the company’s directors, executive officers or Chief Accounting Officer become aware of a Related Party Transaction that was not previously approved or ratified under the Related Party Policy, such person will promptly +notify the Audit Committee (or, if it is not practicable for the company to wait for the Audit Committee to consider the matter, the chairman of the Audit Committee) will consider whether the Related Party Transaction should be ratified or rescinded +or other action should be taken, with such review considering all of the relevant facts and circumstances regarding the Related Party Transaction, including the factors listed below in “—Review Criteria.” The chairman of the Audit +Committee will report to the committee at its next regularly scheduled meeting any actions taken under the Related Party Policy pursuant to the authority delegated in this paragraph. The Audit Committee will also review all of the facts and +circumstances pertaining to the failure to report the Related Party Transaction to the Audit Committee and will take, or recommend to our board of directors, any action the Audit Committee deems appropriate. +No member of the Audit Committee or director of our board will participate in any discussion or approval of a Related Party Transaction for which he or she is a Related +Party, except that the Audit Committee member or board director will provide all material information concerning the Related Party Transaction to the Audit Committee. +If a Related Party Transaction will be ongoing, the Audit Committee may establish guidelines for the Company’s management to follow in its ongoing dealings with +the Related Party. Thereafter, the Audit Committee, on at least an annual basis, will review and assess ongoing relationships with the Related Party to ensure that they are in compliance with the Audit Committee’s guidelines and that the +Related Party Transaction remains appropriate. +Review Criteria +All +Related Party Transactions will be reviewed in accordance with the standards set forth in the Related Party Policy after full disclosure of the Related Party’s interests in the transaction. As appropriate for the circumstances, the Audit +Committee or its chairman, as applicable, will review and consider: +• +the Related Party’s interest in the Related Party Transaction; +2020 Proxy Statement +65 +Table of Contents +• +the terms of the Related Party Transaction, including the approximate dollar value of the amount involved in the Related +Party Transaction and the approximate dollar value of the amount of the Related Party’s interest in the transaction without regard to the amount of any profit or loss; +• +whether the transaction is being undertaken in the ordinary course of business of the Company; +• +whether the transaction with the Related Party is proposed to be, or was, entered into on terms no less favorable to the +Company than terms that could have been reached with an unrelated third party; +• +the purpose of, and the potential benefits to the Company of, the Related Party Transaction; +• +a description of any provisions or limitations imposed as a result of entering into the Related Party Transaction; +• +whether the proposed transaction includes any potential reputational risk issues for the Company which may arise as a +result of or in connection with the Related Party Transaction; +• +whether the proposed transaction would violate any requirements of the Company’s financing or other material +agreements; and +• +any other relevant information regarding the Related Party Transaction or the Related Party. +The Audit Committee, or its chairman, as applicable, may approve or ratify the Related Party Transaction only if the Audit Committee, or its chairman, as applicable, +determines in good faith that, under all of the circumstances, the transaction is fair to the Company. The Audit Committee, in its sole discretion, may impose such conditions as it deems appropriate on the Company or the Related Party in connection +with approval of the Related Party Transaction. +Pre-Approved Related Party Transactions +The Audit Committee has determined that the following transactions will be deemed pre-approved or ratified and will not require review or approval of the Audit +Committee, even if the aggregate amount involved will exceed $120,000, unless otherwise specifically determined by the Audit Committee. +• +Any employment by the Company of an executive officer of the Company or any of its subsidiaries if the related compensation +conforms with our Company’s compensation policies and if the executive officer is not a Family Member of another executive officer or of a director of our board; and +• +Any compensation paid to a director of our board if the compensation is consistent with the Company’s Bylaws and any +compensation policies. +Notwithstanding anything to the contrary in the Related Party Policy, in the event the Bylaws of the Company require +review by our board of directors and/or approval of a Related Party Transaction, the Audit Committee, and its chairman, will not have the authority to review or approve a Related Party Transaction but will provide a recommendation to our board of +directors for the board’s use in its consideration of a given Related Party Transaction. \ No newline at end of file diff --git a/raw/proxies/0001688476/0001193125-21-124722/proxy.txt b/raw/proxies/0001688476/0001193125-21-124722/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..970fc08d8806c4fd2868dd9d3234acfb6cf575b1 --- /dev/null +++ b/raw/proxies/0001688476/0001193125-21-124722/proxy.txt @@ -0,0 +1,4730 @@ +DEF 14A +1 +d108905ddef14a.htm +DEF 14A +DEF 14A +Table of Contents +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Proxy Statement Pursuant to Section 14(a) of the +Securities Exchange Act of 1934 +(Amendment No. ) +Filed by the +Registrant ☒ Filed by a Party other than the +Registrant ☐ +Check the appropriate box: +☐ +Preliminary Proxy Statement +☐ +Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +☒ +Definitive Proxy Statement +☐ +Definitive Additional Materials +☐ +Soliciting Material Pursuant to §240.14a-12 +NexTier Oilfield Solutions Inc. +(Name of the Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +☒ +No fee required. +☐ +Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. +(1) +Title of each class of securities to which transaction applies: +(2) +Aggregate number of securities to which transaction applies: +(3) +Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 +(set forth the amount on which the filing fee is calculated and state how it was determined): +(4) +Proposed maximum aggregate value of transaction: +(5) +Total fee paid: +☐ +Fee paid previously with preliminary materials: +☐ +Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the +previous filing by registration statement number, or the Form or Schedule and the date of its filing. +(1) +Amount Previously Paid: +(2) +Form, Schedule or Registration Statement No.: +(3) +Filing Party: +(4) +Date Filed: +Table of Contents +Table of Contents +Notice of 2021 Annual Meeting of Stockholders +When +Tuesday, June 15, 2021 +at 9:30 a.m. +(CDT) +Doors open at 9:20 a.m. +Where +NexTier Company +Headquarters +3990 Rogerdale Road +Houston, Texas 77042 +Record Date +Stockholders as of +close of business on April 16, 2021 +are entitled to vote +Items of Business +Proposal Summary +Board Voting +Recommendation +Page Reference +(for more detail) +1.  Election of Nine directors +☑ +FOR each nominee +8 +2.  Ratification of selection of KPMG LLP as our independent registered public accounting firm +for 2021 +☑ +FOR +24 +3.  Approval of advisory resolution on 2020 executive compensation +☑ +FOR +27 +4.  Approval of Amendment and Restatement of the NexTier Oilfield Solutions Inc. Equity and +Incentive Award Plan +☑ +FOR +59 +Stockholders will also transact such other business as may properly come before the Annual Meeting. +Attending the Annual Meeting +In Person. To be admitted, you will be required to present a government-issued photo identification (such as a driver’s license or passport) and proof of share ownership. More information can be found in proxy statement +in the section “Other Information”. If you are a beneficial stockholder (that is, your shares are held in the name of a broker, bank or other holder of record), you will also need to obtain a “legal proxy” from the registered +stockholder to vote at the Annual Meeting. You do not need to attend the Annual Meeting of Stockholders to vote if you submitted your proxy in advance of the meeting. +As part of our precautions regarding the coronavirus or COVID-19, we +are planning for the possibility that the meeting may be held virtually over the Internet. If we take this step, we will announce the decision to do so as soon as practicable before the meeting via a press release and posting details on our website +that will also be filed with the SEC as proxy material. As always, we encourage you to vote your shares prior to the Annual Meeting. +Your Vote Is +Very Important. Even if you plan to attend our Annual Meeting in person, please cast your vote as soon as possible. Make sure to have your proxy card or voting instruction form (VIF) in hand: +Vote by Internet +Call Toll-Free +Vote by Mail +Vote in Person +www.proxyvote.com +Call +1-800-690-6903 +(from the +United States and Canada) +Follow the instructions on +your proxy card +Attend our Annual Meeting +and vote by ballot +Submitting your proxy now will not prevent you from voting your shares at the Annual Meeting, as your proxy is revocable at your option. +Important Notice Regarding the Availability of Proxy +Materials for the Annual Meeting of Stockholders to be held on June 15, 2021: This notice, the Proxy Statement, the proxy card and our 2020 Annual Report to Stockholders, which includes our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 (the “2020 10-K”) are available on our website at www.nextierofs.com . +By order of the Board of Directors, +Kevin M. McDonald +Executive Vice President, Chief Administrative Officer & General Counsel +Houston, Texas +April 21, 2021 +i +Table of Contents +Table of Contents +Letter to Stockholders +iii +Proxy Highlights +1 +Proposal 1 – Election of Directors +8 +Nominees +9 +Board of Directors +13 +Board Committees +15 +Director Compensation +16 +Corporate Governance +20 +Proposal 2 – Ratify Appointment of Independent Auditors +24 +Audit Fees +25 +Pre-Approval Policy +25 +Audit Committee Report +26 +Proposal 3 – Advisory Approval of Executive Compensation +27 +Executive Officers +28 +Compensation Committee Report +30 +Compensation Discussion and Analysis +31 +Executive Compensation Tables +50 +CEO Pay Ratio +57 +Proposal 4 – Approval of the Amendment and Restatement of +the NexTier Oilfield Solutions Inc. Equity and Incentive Award Plan +59 +Other Information +69 +Share Ownership +69 +Related Person Transactions +70 +Section 16(a) Reports +73 +Proposals by Stockholders +73 +Householding +73 +Appendix A – NexTier Oilfield Solutions Inc. Equity and Incentive Award Plan +ii +Table of Contents +Letter to Stockholders +Dear Fellow Stockholder, +I invite you to join the Board of Directors and our +management team at the NexTier 2021 Annual Meeting of Stockholders. The sole purpose of the meeting is to consider the matters described in the Notice of 2021 Annual Meeting. +Twenty-twenty was one of the most challenging years in recent history for our world, industry and company. We began the year full of promise, on the heels of one of the +most exciting and transformative years in our company’s history. Our evolution from Keane Group to NexTier, through the merger of equals with C&J Energy Services, Inc., produced a more diversified oilfield services company with greater +scale, while maintaining a solid financial position with a strong balance sheet. +In early March of 2020, we closed the divestiture of our well support services +business. With the strategic divestiture of this non-core business, we further streamlined NexTier’s operations and resources, driving even greater focus on our core competencies. However, shortly +thereafter macro-economic conditions of commodity price declines and the rise of COVID-19 combined to form a challenging environment. While the full economic impact of the +COVID-19 pandemic was still unknown in March, we immediately devised and implemented a plan to protect our customers, our people, our communities and our business. We implemented safety measures to protect our +employees consistent with CDC guidelines; reduced all discretionary spending and hiring, accelerated our integration plan to permanently reduce structural costs in the business and implemented some temporary cost reduction measures (including +temporary pay cuts for directors and employees) to help our business weather the challenges ahead. +Also beginning in March of 2020, our Board of Directors began to +confer with management on a regular basis to oversee enterprise risk resulting from the pandemic and review business progress and recovery. Those meetings continued throughout the year. Due to prudent planning and quick response, our company managed +the economic ramifications of the pandemic well, and our results were better than many in our industry. +As our industry continues to recover, we are positioned for +continued advancement of innovation initiatives, with a rich portfolio of proprietary technologies that will drive safety, operational efficiency and sustainability. For 2021, NexTier is well-positioned as a leader in our highly competitive +industry. Our relentless pursuit of continuous improvement, coupled with a strong portfolio of innovation, positions us to deliver differentiated performance in our operations and provide top value to our customers. We are well positioned to +capitalize on the opportunities in 2021 and beyond. +Sincerely, +Robert W. Drummond +President & Chief Executive Officer +iii +Table of Contents +Proxy Highlights +We were formed under the name Keane Group, Inc. on October 13, 2016, to be a holding corporation as part of an organizational restructuring of Keane Group +Holdings, LLC and its subsidiaries. On October 31, 2019, we completed a merger transaction with C&J Energy Services, Inc. (“C&J”), a publicly traded Delaware corporation. Pursuant to this transaction, C&J was ultimately +merged with and into our wholly owned subsidiary, with our subsidiary continuing as the surviving entity (the “Merger”). On the effective date of the Merger, we changed our name to “NexTier Oilfield Solutions Inc.” We are making +this proxy statement available to you on April 30, 2021 in connection with the solicitation of proxies by our board of directors, or our “Board,” for the NexTier Oilfield Solutions Inc. 2021 Annual Meeting of Stockholders. In this +Proxy Statement, “NexTier,” the “Company,” “we,” “us” and “our” refer to NexTier Oilfield Solutions Inc., a Delaware corporation. +Purpose of the Meeting +The table below +summarizes the proposals that will be voted on, the vote required to approve each item, how votes are counted and how the Board recommends you vote: +Proposal +Required +Approval +Broker +Discretionary +Voting Allowed +Broker +Non-Votes +Abstentions +1.  Election of Directors. To elect each of the nine +individuals named in this Proxy Statement until the 2022 Annual Meeting or, in each case, until his or her earlier death, retirement, resignation or removal from the position of director. +Majority of +Votes Cast +No +No effect +No effect +2.  Ratify Appointment of Independent Auditors. To +ratify the appointment of KPMG as our independent auditor for the fiscal year ending December 31, 2021. +Majority of +Votes Cast +Yes +N/A +No effect +3.  Approve Executive Compensation. To approve, in an +advisory vote, the compensation of our named executive officers. +Majority of +Votes Cast +No +No effect +No effect +4.  Approve Equity Plan Amendment and Restatement. To +approve the amendment and restatement of the NexTier Oilfield Solutions Inc. Equity and Incentive Award Plan. +Majority of +Votes Cast +No +No effect +No effect +How to Vote +To +ensure your representation at the Annual Meeting, we request that you grant your proxy to vote on each of the proposals in this Proxy Statement and any other matters that may properly come before the meeting to the persons named in the proxy card by +voting in one of the ways described herein no later than the Voting Deadline whether or not you plan to attend. You can vote in any of the following ways: +Vote by Internet +Call Toll-Free +Vote by Mail +Vote in Person +www.proxyvote.com +Call +1-800-690-6903 +(from the +United States and Canada) +Follow the instructions on +your proxy card +Attend our Annual Meeting +and vote by ballot +1 +Table of Contents +Please Vote. Your Vote +is Important to Us. +Questions +You +may call or contact our proxy solicitor, D.F. King & Co., Inc., at (866) 751-6310, collect at (212) 269-5550 or NexTier@dfking.com, or contact us, +care of the Corporate Secretary at 3990 Rogerdale Road, Houston, Texas 77042 or via telephone at (713) 325-6000 if you have any questions or need directions to be able to attend the meeting and vote in +person. +Board and Governance Highlights +We are committed to maintaining strong corporate governance that promotes the long-term interests of our stockholders, strengthens Board and management effectiveness +and builds public trust in the Company. The Corporate Governance section of this Proxy Statement beginning on page 20 describes our key corporate governance policies and practices, which include the following highlights: +Our governance framework is built around our Code of Business Conduct and Ethics, which sets our guiding principles and outlines what +we expect from each of our employees. This framework is reinforced by a range of policies which our Board regularly reviews. +2 +Table of Contents +Stockholder Engagement Highlights +We believe that meaningful stockholder engagement is key to building trust with our stockholders and enables us to understand and respond to their concerns. Building +trust with stockholders is important to us and is significantly aided by understanding stockholder viewpoints, priorities and motivations. Our Executive, Investor Relations, and Legal teams comprise our primary engagement team, which regularly +engages with stockholders to seek their views on key matters and to inform our management team and our Board about the issues and emerging governance trends that our stockholders tell us matter most to them. Our Board Chair and Committee chairs are +also available to participate in our engagement efforts when requested. These engagements routinely cover governance and compensation matters, as well as social, environmental, safety and other current issues. +Annual Engagement Cycle +Stockholder Engagement in 2020 +Our 2020 off-season engagement conversations focused on executive compensation and environmental, social and governance related matters. We then reported the feedback we receive from stockholders to the Board and relevant +committees, allowing the Board to better understand our stockholders’ priorities and perspectives and take action, where appropriate. +We reached out to the top 10 stockholders +(excluding Keane Investor Holdings LLC) that represented approximately 43% of outstanding shares (with Keane Investor Holdings, which has representatives on the Board that we have regular interaction with, this would represent +approximately 61% of outstanding shares ). +3 +Table of Contents +What We Heard from Stockholders +What We Did +Diversity of the Board is of high importance +✓   The Board amended the Company’s Corporate Governance +Guidelines to expressly describe its commitment to diversity +✓   The Board amended the Company’s Corporate Governance +Guidelines to affirmatively commit that gender and ethnically diverse candidates will be included in director searches +Interested in increased environmental, social and governance (“ESG”) disclosures +✓   The Company added corporate social responsibility and ESG +related disclosures to its investor presentation, increased discussion of these factors in this Proxy Statement, and enhanced disclosure of these matters on the Company website and published its first Corporate Responsibility Report +Desire for clear oversight of ESG matters +✓   The Board modified the Nominating and Corporate Governance +Charter to clearly establish that committee’s oversight role over corporate responsibility +✓   The Company formed the Environmental, Social and +Governance Steering Committee to support the Company’s on-going commitment to environmental, health and safety, corporate social responsibility, corporate governance, sustainability, and other such public +policy matters relevant to the Company +Environmental, Social and Governance (“ESG”) Highlights +Corporate Responsibility Oversight +Our Board of Directors recognizes that a +robust governance framework and a culture of integrity helps us compete more effectively, sustain success and build long-term stockholder value. NexTier is governed by a Board of Directors and committees of the Board that meet throughout the year. +Directors discharge their responsibilities at Board and committee meetings and through ongoing communication with each other and with management. +The Nominating and Corporate Governance Committee of our Board oversees the development and implementation of a companywide sustainability strategy. An +ESG Steering Committee, composed of a cross-functional team of executives and employees, reports to the Nominating and Corporate Governance Committee and CEO. The Steering Committee focuses on integration and advancement of sustainability +initiatives and awareness across our business. +Corporate Responsibility Framework +At NexTier, we seek to responsibly grow and continuously improve our business in a way that +maximizes stockholder value by taking care of our people, our customers, +our communities and the environment. Our sustainability program is intended to support the purpose and mission of the Company and to contribute to our long-term success and growth. Our ongoing sustainability efforts are +enabled by our digital artificial intelligence platform and focused on four core pillars: Environment, People, Community and Oversight. +4 +Table of Contents +The Company maintains a section of its website for disclosures on corporate responsibility. In addition, NexTier has +published its inaugural Corporate Responsibility Report, which includes our commitments, strategy, initiatives, metrics and achievements for 2020. The Corporate Responsibility Report and other content posted on our website does not constitute a part +of this Proxy Statement. +Voting Information +Who Can Vote. All registered stockholders at the close of business on April 16, 2021 (the “Record Date”) have the right to receive notice of, and +to vote in person or by proxy at, the Annual Meeting. Each share of common stock is entitled to one vote. As of the Record Date, there were 215,466,131 shares of NexTier common stock outstanding and entitled to vote. +Meeting Attendance. Attendance at the meeting is limited to NexTier stockholders as of the record date. If you plan to attend the Annual Meeting in person, you +will need a form of personal identification (such as a driver’s license or passport) along with either your Notice, proxy card or proof of stock ownership to enter the Annual Meeting. If you are a street name stockholder and you wish to attend +the Annual Meeting in person, you will need to provide official documentation (such as a brokerage statement) reflecting your beneficial ownership of NexTier stock as of the Record Date, as well as a valid picture identification (such as a +driver’s license or passport). Admission to the meeting will be on a first-come, first-served basis. Doors will open at 9:20 a.m. Central Daylight Time. Please note that no cameras, recording equipment, electronic devices, large bags, +briefcases or packages will be permitted in the Annual Meeting. +COVID-19 Implications. We are monitoring the +coronavirus situation closely and if we determine that holding an in-person annual meeting could pose a significant risk to the health and safety of our stockholders, employees, and Directors, the Company may +decide to instead hold a Virtual Annual Meeting. If we decide to use that format, we will make a public announcement as soon as practicable prior to the meeting. +In such event, to attend and participate in the Virtual Annual Meeting, stockholders will need to access the live audio webcast of the meeting. To do so, stockholders +of record will need to visit www.virtualshareholdermeeting.com/NEX2021 and use their 16-digit Control Number provided in the Notice to log in to this website, and beneficial owners of shares held in street +name will need to follow the instructions provided by the broker, bank or other nominee that holds their shares. We would encourage stockholders to log in to this website and access the webcast before the Virtual Annual Meeting’s start time. +Further instructions on how to attend, participate in and vote at the Virtual Annual Meeting, including how to demonstrate your ownership of our stock as of the record date, are available at www.virtualshareholdermeeting.com/NEX2021 using your 16-digit control number. Please note you will only be able to participate in the meeting using this website if the Company decides to hold a Virtual Annual Meeting, instead of holding an in-person Annual Meeting in Houston, Texas. +Proxy Voting Deadline. 11:59 P.M. +Eastern Time on June 14, 2021. +Stockholder of Record. If your shares are registered directly in your name with our transfer agent, American +Stock Transfer & Trust Company LLC, you are considered, with respect to those shares, the stockholder of record, and we are sending these proxy materials directly to you. As the stockholder of record, you have the right to grant your voting +proxy directly to us or to a third party, or to vote in person at the Annual Meeting. +Beneficial Owner. If your shares are held in a brokerage account or by +a bank, trustee or other nominee, you are considered the beneficial owner of shares held in street name, and these proxy materials are being forwarded to you on behalf of your broker, bank, trustee or other nominee. As the +5 +Table of Contents +beneficial owner, you have the right to direct your broker, bank, trustee or other nominee how to vote and you also are invited to attend the Annual Meeting of Stockholders. If you received a +printed set of proxy materials, your broker, bank, trustee or other nominee has enclosed a voting instruction form (“VIF”) for you to use in directing the broker, bank, trustee or other nominee how to vote your shares. +Since a beneficial owner is not the stockholder of record, you may not vote these shares in person at the Annual Meeting unless you obtain a legal proxy from the +broker, bank, trustee or other nominee that holds your shares giving you the right to vote the shares at the Annual Meeting. +Proxies. Pursuant to rules +adopted by the Securities and Exchange Commission (“SEC”), we have elected to mail to many of our stockholders a notice of internet availability of proxy materials (“Notice”) instead of a paper copy of the proxy materials. All +stockholders receiving the Notice will have the ability to access the proxy materials over the Internet and receive a paper copy of the proxy materials by mail on request. Instructions on how to access the proxy materials over the Internet or to +request a paper copy may be found in the Notice. In addition, the Notice contains instructions on how you may access proxy materials in printed form by mail or electronically on an ongoing basis. This process has allowed us to expedite our +stockholders’ receipt of proxy materials, lower the costs of distribution, and reduce the environmental impact of our 2021 Annual Meeting. +The Notice of +Internet Availability of Proxy Materials is being mailed on or about April 30, 2021 to each stockholder registered in our share register as of the Record Date. Stockholders not registered in our share register as of the Record Date will not be +entitled to attend, vote or grant proxies to vote at the Annual Meeting. Your vote and proxy are being solicited by our Board of Directors in favor of each of Robert Drummond and Kevin McDonald (the “Proxy Holders”), with full power of +substitution, for use at the Annual Meeting. +We request that you grant your proxy to vote on each of the proposals in this notice and any other matters that may +properly come before the meeting to the Proxy Holders by completing, signing, dating and returning the proxy card in accordance with the instructions thereon, for receipt by us no later than the Proxy Voting Deadline, whether or not you plan to +attend. +If you are a registered holder and you properly complete and submit your proxy card in a timely manner, you will be legally designating the individual or +individuals named by you in the proxy card, or if you do not name your proxy or proxies, the Proxy Holders, to vote your shares in accordance with your instructions indicated on the card. If you are a registered stockholder and properly complete and +submit your proxy card in a timely manner without naming your proxy or proxies and you do not indicate how your shares are to be voted, then the Proxy Holders will vote as the board of directors recommends on each proposal and if other matters +properly come before the Annual Meeting, the Proxy Holders will have your authority to vote your shares in their discretion on such matters. +Revoking Your +Proxy. If you are a stockholder of record , you can revoke your proxy at any time before it is exercised by: +· +Submitting written notice of revocation to NexTier Oilfield Solutions Inc., 3990 Rogerdale Rd, Houston, Texas 77042, Attn: +Corporate Secretary, so long as such notice is received no later than 11:59 p.m., Eastern Time, the day before the Annual Meeting; +· +Voting again by Internet or telephone at a later time before the closing of those voting facilities at 11:59 p.m., Eastern +Time, on the day before the Annual Meeting. +· +Submitting a later dated proxy with new voting instructions by mail or through the telephone or Internet voting systems, so +long as such notice is received no later than 11:59 p.m., Eastern Time, the day before the Annual Meeting; or +6 +Table of Contents +· +Attending the Annual Meeting and voting your shares in person (attending the Annual Meeting will not by itself have the +effect of revoking a previously submitted proxy). +If you are not a registered holder, but you hold your shares through a broker or other +nominee , you must follow the instructions provided by your broker or other nominee if you wish to revoke a previously granted proxy. You may also change your vote or revoke your proxy in person at the Annual Meeting if you obtain a signed proxy +from the record holder (broker or other nominee) giving you the right to vote the shares at the meeting. +Multiple Proxy Cards. If you receive multiple proxy +cards, this indicates that your shares are held in more than one account, such as two brokerage accounts and are registered in different names. You should complete and return each of the proxy cards to ensure that all of your shares are voted. +Cost of Proxy Solicitation. We have retained D.F. King & Co., Inc. to solicit proxies from our stockholders at an estimated fee of $8,500, plus +expenses. Some of our directors, officers and employees may solicit proxies personally, without any additional compensation, electronically, by telephone or by mail. Proxy materials also will be furnished without cost to brokers and other nominees +to forward to the beneficial owners of shares held in their names. All costs of proxy solicitation will be borne by the Company. +Quorum and Voting. A +majority of the outstanding shares of our common stock present in person or represented by proxy at the Annual Meeting will constitute a quorum for the transaction of business. Abstentions and broker non-votes +will be included in determining whether a quorum is present at the Annual Meeting. A “broker non-vote” occurs when a nominee (such as a broker) holding shares for a beneficial owner abstains +from voting on a particular proposal because the nominee does not have discretionary voting power for that proposal and has not received instructions from the beneficial owner on how to vote those shares. +If you are a beneficial owner and your broker or other nominee holds your shares in its name (in “street name”), the broker generally has discretion to vote +your shares with respect to “routine” proposals. The only “routine” proposal in this Proxy Statement is Proposal 2. Proposals 1, 3 and 4 are “non-routine” and your broker may not +vote your shares. Accordingly, if you hold your shares in “street name,” your broker will not be able to vote your shares on these matters unless your broker receives voting instructions from you. +Approval of all Proposals will be decided by a simple majority of the votes cast “FOR” or “AGAINST,” in person or by proxy, provided a quorum is +present. Abstentions and broker “non-votes” will not affect the voting results. +The election of each +director nominee will be considered and voted upon as a separate proposal. There is no cumulative voting in the election of directors. Abstentions and broker “non-votes” will not affect the +voting results. +7 +Table of Contents +Proposal 1. Election of Directors +The Board of Directors recommends that you vote “FOR” each nominee for director. +Our business and affairs are currently managed under the Board of Directors (the “Board”) of NexTier. Under our bylaws, the Board consists of between 7 and 15 +members, as determined by resolution of the Board from time to time. Our Board currently consists of 9 directors. Proxies cannot be voted for a greater number of persons than the number of nominees named. +Upon the recommendation of the Nominating and Corporate Governance Committee, the Board has nominated each of the following nine nominees to be elected at the Annual +Meeting: Robert W. Drummond, Stuart M. Brightman, Gary M. Halverson, Patrick M. Murray, Amy H. Nelson, Melvin G. Riggs, Michael Roemer, James C. Stewart and Scott R. Wille. Each of the nominees is presently serving as a director. +Each director elected will serve for a term of one year and will hold office until the 2022 Annual Meeting and until his or her respective successor is elected and +qualified, or, in each case, until his or her earlier death, resignation, retirement, disqualification or removal from the position of director. All of our nominees have consented to serve as directors and our Board of Directors has no reason to +believe that any of the nominees will be unable to act as a director. A director nominee will be re-elected if approved by a simple majority of the votes cast. +8 +Table of Contents +Nominees +Set forth in the following pages is +certain information furnished to us by our director nominees, including information about their individual experience, qualifications, attributes and skills that led our Nominating and Corporate Governance Committee and Board to conclude that they +should serve as directors. +There are no family relationships among any of our directors or executive officers. None of the corporations or other organizations +referenced in the biographical information below is a parent, subsidiary or other affiliate of NexTier. +Robert W. Drummond +Other Public Company Directorships: +Age: 60 +Director since: 2018 +Frank’s International N.V. (since 2017) +Mr. Drummond serves as a director and as NexTier’ s President and Chief Executive Officer. He joined Keane Group, Inc. (now known as NexTier +Oilfield Solutions Inc.) in August 2018 as Chief Executive Officer and a member of the Board, and was elected as President in October 2019. Prior to joining Keane, Mr. Drummond served as the President & Chief Executive Officer of Key +Energy Services, Inc. and served for more than 30 years at Schlumberger Limited in various executive positions. Mr. Drummond has been a Supervisory Director at Frank’s International N.V. since May 2017, and sits on the board of directors +of the Petroleum Equipment Suppliers Association and the advisory board for the University of Alabama College of Engineering. He has previously served on the board of directors of the National Ocean Industries Association, the Houston Offshore +Energy Center, the Greater Houston Partnership, the API Upstream Committee, and as an Advisory Board Member of the University of Houston Global Energy Management Institute. +Mr. Drummond brings to our Board a wealth of experience in positions of leadership across the energy industry. +Stuart M. Brightman +Age: 64 +Director since: 2019 +Mr. Brightman has served as a member of the NexTier board of directors since October 2019. He served as a director of TETRA Technologies, +Inc. (“TETRA”), a diversified oilfield services company, from May 2009 to May 2020. He also served as Chief Executive Officer of TETRA from May 2009 until May 2019, as President of TETRA from May 2009 until February 2018, and as Executive +Vice President and Chief Operating Officer of TETRA from April 2005 to May 2009. Prior to TETRA, Mr. Brightman spent 11 years at Dresser, Inc. (including its successors in interest, “Dresser”), in a variety of leadership roles, during +which he was involved in multiple M&A transactions, internal restructurings and product/market repositionings. He has experience in integration of acquisitions and oversight of operations, engineering, sales and marketing, finance, human +resources and information technology. +Mr. Brightman’s broad oil field services +and executive management experience, and his proven leadership and business capabilities provide an important point of view to our Board. +9 +Table of Contents +Gary M. Halverson +Age: 62 +Director since: 2016 +Mr. Halverson has served as a member of NexTier’ s board of directors since September 2016. In 2016, Mr. Halverson became a Senior +Advisor at First Reserve, a private equity firm that focuses on energy investments, and a Partner at 360 Development Partners, a commercial real estate firm. Mr. Halverson was formerly Group President of Drilling and Production Systems and +Senior Vice President at Cameron International Corporation from 2014 to 2016 prior to its sale to Schlumberger in 2016. He has over 38 years of industry experience with Cameron, where he worked in various leadership roles across the U.S., Latin +America and Asia. Mr. Halverson currently serves as Chairman of the Board of Directors of the Petroleum Equipment Suppliers Association, as a director on the board of the General Committee of Special Programs of the American Petroleum +Institute, as a director on the board of the Well Control Institute, as a director on the board of FlexSteel Pipeline Technologies, Inc. and was the U.S. delegate to the World Petroleum Congress. +Mr. Halverson’s extensive involvement in the oilfield service industry brings a +valuable perspective to our Board. +Patrick M. Murray (Chairman) +Age: 78 +Director since: 2019 +Mr. Murray has served as a member of the NexTier board of directors since October 2019. Mr. Murray retired from Dresser, Inc. (including its +successors in interest, “Dresser”), a manufacturer and marketer of highly engineered equipment for the energy industry, where he had been the Chairman of the Board and Chief Executive Officer since 2001. From 1996 to 2000 he served in a +variety of senior leadership roles with Dresser. Mr. Murray has over 35 years of domestic and international experience in both operational management and financial/business development leadership roles. Mr. Murray also serves on the board +of the World Affairs Council of Dallas Fort Worth, on the board of advisors for the Maguire Energy Institute at the Edwin L. Cox School of Business, Southern Methodist University, and as Chairman of the Board of Regents of Seton Hall University. +Mr. Murray’s brings to his role as a director extensive executive-level management +experience, public board experience and comprehensive knowledge and understanding of the oil and gas industry. +10 +Table of Contents +Amy H. Nelson +Other Public Company Directorships: +Age: 52 +Director since: 2019 +APA Corporation (since 2014) +Helix Energy Solutions Group, Inc. (since 2019); +Ms. Nelson has served as a member of the NexTier board of directors since October 2019. She is also the president of Greenridge Advisors, LLC, +which she founded in 2007 as an energy services and equipment consulting firm focused on the development, execution, and financing of corporate and product line strategies. Ms. Nelson advises her clients on strategy development, capital +allocation, acquisition evaluation and infrastructure development. Her clients span a broad range of oilfield service, product and geographic markets. Ms. Nelson has been a member of APA Corporation’s board of directors since 2014, and is +a member of its audit and corporate governance and nominating committees. She also joined the Helix Energy Solutions Group, Inc. board of directors and its audit committee in July of 2019, and in May of 2020 began serving as the chair of the audit +committee. Ms. Nelson began her career at Amoco Production Company in a variety of engineering, project management and planning roles. From 2000 to 2007, she served as a vice president of SCF Partners, an oilfield service and equipment-focused +private equity firm, where she concentrated on investment strategy, investment execution and portfolio company management. Ms. Nelson has devoted her career to serving companies in the oil and gas industry. +Ms. Nelson’s experiences have provided her with valuable insight into corporate +strategy, capital allocation, and the assessment and management of risks, including environmental risks, faced by oil and gas companies. This expertise enhances her contributions to the Board. +Melvin G. Riggs +Other Public Company Directorships: +Age: 66 +Director since: 2019 +Royale Energy, Inc. (since 2018) +Mr. Riggs has served as a member of NexTier’ s board of directors since October 2019. Mr. Riggs has served in senior-level positions at +Clayton Williams Energy, Inc. (“CWEI”) and its related companies for 28 years, including his current position as Vice President and Director since May 2017. Clayton Williams Companies is a group of privately held companies involved in oil +and natural gas activities, real estate, and agricultural operations. From March 2015 to April 2017, Mr. Riggs served as President of CWEI, a public exploration and production company that develops and produces oil and natural gas. From +December 2010 until Mach 2015, Mr. Riggs served as Executive Vice President and Chief Operating Officer of CWEI. From 1991 to December 2010, Mr. Riggs served as Senior Vice President—Finance, Secretary, Treasurer, and Chief Financial +Officer of CWEI. Mr. Riggs currently serves as a Director at Royale Energy, Inc. since July 2018. He previously served as a Director at TransAtlantic Petroleum Ltd. from July 2009 to June 2020, and as a Director at CWEI from May 1994 until April +2017. Mr. Riggs is a Certified Public Accountant. +Mr. Riggs has a strong operational +background and extensive financial expertise, all of which brings important insights into board oversight, risk management and corporate governance matters. +11 +Table of Contents +Michael Roemer +Age: 62 +Director since: 2019 +Mr. Roemer has served as a member of the NexTier board of directors since October 2019. Mr. Roemer also operates his business, Roemer +Financial Consulting, a financial advisory services company that he founded in 2012. He advises closely-held businesses with financial advice, focusing on potential merger and acquisitions and exit transactions. Prior to his current role, +Mr. Roemer served as a Partner and Chief Financial Officer of Hammond, Kennedy, Whitney & Company (“HKW”), a private equity firm. In this role, his responsibilities included, among other things, financial and tax reporting, +coordinating financial due diligence of acquisition targets, and working with the HKW team to assess a target’s financial results and the financial management team’s capabilities. He is a licensed CPA with over 35 years’ +experience. +Mr. Roemer brings to his service on our Board an extensive background in +public accounting and knowledge of generally accepted accounting principles, combined with his additional experience as the chief financial officer of a private equity firm and his vast experience in financial and accounting +matters. +James C. Stewart +Age: 58 +Director since: 2011 +Mr. Stewart joined NexTier in March 2011 as Chairman and Chief Executive Officer and became Executive Chairman in August 2018 until +October 31, 2019. Prior to joining NexTier, from 2007 to 2009, he served as the President and Chief Executive Officer of a privately held international drilling company. From 2006 to 2007, Mr. Stewart served as Vice President of Integrated +Drilling Services for Weatherford International plc, based in London and Dubai, where he created and managed a global business unit that included a 50-rig international land contract drilling group and a +global project management team. Mr. Stewart began his career with Schlumberger Limited, where he held senior leadership positions across the globe over the span of 22 years. +Mr. Stewart’s qualifications include his broad leadership experience with oilfield +services, as well as his long tenure and successes in the oil and natural gas market. +Scott R. Wille +Other Public Company Directorships: +Age: 40 +Director since: 2011 +Albertsons Companies (since 2015) +Mr. Wille has served as a member of NexTier’ s board of directors since March 2011. He is currently +Co-Head of Private Equity and a Senior Managing Director at Cerberus, which he joined in 2006. Prior to joining Cerberus, Mr. Wille worked in the leveraged finance group at Deutsche Bank Securities Inc. +from 2004 to 2006. Mr. Wille currently serves as a director of the Albertsons Companies, Inc., the second largest traditional grocery company in the U.S. In addition, Mr. Wille currently serves as a director of Off Lease Only, the largest +independent used car dealer in Florida. Mr. Wille previously served as a director of Remington Outdoor Company, Inc. from February 2014 to March 2018, a designer, manufacturer and marketer of firearms, ammunition and related products and as +director of Tower International, Inc., a manufacturer of engineered structural metal components and assemblies, from September 2010 to October 2012. +Mr. Wille’s experience in the financial and private equity industries, together with his in-depth knowledge of our company and its acquisition strategy, are +valuable to our board of directors’ understanding of our business and financial performance. +12 +Table of Contents +Board of Directors +Our Directors +The Board is currently composed of 9 directors. The following table +provides summary information about these directors as of April 21, 2021. +Committee Memberships +Name and Principal Occupation +Age +Director +Since +Independent +Audit & +Risk +Committee +Nom. & +Gov. +Committee +Comp. +Committee +Robert Drummond +President and CEO of NexTier +60 +2018 +Stuart M. Brightman +Retired CEO and President of TETRA Technologies, Inc. +64 +2019 +🌑 +🌑 +Gary M. Halverson +Retired Group President Drilling & Production Systems Cameron +62 +2016 +🌑 +🌑 +Patrick M. Murray +Retired President & CEO Dresser, Inc. +78 +2019 +🌑 +Amy H. Nelson +President and Founder of Greenridge Advisors, LLC +52 +2019 +🌑 +🌑 +🌑 +🌑 +Melvin G. Riggs +Retired Chief Operating Officer of Clayton Williams Energy, Inc. +66 +2019 +🌑 +🌑 +🌑 +🌑 +Michael Roemer +Founder Roemer Financial Consulting +62 +2019 +🌑 +🌑 +James C. Stewart +Retired Chief Executive Officer of Keane Group, Inc. +58 +2011 +Scott R. Wille +Co-Head of Private Equity & Senior Managing Director at Cerberus Capital Management, L.P. +40 +2011 += Chairperson +Changes to our Board of Directors in 2020 +At the start of 2020, our Board consisted of twelve members. However, after our June 18, 2020 annual meeting of stockholders, the size of our Board was reduced to +nine members. As a result, the Board adjusted the composition of the Board’s standing committees. Below is a chart reflecting committee membership during 2020: +2020 Committee Memberships +Name +Audit & Risk +Nominating & +Corporate +Governance +Compensation +Stuart M. Brightman +1/1/20 – Present +1/1/20 – Present +Marc G. R. Edwards* +1/1/20 – 6/18/20 +1/1/20 – 6/18/20 +Gary M. Halverson +1/1/20 – Present +1/1/20 – 6/18/20 +1/1/20 – Present +John Kennedy* +1/1/20 – 6/18/20 +Steven Mueller* +1/1/20 – 6/18/20 +Amy H. Nelson +1/1/20 – Present +6/18/20 – Present +6/18/20 – Present +Melvin G. Riggs +1/1/20 – Present +6/18/20 – Present +6/18/20 – Present +Michael Roemer +1/1/20 – Present +6/18/20 – Present +* Messers. Edwards, Kennedy and Mueller did not stand for re-election at the 2020 +annual meeting of stockholders. +13 +Table of Contents +Attendance at Board and Committee Meetings, Annual Meeting +During 2020, the Board met eight times. Each member of the Board participated, in person or by telephone, in at least 75% of the aggregate of Board and committee +meetings on which he or she served (during the period that such director served). It is our policy that directors are encouraged to attend each annual meeting of stockholders, and seven of the nine members of our Board did attend. +Director Independence +As a publicly traded company listed on the New York +Stock Exchange (the “NYSE”), we are required to comply with the rules and regulations of the NYSE as well as that of the SEC. Additionally, each of the Audit & Risk Committee (the “Audit Committee”), Compensation +Committee and Nominating and Corporate Governance Committee is required to be comprised solely of independent directors, with heightened standards applicable to Audit Committee and Compensation Committee members. +Each year, our Nominating and Corporate Governance Committee evaluates the relationships between the Company and each director and reports the results of its review to +the Board. To be considered “independent,” a director must be affirmatively determined by the Board, at the recommendation of the Nominating and Corporate Governance Committee and after due deliberation, to have no material relationship +with the Company other than as a director. The Nominating and Governance Committee and the Board assess the relationships and other facts and circumstances relevant to director independence on a case-by-case basis, in each case consistent with the applicable rules and regulations of the NYSE and SEC, and consistent with the Company’s Corporate Governance Guidelines (which can be found on our +website at www.nextierofs.com ). +After reviewing all relationships each director has with the Company, including the nature and extent of any business +relationships between the Company and such person, and based on the review and recommendation of the Nominating and Corporate Governance Committee, the Board has affirmatively determined that each of Messrs. Brightman, Halverson, Murray, Riggs and +Roemer and Ms. Nelson has no material relationships with the Company and, is “independent” under the applicable rules and regulations of the SEC, the NYSE and in accordance with our Corporate Governance Guidelines. In addition to the +Board-level standards for director independence, each member of the Audit Committee meets the heightened independence standards required for audit committee members under the NYSE and SEC rules, and each member of the Compensation Committee meets +the heightened independence standards for compensation committee members under the NYSE rules. +The Board’s independence determinations included a review of +the transactions that occurred since the beginning of 2020 with entities associated with our directors or members of their immediate family. In addition, in making its independence determinations, the Board considered that Mr. Wille is a senior +employee of Cerberus Capital Management, L.P. (together with its affiliates and related funds, “Cerberus”), a stockholder of the Company, and that he was initially designated for nomination to the Board by Cerberus pursuant to a +stockholders’ agreement, which is more fully discussed below. +Director Nominations +In obtaining the names of possible director nominees, our Nominating and Corporate Governance Committee conducts its own inquiries and considers suggestions from other +directors, management, stockholders and professional director search firms. The Nominating and Corporate Governance Committee’s process for evaluating nominees identified in unsolicited recommendations from stockholders is the same as its +process for unsolicited recommendations from other sources and is further described in Section 4.01 of the Company’s Bylaws. However, stockholders desiring to nominate a director candidate at the annual meeting must comply with certain +procedures, for more information, please read “Proposals by Stockholders.” +14 +Table of Contents +The Nominating and Corporate Governance Committee believes that nominees should possess the highest personal and +professional ethics, reputation, integrity and values and be committed to representing the long-term interests of our stockholders. Directors should have a record of accomplishment in their chosen professional field and demonstrate sound business +judgment. Directors must be willing and able to devote sufficient time to carrying out their duties and responsibilities effectively, including attendance at and participation in board and committee meetings, and should be committed to serve on the +board for an extended period of time. The Nominating and Corporate Governance Committee will consider independence, diversity of viewpoints, backgrounds and experience, including a consideration of gender, ethnicity, race, nationality and age in +determining whether a candidate will be an appropriate fit with, and an asset to, the board of directors. When considering existing directors, the Nominating and Corporate Governance Committee evaluates their history of attendance at board and +committee meetings as well as contributions and effectiveness at such meetings. +In addition, pursuant to the terms of our Bylaws and the Second Amended and +Restated Stockholders’ Agreement, dated as of October 31, 2019, by and among the company, Keane Investor Holdings, LLC (“Keane Investor”) and the other parties thereto, Keane Investor (or its permitted assignee or designee) has +certain rights to designate members to our board of directors, subject to certain director qualifications, including that: +· +for so long as Keane Investor (or its permitted assignee or designee) has beneficial ownership of more than 12.5% of the +then outstanding shares of our common stock, the right to appoint two individuals; and +· +for so long as Keane Investor (or its permitted assignee or designee) has beneficial ownership of less than 12.5% but more +than 7.5% of our then-outstanding common stock, the right to appoint one individual. +At this time, Mr. Wille and Mr. Stewart are the +Keane Investor appointees. For additional information, see “ Other Information—Related Party Transactions ” in this proxy statement. +Communication with the Board and its Non-Management Members +Persons may communicate with our Board of Directors by submitting such communication in writing to the attention of Kevin McDonald, General Counsel, in care of the +Board of Directors, NexTier Oilfield Solutions Inc., 3990 Rogerdale Road, Houston, Texas 77042. Persons may communicate with the non-management members of the board of directors by submitting such +communication in writing to Kevin McDonald, General Counsel, in care of the non-management members of the Board of Directors, NexTier Oilfield Solutions Inc., 3990 Rogerdale Road, Houston, Texas 77042. +Board Committees +Our Board has assigned certain +responsibilities to permanent committees comprised of Board members. Prior to April 13, 2020, the Board had four standing committees, the Audit and Risk Committee, the Compensation Committee, the Nominating and Corporate Governance Committee +and the Compliance Committee. The Compliance Committee had been formed to assist in implementing and overseeing certain compliance programs, policies and procedures and to monitor our performance with respect to such programs, policies and +procedures. As part of the Nominating and Corporate Governance Committee’s review of the Board, its size and committee functions, it recommended that, in light of the expected reduction of the size of the Board, the Compliance Committee be +dissolved and these oversight activities be absorbed by the other standing committees or the full Board, as applicable. On April 13, 2020, the Board, following the Nominating and Corporate Governance Committee’s recommendation, dissolved +the Compliance Committee as a standing committee. +15 +Table of Contents +The charter for each committee listed below is available on our website at www.nextierofs.com , by clicking on +“Investor Relations,” then “Corporate Governance,” then the name of the applicable committee charter. Stockholders may obtain printed copies of any charter, free of charge, by sending a written request to NexTier Oilfield +Solutions Inc. at 3990 Rogerdale Road, Houston, Texas 77042, Attn: Corporate Secretary. +Audit and Risk Committee +Committee Members: +Number of meetings in 2020: 5 +Michael Roemer (chair) +Amy H. Nelson +Report: page 26 +Gary M. Halverson +Melvin G. Riggs +The Audit and Risk Committee assists the board in its oversight responsibilities relating to the integrity of our financial statements, +our compliance with legal and regulatory requirements, our independent auditor’s qualifications and independence, enterprise risk management (including cyber risk), the establishment and performance of our internal audit function and the +performance of the independent auditor. Each member of the Audit and Risk Committee has significant financial experience, which provides a greater depth of understanding and oversight of our financial statements, including our balance sheet, +statement of operations and cash flows statements. Our board of directors has determined that Mr. Roemer qualifies as an “audit committee financial expert” as such term is currently defined in Item 407(d)(5) of Regulation S-K. +Our board of directors has adopted a written charter under which the Audit and Risk Committee operates. A +copy of the Audit and Risk Committee charter, which satisfies the applicable standards of the SEC and the NYSE, is available on our website. +Compensation +Committee +Committee Members: +Number of meetings in 2020: 8 +Gary M. Halverson (chair) +Amy H. Nelson +Report: page 30 +Stuart M. Brightman +Melvin G. Riggs +The Compensation Committee is responsible for, among other things, review and administration of our compensation and benefits plans, +approval of the compensation structure of our executive officers, evaluation of our executive officers’ performance and review of salary, bonus and other incentive and equity compensation. A copy of the Compensation Committee charter is +available on our website. +Nominating and Corporate Governance Committee +Committee Members: +Number of meetings in 2020: 5 +Stuart M. Brightman (chair) +Melvin G. Riggs +Amy H. Nelson +Michael Roemer +The Nominating and Corporate Governance Committee is responsible not only for the oversight of risks relating to corporate governance, +board organization, membership and structure, succession planning for our senior management team, including our CEO, corporate responsibility but also for identifying individuals qualified to become members of our board of directors. A copy of the +Nominating and Corporate Governance Committee charter is available on our website. +Director Compensation +Our director compensation philosophy is designed to fairly and reasonably compensate the Company’s non-employee directors +for the time, expertise and effort they devote to serving the Company and to +16 +Table of Contents +align the interest of our directors with the long-term interests of our stockholders. The Compensation Committee monitors trends and best practices in, and periodically reviews and assesses the +adequacy of, director compensation and makes recommendations to the Board. The Compensation Committee’s recommendation takes into account our director compensation philosophy, market trends and compensation levels and practices in our peer +group, stockholder feedback, and the advice of the Compensation Committee’s independent compensation consultant, Compensation Advisory Partners. +Director +Compensation Components +Annual compensation for our non-employee directors is comprised of cash and equity-based +compensation, as set out in the table below. We also reimburse our non-employee directors for reasonable out-of-pocket expenses +associated with travel to and attendance at our Board and committee meetings. We neither pay for meeting attendance nor provide any other benefits or perquisites to our non-employee directors. +In December of 2019, the Compensation Committee reviewed our director compensation program in consultation with its compensation advisor, which provided advice and +recommendation with respect to the design of the Company’s director compensation program. The Compensation Committee reviewed independent and objective market data and analysis, including compensation levels, market trends and best practices. +The Compensation Committee took into account, among other factors, the compensation advisor’s input and stockholder feedback through the say-on-pay stockholder vote +in 2019 in determining the recommendations for adjustments to our director compensation program for 2020. +However, beginning in March of 2020, the industry was +faced with sudden, unforeseen and unprecedented circumstances. The rapid spread of COVID-19 and geopolitical events that increased the supply of low-priced oil to the +global market led to a collapse in oil prices and governmental authorities began imposing restrictions on non-essential activities and travel that contributed to a worldwide reduction in demand for oil. In +response to the uncertainties related to the impact of these events, and in connection with other expense reduction actions, the Compensation Committee approved a temporary 20% reduction in the Board’s quarterly cash compensation (the +“COVID Reduction”) beginning in the third quarter of 2020 and continuing through the Annual Meeting. +The following was the 2020 non-employee director compensation program: +Compensation +Element +2020 Non-Employee Director +Compensation Program +Original +Compensation +Compensation +Net +COVID +Reduction +Annual Cash Retainer (1) +$ +100,000 +$ +80,000 +Annual Equity Retainer (2) +$ +150,000 +$ +150,000 +Additional Cash Retainer— Independent Board +Chair (1) +$ +50,000 +$ +50,000 +Additional Cash Retainer— Independent Audit Committee Chair (1) +$ +20,000 +$ +20,000 +Additional Cash Retainer— Other Independent Committee Chairs (1) +$ +15,000 +$ +15,000 +Additional Equity Retainer— Independent Board Chair +$ +35,000 +$ +35,000 +(1) +The annual cash retainer is paid quarterly, in arrears. +(2) +The annual equity retainer is granted on first business day following the annual stockholder meeting. The original award +was to be based on the volume weighted average price of our common stock for the five trading days prior to the grant date. However, as part of COVID-19 pandemic expense reduction actions, the award was +granted based on the volume weighted average price of our common stock for the ninety trading days prior to the grant date, rounded to the nearest full +17 +Table of Contents +share. The equity retainers were granted as restricted stock awards that vest 100% on the upon the earliest of: (i) the one-year anniversary of the +grant date, (ii) the date of the first meeting of the Company’s stockholder at which directors will be elected in the calendar year following the calendar year in which the grant date occurs, (iii) the date the director incurs a +termination without cause, (iv) the date of the director’s death, and (v) the date of a change in control, subject to continuous service through such vesting date. +Our President and Chief Executive Officer, Mr. Drummond, does not receive any additional compensation for his service as a director (his compensation as an +executive is discussed in CD&A and detailed in “Executive Compensation Tables”). Additionally, one of our non-employee directors, Mr. Wille, who is employed by one of our stockholders, has +declined any equity compensation for his service, and the cash compensation for his service as a director is paid to his employer, pursuant to his employer’s policy. +Transitional Equity Components for Certain Non-Employee Directors +On October 31, 2019, we completed a merger transaction with C&J Energy Services, Inc. (“C&J”), a publicly traded Delaware corporation. As part of +the closing of that merger, six of our then directors resigned, and six of the directors of C&J joined our Board. In addition, on October 11, 2019, Mr. Christian Garcia, then a director on the Board, resigned because he had accepted a +new job with a company that would be a competitor of the combined company following the merger. He was replaced with Mr. Riggs. Finally, as of the completion of the merger, Mr. Stewart became a +non-employee director eligible for a pro-rata equity retainer for his continued service after the merger. These new and transitioning members of the Board were granted +transitional pro-rata equity awards in March of 2020 as equity retainers for their service through the date of the 2021 Annual Meeting. These transitional equity awards were as follows: +Name (1) +Service Period Covered +by the Transitional Grant +Number of Shares of +Restricted Stock +Melvin G. Riggs +10/11/2019 – 06/18/2020 +45,233 +Stuart M. +Brightman (2) +12/11/2019 – 06/18/2020 +32,218 +John +Kennedy (2) +12/11/2019 – 06/18/2020 +32,218 +Steven +Mueller (2) +12/11/2019 – 06/18/2020 +32,218 +Patrick M. +Murray (2) +12/11/2019 – 06/18/2020 +39,735 +Amy H. +Nelson (2) +12/11/2019 – 06/18/2020 +32,218 +Michael +Roemer (2) +12/11/2019 – 06/18/2020 +32,218 +James C. Stewart +11/01/2019 – 06/18/2020 +40,539 +(1) +The awards were based on the volume weighted average price of our common stock for the five trading days prior to the +grant date, rounded to the nearest full share. The equity retainers were granted as restricted stock awards that vest 100% on the upon the earliest of: (i) the one-year anniversary of the grant date, +(ii) the date of the first meeting of the Company’s stockholder at which directors will be elected in the calendar year following the calendar year in which the grant date occurs, (iii) the date the director incurs a termination +without cause, (iv) the date of the director’s death, and (v) the date of a change in control, subject to continuous service through such vesting date. +(2) +Former C&J directors had already received equity grants from +C&J for board service through mid-December (the timing of the annual cycle for equity grants for board service at C&J), and the applicable portion of such compensation was deemed to apply with respect +their service on the Board after the merger through the mid-December vesting of the C&J equity award. The transitional grant covers continued service from the vesting date of the C&J award through the +Company’s 2020 Annual Meeting. +18 +Table of Contents +2020 Director Compensation +Name (3) +Fees Earned or +Paid in Cash ($) (1) +Stock +Awards ($) (2) +Total ($) +Stuart M. Brightman +97,978.14 +196,857.39 +294,835.53 +Marc G. R. Edwards +53,415.30 +- +53,415.30 +Gary M. Halverson +104,945.36 +158,840.15 +263,785.51 +John Kennedy +46,448.09 +38,017.24 +84,465.33 +Steven Mueller +53,415.30 +38,017.24 +91,432.54 +Patrick M. Murray +139,945.36 +242,787.76 +382,733.12 +Amy H. Nelson +89,945.36 +196,857.39 +286,802.75 +Melvin G. Riggs (4) +89,945.36 +138,805.23 +228,751.59 +Michael Roemer +109,945.36 +196,857.39 +306,802.75 +James C. Stewart (4) +89,945.36 +146,739.09 +236,684.42 +Scott R. Wille (3) +89,945.36 +- +89,945.36 +(1) +Stuart M. Brightman, John Kennedy, Steven Mueller, Patrick M. Murray, Amy H. Nelson and Michael Roemer (collectively, the +“C&J Directors”) joined the board on October 31, 2019 as part of a business combination. Melvin G. Riggs joined the Board shortly before the October 31, 2019 business combination, and James C. Stewart became a non-employee director on October 31, 2019 as part of the business combination. They were all granted transitional stock awards for service in 2020 prior to the Company’s annual equity retainer grant of +stock following the annual meeting. +(2) +The number of shares of restricted stock granted for director compensation awards was calculated pursuant the volume +weighted average price of the common stock for (i) the 5 trading days prior to the grant date, for transition awards, and (ii) the 90 trading days prior to the grant date, for annual equity retainer awards. The amount above, however, +reflects the grant date fair value calculated in accordance with ASC 718 (as defined below) of the restricted stock granted in fiscal year 2020. +(3) +Scott R. Wille is employed by one of our largest stockholders and has declined any equity compensation for his service as +a director, and the cash compensation is paid to his employer pursuant to his employer’s policy. Robert Drummond is an employee of the Company, and therefore does not receive any compensation for his service on the Board. +(4) +In light of the lower than usual Company stock price in 2020, and the grants of transition awards and annual equity +retainer awards granted in 2020 to Mr. Riggs and Mr. Stewart, their 2020 grants were capped at the Company’s Equity and Incentive Plan calendar year award limit of 75,000 shares. The remaining restricted stock awards that they would +have been granted under the director compensation plan in 2020 are expected to be awarded as Stock Payment Awards under the Company’s Equity and Incentive Plan at the time of the vesting of the 2020 annual equity retainer awards. The C&J +Directors were not impacted by this limit, as they received their 2020 equity awards under the NexTier Oilfield Solutions Inc. (Former C&J Energy) Management Incentive Plan that has a calendar year award limit of approximately 1.2 million +shares. +As of December 31, 2020, the aggregate number of shares of unvested restricted stock held by each +non-employee director was: +Name +Number of Shares +of Restricted Stock +Stuart M. Brightman +87,563 +Gary M. Halverson +55,345 +Patrick M. Murray +107,993 +Amy H. Nelson +87,563 +Melvin G. Riggs +75,000 +Michael Roemer +87,563 +James C. Stewart +75,000 +Scott R. Wille +— +19 +Table of Contents +Director Services Agreements +We have entered into Director Services Agreements with each of Gary M. Halverson and Melvin G. Riggs. The Director Services Agreements provide that each such director +serve on an at-will basis until the earlier of disability, death, resignation or removal. +Stock Ownership Requirements +We have stock ownership requirements for (i) all independent, non-employee directors (each an “Independent +Director”), and (ii) our Chief Executive Officer and certain other executive officers, including the Chief Financial Officer, the Chief Operating Officer, if any, the Chief Administrative Officer, and the General Counsel, as well as any +President or Executive Vice President reporting directly to the CEO (collectively, the “Executive Officers”). +Stock Ownership Requirement +Independent, Non-Employee +Directors +5X Annual Retainer +Chief Executive Officer +5X Base Salary +Other Executive Officers +2X Base Salary +All Independent Directors are required to own Company common stock in an amount equal to or in excess of five times such Director’s +Annual Director Fee pursuant to the Director compensation program, which shall be determined annually as of the last day of the prior fiscal year. Each Independent Director has five years to meet the requirements, measured from the date he or she is +first elected to the Board or it is first determined that the director meets the definition of an Independent Director. +By the fifth (5th) anniversary of the +later of (a) the date an Executive Officer of the Company begins employment with the Company in such position and (b) June 26, 2018, each Executive Officer is required to own Company common stock in an amount equal to or in excess either +(i) five times annual base salary, if such Executive Officer is the CEO or (ii) for all other Executive Officers two times such Executive Officer’s annual base salary, which will be determined annually as of the last day of the prior +fiscal year of the Company. +The Company believes that each Independent Director and Executive Officer is on track meet such ownership requirements within the +requisite five-year period. +Corporate Governance +Board Leadership Structure +Our Board does not have a formal policy on +whether the roles of Chief Executive Officer and Chairman of the board of directors should be separate. If the Chairman is a member of management, the Board also elects a Lead Director who is a non-management +director. Currently, Robert W. Drummond serves as our President & Chief Executive Officer, while Patrick M. Murray serves as Chairman of the Board. The Board believes that this leadership structure provides the best direction for the +management team and is ideal for the Company and its stockholders. Our non-management directors meet regularly in executive sessions at which only non-management +directors are present, and the Chairman leads those sessions. Because Mr. Murray is independent under applicable listing standards and under our Corporate Governance Guidelines, our Board has not appointed a separate Lead Director. +Our Board expects to review its leadership structure at least annually to ensure that it continues to meet the Company’s needs. +20 +Table of Contents +Role of Board in Risk Oversight +Enterprise risk management is a Company-wide initiative that involves the Board and management identifying, assessing and managing risks that could affect our ability +to fulfill our business objectives or execute our corporate strategy. A primary function of our Board is to assist and oversee management in this effort. The Board and its committees conduct this oversight responsibility. The Board’s committees +assist the Board in fulfilling its oversight responsibilities with respect to risks within its areas of responsibilities, as further discussed below. We believe the Board’s role in risk oversight is consistent with the Company’s leadership +structure, with our CEO and other members of senior management having direct responsibility for managing risk exposure and the potential impacts of the many risks that are associated with our business, and the directors involved in providing +oversight of management’s efforts to reduce, mitigate or eliminate the risks that we face. +The primary means by which the Board and its designated committees +oversee our risk management structure and policies is through regular communications with management, specifically including with our General Counsel, our head of internal audit, our CEO and our Chief Financial Officer (“CFO”). In +connection with our regular quarterly Board and committee meetings, the full Board (or the appropriate committee in the case of risks that are under the purview of a particular committee) receives reports from members of senior management on areas +of material risk to the Company, including operational, financial, legal, cyber, regulatory, and strategic risks. In addition, upon request, either the full Board or a committee may receive additional reports from those executive officers who are +deemed responsible for particular risks. The chair of each of the committees will also discuss and review significant matters with management outside of the quarterly Board meetings as needed. When a committee receives a separate report, or the +chair has separate discussions, the committee chair may discuss that report with the full Board. +21 +Table of Contents +Environmental Risks +As +part of our commitment to long-term, sustainable value creation, the Board and our executive team are committed to actively monitoring how the Company’s performance, opportunities and strategy are influenced by, and influence, the environment. +This review, which is part of the Company’s general risk management process, includes an evaluation of the Company’s material climate-related risks; all material risks identified in the risk management process are assessed by management +and reported to the Board. +Cybersecurity Risks +To guard against the +threat of security breaches and cyber-attacks, the head of the Company’s IT department manages our cybersecurity initiative, which is focused on protecting and preserving the confidentiality, integrity and continued availability of all +information owned by, or in the care of, the Company. The head of IT works closely with the General Counsel in this effort. +The Audit Committee receives regular +reports related to cybersecurity, privacy and controls. As part of this, the Audit Committee will review the results of periodic exercises and response readiness assessments led by outside advisors who provide a third-party independent assessment of +our internal preparedness. +In addition, our internal audit team will also periodically review and report to the Audit Committee on aspects of cybersecurity as part +of its audits. +People Risks +The Board and our executive team are +committed to promoting a healthy and ethical culture throughout the organization. The Board receives regular reports from the Company’s General Counsel, who serves as Chief Compliance Officer, regarding the Company’s compliance program. As +part of this, the Board regularly reviews all complaints received through the anonymous hotline as well as key data related to ongoing legal proceedings. +The Board +also receives regular reports from our senior management team about our other people-related strategies, programs and initiatives, including recruitment, retention, engagement, training and development, health and safety, talent management and +diversity. +Code of Business Conduct and Ethics +We have adopted a +written code of business conduct and ethics (the “Code of Business Conduct and Ethics”) that applies to all of our employees, officers and directors, including those officers responsible for financial reporting. In addition, our senior +financial officers, including our principal executive officer and principal financial officer, are subject to a written code of ethics for senior financial officers. We have made a current copy of both codes available on our website, +www.nextierofs.com and both are available in print and without charge to any person who sends a written request to our Corporate Secretary at 3990 Rogerdale Road, Houston, Texas 77042. In addition, we intend to post on our website all +disclosures that are required by law or the NYSE listing standards concerning any amendments to, or waivers from, any provision of either code. +Corporate +Governance Guidelines +We have adopted corporate governance guidelines in accordance with the corporate governance rules of the NYSE, as applicable, that +serve as a flexible framework within which our board of directors and its committees operate. These guidelines cover a number of areas, including the size and composition of +22 +Table of Contents +the board, board membership criteria and director qualifications, director responsibilities, board agenda, role of the Chief Executive Officer, executive sessions, standing board committees, +board member access to management and independent advisors, director communications with third parties, director compensation, director orientation and continuing education, evaluation of senior management and management succession planning. A copy +of our corporate governance guidelines is posted on our website, www.nextierofs.com . +23 +Table of Contents +Proposal 2. Ratify Appointment of +Independent Auditors +The Board of Directors recommends that you vote “FOR” this proposal. +The Audit and Risk Committee of the Board of Directors (the “Audit Committee”) of the Company has +selected KPMG LLP, an independent registered public accounting firm, to audit the Company’s financial statements and the effectiveness of internal control over financial reporting for 2021. While the Audit Committee is responsible for +appointing, compensating and overseeing the independent auditors’ work, we are requesting the ratification of the appointment of KPMG as our auditor for 2021 as a matter of good corporate governance. KPMG served as our independent auditor since +2011 and the Audit Committee took a number of factors into consideration in determining whether to reappoint KPMG as the Company’s independent auditor, including KPMG’s historical and recent performance, capabilities and expertise, tenure +as the Company’s independent auditor and familiarity with the Company’s business. We believe the appointment of KPMG is in the best interest of the Company and its stockholders. +Representatives of KPMG are expected to be present at the Annual Meeting with an opportunity to make a statement if they would like to do so and to be available to +respond to appropriate questions from our stockholders. +The ratification of the appointment of KPMG as our independent auditor for 2021 requires the affirmative +vote of a simple majority of the votes cast. If you properly submit a proxy card but do not indicate how you wish to vote, the Proxy Holders will vote for the proposal. +24 +Table of Contents +Audit Fees +The following table summarizes fees paid +or accrued to our independent registered public accounting firm, KPMG, in connection with various services for the years ended December 31, 2020 and 2019 respectively: +2020 +2019 +(Thousands of Dollars) +Audit +Fees (1) +$3,846 +$5,883 +Audit–Related Fees (2) +- +- +Tax +Fees (3) +32 +1 +All Other +Fees (4) +- +286 +Total +$3,878 +$6,170 +(1) +Consists of fees for professional services rendered for the audits of our consolidated and combined financial statements +for fiscal years 2019 and 2020 included in our 2020 Form 10-K +(2) +Consists of fees billed for assurance and related services consisting of comfort letters and consents related to other +registration statements filed by the Company during the year. +(3) +Consists of fees for professional services rendered by our principal accountant for tax compliance, tax advice, and tax +planning. +(4) +Consists of fees for products and services provided by our principal accountant, other than the services reported under +“audit fees,” “audit-related fees,” and “tax fees.” +Pre-Approval Policy +Our Audit Committee has adopted an Audit and Non-Audit Services Pre-Approval Policy (the +“Pre-Approval Policy”), that sets forth the procedures and conditions pursuant to which audit and non-audit services proposed to be performed by the +independent auditor may be pre-approved. The Pre-Approval Policy provides that we will not engage the Company’s independent registered public accounting firm to +render any audit, audit-related, tax or permissible non-audit service unless the service is either (i) explicitly approved by the Audit Committee (“specific +pre-approval”) or (ii) entered into pursuant to the pre-approval policies and procedures described in the Pre-Approval +Policy (“General Pre-Approval”). Unless a type of service to be provided by KPMG has received General Pre-Approval under the +Pre-Approval Policy, it requires specific pre-approval by the Audit Committee. Any proposed services exceeding pre-approved cost +levels or budgeted amounts will also require specific pre-approval. On an annual basis, the Audit Committee reviews and generally pre-approves the services (and related +fee levels or budgeted amounts) that may be provided by KPMG. Our Audit Committee may revise the list of general pre-approved services from time to time, based on subsequent determinations. +During 2019 and 2020, no services were provided to us by KPMG other than in accordance with the pre-approval policies and +procedures described above. +25 +Table of Contents +Audit Committee Report +The Audit Committee represents and assists the board of directors in providing independent, objective oversight of the Company’s accounting functions and internal +control over financial reporting. The Audit Committee acts under a charter which is available on the Company’s website at www.nextierofs.com under “Investor Relations,” then “Corporate Governance,” then “Board +Committees,” then “Audit and Risk Committee Charter.” The board of directors has determined that each member of the Audit Committee satisfies the requirements of the NYSE as to independence, financial literacy and expertise. +Management is responsible for the Company’s financial statements and the reporting process, including the system of disclosure controls and procedures and internal +control over financial reporting. +KPMG, the Company’s independent registered public accounting firm, is responsible for expressing an opinion on the +conformity of our financial statements with accounting principles generally accepted in the United States and on the effectiveness of the Company’s internal control over financial reporting. +In discharging its oversight role, the Audit Committee has: +· +reviewed and discussed with management the audited financial statements of NexTier Oilfield Solutions Inc. as of and for +the year ended December 31, 2020; and +· +discussed with KPMG the matters required to be discussed by Auditing Standard No. 1301, Communications +with Audit Committees, as amended, as adopted by the Public Company Accounting Oversight Board. In addition, the Audit Committee has received the written disclosures and the letter from KPMG required by applicable requirements of the Public +Company Accounting Oversight Board regarding the independent auditor’s communications with the Audit Committee concerning independence, and has discussed with KPMG their independence. +The Audit Committee and the Board of Directors believe that, due to KPMG’s knowledge of the Company and the industry in which the Company operates, it is in the +best interest of the Company and its stockholders to continue the retention of KPMG to serve as the Company’s independent registered public accounting firm. Although the Audit Committee has the sole authority to appoint the independent +registered public accounting firm, the Audit Committee recommends that the board of directors ask the stockholders to ratify the appointment of the independent registered public accounting firm at the 2021 Annual General Meeting. +Based on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited financial statements referred to +above be included in the Annual Report on Form 10-K of NexTier Oilfield Solutions Inc. for the year ended December 31, 2020. +The Audit and Risk Committee +Michael Roemer, Chair +Gary M. Halverson +Amy H. Nelson +Melvin G. Riggs +26 +Table of Contents +Proposal 3. Advisory Approval of +Executive Compensation +The Board of Directors recommends that you vote “FOR” this proposal. +We are asking our stockholders to approve, on an annual advisory basis, the compensation of our named executive +officers (“NEOs”) as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion. While this vote is not +binding on our Company, the results of the vote on this proposal will be carefully considered by the board of directors and the Compensation Committee when making future executive compensation decisions. +The text of the resolution in respect of Proposal 3 is as follows: +“ RESOLVED , that the compensation paid to the Company’s named executive officers, as disclosed in this Proxy Statement pursuant to the rules of the SEC, +including the Compensation Discussion and Analysis, compensation tables and any related narrative discussion is hereby APPROVED.” +We urge you to carefully +review the Compensation Discussion and Analysis, or “CD&A,” section in this Proxy Statement, as well as the 2020 Summary Compensation Table, other compensation tables and related narrative discussion, for more information regarding the +compensation of our NEOs. We believe the information in this Proxy Statement demonstrates the successful design and implementation of a compensation program that aligns stockholders’ and management’s interests. +A simple majority of the votes cast is required to approve this proposal. If you properly give a proxy but do not indicate how you wish to vote, the persons named on +the proxy card, or if you do not name your proxy or proxies, the Proxy Holders, will vote for the proposal. +27 +Table of Contents +Executive Officers +Set forth below is certain +information regarding our executive officers as of April 21, 2021, other than the biography of our President & Chief Executive Officer, which appears under “Proposal 1—Election of Directors—Director +Information.” +Name +Age +Position +Robert W. Drummond +60 +President and Chief Executive Officer +Kenneth H. Pucheu +43 +Executive Vice President & Chief Financial Officer +Kevin M. McDonald +54 +Executive Vice President, Chief Administrative Officer, General Counsel and Corporate Secretary +Ian R. Henkes +49 +Senior Vice President, Operations +Phung Ngo-Burns +55 +Chief Accounting Officer and Treasurer +Kenneth H. Pucheu , Executive Vice President and Chief Financial Officer . Mr. Pucheu has served as NexTier’s +Executive Vice President and Chief Financial Officer since December 2019. In addition to his role as Chief Financial Officer, Mr. Pucheu is responsible for all Digital and Information Technology operations of NexTier. He joined Keane Group, +Inc. (now known as NexTier Oilfield Solutions Inc.) in 2016 as Vice President of Finance. Mr. Pucheu has 20 years of experience in corporate and operational finance across the energy industry, as well as deep experience in digital technologies +and business systems. Prior to joining Keane, Mr. Pucheu served at Schlumberger Limited for 15 years in various senior-level positions, including Head of Finance for Drilling and Measurements, and Director of Finance for North America Offshore. +Mr. Pucheu earned a B.S. in Accounting from the University of Louisiana at Lafayette. +Kevin M. McDonald, Executive Vice President, Chief +Administrative Officer, General Counsel and Corporate Secretary . Mr. McDonald serves as NexTier’s Executive Vice President, Chief Administrative Officer and General Counsel. He joined Keane Group, Inc. (now known as +NexTier Oilfield Solutions Inc.) as Executive Vice President, General Counsel & Secretary in November 2016. Prior to joining Keane, Mr. McDonald served in leadership roles at Marathon Oil Corporation from 2012 to 2016, including as +Deputy General Counsel of Corporate Legal Services and Government Relations, Deputy General Counsel of Governance, Compliance & Corporate Services, and Assistant General Counsel. Mr. McDonald practiced as a partner at the international +law firm Fulbright & Jaworski LLP (now Norton Rose Fulbright LLP) in 2012. Mr. McDonald previously held various counsel positions, including President & Chief Executive Officer and acting General Counsel at Arms of Hope, a +nonprofit organization, from 2008 to 2012, Senior Vice President, General Counsel & Chief Compliance Officer at Cooper Industries from 2006 to 2008, Associate General Counsel at Anadarko Petroleum from 2006 to 2008, and Managing Counsel +(Litigation) at Valero Energy from 2002 to 2004. He began his career as an associate at Norton Rose Fulbright LLP between 1992 and 2001. Mr. McDonald graduated with a BS from Texas A&M University and JD from the University of Texas School +of Law. +Ian R. Henkes , Senior Vice President, Operations . Mr. Henkes serves as NexTier’s Senior Vice President, Operations. He joined Keane +Group, Inc. (now known as NexTier Oilfield Solutions Inc.) in February 2016 as the Vice President of HR, and in September of 2017 became the Vice President of South Region, where he served until October 2019. Prior to joining Keane, he served as +Human Resources Manager for Schlumberger’s Drilling & Measurements global businesses from August 2014 to February 2016, as Vice President for North America at Pathfinder Energy Services from January 2013 to +28 +Table of Contents +September 2014, and as Personnel Manager at Pathfinder Energy Services from September 2012 to December 2012. Prior to joining Pathfinder Energy Services, Mr. Henkes worked in various field, +operations, sales, management, and HR positions around the world from 1994 to 2012. Mr. Henkes has extensive experience in wireline, logging while drilling, and directional drilling operations in North America, Latin America, and northern +Europe. +Phung Ngo-Burns , Chief Accounting Officer and Treasurer . +Ms. Ngo-Burns serves as NexTier’s Chief Accounting Officer and Treasurer. She had previously served as Vice President—Integration at the Company from October 2019 to March 2020, and prior to +that as Chief Accounting Officer since 2017. Prior to joining the Company, Ms. Ngo-Burns was a Senior Director with Alvarez and Marsal from 2012-2017. From 2002 to 2012, +Ms. Ngo-Burns served as Chief Financial Officer of Ability Holdings, Inc. and held several executive roles in the finance department of ExpressJet Holdings, Inc., including as Executive Vice President and +Chief Financial Officer. Ms. Ngo-Burns brings nearly 30 years of accounting experience to the Company and holds an M.B.A. from the University of Houston and a B.S. in Business and Accounting from Oklahoma +State University. +29 +Table of Contents +Compensation Committee Report +The Compensation Committee has reviewed and discussed this CD&A with the Company’s management. Based on the review and discussions, the Compensation Committee +has recommended to our board of directors that this CD&A be included in this Proxy Statement. +The Compensation +Committee +Gary M. Halverson, Chair +Stuart M. Brightman +Amy H. Nelson +Melvin G. Riggs +This report shall not be +deemed to be “soliciting material” or to otherwise be considered “filed” with the SEC or be subject to Regulation 14A or 14C (other than as provided in Item 407 of Regulation S-K) or +to the liabilities of Section 18 of the Securities Exchange Act of 1934, as amended, which we refer to as the Exchange Act, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933, as +amended, or the Exchange Act, except to the extent that we specifically incorporate it by reference into such filing. +30 +Table of Contents +Compensation Discussion & Analysis +This Compensation Discussion and Analysis (“CD&A”) focuses on the Company’s 2020 compensation programs, actions and outputs relative to the +Company’s 2020 performance. These compensation decisions reflect the compensation committee’s application of the Company’s compensation philosophy, plan objectives, and performance standards against financial and individual executive +performance through the end of 2020. In 2020, the Company experienced significant stock price decline, consistent with its peer companies and the broader market, due to macro-economic factors and global concerns about the COVID-19 outbreak. As described further in this CD&A, the Compensation Committee and the Company’s management closely monitored the effects of the COVID-19 pandemic +and related market uncertainties and adjusted the compensation of our NEOs in response to these events in order to align the incentives of management with the needs of our business. For the year ended December 31, 2020, our named executive +officers (“NEOs”) were: +NEO +Title +Robert W. Drummond +President & Chief Executive Officer (“CEO”) +Kenneth H. Pucheu +Chief Financial Officer (“CFO”) +Kevin M. McDonald +Executive Vice President, Chief Administrative Officer & General Counsel +Ian R. Henkes +Senior Vice President, Operations +Richard S. Vaclavik (2) +Senior Vice President, Chief Commercial Officer +Gregory L. Powell (1) +Former Executive President and Chief Integration Officer +(1) +Mr. Powell served as the Company’s President & Chief Financial Officer until October 31, 2019, +after which he assumed the role of Executive Vice President & Chief Integration Officer until he separated from service with the Company on May 15, 2020. +(2) +Mr. Vaclavik served as the Company’s Senior Vice President, Chief Commercial Officer until April 6, 2021, +after which he assumed a new role as part of a re-design of the Company’s leadership structure to ensure that the Company has the strongest model in place to position the Company for success as the market +begins to recover. +31 +Table of Contents +Executive Summary +Compensation Practices & Policies +The following practices and +policies in our program promote sound compensation governance and are in the best interests of our stockholders and executives: +What We Do +☑ +Emphasis on variable compensation tied to annual financial performance or long-term relative stock price performance +☑ +Performance-based long-term incentives dependent upon our performance relative to peers makes up an increasing portion of NEO +long-term incentives +☑ +Clawback policy that applies to cash and equity compensation +☑ +Annual compensation risk assessment +☑ +Independent compensation consultant reporting directly to our Compensation Committee +☑ +Stock Ownership Guidelines for senior executive officers and independent non-employee +directors +☑ +Severance and Acceleration of Equity Vesting Conditioned on Restrictive Covenants and Release of Claims +What We Don’t Do +☒ +Prohibition on option repricing without stockholder approval +☒ +Prohibition on hedging of Company securities by our officers and directors +☒ +Prohibition on pledging of Company securities by our executive officers and directors +☒ +No single-trigger change-in-control severance +payments +☒ +No single-trigger change-in-control equity +vesting +☒ +No excise tax gross-ups +☒ +Limited use of perquisites and supplemental benefits +Implications of COVID and Market Uncertainties +The COVID-19 pandemic and efforts to mitigate its spread significantly disrupted the macroeconomic global economy and +the industry in which our business operates. Throughout the year, the Compensation Committee closely monitored the effect of the COVID-19 pandemic on our business and the effectiveness and speed of the actions +taken by executive management to streamline cost structure, safeguard our operations, optimize our financial performance, and ensure the Company had the most appropriate model in place to navigate the uncertain market conditions and position the +Company for success when the market begins to recover. +In May 2020, the Compensation Committee acted to temporarily adjust compensation for the officers, +directors, and employees of the Company: +· +Salary Reductions – The base salaries of all officers was reduced by 20%, which reduction remained in place +through April of 2021. +· +Director Cash Retainer Reduction - The annual director cash retainer was reduced by 20% for the second half of 2020, +which reduction will remain in place until the Annual Meeting. +· +Director Equity Retainer Modification – The 2020 annual director equity retainer, which has historically been +calculated by reference to a five-day volume weighted average price (“VWAP”), was calculated by reference to a 90-day VWAP. +32 +Table of Contents +· +Streamlining Work-Force Expenses – The Company reduced employee-related costs, including furloughing personnel, +reducing pay by 15-20%, and moderating headcount; between the strategic disposition of our well support services business in early March and expense rationalization measures related to COVID-19, we had a 73% reduction of our work-force in 2020. +· +Annual Bonus Opportunity Cap – The annual award bonus opportunity was capped at target for each metric. +· +Suspension of 401(k) Company Match – In May, the Company suspended its 4% match of employee contributions. +· +COVID-19 Retention and Incentive Performance Awards – Certain key +officers were granted performance restricted stock units in June of 2020 that will vest December 31, 2021, subject to the attainment of defined and vigorous cash flow metrics (the “COVID-19 Retention +PSUs”). +2020 Compensation Actions At-A-Glance +The Compensation Committee took the following key compensation-related actions for fiscal year 2020: +· +Base Salaries : In 2020, the Compensation Committee elected to adjust the base salaries of several of our executive +officers to better align with the median of the combined company’s updated peer group and to reflect the new roles assumed by our executive officers in connection with the Merger and post-Merger leadership transitions. However, in light of the COVID-19 pandemic and related market uncertainties, the Compensation Committee, with management’s full support, imposed a temporary 20% base salary reduction for leadership team members to help reduce costs and +improve cash flow of the Company. This reduction was in effect for approximately one year from May 2020 through April 2021. +· +Annual Incentives: The Compensation Committee adopted an annual bonus program for fiscal year 2020 based on the +achievement of specific Company performance objectives related to adjusted EBITDA, integration synergies, free cash flow, and total recordable incident rate. As part of the austerity measures the Company undertook due to the COVID-19 pandemic and the related market uncertainties, the maximum bonus opportunity for each metric was capped at target. In light of our actual level of achievement, our Compensation Committee has determined that +each of the NEOs was eligible to receive an amount under the annual bonus program equal to 50% of the NEO’s target bonus. +· +Long-Term Incentives: The largest single component of compensation granted to our executives is equity compensation. +The executives were awarded long-term incentives consisting of a mixture of RSUs and PSUs. The Compensation Committee believes the use of these equity vehicles creates strong alignment with the Company’s stockholders by linking executive +compensation closely to stock performance, and in the case of PSUs total stockholder return relative to our peers. +· +Special Non-Recurring Compensation : In connection with the Merger, the +Compensation Committee had made certain cash retention or incentive awards to Mr. Pucheu and Mr. Powell that were paid in 2020. In addition, to incentivize and retain certain key officers the +COVID-19 Retention PSUs were granted in June of 2020. These awards were responsive to non-recurring exigent circumstances and are not intended to be a component of any +ongoing compensation framework. +33 +Table of Contents +What Guides Our Program +Our Compensation Philosophy +Our compensation philosophy is driven by the following guiding principles: +· +Pay for performance : a significant portion of an executive’s total compensation should be variable (“at-risk”) and linked to the achievement of specific short- and long-term performance objectives. +· +Stockholder alignment : executives should be compensated through pay elements (base salaries, short and +long-term incentives) designed to enhance stockholder value by incentivizing our executives to work towards goals that drive return on stockholder investment. +· +Competitiveness : target compensation should be competitive with that being offered to individuals in +comparable roles at other companies with which we compete for talent to ensure we employ the best people to lead the successful implementation of our business plans and to attract the caliber of executive we need to support the long-term growth of +our enterprise. +· +Good governance : decisions about compensation should be guided by best-practice governance standards and +rigorous processes that encourage prudent decision-making. +34 +Table of Contents +The Principal Elements of Pay +Our compensation philosophy is supported by the following principal elements of pay: +(1) +PSUs for Messrs. Drummond, Powell and McDonald were weighted 30% of their long-term incentive value for 2019 with RSUs +comprising the remaining 70%. This weighting was increased to 50% PSUs and 50% RSUs for total long-term incentive value in 2020. Messrs. Pucheu, Henkes and Vaclavik did not received PSU awards in 2019, but PSUs comprised 40% of each of their total +long-term incentive value in 2020, with the remaining 60% of their total long-term incentive value being comprised of RSUs. +35 +Table of Contents +Pay Mix +A majority of NEO +total direct compensation for fiscal year 2020 was variable, at approximately 89% for our CEO, and approximately 77% for our other NEOs employed at year-end. The following charts illustrate the total direct +compensation mix for our CEO and such other NEOs for fiscal year 2020: +Our Decision-Making Process +The Role +of the Compensation Committee +The Compensation Committee oversees the executive compensation program for our NEOs. The Compensation Committee is comprised of +independent members of our board of directors. The Compensation Committee works very closely with its independent consultant and management to examine the effectiveness of the Company’s executive compensation program throughout the year. The +Compensation Committee evaluates, determines and approves the compensation of our CEO and other executive officers, and recommends the compensation of our non-employee directors. The Compensation Committee +administers the Company’s equity plans and has overall responsibility for monitoring of the Company’s executive compensation policies, plans and programs. Details of the Compensation Committee’s authority and responsibilities are +specified in the committee’s charter which is available on the Company’s website at www.nextierofs.com . +The Role of Management +Compensation Committee meetings are regularly attended by our CEO, CFO, General Counsel and our Senior Vice President of Human Resources. Each of the management +attendees provides the Compensation Committee with their specific expertise and the business and financial context necessary to understand and properly target financial and performance metrics. None of the members of management are present during +executive sessions where the Compensation Committee deliberates on compensation adjustments under consideration, but the Company’s independent compensation consultant may participate in those discussions. +36 +Table of Contents +The Role of the Independent Consultant +The Compensation Committee has the full authority to engage compensation consultants and other advisors to assist it in the performance of its responsibilities. Prior +to retaining or seeking advice from a compensation consultant or other advisor, the Compensation Committee must consider the independence of such compensation consultant or other advisor. The independent compensation consultant retained by the +Compensation Committee reports directly to the Compensation Committee. +The Compensation Committee had engaged Pearl Meyer & Partners, LLC (“Pearl +Meyer”) as its independent compensation consultant since 2017, and Pearl Meyer continued to advise the Committee until mid-2020. Pearl Meyer did not provide any services to the Company or any of its +subsidiaries other than the services provided to the Compensation Committee. The Compensation Committee assessed the independence of Pearl Meyer and determined that its work for the Compensation Committee has not raised any conflicts of interest. +Selection of a new Independent Compensation Consultant +During 2020, +following the retirement and replacement of two of the three members of our Compensation Committee, the newly reconstituted Compensation Committee reviewed the market alternatives for an independent compensation consultant. While conducting its +review, the Compensation Committee identified three firms as potential consultants based upon its consideration of each firm’s independence, experience within our industry and reputation. The Committee evaluated each firm’s personnel, +philosophy and work practices, industry experience and knowledge and a preliminary analysis of our programs and fee structure. Following this process, the Compensation Committee selected Compensation Advisory Partners LLC (“CAP”) as the +Committee’s new independent compensation consultant to provide information and advice on our executive compensation program design and implementation. CAP took a fresh look at our compensation practices, including (i) a refreshed +compensation review for the executive officers of the Company, including the NEOs; (ii) an assessment of the Company’s compensation components compared to survey and peer group data; and (iii) recommendations for total compensation +opportunity guidelines (i.e., base salary and annual and long-term incentive targets). CAP does not provide any services to the Company or any of its subsidiaries other than the services provided to the Compensation Committee. The Compensation +Committee assessed the independence of CAP and determined that its work for the Compensation Committee has not raised any conflict of interest. +The Role of the +Compensation Peer Group +The Compensation Committee strives to set a competitive level of total compensation for each NEO as compared with executives in similar +positions at peer companies. For purposes of setting fiscal year 2020 compensation levels, in conjunction with the recommendation of Pearl Meyer, the Compensation Committee took into account publicly-available data from industry compensation surveys +and proxy statements from the group of peer companies listed below. +Compensation Peer Group +Apergy Corporation +McDermott International +Patterson-UTI Energy, Inc. +Flowserve Corporation +MRC Global Inc. +ProPetro Holding Corp. +FTS International, Inc. +Nabors Industries, Ltd. +RPC, Inc. +Helmerich & Payne, Inc. +National Oilwell Varco, Inc. +Superior Energy Services, Inc. +KBR, Inc. +NOW Inc. +TechnipFMC plc +Liberty Oilfield Services Inc. +Oceaneering International, Inc. +37 +Table of Contents +The peer companies were selected as potential competitors for executive talent based upon similarity in terms of +business focus, financial size, and peer group overlap. We fell at the 37 th percentile for revenue size relative to this group during 2020, and at the 34 th percentile for market cap as of July of 2020. Following our engagement of CAP, they reviewed our selected peer group and did not recommend any changes for the current year. +This market data is not the sole determinant in setting executive pay levels. The Compensation Committee also considers Company and individual performance, the nature +of an individual’s role within the Company, and his or her experience and contributions to his or her current role when making its compensation-related decisions. +Say-on-Pay Vote and Compensation Actions Taken +We received approximately 93% approval on our advisory say-on-pay vote to approve NEO compensation in 2020. We considered this as an affirmation that +our stockholders support our executive compensation program. We regularly engage in investor outreach to better understand our investors’ concerns and to solicit feedback on our executive compensation program. Our Board and the Compensation +Committee greatly value the benefits of maintaining a dialogue with our stockholders to understand their views on our executive +compensation program and practices. The Compensation Committee intends to consider the outcome of +say-on-pay votes when evaluating the design of our programs and is devoted to consistently reviewing and enhancing our programs to ensure continued alignment with +compensation program guiding principles. +The 2020 Executive Compensation Program in Detail +Base Salary +We provide each of our NEOs with a competitive fixed annual +base salary. The base salaries for our NEOs other than Mr. Vaclavik are set forth in employment agreements between the Company and the applicable NEO (the “Executive Employment Agreements”). Base salaries are reviewed annually by the +Compensation Committee by taking into account the results achieved by each executive, their future potential contributions, scope of responsibilities and experience, and competitive pay practices. +In May of 2020, the Compensation Committee, with management’s full support, temporarily reduced base salaries for leadership team members by 20% to help reduce +costs and improve cash flow in response to the COVID-19 pandemic and related market uncertainties. This reduction was in effect from May 2020 to April 2021. +Contemporaneously with Mr. Pucheu’ s promotion to Executive Vice President in August 2020, the Compensation Committee elected to adjust his base salary to +better align with the median of the combined company’s peer group and to reflect the new role he assumed. +Name +Base Salary +December 31, +2019 ($) +Base Salary +December 31, +2020 ($) (1) +2019-2020 +% Change +Base Salary +Without COVID +Reduction ($) +Robert W. Drummond +1,000,000 +800,000 +-20% +1,000,000 +Kenneth H. Pucheu (2) +375,000 +340,000 +-9% +425,000 +Kevin M. McDonald +475,000 +380,000 +-20% +475,000 +Ian R. Henkes +375,000 +300,000 +-20% +375,000 +Richard S. Vaclavik (3) +375,000 +324,750 +-13% +375,000 +Gregory L. Powell (4) +800,000 +— +— +— +(1) +Base salaries were temporary reduced in order to help improve cash flow of the Company as part of the Company’s +response to COVID and Market Uncertainties. This reduction was operative from May of 2020 to April of 2021. +38 +Table of Contents +(2) +Following the application of base salary reductions in May 2020, Mr. Pucheu’s salary was increased to $425,000, +or $340,000 after taking into account the temporary base salary reduction, in connection with his promotion to Executive Vice President on August 1, 2020. +(3) +Following the application of base salary reductions in May 2020, a portion of Mr. Vaclavik’s salary was +reinstated to $324,750 in October 2020. +(4) +Base salary presented for Mr. Powell is his final base salary upon termination of employment. +2020 Annual Incentives +Each Executive Employment Agreement provides that +the NEO is eligible for an annual bonus, for which target is expressed as a percentage of base salary, as set forth in the table below. The Compensation Committee applied the target bonus percentages for each NEO to the as-adjusted base salary following the voluntary 20% base salary reductions in response to the COVID-19 pandemic and related market uncertainties. +Name +Target Bonus +Opportunity as +a Percent of +Base Salary +2020 +Target Bonus +Opportunity +($) +Robert W. Drummond +125 +% +1,120,192 +Kenneth H. Pucheu +75 +% +261,274 +Kevin M. McDonald +100 +% +425,673 +Ian R. Henkes +75 +% +252,043 +Richard S. Vaclavik +75 +% +255,970 +Gregory L. Powell +100 +% +338,461 +Bonus payments for our NEO’s were calculated under the 2020 Executive Bonus Program, described below. +2020 Executive Bonus Program +The Compensation Committee adopted the Annual +Executive Bonus Program for Fiscal Year 2020 (the “2020 Executive Bonus Program”). The 2020 Executive Bonus Program provides that each NEO is eligible to receive an annual bonus for fiscal year 2020 calculated by multiplying the NEO’s +target bonus by the achieved “Funding Level” based on the Company’s achievement of: +Adjusted EBITDA +Financial Goal +The Compensation Committee chose to use Adjusted EBITDA as the primary metric to focus management +on the generation and flow of cash. This closely aligns the interests of management with stockholders to maintain a strong balance sheet and preserve investment value. Adjusted EBITDA is defined as +net income (loss) adjusted to eliminate the impact of interest, income taxes, depreciation and amortization, along with certain items +management does not consider in assessing ongoing performance. +Integration Synergies +Financial +Goal +While the merger of Keane and C&J afforded both increased scale and high-quality +asset base, an equally attractive opportunity was found in the resulting complementary platforms. When integrated, these platforms would significantly +decrease the annualized operating expense run-rate, which increase overall profitability. An independent, third party was used to validate +eliminated expenses and corresponding decreased run-rates. +39 +Table of Contents +Total Recordable Incident Rate +Safety +Goal +We believe safety culture begins with leadership accountability. We are committed to +lowering injury risk and providing a safe working environment. We strive to lead the industry in safety performance without compromising service +quality. Total recordable injury rate (“TRIR”) was selected as a plan metric to gauge alignment of words and actions. Consistent +with industry and regulatory standards, the calculation of TRIR is based on the number of recordable safety incidents per 200,000 hours worked. +Free Cash Flow +Financial +Goal +Free cash flow was selected as a financial metric to focus management on the most +efficient use of cash while prioritizing operating and capital expenditures. Free cash flow is calculated by subtracting capital expenditures from the total +of cash flow from operations and cash flow from financing and investing activities. +The Funding Level increases on a linear basis between the Threshold and Target. As part of the austerity measures in response to the +COVID and Market Uncertainties, the Funding Level was capped at Target. +Based on such achievements, our Compensation Committee approved a funding level equal to 50% of the target bonus for each participant +in the 2020 Executive Bonus Program. +Determination of 2020 Executive Bonus Program in Response to COVID-19 +The Compensation Committee reserves the discretion to adjust short-term incentive payments under the 2020 Executive Bonus Program up or down depending on individual or +company-wide performance. For all NEOs other than the CEO, this decision is based on the input of the CEO, and, for the CEO, this is based solely on the compensation committee’s evaluation of the CEO. +40 +Table of Contents +The COVID-19 pandemic and related market uncertainties significantly disrupted +the global economy and each of the local economies in which our business operates. Beginning in March 2020, the COVID-19 pandemic emerged and put significant downward pressure on the global economy and oil +demand, which resulted in an abrupt curtailment of our business. Throughout the year, the Compensation Committee closely monitored the effect of the COVID-19 pandemic and related market uncertainties on our +business and the effectiveness and speed of the actions taken by executive management to safeguard our operations, optimize our financial performance, and support the interests of our stockholders. +Following the adoption of the 2020 Executive Bonus Program and the ordinary course establishment of 2020 performance objectives in February 2020, the COVID-19 pandemic and related government actions began to impact our operating results in early March 2020. Immediately following indications that the pandemic was adversely impacting our business, executive +management initiated a series of decisive undertakings. These immediate actions, as well as steps taken throughout the balance of 2020, significantly contributed to our operations and financial performance in both the near and long-term and +positioned the Company to emerge from the pandemic ready to capitalize on the subsequent economic recovery. The actions and achievements by executive management that were specifically considered by the Compensation Committee include: +· +adopting 20% salary reductions for all officers from May 2020 through April 2021; +· +adopting significant reductions to expenses, including (i) adjusting active frac fleet count to align with changing +demand; (ii) consolidating our footprint; (iii) delaying non-essential maintenance projects; (iv) reducing or suspending other discretionary spending; and (vi) restructuring our +organization in a way that maximizes our managerial talent with a streamlined team; +· +reducing employee-related costs, including furloughing personnel, pay reductions by +15-20%, and moderating headcount, between the strategic disposition of our well services business and expense rationalization measures, we had a 73% reduction of our work-force in 2020; +· +implementing a number of business continuity plans and forming a crisis management team to address challenges arising from +the COVID-19 pandemic, including those related to the health and safety of our employees and minimizing operational disruptions to our merchants and partners, including having the vast majority of our +employees work from home for periods of time, implementing additional safety measures for employees continuing critical on-site work, minimizing exposure points by adopting a flex-work program; +· +implementing additional safety protocol including, among other things, additional hand sanitizer stations; temperature +check kiosks at the entrance to our corporate headquarters; eliminating guests to campuses; shifting all meetings to a virtual format; closing meeting rooms and common/shared areas in the office such as cafeterias and fitness rooms; mandatory face +mask wearing (unless the person is eating or alone at work station); installation of signage for CDC guideline distancing and other reminders, and established absence management and tracing protocols to reduce transmission risk; +· +engaging in frequent and consistent communication efforts reinforce the importance of these health and safety measures; and +· +addressing personnel and operational issues arising from office closures, work-from-home orders, workforce reorganizations +and cohort operating teams resulting in minimal disruption to our business. +The Compensation Committee believes that while these activities are +not directly captured in the 2020 performance objectives established in February 2020, they facilitated the Company’s ability to successfully navigate the pandemic. +41 +Table of Contents +Over the course of 2020, the Compensation Committee had regular dialogue with executive management regarding their +efforts and challenges addressing the COVID-19 and related market uncertainties. After careful deliberation, the Compensation Committee ultimately did not modify performance objectives under the 2020 Executive +Bonus Program. As a result, our financial performance during the performance period was below the threshold for payout, as originally established under the 2020 Executive Bonus Program. +However, in light of management’s response to the pandemic, the Compensation Committee exercised their discretion to increase the annual incentive payments to each +of Messrs. Pucheu, Henkes and Vaclavik, as quantified below. +The Compensation Committee believes that these below-target payouts are appropriate and reflective of +the executive management team’s extraordinary efforts to manage the Company through the pandemic and preserve the interests of the Company’s stockholders. +The amount of the incentive compensation for each NEO as well as a comparison of the award to each NEO’s initial and adjusted base salary is set forth below. +Name +2020 Annual Bonus +Percentage of Initial +Base Salary as of +January 1, 2020 +Percentage of Target +Bonus +Robert W. Drummond +$560,096 +56% +50% +Kenneth H. Pucheu +$200,000 +53% +77% +Kevin M. McDonald +$212,836 +45% +50% +Ian R. Henkes +$126,000 +34% +50% +Richard S. Vaclavik +$100,000 +27% +39% +Gregory L. Powell +$169,230 +21% +50% +Retention Bonuses +In order to properly +incentivize and retain Mr. Pucheu’s services during the transition period following the Merger, the Company had granted him a retention bonus in the amount of $100,000, of which $50,000 was contingent upon the attainment of anticipated run +rate synergies in connection with the Merger, payable on the payroll date nine months following the effective time of the Merger, subject to Mr. Pucheu’s continuous employment with the Company through such date. The Compensation Committee +certified the attainment of requisite performance and the retention bonus was paid in August 2020. +In order to properly incentivize and retain +Mr. Vaclavik’s services during the transition period following the Company’s initial public offering, the Company had granted him a retention bonus in the amount of $100,000, of which $50,000 was contingent upon the attainment of +anticipated run rate synergies in connection with the Merger, payable on the payroll date nine months following the effective time of the Merger, subject to Mr. Vaclavik’s continuous employment with the Company through such date. The +Compensation Committee certified the attainment of requisite performance and the retention bonus was paid in August 2020. +Special Value Creation Incentive +Bonus +In order to properly incentivize and reward successful integration following the Merger, pursuant to his Executive Employment Agreement, Mr. Powell, +as Chief Integration Officer, was be entitled to a Value Creation Bonus of $2,600,000 payable upon certification by the Compensation Committee of $100 million of annualized run-rate synergies achieved in +connection with the Merger. The Compensation Committee certified the attainment of requisite performance and paid the special value creation incentive bonus in April 2020. +42 +Table of Contents +2020 Long-Term Incentives +Annual Long-Term Incentive Program +Long-term equity awards provide a strong +link between executive pay and stockholder interests. Our NEOs are eligible to receive long-term equity awards under the Company’s Equity and Incentive Award Plan. For fiscal year 2020, equity awards were granted as a combination of RSU awards +and PSU awards. +· +Restricted stock unit (“RSU”) awards are intended to provide the NEOs with the economic equivalent of a +direct ownership interest in the Company during the vesting period and provide the Company with significant retention security regardless of post-grant stock price volatility. +· +Performance restricted stock unit (“PSU”) awards are performance-based awards that provide meaningful +incentives for management to execute on the longer-term financial and strategic growth goals that drive stockholder value creation. These awards only provide value to the NEOs if relative Annual Total Shareholder Return metrics established by the +Compensation Committee are achieved over a multi-year period. +For fiscal year 2020, the Compensation Committee reviewed market data provided by +Pearl Meyer in determining the targeted award levels for each of our NEOs. The table below shows the number of long-term incentive awards granted for fiscal year 2020 for each of the NEOs: +Name +Performance +Restricted Stock +Unit Awards +Restricted Stock +Unit Awards +Total Grant Date +Value ($) (1) +Robert W. Drummond +448,109 +448,109 +$ +5,834,379 +Kenneth H. Pucheu +74,685 +74,685 +$ +972,399 +Kevin M. McDonald +122,857 +122,857 +$ +1,599,598 +Ian R. Henkes +44,811 +67,217 +$ +729,302 +Richard S. Vaclavik +44,811 +67,217 +$ +729,302 +Gregory L. Powell +122,857 +122,857 +$ +285,028 +(1) +Reflects the grant date fair value calculated in accordance with ASC 718. +RSUs will vest ratably on the first three anniversaries of the date of grant, in each case contingent upon the continued employment of the NEO through each vesting +date. +PSUs will vest as to 50% of such awards based upon performance over the first two years of the performance period (January 1, 2020 – December 31, +2021), and as to 50% based upon performance over a full three-year performance period (January 1, 2020 – December 31, 2022), contingent upon the continued employment of the NEO through each vesting date. +PSU vesting is conditioned upon total shareholder return (“TSR”) relative to the following group of companies (“Performance Peers”) whom we consider +to be direct competitors for business and investor dollars: +Performance Peer Group +FTS International, Inc. +Patterson-UTI Energy, Inc. +RPC, Inc. +Liberty Oilfield Services Inc. +ProPetro Holding Corp. +U.S. Well Services, Inc. +Nine Energy Service, Inc. +Quintana Energy Services Inc. +PHLX Oil Services Sector Index +43 +Table of Contents +The Compensation Committee reserves the right to adjust or change the TSR Peer Group in good faith as circumstances +warrant during the performance period, provided any such change does not result in an arbitrary increase or decrease in the amount payable under such awards. +The +PSU performance peer group differs from our compensation benchmarking peer group because not all of our competitors for talent in the oilfield services industry are direct competitors for business, and not all of the companies in the performance +peer group are large enough or provide enough publicly-available compensation data for the purposes of benchmarking compensation opportunities. +PSU recipients may +earn between 0% and 200% of the number of performance units granted based upon the following performance payout schedule: +Performance Level +Relative TSR Rank +Percent of Target +Units Earned +Maximum +80th Percentile or +³ +ranked 2nd +200% +Target +50 th Percentile +100% +Threshold +20 th Percentile +40% +Below Threshold +Below 20 th Percentile +0% +It is the Committee’s intention to have PSU awards in future years earned based upon performance over a full three-year period. +Both RSUs and PSUs provided that such awards would become fully vested in the event that the NEO is terminated without Cause or for Good Reason or following a +change in control. +COVID-19 Retention and Incentive Performance Awards +In response to the COVID-19 pandemic and related market uncertainties, the Company took a variety of actions including +implementing a new organizational model to reduce costs and streamline the organization. This reorganization increased the duties of many of the executives and reduced the number of supporting employees throughout the organization, while +simultaneously reducing compensation for the executives. In effort to retain and continue to incentivize the executives, one-time COVID-19 Retention PSU awards were +granted to certain officers. The Compensation Committee granted the NEOs the following COVID-19 Retention PSUs in June 2020: +Name +Performance +Restricted Stock +Unit Awards +Total Grant Date +Value ($) (1) +Robert W. Drummond +200,267 +$ +634,846 +Kenneth H. Pucheu +50,067 +$ +158,713 +Kevin M. McDonald +55,073 +$ +174,581 +Ian R. Henkes +25,033 +$ +79,355 +Richard S. Vaclavik +25,033 +$ +79,355 +Gregory L. Powell +— +$ +— +(1) +Reflects the grant date fair value calculated in accordance with ASC 718. +The COVID-19 Retention PSUs will vest as to 100% of such awards based upon performance over the two years of the performance +period (January 1, 2020 – December 31, 2021), contingent upon the continued employment of the NEO through each vesting date. +44 +Table of Contents +The COVID-19 Retention PSU vesting is conditioned on the cash balance at +December 31, 2021 (less any amounts that have been borrowed and are being held in cash pending their use or repayment) such that the COVID-19 Retention PSU recipients may earn between 0% and 150% of the +number of COVID-19 Retention PSUs granted as set forth in the following performance payout schedule: +Performance Level +Cash Balance (Less +Borrowed Funds) +Percent of Target +Units Earned +Maximum +$150,000,000 +150% +Target +$125,000,000 +100% +Threshold +$100,000,000 +00% +Below Threshold +Below $100,000,000 +0% +The COVID-19 Retention PSUs will become fully vested in the event that the NEO is terminated +without Cause or for Good Reason or following a change in control. +Executive Employment Agreements +Each currently employed NEO other than Mr. Vaclavik has entered into an Executive Employment Agreement with the Company. The Executive Employment Agreements with +Messrs. Henkes, McDonald and Drummond each provide for a one year term that automatically renews for additional one-year period unless either party provides written notice at least 90 days prior to the end of +the then term. Mr. Pucheu’s Executive Employment Agreement does not provide for an initial term or automatic renewal. +Pursuant to the Executive +Employment Agreements with the currently employed NEOs (other than Mr. Vaclavik), in the event of a termination of the NEO’s employment by us without Cause or, in the case of Messrs. Drummond, McDonald and Henkes, due to our non-renewal of the applicable Executive Employment Agreement, or by Messrs. Drummond, McDonald, Powell and Henkes for Good Reason, subject to the execution of a release, the applicable NEO will be entitled to the +following severance benefits: +· +severance payments equal to: +· +for Messrs. Drummond and McDonald, two times (or three times if the termination occurs within the period beginning 30 +days prior to a change in control and ending on the two year anniversary of the change of control) the sum of his annual base salary and his target bonus for the year in which the termination occurs, payable over two years in equal monthly +installments, beginning on the 60 th day following the termination date; +· +for Messrs. Pucheu and Henkes, the sum of his annual salary plus target bonus on the termination date, payable over one +year in equal monthly installments, beginning on the 60 th day following the termination date; +· +for Messrs. Pucheu and Henkes, a pro rata annual bonus for the year of termination and for Messrs. Drummond and McDonald, +an amount equal to his target annual bonus for the year of termination; +· +payments with respect to the cost of continuation of coverage of group health coverage: +· +for Messrs. Drummond (upon any termination other than death or voluntarily without Good Reason), and +Mr. McDonald, for up to 18 months (36 months if within the period beginning 30 days prior to a change in control and ending on the two-year anniversary of the change of control); +45 +Table of Contents +· +for Mr. Henkes and Mr. Pucheu, for up to 12 months (18 months if within the period beginning 30 days prior +to a change in control and ending on the one-year anniversary of the change of control). +In addition, +pursuant to the Executive Employment Agreements with each of our NEOs, in the event of his termination of employment due to death or disability, subject to the execution of a release, he or his estate, as applicable, will be entitled to: +· +for Messrs. Drummond and McDonald, an amount equal to his target annual bonus for such year or, for Messrs. Henkes and +Pucheu, a pro rata annual bonus for the year of termination and, for Mr. Powell, a pro rata annual bonus for the year of termination and, subject to certain conditions, the Value Creation Bonus described further in his Executive Employment +Agreement; and +· +a pro rata payment for unused personal time off. +For purposes of the Executive Employment Agreements, “Cause” generally means: (i) conviction or plea of no contest to a felony or any crime involving +dishonesty or theft; (ii) conduct in connection with employment duties or responsibilities that is fraudulent or unlawful; (iii) conduct in connection with employment duties or responsibilities that is grossly negligent and which has a +materially adverse effect on us or our business; (iv) willful misconduct or contravention of specific lawful directions related to a material duty or responsibility directed to be undertaken from our board of directors; (v) material breach +of obligations under the applicable Executive Employment Agreement, including but not limited to breach of restrictive covenants set forth therein; (vi) any acts of dishonesty resulting or intending to result in personal gain or enrichment at +our expense; or (vii) knowing failure to comply with a material policy. +For purposes of the Executive Employment Agreements, as applicable, “Good +Reason” generally means: +· +our failure to cure a material breach of our obligations under the applicable Executive Employment Agreement (in the case +of Mr. Drummond, a material breach by the Company of its obligations under his Executive Employment Agreement); +· +a material diminution of duties, position or title; +· +a material reduction in base salary (in the case of Mr. Drummond, other than as a result of a less-than- 10% reduction +that is part of an across-the-board reduction that is applicable to all other senior executives of the Company); +· +a material reduction in the budget over which the Executive retains authority; or +· +a change in office location that increases the NEO’s commute from his principal residence by more than 50 miles. +Amendments to Employment Agreements +In May 2020, +each of the NEO’s agreed to a temporary 20% reduction in base salary and waived any “good reason” rights under their respective employment agreements related to such reduction in compensation. To the extent that any severance amounts +become due under the executive employment agreements, severance multiples will be based on the executive’s base salary without regard to any such reduction. +Executives without Employment Agreements +Mr. Vaclavik is not party to an +executive employment agreement with the Company nor does the Company maintain a generally applied severance plan. Upon a termination of Mr. Vaclavik’s employment without cause the Company may provide severance and benefits payable in exchange +for a release of claims. Such benefits would be dependent on the terms of the termination. The total cost of such benefits is indeterminable. The Company generally does not provide severance in the case of a termination of employment by Mr. +Vaclavik, with or without good reason, or by reason of death or disability. +46 +Table of Contents +Former NEO Agreements +Greg Powell Separation +On May 15, 2020, pursuant to the terms of +Mr. Powell’s employment agreement, his employment terminated and Mr. Powell separated from service with the Company and received the severance and benefits provided for in his employment agreement, including severance of $3,000,000, +payable over two years in equal monthly installments, a pro-rated payout under the 2020 Executive Bonus Program, the Value Creation Bonus of $2,600,000, as well as accelerated vesting of Mr. Powell’s +RSUs and PSUs (assuming target performance with respect to PSUs), with an aggregate value of $1,019,149, based on a price per share of common stock of $2.42 as of the date of May 15, 2020. Mr. Powell agreed, as a condition to such payments +and benefits, to a release of claims against the Company and certain post-service restrictive covenants following his termination. +Other Practices, Policies and +Guidelines +Claw Back Policy +On February 23, 2017, our board of +directors adopted the Company’s Compensation Recovery Policy (the “Claw Back Policy”). Pursuant to the Claw Back Policy, in the event of a revision and reissuance of a financial statement previously issued by the Company (an +“Accounting Restatement”), our board of directors in its discretion may determine that the officer will be required to repay all or a portion of the amount of incentive-based compensation received by an officer of the Company that exceeds +the amount of such compensation that such officer otherwise would been received determined based upon the Accounting Restatement. In the event that any such Accounting Restatement is required due to material +non-compliance by the Company with any financial reporting requirement under the securities laws, then an executive officer of the Company will be obligated to repay the amount of incentive-based compensation +received by such executive officer that exceeds the amount of such compensation that the executive officer otherwise would have received determined based upon the Accounting Restatement. The Claw Back Policy applies to any incentive-based +compensation received by an officer of the Company during the three completed fiscal years of the Company immediately preceding the date of the applicable Accounting Restatement. For purposes of the Claw Back Policy, “incentive-based +compensation” means any compensation (whether in cash, common stock, or otherwise) to an officer of the Company, that is granted, earned, vested or for which the amount is determined, wholly or in part, on the attainment by the Company of +(i) any measure that is determined and presented in accordance with the accounting principles used in preparing the Company’s financial statements, (ii) any measure that is derived wholly or in part from such measures, or +(iii) the Company’s stock price and total stockholder return. +Stock Ownership Guidelines +Our Board of Directors has implemented stock ownership guidelines for our non-employee directors and senior executive officers +to foster equity ownership and align the interests of our non-employee directors and senior executive officers with our stockholders. Within five years of the later of (a) the date a senior executive +officer commences employment with the Company in such position and (b) June 26, 2018, our Chief Executive Officer is expected to beneficially own a number of shares at least equal to 500% of his base salary and all other executive officers are +expected to beneficially own a number of shares at least equal to 200% of their base salary. Similarly, within five years of the later of (a) the date such a non-employee director commences service with +the Company in such position (including as a result of the determination by the Board that the member has become a non-employee director) and (b) June 26, 2018, our outside directors are expected to +beneficially own a number of shares at least equal to 500% +47 +Table of Contents +of their annual director’s fee. In the event that a non-employee directors and senior executive officers fails to comply with the stock ownership +guidelines following the end of the applicable transition period, then until they are required to hold any shares received from equity grants until such director or executive officer has met the applicable ownership guideline. Each of our executive +officers and directors was within the transition period provided for in the stock ownership guidelines, and therefore in compliance with such guidelines, as of the record date. +Anti-Hedging Policy +We prohibit the NEOs and other executives from engaging +in transactions designed to insulate them from changes in the Company’s stock price. Therefore, the Company has an anti-hedging policy that prohibits our NEOs from entering into transactions that include (without limitation) equity swaps or +short sales of our securities, margin accounts or pledges of our securities, and hedges or monetization transactions involving our securities that are designed to hedge or offset any decrease in the market value of the Company’s securities. In +addition, the purchase or sale of puts, calls, options, or other derivative securities based on the Company’s securities is prohibited under this policy, and borrowing against any account in which our securities are held is prohibited. +Benefits & Perquisites +Our NEOs also generally participate in +other benefit plans on the same terms as all of our other employees. These plans include employee benefit plans maintained by the Company, including the 401(k) program, the medical insurance and reimbursement program, the group term life insurance +program, and the group disability program. In addition, each of the NEOs receive an automobile allowance. +2020 Risk Assessment +Each year, the Company performs a detailed risk analysis of each of its compensation programs. If warranted, the Compensation Committee will recommend changes to +address concerns or considerations raised in the risk review process. Changes may be recommended for the program design or its oversight and administration in order to mitigate unreasonable risk, if any is determined to exist. The Compensation +Committee has concluded that the Company’s compensation arrangements do not encourage any employees to take unnecessary and excessive risks. We do not believe that any risks arising from our compensation policies and practices are reasonably +likely to have a material adverse effect on the Company. +Compensation Committee Interlocks and Insider Participation +None of the members of the Compensation Committee is or has at any time during the past year been an officer or employee of ours. None of our executive officers serves +as a member of the Compensation Committee or board of directors of any other entity that has an executive officer serving as a member of our board of directors or Compensation Committee. +Impact of Tax and Accounting +We regularly consider the various tax and +accounting implications of our compensation plans. When determining the amount of long-term incentives and equity grants to executives and employees, the compensation costs associated with the grants are reviewed, as required by the Financial +Accounting Standards Board Accounting Standards Codification Topic 718 (“ASC 718”). +48 +Table of Contents +Section 162(m) of the Internal Revenue Code (the “Code”) generally prohibits any publicly held +corporation from taking a federal income tax deduction for compensation paid in excess of $1 million in any taxable year to the CEO, the CFO and the next three highest compensated officers for such year and any employee who was covered under +Section 162(m) of the Code in a prior year. The Compensation Committee believes that it is important for it to retain maximum flexibility in designing compensation programs that are in the best interest of the Company and its stockholders. +Therefore, the Compensation Committee, while considering tax deductibility as a factor in determining compensation, may not limit compensation to $1 million in any taxable year if it believes that the compensation is commensurate with the +performance of the covered employee. +49 +Table of Contents +Executive Compensation Tables +Summary Compensation Table +Name and +Principal Position +Year +Salary +($) +Bonus +($) (1) +Stock +Awards +($) (2) +Option +Awards +($) (3) +Non-Equity +Incentive Plan +Compensation +($) (4) +All Other +Compensation +($) (5) +Total +($) +Robert W. Drummond +President & Chief Executive Officer +2020 +896,154 +— +6,469,226 +— +560,096 +23,416 +7,948,892 +2019 +839,231 +— +3,717,367 +— +1,443,750 +30,430 +6,030,778 +2018 +292,308 +800,000 +5,779,943 +— +885,000 +7,452 +7,764,703 +Kenneth H. Pucheu +Executive Vice President & Chief Financial Officer +2020 +348,366 +100,000 +1,131,111 +— +200,000 +16,509 +1,795,986 +2019 +271,311 +50,000 +301,000 +— +338,570 +6,574 +967,455 +Kevin M. McDonald +Executive Vice President, Chief Administrative Officer & General Counsel +2020 +425,673 +— +1,774,180 +— +212,837 +18,646 +2,431,336 +2019 +415,096 +125,000 +1,134,519 +— +680,625 +30,436 +2,385,676 +2018 +400,000 +— +810,892 +443,017 +400,000 +30,025 +2,083,934 +Ian R. Henkes +Senior Vice President, Operations +2020 +336,058 +— +808,657 +— +126,000 +17,316 +1,288,031 +2019 +314,712 +43,897 +481,600 +— +489,844 +30,301 +1,360,354 +2018 +301,154 +43,897 +271,962 +320,415 +450,000 +30,104 +1,417,532 +Richard S. Vaclavik +Senior Vice President, Chief Commercial Officer +2020 +341,294 +100,000 +808,657 +— +100,000 +14,904 +1,364,855 +Gregory L. Powell* +Executive Vice President and Chief Integration Officer +2020 +338,462 +2,600,000 +280,114 +— +169,231 +1,149,667 +4,537,474 +2019 +803,077 +— +3,980,587 +— +1,320,000 +31,043 +6,134,707 +2018 +800,000 +— +2,132,334 +1,172,003 +800,000 +30,625 +4,934,962 +* +Mr. Powell separated from service with the Company on May 15, 2020. See “Compensation Discussion & +Analysis — Former NEO Agreements — Greg Powell Separation” for a summary of his payments upon termination. +(1) +With respect to 2020, amounts for Mr. Pucheu reflect the payment of a special retention bonus granted in connection +with the Merger, amounts for Mr. Vaclavik reflect a special retention bonus granted in connection with the Company’s initial public offering. See “Compensation Discussion & Analysis — Retention Bonuses”) and amounts +for Mr. Powell reflect payment of the Value Creation Bonus payable in connection with certification by the Compensation Committee of $100 million of annualized run-rate synergies achieved in +connection with the Merger. See “Compensation Discussion & Analysis — Former NEO Agreements — Greg Powell Separation”. +(2) +Reflects the grant date fair value calculated in accordance with ASC 718 of the RSUs granted to the NEOs in each of fiscal +years 2020, 2019 and 2018, and the PSUs granted to each of Messrs. Drummond, Powell, and McDonald in 2019 and each NEO in 2020, assuming target performance. See Note 12—Stock- Based Compensation in our audited consolidated and combined +financial statements included in our 2020 10-K for a discussion of the assumptions used in the valuation of such awards. The grant date fair value assuming the highest level of performance conditions were +achieved for the 2020 PSUs, are as follows: Mr. Drummond — $6,786,649; Mr. Pucheu — $1,210,467; Mr. McDonald — $1,861,470; Mr. Henkes — $702,471; Mr. Vaclavik — $702,471; and Mr. Powell — +$285,028. +(3) +Reflects the grant date fair value calculated in accordance with ASC 718 of the stock options granted to the NEOs in +fiscal year 2018. See Note 12—Stock-Based Compensation in our audited consolidated and combined financial statements included in our 2019 10-K for a discussion of the assumptions used in the valuation of +such awards. +(4) +Represents amounts earned under the 2020 Executive Bonus Program. See “Compensation Discussion & Analysis +— 2020 Executive Bonus Program”. +50 +Table of Contents +(5) +A detailed breakdown of “All Other Compensation” is provided in the table below: +Name +Year +Subsidized +Life +and +Disability +($) +401(k) Plan +Company +Contribution +($) +COBRA & +Severance +($) +Automobile +Allowance +($) +Total +($) +Robert W. Drummond +2020 +2,064 +9,975 +— +11,377 +23,416 +Kenneth H. Pucheu +2020 +1,490 +3,642 +— +11,377 +16,509 +Kevin M. McDonald +2020 +1,834 +5,435 +— +11,377 +18,646 +Ian R. Henkes +2020 +1,648 +4,291 +— +11,377 +17,316 +Richard S. Vaclavik +2020 +1,648 +4,291 +— +8,965 +14,904 +Gregory L. Powell +2020 +860 +6,538 +1,135,000 +7,269 +1,149,667 +Grants of Plan Based Awards in Fiscal Year 2020 +Estimated Future Payouts Under +Non-Equity Incentive +Plan +Awards(1) +Estimated Future Payouts +Under Equity Incentive Plan +Awards(3) +All +Other +Stock +Awards: +Number of +Shares +of Stock +or Units +(#)(4) +All Other +Option +Awards: +Number of +Securities +Underlying +Options +(#) +Exercise +or Base +Price of +Option +Awards +($/Share) +Grant +Date +Fair +Value +of Stock +and +Option +Awards +($)(5) +Name +Grant +Date +Threshold +($) +Target +($) +Maximum +($)(2) +Threshold +(#) +Target +(#) +Maximum +(#) +Robert W. Drummond +— +537,692 +1,120,193 +1,120,193 +— +— +— +— +— +— +— +1/2/2020 +— +— +— +— +— +— +448,109 +— +— +2,917,190 +1/2/2020 +— +— +— +224,055 +448,109 +896,218 +— +— +— +2,917,190 +6/4/2020 +— +— +— +100,134 +200,267 +300,401 +— +— +— +634,846 +Kenny H. Pucheu +125,412 +261,274 +261,274 +— +— +— +— +— +— +— +1/2/2020 +— +— +— +— +— +— +74,685 +— +— +486,199 +1/2/2020 +— +— +— +37,343 +74,685 +149,370 +— +— +— +486,199 +6/4/2020 +— +— +— +25,034 +50,067 +75,100 +— +— +— +158,712 +Kevin M. McDonald +204,323 +425,673 +425,673 +— +— +— +— +— +— +— +1/2/2020 +— +— +— +— +— +— +122,857 +— +— +799,799 +1/2/2020 +— +— +— +61,429 +122,857 +245,714 +— +— +— +799,799 +6/4/2020 +— +— +— +27,537 +55,073 +82,610 +— +— +— +174,581 +Ian R. Henkes +120,981 +252,044 +252,044 +— +— +— +— +— +— +— +1/2/2020 +— +— +— +— +— +— +67,217 +— +— +437,583 +1/2/2020 +— +— +— +22,406 +44,811 +89,622 +— +— +— +291,720 +6/4/2020 +— +— +— +12,517 +25,033 +37,550 +— +— +— +79,355 +Richard S. Vaclavik +122,866 +255,970 +255,970 +— +— +— +— +— +— +— +1/2/2020 +— +— +— +— +— +— +67,217 +— +— +437,583 +1/2/2020 +— +— +— +22,406 +44,811 +89,622 +291,720 +6/4/2020 +— +— +— +12,517 +25,033 +37,550 +79,355 +Gregory L. Powell +162,462 +338,462 +338,462 +— +— +— +— +— +— +— +3/26/2020 +— +— +— +— +— +— +122,857 +— +— +140,057 +3/26/2020 +— +— +— +61,429 +122,857 +245,714 +140,057 +(1) +Amounts represent the range of annual cash incentive awards the NEO was potentially entitled to receive based on the +achievement of performance goals for fiscal year 2020 under the 2020 Executive Bonus Program as more fully described in “—Compensation Discussion and Analysis—2020 Annual Incentives.” The amounts actually paid are reported in the +Non-Equity Incentive Plan column of the Summary Compensation table. Pursuant to the 2020 Executive Bonus Plan, performance below a specific threshold will result in no payment with respect to that performance +goal, and the maximum was capped at target. +(2) +Reflects the maximum bonus payable to each executive under the Company’s Executive Incentive Bonus Plan, which was +capped at target for 2020. +51 +Table of Contents +(3) +Represents the potential number of shares associated with the payout opportunity approved by the Compensation Committee +under the PSUs. The potential payouts are performance-based and therefore at risk. If earned, the units are converted to shares based on the attainment of relative TSR rank over the performance period, as described in “—Compensation +Discussion and Analysis—2020 Long-Term Incentives.” +(4) +Represents shares underlying time-based RSUs, which vest ratably on each of the first three anniversaries of the date of +grant. +(5) +Reflects the grant date fair value as calculated in accordance with ASC 718. Assumptions used in the valuation of +equity-based awards are discussed in “Note 12—Stock-Based Compensation” in our audited consolidated and combined financial statements included in our 2020 10-K. With respect to PSUs, assumes +target performance. +Outstanding Equity Awards at Fiscal Year End 2020 +Option Awards +Stock Unit Awards +Name +Number of +securities +underlying +unexercised +options (#) +exercisable +Number of +securities +underlying +unexercised +options (#) +unexercisable +(1) +Equity +incentive +plan +awards: +number of +securities +underlying +unexercised +unearned +options (#) +Option +exercise +price +($) +Option +expiration +date +Number +of +shares +or units +of stock +that +have not +vested +(#) (2) +Market +value of +shares +or units +of stock +that +have not +vested +($) (3) +Equity +incentive +plan +awards: +number of +unearned +shares, +units or +other +rights that +have not +vested +(#)(4) +Equity +incentive +plan +awards: +market or +payout +value of +unearned +shares, +units or +other +rights that +have not +vested +($) (3) +(a) +Grant Date +(b) +(c) +(d) +(e) +(f) +(g) +(h) +(i) +(j) +Robert W. Drummond +2/27/2019 +— +— +— +— +— +161,194 +554,507 +— +1/2/2020 +— +— +— +— +— +448,109 +1,541,495 +448,109 +1,541,495 +6/4/2020 +— +— +— +— +— +— +— +200,267 +688,918 +Kenneth H. Pucheu +4/5/2018 +5,224 +2,613 +— +$ +15.45 +4/5/2024 +2,223 +7,647 +— +4/8/2019 +— +— +— +— +— +16,667 +57,334 +— +1/2/2020 +— +— +— +— +— +74,685 +256,916 +74,685 +256,916 +6/4/2020 +— +— +— +— +— +— +— +50,067 +172,230 +2,353 +(5) +— +(6) +— +(7) +Kevin M. McDonald +4/3/2017 +80,702 +$ +19.00 +4/3/2023 +— +— +— +3/1/2018 +32,532 +16,268 +$ +15.63 +3/1/2024 +13,834 +47,589 +— +8/6/2018 +7,922 +3,963 +$ +14.17 +3/1/2024 +3,818 +13,134 +— +2/27/2019 +— +— +— +— +— +49,196 +169,234 +— +1/2/2020 +— +— +— +— +— +122,857 +422,628 +122,857 +422,628 +6/4/2020 +— +— +— +— +— +— +— +55,073 +189,451 +5,294 +(5) +— +(6) +— +(7) +Ian R. Henkes +4/3/2017 +31,579 +— +$ +19.00 +4/3/2023 +— +— +— +3/1/2018 +13,666 +6,834 +— +$ +15.63 +3/1/2024 +5,800 +19,952 +— +4/8/2019 +— +— +— +— +— +26,667 +91,734 +— +1/2/2020 +— +— +— +— +— +67,217 +231,226 +44,811 +154,150 +6/4/2020 +— +— +— +— +— +— +— +25,033 +86,114 +2,353 +(5) +— +(6) +— +(7) +Richard S. Vaclavik +1/9/2019 +— +— +— +— +— +37,810 +130,066 +— +1/2/2020 +— +— +— +— +— +67,217 +231,226 +44,811 +154,150 +6/4/2020 +— +— +— +— +— +— +— +25,033 +86,114 +Greg L. Powell +4/3/2017 +174,755 +— +$ +19.00 +4/3/2023 +— +— +— +3/1/2018 +136,500 +— +$ +15.63 +3/1/2024 +— +— +— +8/6/2018 +23,280 +— +$ +14.17 +3/1/2024 +— +— +— +(1) +Reflects the number of unvested stock options held by the applicable NEO. 33% of the April 3, 2017 stock options +became vested and exercisable on each of January 20, 2018, 2019 and 2020, 33% of each of the March 1, 2018 and August 6, 2018 stock options became vested and exercisable on each of March 1, 2019 and 2020, and the remaining stock +options became vested and exercisable on March 1, 2021. +52 +Table of Contents +(2) +Reflects the number of unvested RSUs held by the NEO. 33% of each of the March 1, 2018 and August 6, 2018 RSU +became vested on each of March 1, 2019, 2020 and 2021; 33% of the February 27, 2019 RSUs became vested on each of February 27, 2020 and 2021 and the remaining RSUs will become vested on February 27, 2022; and 33% of the +April 8, 2019 RSUs became vested on April 8, 2020 and the remaining RSUs will become vested ratably on each of April 8, 2021 and April 8, 2022; 34% of the January 2, 2020 RSUs became vested on January 2, 2021, and the +remaining RSUs will become vested ratably on each of January 2, 2022 and January 2, 2023; and in each case will become fully vested in the event that the NEO’s employment terminates without cause or for good reason within twelve +months following a change in control. In the case of Mr. Pucheu and Henkes, 33% of the April 5, 2018 RSUs became vested on each of April 5, 2019 and 2020, and the remaining RSUs became vested on April 5, 2021. +(3) +Based on the closing price per share of our common stock on December 31, 2020 of $3.44. +(4) +Reflects the number of unvested PSUs and COVID-19 Retention PSUs held by the NEO, +assuming target performance. 50% of the January 2, 2020 PSUs will vest on each of December 31, 2021 and December 31, 2022; 100% of the June 4, 2020 COVID-19 Retention PSUs will vest on +December 31, 2021, in each case contingent upon the continued employment of the NEO through each vesting date. The January 2, 2020 PSUs will vest conditioned on the Company’s TSR relative to our Performance Peers during the vesting +period, payable between 0% and 200%. The COVID-19 Retention PSUS will vest conditioned on the cash balance of the Company at December 31, 2021 (less any amounts that have been borrowed and are being held +in cash pending their use or repayment), payable between 0% and 150%. See “—Compensation Discussion and Analysis—2020 Long-Term Incentives.” +(5) +Reflects the number of Class B Units of Keane Investor. The Class B Units were granted prior to consummation of +our initial public offering (the “IPO”) under a unit-based management compensation program sponsored by the Company prior to the IPO called the Keane Management Holdings LLC Management Incentive Plan (the “Class B Plan”). In +connection with the IPO, the Class B Plan was assigned to and assumed by Keane Investor. The Class B Units represent profit interests in Keane Investor that are solely obligations of Keane Investor. All Class B Units under the +Class B Plan have been fully vested. +(6) +Class B Units have no exercise price. Instead, Class B units entitled the holder to certain cash distributions +from Keane Investor following the distribution of $1,200,000,000 to holders of Class A Units and other Class B Units in Keane Investor. +(7) +Class B Units have no expiration date. +Option Exercises and Stock Vested in Fiscal Year 2020 +The following table provides +information about option awards and stock units that vested, and the value realized on exercise and vesting by our NEOs during 2020. +Option Awards +Stock Units +Name +Number of +Shares acquired +on exercise (#) +Value +realized on +exercise +($) +Number of +units acquired +on vesting (#) +Value +realized on +vesting +($) (1) +Robert W. Drummond +— +— +338,218 +1,233,407 +Kenneth H. Pucheu +— +— +16,818 +59,689 +Kevin M. McDonald +— +— +69,148 +379,239 +Ian R. Henkes +— +— +29,660 +121,229 +Richard S. Vaclavik +— +— +18,905 +124,395 +Gregory L. Powell +— +— +590,192 +1,930,523 +(1) +Calculated by multiplying the number of ordinary shares by the market value of the underlying shares on the date of +vesting. +Potential Payments Upon Termination or Change in Control +The tables below describe and estimate the amounts and benefits that our NEOs would have been entitled to receive upon a termination of their employment in certain +circumstances or, if applicable, upon a change in control, assuming such events occurred as of December 31, 2020, the last day of fiscal year 2020. The estimated payments are not necessarily indicative of the actual amounts any of our NEOs +53 +Table of Contents +would have received in such circumstances. The tables exclude compensation amounts accrued through December 31, 2020 that would be paid in the normal course of continued employment, such as +accrued but unpaid salary, payment for accrued but unused vacation and vested account balances under our retirement plans that are generally available to all of our salaried employees. Where applicable, the information in the table uses a price per +share for our common stock of $3.44, the closing price on December 31, 2020 (the “Year-End Closing Price”). Generally, payment of severance benefits to an NEO following termination of employment +is subject to the NEO’s timely execution and non-revocation of a release of claims in favor of the Company. +Mr. Powell terminated employment with the Company during 2020. A summary of the actual payments and benefits payable to him in connection with such termination is +provided above. See “Compensation Discussion & Analysis — Former NEO Agreements”. +Robert W. Drummond +Payments and Benefits +Death or +Disability ($) +For Cause or +Without +Good +Reason ($) +Without +Cause or for +Good Reason, +No Change in +Control ($) +Without +Cause or for +Good Reason, +Upon or +Following +Change in +Control ($) +Change in +Control, No +Termination of +Employment ($) +Cash Severance (1) +— +— +4,500,000 +6,750,000 +— +Annual Bonus (2) +1,250,000 +— +1,250,000 +1,250,000 +— +RSU Vesting (3) +2,096,002 +— +2,096,002 +2,096,002 +— +PSU Vesting (4) +2,230,413 +— +2,230,413 +2,230,413 +— +Health Benefits (5) +— +— +24,430 +48,860 +— +Total +5,576,416 +— +10,100,845 +12,375,275 +— +(1) +Reflects severance payments in the event of a termination of Mr. Drummond’s employment without Cause or for Good +Reason, in an amount equal to two times (or three times if the termination occurs within the period beginning 30 days prior to a change in control and ending on the two year anniversary of the change of control) the sum of (i) his annual base +salary, and (ii) his target bonus for the year his termination occurs, payable over the 24-month period (or 36 months if the termination occurs within the period beginning 30 days prior to a change in +control and ending on the two year anniversary of the change of control) following his termination. +(2) +Reflects the target annual bonus payable to Mr. Drummond for fiscal year 2020 under our 2020 Executive Bonus Program. +(3) +Pursuant to his RSU award, Mr. Drummond’s unvested RSUs will become fully vested in the event of death, +disability, or a termination of his employment without Cause or for Good Reason. +(4) +Pursuant to his PSU and COVID-19 Retention PSU awards, Mr. Drummond’s +unvested PSU and COVID-19 Retention PSUs will become fully vested in the event of death, disability, or a termination of his employment without Cause or for Good Reason, assuming target performance. +(5) +Reflects our payment for the cost of continuation health coverage for Mr. Drummond for 18 months following his +termination (36 months if the termination occurs within the period beginning 30 days prior to a change in control and ending on the two-year anniversary of the change of control). +54 +Table of Contents +Kenneth H. Pucheu +Payments and Benefits +Death or +Disability ($) +For Cause +($) +Without +Cause, +No +Change in +Control ($) +Without +Cause, +Upon or +Following +Change in +Control ($) +Change in +Control, No +Termination of +Employment ($) +Cash Severance (1) +— +— +743,750 +743,750 +— +Annual Bonus (2) +318,750 +— +318,750 +318,750 +— +Stock Option Vesting (4) +— +— +— +— +— +RSU Vesting (5) +321,898 +— +321,898 +321,898 +— +PSU Vesting (6) +429,147 +— +429,147 +429,147 +— +Health Benefits (7) +— +— +16,842 +25,263 +— +Total +1,069,795 +— +1,830,387 +1,838,808 +— +(1) +Reflects severance payments in the event of a termination of Mr. Pucheu’s employment without Cause in an amount +equal to the sum of (i) his annual base salary, and (ii) his target bonus for the year his termination occurs, payable over the 12-month period following his termination. +(2) +Reflects a lump-sum cash payment of a pro rata portion of the annual bonus for the +calendar year in which the termination occurs (based upon the number of days Mr. Pucheu was employed by the Company during the year of termination) in an amount equal to: (1) if the termination occurs on or before June 30 of the year +of termination, based on the target bonus and (2) if the termination occurs on or after July 1 of the year of termination, based on the Company’s actual performance during the calendar year through the termination. In the event that +the termination occurs during a Protected Period (as defined in the employment agreement), the amount of such lump-sum payment will be equal to the Target Bonus for the year of termination, without proration, +in either case payable on the 60th day following the Termination Date. +(3) +Reflects payment of retention payment due to Mr. Pucheu, payable upon the next payroll date following a termination +of employment without Cause or in the event of death or disability. +(4) +Pursuant to his Executive Employment Agreement, Mr. Pucheu’s unvested stock options will become fully vested in +the event of a termination of his employment without Cause. The amount in the table reflects the aggregate per share value based on the Year-End Closing Price in excess of the option exercise price. Because +the market price of the stock options as of December 31, 2019 was lower than the strike price of the outstanding options, the value is reflected as $0. +(5) +Pursuant to his Executive Employment Agreement, Mr. Pucheu’s unvested RSUs will become fully vested in the event +of death, disability, or a termination of his employment without Cause. +(6) +Pursuant to his PSU and COVID-19 Retention PSU awards, Mr. Pucheu’s +unvested PSU and COVID-19 Retention PSUs will become fully vested in the event of death, disability, or a termination of his employment without Cause or for Good Reason, assuming target performance. +(7) +Reflects our payment for the cost of continuation health coverage for Mr. Pucheu for twelve months following his +termination (18 months if the termination occurs within the period beginning 30 days prior to a change in control and ending on the one-year anniversary of the change of control). +55 +Table of Contents +Kevin M. McDonald +Payments and Benefits +Death or +Disability ($) +For Cause or +Without +Good Reason ($) +Without +Cause or for +Good Reason, +No Change in +Control ($) +Without +Cause or for +Good Reason, +Upon or +Following +Change in +Control ($) +Change in +Control, No +Termination of +Employment ($) +Cash Severance (1) +— +— +1,900,000 +2,850,000 +— +Annual Bonus (2) +— +— +475,000 +475,000 +— +Stock Option Vesting (3) +— +— +— +— +— +RSU Vesting (4) +652,585 +— +652,585 +652,585 +— +PSU Vesting (5) +612,079 +— +612,079 +612,079 +— +Health Benefits (6) +— +— +29,233 +58,466 +— +Total +1,264,664 +— +3,668,897 +4,648,130 +— +(1) +Reflects severance payments in the event of a termination of Mr. McDonald’s employment without Cause or for Good +Reason, in an amount equal to two times (or three times if the termination occurs within the period beginning 30 days prior to a change in control and ending on the two year anniversary of the change of control) the sum of (i) his annual base +salary, and (ii) his target bonus for the year his termination occurs, payable in a lump sum on the 60th day following the Termination Date. +(2) +Reflects the target annual bonus payable to Mr. McDonald for fiscal year 2020 under our 2020 Executive Bonus Program. +(3) +Pursuant to his Executive Employment Agreement, Mr. McDonald’s unvested stock options will become fully vested +in the event of a termination of his employment without Cause or for Good Reason. The amount in the table reflects the aggregate per share value based on the Year-End Closing Price in excess of the option +exercise price. Because the market price of the stock options as of December 31, 2019 was lower than the strike price of the outstanding options, the value is reflected as $0. +(4) +Pursuant to his Executive Employment Agreement, Mr. McDonald’s unvested RSUs will become fully vested in the +event of a termination of his employment without Cause or for Good Reason. +(5) +Pursuant to his Executive Employment Agreement, Mr. McDonald’s unvested PSUs and +COVID-19 Retention PSUs will become fully vested in the event of a termination of his employment without Cause or for Good Reason, assuming target performance. +(6) +Reflects our payment for the cost of continuation health coverage for Mr. McDonald for 18 months following his +termination (36 months if the termination occurs within the period beginning 30 days prior to a change in control and ending on the two-year anniversary of the change of control). +Ian R. Henkes +Payments and Benefits +Death or +Disability ($) +For Cause or +Without +Good Reason ($) +Without +Cause or for +Good Reason, +No Change in +Control ($) +Without +Cause or for +Good Reason, +Upon or +Following +Change in +Control ($) +Change in +Control, No +Termination of +Employment ($) +Cash Severance (1) +— +— +656,250 +656,250 +— +Annual Bonus (2) +281,250 +— +281,250 +281,250 +— +Stock Option Vesting (3) +— +— +— +— +— +RSU Vesting (4) +342,913 +— +342,913 +342,913 +— +PSU Vesting (5) +240,263 +— +240,263 +240,263 +— +Health Benefits (6) +— +— +17,171 +25,756 +— +Total +864,426 +— +1,537,847 +1,546,433 +— +(1) +Reflects severance payments in the event of a termination of Mr. Henkes’ employment without Cause or for Good +Reason in an amount equal to the sum of (i) his annual base salary, and (ii) his target bonus for the year his termination occurs, payable over the 12-month period following his termination. +56 +Table of Contents +(2) +Reflects lump sum cash payment of a pro rata portion of the annual bonus for the year of termination in an amount equal +to: (1) if the termination occurs on or before June 30 of the year of termination, based on the target bonus; and (2) if the termination occurs on or after July 1 of the year of termination, then based on the Company’s +actual performance during the calendar year through the termination. If the termination occurs without Cause or for Good Reason during a Protected Period (as defined in the Executive Employment Agreement), the amount of such lump sum payment will be +equal to the target bonus, without proration, in either case payable on the 60th day following the Termination Date. +(3) +Pursuant to his Executive Employment Agreement, Mr. Henkes’ unvested stock options will become fully vested in +the event of a termination of his employment without Cause or for Good Reason. The amount in the table reflects the aggregate per share value based on the Year-End Closing Price in excess of the option +exercise price. Because the market price of the stock options as of December 31, 2019 was lower than the strike price of the outstanding options, the value is reflected as $0. +(4) +Pursuant to his Executive Employment Agreement, Mr. Henkes’ unvested RSUs will become fully vested in the event +of death, disability, or a termination of his employment without Cause or for Good Reason. +(5) +Pursuant to his Executive Employment Agreement, Mr. Henkes’ unvested PSUs and +COVID-19 Retention PSUs will become fully vested in the event of death, disability, or a termination of his employment without Cause or for Good Reason, assuming target performance. +(6) +Reflects our payment for the cost of continuation health coverage for Mr. Henkes for twelve months following his +termination (18 months if the termination occurs within the period beginning 30 days prior to a change in control and ending on the one-year anniversary of the change of control). +Richard S. Vaclavik +Payments and Benefits +Death or +Disability ($) +For Cause or +Without +Good Reason ($) +Without +Cause or for +Good Reason, +No Change in +Control ($) +Without +Cause or for +Good Reason, +Upon or +Following +Change in +Control ($) +Change in +Control, No +Termination of +Employment ($) +Cash Severance +— +— +— +— +— +Annual Bonus +— +— +— +— +— +RSU Vesting (1) +361,293 +— +361,293 +361,293 +— +PSU Vesting (2) +240,263 +— +240,263 +240,263 +— +Health Benefits +— +— +— +— +— +Total +601,556 +— +601,556 +601,556 +— +(1) +Mr. Vaclavik is not party to an executive employment agreement with the Company nor does the Company maintain a generally +applied severance plan. Upon a termination of Mr. Vaclavik’s employment, the Company may provide severance and benefits payable in exchange for a release of claims. Such benefits would be dependent on the terms of the termination. The total +cost of such benefits is indeterminable. Mr. Vaclavik’s unvested RSUs will become fully vested in the event of death, disability, or a termination of his employment without Cause or for Good Reason. +(2) +Mr. Vaclavik’s unvested PSUs and COVID-19 Retention PSUs will become +fully vested in the event of death, disability, or a termination of his employment without Cause or for Good Reason. +CEO Pay Ratio +In accordance with the Dodd-Frank Wall +Street Reform and Consumer Protection Act and applicable SEC rules, we are providing the following information about the relationship of our CEO’s compensation to the compensation of an identified median employee. The purpose of this disclosure +is to provide a measure of the equitability of pay within the organization. We believe our compensation philosophy and process yield an equitable result and our ratio is as follows for 2020: +· +the total compensation of our median employee was $181,384, as calculated pursuant to the same methodology as that used to +determine pay for our CEO in the Summary Compensation Table +· +the total compensation of our CEO, as reported in the Summary Compensation Table, was $8,079,667. +· +the ratio of our CEO’s total compensation to the median employee total compensation was 44.54 to 1. +57 +Table of Contents +For the 2020 median employee determination, we did not exclude any of our employees or make any cost-of-living adjustments. To identify our median employee, we compared the year to date Federal Taxable Wages of our employees as of December 31, 2020, all of which +were based in the United States and Canada. We had 1,969 employees as of December 31, 2020. Similar to our CEO, each of our employees enjoys a comprehensive compensation and benefit package that we determine by benchmarking to market practices. +We did not use the same median employee for 2020 as we did in 2019, in light of a change in employee population as a result of our Merger with C&J on +October 31, 2019 and our 2020 internal reorganization and streamlining, which resulted in a meaningful change to our employee population. +We believe the pay +ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on our internal records and the methodology used. Because the SEC rules for identifying the median compensated employee and calculating the pay ratio based on that +employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices, the pay ratio reported by other +companies—including companies in our peer group—may not be comparable to the pay ratio reported above. Other companies may have different employment and compensation practices, different geographic breadth, perform different types of work +and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios. This information is being provided for compliance purposes. Neither the Compensation Committee nor management of the Company use the +pay ratio measure in making compensation decisions. +58 +Table of Contents +Proposal 4. Approval of the +Amendment and Restatement of the NexTier Oilfield Solutions Inc. Equity and Incentive Award Plan. +The Board of Directors recommends that you vote “FOR” this proposal. +We are asking stockholders to approve the amendment and restatement of the +NexTier Oilfield Solutions Inc. Equity and Incentive Award Plan (the “Equity Plan””). On April 19, 2021, our Board of Directors approved the amendment and restatement of the Equity Plan, subject to stockholder approval at the +annual meeting. The amended and restated Equity Plan will become effective on the day of the annual meeting, assuming approval of this Proposal 4 by our stockholders. +Summary of Material Amendments. As we seek to progress the integration of +the Company’s equity compensation arrangements following the Merger, and in light of the extreme stock price volatility in 2020, the following are the material changes proposed to the Equity Plan: +· +Increase in Share Reserve. If approved by the stockholders, the Equity Plan will be amended to provide for an +increase of shares of common stock available for issuance under the Equity Plan. As of January 31, 2021, approximately 362,677 shares remained available for issuance under the Equity Plan, which is insufficient to meet our forecasted needs +under this plan during the next year. We believe that the requested increase will be sufficient for at least two year’s worth of equity-based grants under our current compensation program. The Compensation Committee of the Board will continue +to evaluate equity needs in the context of the business, market volatility and broader compensation program in the future. +· +Increase the Individual Plan Limits. If approved by the stockholders, the Equity Plan will be amended to provide for +an increase in the individual limit of shares that can be awarded in any calendar year for (i) employee and contractors to 10% of the authorized shares under the Equity Plan, and (ii) non-employee directors to 150,000 shares. +Summary of Stockholder Vote Ramifications. A simple majority of the votes +cast is required to approve this proposal. If you properly give a proxy but do not indicate how you wish to vote, the persons named on the proxy card, or if you do not name your proxy or proxies, the Proxy Holders, will vote for the proposal. If +this Proposal 4 is not approved, the amendments to the Equity Plan will not become effective, the existing Equity Plan will continue in full force and effect, and we may continue to grant awards under the Equity Plan, subject to its terms, +conditions and limitations, using the shares of our common stock available for issuance thereunder. Stockholder approval of the amendment and restatement of the Equity Plan also will constitute re-approval of +the material terms of the Equity Plan for purposes of the approval requirements of Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”). +The closing stock price of a common share reported on the NYSE on April 16, 2021, our record date, was $3.55 per share. The full text of the amended and restated +Equity Plan that stockholders are being asked to approve is attached as Appendix A to this proxy statement. +59 +Table of Contents +Overview of Request to Increase the Share Reserve +In October of 2019 in connection with the Merger, Keane Group, Inc. Equity and Incentive Award Plan, which was originally approved by stockholders in 2017, was amended +and restated as the NexTier Oilfield Solutions Inc. Equity and Incentive Award Plan. Also as part of the Merger, the Company assumed the C&J equity incentive plan, and amended and restated that plan under the name “NexTier Oilfield +Solutions Inc. (Former C&J Energy) Management Incentive Plan” (the “C&J Plan”, and collectively with the Equity Plan, the “Plans”). However, legacy Keane employees are not eligible participants under the C&J +Plan. After the integration and internal reorganization that the Company did in 2020, it was decided that going forward the Equity Plan would be the Company’s primary plan under which to grant equity incentive awards to all of the +Company’s directors and employees. The C&J Plan will be maintained to support the currently granted awards under the C&J Plan, but it is not expected that significant future awards would be granted under the C&J Plan. Thus, the +Company desires to “rebalance” the equity plans by amending the C&J Plan to decrease the number of authorized shares and increase by an equal amount the number of authorized shares under the Equity Plan. The Equity Plan and the C&J +Plan are the only Company equity plans from which shares remain available for future grants. +As of January 31, 2021, without giving effect to the amendments +to be approved by this Proposal 4, the Equity Plan had 362,677 shares remaining available for future grant and the C&J Plan had 5,279,523 shares remaining available for future grant; for an aggregate of 5,642,200 shares of common stock available +for future award. The Compensation Committee of the Board of Directors and the Board itself considers this number of shares under the Equity Plan to be inadequate to achieve the stated purpose of the Equity Plan in the future; namely, to promote the +long-term financial interests of the Company by: (i) encouraging directors, officers and employees of the Company to acquire an ownership position in the Company; (ii) enhancing the ability of the Company to attract and retain directors, +officers and key employees of outstanding ability; and (iii) providing directors, officers and key employees with an interest in the Company aligned with that of the Company’s stockholders. +The Board has approved (i) an increase of 10,305,272 authorized shares available for issuance under the Equity Plan and (i) the “rebalance” the +Company’s equity plans by reducing the number of authorized shares available for issuance under the C&J Plan by 4,750,000 million shares and increasing the number of authorized shares available for issuance under the Equity Plan by +4,750,000 – resulting in a total of an additional 15,055,722 shares authorized under the Equity Plan. A summary of current plan balances and the impact of the shares requested in this amendment are summarized in the table below: +C&J Plan +Equity Plan +Aggregate +Impact +Shares Currently Available for Future Grant +5,279,523 +362,677 +5,642,200 +Rebalancing Adjustments to Reallocate Shares +Available for Future Grant between the Plans (1) +(4,750,000 +) +4,750,000 +0 +Aggregate Equity Plan Additional Shares +Requested (1) +10,305,272 +10,305,272 +Less Shares Allocated for Executive 2021 LTI +Awards (2) +(2,947,472 +) +(2,947,472 +) +Total Shares Available for Future Grant After Amendments +529,523 +12,470,477 +13,000,000 +(1) +Subject to shareholder approval of the amendments to the Equity Plan. +(2) +Award Agreements related to 2021 Annual Long-Term Incentive PSU and RSU grants to Messrs. Drummond, Pucheu and McDonald +were entered into on January 4, 2021, subject to stockholder approval of the amendments to the Equity Plan. +60 +Table of Contents +Based upon current stock price and current equity incentive compensation mix, we anticipate that this share reserve +will provide sufficient shares for an additional two to four years of equity awards. +Overview of Request to Increase the Annual Limits on the Aggregate Equity +Compensation +The C&J Plan contains an individual limit for the aggregate number of shares of common stock that may be the subject of an award granted to +any eligible participant in any calendar year as not to exceed 10% of the aggregate number of shares authorized for issuance under the plan. However, the Equity Plan currently provides that the maximum aggregate number of shares of common stock +subject to all awards granted in any calendar year to any one (i) employee or consultant, is 1,500,000, and (ii) non-employee director is 75,000. Having members of the Board and employees subject to very different limits on awards based on the +equity plan they participate in has resulted in challenges as the Compensation Committee and Board seek to uniformly apply compensation philosophy, objectives and decisions to all of the members of similarly situated participants (e.g. to +non-employee directors or to employees). In addition, especially in times when stock price is volatile, the lack of harmony can impair our desired compensation philosophy and reduce compensation flexibility. However, from a governance perspective +the Company believes that it is desirable that the limits remain bifurcated and that there be a meaningful cap on the non-employee director equity awards that can be granted in a calendar year. The Equity Plan has been selected as the primary plan +to be used going forward after the Annual Meeting for the Company’s equity compensation arrangements for all participants. Therefore, it is proposed that the individual limits under the plan be harmonized to provide that: +· +the maximum aggregate number of shares of common stock subject to all awards granted to any one employee or consultant in +any calendar year, as adjusted pursuant to the Equity Plan, is 10% of the authorized shares under the plan; and +· +the maximum aggregate number of shares of common stock subject to all awards granted to any one non-employee director in +any calendar year, as adjusted pursuant to the Plan, is 150,000. +Reasons for Seeking Stockholder Approval +The Equity Plan provides for long-term compensation and incentive opportunities for directors, executives and key employees of the Company and its subsidiaries. The +Board believes that the future success of the Company is dependent upon the quality and continuity of management, and that compensation programs such as restricted stock unit and performance restricted stock unit grants are important in attracting +and retaining individuals of superior ability and in motivating their efforts on behalf of the Company. The 2020 stock price volatility has led to a faster than normal burn rate of available shares under the Equity Plan. If this volatility continues +for a prolonged period, in order to provide competitive compensation opportunities that are aligned with our compensation philosophy, the Committee may choose to use long-term cash-based awards in place of equity. +Stockholder approval of the amendment and restatement of the Equity Plan is required under the rules of the New York Stock Exchange applicable to the Company. If the +amended and restated Equity Plan is not approved, the amendments to the Equity Plan will not go into effect. Awards may continue to be made under the Equity Plan in accordance with its terms as they existed prior to the proposed amendments to the +Equity Plan until the shares remaining for awards under the Equity Plan are exhausted. +61 +Table of Contents +Equity Compensation Plan Information +The following table sets forth certain information regarding the Plans as of December 31, 2020: +Plan Category +Number of securities +to be issued upon +exercise of +outstanding options, +warrants and +rights +Weighted-average +exercise price of +outstanding +options, warrants +and +rights +Number of securities +remaining available +for future issuance +under equity +compensation +plans +(excluding securities +reflected in Column (A)) +Equity compensation plans approved by security holders +1,191,850 +$ +17.18 +906,454 (1) +Equity compensation plans not approved by security holders +549,270 +$ +24.35 +5,936,577 +Total +1,741,120 +$ +19.44 +6,843,031 +(1) +In December 2020, the Company had approved one of the Equity Plan amendments to increase the number of available shares by +and additional 7 million shares, subject to stockholder approval. The number presented in this column excludes that amendment due to it not yet being approved by stockholders. If such amendment were included, the number of securities remaining +available under the Equity Plan for future issuance would be 7,906,454 as of December 31, 2020. +Summary of the Equity Plan (as Proposed +to be Amended and Restated) +The following summary describes briefly the principal features of the Equity Plan (as proposed to be amended and restated). This +general description of the Equity Plan is qualified in its entirety by reference to the copy of the Equity Plan (as amended and restated) attached hereto as Appendix A. +Securities Subject to the Equity Plan. +A maximum of 26,990,323 shares of our common stock may be issued or transferred pursuant to awards under the Equity Plan. The number of shares of our common +stock available under the Equity Plan will be reduced by one share for each share issued under an award. The shares of our common stock covered by the Equity Plan may be treasury shares, authorized but unissued shares or shares purchased in the open +market. In the event of any termination, expiration, lapse or forfeiture of an award, any shares subject to the award will again be made available for future grants under the Equity Plan. Any shares of restricted stock repurchased by the company at +the same price paid for such shares will be made available for issuance again under the Equity Plan. +Eligibility. +Our 2,097 employees, consultants (currently none), nine directors, and employees and consultants of our affiliates (currently none), will be eligible to receive awards under the Equity Plan. +Awards under the Equity Plan. +The Equity Plan provides that the administrator may grant or issue stock options, which may be non-qualified stock +options (“NQSOs”) or, solely to eligible employees, incentive stock options designed to comply with the applicable provisions of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), stock appreciation +rights (“SARs”), restricted stock, restricted stock units, deferred stock, performance awards and stock payments, or any combination thereof. The terms and conditions of each award will be set forth in a separate agreement with the person +receiving the award and will indicate the type, terms and conditions of the award. If an incentive stock option is granted to an employee who then owns, directly or by attribution under the Code, stock possessing more than 10% of the total combined +voting power of all classes of stock of the Company or a subsidiary, then the term of the option will not exceed five years, and the option price will be at least 110% of the fair market value of the shares on the date that the option is +granted. +62 +Table of Contents +Award Limits. +The Equity Plan provides that the maximum aggregate number of shares of common stock subject to all Awards granted to any one employee or consultant in any calendar year, as adjusted, would be 10% of the authorized shares. The +maximum aggregate number of shares of common stock subject to all Awards granted to any one non-employee director in any calendar year, as adjusted, would be 150,000. The maximum amount of any Performance +Award granted to a Participant for any calendar year that is payable solely in cash is $5,000,000. +Vesting and Exercise of Awards. +The applicable award agreement will contain the period during which the right to exercise the award in whole or in part vests, including the events or +conditions upon which the vesting of an award may accelerate. No portion of an award which is not vested at the participant’s termination of employment, termination of directorship or termination of consulting relationship, as applicable, will +subsequently become vested, except as may be otherwise provided by the administrator either in the agreement relating to the award or by action following the grant of the award. +Transferability of Awards. +Awards generally may not be sold, pledged, assigned or transferred in any manner other than by will or by the laws of descent and distribution or, subject to the consent of the administrator, +pursuant to a domestic relations order, unless and until such award has been exercised, or the shares underlying such award have been issued, and all restrictions applicable to such shares have lapsed. Notwithstanding the foregoing, NQSOs may be +transferred without consideration to certain family members and trusts with the administrator’s consent. Awards may be exercised, during the lifetime of the participant, only by the participant or such permitted transferee. +Forfeiture and Claw-Back Provisions. +In the event (i) a participant terminates service with the company prior to a specified date or within a specified time following receipt or exercise of +the award, (ii) the company terminates the participant’s service for “cause,” or (iii) the participant engages in certain competitive activities with the company, the administrator has the right to require the participant to +repay any proceeds, gains or other economic benefit actually or constructively received by the participant or to terminate the award. In addition, all awards (including any proceeds, gains or other economic benefit actually or constructively +received by the participant) may be subject to the provisions of any claw-back policy implemented by the company, including, without limitation, any claw-back policy adopted to comply with the requirements of the Dodd-Frank Wall Street Reform and +Consumer Protection Act of 2010. +Equity Plan Benefits. +The future benefits that will be received under the Equity Plan by our current directors, executive officers and all eligible employees are not currently determinable. +Adjustments for Stock Splits, Recapitalizations, Mergers and Equity Restructurings. +In the event of any recapitalization, reclassification, stock split, reverse stock split, reorganization, merger, consolidation, +split-up, spin-off or other transaction that affects our common stock, the Equity Plan will be equitably adjusted, including the number of available shares, in order to +prevent the dilution or enlargement of the benefits or potential benefits intended to be made available under the Equity Plan or with respect to any award. +Administration of the Equity Plan. +The compensation committee is the administrator of the Equity Plan. Subject to certain limitations, the committee may delegate its authority to grant awards to one or more committees consisting of one or more members of the board +of directors or one or more of our officers. +63 +Table of Contents +Amendment and Termination of the Equity Plan. +Our board of directors and the compensation committee may amend the Equity Plan at any time, subject to stockholder approval to the extent required by +applicable law or regulation or the listing standards of the market or stock exchange on which our common stock is at the time primarily traded. Additionally, stockholder approval will be specifically required to increase the maximum number of +shares of our common stock which may be issued under the Equity Plan, change the eligibility requirements or decrease the exercise price of any outstanding option or stock appreciation right granted under the Equity Plan. The board of directors and +the compensation committee may amend the terms of any award theretofore granted, prospectively or retroactively, however, except as otherwise provided in the Equity Plan, no such amendment will, without the consent of the participant, alter or +impair any rights of the participant under such award without the consent of the participant unless the award itself otherwise expressly so provides. Our board of directors and the compensation committee may suspend or terminate the Equity Plan at +any time. However, in no event may an award be granted pursuant to the Equity Plan on or after the tenth anniversary of the effective date of the Equity Plan. +Prohibition on Repricing. +Except in connection with a corporate transaction involving the company (including, without limitation, any stock distribution, stock split, extraordinary cash +distribution, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination or exchange of shares), the administrator will not, without the +approval of the stockholders, authorize the amendment of any outstanding award to reduce its price per share, including any amendment to reduce the exercise price per share of outstanding options or SARs. +New Plan Benefits +Awards Granted +Contingent Upon Stockholder Approval +On January 4, 2021, the Board approved 2021 Annual Long-Term Incentive PSU and RSU grants to Messrs. Drummond, Pucheu +and McDonald under the Equity Plan, subject to stockholder approval of the amended and restated Equity Plan. In the event that the restated Equity Plan is not approved by our stockholders, these grants will be terminated. The amounts payable under +these grants as of the grant date is set forth in the table below. +NexTier Oilfield Solutions Inc. Equity and Incentive Award Plan +Name (1) +Dollar Value ($) +Number of Units +Robert W. Drummond +President and Chief Executive Officer +7,178,715 +1,999,642 +Kenneth H. Pucheu +Executive Vice President and Chief Financial Officer +1,722,891 +479,914 +Kevin M. McDonald +Executive Vice President, Chief Administrative Officer & +General Counsel +1,679,818 +467,916 +All Current Executive Officers as a Group (2) +10,581,424 +2,947,472 +(1) +The information presented consists of PSU and RSU awards that were awarded to each named individual, subject to +stockholder approval of the Equity Plan, as such individual’s 2021 annual long-term incentive awards. Other than these three awards, the specific benefits or amounts to be received by or allocated to +64 +Table of Contents +participants and the number of shares to be granted under the amended and restated Equity Plan cannot be determined at this time because the amount and form of grants to be made to any eligible +participant in any year is determined at the discretion of the Compensation and Benefits Committee or the Board, as applicable. +(2) +This group includes the awards to Messers. Drummond, Pucheu and McDonald. No other contingent awards have been granted to +any individual or group under the Equity Plan, and no such future awards are determinable at this time. +2020 Awards Under the Equity Plan +Although future grants under the Equity Plan are not determinable at this time, for illustrative purposes, the following table sets forth with respect to each +NEO that is serving as an executive officer at December 31, 2020 and each group listed below (i) the number of shares of stock subject to time-based restricted stock awards or restricted stock units granted in 2020 under the Equity Plan; +and (iii) the target number of shares of stock subject to performance-based restricted stock units granted in 2020 under the Equity Plan. +NexTier Oilfield Solutions Inc. Equity and Incentive Award Plan +Name (1) +Number of Units +Robert W. Drummond +1,096,485 +Kenneth H. Pucheu +199,437 +Kevin M. McDonald +300,787 +Ian R. Henkes +137,061 +Richard S. Vaclavik +137,061 +All current executive officers, as a group (5 persons) +1,826,111 +All current non-employee directors, as +a group (4 persons) (2) +205,345 +All other employees, as a group +1,767,710 +(1) +For purposes of the table above, performance-based stock options are included at “target” levels. +Performance-based stock options may be eligible to vest at 200% of the “target” award levels at “maximum” performance. For a more detailed discussion of the performance-based stock options, see the “Executive +Compensation” section above. +(2) +Of our eight non-employee directors, four participate under the Equity Plan, and four participate under the C&J Plan. +United States Federal Income Tax Aspects of the Equity Plan +Incentive Stock Options. +Incentive Stock Options are subject to special federal +income tax treatment. No federal income tax is imposed on the optionee upon the grant or the exercise of an Incentive Stock Option if the optionee does not dispose of the shares acquired pursuant to the exercise within the two-year period beginning on the date the option was granted or within the one-year period beginning on the date the option was exercised, collectively, the holding period. In +such event, we would not be entitled to any deduction for federal income tax purposes in connection with the grant or exercise of the option or the disposition of the shares so acquired. With respect to an Incentive Stock Option, the difference +between the fair market value of the stock on the date of exercise and the exercise price must generally be included in the optionee’s alternative minimum taxable income for the year in which such exercise occurs. However, if the optionee +exercises an Incentive Stock Option and disposes of the shares received in the same year and the amount realized is less than the fair market value of the shares on the date of exercise, then the amount included in alternative minimum taxable income +will not exceed the amount realized over the adjusted basis of the shares. +65 +Table of Contents +Upon disposition of the shares received upon exercise of an Incentive Stock Option after the holding period, any +appreciation of the shares above the exercise price should constitute capital gain. If an optionee disposes of shares acquired pursuant to his or her exercise of an Incentive Stock Option prior to the end of the holding period, the optionee will be +treated as having received, at the time of disposition, compensation taxable as ordinary income. In such event, and subject to the application of Section 162(m) of the Code as discussed below, we may claim a deduction for compensation paid at +the same time and in the same amount as compensation is treated as received by the optionee. The amount treated as compensation is the excess of the fair market value of the shares at the time of exercise (or in the case of a sale in which a loss +would be recognized, the amount realized on the sale if less) over the exercise price; any amount realized in excess of the fair market value of the shares at the time of exercise would be treated as short-term or long-term capital gain, depending +on the holding period of the shares. +Non-Qualified Stock Options and Stock Appreciation Rights. +As a general rule, no federal income tax is imposed on the optionee upon the grant of a NQSO such as those under the Equity Plan (whether or not including a Stock +Appreciation Right), and we are not entitled to a tax deduction by reason of such grant. Generally, upon the exercise of a NQSO, the optionee will be treated as receiving compensation taxable as ordinary income in the year of exercise in an amount +equal to the excess of the fair market value of the shares of stock at the time of exercise over the option price paid for such shares. In the case of the exercise of a Stock Appreciation Right, if the optionee receives the appreciation in the Stock +Appreciation Right, the cash is compensation income taxable to the optionee; if the optionee receives the appreciation in the form of stock, the difference between the fair market value of the stock and any amount paid by the optionee for the stock +is taxable to the optionee. Upon the exercise of a NQSO or a Stock Appreciation Right, and subject to the application of Section 162(m) of the Code as discussed below, we may claim a deduction for compensation paid at the same time and in the +same amount as compensation income is recognized by the optionee assuming any federal income tax reporting requirements are satisfied. +Upon a subsequent +disposition of the shares received upon exercise of a NQSO or a Stock Appreciation Right, any difference between the fair market value of the shares at the time of exercise and the amount realized on the disposition would be treated as capital gain +or loss. If the shares received upon the exercise of an option or a Stock Appreciation Right are transferred to the optionee subject to certain restrictions, then the taxable income realized by the optionee, unless the optionee elects otherwise, and +our tax deduction (assuming any federal income tax reporting requirements are satisfied) should be deferred and should be measured at the fair market value of the shares at the time the restrictions lapse. The restriction imposed on officers, +directors and 10% stockholders by Section 16(b) of the Exchange Act, is such a restriction during the period prescribed thereby if other shares have been purchased by such an individual within six months of the exercise of a NQSO or Stock +Appreciation Right. +Restricted Stock and Restricted Stock Units. +The +recipient of a Restricted Stock Award or Restricted Stock Units will not realize taxable income at the time of grant, and we will not be entitled to a deduction at that time, assuming that the restrictions constitute a substantial risk of forfeiture +for federal income tax purposes. When the risk of forfeiture with respect to the stock subject to the award lapses, the holder will realize ordinary income in an amount equal to the fair market value of the shares of common stock at such time over +the amount, if any, paid for the shares, and subject to Section 162(m) of the Code, we will be entitled to a corresponding deduction. All dividends and distributions (or the cash equivalent thereof) with respect to a Restricted Stock Award paid +to the holder before the risk of forfeiture lapses will also be compensation income to the holder when paid and, subject to Section 162(m) of the Code, deductible as such by us. Notwithstanding the foregoing, the holder of a Restricted Stock +Award may elect under Section 83(b) of the Code to be taxed at the time of grant of the Restricted Stock Award based on the fair market value of +66 +Table of Contents +the shares of common stock on the date of the award, in which case (1) subject to Section 162(m) of the Code, we will be entitled to a deduction at the same time and in the same amount, +(2) dividends paid to the recipient during the period the forfeiture restrictions apply will be taxable as dividends and will not be deductible by us and (3) there will be no further federal income tax consequences when the risk of +forfeiture lapses. Such election must be made no later than thirty days after the grant of the Restricted Stock Award and is irrevocable. +Performance Awards, +Deferred Stock and Stock Payments. +An individual who has been granted a Performance Award, Deferred Stock or a Stock Payment generally will not realize taxable +income at the time of grant, and we will not be entitled to a deduction at that time. Whether a Performance Award, Deferred Stock or a Stock Payment is paid in cash or shares of common stock, the individual will have taxable compensation, and +subject to the application of Section 162(m) of the Code as discussed below, we will have a corresponding deduction. The measure of such income and deduction will be the amount of any cash paid and the fair market value of any shares of common +stock either at the time the Performance Award, Deferred Stock or a Stock Payment is paid or at the time any restrictions on the shares (including restrictions under Section 16(b) of the Exchange Act) subsequently lapse, depending on the +nature, if any, of the restrictions imposed and whether the individual elects to be taxed without regard to any such restrictions. Any dividend equivalents paid with respect to a Performance Award, Deferred Stock or a Stock Payment prior to the +actual issuance of shares under the award will be compensation income to the employee and, subject to the application of Section 162(m) of the Code as discussed below, deductible as such by us. +Section 162(m) of the Code. +Section 162(m) of the Code precludes +a public corporation from taking a deduction for annual compensation in excess of $1 million paid to its chief executive officer, chief financial officer or any of its three other highest paid officers, and any individual classified as a +“covered employee” for purposes of Section 162(m) in a prior year. +Section 409A of the Code. +Section 409A of the Code generally provides that any non-qualified deferred compensation arrangement which does not meet +specific requirements regarding (1) timing of payouts, (2) advance election of deferrals or (3) restrictions on acceleration of payouts will result in immediate taxation of any amounts deferred to the extent not subject to a +substantial risk of forfeiture. Failure to comply with Section 409A of the Code may result in the early taxation (plus interest) to the holder of the deferred compensation and the imposition of a 20% penalty on the holder on such deferred +amounts included in the holder’s income. In general, to avoid a violation of Section 409A of the Code, nonqualified deferred compensation amounts may only be paid out on a separation from service, disability, death, change-in-control, an unforeseen emergency (other than death) or a specified time (all as defined under Section 409A of the Code). Furthermore, an election to defer +compensation must be made in the calendar year prior to performance of services, and any provision for accelerated payout other than for the reasons specified above may cause the amounts deferred to be subject to early taxation and the imposition of +the excise tax. It is our intention that no award under the Equity Plan be “deferred compensation” subject to Section 409A of the Code unless and to the extent that the Compensation Committee determines otherwise. The terms and +conditions governing any awards that the Compensation Committee determines will be subject to Section 409A of the Code will be set forth in an award agreement that will be drafted with the intent to comply with Section 409A of the Code. +The Equity Plan is not qualified under Section 401(a) of the Code. +67 +Table of Contents +The comments set forth in the above paragraphs are only a summary of certain of the United States federal income +tax consequences relating to the Equity Plan. No consideration has been given to the effects of state, local or other tax laws on the Equity Plan or award recipients. +Inapplicability of ERISA +Based upon current law and published +interpretations, we do not believe that the Equity Plan is subject to any of the provisions of the Employee Retirement Income Security Act of 1974, as amended. +68 +Table of Contents +Other Information +Share Ownership +The following table sets forth +information regarding the beneficial ownership of our common stock as of April 16, 2021 by: +· +each person who is known by us to beneficially own 5% or more of our outstanding shares of capital stock; +· +each member of our board of directors; +· +each of our named executive officers; and +· +all of our directors and executive officers as a group. +Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. A person is +also deemed to be a beneficial owner of any securities of which that person has a right to acquire beneficial ownership within 60 days. Unless otherwise indicated, the address for each 5% stockholder, director and executive officer listed below is +c/o NexTier Oilfield Solutions Inc., 3990 Rogerdale Road, Houston, Texas 77042. +Name of Beneficial Owner +Shares +Beneficially +Owned +Percentage of +Common Stock +Outstanding +5% Stockholders: +Keane Investor Holdings LLC (1) +39,330,828 +18.3 +% +Blackrock Inc. (2) +11,996,662 +5.6 +% +The Vanguard Group (3) +15,072,250 +7.0 +% +T. Rowe Price Associates, Inc. (4) +20,792,391 +9.7 +% +THRC Management, LLC (5) +11,000,000 +5.2 +% +Pzena Investment Management LLC (6) +11,169,202 +5.1 +% +Directors and Named Executive Officers: +Robert W. Drummond +539,952 +* +Stuart M. Brightman +110,624 +* +Gary M. Halverson +111,957 +* +Patrick M. Murray +140,259 +* +Amy H. Nelson +105,116 +* +Melvin G. Riggs +75,000 +* +Michael Roemer +112,843 +* +James C. Stewart +2,859,184 +1.3 +% +Scott R. Wille +- +* +Kenneth H. Pucheu +59,137 +* +Gregory L. Powell +2,421,474 +1.12 +% +Kevin M. McDonald +323,252 +* +Ian R. Henkes +249,881 +* +Richard S. Vaclavik +43,428 +* +All directors and executive officers as a group (14 persons) +4,792,787 +2.2 +% +* +Represents less than 1%. +(1) +The address for Keane Investor Holdings LLC and Mr. Wille is c/o Cerberus Capital Management, L.P., 875 Third Avenue, +New York, New York 10022. Keane Investor is held by a private investor group, including affiliates of Cerberus and certain current members of management. Mr. Wille is affiliated with Cerberus and therefore has an indirect economic interest in +the shares held by Keane Investor. +69 +Table of Contents +(2) +The information contained in the table and this footnote is based solely on a Schedule 13G, filed with the SEC on +January 29, 2021 by BlackRock, Inc. The filing indicates that as of December 31, 2020, BlackRock, Inc. had sole voting power for 11,689,187 shares and sole dispositive power over 11,996,662 shares. The subsidiaries of BlackRock, Inc. that +acquired shares reported by the BlackRock, Inc. are as follows: BlackRock Advisors, LLC, BlackRock Investment Management (UK) Limited, BlackRock Asset Management Canada Limited, BlackRock Investment Management (Australia) Limited, BlackRock +(Netherlands) B.V., BlackRock Fund Advisors, BlackRock Asset Management Ireland Limited, BlackRock Institutional Trust Company, National Association, BlackRock Financial Management, Inc., BlackRock Asset Management Schweiz AG, BlackRock Investment +Management, LLC. The address for BlackRock, Inc. is 55 East 52nd Street, New York, NY 10055. +(3) +The information contained in the table and this footnote is based solely on a Schedule 13G filed with the SEC on +February 10, 2021, by The Vanguard Group. The filing indicates that as of December 31, 2020, The Vanguard Group, Inc. reported that it had shared voting power for 155,318 shares, sole dispositive power for 14,787,995 shares and shared +dispositive power for 284,255 shares. The Vanguard Group, Inc. also reported that the following subsidiaries acquired securities being reported on by the parent holding company: Vanguard Asset Management, Limited, Vanguard Fiduciary Trust Company, +Vanguard Global Advisors, LLC, Vanguard Group (Ireland) Limited, Vanguard Investments Australia Ltd, Vanguard Investments Canada Inc., Vanguard Investments Hong Kong Limited, Vanguard Investments UK, Limited. The address for The Vanguard Group, Inc. +is 100 Vanguard Blvd., Malvern, PA 19355. +(4) +The information contained in the table and this footnote is based solely on a Schedule 13G filed with the SEC on +February 16, 2021, by T. Rowe Price Associates, Inc. The filing indicates that as of December 31, 2020, T. Rowe Price Associates, Inc. reported that it had sole voting power for 5,577,25 shares and sole dispositive power for 20,792,391 +shares. The address for T. Rowe Price Associates, Inc. is 100 E. Pratt Street, Baltimore, MD 21202. +(5) +The information contained in the table and this footnote is based solely on a Schedule 13D filed jointly with the SEC on +January 29, 2021, by Dan Wilks, Staci Wilks, THRC Management, LLC and THRC Holdings, LP (collectively, the “Reporting Persons”). The filing indicates that as of January 29, 2021, the Reporting Persons reported that they had +shared voting and dispositive power for 11,000,000 shares. The address for each of the reporting persons is 17018 IH 20, Cisco, TX 76437. +(6) +The information contained in the table and this footnote is based solely on a Schedule 13G filed with the SEC on +February 4, 2021, by Pzena Investment Management, LLC. The filing indicates that as of December 31, 2020, Pzena Investment Management, LLC reported that it had sole voting power for 8,436,705 shares and sole dispositive power for +11,169,202 shares. The address for Pzena Investment Management, LLC is 320 Park Avenue, 8th Floor, New York, NY 10022. +Related Person Transactions +Certain Related Party +Transactions +We paid Cerberus Operations & Advising Company LLC and its affiliates (collectively “COAC”), fees totaling approximately +$2.2 million during 2020 for consulting services provided in connection with improving the Company’s operations and information technology services, including ongoing support, development, & maintenance. We may retain COAC to provide +similar services in the future. +One of our board members is an employee of Cerberus, and funds managed by one or more affiliates of Cerberus indirectly own a +substantial portion of our equity through their ownership of Keane Investor Holdings LLC. +Policy and Procedures for the Review, Approval or Ratification of +Transactions with Related Persons +Prior to the completion of the IPO, our board of directors adopted a written policy (the “Related Party Policy”) +and procedures for the review, approval or ratification of “Related Party Transactions” by the independent members of the Audit Committee. For purposes of the Related Party Policy, a “Related Party Transaction” is any +transaction, arrangement or relationship or series of similar transactions, arrangements or relationships (including the incurrence or issuance of any indebtedness or the guarantee of indebtedness) in which (1) the aggregate amount involved +will or may be reasonably expected to exceed $120,000 in any fiscal year, (2) the Company or any of its subsidiaries is a participant, and (3) any Related Party (as defined herein) has or will have a direct or indirect material interest. +70 +Table of Contents +The Related Party Policy defines “Related Party” as any person who is, or, at any time since the beginning +of the Company’s last fiscal year, was (1) an executive officer, director or nominee for election as a director of the Company or any of its subsidiaries, (2) a person with greater than five percent (5%) beneficial interest in +the Company, (3) an immediate family member of any of the individuals or entities identified in (1) or (2) of this paragraph, and (4) any firm, corporation or other entity in which any of the foregoing individuals or entities is +employed or is a general partner or principal or in a similar position or in which such person or entity has a five percent (5%) or greater beneficial interest. Immediate family members (each, a “Family Member”) includes a +person’s spouse, parents, stepparents, children, stepchildren, siblings, mothers- and fathers-in-law, sons- and daughters-in-law, brothers- and sisters-in-law and anyone residing in such person’s home, other than a tenant or employee. +Prior to the Company entering into any Related Party Transaction, such Related Party Transaction will be reported to our General Counsel who will report the same +to the Audit Committee. Our General Counsel will conduct an investigation and evaluation of the Related Party Transaction and will report his or her findings to the Audit Committee, including a summary of material facts. The Audit Committee will +review the material facts of all Related Party Transactions which require the Audit Committee’s approval and either approve or disapprove of the Related Party Transaction, subject to the exceptions described below. If advance notice of a +Related Party Transaction has been given to the Audit Committee and it is not possible to convene a meeting of the Audit Committee, then the chairman of the Audit Committee will consider whether the Related Party Transaction is appropriate and, if +it is, will approve the Related Party Transaction, with the Audit Committee being asked to ratify the Related Party Transaction at the next regularly scheduled meeting of the Audit Committee. In the event the Audit Committee does not ratify any such +Related Party Transaction, management shall make all reasonable efforts to cancel or annul such Related Party Transaction. In determining whether to approve or ratify a Related Party Transaction, the Audit Committee, or its chairman, as applicable, +will consider all factors it deems appropriate, including the factors listed below in “—Review Criteria.” +Entering into a Related Party Transaction +without the approval or ratification required by the terms of the Related Party Policy is prohibited and a violation of such policy. In the event the company’s directors, executive officers or Chief Accounting Officer become aware of a Related +Party Transaction that was not previously approved or ratified under the Related Party Policy, such person will promptly notify the Audit Committee (or, if it is not practicable for the company to wait for the Audit Committee to consider the matter, +the chairman of the Audit Committee) will consider whether the Related Party Transaction should be ratified or rescinded or other action should be taken, with such review considering all of the relevant facts and circumstances regarding the Related +Party Transaction, including the factors listed below in “—Review Criteria.” The chairman of the Audit Committee will report to the committee at its next regularly scheduled meeting any actions taken under the Related Party Policy +pursuant to the authority delegated in this paragraph. The Audit Committee will also review all of the facts and circumstances pertaining to the failure to report the Related Party Transaction to the Audit Committee and will take, or recommend to +our board of directors, any action the Audit Committee deems appropriate. +No member of the Audit Committee or director of our board will participate in any +discussion or approval of a Related Party Transaction for which he or she is a Related Party, except that the Audit Committee member or board director will provide all material information concerning the Related Party Transaction to the Audit +Committee. +If a Related Party Transaction will be ongoing, the Audit Committee may establish guidelines for the Company’s management to follow in its ongoing +dealings with the Related Party. Thereafter, the Audit Committee, on at least an annual basis, will review and assess ongoing relationships with the Related Party to ensure that they are in compliance with the Audit Committee’s guidelines and +that the Related Party Transaction remains appropriate. +71 +Table of Contents +Review Criteria +All +Related Party Transactions will be reviewed in accordance with the standards set forth in the Related Party Policy after full disclosure of the Related Party’s interests in the transaction. As appropriate for the circumstances, the Audit +Committee or its chairman, as applicable, will review and consider: +· +the Related Party’s interest in the Related Party Transaction; +· +the terms of the Related Party Transaction, including the approximate dollar value of the amount involved in the Related +Party Transaction and the approximate dollar value of the amount of the Related Party’s interest in the transaction without regard to the amount of any profit or loss; +· +whether the transaction is being undertaken in the ordinary course of business of the Company; +· +whether the transaction with the Related Party is proposed to be, or was, entered into on terms no less favorable to the +Company than terms that could have been reached with an unrelated third party; +· +the purpose of, and the potential benefits to the Company of, the Related Party Transaction; +· +a description of any provisions or limitations imposed as a result of entering into the Related Party Transaction; +· +whether the proposed transaction includes any potential reputational risk issues for the Company which may arise as a +result of or in connection with the Related Party Transaction; +· +whether the proposed transaction would violate any requirements of the Company’s financing or other material +agreements; and +· +any other relevant information regarding the Related Party Transaction or the Related Party. +The Audit Committee, or its chairman, as applicable, may approve or ratify the Related Party Transaction only if the Audit Committee, or its chairman, as applicable, +determines in good faith that, under all of the circumstances, the transaction is fair to the Company. The Audit Committee, in its sole discretion, may impose such conditions as it deems appropriate on the Company or the Related Party in connection +with approval of the Related Party Transaction. +Pre-Approved Related Party Transactions +The Audit Committee has determined that the following transactions will be deemed pre-approved or ratified and will not require +review or approval of the Audit Committee, even if the aggregate amount involved will exceed $120,000, unless otherwise specifically determined by the Audit Committee. +· +Any employment by the Company of an executive officer of the Company or any of its subsidiaries if the related compensation +conforms with our Company’s compensation policies and if the executive officer is not a Family Member of another executive officer or of a director of our board; and +· +Any compensation paid to a director of our board if the compensation is consistent with the Company’s Bylaws and any +compensation policies. +Notwithstanding anything to the contrary in the Related Party Policy, in the event the Bylaws of the Company require +review by our board of directors and/or approval of a Related Party Transaction, the Audit Committee, and its chairman, will not have the authority to review or approve a Related Party Transaction but will provide a recommendation to our board of +directors for the board’s use in its con +sideration of a given Related Party Transaction. +72 +Table of Contents +Section 16(a) Reports +All of our directors, executive officers and greater than 10% stockholders are required to file initial statements and reports of changes of ownership of our common +stock on Forms 3, 4 and 5 with the SEC. We have reviewed these reports, including any amendments there to and written representations from the directors and executive officers. Based upon this review, we believe that no directors, executive officer, +or beneficial owner of more than 10% or more of our common stock failed to file a report on a timely basis during 2020. +Proposals by +Stockholders +The Company expects that its 2022 Annual Meeting will be held in June 2022 consistent with the Company’s 2021 Annual Meeting. Stockholders of +record who intend to submit a proposal or a nomination of an individual to serve as a director at the annual meeting of stockholders in 2022 must provide written notice to the Company in accordance with the Company’s Bylaws. Under the +Company’s Bylaws, such notice must be received at the Company’s principal executive offices, addressed to the Secretary of the Company, not earlier than February 15, 2022 nor later than March 17, 2022, which are dates at least 90 +days but not more than 120 days in advance of the first anniversary of the date of the Annual Meeting. Stockholders are also advised to review our Bylaws, which contain additional requirements about advance notice of stockholder proposals and +director nominations. +Stockholders who intend to submit a proposal at 2022 Annual Meeting and desire that such proposal be included in the proxy materials for such +meeting must follow the procedures prescribed in the Company’s Bylaws and Rule l4a-8 under the Exchange Act. To be eligible for inclusion in the proxy materials, stockholder proposals must be received by +the Secretary of the Company at the Company’s principal executive offices no later than December 26, 2021. +Householding +The SEC permits a single Proxy Statement to be sent to any household at which two or more stockholders reside if they appear to be members of the same family. Each +stockholder continues to receive a separate proxy card. This procedure, referred to as householding, reduces the volume of duplicate information stockholders receive and reduces mailing and printing expenses. A number of brokerage firms have +instituted householding. +As a result, if you hold your shares through a broker and you reside at an address at which two or more stockholders reside, you will +likely be receiving only one Proxy Statement unless any stockholder at that address has given the broker contrary instructions. However, if any such beneficial stockholder residing at such an address wishes to receive a separate Proxy Statement in +the future, or if any such beneficial stockholder that elected to continue to receive separate Proxy Statement wishes to receive a single Proxy Statement in the future, that stockholder should contact their broker or send a request to us care of the +Corporate Secretary at 3990 Rogerdale Road, Houston, Texas 77042. Telephone requests may be directed to (713) 325-6000. We will deliver, promptly upon written or oral request, a separate copy of this +Proxy Statement to a beneficial stockholder at a shared address to which a single copy of the documents was delivered. +73 +Table of Contents +APPENDIX A +N EX T IER O ILFIELD S OLUTIONS I NC . E QUITY +AND I NCENTIVE A WARD P LAN +The purpose of the NexTier +Oilfield Solutions Inc. Equity and Incentive Award Plan (the “ Plan ”) is to promote the success and enhance the value of the Company by linking the personal interests of the members of the Board, Employees, and Consultants to those +of the Company’s stockholders and by providing such individuals with an incentive for outstanding performance to generate superior returns to the Company’s stockholders. The Plan is further intended to provide flexibility to the Company in +its ability to motivate, attract, and retain the services of members of the Board, Employees, and Consultants upon whose judgment, interest, and special effort the successful conduct of the Company’s operations is largely dependent. +The Plan was originally adopted by Keane Group, Inc., a Delaware corporation (the “ Company ”), by resolution +of its Board of Directors on January 3, 2017. The Plan became effective upon its approval by the Company’s stockholders on January 20, 2017 (the “ Effective Date ”). The Plan was subsequently amended on December 7, 2020 +and February 23, 2021, and further amended and restated on each of April 6, 2021 and April 19, 2021, in each case subject to shareholder approval. +ARTICLE I. +DEFINITIONS +Wherever the following terms are used in the Plan they shall have the meanings specified below, unless the context +clearly indicates otherwise. The singular pronoun shall include the plural where the context so indicates. +1.1. “ Applicable Exchange ” shall mean the New York Stock Exchange or other securities +exchange or national market system as may at the applicable time be the principal market for the Common Stock. +1.2. “ Award ” shall mean an Option, a Restricted Stock Award, a Restricted Stock Unit +Award, a Performance Award, a Deferred Stock Award, a Stock Payment Award or a Stock Appreciation Right, in each case, which may be awarded or granted under the Plan. +1.3. “ Award Agreement ” shall mean any written notice, agreement, terms and +conditions, contract or other instrument or document evidencing an Award, including through electronic medium, which shall contain such terms and conditions with respect to an Award as the Committee shall determine consistent with the Plan. +1.4. “ Award Limit ” shall mean the maximum Award amounts set forth in +Section 2.3. +1.5. “ Board ” shall mean the Board of Directors of the Company. +1.6. “ Cerberus Funds ” means, including any successors and permitted assigns, +Cerberus International II Master Fund, L.P., Cerberus Institutional Partners, L.P. – Series Four, Cerberus Institutional Partners V, L.P., Cerberus CP Partners, L.P., Cerberus MG Fund, L.P., CIP VI Overseas Feeder, Ltd. and CIP VI Institutional +Feeder, L.P. +1.7. “ Change in Control ” shall mean, except as otherwise provided +in a Participant’s Award Agreement, the occurrence of any of the following transactions or events occurring on or after the Effective Date: +(a) the acquisition by any Person of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of the greater of (i) 51% or more of either (x) the then outstanding shares of the Company (the “ Outstanding Company Shares ”) or (y) the +combined voting power of the then outstanding +1 +Table of Contents +voting securities of the Company entitled to vote generally in the election of directors (the “ Outstanding Company Voting Securities ”), and (ii) the percentage of +Outstanding Company Voting Securities beneficially owned, individually or in the aggregate, by KIH or the Investor Group; provided , however , that for purposes of this subsection (a), the following acquisitions shall not constitute a +Change in Control: (1) any acquisition by KIH or the Investor Group; (2) any acquisition directly from the Company; (3) any acquisition by the Company; (4) any acquisition by any employee benefit plan (or related +trust) sponsored or maintained by the Company or any corporation controlled by the Company; or (5) any acquisition pursuant to a transaction which complies with clauses (i), (ii) (iii) and (iv) of subsection (c) below; +(b) individuals who, as of October 31, 2019, constitute the Board (the “ Incumbent +Board ”) cease for any reason to constitute at least a majority of the Board; provided , however , that any individual becoming a director subsequent to the Effective Date (i) whose election, or nomination for election by +the Company’s stockholders, was approved by a vote of at least two-thirds (2/3) of the directors then comprising the Incumbent Board or (ii) who is appointed to serve on the Board by KIH and at the +effective time of such appointment KIH is the beneficial owner of 50% or more of the Outstanding Company Shares shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual +whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person +other than the Board; +(c) consummation of a reorganization, merger or consolidation or sale or +other disposition of all or substantially all of the assets of the Company or the acquisition of assets of another entity (each, a “ Corporate Transaction ”), in each case, unless, following such Corporate Transaction, (i) all or +substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Shares and Outstanding Company Voting Securities immediately prior to such Corporate Transaction beneficially own, directly or +indirectly, more than 50% of, respectively, the then outstanding shares and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation or other +entity resulting from such Corporate Transaction (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more +subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Corporate Transaction of the Outstanding Company Shares and Outstanding Company Voting Securities, as the case may be, (ii) KIH or the Investment Group +continue to beneficially own 35% or more of the then outstanding shares of common stock (or, for a non-corporate entity, equivalent securities) of the entity resulting from such Corporate Transaction or the +combined voting power of the then outstanding voting securities of such entity, or (iii) no Person (excluding any employee benefit plan or related trust of the Company or such corporation resulting from such Corporate Transaction) beneficially +owns, directly or indirectly, twenty-five percent (25%) or more of, respectively, the then outstanding shares of the corporation resulting from such Corporate Transaction or the combined voting power of the then outstanding voting securities of such +corporation except to the extent that such ownership existed prior to the Corporate Transaction and (iv) at least a majority of the members of the board of directors of the corporation (or other governing board of a non-corporate entity) resulting from such Corporate Transaction were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Corporate +Transaction; or +(d) approval by the stockholders of the Company of a complete liquidation or +dissolution of the Company. +For purposes of subsection (a) above, the calculation of voting power shall be made as if the date on +which the ownership of such person or group is measured were a record date for a vote of the Company’s stockholders, and for purposes of subsection (c) above, the calculation of voting power shall be made as if the date of the consummation +of the transaction were a record date for a vote of the Company’s stockholders. For all purposes of this Plan, any calculation of the number of securities outstanding at any particular time, including for purposes of determining the particular +percentage of such outstanding voting securities of which any person is the beneficial +2 +Table of Contents +owner, shall be made in accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the Exchange Act. For purposes +of this definition of “Change in Control, “ Person ” means any individual, entity or group within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act. For purposes of the Plan, the Registration Date shall not be +considered a Change in Control. +1.8. “ Code ” shall mean the Internal Revenue Code +of 1986, as amended from time to time. Any reference to any section of the Code shall also be a reference to any successor provision and any Treasury Regulation promulgated thereunder. +1.9. “ Committee ” shall mean the Compensation Committee of the Board, or another +committee or subcommittee of the Board, appointed as provided in Section 10.1, consisting solely of two or more Directors. Solely to the extent required by applicable law or applicable stock exchange rule, each Director serving on the +Committee shall be a Non-Employee Director who is intended to qualify as a “non-employee director” as defined by Rule +16b-3 and as an “independent director” as defined under the applicable stock exchange rule. If for any reason the appointed Committee does not meet the requirements of Rule 16b-3, such noncompliance shall not affect the validity of Awards, grants, interpretations or other actions of the Committee. +1.10. “ Common Stock ” shall mean the common stock of the Company, par value $0.01 per +share. +1.11. “ Company ” shall mean NexTier Oilfield Solutions Inc., a Delaware +corporation. +1.12. “ Consultant ” shall mean any consultant or adviser of the +Company or any of its Subsidiaries if: (a) the consultant or adviser is a natural person, (b) the consultant or adviser renders bona fide services to the Company or any of its Subsidiaries; and (c) the services rendered by the +consultant or adviser are not in connection with the offer or sale of securities in a capital-raising transaction and do not directly or indirectly promote or maintain a market for the Company’s securities. +1.13. “ Covered Employee ” shall mean any Employee who is, or could be, a “covered +employee” within the meaning of Section 162(m) of the Code. +1.14. “ Deferred +Stock ” shall mean a right to receive Common Stock awarded under Section 8.4 of the Plan. +1.15. “ Director ” shall mean a member of the Board. +1.16. “ DRO ” shall mean any judgment, decree or order which relates to marital +property rights of a spouse or former spouse and is made pursuant to applicable domestic relations law (including community property law). +1.17. “ Effective Date ” shall mean January 20, 2017, the date the Plan was +approved by the Company’s stockholders. +1.18. “ Employee ” shall mean any +officer or other employee (as defined in accordance with Section 3401(c) of the Code) of the Company or of its Subsidiaries. +1.19. “ Exchange Act ” shall mean the Securities Exchange Act of 1934, as amended from +time to time. +1.20. “ Fair Market Value ” shall mean, as of any date, the value of +a share of Common Stock determined as follows: +(a) If the Common Stock is listed on an Applicable +Exchange, the value of a share of Common Stock shall be the closing sales price for a share of Common Stock as quoted on such Applicable Exchange for +3 +Table of Contents +such date, or if there is no closing sales price for a share of Common Stock on the date in question, the closing sales price for a share of Common Stock on the last preceding date for which such +quotation exists, as reported in The Wall Street Journal or such other source as the Committee deems reliable; +(b) If the Common Stock is regularly quoted by a recognized securities dealer but closing sales prices +are not reported, the value of a share of Common Stock shall be the mean of the high bid and low asked prices for such date or, if there are no high bid and low asked prices for a share of Common Stock on the date in question, the high bid and low +asked prices for a share of Common Stock on the last preceding date for which such information exists, as reported in The Wall Street Journal or such other source as the Committee deems reliable; or +(c) If the Common Stock is neither listed on an Applicable Exchange nor regularly quoted by a +recognized securities dealer, the value of a share of Common Stock shall be established by the Committee in good faith in whatever manner it considers appropriate taking into account the requirements of Section 422 of the Code or +Section 409A of the Code, as applicable. +1.21. “ Fiscal Year ” shall +mean the fiscal year of the Company. +1.22. “ Incentive Stock Option ” shall mean +an option which conforms to the applicable provisions of Section 422 of the Code and which is designated as an Incentive Stock Option by the Committee. +1.23. “ Investor Group ” shall mean any of (a) the Cerberus Funds taken as a group +and their respective affiliates (other than any of their respective portfolio companies) and any investment fund that is directly or indirectly managed or advised by the manager or advisor of any member of the Cerberus Funds or any of their +affiliates (other than any of their respective portfolio companies), or the successors of any such investment fund, (b) Trican Well Service, L.P. and its affiliates, and (c) the Keane Parties taken as a group and their +respective affiliates. +1.24. “ Keane Parties ” shall mean SJK Family Limited +Partnership, LP, KCK Family Limited Partnership, LP, Tim Keane, Brian Keane, Shawn Keane, Jacquelyn Keane, Cindy Keane and Kevin Keane. +1.25. “ KIH ” shall mean Keane Investor Holdings LLC. +1.26. “ Non-Employee Director ” shall mean a +Director who is not an Employee. +1.27. “ Non-Qualified Stock Option ” shall mean +an Option which is not designated as an Incentive Stock Option by the Committee. +1.28. “ Option ” shall mean a stock option granted under Article IV of the Plan. +1.29. “ Participant ” shall mean an Employee, +Non-Employee Director or Consultant who has been granted an Award. +1.30. “ Performance Award ” shall mean a cash bonus, stock bonus or other performance +or incentive award that is paid in cash, Common Stock or a combination of both, awarded under Section 8.2 of the Plan. +1.31. “ Performance Criteria ” shall mean the criteria (and adjustments) that the +Committee selects for an Award for purposes of establishing a Performance Goal or Performance Goals for a Performance Period. The Performance Criteria for any Award intended to qualify as a Performance Award shall be determined as follows: +(a) The Performance Criteria that shall be used to establish Performance Goals are limited to the +following: (i) net earnings (either before or after (A) interest, (B) taxes, (C) depreciation and (D) amortization), (ii) gross or net sales or revenue, (iii) net income +(either before or after taxes), (iv) operating profit, (v) cash flow (including, but not limited to, operating cash flow and free cash flow), (vi) return on assets, (vii) return on capital, +4 +Table of Contents +(viii) return on stockholders’ equity, (ix) return on sales, (x) gross or net profit or operating margin, (xi) costs, (xii) funds +from operations, (xiii) expenses, (xiv) working capital, (xv) earnings per share, (xvi) price per share of Common Stock, (xvii) market share, (xviii) market capitalization, +(xix) net debt, (xx) achieved incident rate, and (xxi) lost time incident rate, any of which may be measured either in absolute terms or as compared to any incremental increase or decrease or as compared to +results of a peer group. +(b) The Committee in its discretion may, at the time of grant, specify +in the Award that one or more objectively determinable adjustments shall be made to one or more of the Performance Goals. Such adjustments may include one or more of the following: (i) items related to a change in accounting principle; +(ii) items relating to financing activities; (iii) expenses for restructuring or productivity initiatives; (iv) other non-operating items; (v) items related to acquisitions; (vi) items +attributable to the business operations of any entity acquired by the Company during the Performance Period; (vii) items related to the disposal of a business or a material portion of a business; or (viii) items related to +discontinued operations of a business under United States generally accepted accounting principles (“ GAAP ”). +1.32. “ Performance Goals ” shall mean, for a Performance Period, one or more goals +established in writing by the Committee for the Performance Period based upon one or more Performance Criteria. Depending on the Performance Criteria used to establish such Performance Goals, the Performance Goals may be expressed in terms of +overall Company performance or the performance of a division, business unit, or an individual. The achievement of each Performance Goal shall be determined in accordance with GAAP to the extent applicable. +1.33. “ Performance Period ” shall mean one or more periods of time, which may be of +varying and overlapping durations, as the Committee may select, over which the attainment of one or more Performance Goals will be measured. +1.34. “ Person ” shall mean any individual, corporation, partnership, limited liability +company, firm, joint venture, association, joint-stock company, trust, incorporated organization, governmental or regulatory or other entity. +1.35. “ Plan ” shall mean the NexTier Oilfield Solutions Inc. Equity and Incentive +Award Plan, as amended from time to time. Prior to October 31, 2019, the Plan was named the “Keane Group, Inc. Equity and Incentive Award Plan.” +1.36. “ Restricted Stock ” shall mean Common Stock awarded under Article VII of the +Plan that is subject to repurchase or forfeiture. +1.37. “ Restricted Stock Units ” +shall mean rights to receive Common Stock awarded under Section 8.5. +1.38. “ Rule 16b-3 ” shall mean Rule 16b-3 promulgated under the Exchange Act, as such Rule may be amended from time to time. +1.39. “ Section 409A Covered Award ” shall mean an Award granted under the Plan that +constitutes “non-qualified deferred compensation” pursuant to Section 409A of the Code. +1.40. “ Securities Act ” shall mean the Securities Act of 1933, as amended from time to +time. +1.41. “ Stock Appreciation Right ” shall mean a stock appreciation right +granted under Article IX of the Plan. +1.42. “ Stock Payment ” shall mean: +(a) a payment in the form of shares of Common Stock, or (b) an option or other right to purchase shares of Common Stock, as part of a deferred compensation arrangement, made in lieu of all or any portion of the compensation, +including without limitation, salary, bonuses, commissions and directors’ fees, that would otherwise become payable to an Employee, Consultant or Non-Employee Director in cash, awarded under Article VIII of the Plan. +5 +Table of Contents +1.43. “ Subsidiary ” shall mean with +respect to any Person, any entity (other than such Person), whether domestic or foreign, in an unbroken chain of entities beginning with such Person if each of the entities other than the last entity in the unbroken chain beneficially owns, at the +time of the determination, securities or interests representing more than 50% of the total combined voting power of all classes of securities or interests in one of the other entities in such chain. +1.44. “ Subsidiary Corporation ” shall mean any corporation in an unbroken chain of +corporations beginning with the Company if each of the corporations other than the last corporation in the unbroken chain then owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other +corporations in such chain. +1.45. “ Ten Percent Stockholder ” shall mean an +individual owning stock possessing more than 10% of the total combined voting power of all classes of stock of the Company, any Subsidiary Corporation or any parent corporation (as defined under Section 424(e) of the Code). +1.46. “ Termination ” shall mean a Termination of Consultancy, Termination of +Directorship or Termination of Employment, as applicable. +1.47. “ Termination of +Consultancy ” shall mean the time when the engagement of a Participant as a Consultant to the Company or any of its Subsidiaries is terminated for any reason, with or without cause, including, without limitation, by resignation, discharge, +death or retirement, but excluding terminations where there is a simultaneous commencement of employment with the Company or any of its Subsidiaries or service as a Non-Employee Director. For purposes of the +Plan, the engagement of a Participant as a Consultant to a Subsidiary of the Company shall be deemed to be terminated in the event that the Subsidiary engaging such Participant ceases to remain a Subsidiary of the Company for any reason. +1.48. “ Termination of Directorship ” shall mean the time when a Participant who is a Non-Employee Director ceases to be a Director for any reason, including, without limitation, a termination by resignation, failure to be elected, death or retirement, but excluding terminations where there is a +simultaneous commencement of employment or service as a Consultant with the Company or any of its Subsidiaries. +1.49. “ Termination of Employment ” shall mean the time when the employee-employer +relationship between a Participant and the Company or any of its Subsidiaries is terminated for any reason, with or without cause, including, without limitation, a termination by resignation, discharge, death, disability or retirement; but excluding +a termination where there is a simultaneous (a) reemployment or continuing employment of the Participant by the Company or any of its Subsidiaries, (b) establishment of a consulting relationship by the Company or any of its +Subsidiaries with the Participant, or (c) commencement of service by the Participant as a Non-Employee Director. For purposes of the Plan, a Participant’s employment relationship shall be deemed to be terminated in the event that +the Subsidiary of the Company employing such Participant ceases to remain a Subsidiary of the Company for any reason. +ARTICLE II. +SHARES SUBJECT TO PLAN +2.1. Shares Subject to Plan . +(a) Subject to Section 11.3 and Section 2.1(b), the aggregate number of shares of +Common Stock that may be issued or transferred pursuant to Awards under the Plan shall be equal to 26,990,323 shares (the “ Authorized Shares ”). +6 +Table of Contents +(b) In the event of any termination, expiration, +lapse or forfeiture of an Award, any shares of Common Stock subject to such Award shall, to the extent of such termination, expiration, lapse or forfeiture, again be available for future grants of Awards under the Plan. Any shares repurchased by the +Company under Section 7.5 at the same price paid by the Participant so that such shares are returned to the Company will again be available for Awards. +2.2. Stock Distributed . Any Common Stock distributed pursuant to an Award shall consist, in +whole or in part, of authorized and unissued Common Stock, shares of Common Stock held in treasury or shares of Common Stock purchased on the open market, or any combination of the foregoing. +2.3. Limitation on Number of Shares Subject to Awards . The maximum aggregate number of shares +of Common Stock subject to all Awards granted to any one Employee or Consultant in any calendar year, as adjusted pursuant to Section 11.3, is 10% of the Authorized Shares. The maximum aggregate number of shares of Common Stock subject to all +Awards granted to any one Non-Employee Director in any calendar year, as adjusted pursuant to Section 11.3, is 150,000. The maximum amount of any Performance Award granted to a Participant pursuant to Section 8.2(b) that is +payable solely in cash is $5,000,000 in any calendar year. +ARTICLE III. +GRANTING OF AWARDS +3.1. Award Agreement . Each Award shall be evidenced by an Award Agreement. +3.2. Provisions Applicable to Performance Awards . With respect to Performance Awards, the +Committee shall establish the Performance Criteria and the applicable vesting percentage of the Award applicable to each Participant or class of Participants in writing prior to the beginning of the applicable Performance Period or at such later +date as otherwise determined by the Committee and while the outcome of the Performance Goals are substantially uncertain as determined by the Committee in its sole discretion. Following the completion of each Performance Period, the Committee shall +certify in writing whether the applicable Performance Goals have been achieved for such Performance Period. In determining the amount earned by a Covered Employee under a Performance Award, the Committee shall have the right to reduce (but not to +increase) the amount payable at a given level of performance to take into account additional factors that the Committee may deem relevant to the assessment of individual or corporate performance for the Performance Period. +3.3. Limitations Applicable to Section 16 Persons . Notwithstanding any other provision of +the Plan, the Plan, any Award granted or awarded to any individual who is then subject to Section 16 of the Exchange Act shall be subject to any additional limitations set forth in any applicable exemptive rule under +Section 16 of the Exchange Act (including Rule 16b-3) that are requirements for the application of such exemptive rule. To the extent permitted by applicable law, the Plan and Awards granted or awarded hereunder shall be deemed amended +to the extent necessary to conform to such applicable exemptive rule. +3.4. At-Will Employment . Nothing in the Plan or in any Award Agreement hereunder shall confer upon any Participant any right to continue in the employ of, or as a Consultant for, the Company or any of its +Subsidiaries, or as a Director, or shall interfere with or restrict in any way the rights of the Company and any of its Subsidiaries, which rights are hereby expressly reserved, to discharge any Participant at any time for any reason whatsoever, +with or without cause, except to the extent expressly provided otherwise in a written agreement between the Participant and the Company and any of its Subsidiaries. +7 +Table of Contents +ARTICLE IV. +GRANTING OF OPTIONS TO EMPLOYEES, +CONSULTANTS AND NON-EMPLOYEE DIRECTORS +4.1. Eligibility . An Option may be granted to any Employee, Consultant or Non-Employee Director selected by the Committee subject to such terms and conditions not inconsistent with the Plan as the Committee shall impose. +4.2. Qualification of Incentive Stock Options . No Incentive Stock Option shall be granted to +any individual who is not an Employee of the Company or a Subsidiary Corporation. +4.3. Granting of Options . +(a) The Committee shall from time to time, in its discretion, and, subject to applicable limitations +of the Plan: +(i) Determine the number of shares to be subject to such Options granted to the +selected Employees, Consultants or Non-Employee Directors; +(ii) Subject to Section 4.2, determine whether such Options are to be Incentive Stock +Options or Non-Qualified Stock Options; and +(iii) Determine the terms and conditions of such Options, consistent with the Plan. +(b) Any Incentive Stock Option granted under the Plan may be modified by the Committee to disqualify +such Option from treatment as an “incentive stock option” under Section 422 of the Code. +ARTICLE V. +TERMS OF OPTIONS +5.1. Option Price . The price per share of Common Stock subject to each Option granted to +Employees, Non-Employee Directors and Consultants shall be set by the Committee; provided, however , that: +(a) In the case of Incentive Stock Options, such price shall not be less than 100% (or, in the case of +an Incentive Stock Option granted to a Ten Percent Stockholder, 110%) of the Fair Market Value of a share of Common Stock on the date the Option is granted (or the date the Option is modified, extended or renewed for purposes of Section 424(h) +of the Code); and +(b) In the case of Non-Qualified Stock +Options, such price shall not be less than 100% of the Fair Market Value of a share of Common Stock on the date the Option is granted. +5.2. Option Term . The term of an Option granted to an Employee, Consultant or Non-Employee Director shall be set by the Committee in its discretion; provided, however , that the term shall not be more than ten (10) years from the date the Option is granted, or five +(5) years from the date the Option is granted if the Option is an Incentive Stock Option granted to a Ten Percent Stockholder. Except as limited by requirements of Section 409A or Section 422 of the Code, the +Committee may extend the term of any outstanding Option in connection with any Termination of the Participant, but in no event to more than ten (10) years from the date the Option was granted, or amend any other term or condition of such +Option relating to such a Termination. +8 +Table of Contents +5.3. Option Vesting . +(a) The period during which a Participant has the right to exercise an Option, in whole or in part, +shall be set by the Committee and the Committee may determine that an Option may not be exercised in whole or in part for a specified period after it is granted; provided, however , that, unless the Committee otherwise provides in the terms of +the Award Agreement or otherwise, no Option granted to an individual subject to Section 16 of the Exchange Act shall be exercisable until at least six months have elapsed following the date on which the Option was granted. At any time +after grant of an Option, the Committee may, in its discretion and subject to whatever terms and conditions it selects, accelerate the period during which an Option vests. +(b) No portion of an Option granted to an Employee, Consultant or +Non-Employee Director which is unexercisable at Termination shall thereafter become exercisable, except as may be otherwise provided by the Committee either in the Award Agreement or by action of the Committee +following the grant of the Option. +(c) To the extent that the aggregate Fair Market Value of +Common Stock with respect to which Incentive Stock Options (determined as of the time of grant) are exercisable for the first time by a Participant during any calendar year under the Plan, and all other plans of the Company and any Subsidiary +Corporation or parent corporation (as defined under Section 424(e) of the Code) exceeds $100,000, the Options shall be treated as Non-Qualified Stock Options to the extent required by Section 422 of the Code. The rule set forth in +the preceding sentence shall be applied by taking Options and other Incentive Stock Options into account in the order in which they were granted. In addition, if a Participant does not remain in service with the Company or any Subsidiary Corporation +at all times from the time an Incentive Stock Option is granted until three (3) months prior to the date of exercise thereof (or such other period as required by applicable law), such Option shall be treated as a Non-Qualified Stock +Option. +ARTICLE VI. +EXERCISE OF OPTIONS +6.1. Partial Exercise . An exercisable Option may be exercised in whole or in part during the +Option term. However, an Option shall not be exercisable with respect to fractional shares and the Committee may require that, by the terms of the Option, a partial exercise be with respect to a minimum number of shares. +6.2. Manner of Exercise . All or a portion of an exercisable Option shall be deemed exercised +upon delivery of all of the following to the Secretary of the Company, or such other individual or entity designated by the Committee, or his, her or its office, as applicable: +(a) A written notice complying with the applicable rules established by the Committee stating that the +Option, or a portion thereof, is exercised. Such rules may provide that for administrative convenience an Option may not be exercised during such period (not exceeding 10 days) as is specified in advance by the Committee. The notice shall be signed +by the Participant or other Person then entitled to exercise the Option or such portion of the Option; +(b) Such representations and documents as the Committee, in its discretion, deems necessary or +advisable to effect compliance with all applicable provisions of the Securities Act and any other federal, state or foreign securities laws or regulations. The Committee may, in its discretion, also take whatever additional actions it deems +appropriate to effect such compliance including, without limitation, placing legends on share certificates and issuing stop-transfer notices to agents and registrars; +(c) In the event that the Option shall be exercised pursuant to Section 11.1 by any Person or +Persons other than the Participant, appropriate proof of the right of such Person or Persons to exercise the Option; and +9 +Table of Contents +(d) Full cash payment to the Secretary of the +Company for the shares with respect to which the Option, or portion thereof, is exercised. However, the Committee may, in its discretion, (i) allow payment, in whole or in part, through the delivery of shares of Common Stock owned by the +Participant, duly endorsed for transfer to the Company with a Fair Market Value on the date of delivery equal to the aggregate exercise price of the Option or exercised portion thereof; (ii) allow payment, in whole or in part, through the surrender +of shares of Common Stock then issuable upon exercise of the Option having a Fair Market Value on the date of Option exercise equal to the aggregate exercise price of the Option or exercised portion thereof; (iii) allow payment, in whole +or in part, through the delivery of property of any kind which constitutes good and valuable consideration; (iv) allow payment, in whole or in part, through the delivery of a notice that the Participant has placed a market sell order +with a broker with respect to shares of Common Stock then issuable upon exercise of the Option, and the broker timely pays a sufficient portion of the net proceeds of the sale to the Company in satisfaction of the Option exercise price; or +(v) allow payment through any combination of the consideration provided in the foregoing subparagraphs (i), (ii), (iii) and (iv); provided, however , that the payment in the manner prescribed in the preceding paragraphs +shall not be permitted to the extent that the Committee determines that payment in such manner shall result in an extension or maintenance of credit, an arrangement for the extension of credit, or a renewal or an extension of credit in the form of a +personal loan to or for any Director or executive officer of the Company that is prohibited by Section 13(k) of the Exchange Act or other applicable law. +6.3. Conditions to Issuance of Stock Certificates . The Company shall not be required to issue +or deliver any certificate or certificates for shares of stock purchased upon the exercise of any Option or portion thereof prior to fulfillment of all of the following conditions: +(a) The admission of such shares to listing on all stock exchanges on which such class of stock is +then listed; +(b) The completion of any registration or other qualification of such shares under +any federal, state or foreign law, or under the rulings or regulations of the Securities and Exchange Commission or any other governmental regulatory body which the Committee shall, in its discretion, deem necessary or advisable; +(c) The obtaining of any approval or other clearance from any federal, state or foreign governmental +agency which the Committee shall, in its discretion, determine to be necessary or advisable; +(d) The lapse of such reasonable period of time following the exercise of the Option as the Committee +may establish from time to time for reasons of administrative convenience; and +(e) The receipt by +the Company of full payment for such shares, including payment of any applicable withholding tax, which in the discretion of the Committee may be in the form of consideration used by the Participant to pay for such shares under Section 6.2(d). +6.4. Ownership and Transfer Restrictions . The Committee, in its discretion, may impose +such restrictions on the ownership and transferability of the shares purchasable upon the exercise of an Option as it deems appropriate. Any such restriction shall be set forth in the respective Award Agreement and may be referred to on the +certificates evidencing such shares. The Participant shall give the Company prompt notice of any disposition of shares of Common Stock acquired by exercise of an Incentive Stock Option within (a) two years from the date of granting (including +the date the Option is modified, extended or renewed for purposes of Section 424(h) of the Code) such Option to such Participant, or (b) one year after the transfer of such shares to such Participant. +6.5. Additional Limitations on Exercise of Options . Participants may be required to comply with +any timing or other restrictions with respect to the settlement or exercise of an Option, including a window-period limitation, as may be imposed in the discretion of the Committee. +10 +Table of Contents +ARTICLE VII. +AWARD OF RESTRICTED STOCK +7.1. Eligibility . Restricted Stock may be awarded to any Employee, Consultant or Non-Employee Director who the Committee determines should receive such an Award in accordance with the terms and conditions of the Plan. +7.2. Award of Restricted Stock . +(a) The Committee may from time to time, in its discretion, determine the purchase price, if any, the +form of payment for Restricted Stock and other terms and conditions applicable to such Restricted Stock, consistent with the Plan; provided, however , that any such purchase price shall be no less than the par value of the Common Stock to be +purchased, unless otherwise permitted by applicable state law. +(b) Upon the selection of an +Employee, Consultant or Non-Employee Director to be awarded Restricted Stock, the Committee shall instruct the Secretary of the Company to issue such Restricted Stock and may impose such conditions on the +issuance of such Restricted Stock as it deems appropriate, unless the Committee elects to use another system, such as book entries, as evidencing ownership of Restricted Stock. +7.3. Rights as Stockholders . Subject to Section 7.4, the Participant shall have, unless +otherwise provided by the Committee, all the rights of a stockholder with respect to said shares, subject to the restrictions in his or her Award Agreement, including the right to vote such shares and the right to receive all dividends and other +distributions paid or made with respect to the shares; provided, however , that, unless otherwise determined by the Committee at the time of grant, any distributions with respect to the Common Stock shall be subject to the restrictions set +forth in Section 7.4. +7.4. Restriction . All shares of Restricted Stock issued +under the Plan (including any shares received by Participants thereof with respect to shares of Restricted Stock as a result of stock dividends, stock splits or any other form of recapitalization) shall be subject to such restrictions as the +Committee shall provide in the terms of the Award Agreement, which restrictions may include, without limitation, restrictions concerning voting rights and transferability and restrictions based on duration of employment, directorship or consultancy +with the Company, Company performance and individual performance; provided, however , by action taken after the Restricted Stock is issued, the Committee may, on such terms and conditions as it may determine to be appropriate, remove any or +all of the restrictions imposed by the terms of the Award Agreement. Restricted Stock may not be sold or encumbered until all restrictions are terminated or expire. Unless otherwise determined by the Committee, if no consideration was paid by the +Participant upon issuance, a Participant’s rights in unvested Restricted Stock shall lapse, and such Restricted Stock shall be surrendered to the Company without consideration, upon Termination. +7.5. Repurchase of Restricted Stock . The Committee shall provide in the terms of each +individual Award Agreement that the Company shall have the right to repurchase from the Participant the Restricted Stock then subject to restrictions under the Award Agreement immediately upon a Termination at a cash price per share equal to the +price paid by the Participant for such Restricted Stock; provided, however , that the Committee in its discretion may provide that such rights shall not lapse in the event of a Termination following a Change in Control or because of the +Participant’s retirement, death or disability or termination without cause, or otherwise. +7.6. Legend . In order to enforce the restrictions imposed upon shares of Restricted Stock +hereunder, the Committee shall cause a legend or legends to be placed on certificates representing all shares of Restricted Stock that are still subject to restrictions under Award Agreements, which legend or legends shall make appropriate reference +to the conditions imposed thereby. +11 +Table of Contents +7.7. Section 83(b) Election . If a +Participant makes an election under Section 83(b) of the Code to be taxed with respect to the Restricted Stock as of the date of transfer of the Restricted Stock rather than as of the date or dates upon which the Participant would otherwise be +taxable under Section 83(a) of the Code, the Participant shall deliver a copy of such election to the Company immediately after filing such election with the Internal Revenue Service. +ARTICLE VIII. +PERFORMANCE AWARDS, DEFERRED STOCK, STOCK PAYMENTS, RESTRICTED STOCK UNITS +8.1. Eligibility . One or more Performance Awards, Stock Payment Awards, Deferred Stock Awards +and/or Restricted Stock Unit Awards may be granted to any Employee, Consultant or Non-Employee Director whom the Committee determines should receive such an Award. +8.2. Performance Awards . +(a) Any Employee, Consultant or Non-Employee Director selected by the Committee may be granted one or +more Performance Awards. The value of such Performance Awards may be linked to any one or more of the Performance Criteria or other specific performance criteria determined appropriate by the Committee, in each case on a specified date or dates or +over any period or periods determined by the Committee. +(b) Without limiting Section 8.2(a), +the Committee may grant Performance Awards to any Covered Employee in the form of a cash bonus payable upon the attainment of objective Performance Goals which are established by the Committee, in each case on a specified date or dates or over any +period or periods determined by the Committee. Any such bonuses paid to Covered Employees shall be based upon objectively determinable bonus formulas established in accordance with the provisions of Section 3.2. Unless otherwise specified by +the Committee at the time of grant, the Performance Criteria with respect to a Performance Award payable to a Covered Employee shall be determined on the basis of GAAP. +8.3. Stock Payments . Any Employee, Consultant or +Non-Employee Director selected by the Committee may receive Stock Payments in the manner determined from time to time by the Committee. The number of shares shall be determined by the Committee and may be +based upon the Performance Criteria or other specific performance criteria determined appropriate by the Committee, determined on the date such Stock Payment is made or on any date thereafter. +8.4. Deferred Stock . Any Employee, Consultant or +Non-Employee Director selected by the Committee may be granted an award of Deferred Stock in the manner determined from time to time by the Committee. The number of shares of Deferred Stock shall be determined +by the Committee and may be linked to the satisfaction of one or more Performance Goals or other specific performance goals as the Committee determines to be appropriate at the time of grant, in each case on a specified date or dates or over any +period or periods determined by the Committee. Common Stock underlying a Deferred Stock Award will not be issued until the Deferred Stock Award has vested, pursuant to a vesting schedule or the achievement of the applicable Performance Goals or +other specific performance goals set by the Committee. Unless otherwise provided by the Committee, a Participant of Deferred Stock shall have no rights as a Company stockholder with respect to such Deferred Stock until such time as the Award has +vested and the Common Stock underlying the Award has been issued. +8.5. Restricted Stock +Units . Any Employee, Consultant or Non-Employee Director selected by the Committee may be granted an award of Restricted Stock Units in the manner determined from time to time by the Committee. The +Committee is authorized to make awards of Restricted Stock Units in such amounts and subject to such terms and conditions as determined by the Committee at grant. The Committee shall specify the date or dates on which the Restricted Stock Units +shall become fully vested and nonforfeitable, and may specify such conditions to vesting as it deems appropriate, and may specify that such Restricted Stock Units become fully vested and +12 +Table of Contents +nonforfeitable pursuant to the satisfaction of one or more Performance Goals or other specific performance goals as the Committee determines to be appropriate at the time of the grant, in each +case on a specified date or dates or over any period or periods determined by the Committee. The Committee shall specify the distribution dates applicable to each award of Restricted Stock Units which shall be no earlier than the vesting dates and +may be determined at the election of the Employee, Consultant or Non-Employee Director, subject to compliance with Section 409A of the Code. On the distribution dates, the Company shall issue to the +Participant one unrestricted, fully transferable share of Common Stock for each Restricted Stock Unit distributed, or, in the discretion of the Committee, an amount in cash equal to the Fair Market Value of such share of Common Stock on the +distribution date, or a combination of both. +8.6. Term . The term of a Performance Award, +Deferred Stock Award, Stock Payment Award and/or Restricted Stock Unit Award shall be set by the Committee in its discretion. +8.7. Exercise or Purchase Price . The Committee may establish the exercise or purchase price of +a Performance Award, shares of Deferred Stock, shares distributed as a Stock Payment Award or shares distributed pursuant to a Restricted Stock Unit Award; provided, however , that such price shall not be less than the par value of a share of +Common Stock, unless otherwise permitted by applicable state law. +8.8. Exercise upon +Termination . A Performance Award, Deferred Stock Award, Stock Payment Award and/or Restricted Stock Unit Award is exercisable or distributable only prior to a Participant’s Termination; provided, however , that the Committee in its +discretion may provide that the Performance Award, Deferred Stock Award, Stock Payment Award and/or Restricted Stock Unit Award may be exercised or distributed subsequent to a Termination following a Change in Control, or because of the +Participant’s retirement, death or disability or termination without cause, or otherwise. +8.9. Form of Payment . Payment of the amount determined under Section 8.2 above shall be in +cash, in Common Stock or a combination of both, as determined by the Committee at grant. To the extent any payment under this Article VIII is effected in Common Stock, it shall be made subject to satisfaction of all provisions of Section 6.3. +ARTICLE IX. +STOCK +APPRECIATION RIGHTS +9.1. Eligibility . A Stock Appreciation Right may be granted to any +Employee, Consultant or Non-Employee Director selected by the Committee subject to such terms and conditions not inconsistent with the Plan as the Committee shall impose. +9.2. Grant of Stock Appreciation Rights . +(a) A Stock Appreciation Right shall have a term set by the Committee in its discretion; provided, +however , that the term shall not be more than ten (10) years from the date the Stock Appreciation Right is granted. A Stock Appreciation Right shall be exercisable in such installments as the Committee may determine. A Stock Appreciation +Right shall cover such number of shares of Common Stock as the Committee may determine; provided, however , that unless the Committee otherwise provides in the terms of the Award Agreement or otherwise, no Stock Appreciation Right granted to +an individual subject to Section 16 of the Exchange Act shall be exercisable until at least six months have elapsed following the date on which the Stock Appreciation Right was granted. The exercise price per share of Common Stock subject to +each Stock Appreciation Right shall be set by the Committee; provided, that such exercise price per share shall not be less than 100% of the Fair Market Value of a share of Common Stock on the date the Stock Appreciation Right is granted. A +Stock Appreciation Right is exercisable only prior to the Participant’s Termination; provided , that the Committee may provide that Stock Appreciation Rights may be exercised following a Termination or following a Change in Control, or +because of the Participant’s retirement, death or disability or termination without cause, or otherwise. +13 +Table of Contents +(b) A Stock Appreciation Right shall entitle the +Participant (or other Person entitled to exercise the Stock Appreciation Right pursuant to the Plan) to exercise all or a specified portion of the Stock Appreciation Right (to the extent then exercisable pursuant to its terms) and to receive from +the Company an amount determined by multiplying (i) the difference obtained by subtracting the exercise price per share of the Stock Appreciation Right from the Fair Market Value of a share of Common Stock on the date of exercise of the Stock +Appreciation Right by (ii) the number of shares of Common Stock with respect to which the Stock Appreciation Right shall have been exercised, subject to any limitations the Committee may impose. +9.3. Payment and Limitations on Exercise . +(a) Payment of the amounts determined under Section 9.2(b) above shall be in cash, shares of +Common Stock (based on its Fair Market Value as of the date the Stock Appreciation Right is exercised), or a combination of both, as determined by the Committee at grant. The Company shall not be required to issue or deliver any certificate or +certificates for shares of stock issuable upon the exercise of any Stock Appreciation Right prior to fulfillment of the conditions set forth in Section 6.3 above. +(b) Participants of Stock Appreciation Rights may be required to comply with any timing or other +restrictions with respect to the settlement or exercise of a Stock Appreciation Right, including a window-period limitation, as may be imposed in the discretion of the Committee. +ARTICLE X. +ADMINISTRATION +10.1. Committee . The members of the Committee shall be appointed by, and shall serve on the +Committee at the pleasure of, the Board. Appointment of Committee members shall be effective upon acceptance of appointment. Committee members may resign at any time by delivering written notice to the Board. Vacancies in the Committee may be filled +by the Board. +10.2. Duties and Powers of Committee . It shall be the duty of the Committee +to conduct the general administration of the Plan in accordance with its provisions. The Committee shall have the power to interpret the Plan and the Award Agreements, and to adopt such rules for the administration, interpretation and application of +the Plan as are consistent therewith, to interpret, amend or revoke any such rules, to delegate authority in accordance with Section 10.5 and to amend any Award Agreement provided that the rights or obligations of the Participant of the Award +that is the subject of any such Award Agreement are not affected adversely. Any such grant or award under the Plan need not be the same with respect to each Participant. Any such interpretations and rules with respect to Incentive Stock Options +shall be consistent with the provisions of Section 422 of the Code. In its discretion, the Board may at any time and from time to time exercise any and all rights and duties of the Committee under the Plan except with respect to matters which +under Rule 16b-3 are required to be determined in the discretion of the Committee. The Committee may, in its sole discretion, adopt special guidelines and provisions for persons who are residing in or employed +in, or subject to, the taxes of, any domestic or foreign jurisdictions to comply with applicable tax and securities laws of such domestic or foreign jurisdictions. +10.3. Majority Rule; Unanimous Written Consent . The Committee shall act by a majority of its +members in attendance at a meeting at which a quorum is present or by a memorandum or other written instrument signed by all members of the Committee. +10.4. Compensation; Professional Assistance; Good Faith Actions . Members of the Committee shall +receive such compensation, if any, for their services as members as may be determined by the Board. All expenses and liabilities which members of the Committee incur in connection with the administration of the Plan shall be borne by the Company. +The Committee may employ attorneys, consultants, accountants, appraisers, brokers or other persons as it may deem desirable for the administration of the Plan. The Committee, the Company and the +14 +Table of Contents +Company’s officers and Directors shall be entitled to rely upon the advice, opinions or valuations of any such persons. All actions taken and all interpretations and determinations made by +the Committee or the Board in good faith shall be final and binding upon all Participants, the Company and all other interested persons. No members of the Committee or Board shall be personally liable for any action, determination or interpretation +made in good faith with respect to the Plan or Awards, and all members of the Committee and the Board shall be fully protected by the Company in respect of any such action, determination or interpretation. +10.5. Delegation of Authority . The Committee may, in its sole discretion, designate employees +of the Company and professional advisors to assist the Committee in the administration of the Plan, including with respect to the execution of Award Agreements or other documents, and, to the extent permitted by applicable law, delegate from time to +time some or all of its authority to grant Awards under the Plan to a committee or committees consisting of one or more members of the Board and/or one or more officers of the Company. The authority to grant awards, however, may not be delegated to: +(a) individuals who are subject to the reporting rules under Section 16(a) of the Exchange Act, (b) individuals who are Covered Employees, and (c) individuals who are officers of the Company who are delegated authority by the +Committee hereunder to grant Awards to himself or herself. Any delegation hereunder shall be subject to the restrictions and limits that the Committee specifies at the time of such delegation of authority and may be rescinded at any time by the +Committee. At all times, any committee appointed under this Section 10.5 shall serve in such capacity at the pleasure of the Committee. +ARTICLE XI. +MISCELLANEOUS PROVISIONS +11.1. Transferability of Awards . +(a) Except as otherwise provided in Section 11.1(b): +(i) No Award under the Plan may be sold, pledged, assigned or transferred in any manner other than by +will or the laws of descent and distribution or, subject to the consent of the Committee, pursuant to a DRO, unless and until such Award has been exercised, or the shares underlying such Award have been issued, and all restrictions applicable to +such shares have lapsed; +(ii) No Award or interest or right therein shall be liable for the +debts, contracts or engagements of the Participant or his successors in interest or shall be subject to disposition by transfer, alienation, anticipation, pledge, hypothecation, encumbrance, assignment or any other means whether such disposition be +voluntary or involuntary or by operation of law by judgment, levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy), and any attempted disposition thereof shall be null and void and of no effect, except to +the extent that such disposition is permitted by the preceding sentence; and +(iii) During the +lifetime of the Participant, only the Participant may exercise an Option or other Award (or any portion thereof) granted to him under the Plan, unless it has been disposed of pursuant to a DRO; after the death of the Participant, any exercisable +portion of an Option or other Award may, prior to the time when such portion becomes unexercisable under the Plan or the applicable Award Agreement, be exercised by his personal representative or by any Person empowered to do so under the deceased +Participant’s will or under the then applicable laws of descent and distribution. +(b) Notwithstanding Section 11.1(a), the Committee, in its discretion, may determine to permit a +Participant to transfer a Non-Qualified Stock Option to any one or more Permitted Transferees (as defined below), subject to the following terms and conditions: (i) a +Non-Qualified Stock Option transferred to a Permitted Transferee shall not be assignable or transferable by the Permitted Transferee other than by will or the laws of descent and distribution; (ii) any Non-Qualified Stock Option which is transferred to a Permitted Transferee shall continue to be subject to all the terms and conditions of the Non-Qualified Stock Option as +applicable to the +15 +Table of Contents +original Participant (other than the ability to further transfer the Non-Qualified Stock Option); (iii) any transfer of a Non-Qualified Stock Option to a Permitted Transferee shall be without consideration; and (iv) the Participant and the Permitted Transferee shall execute any and all documents requested by the Committee, +including, without limitation documents to (A) confirm the status of the transferee as a Permitted Transferee, (B) satisfy any requirements for an exemption for the transfer under applicable federal, state and foreign securities laws and +(C) evidence the transfer. For purposes of this Section 11.1(b), “ Permitted Transferee ” shall mean, with respect to a Participant, any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, +sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships, any individual sharing the Participant’s household (other than a tenant or employee), a trust in which these individuals +(or the Participant) control the management of assets, and any other entity in which these individuals (or the Participant) own more than 50% of the voting interests, or any other transferee specifically approved by the Committee after taking into +account any federal, state, local and foreign tax and securities laws applicable to transferable Non-Qualified Stock Options. +11.2. Amendment, Suspension or Termination of the Plan and Awards . The Plan may be wholly or +partially amended or otherwise modified, suspended or terminated at any time or from time to time by the Board or the Committee, retroactively or otherwise. However, neither the Board or the Committee may not take any action under this +Section 11.2 without stockholder approval that, except as otherwise provided in the Plan, would require stockholder approval in accordance with applicable law or applicable stock exchange rule. The Board or the Committee may amend the terms of +any Award theretofore granted, prospectively or retroactively, however, except as otherwise provided in the Plan, no such amendment shall, without the consent of the Participant, alter or impair any rights of the Participant under such Award without +the consent of the Participant unless the Award itself otherwise expressly so provides. Except as otherwise provided in the Plan or required by law, no amendment, suspension or termination of the Plan shall, without the consent of the Participant, +alter or impair any rights or obligations under any Award theretofore granted or awarded, unless the Award itself otherwise expressly so provides. No Awards may be granted or awarded during any period of suspension or after termination of the Plan, +and in no event may any Award be granted under the Plan after January 3, 2027, but Awards granted prior to such date may extend beyond that date. +11.3. Changes in Common Stock or Assets of the Company, Acquisition or Liquidation of the Company +and Other Corporate Events . +(a) Subject to Section 11.3(d), in the event of any dividend +or other extraordinary distribution (whether in the form of cash, Common Stock, other securities or other property), recapitalization, reclassification, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, liquidation, dissolution, or sale, transfer, exchange or other disposition of all or substantially all of the assets of the +Company, or exchange of Common Stock or other securities of the Company, issuance of warrants or other rights to purchase Common Stock or other securities of the Company, or other similar corporate transaction or event that affects the Common Stock, +then the Committee shall equitably adjust any or all of the following in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan or with respect to an Award: +(i) The number and kind of shares of Common Stock (or other securities or property) with respect to +which Awards may be granted or awarded (including, without limitation, adjustments of the limitations in Section 2.1 on the maximum number and kind of shares which may be issued under the Plan and adjustments of the Award Limit); +(ii) The number and kind of shares of Common Stock (or other securities or property) subject to +outstanding Awards; or +(iii) The grant or exercise price with respect to any Award. +16 +Table of Contents +(b) Subject to Section 11.3(d), in the event of +any transaction or event described in Section 11.3(a) or any unusual or nonrecurring transactions or events affecting the Company, any of its Subsidiaries, or the financial statements of the Company or any of its Subsidiaries, or of changes in +applicable laws, regulations or accounting principles, the Committee, in its discretion, and on such terms and conditions as it deems appropriate, either by the terms of the Award or by action taken prior to the occurrence of such transaction or +event and either automatically or upon the Participant’s request, is hereby authorized to take any one or more of the following actions whenever the Committee determines that such action is appropriate in order to prevent dilution or +enlargement of the benefits or potential benefits intended to be made available under the Plan or with respect to any Award under the Plan, to facilitate such transactions or events or to give effect to such changes in laws, regulations or +principles: +(i) To provide for the purchase of any such Award for an amount of cash equal to the +amount that could have been attained upon the exercise of such Award or realization of the Participant’s rights had such Award been currently exercisable or payable or fully vested, or for the cancellation of such Award if no amount could have +been attained upon the exercise of such Award or realization of the Participant’s rights had such Award been currently exercisable or payable or fully vested; +(ii) To provide for the replacement of such Award with other rights or property selected by the +Committee in its discretion having an aggregate value not exceeding the amount that could have been attained upon the exercise of such Award or realization of the Participant’s rights had such Award been currently exercisable or payable or +fully vested; +(iii) To provide that the Award cannot vest, be exercised or become payable after +such event; +(iv) To provide that such Award shall be exercisable as to all shares covered +thereby, notwithstanding anything to the contrary in Section 5.3 or the provisions of such Award; +(v) To provide that such Award be assumed by the successor or survivor corporation, or a parent or +subsidiary thereof, or shall be substituted for by similar options, rights or awards covering the stock of the successor or survivor corporation, or a parent or subsidiary thereof, with appropriate adjustments as to the number and kind of shares and +prices; +(vi) To make adjustments in the number and type of shares of Common Stock subject to +outstanding Awards, and/or in the terms and conditions of (including the grant, exercise or purchase price), and the criteria included in, outstanding options, rights and awards and options, rights and awards which may be granted in the future; and +(vii) To provide that, for a specified period of time prior to such event, the restrictions +imposed under an Award Agreement upon some or all shares of Restricted Stock, Restricted Stock Units or Deferred Stock may be terminated, and, in the case of Restricted Stock, some or all shares of such Restricted Stock may cease to be subject to +repurchase under Section 7.5 or forfeiture under Section 7.4 after such event. +(c) Subject +to Sections 11.3(d) and 3.2, the Committee may, in its discretion, include such further provisions and limitations in any Award, agreement or certificate, as it may deem equitable and in the best interests of the Company. +(d) No adjustment or action described in this Section 11.3 or in any other provision of the Plan +shall be authorized to the extent that such adjustment or action would cause the Plan to violate Section 422(b)(1) of the Code. Furthermore, no such adjustment or action shall be authorized to the extent such adjustment or action would result +in short-swing profits liability under Section 16 or violate the exemptive conditions of Rule 16b-3 unless the Committee determines that the Award is not to comply with such exemptive conditions. The +number of shares of Common Stock subject to any Award shall always be rounded down to the next whole number. +17 +Table of Contents +(e) The existence of the Plan, the Award Agreement +and the Awards granted hereunder shall not affect or restrict in any way the right or power of the Company or the stockholders of the Company to make or authorize any adjustment, recapitalization, reorganization or other change in the Company’s +capital structure or its business, any merger or consolidation of the Company, any issue of stock or of options, warrants or rights to purchase stock or of bonds, debentures, preferred or prior preference stocks whose rights are superior to or +affect the Common Stock or the rights thereof or which are convertible into or exchangeable for Common Stock, or the dissolution or liquidation of the company, or any sale or transfer of all or any part of its assets or business, or any other +corporate act or proceeding, whether of a similar character or otherwise. +(f) In connection with +the occurrence of any Equity Restructuring, and notwithstanding anything to the contrary in Sections 11.3(a) and 11.3(b): +(i) The number and type of securities subject to each outstanding Award and the exercise price or +grant price thereof, if applicable, shall be equitably adjusted; and/or +(ii) The Committee shall +make such equitable adjustments, if any, as the Committee in its discretion may deem appropriate to reflect such Equity Restructuring with respect to the aggregate number and kind of shares that may be issued under the Plan (including, but not +limited to, adjustments of the limitations in Section 2.1 on the maximum number and kind of shares which may be issued under the Plan and adjustments of the Award Limit). The adjustments provided under this Section 11.3(f) shall be +nondiscretionary and shall be final and binding on the affected Participant and the Company. +For purposes of this Section 11.3(f), +“ Equity Restructuring ” shall mean a nonreciprocal transaction between the Company and its stockholders, such as a stock dividend, stock split, spin-off, rights offering or recapitalization +through a large, nonrecurring cash dividend, that affects the number or kind of shares of Common Stock (or other securities of the Company) or the share price of Common Stock (or other securities) and causes a material change in the per share value +of the Common Stock underlying outstanding Awards. +11.4. Tax Withholding . The Company or +any of its Subsidiaries shall have the authority and the right to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy federal, state, local and foreign taxes (including the Participant’s FICA +obligation) required by law to be withheld with respect to any taxable event concerning a Participant arising as a result of this Plan. The Committee may in its discretion and in satisfaction of the foregoing requirement allow a Participant to elect +to have the Company withhold shares of Common Stock otherwise issuable under an Award (or allow the return of shares of Common Stock) having a Fair Market Value equal to the sums required to be withheld. Notwithstanding any other provision of the +Plan, the number of shares of Common Stock which may be withheld with respect to the issuance, vesting, exercise or payment of any Award (or which may be repurchased from the Participant of such Award) in order to satisfy the Participant’s +federal, state, local and foreign income and payroll tax liabilities with respect to the issuance, vesting, exercise or payment of the Award shall be limited to the number of shares which have a Fair Market Value on the date of withholding or +repurchase equal to the aggregate amount of such tax liabilities based on the minimum statutory withholding rates for federal, state, local and foreign income tax and payroll tax purposes that are applicable to such supplemental taxable income. +11.5. Prohibition on Repricing . Subject to Section 11.3, the Committee shall not, +without the approval of the stockholders of the Company, authorize the amendment of any outstanding Award to reduce its price per share. Furthermore, no Award shall be canceled and replaced with the grant of an Award having a lesser price per share +without the further approval of stockholders of the Company. Subject to Section 11.2, the Committee shall have the authority, without the approval of the stockholders of the Company, to amend any outstanding award to increase the price per +share or to cancel and replace an Award with the grant of an Award having a price per share that is greater than or equal to the price per share of the original Award. Furthermore, for purposes of this Section 11.6, except in connection with a +corporate transaction involving the Company (including, without limitation, any stock dividend, stock split, extraordinary cash dividend, recapitalization, reorganization, merger, +18 +Table of Contents +consolidation, split-up, spin-off, combination, or exchange of shares), the terms of outstanding Awards may not be +amended to reduce the exercise price per share of outstanding Options or Stock Appreciation Rights or cancel outstanding Options or Stock Appreciation Rights in exchange for cash, other Awards or Options or Stock Appreciation Rights with an exercise +price per share that is less than the exercise price per share of the original Options or Stock Appreciation Rights without the approval of the stockholders of the Company. +11.6. Forfeiture and Claw-Back Provisions . Pursuant to its general authority to determine the +terms and conditions applicable to Awards under the Plan, the Committee shall have the right to provide, in an Award Agreement or otherwise, or to require a Participant to agree by separate written or electronic instrument, that: +(a) (i) Any proceeds, gains or other economic benefit actually or constructively received by the +Participant upon any receipt or exercise of the Award, or upon the receipt or resale of any shares underlying the Award, must be paid to the Company, and (ii) the Award shall terminate and any unexercised portion of the Award (whether or not +vested) shall be forfeited, if (x) a Termination occurs prior to a specified date, or within a specified time period following receipt or exercise of the Award, or (y) the Participant at any time, or during a specified time period, engages +in any activity in competition with the Company, or which is inimical, contrary or harmful to the interests of the Company, as further defined by the Committee or (z) the Participant incurs a Termination for “cause” (as such term is +defined in the sole discretion of the Committee, or as set forth in a written agreement relating to such Award between the Company and the Participant); and +(b) All Awards (including any proceeds, gains or other economic benefit actually or constructively +received by the Participant upon any receipt or exercise of any Award or upon the receipt or resale of any shares underlying the Award) shall be subject to the provisions of any claw-back policy implemented by the Company, including, without +limitation, any claw-back policy adopted to comply with the requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act and any rules or regulations promulgated thereunder, to the extent set forth in such claw-back policy and/or in +the applicable Award Agreement. +11.7. Effect of Plan upon Other Compensation Plans . The +adoption of the Plan shall not affect any other compensation or incentive plans in effect for the Company or any of its Subsidiaries. Nothing in the Plan shall be construed to limit the right of the Company or any of its Subsidiaries: (a) to +establish any other forms of incentives or compensation for Employees, Directors or Consultants of the Company or any of its Subsidiaries, or (b) to grant or assume options or other rights or awards otherwise than under the Plan in connection +with any proper corporate purpose including without limitation, the grant or assumption of options in connection with the acquisition by purchase, lease, merger, consolidation or otherwise, of the business, stock or assets of any corporation, +partnership, limited liability company, firm or association. +11.8. Compliance with Laws . +The Plan, the granting and vesting of Awards under the Plan and the issuance and delivery of shares of Common Stock and the payment of money under the Plan or under Awards granted or awarded hereunder are subject to compliance with all applicable +federal, state, local and foreign laws, rules and regulations (including but not limited to federal, state and foreign securities law and margin requirements) and to such approvals by any listing, regulatory or governmental authority as may, in the +opinion of counsel for the Company, be necessary or advisable in connection therewith. Any securities delivered under the Plan shall be subject to such restrictions, and the Person acquiring such securities shall, if requested by the Company, +provide such assurances and representations to the Company as the Company may deem necessary or desirable to assure compliance with all applicable legal requirements. To the extent permitted by applicable law, the Plan and Awards granted or awarded +hereunder shall be deemed amended to the extent necessary to conform to such laws, rules and regulations. +11.9. Titles . Titles are provided herein for convenience only and are not to serve as a basis +for interpretation or construction of the Plan. +11.10. Governing Law . The Plan and any +agreements hereunder shall be administered, interpreted and enforced under the internal laws of the State of Delaware without regard to conflicts of laws thereof. +19 +Table of Contents +11.11. Section 409A . To the extent an +Award is a Section 409A Covered Award, the Award is intended to comply with Section 409A of the Code and, to the extent applicable, the Plan and Award Agreements shall be limited, construed and interpreted in accordance with +Section 409A of the Code. Neither the Company nor any of its Subsidiaries shall be liable for any additional tax, interest or penalties that may be imposed on a Participant by Section 409A of the Code or any damages for failing to +comply with Section 409A of the Code or this Section 11.12. Notwithstanding anything in the Plan or in an Award to the contrary, the following provisions shall apply to Section 409A Covered Awards: +(a) A Termination shall not be deemed to have occurred for purposes of any provision of a +Section 409A Covered Award providing for payment upon or following a Participant’s Termination unless such Termination is also a “Separation from Service” within the meaning of Code Section 409A and, for purposes of any such +provision of Section 409A Covered Award, references to a “termination,” “termination of employment” or like terms shall mean Separation from Service. Notwithstanding any provision to the contrary in the Plan or the Award, if +the Participant is deemed on the date of the Participant’s Termination to be a “specified employee” within the meaning of that term under Code Section 409A(a)(2)(B) and using the identification methodology selected by the Company +from time to time, or if none, the default methodology set forth in Code Section 409A, then with regard to any such payment under a Section 409A Covered Award, to the extent required to be delayed in compliance with Code Section +409A(a)(2)(B), such payment shall not be made prior to the earlier of (i) the expiration of the six (6)-month period measured from the date of the Participant’s Separation from Service, and (ii) the date of the Participant’s +death. All payments delayed pursuant to this Section 11.12 (a) shall be paid to the Participant on the first day of the seventh month following the date of the Participant’s Separation from Service or, if earlier, on the date of the +Participant’s death. +(b) Whenever a payment under a Section 409A Covered Award +specifies a payment period with reference to a number of days, the actual date of payment within the specified period shall be within the sole discretion of the Company. +(c) If under the Section 409A Covered Award an amount is to be paid in two or more installments, +for purposes of Code Section 409A, each installment shall be treated as a separate payment. +(d) With respect to any settlement or payment made on a Change in Control pursuant to a Section 409A +Covered Award, a Change in Control shall not be deemed to occur unless such event constitutes a “change in control event” within the meaning of Section 409A of the Code. +Notwithstanding any provision of the Plan to the contrary, the Committee may adopt such amendments to the Plan and outstanding Award +Agreements or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, that the Committee determines are necessary or appropriate to (x) exempt an Award from +Section 409A of the Code and/or preserve the intended tax treatment of the benefits provided with respect to the Award, or (y) comply with the requirements of Section 409A of the Code. +11.12. Paperless Administration . In the event that the Company establishes, for itself or using +the services of a third party, an automated system for the documentation, granting or exercise of Awards, such as a system using an internet website or interactive voice response, then the paperless documentation, granting or exercise of Awards by a +Participant may be permitted through the use of such an automated system. +11.13. No Rights to +Awards . No Participant or other Person shall have any claim to be granted any Award pursuant to the Plan, and neither the Company nor the Committee is obligated to treat Participants or any other Persons uniformly. +11.14. Unfunded Status of Awards . The Plan is intended to be an “unfunded” plan for +incentive compensation. With respect to any payments not yet made to a Participant pursuant to an Award, nothing contained in the Plan or any program or Award Agreement shall give the Participant any rights that are greater than those of a general +creditor of the Company or any of its Subsidiaries. +20 +Table of Contents +11.15. Relationship to other Benefits . No +payment pursuant to the Plan shall be taken into account in determining any benefits under any pension, retirement, savings, profit sharing, group insurance, welfare or other benefit plan of the Company or any of its Subsidiaries except to the +extent otherwise expressly provided in writing in such other plan or an agreement thereunder. +11.16. Expenses . The expenses of administering the Plan shall be borne by the Company. +11.17. Severability of Provisions . If any provision of the Plan shall be held invalid or +unenforceable, such invalidity or unenforceability shall not affect any other provisions hereof, and the Plan shall be construed and enforced as if such provisions had not been included. +ARTICLE XII. +MERGER +WITH C&J ENERGY SERVICES, INC. +With respect to any Award, other than a Performance Award, outstanding immediately prior to the +closing of the transactions contemplated by the Agreement and Plan of Merger by and among C&J Energy Services, Inc., a Delaware corporation, the Company and King Merger Sub Corp., a Delaware corporation and wholly-owned subsidiary of the +Company, dated as of June 16, 2019 (the “ Closing ”) that, pursuant to the terms of the applicable Award Agreement, the respective Participant may become vested in the Award based only on the Participant’s continued employment +with the Company or its Subsidiaries, notwithstanding any provision of the Award Agreement to the contrary, the Participant shall become fully vested in such Award in the event of the Participant’s Termination by the Company without Cause +(other than as a result of death or disability) within the 12 month period following the Closing. For purposes of the foregoing, “Cause” shall have the meaning set forth in the Participant’s Award Agreement. +21 +Table of Contents +Table of Contents +NEXTIER OILFIELD SOLUTIONS INC. +3990 ROGERDALE ROAD +HOUSTON, TX 77042 +VOTE BY INTERNET - www.proxyvote.com +Use the Internet to transmit your voting instructions and for electronic delivery of information. Vote by 11:59 p.m. Eastern Time on June 14, 2021. Have +your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. +ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS +If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future +proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or +access proxy materials electronically in future years. +VOTE BY PHONE - 1-800-690-6903 +Use any touch-tone telephone to transmit your voting instructions. Vote by 11:59 p.m. Eastern Time on June 14, 2021. Have your proxy +card in hand when you call and then follow the instructions. +VOTE BY MAIL +Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o +Broadridge, 51 Mercedes Way, Edgewood, NY 11717. +TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: +D51597-P56205 +KEEP THIS PORTION FOR YOUR RECORDS +— — — — — — — — — — — — +— — — — — — — — — — — — — — — — — — — — +— — — — — — — — — — — — — — — — — — — — +— — — — — — — — +DETACH AND RETURN THIS PORTION ONLY +THIS PROXY CARD IS +VALID ONLY WHEN SIGNED AND DATED. +NEXTIER +OILFIELD SOLUTIONS INC. +The Board of Directors recommends you vote FOR the following: +1. +Election of Directors to serve until the 2022 Annual Meeting, or earlier death, retirement or removal +Nominees: +For +Against +Abstain +1a.  Robert W. Drummond +☐ +☐ +☐ +The Board of Directors +recommends you vote FOR proposals 2, 3 and 4. +For +Against +Abstain +1b.  Stuart M. Brightman +☐ +☐ +☐ +2.  To ratify the appointment of KPMG LLP as our +independent auditor for the fiscal year ending December 31, 2021. +☐ +☐ +☐ +1c.  Gary M. Halverson +1d.  Patrick M. Murray +1e.  Amy H. Nelson +☐ +☐ +☐ +☐ +☐ +☐ +☐ +☐ +☐ +3.  To approve, in an advisory vote, the compensation of our named executive +officers. +4.  To approve the amendment and restatement of the NexTier Oilfield Solutions +Inc. Equity and Incentive Award Plan. +☐ +☐ +☐ +☐ +☐ +☐ +1f.   Melvin G. +Riggs +1g.  Michael Roemer +☐ +☐ +☐ +☐ +☐ +☐ +NOTE: Such other +business as may properly come before the meeting or any adjournment thereof. +1h.  James C. Stewart +☐ +☐ +☐ +1i.   Scott R. +Wille +☐ +☐ +☐ +Please indicate if you plan to attend this meeting +☐ +Yes +☐ +No +Please sign exactly as your +name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full +corporate or partnership name by authorized officer. +Signature [PLEASE SIGN WITHIN BOX] Date +Signature (Joint Owners) +Date +Table of Contents +Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: +The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com. +— — — — — — — — — — — — +— — — — — — — — — — — — — — — — — — — — +— — — — — — — — — — — — — — — — — — — — +— — — — — — — — +D51598-P56205 +NEXTIER OILFIELD SOLUTIONS INC. +Annual Meeting of Stockholders +June 15, 2021 +9:30 a.m. CDT +This proxy is solicited by the Board of Directors +The undersigned hereby +appoints Robert Drummond and Kevin M. McDonald, and either of them, with full power of substitution and power to act alone, as proxies to vote all the shares of Common Stock which the undersigned would be entitled to vote if personally present and +acting at the 2021 Annual Meeting of Stockholders, to be held at NexTier Oilfield Solutions Inc. headquarters, located at 3990 Rogerdale Road, Houston, Texas 77042 on Tuesday, June 15, 2021 at 9:30 a.m. Central Daylight Time, and at any adjournments +or postponements thereof. +This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is +made, this proxy will be voted in accordance with the Board of Directors’ recommendations. +Continued and to be signed on reverse side \ No newline at end of file diff --git a/raw/proxies/0001688476/0001193125-21-124722/proxy_rpt.txt b/raw/proxies/0001688476/0001193125-21-124722/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..5b8305bfe609d7f820383f1c40bf91793ad52bc3 --- /dev/null +++ b/raw/proxies/0001688476/0001193125-21-124722/proxy_rpt.txt @@ -0,0 +1,87 @@ +Related Person Transactions +Certain Related Party +Transactions +We paid Cerberus Operations & Advising Company LLC and its affiliates (collectively “COAC”), fees totaling approximately +$2.2 million during 2020 for consulting services provided in connection with improving the Company’s operations and information technology services, including ongoing support, development, & maintenance. We may retain COAC to provide +similar services in the future. +One of our board members is an employee of Cerberus, and funds managed by one or more affiliates of Cerberus indirectly own a +substantial portion of our equity through their ownership of Keane Investor Holdings LLC. +Policy and Procedures for the Review, Approval or Ratification of +Transactions with Related Persons +Prior to the completion of the IPO, our board of directors adopted a written policy (the “Related Party Policy”) +and procedures for the review, approval or ratification of “Related Party Transactions” by the independent members of the Audit Committee. For purposes of the Related Party Policy, a “Related Party Transaction” is any +transaction, arrangement or relationship or series of similar transactions, arrangements or relationships (including the incurrence or issuance of any indebtedness or the guarantee of indebtedness) in which (1) the aggregate amount involved +will or may be reasonably expected to exceed $120,000 in any fiscal year, (2) the Company or any of its subsidiaries is a participant, and (3) any Related Party (as defined herein) has or will have a direct or indirect material interest. +70 +Table of Contents +The Related Party Policy defines “Related Party” as any person who is, or, at any time since the beginning +of the Company’s last fiscal year, was (1) an executive officer, director or nominee for election as a director of the Company or any of its subsidiaries, (2) a person with greater than five percent (5%) beneficial interest in +the Company, (3) an immediate family member of any of the individuals or entities identified in (1) or (2) of this paragraph, and (4) any firm, corporation or other entity in which any of the foregoing individuals or entities is +employed or is a general partner or principal or in a similar position or in which such person or entity has a five percent (5%) or greater beneficial interest. Immediate family members (each, a “Family Member”) includes a +person’s spouse, parents, stepparents, children, stepchildren, siblings, mothers- and fathers-in-law, sons- and daughters-in-law, brothers- and sisters-in-law and anyone residing in such person’s home, other than a tenant or employee. +Prior to the Company entering into any Related Party Transaction, such Related Party Transaction will be reported to our General Counsel who will report the same +to the Audit Committee. Our General Counsel will conduct an investigation and evaluation of the Related Party Transaction and will report his or her findings to the Audit Committee, including a summary of material facts. The Audit Committee will +review the material facts of all Related Party Transactions which require the Audit Committee’s approval and either approve or disapprove of the Related Party Transaction, subject to the exceptions described below. If advance notice of a +Related Party Transaction has been given to the Audit Committee and it is not possible to convene a meeting of the Audit Committee, then the chairman of the Audit Committee will consider whether the Related Party Transaction is appropriate and, if +it is, will approve the Related Party Transaction, with the Audit Committee being asked to ratify the Related Party Transaction at the next regularly scheduled meeting of the Audit Committee. In the event the Audit Committee does not ratify any such +Related Party Transaction, management shall make all reasonable efforts to cancel or annul such Related Party Transaction. In determining whether to approve or ratify a Related Party Transaction, the Audit Committee, or its chairman, as applicable, +will consider all factors it deems appropriate, including the factors listed below in “—Review Criteria.” +Entering into a Related Party Transaction +without the approval or ratification required by the terms of the Related Party Policy is prohibited and a violation of such policy. In the event the company’s directors, executive officers or Chief Accounting Officer become aware of a Related +Party Transaction that was not previously approved or ratified under the Related Party Policy, such person will promptly notify the Audit Committee (or, if it is not practicable for the company to wait for the Audit Committee to consider the matter, +the chairman of the Audit Committee) will consider whether the Related Party Transaction should be ratified or rescinded or other action should be taken, with such review considering all of the relevant facts and circumstances regarding the Related +Party Transaction, including the factors listed below in “—Review Criteria.” The chairman of the Audit Committee will report to the committee at its next regularly scheduled meeting any actions taken under the Related Party Policy +pursuant to the authority delegated in this paragraph. The Audit Committee will also review all of the facts and circumstances pertaining to the failure to report the Related Party Transaction to the Audit Committee and will take, or recommend to +our board of directors, any action the Audit Committee deems appropriate. +No member of the Audit Committee or director of our board will participate in any +discussion or approval of a Related Party Transaction for which he or she is a Related Party, except that the Audit Committee member or board director will provide all material information concerning the Related Party Transaction to the Audit +Committee. +If a Related Party Transaction will be ongoing, the Audit Committee may establish guidelines for the Company’s management to follow in its ongoing +dealings with the Related Party. Thereafter, the Audit Committee, on at least an annual basis, will review and assess ongoing relationships with the Related Party to ensure that they are in compliance with the Audit Committee’s guidelines and +that the Related Party Transaction remains appropriate. +71 +Table of Contents +Review Criteria +All +Related Party Transactions will be reviewed in accordance with the standards set forth in the Related Party Policy after full disclosure of the Related Party’s interests in the transaction. As appropriate for the circumstances, the Audit +Committee or its chairman, as applicable, will review and consider: +· +the Related Party’s interest in the Related Party Transaction; +· +the terms of the Related Party Transaction, including the approximate dollar value of the amount involved in the Related +Party Transaction and the approximate dollar value of the amount of the Related Party’s interest in the transaction without regard to the amount of any profit or loss; +· +whether the transaction is being undertaken in the ordinary course of business of the Company; +· +whether the transaction with the Related Party is proposed to be, or was, entered into on terms no less favorable to the +Company than terms that could have been reached with an unrelated third party; +· +the purpose of, and the potential benefits to the Company of, the Related Party Transaction; +· +a description of any provisions or limitations imposed as a result of entering into the Related Party Transaction; +· +whether the proposed transaction includes any potential reputational risk issues for the Company which may arise as a +result of or in connection with the Related Party Transaction; +· +whether the proposed transaction would violate any requirements of the Company’s financing or other material +agreements; and +· +any other relevant information regarding the Related Party Transaction or the Related Party. +The Audit Committee, or its chairman, as applicable, may approve or ratify the Related Party Transaction only if the Audit Committee, or its chairman, as applicable, +determines in good faith that, under all of the circumstances, the transaction is fair to the Company. The Audit Committee, in its sole discretion, may impose such conditions as it deems appropriate on the Company or the Related Party in connection +with approval of the Related Party Transaction. +Pre-Approved Related Party Transactions +The Audit Committee has determined that the following transactions will be deemed pre-approved or ratified and will not require +review or approval of the Audit Committee, even if the aggregate amount involved will exceed $120,000, unless otherwise specifically determined by the Audit Committee. +· +Any employment by the Company of an executive officer of the Company or any of its subsidiaries if the related compensation +conforms with our Company’s compensation policies and if the executive officer is not a Family Member of another executive officer or of a director of our board; and +· +Any compensation paid to a director of our board if the compensation is consistent with the Company’s Bylaws and any +compensation policies. +Notwithstanding anything to the contrary in the Related Party Policy, in the event the Bylaws of the Company require +review by our board of directors and/or approval of a Related Party Transaction, the Audit Committee, and its chairman, will not have the authority to review or approve a Related Party Transaction but will provide a recommendation to our board of +directors for the board’s use in its con +sideration of a given Related Party Transaction. +72 +Table of Contents \ No newline at end of file diff --git a/raw/proxies/0001688476/0001193125-22-115311/proxy.txt b/raw/proxies/0001688476/0001193125-22-115311/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..c73f2e156d1532becb16f031d12c3ec8799f39e8 --- /dev/null +++ b/raw/proxies/0001688476/0001193125-22-115311/proxy.txt @@ -0,0 +1,3553 @@ +DEF 14A +1 +d390269ddef14a.htm +DEF 14A +DEF 14A +Table of Contents +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Proxy Statement Pursuant to Section 14(a) of the +Securities Exchange Act of 1934 +(Amendment +No. ) +Filed by the Registrant ☒ +Filed by a Party other than the Registrant ☐ +Check the appropriate box: +☐ +Preliminary Proxy Statement +☐ +Confidential, for Use of the Commission Only (as permitted by Rule +14a-6(e)(2)) +☒ +Definitive Proxy Statement +☐ +Definitive Additional Materials +☐ +Soliciting Material Pursuant to §240.14a-12 +NexTier Oilfield Solutions Inc. +(Name of +the Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check all boxes that apply): +☒ +No fee required. +☐ +Fee paid previously with preliminary materials. +☐ +Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules +14a-6(i)(1) and 0-11. +Table of Contents +Table of Contents +Notice of 2022 Annual Meeting of Stockholders +When +Tuesday, June 14, 2022 +at 9:30 a.m. +(CDT) +Doors open at 9:20 a.m. +Where +NexTier Company +Headquarters +3990 Rogerdale Road +Houston, Texas 77042 +Record Date +Stockholders as of +close of business on April 18, 2022 +are entitled to vote +Items of Business +Proposal Summary +Board Voting +Recommendation +Page Reference +(for more detail) +1.  Election of ten directors +☑ +FOR each nominee +8 +2.  Ratification of selection of KPMG LLP as our independent registered public accounting firm +for 2022 +☑ +FOR +24 +3.  Approval of advisory resolution on 2021 executive compensation +☑ +FOR +27 +Stockholders will also transact such other business as may properly come before the 2022 Annual Meeting. +Attending the Annual Meeting +In Person. To be admitted, you will be required to present a government-issued photo identification (such as a driver’s license or passport) and proof of share ownership. More information can be found in proxy statement +in the section “Other Information”. If you are a beneficial stockholder (that is, your shares are held in the name of a broker, bank or other holder of record), you will also need to obtain a “legal proxy” from the registered +stockholder to vote at the Annual Meeting. You do not need to attend the Annual Meeting of Stockholders to vote if you submitted your proxy in advance of the meeting. +As part of our precautions regarding the coronavirus or COVID-19, we +are planning for the possibility that the meeting may be held virtually over the Internet. If we take this step, we will announce the decision to do so as soon as practicable before the meeting via a press release and posting details on our website +that will also be filed with the SEC as proxy material. As always, we encourage you to vote your shares prior to the Annual Meeting. +Your Vote Is +Very Important. Even if you plan to attend our Annual Meeting in person, please cast your vote as soon as possible. Make sure to have your proxy card or voting instruction form (VIF) in hand: +Vote by Internet +Call Toll-Free +Vote by Mail +Vote in Person +www.proxypush.com/NEX +Call +1-866-475-3790 +(from the +United States and Canada) +Follow the instructions on +your proxy card +Attend our Annual Meeting +and vote by ballot +Submitting your proxy now will not prevent you from voting your shares at the 2022 Annual Meeting, as your proxy is revocable at your +option. +Important Notice Regarding the Availability of Proxy +Materials for the Annual Meeting of Stockholders to be held on June 14, 2022: This notice, the Proxy Statement, the proxy card and our 2021 Annual Report to Stockholders, which includes our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 (the “2021 Form 10-K”), are available on our website at +www.nextierofs.com . +By order of the Board of Directors, +Kevin M. +McDonald +Executive Vice President, Chief Administrative Officer & General Counsel +Houston, Texas +April 22, 2022 +i +Table of Contents +Table of Contents +Letter to Stockholders +Proxy Highlights +1 +Proposal 1 – Election of Directors +8 +Nominees +9 +Board of Directors +14 +Our Directors +14 +Board Committees +16 +Director Compensation +17 +Corporate Governance +20 +Proposal 2 – Ratify Appointment of Independent Auditors +24 +Fees Paid to KPMG +25 +Pre-Approval Policy +25 +Audit Committee Report +26 +Proposal 3 – Advisory Approval of Executive Compensation +27 +Executive Officers +28 +Compensation Committee Report +30 +Compensation Discussion & Analysis +31 +Executive Compensation Tables +48 +CEO Pay Ratio +55 +Other Information +56 +Share Ownership +56 +Related Person Transactions +57 +Delinquent Section 16(a) Reports +60 +Proposals by Stockholders +60 +Householding +60 +Table of Contents +Letter to Stockholders +Dear Fellow Stockholder, +I invite you to join the Board of Directors and our +management team at the NexTier 2022 Annual Meeting of Stockholders. The sole purpose of the meeting is to consider the matters described in the Notice of 2022 Annual Meeting of Stockholders. +Two-thousand twenty-one was a transition year, both for our industry and for NexTier. +The year began with many of the same economic headwinds that had impacted customer demand since the start of the COVID-19 pandemic. But, as the year progressed and global oil and natural gas demand and prices +moved higher off the pandemic lows, customer demand began to improve. By mid-year, our industry and company had shifted into a recovery phase. +At NexTier, we used the downturn to strategically reposition ourselves for what we believed would ultimately be a recovery in US onshore oil and gas activity. We +invested counter-cyclically, including the conversion of over half of our hydraulic fracturing fleet to be capable of using natural gas for power, which reduces both the emissions profile and fuel costs of our fleets. We also launched our Power +Solutions natural gas fueling business, which helps us maximize the volume of natural gas we substitute for diesel in our operations. These investments began to pay off by the end of 2021 and significantly contributed to NexTier’s momentum as +we entered 2022. +In August of 2021, we completed the acquisition of Alamo Pressure Pumping (“Alamo”). Alamo was an ideal strategic fit for NexTier, +bringing a high-quality fleet of frac equipment that allowed us to further accelerate our low cost, low emissions strategy, featuring the largest deployed fleet of natural gas powered hydraulic fracturing equipment. The addition of Alamo also made +NexTier the largest well stimulation services provider, as measured by deployed hydraulic fracturing fleets, in the Permian Basin—the most active shale oil play in the United States. The successful integration of Alamo into NexTier was +substantially complete by the end of 2021. +While 2021 saw the world and our industry begin to recover from the pandemic, +COVID-19 nevertheless impacted our operations. For the entirety of 2021, NexTier executed on our plans to protect our customers, our people, our communities, and our business, with safety measures consistent +with CDC guidelines. +Throughout the year, our management team and Board of Directors met on a regular basis to oversee enterprise risk management and review +business progress and recovery. We also decided to expand our Board of Directors to ten members, with Bernardo Rodriguez joining our Board at the beginning of 2022. +As we move into 2022, the economic recovery of the oilfield services business is accelerating. Additionally, heightened geopolitical risk is adding a layer of +complexity to what was already an undersupplied global oil and gas market. In our industry, service capacity utilization started the year very high, and supply constraints are impacting the industry’s ability to respond to customer demand. Our +counter-cyclical investments have us well-positioned to capitalize on these improving dynamics and we are excited for what this means for our business in 2022 and beyond. +Sincerely, +Robert W. Drummond +President & Chief Executive Officer +Table of Contents +Proxy Highlights +NexTier Oilfield Solutions Inc. is a predominately U.S. land focused oilfield service company that offers a diverse set of well completion and production services +across a variety of active and demanding basins. We provide our services through our operating subsidiaries to exploration and production (“E&P”) customers. Our integrated solutions approach is focused on delivering efficiency, and our +ongoing commitment to innovation helps our customers capitalize on technological advancements. NexTier is differentiated through four points of distinction, including safety performance, efficiency, partnership and innovation. We are making this +proxy statement available to you on April 29, 2022 in connection with the solicitation of proxies by our board of directors (or our “Board”) for the NexTier Oilfield Solutions Inc. 2022 Annual Meeting of Stockholders (the “Annual +Meeting”). In this Proxy Statement, “NexTier,” the “Company,” “we,” “us” and “our” refer to NexTier Oilfield Solutions Inc., a Delaware corporation. +Purpose of the Meeting +The table below +summarizes the proposals that will be voted on, the vote required to approve each item, how votes are counted and how the Board recommends you vote: +Proposal +Required +Approval +Broker +Discretionary +Voting Allowed +Broker +Non-Votes +Abstentions +Board +Recommendation +1.  Election of Directors. To +elect each of the ten individuals named in this Proxy Statement until the 2023 Annual Meeting of Stockholder (the “2023 Annual Meeting”) or, in each case, until his or her earlier death, retirement, resignation or removal from the position +of director. +Majority of +Votes Cast +No +No effect +No effect +FOR each +nominee +2.  Ratify Appointment of Independent +Auditors. To ratify the appointment of KPMG LLP as our independent auditor for the fiscal year ending December 31, 2022. +Majority of +Votes Cast +Yes +N/A +No effect +FOR +3.  Approve Executive +Compensation. To approve, in an advisory vote, the compensation of our named executive officers. +Majority of +Votes Cast +No +No effect +No effect +FOR +How to Vote +To +ensure your representation at the Annual Meeting, we request that you grant your proxy to vote on each of the proposals in this Proxy Statement and any other matters that may properly come before the meeting to the persons named in the proxy card by +voting in one of the ways described herein no later than the Voting Deadline whether or not you plan to attend. You can vote in any of the following ways: +Vote by Internet +Call Toll-Free +Vote by Mail +Vote in Person +www.proxypush.com/NEX +Call +1-866-475-3790 +(from the +United States and Canada) +Follow the instructions on +your proxy card +Attend our Annual Meeting +and vote by ballot +1 +Table of Contents +Please Vote. Your Vote +is Important to Us. +Questions +You +may call or contact our proxy solicitor, D.F. King & Co., Inc., at (800) 848-2998, collect at (212) 269-5550 or NexTier@dfking.com, or contact us, +care of the Corporate Secretary at 3990 Rogerdale Road, Houston, Texas 77042 or via telephone at (713) 325-6000 if you have any questions or need directions to be able to attend the meeting and vote in +person. +Board and Governance Highlights +We are committed to maintaining strong corporate governance that promotes the long-term interests of our stockholders, strengthens Board and management effectiveness +and builds public trust in the Company. The Corporate Governance section of this Proxy Statement beginning on page 20 describes our key corporate governance policies and practices, which include the following highlights: +Our governance framework is built around our Code of Business Conduct and Ethics, which sets our guiding principles and outlines what +we expect from each of our employees. This framework is reinforced by a range of policies which our Board regularly reviews. +2 +Table of Contents +Stockholder Engagement Highlights +We believe that meaningful stockholder engagement is key to building trust with our stockholders and enables us to understand and respond to their concerns. Building +trust with stockholders is important to us and is significantly aided by understanding stockholder viewpoints, priorities and motivations. Our Executive, Investor Relations, and Legal teams comprise our primary engagement team, which regularly +engages with stockholders to seek their views on key matters and to inform our management team and our Board about the issues and emerging governance trends that our stockholders tell us matter most to them. Our Board Chair and Committee chairs are +also available to participate in our engagement efforts when requested. These engagements routinely cover governance and compensation matters, as well as social, environmental, safety, and other current issues. +Annual Engagement Cycle +Stockholder Engagement in 2021 +Our 2021 off-season engagement conversations focused on executive compensation and environmental, social and governance related matters. We then reported the feedback we receive from stockholders to the Board and relevant +committees, allowing the Board to better understand our stockholders’ priorities and perspectives and take action, where appropriate. +We reached out to the top 22 stockholders +(excluding Cerberus Capital Management LP, Alamo Frac Holdings, LLC, and THRC Holdings LP) that represented (with Cerberus, Alamo Frac Holdings and THRC) approximately 87% of outstanding shares . +3 +Table of Contents +What We Heard from +Stockholders +What We Did +Diversity +of the Board, and independence of its directors, continues to be of high importance +✓   The addition of Bernardo Rodriguez +to the Board expanded both the number of independent directors as well as the diversity of its membership. +Continued +evolution of the Company’s ESG disclosures, including quantification and measurement of emissions metrics +✓   The Company’s Environmental, +Social and Governance Steering Committee continues to evaluate opportunities to demonstrate the Company’s on-going commitment to environmental, health and safety, corporate social responsibility, +corporate governance, sustainability, and other such public policy matters relevant to the Company. +✓   The Company also published an update +to its first Corporate Sustainability Report, which included disclosures relating to the displacement of diesel with cleaner burning natural gas and the Company’s reduction of CO2e emissions. +Focus on +human capital management, at all levels within the organization +✓   NexTier adopted a Human Rights +Policy in 2021 that was modeled on the United Nations Guiding Principles on Business and Human Rights, and Universal Declaration of Human Rights. This policy incorporates the Company’s commitment to diversity and inclusion in our +workforce. +Environmental, Social and Governance (“ESG”) Highlights +Corporate Responsibility Oversight +Our Board recognizes that a robust +governance framework and a culture of integrity helps us compete more effectively, sustain success and build long-term stockholder value. NexTier is governed by a Board and committees of the Board that meet throughout the year. Directors discharge +their responsibilities at Board and committee meetings and through ongoing communication with each other and with management. +The Nominating and Corporate Governance Committee of our Board oversees the +development and implementation of a companywide sustainability strategy. An ESG Steering Committee, composed of a cross-functional team of executives and employees, reports to the Nominating and Corporate Governance Committee and the Chief Executive +Officer. The Steering Committee focuses on integration and advancement of sustainability initiatives and awareness across our business. +Corporate Responsibility Framework +At NexTier, +we seek to responsibly grow and continuously improve our business in a way that maximizes stockholder value by taking care of our people, our customers, our communities and the environment. Our sustainability program is intended to support the +purpose and mission of the Company and to contribute to our long-term success and growth. Our ongoing sustainability efforts are enabled by our digital artificial intelligence platform and focused on four core pillars: Environment, People, +Community, and Oversight. +The Company maintains a section of its website for disclosures on corporate responsibility. In addition, we published our inaugural +Corporate Responsibility Report in 2020. In 2021, we published an update to our Corporate Responsibility Report, which provided an update on our progress towards our sustainability goals. Beginning in 2022, we plan to publish a Corporate +Responsibility Report annually during the fourth quarter of each year. The Corporate Responsibility Report, the 2021 Update to the Corporate Responsibility Report and other content posted on our website does not constitute a part of this Proxy +Statement. +4 +Table of Contents +Voting Information +Who Can Vote. All registered stockholders at the close of business on April 18, 2022 (the “Record Date”) have the right to receive notice of, and +to vote in person or by proxy at, the Annual Meeting. Each share of common stock is entitled to one vote. As of the Record Date, there were 244,035,932 shares of NexTier common stock outstanding and entitled to vote. +Meeting Attendance. Attendance at the meeting is limited to NexTier stockholders as of the Record Date. If you plan to attend the Annual Meeting in person, you +will need a form of personal identification (such as a driver’s license or passport) along with either your Notice, proxy card or proof of stock ownership to enter the Annual Meeting. If you are a street name stockholder and you wish to attend +the Annual Meeting in person, you will need to provide official documentation (such as a brokerage statement) reflecting your beneficial ownership of NexTier stock as of the Record Date, as well as a valid picture identification (such as a +driver’s license or passport). Admission to the meeting will be on a first-come, first-served basis. Doors will open at 9:20 a.m. Central Daylight Time. Please note that no cameras, recording equipment, electronic devices, large bags, +briefcases or packages will be permitted in the Annual Meeting. +COVID-19 Implications. We are monitoring the +coronavirus situation closely and if we determine that holding an in-person annual meeting could pose a significant risk to the health and safety of our stockholders, employees, and directors, the Company may +decide to instead hold a Virtual Annual Meeting. If we decide to use that format, we will make a public announcement as soon as practicable prior to the meeting. +In such event, to attend and participate in the Virtual Annual Meeting, stockholders will need to access the live audio webcast of the meeting. To do so, stockholders +of record will need to visit www.proxydocs.com/NEX and use their control number provided in the Notice to log in to this website, and beneficial owners of shares held in street name will need to follow the instructions provided by the broker, bank +or other nominee that holds their shares. We would encourage stockholders to log in to this website and access the webcast before the Virtual Annual Meeting’s start time. Further instructions on how to attend, participate in and vote at the +Virtual Annual Meeting, including how to demonstrate your ownership of our stock as of the record date, will be available at www.proxydocs.com/NEX using your control number. Please note you will only be able to participate in the meeting using this +website if the Company decides to hold a Virtual Annual Meeting, instead of holding an in-person Annual Meeting in Houston, Texas. +Proxy Voting Deadline. 11:59 p.m., Eastern Time, on June 13, 2022. +Stockholder of Record. If your shares are registered directly in your name with our transfer agent, American Stock Transfer & Trust Company LLC, you are +considered, with respect to those shares, the stockholder of record, and we are sending these proxy materials directly to you. As the stockholder of record, you have the right to grant your voting proxy directly to us or to a third party, or to vote +in person at the Annual Meeting. +Beneficial Owner. If your shares are held in a brokerage account or by a bank, trustee or other nominee, you are considered +the beneficial owner of shares held in street name, and these proxy materials are being forwarded to you on behalf of your broker, bank, trustee or other nominee. As the beneficial owner, you have the right to direct your broker, bank, trustee or +other nominee how to vote and you also are invited to attend the Annual Meeting. If you received a printed set of proxy materials, your broker, bank, trustee or other nominee has enclosed a voting instruction form (“VIF”) for you to use in +directing the broker, bank, trustee or other nominee how to vote your shares. +5 +Table of Contents +Since a beneficial owner is not the stockholder of record, you may not vote these shares in person at the Annual +Meeting unless you obtain a legal proxy from the broker, bank, trustee or other nominee that holds your shares giving you the right to vote the shares at the Annual Meeting. +Proxies. Pursuant to rules adopted by the Securities and Exchange Commission (“SEC”), we have elected to mail to many of our stockholders a Notice of +Internet Availability of Proxy materials (which we refer to as the “Notice”) instead of a paper copy of the proxy materials. All stockholders receiving the Notice will have the ability to access the proxy materials over the Internet and +receive a paper copy of the proxy materials by mail on request. Instructions on how to access the proxy materials over the Internet or to request a paper copy may be found in the Notice. In addition, the Notice contains instructions on how you may +access proxy materials in printed form by mail or electronically on an ongoing basis. This process has allowed us to expedite our stockholders’ receipt of proxy materials, lower the costs of distribution, and reduce the environmental impact of +our 2022 Annual Meeting. +The Notice is being mailed on or about April 29, 2022 to each stockholder registered in our share register as of the Record Date. +Stockholders not registered in our share register as of the Record Date will not be entitled to attend, vote or grant proxies to vote at the Annual Meeting. Your vote and proxy are being solicited by our Board in favor of each of Robert +W. Drummond and Kevin M. McDonald (the “Proxy Holders”), with full power of substitution, for use at the Annual Meeting. +We request that you +grant your proxy to vote on each of the proposals in this notice and any other matters that may properly come before the meeting to the Proxy Holders by completing, signing, dating and returning the proxy card in accordance with the instructions +thereon, for receipt by us no later than the Proxy Voting Deadline, whether or not you plan to attend. +If you are a registered holder and you properly complete and +submit your proxy card in a timely manner, you will be legally designating the individual or individuals named by you in the proxy card, or if you do not name your proxy or proxies, the Proxy Holders, to vote your shares in accordance with your +instructions indicated on the card. If you are a registered stockholder and properly complete and submit your proxy card in a timely manner without naming your proxy or proxies and you do not indicate how your shares are to be voted, then the Proxy +Holders will vote as the board of directors recommends on each proposal and if other matters properly come before the Annual Meeting, the Proxy Holders will have your authority to vote your shares in their discretion on such matters. +Revoking Your Proxy. If you are a stockholder of record , you can revoke your proxy at any time before it is exercised by: +· +Submitting written notice of revocation to NexTier Oilfield Solutions Inc., 3990 Rogerdale Rd, Houston, Texas 77042, Attn: +Corporate Secretary, so long as such notice is received no later than 11:59 p.m., Eastern Time, the day before the Annual Meeting; +· +Voting again by Internet or telephone at a later time before the closing of those voting facilities at 11:59 p.m., Eastern +Time, on the day before the Annual Meeting. +· +Submitting a later dated proxy with new voting instructions by mail or through the telephone or Internet voting systems, so +long as such notice is received no later than 11:59 p.m., Eastern Time, the day before the Annual Meeting; or +· +Attending the Annual Meeting and voting your shares in person (attending the Annual Meeting will not by itself have the +effect of revoking a previously submitted proxy). +If you are not a registered holder, but you hold your shares through a broker or other +nominee , you must follow the instructions provided by your broker or other nominee if you wish to revoke a previously +6 +Table of Contents +granted proxy. You may also change your vote or revoke your proxy in person at the Annual Meeting if you obtain a signed proxy from the record holder (broker or other nominee) giving you the +right to vote the shares at the meeting. +Multiple Proxy Cards. If you receive multiple proxy cards, this indicates that your shares are held in more than +one account, such as two brokerage accounts and are registered in different names. You should complete and return each of the proxy cards to ensure that all of your shares are voted. +Cost of Proxy Solicitation. We have retained D.F. King & Co., Inc. to solicit proxies from our stockholders at an estimated fee of $8,500, plus +expenses. Some of our directors, officers and employees may solicit proxies personally, without any additional compensation, electronically, by telephone or by mail. Proxy materials also will be furnished without cost to brokers and other nominees +to forward to the beneficial owners of shares held in their names. All costs of proxy solicitation will be borne by the Company. +Quorum and Voting. A +majority of the outstanding shares of our common stock present in person or represented by proxy at the Annual Meeting will constitute a quorum for the transaction of business. Abstentions and broker non-votes +will be included in determining whether a quorum is present at the Annual Meeting. A “broker non-vote” occurs when a nominee (such as a broker) holding shares for a beneficial owner abstains +from voting on a particular proposal because the nominee does not have discretionary voting power for that proposal and has not received instructions from the beneficial owner on how to vote those shares. +If you are a beneficial owner and your broker or other nominee holds your shares in its name (in “street name”), the broker generally has discretion to vote +your shares with respect to “routine” proposals. The only “routine” proposal in this Proxy Statement is Proposal 2. Proposals 1 and 3 are “non-routine” and your broker may not +vote your shares. Accordingly, if you hold your shares in “street name,” your broker will not be able to vote your shares on these matters unless your broker receives voting instructions from you. +Approval of all Proposals will be decided by a simple majority of the votes cast “FOR” or “AGAINST,” in person or by proxy, provided a quorum is +present. Abstentions and broker “non-votes” will not affect the voting results. +The election of each +director nominee will be considered and voted upon as a separate proposal. There is no cumulative voting in the election of directors. Abstentions and broker “non-votes” will not affect the +voting results. +7 +Table of Contents +Proposal 1. Election of Directors +The Board of Directors recommends that you vote “FOR” +each nominee for director. +Our business and affairs are currently managed under our Board. Under our Certificate of Incorporation, the Board consists of +between 7 and 15 members, as determined by resolution of the Board from time to time. Our Board currently consists of ten directors. Proxies cannot be voted for a greater number of persons than the number of nominees named. +Upon the recommendation of the Nominating and Corporate Governance Committee, the Board has nominated each of the following ten nominees to be elected at the Annual +Meeting: Robert W. Drummond, Stuart M. Brightman, Gary M. Halverson, Patrick M. Murray, Amy H. Nelson, Melvin G. Riggs, Bernardo J. Rodriguez, Michael Roemer, James C. Stewart, and Scott R. Wille. Each of the nominees is presently serving as a +director. +Each director elected will serve for a term of one year and will hold office until the 2023 Annual Meeting and until his or her respective successor is +elected and qualified, or, in each case, until his or her earlier death, resignation, retirement, disqualification or removal from the position of director. All of our nominees have consented to serve as directors and our Board has no reason to +believe that any of the nominees will be unable to act as a director. +A director nominee will be re-elected if approved by +a simple majority of the votes cast. If you properly submit a proxy card but do not indicate how you wish to vote, the Proxy Holders will vote for each director nominee. +8 +Table of Contents +Nominees +Set forth in the following pages is +certain information furnished to us by our director nominees, including information about their individual experience, qualifications, attributes and skills that led our Nominating and Corporate Governance Committee and Board to conclude that they +should serve as directors. +There are no family relationships among any of our directors or executive officers. None of the corporations or other organizations +referenced in the biographical information below is a parent, subsidiary or other affiliate of NexTier. +Robert W. Drummond +Other Public Company Directorships: +Age: 61 +Director since: 2018 +Expro Group Holdings N.V. (since 2017) +Mr. Drummond serves as a director and as NexTier’s President and Chief Executive Officer. He joined Keane Group, Inc. (now known as NexTier +Oilfield Solutions Inc.) in August 2018 as Chief Executive Officer and a member of the Board, and was elected as President in October 2019. Prior to joining Keane, Mr. Drummond served as the President & Chief Executive Officer of Key +Energy Services, Inc. and served for more than 30 years at Schlumberger Limited in various executive positions. Mr. Drummond has been a Supervisory Director at Expro Group Holdings N.V. since May 2017, and sits on the board of directors of the +Energy Workforce & Technology Council and the advisory board for the University of Alabama College of Engineering. He has previously served on the board of directors of the National Ocean Industries Association, the Houston Offshore Energy +Center, the Greater Houston Partnership, the API Upstream Committee, and as an Advisory Board Member of the University of Houston Global Energy Management Institute. Mr. Drummond received his Bachelors in Science in Mineral/Petroleum +Engineering from the University of Alabama. +Mr. Drummond brings to our Board a wealth +of experience in positions of leadership across the energy industry. +Stuart M. Brightman +Age: 65 +Director since: 2019 +Mr. Brightman has served as a member of our Board since October 2019. He served as a director of TETRA Technologies, Inc. (“TETRA”), a +diversified oilfield services company, from May 2009 to May 2020. He also served as Chief Executive Officer of TETRA from May 2009 until May 2019, as President of TETRA from May 2009 until February 2018, and as Executive Vice President and Chief +Operating Officer of TETRA from April 2005 to May 2009. Prior to TETRA, Mr. Brightman spent 11 years at Dresser, Inc. (including its successors in interest, “Dresser”) in a variety of leadership roles, during which he was involved in +multiple M&A transactions, internal restructurings and product/market repositionings. He has experience in integration of acquisitions and oversight of operations, engineering, sales and marketing, finance, human resources and information +technology. +Mr. Brightman’s broad oil field services and executive management +experience, and his proven leadership and business capabilities provide an important point of view to our Board. +9 +Table of Contents +Gary M. Halverson +Age: 63 +Director since: 2016 +Mr. Halverson has served as a member of our Board since September 2016. In 2016, Mr. Halverson became a Senior Advisor at First Reserve, a +private equity firm that focuses on energy investments, and a Partner at 360 Development Partners, a commercial real estate firm. Mr. Halverson was formerly Group President of Drilling and Production Systems and Senior Vice President at Cameron +International Corporation from 2014 to 2016 prior to its sale to Schlumberger in 2016. He has over 38 years of industry experience with Cameron, where he worked in various leadership roles across the U.S., Latin America and Asia. Mr. Halverson +currently serves as Chairman of the Board of Directors of the Petroleum Equipment Suppliers Association, as a director on the board of the General Committee of Special Programs of the American Petroleum Institute, as a director on the board of the +Well Control Institute, as a director on the board of FlexSteel Pipeline Technologies, Inc. and was the U.S. delegate to the World Petroleum Congress. +Mr. Halverson’s extensive involvement in the oilfield service industry brings a valuable perspective to our Board. +Patrick M. Murray (Chairman) +Age: 79 +Director since: 2019 +Mr. Murray has served as a member of our Board since October 2019. In May 2004, Mr. Murray retired from Dresser, a manufacturer and marketer +of highly engineered equipment for the energy industry, where he had been the Chairman of the Board and Chief Executive Officer since 2001. From 1996 to 2000 he served in a variety of senior leadership roles with Dresser. Mr. Murray has over 35 +years of domestic and international experience in both operational management and financial/business development leadership roles. Mr. Murray also serves on the board of the World Affairs Council of Dallas Fort Worth, on the board of advisors +for the Maguire Energy Institute at the Edwin L. Cox School of Business, Southern Methodist University, and as Chairman of the Board of Regents of Seton Hall University. +Mr. Murray’s brings to his role as a director extensive executive-level management experience, public board experience and comprehensive knowledge and +understanding of the oil and gas industry. +10 +Table of Contents +Amy H. Nelson +Other Public Company Directorships: +Age: 53 +Director since: 2019 +APA Corporation (since 2014) +Helix Energy Solutions Group, Inc. (since 2019) +Ms. Nelson has served as a member of our Board since October 2019. She is also the president of Greenridge Advisors, LLC, which she founded in +2007 as an energy services and equipment consulting firm focused on the development, execution, and financing of corporate and product line strategies. Ms. Nelson advises her clients on strategy development, capital allocation, acquisition +evaluation and infrastructure development. Her clients span a broad range of oilfield service, product and geographic markets. Ms. Nelson has been a member of APA Corporation’s board of directors since 2014, and is a member of its audit +and corporate governance and nominating committees. She also joined the Helix Energy Solutions Group, Inc. board of directors and its audit committee in July of 2019, and in May of 2020 began serving as the chair of the audit committee. +Ms. Nelson began her career at Amoco Production Company in a variety of engineering, project management and planning roles. From 2000 to 2007, Ms. Nelson served as a vice president of SCF Partners, an oilfield service and equipment-focused +private equity firm, where she concentrated on investment strategy, investment execution and portfolio company management. Ms. Nelson has devoted her career to serving companies in the oil and gas industry. +Ms. Nelson’s experiences have provided her with valuable insight into corporate +strategy, capital allocation, and the assessment and management of risks, including environmental risks, faced by oil and gas companies. This expertise enhances her contributions to the Board. +Melvin G. Riggs +Other Public Company Directorships: +Age: 67 +Director since: 2019 +Black Mountain Acquisition Corp. (since 2021) +Mr. Riggs has served as a member of our Board since October 2019. Mr. Riggs has served in senior-level positions at Clayton Williams Energy, +Inc. (“CWEI”) and its related companies for 28 years, including his current position as Vice President and Director since May 2017. Clayton Williams Companies is a group of privately held companies involved in oil and natural gas +activities, real estate, and agricultural operations. From March 2015 to April 2017, Mr. Riggs served as President of CWEI, a public exploration and production company that develops and produces oil and natural gas. From December 2010 until +March 2015, Mr. Riggs served as Executive Vice President and Chief Operating Officer of CWEI. From 1991 to December 2010, Mr. Riggs served as Senior Vice President—Finance, Secretary, Treasurer, and Chief Financial Officer of CWEI. +Mr. Riggs currently serves as a Director at Black Mountain Acquisition Corp. since October 2021. He previously served as a Director at Royal Energy, Inc. from July 2018 to November 2021, as a Director at TransAtlantic Petroleum Ltd. from July +2009 to June 2020, and as a Director at CWEI from May 1994 until April 2017. Mr. Riggs is a Certified Public Accountant. +Mr. Riggs has a strong operational background and extensive financial expertise, all of which brings important insights into board oversight, risk management and +corporate governance matters. +11 +Table of Contents +Bernardo J. Rodriguez +Age: 57 +Director since: 2022 +Mr. Rodriguez has served as a member of our Board since January 2022. Mr. Rodriquez is the Chief Digital and Technology Officer at J.D. +Power. Mr. Rodriguez is responsible for advancing J.D. Power’s digital and AI transformation and leads the company’s Technology, Artificial Intelligence, Research, Innovation, CX Solutions divisions. From 2016 until Mr. Rodriguez +joined J.D. Power in 2017, Mr. Rodriquez served as Managing Director of Strategy at Huge Inc., a global full-service digital agency that partners with Fortune 100 companies on the design and execution of product and brand strategies, enterprise +transformation and innovation. Prior to joining Huge Inc., Mr. Rodriquez served as a Managing Director at Accenture, the global management consulting and professional services company, where he led the firm’s North American Digital +Strategy Practice for telecommunications, media and technology. From 2010 to early 2015, Mr. Rodriguez served as Chief Digital Officer at Kaplan Test Prep, a top provider of educational and career services, where he was responsible for digital +transformation in technology, data science, user experience, online learning, Kaplan publishing and innovation. Mr. Rodriguez holds a bachelor’s degree of science in electrical engineering from Universidad Rafael Urdaneta in Venezuela and +a master’s degree and Ph.D. in computer engineering from the University of Colorado. +Mr. Rodriguez’s broad executive management experience, and his proven expertise in digital and AI strategy and transformation provide an important point of +view for the Board. +Michael Roemer +Age: 63 +Director since: 2019 +Mr. Roemer has served as a member our Board since October 2019. Mr. Roemer also operates his business, Roemer Financial Consulting, a +financial advisory services company that he founded in 2012. He advises closely-held businesses with financial advice, focusing on potential merger and acquisitions and exit transactions. Prior to his current role, Mr. Roemer served as a +Partner and Chief Financial Officer of Hammond, Kennedy, Whitney & Company (“HKW”), a private equity firm. In this role, his responsibilities included, among other things, financial and tax reporting, coordinating financial due +diligence of acquisition targets, and working with the HKW team to assess a target’s financial results and the financial management team’s capabilities. He is a licensed CPA with over 35 years’ experience. +Mr. Roemer brings to his service on our Board an extensive background in public accounting +and knowledge of generally accepted accounting principles, combined with his additional experience as the chief financial officer of a private equity firm and his vast experience in financial and accounting matters. +12 +Table of Contents +James C. Stewart +Age: 59 +Director since: 2011 +Mr. Stewart joined NexTier in March 2011 as Chairman and Chief Executive Officer and became Executive Chairman in August 2018 until +October 31, 2019. Prior to joining NexTier, from 2007 to 2009, he served as the President and Chief Executive Officer of a privately held international drilling company. From 2006 to 2007, Mr. Stewart served as Vice President of Integrated +Drilling Services for Weatherford International plc, based in London and Dubai, where he created and managed a global business unit that included a 50-rig international land contract drilling group and a +global project management team. Mr. Stewart began his career with Schlumberger Limited, where he held senior leadership positions across the globe over the span of 22 years. +Mr. Stewart’s qualifications include his broad leadership experience with oilfield +services, as well as his long tenure and successes in the oil and natural gas market. +Scott R. Wille +Other Public Company Directorships: +Age: 41 +Director since: 2011 +Albertsons Companies, Inc. (since 2015) +Mr. Wille has served as a member of our Board since March 2011. He is currently Co-Head of Private Equity +and a Senior Managing Director at Cerberus, which he joined in 2006. Prior to joining Cerberus, Mr. Wille worked in the leveraged finance group at Deutsche Bank Securities Inc. from 2004 to 2006. Mr. Wille currently serves as a director of +the Albertsons Companies, Inc., the second largest traditional grocery company in the U.S. In addition, Mr. Wille currently serves as a director of Off Lease Only, the largest independent used car dealer in Florida. Mr. Wille previously +served as a director of Remington Outdoor Company, Inc. from February 2014 to March 2018, a designer, manufacturer and marketer of firearms, ammunition and related products and as director of Tower International, Inc., a manufacturer of engineered +structural metal components and assemblies, from September 2010 to October 2012. +Mr. Wille’s experience in the financial and private equity industries, together with his in-depth knowledge of our +company and its acquisition strategy, are valuable to our Board’s understanding of our business and financial performance. +13 +Table of Contents +Board of Directors +Our Directors +The Board is currently composed of 10 +directors. The following table provides summary information about these directors as of April 22, 2022. +Committee Memberships +Name and Principal Occupation +Age +Director +Since +Independent +Audit & +Risk +Committee +Nom. & +Gov. +Committee +Comp. +Committee +Robert W. Drummond +President and Chief Executive Officer of NexTier +61 +2018 +Stuart M. Brightman +Retired Chief Executive Officer and President of TETRA Technologies, Inc. +65 +2019 +🌑 +🌑 +Gary M. Halverson +Retired Group President Drilling & Production Systems Cameron +63 +2016 +🌑 +🌑 +Patrick M. Murray +Retired President & Chief Executive Officer of Dresser, Inc. +79 +2019 +🌑 +Amy H. Nelson +President and Founder of Greenridge Advisors, LLC +53 +2019 +🌑 +🌑 +🌑 +🌑 +Melvin G. Riggs +Vice President and Director of Clayton Williams Energy, Inc. +67 +2019 +🌑 +🌑 +🌑 +🌑 +Bernardo J. Rodriguez +Chief Digital and Technology Officer at J.D. Power +57 +2022 +🌑 +🌑 +Michael Roemer +Founder Roemer Financial Consulting +63 +2019 +🌑 +🌑 +James C. Stewart +Retired Chief Executive Officer of Keane Group, Inc. +59 +2011 +Scott R. Wille +Co-Head of Private Equity & Senior Managing Director at Cerberus Capital Management, L.P. +41 +2011 += Chairperson +Committee Membership in 2021 +Below is a chart reflecting committee membership during 2021: +2021 Committee Memberships (1) +Name +Audit & Risk +Nominating & +Corporate +Governance +Compensation +Stuart M. Brightman +1/1/20 – Present +1/1/20 – Present +Gary M. Halverson +1/1/20 – Present +1/1/20 – Present +Amy H. Nelson +1/1/20 – Present +6/18/20 – Present +6/18/20 – Present +Melvin G. Riggs +1/1/20 – Present +6/18/20 – Present +6/18/20 – Present +Michael Roemer +1/1/20 – Present +6/18/20 – Present +(1) Mr. Rodriguez joined the Board and began serving on certain of its committees in January 2022 and is thus not +included in this table. +14 +Table of Contents +Attendance at Board and Committee Meetings, Annual Meeting +During 2021, the Board met eight times. Each member of the Board participated, in person or by telephone, in at least 75% of the aggregate of Board and committee +meetings on which he or she served (during the period that such director served). It is our policy that directors are encouraged to attend each annual meeting of stockholders, and all of the nine members of our Board did attend in 2021. +Director Independence +As a publicly traded company listed on the New York +Stock Exchange (the “NYSE”), we are required to comply with the rules and regulations of the NYSE as well as that of the SEC. Additionally, each of the Audit & Risk Committee (the “Audit Committee”), Compensation +Committee and Nominating and Corporate Governance Committee is required to be comprised solely of independent directors, with heightened standards applicable to Audit Committee and Compensation Committee members. +Each year, our Nominating and Corporate Governance Committee evaluates the relationships between the Company and each director and reports the results of its review to +the Board. To be considered “independent,” a director must be affirmatively determined by the Board, at the recommendation of the Nominating and Corporate Governance Committee and after due deliberation, to have no material relationship +with the Company other than as a director. The Nominating and Governance Committee and the Board assess the relationships and other facts and circumstances relevant to director independence on a case-by-case basis, in each case consistent with the applicable rules and regulations of the NYSE and SEC, and consistent with the Company’s Corporate Governance Guidelines (which can be found on our +website at www.nextierofs.com ). +After reviewing all relationships each director has with the Company, including the nature and extent of any business +relationships between the Company and such person, and based on the review and recommendation of the Nominating and Corporate Governance Committee, the Board has affirmatively determined that each of Messrs. Brightman, Halverson, Murray, Riggs, +Rodriguez and Roemer and Ms. Nelson has no material relationships with the Company and, is “independent” under the applicable rules and regulations of the SEC, the NYSE and in accordance with our Corporate Governance Guidelines. In +addition to the Board-level standards for director independence, each member of the Audit Committee meets the heightened independence standards required for audit committee members under the NYSE and SEC rules, and each member of the Compensation +Committee meets the heightened independence standards for compensation committee members under the NYSE rules. +The Board’s independence determinations +included a review of the transactions that occurred since the beginning of 2021 with entities associated with our directors or members of their immediate family. In addition, in making its independence determinations, the Board considered that +Mr. Wille is a senior employee of Cerberus Capital Management, L.P. (together with its affiliates and related funds, “Cerberus”), a stockholder of the Company, and that he was initially designated for nomination to the Board by +Cerberus pursuant to a stockholders’ agreement, which is more fully discussed below. +Director Nominations +In obtaining the names of possible director nominees, our Nominating and Corporate Governance Committee conducts its own inquiries and considers suggestions from other +directors, management, stockholders and professional director search firms. The Nominating and Corporate Governance Committee’s process for evaluating nominees identified in unsolicited recommendations from stockholders is the same as its +process for unsolicited recommendations from other sources and is further described in Section 4.01 of the Company’s Bylaws. However, stockholders desiring to nominate a director candidate at the annual meeting must comply with certain +procedures, for more information, please read “Proposals by Stockholders.” +15 +Table of Contents +The Nominating and Corporate Governance Committee believes that nominees should possess the highest personal and +professional ethics, reputation, integrity and values and be committed to representing the long-term interests of our stockholders. Directors should have a record of accomplishment in their chosen professional field and demonstrate sound business +judgment. Directors must be willing and able to devote sufficient time to carrying out their duties and responsibilities effectively, including attendance at and participation in board and committee meetings, and should be committed to serve on the +board for an extended period of time. The Nominating and Corporate Governance Committee will consider independence, diversity of viewpoints, backgrounds and experience, including a consideration of gender, ethnicity, race, nationality and age in +determining whether a candidate will be an appropriate fit with, and an asset to, the board of directors. When considering existing directors, the Nominating and Corporate Governance Committee evaluates their history of attendance at board and +committee meetings as well as contributions and effectiveness at such meetings. +In addition, pursuant to the terms of our Bylaws and the Second Amended and +Restated Stockholders’ Agreement, dated as of October 31, 2019, by and among the company, Keane Investor Holdings, LLC (“Keane Investor”) and the other parties thereto, Keane Investor (or its permitted assignee or designee) has +certain rights to designate members to our board of directors, subject to certain director qualifications, including that: +· +for so long as Keane Investor (or its permitted assignee or designee) has beneficial ownership of more than 12.5% of the +then outstanding shares of our common stock, the right to appoint two individuals; and +· +for so long as Keane Investor (or its permitted assignee or designee) has beneficial ownership of less than 12.5% but more +than 7.5% of our then-outstanding common stock, the right to appoint one individual. +At this time, Mr. Wille and Mr. Stewart are the +Keane Investor appointees. For additional information, see “ Other Information—Related Party Transactions ” in this proxy statement. +Communication with the Board and its Non-Management Members +Persons may communicate with our Board by submitting such communication in writing to the attention of Kevin McDonald, General Counsel, in care of the Board of +Directors, NexTier Oilfield Solutions Inc., 3990 Rogerdale Road, Houston, Texas 77042. Persons may communicate with the non-management members of the Board by submitting such communication in writing to Kevin +McDonald, General Counsel, in care of the non-management members of the Board of Directors, NexTier Oilfield Solutions Inc., 3990 Rogerdale Road, Houston, Texas 77042. +Board Committees +Our Board has assigned certain +responsibilities to permanent committees comprised of Board members. +The charter for each committee listed below is available on our website at +www.nextierofs.com , by clicking on “Investor Relations,” then “Corporate Governance,” then the name of the applicable committee charter. Stockholders may obtain printed copies of any charter, free of charge, by sending a +written request to NexTier Oilfield Solutions Inc. at 3990 Rogerdale Road, Houston, Texas 77042, Attn: Corporate Secretary. +16 +Table of Contents +Audit and Risk Committee +Committee Members: +Number of meetings in 2021: 8 +Michael Roemer (chair) +Amy H. Nelson +Report: page 26 +Gary M. Halverson +Melvin G. Riggs +Bernardo J. Rodriguez +The Audit Committee assists the board in its oversight responsibilities relating to the integrity of our financial statements, our +compliance with legal and regulatory requirements, our independent auditor’s qualifications and independence, enterprise risk management (including cyber risk), the establishment and performance of our internal audit function and the +performance of the independent auditor. Each member of the Audit Committee has significant financial experience, which provides a greater depth of understanding and oversight of our financial statements, including our balance sheet, statement of +operations and cash flows statements. Our Board has determined that Mr. Roemer qualifies as an “audit committee financial expert” as such term is currently defined in Item 407(d)(5) of +Regulation S-K. +Our board of directors has adopted a written charter under which the Audit Committee operates. A copy +of the Audit Committee charter, which satisfies the applicable standards of the SEC and the NYSE, is available on our website. +Compensation Committee +Committee Members: +Number of meetings in 2021: 8 +Gary M. Halverson (chair) +Amy H. Nelson +Report: page 30 +Stuart M. Brightman +Melvin G. Riggs +The Compensation Committee is responsible for, among other things, review and administration of our compensation and benefits plans, +approval of the compensation structure of our executive officers, evaluation of our executive officers’ performance and review of salary, bonus and other incentive and equity compensation. A copy of the Compensation Committee charter is +available on our website. +Nominating and Corporate Governance Committee +Committee Members: +Number of meetings in 2021: 4 +Stuart M. Brightman (chair) +Melvin G. Riggs +Amy H. Nelson +Michael Roemer +The Nominating and Corporate Governance Committee is responsible not only for the oversight of risks relating to corporate governance, +board organization, membership and structure, succession planning for our senior management team, including our Chief Executive Officer, corporate responsibility but also for identifying individuals qualified to become members of our board of +directors. A copy of the Nominating and Corporate Governance Committee charter is available on our website. +Director Compensation +Our director compensation philosophy is designed to fairly and reasonably compensate the Company’s non-employee directors +for the time, expertise and effort they devote to serving the Company and to align the interest of our directors with the long-term interests of our stockholders. The Compensation Committee monitors trends and best practices in, and periodically +reviews and assesses the adequacy of, director compensation and makes recommendations to the Board. The Compensation Committee’s recommendation takes into account our director compensation philosophy, market trends and compensation levels and +practices in our peer group, stockholder feedback, and the advice of the Compensation Committee’s independent compensation consultant, Compensation Advisory Partners. +17 +Table of Contents +Director Compensation Components +Annual compensation for our non-employee directors is comprised of cash and equity-based compensation, as set out in the table +below. We also reimburse our non-employee directors for reasonable out-of-pocket expenses associated with travel to and +attendance at our Board and committee meetings. We neither pay for meeting attendance nor provide any other benefits or perquisites to our non-employee directors. +In December of 2019, the Compensation Committee reviewed our director compensation program in consultation with its compensation advisor, which provided advice and +recommendation with respect to the design of the Company’s director compensation program. The Compensation Committee reviewed independent and objective market data and analysis, including compensation levels, market trends and best practices. +The Compensation Committee took into account, among other factors, the compensation advisor’s input and stockholder feedback through the say-on-pay stockholder vote +in 2019 in determining the recommendations for adjustments to our director compensation program for 2020. +However, beginning in March of 2020, the industry was +faced with sudden, unforeseen and unprecedented circumstances. The rapid spread of COVID-19 and geopolitical events that increased the supply of low-priced oil to the +global market led to a collapse in oil prices and governmental authorities began imposing restrictions on non-essential activities and travel that contributed to a worldwide reduction in demand for oil. In +response to the uncertainties related to the impact of these events, and in connection with other expense reduction actions, the Compensation Committee approved a temporary 20% reduction in the Board’s quarterly cash compensation (the +“COVID Reduction”) beginning in the third quarter of 2020 and continuing through the 2021 Annual Meeting of Stockholders (the “2021 Annual Meeting”) in June 2021. +The following was the 2021 non-employee director compensation program: +Compensation +Element +2021 Non-Employee Director +Compensation Program +Compensation +Compensation +Net +COVID +Reduction (1) +Annual Cash +Retainer (2) +$ +100,000 +$ +80,000 +Annual Equity +Retainer (3) +$ +150,000 +$ +150,000 +Additional Cash Retainer— Independent Board Chair (2) +$ +50,000 +$ +50,000 +Additional Cash Retainer— Independent Audit Committee Chair (2) +$ +20,000 +$ +20,000 +Additional Cash Retainer— Other Independent Committee Chairs (2) +$ +15,000 +$ +15,000 +Additional Equity Retainer— Independent Board Chair +$ +35,000 +$ +35,000 +(1) +The COVID Reduction applied to a pro-rated portion of each director’s annual +cash retainer for payments made prior to the 2021 Annual Meeting. Following the 2021 Annual Meeting, the COVID Reduction was discontinued. +(2) +The annual cash retainer is paid quarterly, in arrears. +(3) +The annual equity retainer is granted on first business day following the annual stockholder meeting. The award was based +on the volume weighted average price of our common stock for the five trading days prior to the grant date. The equity retainers were granted as restricted stock awards that vest 100% on the upon the earliest of: (i) the one-year anniversary of the grant date, (ii) the date of the first meeting of the Company’s stockholder at which directors will be elected in the calendar year following the calendar year in which the +grant date occurs, (iii) the date the director incurs a termination without cause, (iv) the date of the director’s death, and (v) the date of a change in control, subject to continuous service through such vesting date. +Our President and Chief Executive Officer, Mr. Drummond, does not receive any additional compensation for his service as a director (his +compensation as an executive is discussed in CD&A and +18 +Table of Contents +detailed in “Executive Compensation Tables”). Additionally, one of our non-employee directors, Mr. Wille, who is employed by one of our +stockholders, has declined any equity compensation for his service, and the cash compensation for his service as a director is paid to his employer, pursuant to his employer’s policy. +2021 Director Compensation +Name (1) +Fees Earned or +Paid in Cash ($) +Stock +Awards ($) (2) +Total ($) +Stuart M. Brightman +135,959 +(4) +150,002 +285,961 +Gary M. Halverson +105,959 +150,002 +255,961 +Patrick M. Murray +140,959 +185,004 +325,963 +Amy H. Nelson +124,959 +(4) +150,002 +274,961 +Melvin G. Riggs +120,959 +(4) +282,322 +(5) +403,281 +Michael Roemer +110,959 +150,002 +260,961 +James C. Stewart +90,959 +258,039 +(5) +348,998 +Scott R. Wille (3) +90,959 +— +90,959 +(1) +Mr. Rodriguez joined the Board in January 2022 and thus had no reportable compensation as a director for 2021. +Mr. Drummond is an employee of the Company, and therefore does not receive any compensation for his service on the Board. +(2) +The number of shares of restricted stock granted for director compensation awards was calculated pursuant the volume +weighted average price of the common stock for the 5 trading days prior to the grant date. The amount above, however, reflects the grant date fair value calculated in accordance with ASC 718 (as defined below) of the restricted stock granted in +fiscal year 2021. +(3) +Mr. Wille is employed by one of our largest stockholders and has declined any equity compensation for his service as a +director, and the cash compensation disclosed in this table is paid to his employer pursuant to his employer’s policy. +(4) +Includes fees paid in cash in connection with service on a special committee of the Board formed in connection with the +acquisition of Alamo and its wholly owned subsidiaries in August 2021. +(5) +In light of the lower than usual Company stock price in 2020, and the grants of transition awards and annual equity +retainer awards granted in 2020 to Mr. Riggs and Mr. Stewart, their 2020 grants were capped at the Company’s Equity and Incentive Plan calendar year award limit of 75,000 shares. The remaining restricted stock awards that they would +have been granted under the director compensation plan in 2020 were awarded as Stock Payment Awards under the Company’s Equity and Incentive Plan in June 2021. +As of December 31, 2021, the aggregate number of shares of unvested restricted stock held by each non-employee director +was: +Name +Number of Shares +of Restricted Stock +Stuart M. Brightman +28,996 +Gary M. Halverson +28,996 +Patrick M. Murray +35,762 +Amy H. Nelson +28,996 +Melvin G. Riggs +28,996 +Michael Roemer +28,996 +James C. Stewart +28,996 +Scott R. Wille +— +Director Services Agreements +We have +entered into Director Services Agreements with each of Gary M. Halverson and Melvin G. Riggs. The Director Services Agreements provide that each such director serve on an at-will basis until the earlier of his +disability, death, resignation or removal. +19 +Table of Contents +Stock Ownership Requirements +We have stock ownership requirements for (i) all independent, non-employee directors (each an “Independent +Director”), and (ii) our Chief Executive Officer and certain other executive officers, including the Chief Financial Officer, the Chief Operating Officer, if any, the Chief Administrative Officer, and the General Counsel, as well as any +President or Executive Vice President reporting directly to the Chief Executive Officer (collectively, the “Executive Officers”). +Stock Ownership Requirement +Independent, Non-Employee +Directors +5X Annual Retainer +Chief Executive Officer +5X Base Salary +Other Executive Officers +2X Base Salary +All Independent Directors are required to own Company common stock in an amount equal to or in excess of five times such Director’s +Annual Director Fee pursuant to the Director compensation program, which shall be determined annually as of the last day of the prior fiscal year. Each Independent Director has five years to meet the requirements, measured from the date he or she is +first elected to the Board or it is first determined that the director meets the definition of an Independent Director. +By the fifth (5th) anniversary of the +later of (a) the date an Executive Officer of the Company begins employment with the Company in such position and (b) June 26, 2018, each Executive Officer is required to own Company common stock in an amount equal to or in excess either +(i) five times annual base salary, if such Executive Officer is the Chief Executive Officer or (ii) for all other Executive Officers two times such Executive Officer’s annual base salary, which will be determined annually as of the +last day of the prior fiscal year of the Company. +The Company believes that each Independent Director and Executive Officer is on track meet such ownership +requirements within the requisite five-year period. +Corporate Governance +Board Leadership Structure +Our Board does not have a formal policy on +whether the roles of Chief Executive Officer and Chairman of the board of directors should be separate. If the Chairman is a member of management, the Board also elects a Lead Director who is a non-management +director. Currently, Robert W. Drummond serves as our President & Chief Executive Officer, while Patrick M. Murray serves as Chairman of the Board. The Board believes that this leadership structure provides the best direction for the +management team and is ideal for the Company and its stockholders. Our non-management directors meet regularly in executive sessions at which only non-management +directors are present, and the Chairman leads those sessions. Because Mr. Murray is independent under applicable listing standards and under our Corporate Governance Guidelines, our Board has not appointed a separate Lead Director. +Our Board expects to review its leadership structure at least annually to ensure that it continues to meet the Company’s needs. +Role of Board in Risk Oversight +Enterprise risk management is a +Company-wide initiative that involves the Board and management identifying, assessing and managing risks that could affect our ability to fulfill our business objectives or +20 +Table of Contents +execute our corporate strategy. A primary function of our Board is to assist and oversee management in this effort. The Board and its committees conduct this oversight responsibility. The +Board’s committees assist the Board in fulfilling its oversight responsibilities with respect to risks within its areas of responsibilities, as further discussed below. We believe the Board’s role in risk oversight is consistent with the +Company’s leadership structure, with our Chief Executive Officer and other members of senior management having direct responsibility for managing risk exposure and the potential impacts of the many risks that are associated with our business, +and the directors involved in providing oversight of management’s efforts to reduce, mitigate or eliminate the risks that we face. +The primary means by which +the Board and its designated committees oversee our risk management structure and policies is through regular communications with management, specifically including with our General Counsel, our head of internal audit, our Chief Executive Officer +and our Chief Financial Officer. In connection with our regular quarterly Board and committee meetings, the full Board (or the appropriate committee in the case of risks that are under the purview of a particular committee) receives reports from +members of senior management on areas of material risk to the Company, including operational, financial, legal, cyber, regulatory, and strategic risks. In addition, upon request, either the full Board or a committee may receive additional reports +from those executive officers who are deemed responsible for particular risks. The chair of each of the committees will also discuss and review significant matters with management outside of the quarterly Board meetings as needed. When a committee +receives a separate report, or the chair has separate discussions, the committee chair may discuss that report with the full Board. +21 +Table of Contents +Environmental Risks +As +part of our commitment to long-term, sustainable value creation, the Board and our executive team are committed to actively monitoring how the Company’s performance, opportunities and strategy are influenced by, and influence, the environment. +This review, which is part of the Company’s general risk management process, includes an evaluation of the Company’s material climate-related risks; all material risks identified in the risk management process are assessed by management +and reported to the Board. +Cybersecurity Risks +To guard against the +threat of security breaches and cyber-attacks, the head of the Company’s IT department manages our cybersecurity initiative, which is focused on protecting and preserving the confidentiality, integrity and continued availability of all +information owned by, or in the care of, the Company. The head of IT works closely with the General Counsel in this effort. +The Audit Committee receives regular +reports related to cybersecurity, privacy and controls. As part of this, the Audit Committee will review the results of periodic exercises and response readiness assessments led by outside advisors who provide a third-party independent assessment of +our internal preparedness. With his deep expertise in computer technology, the addition of Bernardo Rodriguez to the Board and the Audit Committee is expected to enhance the Company’s ability to evaluate its cybersecurity preparedness and +contingency plans. +In addition, our internal audit team will also periodically review and report to the Audit Committee on aspects of cybersecurity as part of its +audits. +People Risks +The Board and our executive team are committed to +promoting a healthy and ethical culture throughout the organization. The Board receives regular reports from the Company’s General Counsel, who serves as Chief Compliance Officer, regarding the Company’s compliance program. As part of +this, the Board regularly reviews all complaints received through the anonymous hotline as well as key data related to ongoing legal proceedings. +The Board also +receives regular reports from our senior management team about our other people-related strategies, programs and initiatives, including recruitment, retention, engagement, training and development, health and safety, talent management and diversity. +Code of Business Conduct and Ethics +We have adopted a written code of +business conduct and ethics (the “Code of Business Conduct and Ethics”) that applies to all employees, officers and directors. In addition, our senior financial officers, including our principal executive officer and principal financial +officer, are subject to a written code of ethics for senior financial officers. We have made a current copy of both codes available on our website, www.nextierofs.com and both are available in print and without charge to any person who sends +a written request to our Corporate Secretary at 3990 Rogerdale Road, Houston, Texas 77042. In addition, we intend to post on our website all disclosures that are required by law or the NYSE listing standards concerning any amendments to, or waivers +from, any provision of either code. +22 +Table of Contents +Corporate Governance Guidelines +We have adopted corporate governance guidelines in accordance with the corporate governance rules of the NYSE, as applicable, that serve as a flexible framework +within which our Board and its committees operate. These guidelines cover a number of areas, including the size and composition of the Board, board membership criteria and director qualifications, director responsibilities, board agenda, role of the +Chief Executive Officer, executive sessions, standing board committees, board member access to management and independent advisors, director communications with third parties, director compensation, director orientation and continuing education, +evaluation of senior management and management succession planning. A copy of our corporate governance guidelines is posted on our website, www.nextierofs.com . +23 +Table of Contents +Proposal 2. Ratify Appointment of +Independent Auditors +The Board of Directors recommends that you vote “FOR” this proposal. +The Audit Committee has selected KPMG LLP (“KPMG”), an independent registered public accounting firm, to +audit the Company’s financial statements and the effectiveness of internal control over financial reporting for 2022. While the Audit Committee is responsible for appointing, compensating and overseeing the independent auditors’ work, we +are requesting the ratification of the appointment of KPMG as our auditor for 2022 as a matter of good corporate governance. KPMG served as our independent auditor since 2011 and the Audit Committee took a number of factors into consideration in +determining whether to reappoint KPMG as the Company’s independent auditor, including KPMG’s historical and recent performance, capabilities and expertise, tenure as the Company’s independent auditor and familiarity with the +Company’s business. We believe the appointment of KPMG is in the best interest of the Company and its stockholders. +Representatives of KPMG are expected to be +present at the Annual Meeting with an opportunity to make a statement if they would like to do so and to be available to respond to appropriate questions from our stockholders. +The ratification of the appointment of KPMG as our independent auditor for 2022 requires the affirmative vote of a simple majority of the votes cast. If you properly +submit a proxy card but do not indicate how you wish to vote, the Proxy Holders will vote for the proposal. +24 +Table of Contents +Fees Paid to KPMG +The following table summarizes +fees paid or accrued to our independent registered public accounting firm, KPMG, in connection with various services for the years ended December 31, 2021 and 2020 respectively: +2021 +2020 +(Thousands of Dollars) +Audit Fees (1) +$ +3,206 +$ +3,846 +Audit–Related Fees +— +— +Tax Fees (2) +3 +32 +All Other Fees +— +— +Total +$ +3,209 +$ +3,878 +(1) +Consists of fees for professional services rendered for the audits of our consolidated financial statements for fiscal +years 2021 and 2020 included in our 2021 Form 10-K, the annual audit of the effectiveness of our internal controls over financial reporting, and the reviews of our quarterly financial statements. This category +also includes fees for the issuance of comfort letters, consents and reviews of documents filed with the SEC. +(2) +Consists of fees for professional services rendered for tax compliance and tax planning. +Pre-Approval Policy +Our Audit Committee has adopted an Audit and Non-Audit Services Pre-Approval Policy (the +“Pre-Approval Policy”), that sets forth the procedures and conditions pursuant to which audit and non-audit services proposed to be performed by the +independent auditor may be pre-approved. The Pre-Approval Policy provides that we will not engage the Company’s independent registered public accounting firm to +render any audit, audit-related, tax or permissible non-audit service unless the service is either (i) explicitly approved by the Audit Committee (“specific +pre-approval”) or (ii) entered into pursuant to the pre-approval policies and procedures described in the Pre-Approval +Policy (“General Pre-Approval”). Unless a type of service to be provided by KPMG has received General Pre-Approval under the +Pre-Approval Policy, it requires specific pre-approval by the Audit Committee. Any proposed services exceeding pre-approved cost +levels or budgeted amounts will also require specific pre-approval. On an annual basis, the Audit Committee reviews and generally pre-approves the services (and related +fee levels or budgeted amounts) that may be provided by KPMG. Our Audit Committee may revise the list of general pre-approved services from time to time, based on subsequent determinations. +During 2020 and 2021, no services were provided to us by KPMG other than in accordance with the pre-approval policies and +procedures described above. +25 +Table of Contents +Audit Committee Report +The Audit Committee represents and assists the Board in providing independent, objective oversight of the Company’s accounting functions and internal control over +financial reporting. The Audit Committee acts under a charter which is available on the Company’s website at www.nextierofs.com under “Investor Relations,” then “Corporate Governance,” then “Board +Committees,” then “Audit and Risk Committee Charter.” The Board has determined that each member of the Audit Committee satisfies the requirements of the NYSE as to independence, financial literacy and expertise. +Management is responsible for the Company’s financial statements and the reporting process, including the system of disclosure controls and procedures and internal +control over financial reporting. +KPMG, the Company’s independent registered public accounting firm, is responsible for expressing an opinion on the +conformity of our financial statements with accounting principles generally accepted in the United States and on the effectiveness of the Company’s internal control over financial reporting. +In discharging its oversight role, the Audit Committee has: +· +reviewed and discussed with management the audited financial statements of NexTier Oilfield Solutions Inc. as of and for +the year ended December 31, 2021; and +· +discussed with KPMG the matters required to be discussed by Auditing Standard No. 1301, Communications +with Audit Committees, as amended, as adopted by the Public Company Accounting Oversight Board. In addition, the Audit Committee has received the written disclosures and the letter from KPMG required by applicable requirements of the Public +Company Accounting Oversight Board regarding the independent auditor’s communications with the Audit Committee concerning independence, and has discussed with KPMG their independence. +The Audit Committee and the Board of Directors believe that, due to KPMG’s knowledge of the Company and the industry in which the Company operates, it is in the +best interest of the Company and its stockholders to continue the retention of KPMG to serve as the Company’s independent registered public accounting firm. Although the Audit Committee has the sole authority to appoint the independent +registered public accounting firm, the Audit Committee recommends that the board of directors ask the stockholders to ratify the appointment of the independent registered public accounting firm at the 2022 Annual General Meeting. +Based on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited financial statements referred to +above be included in the Annual Report on Form 10-K of NexTier Oilfield Solutions Inc. for the year ended December 31, 2021. +The Audit and Risk Committee +Michael Roemer, Chair +Gary M. Halverson +Amy H. Nelson +Melvin G. Riggs +Bernardo J. Rodriguez +26 +Table of Contents +Proposal 3. Advisory Approval of +Executive Compensation +The Board of Directors recommends that you vote “FOR” this proposal. +We are asking our stockholders to approve, on an annual advisory basis, the compensation of our named executive +officers (“NEOs”) as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis (“CD&A”), compensation tables and narrative discussion. +While this vote is not binding on our Company, the results of the vote on this proposal will be carefully considered by our Board and the Compensation Committee when making future executive compensation decisions. Our next advisory vote regarding +the frequency of these votes will be held at our 2024 Annual Meeting of Stockholders. +The text of the resolution in respect of Proposal 3 is as follows: +“ RESOLVED , that the compensation paid to the Company’s named executive officers, as disclosed in this Proxy Statement pursuant to the rules of the SEC, +including the Compensation Discussion and Analysis, compensation tables and any related narrative discussion is hereby APPROVED.” +We urge you to carefully +review the CD&A section in this Proxy Statement, as well as the 2021 Summary Compensation Table, other compensation tables and related narrative discussion, for more information regarding the compensation of our NEOs. We believe the information +in this Proxy Statement demonstrates the successful design and implementation of a compensation program that aligns stockholders’ and management’s interests. +A simple majority of the votes cast is required to approve this proposal. If you properly submit a proxy card but do not indicate how you wish to vote, the Proxy +Holders will vote for the proposal. +27 +Table of Contents +Executive Officers +Set forth below is certain +information regarding our executive officers as of April 22, 2022, other than the biography of our President & Chief Executive Officer, which appears under “Proposal 1—Election of Directors—Director +Information.” +Name +Age +Position +Robert W. Drummond +61 +President & Chief Executive Officer +Kenneth H. Pucheu +44 +Executive Vice President & Chief Financial Officer +Kevin M. McDonald +55 +Executive Vice President, Chief Administrative Officer, General Counsel and Corporate Secretary +Matthew R. Gillard +50 +Executive Vice President & Chief Operating Officer +Michael J. McKie +38 +President—Alamo Pressure Pumping +Oladipo O. Iluyomade +44 +Vice President & Chief Accounting Officer +Kenneth H. Pucheu , Executive Vice President and Chief Financial Officer . Mr. Pucheu has served as NexTier’s +Executive Vice President and Chief Financial Officer since December 2019. In addition to his role as Chief Financial Officer, Mr. Pucheu is responsible for all Digital and Information Technology operations of NexTier. He joined Keane Group, +Inc. (now known as NexTier Oilfield Solutions Inc.) in 2016 as Vice President of Finance. Mr. Pucheu has 22 years of experience in corporate and operational finance across the energy industry, as well as deep experience in digital technologies +and business systems. Prior to joining Keane, Mr. Pucheu served at Schlumberger Limited for 15 years in various senior-level positions, including Head of Finance for Drilling and Measurements, and Director of Finance for North America Offshore. +Mr. Pucheu earned a B.S. in Accounting from the University of Louisiana at Lafayette. +Kevin M. McDonald, Executive Vice President, Chief +Administrative Officer, General Counsel and Corporate Secretary . Mr. McDonald serves as NexTier’s Executive Vice President, Chief Administrative Officer and General Counsel. He joined Keane Group, Inc. (now known as +NexTier Oilfield Solutions Inc.) as Executive Vice President, General Counsel & Secretary in November 2016. Prior to joining Keane, Mr. McDonald served in leadership roles at Marathon Oil Corporation from 2012 to 2016, including as +Deputy General Counsel of Corporate Legal Services and Government Relations, Deputy General Counsel of Governance, Compliance & Corporate Services, and Assistant General Counsel. Mr. McDonald practiced as a partner at the international +law firm Fulbright & Jaworski LLP (now Norton Rose Fulbright LLP) in 2012. Mr. McDonald previously held various counsel positions, including President & Chief Executive Officer and acting General Counsel at Arms of Hope, a +nonprofit organization, from 2008 to 2012, Senior Vice President, General Counsel & Chief Compliance Officer at Cooper Industries from 2006 to 2008, Associate General Counsel at Anadarko Petroleum from 2006 to 2008, and Managing Counsel +(Litigation) at Valero Energy from 2002 to 2004. He began his career as an associate at Norton Rose Fulbright LLP between 1992 and 2001. Mr. McDonald graduated with a BS from Texas A&M University and JD from the University of Texas School +of Law. +Matthew R. Gillard , Executive Vice President and Chief Operating Officer . Mr. Gillard has served as Executive Vice President and Chief +Operating Officer since joining NexTier in August 2021. He has more than 24 years’ experience in the oil and gas industry, working primarily for Schlumberger in progressing roles of responsibility including Sales and Commercial Director, Vice +President Completions, President OneStim and Vice President Vertical Integration & Strategy North America. Most recently, Mr. Gillard +28 +Table of Contents +held the role of Principal and Owner of Intex Consulting. He received a Bachelor of Science in Marine & Offshore Civil Engineering from University of Plymouth, UK and a Master of Science +in Petroleum Engineering in Reservoir and Petroleum Engineering from Institute Du Francais Petrole. +Michael J. McKie , President —Alamo +Pressure Pumping . Mr. McKie serves as President of Alamo, joining NexTier via acquisition in August 2021. A co-founder of Alamo, Mr. McKie spent nearly a decade working in frac sand and logistics +where he oversaw the startup of two businesses that each realized greater than 100% CAGR over the period. Prior to entering his career in oilfield services, Mr. McKie was with the private equity firm Insight Equity, a generalist private equity +investment firm in Dallas. He started his career as a management consultant for McKinsey and Co. working across a variety of industries. Mr. McKie received a Bachelors in Science degree with Honors in Finance from the University of Texas. +Oladipo O. Iluyomade , Vice President and Chief Accounting Officer . Mr. Iluyomade has served as NexTier’s Vice President and Chief Accounting +Officer since January 2022. Mr. Iluyomade joined NexTier in October 2019 as Director of Finance. Prior to NexTier, he worked for Schlumberger from 2000 to 2019 in increasing roles of responsibility in Finance, traversing the globe from Nigeria, +Caspian Region, the Middle East, and ultimately to the Americas. Mr. Iluyomade received a Masters of Business Administration from Wayne State College with Advanced Finance Training from Wharton Business School. He achieved status as an +Associate Chartered Accountant from the Institute of Chartered Accountants in Nigeria and a Bachelor of Science in Accounting from Obafemi Awolowo University in Nigeria. +29 +Table of Contents +Compensation Committee Report +The Compensation Committee has reviewed and discussed the below CD&A with the Company’s management. Based on the review and discussions, the Compensation +Committee has recommended to our Board that the CD&A be included in this Proxy Statement. +The Compensation Committee +Gary M. Halverson, Chair +Stuart M. Brightman +Amy H. Nelson +Melvin G. Riggs +This report shall not be +deemed to be “soliciting material” or to otherwise be considered “filed” with the SEC or be subject to Regulation 14A or 14C (other than as provided in Item 407 of Regulation S-K) or +to the liabilities of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933, as amended, or +the Exchange Act, except to the extent that we specifically incorporate it by reference into such filing. +30 +Table of Contents +Compensation Discussion & Analysis +This CD&A focuses on the Company’s 2021 compensation programs, actions and outputs relative to the Company’s 2021 performance. These compensation +decisions reflect the Compensation Committee’s application of the Company’s compensation philosophy, plan objectives, and performance standards against financial and individual executive performance through the end of 2021. For the year +ended December 31, 2021, our NEOs were: +NEO +Title +Robert W. Drummond +President & Chief Executive Officer +Kenneth H. Pucheu +Executive Vice President & Chief Financial Officer +Kevin M. McDonald +Executive Vice President, Chief Administrative Officer & General Counsel +Ian R. Henkes (1) +Senior Vice President, Operations +Matthew R. Gillard (2) +Executive Vice President & Chief Operating Officer +Phung +Ngo-Burns (3) +Former Chief Accounting Officer & Treasurer +(1) +Effective August 4, 2021, Mr. Henkes ceased to be an executive officer of the Company and reports directly to +the COO. +(2) +Effective August 9, 2021, Mr. Gillard was appointed as Executive Vice President & Chief Operating +Officer of the Company. +(3) +Effective January 7, 2022, Ms. Ngo-Burns resigned as Chief Accounting +Officer & Treasurer of the Company in order to pursue other opportunities. +Executive Summary +During 2021, the Company took several important steps, including the acquisition of Alamo, to accelerate our strategy and solidify our position as a leader in natural +gas powered frac technology with a premium position in the Permian Basin. Revenue totaled $1.4 billion for the year ended December 31, 2021, compared to $1.2 billion for the year ended December 31, 2020. Revenue increase was +primarily driven by an increased number of fleets deployed and four months of Alamo revenue. Net loss was $119.4 million, or $0.53 per diluted share, for the year ended December 31, 2021, compared to net loss of $346.9 million, or +$1.62 per diluted share, for the year ended December 31, 2020. +31 +Table of Contents +Compensation Practices & Policies +The following practices and policies in our program promote sound compensation governance and are in the best interests of our stockholders and executives: +What We Do +☑ +Emphasis on variable compensation tied to annual financial performance or long-term relative stock price performance +☑ +Performance-based long-term incentives dependent upon our performance relative to peers makes up an increasing portion of NEO long-term incentives +☑ +Claw Back Policy that applies to cash and equity compensation +☑ +Annual compensation risk assessment +☑ +Independent compensation consultant reporting directly to our Compensation Committee +☑ +Stock Ownership Guidelines for senior executive officers and independent non-employee directors +☑ +Severance and Acceleration of Equity Vesting Conditioned on Restrictive Covenants and Release of Claims +What We Don’t Do +☒ +Prohibition on option repricing without stockholder approval +☒ +Prohibition on hedging of Company securities by our officers and directors +☒ +Prohibition on pledging of Company securities by our executive officers and directors +☒ +No single-trigger change-in-control severance payments +☒ +No single-trigger change-in-control equity vesting +☒ +No excise tax gross-ups +☒ +Limited use of perquisites and supplemental benefits +2021 Compensation Actions At-A-Glance +The Compensation Committee took the following key compensation-related +actions for fiscal year 2021: +· +Base Salaries : In the first quarter of 2021, the Compensation Company relieved the austerity compensation +measures established in response to COVID-19 in 2020 and on April 18, 2021, restored the full pre-austerity salaries of our NEOs in light of Company performance and +perceived market conditions. +· +Annual Incentives : The Compensation Committee adopted an annual bonus program for the fiscal year 2021 +based on the achievement of specific Company performance objectives related to annual adjusted EBITDA, the achievement of ESG & quality, health, safety and environmental (“QHSE”) performance measures and the achievement of relative +financial performance/fleet against the Company’s market peer group. +· +Bifurcated 2021 Performance Period : In response to market uncertainty, the Compensation Committee decided to +measure the Company’s performance with respect to adjusted EBITDA based on two semi-annual performance periods – one for the first six months of 2021 and the second for the remainder of year. +· +Long-Term Incentives : The largest single component of compensation granted to our executives is equity +compensation. The executives were awarded long-term incentives consisting of a mixture of restricted stock unit (“RSU”) awards and performance restricted stock unit (“PSU”) awards. The Compensation Committee believes the use of +these equity vehicles creates strong alignment with the Company’s stockholders by linking executive compensation closely to stock performance, and in the case of PSUs total stockholder return relative to our peers. +32 +Table of Contents +What Guides Our Program +Our Compensation Philosophy +Our compensation philosophy is driven by the following guiding principles: +· +Pay for Performance : A significant portion of an executive’s total compensation should be variable (“at-risk”) and linked to the achievement of specific short- and long-term performance objectives. +· +Stockholder Alignment : Executives should be compensated through pay elements (base salaries, short- and +long-term incentives) designed to enhance stockholder value by incentivizing our executives to work towards goals that drive return on stockholder investment. +· +Competitiveness : Target compensation should be competitive with that being offered to individuals in +comparable roles at other companies with which we compete for talent to ensure we employ the best people to lead the successful implementation of our business plans and to attract the caliber of executives we need to support the long-term growth of +our enterprise. +· +Good Governance : Decisions about compensation should be guided by best-practice governance standards and +rigorous processes that encourage prudent decision-making. +33 +Table of Contents +The Principal Elements of Pay +Our compensation philosophy is supported by the following principal elements of pay: +34 +Table of Contents +Pay Mix +A majority of NEO +total direct compensation for fiscal year 2021 was variable, at approximately 87% for our Chief Executive Officer and approximately 76% for our other NEOs employed at year-end. The following charts illustrate +the total direct compensation mix for our NEOs for fiscal year 2021. +Our Decision-Making Process +The Role +of the Compensation Committee +The Compensation Committee oversees the executive compensation program for our NEOs. The Compensation Committee is comprised of +independent members of our Board. The Compensation Committee works very closely with its independent consultant and management to examine the effectiveness of the Company’s executive compensation program throughout the year. The Compensation +Committee evaluates, determines and approves the compensation of our Chief Executive Officer and other executive officers, and recommends the compensation of our non-employee directors. The Compensation +Committee administers the Company’s equity plans and has overall responsibility for monitoring of the Company’s executive compensation policies, plans and programs. Details of the Compensation Committee’s authority and +responsibilities are specified in the committee’s charter which is available on the Company’s website at www.nextierofs.com . +The Role of +Management +Compensation Committee meetings are regularly attended by our Chief Executive Officer, General Counsel and our Senior Vice President of Human +Resources. Each of the management attendees provides the Compensation Committee with their specific expertise and the business and financial context necessary to understand and properly target financial and performance metrics. None of the members +of management are present during executive sessions where the Compensation Committee deliberates on compensation adjustments under consideration, but the Company’s independent compensation consultant may participate in those discussions. +35 +Table of Contents +The Role of the Independent Consultant +The Compensation Committee has the full authority to engage compensation consultants and other advisors to assist it in the performance of its responsibilities. Prior +to retaining or seeking advice from a compensation consultant or other advisor, the Compensation Committee must consider the independence of such compensation consultant or other advisor. The independent compensation consultant retained by the +Compensation Committee reports directly to the Compensation Committee. +The Compensation Committee had engaged Compensation Advisory Partners LLC (“CAP”) +as its independent compensation consultant since mid-2020 after a rigorous review process and has remained the Company’s ongoing independent compensation consultant through 2021. CAP did not provide any +services to the Company or any of its subsidiaries other than the services provided to the Compensation Committee and the subscription to the salary survey of the oilfield service industry (“OFS Compensation Survey”). The Compensation +Committee assessed the independence of CAP and determined that its work for the Compensation Committee has not raised any conflict of interest. +The Role of the +Compensation Peer Group +The Compensation Committee strives to set a competitive level of total compensation for each NEO as compared with executives in similar +positions at peer companies. For purposes of setting fiscal year 2021 compensation levels, the Compensation Committee, in consultation with CAP, took into account a range of factors including the peer’s respective size in terms of current +revenue, employees and market compensation, and the peer’s respective geographic footprint, operating characteristics, corporate office locations and stock price correlation based on publicly available data from industry compensation surveys +and proxy statements. The peer group determined by the Compensation Committee included: +Compensation Peer Group +Archrock, Inc. +Nabors Industries Ltd. +Patterson-UTI Energy, Inc. +ChampionX Corporation +Newpark Resources, Inc. +ProPetro Holdings Corp. +Flowserve Corporation +NOV Inc. +RPC, Inc. +Helmerick & Payne, Inc. +NOW Inc. +Select Energy Services, Inc. +Liberty Oilfield Services Inc. +Oceaneering International, Inc. +MRC Global Inc. +Oil States International, Inc. +The peer companies were selected as potential competitors for executive talent based upon similarity in terms of business focus, +financial size, and peer group overlap. CAP provided an updated peer group review for 2021 and suggested that several changes be made to the applicable peer group used for benchmarking purposes. These changed included the removal of TechnipFMC plc, +KBR Inc. and Superior Energy Services, Inc. from the peer group analysis and the inclusion of Oil States International, Inc., Select Energy Services, Inc. and Newpark Resources, Inc. in the relevant peer group analysis. Companies removed from the +peer group had revenue scope ranges outside of the Company’s own revenue metrics. The Compensation Committee noted that newly included peer companies better fit within the relevant revenue scope range of the Company. This market data is not the +sole determinant in setting executive pay levels. The Compensation Committee also considers Company and individual performance, the nature of an individual’s role within the Company, and his or her experience and contributions to his or her +current role when making its compensation-related decisions. +36 +Table of Contents +Say-on-Pay Vote and Compensation +Actions Taken +We received approximately 98% approval on our advisory +say-on-pay vote to approve NEO compensation in 2021. We considered this as an affirmation that our stockholders support our executive compensation program. We regularly +engage in investor outreach to better understand our investors’ concerns and to solicit feedback on our executive compensation program. Our Board and the Compensation Committee greatly value the benefits of maintaining a dialogue with our +stockholders to understand their views on our executive compensation program and practices. +The Compensation Committee intends to consider the outcome +of say-on-pay votes when evaluating the design of our programs and is devoted to consistently reviewing and enhancing our programs to ensure continued alignment with compensation program guiding principles. +The 2021 Executive Compensation Program in Detail +Base Salary +We provide each of our NEOs with a competitive fixed annual base salary. The base salaries for our NEOs are set forth in employment agreements between the Company and +the applicable NEO other than Mr. Gillard (the “Executive Employment Agreements”). Base salaries are reviewed annually by the Compensation Committee by taking into account the results achieved by each executive, their future potential +contributions, scope of responsibilities and experience, and competitive pay practices. +In the first quarter of 2021, the Compensation Company relieved the +austerity compensation measures established in response to COVID-19 in 2020, and on April 18, 2021, restored the full pre-austerity salaries of our NEOs in light of +Company performance and perceived market conditions. +In addition, the Compensation Committee increased the base salary for Mr. Pucheu on September 1, +2020 from $375,000 to $425,000, subject at that time to a 20% austerity reduction which was relieved April 18, 2021. +Name +2020 Salary +Pre-Austerity +Reductions +($) +2020 Salary +Austerity +Reduced +($) +2021 Restored Salary +Post Austerity +Reductions +($) +Robert W. Drummond +1,000,000 +800,000 +1,000,000 +Kenneth H. Pucheu +375,000 +340,000 +425,000 +Kevin M. McDonald +475,000 +380,000 +475,000 +Ian R. Henkes +375,000 +300,000 +375,000 +Matthew R. Gillard +— +— +425,000 +Phung Ngo-Burns (1) +300,000 +300,000 +300,000 +(1) +Ms. Ngo-Burns’ salary was not subject to the 2020 austerity measures +based on consultation between the Compensation Committee and management. +37 +Table of Contents +2021 Annual Incentives +Each Executive Employment Agreement provides that the NEO is eligible for an annual bonus, for which target is expressed as a percentage of base salary, as set forth in +the table below. +Name +Target Bonus +Opportunity as +a Percent of +Base Salary +2021 +Target Bonus +Opportunity +($) +Robert W. Drummond +125 +% +1,125,000 +Kenneth H. Pucheu +100 +% +425,000 +Kevin M. McDonald +100 +% +475,000 +Ian R. Henkes +75 +% +281,250 +Matthew R. +Gillard (1) +100 +% +168,720 +Phung Ngo-Burns +60 +% +180,000 +(1) +Effective August 9, 2021, Mr. Gillard was appointed as Executive Vice President & Chief Operating +Officer of the Company. Mr. Gillard’s bonus is reflective of a pro rata amount of his tenure of service to the Company. +Bonus payments +for our NEO’s were calculated under the 2021 Bonus Program, described below. +2021 Annual Bonus Program +The Compensation Committee adopted the Annual Bonus Program for Fiscal Year 2021 (the “2021 Bonus Program”). The 2021 Bonus Program provides that each NEO is +eligible to receive an annual bonus for fiscal year 2021 calculated by multiplying the NEO’s target bonus by the achieved “Funding Level” based on the Company’s achievement of: +Adjusted EBITDA +Financial +Goal +The Compensation Committee chose to use Adjusted EBITDA as the primary metric to +focus management on the generation and flow of cash. This closely aligns the interests of management with stockholders to maintain a strong balance sheet and preserve investment value. Adjusted EBITDA is a +non-GAAP +measure and is defined as (net income (loss)) before interest, income taxes, depreciation and amortization, further adjusted to eliminate +the effects of items management does not consider in assessing ongoing performance as reflected in the Company’s audited financial statement for the performance period. Adjusted EBITDA is calculated after taking into consideration the bonus +payments, which include adjustments reviewed and approved by the Compensation Committee (e.g., consideration for items such as one-time expenses for M&A transactions, commissioning, etc.). +The Compensation Committee believes in providing challenging, but achievable metrics. As such, the Company adopted two distinct Adjusted EBITDA measurement periods for +2021. Under the 2021 Bonus Program, each NEO was eligible to receive up to one-half of target bonus for each six-month Adjusted EBITDA performance period. Payouts are +based upon the extent that each Adjusted EBITDA goal is achieved for each of the two six-month periods. +Aside from Adjusted +EBIDTA’s six-month measurements basis periods, Adjusted EBIDTA performance may also be measured cumulatively at the end of the performance year (both six-month +periods). A catch-up amount may be triggered to the extent that the Company meets or exceeds the second six-month period goals on a cumulative basis. Catch-up payouts were determined by solving for the difference of (i) the six-month bonus payable for such relevant period based on the achievement of the cumulative +performance at the end of the relevant year minus (ii) the aggregate amount of six-month period bonuses due to the participant’s actual performance in both periods. +38 +Table of Contents +ESG & QHSE Performance +Performance Goal +We believe safety culture begins with leadership accountability. We are committed to lowering injury risk and providing a safe working environment. We strive to lead the +industry in safety performance without compromising service +quality. Total recordable injury rate +(“TRIR”) was selected as a plan metric to gauge alignment of words and actions. Consistent with industry and regulatory standards, the calculation of TRIR is based on the number of recordable safety incidents per 200,000 hours worked. +Service Efficiency on Integrated Operations, which we defined as (pump time)/(pump time + transition time + NEX NPT all services), was selected as a metric by the Compensation Committee to reward operating efficiency and the mitigation of +environmental externalities. Finally, the Compensation Committee selected diesel reduction based on a measurement of the reduction in diesel consumed as a result of natural gas substitution for DGB equipment, which we believe promotes efficient use +of resources and the minimization of carbon emissions. +Relative Performance/Fleet +Performance Goal +We believe our management should be rewarded for attaining Adjusted EBITDA per fleet relative to peer companies. Adjusted EBITDA per fleet ranking is determined based on +available reliable market data, with reference to the +following peers: (i) FTS International, Inc., Liberty Oilfield Services, Inc., ProPetro Holding Corp., RPC, Inc. and U.S. Well +Services, Inc. +The following table shows the range of goals for the performance measures for 2021 and our actual performance results. +Financial: Annual Adjusted EBITDA +Weight +Achievement Level +Adjusted EBITDA (1) +Funding +Level (5) +Actual +Performance +First Half +2021 +Second Half +2021 +Full Year +Original +Full Year as +Adjusted +for Alamo +Acquisition +50% +Threshold +$14M +$55M +$69M +$92M +70% +H1 - $16M +H2 - $98M +Year - $114M +Target +$18M +$69M +$87M +$116M +100% +Stretch Level 1 +$22M +$76M +$98M +$128M +150% +Stretch Level 2 +$25M +$83M +$108M +$140M +200% +39 +Table of Contents +Performance: ESG & QHSE +Weight +Weight +Achievement +Level +TRIR +(subject to adjustment +from Chief Executive +Officer in cases of +fatalities) +Funding Level (5) +Actual Performance +25% +34% +Threshold +0.6 +50% +>0.6 +Target +0.5 +100% +Stretch Level 1 +0.4 +150% +Stretch Level 2 +0.3 +200% +Weight +Achievement +Level +Service Efficiency (2) +Integrated Operations +Funding Level (5) +Actual Performance +33% +Threshold +74% +50% +74% +Target +76% +100% +Stretch Level 1 +78% +150% +Stretch Level 2 +80% +200% +Weight +Achievement +Level +Diesel Reduction (3) +(gallons/year) +Funding Level (5) +Actual Performance +33% +Threshold +13,000,000 +50% +23,125,000 +Target +19,000,000 +100% +Stretch Level 1 +21,000,000 +150% +Stretch Level 2 +24,000,000 +200% +Performance: Relative +Performance/Fleet (4) +Weight +Peer Companies +(listed in alpha order) +Fleet Rank Against Peers +Funding Level (5) +Actual Performance +N/A +6 +0% +Third +25% +FTS International, Inc. +Liberty Oilfield Services, +Inc. +ProPetro Holding Corp. +RPC, Inc. +U.S. Well Services, Inc. +N/A +5 +0% +Threshold +4 +50% +Target +3 +100% +Stretch Level 1 +2 +150% +Stretch Level 2 +1 +200% +Performance: Actual Payout % Earned +Adjusted +EBITDA +TRIR +Service +Efficiency +Diesel +Reduction +Relative +Performance/Fleet +Total +Target +Weight +50.00% +8.50% +8.25% +8.25% +25.00% +100.00% +Actual % +Earned +48.75% +0.00% +4.13% +15.30% +25.00% +93.18% +(1) +Adjusted EBITDA means the Company’s earnings (net income (loss)) before interest, income taxes, depreciation and +amortization, further adjusted to eliminate the effects of items management does not consider in assessing ongoing performance as reflected in the Company’s audited financial statement for the performance period. Adjusted EBITDA is calculated +after taking into consideration the bonus payments, which include adjustments reviewed and approved by the Compensation Committee (e.g., consideration for items like one-time expense for M&A transactions, +commissioning, etc.). +(2) +Service Efficiency on Integrated Operations is calculated as (pump time)/(pump time + transition time + NEX NPT all +services). +(3) +Diesel Reduction is based on a measurement of the reduction in diesel consumed as a result of natural gas substitution for +DGB equipment. +(4) +Relative Performance/Fleet means the Company’s Adjusted EBITDA per fleet on an annual basis relative to peer +companies. Adjusted EBITDA per Fleet Ranking (ranking highest to lowest with highest being ranked no. 1 and lowest being ranked no. 6) is determined based on available reliable market data and using the named group of peer companies. +40 +Table of Contents +(5) +Funding Level increases on a linear basis from Threshold through Target and beyond Stretch level points, pro-rated for interim steps. +Based on the formula provided above, each NEO received annual bonuses based on 93% +of target other than Mr. Gillard whose bonus was pro-rated based on his start date of August 9, 2021. The Compensation Committee believes that these below-target payouts are appropriate and +reflective of the executive management team’s extraordinary efforts to continue to manage the Company through the pandemic and preserve the interests of the Company’s stockholders. +The amount of the incentive compensation for each NEO is set forth below. +Name +2021 Annual Bonus +($) +Robert W. Drummond +1,164,585 +Kenneth H. Pucheu +395,958 +Kevin M. McDonald +442,542 +Ian R. Henkes +262,031 +Matthew R. Gillard +157,191 +Phung Ngo-Burns +167,700 +2021 Long-Term Incentives +Annual +Long-Term Incentive Program +Long-term equity awards provide a strong link between executive pay and stockholder interests. Our NEOs are eligible to receive +long-term equity awards under the Company’s Equity and Incentive Award Plan. For fiscal year 2021, equity awards were granted as a combination of RSU awards and PSU awards. +· +RSU awards are intended to provide the NEOs with the economic equivalent of a direct ownership interest in the +Company during the vesting period and provide the Company with significant retention security regardless of post-grant stock price volatility. +· +PSU awards are performance-based awards that provide meaningful incentives for management to execute on the +longer-term financial and strategic growth goals that drive stockholder value creation. These awards only vest if relative total shareholder return (“TSR”) goals established by the Compensation Committee are achieved over a multi-year +period. +For fiscal year 2021, the Compensation Committee reviewed market data provided by CAP in determining the targeted award levels for each +of our NEOs. The table below shows the number of long-term incentive awards granted for fiscal year 2021 for each of the NEOs: +Name +Performance +Restricted Stock +Unit Awards +Restricted Stock +Unit Awards +Total Grant Date +Value ($) (1) +Robert W. Drummond +999,821 +999,821 +4,999,999 +Kenneth H. Pucheu +239,957 +239,957 +1,200,000 +Kevin M. McDonald +233,958 +233,958 +1,169,999 +Ian R. Henkes +149,973 +149,973 +749,999 +Matthew R. Gillard (2) +— +100,000 +349,000 +Phung Ngo-Burns +59,989 +59,989 +299,999 +(1) +Reflects the grant date fair value calculated in accordance with ASC 718. +(2) +Mr. Gillard’s RSU awards reflect an inducement grant. +41 +Table of Contents +RSUs will vest ratably on the first three anniversaries of the date of grant, in each case contingent upon the +continued employment of the NEO through each vesting date. +PSUs will vest as based upon performance over a full three-year performance period (January 1, 2021 +– December 31, 2023), contingent upon the continued employment of the NEO through each vesting date. +PSU vesting is conditioned upon our TSR relative to +the following group of companies (“Performance Peers”) whom we consider to be direct competitors for business and investor dollars: +Performance Peer Group +FTS International, Inc. +Patterson-UTI Energy, Inc. +RPC, Inc. +Liberty Oilfield Services Inc. +PHLX Oil Service Sector Index +U.S. Well Services, Inc. +Nine Energy Service, Inc. +ProPetro Holding Corp +The Compensation Committee reserves the right to adjust or change the group of Performance Peers in good faith as circumstances warrant +during the performance period, provided any such change does not result in an arbitrary increase or decrease in the amount payable under such awards. +The PSU +Performance Peers group differs from our compensation benchmarking peer group because not all of our competitors for talent in the oilfield services industry are direct competitors for business, and not all of the companies in the performance peer +group are large enough or provide enough publicly available compensation data for the purposes of benchmarking compensation opportunities. +PSU recipients may earn +between 0% and 200% of the number of performance units granted based upon the following performance payout schedule: +Performance Level +Relative TSR +Rank +Percent of Target +Units Earned +Maximum +80th Percentile or +≥ ranked 2nd +200% +Target +50th Percentile +100% +Threshold +20th Percentile +40% +Below Threshold +Below 20th Percentile +0% +It is the Committee’s intention to have PSU awards in future years continue to be earned based upon performance over a full +three-year period. +Both RSUs and PSUs are subject to accelerated vesting in the event that the NEO is terminated without Cause or for Good Reason or following a +change in control. +42 +Table of Contents +2020 COVID-19 Retention and Incentive Performance Awards +In June 2020, in response to the COVID-19 pandemic and related market uncertainties, the Company took a variety of actions +including implementing a new organizational model to reduce costs and streamline the organization, which increased the duties of many of the executives and reduced the number of supporting employees throughout the organization, while simultaneously +reducing compensation for the executives. In effort to retain and continue to incentivize the executives, one-time COVID-19 Retention PSU awards were granted to certain +officers as set forth below. +Name +COVID-19 +Retention PSUs +Market Price at +Time of Grant +($) (1) +Robert W. Drummond +200,267 +600,000 +Kenneth H. Pucheu +50,067 +150,001 +Kevin M. McDonald +55,073 +164,999 +Ian R. Henkes +25,033 +74,999 +Matthew R. Gillard +— +— +Phung Ngo-Burns +— +— +(1) +Reflects the grant date fair value calculated in accordance with ASC 718. +The COVID-19 Retention PSUs would vest pursuant to their terms as to 100% of such awards based upon performance over the two +years of the performance period (January 1, 2020 – December 31, 2021), contingent upon the continued employment of the NEO through such vesting date. +The +COVID-19 Retention PSU vesting was conditioned on the cash balance at December 31, 2021 (less any amounts that have been borrowed and are being held in cash pending their use or repayment) such that the COVID-19 Retention PSU recipients may earn between 0% and 150% of the number of COVID-19 Retention PSUs granted as set forth in the following performance payout schedule: +Performance Level +Cash Balance (Less +Borrowed Funds) ($) +Percent of Target +Units Earned +Maximum +150,000,000 +150% +Target +125,000,000 +100% +Threshold +100,000,000 +90% +Below Threshold +Below 100,000,000 +0% +For purposes of determining the Company’s cash balance, the COVID-19 Retention PSU awards +provide that the Company’s cash balance will be reduced by any amounts that have been borrowed pending their use or repayment and that a credit will be provided for any investments made in next generation hydraulic fracturing technology during +the performance period. +As of December 31, 2021, the cash balance of the Company was $110.0 million. During the performance period, the Company borrowed +$44.4 million and the Company’s investment in next generation hydraulic fracturing technology was $143.9 million resulting in a net cash balance for purposes of the COVID-19 Retention PSU awards +in excess of $150 million. As such the COVID-19 Retention PSUs vested at 150% performance. +Executive Employment +Agreements +Each NEO, except for Matthew R. Gillard, has entered into an Executive Employment Agreement with the Company. The Executive Employment Agreements +with Messrs. McDonald and Drummond each provide for a one-year term that automatically renews for additional one-year period unless either party provides written notice +at least 90 days prior to the end of the then term. Mr. Pucheu’s Second Amended +43 +Table of Contents +and Restated Employment Agreement, effective January 11, 2021, does not provide for an initial term or automatic renewal. +Pursuant to the Executive Employment Agreements with our currently employed NEOs, in the event of a termination of the NEO’s employment by us without Cause or, in +the case of Messrs. Drummond, McDonald and Henkes, due to our non-renewal of the applicable Executive Employment Agreement, or by Messrs. Drummond, McDonald and Henkes, for Good Reason, subject to the +execution of a release, the applicable NEO will be entitled to the following severance benefits: +· +Severance payments equal to: +· +for Messrs. Drummond and McDonald, two times (or three times if the termination occurs within the period beginning 30 days +prior to a change in control and ending on the two-year anniversary of the change in control) the sum of his annual base salary and his target bonus for the year in which the termination occurs, payable over +two years in equal monthly installments, beginning on the 60th day following the termination date; +· +for Mr. Pucheu, one and one-half (1.5) times (or two times if the termination +occurs within the period beginning on the date of change in control and ending on the two-year anniversary of the change in control) of the sum of his annual salary plus target bonus on the termination date, +payable over one year in equal monthly installments, beginning on the 60th day following the termination date; +· +for Mr. Henkes, cash severance payments equal to the sum of his annual salary plus target bonus on the termination +date, payable over twelve months in equal monthly installments, beginning on the 60th day following the termination date; and +· +for Ms. Ngo-Burns, cash severance payments equal to twelve months of base +salary, payable over twelve months in equal monthly installments, beginning on the 60th day following the termination date; +· +for Messrs. Henkes and Pucheu, a pro rata annual bonus for the year of termination (or an amount equal to his target annual +bonus for the year of termination if the termination occurs within the period beginning on the date of a change in control and ending on the one-year anniversary of the change in control) and for Messrs. +Drummond and McDonald, an amount equal to his target annual bonus for the year of termination; +· +payments with respect to the cost of continuation of coverage of group health coverage: +· +for Mr. Drummond (upon any termination other than death or voluntarily without Good Reason), and Mr. McDonald, +for up to 18 months (36 months if within the period beginning 30 days prior to a change in control and ending on the two-year anniversary of the change in control); and +· +for Messrs. Henkes and Pucheu, for up to 12 months (18 months if within the period beginning on the date of a change in +control and ending on the one-year anniversary of the change in control). +In addition, pursuant to the +Executive Employment Agreements with each of our NEOs, other than Mr. Gillard and Ms. Ngo-Burns, in the event of the NEO’s termination of employment due to death or disability, subject to the +execution of a release, the NEO’s estate, as applicable, will be entitled to: +· +for Messrs. Drummond and McDonald, an amount equal to his target annual bonus for such year, for Messrs. Henkes and Pucheu, +a pro rata annual bonus for the year of termination; and +· +a pro rata payment for unused personal time. +For purposes of the Executive Employment Agreements, “Cause” generally means: (i) conviction or plea of no contest to a felony or any crime involving +dishonesty or theft; (ii) conduct in connection with employment duties or responsibilities that is fraudulent or unlawful; (iii) conduct in connection with employment duties or responsibilities that is grossly negligent and which has a +materially adverse effect +44 +Table of Contents +on us or our business; (iv) willful misconduct or contravention of specific lawful directions related to a material duty or responsibility directed to be undertaken from our Board; +(v) material breach of obligations under the applicable Executive Employment Agreement, including but not limited to breach of restrictive covenants set forth therein; (vi) any acts of dishonesty resulting or intending to result in +personal gain or enrichment at our expense; or (vii) knowing failure to comply with a material policy. +For purposes of the Executive Employment Agreements, as +applicable, “Good Reason” generally means: +· +our failure to cure a material breach of our obligations under the applicable Executive Employment Agreement (in the case +of Mr. Drummond, a material breach by the Company of its obligations under his Executive Employment Agreement); +· +a material diminution of duties, position or title; +· +a material reduction in base salary (in the case of Mr. Drummond, other than as a result of a less-than- 10% reduction +that is part of an across-the-board reduction that is applicable to all other senior executives of the Company); +· +a material reduction in the budget over which the Executive retains authority; or +· +a change in office location that increases the NEO’s commute from his principal residence by more than 50 miles. +Executives Without Employment Agreements +On +August 9, 2021, the Company appointed Matthew R. Gillard as Executive Vice President, Chief Operating Officer. In connection with his appointment, he was entitled to (i) an annual base salary of $425,000; (ii) eligibility to participate in +the Company’s management bonus program with an initial target of 100% eligible earnings; (iii) eligibility to participate in the Company’s long-term incentive program, and (iv) a one-time +grant of restricted stock under the Company’s Equity and Incentive Award Plan in the amount of 100,000 restricted stock units that will vest pro-rata over three years from the grant date. +Mr. Gillard is also eligible to participate in perks, retirement and welfare benefits plans, programs and arrangements generally available to executive officers +subject, to eligibility requirements. +During the fiscal year end 2021, Mr. Gillard was not contractually entitled to severance benefits in the event of +termination of employment. +Severance Programs +On February 17, +2022, the Compensation Committee approved a leadership severance plan, which provides for severance rights described below for executives without employment agreements, and a continuing award program for qualified retirees, which provides continued +vesting for long-term and short-term incentive awards upon retirement of eligible retirees. Both plans became effective in 2022. +· +Leadership Severance Program . The Leadership Severance Program (the “Severance Program”) provides +severance commitments to its NEOs, as well as other officers and vice presidents, who are not covered under employment agreements with the Company. Pursuant to the Severance Program, NEOs will be eligible for one and +one-half (1.5) times (or two times if the termination occurs within the period beginning on the date of change in control and ending on the two-year anniversary of the change in control (the “Protected +Period”)) their annual base salary and target short-term incentive award payable in 12 equal installments and 12 months (or 18 if the termination occurs within the Protected Period) of subsidized COBRA following a termination without Cause or +for Good Reason (each as defined in the Severance Program). Further, the NEOs will be eligible for a prorated (or target if the termination occurs within the Protected Period) short-term incentive award for the year of termination and will also be +eligible to fully vest in any RSUs and vest in any +45 +Table of Contents +PSUs based on actual performance (or better of actual performance and target if the termination occurs within the Protected Period). All Severance Program benefits are subject to an eligible +employee’s timely execution and non-revocation of a release and waiver agreement in favor of the Company and are subject to the Company’s Compensation Recovery Policy. +· +Continuing Award Program for Qualified Retirees . The Continuing Award Program provides continued vesting for +long-term and short-term incentive awards upon the retirement of eligible employees (i.e., vice president, senior vice president, or executive vice president) who are at least age 55 and who have at least 5 years of service with Company (with at +least three of the most recent years being with the Company), provided that, their combined age and years of service equals 65 (whether or not the executive has an employment agreement). Performance metrics will continue to apply and payment or +settlement of any outstanding awards will occur at the same time and on the same conditions as if the employee had not retired. +Other Practices, +Policies and Guidelines +Claw Back Policy +On February 23, 2017, +our Board adopted the Company’s Compensation Recovery Policy (the “Claw Back Policy”). Pursuant to the Claw Back Policy, in the event of a revision and reissuance of a financial statement previously issued by the Company (an +“Accounting Restatement”), our Board in its discretion may determine that each officer will be required to repay all or a portion of the amount of incentive-based compensation received by an officer of the Company that exceeds the amount +of such compensation that such officer otherwise would been received determined based upon the Accounting Restatement. In the event that any such Accounting Restatement is required due to material +non-compliance by the Company with any financial reporting requirement under the securities laws, then each such executive officer of the Company will be obligated to repay the amount of incentive-based +compensation received by such executive officer that exceeds the amount of such compensation that the executive officer otherwise would have received determined based upon the Accounting Restatement. The Claw Back Policy applies to any +incentive-based compensation received by an officer of the Company during the three completed fiscal years of the Company immediately preceding the date of the applicable Accounting Restatement. For purposes of the Claw Back Policy, +“incentive-based compensation” means any compensation (whether in cash, common stock, or otherwise) to an officer of the Company, that is granted, earned, vested or for which the amount is determined, wholly or in part, on the attainment +by the Company of (i) any measure that is determined and presented in accordance with the accounting principles used in preparing the Company’s financial statements, (ii) any measure that is derived wholly or in part from such +measures, or (iii) the Company’s stock price and total stockholder return. +Stock Ownership Guidelines +Our Board has implemented stock ownership guidelines for our non-employee directors and senior executive officers to foster +equity ownership and align the interests of our non-employee directors and senior executive officers with our stockholders. Within five years of the later of (a) the date a senior executive officer commences +employment with the Company in such position and (b) June 16, 2018, our Chief Executive Officer is expected to beneficially own a number of shares at least equal to 500% of his base salary and all other executive officers are expected to +beneficially own a number of shares at least equal to 200% of their base salary. Similarly, within five years of the later of (a) the date a non-employee director commences service with the Company in such +position (including as a result of the determination by the Board that the member has become a non-employee director) and (b) June 16, 2018, our outside directors are expected to beneficially own a number of +shares at least equal to 500% of their annual director’s fee. In the event that a non-employee director or senior executive officer fails to comply with the stock ownership guidelines following the end of +the applicable transition period, then until such director or officer are required to hold any shares received from equity grants until such director or executive officer has met the applicable ownership +46 +Table of Contents +guideline. Each of our executive officers and directors was within the transition period provided for in the stock ownership guidelines, and therefore in compliance with such guidelines, as of +the record date. +Anti-Hedging Policy +We prohibit the NEOs and other +executives from engaging in transactions designed to insulate them from changes in the Company’s stock price. Therefore, the Company has an anti-hedging policy that prohibits our NEOs from entering into transactions that include (without +limitation) equity swaps or short sales of our securities, margin accounts or pledges of our securities, and hedges or monetization transactions involving our securities that are designed to hedge or offset any decrease in the market value of the +Company’s securities. In addition, the purchase or sale of puts, calls, options, or other derivative securities based on the Company’s securities is prohibited under this policy, and borrowing against any account in which our securities +are held is prohibited. +Benefits & Perquisites +Our NEOs also +generally participate in our other benefit plans on the same terms as all of our other employees. These plans include employee benefit plans maintained by the Company, including the 401(k) program, the medical insurance and reimbursement program, +the group term life insurance program, and the group disability program. In addition, each of the NEOs receives an automobile allowance. Notably, no NEO received a 401(k) company match in 2021. We do not provide any pension benefits, nonqualified +defined contribution, or other deferred compensation plans for our NEOs. +2021 Risk Assessment +Each year, the Company performs a detailed risk analysis of each of its compensation programs. If warranted, the Compensation Committee will recommend changes to +address concerns or considerations raised in the risk review process. Changes may be recommended for the program design or its oversight and administration in order to mitigate unreasonable risk, if any is determined to exist. The Compensation +Committee has concluded that the Company’s compensation arrangements do not encourage any employees to take unnecessary and excessive risks. We do not believe that any risks arising from our compensation policies and practices are reasonably +likely to have a material adverse effect on the Company. +Compensation Committee Interlocks and Insider Participation +None of the members of the Compensation Committee is or has at any time during the past year been an officer or employee of ours. None of our executive officers serve +as a member of the Compensation Committee or board of directors of any other entity that has an executive officer serving as a member of our Board or Compensation Committee. +Impact of Tax and Accounting +We regularly consider the various tax and +accounting implications of our compensation plans. When determining the amount of long-term incentives and equity grants to executives and employees, the compensation costs associated with the grants are reviewed, as required by the Financial +Accounting Standards Board Accounting Standards Codification Topic 718 (“ASC 718”). +Section 162(m) of the Internal Revenue Code (the +“Code”) generally prohibits any publicly held corporation from taking a federal income tax deduction for compensation paid in excess of $1 million in any taxable year to the Chief Executive Officer, the Chief Financial Officer and the +next three highest compensated officers for such year and any employee who was covered under Section 162(m) of the Code in a prior year. The Compensation Committee believes that it is important for it to retain maximum flexibility in designing +compensation programs that are in the best interest of the Company and its stockholders. Therefore, the Compensation Committee, while considering tax deductibility as a factor in determining compensation, may not limit compensation to +$1 million in any taxable year if it believes that the compensation is commensurate with the performance of the covered employee. +47 +Table of Contents +Executive Compensation Tables +Summary Compensation Table +Name and +Principal Position +Year +Salary +($) +Bonus +($) (1) +Stock +Awards +($) (2) +Option +Awards +($) +Non-Equity +Incentive Plan +Compensation +($) (3) +All Other +Compensation +($) (4) +Total +($) (5) +Robert W. Drummond +President & Chief Executive Officer +2021 +940,726 +— +4,999,999 +— +1,164,585 +21,681 +7,126,991 +2020 +896,154 +— +6,469,226 +— +560,096 +23,416 +7,948,892 +2019 +839,231 +— +3,717,367 +— +1,443,750 +30,430 +6,030,778 +Kenneth H. Pucheu +Executive Vice President & Chief Financial Officer +2021 +399,808 +— +1,200,000 +— +395,959 +22,270 +2,018,037 +2020 +348,366 +100,000 +1,131,111 +— +200,000 +16,509 +1,795,986 +2019 +271,311 +50,000 +301,000 +— +338,570 +6,574 +967,455 +Kevin M. McDonald +Executive Vice President, Chief Administrative Officer & General Counsel +2021 +446,845 +— +1,169,999 +— +442,542 +21,681 +2,081,067 +2020 +425,673 +125,000 +1,774,180 +— +212,837 +18,646 +2,431,336 +2019 +415,096 +— +1,134,519 +— +680,625 +30,436 +2,385,676 +Ian R. Henkes +Senior Vice President, Operations +2021 +352,772 +— +749,999 +— +262,032 +22,244 +1,387,047 +2020 +336,058 +43,897 +808,657 +— +126,000 +17,316 +1,288,031 +2019 +314,712 +— +481,600 +— +489,844 +30,301 +1,360,354 +Matthew R. Gillard +Executive Vice President & Chief Operating Officer +2021 +168,720 +— +349,000 +— +157,191 +8,312 +683,223 +Phung Ngo-Burns +Former Chief Accounting Officer & Treasurer +2021 +300,000 +— +299,999 +— +167,700 +10,592 +778,291 +(1) +With respect to 2020, amounts for Mr. Pucheu reflect the payment of a special retention bonus granted in connection with +the C&J Merger. For more information, see the section entitled “Compensation Discussion & Analysis — Retention Bonuses” in our 2020 definitive proxy statement filed with the SEC on April 21, 2021. +(2) +Reflects the grant date fair value calculated in accordance with ASC 718 of the RSUs granted to the NEOs in each of the +periods presented and the PSUs granted to the NEOs in each of the periods presented, assuming target performance. See Note 12 — Stock-Based Compensation in our audited consolidated and combined financial statements included in our 2021 Form 10-K for a discussion of the assumptions used in the valuation of such awards. The grant date fair value assuming the highest level of performance conditions were achieved for the 2021 PSUs, are as follows: +Mr. Drummond — $7,499,999; Mr. Pucheu — $1,800,000; Mr. McDonald — $1,754,999; Mr. Henkes — $1,124,999; and Ms. Ngo-Burns — $449,999. Mr. Gillard did not +receive any PSUs in 2021. +(3) +Represents amounts earned under the 2021 Bonus Program. See “Compensation Discussion & Analysis — 2021 +Annual Bonus Program”. +(4) +A detailed breakdown of “All Other Compensation” is provided in the below table. +Name +Year +Subsidized +Life +and +Disability +($) +Automobile +Allowance +($) +Total +($) +Robert W. Drummond +2021 +889 +20,792 +21,681 +Kenneth H. Pucheu +2021 +1,478 +20,792 +22,270 +Kevin M. McDonald +2021 +889 +20,792 +21,681 +Ian R. Henkes +2021 +1,674 +20,792 +22,244 +Matthew R. Gillard +2021 +466 +7,846 +8,312 +Phung Ngo-Burns +2021 +1,419 +9,173 +10,592 +(5) +The sum of each NEO’s Salary, Stock Awards, Non-Equity Incentive Plan +Compensation and All Other Compensation. +48 +Table of Contents +Grants of Plan Based Awards in Fiscal Year 2021 +Estimated Future Payouts +Under +Non-Equity Incentive Plan +Awards(1) +Estimated Future +Payouts +Under Equity Incentive Plan +Awards(2) +All +Other +Stock +Awards: +Number of +Shares +of Stock +or Units +(#)(3) +Grant +Date +Fair +Value +of Stock +Awards +($)(4) +Name +Grant +Date +Threshold +($) +Target +($) +Maximum +($) +Threshold +(#) +Target +(#) +Maximum +(#) +Robert W. Drummond +— +562,500 +1,125,000 +2,250,000 +— +— +— +— +— +1/4/2021 +— +— +— +— +— +— +999,821 +2,499,999 +1/4/2021 +— +— +— +399,928 +999,821 +1,999,642 +— +2,499,999 +Kenny H. Pucheu +— +212,500 +425,000 +850,000 +— +— +— +— +— +1/4/2021 +— +— +— +— +— +— +239,957 +600,000 +1/4/2021 +— +— +— +95,983 +239,957 +479,914 +— +600,000 +Kevin M. McDonald +— +250,000 +500,000 +1,000,000 +— +— +— +— +— +1/4/2021 +— +— +— +— +— +— +233,958 +585,000 +1/4/2021 +— +— +— +93,583 +233,958 +467,916 +— +585,000 +Ian R. Henkes +— +140,625 +281,250 +562,500 +— +— +— +— +— +1/4/2021 +— +— +— +— +— +— +149,973 +375,000 +1/4/2021 +— +— +— +59,989 +149,973 +299,946 +— +375,000 +Matthew R. Gillard +8/16/2021 +— +— +— +— +— +— +100,000 +349,000 +Phung Ngo-Burns +— +90,000 +180,000 +360,000 +— +— +— +— +— +1/4/2021 +— +— +— +— +— +— +59,989 +149,999 +1/4/2021 +— +— +— +23,996 +59,989 +119,978 +— +149,999 +(1) +Amounts represent the range of annual cash incentive awards the NEO was potentially entitled to receive based on the +achievement of performance goals for fiscal year 2021 under the 2021 Bonus Program as more fully described in “Compensation Discussion and Analysis—2021 Annual Bonus Program.” The amounts actually paid are reported in the Non-Equity Incentive Plan column of the Summary Compensation table. Pursuant to the 2021 Bonus Program, performance below a specific threshold will result in no payment with respect to that performance goal, and the +maximum was capped at target. +(2) +Represents the potential number of shares associated with the payout opportunity approved by the Compensation Committee +under the PSUs. The potential payouts are performance-based and therefore at risk. If earned, the units are converted to shares based on the attainment of relative TSR rank over the performance period, as described in “Compensation Discussion +and Analysis—2021 Long-Term Incentives.” +(3) +Represents shares underlying time-based RSUs, which vest ratably on each of the first three anniversaries of the date of +grant. +(4) +Reflects the grant date fair value as calculated in accordance with ASC 718. Assumptions used in the valuation of +equity-based awards are discussed in “Note 12—Stock-Based Compensation” in our audited consolidated and combined financial statements included in our 2021 Form 10-K. With respect to PSUs, +assumes target performance. +49 +Table of Contents +Outstanding Equity Awards at Fiscal Year End 2021 +Option Awards +Stock Unit Awards +Name +Number of +securities +underlying +unexercised +options (#) +exercisable +Number of +securities +underlying +unexercised +options (#) +unexercisable +Equity +incentive +plan +awards: +number of +securities +underlying +unexercised +unearned +options (#) +Option +exercise +price +($) +Option +expiration +date +Number +of +shares +or units +of stock +that +have not +vested +(#) (1) +Market +value of +shares +or units +of stock +that +have not +vested +($) (2) +Equity +incentive +plan +awards: +number of +unearned +shares, +units or +other +rights that +have not +vested +(#) (3) +Equity +incentive +plan +awards: +market or +payout +value of +unearned +shares, +units or +other +rights that +have not +vested +($) (2) +(a) +Grant Date +(b) +(c) +(d) +(e) +(f) +(g) +(h) +(i) +(j) +Robert W. Drummond +2/27/2019 +— +— +— +— +— +80,597 +286,119 +— +— +1/2/2020 +— +— +— +— +— +— +— +448,109 +1,590,787 +1/2/2020 +— +— +— +— +— +295,752 +1,049,920 +— +— +1/4/2021 +— +— +— +— +— +— +— +999,821 +3,549,365 +1/4/2021 +— +— +— +— +— +999,821 +3,549,365 +— +— +Kenneth H. Pucheu +4/5/2018 +7,837 +— +— +$ +15.45 +4/5/2024 +— +— +— +— +4/8/2019 +— +— +— +— +— +8,334 +29,586 +— +— +1/2/2020 +— +— +— +— +— +— +— +74,685 +265,132 +1/4/2021 +— +— +— +— +— +— +— +239,957 +851,847 +1/4/2021 +— +— +— +— +— +239,957 +851,847 +— +— +Kevin M. McDonald +4/3/2017 +80,702 +— +— +$ +19.00 +4/3/2023 +— +— +— +— +3/1/2018 +48,800 +— +— +$ +15.63 +3/2/2024 +— +— +— +— +8/6/2018 +11,885 +— +— +$ +14.17 +8/6/2024 +— +— +— +— +2/27/2019 +— +— +— +— +— +24,599 +87,326 +— +— +1/2/2020 +— +— +— +— +— +— +— +122,857 +436,142 +1/4/2021 +— +— +— +— +— +— +— +233,958 +830,551 +1/4/2021 +— +— +— +— +— +233,958 +830,551 +— +— +Ian R. Henkes +4/3/2017 +31,579 +— +— +$ +19.00 +4/3/2023 +— +— +— +— +3/1/2018 +20,500 +— +— +$ +15.63 +3/1/2024 +— +— +— +— +4/8/2019 +— +— +— +— +— +13,334 +47,336 +— +— +1/2/2020 +— +— +— +— +— +— +— +44,811 +159,079 +1/2/2020 +— +— +— +— +— +44,811 +157,489 +— +— +1/4/2021 +— +— +— +— +— +— +— +149,973 +532,404 +1/4/2021 +— +— +— +— +— +149,973 +532,404 +— +— +Matthew R. Gillard +8/16/2021 +— +— +— +— +— +100,000 +355,000 +— +— +Phung Ngo-Burns +3/1/2018 +10,700 +— +— +$ +15.63 +3/1/2024 +— +— +— +— +2/27/2019 +— +— +— +— +— +6,639 +23,568 +— +— +2/3/2020 +— +— +— +— +— +24,646 +87,493 +— +— +8/7/2021 +— +— +— +— +— +36,299 +128,861 +— +— +1/4/2021 +— +— +— +— +— +— +— +59,989 +212,961 +1/4/2021 +— +— +— +— +— +59,989 +212,961 +59,989 +212,961 +(1) +Reflects the number of unvested RSUs held by the NEOs, of these: +• +33% of the RSUs granted February 27, 2019 became vested ratably on each of February 27, 2020, 2021 and, 2022; +• +33% of the RSUs granted April 8, 2019 became vested on each of April 8, 2020, 2021 and 2022; +• +34% of the RSUs granted January 2, 2020 became vested on each of January 2, 2021 and 2022 and the remaining RSUs +will become vested on January 2, 2023; +• +34% of the RSUs granted February 3, 2020 became vested on each of February 3, 2021 and 2022 and the remaining RSUs +will become vested on February 3, 2023; +50 +Table of Contents +• +34% of the RSUs granted August 7, 2021 will become vested ratably on each of August 7, 2022, 2023 and 2024; +• +34% of the RSUs granted January 4, 2021 became vested on January 4, 2022 and such remaining RSUs will become +vested ratably on each of January 4, 2023 and 2024; and +• +33% of the RSUs granted on August 16, 2021 will become vested ratably on each of August 16, 2022, 2023 and 2024. +In each case, such RSUs will become fully vested in the event that the NEO’s employment terminates without Cause or +for Good Reason within twelve months following a change in control. +(2) +Based on the closing price per share of our common stock on December 31, 2021 of $3.55. +(3) +Reflects the number of unvested PSUs held by the NEO, assuming target performance, of these: +• +50% of the PSUs granted January 2, 2020 vested on December 31, 2021 and 50% will vest, if at all, on +December 31, 2022; and +• +100% of the PSUs granted January 4, 2021 will vest, if at all, on December 31, 2023, contingent upon the continued +employment of the NEO through each vesting date. The PSUs will vest conditioned on the Company’s TSR relative to our Performance Peers during the vesting period, payable between 0% and 200%. See “Compensation Discussion and +Analysis—2021 Long-Term Incentives.” +Option Exercises and Stock Vested in Fiscal Year 2021 +The following table provides information about option awards and stock units that vested, and the value realized on exercise and vesting by our NEOs during 2021. +Option Awards +Stock Units +Name +Number of +Shares acquired +on exercise (#) +Value +realized on +exercise +($) +Number of +units acquired +on vesting (#) +Value +realized on +vesting +($) (1) +Robert W. Drummond +— +— +533,354 +1,965,304 +Kenneth H. Pucheu +— +— +111,049 +393,270 +Kevin M. McDonald +— +— +166,629 +639,590 +Ian R. Henkes +— +— +79,536 +290,515 +Matthew R. Gillard +— +— +— +— +Phung Ngo-Burns +— +— +41,069 +160,963 +(1) +Calculated by multiplying the number of ordinary shares by the market value of the underlying shares on the date of +vesting. +51 +Table of Contents +Potential Payments Upon Termination or Change in Control +The tables below describe and estimate the amounts and benefits that our NEOs (other than Ms. Ngo-Burns) would have been entitled to receive upon a termination of their +employment in certain circumstances or, if applicable, upon a change in control, assuming such events occurred as of December 31, 2021, the last day of fiscal year 2021. The estimated payments are not necessarily indicative of the actual +amounts any of our NEOs would have received in such circumstances. Ms. Ngo-Burns resigned without Good Reason as Chief Accounting Officer & Treasurer of the Company effective January 7, 2022, and received no severance or acceleration of equity +awards. The tables exclude compensation amounts accrued through December 31, 2021 that would be paid in the normal course of continued employment, such as accrued but unpaid salary, payment for accrued but unused vacation and vested account +balances under our retirement plans that are generally available to all of our salaried employees. Where applicable, the information in the table uses a price per share for our common stock of $3.55, the closing price on December 31, 2021 (the “Year-End Closing Price”). Generally, payment of severance benefits to a NEO following termination of employment is subject to the NEO’s timely execution and +non-revocation of a release of claims in favor of the Company. +Robert W. Drummond +Payments and Benefits +Death or +Disability ($) +For Cause or +Without +Good +Reason ($) +Without +Cause or for +Good Reason, +No Change in +Control ($) +Without +Cause or for +Good Reason, +Upon or +Following +Change in +Control ($) +Change in +Control, No +Termination of +Employment ($) +Cash Severance (1) +— +— +4,500,000 +6,750,000 +— +Annual Bonus (2) +1,250,000 +— +1,250,000 +1,250,000 +— +RSU Vesting (3) +4,885,404 +— +4,885,404 +4,885,404 +— +PSU Vesting (4) +5,140,152 +— +5,140,152 +5,140,152 +— +Health Benefits (5) +— +— +24,430 +48,860 +— +Total +11,275,555 +— +15,799,986 +18,074,416 +— +(1) +Reflects severance payments in the event of a termination of Mr. Drummond’s employment without Cause or for Good +Reason, in an amount equal to two times (or three times if the termination occurs within the period beginning 30 days prior to a change in control and ending on the two-year anniversary of the change in +control) the sum of (i) his annual base salary, and (ii) his target bonus for the year his termination occurs, payable over the 24-month period (or 36 months if the termination occurs within the +period beginning 30 days prior to a change in control and ending on the two-year anniversary of the change in control) following his termination. +(2) +Reflects the target annual bonus payable to Mr. Drummond for fiscal year 2021 under our 2021 Bonus Program. +(3) +Pursuant to his RSU award, Mr. Drummond’s unvested RSUs will become fully vested in the event of death, +disability, or a termination of his employment without Cause or for Good Reason. +(4) +Pursuant to his PSU awards, Mr. Drummond’s unvested PSU will become fully vested at target in the event of death +or disability, or will become fully vested in the event of a termination of his employment without Cause or for Good Reason, if during the first half of the applicable performance period or during a Protected Period (as defined in his Executive +Employment Agreement), assuming target performance (or if during the latter half of the applicable performance period, based on actual performance). Amounts shown above assume target performance. +(5) +Reflects our payment for the cost of continuation health coverage for Mr. Drummond for 18 months following his +termination (36 months if the termination occurs within the period beginning 30 days prior to a change in control and ending on the two-year anniversary of the change in control). +52 +Table of Contents +Kenneth H. Pucheu +Payments and Benefits +Death or +Disability ($) +For Cause +($) +Without +Cause or for +Good Reason, +No Change in +Control ($) +Without +Cause or for +Good Reason +during a +Protected Period, +Upon or +Following +Change in +Control ($) +Change in +Control, No +Termination of +Employment ($) +Cash Severance (1) +— +— +1,275,000 +1,700,000 +— +Annual Bonus (2) +395,959 +— +425,000 +425,000 +— +RSU Vesting (3) +1,056,420 +— +1,056,420 +1,056,420 +— +PSU Vesting (4) +1,116,979 +— +1,116,979 +1,116,979 +— +Health Benefits (5) +— +— +16,842 +25,263 +— +Total +2,648,399 +— +4,090,241 +4,573,662 +— +(1) +Reflects severance payments in the event of a termination of Mr. Pucheu’s employment without Cause or for Good +Reason in an amount equal to the sum of (i) his annual base salary, and (ii) his target bonus for the year his termination occurs, times 1.5 (or two times if the termination occurs within the period beginning on the date of change in +control and ending on the one-year anniversary of the change in control), payable over the 12-month period following his termination. +(2) +Reflects a lump-sum cash payment of a pro rata portion of the annual bonus for the +calendar year in which the termination occurs (based upon the number of days Mr. Pucheu was employed by the Company during the year of termination) in an amount equal to: (1) if the termination occurs on or before June 30 of the year +of termination, based on the target bonus and (2) if the termination occurs on or after July 1 of the year of termination, based on the Company’s actual performance during the calendar year through the termination. In the event that +the termination occurs without Cause or for Good Reason during a Protected Period (as defined in the employment agreement), the amount of such lump-sum payment will be equal to the Target Bonus for the year of +termination, without proration, in either case payable on the 60th day following the Termination Date. +(3) +Pursuant to his Executive Employment Agreement, Mr. Pucheu’s unvested RSUs will become fully vested in the event +of death, disability, or a termination of his employment without Cause or for Good Reason. +(4) +Pursuant to his PSU awards, Mr. Pucheu’s unvested PSUs will become fully vested at target in the event of death +or disability, or will become vested, based on actual performance, in the event of a termination of his employment without Cause or for Good Reason, subject to proration under the terms of his Executive Employment Agreement. Amounts shown above +assume target performance. +(5) +Reflects our payment for the cost of continuation health coverage for Mr. Pucheu for twelve months following his +termination (18 months if the termination occurs within the period beginning on the date of a change in control and ending on the one-year anniversary of the change in control). +Kevin M. McDonald +Payments and Benefits +Death or +Disability ($) +For Cause or +Without +Good Reason ($) +Without +Cause or for +Good Reason, +No Change in +Control ($) +Without +Cause or for +Good Reason, +Upon or +Following +Change in +Control ($) +Change in +Control, No +Termination of +Employment ($) +Cash Severance (1) +— +— +1,098,000 +2,850,000 +— +Annual Bonus (2) +475,000 +— +475,000 +475,000 +— +RSU Vesting (3) +737,229 +— +737,229 +737,229 +— +PSU Vesting (4) +691,483 +— +691,483 +691,483 +— +Health Benefits (5) +— +— +29,233 +58,466 +— +Total +1,428,712 +— +3,030,945 +4,812,178 +— +(1) +Reflects severance payments in the event of a termination of Mr. McDonald’s employment without Cause or for Good +Reason, in an amount equal to two times (or three times if the termination occurs within the period beginning 30 days prior to a change in control and ending on the two-year anniversary of the change in +control) the sum of (i) his annual base +53 +Table of Contents +salary, and (ii) his target bonus for the year his termination occurs, payable in a lump sum on the 60th day following the Termination Date. +(2) +Reflects the target annual bonus payable to Mr. McDonald for fiscal year 2021 under our 2021 Bonus Program. +(3) +Pursuant to his Executive Employment Agreement, Mr. McDonald’s unvested RSUs will become fully vested in the +event of death, disability, or a termination of his employment without Cause or for Good Reason. +(4) +Pursuant to his Executive Employment Agreement, Mr. McDonald’s unvested PSUs will become fully vested at target +in the event of a termination of his employment due to death or disability, or will become fully vested in the event of a termination of his employment without Cause or for Good Reason, if during the first half of the applicable performance period +or during a Protected Period (as defined in his Executive Employment Agreement), assuming target performance (or if during the latter half of the applicable performance period, based on actual performance). Amounts shown above assume target +performance. +(5) +Reflects our payment for the cost of continuation health coverage for Mr. McDonald for 18 months following his +termination (36 months if the termination occurs within the period beginning 30 days prior to a change in control and ending on the two-year anniversary of the change in control). +Ian R. Henkes +Payments and Benefits +Death or +Disability ($) +For Cause or +Without +Good Reason +($) +Without +Cause or for +Good Reason, +No Change in +Control ($) +Without +Cause or for +Good Reason, +Upon or Following +Change in +Control ($) +Change in +Control, No +Termination of +Employment ($) +Cash Severance (1) +— +— +656,250 +656,250 +— +Annual Bonus (2) +281,250 +— +281,250 +281,250 +— +RSU Vesting (3) +1,205,733 +— +1,205,733 +1,205,733 +— +PSU Vesting (4) +1,266,693 +— +1,266,693 +1,266,693 +— +Health Benefits (5) +— +— +17,170 +25,756 +— +Total +2,753,676 +— +3,427,096 +3,435,682 +— +(1) +Reflects severance payments in the event of a termination of Mr. Henkes’ employment without Cause or for Good +Reason in an amount equal to the sum of (i) his annual base salary, and (ii) his target bonus for the year his termination occurs, payable over the 12-month period following his termination. +(2) +Reflects lump sum cash payment of a pro rata portion of the annual bonus for the year of termination in an amount equal +to: (1) if the termination occurs on or before June 30 of the year of termination, based on the target bonus; and (2) if the termination occurs on or after July 1 of the year of termination, then based on the Company’s +actual performance during the calendar year through the termination. If the termination occurs without Cause or for Good Reason during a Protected Period (as defined in the Executive Employment Agreement), the amount of such lump sum payment will be +equal to the target bonus, without proration, in either case payable on the 60th day following the Termination Date. +(3) +Pursuant to his Executive Employment Agreement, Mr. Henkes’ unvested RSUs will become fully vested in the event +of death, disability, or a termination of his employment without Cause or for Good Reason. +(4) +Pursuant to his Executive Employment Agreement, Mr. Henkes’ unvested PSUs will become fully vested at target in +the event of death or disability, or will become vested in the event of a termination of his employment without Cause or for Good Reason, based on actual performance (or if during a Protected Period, based on target performance), subject to +proration under the terms of his Executive Employment Agreement. Amount shown above assume target performance. +(5) +Reflects our payment for the cost of continuation health coverage for Mr. Henkes for twelve months following his +termination (18 months if the termination occurs within the period beginning on the date of a change in control and ending on the one-year anniversary of the change in control). +Matthew R. Gillard +Payments and Benefits +Death or +Disability ($) +For Cause or +Without +Good Reason ($) +Without +Cause, +No Change in +Control ($) +Without +Cause, +Upon or Following +Change in +Control ($) +Change in +Control, No +Termination of +Employment ($) +RSU Vesting (1) +120,700 +— +120,700 +355,000 +— +Total +120,700 +— +120,700 +355,000 +— +(1) +Pursuant to his applicable award agreement, Mr. Gillard’s unvested RSUs will continue to vest according to their +ordinary schedule for one year following a termination due to death, disability, or a termination of his employment without Cause. During the fiscal year end 2021, Mr. Gillard was not legally entitled to severance benefits in the event of +termination of employment. +54 +Table of Contents +CEO Pay Ratio +In accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act and applicable SEC rules, we are providing the following information about the +relationship of our Chief Executive Officer’s compensation to the compensation of an identified median employee. The purpose of this disclosure is to provide a measure of the equitability of pay within the organization. We believe our +compensation philosophy and process yield an equitable result, and our ratio is as follows for 2021: +· +the total compensation of our median employee was $109,603, as calculated pursuant to the same methodology as that used to +determine pay for our Chief Executive Officer in the Summary Compensation Table. +· +the total compensation of our Chief Executive Officer, as reported in the Summary Compensation Table, was $7,126,991. +· +the ratio of our Chief Executive Officer’s total compensation to the median employee total compensation was 65.03 to +1. +For the 2021 median employee determination, we did not exclude any of our employees, other than 44 employees located in Canada, or make any cost-of-living adjustments. To identify our median employee, we compared the year-to-date +Federal Taxable Wages of our employees as of December 31, 2021, all of which were based in the United States. We had 3,942 employees as of December 31, 2021. Similar to our Chief Executive Officer, each of our employees enjoys a +comprehensive compensation and benefits package that we determine by benchmarking to market practices. +We believe the pay ratio is a reasonable estimate calculated +in a manner consistent with SEC rules based on our internal records and the methodology used. Because the SEC rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation +allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices, the pay ratio reported by other companies—including companies in our +peer group—may not be comparable to the pay ratio reported above. Other companies may have different employment and compensation practices, different geographic breadth, perform different types of work and may utilize different methodologies, +exclusions, estimates and assumptions in calculating their own pay ratios. This information is being provided for compliance purposes. Neither the Compensation Committee nor management of the Company use the pay ratio measure in making compensation +decisions. +55 +Table of Contents +Other Information +Share Ownership +The following table sets forth +information regarding the beneficial ownership of our common stock as of April 18, 2022 by: +· +each person who is known by us to beneficially own 5% or more of our outstanding shares of capital stock; +· +each member of our Board; +· +each of our NEOs; and +· +all of our directors and executive officers as a group. +Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. A person is +also deemed to be a beneficial owner of any securities of which that person has a right to acquire beneficial ownership within 60 days. Unless otherwise indicated, the address for each 5% stockholder, director and executive officer listed below is +c/o NexTier Oilfield Solutions Inc., 3990 Rogerdale Road, Houston, Texas 77042. +Name of Beneficial Owner +Shares +Beneficially +Owned +Percentage of +Common Stock +Outstanding +5% Stockholders: +Keane Investor Holdings +LLC (1) +39,330,828 +16.1 +% +Alamo Frac Holdings, +LLC (2) +25,074,337 +10.3 +% +The Vanguard +Group (3) +18,524,794 +7.6 +% +T. Rowe Price Associates, +Inc. (4) +17,273,895 +7.1 +% +THRC Management, +LLC (5) +16,564,980 +6.8 +% +Directors and Named Executive Officers: +Robert W. Drummond +1,168,343 +* +Stuart M. Brightman +139,620 +* +Gary M. Halverson +140,953 +* +Patrick M. Murray +176,021 +* +Amy H. Nelson +134,112 +* +Melvin G. Riggs +129,574 +* +Bernardo J. Rodriguez +14,963 +* +Michael Roemer +141,839 +* +James C. Stewart +2,759,064 +1.1 +% +Scott R. Wille +— +— +Kenneth H. Pucheu +192,381 +* +Kevin M. McDonald +502,125 +* +Matthew R. Gillard +— +— +Ian R. Henkes +355,588 +* +Phung Ngo-Burns +89,476 +* +All directors and current executive officers as a group (15 persons) (2) +30,583,565 +12.5 +% +* +Represents less than 1%. +(1) +The information contained in the table and this footnote is based solely on a Schedule 13G/A filed with the SEC on +February 14, 2022 by Keane Investor. The filing indicates that as of December 31, 2021, Keane Investor reported that it +56 +Table of Contents +had sole voting and dispositive power for 39,330,828 shares. The address for Keane Investor Holdings LLC and Mr. Wille is c/o Cerberus Capital Management, L.P., 875 Third Avenue, New York, +New York 10022. Keane Investor is held by a private investor group, including affiliates of Cerberus and certain current members of management. Mr. Wille is affiliated with Cerberus and therefore has an indirect economic interest in the shares +held by Keane Investor. +(2) +The information contained in the table and this footnote is based on a Form 4 filed with the SEC on March 15, 2022 +and a Schedule 13G filed with the SEC on September 10, 2021 by Alamo Frac Holdings, LLC. Such filings indicate that, as of March 15, 2022, Alamo Frac Holdings, LLC has sole voting and dispositive power with respect to 25,074,337 shares. +Mr. McKie, one of our executive officers, may be deemed to indirectly beneficially own the referenced shares as a result of his control of SJM Frac Holdings, LLC, a member of Alamo Frac Holdings, LLC. Mr. McKie disclaims beneficial +ownership of the securities held by Alamo Frac Holdings, LLC, except to the extent of his pecuniary interest therein. The address for Alamo Frac Holdings, LLC is 1101 N. Little School Rd., Arlington, TX 76017. +(3) +The information contained in the table and this footnote is based solely on a Schedule 13G/A filed with the SEC on +February 10, 2022, by The Vanguard Group. The filing indicates that as of December 31, 2021, The Vanguard Group, Inc. reported that it had shared voting power for 156,816 shares, sole dispositive power for 18,246,359 shares and shared +dispositive power for 278,435 shares. The address for The Vanguard Group, Inc. is 100 Vanguard Blvd., Malvern, PA 19355. +(4) +The information contained in the table and this footnote is based solely on a Schedule 13G/A filed with the SEC on +February 14, 2022, by T. Rowe Price Associates, Inc. The filing indicates that as of December 31, 2021, T. Rowe Price Associates, Inc. reported that it had sole voting power for 5,419,806 shares and sole dispositive power for 17,273,895 +shares. The address for T. Rowe Price Associates, Inc. is 100 E. Pratt Street, Baltimore, MD 21202. +(5) +The information contained in the table and this footnote is based solely on a Schedule 13D/A filed jointly with the SEC on +August 12, 2021, by Dan Wilks, Staci Wilks, THRC Management, LLC and THRC Holdings, LP (collectively, the “Reporting Persons”). The filing indicates that as of August 11, 2021, the Reporting Persons reported that they had shared +voting and dispositive power for 16,564,980 shares. The address for each of the reporting persons is 17018 IH 20, Cisco, TX 76437. +Related Person Transactions +Certain Related Party Transactions +We +paid Cerberus Operations & Advising Company LLC (“Cerberus”) and its affiliates (collectively “COAC”), fees totaling approximately $0.6 million during 2021 for consulting services provided in connection with +improving the Company’s operations and information technology services, including ongoing support, development, and maintenance. We may retain COAC to provide similar services in the future. This amount includes fees paid to Cerberus pursuant +to a services agreement with respect to Mr. Wille in consideration for his service on the Board. Mr. Wille is an employee of Cerberus, and funds managed by one or more affiliates of Cerberus indirectly own a substantial portion of our +equity through their ownership of Keane Investor Holdings LLC. +As part of the acquisition of Alamo, the Company agreed to provide post-closing in-kind services to Alamo Frac Holdings, LLC, valued by the Company at $30 million in the aggregate. Mr. McKie, an executive officer, owns 20% of the equity interests of Alamo Frac Holdings, LLC. During +the year ended December 31, 2021, the Company provided in-kind services to Alamo Frac Holdings, LLC valued at $6.3 million. The Company has a remaining customer contract liability related to these services of $23.7 million as of December 31, 2021. +Policy and Procedures for the Review, Approval or Ratification of Transactions with Related Persons +Our Board has adopted a written policy (the “Related Party Policy”) and procedures for the review, approval or ratification of “Related Party +Transactions” by the independent members of the Audit Committee. For purposes of the Related Party Policy, a “Related Party Transaction” is any transaction, arrangement or relationship or series of similar transactions, arrangements +or relationships (including the incurrence or issuance of any indebtedness or the guarantee of indebtedness) in which (1) the aggregate +57 +Table of Contents +amount involved will or may be reasonably expected to exceed $120,000 in any fiscal year, (2) the Company or any of its subsidiaries is a participant, and (3) any Related Party (as +defined herein) has or will have a direct or indirect material interest. +The Related Party Policy defines “Related Party” as any person who is, or, at +any time since the beginning of the Company’s last fiscal year, was (1) an executive officer, director or nominee for election as a director of the Company or any of its subsidiaries, (2) a person with greater than 5% beneficial +interest in the Company, (3) an immediate family member of any of the individuals or entities identified in (1) or (2) of this paragraph, and (4) any firm, corporation or other entity in which any of the foregoing individuals or +entities is employed or is a general partner or principal or in a similar position or in which such person or entity has a 5% or greater beneficial interest. Immediate family members (each, a “Family Member”) includes a person’s +spouse, parents, stepparents, children, stepchildren, siblings, mothers- and fathers-in-law, sons- and +daughters-in-law, brothers- and sisters-in-law and anyone residing in such person’s +home, other than a tenant or employee. +Prior to the Company entering into any Related Party Transaction, such Related Party Transaction will be reported to our +General Counsel. Our General Counsel will conduct an investigation and evaluation of the Related Party Transaction and will report his or her findings to the Audit Committee, including a summary of material facts. The Audit Committee will review the +material facts of all Related Party Transactions which require the Audit Committee’s approval and either approve or disapprove of the Related Party Transaction, subject to the exceptions described below. If advance notice of a Related Party +Transaction has been given to the Audit Committee and it is not possible to convene a meeting of the Audit Committee, then the chairman of the Audit Committee will consider whether the Related Party Transaction is appropriate and, if it is, will +approve the Related Party Transaction, with the Audit Committee being asked to ratify the Related Party Transaction at the next regularly scheduled meeting of the Audit Committee. In the event the Audit Committee does not ratify any such Related +Party Transaction, management shall make all reasonable efforts to cancel or annul such Related Party Transaction. In determining whether to approve or ratify a Related Party Transaction, the Audit Committee, or its chairman, as applicable, will +consider all factors it deems appropriate, including the factors listed below in “—Review Criteria.” +Entering into a Related Party Transaction +without the approval or ratification required by the terms of the Related Party Policy is prohibited and a violation of such policy. In the event the Company’s directors, executive officers or Chief Accounting Officer become aware of a Related +Party Transaction that was not previously approved or ratified under the Related Party Policy, such person will promptly notify the Audit Committee (or, if it is not practicable for the company to wait for the Audit Committee to consider the matter, +the chairman of the Audit Committee) and the Audit Committee will consider whether the Related Party Transaction should be ratified or rescinded or other action should be taken, with such review considering all of the relevant facts and +circumstances regarding the Related Party Transaction, including the factors listed below in “—Review Criteria.” The chairman of the Audit Committee will report to the committee at its next regularly scheduled meeting any actions +taken under the Related Party Policy pursuant to the authority delegated in this paragraph. The Audit Committee will also review all of the facts and circumstances pertaining to the failure to report the Related Party Transaction to the Audit +Committee and will take, or recommend to our Board, any action the Audit Committee deems appropriate. +No member of the Audit Committee or director of our Board +will participate in any discussion or approval of a Related Party Transaction for which he or she is a Related Party, except that the Audit Committee member or director will provide all material information concerning the Related Party Transaction +to the Audit Committee. +If a Related Party Transaction will be ongoing, the Audit Committee may establish guidelines for the Company’s management to follow in +its ongoing dealings with the Related Party. Thereafter, the Audit Committee, on at least an annual basis, will review and assess ongoing relationships with the Related +58 +Table of Contents +Party to ensure that they are in compliance with the Audit Committee’s guidelines and that the Related Party Transaction remains appropriate. +Review Criteria +All Related Party Transactions will be reviewed in +accordance with the standards set forth in the Related Party Policy after full disclosure of the Related Party’s interests in the transaction. As appropriate for the circumstances, the Audit Committee or its chairman, as applicable, will review +and consider: +· +the Related Party’s interest in the Related Party Transaction; +· +the terms of the Related Party Transaction, including the approximate dollar value of the amount involved in the Related +Party Transaction and the approximate dollar value of the amount of the Related Party’s interest in the transaction without regard to the amount of any profit or loss; +· +whether the transaction is being undertaken in the ordinary course of business of the Company; +· +whether the transaction with the Related Party is proposed to be, or was, entered into on terms no less favorable to the +Company than terms that could have been reached with an unrelated third party; +· +the purpose of, and the potential benefits to the Company of, the Related Party Transaction; +· +a description of any provisions or limitations imposed as a result of entering into the Related Party Transaction; +· +whether the proposed transaction includes any potential reputational risk issues for the Company which may arise as a +result of or in connection with the Related Party Transaction; +· +whether the proposed transaction would violate any requirements of the Company’s financing or other material +agreements; and +· +any other relevant information regarding the Related Party Transaction or the Related Party. +The Audit Committee, or its chairman, as applicable, may approve or ratify the Related Party Transaction only if the Audit Committee, or its chairman, as applicable, +determines in good faith that, under all of the circumstances, the transaction is fair to the Company. The Audit Committee, in its sole discretion, may impose such conditions as it deems appropriate on the Company or the Related Party in connection +with approval of the Related Party Transaction. +Pre-Approved Related Party Transactions +The Audit Committee has determined that the following transactions will be deemed pre-approved or ratified and will not require +review or approval of the Audit Committee, even if the aggregate amount involved will exceed $120,000, unless otherwise specifically determined by the Audit Committee. +· +Any employment by the Company of an executive officer of the Company or any of its subsidiaries if the related compensation +conforms with our Company’s compensation policies and if the executive officer is not a Family Member of another executive officer or of a director of our Board; and +· +Any compensation paid to a director of our Board if the compensation is consistent with the Company’s Bylaws and any +compensation policies. +Notwithstanding anything to the contrary in the Related Party Policy, in the event the Bylaws of the Company require +review by our Board and/or approval of a Related Party Transaction, the Audit Committee, and its chairman, will not have the authority to review or approve a Related Party Transaction but will provide a recommendation to our Board for the +Board’s use in its consideration of a given Related Party Transaction. +59 +Table of Contents +Delinquent Section 16(a) Reports +All of our directors, executive officers and greater than 10% stockholders are required to file initial statements and reports of changes of ownership of our common +stock on Forms 3, 4 and 5 with the SEC. We have reviewed these reports, including any amendments thereto and written representations from the directors and executive officers. Based upon this review, we believe that no directors, executive officer, +or beneficial owner of more than 10% or more of our common stock failed to file a report on a timely basis during 2021, except for the following: (i) Mr. McKie’s Form 3 was filed late with the SEC on September 15, 2021 and +(ii) a Form 4 with respect to an award of restricted stock units to Mr. McKie on August 31, 2021 was filed with the SEC on September +15, 2021. +Proposals by Stockholders +The Company +expects that its 2023 Annual Meeting will be held in June 2023 consistent with the Company’s 2022 Annual Meeting. Stockholders of record who intend to submit a proposal or a nomination of an individual to serve as a director at the annual +meeting of stockholders in 2023 must provide written notice to the Company in accordance with the Company’s Bylaws. Under the Company’s Bylaws, such notice must be received at the Company’s principal executive offices, addressed to +the Secretary of the Company, not earlier than February 14, 2023 nor later than March 16, 2023, which are dates at least 90 days but not more than 120 days in advance of the first anniversary of the date of the Annual Meeting. Stockholders +are also advised to review our Bylaws, which contain additional requirements about advance notice of stockholder proposals and director nominations. +Stockholders +who intend to submit a proposal at 2023 Annual Meeting and desire that such proposal be included in the proxy materials for such meeting must follow the procedures prescribed in the Company’s Bylaws and Rule +14a-8 under the Exchange Act. To be eligible for inclusion in the proxy materials, stockholder proposals must be received by the Secretary of the Company at the Company’s principal executive offices no +later than December 30, 2022. In addition to satisfying the foregoing requirements under our Bylaws, to comply with the universal proxy rules (once effective), shareholders who intend to solicit proxies in support of director nominees other +than NexTier’s nominees must provide notice that sets forth the information required by SEC Rule 14a-19 no later than April 15, 2023. +Householding +The SEC permits a single Proxy Statement +to be sent to any household at which two or more stockholders reside if they appear to be members of the same family. Each stockholder continues to receive a separate proxy card. This procedure, referred to as householding, reduces the volume of +duplicate information stockholders receive and reduces mailing and printing expenses. A number of brokerage firms have instituted householding. +As a result, if you +hold your shares through a broker and you reside at an address at which two or more stockholders reside, you will likely be receiving only one Proxy Statement unless any stockholder at that address has given the broker contrary instructions. +However, if any such beneficial stockholder residing at such an address wishes to receive a separate Proxy Statement in the future, or if any such beneficial stockholder that elected to continue to receive separate Proxy Statement wishes to receive +a single Proxy Statement in the future, that stockholder should contact their broker or send a request to us care of the Corporate Secretary at 3990 Rogerdale Road, Houston, Texas 77042. Telephone requests may be directed to (713) 325-6000. We will deliver, promptly upon written or oral request, a separate copy of this Proxy Statement to a beneficial stockholder at a shared address to which a single copy of the documents was +delivered. +60 +Table of Contents +Table of Contents +YOUR VOTE IS IMPORTANT! PLEASE VOTE BY: INTERNET Go To: www.proxypush.com/NEX Cast your vote online P.O. BOX 8016, CARY, NC 27512-9903 +Have your Proxy Card ready Follow the simple instructions to record your vote PHONE Call 1-866-475-3790 Use any touch-tone telephone Have your Proxy Card ready Follow the simple recorded instructions MAIL Mark, sign and date your Proxy Card Fold and +return your Proxy Card in the postage-paid envelope provided Nextier Oilfield Solutions Inc. Annual Meeting of Stockholders For Stockholders of record as of April 18, 2022 TIME: Tuesday, June 14, 2022 9:30 AM, Central Daylight Time PLACE: NexTier +Oilfield Solutions Inc. headquarters 3990 Rogerdale Road, Houston, Texas 77042 This proxy is being solicited on behalf of the Board of Directors The undersigned hereby appoints Robert Drummond and Kevin M. McDonald (the “Named Proxies”), +and each or either of them, as the true and lawful attorneys of the undersigned, with full power of substitution and revocation, and authorizes them, and each of them, to vote all the shares of capital stock of Nextier Oilfield Solutions Inc. which +the undersigned is entitled to vote at said meeting and any adjournment thereof upon the matters specified and upon such other matters as may be properly brought before the meeting or any adjournment thereof, conferring authority upon such true and +lawful attorneys to vote in their discretion on such other matters as may properly come before the meeting and revoking any proxy heretofore given. THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, SHARES +WILL BE VOTED IDENTICAL TO THE BOARD OF DIRECTORS RECOMMENDATION. This proxy, when properly executed, will be voted in the manner directed herein. In their discretion, the Named Proxies are further authorized to vote upon such other matters that may +properly come before the meeting or any adjournment or postponement thereof. You are encouraged to specify your choice by marking the appropriate box (SEE REVERSE SIDE) but you need not mark any box if you wish to vote in accordance with the Board +of Directors’ recommendation. The Named Proxies cannot vote your shares unless you sign (on the reverse side) and return this card. PLEASE BE SURE TO SIGN AND DATE THIS PROXY CARD AND MARK ON THE REVERSE SIDE +Table of Contents +Nextier Oilfield Solutions Inc. Annual Meeting of Stockholders Please make your marks like this: X THE BOARD OF DIRECTORS RECOMMENDS A +VOTE: FOR ON PROPOSALS 1, 2 AND 3 BOARD OF DIRECTORS PROPOSAL YOUR VOTE RECOMMENDS 1. To elect each of the ten individuals named below until the 2023 Annual Meeting of Stockholders or, in each case, until his or her earlier death, retirement, +resignation, or removal from the position of director. FOR AGAINST ABSTAIN 1a. Robert W. Drummond FOR P2 P2 P2 1b. Stuart M.Brightman FOR P3 P3 P3 1c. Gary M. Halverson FOR P4 P4 P4 1d. Patrick M. Murray FOR P5 P5 P5 1e. Amy H.Nelson FOR P6 P6 P6 +1f. Melvin G. Riggs FOR P7 P7 P7 1g. Bernardo J. Rodriguez FOR P8 P8 P8 1h. Michael Roemer FOR P9 P9 P9 1i. James C. Stewart FOR P10 P10 P10 1j. Scott R. Wille FOR P11 P11 P11 FOR AGAINST ABSTAIN 2. To ratify the appointment of KPMG LLP as our +independent auditor for the fiscal year ending FOR December 31, 2022. P12 P12 P12 3. To approve in an advisory vote, the compensation of our named executive officers. FOR P13 P13 P13 NOTE: Shareholders will also transact such other business as may +properly come before the meeting or any adjournment thereof. Check here if you would like to attend the meeting in person. Authorized Signatures - Must be completed for your instructions to be executed. Please sign exactly as your name(s) appears on +your account. If held in joint tenancy, all persons should sign. Trustees, administrators, etc., should include title and authority. Corporations should provide full name of corporation and title of authorized officer signing the Proxy/Vote Form. +Signature (and Title if applicable) Date Signature (if held jointly) Date \ No newline at end of file diff --git a/raw/proxies/0001688476/0001193125-22-115311/proxy_rpt.txt b/raw/proxies/0001688476/0001193125-22-115311/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..3902a17ddd5e2d31965c7161aa19e00e87dd054a --- /dev/null +++ b/raw/proxies/0001688476/0001193125-22-115311/proxy_rpt.txt @@ -0,0 +1,89 @@ +Related Person Transactions +Certain Related Party Transactions +We +paid Cerberus Operations & Advising Company LLC (“Cerberus”) and its affiliates (collectively “COAC”), fees totaling approximately $0.6 million during 2021 for consulting services provided in connection with +improving the Company’s operations and information technology services, including ongoing support, development, and maintenance. We may retain COAC to provide similar services in the future. This amount includes fees paid to Cerberus pursuant +to a services agreement with respect to Mr. Wille in consideration for his service on the Board. Mr. Wille is an employee of Cerberus, and funds managed by one or more affiliates of Cerberus indirectly own a substantial portion of our +equity through their ownership of Keane Investor Holdings LLC. +As part of the acquisition of Alamo, the Company agreed to provide post-closing in-kind services to Alamo Frac Holdings, LLC, valued by the Company at $30 million in the aggregate. Mr. McKie, an executive officer, owns 20% of the equity interests of Alamo Frac Holdings, LLC. During +the year ended December 31, 2021, the Company provided in-kind services to Alamo Frac Holdings, LLC valued at $6.3 million. The Company has a remaining customer contract liability related to these services of $23.7 million as of December 31, 2021. +Policy and Procedures for the Review, Approval or Ratification of Transactions with Related Persons +Our Board has adopted a written policy (the “Related Party Policy”) and procedures for the review, approval or ratification of “Related Party +Transactions” by the independent members of the Audit Committee. For purposes of the Related Party Policy, a “Related Party Transaction” is any transaction, arrangement or relationship or series of similar transactions, arrangements +or relationships (including the incurrence or issuance of any indebtedness or the guarantee of indebtedness) in which (1) the aggregate +57 +Table of Contents +amount involved will or may be reasonably expected to exceed $120,000 in any fiscal year, (2) the Company or any of its subsidiaries is a participant, and (3) any Related Party (as +defined herein) has or will have a direct or indirect material interest. +The Related Party Policy defines “Related Party” as any person who is, or, at +any time since the beginning of the Company’s last fiscal year, was (1) an executive officer, director or nominee for election as a director of the Company or any of its subsidiaries, (2) a person with greater than 5% beneficial +interest in the Company, (3) an immediate family member of any of the individuals or entities identified in (1) or (2) of this paragraph, and (4) any firm, corporation or other entity in which any of the foregoing individuals or +entities is employed or is a general partner or principal or in a similar position or in which such person or entity has a 5% or greater beneficial interest. Immediate family members (each, a “Family Member”) includes a person’s +spouse, parents, stepparents, children, stepchildren, siblings, mothers- and fathers-in-law, sons- and +daughters-in-law, brothers- and sisters-in-law and anyone residing in such person’s +home, other than a tenant or employee. +Prior to the Company entering into any Related Party Transaction, such Related Party Transaction will be reported to our +General Counsel. Our General Counsel will conduct an investigation and evaluation of the Related Party Transaction and will report his or her findings to the Audit Committee, including a summary of material facts. The Audit Committee will review the +material facts of all Related Party Transactions which require the Audit Committee’s approval and either approve or disapprove of the Related Party Transaction, subject to the exceptions described below. If advance notice of a Related Party +Transaction has been given to the Audit Committee and it is not possible to convene a meeting of the Audit Committee, then the chairman of the Audit Committee will consider whether the Related Party Transaction is appropriate and, if it is, will +approve the Related Party Transaction, with the Audit Committee being asked to ratify the Related Party Transaction at the next regularly scheduled meeting of the Audit Committee. In the event the Audit Committee does not ratify any such Related +Party Transaction, management shall make all reasonable efforts to cancel or annul such Related Party Transaction. In determining whether to approve or ratify a Related Party Transaction, the Audit Committee, or its chairman, as applicable, will +consider all factors it deems appropriate, including the factors listed below in “—Review Criteria.” +Entering into a Related Party Transaction +without the approval or ratification required by the terms of the Related Party Policy is prohibited and a violation of such policy. In the event the Company’s directors, executive officers or Chief Accounting Officer become aware of a Related +Party Transaction that was not previously approved or ratified under the Related Party Policy, such person will promptly notify the Audit Committee (or, if it is not practicable for the company to wait for the Audit Committee to consider the matter, +the chairman of the Audit Committee) and the Audit Committee will consider whether the Related Party Transaction should be ratified or rescinded or other action should be taken, with such review considering all of the relevant facts and +circumstances regarding the Related Party Transaction, including the factors listed below in “—Review Criteria.” The chairman of the Audit Committee will report to the committee at its next regularly scheduled meeting any actions +taken under the Related Party Policy pursuant to the authority delegated in this paragraph. The Audit Committee will also review all of the facts and circumstances pertaining to the failure to report the Related Party Transaction to the Audit +Committee and will take, or recommend to our Board, any action the Audit Committee deems appropriate. +No member of the Audit Committee or director of our Board +will participate in any discussion or approval of a Related Party Transaction for which he or she is a Related Party, except that the Audit Committee member or director will provide all material information concerning the Related Party Transaction +to the Audit Committee. +If a Related Party Transaction will be ongoing, the Audit Committee may establish guidelines for the Company’s management to follow in +its ongoing dealings with the Related Party. Thereafter, the Audit Committee, on at least an annual basis, will review and assess ongoing relationships with the Related +58 +Table of Contents +Party to ensure that they are in compliance with the Audit Committee’s guidelines and that the Related Party Transaction remains appropriate. +Review Criteria +All Related Party Transactions will be reviewed in +accordance with the standards set forth in the Related Party Policy after full disclosure of the Related Party’s interests in the transaction. As appropriate for the circumstances, the Audit Committee or its chairman, as applicable, will review +and consider: +· +the Related Party’s interest in the Related Party Transaction; +· +the terms of the Related Party Transaction, including the approximate dollar value of the amount involved in the Related +Party Transaction and the approximate dollar value of the amount of the Related Party’s interest in the transaction without regard to the amount of any profit or loss; +· +whether the transaction is being undertaken in the ordinary course of business of the Company; +· +whether the transaction with the Related Party is proposed to be, or was, entered into on terms no less favorable to the +Company than terms that could have been reached with an unrelated third party; +· +the purpose of, and the potential benefits to the Company of, the Related Party Transaction; +· +a description of any provisions or limitations imposed as a result of entering into the Related Party Transaction; +· +whether the proposed transaction includes any potential reputational risk issues for the Company which may arise as a +result of or in connection with the Related Party Transaction; +· +whether the proposed transaction would violate any requirements of the Company’s financing or other material +agreements; and +· +any other relevant information regarding the Related Party Transaction or the Related Party. +The Audit Committee, or its chairman, as applicable, may approve or ratify the Related Party Transaction only if the Audit Committee, or its chairman, as applicable, +determines in good faith that, under all of the circumstances, the transaction is fair to the Company. The Audit Committee, in its sole discretion, may impose such conditions as it deems appropriate on the Company or the Related Party in connection +with approval of the Related Party Transaction. +Pre-Approved Related Party Transactions +The Audit Committee has determined that the following transactions will be deemed pre-approved or ratified and will not require +review or approval of the Audit Committee, even if the aggregate amount involved will exceed $120,000, unless otherwise specifically determined by the Audit Committee. +· +Any employment by the Company of an executive officer of the Company or any of its subsidiaries if the related compensation +conforms with our Company’s compensation policies and if the executive officer is not a Family Member of another executive officer or of a director of our Board; and +· +Any compensation paid to a director of our Board if the compensation is consistent with the Company’s Bylaws and any +compensation policies. +Notwithstanding anything to the contrary in the Related Party Policy, in the event the Bylaws of the Company require +review by our Board and/or approval of a Related Party Transaction, the Audit Committee, and its chairman, will not have the authority to review or approve a Related Party Transaction but will provide a recommendation to our Board for the +Board’s use in its consideration of a given Related Party Transaction. +59 +Table of Contents \ No newline at end of file diff --git a/raw/proxies/0001688476/0001193125-23-124272/proxy.txt b/raw/proxies/0001688476/0001193125-23-124272/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..e039b7a1a2ed2e4ed8406c132a6ae9b3af8c6ab4 --- /dev/null +++ b/raw/proxies/0001688476/0001193125-23-124272/proxy.txt @@ -0,0 +1,3784 @@ +DEF 14A +DEF 14A false 0001688476 0001688476 2022-01-01 2022-12-31 0001688476 2020-01-01 2020-12-31 0001688476 2021-01-01 2021-12-31 0001688476 ecd:NonPeoNeoMember 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+Definitive Additional Materials +☐ +Soliciting Material Pursuant to +§240.14a-12 +NexTier Oilfield Solutions Inc. +(Name of the Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check all boxes that apply): +☒ +No fee required. +☐ +Fee paid previously with preliminary materials. +☐ +Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules +14a-6(i)(1) +and +0-11. +N EX T IER 2023 Proxy Statement +Letter to Stockholders +Dear Fellow Stockholder, +I invite you to join the Board of Directors and our management team at the NexTier 2023 Annual Meeting of Stockholders. The sole purpose of the meeting is to consider the matters described in the following Notice of 2023 Annual Meeting of Stockholders. +The Annual Meeting will be held at 9:30 a.m. Central Time, on June 13, 2023, at our corporate headquarters located at 3990 Rogerdale Road, Houston, Texas 77042. +The following Notice of the 2023 Annual Meeting of Stockholders describes the business to be conducted at the Annual Meeting. We encourage you to review the materials and vote your shares. +You may vote via the Internet, by telephone, or by submitting your completed proxy card by mail. If you attend the Annual Meeting, you may vote your shares in person if you are a shareholder of record as of April 17, 2023. +Thank you for your continued support. +Sincerely, +Robert W. Drummond +President & Chief Executive Officer +April 28, 2023 +Notice of 2023 Annual Meeting of Stockholders +When +Tuesday, June 13, 2023 +at 9:30 a.m. (CDT) +Doors open at 9:20 a.m. +Where +NexTier Company Headquarters +3990 Rogerdale Road +Houston, Texas 77042 +Record Date +Stockholders as of close of business on April 17, 2023 +are entitled to vote +Items of Business +Proposal Summary +Board Voting +Recommendation +Page Reference +(for more detail) +1.  Election of eleven directors +FOR each nominee +☑ +9 +2.  Ratification of selection of KPMG LLP as our independent registered public accounting firm for 2023 +FOR +☑ +26 +3.  Approval of advisory resolution on 2022 executive compensation +FOR +☑ +29 +4.  Approval of the amendment and restatement of the NexTier Oilfield Solutions Inc. Equity and Incentive Award Plan +FOR +☑ +62 +Stockholders will also transact such other business as may properly come before the 2023 Annual Meeting. +Attending the Annual Meeting +In Person. To be admitted, you will be required to present a government-issued photo identification (such as a driver’s license or passport) and proof of share ownership. More information can be found in the Proxy Statement in the section entitled “Other Information”. If you are a beneficial stockholder (that is, your shares are held in the name of a broker, bank or other holder of record), you will also need to obtain a “legal proxy” from the registered stockholder to vote at the Annual Meeting. You do not need to attend the Annual Meeting to vote if you submitted your proxy in advance of the meeting. +We intend to hold our Annual Meeting in person. If for any reason it becomes not possible or advisable to hold the Annual Meeting as planned, we will announce alternative arrangements for the meeting, which may include holding the meeting solely by means of remote communication. As always, we encourage you to vote your shares prior to the Annual Meeting. +Your Vote Is Very Important. Even if you plan to attend our Annual Meeting in person, please cast your vote as soon as possible. For instructions on voting, please refer to the Notice you received in the mail or the sections in the Proxy Statement entitled “How to Vote” and “Voting Information” beginning on pages 2 and 6 of the Proxy Statement, respectively. If you received a paper copy of the Proxy Materials, please use your enclosed proxy card to vote. If you are a stockholder of record, you may authorize that your shares be voted at the Annual Meeting in any one of the following ways: +Vote by Internet +Call Toll-Free +Vote by Mail +Vote in Person +www.proxypush.com/NEX +Call 1-866-475-3790 +(from the United States and Canada) +Follow the instructions on +your proxy card +Attend our Annual Meeting +and vote by ballot +Submitting your proxy now will not prevent you from voting your shares at the 2023 Annual Meeting, as your proxy is revocable at your option. +Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be held on June 13, 2023: This Notice, the Proxy Statement, the proxy card and our 2022 Annual Report to Stockholders, which includes our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 (the “2022 Form 10-K”), are available on our website at www.nextierofs.com . +By order of the Board of Directors, +Kevin M. McDonald +Executive Vice President, Chief Administrative Officer & General Counsel +Houston, Texas +April 28, 2023 +Table of Contents +Letter to Stockholders +Proxy Summary +1 +Purpose of the Meeting +1 +How to Vote +2 +Board and Governance Highlights +3 +Stockholder Engagement Highlights +3 +Environmental, Social and Governance (“ESG”) Highlights +5 +Voting Information +6 +Proposal 1 – Election of Directors +9 +Nominees +10 +Board of Directors +16 +Our Directors +16 +Board Committees +19 +Director Compensation +20 +Corporate Governance +23 +Board Leadership Structure +23 +Role of Board in Risk Oversight +23 +Environmental Risks +24 +Cybersecurity Risks +25 +People Risks +25 +Code of Business Conduct and Ethics +25 +Corporate Governance Guidelines +25 +Proposal 2 – Ratify Appointment of Independent Auditors +26 +Audit Committee Report +28 +Proposal 3 – Advisory Approval of Executive Compensation +29 +Executive Officers +30 +Compensation Committee Report +32 +Compensation Discussion & Analysis +33 +Executive Summary +33 +Compensation Practices & Policies +34 +The 2022 Executive Compensation Program in Detail +39 +Other Practices, Policies and Guidelines +47 +Executive Compensation Tables +49 +Summary Compensation Table +49 +Grants of Plan Based Awards in Fiscal Year 2022 +50 +Outstanding Equity Awards at Fiscal Year End 2022 +51 +Option Exercises and Stock Vested in Fiscal Year 2022 +52 +Potential Payments Upon Termination or Change in Control +53 +CEO Pay Rati +57 +Pay vs. Performance Comparison +58 +Proposal 4 – Approval of the Amendment and Restatement of the NexTier Oilfield Solutions Inc. Equity and Incentive Award Plan +62 +Other Information +70 +Share Ownership +70 +Related Person and Related Party Transactions +71 +Delinquent Section 16(a) Reports +74 +Proposals by Stockholders +74 +Householding +74 +Appendix A: NexTier Oilfield Solutions Inc. Equity and Incentive Award Plan +A-1 +Appendix B: Reconciliation of Non-GAAP Financial Measures +B-1 +Proxy Summary +This summary highlights information that you will find throughout this Proxy Statement in connection with the 2023 Annual Meeting of Shareholders (the “Annual Meeting”) of NexTier Oilfield Solutions Inc. (“NexTier”, the “Company”, “we,” “us,” or “our”). This summary does not contain all of the information that you should consider. You should read the entire Proxy Statement and the information contained in NexTier’s Annual Report on Form 10-K for the year ended December 31, 2022, available on our website at www.nextierofs.com/Investors. We are making this Proxy Statement available to you on or about April 28, 2023, in connection with the solicitation of proxies by our board of directors (or our “Board”) for the Annual Meeting. +Purpose of the Meeting +The table below summarizes the proposals that will be voted on, the vote required to approve each item, how votes are counted and how the Board recommends you vote: +Proposal +Required +Approval +Broker +Discretionary +Voting Allowed +Broker +Non-Votes +Abstentions +Board +Recommendation +1.  Election of Directors. To elect each of the eleven individuals named in this Proxy Statement until the 2024 Annual Meeting of Stockholders (the “2024 Annual Meeting”) or, in each case, until his or her earlier death, retirement, resignation or removal from the position of director. +Majority of +Votes Cast +No +No effect +No effect +FOR each +nominee +2.  Ratify Appointment of Independent Auditors. To ratify the appointment of KPMG LLP as our independent auditor for the fiscal year ending December 31, 2023. +Majority of +Votes Cast +Yes +N/A +No effect +FOR +3.  Approve Executive Compensation. To approve, in an advisory vote, the 2022 compensation of our named executive officers. +Majority of +Votes Cast +No +No effect +No effect +FOR +4.  Approve Equity Plan Amendment and Restatement. To approve the amendment and restatement of the NexTier Oilfield Solutions Inc. Equity and Incentive Award Plan. +Majority of +Votes Cast +No +No effect +No effect +FOR +1 +How to Vote +You may hold company shares in multiple accounts and therefore receive more than one set of proxy materials. To ensure that all of your shares are voted, please submit your proxy or voting instructions for each account for which you have received a set of our proxy materials. +To ensure your representation at the Annual Meeting, we request that you grant your proxy to vote on each of the proposals in this Proxy Statement and any other matters that may properly come before the meeting to the persons named in the proxy card by voting in one of the ways described herein no later than the Voting Deadline whether or not you plan to attend. +Stockholder of Record. If you hold your shares in your own name as a holder of record with our transfer agent, American Stock Transfer & Trust Company, LLC, you may authorize that your shares be voted at the Annual Meeting in any one of the following ways: +Vote by Internet +Call Toll-Free +Vote by Mail +Vote in Person +www.proxypush.com/NEX +Call 1-866-475-3790 +(from the United States and Canada) +Follow the instructions on +your proxy card +Attend our Annual Meeting +and vote by ballot +Beneficial Owner. If your shares are held in a brokerage account or by a bank, trustee or other nominee, you are considered the beneficial owner of shares held in street name, and our proxy materials are being forwarded to you on behalf of your broker, bank, trustee or other nominee. As the beneficial owner, you have the right to direct your broker, bank, trustee or other nominee how to vote and you also are invited to attend the Annual Meeting. If you received a printed set of proxy materials, your broker, bank, trustee or other nominee has enclosed a voting instruction form (“VIF”) for you to use in directing the broker, bank, trustee or other nominee how to vote your shares. +Since a beneficial owner is not the stockholder of record, you may not vote these shares in person at the Annual Meeting unless you obtain a legal proxy from the broker, bank, trustee or other nominee that holds your shares giving you the right to vote the shares at the Annual Meeting. Even if you plan to attend the Annual Meeting, we recommend that you submit your proxy or voting instructions in advance of the Annual Meeting as described above so that your vote will be counted if you later decide not to attend or are unable to attend the Annual Meeting. +Please Vote. Your Vote is Important to Us. +Questions +You may call or contact our proxy solicitor, D.F. King & Co., Inc., at (800) 901-0068, collect at (212) 269-5550 or NexTier@dfking.com, or contact us, care of the Corporate Secretary at 3990 Rogerdale Road, Houston, Texas 77042 or via telephone at (713) 325-6000 if you have any questions or need directions to be able to attend the Annual Meeting and vote in person. +2 +Board and Governance Highlights +We are committed to maintaining strong corporate governance that promotes the long-term interests of our stockholders, strengthens Board and management effectiveness and builds public trust in the Company. The Corporate Governance section of this Proxy Statement beginning on page 23 describes our key corporate governance policies and practices, which include the following highlights: +Our governance framework is built around our Code of Business Conduct and Ethics, which sets our guiding principles and outlines what we expect from each of our employees. This framework is reinforced by a range of policies which our Board regularly reviews. +Stockholder Engagement Highlights +We believe that meaningful stockholder engagement is key to building trust with our stockholders and enables us to understand and respond to their concerns. Building trust with stockholders is important to us and is significantly aided by understanding stockholder viewpoints, priorities and motivations. Our Executive, Investor Relations, and Legal teams comprise our primary engagement team, which regularly engages with stockholders to seek their views on key matters and to inform our management team and our Board about the issues and emerging governance trends that our stockholders tell us matter most to them. Our Board Chair and Committee chairs are also available to participate in our engagement efforts when requested. These engagements routinely cover governance and compensation matters, as well as social, environmental, safety, and other current issues. +3 +Annual Engagement Cycle +Stockholder Engagement in 2022 +Our 2022 off-season engagement conversations focused on board composition, executive compensation, human capital management and environmental, social and governance related matters. We then reported the feedback we received from stockholders to the Board and relevant committees, allowing the Board to better understand our stockholders’ priorities and perspectives and take action, where appropriate. +We reached out to the top 30 stockholders (excluding Cerberus Capital Management LP and THRC Holdings LP) that represented (with Cerberus and THRC) approximately 74% of outstanding shares . +What We Heard from Stockholders +What We Did +Diversity of the Board, and independence of its directors, continues to be of high importance +✓   The addition of Leslie Beyer to the Board expanded both the number of independent directors as well as the gender diversity of its membership. +Continued evolution of the Company’s ESG disclosures, including quantification and measurement of emissions metrics +✓   NexTier has adopted disclosures as prescribed by the Sustainability Accounting Standards Board and added additional content in its 2021 Corporate Responsibility Report. +✓   NexTier continues to include disclosures relating to the displacement of diesel with cleaner burning natural gas in its commitment to improving its emissions profile. +Focus on human capital management, at all levels within the organization +✓   NexTier has implemented and enhanced programs such as leadership training, enhanced field competency training, mentorship and succession planning. +No director resignation policy to address “holdover” directors who are not re-elected +✓   NexTier has amended its bylaws to include a director resignation policy for “holdover” directors who are not re-elected. +4 +Environmental, Social and Governance (“ESG”) Highlights +Corporate Responsibility Oversight +Our Board recognizes that a robust governance framework and a culture of integrity helps us compete more effectively, sustain success and build long-term stockholder value. NexTier is governed by a Board and committees of the Board that meet throughout the year. Directors discharge their responsibilities at Board and committee meetings and through ongoing communication with each other and with management. +Our Board of Directors retains overall oversight over ESG matters and has delegated general oversight to the Nominating and Corporate Governance. In addition, each Board committee is responsible for different aspects of ESG (as outlined in each committee’s charter). The Board receives regular updates from each of its committees. +The following chart details the primary oversight responsibilities held by the Board and each of its committees: +Corporate Responsibility Framework +At NexTier, we seek to responsibly grow and continuously improve our business in a way that maximizes stockholder value by taking care of our people, our customers, our communities and the environment. Our sustainability program is intended to support the purpose and mission of the Company and to contribute to our long-term success and growth. Our ongoing sustainability efforts are enabled by our digital platform, NexHub, and focused on four core pillars: Environment, People, Community, and Oversight. +5 +The Company maintains a section of its website for disclosures on corporate responsibility. In addition, we published our 2021 Corporate Responsibility Report in December 2022. The Corporate Responsibility Report, and other content posted on our website does not constitute a part of this Proxy Statement. +Voting Information +Who Can Vote. All registered stockholders at the close of business on April 17, 2023 (the “Record Date”) have the right to receive notice of, and to vote in person or by proxy at, the Annual Meeting. Each share of common stock is entitled to one vote. As of the Record Date, there were 230,495,423 shares of NexTier common stock outstanding and entitled to vote. +Meeting Attendance. Attendance at the meeting is limited to NexTier stockholders as of the Record Date. If you plan to attend the Annual Meeting in person, you will need a form of personal identification (such as a driver’s license or passport) along with either your Notice, proxy card or proof of stock ownership to enter the Annual Meeting. If you are a street name stockholder and you wish to attend the Annual Meeting in person, you will need to provide official documentation (such as a brokerage statement) reflecting your beneficial ownership of NexTier stock as of the Record Date, as well as a valid picture identification (such as a driver’s license or passport). Admission to the meeting will be on a first-come, first-served basis. Doors will open at 9:20 a.m. Central Time. Please note that no cameras, recording equipment, electronic devices, large bags, briefcases or packages will be permitted in the Annual Meeting. +Proxy Voting Deadline. 11:59 p.m., Eastern Time, on June 12, 2023. +Stockholder of Record. If your shares are registered directly in your name with our transfer agent, American Stock Transfer & Trust Company LLC, you are considered, with respect to those shares, the stockholder of record, and we are sending these proxy materials directly to you. As the stockholder of record, you have the right to grant your voting proxy directly to us or to a third party, or to vote in person at the Annual Meeting. +Beneficial Owner. If your shares are held in a brokerage account or by a bank, trustee or other nominee, you are considered the beneficial owner of shares held in street name, and our proxy materials are being forwarded to you on behalf of your broker, bank, trustee or other nominee. As the beneficial owner, you have the right to direct your broker, bank, trustee or other nominee how to vote and you also are invited to attend the Annual Meeting. If you received a printed set of proxy materials, your broker, bank, trustee or other nominee has enclosed a VIF for you to use in directing the broker, bank, trustee or other nominee how to vote your shares. +Since a beneficial owner is not the stockholder of record, you may not vote these shares in person at the Annual Meeting unless you obtain a legal proxy from the broker, bank, trustee or other nominee that holds your shares giving you the right to vote the shares at the Annual Meeting. +Proxies. Pursuant to rules adopted by the Securities and Exchange Commission (“SEC”), we have elected to mail to many of our stockholders a Notice of Internet Availability of Proxy materials (which we refer to as the “Notice”) instead of a paper copy of the proxy materials. All stockholders receiving the Notice will have the ability to access the proxy materials over the Internet and receive a paper copy of the proxy materials by mail on request. Instructions on how to access the proxy materials over the Internet or to request a paper copy may be found in the Notice. In addition, the Notice contains instructions on how you may access proxy materials in printed form by mail or electronically on an ongoing basis. This process has allowed us to expedite our stockholders’ receipt of proxy materials, lower the costs of distribution, and reduce the environmental impact of our 2023 Annual Meeting. +The Notice is being mailed on or about April 28, 2023 to each stockholder registered in our share register as of the Record Date. Stockholders not registered in our share register as of the Record Date will not be entitled to attend, vote or grant proxies to vote at the Annual Meeting. Your vote and proxy are being solicited by our Board in favor of each of Robert W. Drummond and Kevin M. McDonald (the “Proxy Holders”), with full power of substitution, for use at the Annual Meeting. +6 +We request that you grant your proxy to vote on each of the proposals in this notice and any other matters that may properly come before the meeting to the Proxy Holders by completing, signing, dating and returning the proxy card in accordance with the instructions thereon, for receipt by us no later than the Proxy Voting Deadline, whether or not you plan to attend. +If you are a registered holder and you properly complete and submit your proxy card in a timely manner, you will be legally designating the individual or individuals named by you in the proxy card, or if you do not name your proxy or proxies, the Proxy Holders, to vote your shares in accordance with your instructions indicated on the card. If you are a registered stockholder and properly complete and submit your proxy card in a timely manner without naming your proxy or proxies and you do not indicate how your shares are to be voted, then the Proxy Holders will vote as the board of directors recommends on each proposal and if other matters properly come before the Annual Meeting, the Proxy Holders will have your authority to vote your shares in their discretion on such matters. +Revoking Your Proxy. If you are a stockholder of record , you can revoke your proxy at any time before it is exercised by: +• +Submitting written notice of revocation to NexTier Oilfield Solutions Inc., 3990 Rogerdale Rd, Houston, Texas 77042, Attn: Corporate Secretary, so long as such notice is received no later than 11:59 p.m., Eastern Time, the day before the Annual Meeting; +• +Voting again by Internet or telephone at a later time before the closing of those voting facilities at 11:59 p.m., Eastern Time, on the day before the Annual Meeting. +• +Submitting a later dated proxy with new voting instructions by mail, so long as such notice is received no later than 11:59 p.m., Eastern Time, the day before the Annual Meeting; or +• +Attending the Annual Meeting and voting your shares in person (attending the Annual Meeting will not by itself have the effect of revoking a previously submitted proxy). +If you are not a registered holder, but you hold your shares through a broker or other nominee , you must follow the instructions provided by your broker or other nominee if you wish to revoke a previously granted proxy. You may also change your vote or revoke your proxy in person at the Annual Meeting if you obtain a signed proxy from the record holder (broker or other nominee) giving you the right to vote the shares at the meeting. +Proxies which have already been submitted, and which are not subsequently revoked or changed as described above, will be voted at the Annual Meeting as indicated. +Multiple Proxy Cards. If you receive multiple proxy cards, this indicates that your shares are held in more than one account, such as two brokerage accounts and are registered in different names. You should complete and return each of the proxy cards to ensure that all of your shares are voted. +Cost of Proxy Solicitation. We have retained D.F. King & Co., Inc. to solicit proxies from our stockholders at an estimated fee of $8,500, plus expenses. Some of our directors, officers and employees may solicit proxies personally, without any additional compensation, electronically, by telephone or by mail. Proxy materials also will be furnished without cost to brokers and other nominees to forward to the beneficial owners of shares held in their names. All costs of proxy solicitation will be borne by the Company. +Quorum and Voting. A majority of the outstanding shares of our common stock present in person or represented by proxy at the Annual Meeting will constitute a quorum for the transaction of business. Abstentions and broker non-votes will be included in determining whether a quorum is present at the Annual Meeting. A “broker non-vote” occurs when a nominee (such as a broker) holding shares for a beneficial owner abstains from voting on a particular proposal because the nominee does not have discretionary voting power for that proposal and has not received instructions from the beneficial owner on how to vote those shares. +7 +If you are a beneficial owner and your broker or other nominee holds your shares in its name (in “street name”), the broker generally has discretion to vote your shares with respect to “routine” proposals. The only “routine” proposal in this Proxy Statement is Proposal 2. Proposals 1, 3 and 4 are “non-routine” and your broker may not vote your shares. Accordingly, if you hold your shares in “street name,” your broker will not be able to vote your shares on these matters unless your broker receives voting instructions from you. +Approval of all Proposals will be decided by a simple majority of the votes cast “FOR” or “AGAINST,” in person or by proxy, provided a quorum is present. Abstentions and broker “non-votes” will not affect the voting results. +The election of each director nominee will be considered and voted upon as a separate proposal. There is no cumulative voting in the election of directors. Abstentions and broker “non-votes” will not affect the voting results. +8 +Proposal 1. Election of Directors +The Board of Directors recommends that you vote “FOR” each nominee for director. +Our business and affairs are currently managed under our Board. Under our Certificate of Incorporation, the Board consists of between 7 and 15 members, as determined by resolution of the Board from time to time. Our Board currently consists of 11 directors. Proxies cannot be voted for a greater number of persons than the number of nominees named. +Upon the recommendation of the Nominating and Corporate Governance Committee, the Board has nominated each of the following eleven nominees to be elected at the Annual Meeting: Robert W. Drummond, Leslie S. Beyer, Stuart M. Brightman, Gary M. Halverson, Patrick M. Murray, Amy H. Nelson, Melvin G. Riggs, Bernardo J. Rodriguez, Michael Roemer, James C. Stewart, and Scott R. Wille. Each of the nominees is presently serving as a director. +Each director elected will serve for a term of one year and will hold office until the 2024 Annual Meeting of Stockholders and until his or her respective successor is elected and qualified, or, in each case, until his or her earlier death, resignation, retirement, disqualification or removal from the position of director. All of our nominees have consented to serve as directors, and our Board has no reason to believe that any of the nominees will be unable to act as a director. +A director nominee will be re-elected if approved by a simple majority of the votes cast. If you properly submit a proxy card but do not indicate how you wish to vote, the Proxy Holders will vote for each director nominee. +9 +Nominees +Set forth in the following pages is certain information furnished to us by our director nominees, as of the Record Date, including information about their individual experience, qualifications, attributes and skills that led our Nominating and Corporate Governance Committee and Board to conclude that they should serve as directors. +There are no family relationships among any of our directors or executive officers. None of the corporations or other organizations referenced in the biographical information below is a parent, subsidiary or other affiliate of NexTier. +Robert W. Drummond +Age: 62 +Director since: 2018 +Mr. Drummond serves as a director and as NexTier’s President and Chief Executive Officer. He joined NexTier in August 2018 as Chief Executive Officer and a member of the Board, and he was elected as President in October 2019. Prior to joining NexTier, Mr. Drummond served as the President & Chief Executive Officer of Key Energy Services, Inc. and served for more than 30 years at Schlumberger Limited in various executive positions. Mr. Drummond has been a Supervisory Director at Expro Group Holdings N.V. since May 2017. He has previously served on the board of directors of the Energy Workforce & Technology Council, the National Ocean Industries Association, the Houston Offshore Energy Center, the Greater Houston Partnership, the API Upstream Committee, and as an Advisory Board Member of the University of Alabama College of Engineering and the University of Houston Global Energy Management Institute. Mr. Drummond attained his B.S. in Mineral/Petroleum Engineering from the University of Alabama. +Other Public Company Directorships: +•  Expro Group Holdings N.V. (since 2017) +Skills and Qualifications: +Mr. Drummond brings to our Board a wealth of experience in positions of leadership across the energy industry. +Stuart M. Brightman +Age: 66 +Director since: 2019 +Mr. Brightman has served as a member of our Board since October 2019. In January 2023, he accepted appointments to serve on the board of directors of Hunting PLC (LSE: HTG) and each of its committees. Mr. Brightman served as a director of TETRA Technologies, Inc. (“TETRA”), a diversified oilfield services company, from May 2009 to May 2020. He also served as Chief Executive Officer of TETRA from May 2009 until May 2019, as President of TETRA from May 2009 until February 2018, and as Executive Vice President and Chief Operating Officer of TETRA from April 2005 to May 2009. Prior to TETRA, Mr. Brightman spent 11 years at Dresser, Inc. (including its successors in interest, “Dresser”) in a variety of leadership roles, during which he was involved in multiple M&A transactions, internal restructurings and product/market repositionings. He has experience in integration of acquisitions and oversight of operations, engineering, sales and marketing, finance, human resources and information technology. +Other Public Company Directorships: +•  Hunting PLC (LSE: HTG) (since 2023) +Skills and Qualifications: +Mr. Brightman’s broad oil field services and executive management experience, and his proven leadership and business capabilities provide an important point of view to our Board. +10 +Leslie A. Beyer +Age: 47 +Director since: February 2023 +Ms. Beyer is the Chief Executive Officer of the Energy Workforce & Technology Council, the largest global energy technology and services association. Serving in this role since 2014, she is a frequent speaker on issues facing the energy industry including the global energy market, regulatory environment and ESG best practices. Ms. Beyer has been an advocate for the energy services sector testifying before Congress and frequently appearing on national media outlets. Additionally, Ms. Beyer has been a member of the board of directors of Natural Gas Services Group, Inc. (NYSE: NGS) since 2020, serving as chair of the compensation committee and as a member of both its audit and ESG committees. Before joining EWTC, her career highlights include 15 years in Washington, D.C. serving in policy and public affairs roles in the U.S. Senate, multiple presidential campaigns, The White House – Executive Office of the President, U.S. State Department and U.S. Department of Housing and Urban Development. After government service, Ms. Beyer began a career in advocacy as Director, Member and Board Relations with the National Association of Manufacturers. Ms. Beyer holds a bachelor’s degree of arts in Latin American Studies from The University of Texas at Austin. +Other Public Company Directorships: +•  Natural Gas Services Group, Inc. (NYSE: NGS) (since 2020) +Skills and Qualifications: +Ms. Beyer’s leadership and advocacy for responsible operations in the energy sector and extensive experience supporting the energy services sector brings depth and perspective to our Board. +Gary M. Halverson +Age: 64 +Director since: 2016 +Mr. Halverson has served as a member of our Board since September 2016. In 2016, Mr. Halverson became a Senior Advisor at First Reserve, a private equity firm that focuses on energy investments, and a Partner at 360 Development Partners, a commercial real estate firm. Mr. Halverson on currently serves on the board of managers of Tally Energy Services. Mr. Halverson was formerly Group President of Drilling and Production Systems and Senior Vice President at Cameron International Corporation from 2014 to 2016 prior to its sale to Schlumberger in 2016. He has over 38 years of industry experience with Cameron, where he worked in various leadership roles across the U.S., Latin America and Asia. Mr. Halverson formerly served as Chairman of the board of directors of the Petroleum Equipment Suppliers Association, as a director on the board of the General Committee of Special Programs of the American Petroleum Institute, as a director on the board of the Well Control Institute and served as a director on the board of FlexSteel Pipeline Technologies, Inc. and as the U.S. delegate to the World Petroleum Congress. +Skills and Qualifications: +Mr. Halverson’s extensive involvement in the oilfield service industry brings a valuable perspective to our Board. +11 +Patrick M. Murray (Chairman) +Age: 80 +Director since: 2019 +Mr. Murray has served as a member of our Board since October 2019. In May 2007, Mr. Murray retired from Dresser, a manufacturer and marketer of highly engineered equipment for the energy industry, where he had been the Chairman of the Board and Chief Executive Officer since 2001. From 1994 to 2000 he served in a variety of senior leadership roles with Dresser Industries and Halliburton. Mr. Murray has over 40 years of domestic and international experience in both operational management and financial/business development leadership roles. Mr. Murray also serves on the board of the World Affairs Council of Dallas Fort Worth, on the board of advisors for the Maguire Energy Institute at the Edwin L. Cox School of Business, Southern Methodist University, and as Chairman Emeritus of the Board of Regents of Seton Hall University. +Skills and Qualifications: +Mr. Murray brings to his role as a director extensive executive-level management experience, public board experience and comprehensive knowledge and understanding of the oil and gas industry. +Amy H. Nelson +Age: 54 +Director since: 2019 +Ms. Nelson has served as a member of our Board since October 2019. She is also the president of Greenridge Advisors, LLC, which she founded in 2007 as an energy services and equipment consulting firm focused on the development, execution, and financing of corporate and product line strategies. Ms. Nelson advises her clients on strategy development, capital allocation, acquisition evaluation and infrastructure development. Her clients span a broad range of oilfield service, product and geographic markets. Ms. Nelson has been a member of APA Corporation’s board of directors since 2014, and she is a member of both its audit committee and corporate responsibility, governance, and nominating committee. She also joined the Helix Energy Solutions Group, Inc. board of directors in July of 2019, and is currently serving as the chair of the Audit Committee and is a member of the Corporate Governance and Nominating Committee. Ms. Nelson began her career at Amoco Production Company in a variety of engineering, project management and planning roles. From 2000 to 2007, Ms. Nelson served as a vice president of SCF Partners, an oilfield service and equipment-focused private equity firm, where she concentrated on investment strategy, investment execution and portfolio company management. Ms. Nelson has devoted her career to serving companies in the oil and gas industry. +Other Public Company Directorships: +•  APA Corporation (since 2014) +•  Helix Energy Solutions Group, Inc. (since 2019) +Skills and Qualifications: +Ms. Nelson’s experiences have provided her with valuable insight into corporate strategy, capital allocation, and the assessment and management of risks, including environmental risks, faced by oil and gas companies. This expertise enhances her contributions to the Board. +12 +Melvin G. Riggs +Age: 68 +Director since: 2019 +Mr. Riggs has served as a member of our Board since October 2019. Mr. Riggs has served in senior-level positions at Clayton Williams Energy, Inc. (“CWEI”) and its related companies for 38 years, including his current position as Vice President and Director since May 2017. Clayton Williams Companies is a group of privately held companies involved in oil and natural gas activities, real estate, agricultural operations and conservation and commerce of water resources. From March 2015 to April 2017, Mr. Riggs served as President of CWEI, a public exploration and production company that developed and produced oil and natural gas. From December 2010 until March 2015, Mr. Riggs served as Executive Vice President and Chief Operating Officer of CWEI. From 1991 to December 2010, Mr. Riggs served as Senior Vice President—Finance, Secretary, Treasurer, and Chief Financial Officer of CWEI. Mr. Riggs currently serves as a director at Black Mountain Acquisition Corp., a position he has held since October 2021. He previously served as a director at Royal Energy, Inc. from July 2018 to November 2021, as a director at TransAtlantic Petroleum Ltd. from July 2009 to June 2020, and as a director at CWEI from May 1994 until April 2017. Mr. Riggs is a Certified Public Accountant. +Other Public Company Directorships: +•  Black Mountain Acquisition Corp. (since 2021) +Skills and Qualifications: +Mr. Riggs has a strong operational background and extensive financial expertise, all of which brings important insights into board oversight, risk management and corporate governance matters. +Bernardo J. Rodriguez +Age: 58 +Director since: 2022 +Mr. Rodriguez has served as a member of our Board since January 2022. Mr. Rodriquez is the Chief Digital and Technology Officer at J.D. Power. Mr. Rodriguez is responsible for advancing J.D. Power’s digital and AI transformation and leads the company’s Technology, Artificial Intelligence, Research, Innovation, CX Solutions divisions. From 2016 until Mr. Rodriguez joined J.D. Power in 2017, he served as Managing Director of Strategy at Huge Inc., a global full-service digital agency that partners with Fortune 100 companies on the design and execution of product and brand strategies, enterprise transformation and innovation. Prior to joining Huge Inc., Mr. Rodriquez served as a Managing Director at Accenture, the global management consulting and professional services company, where he led the firm’s North American Digital Strategy Practice for telecommunications, media and technology. From 2010 to early 2015, Mr. Rodriguez served as Chief Digital Officer at Kaplan Test Prep, a top provider of educational and career services, where he was responsible for digital transformation in technology, data science, user experience, online learning, Kaplan publishing and innovation. Mr. Rodriguez holds a B.S. in electrical engineering from Universidad Rafael Urdaneta in Venezuela and a master’s degree and Ph.D. in computer engineering from the University of Colorado. +Skills and Qualifications: +Mr. Rodriguez’s broad executive management experience, and his proven expertise in digital, cybersecurity and AI strategy and transformation provide an important point of view for the Board. +13 +Michael Roemer +Age: 64 +Director since: 2019 +Mr. Roemer has served as a member of our Board since October 2019. Mr. Roemer also operates his business, Roemer Financial Consulting, a financial advisory services company that he founded in 2012. He advises closely-held businesses with financial advice, focusing on potential merger and acquisitions and exit transactions. Mr. Roemer is also a member of the Budget and Finance Committee of Planned Parenthood of Northern, Central and Southern New Jersey, a not for profit organization, Chair of the Audit Committee of Affiliated Risk Management Services, Inc., a not for profit organization and a member of the Audit Committee of Planned Parenthood Federation of America, a not for profit organization. Prior to his current role, Mr. Roemer served as a Partner and Chief Financial Officer of Hammond, Kennedy, Whitney & Company (“HKW”), a private equity firm. In this role, his responsibilities included, among other things, financial and tax reporting, coordinating financial due diligence of acquisition targets, and working with the HKW team to assess a target’s financial results and the financial management team’s capabilities. He is a licensed CPA with over 35 years’ experience. +Skills and Qualifications: +Mr. Roemer brings to his service on our Board an extensive background in public accounting and knowledge of generally accepted accounting principles, combined with his additional experience as the chief financial officer of a private equity firm and his vast experience in financial and accounting matters. +James C. Stewart +Age: 60 +Director since: 2011 +Mr. Stewart joined NexTier in March 2011 as Chairman and Chief Executive Officer and became Executive Chairman in August 2018 until October 31, 2019. Prior to joining NexTier, from 2007 to 2009, he served as the President and Chief Executive Officer of a privately held international drilling company. From 2006 to 2007, Mr. Stewart served as Vice President of Integrated Drilling Services for Weatherford International plc, based in London and Dubai, where he created and managed a global business unit that included a 50-rig international land contract drilling group and a global project management team. Mr. Stewart began his career with Schlumberger Limited, where he held senior leadership positions across the globe over the span of 22 years. +Skills and Qualifications: +Mr. Stewart’s qualifications include his broad leadership experience with oilfield services, as well as his long tenure and successes in the oil and natural gas market. +14 +Scott R. Wille +Age: 42 +Director since: 2011 +Mr. Wille has served as a member of our Board since March 2011. He is currently a Senior Managing Director and Head of Consumer and Retail Private Equity at Cerberus, which he joined in 2006. Mr. Wille has also been a member of Cerberus’ Private Equity Investment Committee since 2016. Prior to joining Cerberus, Mr. Wille worked in the leveraged finance group at Deutsche Bank Securities Inc. from 2004 to 2006. Mr. Wille currently serves as a director of the Albertsons Companies, Inc., the second largest traditional grocery company in the U.S. In addition, Mr. Wille currently serves as a director of Off Lease Only, the largest independent used car dealer in Florida and 32 Brands, one of the largest vertically integrated direct to consumer mattress manufacturers in the U.S. Mr. Wille previously served as a director of Remington Outdoor Company, Inc. from February 2014 to March 2018, a designer, manufacturer and marketer of firearms, ammunition and related products and as director of Tower International, Inc., a manufacturer of engineered structural metal components and assemblies, from September 2010 to October 2012. +Other Public Company Directorships: +•  Albertsons Companies, Inc. (since 2015) +Skills and Qualifications: +Mr. Wille’s experience in the financial and private equity industries, together with his in-depth knowledge of our company and its acquisition strategy, are valuable to our Board’s understanding of our business and financial performance. +15 +Board of Directors +Our Directors +The Board is currently composed of 11 directors. The following table provides summary information about these directors as of April 17, 2023. +Committee Memberships +Name and Principal Occupation +Age +Director +Since +Independent +Audit & +Risk +Committee +Nom. & +Gov. +Committee +Comp. +Committee +Robert W. Drummond +President and Chief Executive Officer of NexTier +62 +2018 +Stuart M. Brightman +Retired Chief Executive Officer and President of TETRA Technologies, Inc. +66 +2019 +🌑 +🌑 +Leslie A. Beyer +Chief Executive Officer of the Energy Workforce & Technology Council +47 +2023 +🌑 +🌑 +Gary M. Halverson +Retired Group President Drilling & Production Systems Cameron +64 +2016 +🌑 +🌑 +Patrick M. Murray +Retired President & Chief Executive Officer of Dresser, Inc. +80 +2019 +🌑 +Amy H. Nelson +President and Founder of Greenridge Advisors, LLC +54 +2019 +🌑 +🌑 +🌑 +🌑 +Melvin G. Riggs +Vice President and Director of Clayton Williams Energy, Inc. +68 +2019 +🌑 +🌑 +🌑 +🌑 +Bernardo J. Rodriguez +Chief Digital and Technology Officer at J.D. Power +58 +2022 +🌑 +🌑 +Michael Roemer +Founder Roemer Financial Consulting +64 +2019 +🌑 +🌑 +James C. Stewart +Retired Chief Executive Officer of Keane Group, Inc. +60 +2011 +Scott R. Wille +Co-Head of Private Equity & Senior Managing Director at Cerberus Capital Management, L.P. +42 +2011 += Chairperson +16 +Committee Membership in 2022 +Below is a chart reflecting committee membership during 2022: +2022 Committee Memberships (1) +Name +Audit & Risk +Nominating & +Corporate +Governance +Compensation +Stuart M. Brightman +1/1/20 – Present +1/1/20 – Present +Gary M. Halverson +1/1/20 – Present +1/1/20 – Present +Amy H. Nelson +1/1/20 – Present +6/18/20 – Present +6/18/20 – Present +Melvin G. Riggs +1/1/20 – Present +6/18/20 – Present +6/18/20 – Present +Bernardo J. Rodriguez +1/5/22 – Present +Michael Roemer +1/1/20 – Present +6/18/20 – Present +(1) +Ms. Beyer joined the Board and began serving on the Nominating & Corporate Governance Committee in February 2023 and is thus not included in this table. +Attendance at Board and Committee Meetings, Annual Meeting +During 2022, the Board met five times. Each member of the Board participated, in person or by telephone, in at least 75% of the aggregate of Board and committee meetings on which he or she served (during the period that such director served). It is our policy that directors are encouraged to attend each annual meeting of stockholders, and all of our members of our Board attended the 2022 annual meeting, in person or by telephone. +Director Independence +As a publicly traded company listed on the New York Stock Exchange (the “NYSE”), we are required to comply with the rules and regulations of the NYSE as well as that of the SEC. Additionally, each of the Audit & Risk Committee (the “Audit Committee”), Compensation Committee and Nominating and Corporate Governance Committee is required to be comprised solely of independent directors, with heightened standards applicable to Audit Committee and Compensation Committee members. +Each year, our Nominating and Corporate Governance Committee evaluates the relationships between the Company and each director and reports the results of its review to the Board. To be considered “independent,” a director must be affirmatively determined by the Board, at the recommendation of the Nominating and Corporate Governance Committee and after due deliberation, to have no material relationship with the Company other than as a director. The Nominating and Governance Committee and the Board assess the relationships and other facts and circumstances relevant to director independence on a case-by-case basis, in each case consistent with the applicable rules and regulations of the NYSE and SEC, and consistent with the Company’s Corporate Governance Guidelines (which can be found on our website at www.nextierofs.com ). +After reviewing all relationships each director has with the Company, including the nature and extent of any business relationships between the Company and such person, and based on the review and recommendation of the Nominating and Corporate Governance Committee, the Board has affirmatively determined that each of Messrs. Brightman, Halverson, Murray, Riggs, Rodriguez and Roemer and Mses. Beyer and Nelson have no material relationships with the Company and, is “independent” under the applicable rules and regulations of the SEC, the NYSE and in accordance with our Corporate Governance Guidelines. In addition to the Board-level standards for director independence, each member of the Audit Committee meets the heightened independence standards required for audit committee members under the NYSE and SEC rules, and each member of the Compensation Committee meets the heightened independence standards for compensation committee members under the NYSE rules. +17 +The Board’s independence determinations included consideration of all facts and circumstances that might impair a director’s independence, including a review of other company directorships. In addition, in making its independence determinations, the Board considered that Mr. Wille is a senior employee of Cerberus Capital Management, L.P. (together with its affiliates and related funds, “Cerberus”), a stockholder of the Company, and that he was initially designated for nomination to the Board by Cerberus pursuant to a stockholders’ agreement, which is more fully discussed below. The Company also reviewed Mr. Stewart’s past officer appointment with the Company’s predecessor, Keane Group, Inc. +Director Nominations +In obtaining the names of possible director nominees, our Nominating and Corporate Governance Committee conducts its own inquiries and considers suggestions from other directors, management and stockholders. In addition, the Nominating and Corporate Governance Committee from time to time will engage a third-party search firm to identify or evaluate, or assist in identifying or evaluating potential candidates, for which the third-party search firm will be paid a fee. The search firm will also assist the Nominating and Corporate Governance Committee to identify candidates reflecting diversity in race, gender, and specialized experience. The Nominating and Corporate Governance Committee’s process for evaluating nominees identified in unsolicited recommendations from stockholders is the same as its process for unsolicited recommendations from other sources and is further described in Section 4.01 of the Company’s Bylaws. However, stockholders desiring to nominate a director candidate at the annual meeting must comply with certain procedures, for more information, please read “Proposals by Stockholders.” +The Nominating and Corporate Governance Committee believes that nominees should possess the highest personal and professional ethics, reputation, integrity and values and be committed to representing the long-term interests of our stockholders. Directors should have a record of accomplishment in their chosen professional field and demonstrate sound business judgment. Directors must be willing and able to devote sufficient time to carrying out their duties and responsibilities effectively, including attendance at and participation in board and committee meetings, and should be committed to serve on the board for an extended period of time. Pursuant to our Corporate Governance Guidelines, when assessing Board composition or identifying suitable candidates for appointment or re-election to the Board, the Nominating and Governance Committee considers candidates based on merit and having due regard to the benefits of diversity and the needs of the Board. The Nominating and Corporate Governance Committee will consider independence, diversity of viewpoints, backgrounds and experience, including a consideration of gender, ethnicity, race, nationality and age in determining whether a candidate will be an appropriate fit with, and an asset to, the board of directors. When considering existing directors, the Nominating and Corporate Governance Committee evaluates their history of attendance at board and committee meetings as well as contributions and effectiveness at such meetings. +In addition, pursuant to the terms of our Bylaws and the Second Amended and Restated Stockholders’ Agreement, dated as of October 31, 2019, by and among the company, Keane Investor Holdings, LLC (“Keane Investor”) and the other parties thereto, Keane Investor (or its permitted assignee or designee) has certain rights to designate members to our board of directors, subject to certain director qualifications, including that: +• +for so long as Keane Investor (or its permitted assignee or designee) has beneficial ownership of at least 12.5% of the then outstanding shares of our common stock, the right to designate two individuals; and +• +for so long as Keane Investor (or its permitted assignee or designee) has beneficial ownership of less than 12.5% but at least 7.5% of our then-outstanding common stock, the right to designate one individual. +At this time, Messrs. Wille and Stewart are the Keane Investor appointees. For additional information, see “ Other Information—Related Person and Related Party Transactions ” in this proxy statement. +18 +Board Diversity +The Board is committed to thoughtful board refreshment and ongoing evaluation. The Board believes that a diverse membership enhances the Board’s deliberations and enables the Board to better represent all of the Company’s constituents. Since 2019, both of our new director nominees have added gender or ethnic diversity, as well as expertise and leadership skills in areas that are strategically important to NexTier. +Ø +2022 Mr. Rodriguez joined the Board, adding ethnic diversity and bringing expertise with business transformation through the innovative use of digital strategies and cyber security expertise. +Ø +2023 Ms. Beyer joined the Board, adding gender diversity and bringing experience in leadership and advocacy in responsible operations. +Communication with the Board and its Non-Management Members +Persons may communicate with our Board by submitting such communication in writing to the attention of Kevin McDonald, General Counsel and Corporate Secretary, in care of the Board of Directors, NexTier Oilfield Solutions Inc., 3990 Rogerdale Road, Houston, Texas 77042. Persons may communicate with the non-management members of the Board by submitting such communication in writing to Kevin McDonald, General Counsel and Corporate Secretary, in care of the non-management members of the Board of Directors, NexTier Oilfield Solutions Inc., 3990 Rogerdale Road, Houston, Texas 77042. +Board Committees +Our Board has assigned certain responsibilities to permanent committees comprised of Board members. +The charter for each committee listed below is available on our website at www.nextierofs.com , by clicking on “Investors,” “Corporate Governance,” then “Board Committees” and then the name of the applicable committee charter. Stockholders may obtain printed copies of any charter, free of charge, by sending a written request to NexTier Oilfield Solutions Inc. at 3990 Rogerdale Road, Houston, Texas 77042, Attn: Corporate Secretary. +Audit and Risk Committee +Committee Members: +Number of meetings in 2022: 9 +Michael Roemer (chair) +Amy H. Nelson +Report: page 28 +Gary M. Halverson +Melvin G. Riggs +Bernardo J. Rodriguez +The Audit Committee assists the board in its oversight responsibilities relating to the integrity of our financial statements, our compliance with legal and regulatory requirements, our independent auditor’s qualifications and independence, enterprise risk management (including cyber risk), the establishment and performance of our internal audit function and the performance of the independent auditor. Each member of the Audit Committee has significant financial experience, which provides a greater depth of understanding and oversight of our financial statements, including our balance sheet, statement of operations and cash flows statements. Our Board has determined that Mr. Roemer qualifies as an “audit committee financial expert” as such term is currently defined in Item 407(d)(5) of Regulation S-K. +Our board of directors has adopted a written charter under which the Audit Committee operates. A copy of the Audit Committee charter, which satisfies the applicable standards of the SEC and the NYSE, is available on our website. +19 +Compensation Committee +Committee Members: +Number of m eetings in 2022: 7 +Gary M. Halverson (chair) +Amy H. Nelson +Report: page 32 +Stuart M. Brightman +Melvin G. Riggs +The Compensation Committee is responsible for, among other things, review and administration of our compensation and benefits plans, approval of the compensation structure of our executive officers, evaluation of our executive officers’ performance and review of salary, bonus and other incentive and equity compensation. A copy of the Compensation Committee charter is available on our website. +Nominating and Corporate Governance Committee +Committee Members: +Number of meetings in 2022: 3 +Stuart M. Brightman (chair) +Melvin G. Riggs +Amy H. Nelson +Michael Roemer +Leslie A. Beyer +The Nominating and Corporate Governance Committee is responsible not only for the oversight of risks relating to corporate governance, board organization, membership and structure, succession planning for our senior management team, including our Chief Executive Officer, corporate responsibility but also for identifying individuals qualified to become members of our board of directors. A copy of the Nominating and Corporate Governance Committee charter is available on our website. +Director Compensation +Our director compensation philosophy is designed to provide a market based competitive compensation package to the Company’s non-employee directors for their time commitment, expertise and responsibilities as directors serving the Company and to align the interest of our directors with the long-term interests of our stockholders. The Compensation Committee monitors trends and best practices in, and periodically reviews and assesses the adequacy of, director compensation and makes recommendations to the Board. The Compensation Committee retains Compensation Advisory Partners (“CAP”), as its independent compensation consultant to review director compensation. The Compensation Committee reviewed the following related to CAP’s independence: (i) other services provided to us by CAP; (ii) fees paid by us as a percentage of CAP’s total revenue; (iii) policies or procedures maintained by CAP that are designed to prevent a conflict of interest; (iv) any business or personal relationships between the individual consultants involved in the engagement and a member of the Compensation Committee; (v) any Company stock owned by the individual consultants involved in the engagement; and (vi) any business or personal relationships between our executive officers and CAP or the individual consultants involved in the engagement and concluded that there were no conflicts of interest that prevented CAP from serving as an independent consultant to the Compensation Committee on executive compensation The Compensation Committee considers our director compensation philosophy, market trends and compensation levels and practices in our peer group, stockholder feedback, and the advice of the CAP when establishing the director compensation package. +Director Compensation Components +Annual compensation for our non-employee directors is comprised of cash and equity-based compensation, as set out in the table below. We also reimburse our non-employee directors for reasonable out-of-pocket expenses associated with travel to and attendance at our Board and committee meetings. We neither pay for meeting attendance nor provide any other benefits or perquisites to our non-employee directors. +20 +In February 2022, the Compensation Committee reviewed our director compensation program in consultation with CAP, which provided advice and recommendation with respect to the design of the Company’s director compensation program. The Compensation Committee reviewed independent and objective market data and analysis, including peer group analysis, market trends and best practices. The Compensation Committee took into account, among other factors, the compensation advisor’s input and stockholder feedback and votes in 2021 in determining the recommendations for adjustments to our director compensation program for 2022. Based on its review, the Compensation Committee did not recommend an increase in annual director compensation in 2022. +The following was the 2022 non-employee director compensation program: +Compensation Element +Compensation +Annual Cash Retainer (1) +$ +100,000 +Annual Equity Retainer (2) +$ +150,000 +Additional Cash Retainer— Independent Board Chair (1) +$ +50,000 +Additional Cash Retainer— Independent Audit Committee Chair (1) +$ +20,000 +Additional Cash Retainer— Other Independent Committee Chairs (1) +$ +15,000 +Additional Equity Retainer— Independent Board Chair (2) +$ +35,000 +(1) +The annual cash retainer is paid quarterly, in arrears. +(2) +The annual equity retainer is granted on the first business day following the annual stockholders meeting. The award was based on the volume weighted average price of our common stock for the five trading days prior to the grant date. The equity retainers were granted as restricted stock awards that vest 100% on the upon the earliest of: (i) the one-year anniversary of the grant date, (ii) the date of the first meeting of the Company’s stockholder at which directors will be elected in the calendar year following the calendar year in which the grant date occurs, (iii) the date the director incurs a termination without cause, (iv) the date of the director’s death, and (v) the date of a change in control, subject to continuous service through such vesting date. +2022 Director Compensation +Name +Fees Earned or +Paid in Cash ($) +Stock +Awards ($) (1) +Total ($) +Stuart M. Brightman +$ +115,000 +140,184 +255,184 +Gary M. Halverson +$ +115,000 +140,184 +255,184 +Patrick M. Murray +$ +150,000 +172,892 +322,892 +Amy H. Nelson +$ +100,000 +140,184 +240,184 +Melvin G. Riggs +$ +100,000 +140,184 +240,184 +Bernardo J. Rodriguez (2) +$ +98,904 +216,046 +314,950 +Michael Roemer +$ +120,000 +140,184 +260,184 +James C. Stewart +$ +100,000 +140,184 +240,184 +Scott R. Wille (3) +$ +100,000 +— +100,000 +(1) +The number of shares of restricted stock granted for director compensation awards was calculated pursuant the volume weighted average price of the common stock for the 5 trading days prior to the grant date. The amount above, however, reflects the grant date fair value calculated in accordance with FASB ASC 718 (as defined below) of the restricted stock granted in 2022. +(2) +Mr. Rodriguez joined the Board in January 2022 and received two stock awards in 2022, one award of 14,963 shares of restricted stock upon his joining the board in January 2022 and the other award of 13,921 shares of restricted stock upon commencement of his first full term in June 2022. +(3) +Mr. Wille is employed by one of our largest stockholders and has declined any equity compensation for his service as a director, and the cash compensation disclosed in this table is paid to his employer pursuant to his employer’s policy. +Our President and Chief Executive Officer, Mr. Drummond, does not receive any additional compensation for his service as a director (his compensation as an executive is discussed in CD&A and detailed in “Executive Compensation Tables”). In addition, Ms. Beyer joined the Board on February 10, 2023, and thus had no reportable compensation as a director for 2022. Ms. Beyer is entitled to compensation for her service on the Board on the same basis as all other non-employee directors of the Company, pro-rated from the date of her appointment to the Board. +21 +As of December 31, 2022, the aggregate number of shares of unvested restricted stock held by each non-employee director was: +Name +Number of Shares +of Restricted Stock +Stuart M. Brightman +13,921 +Gary M. Halverson +13,921 +Patrick M. Murray +17,169 +Amy H. Nelson +13,921 +Melvin G. Riggs +13,921 +Bernardo J. Rodriguez +28,884 +Michael Roemer +13,921 +James C. Stewart +13,921 +Scott R. Wille +— +Director Services Agreements +We have entered into Director Services Agreements with each of Gary M. Halverson and Melvin G. Riggs. The Director Services Agreements provide that each such director serve on an at-will basis until the earlier of his disability, death, resignation or removal. +Stock Ownership Requirements +We have stock ownership requirements for (i) all independent, non-employee directors (each an “Independent Director”), and (ii) our Chief Executive Officer and certain other executive officers, including the Chief Financial Officer, the Chief Operating Officer, the Chief Administrative Officer, and the General Counsel, as well as any President or Executive Vice President reporting directly to the Chief Executive Officer (collectively, the “Executive Officers”). +Stock Ownership Requirement +Independent, Non-Employee Directors +5X Annual Retainer +Chief Executive Officer +5X Base Salary +Other Executive Officers +2X Base Salary +All Independent Directors are required to own Company common stock in an amount equal to or in excess of five times such Director’s Annual Director Fee pursuant to the Director compensation program, which shall be determined annually as of the last day of the prior fiscal year. Each Independent Director has five years to meet the requirements, measured from the date he or she is first elected to the Board or it is first determined that the director meets the definition of an Independent Director. +By the fifth (5th) anniversary of the later of (a) the date an Executive Officer of the Company begins employment with the Company in such position and (b) June 26, 2018, each Executive Officer is required to own Company common stock in an amount equal to or in excess either (i) five times annual base salary, if such Executive Officer is the Chief Executive Officer or (ii) for all other Executive Officers two times such Executive Officer’s annual base salary, which will be determined annually as of the last day of the prior fiscal year of the Company. +The Company believes that each Independent Director and Executive Officer either presently meets the stock ownership requirements applicable to him or her or is on track to meet such stock ownership requirements within the requisite five-year period. +22 +Corporate Governance +Board Leadership Structure +Our Board does not have a formal policy on whether the roles of Chief Executive Officer and Chairman of the board of directors should be separate. If the Chairman is a member of management, the Board also elects a Lead Director who is a non-management director. Currently, Robert W. Drummond serves as our President & Chief Executive Officer, while Patrick M. Murray serves as Chairman of the Board. The Board believes that this leadership structure provides the best direction for the management team and is ideal for the Company and its stockholders. Our non-management directors meet regularly in executive sessions at which only non-management directors are present, and the Chairman leads those sessions. Because Mr. Murray is independent under applicable listing standards and under our Corporate Governance Guidelines, our Board has not appointed a separate Lead Director. +Our Board expects to review its leadership structure at least annually to ensure that it continues to meet the Company’s needs. +Role of Board in Risk Oversight +Enterprise risk management is a Company-wide initiative that involves the Board and management identifying, assessing and managing risks that could affect our ability to fulfill our business objectives or execute our corporate strategy. A primary function of our Board is to assist and oversee management in this effort. The Board and its committees conduct this oversight responsibility. The Board’s committees assist the Board in fulfilling its oversight responsibilities with respect to risks within its areas of responsibilities, as further discussed below. We believe the Board’s role in risk oversight is consistent with the Company’s leadership structure, with our Chief Executive Officer and other members of senior management having direct responsibility for managing risk exposure and the potential impacts of the many risks that are associated with our business, and the directors involved in providing oversight of management’s efforts to reduce, mitigate or eliminate the risks that we face. +The primary means by which the Board and its designated committees oversee our risk management structure and policies is through regular communications with management, specifically including with our General Counsel, our head of internal audit, our Chief Executive Officer and our Chief Financial Officer. In connection with our regular quarterly Board and committee meetings, the full Board (or the appropriate committee in the case of risks that are under the purview of a particular committee) receives reports from members of senior management on areas of material risk to the Company, including operational, financial, legal, cyber, regulatory, and strategic risks. In addition, upon request, either the full Board or a committee may receive additional reports from those executive officers who are deemed responsible for particular risks. The chair of each of the committees will also discuss and review significant matters with management outside of the quarterly Board meetings as needed. When a committee receives a separate report, or the chair has separate discussions, the committee chair may discuss that report with the full Board. +23 +THE BOARD +The full Board risk management to ensure purposeful and appropriate risk taking. The board implements its risk oversight function both as a whole and through delegation to Board committees. These committees meet regularly and report back to the Board. +COMMITTEES +COMPENSATION +AUDIT AND RISK +NOMINATING AND +CORPORATE GOVERNANCE +Risk oversight focus areas: +•  compensation philosophy and programs, including confirming that pay arrangements do not encourage excessive risk taking, and +•  health, welfare and retirement benefits policies and programs +Risk oversight focus on policies and processes related to: +•  risk assessment and risk management, generally, +•  financial statements, +•  the financial reporting process, +•  internal controls and accounting matters, +•  tax matters, +•  legal and compliance matters, +•  the internal audit function, and +•  cybersecurity +Risk oversight focus areas: +•  corporate governance, +•  Board organization, membership and structure, +•  corporate responsibility; and +•  succession planning for our CEO and other members of senior management. +MANAGEMENT +Company management is charged with managing risk. The Company has robust internal processes and an internal control environment that facilitate the identification and management of risks and provide regular communication with the Board and its committees. +Environmental Risks +As part of our commitment to long-term, sustainable value creation, the Board and our executive team are committed to actively monitoring how the Company’s performance, opportunities and strategy are influenced by, and influence, the environment. This review, which is part of the Company’s general risk management process, includes an evaluation of the Company’s material climate-related risks; all material risks identified in the risk management process are assessed by management and reported to the Board. +24 +Cybersecurity Risks +The Audit Committee oversees the Company’s cybersecurity risk environment and the Company’s cybersecurity strategy and priorities. The Company’s Vice President - Information Technology, together with other senior leadership, regularly reviews with the committee the Company’s information technology matters, including technology and cybersecurity structure and strategic efforts to protect, optimize and support the growth of the Company, as well as the Company’s internal assessment of cybersecurity risk management capabilities. To guard against the threat of security breaches and cyber-attacks, the head of the Company’s IT department manages our cybersecurity initiative, which is focused on protecting and preserving the confidentiality, integrity and continued availability of all information owned by, or in the care of, the Company. +The Audit Committee receives regular reports related to cybersecurity, privacy and controls. As part of this, the Audit Committee will review the results of periodic exercises and response readiness assessments led by outside advisors who provide a third-party independent assessment of our internal preparedness. In 2022, the Company conducted an independent National Institute of Standards and Technology (NIST) Cybersecurity Framework (CSF) maturity assessment of NexTier’s cyber security posture and program. The Company also did a Business Impact Analysis (BIA) on its operations. In 2022, the Company also implemented a mandatory training program for all employees to educate them about cyber threats. In addition, our internal audit team will periodically review and report to the Audit Committee on aspects of cybersecurity as part of its audits. +People Risks +NexTier is committed to promoting a healthy and ethical culture throughout the organization. The Audit Committee receives regular reports from the Company’s General Counsel, who serves as Chief Compliance Officer, regarding the Company’s compliance program. As part of this, the Audit Committee regularly reviews all complaints received through the anonymous hotline as well as key data related to ongoing legal proceedings. +The Board or its designated committee also receives regular reports from our senior management team about our other people-related strategies, programs and initiatives, including recruitment, retention, engagement, training and development, health and safety, talent management and diversity. +Code of Business Conduct and Ethics +We have adopted a written code of business conduct and ethics (the “Code of Business Conduct and Ethics”) that applies to all employees, officers and directors. In addition, our senior financial officers, including our principal executive officer and principal financial officer, are subject to a written code of ethics for senior financial officers. We have made a current copy of both codes available on our website, www.nextierofs.com and both are available in print and without charge to any person who sends a written request to our Corporate Secretary at 3990 Rogerdale Road, Houston, Texas 77042. We have posted, and intend to post on our website (at https://investors.nextierofs.com/Compliance-and-Ethics ) all disclosures that are required by law or the NYSE listing standards concerning any amendments to, or waivers from, any provision of either code. +Corporate Governance Guidelines +We have adopted corporate governance guidelines in accordance with the corporate governance rules of the NYSE, as applicable, that serve as a flexible framework within which our Board and its committees operate. These guidelines cover a number of areas, including the size and composition of the Board, board membership criteria and director qualifications, director responsibilities, board agenda, role of the Chief Executive Officer, executive sessions, standing board committees, board member access to management and independent advisors, director communications with third parties, director compensation, director orientation and continuing education, evaluation of senior management and management succession planning. A copy of our corporate governance guidelines is posted on our website, www.nextierofs.com . +25 +Proposal 2. Ratify Appointment of Independent Auditors +The Board of Directors recommends that you vote “FOR” this proposal. +The Audit Committee has selected KPMG LLP (“KPMG”), an independent registered public accounting firm, to audit the Company’s financial statements and the effectiveness of internal control over financial reporting for 2023. While the Audit Committee is responsible for appointing, compensating and overseeing the independent auditors’ work, we are requesting the ratification of the appointment of KPMG as our auditor for 2023 as a matter of good corporate governance. KPMG served as our independent auditor since 2011, and the Audit Committee took a number of factors into consideration in determining whether to reappoint KPMG as the Company’s independent auditor, including KPMG’s historical and recent performance, capabilities and expertise, tenure as the Company’s independent auditor and familiarity with the Company’s business. We believe the appointment of KPMG is in the best interest of the Company and its stockholders. +Representatives of KPMG are expected to be present at the Annual Meeting with an opportunity to make a statement if they would like to do so and to be available to respond to appropriate questions from our stockholders. +The ratification of the appointment of KPMG as our independent auditor for 2023 requires the affirmative vote of a simple majority of the votes cast. If you properly submit a proxy card but do not indicate how you wish to vote, the Proxy Holders will vote for the proposal. +26 +Fees Paid to KPMG +The following table summarizes fees paid or accrued to our independent registered public accounting firm, KPMG, in connection with various services for the years ended December 31, 2022 and 2021 respectively: +2022 +2021 +(Thousands of Dollars) +Audit Fees (1) +$2,998 +$3,206 +Audit–Related Fees +— +— +Tax Fees (2) +— +3 +All Other Fees +— +— +Total +$2,998 +$3,209 +(1) +Consists of fees for professional services rendered for the audits of our consolidated financial statements for fiscal years 2022 and 2021 included in our 2022 Form 10-K, the annual audit of the effectiveness of our internal controls over financial reporting, and the reviews of our quarterly financial statements. This category also includes fees for the issuance of consents and reviews of documents filed with the SEC. +(2) +Consists of fees for professional services rendered for tax compliance and tax planning. +Pre-Approval Policy +Our Audit Committee has adopted an Audit and Non-Audit Services Pre-Approval Policy (the “Pre-Approval Policy”), that sets forth the procedures and conditions pursuant to which audit and non-audit services proposed to be performed by the independent auditor may be pre-approved. The Pre-Approval Policy provides that we will not engage the Company’s independent registered public accounting firm to render any audit, audit-related, tax or permissible non-audit service unless the service is either (i) explicitly approved by the Audit Committee (“specific pre-approval”) or (ii) entered into pursuant to the pre-approval policies and procedures described in the Pre-Approval Policy (“General Pre-Approval”). Unless a type of service to be provided by KPMG has received General Pre-Approval under the Pre-Approval Policy, it requires specific pre-approval by the Audit Committee. Any proposed services exceeding pre-approved cost levels or budgeted amounts will also require specific pre-approval. On an annual basis, the Audit Committee reviews and generally pre-approves the services (and related fee levels or budgeted amounts) that may be provided by KPMG. Our Audit Committee may revise the list of general pre-approved services from time to time, based on subsequent determinations. +During 2022 and 2021, no services were provided to us by KPMG other than in accordance with the pre-approval policies and procedures described above. +27 +Audit Committee Report +The Audit Committee represents and assists the Board in providing independent, objective oversight of the Company’s accounting functions and internal control over financial reporting. The Audit Committee acts under a charter which is available on the Company’s website at www.nextierofs.com under “Investors,” then “Corporate Governance,” then “Board Committees,” then “Audit and Risk Committee.” The Board has determined that each member of the Audit Committee satisfies the requirements of the NYSE as to independence, financial literacy and expertise. +Management is responsible for the Company’s financial statements and the reporting process, including the system of disclosure controls and procedures and internal control over financial reporting. +KPMG, the Company’s independent registered public accounting firm, is responsible for expressing an opinion on the conformity of our financial statements with accounting principles generally accepted in the United States and on the effectiveness of the Company’s internal control over financial reporting. +In discharging its oversight role, the Audit Committee has: +• +reviewed and discussed with management the audited financial statements of NexTier Oilfield Solutions Inc. as of and for the year ended December 31, 2022; and +• +discussed with KPMG the matters required to be discussed by Auditing Standard No. 1301, Communications with Audit Committees, as amended, as adopted by the Public Company Accounting Oversight Board. In addition, the Audit Committee has received the written disclosures and the letter from KPMG required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent auditor’s communications with the Audit Committee concerning independence, and has discussed with KPMG their independence. +Based on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited financial statements referred to above be included in the Annual Report on Form 10-K of NexTier Oilfield Solutions Inc. for the year ended December 31, 2022. +The Audit Committee and the Board of Directors believe that, due to KPMG’s knowledge of the Company and the industry in which the Company operates, it is in the best interest of the Company and its stockholders to continue the retention of KPMG to serve as the Company’s independent registered public accounting firm. Although the Audit Committee has the sole authority to appoint the independent registered public accounting firm, the Audit Committee recommends that the Board of Directors ask the stockholders to ratify, at the 2023 Annual Meeting, the appointment of the independent registered public accounting firm for the fiscal year ending December 31, 2023. +The Audit and Risk Committee +Michael Roemer, Chair +Gary M. Halverson +Amy H. Nelson +Melvin G. Riggs +Bernardo J. Rodriguez +28 +Proposal 3. Advisory Approval of Executive Compensation +The Board of Directors recommends that you vote “FOR” this proposal. +We are asking our stockholders to approve, on an annual advisory basis, the compensation of our named executive officers (“NEOs”) as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis (“CD&A”), compensation tables and narrative discussion. While this vote is not binding on our Company, the results of the vote on this proposal will be carefully considered by our Board and the Compensation Committee when making future executive compensation decisions. Our next advisory vote regarding the frequency of these votes will be held at our 2024 Annual Meeting of Stockholders. +The text of the resolution in respect of Proposal 3 is as follows: +“ RESOLVED , that the compensation paid to the Company’s named executive officers, as disclosed in this Proxy Statement pursuant to the rules of the SEC, including the Compensation Discussion and Analysis, compensation tables and any related narrative discussion, is hereby APPROVED.” +We urge you to carefully review the CD&A section in this Proxy Statement, as well as the 2022 Summary Compensation Table, other compensation tables and related narrative discussion, for more information regarding the compensation of our NEOs. We believe the information in this Proxy Statement demonstrates the successful design and implementation of a compensation program that aligns stockholders’ and management’s interests. +A simple majority of the votes cast is required to approve this proposal. If you properly submit a proxy card but do not indicate how you wish to vote, the Proxy Holders will vote for the proposal. +29 +Executive Officers +Set forth below is certain information regarding our executive officers as of April 17, 2023, other than the biography of our President & Chief Executive Officer, which appears under “Proposal 1—Election of Directors—Director Information.” +Name +Age +Position +Robert W. Drummond +62 +President & Chief Executive Officer +Kenneth H. Pucheu +45 +Executive Vice President & Chief Financial Officer +Kevin M. McDonald +56 +Executive Vice President, Chief Administrative Officer, General Counsel and Corporate Secretary +Matthew R. Gillard +51 +Executive Vice President & Chief Operating Officer +Oladipo O. Iluyomade +45 +Vice President & Chief Accounting Officer +Kenneth H. Pucheu , Executive Vice President and Chief Financial Officer . Mr. Pucheu has served as NexTier’s Executive Vice President and Chief Financial Officer since December 2019. In addition to his role as Chief Financial Officer, Mr. Pucheu is responsible for all Digital and Information Technology operations of NexTier. He joined Keane Group, Inc. (now known as NexTier Oilfield Solutions Inc.) in 2016 as Vice President of Finance. Mr. Pucheu has over 20 years of experience in corporate and operational finance across the energy industry, as well as deep experience in digital technologies and business systems. Prior to joining Keane, Mr. Pucheu served at Schlumberger Limited for 15 years in various senior-level positions, including Head of Finance for Drilling and Measurements and Director of Finance for North America Offshore. Mr. Pucheu earned a B.S. in Accounting from the University of Louisiana at Lafayette. +Kevin M. McDonald, Executive Vice President, Chief Administrative Officer, General Counsel and Corporate Secretary . Mr. McDonald serves as NexTier’s Executive Vice President, Chief Administrative Officer and General Counsel. He joined Keane Group, Inc. (now known as NexTier Oilfield Solutions Inc.) as Executive Vice President, General Counsel & Secretary in November 2016. Prior to joining Keane, Mr. McDonald served in leadership roles at Marathon Oil Corporation from 2012 to 2016, including as Deputy General Counsel of Corporate Legal Services and Government Relations, Deputy General Counsel of Governance, Compliance & Corporate Services, and Assistant General Counsel. Mr. McDonald practiced as a partner at the international law firm Fulbright & Jaworski LLP (now Norton Rose Fulbright LLP) in 2012. Mr. McDonald previously held various counsel positions, including President & Chief Executive Officer and acting General Counsel at Arms of Hope, a nonprofit organization, from 2008 to 2012, Senior Vice President, General Counsel & Chief Compliance Officer at Cooper Industries from 2006 to 2008, Associate General Counsel at Anadarko Petroleum from 2004 to 2006, and Managing Counsel (Litigation) at Valero Energy from 2002 to 2004. He began his career as an associate at Norton Rose Fulbright LLP between 1992 and 2001. Mr. McDonald graduated with a B.S. from Texas A&M University and JD from the University of Texas School of Law. +Matthew R. Gillard , Executive Vice President and Chief Operating Officer . Mr. Gillard has served as Executive Vice President and Chief Operating Officer since joining NexTier in August 2021. He has more than 25 years’ experience in the oil and gas industry, working primarily for Schlumberger in progressing roles of responsibility including Sales and Commercial Director, Vice President Completions, President OneStim and Vice President Vertical Integration & Strategy North America. Most recently, Mr. Gillard held the role of Principal and Owner of Intex Consulting. He received a B.S. in Marine & Offshore Civil Engineering from University of Plymouth, UK and a Master of Science in Petroleum Engineering in Reservoir and Petroleum Engineering from Institute Du Francais Petrole. +30 +Oladipo O. Iluyomade , Vice President and Chief Accounting Officer . Mr. Iluyomade has served as NexTier’s Vice President and Chief Accounting Officer since January 2022. Mr. Iluyomade joined NexTier in October 2019 as Director of Finance. Prior to NexTier, he worked for Schlumberger from 2000 to 2019 in increasing roles of responsibility in Finance, traversing the globe from Nigeria, Caspian Region, the Middle East, and ultimately to the Americas. Mr. Iluyomade earned his MBA from Wayne State College with Advanced Finance Training from Wharton Business School. He achieved status as an Associate Chartered Accountant from the Institute of Chartered Accountants in Nigeria and a B.S. in Accounting from Obafemi Awolowo University in Nigeria. +31 +Compensation Committee Report +The Compensation Committee has reviewed and discussed the below CD&A with the Company’s management. Based on the review and discussions, the Compensation Committee has recommended to our Board that the CD&A be included in this Proxy Statement and the Company’s Annual Report on Form 10-K fo the year ended December 31, 2022. +The Compensation Committee +Gary M. Halverson, Chair +Stuart M. Brightman +Amy H. Nelson +Melvin G. Riggs +This report shall not be deemed to be “soliciting material” or to otherwise be considered “filed” with the SEC or be subject to Regulation 14A or 14C (other than as provided in Item 407 of Regulation S-K) or to the liabilities of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that we specifically incorporate it by reference into such filing. +32 +Compensation Discussion & Analysis +This CD&A focuses on the Company’s 2022 compensation programs, actions and outputs relative to the Company’s 2022 performance. These compensation decisions reflect the Compensation Committee’s application of the Company’s compensation philosophy, plan objectives, and performance standards against financial and individual executive performance through the end of 2022. For the year ended December 31, 2022, our NEOs were: +NEO +Title +Robert W. Drummond +President & Chief Executive Officer +Kenneth H. Pucheu +Executive Vice President & Chief Financial Officer +Kevin M. McDonald +Executive Vice President, Chief Administrative Officer, General Counsel & Corporate Secretary +Matthew R. Gillard +Executive Vice President & Chief Operating Officer +Oladipo Iluyomade +Vice President & Chief Accounting Officer +Michael J. McKie (1) +President - Alamo Pressure Pumping +(1) +Effective June 6, 2022, Mr. McKie ceased to be an executive officer of the Company. +Executive Summary +NexTier is a predominately U.S. land focused oilfield services company that offers a diverse set of well completion and production services across a variety of active and demanding basins. We provide our services through our operating subsidiaries to exploration and production (“E&P”) customers. Our integrated solutions approach is focused on delivering efficiency, and our ongoing commitment to innovation helps our customers capitalize on technological advancements. NexTier is differentiated through four points of distinction, including safety performance, efficiency, partnership and innovation. +33 +Compensation Practices & Policies +The following practices and policies in our program promote sound compensation governance and are in the best interests of our stockholders and executives: +What We Do +☑ +Emphasis on variable compensation tied to annual financial performance or long-term relative stock price performance +☑ +Performance-based long-term incentives dependent upon our performance relative to peers makes up a substantial portion of NEO long-term incentives +☑ +Claw Back Policy that applies to cash and equity compensation +☑ +Annual compensation risk assessment +☑ +Independent compensation consultant reporting directly to our Compensation Committee +☑ +Stock Ownership Guidelines for senior executive officers and independent non-employee directors +☑ +Severance and Acceleration of Equity Vesting Conditioned on Restrictive Covenants and Release of Claims +What We Don’t Do +☒ +Prohibition on option repricing without stockholder approval +☒ +Prohibition on hedging of Company securities by our officers and directors +☒ +Prohibition on pledging of Company securities by our executive officers and directors (other than in limited circumstances expressly approved by the Board) +☒ +No single-trigger change-in-control severance payments +☒ +No single-trigger change-in-control equity vesting +☒ +No excise tax gross-ups +☒ +Limited use of perquisites and supplemental benefits +2022 Compensation Actions At-A-Glance +The Compensation Committee took the following key compensation-related actions for fiscal year 2022: +• +Base Salaries : The base salaries of our NEOs are designed to be competitive within our market. The Compensation Committee reviewed compensation data of peer companies in determining base salaries for our NEOs for 2022. +• +Annual Incentives : The Compensation Committee adopted an annual bonus program for the fiscal year 2022 based on the achievement of specific Company performance objectives related to annual adjusted EBITDA, free cash flow and the achievement of ESG & innovation and continuous improvement performance measures. +• +Long-Term Incentives : The largest single component of compensation granted to our executives, the long-term incentives awarded in 2022, are comprised mostly in units settled either in the Company’s stock (“equity awards”) or an amount of cash equal to the product of the number of such units multiplied by the closing price of the Company’s stock on the vesting date. The executives were awarded long-term incentives consisting of a mixture of restricted stock unit (“RSU”) awards and performance unit (“PU”) awards, which PUs settle solely in cash. In addition to RSUs and PUs, Mr. Drummond also received a performance restricted stock unit (“PSU”) award in 2022, to be settled in shares. The Compensation Committee believes the use of these equity and synthetic equity awards creates strong alignment with the Company’s stockholders by linking executive compensation closely to stock performance, and in the case of both PUs and PSUs, total stockholder return relative to our peers. +34 +What Guides Our Program +Our Compensation Philosophy +Our compensation philosophy is driven by the following guiding principles: +• +Pay for Performance : A significant portion of an executive’s total compensation should be variable (“at-risk”) and linked to the achievement of specific short- and long-term performance objectives. +• +Stockholder Alignment : Executives should be compensated through pay elements (base salaries, short- and long-term incentives) designed to enhance stockholder value by incentivizing our executives to work towards goals that drive return on stockholder investment. +• +Competitiveness : Target compensation should be competitive with that being offered to individuals in comparable roles at other companies with which we compete for talent to ensure we employ the best people to lead the successful implementation of our business plans and to attract the caliber of executives we need to support the long-term growth of our enterprise. +• +Good Governance : Decisions about compensation should be guided by best-practice governance standards and rigorous processes that encourage prudent decision-making. +35 +The Principal Elements of Pay +Our compensation philosophy is supported by the following principal elements of pay: +36 +Pay Mix +A majority of NEO total direct compensation for fiscal year 2022 was variable, at approximately 89% for our Chief Executive Officer and approximately 79% for our other NEOs employed at year-end. The following charts illustrate the total direct compensation mix for our NEOs for fiscal year 2022. +Our Decision-Making Process +The Role of the Compensation Committee +The Compensation Committee oversees the executive compensation program for our NEOs. The Compensation Committee is comprised of independent members of our Board. The Compensation Committee works very closely with its independent consultant and management to examine the effectiveness of the Company’s executive compensation program throughout the year. The Compensation Committee evaluates, determines and approves the compensation of our Chief Executive Officer and other executive officers, and recommends the compensation of our non-employee directors. The Compensation Committee administers the Company’s equity plans and has overall responsibility for monitoring of the Company’s executive compensation policies, plans and programs. Details of the Compensation Committee’s authority and responsibilities are specified in the committee’s charter which is available on the Company’s website at www.nextierofs.com . +The Role of Management +Compensation Committee meetings are regularly attended by our Chief Executive Officer, General Counsel and our Senior Vice President of Human Resources. Each of the management attendees provides the Compensation Committee with their specific expertise and the business and financial context necessary to understand and properly target financial and performance metrics. None of the members of management are present during executive sessions where the Compensation Committee deliberates on compensation adjustments under consideration, but the Company’s independent compensation consultant may participate in those discussions. +The Role of the Independent Consultant +The Compensation Committee has the full authority to engage compensation consultants and other advisors to assist it in the performance of its responsibilities. Prior to retaining or seeking advice from a compensation consultant or other advisor, the Compensation Committee must consider the independence of such compensation consultant or other advisor. The independent compensation consultant retained by the Compensation Committee reports directly to the Compensation Committee. +37 +The Compensation Committee had engaged Compensation Advisory Partners LLC (“CAP”) as its independent compensation consultant since mid-2020 after a rigorous review process and has remained the Company’s ongoing independent compensation consultant through 2022. CAP did not provide any services to the Company or any of its subsidiaries other than the services provided to the Compensation Committee and the subscription to the salary survey of the oilfield service industry (“OFS Compensation Survey”). The Compensation Committee assessed the independence of CAP and determined that its work for the Compensation Committee has not raised any conflict of interest. +The Role of the Compensation Peer Group +The Compensation Committee strives to set a competitive level of total compensation for each NEO as compared with executives in similar positions at peer companies. For purposes of setting fiscal year 2022 compensation levels, the Compensation Committee, in consultation with CAP, took into account a range of factors including the peer’s respective size in terms of current revenue, employees and market compensation, and the peer’s respective geographic footprint, operating characteristics, corporate office locations and stock price correlation based on publicly available data from industry compensation surveys and proxy statements. The peer group determined by the Compensation Committee included: +Compensation Peer Group +Archrock, Inc. +Nabors Industries Ltd. +Patterson-UTI Energy, Inc. +ChampionX Corporation +Newpark Resources, Inc. +ProPetro Holdings Corp. +Flowserve Corporation +NOV Inc. +RPC, Inc. +Helmerick & Payne, Inc. +NOW Inc. +Select Energy Services, Inc. +Liberty Oilfield Services Inc. +Oceaneering International, Inc. +MRC Global Inc. +Oil States International, Inc. +The peer companies were selected as potential competitors for executive talent based upon similarity in terms of business focus, financial size, and peer group overlap. CAP provided an updated peer group review for 2022 and suggested that several changes be made to the applicable peer group used for benchmarking purposes. These changes included the removal of TechnipFMC plc, KBR Inc. and Superior Energy Services, Inc. from the peer group analysis and the inclusion of Oil States International, Inc., Select Energy Services, Inc. and Newpark Resources, Inc. in the relevant peer group analysis. Companies removed from the peer group had revenue scope ranges outside of the Company’s own revenue metrics. The Compensation Committee noted that newly included peer companies better fit within the relevant revenue scope range of the Company. This market data is not the sole determinant in setting executive pay levels. The Compensation Committee also considers Company and individual performance, the nature of an individual’s role within the Company, and his or her experience and contributions to his or her current role when making its compensation-related decisions. +Say-on-Pay Vote and Compensation Actions Taken +93 % +2022 +We received approximately 93% approval on our advisory say-on-pay vote to approve NEO compensation in 2022. We considered this as an affirmation that our stockholders support our executive compensation program. We regularly engage in investor outreach to better understand our investors’ concerns and to solicit feedback on our executive compensation program. Our Board and the Compensation Committee greatly value the benefits of maintaining a dialogue with our stockholders to understand their views on our executive +compensation program and practices. The Compensation Committee intends to consider the outcome of say-on-pay votes when evaluating the design of our programs and is devoted to consistently reviewing and enhancing our programs to ensure continued alignment with compensation program guiding principles. +38 +The 2022 Executive Compensation Program in Detail +Base Salary +We provide each of our NEOs with a competitive fixed annual base salary. The base salaries for our NEOs are set forth in employment agreements between the Company and the applicable NEO other than Messrs. Gillard and Iluyomade (the “Executive Employment Agreements”). Base salaries are reviewed annually by the Compensation Committee by taking into account the results achieved by each executive, their future potential contributions, scope of responsibilities and experience, and competitive pay practices. In December 2022, the Compensation Committee reviewed the base salaries of our NEOs and recommended and the Board approved changes in the annual base salaries of certain of our NEOs, effective January 1, 2023. The following table provides the base salaries as in effect at the end of 2021, then end of 2022 and for 2023 for our NEOs. +Name +2022 Annual Base +Salary +($) +2023 Annual Base +Salary +($) +Robert W. Drummond +1,000,000 +1,100,000 +Kenneth H. Pucheu +475,000 +550,000 +Kevin M. McDonald +500,000 +550,000 +Matthew R. Gillard +475,000 +550,000 +Oladipo Iluyomade (1) +250,000 +300,000 +Michael J. McKie +500,000 +500,000 +(1) +The Compensation Committee increased the base salary for Mr. Iluyomade on January 8, 2022 from $180,000 to $250,000 in connection with his appointment as Chief Accounting Officer. +2022 Annual Incentives +Each NEO was eligible for an annual bonus, for which the target amount is expressed as a percentage of base salary, as set forth in the table below. +Name +Target Bonus +Opportunity as +a Percent of +Base Salary +2022 +Target Bonus +Opportunity +($) +Robert W. Drummond +125% +1,250,000 +Kenneth H. Pucheu +100% +475,000 +Kevin M. McDonald +100% +500,000 +Matthew R. Gillard +100% +475,000 +Oladipo Iluyomade +55% +137,500 +Michael J. McKie +50% +250,000 +39 +Bonus payments for our NEOs were calculated under the 2022 Bonus Program, described below. +2022 Annual Bonus Program +The Compensation Committee adopted the Annual Bonus Program for Fiscal Year 2022 (the “2022 Bonus Program”). The 2022 Bonus Program provides that each NEO is eligible to receive an annual bonus for fiscal year 2022 calculated by multiplying the NEO’s target bonus by the achieved “funding level” based on the Company’s achievement of the performance goals outlined below. If the threshold performance level is not met, the pool funding level would be 0% for that performance metric. +70 % +Weighting +Financial Goals +The financial performance metrics of Adjusted EBITDA and Free Cash Flow comprise 70% of the weighting for the 2022 Bonus Program. The Compensation Committee selected Adjusted EBITDA as the primary metric to focus management on the generation and flow of cash with a weight of 50% of the 2022 Bonus Program. This closely aligns the interests of management with stockholders to maintain a strong balance sheet and preserve investment value. Adjusted EBITDA is a non-GAAP measure and is defined as the +Company’s (net income (loss)) before interest, income taxes, depreciation and amortization, further adjusted to eliminate the effects of items management does not consider in assessing ongoing performance as reflected in the Company’s audited financial statement for the performance period. Adjusted EBITDA is calculated after taking into consideration the bonus payments, which include adjustments reviewed and approved by the Compensation Committee (e.g., consideration for items such as one-time expenses for M&A transactions, commissioning, etc.). The Compensation Committee also selected Free Cash Flow as the second financial performance metric with a weight of 20% of the 2022 Bonus Program. This closely aligns the interests of management with stockholders to maintain financial discipline in making prudent decisions on balancing profitability with maximizing cash generation. Free Cash Flow is defined as cash flow provided from operating activities, less payments for property, plant and equipment, including interest expense. Free Cash Flow excludes any cash payments related to the earnout payable pursuant to the acquisition of Alamo Pressure Pumping LLC. “Net Capex” means the purchase of property, plant and equipment less cash proceeds from the sale of assets. +20 % +Weighting +Environmental, Social & Governance (ESG) Goals +We believe safety culture begins with leadership accountability. We are committed to lowering injury risk and providing a safe working environment. We strive to lead the industry in safety performance without compromising service quality. Total recordable injury rate (“TRIR”) was selected as a plan metric to gauge alignment of words and actions, with a weight of 10% of the 2022 Bonus Program. Consistent with industry and regulatory +standards, the calculation of TRIR is based on the number of recordable safety incidents per 200,000 hours worked. The Compensation Committee also selected diesel reduction based on a measurement of the reduction in diesel consumed as a result of natural gas substitution for Dynamic Gas Blending (“DGB”) equipment, which we believe promotes efficient use of resources and the minimization of carbon emissions. Diesel reduction has a weight of 10% of the 2022 Bonus Program. +10 % +Weighting +Innovation & Continuous Improvement Goal +We believe a culture that embraces innovation and continuous improvement begins with leadership, and we are committed to empowering employees to ask questions and share ideas regarding new approaches to that challenges that we and our customers face. Service Efficiency on Integrated Operations, which we defined as (pump time)/(pump time + transition time + NEX NPT all services), was selected as a metric by the Compensation +Committee to reward operating efficiency and the mitigation of environmental externalities. +40 +Financial: Annual Adjusted EBITDA +Weight +Achievement Level +Adjusted +EBITDA (1) +Funding +Level (5) +Actual +Performance +50% +Threshold +$251M +70% +$650M +Target +$314M +100% +Stretch Level 1 +$345M +150% +Stretch Level 2 +$377M +200% +Financial: Free Cash Flow +Weight +Achievement Level +Free Cash +Flow (2) +Funding +Level (5) +Actual +Performance +20% +Threshold +$99M +70% +$268M +Target +$124M +100% +Stretch Level 1 +$136M +150% +Stretch Level 2 +$149M +200% +ESG: Total Recordable Incident Rate +Weight +Achievement Level +TRIR +(subject to +adjustment +from Chief +Executive +Officer in +cases of +fatalities) +Funding +Level (5) +Actual +Performance +10% +Threshold +0.6 +50% +0.59 +Target +0.5 +100% +Stretch Level 1 +0.4 +150% +Stretch Level 2 +0.3 +200% +ESG: Diesel Reduction (3) +Weight +Achievement Level +Measurement +(gallons) +Funding +Level (5) +Actual +Performance +10% +Threshold +28.0M +50% +37.0M +Target +35.0M +100% +Stretch Level 1 +38.5M +150% +Stretch Level 2 +42.0M +200% +Performance: Innovation & Continuous Improvement +Weight +Achievement Level +Service +Efficiency (4) +Funding +Level (5) +Actual +Performance +10% +Threshold +74% +50% +76% +Target +76% +100% +Stretch Level 1 +78% +150% +Stretch Level 2 +80% +200% +41 +% of Target Bonus Amount Earned +Adjusted +EBITDA +Free +Cash +Flow +TRIR +Diesel +Reduction +Innovation & +Continuous +Improvement +Total +Weight +50.0 +% +20.0 +% +10.0 +% +10.0 +% +10.0 +% +100.0 +% +Attainment +100.0 +% +40.0 +% +6.0 +% +12.9 +% +10.0 +% +168.9 +% +(1) +Adjusted EBITDA means the Company’s earnings (net income (loss)) before interest, income taxes, depreciation and amortization, further adjusted to eliminate the effects of items management does not consider in assessing ongoing performance as reflected in the Company’s audited financial statement for the performance period. Adjusted EBITDA is calculated after taking into consideration the bonus payments, which include adjustments reviewed and approved by the Compensation Committee (e.g., consideration for items like one-time expense for M&A transactions, commissioning, etc.). +(2) +Free Cash Flow means cash low from operating activities less payments for property, plant and equipment, including interest expense. Free Cash Flow excludes any cash payments related to the earnout payable pursuant to the acquisition of Alamo. “Net Capex” means the purchase of property, plant and equipment less cash proceeds from the sale of assets. +(3) +Diesel Reduction is based on a measurement of the reduction in diesel consumed as a result of natural gas substitution for DGB equipment, excluding fleets obtained from our acquisition of Alamo. +(4) +Service Efficiency on Integrated Operations is calculated as (pump time)/(pump time + transition time + NEX NPT all services). +(5) +Funding level increases on a linear basis from Threshold through Target and beyond Stretch level points, pro-rated for interim steps. +Based on the formula provided above, each NEO received annual bonuses based on 168.9% of target other than Mr. McKie whose bonus was determined pursuant to his Separation Agreement. The Compensation Committee believes that these above-target payouts are appropriate and reflective of the executive management team’s vision and leadership, as reflected in the Company’s results during 2022. +The amount compensation received by each NEO pursuant to the 2022 Bonus Program is set forth below. +Name +2022 Annual +Incentive Bonus +Program Payout +($) +Robert W. Drummond +2,111,250 +Kenneth H. Pucheu +802,275 +Kevin M. McDonald +844,500 +Matthew R. Gillard +802,275 +Oladipo Iluyomade +229,736 +Michael J. McKie +250,000 +2022 Long-Term Incentives +Annual Long-Term Incentive Program +Long-term equity awards provide a strong link between executive pay and stockholder interests. Our NEOs are eligible to receive long-term equity awards under the Company’s Equity and Incentive Award Plan. For fiscal year 2022, equity awards were granted as a combination of RSU awards and PU awards. Mr. Drummond also received a PSU award. +• +RSU awards are intended to provide the NEOs with the economic equivalent of a direct ownership interest in the Company during the vesting period and provide the Company with significant retention security regardless of post-grant stock price volatility. +42 +• +PSU awards are performance-based awards that provide meaningful incentives for management to execute on the longer-term financial and strategic growth goals that drive stockholder value creation. These awards only vest if relative total shareholder return (“TSR”) goals established by the Compensation Committee are achieved over a multi-year period. Mr. Drummond received a grant of PSUs as part of his performance award. No other NEO received a grant of PSUs for fiscal 2022. +• +PU awards are designed to function exactly like PSUs, except that they are payable solely in cash, and therefore are subject to the maximum payout amount of $5,000,000 pursuant to Section 2.3 of the NexTier Oilfield Solutions Inc. Equity and Incentive Award Plan. +For fiscal year 2022, the Compensation Committee reviewed market data provided by CAP in determining the targeted award levels for each of our NEOs. The table below shows the number of long-term incentive awards granted for fiscal year 2022 for each of the NEOs: +Name +Restricted Stock +Unit Awards +Performance +Restricted Stock +Unit Awards (1) +Performance +Unit Awards (2) +Total Grant Date +Value ($) (3) +Robert W. Drummond +610,596 +271,375 +339,219 +7,213,839 +Kenneth H. Pucheu +162,826 +— +162,826 +1,797,599 +Kevin M. McDonald +149,257 +— +149,256 +1,676,150 +Matthew R. Gillard +162,826 +— +162,825 +1,797,593 +Oladipo Iluyomade +27,138 +— +27,137 +376,124 +Michael J. McKie +39,576 +— +39,575 +530,707 +(1) +Due to an Equity Plan limit of $5,000,000 maximum payout of performance awards solely in cash in any calendar year, Mr. Drummond was granted a portion of his performance awards as PSUs. +(2) +These awards are payable solely in cash. +(3) +Reflects the grant date fair value calculated at target performance in accordance with FASB ASC 718. +RSUs will vest ratably on the first three anniversaries of the date of grant, in each case contingent upon the continued employment of the NEO through each vesting date. +PSUs and PUs will vest based upon performance over a full three-year performance period (January 1, 2022 – December 31, 2024), contingent upon the continued employment of the NEO through December 31, 2024. +PSU vesting is conditioned upon our TSR relative to the following group of companies (“Performance Peers”) whom we consider to be direct competitors for business and investor dollars: +Performance Peer Group +KLX Energy Services Holdings, Inc. +Patterson-UTI Energy, Inc. +RPC, Inc. +Liberty Oilfield Services Inc. +PHLX Oil Service Sector Index +Solaris Oilfield Infrastructure, Inc. +Nine Energy Service, Inc. +ProPetro Holding Corp +U.S. Well Services, Inc. +The Compensation Committee reserves the right to adjust or change the group of Performance Peers in good faith as circumstances warrant during the performance period, provided any such change does not result in an arbitrary increase or decrease in the amount payable under such awards. +The Performance Peers, as a group, differ from our compensation benchmarking peer group because not all of our competitors for talent in the oilfield services industry are direct competitors for business, and some of the Performance Peers do not make enough of their compensation data publicly available for the purposes of benchmarking compensation opportunities. +43 +PSU and PU recipients may earn between 0% and 200% of the number of performance units granted based upon the following performance payout schedule: +Performance Level +Relative TSR +Rank +Percent of Target +Units Earned +Maximum +80th Percentile or +≥ ranked 2nd +200% +Target +50th Percentile +100% +Threshold +20th Percentile +40% +Below Threshold +Below 20th Percentile +0% +If NexTier’s annualized TSR for the applicable performance period is negative, the amount of PSU and PUs earned is capped at Target payout of 100%. +The RSU, PSU and PU award agreements all contain provisions that would accelerate vesting with respect to all or some portion of the units awarded therein upon the occurrence of certain events or combinations of events, including termination without Cause, for Good Reason, a change in control, death and/or disability. +PSU Vesting and Performance Achievement (2020-2022 Awards) +On January 2, 2020, the Compensation Committee granted PSUs (the “2020 PSUs”) to our then current NEOs, which vested in two equal tranches based on performance over a three-year performance period (January 1, 2020 – December 31, 2022). Vesting of the 2020 PSUs was conditioned on NexTier’s TSR relative to its peer group of companies with the amount earned ranging from 0% to 200% of the number of 2020 PSUs granted. +The first tranche of 50% of the 2020 PSUs vested on January 5, 2022 , based on NexTier’s relative TSR performance over the first two years of the performance period (January 1, 2020 – December 31, 2021). Based on NexTier’s TSR performance, which was negative during the performance period, the payout for the first tranche of the 2020 PSU award was capped at Target payout of 100%. +The second tranche of the 2020 PSUs vested on January 5, 2023, based on NexTier’s relative TSR performance over the full three-year performance period ended December 31, 2022, in accordance with the performance payout schedule set forth below; provided that , if NexTier’s annualized TSR for the three-year performance period was negative, the amount of 2020 PSUs earned would have been capped at Target payout of 100%. +Performance Level +Relative TSR +Rank +Percent of Target +Units Earned +Maximum +80th Percentile or +≥ ranked 2nd +200% +Target +50th Percentile +100% +Threshold +20th Percentile +40% +Below Threshold +Below 20th Percentile +0% +Based on NexTier’s TSR performance relative to its performance peer group for the performance period ended December 31, 2022 in the 70th percentile, the second tranche of the 2020 PSUs paid out at 167% of Target to the following NEOs: +Name +Target Number of +2020 PSUs +Number of PSUs +Earned +Robert W. Drummond +224,055 +374,172 +Kenneth H. Pucheu +37,343 +62,363 +Kevin M. McDonald +61,429 +102,586 +44 +Executive Employment Agreements +Each NEO, except for Messrs. Gillard and Iluyomade, has entered into an Executive Employment Agreement with the Company. The Executive Employment Agreements with Messrs. McDonald and Drummond each provide for a one-year term that automatically renews for additional one-year period unless either party provides written notice at least 90 days prior to the end of the then term. Mr. Pucheu’s Second Amended and Restated Employment Agreement, effective January 11, 2021, does not provide for an initial term or automatic renewal. +Pursuant to the Executive Employment Agreements with our currently employed NEOs, in the event of a termination of the NEO’s employment by us without Cause (as defined below) or, in the case of Messrs. Drummond and McDonald, due to our non-renewal of the applicable Executive Employment Agreement, or by Messrs. Drummond and McDonald, for Good Reason (as defined below) , subject to the execution of a release, the applicable NEO will be entitled to the following severance benefits: +● +Severance payments equal to: +• +for Messrs. Drummond and McDonald, two times (or three times if the termination occurs within the period beginning 30 days prior to a change in control and ending on the two-year anniversary of the change in control) the sum of his annual base salary and his target bonus for the year in which the termination occurs, payable over two years in equal monthly installments, beginning on the 60th day following the termination date; +• +for Mr. Pucheu, one and one-half times (or two times if the termination occurs within the period beginning on the date of change in control and ending on the two-year anniversary of the change in control) of the sum of his annual salary plus target bonus on the termination date, payable over one year in equal monthly installments, beginning on the 60th day following the termination date; +● +for Mr. Pucheu, a pro-rated annual bonus for the year of termination (or an amount equal to his target annual bonus for the year of termination if the termination occurs within the period beginning on the date of a change in control and ending on the one-year anniversary of the change in control) and for Messrs. Drummond and McDonald, an amount equal to his target annual bonus for the year of termination; +● +payments with respect to the cost of continuation of coverage of group health coverage: +• +for Mr. Drummond (upon any termination other than death or voluntarily without Good Reason), and Mr. McDonald, for up to 18 months (36 months if within the period beginning 30 days prior to a change in control and ending on the two-year anniversary of the change in control); and +• +for Mr. Pucheu, for up to 12 months (18 months if within the period beginning on the date of a change in control and ending on the one-year anniversary of the change in control). +In addition, pursuant to the Executive Employment Agreements, in the event of the NEO’s termination of employment due to death or disability, subject to the execution of a release, the NEO’s estate, as applicable, will be entitled to: +• +for Messrs. Drummond and McDonald, an amount equal to his target annual bonus for such year, for Mr. Pucheu, a pro-rated annual bonus for the year of termination; and +• +a pro-rated payment for unused personal time. +For purposes of the Executive Employment Agreements, “Cause” generally means: (i) conviction or plea of no contest to a felony or any crime involving dishonesty or theft; (ii) conduct in connection with employment duties or responsibilities that is fraudulent or unlawful; (iii) conduct in connection with employment duties or responsibilities that is grossly negligent and which has a materially adverse effect on us or our business; (iv) willful misconduct or contravention of specific lawful directions related to a material duty or responsibility directed to be undertaken from our Board; (v) material breach of obligations under the applicable Executive Employment Agreement, including but not limited to breach of restrictive covenants set forth therein; (vi) any acts of dishonesty resulting or intending to result in personal gain or enrichment at our expense; or (vii) knowing failure to comply with a material policy. +45 +For purposes of the Executive Employment Agreements, as applicable, “Good Reason” generally means: +• +our failure to cure a material breach of our obligations under the applicable Executive Employment Agreement (in the case of Mr. Drummond, a material breach by the Company of its obligations under his Executive Employment Agreement); +• +a material diminution of duties, position or title; +• +a material reduction in base salary (in the case of Mr. Drummond, other than as a result of a less-than- 10% reduction that is part of an across-the-board reduction that is applicable to all other senior executives of the Company); +• +a material reduction in the budget over which the Executive retains authority; or +• +a change in office location that increases the NEO’s commute from his principal residence by more than 50 miles. +Executives Without Employment Agreements +On August 9, 2021, the Company appointed Matthew R. Gillard as Executive Vice President, Chief Operating Officer. In connection with his appointment, he was entitled to (i) an annual base salary of $425,000; (ii) eligibility to participate in the Company’s management bonus program with an initial target of 100% eligible earnings; (iii) eligibility to participate in the Company’s long-term incentive program, and (iv) a one-time grant of restricted stock under the Company’s Equity and Incentive Award Plan in the amount of 100,000 restricted stock units that will vest pro-rata over three years from the grant date. +On January 8, 2022, the Company appointed Oladipo Iluyomade as Vice President and Chief Accounting Officer. In connection with his appointment, he was entitled to (i) an annual base salary of $250,000; (ii) eligibility to participate in the Company’s management bonus program with an initial target of 55% eligible earnings; and (iii) continued eligibility to participate in the Company’s long-term incentive program. +Messrs. Gillard and Iluyomade are also eligible to participate in perks, retirement and welfare benefits plans, programs and arrangements generally available to executive officers subject, to eligibility requirements (including the Leadership Severance Program described below). +Leadership Severance Program +On February 17, 2022, the Compensation Committee approved a leadership severance plan, which provides for severance rights described below for executives without employment agreements, and a continuing award program for qualified retirees, which provides continued vesting for long-term and short-term incentive awards upon retirement of eligible retirees. Both plans became effective in 2022. +• +Leadership Severance Program . The Leadership Severance Program (the “Severance Program”) provides severance commitments to its NEOs, as well as other officers and vice presidents, who are not covered under employment agreements with the Company. Pursuant to the Severance Program, NEOs will be eligible for one and one-half times (or two times if the termination occurs within the period beginning on the date of change in control and ending on the two-year anniversary of the change in control (the “Protected Period”)) their annual base salary and target short-term incentive award payable in 12 equal installments and 12 months (or 18 if the termination occurs within the Protected Period) of subsidized COBRA following a termination without Cause or for Good Reason (each as defined in the Severance Program). Further, the NEOs will be eligible for a prorated (or target if the termination occurs within the Protected Period) short-term incentive award for the year of termination and will also be eligible to fully vest in any RSUs and vest in any PSUs based on actual performance (or better of actual performance and target if the termination occurs within the Protected Period). All Severance Program benefits are subject to an eligible employee’s timely execution and non-revocation of a release and waiver agreement in favor of the Company and are subject to the Company’s Compensation Recovery Policy. +46 +• +Continuing Award Program for Qualified Retirees . The Continuing Award Program provides continued vesting for long-term and short-term incentive awards upon the retirement of eligible employees (i.e., vice president, senior vice president, or executive vice president) who are at least age 55 and who have at least five years of service with Company (with at least three of the most recent years being with the Company), provided that, their combined age and years of service equals 65 (whether or not the executive has an employment agreement). Performance metrics will continue to apply and payment or settlement of any outstanding awards will occur at the same time and on the same conditions as if the employee had not retired. The treatment of an employee’s outstanding awards under the Continuing Award Program as described above is subject to the employee’s execution of a release of claims against the Company. In addition, eligible employees will receive the benefits of the program upon death, disability or termination without cause. +Other Practices, Policies and Guidelines +Claw Back Policy +On February 23, 2017, our Board adopted the Company’s Compensation Recovery Policy (the “Claw Back Policy”). Pursuant to the Claw Back Policy, in the event of a revision and reissuance of a financial statement previously issued by the Company (an “Accounting Restatement”), our Board in its discretion may determine that each officer will be required to repay all or a portion of the amount of incentive-based compensation received by an officer of the Company that exceeds the amount of such compensation that such officer otherwise would been received determined based upon the Accounting Restatement. In the event that any such Accounting Restatement is required due to material non-compliance by the Company with any financial reporting requirement under the securities laws, then each such executive officer of the Company will be obligated to repay the amount of incentive-based compensation received by such executive officer that exceeds the amount of such compensation that the executive officer otherwise would have received determined based upon the Accounting Restatement. The Claw Back Policy applies to any incentive-based compensation received by an officer of the Company during the three completed fiscal years of the Company immediately preceding the date of the applicable Accounting Restatement. For purposes of the Claw Back Policy, “incentive-based compensation” means any compensation (whether in cash, common stock, or otherwise) to an officer of the Company, that is granted, earned, vested or for which the amount is determined, wholly or in part, on the attainment by the Company of (i) any measure that is determined and presented in accordance with the accounting principles used in preparing the Company’s financial statements, (ii) any measure that is derived wholly or in part from such measures, or (iii) the Company’s stock price and total stockholder return. +Stock Ownership Guidelines +Our Board has implemented stock ownership guidelines for our non-employee directors and senior executive officers to foster equity ownership and align the interests of our non-employee directors and senior executive officers with our stockholders. Within five years of the later of (a) the date a senior executive officer commences employment with the Company in such position and (b) June 16, 2018, our Chief Executive Officer is expected to beneficially own a number of shares at least equal to five times his base salary and all other executive officers are expected to beneficially own a number of shares at least equal to two times their base salary. Similarly, within five years of the later of (a) the date a non-employee director commences service with the Company in such position (including as a result of the determination by the Board that the member has become a non-employee director) and (b) June 16, 2018, our outside directors are expected to beneficially own a number of shares at least equal to 500% of their annual director’s fee. In the event that a non-employee director or senior executive officer fails to comply with the stock ownership guidelines following the end of the applicable transition period, then until such director or officer are required to hold any shares received from equity grants until such director or executive officer has met the applicable ownership guideline. Each of our executive officers and directors was in compliance with such guidelines, as of the record date. +47 +Anti-Hedging Policy +We prohibit the NEOs and other executives from engaging in transactions designed to insulate them from changes in the Company’s stock price. Therefore, the Company has an anti-hedging policy that prohibits our NEOs from entering into transactions that include (without limitation) equity swaps or short sales of our securities, margin accounts or pledges of our securities, and hedges or monetization transactions involving our securities that are designed to hedge or offset any decrease in the market value of the Company’s securities. In addition, the purchase or sale of puts, calls, options, or other derivative securities based on the Company’s securities is prohibited under this policy, and borrowing against any account in which our securities are held is prohibited. +Benefits & Perquisites +Our NEOs also generally participate in our other benefit plans on the same terms as all of our other employees. These plans include employee benefit plans maintained by the Company, including the 401(k) program, the medical insurance and reimbursement program, the group term life insurance program, and the group disability program. In addition, each of the NEOs receives an automobile allowance. We do not provide any pension benefits, nonqualified defined contribution, or other deferred compensation plans for our NEOs. +2022 Risk Assessment +Each year, the Company performs a detailed risk analysis of each of its compensation programs. If warranted, the Compensation Committee will recommend changes to address concerns or considerations raised in the risk review process. Changes may be recommended for the program design or its oversight and administration in order to mitigate unreasonable risk, if any is determined to exist. The Compensation Committee has concluded that the Company’s compensation arrangements do not encourage any employees to take unnecessary and excessive risks. We do not believe that any risks arising from our compensation policies and practices are reasonably likely to have a material adverse effect on the Company. +Compensation Committee Interlocks and Insider Participation +None of the members of the Compensation Committee is or has at any time during the past year been an officer or employee of ours. None of our executive officers serve as a member of the Compensation Committee or board of directors of any other entity that has an executive officer serving as a member of our Board or Compensation Committee. +Impact of Tax and Accounting +We regularly consider the various tax and accounting implications of our compensation plans. When determining the amount of long-term incentives and equity grants to executives and employees, the compensation costs associated with the grants are reviewed, as required by the Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“FASB ASC 718”). +Section 162(m) of the Internal Revenue Code (the “Code”) generally prohibits any publicly held corporation from taking a federal income tax deduction for compensation paid in excess of $1 million in any taxable year to the Chief Executive Officer, the Chief Financial Officer and the next three highest compensated officers for such year and any employee who was covered under Section 162(m) of the Code in a prior year. The Compensation Committee believes that it is important for it to retain maximum flexibility in designing compensation programs that are in the best interest of the Company and its stockholders. Therefore, the Compensation Committee, while considering tax deductibility as a factor in determining compensation, may not limit compensation to $1 million in any taxable year if it believes that the compensation is commensurate with the performance of the covered employee. +48 +Executive Compensation Tables +Summary Compensation Table +Name and +Principal Position +Year +Salary +($) +Bonus +($) (1) +Stock +Awards +($) (2) +Non-Equity +Incentive Plan +Compensation +($) (3) +All Other +Compensation +($) (4) +Total +($) (5) +Robert W. Drummond +President & Chief Executive Officer +2022 +1,000,000 +— +7,213,744 +2,111,250 +34,623 +10,359,617 +2021 +940,726 +— +4,999,999 +1,164,585 +21,681 +7,126,991 +2020 +896,154 +— +6,469,226 +560,096 +23,416 +7,948,892 +Kenneth H. Pucheu +Executive Vice President & Chief Financial Officer +2022 +471,986 +— +1,798,219 +802,275 +34,623 +3,107,103 +2021 +399,808 +— +1,200,000 +395,959 +22,270 +2,018,037 +2020 +348,366 +100,000 +1,131,111 +200,000 +16,509 +1,795,986 +Kevin M. McDonald +Executive Vice President, Chief Administrative Officer, General Counsel & Corporate Secretary +2022 +498,493 +— +1,676,802 +844,500 +34,623 +3,054,418 +2021 +446,845 +— +1,169,999 +442,542 +21,681 +2,081,067 +2020 +425,673 +125,000 +1,774,180 +212,837 +18,646 +2,431,336 +Matthew R. Gillard +Executive Vice President & Chief Operating Officer +2022 +471,986 +— +1,798,219 +802,275 +34,302 +3,106,782 +2021 +168,720 +— +349,000 +157,191 +8,312 +683,223 +Oladipo Iluyomade +Vice President & Chief Accounting Officer +2022 +248,658 +— +376,192 +229,736 +22,674 +877,260 +Joe McKie +President– Alamo Pressure Pumping +2022 +500,006 +— +530,721 +250,000 +13,925 +1,294,652 +(1) +For 2020, the amount for Mr. Pucheu reflects the payment of a special retention bonus granted in connection with the C&J Merger. For more information, see the section entitled “Compensation Discussion & Analysis — Retention Bonuses” in our 2020 definitive proxy statement filed with the SEC on April 21, 2021. +(2) +This column reflects aggregate grant date fair value of RSUs, PSUs and PUs calculated in accordance with FASB ASC 718, assuming target performance. Please see “Note 12 — Stock-Based Compensation” in our audited consolidated and combined financial statements in our annual reports on Form 10-K for the years ended December 31, 2022, December 31, 2021 and December 31, 2020 for a discussion of the assumptions used in the valuation of such awards. The grant date fair value, assuming the highest level of performance conditions were achieved for the 2022 PSUs and PUs, are as follows: Messrs. Drummond — $7,845,264; Pucheu — $1,841,174; McDonald — $1,744,614; Gillard — $1,841,174, Iluyomade — $459,836 and McKie — $634,812. +(3) +Represents amounts paid under the Company’s annual cash bonus program. +(4) +A detailed breakdown of “All Other Compensation” for 2022 is provided in the below table. +Name +Year +Subsidized +Life and +Disability +($) +Automobile +Allowance +($) +401(k) Match +($) +Total +($) +2022 +2,023 +20,400 +12,200 +34,623 +Robert W. Drummond +2021 +889 +20,792 +— +21,681 +2020 +2,064 +11,377 +9,975 +23,416 +2022 +2,023 +20,400 +12,200 +34,623 +Kenneth H. Pucheu +2021 +1,478 +20,792 +— +22,270 +2020 +1,490 +11,377 +3,642 +16,509 +2022 +2,023 +20,400 +12,200 +34,623 +Kevin M. McDonald +2021 +889 +20,792 +— +21,681 +2020 +1,834 +11,377 +5,435 +18,646 +Matthew R. Gillard +2022 +1,702 +20,400 +12,200 +34,302 +2021 +466 +7,846 +— +8,312 +Oladipo Iluyomade +2022 +1,582 +9,000 +12,092 +22,674 +Michael J. McKie +2022 +1,725 +— +12,200 +13,925 +49 +Grants of Plan Based Awards in Fiscal Year 2022 +The following table provides information about all plan-based awards granted to each NEO in 2022. The awards listed in the table were granted under the NexTier Oilfield Solutions Inc. Equity and Incentive Award Plan and are described in more detail in “Compensation Discussion and Analysis.” +Estimated Future Payouts Under +Non-Equity Incentive Plan +Awards (1) +Estimated Future Payouts +Under Equity Incentive Plan +Awards (2) +All +Other +Stock +Awards: +Number of +Shares +of Stock +or Units +(#) (3) +Grant +Date +Fair +Value +of Stock +Awards +($) (4) +Name +Type of +Award +Grant +Date +Threshold +($) +Target +($) +Maximum +($) +Threshold +(#) +Target +(#) +Maximum +(#) +Robert W. Drummond +Cash Bonus +— +800,000 +1,250,000 +2,500,000 +— +— +— +— +— +PU +1/3/2022 +— +— +— +135,688 +339,218 +678,438 +— +1,404,272 +PSU +1/3/2022 +— +— +— +108,550 +271,375 +542,750 +— +2,518,360 +RSU +1/3/2022 +— +— +— +— +— +— +610,596 +3,291,112 +Kenny H. Pucheu +Cash Bonus +— +304,000 +475,000 +950,000 +— +— +— +— +— +PU +1/3/2022 +— +— +— +65,130 +162,826 +325,652 +— +920,587 +RSU +1/3/2022 +— +— +— +— +— +— +162,826 +877,632 +Kevin M. McDonald +Cash Bonus +— +320,000 +500,000 +1,000,000 +— +— +— +— +— +PU +1/3/2022 +— +— +— +59,702 +149,256 +298,512 +— +872,307 +RSU +1/3/2022 +— +— +— +— +— +— +149,257 +804,495 +Matthew R. Gillard +Cash Bonus +— +304,000 +475,000 +950,000 +— +— +— +— +— +PU +1/3/2022 +— +— +— +65,130 +162,825 +325,650 +— +920,587 +RSU +1/3/2022 +— +— +— +— +— +— +162,826 +877,632 +Oladipo Iluyomade +Cash Bonus +— +88,000 +137,500 +275,000 +— +— +— +— +— +PU +1/3/2022 +— +— +— +10,855 +27,137 +54,274 +— +229,918 +RSU +1/3/2022 +— +— +— +— +— +— +27,138 +146,274 +Michael J. McKie +Cash Bonus +— +160,000 +250,000 +500,000 +— +— +— +— +— +PU +1/3/2022 +— +— +— +15,830 +39,575 +79,150 +— +317,406 +RSU +1/3/2022 +— +— +— +— +— +— +39,576 +213,315 +(1) +The amounts in these columns represent the threshold, target and maximum amount of annual cash incentive awards the NEO was potentially entitled to receive based on the achievement of performance goals for fiscal year 2022 under the 2022 Bonus Program as more fully described in “Compensation Discussion and Analysis—2022 Annual Bonus Program.” If the threshold performance level was not met, the pool funding level would be 0%. The amounts actually paid are reported in the Non-Equity Incentive Plan column of the Summary Compensation table. +(2) +The amounts shown in these columns represent the potential number of units associated with the payout PUs for each NEO and the additional grant of PSUs for Mr. Drummond. PUs are payable solely in cash. The potential payouts are performance-based and therefore at risk. If earned, the units are converted to a greater or lesser number of units based on the attainment of relative TSR rank over the performance period, as described in “Compensation Discussion and Analysis—2022 Long-Term Incentives.” RSUs, if earned are paid in stock and PUs, if earned, are paid in cash. +(3) +Represents shares underlying time-based RSUs, which vest ratably on each of the first three anniversaries of the date of grant. +(4) +The amounts shown in this column reflect the grant date fair value of the awards as calculated in accordance with FASB ASC 718. Assumptions used in the valuation of equity-based awards are discussed in “Note 12—Stock-Based Compensation” in our audited consolidated and combined financial statements included in our annual report on Form 10-K for the year ended December 31, 2022. With respect to PSUs and PUs the grant date value assumes target performance. +50 +Outstanding Equity Awards at Fiscal Year End 2022 +Option Awards +Stock Unit Awards +Name +Number of +securities +underlying +unexercised +options (#) +exercisable +Number of +securities +underlying +unexercised +options (#) +unexercisable +Equity +incentive +plan +awards: +number of +securities +underlying +unexercised +unearned +options (#) +Option +exercise +price +($) +Option +expiration +date +Number +of +shares +or units +of stock +that +have not +vested +(#) (1) +Market +Value +of +shares +or units +of stock +that +have not +vested +($) (2) +Equity +incentive +plan +awards: +number of +unearned +shares, +units or +other +rights that +have not +vested +(#) (3) +Equity +incentive +plan +awards: +market or +payout +value of +unearned +shares, +units or +other +rights that +have not +vested +($) (2) +(a) +Grant Date +(b) +(c) +(d) +(e) +(f) +(g) +(h) +(i) +(j) +Robert W. Drummond +1/2/2020 +— +— +— +— +— +147,876 +1,366,374 +224,055 +(4) +2,070,268 +1/4/2021 +— +— +— +— +— +659,882 +6,097,310 +999,821 +(5) +9,238,346 +1/3/2022 +— +— +— +— +— +610,596 +5,641,907 +610,594 +(6) +5,641,889 +Kenneth H. Pucheu +4/5/2018 +7,837 +— +— +15.45 +4/5/2024 +— +— +— +— +1/2/2020 +— +— +— +— +— +24,646 +227,729 +37,343 +(4) +345,049 +1/4/2021 +— +— +— +— +— +158,372 +1,463,357 +239,957 +(5) +2,217,203 +1/3/2022 +— +— +— +— +— +162,826 +1,504,512 +162,825 +(6) +1,504,532 +Kevin M. McDonald +4/3/2017 +80,702 +— +— +19.00 +4/3/2023 +— +— +— +— +3/1/2018 +48,800 +— +— +15.63 +3/2/2024 +— +— +— +— +8/6/2018 +11,885 +— +— +14.17 +8/6/2024 +— +— +— +— +1/2/2020 +— +— +— +— +— +40,543 +374,617 +61,429 +(4) +567,603 +1/4/2021 +— +— +— +— +— +154,412 +1,426,767 +233,958 +(5) +2,161,772 +1/3/2022 +— +— +— +— +— +149,257 +1,379,135 +149,256 +(6) +1,379,125 +Matthew R. Gillard +8/16/2021 +— +— +— +— +— +66,000 +609,840 +— +— +1/3/2022 +— +— +— +— +— +162,826 +1,504,512 +162,825 +(6) +1,504,503 +Oladipo Iluyomade +2/3/2020 +— +— +— +— +— +3,696 +34,151 +— +— +1/25/2021 +— +— +— +— +— +13,662 +126,237 +— +— +1/3/2022 +— +— +— +— +— +27,138 +250,755 +27,137 +(6) +250,746 +Michael J. McKie +8/31/2021 +— +— +— +— +— +13,761 +127,152 +1/3/2022 +— +— +— +— +— +39,576 +365,682 +39,575 +(6) +365,673 +(1) +Awards vest ratably over three years from the date of grant. +(2) +The values represented in this column have been calculated by multiplying $9.24, the closing price of our common stock on December 30, 2022, by the number of unvested shares of RSUs or PSUs and the number of units of PUs. PUs are payable solely in cash. +(3) +Awards are reflected assuming target performance. +(4) +Share-based TSR PUs granted in 2020 vest 50% based upon performance over the two years from the date of grant (January 1, 2020 to December 31, 2021) and vest 50% based upon performance after the full three year period (January 1, 2020 to December 31, 2022). Such PSU awards will vest upon certification by the Compensation Committee of the level of achievement of the performance conditions during the performance measurement period. +(5) +Share-based TSR PUs granted in 2021 vest based upon performance over the three year period from the date of grant (January 1, 2021 to December 31, 2023). Such PSU awards will vest upon certification by the Compensation Committee of the level of achievement of the performance conditions during the performance measurement period. +(6) +For Mr. Drummond, includes 339,219 TSR PUs (payable solely in cash) and 271,375 PSUs granted in 2022 vest based upon performance over the three-year period from the date of grant (January 1, 2022 to December 31, 2024). For all other NEOs, includes only PUs which vest based upon performance over the three-year period from the date of grant (January 1, 2022 to December 31, 2024). PU and PSU awards will vest upon certification by the Compensation Committee of the level of achievement of the performance conditions during the performance measurement period. +51 +Option Exercises and Stock Vested in Fiscal Year 2022 +The following table provides information about option awards and stock units that vested, and the value realized on exercise and vesting by our NEOs during 2022. +Option Awards +Stock Unit Awards +Name +Number of +shares acquired +on exercise (#) +Value realized +on exercise +($) +Number of +shares acquired +on vesting (#) +Value realized +on vesting +($) (1) +Robert W. Drummond +— +— +1,092,866 +5,429,135 +Kenneth H. Pucheu +— +— +227,007 +1,144,598 +Kevin M. McDonald +— +— +288,725 +1,440,837 +Matthew R. Gillard +— +— +34,000 +291,040 +Oladipo Iluyomade +— +— +10,736 +54,164 +Michael J. McKie +— +— +7,089 +66,424 +(1) +The value in this column for the NEOs’ RSUs and PSUs that vested during 2022 has been calculated by multiplying the per share fair market value of the underlying shares on the vesting date by the number of shares that vested. +52 +Potential Payments Upon Termination or Change in Control +The tables below describe and estimate the amounts and benefits that our NEOs (other than Mr. McKie) would have been entitled to receive upon a termination of their employment in certain circumstances or, if applicable, upon a change in control, assuming such events occurred as of December 30, 2022, the last trading day of fiscal year 2022. The estimated payments are not necessarily indicative of the actual amounts any of our NEOs would have received in such circumstances. Mr. McKie’s employment term ended effective February 28, 2023, and pursuant to a severance agreement executed between Mr. McKie and the Company, Mr. McKie received (i) his 2022 annual bonus paid out at target performance in the amount of $250,000 (ii) all unvested RSUs were vested (39,881 RSUs valued at $368,500) and (iii) all unvested PUs were vested at target performance (a total of 39,575 PUs valued at $365,673). The RSUs and PUs were valued at a price per share for our common stock of $9.24, the closing price on December 30, 2022 (the “Year-End Closing Price”). The tables exclude compensation amounts accrued through December 31, 2022, that would be paid in the normal course of continued employment, such as accrued but unpaid salary, payment for accrued but unused vacation and vested account balances under our retirement plans that are generally available to all of our salaried employees. Where applicable, the information in the table uses the Year-End Closing Price. Generally, payment of severance benefits to a NEO following termination of employment is subject to the NEO’s timely execution and non-revocation of a release of claims in favor of the Company. +Robert W. Drummond +Payments and Benefits +Death or +Disability +For Cause or +Without +Good +Reason +Without +Cause or for +Good Reason, +No Change in +Control +Without +Cause or for +Good Reason, +Upon or +Following +Change in +Control +Change in +Control, No +Termination of +Employment +Cash Severance (1) +— +— +$ +4,500,000 +$ +6,750,000 +— +Annual Bonus (2) +$ +1,250,000 +— +$ +1,250,000 +$ +1,250,000 +— +Long-Term Incentives (by Grant Date) (3)(4)(5) +01/02/2020 PSU +$ +2,070,268 +— +$ +2,070,268 +$ +2,070,268 +— +01/02/2020 RSU +$ +1,366,374 +— +$ +1,366,374 +$ +1,366,374 +— +01/04/2021 PSU +$ +9,238,346 +— +$ +9,238,346 +$ +9,238,346 +— +01/04/2021 RSU +$ +6,097,310 +— +$ +6,097,310 +$ +6,097,310 +— +01/03/2022 PSU +$ +2,507,505 +— +$ +2,507,505 +$ +2,507,505 +— +01/03/2022 PU +$ +3,134,384 +— +$ +3,134,384 +$ +3,134,384 +— +01/03/2022 RSU +$ +5,641,907 +— +$ +5,641,907 +$ +5,641,907 +— +Health Benefits (6) +— +— +$ +25,798 +$ +51,595 +— +Total +$ +32,693,166 +— +$ +35,334,577 +$ +37,610,374 +— +(1) +Reflects severance payments in the event of a termination of Mr. Drummond’s employment without Cause or for Good Reason, in an amount equal to two times (or three times if the termination occurs within the period beginning 30 days prior to a change in control and ending on the two-year anniversary of the change in control) the sum of (i) his annual base salary, and (ii) his target bonus for the year his termination occurs, payable over the 24-month period (or 36 months if the termination occurs within the period beginning 30 days prior to a change in control and ending on the two-year anniversary of the change in control) following his termination. +(2) +Reflects the target annual bonus payable to Mr. Drummond for fiscal year 2022 under our 2022 Bonus Program. +(3) +Pursuant to his RSU award, Mr. Drummond’s unvested RSUs will become fully vested in the event of death, disability, or a termination of his employment without Cause or for Good Reason. +(4) +Pursuant to his PSU awards, Mr. Drummond’s unvested PSUs will become fully vested at target in the event of death or disability, or will become fully vested in the event of a termination of his employment without Cause or for Good Reason, if during the first half of the applicable performance period or during a Protected Period (as defined in his Executive Employment Agreement), assuming target performance (or if during the latter half of the applicable performance period, based on actual performance). Amounts shown above assume target performance. +53 +(5) +Pursuant to his PU award, Mr. Drummond’s unvested PUs will become fully vested at target in the event of death or disability, or will become fully vested in the event of a termination of his employment without Cause or for Good Reason, if during the first half of the applicable performance period or during a Protected Period (as defined in his Executive Employment Agreement), assuming target performance (or if during the latter half of the applicable performance period, based on actual performance). Amounts shown above assume target performance. Based on the closing price per share of our common stock on December 30, 2022 of $9.24. +(6) +Reflects our payment for the cost of continuation health coverage for Mr. Drummond for 18 months following his termination (36 months if the termination occurs within the period beginning 30 days prior to a change in control and ending on the two-year anniversary of the change in control). +Kenneth H. Pucheu +Payments and Benefits +Death or +Disability +For Cause +Without +Cause or for +Good Reason, +No Change in +Control +Without +Cause or for +Good Reason +during a +Protected Period, +Upon or +Following +Change in +Control +Change in +Control, No +Termination of +Employment +Cash Severance (1) +— +— +$ +1,425,000 +$ +1,900,000 +— +Annual Bonus (2) +$ +475,000 +— +$ +475,000 +$ +475,000 +— +Long-Term Incentives (by Grant Date) (3)(4)(5) +01/02/2020 PSU +$ +345,049 +— +$ +345,049 +$ +345,049 +— +01/02/2020 RSU +$ +227,729 +— +$ +227,729 +$ +227,729 +— +01/04/2021 PSU +$ +2,217,203 +— +$ +2,217,203 +$ +2,217,203 +— +01/04/2021 RSU +$ +1,463,357 +— +$ +1,463,357 +$ +1,463,357 +— +01/03/2022 PU +$ +1,504,503 +— +$ +1,504,503 +$ +1,504,503 +— +01/03/2022 RSU +$ +1,504,512 +— +$ +1,504,512 +$ +1,504,512 +— +Health Benefits (6) +— +— +$ +17,819 +$ +26,729 +— +Total +$ +8,315,288 +— +$ +8,452,847 +$ +8,990,757 +— +(1) +Reflects severance payments in the event of a termination of Mr. Pucheu’s employment without Cause or for Good Reason in an amount equal to the sum of (i) his annual base salary, and (ii) his target bonus for the year his termination occurs, times 1.5 (or two times if the termination occurs within the period beginning on the date of change in control and ending on the one-year anniversary of the change in control), payable over the 12-month period following his termination. +(2) +Reflects a lump-sum cash payment of a pro-rated portion of the annual bonus for the calendar year in which the termination occurs (based upon the number of days Mr. Pucheu was employed by the Company during the year of termination) in an amount equal to: (1) if the termination occurs on or before June 30 of the year of termination, based on the target bonus and (2) if the termination occurs on or after July 1 of the year of termination, based on the Company’s actual performance during the calendar year through the termination. In the event that the termination occurs without Cause or for Good Reason during a Protected Period (as defined in the employment agreement), the amount of such lump-sum payment will be equal to the Target Bonus for the year of termination, without proration, in either case payable on the 60th day following the Termination Date. +(3) +Pursuant to his Executive Employment Agreement, Mr. Pucheu’s unvested RSUs will become fully vested in the event of death, disability, or a termination of his employment without Cause or for Good Reason. +(4) +Pursuant to his PSU awards, Mr. Pucheu’s unvested PSUs will become fully vested at target in the event of death or disability, or will become vested, based on actual performance, in the event of a termination of his employment without Cause or for Good Reason, subject to proration under the terms of his Executive Employment Agreement. Amounts shown above assume target performance. +(5) +Pursuant to his PU award, Mr. Pucheu’s unvested PUs will become fully vested at target in the event of death or disability, or will become fully vested, based on actual performance, in the event of a termination of his employment without Cause or for Good Reason, subject to proration under the terms of his Executive Employment Agreement. Amounts shown above assume target performance. Based on the closing price per share of our common stock on December 30, 2022 of $9.24. +(6) +Reflects our payment for the cost of continuation health coverage for Mr. Pucheu for 12 months following his termination (18 months if the termination occurs within the period beginning on the date of a change in control and ending on the one-year anniversary of the change in control). +54 +Kevin M. McDonald +Payments and Benefits +Death or +Disability +For Cause or +Without +Good Reason +Without +Cause or for +Good Reason, +No Change in +Control +Without +Cause or for +Good Reason, +Upon or +Following +Change in +Control +Change in +Control, No +Termination of +Employment +Cash Severance (1) +— +— +$ +2,000,000 +$ +3,000,000 +— +Annual Bonus (2) +$ +500,000 +— +$ +500,000 +$ +500,000 +— +Long-Term Incentives (by Grant Date) (3)(4)(5) +01/02/2020 PSU +$ +567,604 +— +$ +567,604 +$ +567,604 +— +01/02/2020 RSU +$ +374,617 +— +$ +374,617 +$ +374,617 +— +01/04/2021 PSU +$ +2,161,772 +— +$ +2,161,772 +$ +2,161,772 +— +01/04/2021 RSU +$ +1,426,767 +— +$ +1,426,767 +$ +1,426,767 +— +01/03/2022 PU +$ +1,379,125 +— +$ +1,379,125 +$ +1,379,125 +— +01/03/2022 RSU +$ +1,379,135 +— +$ +1,379,135 +$ +1,379,135 +— +Health Benefits (6) +— +— +$ +30,981 +$ +61,962 +— +Total +$ +8,534,311 +— +$ +9,371,164 +$ +10,402,145 +— +(1) +Reflects severance payments in the event of a termination of Mr. McDonald’s employment without Cause or for Good Reason, in an amount equal to two times (or three times if the termination occurs within the period beginning 30 days prior to a change in control and ending on the two-year anniversary of the change in control) the sum of (i) his annual base salary, and (ii) his target bonus for the year his termination occurs, payable in a lump sum on the 60th day following the Termination Date. +(2) +Reflects the target annual bonus payable to Mr. McDonald for fiscal year 2022 under our 2022 Bonus Program. +(3) +Pursuant to his Executive Employment Agreement, Mr. McDonald’s unvested RSUs will become fully vested in the event of death, disability, or a termination of his employment without Cause or for Good Reason. +(4) +Pursuant to his Executive Employment Agreement, Mr. McDonald’s unvested PSUs will become fully vested at target in the event of a termination of his employment due to death or disability, or will become fully vested in the event of a termination of his employment without Cause or for Good Reason, if during the first half of the applicable performance period or during a Protected Period (as defined in his Executive Employment Agreement), assuming target performance (or if during the latter half of the applicable performance period, based on actual performance). Amounts shown above assume target performance. +(5) +Pursuant to his Executive Employment Agreement, Mr. McDonald’s unvested PUs will become fully vested at target in the event of a termination of his employment due to death or disability, or will become fully vested in the event of a termination of his employment without Cause or for Good Reason, if during the first half of the applicable performance period or during a Protected Period (as defined in his Executive Employment Agreement), assuming target performance (or if during the latter half of the applicable performance period, based on actual performance). Amounts shown above assume target performance. Based on the closing price per share of our common stock on December 30, 2022 of $9.24. +(6) +Reflects our payment for the cost of continuation health coverage for Mr. McDonald for 18 months following his termination (36 months if the termination occurs within the period beginning 30 days prior to a change in control and ending on the two-year anniversary of the change in control). +55 +Matthew R. Gillard +Payments and Benefits +Death or +Disability +For Cause or +Without +Good Reason +Without +Cause, +No Change in +Control +Without +Cause, +Upon or Following +Change in +Control +Change in +Control, No +Termination of +Employment +Cash Severance (1) +— +— +$ +1,425,000 +$ +1,900,000 +— +Annual Bonus (2) +$ +475,000 +— +$ +475,000 +$ +475,000 +— +Long-Term Incentives (by Grant Date) (3)(4) +08/16/2021 RSU (66,000) +$ +609,840 +— +$ +609,840 +$ +609,840 +— +01/03/2022 PU (162,825) +$ +1,504,503 +$ +1,504,503 +$ +1,504,503 +01/03/2022 RSU (162,826) +$ +1,504,512 +$ +1,504,512 +$ +1,504,512 +Health Benefits (5) +$ +17,198 +$ +25,798 +Total +$ +4,093,855 +— +$ +5,536,053 +$ +6,019,653 +— +(1) +Reflects severance payments in the event of a termination of Mr. Gillard’s employment without Cause or for Good Reason, in an amount equal to 1.5 times (or two times if the termination occurs within the one year following a change in control) the sum of (i) his annual base salary, and (ii) his target bonus for the year his termination occurs, payable in equal installments over a 12 month period starting on the 60th day following the Termination Date, pursuant to the NexTier Oilfield Solutions Inc. Leadership Severance Program (the “Severance Program”). +(2) +Reflects the target annual bonus payable to Mr. Gillard for fiscal year 2022 under our 2022 Bonus Program. The Annual Bonus would be pro-rated at target performance to reflect days worked in the event of termination due to death or disability or a termination without Cause or for Good Reason and the annual bonus would be paid at target if termination occurred within the one year period of a change in control, pursuant to the Severance Program. +(3) +Mr. Gillard’s unvested RSUs will become fully vested following a termination due to death, disability, or a termination of his employment without Cause or upon a change in control without Cause or for Good Reason. +(4) +Reflects unvested PU’s valued at target performance. Pursuant to the Severance Program, Mr. Gillard’s unvested PUs will become (i) vested at actual performance in the event of a termination of his employment due to death or disability, or (ii) fully vested and paid at actual performance in the event of a termination of his employment without Cause or for Good Reason, or (iii) fully vested at target performance or actual performance (whichever is better) in the event of a termination of his employment due to a change in control without Cause or for Good Reason. Based on the closing price per share of our common stock on December 30, 2022 of $9.24. +(5) +Reflects our payment for the cost of continuation health coverage for Mr. Gillard for 12 months following his termination (18 months if the termination occurs within the one-year period following a change in control). +Oladipo Iluyomade +Payments and Benefits +Death or +Disability +For Cause or +Without +Good Reason +Without +Cause, +No Change in +Control +Without +Cause, +Upon or Following +Change in +Control +Change in +Control, No +Termination of +Employment +Cash Severance (1) +— +$ +750,000 +$ +1,000,000 +— +Annual Bonus (2) +$ +250,000 +$ +250,000 +$ +250,000 +— +Long-Term Incentives (by Grant Date) (3)(4) +02/03/2020 RSU +$ +34,151 +— +$ +34,151 +$ +34,151 +— +01/25/2021 RSU +$ +126,237 +— +$ +126,237 +$ +126,237 +— +01/03/2022 PU +$ +250,746 +— +$ +250,746 +$ +250,746 +— +01/03/2022 RSU +$ +250,755 +— +$ +250,755 +$ +250,755 +— +Health Benefits (5) +$ +14,632 +$ +21,948 +Total +$ +661,143 +— +$ +1,676,521 +$ +1,933,837 +— +(1) +Reflects severance payments in the event of a termination of Mr. Iluyomade’s employment without Cause or for Good Reason, in an amount equal to 1.5 times (or two times if the termination occurs within the one year following a change in control) the sum of (i) his annual base salary, and (ii) his target bonus for the year his termination occurs, payable in equal installments over a 12 month period starting on the 60th day following the Termination Date, pursuant to the Severance Program. +56 +(2) +Reflects the target annual bonus payable to Mr. Iluyomade for fiscal year 2022 under our 2022 Bonus Program. The Annual Bonus would be pro-rated at target performance to reflect days worked in the event of termination due to death or disability or a termination without Cause or for Good Reason and the annual bonus would be paid at target if termination occurred within the one year period of a change in control, pursuant to the Severance Program. +(3) +Mr. Iluyomade’s unvested RSUs will become fully vested following a termination due to death, disability, or a termination of his employment without Cause or upon a change in control without Cause or for Good Reason. +(4) +Reflect unvested PU’s valued at target performance. Pursuant to the Severance Program, Mr. Iluyomade’s unvested PUs will become (i) vested at actual performance in the event of a termination of his employment due to death or disability, or (ii) fully vested and paid at actual performance in the event of a termination of his employment without Cause or for Good Reason, or (iii) fully vested at target performance or actual performance (whichever is better) in the event of a termination of his employment due to a change in control without Cause or for Good Reason. Based on the closing price per share of our common stock on December 30, 2022 of $9.24. +(6) +Reflects our payment for the cost of continuation health coverage for Mr. Iluyomade for 12 months following his termination (18 months if the termination occurs within the one-year period following a change in control). +CEO Pay Ratio +In accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act and applicable SEC rules, we are providing the following information about the relationship of our Chief Executive Officer’s compensation to the compensation of an identified median employee. The purpose of this disclosure is to provide a measure of the equitability of pay within the organization. We believe our compensation philosophy and process yield an equitable result, and our ratio is as follows for 2022: +• +the total compensation of our median employee was $122,035, as calculated pursuant to the same methodology as that used to determine pay for our Chief Executive Officer in the Summary Compensation Table. +• +the total compensation of our Chief Executive Officer, as reported in the Summary Compensation Table, was $10,347,512. +• +the ratio of our Chief Executive Officer’s total compensation to the median employee total compensation was 86.79 to 1. +For the 2022 median employee determination, we did not exclude any of our employees, other than 51 employees located in Canada, or make any cost-of-living adjustments. To identify our median employee, we compared the 2022 annual total earnings (as such term is used in our payroll system for Federal Income Tax purposes) paid to each our employees, all of which were based in the United States. We had 4,216 such employees as of December 31, 2022. Similar to our Chief Executive Officer, each of our employees enjoys a comprehensive compensation and benefits package that we determine by benchmarking to market practices. +We believe the pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on our internal records and the methodology used. Because the SEC rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices, the pay ratio reported by other companies—including companies in our peer group—may not be comparable to the pay ratio reported above. Other companies may have different employment and compensation practices, different geographic breadth, perform different types of work and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios. This information is being provided for compliance purposes. Neither the Compensation Committee nor management of the Company use the pay ratio measure in making compensation decisions. +57 +Pay vs. Performance Comparison +In accordance with the Dodd-Frank Wall Street Reform and Consumer +P +rotection +Act +and applicable SEC rules, the following table sets forth additional compensation information for our NEOs, calculated in accordance with SEC rules, for fiscal years 2022, 2021 and 2020. For more information about how our executive compensation program is designed to link a substantial portion of our NEOs’ realized compensation to the achievement of financial, operational, and strategic objectives, and to align our executive pay with changes in the value of our shareholders’ investments, refer to our CD&A above. +Year +Summary +Compensation +Table Total for +CEO ($) +(1) +Compensation +Actually Paid +to CEO ($) +(2) +Average +Summary +Compensation +Table Total for +Non-CEO +NEOs ($) +(3) +Average +Compensation +Actually Paid +to +Non-CEO +NEOs ($) +(2) +Value of initial fixed $100 +investment based on: +Stated in +thousands +Total +Shareholder +Return ($) +(4) +Peer Group +Total +Shareholder +Return ($) +(5) +Net +Income/ +(Loss) +($) +(6) +Adjusted +EBITDA +($) +(7) +2022 +10,359,617 +32,357,272 +2,288,043 +5,023,217 +137.91 +112.94 +314,969 +656,830 +2021 +7,126,991 +10,653,090 +1,389,533 +1,885,751 +52.99 +69.90 +( 119,423 +) +113,962 +2020 +7,948,892 +4,613,785 +2,283,536 +1,715,633 +51.34 +57.70 +( 346,883 +) +78,976 +(1) +The dollar amounts reported are the amounts of total compensation reported for our CEO, Mr. Drummond , in the Summary Compensation Table (“SCT”) for fiscal years 2022, 2021 and 2020. +(2) +The dollar amounts reported represent the amount of compensation actually paid (as used and required to be computed in accordance with SEC rules, “CAP”). The dollar amounts do not reflect the actual amounts of compensation paid to our CEO or other NEOs during the applicable year. The following additions/(deductions) were applied to total compensation as reported in the Summary Compensation Table in determining compensation actually paid with respect to our CEO and, on average, our other NEOs: +(3) +The dollar amounts reflect the average total compensation for our NEOs, other than our CEO, reported in the “Total” column of the SCT. For 2021, reflects average total compensation for Messrs. Pucheu, McDonald and Gillard, as well as Mr. Henkes and +Ms. Ngo-Burns, +our Senior Vice President, Operations and former Chief Accounting Officer, respectively. For 2020, reflects average total compensation for Messrs. Pucheu and McDonald, as well as Messrs. Henkes, Vaclavik and Powell, our Senior Vice President, Operations; former Senior Vice President, Chief Commercial Officer; and former Executive Vice President & Chief Integration Officer, respectively. +(4) +Reflects cumulative total shareholder return of the Company, as of December 31, 2022, 2021 and 2020, calculated in accordance with Item 201(e) of Regulation +S-K. +(5) +Reflects cumulative total shareholder return of the PHLX Oil Service Sector Index (the “OSX”), as of December 31, 2022, 2021 and 2020. The OSX is the peer group used by NexTier for purposes of Item 201(e)(1(ii) of Regulation +S-K +under the Exchange Act in NexTier’s Annual Report on Form +10-K +for the year ended December 31, 2022. +(6) +Reflects net income (loss) as shown in NexTier’s Annual Report on Form +10-K +for the years ended December 31, 2022, 2021 and 2020. +(7) +Reflects Adjusted EBITDA (as defined and used in our CD&A above), the Company-selected measure for 2022. For a reconciliation of net income to adjusted EBITDA, see Appendix B. +58 +Table of Contents +CEO ($) +Average NEO Excluding CEO +($) +2022 +2021 +2020 +2022 +2021 +2020 +Total Compensation from SCT +10,359,617 +7,126,991 +7,948,892 +2,288,043 +1,389,533 +2,283,536 +Equity Award Adjustments: +Grant date values in SCT +( 7,213,744 +) +( 4,999,999 +) +( 6,469,226 +) +( 1,236,031 +) +( 753,799 +) +( 960,544 +) +Year-end +fair value of awards granted during the year that remain unvested at year end +RSU +5,641,907 +3,549,365 +1,541,495 +1,000,919 +556,553 +312,925 +PSU +3,972,930 +5,299,051 +3,150,770 +— +724,910 +429,511 +PU +2,540,087 +— +— +1,213,929 +— +— +Stock Option +— +— +— +— +— +— +Change in fair value of awards granted in prior years and vested during the year +RSU +752,290 +97,522 +( 1,032,654 +) +118,478 +18,553 +( 402,411 +) +PSU +( 957 +) +— +— +3,067 +— +— +PU +— +— +— +— +— +— +Stock Option +— +— +— +— +( 4,752 +) +( 41,238 +) +Vesting date fair value of awards granted and vested during the year +RSU +— +— +— +— +— +59,463 +PSU +— +— +— +— +— +59,463 +PU +— +— +— +— +— +— +Stock Option +— +— +— +— +— +— +Change in fair value of awards granted in prior years that remain unvested at year end +RSU +4,596,143 +41,398 +( 525,492 +) +540,655 +6,349 +( 21,619 +) +PSU +11,708,999 +( 461,238 +) +— +1,094,157 +( 51,596 +) +— +PU +— +— +— +— +— +— +Stock Option +— +— +— +— +— +( 3,453 +) +Compensation Actually Paid +32,357,272 +10,653,090 +4,613,785 +5,023,217 +1,885,751 +1,715,633 +59 +Table of Contents +Pay for Performance Alignment +The three most important financial performance measures used by our Compensation Committee to link CAP to our CEO and other NEOs in 2022, calculated in accordance with SEC regulations, to company performance is set forth below. The role of each of these performance measures in determining our NEOs’ compensation is discussed in the CD&A above. +Adjusted EBITDA +Free Cash Flow +Total Shareholder Return +The following graphs illustrate that CAP over the three-year period ended December 31, 2022 aligns to trends in NexTier’s TSR, net income (loss) and Adjusted EBITDA performance over the same period. In addition, the chart titled “CAP vs. Total Shareholder Return (NEX and OSX)” illustrates that NexTier’s TSR over this three-year period aligns closely with the TSR for the OSX over the same period. For 2022, CAP was primarily impacted by NexTier’s share price appreciation of 160% during the year. +60 +Table of Contents +61 +Proposal 4. Approval of the Amendment and Restatement of the NexTier Oilfield Solutions Inc. Equity and Incentive Award Plan. +The Board of Directors recommends that you vote “FOR” this proposal. +The use of equity-based awards has been a key component of our compensation program. The ability to grant equity-based compensation awards is critical to attract, retain and motivate our officers, key employees, consultants and directors and to continue to align the interests of participants to those of the Company’s stockholders. +We are asking stockholders to approve the amendment and restatement of the NexTier Oilfield Solutions Inc. Equity and Incentive Award Plan (the “Equity Plan”). On April 18, 2023, our Board of Directors (the “Board”) approved the amendment and restatement of the Equity Plan, subject to stockholder approval at the annual meeting. The amended and restated Equity Plan will become effective on the day of the annual meeting, assuming approval of this Proposal 4 by our stockholders. +Summary of Material Amendments +Increase in Share Reserve . If approved by the stockholders, the Equity Plan will be amended to provide for an increase of 10,000,000 shares of common stock available for issuance under the Equity Plan. As of January 31, 2023, approximately 3,184,335 shares remained available for issuance under the Equity Plan. The Board has determined that approval of the amendment to the Equity Plan is necessary to allow us to continue to make our customary annual long-term incentive awards and other equity awards going forward. We believe that the requested increase will be sufficient for at least three year’s worth of equity-based grants under our current compensation program. The Compensation Committee of the Board (the “Compensation Committee”) will continue to evaluate equity needs in the context of the business, market volatility and broader compensation program in the future. +Minimum Vesting Period . If approved by the stockholders, the Equity Plan will be amended to provide that awards granted under the Equity Plan will have a minimum vesting period and/or performance period of one year from the date of grant, provided that up to an aggregate of 5% of the number of shares available for issuance under the Equity Plan may be granted without regard to the one-year vesting requirement. +Change in Control . If approved by the stockholders, the Equity Plan will be amended to provide that, unless otherwise provided in an award agreement or other agreement, upon a change in control of the Company: (i) any outstanding stock option, stock appreciation rights (“SARs”), restricted stock and restricted stock units will vest as of or immediately prior to the change in control if such award is not assumed, continued or replaced with a “replacement award”; (ii) if the participant receives a replacement award in connection with a change in control, and the participant’s employment is terminated without cause within one year following the consummation of a change in control, (A) outstanding stock options, SARs, restricted stock and restricted stock units held by such participant will vest on the participant’s termination date and (B) outstanding performance awards, stock payments, deferred stock and other awards subject to performance criteria will be deemed achieved at the greater of 100% target performance and actual performance through the participant’s termination date extrapolated through the end of the performance period, and all other terms and conditions will be deemed met as of the participant’s termination date. “Replacement award” means an award (a) of the same type (e.g., option, restricted stock unit, etc.) as the award, (b) that has a value at least equal to the value of the award, (c) that relates to publicly traded equity securities of the Company or its successor or is payable solely in cash, and (d) that has other terms and conditions of which are not less favorable to the participant than the terms and conditions of the award. With respect to awards that are +62 +subject to performance objectives, the Committee may, in its sole discretion, provide that any such award will be paid prior to when any or all such performance objectives are certified (or without regard to whether they are certified) or may make necessary and appropriate adjustments in the performance objectives. +Summary of Stockholder Vote Ramifications . A simple majority of the votes cast is required to approve this proposal. If you properly give a proxy but do not indicate how you wish to vote, the persons named on the proxy card, or if you do not name your proxy or proxies, the Proxy Holders, will vote for the proposal. If this Proposal 4 is not approved, the amendments to the Equity Plan will not become effective, the existing Equity Plan will continue in full force and effect, and we may continue to grant awards under the Equity Plan, subject to its terms, conditions and limitations, using the shares of our common stock available for issuance thereunder. +The closing stock price of a common share reported on the NYSE on April 17, 2023, our record date, was $8.39 per share. The full text of the amended and restated Equity Plan that stockholders are being asked to approve is attached as Appendix A to this proxy statement. +Background and Purpose to Increase the Share Reserve +In October 2019 in connection with our merger transaction (the “Merger”) with C&J Energy Services, Inc. (“C&J”), a publicly traded Delaware corporation., the Keane Group, Inc. Equity and Incentive Award Plan, which was originally approved by stockholders in 2017, was amended and restated as the NexTier Oilfield Solutions Inc. Equity and Incentive Award Plan. Also, as part of the Merger, the Company assumed the C&J equity incentive plan, and amended and restated that plan under the name “NexTier Oilfield Solutions Inc. (Former C&J Energy) Management Incentive Plan” (the “C&J Plan”, and collectively with the Equity Plan, the “Plans”). However, legacy Keane employees are not eligible participants under the C&J Plan. After the integration and internal reorganization that the Company did in 2020, it was decided that going forward the Equity Plan would be the Company’s primary plan under which to grant equity incentive awards to all of the Company’s directors and employees. The C&J Plan will be maintained to support the currently granted awards under the C&J Plan, but there have been no awards granted under the C&J Plan since 2021. The Equity Plan and the C&J Plan are the only Company equity plans from which shares remain available for future grants. +As of January 31, 2023, without giving effect to the amendments to be approved by this Proposal 4, the Equity Plan had 3,184,335 shares remaining available for future grant and the C&J Plan had 680,351 shares remaining available for future grant; for an aggregate of 3,864,686 shares of common stock available for future award. The Compensation Committee and the Board itself considers this number of shares under the Equity Plan to be inadequate to achieve the stated purpose of the Equity Plan in the future; namely, to promote the long-term financial interests of the Company by: (i) encouraging directors, officers and employees of the Company to acquire an ownership position in the Company; (ii) enhancing the ability of the Company to attract and retain directors, officers and key employees of outstanding ability; and (iii) providing directors, officers and key employees with an interest in the Company aligned with that of the Company’s stockholders. +NexTier is committed to effectively managing its employee equity compensation programs in light of potential stockholder dilution. For this reason, in administering our equity compensation program, we consider both our “burn rate” and our “overhang” in evaluating the impact of the program on our stockholders. We define “burn rate” as the number of equity awards granted during the fiscal year, divided by the number of weighted average shares of common stock outstanding. The burn rate measures the potential dilutive effect of our equity grants. We define “total overhang” as the stock options outstanding but not exercised and outstanding full value awards (which include restricted stock units, performance shares at maximum and similar awards), plus equity awards available to be granted, divided by the total shares of common stock outstanding. The overhang measures the potential dilutive effect of outstanding equity awards plus shares available for grant under our Plans. +We endeavor to ensure that our burn rate and overhang are managed to levels comparable to our compensation peer group, and within the limits recommended by certain independent stockholder advisory groups. Our burn rate (number of shares granted, without excluding forfeited or canceled awards and including performance shares at maximum) of 1.41% for fiscal year 2022 aligns with the peer 50th percentile, while the three-year average burn rate of 2.7% is near the 75th percentile. The 10,000,000 proposed share request, plus the 3,864,686 shares currently available for issuance under the Plans as of January 31, 2023, results in a total basic +63 +share capital dilution of 10.0%, approximating the 75th percentile of our compensation peer group. A description of our peer group companies is included in the “Compensation Discussion and Analysis” section of this proxy statement. The Company’s depressed stock price in 2020 and 2021, and the grant of equity in connection with recent mergers and acquisitions activity, has led to a faster than normal burn rate of available shares under the Equity Plan. Based upon the Company’s current stock price and current equity incentive compensation mix, we anticipate that this share reserve will provide sufficient shares for an additional three or more years of equity awards. +Accordingly, the Board believes that the request for an additional 10,000,000 shares in the Equity Plan is reasonable and prudent to allow us to replenish our share usage from previous fiscal years, to continue our current granting practices in the future and to be able to attract and retain highly-qualified persons to serve as officers, non-employee directors and key employees of the Company and/or its affiliates and to align their interests more closely with the interests of the Company’s stockholders, as well as provide incentives and reward opportunities designed to enhance the profitable growth of the Company. +Reasons for Seeking Stockholder Approval +The Equity Plan provides for long-term compensation and incentive opportunities for directors, executives and key employees of the Company and its subsidiaries. The Board believes that the future success of the Company is dependent upon the quality and continuity of management, and that compensation programs such as restricted stock unit and performance restricted stock unit grants are important in attracting and retaining individuals of superior ability and in motivating their efforts on behalf of the Company. +Stockholder approval of the amendment and restatement of the Equity Plan is required under the rules of the NYSE applicable to the Company. If the amended and restated Equity Plan is not approved, the amendments to the Equity Plan will not go into effect. Awards may continue to be made under the Equity Plan in accordance with its terms as they existed prior to the proposed amendments to the Equity Plan until the shares remaining for awards under the Equity Plan are exhausted. +Equity Compensation Plan Information +The following table sets forth certain information regarding the Plans as of December 31, 2022. +Plan Category +(a) +Number of securities +to be issued upon +exercise of +outstanding options, +warrants and rights +(b) +Weighted-average +exercise price of +outstanding +options, warrants +and rights (1) +(c) +Number of securities +remaining available +for future issuance +under equity +compensation plans +(excluding securities +reflected in Column (a)) +Equity compensation plans approved by security holders +11,750,946 +$17.21 +5,469,745 +Equity compensation plans not approved by security holders (2) +1,546,709 +$24.78 +525,538 +Total +13,297,655 +$20.48 +5,995,283 +(1) +The weighted average price does not take into account shares issuable upon the vesting of outstanding performance stock units or restricted stock units, which have no exercise price. +(2) +Consists of shares issuable under our C&J Plan. +64 +Summary of the Equity Plan (as Proposed to be Amended and Restated) +The following summary describes briefly the principal features of the Equity Plan (as proposed to be amended and restated). This general description of the Equity Plan is qualified in its entirety by reference to the copy of the Equity Plan (as amended and restated) attached hereto as Appendix A. +Securities Subject to the Equity Plan. +A maximum of 36,990,323 shares of our common stock may be issued or transferred pursuant to awards under the Equity Plan. The number of shares of our common stock available under the Equity Plan will be reduced by one share for each share issued under an award. The shares of our common stock covered by the Equity Plan may be treasury shares, authorized but unissued shares or shares purchased in the open market. In the event of any termination, expiration, lapse or forfeiture of an award, any shares subject to the award will again be made available for future grants under the Equity Plan. Any shares of restricted stock repurchased by the Company at the same price paid for such shares will be made available for issuance again under the Equity Plan. +Eligibility. +Approximately 4,290 employees, consultants and ten non-employee directors are eligible to receive awards under the Equity Plan. +Awards under the Equity Plan. +The Equity Plan provides that the administrator may grant or issue stock options, which may be non-qualified stock options (“NQSOs”) or, solely to eligible employees, incentive stock options designed to comply with the applicable provisions of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), SARs, restricted stock, restricted stock units, deferred stock, performance awards and stock payments, or any combination thereof. The terms and conditions of each award will be set forth in a separate agreement with the person receiving the award and will indicate the type, terms and conditions of the award. If an incentive stock option is granted to an employee who then owns, directly or by attribution under the Code, stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or a subsidiary, then the term of the option will not exceed five years, and the option price will be at least 110% of the fair market value of the shares on the date that the option is granted. +Award Limits. +The Equity Plan provides that the maximum aggregate number of shares of common stock subject to all awards granted to any one employee or consultant in any calendar year, as adjusted, would be 10% of the authorized shares. The maximum aggregate number of shares of common stock subject to all awards granted to any one non-employee director in any calendar year, as adjusted, would be 150,000. The maximum amount of any performance award granted to a Participant for any calendar year that is payable solely in cash is $5,000,000. +Vesting and Exercise of Awards. +The applicable award agreement will contain the period during which the right to exercise the award in whole or in part vests, including the events or conditions upon which the vesting of an award may accelerate. Awards granted under the Equity Plan have a minimum vesting period and/or performance period of one year from the date of grant, provided that up to an aggregate of 5% of the number of shares available for issuance under the Equity Plan may be granted without regard to the one-year vesting requirement. +No portion of an award which is not vested at the participant’s termination of employment, termination of directorship or termination of consulting relationship, as applicable, will subsequently become vested, except as may be otherwise provided by the administrator either in the agreement relating to the award or by action following the grant of the award. Awards granted under the Equity Plan have a +65 +minimum vesting period and/or performance period of one year from the date of grant, provided that up to an aggregate of 5% of the number of shares available for issuance under the Equity Plan may be granted without regard to the one-year vesting requirement. +Transferability of Awards. +Awards generally may not be sold, pledged, assigned or transferred in any manner other than by will or by the laws of descent and distribution or, subject to the consent of the administrator, pursuant to a domestic relations order, unless and until such award has been exercised, or the shares underlying such award have been issued, and all restrictions applicable to such shares have lapsed. Notwithstanding the foregoing, NQSOs may be transferred without consideration to certain family members and trusts with the administrator’s consent. Awards may be exercised, during the lifetime of the participant, only by the participant or such permitted transferee. +Forfeiture and Claw-Back Provisions. +In the event (i) a participant terminates service with the company prior to a specified date or within a specified time following receipt or exercise of the award, (ii) the company terminates the participant’s service for “cause,” or (iii) the participant engages in certain competitive activities with the company, the administrator has the right to require the participant to repay any proceeds, gains or other economic benefit actually or constructively received by the participant or to terminate the award. In addition, all awards (including any proceeds, gains or other economic benefit actually or constructively received by the participant) may be subject to the provisions of any claw-back policy implemented by the company, including, without limitation, any claw-back policy adopted to comply with the requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. +Equity Plan Benefits. +The future benefits that will be received under the Equity Plan by our current directors, executive officers and all eligible employees are not currently determinable. +Adjustments for Stock Splits, Recapitalizations, Mergers and Equity Restructurings. +In the event of any recapitalization, reclassification, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off or other transaction that affects our common stock, the Equity Plan will be equitably adjusted, including the number of available shares, in order to prevent the dilution or enlargement of the benefits or potential benefits intended to be made available under the Equity Plan or with respect to any award. +Administration of the Equity Plan. +The Compensation Committee is the administrator of the Equity Plan. Subject to certain limitations, the Compensation Committee may delegate its authority to grant awards to one or more committees consisting of one or more members of the Board or one or more of our officers. +Change in Control +In the event of any change in control in which awards of stock options, SARs, restricted stock and restricted stock units are not assumed, continued or replaced with a replacement award, such awards will be subject to accelerated vesting immediately prior to the change in control. +In the event of any change in control in which awards are replaced with a replacement award, the awards will be subject to accelerated vesting in the event of the participant’s termination of without cause within one year after the change in control. With respect to outstanding performance awards, stock payments, deferred stock and other awards subject to performance criteria, achievement of the applicable performance criteria will be deemed achieved at the greater of target performance and actual performance through the participant’s termination date extrapolated through the end of the performance period. +66 +Amendment and Termination of the Equity Plan. +Our Board and the Compensation Committee may amend the Equity Plan at any time, subject to stockholder approval to the extent required by applicable law or regulation or the listing standards of the market or stock exchange on which our common stock is at the time primarily traded. Additionally, stockholder approval will be specifically required to increase the maximum number of shares of our common stock which may be issued under the Equity Plan, change the eligibility requirements or decrease the exercise price of any outstanding option or stock appreciation right granted under the Equity Plan. The Board and the Compensation Committee may amend the terms of any award theretofore granted, prospectively or retroactively, however, except as otherwise provided in the Equity Plan, no such amendment will, without the consent of the participant, alter or impair any rights of the participant under such award without the consent of the participant unless the award itself otherwise expressly so provides. Our Board and the Compensation Committee may suspend or terminate the Equity Plan at any time. However, in no event may an award be granted pursuant to the Equity Plan on or after the tenth anniversary of the effective date of the Equity Plan. +Prohibition on Repricing. +Except in connection with a corporate transaction involving the Company (including, without limitation, any stock distribution, stock split, extraordinary cash distribution, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination or exchange of shares), the administrator will not, without the approval of the stockholders, authorize the amendment of any outstanding award to reduce its price per share, including any amendment to reduce the exercise price per share of outstanding options or SARs. +New Plan Benefits +The dollar value and number of awards to be granted in the future to eligible participants under the Equity Plan are generally not currently determinable because the value and number of such awards are subject to the discretion of the Compensation Committee. +United States Federal Income Tax Aspects of the Equity Plan +Incentive Stock Options. +Incentive Stock Options are subject to special federal income tax treatment. No federal income tax is imposed on the optionee upon the grant or the exercise of an Incentive Stock Option if the optionee does not dispose of the shares acquired pursuant to the exercise within the two-year period beginning on the date the option was granted or within the one-year period beginning on the date the option was exercised, collectively, the holding period. In such event, we would not be entitled to any deduction for federal income tax purposes in connection with the grant or exercise of the option or the disposition of the shares so acquired. With respect to an Incentive Stock Option, the difference between the fair market value of the stock on the date of exercise and the exercise price must generally be included in the optionee’s alternative minimum taxable income for the year in which such exercise occurs. However, if the optionee exercises an Incentive Stock Option and disposes of the shares received in the same year and the amount realized is less than the fair market value of the shares on the date of exercise, then the amount included in alternative minimum taxable income will not exceed the amount realized over the adjusted basis of the shares. +Upon disposition of the shares received upon exercise of an Incentive Stock Option after the holding period, any appreciation of the shares above the exercise price should constitute capital gain. If an optionee disposes of shares acquired pursuant to his or her exercise of an Incentive Stock Option prior to the end of the holding period, the optionee will be treated as having received, at the time of disposition, compensation taxable as ordinary income. In such event, and subject to the application of Section 162(m) of the Code as discussed below, we may claim a deduction for compensation paid at the same time and in the same amount as compensation is treated as received by the optionee. The amount treated as compensation is the excess of the fair market value of the shares at the time of exercise (or in +67 +the case of a sale in which a loss would be recognized, the amount realized on the sale if less) over the exercise price; any amount realized in excess of the fair market value of the shares at the time of exercise would be treated as short-term or long-term capital gain, depending on the holding period of the shares. +Non-Qualified Stock Options and Stock Appreciation Rights. +As a general rule, no federal income tax is imposed on the optionee upon the grant of a NQSO such as those under the Equity Plan (whether or not including a SAR), and we are not entitled to a tax deduction by reason of such grant. Generally, upon the exercise of a NQSO, the optionee will be treated as receiving compensation taxable as ordinary income in the year of exercise in an amount equal to the excess of the fair market value of the shares of stock at the time of exercise over the option price paid for such shares. In the case of the exercise of a SAR, if the optionee receives the appreciation in the SAR, the cash is compensation income taxable to the optionee; if the optionee receives the appreciation in the form of stock, the difference between the fair market value of the stock and any amount paid by the optionee for the stock is taxable to the optionee. Upon the exercise of a NQSO or a SAR, and subject to the application of Section 162(m) of the Code as discussed below, we may claim a deduction for compensation paid at the same time and in the same amount as compensation income is recognized by the optionee assuming any federal income tax reporting requirements are satisfied. +Upon a subsequent disposition of the shares received upon exercise of a NQSO or a SAR, any difference between the fair market value of the shares at the time of exercise and the amount realized on the disposition would be treated as capital gain or loss. If the shares received upon the exercise of an option or a SAR are transferred to the optionee subject to certain restrictions, then the taxable income realized by the optionee, unless the optionee elects otherwise, and our tax deduction (assuming any federal income tax reporting requirements are satisfied) should be deferred and should be measured at the fair market value of the shares at the time the restrictions lapse. +Restricted Stock and Restricted Stock Units. +The recipient of an award of restricted stock or restricted stock units will not realize taxable income at the time of grant, and we will not be entitled to a deduction at that time, assuming that the restrictions constitute a substantial risk of forfeiture for federal income tax purposes. When the risk of forfeiture with respect to the stock subject to the award lapses, the holder will realize ordinary income in an amount equal to the fair market value of the shares of common stock at such time over the amount, if any, paid for the shares, and subject to Section 162(m) of the Code, we will be entitled to a corresponding deduction. All dividends and distributions (or the cash equivalent thereof) with respect to a restricted stock award paid to the holder before the risk of forfeiture lapses will also be compensation income to the holder when paid and, subject to Section 162(m) of the Code, deductible as such by us. Notwithstanding the foregoing, the holder of a restricted stock award may elect under Section 83(b) of the Code to be taxed at the time of grant of the restricted stock award based on the fair market value of the shares of common stock on the date of the award, in which case (1) subject to Section 162(m) of the Code, we will be entitled to a deduction at the same time and in the same amount, (2) dividends paid to the recipient during the period the forfeiture restrictions apply will be taxable as dividends and will not be deductible by us and (3) there will be no further federal income tax consequences when the risk of forfeiture lapses. Such election must be made no later than thirty days after the grant of the restricted stock award and is irrevocable. +Performance Awards, Deferred Stock and Stock Payments. +An individual who has been granted a performance award, deferred stock or a stock payment generally will not realize taxable income at the time of grant, and we will not be entitled to a deduction at that time. Whether a performance award, deferred stock or a stock payment is paid in cash or shares of common stock, the individual will have taxable compensation, and subject to the application of Section 162(m) of the Code as discussed below, we will have a corresponding deduction. The measure of such income and deduction will be the amount of any cash paid and the fair market value of any shares of common stock either at the time the performance award, deferred stock or a stock payment is paid or at the time any restrictions on the shares (including restrictions under Section 16(b) of the Exchange Act) subsequently lapse, depending on the nature, if any, of the restrictions imposed +68 +and whether the individual elects to be taxed without regard to any such restrictions. Any dividend equivalents paid with respect to a performance award, deferred stock or a stock payment prior to the actual issuance of shares under the award will be compensation income to the employee and, subject to the application of Section 162(m) of the Code as discussed below, deductible as such by us. +Section 162(m) of the Code. +Section 162(m) of the Code precludes a public corporation from taking a deduction for annual compensation in excess of $1 million paid to its chief executive officer, chief financial officer or any of its three other highest paid officers, and any individual classified as a “covered employee” for purposes of Section 162(m) in a prior year. +Section 409A of the Code. +Section 409A of the Code generally provides that any non-qualified deferred compensation arrangement which does not meet specific requirements regarding (1) timing of payouts, (2) advance election of deferrals or (3) restrictions on acceleration of payouts will result in immediate taxation of any amounts deferred to the extent not subject to a substantial risk of forfeiture. Failure to comply with Section 409A of the Code may result in the early taxation (plus interest) to the holder of the deferred compensation and the imposition of a 20% penalty on the holder on such deferred amounts included in the holder’s income. In general, to avoid a violation of Section 409A of the Code, nonqualified deferred compensation amounts may only be paid out on a separation from service, disability, death, change-in-control, an unforeseen emergency (other than death) or a specified time (all as defined under Section 409A of the Code). Furthermore, an election to defer compensation must be made in the calendar year prior to performance of services, and any provision for accelerated payout other than for the reasons specified above may cause the amounts deferred to be subject to early taxation and the imposition of the excise tax. It is our intention that no award under the Equity Plan be “deferred compensation” subject to Section 409A of the Code unless and to the extent that the Compensation Committee determines otherwise. The terms and conditions governing any awards that the Compensation Committee determines will be subject to Section 409A of the Code will be set forth in an award agreement that will be drafted with the intent to comply with Section 409A of the Code. +The Equity Plan is not qualified under Section 401(a) of the Code. +The comments set forth in the above paragraphs are only a summary of certain of the United States federal income tax consequences relating to the Equity Plan. No consideration has been given to the effects of state, local or other tax laws on the Equity Plan or award recipients. +Inapplicability of ERISA +Based upon current law and published interpretations, we do not believe that the Equity Plan is subject to any of the provisions of the Employee Retirement Income Security Act of 1974, as amended. +69 +Other Information +Share Ownership +As of the Record Date, there were 230,495,423 shares of common stock issued and outstanding. The following table sets forth information regarding the beneficial ownership of our common stock as of the Record Date by: +• +each person who is known by us to beneficially own 5% or more of our outstanding shares of capital stock; +• +each member of our Board; +• +each of our NEOs; and +• +all of our directors and executive officers as a group. +Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. A person is also deemed to be a beneficial owner of any securities of which that person has a right to acquire beneficial ownership within 60 days. Unless otherwise indicated, the address for each 5% stockholder, director and executive officer listed below is c/o NexTier Oilfield Solutions Inc., 3990 Rogerdale Road, Houston, Texas 77042. +Name of Beneficial Owner +Shares +Beneficially +Owned +Percentage of +Common Stock +Outstanding +5% Stockholders: +Keane Investor Holdings LLC (1) +32,330,828 +14.0 +% +THRC Management, LLC (2) +21,499,302 +9.3 +% +The Vanguard Group (3) +20,822,567 +9.0 +% +BlackRock Inc. (4) +13,124,214 +5.7 +% +FMR LLC (5) +12,947,857 +5.6 +% +Directors and Named Executive Officers: +Robert W. Drummond (6) +1,778,252 +* +Lesley S. Beyer +4,806 +* +Stuart M. Brightman +153,541 +* +Gary M. Halverson +154,874 +* +Patrick M. Murray +193,190 +* +Amy H. Nelson +148,033 +* +Melvin G. Riggs +143,495 +* +Bernardo J. Rodriguez +28,884 +* +Michael Roemer +155,760 +* +James C. Stewart (7) +2,100,597 +* +Scott R. Wille +— +* +Kenneth H. Pucheu (8) +240,740 +* +Kevin M. McDonald (9) +490,245 +* +Matthew R. Gillard (10) +66,500 +* +Oladipo Ilyuomade (11) +11,547 +* +Michael J. McKie (12) +500,000 +* +All directors and current executive officers as a group (15 persons) +5,670,464 +2.5 +% +* +Represents less than 1%. +70 +(1) +The information contained in the table and this footnote is based solely on a Schedule 13G/A filed with the SEC on February 14, 2023, by Keane Investor. The filing indicates that as of December 31, 2022, Keane Investor reported that it had sole voting and dispositive power for 32,330,828 shares. The address for Keane Investor and Mr. Wille is c/o Cerberus Capital Management, L.P., 875 Third Avenue, New York, New York 10022. Keane Investor is held by a private investor group, including affiliates of Cerberus and certain current members of management. Mr. Wille is affiliated with Cerberus and therefore has an indirect economic interest in the shares held by Keane Investor. +(2) +The information contained in the table and this footnote is based solely on a Schedule 13D/A filed jointly with the SEC on June 30, 2022, by Dan Wilks, THRC Management, LLC and THRC Holdings, LP (collectively, the “Reporting Persons”). The filing indicates that as of June 17, 2022, the Reporting Persons reported that they had shared voting and dispositive power for 21,499,302 shares. The address for each of the reporting persons is 17018 IH 20, Cisco, TX 76437. +(3) +The information contained in the table and this footnote is based solely on a Schedule 13G/A filed with the SEC on February 9, 2023, by The Vanguard Group. The filing indicates that as of December 30, 2022, The Vanguard Group reported that it had shared voting power for 304,203 shares, sole dispositive power for 20,355,953 shares and shared dispositive power for 466,614 shares. The address for The Vanguard Group is 100 Vanguard Blvd., Malvern, PA 19355. +(4) +The information contained in the table and this footnote is based solely on a Schedule 13G filed with the SEC on February 3, 2023, by BlackRock Inc. The filing indicates that as of December 31, 2022, BlackRock, Inc. reported that it had sole voting power for 12,703,307shares and sole dispositive power for 13,124,214 shares. The address for The BlackRock, Inc. is 55 East 52 nd St., New York, NY 10055. +(5) +The information contained in the table and this footnote is based solely on a Schedule 13G filed with the SEC on February 9, 2023, by FMR LLC. The filing indicates that as of December 31, 2022, FMR LLC reported that (i) FMR had sole voting power over 12,944,715 shares and sole dispositive power for 12,947,857 shares; (ii) FMR LLC’s shareholders are party to a shareholders’ voting agreement; and (iii) that Abigail P. Johnson had sole dispositive power for 12,947,857 shares. The address for FMR LLC is 245 Summer Street, Boston, MA 02210. +(6) +Does not include (i) 1,532,156 shares underlying performance based RSUs and (ii) 993,894 shares of restricted stock that do not have voting rights. +(7) +Includes 209,809 stock options exercisable within 60 days. Mr. Stewart has pledged 1,600,000 shares of our common stock as collateral for an asset-based loan. +(8) +Includes 7,837 stock options exercisable within 60 days. Does not include (i) 313,025 shares underlying performance based RSUs and (ii) 259,719 shares of restricted stock that do not have voting rights. +(9) +Includes 60,685 stock options exercisable within 60 days. Does not include (i) 296,588 shares underlying performance based RSUs and (ii) 238,346 shares of restricted stock that do not have voting rights. +(10) +Does not include (i) 73,068 shares underlying performance based RSUs and (ii) 246,533 shares of restricted stock that do not have voting rights. +(11) +Does not include (i) 13,048 shares underlying performance based RSUs and (ii) 37,790 shares of restricted stock that do not have voting rights. +(12) +Does not include 39,881 shares underlying RSUs that do not have voting rights. +Related Person and Related Party Transactions +Certain Related Person and Related Party Transactions +We paid Cerberus Operations & Advising Company LLC (“Cerberus”) and its affiliates (collectively “COAC”), fees totaling approximately $0.5 million during 2022 for consulting services provided in connection with improving the Company’s operations and information technology services, including ongoing support, development, and maintenance. We may retain COAC to provide similar services in the future. This amount includes fees paid to Cerberus pursuant to a services agreement with respect to Mr. Wille in consideration for his service on the Board. Mr. Wille is an employee of Cerberus, and funds managed by one or more affiliates of Cerberus indirectly own a substantial portion of our equity through their ownership of Keane Investor Holdings LLC. +As part of the acquisition of Alamo, the Company agreed to provide post-closing in-kind services to Alamo Frac Holdings, LLC (“Alamo Frac Holdings”), valued by the Company at $30 million in the aggregate. In addition, pursuant to an earnout agreement entered in connection with the acquisition of Alamo (the “Earnout Agreement”), based on the achievement of certain performance criteria, the Company has agreed with Alamo Frac Holdings, to cumulative Earnout Payments of $73.8 million, of which $33.4 million has been paid as of December 31, 2022. The Company expects to pay the additional $40.4 million in 2023. Mr. McKie, an executive officer until June 6, 2022 indirectly owned 20% of the equity interests of Alamo Frac Holdings at the time of the acquisition of Alamo. During the year ended December 31, 2022, the +71 +Company provided in-kind services to Alamo Frac Holdings valued at $4.4 million. The Company has a remaining customer contract liability related to these services of $19.4 million as of December 31, 2022. +Policy and Procedures for the Review, Approval or Ratification of Related Party Transactions +Our Board has adopted a written policy (the “Related Party Policy”) and procedures for the review, approval or ratification of “Related Party Transactions” by the independent members of the Audit Committee. For purposes of the Related Party Policy, a “Related Party Transaction” is any transaction, arrangement or relationship or series of similar transactions, arrangements or relationships (including the incurrence or issuance of any indebtedness or the guarantee of indebtedness) in which (1) the aggregate amount involved will or may be reasonably expected to exceed $120,000 in any fiscal year, (2) the Company or any of its subsidiaries is a participant, and (3) any Related Party (as defined herein) has or will have a direct or indirect material interest. +The Related Party Policy defines “Related Party” as any person who is, or, at any time since the beginning of the Company’s last fiscal year, was (1) an executive officer, director or nominee for election as a director of the Company or any of its subsidiaries, (2) a person with greater than 5% beneficial interest in the Company, (3) an immediate family member of any of the individuals or entities identified in (1) or (2) of this paragraph, and (4) any firm, corporation or other entity in which any of the foregoing individuals or entities is employed or is a general partner or principal or in a similar position or in which such person or entity has a 5% or greater beneficial interest. Immediate family members (each, a “Family Member”) includes a person’s spouse, parents, stepparents, children, stepchildren, siblings, mothers- and fathers-in-law, sons- and daughters-in-law, brothers- and sisters-in-law and anyone residing in such person’s home, other than a tenant or employee. +Prior to the Company entering into any Related Party Transaction, such Related Party Transaction will be reported to our General Counsel. Our General Counsel will conduct an investigation and evaluation of the Related Party Transaction and will report his or her findings to the Audit Committee, including a summary of material facts. The Audit Committee will review the material facts of all Related Party Transactions which require the Audit Committee’s approval and either approve or disapprove of the Related Party Transaction, subject to the exceptions described below. If advance notice of a Related Party Transaction has been given to the Audit Committee and it is not possible to convene a meeting of the Audit Committee, then the chairman of the Audit Committee will consider whether the Related Party Transaction is appropriate and, if it is, will approve the Related Party Transaction, with the Audit Committee being asked to ratify the Related Party Transaction at the next regularly scheduled meeting of the Audit Committee. In the event the Audit Committee does not ratify any such Related Party Transaction, management shall make all reasonable efforts to cancel or annul such Related Party Transaction. In determining whether to approve or ratify a Related Party Transaction, the Audit Committee, or its chairman, as applicable, will consider all factors it deems appropriate, including the factors listed below in “—Review Criteria.” +Entering into a Related Party Transaction without the approval or ratification required by the terms of the Related Party Policy is prohibited and a violation of such policy. In the event the Company’s directors, executive officers or Chief Accounting Officer become aware of a Related Party Transaction that was not previously approved or ratified under the Related Party Policy, such person will promptly notify the Audit Committee (or, if it is not practicable for the company to wait for the Audit Committee to consider the matter, the chairman of the Audit Committee) and the Audit Committee will consider whether the Related Party Transaction should be ratified or rescinded or other action should be taken, with such review considering all of the relevant facts and circumstances regarding the Related Party Transaction, including the factors listed below in “—Review Criteria.” The chairman of the Audit Committee will report to the committee at its next regularly scheduled meeting any actions taken under the Related Party Policy pursuant to the authority delegated in this paragraph. The Audit Committee will also review all of the facts and circumstances pertaining to the failure to report the Related Party Transaction to the Audit Committee and will take, or recommend to our Board, any action the Audit Committee deems appropriate. +No member of the Audit Committee or director of our Board will participate in any discussion or approval of a Related Party Transaction for which he or she is a Related Party, except that the Audit Committee member or director will provide all material information concerning the Related Party Transaction to the Audit Committee. +72 +If a Related Party Transaction will be ongoing, the Audit Committee may establish guidelines for the Company’s management to follow in its ongoing dealings with the Related Party. Thereafter, the Audit Committee, on at least an annual basis, will review and assess ongoing relationships with the Related Party to ensure that they are in compliance with the Audit Committee’s guidelines and that the Related Party Transaction remains appropriate. +Review Criteria +All Related Party Transactions will be reviewed in accordance with the standards set forth in the Related Party Policy after full disclosure of the Related Party’s interests in the transaction. As appropriate for the circumstances, the Audit Committee or its chairman, as applicable, will review and consider: +• +the Related Party’s interest in the Related Party Transaction; +• +the terms of the Related Party Transaction, including the approximate dollar value of the amount involved in the Related Party Transaction and the approximate dollar value of the amount of the Related Party’s interest in the transaction without regard to the amount of any profit or loss; +• +whether the transaction is being undertaken in the ordinary course of business of the Company; +• +whether the transaction with the Related Party is proposed to be, or was, entered into on terms no less favorable to the Company than terms that could have been reached with an unrelated third party; +• +the purpose of, and the potential benefits to the Company of, the Related Party Transaction; +• +a description of any provisions or limitations imposed as a result of entering into the Related Party Transaction; +• +whether the proposed transaction includes any potential reputational risk issues for the Company which may arise as a result of or in connection with the Related Party Transaction; +• +whether the proposed transaction would violate any requirements of the Company’s financing or other material agreements; and +• +any other relevant information regarding the Related Party Transaction or the Related Party. +The Audit Committee, or its chairman, as applicable, may approve or ratify the Related Party Transaction only if the Audit Committee, or its chairman, as applicable, determines in good faith that, under all of the circumstances, the transaction is fair to the Company. The Audit Committee, in its sole discretion, may impose such conditions as it deems appropriate on the Company or the Related Party in connection with approval of the Related Party Transaction. +Pre-Approved Related Party Transactions +The Audit Committee has determined that the following transactions will be deemed pre-approved or ratified and will not require review or approval of the Audit Committee, even if the aggregate amount involved will exceed $120,000, unless otherwise specifically determined by the Audit Committee. +• +Any employment by the Company of an executive officer of the Company or any of its subsidiaries if the related compensation conforms with our Company’s compensation policies and if the executive officer is not a Family Member of another executive officer or of a director of our Board; and +• +Any compensation paid to a director of our Board if the compensation is consistent with the Company’s Bylaws and any compensation policies. +Notwithstanding anything to the contrary in the Related Party Policy, in the event the Bylaws of the Company require review by our Board and/or approval of a Related Party Transaction, the Audit Committee, and its chairman, will not have the authority to review or approve a Related Party Transaction but will provide a recommendation to our Board for the Board’s use in its consideration of a given Related Party Transaction. +73 +Delinquent Section 16(a) Reports +All of our directors, executive officers and greater than 10% stockholders are required to file initial statements and reports of changes of ownership of our common stock on Forms 3, 4 and 5 with the SEC. We have reviewed these reports, including any amendments thereto and written representations from the directors and executive officers. Based upon this review, we believe that no directors, executive officer, or beneficial owner of more than 10% or more of our common stock failed to file a report on a timely basis during 2022, except for the following: (i) a Form 4 with respect to the vesting of restricted stock units and related withholding of shares for federal income tax purposes on January 2, 2022 was filed with the SEC on January 6, 2022 for each of Messrs. Drummond, McDonald, Pucheu and Ms. Ngo Burns; (ii) a Form 4 with respect to the grant of restricted stock units to Messrs. Drummond, McDonald, Gillard, McKie and Pucheu on January 3, 2022 was filed with the SEC on January 6, 2022; (iii) a grant of restrict stock units to Mr. Iluyomade on January 10, 2022 was filed with the SEC on January 18, 2022; and (iv) a Form 4 with respect to the August 16, 2022 vesting of restricted stock units and related withholding of shares for federal income tax purposes for Mr. Gillard was filed with the SEC on January 5, 2023. +Proposals by Stockholders +The Company expects that its 2024 Annual Meeting will be held in June 2024 consistent with the timing of the Company’s 2023 Annual Meeting. Stockholders of record who intend to submit a proposal or a nomination of an individual to serve as a director at the annual meeting of stockholders in 2024 must provide written notice to the Company in accordance with the Company’s Bylaws. Under the Company’s Bylaws, such notice must be received at the Company’s principal executive offices, addressed to the Secretary of the Company, not earlier than February 14, 2024 nor later than March 15, 2024, which are dates at least 90 days but not more than 120 days in advance of the first anniversary of the date of the 2023 Annual Meeting. Stockholders are also advised to review our Bylaws, which contain additional requirements about advance notice of stockholder proposals and director nominations. +Stockholders who intend to submit a proposal at 2024 Annual Meeting and desire that such proposal be included in the proxy materials for such meeting must follow the procedures prescribed in the Company’s Bylaws and Rule 14a-8 under the Exchange Act. To be eligible for inclusion in the proxy materials, stockholder proposals must be received by the Secretary of the Company at the Company’s principal executive offices no later than December 30, 2023. In addition to satisfying the foregoing requirements under our Bylaws, to comply with the universal proxy rules (once effective), shareholders who intend to solicit proxies in support of director nominees other than NexTier’s nominees must provide notice to the Secretary of the Company that sets forth the information required by Exchange Act Rule 14a-19 no later than April 15, 2024, which is the date 60 calendar days prior to the first anniversary of the date of the 2023 Annual Meeting. +Householding +The SEC permits a single Proxy Statement and certain other proxy materials, including, as applicable, our annual report to securityholders and Notice of Internet Availability of Proxy Materials (collectively with this Proxy Statement, the “Proxy Materials”) to be sent to any household at which two or more stockholders reside if they appear to be members of the same family. Each stockholder continues to receive a separate proxy card. This procedure, referred to as householding, reduces the volume of duplicate information stockholders receive and reduces mailing and printing expenses. A number of brokerage firms have instituted householding. +As a result, if you hold your shares through a broker and you reside at an address at which two or more stockholders reside, you will likely be receiving only one set of Proxy Materials unless any stockholder at that address has given the broker contrary instructions. However, if any such beneficial stockholder residing at such an address wishes to receive a separate set of Proxy Materials in the future, or if any such beneficial stockholder that elected to continue to receive separate sets of Proxy Materials wishes to receive a single set of Proxy Materials in the future, that stockholder should contact their broker or send a request to care of the Corporate Secretary at 3990 Rogerdale Road, Houston, Texas 77042. Telephone requests may be directed to (713) 325-6000. We will deliver, promptly upon written or oral request, a separate copy of our Proxy Materials to a beneficial stockholder at a shared address to which a single copy of the documents was delivered. +74 +APPENDIX A +N EX T IER O ILFIELD S OLUTIONS I NC . E QUITY AND I NCENTIVE A WARD P LAN +The purpose of the NexTier Oilfield Solutions Inc. Equity and Incentive Award Plan (the “ Plan ”) is to promote the success and enhance the value of the Company by linking the personal interests of the members of the Board, Employees, and Consultants to those of the Company’s stockholders and by providing such individuals with an incentive for outstanding performance to generate superior returns to the Company’s stockholders. The Plan is further intended to provide flexibility to the Company in its ability to motivate, attract, and retain the services of members of the Board, Employees, and Consultants upon whose judgment, interest, and special effort the successful conduct of the Company’s operations is largely dependent. +The Plan was originally adopted by Keane Group, Inc., a Delaware corporation (the “ Company ”), by resolution of its Board of Directors on January 3, 2017. The Plan became effective upon its approval by the Company’s stockholders on January 20, 2017 (the “ Effective Date ”). The Plan was subsequently amended on December 7, 2020 and February 23, 2021, and further amended and restated on each of April 6, 2021, April 19, 2021, April 29, 2021 and April 18, 2023, in each case subject to shareholder approval. +ARTICLE I. +DEFINITIONS +Wherever the following terms are used in the Plan they shall have the meanings specified below, unless the context clearly indicates otherwise. The singular pronoun shall include the plural where the context so indicates. +1.1. “ Applicable Exchange ” shall mean the New York Stock Exchange or other securities exchange or national market system as may at the applicable time be the principal market for the Common Stock. +1.2. “ Award ” shall mean an Option, a Restricted Stock Award, a Restricted Stock Unit Award, a Performance Award, a Deferred Stock Award, a Stock Payment Award or a Stock Appreciation Right, in each case, which may be awarded or granted under the Plan. +1.3. “ Award Agreement ” shall mean any written notice, agreement, terms and conditions, contract or other instrument or document evidencing an Award, including through electronic medium, which shall contain such terms and conditions with respect to an Award as the Committee shall determine consistent with the Plan. +1.4. “ Award Limit ” shall mean the maximum Award amounts set forth in Section 2.3. +1.5. “ Board ” shall mean the Board of Directors of the Company. +1.6. “ Cerberus Funds ” means, including any successors and permitted assigns, Cerberus International II Master Fund, L.P., Cerberus Institutional Partners, L.P. – Series Four, Cerberus Institutional Partners V, L.P., Cerberus CP Partners, L.P., Cerberus MG Fund, L.P., CIP VI Overseas Feeder, Ltd. and CIP VI Institutional Feeder, L.P. +1.7. “ Change in Control ” shall mean, except as otherwise provided in a Participant’s Award Agreement, the occurrence of any of the following transactions or events occurring on or after the Effective Date: +(a) the acquisition by any Person of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of the greater of (i) 51% or more of either (x) the then outstanding shares of the Company (the “ Outstanding Company Shares ”) or (y) the combined voting power of the then outstanding voting securities of the +1 +Company entitled to vote generally in the election of directors (the “ Outstanding Company Voting Securities ”), and (ii) the percentage of Outstanding Company Voting Securities beneficially owned, individually or in the aggregate, by KIH or the Investor Group; provided , however , that for purposes of this subsection (a), the following acquisitions shall not constitute a Change in Control: (1) any acquisition by KIH or the Investor Group; (2) any acquisition directly from the Company; (3) any acquisition by the Company; (4) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company; or (5) any acquisition pursuant to a transaction which complies with clauses (i), (ii) (iii) and (iv) of subsection (c) below; +(b) individuals who, as of October 31, 2019, constitute the Board (the “I ncumbent Board ”) cease for any reason to constitute at least a majority of the Board; provided , however , that any individual becoming a director subsequent to the Effective Date (i) whose election, or nomination for election by the Company’s stockholders, was approved by a vote of at least two-thirds (2/3) of the directors then comprising the Incumbent Board or (ii) who is appointed to serve on the Board by KIH and at the effective time of such appointment KIH is the beneficial owner of 50% or more of the Outstanding Company Shares shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; +(c) consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company or the acquisition of assets of another entity (each, a “ Corporate Transaction ”), in each case, unless, following such Corporate Transaction, (i) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Shares and Outstanding Company Voting Securities immediately prior to such Corporate Transaction beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding shares and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation or other entity resulting from such Corporate Transaction (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Corporate Transaction of the Outstanding Company Shares and Outstanding Company Voting Securities, as the case may be, (ii) KIH or the Investment Group continue to beneficially own 35% or more of the then outstanding shares of common stock (or, for a non-corporate entity, equivalent securities) of the entity resulting from such Corporate Transaction or the combined voting power of the then outstanding voting securities of such entity, or (iii) no Person (excluding any employee benefit plan or related trust of the Company or such corporation resulting from such Corporate Transaction) beneficially owns, directly or indirectly, 25% or more of, respectively, the then outstanding shares of the corporation resulting from such Corporate Transaction or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Corporate Transaction and (iv) at least a majority of the members of the board of directors of the corporation (or other governing board of a non-corporate entity) resulting from such Corporate Transaction were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Corporate Transaction; or +(d) approval by the stockholders of the Company of a complete liquidation or dissolution of the Company. +For purposes of subsection (a) above, the calculation of voting power shall be made as if the date on which the ownership of such person or group is measured were a record date for a vote of the Company’s stockholders, and for purposes of subsection (c) above, the calculation of voting power shall be made as if the date of the consummation of the transaction were a record date for a vote of the Company’s stockholders. For all purposes of this Plan, any calculation of the number of securities outstanding at any particular time, including for purposes of determining the particular percentage of such outstanding voting securities of which any person is the beneficial owner, shall be made in accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the Exchange Act. For purposes of this definition of “Change in Control, “ Person ” means any +2 +individual, entity or group within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act. For purposes of the Plan, the Registration Date shall not be considered a Change in Control. +1.8. “ Code ” shall mean the Internal Revenue Code of 1986, as amended from time to time. Any reference to any section of the Code shall also be a reference to any successor provision and any Treasury Regulation promulgated thereunder. +1.9. “ Committee ” shall mean the Compensation Committee of the Board, or another committee or subcommittee of the Board, appointed as provided in Section 10.1, consisting solely of two or more Directors. Solely to the extent required by applicable law or applicable stock exchange rule, each Director serving on the Committee shall be a Non-Employee Director who is intended to qualify as a “non-employee director” as defined by Rule 16b-3 and as an “independent director” as defined under the applicable stock exchange rule. If for any reason the appointed Committee does not meet the requirements of Rule 16b-3, such noncompliance shall not affect the validity of Awards, grants, interpretations or other actions of the Committee. +1.10. “ Common Stock ” shall mean the common stock of the Company, par value $0.01 per share. +1.11. “ Company ” shall mean NexTier Oilfield Solutions Inc. , a Delaware corporation. +1.12. “ Consultant ” shall mean any consultant or adviser of the Company or any of its Subsidiaries if: (a) the consultant or adviser is a natural person, (b) the consultant or adviser renders bona fide services to the Company or any of its Subsidiaries; and (c) the services rendered by the consultant or adviser are not in connection with the offer or sale of securities in a capital-raising transaction and do not directly or indirectly promote or maintain a market for the Company’s securities. +1.13. “ Covered Employee ” shall mean any Employee who is, or could be, a “covered employee” within the meaning of Section 162(m) of the Code. +1.14. “ Deferred Stock ” shall mean a right to receive Common Stock awarded under Section 8.4 of the Plan. +1.15. “ Director ” shall mean a member of the Board. +1.16. “ DRO ” shall mean any judgment, decree or order which relates to marital property rights of a spouse or former spouse and is made pursuant to applicable domestic relations law (including community property law). +1.17. “ Effective Date ” shall mean January 20, 2017, the date the Plan was approved by the Company’s stockholders. +1.18. “ Employee ” shall mean any officer or other employee (as defined in accordance with Section 3401(c) of the Code) of the Company or of its Subsidiaries. +1.19. “ Exchange Act ” shall mean the Securities Exchange Act of 1934, as amended from time to time. +1.20. “ Fair Market Value ” shall mean, as of any date, the value of a share of Common Stock determined as follows: +(a) If the Common Stock is listed on an Applicable Exchange, the value of a share of Common Stock shall be the closing sales price for a share of Common Stock as quoted on such Applicable Exchange for such date, or if there is no closing sales price for a share of Common Stock on the date in question, the closing sales price for a share of Common Stock on the last preceding date for which such quotation exists, as reported in The Wall Street Journal or such other source as the Committee deems reliable; +(b) If the Common Stock is regularly quoted by a recognized securities dealer but closing sales prices are not reported, the value of a share of Common Stock shall be the mean of the high bid and low asked prices for such +3 +date or, if there are no high bid and low asked prices for a share of Common Stock on the date in question, the high bid and low asked prices for a share of Common Stock on the last preceding date for which such information exists, as reported in The Wall Street Journal or such other source as the Committee deems reliable; or +(c) If the Common Stock is neither listed on an Applicable Exchange nor regularly quoted by a recognized securities dealer, the value of a share of Common Stock shall be established by the Committee in good faith in whatever manner it considers appropriate taking into account the requirements of Section 422 of the Code or Section 409A of the Code, as applicable. +1.21. “ Fiscal Year ” shall mean the fiscal year of the Company. +1.22. “ Incentive Stock Option ” shall mean an option which conforms to the applicable provisions of Section 422 of the Code and which is designated as an Incentive Stock Option by the Committee. +1.23. “ Investor Group ” shall mean any of (a) the Cerberus Funds taken as a group and their respective affiliates (other than any of their respective portfolio companies) and any investment fund that is directly or indirectly managed or advised by the manager or advisor of any member of the Cerberus Funds or any of their affiliates (other than any of their respective portfolio companies), or the successors of any such investment fund, (b) Trican Well Service, L.P. and its affiliates, and (c) the Keane Parties taken as a group and their respective affiliates. +1.24. “ Keane Parties ” shall mean SJK Family Limited Partnership, LP, KCK Family Limited Partnership, LP, Tim Keane, Brian Keane, Shawn Keane, Jacquelyn Keane, Cindy Keane and Kevin Keane. +1.25. “ KIH ” shall mean Keane Investor Holdings LLC. +1.26. “ Non-Employee Director ” shall mean a Director who is not an Employee. +1.27. “ Non-Qualified Stock Option ” shall mean an Option which is not designated as an Incentive Stock Option by the Committee. +1.28. “ Option ” shall mean a stock option granted under Article IV of the Plan. +1.29. “ Participant ” shall mean an Employee, Non-Employee Director or Consultant who has been granted an Award. +1.30. “ Performance Award ” shall mean a cash bonus, stock bonus or other performance or incentive award that is paid in cash, Common Stock or a combination of both, awarded under Section 8.2 of the Plan. +1.31. “ Performance Criteria ” shall mean the criteria (and adjustments) that the Committee selects for an Award for purposes of establishing a Performance Goal or Performance Goals for a Performance Period. The Performance Criteria for any Award intended to qualify as a Performance Award shall be determined as follows: +(a) The Performance Criteria that shall be used to establish Performance Goals are limited to the following: (i) net earnings (either before or after (A) interest, (B) taxes, (C) depreciation and (D) amortization), (ii) gross or net sales or revenue, (iii) net income (either before or after taxes), (iv) operating profit, (v) cash flow (including, but not limited to, operating cash flow and free cash flow), (vi) return on assets, (vii) return on capital, (viii) return on stockholders’ equity, (ix) return on sales, (x) gross or net profit or operating margin, (xi) costs, (xii) funds from operations, (xiii) expenses, (xiv) working capital, (xv) earnings per share, (xvi) price per share of Common Stock, (xvii) market share, (xviii) market capitalization, (xix) net debt, (xx) achieved incident rate, (xxi) lost time incident rate, and (xxii) serious injury frequency rate, any of which may be measured either in absolute terms or as compared to any incremental increase or decrease or as compared to results of a peer group. +(b) The Committee in its discretion may, at the time of grant, specify in the Award that one or more objectively determinable adjustments shall be made to one or more of the Performance Goals. Such adjustments may include +4 +one or more of the following: (i) items related to a change in accounting principle; (ii) items relating to financing activities; (iii) expenses for restructuring or productivity initiatives; (iv) other non-operating items; (v) items related to acquisitions; (vi) items attributable to the business operations of any entity acquired by the Company during the Performance Period; (vii) items related to the disposal of a business or a material portion of a business; or (viii) items related to discontinued operations of a business under United States generally accepted accounting principles (“ GAAP ”). +1.32. “ Performance Goals ” shall mean, for a Performance Period, one or more goals established in writing by the Committee for the Performance Period based upon one or more Performance Criteria. Depending on the Performance Criteria used to establish such Performance Goals, the Performance Goals may be expressed in terms of overall Company performance or the performance of a division, business unit, or an individual. The achievement of each Performance Goal shall be determined in accordance with GAAP to the extent applicable. +1.33. “ Performance Period ” shall mean one or more periods of time, which may be of varying and overlapping durations, as the Committee may select, over which the attainment of one or more Performance Goals will be measured. +1.34. “ Person ” shall mean any individual, corporation, partnership, limited liability company, firm, joint venture, association, joint-stock company, trust, incorporated organization, governmental or regulatory or other entity. +1.35. “ Plan ” shall mean the NexTier Oilfield Solutions Inc. Equity and Incentive Award Plan, as amended from time to time. Prior to October 31, 2019, the Plan was named the “Keane Group, Inc. Equity and Incentive Award Plan.” +1.36. “ Restricted Stock ” shall mean Common Stock awarded under Article VII of the Plan that is subject to repurchase or forfeiture. +1.37. “ Restricted Stock Units ” shall mean rights to receive Common Stock awarded under Section 8.5. +1.38. “ Rule 16b-3 ” shall mean Rule 16b-3 promulgated under the Exchange Act, as such Rule may be amended from time to time. +1.39. “ Section 409A Covered Award ” shall mean an Award granted under the Plan that constitutes “non-qualified deferred compensation” pursuant to Section 409A of the Code. +1.40. “ Securities Act ” shall mean the Securities Act of 1933, as amended from time to time. +1.41. “ Stock Appreciation Right ” shall mean a stock appreciation right granted under Article IX of the Plan. +1.42. “ Stock Payment ” shall mean: (a) a payment in the form of shares of Common Stock, or (b) an option or other right to purchase shares of Common Stock, as part of a deferred compensation arrangement, made in lieu of all or any portion of the compensation, including without limitation, salary, bonuses, commissions and directors’ fees, that would otherwise become payable to an Employee, Consultant or Non-Employee Director in cash, awarded under Article VIII of the Plan. +1.43. “ Subsidiary ” shall mean with respect to any Person, any entity (other than such Person), whether domestic or foreign, in an unbroken chain of entities beginning with such Person if each of the entities other than the last entity in the unbroken chain beneficially owns, at the time of the determination, securities or interests representing more than 50% of the total combined voting power of all classes of securities or interests in one of the other entities in such chain. +1.44. “ Subsidiary Corporation ” shall mean any corporation in an unbroken chain of corporations beginning with the Company if each of the corporations other than the last corporation in the unbroken chain then owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. +5 +1.45. “ Ten Percent Stockholder ” shall mean an individual owning stock possessing more than 10% of the total combined voting power of all classes of stock of the Company, any Subsidiary Corporation or any parent corporation (as defined under Section 424(e) of the Code). +1.46. “ Termination ” shall mean a Termination of Consultancy, Termination of Directorship or Termination of Employment, as applicable. +1.47. “ Termination of Consultancy ” shall mean the time when the engagement of a Participant as a Consultant to the Company or any of its Subsidiaries is terminated for any reason, with or without cause, including, without limitation, by resignation, discharge, death or retirement, but excluding terminations where there is a simultaneous commencement of employment with the Company or any of its Subsidiaries or service as a Non-Employee Director. For purposes of the Plan, the engagement of a Participant as a Consultant to a Subsidiary of the Company shall be deemed to be terminated in the event that the Subsidiary engaging such Participant ceases to remain a Subsidiary of the Company for any reason. +1.48. “ Termination of Directorship ” shall mean the time when a Participant who is a Non-Employee Director ceases to be a Director for any reason, including, without limitation, a termination by resignation, failure to be elected, death or retirement, but excluding terminations where there is a simultaneous commencement of employment or service as a Consultant with the Company or any of its Subsidiaries. +1.49. “ Termination of Employment ” shall mean the time when the employee-employer relationship between a Participant and the Company or any of its Subsidiaries is terminated for any reason, with or without cause, including, without limitation, a termination by resignation, discharge, death, disability or retirement; but excluding a termination where there is a simultaneous (a) reemployment or continuing employment of the Participant by the Company or any of its Subsidiaries, (b) establishment of a consulting relationship by the Company or any of its Subsidiaries with the Participant, or (c) commencement of service by the Participant as a Non-Employee Director. For purposes of the Plan, a Participant’s employment relationship shall be deemed to be terminated in the event that the Subsidiary of the Company employing such Participant ceases to remain a Subsidiary of the Company for any reason. +ARTICLE II. +SHARES SUBJECT TO PLAN +2.1. Shares Subject to Plan . +(a) Subject to Section 11.3 and Section 2.1(b), the aggregate number of shares of Common Stock that may be issued or transferred pursuant to Awards under the Plan shall be equal to 36,990,323 shares (the “ Authorized Shares ”). +(b) In the event of any termination, expiration, lapse or forfeiture of an Award, any shares of Common Stock subject to such Award shall, to the extent of such termination, expiration, lapse or forfeiture, again be available for future grants of Awards under the Plan. Any shares repurchased by the Company under Section 7.5 at the same price paid by the Participant so that such shares are returned to the Company will again be available for Awards. +2.2. Stock Distributed . Any Common Stock distributed pursuant to an Award shall consist, in whole or in part, of authorized and unissued Common Stock, shares of Common Stock held in treasury or shares of Common Stock purchased on the open market, or any combination of the foregoing. +2.3. Limitation on Number of Shares Subject to Awards . The maximum target number of shares of Common Stock subject to all Awards granted to any one Employee or Consultant in any calendar year, as adjusted pursuant to Section 11.3, is 10% of the Authorized Shares. The maximum target number of shares of Common Stock subject +6 +to all Awards granted to any one Non-Employee Director in any calendar year, as adjusted pursuant to Section 11.3, is 150,000. The maximum number of shares that may be issuable pursuant to a Performance Award shall not exceed 200% of the target number of Common Shares subject to the Performance Award. The maximum amount of any Performance Award granted to a Participant pursuant to Section 8.2(b) that is payable solely in cash is $5,000,000 in any calendar year. +ARTICLE III. +GRANTING OF AWARDS +3.1. Award Agreement . Each Award shall be evidenced by an Award Agreement. +3.2. Provisions Applicable to Performance Awards . With respect to Performance Awards, the Committee shall establish the Performance Criteria and the applicable vesting percentage of the Award applicable to each Participant or class of Participants in writing prior to the beginning of the applicable Performance Period or at such later date as otherwise determined by the Committee and while the outcome of the Performance Goals are substantially uncertain as determined by the Committee in its sole discretion. Following the completion of each Performance Period, the Committee shall certify in writing whether the applicable Performance Goals have been achieved for such Performance Period. In determining the amount earned by a Covered Employee under a Performance Award, the Committee shall have the right to reduce (but not to increase) the amount payable at a given level of performance to take into account additional factors that the Committee may deem relevant to the assessment of individual or corporate performance for the Performance Period. +3.3. Minimum Vesting . Notwithstanding any other provision of the Plan, any Award granted or awarded under the Plan must provide for a minimum vesting and/or Performance Period of at least one year from the date of grant; provided , however that the Committee may grant up to 5% of the aggregate number of Authorized Shares for issuance under this Plan (as described in Section 2.1) as Awards without a minimum vesting and/or Performance Period. +3.4. Limitations Applicable to Section 16 Persons . Notwithstanding any other provision of the Plan, any Award granted or awarded to any individual who is then subject to Section 16 of the Exchange Act shall be subject to any additional limitations set forth in any applicable exemptive rule under Section 16 of the Exchange Act (including Rule 16b-3) that are requirements for the application of such exemptive rule. To the extent permitted by applicable law, the Plan and Awards granted or awarded hereunder shall be deemed amended to the extent necessary to conform to such applicable exemptive rule. +3.5. At-Will Employment . Nothing in the Plan or in any Award Agreement hereunder shall confer upon any Participant any right to continue in the employ of, or as a Consultant for, the Company or any of its Subsidiaries, or as a Director, or shall interfere with or restrict in any way the rights of the Company and any of its Subsidiaries, which rights are hereby expressly reserved, to discharge any Participant at any time for any reason whatsoever, with or without cause, except to the extent expressly provided otherwise in a written agreement between the Participant and the Company and any of its Subsidiaries. +ARTICLE IV. +GRANTING OF OPTIONS TO EMPLOYEES, +CONSULTANTS AND NON-EMPLOYEE DIRECTORS +4.1. Eligibility . An Option may be granted to any Employee, Consultant or Non-Employee Director selected by the Committee subject to such terms and conditions not inconsistent with the Plan as the Committee shall impose. +7 +4.2. Qualification of Incentive Stock Options . No Incentive Stock Option shall be granted to any individual who is not an Employee of the Company or a Subsidiary Corporation. +4.3. Granting of Options . +(a) The Committee shall from time to time, in its discretion, and, subject to applicable limitations of the Plan: +(i) Determine the number of shares to be subject to such Options granted to the selected Employees, Consultants or Non-Employee Directors; +(ii) Subject to Section 4.2, determine whether such Options are to be Incentive Stock Options or Non-Qualified Stock Options; and +(iii) Determine the terms and conditions of such Options, consistent with the Plan. +(b) Any Incentive Stock Option granted under the Plan may be modified by the Committee to disqualify such Option from treatment as an “incentive stock option” under Section 422 of the Code. +ARTICLE V. +TERMS OF OPTIONS +5.1. Option Price . The price per share of Common Stock subject to each Option granted to Employees, Non-Employee Directors and Consultants shall be set by the Committee; provided, however , that: +(a) In the case of Incentive Stock Options, such price shall not be less than 100% (or, in the case of an Incentive Stock Option granted to a Ten Percent Stockholder, 110%) of the Fair Market Value of a share of Common Stock on the date the Option is granted (or the date the Option is modified, extended or renewed for purposes of Section 424(h) of the Code); and +(b) In the case of Non-Qualified Stock Options, such price shall not be less than 100% of the Fair Market Value of a share of Common Stock on the date the Option is granted. +5.2. Option Term . The term of an Option granted to an Employee, Consultant or Non-Employee Director shall be set by the Committee in its discretion; provided, however , that the term shall not be more than ten (10) years from the date the Option is granted, or five (5) years from the date the Option is granted if the Option is an Incentive Stock Option granted to a Ten Percent Stockholder. Except as limited by requirements of Section 409A or Section 422 of the Code, the Committee may extend the term of any outstanding Option in connection with any Termination of the Participant, but in no event to more than ten (10) years from the date the Option was granted, or amend any other term or condition of such Option relating to such a Termination. +5.3. Option Vesting . +(a) The period during which a Participant has the right to exercise an Option, in whole or in part, shall be set by the Committee and the Committee may determine that an Option may not be exercised in whole or in part for a specified period after it is granted. At any time after grant of an Option, the Committee may, in its discretion and subject to whatever terms and conditions it selects, accelerate the period during which an Option vests. +(b) No portion of an Option granted to an Employee, Consultant or Non-Employee Director which is unexercisable at Termination shall thereafter become exercisable, except as may be otherwise provided by the Committee either in the Award Agreement or by action of the Committee following the grant of the Option. +(c) To the extent that the aggregate Fair Market Value of Common Stock with respect to which Incentive Stock Options (determined as of the time of grant) are exercisable for the first time by a Participant during any calendar +8 +year under the Plan, and all other plans of the Company and any Subsidiary Corporation or parent corporation (as defined under Section 424(e) of the Code) exceeds $100,000, the Options shall be treated as Non-Qualified Stock Options to the extent required by Section 422 of the Code. The rule set forth in the preceding sentence shall be applied by taking Options and other Incentive Stock Options into account in the order in which they were granted. In addition, if a Participant does not remain in service with the Company or any Subsidiary Corporation at all times from the time an Incentive Stock Option is granted until three (3) months prior to the date of exercise thereof (or such other period as required by applicable law), such Option shall be treated as a Non-Qualified Stock Option. +ARTICLE VI. +EXERCISE OF OPTIONS +6.1. Partial Exercise . An exercisable Option may be exercised in whole or in part during the Option term. However, an Option shall not be exercisable with respect to fractional shares and the Committee may require that, by the terms of the Option, a partial exercise be with respect to a minimum number of shares. +6.2. Manner of Exercise . All or a portion of an exercisable Option shall be deemed exercised upon delivery of all of the following to the Secretary of the Company, or such other individual or entity designated by the Committee, or his, her or its office, as applicable: +(a) A written notice complying with the applicable rules established by the Committee stating that the Option, or a portion thereof, is exercised. Such rules may provide that for administrative convenience an Option may not be exercised during such period (not exceeding 10 days) as is specified in advance by the Committee. The notice shall be signed by the Participant or other Person then entitled to exercise the Option or such portion of the Option; +(b) Such representations and documents as the Committee, in its discretion, deems necessary or advisable to effect compliance with all applicable provisions of the Securities Act and any other federal, state or foreign securities laws or regulations. The Committee may, in its discretion, also take whatever additional actions it deems appropriate to effect such compliance including, without limitation, placing legends on share certificates and issuing stop-transfer notices to agents and registrars; +(c) In the event that the Option shall be exercised pursuant to Section 11.1 by any Person or Persons other than the Participant, appropriate proof of the right of such Person or Persons to exercise the Option; and +(d) Full cash payment to the Secretary of the Company for the shares with respect to which the Option, or portion thereof, is exercised. However, the Committee may, in its discretion, (i) allow payment, in whole or in part, through the delivery of shares of Common Stock owned by the Participant, duly endorsed for transfer to the Company with a Fair Market Value on the date of delivery equal to the aggregate exercise price of the Option or exercised portion thereof; (ii) allow payment, in whole or in part, through the surrender of shares of Common Stock then issuable upon exercise of the Option having a Fair Market Value on the date of Option exercise equal to the aggregate exercise price of the Option or exercised portion thereof; (iii) allow payment, in whole or in part, through the delivery of property of any kind which constitutes good and valuable consideration; (iv) allow payment, in whole or in part, through the delivery of a notice that the Participant has placed a market sell order with a broker with respect to shares of Common Stock then issuable upon exercise of the Option, and the broker timely pays a sufficient portion of the net proceeds of the sale to the Company in satisfaction of the Option exercise price; or (v) allow payment through any combination of the consideration provided in the foregoing subparagraphs (i), (ii), (iii) and (iv); provided, however , that the payment in the manner prescribed in the preceding paragraphs shall not be permitted to the extent that the Committee determines that payment in such manner shall result in an extension or maintenance of credit, an arrangement for the extension of credit, or a renewal or an extension of credit in the form of a personal loan to or for any Director or executive officer of the Company that is prohibited by Section 13(k) of the Exchange Act or other applicable law. +9 +6.3. Conditions to Issuance of Stock Certificates . The Company shall not be required to issue or deliver any certificate or certificates for shares of stock purchased upon the exercise of any Option or portion thereof prior to fulfillment of all of the following conditions: +(a) The admission of such shares to listing on all stock exchanges on which such class of stock is then listed; +(b) The completion of any registration or other qualification of such shares under any federal, state or foreign law, or under the rulings or regulations of the Securities and Exchange Commission or any other governmental regulatory body which the Committee shall, in its discretion, deem necessary or advisable; +(c) The obtaining of any approval or other clearance from any federal, state or foreign governmental agency which the Committee shall, in its discretion, determine to be necessary or advisable; +(d) The lapse of such reasonable period of time following the exercise of the Option as the Committee may establish from time to time for reasons of administrative convenience; and +(e) The receipt by the Company of full payment for such shares, including payment of any applicable withholding tax, which in the discretion of the Committee may be in the form of consideration used by the Participant to pay for such shares under Section 6.2(d). +6.4. Ownership and Transfer Restrictions . The Committee, in its discretion, may impose such restrictions on the ownership and transferability of the shares purchasable upon the exercise of an Option as it deems appropriate. Any such restriction shall be set forth in the respective Award Agreement and may be referred to on the certificates evidencing such shares. The Participant shall give the Company prompt notice of any disposition of shares of Common Stock acquired by exercise of an Incentive Stock Option within (a) two years from the date of granting (including the date the Option is modified, extended or renewed for purposes of Section 424(h) of the Code) such Option to such Participant, or (b) one year after the transfer of such shares to such Participant. +6.5. Additional Limitations on Exercise of Options . Participants may be required to comply with any timing or other restrictions with respect to the settlement or exercise of an Option, including a window-period limitation, as may be imposed in the discretion of the Committee. +ARTICLE VII. +AWARD OF RESTRICTED STOCK +7.1. Eligibility . Restricted Stock may be awarded to any Employee, Consultant or Non-Employee Director who the Committee determines should receive such an Award in accordance with the terms and conditions of the Plan. +7.2. Award of Restricted Stock . +(a) The Committee may from time to time, in its discretion, determine the purchase price, if any, the form of payment for Restricted Stock and other terms and conditions applicable to such Restricted Stock, consistent with the Plan; provided, however , that any such purchase price shall be no less than the par value of the Common Stock to be purchased, unless otherwise permitted by applicable state law. +(b) Upon the selection of an Employee, Consultant or Non-Employee Director to be awarded Restricted Stock, the Committee shall instruct the Secretary of the Company to issue such Restricted Stock and may impose such conditions on the issuance of such Restricted Stock as it deems appropriate, unless the Committee elects to use another system, such as book entries, as evidencing ownership of Restricted Stock. +7.3. Rights as Stockholders . Subject to Section 7.4, the Participant shall have, unless otherwise provided by the Committee, all the rights of a stockholder with respect to said shares, subject to the restrictions in his or her Award +10 +Agreement, including the right to vote such shares and the right to receive all dividends and other distributions paid or made with respect to the shares; provided, however , that, unless otherwise determined by the Committee at the time of grant, any distributions with respect to the Common Stock shall be subject to the restrictions set forth in Section 7.4. +7.4. Restriction . All shares of Restricted Stock issued under the Plan (including any shares received by Participants thereof with respect to shares of Restricted Stock as a result of stock dividends, stock splits or any other form of recapitalization) shall be subject to such restrictions as the Committee shall provide in the terms of the Award Agreement, which restrictions may include, without limitation, restrictions concerning voting rights and transferability and restrictions based on duration of employment, directorship or consultancy with the Company, Company performance and individual performance; provided, however , by action taken after the Restricted Stock is issued, the Committee may, on such terms and conditions as it may determine to be appropriate, remove any or all of the restrictions imposed by the terms of the Award Agreement. Restricted Stock may not be sold or encumbered until all restrictions are terminated or expire. Unless otherwise determined by the Committee, if no consideration was paid by the Participant upon issuance, a Participant’s rights in unvested Restricted Stock shall lapse, and such Restricted Stock shall be surrendered to the Company without consideration, upon Termination. +7.5. Repurchase of Restricted Stock . The Committee shall provide in the terms of each individual Award Agreement that the Company shall have the right to repurchase from the Participant the Restricted Stock then subject to restrictions under the Award Agreement immediately upon a Termination at a cash price per share equal to the price paid by the Participant for such Restricted Stock; provided, however , that the Committee in its discretion may provide that such rights shall not lapse in the event of a Termination following a Change in Control or because of the Participant’s retirement, death or disability or termination without cause, or otherwise. +7.6. Legend . In order to enforce the restrictions imposed upon shares of Restricted Stock hereunder, the Committee shall cause a legend or legends to be placed on certificates representing all shares of Restricted Stock that are still subject to restrictions under Award Agreements, which legend or legends shall make appropriate reference to the conditions imposed thereby. +7.7. Section 83(b) Election . If a Participant makes an election under Section 83(b) of the Code to be taxed with respect to the Restricted Stock as of the date of transfer of the Restricted Stock rather than as of the date or dates upon which the Participant would otherwise be taxable under Section 83(a) of the Code, the Participant shall deliver a copy of such election to the Company immediately after filing such election with the Internal Revenue Service. +ARTICLE VIII. +PERFORMANCE AWARDS, DEFERRED STOCK, STOCK PAYMENTS, RESTRICTED STOCK UNITS +8.1. Eligibility . One or more Performance Awards, Stock Payment Awards, Deferred Stock Awards and/or Restricted Stock Unit Awards may be granted to any Employee, Consultant or Non-Employee Director whom the Committee determines should receive such an Award. +8.2. Performance Awards . +(a) Any Employee, Consultant or Non-Employee Director selected by the Committee may be granted one or more Performance Awards. The value of such Performance Awards may be linked to any one or more of the Performance Criteria or other specific performance criteria determined appropriate by the Committee, in each case on a specified date or dates or over any period or periods determined by the Committee. +(b) Without limiting Section 8.2(a), the Committee may grant Performance Awards to any Covered Employee in the form of a cash bonus payable upon the attainment of objective Performance Goals which are established by +11 +the Committee, in each case on a specified date or dates or over any period or periods determined by the Committee. Any such bonuses paid to Covered Employees shall be based upon objectively determinable bonus formulas established in accordance with the provisions of Section 3.2. Unless otherwise specified by the Committee at the time of grant, the Performance Criteria with respect to a Performance Award payable to a Covered Employee shall be determined on the basis of GAAP. +8.3. Stock Payments . Any Employee, Consultant or Non-Employee Director selected by the Committee may receive Stock Payments in the manner determined from time to time by the Committee. The number of shares shall be determined by the Committee and may be based upon the Performance Criteria or other specific performance criteria determined appropriate by the Committee, determined on the date such Stock Payment is made or on any date thereafter. +8.4. Deferred Stock . Any Employee, Consultant or Non-Employee Director selected by the Committee may be granted an award of Deferred Stock in the manner determined from time to time by the Committee. The number of shares of Deferred Stock shall be determined by the Committee and may be linked to the satisfaction of one or more Performance Goals or other specific performance goals as the Committee determines to be appropriate at the time of grant, in each case on a specified date or dates or over any period or periods determined by the Committee. Common Stock underlying a Deferred Stock Award will not be issued until the Deferred Stock Award has vested, pursuant to a vesting schedule or the achievement of the applicable Performance Goals or other specific performance goals set by the Committee. Unless otherwise provided by the Committee, a Participant of Deferred Stock shall have no rights as a Company stockholder with respect to such Deferred Stock until such time as the Award has vested and the Common Stock underlying the Award has been issued. +8.5. Restricted Stock Units . Any Employee, Consultant or Non-Employee Director selected by the Committee may be granted an award of Restricted Stock Units in the manner determined from time to time by the Committee. The Committee is authorized to make awards of Restricted Stock Units in such amounts and subject to such terms and conditions as determined by the Committee at grant. The Committee shall specify the date or dates on which the Restricted Stock Units shall become fully vested and nonforfeitable, and may specify such conditions to vesting as it deems appropriate, and may specify that such Restricted Stock Units become fully vested and nonforfeitable pursuant to the satisfaction of one or more Performance Goals or other specific performance goals as the Committee determines to be appropriate at the time of the grant, in each case on a specified date or dates or over any period or periods determined by the Committee. The Committee shall specify the distribution dates applicable to each award of Restricted Stock Units which shall be no earlier than the vesting dates and may be determined at the election of the Employee, Consultant or Non-Employee Director, subject to compliance with Section 409A of the Code. On the distribution dates, the Company shall issue to the Participant one unrestricted, fully transferable share of Common Stock for each Restricted Stock Unit distributed, or, in the discretion of the Committee, an amount in cash equal to the Fair Market Value of such share of Common Stock on the distribution date, or a combination of both. +8.6. Term . The term of a Performance Award, Deferred Stock Award, Stock Payment Award and/or Restricted Stock Unit Award shall be set by the Committee in its discretion. +8.7. Exercise or Purchase Price . The Committee may establish the exercise or purchase price of a Performance Award, shares of Deferred Stock, shares distributed as a Stock Payment Award or shares distributed pursuant to a Restricted Stock Unit Award; provided, however , that such price shall not be less than the par value of a share of Common Stock, unless otherwise permitted by applicable state law. +8.8. Exercise upon Termination . A Performance Award, Deferred Stock Award, Stock Payment Award and/or Restricted Stock Unit Award is exercisable or distributable only prior to a Participant’s Termination; provided, however , that the Committee in its discretion may provide that the Performance Award, Deferred Stock Award, Stock Payment Award and/or Restricted Stock Unit Award may be exercised or distributed subsequent to a Termination following a Change in Control, or because of the Participant’s retirement, death or disability or termination without cause, or otherwise. +12 +8.9. Form of Payment . Payment of the amount determined under Section 8.2 above shall be in cash, in Common Stock or a combination of both, as determined by the Committee at grant. To the extent any payment under this Article VIII is effected in Common Stock, it shall be made subject to satisfaction of all provisions of Section 6.3. +ARTICLE IX. +STOCK APPRECIATION RIGHTS +9.1. Eligibility . A Stock Appreciation Right may be granted to any Employee, Consultant or Non-Employee Director selected by the Committee subject to such terms and conditions not inconsistent with the Plan as the Committee shall impose. +9.2. Grant of Stock Appreciation Rights . +(a) A Stock Appreciation Right shall have a term set by the Committee in its discretion; provided, however , that the term shall not be more than ten (10) years from the date the Stock Appreciation Right is granted. A Stock Appreciation Right shall be exercisable in such installments as the Committee may determine. A Stock Appreciation Right shall cover such number of shares of Common Stock as the Committee may determine. The exercise price per share of Common Stock subject to each Stock Appreciation Right shall be set by the Committee; provided, that such exercise price per share shall not be less than 100% of the Fair Market Value of a share of Common Stock on the date the Stock Appreciation Right is granted. A Stock Appreciation Right is exercisable only prior to the Participant’s Termination; provided, that the Committee may provide that Stock Appreciation Rights may be exercised following a Termination or following a Change in Control, or because of the Participant’s retirement, death or disability or termination without cause, or otherwise. +(b) A Stock Appreciation Right shall entitle the Participant (or other Person entitled to exercise the Stock Appreciation Right pursuant to the Plan) to exercise all or a specified portion of the Stock Appreciation Right (to the extent then exercisable pursuant to its terms) and to receive from the Company an amount determined by multiplying (i) the difference obtained by subtracting the exercise price per share of the Stock Appreciation Right from the Fair Market Value of a share of Common Stock on the date of exercise of the Stock Appreciation Right by (ii) the number of shares of Common Stock with respect to which the Stock Appreciation Right shall have been exercised, subject to any limitations the Committee may impose. +9.3. Payment and Limitations on Exercise . +(a) Payment of the amounts determined under Section 9.2(b) above shall be in cash, shares of Common Stock (based on its Fair Market Value as of the date the Stock Appreciation Right is exercised), or a combination of both, as determined by the Committee at grant. The Company shall not be required to issue or deliver any certificate or certificates for shares of stock issuable upon the exercise of any Stock Appreciation Right prior to fulfillment of the conditions set forth in Section 6.3 above. +(b) Participants of Stock Appreciation Rights may be required to comply with any timing or other restrictions with respect to the settlement or exercise of a Stock Appreciation Right, including a window-period limitation, as may be imposed in the discretion of the Committee. +ARTICLE X. +ADMINISTRATION +10.1. Committee . The members of the Committee shall be appointed by, and shall serve on the Committee at the pleasure of, the Board. Appointment of Committee members shall be effective upon acceptance of appointment. Committee members may resign at any time by delivering written notice to the Board. Vacancies in the Committee may be filled by the Board. +13 +10.2. Duties and Powers of Committee . It shall be the duty of the Committee to conduct the general administration of the Plan in accordance with its provisions. The Committee shall have the power to interpret the Plan and the Award Agreements, and to adopt such rules for the administration, interpretation and application of the Plan as are consistent therewith, to interpret, amend or revoke any such rules, to delegate authority in accordance with Section 10.5 and to amend any Award Agreement provided that the rights or obligations of the Participant of the Award that is the subject of any such Award Agreement are not affected adversely. Any such grant or award under the Plan need not be the same with respect to each Participant. Any such interpretations and rules with respect to Incentive Stock Options shall be consistent with the provisions of Section 422 of the Code. In its discretion, the Board may at any time and from time to time exercise any and all rights and duties of the Committee under the Plan except with respect to matters which under Rule 16b-3 are required to be determined in the discretion of the Committee. The Committee may, in its sole discretion, adopt special guidelines and provisions for persons who are residing in or employed in, or subject to, the taxes of, any domestic or foreign jurisdictions to comply with applicable tax and securities laws of such domestic or foreign jurisdictions. +10.3. Majority Rule; Unanimous Written Consent . The Committee shall act by a majority of its members in attendance at a meeting at which a quorum is present or by a memorandum or other written instrument signed by all members of the Committee. +10.4. Compensation; Professional Assistance; Good Faith Actions . Members of the Committee shall receive such compensation, if any, for their services as members as may be determined by the Board. All expenses and liabilities which members of the Committee incur in connection with the administration of the Plan shall be borne by the Company. The Committee may employ attorneys, consultants, accountants, appraisers, brokers or other persons as it may deem desirable for the administration of the Plan. The Committee, the Company and the Company’s officers and Directors shall be entitled to rely upon the advice, opinions or valuations of any such persons. All actions taken and all interpretations and determinations made by the Committee or the Board in good faith shall be final and binding upon all Participants, the Company and all other interested persons. No members of the Committee or Board shall be personally liable for any action, determination or interpretation made in good faith with respect to the Plan or Awards, and all members of the Committee and the Board shall be fully protected by the Company in respect of any such action, determination or interpretation. +10.5. Delegation of Authority . The Committee may, in its sole discretion, designate employees of the Company and professional advisors to assist the Committee in the administration of the Plan, including with respect to the execution of Award Agreements or other documents, and, to the extent permitted by applicable law, delegate from time to time some or all of its authority to grant Awards under the Plan to a committee or committees consisting of one or more members of the Board and/or one or more officers of the Company. The authority to grant awards, however, may not be delegated to: (a) individuals who are subject to the reporting rules under Section 16(a) of the Exchange Act, (b) individuals who are Covered Employees, and (c) individuals who are officers of the Company who are delegated authority by the Committee hereunder to grant Awards to himself or herself. Any delegation hereunder shall be subject to the restrictions and limits that the Committee specifies at the time of such delegation of authority and may be rescinded at any time by the Committee. At all times, any committee appointed under this Section 10.5 shall serve in such capacity at the pleasure of the Committee. +ARTICLE XI. +MISCELLANEOUS PROVISIONS +11.1. Transferability of Awards . +(a) Except as otherwise provided in Section 11.1(b): +(i) No Award under the Plan may be sold, pledged, assigned or transferred in any manner other than by will or the laws of descent and distribution or, subject to the consent of the Committee, pursuant to a DRO, unless and until +14 +such Award has been exercised, or the shares underlying such Award have been issued, and all restrictions applicable to such shares have lapsed; +(ii) No Award or interest or right therein shall be liable for the debts, contracts or engagements of the Participant or his successors in interest or shall be subject to disposition by transfer, alienation, anticipation, pledge, hypothecation, encumbrance, assignment or any other means whether such disposition be voluntary or involuntary or by operation of law by judgment, levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy), and any attempted disposition thereof shall be null and void and of no effect, except to the extent that such disposition is permitted by the preceding sentence; and +(iii) During the lifetime of the Participant, only the Participant may exercise an Option or other Award (or any portion thereof) granted to him under the Plan, unless it has been disposed of pursuant to a DRO; after the death of the Participant, any exercisable portion of an Option or other Award may, prior to the time when such portion becomes unexercisable under the Plan or the applicable Award Agreement, be exercised by his personal representative or by any Person empowered to do so under the deceased Participant’s will or under the then applicable laws of descent and distribution. +(b) Notwithstanding Section 11.1(a), the Committee, in its discretion, may determine to permit a Participant to transfer a Non-Qualified Stock Option to any one or more Permitted Transferees (as defined below), subject to the following terms and conditions: (i) a Non-Qualified Stock Option transferred to a Permitted Transferee shall not be assignable or transferable by the Permitted Transferee other than by will or the laws of descent and distribution; (ii) any Non-Qualified Stock Option which is transferred to a Permitted Transferee shall continue to be subject to all the terms and conditions of the Non-Qualified Stock Option as applicable to the original Participant (other than the ability to further transfer the Non-Qualified Stock Option); (iii) any transfer of a Non-Qualified Stock Option to a Permitted Transferee shall be without consideration; and (iv) the Participant and the Permitted Transferee shall execute any and all documents requested by the Committee, including, without limitation documents to (A) confirm the status of the transferee as a Permitted Transferee, (B) satisfy any requirements for an exemption for the transfer under applicable federal, state and foreign securities laws and (C) evidence the transfer. For purposes of this Section 11.1(b), “ Permitted Transferee ” shall mean, with respect to a Participant, any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships, any individual sharing the Participant’s household (other than a tenant or employee), a trust in which these individuals (or the Participant) control the management of assets, and any other entity in which these individuals (or the Participant) own more than 50% of the voting interests, or any other transferee specifically approved by the Committee after taking into account any federal, state, local and foreign tax and securities laws applicable to transferable Non-Qualified Stock Options. +11.2. Amendment, Suspension or Termination of the Plan and Awards . The Plan may be wholly or partially amended or otherwise modified, suspended or terminated at any time or from time to time by the Board or the Committee, retroactively or otherwise. However, neither the Board or the Committee may not take any action under this Section 11.2 without stockholder approval that, except as otherwise provided in the Plan, would require stockholder approval in accordance with applicable law or applicable stock exchange rule. The Board or the Committee may amend the terms of any Award theretofore granted, prospectively or retroactively, however, except as otherwise provided in the Plan, no such amendment shall, without the consent of the Participant, alter or impair any rights of the Participant under such Award without the consent of the Participant unless the Award itself otherwise expressly so provides. Except as otherwise provided in the Plan or required by law, no amendment, suspension or termination of the Plan shall, without the consent of the Participant, alter or impair any rights or obligations under any Award theretofore granted or awarded, unless the Award itself otherwise expressly so provides. No Awards may be granted or awarded during any period of suspension or after termination of the Plan, and in no event may any Award be granted under the Plan after January 3, 2027, but Awards granted prior to such date may extend beyond that date. +15 +11.3. Changes in Common Stock or Assets of the Company, Acquisition or Liquidation of the Company, Change in Control and Other Corporate Events . +(a) Subject to Section 11.3(d), in the event of any dividend or other extraordinary distribution (whether in the form of cash, Common Stock, other securities or other property), recapitalization, reclassification, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, liquidation, dissolution, or sale, transfer, exchange or other disposition of all or substantially all of the assets of the Company, or exchange of Common Stock or other securities of the Company, issuance of warrants or other rights to purchase Common Stock or other securities of the Company, or other similar corporate transaction or event that affects the Common Stock (including for these purposes, any Change in Control), then the Committee shall equitably adjust any or all of the following in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan or with respect to an Award: +(i) The number and kind of shares of Common Stock (or other securities or property) with respect to which Awards may be granted or awarded (including, without limitation, adjustments of the limitations in Section 2.1 on the maximum number and kind of shares which may be issued under the Plan and adjustments of the Award Limit); +(ii) The number and kind of shares of Common Stock (or other securities or property) subject to outstanding Awards; or +(iii) The grant or exercise price with respect to any Award. +(b) Subject to Section 11.3(e), unless provided otherwise in an Award Agreement or other agreement, upon a Change in Control of the Company: +(i) Each outstanding Option, Restricted Stock, Restricted Stock Unit and Stock Appreciation Right shall vest as of or immediately prior to the Change in Control if such Award is not assumed or continued or replaced with an Award that constitutes a Replacement Award. “ Replacement Award ” means an award (A) of the same type (e.g., Option, Restricted Stock Unit, etc.) as the Award, (B) that has a value at least equal to the value of the Award, (C) that relates to publicly traded equity securities of the Company or its successor in the Change in Control or another entity that is affiliated with the Company or its successor following the Change in Control or is payable solely in cash, and (D) the other terms and conditions of which are not less favorable to the Participant than the terms and conditions of the Award (including the provisions that would apply in the event of a subsequent Change in Control). A Replacement Award may be granted only to the extent it does not result in the Award or Replacement Award failing to comply with or be exempt from Code section 409A. Without limiting the generality of the foregoing, the Replacement Award may take the form of a continuation of the Award if the requirements of the two preceding sentences are satisfied. +(ii) If the Participant receives a Replacement Award in connection with a Change in Control, and the Participant is terminated by the Company without Cause within one year following the consummation of a Change in Control, (A) outstanding Options, Restricted Stock, Restricted Stock Units and Stock Appreciation Rights held by such Participant shall vest on the Participant’s Termination date and (B) outstanding Performance Awards, Stock Payments, Deferred Stock and other awards subject to Performance Criteria will be deemed achieved at the greater of (X) 100% target performance and (Y) actual performance through the Participant’s Termination date extrapolated through the end of the Performance Period on the assumption that performance will continue at the same rate through the end of the Performance Period, and all other terms and conditions will be deemed met as of the Participant’s Termination date. +(iii) With respect to each outstanding Performance Award, Stock Payment, Deferred Stock or other Award, the Committee may, in its sole discretion, provide that any such full or prorated Award will be paid under the provisions of this Section 11.3 prior to when any or all such Performance Criteria are certified (or without regard to whether they are certified) or may make necessary and appropriate adjustments in the Performance Criteria. +16 +(c) Subject to Section 11.3(e), in the event of any transaction or event described in Sections 11.3(a) or (b) or any other unusual or nonrecurring transactions or events affecting the Company, any of its Subsidiaries, or the financial statements of the Company or any of its Subsidiaries, or of changes in applicable laws, regulations or accounting principles, the Committee, in its discretion, and on such terms and conditions as it deems appropriate, either by the terms of the Award or by action taken prior to the occurrence of such transaction or event and either automatically or upon the Participant’s request, is hereby authorized to take any one or more of the following actions whenever the Committee determines that such action is appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan or with respect to any Award under the Plan, to facilitate such transactions or events or to give effect to such changes in laws, regulations or principles: +(i) To provide for the purchase of any such Award for an amount of cash equal to the amount that could have been attained upon the exercise of such Award or realization of the Participant’s rights had such Award been currently exercisable or payable or fully vested, or for the cancellation of such Award if no amount could have been attained upon the exercise of such Award or realization of the Participant’s rights had such Award been currently exercisable or payable or fully vested; +(ii) To provide for the replacement of such Award with other rights or property selected by the Committee in its discretion having an aggregate value not exceeding the amount that could have been attained upon the exercise of such Award or realization of the Participant’s rights had such Award been currently exercisable or payable or fully vested; +(iii) To provide that the Award cannot vest, be exercised or become payable after such event; +(iv) To provide that such Award shall be exercisable as to all shares covered thereby, notwithstanding anything to the contrary in Section 5.3 or the provisions of such Award; +(v) To provide that such Award be assumed by the successor or survivor corporation, or a parent or subsidiary thereof, or shall be substituted for by similar options, rights or awards covering the stock of the successor or survivor corporation, or a parent or subsidiary thereof, with appropriate adjustments as to the number and kind of shares and prices; +(vi) To make adjustments in the number and type of shares of Common Stock subject to outstanding Awards, and/or in the terms and conditions of (including the grant, exercise or purchase price), and the criteria included in, outstanding options, rights and awards and options, rights and awards which may be granted in the future; and +(vii) To provide that, for a specified period of time prior to such event, the restrictions imposed under an Award Agreement upon some or all shares of Restricted Stock, Restricted Stock Units or Deferred Stock may be terminated, and, in the case of Restricted Stock, some or all shares of such Restricted Stock may cease to be subject to repurchase under Section 7.5 or forfeiture under Section 7.4 after such event. +(d) Subject to Sections 11.3(e) and 3.2, the Committee may, in its discretion, include such further provisions and limitations in any Award, agreement or certificate, as it may deem equitable and in the best interests of the Company. +(e) No adjustment or action described in this Section 11.3 or in any other provision of the Plan shall be authorized to the extent that such adjustment or action would cause the Plan to violate Section 422(b)(1) of the Code. Furthermore, no such adjustment or action shall be authorized to the extent such adjustment or action would result in short-swing profits liability under Section 16 or violate the exemptive conditions of Rule 16b-3 unless the Committee determines that the Award is not to comply with such exemptive conditions. The number of shares of Common Stock subject to any Award shall always be rounded down to the next whole number. +(f) The existence of the Plan, the Award Agreement and the Awards granted hereunder shall not affect or restrict in any way the right or power of the Company or the stockholders of the Company to make or authorize any +17 +adjustment, recapitalization, reorganization or other change in the Company’s capital structure or its business, any merger or consolidation of the Company, any issue of stock or of options, warrants or rights to purchase stock or of bonds, debentures, preferred or prior preference stocks whose rights are superior to or affect the Common Stock or the rights thereof or which are convertible into or exchangeable for Common Stock, or the dissolution or liquidation of the company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise. +(g) In connection with the occurrence of any Equity Restructuring, and notwithstanding anything to the contrary in Sections 11.3(a) and 11.3(b): +(i) The number and type of securities subject to each outstanding Award and the exercise price or grant price thereof, if applicable, shall be equitably adjusted; and/or +(ii) The Committee shall make such equitable adjustments, if any, as the Committee in its discretion may deem appropriate to reflect such Equity Restructuring with respect to the aggregate number and kind of shares that may be issued under the Plan (including, but not limited to, adjustments of the limitations in Section 2.1 on the maximum number and kind of shares which may be issued under the Plan and adjustments of the Award Limit). The adjustments provided under this Section 11.3(f) shall be nondiscretionary and shall be final and binding on the affected Participant and the Company. +For purposes of this Section 11.3(f), “ Equity Restructuring ” shall mean a nonreciprocal transaction between the Company and its stockholders, such as a stock dividend, stock split, spin-off, rights offering or recapitalization through a large, nonrecurring cash dividend, that affects the number or kind of shares of Common Stock (or other securities of the Company) or the share price of Common Stock (or other securities) and causes a material change in the per share value of the Common Stock underlying outstanding Awards. +11.4. Tax Withholding . The Company or any of its Subsidiaries shall have the authority and the right to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy federal, state, local and foreign taxes (including the Participant’s FICA obligation) required by law to be withheld with respect to any taxable event concerning a Participant arising as a result of this Plan. The Committee may in its discretion and in satisfaction of the foregoing requirement allow a Participant to elect to have the Company withhold shares of Common Stock otherwise issuable under an Award (or allow the return of shares of Common Stock) having a Fair Market Value equal to the sums required to be withheld. Notwithstanding any other provision of the Plan, the number of shares of Common Stock which may be withheld with respect to the issuance, vesting, exercise or payment of any Award (or which may be repurchased from the Participant of such Award) in order to satisfy the Participant’s federal, state, local and foreign income and payroll tax liabilities with respect to the issuance, vesting, exercise or payment of the Award shall be limited to the number of shares which have a Fair Market Value on the date of withholding or repurchase equal to the aggregate amount of such tax liabilities based on the minimum statutory withholding rates for federal, state, local and foreign income tax and payroll tax purposes that are applicable to such supplemental taxable income. +11.5. Prohibition on Repricing . Subject to Section 11.3, the Committee shall not, without the approval of the stockholders of the Company, authorize the amendment of any outstanding Award to reduce its price per share. Furthermore, no Award shall be canceled and replaced with the grant of an Award having a lesser price per share without the further approval of stockholders of the Company. Subject to Section 11.2, the Committee shall have the authority, without the approval of the stockholders of the Company, to amend any outstanding award to increase the price per share or to cancel and replace an Award with the grant of an Award having a price per share that is greater than or equal to the price per share of the original Award. Furthermore, for purposes of this Section 11.6, except in connection with a corporate transaction involving the Company (including, without limitation, any stock dividend, stock split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination, or exchange of shares), the terms of outstanding Awards may not be amended to reduce the exercise price per share of outstanding Options or Stock Appreciation Rights or cancel outstanding Options or +18 +Stock Appreciation Rights in exchange for cash, other Awards or Options or Stock Appreciation Rights with an exercise price per share that is less than the exercise price per share of the original Options or Stock Appreciation Rights without the approval of the stockholders of the Company. +11.6. Forfeiture and Claw-Back Provisions . Pursuant to its general authority to determine the terms and conditions applicable to Awards under the Plan, the Committee shall have the right to provide, in an Award Agreement or otherwise, or to require a Participant to agree by separate written or electronic instrument, that: +(a) (i) Any proceeds, gains or other economic benefit actually or constructively received by the Participant upon any receipt or exercise of the Award, or upon the receipt or resale of any shares underlying the Award, must be paid to the Company, and (ii) the Award shall terminate and any unexercised portion of the Award (whether or not vested) shall be forfeited, if (x) a Termination occurs prior to a specified date, or within a specified time period following receipt or exercise of the Award, or (y) the Participant at any time, or during a specified time period, engages in any activity in competition with the Company, or which is inimical, contrary or harmful to the interests of the Company, as further defined by the Committee or (z) the Participant incurs a Termination for “cause” (as such term is defined in the sole discretion of the Committee, or as set forth in a written agreement relating to such Award between the Company and the Participant); and +(b) All Awards (including any proceeds, gains or other economic benefit actually or constructively received by the Participant upon any receipt or exercise of any Award or upon the receipt or resale of any shares underlying the Award) shall be subject to the provisions of any claw-back policy implemented by the Company, including, without limitation, any claw-back policy adopted to comply with the requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act and any rules or regulations promulgated thereunder, to the extent set forth in such claw-back policy and/or in the applicable Award Agreement. +11.7. Effect of Plan upon Other Compensation Plans . The adoption of the Plan shall not affect any other compensation or incentive plans in effect for the Company or any of its Subsidiaries. Nothing in the Plan shall be construed to limit the right of the Company or any of its Subsidiaries: (a) to establish any other forms of incentives or compensation for Employees, Directors or Consultants of the Company or any of its Subsidiaries, or (b) to grant or assume options or other rights or awards otherwise than under the Plan in connection with any proper corporate purpose including without limitation, the grant or assumption of options in connection with the acquisition by purchase, lease, merger, consolidation or otherwise, of the business, stock or assets of any corporation, partnership, limited liability company, firm or association. +11.8. Compliance with Laws . The Plan, the granting and vesting of Awards under the Plan and the issuance and delivery of shares of Common Stock and the payment of money under the Plan or under Awards granted or awarded hereunder are subject to compliance with all applicable federal, state, local and foreign laws, rules and regulations (including but not limited to federal, state and foreign securities law and margin requirements) and to such approvals by any listing, regulatory or governmental authority as may, in the opinion of counsel for the Company, be necessary or advisable in connection therewith. Any securities delivered under the Plan shall be subject to such restrictions, and the Person acquiring such securities shall, if requested by the Company, provide such assurances and representations to the Company as the Company may deem necessary or desirable to assure compliance with all applicable legal requirements. To the extent permitted by applicable law, the Plan and Awards granted or awarded hereunder shall be deemed amended to the extent necessary to conform to such laws, rules and regulations. +11.9. Titles . Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of the Plan. +11.10. Governing Law . The Plan and any agreements hereunder shall be administered, interpreted and enforced under the internal laws of the State of Delaware without regard to conflicts of laws thereof. +19 +11.11. Section 409A . To the extent an Award is a Section 409A Covered Award, the Award is intended to comply with Section 409A of the Code and, to the extent applicable, the Plan and Award Agreements shall be limited, construed and interpreted in accordance with Section 409A of the Code. Neither the Company nor any of its Subsidiaries shall be liable for any additional tax, interest or penalties that may be imposed on a Participant by Section 409A of the Code or any damages for failing to comply with Section 409A of the Code or this Section 11.12. Notwithstanding anything in the Plan or in an Award to the contrary, the following provisions shall apply to Section 409A Covered Awards: +(a) A Termination shall not be deemed to have occurred for purposes of any provision of a Section 409A Covered Award providing for payment upon or following a Participant’s Termination unless such Termination is also a “Separation from Service” within the meaning of Code Section 409A and, for purposes of any such provision of Section 409A Covered Award, references to a “termination,” “termination of employment” or like terms shall mean Separation from Service. Notwithstanding any provision to the contrary in the Plan or the Award, if the Participant is deemed on the date of the Participant’s Termination to be a “specified employee” within the meaning of that term under Code Section 409A(a)(2)(B) and using the identification methodology selected by the Company from time to time, or if none, the default methodology set forth in Code Section 409A, then with regard to any such payment under a Section 409A Covered Award, to the extent required to be delayed in compliance with Code Section 409A(a)(2)(B), such payment shall not be made prior to the earlier of (i) the expiration of the six (6)-month period measured from the date of the Participant’s Separation from Service, and (ii) the date of the Participant’s death. All payments delayed pursuant to this Section 11.12 (a) shall be paid to the Participant on the first day of the seventh month following the date of the Participant’s Separation from Service or, if earlier, on the date of the Participant’s death. +(b) Whenever a payment under a Section 409A Covered Award specifies a payment period with reference to a number of days, the actual date of payment within the specified period shall be within the sole discretion of the Company. +(c) If under the Section 409A Covered Award an amount is to be paid in two or more installments, for purposes of Code Section 409A, each installment shall be treated as a separate payment. +(d) With respect to any settlement or payment made on a Change in Control pursuant to a Section 409A Covered Award, a Change in Control shall not be deemed to occur unless such event constitutes a “change in control event” within the meaning of Section 409A of the Code. +Notwithstanding any provision of the Plan to the contrary, the Committee may adopt such amendments to the Plan and outstanding Award Agreements or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, that the Committee determines are necessary or appropriate to (x) exempt an Award from Section 409A of the Code and/or preserve the intended tax treatment of the benefits provided with respect to the Award, or (y) comply with the requirements of Section 409A of the Code. +11.12. Paperless Administration . In the event that the Company establishes, for itself or using the services of a third party, an automated system for the documentation, granting or exercise of Awards, such as a system using an internet website or interactive voice response, then the paperless documentation, granting or exercise of Awards by a Participant may be permitted through the use of such an automated system. +11.13. No Rights to Awards . No Participant or other Person shall have any claim to be granted any Award pursuant to the Plan, and neither the Company nor the Committee is obligated to treat Participants or any other Persons uniformly. +11.14. Unfunded Status of Awards . The Plan is intended to be an “unfunded” plan for incentive compensation. With respect to any payments not yet made to a Participant pursuant to an Award, nothing contained in the Plan or any program or Award Agreement shall give the Participant any rights that are greater than those of a general creditor of the Company or any of its Subsidiaries. +20 +11.15. Relationship to other Benefits . No payment pursuant to the Plan shall be taken into account in determining any benefits under any pension, retirement, savings, profit sharing, group insurance, welfare or other benefit plan of the Company or any of its Subsidiaries except to the extent otherwise expressly provided in writing in such other plan or an agreement thereunder. +11.16. Expenses . The expenses of administering the Plan shall be borne by the Company. +11.17. Severability of Provisions . If any provision of the Plan shall be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions hereof, and the Plan shall be construed and enforced as if such provisions had not been included. +21 +APPENDIX B +NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES +NON-GAAP FINANCIAL MEASURES +(unaudited, amounts in thousands) +Year Ended +December 31, +2022 +December 31, +2021 +Net income (loss) +314,969 +(119,423 +) +Interest expense, net +28,382 +24,609 +Income tax expense +4,560 +1,686 +Depreciation and amortization +229,259 +184,164 +EBITDA +577,170 +91,036 +Plus management adjustments: +Acquisition, integration and expansion (1) +63,435 +8,709 +Non-cash stock compensation (2) +29,595 +24,677 +Market-driven costs (3) +— +8,755 +Divestiture of business (4) +2,509 +7,849 +Gain on equity security investment, net (5) +(7,389 +) +(157 +) +Litigation (6) +237 +7,875 +Tax audit (7) +— +(24,877 +) +Insurance recovery, net (8) +(8,564 +) +(10,409 +) +Other +(163 +) +504 +Adjusted EBITDA +656,830 +113,962 +(1) +Represents transaction and integration costs, including earnout payments, related to acquisitions. +(2) +Represents non-cash amortization of equity awards issued under the Company’s Incentive Award Plan. +(3) +Represents market-driven severance, leased facility closures, and restructuring costs incurred as a result of significant declines in crude oil prices resulting from demand destruction from the COVID-19 pandemic and global oversupply. +(4) +Represents bad debt expense on the sale of the Well Support Services segment to, and related to the bankruptcy filing of Basic Energy Services. +(5) +Represents the realized and unrealized (gain) loss on an equity security investment composed primarily of common equity shares in a public company. +(6) +Represents increases, net in accruals related to contingencies acquired in business acquisitions. +(7) +Represents a reduction of the Company’s accrual related to tax audits acquired in business acquisitions or exceptional events. +(8) +Represents a gain on estimated insurance recovery in excess of book value due to a fire incident and net of losses associated with assets that were damaged in the fire and ultimately could not be repaired or recovered. +Year Ended +December 31, +2022 +Net cash used in operating activities +$ +454,391 +Net cash used in investing activities (1) : +Capital expenditures +(225,118 +) +Proceeds from disposal of assets +50,227 +Proceeds from insurance recoveries +15,351 +Net cash used in investing activities +(159,540 +) +Free cash flow +$ +294,851 +(1) +Excludes $27.2 million from the acquisition from Continental Intermodal Group LP and $0.5 million due to net working capital adjustments in connection with the acquisition of Alamo Pressure Pumping (“Alamo”). +NexTier 3990 Rogerdale Rd., Houston, Texas 77042 NexTierOFS.com +YOUR VOTE IS IMPORTANT! PLEASE VOTE BY: INTERNET Go • To: www.proxypush.com/NEX Cast your vote online P.O. BOX 8016, CARY, NC 27512-9903 • • Have your Proxy Card ready Follow the simple instructions to record your vote PHONE Call 1-866-475-3790 • • Use any touch-tone telephone • Have your Proxy Card ready Follow the simple recorded instructions MAIL • • Mark, sign and date your Proxy Card Fold and return your Proxy Card in the postage-paid envelope provided Nextier Oilfield Solutions Inc. Annual Meeting of Stockholders For Stockholders of record as of April 17, 2023 TIME: Tuesday, June 13, 2023 9:30 AM, Central Daylight Time PLACE: NexTier Oilfield Solutions Inc. headquarters 3990 Rogerdale Road, Houston, Texas 77042 This proxy is being solicited on behalf of the Board of Directors The undersigned hereby appoints Robert Drummond and Kevin M. McDonald (the “Named Proxies”), and each or either of them, as the true and lawful attorneys of the undersigned, with full power of substitution and revocation, and authorizes them, and each of them, to vote all the shares of capital stock of Nextier Oilfield Solutions Inc. which the undersigned is entitled to vote at said meeting and any adjournment thereof upon the matters specified and upon such other matters as may be properly brought before the meeting or any adjournment thereof, conferring authority upon such true and lawful attorneys to vote in their discretion on such other matters as may properly come before the meeting and revoking any proxy heretofore given. THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, SHARES WILL BE VOTED IDENTICAL TO THE BOARD OF DIRECTORS RECOMMENDATION. This proxy, when properly executed, will be voted in the manner directed herein. In their discretion, the Named Proxies are further authorized to vote upon such other matters that may properly come before the meeting or any adjournment or postponement thereof. You are encouraged to specify your choice by marking the appropriate box (SEE REVERSE SIDE) but you need not mark any box if you wish to vote in accordance with the Board of Directors’ recommendation. The Named Proxies cannot vote your shares unless you sign (on the reverse side) and return this card. PLEASE BE SURE TO SIGN AND DATE THIS PROXY CARD AND MARK ON THE REVERSE SIDE +Nextier Oilfield Solutions Inc. Annual Meeting of Stockholders Please make your marks like this: X THE BOARD OF DIRECTORS RECOMMENDS A VOTE: FOR PROPOSALS 1, 2, 3 AND 4 BOARD OF DIRECTORS PROPOSAL YOUR VOTE RECOMMENDS 1. To elect each of the eleven individuals named below until the 2024 Annual Meeting of Stockholders or, in each case, until his or her earlier death, retirement, resignation, or removal from the position of director. FOR AGAINST ABSTAIN 1a. Robert W. Drummond FOR 1b. Leslie A. Beyer FOR 1c. Stuart M. Brightman FOR 1d. Gary M. Halverson FOR 1e. Patrick M. Murray FOR 1f. Amy H. Nelson FOR 1g. Melvin G. Riggs FOR 1h. Bernardo J. Rodriguez FOR 1i. Michael Roemer FOR 1j. James C. Stewart FOR 1k. Scott R. Wille FOR FOR AGAINST ABSTAIN 2. To ratify the appointment of KPMG LLP as our independent auditor for the fiscal year ending FOR December 31, 2023. 3. To approve, in an advisory vote, the 2022 compensation of our named executive officers. FOR 4. To approve the amendment and restatement of the NexTier Oilfield Solutions Inc. Equity and FOR Incentive Award Plan. NOTE: Shareholders will also transact such other business as may properly come before the meeting or adjournment thereof. Check here if you would like to attend the meeting in person. Authorized Signatures—Must be completed for your instructions to be executed. Please sign exactly as your name(s) appears on your account. If held in joint tenancy, all persons should sign. Trustees, administrators, etc., should include title and authority. Corporations should provide full name of corporation and title of authorized officer signing the Proxy/Vote Form. Signature (and Title if applicable) Date Signature (if held jointly) Date \ No newline at end of file diff --git a/raw/proxies/0001688476/0001193125-23-124272/proxy_rpt.txt b/raw/proxies/0001688476/0001193125-23-124272/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..0f92bc48abcd6c43787cbec08383a7fc61606189 --- /dev/null +++ b/raw/proxies/0001688476/0001193125-23-124272/proxy_rpt.txt @@ -0,0 +1,8 @@ +Pre-Approved Related Party Transactions +The Audit Committee has determined that the following transactions will be deemed pre-approved or ratified and will not require review or approval of the Audit Committee, even if the aggregate amount involved will exceed $120,000, unless otherwise specifically determined by the Audit Committee. +• +Any employment by the Company of an executive officer of the Company or any of its subsidiaries if the related compensation conforms with our Company’s compensation policies and if the executive officer is not a Family Member of another executive officer or of a director of our Board; and +• +Any compensation paid to a director of our Board if the compensation is consistent with the Company’s Bylaws and any compensation policies. +Notwithstanding anything to the contrary in the Related Party Policy, in the event the Bylaws of the Company require review by our Board and/or approval of a Related Party Transaction, the Audit Committee, and its chairman, will not have the authority to review or approve a Related Party Transaction but will provide a recommendation to our Board for the Board’s use in its consideration of a given Related Party Transaction. +73 \ No newline at end of file diff --git a/raw/proxies/0001694028/0001387131-19-001829/proxy.txt b/raw/proxies/0001694028/0001387131-19-001829/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..a3cd41f3ff44827c4721d4cef2a1c3312fda8f97 --- /dev/null +++ b/raw/proxies/0001694028/0001387131-19-001829/proxy.txt @@ -0,0 +1,1421 @@ +DEF 14A +1 +lbrt-def14a_042319.htm +DEFINITIVE PROXY STATEMENT +lbrt-def14a_042319 +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Proxy Statement Pursuant to Section 14(a) of the +Securities Exchange Act of 1934 +(Amendment No. ) +Filed by the Registrant  ☒ +Filed by a party other than the Registrant  ☐ +Check the appropriate box: +☐ +Preliminary Proxy Statement +☐ Confidential, +for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +☒ Definitive +Proxy Statement +☐ Definitive +Additional Materials +☐ +Soliciting Material Pursuant to § 240.14a-12 +LIBERTY OILFIELD SERVICES INC. +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +☒  No fee required +☐   Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11 +1) +Title of each class of securities to which transaction applies: +2) +Aggregate number of securities to which transaction applies: +3) +Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on +which the filing fee is calculated and state how it was determined): +4) +Proposed maximum aggregate value of transaction: +5) +Total fee paid: +☐ Fee paid previously with preliminary materials. +☐ Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. +1) +Amount Previously Paid: +2) +Form, Schedule or Registration Statement No.: +3) +Filing Party: +4) Date +Filed: +LIBERTY OILFIELD SERVICES INC. +950 17 th Street, Suite 2400 +Denver, Colorado 80202 +NOTICE OF 2019 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD APRIL 23, 2019 +To our valued stockholders: +Notice is hereby given that the 2019 Annual Meeting of Stockholders (the “ Annual Meeting ”) of Liberty Oilfield Services Inc. (the “ Company ”) will be held on Tuesday, April 23, 2019, at 9:00 a.m. local time, at The Renaissance Denver City Center Hotel, 9 18 17 th Str eet, Denver, Colorado 80202. At the Annual Meeting, stockholders will be asked to: +1. Elect eight (8) directors to our board of directors to serve until the 2020 annual meeting or until their successors are duly elected and qualified ( Proposal 1 ); +2. Ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2019 ( Proposal 2 ); +3. Approve, on an advisory basis, the compensation of our named executive officers ( Proposal 3 ); +4. Approve, on an advisory basis, the frequency of future advisory votes to approve the compensation of our named executive officers at an interval of “every one year,” “every two years” or “every three years” ( Proposal 4 ); and +5. Transact such other business as may properly be brought before the Annual Meeting. +You can find more information, including the nominees for directors and details regarding our independent registered public accounting firm and executive compensation, in the attached proxy statement. The board of directors recommends that you vote in favor of each of the above proposals. Pursuant to the “notice and access” rules adopted by the Securities and Exchange Commission, we have elected to provide access to our proxy materials on the Internet. The approximate date on which this Proxy Statement, the accompanying Notice of Internet Availability of Proxy Materials (the “ Notice ”), proxy card, and the Company’s Annual Report on Form 10-K are first being made available to stockholders at http://astproxyportal.com/ast/21952/ is March 12, 2019. The Notice includes instructions on how to access our proxy materials over the Internet, vote online and request a printed copy of these materials. +Only stockholders of record at the close of business on February 25, 2019 are entitled to notice of, and to vote at, the Annual Meeting or any adjournment. A complete list of stockholders entitled to vote at the Annual Meeting will be available for examination during ordinary business hours at our principal executive offices located at 950 17 th Street, Suite 2400, Denver, Colorado 80202, for a period of ten (10) days prior to the Annual Meeting. This list of stockholders will also be available for inspection at the Annual Meeting. +IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE ANNUAL MEETING. ACCORDINGLY, EVEN IF YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON, WE URGE YOU TO COMPLETE, SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY CARD IN THE POSTAGE-PREPAID ENVELOPE PRIOR TO THE ANNUAL MEETING OR FOLLOW THE INTERNET OR TELEPHONE VOTING PROCEDURES DESCRIBED ON THE PROXY CARD. IF YOU ATTEND THE ANNUAL MEETING AND WISH TO VOTE IN PERSON, YOU MAY WITHDRAW YOUR PROXY AND VOTE IN PERSON. YOUR PROMPT CONSIDERATION IS GREATLY APPRECIATED. YOUR VOTE IS IMPORTANT TO US. +By Order of the Board of Directors, +/s/ R. Sean Elliott +R. Sean Elliott +Vice President, General Counsel and Corporate Secretary +Denver, Colorado +March 11, 2019 +IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING +TO BE HELD ON APRIL 23, 2019 +This Notice of Annual Meeting and Proxy Statement and our Annual Report on Form 10-K are available at +http://astproxyportal.com/ast/21952/ +i +TABLE OF CONTENTS +GENERAL INFORMATION ABOUT THE 2019 ANNUAL MEETING OF STOCKHOLDERS AND VOTING +1 +PROPOSAL 1 — ELECTION OF DIRECTORS +5 +THE BOARD AND ITS COMMITTEES +8 +EXECUTIVE OFFICERS +12 +COMPENSATION DISCUSSION & ANALYSIS +13 +COMPENSATION COMMITTEE REPORT +17 +EXECUTIVE COMPENSATION TABLES +1 8 +DIRECTOR COMPENSATION +22 +EQUITY COMPENSATION PLAN INFORMATION +23 +PROPOSAL 2 — RATIFICATION OF APPOINTMENT OF THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +24 +AUDIT COMMITTEE REPORT +26 +PROPOSAL 3 — ADVISORY VOTE TO APPROVE THE COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS +27 +PROPOSAL 4 — ADVISORY VOTE TO APPROVE THE FREQUENCY OF FUTURE ADVISORY VOTES TO APPROVE EXECUTIVE COMPENSATION +28 +SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT +29 +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +31 +SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE +37 +HOUSEHOLDING +37 +STOCKHOLDER PROPOSALS +37 +WHERE YOU CAN FIND MORE INFORMATION +37 +OTHER MATTERS +38 +1 +LIBERTY OILFIELD SERVICES INC. +950 17 th Street, Suite 2400 +Denver, Colorado 80202 +PROXY STATEMENT +GENERAL INFORMATION ABOUT THE 2019 ANNUAL MEETING OF STOCKHOLDERS AND VOTING +The enclosed proxy is solicited on behalf of the Board of Directors (the “ Board ”) of Liberty Oilfield Services Inc. (the “ Company ”) for use at the Company’s 2019 Annual Meeting of Stockholders that will be held on Tuesday, April 23, 2019, at 9:00 a.m. local time, at The Renaissance Denver City Center Hotel, 918 17th Street, Denver, Colorado 80202 (the “ Annual Meeting ”). In this proxy statement (the “ Proxy Statement ”) the terms “ Liberty ,” “ we ,” “ us ” and “ our ” all refer to the Company. This Proxy Statement contains important information for you to consider when deciding how to vote on the matters brought before the Annual Meeting. Please read it carefully. +We are providing these proxy materials to you in connection with the solicitation by the Board of proxies to be voted at the Annual Meeting and at any adjournment or postponement thereof. By executing and returning the enclosed proxy card or by voting via the Internet or by telephone as set forth herein, you authorize the persons named in the proxy to represent you and vote your shares on the matters described herein. Those persons will also be authorized to vote your shares to adjourn the Annual Meeting from time to time and to vote your shares at any adjournments or postponements of the Annual Meeting. +Pursuant to the “notice and access” rules adopted by the Securities and Exchange Commission (the “ SEC ”), we have elected to provide stockholders access to our proxy materials over the Internet. The approximate date on which this Proxy Statement, the accompanying Notice of Internet Availability of Proxy Materials (the “ Notice ”), proxy card, and the Company’s 2019 Annual Report to Stockholders are first being made available to stockholders at http://astproxyportal.com/ast/21952/ is March 12, 2019. The Notice includes instructions on how to access our proxy materials over the Internet and how to request a printed copy of the se materials. +Choosing to receive your future proxy materials by e-mail or to receive a single set of proxy materials per household will save the Company the cost of printing and mailing documents to you and will reduce the impact of the Company’s annual meetings on the environment. If you choose to receive future proxy materials by e-mail, you will receive an e-mail next year with instructions containing a link to those materials and a link to the proxy voting site. Your election to receive proxy materials by e-mail will remain in effect until you terminate it. +Annual Meeting Time & Location +Date: Tuesday, April 23, 2019 +Time: 9:00 a.m. local time +Location: The Renaissance Denver City Center Hotel, 918 17th Street, Denver, Colorado 80202 +Who Can Vote at the Annual Meeting +The Company’s Class A Common Stock, par value $0.01 per share (the “ Class A Common Stock ”), and Class B Common Stock, par value $0.01 per share (the “ Class B Common Stock ,” and together with the Class A Common Stock, the “ Common Stock ”), are the only classes of securities entitled to vote at the Annual Meeting. Holders of Class A Common Stock and Class B Common Stock will vote together as a single class on all matters presented at the Annual Meeting. Each share of Common Stock outstanding at the close of business on February 25, 2019 (the “ Record Date ”) entitles its holder to one vote with respect to each matter at the Annual Meeting, and only stockholders of record on the Record Date are entitled to notice of, and to vote, in person or by proxy, at the Annual Meeting. +A complete list of stockholders entitled to vote at the Annual Meeting will be available for examination during ordinary business hours at our principal executive offices located at 950 17 th Street, Suite 2400, Denver, Colorado 80202, for a period of ten (10) days prior to the Annual Meeting. This list of stockholders will also be available for inspection at the Annual Meeting. If you plan to attend the Annual Meeting in person, you may be asked to show proof of your stock ownership, such as a recent account statement, letter or proxy from your broker or other intermediary, along with photo identification. +2 +How to Vote at the Annual Meeting +Many holders of the Company’s Common Stock hold their shares through a broker, bank, trustee or other nominee rather than directly in their own name. As summarized below, there are some distinctions between shares held of record and those owned beneficially. +Stockholder of Record. If your shares are registered directly in your name with our transfer agent, American Stock Transfer & Trust Company LLC, then you are considered a “stockholder of record” with respect to those shares. In this case, a Notice or, if requested, a set of proxy materials has been sent to you directly by us. As a stockholder of record, you may vote over the Internet as described in the Notice that was mailed to you or, if you have received or requested a hard copy of this Proxy Statement and accompanying proxy card, you may vote by telephone as described on the proxy card, or by mail by marking, signing, dating and mailing your proxy card in the postage-paid envelope provided. Your designation of a proxy is revocable by following the procedures outlined in this Proxy Statement. The method by which you vote will not limit your right to vote in person at the Annual Meeting. If you submit a signed proxy card but do not give voting instructions as to how your shares of Common Stock should be voted on a particular proposal at the Annual Meeting, your shares will be voted in accordance with the recommendations of our Board stated in this Proxy Statement. +Beneficial Owners of Shares Held in Street Name. If your shares of our Common Stock are held in a brokerage account or by a bank, trust or other nominee or custodian, then you are considered the beneficial owner of those shares, which are held in “street name.” In this case, a Notice or, if requested, a set of proxy materials has been forwarded to you by the organization that holds your shares. The organization holding your account is considered the stockholder of record for purposes of voting at the Annual Meeting. As the beneficial owner, you have the right to instruct that organization as to how to vote the shares held in your account. If you are a beneficial owner of shares held in “street name,” you need to submit voting instructions to your broker, bank or other nominee in order to cast your vote. The Notice that was mailed to you by that organization has specific instructions for how to submit your vote, or if you have received or requested a hard copy of this Proxy Statement you may mark, sign, date and mail the accompanying voting instruction form in the postage-paid envelope provided. Your vote is revocable by following the procedures outlined in this Proxy Statement. However, since you are not a stockholder of record you may not vote your shares in person at the Annual Meeting without obtaining authorization from your broker, bank or other nominee. Whether or not you plan to attend the Annual Meeting, we urge you to vote by following the voting instructions provided to you to ensure that your vote is counted. +Telephone and Internet voting for stockholders of record will be available up until 11:59 PM Eastern Time on April 22, 2019, and mailed proxy cards must be received by April 22, 2019 in order to be counted at the Annual Meeting. If the Annual Meeting is adjourned or postponed, these deadlines may be extended. The voting deadlines and availability of telephone and Internet voting for beneficial owners of shares held in “street name” will depend on the voting processes of the organization that holds your shares of Common Stock. Therefore, we urge you to carefully review and follow the voting instructions card and any other materials that you receive from t hat organization. +If you receive more than one Notice, it is because your shares are registered in more than one name or are registered in different accounts. Please follow the instructions on each Notice received to ensure that all of your shares of Common Stock are voted. +“Broker Non-Votes” and their Effect on Proposals +A broker non-vote occurs when a broker, bank, trust or other nominee or custodian holding shares for a beneficial owner in “street name” does not vote the shares on a proposal because the nominee does not have discretionary voting power for a particular item and has not received instructions from the beneficial owner regarding voting. Brokers who hold shares for the accounts of their clients have discretionary authority to vote shares if specific instructions are not given, only with respect to “routine” items. +If your shares are held by a broker on your behalf and you do not instruct the broker as to how to vote your shares of Common Stock with regard to the election of directors ( Proposal 1 ), the advisory vote regarding the compensation of named executive officers ( Proposal 3 ) or the advisory vote regarding the frequency of future advisory votes to approve executive compensation ( Proposal 4 ), the broker may not exercise discretion to vote for or against those proposals because each of these proposals are considered “non-routine” under applicable New York Stock Exchange (“ NYSE ”) rules. With respect to the ratification of the appointment of Deloitte & Touche LLP (“ Deloitte ”) as our independent registered public accounting firm for the fiscal year ended December 31, 2019 ( Proposal 2 ), the broker may exercise its discretion to vote for or against that proposal in the absence of your instruction. Broker non-votes are not counted as votes in favor of or against any proposal. +Quorum Requirements for the Annual Meeting +The presence at the Annual Meeting, whether in person or by valid proxy, of stockholders holding a majority of the shares of Common Stock outstanding on the Record Date will constitute a quorum, permitting us to conduct our business at the Annual Meeting. On the Record Date, there were 67,241,273 of Class A Common Stock and 45,072,803 of Class B Common Stock issued and outstanding and entitled to be voted at the Annual Meeting. Abstentions (i.e. if you or your broker mark “ABSTAIN” on a proxy or voting instruction form, or if a stockholder of record attends the Annual Meeting but does not vote (either before or during the Annual Meeting)) and broker non-votes will be considered to be shares present at the Annual Meeting for purposes of constituting a quorum. +3 +Votes Required to Approval Proposals and Board Recommendation +Proposal +Required Vote +Board Recommendation +(1) To elect eight (8) directors to the Board to serve until the 2020 annual meeting or until their successors are duly elected and qualified. +Plurality of Votes Cast +FOR EACH NOMINEE +(2) To ratify the appointment of Deloitte as our independent registered public accounting firm for the fiscal year ending December 31, 2019. +Majority of Votes Cast +FOR +(3) To approve, on an advisory basis, the compensation of our named executive officers. +Majority of Votes Cast +FOR +(4) To approve, on an advisory basis, the frequency of future advisory votes to approve the compensation of our named executive officers at an interval of “every one year,” “every two years” or “every three years.” +Plurality of Votes Cast +ONE YEAR +Election of Directors . To be elected, director nominees must receive a plurality of the votes cast and entitled to vote in the election of directors at the Annual Meeting; this means that the eight (8) nominees receiving the highest number of “FOR” votes cast will be elected. Abstention and broker non-votes will have no effect on the outcome of the election of our directors ( Proposal 1 ) and cumulative voting is not permitted. +Ratification of our Independent Public Accounting Firm . The affirmative vote of a majority of the shares of Common Stock present in person or represented by proxy at the Annual Meeting is required to ratify the appointment of Deloitte as our independent registered public accounting firm for the fiscal year ending December 31, 2019 ( Proposal 2 ). Abstentions are not counted as votes cast and will have no effect on the outcome of this proposal. Brokers have discretionary authority in the absence of timely instructions from their customers to vote on this proposal. As a result, there will be no broker non-votes with respect to this proposal. +Approval of Named Executive Officer Compensation . Approval, on a non-binding advisory basis, of the compensation of our named executive officers requires the affirmative vote of a majority of the shares of Common Stock present in person or represented by proxy at the Annual Meeting ( Proposal 3 ). Abstentions and broker non-votes are not counted as votes cast and will have no effect on the outcome of this proposal. +Approval of Frequency of Future Advisory Votes to Approve the Compensation of Our Named Executive Officers. The voting frequency option (every one year, two years or three years) that receives the highest number of votes cast by the holders of shares of Common Stock present or represented by proxy and entitled to vote will be deemed the frequency for the advisory vote to approve the compensation of our named executive officers that has been approved, on an advisory basis, by stockholders. Abstentions and broker non-votes are not counted as votes cast and will have no effect on the outcome of this proposal. +The Board recommends that you vote: +FOR the election of each of the eight (8) nominees to serve on our Board until the 2020 annual meeting or until their successors are duly elected and qualified; +FOR the ratification of Deloitte as our independent registered public accounting firm for the fiscal year ending Dece mber 31, 20 19; +FOR the approval of the compensation of our named executive officers as disclosed in this Proxy Statement; and +FOR a frequency of every year for future advisory votes to approve the compensation of our named executive officers. +Revoking Your Proxy; Changing Your Vote +If you are a stockholder of record, you may revoke your proxy before the vote is taken at the Annual Meeting by: +• signing, dating and delivering a new proxy with a later date before the applicable deadline to our Corporate Secretary; +• attending and voting in person at the Annual Meeting; or +• filing a written revocation with our Corporate Secretary. +4 +If your shares are held in “street name,” you may submit new voting instructions by contacting your broker or other organization holding your shares. You may also vote in person at the Annual Meeting, which will have the effect of revoking any previously submitted voting instructions, if you obtain a legal proxy from the organization that holds your shares. +Your last vote or proxy will be the vote or proxy that is counted. Your attendance at the Annual Meeting will not automatically revoke your proxy. +Dissent and Appraisal Rights +No action is proposed at the Annual Meeting for which the laws of the State of Delaware or other applicable law provides a right of our stockholders to dissent and obtain appraisal of or payment for such stockholders’ Common Stock. +Solicitation Costs +The cost of preparing, assembling and mailing the proxy materials and of reimbursing brokers, nominees and fiduciaries for the out-of-pocket and clerical expenses of transmitting copies of the proxy materials to the beneficial owners of shares held of record by such persons, will be borne by the Company. The Company has retained D.F. King & Co., Inc. (“ D.F. King ”) to aid in the solicitation of proxies. It is estimated that the cost of D. F. King’s services will be approximately $8,500 plus expenses. In addition to the solicitation of proxies by mail, proxies may also be solicited by telephone, electronic communication, or personal communication by employees of D.F. King and the Company. +Voting Results +We will publish final results in a Current Report on Form 8-K to be filed with the SEC within four (4) business days following the A nnual Meeting. +Questions +You may call or contact our proxy solicitor, D.F. King, at (866) 342-8290 or via email at libertyoilfield@dfking.c om if you have any questions concerning this Proxy Statement. +PLEASE VOTE. YOUR VOTE IS IMPORANT TO US. +5 +PROPOSAL 1 — ELECTION OF DIRECTORS +A board of eight (8) directors is to be elected at the Annual Meeting. Each director elected to the Board will hold office until the next annual meeting or until his or her successor has been elected and qualified. Unless otherwise instructed, the proxy holders will vote the proxies received by them for the eight (8) director nominees named below, all of whom are presently directors of the Company. In the event that any nominee is unable or declines to serve as a director at the time of the Annual Meeting, the proxies will be voted for any nominee who shall be designated by the present Board to fill the vacancy, unless the size of the Board is reduced. The proxies cannot be voted for a greater number of persons than the number of nominees named in this proxy statement. It is not expected that any nominee will be unable or will decline to serve as a director. Biographical information regarding each nominee is set forth below, as well as a summary of the experiences, qualifications, attributes or skills that caused the Board to determine that each nominee should serve as a director of the Company. Each nominee’s experience is evaluated in determining the overall composition of the Board. +Name (Age) +Business Experience +Director +Since +Christopher A. Wright (54) +Mr. Wright has served on the Board since the initial public offering of the Company (the “IPO”). He has also served as our Chief Executive Officer since December 2016 and as the Chief Executive Officer of Liberty Oilfield Services Holdings LLC (“Liberty Holdings”), a prior subsidiary of the Company, since its formation in March 2011 until the IPO. Mr. Wright is the Executive Chairman of Liberty Resources LLC, an oil and natural gas exploration and production company focused in the Williston Basin, and was the Chief Executive Officer from its formation in September 2010 until March 2017. Mr. Wright founded Pinnacle Technologies, a company that developed and commercialized tiltmeter and microseismic fracture mapping, and served as Chief Executive Officer of Pinnacle Technologies from 1992 to 2006. From 2000 to 2006, Mr. Wright served as Chairman of Stroud Energy, Inc., a shale natural gas producer. Mr. Wright has a Bachelor of Science in Mechanical Engineering from the Massachusetts Institute of Technology (“MIT”) and conducted graduate work in electrical engineering at both the University of California-Berkeley and MIT. We believe that Mr. Wright’s experience leading our growth as our Chief Executive Officer and his extensive experience in the hydraulic fracturing services industry qualifies him for service on our Board. +2018 +William F. Kimble (59 ) +Mr. Kimble has served on the Board since the IPO and as Lead Director since October 2018. From 2009 until his retirement in 2015, Mr. Kimble served as the Office Managing Partner for the Atlanta office and Managing Partner - Southeastern United States at KPMG LLP (“KPMG”), one of the largest audit, tax and advisory services firms in the world. Mr. Kimble was also responsible for moderating KPMG’s Audit Committee Institute and Audit Committee Chair Sessions. Until his retirement, Mr. Kimble had been with KPMG or its predecessor firm since 1986. During his tenure with KPMG, Mr. Kimble also held numerous senior leadership positions, including Global Chairman of Industrial Markets. Mr. Kimble served as KPMG’s Energy Sector Leader for ten (10) years and was the executive director of KPMG’s Global Energy Institute. Mr. Kimble serves on the board of directors and the audit committee of PRGX Global, Inc. Mr. Kimble also serves on the board of directors, the special committee, and is chair of the audit committee of DCP Midstream Partners, LP. Mr. Kimble has a Bachelor of Accounting and Business Administration from Southern Methodist University. We believe that Mr. Kimble’s extensive accounting background and his experience as a director of public companies qualify him for service on our Board. +2018 +6 +Name (Age) +Business Experience +Director +Since +Cary D. Steinbeck (47) +Mr. Steinbeck has served on the Board since the IPO. Mr. Steinbeck served on the board of managers of Liberty Holdings from October 2016 until the IPO. Mr. Steinbeck has been a Managing Director at Shea Ventures, an investment firm, since October 2014. From 2007 to 2014, he served as a Managing Director at the Oakmont Corporation, an investment firm. Mr. Steinbeck is also a director at Liberty Resources LLC and is a Chartered Financial Analyst ® charterholder. Mr. Steinbeck has a Bachelor of Arts in Economics from the University of California, Santa Barbara, and a Master of Business Administration from the University of Southern California. We believe that Mr. Steinbeck’s experience in the private equity industry, energy sector investing experience, extensive board participation and understanding of financial markets will provide valuable insights for our Company and qualify him for service on our Board. +2018 +N. John Lancaster, Jr. (50) +Mr. Lancaster has served on the Board since the IPO. Mr. Lancaster is currently a Partner at Riverstone Holdings LLC (“ Riverstone ”), an energy-focused private equity firm. Prior to joining Riverstone in 2000, Mr. Lancaster was a director with The Beacon Group, LLC, a privately held firm specializing in principal investing and strategic advisory services in the energy and other industries. Prior to joining Beacon, Mr. Lancaster was a Vice President with Credit Suisse First Boston’s Natural Resources Group in Houston, Texas. Mr. Lancaster served on the board of directors of Cobalt International Energy, Inc., an exploration and production company, from May 2010 to May 2013. Mr. Lancaster has a Bachelor of Business Administration from the University of Texas at Austin and a Master of Business Administration from Harvard Business School. Mr. Lancaster has been nominated to serve on our Board by Riverstone pursuant to the stockholders’ agreement as further detailed herein. We believe Mr. Lancaster’s experience investing in the energy sector as well as his strong financial experience qualify him for service on our Board. +2018 +Brett Staffieri (40) +Mr. Staffieri has served on our Board since the IPO and served on the board of managers of Liberty Holdings from October 2016 until the IPO. Mr. Staffieri has been a Managing Director at Riverstone since 2014 and has worked at Riverstone since 2006. Mr. Staffieri has a Bachelor of Business Administration from the University of Texas at Austin and a Master of Business Administration from The Wharton School, where he graduated with honors. Mr. Staffieri has been nominated to serve on our Board by Riverstone pursuant to the stockholders’ agreement. We believe that Mr. Staffieri’s extensive experience investing in the energy sector, particularly with respect to his involvement in Liberty Holdings since its founding, qualifies him for service on our Board. +2018 +Peter A. Dea (65) +Mr. Dea has served on our Board since the IPO. Mr. Dea has been the Executive Chairman of Confluence Resources LP (“ Confluence ”) since September 2016. Mr. Dea has served as the President and Chief Executive Officer of Cirque Resources LP (“ Cirque ”) since May 2007. Both Confluence and Cirque are private oil and gas companies. From November 2001 through August 2006, Mr. Dea was President and Chief Executive Officer and a director of Western Gas Resources, Inc. (“ Western Gas ”). Mr. Dea joined Barrett Resources Corporation (“ Barrett ”) in November 1993 and served as Chief Executive Officer and director from November 1999 and as Chairman from February 2000 through August 2001. Western Gas and Barrett were public oil and gas companies. Prior to that Mr. Dea served in several geologic positions with Exxon Company, U.S.A. Mr. Dea currently serves as a director of Encana Corporation. Mr. Dea has a Bachelor of Arts in Geology from Western State Colorado University and a Masters of Science in Geology from the University of Montana. Mr. Dea also attended the Harvard Business School, Advanced Management Program. We believe that Mr. Dea’s extensive oil and gas exploration and production experience and involvement in state and national energy policies qualify him for service on our Board. +2018 +7 +Name (Age) +Business Experience +Director +Since +Ken Babcock (62) +Mr. Babcock has served on our Board since the IPO. Mr. Babcock is currently the Chief Executive Officer of Abaco Energy Technologies LLC (“ Abaco ”), a private Houston-based company that was formed by Riverstone in 2013 to focus on opportunities in manufacturing and services related to North American drilling, completion, and production, and associated infrastructure. Prior to joining Abaco, Mr. Babcock was the President and Chief Executive Officer of Titan Specialties, Ltd. (“ Titan ”), a Riverstone portfolio company, from 2008 until its sale to Hunting PLC in September 2011. Following the sale, Mr. Babcock remained at Titan until June 2012. Prior to joining Titan, from 2005 until 2008, Mr. Babcock served as President and Chief Executive Officer of International Logging, Inc. (“ ILI ”), also a Riverstone portfolio company, where he took a narrowly-focused mud logging company of over 300 employees to a diverse well site services organization of over 1,800 employees spread over 60 countries in a little over two years. Prior to joining ILI, Mr. Babcock was Director of Strategic Sales at Baker Hughes INTEQ and Vice President of Business Development at Noble Technology Services. Mr. Babcock began his career with EXLOG in 1980. Mr. Babcock has a Bachelor of Science in Geology from Florida State University. Mr. Babcock has been nominated to serve on our Board by Riverstone pursuant to the stockholders’ agreement. We believe that Mr. Babcock’s strong business leadership experience qualifies him for service on our Board. +2018 +Jesal Shah (33) +Mr. Shah has served on our Board since the IPO. Mr. Shah is a Principal of Riverstone, an energy-focused private equity firm. Mr. Shah joined Riverstone in 2010 and returned to Riverstone in 2015 after earning a Master of Business Administration. Prior to joining Riverstone, Mr. Shah worked in the Investment Banking Division of Credit Suisse. While at Credit Suisse, Mr. Shah worked on mergers and acquisitions and capital markets financings in the global energy sector. Mr. Shah has a Bachelor of Arts in Economics and Spanish from Tufts University and a Master of Business Administration from Harvard Business School. Mr. Shah has been nominated to serve on our Board by Riverstone pursuant to the stockholders’ agreement. We believe that Mr. Shah’s experience investing in the energy sector qualifies him for service on our Board. +2018 +Vote Required +The election of directors requires the affirmative vote of a plurality of the votes validly cast at the election. Neither abstentions nor broker non-votes will have any effect on the outcome of voting on director elections. +THE BOARD UNANIMOUSLY RECOMMENDS VOTING “ FOR ” +THE ELECTION OF EACH DIRECTOR NOMINEE. +8 +THE BOARD AND ITS COMMITTEES +THE BOARD +Status as a Controlled Company +Our Board has determined that we are a controlled company under NYSE corporate governance standards and, as a result, we qualify for and may rely on exemptions for certain director independence and corporate governance requirements of the NYSE. Under the rules of the NYSE, a listed company is a controlled company when more than 50% of the voting power is held by an individual, a group or another company. We are a controlled company because Riverstone, its affiliates and certain prior existing owners of Liberty Holdings own in excess of 50% of the voting power of our Common Stock. Consequently, the Company has availed itself of certain controlled company exemptions. A controlled company does not need its board of directors to have a majority of independent directors or to form independent compensation and nominating and governance committees. +If at any time we cease to be a controlled company, we will take all action necessary to comply with NYSE corporate governance standards, including appointing a majority of independent directors to our Board and ensuring we have a nominating and corporate governance committee and compensation committee composed entirely of independent directors, subject to the permitted “phase-in” period. +Composition of the Board +Prior to the IPO, our Board consisted of one member, Michael Stock. In connection with the IPO, we expanded our Board from one to eight members, Michael Stock resigned and eight new members were appointed. Our Board currently consists of a single class of eight directors each serving one-year terms. After we cease to be a controlled company, our Board will be divided into three classes of directors, with each class as equal in number as possible, serving staggered three-year terms, and such directors will be removable only for “cause.” +In connection with the IPO, we entered into a stockholders’ agreement with certain stockholders. This stockholders’ agreement provides Riverstone with the right to designate a certain number of nominees to our Board so long as they and their affiliates collectively beneficially own more than 10% of the outstanding shares of our Class A Common Stock. For further information on the stockholders’ agreement, see the section titled “ Related Party Transactions ” under the subtitle “ Stockholders’ Agreement .” +In evaluating director candidates, we assess whether a candidate possesses the integrity, judgment, knowledge, experience, skills and expertise that are likely to enhance the Board’s ability to manage and direct our affairs and business, including, when applicable, to enhance the ability of committees of the Board to fulfill their duties of increasing the length of time necessary to change the composition of a majority of the Board. +Board Leadership Structure and Role in Risk Oversight +Our Board does not have a policy regarding separation of the roles of Chief Executive Officer and Chairman of the Board. The Board believes it is in our best interests to make that determination based on circumstances from time to time. Currently, our Chief Executive Officer serves as the Chairman of the Board, and William F. Kimble, a non-employee independent director, serves as our Lead Director. As Lead Director, Mr. Kimble serves as a liaison between the Chairman and the non-management directors and presides at executive sessions of the non-management directors and any other Board meetings at which the Chairman is not present, among other responsibilities. Our Board believes that this structure, combined with our corporate governance policies and processes, creates an appropriate balance between strong and consistent leadership and independent oversight of our business. The Chairman chairs the meetings of our Board and stockholders, with input from the Lead Director, and as such, our Board believes that a person with a comprehensive knowledge of the Company is in the best position to serve the role of Chairman. +Our Board believes its administration of its risk oversight function has not affected its leadership structure. Risk is inherent with every business, and how well a business manages risk can ultimately determine its success. We face a number of risks, including those described under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2018. Our Board is actively involved in oversight of risks that could affect us. This oversight is conducted by the Board, which has responsibility for general oversight of risks, but the Audit Committee of the Board (the “ Audit Committee ”) assists the Board in fulfilling such oversight responsibilities. Risk assessment and oversight are an integral part of our governance and management processes. The Board encourages management to promote a culture that incorporates risk management into our corporate strategy and day-to-day business operations. Management discusses strategic and operational risks at regular management meetings, and beginning in 2019 will conduct specific strategic sessions during the year that include a focused discussion and analysis of the risks facing us. Throughout the year, senior management reviews risks with the Board at regular Board meetings as part of management presentations that focus on the Company’s overall operations and presents the steps taken by management to mitigate or eliminate such risks. +9 +The Board does not have a standing risk management committee, but rather administers this oversight function directly through the Board as a whole. The Board is responsible for monitoring and assessing strategic risk exposure, and the Audit Committee assists the Board in fulfilling such oversight responsibilities by overseeing our major financial risk exposures and the steps our management has taken to monitor and control these exposures. The Audit Committee also monitors compliance with legal and regulatory requirements and considers and approves or disapproves any related-person transactions. +Our Board expects to periodically review its leadership structure to ensure that it continues to meet the Company’s needs. +Director Independence and Family Relationships +The Company’s standards for determining director independence require the assessment of directors’ independence each year. A director cannot be considered independent unless the Board affirmatively determines that he or she does not have any relationship with management or the Company that may interfere with the exercise of his or her independent judgment, including any of the relationships that would disqualify the director from being independent under the rules of the NYSE. +The Board has assessed the independence of each non-employee director under the independence standards of the NYSE. The Board has determined that each of Messrs. Steinbeck, Kimble, Dea and Babcock is considered independent under the NYSE rules. In connection with its assessment of the independence of each non-employee director, the Board also determined that Messrs. Steinbeck, Kimble and Dea are independent as defined in Section 10A-3 of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”) and under the standards set forth by the NYSE applicable to members of the Audit Committee. Furthermore, none of our directors of officers have any family relationship with any director or other officers. “Family relationship” for this purpose means any relationship by blood, marriage or adoption, not more remote than first cousin. +BOARD COMMITTEES +Overview +Our Board has established an Audit Committee and a Compensation Committee (the “ Compensation Committee ”) as further detailed herein. The below chart sets for the members and chairperson of each Board committee. +Name +Audit Committee +Compensation Committee +William F. Kimble +* +Cary D. Steinbeck +• +• +Peter A. Dea +• +* +Brett Staffieri +• +•   Member  *   Chairperson +Audit Committee +Rules implemented by the NYSE and the SEC require us to have an Audit Committee comprised of at least three (3) directors who meet the independence and experience standards established by the NYSE and the Exchange Act. Our Audit Committee currently consists of three (3) directors, all of whom are independent under the rules of the SEC and the standards set forth by the NYSE applicable to members of an Audit Committee. Messrs. Kimble, Dea and Steinbeck are the members of our Audit Committee with Mr. Kimble serving as the chairperson. Each member of our Audit Committee is financially literate, and our Board has determined that Mr. Kimble qualifies as an “audit committee financial expert” as defined in applicable SEC rules. +The Audit Committee oversees, reviews, acts on and reports on various auditing and accounting matters to our Board, including: the selection of our independent accountants, the scope of our annual audits, fees to be paid to the independent accountants, the performance of our independent accountants and our accounting practices. The general purpose of our Audit Committee is to assist the Board in oversight responsibilities regarding the integrity of the Company’s financial statements, compliance with legal and regulatory requirements, performance of the independent registered public accounting firm engaged by the Company and the effectiveness of the Company’s internal audit functions. The Audit Committee operates under an Audit Committee charter that defines the committee’s primary duties in a manner consistent with the rules of the SEC and NYSE. A current copy of the Audit Committee charter is posted under the Corporate Governance section of our website, which is located at www.libertyfrac.com . +10 +Compensation Committee +While we are not currently required to do so on account of our “controlled company” status within the meaning of the NYSE corporate governance standards, in early March 2018, our Board formed the Compensation Committee. Our Compensation Committee currently consists of three (3) directors: Messrs. Staffieri, Dea and Steinbeck. Our Compensation Committee assists our Board in establishing salaries, incentives and other forms of compensation for officers and other employees. Our Compensation Committee also assists the Board with the administration and oversight of our incentive compensation and benefit plans. The Compensation Committee operates under a Compensation Committee charter that defines the committee’s primary duties. A current copy of the Compensation Committee charter is posted under the Corporate Governance section of our website, which is located at www.libertyfrac.com . +The Board has determined that Messrs. Dea and Steinbeck are independent under the standards set forth by the NYSE. Because we are a “controlled company” within the meaning of the NYSE corporate governance standards, we are not required to, and do not currently expect to, have a Compensation Committee comprised entirely of independent directors under the standards set forth by the NYSE applicable to members of the Compensation Committee. If and when we are no longer a “controlled company” within the meaning of the NYSE corporate governance standards, we may be required to make changes to the composition of our Compensation Committee so that it is comprised entirely of independent directors. +Nominating and Corporate Governance Committee +Because we are a “controlled company” within the meaning of NYSE corporate governance standards, we are not required to, and do not currently expect to, have a nominating and corporate governance committee. +If and when we are no longer a “controlled company” within the meaning of NYSE corporate governance standards, we will be required to establish a nominating and corporate governance committee. We anticipate that such a nominating and corporate governance committee would consist of three (3) directors who will be “independent” under the rules of the SEC. This nominating and corporate governance committee would identify, evaluate and recommend qualified nominees to serve on our Board and develop and oversee our internal corporate governance processes. Upon formation of a nominating and corporate governance committee, we would expect to adopt a nominating and corporate governance committee charter defining the committee’s primary duties in a manner consistent with NYSE standards. +MEETING ATTENDANCE OF THE BOARD AND BOARD COMMITTEES +During 2018, the Board met nine (9) times, the Audit Committee met nine (9) times and the Compensation Committee met five (5) times. Each director participated, whether in person or by telephone, in at least seventy-five percent (75%) of all meetings of the Board and the committees of which such director is a member. There is no formal policy as to director attendance at the Annual Meeting but our corporate governance guidelines encourage directors to attend. As this is our first Annual Meeting, we have no statistics for previous director attendance of annual meetings of stockholders. +CORPORATE CODE OF BUSINESS CONDUCT AND ETHICS +Our Board has adopted a Corporate Code of Business Conduct and Ethics (the “ Ethics Code ”) applicable to our employees, directors and officers, in accordance with applicable U.S. federal securities laws and the corporate governance rules of the NYSE. Any waiver of the Ethics Code may be made only by our Board or a Board committee and will be promptly disclosed as required by applicable SEC laws and the corporate governance rules of the NYSE. A current copy of the Ethics Code is posted under the Corporate Governance section of our website, which is located at www.libertyfrac.com . +COMMUNICATION WITH THE BOARD +The Board welcomes communications from the Company’s stockholders and other interested parties. Stockholders and any other interested parties may send communications to the Board, any committee of the Board, the Chairman of the Board or any other director in particular to: +Liberty Oilfield Services Inc. +950 17 th Street, Suite 2400 +Denver, Colorado 80202 +11 +Stockholders and any other interested parties should mark the envelope containing each communication as “Stockholder Communication with Directors” and clearly identify the intended recipient(s) of the communication. The Company’s General Counsel or other officer as designated by the Board, will review each communication received from stockholders and other interested parties and will forward the communication, as expeditiously as reasonably practicable, to the addressees if the communication falls within the scope of matters generally considered by the Board. To the extent the subject matter of a communication relates to matters that have been delegated by the Board to a committee or to an executive officer of the Company, then the Company’s General Counsel may forward the communication to the executive officer or chairman of the committee to which the matter has been delegated. The acceptance and forwarding of communications to the members of the Board or an executive officer does not imply or create any fiduciary duty of the Board members or executive officer to the person submitting the communications. +COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION +The members of the Compensation Committee are set forth above. During 2018, our last completed fiscal year, none of our executive officers served on the board of directors or compensation committee of a company that had an executive officer that served on our Board or Compensation Committee. Further, no member of our Board was an executive officer of a company in which one of our executive officers served as a member of the board of directors or compensation committee of that company. +12 +EXECUTIVE OFFICERS +The following sets forth certain information with respect to the executive officers of the Company as of March 1, 2019. +Name +Age +Position(s) +Christopher A. Wright +54 +Chairman of the Board and Chief Executive Officer +Michael Stock +57 +Chief Financial Officer and Treasurer +Ron Gusek +47 +President +R. Sean Elliott +44 +Vice President, General Counsel and Corporate Secretary +Ryan T. Gosney +45 +Chief Accounting Officer +See “ Proposal 1 – Election of Directors ” above for information regarding Mr. Wright. +Michael Stock – Chief Financial Officer and Treasurer . Michael Stock has served as our Chief Financial Officer since December 2016, our Treasurer since March 2018 and as the Chief Financial Officer of Liberty Holdings from April 2012 until our IPO. Mr. Stock served as a director of the Company from December 2016 up until the IPO. Prior to joining Liberty Holdings, from 2009 to 2012, he was employed by TAS Energy Inc., an industrial energy technology company. During his tenure, he served as Chief Financial Officer and was a key part of the raising of equity from leading investment groups including Kleiner Perkins, Element Partners, Natural Gas Partners and Credit Suisse. From 1997 to 2009, Mr. Stock served as Chief Financial Officer for Pinnacle Technologies. +Ron Gusek – President . Ron Gusek has served as our President since December 2016 and as the President of Liberty Holdings from November 2016 until the IPO. Mr. Gusek served as the Vice President of Technology and Development of Liberty Holdings, from 2014 until his promotion to President. Prior to joining Liberty Holdings, from 2011 to 2014, Mr. Gusek served as Vice President, Corporate Engineering and Technology of Sanjel Corporation, a global energy service company. Prior to joining Sanjel Corporation, from 2009 to 2011, Mr. Gusek was Director of Engineering for Zodiac Exploration, an oil and natural gas exploration and production company working in the central San Joaquin valley in California. From 2003 to 2008, Mr. Gusek was the Canadian Regional Manager of Pinnacle Technologies. Mr. Gusek has a Bachelor of Science in Mechanical Engineering from the University of Alberta. +R. Sean Elliott – Vice President, General Counsel and Secretary . Sean Elliott has served as our Vice President and General Counsel since March 2017 and our Corporate Secretary since the IPO. Between September 2016 and March 2017, Mr. Elliott worked as Assistant General Counsel at USAA Real Estate Company, a real estate investment firm. Between June 2015 and September 2016, Mr. Elliott served as Counsel at Haynes and Boone, LLP, an international corporate law firm. Between November 2007 and May 2015, Mr. Elliott served as Vice President, General Counsel, Corporate Secretary and Chief Compliance Officer of CARBO Ceramics Inc., an oilfield services production enhancement company. Mr. Elliott has a Bachelor of Arts in Economics and Business Administration from Austin College and a Doctor in Jurisprudence degree from the University of Texas at Austin. +Ryan T. Gosney – Chief Accounting Officer . Ryan Gosney has been our Chief Accounting Officer since March 2017. Between July 2016 and February 2017, Mr. Gosney served as the Chief Accounting Officer of Vantage Energy Inc. (“ Vantage ”), an oil and gas exploration and production company. Prior to joining Vantage, Mr. Gosney served as Chief Financial Officer for Dorado E&P Partners, LLC, an oil and gas company, from January 2012 to January 2016. Mr. Gosney began his career as an auditor with Arthur Andersen, LLP in September 1995 where he served in increasing roles of responsibility up to Audit Manager until June 2002. Mr. Gosney has also served as Controller for Patina Oil & Gas Corporation from October 2002 to October 2005 and Delta Petroleum Corporation from October 2005 to January 2012. Mr. Gosney has a Bachelor of Business Administration from Texas Christian University. +13 +COMPENSATION DISCUSSION & ANALYSIS +This Compensation Discussion and Analysis provides information about our rationale and policies with regard to the compensation of our principal executive officer, principal financial officer and our three other most highly-compensated executive officers (our “ Named Executive Officers ”) for 2018 and is intended to provide investors with the material information necessary for understanding our compensation policies and decisions regarding our Named Executive Officers as well as providing context for the tabular disclosure provided in the executive compensation tables below. Our Named Executive Officers for 2018 include: +Name +Title +Christopher A. Wright +Chairman of the Board (1) and Chief Executive Officer +Michael Stock +Chief Financial Officer (1) and Treasurer (2) +Ron Gusek +President +R. Sean Elliott +Vice President, General Counsel and Corporate Secretary (3) +Ryan T. Gosney +Chief Accounting Officer +(1) In connection with the IPO, Mr. Stock ceased to be a member of the Board and Mr. Wright was appointed to the Board. +(2) Mr. Stock was appointed Treasurer effective as of March 8, 2018. +(3) Mr. Elliott was appointed Corporate Secretary effective as of the closing of the IPO. +Implementation of Post-IPO Compensation Structure +Our IPO became effective in January 2018. Prior to the corporate reorganization and IPO of the Company, the board of directors of Liberty Oilfield Services LLC and LOS Acquisition Co I LLC and its subsidiaries (collectively, the “ Predecessor ”) was responsible for oversight of the compensation of our Chief Executive Officer, Chief Financial Officer and President, with the objective of attracting and retaining talented executives. The board of directors of our Predecessor had the authority to determine the compensation for these officers for the fiscal year ended December 31, 2017, although actual compensation determinations may have been delegated to one or more board members and input was considered from our Chief Executive Officer in making determinations regarding our exe cutive compensation. +After our IPO, we transitioned to a more standard public company compensation structure during 2018, which included: +• Formed the Compensation Committee in March 2018; +• Engaged Longnecker and Associates, an independent executive compensation consulting firm (the “ Compensation Consultant ”), to assist the Compensation Committee in transitioning our compensation structure to that comparable to our peer companies, including performing a thorough review of the Company’s and its peer companies’ executive compensation practices, designing and helping implement a compensation program for the Company’s Named Executed Officers and other executive officers in 2018; +• Formulated a peer group for compensation purposes with the assistance of the Compensation Consultant; +• Adjusted 2018 base salaries for our executive officers to better reflect market competitive levels; +• Granted time-based restricted stock unit awards; and +• Adopted executive team annual incentive program metrics, including target incentives. +Compensation Best Practices +The Company’s compensation program has been designed to support a strong governance model. Key elements of the program in support of this objective are set forth in the chart below: +What We Do +What We Don’t Do +✓ +Determine annual incentive compensation with the majority of the potential payment based upon the achievement of pre-established performance goals +x +x +x +No excise tax gross ups +No single-trigger severance +No excessive perquisites +✓ +Target the market median for all elements of compensation +x +No short-term or speculative trading of Company stock +✓ +Use an independent compensation consultant +x +No re-pricing of incentive awards +✓ +Hold regular executive sessions of the Compensation Committee without management present +x +No supplemental retirement plans +14 +Competitive Market Position, Peer Group and Role of Compensation Consultant +To further emphasize the alignment between Company performance and executive pay and to ensure compensation is competitive, the Compensation Committee generally targets the 50 th percentile for total compensation (base salary and short-term and long-term incentives), as reflected by various sources of compensation data (“ Market Data ”). The Market Data provided to the Compensation Committee by the Compensation Consultant includes compensation information from the Company’s peer companies as well as other broad-based compensation survey sources selected by the Compensation Consultant. +For purposes of setting 2018 compensation, the peer group companies (our “ Peer Group ”) used by the Compensation Committee included the following companies: +McDermott International, Inc. +Helmerich & Payne, Inc. +Patterson-UTI Energy, Inc. +Superior Energy Services, Inc. +C&J Energy Services, Inc. +RPC, Inc. +Keane Group, Inc. +Exterran Corporation +FTS International, Inc. +ProPetro Holding Corp. +Fairmount Santrol Holdings Inc. +Archrock, Inc. +Unit Corporation +Newpark Resources, Inc. +Oil States International, Inc. +Core Laboratories N.V. +Our Peer Group was selected based on companies that broadly represent related drilling and oilfield services businesses and are of reasonably comparable revenue size to the Company. While some of these companies have larger market capitalizations, these companies represent the market in which we most directly compete for qualified professionals. As a whole, our Peer Group reflects companies with related operations, of reasonably similar size, and with which we compete for talent. +Although the Compensation Committee used the Market Data to inform its decisions regarding the form and amount of compensation provided to the Named Executive Officers in 2018, the Compensation Committee has the final authority to make all decisions regarding compensation. In making these decisions, the Compensation Committee considered recommendations made by the Chief Executive Officer for the Named Executive Officers; however the final decisions were made by the Compensation Committee and the Board of Directors. Using the independence factors established by the SEC and the NYSE, the Compensation Committee determined that the Compensation Consultant’s work did not raise any conflicts of interest, and they are considered an independent consulting firm. +Objectives of Compensation +The goal of the Company’s compensation program is to help attract and retain qualified executive talent and to strengthen the alignment between executives and stockholders’ interests, enhancing stockholder value. To achieve this goal, the Compensation Committee’s decisions are guided by the following principles: provide a competitive compensation package; relate compensation to the performance of the Company and the individual; and align employee objectives with the objectives of stockholders by encouraging executive stock ownership. +In order to achieve these objectives, the Compensation Committee has created a compensation package that combines current and deferred cash compensation with equity-based compensation. The Company’s compensation program for executive officers consists of the following items: +• base salary; +• performance-based annual incentive payments under the Liberty Oilfield Services Inc. Long Term Incentive Plan (“ LTIP ”), which in 2018 were based upon the Company’s adjusted pre-tax earnings per share (“ Pre-Tax EPS ”), return on capital employed (“ ROCE ”) and personal performance; +• long-term equity awards under our LTIP, consisting of restricted stock units; and +• matching and discretionary contributions under the Liberty Oilfield Services 401(k) Savings Plan. +The Compensation Committee structures executive total direct compensation to emphasize performance through the annual incentive program and long-term incentives. The Compensation Committee believes that the compensation mix should strike a balance promoting long-term returns without motivating or rewarding excessive or inappropriate risk taking. +15 +Elements of Compensation +Base Salary +Each Named Executive Officer’s base salary is a fixed component of compensation for performing specific job duties and functions. The base salaries of the Named Executive Officers prior to the IPO were established at a level that the board of directors of our Predecessor and our Chief Executive Officer determined was necessary to retain the individual’s services. In 2018, based on the analysis provided by the Compensation Consultant and the recommendation of the Compensation Committee, the base salaries of our Named Executive Officers were increased to be more in line with the median salary of our peer group for each respective position, as follows: +Name +Pre-IPO Base Salary +Base Salary +(as of December 31, 2018) +Percent Increase +Christopher A. Wright +$500,000 +$600,000 +20.0% +Michael Stock +$375,000 +$400,000 +6.7% +Ron Gusek +$375,000 +$400,000 +6.7% +R. Sean Elliott +$350,000 +$360,000 +2.9% +Ryan T. Gosney +$255,000 +$270,000 +5.9% +Annual Incentive Award +In 2018, based on the analysis provided by the Compensation Consultant and the recommendation of the Compensation Committee, the Board established performance metrics and hurdles for our 2018 annual incentive pursuant to the terms of our LTIP that are focused on adjusted Pre-Tax EPS and ROCE results. The Compensation Consultant and Compensation Committee recommended, and the Board adopted, maintaining an element of discretion in the annual incentive for our executive officers in order to provide the Compensation Committee and Board the ability to apply some subjectivity to final payouts and the flexibility to respond to certain extraordinary events. No payout percentage will be earned for a metric if the actual Company performance of that metric is below the threshold level set forth below. Payouts for performance between threshold, target and maximum will be calculated using straight line interpolation. The overall payout amount for each participant is capped at 200% of each participant’s target incentive. The performance metrics, their related thresholds and weightings and actual performance for the year ended December 31, 2018 are set forth in the table below: +Performance Metric +Weighting +Threshold +Target +Maximum +Actual +Performance +Earned +Payout +Percentage +Adjusted Pre-Tax EPS (1) +40% +$2.13 +$3.20 +$4.27 +$2.57 +28% +ROCE (2) +40% +30% +45% +65% +43% +37% +Discretionary +20% +N/A +N/A +N/A +Variable +Variable +PAYOUT +50% +100% +200% +(1) Adjusted Pre-Tax EPS is equal to the Company’s 2018 Adjusted EBITDA (calculated as presented in the Company’s Annual Report on Form 10-K), plus non-cash equity compensation expense, minus interest expense, depreciation and amortization, divided by diluted weighted average shares outstanding (excluding RSUs) f or 2018. +(2) ROCE is equal to the Company’s 2018 Adjusted EBITDA (calculated as presented in the Company’s Annual Report on Form 10-K), plus non-cash equity compensation expense, minus depreciation and amortization, divided by the average of capital (debt, redeemable common units and equity) employed at Dec ember 31, 20 17 a nd 20 18. +Messrs. Wright, Stock and Gusek received a target payout of 20% of their discretionary incentive opportunity for 2018. Mr. Elliott received an above target payout of 25% of his discretionary incentive opportunity on account of his work in assisting the Company in its first year of public reporting and successful settlement of a litigation matter. Similarly, Mr. Gosney received an above target payout of 30% on account of his work in assisting the Company in its first year of public reporting and assistance preparing for compliance with Section 404 of the Sarbanes-Oxley Act. The target incentive for each Named Executive Officer and the 2018 annual incentive payout for each Named Executive Officer is set forth below: +Name +Target Annual +Incentive +(% of Base Salary) +Target Annual +Incentive ($) +Performance +Achievement Level +(% of Target) +Actual 2018 Annual +Incentive Payout +Christopher A. Wright +150% +$900,000 +86% +$772,891 +Michael Stock +125% +$500,000 +86% +$429,384 +Ron Gusek +125% +$500,000 +86% +$429,384 +R. Sean Elliott +100% +$360,000 +91% +$327,156 +Ryan T. Gosney +75% +$202,500 +96% +$194,151 +16 +Long-Term Incentive Compensation +In order to incentivize individuals providing services to us or our affiliates, the Board of our Predecessor adopted the LTIP prior to the completion of the IPO. The LTIP provides for the grant, from time to time, at the discretion of the Board and the Compensation Committee, of stock options, stock appreciation rights (“ SARs ”), restricted stock, restricted stock units (“ RSUs ”), stock awards, dividend equivalents, other stock-based awards, cash awards, substitute awards and performance awards. A total of 12,908,734 shares of our Class A Common Stock were initially reserved for issuance pursuant to awards under the LTIP. +On April 24, 2018, following recommendations by the Compensation Consultant and our Compensation Committee, our Board granted RSUs, which represent the right to receive shares of our Class A Common Stock following the applicable vesting period. The Compensation Committee considered the use of other forms of equity awards, including restricted stock and stock options, and ultimately determined to use RSUs given that they have a less dilutive effect than stock options and do not require the issuance of actual shares of Class A Common Stock unless and until vesting conditions are met. The Compensation Committee targeted the 50 th percentile for the value of RSUs for the Named Executive Officers as a group, and then allocated the value of RSUs to each of the Named Executive Officers based on Market Data and other internal equity considerations. The RSUs granted in 2018 vest ratably over a three-year period beginning on the date of grant. In addition to the three-year RSUs, Messrs. Elliott and Gosney received additional awards of RSUs that vest ratably over a two-year period beginning on the date of grant. These grants to Messrs. Elliott and Gosney were made with a shorter vesting period in order to recognize services provided to the Company prior to and in connection with the IPO. The Compensation Committee and our Board determined that a time-based vesting approach was appropriate given the Company’s recent transition to public company status and the desire to provide our Named Executive Officers with a long-term retention-focused award that also aligns the interests of our Named Executive Officers with those of our stockholders. +Other Compensation Elements +401(k) Plan. We currently maintain a retirement plan intended to provide benefits under Section 401(k) of the Internal Revenue Code of 1986, as amended (the “ Code ”) under which employees, including our Named Executive Officers, are allowed to contribute portions of their base compensation to a tax-qualified retirement account under the Liberty Oilfield Services 401(k) Savings Plan. We provide matching contributions at a rate of $1.00 for each $1.00 of employee contribution, subject to a cap of 6% of the employee’s salary. +Pension and Nonqualified Deferred Compensation. We have not maintained, and do not currently maintain, a defined benefit pension plan or nonqualified deferred compensation plan. +Employment Agreements . We have not entered into any employment, severance or change in control agreements with any of our Named Executive Officers. +Perquisites and Other Benefits . We provide limited perquisites to our Named Executive Officers. For example, none of our Named Executive Officers receive car allowances or Company-sponsored country club memberships. During 2017 and 2018, we did provide Mr. Elliott with travel and lodging assistance in connection with business activities at our headquarters in Denver, Colorado. This assistance was discontinued in 2019. +Anti-Hedging and Pledging Policy. Our Insider Trading Policy prohibits hedging and pledging of Company securities by providing that hedging or monetization transactions, whether direct or indirect, involving the Company’s securities and the pledging of Company securities as collateral are prohibited. The policy also prohibits transactions involving Company-based derivative securities. +Risk Assessment +The Compensation Committee reviewed our employee compensation practices and policies and determined that such policies do not encourage excessive or unnecessary risk-taking, and are not likely to have a material adverse effect on the Company. +Actions Taken Following 2018 Fiscal Year End +In January 2019, our Compensation Committee and Board approved a change to the structure of our long-term incentive awards in order to better align the awards with stockholder interests and to further the Company’s pay-for-performance philosophy. In accordance with the revised long-term incentive award structure, our Named Executive Officers were awarded RSUs with a mix of time and performance-based vesting conditions. One-half of the RSUs awarded to Messrs. Wright, Stock and Gusek vest ratably over a three-year period, and one-half vests at the end of a three-year performance period based on the Company’s performance against certain financial metrics. Messrs. Elliott and Gosney received RSU awards with similar time and performance-based vesting conditions, except that the mix for their awards was two-thirds time-based and one-third performance-based. +17 +COMPENSATION COMMITTEE REPORT +The information contained in this Compensation Committee Report shall not be deemed to be “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933, as amended (the “ Securities Act ”), or the Exchange Act, except to the extent that the Company specifically incorporates such information by reference in such filing. +The Compensation Committee reviewed and discussed the Compensation Discussion and Analysis required by Item 402 of Regulation S-K promulgated by the SEC with management of the Company, and, based on such review and discussions, the Compensation Committee recommended to the Board that such Compensation Discussion and Analysis be included in this Proxy Statement and incorporated by reference into the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018. +Compensation Committee of the Board of Directors: +Peter A. Dea, Chairman +Brett Staffieri, Member +Cary D. Steinbeck, Member +18 +EXECUTIVE COMPENSATION TABLES +Summary Compensation Table +The following table summarizes the compensation awarded to, earned by or paid to our Named Executive Officers for the fiscal years ended December 31, 2018, 2017 and 2016. +Name & Principal Position +Year +Salary +($) +Bonus +($) (3) +Stock +Awards +($) (4) +Option +Awards +($) (5) +Non-Equity +Incentive Plan +Compensation +($) (3) +All Other +Compensation ($) (6) +Total +($) +Christopher A. Wright +Chairman of the Board & +Chief Executive Officer (1) +2018 +575,000 +180,000 +2,981,289 +— +592,891 +24,500 +4,353,680 +2017 +349,890 +1,590,162 +— +— +— +5,722 +1,945,774 +2016 +124,313 +— +— +— +— +— +124,313 +Michael Stock +Chief Financial Officer, +Treasurer & Director (1) +2018 +393,750 +100,000 +1,325,013 +— +329,384 +24,067 +2,172,214 +2017 +282,668 +1,192,809 +— +— +— +8,513 +1,483,990 +2016 +183,921 +25,000 +— +— +— +— +208,921 +Ron Gusek +President +2018 +393,750 +100,000 +1,325,013 +— +329,384 +18,500 +2,166,647 +2017 +242,885 +1,192,809 +— +— +— +7,603 +1,443,297 +2016 +150,820 +25,000 +— +0 +— +— +175,820 +R. Sean Elliott (2) +Vice President, +General Counsel & +Corporate Secretary +2018 +357,500 +90,000 +1,093,130 +— +237,156 +49,678 +1,827,464 +2017 +280,667 +175,750 +— +— +— +52,822 +509,239 +Ryan T. Gosney (2) +Chief Accounting Officer +2018 +266,250 +60,750 +670,781 +— +133,401 +9,588 +1,140,770 +2017 +207,256 +156,683 +— +— +— +7,356 +371,295 +(1) In connection with our IPO, Mr. Stock ceased to be a member of our Board and Mr. Wright was appointed to our Board. +(2) Messrs. Elliott and Gosney joined us in March 2017, and as such, there is no compensation reported for Messrs. Elliott and Gosney for 2016. +(3) The amounts reported in the “Non-Equity Incentive Plan Compensation” column for 2018 reflect the portion of the 2018 annual incentive payouts related to achievement of the Company-wide performance metrics. The portion of the 2018 annual incentive payouts related to the discretionary component are reported in the “Bonus” column for 2018. +(4) The amounts shown do not reflect compensation actually received by the Named Executive Officer. Rather, amounts set forth in the “Stock Awards” column represent the aggregate grant date fair value of restricted stock unit awards computed in accordance with FASB ASC Topic 718 for financial statement reporting purposes in fiscal year 2018 by the Company with respect to restricted stock units. A discussion of the assumptions used in this valuation with respect to awards made in fiscal year 2018 may be found in Note 8 to the Company’s financial statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. The Class A Common Stock the Named Executive Officers received in exchange for their Class B Units in Liberty Holdings (defined and described further below) have not been included in this column as they did not have a grant date fair value for accounting purposes in 2018. +(5) Amounts reported in the “Option Awards” column reflect the aggregate grant date fair value, computed in accordance with FASB ASC Topic 718, of Class B-5 Units granted to Mr. Gusek during fiscal year 2016. The Class B-5 Units represent membership interests in Liberty Holdings that are intended to constitute profits interests for federal income tax purposes. Despite the fact that the Class B-5 Units do not require the payment of an exercise price, they are most similar economically to stock options. Accordingly, they are classified as “options” under the definition provided in Item 402(a)(6)(i) of Regulation S-K as an instrument with an “opti on-like feature.” +(6) For Mr. Elliott, amounts reported in the “All Other Compensation” column reflect (a) $18,500 of discretionary matching contributions made to his 401(k) plan account during the fiscal year ended December 31, 2018, and (b) $31,178 of travel, lodging, and related expenses during the fiscal year ended December 31, 2018. For the other Named Executive Officers, amounts reported in the “All Other Compensation” column reflect discretionary matching contributions made to each Named Executive Officer’s 401(k) plan account during the fiscal year ended December 31, 2018. +19 +Grants of Plan-Based Awards +The following table provides information for each of our Named Executive Officers regarding plan-based awards granted during fiscal year 2018. +Name +Grant Date +Estimated Future Payouts Under +Non-Equity Incentive Plan Awards (1) +All Other +Stock Awards: +Number of +Shares of Stock +or Units +(#) (2) +Grant Date +Fair Value +of Stock and +Option Awards +($) (3) +Threshold +($) +Target +($) +Maximum +($) +Christopher A. Wright +360,000 +720,000 +1,440,000 +4/24/2018 +149,513 +2,981,289 +Michael Stock +200,000 +400,000 +800,000 +4/24/2018 +66,450 +1,325,013 +Ron Gusek +200,000 +400,000 +800,000 +4/24/2018 +66,450 +1,325,013 +R. Sean Elliott +144,000 +288,000 +576,000 +4/24/2018 +54,821 +1,093,130 +Ryan T. Gosney +81,000 +162,000 +324,000 +4/24/2018 +33,640 +670,781 +(1) The amounts in these columns reflect the potential threshold, target and maximum payouts with respect to the Company-wide metrics under the 2018 annual incentive awards. The amounts reflected herein do include amounts that may be earned with respect to the discretionary component of the 2018 annual incenti ve awards. +(2) The amounts shown in this column reflect RSU awards granted to the Named Executive Officers during fiscal year 2018. +(3) The amounts shown do not reflect compensation actually received by the Named Executive Officer. Rather, amounts set forth in the “Stock Awards” column represent the aggregate grant date fair value of RSUs computed in accordance with FASB ASC Topic 718 for financial statement reporting purposes in fiscal year 2018 by the Company with respect to restricted stock units. A discussion of the assumptions used in this valuation with respect to awards made in fiscal year 2018 may be found in Note 8 to the Company’s financial statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. +Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table +Exchange of Class B Units +In connection with our corporate reorganization and the IPO, the Class B Units in Liberty Holdings (the “ Class B Units ”) previously granted to our Named Executive Officers that remained unvested were exchanged for restricted shares of our Class A Common Stock granted pursuant to the Liberty Oilfield Services Inc. Legacy Restricted Stock Plan. These restricted stock awards are subject to the same vesting conditions applicable to the Class B Units immediately prior to the exchange. Fully vested Class B Units held by our Named Executive Officers were exchanged for unrestricted shares of our Class A Common Stock. See below under “ Potential Payments Upon a Termination or Change in Control ” for additional information regarding the circumstances that could result in accelerated vesting of these awards. +20 +Outstanding Equity Awards at 2018 Fiscal Year-End +The following table reflects information regarding outstanding equity-based awards held by our Named Executive Officers as of December 31, 2018, which consist of restricted stock awards and RSU awards. +Name +Stock Awards +Number of +Shares or Units of +Stock That Have +Not Vested +(#) +Market Value of +Shares or Units of +Stock That Have +Not Vested +($) (4) +Christopher A. Wright +149,513 +(1) +1,936,193 +Michael Stock +66,450 +(1) +860,528 +Ron Gusek +66,450 +(1) +860,528 +194,988 +(2) +2,525,095 +R. Sean Elliott +41,116 +(1) +532,452 +13,705 +(3) +177,480 +Ryan T. Gosney +25,230 +(1) +326,729 +8,410 +(3) +108,910 +(1) These RSUs granted on April 24, 2018 vest in one-third increments on each of April 1, 2019, April 1, 2020 and April 1, 2021, so long as the applicable Named Executive Officer remains employed through such dates. +(2) The restricted stock awards vest one-half on each of October 31, 2019 and October 31, 2020, so long as Mr. Gusek remains employed through such dates. +(3) These RSUs granted on April 24, 2018 vest one-half on each of April 1, 2019 and April 1, 2020, so long as the applicable Named Executive Officer remains employed through such dates. +(4) Amounts in this column reflect the value of unvested RSU and restricted stock awards held by the Named Executive Officers calculated based on the closing price of our Class A Common Stock on December 31, 2018 of $12.95. +Option Exercises and Stock Vested +The following table reflects the value received by each Named Executive Officer on the exchange of vested Class B Units in Liberty Holdings for shares of our Class A Common Stock and the value received on the vesting of restricted stock awards and RSU awards during fiscal year 2018. +Name +Option Awards +Stock Awards +Number of +Shares Acquired +on Exercise +(#) (1) +Value Realized +on Exercise +($) (2) +Number of +Shares Acquired +on Vesting +(#) +Value Realized +on Vesting +($) (3) +Christopher A. Wright +2,800,950 +62,517,204 +— +— +Michael Stock +1,493,840 +33,342,509 +— +— +Ron Gusek +774,125 +17,278,470 +323,038 +6,329,740 +R. Sean Elliott +— +— +— +— +Ryan T. Gosney +— +— +— +— +(1) The amounts in this column reflect shares of Class A Common Stock received in exchange for each Named Executive Officer’s vested Class B Units in connection with the IPO. +(2) The amounts in this column reflect the value of the shares in the preceding column based on the closing price of our Class A Common Stock on the date of th e exchange. +(3) The amounts in this column reflect the value of the shares in the preceding column based on the closing price of our Class A Common Stock on the applicable vestin g date. +21 +Pension Benefits and Nonqualified Deferred Compensation +We do not maintain and our Named Executive Officers do not participate in any defined benefit pension plan or nonqualified deferred compensation plan. +Potential Payments Upon Termination or Change in Control +We do not currently maintain any employment agreements, severance agreements or change in control agreements with any of the Named Executive Officers. +Restricted Stock Awards. As of December 31, 2018, Mr. Gusek was the only Named Executive Officer with shares of restricted Class A Common Stock. The restricted shares will accelerate and become 100% vested upon a “change in control,” which generally occurs upon (i) the acquisition of 50% or more of the total fair market value or total voting power of our outstanding securities, (ii) the acquisition (other than by Riverstone or its affiliates until such time as Riverstone or its affiliates holds less than 20% of the total voting power of our outstanding securities) of 30% or more of the total voting power of our outstanding securities, (iii) the replacement of a majority of our Board during any 12-month period with directors whose appointment or election is not endorsed by a majority of the Board prior to the date of the appointment or election, and (iv) a sale of 40% or more of the total gross fair market value of our assets. +RSU Awards . The RSUs held by our Named Executive Officers under the LTIP will accelerate and become 100% vested upon a termination of the Named Executive Officer’s employment with the Company due to the Named Executive Officer’s death or “disability.” For purposes of the RSU awards, “disability” means the Named Executive Officer’s inability to perform his duties, after accounting for reasonable accommodation, due to a mental or physical impairment that continues (or can reasonably be expected to continue) for (i ) 90 cons ecutive days or (ii) 180 days out of any 365-day period, which, in either case, shall only be deemed to occur following the written determination by the Company of any such occurrence of disability. +The table below sets forth the value of the accelerated vesting that would occur with respect to each Named Executive Officer in the event of a change in control or such Named Executive Officer’s death or disability had occurred on December 31, 2018, calculated based on the closing price of our Class A Common Stock on December 31, 2018 of $12.95. +Name +Change in +Control +($) +Death/ +Disability +($) +Christopher A. Wright +— +1,936,193 +Michael Stock +— +860,528 +Ron Gusek +2,525,095 +860,528 +R. Sean Elliott +— +709,932 +Ryan T. Gosney +— +435,638 +22 +DIRECTOR COMPENSATION +Following our IPO, we adopted a non-employee director compensation program that is applicable to each of our non-employee directors who are not also officers or employees of us or Riverstone. The Compensation Consultant also conducted an analysis of market-competitive total director compensation (annual retainers, meeting fees and equity awards) using the Company’s peer group as a comparative metric. Pursuant to this program, each non-employee director who is not an affiliate of Riverstone will receive the following compensation for their service on our Board: +• A cash retainer of $65,000 per year, payable quarterly in arrears; +• An additional cash retainer of $20,000 per year, payable quarterly in arrears if such non-employee director serves as the chairperson of our Audit Committee; +• An additional cash retainer of $15,000 per year, payable quarterly in arrears if such non-employee director serves as the chairperson of our Compensation Committee; +• An additional cash retainer of $10,000 per year, payable quarterly in arrears if such non-employee director serves as the chairperson of a Nominating and Corporate Governance Committee, once established by the Company; +• An additional cash retainer of $20,000 per year, payable quarterly in arrears if such non-employee director serves as the Lead Director of the Company; +• An additional payment of $1,500 for each Board meeting attended in-person by such non-employee director; and +• Annual equity based compensation with an aggregate grant date value of $125,000, subject to the terms of the LTIP and the award agreement pursuant to which such award is granted. +In 2018, non-employee directors that were members of our Board received a one-time award under the LTIP with a grant date value equal to $225,000, subject to the terms and conditions of the LTIP and the award agreement pursuant to which such award is granted. These awards were made in the form of RSUs, based upon the average closing price for our Class A Common Stock for the 30 trading days prior to the date of such grant. In addition, each director will be reimbursed for out-of-pocket expenses incurred in connection with attending board and committee meetings. +The table below summaries the compensation our directors received for the fiscal year ended December 31, 2018. +Name +Fees Earned or +Paid in Cash +($) +Stock +Awards +($) (1) +Total +($) +William F. Kimble +94,889 +248,432 +343,321 +Cary D. Steinbeck +71,000 +248,432 +319,432 +Peter A. Dea +82,250 +248,432 +330,682 +Ken Babcock +71,000 +248,432 +319,432 +(1) The amounts shown do not reflect compensation actually received by the directors. Rather, amounts set forth in the Stock Awards column represent the aggregate grant date fair value of awards computed in accordance with FASB ASC Topic 718 for financial statement reporting purposes in fiscal year 2018 by the Company with respect to restricted stock units. A discussion of the assumptions used in this valuation with respect to awards made in fiscal year 2018 may be found in Note 8 to the Company’s financial statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. As of December 31, 2018, each director held 12,459 unvested RSUs. +23 +EQUITY COMPENSATION PLAN INFORMATION +The following table sets forth information about our Class A Common Stock that may be issued under equity compensation plans as of December 31, 2018. +Plan Category +Number of defined +securities to be +issued upon exercise +of outstanding +options, warrants +and rights +(a) (1) +Weighted–average +exercise price of +outstanding options, +warrants and rights +(b) (2) +Number of securities +remaining available +for future issuance +under equity +compensation plans +(excluding securities +reflected in +column (a)) +(c) (3) +Equity compensation plans approved by security holders +— +— +— +Equity compensation plans not approved by security holders +1,193,683 +— +11,715,051 +Total +1,193,683 +11,715,051 +(1) This column reflects shares of our Class A Common Stock subject to RSU awards granted under the LTIP outstanding and unvested as of December 31, 2018. No stock options or warrants have been granted under the LTIP. +(2) No stock options have been granted under the LTIP, and the RSU awards reflected in column (a) are not reflected in this column as they do not have an exercise price. +(3) This column reflects the total number of shares of Class A Common Stock remaining available for issuance under the LTIP. +Our only equity compensation plan is the LTIP. The LTIP was approved prior to our IPO but has not been approved by our public stockholders. Please read Note 8 to the Company’s financial statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 for a description of our equity compensation plans. In addition, a detailed description of the terms of the LTIP is available in our registration statement on Form S-1, last filed on January 2, 2018, under the heading “ Executive Compensation—Actions Taken Following Fiscal Year End—Long-Term Incentive Plan .” +24 +PROPOSAL 2 — RATIFICATION OF APPOINTMENT OF THE COMPANY’S INDEPEND ENT REGISTERED PUBLIC ACCOUNTING FI RM +The Audit Committee of the Board has appointed Deloitte & Touche LLP (“ Deloitte ”) as the Company’s independent registered public accounting firm to audit the financial statements of the Company for the fiscal year ending December 31, 2019. The audit of the Company’s consolidated financial statements for the fiscal year ended December 31, 2018 was completed by Deloitte on Febru ary 28, 20 19. Deloitte has acted as the Company’s independent registered public accounting firm since 2016. +The Board is submitting the appointment of Deloitte for ratification at the Annual Meeting. The submission of this matter for approval by stockholders is not legally required, but the Board and the Audit Committee believe the submission provides an opportunity for stockholders through their vote to communicate with the Board and the Audit Committee about an important aspect of corporate governance. If the stockholders do not ratify the appointment of Deloitte, the Audit Committee will reconsider the appointment of that firm as the Company’s auditors. +The Audit Committee has the sole authority and responsibility to retain, evaluate and replace the Company’s independent auditors, and stockholder ratification of this appointment does not limit the authority of the Audit Committee to change auditors at any time. Representatives of Deloitte are expected to be present at the Annual Meeting and will have an opportunity to make a statement if they so desire and will be available to respond to appropriate questions. +The following table summarizes the aggregate fees billed or expected to be billed by Deloitte for the fiscal years ended December 31, 2018 and 2017. +2018 +2017 +Audit Fees +$ +1,884,321 +$ +1,124,792 +Audit-Related Fees +98,000 +1,381,930 +Tax Fees +188,030 +601,245 +All Other Fees +— +— +Total Fees +$ +2,170,351 +$ +3,107,967 +Audit Fees +Deloitte’s fees were $1,884,321 in 2018 and $1,124,792 in 2017. In 2018, Deloitte’s audit fees related primarily to the audit and review of the consolidated financial statements for fiscal year 2018 included in our Annual Report for the year ended December 31, 2018. In 2017, Deloitte’s fees related primarily to the audit and review of the combined financial statements for fiscal years 2017 and 2016 included in our Annual Report for the year ended December 31, 2017 and Registration Statement on Form S-1. +Audit-Related Fees +Deloitte’s fees for audit-related services were $98,000 in 2018 and $1,381,930 in 2017. In 2018, audit-related fees related primarily to the Company’s shelf registration and consulting services related to the adoption of new accounting standards. In 2017, audit-related fees consisted primarily of fees billed for assurance and related services primarily in connection with the IPO. +Tax Fees +Deloitte’s fees for tax services were $188,030 in 2018 and $601,245 in 2017. Tax services primarily involve professional services rendered by Deloitte for tax compliance, tax advice and tax planning. +25 +All Other Fees +Deloitte did not provide any other products and services in 2018 and 2017 and consequently there were no other fees incurred. +Before Deloitte is engaged to render audit or non-audit services, the Audit Committee must pre-approve the engagement. The charter of the Audit Committee and its pre-approval policy provides that pre-approval is not required if the engagement is entered into pursuant to pre-approval policies and procedures established by the Audit Committee. The Chairman of the Audit Committee has the authority to grant pre-approvals, provided such approvals are within the pre-approval policy and presented to the Audit Committee at a subsequent meeting. The Audit Committee pre-approved all of the fees described in the table set forth above. The duties of the Audit Committee are described in the Charter of the Audit Committee that is posted on the Company’s website at www.libertyfrac.com under the Corporate Governance section. +Vote Required +A majority of the votes cast and entitled to vote is required to approve this proposal. If you properly give a proxy but do not indicate how you wish to vote, the person named on the proxy card, or if you do not name a proxy, your proxy will vote for the proposal. +THE AUDIT COMMITTEE AND THE BOARD RECOMMEND VOTING “ FOR ” THE +RATIFICATION OF APPOINTMENT OF DELOITTE AS THE COMPANY’S +INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE +FISCAL YEAR ENDING DECEMBER 31, 2019. +26 +AUDIT COMMITTEE REPORT +The information contained in this Audit Committee Report shall not be deemed to be “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act or the Exchange Act, except to the extent that the Company specifically incorporates such information by reference in such filing. +Primary Oversight Responsibilities +Our management is responsible for establishing a system of internal controls, assessing such controls and for preparing our consolidated financial statements in accordance with generally accepted accounting principles. Our independent registered public accounting firm is responsible for auditing our consolidated financial statements in accordance with standards of the Public Company Accounting Oversight Board (United States) (the “ PCAOB ”) and issuing its report based on its audit. +Under the Audit Committee’s charter, the purpose of the Audit Committee is to assist the Board in fulfilling its oversight responsibilities as to, among other duties: (1) the integrity of the Company’s financial statements; (2) the Company’s compliance with legal and regulatory requirements; (3) qualifications, independence and performance of the independent registered public accounting firm engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the Company; (4) effectiveness and performance of the Company’s internal audit function; (5) the annual preparation of this report and publishing this report in the Company’s Proxy Statement for its annual meeting of stockholders or its Annual Report on Form 10-K; and (6) performing such other functions as the Board may assign to the Audit Committee from time to time. +Oversight of Independent Auditors +In connection with the evaluation, appointment and retention of the independent registered public accounting firm, at least annually the Audit Committee reviews and evaluates the independence and quality control procedures of the independent registered public accounting firm and the experience and qualifications of its senior personnel providing audit services to the Company. Based on this evaluation, the Audit Committee has retained Deloitte as our independent registered public accounting firm for 2019. +2018 Audited Financial Statements +In connection with the preparation of the audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2018: +• The Audit Committee reviewed and discussed the audited financial statements and associated audit with the independent registered public accounting firm and management; +• The Audit Committee discussed with the independent registered public accounting firm the matters required to be discussed by Auditing Standard No. 1301 “Communications with Audit Committees” as adopted by the PCAOB. In general, these auditing standards require the independent registered public accounting firm to communicate to the Audit Committee certain matters that are incidental to the audit, such as any initiation of, or changes to, significant accounting policies, management judgments, accounting estimates and audit adjustments; disagreements with management; the independent registered public accounting firm’s judgment about the quality of our accounting principles; significant audit risks identified and any changes from planned audit strategy; the use of specialists on the audit team; and issues for which the independent registered public accounting firm have consulted outside the engagement team; and +• The Audit Committee has received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the PCAOB regarding the independent registered public accounting firm’s communication with the Audit Committee concerning independence, and has discussed the independent registered public accounting firm’s independence with the independent registered public accounting firm. The Audit Committee also considered whether the independent registered public accounting firm’s provision of non-audit services to us was compatible with maintaining their independence. +Based on the review and discussions noted above, the Audit Committee recommended to the Board that the audited consolidated financial statements of the Company for the year ended December 31, 2018 be included in our Annual Report on Form 10-K filed with the SEC. +Audit Committee of the Board of Directors: +William F. Kimble, Chairman +Cary D. Steinbeck, Member +Peter A. Dea, Member +27 +PROPOSAL 3 — ADVISORY VOTE TO APPROVE THE COMPENSATION OF THE COM PANY’S NAMED EXECUTIVE OF FICERS +Section 14A(a)(1) of the Exchange Act, which was added to the Exchange Act by Section 951 of the Dodd-Frank Act, affords the stockholders a vote to approve, on a non-binding, advisory basis, the compensation of our Named Executive Officers for the fiscal year ended December 31, 2018 (commonly known as a say-on-pay vote ). This vote is not intended to address any specific item of compensation and is not a vote on our general compensation policies, compensation of the Board, or our compensation policies as they relate to risk management. Section 14A(a)(2) of the Exchange Act requires us to hold a say-on-pay vote at least once every three years, although the Company currently intends to hold such vote annually. +As described more fully in the Compensation Discussion and Analysis section of this Proxy Statement and the accompanying tabular and narrative disclosures, the Company’s compensation policy is designed to attract and retain highly qualified executive officers. The Company’s compensation program seeks to align executive compensation with stockholder value on an annual and long-term basis through a combination of base pay, annual incentives, and certain long-term incentives. Please read the Compensation Discussion and Analysis section of this Proxy for additional details on our executive compensation program. +The Board strongly endorses the Company’s executive compensation program and recommends that the stockholders approve on an advisory, non-binding basis, the following resolution: +RESOLVED, that the stockholders approve, on an advisory basis, the compensation of the Company’s Named Executive Officers as described in the proxy statement, including the Compensation Discussion and Analysis and the tabular and narrative disclosure contained therein. +Vote Required +The approval, on a non-binding basis, of the compensation of our Named Executive Officers requires a majority of the votes cast and entitled to vote . If you properly give a proxy but do not indicate how you wish to vote, the person named on the proxy card, or if you do not name a proxy, your proxy will vote for the proposal. +THE BOARD RECOMMENDS VOTING “ FOR ” THE APPROVAL OF +THE COMPENSATION OF THE NAMED EXECUTED OFFICERS. +28 +PROPOSAL 4 — ADVISORY VOTE TO APPROVE THE FREQUENCY OF FUTURE ADVISO RY VOTES TO APPROVE EXECUTIVE COMPE NSATION +As described in Proposal 3 above, Section 14A of the Exchange Act affords stockholders an advisory say-on-pay vote to approve the Company’s executive compensation program. As required by Section 14A of the Exchange Act, this Proposal 4 affords stockholders an advisory vote on the frequency of future say-on-pay votes. The advisory vote on the frequency of the say-on-pay vote is a nonbinding vote as to how often future say-on-pay votes should occur: every year, every two years, or every three years. In addition, stockholders may abstain from voting on this Proposal 4; however, Section 14A of the Exchange Act requires the Company to hold the advisory vote on the frequency of the say-on-pay vote at least once every six years. +In formulating its recommendation, the Board considered that say-on-pay held every year would best enable stockholders to timely express their views on the Company’s executive compensation program and enable the Board and the Compensation Committee to determine current stockholder sentiment. However, because the advisory vote on executive compensation occurs well after the beginning of the compensation year and because the different elements of our executive compensation programs are designed to operate in an integrated manner and to complement one another, it may not be appropriate or feasible to change our executive compensation programs in consideration of one year’s advisory vote on executive compensation by the time of the following year’s annual meeting of stockholders. +The stockholders are being asked to vote among the following frequency options (not solely for or against the recommendation of t he Board): +• Choice 1—every year; +• Choice 2—every two years; +• Choice 3—every three years; or +• Choice 4—abstain from voting. +Vote Required +This advisory vote on the frequency of future say-on-pay votes is not binding on the Company or the Board. However, the Board will take into account the result of the vote when determining the frequency of future say-on-pay votes. The frequency to receive a plurality of the votes cast and entitled to vote (the frequency receiving the highest number of votes) will be elected. If you properly give a proxy but do not indicate how you wish to vote, the person named on the proxy card, or if you do not name a proxy, your proxy will vote for every one year. +THE BOARD RECOMMENDS VOTING FOR “ ONE YEAR ” +WITH RESPECT TO THE FREQUENCY OF FUTURE ADVISORY VOTES +TO APPROVE EXECUTIVE COMPENSATION. +29 +SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT +The following table sets forth the beneficial ownership of our common stock as of February 26, 2019, by: +* each person known to us to beneficially own more than 5% of any class of our outstanding voting securities; +* each member of our Board and each nominee to our Board; +* each of our Named Executive Officers; and +* all of our directors, director nominees and Named Executive Officers as a group. +Except as otherwise indicated, the persons listed below have sole voting and investment power with respect to all shares of our Common Stock beneficially owned by them, except to the extent this power may be shared with a spouse. All information with respect to beneficial ownership has been furnished by the 5% or more stockholders, directors or Named Executive Officers, as the case may be. Unless otherwise noted, the mailing address of each listed beneficial owner is 950 17th Street, Suite 2400, Denver, Colorado 80202. As of February 26, 2019, 68,741,273 shares of our Class A Common Stock were outstanding and 43,572,803 shares of our Class B Common Stock were outstanding. +Shares of Common Stock beneficially owned +Class A +Common Stock +Class B +Common Stock (1) +Combined Voting +Power (2) +Number +% +Number +% +Number +% +5% Stockholders +R/C Energy IV Direct Partnership, L.P. (3) +14,508,045 +21.1% +— +— +14,508,045 +12.9 % +R/C IV Liberty Holdings, L.P. (4) +2,604,248 +3.8% +30,810,350 +70.7% +33,414,598 +29.8% +Entities associated with Oakmont Corporation (5) +1,924,827 +2.8% +9,180,615 +21.1% +11,105,442 +9.9% +FMR LLC (6) +6,174,034 +9.0% +— +— +6,174,034 +5.5% +C. Mark Pearson (7) +653,252 +1.0% +3,158,435 +7.2% +3,811,687 +3.4% +Black Rock, Inc. (8) +3,415,041 +5.0% +— +— +3,415,041 +3.0% +Directors and Named Executive Officers: +Christopher A. Wright (10) +3,593,288 +5.2% +— +— +3,593,288 +3.2% +Michael Stock (10) +1,476,477 +2.1% +— +— +1,476,477 +1.3% +Ron Gusek (10) +1,308,688 +1.9% +— +— +1,308,688 +1.2% +Cary D. Steinbeck (9) +382,374 +* +— +— +382,374 +* +N. John Lancaster, Jr. +4,603 +* +32,713 +* +37,316 +* +Brett Staffieri +— +— +23,341 +* +23,341 +* +William F. Kimble +12,459 +* +— +— +12,459 +* +Peter A. Dea +12,459 +* +— +— +12,459 +* +Ken Babcock +71,282 +* +— +— +71,282 +* +Jesal Shah +— +— +— +— +— +— +R. Sean Elliott (10) +20,558 +* +— +— +20,558 +* +Ryan T. Gosney (10) +12,615 +* +— +— +12,615 +* +Directors and Named Executive Officers +as a group (12 persons) +6,894,803 +10.0% +56,054 +* +6,950,857 +6.2% +(1) Under the Liberty LLC Agreement, each Liberty Unit Holder has, subject to certain limitations, the right to cause Liberty LLC to acquire all or a portion of its Liberty LLC Units for, at Liberty LLC’s election, (i) shares of our Class A Common Stock at a redemption ratio of one share of Class A Common Stock for each Liberty LLC Unit redeemed, subject to conversion rate adjustments for stock splits, stock dividends and reclassification and other similar transactions or (ii) an equivalent amount of cash. In connection with any redemption of Liberty LLC Units pursuant to the Redemption Right or our Call Right, the corresponding number of shares of Class B Common Stock will be cancelled. See “Certain Relationships and Related Person Transactions – Liberty LLC Agreement” set forth herein. Beneficial ownership of Liberty LLC Units is not reflected as beneficial ownership of shares of our Class A Common Stock for which such units may be redeemed. +(2) Represents percentage of voting power of our Class A Common Stock and Class B Common Stock voting together as a single class. +(3) R/C Energy IV Direct Partnership, L.P. is an investment partnership affiliated with Riverstone/Carlyle Global Energy and Power Fund IV, L.P., or R/C IV. Management and control of R/C Energy IV Direct Partnership, L.P. is with its general partner, Riverstone/Carlyle Energy Partners IV, L.P., which is in turn managed and controlled by its general partner, R/C Energy GP IV, LLC, an affiliate of R/C IV. R/C Energy GP IV, LLC is managed by a management committee consisting of Pierre F. Lapeyre, Jr., David M. Leuschen, James T. Hackett, N. John Lancaster, Daniel A. D’Aniello and Edward J. Mathias. As a result, each of R/C Energy GP IV, LLC and Riverstone/Carlyle Energy Partners IV, L.P. may be deemed to share beneficial ownership of the shares held of record by R/C Energy IV Direct Partnership, L.P. The business address for each of the entities and individuals other than Messrs. D’Aniello and Mathias is c/o Riverstone Holdings, 712 Fifth Avenue, 36th Floor, New York, NY 10019. The business address for each of Messrs. D’Aniello and Mathias is c/o The Carlyle Group, 1001 Pennsylvania Avenue, N.W., Suite 200, Washington, D.C. 20004. +30 +(4) R/C IV Liberty Holdings, L.P. is an investment partnership affiliated with R/C IV. Management and control of R/C IV Liberty Holdings, L.P. is with its general partner, Riverstone/Carlyle Energy Partners IV, L.P., which is in turn managed and controlled by its general partner, R/C Energy GP IV, LLC, an affiliate of R/C IV. R/C Energy GP IV, LLC is managed by a management committee consisting of Pierre F. Lapeyre, Jr., David M. Leuschen, James T. Hackett, N. John Lancaster, Daniel A. D’Aniello and Edward J. Mathias. As a result, each of R/C Energy GP IV, LLC and Riverstone/Carlyle Energy Partners IV, L.P. may be deemed to share beneficial ownership of the shares held of record by R/C IV Liberty Holdings, L.P. The business address for each of the entities and individuals other than Messrs. D’Aniello and Mathias is c/o Riverstone Holdings, 712 Fifth Avenue, 36th Floor, New York, NY 10019. The business address for each of Messrs. D’Aniello and Mathias is c/o The Carlyle Group, 1001 Pennsylvania Avenue, N.W., Suite 200, Washington, D.C. 20004. +(5) This information is based solely on a Schedule 13G jointly filed with the SEC on February 8, 2019, by Oakmont Corporation, Robert A. Day and Laurel Road II, LLC, in which it reported that Oakmont Corporation has shared voting power and shared dispositive power as to 12,605,442 shares of Common Stock, Robert A. Day has shared voting power and shared dispositive power as to 12,605,442 shares of Common Stock and Laurel Road II, LLC has shared voting power and shared dispositive power as to 9,549,012 shares of Common Stock. The principal business address of the Oakmont Corporation, Mr. Day and Laurel Road II, LLC is 8 65 S. Figuer oa St., Suite 700, Los Angeles, CA 90017. +(6) This information is based solely on a Schedule 13G filed with the SEC on February 13, 2019, by FMR LLC, in which it reported that FMR LLC has sole voting power as to 773,086 shares of Class A Common Stock and sole dispositive power as to 6,174,034 shares of Class A Common Stock. The principal business address of FRM LLC is 245 Summer Street, Boston, MA 02210. +(7) This information is based solely on a Schedule 13G filed with the SEC on February 14, 2019, by Mr. Pearson, in which it reported that Mr. Pearson has sole voting power and sole dispositive power as to 3,811,687 shares of Common Stock. The principal business address of C. Mark Pearson is 1200 17th Street, Suite 200, Denver, CO 80202. +(8) This information is based solely on a Schedule 13G/A filed with the SEC on February 11, 2019, by BlackRock, Inc., in which it reported that BlackRock, Inc. has sole voting power and sole dispositive power as to 3,415,041 shares of Class A Common Stock. The principal business address of BlackRock, Inc. is 55 East 52 nd Street, New York, NY 10055. +(9) Includes 369,915 shares of Class A Common Stock held by the Steinbeck Family Trust. Mr. Steinbeck has voting and dispositive power over these shares. +(10) Shares of Class A Common Stock held by Messrs. Wright, Stock, Gusek, Elliott and Gosney include 49,838, 22,150, 22,150, 20,558 and 12,615 shares of stock, respectively, that will be received upon the vesting of RSUs on April 1, 2019. +* Less than 1.0%. +31 +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +Policies and Procedures for Review of Related Party Transactions +A “Related Party Transaction” is a transaction, arrangement or relationship in which the Company or any of its subsidiaries was, is or will be a participant, the amount of which involved exceeds $120,000, and in which any related person had, has or will have a direct or indirect material interest. A “Related Person” is: +• any person who is, or at any time during the applicable period was, one of our executive officers or one of our directors; +• any person who is known by us to be the beneficial owner of more than 5% of our Class A Common Stock; +• any immediate family member of any of the foregoing persons, which means any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law of a director, executive officer or a beneficial owner of more than 5% of our Class A Common Stock, and any person (other than a tenant or employee) sharing the household of such director, executive officer or beneficial owner of more than 5% of our Class A common stock; and +• any firm, corporation or other entity in which any of the foregoing persons is a partner or principal or in a similar position or in which such person has a 10.0% or greater beneficial ownership interest. +Our Board adopted a written related party transactions policy in connection with the IPO. Pursuant to this policy, our Audit Committee will review all material facts of all Related Party Transactions and either approve or disapprove entry into the Related Party Transaction, subject to certain limited exceptions. The determination of the Audit Committee is documented in the Audit Committee’s minutes. In determining whether to approve or disapprove entry into a Related Party Transaction, our Audit Committee takes into account, among other factors, the following: (i) whether the Related Party Transaction is on terms no less favorable than terms generally available to an unaffiliated third-party under the same or similar circumstances and (ii) the extent of the Related Person’s interest in the transaction. Furthermore, the policy requires that all Related Party Transactions required to be disclosed in our filings with the SEC be so disclosed in accordance with applicable laws, rules and regulations. +The following discussion is a brief summary of our corporate reorganization and certain material arrangements, agreements and transactions we have with related parties. It does not include all of the provisions of our material arrangements, agreements and transactions with related parties, does not purport to be complete and is qualified in its entirety by reference to the arrangements, agreements and transactions described. +Corporate Reorganization +On January 17, 2018, we completed our IPO of 14,640,755 shares of our Class A Common Stock at a public offering price of $17.00 per share, of which 14,340,214 shares were offered by us and 300,541 shares were offered by the selling shareholder. We used our net proceeds from the IPO to redeem ownership in us from certain Legacy Owners (as defined below) and contributed the remaining proceeds to Liberty Oilfield Services New HoldCo LLC (“ Liberty LLC ”) in exchange for units in Liberty LLC (the “ Liberty LLC Units ”). In connection with the IPO, we completed a corporate reorganization which included the following restructuring steps: +• Liberty Holdings contributed all of its assets to Liberty LLC in exchange for Liberty LLC Units; +• Liberty Holdings liquidated and distributed to its then-existing owners (the “ Legacy Owners ”) Liberty LLC Units pursuant to the terms of the limited liability company agreement of Liberty Holdings and the Master Reorganization Agreement dated as of January 11, 2018, by and among the Company, Liberty Holdings, Liberty LLC, and the other parties nam ed therein; +• Certain of the Legacy Owners directly or indirectly contributed all or a portion of their Liberty LLC Units to the Company in exchange for 55,685,027 shares of our Class A Common Stock, and 1,258,514 shares of restricted stock. Subsequent to the initial exchange, 1,609,122 shares of Class A Common Stock were redeemed for an aggregate purchase price of $25.9 million upon the exercise of the underwriters’ overallotment option; +• We issued the Legacy Owners that continued to own Liberty LLC Units (the “ Liberty Unit Holders ”) an aggregate amount of 48,207,372 shares of our Class B Common Stock; and +• We then contributed the net proceeds it received from the IPO to Liberty LLC in exchange for additional Liberty LLC Units such that the Company holds a total number of Liberty LLC Units equal to the number of shares of Class A Common Stock outstanding following the IPO. +32 +Related Party Transactions +The following is a description of transactions entered into, or in effect, after January 1, 2018 to which we have been a party, in which the amount involved in the transaction exceeds $120,000, and in which any of our directors, executive officers or beneficial owners of more than 5% of our voting securities, or affiliates or immediate family members of any of our directors, executive officers or beneficial owners of more than 5% of our voting securities, had or will have a direct or indirect material interest. We believe the terms obtained or consideration that we paid or received, as applicable, in connection with the transactions described below were comparable to terms available or the amounts that would be paid or received, as applicable, from unrelated third parties. +Liberty LLC Agreement +We entered into the Liberty LLC Amended and Restated Limited Liability Company Agreement (the “ Liberty LLC Agreement ”) in connection with the closing of our IPO, which provides for limitations on the ability of Liberty Unit Holders to transfer their Liberty LLC Units and provides the Company, as managing member of Liberty LLC, with the right to impose restrictions (in addition to those already in place) on the ability of Liberty Unit Holders to redeem their Liberty LLC Units pursuant to the Redemption Right (as defined below) to the extent the Company believes it is necessary to ensure that Liberty LLC will continue to be treated as a partnership for U.S. federal income tax purposes. +Redemption Rights +Under the Liberty LLC Agreement, each Liberty Unit Holder has, subject to certain limitations, the right (the “ Redemption Right ”) to cause Liberty LLC to acquire all or a portion of its Liberty LLC Units for, at Liberty LLC’s election, (i) shares of our Class A Common Stock at a redemption ratio of one share of Class A Common Stock for each Liberty LLC Unit redeemed, subject to conversion rate adjustments for stock splits, stock dividends and reclassification and other similar transactions or (ii) an equivalent amount of cash. Alternatively, upon the exercise of the Redemption Right, the Company (instead of Liberty LLC) will have the right (the “ Call Right ”) to, for administrative convenience, acquire each tendered Liberty LLC Unit directly from the redeeming Liberty Unit Holder for, at its election, (x) one share of Class A Common Stock or (y) an equivalent amount of cash. In addition, upon a change of control of the Company, the Company has the right to require each holder of Liberty LLC Units (other than the Company) to exercise its Redemption Right with respect to some or all of such unit holder’s Liberty LLC Units. In connection with any redemption of Liberty LLC Units pursuant to the Redemption Right or our Call Right, the corresponding number of shares of Class B Common Stock will be cancelled. As the Liberty Unit Holders redeem their Liberty LLC Units, our membership interest in Liberty LLC will be correspondingly increased, the number of shares of Class A Common Stock outstanding will be increased, and the number of shares of Class B Common Stock outstanding will be reduced. +Distributions and Allocations +Under the Liberty LLC Agreement, the Company has the right to determine when distributions will be made to the holders of Liberty LLC Units and the amount of any such distributions. If the Company authorizes a distribution, such distribution will be made to the holders of Liberty LLC Units generally on a pro rata basis in accordance with their respective percentage ownership of Libert y LLC Units. +Liberty LLC will allocate its net income or net loss for each year to the holders of Liberty LLC Units pursuant to the terms of the Liberty LLC Agreement, and the holders of Liberty LLC Units, including the Company, will generally incur U.S. federal, state and local income taxes on their share of any taxable income of Liberty LLC. Net income and losses of Liberty LLC generally will be allocated to the holders of Liberty LLC Units on a pro rata basis in accordance with their respective percentage ownership of Liberty LLC Units, subject to requirements under U.S. federal income tax law that certain items of income, gain, loss or deduction be allocated disproportionately in certain circumstances. To the extent Liberty LLC has available cash and subject to the terms of any future debt instruments, the Company intends to cause Liberty LLC to make (i) generally pro rata distributions to the holders of Liberty LLC Units, including the Company, in an amount sufficient to allow the Company to pay its taxes and to allow it to make payments under the Tax Receivable Agreements (as defined below), (ii) tax advances, which will be repaid upon exercise of the Redemption Right or the Call Right, as applicable, in an amount sufficient to allow each of the Liberty Unit Holders to pay its respective taxes on such holder’s allocable share of Liberty LLC’s taxable income after taking into account certain other distributions or payments received by the Liberty Unit Holders from Liberty LLC or the Company, and (iii) non-pro rata payments to the Company to reimburse it for its corporate and other overhead expenses. +Issuance of Equity +The Liberty LLC Agreement provides that, except as otherwise determined by us, at any time the Company issues a share of its Class A Common Stock or any other equity security, the net proceeds received by the Company with respect to such issuance, if any, shall be concurrently invested in Liberty LLC, and Liberty LLC shall issue to the Company one Liberty LLC Unit or other economically equivalent equity interest. Conversely, if at any time, any shares of Class A Common Stock are redeemed, repurchased or otherwise acquired, Liberty LLC shall redeem, repurchase or otherwise acquire an equal number of Liberty LLC Units held by the Company, upon the same terms and for the same price, as the shares of the Class A Common Stock are redeemed, repurchased or otherwise acquired. +33 +Competition +Under the Liberty LLC Agreement, the members have agreed that Riverstone and its affiliates will be permitted to engage in business activities or invest in or acquire businesses which may compete with our business or do business with our customers. +Dissolution +Liberty LLC will be dissolved only upon the first to occur of (i) the sale of substantially all of its assets or (ii) an election by us to dissolve the company. Upon dissolution, Liberty LLC will be liquidated and the proceeds from any liquidation will be applied and distributed in the following manner: (a) first, to creditors (including to the extent permitted by law, creditors who are members) in satisfaction of the liabilities of Liberty LLC, (b) second, to establish cash reserves for contingent or unforeseen liabilities and (c) third, to the members in proportion to the number of Liberty LLC Units owned by each of them. +Tax Receivable Agreements +As discussed above, the Company acquired Liberty LLC Units from certain of the Liberty Unit Holders in exchange for cash. In addition, the Liberty Unit Holders may redeem their Liberty LLC Units for shares of Class A Common Stock or cash, as applicable, in the future pursuant to the Redemption Right or the Call Right. Liberty LLC intends to make for itself (and for each of its direct or indirect subsidiaries that is treated as a partnership for U.S. federal income tax purposes and that it controls) an election under Section 754 of the Internal Revenue Code that will be effective for the year 2018 and each taxable year in which a redemption of Liberty LLC Units pursuant to the Redemption Right or the Call Right occurs. Pursuant to the Section 754 election, our acquisition (or deemed acquisition for U.S. federal income tax purposes) of Liberty LLC Units for cash as a part of the corporate reorganization and redemptions of Liberty LLC Units pursuant to the Redemption Right or the Call Right are expected to result in adjustments to the tax basis of the tangible and intangible assets of Liberty LLC. These adjustments will be allocated to the Company. Such adjustments to the tax basis of the tangible and intangible assets of Liberty LLC would not have been available to the Company absent its acquisition or deemed acquisition of Liberty LLC Units as a part of the corporate reorganization or pursuant to the exercise of the Redemption Right or the Call Right. The anticipated basis adjustments are expected to increase (for U.S. federal income tax purposes) the Company’s depreciation, depletion and amortization deductions and may also decrease the Company’s gains (or increase its losses) on future dispositions of certain assets to the extent tax basis is allocated to those assets. Such increased deductions and losses and reduced gains may reduce the amount of tax that the Company would otherwise be required to pay in the future. +In connection with the IPO, on January 17, 2018, the Company entered into two tax receivable agreements, (the “ Tax Receivable Agreements ”) with the Liberty Unit Holders and the selling shareholder (each such person and any permitted transferee, a “ TRA Holder ” and together, the “ TRA Holders ”). The Tax Receivable Agreements generally provide for the payment by the Company of 85% of the net cash savings, if any, in U.S. federal, state, and local income tax and franchise tax (computed using simplifying assumptions to address the impact of state and local taxes) that the Company actually realizes (or is deemed to realize in certain circumstances) in periods after the IPO as a result, as applicable to each TRA Holder, of (i) certain increases in tax basis that occur as a result of the Company’s acquisition (or deemed acquisition for U.S. federal income tax purposes) of all or a portion of such TRA Holder’s Liberty LLC Units in connection with the IPO or pursuant to the exercise of the Redemption Right or the Company’s Call Right, (ii) any net operating losses available to the Company as a result of the corporate reorganization, and (iii) imputed interest deemed to be paid by the Company as a result of, and additional tax basis arising from, any payments the Company makes under the Tax Receivable Agreements. +Stockholders’ Agreement +We are party to a stockholders’ agreement with Riverstone and certain Legacy Owners (collectively, the “ Principal Stockholders ”). Among other things, the stockholders’ agreement provides the right to designate nominees to our Board as follows: +• so long as Riverstone and its affiliates collectively own at least 35% of our Class A Common Stock, Riverstone can designate up to five (5) nominees to the Board, with the Board size decreasing by one (1) director when Riverstone and its affiliates no longer own at least 35% of our Class A Common Stock; +• so long as Riverstone and its affiliates collectively own at least 30% of our Class A Common Stock, Riverstone can designate up to four (4) nominees to our Board; +• so long as Riverstone and its affiliates collectively own at least 20% of our Class A Common Stock but less than 30% of our Class A Common Stock, Riverstone can designate up to two (2) nominees to our Board; and +• so long as Riverstone and its affiliates collectively own at least 10% of our Class A Common Stock but less than 20% of our Class A common stock, Riverstone can designate up to one (1) nominee to our Board. +34 +Pursuant to the stockholders’ agreement we and the Principal Stockholders will be required to take all necessary actions, to the fullest extent permitted by applicable law (including with respect to any fiduciary duties under Delaware law), to cause the election of the nominees designated by Riverstone. At any time the members of our Board are allocated among separate classes of directors, (i) the directors designated by Riverstone pursuant to the stockholders’ agreement will be in different classes of directors to the extent practicable and (ii) Riverstone will be permitted to designate the class or classes to which each such director will be allocated. Riverstone will be entitled to designate the replacement for any of its Board designees whose service terminates prior to the end of such director’s term. Riverstone currently has the right to nominate another member to our Board. +In addition, the stockholders’ agreement provides that for so long as the Principal Stockholders and their affiliates own at least 20% of the outstanding shares of our Class A Common Stock, Riverstone will have the right to cause any committee of our Board to include in its membership at least one (1) director designated by Riverstone, except to the extent that such membership would violate applicable securities laws or stock exchange rules. The rights granted to Riverstone to designate directors are additive to and not intended to limit in any way the rights that Riverstone or any of its affiliates may have to nominate, elect or remove our directors under our certificate of incorporation, bylaws or the Delaware General Corporation Law. +Furthermore, so long as Riverstone and its affiliates collectively own at least 20% of the outstanding shares of Class A Common Stock, we have agreed not to take, and will take all necessary action to cause our subsidiaries not to take, the following direct or indirect actions (or enter into an agreement to take such actions) without the prior consent of Riverstone: +• any material change, through any acquisition, disposition of assets or otherwise, in the nature of our business or operations and our subsidiaries as of the date of the stockholders’ agreement; +• hiring or terminating our Chief Executive Officer or the Chief Financial Officer and their respective successors; +• any transaction that, if consummated, would constitute a Change of Control (as defined in the stockholders’ agreement) or entering into any definitive agreement or series of related agreements that govern any transaction or series of related transactions that, if consummated, would result in a Change of Control; +• entering into any agreement providing for certain acquisitions or dispositions, in each such case, involving consideration payable or receivable by us or any of our subsidiaries in excess of $100 million in the aggregate in any single transaction or series of related transactions during any 12-month period; +• any incurrence by us or any of our subsidiaries of indebtedness for borrowed money (including through capital leases, the issuance of debt securities or the guarantee of indebtedness of another person) in excess of $100 million in the aggregate in any single transaction or series of related transactions during any 12-month period; +• any issuance or series of related issuances of equity securities by us or any of our subsidiaries for an aggregate consideration in excess of $100 million; +• any payment or declaration of any dividend or other distribution of any shares of Class A Common Stock or entering into any recapitalization transaction the primary purpose of which is to pay a dividend; +• any increase or decrease in the size of our Board, committees of the Board, and board and committees of our subsidiaries; +• settling any litigation to which we or any of our subsidiaries is a party involving the payment by us or any of our subsidiaries of an aggregate amount equal to or greater than $25 million; +• entering into any joint venture or similar business alliance involving investment, contribution or disposition by us or any of our subsidiaries of assets (including stock of subsidiaries) having an aggregate fair market value in excess of $100 million, other than transactions solely between and among us and our wholly owned subsidiaries; and +• any amendment, modification or waiver of our certificate of incorporation, bylaws or any other governing document following the date of the stockholders’ agreement that (i) causes the number of Board seats to be less than or greater than nine (9) (although the current size of the Board, as ratified by the Riverstone directors, is eight (8)) or (ii) materially and adversely affects any Principal Stockholder. +35 +Registration Rights Agreement +In connection with the closing of the IPO, we entered into a registration rights agreement with the Legacy Owners. The agreement contains provisions by which we agree to register under the federal securities laws the offer and resale of shares of our Class A Common Stock by the Legacy Owners or certain of their affiliates or permitted transferees under the registration rights agreement. These registration rights will be subject to certain conditions and limitations. We will generally be obligated to pay all registration expenses in connection with these registration obligations, regardless of whether a registration statement is filed or becomes effective. +Indemnification for Officers and Directors +Our certificate of incorporation and bylaws provide indemnification rights to our directors and officers and permit us to purchase insurance on behalf of any officer, director, employee or other agent for any liability arising out of that person’s actions as our officer, director, employee or agent, regardless of whether Delaware law would mandate indemnification. Additionally, we have entered into separate indemnity agreements with our directors and officers to provide additional indemnification benefits, including the right to receive, in advance, reimbursements for expenses incurred in connection with a defense for which the director or officer is entitled to indemnification. We believe that the limitation of liability provisions in our certificate of incorporation, bylaws and the indemnity agreements will facilitate our ability to continue to attract and retain qualified individuals to serve as directors and officers. +Additional Historical Transactions with Affiliates +Share Repurchase +On September 10, 2018, the Board authorized a share repurchase plan to repurchase up to $100 million of the Company’s Class A Common Stock through September 30, 2019. During September 2018, the Company repurchased 2,491,160 shares of Class A Common Stock from Riverstone sellers, at a weighted average purchase price of $18.96 per share, pursuant to a share repurchase agreement. +Advisory Services Agreement +Liberty Holdings entered into an advisory services agreement, dated December 30, 2011, with Riverstone/Carlyle Energy Partners IV, L.P. (“ R/C ”), in which R/C agreed to provide certain administrative advisory services to Liberty Holdings. The service fees incurred to R/C for the years ended December 31, 2018, 2017 and 2016 were approximately $0, $1.5 million and $0.5 million, respectively. The advisory services agreement was terminated pursuant to an agreement effective as of January 11, 2018. On January 11, 2018, Liberty Holdings, R/C and other parties entered into a Master Reorganization Agreement that, among other things, crystallized the “waterfall” provisions of Article VI of the Third Amended and Restated Limited Liability Agreement of Liberty Holdings, dated October 11, 2016 (the “ Holdings LLC Agreement ”) in connection with the initial public offering of shares of Class A Common Stock. As part of this crystallization, R/C and affiliate entities (collectively, the “ R/C Affiliates ”) received shares of Class A Common Stock, including 117,647 shares of Class A Common Stock (such 117,647 referred to as the “ Issued Shares ”) to compensate the R/C Affiliates for certain accrued preferred returns but which would not have been issued had the $2.0 million in fees owing under the advisory services agreement been paid in cash. Had this fee been paid in cash on or prior to January 11, 2018, R/C and Liberty Holdings acknowledge that R/C Affiliates would not have received the Issued Shares in the crystallization pursuant to the provisions of the Holdings LLC Agreement. +Subsequently, during the fourth quarter of 2018, R/C asserted that certain provisions of the termination of advisory services agreement provided for R/C to receive $2.0 million in cash as payment of those accrued fees. To resolve this matter, the Company agreed to pay the R/C Affiliates $2.0 million in cash in exchange for the purchase, at the IPO price, or return of the Issued Shares and $0.3 million for interest and the settlement of the matter. Such purchase and payment were made in January 2019. The purchased and returned shares of Class A Common Stock were canceled and retired, and the Company does not expect to incur future expense related to the advisory services agreement or termination thereof. +Transactions with Liberty Resources +Liberty Resources LLC (“ Liberty Resources ”), an oil and gas exploration and production company, entered into a master service agreement with Liberty Oilfield Services LLC (“ Liberty Services ”), whereby Liberty Services provides hydraulic fracturing service to Liberty Resources at market service rates. The amounts related to the provision of hydraulic fracturing services to Liberty Resources under the master services agreement for the years ended December 31, 2018, 2017 and 2016 were approximately $23.1 million, $24.7 million and $13.1 million, respectively. +36 +Conflicts of Interest +The related party transactions described herein may cause certain conflicts of interests, including that: +• we may enter into contracts between us, on the one hand, and related parties, on the other, that are not as a result of arm’s-length transactions; +• our executive officers and directors that hold positions of responsibility with related parties may be aware of certain business opportunities that are appropriate for presentation to us as well as to such other related parties and may present such business opportunities to such other parties; and +• our executive officers and directors that hold positions of responsibility with related parties may have significant duties with, and spend significant time serving, other entities and may have conflicts of interest in allocating time. +For example, Mr. Wright, our Chief Executive Officer, is the Executive Chairman of Liberty Resources, a position which may require a portion of his time and which may cause conflicts of interest in pursuing business opportunities of which he becomes aware. Furthermore, our governing documents provide that Riverstone and its respective affiliates (including portfolio investments of its affiliates) are not restricted from owning assets or engaging in businesses that compete directly or indirectly with us. Riverstone or its respective affiliates may become aware, from time to time, of certain business opportunities (such as acquisition opportunities) and may direct such opportunities to other businesses in which they have invested, in which case we may not become aware of or otherwise have the ability to pursue such opportunity. Furthermore, such businesses may choose to compete with us for these opportunities, possibly causing these opportunities to not be available to us or causing them to be more expensive for us to pursue. In addition, Riverstone or its respective affiliates may dispose of oil and gas service or other assets in the future, without any obligation to offer us the opportunity to purchase any of those assets. +37 +SECTION 16( a ) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE +Section 16(a) of the Exchange Act requires the Company’s directors, executive officers and persons who are beneficial owners of more than ten percent (10%) of a registered class of the Company’s equity securities to file with the SEC initial reports of ownership and reports of changes in ownership. Directors, executive officers and beneficial owners of more than ten percent (10%) of a registered class of the Company’s equity securities are also required to furnish the Company with copies of all Section 16(a) reports that they file with the SEC. If requested, the Company assists its executive officers and directors in complying with the reporting requirements of Section 16(a) of the Exchange Act. The SEC has designated specific deadlines for these reports, and we must identify in this Proxy Statement those persons who did not file these reports when due. +To the Company’s knowledge, based solely on examination of these reports and on written representations provided to us, all directors, executive officers and ten percent (10%) owners timely filed all reports regarding transactions in our securities required to be filed for 2018 pursuant to Section 16(a) of the Exchange Act, except for one late Form 4 filing for Cary D. Steinbeck related to a distribution to a trust on September 11, 2018. +HOUSEHOLDING +The SEC permits companies and intermediaries (such as brokers and banks) to satisfy delivery requirements for proxy statements and annual reports with respect to two or more stockholders sharing the same address by delivering a single proxy statement and annual report to those stockholders. This process, which is commonly referred to as “householding,” is intended to reduce the volume of duplicate information stockholders receive and reduce expenses for companies. Both the Company and some of our intermediaries may be householding our proxy materials and Annual Report on Form 10-K. Once you have received notice from your broker or another intermediary that they will be householding materials sent to your address, householding will continue until you are notified otherwise or until you revoke your consent. Should you wish to receive separate copies of our Annual Report on Form 10-K and proxy statement in the future, we will promptly deliver a separate copy of each of these documents to you if you send a written or oral request to us at our phone number or address appearing on the cover of this Proxy Statement, to the attention of the Corporate Secretary. If you hold your shares through an intermediary that is householding and you want to receive separate copies of our Annual Report on Form 10-K and proxy statement in the future, you should contact your bank, broker or other nominee record holder. +STOCKHOLDER PROPOSALS +A stockholder who would like to have a proposal considered for including in our 2020 proxy statement and annual meeting of stockholders must submit the proposal so that it is received by not earlier than the close of business on December 25, 2019, and not later than the close of business on January 24, 2020, unless the date of our 2020 annual meeting of stockholders is more than 30 days before or more than 60 days after April 23, 2020, in which case the proposal must be received no later than the 10 th day following the day on which public announcement of the date of such meeting is first made by the Company. SEC rules set standards for eligibility and specify the types of stockholder proposals that may be excluded from a proxy statement. Stockholders who intend to submit a proposal at the 2020 annual meeting must follow the procedures prescribed in the Company’s Amended and Restated Bylaws and Rule l4a-8 under the Exchange Act. Proposals should be directed to Liberty Oilfield Services Inc., Attn: Corporate Secretary, 950 17th Street, Suite 2400, Den ver, Colorado 80202. +WHERE YOU CAN FIND MORE INFORMATION +We file or furnish annual, quarterly and current reports, proxy statements and other documents with the SEC under the Exchange Act. The SEC also maintains an internet website at www.sec.gov that contains reports, proxy and information statements and other information regarding issuers, including us, that file electronically with the SEC. +We also make available free of charge through our website, www.libertyfrac.com, electronic copies of certain documents that we file with the SEC, including our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. +38 +OTHER MATTERS +As of the date of this Proxy Statement, the Board does not intend to present any matters other than those described herein at the Annual Meeting and is unaware of any matters to be presented by other parties. If other matters are properly brought before the meeting for action by the stockholders, proxies will be voted in accordance with the recommendation of the Board or, in the absence of such a recommendation, in accordance with the judgment of the proxy holder. +IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING TO BE HELD ON APRIL 23, 2019: +A COPY OF THIS PROXY STATEMENT, THE NOTICE OF 2019 ANNUAL MEETING OF STOCKHOLDER, THE 2019 ANNUAL REPORT TO STOCKHOLDERS AND THE PROXY CARD ARE AVAILABLE AT HTTP://ASTPROXYPORTAL.COM/AST/21952/ . +IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, YOU ARE URGED TO VOTE BY INTERNET, BY PHONE OR IF YOU HAVE RECEIVED PAPER COPIES OF THE PROXY MATERIALS, BY COMPLETING, SIGNING AND RETURNING THE PROXY IN THE ENCLOSED POSTAGE-PAID, ADDRESSED ENVELOPE. +By Order of the Board of Directors, +/s/ R. Sean Elliott +R. Sean Elliott +Vice President, General Counsel and Corporate Secretary +Denver, Colorado +March 11, 2019 +ANNUAL MEETING OF STOCKHOLDERS OF +LIBERTY OILFIELD SERVICES INC. +April 23, 2019 +GO +GREEN +e-Consent makes it easy to go paperless. With e-Consent, you can quickly access your proxy material, statements +and other eligible documents online, while reducing costs, clutter and paper waste. Enroll today via www.astfinancial.com to enjoy +online access. +NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL : +The Notice of Meeting, proxy statement and proxy card +are available at http://www.astproxyportal.com/ast/21952 +Please sign, date and mail +your proxy card in the +envelope provided as soon +as possible. +Please detach along perforated line and mail in the envelope provided. +20830304000000001000 9 +042319 +THE +BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE NOMINEES LISTED IN PROPOSAL 1, +"FOR" PROPOSALS 2 AND 3, AND FOR "ONE YEAR" FOR PROPOSAL 4. +PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK +INK AS SHOWN HERE ☒ +1. Election of Directors: +☐ +NOMINEES: +FOR +ALL NOMINEES +Christopher A. Wright +William F. Kimble +☐ +WITHHOLD AUTHORITY +FOR +ALL NOMINEES +Cary D. Steinbeck +N. John Lancaster, Jr. +Brett Staffieri +☐ +FOR ALL EXCEPT +(See +instructions below) +Peter A. Dea +Ken Babcock +Jesal Shah +INSTRUCTIONS: To withhold authority to vote for any individual nominee(s), mark “FOR ALL EXCEPT” and +fill in the circle next to each nominee you wish to withhold, as shown here: +● +To change the address on your account, please check the box at right and indicate your new address in +the address space above. Please note that changes to the registered name(s) on the account may not be submitted via this method. +☐ +FOR +AGAINST +ABSTAIN +2. +Ratification +of the appointment of Deloitte & Touche LLP as the Company’s independent registered +public accounting firm for the fiscal year ending December 31, 2019. +☐ +☐ +☐ +FOR +AGAINST +ABSTAIN +3. +Approval, on an advisory basis, of the compensation of the Company’s named executive officers. +☐ +☐ +☐ +1 YEAR +2 YEARS +3 YEARS +ABSTAIN +4. +Approval, on an advisory basis, of the frequency of future advisory votes to approve the compensation +of the Company’s named executive officers. +☐ +☐ +☐ +☐ +TO +INCLUDE ANY COMMENTS, USE THE COMMENTS BOX ON THE REVERSE SIDE OF THIS CARD. +IMPORTANT +NOTICE +YOUR VOTE IS IMPORTANT. PLEASE +SIGN, DATE AND RETURN YOUR PROXY AS SOON AS POSSIBLE. BY DOING SO, YOU MAY SAVE LIBERTY OILFIELD SERVICES INC. THE EXPENSE OF +ADDITIONAL SOLICITATION. +NOTE: +In their discretion, the Proxies are authorized to vote upon such other business as may properly come +before the meeting or any adjournment or postponement thereof. +MARK “X” +HERE IF YOU PLAN TO ATTEND THE MEETING ☐ +Signature of Stockholder +Date: +Signature of Stockholder +Date: +Note: +Please +sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder +should sign. When signing as executor, administrator, attorney, trustee or guardian, please give +full title as such. If the signer is a corporation, please sign full corporate name by duly authorized +officer, giving full title as such. If signer is a partnership, please sign in partnership name +by authorized person. +1 +LIBERTY OILFIELD SERVICES INC. +THIS +PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS +FOR THE ANNUAL MEETING OF STOCKHOLDERS +The +undersigned hereby appoint(s) Christopher A. Wright, Michael Stock and R. Sean Elliott, or any one of them, attorneys with full +power of substitution and revocation to each, for and in the name of the undersigned with all the powers the undersigned would +possess if personally present, to vote the shares of the undersigned in Liberty Oilfield Services Inc. as indicated on the proposals +referred to on the reverse side hereof at the annual meeting of its stockholders to be held at The Renaissance Denver City Center +Hotel, 918 17th Street, Denver Colorado 80202 on April 23, 2019 at 9:00 a.m., local time and at any adjournments thereof, and +in their or his discretion upon any other matter which may properly come before said meeting. +This +card also constitutes voting instructions to the trustees under the Liberty Oilfield Services Inc. savings plans to vote, in person +or by proxy, the proportionate interest of the undersigned in the shares of Common Stock of Liberty Oilfield Services Inc. held +by the trustees under the plans, as described in the proxy statement. +(Continued and to be signed on the reverse side) +COMMENTS: +1.1 +14475 \ No newline at end of file diff --git a/raw/proxies/0001694028/0001387131-19-001829/proxy_rpt.txt b/raw/proxies/0001694028/0001387131-19-001829/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..a541baea827d39906965154ddca341e3d3084dc5 --- /dev/null +++ b/raw/proxies/0001694028/0001387131-19-001829/proxy_rpt.txt @@ -0,0 +1,78 @@ +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +Policies and Procedures for Review of Related Party Transactions +A “Related Party Transaction” is a transaction, arrangement or relationship in which the Company or any of its subsidiaries was, is or will be a participant, the amount of which involved exceeds $120,000, and in which any related person had, has or will have a direct or indirect material interest. A “Related Person” is: +• any person who is, or at any time during the applicable period was, one of our executive officers or one of our directors; +• any person who is known by us to be the beneficial owner of more than 5% of our Class A Common Stock; +• any immediate family member of any of the foregoing persons, which means any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law of a director, executive officer or a beneficial owner of more than 5% of our Class A Common Stock, and any person (other than a tenant or employee) sharing the household of such director, executive officer or beneficial owner of more than 5% of our Class A common stock; and +• any firm, corporation or other entity in which any of the foregoing persons is a partner or principal or in a similar position or in which such person has a 10.0% or greater beneficial ownership interest. +Our Board adopted a written related party transactions policy in connection with the IPO. Pursuant to this policy, our Audit Committee will review all material facts of all Related Party Transactions and either approve or disapprove entry into the Related Party Transaction, subject to certain limited exceptions. The determination of the Audit Committee is documented in the Audit Committee’s minutes. In determining whether to approve or disapprove entry into a Related Party Transaction, our Audit Committee takes into account, among other factors, the following: (i) whether the Related Party Transaction is on terms no less favorable than terms generally available to an unaffiliated third-party under the same or similar circumstances and (ii) the extent of the Related Person’s interest in the transaction. Furthermore, the policy requires that all Related Party Transactions required to be disclosed in our filings with the SEC be so disclosed in accordance with applicable laws, rules and regulations. +The following discussion is a brief summary of our corporate reorganization and certain material arrangements, agreements and transactions we have with related parties. It does not include all of the provisions of our material arrangements, agreements and transactions with related parties, does not purport to be complete and is qualified in its entirety by reference to the arrangements, agreements and transactions described. +Corporate Reorganization +On January 17, 2018, we completed our IPO of 14,640,755 shares of our Class A Common Stock at a public offering price of $17.00 per share, of which 14,340,214 shares were offered by us and 300,541 shares were offered by the selling shareholder. We used our net proceeds from the IPO to redeem ownership in us from certain Legacy Owners (as defined below) and contributed the remaining proceeds to Liberty Oilfield Services New HoldCo LLC (“ Liberty LLC ”) in exchange for units in Liberty LLC (the “ Liberty LLC Units ”). In connection with the IPO, we completed a corporate reorganization which included the following restructuring steps: +• Liberty Holdings contributed all of its assets to Liberty LLC in exchange for Liberty LLC Units; +• Liberty Holdings liquidated and distributed to its then-existing owners (the “ Legacy Owners ”) Liberty LLC Units pursuant to the terms of the limited liability company agreement of Liberty Holdings and the Master Reorganization Agreement dated as of January 11, 2018, by and among the Company, Liberty Holdings, Liberty LLC, and the other parties nam ed therein; +• Certain of the Legacy Owners directly or indirectly contributed all or a portion of their Liberty LLC Units to the Company in exchange for 55,685,027 shares of our Class A Common Stock, and 1,258,514 shares of restricted stock. Subsequent to the initial exchange, 1,609,122 shares of Class A Common Stock were redeemed for an aggregate purchase price of $25.9 million upon the exercise of the underwriters’ overallotment option; +• We issued the Legacy Owners that continued to own Liberty LLC Units (the “ Liberty Unit Holders ”) an aggregate amount of 48,207,372 shares of our Class B Common Stock; and +• We then contributed the net proceeds it received from the IPO to Liberty LLC in exchange for additional Liberty LLC Units such that the Company holds a total number of Liberty LLC Units equal to the number of shares of Class A Common Stock outstanding following the IPO. +32 +Related Party Transactions +The following is a description of transactions entered into, or in effect, after January 1, 2018 to which we have been a party, in which the amount involved in the transaction exceeds $120,000, and in which any of our directors, executive officers or beneficial owners of more than 5% of our voting securities, or affiliates or immediate family members of any of our directors, executive officers or beneficial owners of more than 5% of our voting securities, had or will have a direct or indirect material interest. We believe the terms obtained or consideration that we paid or received, as applicable, in connection with the transactions described below were comparable to terms available or the amounts that would be paid or received, as applicable, from unrelated third parties. +Liberty LLC Agreement +We entered into the Liberty LLC Amended and Restated Limited Liability Company Agreement (the “ Liberty LLC Agreement ”) in connection with the closing of our IPO, which provides for limitations on the ability of Liberty Unit Holders to transfer their Liberty LLC Units and provides the Company, as managing member of Liberty LLC, with the right to impose restrictions (in addition to those already in place) on the ability of Liberty Unit Holders to redeem their Liberty LLC Units pursuant to the Redemption Right (as defined below) to the extent the Company believes it is necessary to ensure that Liberty LLC will continue to be treated as a partnership for U.S. federal income tax purposes. +Redemption Rights +Under the Liberty LLC Agreement, each Liberty Unit Holder has, subject to certain limitations, the right (the “ Redemption Right ”) to cause Liberty LLC to acquire all or a portion of its Liberty LLC Units for, at Liberty LLC’s election, (i) shares of our Class A Common Stock at a redemption ratio of one share of Class A Common Stock for each Liberty LLC Unit redeemed, subject to conversion rate adjustments for stock splits, stock dividends and reclassification and other similar transactions or (ii) an equivalent amount of cash. Alternatively, upon the exercise of the Redemption Right, the Company (instead of Liberty LLC) will have the right (the “ Call Right ”) to, for administrative convenience, acquire each tendered Liberty LLC Unit directly from the redeeming Liberty Unit Holder for, at its election, (x) one share of Class A Common Stock or (y) an equivalent amount of cash. In addition, upon a change of control of the Company, the Company has the right to require each holder of Liberty LLC Units (other than the Company) to exercise its Redemption Right with respect to some or all of such unit holder’s Liberty LLC Units. In connection with any redemption of Liberty LLC Units pursuant to the Redemption Right or our Call Right, the corresponding number of shares of Class B Common Stock will be cancelled. As the Liberty Unit Holders redeem their Liberty LLC Units, our membership interest in Liberty LLC will be correspondingly increased, the number of shares of Class A Common Stock outstanding will be increased, and the number of shares of Class B Common Stock outstanding will be reduced. +Distributions and Allocations +Under the Liberty LLC Agreement, the Company has the right to determine when distributions will be made to the holders of Liberty LLC Units and the amount of any such distributions. If the Company authorizes a distribution, such distribution will be made to the holders of Liberty LLC Units generally on a pro rata basis in accordance with their respective percentage ownership of Libert y LLC Units. +Liberty LLC will allocate its net income or net loss for each year to the holders of Liberty LLC Units pursuant to the terms of the Liberty LLC Agreement, and the holders of Liberty LLC Units, including the Company, will generally incur U.S. federal, state and local income taxes on their share of any taxable income of Liberty LLC. Net income and losses of Liberty LLC generally will be allocated to the holders of Liberty LLC Units on a pro rata basis in accordance with their respective percentage ownership of Liberty LLC Units, subject to requirements under U.S. federal income tax law that certain items of income, gain, loss or deduction be allocated disproportionately in certain circumstances. To the extent Liberty LLC has available cash and subject to the terms of any future debt instruments, the Company intends to cause Liberty LLC to make (i) generally pro rata distributions to the holders of Liberty LLC Units, including the Company, in an amount sufficient to allow the Company to pay its taxes and to allow it to make payments under the Tax Receivable Agreements (as defined below), (ii) tax advances, which will be repaid upon exercise of the Redemption Right or the Call Right, as applicable, in an amount sufficient to allow each of the Liberty Unit Holders to pay its respective taxes on such holder’s allocable share of Liberty LLC’s taxable income after taking into account certain other distributions or payments received by the Liberty Unit Holders from Liberty LLC or the Company, and (iii) non-pro rata payments to the Company to reimburse it for its corporate and other overhead expenses. +Issuance of Equity +The Liberty LLC Agreement provides that, except as otherwise determined by us, at any time the Company issues a share of its Class A Common Stock or any other equity security, the net proceeds received by the Company with respect to such issuance, if any, shall be concurrently invested in Liberty LLC, and Liberty LLC shall issue to the Company one Liberty LLC Unit or other economically equivalent equity interest. Conversely, if at any time, any shares of Class A Common Stock are redeemed, repurchased or otherwise acquired, Liberty LLC shall redeem, repurchase or otherwise acquire an equal number of Liberty LLC Units held by the Company, upon the same terms and for the same price, as the shares of the Class A Common Stock are redeemed, repurchased or otherwise acquired. +33 +Competition +Under the Liberty LLC Agreement, the members have agreed that Riverstone and its affiliates will be permitted to engage in business activities or invest in or acquire businesses which may compete with our business or do business with our customers. +Dissolution +Liberty LLC will be dissolved only upon the first to occur of (i) the sale of substantially all of its assets or (ii) an election by us to dissolve the company. Upon dissolution, Liberty LLC will be liquidated and the proceeds from any liquidation will be applied and distributed in the following manner: (a) first, to creditors (including to the extent permitted by law, creditors who are members) in satisfaction of the liabilities of Liberty LLC, (b) second, to establish cash reserves for contingent or unforeseen liabilities and (c) third, to the members in proportion to the number of Liberty LLC Units owned by each of them. +Tax Receivable Agreements +As discussed above, the Company acquired Liberty LLC Units from certain of the Liberty Unit Holders in exchange for cash. In addition, the Liberty Unit Holders may redeem their Liberty LLC Units for shares of Class A Common Stock or cash, as applicable, in the future pursuant to the Redemption Right or the Call Right. Liberty LLC intends to make for itself (and for each of its direct or indirect subsidiaries that is treated as a partnership for U.S. federal income tax purposes and that it controls) an election under Section 754 of the Internal Revenue Code that will be effective for the year 2018 and each taxable year in which a redemption of Liberty LLC Units pursuant to the Redemption Right or the Call Right occurs. Pursuant to the Section 754 election, our acquisition (or deemed acquisition for U.S. federal income tax purposes) of Liberty LLC Units for cash as a part of the corporate reorganization and redemptions of Liberty LLC Units pursuant to the Redemption Right or the Call Right are expected to result in adjustments to the tax basis of the tangible and intangible assets of Liberty LLC. These adjustments will be allocated to the Company. Such adjustments to the tax basis of the tangible and intangible assets of Liberty LLC would not have been available to the Company absent its acquisition or deemed acquisition of Liberty LLC Units as a part of the corporate reorganization or pursuant to the exercise of the Redemption Right or the Call Right. The anticipated basis adjustments are expected to increase (for U.S. federal income tax purposes) the Company’s depreciation, depletion and amortization deductions and may also decrease the Company’s gains (or increase its losses) on future dispositions of certain assets to the extent tax basis is allocated to those assets. Such increased deductions and losses and reduced gains may reduce the amount of tax that the Company would otherwise be required to pay in the future. +In connection with the IPO, on January 17, 2018, the Company entered into two tax receivable agreements, (the “ Tax Receivable Agreements ”) with the Liberty Unit Holders and the selling shareholder (each such person and any permitted transferee, a “ TRA Holder ” and together, the “ TRA Holders ”). The Tax Receivable Agreements generally provide for the payment by the Company of 85% of the net cash savings, if any, in U.S. federal, state, and local income tax and franchise tax (computed using simplifying assumptions to address the impact of state and local taxes) that the Company actually realizes (or is deemed to realize in certain circumstances) in periods after the IPO as a result, as applicable to each TRA Holder, of (i) certain increases in tax basis that occur as a result of the Company’s acquisition (or deemed acquisition for U.S. federal income tax purposes) of all or a portion of such TRA Holder’s Liberty LLC Units in connection with the IPO or pursuant to the exercise of the Redemption Right or the Company’s Call Right, (ii) any net operating losses available to the Company as a result of the corporate reorganization, and (iii) imputed interest deemed to be paid by the Company as a result of, and additional tax basis arising from, any payments the Company makes under the Tax Receivable Agreements. +Stockholders’ Agreement +We are party to a stockholders’ agreement with Riverstone and certain Legacy Owners (collectively, the “ Principal Stockholders ”). Among other things, the stockholders’ agreement provides the right to designate nominees to our Board as follows: +• so long as Riverstone and its affiliates collectively own at least 35% of our Class A Common Stock, Riverstone can designate up to five (5) nominees to the Board, with the Board size decreasing by one (1) director when Riverstone and its affiliates no longer own at least 35% of our Class A Common Stock; +• so long as Riverstone and its affiliates collectively own at least 30% of our Class A Common Stock, Riverstone can designate up to four (4) nominees to our Board; +• so long as Riverstone and its affiliates collectively own at least 20% of our Class A Common Stock but less than 30% of our Class A Common Stock, Riverstone can designate up to two (2) nominees to our Board; and +• so long as Riverstone and its affiliates collectively own at least 10% of our Class A Common Stock but less than 20% of our Class A common stock, Riverstone can designate up to one (1) nominee to our Board. +34 +Pursuant to the stockholders’ agreement we and the Principal Stockholders will be required to take all necessary actions, to the fullest extent permitted by applicable law (including with respect to any fiduciary duties under Delaware law), to cause the election of the nominees designated by Riverstone. At any time the members of our Board are allocated among separate classes of directors, (i) the directors designated by Riverstone pursuant to the stockholders’ agreement will be in different classes of directors to the extent practicable and (ii) Riverstone will be permitted to designate the class or classes to which each such director will be allocated. Riverstone will be entitled to designate the replacement for any of its Board designees whose service terminates prior to the end of such director’s term. Riverstone currently has the right to nominate another member to our Board. +In addition, the stockholders’ agreement provides that for so long as the Principal Stockholders and their affiliates own at least 20% of the outstanding shares of our Class A Common Stock, Riverstone will have the right to cause any committee of our Board to include in its membership at least one (1) director designated by Riverstone, except to the extent that such membership would violate applicable securities laws or stock exchange rules. The rights granted to Riverstone to designate directors are additive to and not intended to limit in any way the rights that Riverstone or any of its affiliates may have to nominate, elect or remove our directors under our certificate of incorporation, bylaws or the Delaware General Corporation Law. +Furthermore, so long as Riverstone and its affiliates collectively own at least 20% of the outstanding shares of Class A Common Stock, we have agreed not to take, and will take all necessary action to cause our subsidiaries not to take, the following direct or indirect actions (or enter into an agreement to take such actions) without the prior consent of Riverstone: +• any material change, through any acquisition, disposition of assets or otherwise, in the nature of our business or operations and our subsidiaries as of the date of the stockholders’ agreement; +• hiring or terminating our Chief Executive Officer or the Chief Financial Officer and their respective successors; +• any transaction that, if consummated, would constitute a Change of Control (as defined in the stockholders’ agreement) or entering into any definitive agreement or series of related agreements that govern any transaction or series of related transactions that, if consummated, would result in a Change of Control; +• entering into any agreement providing for certain acquisitions or dispositions, in each such case, involving consideration payable or receivable by us or any of our subsidiaries in excess of $100 million in the aggregate in any single transaction or series of related transactions during any 12-month period; +• any incurrence by us or any of our subsidiaries of indebtedness for borrowed money (including through capital leases, the issuance of debt securities or the guarantee of indebtedness of another person) in excess of $100 million in the aggregate in any single transaction or series of related transactions during any 12-month period; +• any issuance or series of related issuances of equity securities by us or any of our subsidiaries for an aggregate consideration in excess of $100 million; +• any payment or declaration of any dividend or other distribution of any shares of Class A Common Stock or entering into any recapitalization transaction the primary purpose of which is to pay a dividend; +• any increase or decrease in the size of our Board, committees of the Board, and board and committees of our subsidiaries; +• settling any litigation to which we or any of our subsidiaries is a party involving the payment by us or any of our subsidiaries of an aggregate amount equal to or greater than $25 million; +• entering into any joint venture or similar business alliance involving investment, contribution or disposition by us or any of our subsidiaries of assets (including stock of subsidiaries) having an aggregate fair market value in excess of $100 million, other than transactions solely between and among us and our wholly owned subsidiaries; and +• any amendment, modification or waiver of our certificate of incorporation, bylaws or any other governing document following the date of the stockholders’ agreement that (i) causes the number of Board seats to be less than or greater than nine (9) (although the current size of the Board, as ratified by the Riverstone directors, is eight (8)) or (ii) materially and adversely affects any Principal Stockholder. +35 +Registration Rights Agreement +In connection with the closing of the IPO, we entered into a registration rights agreement with the Legacy Owners. The agreement contains provisions by which we agree to register under the federal securities laws the offer and resale of shares of our Class A Common Stock by the Legacy Owners or certain of their affiliates or permitted transferees under the registration rights agreement. These registration rights will be subject to certain conditions and limitations. We will generally be obligated to pay all registration expenses in connection with these registration obligations, regardless of whether a registration statement is filed or becomes effective. +Indemnification for Officers and Directors +Our certificate of incorporation and bylaws provide indemnification rights to our directors and officers and permit us to purchase insurance on behalf of any officer, director, employee or other agent for any liability arising out of that person’s actions as our officer, director, employee or agent, regardless of whether Delaware law would mandate indemnification. Additionally, we have entered into separate indemnity agreements with our directors and officers to provide additional indemnification benefits, including the right to receive, in advance, reimbursements for expenses incurred in connection with a defense for which the director or officer is entitled to indemnification. We believe that the limitation of liability provisions in our certificate of incorporation, bylaws and the indemnity agreements will facilitate our ability to continue to attract and retain qualified individuals to serve as directors and officers. +Additional Historical Transactions with Affiliates +Share Repurchase +On September 10, 2018, the Board authorized a share repurchase plan to repurchase up to $100 million of the Company’s Class A Common Stock through September 30, 2019. During September 2018, the Company repurchased 2,491,160 shares of Class A Common Stock from Riverstone sellers, at a weighted average purchase price of $18.96 per share, pursuant to a share repurchase agreement. +Advisory Services Agreement +Liberty Holdings entered into an advisory services agreement, dated December 30, 2011, with Riverstone/Carlyle Energy Partners IV, L.P. (“ R/C ”), in which R/C agreed to provide certain administrative advisory services to Liberty Holdings. The service fees incurred to R/C for the years ended December 31, 2018, 2017 and 2016 were approximately $0, $1.5 million and $0.5 million, respectively. The advisory services agreement was terminated pursuant to an agreement effective as of January 11, 2018. On January 11, 2018, Liberty Holdings, R/C and other parties entered into a Master Reorganization Agreement that, among other things, crystallized the “waterfall” provisions of Article VI of the Third Amended and Restated Limited Liability Agreement of Liberty Holdings, dated October 11, 2016 (the “ Holdings LLC Agreement ”) in connection with the initial public offering of shares of Class A Common Stock. As part of this crystallization, R/C and affiliate entities (collectively, the “ R/C Affiliates ”) received shares of Class A Common Stock, including 117,647 shares of Class A Common Stock (such 117,647 referred to as the “ Issued Shares ”) to compensate the R/C Affiliates for certain accrued preferred returns but which would not have been issued had the $2.0 million in fees owing under the advisory services agreement been paid in cash. Had this fee been paid in cash on or prior to January 11, 2018, R/C and Liberty Holdings acknowledge that R/C Affiliates would not have received the Issued Shares in the crystallization pursuant to the provisions of the Holdings LLC Agreement. +Subsequently, during the fourth quarter of 2018, R/C asserted that certain provisions of the termination of advisory services agreement provided for R/C to receive $2.0 million in cash as payment of those accrued fees. To resolve this matter, the Company agreed to pay the R/C Affiliates $2.0 million in cash in exchange for the purchase, at the IPO price, or return of the Issued Shares and $0.3 million for interest and the settlement of the matter. Such purchase and payment were made in January 2019. The purchased and returned shares of Class A Common Stock were canceled and retired, and the Company does not expect to incur future expense related to the advisory services agreement or termination thereof. +Transactions with Liberty Resources +Liberty Resources LLC (“ Liberty Resources ”), an oil and gas exploration and production company, entered into a master service agreement with Liberty Oilfield Services LLC (“ Liberty Services ”), whereby Liberty Services provides hydraulic fracturing service to Liberty Resources at market service rates. The amounts related to the provision of hydraulic fracturing services to Liberty Resources under the master services agreement for the years ended December 31, 2018, 2017 and 2016 were approximately $23.1 million, $24.7 million and $13.1 million, respectively. +36 +Conflicts of Interest +The related party transactions described herein may cause certain conflicts of interests, including that: +• we may enter into contracts between us, on the one hand, and related parties, on the other, that are not as a result of arm’s-length transactions; +• our executive officers and directors that hold positions of responsibility with related parties may be aware of certain business opportunities that are appropriate for presentation to us as well as to such other related parties and may present such business opportunities to such other parties; and +• our executive officers and directors that hold positions of responsibility with related parties may have significant duties with, and spend significant time serving, other entities and may have conflicts of interest in allocating time. +For example, Mr. Wright, our Chief Executive Officer, is the Executive Chairman of Liberty Resources, a position which may require a portion of his time and which may cause conflicts of interest in pursuing business opportunities of which he becomes aware. Furthermore, our governing documents provide that Riverstone and its respective affiliates (including portfolio investments of its affiliates) are not restricted from owning assets or engaging in businesses that compete directly or indirectly with us. Riverstone or its respective affiliates may become aware, from time to time, of certain business opportunities (such as acquisition opportunities) and may direct such opportunities to other businesses in which they have invested, in which case we may not become aware of or otherwise have the ability to pursue such opportunity. Furthermore, such businesses may choose to compete with us for these opportunities, possibly causing these opportunities to not be available to us or causing them to be more expensive for us to pursue. In addition, Riverstone or its respective affiliates may dispose of oil and gas service or other assets in the future, without any obligation to offer us the opportunity to purchase any of those assets. +37 \ No newline at end of file diff --git a/raw/proxies/0001694028/0001387131-20-002743/proxy.txt b/raw/proxies/0001694028/0001387131-20-002743/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..cac47e3b6cf34859a92eec245740e86a930bea3f --- /dev/null +++ b/raw/proxies/0001694028/0001387131-20-002743/proxy.txt @@ -0,0 +1,1589 @@ +DEF 14A +1 +lbrt-def14a_042120.htm +DEFINITIVE PROXY STATEMENT +lbrt-def14a_042120 +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Proxy Statement Pursuant to Section 14(a) of the +Securities Exchange Act of 1934 +(Amendment No. ) +Filed by the Registrant  ☒ +Filed by a party other than the Registrant   +Check the appropriate box: + Preliminary Proxy Statement + Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +☒ Definitive Proxy Statement + Definitive Additional Materials + Soliciting Material Pursuant to § 240.14a-12 +LIBERTY OILFIELD SERVICES INC. +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +☒  No fee required +   Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11 +1) Title of each class of securities to which transaction applies: +2) Aggregate number of securities to which transaction applies: +3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): +4) Proposed maximum aggregate value of transaction: +5) Total fee paid: + Fee paid previously with preliminary materials. + Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. +1) Amount Previously Paid: +2) Form, Schedule or Registration Statement No.: +3) Filing Party: +4) Date Filed: +LIBERTY OILFIELD SERVICES INC. +950 17 th Street, Suite 2400 +Denver, Colorado 80202 +NOTICE OF 2020 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD APRIL 21, 2020 +To our valued stockholders: +Notice is hereby given that the 2020 Annual Meeting of Stockholders (the “ Annual Meeting ”) of Liberty Oilfield Services Inc. (the “ Company ”) will be held on Tuesday, April 21, 2020, at 9:00 a.m. local time, at The Westin Denver Downtown, 16 72 Lawrence Stree t, Denver, Colorado 80202. At the Annual Meeting, stockholders will be asked to: +1. Elect three (3) Class I directors to our board of directors to serve until the 2023 annual meeting or until their successors are duly elected and qualified ( Proposal 1 ); +2. Ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2020 ( Proposal 2 ); +3. Approve, on an advisory basis, the compensation of our named executive officers ( Proposal 3 ); and +4. Transact such other business as may properly be brought before the Annual Meeting. +You can find more information, including the nominees for directors and details regarding our independent registered public accounting firm and executive compensation, in the attached proxy statement. The board of directors recommends that you vote in favor of each of the above proposals. Pursuant to the “notice and access” rules adopted by the Securities and Exchange Commission, we have elected to provide access to our proxy materials on the Internet. The approximate date on which the attached proxy statement, the accompanying Notice of Internet Availability of Proxy Materials (the “ Notice ”), proxy card, and the Company’s Annual Report on Form 10-K are first being made available to stockholders at http://astproxyportal.com/ast/21952/ is March 11 , 2020. The Notice includes instructions on how to access our proxy materials over the Internet, vote online and request a printed copy of these materials. +Only stockholders of record at the close of business on February 24, 2020 are entitled to notice of, and to vote at, the Annual Meeting or any adjournment. A complete list of stockholders entitled to vote at the Annual Meeting will be available for examination during ordinary business hours at our principal executive offices located at 950 17 th Street, Suite 2400, Denver, Colorado 80202, for a period of ten (10) days prior to the Annual Meeting. This list of stockholders will also be available for inspection at the Annual Meeting. +IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE ANNUAL MEETING. ACCORDINGLY, EVEN IF YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON, WE URGE YOU TO COMPLETE, SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY CARD IN THE POSTAGE-PREPAID ENVELOPE PRIOR TO THE ANNUAL MEETING OR FOLLOW THE INTERNET OR TELEPHONE VOTING PROCEDURES DESCRIBED ON THE PROXY CARD. IF YOU ATTEND THE ANNUAL MEETING AND WISH TO VOTE IN PERSON, YOU MAY WITHDRAW YOUR PROXY AND VOTE IN PERSON. YOUR PROMPT CONSIDERATION IS GREATLY APPRECIATED. YOUR VOTE IS IMPORTANT TO US. +By Order of the Board of Directors, +/s/ R. Sean Elliott +R. Sean Elliott +Vice President, General Counsel and Corporate Secretary +Denver, Colorado +March 10 , 2020 +IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING +TO BE HELD ON APRIL 21, 2020 +This Notice of Annual Meeting and Proxy Statement and our Annual Report on Form 10-K are available at +http://astproxyportal.com/ast/21952/ +i +TABLE OF CONTENTS +GENERAL INFORMATION ABOUT THE 2020 ANNUAL MEETING OF STOCKHOLDERS AND VOTING +1 +PROPOSAL 1 — ELECTION OF DIRECTORS +5 +THE BOARD AND ITS COMMITTEES +8 +EXECUTIVE OFFICERS +12 +COMPENSATION DISCUSSION & ANALYSIS +13 +COMPENSATION COMMITTEE REPORT +20 +EXECUTIVE COMPENSATION TABLES +21 +DIRECTOR COMPENSATION +26 +EQUITY COMPENSATION PLAN INFORMATION +27 +CEO PAY RATIO +28 +PROPOSAL 2 — RATIFICATION OF APPOINTMENT OF THE COMPANY’S INDEPENDENT REGISTERED PU BLIC ACCOUNTI NG FIRM +29 +AUDIT COMMITTEE REPORT +31 +PROPOSAL 3 — ADVISORY VOTE TO APPROVE THE COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS +32 +SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT +33 +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +35 +DELINQUENT SECTION 16(a) REPORTS +41 +HOUSEHOLDING +41 +STOCKHOLDER PROPOSALS +41 +WHERE YOU CAN FIND MORE INFORMATION +41 +OTHER MATTERS +42 +1 +LIBERTY OILFIELD SERVICES INC. +950 17 th Street, Suite 2400 +Denver, Colorado 80202 +PROXY STATEMENT +GENERAL INFORMATION ABOUT THE 2020 ANNUAL MEETING OF STOCKHOLDERS AND VOTING +The enclosed proxy is solicited on behalf of the Board of Directors (the “ Board ” ) of Liberty Oilfield Services Inc. (the “ Company ” ) for use at the Company ’ s 2020 Annual Meeting of Stockholders that will be held on Tuesday, April 21, 2020, at 9:00 a.m. local time, at The Westin Denver Downtown, 1672 Lawrence Street, Denver, Colorado 80202 (the “ Annual Meeting ” ). In this proxy statement (the “ Proxy Statement ”) the terms “ Liberty ,” “ we ,” “ us ” and “ our ” all refer to the Company. This Proxy Statement contains important information for you to consider when deciding how to vote on the matters brought before the Annual Meeting. Please read it carefully. +We are providing these proxy materials to you in connection with the solicitation by the Board of proxies to be voted at the Annual Meeting and at any adjournment or postponement thereof. By executing and returning the enclosed proxy card or by voting via the Internet or by telephone as set forth herein, you authorize the persons named in the proxy to represent you and vote your shares on the matters described herein. Those persons will also be authorized to vote your shares to adjourn the Annual Meeting from time to time and to vote your shares at any adjournments or postponements of the Annual Meeting. +Pursuant to the “notice and access” rules adopted by the Securities and Exchange Commission (the “ SEC ”), we have elected to provide stockholders access to our proxy materials over the Internet. The approximate date on which this Proxy Statement, the accompanying Notice of Internet Availability of Proxy Materials (the “ Notice ”), proxy card, and the Company’s 2019 Annual Report on Form 10-K are first being made available to stockholders at http://astproxyportal.com/ast/21952/ is March 11 , 2020. The Notice includes instructions on how to access our proxy materials over the Internet and how to request a printed copy of these materials. +Choosing to receive your future proxy materials by e-mail or to receive a single set of proxy materials per household will save the Company the cost of printing and mailing documents to you and will reduce the impact of the Company’s annual meetings on the environment. If you choose to receive future proxy materials by e-mail, you will receive an e-mail next year with instructions containing a link to those materials and a link to the proxy voting site. Your election to receive proxy materials by e-mail will remain in effect until you terminate it. +Annual Meeting Time & Location +➞ Date : Tuesday, April 21, 2020 +➞ Time : 9:00 a.m. local time +➞ Location : The Westin Denver Downtown, 1672 Lawrence Street, Denver, Colorado 80202 +Who Can Vote at the Annual Meeting +The Company’s Class A Common Stock, par value $0.01 per share (the “ Class A Common Stock ”), and Class B Common Stock, par value $0.01 per share (the “ Class B Common Stock ,” and together with the Class A Common Stock, the “ Common Stock ”), are the only classes of securities entitled to vote at the Annual Meeting. Holders of Class A Common Stock and Class B Common Stock will vote together as a single class on all matters presented at the Annual Meeting. Each share of Common Stock outstanding at the close of business on February 24, 2020 (the “ Record Date ”) entitles its holder to one vote with respect to each matter at the Annual Meeting, and only stockholders of record on the Record Date are entitled to notice of, and to vote, in person or by proxy, at the Annual Meeting. +A complete list of stockholders entitled to vote at the Annual Meeting will be available for examination during ordinary business hours at our principal executive offices located at 950 17 th Street, Suite 2400, Denver, Colorado 80202, for a period of ten (10) days prior to the Annual Meeting. This list of stockholders will also be available for inspection at the Annual Meeting. If you plan to attend the Annual Meeting in person, you may be asked to show proof of your stock ownership, such as a recent account statement, letter or proxy from your broker or other intermediary, along with photo identification. +2 +How to Vote at the Annual Meeting +Many holders of the Company’s Common Stock hold their shares through a broker, bank, trustee or other nominee rather than directly in their own name. As summarized below, there are some distinctions between shares held of record and those owned beneficially. +Stockholder of Record. If your shares are registered directly in your name with our transfer agent, American Stock Transfer & Trust Company LLC, then you are considered a “stockholder of record” with respect to those shares. In this case, a Notice or, if requested, a set of proxy materials has been sent to you directly by us. As a stockholder of record, you may vote over the Internet as described in the Notice that was mailed to you or, if you have received or requested a hard copy of this Proxy Statement and accompanying proxy card, you may vote by telephone as described on the proxy card, or by mail by marking, signing, dating and mailing your proxy card in the postage-paid envelope provided. Your designation of a proxy is revocable by following the procedures outlined in this Proxy Statement. The method by which you vote will not limit your right to vote in person at the Annual Meeting. If you submit a signed proxy card but do not give voting instructions as to how your shares of Common Stock should be voted on a particular proposal at the Annual Meeting, your shares will be voted in accordance with the recommendations of our Board stated in this Proxy Statement. +Beneficial Owners of Shares Held in Street Name. If your shares of our Common Stock are held in a brokerage account or by a bank, trust or other nominee or custodian, then you are considered the beneficial owner of those shares, which are held in “street name.” In this case, a Notice or, if requested, a set of proxy materials has been forwarded to you by the organization that holds your shares. The organization holding your account is considered the stockholder of record for purposes of voting at the Annual Meeting. As the beneficial owner, you have the right to instruct that organization as to how to vote the shares held in your account. If you are a beneficial owner of shares held in “street name,” you need to submit voting instructions to your broker, bank or other nominee in order to cast your vote. The Notice that was mailed to you by that organization has specific instructions for how to submit your vote, or if you have received or requested a hard copy of this Proxy Statement you may mark, sign, date and mail the accompanying voting instruction form in the postage-paid envelope provided. Your vote is revocable by following the procedures outlined in this Proxy Statement. However, since you are not a stockholder of record you may not vote your shares in person at the Annual Meeting without obtaining authorization from your broker, bank or other nominee. Whether or not you plan to attend the Annual Meeting, we urge you to vote by following the voting instructions provided to you to ensure that your vote is counted. +Telephone and Internet voting for stockholders of record will be available up until 11:59 PM Eastern Time on April 20, 2020, and mailed proxy cards must be received by April 20, 2020 in order to be counted at the Annual Meeting. If the Annual Meeting is adjourned or postponed, these deadlines may be extended. The voting deadlines and availability of telephone and Internet voting for beneficial owners of shares held in “street name” will depend on the voting processes of the organization that holds your shares of Common Stock. Therefore, we urge you to carefully review and follow the voting instructions card and any other materials that you receive from that organization. +If you receive more than one Notice, it is because your shares are registered in more than one name or are registered in different accounts. Please follow the instructions on each Notice received to ensure that all of your shares of Common Stock are voted. +“Broker Non-Votes” and Abstentions and their Effect on Proposals +A broker non-vote occurs when a broker, bank, trust or other nominee or custodian holding shares for a beneficial owner in “street name” does not vote the shares on a proposal because the nominee does not have discretionary voting power for a particular item and has not received instructions from the beneficial owner regarding voting. Brokers who hold shares for the accounts of their clients have discretionary authority to vote shares if specific instructions are not given, only with respect to “routine” items. +If your shares are held by a broker on your behalf and you do not instruct the broker as to how to vote your shares of Common Stock with regard to the election of directors ( Proposal 1 ) or the advisory vote regarding the compensation of named executive officers ( Proposal 3 ), the broker may not exercise discretion to vote for or against those proposals because each of these proposals are considered “non-routine” under applicable New York Stock Exchange (“ NYSE ”) rules. With respect to the ratification of the appointment of Deloitte & Touche LLP (“ Deloitte ”) as our independent registered public accounting firm for the fiscal year ended December 31, 2020 ( Proposal 2 ), the broker may exercise its discretion to vote for or against that proposal in the absence of your instruction. Broker non-votes would be treated as not entitled to vote with respect to non-discretionary matters. +An abstention (i.e. if you or your broker mark “ABSTAIN” on a proxy or voting instruction form, or if a stockholder of record attends the Annual Meeting but does not vote (either before or during the Annual Meeting)) has the same effect as voting “AGAINST” the ratification of the appointment of Deloitte as our independent registered public accounting firm for the fiscal year ended December 31, 2020 ( Proposal 2 ) or the advisory vote regarding the compensation of named executive officers ( Proposal 3 ). Votes that are withheld from a director’s election will not affect the outcome of the vote on the election of a director. +3 +Quorum Requirements for the Annual Meeting +The presence at the Annual Meeting, whether in person or by valid proxy, of stockholders holding a majority of the shares of Common Stock outstanding on the Record Date will constitute a quorum, permitting us to conduct our business at the Annual Meeting. On the Record Date, there were 81,920,347 of Class A Common Stock and 30,638,960 of Class B Common Stock issued and outstanding and entitled to be voted at the Annual Meeting. Abstentions and broker non-votes will be considered to be shares present at the Annual Meeting for purposes of constituting a quorum. +Votes Required to Approve Proposals and Board Recommendations +Proposal +Required Vote +Board Recommendation +(1) To elect three (3) Class I directors to the Board to serve until the 2023 annual meeting or until their successors are duly elected a nd qualified. +Plurality of Votes Cast +FOR EACH NOMINEE +(2) To ratify the appointment of Deloitte as our independent registered public accounting firm for the fiscal year ending Dec ember 31, 2020. +Majority of Shares Present and Entitled to Vote +FOR +(3) To approve, on an advisory basis, the compensation of our named executive officers. +Majority of Shares Present and Entitled to Vote +FOR +Election of Directors . To be elected, director nominees must receive a plurality of the votes cast and entitled to vote in the election of directors at the Annual Meeting; this means that the three (3) nominees receiving the highest number of “FOR” votes cast will be elected. Abstention and broker non-votes will have no effect on the outcome of the election of our directors and cumulative voting is not permitted. +Ratification of our Independent Registered Public Accounting Firm . The affirmative vote of a majority of the shares of Common Stock present in person or represented by proxy at the Annual Meeting and entitled to vote is required to ratify the appointment of Deloitte as our independent registered public accounting firm for the fiscal year ending December 31, 2020. Abstentions will have the effect of a vote against this proposal. Brokers have discretionary authority in the absence of timely instructions from their customers to vote on this proposal. As a result, there will be no broker non-votes with respect to this proposal. +Approval of Named Executive Officer Compensation . Approval, on a non-binding advisory basis, of the compensation of our named executive officers requires the affirmative vote of a majority of the shares of Common Stock present in person or represented by proxy at the Annual Meeting and entitled to vote. Abstentions will have the effect of a vote against this proposal, and broker non-votes are not counted as votes cast and will have no effect on the outcome of this proposal. +The Board recommends that you vote: +FOR the election of each of the three (3) Class I nominees to serve on our Board until the 2023 annual meeting or until their successors are duly elected and qualified; +FOR the ratification of Deloitte as our independent registe red public accounting firm for the fiscal year ending D ecember 31, 2020; and +FOR the approval of the compensation of our named executive officers as disclosed in this Proxy Statement. +Revoking Your Proxy; Changing Your Vote +If you are a stockholder of record, you may revoke your proxy before the vote is taken at the Annual Meeting by: +• signing, dating and delivering a new proxy with a later date before the applicable deadline to our Corporate Secretary; +• attending and voting in person at the Annual Meeting; or +• filing a written revocation with our Corporate Secretary. +4 +If your shares are held in “street name,” you may submit new voting instructions by contacting your broker or other organization holding your shares. You may also vote in person at the Annual Meeting, which will have the effect of revoking any previously submitted voting instructions, if you obtain a legal proxy from the organization that holds your shares. +Your last vote or proxy will be the vote or proxy that is counted. Your attendance at the Annual Meeting will not automatically revoke your proxy. +Dissent and Appraisal Rights +No action is proposed at the Annual Meeting for which the laws of the State of Delaware or other applicable law provides a right of our stockholders to dissent and obtain appraisal of or payment for such stockholders’ Common Stock. +Solicitation Costs +The cost of preparing, assembling and mailing the proxy materials and of reimbursing brokers, nominees and fiduciaries for the out-of-pocket and clerical expenses of transmitting copies of the proxy materials to the beneficial owners of shares held of record by such persons, will be borne by the Company. The Company has retained D.F. King & Co., Inc. ( “ D.F. King ” ) to aid in the solicitation of proxies. It is estimated that the cost of D. F. King ’ s services will be approximately $8,500 plus expenses. In addition to the solicitation of proxies by mail, proxies may also be solicited by telephone, electronic communication, or personal communication by employees of D.F. King and the Company. +Voting Results +We will publish final results in a Current Report on Form 8-K to be filed with the SEC within four (4) business days following the Annual Meeting. +Questions +You may call or contact our proxy solicitor, D.F. King, at (866) 796-1290 or via email at libertyoilfield@dfking.com if you have any questions concerning this Proxy Statement. +PLEASE VOTE. YOUR VOTE IS IMPORTANT TO US. +5 +PROPOSAL 1 — ELECTION OF DIRECTORS +Our Board currently consists of nine (9) directors. In accordance with the terms of our certificate of incorporation and bylaws, our Board is divided into three classes: Class I, Class II and Class III, with each class serving staggered three-year terms. Upon the expiration of the term of a class of directors, directors in that class will be eligible to be elected for a new three-year term at the annual meeting of stockholders in the year in which their term expires. Each director elected to the Board will hold office until his or her successor has been elected and qualified or until the earlier of their death, resignation, disqualification or removal. The current members of the classes of our Board are divided as follows: +♦ Class I (current term expires 2020): Gale A. Norton, Jesal Shah, and Cary D. Steinbeck +♦ Class II (term expires in 2021): Ken Babcock, Brett Staffieri, and Christopher A. Wright +♦ Class III (term expires in 2022): Peter A. Dea, William F. Kimble, and N. John Lancaster, Jr. +Unless otherwise instructed, the proxy holders will vote the proxies received by them for the three (3) director nominees named below, all of whom are presently directors of the Company. In the event that any nominee is unable or declines to serve as a director at the time of the Annual Meeting, the proxies will be voted for any nominee who shall be designated by the present Board to fill the vacancy, unless the size of the Board is reduced. The proxies cannot be voted for a greater number of persons than the number of nominees named in this proxy statement. It is not expected that any nominee will be unable or will decline to serve as a director. Biographical information regarding each nominee is set forth below, as well as a summary of the experiences, qualifications, attributes or skills that caused the Board to determine that each nominee should serve as a director of the Company. Each nominee ’ s experience is evaluated in determining the overall composition of the Board. +NOMINEES FOR ELECTION AS CLASS I DIRECTORS TO A THREE-YEAR TERM EXPIRING +AT THE 2023 ANNUAL MEETING OF STOCKHOLDERS +Name (Age) +Business Experience +Director +Since +Gale A. Norton (66) +Ms. Norton has served on our Board since July of 2019. She has been the President of Norton Regulatory Strategies, a consulting firm, since 2011. From 2007 to 2010, she served as General Counsel, Unconventional Oil, of Royal Dutch Shell, an international oil and natural gas company (“ Shell ”). Prior to joining Shell, Ms. Norton served as the Secretary of the Interior of the United States under President George W. Bush from 2001 until 2006 and as the Attorney General of the State of Colorado from 1991 until 1999. Ms. Norton is a director of American Transmission Company, a private company in the electric utility industry and she is a Governance Fellow of the National Association of Corporate Directors. Ms. Norton holds Bachelor of Arts and Juris Doctorate degrees from the University of Denver. We believe that Ms. Norton’s experience as Attorney General of the State of Colorado and Secretary of the Interior of the United States qualifies her for service on our Board. +2019 +Jesal Shah (34) +Mr. Shah has served on our Board since the initial public offering of the Company (the “ IPO ”). Mr. Shah is a Principal of Riverstone Holdings LLC (“ Riverstone ”), an energy-focused private equity firm. Mr. Shah joined Riverstone in 2010 and returned to Riverstone in 2015 after earning a Master of Business Administration. Prior to joining Riverstone, Mr. Shah worked in the Investment Banking Division of Credit Suisse. While at Credit Suisse, Mr. Shah worked on mergers and acquisitions and capital markets financings in the global energy sector. Mr. Shah has a Bachelor of Arts in Economics and Spanish from Tufts University and a Master of Business Administration from Harvard Business School. Mr. Shah has been nominated to serve on our Board by Riverstone pursuant to the stockholders’ agreement as further detailed herein. We believe that Mr. Shah’s experience investing in the energy sector qualifies him for service on our Board. +2018 +Cary D. Steinbeck (48) +Mr. Steinbeck has served on our Board since the IPO. Mr. Steinbeck served on the board of managers of Liberty Oilfield Services Holdings LLC (“ Liberty Holdings ”), a prior subsidiary of the Company, from October 2016 until the IPO. Mr. Steinbeck has been a Managing Director at Shea Ventures, an investment firm, since October 2014. From 2007 to 2014, he served as a Managing Director at Oakmont Corporation, an investment firm. Mr. Steinbeck is also a director at Liberty Resources LLC and is a Chartered Financial Analyst ® charterholder. Mr. Steinbeck has a Bachelor of Arts in Economics from the University of California, Santa Barbara, and a Master of Business Administration from the University of Southern California. We believe that Mr. Steinbeck’s experience in the private equity industry, energy sector investing experience, extensive board participation and understanding of financial markets will provide valuable insights for our Company and qualify him for service on our Board. +2018 +6 +Vote Required +The election of directors requires the affirmative vote of a plurality of the votes validly cast at the election. Neither abstentions nor broker non-votes will have any effect on the outcome of voting on director elections. +THE BOARD UNANIMOUSLY RECOMMENDS VOTING “ FOR ” +THE ELECTION OF EACH CLASS I DIRECTOR NOMINEE. +DIRECTORS CONTINUING IN OFFICE +Name (Age) +Business Experience +Director +Since +Christopher A. Wright (55) +Mr. Wright has served on our Board since the IPO. He has also served as our Chief Executive Officer since December 2016 and as the Chief Executive Officer of Liberty Holdings since its formation in March 2011 until the IPO. Mr. Wright is the Executive Chairman of Liberty Resources LLC, an oil and natural gas exploration and production company focused in the Williston Basin, and was the Chief Executive Officer from its formation in September 2010 until March 2017. Mr. Wright founded Pinnacle Technologies, a company that developed and commercialized tiltmeter and microseismic fracture mapping, and served as Chief Executive Officer of Pinnacle Technologies from 1992 to 2006. From 2000 to 2006, Mr. Wright served as Chairman of Stroud Energy, Inc., a shale natural gas producer. Mr. Wright currently serves on the Board of Directors for Urban Solution Group, US Ceramics, LLC and the Federal Reserve Bank of Kansas City, Denver Branch. Mr. Wright has a Bachelor of Science in Mechanical Engineering from the Massachusetts Institute of Technology (“ MIT ”) and conducted graduate work in electrical engineering at both the University of California-Berkeley and MIT. We believe that Mr. Wright’s experience leading our growth as our Chief Executive Officer and his extensive experience in the hydraulic fracturing services industry qualifies him for service on our Board. +2018 +William F. Kimble (60) +Mr. Kimble has served on our Board since the IPO and as Lead Director since October 2018. From 2009 until his retirement in 2015, Mr. Kimble served as the Office Managing Partner for the Atlanta office and Managing Partner - Southeastern United States at KPMG LLP (“ KPMG ”), one of the largest audit, tax and advisory services firms in the world. Mr. Kimble was also responsible for moderating KPMG’s Audit Committee Institute and Audit Committee Chair Sessions. Until his retirement, Mr. Kimble had been with KPMG or its predecessor firm since 1986. During his tenure with KPMG, Mr. Kimble also held numerous senior leadership positions, including Global Chairman of Industrial Markets. Mr. Kimble served as KPMG’s Energy Sector Leader for ten (10) years and was the executive director of KPMG’s Global Energy Institute. Mr. Kimble serves on the board of directors and the audit committee of PRGX Global, Inc. Mr. Kimble also serves on the board of directors, the special committee, and is chair of the audit committee of DCP Midstream Partners, LP. Mr. Kimble has a Bachelor of Accounting and Business Administration from Southern Methodist University. We believe that Mr. Kimble’s extensive accounting background and his experience as a director of public companies qualify him for service on our Board. +2018 +N. John Lancaster, Jr. (51) +Mr. Lancaster has served on our Board since the IPO and served on the board of managers of Liberty Holdings from December 2011 until the IPO. Mr. Lancaster is currently a Partner at Riverstone, an energy-focused private equity firm. Prior to joining Riverstone in 2000, Mr. Lancaster was a director with The Beacon Group, LLC, a privately held firm specializing in principal investing and strategic advisory services in the energy and other industries. Prior to joining Beacon, Mr. Lancaster was a Vice President with Credit Suisse First Boston’s Natural Resources Group in Houston, Texas. Mr. Lancaster served on the board of directors of Cobalt International Energy, Inc., an exploration and production company, from May 2010 to May 2013. Mr. Lancaster has a Bachelor of Business Administration from the University of Texas at Austin and a Master of Business Administration from Harvard Business School. Mr. Lancaster has been nominated to serve on our Board by Riverstone pursuant to the stockholders’ agreement. We believe Mr. Lancaster’s experience investing in the energy sector as well as his strong financial experience qualify him for service on our Board. +2018 +7 +Name (Age) +Business Experience +Director +Since +Brett Staffieri (41) +Mr. Staffieri has served on our Board since the IPO and served on the board of managers of Liberty Holdings from December 2011 until the IPO. Mr. Staffieri has been a Partner at Riverstone since February 2019 and has worked at Riverstone since 2006. Mr. Staffieri has a Bachelor of Business Administration from the University of Texas at Austin and a Master of Business Administration from The Wharton School, where he graduated with honors. Mr. Staffieri has been nominated to serve on our Board by Riverstone pursuant to the stockholders’ agreement. We believe that Mr. Staffieri’s extensive experience investing in the energy sector, particularly with respect to his involvement in Liberty Holdings since its founding, qualifies him for service on our Board. +2018 +Peter A. Dea (66) +Mr. Dea has served on our Board since the IPO. Mr. Dea has been the Executive Chairman of Confluence Resources LP (“ Confluence ”) since September 2016. Mr. Dea has served as the President and Chief Executive Officer of Cirque Resources LP (“ Cirque ”) since May 2007. Both Confluence and Cirque are private oil and gas companies. From November 2001 through August 2006, Mr. Dea was President and Chief Executive Officer and a director of Western Gas Resources, Inc. (“ Western Gas ”). Mr. Dea joined Barrett Resources Corporation (“ Barrett ”) in November 1993 and served as Chief Executive Officer and director from November 1999 and as Chairman from February 2000 through August 2001. Western Gas and Barrett were public oil and gas companies. Prior to that Mr. Dea served in several geologic positions with Exxon Company, U.S.A. Mr. Dea currently serves as a director of Ovintiv Inc. and has served as a director of Antero Midstream Corporation since the closing of its simplification transaction in March 2019. Prior to the simplification, Mr. Dea served as a director of the general partner of Antero Midstream GP LP beginning in April 2018. Mr. Dea has a Bachelor of Arts in Geology from Western State Colorado University and a Masters of Science in Geology from the University of Montana. Mr. Dea also attended the Harvard Business School, Advanced Management Program. We believe that Mr. Dea’s extensive oil and gas exploration and production experience and involvement in state and national energy policies qualify him for service on our Board. +2018 +Ken Babcock (63) +Mr. Babcock has served on our Board since the IPO. Mr. Babcock is currently the Chief Executive Officer of Abaco Energy Technologies LLC (“ Abaco ”), a private Houston-based Riverstone portfolio company that was formed in 2013 to focus on opportunities in manufacturing and services related to North American drilling, completion, and production, and associated infrastructure. Prior to joining Abaco, Mr. Babcock was the President and Chief Executive Officer of Titan Specialties, Ltd. (“ Titan ”) from 2008 until its sale to Hunting PLC in September 2011. Following the sale, Mr. Babcock remained at Titan until June 2012. Prior to joining Titan, from 2005 until 2008, Mr. Babcock served as President and Chief Executive Officer of International Logging, Inc. (“ ILI ”) where he took a narrowly-focused mud logging company of over 300 employees to a diverse well site services organization of over 1,800 employees spread over 60 countries in a little over two years. Prior to joining ILI, Mr. Babcock was Director of Strategic Sales at Baker Hughes INTEQ and Vice President of Business Development at Noble Technology Services. Mr. Babcock began his career with EXLOG in 1980. Mr. Babcock has a Bachelor of Science in Geology from Florida State University. Mr. Babcock has been nominated to serve on our Board by Riverstone pursuant to the stockholders’ agreement. We believe that Mr. Babcock’s strong business leadership experience qualifies him for service on our Board. +2018 +8 +THE BOARD AND ITS COMMITTEES +THE BOARD +Composition of the Board +Prior to the IPO, our Board consisted of one member, Michael Stock. In connection with the IPO, we expanded our Board from one to eight members, Michael Stock resigned and eight new members were appointed. In July 2019, we further expanded our Board from eight to nine members and transitioned from a single class of directors each serving one-year terms to three classes of directors, each as equal in number as possible, with each class serving staggered three-year terms. +In connection with the IPO, we entered into a stockholders’ agreement with certain stockholders. This stockholders’ agreement provides Riverstone with the right to designate a certain number of nominees to our Board so long as they and their affiliates collectively beneficially own more than 10% of the outstanding shares of our Class A Common Stock. In July 2019, and in connection with the expansion of our Board to nine members, we entered into an additional stockholders agreement with affiliates of Riverstone which provides that, to the extent Riverstone and its affiliates collectively beneficially own more than 10% of the outstanding shares of our Class A Common Stock and the Board is comprised of five or more directors that are not nominees of Riverstone and its affiliates, Riverstone and its affiliates may elect one additional nominee to serve on the Board. For further information on the stockholders’ agreements, see the section titled “ Related Party Transactions ” under the subtitle “ Stockholders’ Agreements .” +In evaluating director candidates, we, through the Nominating and Governance Committee of the Board (the “ Nominating and Governance Committee ”), review the following criteria when assessing director candidates: +✓ relevant skills, qualifications and experience; +✓ independence under applicable standards; +✓ business judgment; +✓ service on boards of directors of other companies; +✓ personal and professional integrity; +✓ openness and willingness to work as part of a team; +✓ willingness to commit the required time to serve as a Board member; and +✓ familiarity with the Company and its industry. +Board Leadership Structure and Role in Risk Oversight +Our Board does not have a policy regarding separation of the roles of Chief Executive Officer and Chairman of the Board. The Board believes it is in our best interests to make that determination based on circumstances from time to time. Currently, our Chief Executive Officer serves as the Chairman of the Board, and William F. Kimble, a non-employee independent director, serves as our Lead Director. As Lead Director, Mr. Kimble serves as a liaison between the Chairman and the non-management directors and presides at executive sessions of the non-management directors and any other Board meetings at which the Chairman is not present, among other responsibilities. Our Board believes that this structure, combined with our corporate governance policies and processes, creates an appropriate balance between strong and consistent leadership and independent oversight of our business. The Chairman chairs the meetings of our Board and stockholders, with input from the Lead Director, and as such, our Board believes that a person with a comprehensive knowledge of the Company is in the best position to serve the role of Chairman. +Our Board believes its administration of its risk oversight function has not affected its leadership structure. Risk is inherent with every business, and how well a business manages risk can ultimately determine its success. We face a number of risks, including those described under “ Risk Factors ” in our Annual Report on Form 10-K for the year ended December 31, 2019. Our Board is actively involved in oversight of risks that could affect us. This oversight is conducted by the Board, which has responsibility for general oversight of risks, but the Audit Committee of the Board (the “ Audit Committee ”) assists the Board in fulfilling such oversight responsibilities. Risk assessment and oversight are an integral part of our governance and management processes. The Board encourages management to promote a culture that incorporates risk management into our corporate strategy and day-to-day business operations. Management +9 +discusses strategic and operational risks at regular management meetings and conducted a specific strategic session during the year that included a focused discussion and analysis of the risks facing us. Throughout the year, senior management reviews risks with the Board at regular Board meetings as part of management presentations that focus on the Company’s overall operations and presents the steps taken by management to mitigate or eliminate such risks. +The Board does not have a standing risk management committee, but rather administers this oversight function directly through the Board as a whole. The Board is responsible for monitoring and assessing strategic risk exposure, and the Audit Committee assists the Board in fulfilling such oversight responsibilities by overseeing our major risk exposures and the steps our management has taken to monitor and control these exposures. The Audit Committee also monitors compliance with legal and regulatory requirements and considers and approves or disapproves any related-person transactions. +Our Board expects to periodically review its leadership structure to ensure that it continues to meet the Company’s needs. +Director Independence and Family Relationships +The Company’s standards for determining director independence require the assessment of directors’ independence each year. A director cannot be considered independent unless the Board affirmatively determines that he or she does not have any relationship with management or the Company that may interfere with the exercise of his or her independent judgment, including any of the relationships that would disqualify the director from being independent under the rules of the NYSE. +The Board has assessed the independence of each non-employee director under the independence standards of the NYSE. The Board has determined that each of Messrs. Steinbeck, Kimble, Dea and Babcock and Ms. Norton is considered independent under the NYSE rules. In connection with its assessment of the independence of each non-employee director, the Board also determined that Messrs. Steinbeck, Kimble, Babcock and Dea and Ms. Norton are independent as defined in Section 10A-3 of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”) and under the standards set forth by the NYSE applicable to members of the Audit Committee. Furthermore, none of our directors or officers have any family relationship with any director or other officers. “Family relationship” for this purpose means any relationship by blood, marriage or adoption, not more remote than first cousin. +BOARD COMMITTEES +Overview +Our Board has established an Audit Committee, a Compensation Committee of the Board (the “ Compensation Committee ”) and a Nominating and Governance Committee as further detailed herein. The below chart sets forth the members and chairperson of each Board committee. In February 2020, Mr. Babcock replaced Mr. Staffieri on our Compensation Committee and Ms. Norton replaced Mr. Dea on our Audit Committee. +Name +Audit Committee +Compensation Committee +Nominating and +Governance Committee +William F. Kimble +* +• +Cary D. Steinbeck +• +• +Peter A. Dea +* +• +Ken Babcock +• +Gale A. Norton +• +* +*   Chairperson   •   Member +Audit Committee +Rules implemented by the NYSE and the SEC require us to have an Audit Committee comprised of at least three (3) directors who meet the independence and experience standards established by the NYSE and the Exchange Act. Our Audit Committee currently consists of three (3) directors, all of whom are independent under the rules of the SEC and the standards set forth by the NYSE applicable to members of an Audit Committee. Messrs. Kimble and Steinbeck and Ms. Norton are the members of our Audit Committee with Mr. Kimble serving as the chairperson. Each member of our Audit Committee is financially literate, and our Board has determined that Mr. Kimble qualifies as an “audit committee financial expert” as defined in applicable SEC rules. +10 +The Audit Committee oversees, reviews, acts on and reports on various auditing and accounting matters to our Board, including: the selection of our independent accountants, the scope of our annual audits, fees to be paid to the independent accountants, the performance of our independent accountants and our accounting practices. The general purpose of our Audit Committee is to assist the Board in oversight responsibilities regarding the integrity of the Company’s financial statements, compliance with legal and regulatory requirements, performance of the independent registered public accounting firm engaged by the Company and the effectiveness of the Company’s internal audit functions. The Audit Committee operates under an Audit Committee charter that defines the committee’s primary duties in a manner consistent with the rules of the SEC and NYSE. A current copy of the Audit Committee charter can be found on our website, www.libertyfrac.com , by first clicking “ Investors ” then “ Corporate Governance ” and proceeding to “ Governance Documents .” +Compensation Committee +Our Compensation Committee currently consists of three (3) directors: Messrs. Dea, Babcock and Steinbeck with Mr. Dea serving as the chairperson. Our Compensation Committee assists our Board in establishing salaries, incentives and other forms of compensation for officers and other employees. Our Compensation Committee also assists the Board with the administration and oversight of our incentive compensation and benefit plans. The Compensation Committee operates under a Compensation Committee charter that defines the committee’s primary duties. The Compensation Committee has the authority to delegate to its Chairperson or any one of its members the responsibility and authority for any particular matter, as it deems appropriate from time to time under the circumstances. A current copy of the Compensation Committee charter can be found on our website, www.libertyfrac.com , by first clicking “ Investors ” then “ Corporate Governance ” and proceeding to “ Governance Documents .” +The Board has determined that all directors on the Compensation Committee are independent under the standards set forth by the NYSE. +Nominating and Governance Committee +Our Nominating and Governance Committee currently consists of three (3) directors: Ms. Norton and Messrs. Kimble and Dea with Ms. Norton serving as the chairperson. The Nominating and Governance Committee operates under a Nominating and Governance Committee charter that defines the committee’s primary duties. A current copy of the Nominating and Governance Committee charter can be found on our website, www.libertyfrac.com , by first clicking “ Investors ” then “ Corporate Governance ” and proceeding to “ Governance Documents .” +Our Nomi nating and Governance Committee identifies, evaluates and recommends qualified nominees to serve on our Board, subject to the terms of the stockholders’ agreements the Company has entered into with certain stockholders related to the appointment of directors. See “ Certain Relationships and Related Party Transactions—Related Party Transactions—Stockholders’ Agreements .” Our Nominating and Governance Committee also develops and oversees our corporate governance processes, including the annual performance evaluation of the Board and its committees, and of management, and develops, reviews and recommends to the Board any changes to our Corporate Governance Guidelines and other applicable governance policies. +When identifying director nominees, the Nominating and Governance Committee considers and reviews the following criteria: the candidate’s relevant skills, qualifications and experience, independence under applicable standards, business judgement, service on boards of directors of other companies, personal and professional integrity, openness and ability to work as part of a team, willingness to commit to the required time to serve as a member of the Board and familiarity with the Company and its industry. Additionally, when considering the recommendation to the Board that an existing director be nominated for election at the annual meeting of stockholders, the Nominating and Governance Committee will consider and review: the past Board and committee meeting attendance and performance, the length of Board service, the personal and professional integrity, the relevant experience, skills, qualifications and contributions that the existing director brings to the Board and the independence under the applicable standards. +The Nominating and Governance Committee will consider suggestions from any source, particularly from stockholders, regarding possible candidates for director; provided, however , that in order for such stockholder recommendation to be considered, the recommendations must comply with the procedures outlined under “ Stockholder Proposals ” below. +The Board has determined that all directors on the Nominating and Governance Committee are independent under the standards set forth by the NYSE. +11 +MEETING ATTENDANCE OF THE BOARD AND BOARD COMMITTEES +During 2019, the Board met five (5) times, the Audit Committee met nine (9) times, the Compensation Committee met six (6) times, and the Nominating and Governance Committee, which was formed in July 2019, met one (1) time. With the exception of Mr. Dea and Ms. Norton, each director participated, whether in person or by telephone, in at least seventy-five percent (75%) of all meetings of the Board and the committees of which such director is a member. Ms. Norton joined our Board in July 2019 and attended one hundred percent (100%) of the Board meetings held in 2019 following her appointment. Mr. Dea participated in at least seventy-five percent (75%) of the Board and Compensation Committee meetings in 2019, but did not participate in at least seventy-five percent (75%) of the Audit Committee meetings. He no longer serves on the Audit Committee. There is no formal policy as to director attendance at the Annual Meeting but our corporate governance guidelines encourage directors to attend. All members of our Board attended last year’s annual stockholder meeting. +CORPORATE CODE OF BUSINESS CONDUCT AND ETHICS +Our Board has adopted a Corporate Code of Business Conduct and Ethics (the “ Ethics Code ”) applicable to our employees, directors and officers, in accordance with applicable U.S. federal securities laws and the corporate governance rules of the NYSE. Any waiver of the Ethics Code may be made only by our Board or a Board committee and will be promptly disclosed as required by applicable SEC laws and the corporate governance rules of the NYSE. A current copy of the Ethics Code can be found on our website, w ww.libertyfrac.co m , by first clicking “ Investors ” then “ Corporate Governance ” and proceeding to “ Governance Documents ,” and is available in print to any shareholder who requests it. +CORPORATE GOVERNANCE GUIDELINES +Our Board has adopted Corporate Governance Guidelines (the “ Governance Guidelines ”) in accordance with the corporate governance rules of the NYSE, as applicable, that serve as a framework within which our Board and committees operate. These guidelines cover matters including, but not limited to, the composition of our Board, Board membership criteria and qualifications, director responsibilities, meetings of the Board and non-management directors, Board committees, director access to management and independent advisors, director compensation, and evaluation of management and management succession planning. A current copy of our Governance Guidelines can be found on our website, www.libertyfrac.com , by first clicking “ Investors ” then “ Corporate Governance ” and proceeding to “ Governance Documents .” +COMMUNICATION WITH THE BOARD +The Board welcomes communications from the Company’s stockholders and other interested parties. Stockholders and any other interested parties may send communications to the Board, any committee of the Board, the Chairman of the Board or any other director in particular to: +Liberty Oilfield Services Inc. +950 17 th Street, Suite 2400 +Denver, Colorado 80202 +Stockholders and any other interested parties should mark the envelope containing each communication as “Stockholder Communication with Directors” and clearly identify the intended recipient(s) of the communication. The Company’s General Counsel or other officer as designated by the Board, will review each communication received from stockholders and other interested parties and will forward the communication, as expeditiously as reasonably practicable, to the addressees if the communication falls within the scope of matters generally considered by the Board. To the extent the subject matter of a communication relates to matters that have been delegated by the Board to a committee or to an executive officer of the Company, then the Company’s General Counsel may forward the communication to the executive officer or chairman of the committee to which the matter has been delegated. The acceptance and forwarding of communications to the members of the Board or an executive officer does not imply or create any fiduciary duty of the Board members or executive officer to the person submitting the communications. +COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION +The members of the Compensation Committee are set forth above. During 2019, our last completed fiscal year, none of our executive officers served on the board of directors or compensation committee of a company that had an executive officer that served on our Board or Compensation Committee. Further, no member of our Board was an executive officer of a company in which one of our executive officers served as a member of the board of directors or compensation committee of that company. +12 +EXECUTIVE OFFICERS +The following sets forth certain information with respect to the executive officers of the Company as of March 1, 2020. +Name +Age +Position(s) +Christopher A. Wright +55 +Chairman of the Board and Chief Executive Officer +Michael Stock +58 +Chief Financial Officer and Treasurer +Ron Gusek +48 +President +R. Sean Elliott +45 +Vice President, General Counsel and Corporate Secretary +Ryan T. Gosney +46 +Chief Accounting Officer +See “ Proposal 1 – Election of Directors –Directors Continuing in Office ” above for information regarding Mr. Wright. +Michael Stock – Chief Financial Officer and Treasurer . Michael Stock has served as our Chief Financial Officer since December 2016, our Treasurer since March 2018 and as the Chief Financial Officer of Liberty Holdings from April 2012 until our IPO. Mr. Stock served as a director of the Company from December 2016 up until the IPO. Prior to joining Liberty Holdings, from 2009 to 2012, he was employed by TAS Energy Inc., an industrial energy technology company. During his tenure, he served as Chief Financial Officer and was a key part of the raising of equity from leading investment groups including Kleiner Perkins, Element Partners, Natural Gas Partners and Credi t Suisse. From 1997 to 2009, Mr. Stock served as Chief Financial Officer for Pinnacle Technologies. +Ron Gusek – President . Ron Gusek has served as our President since December 2016 and as the President of Liberty Holdings from November 2016 until the IPO. Mr. Gusek served as the Vice President of Technology and Development of Liberty Holdings, from 2014 until his promotion to President. Prior to joining Liberty Holdings, from 2011 to 2014, Mr. Gusek served as Vice President, Corporate Engineering and Technology of Sanjel Corporation, a global energy service company. Prior to joining Sanjel Corporation, from 2009 to 2011, Mr. Gusek was Director of Engineering for Zodiac Exploration, an oil and natural gas exploration and production company working in the central San Joaquin valley in California. From 2003 to 2008, Mr. Gusek was the Canadian Regional Manager of Pinnacle Technologies. Mr. Gusek has a Bachelor of Science in Mechanical Engineering from the University of Alberta. +R. Sean Elliott – Vice President, General Counsel and Secretary . Sean Elliott has served as our Vice President and General Counsel since March 2017 and our Corporate Secretary since the IPO. Between September 2016 and March 2017, Mr. Elliott worked as Assistant General Counsel at USAA Real Estate Company, a real estate investment firm. Between June 2015 and September 2016, Mr. Elliott served as Counsel at Haynes and Boone, LLP, an international corporate law firm. Between November 2007 and May 2015, Mr. Elliott served as Vice President, General Counsel, Corporate Secretary and Chief Compliance Officer of CARBO Ceramics Inc., an oilfield services production enhancement company. Mr. Elliott has a Bachelor of Arts in Economics and Business Administration from Austin College and a Doctor in Jurisprudence degree from the University of Texas at Austin. +Ryan T. Gosney – Chief Accounting Officer . Ryan Gosney has been our Chief Accounting Officer since March 2017. Between July 2016 and February 2017, Mr. Gosney served as the Chief Accounting Officer of Vantage Energy Inc. (“ Vantage ”), an oil and gas exploration and production company. Prior to joining Vantage, Mr. Gosney served as Chief Financial Officer for Dorado E&P Partners, LLC, an oil and gas company, from January 2012 to January 2016. Mr. Gosney began his career as an auditor with Arthur Andersen, LLP in September 1995 where he served in increasing roles of responsibility up to Audit Manager until June 2002. Mr. Gosney has also served as Controller for Patina Oil & Gas Corporation from October 2002 to October 2005 and Delta Petroleum Corporation from October 2005 to January 2012. Mr. Gosney has a Bachelor of Business Administration from Texas Christian University. +13 +COMPENSATION DISCUSSION & ANALYSIS +This Compensation Discussion & Analysis provides information about our rationale and policies with regard to the compensation of our principal executive officer, principal financial officer and our three other most highly-compensated executive officers (our “ Named Executive Officers ”) for 2019 and is intended to provide investors with the material information necessary for understanding our compensation policies and decisions regarding our Named Executive Officers as well as providing context for the tabular disclosure provided in the executive compensation tables below. Our Named Executive Officers for 2019 include: +Name +Title +Christopher A. Wright +Chairman of the Board and Chief Executive Officer +Michael Stock +Chief Financial Officer and Treasurer +Ron Gusek +President +R. Sean Elliott +Vice President, General Counsel and Corporate Secretary +Ryan T. Gosney +Chief Accounting Officer +2019 Compensation Overview +The Compensation Committee recommended, and the Board approved, the following compensation-related actions for our Named Executive Officers for fiscal year 2019, further detailed below: +• Base Salaries : The base salaries for each Named Executive Officer were raised by two percent (2%) from 2018. +• Annual Incentive Awards : The bonus target for annual incentive awards were the same targets used for 2018 based on the achievement of specific Company performance objectives, including a new performance metric as described in this Proxy Statement . +• Long-Term Incentive Compensation : The long-term incentive compensation included both time-based awards, vesting ratably over a three-year period, and new performance-based awards, with three year cliff vesting. +2019 Say on Pay and Say on Frequency +At our 2019 annual meeting of stockholders, our stockholders were asked to approve, on a non-binding, advisory basis, the compensation of our Named Executive Officers, as reported in our 2019 proxy statement (“ Say on Pay ”), and the frequency in which the Company should hold future votes on the compensation of our Named Executive Officers (“ Say on Frequency ”). In 2019, our stockholders overwhelming approved the compensation of our Named Executive Officers, with over 99% of the votes cast in favor of such practices. Additionally, over 99% of the votes cast for our Say on Frequency supported holding future Say on Pay votes on an annual basis, and as a result of such support, our Board determined it was appropriate to hold Say on Pay votes every year until our next vote on Say on Frequency to provide our stockholders with the ability to frequently provide feedback regarding our compensation practices and policies. The Compensation Committee and the Board viewed the results of the Say on Pay vote and, given the strong stockholder support for the compensation of our Named Executive Officers in 2018, believe that no significant changes to our compensation program were warranted as a result of this vote. Although our stockholders overwhelmingly supported our existing compensation program, the Compensation Committee and the Board determined that certain changes, as described below, were advisable in order to further align the pay of our Named Executive Officers with the Company’s performance. As discussed in more detail in “ Proposal 3: Advisory Vote to Approve the Compensation of the Company’s Named Executive Officers ,” the Board has recommended that stockholders vote, on a non-binding advisory basis, to approve the compensation of our Named Executive Officers, as described below. +Compensation Best Practices +The Company’s compensation program has been designed to support a strong governance model. Key elements of the program in support of this objective are set forth in the chart below: +What We Do +What We Don’t Do +✓ +Determine annual incentive compensation with the majority of the potential payment based upon the achievement of pre-established performance goals +x +x +x +x +x +x +x +No excise tax gross ups +No single-trigger severance +No excessive perquisites +No short-term or speculative trading of Company stock +No re-pricing of incentive awards +No supplemental retirement plans +No guaranteed bonuses or uncapped incentives +✓ +Generally target the market median for total compensation +✓ +Use an independent compensation consultant +✓ +Hold regular executive sessions of the Compensation Committee without management present +✓ +Base a portion of the long-term incentives upon our performance relative to peers starting in 2019 +14 +Process for Setting Compensation and Role of Compensation Consultant +At the beginning of each year, the Compensation Committee engages an independent executive compensation consulting firm in order to provide independent and objective market compensation data, conduct compensation analysis, recommend plan design changes and advise on compensation related risks. The Compensation Consultant acts solely at the direction of the Compensation Committee and not at the direction of the Company’s management team. During 2019, the Compensation Committee engaged Longnecker and Associates as such compensation consultant (the “ Compensation Consultant ”). The Compensation Consultant compiles compensation surveys for review by the Compensation Committee and management. After review of the Compensation Consultant’s surveys, management provides recommendations of compensation for our Named Executive Officers to the Compensation Committee. Such recommendations are generally based upon the guidance of the Compensation Consultant and the performance of our management as a team. The Compensation Committee then reviews management’s recommendation with the ability to ask questions of both management and the Compensation Consultant and may conduct an executive session as needed to discuss compensation. The Compensation Committee and Board collectively have the final authority to make all decisions regarding compensation. +The Compensation Consultant also assists the Compensation Committee with the determination of our Peer Group, as described below, and design of our annual incentive program and long-term incentive awards. Using the independence factors established by the SEC a nd the NYSE, the Compensation Committee determined that the Compensation Consultant’s work did not raise any conflicts of interest, and they are considered an independent consulting firm. +Competitive Market Position and Peer Group +To further emphasize the alignment between Company performance and executive pay and to ensure compensation is competitive, for 2019 the Compensation Committee targeted the 50 th percentile for total compensation (base salary and short-term and long-term incentives), as reflected by various sources of compensation data (collectively, “ Market Data ”). The Market Data provided to the Compensation Committee by the Compensation Consultant includes compensation information from our Peer Group (as defined below) as well as other broad-based compensation survey sources selected by the Compensation Consultant. Although the Compensation Committee used the Market Data to inform its decisions regarding the form and amount of compensation provided to our Named Executive Officers in 2019, the Compensation Committee also considered other factors such that the compensation provided to our Named Executive Officers is not exclusively reflective of the Market Data. +For purposes of setting 2019 compensation, the peer group companies (our “ Peer Group ”) used by the Compensation Consultant and the Compensation Committee included the following companies: +Core Laboratories N.V. +Helmerich & Payne, Inc. +Patterson-UTI Energy, Inc. +Superior Energy Services, Inc. +C&J Energy Services, Inc.* +RPC, Inc. +Keane Group, Inc.* +Exterran Corporation. +FTS International, Inc. +ProPetro Holding Corp. +Unit Corporation +Archrock, Inc. +Oil States International, Inc. +* On October 31, 2019, C&J Energy Services, Inc. completed a merger transaction with and into Keane Group, Inc. The combined enterprise is now known as Nex Tier Oilfield Solutions Inc. +Our Peer Group was selected based on companies that broadly represent related drilling and oilfield services businesses and are of reasonably comparable revenue size to the Company. While some of these companies have larger market capitalizations, these companies represent the market in which we most directly compete for qualified professionals. As a whole, our Peer Group reflects companies with related operations, of reasonably similar size, and with which we compete for talent. +Objectives of Compensation +The goal of the Company’s compensation program is to help attract and retain qualified executive talent and to strengthen the alignment between executives and stockholders’ interests, enhancing stockholder value. To achieve this goal, the Compensation Committee’s decisions are guided by the following principles: provide a competitive compensation package; relate compensation to the performance of the Company and the individual; and align employee objectives with the objectives of stockholders by encouraging executive st ock ownership. +15 +In order to achieve these objectives, the Compensation Committee has created a compensation package that combines current and deferred cash compensation with equity-based compensation. The Company’s compensation program for executive officers consists of the following items: +* base salary; +* performance-based annual incentive payments under the Liberty Oilfield Services Inc. Long Term Incentive Plan (“ LTIP ”), which in 2019 were based upon the Company’s adjusted pre-tax earnings per share (“ Pre-Tax EPS ”), return on capital employed (“ ROCE ”), the Company’s adjusted ROCE (ROCE revised to a standardized calculation as described herein) (“ Adjusted ROCE ”) as compared to the Adjusted ROCE of a peer group of companies (such comparison, “ Comparative ROCE ”) and personal performance; +* long-term equity awards under our LTIP, consisting of both time-based and performance-based restricted stock units; and +* matching and discretionary contributions under the Liberty Oilfield Services 401(k) Savings Plan. +The Compensation Committee structures executive total direct compensation to emphasize performance through the annual incentive program and long-term incentives. The Compensation Committee believes that the compensation mix should strike a balance promoting long- term returns without motivating or rewarding excessive or inappropriate risk-taking. +Elements of Compensation +2019 Pay Mix +Our compensation program is designed so that the higher an executive’s position in the Company, the greater the percentage of compensation is contingent on the Company’s performance. The Company believes that having a significant portion of our Named Executive Officers’ compensation at risk better aligns their interests with the long-term interests of the Company and its stockholders. A majority of our Named Executive Officers total target direct compensation for fiscal year 2019 was variable, at approximately 88% for our Chief Executive Officer and averaging 82% for our other Named Executive Officers. The following charts illustrate the total target mix of direct compensation for our Named Executive Officers for fiscal year 2019. +16 +Base Salary +Each Named Executive Officer’s base salary is a fixed component of compensation for performing specific job duties and functions. In 2019, based on the analysis provided by the Compensation Consultant and the recommendation of the Compensation Committee, the Board increased the base salaries of our Named Executive Officers by 2%, effective April 1, 2019, to reflect cost of living adjustments. These base salary increases were less than those recommended by the Compensation Consultant. Specifically, the adjusted base salaries for each Named Executive Officer are as follows: +Name +2019 Base Salary +Increase over +2018 Base Salary +Christopher A. Wright +$612,000 +2% +Michael Stock +$408,000 +2% +Ron Gusek +$408,000 +2% +R. Sean Elliott +$367,200 +2% +Ryan T. Gosney +$275,400 +2% +Annual Incentive Award +In 2019, based on the analysis provided by the Compensation Consultant and the recommendation of the Compensation Committee, the Board established performance metrics and hurdles for our 2019 annual incentive awards that are focused on the results of adjusted Pre-Tax EPS, ROCE and Comparative ROCE. The Compensation Consultant and Compensation Committee recommended, and the Board approved, maintaining an element of discretion in the annual incentive for our Named Executive Officers in order to provide the Compensation Committee and the Board the flexibility to respond to specific events that are relevant to the Named Executive Officer’s performance during the year. No payout percentage will be earned for a metric if the actual Company performance of that metric is below the threshold level set forth below. Payouts for performance between threshold, target and maximum are calculated using straight line interpolation. The overall payout amount for each Named Executive Officer is capped at 200% of each Named Executive Officer’s target incentive award. The performance metrics, their related thresholds and weightings and actual performance for the year ended December 31, 2019 are set forth in the table below: +Performance Metric +Weighting +Threshold +(50% Payout) +Target +(100% Payout) +Maximum +(200% Payout) +Actual +Performance +Earned Payout +Percentage +of Annual +Incentive Award +Adjusted Pre-Tax EPS (1) +25% +$0.71 +$1.06 +$1.59 +$0.98 +22.0% +ROCE (2) +25% +11.3% +17% +25.5% +14.5% +19.4% +Comparative ROCE (3) +30% +See Comparative ROCE Chart below +2 of 10 +5 3.2 % +Discretionary +20% +N/A +N/A +N/A +Variable +Variable +(1) Adjusted Pre-Tax EPS is equal to the Company’s 2019 Adjusted EBITDA (calculated as presented in the Company’s Annual Report on Form 10-K), plus non-cash equity compensation expense, minus interest expense, depreciation and amortization, divided by diluted weighted average shares outstanding (including exchanged Class B Common Stock shares excluded from diluted EPS and excluding the dilutive impact of restricted stock units not outstanding at the beginning of 2019) fo r 2019. +(2) ROCE is equal to the Company’s 2019 Adjusted EBITDA (calculated as presented in the Company’s Annual Report on Form 10-K), plus non-cash equity compensation expense, minus depreciation and amortization, divided by the simple average of capital (debt and equity) employed at December 31, 2019 and 2018. +(3) Comparative ROCE is determined by comparing the Company’s Adjusted ROCE, which is equal to the Company’s 2019 pre-tax income, plus interest expense and stock based compensation expense, and ranking it against the Adjusted ROCE of the 2019 peer group, as further detailed below. +Our Named Executive Officers had a strong performance in 2019 despite a challenging market. Given this performance, the Compensation Committee recommended that each Named Executive Officer receive a target payout of their discretionary incentive opportunity, other than Messrs. Wright and Stock . Messrs. Wright and Stock each voluntarily requested, and the Compensation Committee approved, a reduction in the payout of their discretionary incentive opportunity by approximately 15% and 30%, respectively. +17 +The target incentive for each Named Executive Officer and the 2019 annual incentive payout for each Named Executive Officer is set forth below: +Name +Target Annual +Incentive +(% of Base Salary) +Target Annual +Incentive ($) +Performance +Achievement Level +(% of Target) +Actual 2019 Annual +Incentive Payout +Christopher A. Wright +147.1% +$900,000 +111. 3 % +$ 1,001,400 +Michael Stock +122.5% +$500,000 +108. 6 % +$ 543,000 +Ron Gusek +122.5% +$500,000 +114. 6 % +$ 573,000 +R. Sean Elliott +98.0% +$360,000 +114. 6 % +$ 412,560 +Ryan T. Gosney +73.5% +$202,500 +114. 6 % +$ 232,065 +Comparative ROCE is determined by comparing and ranking the Company’s Adjusted ROCE against the Adjusted ROCEs of a group of peer companies (such peer group, the “ ROCE Peer Group ”). Our Adjusted ROCE and the ROCE Peer Group Adjusted ROCEs for a calendar year are calculated and then ranked in order of highest to lowest, with the highest Adjusted ROCE being ranked 1 of 10, and the lowest Adjusted ROCE ranked 10 of 10. The amount of the target award paid for this metric is then based on our numerical ranking against the ROCE Peer Group as follows, with the use of line a r interpolation to determine the exact amount of payout: +Comparative ROCE +Ranking of Company Adjusted +ROCE against ROCE Peer Group +Payout Percentage of +Target Award +1 of 10 +200% +2 of 10 +175% +3 of 10 +150% +4 of 10 +125% +5 of 10 +100% +6 of 10 +75% +7 of 10 +50% +8 of 10 +0% +9 of 10 +0% +10 of 10 +0% +The ROCE Peer Group is reviewed and set each year, provided that the Compensation Committee reserves the right to recommend, and the Board to make, substitutions and revisions to the ROCE Peer Group throughout the year. The 2019 ROCE Peer Group consists of the following companies: +Helmerich & Payne, Inc. +Nex Tier Oilfield Solutions Inc.* +Oil States International, Inc. +Patterson-UTI Energy, Inc. +ProPetro Holding Corp. +RPC, Inc. +Superior Energy Services, Inc. +Nine Energy Service, Inc. +Halliburton Company +* On October 31, 2019, Keane Group, Inc. completed a merger transaction with C&J Energy Services, Inc. The combined enterprise is now known as Nex Tier Oilfield Solutions Inc. +Our Company Adjusted ROCE for 2019 was 13.5%, which ranked 2 of 10 against the ROCE Peer Group for 2019, resulting in a weighted payout percentage for the Comparative ROCE component of the annual incentive award equal to 5 3.2 %. +Long-Term Incentive Compensation +We maintain the LTIP in order to incentivize individuals providing services to us or our affiliates. In 2019, following recommendations by the Compensation Consultant and our Compensation Committee, our Board granted both time-based and performance-based restricted stock units (“ RSUs ”), each which represent the right to receive shares of our Class A Common Stock following the applicable vesting period. The Compensation Committee considered the use of other forms of equity awards, including restricted stock and stock options, and ultimately determined to use RSUs given that they have a less dilutive effect than stock options and do not require the issuance of actual shares of Class A Common Stock unless and until vesting conditions are met. For 2019, the value of RSUs for the Named Executive Officers as a group is slightly below the 50 th percentile based on Market Data. The Compensation Committee and our Board determined that a combination of time-based and a performance-based vesting approach was appropriate given the Company’s desire to provide our Named Executive Officers with a long-term retention-focused award that also aligns the interests of our Named Executive Officers with those of our stockholders while at the same time furthering the Company’s pay-for-performance philosophy. +18 +For 2019, one-half of the RSUs awarded to Messrs. Wright, Stock and Gusek vest ratably over a three-year period, and one-half vests at the end of a three-year performance period based on the Company’s performance against its peers. Messrs. Elliott and Gosney received RSU awards with similar time and performance-based vesting conditions for 2019, except that the mix for their awards was 67% time-based and 33% performance-based. +Performance-based RSUs provide the Named Executive Officer the right to receive an amount ranging from 0% to 200% of the target performance-based RSUs granted based on the Company’s Comparative ROCE performance during the three-year performance period, subject to the continued employment of the Named Executive Officer. To determine the Company’s Comparative ROCE, Adjusted ROCE will be calculated for the Company and each entity in the ROCE Peer Group, as described above under “ Elements of Compensation—Annual Incentive Award ,” for each applicable year. After the end of the three-year performance period, the Adjusted ROCE calculations of each entity for each year shall be averaged in order to obtain an average Adjusted ROCE calculation for the entire three year period. The entities in the ROCE Peer Group will be arranged (highest to lowest) by their averaged Adjusted ROCE, excluding the Company. The Company’s percentile rank will be interpolated between the entity with the next highest average Adjusted ROCE and the entity with the next lowest average Adjusted ROCE. The Company’s percentile rank will then be used to determine the payout percentage of the target performance-based RSU. +Employment, Severance and Change in Control Agreements +In April 2019, the Compensation Committee reviewed the Company’s practices relating to employment, severance and change in control agreements for executive officers. As part of this process, the Compensation Committee received a presentation from the Compensation Consultant (the “ April 2019 Presentation ”) that indicated the use of employment and severance agreements for executive officers was common at Peer Group companies. Moreover, the April 2019 Presentation indicated that approximately 85% of the Peer Group companies have implemented change in control agreements with their executive officers. The Compensation Committee acknowledged that in a change in control situation, executive officer positions can be eliminated due to redundancy or misalignment with a new ownership structure even though the individual has performed in a satisfactory manner. In addition, the Compensation Committee noted it is important for executive officers to continue to focus on fulfilling their duties as opposed to being distracted by the potential impact of a change in control transaction on their future employment, and the implementation of change of control agreements could help mitigate this situation. +Based on this analysis and the information contained in the April 2019 Presentation, in August 2019, the Compensation Committee recommended, and the Board approved, that the Company enter into a change in control agreement with each of Mr. Elliott and Mr. Gosney (the “ Change in Control Agreements ”). At the request of the other executive officers, the Compensation Committee did not recommend change in control agreements for them , as these officers have accumulated vested equity interests in the Company prior to the time of the IPO, and the value of these equity interests would likely provide adequate benefits in the event of a change in control transaction . +Each Change in Control Agreement provides severance benefits in the event the executive officer’s employment is terminated without cause or the executive officer resigns for good reason within 18 months following a change in control , as described in more detail below under “ Potential Payments Upon Termination or Change in Control—Change in Control Agreements .” The benefits provided to the executive officer in the Change in Control Agreements were primarily based on the recommendation of the Compensation Consultant and Peer Group median data as set forth in the April 2019 Presentation. +We have not entered into any other employment, severance or change in control agreements with any of our Named Executive Officers. +Other Compensation Elements +401(k) Plan. We currently maintain a retirement plan intended to provide benefits under Section 401(k) of the Internal Revenue Code of 1986, as amended (the “ Code ”) under which employees, including our Named Executive Officers, are allowed to contribute portions of their base compensation to a tax-qualified retirement account under the Liberty Oilfield Services 401(k) Savings Plan. We provide matching contributions at a rate of $1.00 for each $1.00 of employee contribution, subject to a cap of the lower of (i) 6% of the employ ee’s salary and (ii) the applicable contribution limits under the C o de . +Pension and Nonqualified Deferred Compensation. We have not maintained, and do not currently maintain, a defined benefit pension plan or nonqualified deferred compensation plan. +Perquisites and Other Benefits . We provide limited perquisites to our Named Executive Officers. For example, none of our Named Executive Officers receive car allowances or Company-sponsored country club memberships. +19 +Anti-Hedging and Pledging Policy. Our Insider Trading Policy generally prohibits our directors, employees and officers from hedging and pledging of Company securities by providing that hedging or monetization transactions, whether direct or indirect, involving the Company’s securities and the pledging of Company securities as collateral are prohibited. Short term exceptions to this prohibition (such as temporary margin loans) may be granted depending on specific facts and circumstances. Any exceptions for our directors and officers must be granted by our Audit Committee and will be periodically communicated to the Board. The policy also prohibits transactions involving Company-based derivative securities. +Risk Assessment +The Compensation Committee reviewed our employee compensation practices and policies and determined that such policies do not encourage excessive or unnecessary risk-taking, and are not likely to have a material adverse effect on the Company. +20 +COMPENSATION COMMITTEE REPORT +The information contained in this Compensation Committee Report shall not be deemed to be “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933, as amended (the “ Securities Act ”), or the Exchange Act, except to the extent that the Company specifically incorporates such information by reference in such filing. +The Compensation Committee reviewed and discussed the Compensation Discussion & Analysis required by Item 402 of Regulation S-K promulgated by the SEC with management of the Company, and, based on such review and discussions, the Compensation Committee recommended to the Board that such Compensation Discussion & Analysis be included in this Proxy Statement and incorporated by reference into the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019. +Compensation Committee of the Board of Directors: +Peter A. Dea, Chairman +Ken Babcock, Member +Cary D. Steinbeck, Member +21 +EXECUTIVE COMPENSATION TABLES +Summary Compensation Table +The following table summarizes the compensation awarded to, earned by or paid to our Named Executive Officers for the fiscal years ended December 31, 2019, 2018 and 2017. +Name & Principal Position +Year +Salary +($) +Bonus +($) (2) +Stock +Awards +($) (3) +Non-Equity +Incentive Plan +Compensation +($) (2) +All Other +Compensation +($) (4) +Total +($) +Christopher A. Wright +Chairman of the Board +& Chief Executive Officer +2019 +608,769 +150,000 +3,750,207 +851,400 +16,800 +5,377,176 +2018 +575,000 +180,000 +2,981,289 +592,891 +16,500 +4,345,680 +2017 +349,890 +1,590,162 +— +— +5,722 +1,945,774 +Michael Stock +Chief Financial Officer & Treasurer +2019 +405,846 +70,000 +1,666,755 +473,000 +16,800 +2,632,401 +2018 +393,750 +100,000 +1,325,013 +329,384 +16,500 +2,164,647 +2017 +282,668 +1,192,809 +— +— +8,513 +1,483,990 +Ron Gusek +President +2019 +405,846 +100,000 +1,666,755 +473,000 +16,800 +2,662,401 +2018 +393,750 +100,000 +1,325,013 +329,384 +16,500 +2,164,647 +2017 +242,885 +1,192,809 +— +— +7,603 +1,443,297 +R. Sean Elliott (1) +Vice President, Gener al Coun sel & Corpo rate Secret ary +2019 +365,262 +72,000 +1,031,320 +340,560 +16,800 +1,825,942 +2018 +357,500 +90,000 +1,093,130 +237,156 +47,678 +1,825,464 +2017 +280,667 +175,750 +— +— +52,822 +509,239 +Ryan T. Gosney (1) +Chief Accounting Officer +2019 +273,946 +40,500 +632,853 +191,565 +16,800 +1,155,66 4 +2018 +266,250 +210,750 +670,781 +133,401 +16,500 +1,297,682 +2017 +207,256 +156,683 +— +— +7,356 +371,295 +(1) Messrs. Elliott and Gosney joined us in March 2017 and therefore 2017 compensation reflects a partial year of service. +(2) The amounts reported in the “Non-Equity Incentive Plan Compensation” columns for 2019 and 2018 reflect the portion of the 2019 and 2018 annual incentive payouts related to achievement of the Company-wide performance metrics. The portion of the 2019 and 2018 annual incentive payouts related to the discretionary component are reported in the “Bonus” column for 2019 and 2018, respectively. Mr. Gosney’s reported bonus for 2018 also includes a $150,000 discretionary payment that was made by the Company in connection with his exemplary work on the IPO. This amount was paid in January 2018. This discretionary payment was inadvertently omitted from the Company’s 2019 proxy statement. +(3) The amounts shown do not reflect compensation actually received by the Named Executive Officer. Rather, amounts set forth in the “Stock Awards” column represent the aggregate grant date fair value of time-based and performance-based restricted stock unit awards computed in accordance with FASB ASC Topic 718 for financial statement reporting purposes in fiscal years 2019 and 2018 by the Company with respect to restricted stock units. A discussion of the assumptions used in this valuation with respect to awards made in fiscal year 2019 may be found in Note 8 to the Company’s financial statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. Performance-based awards are included based on the assumption that they will vest at 100% of the target award, since actual vesting will not be determined until the end of the performance period. The Class A Common Stock that certain of the Named Executive Officers received at the time of the IPO in exchange for their Class B Units in Liberty Holdings, as described below under “ Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table ,” have not been included in this column, as there was no grant date fair value or incremental fair value associated with the exchange for accounting purposes in 2018. +(4) For the Named Executive Officers, amounts reported in the “All Other Compensation” column for 2019 reflect discretionary matching contributions earned by each Named Executive Officer pursuant to the Company’s 401(k) plan . The amounts reported in the “All Other Compensation” column for 2018 for Messrs. Wright, Stock, Gusek and Elliott were previously overstated in the Company’s 2019 proxy statement with respect to the discretionary matching contributions earned by each Named Executive Officer pursuant to the Company’s 401(k) plan , and such amounts have been reduced in connection with a true-up that occurred in 2019. The amount reported in the “All Other Compensation” column for 2018 for Mr. Gosney was previously understated in the Company’s 2019 proxy statement with respect to the discretionary matching contributions earned by Mr. Gosney pursuant to the Company’s 401(k) plan , and such amount has been increased in connection with a true-up that occurred in 2019. +22 +Grants of Plan-Based Awards +The following table provides information for each of our Named Executive Officers regarding plan-based awards granted during fiscal year 2019. +Name +Grant Date +Estimated Future Payouts Under +Non-Equity Incentive Plan Awards (1) +Estimated Future Payouts Under +Equity Incentive Plan Awards (2) +All Other +Stock +Awards: +Number of +Shares of +Stock or +Units +(#) (3) +Grant Date +Fair Value +of Stock +and Option +Awards +($) (4) +Threshold +($) +Target +($) +Maximum +($) +Threshold +(#) +Target +(#) +Maximum +(#) +Christopher A. Wright +360,000 +720,000 +1,440,000 +1/22/2019 +62,797 +125,593 +251,186 +1,875,103 +1/22/2019 +125,593 +1,875,103 +Michael Stock +200,000 +400,000 +800,000 +1/22/2019 +27,910 +55,819 +111,638 +833,378 +1/22/2019 +55,819 +833,378 +Ron Gusek +200,000 +400,000 +800,000 +1/22/2019 +27,910 +55,819 +111,638 +833,378 +1/22/2019 +55,819 +833,378 +R. Sean Elliott +144,000 +288,000 +576,000 +1/22/2019 +11,398 +22,796 +45,592 +340,344 +1/22/2019 +46,281 +690,975 +Ryan T. Gosney +81,000 +162,000 +324,000 +1/22/2019 +6,994 +13,988 +27,976 +208,841 +1/22/2019 +28,400 +424,012 +(1) The amounts shown in these columns reflect the potential threshold, target and maximum payouts with respect to the performance-based financial metrics under the 2019 annual incentive awards. The amounts reflected herein include amounts that may be earned with respect to the discretionary component of the 2019 annual incentive awards. +(2) The amounts shown in these columns reflect the potential threshold, target and maximum number of performance-based RSU awards granted to the Named Executive Officers during fiscal year 2019. +(3) The amounts shown in this column reflect time-based vesting RSU awards granted to the Named Executive Officers during fiscal year 2019. +(4) The amounts shown in this column do not reflect compensation actually received by the Named Executive Officer. Rather, amounts set forth herein represent the aggregate grant date fair value of time-based and performance-based RSUs computed in accordance with FASB ASC Topic 718 for financial statement reporting purposes in fiscal year 2019 by the Company. A discussion of the assumptions used in this valuation with respect to awards made in fiscal year 2019 may be found in Note 8 to the Company’s financial statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. +Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table +In connection with our corporate reorganization and the IPO, the Class B Units in Liberty Holdings (the “ Class B Units ”) previously granted to certain of our Named Executive Officers that remained unvested were exchanged for restricted shares of our Class A Common Stock granted pursuant to the Liberty Oilfield Services Inc. Legacy Restricted Stock Plan. These restricted stock awards are subject to the same vesting conditions applicable to the Class B Units imm ediately prior to the exchange. Fully vested Class B Units held by our Named Executive Officers were exchanged for unrestricted shares of our Class A Common Stock. See below under “ Potential Payments Upon a Termination or Change in Control ” for additional information regarding the circumstances that could result in accelerated vesting of these awards. +23 +Outstanding Equity Awards at 2019 Fiscal Year-End +The following table reflects information regarding outstanding equity-based awards held by our Named Executive Officers as of December 31, 2019, which consist of restricted stock awards, time-based RSU awards and performance-based RSU awards. +Name +Stock Awards +Number of Shares or +Units of Stock That +Have Not Vested +(#) +Market Value of +Shares or Units of +Stock That +Have Not Vested +($) (5) +Equity Incentive +Plan Awards: +Number of +Unearned Shares, +Units or Other +Rights That +Have Not Vested +(#) (6) +Equity Incentive +Plan Awards: +Market or Payout +Value of Unearned +Shares, Units or +Other Rights That +Have Not Vested +($) (7) +Christopher A. Wright +99,676 (1) +1,108,397 +125,593 (2) +1,396,594 +251,186 +2,793,188 +Michael Stock +44,300 (1) +492,616 +55,819 (2) +620,707 +111,638 +1,241,415 +Ron Gusek +44,300 (1) +492,616 +97,493 (3) +1,084,122 +55,819 (2) +620,707 +111,638 +1,241,415 +R. Sean Elliott +27,411 (1) +304,810 +6,853 (4) +76,205 +46,281 (2) +514,645 +45,592 +506,983 +Ryan T. Gosney +16,820 (1) +187,038 +4,205 (4) +46,760 +28,400 (2) +315,808 +27,976 +311,093 +(1) These RSUs granted on April 24, 2018 vest one-half on each of April 1, 2020 and April 1, 2021, so long as the applicable Named Executive Officer remains employed through such dates. +(2) These RSUs granted on January 22, 2019 vest in one-third increments on each of April 1, 2020, April 1, 2021 and April 1, 2022, so long as the applicable Named Executive Officer remains employed through such dates. +(3) The restricted stock award vests on October 31, 2020, so long as Mr. Gusek remains employed through such date. +(4) These RSUs granted on April 24, 2018 vest on April 1, 2020, so long as the applicable Named Executive Officer remains employed through such date. +(5) Amounts in this column reflect the value of unvested time-based RSU and restricted stock awards held by the Named Executive Officers, calculated based on the closing price of our Class A Common Stock on December 31, 2019 of $11.12. +(6) These performance-based RSUs granted on January 22, 2019 will vest on April 1, 2022, subject to achievement of the Comparative ROCE performance metrics and the applicable Named Executive Officer’s continued employment through such date. As of December 31, 2019, the performance-based RSUs granted on January 22, 2019 were trending above target, and in accordance with the SEC rules, are reflected in this table at maximum, therefore, the performance-based RSUs may actually vest at a lower amount than reflected in this column. +(7) Amounts in this column reflect the value of unvested performance-based RSU awards held by the Named Executive Officers reported in the preceding column calculated based on the closing price of our Class A Common Stock on December 31, 2019 of $11.12. +24 +Option Exercises and Stock Vested +The following table reflects the value received by each Named Executive Officer on the vesting of restricted stock awards and RSU awards during fiscal year 2019. +Name +Stock Awards +Number of +Shares Acquired +on Vesting +(#) +Value Realized +on Vesting +($) (1) +Christopher A. Wright +49,837 +768,985 +Michael Stock +22,150 +341,775 +Ron Gusek +119,644 +1,239,694 +R. Sean Elliott +20,557 +317,195 +Ryan T. Gosney +12,615 +194,649 +(1) The amounts in this column reflect the value of the shares in the preceding column based on the closing price of our Class A Common Stock on the applicable vesting date, including the value of any shares withheld for tax withholding purposes. +Pension Benefits and Nonqualified Deferred Compensation +We do not maintain and our Named Executive Officers do not participate in any defined benefit pension plan or nonqualified deferred compensation plan. +Potential Payments Upon Termination or Change in Control +Change in Control Agreements +In August 2019, the Company entered into Change in Control Agreements with each of Mr. Elliott and Mr. Gosney. For further detail on the Company’s decision to enter into Change in Control Agreements, see the section titled “ Employment, Severance and Change in Control Agreements ” contained in the Compensation Discussion & Analysis section set forth herein. Each Change in Control Agreement provides that if the Named Executive Officer’s employment is terminated without “cause” or the Named Executive Officer resigns for “good reason” within 18 months following a “change in control,” the Named Executive Officer will be entitled to receive, subject to such Named Executive Officer’s timely execution and non-revocation of a release of claims in favor of the Company: (i) two times the sum of (a) the Named Executive Officer’s annualized base salary for the year in which the termination occurs (or, if greater, that in effect immediately preceding the change in control) plus (b) an amount equal to the higher of (1) the Named Executive Officer’s target annual bonus for year in which the termination occurs or (2) the average of the Named Executive Officer’s target annual bonus for the three most recently completed calendar years; (ii) a pro-rated portion of the Named Executive Officer’s target annual bonus for the calendar year in which the termination occurs; (iii) reimbursement for a portion of the COBRA premiums paid by the executive for continued coverage under the Company’s group health plans for up to 18 months plus a lump sum cash payment equal to six times such monthly amount; and (iv) vesting of all outstanding time-based and performance-based equity awards granted pursuant to any Company long term incentive plan as of the date of termination, with such performance-based equity awards being vested at the higher of target performance or actual performance through the termination date. +For purposes of the Change in Control Agreements, the following terms generally have the meanings set forth below: +• “Cause” generally means the Named Executive Officer’s (i) material breach of the Change in Control Agreement or any other agreement with the Company, (ii) material breach of any policy or code of conduct, (iii) violation of any law applicable to the workplace or employment relationship that is materially injurious to the Company, (iv) gross negligence, willful misconduct or willful breach of fiduciary duty, fraud, theft or embezzlement, (v) conviction or indict ment , or plea of nolo contendere, to any felony or conviction or plea of nolo contendere to any crime involving moral turpitude, or (vi) willful failure or refusal to substantially performance such Named Executive Officer’s obligations or to follow in any material respect to any specific lawful direction from the Company. Clauses (i), (ii), (iii) and (vi) are subject to certain notice and cure rights. +• “Change in control” generally means (i) a change in the ownership of the Company, (ii) a change in the effective control of the Company, or (iii) a change in the ownership of a substantial portion of the Company’s assets, in each case, as such phrases are defined under the Treasury regulations promulgated pursuant to Section 409A of the Code. +• “Good reason” generally means (i) a material diminution in the Named Executive Officer’s total cash compensation, (ii ) a ma terial diminution in the Named Executive Officer’s authority, duties or responsibilities as a whole, (iii) a geographic relocation by more than 50 miles, (iv) a material breach by the Company of the Change in Control Agreement or any other agreement between the Named Executive Officer and the Company, or (v) a failure to timely pay or provide any material payment, benefit or other consideration or compensation owed to the Named Executive Officer, in each case, subject to certain notice and cure rights. +25 +Restricted Stock Awards +As of December 31, 2019, Mr. Gusek was the only Named Executive Officer with shares of restricted Class A Common Stock. The restricted shares will accelerate and become 100% vested upon a “change in control,” which generally occurs upon (i) the acquisition of 50% or more of the total fair market value or total voting power of our outstanding securities, (ii) the acquisition (other than by Riverstone or its affiliates until such time as Riverstone or its affiliates holds less than 20% of the total voting power of our outstanding securities) of 30% or more of the total voting power of our outstanding securities, (iii) the replacement of a majority of our Board during any 12-month period with directors whose appointment or election is not endorsed by a majority of the Board prior to the date of the appointment or election, and (iv) a sale of 40% or more of the total gross fair market value of our assets. +RSU Awards +The RSUs held by our Named Executive Officers under the LTIP will accelerate and become 100% vested upon a termination of the Named Executive Officer’s employment with the Company due to the Named Executive Officer’s death or “disability.” For RSUs that use performance-based vesting, the award will remain outstanding and eligible to be earned based on the Company’s achievement of the applicable performance metrics at the end of the performance period. For purposes of the RSU awards, “disability” means the Named Executive Officer’s inability to perform his duties, after accounting for reasonable accommodation, due to a mental or physical impairment that continues (or can reasonably be expected to continue) for (i) 90 consecutive days or (ii) 180 days out of any 365-day period, which, in either case, shall only be deemed to occur following the written determination by the Company of any such occurrence of disability. +The tables below describes and estimates the amounts and benefits each Named Executive Officer would have been entitled to receive upon a termination of his employment in certain circumstances or a change in control, assuming such events occurred as of Dec ember 31, 20 19, the last day of fiscal year 2019. The estimated payments are not necessarily indicative of the actual amounts such executive would have received in such circumstances. The table excludes compensation amounts accrued through December 31, 2019 that would be paid in the normal course of continued employment, such as accrued but unpaid salary and vested account balances under our retirement plans that are generally available to all of our salaried employees. Where applicable, the information in the table uses a price per share for our Common Stock of $11.12, the closing price on December 31, 2019 (the “ Year-End Closing Price ”). Generally, payment of severance benefits to a Named Executive Officer following termination of employment is subject to such officer’s timely execution and non-revocation of a release of claims in favor of the Company. +Name +Change in +Control +($) +Death/ +Disability +($) +Termination +without Cause or +Resignation for +Good Reason on or within 18 Months +Following a Change in Control +($) +Christopher A. Wright +Equity Award Acceleration (1) +— +5,298,180 +— +Michael Stock +Equity Award Acceleration (1) +— +3,438,860 +— +Ron Gusek +Equity Award Acceleration (1) +1,084,122 +3,438,860 +— +R. Sean Elliott +Cash Severance (2) +— +— +1,814,400 +Benefit Continuation (3) +— +— +55,584 +Equity Award Acceleration (1) +— +1,402,643 +1,402,643 +Ryan Gosney +Cash Severance (2) +— +— +1,158,300 +Benefit Continuation (3) +— +— +95,621 +Equity Award Acceleration (1) +— +860,699 +860,699 +(1) The amounts reported in these rows reflect the value of restricted stock, time-based RSU and performance-based RSU awards that would accelerate in connection with the applicable event, calculated based on the Year-End Closing Price. For purposes of the performance-based RSUs, these amounts reflect an assumed achievement of maximum performance, as the performance-based RSUs were trending above target as of December 31, 2019. +(2) The amounts reported in these rows reflect the full amount of each Named Executive Officer’s target annual incentive award for 2019, as the pro-ration provided for under the Change in Control Agreements would result in the full amount of such target annual incentive awards being payable. +(3) The amounts reported in these rows are calculated based on the premiums in effect as of December 2019, which are assumed for purposes of this table to remain the same throughout the applicable benefit reimbursement period. +26 +DIRECTOR COMPENSATION +Following our IPO, we adopted a non-employee director compensation program that was applicable to each of our non-employee directors who are not also officers or employees of Riverstone. This plan was further amended in August 2019 and now applies to all non-employee directors, including those who are officers or employees of Riverstone. The Compensation Consultant also conducted an analysis of market-competitive total director compensation (annual retainers, meeting fees and equity awards) using our Peer Group as a comparative metric. Pursuant to this program, each non-employee director will receive the following compensation for their service on our Board: +* A cash retainer of $65,000 per year, payable quarterly in arrears; +* An additional cash retainer of $20,000 per year, payable quarterly in arrears if such non-employee director serves as the chairperson of our Audit Committee; +* An additional cash retainer of $15,000 per year, payable quarterly in arrears if such non-employee director serves as the chairperson of our Compensation Committee; +* An additional cash retainer of $10,000 per year, payable quarterly in arrears if such non-employee director serves as the chairperson of a Nominating and Governance Committee; +* An additional cash retainer of $20,000 per year, payable quarterly in arrears if such non-employee director serves as the Lead Director of the Company; +* An additional payment of $1,500 for each Board meeting attended in-person by such non-employee director; and +* Either: +(a) annual equity based compensation in the form of RSUs with an aggregate grant date value of $125,000, subject to the terms of the LTIP and the award agreement pursuant to which such award is granted. The award shall be subject to a 12 month vesting period, unless otherwise determined by the Board. The annual grant shall be made automatically on January 2nd of each year, using the 30 day average trading price of the Company’s Class A Common Stock prior to the date of grant to determine the number of units to be granted; or +(b) an additional cash payment of $125,000 per year, payable quarterly in arrears. +Each non-employee director shall be given an opportunity to elect whether they would like to receive item (a) or (b) above prior to the beginning of each year. If a non-employee director joins the Board or otherwise becomes eligible for director compensation during the course of a calendar year, the director will be allowed to make such election upon joining or becoming eligible. If a non-employee director joins the Board during the course of a calendar year, the director will be entitled to receive a prorated RSU award (if so elected) for that year, which shall vest over the remaining portion of the year, unless otherwise determined by the Board. All annual cash payments shall be prorated for partial years of service or eligibility. +In addition, each non-employee director will be reimbursed for out-of-pocket expenses incurred in connection with attending Board and committee meetings. +The table below sets forth the compensation our non-employee directors received for the fiscal year ended December 31, 2019. +Name +Fees Earned +or Paid in Cash +($) +Stock +Awards +($) (1) +Total +($) +William F. Kimble +111,000 +104,735 +215,735 +Peter A. Dea +84,500 +104,735 +189,235 +Cary D. Steinbeck +71,000 +104,735 +175,735 +Ken Babcock +71,000 +104,735 +175,735 +N. John Lancaster, Jr. (2) +67,071 +— +67,071 +Brett Staffieri (2) +67,071 +— +67,071 +Jesal Shah (2) +67,071 +— +67,071 +Gale A. Norton (3) +36,016 +53,143 +89,159 +(1) The amounts shown do not reflect compensation actually received by the directors. Rather, amounts set forth in the Stock Awards column represent the aggregate grant date fair value of awards computed in accordance with FASB ASC Topic 718 for financial statement reporting purposes in fiscal year 2019 by the Company with respect to restricted stock units. A discussion of the assumptions used in this valuation with respect to awards made in fiscal year 2019 may be found in Note 8 to the Company’s financial statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. As of December 31, 2019, Messrs. Kimble, Dea, Steinbeck and Babcock held 7,787 unvested RSUs and Ms. Norton held 3,815 unvested RSUs. +(2) Messrs. Lancaster, Staffieri and Shah are Riverstone employees and serve on the Board as nominees of Riverstone pursuant to the terms of stockholders agreements. In connection with the amendment to our director compensation plan in August 2019, Riverstone employees who served as directors now receive compensation for such service. The Company has been informed that Messrs. Lancaster, Staffieri and Shah remit all director compensation that they receive from the Company to Riverstone in accordance with the terms of their employment with Riverstone. +(3) Ms. Norton joined the Board in July 2019. +27 +EQUITY COMPENSATION PLAN INFORMATION +The following table sets forth information about our Class A Common Stock that may be issued under equity compensation plans as of December 31, 2019. +Plan Category +Number of defined +securities to be +issued upon exercise +of outstanding +options, warrants +and rights +(a) (1) +Weighted–average +exercise price of +outstanding options, +warrants and rights +(b) (2) +Number of securities +remaining available +for future issuance +under equity +compensation plans +(excluding securities +reflected in +column (a)) +(c) (3) +Equity compensation plans approved by security holders +— +— +— +Equity compensation plans not approved by security holders +2,393,089 +— +10,187,846 +Total +2,393,089 +— +10,187,846 +(1) This column reflects shares of our Class A Common Stock subject to RSU awards granted under the LTIP outstanding and unvested as of Dece mber 31, 2019. The performance-based RSUs granted under the LTIP are reflected based on an achievement of maximum performance. No stock options or warrants have been granted under the LTIP. +(2) No stock options have been granted under the LTIP, and the RSU awards reflected in column (a) are not reflected in this column as they do not have an exercise price. +(3) This column reflects the total number of shares of Class A Common Stock remaining available for issuance under the LTIP. +Our only equity compensation plan is the LTIP. The LTIP was approved prior to our IPO but has not been approved by our public stockholders. Please read Note 8 to the Company’s financial statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 for a description of our equity compensation plans. In addition, a detailed description of the terms of the LTIP is available in our registration statement on Form S-1, last filed on January 2, 2018, under the heading “ Executive Compensation—Actions Taken Following Fiscal Year End—Long-Term Incentive Plan .” +28 +CEO PAY RATIO +As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, we are providing the following information about the relationship of the annual total compensation of our employees and the annual total compensation of Christopher A. Wright, our Chief Executive Officer (our “ CEO ”). +For 2019, our last completed fiscal year: +* The total compensation of our median employee was $ 103,824.62 as calculated pursuant to the same methodology as that used to determine pay for our CEO in the Summary Compensation Table included above; and +* The total compensation of our CEO, as reported in the Summary Compensation Table included above, was $ 5,377,176 . +* Based on this information, for 2019 the ratio of the total compensation of our CEO to the median employee total compensation was reasonably estimated to be 52 to 1. +The pay ratio set forth above is a reasonable estimate calculated in a manner consistent with SEC rules based on our human resources systems of record and the methodology described below. Because the SEC rules for identifying the median employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices, the pay ratio reported by other companies may not be comparable to the pay ratio that we report above, as other companies may have different employment and compensation practices, different types of workforce, and operate in different countries, and may use different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios. To identity the median of the annual total compensation of all our employees, as well as to determine the annual total compensation of our median employee and our CEO, we took the following steps: +✓ We determined that, as of December 31, 2019, our employee population consisted of approximately 2,571 individuals with all of these individuals located in the United States (as reported in Item 1, Business in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019). This population consisted of our full-time, part-time and temporary employees who receive d Company benefits, as we do not have seasonal workers. We selected December 31, 2019 as our identification date for determining our median employee because it enabled us to make such identification in a reasonably efficient and economic manner. +✓ We used a consistently applied compensation measure to identify our median employee by comparing the amount of compensation as reported to the Internal Revenue Service on Form W-2 for 2019. +✓ We identified our median employee by consistently applying this compensation measure to all of our employees included in our analysis. Since all of our employees, including our CEO, are located in the United States, we did not make any cost of living adjustments in identifying the median employee. Our median employee for 2019 was a full-time, salaried employee working as a field engineer with annual compensation of $96,297.20 set forth on such employee’s Form W-2 for 2019 . +✓ After we identified our median employee, we combined all of the elements of such employee’s compensation for the 2019 year in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K, resulting in annual total compensation of $ 103,824.62 . The differences between such employee’s taxable compensation reported on Form W-2 for 2019 of $96,297.20 and the employee’s annual total compensation calculated pursuant to Regulation S-K include the following adjustments: (i) modification from bonuses paid during 2019 to bonuses earned during 2019, (ii) addition of contributions made by the employee and by the Company on the employee’s behalf to our 401(k) plan for 2019, (iii) addition of the costs of tax deductible employee group health plan premiums, and (iv) subtraction of other taxable compensation including compensation for provided housing and that attributable to group term life, short-term and long-term disability benefits. +✓ With respect to the annual total compensation of our CEO, we used the amount reported in the “Total” column of our 2019 Summary Compensation Table included in this Proxy Statement and incorporated by reference under Item 11 of Part III of our Annual Report on Form 10-K for the year ended December 31, 2019. +29 +PROPOSAL 2 — RATIFICATION OF APPOINTMENT OF THE COMPANY’S +IN DEPENDENT REGISTERED PUBLIC ACCOUNTIN G FIRM +The Audit Committee has appointed Deloitte as the Company ’ s independent registered public accounting firm to audit the financial statements of the Company for the fiscal year ending December 31, 2020. The audit of the Company’s consolidated financial statements for the fiscal year ended December 31, 2019 was completed by Deloitte on February 26, 2020. Deloitte has acted as the Company ’ s independent registered public accounting firm since 2016. +The Board is submitting the appointment of Deloitte for ratification at the Annual Meeting. The submission of this matter for approval by stockholders is not legally required, but the Board and the Audit Committee believe the submission provides an opportunity for stockholders through their vote to communicate with the Board and the Audit Committee about an important aspect of corporate governance. If the stockholders do not ratify the appointment of Deloitte, the Audit Committee will reconsider the appointment of that firm as the Company’s auditors. +The Audit Committee has the sole authority and responsibility to retain, evaluate and replace the Company’s independent auditors, and stockholder ratification of this appointment does not limit the authority of the Audit Committee to change auditors at any time. Representatives of Deloitte are expected to be present at the Annual Meeting and will have an opportunity to make a statement if they so desire and will be available to respond to appropriate questions. +The following table summarizes the aggregate fees billed or expected to be billed by Deloitte for the fiscal years ended December 31, 2019 and 2018. +2019 +2018 +Audit Fees +$ 2,198,060 +$ 1,884,321 +Audit-Related Fees +89,580 +98,000 +Tax Fees +326,287 +188,030 +All Other Fees +— +— +Total Fees +$ 2,613,927 +$ 2,170,351 +Audit Fees +Deloitte’s fees were $ 2,198,060 in 2019 and $1,884,321 in 2018. In 2019, Deloitte’s audit fees related primarily to the integrated annual audit and quarterly reviews of the consolidated financial statements for fiscal year 2019 included in our Annual Report on Form 10-K for the year ended December 31, 2019. In 2018, Deloitte’s audit fees related primarily to the annual audit and quarterly reviews of the consolidated financial statements for fiscal year 2018 included in our Annual Report on Form 10-K for the year ended December 31, 2018. +Audit-Related Fees +Deloitte’s fees for au dit-related services were $ 89,580 in 2019 and $98,000 in 2018. In 2019, audit-related fees related primarily to shelf registration statements filed in connection with certain TRA exchanges. In 2018, audit-related fees related primarily to the Company’s shelf registration and consulting services related to the adoption of new accounting standards. +Tax Fees +Deloitte’s fees for tax services were $ 326,287 in 2019 and $188,030 in 2018. Tax services primarily involve professional services rendered by Deloitte for tax compliance, tax advice and tax planning. +All Other Fees +Deloitte did not provide any other products and services in 2019 and 2018 and, consequently, there were no other fees incurred. +Before Deloitte is engaged to render audit or non-audit services, the Audit Committee must pre-approve the engagement. The charter of the Audit Committee and its pre-approval policy provides that pre-approval is not required if the engagement is entered into pursuant to pre-approval policies and procedures established by the Audit Committee. The Chairman of the Audit Committee has the authority to grant pre-approvals, provided such approvals are within the pre-approval policy and presented to the Audit Committee at a subsequent meeting. The Audit Committee pre-approved all of the fees described in the table set forth above. The duties of the Audit Committee are described in the charter of the Audit Committee that can be found on the Company’s website, www.libertyfrac.com, by first clicking “ Investors ” then “ Corporate Governance ” and proceeding to “ Governance Documents .” +30 +Vote Required +The affirmative vote of a majority of the shares of Common Stock present in person or represented by proxy at the Annual Meeting and entitled to vote is required to approve this proposal. If you submit a signed proxy card but do not give voting instructions as to how your shares of Common Stock should be voted, your shares will be voted in accordance with the recommendations of our Board stated in this Proxy Statement. +THE AUDIT COMMITTEE AND THE BOARD RECOMMEND VOTING “ FOR ” THE +RATIFICATION OF APPOINTMENT OF DELOITTE AS THE COMPANY’S +INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE +FISCAL YEAR ENDING DECEMBER 31, 2020. +31 +AUDIT COMMITTEE REPORT +The information contained in this Audit Committee Report shall not be deemed to be “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act or the Exchange Act, except to the extent that the Company specifically incorporates such information by reference in such filing. +Primary Oversight Responsibilities +Our management is responsible for establishing a system of internal controls, assessing such controls and for preparing our consolidated financial statements in accordance with generally accepted accounting principles. The Audit Committee provides oversight to these management activities. Our independent registered public accounting firm is responsible for auditing our consolidated financial statements in accordance with standards of the United Stated Public Company Accounting Oversight Board (the “ PCAOB ”) and issuing its report based on its audit. +Under the Audit Committee’s charter, the purpose of the Audit Committee is to assist the Board in fulfilling its oversight responsibilities as to, among other duties: (i) the integrity of the Company’s financial statements; (ii) the Company’s compliance with legal and regulatory requirements; (iii) qualifications, independence and performance of the independent registered public accounting firm engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the Company; (iv) effectiveness and performance of the Company’s internal audit function; (v) the annual preparation of this report and publishing this report in the Company’s Proxy Statement for its annual meeting of stockholders or its Annual Report on Form 10-K; and (vi) performing such other functions as the Board may assign to the Audit Committee from time to time. +Oversight of Independent Auditors +In connection with the evaluation, appointment and retention of the independent registered public accounting firm, at least annually the Audit Committee reviews and evaluates the independence and quality control procedures of the independent registered public accounting firm and the experience and qualifications of its senior personnel providing audit services to the Company. Based on this evaluation, the Audit Committee has retained Deloitte as our independent registered public accounting firm for 2020. +2019 Audited Financial Statements +In connection with the preparation of the audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2019: +• The Audit Committee reviewed and discussed the audited financial statements and associated audit with the independent registered public accounting firm and management; +• The Audit Committee discussed with the independent registered public accounting firm the matters required to be discussed by Auditing Standard No. 1301 “Communications with Audit Committees” as adopted by the PCAOB. In general, these auditing standards require the independent registered public accounting firm to communicate to the Audit Committee certain matters that are incidental to the audit, such as any initiation of, or changes to, significant accounting policies, management judgments, accounting estimates and audit adjustments; disagreements with management; the independent registered public accounting firm’s judgment about the quality of our accounting principles; significant audit risks identified and any changes from planned audit strategy; the use of specialists on the audit team; and issues for which the independent registered public accounting firm have consulted outside the engagement team; and +• The Audit Committee has received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the PCAOB regarding the independent registered public accounting firm’s communication with the Audit Committee concerning independence, and has discussed the independent registered public accounting firm’s independence with the independent registered public accounting firm. The Audit Committee also considered whether the independent registered public accounting firm’s provision of non-audit services to us was compatible with maintaining their independence. +Based on the review and discussions noted above, the Audit Committee recommended to the Board that the audited consolidated financial statements of the Company for the year ended December 31, 2019 be included in our Annual Report on Form 10-K filed with the SEC. +Audit Committee of the Board of Directors: +William F. Kimble, Chairman +Cary D. Steinbeck, Member +Gale A. Norton, Member +32 +PROPOSAL 3 — ADVISORY VOTE TO APPROVE THE COMPENSATION OF THE +COMP ANY’S NAMED EXECUTIVE OFFIC ERS +Section 14A(a)(1) of the Exchange Act, which was added to the Exchange Act by Section 951 of the Dodd-Frank Act, affords the stockholders a vote to approve, on a non-binding, advisory basis, the compensation of our Named Executive Officers for the fiscal year ended December 31, 2019 (commonly known as a “ say-on-pay vote ”). This vote is not intended to address any specific item of compensation and is not a vote on our general compensation policies, compensation of the Board, or our compensation policies as they relate to risk management. Section 14A(a)(2) of the Exchange Act requires us to hold a say-on-pay vote at least once every three years, although the Company currently holds such vote annually. +As described more fully in the “ Compensation Discussion & Analysis ” section of this Proxy Statement and the accompanying tabular and narrative disclosures , the Company ’ s compensation policy is designed to attract and retain highly qualified executive officers. The Company’s compensation program seeks to align executive compensation with stockholder value on an annual and long-term basis through a combination of base pay, annual incentives, and certain long-term incentives. Please read the Compensation Discussion & Analysis section of this Proxy Statement for additional details on our executive compensation program. +The Board strongly endorses the Company ’ s executive compensation program and recommends that the stockholders approve on an advisory, non-binding basis, the following resolution: +RESOLVED, that the stockholders approve, on an advisory basis, the compensation of the Company ’ s Named Executive Officers as described in the proxy statement, including the Compensation Discussion & Analysis and the tabular and narrative disclosure cont ained therein. +Vote Required +The approval, on a non-binding basis, of the compensation of our Named Executive Officers requires the affirmative vote of a majority of the shares of Common Stock present in person or represented by proxy at the Annual Meeting and entitled to vote. If you submit a signed proxy card but do not give voting instructions as to how your shares of Common Stock should be voted, your shares will be voted in accordance with the recommendations of our Board stated in this Proxy Statement. +THE BOARD RECOMMENDS VOTING “ FOR ” THE APPROVAL OF +THE COMPENSATION OF THE COMPANY’S NAMED EXECUTED OFFICERS. +33 +SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT +The following table sets forth the beneficial ownership of our common stock as of February 24, 2020, by: +* each person known to us to beneficially own more than 5% of any class of our outstanding voting securities; +* each member of our Board and each nominee to our Board; +* each of our Named Executive Officers; and +* all of our directors, director nominees and Named Executive Officers as a group. +Except as otherwise indicated, the persons listed below have sole voting and investment power with respect to all shares of our Common Stock beneficially owned by them, except to the extent this power may be shared with a spouse. All information with respect to beneficial ownership has been furnished by the 5% or more stockholders, directors or Named Executive Officers, as the case may be. Unless otherwise noted, the mailing address of each listed beneficial owner is 950 17th Street, Suite 2400, Denver, Colorado 80202. As of February 24, 2020, 81,920,347 shares of our Class A Common Stock were outstanding and 30,638,960 shares of our Class B Common Stock were outstanding. +Shares of Common Stock Beneficially Owned +Class A +Common Stock +Class B +Common Stock (1) +Combined Voting +Power (2) +Number +% +Number +% +Number +% +5% Stockholders +R/C Energy IV Direct Partnership, L.P. (3) +10,264,088 +12.5 +% +— +— +10,264,088 +9.1 +% +R/C IV Liberty Holdings, L.P. (4) +2,586,344 +3.1 +% +21,204,564 +69.2 +% +23,790,908 +21.1 +% +Entities associated with Oakmont Corporation (5) +2,070,310 +2.5 +% +6,680,615 +21.8 +% +8,750,925 +7.8 +% +T. Rowe Price Associates, Inc. (6) +12,560,891 +15.3 +% +— +— +12,560,891 +11.1 +% +The Vanguard Group (7) +5,105,662 +6.2 +% +— +— +5,105,662 +4.5 +% +FMR LLC (8) +4,387,580 +5.3 +% +— +— +4,387,580 +3.9 +% +Directors and Named Executive Officers: +Christopher A. Wright (9) +3,684,990 +4.5 +% +— +— +3,684,990 +3.3 +% +Michael Stock (9) +1,346,991 +1.6 +% +— +— +1,346,991 +1.2 +% +Ron Gusek (9) +1,313,024 +1.6 +% +— +— +1,313,024 +1.2 +% +R. Sean Elliott (9) +49,535 +* +— +— +49,535 +* +Ryan T. Gosney (9) +31,040 +* +— +— +31,040 +* +Cary D. Steinbeck (10) +399,966 +* +— +— +399,966 +* +Ken Babcock +79,069 +* +— +— +79,069 +* +N. John Lancaster, Jr. +37,316 +* +— +— +37,316 +* +William F. Kimble +20,246 +* +— +— +20,246 +* +Peter A. Dea +20,246 +* +— +— +20,246 +* +Gale A. Norton +4,065 +* +— +— +4,065 +* +Brett Staffieri +— +— +— +— +— +— +Jesal Shah +— +— +— +— +— +— +Directors and Named Executive Officers +as a group (13 persons) +6,986,488 +8.5 +% +— +— +6,986,488 +6.2 +% +(1) Under the Liberty LLC Agreement (as defined herein), each Liberty Unit Holder (as defined herein) has, subject to certain limitations, the right to cause Liberty LLC (as defined herein) to acquire all or a portion of its Liberty LLC Units (as defined herein) for, at Liberty LLC’s election, (i) shares of our Class A Common Stock at a redemption ratio of one share of Class A Common Stock for each Liberty LLC Unit redeemed, subject to conversion rate adjustments for stock splits, stock dividends and reclassification and other similar transactions or (ii) an equivalent amount of cash. In connection with any redemption of Liberty LLC Units pursuant to the Redemption Right or the Call Right (as defined below), the corresponding number of shares of Class B Common Stock will be cancelled. See “Certain Relationships and Related Person Transactions – Liberty LLC Agreement” set forth herein. Beneficial ownership of Liberty LLC Units is not reflected as beneficial ownership of shares of our Class A Common Stock for which such units may be redeemed. +(2) Represents percentage of voting power of our Class A Common Stock and Class B Common Stock voting together as a single class. +(3) R/C Energy IV Direct Partnership, L.P. is an investment partnership affiliated with Riverstone/Carlyle Global Energy and Power Fund IV, L.P., or R/C IV. Management and control of R/C Energy IV Direct Partnership, L.P. is with its general partner, Riverstone/Carlyle Energy Partners IV, L.P., which is in turn managed and controlled by its general partner, R/C Energy GP IV, LLC, an affiliate of R/C IV. R/C Energy GP IV, LLC is managed by a management committee consisting of Pierre F. Lapeyre, Jr., David M. Leuschen, James T. Hackett, N. John Lancaster, Daniel A. D’Aniello and Edward J. Mathias. As a result, each of R/C Energy GP IV, LLC and Riverstone/Carlyle Energy Partners IV, L.P. may be deemed to share beneficial ownership of the shares held of record by R/C Energy IV Direct Partnership, L.P. The business address for each of the entities and individuals other than Messrs. D’Aniello and Mathias is c/o Riverstone Holdings, 712 Fifth Avenue, 36th Floor, New York, NY 10019. The business address for each of Messrs. D’Aniello and Mathias is c/o The Carlyle Group, 1001 Pennsylvania Avenue, N.W., Suite 200, Washington, D.C. 20004. +34 +(4) R/C IV Liberty Holdings, L.P. is an investment partnership affiliated with R/C IV. Management and control of R/C IV Liberty Holdings, L.P. is with its general partner, Riverstone/Carlyle Energy Partners IV, L.P., which is in turn managed and controlled by its general partner, R/C Energy GP IV, LLC, an affiliate of R/C IV. R/C Energy GP IV, LLC is managed by a management committee consisting of Pierre F. Lapeyre, Jr., David M. Leuschen, James T. Hackett, N. John Lancaster, Daniel A. D’Aniello and Edward J. Mathias. As a result, each of R/C Energy GP IV, LLC and Riverstone/Carlyle Energy Partners IV, L.P. may be deemed to share beneficial ownership of the shares held of record by R/C IV Liberty Holdings, L.P. The business address for each of the entities and individuals other than Messrs. D’Aniello and Mathias is c/o Riverstone Holdings, 712 Fifth Avenue, 36th Floor, New York, NY 10019. The business address for each of Messrs. D’Aniello and Mathias is c/o The Carlyle Group, 1001 Pennsylvania Avenue, N.W., Suite 200, Washington, D.C. 20004. +(5) This information is based solely on a Schedule 13G jointly filed with the SEC on February 14, 2020, by Oakmont Corporation, Robert A. Day and Laurel Road II, LLC, in which it reported that Oakmont Corporation has shared voting power and shared dispositive power as to 8,750,925 shares of Common Stock, Robert A. Day has shared voting power and shared dispositive power as to 8,750,925 shares of Common Stock and Laurel Road II, LLC has shared voting power and shared dispositive power as to 5,367,301 shares of Common Stock. The principal business address of Oakmont Corporation, Mr. Day and Laurel Road II, LLC is 865 S. Figueroa St., Suite 700, Los Angeles, CA 90017. +(6) This information is based solely on a Schedule 13G/A filed with the SEC on February 14, 2020, by T. Rowe Price Associates, Inc., in which it reported that T. Rowe Price Associates, Inc. has sole voting power as to 3,013,622 shares of Class A Common Stock and sole dispositive power as to 12,560,891 shares of Class A Common Stock. The principal business address of T. Rowe Price Associates, Inc. is 100 E. Pratt Street, Baltimore, MD 21202. +(7) This information is based solely on a Schedule 13G filed with the SEC on February 11, 2020, by The Vanguard Group , in which it reported that The Vanguard Group has sole voting power as to 72,223 shares of Class A Common Stock, shared voting power as to 4,553 shares of Class A Common Stock, sole dispositive power as to 5,038,109 shares of Class A Common Stock and shared dispositive power as to 67,553 shares of Class A Common Stock. The principal business address of The Vanguard Group is 100 Vanguard Blvd., Malvern, PA 19355. +(8) This information is based solely on a Schedule 13G filed with the SEC on February 7, 2020, by FMR LLC and Abigail P. Johnson, in which it reported that FMR LLC has sole voting power as to 2 74,669 shares of Class A Common Stock and shared power as to 4,387,580 shares of Class A Common Stock and Ms. Johnson has no voting power, and shared dispositive power as to 4,387,580 shares of Class A Common Stock. The principal business address of FRM LLC is 245 Summer Street, Boston, MA 02210. +(9) Shares of Class A Common Stock held by Messrs. Wright, Stock, Gusek, Elliott and Gosney include 91,702, 40,756, 40,756, 35,985 and 22,081 shares of stock, respectively, that will be received upon the vesting of RSUs and restricted stock within 60 days of February 24, 2020. +(10) Includes 369,915 shares of Class A Common Stock held by the Steinbeck Family Trust and 9,805 shares of Class A Common Stock received by Cary Dustin Steinbeck & Melissa Maucione Crimson Steinbeck TR on May 7, 2019 upon a distribution by Laurel Road LLC to its members. Mr. Steinbeck has voting and dispositive power over these shares. +* Less than 1.0%. +35 +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +Policies and Procedures for Review of Related Party Transactions +A “Related Party Transaction” is a transaction, arrangement or relationship in which the Company or any of its subsidiaries was, is or will be a participant, the amount of which involved exceeds $120,000, and in which any related person had, has or will have a direct or indirect material interest. A “Related Person” is: +♦ any person who is, or at any time during the applicable period was, one of our executive officers or one of our directors; +♦ any person who is known by us to be the beneficial owner of more than 5% of our Class A Common Stock; +♦ any immediate family member of any of the foregoing persons, which means any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law of a director, executive officer or a beneficial owner of more than 5% of our Class A Common Stock, and any person (other than a tenant or employee) sharing the household of such director, executive officer or beneficial owner of more than 5% of our Class A Common Stock; and +♦ any firm, corporation or other entity in which any of the foregoing persons is a partner or principal or in a similar position or in which such person has a 10.0% or greater beneficial ownership interest. +Our Board adopted a written related party transactions policy in connection with the IPO. Pursuant to this policy, our Audit Committee reviews all material facts of all Related Party Transactions and either approves or disapproves entry into the Related Party Transaction, subject to certain limited exceptions. The determination of the Audit Committee is documented in the Audit Committee’s minutes. In determining whether to approve or disapprove entry into a Related Party Transaction, our Audit Committee takes into account, among other factors, the following: (i) whether the Related Party Transaction is on terms no less favorable than terms generally available to an unaffiliated third-party under the same or similar circumstances and (ii) the extent of the Related Person’s interest in the transaction. Furthermore, the policy requires that all Related Party Transactions required to be disclosed in our filings with the SEC be so disclosed in accordance with applicable laws, rules and regulations. +The following discussion is a brief summary of our corporate reorganization and certain material arrangements, agreements and transactions we have with related parties. It does not include all of the provisions of our material arrangements, agreements and transactions with related parties, does not purport to be complete and is qualified in its entirety by reference to the arrangements, agreements and transactions described. +Corporate Reorganization +On January 17, 2018, we completed our IPO of 14,640,755 shares of our Class A Common Stock at a public offering price of $17.00 per share, of which 14,340,214 shares were offered by us and 300,541 shares were offered by the selling shareholder. We used our net proceeds from the IPO to redeem ownership in us from certain Legacy Owners (as defined below) and contributed the remaining proceeds to Liberty Oilfield Services New HoldCo LLC (“ Liberty LLC ”) in exchange for units in Liberty LLC (the “ Liberty LLC Units ”). In connection with the IPO, we completed a corporate reorganization which included the following restructuring steps: +• Liberty Holdings contributed all of its assets to Liberty LLC in exchange for Liberty LLC Units; +• Liberty Holdings liquidated and distributed to its then-existing owners (the “ Legacy Owners ”) Liberty LLC Units pursuant to the terms of the limited liability company agreement of Liberty Holdings and the Master Reorganization Agreement dated as of January 11, 2018, by and among the Company, Liberty Holdings, Liberty LLC, and the other parties nam ed therein; +• Certain of the Legacy Owners directly or indirectly contributed all or a portion of their Liberty LLC Units to the Company in exchange for 55,685,027 shares of our Class A Common Stock, and 1,258,514 shares of restricted stock. Subsequent to the initial exchange, 1,609,122 shares of Class A Common Stock were redeemed for an aggregate purchase price of $25.9 million upon the exercise of the underwriters’ overallotment option; +• We issued the Legacy Owners that continued to own Liberty LLC Units (the “ Liberty Unit Holders ”) an aggregate amount of 48,207,372 shares of our Class B Common Stock; and +• We then contributed the net proceeds it received from the IPO to Liberty LLC in exchange for additional Liberty LLC Units such that the Company holds a total number of Liberty LLC Units equal to the number of shares of Class A Common Stock outstanding following the IPO. +36 +Related Party Transactions +The following is a description of transactions entered into, or in effect, after January 1, 2019 to which we have been a party, in which the amount involved in the transaction exceeds $120,000, and in which any of our directors, executive officers or beneficial owners of more than 5% of our voting securities, or affiliates or immediate family members of any of our directors, executive officers or beneficial owners of more than 5% of our voting securities, had or will have a direct or indirect material interest. We believe the terms obtained or consideration that we paid or received, as applicable, in connection with the transactions described below were comparable to terms available or the amounts that would be paid or received, as applicable, from unrelated third parties. +Liberty LLC Agreement +We entered into the Second Amended and Restated Limited Liability Company Agreement of Liberty LLC (the “ Liberty LLC Agreement ”) in connection with the closing of our IPO, which provides for limitations on the ability of Liberty Unit Holders to transfer their Liberty LLC Units and provides the Company, as managing member of Liberty LLC, with the right to impose restrictions (in addition to those already in place) on the ability of Liberty Unit Holders to redeem their Liberty LLC Units pursuant to the Redemption Right (as defined below) to the extent the Company believes it is necessary to ensure that Liberty LLC will continue to be treated as a partnership for U.S. federal income tax purposes. +Redemption Rights +Under the Liberty LLC Agreement, each Liberty Unit Holder has, subject to certain limitations, the right (the “ Redemption Right ”) to cause Liberty LLC to acquire all or a portion of its Liberty LLC Units for, at Liberty LLC’s election, (i) shares of our Class A Common Stock at a redemption ratio of one share of Class A Common Stock for each Liberty LLC Unit redeemed, subject to conversion rate adjustments for stock splits, stock dividends and reclassification and other similar transactions or (ii) an equivalent amount of cash. Alternatively, upon the exercise of the Redemption Right, the Company (instead of Liberty LLC) h as the right (the “ Call Right ”) to, for administrative convenience, acquire each tendered Liberty LLC Unit directly from the redeeming Liberty Unit Holder for, at the Company’s election, (x) one share of Class A Common Stock or (y) an equivalent amount of cash. In addition, upon a change of control of the Company, the Company has the right to require each holder of Liberty LLC Units (other than the Company) to exercise its Redemption Right with respect to some or all of such unit holder’s Liberty LLC Units. In connection with any redemption of Liberty LLC Units pursuant to the Redemption Right or the Call Right, the corresponding number of shares of Class B Common Stock will be cancelled. As the Liberty Unit Holders redeem their Liberty LLC Units, our membership interest in Liberty LLC will be correspondingly increased, the number of shares of Class A Common Stock outstanding will be increased, and the number of shares of Class B Common Stock outstanding will be reduced. +Distributions and Allocations +Under the Liberty LLC Agreement, the Company has the right to determine when distributions will be made to the holders of Liberty LLC Units and the amount of any such distributions. If the Company authorizes a distribution, such distribution will be made to the holders of Liberty LLC Units generally on a pro rata basis in accordance with their respective percentage ownership of Liberty LLC Units. +Liberty LLC will allocate its net income or net loss for each year to the holders of Liberty LLC Units pursuant to the terms of the Liberty LLC Agreement, and the holders of Liberty LLC Units, including the Company, will generally incur U.S. federal, state and local income taxes on their share of any taxable income of Liberty LLC. Net income and losses of Liberty LLC generally will be allocated to the holders of Liberty LLC Units on a pro rata basis in accordance with their respective percentage ownership of Liberty LLC Units, subject to requirements under U.S. federal income tax law that certain items of income, gain, loss or deduction be allocated disproportionately in certain circumstances. To the extent Liberty LLC has available cash and subject to the terms of any debt instruments, the Company intends to cause Liberty LLC to make (i) generally pro rata distributions to the holders of Liberty LLC Units, including the Company, in an amount sufficient to allow the Company to pay its taxes and to allow it to make payments under the Tax Receivable Agreements (as defined below), (ii) tax advances, which will be repaid upon exercise of the Redemption Right or the Call Right, as applicable, in an amount sufficient to allow each of the Liberty Unit Holders to pay its respective taxes on such holder’s allocable share of Liberty LLC’s taxable income after taking into account certain other distributions or payments received by the Liberty Unit Holders from Liberty LLC or the Company, and (iii) non-pro rata payments to the Company to reimburse it for its corporate and other overhead expenses. +Issuance of Equity +The Liberty LLC Agreement generally provides that at any time the Company issues a share of its Class A Common Stock or any other equity security, the net proceeds received by the Company with respect to such issuance, if any, shall be concurrently invested in Liberty LLC, and Liberty LLC shall issue to the Company one Liberty LLC Unit or other economically equivalent equity interest. Conversely, if at any time, any shares of Class A Common Stock are redeemed, repurchased or otherwise acquired, Liberty LLC shall redeem, repurchase or otherwise acquire an equal number of Liberty LLC Units held by the Company, upon the same terms and for the same price, as the shares of the Class A Common Stock are redeemed, repurchased or otherwise acquired. +37 +Competition +Under the Liberty LLC Agreement, the members have agreed that Riverstone and its affiliates will be permitted to engage in business activities or invest in or acquire businesses which may compete with our business or do business with our customers. +Dissolution +Liberty LLC will be dissolved only upon the first to occur of (i) the sale of substantially all of its assets or (ii) an election by us to dissolve the company. Upon dissolution, Liberty LLC will be liquidated and the proceeds from any liquidation will be applied and distributed in the following manner: (i) first, to creditors (including to the extent permitted by law, creditors who are members) in satisfaction of the liabilities of Liberty LLC; (ii) second, to establish cash reserves for contingent or unforeseen liabilities; and (iii) third, to the members in proportion to the number of Liberty LLC Units owned by each of them. +Tax Receivable Agreements +In connection with the IPO, on January 17, 2018, the Company entered into two tax receivable agreements, (the “ TRAs ”) with the Liberty Unit Holders and the selling shareholder (each such person and any permitted transferee, a “ TRA Holder ” and together, the “ TR A Hold ers ”). The TRAs generally provide for the payment by the Company of 85% of the net cash savings, if any, in U.S. federal, state, and local income tax and franchise tax (computed using simplifying assumptions to address the impact of state and local taxes) that the Company actually realizes (or is deemed to realize in certain circumstances) in periods after the IPO as a result, as applicable to each TRA Holder, of (i) certain increases in tax basis that occur as a result of the Company’s acquisition (or deemed acquisition for U.S. federal income tax purposes) of all or a portion of such TRA Holder’s Liberty LLC Units in connection with the IPO or pursuant to the exercise of the Redemption Right or the Call Right, (ii) any net operating losses available to the Company as a result of the corporate reorganization, and (iii) imputed interest deemed to be paid by the Company as a result of, and additional tax basis arising from, any payments the Company makes under the TRAs. +Stockholders’ Agreements +We are party to a stockholders’ agreement with Riverstone and certain Legacy Owners (collectively, the “ Principal Stockholders ”). Among other things, the stockholders’ agreement provides the right to designate nominees to our Board as follows: +• so long as Riverstone and its affiliates collectively own at least 35% of our Class A Common Stock, Riverstone can designate up to five (5) nominees to the Board, with the Board size decreasing by one (1) director when Riverstone and its affiliates no longer own at least 35% of our Class A Common Stock; +• so long as Riverstone and its affiliates collectively own at least 30% of our Class A Common Stock, Riverstone can designate up to four (4) nominees to our Board; +• so long as Riverstone and its affiliates collectively own at least 20% of our Class A Common Stock but less than 30% of our Class A Common Stock, Riverstone can designate up to two (2) nominees to our Board; and +• so long as Riverstone and its affiliates collectively own at least 10% of our Class A Common Stock but less than 20% of our Class A common stock, Riverstone can designate up to one (1) nominee to our Board. +In connection with the appointment of Ms. Norton and the expansion of the Board in July 2019, the Company, R/C Energy IV Direct Partnership, L.P. and R/C IV Liberty Holdings, L.P. entered into an additional stockholders agreement (the “ Additional Agreement ”). Pursuant to the Additional Agreement, the Company agreed to use reasonable best efforts to cause the Board to, in the case where Riverstone and its affiliates beneficially own at least 10% of the outstanding shares of our Class A Common Stock, and the Board is comprised of five (5) or more directors that are not Riverstone nominees, elect one (1) additional nominee designated by Riverstone to serve on the Board. The Additional Agreement does not limit or replace the rights of Riverstone under the stockholders agreement entered into in con nection with the IPO. +Pursuant to the stockholders’ agreement we and the Principal Stockholders will be required to take all necessary actions, to the fullest extent permitted by applicable law (including with respect to any fiduciary duties under Delaware law), to cause the election of the nominees designated by Riverstone. At any time the members of our Board are allocated among separate classes of directors, (i) the directors designated by Riverstone pursuant to the stockholders’ agreement will be in different classes of directors to the extent practicable and (ii) Riverstone will be permitted to designate the class or classes to which each such director will be allocated. Riverstone will be entitled to designate the replacement for any of its Board designees whose service terminates prior to the end of such director’s term. +38 +In addition, the stockholders’ agreement provides that for so long as the Principal Stockholders and their affiliates own at least 20% of the outstanding shares of our Class A Common Stock, Riverstone will have the right to cause any committee of our Board to include in its membership at least one (1) director designated by Riverstone, except to the extent that such membership would violate applicable securities laws or stock exchange rules. The rights granted to Riverstone to designate directors are additive to and not intended to limit in any way the rights that Riverstone or any of its affiliates may have to nominate, elect or remove our directors under our certificate of incorporation, bylaws or the Delaware General Corporation Law. +Furthermore, so long as Riverstone and its affiliates collectively own at least 20% of the outstanding shares of Class A Common Stock, we have agreed not to take, and will take all necessary action to cause our subsidiaries not to take, the following direct or indirect actions (or enter into an agreement to take such actions) without the prior consent of Riverstone: +• any material change, through any acquisition, disposition of assets or otherwise, in the nature of our business or operations and our subsidiaries as of the date of the stockholders’ agreement; +• hiring or terminating our Chief Executive Officer or the Chief Financial Officer and their respective successors; +• any transaction that, if consummated, would constitute a Change of Control (as defined in the stockholders’ agreement) or entering into any definitive agreement or series of related agreements that govern any transaction or series of related transactions that, if consummated, would result in a Change of Control; +• entering into any agreement providing for certain acquisitions or dispositions, in each such case, involving consideration payable or receivable by us or any of our subsidiaries in excess of $100 million in the aggregate in any single transaction or series of related transactions during any 12-month period; +• any incurrence by us or any of our subsidiaries of indebtedness for borrowed money (including through capital leases, the issuance of debt securities or the guarantee of indebtedness of another person) in excess of $100 million in the aggregate in any single transaction or series of related transactions during any 12-month period; +• any issuance or series of related issuances of equity securities by us or any of our subsidiaries for an aggregate consideration in excess of $100 million; +• any payment or declaration of any dividend or other distribution of any shares of Class A Common Stock or entering into any recapitalization transaction the primary purpose of which is to pay a dividend; +• any increase or decrease in the size of our Board, committees of the Board, and board and committees of our subsidiaries; +• settling any litigation to which we or any of our subsidiaries is a party involving the payment by us or any of our subsidiaries of an aggregate amount equal to or greater than $25 million; +• entering into any joint venture or similar business alliance involving investment, contribution or disposition by us or any of our subsidiaries of assets (including stock of subsidiaries) having an aggregate fair market value in excess of $100 million, other than transactions solely between and among us and our wholly owned subsidiaries; and +• any amendment, modification or waiver of our certificate of incorporation, bylaws or any other governing document following the date of the stockholders’ agreement that (i) causes the number of Board seats to be less than or greater than nine (9) or (ii) materially and adversely affects any Principal Stockholder. +Registration Rights Agreement +In connection with the closing of the IPO, we entered into a registration rights agreement with the Legacy Owners. The agreement contains provisions by which we agree to register under the federal securities laws the offer and resale of shares of our Class A Common Stock by the Legacy Owners or certain of their affiliates or permitted transferees under the registration rights agreement. These registration rights will be subject to certain conditions and limitations. We will generally be obligated to pay all registration expenses in connection with these registration obligations, regardless of whether a registration statement is filed or becomes effective. +Indemnification for Officers and Directors +Our certificate of incorporation and bylaws provide indemnification rights to our directors and officers and permit us to purchase insurance on behalf of any officer, director, employee or other agent for any liability arising out of that person’s actions as our officer, director, employee or agent, regardless of whether Delaware law would mandate indemnification. Additionally, we have entered into separate indemnity agreements with our directors and officers to provide additional indemnification benefits, including the right to receive, in advance, reimbursements for expenses incurred in connection with a defense for which the director or officer is entitled to indemnification. We believe that the limitation of liability provisions in our certificate of incorporation, bylaws and the indemnity agreements will facilitate our ability to continue to attract and retain qualified individuals to serve as directors and officers. +39 +Underwriting Agreement +On July 8, 2019, we entered into an underwriting agreement (the “ Underwriting Agreement ”) with R/C Energy IV Direct Partnership, L.P. and R/C IV Liberty Holdings, L.P. (together, the “ Selling Stockholders ”) and Barclays Capital Inc. (the “ Underwriter ”), pursuant to which the Selling Stockholders agreed to sell to the Underwriter, and the Underwriter agreed to purchase from the Selling Stockholders, subject to and upon the terms and conditions set forth therein, an aggregate of 8,000,000 shares of our Class A Common Stock (the “ Offering ”). The Offering closed on July 11, 2019. We did not receive any proceeds from the sale of shares of Class A Common Stock in the Offering. The Underwriting Agreement contains customary representations, warranties and agreements of the Company and the Selling Stockholders and other customary obligations of the parties and termination provisions. +Share Repurchases +On September 10, 2018, the Board authorized a share repurchase plan to repurchase up to $100 million of the Company’s Class A Common Stock through September 30, 2019. On January 22, 2019, the Board authorized an additional $100.0 million under the share repurchase plan through January 31, 2021. The Company repurchased 117,647 shares and 2,491,160 shares of Class A Common Stock from Riverstone sellers, at a weighted average purchase price of $17.00 per share and $18.96 per share, pursuant to a share repurchase program for the years ended December 31, 2019 and 2018, respectively. +Transactions with Liberty Resources +Liberty Resources LLC (“ Liberty Resources ”), an oil and gas exploration and production company, entered into a master service agreement with L iberty Oilfield Services LLC (“ Liberty Services ”), whereby Liberty Services provides hydraulic fracturing service to Liberty Resources at market service rates. The amounts related to the provision of hydraulic fracturing services to Liberty Resources under the master services agreement for the years ended December 31, 2019, 2018 and 2017 were approximately $18.3 million, $23.1 million and $24.7 million, respectively. As of December 31, 2019 and 2018, $7.1 million and $15.1 million, respectively, of the Company’s accounts receivable, and $0.0 million and $0.0 million, respectively, of the Company’s unbilled revenue was with Liberty Resources. On June 24, 2019 (the “Agreement Date”), the Company entered into an agreement with Liberty Resources to amend payment terms for outstanding invoices due as of the Agreement Date to be due on July 31, 2020. On September 30, 2019, the agreement was amended to extend the due date of the remaining amounts outstanding to October 31, 2020. Amounts outstanding from Liberty Resources as of the Agreement Date were $15.6 million. As of December 31, 2019, amounts outstanding under the amended payment terms from Liberty Resources were $2.5 million. The balance outstanding is subject to interest at 13% annual percent yield, retroactively applied to the respective invoice date. During the year ended December 31, 2019, interest income from Liberty Resources was $1.8 million, and accrued interest as of December 31, 2019 was $0.0 million. Receivables earned for services performed after the Agreement Date continue to be subject to normal 30-day payment terms, provided that any amount unpaid after 60 days will be subject to 13% interest. +Transactions with PropX +Liberty Oilfield Services LLC (“ LOS ”), a subsidiary of the Company, currently leases equipment from Proppant Express Solutions, LLC (“ PropX ”), a provider of proppant logistics equipment. R/C IV Liberty Big Box Holdings, L.P., a Riverstone fund, holds a majority interest in PropX. Accordingly, funds associated with Riverstone hold over a 10% interest in both the Company and PropX. For the year ended December 31, 2019, LOS paid PropX $9.8 million for the lease of proppant logistics equipment. +Advisory Agreement +Liberty Holdings entered into an advisory agreement, dated December 30, 2011, with Riverstone/Carlyle Energy Partners IV, L.P. (“ R/C ”), in which R/C agreed to provide certain administrative advisory services to Liberty Holdings. The advisory services agreement was terminated pursuant to an agreement effective as of January 11, 2018. On January 11, 2018, Liberty Holdings, R/C and other parties entered into a Master Reorganization Agreement that, among other things, crystallized the “waterfall” provisions of Article VI of the Third Amended and Restated Limited Liability Agreement of Liberty Holdings, dated October 11, 2016 (the “ Holdings LLC Agreement ”), in connection with the IPO. As part of this crystallization, R/C and affiliated entities (collectively, the “ R/C Affiliates ”) received shares of Class A Common Stock, including 117,647 shares of Class A Common Stock (such 117,647 referred to as the “ Issued Shares ”) to compensate R/C Affiliates for certain accrued preferred returns but which would not have been issued had the $2.0 million in fees owing under the advisory agreement been paid in cash. Had this fee been paid in cash on or prior to January 11, 2018, R/C and Liberty Holdings acknowledge that R/C Affiliates would not have received the Issued Shares in the crystallization pursuant to the provisions of the Holdings LLC Agreement. Subsequently, during the fourth quarter of 2018, R/C asserted that certain provisions of the termination of services agreement provided for R/C to receive $2.0 million in cash as payment of those accrued fees. To resolve this matter, the Company agreed to pay R/C Affiliates $2.0 million in cash in exchange for the return, at the IPO price, of the Issued Shares and $0.3 million for interest and the settlement of the matter. Accordingly, $2.3 million was recorded as accrued liabilities - related party in the accompanying consolidated balance sheet as of December 31, 2018 and subsequently paid in January 2019. The returned shares of Class A Common Stock were canceled and retired, and the Company does not expect to incur future expense related to the advisory agreement or termination thereof. +40 +Conflicts of Interest +The related party transactions described herein may cause certain conflicts of interests, including that: +♦ we may enter into contracts between us, on the one hand, and related parties, on the other, that are not as a result of arm’s-length transactions; +♦ our executive officers and directors that hold positions of responsibility with related parties may be aware of certain business opportunities that are appropriate for presentation to us as well as to such other related parties and may present such business opportunities to such other parties; and +♦ our executive officers and directors that hold positions of responsibility with related parties may have significant duties with, and spend significant time serving, other entities and may have conflicts of interest in allocating time. +For example, Mr. Wright, our Chief Executive Officer, is the Executive Chairman of Liberty Resources, a position which may require a portion of his time and which may cause conflicts of interest in pursuing business opportunities of which he becomes aware. Furthermore, our governing documents provide that Riverstone and its respective affiliates (including portfolio investments of its affiliates) are not restricted from owning assets or engaging in businesses that compete directly or indirectly with us. Riverstone or its respective affiliates may become aware, from time to time, of certain business opportunities (such as acquisition opportunities) and may direct such opportunities to other businesses in which they have invested, in which case we may not become aware of or otherwise have the ability to pursue such opportunity. Furthermore, such businesses may choose to compete with us for these opportunities, possibly causing these opportunities to not be available to us or causing them to be more expensive for us to pursue. In addition, Riverstone or its respective affiliates may dispose of oil and gas service or other assets in the future, without any obligation to offer us the opportunity to purchase any of those assets. +41 +DELINQUENT SECTION 16( a ) REPORTS +Section 16(a) of the Exchange Act requires the Company’s directors, executive officers and persons who are beneficial owners of more than ten percent (10%) of a registered class of the Company’s equity securities to file with the SEC initial reports of ownership and reports of changes in ownership. Directors, executive officers and beneficial owners of more than ten percent (10%) of a registered class of the Company’s equity securities are also required to furnish the Company with copies of all Section 16(a) reports that they file with the SEC. If requested, the Company assists its executive officers and directors in complying with the reporting requirements of Section 16(a) of the Exchange Act. The SEC has designated specific deadlines for these reports, and we must identify in this Proxy Statement those persons who did not file these reports when due. +To the Company’s knowledge, based solely on examination of these reports and on written representations provided to us, all directors, executive officers and ten percent (10%) owners timely filed all reports regarding transactions in our securities required to be filed for 2019 pursuant to Section 16(a) of the Exchange Act, except for one late Form 4 filing for Ron Gusek related to a sale pursuant to a 10b-5 trading plan on April 23, 2019, and one late Form 4 filing for Brett Staffieri related to a redemption of Class B Common Stock and an issuance of Class A Common Stock on August 9, 2019. +HOUSE HOLDING +The SEC permits companies and intermediaries (such as brokers and banks) to satisfy delivery requirements for proxy statements and annual reports with respect to two or more stockholders sharing the same address by delivering a single proxy statement and annual report to those stockholders. This process, which is commonly referred to as “householding,” is intended to reduce the volume of duplicate information stockholders receive and reduce expenses for companies. Both the Company and some of our intermediaries may be householding our proxy materials and Annual Report on Form 10-K. Once you have received notice from your broker or another intermediary that they will be householding materials sent to your address, householding will continue until you are notified otherwise or until you revoke your consent. Should you wish to receive separate copies of our Annual Report on Form 10-K and proxy statement in the future, we will promptly deliver a separate copy of each of these documents to you if you send a written or oral request to us at our phone number or address appearing on the cover of this Proxy Statement, to the attention of the Corporate Secretary. If you hold your shares through an intermediary that is householding and you want to receive separate copies of our Annual Report on Form 10-K and proxy statement in the future, you should contact your bank, broker or other nominee record holder. +STOCKHOLDER PROPOSALS +A stockholder who would like to have a proposal considered for including in our 2021 proxy statement and annual meeting of stockholders must submit the proposal so that it is received by not earlier than the close of business on December 22, 2020, and not later than the close of business on January 21, 2021, unless the date of our 2021 annual meeting of stockholders is more than 30 days before or more than 60 days after April 21, 2021, in which case the proposal must be received no later than the 10 th day following the day on which public announcement of the date of such meeting is first made by the Company. SEC rules set standards for eligibility and specify the types of stockholder proposals that may be excluded from a proxy statement. Stockholders who intend to submit a proposal for nomination of persons for election to our Board or a proposal of business at the 2021 annual meeting must follow the procedures prescribed in the Company’s Amended and Restated Bylaws and Rule l4a-8 under the Exchange Act. Proposals should be directed to Liberty Oilfield Services Inc., Attn: Corporate Secretary, 950 17th Street, Suite 2400, Denver, Colorado 80202. No stockholder proposal was received for inclusion in this Proxy Statement. +WHERE YOU CAN FIND MORE INFORMATION +We file or furnish annual, quarterly and current reports, proxy statements and other documents with the SEC under the Exchange Act. The SEC also maintains an internet website at www.sec.gov that contains reports, proxy and information statements and other information regarding issuers, including us, that file electronically with the SEC. +We also make available free of charge through our website, www.libertyfrac.com, electronic copies of certain documents that we file with the SEC, including our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. +42 +OTHER MATTERS +As of the date of this Proxy Statement, the Board does not intend to present any matters other than those described herein at the Annual Meeting and is unaware of any matters to be presented by other parties. If other matters are properly brought before the meeting for action by the stockholders, proxies will be voted in accordance with the recommendation of the Board or, in the absence of such a recommendation, in accordance with the judgment of the proxy holder. +IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING TO BE HELD ON APRIL 21, 2020: +A COPY OF THIS PROXY STATEMENT, THE NOTICE OF 2020 ANNUAL MEETING OF STOCKHOLDERS, THE 2020 ANNUAL REPORT TO STOCKHOLDERS AND THE PROXY CARD ARE AVAILABLE AT HTT P://ASTPROXYPORTAL.COM/AST/21952 . +IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, YOU ARE URGED TO VOTE BY INTERNET, BY PHONE OR IF YOU HAVE RECEIVED PAPER COPIES OF THE PROXY MATERIALS, BY COMPLETING, SIGNING AND RETURNING THE PROXY IN THE ENCLOSED POSTAGE-PAID, ADDRESSED ENVELOPE. +By Order of the Board of Directors, +/s/ R. Sean Elliott +R. Sean Elliott +Vice President, General Counsel and Corporate Secretary +Denver, Colorado +March 10 , 20 20 +ANNUAL MEETING OF STOCKHOLDERS OF +LIBERTY OILFIELD SERVICES INC. +April 21, 2020 +GO GREEN +e-Consent +makes it easy to go paperless. With e-Consent, you can quickly access your proxy material, statements and other eligible documents +online, while reducing costs, clutter and paper waste. Enroll today via www.astfinancial.com to enjoy online access. +NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL : +The Notice of Meeting, proxy statement and proxy card +are available at http://www.astproxyportal.com/ast/21952 +Please sign, date +and mail +your proxy card in the +envelope provided as soon +as possible. +Please +detach along perforated line and mail in the envelope provided. +20330300000000001000 2 +042120 +THE BOARD OF DIRECTORS RECOMMENDS THAT +YOU VOTE “FOR” THE NOMINEES LISTED IN PROPOSAL 1 AND “FOR” PROPOSALS 2 AND 3. +PLEASE SIGN, DATE AND +RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE ☒ +1. Election of Directors: +☐ +NOMINEES: +FOR +ALL NOMINEES +Gale A. Norton +Jesal Shah +☐ +WITHHOLD AUTHORITY +FOR +ALL NOMINEES +Cary D. Steinbeck +☐ +FOR ALL EXCEPT +(See +instructions below) +INSTRUCTIONS: To withhold authority to vote for any individual nominee(s), mark “ FOR ALL EXCEPT ” +and fill in the circle next to each nominee you wish to withhold, as shown here: ● +To change the address on your account, please check the box at right and indicate your new address in the address space above. +Please note that changes to the registered name(s) on the account may not be submitted via this method. +☐ +FOR +AGAINST +ABSTAIN +2. +Ratification of the appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting +firm for the fiscal year ending December 31, 2020. +☐ +☐ +☐ +FOR +AGAINST +ABSTAIN +3. +Approval, on an advisory basis, of the compensation of the Company’s named executive officers. +☐ +☐ +☐ +TO +INCLUDE ANY COMMENTS, USE THE COMMENTS BOX ON THE REVERSE SIDE OF THIS CARD. +IMPORTANT +NOTICE +YOUR +VOTE IS IMPORTANT. PLEASE SIGN, DATE AND RETURN YOUR PROXY AS SOON AS POSSIBLE. BY DOING +SO, YOU MAY SAVE LIBERTY OILFIELD SERVICES INC. THE EXPENSE OF ADDITIONAL SOLICITATION. +NOTE: +In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting +or any adjournment or postponement thereof. +MARK +“X” HERE IF YOU PLAN TO ATTEND THE MEETING ☐ +Signature of Stockholder +Date: +Signature of Stockholder +Date: +Note: +Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When +signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, +please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please +sign in partnership name by authorized person. +1 +LIBERTY +OILFIELD SERVICES INC. +THIS +PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS +FOR +THE ANNUAL MEETING OF STOCKHOLDERS +The +undersigned hereby appoint(s) Christopher A. Wright, Michael Stock and R. Sean Elliott, or any one of them, attorneys with full +power of substitution and revocation to each, for and in the name of the undersigned with all the powers the undersigned would +possess if personally present, to vote the shares of the undersigned in Liberty Oilfield Services Inc. as indicated on the proposals +referred to on the reverse side hereof at the annual meeting of its stockholders to be held at The Westin Denver Downtown, 1672 +Lawrence Street, Denver, Colorado 80202 on April 21, 2020 at 9:00 a.m., local time and at any adjournments thereof, and in their +or his discretion upon any other matter which may properly come before said meeting. +This card also constitutes voting +instructions to the trustees under the Liberty Oilfield Services Inc. savings plans to vote, in person or by proxy, the proportionate +interest of the undersigned in the shares of Common Stock of Liberty Oilfield Services Inc. held by the trustees under the plans, +as described in the proxy statement. +(Continued and to be signed on the reverse side) +COMMENTS: +1.1 +14475 \ No newline at end of file diff --git a/raw/proxies/0001694028/0001387131-20-002743/proxy_rpt.txt b/raw/proxies/0001694028/0001387131-20-002743/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..8d1a8118c0e7c4cb14d93412284869fbc7d1c795 --- /dev/null +++ b/raw/proxies/0001694028/0001387131-20-002743/proxy_rpt.txt @@ -0,0 +1,80 @@ +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +Policies and Procedures for Review of Related Party Transactions +A “Related Party Transaction” is a transaction, arrangement or relationship in which the Company or any of its subsidiaries was, is or will be a participant, the amount of which involved exceeds $120,000, and in which any related person had, has or will have a direct or indirect material interest. A “Related Person” is: +♦ any person who is, or at any time during the applicable period was, one of our executive officers or one of our directors; +♦ any person who is known by us to be the beneficial owner of more than 5% of our Class A Common Stock; +♦ any immediate family member of any of the foregoing persons, which means any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law of a director, executive officer or a beneficial owner of more than 5% of our Class A Common Stock, and any person (other than a tenant or employee) sharing the household of such director, executive officer or beneficial owner of more than 5% of our Class A Common Stock; and +♦ any firm, corporation or other entity in which any of the foregoing persons is a partner or principal or in a similar position or in which such person has a 10.0% or greater beneficial ownership interest. +Our Board adopted a written related party transactions policy in connection with the IPO. Pursuant to this policy, our Audit Committee reviews all material facts of all Related Party Transactions and either approves or disapproves entry into the Related Party Transaction, subject to certain limited exceptions. The determination of the Audit Committee is documented in the Audit Committee’s minutes. In determining whether to approve or disapprove entry into a Related Party Transaction, our Audit Committee takes into account, among other factors, the following: (i) whether the Related Party Transaction is on terms no less favorable than terms generally available to an unaffiliated third-party under the same or similar circumstances and (ii) the extent of the Related Person’s interest in the transaction. Furthermore, the policy requires that all Related Party Transactions required to be disclosed in our filings with the SEC be so disclosed in accordance with applicable laws, rules and regulations. +The following discussion is a brief summary of our corporate reorganization and certain material arrangements, agreements and transactions we have with related parties. It does not include all of the provisions of our material arrangements, agreements and transactions with related parties, does not purport to be complete and is qualified in its entirety by reference to the arrangements, agreements and transactions described. +Corporate Reorganization +On January 17, 2018, we completed our IPO of 14,640,755 shares of our Class A Common Stock at a public offering price of $17.00 per share, of which 14,340,214 shares were offered by us and 300,541 shares were offered by the selling shareholder. We used our net proceeds from the IPO to redeem ownership in us from certain Legacy Owners (as defined below) and contributed the remaining proceeds to Liberty Oilfield Services New HoldCo LLC (“ Liberty LLC ”) in exchange for units in Liberty LLC (the “ Liberty LLC Units ”). In connection with the IPO, we completed a corporate reorganization which included the following restructuring steps: +• Liberty Holdings contributed all of its assets to Liberty LLC in exchange for Liberty LLC Units; +• Liberty Holdings liquidated and distributed to its then-existing owners (the “ Legacy Owners ”) Liberty LLC Units pursuant to the terms of the limited liability company agreement of Liberty Holdings and the Master Reorganization Agreement dated as of January 11, 2018, by and among the Company, Liberty Holdings, Liberty LLC, and the other parties nam ed therein; +• Certain of the Legacy Owners directly or indirectly contributed all or a portion of their Liberty LLC Units to the Company in exchange for 55,685,027 shares of our Class A Common Stock, and 1,258,514 shares of restricted stock. Subsequent to the initial exchange, 1,609,122 shares of Class A Common Stock were redeemed for an aggregate purchase price of $25.9 million upon the exercise of the underwriters’ overallotment option; +• We issued the Legacy Owners that continued to own Liberty LLC Units (the “ Liberty Unit Holders ”) an aggregate amount of 48,207,372 shares of our Class B Common Stock; and +• We then contributed the net proceeds it received from the IPO to Liberty LLC in exchange for additional Liberty LLC Units such that the Company holds a total number of Liberty LLC Units equal to the number of shares of Class A Common Stock outstanding following the IPO. +36 +Related Party Transactions +The following is a description of transactions entered into, or in effect, after January 1, 2019 to which we have been a party, in which the amount involved in the transaction exceeds $120,000, and in which any of our directors, executive officers or beneficial owners of more than 5% of our voting securities, or affiliates or immediate family members of any of our directors, executive officers or beneficial owners of more than 5% of our voting securities, had or will have a direct or indirect material interest. We believe the terms obtained or consideration that we paid or received, as applicable, in connection with the transactions described below were comparable to terms available or the amounts that would be paid or received, as applicable, from unrelated third parties. +Liberty LLC Agreement +We entered into the Second Amended and Restated Limited Liability Company Agreement of Liberty LLC (the “ Liberty LLC Agreement ”) in connection with the closing of our IPO, which provides for limitations on the ability of Liberty Unit Holders to transfer their Liberty LLC Units and provides the Company, as managing member of Liberty LLC, with the right to impose restrictions (in addition to those already in place) on the ability of Liberty Unit Holders to redeem their Liberty LLC Units pursuant to the Redemption Right (as defined below) to the extent the Company believes it is necessary to ensure that Liberty LLC will continue to be treated as a partnership for U.S. federal income tax purposes. +Redemption Rights +Under the Liberty LLC Agreement, each Liberty Unit Holder has, subject to certain limitations, the right (the “ Redemption Right ”) to cause Liberty LLC to acquire all or a portion of its Liberty LLC Units for, at Liberty LLC’s election, (i) shares of our Class A Common Stock at a redemption ratio of one share of Class A Common Stock for each Liberty LLC Unit redeemed, subject to conversion rate adjustments for stock splits, stock dividends and reclassification and other similar transactions or (ii) an equivalent amount of cash. Alternatively, upon the exercise of the Redemption Right, the Company (instead of Liberty LLC) h as the right (the “ Call Right ”) to, for administrative convenience, acquire each tendered Liberty LLC Unit directly from the redeeming Liberty Unit Holder for, at the Company’s election, (x) one share of Class A Common Stock or (y) an equivalent amount of cash. In addition, upon a change of control of the Company, the Company has the right to require each holder of Liberty LLC Units (other than the Company) to exercise its Redemption Right with respect to some or all of such unit holder’s Liberty LLC Units. In connection with any redemption of Liberty LLC Units pursuant to the Redemption Right or the Call Right, the corresponding number of shares of Class B Common Stock will be cancelled. As the Liberty Unit Holders redeem their Liberty LLC Units, our membership interest in Liberty LLC will be correspondingly increased, the number of shares of Class A Common Stock outstanding will be increased, and the number of shares of Class B Common Stock outstanding will be reduced. +Distributions and Allocations +Under the Liberty LLC Agreement, the Company has the right to determine when distributions will be made to the holders of Liberty LLC Units and the amount of any such distributions. If the Company authorizes a distribution, such distribution will be made to the holders of Liberty LLC Units generally on a pro rata basis in accordance with their respective percentage ownership of Liberty LLC Units. +Liberty LLC will allocate its net income or net loss for each year to the holders of Liberty LLC Units pursuant to the terms of the Liberty LLC Agreement, and the holders of Liberty LLC Units, including the Company, will generally incur U.S. federal, state and local income taxes on their share of any taxable income of Liberty LLC. Net income and losses of Liberty LLC generally will be allocated to the holders of Liberty LLC Units on a pro rata basis in accordance with their respective percentage ownership of Liberty LLC Units, subject to requirements under U.S. federal income tax law that certain items of income, gain, loss or deduction be allocated disproportionately in certain circumstances. To the extent Liberty LLC has available cash and subject to the terms of any debt instruments, the Company intends to cause Liberty LLC to make (i) generally pro rata distributions to the holders of Liberty LLC Units, including the Company, in an amount sufficient to allow the Company to pay its taxes and to allow it to make payments under the Tax Receivable Agreements (as defined below), (ii) tax advances, which will be repaid upon exercise of the Redemption Right or the Call Right, as applicable, in an amount sufficient to allow each of the Liberty Unit Holders to pay its respective taxes on such holder’s allocable share of Liberty LLC’s taxable income after taking into account certain other distributions or payments received by the Liberty Unit Holders from Liberty LLC or the Company, and (iii) non-pro rata payments to the Company to reimburse it for its corporate and other overhead expenses. +Issuance of Equity +The Liberty LLC Agreement generally provides that at any time the Company issues a share of its Class A Common Stock or any other equity security, the net proceeds received by the Company with respect to such issuance, if any, shall be concurrently invested in Liberty LLC, and Liberty LLC shall issue to the Company one Liberty LLC Unit or other economically equivalent equity interest. Conversely, if at any time, any shares of Class A Common Stock are redeemed, repurchased or otherwise acquired, Liberty LLC shall redeem, repurchase or otherwise acquire an equal number of Liberty LLC Units held by the Company, upon the same terms and for the same price, as the shares of the Class A Common Stock are redeemed, repurchased or otherwise acquired. +37 +Competition +Under the Liberty LLC Agreement, the members have agreed that Riverstone and its affiliates will be permitted to engage in business activities or invest in or acquire businesses which may compete with our business or do business with our customers. +Dissolution +Liberty LLC will be dissolved only upon the first to occur of (i) the sale of substantially all of its assets or (ii) an election by us to dissolve the company. Upon dissolution, Liberty LLC will be liquidated and the proceeds from any liquidation will be applied and distributed in the following manner: (i) first, to creditors (including to the extent permitted by law, creditors who are members) in satisfaction of the liabilities of Liberty LLC; (ii) second, to establish cash reserves for contingent or unforeseen liabilities; and (iii) third, to the members in proportion to the number of Liberty LLC Units owned by each of them. +Tax Receivable Agreements +In connection with the IPO, on January 17, 2018, the Company entered into two tax receivable agreements, (the “ TRAs ”) with the Liberty Unit Holders and the selling shareholder (each such person and any permitted transferee, a “ TRA Holder ” and together, the “ TR A Hold ers ”). The TRAs generally provide for the payment by the Company of 85% of the net cash savings, if any, in U.S. federal, state, and local income tax and franchise tax (computed using simplifying assumptions to address the impact of state and local taxes) that the Company actually realizes (or is deemed to realize in certain circumstances) in periods after the IPO as a result, as applicable to each TRA Holder, of (i) certain increases in tax basis that occur as a result of the Company’s acquisition (or deemed acquisition for U.S. federal income tax purposes) of all or a portion of such TRA Holder’s Liberty LLC Units in connection with the IPO or pursuant to the exercise of the Redemption Right or the Call Right, (ii) any net operating losses available to the Company as a result of the corporate reorganization, and (iii) imputed interest deemed to be paid by the Company as a result of, and additional tax basis arising from, any payments the Company makes under the TRAs. +Stockholders’ Agreements +We are party to a stockholders’ agreement with Riverstone and certain Legacy Owners (collectively, the “ Principal Stockholders ”). Among other things, the stockholders’ agreement provides the right to designate nominees to our Board as follows: +• so long as Riverstone and its affiliates collectively own at least 35% of our Class A Common Stock, Riverstone can designate up to five (5) nominees to the Board, with the Board size decreasing by one (1) director when Riverstone and its affiliates no longer own at least 35% of our Class A Common Stock; +• so long as Riverstone and its affiliates collectively own at least 30% of our Class A Common Stock, Riverstone can designate up to four (4) nominees to our Board; +• so long as Riverstone and its affiliates collectively own at least 20% of our Class A Common Stock but less than 30% of our Class A Common Stock, Riverstone can designate up to two (2) nominees to our Board; and +• so long as Riverstone and its affiliates collectively own at least 10% of our Class A Common Stock but less than 20% of our Class A common stock, Riverstone can designate up to one (1) nominee to our Board. +In connection with the appointment of Ms. Norton and the expansion of the Board in July 2019, the Company, R/C Energy IV Direct Partnership, L.P. and R/C IV Liberty Holdings, L.P. entered into an additional stockholders agreement (the “ Additional Agreement ”). Pursuant to the Additional Agreement, the Company agreed to use reasonable best efforts to cause the Board to, in the case where Riverstone and its affiliates beneficially own at least 10% of the outstanding shares of our Class A Common Stock, and the Board is comprised of five (5) or more directors that are not Riverstone nominees, elect one (1) additional nominee designated by Riverstone to serve on the Board. The Additional Agreement does not limit or replace the rights of Riverstone under the stockholders agreement entered into in con nection with the IPO. +Pursuant to the stockholders’ agreement we and the Principal Stockholders will be required to take all necessary actions, to the fullest extent permitted by applicable law (including with respect to any fiduciary duties under Delaware law), to cause the election of the nominees designated by Riverstone. At any time the members of our Board are allocated among separate classes of directors, (i) the directors designated by Riverstone pursuant to the stockholders’ agreement will be in different classes of directors to the extent practicable and (ii) Riverstone will be permitted to designate the class or classes to which each such director will be allocated. Riverstone will be entitled to designate the replacement for any of its Board designees whose service terminates prior to the end of such director’s term. +38 +In addition, the stockholders’ agreement provides that for so long as the Principal Stockholders and their affiliates own at least 20% of the outstanding shares of our Class A Common Stock, Riverstone will have the right to cause any committee of our Board to include in its membership at least one (1) director designated by Riverstone, except to the extent that such membership would violate applicable securities laws or stock exchange rules. The rights granted to Riverstone to designate directors are additive to and not intended to limit in any way the rights that Riverstone or any of its affiliates may have to nominate, elect or remove our directors under our certificate of incorporation, bylaws or the Delaware General Corporation Law. +Furthermore, so long as Riverstone and its affiliates collectively own at least 20% of the outstanding shares of Class A Common Stock, we have agreed not to take, and will take all necessary action to cause our subsidiaries not to take, the following direct or indirect actions (or enter into an agreement to take such actions) without the prior consent of Riverstone: +• any material change, through any acquisition, disposition of assets or otherwise, in the nature of our business or operations and our subsidiaries as of the date of the stockholders’ agreement; +• hiring or terminating our Chief Executive Officer or the Chief Financial Officer and their respective successors; +• any transaction that, if consummated, would constitute a Change of Control (as defined in the stockholders’ agreement) or entering into any definitive agreement or series of related agreements that govern any transaction or series of related transactions that, if consummated, would result in a Change of Control; +• entering into any agreement providing for certain acquisitions or dispositions, in each such case, involving consideration payable or receivable by us or any of our subsidiaries in excess of $100 million in the aggregate in any single transaction or series of related transactions during any 12-month period; +• any incurrence by us or any of our subsidiaries of indebtedness for borrowed money (including through capital leases, the issuance of debt securities or the guarantee of indebtedness of another person) in excess of $100 million in the aggregate in any single transaction or series of related transactions during any 12-month period; +• any issuance or series of related issuances of equity securities by us or any of our subsidiaries for an aggregate consideration in excess of $100 million; +• any payment or declaration of any dividend or other distribution of any shares of Class A Common Stock or entering into any recapitalization transaction the primary purpose of which is to pay a dividend; +• any increase or decrease in the size of our Board, committees of the Board, and board and committees of our subsidiaries; +• settling any litigation to which we or any of our subsidiaries is a party involving the payment by us or any of our subsidiaries of an aggregate amount equal to or greater than $25 million; +• entering into any joint venture or similar business alliance involving investment, contribution or disposition by us or any of our subsidiaries of assets (including stock of subsidiaries) having an aggregate fair market value in excess of $100 million, other than transactions solely between and among us and our wholly owned subsidiaries; and +• any amendment, modification or waiver of our certificate of incorporation, bylaws or any other governing document following the date of the stockholders’ agreement that (i) causes the number of Board seats to be less than or greater than nine (9) or (ii) materially and adversely affects any Principal Stockholder. +Registration Rights Agreement +In connection with the closing of the IPO, we entered into a registration rights agreement with the Legacy Owners. The agreement contains provisions by which we agree to register under the federal securities laws the offer and resale of shares of our Class A Common Stock by the Legacy Owners or certain of their affiliates or permitted transferees under the registration rights agreement. These registration rights will be subject to certain conditions and limitations. We will generally be obligated to pay all registration expenses in connection with these registration obligations, regardless of whether a registration statement is filed or becomes effective. +Indemnification for Officers and Directors +Our certificate of incorporation and bylaws provide indemnification rights to our directors and officers and permit us to purchase insurance on behalf of any officer, director, employee or other agent for any liability arising out of that person’s actions as our officer, director, employee or agent, regardless of whether Delaware law would mandate indemnification. Additionally, we have entered into separate indemnity agreements with our directors and officers to provide additional indemnification benefits, including the right to receive, in advance, reimbursements for expenses incurred in connection with a defense for which the director or officer is entitled to indemnification. We believe that the limitation of liability provisions in our certificate of incorporation, bylaws and the indemnity agreements will facilitate our ability to continue to attract and retain qualified individuals to serve as directors and officers. +39 +Underwriting Agreement +On July 8, 2019, we entered into an underwriting agreement (the “ Underwriting Agreement ”) with R/C Energy IV Direct Partnership, L.P. and R/C IV Liberty Holdings, L.P. (together, the “ Selling Stockholders ”) and Barclays Capital Inc. (the “ Underwriter ”), pursuant to which the Selling Stockholders agreed to sell to the Underwriter, and the Underwriter agreed to purchase from the Selling Stockholders, subject to and upon the terms and conditions set forth therein, an aggregate of 8,000,000 shares of our Class A Common Stock (the “ Offering ”). The Offering closed on July 11, 2019. We did not receive any proceeds from the sale of shares of Class A Common Stock in the Offering. The Underwriting Agreement contains customary representations, warranties and agreements of the Company and the Selling Stockholders and other customary obligations of the parties and termination provisions. +Share Repurchases +On September 10, 2018, the Board authorized a share repurchase plan to repurchase up to $100 million of the Company’s Class A Common Stock through September 30, 2019. On January 22, 2019, the Board authorized an additional $100.0 million under the share repurchase plan through January 31, 2021. The Company repurchased 117,647 shares and 2,491,160 shares of Class A Common Stock from Riverstone sellers, at a weighted average purchase price of $17.00 per share and $18.96 per share, pursuant to a share repurchase program for the years ended December 31, 2019 and 2018, respectively. +Transactions with Liberty Resources +Liberty Resources LLC (“ Liberty Resources ”), an oil and gas exploration and production company, entered into a master service agreement with L iberty Oilfield Services LLC (“ Liberty Services ”), whereby Liberty Services provides hydraulic fracturing service to Liberty Resources at market service rates. The amounts related to the provision of hydraulic fracturing services to Liberty Resources under the master services agreement for the years ended December 31, 2019, 2018 and 2017 were approximately $18.3 million, $23.1 million and $24.7 million, respectively. As of December 31, 2019 and 2018, $7.1 million and $15.1 million, respectively, of the Company’s accounts receivable, and $0.0 million and $0.0 million, respectively, of the Company’s unbilled revenue was with Liberty Resources. On June 24, 2019 (the “Agreement Date”), the Company entered into an agreement with Liberty Resources to amend payment terms for outstanding invoices due as of the Agreement Date to be due on July 31, 2020. On September 30, 2019, the agreement was amended to extend the due date of the remaining amounts outstanding to October 31, 2020. Amounts outstanding from Liberty Resources as of the Agreement Date were $15.6 million. As of December 31, 2019, amounts outstanding under the amended payment terms from Liberty Resources were $2.5 million. The balance outstanding is subject to interest at 13% annual percent yield, retroactively applied to the respective invoice date. During the year ended December 31, 2019, interest income from Liberty Resources was $1.8 million, and accrued interest as of December 31, 2019 was $0.0 million. Receivables earned for services performed after the Agreement Date continue to be subject to normal 30-day payment terms, provided that any amount unpaid after 60 days will be subject to 13% interest. +Transactions with PropX +Liberty Oilfield Services LLC (“ LOS ”), a subsidiary of the Company, currently leases equipment from Proppant Express Solutions, LLC (“ PropX ”), a provider of proppant logistics equipment. R/C IV Liberty Big Box Holdings, L.P., a Riverstone fund, holds a majority interest in PropX. Accordingly, funds associated with Riverstone hold over a 10% interest in both the Company and PropX. For the year ended December 31, 2019, LOS paid PropX $9.8 million for the lease of proppant logistics equipment. +Advisory Agreement +Liberty Holdings entered into an advisory agreement, dated December 30, 2011, with Riverstone/Carlyle Energy Partners IV, L.P. (“ R/C ”), in which R/C agreed to provide certain administrative advisory services to Liberty Holdings. The advisory services agreement was terminated pursuant to an agreement effective as of January 11, 2018. On January 11, 2018, Liberty Holdings, R/C and other parties entered into a Master Reorganization Agreement that, among other things, crystallized the “waterfall” provisions of Article VI of the Third Amended and Restated Limited Liability Agreement of Liberty Holdings, dated October 11, 2016 (the “ Holdings LLC Agreement ”), in connection with the IPO. As part of this crystallization, R/C and affiliated entities (collectively, the “ R/C Affiliates ”) received shares of Class A Common Stock, including 117,647 shares of Class A Common Stock (such 117,647 referred to as the “ Issued Shares ”) to compensate R/C Affiliates for certain accrued preferred returns but which would not have been issued had the $2.0 million in fees owing under the advisory agreement been paid in cash. Had this fee been paid in cash on or prior to January 11, 2018, R/C and Liberty Holdings acknowledge that R/C Affiliates would not have received the Issued Shares in the crystallization pursuant to the provisions of the Holdings LLC Agreement. Subsequently, during the fourth quarter of 2018, R/C asserted that certain provisions of the termination of services agreement provided for R/C to receive $2.0 million in cash as payment of those accrued fees. To resolve this matter, the Company agreed to pay R/C Affiliates $2.0 million in cash in exchange for the return, at the IPO price, of the Issued Shares and $0.3 million for interest and the settlement of the matter. Accordingly, $2.3 million was recorded as accrued liabilities - related party in the accompanying consolidated balance sheet as of December 31, 2018 and subsequently paid in January 2019. The returned shares of Class A Common Stock were canceled and retired, and the Company does not expect to incur future expense related to the advisory agreement or termination thereof. +40 +Conflicts of Interest +The related party transactions described herein may cause certain conflicts of interests, including that: +♦ we may enter into contracts between us, on the one hand, and related parties, on the other, that are not as a result of arm’s-length transactions; +♦ our executive officers and directors that hold positions of responsibility with related parties may be aware of certain business opportunities that are appropriate for presentation to us as well as to such other related parties and may present such business opportunities to such other parties; and +♦ our executive officers and directors that hold positions of responsibility with related parties may have significant duties with, and spend significant time serving, other entities and may have conflicts of interest in allocating time. +For example, Mr. Wright, our Chief Executive Officer, is the Executive Chairman of Liberty Resources, a position which may require a portion of his time and which may cause conflicts of interest in pursuing business opportunities of which he becomes aware. Furthermore, our governing documents provide that Riverstone and its respective affiliates (including portfolio investments of its affiliates) are not restricted from owning assets or engaging in businesses that compete directly or indirectly with us. Riverstone or its respective affiliates may become aware, from time to time, of certain business opportunities (such as acquisition opportunities) and may direct such opportunities to other businesses in which they have invested, in which case we may not become aware of or otherwise have the ability to pursue such opportunity. Furthermore, such businesses may choose to compete with us for these opportunities, possibly causing these opportunities to not be available to us or causing them to be more expensive for us to pursue. In addition, Riverstone or its respective affiliates may dispose of oil and gas service or other assets in the future, without any obligation to offer us the opportunity to purchase any of those assets. +41 \ No newline at end of file diff --git a/raw/proxies/0001694028/0001387131-21-003376/proxy.txt b/raw/proxies/0001694028/0001387131-21-003376/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..d29296a78e1c7de81a030a0e2bcc90ef653d8949 --- /dev/null +++ b/raw/proxies/0001694028/0001387131-21-003376/proxy.txt @@ -0,0 +1,1611 @@ +DEF 14A +1 +lbrt-def14a_042021.htm +DEFINITIVE PROXY STATEMENT +lbrt-def14a_043021 +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Proxy Statement Pursuant to Section 14(a) of the +Securities Exchange Act of 1934 +(Amendment No. ) +Filed by the Registrant ☒ +Filed by a party other than the Registrant ☐ +Check the appropriate box: +☐ +Preliminary Proxy Statement +☐ +Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +☒ +Definitive Proxy Statement +☐ +Definitive Additional Materials +☐ +Soliciting Material Pursuant to § 240.14a-12 +LIBERTY OILFIELD SERVICES INC. +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +☒  No fee required +☐  Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11 +1) Title of each class of securities to which transaction applies: +2) Aggregate number of securities to which transaction applies: +3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): +4) Proposed maximum aggregate value of transaction: +5) Total fee paid: +☐ Fee paid previously with preliminary materials. +☐ Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of it s filing. +1) Amount Previously Paid: +2) Form, Schedule or Registration Statement No.: +3) Filing Party: +4) Date Filed: +LIBERTY OILFIELD SERVICES INC. +9 50 17 TH STREET, SUITE 2400 +DENVER, COLORADO 80202 +NOTICE OF 2021 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD APRIL 20, 2021 +To our valued stockholders: +Notice is hereby given that the 2021 Annual Meeting of Stockholders (the “ Annual Meeting ”) of Liberty Oilfield Services Inc. (the “ Company ”) will be held on Tuesday, April 20, 2021, at 9:00 a.m. Mountain Time. In light of public health concerns regarding the coronavirus outbreak and in consideration of medical and governmental recommendations and orders limiting the number of persons that may gather at public events, the Annual Meeting will be held in a virtual meeting format only. You will not be able to attend the Annual Meeting physically in person. At the Annual Meeting, stockholders will be asked to: +1. Elect three (3) Class II directors to our board of directors to serve until the 2024 annual meeting or until their successors are duly elected and qualified ( Proposal 1 ); +2. Ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2021 ( Proposal 2 ); +3. Approve, on an advisory basis, the compensation of our named executive officers ( Proposal 3 ); and +4. Transact such other business as may properly be brought before the Annual Meeting. +You +can find more information, including the nominees for directors and details regarding our independent registered public accounting +firm and executive compensation, in the attached proxy statement. The board of directors recommends that you vote in favor +of each of the above proposals. Pursuant to the “notice and access” rules adopted by the Securities and Exchange +Commission, we have elected to provide access to our proxy materials on the Internet. The approximate date on which the attached +proxy statement, the accompanying Notice of Internet Availability of Proxy Materials (the “ Notice ”), proxy +card, and the Company’s Annual Report on Form 10-K are first being made available to stockholders at http://astproxyportal.com/ast/21952/ +is March 10, 2021. The Notice includes instructions on how to access our proxy materials over the Internet, vote online +and request a printed copy of these materials. +Only +stockholders of record at the close of business on February 22, 2021 are entitled to notice of, and to vote at, the Annual +Meeting or any adjournment. A complete list of stockholders entitled to vote at the Annual Meeting will be available for examination +ten days before the Annual Meeting. If you would like to inspect the list of Company stockholders of record, please contact +the Investor Relations department at IR@libertyfrac.com to schedule an appointment or request access electronically +or in person. This list of stockholders will also be available for inspection during the Annual Meeting by clicking on the +link labeled “Request Stockholder List” on the virtual meeting site. +IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE ANNUAL MEETING. ACCORDINGLY, EVEN IF YOU PLAN TO ATTEND THE ANNUAL MEETING VIRTUALLY, WE URGE YOU TO COMPLETE, SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY CARD IN THE POSTAGE-PREPAID ENVELOPE PRIOR TO THE ANNUAL MEETING OR FOLLOW THE INTERNET OR TELEPHONE VOTING PROCEDURES DESCRIBED ON THE PROXY CARD. IF YOU ATTEND THE ANNUAL MEETING VIRTUALLY AND WISH TO VOTE AT THAT TIME, YOU MAY WITHDRAW YOUR PROXY AND VOTE AT THE MEETING. YOUR PROMPT CONSIDERATION IS GREATLY APPRECIATED. YOUR VOTE IS IMPORTANT TO US. +By Order of the Board of Directors, +/s/ R. Sean Elliott +R. Sean Elliott +Vice President, General Counsel and Corporate Secretary +Denver, Colorado +March 9, 2021 +IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING +TO BE HELD ON APRIL 20, 2021 +This +Notice of Annual Meeting and Proxy Statement and our Annual Report on Form 10-K are available at +http://astproxyportal.com/ast/21952/ +i +TABLE OF CONTENTS +GENERAL INFORMATION ABOUT THE 2021 ANNUAL MEETING OF STOCKHOLDERS AND VOTING +1 +PROPOSAL 1 — ELECTION OF DIRECTORS +5 +THE BOARD AND ITS COMMITTEES +9 +EXECUTIVE OFFICERS +13 +COMPENSATION DISCUSSION & ANALYSIS +14 +COMPENSATION COMMITTEE REPORT +20 +EXECUTIVE COMPENSATION TABLES +21 +DIRECTOR COMPENSATION +26 +EQUITY COMPENSATION PLAN INFORMATION +28 +CEO PAY RATIO +29 +PROPOSAL 2 — RATIFICATION OF APPOINTMENT OF THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +30 +AUDIT COMMITTEE REPORT +32 +PROPOSAL 3 — ADVISORY VOTE TO APPROVE THE COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS +33 +SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT +34 +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +36 +DELINQUENT SECTION 16(a) REPORTS +41 +HOUSEHOLDING +41 +STOCKHOLDER PROPOSALS +41 +WHERE YOU CAN FIND MORE INFORMATION +41 +OTHER MATTERS +42 +1 +LIBERTY OILFIELD SERVICES INC. +950 17 TH STREET, SUITE 2400 +DENVER, COLORADO 80202 +PROXY STATEMENT +GENERAL INFORMATION ABOUT THE 2021 ANNUAL MEETING OF STOCKHOLDERS AND VOTING +The +enclosed proxy is solicited on behalf of the Board of Directors (the “ Board ” ) +of Liberty Oilfield Services Inc. (the “ Company ” ) +for use at the Company ’ s 2021 Annual Meeting of Stockholders that will be held on +Tuesday, April 20, 2021, at 9:00 a.m. Mountain Time, virtually at https://web.lumiagm.com/245867901 (the “ Annual +Meeting ” ). In this proxy statement (the “ Proxy Statement ”) +the terms “ Liberty ,” “ we ,” “ us ” and “ our ” all +refer to the Company. This Proxy Statement contains important information for you to consider when deciding how to vote on +the matters brought before the Annual Meeting. Please read it carefully. +We are providing these proxy materials to you in connection with the solicitation by the Board of proxies to be voted at the Annual Meeting and at any adjournment or postponement thereof. By executing and returning the enclosed proxy card or by voting via the Internet or by telephone as set forth herein, you authorize the persons named in the proxy to represent you and vote your shares on the matters described herein. Those persons will also be authorized to vote your shares to adjourn the Annual Meeting from time to time and to vote your shares at any adjournments or postponements of the Annual Meeting. +Pursuant +to the “notice and access” rules adopted by the Securities and Exchange Commission (the “ SEC ”), +we have elected to provide stockholders access to our proxy materials over the Internet. The approximate date on which +this Proxy Statement, the accompanying Notice of Internet Availability of Proxy Materials (the “ Notice ”), +proxy card, and the Company’s 2020 Annual Report on Form 10-K are first being made available to stockholders at http://astproxyportal.com/ast/21952/ +is March 10, 2021. The Notice includes instructions on how to access our proxy materials over the Internet and how +to request a printed copy of these materials. +Choosing to receive your future proxy materials by e-mail or to receive a single set of proxy materials per household will save the Company the cost of printing and mailing documents to you and will reduce the impact of the Company’s annual meetings on the environment. If you choose to receive future proxy materials by e-mail, you will receive an e-mail next year with instructions containing a link to those materials and a link to the proxy voting site. Your election to receive proxy materials by e-mail will remain in effect until you terminate it. +Annual Meeting Time & Location +➞ Date : Tuesday, April 20, 2021 +➞ Time : 9:00 a.m. Mountain Time +➞ +Location : Virtually +held at https://web.lumiagm.com/245867901 +Who Can Vote at the Annual Meeting +The Company’s Class A Common Stock, par value $0.01 per share (the “ Class A Common Stock ”), and Class B Common Stock, par value $0.01 per share (the “ Class B Common Stock ,” and together with the Class A Common Stock, the “ Common Stock ”), are the only classes of securities entitled to vote at the Annual Meeting. Holders of Class A Common Stock and Class B Common Stock will vote together as a single class on all matters presented at the Annual Meeting. Each share of Common Stock outstanding at the close of business on February 22, 2021 (the “ Record Date ”) entitles its holder to one vote with respect to each matter at the Annual Meeting, and only stockholders of record on the Record Date are entitled to notice of, and to vote, virtually online or by proxy, at the Annual Meeting. +A complete list of stockholders entitled to vote at the Annual Meeting will be available for examination ten days before the Annual Meeting. If you would like to inspect the list of Company stockholders of record, please contact the Investor Relations department at IR@libertyfrac.com to schedule an appointment. This list of stockholders will also be available for inspection during the Annual Meeting by clicking on the link labeled “Request Stockholder List” on the virtual meeting site. +2 +How to Vote at the Annual Meeting +Many holders of the Company’s Common Stock hold their shares through a broker, bank, trustee or other nominee rather than directly in their own name. As summarized below, there are some distinctions between shares held of record an d those owned beneficially. +Stockholder of Record. If your shares are registered directly in your name with our transfer agent, American Stock Transfer & Trust Company LLC, then you are considered a “stockholder of record” with respect to those shares. In this case, a Notice or, if requested, a set of proxy materials has been sent to you directly by us. As a stockholder of record, you may vote over the Internet as described in the Notice that was mailed to you or, if you have received or requested a hard copy of this Proxy Statement and accompanying proxy card, you may vote by telephone as described on the proxy card, or by mail by marking, signing, dating and mailing your proxy card in the postage-paid envelope provided. Your designation of a proxy is revocable by following the procedures outlined in this Proxy Statement. The method by which you vote will not limit your right to vote virtually at the Annual Meeting. If you submit a signed proxy card but do not give voting instructions as to how your shares of Common Stock should be voted on a particular proposal at the Annual Meeting, your shares will be voted in accordance with the recommendations of our Board stated in this Proxy Statement. +Beneficial Owners of Shares Held in Street Name. If your shares of our Common Stock are held in a brokerage account or by a bank, trust or other nominee or custodian, then you are considered the beneficial owner of those shares, which are held in “street name.” In this case, a Notice or, if requested, a set of proxy materials has been forwarded to you by the organization that holds your shares. The organization holding your account is considered the stockholder of record for purposes of voting at the Annual Meeting. As the beneficial owner, you have the right to instruct that organization as to how to vote the shares held in your account. If you are a beneficial owner of shares held in “street name,” you need to submit voting instructions to your broker, bank or other nominee in order to cast your vote. The Notice that was mailed to you by that organization has specific instructions for how to submit your vote, or if you have received or requested a hard copy of this Proxy Statement you may mark, sign, date and mail the accompanying voting instruction form in the postage-paid envelope provided. Your vote is revocable by following the procedures outlined in this Proxy Statement. However, since you are not a stockholder of record you may not vote your shares virtually at the Annual Meeting without obtaining authorization from your broker, bank or other nominee. Whether or not you plan to attend the Annual Meeting virtually, we urge you to vote by following the voting instructions provided to you to ensure that your vote is counted. To vote virtually at the Annual Meeting, you must first obtain a valid legal proxy from your broker, bank or other agent and then register in advance to attend the Annual Meeting. After obtaining a valid legal proxy from your broker, bank or other agent, to then register to attend the Annual Meeting, you must submit proof of your legal proxy reflecting the number of your shares along with your name and email address to AST. Requests for registration should be directed to proxy@astfinancial.com or to facsimile number 718-765-8730. Written requests can be mailed to: +American Stock Transfer & Trust Company LLC +Attn: Proxy Tabulation Department +6201 15 th Avenue +Brooklyn, New York 11219 +Requests for registration must be labeled as “Legal Proxy” and be received no later than 5:00 p.m., Eastern Time, on April 6, 2021. You will receive a confirmation of your registration by email after we receive your registration materials. +Telephone and Internet voting for stockholders of record will be available up until 11:59 PM Eastern Time on April 19, 2021, and mailed proxy cards must be received by April 19, 2021 in order to be counted at the Annual Meeting. If the Annual Meeting is adjourned or postponed, these deadlines may be extended. The voting deadlines and availability of telephone and Internet voting for beneficial owners of shares held in “street name” will depend on the voting processes of the organization that holds your shares of Common Stock. Therefore, we urge you to carefully review and follow the voting instructions card and any other materials that you receive from that organization. +If you receive more than one Notice, it is because your shares are registered in more than one name or are registered in different accounts. Please follow the instructions on each Notice received to ensure that all of your shares of Common Stock are voted. +“Broker Non-Votes” and Abstentions and their Effect on Proposals +A broker non-vote occurs when a broker, bank, trust or other nominee or custodian holding shares for a beneficial owner in “street name” does not vote the shares on a proposal because the nominee does not have discretionary voting power for a particular item and has not received instructions from the beneficial owner regarding voting. Brokers who hold shares for the accounts of their clients have discretionary authority to vote shares if specific instructions are not given, only with respect to “routine” items. +If your shares are held by a broker on your behalf and you do not instruct the broker as to how to vote your shares of Common Stock with regard to the election of directors ( Proposal 1 ) or the advisory vote regarding the compensation of named executive officers ( Proposal 3 ), the broker may not exercise discretion to vote for or against those proposals because each of these proposals are considered “n on-routi ne” +3 +under applicable New York Stock Exchange (“ NYSE ”) rules. With respect to the ratification of the appointment of Deloitte & Touche LLP (“ Deloitte ”) as our independent registered public accounting firm for the fiscal year ended December 31, 2021 ( Pro posal 2 ), the broker may exercise its discretion to vote for or against that proposal in the absence of your instruction. Broker non-votes would be treated as not entitled to vote with respect to non-discretionary matters. +An abstention (i.e. if you or your broker mark “ABSTAIN” on a proxy or voting instruction form, or if a stockholder of record attends the Annual Meeting but does not vote (either before or during the Annual Meeting)) has the same effect as voting “AGAINST” the ratification of the appointment of Deloitte as our independent registered public accounting firm for the fiscal year ended Dec ember 31, 20 21 ( Proposal 2 ) or the advisory vote regarding the compensation of named executive officers ( Proposal 3 ). Votes that are withheld from a director’s election will not affect the outcome of the vote on the election of a director. +Quorum Requirements for the Annual Meeting +The presence at the Annual Meeting, whether in person or by valid proxy, of stockholders holding a majority of the shares of Common Stock outstanding on the Record Date will constitute a quorum, permitting us to conduct our business at the Annual Meeting. On the Record Date, there were 165,068,515 of Class A Common Stock and 14,472,440 of Class B Common Stock issued and outstanding and entitled to be voted at the Annual Meeting. Abstentions and broker non-votes will be considered to be shares present at the Annual Meeting for purposes of constituting a quorum. +Votes Required to Approve Proposals and Board Recommendations +Proposal +Required Vote +Board Recommendation +(1) To elect three (3) Class II directors to the Board to serve until the 2024 annual meeting or until their successors are duly elected and qualified. +Plurality of Votes Cast +FOR EACH NOMINEE +(2) To ratify the appointment of Deloitte as our independent registered public accounting firm for the fiscal year ending December 31, 2021. +Majority of Shares Present and Entitled to Vote +FOR +(3) To approve, on an advisory basis, the compensation of our named executive officers. +Majority of Shares Present and Entitled to Vote +FOR +Election of Directors . To be elected, director nominees must receive a plurality of the votes cast and entitled to vote in the election of directors at the Annual Meeting; this means that the three (3) nominees receiving the highest number of “FOR” votes cast will be elected. Abstention and broker non-votes will have no effect on the outcome of the election of our directors and cumulative voting is not permitted. +Ratification of our Independent Registered Public Accounting Firm . The affirmative vote of a majority of the shares of Common Stock present in person or represented by proxy at the Annual Meeting and entitled to vote is required to ratify the appointment of Deloitte as our independent registered public accounting firm for the fiscal year ending December 31, 2021. Abstentions will have the effect of a vote against this proposal. Brokers have discretionary authority in the absence of timely instructions from their customers to vote on this proposal. As a result, there will be no broker non-votes with respect to this proposal. +Approval of Named Executive Officer Compensation . Approval, on a non-binding advisory basis, of the compensation of our named executive officers requires the affirmative vote of a majority of the shares of Common Stock present in person or represented by proxy at the Annual Meeting and entitled to vote. Abstentions will have the effect of a vote against this proposal, and broker non-votes are not counted as votes cast and will have no effect on the outcome of this proposal. +The Board recommends that you vote: +FOR the election of each of the three (3) Class II nominees to serve on our Board until the 2024 annual meeting or until their successors are duly elected and qualified; +FOR the ratification of Deloitte as our independent registered public accounting firm for the fiscal year ending December 31, 2021; and +FOR the approval of the compensation of our named executive officers as disclosed in this Proxy Statement. +4 +Revoking Your Proxy; Changing Your Vote +If you are a stockholder of record, you may revoke your proxy before the vote is taken at the Annual Meeting by: +• signing, dating and delivering a new proxy with a later date before the applicable deadline to our Corporate Secretary; +• attending virtually and voting virtually online at the Annual Meeting; or +• filing a written revocation with our Corporate Secretary. +If your shares are held in “street name,” you may submit new voting instructions by contacting your broker or other organization holding your shares. You may also vote virtually online at the Annual Meeting, which will have the effect of revoking any previously submitted voting instructions, if you obtain a legal proxy from the organization that holds your shares. +Your last vote or proxy will be the vote or proxy that is counted. Your virtual attendance at the Annual Meeting will not automatically revoke your proxy. +Dissent and Appraisal Rights +No action is proposed at the Annual Meeting for which the laws of the State of Delaware or other applicable law provides a right of our stockholders to dissent and obtain appraisal of or payment for such stockholders’ Common Stock. +Solicitation Costs +The cost of preparing, assembling and mailing the proxy materials and of reimbursing brokers, nominees and fiduciaries for the out-of-pocket and clerical expenses of transmitting copies of the proxy materials to the beneficial owners of shares held of record by such persons, will be borne by the Company. The Company has retained D.F. King & Co., Inc. ( “ D.F. King ” ) to aid in the solicitation of proxies. It is estimated that the cost of D. F. King ’ s services will be approximately $8,500 plus expenses. In addition to the solicitation of proxies by mail, proxies may also be solicited by telephone, electronic communication, or personal communication by employees of D.F. King and the Company. +Voting Results +We will publish final results in a Current Report on Form 8-K to be filed with the SEC within four (4) business days following the Ann ual Meeting. +Questions +You may call or contact our proxy solicitor, D.F. King, at (866) 796-1290 or via email at libertyoilfield@dfking.com if you have any questions concerning this Proxy Statement. During the Annual Meeting, stockholders who have registered with their voting control number may submit written questions by referring to the “Chat Box” icon located at the top of the left-hand panel of their screen. +PLEASE VOTE. YOUR VOTE IS IMPORTANT TO US. +5 +PROPOSAL 1 — ELECTION OF DIRECTORS +Our Board currently consists of nine (9) directors. In accordance with the terms of our certificate of incorporation and bylaws, our Board is divided into three classes: Class I, Class II and Class III, with each class serving staggered three-year terms. Upon the expiration of the term of a class of directors, directors in that class will be eligible to be elected for a new three-year term at the annual meeting of stockholders in the year in which their term expires. Each director elected to the Board will hold office until his or her successor has been elected and qualified or until the earlier of their death, resignation, disqualification or removal. The current members of the classes of our Board are divided as follows: +♦ Class II (term expires in 2021): Ken Babcock, Brett Staffieri, and Christopher A. Wright +♦ Class III (term expires in 2022): Peter A. Dea, William F. Kimble, and James R. McDonald +♦ Class I (current term expires 2023): Simon Ayat, Gale A. Norton, and Cary D. Steinbeck +Unless otherwise instructed, the proxy holders will vote the proxies received by them for the three (3) director nominees named below, all of whom are presently directors of the Company. In the event that any nominee is unable or declines to serve as a director at the time of the Annual Meeting, the proxies will be voted for any nominee who shall be designated by the present Board to fill the vacancy, unless the size of the Board is reduced. The proxies cannot be voted for a greater number of persons than the number of nominees named in this proxy statement. It is not expected that any nominee will be unable or will decline to serve as a director. Biographical information regarding each nominee is set forth below, as well as a summary of the experiences, qualifications, attributes or skills that caused the Board to determine that each nominee should serve as a director of the Company. Each nominee ’ s experience is evaluated in determining the overall composition of the Board. +NOMINEES FOR ELECTION AS CLASS II DIRECTORS TO A THREE-YEAR TERM EXPIRING +AT THE 2024 ANNUAL MEETING OF STOCKHOLDERS +Name (Age) +Business Experience +Director +Since +Ken Babcock (64) +Mr. Babcock has served on our Board since the initial public offering of the company in 2018 (the “ IPO ”). Mr. Babcock is currently the Chief Executive Officer of Abaco Energy Technologies LLC (“ Abaco ”), a private Houston-based portfolio company of Riverstone Holdings LLC, an energy-focused private equity firm (“ Riverstone ”), that was formed in 2013 to focus on opportunities in manufacturing and services related to North American drilling, completion, and production, and associated infrastructure. Prior to joining Abaco, Mr. Babcock was the President and Chief Executive Officer of Titan Specialties, Ltd. (“ Titan ”) from 2008 until its sale to Hunting PLC in September 2011. Following the sale, Mr. Babcock remained at Titan until June 2012. Prior to joining Titan, from 2005 until 2008, Mr. Babcock served as President and Chief Executive Officer of International Logging, Inc. (“ ILI ”) where he took a narrowly-focused mud logging company of over 300 employees to a diverse well site services organization of over 1,800 employees spread over 60 countries in a little over two years. Prior to joining ILI, Mr. Babcock was Director of Strategic Sales at Baker Hughes INTEQ and Vice President of Business Development at Noble Technology Services. Mr. Babcock began his career with EXLOG in 1980. Mr. Babcock has a Bachelor of Science in Geology from Florida State University. We believe that Mr. Babcock’s strong business leadership experience qualifies him for service on our Board. +2018 +Brett Staffieri (42) +Mr. Staffieri has served on our Board since the IPO. Mr. Staffieri has been a Partner at Riverstone since February 2019 and has worked at Riverstone since 2006. Mr. Staffieri has a Bachelor of Business Administration from the University of Texas at Austin and a Master of Business Administration from The Wharton School, where he graduated with honors. Mr. Staffieri has been nominated to serve on our Board by Riverstone pursuant to the amended and restated stockholders agreement described later in this proxy statement. We believe that Mr. Staffieri’s extensive experience investing in the energy sector qualifies him for service on our Board. +2018 +6 +Name (Age) +Business Experience +Director +Since +Christopher A. Wright (56) +Mr. Wright has served on our Board since the IPO. He has also served as our Chief Executive Officer since December 2016 and as the Chief Executive Officer of Liberty Holdings since its formation in March 2011 until the IPO. Mr. Wright is the Executive Chairman of Liberty Resources LLC, an oil and natural gas exploration and production company focused in the Williston Basin, and was the Chief Executive Officer from its formation in September 2010 until March 2017. Mr. Wright founded Pinnacle Technologies, a company that developed and commercialized tiltmeter and microseismic fracture mapping, and served as Chief Executive Officer of Pinnacle Technologies from 1992 to 2006. From 2000 to 2006, Mr. Wright served as Chairman of Stroud Energy, Inc., a shale natural gas producer. Mr. Wright currently serves on the Board of Directors for Urban Solution Group, US Ceramics, LLC and the Federal Reserve Bank of Kansas City, Denver Branch. Mr. Wright has a Bachelor of Science in Mechanical Engineering from the Massachusetts Institute of Technology (“ MIT ”) and conducted graduate work in electrical engineering at both the University of California-Berkeley and MIT. We believe that Mr. Wright’s experience leading our growth as our Chief Executive Officer and his extensive experience in the hydraulic fracturing services industry qualifies him for service on our Board. +2018 +Vote Required +The election of directors requires the affirmative vote of a plurality of the votes validly cast at the election. Neither abstentions nor broker non-votes will have any effect on the outcome of voting on director elections. +THE BOARD UNANIMOUSLY RECOMMENDS VOTING “ FOR ” +THE ELECTION OF EACH CLASS II DIRECTOR NOMINEE. +DIRECTORS CONTINUING IN OFFICE +Name (Age) +Business Experience +Director +Since +Simon Ayat (66) +Mr. Ayat joined our Board in connection with the acquisition of Schlumberger’s OneStim business (“ OneStim ”) at the end of 2020 (the “ OneStim Acquisition ”). Mr. Ayat has served as Senior Strategic Advisor to the Chief Executive Officer for Schlumberger, an international oilfield services and technology company, since January 2020. From March 2007 until his retirement in January 2020 he served as the Executive Vice President and Chief Financial Officer of Schlumberger. Mr. Ayat has held several financial and operational positions in Schlumberger, where he commenced his career in 1982. He was based in Paris, Houston and Dallas, as well as in the Middle East and Far East regions, serving as group treasurer, controller, Geomarket manager for Indonesia and drilling regional vice president for Asia Pacific. Mr. Ayat is also a member of the board of directors of Tenaris S.A., a manufacturer of pipes and related services for energy and industrial applications, and Eurasia Drilling Company, the largest provider of drilling services in Russia. He is a French and Lebanese citizen. Mr. Ayat has been nominated to serve on our Board by Schlumberger pursuant to the amended and restated stockholders agreement described later in this proxy statement. We believe Mr. Ayat’s extensive experience in the oilfield services industry and as the Chief Financial Officer of a publicly-traded oilfield services company with international operations qualifies him for service on our Board. +2020 +7 +Name (Age) +Business Experience +Director +Since +Peter A. Dea (67) +Mr. Dea has served on our Board since the IPO. Mr. Dea has been the Executive Chairman of Confluence Resources LP (“ Confluence ”) since September 2016. Mr. Dea has served as the President and Chief Executive Officer of Cirque Resources LP (“ Cirque ”) since May 2007. Both Confluence and Cirque are private oil and gas companies. From November 2001 through August 2006, Mr. Dea was President and Chief Executive Officer and a director of Western Gas Resources, Inc. (“ Western Gas ”). Mr. Dea joined Barrett Resources Corporation (“ Barrett ”) in November 1993 and served as Chief Executive Officer and director from November 1999 and as Chairman from February 2000 through August 2001. Western Gas and Barrett were public oil and gas companies. Prior to that Mr. Dea served in several geologic positions with Exxon Company, U.S.A. Mr. Dea currently serves as the Chairman of the Board of Ovintiv Inc. and has served as a director of Antero Midstream Corporation since the closing of its simplification transaction in March 2019. Prior to the simplification, Mr. Dea served as a director of the general partner of Antero Midstream GP LP beginning in April 2018. Mr. Dea has a Bachelor of Arts in Geology from Western State Colorado University and a Masters of Science in Geology from the University of Montana. Mr. Dea also attended the Harvard Business School, Advanced Management Program. We believe that Mr. Dea’s extensive oil and gas exploration and production experience and involvement in state and national energy policies qualify him for service on our Board. +2018 +William F. Kimble (61) +Mr. Kimble has served on our Board since the IPO and as Lead Director since October 2018. From 2009 until his retirement in 2015, Mr. Kimble served as the Office Managing Partner for the Atlanta office and Managing Partner - Southeastern United States at KPMG LLP (“ KPMG ”), one of the largest audit, tax and advisory services firms in the world. Mr. Kimble was also responsible for moderating KPMG’s Audit Committee Institute and Audit Committee Chair Sessions. Until his retirement, Mr. Kimble had been with KPMG or its predecessor firm since 1986. During his tenure with KPMG, Mr. Kimble also held numerous senior leadership positions, including Global Chairman of Industrial Markets. Mr. Kimble served as KPMG’s Energy Sector Leader for ten (10) years and was the executive director of KPMG’s Global Energy Institute. Mr. Kimble serves on the board of directors and the audit committee of PRGX Global, Inc. Mr. Kimble also serves on the board of directors, the special committee, and is chair of the audit committee of DCP Midstream Partners, LP. Mr. Kimble has a Bachelor of Accounting and Business Administration from Southern Methodist University. We believe that Mr. Kimble’s extensive accounting background and his experience as a director of public companies qualify him for service on our Board. +2018 +James R. McDonald (42) +Mr. McDonald joined our Board in connection with the OneStim Acquisition. Mr. McDonald has served as President, Americas Land for Schlumberger, an international oilfield services and technology company, since July 2020. Prior to that time, he held multiple executive positions at Schlumberger; including President, Well Services from April 2018 until June 2020, Head of Reservoir Characterization Group Operations, North America Offshore from June 2017 until March 2018, Vice President, Wireline, North America, from January 2016 until June 2017, and Vice President Cased Hole Wireline, North American Land from January 2015 until December 2015. Mr. McDonald holds a Bachelor of Science in Chemical Engineering from the Massachusetts Institute of Technology. Mr. McDonald has been nominated to serve on our Board by Schlumberger pursuant to the amended and restated stockholders agreement described later in this proxy statement. We believe Mr. McDonald’s extensive experience in the oilfield services industry qualifies him for service on our Board. +2020 +8 +Name (Age) +Business Experience +Director +Since +Gale A. Norton (67) +Ms. Norton has served on our Board since July of 2019. She has been the President of Norton Regulatory Strategies, a consulting firm, since 2011. From 2007 to 2010, she served as General Counsel, Unconventional Oil, of Royal Dutch Shell, an international oil and natural gas company (“ Shell ”). Prior to joining Shell, Ms. Norton served as the Secretary of the Interior of the United States under President George W. Bush from 2001 until 2006 and as the Attorney General of the State of Colorado from 1991 until 1999. Ms. Norton is a director of American Transmission Company, a private company in the electric utility industry and she has been a Governance Fellow of the National Association of Corporate Directors. Ms. Norton holds Bachelor of Arts and Juris Doctorate degrees from the University of Denver. We believe that Ms. Norton’s experience as Attorney General of the State of Colorado and Secretary of the Interior of the United States qualifies her for service on our Board. +2019 +Cary D. Steinbeck (49) +Mr. Steinbeck has served on our Board since the IPO. Mr. Steinbeck served on the board of managers of Liberty Oilfield Services Holdings LLC (“ Liberty Holdings ”), a prior subsidiary of the Company, from October 2016 until the IPO. Mr. Steinbeck has been a Managing Director at Shea Ventures, an investment firm, since October 2014. From 2007 to 2014, he served as a Managing Director at Oakmont Corporation, an investment firm. Mr. Steinbeck is also a director at Liberty Resources LLC and is a Chartered Financial Analyst® charterholder. Mr. Steinbeck has a Bachelor of Arts in Economics from the University of California, Santa Barbara, and a Master of Business Administration from the University of Southern California. We believe that Mr. Steinbeck’s experience in the private equity industry, energy sector investing experience, extensive board participation and understanding of financial markets will provide valuable insights for our Company and qualify him for service on our Board. +2018 +9 +THE BOARD AND ITS COMMITTEES +THE BOARD +Composition of the Board +Our Board consists of nine members separated into three classes of directors, each as equal in number as possible, with each class serving staggered three-year terms. +In connection with the OneStim Acquisition, we entered into an amended and restated stockholders agreement with affiliates of Riverstone and Schlumberger. This amended and restated stockholders agreement amends previous stockholder agreements entered into between the Company and Riverstone and provides (i) Riverstone with the right to designate (A) two nominees to our Board so long as they and their affiliates collectively beneficially own the number of shares of Common Stock as such persons owned immediately prior to the OneStim acquisition, and (B) one nominee to our Board so long as they and their affiliates collectively beneficially own at least 10% of the outstanding shares of our Common Stock; and (ii) Schlumberger with the right to designate (A) two nominees to our Board so long as they and their affiliates collectively beneficially own at least 20% of the outstanding shares of our Common Stock, and (B) one nominee to our Board so long as they and their affiliates collectively beneficially own at least 10% of the outstanding shares of our Common Stock. For further information on the amended and restated stockholders agreement, see the section titled “ Related Party Transactions ” under the subtitle “ Amended and Restated Stockholde rs Agreement .” +In evaluating director candidates, we, through the Nominating and Governance Committee of the Board (the “ Nominating and Governance Committee ”), review the following criteria when assessing director candidates: +✓ relevant skills, qualifications and experience; +✓ independence under applicable standards; +✓ business judgment; +✓ service on boards of directors of other companies; +✓ personal and professional integrity; +✓ openness and willingness to work as part of a team; +✓ willingness to commit the required time to serve as a Board member; and +✓ familiarity with the Company and its industry. +Board Leadership Structure and Role in Risk Oversight +Our Board does not have a policy regarding separation of the roles of Chief Executive Officer and Chairman of the Board. The Board believes it is in our best interests to make that determination based on circumstances from time to time. Currently, our Chief Executive Officer serves as the Chairman of the Board, and William F. Kimble, a non-employee independent director, serves as our Lead Director. As Lead Director, Mr. Kimble serves as a liaison between the Chairman and the non-management directors and presides at executive sessions of the non-management directors and any other Board meetings at which the Chairman is not present, among other responsibilities. Our Board believes that this structure, combined with our corporate governance policies and processes, creates an appropriate balance between strong and consistent leadership and independent oversight of our business. The Chairman chairs the meetings of our Board and stockholders, with input from the Lead Director, and as such, our Board believes that a person with a comprehensive knowledge of the Company is in the best position to serve the role of Chairman. +Our Board believes its administration of its risk oversight function has not affected its leadership structure. Risk is inherent with every business, and how well a business manages risk can ultimately determine its success. We face a number of risks, including those described under “ Risk Factors ” in our Annual Report on Form 10-K for the year ended December 31, 2020. Our Board is actively involved in oversight of risks that could affect us. This oversight is conducted by the Board, which has responsibility for general oversight of risks, but the Audit Committee of the Board (the “ Audit Committee ”) assists the Board in fulfilling such oversight responsibilities. Risk assessment and oversight are an integral part of our governance and management processes. The Board encourages management to promote a culture that incorporates risk management into our corporate strategy and day-to-day business operations. Management discusses strategic and operational risks at regular management meetings and conducted a specific strategic session during the year that included a focused discussion and analysis of the risks facing us. Throughout the year, senior management reviews risks with the Board at regular Board meetings as part of management presentations that focus on the Company’s overall operations and presents the steps taken by management to mitigate or eliminate such risks. +10 +The Board does not have a standing risk management committee, but rather administers this oversight function directly through the Board as a whole. The Board is responsible for monitoring and assessing strategic risk exposure, and the Audit Committee assists the Board in fulfilling such oversight responsibilities by overseeing our major risk exposures and the steps our management has taken to monitor and control these exposures. The Audit Committee also monitors compliance with legal and regulatory requirements and considers and approves or disapproves any related-person transactions. +Our Board periodically review its governance and committee structure to ensure that it continues to meet the Company’s needs. +Director Independence and Family Relationships +The Company’s standards for determining director independence require the assessment of directors’ independence each year. A director cannot be considered independent unless the Board affirmatively determines that he or she does not have any relationship with management or the Company that may interfere with the exercise of his or her independent judgment, including any of the relationships that would disqualify the director from being independent under the rules of the NYSE. +The Board has assessed the independence of each non-employee director under the independence standards of the NYSE. The Board has determined that each of Messrs. Ayat, Babcock, Dea, Kimble, McDonald, Staffieri and Steinbeck and Ms. Norton is considered independent under the NYSE rules. In connection with its assessment of the independence of each non-employee director, the Board also determined that Messrs. Steinbeck, Kimble, Babcock and Dea and Ms. Norton are independent as defined in Section 10A-3 of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”) and under the standards set forth by the NYSE applicable to members of the Audit Committee. Furthermore, none of our directors or officers have any family relationship with any director or other officers. “Family relationship” for this purpose means any relationship by blood, marriage or adoption, not more remote than first cousin. +BOARD COMMITTEES +Overview +Our Board has established an Audit Committee, a Compensation Committee of the Board (the “ Compensation Committee ”) and a Nominating and Governance Committee as further detailed herein. The below chart sets forth the members and chairperson of each Board committee. +Name +Audit Committee +Compensation Committee +Nominating and +Governance Committee +William F. Kimble +* +• +Cary D. Steinbeck +• +• +Peter A. Dea +* +• +Ken Babcock +• +Gale A. Norton +• +* +*   Chairperson   •   Member +Audit Committee +Rules implemented by the NYSE and the SEC require us to have an Audit Committee comprised of at least three (3) directors who meet the independence and experience standards established by the NYSE and the Exchange Act. Our Audit Committee currently consists of three (3) directors, all of whom are independent under the rules of the SEC and the standards set forth by the NYSE applicable to members of an Audit Committee. Messrs. Kimble and Steinbeck and Ms. Norton are the members of our Audit Committee with Mr. Kimble serving as the chairperson. Each member of our Audit Committee is financially literate, and our Board has determined that Mr. Kimble qualifies as an “audit committee financial expert” as defined in applicable SEC rules. +The +Audit Committee oversees, reviews, acts on and reports on various auditing and accounting matters to our Board, including: +the selection of our independent accountants, the scope of our annual audits, fees to be paid to the independent accountants, +the performance of our independent accountants and our accounting practices. The general purpose of our Audit Committee is +to assist the Board in oversight responsibilities regarding the integrity of the Company’s financial statements, compliance +with legal and regulatory requirements, performance of the independent registered public accounting firm engaged by the Company +and the effectiveness of the Company’s internal audit functions. The Audit Committee operates under an Audit Committee +charter that defines the committee’s primary duties in a manner consistent with the rules of the SEC and NYSE. A current +copy of the Audit Committee charter can be found on our website, www.libertyfrac.com , by first clicking “ Investors ” +then “ Corporate Governance ” and proceeding to “ Governance Documents .” +11 +Compensation Committee +Our +Compensation Committee currently consists of three (3) directors: Messrs. Dea, Babcock and Steinbeck with Mr. Dea serving +as the chairperson. Our Compensation Committee assists our Board in establishing salaries, incentives and other forms of compensation +for officers and other employees. Our Compensation Committee also assists the Board with the administration and oversight +of our incentive compensation and benefit plans. The Compensation Committee operates under a Compensation Committee charter +that defines the committee’s primary duties. The Compensation Committee has the authority to delegate to its chairperson +or any one of its members the responsibility and authority for any particular matter, as it deems appropriate from time to +time under the circumstances. A current copy of the Compensation Committee charter can be found on our website, www.libertyfrac.com , +by first clicking “ Investors ” then “ Corporate Governance ” and proceeding to “ Governance +Documents .” +The Board has determined that all directors on the Compensation Committee are independent under the standards set forth by the NYSE. +Nominating and Governance Committee +Our +Nominating and Governance Committee currently consists of three (3) directors: Ms. Norton and Messrs. Kimble and Dea with +Ms. Norton serving as the chairperson. The Nominating and Governance Committee operates under a Nominating and Governance +Committee charter that defines the committee’s primary duties. A current copy of the Nominating and Governance Committee +charter can be found on our website, www.libertyfrac.com , by first clicking “ Investors ” then “ Corporate +Governance ” and proceeding to “ Governance Documents .” +Our Nominating and Governance Committee identifies, evaluates and recommends qualified nominees to serve on our Board, subject to the terms of the amended and restated stockholders agreement the Company has entered into with certain stockholders related to the appointment of directors. See “ Certain Relationships and Related Party Transactions—Related Party Transactions—Amended and Restated Stockholders Agreement .” Our Nominating and Governance Committee also develops and oversees our corporate governance processes, including the annual performance evaluation of the Board and its committees, and of management, and develops, reviews and recommends to the Board any changes to our Corporate Governance Guidelines and other applicable governance policies. +When identifying director nominees, the Nominating and Governance Committee considers and reviews the following criteria: the candidate’s relevant skills, qualifications and experience, independence under applicable standards, business judgement, service on boards of directors of other companies, personal and professional integrity, openness and ability to work as part of a team, willingness to commit to the required time to serve as a member of the Board and familiarity with the Company and its industry. Additionally, when considering the recommendation to the Board that an existing director be nominated for election at the annual meeting of stockholders, the Nominating and Governance Committee will consider and review: the past Board and committee meeting attendance and performance, the length of Board service, the personal and professional integrity, the relevant experience, skills, qualifications and contributions that the existing director brings to the Board and the independence under the applicable standards. +The Nominating and Governance Committee will consider suggestions from any source, particularly from stockholders, regarding possible candidates for director; provided, however , that in order for such stockholder recommendation to be considered, the recommendations must comply with the procedures outlined under “ Stockholder Proposals ” below. +The Board has determined that all directors on the Nominating and Governance Committee are independent under the standards set forth by the NYSE. +MEETING ATTENDANCE OF THE BOARD AND BOARD COMMITTEES +During 2020, the Board met eight (8) times, the Audit Committee met nine (9) times, the Compensation Committee met five (5) times, and the Nominating and Governance Committee met three (3) times. Each director participated, whether in person or by telephone, in at least seventy-five percent (75%) of all meetings of the Board and the committees of which such director is a member. There is no formal policy as to director attendance at the Annual Meeting but our corporate governance guidelines encourage directors to attend. All members of our Board attended last year’s annual stockholder meeting. +CORPORATE CODE OF BUSINESS CONDUCT AND ETHICS +Our Board has adopted a Corporate Code of Business Conduct and Ethics (the “ Ethics Code ”) applicable to our employees, directors and officers, in accordance with applicable U.S. federal securities laws and the corporate governance rules of the NYSE. Any waiver of the Ethics Code may be made only by our Board or a Board committee and will be promptly disclosed as required by applicable SEC laws and the corporate governance rules of the NYSE. A current copy of the Ethics Code can be found on our website, w ww.libertyfrac.co m , by first clicking “ Investors ” then “ Corporate Governance ” and proceeding to “ Governance Documents ,” and is available in print to any stockholder who requests it. +12 +CORPORATE GOVERNANCE GUIDELINES +Our Board has adopted Corporate Governance Guidelines (the “ Governance Guidelines ”) in accordance with the corporate governance rules of the NYSE, as applicable, that serve as a framework within which our Board and committees operate. These guidelines cover matters including, but not limited to, the composition of our Board, Board membership criteria and qualifications, director responsibilities, meetings of the Board and non-management directors, Board committees, director access to management and independent advisors, director compensation, and evaluation of management and management succession planning. A current copy of our Governance Guidelines can be found on our website, www.libertyfrac.com , by first clicking “ Investors ” then “ Corporate Governance ” and proceeding to “ Governance Documents .” +COMMUNICATION WITH THE BOARD +The Board welcomes communications from the Company’s stockholders and other interested parties. Stockholders and any other interested parties may send communications to the Board, any committee of the Board, the Chairman of the Board or any other director in particular to: +Liberty Oilfield Services Inc. +950 17 th Street, Suite 2400 +Denver, Colorado 80202 +Stockholders and any other interested parties should mark the envelope containing each communication as “Stockholder Communication with Directors” and clearly identify the intended recipient(s) of the communication. The Company’s General Counsel or other officer as designated by the Board, will review each communication received from stockholders and other interested parties and will forward the communication, as expeditiously as reasonably practicable, to the addressees if the communication falls within the scope of matters generally considered by the Board. To the extent the subject matter of a communication relates to matters that have been delegated by the Board to a committee or to an executive officer of the Company, then the Company’s General Counsel may forward the communication to the executive officer or chairman of the committee to which the matter has been delegated. The acceptance and forwarding of communications to the members of the Board or an executive officer does not imply or create any fiduciary duty of the Board members or executive officer to the person submitting the communications. +COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION +The members of the Compensation Committee are set forth above. During 2020, our last completed fiscal year, none of our executive officers served on the board of directors or compensation committee of a company that had an executive officer that served on our Board or Compensation Committee. Further, no member of our Board was an executive officer of a company in which one of our executive officers served as a member of the board of directors or compensation committee of that company. +13 +EXECUTIVE OFFICERS +The following sets forth certain information with respect to the executive officers of the Company as of March 1, 2021. +Name +Age +Position(s) +Christopher A. Wright +56 +Chairman of the Board and Chief Executive Officer +Michael Stock +59 +Chief Financial Officer and Treasurer +Ron Gusek +49 +President +R. Sean Elliott +46 +Vice President, General Counsel and Corporate Secretary +Ryan T. Gosney +47 +Chief Accounting Officer +See “ Proposal 1 – Election of Directors – Nominees for Election as Class II Directors to a Three-Year Term Expiring at the 2024 Annual Meeting of Stockholders ” above for information regarding Mr. Wright. +Michael Stock – Chief Financial Officer and Treasurer . Michael Stock has served as our Chief Financial Officer since December 2016, our Treasurer since March 2018 and as the Chief Financial Officer of Liberty Holdings from April 2012 until our IPO. Mr. Stock served as a director of the Company from December 2016 up until the IPO. Prior to joining Liberty Holdings, from 2009 to 2012, he was employed by TAS Energy Inc., an industrial energy technology company. During his tenure, he served as Chief Financial Officer and was a key part of the raising of equity from leading investment groups including Kleiner Perkins, Element Partners, Natural Gas Partners and Credit Suisse. From 1997 to 2009, Mr. Stock served as Chief Financial Officer for Pinnacle Technologies. +Ron Gusek – President . Ron Gusek has served as our President since December 2016 and as the President of Liberty Holdings from November 2016 until the IPO. Mr. Gusek served as the Vice President of Technology and Development of Liberty Holdings, from 2014 until his promotion to President. Prior to joining Liberty Holdings, from 2011 to 2014, Mr. Gusek served as Vice President, Corporate Engineering and Technology of Sanjel Corporation, a global energy service company. Prior to joining Sanjel Corporation, from 2009 to 2011, Mr. Gusek was Director of Engineering for Zodiac Exploration, an oil and natural gas exploration and production company working in the central San Joaquin valley in California. From 2003 to 2008, Mr. Gusek was the Canadian Regional Manager of Pinnacle Technologies. Mr. Gusek has a Bachelor of Science in Mechanical Engineering from the University of Alberta. +R. Sean Elliott – Vice President, General Counsel and Secretary . Sean Elliott has served as our Vice President and General Counsel since March 2017 and our Corporate Secretary since the IPO. Between September 2016 and March 2017, Mr. Elliott worked as Assistant General Counsel at USAA Real Estate Company, a real estate investment firm. Between June 2015 and September 2016, Mr. Elliott served as Counsel at Haynes and Boone, LLP, an international corporate law firm. Between November 2007 and May 2015, Mr. Elliott served as Vice President, General Counsel, Corporate Secretary and Chief Compliance Officer of CARBO Ceramics Inc., an oilfield services production enhancement company. Mr. Elliott has a Bachelor of Arts in Economics and Business Administration from Austin College and a Doctor in Jurisprudence degree from the University of Texas at Austin. +Ryan T. Gosney – Chief Accounting Officer . Ryan Gosney has been our Chief Accounting Officer since March 2017. Between July 2016 and February 2017, Mr. Gosney served as the Chief Accounting Officer of Vantage Energy Inc. (“ Vantage ”), an oil and gas exploration and production company. Prior to joining Vantage, Mr. Gosney served as Chief Financial Officer for Dorado E&P Partners, LLC, an oil and gas company, from January 2012 to January 2016. Mr. Gosney began his career as an auditor with Arthur Andersen, LLP in September 1995 where he served in increasing roles of responsibility up to Audit Manager until June 2002. Mr. Gosney has also served as Controller for Patina Oil & Gas Corporation from October 2002 to October 2005 and Delta Petroleum Corporation from October 2005 to January 2012. Mr. Gosney has a Bachelor of Business Administration from Texas Christian University. +14 +COMPENSATION DISCUSSION & ANALYSIS +This Compensation Discussion & Analysis provides information about our rationale and policies with regard to the compensation of our principal executive officer, principal financial officer and our three other most highly-compensated executive officers (our “ Named Executive Officers ”) for 2020 and is intended to provide investors with the material information necessary for understanding our compensation policies and decisions regarding our Named Executive Officers as well as providing context for the tabular disclosure provided in the executive compensation tables below. Our Named Executive Officers for 2020 include: +Name +Title +Christopher A. Wright +Chairman of the Board and Chief Executive Officer +Michael Stock +Chief Financial Officer and Treasurer +Ron Gusek +President +R. Sean Elliott +Vice President, General Counsel and Corporate Secretary +Ryan T. Gosney +Chief Accounting Officer +2020 Compensation Overview and COVID Compensation Reductions +In January 2020, the Compensation Committee recommended, and the Board approved, the following compensation-related actions for our Named Executive Officers for fiscal year 2020, further detailed below: +• Base Salaries : The 2020 base salaries for each Named Executive Officer were initially raised by 2% from 2019. +• Annual Incentive Awards : The bonus target for annual incentive awards were initially the same targets used for 2019 based on the achievement of specific Company performance objectives. +• Long-Term Incentive Compensation : The long-term incentive compensation included both time-based awards, vesting ratably over a three-year period, and performance-based awards, with three year cliff vesting. +Beginning in March 2020, the COVID-19 pandemic emerged and put significant downward pressure on the global economy and oil demand, which resulted in the most abrupt curtailment of frac activity ever. In April 2020, we announced strategic actions to align our cost structure with demand for frac services. As part of that effort, the Named Executive Officers voluntarily requested, and the Compensation Committee and Board approved, the following changes to the compensation actions previously established in January 2020: +• Cancellation of Base Salary Raise . The 2% raise in base salaries for the Named Executive Officers was cancelled. +• Reduction in 2019 Base Salary Amounts. The 2019 base salary in effect for each Named Executive Officer was reduced by 30% from April 2020 through December 2020. In addition, during the months of May, June and July of 2020, the Named Executive Officers voluntarily agreed to decrease these reduced base salary levels by an additional 50%. While the Named Executive Officers continued to work full time from May through July 2020, they further reduced their base salaries during this period to participate in the effects of the Company’s furlough program. +• Cancellation of Annual Incentive Awards . The 2020 Annual Incentive Awards, including the discretionary bonus opportunity for each Named Executive Officer, were cancelled. +Effective January 1, 2021, and in light of improving business conditions, base salaries for Named Executive Officers returned to the levels established in January 2019. The Compensation Committee has not approved Annual Incentive Awards for the Named Executive Officers for 2021, but expects to consider approval of these awards at a later time during the year using an award structure similar to the one used in 2019. +2020 Say on Pay +At our 2020 annual meeting of stockholders, our stockholders were asked to approve, on a non-binding, advisory basis, the compensation of our Named Executive Officers, as reported in our 2020 proxy statement (“ Say on Pay ”). In 2020, our stockholders overwhelming approved the compensation of our Named Executive Officers, with over 98% of the votes cast in favor of such practices. The Compensation Committee and the Board viewed the results of the Say on Pay vote and, given the strong stockholder support for the compensation of our Named Executive Officers in 2020, believe that no significant changes to our compensation program were warranted as a result of this vote. As discussed in more detail in “ Proposal 3: Advisory Vote to Approve the Compensation of the Company’s Named Executive Officers ,” the Board has recommended that stockholders vote, on a non-binding advisory basis, to approve the compensation of our Named Executive Officers, as described below. +15 +Compensation Best Practices +The Company’s compensation program has been designed to support a strong governance model. Key el ements of the program in support of this objective are set forth in the chart below: +What We Do +What We Don’t Do +✓ +Determine annual incentive compensation with the majority of the potential payment based upon the achievement of pre-established performance goals +x +x +x +x +x +x +x +No excise tax gross ups +No single-trigger severance +No excessive perquisites +No short-term or speculative trading of Company stock +No re-pricing of incentive awards +No supplemental retirement plans +No guaranteed bonuses or uncapped incentives +✓ +Generally target the market median for total compensation +✓ +Use an independent compensation consultant +✓ +Hold regular executive sessions of the Compensation Committee without management present +✓ +Base a portion of the long-term incentives upon our performance relative to peers +Process for Setting Compensation and Role of Compensation Consultant +At the beginning of each year, the Compensation Committee engages an independent executive compensation consulting firm in order to provide independent and objective market compensation data, conduct compensation analysis, recommend plan design changes and advise on compensation related risks. The Compensation Consultant acts solely at the direction of the Compensation Committee and not at the direction of the Company’s management team. During 2020, the Compensation Committee engaged Longnecker and Associates as such compensation consultant (the “ Compensation Consultant ”). The Compensation Consultant compiles compensation surveys for review by the Compensation Committee and management. After review of the Compensation Consultant’s surveys, management provides recommendations of compensation for our Named Executive Officers to the Compensation Committee. Such recommendations are generally based upon the guidance of the Compensation Consultant and the performance of our management as a team. The Compensation Committee then reviews management’s recommendation with the ability to ask questions of both management and the Compensation Consultant and may conduct an executive session as needed to discuss compensation. The Compensation Committee and Board collectively have the final authority to make all decisions regarding compensation. +The Compensation Consultant also assists the Compensation Committee with the determination of our Peer Group, as described below, and design of our annual incentive program and long-term incentive awards. Using the independence factors established by the SEC and the NYSE, the Compensation Committee determined that the Compensation Consultant’s work did not raise any conflicts of interest, and they are considered an independent consulting firm. +Competitive Market Position and Peer Group +To further emphasize the alignment between Company performance and executive pay and to ensure compensation is competitive, for 2020 the Compensation Committee initially targeted the 50 th percentile for total compensation (base salary and short-term and long-term incentives), as reflected by various sources of compensation data (collectively, “ Market Data ”). The Market Data provided to the Compensation Committee by the Compensation Consultant includes compensation information from our Peer Group (as defined below) as well as other broad-based compensation survey sources selected by the Compensation Consultant. Although the Compensation Committee used the Market Data to inform its decisions regarding the form and amount of compensation initially designed for our Named Executive Officers in 2020, the Compensation Committee also considered other factors such that the compensation actually received by our Named Executive Officers is not exclusively reflective of the Market Data. For example and as explained above, in light of the severe downturn in the frac industry during 2020, the Compensation Committee took several actions to reduce the 2020 compensation for Named Executive Officers. As a result of these actions, the total compensation received by the Named Executive Officers for 2020 did not align with the 50 th percentile target for compensation. +For purposes of setting 2020 compensation, the peer group companies (our “ Peer Group ”) used by the Compensation Consultant and the Compensation Committee included the following companies: +Core Laboratories N.V. +Helmerich & Payne, Inc. +Patterson-UTI Energy, Inc. +RPC, Inc. +NexTier Oilfield Solutions Inc. +Exterran Corporation +FTS International, Inc. +ProPetro Holding Corp. +Unit Corporation +Archrock, Inc. +Oil States International, Inc. +16 +Our Peer Group was selected based on companies that broadly represent related drilling and oilfield services businesses and are of reasonably comparable revenue size to the Company. While some of these companies have larger market capitalizations, these companies represent the market in which we most directly compete for qualified professionals. As a whole, our Peer Group reflects companies with related operations, of reasonably similar size, and with which we compete for talent. +Objectives of Compensation +The goal of the Company’s compensation program is to help attract and retain qualified executive talent and to strengthen the alignment between executives and stockholders’ interests, enhancing stockholder value. To achieve this goal, the Compensation Committee’s decisions are guided by the following principles: provide a competitive compensation package; relate compensation to the performance of the Company and the individual; and align employee objectives with the objectives of stockholders by encouraging executive stock ownership. +In order to achieve these objectives, the Compensation Committee has created a compensation package that combines current and deferred cash compensation with equity-based compensation. The Company’s compensation program for executive officers consists of the following items, although as described above, not all of these elements of compensation were paid to Named Executive Officers for 2020: +* base salary; +* performance-based annual incentive payments under the Liberty Oilfield Services Inc. Long Term Incentive Plan (“ LTIP ”), which in 2020 were initially based upon the Company’s adjusted pre-tax earnings per share (“ Pre-Tax EPS ”), return on capital employed (“ ROCE ”), the Company’s adjusted ROCE (ROCE revised to a standardized calculation as described herein) (“ Adjusted ROCE ”) as compared to the Adjusted ROCE of a peer group of companies (such comparison, “ Comparative ROCE ”) and personal performance; +* long-term equity awards under our LTIP, consisting of both time-based and performance-based restricted stock units; and +* matching and discretionary contributions under the Liberty Oilfield Services 401(k) Savings Plan. +The Compensation Committee structures executive total direct compensation to emphasize performance through the annual incentive program and long-term incentives. The Compensation Committee believes that the compensation mix should strike a balance promoting long- term returns without motivating or rewarding excessive or inappropriate risk-taking. +Elements of Compensation +2020 Pay Mix +Our compensation program is designed so that the higher an executive’s position in the Company, the greater the percentage of compensation is contingent on the Company’s performance. The Company believes that having a significant portion of our Named Executive Officers’ compensation at risk better aligns their interests with the long-term interests of the Company and its stockholders. A majority of our Named Executive Officers total target direct compensation for fiscal year 2020 was variable, at approximately 87% for our Chief Executive Officer and averaging 79% for our other Named Executive Officers. The following charts illustrate the total target mix of direct compensation for our Named Executive Officers for fiscal year 2020 and does not include annual cash incentive compensation, as this program was cancelled for 2020. +17 +Base Salary +Each Named Executive Officer’s base salary is a fixed component of compensation for performing specific job duties and functions. At the start of 2020, based on the analysis provided by the Compensation Consultant and the recommendation of the Compensation Committee, the Board increased the base salaries of our Named Executive Officers by 2%, effective April 1, 2020, to reflect cost of living adjustments. These base salary increases were less than those recommended by the Compensation Consultant. However, in March 2020, in light of marketplace conditions, our Named Executive Officers voluntarily requested the proposed base salary raises be cancelled and a temporary reduction of their existing base salaries of 30% become effective April 1, 2020. These reductions were approved by both the Compensation Committee and the Board. On April 21, 2020, at the request of the Named Executive Officers, the Compensation Committee and the Board approved a fu rther reduction of 50% from the reduced salary amounts for the months of May, June and July of 2020. Beginning in August 2020, the base salaries of the Named Executive Officers were reverted to 100% of the reduced amount that was effective in April. Specifically, the adjusted base salaries for each Named Executive Officer are as follows for 2020: +Name +2019 Base Salary (1) +Revised Reduced +Salary–Effective +April 1, 2020 (2) +Annualized Salary +May, June, July +2020 +Christopher A. Wright +$612,000 +$428,400 +$214,200 +Michael Stock +$408,000 +$285,600 +$142,800 +Ron Gusek +$408,000 +$285,600 +$142,800 +R. Sean Elliott +$367,200 +$257,040 +$128,520 +Ryan T. Gosney +$275,400 +$192,780 +$   96,390 +(1) These base salary amounts were effective January 1 to March 31, 2020. +(2) These revised reduced salary amounts were effective April 1 to April 30, 2020 and again August 1 to December 31, 2020. +Effective January 1, 2021, the base salaries for the Named Executive Officers returned to 100% of the 2019 Base Salary amounts . +Annual Incentive Award +In January 2020, based on the analysis provided by the Compensation Consultant and the recommendation of the Compensation Committee, the Board established performance metrics and hurdles for our 2020 annual incentive awards that are focused on the results of adjusted Pre-Tax EPS, ROCE and Comparative ROCE. The Compensation Consultant and Compensation Committee recommended, and the Board approved, maintaining an element of discretion in the annual incentive for our Named Executive Officers in order to provide the Compensation Committee and the Board the flexibility to respond to specific events that are relevant to the Named Executive Officer’s performance during the year. No payout percentage would be earned for a metric if the actual Company performance of that metric was below the threshold level set for that metric. Payouts for performance between threshold, target and maximum would have been calculated using straight line interpolation. The overall payout amount for each Named Executive Officer is capped at 200% of each Named Executive Officer’s target incentive award. Although our Named Executive Officers provided a strong performance in 2020, given the challenging market, in March 2020, each Named Executive Officer voluntarily agreed, and the Compensation Committee and Board approved, the cancellation of 2020 Annual Incentive Awards. +Long-Term Incentive Compensation +We maintain the LTIP in order to incentivize individuals providing services to us or our affiliates. In 2020, following recommendations by the Compensation Consultant and our Compensation Committee, our Board granted both time-based and performance-based restricted stock units (“ RSUs ”), each which represent the right to receive shares of our Class A Common Stock following the applicable vesting period. The Compensation Committee has considered the use of other forms of equity awards, including restricted stock and stock options, and ultimately determined to use RSUs given that they have a less dilutive effect than stock options and do not require the issuance of actual shares of Class A Common Stock unless and until vesting conditions are met. For 2020, the grant date value of RSUs for the Named Executive Officers as a group is below the 50 th percentile based on Market Data, as management recommended a one-time reduction in the value of RSUs granted in order to account for a reduction in stock price since year over year. The Compensation Committee and our Board determined that a combination of time-based and a performance-based vesting approach was appropriate given the Company’s desire to provide our Named Executive Officers with a long-term retention-focused award that also aligns the interests of our Named Executive Officers with those of our stockholders while at the same time furthering the Company’s pay-for-performance philosophy. +For 2020, one-half of the RSUs awarded to Messrs. Wright, Stock and Gusek vest ratably over a three-year period, and one-half vests at the end of a three-year performance period based on the Company’s performance against its peers. Messrs. Elliott and Gosney received RSU awards with similar time and performance-based vesting conditions for 2020, except that the mix for their awards was 67% time-based and 33% performance-based. +18 +Performance-based RSUs provide the Named Executive Officer the right to receive an amount ranging from 0% to 200% of the target performance-based RSUs granted based on the Company’s Comparative ROCE performance during the three-year performance period, subject to the continued employment of the Named Executive Officer. Comparative ROCE is determined by comparing and ranking the Company’s Adjusted ROCE against the Adjusted ROCEs of a group of peer companies (such peer group, the “ ROCE Peer Group ”). Our Adjusted ROCE and the ROCE Peer Group Adjusted ROCEs for a calendar year are calculated and then ranked in order of highest to lowest, with the highest Adjusted ROCE being ranked 1 of 10, and the lowest Adjusted ROCE ranked 10 of 10. +The ROCE Peer Group is reviewed and set each year, provided that the Compensation Committee reserves the right to recommend, and the Board to make, substitutions and revisions to the ROCE Peer Group throughout the year. While some companies in the ROCE Peer Group may overlap with companies in Peer Group, the focus of the ROCE Peer Group is to provide a metric by which the effectiveness of capital deployment can be measured. Accordingly, the ROCE Peer Group focuses more particularly on other companies that have capital needs that are similar to those of the Company. The Peer Group tends to focus and include companies based on the relative size of the peers based on metrics such as revenue and market capitalization. The ROCE Peer Group also utilizes the S&P 500 to provide a broader measure of the effectiveness of deployment of capital across various industries. The 2020 ROCE Peer Group consists of the following companies: +Halliburton +Nine Energy Service Inc. +Helmerich & Payne, Inc. +NexTier Oilfield Solutions Inc. +Oil States International, Inc. +Patterson-UTI Energy, Inc. +ProPetro Holding Corp. +RPC, Inc. +S&P 500 +After the end of the three-year performance period, the Adjusted ROCE calculations of each entity for each year shall be averaged in order to obtain an average Adjusted ROCE calculation for the entire three year period. The entities in the ROCE Peer Group will be arranged (highest to lowest) by their averaged Adjusted ROCE, excluding the Company. The Company’s rank and award payout percentage will be interpolated between the entity with the next highest average Adjusted ROCE and the entity with the next lowest average Adjusted ROCE as follows: +Comparative ROCE +Ranking of Company Adjusted ROCE +against ROCE Peer Group +Payout Percentage of +Target Award +1 of 10 +200% +2 of 10 +175% +3 of 10 +150% +4 of 10 +125% +5 of 10 +100% +6 of 10 +75% +7 of 10 +50% +8 of 10 +0% +9 of 10 +0% +10 of 10 +0% +Employment, Severance and Change in Control Agreements +The Company has entered into a change in control agreement with each of Mr. Elliott and Mr. Gosney (the “ Change in Control Agreements ”). At the request of the other executive officers, all who have accumulated vested equity interests in the Company prior to the time of the IPO, and the value of such equity interests would likely provide adequate benefits in the event of a change in control transaction, no such change of control agreements have been executed for those officers. +Each Change in Control Agreement provides severance benefits in the event the executive officer’s employment is terminated without cause or the executive officer resigns for good reason within 18 months following a change in control , as described in more detail below under “ Potential Payments Upon Termination or Change in Control—Change in Control Agreements .” The benefits provided to the executive officer in the Change in Control Agreements were primarily based on the recommendation of the Compensation Consultant and Peer Group median data provided at the time the Change in Control Agreements were executed. +We have not entered into any other employment, severance or change in control agreements with any of our Named Executive Officers. +19 +Other Compensation Elements +401(k) Plan. We currently maintain a retirement plan intended to provide benefits under Section 401(k) of the Internal Revenue Code of 1986, as amended (the “ Code ”) under which employees, including our Named Executive Officers, are allowed to contribute portions of their base compensation to a tax-qualified retirement account under the Liberty Oilfield Services 401(k) Savings Plan. We provide matchi ng contributions at a rate of $1.00 for each $1.00 of employee contribution, subject to a cap of the lower of (i) 6% of the employee’s salary and (ii) the applicable contribution limits under the Code. In light of marketplace conditions, matching contributions were suspended from April 2020 through December 2020, and resumed in January 2021. +Pension and Nonqualified Deferred Compensation. We have not maintained, and do not currently maintain, a defined benefit pension plan or nonqualified deferred compensation plan. +Perquisites and Other Benefits . We provide limited perquisites to our Named Executive Officers. For example, none of our Named Executive Officers receive car allowances or Company-sponsored country club memberships. +Anti-Hedging and Pledging Policy. Our Insider Trading Policy generally prohibits our directors, employees and officers from hedging and pledging of Company securities by providing that hedging or monetization transactions, whether direct or indirect, involving the Company’s securities and the pledging of Company securities as collateral are prohibited. Short term exceptions to this prohibition (such as temporary margin loans) may be granted depending on specific facts and circumstances. Any exceptions for our directors and officers must be granted by our Audit Committee and will be periodically communicated to the Board. The policy also prohibits transactions involving Company-based derivative securities. +Risk +Assessment +The Compensation Committee reviewed our employee compensation practices and policies and determined that such policies do not encourage excessive or unnecessary risk-taking, and are not likely to have a material adverse effect on the Company. +20 +COMPENSATION COMMITTEE REPORT +The information contained in this Compensation Committee Report shall not be deemed to be “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933, as amended (the “ Securities Act ”), or the Exchange Act, except to the extent that the Company specifically incorporates such information by reference in such filing. +The Compensation Committee reviewed and discussed the Compensation Discussion & Analysis required by Item 402 of Regulation S-K promulgated by the SEC with management of the Company, and, based on such review and discussions, the Compensation Committee recommended to the Board that such Compensation Discussion & Analysis be included in this Proxy Statement and incorporated by reference into the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020. +Compensation Committee of the Board of Directors: +Peter A. Dea, Chairman +Ken Babcock, Member +Cary D. Steinbeck, Member +21 +EXECUTIVE COMPENSATION TABLES +Summary Compensation Table +The following table summarizes the compensation awarded to, earned by or paid to our Named Executive Officers for the fiscal years ended December 31, 2020, 2019 and 2018. +Name & Principal Position +Year +Salary +($) (1) +Bonus +($) (2) +Stock +Awards +($) (3) +Non-Equity +Incentive Plan +Compensation +($) (2) +All Other +Compensation +($) (4) +Total +($) +Christopher A. Wright +Chairman of the Board & +Chief Executive Officer +2020 +428,400 +0 +2,876,014 +0 +5,700 +3,310,114 +2019 +608,769 +150,000 +3,750,207 +851,400 +16,800 +5,377,176 +2018 +575,000 +180,000 +2,981,289 +592,891 +16,500 +4,345,680 +Michael Stock +Chief Financial Officer +& Treasurer +2020 +285,600 +0 +1,278,229 +0 +5,700 +1,569,529 +2019 +405,846 +70,000 +1,666,755 +473,000 +16,800 +2,632,401 +2018 +393,750 +100,000 +1,325,013 +329,384 +16,500 +2,164,647 +Ron Gusek +President +2020 +285,600 +0 +1,278,229 +0 +5,700 +1,569,529 +2019 +405,846 +100,000 +1,666,755 +473,000 +16,800 +2,662,401 +2018 +393,750 +100,000 +1,325,013 +329,384 +16,500 +2,164,647 +R. Sean Elliott +Vice President, General Counsel +& Corporate Secretary +2020 +257,040 +0 +789,119 +0 +5,700 +1,051,859 +2019 +365,262 +72,000 +1,031,320 +340,560 +16,800 +1,825,942 +2018 +357,500 +90,000 +1,093,130 +237,156 +47,678 +1,825,464 +Ryan T. Gosney +Chief Accounting Officer +2020 +192,780 +0 +485,329 +0 +5,700 +683,809 +2019 +273,946 +40,500 +632,853 +191,565 +16,800 +1,155,664 +2018 +266,250 +210,750 +670,781 +133,401 +16,500 +1,297,682 +(1) Salary amounts for the 2020 year reflect the various reductions discussed above within the Compensation Discussion & Analysis. +(2) The amounts reported in the “Non-Equity Incentive Plan Compensation” columns reflect the portion of the annual incentive payouts related to achievement of the Company-wide performance metrics. The portion of the annual incentive payouts related to the discretionary component are reported in the “Bonus” column. +(3) The amounts shown do not reflect compensation actually received by the Named Executive Officer. Rather, amounts set forth in the “Stock Awards” column represent the aggregate grant date fair value of time-based and performance-based restricted stock unit awards computed in accordance with FASB ASC Topic 718 for financial statement reporting purposes by the Company with respect to restricted stock units. A discussion of the assumptions used in this valuation with respect to awards made in fiscal year 2020 may be found in Note 9 to the Company’s financial statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. Performance-based awards are included based on the assumption that they will vest at 100% of the target award, since actual vesting will not be determined until the end of the performance period. The Class A Common Stock that certain of the Named Executive Officers received at the time of the IPO in exchange for their Class B Units in Liberty Holdings have not been included in this column, as there was no grant date fair value or incremental fair value associated with the exchange for accounting purposes in 2018. +(4) For the Named Executive Officers, amounts reported in the “All Other Compensation” column for 2020 reflect discretionary matching contributions earned by each Named Executive Officer pursuant to the Company’s 401(k) plan. +22 +Grants of Plan-Based Awards +The following table provides information for each of our Named Executive Officers regarding plan-based awards granted during fiscal year 2020. +Name +Grant Date +Estimated Future Payouts Under +Non-Equity Incentive Plan Awards (1) +Estimated Future Payouts Under +Equity Incentive Plan Awards (2) +All Other +Stock +Awards: +Number of +Shares of +Stock or +Units +(#) (3) +Grant Date +Fair Value +of Stock +and Option +Awards +($) (4) +Threshold +($) +Target +($) +Maximum +($) +Threshold +(#) +Target +(#) +Maximum +(#) +Christopher A. Wright +360,000 +720,000 +1,440,000 +1/20/2020 +74,741 +149,481 +298,962 +1,438,007 +1/20/2020 +149,481 +1,438,007 +Michael Stock +200,000 +400,000 +800,000 +1/20/2020 +33,218 +66,436 +132,872 +639,115 +1/20/2020 +66,436 +639,115 +Ron Gusek +200,000 +400,000 +800,000 +1/20/2020 +33,218 +66,436 +132,872 +639,115 +1/20/2020 +66,436 +639,115 +R. Sean Elliott +144,000 +288,000 +576,000 +1/20/2020 +13,672 +27,343 +54,686 +263,040 +1/20/2020 +54,686 +526,079 +Ryan T. Gosney +81,000 +162,000 +324,000 +1/20/2020 +8,408 +16,816 +33,632 +161,770 +1/20/2020 +33,634 +323,559 +(1) The amounts shown in these columns reflect the potential threshold, target and maximum payouts with respect to the performance-based financial metrics originally approved under the 2020 annual incentive awards. The amounts reflected herein do not include amounts that may be earned with respect to the discretionary component of the 2020 annual incentive awards. As noted above, the 2020 annual incentive awards, including the discretionary component, were cancelled in light of marketplace conditions. +(2) The amounts shown in these columns reflect the potential threshold, target and maximum number of performance-based RSU awards granted to the Named Executive Officers during fiscal year 2020. +(3) The amounts shown in this column reflect time-based vesting RSU awards granted to the Named Executive Officers during fiscal year 2020. +(4) The amounts shown in this column do not reflect compensation actually received by the Named Executive Officer. Rather, amounts set forth herein represent the aggregate grant date fair value of time-based and performance-based RSUs computed in accordance with FASB ASC Topic 718 for financial statement reporting purposes in fiscal year 2020 by the Company. A discussion of the assumptions used in this valuation with respect to awards made in fiscal year 2020 may be found in Note 9 to the Company’s financial statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. +23 +Outstanding Equity Awards at 2020 Fiscal Year-End +The following table reflects information regarding outstanding equity-based awards held by our Named Executive Officers as of December 31, 2020, which consist of time-based RSU awards and performance-based RSU awards. +Name +Stock Awards +Number of Shares +or Units of Stock +That Have +Not Vested +(#) +Market Value +of Shares +or Units of Stock +That Have +Not Vested +($) (4) +Equity Incentive +Plan Awards: +Number of +Unearned Shares, +Units or Other +Rights That Have +Not Vested +(#) +Equity Incentive +Plan Awards: +Market or Payout +Value of Unearned +Shares, Units or +Other Rights That +Have Not Vested +($) (7) +Christopher A. Wright +49,838 +(1) +513,830 +83,729 +(2) +863,246 +149,481 +(3) +1,541,149 +251,186 +(5) +2,589,728 +298,962 +(6) +3,082,298 +Michael Stock +22,150 +(1) +228,367 +37,213 +(2) +383,666 +66,436 +(3) +684,955 +111,638 +(5) +1,150,988 +132,872 +(6) +1,369,910 +Ron Gusek +22,150 +(1) +228,367 +37,213 +(2) +383,666 +66,436 +(3) +684,955 +111,638 +(5) +1,150,988 +132,872 +(6) +1,369,910 +R. Sean Elliott +13,705 +(1) +141,299 +30,854 +(2) +318,105 +54,686 +(3) +563,813 +45,592 +(5) +470,054 +54,686 +(6) +563,813 +Ryan T. Gosney +8,410 +(1) +86,707 +18,934 +(2) +195,210 +33,634 +(3) +346,767 +27,976 +(5) +288,433 +33,632 +(6) +346,746 +(1) These RSUs granted on April 24, 2018 vest on April 1, 2021, so long as the applicable Named Executive Officer remains employed through such date. +(2) These RSUs granted on January 22, 2019 vest in one-half on each of April 1, 2021 and April 1, 2022, so long as the applicable Named Executive Officer remains employed through such dates. +(3) These RSUs granted on January 20, 2020 vest in one-third increments on each of April 1, 2021, April 1, 2022 and April 1, 2023, so long as the applicable Named Executive Officer remains employed through such dates. +(4) Amounts in this column reflect the value of unvested time-based RSU awards held by the Named Executive Officers, calculated based on the closing price of our Class A Common Stock on December 31, 2020 of $10.31. +(5) These performance-based RSUs granted on January 22, 2019 will vest on April 1, 2022, subject to achievement of the Comparative ROCE performance metrics and the applicable Named Executive Officer’s continued employment through such date. As of December 31, 2020, the performance-based RSUs granted on January 22, 2019 were trending above target, and in accordance with the SEC rules, are reflected in this table at maximum , therefore, the performance-based RSUs may actually vest at a lower amount than reflected in this column. +(6) These performance-based RSUs granted on January 20, 2020 will vest on April 1, 2023, subject to achievement of the Comparative ROCE performance metrics and the applicable Named Executive Officer’s continued employment through such date. As of December 31, 2020, the performance-based RSUs granted on January 20, 2020 were trending above target, and in accordance with the SEC rules, are reflected in this table at maximum, therefore, the performance-based RSUs may actually vest at a lower amount than reflected in this column. +(7) Amounts in this column reflect the value of unvested performance-based RSU awards held by the Named Executive Officers reported in the preceding column calculated based on the closing price of our Class A Common Stock on December 31, 2020 of $10.31. +24 +Option Exercises and Stock Vested +The following table reflects the value received by each Named Executive Officer on the vesting of restricted stock awards and RSU awards during fiscal year 2020. None of our Named Executive Officers held stock option awards during the 2020 year. +Name +Stock Awards +Number of +Shares Acquired +on Vesting +(#) +Value Realized +on Vesting +($) (1) +Christopher A. Wright +91,702 +207,247 +Michael Stock +40,756 +92,109 +Ron Gusek +138,249 +743,362 +R. Sean Elliott +35,985 +81,326 +Ryan T. Gosney +22,081 +49,903 +(1) The amounts in this column reflect the value of the shares in the preceding column based on the closing price of our Class A Common Stock on the applicable vesting date, including the value of any shares withheld for tax withholding purposes. +Pension Benefits and Nonqualified Deferred Compensation +We do not maintain and our Named Executive Officers do not participate in any defined benefit pension plan or nonqualified deferred compensation plan. +Potential Payments Upon Termination or Change in Control +Change in Control Agreements +The Company has entered into Change in Control Agreements with each of Mr. Elliott and Mr. Gosney. For further detail on the Company’s decision to enter into Change in Control Agreements with these Named Executive Officers, see the section titled “ Employment, Severance and Change in Control Agreements ” contained in the Compensation Discussion & Analysis section set forth herein. Each Change in Control Agreement provides that if the Named Executive Officer’s employment is terminated without “cause” or the Named Executive Officer resigns for “good reason” within 18 months following a “change in control,” the Named Executive Officer will be entitled to receive, subject to such Named Executive Officer’s timely execution and non-revocation of a release of claims in favor of the Company: (i) two times the sum of (a) the Named Executive Officer’s annualized base salary for the year in which the termination occurs (or, if greater, that in effect immediately preceding the change in control) plus (b) an amount equal to the higher of (1) the Named Executive Officer’s target annual bonus for year in which the termination occurs or (2) the average of the Named Executive Officer’s target annual bonus for the three most recently completed calendar years; (ii) a pro-rated portion of the Named Executive Officer’s target annual bonus for the calendar year in which the termination occurs; (iii) reimbursement for a portion of the COBRA premiums paid by the executive for continued coverage under the Company’s group health plans for up to 18 months plus a lump sum cash payment equal to six times such monthly amount; and (iv) vesting of all outstanding time-based and performance-based equity awards granted pursuant to any Company long term incentive plan as of the date of termination, with such performance-based equity awards being vested at the higher of target performance or actual performance through the termination date. +For purposes of the Change in Control Agreements, the following terms generally have the meanings set forth below: +• “ Cause ” generally means the Named Executive Officer’s (i) material breach of the Change in Control Agreement or any other agreement with the Company, (ii) material breach of any policy or code of conduct, (iii) violation of any law applicable to the workplace or employment relationship that is materially injurious to the Company, (iv) gross negligence, willful misconduct or willful breach of fiduciary duty, fraud, theft or embezzlement, (v) conviction or indictment, or plea of nolo contendere, to any felony or conviction or plea of nolo contendere to any crime involving moral turpitude, or (vi) willful failure or refusal to substantially perform such Named Executive Officer’s obligations or to follow in any material respect any specific lawful direction from the Company. Clauses (i), (ii), (iii) and (vi) are subject to certain notice and cure rights . +• “ Change in control ” generally means (i) a change in the ownership of the Company, (ii) a change in the effective control of the Company, or (iii) a change in the ownership of a substantial portion of the Company’s assets, in each case, as such phrases are defined under the Treasury regulations promulgated pursuant to Section 409A of the Code. +• “ Good reason ” generally means (i) a material diminution in the Named Executive Officer’s total cash compensation, (ii) a material diminution in the Named Executive Officer’s authority, duties or responsibilities as a whole, (iii) a geographic relocation by more than 50 miles, (iv) a material breach by the Company of the Change in Control Agreement or any other agreement between the Named Executive Officer and the Company, or (v) a failure to timely pay or provide any material payment, benefit or other consideration or compensation owed to the Named Executive Officer, in each case, subject to certain notice and cure rights. +25 +RSU Awards +The RSUs held by our Named Executive Officers under the LTIP will accelerate and become 100% vested upon a termination of the Named Executive Officer’s employment with the Company due to the Named Executive Officer’s death or “disability.” For RSUs that use performance-based vesting, the award will remain outstanding and eligible to be earned based on the Company’s achievement of the applicable performance metrics at the end of the performance period. For purposes of the RSU awards, “disability” means the Named Executive Officer’s inability to perform his duties, after accounting for reasonable accommodation, due to a mental or physical impairment that continues (or can reasonably be expected to continue) for (i) 90 consecutive days or (ii) 180 days out of any 365-day period, which, in either case, shall only be deemed to occur following the written determination by the Company of any such occurrence of disability. +The table below describes and estimates the amounts and benefits each Named Executive Officer would have been eligible to receive upon a termination of his employment in certain circumstances or a change in control, assuming such events occurred as of Dec ember 31, 20 20, the last day of fiscal year 2020. For the purposes of this table, the base salary and target bonus amounts used are those as set by the Compensation Committee and Board in January 2020, and do not give effect to temporary salary reductions and subsequent termination of incentive payments during 2020. The estimated payments are not necessarily indicative of the actual amounts such executive would have received in such circumstances, as such amounts could not be known with certainty until the applicable event occurred. The table excludes compensation amounts accrued through December 31, 2020 that would be paid in the normal course of continued employment, such as accrued but unpaid salary and vested account balances under our retirement plans that are generally available to all of our salaried employees. Where applicable, the information in the table uses a price per share for our Common Stock of $10.31, the closing price on December 31, 2020 (the “ Year-End Closing Price ”). Generally, payment of severance benefits to a Named Executive Officer following termination of employment is subject to such officer’s timel y execution and non-revocation of a release of claims in favor of the Company. +Name +Change in +Control +($) +Death/ +Disability +($) +Termination +without Cause or +Resignation for +Good Reason on or +within 18 Months +Following a +Change in Control +($) +Christopher A. Wright +Equity Award Acceleration (1) +— +8,590,251 +— +Michael Stock +Equity Award Acceleration (1) +— +3,817,886 +— +Ron Gusek +Equity Award Acceleration (1) +— +3,817,886 +— +R. Sean Elliott +Cash Severance (2) +— +— +1,814,400 +Benefit Continuation (3) +— +— +28,032 +Equity Award Acceleration (1) +— +2,057,084 +2,057,084 +Ryan Gosney +Cash Severance (2) +— +— +1,158,300 +Benefit Continuation (3) +— +— +48,240 +Equity Award Acceleration (1) +— +1,263,863 +1,263,863 +(1) The amounts reported in these rows reflect the value of time-based RSU and performance-based RSU awards that would accelerate in connection with the applicable event, calculated based on the Year-End Closing Price. For purposes of the performance-based RSUs, these amounts reflect an assumed achievement of maximum performance, as the performance-based RSUs were trending above target as of December 31, 2020. +(2) The amounts reported in these rows reflect the full amount of each Named Executive Officer’s target annual incentive award for 2020, as the pro-ration provided for under the Change in Control Agreements would result in the full amount of such target annual incentive awards being payable as of December 31, 2020. +(3) The amounts reported in these rows are calculated based on the premiums in effect as of December 2020, which are assumed for purposes of this table to remain the same throughout the applicable benefit reimbursement period. +26 +DIRECTOR COMPENSATION +We have adopted a non-employee director compensation program that is applicable to each of our non-employee directors. The Compensation Consultant also conducted an analysis of market-competitive total director compensation (annual retainers, meeting fees and equity awards) using our Peer Group as a comparative metric. Pursuant to this program, during 2020 each non-employee director was entitled to receive the following compensation for their service on our Board: +* A cash retainer of $65,000 per year, payable quarterly in arrears, which amount was voluntarily reduced by the Board by 30% from April 1, 2020 until December 31, 2020 in light of marketplace conditions; +* An additional cash retainer of $20,000 per year, payable quarterly in arrears if such non-employee director serves as the chairperson of our Audit Committee; +* An additional cash retainer of $15,000 per year, payable quarterly in arrears if such non-employee director serves as the chairperson of our Compensation Committee; +* An additional cash retainer of $10,000 per year, payable quarterly in arrears if such non-employee director serves as the chairperson of a Nominating and Governance Committee; +* An additional cash retainer of $20,000 per year, payable quarterly in arrears if such non-employee director serves as the Lead Director of the Company; +* An additional payment of $1,500 for each Board meeting attended in-person by such non-employee director; and +* Either: +(a) annual equity based compensation in the form of RSUs with an aggregate grant date value of $125,000, subject to the terms of the LTIP and the award agreement pursuant to which such award is granted. The award shall be subject to a 12-month vesting period, unless otherwise determined by the Board. The annual grant shall be made automatically on January 2nd of each year, using the 30 day average trading price of the Company’s Class A Common Stock prior to the date of grant to determine the number of units to be granted; or +(b) an additional cash payment of $125,000 per year, payable quarterly in arrears. +Beginning in 2021, the amount of equity-based compensation in item (a) has been increased to $150,000, and the amount of cash in item (b) has been reduced to $100,000. This change was made by the Board in October 2020 in response to a recommendation from the Compensation Committee and the Compensation Consultant in order to better align with marketplace practices to incentivize the use of restricted equity where a director is able to elect cash or equity as a form of compensation. +Each non-employee director shall be given an opportunity to elect whether they would like to receive item (a) or (b) above prior to the beginning of each year. If a non-employee director joins the Board or otherwise becomes eligible for director compensation during the course of a calendar year, the director will be allowed to make such election upon joining or becoming eligible. If a non-employee director joins the Board during the course of a calendar year, the director will be entitled to receive a prorated RSU award (if so elected) for that year, which shall vest over the remaining portion of the year, unless otherwise determined by the Board. All annual cash payments shall be prorated for partial years of service or eligibility. +In addition, each non-employee director will be reimbursed for out-of-pocket expenses incurred in connection with attending Board and committee meetings. +27 +The table below sets forth the compensation our non-employee directors received for the fiscal year ended December 31, 2020. +Name +Fees Earned +or Paid in Cash +($) +Stock Award +($) (1) +Total +($) +William F. Kimble +93,375 +137,687 +231,062 +Peter A. Dea +193,375 +— +193,375 +Cary D. Steinbeck +178,375 +— +178,375 +Ken Babcock +53,375 +137,687 +191,062 +N. John Lancaster, Jr. (2) +178,375 +— +178,375 +Brett Staffieri (2) +176,875 +— +176,875 +Jesal Shah (2) +176,875 +— +176,875 +Gale A. Norton +63,375 +137,687 +201,062 +(1) The amounts shown do not reflect compensation actually received by the directors. Rather, amounts set forth in the Stock Awards column represent the aggregate grant date fair value of awards computed in accordance with FASB ASC Topic 718 for financial statement reporting purposes in fiscal year 2020 by the Company with respect to restricted stock units. A discussion of the assumptions used in this valuation with respect to awards made in fiscal year 2020 may be found in Note 9 to the Company’s financial statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. As of December 31, 2020, Messrs. Kimble and Babcock and Ms. Norton each held 12,820 unvested RSUs. +(2) Messrs. Lancaster, Staffieri and Shah are Riverstone employees and serve or served on the Board as nominees of Riverstone pursuant to the terms of stockholders agreements. The Company has been informed that Messrs. Lancaster, Staffieri and Shah remit all director compensation that they receive from the Company to Riverstone in accordance with the terms of their employment with Riverstone. Messrs. Lancaster and Shah resigned from the Board effective as of December 31, 2020. +28 +EQUITY COMPENSATION PLAN INFORMATION +The following table sets forth information about our Class A Common Stock that may be issued under equity compensation plans as of December 31, 2020. +Plan Category +Number of defined +securities to be +issued upon exercise +of outstanding +options, warrants +and rights +(a) (1) +Weighted–average +exercise price of +outstanding options, +warrants and rights +(b) (2) +Number of securities +remaining available +for future issuance +under equity +compensation plans +(excluding securities +reflected in +column (a)) +(c) (3) +Equity compensation plans approved by security holders +— +— +— +Equity compensation plans not approved by security holders +3,627,484 +— +8,018,327 +Total +3,627,484 +— +8,018,327 +(1) This column reflects shares of our Class A Common Stock subject to RSU awards granted under the LTIP outstanding and unvested as of December 31, 2020. The performance-based RSUs granted under the LTIP are reflected based on an achievement of maximum performance. No stock options or warrants have been granted under the LTIP. +(2) No stock options have been granted under the LTIP, and the RSU awards reflected in column (a) are not reflected in this column as they do not have an exercise price. +(3) This column reflects the total number of shares of Class A Common Stock remaining available for issuance under the LTIP. +Our only equity compensation plan is the LTIP. The LTIP was approved prior to our IPO but has not been approved by our public stockholders. Please read Note 9 to the Company’s financial statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 for a description of our equity compensation plans. In addition, a detailed description of the terms of the LTIP is available in our registration statement on Form S-1, last filed on January 2, 2018, under the heading “ Executive Compensation—Actions Taken Following Fiscal Year End—Long-Term Incentive Plan .” +29 +CEO PAY RATIO +As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, we are providing the following information about the relationship of the annual total compensation of our employees and the annual total compensation of Christopher A. Wright, our Chief Executive Officer (our “ CEO ”). +For 2020, our last completed fiscal year: +* The total compensation of our median employee was $77,143, as calculated pursuant to the same methodology as that used to determine pay for our CEO in the Summary Compensation Table included above; and +* The tot al compensation of our CEO, as reported in the Summary Compensation Table included above, was $3,310,114. +* Based on this information, for 2020 the ratio of the total compensation of our CEO to the median employee total compensation was reasonably estimated to be 43 to 1. +The pay ratio set forth above is a reasonable estimate calculated in a manner consistent with SEC rules based on our human resources systems of record and the methodology described below. Because the SEC rules for identifying the median employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices, the pay ratio reported by other companies may not be comparable to the pay ratio that we report above, as other companies may have different employment and compensation practices, different types of workforce, and operate in different countries, and may use different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios. To identity the median of the annual total compensation of all our employees, as well as to determine the annual total compensation of our median employee and our CEO, we took the following steps: +✓ We determined that, as of December 31, 2020, our employee population excluding our CEO consisted of approximately 1,911 individuals with all of these individuals located in the United States (as reported in Item 1, Business in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020). This population consisted of our full-time, part-time and temporary employees who received Company benefits, as we do not have seasonal workers. We selected December 31, 2020 as our identification date for determining our median employee because it enabled us to make such identification in a reasonably efficient and economic manner. +✓ We used a consistently applied compensation measure to identify our median employee by comparing the amount of compensation as reported to the Internal Revenue Service on Form W-2 for 2020. +✓ We identified our median employee by consistently applying this compensation measure to all of our employees included in our analysis. Since all of our employees, including our CEO, are located in the United States, we did not make any cost of living adjustments in identifying the median employee. Our median employee for 2020 was a full-time, salaried employee working as a district warehouse manager with annual compensation of $69,375 set forth on such employee’s Form W-2 for 2020. +✓ After we identified our median employee, we combined all of the elements of such employee’s compensation for the 2020 year in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K, resulting in annual total compensation of $77,143. The differences between such employee’s taxable compensation reported on Form W-2 for 2020 of $69,375 and the employee’s annual total compensation calculated pursuant to Regulation S-K include the following adjustments: (i) modification from bonuses paid during 2020 to bonuses earned during 2020, (ii) addition of contributions made by the employee and by the Company on the employee’s behalf to our 401(k) plan for 2020, (iii) addition of the costs of tax deductible employee group health plan premiums and employee contributions to tax deductible flexible spending accounts, and (iv) subtraction of other taxable compensation including compensation for provided housing and that attributable to group term life, short-term and long-term disability benefits. +✓ With respect to the annual total compensation of our CEO, we used the amount reported in the “Total” column of our 2020 Summary Compensation Table included in this Proxy Statement and incorporated by reference under Item 11 of Part III of our Annual Report on Form 10-K for the year ended December 31, 2020. +30 +PROPOSAL 2 — RATIFICATION OF APPOINTMENT OF THE COMPANY’S +INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +The Audit Committee has appointed Deloitte as the Company ’ s independent registered public accounting firm to audit the financial statements of the Company for the fiscal year ending December 31, 2021. The audit of the Company’s consolidated financial statements for the fiscal year ended December 31, 2020 was completed by Deloitte on February 24 , 2021. Deloitte has acted as the Company ’ s independent registered public accounting firm since 2016. +The Board is submitting the appointment of Deloitte for ratification at the Annual Meeting. The submission of this matter for approval by stockholders is not legally required, but the Board and the Audit Committee believe the submission provides an opportunity for stockholders through their vote to communicate with the Board and the Audit Committee about an important aspect of corporate governance. If the stockholders do not ratify the appointment of Deloitte, the Audit Committee will reconsider the appointment of that firm as the Company’s auditors. +The Audit Committee has the sole authority and responsibility to retain, evaluate and replace the Company’s independent auditors, and stockholder ratification of this appointment does not limit the authority of the Audit Committee to change auditors at any time. Representatives of Deloitte are expected to be present at the Annual Meeting and will have an opportunity to make a statement if they so desire and will be available to respond to appropriate questions. +The following table summarizes the aggregate fees billed or expected to be billed by Deloitte for the fiscal years ended December 31, 2020 and 2019. +2020 +2019 +Audit Fees +$ 2,144,560 +$ 2,198,060 +Audit-Related Fees +281,893 +89,580 +Tax Fees +268,526 +326,287 +All Other Fees +— +— +Total Fees +$ 2,694,979 +$ 2,613,927 +Audit Fees +Deloitte’s fees were $1,915,696 in 2020 and $ 2,198,060 in 2019. In 2020, Deloitte’s audit fees related primarily to the integrated annual audit and quarterly reviews of the consolidated financial statements for fiscal year 2020 included in our Annual Report on Form 10-K for the year ended December 31, 2020. In 2019, Deloitte’s audit fees related primarily to the integrated annual audit and quarterly reviews of the consolidated financial statements for fiscal year 2019 included in our Annual Report on Form 10-K for the year ended Decem ber 31, 2019. +Audit-Related Fees +Deloitte’s fees for audit-related services were $211,893 in 2020 and $ 89,580 in 2019. In 2020, audit-related fees related primarily to the Company’s proxy filing for stockholder approval of the OneStim Acquisition and SEC filings in connection with certain TRA exchanges. In 2019, audit-related fees related primarily to shelf registration statements filed in connection with certain TRA exchanges. +Tax Fees +Deloitte’s fees for tax services were $269,226 in 2020 and $ 326,287 in 2019. Tax services primarily involve professional services rendered by Deloitte for tax compliance, tax advice and tax planning. +All Other Fees +Deloitte did not provide any other products and services in 2020 and 2019 and, consequently, there were no other fees incurred. +Before +Deloitte is engaged to render audit or non-audit services, the Audit Committee must pre-approve the engagement. The charter +of the Audit Committee and its pre-approval policy provides that pre-approval is not required if the engagement is entered +into pursuant to pre-approval policies and procedures established by the Audit Committee. The Chairman of the Audit Committee +has the authority to grant pre-approvals, provided such approvals are within the pre-approval policy and presented to the +Audit Committee at a subsequent meeting. The Audit Committee pre-approved all of the fees described in the table set forth +above. The duties of the Audit Committee are described in the charter of the Audit Committee that can be found on the Company’s +website, www.libertyfrac.com , by first clicking “ Investors ” then “ Corporate Governance ” +and proceeding to “ Governance Documents .” +31 +Vote Required +T he affirmative vote of a majority of the shares of Common Stock present in person or represented by proxy at the Annual Meeting and entitled to vote is required to approve this proposal. If you submit a signed proxy card but do not give voting instructions as to how your shares of Common Stock should be voted, your shares will be voted in accordance with the recommendations of our Board stated in this Proxy Statement. +THE AUDIT COMMITTEE AND THE BOARD RECOMMEND VOTING “ FOR ” THE +RATIFICATION OF APPOINTMENT OF DELOITTE AS THE COMPANY’S +INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR +THE FISCAL YEAR ENDING DECEMBER 31, 2021. +32 +AUDIT COMMITTEE REPORT +The information contained in this Audit Committee Report shall not be deemed to be “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act or the Exchange Act, except to the extent that the Company specifically incorporates such information by reference in such filing. +Primary Oversight Responsibilities +Our management is responsible for establishing a system of internal controls, assessing such controls and for preparing our consolidated financial statements in accordance with generally accepted accounting principles. The Audit Committee provides oversight of these management activities. Our independent registered public accounting firm is responsible for auditing our consolidated financial statements in accordance with standards of the United Stated Public Company Accounting Oversight Board (the “ PCAOB ”) and issuing its report based on its audit. +Under the Audit Committee’s charter, the purpose of the Audit Committee is to assist the Board in fulfilling its oversight responsibilities as to, among other duties: (i) the integrity of the Company’s financial statements; (ii) the Company’s compliance with legal and regulatory requirements; (iii) qualifications, independence and performance of the independent registered public accounting firm engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the Company; (iv) effectiveness and performance of the Company’s internal audit function; (v) the annual preparation of this report and publishing this report in the Company’s Proxy Statement for its annual meeting of stockholders or its Annual Report on Form 10-K; and (vi) performing such other functions as the Board may assign to the Audit Committee from time to time. +Oversight of Independent Auditors +In connection with the evaluation, appointment and retention of the independent registered public accounting firm, at least annually the Audit Committee reviews and evaluates the independence and quality control procedures of the independent registered public accounting firm and the experience and qualifications of its senior personnel providing audit services to the Company. Based on this evaluation, the Audit Committee has retained Deloitte as our independent registered public accounting firm for 2021. +2020 Audited Financial Statements +In connection with the preparation of the audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2020: +• The Audit Committee reviewed and discussed the audited financial statements and associated audit with the independent registered public accounting firm and management; +• The Audit Committee discussed with the independent registered public accounting firm the matters required to be discussed by Auditing Standard No. 1301 “Communications with Audit Committees” as adopted by the PCAOB. In general, these auditing standards require the independent registered public accounting firm to communicate to the Audit Committee certain matters that are incidental to the audit, such as any initiation of, or changes to, significant accounting policies, management judgments, accounting estimates and audit adjustments; disagreements with management; the independent registered public accounting firm’s judgment about the quality of our accounting principles; significant audit risks identified and any changes from planned audit strategy; the use of specialists on the audit team; and issues for which the independent registered public accounting firm have consulted outside the engagement team; and +• The Audit Committee has received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the PCAOB regarding the independent registered public accounting firm’s communication with the Audit Committee concerning independence, and has discussed the independent registered public accounting firm’s independence with the independent registered public accounting firm. The Audit Committee also considered whether the independent registered public accounting firm’s provision of non-audit services to us was compatible with maintaining their independence. +Based on the review and discussions noted above, the Audit Committee recommended to the Board that the audited consolidated financial statements of the Company for the year ended December 31, 2020 be included in our Annual Report on Form 10-K filed with the SEC. +Audit Committee of the Board of Directors: +William F. Kimble, Chairman +Cary D. Steinbeck, Member +Gale A. Norton, Member +33 +PROPOSAL 3 — ADVISORY VOTE TO APPROVE THE COMPENSATION OF THE +COMPANY’S NAMED EXECUTIVE OFFICERS +Section 14A(a)(1) of the Exchange Act, which was added to the Exchange Act by Section 951 of the Dodd-Frank Act, affords the stockholders a vote to approve, on a non-binding, advisory basis, the compensation of our Named Executive Officers for the fiscal year ended December 31, 2020 (commonly known as a “ say-on-pay vote ”). This vote is not intended to address any specific item of compensation and is not a vote on our general compensation policies, compensation of the Board, or our compensation policies as they relate to risk management. Section 14A(a)(2) of the Exchange Act requires us to hold a say-on-pay vote at least once every three years, although the Company currently holds such vote annually. +As described more fully in the “ Compensation Discussion & Analysis ” section of this Proxy Statement and the accompanying tabular and narrative disclosures, the Company ’ s compensation policy is designed to attract and retain highly qualified executive officers. The Company’s compensation program seeks to align executive compensation with stockholder value on an annual and long-term basis through a combination of base pay, annual incentives, and certain long-term incentives. Please read the Compensation Discussion & Analysis section of this Proxy Statement for additional details on our executive compensation program. +The Board strongly endorses the Company ’ s executive compensation program and recommends that the stockholders approve on an advisory, non-binding basis, the following resolution: +RESOLVED, that the stockholders approve, on an advisory basis, the compensation of the Company ’ s Named Executive Officers as described in the proxy statement, including the Compensation Discussion & Analysis and the tabular and narrative disclosure cont ained therein. +Vote Required +The approval, on a non-binding basis, of the compensation of our Named Executive Officers requires the affirmative vote of a majority of the shares of Common Stock present in person or represented by proxy at the Annual Meeting and entitled to vote. If you submit a signed proxy card but do not give voting instructions as to how your shares of Common Stock should be voted, your shares will be voted in accordance with the recommendations of our Board stated in this Proxy Statement. +THE BOARD RECOMMENDS VOTING “ FOR ” THE APPROVAL OF +THE COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS. +34 +SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT +The following table sets forth the beneficial ownership of our common stock as of March 2, 2021, by: +* each person known to us to beneficially own more than 5% of any class of our outstanding voting securities; +* each member of our Board and each nominee to our Board; +* each of our Named Executive Officers; and +* all of our directors, director nominees and Named Executive Officers as a group. +Except as otherwise indicated, the persons listed below have sole voting and investment power with respect to all shares of our Common Stock beneficially owned by them, except to the extent this power may be shared with a spouse. All information with respect to beneficial ownership has been furnished by the 5% or more stockholders, directors or Named Executive Officers, as the case may be. Unless otherwise noted, the mailing address of each listed beneficial owner is 950 17th Street, Suite 2400, Denver, Colorado 80202. A s o f March 2, 2021, 165,068,515 shares of our Class A Common Stock were outstanding and 14,472,440 shares of our Class B Common Stock were outstanding. +Shares of Common Stock Beneficially Owned +Class A +Common Stock +Class B +Common Stock (1) +Combined +Voting Power (2) +Number +% +Number +% +Number +% +5% Stockholders +Riverstone/Carlyle Energy Partners IV, L.P. (3) +8,495,239 +5.1 +% +11,109,757 +76.8 +% +19,604,996 +10.9 +% +Schlumberger Limited (4) +66,326,134 +40.2 +% +— +— +66,326,134 +37.0 +% +T. Rowe Price Associates, Inc. (5) +14,262,398 +8.7 +% +— +— +14,262,398 +7.9 +% +FMR LLC (6) +8,334,514 +5.0 +% +— +— +8,334,514 +4.6 +% +Directors and Named Executive Officers: +Christopher A. Wright (7) +3,696,188 +2.2 +% +— +— +3,708,088 +2.1 +% +Michael Stock (7) +1,206,178 +* +— +— +1,249,178 +* +Ron Gusek (7) +1,279,112 +* +— +— +1,354,112 +* +R. Sean Elliott (7) +83,133 +* +— +— +83,133 +* +Ryan T. Gosney (7) +53,727 +* +— +— +53,727 +* +Cary D. Steinbeck (8) +399,966 +* +— +— +399,966 +* +Ken Babcock +91,889 +* +— +— +91,889 +* +William F. Kimble +33,066 +* +— +— +33,066 +* +Peter A. Dea +20,246 +* +— +— +20,246 +* +Gale A. Norton +16,885 +* +— +— +16,885 +* +Brett Staffieri +— +— +— +— +— +— +Simon Ayat +— +— +— +— +— +— +James R. McDonald +— +— +— +— +— +— +Directors and Named Executive Officers +as a group (13 persons) +6,880,390 +4.2 +% +— +— +7,038,390 +3.8 +% +(1) Under the Liberty LLC Agreement (as defined herein), each Liberty Unit Holder (as defined herein) has, subject to certain limitations, the right to cause Liberty LLC (as defined herein) to acquire all or a portion of its Liberty LLC Units (as defined herein) for, at Liberty LLC’s election, (i) shares of our Class A Common Stock at a redemption ratio of one share of Class A Common Stock for each Liberty LLC Unit redeemed, subject to conversion rate adjustments for stock splits, stock dividends and reclassification and other similar transactions or (ii) an equivalent amount of cash. In connection with any redemption of Liberty LLC Units pursuant to the Redemption Right or the Call Right (as defined below), the corresponding number of shares of Class B Common Stock will be cancelled. See “ Certain Relationships and Related Person Transactions – Liberty LLC Agreement ” set forth herein. Beneficial ownership of Liberty LLC Units is not reflected as beneficial ownership of shares of our Class A Common Stock for which such units may be redeemed. +(2) Represents percentage of voting power of our Class A Common Stock and Class B Common Stock voting together as a single class. +(3) Based on information set forth in a Schedule 13D/A filed with the SEC on February 11, 2021 by Riverstone/Carlyle Energy Partners IV, L.P. (“ Riverstone Carlyle ”), R /C Ene rgy IV Direct Partnership, L.P. (“ R/C Direct ”), R/C Liberty Holdings, L.P. (“ R/C Liberty ”) and R/C Energy GP IV, LLC (“ R/C GP ”). In such filing, ( i) Ri verstone Carlyle and R/C GP each reported shared beneficial ownership of an aggregate of 8,495,239 shares of Class A Common Stock and 11,109,757 shares of Class B Common Stock, (ii) R/C Direct reported shared beneficial ownership of 5,908,895 shares of Class A Common Stock and (iii) R/C Liberty reported shared beneficial ownership of 2,586,344 shares of Class A Common Stock and 11,109,757 shares of Class B Common Stock. The shares directly owned by R/C Direct and R/C Liberty are deemed to be beneficially owned by Riverstone/Carlyle, their general partner, and all of such shares are deemed to be beneficially owned by R/C GP, the general partner of Riverstone/Carlyle. The business address for each of these entities is c/o Riverstone Holdings, 712 Fifth Avenue, 36th Floor, New York, NY 10019. +35 +(4) Based on information set forth in a Schedule 13D filed with the SEC on January 11, 2021 by Schlumberger N.V. (Schlumberger Limited), Schlumberger B.V., Schlumberger Holdings Corporation (“ SHC ”) and Schlumberger Technology Corporation (“ Schlumberger ”). As reported in such filing, Schlumberger directly holds 66,326,134 shares of Class A Common Stock. Since SHC controls Schlumberger, it is deemed to beneficially own the shares held directly by Schlumberger. Since Schlumberger B.V. controls SHC, it is deemed to beneficially own the shares held directly by Schlumberger. Since Schlumberger Limited controls Schlumberger B.V., it is deemed to beneficially own the shares held directly by Schlumberger. The business address for each of these entities is 5599 San Felipe, 17th Floor Houston, Texas 77056. +(5) Based on information set forth in a Schedule 13G/A filed with the SEC on February 10, 2021, by T. Rowe Price Associates, Inc., in which it reported that T. Rowe Price Associates, Inc. has sole voting power as to 3,929,920 shares of Class A Common Stock and sole dispositive power as to 14,262,398 shares of Class A Common Stock. The principal business address of T. Rowe Price Associates, Inc. is 100 E. Pratt Street, Baltimore, MD 21202. +(6) This information is based solely on a Schedule 13G/A filed with the SEC on February 10, 2021, by FMR LLC and Abigail P. Johnson, in which it reported that FMR LLC has sole voting power as to 588,459 shares of Class A Common Stock and shared power as to 8,334,514 shares of Class A Common Stock and Ms. Johnson has no voting power, and shared dispositive power as to 8,334,514 shares of Class A Common Stock. The principal business address of FMR LLC is 245 Summer Street, Boston, MA 02210. +(7) Shares of Class A Common Stock held by Messrs. Wright, Stock, Gusek, Elliott and Gosney include 141,529, 62,901, 62,901, 47,360 and 29,088 shares of stock, respectively, that will be received upon the vesting of RSUs within 60 days of February 24, 2021. +(8) Includes 369,915 shares of Class A Common Stock held by the Steinbeck Family Trust and 9,805 shares of Class A Common Stock received by Cary Dustin Steinbeck & Melissa Maucione Crimson Steinbeck TR on May 7, 2019 upon a distribution by Laurel Road LLC to its members. Mr. Steinbeck has voting and dispositive power over these shares. +* Less than 1.0%. +36 +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +Policies and Procedures for Review of Related Party Transactions +A “ Related Party Transaction ” is a transaction, arrangement or relationship in which the Company or any of its subsidiaries was, is or will be a participant, the amount of which involved exceeds $120,000, and in which any related person had, has or will have a direct or indirect material interest. A “ Related Person ” is: +♦ any person who is, or at any time during the applicable period was, one of our executive officers or one of our directors; +♦ any person who is known by us to be the beneficial owner of more than 5% of our Class A Common Stock; +♦ any immediate family member of any of the foregoing persons, which means any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law of a director, executive officer or a beneficial owner of more than 5% of our Class A Common Stock, and any person (other than a tenant or employee) sharing the household of such director, executive officer or beneficial owner of more than 5% of our Class A Common Stock; and +♦ any firm, corporation or other entity in which any of the foregoing persons is a partner or principal or in a similar position or in which such person has a 10.0% or greater beneficial ownership interest. +Our Board adopted a written related party transactions policy in connection with the IPO. Pursuant to this policy, our Audit Committee reviews all material facts of all Related Party Transactions and either approves or disapproves entry into the Related Party Transaction, subject to certain limited exceptions. The determination of the Audit Committee is documented in the Audit Committee’s minutes. In determining whether to approve or disapprove entry into a Related Party Transaction, our Audit Committee takes into account, among other factors, the following: (i) whether the Related Party Transaction is on terms no less favorable than terms generally available to an unaffiliated third-party under the same or similar circumstances and (ii) the extent of the Related Person’s interest in the transaction. Further more, the policy requires that all Related Party Transactions required to be disclosed in our filings with the SEC be so disclosed in accordance with applicable laws, rules and regulations. +Related Party Transactions +The following is a description of transactions entered into, or in effect, after January 1, 2020 to which we have been a party, in which the amount involved in the transaction exceeds $120,000, and in which any of our directors, executive officers or beneficial owners of more than 5% of our voting securities, or affiliates or immediate family members of any of our directors, executive officers or beneficial owners of more than 5% of our voting securities, had or will have a direct or indirect material interest. We believe the terms obtained or consideration that we paid or received, as applicable, in connection with the transactions described below were comparable to terms available or the amounts that would be paid or received, as applicable, from unrelated third parties. +Liberty LLC Agreement +We entered into the Second Amended and Restated Limited Liability Company Agreement of Liberty Oilfield Services New HoldCo LLC (“ Liberty LLC ”) (the “ Liberty LLC Agreement ”) in connection with the closing of our IPO, which provides for limitations on the ability of Liberty Unit Holders to transfer their units in Liberty LLC (the “ Liberty LLC Units ”) and provides the Company, as managing member of Liberty LLC, with the right to impose restrictions (in addition to those already in place) on the ability of Liberty Unit Holders to redeem their Liberty LLC Units pursuant to the Redemption Right (as defined below) to the extent the Company believes it is necessary to ensure that Liberty LLC will continue to be treated as a partnership for U.S. federal income tax purposes. +Redemption Rights +Under the Liberty LLC Agreement, each Liberty Unit Holder has, subject to certain limitations, the right (the “ Redemption Right ”) to cause Liberty LLC to acquire all or a portion of its Liberty LLC Units for, at Liberty LLC’s election, (i) shares of our Class A Common Stock at a redemption ratio of one share of Class A Common Stock for each Liberty LLC Unit redeemed, subject to conversion rate adjustments for stock splits, stock dividends and reclassification and other similar transactions or (ii) an equivalent amount of cash. Alternatively, upon the exercise of the Redemption Right, the Company (instead of Liberty LLC) has the right (the “ Call Right ”) to, for administrative convenience, acquire each tendered Liberty LLC Unit directly from the redeeming Liberty Unit Holder for, at the Company’s election, (x) one share of Class A Common Stock or (y) an equivalent amount of cash. In addition, upon a change of control of the Company, the Company has the right to require each holder of Liberty LLC Units (other than the Company) to exercise its Redemption Right with respect to some or all of such unit holder’s Liberty LLC Units. In connection with any redemption of Liberty LLC Units pursuant to the Redemption Right or the Call Right, the corresponding number of shares of Class B Common Stock will be cancelled. As the Liberty Unit Holders redeem their Liberty LLC Units, our membership interest in Liberty LLC will be correspondingly increased, the number of shares of Class A Common Stock outstanding will be increased, and the number of shares of Class B Common Stock outstanding will be reduced. +37 +Distributions and Allocations +Under the Liberty LLC Agreement, the Company has the right to determine when distributions will be made to the holders of Liberty LLC Units and the amount of any such distributions. If the Company authorizes a distribution, such distribution will be made to the holders of Liberty LLC Units generally on a pro rata basis in accordance with their respective percentage ownership of Liberty LLC Units. +Liberty LLC will allocate its net income or net loss for each year to the holders of Liberty LLC Units pursuant to the terms of the Liberty LLC Agreement, and the holders of Liberty LLC Units, including the Company, will generally incur U.S. federal, state and local income taxes on their share of any taxable income of Liberty LLC. Net income and losses of Liberty LLC generally will be allocated to the holders of Liberty LLC Units on a pro rata basis in accordance with their respective percentage ownership of Liberty LLC Units, subject to requirements under U.S. federal income tax law that certain items of income, gain, loss or deduction be allocated disproportionately in certain circumstances. To the extent Liberty LLC has available cash and subject to the terms of any debt instruments, the Company intends to cause Liberty LLC to make (i) generally pro rata distributions to the holders of Liberty LLC Units, including the Company, in an amount sufficient to allow the Company to pay its taxes and to allow it to make payments under the Tax Receivable Agreements (as defined below), (ii) tax advances, which will be repaid upon exercise of the Redemption Right or the Call Right, as applicable, in an amount sufficient to allow each of the Liberty Unit Holders to pay its respective taxes on such holder’s allocable share of Liberty LLC’s taxable income after taking into account certain other distributions or payments received by the Liberty Unit Holders from Liberty LLC or the Company, and (iii) non-pro rata payments to the Company to reimburse it for its corporate and other overhead expenses. +Issuance of Equity +The Liberty LLC Agreement generally provides that at any time the Company issues a share of its Class A Common Stock or any other equity security, the net proceeds received by the Company with respect to such issuance, if any, shall be concurrently invested in Libe rty LLC , and Liberty LLC shall issue to the Company one Liberty LLC Unit or other economically equivalent equity interest. Conversely, if at any time, any shares of Class A Common Stock are redeemed, repurchased or otherwise acquired, Liberty LLC shall redeem, repurchase or otherwise acquire an equal number of Liberty LLC Units held by the Company, upon the same terms and for the same price, as the shares of the Class A Common Stock are redeemed, repurchased or otherwise acquired. +Competition +Under the Liberty LLC Agreement, the members have agreed that Riverstone and its affiliates will be permitted to engage in business activities or invest in or acquire businesses which may compete with our business or do business with our customers. +Dissolution +Liberty LLC will be dissolved only upon the first to occur of (i) the sale of substantially all of its assets or (ii) an election by us to dissolve the company. Upon dissolution, Liberty LLC will be liquidated and the proceeds from any liquidation will be applied and distributed in the following manner: (i) first, to creditors (including to the extent permitted by law, creditors who are members) in satisfaction of the liabilities of Liberty LLC; (ii) second, to establish cash reserves for contingent or unforeseen liabilities; and (iii) third, to the members in proportion to the number of Liberty LLC Units owned by each of them. +Tax Receivable Agreements +In connection with the IPO, on January 17, 2018, the Company entered into two tax receivable agreements, (the “ TRAs ”) with the Liberty Unit Holders and the selling stockholder (each such person and any permitted transferee, a “ TRA Holder ” and together, the “ TRA Holders ”). The TRAs generally provide for the payment by the Company of 85% of the net cash savings, if any, in U.S. federal, state, and local income tax and franchise tax (computed using simplifying assumptions to address the impact of state and local taxes) that the Company actually realizes (or is deemed to realize in certain circumstances) in periods after the IPO as a result, as applicable to each TRA Holder, of (i) certain increases in tax basis that occur as a result of the Company’s acquisition (or deemed acqu isition for U.S. federal income tax purposes) of all or a portion of such TRA Holder’s Liberty LLC Units in connection with the IPO or pursuant to the exercise of the Redemption Right or the Call Right, (ii) any net operating losses available to the Company as a result of the corporate reorganization, and (iii) imputed interest deemed to be paid by the Company as a result of, and additional tax basis arising from, any payments the Company makes under the TRAs. For the year ended December 31, 2020, the Company made TRA payments of $1.9 million and $5.5 million, totaling $7.4 million. These TRA payments were related to tax benefits realized in prior years and for the Company’s carryback of 2019 net operating losses to 2018 taxable income under the CARES Act. +38 +Master Transaction Agreement +On August 31, 2020, the Company, entered into a Master Transaction Agreement (the “ MTA ”) with Schlumberger, Schlumberger Canada Limited, (“ Schlumberger Canada ” and, together with Schlumberger, the “ Schlumberger Parties ”), Liberty LLC, and LOS Canada Operations Inc. (“ Canadian Buyer ”), pursuant to which the Liberty LLC and Canadian Buyer acquired the Schlumberger Parties’ OneStim business in exchange for 57,377,232 shares of Class A Common Stock and a non-interest bearing demand promissory note, which note was satisfied with 8,948,902 shares of Class A Common Stock, resulting in a total of 66,326,134 shares of Class A Common Stock being issued in connection with the transaction. The Schlumberger Parties are affiliated with Messrs. Ayat and McDonald, who are on our Board. The transactions contemplated by the MTA closed on December 31, 2020. +Until December 31, 2024, subject to certain exceptions and as more specifically set forth in the MTA, without the prior written consent of the Company, each of Schlumberger and Schlumberger Canada will not, and will cause each of their respective affiliates (including Schlumberger Limited) not to, directly or indirectly engage in any business or enterprise that is competitive with OneStim within onshore United States and Canada. +On December 31, 2020, in connection with the closing of the transactions contemplated by the MTA, the Company (and/or one or more of its subsidiaries) and the Schlumberger Parties entered into the following agreements, each of which may involve amounts in excess of $120,000: (i) an intellectual property license agreement, whereby the Schlumberger Parties granted to Liberty LLC and the Company exclusive and non-exclusive licenses to certain intellectual property, and Liberty LLC granted to the Schlumberger Parties a non-exclusive license to certain patents acquired by Liberty LLC under the MTA; (ii) an employee matters agreement, pursuant to which the applicable Schlumberger Party agreed to lease employees to the Company or a subsidiary of the Company until March 1, 2021, subject to certain exceptions and extensions; (iii) an alliance agreement whereby Schlumberger and Liberty LLC agreed to collaborate to advance each of their product portfolios and technology offerings; (iv) a transition services agreement whereby Schlumberger or its designee agreed to provide certain back-office, administrative, field operations, supply chain and other specified services to the Company until March 1, 2021, subject to certain exceptions and extensions; and (v) a strategic supply agreement intended to provide the Company with an opportunity to purchase from the various business lines of Schlumberger, products and services with competitive pricing terms for a term not to exceed the term of the non-compete covenant in the MTA discussed above. +Amended and Restated Stockholders Agreement +In connection with the OneStim Acquisition, we entered into an amended and restated stockholders agreement with affiliates of Riverstone, and the Schlumberger Parties. Among other things, the amended and restated stockholders agreement provides the right to designate nominees to our Board as follows: +• so long as Riverstone and its affiliates collectively beneficially own at least the number of shares of Common Stock as such persons owned immediately prior to the OneStim acquisition, Riverstone can designate up to two (2) nominees to our Board; +• so long as Riverstone and its affiliates collectively beneficially own at least 10% of the outstanding shares of our Common Stock, Riverstone can designate up to one (1) nominee to our Board; +• so long as the Schlumberger Parties and its affiliates collectively beneficially own at least 20% of the outstanding shares of our Common Stock, the Schlumberger Parties can designate up to two (2) nominees to our Board; and +• so long as the Schlumberger Parties and their affiliates collectively beneficially own at least 10% of the outstanding shares of our Common Stock, the Schlumberger Parties can designate up to one (1) nominee to our Board. +Pursuant to the amended and restated stockholders agreement, the Schlumberger Parties will not, (i) for a period of nine months from the closing of the OneStim Acquisition, transfer or dispose of (or take other analogous actions in accordance with the terms of the agreement) any economic, voting or other rights in or to their issued shares, other than certain permitted transfers and, (ii) for a period of four years from the closing of the OneStim Acquisition, make any transfer of Common Stock to any direct competitor of the Company or to any person that is subject to, or by virtue of such transfer would become subject to, the reporting obligations under Schedule 13D under the Exchange Act, with respect to Common Stock (the “ Lock-Up and Transfer Restrictions ”). +Pursuant to the amended and restated stockholders agreement, the Schlumberger Parties and their affiliates are subject to customary standstill restrictions in accordance with which such parties will agree not to, among other things, acquire beneficial ownership of any equity securities of the Company or publicly seek or encourage any offer or proposal for a merger or similar transaction involving the Company during the period commencing on the date of the agreement and continuing until the fourth anniversary of the closing of the OneStim Acquisition (the “ Standstill ”). +39 +Pursuant to the amended and restated stockholders agreement, we will be required to take all necessary actions, to the fullest extent permitted by applicable law (including with respect to any fiduciary duties under Delaware law), to cause the election of the nominees designated by either the Riverstone affiliates or the Schlumberger Parties. At any time the members of our Board are allocated among separate classes of directors, (i) the directors designated by the Riverstone affiliates pursuant to the amended and restated stockholders agreement will be to the classes as mutually agreed between us and the Riverstone affiliates, and (ii) the directors designated by the Schlumberger Parties pursuant to the amended and restated stockholders agreement will be to the classes as mutually agreed between us and the Schlumberger Parties. The Riverstone affiliates will be entitled to designate the replacement for any of its Board designees whose service terminates prior to the end of such director’s term. The Schlumberger Parties will be entitled to designate the replacement for any of its Board designees whose service terminates prior to the end of such director’s term. +The amended and restated stockholders agreement will terminate with respect to the Schlumberger Parties at the earliest of (a) such time as the Schlumberger Parties no longer beneficially own at least 10% of the outstanding shares of Common Stock and are no longer subject to the Standstill and the Lock-Up and Transfer Restrictions, (b) such time as the Schlumberger Parties do not beneficially own any shares of Common Stock, and (c) the written agreement of the Schlumberger Parties and the Company terminating the agreement. The amended and restated stockholders agreemen t will terminate with respect to Riverstone at the earliest of (i) such time as Riverstone and its affiliates no longer beneficially own at least 10% of the outstanding shares of Common Stock, and (ii) the delivery of written notice to the Company by Riverstone of the termination of the agreement with respect to Riverstone. +Amended and Restated Registration Rights Agreement +In connection with the OneStim Acquisition, we entered into an amended and restated registration rights agreement with Schlumberger, Schlumberger Canada and each of the other holders identified therein (the “ Holders ”), pursuant to which, among other things, certain Holders, including affiliates of Riverstone, Schlumberger and Schlumberger Canada (the “ Sponsoring Holders ”), have customary demand registration rights and we are obligated to prepare and file a registration statement registering the offer and sale of all of Schlumberger and Schlumberger Canada’s shares of Class A Common Stock. In addition, pursuant to this agreement, the Sponsoring Holders have the right to require us, subject to certain limitations set forth therein, to effect a distribution of any or all of their shares of Class A Common Stock by means of an underwritten offering. We are not obligated to effect any underwritten offering unless the dollar amount of the registrable securities of the Sponsoring Holder(s) demanding such underwritten offering to be included therein is reasonably likely to result in gross sale proceeds of at least $25 million. The amended and restated registration rights agreement also provides Holders with certain customary piggyback registration rights. These registration rights are subject to certain conditions and limitations, including the right of the underwriters to limit the number of shares to be included in a registration or offering and the Company’s right to delay or withdraw a registration statement under certain circumstances. +Indemnification for Officers and Directors +Our certificate of incorporation and bylaws provide indemnification rights to our directors and officers and permit us to purchase insurance on behalf of any officer, director, employee or other agent for any liability arising out of that person’s actions as our officer, director, employee or agent, regardless of whether Delaware law would mandate indemnification. Additionally, we have entered into separate indemnity agreements with our directors and officers to provide additional indemnification benefits, including the right to receive, in advance, reimbursements for expenses incurred in connection with a defense for which the director or officer is entitled to indemnification. We believe that the limitation of liability provisions in our certificate of incorporation, bylaws and the indemnity agreements will facilitate our ability to continue to attract and retain qualified individuals to serve as directors and officers. +Underwriting Agreement +On February 8, 2021, the Company, R/C Energy IV Direct Partnership, L.P. and R/C IV Liberty Holdings, L.P. (together, the “ Riverstone Affiliates ”) and Morgan Stanley & Co. LLC (the “ Underwriter ”), entered into an underwriting agreement (the “ Underwriting Agreement ”), pursuant to which the Riverstone Affiliates agreed to sell to the Underwriter, and the Underwriter agreed to purchase from the Riverstone Affiliates, subject to and upon the terms and conditions set forth therein, an aggregate of 8,700,000 shares of Class A Common Stock of the Company (the “ Offering ”). The Offering closed on February 11, 2021. Pursuant to the Underwriting Agreement, the Riverstone Affiliates also granted the Underwriter a 30-day option to purchase from the Riverstone Affiliates up to 1,305,000 additional shares of Class A Common Stock at the public offering price, less the underwriting discount. The Company will not receive any proceeds from the sale of shares of Class A Common Stock in the Offering. The Underwriting Agreement contains customary representations, warranties and agreements of the Company and the Riverstone Affiliates and other customary obligations of the parties and termination provisions. +40 +Transactions with Liberty Resources +Liberty Resources LLC (“ Liberty Resources ”) is an oil and gas exploration and production company of which Mr. Wright is the Executive Chairman. Mr. Wright previously served as the Chief Executive Officer at Liberty Resources from its formation in September 2010 until March 2017. Liberty Resources entered into a master service agreement with Liberty Oilfield Services LLC (“ Liberty Services ”), whereby Liberty Services provides hydraulic fracturing service to Liberty Resources at market service rates. For the year ended Dec ember 31, 20 20, the amounts related to the provision of hydraulic fracturing services to Liberty Resources under the master services agreement was $0.0 million and interest income from Liberty Resources was $0.3 million. As of December 31, 2020, $0.0 million of the Company’s accounts and notes receivable were from Liberty Resources. +Transactions with PropX +Liberty Oilfield Services LLC (“ LOS ”), a subsidiary of the Company, currently leases equipment from Proppant Express Solutions, LLC (“ PropX ”), a provider of proppant logistics equipment. R/C IV Liberty Big Box Holdings, L.P., a Riverstone fund, holds a majority interest in PropX. Accordingly, funds associated with Riverstone hold over a 10% interest in both the Company and PropX. For the year ended December 31, 2020, LOS paid PropX $8.7 million for the lease of proppant logistics equipment. +Conflicts of Interest +The related party transactions described herein may cause certain conflicts of interests, including that: +♦ we may enter into contracts between us, on the one hand, and related parties, on the other, that are not as a result of arm’s-length transactions; +♦ our executive officers and directors that hold positions of responsibility with related parties may be aware of certain business opportunities that are appropriate for presentation to us as well as to such other related parties and may present such business opportunities to such other parties; and +♦ our executive officers and directors that hold positions of responsibility with related parties may have significant duties with, and spend significant time serving, other entities and may have conflicts of interest in allocating time. +For example, Mr. Wright, our Chief Executive Officer, is the Executive Chairman of Liberty Resources, a position which may require a portion of his time and which may cause conflicts of interest in pursuing business opportunities of which he becomes aware. Furthermore, our governing documents provide that Riverstone and its respective affiliates (including portfolio investments of its affiliates) are not restricted from owning assets or engaging in businesses that compete directly or indirectly with us. Riverstone or its respective affiliates may become aware, from time to time, of certain business opportunities (such as acquisition opportunities) and may direct such opportunities to other businesses in which they have invested, in which case we may not become aware of or otherwise have the ability to pursue such opportunity. Furthermore, such businesses may choose to compete with us for these opportunities, possibly causing these opportunities to not be available to us or causing them to be more expensive for us to pursue. In addition, Riverstone or its respective affiliates may dispose of oil and gas service or other assets in the future, without any obligation to offer us the opportunity to purchase any of those assets. +41 +DELINQUENT SECTION 16( a ) REPORTS +Section 16(a) of the Exchange Act requires the Company’s directors, executive officers and persons who are beneficial owners of more than ten percent (10%) of a registered class of the Company’s equity securities to file with the SEC initial reports of ownership and reports of changes in ownership. Direct ors, executive officers and beneficial owners of more than ten percent (10%) of a registered class of the Company’s equity securities are also required to furnish the Company with copies of all Section 16(a) reports that they file with the SEC. If requested, the Company assists its executive officers and directors in complying with the reporting requirements of Section 16(a) of the Exchange Act. The SEC has designated specific deadlines for these reports, and we must identify in this Proxy Statement those persons who did not file these reports when due. +To the Company’s knowledge, based solely on examination of these reports and on written representations provided to us, all directors, executive officers and ten percent (10%) owners timely filed all reports regarding transactions in our securities required to be filed for 2020 pursuant to Section 16(a) of the Exchange Act. +HOUSEHOLDING +The SEC permits companies and intermediaries (such as brokers and banks) to satisfy delivery requirements for proxy statements and annual reports with respect to two or more stockholders sharing the same address by delivering a single proxy statement and annual report to those stockholders. This process, which is commonly referred to as “householding,” is intended to reduce the volume of duplicate information stockholders receive and reduce expenses for companies. Both the Company and some of our intermediaries may be householding our proxy materials and Annual Report on Form 10-K. Once you have received notice from your broker or another intermediary that they will be householding materials sent to your address, householding will continue until you are notified otherwise or until you revoke your consent. Should you wish to receive separate copies of our Annual Report on Form 10-K and proxy statement in the future, we will promptly deliver a separate copy of each of these documents to you if you send a written or oral request to us at our phone number or address appearing on the cover of this Proxy Statement, to the attention of the Corporate Secretary. If you hold your shares through an intermediary that is householding and you want to receive separate copies of our Annual Report on Form 10-K and proxy statement in the future, you should contact your bank, broker or other nominee record holder. +STOCKHOLDER PROPOSALS +A stockholder who would like to have a proposal considered for including in our 2022 proxy statement and annual meeting of stockholders must submit the proposal so that it is received by not earlier than the close of business on December 21, 2021, and not later than the close of business on January 20, 2022, unless the date of our 2022 annual meeting of stockholders is more than 30 days before or more than 60 days after April 20, 2022, in which case the proposal must be received no later than the 10 th day following the day on which public announcement of the date of such meeting is first made by the Company. SEC rules set standards for eligibility and specify the types of stockholder proposals that may be excluded from a proxy statement. Stockholders who intend to submit a proposal for nomination of persons for election to our Board or a proposal of business at the 2022 annual meeting must follow the procedures prescribed in the Company’s Amended and Restated Bylaws and Rule l4a-8 under the Exchange Act. Proposals should be directed to Liberty Oilfield Services Inc., Attn: Corporate Secretary, 950 17th Street, Suite 2400, Denver, Colorado 80202. No stockholder proposal was received for inclusion in this Proxy Statement. +WHERE YOU CAN FIND MORE INFORMATION +We +file or furnish annual, quarterly and current reports, proxy statements and other documents with the SEC under the Exchange +Act. The SEC also maintains an internet website at www.sec.gov that contains reports, proxy and information statements +and other information regarding issuers, including us, that file electronically with the SEC. +We +also make available free of charge through our website, www.libertyfrac.com , electronic copies of certain documents +that we file with the SEC, including our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form +8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably +practicable after we electronically file such material with, or furnish it to, the SEC. +42 +OTHER MATTERS +As of the date of this Proxy Statement, the Board does not intend to present any matters other than those described herein at the Annual Meeting and is unaware of any matters to be presented by other parties. If other matters are properly brought before the meeting for action by the stockholders, proxies will be voted in accordance with the recommendation of the Board or, in the absence of such a recommendation, in accordance with the judgment of the proxy holder. +IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING TO BE HELD ON APRIL 20, 2021: +A +COPY OF THIS PROXY STATEMENT, THE NOTICE OF 2021 ANNUAL MEETING OF STOCKHOLDERS, THE 2021 ANNUAL REPORT TO STOCKHOLDERS AND +THE PROXY CARD ARE AVAILABLE AT HTTP://ASTPROXYPORTAL.COM/AST/21952 . +IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, YOU ARE URGED TO VOTE BY INTERNET, BY PHONE OR IF YOU HAVE RECEIVED PAPER COPIES OF THE PROXY MATERIALS, BY COMPLETING, SIGNING AND RETURNING THE PROXY IN THE ENCLOSED POSTAGE-PAID, ADDRESSED ENVELOPE. +By Order of the Board of Directors, +/s/ R. Sean Elliott +R. Sean Elliott +Vice President, General Counsel and Corporate Secretary +Denver, Colorado +March 9, 2021 +ANNUAL MEETING OF STOCKHOLDERS OF +LIBERTY OILFIELD SERVICES INC. +Tuesday, April 20, 2021 +GO GREEN +e-Consent +makes it easy to go paperless. With e-Consent, you can quickly access your proxy material, statements and other eligible +documents online, while reducing costs, clutter and paper waste. Enroll today via www.astfinancial.com to enjoy online access. +NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL : +The Notice of Meeting, proxy statement and proxy card +are available at http://www.astproxyportal.com/ast/21952 +Please sign, date +and mail +your proxy card in the +envelope provided as soon +as possible. +Please detach along perforated +line and mail in the envelope provided. +20330300000000001000 2 +042021 +THE +BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE NOMINEES LISTED IN PROPOSAL +1 AND "FOR" PROPOSALS 2 AND 3. +PLEASE +SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK +INK AS SHOWN HERE +☒ +1. Election of Directors: To elect three (3) Class II directors to the Board to serve until the 2024 annual +meeting or until their successors are duly elected and qualified. +☐ +NOMINEES: +FOR +ALL NOMINEES +Ο +Ken Babcock +O +Brett Staffieri +☐ +WITHHOLD AUTHORITY +FOR +ALL NOMINEES +O +Christopher A. Wright +☐ +FOR ALL EXCEPT +(See +instructions below) +INSTRUCTIONS: To withhold authority to vote for any individual nominee(s), mark “ FOR ALL EXCEPT ” +and fill in the circle next to each nominee you wish to withhold, as shown here: ● +To change the address on your account, please check the box at right and indicate your new address in the address space above. +Please note that changes to the registered name(s) on the account may not be submitted via this method. +☐ +FOR +AGAINST +ABSTAIN +2. +Ratification of the appointment of Deloitte +& Touche LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2021. +☐ +☐ +☐ +FOR +AGAINST +ABSTAIN +3. +Approval, on an advisory basis, of the compensation of the Company’s named executive officers. +☐ +☐ +☐ +TO +INCLUDE ANY COMMENTS, USE THE COMMENTS BOX ON THE REVERSE SIDE OF THIS CARD. +IMPORTANT +NOTICE +YOUR +VOTE IS IMPORTANT. PLEASE SIGN, DATE AND RETURN YOUR PROXY AS SOON AS POSSIBLE. BY DOING +SO, YOU MAY SAVE LIBERTY OILFIELD SERVICES INC. THE EXPENSE OF ADDITIONAL SOLICITATION. +NOTE: +In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting +or any adjournment or postponement thereof. +MARK +“X” HERE IF YOU PLAN TO ATTEND THE VIRTUAL MEETING ☐ +Signature of Stockholder +Date: +Signature of Stockholder +Date: +Note: +Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder +should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer +is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, +please sign in partnership name by authorized person. +1 +LIBERTY OILFIELD SERVICES INC. +THIS +PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS +FOR +THE ANNUAL MEETING OF STOCKHOLDERS +The +undersigned hereby appoint(s) Christopher A. Wright, Michael Stock and R. Sean Elliott, or any one of them, attorneys with full +power of substitution and revocation to each, for and in the name of the undersigned with all the powers the undersigned would +possess if personally present, to vote the shares of the undersigned in Liberty Oilfield Services Inc. as indicated on the proposals +referred to on the reverse side hereof at the annual meeting of its stockholders to be held virtually via live webcast at https://web.lumiagm.com/245867901 +(password: liberty2021) on Tuesday, April 20, 2021 at 9:00 a.m. Mountain Time and at any adjournments thereof, and in their or +his discretion upon any other matter which may properly come before said meeting. +This card +also constitutes voting instructions to the trustees under the Liberty Oilfield Services Inc. savings plans to vote, in person +or by proxy, the proportionate interest of the undersigned in the shares of Common Stock of Liberty Oilfield Services Inc. held +by the trustees under the plans, as described in the proxy statement. +(Continued and to be signed on the reverse side) +COMMENTS: +1.1 +14475 \ No newline at end of file diff --git a/raw/proxies/0001694028/0001387131-21-003376/proxy_rpt.txt b/raw/proxies/0001694028/0001387131-21-003376/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..b3a15417be015a8bd7da391bb0d389d85b075e76 --- /dev/null +++ b/raw/proxies/0001694028/0001387131-21-003376/proxy_rpt.txt @@ -0,0 +1,60 @@ +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +Policies and Procedures for Review of Related Party Transactions +A “ Related Party Transaction ” is a transaction, arrangement or relationship in which the Company or any of its subsidiaries was, is or will be a participant, the amount of which involved exceeds $120,000, and in which any related person had, has or will have a direct or indirect material interest. A “ Related Person ” is: +♦ any person who is, or at any time during the applicable period was, one of our executive officers or one of our directors; +♦ any person who is known by us to be the beneficial owner of more than 5% of our Class A Common Stock; +♦ any immediate family member of any of the foregoing persons, which means any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law of a director, executive officer or a beneficial owner of more than 5% of our Class A Common Stock, and any person (other than a tenant or employee) sharing the household of such director, executive officer or beneficial owner of more than 5% of our Class A Common Stock; and +♦ any firm, corporation or other entity in which any of the foregoing persons is a partner or principal or in a similar position or in which such person has a 10.0% or greater beneficial ownership interest. +Our Board adopted a written related party transactions policy in connection with the IPO. Pursuant to this policy, our Audit Committee reviews all material facts of all Related Party Transactions and either approves or disapproves entry into the Related Party Transaction, subject to certain limited exceptions. The determination of the Audit Committee is documented in the Audit Committee’s minutes. In determining whether to approve or disapprove entry into a Related Party Transaction, our Audit Committee takes into account, among other factors, the following: (i) whether the Related Party Transaction is on terms no less favorable than terms generally available to an unaffiliated third-party under the same or similar circumstances and (ii) the extent of the Related Person’s interest in the transaction. Further more, the policy requires that all Related Party Transactions required to be disclosed in our filings with the SEC be so disclosed in accordance with applicable laws, rules and regulations. +Related Party Transactions +The following is a description of transactions entered into, or in effect, after January 1, 2020 to which we have been a party, in which the amount involved in the transaction exceeds $120,000, and in which any of our directors, executive officers or beneficial owners of more than 5% of our voting securities, or affiliates or immediate family members of any of our directors, executive officers or beneficial owners of more than 5% of our voting securities, had or will have a direct or indirect material interest. We believe the terms obtained or consideration that we paid or received, as applicable, in connection with the transactions described below were comparable to terms available or the amounts that would be paid or received, as applicable, from unrelated third parties. +Liberty LLC Agreement +We entered into the Second Amended and Restated Limited Liability Company Agreement of Liberty Oilfield Services New HoldCo LLC (“ Liberty LLC ”) (the “ Liberty LLC Agreement ”) in connection with the closing of our IPO, which provides for limitations on the ability of Liberty Unit Holders to transfer their units in Liberty LLC (the “ Liberty LLC Units ”) and provides the Company, as managing member of Liberty LLC, with the right to impose restrictions (in addition to those already in place) on the ability of Liberty Unit Holders to redeem their Liberty LLC Units pursuant to the Redemption Right (as defined below) to the extent the Company believes it is necessary to ensure that Liberty LLC will continue to be treated as a partnership for U.S. federal income tax purposes. +Redemption Rights +Under the Liberty LLC Agreement, each Liberty Unit Holder has, subject to certain limitations, the right (the “ Redemption Right ”) to cause Liberty LLC to acquire all or a portion of its Liberty LLC Units for, at Liberty LLC’s election, (i) shares of our Class A Common Stock at a redemption ratio of one share of Class A Common Stock for each Liberty LLC Unit redeemed, subject to conversion rate adjustments for stock splits, stock dividends and reclassification and other similar transactions or (ii) an equivalent amount of cash. Alternatively, upon the exercise of the Redemption Right, the Company (instead of Liberty LLC) has the right (the “ Call Right ”) to, for administrative convenience, acquire each tendered Liberty LLC Unit directly from the redeeming Liberty Unit Holder for, at the Company’s election, (x) one share of Class A Common Stock or (y) an equivalent amount of cash. In addition, upon a change of control of the Company, the Company has the right to require each holder of Liberty LLC Units (other than the Company) to exercise its Redemption Right with respect to some or all of such unit holder’s Liberty LLC Units. In connection with any redemption of Liberty LLC Units pursuant to the Redemption Right or the Call Right, the corresponding number of shares of Class B Common Stock will be cancelled. As the Liberty Unit Holders redeem their Liberty LLC Units, our membership interest in Liberty LLC will be correspondingly increased, the number of shares of Class A Common Stock outstanding will be increased, and the number of shares of Class B Common Stock outstanding will be reduced. +37 +Distributions and Allocations +Under the Liberty LLC Agreement, the Company has the right to determine when distributions will be made to the holders of Liberty LLC Units and the amount of any such distributions. If the Company authorizes a distribution, such distribution will be made to the holders of Liberty LLC Units generally on a pro rata basis in accordance with their respective percentage ownership of Liberty LLC Units. +Liberty LLC will allocate its net income or net loss for each year to the holders of Liberty LLC Units pursuant to the terms of the Liberty LLC Agreement, and the holders of Liberty LLC Units, including the Company, will generally incur U.S. federal, state and local income taxes on their share of any taxable income of Liberty LLC. Net income and losses of Liberty LLC generally will be allocated to the holders of Liberty LLC Units on a pro rata basis in accordance with their respective percentage ownership of Liberty LLC Units, subject to requirements under U.S. federal income tax law that certain items of income, gain, loss or deduction be allocated disproportionately in certain circumstances. To the extent Liberty LLC has available cash and subject to the terms of any debt instruments, the Company intends to cause Liberty LLC to make (i) generally pro rata distributions to the holders of Liberty LLC Units, including the Company, in an amount sufficient to allow the Company to pay its taxes and to allow it to make payments under the Tax Receivable Agreements (as defined below), (ii) tax advances, which will be repaid upon exercise of the Redemption Right or the Call Right, as applicable, in an amount sufficient to allow each of the Liberty Unit Holders to pay its respective taxes on such holder’s allocable share of Liberty LLC’s taxable income after taking into account certain other distributions or payments received by the Liberty Unit Holders from Liberty LLC or the Company, and (iii) non-pro rata payments to the Company to reimburse it for its corporate and other overhead expenses. +Issuance of Equity +The Liberty LLC Agreement generally provides that at any time the Company issues a share of its Class A Common Stock or any other equity security, the net proceeds received by the Company with respect to such issuance, if any, shall be concurrently invested in Libe rty LLC , and Liberty LLC shall issue to the Company one Liberty LLC Unit or other economically equivalent equity interest. Conversely, if at any time, any shares of Class A Common Stock are redeemed, repurchased or otherwise acquired, Liberty LLC shall redeem, repurchase or otherwise acquire an equal number of Liberty LLC Units held by the Company, upon the same terms and for the same price, as the shares of the Class A Common Stock are redeemed, repurchased or otherwise acquired. +Competition +Under the Liberty LLC Agreement, the members have agreed that Riverstone and its affiliates will be permitted to engage in business activities or invest in or acquire businesses which may compete with our business or do business with our customers. +Dissolution +Liberty LLC will be dissolved only upon the first to occur of (i) the sale of substantially all of its assets or (ii) an election by us to dissolve the company. Upon dissolution, Liberty LLC will be liquidated and the proceeds from any liquidation will be applied and distributed in the following manner: (i) first, to creditors (including to the extent permitted by law, creditors who are members) in satisfaction of the liabilities of Liberty LLC; (ii) second, to establish cash reserves for contingent or unforeseen liabilities; and (iii) third, to the members in proportion to the number of Liberty LLC Units owned by each of them. +Tax Receivable Agreements +In connection with the IPO, on January 17, 2018, the Company entered into two tax receivable agreements, (the “ TRAs ”) with the Liberty Unit Holders and the selling stockholder (each such person and any permitted transferee, a “ TRA Holder ” and together, the “ TRA Holders ”). The TRAs generally provide for the payment by the Company of 85% of the net cash savings, if any, in U.S. federal, state, and local income tax and franchise tax (computed using simplifying assumptions to address the impact of state and local taxes) that the Company actually realizes (or is deemed to realize in certain circumstances) in periods after the IPO as a result, as applicable to each TRA Holder, of (i) certain increases in tax basis that occur as a result of the Company’s acquisition (or deemed acqu isition for U.S. federal income tax purposes) of all or a portion of such TRA Holder’s Liberty LLC Units in connection with the IPO or pursuant to the exercise of the Redemption Right or the Call Right, (ii) any net operating losses available to the Company as a result of the corporate reorganization, and (iii) imputed interest deemed to be paid by the Company as a result of, and additional tax basis arising from, any payments the Company makes under the TRAs. For the year ended December 31, 2020, the Company made TRA payments of $1.9 million and $5.5 million, totaling $7.4 million. These TRA payments were related to tax benefits realized in prior years and for the Company’s carryback of 2019 net operating losses to 2018 taxable income under the CARES Act. +38 +Master Transaction Agreement +On August 31, 2020, the Company, entered into a Master Transaction Agreement (the “ MTA ”) with Schlumberger, Schlumberger Canada Limited, (“ Schlumberger Canada ” and, together with Schlumberger, the “ Schlumberger Parties ”), Liberty LLC, and LOS Canada Operations Inc. (“ Canadian Buyer ”), pursuant to which the Liberty LLC and Canadian Buyer acquired the Schlumberger Parties’ OneStim business in exchange for 57,377,232 shares of Class A Common Stock and a non-interest bearing demand promissory note, which note was satisfied with 8,948,902 shares of Class A Common Stock, resulting in a total of 66,326,134 shares of Class A Common Stock being issued in connection with the transaction. The Schlumberger Parties are affiliated with Messrs. Ayat and McDonald, who are on our Board. The transactions contemplated by the MTA closed on December 31, 2020. +Until December 31, 2024, subject to certain exceptions and as more specifically set forth in the MTA, without the prior written consent of the Company, each of Schlumberger and Schlumberger Canada will not, and will cause each of their respective affiliates (including Schlumberger Limited) not to, directly or indirectly engage in any business or enterprise that is competitive with OneStim within onshore United States and Canada. +On December 31, 2020, in connection with the closing of the transactions contemplated by the MTA, the Company (and/or one or more of its subsidiaries) and the Schlumberger Parties entered into the following agreements, each of which may involve amounts in excess of $120,000: (i) an intellectual property license agreement, whereby the Schlumberger Parties granted to Liberty LLC and the Company exclusive and non-exclusive licenses to certain intellectual property, and Liberty LLC granted to the Schlumberger Parties a non-exclusive license to certain patents acquired by Liberty LLC under the MTA; (ii) an employee matters agreement, pursuant to which the applicable Schlumberger Party agreed to lease employees to the Company or a subsidiary of the Company until March 1, 2021, subject to certain exceptions and extensions; (iii) an alliance agreement whereby Schlumberger and Liberty LLC agreed to collaborate to advance each of their product portfolios and technology offerings; (iv) a transition services agreement whereby Schlumberger or its designee agreed to provide certain back-office, administrative, field operations, supply chain and other specified services to the Company until March 1, 2021, subject to certain exceptions and extensions; and (v) a strategic supply agreement intended to provide the Company with an opportunity to purchase from the various business lines of Schlumberger, products and services with competitive pricing terms for a term not to exceed the term of the non-compete covenant in the MTA discussed above. +Amended and Restated Stockholders Agreement +In connection with the OneStim Acquisition, we entered into an amended and restated stockholders agreement with affiliates of Riverstone, and the Schlumberger Parties. Among other things, the amended and restated stockholders agreement provides the right to designate nominees to our Board as follows: +• so long as Riverstone and its affiliates collectively beneficially own at least the number of shares of Common Stock as such persons owned immediately prior to the OneStim acquisition, Riverstone can designate up to two (2) nominees to our Board; +• so long as Riverstone and its affiliates collectively beneficially own at least 10% of the outstanding shares of our Common Stock, Riverstone can designate up to one (1) nominee to our Board; +• so long as the Schlumberger Parties and its affiliates collectively beneficially own at least 20% of the outstanding shares of our Common Stock, the Schlumberger Parties can designate up to two (2) nominees to our Board; and +• so long as the Schlumberger Parties and their affiliates collectively beneficially own at least 10% of the outstanding shares of our Common Stock, the Schlumberger Parties can designate up to one (1) nominee to our Board. +Pursuant to the amended and restated stockholders agreement, the Schlumberger Parties will not, (i) for a period of nine months from the closing of the OneStim Acquisition, transfer or dispose of (or take other analogous actions in accordance with the terms of the agreement) any economic, voting or other rights in or to their issued shares, other than certain permitted transfers and, (ii) for a period of four years from the closing of the OneStim Acquisition, make any transfer of Common Stock to any direct competitor of the Company or to any person that is subject to, or by virtue of such transfer would become subject to, the reporting obligations under Schedule 13D under the Exchange Act, with respect to Common Stock (the “ Lock-Up and Transfer Restrictions ”). +Pursuant to the amended and restated stockholders agreement, the Schlumberger Parties and their affiliates are subject to customary standstill restrictions in accordance with which such parties will agree not to, among other things, acquire beneficial ownership of any equity securities of the Company or publicly seek or encourage any offer or proposal for a merger or similar transaction involving the Company during the period commencing on the date of the agreement and continuing until the fourth anniversary of the closing of the OneStim Acquisition (the “ Standstill ”). +39 +Pursuant to the amended and restated stockholders agreement, we will be required to take all necessary actions, to the fullest extent permitted by applicable law (including with respect to any fiduciary duties under Delaware law), to cause the election of the nominees designated by either the Riverstone affiliates or the Schlumberger Parties. At any time the members of our Board are allocated among separate classes of directors, (i) the directors designated by the Riverstone affiliates pursuant to the amended and restated stockholders agreement will be to the classes as mutually agreed between us and the Riverstone affiliates, and (ii) the directors designated by the Schlumberger Parties pursuant to the amended and restated stockholders agreement will be to the classes as mutually agreed between us and the Schlumberger Parties. The Riverstone affiliates will be entitled to designate the replacement for any of its Board designees whose service terminates prior to the end of such director’s term. The Schlumberger Parties will be entitled to designate the replacement for any of its Board designees whose service terminates prior to the end of such director’s term. +The amended and restated stockholders agreement will terminate with respect to the Schlumberger Parties at the earliest of (a) such time as the Schlumberger Parties no longer beneficially own at least 10% of the outstanding shares of Common Stock and are no longer subject to the Standstill and the Lock-Up and Transfer Restrictions, (b) such time as the Schlumberger Parties do not beneficially own any shares of Common Stock, and (c) the written agreement of the Schlumberger Parties and the Company terminating the agreement. The amended and restated stockholders agreemen t will terminate with respect to Riverstone at the earliest of (i) such time as Riverstone and its affiliates no longer beneficially own at least 10% of the outstanding shares of Common Stock, and (ii) the delivery of written notice to the Company by Riverstone of the termination of the agreement with respect to Riverstone. +Amended and Restated Registration Rights Agreement +In connection with the OneStim Acquisition, we entered into an amended and restated registration rights agreement with Schlumberger, Schlumberger Canada and each of the other holders identified therein (the “ Holders ”), pursuant to which, among other things, certain Holders, including affiliates of Riverstone, Schlumberger and Schlumberger Canada (the “ Sponsoring Holders ”), have customary demand registration rights and we are obligated to prepare and file a registration statement registering the offer and sale of all of Schlumberger and Schlumberger Canada’s shares of Class A Common Stock. In addition, pursuant to this agreement, the Sponsoring Holders have the right to require us, subject to certain limitations set forth therein, to effect a distribution of any or all of their shares of Class A Common Stock by means of an underwritten offering. We are not obligated to effect any underwritten offering unless the dollar amount of the registrable securities of the Sponsoring Holder(s) demanding such underwritten offering to be included therein is reasonably likely to result in gross sale proceeds of at least $25 million. The amended and restated registration rights agreement also provides Holders with certain customary piggyback registration rights. These registration rights are subject to certain conditions and limitations, including the right of the underwriters to limit the number of shares to be included in a registration or offering and the Company’s right to delay or withdraw a registration statement under certain circumstances. +Indemnification for Officers and Directors +Our certificate of incorporation and bylaws provide indemnification rights to our directors and officers and permit us to purchase insurance on behalf of any officer, director, employee or other agent for any liability arising out of that person’s actions as our officer, director, employee or agent, regardless of whether Delaware law would mandate indemnification. Additionally, we have entered into separate indemnity agreements with our directors and officers to provide additional indemnification benefits, including the right to receive, in advance, reimbursements for expenses incurred in connection with a defense for which the director or officer is entitled to indemnification. We believe that the limitation of liability provisions in our certificate of incorporation, bylaws and the indemnity agreements will facilitate our ability to continue to attract and retain qualified individuals to serve as directors and officers. +Underwriting Agreement +On February 8, 2021, the Company, R/C Energy IV Direct Partnership, L.P. and R/C IV Liberty Holdings, L.P. (together, the “ Riverstone Affiliates ”) and Morgan Stanley & Co. LLC (the “ Underwriter ”), entered into an underwriting agreement (the “ Underwriting Agreement ”), pursuant to which the Riverstone Affiliates agreed to sell to the Underwriter, and the Underwriter agreed to purchase from the Riverstone Affiliates, subject to and upon the terms and conditions set forth therein, an aggregate of 8,700,000 shares of Class A Common Stock of the Company (the “ Offering ”). The Offering closed on February 11, 2021. Pursuant to the Underwriting Agreement, the Riverstone Affiliates also granted the Underwriter a 30-day option to purchase from the Riverstone Affiliates up to 1,305,000 additional shares of Class A Common Stock at the public offering price, less the underwriting discount. The Company will not receive any proceeds from the sale of shares of Class A Common Stock in the Offering. The Underwriting Agreement contains customary representations, warranties and agreements of the Company and the Riverstone Affiliates and other customary obligations of the parties and termination provisions. +40 +Transactions with Liberty Resources +Liberty Resources LLC (“ Liberty Resources ”) is an oil and gas exploration and production company of which Mr. Wright is the Executive Chairman. Mr. Wright previously served as the Chief Executive Officer at Liberty Resources from its formation in September 2010 until March 2017. Liberty Resources entered into a master service agreement with Liberty Oilfield Services LLC (“ Liberty Services ”), whereby Liberty Services provides hydraulic fracturing service to Liberty Resources at market service rates. For the year ended Dec ember 31, 20 20, the amounts related to the provision of hydraulic fracturing services to Liberty Resources under the master services agreement was $0.0 million and interest income from Liberty Resources was $0.3 million. As of December 31, 2020, $0.0 million of the Company’s accounts and notes receivable were from Liberty Resources. +Transactions with PropX +Liberty Oilfield Services LLC (“ LOS ”), a subsidiary of the Company, currently leases equipment from Proppant Express Solutions, LLC (“ PropX ”), a provider of proppant logistics equipment. R/C IV Liberty Big Box Holdings, L.P., a Riverstone fund, holds a majority interest in PropX. Accordingly, funds associated with Riverstone hold over a 10% interest in both the Company and PropX. For the year ended December 31, 2020, LOS paid PropX $8.7 million for the lease of proppant logistics equipment. +Conflicts of Interest +The related party transactions described herein may cause certain conflicts of interests, including that: +♦ we may enter into contracts between us, on the one hand, and related parties, on the other, that are not as a result of arm’s-length transactions; +♦ our executive officers and directors that hold positions of responsibility with related parties may be aware of certain business opportunities that are appropriate for presentation to us as well as to such other related parties and may present such business opportunities to such other parties; and +♦ our executive officers and directors that hold positions of responsibility with related parties may have significant duties with, and spend significant time serving, other entities and may have conflicts of interest in allocating time. +For example, Mr. Wright, our Chief Executive Officer, is the Executive Chairman of Liberty Resources, a position which may require a portion of his time and which may cause conflicts of interest in pursuing business opportunities of which he becomes aware. Furthermore, our governing documents provide that Riverstone and its respective affiliates (including portfolio investments of its affiliates) are not restricted from owning assets or engaging in businesses that compete directly or indirectly with us. Riverstone or its respective affiliates may become aware, from time to time, of certain business opportunities (such as acquisition opportunities) and may direct such opportunities to other businesses in which they have invested, in which case we may not become aware of or otherwise have the ability to pursue such opportunity. Furthermore, such businesses may choose to compete with us for these opportunities, possibly causing these opportunities to not be available to us or causing them to be more expensive for us to pursue. In addition, Riverstone or its respective affiliates may dispose of oil and gas service or other assets in the future, without any obligation to offer us the opportunity to purchase any of those assets. +41 \ No newline at end of file diff --git a/raw/proxies/0001694028/0001387131-22-003380/proxy.txt b/raw/proxies/0001694028/0001387131-22-003380/proxy.txt new file mode 100644 index 0000000000000000000000000000000000000000..adf8bfdb6654195ccd892cc804076ce2f8d7920e --- /dev/null +++ b/raw/proxies/0001694028/0001387131-22-003380/proxy.txt @@ -0,0 +1,1875 @@ +DEF 14A +1 +lbrt-def14a_041922.htm +DEFINITIVE PROXY STATEMENT +lbrt-def14a_041922 +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Proxy Statement Pursuant to Section 14(a) of the +Securities Exchange Act of 1934 +(Amendment No. ) +Filed by the Registrant ☒ +Filed by a party other than the Registrant ☐ +Check the appropriate box: +☐ +Preliminary Proxy Statement +☐ +Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +☒ +Definitive Proxy Statement +☐ +Definitive Additional Materials +☐ +Soliciting Material Pursuant to §240.14a-12 +LIBERTY OILFIELD SERVICES INC. +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check the appropriate box): +☒  No fee required +☐  Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11 +1) Title of each class of securities to which transaction applies: +2) Aggregate number of securities to which transaction applies: +3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): +4) Proposed maximum aggregate value of transaction: +5) Total fee paid: +☐ Fee paid previously with preliminary materials. +☐ Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. +1) Amount Previously Paid: +2) Form, Schedule or Registration Statement No.: +3) Filing Party: +4) Date Filed: +LIBERTY OILFIELD SERVICES INC. +950 17 TH STREET, SUITE 2400 +DENVER, COLORADO 80202 +NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD APRIL 19, 2022 +To our valued stockholders: +Notice is hereby given that the 2022 Annual Meeting of Stockholders (the “ Annual Meeting ”) of Liberty Oilfield Services Inc. (the “ Company ”) will be held on Tuesday, April 19, 2022, at 9:00 a.m. Mountain Time. This year’s Annual Meeting will be accessible through the Internet in order to permit our stockholders to participate from any geographic location with Internet connectivity. We believe this enhances accessibility to our Annual Meeting for all stockholders. To attend the Annual Meeting, you must access the meeting website at https://web.lumiagm.com/245867901. Although no physical in-person meeting will be held, we have designed the format of the virtual Annual Meeting to ensure that our stockholders of record who attend the Annual Meeting will be afforded similar rights and opportunities to participate as they would at an in-person meeting, while providing an online experience available to all of our stockholders regardless of location. At the Annual Meeting, stockholders will be asked to: +1. Elect three (3) Class III directors to our board of directors to serve until the 2025 annual meeting or until their successors are duly elected and qualified (Proposal 1); +2. Approve, on an advisory basis, the compensation of our named executive officers (Proposal 2); +3. Ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2022 (Proposal 3); +4. Approve an amendment to our Amended and Restated Certificate of Incorporation to change the name of the Company to Liberty Energy Inc. (Proposal 4); and +5. Transact such other business as may properly be brought before the Annual Meeting. +You can find more information, including the nominees for directors, executive compensation, details regarding our independent registered public accounting firm, and the proposed name change, in the attached proxy statement. The board of directors recommends that you vote in favor of each of the above proposals. Pursuant to the “notice and access” rules adopted by the Securities and Exchange Commission, we have elected to provide access to our proxy materials on the Internet. The approximate date on which the attached proxy statement, the accompanying Notice of Internet Availability of Proxy Materials (the “ Notice ”), proxy card, and the Company’s Annual Report on Form 10-K are first being made available to stockholders at http://astproxyportal.com/ast/21952/ is March 9, 2022. The Notice includes instructions on how to access our proxy materials over the Internet, vote online and request a printed copy of these materials. +Only stockholders of record at the close of business on February 22, 2022 are entitled to notice of, and to vote at, the Annual Meeting or any adjournment. A complete list of stockholders entitled to vote at the Annual Meeting will be available for examination ten days before the Annual Meeting. If you would like to inspect the list of Company stockholders of record, please contact the Investor Relations department at IR@libertyfrac.com to schedule an appointment or request access electronically or in person. This list of stockholders will also be available for inspection during the Annual Meeting by clicking on the link labeled “Request Stockholder List” on the virtual meeting site. +IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE ANNUAL MEETING. ACCORDINGLY, EVEN IF YOU PLAN TO ATTEND THE ANNUAL MEETING VIRTUALLY, WE URGE YOU TO COMPLETE, SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY CARD IN THE POSTAGE-PREPAID ENVELOPE PRIOR TO THE ANNUAL MEETING OR FOLLOW THE INTERNET OR TELEPHONE VOTING PROCEDURES DESCRIBED ON THE PROXY CARD. IF YOU ATTEND THE ANNUAL MEETING VIRTUALLY AND WISH TO VOTE AT THAT TIME, YOU MAY WITHDRAW YOUR PROXY AND VOTE AT THE MEETING. YOUR PROMPT CONSIDERATION IS GREATLY APPRECIATED. YOUR VOTE IS IMPORTANT TO US. +By Order of the Board of Directors, +/s/ R. Sean Elliott +R. Sean Elliott +Vice President, General Counsel and Corporate Secretary +Denver, Colorado +March 8, 2022 +IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING +TO BE HELD ON APRIL 19, 2022 +This Notice of Annual Meeting and Proxy Statement and our Annual Report on Form 10-K are available at +http://astproxyportal.com/ast/21952/ +i +TABLE OF CONTENTS +GENERAL INFORMATION ABOUT THE 2022 ANNUAL MEETING OF STOCKHOLDERS AND VOTING +1 +PROPOSAL 1 — ELECTION OF DIRECTORS +5 +THE BOARD AND ITS COMMITTEES +9 +EXECUTIVE OFFICERS +15 +COMPENSATION DISCUSSION & ANALYSIS +16 +COMPENSATION COMMITTEE REPORT +23 +EXECUTIVE COMPENSATION TABLES +24 +DIRECTOR COMPENSATION +29 +EQUITY COMPENSATION PLAN INFORMATION +31 +CEO PAY RATIO +32 +PROPOSAL 2 — ADVISORY VOTE TO APPROVE THE COMPENSATION OF THE COMPANY’S NAMED +EXECUTIVE OFFICERS +33 +PROPOSAL 3 — RATIFICATION OF APPOINTMENT OF THE COMPANY’S INDEPENDENT REGISTERED +PUBLIC ACCOUNTING FIRM +34 +AUDIT COMMITTEE REPORT +36 +PROPOSAL 4 — APPROVAL OF AN AMENDMENT TO THE COMPANY’S AMENDED AND RESTATED +CERTIFICATE OF INCORPORATION TO CHANGE THE NAME OF THE COMPANY +38 +SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT +39 +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +41 +DELINQUENT SECTION 16(a) REPORTS +46 +HOUSEHOLDING +46 +STOCKHOLDER PROPOSALS +46 +WHERE YOU CAN FIND MORE INFORMATION +46 +OTHER MATTERS +47 +1 +LIBERTY OILFIELD SERVICES INC. +950 17 TH STREET, SUITE 2400 +DENVER, COLORADO 80202 +PROXY STATEMENT +GENERAL INFORMATION ABOUT THE 2022 ANNUAL MEETING OF STOCKHOLDERS AND VOTING +The enclosed proxy is solicited on behalf of the Board of Directors (the “ Board ” ) of Liberty Oilfield Services Inc. (the “ Company ” ) for use at the Company ’ s 2022 Annual Meeting of Stockholders that will be held on Tuesday, April 19, 2022, at 9:00 a.m. Mountain Time, virtually at https://web.lumiagm.com/245867901 (the “ Annual Meeting ” ). In this proxy statement (the “ Proxy Statement ”) the terms “ Liberty ,” “ we ,” “ us ” and “ our ” all refer to the Company. This Proxy Statement contains important information for you to consider when deciding how to vote on the matters brought before the Annual Meeting. Please read it carefully. +We are providing these proxy materials to you in connection with the solicitation by the Board of proxies to be voted at the Annual Meeting and at any adjournment or postponement thereof. By executing and returning the enclosed proxy card or by voting via the Internet or by telephone as set forth herein, you authorize the persons named in the proxy to represent you and vote your shares on the matters described herein. Those persons will also be authorized to vote your shares to adjourn the Annual Meeting from time to time and to vote your shares at any adjournments or postponements of the Annual Meeting. +Pursuant to the “notice and access” rules adopted by the Securities and Exchange Commission (the “ SEC ”), we have elected to provide stockholders access to our proxy materials over the Internet. The approximate date on which this Proxy Statement, the accompanying Notice of Internet Availability of Proxy Materials (the “ Notice ”), proxy card, and the Company’s 2021 Annual Report on Form 10-K are first being made available to stockholders at http://astproxyportal.com/ast/21952/ is March 9, 2022. The Notice includes instructions on how to access our proxy materials over the Internet and how to request a printed copy of these materials. +Choosing to receive your future proxy materials by e-mail or to receive a single set of proxy materials per household will save the Company the cost of printing and mailing documents to you and will reduce the impact of the Company’s annual meetings on the environment. If you choose to receive future proxy materials by e-mail, you will receive an e-mail next year with instructions containing a link to those materials and a link to the proxy voting site. Your election to receive proxy materials by e-mail will remain in effect until you terminate it. +Annual Meeting Time & Location + Date : Tuesday, April 19, 2022 + Time : 9:00 a.m. Mountain Time + Location : Virtually held at https://web.lumiagm.com/245867901 +Who Can Vote at the Annual Meeting +The Company’s Class A Common Stock, par value $0.01 per share (the “ Class A Common Stock ”), and Class B Common Stock, par value $0.01 per share (the “ Class B Common Stock ,” and together with the Class A Common Stock, the “ Common Stock ”), are the only classes of securities entitled to vote at the Annual Meeting. Holders of Class A Common Stock and Class B Common Stock will vote together as a single class on all matters presented at the Annual Meeting. Each share of Common Stock outstanding at the close of business on February 22, 2022 (the “ Record Date ”) entitles its holder to one vote with respect to each matter at the Annual Meeting, and only stockholders of record on the Record Date are entitled to notice of, and to vote, virtually online or by proxy, at the Annual Meeting. +A complete list of stockholders entitled to vote at the Annual Meeting will be available for examination ten days before the Annual Meeting. If you would like to inspect the list of Company stockholders of record, please contact the Investor Relations department at IR@libertyfrac.com to schedule an appointment. This list of stockholders will also be available for inspection during the Annual Meeting by clicking on the link labeled “Request Stockholder List” on the virtual meeting site. +2 +How to Vote at the Annual Meeting +Many holders of the Company’s Common Stock hold their shares through a broker, bank, trustee or other nominee rather than directly in their own name. As summarized below, there are some distinctions between shares held of record and those owned beneficially. +Stockholder of Record. If your shares are registered directly in your name with our transfer agent, American Stock Transfer & Trust Company LLC, then you are considered a “stockholder of record” with respect to those shares. In this case, a Notice or, if requested, a set of proxy materials has been sent to you directly by us. As a stockholder of record, you may vote over the Internet as described in the Notice that was mailed to you or, if you have received or requested a hard copy of this Proxy Statement and accompanying proxy card, you may vote by telephone as described on the proxy card, or by mail by marking, signing, dating and mailing your proxy card in the postage-paid envelope provided. Your designation of a proxy is revocable by following the procedures outlined in this Proxy Statement. The method by which you vote will not limit your right to vote virtually at the Annual Meeting. If you submit a signed proxy card but do not give voting instructions as to how your shares of Common Stock should be voted on a particular proposal at the Annual Meeting, your shares will be voted in accordance with the recommendations of our Board stated in this Proxy Statement. +Beneficial Owners of Shares Held in Street Name. If your shares of our Common Stock are held in a brokerage account or by a bank, trust or other nominee or custodian, then you are considered the beneficial owner of those shares, which are held in “street name.” In this case, a Notice or, if requested, a set of proxy materials has been forwarded to you by the organization that holds your shares. The organization holding your account is considered the stockholder of record for purposes of voting at the Annual Meeting. As the beneficial owner, you have the right to instruct that organization how to vote the shares held in your account. If you are a beneficial owner of shares held in “street name,” you need to submit voting instructions to your broker, bank or other nominee in order to cast your vote. The Notice that was mailed to you by that organization has specific instructions for how to submit your vote, or if you have received or requested a hard copy of this Proxy Statement you may mark, sign, date and mail the accompanying voting instruction form in the postage-paid envelope provided. Your vote is revocable by following the procedures outlined in this Proxy Statement. However, since you are not a stockholder of record you may not vote your shares virtually at the Annual Meeting without obtaining authorization from your broker, bank or other nominee. Whether or not you plan to attend the Annual Meeting virtually, we urge you to vote by following the voting instructions provided to you to ensure that your vote is counted. To vote virtually at the Annual Meeting, you must first obtain a valid legal proxy from your broker, bank or other agent and then register in advance to attend the Annual Meeting. After obtaining a valid legal proxy from your broker, bank or other agent, to then register to attend the Annual Meeting, you must submit proof of your legal proxy reflecting the number of your shares along with your name and email address to AST. Requests for registration should be directed to proxy@astfinancial.com or to facsimile number 718-765-8730. Written requests can be mailed to: +American Stock Transfer & Trust Company LLC +Attn: Proxy Tabulation Department +6201 15 th Avenue +Brooklyn, New York 11219 +Requests for registration must be labeled as “Legal Proxy” and be received no later than 5:00 p.m., Eastern Time, on April 5, 2022. You will receive a confirmation of your registration by email after we receive your registration materials. +Telephone and Internet voting for stockholders of record will be available up until 11:59 PM Eastern Time on April 18, 2022, and mailed proxy cards must be received by April 18, 2022 in order to be counted at the Annual Meeting. If the Annual Meeting is adjourned or postponed, these deadlines may be extended. The voting deadlines and availability of telephone and Internet voting for beneficial owners of shares held in “street name” will depend on the voting processes of the organization that holds your shares of Common Stock. Therefore, we urge you to carefully review and follow the voting instructions card and any other materials that you receive from that organization. +If you receive more than one Notice, it is because your shares are registered in more than one name or are registered in different accounts. Please follow the instructions on each Notice received to ensure that all of your shares of Common Stock are voted. +“Broker Non-Votes” and Abstentions and their Effect on Proposals +A broker non-vote occurs when a broker, bank, trust or other nominee or custodian holding shares for a beneficial owner in “street name” does not vote the shares on a proposal because the nominee does not have discretionary voting power for a particular item and has not received instructions from the beneficial owner regarding voting. Brokers who hold shares for the accounts of their clients have discretionary authority to vote shares if specific instructions are not given, only with respect to “routine” items. +If your shares are held by a broker on your behalf and you do not instruct the broker as to how to vote your shares of Common Stock with regard to the election of directors ( Proposal 1 ) or the advisory vote regarding the compensation of named executive officers ( Proposal 2 ), the broker may not exercise discretion to vote for or against those proposals because each of these proposals are considered “non-routine” under applicable New York Stock Exchange (“ NYSE ”) rules. With respect to the ratification of the appointment of Deloitte & +3 +Touche LLP (“ Deloitte ”) as our independent registered public accounting firm for the fiscal year ended December 31, 2022 ( Proposal 3 ) and the name change ( Proposal 4 ), the broker may exercise its discretion to vote for or against those proposals in the absence of your instruction. Broker non-votes would be treated as not entitled to vote with respect to non-discretionary matters. +An abstention (i.e. if you or your broker mark “ABSTAIN” on a proxy or voting instruction form, or if a stockholder of record attends the Annual Meeting but does not vote (either before or during the Annual Meeting)) has the same effect as voting “AGAINST” the advisory vote regarding the compensation of named executive officers ( Proposal 2 ), the ratification of the appointment of Deloitte as our independent registered public accounting firm for the fiscal year ended December 31, 2022 ( Proposal 3 ), or the name change ( Proposal 4 ). Votes that are withheld from a director’s election will not affect the outcome of the vote on the election of a director. +Quorum Requirements for the Annual Meeting +The presence at the Annual Meeting, whether in person or by valid proxy, of stockholders holding a majority of the shares of Common Stock outstanding on the Record Date and entitled to vote at the meeting will constitute a quorum, permitting us to conduct our business at the Annual Meeting. On the Record Date, there were 183,645,580 of Class A Common Stock and 2,449,191 of Class B Common Stock issued and outstanding and entitled to be voted at the Annual Meeting. Abstentions and broker non-votes will be considered to be shares present at the Annual Meeting for purposes of constituting a quorum. +Votes Required to Approve Proposals and Board Recommendations +Proposal +Required Vote +Board Recommendation +(1) To elect three (3) Class III directors to the Board to serve until the 2025 annual meeting or until their successors are duly elected and qualified. +Plurality of Votes Cast +FOR EACH NOMINEE +(2) To approve, on an advisory basis, the compensation of our named executive officers. +Majority of Shares Present and Entitled to Vote on the Matter +FOR +(3) To ratify the appointment of Deloitte as our independent registered public accounting firm for the fiscal year ending December 31, 2022. +Majority of Shares Present and Entitled to Vote on the Matter +FOR +(4) To approve an amendment to our Amended and Restated Certificate of Incorporation to change the name of the Company to Liberty Energy Inc. +At least 66 2/3% in Voting Power of the Outstanding Shares Entitled to Vote Thereon +FOR +Election of Directors . To be elected, director nominees must receive a plurality of the votes cast by the holders of the shares entitled to vote in the election of directors at the Annual Meeting; this means that the three (3) nominees receiving the highest number of “FOR” votes cast will be elected. Abstention and broker non-votes will have no effect on the outcome of the election of our directors and cumulative voting is not permitted. +Approval of Named Executive Officer Compensation . Approval, on a non-binding advisory basis, of the compensation of our named executive officers requires the affirmative vote of a majority of the shares of Common Stock present in person or represented by proxy at the Annual Meeting and entitled to vote on the matter. Abstentions will have the effect of a vote against this proposal, and broker non-votes are not counted as votes cast and will have no effect on the outcome of this proposal. +Ratification of our Independent Registered Public Accounting Firm . The affirmative vote of a majority of the shares of Common Stock present in person or represented by proxy at the Annual Meeting and entitled to vote on the matter is required to ratify the appointment of Deloitte as our independent registered public accounting firm for the fiscal year ending December 31, 2022. Abstentions will have the effect of a vote against this proposal. Brokers have discretionary authority in the absence of timely instructions from their customers to vote on this proposal. As a result, there will be no broker non-votes with respect to this proposal. +Approval of Name Change . Approval of an amendment to our Amended and Restated Certificate of Incorporation to change the name of the Company to Liberty Energy Inc. requires the affirmative vote of the holders of at least 66 2/3% in voting power of the outstanding shares of Common Stock entitled to vote thereon. Abstentions will have the effect of a vote against this proposal, and broker non-votes are not counted as votes cast and will have no effect on the outcome of this proposal. +4 +The Board recommends that you vote: +FOR the election of each of the three (3) Class III nominees to serve on our Board until the 2025 annual meeting or until their successors are duly elected and qualified; +FOR the approval of the compensation of our named executive officers as disclosed in this Proxy Statement; +FOR the ratification of Deloitte as our independent registered public accounting firm for the fiscal year ending December 31, 2022; and +FOR the approval of an amendment to our Amended and Restated Certificate of Incorporation to change the name of the Company to Liberty Energy Inc. +Revoking Your Proxy; Changing Your Vote +If you are a stockholder of record, you may revoke your proxy before the vote is taken at the Annual Meeting by: +• signing, dating and delivering a new proxy with a later date before the applicable deadline to our Corporate Secretary; +• attending virtually and voting virtually online at the Annual Meeting; or +• filing a written revocation with our Corporate Secretary. +If your shares are held in “street name,” you may submit new voting instructions by contacting your broker or other organization holding your shares. You may also vote virtually online at the Annual Meeting, which will have the effect of revoking any previously submitted voting instructions, if you obtain a legal proxy from the organization that holds your shares. +Your last vote or proxy will be the vote or proxy that is counted. Your virtual attendance at the Annual Meeting will not automatically revoke your proxy. +Dissent and Appraisal Rights +No action is proposed at the Annual Meeting for which the laws of the State of Delaware or other applicable law provides a right of our stockholders to dissent and obtain appraisal of or payment for such stockholders’ Common Stock. +Solicitation Costs +The cost of preparing, assembling and mailing the proxy materials and of reimbursing brokers, nominees and fiduciaries for the out-of-pocket and clerical expenses of transmitting copies of the proxy materials to the beneficial owners of shares held of record by such persons, will be borne by the Company. The Company has retained D.F. King & Co., Inc. ( “ D.F. King ” ) to aid in the solicitation of proxies. It is estimated that the cost of D. F. King ’ s services will be approximately $9,500 plus expenses. In addition to the solicitation of proxies by mail, proxies may also be solicited by telephone, electronic communication, or personal communication by employees of D.F. King and the Company. +Voting Results +We will publish final results in a Current Report on Form 8-K to be filed with the SEC within four (4) business days following the Annual Meeting. +Management Q&A Session +Stockholders of record who have registered with their voting control number will be able to submit questions for the Annual Meeting’s question and answer session during the meeting through https://web.lumiagm.com/245867901 by referring to the “Chat Box” icon located at the top of the left-hand panel of their screen. For questions regarding the webcast please reach out to IR@libertyfrac.com . +Technical Difficulties or Trouble Accessing the Annual Meeting +If you encounter any technical difficulties with accessing the audio webcast on the day of the Annual Meeting, contact IR@libertyfrac.com . American Stock Transfer will also be present at the Annual Meeting and monitoring the webcast to assist with any issues. +Questions +You may call or contact our proxy solicitor, D.F. King, at (866) 796-1290 or via email at libertyoilfield@dfking.com if you have any questions concerning this Proxy Statement. +PLEASE VOTE. YOUR VOTE IS IMPORTANT TO US. +5 +PROPOSAL 1 — ELECTION OF DIRECTORS +Our Board currently consists of nine (9) directors. In accordance with the terms of our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws, our Board is divided into three classes: Class I, Class II and Class III, with each class serving staggered three-year terms. Upon the expiration of the term of a class of directors, directors in that class will be eligible to be elected for a new three-year term at the annual meeting of stockholders in the year in which their term expires. Each director elected to the Board will hold office until his or her successor has been elected and qualified or until the earlier of their death, resignation, disqualification or removal. The current members of the classes of our Board are divided as follows: +♦ Class III (term expires in 2022): Peter A. Dea, William F. Kimble, and James R. McDonald +♦ Class I (term expires 2023): Simon Ayat, Gale A. Norton, and Cary D. Steinbeck +♦ Class II (term expires in 2024): Ken Babcock, Audrey Robertson, and Christopher A. Wright +Unless otherwise instructed, the proxy holders will vote the proxies received by them for the three (3) director nominees named below, all of whom are presently directors of the Company. In the event that any nominee is unable or declines to serve as a director at the time of the Annual Meeting, the proxies will be voted for any nominee who shall be designated by the present Board to fill the vacancy, unless the size of the Board is reduced. The proxies cannot be voted for a greater number of persons than the number of nominees named in this proxy statement. It is not expected that any nominee will be unable or will decline to serve as a director. Biographical information regarding each nominee is set forth below, as well as a summary of the experiences, qualifications, attributes or skills that caused the Board to determine that each nominee should serve as a director of the Company. Each nominee ’ s experience is evaluated in determining the overall composition of the Board. +NOMINEES FOR ELECTION AS CLASS III DIRECTORS TO A THREE-YEAR TERM EXPIRING +AT THE 2025 ANNUAL MEETING OF STOCKHOLDERS +PETER A. DEA +Age: 68 +Key Areas of Experience +Director Since: 2018 +INDEPENDENT +• Exploration and Production +• Senior Management Experience +(CEO/CFO) +• Mergers & Acquisitions +• ESG +• HR/Compensation +• Investor Relations +• Corporate Governance +Mr. Dea has served on our Board since the initial public offering of the company in 2018 (the “ IPO ”). Mr. Dea has been the Executive Chairman of Confluence Resources LP (“ Confluence ”) since September 2016. Mr. Dea has served as the President and Chief Executive Officer of Cirque Resources LP (“ Cirque ”) since May 2007. Both Confluence and Cirque are private oil and gas companies. From November 2001 through August 2006, Mr. Dea was President and Chief Executive Officer and a director of Western Gas Resources, Inc. (“ Western Gas ”). Mr. Dea joined Barrett Resources Corporation (“ Barrett ”) in November 1993 and served as Chief Executive Officer and director from November 1999 and as Chairman from February 2000 through August 2001. Western Gas and Barrett were public oil and gas companies. Prior to that, Mr. Dea served in several geologic positions with Exxon Company, U.S.A. Mr. Dea currently serves as the Chairman of the Board of Ovintiv Inc. and has served as a director of Antero Midstream Corporation since the closing of its simplification transaction in March 2019. Prior to the simplification, Mr. Dea served as a director of the general partner of Antero Midstream GP LP beginning in April 2018. Mr. Dea has a Bachelor of Arts in Geology from Western State Colorado University and a Masters of Science in Geology from the University of Montana. Mr. Dea also attended the Harvard Business School, Advanced Management Program. We believe that Mr. Dea’s extensive oil and gas exploration and production experience and involvement in state and national energy policies qualify him for service on our Board. +6 +WILLIAM F. KIMBLE +Age: 62 +Key Areas of Experience +Director Since: 2018 INDEPENDENT +• Public Accounting +• Mergers & Acquisitions +• Legal/Regulatory +• Corporate Governance +• Risk Management +Mr. Kimble has served on our Board since the IPO and as Lead Director since October 2018. From 2009 until his retirement in 2015, Mr. Kimble served as the Office Managing Partner for the Atlanta office and Managing Partner - Southeastern United States at KPMG LLP (“ KPMG ”), one of the largest audit, tax and advisory services firms in the world. Mr. Kimble was also responsible for moderating KPMG’s Audit Committee Institute and Audit Committee Chair Sessions. Until his retirement, Mr. Kimble had been with KPMG or its predecessor firm since 1986. During his tenure with KPMG, Mr. Kimble also held numerous senior leadership positions, including Global Chairman of Industrial Markets. Mr. Kimble served as KPMG’s Energy Sector Leader for ten (10) years and was the executive director of KPMG’s Global Energy Institute. Mr. Kimble serves on the board of directors and the audit committee of PRGX Global, Inc. Mr. Kimble also serves on the board of directors, the special committee, and is chair of the audit committee of DCP Midstream Partners, LP. Mr. Kimble has a Bachelor of Accounting and Business Administration from Southern Methodist University. We believe that Mr. Kimble’s extensive accounting background and his experience as a director of public companies qualify him for service on our Board. +JAMES R. MCDONALD +Age: 43 +Key Areas of Experience +Director Since: 2020 INDEPENDENT +• Technology +• Oilfield Services +• Marketing/Sales +Mr. McDonald joined our Board in connection with the acquisition of the OneStim business (“ OneStim ”) from Schlumberger Limited (“ Schlumberger ”) at the end of 2020 (the “ OneStim Acquisition ”) as a Schlumberger designee. Mr. McDonald has served as President, Americas Land for Schlumberger, an international oilfield services and technology company, since July 2020. Prior to that time, he held multiple executive positions at Schlumberger; including President, Well Services from April 2018 until June 2020; Head of Reservoir Characterization Group Operations, North America Offshore from June 2017 until March 2018; Vice President, Wireline, North America, from January 2016 until June 2017; and Vice President Cased Hole Wireline, North American Land from January 2015 until December 2015. Mr. McDonald holds a Bachelor of Science in Chemical Engineering from the Massachusetts Institute of Technology. Mr. McDonald has been nominated to serve on our Board by Schlumberger pursuant to the amended and restated stockholders agreement described later in this Proxy Statement. We believe Mr. McDonald’s extensive experience in the oilfield services industry qualifies him for service on our Board. +Vote Required +The election of directors requires the affirmative vote of a plurality of the votes validly cast by the holders of the shares of Common Stock entitled to vote at the election. Neither abstentions nor broker non-votes will have any effect on the outcome of voting on director elections. +THE BOARD UNANIMOUSLY RECOMMENDS VOTING “ FOR ” +THE ELECTION OF EACH CLASS III DIRECTOR NOMINEE. +7 +DIRECTORS CONTINUING IN OFFICE +SIMON AYAT +Age: 67 +Key Areas of Experience +Director Since: 2020 +INDEPENDENT +• Corporate Finance/Capital Markets +• Senior Management Experience +(CEO/CFO) +• Oilfield Services +• Mergers & Acquisitions +• Legal/Regulatory +• Corporate Governance +• ESG +• HR/Compensation +• Investor Relations +• Risk Management +Mr. Ayat joined our Board in connection with the OneStim Acquisition as a Schlumberger designee. Mr. Ayat served as Senior Strategic Advisor to the Chief Executive Officer for Schlumberger, an international oilfield services and technology company, from January 2020 until January 2022. From March 2007 until his retirement in January 2020, he served as the Executive Vice President and Chief Financial Officer of Schlumberger. Mr. Ayat has held several financial and operational positions in Schlumberger, where he commenced his career in 1982. He was based in Paris, Houston and Dallas, as well as in the Middle East and Far East regions, serving as group treasurer, controller, Geomarket manager for Indonesia and drilling regional vice president for Asia Pacific. Mr. Ayat is also a member of the board of directors of Tenaris S.A., a manufacturer of pipes and related services for energy and industrial applications, and Eurasia Drilling Company, the largest provider of drilling services in Russia. He is a French and Lebanese citizen. Mr. Ayat has been nominated to serve on our Board by Schlumberger pursuant to the amended and restated stockholders agreement described later in this Proxy Statement. We believe Mr. Ayat’s extensive experience in the oilfield services industry and as the Chief Financial Officer of a publicly-traded oilfield services company with international operations qualifies him for service on our Board. +GALE A. NORTON +Age: 67 +Key Areas of Experience +Director Since: 2019 +INDEPENDENT +• Legal/Regulatory +• Corporate Governance +• ESG +Ms. Norton has served on our Board since July of 2019. She has been the President of Norton Regulatory Strategies, a consulting firm, since 2011. From 2007 to 2010, she served as General Counsel, Unconventional Oil, of Royal Dutch Shell, an international oil and natural gas company (“ Shell ”). Prior to joining Shell, Ms. Norton served as the Secretary of the Interior of the United States under President George W. Bush from 2001 until 2006 and as the Attorney General of the State of Colorado from 1991 until 1999. Ms. Norton is a director of American Transmission Company, a private company in the electric utility industry and she has been a Governance Fellow of the National Association of Corporate Directors. Ms. Norton holds Bachelor of Arts and Juris Doctorate degrees from the University of Denver. We believe that Ms. Norton’s experience as Attorney General of the State of Colorado and Secretary of the Interior of the United States qualifies her for service on our Board. +CARY D. STEINBECK +Age: 50 +Key Areas of Experience +Director Since: 2018 +INDEPENDENT +• Exploration and Production +• Corporate Finance/Capital Markets +Mr. Steinbeck has served on our Board since the IPO. Mr. Steinbeck served on the board of managers of Liberty Oilfield Services Holdings LLC (“ Liberty Holdings ”), a prior subsidiary of the Company, from October 2016 until the IPO. Mr. Steinbeck has been a Managing Director at Shea Ventures, an investment firm, since October 2014. From 2007 to 2014, he served as a Managing Director at Oakmont Corporation, an investment firm. Mr. Steinbeck is also a director at Liberty Resources LLC and Accretion Acquisition Corp., and is a Chartered Financial Analyst® charterholder. Mr. Steinbeck has a Bachelor of Arts in Economics from the University of California, Santa Barbara, and a Master of Business Administration from the University of Southern California. We believe that Mr. Steinbeck’s experience in the private equity industry, energy sector investing experience, extensive board participation and understanding of financial markets will provide valuable insights for our Company and qualifies him for service on our Board. +8 +KEN BABCOCK +Age: 65 +Key Areas of Experience +Director Since: 2018 +INDEPENDENT +• Technology +• Senior Management Experience +(CEO/CFO) +• Oilfield Services +• Mergers & Acquisitions +• Marketing/Sales +• HR/Compensation +Mr. Babcock has served on our Board since the IPO. Mr. Babcock is currently the Chief Executive Officer of Abaco Energy Technologies LLC (“ Abaco ”), a private Houston-based portfolio company of Riverstone Holdings LLC, an energy-focused private equity firm (“ Riverstone ”), that was formed in 2013 to focus on opportunities in manufacturing and services related to North American drilling, completion, and production, and associated infrastructure. Prior to joining Abaco, Mr. Babcock was the President and Chief Executive Officer of Titan Specialties, Ltd. (“ Titan ”) from 2008 until its sale to Hunting PLC in September 2011. Following the sale, Mr. Babcock remained at Titan until June 2012. Prior to joining Titan, from 2005 until 2008, Mr. Babcock served as President and Chief Executive Officer of International Logging, Inc. (“ ILI ”) where he took a narrowly-focused mud logging company of over 300 employees to a diverse well site services organization of over 1,800 employees spread over 60 countries in a little over two years. Prior to joining ILI, Mr. Babcock was Director of Strategic Sales at Baker Hughes INTEQ and Vice President of Business Development at Noble Technology Services. Mr. Babcock began his career with EXLOG in 1980. Mr. Babcock has a Bachelor of Science in Geology from Florida State University. We believe that Mr. Babcock’s strong business leadership experience qualifies him for service on our Board. +AUDREY ROBERTSON +Age: 41 +Key Areas of Experience +Director Since: 2021 +• Exploration and Production +• Corporate Finance/Capital Markets +• Senior Management Experience +(CEO/CFO) +• Public Accounting +• Mergers & Acquisitions +• Investor Relations +• Risk Management +Ms. Robertson joined our Board in June 2021. Ms. Robertson has served as the co-founder and Chief Financial Officer of Franklin Mountain Energy, LLC, a private oil and gas company operating in the Permian Basin since September 2018. She also served as a co-founder and Managing Partner of Copper Trail Partners, LLC, a private equity platform based in Denver from November 2017 until December 2021. From 2005 to 2016, she served as a Partner and Senior Managing Director at Kayne Anderson Capital Advisors. Prior to that time, she was an investment banker with Goldman Sachs & Co. Ms. Robertson was a Director of Bonanza Creek Energy, LLC from January 2020 until November 2021 and served on the board of directors of Extraction Oil and Gas, LLC from September 2019 to January 2021. She has served on the boards of several private companies and not-for-profit organizations. She holds a Bachelor of Science degree in Applied Economics and Management from Cornell University and a Master of Accounting degree from the University of Southern California. We believe that Ms. Robertson’s significant experience in the oil and gas exploration and production industry and accounting credentials qualifies her for service on our Board. +CHRISTOPHER A. WRIGHT +Age: 57 +Key Areas of Experience +Director Since: 2018 +• Exploration and Production +• Technology +• Senior Management Experience +(CEO/CFO) +• Oilfield Services +• Mergers & Acquisitions +• ESG +• Marketing/Sales +• HR/Compensation +• Investor Relations +Mr. Wright has served on our Board since the IPO. He has also served as our Chief Executive Officer since December 2016 and as the Chief Executive Officer of Liberty Holdings since its formation in March 2011 until the IPO. Mr. Wright is the Executive Chairman of Liberty Resources LLC, an oil and natural gas exploration and production company focused in the Williston Basin, and was the Chief Executive Officer from its formation in September 2010 until March 2017. Mr. Wright founded Pinnacle Technologies, a company that developed and commercialized tiltmeter and microseismic fracture mapping, and served as Chief Executive Officer of Pinnacle Technologies from 1992 to 2006. From 2000 to 2006, Mr. Wright served as Chairman of Stroud Energy, Inc., a shale natural gas producer. Mr. Wright currently serves on the Board of Directors for Urban Solution Group, US Ceramics, LLC (both of which are private companies) and the Federal Reserve Bank of Kansas City, Denver Branch. He also serves on the Board of Directors of Accretion Acquisition Corp. Mr. Wright has a Bachelor of Science in Mechanical Engineering from the Massachusetts Institute of Technology (“ MIT ”) and conducted graduate work in electrical engineering at both the University of California-Berkeley and MIT. We believe that Mr. Wright’s experience leading our growth as our Chief Executive Officer and his extensive experience in the hydraulic fracturing services industry qualifies him for service on our Board. +9 +THE BOARD AND ITS COMMITTEES +THE BOARD +Composition of the Board +Our Board consists of nine members separated into three classes of directors, each as equal in number as possible, with each class serving staggered three-year terms. +In connection with the OneStim Acquisition, we entered into an amended and restated stockholders agreement. This amended and restated stockholders agreement provides Schlumberger with the right to designate (A) two nominees to our Board so long as they and their affiliates collectively beneficially own at least 20% of the outstanding shares of our Common Stock, and (B) one nominee to our Board so long as they and their affiliates collectively beneficially own at least 10% of the outstanding shares of our Common Stock. Pursuant to the amended and restated stockholders agreement, Schlumberger designated Mr. McDonald and Mr. Ayat as director nominees, each of whom is currently serving on our Board. For further information on the amended and restated stockholders agreement, see the section titled “ Related Party Transactions ” under the subtitle “ Amended and Restated Stockholders Agreement .” +In evaluating director candidates, we, through the Nominating and Governance Committee of the Board (the “ Nominating and Governance Committee ”), review the following criteria when assessing director candidates: +✓ relevant skills, qualifications and experience; +✓ independence under applicable standards; +✓ qualifications to serve on Board committees and, as appropriate, serve as a committee chairperson; +✓ business judgment; +✓ service on boards of directors of other companies; +✓ personal and professional integrity; +✓ openness and willingness to work as part of a team; +✓ willingness to commit the required time to serve as a Board member; and +✓ familiarity with the Company and its industry. +Board Diversity and Summary of Director Core Skills +The diversity of experience and range of competencies, qualifications and viewpoints of each director on our Board embody key abilities that our Nominating and Governance Committee considers valuable to effective oversight of the Company. The Nominating and Governance Committee values diversity of thought in director candidates, and further believes that gender and ethnic diversity can be one way to accomplish diversity of thought while still maintaining a Board that is adequately qualified to discharge its duties. Presently, two of our nine Board members are female, and two of our Board members qualify as ethnically diverse. +We believe that our director nominees are able to provide a well-rounded set of expertise that will assist in effective oversight of management at the Company. The matrix below identifies the core skills, primary competencies and other attributes that each director brings forth in their service to our Board and committees. The lack of an indicator for a particular item does not mean that the director does not possess that qualification, skill or experience in general. The indicator merely represents a core skill that the director brings to our Board. Furthermore, each director possesses other competencies not identified below. We believe identifying primary skills is a more meaningful presentation of the key contributions and value that each director brings to their service on the Board and to our stockholders. For more information about each director, see the individual biographies set forth above. +10 +Ayat +Babcock +Dea +Kimble +McDonald +Norton +Steinbeck +Robertson +Wright +Exploration and Production +✓ +✓ +✓ +✓ +Technology +✓ +✓ +✓ +Corporate Finance/Capital Markets +✓ +✓ +✓ +Senior Management Experience +(CEO/CFO) +✓ +✓ +✓ +✓ +✓ +Oilfield Services +✓ +✓ +✓ +✓ +Public Accounting +✓ +✓ +Mergers & Acquisitions +✓ +✓ +✓ +✓ +✓ +✓ +Legal/Regulatory +✓ +✓ +✓ +Corporate Governance +✓ +✓ +✓ +✓ +ESG +✓ +✓ +✓ +✓ +Marketing/Sales +✓ +✓ +✓ +HR/Compensation +✓ +✓ +✓ +✓ +Investor Relations +✓ +✓ +✓ +✓ +Risk Management +✓ +✓ +✓ +Board Leadership Structure and Role in Risk Oversight +Our Board does not have a policy regarding separation of the roles of Chief Executive Officer and Chairman of the Board. The Board believes it is in our best interests to make that determination based on circumstances from time to time. Currently, our Chief Executive Officer serves as the Chairman of the Board, and William F. Kimble, a non-employee independent director, serves as our Lead Director. As Lead Director, Mr. Kimble serves as a liaison between the Chairman and the non-management directors and presides at executive sessions of the non-management directors and any other Board meetings at which the Chairman is not present, among other responsibilities. Our Board believes that this structure, combined with our corporate governance policies and processes, creates an appropriate balance between strong and consistent leadership and independent oversight of our business. The Chairman chairs the meetings of our Board and stockholders, with input from the Lead Director, and as such, our Board believes that a person with comprehensive knowledge of the Company is in the best position to serve the role of Chairman. +Our Board believes its administration of its risk oversight function has not affected its leadership structure. Risk is inherent with every business, and how well a business manages risk can ultimately determine its success. We face a number of risks, including those described under “ Risk Factors ” in our Annual Report on Form 10-K for the year ended December 31, 2021. Our Board is actively involved in oversight of risks that could affect us. This oversight is conducted by the Board, which has responsibility for general oversight of risks, but the Audit Committee of the Board (the “ Audit Committee ”) assists the Board in fulfilling such oversight responsibilities. Risk assessment and oversight are an integral part of our governance and management processes. The Board encourages management to promote a culture that incorporates risk management into our corporate strategy and day-to-day business operations. Management discusses strategic and operational risks at regular management meetings and conducted a specific strategic session during the year that included a focused discussion and analysis of the risks facing us. Throughout the year, senior management reviews risks with the Board at regular Board meetings as part of management presentations that focus on the Company’s overall operations and presents the steps taken by management to mitigate or eliminate such risks. +The Board does not have a standing risk management committee, but rather administers this oversight function directly through the Board as a whole. The Board is responsible for monitoring and assessing strategic risk exposure, and the Audit Committee assists the Board in fulfilling such oversight responsibilities by overseeing our major risk exposures and the steps our management has taken to monitor and control these exposures. The Audit Committee also monitors compliance with legal and regulatory requirements and considers and approves or disapproves any related-person transactions. +Our Board periodically review its governance and committee structure to ensure that it continues to meet the Company’s needs. +Director Independence and Family Relationships +The Company’s standards for determining director independence require the assessment of directors’ independence each year. A director cannot be considered independent unless the Board affirmatively determines that he or she does not have any relationship with management or the Company that may interfere with the exercise of his or her independent judgment, including any of the relationships that would disqualify the director from being independent under the rules of the NYSE. +11 +The Board has assessed the independence of each non-employee director under the independence standards of the NYSE. The Board has determined that each of Messrs. Ayat, Babcock, Dea, Kimble, McDonald and Steinbeck and Ms. Norton is considered independent under the NYSE rules. In connection with its assessment of the independence of each non-employee director, the Board also determined that Messrs. Ayat, Babcock, Dea, Kimble and Steinbeck and Ms. Norton are independent as defined in Section 10A-3 of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”) and under the standards set forth by the NYSE applicable to members of the Audit Committee. Furthermore, none of our directors or officers have any family relationship with any director or other officers. “Family relationship” for this purpose means any relationship by blood, marriage or adoption, not more remote than first cousin. +BOARD COMMITTEES +Overview +Our Board has established an Audit Committee, a Compensation Committee of the Board (the “ Compensation Committee ”) and a Nominating and Governance Committee as further detailed herein. The below chart sets forth the members and chairperson of each Board committee. +Name +Audit Committee +Compensation Committee +Nominating and +Governance Committee +William F. Kimble +* +• +Cary D. Steinbeck +• +• +Peter A. Dea +* +• +Ken Babcock +• +Gale A. Norton +• +* +*   Chairperson   •   Member +Audit Committee +Rules implemented by the NYSE and the SEC require us to have an Audit Committee comprised of at least three (3) directors who meet the independence and experience standards established by the NYSE and the Exchange Act. Our Audit Committee currently consists of three (3) directors, all of whom are independent under the rules of the SEC and the standards set forth by the NYSE applicable to members of an Audit Committee. Messrs. Kimble and Steinbeck and Ms. Norton are the members of our Audit Committee with Mr. Kimble serving as the chairperson. Each member of our Audit Committee is financially literate, and our Board has determined that Mr. Kimble qualifies as an “audit committee financial expert” as defined in applicable SEC rules. +The Audit Committee oversees, reviews, acts on and reports on various auditing and accounting matters to our Board, including: the selection of our independent accountants, the scope of our annual audits, fees to be paid to the independent accountants, the performance of our independent accountants and our accounting practices. The general purpose of our Audit Committee is to assist the Board in oversight responsibilities regarding the integrity of the Company’s financial statements, compliance with legal and regulatory requirements, performance of the independent registered public accounting firm engaged by the Company and the effectiveness of the Company’s internal audit functions. The Audit Committee operates under an Audit Committee charter that defines the committee’s primary duties in a manner consistent with the rules of the SEC and NYSE. A current copy of the Audit Committee charter can be found on our website, www.libertyfrac.com , by first clicking “ Investors ” then “ Corporate Governance ” and proceeding to “ Governance Documents .” +Compensation Committee +Our Compensation Committee currently consists of three (3) directors: Messrs. Dea, Babcock and Steinbeck with Mr. Dea serving as the chairperson. Our Compensation Committee establishes salaries, incentives and other forms of compensation for officers and other employees. Our Compensation Committee also assists the Board with the administration and oversight of our incentive compensation and benefit plans. The Compensation Committee operates under a Compensation Committee charter that defines the committee’s primary duties. The Compensation Committee has the authority to delegate to its chairperson or any one of its members the responsibility and authority for any particular matter, as it deems appropriate from time to time under the circumstances. A current copy of the Compensation Committee charter can be found on our website, www.libertyfrac.com , by first clicking “ Investors ” then “ Corporate Governance ” and proceeding to “ Governance Documents .” +The Board has determined that all directors on the Compensation Committee are independent under the standards set forth by the NYSE. +12 +Nominating and Governance Committee +Our Nominating and Governance Committee currently consists of three (3) directors: Ms. Norton and Messrs. Kimble and Dea with Ms. Norton serving as the chairperson. The Nominating and Governance Committee operates under a Nominating and Governance Committee charter that defines the committee’s primary duties. A current copy of the Nominating and Governance Committee charter can be found on our website, www.libertyfrac.com , by first clicking “ Investors ” then “ Corporate Governance ” and proceeding to “ Governance Documents .” +Our Nominating and Governance Committee identifies, evaluates and recommends qualified nominees to serve on our Board, subject to the terms of the amended and restated stockholders agreement the Company has entered into with certain stockholders related to the appointment of directors. See “ Certain Relationships and Related Party Transactions—Related Party Transactions—Amended and Restated Stockholders Agreement .” Our Nominating and Governance Committee also develops and oversees our corporate governance processes, including the annual performance evaluation of the Board and its committees, and of management, and develops, reviews and recommends to the Board any changes to our Corporate Governance Guidelines and other applicable governance policies. +The Board and the Nominating Committee believe the skills, qualities, attributes, and experience of our directors provide our Company with business acumen and a diverse range of perspectives to effectively address our evolving needs and represent the best interests of our stockholders. +When identifying director nominees, the Nominating and Governance Committee considers and reviews the following criteria: the candidate’s relevant skills, qualifications and experience; independence under applicable standards; qualifications to serve on Board committees and, as appropriate, serve as a committee chairperson; business judgement; service on boards of directors of other companies; personal and professional integrity; openness and ability to work as part of a team; willingness to commit to the required time to serve as a member of the Board; and familiarity with the Company and its industry. Additionally, when considering the recommendation to the Board that an existing director be nominated for election at the annual meeting of stockholders, the Nominating and Governance Committee will consider and review: the past Board and committee meeting attendance and performance, the length of Board service, the personal and professional integrity, the relevant experience, skills, qualifications and contributions that the existing director brings to the Board and the independence under the applicable standards. +The Nominating and Governance Committee will consider suggestions from any source, particularly from stockholders, regarding possible candidates for director; provided, however , that in order for such stockholder recommendation to be considered, the recommendations must comply with the procedures outlined under “ Stockholder Proposals ” below. +The Board has determined that all directors on the Nominating and Governance Committee are independent under the standards set forth by the NYSE. +MEETING ATTENDANCE OF THE BOARD AND BOARD COMMITTEES +During 2021, the Board and its committees met on a set schedule, held special meetings, and acted by written consent from time to time, as appropriate, as reflected in the following table: +Regularly Scheduled Meetings +Special Meetings +Total Meetings +Board of Directors +5 +3 +8 +Audit Committee +8 +1 +9 +Compensation Committee +4 +1 +5 +Nominating and Governance Committee +2 +1 +3 +At each Board meeting, time is reserved for the independent directors to meet in executive session without the Chief Executive Officer present. Furthermore, executive officers regularly attend Board meetings to present information to our Board on our business and strategy. From time to time between meetings, Board and committee members confer with each other and with management and independent consultants regarding relevant issues, and representatives of management may meet with such consultants on behalf of the relevant committee. +Each director participated, whether in person or by telephone, in at least seventy-five percent (75%) of all meetings of the Board and the committees of which such director is a member. During 2022, some of our directors recused themselves from special meetings of the Board due to potential conflicts of interest, and their recusal was not counted as an absence. There is no formal policy as to director attendance at the Annual Meeting, but our corporate governance guidelines encourage directors to attend. All members of our Board attended last year’s annual stockholder meeting. +13 +ESG FOCUSED +While we recognize the various environmental and social impacts of hydrocarbon energy, we believe that access to life-enhancing modern energy presents the most pressing global energy challenge. We passionately work to better the process of bringing hydrocarbons to the surface in a clean, safe and efficient fashion and view ESG principles as foundational to our business. We focus on developing and adding technologies to our operations that assist our customers in implementing their ESG goals. The list below sets forth specific examples of our efforts towards ESG principles: +♦ In 2013, we introduced Tier II dual-fuel technology to our fleets which allows our frac pumps to use natural gas in place of some diesel fuel to lower particulate emissions. +♦ In 2014, we began the use of containerized sand delivery at frac locations, which reduces dust, noise and truck traffic. +♦ In 2016, we introduced Quiet Fleet® technology, which significantly reduces noise levels associated with frac operations. +♦ In 2018, we began a partnership with an equipment supplier to introduce Tier IV dynamic gas blending, or DGB, engines to our frac fleet that can substitute up to 80% of the diesel typically used by a frac pump with natural gas and significantly lower emission levels in frac operations. Tier IV DGB engines were added to our fleet in 2020. +♦ In 2021, we announced the successful test of digiFrac™, our innovative, purpose-built electric frac pump that has approximately a 25% lower CO2e emission profile than the Tier IV DGB. We have entered into two multi-year arrangements with customers for digiFrac fleets and expect to deliver the first fleet into commercial service in 2022. +♦ In October 2021, we closed the acquisition of PropX, which offers innovative, environmentally friendly technology with optimized dry and wet sand containers and wellsite proppant handling equipment that drive logistics efficiency and reduce noise and emissions. +Furthermore, we are continuously committed to engagement in our communities. We provide K-12 scholarships to low-income children through ACE (Alliance for Choice in Education) and we have launched a Liberty Scholars program at Montana Technological University to enable lower income students to obtain a college engineering education. In 2021, over 100 students received Liberty scholarships. We have numerous other efforts targeting schools, veterans, poverty abatement, low-income housing, criminal justice reform and job opportunities for those who had a disadvantaged start in life. In 2021, we launched Love, Liberty, our matching program that is aimed to encourage our employees to get involved in their communities. +CORPORATE CODE OF BUSINESS CONDUCT AND ETHICS +Our Board has adopted a Corporate Code of Business Conduct and Ethics (the “ Ethics Code ”) applicable to our employees, directors and officers, in accordance with applicable U.S. federal securities laws and the corporate governance rules of the NYSE. Any waiver of the Ethics Code may be made only by our Board or a Board committee and will be promptly disclosed as required by applicable SEC laws and the corporate governance rules of the NYSE. A current copy of the Ethics Code can be found on our website, www.libertyfrac.com , by first clicking “ Investors ” then “ Corporate Governance ” and proceeding to “ Governance Documents ,” and is available in print to any stockholder who requests it. We intend to post any waiver of our Ethics Code or substantive amendments to the Ethics Code to this website. +CORPORATE GOVERNANCE GUIDELINES +Our Board has adopted Corporate Governance Guidelines (the “ Governance Guidelines ”) in accordance with the corporate governance rules of the NYSE that serve as a framework within which our Board and committees operate. These guidelines cover matters including, but not limited to, the composition of our Board, Board membership criteria and qualifications, director responsibilities, meetings of the Board and non-management directors, Board committees, director access to management and independent advisors, director compensation, and evaluation of management and management succession planning. A current copy of our Governance Guidelines can be found on our website, www.libertyfrac.com , by first clicking “ Investors ” then “ Corporate Governance ” and proceeding to “ Governance Documents ,” and is available in print to any stockholder who requests it. +14 +COMMUNICATION WITH THE BOARD +The Board welcomes communications from the Company’s stockholders and other interested parties. Stockholders and any other interested parties may send communications to the Board, any committee of the Board, the Chairman of the Board or any other director in particular to: +Liberty Oilfield Services Inc. +950 17 th Street, Suite 2400 +Denver, Colorado 80202 +Stockholders and any other interested parties should mark the envelope containing each communication as “Stockholder Communication with Directors” and clearly identify the intended recipient(s) of the communication. The Company’s General Counsel or other officer as designated by the Board, will review each communication received from stockholders and other interested parties and will forward the communication, as expeditiously as reasonably practicable, to the addressees if the communication falls within the scope of matters generally considered by the Board. To the extent the subject matter of a communication relates to matters that have been delegated by the Board to a committee or to an executive officer of the Company, then the Company’s General Counsel may forward the communication to the executive officer or chairman of the committee to which the matter has been delegated. The acceptance and forwarding of communications to the members of the Board or an executive officer does not imply or create any fiduciary duty of the Board members or executive officer to the person submitting the communications. +COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION +The members of the Compensation Committee are set forth above. During 2021, our last completed fiscal year, none of our executive officers served on the board of directors or compensation committee of a company that had an executive officer that served on our Board or Compensation Committee. Further, no member of our Board was an executive officer of a company in which one of our executive officers served as a member of the board of directors or compensation committee of that company. +15 +EXECUTIVE OFFICERS +The following sets forth certain information with respect to the executive officers of the Company as of March 1, 2022. +Name +Age +Position(s) +Christopher A. Wright +57 +Chairman of the Board and Chief Executive Officer +Michael Stock +60 +Chief Financial Officer and Treasurer +Ron Gusek +50 +President +R. Sean Elliott +47 +Vice President, General Counsel and Corporate Secretary +Ryan T. Gosney +48 +Chief Accounting Officer +See “ Proposal 1 – Election of Directors – Directors Continuing in Office ” above for information regarding Mr. Wright. +Michael Stock – Chief Financial Officer and Treasurer . Michael Stock has served as our Chief Financial Officer since December 2016, our Treasurer since March 2018 and as the Chief Financial Officer of Liberty Holdings from April 2012 until our IPO. Mr. Stock served as a director of the Company from December 2016 up until the IPO. Prior to joining Liberty Holdings, from 2009 to 2012, he was employed by TAS Energy Inc., an industrial energy technology company. During his tenure, he served as Chief Financial Officer and was a key part of the raising of equity from leading investment groups including Kleiner Perkins, Element Partners, Natural Gas Partners and Credit Suisse. From 1997 to 2009, Mr. Stock served as Chief Financial Officer for Pinnacle Technologies. +Ron Gusek – President . Ron Gusek has served as our President since December 2016 and as the President of Liberty Holdings from November 2016 until the IPO. Mr. Gusek served as the Vice President of Technology and Development of Liberty Holdings, from 2014 until his promotion to President. Prior to joining Liberty Holdings, from 2011 to 2014, Mr. Gusek served as Vice President, Corporate Engineering and Technology of Sanjel Corporation, a global energy service company. Prior to joining Sanjel Corporation, from 2009 to 2011, Mr. Gusek was Director of Engineering for Zodiac Exploration, an oil and natural gas exploration and production company working in the central San Joaquin valley in California. From 2003 to 2008, Mr. Gusek was the Canadian Regional Manager of Pinnacle Technologies. Mr. Gusek has a Bachelor of Science in Mechanical Engineering from the University of Alberta. +R. Sean Elliott – Vice President, General Counsel and Secretary . Sean Elliott has served as our Vice President and General Counsel since March 2017 and our Corporate Secretary since the IPO. Between September 2016 and March 2017, Mr. Elliott worked as Assistant General Counsel at USAA Real Estate Company, a real estate investment firm. Between June 2015 and September 2016, Mr. Elliott served as Counsel at Haynes and Boone, LLP, an international corporate law firm. Between November 2007 and May 2015, Mr. Elliott served as Vice President, General Counsel, Corporate Secretary and Chief Compliance Officer of CARBO Ceramics Inc., an oilfield services production enhancement company. Mr. Elliott has a Bachelor of Arts in Economics and Business Administration from Austin College and a Doctor in Jurisprudence degree from the University of Texas at Austin. +Ryan T. Gosney – Chief Accounting Officer . Ryan Gosney has been our Chief Accounting Officer since March 2017. Between July 2016 and February 2017, Mr. Gosney served as the Chief Accounting Officer of Vantage Energy Inc. (“ Vantage ”), an oil and gas exploration and production company. Prior to joining Vantage, Mr. Gosney served as Chief Financial Officer for Dorado E&P Partners, LLC, an oil and gas company, from January 2012 to January 2016. Mr. Gosney began his career as an auditor with Arthur Andersen, LLP in September 1995 where he served in increasing roles of responsibility up to Audit Manager until June 2002. Mr. Gosney has also served as Controller for Patina Oil & Gas Corporation from October 2002 to October 2005 and Delta Petroleum Corporation from October 2005 to January 2012. Mr. Gosney has a Bachelor of Business Administration from Texas Christian University. +16 +COMPENSATION DISCUSSION & ANALYSIS +This Compensation Discussion & Analysis provides information about our rationale and policies with regard to the compensation of our principal executive officer, principal financial officer and our three other most highly-compensated executive officers (our “ Named Executive Officers ”) for 2021 and is intended to provide investors with the material information necessary for understanding our compensation policies and decisions regarding our Named Executive Officers as well as providing context for the tabular disclosure provided in the executive compensation tables below. Our Named Executive Officers for 2021 include: +Name +Title +Christopher A. Wright +Chairman of the Board and Chief Executive Officer +Michael Stock +Chief Financial Officer and Treasurer +Ron Gusek +President +R. Sean Elliott +Vice President, General Counsel and Corporate Secretary +Ryan T. Gosney +Chief Accounting Officer +2021 Compensation Overview +Effective January 1, 2021, in light of improving business conditions, base salaries for our Named Executive Officers returned to the levels established in January 2019 after the COVID-19 pandemic related salary reductions throughout the prior year. The Compensation Committee recommended, and the Board approved, the following compensation-related actions for our Named Executive Officers for fiscal year 2021, further detailed below: +• Base Salaries : The 2021 base salaries for each Named Executive Officer were returned to the levels established in January 2019. +• Annual Incentive Awards : After initially suspending annual incentive awards through June 2021, targets were reinstated in July using the same performance metrics used for 2019. +• Long-Term Incentive Compensation : The long-term incentive compensation included both time-based awards, vesting ratably over a three-year period, and performance-based awards, with three-year cliff vesting. +2021 Say on Pay +At our 2021 annual meeting of stockholders, our stockholders were asked to approve, on a non-binding, advisory basis, the compensation of our Named Executive Officers, as reported in our 2021 proxy statement (“ Say on Pay ”). In 2021, our stockholders overwhelming approved the compensation of our Named Executive Officers, with over 99% of the votes cast in favor of such practices. The Compensation Committee and the Board viewed the results of the Say on Pay vote and, given the strong stockholder support for the compensation of our Named Executive Officers in 2021, believe that no significant changes to our compensation program were warranted as a result of this vote. As discussed in more detail in “ Proposal 2: Advisory Vote to Approve the Compensation of the Company’s Named Executive Officers ,” the Board has recommended that stockholders vote, on a non-binding advisory basis, to approve the compensation of our Named Executive Officers, as described below. +Compensation Best Practices +The Company’s compensation program has been designed to support a strong governance model. Key elements of the program in support of this objective are set forth in the chart below: +What We Do +What We Don’t Do +✓ +Determine annual incentive compensation with the majority of the potential payment based upon the achievement of pre-established performance goals +x +x +x +x +x +x +No excise tax gross ups +No single-trigger severance No excessive perquisites +No short-term or speculative trading of Company stock +No re-pricing of incentive awards +No supplemental retirement plans +No guaranteed bonuses or uncapped incentives +✓ +Generally target the market median for total compensation +✓ +Use an independent compensation consultant +✓ +Hold regular executive sessions of the Compensation Committee without management present +✓ +Base a portion of the long-term incentives upon our performance relative to peers +17 +Process for Setting Compensation and Role of Compensation Consultant +At the beginning of each year, the Compensation Committee engages an independent executive compensation consulting firm in order to provide independent and objective market compensation data, conduct compensation analysis, recommend plan design changes and advise on compensation related risks. The Compensation Consultant (as defined below) acts solely at the direction of the Compensation Committee and not at the direction of the Company’s management team. During 2021, the Compensation Committee engaged Longnecker and Associates (now known as NFP Compensation Consulting) as such compensation consultant (the “ Compensation Consultant ”). The Compensation Consultant compiles compensation surveys for review by the Compensation Committee and management. After review of the Compensation Consultant’s surveys, management provides recommendations of compensation for our Named Executive Officers to the Compensation Committee. Such recommendations are generally based upon the guidance of the Compensation Consultant and the performance of our management as a team. The Compensation Committee then reviews management’s recommendation with the ability to ask questions of both management and the Compensation Consultant and may conduct an executive session as needed to discuss compensation. Previously, the Compensation Committee and Board collectively have had the final authority to make all decisions regarding compensation. At the Board meeting in January 2022, the Board approved amendments to the Compensation Committee charter which now permit the Compensation Committee to making recurring and other compensation decisions without separate Board approval, providing the Compensation Committee with additional autonomy. +The Compensation Consultant also assists the Compensation Committee with the determination of our Peer Group, as described below, and design of our annual incentive program and long-term incentive awards. Using the independence factors established by the SEC and the NYSE, the Compensation Committee determined that the Compensation Consultant’s work did not raise any conflicts of interest, and they are considered an independent consulting firm. +Competitive Market Position and Peer Group +To further emphasize the alignment between Company performance and executive pay and to ensure compensation is competitive, for 2021 the Compensation Committee targeted the 50 th percentile for total compensation (base salary and short-term and long-term incentives) for the named executive officers as a group, as reflected by various sources of compensation data (collectively, “ Market Data ”). As further explained below, in 2021, actual compensation amounts were impacted by the specific performance goals selected for annual incentives and the use of additional long-term incentives to reward selected Named Executive Officers for their efforts in completing a strategic acquisition. The Market Data provided to the Compensation Committee by the Compensation Consultant includes compensation information from our Peer Group (as defined below) as well as other broad-based compensation survey sources selected by the Compensation Consultant. Although the Compensation Committee used the Market Data to inform its decisions regarding the form and amount of compensation provided to our Named Executive Officers in 2021, the Compensation Committee also considered other factors such that the compensation provided to our Named Executive Officers is not exclusively reflective of the Market Data. +For purposes of setting 2021 compensation, the peer group companies (our “ Peer Group ”) used by the Compensation Consultant and the Compensation Committee included the following companies: +Core Laboratories N.V. +Helmerich & Payne, Inc. +Patterson-UTI Energy, Inc. +ChampionX Corporation +NexTier Oilfield Solutions Inc. +Exterran Corporation +Cactus, Inc. +ProPetro Holding Corp. +Archrock, Inc. +Our Peer Group was selected based on companies that broadly represent related drilling and oilfield services businesses and are of reasonably comparable revenue size to the Company. While some of these companies have larger market capitalizations, these companies represent the market in which we most directly compete for qualified professionals. As a whole, our Peer Group reflects companies with related operations, of reasonably similar size, and with which we compete for talent. +Objectives of Compensation +The goal of the Company’s compensation program is to help attract and retain qualified executive talent and to strengthen the alignment between executives and stockholders’ interests, enhancing stockholder value. To achieve this goal, the Compensation Committee’s decisions are guided by the following principles: provide a competitive compensation package; relate compensation to the performance of the Company and the individual; and align employee objectives with the objectives of stockholders by encouraging executive stock ownership. +18 +In order to achieve these objectives, the Compensation Committee has created a compensation package that combines current and deferred cash compensation with equity-based compensation. The Company’s compensation program for executive officers consists of the following items: +* base salary; +* performance-based annual incentive payments under the Liberty Oilfield Services Inc. Long Term Incentive Plan (“ LTIP ”), which in 2021 were based upon the Company’s adjusted pre-tax earnings per share (“ Adjusted Pre-Tax EPS ”), return on capital employed (“ ROCE ”), the Company’s adjusted ROCE (ROCE revised to a standardized calculation as described herein) (“ Adjusted ROCE ”) as compared to the Adjusted ROCE of a peer group of companies (such comparison, “ Comparative ROCE ”) and personal performance; +* long-term equity awards under our LTIP, consisting of both time-based and performance-based restricted stock units; and +* matching and discretionary contributions under the Liberty Oilfield Services 401(k) Savings Plan. +The Compensation Committee structures executive total direct compensation to emphasize performance through the annual incentive program and long-term incentives. The Compensation Committee believes that the compensation mix should strike a balance promoting long- term returns without motivating or rewarding excessive or inappropriate risk-taking. +Elements of Compensation +2021 Pay Mix +Our compensation program is designed so that the higher an executive’s position in the Company, the greater the percentage of compensation is contingent on the Company’s performance. The Company believes that having a significant portion of our Named Executive Officers’ compensation at risk better aligns their interests with the long-term interests of the Company and its stockholders. A majority of our Named Executive Officers total target direct compensation for fiscal year 2021 was variable, at approximately 88% for our Chief Executive Officer and averaging 84% for our other Named Executive Officers. The following charts illustrate the total target mix of direct compensation for our Named Executive Officers for fiscal year 2021. +19 +Base Salary +Each Named Executive Officer’s base salary is a fixed component of compensation for performing specific job duties and functions. At the request of our Named Executive Officers, extensive reductions were made to base salaries in 2020 in light of marketplace conditions, including a cancellation of a previously approved 2% raise in March 2020 and a 30% reduction of existing base salaries, followed by a further 50% reduction from the reduced amount in April 2020 for May, June and July of 2020. In 2021, based on the analysis provided by the Compensation Consultant and the recommendation of the Compensation Committee, the Board reestablished the base salaries of our Named Executive Officers that were in effect pre-COVID-19 pandemic at the start of 2020, as last increased in January 2019. Specifically, the adjusted base salaries for each Named Executive Officer are as follows for 2021: +Name +2021 Base Salary +Increase over 2019 Base Salary +Christopher A. Wright +$612,000 +0% +Michael Stock +$408,000 +0% +Ron Gusek +$408,000 +0% +R. Sean Elliott +$367,200 +0% +Ryan T. Gosney +$275,400 +0% +Annual Incentive Award +Given marketplace conditions at the start of 2021, our Named Executive Officers voluntarily requested a suspension of the annual incentive awards. In July 2021, based on the analysis provided by the Compensation Consultant and the recommendation of the Compensation Committee, the Board established performance metrics and hurdles for our 2021 annual incentive awards that are focused on the results of Adjusted Pre-Tax EPS, ROCE and Comparative ROCE. At the suggestion of our Named Executive Officers, the 2021 thresholds used for Adjusted Pre-Tax EPS and ROCE, which account for 50% of the annual incentive opportunity, were set at a level that would require extraordinary performance in order to result in any payout. The Compensation Committee agreed with this approach in 2021 since the intention was for the annual incentive program to be suspended for one-half of the year, and absent extortionary performance, these thresholds would result in only 50% of the target incentive amount being available for payment. +The Compensation Consultant and Compensation Committee recommended, and the Board approved, maintaining an element of discretion in the annual incentive for our Named Executive Officers in order to provide the Compensation Committee and the Board the flexibility to respond to specific events that are relevant to each Named Executive Officer’s performance during the year. No payout percentage would be earned for a metric if the actual Company performance of that metric was below the threshold level set for that metric below. Payouts for performance between threshold, target and maximum would have been calculated using straight line interpolation. The overall payout amount for each Named Executive Officer is capped at 200% of each Named Executive Officer’s target incentive award. The performance metrics, their related thresholds and weightings and actual performance for the year ended December 31, 2021 are set forth in the table below: +Performance Metric +Weighting +Threshold +(50% +Payout) +Target +(100% +Payout) +Maximum +(200% +Payout) +Actual +Performance +Earned +Payout +Percentage +of Annual +Incentive +Award +Adjusted Pre-Tax EPS (1) +25% +$0.00 +$0.24 +$0.47 +$-0.86 +0% +ROCE (2) +25% +0% +4% +8% +-10.2% +0% +Comparative ROCE (3) +30% +See Comparative ROCE Chart below +9 of 10 (4) +0% +Discretionary +20% +N/A +N/A +N/A +Variable +Variable +(1) Adjusted Pre-Tax EPS is equal to the Company’s 2021 Adjusted EBITDA (calculated as presented in the Company’s Annual Report on Form 10-K), minus interest expense, depreciation and amortization, divided by diluted weighted average shares outstanding (including Class B Common Stock shares and RSUs excluded from diluted EPS and excluding the dilutive impact of restricted stock units not outstanding at the beginning of 2021) for 2021. +(2) ROCE is equal to the Company’s 2021 Adjusted EBITDA (calculated as presented in the Company’s Annual Report on Form 10-K), minus depreciation and amortization, divided by the simple average of capital (debt and equity) employed at December 31, 2021 and 2020. +(3) Comparative ROCE is determined by comparing the Company’s Adjusted ROCE, which is equal to the Company’s 2021 pre-tax income, plus interest expense and stock based compensation expense, and ranking it against the Adjusted ROCE of the 2021 peer group, as further detailed below. +(4) Comparative ROCE Peer Group data estimated on a consistent basis with Company and based on public data as of March 1, 2022. +20 +In 2021, our Named Executive Officers worked tirelessly to rebuild from 2020 despite a persisting challenging market while also coordinating the integration efforts related to OneStim Acquisition. Given this performance, the Compensation Committee recommended that all Named Executive Officers receive a 40% payout on account discretionary incentive opportunity, other than Messrs. Wright and Stock. Messrs. Wright and Stock voluntarily requested, and the Compensation Committee approved, a target or 20% payout of their discretionary incentive opportunity instead of 40%. +The target incentive for each Named Executive Officer and the 2021 annual incentive payout for each Named Executive Officer is set forth below: +Name +Target +Annual +Incentive +(% of Base +Salary) +Target +Annual +Incentive ($) +Performance +Achievement +Level +(% of Target) +Actual 2021 +Annual +Incentive +Payout +Christopher A. Wright +147.1% +$900,000 +20% +$180,000 +Michael Stock +122.5% +$500,000 +20% +$100,000 +Ron Gusek +122.5% +$500,000 +40% +$200,000 +R. Sean Elliott +98.0% +$360,000 +40% +$144,000 +Ryan T. Gosney +73.5% +$202,500 +40% +$81,000 +Comparative ROCE is determined by comparing and ranking the Company’s Adjusted ROCE against the Adjusted ROCEs of a group of peer companies (such peer group, the “ ROCE Peer Group ”). Our Adjusted ROCE and the ROCE Peer Group Adjusted ROCEs for a calendar year are calculated and then ranked in order of highest to lowest, with the highest Adjusted ROCE being ranked 1 of 10, and the lowest Adjusted ROCE ranked 10 of 10. The amount of the target award paid for this metric is then based on our numerical ranking against the ROCE Peer Group as follows, with the use of linear interpolation to determine the exact amount of payout (the “ ROCE Ranking Matrix ”): +Comparative ROCE +Ranking of Company Adjusted ROCE +against ROCE Peer Group +Payout Percentage of +Target Award +1 of 10 +200% +2 of 10 +175% +3 of 10 +150% +4 of 10 +125% +5 of 10 +100% +6 of 10 +75% +7 of 10 +50% +8 of 10 +0% +9 of 10 +0% +10 of 10 +0% +The ROCE Peer Group is reviewed and set each year, provided that the Compensation Committee reserves the right to recommend, and the Board to make, substitutions and revisions to the ROCE Peer Group throughout the year. While some companies in the ROCE Peer Group may overlap with companies in Peer Group, the focus of the ROCE Peer Group is to provide a metric by which the effectiveness of capital deployment can be measured. Accordingly, the ROCE Peer Group focuses more particularly on other companies that have capital needs that are similar to those of the Company. The Peer Group tends to focus and include companies based on the relative size of the peers based on metrics such as revenue and market capitalization. The ROCE Peer Group also utilizes the S&P 500 to provide a broader measure of the effectiveness of deployment of capital across various industries. The 2021 ROCE Peer Group consists of the following companies: +Helmerich & Payne, Inc. +NexTier Oilfield Solutions Inc. +Oil States International, Inc. +Patterson-UTI Energy, Inc. +ProPetro Holding Corp. +RPC, Inc. +S&P 500 +Nine Energy Service, Inc. +Halliburton Company +Our Company Adjusted ROCE for 2021 was -10.3%, which ranked 9 of 10 against the ROCE Peer Group for 2021 based on public data as of March 1, 2022, resulting in a weighted payout percentage for the Comparative ROCE component of the annual incentive award equal to 0%. +21 +Long-Term Incentive Compensation +We maintain the LTIP in order to incentivize individuals providing services to us or our affiliates. In 2021, following recommendations by the Compensation Consultant and our Compensation Committee, our Board granted both time-based and performance-based restricted stock units (“ RSUs ”), each which represent the right to receive shares of our Class A Common Stock following the applicable vesting period. The Compensation Committee has considered the use of other forms of equity awards, including restricted stock and stock options, and ultimately determined to use RSUs given that they have a less dilutive effect than stock options and do not require the issuance of actual shares of Class A Common Stock unless and until vesting conditions are met. For 2021, the grant date value of RSUs for the Named Executive Officers as a group was initially set at approximately the 50 th percentile based on Market Data. The Compensation Committee and our Board determined that a combination of time-based and a performance-based vesting approach was appropriate given the Company’s desire to provide our Named Executive Officers with a long-term retention-focused award that also aligns the interests of our Named Executive Officers with those of our stockholders while at the same time furthering the Company’s pay-for-performance philosophy. +In 2021, the Compensation Committee recognized that while all the Named Executive Officers made important contributions to the negotiation and successful closing of the OneStim Acquisition, Messrs. Elliott and Gosney, in particular, devoted substantial time, effort and leadership in order to complete the transaction. On the recommendations of other members of management and the Compensation Consultant, the Committee approved a one-time increase in the 2021 RSU awards for Messrs. Elliott and Gosney that resulted in the grant date value of their award being set at approximately the 75 th percentile for their position based on Market Data, with the increased amount of their 2021 award being made in performance-based RSUs with three-year cliff vesting. +For 2021, one-half of the RSUs awarded to Messrs. Wright, Stock and Gusek vest ratably over a three-year period, and one-half vests at the end of a three-year performance period based on the Company’s performance against its peers. Messrs. Elliott and Gosney received RSU awards with similar time and performance-based vesting conditions for 2021, except that in light of the one-time increase mentioned above, approximately 42% of these awards was time-based, and 58% was performance based. In 2019 and 2020, the mix for the RSU awards made to Messrs. Elliott and Gosney was 67% time-based and 33% performance-based. +Performance-based RSUs provide the Named Executive Officer the right to receive an amount ranging from 0% to 200% of the target performance-based RSUs granted based on the Company’s Comparative ROCE performance during the three-year performance period, subject to the continued employment of the Named Executive Officer. To determine the Company’s Comparative ROCE, Adjusted ROCE will be calculated for the Company and each entity in the ROCE Peer Group, as described above under “ Elements of Compensation—Annual Incentive Award ,” for each applicable year. After the end of the three-year performance period, the Adjusted ROCE calculations of each entity for each year shall be averaged in order to obtain an average Adjusted ROCE calculation for the entire three-year period. The entities in the ROCE Peer Group will be arranged (highest to lowest) by their averaged Adjusted ROCE, excluding the Company. The Company’s percentile rank will be interpolated between the entity with the next highest average Adjusted ROCE and the entity with the next lowest average Adjusted ROCE. The Company’s percentile rank will then be used to determine the payout percentage of the target performance-based RSU by using the ROCE Ranking Matrix set forth above. The chart below shows the Company’s Comparative ROCE rank for 2019, 2020 and 2021, resulting in an award payout of 134% of target for the performance-based RSUs that were awarded to Named Executive Officers in January 2019 and vest on April 1, 2022: +Year +Company Adjusted ROCE Percentage +Ranking of Company Adjusted ROCE against ROCE Peer Group +2019 +13.5% +2 of 10 +2020 +-13.9% +3 of 10 +2021 +-10.3% +9 of 10 +3 year average +-3.6% +4 of 10 +Employment, Severance and Change in Control Agreements +The Company has entered into a change in control agreement with each of Mr. Elliott and Mr. Gosney (the “ Change in Control Agreements ”). No such change of control agreements have been entered into with the Company’s other executive officers, as the value of the vested equity interests in the Company that such officers acquired prior to the time of the IPO would likely provide adequate benefits in the event of a change in control transaction. +Each Change in Control Agreement provides severance benefits in the event the executive officer’s employment is terminated without cause or the executive officer resigns for good reason within 18 months following a change in control , as described in more detail below under “ Potential Payments Upon Termination or Change in Control—Change in Control Agreements .” The benefits provided to the executive officer in the Change in Control Agreements were primarily based on the recommendation of the Compensation Consultant and Peer Group median data provided at the time the Change in Control Agreements were executed. +We have not entered into any other employment, severance or change in control agreements with any of our Named Executive Officers. +22 +Other Compensation Elements +401(k) Plan. We currently maintain a retirement plan intended to provide benefits under Section 401(k) of the Internal Revenue Code of 1986, as amended (the “ Code ”) under which employees, including our Named Executive Officers, are allowed to contribute portions of their base compensation to a tax-qualified retirement account under the Liberty Oilfield Services 401(k) Savings Plan. We provide matching contributions at a rate of $1.00 for each $1.00 of employee contribution, subject to a cap of the lower of (i) 6% of the employee’s salary and (ii) the applicable contribution limits under the Code. +Pension and Nonqualified Deferred Compensation. We have not maintained, and do not currently maintain, a defined benefit pension plan or nonqualified deferred compensation plan. +Perquisites and Other Benefits . We provide limited perquisites to our Named Executive Officers. For example, none of our Named Executive Officers receive car allowances. +Anti-Hedging and Pledging Policy. Our Insider Trading Policy generally prohibits our directors, employees and officers from hedging and pledging of Company securities by providing that hedging or monetization transactions, whether direct or indirect, involving the Company’s securities and the pledging of Company securities as collateral are prohibited. Short term exceptions to this prohibition (such as temporary margin loans) may be granted depending on specific facts and circumstances. Any exceptions for our directors and officers must be granted by our Audit Committee and will be periodically communicated to the Board. The policy also prohibits transactions involving Company-based derivative securities. +Risk Assessment +The Compensation Committee reviewed our employee compensation practices and policies and determined that such policies do not encourage excessive or unnecessary risk-taking, and are not likely to have a material adverse effect on the Company. +23 +COMPENSATION COMMITTEE REPORT +The information contained in this Compensation Committee Report shall not be deemed to be “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933, as amended (the “ Securities Act ”), or the Exchange Act, except to the extent that the Company specifically incorporates such information by reference in such filing. +The Compensation Committee reviewed and discussed the Compensation Discussion & Analysis required by Item 402 of Regulation S-K promulgated by the SEC with management of the Company, and, based on such review and discussions, the Compensation Committee recommended to the Board that such Compensation Discussion & Analysis be included in this Proxy Statement and incorporated by reference into the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021. +Compensation Committee of the Board of Directors: +Peter A. Dea, Chairman +Ken Babcock, Member +Cary D. Steinbeck, Member +24 +EXECUTIVE COMPENSATION TABLES +Summary Compensation Table +The following table summarizes the compensation awarded to, earned by or paid to our Named Executive Officers for the fiscal years ended December 31, 2021, 2020 and 2019. +Name & Principal Position +Year +Salary +($) +Bonus +($) (1) +Stock +Awards +($) (2) +Non-Equity +Incentive Plan +Compensation +($) (1) +All Other +Compensation +($) (3) +Total +($) +Christopher A. Wright +Chairman of the Board +& Chief Executive Officer +2021 +612,000 +180,000 +3,801,972 +0 +17,400 +4,611,372 +2020 +428,400 +0 +2,876,014 +0 +5,700 +3,310,114 +2019 +608,769 +150,000 +3,750,207 +851,400 +16,800 +5,377,176 +Michael Stock +Chief Financial Officer +& Treasurer +2021 +408,000 +100,000 +1,689,762 +0 +17,400 +2,215,162 +2020 +285,600 +0 +1,278,229 +0 +5,700 +1,569,529 +2019 +405,846 +70,000 +1,666,755 +473,000 +16,800 +2,632,401 +Ron Gusek +President +2021 +408,000 +200,000 +1,689,762 +0 +17,400 +2,315,162 +2020 +285,600 +0 +1,278,229 +0 +5,700 +1,569,529 +2019 +405,846 +100,000 +1,666,755 +473,000 +16,800 +2,662,401 +R. Sean Elliott +Vice President, General Counsel & Corporate Secretary +2021 +367,200 +144,000 +1,662,426 +0 +17,400 +2,191,026 +2020 +257,040 +0 +789,119 +0 +5,700 +1,051,859 +2019 +365,262 +72,000 +1,031,320 +340,560 +16,800 +1,825,942 +Ryan T. Gosney +Chief Accounting Officer +2021 +275,400 +81,000 +1,020,111 +0 +16,524 +1,393,035 +2020 +192,780 +0 +485,329 +0 +5,700 +683,809 +2019 +273,946 +40,500 +632,853 +191,565 +16,800 +1,155,664 +(1) The amounts reported in the “Non-Equity Incentive Plan Compensation” columns reflect the portion of the annual incentive payouts related to achievement of the Company-wide performance metrics. The portion of the annual incentive payouts related to the discretionary component are reported in the “Bonus” column. +(2) The amounts shown do not reflect compensation actually received by the Named Executive Officer. Rather, amounts set forth in the “Stock Awards” column represent the aggregate grant date fair value of time-based and performance-based restricted stock unit awards computed in accordance with FASB ASC Topic 718 for financial statement reporting purposes by the Company with respect to restricted stock units. A discussion of the assumptions used in this valuation with respect to awards made in fiscal year 2021 may be found in Note 10 to the Company’s financial statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. Performance-based awards are included based on the assumption that they will vest at 100% of the target award, since actual vesting will not be determined until the end of the performance period. The Class A Common Stock that certain of the Named Executive Officers received at the time of the IPO in exchange for their Class B Units in Liberty Holdings have not been included in this column, as there was no grant date fair value or incremental fair value associated with the exchange for accounting purposes in 2018. +(3) For the Named Executive Officers, amounts reported in the “All Other Compensation” column for 2021 reflect discretionary matching contributions earned by each Named Executive Officer pursuant to the Company’s 401(k) plan. +25 +Grants of Plan-Based Awards +The following table provides information for each of our Named Executive Officers regarding plan-based awards granted during fiscal year 2021. +Name +Grant Date +Estimated Future Payouts Under +Non-Equity Incentive Plan Awards (1) +Estimated Future Payouts Under +Equity Incentive Plan Awards (2) +All Other Stock Awards: Number of Shares of Stock or Units +(#) (3) +Grant Date Fair Value of Stock Awards ($) (4) +Threshold +($) +Target +($) +Maximum +($) +Threshold +(#) +Target +(#) +Maximum +(#) +Christopher A. Wright +360,000 +720,000 +1,440,000 +1/20/2021 +73,228 +146,455 +292,910 +1,900,986 +1/20/2021 +146,455 +1,900,986 +Michael Stock +200,000 +400,000 +800,000 +1/20/2021 +32,546 +65,091 +130,182 +844,881 +1/20/2021 +65,091 +844,881 +Ron Gusek +200,000 +400,000 +800,000 +1/20/2021 +32,546 +65,091 +130,182 +844,881 +1/20/2021 +65,091 +844,881 +R. Sean Elliott +144,000 +288,000 +576,000 +1/20/2021 +37,054 +74,107 +148,214 +961,909 +1/20/2021 +53,969 +700,518 +Ryan T. Gosney +81,000 +162,000 +324,000 +1/20/2021 +22,737 +45,474 +99,948 +590,253 +1/20/2021 +33,117 +429,859 +(1) The amounts shown in these columns reflect the potential threshold, target and maximum payouts with respect to the performance-based financial metrics approved under the 2021 annual incentive awards. The amounts reflected herein do not include amounts that may be earned with respect to the discretionary component of the 2021 annual incentive awards. +(2) The amounts shown in these columns reflect the potential threshold, target and maximum number of performance-based RSU awards granted to the Named Executive Officers during fiscal year 2021. +(3) The amounts shown in this column reflect time-based vesting RSU awards granted to the Named Executive Officers during fiscal year 2021. +(4) The amounts shown in this column do not reflect compensation actually received by the Named Executive Officer. Rather, amounts set forth herein represent the aggregate grant date fair value of time-based and performance-based RSUs computed in accordance with FASB ASC Topic 718 for financial statement reporting purposes in fiscal year 2021 by the Company. A discussion of the assumptions used in this valuation with respect to awards made in fiscal year 2021 may be found in Note 10 to the Company’s financial statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. +26 +Outstanding Equity Awards at 2021 Fiscal Year-End +The following table reflects information regarding outstanding equity-based awards held by our Named Executive Officers as of December 31, 2021, which consist of time-based RSU awards and performance-based RSU awards. +Name +Stock Awards +Number of Shares +or Units of Stock +That Have +Not Vested +(#) +Market Value +of Shares +or Units of Stock +That Have +Not Vested +($) (4) +Equity Incentive +Plan Awards: +Number of +Unearned Shares, +Units or Other +Rights That Have +Not Vested +(#) +Equity Incentive +Plan Awards: +Market or Payout +Value of Unearned +Shares, Units or +Other Rights That +Have Not Vested +($) (8) +Christopher A. Wright +41,865 +(1) +406,091 +99,654 +(2) +966,644 +146,455 +(3) +1,420,614 +251,186 +(5) +2,436,504 +298,962 +(6) +2,899,931 +146,455 +(7) +1,420,614 +Michael Stock +18,607 +(1) +180,488 +44,291 +(2) +429,623 +65,091 +(3) +631,383 +111,638 +(5) +1,082,889 +132,872 +(6) +1,288,858 +65,091 +(7) +631,383 +Ron Gusek +18,607 +(1) +180,488 +44,291 +(2) +429,623 +65,091 +(3) +631,383 +111,638 +(5) +1,082,889 +132,872 +(6) +1,288,858 +65,091 +(7) +631,383 +R. Sean Elliott +15,427 +(1) +149,642 +36,458 +(2) +353,643 +53,969 +(3) +523,499 +45,592 +(5) +442,242 +54,686 +(6) +530,454 +74,107 +(7) +718,838 +Ryan T. Gosney +9,467 +(1) +91,830 +22,423 +(2) +217,503 +33,117 +(3) +321,235 +27,976 +(5) +271,367 +33,632 +(6) +326,230 +45,474 +(7) +441,098 +(1) These RSUs granted on January 22, 2019 vest on April 1, 2022, so long as the applicable Named Executive Officer remains employed through such date. +(2) These RSUs granted on January 20, 2020 vest in one-half increments on each of April 1, 2022 and April 1, 2023, so long as the applicable Named Executive Officer remains employed through such dates. +(3) These RSUs granted on January 20, 2021 vest in one-third increments on each of April 1, 2022, April 1, 2023 and April 1, 2024, so long as the applicable Named Executive Officer remains employed through such dates. +(4) Amounts in this column reflect the value of unvested time-based RSU awards held by the Named Executive Officers, calculated based on the closing price of our Class A Common Stock on December 31, 2021 of $9.70. +(5) These performance-based RSUs granted on January 22, 2019 will vest on April 1, 2022, subject to achievement of the Comparative ROCE performance metrics and the applicable Named Executive Officer’s continued employment through such date. As of December 31, 2021, the performance-based RSUs granted on January 22, 2019 were trending above target, and in accordance with the SEC rules, are reflected in this table at maximum, therefore, the performance-based RSUs may actually vest at a lower amount than reflected in this column. +(6) These performance-based RSUs granted on January 20, 2020 will vest on April 1, 2023, subject to achievement of the Comparative ROCE performance metrics and the applicable Named Executive Officer’s continued employment through such date. As of December 31, 2020, the performance-based RSUs granted on January 20, 2020 were trending above target, and in accordance with the SEC rules, are reflected in this table at maximum, therefore, the performance-based RSUs may actually vest at a lower amount than reflected in this column. +27 +(7) These performance-based RSUs granted on January 20, 2021 will vest on April 1, 2024, subject to achievement of the Comparative ROCE performance metrics and the applicable Named Executive Officer’s continued employment through such date. As of December 31, 2021, the performance-based RSUs granted on January 18, 2021 were trending below target, and in accordance with the SEC rules, are reflected in this table at target, therefore, the performance-based RSUs may actually vest at a higher amount than reflected in this column. +(8) Amounts in this column reflect the value of unvested performance-based RSU awards held by the Named Executive Officers reported in the preceding column calculated based on the closing price of our Class A Common Stock on December 31, 2021 of $9.70. +Option Exercises and Stock Vested +The following table reflects the value received by each Named Executive Officer on the vesting of restricted stock awards and RSU awards during fiscal year 2021. None of our Named Executive Officers held stock option awards during the 2021 year. +Name +Stock Awards +Number of +Shares Acquired +on Vesting +(#) +Value Realized +on Vesting +($) (1) +Christopher A. Wright +141,529 +1,655,889 +Michael Stock +62,901 +735,942 +Ron Gusek +62,901 +735,942 +R. Sean Elliott +47,361 +554,124 +Ryan T. Gosney +29,088 +340,330 +(1) The amounts in this column reflect the value of the shares in the preceding column based on the closing price of our Class A Common Stock on the applicable vesting date, including the value of any shares withheld for tax withholding purposes. +Pension Benefits and Nonqualified Deferred Compensation +We do not maintain and our Named Executive Officers do not participate in any defined benefit pension plan or nonqualified deferred compensation plan. +Potential Payments Upon Termination or Change in Control +Change in Control Agreements +The Company has entered into Change in Control Agreements with each of Mr. Elliott and Mr. Gosney. For further detail on the Company’s decision to enter into Change in Control Agreements with these Named Executive Officers, see the section titled “ Employment, Severance and Change in Control Agreements ” contained in the Compensation Discussion & Analysis section set forth herein. Each Change in Control Agreement provides that if the Named Executive Officer’s employment is terminated without “cause” or the Named Executive Officer resigns for “good reason” within 18 months following a “change in control,” the Named Executive Officer will be entitled to receive, subject to such Named Executive Officer’s timely execution and non-revocation of a release of claims in favor of the Company: (i) two times the sum of (a) the Named Executive Officer’s annualized base salary for the year in which the termination occurs (or, if greater, that in effect immediately preceding the change in control) plus (b) an amount equal to the higher of (1) the Named Executive Officer’s target annual bonus for year in which the termination occurs or (2) the average of the Named Executive Officer’s target annual bonus for the three most recently completed calendar years; (ii) a pro-rated portion of the Named Executive Officer’s target annual bonus for the calendar year in which the termination occurs; (iii) reimbursement for a portion of the COBRA premiums paid by the executive for continued coverage under the Company’s group health plans for up to 18 months plus a lump sum cash payment equal to six times such monthly amount; and (iv) vesting of all outstanding time-based and performance-based equity awards granted pursuant to any Company long term incentive plan as of the date of termination, with such performance-based equity awards being vested at the higher of target performance or actual performance through the termination date. +For purposes of the Change in Control Agreements, the following terms generally have the meanings set forth below: +• “ Cause ” generally means the Named Executive Officer’s (i) material breach of the Change in Control Agreement or any other agreement with the Company, (ii) material breach of any policy or code of conduct, (iii) violation of any law applicable to the workplace or employment relationship that is materially injurious to the Company, (iv) gross negligence, willful misconduct or willful breach of fiduciary duty, fraud, theft or embezzlement, (v) conviction or indictment, or plea of nolo contendere, to any felony or conviction or plea of nolo contendere to any crime involving moral turpitude, or (vi) willful failure or refusal to substantially perform such Named Executive Officer’s obligations or to follow in any material respect any specific lawful direction from the Company. Clauses (i), (ii), (iii) and (vi) are subject to certain notice and cure rights. +28 +• “ Change in Control ” generally means (i) a change in the ownership of the Company, (ii) a change in the effective control of the Company, or (iii) a change in the ownership of a substantial portion of the Company’s assets, in each case, as such phrases are defined under the Treasury regulations promulgated pursuant to Section 409A of the Code. +• “ Good Reason ” generally means (i) a material diminution in the Named Executive Officer’s total cash compensation, (ii) a material diminution in the Named Executive Officer’s authority, duties or responsibilities as a whole, (iii) a geographic relocation by more than 50 miles, (iv) a material breach by the Company of the Change in Control Agreement or any other agreement between the Named Executive Officer and the Company, or (v) a failure to timely pay or provide any material payment, benefit or other consideration or compensation owed to the Named Executive Officer, in each case, subject to certain notice and cure rights. +RSU Awards +The RSUs held by our Named Executive Officers under the LTIP will accelerate and become 100% vested upon a termination of the Named Executive Officer’s employment with the Company due to the Named Executive Officer’s death or “disability.” For RSUs that use performance-based vesting, the award will remain outstanding and eligible to be earned based on the Company’s achievement of the applicable performance metrics at the end of the performance period. For purposes of the RSU awards, “disability” means the Named Executive Officer’s inability to perform his duties, after accounting for reasonable accommodation, due to a mental or physical impairment that continues (or can reasonably be expected to continue) for (i) 90 consecutive days or (ii) 180 days out of any 365-day period, which, in either case, shall only be deemed to occur following the written determination by the Company of any such occurrence of disability. +The table below describes and estimates the amounts and benefits each Named Executive Officer would have been eligible to receive upon a termination of his employment in certain circumstances or a change in control, assuming such events occurred as of December 31, 2021, the last day of fiscal year 2021. The estimated payments are not necessarily indicative of the actual amounts such executive would have received in such circumstances, as such amounts could not be known with certainty until the applicable event occurred. The table excludes compensation amounts accrued through December 31, 2021 that would be paid in the normal course of continued employment, such as accrued but unpaid salary and vested account balances under our retirement plans that are generally available to all of our salaried employees. Where applicable, the information in the table uses a price per share for our Common Stock of $9.70, the closing price on December 31, 2021 (the “ Year-End Closing Price ”). Generally, payment of severance benefits to a Named Executive Officer following termination of employment is subject to such officer’s timely execution and non-revocation of a release of claims in favor of the Company. +Name +Change in +Control +($) +Death/ +Disability +($) +Termination +without Cause or +Resignation for +Good Reason on or +within 18 Months +Following a +Change in Control +($) +Christopher A. Wright +Equity Award Acceleration (1) +— +9,550,387 +— +Michael Stock +Equity Award Acceleration (1) +— +4,244,613 +— +Ron Gusek +Equity Award Acceleration (1) +— +4,244,613 +— +R. Sean Elliott +Cash Severance (2) +— +— +1,814,400 +Benefit Continuation (3) +— +— +21,842 +Equity Award Acceleration (1) +— +2,718,891 +2,718,891 +Ryan Gosney +Cash Severance (2) +— +— +1,158,300 +Benefit Continuation (3) +— +— +37,649 +Equity Award Acceleration (1) +— +1,669,254 +1,669,254 +(1) The amounts reported in these rows reflect the value of time-based RSU and performance-based RSU awards that would accelerate in connection with the applicable event, calculated based on the Year-End Closing Price. For purposes of the performance-based RSUs granted in 2019 and 2020, these amounts reflect an assumed achievement of maximum performance, as the performance-based RSUs were trending above target as of December 31, 2021. For purposes of the performance-based RSUs granted in 2021, these amounts reflect an assumed achievement of target performance, as the performance-based RSUs were trending below target as of December 31, 2021. +(2) The amounts reported in these rows reflect the full amount of each Named Executive Officer’s target annual incentive award for 2020, as the pro-ration provided for under the Change in Control Agreements would result in the full amount of such target annual incentive awards being payable as of December 31, 2021. +(3) The amounts reported in these rows are calculated based on the premiums in effect as of December 2021, which are assumed for purposes of this table to remain the same throughout the applicable benefit reimbursement period. +29 +DIRECTOR COMPENSATION +We have adopted a non-employee director compensation program that is applicable to each of our non-employee directors. The Compensation Consultant also conducted an analysis of market-competitive total director compensation (annual retainers, meeting fees and equity awards) using our Peer Group as a comparative metric. Pursuant to this program, during 2021 each non-employee director was entitled to receive the following compensation for their service on our Board: +* A cash retainer of $65,000 per year, payable quarterly in arrears; +* An additional cash retainer of $20,000 per year, payable quarterly in arrears if such non-employee director serves as the chairperson of our Audit Committee; +* An additional cash retainer of $15,000 per year, payable quarterly in arrears if such non-employee director serves as the chairperson of our Compensation Committee; +* An additional cash retainer of $10,000 per year, payable quarterly in arrears if such non-employee director serves as the chairperson of a Nominating and Governance Committee; +* An additional cash retainer of $20,000 per year, payable quarterly in arrears if such non-employee director serves as the Lead Director of the Company; +* An additional payment of $1,500 for each Board meeting attended in-person by such non-employee director; and +* Either: +(a) annual equity based compensation in the form of RSUs with an aggregate grant date value of $150,000, subject to the terms of the LTIP and the award agreement pursuant to which such award is granted. The award shall be subject to a 12-month vesting period, unless otherwise determined by the Board. The annual grant shall be made automatically on January 2 nd of each year, using the 30-day average closing price of the Company’s Class A Common Stock prior to the date of grant to determine the number of units to be granted; +(b) an additional cash payment of $100,000 per year, payable quarterly in arrears; or +(c) A charitable cash donation by the Company of $100,000 per year, payable quarterly in arrears, to an organization designated by the director and that is qualified under Section 501(c)(3) of the Internal Revenue Code, provided that the organization must be independent of the director and reasonably acceptable to the Compensation Committee. +Effective as of January 1, 2022, our non-employee director compensation program was updated to remove the additional payment of $1,500 for each Board meeting attended in-person and increase the annual cash retainer from $65,000 to $80,000. This change was made by the Board in October 2021 in response to a recommendation from the Compensation Committee and the Compensation Consultant in order to better align with marketplace practices. +Each non-employee director shall be given an opportunity to elect whether they would like to receive item (a), (b) or (c) above prior to the beginning of each year. If a non-employee director joins the Board or otherwise becomes eligible for director compensation during the course of a calendar year, the director will be allowed to make such election upon joining or becoming eligible. If a non-employee director joins the Board during the course of a calendar year, the director will be entitled to receive a prorated RSU award (if so elected) for that year, which shall vest over the remaining portion of the year, unless otherwise determined by the Board. All annual cash payments shall be prorated for partial years of service or eligibility. +In addition, each non-employee director will be reimbursed for out-of-pocket expenses incurred in connection with attending Board and committee meetings. +30 +The table below sets forth the compensation our non-employee directors received for the fiscal year ended December 31, 2021. +Name +Fees Earned +or Paid in Cash +($) +Stock Awards +($) (1) +All Other +Compensation +($) +Total +($) +Simon Ayat +— +— +100,000 +(2) +100,000 +Ken Babcock +69,500 +151,914 +— +221,414 +Peter A. Dea +86,000 +151,914 +— +237,914 +William F. Kimble +111,000 +151,914 +— +262,914 +James R. McDonald +— +— +100,000 +(3) +— +Gale A. Norton +81,000 +151,914 +— +232,914 +Audrey Robertson (4) +38,349 +84,379 +— +122,728 +Brett Staffieri (5) +75,700 +— +— +75,700 +Cary D. Steinbeck +71,000 +151,914 +— +222,914 +(1) The amounts shown do not reflect compensation actually received by the directors. Rather, amounts set forth in the Stock Awards column represent the aggregate grant date fair value of awards computed in accordance with FASB ASC Topic 718 for financial statement reporting purposes in fiscal year 2021 by the Company with respect to restricted stock units. A discussion of the assumptions used in this valuation with respect to awards made in fiscal year 2021 may be found in Note 10 to the Company’s financial statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. As of December 31, 2021, Messrs. Babcock, Dea, Kimble and Steinbeck and Ms. Norton each held 14,345 unvested RSUs and Ms. Robertson held 5,588 unvested RSUs. +(2) Mr. Ayat is serving on the Board as a nominee of Schlumberger pursuant to the amended and restated stockholders agreement, as further described herein. Represents the amount of charitable contributions that the Company has agreed to make on behalf of Mr. Ayat in connection with his 2021 Board service. As of March 4, 2022, the Company has paid $60,000 of this amount to charities designated by Mr. Ayat. +(3) Mr. McDonald is employed by Schlumberger and is serving on the Board as a nominee of Schlumberger pursuant to the amended and restated stockholders agreement, as further described herein. Represents the amount of charitable contributions that the Company has agreed to make on behalf of Mr. McDonald in connection with his 2021 Board service. As of March 4, 2022, the Company has paid $0 of this amount to charities designated by Mr. McDonald. +(4) Ms. Robertson joined the Board effective as of June 15, 2021. +(5) Mr. Staffieri served on the Board as a nominee of Riverstone. The Company has been informed that Mr. Staffieri remitted all director compensation that he received from the Company in 2021 to Riverstone in accordance with the terms of his employment with Riverstone. Mr. Staffieri resigned from the Board effective as of June 15, 2021. +31 +EQUITY COMPENSATION PLAN INFORMATION +The following table sets forth information about our Class A Common Stock that may be issued under equity compensation plans as of December 31, 2021. +Plan Category +Number of defined +securities to be +issued upon exercise +of outstanding +options, warrants +and rights +(a) (1) +Weighted–average +exercise price of +outstanding options, +warrants and rights +(b) (2) +Number of securities +remaining available +for future issuance +under equity +compensation plans +(excluding securities +reflected in +column (a)) +(c) (3) +Equity compensation plans approved by security holders +— +— +— +Equity compensation plans not approved by security holders +5,121,164 +— +5,619,303 +Total +5,121,164 +— +5,619,303 +(1) This column reflects shares of our Class A Common Stock subject to RSU awards granted under the LTIP outstanding and unvested as of December 31, 2021. The performance-based RSUs granted under the LTIP are reflected based on an achievement of maximum performance. No stock options or warrants have been granted under the LTIP. +(2) No stock options have been granted under the LTIP, and the RSU awards reflected in column (a) are not reflected in this column as they do not have an exercise price. +(3) This column reflects the total number of shares of Class A Common Stock remaining available for issuance under the LTIP. +Our only equity compensation plan is the LTIP. The LTIP was approved prior to our IPO but has not been approved by our public stockholders. Please read Note 10 to the Company’s financial statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 for a description of our equity compensation plans. In addition, a detailed description of the terms of the LTIP is available in our registration statement on Form S-1, last filed on January 2, 2018, under the heading “ Executive Compensation—Actions Taken Following Fiscal Year End—Long-Term Incentive Plan .” +32 +CEO PAY RATIO +As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, we are providing the following information about the relationship of the annual total compensation of our employees and the annual total compensation of Christopher A. Wright, our Chief Executive Officer (our “ CEO ”). +For 2021, our last completed fiscal year: +* The total compensation of our median employee was $95,884, as calculated pursuant to the same methodology as that used to determine pay for our CEO in the Summary Compensation Table included above; and +* The total compensation of our CEO, as reported in the Summary Compensation Table included above, was $4,611,372. +* Based on this information, for 2021 the ratio of the total compensation of our CEO to the median employee total compensation was reasonably estimated to be 48 to 1. +The pay ratio set forth above is a reasonable estimate calculated in a manner consistent with SEC rules based on our human resources systems of record and the methodology described below. Because the SEC rules for identifying the median employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices, the pay ratio reported by other companies may not be comparable to the pay ratio that we report above, as other companies may have different employment and compensation practices, different types of workforce, and operate in different countries, and may use different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios. To identity the median of the annual total compensation of all our employees, as well as to determine the annual total compensation of our median employee and our CEO, we took the following steps: +✓ We determined that, as of December 31, 2021, our employee population excluding our CEO consisted of approximately 3,600 individuals with all of these individuals located in the United States and Canada (as reported in Item 1, Business in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021). This population consisted of our full-time, part-time and temporary employees who received Company benefits, as we do not have seasonal workers. We selected December 31, 2021 as our identification date for determining our median employee because it enabled us to make such identification in a reasonably efficient and economic manner. +✓ We used a consistently applied compensation measure to identify our median employee by comparing the amount of compensation as reported to the Internal Revenue Service on Form W-2 for 2021 for US employees and the amount of compensation as reported to the Canadian Revenue Agency on T4 Statement of Renumeration Paid for 2021 for Canadian employees. +✓ We identified our median employee by consistently applying this compensation measure to all of our employees included in our analysis. Since all of our employees, including our CEO, are located in the United States and Canada, we did not make any cost of living adjustments in identifying the median employee. Our median employee for 2021 was a full-time, salaried employee working as a wireline coordinator with annual compensation of $80,092.42 set forth on such employee’s Form W-2 for 2021. +✓ After we identified our median employee, we combined all of the elements of such employee’s compensation for the 2021 year in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K, resulting in annual total compensation of $95,883.68. The differences between such employee’s taxable compensation reported on Form W-2 for 2021 of $80,092.42 and the employee’s annual total compensation calculated pursuant to Regulation S-K include the following adjustments: (i) modification from bonuses paid during 2022 to bonuses earned during 2021, (ii) addition of contributions made by the employee and by the Company on the employee’s behalf to our 401(k) plan for 2021, (iii) addition of the costs of tax deductible employee group health plan premiums and employee contributions to tax deductible flexible spending accounts, and (iv) subtraction of other taxable compensation including compensation for provided housing or transportation and that attributable to group term life, short-term and long-term disability benefits. +✓ With respect to the annual total compensation of our CEO, we used the amount reported in the “Total” column of our 2021 Summary Compensation Table included in this Proxy Statement and incorporated by reference under Item 11 of Part III of our Annual Report on Form 10-K for the year ended December 31, 2021. +33 +PROPOSAL 2 — ADVISORY VOTE TO APPROVE THE COMPENSATION OF THE +COMPANY’S NAMED EXECUTIVE OFFICERS +Section 14A(a)(1) of the Exchange Act, which was added to the Exchange Act by Section 951 of the Dodd-Frank Act, affords the stockholders a vote to approve, on a non-binding, advisory basis, the compensation of our Named Executive Officers for the fiscal year ended December 31, 2021 (commonly known as a “ say-on-pay vote ”). This vote is not intended to address any specific item of compensation and is not a vote on our general compensation policies, compensation of the Board, or our compensation policies as they relate to risk management. Section 14A(a)(2) of the Exchange Act requires us to hold a say-on-pay vote at least once every three years, although the Company currently holds such vote annually. +As described more fully in the “ Compensation Discussion & Analysis ” section of this Proxy Statement and the accompanying tabular and narrative disclosures, the Company ’ s compensation policy is designed to attract and retain highly qualified executive officers. The Company’s compensation program seeks to align executive compensation with stockholder value on an annual and long-term basis through a combination of base pay, annual incentives, and certain long-term incentives. Please read the Compensation Discussion & Analysis section of this Proxy Statement for additional details on our executive compensation program. +The Board strongly endorses the Company ’ s executive compensation program and recommends that the stockholders approve on an advisory, non-binding basis, the following resolution: +RESOLVED, that the stockholders approve, on an advisory basis, the compensation of the Company ’ s Named Executive Officers as described in the proxy statement, including the Compensation Discussion & Analysis and the tabular and narrative disclosure contained therein. +Vote Required +The approval, on a non-binding basis, of the compensation of our Named Executive Officers requires the affirmative vote of a majority of the shares of Common Stock present in person or represented by proxy at the Annual Meeting and entitled to vote on the matter. If you submit a signed proxy card but do not give voting instructions as to how your shares of Common Stock should be voted, your shares will be voted in accordance with the recommendations of our Board stated in this Proxy Statement. +THE BOARD RECOMMENDS VOTING “ FOR ” THE APPROVAL OF +THE COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS. +34 +PROPOSAL 3 — RATIFICATION OF APPOINTMENT OF THE COMPANY’S +INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +The Audit Committee has appointed Deloitte as the Company ’ s independent registered public accounting firm to audit the financial statements of the Company for the fiscal year ending December 31, 2022. The audit of the Company’s consolidated financial statements for the fiscal year ended December 31, 2021 was completed by Deloitte on February 21 , 2022. Deloitte has acted as the Company ’ s independent registered public accounting firm since 2016. +The Board is submitting the appointment of Deloitte for ratification at the Annual Meeting. The submission of this matter for approval by stockholders is not legally required, but the Board and the Audit Committee believe the submission provides an opportunity for stockholders through their vote to communicate with the Board and the Audit Committee about an important aspect of corporate governance. If the stockholders do not ratify the appointment of Deloitte, the Audit Committee will reconsider the appointment of that firm as the Company’s auditors. +The Audit Committee has the sole authority and responsibility to retain, evaluate and replace the Company’s independent auditors, and stockholder ratification of this appointment does not limit the authority of the Audit Committee to change auditors at any time. Representatives of Deloitte are expected to be present at the Annual Meeting and will have an opportunity to make a statement if they so desire and will be available to respond to appropriate questions. +The following table summarizes the aggregate fees billed or expected to be billed by Deloitte for the fiscal years ended December 31, 2021 and 2020. +2021 +2020 +Audit Fees +$ 2,345,213 +$ 2,144,560 +Audit-Related Fees +40,000 +281,893 +Tax Fees +426,042 +268,526 +All Other Fees +— +— +Total Fees +$ 2,811,255 +$ 2,694,979 +Audit Fees +Deloitte’s fees were $2,345,213 in 2021 and $2,144,650 in 2020. In 2021, Deloitte’s audit fees related primarily to the integrated annual audit and quarterly reviews of the consolidated financial statements for fiscal year 2021 included in our Annual Report on Form 10-K for the year ended December 31, 2021. In 2020, Deloitte’s audit fees related primarily to the integrated annual audit and quarterly reviews of the consolidated financial statements for fiscal year 2020 included in our Annual Report on Form 10-K for the year ended December 31, 2020. +Audit-Related Fees +Deloitte’s fees for audit-related services were $40,000 in 2021 and $281,893 in 2020. In 2021, audit-related fees related primarily to SEC filings in connection with certain TRA exchanges. In 2020, audit-related fees related primarily to the Company’s proxy filing for stockholder approval of the OneStim Acquisition and SEC filings in connection with certain TRA exchanges. +Tax Fees +Deloitte’s fees for tax services were $426,042 in 2021 and $268,526 in 2020. Tax services primarily involve professional services rendered by Deloitte for tax compliance, tax advice and tax planning. +All Other Fees +Deloitte did not provide any other products and services in 2021 and 2020 and, consequently, there were no other fees incurred. +Before Deloitte is engaged to render audit or non-audit services, the Audit Committee must pre-approve the engagement. The charter of the Audit Committee and its pre-approval policy provides that pre-approval is not required if the engagement is entered into pursuant to pre-approval policies and procedures established by the Audit Committee. The Chairman of the Audit Committee has the authority to grant pre-approvals, provided such approvals are within the pre-approval policy and presented to the Audit Committee at a subsequent meeting. The Audit Committee pre-approved all of the fees described in the table set forth above. The duties of the Audit Committee are described in the charter of the Audit Committee that can be found on the Company’s website, www.libertyfrac.com , by first clicking “ Investors ” then “ Corporate Governance ” and proceeding to “ Governance Documents .” +35 +Vote Required +The affirmative vote of a majority of the shares of Common Stock present in person or represented by proxy at the Annual Meeting and entitled to vote on the matter is required to approve this proposal. If you submit a signed proxy card but do not give voting instructions as to how your shares of Common Stock should be voted, your shares will be voted in accordance with the recommendations of our Board stated in this Proxy Statement. +THE AUDIT COMMITTEE AND THE BOARD RECOMMEND VOTING “ FOR ” THE +RATIFICATION OF APPOINTMENT OF DELOITTE AS THE COMPANY’S +INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR +THE FISCAL YEAR ENDING DECEMBER 31, 2022. +36 +AUDIT COMMITTEE REPORT +The information contained in this Audit Committee Report shall not be deemed to be “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act or the Exchange Act, except to the extent that the Company specifically incorporates such information by reference in such filing. +Primary Oversight Responsibilities +Our management is responsible for establishing a system of internal controls, assessing such controls and for preparing our consolidated financial statements in accordance with generally accepted accounting principles. The Audit Committee provides oversight of these management activities. Our independent registered public accounting firm is responsible for auditing our consolidated financial statements in accordance with standards of the United Stated Public Company Accounting Oversight Board (the “ PCAOB ”) and issuing its report based on its audit. +Under the Audit Committee’s charter, the purpose of the Audit Committee is to assist the Board in fulfilling its oversight responsibilities as to, among other duties: (i) the integrity of the Company’s financial statements; (ii) the Company’s compliance with legal and regulatory requirements; (iii) qualifications, independence and performance of the independent registered public accounting firm engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the Company; (iv) effectiveness and performance of the Company’s internal audit function; (v) the annual preparation of this report and publishing this report in the Company’s Proxy Statement for its annual meeting of stockholders or its Annual Report on Form 10-K; and (vi) performing such other functions as the Board may assign to the Audit Committee from time to time. +Oversight of Independent Auditors +In connection with the evaluation, appointment and retention of the independent registered public accounting firm, at least annually the Audit Committee reviews and evaluates the independence and quality control procedures of the independent registered public accounting firm and the experience and qualifications of its senior personnel providing audit services to the Company. In this evaluation, the Audit Committee may consider, among other factors, the following with respect to the independent registered public accounting firm: their historical and recent performance on our audit, the quality and candor of their communications with the both the Audit Committee and management, the depth of expertise of their audit team and the value provided by their national office, the appropriateness of their fees, how effectively they maintained their independence, their tenure as our independent auditors, their knowledge of our operations, accounting policies and practices, and internal control over financial reporting, and external data relating to audit quality and performance by them and their peer firms. Based on this overall evaluation, the Audit Committee has retained Deloitte as our independent registered public accounting firm for 2022. +2021 Audited Financial Statements +In connection with the preparation of the audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2021: +• The Audit Committee reviewed and discussed the audited financial statements and associated audit with the independent registered public accounting firm and management; +• The Audit Committee discussed with the independent registered public accounting firm the matters required to be discussed by Auditing Standard No. 1301 “Communications with Audit Committees” as adopted by the PCAOB. In general, these auditing standards require the independent registered public accounting firm to communicate to the Audit Committee certain matters that are incidental to the audit, such as any initiation of, or changes to, significant accounting policies, management judgments, accounting estimates and audit adjustments; disagreements with management; the independent registered public accounting firm’s judgment about the quality of our accounting principles; significant audit risks identified and any changes from planned audit strategy; the use of specialists on the audit team; and issues for which the independent registered public accounting firm have consulted outside the engagement team; and +• The Audit Committee has received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the PCAOB regarding the independent registered public accounting firm’s communication with the Audit Committee concerning independence, and has discussed the independent registered public accounting firm’s independence with the independent registered public accounting firm. The Audit Committee also considered whether the independent registered public accounting firm’s provision of non-audit services to us was compatible with maintaining their independence. +37 +Based on the review and discussions noted above, the Audit Committee recommended to the Board that the audited consolidated financial statements of the Company for the year ended December 31, 2021 be included in our Annual Report on Form 10-K filed with the SEC. +Audit Committee of the Board of Directors: +William F. Kimble, Chairman +Cary D. Steinbeck, Member +Gale A. Norton, Member +38 +PROPOSAL 4 — APPROVAL OF AN AMENDMENT TO OUR AMENDED AND RESTATED +CERTIFICATE OF INCORPORATION TO CHANGE THE NAME OF THE COMPANY TO LIBERTY ENERGY INC. +Our Amended and Restated Certificate of Incorporation requires the affirmative vote of the holders of at least 66 2/3% in voting power of the outstanding shares of Common Stock entitled to vote thereon, voting together as a single class in order to amend any provision of our Certificate of Incorporation. +On January 18, 2022, the Board unanimously adopted a resolution to amend, and to recommend that the stockholders approve, an amendment to Article First of our Amended and Restated Certificate of Incorporation for the purpose of changing our name from “Liberty Oilfield Services Inc.” to “Liberty Energy Inc.” The Board strongly endorses the name change and recommends that the stockholders approve the following resolution: +RESOLVED, that the stockholders approve an amendment to Article FIRST of the Company’s Amended and Restated Certificate of Incorporation as follows: +FIRST: The name of the Corporation is Liberty Energy Inc. +Reasons for Name Change +Due to our internal growth and strategic acquisitions over the past few years, as discussed further in this Proxy Statement and our Annual Report on Form 10-K, the Company has grown to become a provider of integrated hydraulic fracturing services, including wireline, proppant delivery, sand mine operations, related goods, and associated data analytics and technologies. Throughout this growth, we have stayed intently focused on providing “next-generation” frac fleets and technologies to assist our customers with completing their wells in an ESG-friendly manner, including working to better the process of bringing hydrocarbons to the surface in a clean, safe and efficient fashion. +While we recognize the various environmental and social impacts of hydrocarbon energy and fervently work to address them as shown above, we believe that access to life-enhancing modern energy presents the most pressing global energy challenge. We are proud to deliver affordable, dependable energy that is vital to human progress. Given the breadth of the related services now offered and our focus on energy production, the Company believes the new name of “Liberty Energy Inc.” better aligns with the Company’s goal of both providing energy and bettering human lives. +Effects of Name Change +If the stockholders approve the proposed amendment to our Amended and Restated Certificate of Incorporation, the amendment will become effective upon the filing of a certificate of amendment to our Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware, which would be filed shortly after the Annual Meeting. While the name change will cause us to incur certain modest costs, the Board believes that any potential confusion and costs associated with the name change will be minimal and will be outweighed by the benefits of the name change. The change in the Company’s name will not affect the status of the Company or the rights of any stockholder in any respect. We will not change the trading symbol for our Class A Common Stock as a result of the name change, which will continue to be quoted on the NYSE as LBRT. +Vote Required +The approval of an amendment to our Amended and Restated Certificate of Incorporation requires the affirmative vote of at least 66 2/3% in voting power of the outstanding shares of Common Stock entitled to vote thereon. If you submit a signed proxy card but do not give voting instructions as to how your shares of Common Stock should be voted, your shares will be voted in accordance with the recommendations of our Board stated in this Proxy Statement. +THE BOARD RECOMMENDS VOTING “ FOR ” THE APPROVAL OF +AN AMENDMENT TO OUR AMENDED AND RESTATED +CERTIFICATE OF INCORPORATION TO CHANGE THE NAME +OF THE COMPANY TO LIBERTY ENERGY INC. +39 +SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT +The following table sets forth the beneficial ownership of our common stock as of March 3, 2022, by: +* each person known to us to beneficially own more than 5% of any class of our outstanding voting securities; +* each member of our Board and each nominee to our Board; +* each of our Named Executive Officers; and +* all of our directors, director nominees and Named Executive Officers as a group. +Except as otherwise indicated, the persons listed below have sole voting and investment power with respect to all shares of our Common Stock beneficially owned by them, except to the extent this power may be shared with a spouse. All information with respect to beneficial ownership has been furnished by the 5% or more stockholders, directors or Named Executive Officers, as the case may be. Unless otherwise noted, the mailing address of each listed beneficial owner is 950 17th Street, Suite 2400, Denver, Colorado 80202. As of March 3, 2022, 183,652,228 shares of our Class A Common Stock were outstanding and 2,449,191 shares of our Class B Common Stock were outstanding. +Shares of Common Stock Beneficially Owned +Class A +Common Stock +Class B +Common Stock (1) +Combined Voting +Power (2) +Number +% +Number +% +Number +% +5% Stockholders +Schlumberger Limited (3) +49,601,961 +27.0 +% +— +— +49,601,961 +26.7 +% +T. Rowe Price Associates, Inc. (4) +11,850,048 +6.5 +% +— +— +11,850,048 +6.4 +% +FMR LLC (5) +27,616,589 +15.0 +% +— +— +27,616,589 +14.8 +% +The Vanguard Group (6) +10,881,721 +5.9 +% +10,881,721 +5.8 +% +Directors and Named Executive Officers: +Christopher A. Wright (7) +3,322,850 +1.8 +% +— +— +3,322,850 +1.8 +% +Michael Stock (7) +713,995 +* +— +— +713,995 +* +Ron Gusek (7) +1,230,348 +* +— +— +1,230,348 +* +R. Sean Elliott (7) +143,741 +* +— +— +143,741 +* +Ryan T. Gosney (7) +95,550 +* +— +— +95,550 +* +Cary D. Steinbeck (8) +423,746 +* +— +— +423,746 +* +Ken Babcock +106,234 +* +— +— +106,234 +* +William F. Kimble +47,411 +* +— +— +47,411 +* +Peter A. Dea +37,994 +* +— +— +37,994 +* +Gale A. Norton +31,230 +* +— +— +31,230 +* +Simon Ayat +— +— +— +— +— +— +James R. McDonald +— +— +— +— +— +— +Audrey Robertson (9) +5,793 +— +— +— +5,793 +— +Directors and Named Executive Officers +as a group (13 persons) +6,158,892 +3.4 +% +— +— +6,158,892 +3.3 +% +(1) Under the Liberty LLC Agreement (as defined herein), each Liberty Unit Holder (as defined herein) has, subject to certain limitations, the right to cause Liberty LLC (as defined herein) to acquire all or a portion of its Liberty LLC Units (as defined herein) for, at Liberty LLC’s election, (i) shares of our Class A Common Stock at a redemption ratio of one share of Class A Common Stock for each Liberty LLC Unit redeemed, subject to conversion rate adjustments for stock splits, stock dividends and reclassification and other similar transactions or (ii) an equivalent amount of cash. In connection with any redemption of Liberty LLC Units pursuant to the Redemption Right or the Call Right (as defined below), the corresponding number of shares of Class B Common Stock will be cancelled. See “ Certain Relationships and Related Person Transactions – Liberty LLC Agreement ” set forth herein. Beneficial ownership of Liberty LLC Units is not reflected as beneficial ownership of shares of our Class A Common Stock for which such units may be redeemed. +(2) Represents percentage of voting power of our Class A Common Stock and Class B Common Stock voting together as a single class. +(3) Based on information set forth in a Schedule 13D/A filed with the SEC on March 3, 2021 by Schlumberger N.V. (Schlumberger Limited), Schlumberger B.V., Schlumberger Holdings Corporation (“ SHC ”) and Schlumberger Technology Corporation (“ Schlumberger ”). As reported in such filing, Schlumberger directly holds 49,601,961 shares of Class A Common Stock. Since SHC controls Schlumberger, it is deemed to beneficially own the shares held directly by Schlumberger. Since Schlumberger B.V. controls SHC, it is deemed to beneficially own the shares held directly by Schlumberger. Since Schlumberger Limited controls Schlumberger B.V., it is deemed to beneficially own the shares held directly by Schlumberger. The business address for each of these entities is 5599 San Felipe, 17th Floor Houston, Texas 77056. +40 +(4) This information is based solely on a Schedule 13G/A filed with the SEC on February 14, 2022, by T. Rowe Price Associates, Inc., in which it reported that T. Rowe Price Associates, Inc. has sole voting power as to 3,769,542 shares of Class A Common Stock and sole dispositive power as to 11,850,048 shares of Class A Common Stock. The principal business address of T. Rowe Price Associates, Inc. is 100 E. Pratt Street, Baltimore, MD 21202. +(5) This information is based solely on a Schedule 13G/A filed with the SEC on February 9, 2022, by FMR LLC and Abigail P. Johnson, in which it reported that FMR LLC has sole voting power as to 9,006,549 shares of Class A Common Stock and sole dispositive power as to 27,616,589 shares of Class A Common Stock and Ms. Johnson has no voting power, and shared dispositive power as to 27,616,589 shares of Class A Common Stock. The principal business address of FMR LLC is 245 Summer Street, Boston, MA 02210. +(6) This information is based solely on a Schedule 13G/ filed with the SEC on February 10, 2022 by The Vanguard Group, in which it reported that The Vanguard Group has shared voting power as to 109,757 shares of Class A Common Stock, sole dispositive power as to10,694,919 shares of Class A Common Stock and shared dispositive power as to 186,802 shares of Class A Common Stock. +(7) Shares of Class A Common Stock held by Messrs. Wright, Stock, Gusek, Elliott and Gosney include (a) 140,510, 62,449, 62,449, 51,645 and 31,717 shares of stock, respectively, that will be received upon the vesting of time-based RSUs and (b) 168,885, 75,060, 75,060, 30,654 and 18,810 shares of stock, respectively, that will be received upon the vesting of performance-based RSUs within 60 days of March 1, 2022. +(8) Includes 379,350 shares of Class A Common Stock held by the Steinbeck Family Trust and 9,805 shares of Class A Common Stock held by the Cary Dustin Steinbeck & Melissa Maucione Crimson Steinbeck Trust. Mr. Steinbeck has voting and dispositive power over these shares. +(9) Includes 200 shares held in custodial accounts on behalf of minor children of Ms. Robertson and 5 shares held through a Roth IRA. +* Less than 1.0%. +41 +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +Policies and Procedures for Review of Related Party Transactions +A “ Related Party Transaction ” is a transaction, arrangement or relationship in which the Company or any of its subsidiaries was, is or will be a participant, the amount of which involved exceeds $120,000, and in which any related person had, has or will have a direct or indirect material interest. A “ Related Person ” is: +♦ any person who is, or at any time during the applicable period was, one of our executive officers or one of our directors; +♦ any person who is known by us to be the beneficial owner of more than 5% of our Class A Common Stock; +♦ any immediate family member of any of the foregoing persons, which means any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law of a director, executive officer or a beneficial owner of more than 5% of our Class A Common Stock, and any person (other than a tenant or employee) sharing the household of such director, executive officer or beneficial owner of more than 5% of our Class A Common Stock; and +♦ any firm, corporation or other entity in which any of the foregoing persons is a partner or principal or in a similar position or in which such person has a 10.0% or greater beneficial ownership interest. +Our Board adopted a written related party transactions policy in connection with the IPO. Pursuant to this policy, our Audit Committee reviews all material facts of all Related Party Transactions and either approves or disapproves entry into the Related Party Transaction, subject to certain limited exceptions. The determination of the Audit Committee is documented in the Audit Committee’s minutes. In determining whether to approve or disapprove entry into a Related Party Transaction, our Audit Committee takes into account, among other factors, the following: (i) whether the Related Party Transaction is on terms no less favorable than terms generally available to an unaffiliated third-party under the same or similar circumstances and (ii) the extent of the Related Person’s interest in the transaction. Furthermore, the policy requires that all Related Party Transactions required to be disclosed in our filings with the SEC be so disclosed in accordance with applicable laws, rules and regulations. +Related Party Transactions +The following is a description of transactions entered into, or in effect, after January 1, 2021 to which we have been a party, in which the amount involved in the transaction exceeds $120,000, and in which any of our directors, executive officers or beneficial owners of more than 5% of our voting securities, or affiliates or immediate family members of any of our directors, executive officers or beneficial owners of more than 5% of our voting securities, had or will have a direct or indirect material interest. We believe the terms obtained or consideration that we paid or received, as applicable, in connection with the transactions described below were comparable to terms available or the amounts that would be paid or received, as applicable, from unrelated third parties. +Liberty LLC Agreement +We entered into the Second Amended and Restated Limited Liability Company Agreement of Liberty Oilfield Services New HoldCo LLC (“ Liberty LLC ”) (the “ Liberty LLC Agreement ”) in connection with the closing of our IPO, which provides for limitations on the ability of holders of units of Liberty LLC (the “ Liberty LLC Units, ” and the holders of Liberty LLC Units “ Liberty Unit Holders ”) to transfer their Liberty LLC Units and provides the Company, as managing member of Liberty LLC, with the right to impose restrictions (in addition to those already in place) on the ability of Liberty Unit Holders to redeem their Liberty LLC Units pursuant to the Redemption Right (as defined below) to the extent the Company believes it is necessary to ensure that Liberty LLC will continue to be treated as a partnership for U.S. federal income tax purposes. +Redemption Rights +Under the Liberty LLC Agreement, each Liberty Unit Holder has, subject to certain limitations, the right (the “ Redemption Right ”) to cause Liberty LLC to acquire all or a portion of its Liberty LLC Units for, at Liberty LLC’s election, (i) shares of our Class A Common Stock at a redemption ratio of one share of Class A Common Stock for each Liberty LLC Unit redeemed, subject to conversion rate adjustments for stock splits, stock dividends and reclassification and other similar transactions or (ii) an equivalent amount of cash. Alternatively, upon the exercise of the Redemption Right, the Company (instead of Liberty LLC) has the right (the “ Call Right ”) to, for administrative convenience, acquire each tendered Liberty LLC Unit directly from the redeeming Liberty Unit Holder for, at the Company’s election, (x) one share of Class A Common Stock or (y) an equivalent amount of cash. In addition, upon a change of control of the Company, the Company has the right to require each holder of Liberty LLC Units (other than the Company) to exercise its Redemption Right with respect to some or all of such unit holder’s Liberty LLC Units. In connection with any redemption of Liberty LLC Units pursuant to the Redemption Right or the Call Right, the corresponding number of shares of Class B Common Stock will be +42 +cancelled. As the Liberty Unit Holders redeem their Liberty LLC Units, our membership interest in Liberty LLC will be correspondingly increased, the number of shares of Class A Common Stock outstanding will be increased, and the number of shares of Class B Common Stock outstanding will be reduced. +Distributions and Allocations +Under the Liberty LLC Agreement, the Company has the right to determine when distributions will be made to the holders of Liberty LLC Units and the amount of any such distributions. If the Company authorizes a distribution, such distribution will be made to the holders of Liberty LLC Units generally on a pro rata basis in accordance with their respective percentage ownership of Liberty LLC Units. +Liberty LLC will allocate its net income or net loss for each year to the holders of Liberty LLC Units pursuant to the terms of the Liberty LLC Agreement, and the holders of Liberty LLC Units, including the Company, will generally incur U.S. federal, state and local income taxes on their share of any taxable income of Liberty LLC. Net income and losses of Liberty LLC generally will be allocated to the holders of Liberty LLC Units on a pro rata basis in accordance with their respective percentage ownership of Liberty LLC Units, subject to requirements under U.S. federal income tax law that certain items of income, gain, loss or deduction be allocated disproportionately in certain circumstances. To the extent Liberty LLC has available cash and subject to the terms of any debt instruments, the Company intends to cause Liberty LLC to make (i) generally pro rata distributions to the holders of Liberty LLC Units, including the Company, in an amount sufficient to allow the Company to pay its taxes and to allow it to make payments under the Tax Receivable Agreements (as defined below), (ii) tax advances, which will be repaid upon exercise of the Redemption Right or the Call Right, as applicable, in an amount sufficient to allow each of the Liberty Unit Holders to pay its respective taxes on such holder’s allocable share of Liberty LLC’s taxable income after taking into account certain other distributions or payments received by the Liberty Unit Holders from Liberty LLC or the Company, and (iii) non-pro rata payments to the Company to reimburse it for its corporate and other overhead expenses. +Issuance of Equity +The Liberty LLC Agreement generally provides that at any time the Company issues a share of its Class A Common Stock or any other equity security, the net proceeds received by the Company with respect to such issuance, if any, shall be concurrently invested in Liberty LLC, and Liberty LLC shall issue to the Company one Liberty LLC Unit or other economically equivalent equity interest. Conversely, if at any time, any shares of Class A Common Stock are redeemed, repurchased or otherwise acquired, Liberty LLC shall redeem, repurchase or otherwise acquire an equal number of Liberty LLC Units held by the Company, upon the same terms and for the same price, as the shares of the Class A Common Stock are redeemed, repurchased or otherwise acquired. +Dissolution +Liberty LLC will be dissolved only upon the first to occur of (i) the sale of substantially all of its assets or (ii) an election by us to dissolve the company. Upon dissolution, Liberty LLC will be liquidated and the proceeds from any liquidation will be applied and distributed in the following manner: (i) first, to creditors (including to the extent permitted by law, creditors who are members) in satisfaction of the liabilities of Liberty LLC; (ii) second, to establish cash reserves for contingent or unforeseen liabilities; and (iii) third, to the members in proportion to the number of Liberty LLC Units owned by each of them. +Tax Receivable Agreements +In connection with the IPO, on January 17, 2018, the Company entered into two tax receivable agreements, (the “ TRAs ”) with the Liberty Unit Holders and the selling stockholder (each such person and any permitted transferee, a “ TRA Holder ” and together, the “ TRA Holders ”). The TRAs generally provide for the payment by the Company of 85% of the net cash savings, if any, in U.S. federal, state, and local income tax and franchise tax (computed using simplifying assumptions to address the impact of state and local taxes) that the Company actually realizes (or is deemed to realize in certain circumstances) in periods after the IPO as a result, as applicable to each TRA Holder, of (i) certain increases in tax basis that occur as a result of the Company’s acquisition (or deemed acquisition for U.S. federal income tax purposes) of all or a portion of such TRA Holder’s Liberty LLC Units in connection with the IPO or pursuant to the exercise of the Redemption Right or the Call Right, (ii) any net operating losses available to the Company as a result of the corporate reorganization, and (iii) imputed interest deemed to be paid by the Company as a result of, and additional tax basis arising from, any payments the Company makes under the TRAs. For the year ended December 31, 2020, the Company made TRA payments of $1.9 million and $5.5 million, totaling $7.4 million. These TRA payments were related to tax benefits realized in prior years and for the Company’s carryback of 2019 net operating losses to 2018 taxable income under the CARES Act. +Schlumberger +Master Transaction Agreement +On August 31, 2020, the Company, entered into a Master Transaction Agreement (the “ MTA ”) with Schlumberger, Schlumberger Canada Limited, (“ Schlumberger Canada ” and, together with Schlumberger, the “ Schlumberger Parties ”), Liberty LLC, and LOS Canada Operations Inc. (“ Canadian Buyer ”), pursuant to which the Liberty LLC and Canadian Buyer acquired the Schlumberger Parties’ +43 +OneStim business in exchange for 57,377,232 shares of Class A Common Stock and a non-interest bearing demand promissory note, which note was satisfied with 8,948,902 shares of Class A Common Stock, resulting in a total of 66,326,134 shares of Class A Common Stock being issued in connection with the transaction. The Schlumberger Parties are affiliated with Messrs. Ayat and McDonald, who are on our Board. The transactions contemplated by the MTA closed on December 31, 2020. +Until December 31, 2024, subject to certain exceptions and as more specifically set forth in the MTA, without the prior written consent of the Company, each of Schlumberger and Schlumberger Canada will not, and will cause each of their respective affiliates (including Schlumberger Limited) not to, directly or indirectly engage in any business or enterprise that is competitive with OneStim within onshore United States and Canada. +On December 31, 2020, in connection with the closing of the transactions contemplated by the MTA, the Company (and/or one or more of its subsidiaries) and the Schlumberger Parties entered into the following agreements, each of which may involve amounts in excess of $120,000: (i) an intellectual property license agreement, whereby the Schlumberger Parties granted to Liberty LLC and the Company exclusive and non-exclusive licenses to certain intellectual property, and Liberty LLC granted to the Schlumberger Parties a non-exclusive license to certain patents acquired by Liberty LLC under the MTA; (ii) an employee matters agreement, pursuant to which the applicable Schlumberger Party agreed to lease employees to the Company or a subsidiary of the Company until March 1, 2021, subject to certain exceptions and extensions; (iii) an alliance agreement whereby Schlumberger and Liberty LLC agreed to collaborate to advance each of their product portfolios and technology offerings; (iv) a transition services agreement whereby Schlumberger or its designee agreed to provide certain back-office, administrative, field operations, supply chain and other specified services to the Company until March 1, 2021, subject to certain exceptions and extensions; and (v) a strategic supply agreement intended to provide the Company with an opportunity to purchase from the various business lines of Schlumberger, products and services with competitive pricing terms for a term not to exceed the term of the non-compete covenant in the MTA discussed above. +Amended and Restated Stockholders Agreement +In connection with the OneStim Acquisition, we entered into an amended and restated stockholders agreement with affiliates of Riverstone, and the Schlumberger Parties. Among other things, the amended and restated stockholders agreement provides the right to designate nominees to our Board as follows: +• so long as the Schlumberger Parties and its affiliates collectively beneficially own at least 20% of the outstanding shares of our Common Stock, the Schlumberger Parties can designate up to two (2) nominees to our Board; and +• so long as the Schlumberger Parties and their affiliates collectively beneficially own at least 10% of the outstanding shares of our Common Stock, the Schlumberger Parties can designate up to one (1) nominee to our Board. +Pursuant to the amended and restated stockholders agreement, the Schlumberger Parties will not, (i) for a period of nine months from the closing of the OneStim Acquisition, transfer or dispose of (or take other analogous actions in accordance with the terms of the agreement) any economic, voting or other rights in or to their issued shares, other than certain permitted transfers and, (ii) for a period of four years from the closing of the OneStim Acquisition, make any transfer of Common Stock to any direct competitor of the Company or to any person that is subject to, or by virtue of such transfer would become subject to, the reporting obligations under Schedule 13D under the Exchange Act, with respect to Common Stock (the “ Lock-Up and Transfer Restrictions ”). +Pursuant to the amended and restated stockholders agreement, the Schlumberger Parties and their affiliates are subject to customary standstill restrictions in accordance with which such parties will agree not to, among other things, acquire beneficial ownership of any equity securities of the Company or publicly seek or encourage any offer or proposal for a merger or similar transaction involving the Company during the period commencing on the date of the agreement and continuing until the fourth anniversary of the closing of the OneStim Acquisition (the “ Standstill ”). +Pursuant to the amended and restated stockholders agreement, we will be required to take all necessary actions, to the fullest extent permitted by applicable law (including with respect to any fiduciary duties under Delaware law), to cause the election of the nominees designated by either the Riverstone affiliates or the Schlumberger Parties. At any time the members of our Board are allocated among separate classes of directors, (i) the directors designated by the Riverstone affiliates pursuant to the amended and restated stockholders agreement will be to the classes as mutually agreed between us and the Riverstone affiliates, and (ii) the directors designated by the Schlumberger Parties pursuant to the amended and restated stockholders agreement will be to the classes as mutually agreed between us and the Schlumberger Parties. The Riverstone affiliates will be entitled to designate the replacement for any of its Board designees whose service terminates prior to the end of such director’s term. The Schlumberger Parties will be entitled to designate the replacement for any of its Board designees whose service terminates prior to the end of such director’s term. +The amended and restated stockholders agreement will terminate with respect to the Schlumberger Parties at the earliest of (a) such time as the Schlumberger Parties no longer beneficially own at least 10% of the outstanding shares of Common Stock and are no longer subject to the Standstill and the Lock-Up and Transfer Restrictions, (b) such time as the Schlumberger Parties do not beneficially own +44 +any shares of Common Stock, and (c) the written agreement of the Schlumberger Parties and the Company terminating the agreement. The amended and restated stockholders agreement will terminate with respect to Riverstone at the earliest of (i) such time as Riverstone and its affiliates no longer beneficially own at least 10% of the outstanding shares of Common Stock, and (ii) the delivery of written notice to the Company by Riverstone of the termination of the agreement with respect to Riverstone. +Amended and Restated Registration Rights Agreement +In connection with the OneStim Acquisition, we entered into an amended and restated registration rights agreement with Schlumberger, Schlumberger Canada and each of the other holders identified therein (the “ Holders ”), pursuant to which, among other things, certain Holders, including affiliates of Riverstone, Schlumberger and Schlumberger Canada (the “ Sponsoring Holders ”), have customary demand registration rights and we are obligated to prepare and file a registration statement registering the offer and sale of all of Schlumberger and Schlumberger Canada’s shares of Class A Common Stock. In addition, pursuant to this agreement, the Sponsoring Holders have the right to require us, subject to certain limitations set forth therein, to effect a distribution of any or all of their shares of Class A Common Stock by means of an underwritten offering. We are not obligated to effect any underwritten offering unless the dollar amount of the registrable securities of the Sponsoring Holder(s) demanding such underwritten offering to be included therein is reasonably likely to result in gross sale proceeds of at least $25 million. The amended and restated registration rights agreement also provides Holders with certain customary piggyback registration rights. These registration rights are subject to certain conditions and limitations, including the right of the underwriters to limit the number of shares to be included in a registration or offering and the Company’s right to delay or withdraw a registration statement under certain circumstances. +Property Swap +During 2021, a subsidiary of the Company and Schlumberger entered into a property swap agreement under which the Company exchanged with Schlumberger a property acquired in the OneStim Acquisition and $4.9 million in cash for a separate property that the Company has utilized with its existing operations. +Working Capital Settlement +Under the MTA, to the extent the net working capital, as defined therein, of the transferred OneStim business is less than $54.6 million, the difference shall be payable in cash to the Company. In 2021, the Company agreed on a working capital settlement from Schlumberger of $15.8 million, most of which was netted against transaction services costs and cash settlements during the transition services period. +Purchase of Chemicals, Proppant and Equipment +Following the OneStim Acquisition, in the normal course of business, the Company purchases chemicals, proppant and other equipment and maintenance parts from Schlumberger and its subsidiaries. For the year ended December 31, 2021, total purchases from Schlumberger were approximately $28.2 million, and as of December 31, 2021, amounts due to Schlumberger were $3.8 million. +Underwriting Agreement +On February 8, 2021, the Company, R/C Energy IV Direct Partnership, L.P. and R/C IV Liberty Holdings, L.P. (together, the “ Riverstone Affiliates ”) and Morgan Stanley & Co. LLC (the “ Underwriter ”), entered into an underwriting agreement (the “ Underwriting Agreement ”), pursuant to which the Riverstone Affiliates agreed to sell to the Underwriter, and the Underwriter agreed to purchase from the Riverstone Affiliates, subject to and upon the terms and conditions set forth therein, an aggregate of 8,700,000 shares of Class A Common Stock of the Company (the “ Offering ”). The Offering closed on February 11, 2021. Pursuant to the Underwriting Agreement, the Riverstone Affiliates also granted the Underwriter a 30-day option to purchase from the Riverstone Affiliates up to 1,305,000 additional shares of Class A Common Stock at the public offering price, less the underwriting discount. The Company will not receive any proceeds from the sale of shares of Class A Common Stock in the Offering. The Underwriting Agreement contains customary representations, warranties and agreements of the Company and the Riverstone Affiliates and other customary obligations of the parties and termination provisions. +Transactions with Liberty Resources +Liberty Resources LLC (“ Liberty Resources ”) is an oil and gas exploration and production company of which Mr. Wright is the Executive Chairman. Mr. Wright previously served as the Chief Executive Officer at Liberty Resources from its formation in September 2010 until March 2017. Liberty Resources entered into a master service agreement with Liberty Oilfield Services LLC, a subsidiary of the Company (“ Liberty Services ”), whereby Liberty Services provides hydraulic fracturing service to Liberty Resources at market service rates. For the year ended December 31, 2021, the amounts related to the provision of hydraulic fracturing services to Liberty Resources under the master services agreement was $2.8 million. +45 +Transactions with Franklin Mountain +Franklin Mountain Energy LLC (“ Franklin Mountain ”) is an oil and gas exploration and production company of which Ms. Robertson serves as the Chief Financial Officer. Franklin Mountain entered into a master service agreement with Liberty Services, whereby Liberty Services provides hydraulic fracturing service to Franklin Mountain at market service rates. For the year ended December 31, 2021, the amounts related to the provision of hydraulic fracturing services to Franklin Mountain under the master services agreement was $20.5 million or 0.8% of the Company’s revenues for such period. +Transactions with PropX +Liberty Services currently leases equipment from Proppant Express Solutions, LLC (“ PropX ”), a provider of proppant logistics equipment. Liberty Services acquired PropX in October of 2021 (the “ PropX Acquisition ”), resulting in PropX now being a wholly-owned subsidiary of Liberty Services. R/C IV Liberty Big Box Holdings, L.P., a Riverstone fund and a former significant stockholder of the Company, held a greater than 10% equity interest in PropX. Christopher A. Wright, the Chief Executive Officer, Michael Stock, the Chief Financial Officer and Ron Gusek, the President of the Company, held a less than 5% equity interest in PropX through Big Box Proppant Investments LLC. Cary Steinbeck, a director of the Company, served on the PropX Board and held a less than 5% indirect equity interest in PropX. In addition, Brett Staffieri, a Riverstone appointed director, served on the Board of the Company until June 15, 2021 and on the PropX board of directors until the PropX Acquisition. The PropX Acquisition was reviewed and approved by the disinterested members of the Board and pursuant to the Company’s related party transactions policy. From January 1, 2021 through the PropX Acquisition date, Liberty Services paid PropX $7.3 million for the lease of proppant logistics equipment. In connection with the PropX Acquisition, each of the sellers and certain of their investors that received Liberty LLC units, entered into a joinder to the Liberty LLC Agreement. See “ Certain Relationships and Related Person Transactions – Liberty LLC Agreement ” above for a description of the material terms of the Liberty LLC Agreement. +Transactions with Tim Babcock +Tim Babcock is currently employed at ST9 Gas and Oil LLC, a wholly-owned subsidiary of Liberty Services (“ ST9 ”) as a key account manager. Tim Babcock is the son of Ken Babcock, who serves on the Board. For the year ended December 31, 2021, ST9 paid Tim Babcock $121,772.92. +Indemnification for Officers and Directors +Our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws provide indemnification rights to our directors and officers and permit us to purchase insurance on behalf of any officer, director, employee or other agent for any liability arising out of that person’s actions as our officer, director, employee or agent, regardless of whether Delaware law would mandate indemnification. Additionally, we have entered into separate indemnity agreements with our directors and officers to provide additional indemnification benefits, including the right to receive, in advance, reimbursements for expenses incurred in connection with a defense for which the director or officer is entitled to indemnification. We believe that the limitation of liability provisions in our certificate of incorporation, bylaws and the indemnity agreements will facilitate our ability to continue to attract and retain qualified individuals to serve as directors and officers. +Conflicts of Interest +The related party transactions described herein may cause certain conflicts of interests, including that: +♦ we may enter into contracts between us, on the one hand, and related parties, on the other, that are not as a result of arm’s-length transactions; +♦ our executive officers and directors that hold positions of responsibility with related parties may be aware of certain business opportunities that are appropriate for presentation to us as well as to such other related parties and may present such business opportunities to such other parties; and +♦ our executive officers and directors that hold positions of responsibility with related parties may have significant duties with, and spend significant time serving, other entities and may have conflicts of interest in allocating time. +For example, Mr. Wright, our Chief Executive Officer, is the Executive Chairman of Liberty Resources, a position which may require a portion of his time and which may cause conflicts of interest in pursuing business opportunities of which he becomes aware. +46 +DELINQUENT SECTION 16( a ) REPORTS +Section 16(a) of the Exchange Act requires the Company’s directors, executive officers and persons who are beneficial owners of more than ten percent (10%) of a registered class of the Company’s equity securities to file with the SEC initial reports of ownership and reports of changes in ownership. Directors, executive officers and beneficial owners of more than ten percent (10%) of a registered class of the Company’s equity securities are also required to furnish the Company with copies of all Section 16(a) reports that they file with the SEC. If requested, the Company assists its executive officers and directors in complying with the reporting requirements of Section 16(a) of the Exchange Act. The SEC has designated specific deadlines for these reports, and we must identify in this Proxy Statement those persons who did not file these reports when due. +To the Company’s knowledge, based solely on examination of these reports and on written representations provided to us, all directors, executive officers and ten percent (10%) owners timely filed all reports regarding transactions in our securities required to be filed for 2021 pursuant to Section 16(a) of the Exchange Act, except for one late Form 3 filing for James R. McDonald due to a delay in receipt of EDGAR codes in January 2021, one late Form 4 filing for Peter Dea related to annual director RSU grant on February 9, 2021 and one late Form 4 filing for Ron Gusek related to shares received upon conversion of Class B Common Stock on December 2, 2021. +HOUSEHOLDING +The SEC permits companies and intermediaries (such as brokers and banks) to satisfy delivery requirements for proxy statements and annual reports with respect to two or more stockholders sharing the same address by delivering a single proxy statement and annual report to those stockholders. This process, which is commonly referred to as “householding,” is intended to reduce the volume of duplicate information stockholders receive and reduce expenses for companies. Both the Company and some of our intermediaries may be householding our proxy materials and Annual Report on Form 10-K. Once you have received notice from your broker or another intermediary that they will be householding materials sent to your address, householding will continue until you are notified otherwise or until you revoke your consent. Should you wish to receive separate copies of our Annual Report on Form 10-K and proxy statement in the future, we will promptly deliver a separate copy of each of these documents to you if you send a written or oral request to us at our phone number or address appearing on the cover of this Proxy Statement, to the attention of the Corporate Secretary. If you hold your shares through an intermediary that is householding and you want to receive separate copies of our Annual Report on Form 10-K and proxy statement in the future, you should contact your bank, broker or other nominee record holder. +STOCKHOLDER PROPOSALS +Pursuant to Rule l4a-8 under the Exchange Act, in order for a stockholder proposal to be included in the Company’s proxy statement for its 2023 annual meeting, such proposal must be received at the Company’s principal executive offices at 950 17th Street, Suite 2400, Denver, Colorado 80202, Attn: Corporate Secretary, no later than November 9, 2022, and must comply with additional requirements established by the SEC. SEC rules set standards for eligibility and specify the types of stockholder proposals that may be excluded from a proxy statement. In addition, the Company’s Amended and Restated Bylaws provide that any stockholder who would like to have a proposal considered at our 2023 annual meeting of stockholders must submit the proposal to the Secretary of the Company at the Company’s principal executive offices so that it is received by not earlier than the close of business on December 20, 2022, and not later than the close of business on January 19, 2023, unless the date of our 2023 annual meeting is more than 30 days before or more than 60 days after April 19, 2023, in which case the proposal must be received no later than the 10th day following the day on which public announcement of the date of such meeting is first made by the Company. A copy of the Company’s Amended and Restated Bylaws is available upon request from the Secretary of the Company. Stockholders who intend to submit a proposal for nomination of persons for election to our Board or a proposal of business at the 2023 annual meeting (other than matters properly brought under Rule 14a-8 under the Exchange Act and included in the Company’s notice of meeting) must follow the procedures prescribed in the Company’s Amended and Restated Bylaws. No stockholder proposal was received for inclusion in this Proxy Statement. +WHERE YOU CAN FIND MORE INFORMATION +We file or furnish annual, quarterly and current reports, proxy statements and other documents with the SEC under the Exchange Act. The SEC also maintains an internet website at www.sec.gov that contains reports, proxy and information statements and other information regarding issuers, including us, that file electronically with the SEC. +We also make available free of charge through our website, www.libertyfrac.com , electronic copies of certain documents that we file with the SEC, including our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. +47 +OTHER MATTERS +As of the date of this Proxy Statement, the Board does not intend to present any matters other than those described herein at the Annual Meeting and is unaware of any matters to be presented by other parties. If other matters are properly brought before the meeting for action by the stockholders, proxies will be voted in accordance with the recommendation of the Board or, in the absence of such a recommendation, in accordance with the judgment of the proxy holder. +IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING TO BE HELD ON APRIL 19, 2022: +A COPY OF THIS PROXY STATEMENT, THE NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS, THE 2022 ANNUAL REPORT TO STOCKHOLDERS AND THE PROXY CARD ARE AVAILABLE AT HTTP://ASTPROXYPORTAL.COM/AST/21952 . +IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, YOU ARE URGED TO VOTE BY INTERNET, BY PHONE OR IF YOU HAVE RECEIVED PAPER COPIES OF THE PROXY MATERIALS, BY COMPLETING, SIGNING AND RETURNING THE PROXY IN THE ENCLOSED POSTAGE-PAID, ADDRESSED ENVELOPE. +By Order of the Board of Directors, +/s/ R. Sean Elliott +R. Sean Elliott +Vice President, General Counsel and Corporate Secretary +Denver, Colorado +March 8, 2022 +ANNUAL MEETING OF STOCKHOLDERS OF +LIBERTY OILFIELD SERVICES INC. +Tuesday, April 19, 2022 +GO GREEN +e-Consent makes it easy to go paperless. With e-Consent, you can quickly access your proxy material, statements and other eligible documents online, while reducing costs, clutter and paper waste. Enroll today via www.astfinancial.com to enjoy online access. +NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL : +The Notice of Meeting, proxy statement and proxy card +are available at http://www.astproxyportal.com/ast/21952 +Please sign, date +and mail +your proxy card in the +envelope provided as soon +as possible. +Please detach along perforated +line and mail in the envelope provided. +20330303000000001000 6 +041922 +THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE NOMINEES LISTED IN PROPOSAL 1 AND “FOR” PROPOSALS 2, 3 AND 4. +PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE +☒ +1. Election +of Directors: To elect three (3) Class III directors to the Board to serve until the 2025 annual meeting or until their successors +are duly elected and qualified. +NOMINEES: +☐ +FOR +ALL NOMINEES +Peter +A. Dea +William +F. Kimble +James +R. McDonald +☐ +WITHHOLD +AUTHORITY +FOR ALL NOMINEES +☐ +FOR +ALL EXCEPT +(See instructions below) +INSTRUCTIONS: To +withhold authority to vote for any individual nominee(s), mark “FOR ALL EXCEPT” and fill in the circle +next to each nominee you wish to withhold, as shown here: ● +To +change the address on your account, please check the box at right and indicate your new address in the address space above. +Please note that changes to the registered name(s) on the account may not be submitted via this method. +☐ +FOR +AGAINST +ABSTAIN +2. +Approval, on an advisory basis, of the compensation of the +Company’s named executive officers. +☐ +☐ +☐ +FOR +AGAINST +ABSTAIN +3. +Ratification of the appointment of Deloitte & Touche LLP as the +Company’s independent registered public accounting firm for the +fiscal year ending December 31, 2022. +☐ +☐ +☐ +FOR +AGAINST +ABSTAIN +4. +Approval of an amendment to the Company’s Amended and +Restated Certificate of Incorporation to change the name of the +Company. +☐ +☐ +☐ +TO +INCLUDE ANY COMMENTS, USE THE COMMENTS BOX ON THE REVERSE SIDE OF THIS CARD. +IMPORTANT +NOTICE +YOUR +VOTE IS IMPORTANT. PLEASE SIGN, DATE AND RETURN YOUR PROXY AS SOON AS POSSIBLE. BY DOING +SO, YOU MAY SAVE LIBERTY OILFIELD SERVICES INC. THE EXPENSE OF ADDITIONAL SOLICITATION. +NOTE: +In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting +or any adjournment or postponement thereof. +MARK +“X” HERE IF YOU PLAN TO ATTEND THE VIRTUAL MEETING ☐ +Signature of Stockholder +Date: +Signature of Stockholder +Date: +Note: +Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full +title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person. +1 +LIBERTY OILFIELD SERVICES INC. +THIS +PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS +FOR +THE ANNUAL MEETING OF STOCKHOLDERS +The undersigned hereby appoint(s) Christopher A. Wright, Michael Stock and R. Sean Elliott, or any one +of them, attorneys with full power of substitution and revocation to each, for and in the name of the undersigned +with all the powers the undersigned would possess if personally present, to vote the shares of the undersigned +in Liberty Oilfield Services Inc. as indicated on the proposals referred to on the reverse side hereof at the annual +meeting of its stockholders to be held virtually via live webcast at https://web.lumiagm.com/245867901 +(password: liberty2022) on Tuesday, April 19, 2022 at 9:00 a.m. Mountain Time and at any adjournments +thereof, and in their or his discretion upon any other matter which may properly come before said meeting. +This card also constitutes voting instructions to the trustees under the Liberty Oilfield Services Inc. savings +plans to vote, in person or by proxy, the proportionate interest of the undersigned in the shares of Common +Stock of Liberty Oilfield Services Inc. held by the trustees under the plans, as described in the proxy statement. +(Continued and to be signed on the reverse side) +COMMENTS: +1.1 +14475 \ No newline at end of file diff --git a/raw/proxies/0001694028/0001387131-22-003380/proxy_rpt.txt b/raw/proxies/0001694028/0001387131-22-003380/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..88361878840104eb464d7592fd88e0f3d7cddc3b --- /dev/null +++ b/raw/proxies/0001694028/0001387131-22-003380/proxy_rpt.txt @@ -0,0 +1,70 @@ +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +Policies and Procedures for Review of Related Party Transactions +A “ Related Party Transaction ” is a transaction, arrangement or relationship in which the Company or any of its subsidiaries was, is or will be a participant, the amount of which involved exceeds $120,000, and in which any related person had, has or will have a direct or indirect material interest. A “ Related Person ” is: +♦ any person who is, or at any time during the applicable period was, one of our executive officers or one of our directors; +♦ any person who is known by us to be the beneficial owner of more than 5% of our Class A Common Stock; +♦ any immediate family member of any of the foregoing persons, which means any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law of a director, executive officer or a beneficial owner of more than 5% of our Class A Common Stock, and any person (other than a tenant or employee) sharing the household of such director, executive officer or beneficial owner of more than 5% of our Class A Common Stock; and +♦ any firm, corporation or other entity in which any of the foregoing persons is a partner or principal or in a similar position or in which such person has a 10.0% or greater beneficial ownership interest. +Our Board adopted a written related party transactions policy in connection with the IPO. Pursuant to this policy, our Audit Committee reviews all material facts of all Related Party Transactions and either approves or disapproves entry into the Related Party Transaction, subject to certain limited exceptions. The determination of the Audit Committee is documented in the Audit Committee’s minutes. In determining whether to approve or disapprove entry into a Related Party Transaction, our Audit Committee takes into account, among other factors, the following: (i) whether the Related Party Transaction is on terms no less favorable than terms generally available to an unaffiliated third-party under the same or similar circumstances and (ii) the extent of the Related Person’s interest in the transaction. Furthermore, the policy requires that all Related Party Transactions required to be disclosed in our filings with the SEC be so disclosed in accordance with applicable laws, rules and regulations. +Related Party Transactions +The following is a description of transactions entered into, or in effect, after January 1, 2021 to which we have been a party, in which the amount involved in the transaction exceeds $120,000, and in which any of our directors, executive officers or beneficial owners of more than 5% of our voting securities, or affiliates or immediate family members of any of our directors, executive officers or beneficial owners of more than 5% of our voting securities, had or will have a direct or indirect material interest. We believe the terms obtained or consideration that we paid or received, as applicable, in connection with the transactions described below were comparable to terms available or the amounts that would be paid or received, as applicable, from unrelated third parties. +Liberty LLC Agreement +We entered into the Second Amended and Restated Limited Liability Company Agreement of Liberty Oilfield Services New HoldCo LLC (“ Liberty LLC ”) (the “ Liberty LLC Agreement ”) in connection with the closing of our IPO, which provides for limitations on the ability of holders of units of Liberty LLC (the “ Liberty LLC Units, ” and the holders of Liberty LLC Units “ Liberty Unit Holders ”) to transfer their Liberty LLC Units and provides the Company, as managing member of Liberty LLC, with the right to impose restrictions (in addition to those already in place) on the ability of Liberty Unit Holders to redeem their Liberty LLC Units pursuant to the Redemption Right (as defined below) to the extent the Company believes it is necessary to ensure that Liberty LLC will continue to be treated as a partnership for U.S. federal income tax purposes. +Redemption Rights +Under the Liberty LLC Agreement, each Liberty Unit Holder has, subject to certain limitations, the right (the “ Redemption Right ”) to cause Liberty LLC to acquire all or a portion of its Liberty LLC Units for, at Liberty LLC’s election, (i) shares of our Class A Common Stock at a redemption ratio of one share of Class A Common Stock for each Liberty LLC Unit redeemed, subject to conversion rate adjustments for stock splits, stock dividends and reclassification and other similar transactions or (ii) an equivalent amount of cash. Alternatively, upon the exercise of the Redemption Right, the Company (instead of Liberty LLC) has the right (the “ Call Right ”) to, for administrative convenience, acquire each tendered Liberty LLC Unit directly from the redeeming Liberty Unit Holder for, at the Company’s election, (x) one share of Class A Common Stock or (y) an equivalent amount of cash. In addition, upon a change of control of the Company, the Company has the right to require each holder of Liberty LLC Units (other than the Company) to exercise its Redemption Right with respect to some or all of such unit holder’s Liberty LLC Units. In connection with any redemption of Liberty LLC Units pursuant to the Redemption Right or the Call Right, the corresponding number of shares of Class B Common Stock will be +42 +cancelled. As the Liberty Unit Holders redeem their Liberty LLC Units, our membership interest in Liberty LLC will be correspondingly increased, the number of shares of Class A Common Stock outstanding will be increased, and the number of shares of Class B Common Stock outstanding will be reduced. +Distributions and Allocations +Under the Liberty LLC Agreement, the Company has the right to determine when distributions will be made to the holders of Liberty LLC Units and the amount of any such distributions. If the Company authorizes a distribution, such distribution will be made to the holders of Liberty LLC Units generally on a pro rata basis in accordance with their respective percentage ownership of Liberty LLC Units. +Liberty LLC will allocate its net income or net loss for each year to the holders of Liberty LLC Units pursuant to the terms of the Liberty LLC Agreement, and the holders of Liberty LLC Units, including the Company, will generally incur U.S. federal, state and local income taxes on their share of any taxable income of Liberty LLC. Net income and losses of Liberty LLC generally will be allocated to the holders of Liberty LLC Units on a pro rata basis in accordance with their respective percentage ownership of Liberty LLC Units, subject to requirements under U.S. federal income tax law that certain items of income, gain, loss or deduction be allocated disproportionately in certain circumstances. To the extent Liberty LLC has available cash and subject to the terms of any debt instruments, the Company intends to cause Liberty LLC to make (i) generally pro rata distributions to the holders of Liberty LLC Units, including the Company, in an amount sufficient to allow the Company to pay its taxes and to allow it to make payments under the Tax Receivable Agreements (as defined below), (ii) tax advances, which will be repaid upon exercise of the Redemption Right or the Call Right, as applicable, in an amount sufficient to allow each of the Liberty Unit Holders to pay its respective taxes on such holder’s allocable share of Liberty LLC’s taxable income after taking into account certain other distributions or payments received by the Liberty Unit Holders from Liberty LLC or the Company, and (iii) non-pro rata payments to the Company to reimburse it for its corporate and other overhead expenses. +Issuance of Equity +The Liberty LLC Agreement generally provides that at any time the Company issues a share of its Class A Common Stock or any other equity security, the net proceeds received by the Company with respect to such issuance, if any, shall be concurrently invested in Liberty LLC, and Liberty LLC shall issue to the Company one Liberty LLC Unit or other economically equivalent equity interest. Conversely, if at any time, any shares of Class A Common Stock are redeemed, repurchased or otherwise acquired, Liberty LLC shall redeem, repurchase or otherwise acquire an equal number of Liberty LLC Units held by the Company, upon the same terms and for the same price, as the shares of the Class A Common Stock are redeemed, repurchased or otherwise acquired. +Dissolution +Liberty LLC will be dissolved only upon the first to occur of (i) the sale of substantially all of its assets or (ii) an election by us to dissolve the company. Upon dissolution, Liberty LLC will be liquidated and the proceeds from any liquidation will be applied and distributed in the following manner: (i) first, to creditors (including to the extent permitted by law, creditors who are members) in satisfaction of the liabilities of Liberty LLC; (ii) second, to establish cash reserves for contingent or unforeseen liabilities; and (iii) third, to the members in proportion to the number of Liberty LLC Units owned by each of them. +Tax Receivable Agreements +In connection with the IPO, on January 17, 2018, the Company entered into two tax receivable agreements, (the “ TRAs ”) with the Liberty Unit Holders and the selling stockholder (each such person and any permitted transferee, a “ TRA Holder ” and together, the “ TRA Holders ”). The TRAs generally provide for the payment by the Company of 85% of the net cash savings, if any, in U.S. federal, state, and local income tax and franchise tax (computed using simplifying assumptions to address the impact of state and local taxes) that the Company actually realizes (or is deemed to realize in certain circumstances) in periods after the IPO as a result, as applicable to each TRA Holder, of (i) certain increases in tax basis that occur as a result of the Company’s acquisition (or deemed acquisition for U.S. federal income tax purposes) of all or a portion of such TRA Holder’s Liberty LLC Units in connection with the IPO or pursuant to the exercise of the Redemption Right or the Call Right, (ii) any net operating losses available to the Company as a result of the corporate reorganization, and (iii) imputed interest deemed to be paid by the Company as a result of, and additional tax basis arising from, any payments the Company makes under the TRAs. For the year ended December 31, 2020, the Company made TRA payments of $1.9 million and $5.5 million, totaling $7.4 million. These TRA payments were related to tax benefits realized in prior years and for the Company’s carryback of 2019 net operating losses to 2018 taxable income under the CARES Act. +Schlumberger +Master Transaction Agreement +On August 31, 2020, the Company, entered into a Master Transaction Agreement (the “ MTA ”) with Schlumberger, Schlumberger Canada Limited, (“ Schlumberger Canada ” and, together with Schlumberger, the “ Schlumberger Parties ”), Liberty LLC, and LOS Canada Operations Inc. (“ Canadian Buyer ”), pursuant to which the Liberty LLC and Canadian Buyer acquired the Schlumberger Parties’ +43 +OneStim business in exchange for 57,377,232 shares of Class A Common Stock and a non-interest bearing demand promissory note, which note was satisfied with 8,948,902 shares of Class A Common Stock, resulting in a total of 66,326,134 shares of Class A Common Stock being issued in connection with the transaction. The Schlumberger Parties are affiliated with Messrs. Ayat and McDonald, who are on our Board. The transactions contemplated by the MTA closed on December 31, 2020. +Until December 31, 2024, subject to certain exceptions and as more specifically set forth in the MTA, without the prior written consent of the Company, each of Schlumberger and Schlumberger Canada will not, and will cause each of their respective affiliates (including Schlumberger Limited) not to, directly or indirectly engage in any business or enterprise that is competitive with OneStim within onshore United States and Canada. +On December 31, 2020, in connection with the closing of the transactions contemplated by the MTA, the Company (and/or one or more of its subsidiaries) and the Schlumberger Parties entered into the following agreements, each of which may involve amounts in excess of $120,000: (i) an intellectual property license agreement, whereby the Schlumberger Parties granted to Liberty LLC and the Company exclusive and non-exclusive licenses to certain intellectual property, and Liberty LLC granted to the Schlumberger Parties a non-exclusive license to certain patents acquired by Liberty LLC under the MTA; (ii) an employee matters agreement, pursuant to which the applicable Schlumberger Party agreed to lease employees to the Company or a subsidiary of the Company until March 1, 2021, subject to certain exceptions and extensions; (iii) an alliance agreement whereby Schlumberger and Liberty LLC agreed to collaborate to advance each of their product portfolios and technology offerings; (iv) a transition services agreement whereby Schlumberger or its designee agreed to provide certain back-office, administrative, field operations, supply chain and other specified services to the Company until March 1, 2021, subject to certain exceptions and extensions; and (v) a strategic supply agreement intended to provide the Company with an opportunity to purchase from the various business lines of Schlumberger, products and services with competitive pricing terms for a term not to exceed the term of the non-compete covenant in the MTA discussed above. +Amended and Restated Stockholders Agreement +In connection with the OneStim Acquisition, we entered into an amended and restated stockholders agreement with affiliates of Riverstone, and the Schlumberger Parties. Among other things, the amended and restated stockholders agreement provides the right to designate nominees to our Board as follows: +• so long as the Schlumberger Parties and its affiliates collectively beneficially own at least 20% of the outstanding shares of our Common Stock, the Schlumberger Parties can designate up to two (2) nominees to our Board; and +• so long as the Schlumberger Parties and their affiliates collectively beneficially own at least 10% of the outstanding shares of our Common Stock, the Schlumberger Parties can designate up to one (1) nominee to our Board. +Pursuant to the amended and restated stockholders agreement, the Schlumberger Parties will not, (i) for a period of nine months from the closing of the OneStim Acquisition, transfer or dispose of (or take other analogous actions in accordance with the terms of the agreement) any economic, voting or other rights in or to their issued shares, other than certain permitted transfers and, (ii) for a period of four years from the closing of the OneStim Acquisition, make any transfer of Common Stock to any direct competitor of the Company or to any person that is subject to, or by virtue of such transfer would become subject to, the reporting obligations under Schedule 13D under the Exchange Act, with respect to Common Stock (the “ Lock-Up and Transfer Restrictions ”). +Pursuant to the amended and restated stockholders agreement, the Schlumberger Parties and their affiliates are subject to customary standstill restrictions in accordance with which such parties will agree not to, among other things, acquire beneficial ownership of any equity securities of the Company or publicly seek or encourage any offer or proposal for a merger or similar transaction involving the Company during the period commencing on the date of the agreement and continuing until the fourth anniversary of the closing of the OneStim Acquisition (the “ Standstill ”). +Pursuant to the amended and restated stockholders agreement, we will be required to take all necessary actions, to the fullest extent permitted by applicable law (including with respect to any fiduciary duties under Delaware law), to cause the election of the nominees designated by either the Riverstone affiliates or the Schlumberger Parties. At any time the members of our Board are allocated among separate classes of directors, (i) the directors designated by the Riverstone affiliates pursuant to the amended and restated stockholders agreement will be to the classes as mutually agreed between us and the Riverstone affiliates, and (ii) the directors designated by the Schlumberger Parties pursuant to the amended and restated stockholders agreement will be to the classes as mutually agreed between us and the Schlumberger Parties. The Riverstone affiliates will be entitled to designate the replacement for any of its Board designees whose service terminates prior to the end of such director’s term. The Schlumberger Parties will be entitled to designate the replacement for any of its Board designees whose service terminates prior to the end of such director’s term. +The amended and restated stockholders agreement will terminate with respect to the Schlumberger Parties at the earliest of (a) such time as the Schlumberger Parties no longer beneficially own at least 10% of the outstanding shares of Common Stock and are no longer subject to the Standstill and the Lock-Up and Transfer Restrictions, (b) such time as the Schlumberger Parties do not beneficially own +44 +any shares of Common Stock, and (c) the written agreement of the Schlumberger Parties and the Company terminating the agreement. The amended and restated stockholders agreement will terminate with respect to Riverstone at the earliest of (i) such time as Riverstone and its affiliates no longer beneficially own at least 10% of the outstanding shares of Common Stock, and (ii) the delivery of written notice to the Company by Riverstone of the termination of the agreement with respect to Riverstone. +Amended and Restated Registration Rights Agreement +In connection with the OneStim Acquisition, we entered into an amended and restated registration rights agreement with Schlumberger, Schlumberger Canada and each of the other holders identified therein (the “ Holders ”), pursuant to which, among other things, certain Holders, including affiliates of Riverstone, Schlumberger and Schlumberger Canada (the “ Sponsoring Holders ”), have customary demand registration rights and we are obligated to prepare and file a registration statement registering the offer and sale of all of Schlumberger and Schlumberger Canada’s shares of Class A Common Stock. In addition, pursuant to this agreement, the Sponsoring Holders have the right to require us, subject to certain limitations set forth therein, to effect a distribution of any or all of their shares of Class A Common Stock by means of an underwritten offering. We are not obligated to effect any underwritten offering unless the dollar amount of the registrable securities of the Sponsoring Holder(s) demanding such underwritten offering to be included therein is reasonably likely to result in gross sale proceeds of at least $25 million. The amended and restated registration rights agreement also provides Holders with certain customary piggyback registration rights. These registration rights are subject to certain conditions and limitations, including the right of the underwriters to limit the number of shares to be included in a registration or offering and the Company’s right to delay or withdraw a registration statement under certain circumstances. +Property Swap +During 2021, a subsidiary of the Company and Schlumberger entered into a property swap agreement under which the Company exchanged with Schlumberger a property acquired in the OneStim Acquisition and $4.9 million in cash for a separate property that the Company has utilized with its existing operations. +Working Capital Settlement +Under the MTA, to the extent the net working capital, as defined therein, of the transferred OneStim business is less than $54.6 million, the difference shall be payable in cash to the Company. In 2021, the Company agreed on a working capital settlement from Schlumberger of $15.8 million, most of which was netted against transaction services costs and cash settlements during the transition services period. +Purchase of Chemicals, Proppant and Equipment +Following the OneStim Acquisition, in the normal course of business, the Company purchases chemicals, proppant and other equipment and maintenance parts from Schlumberger and its subsidiaries. For the year ended December 31, 2021, total purchases from Schlumberger were approximately $28.2 million, and as of December 31, 2021, amounts due to Schlumberger were $3.8 million. +Underwriting Agreement +On February 8, 2021, the Company, R/C Energy IV Direct Partnership, L.P. and R/C IV Liberty Holdings, L.P. (together, the “ Riverstone Affiliates ”) and Morgan Stanley & Co. LLC (the “ Underwriter ”), entered into an underwriting agreement (the “ Underwriting Agreement ”), pursuant to which the Riverstone Affiliates agreed to sell to the Underwriter, and the Underwriter agreed to purchase from the Riverstone Affiliates, subject to and upon the terms and conditions set forth therein, an aggregate of 8,700,000 shares of Class A Common Stock of the Company (the “ Offering ”). The Offering closed on February 11, 2021. Pursuant to the Underwriting Agreement, the Riverstone Affiliates also granted the Underwriter a 30-day option to purchase from the Riverstone Affiliates up to 1,305,000 additional shares of Class A Common Stock at the public offering price, less the underwriting discount. The Company will not receive any proceeds from the sale of shares of Class A Common Stock in the Offering. The Underwriting Agreement contains customary representations, warranties and agreements of the Company and the Riverstone Affiliates and other customary obligations of the parties and termination provisions. +Transactions with Liberty Resources +Liberty Resources LLC (“ Liberty Resources ”) is an oil and gas exploration and production company of which Mr. Wright is the Executive Chairman. Mr. Wright previously served as the Chief Executive Officer at Liberty Resources from its formation in September 2010 until March 2017. Liberty Resources entered into a master service agreement with Liberty Oilfield Services LLC, a subsidiary of the Company (“ Liberty Services ”), whereby Liberty Services provides hydraulic fracturing service to Liberty Resources at market service rates. For the year ended December 31, 2021, the amounts related to the provision of hydraulic fracturing services to Liberty Resources under the master services agreement was $2.8 million. +45 +Transactions with Franklin Mountain +Franklin Mountain Energy LLC (“ Franklin Mountain ”) is an oil and gas exploration and production company of which Ms. Robertson serves as the Chief Financial Officer. Franklin Mountain entered into a master service agreement with Liberty Services, whereby Liberty Services provides hydraulic fracturing service to Franklin Mountain at market service rates. For the year ended December 31, 2021, the amounts related to the provision of hydraulic fracturing services to Franklin Mountain under the master services agreement was $20.5 million or 0.8% of the Company’s revenues for such period. +Transactions with PropX +Liberty Services currently leases equipment from Proppant Express Solutions, LLC (“ PropX ”), a provider of proppant logistics equipment. Liberty Services acquired PropX in October of 2021 (the “ PropX Acquisition ”), resulting in PropX now being a wholly-owned subsidiary of Liberty Services. R/C IV Liberty Big Box Holdings, L.P., a Riverstone fund and a former significant stockholder of the Company, held a greater than 10% equity interest in PropX. Christopher A. Wright, the Chief Executive Officer, Michael Stock, the Chief Financial Officer and Ron Gusek, the President of the Company, held a less than 5% equity interest in PropX through Big Box Proppant Investments LLC. Cary Steinbeck, a director of the Company, served on the PropX Board and held a less than 5% indirect equity interest in PropX. In addition, Brett Staffieri, a Riverstone appointed director, served on the Board of the Company until June 15, 2021 and on the PropX board of directors until the PropX Acquisition. The PropX Acquisition was reviewed and approved by the disinterested members of the Board and pursuant to the Company’s related party transactions policy. From January 1, 2021 through the PropX Acquisition date, Liberty Services paid PropX $7.3 million for the lease of proppant logistics equipment. In connection with the PropX Acquisition, each of the sellers and certain of their investors that received Liberty LLC units, entered into a joinder to the Liberty LLC Agreement. See “ Certain Relationships and Related Person Transactions – Liberty LLC Agreement ” above for a description of the material terms of the Liberty LLC Agreement. +Transactions with Tim Babcock +Tim Babcock is currently employed at ST9 Gas and Oil LLC, a wholly-owned subsidiary of Liberty Services (“ ST9 ”) as a key account manager. Tim Babcock is the son of Ken Babcock, who serves on the Board. For the year ended December 31, 2021, ST9 paid Tim Babcock $121,772.92. +Indemnification for Officers and Directors +Our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws provide indemnification rights to our directors and officers and permit us to purchase insurance on behalf of any officer, director, employee or other agent for any liability arising out of that person’s actions as our officer, director, employee or agent, regardless of whether Delaware law would mandate indemnification. Additionally, we have entered into separate indemnity agreements with our directors and officers to provide additional indemnification benefits, including the right to receive, in advance, reimbursements for expenses incurred in connection with a defense for which the director or officer is entitled to indemnification. We believe that the limitation of liability provisions in our certificate of incorporation, bylaws and the indemnity agreements will facilitate our ability to continue to attract and retain qualified individuals to serve as directors and officers. +Conflicts of Interest +The related party transactions described herein may cause certain conflicts of interests, including that: +♦ we may enter into contracts between us, on the one hand, and related parties, on the other, that are not as a result of arm’s-length transactions; +♦ our executive officers and directors that hold positions of responsibility with related parties may be aware of certain business opportunities that are appropriate for presentation to us as well as to such other related parties and may present such business opportunities to such other parties; and +♦ our executive officers and directors that hold positions of responsibility with related parties may have significant duties with, and spend significant time serving, 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to Section 14(a) of the +Securities Exchange Act of 1934 +(Amendment No.  ) +Filed by the Registrant ☒ +Filed by a party other than the Registrant ☐ +Check the appropriate box: +☐ +Preliminary Proxy Statement +☐ +Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +☒ +Definitive Proxy Statement +☐ +Definitive Additional Materials +☐ +Soliciting Material Pursuant to § 240.14a-12 +LIBERTY ENERGY INC. +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check all boxes that apply): +☒  No fee required +☐   Fee paid previously with preliminary materials. +☐   Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11 +LIBERTY ENERGY INC. +950 17 TH STREET, SUITE 2400 +DENVER, COLORADO 80202 +NOTICE OF 2023 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD APRIL 18, 2023 +To our valued stockholders: +Notice is hereby given that the 2023 Annual Meeting of Stockholders (the “ Annual Meeting ”) of Liberty Energy Inc. (the “ Company ”) will be held on Tuesday, April 18, 2023, at 9:00 a.m. Mountain Time. This year’s Annual Meeting will be accessible through the Internet in order to permit our stockholders to participate from any geographic location with Internet connectivity. We believe this enhances accessibility to our Annual Meeting for all stockholders. To attend the Annual Meeting, you must access the meeting website at https://web.lumiagm.com/245867901. Although no physical in-person meeting will be held, we have designed the format of the virtual Annual Meeting to ensure that our stockholders of record who attend the Annual Meeting will be afforded similar rights and opportunities to participate as they would at an in-person meeting, while providing an online experience available to all of our stockholders regardless of location. At the Annual Meeting, stockholders will be asked to: +1. Elect three (3) Class I directors to our board of directors to serve until the 2026 annual meeting or until their successors are duly elected and qualified ( Proposal 1 ); +2. Approve, on an advisory basis, the compensation of our named executive officers ( Proposal 2 ); +3. Ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2023 ( Proposal 3 ); and +4. Transact such other business as may properly be brought before the Annual Meeting. +You can find more information, including the nominees for directors, executive compensation, and details regarding our independent registered public accounting firm, in the attached proxy statement. The board of directors recommends that you vote in favor of each of the above proposals. Pursuant to the “notice and access” rules adopted by the Securities and Exchange Commission, we have elected to provide access to our proxy materials on the Internet. The approximate date on which the attached proxy statement, the accompanying Notice of Internet Availability of Proxy Materials (the “ Notice ”), proxy card, and the Company’s Annual Report on Form 10-K are first being made available to stockholders at http://astproxyportal.com/ast/21952/ is March 8, 2023. The Notice includes instructions on how to access our proxy materials over the Internet, vote online and request a printed copy of these materials. +Only stockholders of record at the close of business on February 21, 2023 are entitled to notice of, and to vote at, the Annual Meeting or any adjournment. A complete list of stockholders entitled to vote at the Annual Meeting will be available for examination ten days before the Annual Meeting. If you would like to inspect the list of Company stockholders of record, please contact the Investor Relations department at IR@libertyenergy.com to schedule an appointment or request access electronically or in person. +IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE ANNUAL MEETING. ACCORDINGLY, EVEN IF YOU PLAN TO ATTEND THE ANNUAL MEETING VIRTUALLY, WE URGE YOU TO COMPLETE, SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY CARD IN THE POSTAGE-PREPAID ENVELOPE PRIOR TO THE ANNUAL MEETING OR FOLLOW THE INTERNET OR TELEPHONE VOTING PROCEDURES DESCRIBED ON THE PROXY CARD. IF YOU ATTEND THE ANNUAL MEETING VIRTUALLY AND WISH TO VOTE AT THAT TIME, YOU MAY WITHDRAW YOUR PROXY AND VOTE AT THE MEETING. YOUR PROMPT CONSIDERATION IS GREATLY APPRECIATED. YOUR VOTE IS IMPORTANT TO US. +By Order of the Board of Directors, +/s/ R. Sean Elliott +R. Sean Elliott +Chief Legal Officer and Corporate Secretary +Denver, Colorado +March 8, 2023 +IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING +TO BE HELD ON APRIL 18, 2023 +This Notice of Annual Meeting and Proxy Statement and our Annual Report on Form 10-K are available at +http://astproxyportal.com/ast/21952/ +i +TABLE OF CONTENTS +GENERAL INFORMATION ABOUT THE 2023 ANNUAL MEETING OF STOCKHOLDERS AND VOTING +1 +PROPOSAL 1 – ELECTION OF DIRECTORS +5 +THE BOARD AND ITS COMMITTEES +9 +EXECUTIVE OFFICERS +15 +COMPENSATION DISCUSSION & ANALYSIS +16 +COMPENSATION COMMITTEE REPORT +23 +EXECUTIVE COMPENSATION TABLES +24 +DIRECTOR COMPENSATION +29 +EQUITY COMPENSATION PLAN INFORMATION +31 +CEO PAY RATIO +32 +PAY VERSUS PERFORMANCE +33 +PROPOSAL 2 – ADVISORY VOTE TO APPROVE THE COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS +36 +PROPOSAL 3 – RATIFICATION OF APPOINTMENT OF THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIR M +37 +AUDIT COMMITTEE REPORT +39 +SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT +41 +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +43 +HOUSEHOLDING +48 +STOCKHOLDER PROPOSALS +48 +WHERE YOU CAN FIND MORE INFORMATION +48 +OTHER MATTERS +48 +1 +LIBERTY ENERGY INC. +950 17 TH STREET, SUITE 2400 +DENVER, COLORADO 80202 +PROXY STATEMENT +GENERAL INFORMATION ABOUT THE 2023 ANNUAL MEETING OF STOCKHOLDERS AND VOTING +The enclosed proxy is solicited on behalf of the Board of Directors (the “ Board ”) of Liberty Energy Inc. (the “ Company ”) for use at the Company’s 2023 Annual Meeting of Stockholders that will be held on Tuesday, April 18, 2023, at 9:00 a.m. Mountain Time, virtually at https://web.lumiagm.com/245867901 (the “ Annual Meeting ”). In this proxy statement (the “ Proxy Statement ”) the terms “ Liberty ,” “ we ,” “ us ” and “ our ” all refer to the Company. This Proxy Statement contains important information for you to consider when deciding how to vote on the matters brought before the Annual Meeting. Please read it carefully. +We are providing these proxy materials to you in connection with the solicitation by the Board of proxies to be voted at the Annual Meeting and at any adjournment or postponement thereof. By executing and returning the enclosed proxy card or by voting via the Internet or by telephone as set forth herein, you authorize the persons named in the proxy to represent you and vote your shares on the matters described herein. Those persons will also be authorized to vote your shares to adjourn the Annual Meeting from time to time and to vote your shares at any adjournments or postponements of the Annual Meeting. +Pursuant to the “notice and access” rules adopted by the Securities and Exchange Commission (the “ SEC ”), we have elected to provide stockholders access to our proxy materials over the Internet. The approximate date on which this Proxy Statement, the accompanying Notice of Internet Availability of Proxy Materials (the “ Notice ”), proxy card, and the Company’s 2022 Annual Report on Form 10-K are first being made available to stockholders at http://astproxyportal.com/ast/21952/ is March 8, 2023. The Notice includes instructions on how to access our proxy materials over the Internet and how to request a printed copy of these materials. +Choosing to receive your future proxy materials by e-mail or to receive a single set of proxy materials per household will save the Company the cost of printing and mailing documents to you and will reduce the impact of the Company’s annual meetings on the environment. If you choose to receive future proxy materials by e-mail, you will receive an e-mail next year with instructions containing a link to those materials and a link to the proxy voting site. Your election to receive proxy materials by e-mail will remain in effect until you terminate it. +Annual Meeting Time & Location +➙ Date : Tuesday, April 18, 2023 +➙ Time : 9:00 a.m. Mountain Time +➙ Location : Virtually held at https://web.lumiagm.com/245867901 +Who Can Vote at the Annual Meeting +The Company’s Class A Common Stock, par value $0.01 per share (the “ Common Stock ”), is the only class of securities entitled to vote at the Annual Meeting. Each share of Common Stock outstanding at the close of business on February 21, 2023 (the “ Record Date ”) entitles its holder to one vote with respect to each matter at the Annual Meeting, and only stockholders of record on the Record Date are entitled to notice of, and to vote, virtually online or by proxy, at the Annual Meeting. +A complete list of stockholders entitled to vote at the Annual Meeting will be available for examination ten days before the Annual Meeting. If you would like to inspect the list of Company stockholders of record, please contact the Investor Relations department at IR@libertyenergy.com to schedule an appointment. +2 +How to Vote at the Annual Meeting +Many holders of the Company’s Common Stock hold their shares through a broker, bank, trustee or other nominee rather than directly in their own name. As summarized below, there are some distinctions between shares held of record and those owned beneficially. +Stockholder of Record. If your shares are registered directly in your name with our transfer agent, American Stock Transfer & Trust Company LLC, then you are considered a “stockholder of record” with respect to those shares. In this case, a Notice or, if requested, a set of proxy mat erials has been sent to you directly by us. As a stockholder of record, you may vote over the Internet as described in the Notice that was mailed to you or, if you have received or requested a hard copy of this Proxy Statement and accompanying proxy card, you may vote by telephone as described on the proxy card, or by mail by marking, signing, dating and mailing your proxy card in the postage-paid envelope provided. Your designation of a proxy is revocable by following the procedures outlined in this Proxy Statement. The method by which you vote will not limit your right to vote virtually at the Annual Meeting. If you submit a signed proxy card but do not give voting instructions as to how your shares of Common Stock should be voted on a particular proposal at the Annual Meeting, your shares will be voted in accordance with the recommendations of our Board stated in this Proxy Statement. +Beneficial Owners of Shares Held in Street Name. If your shares of our Common Stock are held in a brokerage account or by a bank, trust or other nominee or custodian, then you are considered the beneficial owner of those shares, which are held in “street name.” In this case, a Notice or, if requested, a set of proxy materials has been forwarded to you by the organization that holds your shares. The organization holding your account is considered the stockholder of record for purposes of voting at the Annual Meeting. As the beneficial owner, you have the right to instruct that organization how to vote the shares held in your account. If you are a beneficial owner of shares held in “street name,” you need to submit voting instructions to your broker, bank or other nominee in order to cast your vote. The Notice that was mailed to you by that organization has specific instructions for how to submit your vote, or if you have received or requested a hard copy of this Proxy Statement you may mark, sign, date and mail the accompanying voting instruction form in the postage-paid envelope provided. Your vote is revocable by following the procedures outlined in this Proxy Statement. However, since you are not a stockholder of record you may not vote your shares virtually at the Annual Meeting without obtaining authorization from your broker, bank or other nominee. Whether or not you plan to attend the Annual Meeting virtually, we urge you to vote by following the voting instructions provided to you to ensure that your vote is counted. To vote virtually at the Annual Meeting, you must first obtain a valid legal proxy from your broker, bank or other agent and then register in advance to attend the Annual Meeting. After obtaining a valid legal proxy from your broker, bank or other agent, to then register to attend the Annual Meeting, you must submit proof of your legal proxy reflecting the number of your shares along with your name and email address to AST. Requests for registration should be directed to proxy@astfinancial.com or to facsimile number 718-765-8730. Written requests can be mailed to: +American Stock Transfer & Trust Company LLC +Attn: Proxy Tabulation Department +6201 15 th Avenue +Brooklyn, New York 11219 +Requests for registration must be labeled as “Legal Proxy” and be received no later than 5:00 p.m., Eastern Time, on April 4, 2023. You will receive a confirmation of your registration by email after we receive your registration materials. +Telephone and Internet voting for stockholders of record will be available up until 11:59 PM Eastern Time on April 17, 2023, and mailed proxy cards must be received by April 17, 2023 in order to be counted at the Annual Meeting. If the Annual Meeting is adjourned or postponed, these deadlines may be extended. The voting deadlines and availability of telephone and Internet voting for beneficial owners of shares held in “street name” will depend on the voting processes of the organization that holds your shares of Common Stock. Therefore, we urge you to carefully review and follow the voting instructions card and any other materials that you receive from that organization. +If you receive more than one Notice, it is because your shares are registered in more than one name or are registered in different accounts. Please follow the instructions on each Notice received to ensure that all of your shares of Common Stock are voted. +“Broker Non-Votes” and Abstentions and their Effect on Proposals +A broker non-vote occurs when a broker, bank, trust or other nominee or custodian holding shares for a beneficial owner in “street name” does not vote the shares on a proposal because the nominee does not have discretionary voting power for a particular item and has not received instructions from the beneficial owner regarding voting. Brokers who hold shares for the accounts of their clients have discretionary authority to vote shares if specific instructions are not given, only with respect to “routine” items. +3 +If your shares are held by a broker on your behalf and you do not instruct the broker as to how to vote your shares of Common Stock with regard to the election of directors (“ Proposal 1” ) or the advisory vote regarding the compensation of named executive officers (“ Proposal 2 ” ), the broker may not exercise discretion to vote for or against those proposals because each of these proposals are considered “non-routine” under applicable New York Stock Exchange (“ NYSE ”) rules. With respect to the ratification of the appointment of Deloitte & Touche LLP (“ Deloitte ”) as our independent registered public accounting firm for the fiscal year ended December 31, 2023 (“ Proposal 3 ” ), the broker may exercise its discretion to vote for or against those proposals in the absence of your instruction. Broker non-votes would be treated as not entitled to vote with respect to non-discretionary matters. +An abstention (i.e. if you or your broker mark “ABSTAIN” on a proxy or voting instruction form, or if a stockholder of record attends the Annual Meeting but does not vote (either before or during the Annual Meeting)) has the same effect as voting “AGAINST” the advisory vote regarding the compensation of named executive officers (Proposal 2), or the ratification of the appointment of Deloitte as our independent registered public accounting firm for the fiscal year ended December 31, 2023 (Proposal 3). Votes that are withheld from a director’s election will not affect the outcome of the vote on the election of a director (Proposal 1). +Quorum Requirements for the Annual Meeting +The presence at the Annual Meeting, whether in person or by valid proxy, of stockholders holding a majority of the shares of Common Stock outstanding on the Record Date and entitled to vote at the meeting will constitute a quorum, permitting us to conduct our business at the Annual Meeting. On the Record Date, there were 175,447,289 shares of Common Stock issued and outstanding and entitled to be voted at the Annual Meeting. Abstentions and broker non-votes will be considered to be shares present at the Annual Meeting for purposes of constituting a quorum. +Votes Required to Approve Proposals and Board Recommendations +Proposal +Required Vote +Board Recommendation +(1) To elect three (3) Class I directors to the Board to serve until the 2026 annual meeting or until their successors are duly elected and qualified. +Plurality of Votes Cast +FOR EACH NOMINEE +(2) To approve, on an advisory basis, the compensation of our named executive officers . +Majority of Shares Present and Entitled to Vote on the Matter +FOR +(3) To ratify the appointment of Deloitte as our independent registered public accounting firm for the fiscal year ending December 31, 2023 . +Majority of Shares Present and Entitled to Vote on the Matter +FOR +Election of Directors . To be elected, director nominees must receive a plurality of the votes cast by the holders of the shares entitled to vote in the election of directors at the Annual Meeting; this means that the three (3) nominees receiving the highest number of “FOR” votes cast will be elected. Abstentions and broker non-votes will have no effect on the outcome of the election of our directors, and cumulative voting is not permitted. +Approval of Named Executive Officer Compensation . Approval, on a non-binding advisory basis, of the compensation of our named executive officers requires the affirmative vote of a majority of the shares of Common Stock present in person or represented by proxy at the Annual Meeting and entitled to vote on the matter. Abstentions will have the effect of a vote against this proposal. Because Proposal 2 is conside red a “non-routine” item, brokers are not entitled to vote on Proposal 2, and broker non-votes are not counted as votes cast. As a result, broker non-votes will have no effect on the outcome of Proposal 2. Your votes with respect to the approval of Proposal 2 are advisory, which means the results of such votes are not binding on us, the Board and the committees of the Board. Although non-binding, the Board and its committees value the opinions of our stockholders and will review and consider the voting results when making future decisions regarding executive compensation. +Ratification of our Independent Registered Public Accounting Firm . The affirmative vote of a majority of the shares of Common Stock present in person or represented by proxy at the Annual Meeting and entitled to vote on the matter is required to ratify the appointment of Deloitte as our independent registered public accounting firm for the fiscal year ending December 31, 2023. Abstentions will have the effect of a vote against Proposal 3. Because Proposal 3 is considered a “routine” item, brokers have discretionary authority in the absence of timely instructions from their customers to vote on this proposal. As a result, there will be no broker non-votes with respect to this proposal. +4 +The Board recommends that you vote: +FOR the election of each of the three (3) Class I nominees to serve on our Board until the 2026 annual meeting or until their successors are duly elected and qualified; +FOR the approval of the compensation of our named executive officers as disclosed in this Proxy Statement; and +FOR the ratification of Deloitte as our independent registered public accounting firm for the fiscal year ending December 31, 2023. +Revoking Your Proxy; Changing Your Vote +If you are a stockholder of record, you may revoke your proxy before the vote is taken at the Annual Meeting by: +• signing, dating and delivering a new proxy with a later date before the applicable deadline to our Corporate Secretary; +• attending virtually and voting virtually online at the Annual Meeting; or +• filing a written revocation with our Corporate Secretary. +If your shares are held in “street name,” you may submit new voting instructions by contacting your broker or other organization holding your shares. You may also vote virtually online at the Annual Meeting, which will have the effect of revoking any previously submitted voting instructions, if you obtain a legal proxy from the organization that holds your shares. +Your last vote or proxy will be the vote or proxy that is counted. Your virtual attendance at the Annual Meeting will not automatically revoke your proxy. +Dissent and Appraisal Rights +No action is proposed at the Annual Meeting for which the laws of the State of Delaware or other applicable law provides a right of our stockholders to dissent and obtain appraisal of or payment for such stockholders’ Common Stock. +Solicitation Costs +The cost of preparing, assembling and mailing the proxy materials and of reimbursing brokers, nominees and fiduciaries for the out-of-pocket and clerical expenses of transmitting copies of the proxy materials to the beneficial owners of shares held of record by such persons, will be borne by the Company. The Company has retained D.F. King & Co., Inc. (“ D.F. King ”) to aid in the solicitation of proxies. It is estimated that the cost of D. F. King’s services will be approximately $9,500 plus expenses. In addition to the solicitation of proxies by mail, proxies may also be solicited by telephone, electronic communication, or personal communication by employees of D.F. King and the Company. +Voting Results +We will publish final results in a Current Report on Form 8-K to be filed with the SEC within four (4) business days following the Annual Meeting. +Management Q&A Session +Stockholders of record who have registered with their voting control number will be able to submit questions for the Annual Meeting’s question and answer session during the meeting through https://web.lumiagm.com/245867901 by referring to the “Chat Box” icon located at the top of the left-hand panel of their screen. For questions regarding the webcast please reach out to IR@libertyenergy.com . +Technical Difficulties or Trouble Accessing the Annual Meeting +If you encounter any technical difficulties with accessing the audio webcast on the day of the Annual Meeting, contact IR@libertyenergy.com . American Stock Transfer will also be present at the Annual Meeting and monitoring the webcast to assist with any issues. +Questions +You may call or contact our proxy solicitor, D.F. King, at (888) 280-6942 or via email at libertyenergy@dfking.com if you have any questions concerning this Proxy Statement. +PLEASE VOTE. YOUR VOTE IS IMPORTANT TO US. +5 +PROPOSAL 1 — ELECTION OF DIRECTORS +Our Board currently consists of nine (9) directors. In accordance with the terms of our Amended and Restated Certificate of Incorporation (as amended, the “ Amended and Restated Certificate of Incorporation ”) and Second Amended and Restated Bylaws (as amended, the “ Second Amended and Restated Bylaws ”), our Board is divided into three classes: Class I, Class II and Class III, with each class serving staggered three-year terms. Upon the expiration of the term of a class of directors, directors in that class will be eligible to be elected for a new three-year term at the annual meeting of stockholders in the year in which their term expires. Each director elected to the Board will hold office until his or her successor has been elected and qualified or until the earlier of their death, resignation, disqualification or removal. The current members of the classes of our Board are divided as follows: +♦ Class I (term expires 2023): Simon Ayat, Gale A. Norton, and Cary D. Steinbeck +♦ Class II (term expires in 2024): Ken Babcock, Audrey Robertson, and Christopher A. Wright +♦ Class III (term expires in 2025): Peter A. Dea, William F. Kimble, and James R. McDonald +Unless otherwise instructed, the proxy holders will vote the proxies received by them for the three (3) director nominees named below, all of whom are presently directors of the Company. In the event that any nominee is unable or declines to serve as a director at the time of the Annual Meeting, the proxies will be voted for any nominee who shall be designated by the present Board to fill the vacancy, unless the size of the Board is reduced. The proxies cannot be voted for a greater number of persons than the number of nominees named in this proxy statement. It is not expected that any nominee will be unable or will decline to serve as a director. Biographical information regarding each nominee is set forth below, as well as a summary of the experiences, qualifications, attributes or skills that caused the Board to determine that each nominee should serve as a director of the Company. Each nominee’s experience is evaluated in determining the overall composition of the Board. +NOMINEES FOR ELECTION AS CLASS I DIRECTORS TO A THREE-YEAR TERM EXPIRING +AT THE 2026 ANNUAL MEETING OF STOCKHOLDERS +SIMON AYAT +Age: +68 +Key +Areas of Experience +Director +Since: 2020 +INDEPENDENT +• Corporate +Finance/Capital Markets +• Senior +Management Experience (CEO/CFO) +• Oilfield +Services +• Mergers +& Acquisitions +• Legal/Regulatory +• Corporate +Governance +• ESG +• HR/Compensation +• Investor +Relations +• Risk +Management +Mr. Ayat served as Senior Strategic Advisor to the Chief Executive Officer for Schlumberger (“ SLB ”), an international oilfield services and technology company, from January 2020 until January 2022. From March 2007 until January 2020, he served as the Executive Vice President and Chief Financial Officer of SLB. Mr. Ayat has held several financial and operational positions in SLB, where he commenced his career in 1982. He was based in Paris, Houston and Dallas, as well as in the Middle East and Far East regions, serving as group treasurer, controller, Geomarket manager for Indonesia and drilling regional vice president for Asia Pacific. Mr. Ayat is also a member of the board of directors of Tenaris S.A., a manufacturer of pipes and related services for energy and industrial applications. He is a French and Lebanese citizen. Mr. Ayat was initially nominated to serve on our Board by SLB pursuant to the amended and restated stockholders agreement described later in this Proxy Statement. We believe Mr. Ayat’s extensive experience in the oilfield services industry and as the Chief Financial Officer of a publicly-traded oilfield services company with international operations qualifies him for service on our Board. +GALE A. NORTON +Age: 68 +Key Areas of Experience +Director Since: 2019 +INDEPENDENT +• Legal/Regulatory +• Corporate Governance +• ESG +Ms. Norton has been the President of Norton Regulatory Strategies, a consulting firm, since 2011. From 2007 to 2010, she served as General Counsel, Unconventional Oil, of Royal Dutch Shell, an international oil and natural gas company (“ Shell ”). Prior to joining Shell, Ms. Norton served as the Secretary of the Interior of the United States under President George W. Bush from 2001 until 2006 and as the Attorney General of the State of Colorado from 1991 until 1999. Ms. Norton is a director of American Transmission Company, a private company in the electric utility industry and she has been a Governance Fellow of the National Association of Corporate Directors. Ms. Norton holds Bachelor of Arts and Juris Doctorate degrees from the University of Denver. We believe that Ms. Norton’s experience as Attorney General of the State of Colorado and Secretary of the Interior of the United States qualifies her for service on our Board. +6 +CARY D. STEINBECK +Age: 51 +Key Areas of Experience +Director Since: 2018 +INDEPENDENT +• Exploration and Production +• Corporate Finance/Capital Markets +Mr. Steinbeck has been a Managing Director at Shea Ventures, an investment firm, since October 2014. From 2007 to 2014, he served as a Managing Director at Oakmont Corporation, an investment firm. Mr. Steinbeck is also a director at Liberty Resources LLC and Accretion Acquisition Corp. and is a Chartered Financial Analyst® charterholder. Mr. Steinbeck has a Bachelor of Arts in Economics from the University of California, Santa Barbara, and a Master of Business Administration from the University of Southern California. We believe that Mr. Steinbeck’s experience in the private equity industry, energy sector investing experience, extensive board participation and understanding of financial markets will provide valuable insights for our Company and qualifies him for service on our Board. +Vote Required +The election of directors requires the affirmative vote of a plurality of the votes validly cast by the holders of the shares of Common Stock entitled to vote at the election. If you submit a signed proxy card but do not give voting instructions as to how your shares of Common Stock should be voted, your shares will be voted in accordance with the recommendations of our Board stated in this Proxy Statement. Neither abstentions nor broker non-votes will have any effect on the outcome of voting on director elections. +THE BOARD UNANIMOUSLY RECOMMENDS VOTING “ FOR ” +THE ELECTION OF EACH CLASS I DIRECTOR NOMINEE. +7 +DIRECTORS CONTINUING IN OFFICE +KEN BABCOCK +Age: 66 +Key Areas of Experience +Director Since: 2018 +INDEPENDENT +• Technology +• Senior Management Experience (CEO/CFO) +• Oilfield Services +• Mergers & Acquisitions +• Marketing/Sales +• HR/Compensation +Mr. Babcock is currently the Chief Executive Officer of Abaco Energy Technologies LLC (“ Abaco ”), a private Houston-based portfolio company of Riverstone Holdings LLC, an energy-focused private equity firm (“ Riverstone ”), that was formed in 2013 to focus on opportunities in manufacturing and services related to North American drilling, completion, and production, and associated infrastructure. Prior to joining Abaco, Mr. Babcock was the President and Chief Executive Officer of Titan Specialties, Ltd. (“ Titan ”) from 2008 until its sale to Hunting PLC in September 2011. Following the sale, Mr. Babcock remained at Titan until June 2012. Prior to joining Titan, from 2005 until 2008, Mr. Babcock served as President and Chief Executive Officer of International Logging, Inc. (“ ILI ”) where he took a narrowly-focused mud logging company of over 300 employees to a diverse well site services organization of over 1,800 employees spread over 60 countries in a little over two years. Prior to joining ILI, Mr. Babcock was Director of Strategic Sales at Baker Hughes INTEQ and Vice President of Business Development at Noble Technology Services. Mr. Babcock began his career with EXLOG in 1980. Mr. Babcock has a Bachelor of Science in Geology from Florida State University. We believe that Mr. Babcock’s strong business leadership experience qualifies him for service on our Board. +AUDREY ROBERTSON +Age: 42 +Key Areas of Experience +Director Since: 2021 +• Exploration and Production +• Corporate Finance/Capital Markets +• Senior Management Experience (CEO/CFO) +• Public Accounting +• Mergers & Acquisitions +• Investor Relations +• Risk Management +Ms. Robertson has served as the co-founder and Chief Financial Officer of Franklin Mountain Energy, LLC, a private oil and gas company operating in the Permian Basin since September 2018. She also served as a co-founder and Managing Partner of Copper Trail Partners, LLC, a private equity platform based in Denver from November 2017 until December 2021. From 2005 to 2016, she served as a Partner and Senior Managing Director at Kayne Anderson Capital Advisors. Prior to that time, she was an investment banker with Goldman Sachs & Co. Ms. Robertson was a Director of Bonanza Creek Energy, LLC from January 2020 until November 2021 and served on the board of directors of Extraction Oil and Gas, LLC from September 2019 to January 2021. She has served on the boards of several private companies and not-for-profit organizations. She holds a Bachelor of Science degree in Applied Economics and Management from Cornell University and a Master of Accounting degree from the University of Southern California. We believe that Ms. Robertson’s significant experience in the oil and gas exploration and production industry and accounting credentials qualifies her for service on our Board. +CHRISTOPHER A. WRIGHT +Age: 58 +Key Areas of Experience +Director Since: 2018 +• Exploration and Production +• Technology +• Senior Management Experience (CEO/CFO) +• Oilfield Services +• Mergers & Acquisitions +• ESG +• Marketing/Sales +• HR/Compensation +• Investor Relations +Mr. Wright has served as our Chief Executive Officer since December 2016 and as the Chief Executive Officer of our predecessor company since its founding in 2011. Mr. Wright is the Executive Chairman of Liberty Resources LLC, an oil and natural gas exploration and production company focused in the Williston Basin, and was the Chief Executive Officer from its formation in September 2010 until March 2017. Mr. Wright founded Pinnacle Technologies, a company that developed and commercialized tiltmeter and microseismic fracture mapping and served as Chief Executive Officer of Pinnacle Technologies from 1992 to 2006. From 2000 to 2006, Mr. Wright served as Chairman of Stroud Energy, Inc., a shale natural gas producer. Mr. Wright currently serves on the Board of Directors for Urban Solution Group, US Ceramics, LLC (both of which are private companies) and the Federal Reserve Bank of Kansas City, Denver Branch. He also serves on the Board of Directors of Accretion Acquisition Corp. Mr. Wright has a Bachelor of Science in Mechanical Engineering from the Massachusetts Institute of Technology (“ MIT ”) and conducted graduate work in electrical engineering at both the University of California-Berkeley and MIT. We believe that Mr. Wright’s experience leading our growth as our Chief Executive Officer and his extensive experience in the hydraulic fracturing services industry qualifies him for service on our Board. +8 +PETER A. DEA +Age: 69 +Key Areas of Experience +Director Since: 2018 +INDEPENDENT +• Exploration and Production +• Senior Management Experience (CEO/CFO) +• Mergers & Acquisitions +• ESG +• HR/Compensation +• Investor Relations +• Corporate Governance +Mr. Dea has been the Executive Chairman of Confluence Resources LP (“ Confluence ”) since September 2016. Mr. Dea has served as the President and Chief Executive Officer of Cirque Resources LP (“ Cirque ”) since May 2007. Both Confluence and Cirque are private oil and gas companies. From November 2001 through August 2006, Mr. Dea was President and Chief Executive Officer and a director of Western Gas Resources, Inc. (“ Western Gas ”). Mr. Dea joined Barrett Resources Corporation (“ Barrett ”) in November 1993 and served as Chief Executive Officer and director from November 1999 and as Chairman from February 2000 through August 2001. Western Gas and Barrett were public oil and gas companies. Prior to that, Mr. Dea served in several geologic positions with Exxon Company, U.S.A. Mr. Dea currently serves as the Chairman of the Board of Ovintiv Inc. and has served as a director of Antero Midstream Corporation since the closing of its simplification transaction in March 2019. Prior to the simplification, Mr. Dea served as a director of the general partner of Antero Midstream GP LP beginning in April 2018. Mr. Dea has a Bachelor of Arts in Geology from Western State Colorado University and a Masters of Science in Geology from the University of Montana. Mr. Dea also attended the Harvard Business School, Advanced Management Program. We believe that Mr. Dea’s extensive oil and gas exploration and production experience and involvement in state and national energy policies qualify him for service on our Board. +WILLIAM F. KIMBLE +Age: 63 +Key Areas of Experience +Director Since: 2018 +INDEPENDENT +• Public Accounting +• Mergers & Acquisitions +• Legal/Regulatory +• Corporate Governance +• Risk Management +Mr. Kimble has served on our Board since the initial public offering of our Common Stock (the “ IPO ”) and as Lead Director since October 2018. From 2009 until his retirement in 2015, Mr. Kimble served as the Office Managing Partner for the Atlanta office and Managing Partner - Southeastern United States at KPMG LLP (“ KPMG ”), one of the largest audit, tax and advisory services firms in the world. Mr. Kimble was also responsible for moderating KPMG’s Audit Committee Institute and Audit Committee Chair Sessions. Until his retirement, Mr. Kimble had been with KPMG or its predecessor firm since 1986. During his tenure with KPMG, Mr. Kimble also held numerous senior leadership positions, including Global Chairman of Industrial Markets. Mr. Kimble served as KPMG’s Energy Sector Leader for ten (10) years and was the executive director of KPMG’s Global Energy Institute. Mr. Kimble serves on the board of directors and is the chair of the audit committee of Northern Oil and Gas, Inc. Mr. Kimble also serves on the board of directors, the special committee, and is chair of the audit committee of DCP Midstream Partners, LP. Mr. Kimble has a Bachelor of Accounting and Business Administration from Southern Methodist University. We believe that Mr. Kimble’s extensive accounting background and his experience as a director of public companies qualify him for service on our Board. +JAMES R. MCDONALD +Age: 44 +Key Areas of Experience +Director Since: 2020 +INDEPENDENT +• Technology +• Oilfield Services +• Marketing/Sales +Mr. McDonald has been President Americas Land of SLB, overseeing onshore operations in North and South America, since 2020. Previously, he served as President of Well Services running SLB’s global stimulation, coiled tubing intervention, cementing and offshore vessel operations. In addition, Mr. McDonald held multiple leadership roles in line management, operations, quality and safety, and business development at SLB over the past 21 years. His assignments spanned North and South America, North Africa and the Middle East in both land and offshore environments that included unconventional and deep water. Mr. McDonald graduated from the Massachusetts Institute of Technology with a degree in chemical engineering. He is actively engaged within the energy industry and community, and currently serves on the Board of Directors of Permian Strategic Partnership, the Energy Workforce and Technology Council, and he is on the Upstream and Service Supply and Technology Committees of the American Petroleum Institute. Mr. McDonald was initially nominated to serve on our Board by SLB pursuant to the amended and restated stockholders agreement described later in this Proxy Statement. We believe Mr. McDonald’s extensive experience in the oilfield services industry qualifies him for service on our Board. +9 +THE BOARD AND ITS COMMITTEES +THE BOARD +Composition of the Board +Our Board consists of nine members separated into three classes of directors, each as equal in n umber as possible, with each class serving staggered three-year terms. +In evaluating director candidates, we, through the Nominating and Governance Committee of the Board (the “ Nominating and Governance Committee ”), review the following criteria when assessing director candidates: +✓ relevant skills, qualifications and experience; +✓ independence under applicable standards; +✓ qualifications to serve on Board committees and, as appropriate, serve as a committee chairperson; +✓ business judgment; +✓ service on boards of directors of other companies; +✓ personal and professional integrity; +✓ openness and willingness to work as part of a team; +✓ willingness to commit the required time to serve as a Board member; and +✓ familiarity with the Company and its industry. +Board Diversity and Summary of Director Core Skills +The diversity of experience and range of competencies, qualifications and viewpoints of each director on our Board embody key abilities that our Nominating and Governance Committee considers valuable to effective oversight of the Company. The Nominating and Governance Committee values diversity of thought in director candidates, and further believes that gender and ethnic diversity can be one way to accomplish diversity of thought while still maintaining a Board that is adequately qualified to discharge its duties. Presently: +✓ two of our Board members are female; and +✓ two of our Board members qualify as ethnically diverse. +We believe that our director nominees are able to provide a well-rounded set of expertise that will assist in effective oversight of management at the Company. The matrix below identifies the core skills, primary competencies and other attributes that each director brings forth in their service to our Board and committees. The lack of an indicator for a particular item does not mean that the director does not possess that qualification, skill or experience in general. The indicator merely represents a core skill that the director brings to our Board. Furthermore, each director possesses other competencies not identified below. We believe identifying primary skills is a more meaningful presentation of the key contributions and value that each director brings to their service on the Board and to our stockholders. For more information about each director, see the individual biographies set forth above. +10 +Ayat +Babcock +Dea +Kimble +McDonald +Norton +Robertson +Steinbeck +Wright +Exploration and Production +✔ +✔ +✔ +✔ +Technology +✔ +✔ +✔ +Corporate Finance/Capital Markets +✔ +✔ +✔ +Senior Management Experience +(CEO/CFO) +✔ +✔ +✔ +✔ +✔ +Oilfield Services +✔ +✔ +✔ +✔ +Public Accounting +✔ +✔ +Mergers & Acquisitions +✔ +✔ +✔ +✔ +✔ +✔ +Legal/Regulatory +✔ +✔ +✔ +Corporate Governance +✔ +✔ +✔ +✔ +ESG +✔ +✔ +✔ +✔ +Marketing/Sales +✔ +✔ +✔ +HR/Compensation +✔ +✔ +✔ +✔ +Investor Relations +✔ +✔ +✔ +✔ +Risk Management +✔ +✔ +✔ +Board Leadership Structure and Role in Risk Oversight +Our Board does not have a policy regarding separation of the roles of Chief Executive Officer and Chairman of the Board (the “ Chairman ”). The Board believes it is in our best interests to make that determination based on circumstances from time to time. Currently, our Chief Executive Officer serves as the Chairman, and William F. Kimble, a non-employee independent director, serves as our Lead Director. As Lead Director, Mr. Kimble serves as a liaison between the Chairman and the non-management directors and presides at executive sessions of the non-management directors and any other Board meetings at which the Chairman is not present, among other responsibilities. Our Board believes that this structure, combined with our corporate governance policies and processes, creates an appropriate balance between strong and consistent leadership and independent oversight of our business. The Chairman chairs the meetings of our Board and stockholders, with input from the Lead Director, and as such, our Board believes that a person with comprehensive knowledge of the Company is in the best position to serve the role of Chairman. +Our Board believes its administration of its risk oversight function has not affected its leadership structure. Risk is inherent with every business, and how well a business manages risk can ultimately determine its success. We face a number of risks, including those described under “ Risk Factors ” in our Annual Report on Form 10-K for the year ended December 31, 2022. Our Board is actively involved in oversight of risks that could affect us. This oversight is conducted by the Board, which has responsibility for general oversight of risks, but the Audit Committee of the Board (the “ Audit Committee ”) assists the Board in fulfilling such oversight responsibilities. Risk assessment and oversight are an integral part of our governance and management processes. The Board encourages management to promote a culture that incorporates risk management into our corporate strategy and day-to-day business operations. Management discusses strategic and operational risks at regular management meetings and conducted a specific strategic session during the year that included a focused discussion and analysis of the risks facing us. Throughout the year, senior management reviews risks with the Board at regular Board meetings as part of management presentations that focus on the Company’s overall operations and presents the steps taken by management to mitigate or eliminate such risks. +The Board does not have a standing risk management committee, but rather administers this oversight function directly through the Board as a whole. The Board is responsible for monitoring and assessing strategic risk exposure, and the Audit Committee assists the Board in fulfilling such oversight responsibilities by overseeing our major risk exposures and the steps our management has taken to monitor and control these exposures. The Audit Committee also monitors compliance with legal and regulatory requirements and considers and approves or disapproves any related-person transactions. +Our Board periodically reviews its governance and committee structure to ensure that it continues to meet the Company’s needs. +Director Independence and Family Relationships +The Company’s standards for determining director independence require the assessment of directors’ independence each year. A director cannot be considered independent unless the Board affirmatively determines that he or she does not have any relationship with management or the Company that may interfere with the exercise of his or her independent judgment, including any of the relationships that would disqualify the director from being independent under the rules of the NYSE. +11 +The Board has assessed the independence of each non-employee director under the independence standards of the NYSE. The Board has determined that each of Messrs. Ayat, Babcock, Dea, Kimble, McDonald and Steinbeck and Ms. Norton is considered independent under the NYSE rules. In connection with its assessment of the independence of each non-employee director, the Board also determined that Messrs. Ayat, Babcock, Dea, Kimble McDonald and Steinbeck and Ms. Norton are independent as defined in Section 10A-3 of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”) and under the standards set forth by the NYSE applicable to members of the Audit Committee. Furthermore, none of our directors or officers have any family relationship with any director or other officers. “Family relationship” for this purpose means any relationship by blood, marriage or adoption, not more remote than first cousin. +BOARD COMMITTEES +Overview +Our Board has established an Audit Committee, a Compensation Committee of the Board (the “ Compensation Committee ”) and a Nominating and Governance Committee as further detailed herein. The below chart sets forth the members and chairperson of each Board committee. +Name +Audit Committee +Compensation Committee +Nominating and +Governance Committee +William F. Kimble +* +• +Cary D. Steinbeck +• +• +Peter A. Dea +* +• +Ken Babcock +• +Gale A. Norton +• +* +*   Chairperson   •   Member +Audit Committee +Rules implemented by the NYSE and the SEC require us to have an Audit Committee comprised of at least three (3) directors who meet the independence and experience standards established by the NYSE and the Exchange Act. Our Audit Committee currently consists of three (3) directors, all of whom are independent under the rules of the SEC and the standards set forth by the NYSE applicable to members of an Audit Committee. Messrs. Kimble and Steinbeck and Ms. Norton are the members of our Audit Committee with Mr. Kimble serving as the chairperson. Each member of our Audit Committee is financially literate, and our Board has determined that Mr. Kimble qualifies as an “audit committee financial expert” as defined in applicable SEC rules. +The Audit Committee oversees, reviews, acts on and reports on various auditing and accounting matters to our Board, including: the selection of our independent accountants, the scope of our annual audits, fees to be paid to the independent accountants, the performance of our independent accountants and our accounting practices. The general purpose of our Audit Committee is to assist the Board in oversight responsibilities regarding the integrity of the Company’s financial statements, compliance with legal and regulatory requirements, performance of the independent registered public accounting firm engaged by the Company and the effectiveness of the Company’s internal audit functions. The Audit Committee operates under an Audit Committee charter that defines the committee’s primary duties in a manner consistent with the rules of the SEC and NYSE. A current copy of the Audit Committee charter can be found on our website, www.libertyenergy.com , by first clicking “ Investors ” then “ Corporate Governance ” and proceeding to “ Governance Documents .” +Compensation Committee +Our Compensation Committee currently consists of three (3) directors: Messrs. Dea, Babcock and Steinbeck with Mr. Dea serving as the chairperson. Our Compensation Committee establishes salaries, incentives and other forms of compensation for officers and other employees. Our Compensation Committee also assists the Board with the administration and oversight of our incentive compensation and benefit plans. The Compensation Committee operates under a Compensation Committee charter that defines the committee’s primary duties. The Compensation Committee has the authority to delegate to its chairperson or any one of its members the responsibility and authority for any particular matter, as it deems appropriate from time to time under the circumstances. A current copy of the Compensation Committee charter can be found on our website, www.libertyenergy.com , by first clicking “ Investors ” then “ Corporate Governance ” and proceeding to “ Governance Documents .” +The Board has determined that all directors on the Compensation Committee are independent under the standards set forth by the NYSE. +12 +Nominating and Governance Committee +Our Nominating and Governance Committee currently consists of three (3) directors: Ms. Norton and Messrs. Kimble and Dea with Ms. Norton serving as the chairperson. The Nominating and Governance Committee operates under a Nominating and Governance Committee charter that defines the committee’s primary duties. A current copy of the Nominating and Governance Committee charter can be found on our website, www.libertyenergy.com , by first clicking “ Investors ” then “ Corporate Governance ” and proceeding to “ Governance Documents .” +Our Nominating and Governance Committee identifies, evaluates and recommends qualified nominees to serve on our Board. Our Nominating and Governance Committee also develops and oversees our corporate governance processes, including the annual performance evaluation of the Board and its committees, and of management, and develops, reviews and recommends to the Board any changes to our Corporate Governance Guidelines and other applicable governance policies. +The Board and the Nominating Committee believe the skills, qualities, attributes, and experience of our directors provide our Company with business acumen and a diverse range of perspectives to effectively address our evolving needs and represent the best interests of our stockholders. +When identifying director nominees, the Nominating and Governance Committee considers and reviews the following criteria: the candidate’s relevant skills, qualifications and experience; independence under applicable standards; qualifications to serve on Board committees and, as appropriate, serve as a committee chairperson; business judgement; service on boards of directors of other companies; personal and professional integrity; openness and ability to work as part of a team; willingness to commit to the required time to serve as a member of the Board; and familiarity with the Company and its industry. Additionally, when considering the recommendation to the Board that an existing director be nominated for election at the annual meeting of stockholders, the Nominating and Governance Committee will consider and review: the past Board and committee meeting attendance and performance, the length of Board service, the personal and professional integrity, the relevant experience, skills, qualifications and contributions that the existing director brings to the Board and the independence under the applicable standards. +The Nominating and Governance Committee will consider suggestions from any source, particularly from stockholders, regarding possible candidates for director; provided, however , that in order for such stockholder recommendation to be considered, the recommendations must comply with the procedures outlined under “ Stockholder Proposals ” below. +The Board has determined that all directors on the Nominating and Governance Committee are independent under the standards set forth by the NYSE. +MEETING ATTENDANCE OF THE BOARD AND BOARD COMMITTEES +During 2022, the Board and its committees met on a set schedule, held special meetings, and acted by written consent from time to time, as appropriate, as reflected in the following table: +Regularly Scheduled Meetings +Special Meetings +Total Meetings +Board +of Directors +5 +1 +6 +Audit +Committee +9 +0 +9 +Compensation +Committee +4 +0 +4 +Nominating +and Governance Committee +2 +1 +3 +At each Board meeting, time is reserved for the independent directors to meet in executive session without the Chief Executive Officer present. Furthermore, executive officers regularly attend Board meetings to present information to our Board on our business and strategy. From time to time between meetings, Board and committee members confer with each other and with management and independent consultants regarding relevant issues, and representatives of management may meet with such consultants on behalf of the relevant committee. +Each director participated, whether in person or by telephone or videoconference, in at least seventy-five percent (75%) of all meetings of the Board and the committees of which such director is a member. There is no formal policy as to director attendance at the Annual Meeting, but our corporate governance guidelines encourage directors to attend. All members of our Board attended last year’s annual stockholder meeting. +13 +ESG FOCUSED +While we recognize the various environmental and social impacts of hydrocarbon energy, we believe that access to life-enhancing modern energy presents the most pressing global energy challenge. We passionately work to better the process of bringing hydrocarbons to the surface in a clean, safe and efficient fashion and view ESG principles as foundational to our business. We focus on developing and adding technologies to our operations that assist our customers in implementing their ESG goals. The list below sets forth specific examples of our efforts towards ESG principles: +♦ In 2013, we introduced Tier II dual-fuel technology to our fleets which allows our frac pumps to use natural gas in place of some diesel fuel to lower particulate emissions. +♦ In 2014, we began the use of containerized sand delivery at frac locations, which reduces dust, noise and truck traffic. +♦ In 2016, we introduced Quiet Fleet® technology, which significantly reduces noise levels associated with frac operations. +♦ In 2018, we began a partnership with an equipment supplier to introduce Tier IV dynamic gas blending, or DGB, engines to our frac fleet that can substitute up to 80% of the diesel typically used by a frac pump with natural gas and significantly lower emission levels in frac operations. Tier IV DGB engines were added to our fleet in 2020. +♦ I n October 2021, we closed the acquisition of PropX, which offers innovative, environmentally friendly technology with optimized dry and wet sand containers and wellsite proppant handling equipment that drive logistics efficiency and reduce noise and emissions. +♦ In 2022, we began commercial use of digiFrac™, our innovative, purpose-built electric frac pump that has approximately a 25% lower CO2e emission profile than the Tier IV DGB. +♦ In August 2022, we released our second annual Bettering Human Lives report, highlighting the importance of energy in the modern world and Liberty’s ESG 2021 data, which was updated to cover the critical link hydrocarbons play in geopolitics, food, and their role in enabling the modern world. +♦ In September 2022, we announced our investment in Natron Energy (“Natron”) as we plan to collaborate with Natron to introduce sodium-ion batteries as an energy storage solution to provide uninterruptible backup power for our digiFrac electric frac pumps. Natron’s sodium-ion batteries are expected to be used to maximize uptime and optimize generator utilization ensuring the lowest possible emissions footprint for onsite power generation. +Furthermore, we are continuously committed to engagement in our communities. We provide K-12 scholarships to low-income children through ACE (Alliance for Choice in Education) and we have launched a Liberty Scholars program at Montana Technological University to enable lower income students to obtain a college engineering education. In 2022, over 100 students received Liberty scholarships. We have numerous other efforts targeting schools, veterans, poverty abatement, low-income housing, criminal justice reform and job opportunities for those who had a disadvantaged start in life. In 2021, we launched Love, Liberty, our matching program that is aimed to encourage our employees to get involved in their communities. +Our Board receives updates on our ESG initiatives as part of each regular Board meeting. +CORPORATE CODE OF BUSINESS CONDUCT AND ETHICS +Our Board has adopted a Corporate Code of Business Conduct and Ethics (the “ Ethics Code ”) applicable to our employees, directors and officers, in accordance with applicable U.S. federal securities laws and the corporate governance rules of the NYSE. Any waiver of the Ethics Code may be made only by our Board or a Board committee and will be promptly disclosed as required by applicable SEC laws and the corporate governance rules of the NYSE. A current copy of the Ethics Code can be found on our website, www.libertyenergy.com , by first clicking “ Investors ” then “ Corporate Governance ” and proceeding to “ Governance Documents ,” and is available in print to any stockholder who requests it. We intend to post any waiver of our Ethics Code or substantive amendments to the Ethics Code to this website. +14 +CORPORATE GOVERNANCE GUIDELINES +Our Board has adopted Corporate Governance Guidelines (the “ Governance Guidelines ”) in accordance with the corporate governance rules of the NYSE that serve as a framework within which our Board and committees operate. These guidelines cover matters including, but not limited to, the composition of our Board, Board membership criteria and qualifications, director responsibilities, meetings of the Board and non-management directors, Board committees, director access to management and independent advisors, director compensation, and evaluation of management and management succession planning. A current copy of our Governance Guidelines can be found on our website, www.libertyenergy.com , by first clicking “ Investors ” then “ Corporate Governance ” and proceeding to “ Governance Documents ,” and is available in print to any stockholder who requests it. +COMMUNICATION WITH THE BOARD +The Board welcomes communications from the Company’s stockholders and other interested parties. Stockholders and any other interested parties may send communications to the Board, any committee of the Board, the Chairman or any other director in particular to: +Liberty Energy Inc. +950 17 th Street, Suite 2400 +Denver, Colorado 80202 +Stockholders and any other interested parties should mark the envelope containing each communication as “Stockholder Communication with Directors” and clearly identify the intended recipient(s) of the communication. The Company’s Chief Legal Officer or other officer as designated by the Board, will review each communication received from stockholders and other interested parties and will forward the communication, as expeditiously as reasonably practicable, to the addressees if the communication falls within the scope of matters generally considered by the Board. To the extent the subject matter of a communication relates to matters that have been delegated by the Board to a committee or to an executive officer of the Company, then the Company’s Chief Legal Officer may forward the communication to the executive officer or chairman of the committee to which the matter has been delegated. The acceptance and forwarding of communications to the members of the Board or an executive officer does not imply or create any fiduciary duty of the Board members or executive officer to the person submitting the communications. +COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION +The members of the Compensation Committee are set forth above. During 2022, our last completed fiscal year, none of our executive officers served on the board of directors or compensation committee of a company that had an executive officer that served on our Board or Compensation Committee. Further, no member of our Board was an executive officer of a company in which one of our executive officers served as a member of the board of directors or compensation committee of that company. +15 +EXECUTIVE OFFICERS +The following sets forth certain information with respect to the executive officers of the Company as of March 1, 2023. +Name +Age +Position(s) +Christopher A. Wright +58 +Chairman of the Board and Chief Executive Officer +Michael Stock +61 +Chief Financial Officer and Treasurer +Ron Gusek +51 +President +R. Sean Elliott +48 +Chief Legal Officer and Corporate Secretary +Ryan T. Gosney +49 +Chief Accounting Officer +See “ Proposal 1 – Election of Directors – Directors Continuing in Office ” above for information regarding Mr. Wright. +Michael Stock – Chief Financial Officer and Treasurer . Michael Stock has served as our Chief Financial Officer since December 2016, our Treasurer since March 2018 and as the Chief Financial Officer of Liberty Holdings from April 2012 until our IPO. Mr. Stock served as a director of the Company from December 2016 up until January 2018 and resigned upon completion of our IPO. Prior to joining Liberty Holdings, from 2009 to 2012, he was employed by TAS Energy Inc., an industrial energy technology company. During his tenure, he served as Chief Financial Officer and was a key part of the raising of equity from leading investment groups including Kleiner Perkins, Element Partners, Natural Gas Partners and Credit Suisse. From 1997 to 2009, Mr. Stock served as Chief Financial Officer for Pinnacle Technologies. +Ron Gusek – President . Ron Gusek has served as our President since December 2016 and as the President of Liberty Holdings from November 2016 until the IPO. Mr. Gusek served as the Vice President of Technology and Development of Liberty Holdings, from 2014 until his promotion to President. Prior to joining Liberty Holdings, from 2011 to 2014, Mr. Gusek served as Vice President, Corporate Engineering and Technology of Sanjel Corporation, a global energy service company. Prior to joining Sanjel Corporation, from 2009 to 2011, Mr. Gusek was Director of Engineering for Zodiac Exploration, an oil and natural gas exploration and production company working in the central San Joaquin valley in California. From 2003 to 2008, Mr. Gusek was the Canadian Regional Manager of Pinnacle Technologies. Mr. Gusek has a Bachelor of Science in Mechanical Engineering from the University of Alberta. +R. Sean Elliott – Chief Legal Officer and Corporate Secretary . Sean Elliott served as our Vice President and General Counsel from March 2017 to January 2023, as our Corporate Secretary since 2018 and was appointe d Chief Legal Officer in January 2023. Between September 2016 and March 2017, Mr. Elliott worked as Assistant General Counsel at USAA Real Estate Company, a real estate investment firm. Between June 2015 and September 2016, Mr. Elliott served as Counsel at Haynes and Boone, LLP, an international corporate law firm. Between November 2007 and May 2015, Mr. Elliott served as Vice President, General Counsel, Corporate Secretary and Chief Compliance Officer of CARBO Ceramics Inc., an oilfield services production enhancement company. Mr. Elliott has a Bachelor of Arts in Economics and Business Administration from Austin College and a Doctor in Jurisprudence degree from the University of Texas at Austin. +Ryan T. Gosney – Chief Accounting Officer . Ryan Gosney has been our Chief Accounting Officer since March 2017. Between July 2016 and February 2017, Mr. Gosney served as the Chief Accounting Officer of Vantage Energy Inc. (“ Vantage ”), an oil and gas exploration and production company. Prior to joining Vantage, Mr. Gosney served as Chief Financial Officer for Dorado E&P Partners, LLC, an oil and gas company, from January 2012 to January 2016. Mr. Gosney began his career as an auditor with Arthur Andersen, LLP in September 1995 where he served in increasing roles of responsibility up to Audit Manager until June 2002. Mr. Gosney has also served as Controller for Patina Oil & Gas Corporation from October 2002 to October 2005 and Delta Petroleum Corporation from October 2005 to January 2012. Mr. Gosney has a Bachelor of Business Administration from Texas Christian University. +16 +COMPENSATION DISCUSSION & ANALYSIS +This Compensation Discussion & Analysis provides information about our rationale and policies with regard to the compensation of our principal executive officer, principal financial officer and our three other most highly-compensated executive officers (our “ Named Executive Officers ” or “ NEOs ”) for 2022 and is intended to provide investors with the material information necessary for understanding our compensation policies and decisions regarding our Named Executive Officers as well as providing context for the tabular disclosure provided in the executive compensation tables below. Our Named Executive Officers for 2022 include: +Name +Title +Christopher A. Wright +Chairman of the Board and Chief Executive Officer +Michael Stock +Chief Financial Officer and Treasurer +Ron Gusek +President +R. Sean Elliott +Vice President, General Counsel and Corporate Secretary (1) +Ryan T. Gosney +Chief Accounting Officer +(1) Mr. Elliott’s title was changed to Chief Legal Officer and Corporate Secretary effective January 2023. +2022 Compensation Overview +The Compensation Committee recommended, and the Board approved, the following compensation-related actions for our Named Executive Officers for fiscal year 2022, further detailed below: +• Base Salaries : After not increasing base salaries since 2019 and multiple base salary reductions during 2020 in light of the COVID pandemic, the 2022 base salaries for each Named Executive Officer other than Messrs. Stock and Wright were increased 9-10%. +• Annual Incentive Awards : The bonus target criteria for annual incentive awards was the same used in 2021 based on the achievement of specific Company performance objectives. +• Long-Term Incentive Compensation : The long-term incentive compensation included both time-based awards, vesting ratably over a three-year period, and performance-based awards, with three-year cliff vesting. +2022 Say on Pay +At our 2022 annual meeting of stockholders, our stockholders were asked to approve, on a non-binding, advisory basis, the compensation of our Named Executive Officers, as reported in our 2022 proxy statement (“ Say on Pay ”). In 2022, our stockholders overwhelming approved the compensation of our Named Executive Officers, with over 98% of the votes cast in favor of such practices. The Compensation Committee and the Board viewed the results of the Say on Pay vote and, given the strong stockholder support for the compensation of our Named Executive Officers in 2022, believe that no significant changes to our compensation program were warranted as a result of this vote. As discussed in more detail in “ Proposal 2: Advisory Vote to Approve the Compensation of the Company’s Named Executive Officers ,” the Board has recommended that stockholders vote, on a non-binding advisory basis, to approve the compensation of our Named Executive Officers, as described below. +Compensation Best Practices +The Company’s compensation program has been designed to support a strong governance model. Key elements of the program in support of this objective are set forth in the chart below: +What We Do +What We Don’t Do +✓ +Determine annual incentive compensation with the majority of the potential payment based upon the achievement of pre-established performance goals +x +x +x +x +x +x +x +No excise tax gross ups +No single-trigger severance +No excessive perquisites +No short-term or speculative trading of Company stock +No re-pricing of incentive awards +No supplemental retirement plans +No guaranteed bonuses or uncapped incentives +✓ +Generally target the market median for total compensation +✓ +Use an independent compensation consultant +✓ +Hold regular executive sessions of the Compensation Committee without management present +✓ +Base a portion of the long-term incentives upon our performance relative to peers +✓ +Apply Stock Ownership Guidelines for executive officers and most Board members +17 +Process for Setting Compensation and Role of Compensation Consultant +At the beginning of each year, the Compensation Committee engages an independent executive compensation consulting firm in order to provide independent and objective market compensation data, conduct compensation analysis, recommend plan design changes and advise on compensation related risks. The Compensation Consultant (as defined below) acts solely on behalf of the Compensation Committee and not on behalf of the Company’s management team. During 2022, the Compensation Committee engaged NFP Compensation Consulting as such compensation consultant (the “ Compensation Consultant ”). The Compensation Consultant compiles compensation surveys for review by the Compensation Committee and management. After review of the Compensation Consultant’s surveys, management provides recommendations of compensation for our Named Executive Officers to the Compensation Committee. Such recommendations are generally based upon the guidance of the Compensation Consultant and the performance of our management as a team. The Compensation Committee then reviews management’s recommendation with the ability to ask questions of both management and the Compensation Consultant and may conduct an executive session as needed to discuss compensation. Previously, the Compensation Committee and Board collectively have had the final authority to make all decisions regarding compensation. At the Board meeting in January 2022, the Board approved amendments to the Compensation Committee charter which now permit the Compensation Committee to making recurring and other compensation decisions without separate Board approval, providing the Compensation Committee with additional autonomy. +The Compensation Consultant also assists the Compensation Committee with the determination of our Peer Group, as defined and described below, and design of our annual incentive program and long-term incentive awards. Using the independence factors established by the SEC and the NYSE, the Compensation Committee determined that the Compensation Consultant’s work did not raise any conflicts of interest, and they are considered an independent consulting firm. +Competitive Market Position and Peer Group +To further emphasize the alignment between Company performance and executive pay and to ensure compensation is competitive, for 2022 the Compensation Committee generally targeted the 50 th percentile for total compensation (base salary and short-term and long-term incentives) for the named executive officers as a group, as reflected by various sources of compensation data (collectively, “ Market Data ”). As further explained below, in 2022, actual compensation amounts were impacted by the specific performance goals selected for annual incentives and the use of additional long-term incentives to reward selected Named Executive Officers for their efforts in completing a strategic acquisition. The Market Data provided to the Compensation Committee by the Compensation Consultant includes compensation information from our Peer Group as well as other broad-based compensation survey sources selected by the Compensation Consultant. Although the Compensation Committee used the Market Data to inform its decisions regarding the form and amount of compensation provided to our Named Executive Officers in 2022, the Compensation Committee also considered other factors such that the compensation provided to our Named Executive Officers is not exclusively reflective of the M arket Data. +For purposes of setting 2022 compensation, the peer group companies (our “ Peer Group ”) used by the Compensation Consultant and the Compensation Committee included the following companies: +NOV Inc. +Flowserve Corporation +Weatherford International plc +Helmerich & Payne, Inc. +Patterson-UTI Energy, Inc. +ChampionX Corporation +NexTier Oilfield Solutions Inc. +Valaris Limited +Cactus, Inc. +Oceaneering International, Inc. +Archrock, Inc. +Gates Industrial Corporation plc +Our Peer Group was selected based on companies that broadly represent related drilling, oilfield services and manufacturing businesses and are of reasonably comparable size to the Company based on revenue, market capitalization and other financial metrics. While some of these companies have different revenues or market capitalizations, these companies represent the market in which we most directly compete for qualified professionals. As a whole, our Peer Group reflects companies with related operations, of reasonably similar size, and with which we compete for talent. +Objectives of Compensation +The goal of the Company’s compensation program is to help attract and retain qualified executive talent and to strengthen the alignment between executives and stockholders’ interests, enhancing stockholder value. To achieve this goal, the Compensation Committee’s decisions are guided by the following principles: provide a competitive compensation package; relate compensation to the performance of the Company and the individual; and align employee objectives with the objectives of stockholders by encouraging executive stock ownership. +18 +In order to achieve these objectives, the Compensation Committee has created a compensation package that combines current and deferred cash compensation with equity-based compensation. The Company’s compensation program for executive officers consists of the following items: +* base salary; +* performance-based annual incentive payments under the Company’s Long Term Incentive Plan (“ LTIP ”), which in 2022 were based upon the Company’s adjusted pre-tax earnings per share (“ Adjusted Pre-Tax EPS ”), return on capital employed (“ ROCE ”), the Company’s adjusted ROCE (ROCE revised to a standardized calculation as described herein) (“ Adjusted ROCE ”) as compared to the Adjusted ROCE of a peer group of companies (such comparison, “ Comparative ROCE ”) and personal performance; +* long-term equity awards under our LTIP, consisting of both time-based and performance-based restricted stock units; and +* matching and discretionary contributions under the Liberty Oilfield Services 401(k) Savings Plan. +The Compensation Committee structures executive total direct compensation to emphasize performance through the annual incentive program and long-term incentives. The Compensation Committee believes that the compensation mix should strike a balance promoting long-term returns without motivating or rewarding excessive or inappropriate risk-taking. +Elements of Compensation +2022 Pay Mix +Our compensation program is designed so that the higher an executive’s position in the Company, the greater the percentage of compensation is contingent on the Company’s performance. The Company believes that having a significant portion of our Named Executive Officers’ compensation at risk better aligns their interests with the long-term interests of the Company and its stockholders. A majority of our Named Executive Officers total target direct compensation for fiscal year 2022 was variable, at approximately 88% for our Chief Executive Officer and averaging 80% for our other Named Executive Officers. The following charts illustrate the total target mix of direct compensation for our Named Executive Officers for fiscal year 2022. +19 +Base Salary +Each Named Executive Officer’s base salary is a fixed component of compensation for performing specific job duties and functions. At the request of our Named Executive Officers, extensive reductions were made to base salaries in 2020 in light of marketplace conditions, including a cancellation of a previously approved 2% raise in March 2020 and a 30% reduction of existing base salaries, followed by a further 50% reduction from the reduced amount in April 2020 for May, June and July of 2020. In 2021, based on the analysis provided by the Compensation Consultant and the recommendation of the Compensation Committee, the Board reestablished the base salaries of our Named Executive Officers that were in effect pre-COVID-19 pandemic at the start of 2020, as last increased in January 2019. In January 2022, the Compensation Committee approved the first raise to some Named Executive Officer base salaries in three years, effective February 2022. Specifically, the annualized base salaries for each Named Executive Officer are as follows for 2022: +Name +2022 Base Salary +Increase over 2021 Base Salary +Christopher +A. Wright +$612,000 +0% +Michael +Stock +$408,000 +0% +Ron +Gusek +$450,000 +10% +R. +Sean Elliott +$400,000 +9% +Ryan +T. Gosney +$300,000 +9% +Annual Incentive Award +In 2022, based on the analysis provided by the Compensation Consultant and the recommendation of the Compensation Committee, the Board established performance metrics and hurdles for our 2022 annual incentive awards that are focused on the results of adjusted Pre-Tax EPS, ROCE and Comparative ROCE. The Compensation Consultant and Compensation Committee recommended, and the Board approved, maintaining an element of discretion in the annual incentive for our Named Executive Officers in order to provide the Compensation Committee and the Board the flexibility to respond to specific events that are relevant to each Named Executive Officer’s performance during the year. No payout percentage would be earned for a metric if the actual Company performance of that metric was below the threshold level set for that metric below. Payouts for performance between threshold, target and maximum would have been calculated using straight line interpolation. The overall payout amount for each Named Executive Officer is capped at 200% of each Named Executive Officer’s target incentive award. The performance metrics, their related thresholds and weightings and actual performance for the year ended December 31, 2022 are set forth in the table below: +Performance Metric +Weighting +Threshold +(50% +Payout) +Target +(100% +Payout) +Maximum +(200% +Payout) +Actual Performance +Earned Payout Percentage of Annual Incentive Award +Adjusted Pre-Tax EPS (1) +25% +$0.08 +$0.30 +$0.68 +$2.78 +200% +ROCE (2) +25% +3% +6% +10% +35% +200% +Comparative ROCE (3) +30% +See Comparative ROCE Chart below +3 of 10 (4) +167% +Discretionary +20% +N/A +N/A +N/A +Variable +Variable +(1) Adjusted Pre-Tax EPS is equal to the Company’s 2022 Adjusted EBITDA (calculated as presented in the Company’s Annual Report on Form 10-K which now adjusts for non-cash equity compensation expense), minus interest expense, depreciation and amortization, divided by basic weighted average shares outstanding (including Class B Common Stock shares) for 2022. +(2) ROCE is equal to the Company’s 2022 Adjusted EBITDA (calculated as presented in the Company’s Annual Report on Form 10-K which now adjusts for non-cash equity compensation expense), minus depreciation and amortization, divided by the simple average of capital (debt and equity) employed at December 31, 2022 and 2021. +(3) Comparative ROCE is determined by comparing the Company’s Adjusted ROCE, which is equal to the Company’s 2022 income before taxes and loss (gain) on remeasurement of liability under tax receivable agreements, plus interest expense and stock-based compensation expense, and ranking it against the Adjusted ROCE of the 2022 peer group, as further detailed below. +(4) Comparative ROCE Peer Group data estimated on a consistent basis with Company and based on public data as of February 24, 2023. +In 2022, our Named Executive Officers continued to work to rebuild the Company from the lows experienced during the COVID-19 pandemic experienced during 2020 and 2021. During 2020, no incentive compensation or bonus was paid to Named Executive Officers, and only 40% of the target incentive was paid during 2021. Given these facts and the very high rate of performance in 2022 on Adjusted Pre-Tax EPS, ROCE and Comparative ROCE financial metrics, the Compensation Committee approved a 40% payout on the 2022 discretionary incentive opportunity for all Named Executive Officers. +20 +The target incentive for each Named Executive Officer and the 2022 annual incentive payout for each Named Executive Officer is set forth below: +Name +Target Annual Incentive +(% of Base Salary) +Target Annual +Incentive ($) +Performance Achievement Level +(% of Target) +Actual 2022 Annual Incentive Payout +Christopher +A. Wright +147.1% +$900,000 +190.1% +$1,710,927 +Michael +Stock +122.5% +$500,000 +190.1% +$950,515 +Ron +Gusek +122.2% +$550,000 +190.1% +$1,045,567 +R. +Sean Elliott +93.8% +$375,000 +190.1% +$712,886 +Ryan +T. Gosney +100% +$300,000 +190.1% +$570,309 +Comparative ROCE is determined by comparing and ranking the Company’s Adjusted ROCE against the Adjusted ROCEs of a group of peer companies (such peer group, the “ ROCE Peer Group ”). Our Adjusted ROCE and the ROCE Peer Group Adjusted ROCEs for a calendar year are calculated and then ranked in order of highest to lowest, with the highest Adjusted ROCE being ranked 1 of 10, and the lowest Adjusted ROCE ranked 10 of 10. The amount of the target award paid for this metric is then based on our numerical ranking against the ROCE Peer Group as follows, with the use of linear interpolation to determine the exact amount of payout (the “ ROCE Ranking Matrix ”): +Comparative ROCE +Ranking of Company Adjusted ROCE against ROCE Peer Group +Payout Percentage of +Target Award +1 +of 10 +200% +2 +of 10 +175% +3 +of 10 +150% +4 +of 10 +125% +5 +of 10 +100% +6 +of 10 +75% +7 +of 10 +50% +8 +of 10 +0% +9 +of 10 +0% +10 +of 10 +0% +The ROCE Peer Group is reviewed and set each year, provided that the Compensation Committee reserves the right to recommend, and the Board to make, substitutions and revisions to the ROCE Peer Group throughout the year. While some companies in the ROCE Peer Group may overlap with companies in Peer Group, the focus of the ROCE Peer Group is to provide a metric by which the effectiveness of capital deployment can be measured. Accordingly, the ROCE Peer Group focuses more particularly on other companies that have capital needs that are similar to those of the Company. The Peer Group tends to focus and include companies based on the relative size of the peers based on metrics such as revenue and market capitalization. The ROCE Peer Group also utilizes the S&P 500 to provide a broader measure of the effectiveness of deployment of capital across various industries. The 2022 ROCE Peer Group consists of the following companies: +Helmerich & Payne, Inc. +NexTier Oilfield Solutions Inc. +Oil States International, Inc. +Patterson-UTI Energy, Inc. +ProPetro Holding Corp. +RPC, Inc. +S&P 500 +Nine Energy Service, Inc. +Halliburton Company +Our Company Adjusted ROCE for 2022 was 34.0%, which ranked 3 of 10 against the ROCE Peer Group for 2022 based on public data as of March 1, 2023, resulting in a weighted payout percentage for the Comparative ROCE component of the annual incentive award equal to 167.0%. +21 +Long-Term Incentive Compensation +We maintain the LTIP in order to incentivize individuals providing services to us or our affiliates. In 2022, following recommendations by the Compensation Consultant and our Compensation Committee, our Board granted both time-based and performance-based restricted stock units (“ RSUs ”), each which represent the right to receive shares of our Class A Common Stock following the applicable vesting period. The Compensation Committee has considered the use of other forms of equity awards, including restricted stock and stock options, and ultimately determined to use RSUs given that they have a less dilutive effect than stock options and do not require the issuance of actual shares of Class A Common Stock unless and until vesting conditions are met. For 2022, the grant date value of RSUs for the Named Executive Officers as a group was initially set at approximately the 50 th percentile based on Market Data. The Compensation Committee and our Board determined that a combination of time-based and a performance-based vesting approach was appropriate given the Company’s desire to provide our Named Executive Officers with a long-term retention-focused award that also aligns the interests of our Named Executive Officers with those of our stockholders while at the same time furthering the Company’s pay-for-performance philosophy. +For 2022, one-half of the RSUs awarded to Messrs. Wright, Stock and Gusek vest ratably over a three-year period, and one-half vests at the end of a three-year performance period based on the Company’s performance against a ROCE Peer Group. Messrs. Elliott and Gosney received RSU awards with similar time and performance-based vesting conditions for 2022, except that 67% of these awards were time-based, and 33% were performance-based. +Performance-based RSUs provide the Named Executive Officer the right to receive an amount ranging from 0% to 200% of the target performance-based RSUs granted based on the Company’s Comparative ROCE performance during the three-year performance period, subject to the continued employment of the Named Executive Officer. To determine the Company’s Comparative ROCE, Adjusted ROCE will be calculated for the Company and each entity in the ROCE Peer Group, as described above under “ Elements of Compensation—Annual Incentive Award ,” for each applicable year. After the end of the three-year performance period, the Adjusted ROCE calculations of each entity for each year shall be averaged in order to obtain an average Adjusted ROCE calculation for the entire three-year period. The entities in the ROCE Peer Group will be arranged (highest to lowest) by their averaged Adjusted ROCE, excluding the Company. The Company’s percentile rank will be interpolated between the entity with the next highest average Adjusted ROCE and the entity with the next lowest average Adjusted ROCE. The Company’s percentile rank will then be used to determine the payout percentage of the target performance-based RSU by using the ROCE Ranking Matrix set forth above. The chart below shows the Company’s Comparative ROCE rank for 2020, 2021 and 2022, resulting in an award payout of 150.3% of target for the performance-based RSUs that were awarded to Named Executive Officers in January 2020 and vest on April 1, 2023: +Year +Company Adjusted ROCE Percentage +Ranking of Company Adjusted ROCE against ROCE Peer Group +2020 +-13.9% +3 +of 10 +2021 +-10.3% +9 +of 10 +2022 +34.0% +3 +of 10 +3 +year average +2.8% +3 +of 10 +Employment, Severance and Change in Control Agreements +The Company has entered into a change in control agreement with each of Mr. Elliott and Mr. Gosney (the “ Change in Control Agreements ”). No such change of control agreements have been entered into with the Company’s other Named Executive Officers, as the value of the vested equity interests in the Company that such officers acquired prior to the time of the IPO would likely provide adequate benefits in the event of a change in control transaction. +Each Change in Control Agreement provides severance benefits in the event the executive officer’s employment is terminated without cause or the executive officer resigns for good reason within 18 months following a change in control, as described in more detail below under “ Potential Payments Upon Termination or Change in Control—Change in Control Agreements .” The benefits provided to the executive officer in the Change in Control Agreements were primarily based on the recommendation of the Compensation Consultant and Peer Group median data provided at the time the Change in Control Agreements were executed. +We have not entered into any other employment, severance or change in control agreements with any of our Named Executive Officers. +22 +Other Compensation Elements +401(k) Plan. We currently maintain a retirement plan intended to provide benefits under Section 401(k) of the Internal Revenue Code of 1986, as amended (the “ Code ”) under which employees, including our Named Executive Officers, are allowed to contribute portions of their base compensation to a tax-qualified retirement account under the Liberty Oilfield Services 401(k) Savings Plan. We provide matching contributions at a rate of $1.00 for each $1.00 of employee contribution, subject to a cap of the lower of (i) 6% of the employee’s salary and (ii) the applicable contribution limits under the Code. +Pension and Nonqualified Deferred Compensation. We have not maintained, and do not currently maintain, a defined benefit pension plan or nonqualified deferred compensation plan. +Perquisites and Other Benefits . We provide limited perquisites to our Named Executive Officers. For example, none of our Named Executive Officers receive car allowances. +Anti-Hedging and Pledging Policy. Our Insider Trading Policy (the “ Insider Trading Policy ”) generally prohibits our directors, employees and officers from hedging and pledging of Company securities by providing that hedging or monetization transactions, whether direct or indirect, involving the Company’s securities and the pledging of Company securities as collateral are prohibited. Short term exceptions to this prohibition (such as temporary margin loans) may be granted depending on specific facts and circumstances. Any exceptions to the Insider Trading Policy for our directors and officers must be granted by our Audit Committee and will be periodically communicated to the Board. The Insider Trading Policy also prohibit s transactions involving Company-based derivative securities. +Stock Ownership Guidelines . We have implemented stock ownership guidelines for our executive officers and our directors that receive compensation from us for Board service to foster equity ownership and align interests with our stockholders. Within five years of the later of (a) the date of becoming an executive officer and (b) October 18, 2022, our Chief Executive Officer is expected to own a number of shares equal to six times of his base salary and all other executive officers are expected to own a number of shares equal to two times their base salary. Similarly, within five years of the later of (a) the date a compensated director commences service with the Company in such position and (b) October 18, 2022, our compensated directors are expected to own a number of shares equal to five times their annual Board cash retainer. Shares that are owned directly, indirectly (such as through a 401(k) plan or family trust) and shares issuable upon settlement of restricted stock units (including the target number of shares to be issued under performance-based units) count towards meeting these ownership requirements. In the event that an executive officer or compensated director fails to comply with these ownership guidelines following the end of the applicable transition period and subject to certain exceptions, they are expected to retain not less than 50% of the number of shares issued to him or her under our Long Term Incentive Plan or similar future equity compensation plans, net of the number of shares applied to the payment of taxes on such awards. Each of our executive officers and compensated directors was within the transition period provided for in the stock ownership guidelines as of the Record Date; however all of our executive officers and several of our directors were in compliance with these guidelines even without the benefit of the transition period as of the Record Date. +Risk Assessment +The Compensation Committee reviewed our employee compensation practices and policies and determined that such policies do not encourage excessive or unnecessary risk-taking, and are not likely to have a material adverse effect on the Company. +23 +COMPENSATION COMMITTEE REPORT +The information contained in this Compensation Committee Report shall not be deemed to be “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933, as amended (the “ Securities Act ”), or the Exchange Act, except to the extent that the Company specifically incorporates such information by reference in such filing. +The Compensation Committee reviewed and discussed the Compensation Discussion & Analysis required by Item 402 of Regulation S-K promulgated by the SEC with management of the Company, and, based on such review and discussions, the Compensation Committee recommended to the Board that such Compensation Discussion & Analysis be included in this Proxy Statement and incorporated by reference into the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022. +Compensation Committee of the Board of Directors: +Peter A. Dea, Chairman +Ken Babcock, Member +Cary D. Steinbeck, Member +24 +EXECUTIVE COMPENSATION TABLES +Summary Compensation Table +The following table summarizes the compensation awarded to, earned by or paid to Principal Executive Officer (“ PEO ”) and our other Named Executive Officers for the fiscal years ended December 31, 2022, 2021 and 2020. +Name +& Principal Position +Year +Salary +($) +Bonus +($) (1) +Stock +Awards +($) (2) +Non-Equity +Incentive +Plan +Compensation +($) (1) +All +Other +Compensation +($) (3) +Total +($) +Christopher +A. Wright +Chairman +of the Board & Chief Executive Officer +2022 +612,000 +360,000 +3,406,258 +1,350,927 +18,300 +5,747,485 +2021 +612,000 +180,000 +3,801,972 +0 +17,400 +4,611,372 +2020 +428,400 +0 +2,876,014 +0 +5,700 +3,310,114 +Michael +Stock +Chief +Financial Officer & Treasurer +2022 +408,000 +200,000 +1,526,949 +750,515 +18,300 +2,903,764 +2021 +408,000 +100,000 +1,689,762 +0 +17,400 +2,215,162 +2020 +285,600 +0 +1,278,229 +0 +5,700 +1,569,529 +Ron +Gusek +President +2022 +443,538 +220,000 +1,526,949 +825,567 +18,300 +3,034,354 +2021 +408,000 +200,000 +1,689,762 +0 +17,400 +2,315,162 +2020 +285,600 +0 +1,278,229 +0 +5,700 +1,569,529 +R. +Sean Elliott +Vice +President, General Counsel & Corporate Secretary +2022 +394,954 +150,000 +945,531 +562,886 +18,300 +2,071,671 +2021 +367,200 +144,000 +1,662,426 +0 +17,400 +2,191,026 +2020 +257,040 +0 +789,119 +0 +5,700 +1,051,859 +Ryan +T. Gosney +Chief +Accounting Officer +2022 +296,215 +120,000 +587,291 +450,309 +5,891 +1,459,706 +2021 +275,400 +81,000 +1,020,111 +0 +16,524 +1,393,035 +2020 +192,780 +0 +485,329 +0 +5,700 +683,809 +(1) The amounts reported in the “Non-Equity Incentive Plan Compensation” column reflect the portion of the annual incentive payouts related to achievement of the Company-wide performance metrics. The portion of the annual incentive payouts related to the discretionary component are reported in the “Bonus” column. +(2) The amounts shown do not reflect compensation actually received by the Named Executive Officer. Rather, amounts set forth in the “Stock Awards” column represent the aggregate grant date fair value of time-based and performance-based restricted stock unit awards computed in accordance with FASB ASC Topic 718 for financial statement reporting purposes by the Company with respect to restricted stock units. A discussion of the assumptions used in this valuation with respect to awards made in fiscal year 2022 may be found in Note 10 to the Company’s financial statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. Performance-based awards are included based on the assumption that they will vest at 100% of the target award, since actual vesting will not be determined until the end of the performance period. +(3) For the Named Executive Officers, amounts reported in the “All Other Compensation” column for 2022 reflect discretionary matching contributions earned by each Named Executive Officer pursuant to the Company’s 401(k) plan. +25 +Grants of Plan-Based Awards +The following table provides information for each of our Named Executive Officers regarding plan-based awards granted during fiscal year 2022. +Name +Grant Date +Estimated Future Payouts Under +Non-Equity Incentive Plan Awards (1) +Estimated Future Payouts Under +Equity Incentive Plan Awards (2) +All Other +Stock +Awards: +Number of +Shares of +Stock or +Units +(#) (3) +Grant Date +Fair Value +of Stock +Awards +($) (4) +Threshold +($) +Target +($) +Maximum +($) +Threshold +(#) +Target +(#) +Maximum +(#) +Christopher +A. Wright +360,000 +720,000 +1,440,000 +1/18/2022 +68,786 +137,571 +275,142 +1,703,129 +1/18/2022 +137,571 +1,703,129 +Michael +Stock +200,000 +400,000 +800,000 +1/18/2022 +30,835 +61,670 +123,340 +763,475 +1/18/2022 +61,670 +763,475 +Ron +Gusek +220,000 +440,000 +880,000 +1/18/2022 +30,835 +61,670 +123,340 +763,475 +1/18/2022 +61,670 +763,475 +R. +Sean Elliott +150,000 +300,000 +600,000 +1/18/2022 +12,602 +25,204 +50,408 +312,026 +1/18/2022 +51,172 +633,506 +Ryan +T. Gosney +120,000 +240,000 +480,000 +1/18/2022 +7,828 +15,655 +31,310 +193,809 +1/18/2022 +31,784 +393,482 +(1) The amounts shown in these columns reflect the potential threshold, target and maximum payouts with respect to the performance-based financial metrics approved under the 2022 annual incentive awards. The amounts reflected herein do not include amounts that may be earned with respect to the discretionary component of the 2022 annual incentive awards. +(2) The amounts shown in these columns reflect the potential threshold, target and maximum number of performance-based RSU awards granted to the Named Executive Officers during fiscal year 2022. +(3) The amounts shown in this column reflect time-based vesting RSU awards granted to the Named Executive Officers during fiscal year 2022. +(4) The amounts shown in this column do not reflect compensation actually received by the Named Executive Officer. Rather, amounts set forth herein represent the aggregate grant date fair value of time-based and performance-based RSUs computed in accordance with FASB ASC Topic 718 for financial statement reporting purposes in fiscal year 2022 by the Company. A discussion of the assumptions used in this valuation with respect to awards made in fiscal year 2022 may be found in Note 10 to the Company’s financial statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. +26 +Outstanding Equity Awards at 2022 Fiscal Year-End +The following table reflects information regarding outstanding equity-based awards held by our Named Executive Officers as of December 31, 2022, which consist of time-based RSU awards and performance-based RSU awards. +Name +Stock Awards +Number of Shares +or Units of Stock That Have +Not Vested +(#) +Market Value +of Shares +or Units of Stock That Have +Not Vested +($) (4) +Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested +(#) +Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) (8) +Christopher +A. Wright +49,827 +(1) +797,730 +97,637 +(2) +1,563,168 +137,571 +(3) +2,202,512 +298,962 +(5) +4,786,382 +292,910 +(6) +4,689,489 +275,142 +(7) +4,405,023 +Michael +Stock +22,146 +(1) +354,557 +43,394 +(2) +694,738 +61,670 +(3) +987,337 +132,872 +(5) +2,127,281 +130,182 +(6) +2,084,214 +123,340 +(7) +1,974,673 +Ron +Gusek +22,146 +(1) +354,557 +43,394 +(2) +694,738 +61,670 +(3) +987,337 +132,872 +(5) +2,127,281 +130,182 +(6) +2,084,214 +123,340 +(7) +1,974,673 +R. +Sean Elliott +18,229 +(1) +291,846 +35,980 +(2) +576,040 +51,172 +(3) +819,264 +54,686 +(5) +875,523 +148,214 +(6) +2,372,906 +50,408 +(7) +807,032 +Ryan +T. Gosney +11,212 +(1) +179,504 +22,078 +(2) +353,469 +31,784 +(3) +508,862 +33,632 +(5) +538,448 +90,948 +(6) +1,456,077 +31,310 +(7) +501,273 +(1) These RSUs granted on January 22, 2020 vest on April 1, 2023, so long as the applicable Named Executive Officer remains employed through such date. +(2) These RSUs granted on January 20, 2021 vest in one-half increments on each of April 1, 2023 and April 1, 2024, so long as the applicable Named Executive Officer remains employed through such dates. +(3) These RSUs granted on January 18, 2022 vest in one-third increments on each of April 1, 2023, April 1, 2024 and April 1, 2025, so long as the applicable Named Executive Officer remains employed through such dates. +(4) Amounts in this column reflect the value of unvested time-based RSU awards held by the Named Executive Officers, calculated based on the closing price of our Class A Common Stock on December 30, 2022 of $16.01. +(5) These performance-based RSUs granted on January 22, 2020 will vest on April 1, 2023, subject to achievement of the Comparative ROCE performance metrics and the applicable Named Executive Officer’s continued employment through such date. As of December 31, 2022, the performance-based RSUs granted on January 22, 2020 were trending above target, and in accordance with the SEC rules, are reflected in this table at maximum, therefore, the performance -based RSUs may actually vest at a lower amount than reflected in this column. +(6) These performance-based RSUs granted on January 20, 2021 will vest on April 1, 2024, subject to achievement of the Comparative ROCE performance metrics and the applicable Named Executive Officer’s continued employment through such date. As of December 31, 2022, the performance-based RSUs granted on January 20, 2021 were trending above target, and in accordance with the SEC rules, are reflected in this table at maximum, therefore, the performance-based RSUs may actually vest at a lower amount than reflected in this column. +27 +(7) These performance-based RSUs granted on January 18, 2022 will vest on April 1, 2025, subject to achievement of the Comparative ROCE performance metrics and the applicable Named Executive Officer’s continued employment through such date. As of December 31, 2022, the performance-based RSUs granted on January 18, 2022 were trending above target, and in accordance with the SEC rules, are reflected in this table at maximum, therefore, the performance-based RSUs may actually vest at a lower amount than reflected in this column. +(8) Amounts in this column reflect the value of unvested performance-based RSU awards held by the Named Executive Officers reported in the preceding column calculated based on the closing price of our Class A Common Stock on December 30, 2022 of $16.01. +Option Exercises and Stock Vested +The following table reflects the value received by each Named Executive Officer on the vesting of restricted stock awards and RSU awards during fiscal year 2022. None of our Named Executive Officers held stock option awards during the 2022 year. +Name +Stock Awards +Number of +Shares Acquired +on Vesting +(#) +Value Realized +on Vesting +($) (1) +Christopher +A. Wright +309,395 +4,777,059 +Michael +Stock +137,509 +2,123,139 +Ron +Gusek +137,509 +2,123,139 +R. +Sean Elliott +82,299 +1,270,697 +Ryan +T. Gosney +50,527 +780,137 +(1) The amounts in this column reflect the value of the shares in the preceding column based on the closing price of our Class A Common Stock of $15.44 on April 1, 2022, the applicable vesting date, including the value of any shares withheld for tax withholding purposes. +Pension Benefits and Nonqualified Deferred Compensation +We do not maintain and our Named Executive Officers do not participate in any defined benefit pension plan or nonqualified deferred compensation plan. +Potential Payments Upon Termination or Change in Control +Change in Control Agreements +The Company has entered into Change in Control Agreements with each of Mr. Elliott and Mr. Gosney. For further detail on the Company’s decision to enter into Change in Control Agreements with these Named Executive Officers, see the section titled “ Employment, Severance and Change in Control Agreements ” contained in the Compensation Discussion & Analysis section set forth herein. Each Change in Control Agreement provides that if the Named Executive Officer’s employment is terminated without “cause” or the Named Executive Officer resigns for “good reason” within 18 months following a “change in control,” the Named Executive Officer will be entitled to receive, subject to such Named Executive Officer’s timely execution and non-revocation of a release of claims in favor of the Company: (i) two times the sum of (a) the Named Executive Officer’s annualized base salary for the year in which the termination occurs (or, if greater, that in effect immediately preceding the change in control) plus (b) an amount equal to the higher of (1) the Named Executive Officer’s target annual bonus for year in which the termination occurs or (2) the average of the Named Executive Officer’s target annual bonus for the three most recently completed calendar years; (ii) a pro-rated portion of the Named Executive Officer’s target annual bonus for the calendar year in which the termination occurs; (iii) reimbursement for a portion of the COBRA premiums paid by the executive for continued coverage under the Company’s group health plans for up to 18 months plus a lump sum cash payment equal to six times such monthly amount; and (iv) vesting of all outstanding time-based and performance-based equity awards granted pursuant to any Company long term incentive plan as of the date of termination, with such performance-based equity awards being vested at the higher of target performance or actual performance through the termination date. +For purposes of the Change in Control Agreements, the following terms generally have the meanings set forth below: +• “ Cause ” generally means the Named Executive Officer’s (i) material breach of the Change in Control Agreement or any other agreement with the Company, (ii) material breach of any policy or code of conduct, (iii) violation of any law applicable to the workplace or employment relationship that is materially injurious to the Company, (iv) gross negligence, willful misconduct or willful breach of fiduciary duty, fraud, theft or embezzlement, (v) conviction or indictment, or plea of nolo contendere, to any felony or conviction or plea of nolo contendere to any crime involving moral turpitude, or (vi) willful failure or refusal to substantially perform such Named Executive Officer’s obligations or to follow in any material respect any specific lawful direction from the Company. Clauses (i), (ii), (iii) and (vi) are subject to certain notice and cure rights. +28 +• “ Change in Control ” generally means (i) a change in the ownership of the Company, (ii) a change in the effective control of the Company, or (iii) a change in the ownership of a substantial portion of the Company’s assets, in each case, as such phrases are defined under the Treasury regulations promulgated pursuant to Section 409A of the Code. +• “ Good Reason ” generally means (i) a material diminution in the Named Executive Officer’s total cash compensation, (ii) a m aterial diminution in the Named Executive Officer’s authority, duties or responsibilities as a whole, (iii) a geographic relocation by more than 50 miles, (iv) a material breach by the Company of the Change in Control Agreement or any other agreement between the Named Executive Officer and the Company, or (v) a failure to timely pay or provide any material payment, benefit or other consideration or compensation owed to the Named Executive Officer, in each case, subject to certain notice and cure rights. +RSU Awards +The RSUs held by our Named Executive Officers under the LTIP will accelerate and become 100% vested upon a termination of the Named Executive Officer’s employment with the Company due to the Named Executive Officer’s death or “disability.” For RSUs that use performance-based vesting, the award will remain outstanding and eligible to be earned based on the Company’s achievement of the applicable performance metrics at the end of the performance period. For purposes of the RSU awards, “disability” means the Named Executive Officer’s inability to perform his duties, after accounting for reasonable accommodation, due to a mental or physical impairment that continues (or can reasonably be expected to continue) for (i) 90 consecutive days or (ii) 180 days out of any 365-day period, which, in either case, shall only be deemed to occur following the written determination by the Company of any such occurrence of disability. +The table below describes and estimates the amounts and benefits each Named Executive Officer would have been eligible to receive upon a termination of his employment in certain circumstances or a change in control, assuming such events occurred as of December 31 , 2022, the last day of fiscal year 2022. The estimated payments are not necessarily indicative of the actual amounts such executive would have received in such circumstances, as such amounts could not be known with certainty until the applicable event occurred. The table excludes compensation amounts accrued through December 31, 2022 that would be paid in the normal course of continued employment, such as accrued but unpaid salary and vested account balances under our retirement plans that are generally available to all of our salaried employees. Where applicable, the information in the table uses a price per share for our Common Stock of $16.01, the closing price on December 31, 2022 (the “ Year-End Closing Price ”). Generally, payment of severance benefits to a Named Executive Officer following termination of employment is subject to such officer’s timely execution and non-revocation of a release of claims in favor of the Company. +Name +Change in +Control +($) +Death/ +Disability +($) +Termination without Cause or Resignation for Good Reason on or within 18 Months Following a Change in Control +($) +Christopher +A. Wright +Equity +Award Acceleration (1) +— +18,444,304 +— +Michael +Stock +Equity +Award Acceleration (1) +— +8,222,800 +— +Ron +Gusek +Equity +Award Acceleration (1) +— +8,222,800 +— +R. +Sean Elliott +Cash +Severance (2) +— +— +1,925,000 +Benefit +Continuation (3) +— +— +22,745 +Equity +Award Acceleration (1) +— +5,742,611 +5,742,611 +Ryan +Gosney +Cash +Severance (2) +— +— +1,500,000 +Benefit +Continuation (3) +— +— +23,005 +Equity +Award Acceleration (1) +— +3,537,633 +3,537,633 +(1) The amounts reported in these rows reflect the value of time-based RSU and performance-based RSU awards that would accelerate in connection with the applicable event, calculated based on the Year-End Closing Price. For purposes of the performance-based RSUs granted in 2020, 2021 and 2022 these amounts reflect an assumed achievement of maximum performance, as the performance-based RSUs were trending above target as of December 31, 2022. +(2) The amounts reported in these rows reflect the full amount of each Named Executive Officer’s target annual incentive award for 2022, as the pro-ration provided for under the Change in Control Agreements would result in the full amount of such target annual incentive awards being payable as of December 31, 2022. +(3) The amounts reported in these rows are calculated based on the premiums in effect as of December 2022, which are assumed for purposes of this table to remain the same throughout the applicable benefit reimbursement period. +29 +DIRECTOR COMPENSATION +We have adopted a non-employee director compensation program that is applicable to each of our non-employee directors. The Compensation Consultant also conducted an analysis of market-competitive total director compensation (annual retainers, meeting fees and equity awards) using our Peer Group as a comparative metric. Pursuant to this program, during 2022 each non-employee director was entitled to receive the following compensation for their service on our Board: +* A cash retainer of $80,000 per year, payable quarterly in arrears; +* An additional cash retainer of $20,000 per year, payable quarterly in arrears if such non-employee director serves as the chairperson of our Audit Committee; +* An additional cash retainer of $15,000 per year, payable quarterly in arrears if such non-employee director serves as the chairperson of our Compensation Committee; +* An additional cash retainer of $10,000 per year, payable quarterly in arrears if such non-employee director serves as the chairperson of a Nominating and Governance Committee; +* An additional cash retainer of $20,000 per year, payable quarterly in arrears if such non-employee director serves as the Lead Director of the Company; +* Either: +(a) annual equity based compensation in the form of RSUs with an aggregate grant date value of $150,000, subject to the terms of the LTIP and the award agreement pursuant to which such award is granted. The award shall be subject to a 12-month vesting period, unless otherwise determined by the Board. The annual grant shall be made automatically on January 2 nd of each year, using the 30-day average closing price of the Company’s Class A Common Stock prior to the date of grant to determine the number of units to be granted; +(b) an additional cash payment of $100,000 per year, payable quarterly in arrears; or +(c) a charitable cash donation by the Company of $100,000 per year, payable quarterly in arrears, to an organization designated by the director and that is qualified under Section 501(c)(3) of the Internal Revenue Code, provided that the organization must be independent of the director and reasonably acceptable to the Compensation Committee. +Effective as of January 1, 2023, our non-employee director compensation program was updated to increase the annual cash retainer from $80,000 to $100,000 and the amount of the grant date value for equity based compensation from $150,000 to $162,000. This change was made by the Compensation Committee in October 2022 in response to a recommendation from the Compensation Committee and the Compensation Consultant in order to better align with marketplace practices. +Each non-employee director shall be given an opportunity to elect whether they would like to receive item (a), (b) or (c) above prior to the beginning of each year. If a non-employee director joins the Board or otherwise becomes eligible for director compensation during the course of a calendar year, the director will be allowed to make such election upon joining or becoming eligible. If a non-employee director joins the Board during the course of a calendar year, the director will be entitled to receive a prorated RSU award (if so elected) for that year, which shall vest over the remaining portion of the year, unless otherwise determined by the Board. All annual cash payments shall be prorated for partial years of service or eligibility. +In addition, each non-employee director will be reimbursed for out-of-pocket expenses incurred in connection with attending Board and committee meetings. +30 +The table below sets forth the compensation our non-employee directors received for the fiscal year ended December 31, 2022. +Name +Fees Earned +or Paid in Cash ($) +Stock +Awards ($) (1) +All Other Compensation ($) +Total +($) +Simon +Ayat +80,000 +149,991 +229,991 +Ken +Babcock +80,000 +149,991 +— +229,991 +Peter +A. Dea +95,000 +149,991 +— +244,991 +William +F. Kimble +120,000 +149,991 +— +269,991 +James +R. McDonald +— +— +100,000 +(2) +— +Gale +A. Norton +90,000 +149,991 +— +239,991 +Audrey +Robertson +80,000 +149,991 +— +229,991 +Cary +D. Steinbeck +80,000 +149,991 +— +229,991 +(1) The amounts shown do not reflect compensation actually received by the directors. Rather, amounts set forth in the Stock Awards column represent the aggregate grant date fair value of awards computed in accordance with FASB ASC Topic 718 for financial statement reporting purposes in fiscal year 2022 by the Company with respect to restricted stock units. A discussion of the assumptions used in this valuation with respect to awards made in fiscal year 2021 may be found in Note 10 to the Company’s financial statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. As of December 31, 2022, Messrs. Ayat, Babcock, Dea, Kimble and Steinbeck and Ms. Norton and Ms. Robertson each held 15,463 unvested RSUs. +(2) Represents the amount of charitable contributions that the Company has agreed to make on behalf of Mr. McDonald in connection with his 2022 Board service. As of March 1, 2023, the Company has paid $0 of this amount to charities designated by Mr. McDonald. +31 +EQUITY COMPENSATION PLAN INFORMATION +The following table sets forth information about our Class A Common Stock that may be issued under equity compensation plans as of December 31, 2022. +Plan Category +Number of defined securities to be issued upon exercise of outstanding options, warrants and rights +(a) (1) +Weighted–average exercise price of outstanding options, warrants and rights +(b) (2) +Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in +column (a)) +(c) (3) +Equity +compensation plans approved by security holders +— +— +— +Equity +compensation plans not approved by security holders +5,766,903 +— +4,365,814 +Total +5,766,903 +— +4,365,814 +(1) This column reflects shares of our Class A Common Stock subject to RSU awards granted under the LTIP outstanding and unvested as of December 31, 2022. The performance-based RSUs granted under the LTIP are reflected based on an achievement of maximum performance. No stock options or warrants have been granted under the LTIP. +(2) No stock options have been granted under the LTIP, and the RSU awards reflected in column (a) are not reflected in this column as they do not have an exercise price. +(3) This column reflects the total number of shares of Class A Common Stock remaining available for issuance under the LTIP, giving effect to the “share recycling” feature of the LTIP, which allows shares that are forfeited due to termination of service or surrendered to satisfy tax withholding obligations to be eligible for reissuance under the LTIP. +Our only equity compensation plan is the LTIP. The LTIP was approved prior to our IPO but has not been approved by our public stockholders. Please read Note 10 to the Company’s financial statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 for a description of our equity compensation plans. In addition, a detailed description of the terms of the LTIP is available in our registration statement on Form S-1, last filed on January 2, 2018, under the heading “ Executive Compensation—Actions Taken Following Fiscal Year End—Long-Term Incentive Plan .” +32 +CEO PAY RATIO +As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, we are providing the following information about the rel ationship of the annual total compensation of our employees and the annual total compensation of Christopher A. Wright, our Chief Executive Officer (our “ CEO ”). +For 2022, our last completed fiscal year: +* The total compensation of our median employee was $112,068, as calculated pursuant to the same methodology as that used to determine pay for our CEO in the Summary Compensation Table included above; and +* The total compensation of our CEO, as reported in the Summary Compensation Table included above, was $5,747,485. +* Based on this information, for 2022 the ratio of the total compensation of our CEO to the median employee total compensation was reasonably estimated to be 51 to 1. +The pay ratio set forth above is a reasonable estimate calculated in a manner consistent with SEC rules based on our human resources systems of record and the methodology described below. Because the SEC rules for identifying the median employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices, the pay ratio reported by other companies may not be comparable to the pay ratio that we report above, as other companies may have different employment and compensation practices, different types of workforce, and operate in different countries, and may use different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios. To identity the median of the annual total compensation of all our employees, as well as to determine the annual total compensation of our median employee and our CEO, we took the following steps: +✓ We determined that, as of December 12, 2022, our employee population excluding our CEO consisted of approximately 4,865 individuals with all of these individuals located in the United States and Canada. This population consisted of our full-time, part-time and temporary employees who received Company benefits, as we do not have seasonal workers. We selected December 12, 2022 as our identification date for determining our median employee because it enabled us to make such identification in a reasonably efficient and economic manner, as this is the date of the last period worked during the year for which payment was made to employees in 2022. +✓ We used a consistently applied compensation measure to identify our median employee by comparing the amount of compensation as reported to the Internal Revenue Service on Form W-2 for 2022 for US employees and the amount of compensation as reported to the Canadian Revenue Agency on T4 Statement of Renumeration Paid for 2022 for Canadian employees. +✓ We identified our median employee by consistently applying this compensation measure to all of our employees included in our analysis. Since all of our employees, including our CEO, are located in the United States and Canada, we did not make any cost of living adjustments in identifying the median employee. Our median employee for 2022 was a full-time, salaried employee working as a wireline equipment operator with annual compensation of $93,901 set forth on such employee’s Form W-2 for 2022. +✓ After we identified our median employee, we combined all of the elements of such employee’s compensation for the 2022 year in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K, resulting in annual total compensation of $112,068. The differences between such employee’s taxable compensation reported on Form W-2 for 2022 of $93,901 and the employee’s annual total compensation calculated pursuant to Regulation S-K include the following adjustments: (i) modification from bonuses paid during 2022 to bonuses earned during 2022, if needed, (ii) addition of contributions made by the employee and by the Company on the employee’s behalf to our 401(k) plan for 2022, (iii) addition of the costs of tax deductible employee group health plan premiums and employee contributions to tax deductible flexible spending accounts, if any and (iv) subtraction of other taxable compensation including compensation for provided housing or transportation and that attributable to group term life, short-term and long-term disability benefits, if applicable. +✓ With respect to the annual total compensation of our CEO, we used the amount reported in the “Total” column of our 2022 Summary Compensation Table included in this Proxy Statement and incorporated by reference under Item 11 of Part III of our Annual Report on Form 10-K for the year ended December 31, 2022. +33 +PAY VERSUS PERFORMANCE +Pay Versus Performance Table for 2022 +Year +Summary +Compensation +Table Total for +PEO ($) (1) +Compensation +Actually Paid to +PEO ($) (2) +Average +Summary +Compensation +Table Total for +Non-PEO NEOs +($) (3) +Average +Summary +Compensation +Actually Paid to +Non-PEO NEOs +($) (4) +Value of Initial Fixed $100 +Investment Based On: +Net Income (Loss) +(in Thousands) +($) (6) +Adjusted ROCE (7) +TSR +Peer Group +TSR (5) +2022 +5,747,485 +12,201,790 +2,367,374 +4,567,954 +147.11 +107.11 +399,602 +34.0 % +2021 +4,611,372 +3,946,524 +2,028,596 +1,738,700 +88.85 +67.34 +( 179,244 ) +- 10.3 % +2020 +3,310,114 +2,493,998 +1,218,682 +909,552 +94.44 +56.62 +( 115,583 ) +- 13.9 % +(1) The dollar amounts reported +are the amounts of total compensation reported for Christopher +A. Wright (our Chairman/CEO) for each corresponding year in the “Total” +column of the Summary Compensation Table provided above. +(2) The dollar amounts reported +represent the amount of “compensation actually paid” to Mr. Wright, as computed in accordance with Item 402(v) of SEC Regulation +S-K. The dollar amounts reported do not reflect the actual amount of compensation earned by or paid to Mr. Wright during the applicable +year. In accordance with the requirements of Item 402(v) of SEC Regulation S-K, the following adjustments were made to Mr. Wright’s +total compensation for each year to determine the compensation actually paid to Mr. Wright: +Year +Reported +Summary +Compensation +Table Total +for PEO +($) +Less Grant Date +Fair Value of +Current Year +Equity Awards +($) +Year-End +Fair Value of +Current Year +Equity Awards +($) +Change in +Year- End Fair +Value of Prior +Year Unvested +Equity Awards +($) +Change in +Fair Value of +Equity Awards +Vested in +Current Year +($) +Compensation +Actually Paid +to PEO +($) +2022 +5,747,485 +( 3,406,258 ) +4,405,023 +3,612,975 +1,842,565 +12,201,790 +2021 +4,611,372 +( 3,801,972 ) +2,841,227 +99,171 +196,725 +3,946,524 +2020 +3,310,114 +( 2,876,014 ) +3,082,298 +( 209,920 ) +( 812,480 ) +2,493,998 +(3) The dollar amounts reported +represent the average of the amounts reported for our NEOs as a group (excluding Mr. Wright) in the “Total” column of the +Summary Compensation Table provided above. The NEOs (excluding Mr. Wright) included for purposes of calculating the average amounts in +each applicable year are Messrs. Stock, Gusek, Elliott and Gosney. +(4) The dollar amounts reported +represent the average amount of “compensation actually paid” to the NEOs as a group (excluding Mr. Wright), as computed in +accordance with Item 402(v) of SEC Regulation S-K. The NEOs (excluding Mr. Wright) included for purposes of calculating the average amounts +in each applicable year are Messrs. Stock, Gusek, Elliott and Gosney. The dollar amounts reported do not reflect the actual average amount +of compensation earned by or paid to the NEOs as a group (excluding Mr. Wright) during the applicable year. In accordance with the requirements +of Item 402(v) of SEC Regulation S-K, the following adjustments were made to average total compensation for the NEOs as a group (excluding +Mr. Wright) for each year to determine the compensation actually paid: +Year +Reported +Average +Summary +Compensation +Table Total for +Non-PEO NEOs +($) +Less Grant Date +Fair Value of +Current Year +Equity Awards +($) +Year-End +Fair Value of +Current Year +Equity Awards +($) +Change in +Year- End Fair +Value of Prior +Year Unvested +Equity Awards +($) +Change in +Fair Value of +Equity Awards +Vested in +Current Year +($) +Average +Compensation +Actually Paid to +Non-PEO NEOs +($) +2022 +2,367,374 +( 1,146,682 ) +1,482,906 +1,259,414 +604,943 +4,567,954 +2021 +2,028,596 +( 1,515,516 ) +1,132,550 +22,787 +70,282 +1,738,700 +2020 +1,218,682 +( 957,726 ) +1,026,420 +( 68,658 ) +( 309,165 ) +909,552 +(5) The peer group selected +for each listed year consists of the Philadelphia Oil Service Index (the “OSX”). We also use this peer group for purposes +of the Stock Performance Graph set forth in “Item 5- Market for Registrant’s Common Equity, Related Stockholder Matters and +Issuer Purchases of Equity Securities” of our Annual Report on Form 10-K for the year ended December 31, 2022. +(6) The dollar amounts reported +represent the amount of net income (loss) (in thousands) attributable to Liberty Energy Inc. in our audited consolidated financial statements +for the applicable year. +(7) Adjusted ROCE is equal +to the Company’s 2022 income before taxes and loss (gain) on remeasurement of liability under tax receivable agreements, plus interest +expense and stock-based compensation expense, divided by the simple average of capital (debt and equity) employed at December 31, 2022 +and 2021. We rank our Adjusted ROCE against those of the ROCE Peer Group to determine Comparative ROCE, which is used as a metric to +determine a portion of annual incentive compensation and the vesting of performance-based RSU awards. While we use numerous financial +and non-financial performance measures for the purpose of evaluating performance for our compensation programs, we have determined that +our Adjusted ROCE is the financial performance measure that, in our assessment, represents the most important performance measure (that +is not otherwise required to be disclosed in this table) used by us to link compensation actually paid to our NEOs for the most recently +completed fiscal year, to our performance. +34 +Performance Metrics +The most important financial performance measures that we use to link executive compensation actually paid to the NEOs for the most recently completed fiscal year to our performance are as follows: +• Pre-tax Earnings Per Share +(as defined in footnote 1 of “Compensation Discussion and Analysis- Elements of Compensation-Annual Incentive Award” above) +• ROCE (as defined in footnote +2 of “Compensation Discussion and Analysis- Elements of Compensation-Annual Incentive Award” above) +• Adjusted ROCE (as defined +in footnote 3 of “Compensation Discussion and Analysis- Elements of Compensation-Annual Incentive Award” above) +• Comparative ROCE (as defined +in footnote 3 of “Compensation Discussion and Analysis- Elements of Compensation-Annual Incentive Award” above) +Analysis of Information in Pay Versus Performance Table +As described in more detail in “Compensation Discussion and Analysis” above, our executive compensation program includes variable components in the form of annual incentive compensation and long-term incentive awards. While we utilize several performance measures to align executive compensation with our performance, all of those measures are not presented in the “Pay Versus Performance Table for 2022.” Moreover, we generally seek to incentivize long-term performance and, therefore, do not specifically align our performance measures with compensation that is actually paid (as computed in accordance with SEC regulations) for a particular year. In accordance with SEC regulations, we are providing the following descriptions of the relationships between information presented in the “Pay Versus Performance Table for 2022.” +Compensation Actually Paid and Cumulative TSR +As demonstrated by the following graph, the amount of compensation actually paid to Mr. Wright and the average amount of compensation actually paid to our NEOs as a group (excluding Mr. Wright) is generally aligned with our cumulative TSR over the three years presented in the “ Pay Versus Performance Table for 2022.” The alignment of compensation actually paid with our cumulative TSR over the period presented is due to the fact that a significant portion of the compensation actually paid to our NEOs is comprised of equity awards. +35 +For each of the three years presented in the “Pay Versus Performance Table for 2022,” our cumulative TSR exceeded that of peers contained in the OSX stock index. The following table details our cumulative TSR in comparison to the OSX cumulative TSR for each of the measurement periods (determined in accordance with SEC regulations). +Compensation Actually Paid and Net Income (Loss) +As demonstrated by the following table, the amount of compensation actually paid to Mr. Wright and the average amount of compensation actually paid to other NEOs as a group (excluding Mr. Wright) is generally aligned with our net income (loss) over the three years presented in the “Pay Versus Performance Table for 2022.” While we do not use net income (loss) as a performance measure in the overall executive compensation program, the measure of net income (loss) is correlated with the measures of Pre-Tax EPS and ROCE, which we do use in setting goals for annual incentive compensation, and Comparative ROCE, which we use both in setting goals for annual incentive compensation and the vesting of performance-based RSU awards. +Compensation Actually Paid and Adjusted ROCE +As demonstrated by the following table, the amount of compensation actually paid to Mr. Wright and the average amount of compensation actually paid to our other NEOs as a group (excluding Mr. Wright) is generally aligned with our Adjusted ROCE over each of the three years presented in the “ Pay Versus Performance Table for 2022.” +36 +PROPOSAL 2 — ADVISORY VOTE TO APPROVE THE COMPENSATION OF THE +COMPANY’S NAMED EXECUTIVE OFFICERS +Section 14A(a)(1) of the Exchange Act, which was added to the Exchange Act by Section 951 of the Dodd-Frank Act, affords the stockholders a vote to approve, on a non-binding, advisory basis, the compensation of our Named Executive Officers for the fiscal year ended December 31, 2022 (commonly known as a “ say-on-pay vote ”). This vote is not intended to address any specific item of compensation and is not a vote on our general compensation policies, compensation of the Board, or our compensation policies as they relate to risk management. Section 14A(a)(2) of the Exchange Act requires us to hold a say-on-pay vote at least once every three years, although the Company currently holds such vote annually. +As described more fully in the “ Compensation Discussion & Analysis ” section of this Proxy Statement and the accompanying tabular and narrative disclosures, the Company’s compensation policy is designed to attract and retain highly qualified executive officers. The Company’s compensation program seeks to align executive compensation with stockholder value on an annual and long-term basis through a combination of base pay, annual incentives, and certain long-term incentives. Please read the Compensation Discussion & Analysis section of this Proxy Statement for additional details on our executive compensation program. +The Board strongly endorses the Company’s executive compensation program and recommends that the stockholders approve on an advisory, non-binding basis, the following resolution: +RESOLVED, that the stockholders approve, on an advisory basis, the compensation of the Company’s Named Executive Officers as described in the proxy statement, including the Compensation Discussion & Analysis and the tabular and narrative disclosure contained therein. +Vote Required +The approval, on a non-binding basis, of the compensation of our Named Executive Officers requires the affirmative vote of a majority of the shares of Common Stock present in person or represented by proxy at the Annual Meeting and entitled to vote on the matter. If you submit a signed proxy card but do not give voting instructions as to how your shares of Common Stock should be voted, your shares will be voted in accordance with the recommendations of our Board stated in this Proxy Statement. Abstentions will have the same effect as a vote “AGAINST” Proposal 2, and broker non-votes will not have any effect on the outcome of Proposal 2. +THE BOARD RECOMMENDS VOTING “ FOR ” THE APPROVAL OF +THE COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS. +37 +PROPOSAL 3 — RATIFICATION OF APPOINTMENT OF THE COMPANY’S +INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +The Audit Committee has appointed Deloitte as the Company’s independent registered public accounting firm to audit the financial statements of the Company for the fiscal year ending December 31, 2022. The audit of the Company’s consolidated financial statements for the fiscal year ended December 31, 2022 was completed by Deloitte on February 22, 2023. Deloitte has acted as the Company’s independent registered public accounting firm since 2016. +The Board is submitting the appointment of Deloitte for ratification at the Annual Meeting. The submission of this matter for approval by stockholders is not legally required, but the Board and the Audit Committee believe the submission provides an opportunity for stockholders through their vote to communicate with the Board and the Audit Committee about an important aspect of corporate governance. If the stockholders do not ratify the appointment of Deloitte, the Audit Committee will reconsider the appointment of that firm as the Company’s auditors. +The Audit Committee has the sole authority and responsibility to retain, evaluate and replace the Company’s independent auditors, and stockholder ratification of this appointment does not limit the authority of the Audit Committee to change auditors at any time. Representatives of Deloitte are expected to be present at the Annual Meeting and will have an opportunity to make a statement if they so desire and will be available to respond to appropriate questions. +The following table summarizes the aggregate fees billed or expected to be billed by Deloitte for the fiscal years ended December 31, 2022 and 2021. +2022 +2021 +Audit Fees +$ 2,500,000 +$ 2,345,213 +Audit-Related Fees +85,000 +40,000 +Tax Fees +241,995 +426,042 +All Other Fees +— +— +Total Fees +$ 2,826,995 +$ 2,811,255 +Audit Fees +Deloitte’s fees were $2,500,000 in 2022 and $2,345,213 in 2021. In 2022, Deloitte’s audit fees related primarily to the integrated annual audit and quarterly reviews of the consolidated financial statements for fiscal year 2022 included in our Annual Report on Form 10-K for the year ended December 31, 2022. In 2021, Deloitte’s audit fees related primarily to the integrated annual audit and quarterly reviews of the consolidated financial statements for fiscal year 2021 included in our Annual Report on Form 10-K for the year ended December 31 , 2021. +Audit-Related Fees +Deloitte’s fees for audit-related services were $85,000 in 2022 and $40,000 in 2021. In both 2022 and 2021, audit-related fees related primarily to SEC filings in connection with certain TRA exchanges. +Tax Fees +Deloitte’s fees for tax services were $241,995 in 2022 and $426,042 in 2021. Tax services primarily involve professional services rendered by Deloitte for tax compliance, tax advice and tax planning. +All Other Fees +Deloitte did not provide any other products and services in 2022 or 2021 and, consequently, there were no other fees incurred. +Before Deloitte is engaged to render audit or non-audit services, the Audit Committee must pre-approve the engagement. The charter of the Audit Committee and its pre-approval policy provides that pre-approval is not required if the engagement is entered into pursuant to pre-approval policies and procedures established by the Audit Committee. The Chairman of the Audit Committee has the authority to grant pre-approvals, provided such approvals are within the pre-approval policy and presented to the Audit Committee at a subsequent meeting. The Audit Committee pre-approved all of the fees described in the table set forth above. The duties of the Audit Committee are described in the charter of the Audit Committee that can be found on the Company’s website, www.libertyenergy.com , by first clicking “ Investors ” then “ Corporate Governance ” and proceeding to “ Governance Documents .” +38 +Vote Required +The affirmative vote of a majority of the shares of Common Stock present in person or represented by proxy at the Annual Meeting and entitled to vote on the matter is required to approve Proposal 3. If you submit a signed proxy card but do not give voting instructions as to how your shares of Common Stock should be voted, your shares will be voted in accordance with the recommendations of our Board stated in this Proxy Statement. Abstentions will have the same effect as a vote “AGAINST” Proposal 3, and there will be no broker non-votes with respect to Proposal 3. +THE AUDIT COMMITTEE AND THE BOARD RECOMMEND VOTING “ FOR ” THE +RATIFICATION OF APPOINTMENT OF DELOITTE AS THE COMPANY’S INDEPENDENT REGISTERED +PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2023. +39 +AUDIT COMMITTEE REPORT +The information contained in this Audit Committee Report shall not be deemed to be “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act or the Exchange Act, except to the extent that the Company specifically incorporates such information by reference in such filing. +Primary Oversight Responsibilities +Our management is responsible for establishing a system of internal controls, assessing such controls and for preparing our consolidated financial statements in accordance with generally accepted accounting principles. The Audit Committee provides oversight of these management activities. Our independent registered public accounting firm is responsible for auditing our consolidated financial statements in accordance with standards of the United Stated Public Company Accounting Oversight Board (the “ PCAOB ”) and issuing its report based on its audit. +Under the Audit Committee’s charter, the purpose of the Audit Committee is to assist the Board in fulfilling its oversight responsibilities as to, among other duties: (i) the integrity of the Company’s financial statements; (ii) the Company’s compliance with legal and regulatory requirements; (iii) qualifications, independence and performance of the independent registered public accounting firm engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the Company; (iv) effectiveness and performance of the Company’s internal audit function; (v) the annual preparation of this report and publishing this report in the Company’s Proxy Statement for its annual meeting of stockholders or its Annual Report on Form 10-K; and (vi) performing such other functions as the Board may assign to the Audit Committee from time to time. +Oversight of Independent Auditors +In connection with the evaluation, appointment and retention of the independent registered public accounting firm, at least annually the Audit Committee reviews and evaluates the independence and quality control procedures of the independent registered public accounting firm and the experience and qualifications of its senior personnel providing audit services to the Company. In this evaluation, the Audit Committee may consider, among other factors, the following with respect to the independent registered public accounting firm: their historical and recent performance on our audit, the quality and candor of their communications with the both the Audit Committee and management, the depth of expertise of their audit team and the value provided by their national office, the appropriateness of their fees, how effectively they maintained their independence, their tenure as our independent auditors, their knowledge of our operations, accounting policies and practices, and internal control over financial reporting, and external data relating to audit quality and performance by them and their peer firms. Based on this overall evaluation, the Audit Committee has retained Deloitte as our independent registered public accounting firm for 2022. +2022 Audited Financial Statements +In connection with the preparation of the audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2022: +• The Audit Committee reviewed and discussed the audited financial statements and associated audit with the independent registered public accounting firm and management; +• The Audit Committee discussed with the independent registered public accounting firm the matters required to be discussed by Auditing Standard No. 1301 “Communications with Audit Committees” as adopted by the PCAOB. In general, these auditing standards require the independent registered public accounting firm to communicate to the Audit Committee certain matters that are incidental to the audit, such as any initiation of, or changes to, significant accounting policies, management judgments, accounting estimates and audit adjustments; disagreements with management; the independent registered public accounting firm’s judgment about the quality of our accounting principles; significant audit risks identified and any changes from planned audit strategy; the use of specialists on the audit team; and issues for which the independent registered public accounting firm have consulted outside the engagement team; and +• The Audit Committee has received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the PCAOB regarding the independent registered public accounting firm’s communication with the Audit Committee concerning independence, and has discussed the independent registered public accounting firm’s independence with the independent registered public accounting firm. The Audit Committee also considered whether the independent registered public accounting firm’s provision of non-audit services to us was compatible with maintaining their independence. +40 +Based on the review and discussions noted above, the Audit Committee recommended to the Board that the audited consolidated financial statements of the Company for the year ended December 31, 2022 be included in our Annual Report on Form 10-K filed with the SEC. +Audit Committee of the Board of Directors: +William F. Kimble, Chairman +Cary D. Steinbeck, Member +Gale A. Norton, Member +41 +SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT +The following table sets forth the beneficial ownership of our common stock as of March 1, 2023, by: +* each person known to us to beneficially own more than 5% of any class of our outstanding voting securities; +* each member of our Board and each nominee to our Board; +* each of our Named Executive Officers; and +* all of our directors, director nominees and Named Executive Officers as a group. +Except as otherwise indicated, the persons listed below have sole voting and investment power with respect to all shares of our Common Stock beneficially owned by them, except to the extent this power may be shared with a spouse. All information with respect to beneficial ownership has been furnished by the 5% or more stockholders, directors or Named Executive Officers, as the case may be. Unless otherwise noted, the mailing address of each listed beneficial owner is 950 17th Street, Suite 2400, Denver, Colorado 80202. As of March 1, 2023, 175,447,289 shares of our Class A Common Stock were outstanding. +Effective January 31, 2023, Liberty LLC was merged into the Company (such merger, the “ Liberty LLC Merger ”) with the Company surviving Liberty LLC Merger. In connection with Liberty LLC Merger, all outstanding shares of our Class B Common Stock were redeemed and exchanged for an equal number of shares of our Class A Common Stock. +Class A +Common Stock +Number +% +5% Stockholders +T. Rowe Price Investment Management Inc. (1) +10,668,607 +6.1 +% +FMR LLC (2) +21,929,126 +12.5 +% +The Vanguard Group (3) +18,313,007 +10.4 +% +Blackrock, Inc. ( 4 ) +13,292,031 +7.6 +% +Directors and Named Executive Officers: +Christopher A. Wright (5) +3,204,182 +1.8 +% +Michael Stock (5) +817,066 +* +Ron Gusek (5) +1,209,246 +* +R. Sean Elliott (5) +180,732 +* +Ryan T. Gosney (5) +98,765 +* +Cary D. Steinbeck (6) +439,209 +* +Ken Babcock +121,697 +* +William F. Kimble +62,874 +* +Peter A. Dea +50,054 +* +Gale A. Norton +46,693 +* +Simon Ayat +15,463 +— +James R. McDonald +— +— +Audrey Robertson (7) +26,455 +— +Directors and Named Executive Officers +as a group (13 persons) +6,272,435 +3.6 +% +(1) This information is based solely on a Schedule 13G filed with the SEC on February 14, 2023, by T. Rowe Price Investment Management, Inc., in which it reported that T. Rowe Price Associates, Inc. has sole voting power as to 3,483,273 shares of Class A Common Stock and sole dispositive power as to 10,668,607 shares of Class A Common Stock. The principal business address of T. Rowe Price Associates, Inc. is 100 E. Pratt Street, Baltimore, MD 21202. +(2) This information is based solely on a Schedule 13G/A filed with the SEC on February 9, 2023, by FMR LLC and Abigail P. Johnson, in which it reported that FMR LLC has sole voting power as to 21,917,445 shares of Class A Common Stock and sole dispositive power as to 21,929,126 shares of Class A Common Stock and Ms. Johnson has no voting power, and shared dispositive power as to 21,929,126 shares of Class A Common Stock. The principal business address of FMR LLC is 245 Summer Street, Boston, MA 02210. +(3) This information is based solely on a Schedule 13G/A filed with the SEC on February 10, 2023 by The Vanguard Group, in which it reported that The Vanguard Group has shared voting power as to 262,384 shares of Class A Common Stock, sole dispositive power as to 17,924,684 shares of Class A Common Stock and shared dispositive power as to 388,320 shares of Class A Common Stock. The principal business address of The Vanguard Group is 100 Vanguard Blvd., Malvern, PA 19355. +42 +(4) This information is based solely on a Schedule 13G filed with the SEC on February 3, 2023 by Blackrock, Inc., in which it reported that Blackrock, Inc. has sole voting power as to 12,599,815 shares of Class A Common Stock and sole dispositive power as to 13,292,031 shares of Class A Common Stock. The principal business address of Blackrock, Inc. is 55 East 52nd Street, New York, NY 10055. +(5) Shares of Class A Common Stock held by Messrs. Wright, Stock, Gusek, Elliott and Gosney include (a) 144,502, 64,400, 64,400, 53,276 and 32,845 shares of stock, respectively, that will be received upon the vesting of time-based RSUs and (b) 224,700, 99,867, 99,867, 41,102 and 25,278 shares of stock, respectively, that will be received upon the vesting of performance-based RSUs within 60 days of March 1, 2023. +(6) Includes 379,350 shares of Class A Common Stock held by the Steinbeck Family Trust and 9,805 shares of Class A Common Stock held by the Cary Dustin Steinbeck & Melissa Maucione Crimson Steinbeck Trust. Mr. Steinbeck has voting and dispositive power over these shares. +(7) Includes 200 shares held in custodial accounts on behalf of minor children of Ms. Robertson and 5 shares held through a Roth IRA. +* Less than 1.0%. +43 +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +Policies and Procedures for Review of Related Party Transactions +A “ Related Party Transaction ” is a transaction, arrangement or relationship in which the Company or any of its subsidiaries was, is or will be a participant, the amount of which involved exceeds $120,000, and in which any related person had, has or will have a direct or indirect material interest. A “ Related Person ” is: +♦ any person who is, or at any time during the applicable period was, one of our executive officers or one of our directors; +♦ any person who is known by us to be the beneficial owner of more than 5% of our Class A Common Stock; +♦ any immediate family member of any of the foregoing persons, which means any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law of a director, executive officer or a beneficial owner of more than 5% of our Class A Common Stock, and any person (other than a tenant or employee) sharing the household of such director, executive officer or beneficial owner of more than 5% of our Class A Common Stock; and +♦ any firm, corporation or other entity in which any of the foregoing persons is a partner or principal or in a similar position or in which such person has a 10.0% or greater beneficial ownership interest. +Our Board has adopted a written related party transactions policy. Pursuant to this policy, our Audit Committee reviews all material facts of all Related Party Transactions and either approves or disapproves entry into the Related Party Transaction, subject to certain limited exceptions. The determination of the Audit Committee is documented in the Audit Committee’s minutes. In determining whether to approve or disapprove entry into a Related Party Transaction, our Audit Committee takes into account, among other factors, the following: (i) whether the Related Party Transaction is on terms no less favorable than terms generally available to an unaffiliated third-party under the same or similar circumstances and (ii) the extent of the Related Person’s interest in the transaction. Furthermore, the policy requires that all Related Party Transactions required to be disclosed in our filings with the SEC be so disclosed in accordance with applicable laws, rules and regulations. +Related Party Transactions +The following is a description of transactions entered into, or in effect, after January 1, 2022 to which we have been a party, in which the amount involved in the transaction exceeds $120,000, and in which any of our directors, executive officers or beneficial owners of more than 5% of our voting securities, or affiliates or immediate family members of any of our directors, executive officers or beneficial owners of more than 5% of our voting securities, had or will have a direct or indirect material interest. We believe the terms obtained or consideration that we paid or received, as applicable, in connection with the transactions described below were comparable to terms available or the amounts that would be paid or received, as applicable, from un related third parties. +Liberty LLC Agreement +We entered into the Second Amended and Restated Limited Liability Company Agreement of Liberty Oilfield Services New HoldCo LLC (“ Liberty LLC ”) (the “ Liberty LLC Agreement ”) in connection with the closing of our IPO, which provides for limitations on the ability of holders of units of Liberty LLC (the “ Liberty LLC Units, ” and the holders of Liberty LLC Units “ Liberty Unit Holders ”) to transfer their Liberty LLC Units and provides the Company, as managing member of Liberty LLC, with the right to impose restrictions (in addition to those already in place) on the ability of Liberty Unit Holders to redeem their Liberty LLC Units pursuant to the Redemption Right (as defined below) to the extent the Company believes it is necessary to ensure that Liberty LLC will continue to be treated as a partnership for U.S. federal income tax purposes. +Effective January 31, 2023, the Liberty LLC Merger occurred, with the Company being the surviving entity of the Liberty LLC Merger. In connection with Liberty LLC Merger, all outstanding shares of our Class B Common Stock were redeemed and exchanged for an equal number of shares of our Class A Common Stock. Also effective January 31, 2023, as a result of the Liberty LLC Merger, the Liberty LLC Agreement terminated. +Redemption Rights +Under the Liberty LLC Agreement, each Liberty Unit Holder had, subject to certain limitations, the right (the “ Redemption Right ”) to cause Liberty LLC to acquire all or a portion of its Liberty LLC Units for, at Liberty LLC’s election, (i) shares of our Class A Common Stock at a redemption ratio of one share of Class A Common Stock for each Liberty LLC Unit redeemed, subject to conversion rate adjustments for stock splits, stock dividends and reclassification and other similar transactions or (ii) an equivalent amount of cash. Alternatively, upon the exercise of the Redemption Right, the Company (instead of Liberty LLC) had the right (the “ Call Right ”) to, +44 +for administrative convenience, acquire each tendered Liberty LLC Unit directly from the redeeming Liberty Unit Holder for, at the Company’s election, (x) one share of Class A Common Stock or (y) an equivalent amount of cash. In addition, upon a change of control of the Company, the Company had the right to require each holder of Liberty LLC Units (other than the Company) to exercise its Redemption Right with respect to some or all of such unit holder’s Liberty LLC Units. In connection with any redemption of Liberty LLC Units pursuant to the Redemption Right or the Call Right, the corresponding number of shares of Class B Common Stock would be cancelled. +As of January 31, 2023, and, as a result of the Liberty LLC Merger, all outstanding Redemption Rights for Liberty LLC Units had been exercised, and no further redemption of Liberty LLC Units will occur in the future. +Distributions and Allocations +Under the Liberty LLC Agreement, the Company had the right to determine when distributions will be made to the holders of Liberty LLC Units and the amount of any such distributions. If the Company authorized a distribution, such distribution would be made to the holders of Liberty LLC Units generally on a pro rata basis in accordance with their respective percentage ownership of Liberty LLC Units. +Liberty LLC allocated its net income or net loss for each year to the holders of Liberty LLC Units pursuant to the terms of the Liberty LLC Agreement, and the holders of Liberty LLC Units, including the Company, generally incurred U.S. federal, state and local income taxes on their share of any taxable income of Liberty LLC. Net income and losses of Liberty LLC generally were allocated to the holders of Liberty LLC Units on a pro rata basis in accordance with their respective percentage ownership of Liberty LLC Units, subject to requirements under U.S. federal income tax law that certain items of income, gain, loss or deduction be allocated disproportionately in certain circumstances. To the extent Liberty LLC had available cash and subject to the terms of any debt instruments, the Company intended to cause Liberty LLC to make (i) generally pro rata distributions to the holders of Liberty LLC Units, including the Company, in an amount sufficient to allow the Company to pay its taxes and to allow it to make payments under the Tax Receivable Agreements (as defined below), (ii) tax advances, which will be repaid upon exercise of the Redemption Right or the Call Right, as applicable, in an amount sufficient to allow each of the Liberty Unit Holders to pay its respective taxes on such holder’s allocable share of Liberty LLC’s taxable income after taking into account certain other distributions or payments received by the Liberty Unit Holders from Liberty LLC or the Company, and (iii) non-pro rata payments to the Company to reimburse it for its corporate and other overhead expenses. +Issuance of Equity +The Liberty LLC Agreement generally provided that at any time the Company issues a share of its Class A Common Stock or any other equity security, the net proceeds received by the Company with respect to such issuance, if any, shall be concurrently invested in Liberty LLC, and Liberty LLC shall issue to the Company one Liberty LLC Unit or other economically equivalent equity interest. Conversely, if at any time, any shares of Class A Common Stock were redeemed, repurchased or otherwise acquired, Liberty LLC would redeem, repurchase or otherwise acquire an equal number of Liberty LLC Units held by the Company, upon the same terms and for the same price, as the shares of the Class A Common Stock are redeemed, repurchased or otherwise acquired. +Schlumberger +Master Transaction Agreement +On August 31, 2020, the Company, entered into a Master Transaction Agreement (the “ MTA ”) with SLB, Schlumberger Canada Limited, (“ SLB Canada ” and, together with SLB, the “ SLB Parties ”), Liberty LLC, and LOS Canada Operations Inc. (“ Canadian Buyer ”), pursuant to which the Liberty LLC and Canadian Buyer acquired the SLB Parties’ OneStim business (the “OneStim Acquisition”) in exchange for 57,377,232 shares of Class A Common Stock and a non-interest bearing demand promissory note, which note was satisfied with 8,948,902 shares of Class A Common Stock, resulting in a total of 66,326,134 shares of Class A Common Stock being issued in connection with the transaction. The SLB Parties are affiliated with Messrs. Ayat and McDonald, who are on our Board. The transactions contemplated by the MTA closed on December 31, 2020. +Until December 31, 2024, subject to certain exceptions and as more specifically set forth in the MTA, without the prior written consent of the Company, each of SLB and SLB Canada will not, and will cause each of their respective affiliates (including Schlumberger Limited) not to, directly or indirectly engage in any business or enterprise that is competitive with OneStim within onshore United States and Canada. +On December 31, 2020, in connection with the closing of the transactions contemplated by the MTA, the Company (and/or one or more of its subsidiaries) and the SLB Parties entered into the following agreements, each of which may involve amounts in excess of $120,000: (i) an intellectual property license agreement, whereby the SLB Parties granted to Liberty LLC and the Company exclusive and non-exclusive licenses to certain intellectual property, and Liberty LLC granted to the SLB Parties a non-exclusive license to +45 +certain patents acquired by Liberty LLC under the MTA; (ii) an employee matters agreement, pursuant to which the applicable SLB Party agreed to lease employees to the Company or a subsidiary of the Company until March 1, 2021, subject to certain exceptions and extensions; (iii) an alliance agreement whereby SLB and Liberty LLC agreed to collaborate to advance each of their product portfolios and technology offerings; (iv) a transition services agreement whereby SLB or its design ee agreed to provide certain back-office, administrative, field operations, supply chain and other specified services to the Company until March 1, 2021, subject to certain exceptions and extensions; and (v) a strategic supply agreement intended to provide the Company with an opportunity to purchase from the various business lines of SLB, products and services with competitive pricing terms for a term not to exceed the term of the non-compete covenant in the MTA discussed above. +Amended and Restated Stockholders Agreement +In connection with the OneStim Acquisition, we entered into an amended and restated stockholders agreement with affiliates of Riverstone, and the SLB Parties. Among other things, the amended and restated stockholders agreement provides the right to designate nominees to our Board as follows: +• so long as the SLB Parties and its affiliates collectively beneficially own at least 20% of the outstanding shares of our Common Stock, the SLB Parties can designate up to two (2) nominees to our Board; and +• so long as the SLB Parties and their affiliates collectively beneficially own at least 10% of the outstanding shares of our Common Stock, the SLB Parties can designate up to one (1) nominee to our Board. +As of December 31, 2022, neither Riverstone nor the SLB Parties had the right to designate any nominees to our Board, however, such previously designated nominees will remain on the Board until their term is complete or, pursuant to the stockholders agreement, until the Nominating and Governance Committee requests that such director designated by the Riverstone or SLB Parties resign. +Pursuant to the amended and restated stockholders agreement, the SLB Parties will not, for a period of four years from the closing of the OneStim Acquisition, make any transfer of Common Stock to any direct competitor of the Company or to any person that is subject to, or by virtue of such transfer would become subject to, the reporting obligations under Schedule 13D under the Exchange Act, with respect to Common Stock (the “ Lock-Up and Transfer Restrictions ”). +Pursuant to the amended and restated stockholders agreement, the SLB Parties and their affiliates are subject to customary standstill restrictions in accordance with which such parties will agree not to, among other things, acquire beneficial ownership of any equity securities of the Company or publicly seek or encourage any offer or proposal for a merger or similar transaction involving the Company during the period commencing on the date of the agreement and continuing until the fourth anniversary of the closing of the OneStim Acquisition (the “ Standstill ”). +Pursuant to the amended and restated stockholders agreement, we will be required to take all necessary actions, to the fullest extent permitted by applicable law (including with respect to any fiduciary duties under Delaware law), to cause the election of the nominees designated by either the Riverstone affiliates or the SLB Parties. At any time the members of our Board are allocated among separate classes of directors, (i) the directors designated by the Riverstone affiliates pursuant to the amended and restated stockholders agreement will be to the classes as mutually agreed between us and the Riverstone affiliates, and (ii) the directors designated by the SLB Parties pursuant to the amended and restated stockholders agreement will be to the classes as mutually agreed between us and the SLB Parties. The Riverstone affiliates will be entitled to designate the replacement for any of its Board designees whose service terminates prior to the end of such director’s term. The SLB Parties will be entitled to designate the replacement for any of its Board designees whose service terminates prior to the end of such director’s term. +The amended and restated stockholders agreement will terminate with respect to the SLB Parties at the earliest of (a) such time as the SLB Parties no longer beneficially own at least 10% of the outstanding shares of Common Stock and are no longer subject to the Standstill and the Lock-Up and Transfer Restrictions, (b) such time as the SLB Parties do not beneficially own any shares of Common Stock, and (c) the written agreement of the SLB Parties and the Company terminating the agreement. The amended and restated stockholders agreement will terminate with respect to Riverstone at the earliest of (i) such time as Riverstone and its affiliates no longer beneficially own at least 10% of the outstanding shares of Common Stock, and (ii) the delivery of written notice to the Company by Riverstone of the termination of the agreement with respect to Riverstone. +As of December 31, 2022, Riverstone did not beneficially own 10% of the outstanding shares of Common Stock, and, as a result, the amended and restated stockholders agreement terminated with respect to Riverstone. +Amended and Restated Registration Rights Agreement +In connection with the OneStim Acquisition, we entered into an amended and restated registration rights agreement with SLB, SLB Canada and each of the other holders identified therein (the “ Holders ”), pursuant to which, among other things, certain Holders, including affiliates of Riverstone, SLB and SLB Canada (the “ Sponsoring Holders ”), have customary demand registration rights and we +46 +are obligated to prepare and file a registration statement registering the offer and sale of all of SLB and SLB Canada’s shares of Class A Common Stock. In addition, pursuant to this agreement, the Sponsoring Holders have the right to require us, subject to certain limitations set forth therein, to effect a distribution of any or all of their shares of Class A Common Stock by means of an underwritten offering. We are not obligated to effect any underwritten offering unless the dollar amount of the registrable securities of the Sponsoring Holder(s) demanding such underwritten offering to be included therein is reasonably likely to result in gross sale proceeds of at least $25 million. The amended and restated registration rights agreement also provides Holders with certain customary piggyback registration rights. These registration rights are subject to certain conditions and limitations, including the right of the underwriters to limit the number of shares to be included in a registration or offering and the Company’s right to delay or withdraw a registration statement under certain circumstances. +Stock Repurchase +During the year ended December 31, 2022, the Company repurchased and retired 1,700,000 shares of Common Stock for $27.8 million or $16.35 average price per share from SLB, under the Company’s share repurchase program announced in July 2023. +Purchase of Chemicals, Proppant and Equipment +Following the OneStim Acquisition, in the normal course of business, the Company purchases chemicals, proppant and other equipment and maintenance parts from SLB and its subsidiaries. For the year ended December 31, 2022, total purchases from SLB were approximately $21.7 million, and as of December 31, 2022, amounts due to SLB were $2.6 million. +Underwriting Agreement +On April 29, 2022, the Company, Liberty LLC, SLB, and BofA Securities, Inc. and J.P. Morgan Securities LLC (together, the “ Underwriters ”), entered into an underwriting agreement, dated as of April 29, 2022, pursuant to which SLB sold 14,500,000 shares of Class A Common Stock at a price of $15.50 per share to the Underwriters (the “ Sale ”). The Sale closed on May 3, 2022. The Company did not receive any proceeds from the Sale. The underwriting agreement contains customary representations, warranties and agreements of the Company and SLB and other customary obligations of the parties and termination provisions. +Transactions with Liberty Resources +Liberty Resources LLC (“ Liberty Resources ”) is an oil and gas exploration and production company of which Mr. Wright is the Executive Chairman and an equity owner. Mr. Wright previously served as th e Chief Executive Officer at Liberty Resources from its formation in September 2010 until March 2017. Liberty Resources entered into a master service agreement with Liberty Oilfield Services LLC, a subsidiary of the Company (“ Liberty Services ”), whereby Liberty Services provides hydraulic fracturing service to Liberty Resources at market service rates. For the year ended December 31, 2022, the amounts related to the provision of hydraulic fracturing services to Liberty Resources under the master services agreement was $16.7 million. +In December 2022, the Company entered into a letter agreement with Liberty Resources to extend the payment terms for certain accounts receivable until April 1, 2014, subject to timely payment of monthly interest charges ranging from 12-18%. As of December 31 , 2022, the amount of receivables subject to this letter agreement was approximately $11.8 million. +Transactions with Franklin Mountain +Franklin Mountain Energy LLC (“ Franklin Mountain ”) is an oil and gas exploration and production company of which Ms. Robertson serves as the Chief Financial Officer. Franklin Mountain entered into a master service agreement with Liberty Services, whereby Liberty Services provides hydraulic fracturing service to Franklin Mountain at market service rates. For the year ended December 31, 2022, the amounts related to the provision of hydraulic fracturing services to Franklin Mountain under the master services agreement was $131.8 million or 3.2% of the Company’s revenues for such period. +Transactions with Tim Babcock +Tim Babcock is currently employed at ST9 Gas and Oil LLC, a wholly-owned subsidiary of Liberty Services (“ ST9 ”) as a key account manager. Tim Babcock is the son of Ken Babcock, who serves on the Board. For the year ended December 31, 2022, ST9 paid Tim Babcock $177,219. +47 +Indemnification for Officers and Directors +Our Amended and Restated Certificate of Incorporation and Second Amended and Restated Bylaws provide indemnification rights to our directors and officers and permit us to purchase insurance on behalf of any officer, director, employee or other agent for any liability arising out of that person’s actions as our officer, director, employee or agent, regardless of whether Delaware law would mandate indemnification. Additionally, we have entered into separate indemnity agreements with our directors and certain officers to provide additional indemnification benefits, including the right to receive, in advance, reimbursements for expenses incurred in connection with a defense for which the director or officer is entitled to indemnification. We believe that the limitation of liability provisions in our Amended and Restated Certificate of Incorporation, Second Amended and Restated Bylaws and the indemnity agreements will facilitate our ability to continue to attract and retain qualified individuals to serve as directors and officers. +Conflicts of Interest +The related party transactions described herein may cause certain conflicts of interests, including that: +♦ we may enter into contracts between us, on the one hand, and related parties, on the other, that are not as a result of arm’s-length transactions; +♦ our executive officers and directors that hold positions of responsibility with related parties may be aware of certain business opportunities that are appropriate for presentation to us as well as to such other related parties and may present such business opportunities to such other parties; and +♦ our executive officers and directors that hold positions of responsibility with related parties may have significant duties with, and spend significant time serving, other entities and may have conflicts of interest in allocating time. +For example, Mr. Wright, our Chief Executive Officer, is the Executive Chairman of Liberty Resources, a position which may require a portion of his time and which may cause conflicts of interest in pursuing business opportunities of which he becomes aware. +48 +HOUSEHOLDING +The SEC permits companies and intermediaries (such as brokers and banks) to satisfy delivery requirements for proxy statements and annual reports with respect to two or more stockholders sharing the same address by delivering a single proxy statement and annual report to those stockholders. This process, which is commonly referred to as “householding,” is intended to reduce the volume of duplicate information stockholders receive and reduce expenses for companies. Both the Company and some of our intermediaries may be householding our proxy materials and Annual Report on Form 10-K. Once you have received notice from your broker or another intermediary that they will be householding materials sent to your address, householding will continue until you are notified otherwise or until you revoke your consent. Should you wish to receive separate copies of our Annual Report on Form 10-K and proxy statement in the future, we will promptly deliver a separate copy of each of these documents to you if you send a written or oral request to us at our phone number or address appearing on the cover of this Proxy Statement, to the attention of the Corporate Secretary. If you hold your shares through an intermediary that is householding and you want to receive separate copies of our Annual Report on Form 10-K and proxy statement in the future, you should contact your bank, broker or other nominee record holder. +STOCKHOLDER PROPOSALS +Pursuant to Rule l4a-8 under the Exchange Act, in order for a stockholder proposal to be included in the Company’s proxy statement for its 2024 annual meeting, such proposal must be received at the Company’s principal executive offices at 950 17th Street, Suite 2400, Denver, Colorado 80202, Attn: Corporate Secretary, no later than November 9, 2023, and must comply with additional requirements established by the SEC. SEC rules set standards for eligibility and specify the types of stockholder proposals that may be excluded from a proxy statement. In addition, the Company’s Second Amended and Restated Bylaws provide that any stockholder who would like to have a proposal considered at our 2024 annual meeting of stockholders must submit the proposal to the Secretary of the Company at the Company’s principal executive offices so that it is received by not earlier than the close of business on December 20, 2023, and not later than the close of business on January 19, 2024, unless the date of our 2024 annual meeting is more than 30 days before or more than 60 days after April 18, 2024, in which case the proposal must be received no later than the 10th day following the day on which public announcement of the date of such meeting is first made by the Company. A copy of the Company’s Second Amended and Restated Bylaws is available upon request from the Secretary of the Company. Stockholders who intend to submit a proposal for nomination of persons for election to our Board or a proposal of business at the 2024 annual meeting (other than matters properly brought under Rule 14a-8 under the Exchange Act and included in the Company’s notice of meeting) must follow the procedures prescribed in the Company’s Second Amended and Restated Bylaws. No stockholder proposal was received for inclusion in this Proxy Statement. +Stockholders who intend to solicit proxies in support of director nominees other than our nominees must provide notice the Secretary of the Company that sets forth the information required by Rule 14a-19 of the Exchange Act in accordance with and within the time period prescribed in the advance notice provisions of our Second Amended and Restated Bylaws. +WHERE YOU CAN FIND MORE INFORMATION +We file or furnish annual, quarterly and current reports, proxy statements and other documents with the SEC under the Exchange Act. The SEC also maintains an internet website at www.sec.gov that contains reports, proxy and information statements and other information regarding iss uers, including us, that file electronically with the SEC. +We also make available free of charge through our website, www.libertyenergy.com , electronic copies of certain documents that we file with the SEC, including our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. +OTHER MATTERS +As of the date of this Proxy Statement, the Board does not intend to present any matters other than those described herein at the Annual Meeting and is unaware of any matters to be presented by other parties. If other matters are properly brought before the meeting for action by the stockholders, proxies will be voted in accordance with the recommendation of the Board or, in the absence of such a recommendation, in accordance with the judgment of the proxy holder. +49 +IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING TO BE HELD ON APRIL 18, 2023: +A COPY OF THIS PROXY STATEMENT, THE NOTICE OF 2023 ANNUAL MEETING OF STOCKHOLDERS, THE 2023 ANNUAL REPORT TO STOCKHOLDERS AND THE PROXY CARD ARE AVAILABLE AT HTTP://ASTPROXYPORTAL.COM/AST/21952 +IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, YOU ARE URGED TO VOTE BY INTERNET, BY PHONE OR IF YOU HAVE RECEIVED PAPER COPIES OF THE PROXY MATERIALS, BY COMPLETING, SIGNING AND RETURNING THE PROXY IN THE ENCLOSED POSTAGE-PAID, ADDRESSED ENVELOPE. +By Order of the Board of Directors, +/s/ R. Sean Elliott +R. Sean Elliott +Chief Legal Officer and Corporate Secretary +Denver, Colorado +March 8, 2023 +ANNUAL MEETING OF STOCKHOLDERS OF +LIBERTY ENERGY INC. +Tuesday, April 18, 2023 +GO +GREEN +e-Consent makes it easy to go paperless. With e-Consent, you can quickly access your proxy material, statements and other +eligible documents online, while reducing costs, clutter and paper waste. Enroll today via www.astfinancial.com to enjoy online +access. +NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL : +The Notice of Meeting, proxy statement and proxy card +are +available at http://www.astproxyportal.com/ast/21952 +Please sign, date and mail +your proxy card in the +envelope provided as soon +as possible. +Please +detach along perforated line and mail in the envelope provided. +20330300000000001000 2 +041823 +THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE NOMINEES LISTED IN PROPOSAL 1 AND “FOR” PROPOSALS 2 AND 3. +PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE ☒ +1. Election of Directors: To elect three (3) Class I directors to the Board to +serve until the 2026 annual meeting or until their successors are duly +elected and qualified. +☐ +NOMINEES: +FOR +ALL NOMINEES +Simon Ayat +Gale A. Norton +☐ +WITHHOLD AUTHORITY +FOR +ALL NOMINEES +Cary D. Steinbeck +☐ +FOR ALL EXCEPT +(See +instructions below) +INSTRUCTIONS: To +withhold authority to vote for any individual nominee(s), mark “FOR ALL EXCEPT” +and fill in the circle next to each nominee you wish to withhold, as shown here: +● +To change the address on your account, please check the box at right and indicate your new address in the address space above. +Please note that changes to the registered name(s) on the account may not be submitted via this method. +☐ +FOR +AGAINST +ABSTAIN +2. +Approval, on an advisory basis, of the compensation of the +Company’s named executive officers. +☐ +☐ +☐ +FOR +AGAINST +ABSTAIN +3. +Ratification of the appointment of Deloitte & Touche LLP as the +Company’s independent registered public accounting firm for the +fiscal year ending December 31, 2023. +☐ +☐ +☐ +TO +INCLUDE ANY COMMENTS, USE THE COMMENTS BOX ON THE REVERSE SIDE OF THIS CARD. +IMPORTANT +NOTICE +YOUR +VOTE IS IMPORTANT. PLEASE SIGN, DATE AND RETURN YOUR PROXY AS SOON AS POSSIBLE. BY DOING SO, YOU MAY SAVE LIBERTY ENERGY INC. +THE EXPENSE OF ADDITIONAL SOLICITATION. +NOTE: +In their discretion, the Proxies are authorized to vote upon such +other business as may properly come before the meeting or any +adjournment or postponement thereof. +MARK +“X” HERE IF YOU PLAN TO ATTEND THE VIRTUAL MEETING ☐ +Signature of Shareholder +Date: +Signature of Shareholder +Date: +Note: +Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When +signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, +please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please +sign in partnership name by authorized person. +1 +LIBERTY +ENERGY INC. +THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS +FOR THE ANNUAL MEETING OF STOCKHOLDERS +The +undersigned hereby appoint(s) Christopher A. Wright, Michael Stock and R. Sean Elliott, or any one of them, attorneys with full power +of substitution and revocation to each, for and in the name of the undersigned with all the powers the undersigned would possess if personally +present, to vote the shares of the undersigned in Liberty Energy Inc. as indicated on the proposals referred to on the reverse side hereof +at the annual meeting of its stockholders to be held virtually via live webcast at https://web.lumiagm.com/245867901 (password: liberty2023) +on Tuesday, April 18, 2023 at 9:00 a.m. Mountain Time and at any adjournments thereof, and in their or his discretion upon any other +matter which may properly come before said meeting. +THE +SHARES REPRESENTED BY THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF +NO SPECIFIC DIRECTION IS GIVEN AS TO THE PROPOSALS ON THE REVERSE SIDE, THIS PROXY WILL BE VOTED "FOR" THE NOMINEES LISTED +IN PROPOSAL 1 AND "FOR" PROPOSALS 2 AND 3. PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY. +This card also constitutes voting instructions to the trustees under the Liberty Energy Inc. savings plans to vote, in person or by proxy, the proportionate interest of the undersigned in the shares of Common Stock of Liberty Energy Inc. held by the trustees under the plans, as described in the proxy statement. +(Continued and to be signed on the reverse side) +COMMENTS: +1.1 +14475 \ No newline at end of file diff --git a/raw/proxies/0001694028/0001839882-23-006148/proxy_rpt.txt b/raw/proxies/0001694028/0001839882-23-006148/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..ca489b60adf4680ce29630321d71891c27b91fcd --- /dev/null +++ b/raw/proxies/0001694028/0001839882-23-006148/proxy_rpt.txt @@ -0,0 +1,69 @@ +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +Policies and Procedures for Review of Related Party Transactions +A “ Related Party Transaction ” is a transaction, arrangement or relationship in which the Company or any of its subsidiaries was, is or will be a participant, the amount of which involved exceeds $120,000, and in which any related person had, has or will have a direct or indirect material interest. A “ Related Person ” is: +♦ any person who is, or at any time during the applicable period was, one of our executive officers or one of our directors; +♦ any person who is known by us to be the beneficial owner of more than 5% of our Class A Common Stock; +♦ any immediate family member of any of the foregoing persons, which means any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law of a director, executive officer or a beneficial owner of more than 5% of our Class A Common Stock, and any person (other than a tenant or employee) sharing the household of such director, executive officer or beneficial owner of more than 5% of our Class A Common Stock; and +♦ any firm, corporation or other entity in which any of the foregoing persons is a partner or principal or in a similar position or in which such person has a 10.0% or greater beneficial ownership interest. +Our Board has adopted a written related party transactions policy. Pursuant to this policy, our Audit Committee reviews all material facts of all Related Party Transactions and either approves or disapproves entry into the Related Party Transaction, subject to certain limited exceptions. The determination of the Audit Committee is documented in the Audit Committee’s minutes. In determining whether to approve or disapprove entry into a Related Party Transaction, our Audit Committee takes into account, among other factors, the following: (i) whether the Related Party Transaction is on terms no less favorable than terms generally available to an unaffiliated third-party under the same or similar circumstances and (ii) the extent of the Related Person’s interest in the transaction. Furthermore, the policy requires that all Related Party Transactions required to be disclosed in our filings with the SEC be so disclosed in accordance with applicable laws, rules and regulations. +Related Party Transactions +The following is a description of transactions entered into, or in effect, after January 1, 2022 to which we have been a party, in which the amount involved in the transaction exceeds $120,000, and in which any of our directors, executive officers or beneficial owners of more than 5% of our voting securities, or affiliates or immediate family members of any of our directors, executive officers or beneficial owners of more than 5% of our voting securities, had or will have a direct or indirect material interest. We believe the terms obtained or consideration that we paid or received, as applicable, in connection with the transactions described below were comparable to terms available or the amounts that would be paid or received, as applicable, from un related third parties. +Liberty LLC Agreement +We entered into the Second Amended and Restated Limited Liability Company Agreement of Liberty Oilfield Services New HoldCo LLC (“ Liberty LLC ”) (the “ Liberty LLC Agreement ”) in connection with the closing of our IPO, which provides for limitations on the ability of holders of units of Liberty LLC (the “ Liberty LLC Units, ” and the holders of Liberty LLC Units “ Liberty Unit Holders ”) to transfer their Liberty LLC Units and provides the Company, as managing member of Liberty LLC, with the right to impose restrictions (in addition to those already in place) on the ability of Liberty Unit Holders to redeem their Liberty LLC Units pursuant to the Redemption Right (as defined below) to the extent the Company believes it is necessary to ensure that Liberty LLC will continue to be treated as a partnership for U.S. federal income tax purposes. +Effective January 31, 2023, the Liberty LLC Merger occurred, with the Company being the surviving entity of the Liberty LLC Merger. In connection with Liberty LLC Merger, all outstanding shares of our Class B Common Stock were redeemed and exchanged for an equal number of shares of our Class A Common Stock. Also effective January 31, 2023, as a result of the Liberty LLC Merger, the Liberty LLC Agreement terminated. +Redemption Rights +Under the Liberty LLC Agreement, each Liberty Unit Holder had, subject to certain limitations, the right (the “ Redemption Right ”) to cause Liberty LLC to acquire all or a portion of its Liberty LLC Units for, at Liberty LLC’s election, (i) shares of our Class A Common Stock at a redemption ratio of one share of Class A Common Stock for each Liberty LLC Unit redeemed, subject to conversion rate adjustments for stock splits, stock dividends and reclassification and other similar transactions or (ii) an equivalent amount of cash. Alternatively, upon the exercise of the Redemption Right, the Company (instead of Liberty LLC) had the right (the “ Call Right ”) to, +44 +for administrative convenience, acquire each tendered Liberty LLC Unit directly from the redeeming Liberty Unit Holder for, at the Company’s election, (x) one share of Class A Common Stock or (y) an equivalent amount of cash. In addition, upon a change of control of the Company, the Company had the right to require each holder of Liberty LLC Units (other than the Company) to exercise its Redemption Right with respect to some or all of such unit holder’s Liberty LLC Units. In connection with any redemption of Liberty LLC Units pursuant to the Redemption Right or the Call Right, the corresponding number of shares of Class B Common Stock would be cancelled. +As of January 31, 2023, and, as a result of the Liberty LLC Merger, all outstanding Redemption Rights for Liberty LLC Units had been exercised, and no further redemption of Liberty LLC Units will occur in the future. +Distributions and Allocations +Under the Liberty LLC Agreement, the Company had the right to determine when distributions will be made to the holders of Liberty LLC Units and the amount of any such distributions. If the Company authorized a distribution, such distribution would be made to the holders of Liberty LLC Units generally on a pro rata basis in accordance with their respective percentage ownership of Liberty LLC Units. +Liberty LLC allocated its net income or net loss for each year to the holders of Liberty LLC Units pursuant to the terms of the Liberty LLC Agreement, and the holders of Liberty LLC Units, including the Company, generally incurred U.S. federal, state and local income taxes on their share of any taxable income of Liberty LLC. Net income and losses of Liberty LLC generally were allocated to the holders of Liberty LLC Units on a pro rata basis in accordance with their respective percentage ownership of Liberty LLC Units, subject to requirements under U.S. federal income tax law that certain items of income, gain, loss or deduction be allocated disproportionately in certain circumstances. To the extent Liberty LLC had available cash and subject to the terms of any debt instruments, the Company intended to cause Liberty LLC to make (i) generally pro rata distributions to the holders of Liberty LLC Units, including the Company, in an amount sufficient to allow the Company to pay its taxes and to allow it to make payments under the Tax Receivable Agreements (as defined below), (ii) tax advances, which will be repaid upon exercise of the Redemption Right or the Call Right, as applicable, in an amount sufficient to allow each of the Liberty Unit Holders to pay its respective taxes on such holder’s allocable share of Liberty LLC’s taxable income after taking into account certain other distributions or payments received by the Liberty Unit Holders from Liberty LLC or the Company, and (iii) non-pro rata payments to the Company to reimburse it for its corporate and other overhead expenses. +Issuance of Equity +The Liberty LLC Agreement generally provided that at any time the Company issues a share of its Class A Common Stock or any other equity security, the net proceeds received by the Company with respect to such issuance, if any, shall be concurrently invested in Liberty LLC, and Liberty LLC shall issue to the Company one Liberty LLC Unit or other economically equivalent equity interest. Conversely, if at any time, any shares of Class A Common Stock were redeemed, repurchased or otherwise acquired, Liberty LLC would redeem, repurchase or otherwise acquire an equal number of Liberty LLC Units held by the Company, upon the same terms and for the same price, as the shares of the Class A Common Stock are redeemed, repurchased or otherwise acquired. +Schlumberger +Master Transaction Agreement +On August 31, 2020, the Company, entered into a Master Transaction Agreement (the “ MTA ”) with SLB, Schlumberger Canada Limited, (“ SLB Canada ” and, together with SLB, the “ SLB Parties ”), Liberty LLC, and LOS Canada Operations Inc. (“ Canadian Buyer ”), pursuant to which the Liberty LLC and Canadian Buyer acquired the SLB Parties’ OneStim business (the “OneStim Acquisition”) in exchange for 57,377,232 shares of Class A Common Stock and a non-interest bearing demand promissory note, which note was satisfied with 8,948,902 shares of Class A Common Stock, resulting in a total of 66,326,134 shares of Class A Common Stock being issued in connection with the transaction. The SLB Parties are affiliated with Messrs. Ayat and McDonald, who are on our Board. The transactions contemplated by the MTA closed on December 31, 2020. +Until December 31, 2024, subject to certain exceptions and as more specifically set forth in the MTA, without the prior written consent of the Company, each of SLB and SLB Canada will not, and will cause each of their respective affiliates (including Schlumberger Limited) not to, directly or indirectly engage in any business or enterprise that is competitive with OneStim within onshore United States and Canada. +On December 31, 2020, in connection with the closing of the transactions contemplated by the MTA, the Company (and/or one or more of its subsidiaries) and the SLB Parties entered into the following agreements, each of which may involve amounts in excess of $120,000: (i) an intellectual property license agreement, whereby the SLB Parties granted to Liberty LLC and the Company exclusive and non-exclusive licenses to certain intellectual property, and Liberty LLC granted to the SLB Parties a non-exclusive license to +45 +certain patents acquired by Liberty LLC under the MTA; (ii) an employee matters agreement, pursuant to which the applicable SLB Party agreed to lease employees to the Company or a subsidiary of the Company until March 1, 2021, subject to certain exceptions and extensions; (iii) an alliance agreement whereby SLB and Liberty LLC agreed to collaborate to advance each of their product portfolios and technology offerings; (iv) a transition services agreement whereby SLB or its design ee agreed to provide certain back-office, administrative, field operations, supply chain and other specified services to the Company until March 1, 2021, subject to certain exceptions and extensions; and (v) a strategic supply agreement intended to provide the Company with an opportunity to purchase from the various business lines of SLB, products and services with competitive pricing terms for a term not to exceed the term of the non-compete covenant in the MTA discussed above. +Amended and Restated Stockholders Agreement +In connection with the OneStim Acquisition, we entered into an amended and restated stockholders agreement with affiliates of Riverstone, and the SLB Parties. Among other things, the amended and restated stockholders agreement provides the right to designate nominees to our Board as follows: +• so long as the SLB Parties and its affiliates collectively beneficially own at least 20% of the outstanding shares of our Common Stock, the SLB Parties can designate up to two (2) nominees to our Board; and +• so long as the SLB Parties and their affiliates collectively beneficially own at least 10% of the outstanding shares of our Common Stock, the SLB Parties can designate up to one (1) nominee to our Board. +As of December 31, 2022, neither Riverstone nor the SLB Parties had the right to designate any nominees to our Board, however, such previously designated nominees will remain on the Board until their term is complete or, pursuant to the stockholders agreement, until the Nominating and Governance Committee requests that such director designated by the Riverstone or SLB Parties resign. +Pursuant to the amended and restated stockholders agreement, the SLB Parties will not, for a period of four years from the closing of the OneStim Acquisition, make any transfer of Common Stock to any direct competitor of the Company or to any person that is subject to, or by virtue of such transfer would become subject to, the reporting obligations under Schedule 13D under the Exchange Act, with respect to Common Stock (the “ Lock-Up and Transfer Restrictions ”). +Pursuant to the amended and restated stockholders agreement, the SLB Parties and their affiliates are subject to customary standstill restrictions in accordance with which such parties will agree not to, among other things, acquire beneficial ownership of any equity securities of the Company or publicly seek or encourage any offer or proposal for a merger or similar transaction involving the Company during the period commencing on the date of the agreement and continuing until the fourth anniversary of the closing of the OneStim Acquisition (the “ Standstill ”). +Pursuant to the amended and restated stockholders agreement, we will be required to take all necessary actions, to the fullest extent permitted by applicable law (including with respect to any fiduciary duties under Delaware law), to cause the election of the nominees designated by either the Riverstone affiliates or the SLB Parties. At any time the members of our Board are allocated among separate classes of directors, (i) the directors designated by the Riverstone affiliates pursuant to the amended and restated stockholders agreement will be to the classes as mutually agreed between us and the Riverstone affiliates, and (ii) the directors designated by the SLB Parties pursuant to the amended and restated stockholders agreement will be to the classes as mutually agreed between us and the SLB Parties. The Riverstone affiliates will be entitled to designate the replacement for any of its Board designees whose service terminates prior to the end of such director’s term. The SLB Parties will be entitled to designate the replacement for any of its Board designees whose service terminates prior to the end of such director’s term. +The amended and restated stockholders agreement will terminate with respect to the SLB Parties at the earliest of (a) such time as the SLB Parties no longer beneficially own at least 10% of the outstanding shares of Common Stock and are no longer subject to the Standstill and the Lock-Up and Transfer Restrictions, (b) such time as the SLB Parties do not beneficially own any shares of Common Stock, and (c) the written agreement of the SLB Parties and the Company terminating the agreement. The amended and restated stockholders agreement will terminate with respect to Riverstone at the earliest of (i) such time as Riverstone and its affiliates no longer beneficially own at least 10% of the outstanding shares of Common Stock, and (ii) the delivery of written notice to the Company by Riverstone of the termination of the agreement with respect to Riverstone. +As of December 31, 2022, Riverstone did not beneficially own 10% of the outstanding shares of Common Stock, and, as a result, the amended and restated stockholders agreement terminated with respect to Riverstone. +Amended and Restated Registration Rights Agreement +In connection with the OneStim Acquisition, we entered into an amended and restated registration rights agreement with SLB, SLB Canada and each of the other holders identified therein (the “ Holders ”), pursuant to which, among other things, certain Holders, including affiliates of Riverstone, SLB and SLB Canada (the “ Sponsoring Holders ”), have customary demand registration rights and we +46 +are obligated to prepare and file a registration statement registering the offer and sale of all of SLB and SLB Canada’s shares of Class A Common Stock. In addition, pursuant to this agreement, the Sponsoring Holders have the right to require us, subject to certain limitations set forth therein, to effect a distribution of any or all of their shares of Class A Common Stock by means of an underwritten offering. We are not obligated to effect any underwritten offering unless the dollar amount of the registrable securities of the Sponsoring Holder(s) demanding such underwritten offering to be included therein is reasonably likely to result in gross sale proceeds of at least $25 million. The amended and restated registration rights agreement also provides Holders with certain customary piggyback registration rights. These registration rights are subject to certain conditions and limitations, including the right of the underwriters to limit the number of shares to be included in a registration or offering and the Company’s right to delay or withdraw a registration statement under certain circumstances. +Stock Repurchase +During the year ended December 31, 2022, the Company repurchased and retired 1,700,000 shares of Common Stock for $27.8 million or $16.35 average price per share from SLB, under the Company’s share repurchase program announced in July 2023. +Purchase of Chemicals, Proppant and Equipment +Following the OneStim Acquisition, in the normal course of business, the Company purchases chemicals, proppant and other equipment and maintenance parts from SLB and its subsidiaries. For the year ended December 31, 2022, total purchases from SLB were approximately $21.7 million, and as of December 31, 2022, amounts due to SLB were $2.6 million. +Underwriting Agreement +On April 29, 2022, the Company, Liberty LLC, SLB, and BofA Securities, Inc. and J.P. Morgan Securities LLC (together, the “ Underwriters ”), entered into an underwriting agreement, dated as of April 29, 2022, pursuant to which SLB sold 14,500,000 shares of Class A Common Stock at a price of $15.50 per share to the Underwriters (the “ Sale ”). The Sale closed on May 3, 2022. The Company did not receive any proceeds from the Sale. The underwriting agreement contains customary representations, warranties and agreements of the Company and SLB and other customary obligations of the parties and termination provisions. +Transactions with Liberty Resources +Liberty Resources LLC (“ Liberty Resources ”) is an oil and gas exploration and production company of which Mr. Wright is the Executive Chairman and an equity owner. Mr. Wright previously served as th e Chief Executive Officer at Liberty Resources from its formation in September 2010 until March 2017. Liberty Resources entered into a master service agreement with Liberty Oilfield Services LLC, a subsidiary of the Company (“ Liberty Services ”), whereby Liberty Services provides hydraulic fracturing service to Liberty Resources at market service rates. For the year ended December 31, 2022, the amounts related to the provision of hydraulic fracturing services to Liberty Resources under the master services agreement was $16.7 million. +In December 2022, the Company entered into a letter agreement with Liberty Resources to extend the payment terms for certain accounts receivable until April 1, 2014, subject to timely payment of monthly interest charges ranging from 12-18%. As of December 31 , 2022, the amount of receivables subject to this letter agreement was approximately $11.8 million. +Transactions with Franklin Mountain +Franklin Mountain Energy LLC (“ Franklin Mountain ”) is an oil and gas exploration and production company of which Ms. Robertson serves as the Chief Financial Officer. Franklin Mountain entered into a master service agreement with Liberty Services, whereby Liberty Services provides hydraulic fracturing service to Franklin Mountain at market service rates. For the year ended December 31, 2022, the amounts related to the provision of hydraulic fracturing services to Franklin Mountain under the master services agreement was $131.8 million or 3.2% of the Company’s revenues for such period. +Transactions with Tim Babcock +Tim Babcock is currently employed at ST9 Gas and Oil LLC, a wholly-owned subsidiary of Liberty Services (“ ST9 ”) as a key account manager. Tim Babcock is the son of Ken Babcock, who serves on the Board. For the year ended December 31, 2022, ST9 paid Tim Babcock $177,219. +47 +Indemnification for Officers and Directors +Our Amended and Restated Certificate of Incorporation and Second Amended and Restated Bylaws provide indemnification rights to our directors and officers and permit us to purchase insurance on behalf of any officer, director, employee or other agent for any liability arising out of that person’s actions as our officer, director, employee or agent, regardless of whether Delaware law would mandate indemnification. Additionally, we have entered into separate indemnity agreements with our directors and certain officers to provide additional indemnification benefits, including the right to receive, in advance, reimbursements for expenses incurred in connection with a defense for which the director or officer is entitled to indemnification. We believe that the limitation of liability provisions in our Amended and Restated Certificate of Incorporation, Second Amended and Restated Bylaws and the indemnity agreements will facilitate our ability to continue to attract and retain qualified individuals to serve as directors and officers. +Conflicts of Interest +The related party transactions described herein may cause certain conflicts of interests, including that: +♦ we may enter into contracts between us, on the one hand, and related parties, on the other, that are not as a result of arm’s-length transactions; +♦ our executive officers and directors that hold positions of responsibility with related parties may be aware of certain business opportunities that are appropriate for presentation to us as well as to such other related parties and may present such business opportunities to such other parties; and +♦ our executive officers and directors that hold positions of responsibility with related parties may have significant duties with, and spend significant time serving, other entities and may have conflicts of interest in allocating time. +For example, Mr. Wright, our Chief Executive Officer, is the Executive Chairman of Liberty Resources, a position which may require a portion of his time and which may cause conflicts of interest in pursuing business opportunities of which he becomes aware. +48 +HOUSEHOLDING +The SEC permits companies and intermediaries (such as brokers and banks) to satisfy delivery requirements for proxy statements and annual reports with respect to two or more stockholders sharing the same address by delivering a single proxy statement and annual report to those stockholders. This process, which is commonly referred to as “householding,” is intended to reduce the volume of duplicate information stockholders receive and reduce expenses for companies. Both the Company and some of our intermediaries may be householding our proxy materials and Annual Report on Form 10-K. Once you have received notice from your broker or another intermediary that they will be householding materials sent to your address, householding will continue until you are notified otherwise or until you revoke your consent. Should you wish to receive separate copies of our Annual Report on Form 10-K and proxy statement in the future, we will promptly deliver a separate copy of each of these documents to you if you send a written or oral request to us at our phone number or address appearing on the cover of this Proxy Statement, to the attention of the Corporate Secretary. 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AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE +14A +Proxy +Statement Pursuant to Section 14(a) of the +Securities Exchange Act of 1934 +(Amendment No. ) +Filed +by the Registrant ☒ +Filed by a party other than the Registrant ☐ +Check +the appropriate box: +☐ +Preliminary Proxy Statement +☐ +Confidential, for Use of +the Commission Only (as permitted by Rule 14a-6(e)(2)) +☒ +Definitive Proxy Statement +☐ +Definitive Additional Materials +☐ +Soliciting Material Pursuant +to §240.14a-12 +LIBERTY +ENERGY INC . +(Name of Registrant as Specified +In Its Charter) +(Name +of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment +of Filing Fee (Check all boxes that apply): +☒ +No fee required +☐ +Fee paid previously with preliminary +materials. +☐ +Fee computed on table below +per Exchange Act Rules 14a-6(i)(1) and 0-11 +LIBERTY +ENERGY INC. +950 17th STREET, SUITE 2400 +DENVER, COLORADO 80202 +NOTICE +OF 2025 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD APRIL 15, 2025 +To +our valued stockholders: +Notice +is hereby given that the 2025 Annual Meeting of Stockholders (the “ Annual Meeting ”) of Liberty Energy Inc. +(the “ Company ” or “ Liberty ”) will be held on Tuesday, April 15, 2025, at 9:00 a.m. Mountain +Time. This year’s Annual Meeting will be accessible through the Internet in order to permit our stockholders to participate +from any geographic location with Internet connectivity. We believe this enhances accessibility to our Annual Meeting for all +stockholders. To attend the Annual Meeting, you must access the meeting website at https://web.lumiconnect.com/245867901. Although +no physical in-person meeting will be held, we have designed the format of the virtual Annual Meeting to ensure that our stockholders +of record who attend the Annual Meeting will be afforded similar rights and opportunities to participate as they would at an in-person +meeting, while providing an online experience available to all of our stockholders regardless of location. At the Annual Meeting, +stockholders will be asked to: +1. +Elect +three Class III directors to our board of directors to serve until the 2028 annual meeting or until their successors are duly +elected and qualified (“ Proposal 1 ”); +2. +Approve, +on an advisory basis, the compensation of our named executive officers (“ Proposal 2 ”); +3. +Ratify +the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending +December 31, 2025 (“ Proposal 3 ”); +4. +Determine, +on an advisory basis, the frequency of future advisory votes to approve the compensation of our named executive officers (“ Proposal +4 ”); +5. +Approve +an amendment to our Amended and Restated Certificate of Incorporation (as amended, the “ Charter ”) to declassify +our board of directors (“ Proposal 5 ”); +6. +Approve +an amendment to our Charter to remove the 66 2/3% supermajority vote requirements to amend, alter, or repeal our Charter and +our Second Amended and Restated Bylaws and to remove directors from office (“ Proposal 6 ”); +7. +Approve +an amendment to our Charter to limit the liability of certain of our officers (“ Proposal 7 ”); +8. +Approve +an amendment to our Charter to delete the waiver of Section 203 of the Delaware General Corporation Law, as amended (“ Proposal +8 ” ) ; +9. +Approve +miscellaneous amendments to our Charter (“ Proposal 9 ”); and +10. +Transact +such other business as may properly be brought before the Annual Meeting. +You +can find more information, including the nominees for directors, executive compensation, and details regarding our independent +registered public accounting firm, in the attached proxy statement. The board of directors recommends that you vote in favor of +each of the above proposals. Pursuant to the “notice and access” rules adopted by the Securities and Exchange Commission, +we have elected to provide access to our proxy materials on the Internet. The approximate date on which the attached proxy statement, +the accompanying Notice of Internet Availability of Proxy Materials (the “ Notice ”), proxy card, and the Company’s +Annual Report on Form 10-K for the year ended December 31, 2024 are first being made available to stockholders at http://astproxyportal.com/ast/21952/ +is March 6, 2025. The Notice includes instructions on how to access our proxy materials over the Internet, vote online and +request a printed copy of these materials. +Only +stockholders of record at the close of business on February 19, 2025 are entitled to notice of, and to vote at, the Annual Meeting +or any adjournment. A complete list of stockholders entitled to vote at the Annual Meeting will be available for examination ten +days before the Annual Meeting. If you would like to inspect the list of Company stockholders of record, please contact the Investor +Relations department at IR@libertyenergy.com to schedule an appointment or request access electronically or in person. +IT +IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE ANNUAL MEETING. ACCORDINGLY, EVEN IF YOU PLAN TO ATTEND THE ANNUAL MEETING +VIRTUALLY, WE URGE YOU TO COMPLETE, SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY CARD IN THE POSTAGE-PREPAID ENVELOPE PRIOR +TO THE ANNUAL MEETING OR FOLLOW THE INTERNET OR TELEPHONE VOTING PROCEDURES DESCRIBED ON THE PROXY CARD. IF YOU ATTEND THE ANNUAL +MEETING VIRTUALLY AND WISH TO VOTE AT THAT TIME, YOU MAY WITHDRAW YOUR PROXY AND VOTE AT THE MEETING. YOUR PROMPT CONSIDERATION +IS GREATLY APPRECIATED. YOUR VOTE IS IMPORTANT TO US. +By +Order of the Board of Directors, +/s/ +R. Sean Elliott +R. +Sean Elliott +Chief +Legal Officer and Corporate Secretary +Denver, +Colorado +March 6, 2025 +IMPORTANT +NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING +TO BE HELD ON APRIL 15, 2025 +This Notice of Annual Meeting and Proxy Statement +and our Annual Report on Form 10-K are available at +http://astproxyportal.com/ast/21952/ +TABLE +OF CONTENTS +GENERAL INFORMATION ABOUT THE 2025 ANNUAL MEETING OF STOCKHOLDERS AND VOTING +1 +PROPOSAL 1 – ELECTION OF DIRECTORS +7 +THE BOARD AND ITS COMMITTEES +13 +EXECUTIVE OFFICERS +19 +COMPENSATION DISCUSSION & ANALYSIS +20 +COMPENSATION COMMITTEE REPORT +27 +EXECUTIVE COMPENSATION TABLES +28 +DIRECTOR COMPENSATION +34 +EQUITY COMPENSATION PLAN INFORMATION +36 +CEO PAY RATIO +37 +PAY VERSUS PERFORMANCE +38 +PROPOSAL 2 – ADVISORY VOTE TO APPROVE THE COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS +42 +PROPOSAL 3 – RATIFICATION OF APPOINTMENT OF THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +43 +AUDIT COMMITTEE REPORT +44 +PROPOSAL 4 – ADVISORY VOTE TO DETERMINE THE FREQUENCY OF FUTURE ADVISORY VOTES TO APPROVE THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS +46 +PROPOSAL 5 – APPROVE AN AMENDMENT TO THE COMPANY’S CERTIFICATE OF INCORPORATION TO DECLASSIFY THE BOARD OF DIRECTORS +47 +PROPOSAL 6 – APPROVE AN AMENDMENT TO THE COMPANY’S CERTIFICATE OF INCORPORATION TO REMOVE THE 66 2/3% SUPERMAJORITY VOTE REQUIREMENTS TO AMEND, ALTER, OR REPEAL THE COMPANY’S CERTIFICATE OF INCORPORATION AND BYLAWS AND TO REMOVE DIRECTORS FROM OFFICE +49 +PROPOSAL 7 – APPROVE AN AMENDMENT TO THE COMPANY’S CERTIFICATE OF INCORPORATION TO LIMIT THE LIABILITY OF CERTAIN OFFICERS +51 +PROPOSAL 8 – APPROVE AN AMENDMENT TO THE COMPANY’S CERTIFICATE OF INCORPORATION TO DELETE THE WAIVER OF SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW +52 +PROPOSAL 9 – APPROVE MISCELLANEOUS AMENDMENTS TO CLARIFY AND UPDATE THE COMPANY’S CERTIFICATE OF INCORPORATION +54 +SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT +55 +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +57 +HOUSEHOLDING +59 +STOCKHOLDER PROPOSALS +59 +WHERE YOU CAN FIND MORE INFORMATION +59 +OTHER MATTERS +59 +ANNEX A: LIBERTY ENERGY INC. SECOND AMENDED AND RESTATED CERTIFICATE OF INCORPORATION +A-1 +LIBERTY +ENERGY INC. +950 17th STREET, SUITE 2400 +DENVER, COLORADO 80202 +PROXY +STATEMENT +GENERAL +INFORMATION ABOUT THE 2025 ANNUAL MEETING OF STOCKHOLDERS AND VOTING +The +enclosed proxy is solicited on behalf of the Board of Directors (the “ Board ”) of Liberty Energy Inc. (the “ Company ”) +for use at the Company’s 2025 Annual Meeting of Stockholders that will be held on Tuesday, April 15, 2025, at 9:00 a.m. +Mountain Time, virtually at https://web.lumiconnect.com/245867901 (the “ Annual Meeting ”). In this proxy +statement (the “ Proxy Statement ”) the terms “ Liberty ,” “ we ,” “ us ” +and “ our ” all refer to the Company. This Proxy Statement contains important information for you to consider +when deciding how to vote on the matters brought before the Annual Meeting. Please read it carefully. +We +are providing these proxy materials to you in connection with the solicitation by the Board of proxies to be voted at the Annual +Meeting and at any adjournment or postponement thereof. By executing and returning the enclosed proxy card or by voting via the +Internet or by telephone as set forth herein, you authorize the persons named in the proxy to represent you and vote your shares +on the matters described herein. Those persons will also be authorized to vote your shares to adjourn the Annual Meeting from +time to time and to vote your shares at any adjournments or postponements of the Annual Meeting. +Pursuant +to the “notice and access” rules adopted by the Securities and Exchange Commission (the “ SEC ”), +we have elected to provide stockholders access to our proxy materials over the Internet. The approximate date on which this +Proxy Statement, the accompanying Notice of Internet Availability of Proxy Materials (the “ Notice ”), proxy +card, and the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 are first being made available to +stockholders at http://astproxyportal.com/ast/21952/ is March 6, 2025. The Notice includes instructions on how to access +our proxy materials over the Internet and how to request a printed copy of these materials. +Choosing +to receive your future proxy materials by e-mail or to receive a single set of proxy materials per household will save the Company +the cost of printing and mailing documents to you and will reduce the impact of the Company’s annual meetings on the environment. +If you choose to receive future proxy materials by e-mail, you will receive an e-mail next year with instructions containing a +link to those materials and a link to the proxy voting site. Your election to receive proxy materials by e-mail will remain in +effect until you terminate it. +Annual +Meeting Time & Location +→ +Date : Tuesday, +April 15, 2025 +→ +Time : 9:00 a.m. +Mountain Time +→ +Location : Virtually +held at https://web.lumiconnect.com/245867901 +Who +Can Vote at the Annual Meeting +The +Company’s Class A Common Stock, par value $0.01 per share (the “ Common Stock ”), is the only class of +securities entitled to vote at the Annual Meeting. Each share of Common Stock outstanding at the close of business on February +19, 2025 (the “ Record Date ”) entitles its holder to one vote with respect to each matter at the Annual Meeting, +and only stockholders of record on the Record Date are entitled to notice of, and to vote, virtually online or by proxy, at the +Annual Meeting. +A +complete list of stockholders entitled to vote at the Annual Meeting will be available for examination ten days before the Annual +Meeting. If you would like to inspect the list of Company stockholders of record, please contact the Investor Relations department +at IR@libertyenergy.com to schedule an appointment. +1 +Purpose +of the Annual Meeting +At +our Annual Meeting, stockholders will act upon the following matters outlined in the Notice: +1. +Elect +three Class III directors to our Board to serve until the 2028 annual meeting or until their successors are duly elected and +qualified (“ Proposal 1 ”); +2. +Approve, +on an advisory basis, the compensation of our named executive officers (“ Proposal 2 ”); +3. +Ratify +the appointment of Deloitte & Touche LLP (“ Deloitte” ) as our independent registered public accounting +firm for the fiscal year ending December 31, 2025 (“ Proposal 3 ”); +4. +Determine, +on an advisory basis, the frequency of future advisory votes to approve the compensation of our named executive officers (“ Proposal +4 ”); +5. +Approve +an amendment to our Amended and Restated Certificate of Incorporation (as amended, the “ Charter ”) to declassify +our Board (“ Proposal 5 ”); +6. +Approve +an amendment to our Charter to remove the 66 2/3% supermajority vote requirements to amend, alter, or repeal our Charter and +our Second Amended and Restated Bylaws (as amended, the “ Bylaws ”) and to remove directors from office (“ Proposal +6 ”); +7. +Approve +an amendment to our Charter to limit the liability of certain of our officers (“ Proposal 7 ”); +8. +Approve +an amendment to our Charter to delete the waiver of Section 203 of the Delaware General Corporation Law, as amended (the “ DGCL ”) +(“ Proposal 8 ” ) ; +9. +Approve +miscellaneous amendments to our Charter (“ Proposal 9 ”); and +10. +Transact +such other business as may properly be brought before the Annual Meeting. +How +to Vote at the Annual Meeting +Many +holders of the Company’s Common Stock hold their shares through a broker, bank, trustee or other nominee rather than directly +in their own name. As summarized below, there are some distinctions between shares held of record and those owned beneficially. +Stockholder +of Record. If your shares are registered directly in your name with our transfer agent, Equiniti Trust Company LLC (“Equiniti”), +then you are considered a “stockholder of record” with respect to those shares. In this case, a Notice or, if requested, +a set of proxy materials has been sent to you directly by us. As a stockholder of record, you may vote over the Internet as described +in the Notice that was mailed to you or, if you have received or requested a hard copy of this Proxy Statement and accompanying +proxy card, you may vote by telephone as described on the proxy card, or by mail by marking, signing, dating and mailing your +proxy card in the postage-paid envelope provided. Your designation of a proxy is revocable by following the procedures outlined +in this Proxy Statement. The method by which you vote will not limit your right to vote virtually at the Annual Meeting. If you +submit a signed proxy card but do not give voting instructions as to how your shares of Common Stock should be voted on a particular +proposal at the Annual Meeting, your shares will be voted in accordance with the recommendations of our Board stated in this Proxy +Statement. +Beneficial +Owners of Shares Held in Street Name. If your shares of our Common Stock are held in a brokerage account or by a bank, trust +or other nominee or custodian, then you are considered the beneficial owner of those shares, which are held in “street name.” +In this case, a Notice or, if requested, a set of proxy materials has been forwarded to you by the organization that holds your +shares. The organization holding your account is considered the stockholder of record for purposes of voting at the Annual Meeting. +As the beneficial owner, you have the right to instruct that organization how to vote the shares held in your account. If you +are a beneficial owner of shares held in “street name,” you need to submit voting instructions to your broker, bank +or other nominee in order to cast your vote. The Notice that was mailed to you by that organization has specific instructions +for how to submit your vote, or if you have received or requested a hard copy of this Proxy Statement you may mark, sign, date +and mail the accompanying voting instruction form in the postage-paid envelope provided. Your vote is revocable by following the +procedures outlined in this Proxy Statement. However, since you are not a stockholder of record you may not vote your shares virtually +at the Annual Meeting without obtaining authorization from your broker, bank or other nominee. Whether or not you plan to attend +the Annual Meeting virtually, we urge you to vote by following the voting instructions provided to you to ensure that your vote +is counted. To vote virtually at the Annual Meeting, you must first obtain a legal proxy from your broker, bank or other agent +and then register in advance to attend the Annual Meeting. After obtaining a legal proxy from your broker, bank or other agent, +to then register to attend the Annual Meeting, you must submit proof of your legal proxy reflecting the number of your shares +along with your name and email address to Equiniti. Requests for registration should be directed to proxy@equiniti.com or to facsimile +number 718-765-8730. Written requests can be mailed to: +Equiniti +Trust Company LLC +Attention: Proxy Tabulation Department +55 Challenger Road, 2nd Floor +Ridgefield Park, New Jersey 07660 +2 +Requests +for registration must be labeled as “Legal Proxy” and be received no later than 5:00 p.m., Eastern Time, on April +1, 2025. You will receive a confirmation of your registration by email after we receive your registration materials. +Telephone +and Internet voting for stockholders of record will be available up until 11:59 p.m. Eastern Time on April 14, 2025, and mailed +proxy cards must be received by April 14, 2025 in order to be counted at the Annual Meeting. If the Annual Meeting is adjourned +or postponed, these deadlines may be extended. The voting deadlines and availability of telephone and Internet voting for beneficial +owners of shares held in “street name” will depend on the voting processes of the organization that holds your shares +of Common Stock. Therefore, we urge you to carefully review and follow the voting instructions card and any other materials that +you receive from that organization. +If +you receive more than one Notice, it is because your shares are registered in more than one name or are registered in different +accounts. Please follow the instructions on each Notice received to ensure that all of your shares of Common Stock are voted. +“Broker +Non-Votes” and Abstentions and their Effect on Proposals +A +broker non-vote occurs when a broker, bank, trust or other nominee or custodian holding shares for a beneficial owner in “street +name” does not vote the shares on a proposal because the nominee does not have discretionary voting power for a particular +item and has not received instructions from the beneficial owner regarding voting. Brokers who hold shares for the accounts of +their clients have discretionary authority to vote shares if specific instructions are not given, only with respect to “routine” +items. +If +your shares are held by a broker on your behalf and you do not instruct the broker as to how to vote your shares of Common Stock +with regard to Proposals 1, 2, and 4 through 9, the broker may not exercise discretion to vote for or against those proposals +because each of these proposals are considered “non-routine” under applicable New York Stock Exchange (“ NYSE ”) +rules. With respect to Proposal 3, the broker may exercise its discretion to vote for or against such proposal in the absence +of your instruction. Broker non-votes are treated as not entitled to vote on a matter with respect to non-discretionary matters. +An +abstention (i.e. if you or your broker mark “ABSTAIN” on a proxy or voting instruction form, or if a stockholder of +record attends the Annual Meeting but does not vote (either before or during the Annual Meeting)) has the same effect as voting +“AGAINST” Proposals 2, 3, and 5 through 9. Votes that are withheld from a director’s election will not affect +the outcome of Proposal 1, and an abstention will have no effect on Proposal 4. +Quorum +Requirements for the Annual Meeting +The +presence at the Annual Meeting, whether in person or by proxy, of stockholders holding a majority of the shares of Common Stock +outstanding on the Record Date and entitled to vote at the meeting will constitute a quorum, permitting us to conduct our business +at the Annual Meeting. On the Record Date, there were 162,336,099 shares of Common Stock issued and outstanding and entitled to +be voted at the Annual Meeting. Abstentions and broker non-votes will be considered to be shares present at the Annual Meeting +for purposes of constituting a quorum. +3 +Votes +Required to Approve Proposals and Board Recommendations +Board +Recommendation +Treatment +of +Proposal +Required +Vote +Abstentions +Broker +Non-Votes +(1) +To elect three Class III directors to the Board to serve until the 2028 annual meeting +or until their successors are duly elected and qualified +Plurality +of Votes Cast: The three nominees receiving the greatest number of votes cast in person or represented by proxy and entitled +to vote on the matter (1) +“FOR” +EACH NOMINEE +Abstentions +have no effect. In addition, if you “withhold” authority to vote with respect to the election +of some or all of the nominees, your shares will not be voted with respect to those nominees indicated +Broker +non-votes have no effect +(2) +To approve, on an advisory basis, the compensation of our named executive officers (2) +Affirmative +vote of a majority of shares present in person or by proxy and entitled to vote on the matter +“FOR” +Abstentions +have the effect of a vote against “AGAINST” +Broker +non-votes have no effect +(3) +To ratify the appointment of Deloitte as our independent registered public accounting firm for the fiscal year ending December +31, 2025 +Affirmative +vote of a majority of shares present in person or by proxy and entitled to vote on the matter +“FOR” +Abstentions +have the effect of a vote “AGAINST” +There +will be no broker non-votes because brokers have discretion to vote on this proposal +(4) +To determine, on an advisory basis, the frequency of future advisory votes on the compensation of our named executive officers (3) +Plurality +of Votes Cast: The frequency receiving the greatest number of votes cast in person or represented by proxy and entitled to +vote on the matter +“1 +YEAR” +Abstentions +have no effect +Broker +non-votes have no effect +(5) +To approve an amendment to our Charter to declassify our Board +Affirmative +vote of the holders of at least 66 2/3% in voting power of the outstanding shares of stock entitled to vote thereon, voting +together as a single class +“FOR” +Abstentions +have the effect of a vote “AGAINST” +Broker +non-votes have the effect of a vote “AGAINST” +(6) +To approve an amendment to our Charter to remove the 66 2/3% supermajority vote requirements to amend, alter, or repeal our +Charter and Bylaws and to remove directors from office +Affirmative +vote of the holders of at least 66 2/3% in voting power of the outstanding shares of stock entitled to vote thereon, voting +together as a single class +“FOR” +Abstentions +have the effect of a vote “AGAINST” +Broker +non-votes have the effect of a vote “AGAINST” +(7) +To approve an amendment to our Charter to limit the liability of certain officers +Affirmative +vote of the holders of at least 66 2/3% in voting power of the outstanding shares of stock entitled to vote thereon, voting +together as a single class +“FOR” +Abstentions +have the effect of a vote “AGAINST” +Broker +non-votes have the effect of a vote “AGAINST” +4 +(8) +To approve an amendment to our Charter to delete the waiver of Section 203 of the DGCL +Affirmative +vote of the holders of at least 66 2/3% in voting power of the outstanding shares of stock entitled to vote thereon, voting +together as a single class +“FOR” +Abstentions +have the effect of a vote “AGAINST” +Broker +non-votes have the effect of a vote “AGAINST” +(9) +To approve miscellaneous amendments to clarify and update our Charter +Affirmative +vote of the holders of at least 66 2/3% in voting power of the outstanding shares of stock entitled to vote thereon, voting +together as a single class +“FOR” +Abstentions +have the effect of a vote “AGAINST” +Broker +non-votes have the effect of a vote “AGAINST” +(1) +If +any nominee receives a greater number of “withhold authority” than votes “for” his or her election +in an uncontested election, where an uncontested election is any election of directors in which the number of nominees for +election does not exceed the number of directors to be elected, then that nominee is required to tender his or her resignation, +which the Board, upon the recommendation of the Nominating and Governance Committee, will decide to accept or decline. +(2) +Because +this stockholder vote is advisory, the vote will not be binding, but the Compensation Committee will review the voting results +and take them into consideration when making future compensation decisions for our named executive officers. +(3) +Because +this stockholder vote is advisory, the vote will not be binding, but the Compensation Committee will review the voting results +and take them into consideration when determining the frequency of future advisory votes regarding the compensation our named +executive officers. +5 +Revoking +Your Proxy; Changing Your Vote +If +you are a stockholder of record, you may revoke your proxy before the vote is taken at the Annual Meeting by: +● +signing, +dating and delivering a new proxy with a later date before the applicable deadline to our Corporate Secretary; +● +attending +virtually and voting virtually online at the Annual Meeting; or +● +filing +a written revocation with our Corporate Secretary. +If +your shares are held in “street name,” you may submit new voting instructions by contacting your broker or other organization +holding your shares. You may also vote virtually online at the Annual Meeting, which will have the effect of revoking any previously +submitted voting instructions, if you obtain a legal proxy from the organization that holds your shares. +Your +last vote or proxy will be the vote or proxy that is counted. Your virtual attendance at the Annual Meeting will not automatically +revoke your proxy. +Dissent +and Appraisal Rights +No +action is proposed at the Annual Meeting for which the laws of the State of Delaware or other applicable law provides a right +of our stockholders to dissent and obtain appraisal of or payment for such stockholders’ Common Stock. +Solicitation +Costs +The +cost of preparing, assembling and mailing the proxy materials and of reimbursing brokers, nominees and fiduciaries for the out- +of-pocket and clerical expenses of transmitting copies of the proxy materials to the beneficial owners of shares held of record +by such persons, will be borne by the Company. The Company has retained D.F. King & Co., Inc. (“ D.F. King ”) +to aid in the solicitation of proxies. It is estimated that the cost of D. F. King’s services will be approximately $11,500 +plus expenses. In addition to the solicitation of proxies by mail, proxies may also be solicited by telephone, electronic communication, +or personal communication by employees of D.F. King and the Company. +Voting +Results +We +plan to publish the voting results in a Current Report on Form 8-K, which we expect will be filed with the SEC within four business +days following the Annual Meeting. +Management +Q&A Session +Stockholders +of record who have registered with their voting control number will be able to submit questions for the Annual Meeting’s +question and answer session during the meeting through https://web.lumiconnect.com/245867901 by referring to the “Chat +Box” icon located at the top of the left-hand panel of their screen. For questions regarding the webcast please reach out +to IR@libertyenergy.com . +Technical +Difficulties or Trouble Accessing the Annual Meeting +If +you encounter any technical difficulties with accessing the audio webcast on the day of the Annual Meeting, contact IR@libertyenergy.com . +Equiniti will also be present at the Annual Meeting and monitoring the webcast to assist with any issues. +Questions +You +may call or contact our proxy solicitor, D.F. King, at (800) 334-0384 or via email at libertyenergy@dfking.com if you have +any questions concerning this Proxy Statement. +PLEASE +VOTE. YOUR VOTE IS IMPORTANT TO US. +6 +PROPOSAL +1 — ELECTION OF THREE CLASS III DIRECTORS TO A THREE-YEAR TERM EXPIRING AT THE 2028 ANNUAL MEETING OF STOCKHOLDERS +Information +about our Board +Our +Board currently consists of 10 directors. In accordance with the terms of our Charter and Bylaws, our Board is divided into three +classes: Class I, Class II and Class III, with each class serving staggered three-year terms. Upon the expiration of the term +of a class of directors, directors in that class will be eligible to be elected for a new three-year term at the annual meeting +of stockholders in the year in which their term expires. Each director elected to the Board will hold office until his or her +successor has been elected and qualified or until the earlier of their death, resignation, disqualification or removal. The current +members of the classes of our Board are divided as follows: +♦ +Class +III (term expires in 2025): Peter A. Dea, William F. Kimble, and James R. McDonald +♦ +Class +I (term expires 2026): Simon Ayat, Arjun Murti, Gale A. Norton, and Cary D. Steinbeck +♦ +Class +II (term expires in 2027): Ken Babcock, Ron Gusek, and Audrey Robertson +♦ +In Proposal 5 herein, +the Company is recommending that stockholders approve a Charter amendment that would, if approved, begin a phased-in declassification +of the Board starting at next year’s annual meeting of stockholders. +To +be elected, director nominees must receive a plurality of the votes cast by the holders of the shares entitled to vote in the +election of directors at the Annual Meeting. Nonetheless, pursuant to our Corporate Governance Guidelines, in an uncontested election, +any director nominee who receives a greater number of “WITHHOLD” votes than votes “FOR” his or her election +(a “Majority Withheld Vote”) is required to tender his or her resignation to the Chair of the Nominating and Governance +Committee within seven days following certification of the stockholder vote. The Nominating and Governance Committee must recommend +to the Board whether to accept the resignation offer within 60 days of receiving the offer of resignation. The Board is required +to consider and act on the recommendation within 30 days following receipt of the recommendation. +Unless +otherwise instructed, the proxy holders will vote the proxies received by them for the three director nominees named below, all +of whom are presently directors of the Company. In the event that any nominee is unable or declines to serve as a director at +the time of the Annual Meeting, the proxies will be voted for any nominee who shall be designated by the present Board to fill +the vacancy, unless the size of the Board is reduced. The proxies cannot be voted for a greater number of persons than the number +of nominees named in this proxy statement. It is not expected that any nominee will be unable or will decline to serve as a director. +Biographical information regarding each nominee is set forth below, as well as a summary of the experiences, qualifications, attributes +or skills that caused the Board to determine that each nominee should serve as a director of the Company. Each nominee’s +experience is evaluated in determining the overall composition of the Board. +Recent +Changes and Developments regarding our Board +On +November 16, 2024, then President-elect Donald J. Trump announced his appointment of Mr. Wright our then Chairman, Director and +Chief Executive Officer to serve as the incoming Secretary of Energy of the United States, subject to ratification and confirmation +by the United States Senate, which occurred on February 3, 2025. As a result, effective February 3, 2025, Mr. Wright resigned +from his positions as Chairman, Director and Chief Executive Officer of the Company. In accordance with the Company’s succession +plan, effective on February 3, 2025, the Board appointed William Kimble as the Company’s independent Chairman of the Board +and Ron Gusek as the Company’s Chief Executive Officer and as a Class II director of the Board with an initial term expiring +at the 2027 annual meeting of stockholders. +On +January 22, 2025 the Board determined to increase the size of the Board from nine directors to 10 directors and appointed Arjun +Murti to fill the newly created vacancy. Mr. Murti was appointed as a Class I director with an initial term expiring at the 2026 +annual meeting of stockholders. +On +February 12, 2025, Ms. Robertson provided notice of her intention to resign from the Board, effective upon and subject to ratification +and confirmation by the United States Senate as the incoming Assistant Secretary of Energy, Efficiency and Renewables, in the +Department of Energy of the United States. Ms. Robertson will continue to serve as a member of the Board unless and until confirmed +by the Senate. +7 +NOMINEES +FOR ELECTION AS CLASS III DIRECTORS TO A THREE-YEAR TERM EXPIRING AT THE 2028 ANNUAL MEETING OF STOCKHOLDERS +PETER +A. DEA +Age: +71 +Key +Areas of Experience +Director +Since: 2018 +INDEPENDENT +● Exploration +and Production +● Senior +Management Experience (CEO/CFO) +● Mergers +& Acquisitions +● ESG +● HR/Compensation +● Investor +Relations +● Corporate +Governance +Mr. Dea has been the Executive Chairman of Confluence Resources LP (“ Confluence ”) since September 2016. Mr. Dea has served as the President and Chief Executive Officer of Cirque Resources LP (“ Cirque ”) since May 2007. Both Confluence and Cirque are private oil and gas companies. From November 2001 through August 2006, Mr. Dea was President and Chief Executive Officer and a director of Western Gas Resources, Inc. (“ Western Gas ”). Mr. Dea joined Barrett Resources Corporation (“ Barrett ”) in November 1993 and served as Chief Executive Officer and director from November 1999 and as Chairman from February 2000 through August 2001. Western Gas and Barrett were public oil and gas companies. Prior to that, Mr. Dea served in several geologic positions with Exxon Company, U.S.A. Mr. Dea currently serves as the Chairman of the Board of Ovintiv Inc. and has served as a director of Antero Midstream Corporation since the closing of its simplification transaction in March 2019. Prior to the simplification, Mr. Dea served as a director of the general partner of Antero Midstream GP LP beginning in April 2018. Mr. Dea has a Bachelor of Arts in Geology from Western State Colorado University and a Masters of Science in Geology from the University of Montana. Mr. Dea also attended the Harvard Business School, Advanced Management Program. We believe that Mr. Dea’s extensive oil and gas exploration and production experience and involvement in state and national energy policies qualify him for service on our Board. +WILLIAM +F. KIMBLE +Age: +65 +Key +Areas of Experience +Director +Since: 2018 +INDEPENDENT +● Public +Accounting +● Mergers +& Acquisitions +● Legal/Regulatory +● Corporate +Governance +● Risk +Management +● Technology/Cybersecurity +Mr. Kimble has served on our Board since the initial public offering of our Common Stock (the “ IPO ”) and as non-executive Chairman of the Board since February 2025. He held the position of Lead Director from October 2018 until his appointment as non-executive Chairman. From 2009 until his retirement in 2015, Mr. Kimble served as the Office Managing Partner for the Atlanta office and Managing Partner - Southeastern United States at KPMG LLP (“ KPMG ”), one of the largest audit, tax and advisory services firms in the world. Mr. Kimble was also responsible for moderating KPMG’s Audit Committee Institute and Audit Committee Chair Sessions. Until his retirement, Mr. Kimble had been with KPMG or its predecessor firm since 1986. During his tenure with KPMG, Mr. Kimble also held numerous senior leadership positions, including Global Chairman of Industrial Markets. Mr. Kimble served as KPMG’s Energy Sector Leader for 10 years and was the executive director of KPMG’s Global Energy Institute. Mr. Kimble serves on the board of directors and is the chair of the audit committee of Northern Oil and Gas, Inc. Mr. Kimble also served on the board of directors, the special committee, and was chair of the audit committee of DCP Midstream, LP from June 2015 until October 2023. Mr. Kimble has a Bachelor of Accounting and Business Administration from Southern Methodist University. We believe that Mr. Kimble’s extensive accounting background and his experience as a director of public companies qualify him for service on our Board. +8 +JAMES +R. MCDONALD +Age: +46 +Key +Areas of Experience +Director +Since: 2020 +INDEPENDENT +● Technology/Cybersecurity +● Oilfield +Services +● Marketing/Sales +● Investor +Relations +Mr. McDonald has been Senior Vice President of Investor Relations for Schlumberger (“ SLB ”), an international oilfield services and technology company, since April 2023. Previously, he served as President Americas Land of SLB, overseeing onshore operations in North and South America, from June 2020 to April 2023. Previously, he served as President of Well Services running SLB’s global stimulation, coiled tubing intervention, cementing and offshore vessel operations. In addition, Mr. McDonald held multiple leadership roles in line management, operations, quality and safety, and business development at SLB over the past 21 years. His assignments spanned North and South America, North Africa and the Middle East in both land and offshore environments that included unconventional and deep water. Mr. McDonald graduated from the Massachusetts Institute of Technology with a degree in chemical engineering. He is actively engaged within the energy industry and community, and currently serves on the Board of Directors of Permian Strategic Partnership, the Energy Workforce and Technology Council, and he is on the Upstream and Service Supply and Technology Committees of the American Petroleum Institute. Mr. McDonald was initially nominated to serve on our Board by SLB pursuant to a stockholders agreement that is no longer in effect. We believe Mr. McDonald’s extensive experience in the oilfield services industry qualifies him for service on our Board. +Vote +Required +The +election of directors requires the affirmative vote of a plurality of the votes cast by the holders of the shares of Common Stock +entitled to vote in the election. If you submit a signed proxy card but do not give voting instructions as to how your shares +of Common Stock should be voted, your shares will be voted in accordance with the recommendations of our Board stated in this +Proxy Statement. Neither abstentions nor broker non-votes will have any effect on the outcome of voting on director elections. +THE +BOARD RECOMMENDS VOTING “ FOR ” THE ELECTION OF EACH CLASS III DIRECTOR NOMINEE. +9 +DIRECTORS +CONTINUING IN OFFICE +SIMON +AYAT +Age: +70 +Key +Areas of Experience +Director +Since: 2020 +INDEPENDENT +● Corporate +Finance/Capital Markets +● Senior +Management Experience (CEO/CFO) +● Oilfield +Services +● Mergers +& Acquisitions +● Legal/Regulatory +● Corporate +Governance +● ESG +● HR/Compensation +● Investor +Relations +● Risk +Management +Mr. Ayat served as Senior Strategic Advisor to the Chief Executive Officer for SLB from January 2020 until January 2022. From March 2007 until January 2020, he served as the Executive Vice President and Chief Financial Officer of SLB. Mr. Ayat has held several financial and operational positions in SLB, where he commenced his career in 1982. He was based in Paris, Houston and Dallas, as well as in the Middle East and Far East regions, serving as group treasurer, controller, Geomarket manager for Indonesia and drilling regional vice president for Asia Pacific. Mr. Ayat is also a member of the board of directors and audit committee of Tenaris S.A., a manufacturer of pipes and related services for energy and industrial applications. He is a French and Lebanese citizen. Mr. Ayat was initially nominated to serve on our Board by SLB pursuant to a stockholders agreement that is no longer in effect. We believe Mr. Ayat’s extensive experience in the oilfield services industry and as the Chief Financial Officer of a publicly traded oilfield services company with international operations qualifies him for service on our Board. +ARJUN +MURTI +Age: +55 +Key +Areas of Experience +Director +Since: 2025 +INDEPENDENT +● Exploration +and Production +● Corporate +Finance/Capital Markets +● Mergers +& Acquisitions +● Oilfield +Services +Mr. Murti is currently a Partner at Veriten LLC, a private research, investment and strategy firm (“Veriten”), and a Senior Advisor at Warburg Pincus, a private equity firm. He previously was a Partner at Goldman Sachs (“GS”) from 2006 to 2014. Prior to becoming Partner at GS, he served as Managing Director from 2003 to 2006 and as Vice President from 1999 to 2003. During his time at GS, Mr. Murti worked as a sell-side equity research analyst covering the energy sector and was co-director of equity research for the Americas from 2012 to 2014. Previously, Mr. Murti held equity analyst positions at JP Morgan Investment Management from 1995 to 1999 and at Petrie Parkman from 1992 to 1995. Mr. Murti has been a member of the board of directors of ConocoPhillips since 2015 and serves on its audit and finance committee as chair, executive committee, and human resources and compensation committee. He also serves on the advisory boards of ClearPath and the Center on Global Energy Policy at Columbia University. Mr. Murti has a Bachelor of Science and Arts in Finance from the University of Denver. We believe that Mr. Murti’s extensive experience in the areas of finance, capital markets, and energy policy qualify him for service on our Board. +GALE +A. NORTON +Age: +70 +Key +Areas of Experience +Director +Since: 2019 +INDEPENDENT +● Legal/Regulatory +● Corporate +Governance +● ESG +Ms. Norton has been the President of Norton Regulatory Strategies, a consulting firm, since 2011. From 2007 to 2010, she served as General Counsel, Unconventional Oil, of Royal Dutch Shell, an international oil and natural gas company (“ Shell ”). Prior to joining Shell, Ms. Norton served as the Secretary of the Interior of the United States under President George W. Bush from 2001 until 2006 and as the Attorney General of the State of Colorado from 1991 until 1999. Ms. Norton is a director of American Transmission Company, a private company in the electric utility industry and she has been a Governance Fellow of the National Association of Corporate Directors. Ms. Norton holds Bachelor of Arts and Juris Doctorate degrees from the University of Denver. We believe that Ms. Norton’s experience as Attorney General of the State of Colorado and Secretary of the Interior of the United States qualifies her for service on our Board. +10 +CARY +D. STEINBECK +Age: +53 +Key +Areas of Experience +Director +Since: 2018 INDEPENDENT +● Exploration +and Production +● Mergers +& Acquisitions +● Corporate +Finance/Capital Markets +Mr. Steinbeck has been a Managing Director at Shea Ventures, an investment firm, since October 2014. From 2007 to 2014, he served as a Managing Director at Oakmont Corporation, an investment firm. Mr. Steinbeck is a member of the board of directors of Liberty Resources LLC and served on the board of directors of Accretion Acquisition Corp. from October 2021 to December 2023. Mr. Steinbeck is a Chartered Financial Analyst ® charterholder and has a Bachelor of Arts in Economics from the University of California, Santa Barbara, and a Master of Business Administration from the University of Southern California. We believe that Mr. Steinbeck’s experience in the private equity industry, energy sector investing experience, extensive board participation and understanding of financial markets provide valuable insights for our Company and qualify him for service on our Board. +KEN +BABCOCK +Age: +68 +Key +Areas of Experience +Director +Since: 2018 +INDEPENDENT +● Technology/Cybersecurity +● Senior +Management Experience (CEO/CFO) +● Oilfield +Services +● Mergers +& Acquisitions +● Marketing/Sales +● HR/Compensation +Mr. Babcock is currently the Chief Executive Officer of Abaco Energy Technologies LLC (“ Abaco ”), a private Houston-based portfolio company of Riverstone Holdings LLC, an energy-focused private equity firm (“ Riverstone ”), that was formed in 2013 to focus on opportunities in manufacturing and services related to North American drilling, completion, and production, and associated infrastructure. Prior to joining Abaco, Mr. Babcock was the President and Chief Executive Officer of Titan Specialties, Ltd. (“ Titan ”) from 2008 until its sale to Hunting PLC in September 2011. Following the sale, Mr. Babcock remained at Titan until June 2012. Prior to joining Titan, from 2005 until 2008, Mr. Babcock served as President and Chief Executive Officer of International Logging, Inc. (“ ILI ”) where he took a narrowly-focused mud logging company of over 300 employees to a diverse well site services organization of over 1,800 employees spread over 60 countries in a little over two years. Prior to joining ILI, Mr. Babcock was Director of Strategic Sales at Baker Hughes INTEQ and Vice President of Business Development at Noble Technology Services. Mr. Babcock began his career with EXLOG in 1980. Mr. Babcock has a Bachelor of Science in Geology from Florida State University. We believe that Mr. Babcock’s strong business leadership experience qualifies him for service on our Board. +RON +GUSEK +Age: +53 +Key +Areas of Experience +Director +Since: 2025 +● Exploration +and Production +● Technology/Cybersecurity +● Senior +Management Experience (CEO/CFO) +● Oilfield +Services +● ESG +● Marketing/Sales +● HR/Compensation +● Investor +Relations +Mr. Gusek has served as the Company’s Chief Executive Officer since February 2025 and has been President since 2016. He served as the Company’s Vice President of Technology and Development of the Company’s predecessor from 2014 until his promotion to President in 2016. From 2011 to 2014, Mr. Gusek served as Vice President, Corporate Engineering and Technology of Sanjel Corporation, a global energy service company. Prior to joining Sanjel Corporation, from 2009 to 2011, Mr. Gusek was Director of Engineering for Zodiac Exploration, an oil and natural gas exploration and production company working in the central San Joaquin valley in California. From 2003 to 2008, Mr. Gusek was the Canadian Regional Manager of Pinnacle Technologies. Mr. Gusek has a Bachelor of Science in Mechanical Engineering from the University of Alberta. We believe that Mr. Gusek’s experience leading our growth during his tenure as our President, and now Chief Executive Officer, and his extensive experience in the hydraulic fracturing services industry, including technical expertise, qualifies him for service on our Board. +11 +AUDREY +ROBERTSON +Age: +44 +Key +Areas of Experience +Director +Since: 2021 +● Exploration +and Production +● Corporate +Finance/Capital Markets +● Senior +Management Experience (CEO/CFO) +● Public +Accounting +● Mergers +& Acquisitions +● Investor +Relations +● Risk +Management +Ms. Robertson is a co-founder of Franklin Mountain Energy, LLC, a private oil and gas company operating in the Permian Basin, and served as its Executive Vice President of Finance from January 2023 until the sale of the company in January 2025. She served as Chief Financial Officer from September 2018 to January 2023. She also served as a co-founder and Managing Partner of Copper Trail Partners, LLC, a private equity platform based in Denver from November 2017 until December 2021. From 2005 to 2016, she served as a Partner and Senior Managing Director at Kayne Anderson Capital Advisors. Prior to that time, she was an investment banker with Goldman Sachs & Co. Ms. Robertson was a Director of Bonanza Creek Energy, LLC and served on both the audit and compensation committees from January 2020 until November 2021 and served on the board of directors of Extraction Oil and Gas, LLC from September 2019 to January 2021 where she served on the audit committee and chaired the special committee on restructuring. She is the current Vice Chair and a member of the Board of Directors of the New Mexico Oil and Gas Association and serves on the Finance and Governance sub-committees. She has served on the boards of several private companies and not-for-profit organizations. She holds a Bachelor of Science degree in Applied Economics and Management from Cornell University and a Master of Accounting degree from the University of Southern California. We believe that Ms. Robertson’s significant experience in the oil and gas exploration and production industry and accounting credentials qualify her for service on our Board. +12 +THE +BOARD AND ITS COMMITTEES +THE +BOARD +Composition +of the Board +Our +Board consists of 10 members separated into three classes of directors, each as equal in number as possible, with each class serving +staggered three-year terms. In Proposal 5 herein, the Company is recommending that stockholders approve a Charter amendment that +would, if approved, begin a phased-in declassification of the Board starting at next year’s annual meeting of stockholders. +In +evaluating director candidates, we, through the Nominating and Governance Committee of the Board (the “ Nominating and +Governance Committee ”), review the following criteria when assessing director candidates: +✓ relevant +skills, qualifications and experience; +✓ independence +under applicable standards; +✓ qualifications +to serve on Board committees and, as appropriate, serve as a committee chairperson; +✓ business +judgment; +✓ service +on boards of directors of other companies; +✓ personal +and professional integrity; +✓ openness +and willingness to work as part of a team; +✓ willingness +to commit the required time to serve as a Board member; and +✓ familiarity +with the Company and its industry. +Board +Diversity and Summary of Director Core Skills +The +diversity of experience and range of competencies, qualifications and viewpoints of each director on our Board embody key abilities +that our Nominating and Governance Committee considers valuable to effective oversight of the Company. The Nominating and Governance +Committee values a range of talents, ages, skills, experiences, diversity, and expertise sufficient to provide sound and prudent +guidance with respect to the Company’s strategic and operational objectives, and further believes that gender and ethnic +diversity can be one way to accomplish diversity of thought while still maintaining a Board that is adequately qualified to discharge +its duties. Presently, half of our Board is comprised of members representing gender and ethnic diversity with: +✓ two +Board members being female; and +✓ three +additional Board members being ethnically diverse. +We +believe that our director nominees are able to provide a well-rounded set of expertise that will assist in effective oversight +of management at the Company. The matrix below identifies the core skills, primary competencies and other attributes that each +director brings forth in their service to our Board and committees. The lack of an indicator for a particular item does not mean +that the director does not possess that qualification, skill or experience in general. The indicator merely represents a core +skill that the director brings to our Board. Furthermore, each director possesses other competencies not identified below. We +believe identifying primary skills is a more meaningful presentation of the key contributions and value that each director brings +to their service on the Board and to our stockholders. For more information about each director, see the individual biographies +set forth above. +13 +Ayat +Babcock +Dea +Gusek +Kimble +McDonald +Murti +Norton +Robertson +Steinbeck +Exploration and Production +✓ +✓ +✓ +✓ +✓ +Technology/Cybersecurity +✓ +✓ +✓ +✓ +Corporate Finance/Capital Markets +✓ +✓ +✓ +✓ +Senior Management Experience +(CEO/CFO) +✓ +✓ +✓ +✓ +✓ +Oilfield Services +✓ +✓ +✓ +✓ +✓ +Public Accounting +✓ +✓ +Mergers & Acquisitions +✓ +✓ +✓ +✓ +✓ +✓ +✓ +Legal/Regulatory +✓ +✓ +✓ +Corporate Governance +✓ +✓ +✓ +✓ +ESG +✓ +✓ +✓ +✓ +Marketing/Sales +✓ +✓ +✓ +HR/Compensation +✓ +✓ +✓ +✓ +Investor Relations +✓ +✓ +✓ +✓ +✓ +Risk Management +✓ +✓ +✓ +✓ +Board +Leadership Structure and Role in Risk Oversight +Our +Board does not have a policy regarding separation of the roles of Chief Executive Officer and Chairman of the Board (the “ Chairman ”). +In accordance with our Corporate Governance Guidelines (the “ Governance Guidelines ”), the Board periodically +reassesses the separation of the roles of Chief Executive Officer and Chairman. In connection with Mr. Wright’s resignation +from his positions as Chairman, Director and Chief Executive Officer due to his appointment as the Secretary of Energy of the +United States, the Board appointed William F. Kimble, a non-employee independent director who was serving as Lead Director of +the Board during Mr. Wright’s tenure as Chairman and Chief Executive Officer, to serve as the non-executive Chairman. As +the non-executive Chairman, Mr. Kimble presides at executive sessions of the non-management directors among other responsibilities, +including chairing the meetings of our Board and stockholders. Our Board believes that this structure, combined with our corporate +governance policies and processes, creates an appropriate balance between strong and consistent leadership and independent oversight +of our business. Additionally, this structure allows our Chief Executive Officer to focus on executing our business strategy, +enhancing our operational excellence, furthering our leading technological innovation, and engaging with our stakeholders. Meanwhile, +our non-executive Chairman can focus on leading the Board, ensuring that it provides strong oversight of management and that all +directors are well-positioned to discharge their duties appropriately. +The +Board is responsible for overseeing that the risk management processes designed and implemented by our management are functioning +as intended, and that steps are taken by management to identify and mitigate significant and emerging risks to the Company. Risk +is inherent with every business, and how well a business manages risk can ultimately determine its success. We face a number of +risks, including those described under “ Risk Factors ” in our Annual Report on Form 10-K for the year ended +December 31, 2024. Our Board is actively involved in oversight of risks that could affect us. This oversight is conducted by the +Board, which has responsibility for general oversight of risks, but the Audit Committee of the Board (the “ Audit Committee ”) +assists the Board in fulfilling such oversight responsibilities. Risk assessment and oversight are an integral part of our governance +and management processes. The Board encourages management to promote a culture that incorporates risk management into our corporate +strategy and day-to-day business operations. Management discusses strategic and operational risks at regular management meetings +and conducted a specific strategic session during the year that included a focused discussion and analysis of the risks facing +us. Throughout the year, senior management reviews risks with the Board at regular Board meetings as part of management presentations +that focus on the Company’s overall operations and presents the steps taken by management to mitigate or eliminate such +risks. +The +Board does not have a standing risk management committee, but rather administers this oversight function through the Audit Committee +and the Board as a whole. The Board is responsible for monitoring and assessing strategic risk exposure, and the Audit Committee +assists the Board in fulfilling such oversight responsibilities by overseeing our major risk exposures, including significant +financial, information technology, and cybersecurity risks, and the steps our management has taken to monitor and control these +exposures. The Audit Committee also monitors compliance with legal and regulatory requirements and considers and approves or disapproves +any related-person transactions. +Our +Board periodically reviews its governance and committee structure to ensure that it continues to meet the Company’s needs. +Director +Independence and Family Relationships +The +Company’s standards for determining director independence require the assessment of directors’ independence each year. +A director cannot be considered independent unless the Board affirmatively determines that he or she does not have any relationship +with management or the Company that may interfere with the exercise of his or her independent judgment, including any of the relationships +that would disqualify the director from being independent under the rules of the NYSE. +14 +The +Board has assessed the independence of each non-employee director under the independence standards of the NYSE. The Board has +determined that each of Messrs. Ayat, Babcock, Dea, Kimble, McDonald, Murti and Steinbeck and Ms. Norton is considered independent +under the NYSE rules. In connection with its assessment of the independence of each non-employee director, the Board also determined +that Messrs. Ayat, Babcock, Dea, Kimble, McDonald, Murti and Steinbeck and Ms. Norton are independent as defined in Section 10A-3 +of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”) and under the standards set forth by +the NYSE applicable to members of the Audit Committee. Furthermore, none of our directors or officers have any family relationship +with any director or other officers. “Family relationship” for this purpose means any relationship by blood, marriage +or adoption, not more remote than first cousin. +BOARD +COMMITTEES +Overview +Our +Board has established an Audit Committee, a Compensation Committee of the Board (the “ Compensation Committee ”) +and a Nominating and Governance Committee as further detailed herein. The below chart sets forth the members and chairperson of +each Board committee. +Name +Audit +Committee +Compensation +Committee +Nominating +and +Governance +Committee +William +F. Kimble + +* +● +Cary +D. Steinbeck +● +● +Peter +A. Dea +* +● +Ken +Babcock +● +Gale +A. Norton +● +* +Simon +Ayat +● +James +R. McDonald +● ++ +Non-Executive Chairman +of +the Board +* +Chairperson +● +Member +Audit +Committee +Rules +implemented by the NYSE and the SEC require us to have an Audit Committee comprised of at least three directors who meet the independence +and experience standards established by the NYSE and the Exchange Act. Our Audit Committee currently consists of four directors, +all of whom are independent under the rules of the SEC and the standards set forth by the NYSE applicable to members of an Audit +Committee. Messrs. Ayat, Kimble and Steinbeck and Ms. Norton are the members of our Audit Committee with Mr. Kimble serving as +the chairperson. Each member of our Audit Committee is financially literate, and our Board has determined that Mr. Kimble qualifies +as an “audit committee financial expert” as defined in applicable SEC rules. +The +Audit Committee oversees, reviews, acts on and reports on various auditing and accounting matters to our Board, including: the +selection of our independent accountants, the scope of our annual audits, fees to be paid to the independent accountants, the +performance of our independent accountants and our accounting practices. The general purpose of our Audit Committee is to assist +the Board in oversight responsibilities regarding the integrity of the Company’s financial statements, compliance with legal +and regulatory requirements, performance of the independent registered public accounting firm engaged by the Company and the effectiveness +of the Company’s internal audit functions. The Audit Committee is also responsible for oversight of the Company’s +information technology and cybersecurity risks. The Audit Committee operates under an Audit Committee charter that defines the +committee’s primary duties in a manner consistent with the rules of the SEC and NYSE. A current copy of the Audit Committee +charter can be found on our website, www.libertyenergy.com , by first clicking “ Investors ” then “ Corporate +Governance ” and proceeding to “ Governance Documents .” +Compensation +Committee +Our +Compensation Committee currently consists of four directors: Messrs. Dea, Babcock, McDonald, and Steinbeck with Mr. Dea serving +as the chairperson. Our Compensation Committee establishes salaries, incentives and other forms of compensation for the Board, +executive officers, and other senior officers. Our Compensation Committee also assists the Board with the administration and oversight +of our incentive compensation and benefit plans, our compensation recovery policy, and our stock ownership guidelines. The Compensation +Committee has the authority to delegate to its chairperson or any one of its members the responsibility and authority for any +particular matter, as it deems appropriate from time to time under the circumstances. The Compensation Committee operates under +a Compensation Committee charter that defines the committee’s primary duties. A current copy of the Compensation Committee +charter can be found on our website, www.libertyenergy.com , by first clicking “ Investors ” then “ Corporate +Governance ” and proceeding to “ Governance Documents .” +The +Board has determined that all directors on the Compensation Committee are independent under the standards set forth by the NYSE +and under the Exchange Act. +15 +Nominating +and Governance Committee +Our +Nominating and Governance Committee currently consists of three directors: Ms. Norton and Messrs. Kimble and Dea with Ms. Norton +serving as the chairperson. The Nominating and Governance Committee operates under a Nominating and Governance Committee charter +that defines the committee’s primary duties. A current copy of the Nominating and Governance Committee charter can be found +on our website, www.libertyenergy.com , by first clicking “ Investors ” then “ Corporate Governance ” +and proceeding to “ Governance Documents .” +Our +Nominating and Governance Committee oversees our corporate governance framework, including identifying, evaluating and recommending +qualified nominees to serve on our Board. Our Nominating and Governance Committee also develops and oversees our corporate governance +processes, including the annual performance evaluation of the Board and its committees, and of senior management, evaluating director +independence, and develops, reviews and recommends to the Board any changes to our Corporate Governance Guidelines and other applicable +governance policies. +The +Board and the Nominating and Governance Committee believe the skills, qualities, attributes, and experience of our directors provide +our Company with business acumen and a diverse range of perspectives to effectively address our evolving needs and represent the +best interests of our stockholders. +When +identifying director nominees, the Nominating and Governance Committee considers and reviews the following criteria: the candidate’s +relevant skills, qualifications and experience; independence under applicable standards; qualifications to serve on Board committees +and, as appropriate, serve as a committee chairperson; business judgement; service on boards of directors of other companies; +personal and professional integrity; openness and ability to work as part of a team; willingness to commit to the required time +to serve as a member of the Board; and familiarity with the Company and its industry. Additionally, when considering the recommendation +to the Board that an existing director be nominated for election at the annual meeting of stockholders, the Nominating and Governance +Committee will consider and review: the past Board and committee meeting attendance and performance, the length of Board service, +the personal and professional integrity, the relevant experience, skills, qualifications and contributions that the existing director +brings to the Board and their independence under the applicable standards. +The +Nominating and Governance Committee will consider suggestions from any source, particularly from stockholders, regarding possible +candidates for director; provided, however , that in order for such stockholder recommendation to be considered, the recommendations +must comply with the procedures outlined under “ Stockholder Proposals ” below. +The +Board has determined that all directors on the Nominating and Governance Committee are independent under the standards set forth +by the NYSE. +MEETING +ATTENDANCE OF THE BOARD AND BOARD COMMITTEES +During +2024, the Board and its committees regularly met on a set schedule as set forth in the following table. Additionally, the Board +and its committees acted by written consent from time to time, as appropriate. The Board and its committees held no special meetings +during 2024. +Regularly +Scheduled +Meetings +Special +Meetings +Total +Meetings +Board +of Directors +5 +0 +5 +Audit +Committee +7 +0 +7 +Compensation +Committee +4 +0 +4 +Nominating +and Governance Committee +3 +0 +3 +At +each Board meeting, time is reserved for the independent directors to meet in executive session without the Chief Executive Officer +present. Furthermore, executive officers regularly attend Board meetings to present information to our Board on our business and +strategy. From time to time between meetings, Board and committee members confer with each other and with management and independent +consultants regarding relevant issues, and representatives of management may meet with such consultants on behalf of the relevant +committee. +Each +director participated, whether in person or by telephone or videoconference, in at least seventy-five percent (75%) of all meetings +of the Board and the committees of which such director is a member. There is no formal policy as to director attendance at the +Annual Meeting, but our corporate governance guidelines encourage directors to attend. Eight members of our Board who were serving +at such time attended last year’s annual stockholder meeting. +16 +CORPORATE +CODE OF BUSINESS CONDUCT AND ETHICS +Our +Board has adopted a Corporate Code of Business Conduct and Ethics (the “ Ethics Code ”) applicable to our employees, +directors and officers, in accordance with applicable U.S. federal securities laws and the corporate governance rules of the NYSE. +Any waiver of the Ethics Code may be made only by our Board or a Board committee and will be promptly disclosed as required by +applicable SEC laws and the corporate governance rules of the NYSE. A current copy of the Ethics Code can be found on our website, +www.libertyenergy.com , by first clicking “ Investors ” then “ Corporate Governance ” +and proceeding to “ Governance Documents ,” and is available in print to any stockholder who requests it. We +intend to post any waiver of our Ethics Code or substantive amendments to the Ethics Code to our website. +CORPORATE +GOVERNANCE GUIDELINES +Our +Board has adopted the Governance Guidelines in accordance with the corporate governance rules of the NYSE that serve as a framework +within which our Board and committees operate. These guidelines cover matters including, but not limited to, the composition of +our Board, Board membership criteria and qualifications, director responsibilities, meetings of the Board and non-management directors, +Board committees, director access to management and independent advisors, director compensation, and evaluation of management +and management succession planning. A current copy of our Governance Guidelines can be found on our website, www.libertyenergy.com , +by first clicking “ Investors ” then “ Corporate Governance ” and proceeding to “ Governance +Documents ,” and is available in print to any stockholder who requests it. +DIRECTOR +RESIGNATION POLICY +Our +director resignation policy is set forth within our Corporate Governance Guidelines. To be elected, director nominees must receive +a plurality of the votes cast by the holders of the shares entitled to vote in the election of directors at the Annual Meeting. +However, in an uncontested election, any director nominee who receives a Majority Withheld Vote is required to tender his or her +resignation to the Chair of the Nominating and Governance Committee within seven days following certification of the stockholder +vote. The Nominating and Governance Committee must recommend to the Board whether to accept the resignation offer within 60 days +of receiving the offer of resignation. The Board is required to consider and act on the recommendation within 30 days following +receipt of the recommendation. +COMPENSATION +RECOVERY POLICY +Our +Compensation Recovery Policy provides that incentive-based compensation paid to our current and former executive officers may +be recovered in the event of a restatement of our financial results. In connection with any such restatement, the Compensation +Committee may seek recovery of any erroneously awarded incentive compensation paid within a three-year lookback period, including +payments under the annual cash incentive program and payments and grants under the long-term incentive plan, by reimbursement, +cancellation, forfeiture, and/or offset. +COMMUNICATION +WITH THE BOARD +The +Board welcomes communications from the Company’s stockholders and other interested parties. Stockholders and any other interested +parties may send communications to the Board, any committee of the Board, the Chairman or any other director to: +Liberty +Energy Inc. +c/o +Corporate Secretary +950 +17th Street, Suite 2400 +Denver, +Colorado 80202 +Stockholders +and any other interested parties should mark the envelope containing each communication as “Stockholder Communication with +Directors” and clearly identify the intended recipient(s) of the communication. The Company’s Corporate Secretary +or other officer as designated by the Board, will review each communication received from stockholders and other interested parties +and will forward the communication, as expeditiously as reasonably practicable, to the addressees if the communication falls within +the scope of matters generally considered by the Board. To the extent the subject matter of a communication relates to matters +that have been delegated by the Board to a committee or to an executive officer of the Company, then the Company’s Corporate +Secretary may forward the communication to the executive officer or chairman of the committee to which the matter has been delegated. +The acceptance and forwarding of communications to the members of the Board or an executive officer does not imply or create any +fiduciary duty of the Board members or executive officer to the person submitting the communications. +STOCKHOLDER +ENGAGEMENT +We +believe that regular dialogue with, and accountability to, our stockholders is critical to our success and value creation. Our +management team participates in investor meetings throughout the year to discuss our business and strategic priorities and financial +performance. These meetings include in-person, telephone and webcast engagements, as well as investor conferences. The feedback +obtained through such engagement provides our Board and management with valuable insights on our business strategy and performance, +technological innovation, corporate responsibility, executive compensation, sustainability initiatives, and many other topics +of interest to our stockholders. +17 +COMPENSATION +COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION +The +members of the Compensation Committee are set forth above. During 2024, our last completed fiscal year, none of our executive +officers served on the board of directors or compensation committee of a company that had an executive officer that served on +our Board or Compensation Committee. Further, no member of our Board was an executive officer of a company in which one of our +executive officers served as a member of the board of directors or compensation committee of that company. +18 +EXECUTIVE +OFFICERS +The +following sets forth certain information with respect to the executive officers of the Company as of February 19, 2025. +Name +Age +Position(s) +Ron +Gusek +53 +Director, +President, and Chief Executive Officer +Michael +Stock +63 +Chief +Financial Officer and Treasurer +R. +Sean Elliott +50 +Chief +Legal Officer and Corporate Secretary +Ryan +T. Gosney +51 +Chief +Accounting Officer and Vice President of Finance +Ron +Gusek – Director, President, and Chief Executive Officer. See “Proposal 1 – Election of Directors +– Directors Continuing in Office” above for information regarding Mr. Gusek . +Michael +Stock – Chief Financial Officer and Treasurer. Michael Stock has served as our Chief Financial Officer since +December 2016, our Treasurer since March 2018 and as the Chief Financial Officer of our predecessor company from April 2012 +until our IPO. Mr. Stock served as a director of the Company from December 2016 up until January 2018 and resigned upon completion +of our IPO. From 2009 to 2012, he was employed by TAS Energy Inc., an industrial energy technology company. During his tenure, +he served as Chief Financial Officer and was a key part of the raising of equity from leading investment groups including +Kleiner Perkins, Element Partners, Natural Gas Partners and Credit Suisse. From 1997 to 2009, Mr. Stock served as Chief Financial +Officer for Pinnacle Technologies. +R. +Sean Elliott – Chief Legal Officer and Corporate Secretary . Sean Elliott has been our Chief Legal Officer since +January 2023 and prior to that was Vice President and General Counsel since March 2017. He has also served as our Corporate +Secretary since 2018. Between September 2016 and March 2017, Mr. Elliott worked as Assistant General Counsel at USAA Real +Estate Company, a real estate investment firm. Between June 2015 and September 2016, Mr. Elliott served as Counsel at Haynes +and Boone, LLP, an international corporate law firm. Between November 2007 and May 2015, Mr. Elliott served as Vice President, +General Counsel, Corporate Secretary and Chief Compliance Officer of CARBO Ceramics Inc., an oilfield services production +enhancement company. Mr. Elliott has a Bachelor of Arts in Economics and Business Administration from Austin College and a +Doctor in Jurisprudence degree from the University of Texas at Austin. +Ryan +T. Gosney – Chief Accounting Officer and Vice President of Finance . Ryan +Gosney has been our Chief Accounting Officer since March 2017 and Vice President of Finance since January 2025. Between July +2016 and February 2017, Mr. Gosney served as the Chief Accounting Officer of Vantage Energy Inc. (“ Vantage ”), +an oil and gas exploration and production company. Prior to joining Vantage, Mr. Gosney served as Chief Financial Officer +for Dorado E&P Partners, LLC, an oil and gas company, from January 2012 to January 2016. Mr. Gosney began his career as +an auditor with Arthur Andersen, LLP in September 1995 where he served in increasing roles of responsibility up to Audit Manager +until June 2002. Mr. Gosney has also served as Controller for Patina Oil & Gas Corporation from October 2002 to October +2005 and Delta Petroleum Corporation from October 2005 to January 2012. Mr. Gosney has a Bachelor of Business Administration +from Texas Christian University. +19 +COMPENSATION +DISCUSSION & ANALYSIS +This +Compensation Discussion & Analysis provides information about our rationale and policies with regard to the compensation of +our principal executive officer, principal financial officer and our three other most highly-compensated executive officers (our +“ Named Executive Officers ” or “ NEOs ”) for 2024 and is intended to provide investors with +the material information necessary for understanding our compensation policies and decisions regarding our Named Executive Officers +as well as providing context for the tabular disclosure provided in the executive compensation tables below. Our Named Executive +Officers for 2024 include: +Name +Title +Christopher +A. Wright (1) +Chairman +of the Board and Chief Executive Officer +Michael +Stock +Chief +Financial Officer and Treasurer +Ron +Gusek (2) +President +R. +Sean Elliott +Chief +Legal Officer and Corporate Secretary +Ryan +T. Gosney (3) +Chief +Accounting Officer +(1) Mr. +Wright resigned as Chairman of the Board and Chief Executive Officer effective February 3, 2025 in connection with his confirmation +as Secretary of the United States Department of Energy as previously disclosed in the Company’s Current Report on Form 8-K +filed on November 19, 2024. +(2) Mr. +Gusek was appointed Chief Executive Officer effective February 3, 2025 in connection with the resignation of Mr. Wright as described +in the above footnote. +(3) Mr. +Gosney was additionally appointed Vice President of Finance effective January 22, 2025. +2024 +Compensation Overview +The +Compensation Committee recommended, and the Board approved, the following compensation-related actions for our Named Executive +Officers for fiscal year 2024, further detailed below: +● Base +Salaries : The 2024 base salaries for each Named Executive Officer were increased +in response to marketplace pay increases. +● Annual +Incentive Awards : The bonus target criteria for annual incentive awards was the same +used in 2023 based on the achievement of specific Company performance objectives. +● Long-Term +Incentive Compensation : The long-term incentive compensation included both time-based +awards, vesting ratably over a three-year period, and performance-based awards, with +three-year cliff vesting. +Leadership +Changes +On +November 16, 2024, then President-elect Donald J. Trump announced his appointment of Mr. Wright our then Chairman, Director, and +Chief Executive Officer to serve as the incoming Secretary of Energy of the United States, subject to ratification and confirmation +by the United States Senate, which occurred on February 3, 2025. As a result, effective February 3, 2025, Mr. Wright resigned +from his positions as Chairman, Director, and Chief Executive Officer of the Company. In accordance with the Company’s succession +plan, effective on February 3, 2025, the Board appointed William Kimble as the Company’s non-executive Chairman and Ron +Gusek as a director of the Board and as Chief Executive Officer. +2024 +Say on Pay +At +our 2024 annual meeting of stockholders, our stockholders were asked to approve, on a non-binding, advisory basis, the compensation +of our Named Executive Officers, as reported in our 2024 proxy statement (“ Say on Pay ”). In 2024, our stockholders +overwhelmingly approved the compensation of our Named Executive Officers, with nearly 95% of the votes cast in favor of such practices. +The Compensation Committee and the Board viewed the results of the Say on Pay vote and, given the strong stockholder support for +the compensation of our Named Executive Officers in 2024, believe that no significant changes to our compensation program were +warranted as a result of this vote. As discussed in more detail in “ Proposal 2: Advisory Vote to Approve the Compensation +of the Company’s Named Executive Officers ,” the Board has recommended that stockholders vote, on a non-binding +advisory basis, to approve the compensation of our Named Executive Officers, as described below. +20 +Compensation +Best Practices +The +Company’s compensation program has been designed to support a strong governance model. Key elements of the program in support +of this objective are set forth in the chart below: +What +We Do +What +We Don’t Do +✓ +Determine +annual incentive compensation with the majority of the potential payment based upon the achievement of pre-established performance +goals +× +No +excise tax gross ups +× +No +single-trigger severance +× +No +excessive perquisites +✓ +Generally +target the market median for total compensation +× +No +short-term or speculative trading of Company stock +✓ +Use +an independent compensation consultant +× +No +re-pricing of incentive awards +✓ +Hold regular executive sessions +of the Compensation Committee without management present +× +No +supplemental retirement plans +No guaranteed bonuses or uncapped incentives +✓ +Compensation +Committee comprised solely of independent directors +× +No +payment of dividends on unvested stock awards +✓ +Base a portion of the long-term +incentives upon our performance relative to peers +× +Ban on hedging and +pledging +✓ +Apply +Stock Ownership Guidelines for executive officers and most Board members +✓ +Manage +incentive compensation overpayment risk through compensation recovery/clawback policy +✓ +“Double +trigger” LTI vesting upon a change of control +✓ +Significant +portion of total target compensation for NEOs is performance-based or at risk +Process +for Setting Compensation and Role of Compensation Consultant +At +the beginning of each year, the Compensation Committee engages an independent executive compensation consulting firm in order +to provide independent and objective market compensation data, conduct compensation analysis, recommend plan design changes and +advise on compensation related risks. The Compensation Consultant (as defined below) acts solely on behalf of the Compensation +Committee and not on behalf of the Company’s management team. During 2024, the Compensation Committee engaged NFP and CBIZ +Inc. as compensation consultants, with CBIZ replacing NFP in April 2024 (the “ Compensation Consultant ”). The +Compensation Consultant compiles compensation surveys for review by the Compensation Committee and management. After review of +the Compensation Consultant’s surveys, management provides recommendations of compensation for our Named Executive Officers +to the Compensation Committee. Such recommendations are generally based upon the guidance of the Compensation Consultant and the +performance of our management as a team. The Compensation Committee then reviews management’s recommendation with the ability +to ask questions of both management and the Compensation Consultant and may conduct an executive session as needed to discuss +compensation. The Compensation Committee has the final authority to make all decisions regarding recurring and other compensation +decisions without separate Board approval. +The +Compensation Consultant also assists the Compensation Committee with the determination of our Peer Group, as defined and described +below, and design of our annual incentive program and long-term incentive awards. Using the independence factors established by +the SEC and the NYSE, the Compensation Committee determined that the Compensation Consultant’s work did not raise any conflicts +of interest, and they are considered an independent consulting firm. +Competitive +Market Position and Peer Group +To +further emphasize the alignment between Company performance and executive pay and to ensure compensation is competitive, for 2024 +the Compensation Committee generally targeted the 50th percentile for total compensation (base salary and short-term and long-term +incentives) for the named executive officers as a group, as reflected by various sources of compensation data (collectively, “ Market +Data ”). The Market Data provided to the Compensation Committee by the Compensation Consultant includes compensation +information from our Peer Group as well as other broad-based compensation survey sources selected by the Compensation Consultant. +Although the Compensation Committee used the Market Data to inform its decisions regarding the form and amount of compensation +provided to our Named Executive Officers in 2024, the Compensation Committee also considered other factors such that the compensation +provided to our Named Executive Officers is not exclusively reflective of the Market Data. +For +purposes of setting 2024 compensation, the peer group companies (our “ Peer Group ”) used by the Compensation +Consultant and the Compensation Committee included the following companies: +NOV +Inc. +Flowserve +Corporation +Weatherford +International plc +Gates +Industrial Corporation plc +ChampionX +Corporation +Oceaneering +International, Inc. +Valaris +Limited +Helmerich +& Payne, Inc. +Patterson-UTI +Energy, Inc. +Cactus, +Inc. +21 +Our +Peer Group was selected based on companies that broadly represent related drilling, oilfield services and manufacturing businesses +and are of reasonably comparable size to the Company based on revenue, market capitalization and other financial metrics. While +some of these companies have different revenues or market capitalizations, these companies represent the market in which we most +directly compete for qualified professionals. As a whole, our Peer Group reflects companies with related operations, of reasonably +similar size, and with which we compete for talent. Our Peer Group consists of the same companies that comprised our 2023 compensation +peer group with the exception of NexTier Oilfield Solutions Inc., which ceased to exist following its merger into Patterson-UTI +Energy, Inc. in the second half of 2023. +Objectives +of Compensation +The +goal of the Company’s compensation program is to help attract and retain qualified executive talent and to strengthen the +alignment between executives and stockholders’ interests, enhancing stockholder value. To achieve this goal, the Compensation +Committee’s decisions are guided by the following principles: provide a competitive compensation package; relate compensation +to the performance of the Company and the individual; and align employee objectives with the objectives of stockholders by encouraging +executive stock ownership. +In +order to achieve these objectives, the Compensation Committee has created a compensation package that combines fixed and variable +cash compensation with equity-based compensation. The Company’s compensation program for executive officers consists of +the following items: +* base +salary; +* performance-based +annual incentive payments under the Company’s Amended and Restated Long-Term Incentive +Plan (” LTIP ”), which in 2024 were based upon the Company’s adjusted +pre-tax earnings per share (“ Adjusted Pre-Tax EPS ”), return on capital +employed (“ Adjusted ROCE ”), the Company’s Adjusted ROCE as compared +to the Adjusted ROCE of a peer group of companies (such comparison, “ Comparative +ROCE ”), and personal performance; +* long-term +equity awards under our LTIP, consisting of both time-based and performance-based restricted +stock units; and +* matching +contributions under the Liberty Oilfield Services 401(k) Savings Plan. +The +Compensation Committee structures executive total direct compensation to emphasize performance through the annual incentive program +and long-term incentives. The Compensation Committee believes that the compensation mix should strike a balance promoting long-term +returns without motivating or rewarding excessive or inappropriate risk-taking. +Elements +of Compensation +2024 +Pay Mix +Our +compensation program is designed so that the higher an executive’s position in the Company, the greater the percentage of +compensation is contingent on the Company’s performance. The Company believes that having a significant portion of our Named +Executive Officers’ compensation at risk better aligns their interests with the long-term interests of the Company and its +stockholders. A majority of our Named Executive Officers total target direct compensation for fiscal year 2024 was variable, at +approximately 88% for our Chief Executive Officer and averaging 81% for our other Named Executive Officers. The following charts +illustrate the total target mix of direct compensation for our Named Executive Officers for fiscal year 2024. +Chief +Executive Officer +Other +Named Executive Officers (Average) +22 +Base +Salary +Each +Named Executive Officer’s base salary is a fixed component of compensation for performing specific job duties and functions. +In January 2024, the Compensation Committee approved a 5% raise to Named Executive Officer base salaries effective February 2024 +to more closely align with the 50th percentile of the Peer Group since current salaries had fallen below the 25th percentile of +the Peer Group. Specifically, the annualized base salaries for each Named Executive Officer are as follows for 2024: +Name +2024 +Base Salary +Increase +over 2023 +Base +Salary +Christopher +A. Wright +$675,000 +5% +Michael +Stock +$449,000 +5% +Ron +Gusek +$497,000 +5% +R. +Sean Elliott +$441,000 +5% +Ryan +T. Gosney +$331,000 +5% +Annual +Incentive Award +In +2024, based on the analysis provided by the Compensation Consultant and the recommendation of the Compensation Committee, the +Board established performance metrics and hurdles for our 2024 annual incentive awards that are focused on the results of adjusted +Pre-Tax EPS, Adjusted ROCE and Comparative ROCE. The Compensation Consultant recommended, and the Compensation Committee approved, +maintaining an element of discretion in the annual incentive for our Named Executive Officers in order to provide the Compensation +Committee the flexibility to respond to specific events that are relevant to each Named Executive Officer’s performance +during the year. No payout percentage would be earned for a metric if the actual Company performance of that metric was below +the threshold level set for that metric below. Payouts for performance between threshold, target and maximum would have been calculated +using straight line interpolation. The overall payout amount for each Named Executive Officer is capped at 200% of each Named +Executive Officer’s target incentive award. The performance metrics, their related thresholds and weightings and actual +performance for the year ended December 31, 2024 are set forth in the table below: +Performance +Metric +Weighting +Threshold +(50% +Payout) +Target +(100% +Payout) +Maximum +(200% +Payout) +Actual +Performance +Earned +Payout Percentage of Annual Incentive Award +Adjusted Pre-Tax EPS (1) +25% +$1.05 +$3.23 +$5.42 +$2.40 +80.9% +Adjusted ROCE (2) +25% +9% +27% +42% +19.6% +79.6% +Comparative ROCE (3) +30% +See +Comparative ROCE Chart below +1 +of 10 (4) +200% +Discretionary +20% +N/A +N/A +N/A +20% +100% +(1) Adjusted +Pre-Tax EPS is equal to the Company’s 2024 adjusted pre-tax income (adding back +income tax and certain adjustments that include tax receivable agreement impacts, when +applicable), divided by diluted weighted average shares outstanding for 2024. +(2) Adjusted +ROCE is equal to the Company’s 2024 adjusted pre-tax net income (adding back income +tax and tax receivable agreement impacts, when applicable) divided by the simple average +of capital (debt and equity) employed at December 31, 2024 and 2023. +(3) Comparative +ROCE is determined by comparing the Company’s Adjusted ROCE and ranking it against +the Adjusted ROCE of the 2024 peer group, as further detailed below. +(4) Based +on publicly filed data as of February 28, 2025. +In +the view of the Compensation Committee, the Company faced softening market conditions in 2024 better than its peers as evidenced +by the Company’s financial execution and approved a target payout of 20% on the 2024 discretionary incentive opportunity +for all Named Executive Officers. The same rate of payout on the discretionary portion was awarded for each executive officer +to recognize the collaborative team effort utilized to obtain these results. +23 +The +target incentive for each Named Executive Officer and the 2024 annual incentive payout for each Named Executive Officer is set +forth below. Target incentive levels were increased in 2024 from 7-10%, depending on the officer, in order to better align targeted +total cash compensation with the 50th percentile of the Peer Group. +Name +Target +Annual Incentive +(% of Base Salary) +Target +Annual Incentive ($) +Performance +Achievement Level +(% +of Target) +Actual +2024 Annual Incentive Payout +Christopher A. Wright +158.5% +$1,070,000 +120.1% +$1,284,803 +Michael Stock +138.3% +$621,000 +120.1% +$745,666 +Ron Gusek +135.6% +$674,000 +120.1% +$809,306 +R. Sean Elliott +109.3% +$482,000 +120.1% +$578,762 +Ryan T. Gosney +116.3% +$385,000 +120.1% +$462,289 +Comparative +ROCE is determined by comparing and ranking the Adjusted ROCE (as defined below) of the Company against the Adjusted ROCE of peer +companies (such peer group, the “ ROCE Peer Group ”). Our Adjusted ROCE and the Adjusted ROCE of each member +of the ROCE Peer Group is calculated for a calendar year and then ranked in order of highest to lowest, with the highest Adjusted +ROCE being ranked 1 of 10, and the lowest Adjusted ROCE ranked 10 of 10. The amount of the target award paid for this metric is +then based on our numerical ranking against the ROCE Peer Group as follows, with the use of linear interpolation to determine +the exact amount of payout (the “ ROCE Ranking Matrix ”): +Comparative +ROCE +Ranking +of Company Adjusted ROCE +against ROCE Peer Group +Payout +Percentage of Target Award +1 +of 10 +200% +2 +of 10 +175% +3 +of 10 +150% +4 +of 10 +125% +5 +of 10 +100% +6 +of 10 +75% +7 +of 10 +50% +8 +of 10 +0% +9 +of 10 +0% +10 +of 10 +0% +The +ROCE Peer Group is reviewed and set each year, provided that the Compensation Committee reserves the right to revise the ROCE +Peer Group throughout the year, which may include adjustments to eliminate the effects of extraordinary or non-recurring items. +While some companies in the ROCE Peer Group may overlap with companies in Peer Group, the focus of the ROCE Peer Group is to provide +a metric by which the effectiveness of capital deployment can be measured. Accordingly, the ROCE Peer Group focuses more particularly +on other companies that have capital needs that are similar to those of the Company. The Peer Group tends to focus and include +companies based on the relative size of the peers based on metrics such as revenue and market capitalization. The ROCE Peer Group +also utilizes the S&P 500 to provide a broader measure of the effectiveness of deployment of capital across various industries. +Similar to the rationale for using the S&P 500, the Committee believes that that the OSX index also provides a broad measure +of the effectiveness of the deployment of capital across the oilfield services industry. The 2024 ROCE Peer Group is unchanged +from 2023 and consists of the following companies and indices: +S&P +500 Index +Halliburton +Company +OSX +Index +Oil States International, Inc. +ProPetro +Holding Corp. +Helmerich +& Payne, Inc. +Patterson-UTI +Energy, Inc. +RPC, +Inc. +Nine +Energy Service, Inc. +Our +Company Adjusted ROCE for 2024 was 19.6%, which ranked 1 of 10 against the ROCE Peer Group for 2024 based on publicly filed data +as of February 28, 2025, resulting in a weighted payout percentage for the Comparative ROCE component of the annual incentive +award equal to 200.0%. +24 +Long-Term +Incentive Compensation +We +maintain the LTIP in order to incentivize individuals providing services to us or our affiliates. In 2024, following recommendations +by the Compensation Consultant and our Compensation Committee, our Board granted both time-based and performance-based restricted +stock units (“ RSUs ”), each which represent the right to receive shares of our Class A Common Stock following +the applicable vesting period. The Compensation Committee has considered the use of other forms of equity awards, including restricted +stock and stock options, and ultimately determined to use RSUs given that they have a less dilutive effect than stock options +and do not require the issuance of actual shares of Class A Common Stock unless and until vesting conditions are met. For 2024, +the grant date value of RSUs for the Named Executive Officers as a group was initially set at approximately the 50th percentile +based on market data. The Compensation Committee and our Board determined that a combination of time-based and a performance-based +vesting approach was appropriate given the Company’s desire to provide our Named Executive Officers with a long-term retention-focused +award that also aligns the interests of our Named Executive Officers with those of our stockholders while at the same time furthering +the Company’s pay-for-performance philosophy. +For +2024, one-half of the RSUs awarded to Messrs. Wright, Stock and Gusek vest ratably over a three-year period, and one-half vests +at the end of a three-year performance period based on the Company’s performance against a ROCE Peer Group. Messrs. Elliott +and Gosney received RSU awards with similar time and performance-based vesting conditions for 2024, except that 67% of these awards +were time-based, and 33% were performance-based. +Performance-based +RSUs provide the Named Executive Officer the right to receive an amount ranging from 0% to 200% of the target performance-based +RSUs granted based on the Company’s Comparative ROCE performance during the three-year performance period, subject to the +continued employment of the Named Executive Officer. For the years prior to 2024, Comparative ROCE is based on Adjusted ROCE, +which is equal to income before taxes and loss (gain) on remeasurement of liability under tax receivable agreements, plus interest +expense and stock-based compensation expense for the year divided by the simple average of capital (debt and equity) employed +at the beginning and end of each year presented. Beginning in 2024, the Adjusted ROCE calculation was changed to be equal to adjusted +pre-tax net income (adding back income tax and tax receivable agreement impacts, when applicable) for the year divided by the +simple average of capital (debt and equity) employed at the beginning and end of such year. After the end of the three-year performance +period, the Adjusted ROCE calculations of the Company and each entity in the ROCE Peer Group will be computed for each year and +then averaged for the entire three-year period. The entities in the ROCE Peer Group will be arranged (highest to lowest) by their +averaged Adjusted ROCE, excluding the Company. The Company’s percentile rank will be interpolated between the entity with +the next highest average Adjusted ROCE and the entity with the next lowest average Adjusted ROCE. The Company’s percentile +rank will then be used to determine the payout percentage of the target performance-based RSU by using the ROCE Ranking Matrix +set forth above. The chart below shows the Company’s Comparative ROCE rank for 2022, 2023, and 2024, resulting in an award +payout of 200% of target for the performance-based RSUs that were awarded to Named Executive Officers in January 2022 and vest +on April 1, 2025: +Year +Company +Adjusted ROCE Percentage +Ranking +of Company Adjusted ROCE against +ROCE +Peer Group +2022 +34.0% +3 +of 10 +2023 +42.9% +1 +of 10 +2024 +22.7% +1 +of 10 +3-year +average +33.2% +1 +of 10 +Employment, +Severance and Change in Control Agreements +The +Company has entered into a change in control agreement with each of Mr. Elliott and Mr. Gosney (the “ Change in Control +Agreements ”). No such change of control agreements have been entered into with the Company’s other Named Executive +Officers, as the value of the vested equity interests in the Company that such officers acquired prior to the time of the IPO +would likely provide adequate benefits in the event of a change in control transaction. +Each +Change in Control Agreement provides severance benefits in the event the executive officer’s employment is terminated without +cause or the executive officer resigns for good reason within 18 months following a change in control, as described in more detail +below under “ Potential Payments Upon Termination or Change in Control—Change in Control Agreements .” +The benefits provided to the executive officer in the Change in Control Agreements were primarily based on the recommendation +of the Compensation Consultant and Peer Group median data provided at the time the Change in Control Agreements were executed. +We +have not entered into any other employment, severance or change in control agreements with any of our Named Executive Officers. +Other +Compensation Elements +401(k) +Plan. We currently maintain a retirement plan intended to provide benefits under Section 401(k) of the Internal Revenue Code +of 1986, as amended (the “ Code ”) under which employees, including our Named Executive Officers, are allowed +to contribute portions of their base compensation to a tax-qualified retirement account under the Liberty Oilfield Services 401(k) +Savings Plan. We provide +25 +matching contributions at a rate of $1.00 for each $1.00 of employee contribution, subject to a cap of +the lower of (i) 6% of the employee’s salary and (ii) the applicable contribution limits under the Code. +Pension +and Nonqualified Deferred Compensation. We have not maintained, and do not currently maintain, a defined benefit pension plan +or nonqualified deferred compensation plan. +Perquisites +and Other Benefits . We provide limited perquisites to our Named Executive Officers. For example, none of our Named Executive +Officers receive car allowances. +Other +Compensation Policies +Anti-Hedging +and Pledging Policy. Our Insider Trading Policy (the “ Insider Trading Policy ”) generally prohibits our +directors, employees and officers from hedging and pledging of Company securities by providing that hedging or monetization transactions, +whether direct or indirect, involving the Company’s securities and the pledging of Company securities as collateral are +prohibited. Short term exceptions to this prohibition (such as temporary margin loans) may be granted depending on specific facts +and circumstances. Any exceptions to the Insider Trading Policy for our directors and officers must be granted by our Audit Committee +and will be periodically communicated to the Board. The Insider Trading Policy also prohibits transactions involving Company-based +derivative securities. While the Company is not subject to the Insider Trading Policy, the Company does not trade in its securities +when it is in possession of material nonpublic information except as may be pursuant to an appropriately adopted Rule 10b5-1 trading +plan. +Policies +and practices related to the grant of certain equity awards close in time to the release of material nonpublic information . +The Company does not currently grant stock options, stock appreciation rights, or similar option-like instruments. Accordingly, +the Company has no specific policy or practice on the timing of such awards in relation to the disclosure of material non-public +information by the Company. If in the future the Company determines to grant options, stock appreciation rights, or similar option-like +instruments, the Company intends to establish policies or practices regarding the timing of such awards in relation to the disclosure +of material non-public information, and the Board will evaluate the appropriate steps to take in relation to the foregoing. +Stock +Ownership Guidelines . We have implemented stock ownership guidelines for our executive officers and our directors who receive +compensation from us for Board service to foster equity ownership and align interests with our stockholders. Within five years +of the later of (a) the date of becoming an executive officer and (b) October 18, 2022, our Chief Executive Officer is expected +to own a number of shares with a value equal to six times of his base salary and all other executive officers are expected to +own a number of shares with a value equal to two times their base salary. Similarly, within five years of the later of (a) the +date a compensated director commences service with the Company in such position and (b) October 18, 2022, our compensated directors +are expected to own a number of shares with a value equal to five times their annual Board cash retainer. Shares that are owned +directly, indirectly (such as through a 401(k) plan or family trust) and shares issuable upon settlement of restricted stock units +(including the target number of shares to be issued under performance-based units) count towards meeting these ownership requirements. +In the event that an executive officer or compensated director fails to comply with these ownership guidelines following the end +of the applicable transition period and subject to certain exceptions, they are expected to retain not less than 50% of the number +of shares issued to him or her under our LTIP or similar future equity compensation plans, net of the number of shares applied +to the payment of taxes on such awards. Each of our executive officers and compensated directors was within the transition period +provided for in the stock ownership guidelines as of the Record Date; however as of the Record Date all of our executive officers +and directors, with the exception of Mr. Murti who was recently appointed to the Board in January 2025, were in compliance with +these guidelines even without the benefit of the transition period. +Risk +Assessment +The +Compensation Committee reviewed our employee compensation practices and policies and determined that such policies do not encourage +excessive or unnecessary risk-taking and are not likely to have a material adverse effect on the Company. Furthermore, the Board +and Compensation Committee recently adopted our compensation recovery policy to further enhance integrity and accountability in +relation to the Company’s compensation philosophy. +26 +COMPENSATION +COMMITTEE REPORT +The +information contained in this Compensation Committee Report shall not be deemed to be “soliciting material” or to +be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the +Securities Act of 1933, as amended (the “ Securities Act ”), or the Exchange Act, except to the extent that the +Company specifically incorporates such information by reference in such filing. +The +Compensation Committee reviewed and discussed the Compensation Discussion & Analysis required by Item 402 of Regulation S-K +promulgated by the SEC with management of the Company, and, based on such review and discussions, the Compensation Committee recommended +to the Board that such Compensation Discussion & Analysis be included in this Proxy Statement and incorporated by reference +into the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024. +Compensation +Committee of the Board of Directors: +Peter +A. Dea (Chair) +Ken +Babcock +James +R. McDonald +Cary +D. Steinbeck +27 +EXECUTIVE +COMPENSATION TABLES +Summary +Compensation Table +The +following table summarizes the compensation awarded to, earned by or paid to our Principal Executive Officer (“PEO”), +Principal Financial Officer, and other Named Executive Officers for the fiscal years ended December 31, 2024, 2023, 2022. +Name +& Principal Position +Year +Salary(7) +($) +Bonus +($) (1) +Stock +Awards +($) (2) +Non-Equity +Incentive Plan +Compensation +($) (1) +All +Other +Compensation +($) (3) +Total +($) +Christopher +A. Wright +Chairman of the Board & +Chief Executive Officer(4) +2024 +696,039 +214,000 +3,832,639 +1,070,803 +23,008 +5,836,488 +2023 +638,231 +300,000 +3,590,569 +1,078,500 +20,800 +5,628,100 +2022 +612,000 +360,000 +3,406,258 +1,350,927 +18,300 +5,747,485 +Michael +Stock +Chief Financial Officer & Treasurer +2024 +463,038 +124,200 +1,718,213 +621,466 +22,486 +2,949,403 +2023 +424,923 +174,000 +1,609,575 +625,530 +20,800 +2,854,828 +2022 +408,000 +200,000 +1,526,949 +750,515 +18,300 +2,903,764 +Ron +Gusek +President(5) +2024 +512,423 +134,800 +1,718,213 +674,506 +22,597 +3,062,538 +2023 +469,462 +189,000 +1,609,575 +679,455 +20,800 +2,968,292 +2022 +443,538 +220,000 +1,526,949 +825,567 +18,300 +3,034,354 +R. +Sean Elliott +Chief Legal Officer & Corporate Secretary +2024 +454,731 +96,400 +1,063,656 +482,362 +22,468 +2,119,616 +2023 +416,923 +135,000 +996,456 +485,325 +20,800 +2,054,504 +2022 +394,954 +150,000 +945,531 +562,886 +18,300 +2,071,671 +Ryan +T. Gosney +Chief Accounting Officer(6) +2024 +341,269 +77,000 +689,492 +385,289 +22,214 +1,515,264 +2023 +312,692 +105,000 +619,062 +377,475 +20,800 +1,435,029 +2022 +296,215 +120,000 +587,291 +450,309 +5,891 +1,459,706 +(1) The +amounts reported in the “Non-Equity Incentive Plan Compensation” column reflect +the portion of the annual incentive payouts related to achievement of the Company-wide +performance metrics. The portion of the annual incentive payouts related to the discretionary +component are reported in the “Bonus” column. +(2) The +amounts shown do not reflect compensation actually received by the Named Executive Officer. +Rather, amounts set forth in the “Stock Awards” column represent the aggregate +grant date fair value of time-based and performance-based restricted stock unit awards +computed in accordance with FASB ASC Topic 718 for financial statement reporting purposes +by the Company with respect to restricted stock units. A discussion of the assumptions +used in this valuation with respect to awards made in fiscal year 2024 may be found in +Note 10 to the Company’s financial statements contained in the Company’s +Annual Report on Form 10-K for the year ended December 31, 2024. Performance-based awards +are included based on the assumption that they will vest at 100% of the target award, +since actual vesting will not be determined until the end of the performance period. +(3) For +the Named Executive Officers, amounts reported in the “All Other Compensation” +column for 2024 reflect discretionary matching contributions earned by each Named Executive +Officer pursuant to the Company’s 401(k) plan. Additionally, this column includes +a $750 holiday bonus that was paid in an equal amount to all Company employees. +(4) Mr. +Wright resigned as Chairman of the Board and Chief Executive Officer effective February +3, 2025 in connection with his confirmation as Secretary of the United States Department +of Energy as previously disclosed in the Company’s Current Report on Form 8-K filed +on November 19, 2024. +(5) Mr. +Gusek was appointed Chief Executive Officer effective February 3, 2025 in connection +with the resignation of Mr. Wright as described in the above footnote. +(6) Mr. +Gosney was additionally appointed Vice President of Finance effective January 22, 2025. +(7) Salary +for 2024 reflects an additional pay period during the year due to the timing of the bi-weekly +payroll calendar. +28 +Grants +of Plan-Based Awards +The +following table provides information for each of our Named Executive Officers regarding plan-based awards granted during fiscal +year 2024. +Estimated +Future Payouts Under Non-Equity Incentive Plan Awards (1) +Estimated +Future Payouts Under Equity Incentive Plan Awards (2) +All +Other Stock Awards: Number of Shares of Stock or +Grant +Date Fair Value of Stock +Name +Grant +Date +Threshold +($) +Target +($) +Maximum +($) +Threshold +(#) +Target +(#) +Maximum +(#) +Units +(#) (3) +Awards +($) (4) +Christopher +A. Wright +428,000 +856,000 +1,712,000 +1/22/2024 +55,321 +110,642 +221,284 +1,916,319 +1/22/2024 +110,642 +1,916,319 +Michael Stock +248,400 +496,800 +993,600 +1/22/2024 +24,801 +49,602 +99,204 +859,107 +1/22/2024 +49,602 +859,107 +Ron Gusek +269,600 +539,200 +1,078,400 +1/22/2024 +24,801 +49,602 +99,204 +859,107 +1/22/2024 +49,602 +859,107 +R. Sean Elliott +192,800 +385,600 +771,200 +1/22/2024 +10,133 +20,266 +40,532 +351,007 +1/22/2024 +41,146 +712,649 +Ryan T. Gosney +154,000 +308,000 +616,000 +1/22/2024 +6,569 +13,137 +26,274 +227,533 +1/22/2024 +26,672 +461,959 +(1) +The +amounts shown in these columns reflect the potential threshold, target and maximum payouts +with respect to the performance-based financial metrics approved under the 2024 annual +incentive awards. The amounts reflected herein do not include amounts that may be earned +with respect to the discretionary component of the 2024 annual incentive awards. +(2) The +amounts shown in these columns reflect the potential threshold, target and maximum number +of performance-based RSU awards granted to the Named Executive Officers during fiscal +year 2024. +(3) The +amounts shown in this column reflect time-based vesting RSU awards granted to the Named +Executive Officers during fiscal year 2024. +(4) The +amounts shown in this column do not reflect compensation actually received by the Named +Executive Officer. Rather, amounts set forth herein represent the aggregate grant date +fair value of time-based and performance-based RSUs computed in accordance with FASB +ASC Topic 718 for financial statement reporting purposes in fiscal year 2024 by the Company. +A discussion of the assumptions used in this valuation with respect to awards made in +fiscal year 2024 may be found in Note 10 to the Company’s financial statements +contained in the Company’s Annual Report on Form 10-K for the year ended December +31, 2024. +29 +Outstanding +Equity Awards at Fiscal Year-End +The +following table reflects information regarding outstanding equity-based awards held by our Named Executive Officers as of December +31, 2024, which consist of time-based RSU awards and performance-based RSU awards. +Stock +Awards +Name +Number +of Shares or Units of Stock That Have Not Vested (#) +Market +Value of Shares or Units of Stock That Have Not Vested ($) (4) +Equity +Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) +Equity +Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) (8) +Christopher +A. Wright(9) +45,857 +(1) +912,096 +76,526 +(2) +1,522,102 +110,642 +(3) +2,200,669 +275,142 +(5) +5,472,574 +229,576 +(6) +4,566,267 +221,284 +(7) +4,401,339 +Michael +Stock +20,557 +(1) +408,879 +34,305 +(2) +682,326 +49,602 +(3) +986,584 +123,340 +(5) +2,453,233 +102,914 +(6) +2,046,959 +99,204 +(7) +1,973,168 +Ron +Gusek +20,557 +(1) +408,879 +34,305 +(2) +682,326 +49,602 +(3) +986,584 +123,340 +(5) +2,453,233 +102,914 +(6) +2,046,959 +99,204 +(7) +1,973,168 +R. +Sean Elliott +17,058 +(1) +339,284 +28,458 +(2) +566,030 +41,146 +(3) +818,394 +50,408 +(5) +1,002,615 +42,050 +(6) +836,375 +40,532 +(7) +806,181 +Ryan +T. Gosney +10,595 +(1) +210,735 +17,680 +(2) +351,655 +26,672 +(3) +530,506 +31,310 +(5) +622,756 +26,124 +(6) +519,606 +26,274 +(7) +522,590 +(1) These +RSUs granted on January 18, 2022 vest on April 1, 2025, so long as the applicable Named +Executive Officer remains employed through such date. +(2) These +RSUs granted on February 8, 2023 vest in one-half increments on each of April 1, 2025 +and April 1, 2026, so long as the applicable Named Executive Officer remains employed +through such dates. +(3) These +RSUs granted on January 22, 2024 vest in one-third increments on each of April 1, 2025, +April 1, 2026 and April 1, 2027, so long as the applicable Named Executive Officer remains +employed through such dates. +(4) Amounts +in this column reflect the value of unvested time-based RSU awards held by the Named +Executive Officers, calculated based on the closing price of our Class A Common Stock +on December 31, 2024 of $19.89. +(5) These +performance-based RSUs granted on January 18, 2022 will vest on April 1, 2025, subject +to achievement of the Comparative ROCE performance metrics and the applicable Named Executive +Officer’s continued employment through such date. As of December 31, 2024, the +performance-based RSUs granted on January 18, 2022 were trending above target, and in +accordance with the SEC rules, are reflected in this table at maximum, therefore, the +performance-based RSUs may actually vest at a lower amount than reflected in this column. +30 +(6) These +performance-based RSUs granted on February 8, 2023 will vest on April 1, 2026, subject +to achievement of the Comparative ROCE performance metrics and the applicable Named Executive +Officer’s continued employment through such date. As of December 31, 2024, the +performance-based RSUs granted on February 8, 2023 were trending above target, and in +accordance with the SEC rules, are reflected in this table at maximum, therefore, the +performance-based RSUs may actually vest at a lower amount than reflected in this column. +(7) These +performance-based RSUs granted on January 22, 2024 will vest on April 1, 2027, subject +to achievement of the Comparative ROCE performance metrics and the applicable Named Executive +Officer’s continued employment through such date. As of December 31, 2024, the +performance-based RSUs granted on January 22, 2024 were trending above target, and in +accordance with the SEC rules, are reflected in this table at maximum, therefore, the +performance-based RSUs may actually vest at a lower amount than reflected in this column. +(8) Amounts +in this column reflect the value of unvested performance-based RSU awards held by the +Named Executive Officers reported in the preceding column calculated based on the closing +price of our Class A Common Stock on December 31, 2024 of $19.89. +(9) Mr. +Wright resigned as Chairman of the Board and Chief Executive Officer effective February +3, 2025 in connection with his confirmation as Secretary of the United States Department +of Energy as previously disclosed in the Company’s Current Report on Form 8-K filed +on November 19, 2024. Also effective February 3, 2025, all unvested equity awards previously +awarded to Mr. Wright became vested pursuant to our Compensation Committee’s authorization +as previously disclosed in our Current Report on Form 8-K filed on January 22, 2025. +Option +Exercises and Stock Vested +The +following table reflects the value received by each Named Executive Officer on the vesting of time-based and performance-based +RSUs during fiscal year 2024, which performance-based RSUs vested at approximately 178% of target. None of our Named Executive +Officers held stock option awards during fiscal year 2024. +Stock +Awards +Name +Number +of Shares Acquired on Vesting +(#) +Value +Realized on Vesting +($) (1) +Christopher +A. Wright +393,513 +8,251,968 +Michael Stock +175,217 +3,674,299 +Ron Gusek +175,217 +3,674,299 +R. Sean Elliott +181,128 +3,798,261 +Ryan T. Gosney +111,382 +2,335,681 +(1) The +amounts in this column reflect the value of the shares in the preceding column based +on the closing price of our Class A Common Stock of $20.97 on April 1, 2024, the applicable +vesting date, including the value of any shares withheld for tax withholding purposes. +Pension +Benefits and Nonqualified Deferred Compensation +We +do not maintain and our Named Executive Officers do not participate in any defined benefit pension plan or nonqualified deferred +compensation plan. +Potential +Payments Upon Termination or Change in Control +Change +in Control Agreements +The +Company has entered into Change in Control Agreements with each of Mr. Elliott and Mr. Gosney. For further detail on the Company’s +decision to enter into Change in Control Agreements with these Named Executive Officers, see the section titled “ Employment, +Severance and Change in Control Agreements ” contained in the Compensation Discussion & Analysis section set forth +herein. Each Change in Control Agreement provides that if the Named Executive Officer’s employment is terminated without +“cause” or the Named Executive Officer resigns for “good reason” within 18 months following a “change +in control,” the Named Executive Officer will be entitled to receive, subject to such Named Executive Officer’s timely +execution and non-revocation of a release of claims in favor of the Company: (i) two times the sum of (a) the Named Executive +Officer’s annualized base salary for the year in which the termination occurs (or, if greater, that in effect immediately +preceding the change in control) plus (b) an amount equal to the higher of (1) the Named Executive Officer’s target annual +bonus for year in which the termination occurs or (2) the average of the Named Executive Officer’s target annual bonus for +the three most recently completed calendar years; (ii) a pro-rated portion of the Named Executive Officer’s target annual +bonus for the calendar year in which the termination occurs; (iii) reimbursement for a portion of the COBRA premiums paid by the +executive for continued coverage under the Company’s group health plans for up to 18 months plus a lump sum cash payment +equal to six times such monthly amount; and (iv) vesting of all outstanding time-based and performance-based equity awards granted +pursuant to any Company long term incentive plan as of the date of termination, with such performance-based equity awards being +vested at the higher of target performance or actual performance through the termination date. +31 +For +purposes of the Change in Control Agreements, the following terms generally have the meanings set forth below: +* “ Cause ” +generally means the Named Executive Officer’s (i) material breach of the Change +in Control Agreement or any other agreement with the Company, (ii) material breach of +any policy or code of conduct, (iii) violation of any law applicable to the workplace +or employment relationship that is materially injurious to the Company, (iv) gross negligence, +willful misconduct or willful breach of fiduciary duty, fraud, theft or embezzlement, +(v) conviction or indictment, or plea of nolo contendere, to any felony or conviction +or plea of nolo contendere to any crime involving moral turpitude, or (vi) willful failure +or refusal to substantially perform such Named Executive Officer’s obligations +or to follow in any material respect any specific lawful direction from the Company. +Clauses (i), (ii), (iii) and (vi) are subject to certain notice and cure rights. +* “ Change +in Control ” generally means (i) a change in the ownership of the Company, (ii) +a change in the effective control of the Company, or (iii) a change in the ownership +of a substantial portion of the Company’s assets, in each case, as such phrases +are defined under the Treasury regulations promulgated pursuant to Section 409A of the +Code. +* “ Good +Reason ” generally means (i) a material diminution in the Named Executive Officer’s +total cash compensation, (ii) a material diminution in the Named Executive Officer’s +authority, duties or responsibilities as a whole, (iii) a geographic relocation by more +than 50 miles, (iv) a material breach by the Company of the Change in Control Agreement +or any other agreement between the Named Executive Officer and the Company, or (v) a +failure to timely pay or provide any material payment, benefit or other consideration +or compensation owed to the Named Executive Officer, in each case, subject to certain +notice and cure rights. +RSU +Awards +The +RSUs held by our Named Executive Officers under the LTIP will accelerate and become 100% vested upon a termination of the Named +Executive Officer’s employment with the Company due to the Named Executive Officer’s death or “disability.” +For RSUs that use performance-based vesting, the award will remain outstanding and eligible to be earned based on the Company’s +achievement of the applicable performance metrics at the end of the performance period. For purposes of the RSU awards, “disability” +means the Named Executive Officer’s inability to perform his duties, after accounting for reasonable accommodation, due +to a mental or physical impairment that continues (or can reasonably be expected to continue) for (i) 90 consecutive days or (ii) +180 days out of any 365-day period, which, in either case, shall only be deemed to occur following the written determination by +the Company of any such occurrence of disability. +32 +The +table below describes and estimates the amounts and benefits each Named Executive Officer would have been eligible to receive +upon a termination of his employment in certain circumstances or a change in control, assuming such events occurred as of December +31, 2024, the last day of fiscal year 2024. The estimated payments are not necessarily indicative of the actual amounts such executive +would have received in such circumstances, as such amounts could not be known with certainty until the applicable event occurred. +The table excludes compensation amounts accrued through December 31, 2024 that would be paid in the normal course of continued +employment, such as accrued but unpaid salary and vested account balances under our retirement plans that are generally available +to all of our salaried employees. Where applicable, the information in the table uses a price per share for our Common Stock of +$19.89, the closing price on December 31, 2024 (the “ Year-End Closing Price ”). Generally, payment of severance +benefits to a Named Executive Officer following termination of employment is subject to such officer’s timely execution +and non-revocation of a release of claims in favor of the Company. +Name +Change +in +Control ($) +Death/ +Disability ($) +Termination +without Cause or Resignation for Good Reason on or within 18 Months Following a Change in Control ($) +Christopher A. Wright +Equity +Award Acceleration (1)(4) +— +19,075,047 +— +Michael Stock +Equity +Award Acceleration (1) +— +8,551,149 +— +Ron Gusek +Equity +Award Acceleration (1) +— +8,551,149 +— +R. Sean Elliott +Cash +Severance (2) +— +— +2,328,000 +Benefit +Continuation (3) +— +— +27,141 +Equity +Award Acceleration (1) +— +4,368,879 +4,368,879 +Ryan Gosney +Cash +Severance (2) +— +— +1,817,000 +Benefit +Continuation (3) +— +— +27,188 +Equity +Award Acceleration (1) +— +2,757,848 +2,757,848 +(1) The +amounts reported in these rows reflect the value of time-based RSU and performance-based +RSU awards that would accelerate in connection with the applicable event, calculated +based on the Year-End Closing Price. For purposes of the performance-based RSUs granted +in 2022, 2023 and 2024 these amounts reflect an assumed achievement of maximum performance, +as the performance-based RSUs were trending above target as of December 31, 2024. +(2) The +amounts reported in these rows reflect the full amount of each Named Executive Officer’s +target annual incentive award for 2024, as the pro-ration provided for under the Change +in Control Agreements would result in the full amount of such target annual incentive +awards being payable as of December 31, 2024 +(3) The +amounts reported in these rows are calculated based on the premiums in effect as of December +2024, which are assumed for purposes of this table to remain the same throughout the +applicable benefit reimbursement period. +(4) Mr. +Wright resigned as Chairman of the Board and Chief Executive Officer effective February +3, 2025 in connection with his confirmation as Secretary of the United States Department +of Energy as previously disclosed in the Company’s Current Report on Form 8-K filed +on November 19, 2024. Also effective February 3, 2025, all unvested equity awards previously +awarded to Mr. Wright became vested pursuant to our Compensation Committee’s authorization +as previously disclosed in our Current Report on Form 8-K filed on January 22, 2025. +33 +DIRECTOR +COMPENSATION +We +have adopted a non-employee director compensation program that is applicable to each of our non-employee directors. The Compensation +Consultant also conducted an analysis of market-competitive total director compensation (annual retainers, meeting fees and equity +awards) using our Peer Group as a comparative metric. Pursuant to this program, during 2024 each non-employee director was entitled +to receive the following compensation for their service on our Board: +* A +cash retainer of $100,000 per year, payable quarterly in arrears; +* An +additional annual cash retainer of $10,000 for serving as a member of our Audit Committee +or $20,000 for serving as the chairperson of our Audit Committee, in each case payable +quarterly in arrears; +* An +additional annual cash retainer of $7,500 for serving as a member of our Compensation +Committee or $15,000 for serving as the chairperson of our Compensation Committee, in +each case payable quarterly in arrears; +* An +additional cash retainer of $5,000 for serving as a member of our Nominating and Governance +Committee or $10,000 for serving as the chairperson of our Nominating and Governance +Committee, in each case payable quarterly in arrears; +* An +additional annual cash retainer of $20,000 for serving as the Lead Director of the Company, +payable quarterly in arrears; and +* Either: +(a) annual +equity-based compensation in the form of RSUs with an aggregate grant date value of $175,000, +subject to the terms of the LTIP and the award agreement pursuant to which such award +is granted. The award shall be subject to a 12-month vesting period, unless otherwise +determined by the Board. The annual grant is automatically made on January 2nd of each +year, using the 30-day average closing price of the Company’s Class A Common Stock +prior to the date of grant to determine the number of units to be granted; +(b) an +additional cash payment of $100,000 per year, payable quarterly in arrears; or +(c) a +charitable cash donation by the Company of $100,000 per year, payable quarterly in arrears, +to an organization designated by the director and that is qualified under Section 501(c)(3) +of the Internal Revenue Code, provided that the organization must be independent of the +director and reasonably acceptable to the Compensation Committee. +Effective +as of January 1, 2025, our non-employee director compensation program was updated to add compensation for serving as the non-executive +Chairman consisting of an annual cash retainer of $60,000 and RSUs with a grant date value of $75,000 on the same terms and conditions +set forth in paragraph (a) above. These changes were made by the Compensation Committee and ratified by the Board in January 2025 +in response to a recommendation from the Compensation Consultant to align with marketplace practices where the chairperson of +the board is independent and not also an employee of the company. +Each +non-employee director is given an opportunity to elect whether they would like to receive item (a), (b) or (c) above prior to +the beginning of each year. If a non-employee director joins the Board or otherwise becomes eligible for director compensation +during the course of a calendar year, the director will be allowed to make such election upon joining or becoming eligible. If +a non-employee director joins the Board during the course of a calendar year, the director will be entitled to receive a prorated +RSU award (if so elected) for that year, which shall vest over the remaining portion of the year, unless otherwise determined +by the Board. All annual cash payments, including the charitable cash contribution option if elected, shall be prorated for partial +years of service or eligibility. +In +addition, each non-employee director is reimbursed for out-of-pocket expenses incurred in connection with attending Board and +committee meetings. +34 +The +table below sets forth the compensation our non-employee directors earned for their service for the fiscal year ended December +31, 2024. +Name +Fees +Earned or +Paid +in Cash ($) +Stock +Awards ($) (1) +All +Other +Compensation +($) +Total +($) +Simon +Ayat +110,000 +168,688 +— +278,688 +Ken +Babcock +107,500 +168,688 +— +276,188 +Peter +A. Dea +120,000 +168,688 +— +288,688 +William +F. Kimble +145,000 +168,688 +— +313,688 +James +R. McDonald +— +— +100,000 +(2) +100,000 +(2) +Gale +A. Norton +120,000 +168,688 +— +288,688 +Audrey +Robertson +100,000 +168,688 +— +268,688 +Cary +D. Steinbeck +117,500 +168,688 +— +286,188 +(1) The +amounts shown do not reflect compensation actually received by the directors. Rather, +amounts set forth in the Stock Awards column represent the aggregate grant date fair +value of awards computed in accordance with FASB ASC Topic 718 for financial statement +reporting purposes in fiscal year 2024 by the Company with respect to restricted stock +units. A discussion of the assumptions used in this valuation with respect to awards +made in fiscal year 2024 may be found in Note 10 to the Company’s financial statements +contained in the Company’s Annual Report on Form 10-K for the year ended December +31, 2024. As of December 31, 2024, Messrs. Ayat, Babcock, Dea, Kimble and Steinbeck and +Ms. Norton and Ms. Robertson each held 9,289 unvested RSUs. +(2) The +Company has agreed to make up to $100,000 in charitable donations to organizations designated +by Mr. McDonald in connection with his 2024 Board service. As of February 19, 2025, no +donations have been designated and therefore no payments have been made by us. +35 +EQUITY +COMPENSATION PLAN INFORMATION +The +following table sets forth information about our Class A Common Stock that may be issued under the LTIP as of December 31, 2024: +Plan +Category +Number +of defined securities to be issued upon exercise of outstanding options, warrants and rights (a) +Weighted–average +exercise price of outstanding options, warrants and rights (b) (2) +Number +of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column +(a)) +(c) (3) +December +31, 2024 (1) +December +31, 2024 +December +31, 2024 +Equity +compensation plans approved by security holders +5,152,286 +— +10,411,081 +Equity +compensation plans not approved by security holders +— +— +— +Total +5,152,286 +— +10,411,081 +(1) This +column reflects shares of our Class A Common Stock subject to RSU awards granted under +the LTIP outstanding and unvested as of the December 31, 2024. The performance-based +RSUs granted under the LTIP are reflected based on an achievement of maximum performance. +No stock options or warrants have been granted under the LTIP. +(2) No +stock options have been granted under the LTIP, and the RSU awards reflected in column +(a) are not reflected in this column as they do not have an exercise price. +(3) This +column reflects the total number of shares of Class A Common Stock remaining available +for issuance under the LTIP. +Our +only equity compensation plan is the LTIP. The LTIP was approved by our stockholders at the 2024 annual meeting. Please read Note +10 to the Company’s financial statements contained in the Company’s Annual Report on Form 10-K for the year ended +December 31, 2024 for a description of our equity compensation plan. In addition, a detailed description of the terms of the LTIP +is available in our Definitive Proxy Statement on Schedule 14A filed on March 7, 2024 under the discussion of Proposal 4 therein. +36 +CEO +PAY RATIO +As +required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, +we are providing the following information about the relationship of the annual total compensation of our employees and the annual +total compensation of Christopher A. Wright, our former Chief Executive Officer (our “ CEO ”). +For +2024, our last completed fiscal year: +* The +total compensation of our median employee was $128,549 calculated using the same methodology +used to determine pay for our CEO in the Summary Compensation Table included above; and +* The +total compensation of our CEO, as reported in the Summary Compensation Table included +above, was $5,836,488. +* Based +on this information, for 2024 the ratio of the total compensation of our CEO to the median +employee total compensation was reasonably estimated to be 45 to 1. +The +pay ratio set forth above is a reasonable estimate calculated in a manner consistent with SEC rules based on our human resources +systems of record and the methodology described below. Because the SEC rules for identifying the median employee and calculating +the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to +apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices, the pay +ratio reported by other companies may not be comparable to the pay ratio that we report above, as other companies may have different +employment and compensation practices, different types of workforce, and operate in different countries, and may use different +methodologies, exclusions, estimates and assumptions in calculating their own pay ratios. To identity the median of the annual +total compensation of all our employees, as well as to determine the annual total compensation of our median employee and our +CEO, we took the following steps: +✓ We +determined that, as of December 21, 2024, our employee population excluding our CEO consisted +of approximately 5,700 individuals with all of these individuals located in the United +States and Canada. This population consisted of our full-time, part-time and temporary +employees who received Company benefits, as we do not have seasonal workers. We selected +December 21, 2024 as our identification date for determining our median employee because +it enabled us to make such identification in a reasonably efficient and economic manner, +as this is the date of the last period worked during the year for which payment was made +to employees in 2024. +✓ We +used a consistently applied compensation measure to identify our median employee by comparing +the amount of compensation as reported to the Internal Revenue Service on Form W-2 for +2024 for US employees and the amount of compensation as reported to the Canadian Revenue +Agency on T4 Statement of Renumeration Paid for 2024 for Canadian employees. +✓ We +identified our median employee by consistently applying this compensation measure to +all of our employees included in our analysis. Since all of our employees, including +our CEO, are located in the United States and Canada, we did not make any cost of living +adjustments in identifying the median employee. Our median employee for 2024 was a fulltime, +salaried employee working as an equipment operator with annual compensation of $112,897 +set forth on such employee’s Form W-2 for 2024. +✓ After +we identified our median employee, we combined all of the elements of such employee’s +compensation for the 2024 year in accordance with the requirements of Item 402(c)(2)(x) +of Regulation S-K, resulting in annual total compensation of $128,549. The differences +between such employee’s taxable compensation reported on Form W-2 for 2024 of $112,897 +and the employee’s annual total compensation calculated pursuant to Regulation +S-K include the following adjustments: (i) modification from bonuses paid during 2024 +to bonuses earned during 2024, if needed, (ii) addition of contributions made by the +employee and by the Company on the employee’s behalf to our 401(k) plan for 2024, +if any, (iii) addition of the costs of tax deductible employee group health plan premiums +and employee contributions to tax deductible flexible spending accounts, if any and (iv) +subtraction of other taxable compensation including compensation for provided housing +or transportation and that attributable to group term life, short-term and long-term +disability benefits, if applicable. +✓ With +respect to the annual total compensation of our CEO, we used the amount reported in the +“Total” column of our 2024 Summary Compensation Table included in this Proxy +Statement and incorporated by reference under Item 11 of Part III of our Annual Report +on Form 10-K for the year ended December 31, 2024. +37 +PAY +VERSUS PERFORMANCE +Pay +Versus Performance Table for 2024 +Summary +Compensation +Compensation +Average +Summary +Compensation +Table +Total for +Average +Summary +Compensation +Actually +Paid to +Value +of Initial Fixed $100 +Investment +Based On: +Net +Income +(Loss) +(in +Table +Total for +Actually +Paid to +Non-PEO +NEOs +Non-PEO +NEOs +Company +Peer +Group +Thousands) +Adjusted +Year +PEO +($) (1) +PEO +($) (2) +($) (3) +($) (4) +TSR +($) +TSR +($) (5) +($) (6) +ROCE (7) +2024 +5,836,488 +10,045,829 +2,411,705 +3,805,434 +188.06 +101.68 +316,010 +19.6 +% +2023 +5,628,100 +9,819,996 +2,328,163 +3,919,083 +169.06 +115.11 +556,317 +42.9 +% +2022 +5,747,485 +12,201,790 +2,367,374 +4,567,954 +147.11 +112.94 +399,602 +34.0 +% +2021 +4,611,372 +3,946,524 +2,028,596 +1,738,700 +88.85 +69.94 +( 179,244 +) +- 10.3 +% +2020 +3,310,114 +2,493,998 +1,218,682 +909,552 +94.44 +57.93 +( 115,583 +) +- 13.9 +% +(1) +The +dollar amounts reported are the amounts of total compensation reported for Christopher +A. Wright (our former Chairman and CEO) for each corresponding year in the “Total” +column of the Summary Compensation Table provided above. +(2) The +dollar amounts reported represent the amount of “compensation actually paid” +to Mr. Wright, as computed in accordance with Item 402(v) of SEC Regulation S-K. The +dollar amounts reported do not reflect the actual amount of compensation earned by or +paid to Mr. Wright during the applicable year. In accordance with the requirements of +Item 402(v) of SEC Regulation S-K, the following adjustments were made to Mr. Wright’s +total compensation for each year to determine the compensation actually paid to Mr. Wright: +(3) +The +dollar amounts reported represent the average of the amounts reported for our NEOs as +a group (excluding Mr. Wright) in the “Total” column of the Summary Compensation +Table provided above. The NEOs (excluding Mr. Wright) included for purposes of calculating +the average amounts in each applicable year are Messrs. Stock, Gusek, Elliott and Gosney. +(4) The +dollar amounts reported represent the average amount of “compensation actually +paid” to the NEOs as a group (excluding Mr. Wright), as computed in accordance +with Item 402(v) of SEC Regulation S-K. The NEOs (excluding Mr. Wright) included for +purposes of calculating the average amounts in each applicable year are Messrs. Stock, +Gusek, Elliott and Gosney. The dollar amounts reported do not reflect the actual average +amount of compensation earned by or paid to the NEOs as a group (excluding Mr. Wright) +during the applicable year. In accordance with the requirements of Item 402(v) of SEC +Regulation S-K, the following adjustments were made to average total compensation for +the NEOs as a group (excluding Mr. Wright) for each year to determine the compensation +actually paid: +(5) The +peer group selected for each listed year consists of the OSX. We also use this peer group +for purposes of the Stock Performance Graph set forth in “Item 5 - Market for Registrant’s +Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities” +of our Annual Report on Form 10-K for the year ended December 31, 2024. +(6) The +dollar amounts reported represent the amount of net income (loss) (in thousands) attributable +to Liberty Energy Inc. in our audited consolidated financial statements for the applicable +year +(7) For +the year ended December 31, 2024, Adjusted ROCE is equal to the Company’s 2024 +income before taxes and loss (gain) on remeasurement of liability under tax receivable +agreements, divided by the simple average of capital (debt and equity) employed at the +beginning and end of the year. For the years ended December 31, 2020 to 2023, Adjusted +ROCE is equal to the Company’s income before taxes and loss (gain) on remeasurement +of liability under tax receivable agreements, plus interest expense and stock-based compensation +expense for the year, divided by the simple average of capital (debt and equity) employed +at the beginning and end of each year presented. We rank our Adjusted ROCE against those +of the ROCE Peer Group to determine Comparative ROCE, which is used as a metric to determine +a portion of annual incentive compensation and the vesting of performance-based RSU awards. +While we use numerous financial and non-financial performance measures for the purpose +of evaluating performance for our compensation programs, we have determined that our +Adjusted ROCE is the financial performance measure that, in our assessment, represents +the most important performance measure (that is not otherwise required to be disclosed +in this table) used by us to link compensation actually paid to our NEOs for the most +recently completed fiscal year, to our performance. +(1) +The +dollar amounts reported are the amounts of total compensation reported for Christopher +A. Wright (our former Chairman and CEO) for each corresponding year in the “Total” +column of the Summary Compensation Table provided above. +(2) The +dollar amounts reported represent the amount of “compensation actually paid” +to Mr. Wright, as computed in accordance with Item 402(v) of SEC Regulation S-K. The +dollar amounts reported do not reflect the actual amount of compensation earned by or +paid to Mr. Wright during the applicable year. In accordance with the requirements of +Item 402(v) of SEC Regulation S-K, the following adjustments were made to Mr. Wright’s +total compensation for each year to determine the compensation actually paid to Mr. Wright: +Year +Reported +Summary +Compensation +Table +Total for +PEO +($) +Deduct +Fair Value +of +Equity Awards +Reported +in +Summary +Compensation +Table +($) +Add +Year-End +Fair +Value of +Equity +Awards +Granted +in +Current +Year +($) +Add +(Deduct) +Change +in Fair +Value +at Year End +of +Unvested +Equity +Awards +Granted +in Prior +Years +($) +Add +(Deduct) +Change +in Fair +Value +of Equity +Awards +Vested in +Current +Year +($) +Compensation +Actually +Paid to +PEO +($) +2024 +5,836,488 +( 3,832,639 +) +4,401,339 +2,715,100 +925,541 +10,045,829 +2023 +5,628,100 +( 3,590,569 +) +4,164,509 +4,410,269 +( 792,313 +) +9,819,996 +2022 +5,747,485 +( 3,406,258 +) +4,405,023 +3,612,975 +1,842,565 +12,201,790 +2021 +4,611,372 +( 3,801,972 +) +2,841,227 +99,171 +196,725 +3,946,524 +2020 +3,310,114 +( 2,876,014 +) +3,082,298 +( 209,920 +) +( 812,480 +) +2,493,998 +(3) +The +dollar amounts reported represent the average of the amounts reported for our NEOs as +a group (excluding Mr. Wright) in the “Total” column of the Summary Compensation +Table provided above. The NEOs (excluding Mr. Wright) included for purposes of calculating +the average amounts in each applicable year are Messrs. Stock, Gusek, Elliott and Gosney. +(4) The +dollar amounts reported represent the average amount of “compensation actually +paid” to the NEOs as a group (excluding Mr. Wright), as computed in accordance +with Item 402(v) of SEC Regulation S-K. The NEOs (excluding Mr. Wright) included for +purposes of calculating the average amounts in each applicable year are Messrs. Stock, +Gusek, Elliott and Gosney. The dollar amounts reported do not reflect the actual average +amount of compensation earned by or paid to the NEOs as a group (excluding Mr. Wright) +during the applicable year. In accordance with the requirements of Item 402(v) of SEC +Regulation S-K, the following adjustments were made to average total compensation for +the NEOs as a group (excluding Mr. Wright) for each year to determine the compensation +actually paid: +38 +Year +Reported +Average +Summary +Compensation +Table +Total for Non- +PEO +NEOs +($) +Deduct +Fair Value +of +Equity Awards +Reported +in +Summary +Compensation +Table +($) +Add +Year-End +Fair +Value of +Equity +Awards +Granted +in +Current +Year +($) +Add +(Deduct) +Change +in Fair +Value +at Year End +of +Unvested +Equity +Awards +Granted +in Prior +Years +($) +Add +(Deduct) +Change +in Fair +Value +of Equity +Awards +Vested in +Current +Year +($) +Average +Compensation +Actually +Paid to +Non-PEO +NEOs +($) +2024 +2,411,705 +( 1,297,394 +) +1,489,905 +826,530 +374,687 +3,805,434 +2023 +2,328,163 +( 1,208,667 +) +1,401,868 +1,667,331 +( 269,613 +) +3,919,083 +2022 +2,367,374 +( 1,146,682 +) +1,482,906 +1,259,414 +604,943 +4,567,954 +2021 +2,028,596 +( 1,515,516 +) +1,132,550 +22,787 +70,282 +1,738,700 +2020 +1,218,682 +( 957,726 +) +1,026,420 +( 68,658 +) +( 309,165 +) +909,552 +(5) The +peer group selected for each listed year consists of the OSX. We also use this peer group +for purposes of the Stock Performance Graph set forth in “Item 5 - Market for Registrant’s +Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities” +of our Annual Report on Form 10-K for the year ended December 31, 2024. +(6) The +dollar amounts reported represent the amount of net income (loss) (in thousands) attributable +to Liberty Energy Inc. in our audited consolidated financial statements for the applicable +year +(7) For +the year ended December 31, 2024, Adjusted ROCE is equal to the Company’s 2024 +income before taxes and loss (gain) on remeasurement of liability under tax receivable +agreements, divided by the simple average of capital (debt and equity) employed at the +beginning and end of the year. For the years ended December 31, 2020 to 2023, Adjusted +ROCE is equal to the Company’s income before taxes and loss (gain) on remeasurement +of liability under tax receivable agreements, plus interest expense and stock-based compensation +expense for the year, divided by the simple average of capital (debt and equity) employed +at the beginning and end of each year presented. We rank our Adjusted ROCE against those +of the ROCE Peer Group to determine Comparative ROCE, which is used as a metric to determine +a portion of annual incentive compensation and the vesting of performance-based RSU awards. +While we use numerous financial and non-financial performance measures for the purpose +of evaluating performance for our compensation programs, we have determined that our +Adjusted ROCE is the financial performance measure that, in our assessment, represents +the most important performance measure (that is not otherwise required to be disclosed +in this table) used by us to link compensation actually paid to our NEOs for the most +recently completed fiscal year, to our performance. +Performance +Measures +The +most important financial performance measures that we use to link executive compensation actually paid to the NEOs for the most +recently completed fiscal year to our performance are Adjusted Pre-tax EPS , Adjusted ROCE , and Comparative ROCE , which performance +measures for the most recently completed fiscal year are defined in the footnotes to the table in “Compensation Discussion +and Analysis – Elements of Compensation – Annual Incentive Award” above. +Analysis +of Information in Pay Versus Performance Table +As +described in more detail in “Compensation Discussion and Analysis” above, our executive compensation program includes +variable components in the form of annual incentive compensation and long-term incentive awards. While we utilize several performance +measures to align executive compensation with our performance, all of those measures are not presented in the “Pay Versus +Performance Table for 2024.” Moreover, we generally seek to incentivize long-term performance and, therefore, do not specifically +align our performance measures with compensation that is actually paid (as computed in accordance with SEC regulations) for a +particular year. In accordance with SEC regulations, we are providing the following descriptions of the relationships between +information presented in the “Pay Versus Performance Table for 2024.” +39 +Compensation +Actually Paid and Cumulative TSR +As +demonstrated by the following graph, the amount of compensation actually paid to Mr. Wright and the average amount of compensation +actually paid to our NEOs as a group (excluding Mr. Wright) is generally aligned with our cumulative TSR over the three years +presented in the “ Pay Versus Performance Table for 2024.” The alignment of compensation actually paid with +our cumulative TSR over the period presented is because a significant portion of the compensation actually paid to our NEOs is +comprised of equity awards. +For +each of the three years presented in the “Pay Versus Performance Table for 2024,” our cumulative TSR exceeded that +of peers contained in the OSX stock index. The following table details our cumulative TSR in comparison to the OSX cumulative +TSR for each of the measurement periods (determined in accordance with SEC regulations). +40 +Compensation +Actually Paid and Net Income (Loss) +As +demonstrated by the following table, the amount of compensation actually paid to Mr. Wright and the average amount of compensation +actually paid to other NEOs as a group (excluding Mr. Wright) is generally aligned with our net income (loss) over the three years +presented in the “Pay Versus Performance Table for 2024.” While we do not use net income (loss) as a performance measure +in the overall executive compensation program, the measure of net income (loss) is correlated with the measures of Pre-Tax EPS +and ROCE, which we do use in setting goals for annual incentive compensation, and Comparative ROCE, which we use both in setting +goals for annual incentive compensation and the vesting of performance-based RSU awards. +Compensation +Actually Paid and Adjusted ROCE +As +demonstrated by the following table, the amount of compensation actually paid to Mr. Wright and the average amount of compensation +actually paid to our other NEOs as a group (excluding Mr. Wright) is generally aligned with our Adjusted ROCE over each of the +three years presented in the “ Pay Versus Performance Table for 2024.” +41 +PROPOSAL +2 — ADVISORY VOTE TO APPROVE THE COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS +Section +14A(a)(1) of the Exchange Act, which was added to the Exchange Act by Section 951 of the Dodd-Frank Act, affords the stockholders +a vote to approve, on a non-binding, advisory basis, the compensation of our Named Executive Officers for the fiscal year ended +December 31, 2024 (commonly known as a “ say-on-pay vote ”). This vote is not intended to address any specific +item of compensation and is not a vote on our general compensation policies, compensation of the Board, or our compensation policies +as they relate to risk management. Section 14A(a)(2) of the Exchange Act requires us to hold a say-on-pay vote at least once every +three years, although the Company currently holds this vote annually. +As +described more fully in the “ Compensation Discussion & Analysis ” section of this Proxy Statement and the +accompanying tabular and narrative disclosures, the Company’s compensation policy is designed to attract and retain highly +qualified executive officers. The Company’s compensation program seeks to align executive compensation with stockholder +value on an annual and long-term basis through a combination of base pay, annual incentives, and certain long-term incentives. +Please read the Compensation Discussion & Analysis section of this Proxy Statement for additional details on our executive +compensation program. +The +Board strongly endorses the Company’s executive compensation program and recommends that the stockholders approve on an +advisory, non-binding basis, the following resolution: +RESOLVED, +that the stockholders approve, on an advisory basis, the compensation of the Company’s Named Executive Officers as described +in the proxy statement, including the Compensation Discussion & Analysis, and the compensation tables and related narrative +disclosure contained therein. +Vote +Required +Your +votes with respect to the approval of Proposal 2 are advisory, which means the results of such votes are not binding on us, the +Board and the committees of the Board. Although non-binding, the Board and its committees value the opinions of our stockholders +and will review and consider the voting results when making future decisions regarding executive compensation. Because the advisory +vote on executive compensation occurs well after the beginning of the compensation year and because the different elements of +our executive compensation programs are designed to operate in an integrated manner and to complement one another, it may not +be appropriate or feasible to change our executive compensation programs in consideration of one year’s advisory vote on +executive compensation by the time of the following year’s annual meeting of stockholders. +The +approval, on a non-binding basis, of the compensation of our Named Executive Officers requires the affirmative vote of a majority +of the shares of Common Stock present in person or represented by proxy at the Annual Meeting and entitled to vote on the matter. +If you submit a signed proxy card but do not give voting instructions as to how your shares of Common Stock should be voted, your +shares will be voted in accordance with the recommendations of our Board stated in this Proxy Statement. Abstentions will have +the same effect as a vote “AGAINST” Proposal 2, and broker non-votes will not have any effect on the outcome of Proposal +2. +THE +BOARD RECOMMENDS VOTING “ FOR ” THE APPROVAL, ON AN ADVISORY BASIS, OF THE COMPENSATION OF THE COMPANY’S +NAMED EXECUTIVE OFFICERS. +42 +PROPOSAL +3 — RATIFICATION OF APPOINTMENT OF THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +The +Audit Committee has appointed Deloitte as the Company’s independent registered public accounting firm to audit the financial +statements of the Company for the fiscal year ending December 31, 2025. The audit of the Company’s consolidated financial +statements for the fiscal year ended December 31, 2024 was completed by Deloitte on February 6, 2025. Deloitte has acted as the +Company’s independent registered public accounting firm since 2016. +The +Board is submitting the appointment of Deloitte for ratification at the Annual Meeting. The submission of this matter for approval +by stockholders is not legally required, but the Board and the Audit Committee believe the submission provides an opportunity +for stockholders through their vote to communicate with the Board and the Audit Committee about an important aspect of corporate +governance. If the stockholders do not ratify the appointment of Deloitte, the Audit Committee will reconsider the appointment +of that firm as the Company’s independent registered public accounting firm. +The +Audit Committee has the sole authority and responsibility to retain, evaluate and replace the Company’s independent auditors, +and stockholder ratification of this appointment does not limit the authority of the Audit Committee to change auditors at any +time. Representatives of Deloitte are expected to be present at the Annual Meeting and will have an opportunity to make a statement +if they so desire and will be available to respond to appropriate questions. +The +following table summarizes the aggregate fees billed or expected to be billed by Deloitte for the fiscal years ended December +31, 2024 and 2023. +2024 +2023 +Audit +Fees (1) +$ +2,730,000 +$ +2,650,000 +Audit-Related +Fees (2) +30,000 +— +Tax +Fees (3) +89,513 +374,300 +All +Other Fees (4) +— +— +Total +Fees +$ +2,849,513 +$ +3,024,300 +(1) +Deloitte’s +audit fees related primarily to the integrated annual audit of the consolidated financial +statements for the fiscal year as included in our Annual Report on Form 10-K, which integrated +audit includes the audit of the effectiveness of internal controls over financial reporting, +quarterly reviews, and consultations relating to the audit and quarterly reviews. +(2) Deloitte’s +audit-related fees were in connection with the Company’s Registration Statement +on Form S-8 filed on May 17, 2024 and the auditor consent thereto. +(3) Deloitte’s +fees for tax services related primarily to professional services rendered by Deloitte +for tax compliance, tax advice and tax planning. +(4) Deloitte +did not provide any other products and services so no other fees were incurred. +Before +Deloitte is engaged to render audit or non-audit services, the Audit Committee must pre-approve the engagement. The charter of +the Audit Committee and its pre-approval policy provides that pre-approval is not required if the engagement is entered into pursuant +to pre-approval policies and procedures established by the Audit Committee. The Chairman of the Audit Committee has the authority +to grant pre-approvals, provided such approvals are within the pre-approval policy and presented to the Audit Committee at a subsequent +meeting. The Audit Committee pre-approved all of the fees described in the table set forth above. The duties of the Audit Committee +are described in the charter of the Audit Committee that can be found on the Company’s website, www.libertyenergy.com , +by first clicking “ Investors ” then “ Corporate Governance ” and proceeding to “ Governance +Documents .” +Vote +Required +The +affirmative vote of a majority of the shares of Common Stock present in person or represented by proxy at the Annual Meeting and +entitled to vote on the matter is required to approve Proposal 3. If you submit a signed proxy card but do not give voting instructions +as to how your shares of Common Stock should be voted, your shares will be voted in accordance with the recommendations of our +Board stated in this Proxy Statement. Abstentions will have the same effect as a vote “AGAINST” Proposal 3, and there +will be no broker non-votes with respect to Proposal 3. +THE +BOARD RECOMMENDS VOTING “ FOR ” THE RATIFICATION OF APPOINTMENT OF DELOITTE AS THE COMPANY’S INDEPENDENT +REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2025. +43 +AUDIT +COMMITTEE REPORT +The +information contained in this Audit Committee Report shall not be deemed to be “soliciting material” or to be “filed” +with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act or the Exchange +Act, except to the extent that the Company specifically incorporates such information by reference in such filing. +Primary +Oversight Responsibilities +Our +management is responsible for establishing a system of internal controls, assessing such controls and for preparing our consolidated +financial statements in accordance with generally accepted accounting principles. The Audit Committee provides oversight of these +management activities. Our independent registered public accounting firm is responsible for auditing our consolidated financial +statements in accordance with standards of the United Stated Public Company Accounting Oversight Board (the “ PCAOB ”) +and issuing its report based on its audit. +Under +the Audit Committee’s charter, the purpose of the Audit Committee is to assist the Board in fulfilling its oversight responsibilities +as to, among other duties: (i) the integrity of the Company’s financial statements; (ii) the Company’s compliance +with legal and regulatory requirements; (iii) qualifications, independence and performance of the independent registered public +accounting firm engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services +for the Company; (iv) effectiveness and performance of the Company’s internal audit function; (v) the annual preparation +of this report and publishing this report in the Company’s Proxy Statement for its annual meeting of stockholders or its +Annual Report on Form 10-K; and (vi) performing such other functions as the Board may assign to the Audit Committee from time +to time. +Oversight +of Independent Auditors +In +connection with the evaluation, appointment and retention of the independent registered public accounting firm, at least annually +the Audit Committee reviews and evaluates the independence and quality control procedures of the independent registered public +accounting firm and the experience and qualifications of its senior personnel providing audit services to the Company. In this +evaluation, the Audit Committee may consider, among other factors, the following with respect to the independent registered public +accounting firm: their historical and recent performance on our audit, the quality and candor of their communications with the +both the Audit Committee and management, the depth of expertise of their audit team and the value provided by their national office, +the appropriateness of their fees, how effectively they maintained their independence, their tenure as our independent auditors, +their knowledge of our operations, accounting policies and practices, and internal control over financial reporting, and external +data relating to audit quality and performance by them and their peer firms. Based on this overall evaluation, the Audit Committee +retained Deloitte as our independent registered public accounting firm for 2024. +2024 +Audited Financial Statements +In +connection with the preparation of the audited consolidated financial statements included in our Annual Report on Form 10-K for +the year ended December 31, 2024: +● The +Audit Committee reviewed and discussed the audited financial statements and associated +audit with the independent registered public accounting firm and management; +● The +Audit Committee discussed with the independent registered public accounting firm the +matters required to be discussed by Auditing Standard No. 1301 “Communications +with Audit Committees” as adopted by the PCAOB. In general, these auditing standards +require the independent registered public accounting firm to communicate to the Audit +Committee certain matters that are incidental to the audit, such as any initiation of, +or changes to, significant accounting policies, management judgments, accounting estimates +and audit adjustments; disagreements with management; the independent registered public +accounting firm’s judgment about the quality of our accounting principles; significant +audit risks identified and any changes from planned audit strategy; the use of specialists +on the audit team; and issues for which the independent registered public accounting +firm have consulted outside the engagement team; and +● The +Audit Committee has received the written disclosures and the letter from the independent +registered public accounting firm required by applicable requirements of the PCAOB regarding +the independent registered public accounting firm’s communication with the Audit +Committee concerning independence and has discussed the independent registered public +accounting firm’s independence with the independent registered public accounting +firm. The Audit Committee also considered whether the independent registered public accounting +firm’s provision of non-audit services to us was compatible with maintaining their +independence. +44 +Based +on the review and discussions noted above, the Audit Committee recommended to the Board that the audited consolidated financial +statements of the Company for the year ended December 31, 2024 be included in our Annual Report on Form 10-K filed with the SEC. +Audit +Committee of the Board of Directors: +William +F. Kimble (Chair) +Simon +Ayat +Gale +A. Norton +Cary +D. Steinbeck +45 +PROPOSAL +4 — ADVISORY VOTE TO DETERMINE THE FREQUENCY OF FUTURE ADVISORY VOTES TO APPROVE THE COMPENSATION OF THE COMPANY’S +NAMED EXECUTIVE OFFICERS +As +described in Proposal 2 above, Section 14A of the Exchange Act affords stockholders an advisory say-on-pay vote to approve the +Company’s executive compensation program. As required by Section 14A of the Exchange Act, this Proposal 4 affords stockholders +an advisory vote on the frequency of future say-on-pay votes. The advisory vote on the frequency of the say-on-pay vote is a non-binding +vote as to how often future say-on-pay votes should occur: every year, every two years, or every three years. In addition, stockholders +may abstain from voting on this Proposal 4; however, Section 14A of the Exchange Act requires the Company to hold the advisory +vote on the frequency of the say-on-pay vote at least once every six years. The Company has held its advisory say-on-pay annually +since inception. +In +formulating its recommendation, the Board considered that say-on-pay held every year would best enable stockholders to timely +express their views on the Company’s executive compensation program and enable the Board and the Compensation Committee +to determine current stockholder sentiment. The Board believes that an annual vote is consistent with the Company’s efforts +to engage in an ongoing dialogue with stockholders on executive compensation and corporate governance matters. +Although +the frequency vote is non-binding, consistent with the Company’s responsiveness to stockholders, the Compensation Committee +and the Board will review the results of the vote will take the stockholders’ views into account in determining the frequency +of future advisory votes to approve the compensation of the named executive officers. +The +stockholders are being asked to vote among the following frequency options: +● Choice +1—every year; +● Choice +2—every two years; +● Choice +3—every three years; or +● Choice +4—abstain from voting. +Vote +Required +This +advisory vote on the frequency of future say-on-pay votes is non-binding on the Company or the Board. However, the Board will +consider the result of the vote when determining the frequency of future say-on-pay votes. The frequency to receive a plurality +of the votes cast and entitled to vote on the matter (the frequency receiving the highest number of votes) will be the choice +recommended by the stockholders. If you submit a signed proxy card but do not give voting instructions as to how your shares of +Common Stock should be voted, your shares will be voted in accordance with the recommendations of our Board stated in this Proxy +Statement. Abstentions and broker non-votes will not have any effect on the outcome of Proposal 4. +THE +BOARD RECOMMENDS VOTING “ 1 YEAR ” ON THE ADVISORY VOTE TO DETERMINE THE FREQUENCY OF FUTURE ADVISORY VOTES TO +APPROVE THE COMPENSATION OF THE COMPANY’S NAMED +EXECUTIVE OFFICERS. +46 +PROPOSAL +5 — APPROVAL OF AN AMENDMENT TO THE COMPANY’S CERTIFICATE OF INCORPORATION TO DECLASSIFY THE BOARD OF DIRECTORS +The +Board, having determined that it is advisable and in the best interests of the Company and its stockholders, is submitting for +stockholder approval a proposal to amend the Charter to remove the three separate classes of directors of the Board and +replace them with one class of directors over a three-year phase-in period and to make certain additional changes related +thereto (collectively, the “ Declassification Amendment ”). Declassifying the Board will allow the +Company’s stockholders to vote on the election of the entire Board each year, rather than on a three-year staggered +basis as with the current classified board structure. The following description is a summary only and is qualified in +its entirety by reference to Annex A to this Proxy Statement. +Current +Status +Under +the Charter, the Board is currently separated into three classes. Absent the earlier death, disability, resignation, disqualification +or removal of a director, each year the stockholders of the Company are asked to elect the directors comprising one of the classes +for a three-year term. The term of the current Class III directors is set to expire at this Annual Meeting. The term of the current +Class I directors is set to expire in 2026 and the term of the current Class II directors is set to expire in 2027. Directors +may be removed only for cause upon the affirmative vote of the holders of at least 66 2/3% of the outstanding shares of stock +of the Company entitled to vote generally for the election of directors. +Rationale +for the Proposal +The Board believes +that the classified board structure served the Company well following the Company’s initial public offering (the +“IPO”) as a newly public company, in which our former private equity sponsor held a substantial stake, by promoting +continuity and stability and encouraging a long-term perspective on the part of directors, and it would be beneficial in the event +of a proxy contest. As part of our continuous evaluation of corporate governance practices and engagement with stockholders, the Board and +the Nominating and Governance Committee of the Board regularly review our governing documents and consider possible +changes. After careful consideration and having heard our stockholders’ preferences expressed through our engagement with +them and given the Company’s continued growth following the IPO and the exit of its private equity sponsors, the Board +has determined that it is in the best interests of the Company and its stockholders to declassify the Board over +a three-year period, so that all directors stand for election annually from and after the 2028 annual meeting of stockholders. A +declassified board will enable the Company’s stockholders to express a view on each director’s performance by +means of an annual vote and will support the Company’s ongoing efforts to maintain “best practices” in corporate +governance. +Effect +of the Proposal +If +the Declassification Amendment is approved by the Company’s stockholders and implemented by the Company, (i) the current +Class III directors will be elected at the 2025 annual meeting of stockholders to serve for a three year term expiring at the +2028 annual meeting of the stockholders, (ii) the current Class I directors will be elected at the 2026 annual meeting of stockholders +to serve for a term of one year, (iii) the current Class I and II directors will be elected at the 2027 annual meeting of stockholders +to serve for a term of one year, and (iv) the current Class I, II and III directors will be elected at the 2028 annual meeting +of stockholders to serve for a term of one year, at which time all directors will be elected to serve for one-year terms at all +subsequent annual meetings of stockholders. +Under +Section 141(k) of the DGCL, unless otherwise provided in a company’s certificate of incorporation, directors serving on +a classified board may be removed by stockholders only for cause, while directors serving on a non-classified board may +be removed, with or without cause, by the holders of a majority of the shares then entitled to vote at an election of directors. +As a result, approval of the Declassification Amendment will also result in an amendment to the Charter to allow for +the removal of a director from the Board, with or without cause, by the holders of a majority in voting power of the then-outstanding +shares then entitled to vote at an election of directors, from and after the 2026 annual meeting of stockholders for the current +Class I directors, from and after the 2027 annual meeting of stockholders for the current Class I and II directors and from and +after the 2028 annual meeting of stockholders for all directors. +The +Declassification Amendment would become effective upon the filing of a certificate of amendment to the Charter with the Secretary +of State of the State of Delaware reflecting the changes in Annex A to this Proxy Statement, which we expect would be filed +by the Company promptly following the Annual Meeting if our stockholders approve the Declassification Amendment. If the Declassification +Amendment is not approved, the corresponding amendments in Article Fifth of Annex A to this Proxy Statement will not be +implemented. The description of the Declassification Amendment is qualified in its entirety by reference to the text of the proposed +revisions, which are set forth in Annex A to this Proxy Statement. Additions are indicated by underlining, and deletions +are indicated by strikeouts. The adoption of the Declassification Amendment is not contingent on the approval of any other proposal +described in this Proxy Statement. The Board reserves the right to elect to abandon the Declassification Amendment prior to its +implementation, if it determines, in its sole discretion, that the Declassification Amendment is no longer in the best interests +of the Company and its stockholders. +47 +Vote +Required +The +approval of Proposal 5 requires the affirmative vote of the holders of at least 66 2/3% in voting power of the outstanding +shares of Common Stock entitled to vote thereon, voting together as a single class. If you submit a signed proxy card but do not +give voting instructions as to how your shares of Common Stock should be voted, your shares will be voted in accordance with the +recommendations of our Board stated in this Proxy Statement. Abstentions and broker non-votes will have the same effect as a vote +“AGAINST” Proposal 5. +THE +BOARD RECOMMENDS VOTING “ FOR ” APPROVAL OF AN AMENDMENT TO THE COMPANY’S CERTIFICATE OF INCORPORATION +TO DECLASSIFY THE BOARD OF DIRECTORS. +48 +PROPOSAL +6 — APPROVAL OF AN AMENDMENT TO THE COMPANY’S CERTIFICATE OF INCORPORATION TO REMOVE THE 66 2/3% SUPERMAJORITY VOTE +REQUIREMENTS TO AMEND, ALTER, OR REPEAL THE COMPANY’S CERTIFICATE OF INCORPORATION AND BYLAWS AND TO REMOVE DIRECTORS FROM +OFFICE +The +Board, having determined that it is advisable and in the best interests of the Company and its stockholders, is submitting for +stockholder approval a proposal to amend the Charter to (a) change the required vote of stockholders to amend, alter or repeal +any provision of the Company’s Bylaws from not less than 66 2/3% in voting power of the then-outstanding shares of stock +entitled to vote thereon to a majority in voting power of the then-outstanding shares of stock entitled to vote thereon, (b) change +the required vote of stockholders to amend, alter or repeal any provisions of the Charter, from at least 66 2/3% in voting power +of the then-outstanding shares of stock entitled to vote thereon to the affirmative vote of a majority in voting power of the +outstanding shares of stock of the Company entitled to vote thereon and (c) change the required vote of stockholders to remove +directors from office from at least 66 2/3% in voting power of the then-outstanding shares of stock entitled to vote thereon to +the affirmative vote of at least a majority of the outstanding shares of Common Stock entitled to vote at an election of directors; +each to take effect following stockholder approval of the changes described to the Charter in Annex A (the “ Majority +Vote Amendment ”). +Current +Status +Under +the Charter, an amendment, alteration or repeal of any provision of the Company’s Bylaws or the Charter by the stockholders +requires the approval of holders of not less than 66 2/3% in voting power of the then-outstanding shares of stock of the Company +entitled to vote thereon, voting together as a single class. Additionally, removal of any director from office by stockholders +requires the affirmative vote of the holders of at least 66 2/3% of the outstanding shares of Common Stock entitled to vote at +an election of directors. +Rationale +for the Proposal +The +Board believes that the supermajority voting requirements served the Company well following the IPO as a newly public company, +in which our former private equity sponsor held a substantial stake, by promoting continuity and stability. As part of our continuous +evaluation of corporate governance practices, the Board and the Nominating and Governance Committee of the Board regularly review +our governing documents and consider possible changes. While the Board believes that the corporate governance stability benefits +exist, it recognizes that many investors and other stakeholders believe that supermajority voting provisions may limit a board’s +responsiveness and accountability to stockholders and restrict stockholder participation in certain corporate governance matters. +After careful consideration, the Board has determined that it is in the best interests of the Company and its stockholders to +amend the Charter to remove the supermajority voting requirements described above. The majority voting requirements will enable +the Company’s stockholders to more easily approve amendments to the Charter and will support the Company’s ongoing +efforts to maintain “best practices” in corporate governance. +Effect +of the Proposal +If +the Majority Vote Amendment is approved by the Company’s stockholders and implemented by the Company, (i) the affirmative +vote of at least a majority in voting power of the then-outstanding shares of stock of the Company entitled to vote thereon will +be required to amend, alter or repeal any provision of the Charter or the Bylaws and (ii) the affirmative vote of at least a majority +of the outstanding shares of Common Stock entitled to vote at an election of directors will be required to remove a director from +office. Following stockholder approval of the Majority Vote Amendment, the Board will make conforming amendments to the Bylaws +to reduce the stockholder voting threshold to amend, alter, or repeal the Bylaws from the holders of not less than 66 2/3% of +the then-outstanding shares of stock entitled to vote thereon to the affirmative vote of the holders of a majority in voting power +of the then-outstanding shares of stock entitled to vote thereon. +The +Majority Vote Amendment would become effective upon the filing of a certificate of amendment to the Charter with the Secretary +of State of the State of Delaware reflecting the changes in Annex A to this Proxy Statement, which we expect would be filed +by the Company promptly following the Annual Meeting if our stockholders approve the Majority Vote Amendment. If the Majority +Vote Amendment is not approved, the corresponding amendments in Articles Fifth, Eighth, Twelfth, +and Thirteenth of Annex A to this Proxy Statement will not be implemented. The description +of the Majority Vote Amendment is qualified in its entirety by reference to the text of the proposed revisions, which are set +forth in Annex A to this Proxy Statement. Additions are indicated by underlining, and deletions are indicated by strikeouts. +The adoption of the Majority Vote Amendment is not contingent on the approval of any other +proposal described in this Proxy Statement. The Board reserves the right to elect to abandon the Majority Vote Amendment +prior to its implementation, if it determines, in its sole discretion, that the Majority Vote Amendment is no longer in the best +interests of the Company and its stockholders. +49 +Vote +Required +The +approval of Proposal 6 requires the affirmative vote of the holders of at least 66 2/3% in voting power of the outstanding shares +of Common Stock entitled to vote thereon, voting together as a single class. If you submit a signed proxy card but do not give +voting instructions as to how your shares of Common Stock should be voted, your shares will be voted in accordance with the recommendations +of our Board stated in this Proxy Statement. Abstentions and broker non-votes will have the same effect as a vote “AGAINST” +Proposal 6. +THE +BOARD RECOMMENDS VOTING “ FOR ” APPROVAL OF AN AMENDMENT TO THE COMPANY’S CERTIFICATE OF INCORPORATION +TO REMOVE THE 66 2/3% SUPERMAJORITY VOTE REQUIREMENTS TO AMEND, ALTER, OR REPEAL THE COMPANY’S CERTIFICATE OF INCORPORATION +AND BYLAWS AND TO REMOVE DIRECTORS FROM OFFICE. +50 +PROPOSAL +7 — APPROVAL OF AN AMENDMENT TO THE COMPANY’S CERTIFICATE OF INCORPORATION TO LIMIT THE LIABILITY OF CERTAIN OFFICERS +The +Board, having determined that it is advisable and in the best interests of the Company and its stockholders, is submitting for +stockholder approval a proposal to amend our Charter to implement the DGCL provisions permitting exculpation of officers (the +“ Officer Exculpation Amendment ”). +Current +Status +The +Charter currently provides for exculpation of directors, as permitted by the DGCL, but does not include a provision that allows +for the exculpation of officers. The DGCL permits Delaware corporations to limit the personal liability of directors for monetary +damages associated with breaches of the duty of care in limited circumstances, and our Charter currently includes those limitations. +Effective August 1, 2022, the DGCL was amended to permit Delaware corporations to amend their certificates of incorporation, subject +to stockholder approval, to limit the personal liability of certain officers for monetary damages associated with breaches of +the fiduciary duty of care (but not the fiduciary duty of loyalty) in limited circumstances. +The +Officer Exculpation Amendment would permit exculpation of officers only for direct claims for breaches of the duty of care, as +opposed to derivative claims made by stockholders on behalf of the Company, and, like the director exculpation provision, would +not exculpate officers from liability for breach of the duty of loyalty, acts or omissions not in good faith or that involve intentional +misconduct or a knowing violation of law, or any transaction in which the officer derived an improper personal benefit. Similar +to what is provided for director exculpation, the Officer Exculpation Amendment provides that if the DGCL is further amended to +eliminate or limit the personal liability of officers, the liability of officers will be limited to the fullest extent permitted +by law, as so amended. +Rationale +for the Proposal +The +Board believes the Officer Exculpation Amendment is advisable and in the best interests of the Company and its stockholders because +it achieves a balance between stockholder interest in officer accountability, attracting and retaining quality officers, and reducing +litigation and insurance costs associated with lawsuits. In the absence of such exculpation protection, individuals might be deterred +from serving as officers due to exposure to personal liability and the risk of incurring substantial expense in defending lawsuits, +regardless of merit. Aligning the protections available to our officers with those available to our directors to the extent such +protections are available under the DGCL would empower officers to exercise their business judgment in furtherance of stockholder +interests without the potential for distraction posed by the risk of personal liability. In determining that the Officer Exculpation +Amendment is in the best interests of the Company and its stockholders, the Board considered the narrow class and type of claims +for which officers would be exculpated and the benefits the Board believes would accrue to the Company and its stockholders as +described above. +Effect +of the Proposal +The +Officer Exculpation Amendment would become effective upon the filing of a certificate of amendment to the Charter with the Secretary +of State of the State of Delaware reflecting the changes in Annex A to this Proxy Statement, which we expect would be filed +by the Company promptly following the Annual Meeting if our stockholders approve the Officer Exculpation Amendment. If the Officer +Exculpation Amendment is not approved, the corresponding amendments in Article Ninth of Annex A to this Proxy Statement +will not be implemented. The description of the Officer Exculpation Amendment is qualified in its entirety by reference to the +text of the proposed revisions, which are set forth in Annex A to this Proxy Statement. Additions are indicated by underlining, +and deletions are indicated by strikeouts. The adoption of the Officer Exculpation Amendment is not contingent on the approval +of any other proposal described in this Proxy Statement. The Board reserves the right to elect to abandon the Officer Exculpation +Amendment prior to its implementation, if it determines, in its sole discretion, that the Officer Exculpation Amendment is no +longer in the best interests of the Company and its stockholders. +Vote +Required +The +approval of Proposal 7 requires the affirmative vote of the holders of at least 66 2/3% in voting power of the outstanding shares +of Common Stock entitled to vote thereon, voting together as a single class. If you submit a signed proxy card but do not give +voting instructions as to how your shares of Common Stock should be voted, your shares will be voted in accordance with the recommendations +of our Board stated in this Proxy Statement. Abstentions and broker non-votes will have the same effect as a vote “AGAINST” +Proposal 7. +THE +BOARD RECOMMENDS VOTING “ FOR ” APPROVAL OF AN AMENDMENT TO THE COMPANY’S CERTIFICATE OF INCORPORATION +TO LIMIT THE LIABILITY OF CERTAIN OFFICERS. +51 +PROPOSAL +8 — APPROVAL OF AN AMENDMENT TO THE COMPANY’S CERTIFICATE OF INCORPORATION TO DELETE THE WAIVER OF SECTION 203 OF +THE DELAWARE GENERAL CORPORATION LAW +The +Board, having determined that it is advisable and in the best interests of the Company and its stockholders, is submitting for +stockholder approval a proposal to amend our Charter to delete the Company’s waiver of Section 203 of the DGCL (“ Section +203 ”) and expressly provide that the Company elects to be governed by Section 203 (the “ Section 203 Amendment ”). +As a result, the Company would become subject to Section 203, which generally prohibits a Delaware corporation from engaging in +a “business combination” with any “interested stockholder” for a period of three years following the date +that the stockholder became an interested stockholder except in certain circumstances. The following description is a summary +only and is qualified in its entirety by reference to Annex A to this Proxy Statement, which incorporates the amendment +to expressly provide that the Company elects to be governed by Section 203 and marks those changes specifically. +Current +Status +Under +the Charter, the Company expressly elects not to be governed by Section 203. Section 203 generally prohibits a Delaware corporation +from engaging in any “business combination” with any “interested stockholder” for a period of three years +following the date that the stockholder became an interested stockholder, unless +● prior +to such time, either the business combination or the transaction in which the stockholder +became an interested stockholder was approved by the board of directors; +● upon +consummation of the transaction that resulted in the stockholder becoming an interested +stockholder, the interested stockholder owned at least 85% of the voting stock of the +corporation outstanding at the time the transaction commenced; or +● at +or after such time the business combination is approved by the board of directors and +authorized at a meeting of stockholders by the affirmative vote of at least two-thirds +of the outstanding voting stock that is not owned by the interested stockholder. +A +“business combination” generally includes: (i) mergers between the corporation and an interested stockholder (or certain +of their affiliates); (ii) sales or dispositions to an interested stockholder of assets worth 10% or more of the total asset value +of the corporation (measured by consolidated asset value or aggregate stock value); (iii) certain issuances or transfers of stock +to an interested stockholder; (iv) certain transactions involving the corporation that would increase the proportionate ownership +of the interested stockholder; and (v) a receipt by the interested stockholder (except proportionately as a stockholder) of any +loans, advances, guarantees, pledges or other financial benefits provided by the corporation. +An +“interested stockholder” is generally defined as a person or group that beneficially owns 15% or more of the corporation’s +outstanding common stock. A “business combination” includes a merger, consolidation, sale of assets or other transaction +resulting in a financial benefit to the stockholder. +Rationale +for the Proposal +The +Board believes that the waiver of Section 203 was appropriate for the Company following the IPO as a newly public company in which +our former private equity sponsor held a substantial stake. As part of our continuous evaluation of corporate governance practices, +the Board and the Nominating and Governance Committee of the Board regularly review our governing documents and consider possible +changes. The Board has carefully considered the potential adverse effects and the benefits of being subject to the provisions +of Section 203 described above and has concluded that any adverse effects of Section 203 are substantially outweighed by the increased +protection which the statute will afford our stockholders. +If +the Company becomes subject to Section 203 it may have an anti-takeover effect with respect to transactions not approved in advance +by the Board. Becoming subject to Section 203 may also discourage takeover attempts that could result in a premium over the market +price for the shares of our common stock held by stockholders. +The +Board believes that it is in the best interest of the Company and its stockholders for Section 203 to apply to the Company because +it will encourage any potential acquirer to negotiate with our Board and will reduce the likelihood of a hostile takeover that +does not provide adequate value to the Company’s stockholders. The Board believes that a non-negotiated takeover bid may +be unfair, coercive or disadvantageous to the Company and its stockholders because such a bid may: (i) be timed to take advantage +of temporarily depressed stock prices; (ii) be designed to foreclose or minimize the possibility of more favorable competing bids; +or (iii) involve the acquisition of only a controlling interest in our Company’s stock or a two-tiered bid, without affording +all stockholders the opportunity to receive the same economic benefits. +52 +The +application of Section 203 to the Company will confer upon the Board the power to reject a proposed business combination in certain +circumstances, even though a potential acquirer may be offering a premium for our capital stock or assets over the then-current +market price. In a transaction in which an acquirer must negotiate with the Board, the Board can negotiate for the terms and structure +that the Board believes are in the best interests of the Company and its stockholders and can reject any proposal that the Board +believes is inadequate or unfairly timed. Becoming subject to Section 203 may also discourage potential acquirers that are unwilling +to negotiate with the Board. Section 203 should not interfere with any merger or business combination approved by the Board. A +substantial number of public companies are governed by Section 203, and the Board believes that such election is consistent with +good principles of corporate governance and is appropriate for public companies incorporated in Delaware that do not have a substantial +stockholder. +The +Section 203 Amendment is not prompted by any specific contemplated or anticipated stockholder action of which the Board is aware. +Additionally, the Second 203 Amendment is not part of a plan to adopt a series of anti-takeover amendments, and the Board and +management have no current plan or intention to propose other measures in future proxy solicitations that could have an anti-takeover +effect. +Effect +of Proposal +If +the Section 203 Amendment is approved, “business combinations” with “interested stockholders” will be +conditioned upon satisfaction of the provisions of Section 203. Under certain circumstances, Section 203 will have an anti-takeover +effect with respect to transactions not approved in advance by the Board by making it more difficult for a person who would be +an “interested stockholder” to effect various business combinations with us for a three-year period. As a result, +this may encourage companies interested in acquiring us to negotiate in advance with the Board because the stockholder approval +requirement would be avoided if the Board approves either the business combination or the transaction which results in the stockholder +becoming an interested stockholder. Section 203 also may have the effect of preventing changes in our Board and may make it more +difficult to accomplish transactions which stockholders may otherwise deem to be in their best interests. +The +Section 203 Amendment would become effective upon the filing of a certificate of amendment to the Charter with the Secretary of +State of the State of Delaware reflecting the changes in Annex A to this Proxy Statement, which we expect would be filed +by the Company promptly following the Annual Meeting if our stockholders approve the Section 203 Amendment. If the Section 203 +Amendment is not approved, the corresponding amendments in Article Eleventh of Annex A to this Proxy Statement will not +be implemented. The description of the Section 203 Amendment is qualified in its entirety by reference to the text of the proposed +revisions, which are set forth in Annex A to this Proxy Statement. Additions are indicated by underlining, and deletions +are indicated by strikeouts. The adoption of the Section 203 Amendment is not contingent on the approval of any other proposal +described in this Proxy Statement. The Board reserves the right to elect to abandon the Section 203 Amendment prior to its implementation, +if it determines, in its sole discretion, that the Section 203 Amendment is no longer in the best interests of the Company and +its stockholders. +Vote +Required +The +approval of Proposal 8 requires the affirmative vote of the holders of at least 66 2/3% in voting power of the outstanding shares +of Common Stock entitled to vote thereon, voting together as a single class. If you submit a signed proxy card but do not give +voting instructions as to how your shares of Common Stock should be voted, your shares will be voted in accordance with the recommendations +of our Board stated in this Proxy Statement. Abstentions and broker non-votes will have the same effect as a vote “AGAINST” +Proposal 8. +THE +BOARD RECOMMENDS VOTING “ FOR ” APPROVAL OF AN AMENDMENT TO THE COMPANY’S CERTIFICATE OF INCORPORATION +TO DELETE THE WAIVER OF SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW. +53 +PROPOSAL +9 — APPROVAL OF MISCELLANEOUS AMENDMENTS TO CLARIFY AND UPDATE THE COMPANY’S CERTIFICATE OF INCORPORATION +The +Board, having determined that it is advisable and in the best interests of the Company and its stockholders, is submitting for +stockholder approval a proposal to amend the Charter to clarify and modernize it by removing outdated terms relating to our former +private equity sponsor that has since exited control and ownership of the Company and certain other immaterial changes (the “ Miscellaneous +Amendments ”). +Current +Status +The +Charter currently includes, among other things, references to “Principal Stockholders,” “Trigger Date,” +“LLC Agreement,” “Stockholders Agreement,” and the various provisions related thereto and as well as provisions +that are now inapplicable following the “Trigger Date.” +Rationale +for Proposal +As +part of our continuous evaluation of corporate governance practices, the Board and the Nominating and Governance Committee of +the Board regularly review our governing documents and consider possible changes. Given that our former private equity sponsor +is no longer a significant stockholder and is no longer involved with the management of the Company, the Board believes eliminating +these provisions will avoid potential confusion relating to provisions that are obsolete and no longer applicable. As a result, +the Company is seeking stockholder approval of the Miscellaneous Amendments. +Effect +of the Proposal +The +Miscellaneous Amendments would become effective upon the filing of a certificate of amendment to the Charter with the Secretary +of State of the State of Delaware reflecting the changes in Annex A to this Proxy Statement, which we expect would be filed +by the Company promptly following the Annual Meeting if our stockholders approve the Miscellaneous Amendments. If the Miscellaneous +Amendments are not approved, the corresponding amendments in Annex A to this Proxy Statement will not be implemented. The +description of the Miscellaneous Amendments is qualified in its entirety by reference to the text of the proposed revisions, which +are set forth in Annex A to this Proxy Statement. Additions are indicated by underlining, and deletions are indicated by +strikeouts. The adoption of the Miscellaneous Amendments are not contingent on the approval of any other proposal described in +this Proxy Statement. The Board reserves the right to elect to abandon the Miscellaneous Amendments prior to implementation, if +it determines, in its sole discretion, that the Miscellaneous Amendments are no longer in the best interests of the Company and +its stockholders. +Vote +Required +The +approval of Proposal 9 requires the affirmative vote of the holders of at least 66 2/3% in voting power of the outstanding shares +of Common Stock entitled to vote thereon, voting together as a single class. If you submit a signed proxy card but do not give +voting instructions as to how your shares of Common Stock should be voted, your shares will be voted in accordance with the recommendations +of our Board stated in this Proxy Statement. Abstentions and broker non-votes will have the same effect as a vote “AGAINST” +Proposal 9. +THE +BOARD RECOMMENDS VOTING “ FOR ” APPROVAL OF MISCELLANEOUS AMENDMENTS TO CLARIFY AND UPDATE THE COMPANY’S +CERTIFICATE OF INCORPORATION. +54 +SECURITY +OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT +Except +to the extent indicated otherwise in the footnotes, the following table sets forth the beneficial ownership of our common stock +as of February 19, 2025 based on 162,336,099 shares of our Class A Common Stock outstanding on such date: +* each +person known to us to beneficially own more than 5% of any class of our outstanding voting +securities; +* each +member of our Board and each nominee to our Board; +* each +of our Named Executive Officers; and +* all +of our current directors and executive officers as a group. +Except +as otherwise indicated, the persons listed below have sole voting and investment power with respect to all shares of our Common +Stock beneficially owned by them, except to the extent this power may be shared with a spouse. All information with respect to +beneficial ownership has been furnished by the 5% or more stockholders, directors, director nominees, or Named Executive Officers, +as the case may be. Unless otherwise noted, the mailing address of each listed beneficial owner is 950 17th Street, Suite 2400, +Denver, Colorado 80202. +Class +A +Common Stock +Number +% +5% +Stockholders +Blackrock, +Inc. (1) +27,461,174 +16.9 +% +The +Vanguard Group (2) +19,224,315 +11.8 +% +FMR +LLC (3) +15,203,654 +9.4 +% +Dimensional +Fund Advisors LP (4) +9,443,949 +5.8 +% +Directors, +Director Nominees, and Named +Executive Officers: +Christopher +Wright (5) +2,678,080 +1.6 +% +Ron +Gusek (6) +1,243,979 +* +Michael +Stock (6) +748,326 +* +R. +Sean Elliott (6) +267,854 +* +Ryan +T. Gosney (6) +171,570 +* +Simon +Ayat +35,011 +* +Ken +Babcock (7) +59,289 +* +Peter +A. Dea +69,602 +* +William +F. Kimble +69,963 +* +James +R. McDonald +— +— +Arjun +Murti +— +— +Gale +A. Norton +66,241 +* +Audrey +Robertson (8) +40,804 +* +Cary +D. Steinbeck (9) +358,703 +* +Current +Directors and Executive Officers as a group +(13 persons) (10) +3,131,342 +1.9 +% +(1) This +information is based solely on a Schedule 13G/A filed with the SEC on November 12, 2024 +by Blackrock, Inc., in which it reported that Blackrock, Inc. has sole voting power as +to 26,686,744 shares of Class A Common Stock and sole dispositive power as to 27,461,174 +shares of Class A Common Stock. The principal business address of Blackrock, Inc. is +50 Hudson Yards, New York, NY 10001. +(2) This +information is based solely on a Schedule 13G/A filed with the SEC on February 13, 2024 +by The Vanguard Group, in which it reported that The Vanguard Group has shared voting +power as to 172,985 shares of Class A Common Stock, sole dispositive power as to 18,903,189 +shares of Class A Common Stock and shared dispositive power as to 321,126 shares of Class +A Common Stock. The principal business address of The Vanguard Group is 100 Vanguard +Blvd., Malvern, PA 19355. +(3) This +information is based solely on a Schedule 13G/A filed with the SEC on February 12, 2025, +by FMR LLC and Abigail P. Johnson, in which it reported that FMR LLC has sole voting +power as to 15,187,813 shares of Class A Common Stock and sole dispositive power as to +15,203,654 shares of Class A Common Stock and Ms. Johnson has no voting power, and sole +dispositive power as to 15,203,654 shares of Class A Common Stock. The principal business +address of FMR LLC is 245 Summer Street, Boston, MA 02210. +(4) This +information is based solely on a Schedule 13G filed with the SEC on February 9, 2024 +by Dimensional Fund Advisors LP, in which it reported that Dimensional Fund Advisors +LP has sole voting power as to 9,278,827 shares of Class A Common Stock, sole dispositive +power as to 9,443,949 shares of Class A Common Stock. The principal business address +of Dimensional Fund Advisors LP is 6300 Bee Cave Road, Building One, Austin, TX 78746. +(5) Includes +Mr. Wright in his capacity as a Named Executive Officer of the Company. Mr. Wright’s +ownership information is as of February 3, 2025, which is the date that he resigned from +all positions with the Company and ceased to be a Section 16 reporting person in connection +with his confirmation as Secretary of Energy of the United States. Mr. Wright informed +the Company that he plans to divest all of his ownership in the Company in accordance +with Federal ethics requirements. +55 +(6) Shares +of Class A Common Stock held by Messrs. Gusek, Stock, Elliott and Gosney include (a) +54,243; 54,243; 45,002; and 28,325 shares of stock, respectively, that will be received +upon the vesting of time-based RSUs and (b) 123,340; 123,340; 50,408; and 31,310 shares +of stock, respectively, that will be received upon the vesting of performance-based RSUs +within 60 days of February 19, 2025. +(7) Includes +9,289 shares of Class A Common Stock held by a family trust. +(8) Includes +200 shares of Class A Common Stock held in custodial accounts on behalf of minor children +of Ms. Robertson and 5 shares held in a Roth IRA. +(9) Includes +329,350 shares of Class A Common Stock held by the Steinbeck Family Trust and 9,805 shares +of Class A Common Stock held by the Cary Dustin Steinbeck & Melissa Maucione Crimson +Steinbeck Trust. Mr. Steinbeck has voting and dispositive power over these shares. +(10) Excludes +Mr. Wright, who was neither a director nor an executive officer of the Company as of +the date of this table. +* Less +than 1.0%. +56 +CERTAIN +RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +Policies +and Procedures for Review of Related Party Transactions +A +“ Related Party Transaction ” is a transaction, arrangement or relationship in which the Company or any of its +subsidiaries was, is or will be a participant, the amount of which involved exceeds $120,000, and in which any related person +had, has or will have a direct or indirect material interest. A “ Related Person ” is: +♦ any +person who is, or at any time during the applicable period was, one of our executive +officers or one of our directors; +♦ any +person who is known by us to be the beneficial owner of more than 5% of our Class A Common +Stock; +♦ any +immediate family member of any of the foregoing persons, which means any child, stepchild, +parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, +brother-in-law or sister-in-law of a director, executive officer or a beneficial owner +of more than 5% of our Class A Common Stock, and any person (other than a tenant or employee) +sharing the household of such director, executive officer or beneficial owner of more +than 5% of our Class A Common Stock; and +♦ any +firm, corporation or other entity in which any of the foregoing persons is a partner +or principal or in a similar position or in which such person has a 10.0% or greater +beneficial ownership interest. +Our +Board has adopted a written related party transactions policy. Pursuant to this policy, our Audit Committee reviews all material +facts of all Related Party Transactions and either approves or disapproves entry into the Related Party Transaction, subject to +certain limited exceptions. The determination of the Audit Committee is documented in the Audit Committee’s minutes. In +determining whether to approve or disapprove entry into a Related Party Transaction, our Audit Committee considers, among other +factors, the following: (i) whether the Related Party Transaction is on terms no less favorable than terms generally available +to an unaffiliated third- party under the same or similar circumstances and (ii) the extent of the Related Person’s interest +in the transaction. Furthermore, the policy requires that all Related Party Transactions required to be disclosed in our filings +with the SEC be so disclosed in accordance with applicable laws, rules and regulations. +Related +Party Transactions +The +following is a description of transactions entered into, or in effect, after January 1, 2024 to which we have been a party, in +which the amount involved in the transaction exceeds $120,000, and in which any of our directors, executive officers or beneficial +owners of more than 5% of our voting securities, or affiliates or immediate family members of any of our directors, executive +officers or beneficial owners of more than 5% of our voting securities, had or will have a direct or indirect material interest. +We believe the terms obtained or consideration that we paid or received, as applicable, in connection with the transactions described +below were comparable to terms available or the amounts that would be paid or received, as applicable, from unrelated third parties. +Transactions +with Liberty Resources +Liberty +Resources LLC (“ Liberty Resources ”) is an oil and gas exploration and production company of which Mr. Wright, +our former Chairman of the Board and Chief Executive Officer, was the Executive Chairman and an equity owner. Mr. Wright previously +served as the Chief Executive Officer at Liberty Resources from its formation in September 2010 until March 2017. Liberty Resources +entered into a master service agreement with Liberty Oilfield Services LLC (n/k/a Liberty Energy Services LLC), a subsidiary of +the Company (“ Liberty Services ”), whereby Liberty Services provides hydraulic fracturing service to Liberty +Resources at market service rates. For the year ended December 31, 2024, the amounts related to the provision of hydraulic fracturing +services to Liberty Resources under the master services agreement were $11.1 million. +In +December 2022, the Company entered into a letter agreement with Liberty Resources to extend the payment terms for certain accounts +receivable until April 1, 2024, and, in August 2023, the parties revised such letter agreement to make various modifications including +further extending payment terms until January 1, 2025, subject to timely payment of monthly interest charges ranging from 15-20%. +As of December 31, 2024, the receivables subject to this letter agreement had been repaid in the entirety. +In +March 2024, Liberty Resources ceased to be a Related Person following its acquisition by third party. +Transactions +with Franklin Mountain +Franklin +Mountain Energy LLC (“ Franklin Mountain ”) is an oil and gas exploration and production company of which Ms. +Robertson, a member of our Board, serves as the Chief Financial Officer. Franklin Mountain entered into a master service agreement +with Liberty Services, whereby Liberty Services provides hydraulic fracturing service to Franklin Mountain at market service rates. +For the year ended December 31, 2024, the amounts related to the provision of hydraulic fracturing services to Franklin Mountain +under the master services agreement was $120.3 million. +57 +Transactions +with Tim Babcock +Tim +Babcock is currently employed by the Company as a director of operations. Tim Babcock is the son of Ken Babcock, a member of our +Board. For the year ended December 31, 2024, Tim Babcock was paid gross compensation of $221,750 for his services as an employee. +Transactions +with the Bettering Human Lives Foundation +In +December 2023, the Company established the Bettering Human Lives Foundation (the “ Foundation ”), a nonprofit +organization dedicated to promoting clean cooking solutions and improving the well-being of communities worldwide. Mr. Wright, +the Company’s former CEO also formerly served as Chairman of the Foundation, and his sister-in-law, Anne Hyre, currently +serves as the Foundation’s executive director. Ms. Hyre is employed by the Company and seconded to the Foundation. We expect +that Ms. Hyre will receive total compensation of approximately $250,000 from the Company for the year ended December 31, 2024. +In addition, the Company and the Foundation are parties to a Support Services Agreement (the “Support Services Agreement”) +whereby the Company provides certain administrative and operational support services to the Foundation. During the year ended +December 31, 2024, the Company made charitable contributions of $0.9 million to the Foundation and received $0.5 million in other +service revenue from the Foundation under the Support Services Agreement. +Transactions +with Veriten LLC +Mr. +Murti joined our Board in January 2025. He is a partner at Veriten LLC, a private research, investment and strategy firm, that +the Company retained for consulting services in 2024 for approximately $250,000 and has retained again in 2025 for approximately +$250,000. +Indemnification +for Officers and Directors +Our +Charter and Bylaws provide indemnification rights to our directors and officers and permit us to purchase insurance on behalf +of any officer, director, employee or other agent for any liability arising out of that person’s actions as our officer, +director, employee or agent, regardless of whether Delaware law would mandate indemnification. Additionally, we have entered into +separate indemnity agreements with our directors and certain officers to provide additional indemnification benefits, including +the right to receive, in advance, reimbursements for expenses incurred in connection with a defense for which the director or +officer is entitled to indemnification. We believe that the limitation of liability provisions in our Charter, Bylaws and the +indemnity agreements will facilitate our ability to continue to attract and retain qualified individuals to serve as directors +and officers. +Conflicts +of Interest +The +related party transactions described herein may cause certain conflicts of interests, including that: +♦ we +may enter into contracts between us, on the one hand, and related parties, on the other, +that are not as a result of arm’s-length transactions; +♦ our +executive officers and directors that hold positions of responsibility with related parties +may be aware of certain business opportunities that are appropriate for presentation +to us as well as to such other related parties and may present such business opportunities +to such other parties; and +♦ our +executive officers and directors that hold positions of responsibility with related parties +may have significant duties with, and spend significant time serving, other entities +and may have conflicts of interest in allocating time. +58 +HOUSEHOLDING +The +SEC permits companies and intermediaries (such as brokers and banks) to satisfy delivery requirements for proxy statements and +annual reports with respect to two or more stockholders sharing the same address by delivering a single proxy statement and annual +report to those stockholders. This process, which is commonly referred to as “householding,” is intended to reduce +the volume of duplicate information stockholders receive and reduce expenses for companies. Both the Company and some of our intermediaries +may be householding our proxy materials and Annual Report on Form 10-K. Once you have received notice from your broker or another +intermediary that they will be householding materials sent to your address, householding will continue until you are notified +otherwise or until you revoke your consent. Should you wish to receive separate copies of our Annual Report on Form 10-K and proxy +statement in the future, we will promptly deliver a separate copy of each of these documents to you if you send a written or oral +request to us at our address or phone number appearing on the cover of this Proxy Statement, to the attention of the Corporate +Secretary. If you hold your shares through an intermediary that is householding and you want to receive separate copies of our +Annual Report on Form 10-K and proxy statement in the future, you should contact your bank, broker or other nominee record holder. +STOCKHOLDER +PROPOSALS +Pursuant +to Rule l4a-8 under the Exchange Act, in order for a stockholder proposal to be included in the Company’s proxy statement +for its 2026 annual meeting, such proposal must be received at the Company’s principal executive offices at 950 17th Street, +Suite 2400, Denver, Colorado 80202, Attention: Corporate Secretary, no later than November 6, 2025, and must comply with additional +requirements established by the SEC. SEC rules set standards for eligibility and specify the types of stockholder proposals that +may be excluded from a proxy statement. In addition, the Company’s Second Amended and Restated Bylaws provide that any stockholder +who would like to have a proposal considered at our 2026 annual meeting of stockholders must submit the proposal to the Secretary +of the Company at the Company’s principal executive offices so that it is received by not earlier than the close of business +on December 16, 2025, and not later than the close of business on January 15, 2026, unless the date of our 2026 annual meeting +is more than 30 days before or more than 60 days after April 15, 2026, in which case the proposal must be received no later than +the 10th day following the day on which public announcement of the date of such meeting is first made by the Company. A copy of +the Company’s Second Amended and Restated Bylaws is available upon request from the Secretary of the Company. Stockholders +who intend to submit a proposal for nomination of persons for election to our Board or a proposal of business at the 2026 annual +meeting (other than matters properly brought under Rule 14a-8 under the Exchange Act and included in the Company’s notice +of meeting) must follow the procedures prescribed in the Company’s Second Amended and Restated Bylaws. No stockholder proposal +was received for inclusion in this Proxy Statement. +Stockholders +who intend to solicit proxies in support of director nominees other than our nominees must provide notice to the Secretary of +the Company that sets forth the information required by Rule 14a-19 of the Exchange Act in accordance with and within the time +period prescribed in the advance notice provisions of our Second Amended and Restated Bylaws. +WHERE +YOU CAN FIND MORE INFORMATION +We +file or furnish annual, quarterly and current reports, proxy statements and other documents with the SEC under the Exchange Act. +The SEC also maintains an internet website at www.sec.gov that contains reports, proxy and information statements and other +information regarding issuers, including us, that file electronically with the SEC. +We +also make available free of charge through our website, www.libertyenergy.com , electronic copies of certain documents that +we file with the SEC, including our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and +amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable +after we electronically file such material with, or furnish it to, the SEC. +OTHER +MATTERS +As +of the date of this Proxy Statement, the Board does not intend to present any matters other than those described herein at the +Annual Meeting and is unaware of any matters to be presented by other parties. If other matters are properly brought before the +meeting for action by the stockholders, proxies will be voted in accordance with the recommendation of the Board or, in the absence +of such a recommendation, in accordance with the judgment of the proxy holder. +IMPORTANT +NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING TO BE HELD ON APRIL 15, 2025: +A +COPY OF THIS PROXY STATEMENT, THE NOTICE OF 2025 ANNUAL MEETING OF STOCKHOLDERS, THE 2025 ANNUAL REPORT TO STOCKHOLDERS AND THE +PROXY CARD ARE AVAILABLE AT HTTP://ASTPROXYPORTAL.COM/AST/21952 +59 +IT +IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, YOU ARE URGED TO VOTE BY INTERNET, +BY PHONE OR IF YOU HAVE RECEIVED PAPER COPIES OF THE PROXY MATERIALS, BY COMPLETING, SIGNING AND RETURNING THE PROXY IN THE ENCLOSED +POSTAGE-PAID, ADDRESSED ENVELOPE. +By +Order of the Board of Directors, +/s/ +R. Sean Elliott +R. +Sean Elliott +Chief +Legal Officer and Corporate Secretary +Denver, +Colorado +March +6 , 2025 +60 +ANNEX +A +LIBERTY +ENERGY INC. +SECOND +AMENDED AND RESTATED CERTIFICATE OF INCORPORATION +A- 1 +SECOND +AMENDED AND RESTATED +CERTIFICATE OF INCORPORATION +OF +LIBERTY OILFIELD +SERVICES ENERGY INC. +Liberty Oilfield +Services Energy Inc. (the “ Corporation ”), a corporation +organized and existing under the General Corporation Law of the State of Delaware as set forth in Title 8 of the Delaware Code +(the “ DGCL ”), hereby certifies as follows: +1. The +original Certificate of Incorporation of the Corporation (the “ Original Certificate +of Incorporation ”) was filed with the Secretary of State of the State of Delaware on December 21, 2016 . +(the “ Certificate of Incorporation ”), amended on January 17, 2018 +(the “ First Amended and Restated Certificate ”), and further amended on April 19, 2022 (the “ Certificate +of Amendment ”, and together with the First Amended and Restated Certificate, the “ Amended Certificate of Incorporation ”). +2. This +Second Amended and Restated Certificate of Incorporation (this “ Amended and +Restated Certificate of Incorporation ”), which amends and restates and +amends the Original Amended +Certificate of Incorporation, has been declared advisable by the board of directors of the Corporation (the “ Board ”), +duly adopted by the stockholders of the Corporation and duly executed and acknowledged by the officers of the Corporation in accordance +with Sections 103; 228; 242 and 245 of the DGCL. +3. The +Original Amended Certificate of Incorporation +is hereby amended and restated in its entirety to read as follows: +FIRST: The name of +the Corporation is Liberty Oilfield Services Energy +Inc. +SECOND: The address +of its registered office in the State of Delaware is The Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801 +in New Castle County; Delaware. The name of its registered agent at such address is The Corporation Trust Company. +THIRD: The nature of +the business or purposes to be conducted or promoted by the Corporation is to engage in any lawful act or activity for which corporations +may be organized under the DGCL as it currently exists or may hereafter be amended. +FOURTH: The total number +of shares of stock that the Corporation shall have the authority to issue is 800,010,000 shares of stock, classified as (i) 10,000 +shares of preferred stock, par value $0.01 per share (“ Preferred Stock ”), (ii) 400,000,000 shares of +Class A common stock, par value $0.01 per share (“ Class A Common Stock ”), and (iii) 400,000,000 shares +of Class B common stock; par value $0.01 per share (“ Class B Common Stock ” and, together with the Class +A Common Stock, the “ Common Stock ”). +A- 2 +1. Provisions +Relating to Preferred Stock . +a. Preferred +Stock may be issued from time to time in one or more classes or series, the shares of each series to have such designations and +powers, preferences and rights, and qualifications, limitations and restrictions thereof, as are stated and expressed herein and +in the resolution or resolutions providing for the issue of such series adopted by the Board as hereafter prescribed (a “ Preferred +Stock Designation ”). +b. Subject +to any limitations prescribed by law and the rights of any series of the Preferred Stock then outstanding, if any, authority is +hereby expressly granted to and vested in the Board to authorize the issuance of Preferred Stock from time to time in one or more +classes or series, and with respect to each series of Preferred Stock, to fix and state by the resolution or resolutions from time +to time adopted by the Board providing for the issuance thereof the designation and the powers, preferences, rights, qualifications, +limitations and restrictions relating to each series of Preferred Stock, including, but not limited to, the following: +i. whether +or not the series is to have voting rights, full, special or limited, or is to be without voting rights, and whether or not such +series is to be entitled to vote as a separate class either alone or together with the holders of one or more other classes or +series of stock; +ii. the +number of shares to constitute the series and the designations thereof; +iii. the +preferences, and relative, participating, optional or other special rights, if any, and the qualifications, limitations or restrictions +thereof, if any, with respect to any series; +iv. whether +or not the shares of any series shall be redeemable at the option of the Corporation or the holders thereof or upon the happening +of any specified event, and, if redeemable, the redemption price or prices (which may be payable in the form of cash, notes, securities +or other property), and the time or times at which, and the terms and conditions upon which, such shares shall be redeemable and +the manner of redemption; +v. whether +or not the shares of a series shall be subject to the operation of retirement or sinking funds to be applied to the purchase or +redemption of such shares for retirement, and, if such retirement or sinking fund or funds are to be established, the annual amount +thereof, and the terms and provisions relative to the operation thereof; +vi. the +dividend rate, whether dividends are payable in cash, stock of the Corporation or other property, the conditions upon which and +the times when such dividends are payable, the preference to or the relation to the payment of dividends payable on any other class +or classes or series of stock, whether or not such dividends shall be cumulative or noncumulative, and if cumulative, the date +or dates from which such dividends shall accumulate; +A- 3 +vii. the +preferences, if any, and the amounts thereof which the holders of any series thereof shall be entitled to receive upon the voluntary +or involuntary liquidation, dissolution or winding up of, or upon any distribution of the assets of, the Corporation; +viii. whether +or not the shares of any series, at the option of the Corporation or the holder thereof or upon the happening of any specified +event, shall be convertible into or exchangeable for, the shares of any other class or classes or of any other series of the same +or any other class or classes of stock, securities or other property of the Corporation and the conversion price or prices or ratio +or ratios or the rate or rates at which such exchange may be made, with such adjustments, if any, as shall be stated and expressed +or provided for in such resolution or resolutions; and +ix. such +other powers, preferences, rights, qualifications, limitations and restrictions with respect to any series as may to the Board +seem advisable. +c. The +shares of each series of Preferred Stock may vary from the shares of any other series thereof in any or all of the foregoing respects. +2. Provisions +Relating to Common Stock . +a. Except +as may otherwise be provided in this Amended and Restated Certificate of Incorporation, each share of Common Stock shall have identical +rights and privileges in every respect. Common Stock shall be subject to the express terms of Preferred Stock and any series thereof. +Except as may otherwise be provided in this Amended and Restated Certificate of Incorporation, in a Preferred Stock Designation +or by applicable law, the holders of shares of Common Stock shall be entitled to one vote for each such share on all matters which +to the stockholders are entitled to vote, the holders of shares of Common Stock shall have the exclusive right to vote for the +election of directors and on all other matters upon which the stockholders are entitled to vote, and the holders of Preferred Stock +shall not be entitled to vote at or receive notice of any meeting of stockholders, other than as provided in the applicable Preferred +Stock Designation. Each holder of Common Stock shall be entitled to notice of any stockholders’ meeting in accordance with +the bylaws of the Corporation (as in effect at the time in question) and applicable law on all matters put to a vote of the stockholders +of the Corporation. Except as otherwise required in this Amended and Restated Certificate of Incorporation or by applicable law, +the holders of Common Stock shall vote together as a single class on all matters (or, if any holders of Preferred Stock are entitled +to vote together with the holders of Common Stock, the holders of Common Stock and the Preferred Stock shall vote together as a +single class). +b. Notwithstanding +the foregoing, except as otherwise required by applicable law, holders of Common Stock, as such, shall not be entitled to vote +on any amendment to this Amended and Restated Certificate of Incorporation (including any Preferred Stock Designation) that relates +solely to the terms of one or more outstanding series of Preferred Stock if the holders of such affected series are entitled, either +separately or together with the holders of one or more other such series, to vote thereon pursuant to this Amended and Restated +Certificate of Incorporation (including any Preferred Stock Designation) or pursuant to the DGCL. +A- 4 +c. Subject +to the prior rights and preferences, if any, applicable to shares of Preferred Stock or any series thereof, the holders of shares +of Class A Common Stock shall be entitled to receive ratably in proportion to the number of shares of Class A Common Stock held +by them such dividends and distributions (payable in cash, stock or otherwise), if any, as may be declared thereon by the Board +at any time and from time to time out of any funds of the Corporation legally available therefor. Dividends and other distributions +shall not be declared or paid on the Class B Common Stock unless (i) the dividend consists of shares of Class B Common Stock or +of rights, options, warrants or other securities convertible or exercisable into or exchangeable for shares of Class B Common Stock +paid proportionally with respect to each outstanding share of Class B Common Stock and (ii) a dividend consisting of shares of +Class A Common Stock or of rights, options, warrants or other securities convertible or exercisable into or exchangeable for shares +of Class A Common Stock on equivalent terms is simultaneously paid to the holders of Class A Common Stock. If dividends are declared +on the Class A Common Stock or the Class B Common Stock that are payable in shares of Common Stock, or securities convertible into, +or exercisable or exchangeable for Common Stock, the dividends payable to the holders of Class A Common Stock shall be paid only +in shares of Class A Common Stock (or securities convertible into, or exercisable or exchangeable for Class A Common Stock), the +dividends payable to the holders of Class B Common Stock shall be paid only in shares of Class B Common Stock (or securities convertible +into, or exercisable or exchangeable for Class B Common Stock), and such dividends shall be paid in the same number of shares (or +fraction thereof) on a per share basis of the Class A Common Stock and Class B Common Stock, respectively (or securities convertible +into, or exercisable or exchangeable for the same number of shares (or fraction thereof) on a per share basis of the Class A Common +Stock and Class B Common Stock, respectively). In no event shall the shares of either Class A Common Stock or Class B Common Stock +be split, divided, or combined unless the outstanding shares of the other class shall be proportionately split, divided or combined. +d. In +the event of any voluntary or involuntary liquidation, dissolution or winding-up of the Corporation, after distribution in full +of the preferential amounts, if any, to be distributed to the holders of shares of Preferred Stock or any series thereof, the holders +of shares of Class A Common Stock shall be entitled to receive all of the remaining assets of the Corporation available for distribution +to its stockholders, ratably in proportion to the number of shares of Common Stock held by them. The holders of shares of Class +B Common Stock, as such, shall not be entitled to receive any assets of the Corporation in the event of any voluntary or involuntary +liquidation, dissolution or winding up of the affairs of the Corporation. A dissolution, liquidation or winding-up of the Corporation, +as such terms are used in this paragraph (d), shall not be deemed to be occasioned by or to include any consolidation or merger +of the Corporation with or into any other corporation or corporations or other entity or a sale, lease, exchange or conveyance +of all or a part of the assets of the Corporation . +A- 5 +e. Reserved. Shares +of Class B Common Stock shall be exchangeable for shares of Class A Common Stock on the terms and subject to the conditions set +forth in the Amended and Restated Limited Liability Agreement of Liberty Oilfield Services New HoldCo LLC, as it may be amended, +restated, supplemented and otherwise modified from time to time (the “ LLC Agreement ” ). +The Corporation will at all times reserve and keep available out of its authorized but unissued shares of Class A Common Stock, +solely for the purpose of issuance upon exchange of the outstanding shares of Class B Common Stock for Class A Common Stock pursuant +to the LLC Agreement, such number of shares of Class A Common Stock that shall be issuable upon any such exchange pursuant to the +LLC Agreement; provided that nothing contained herein shall be construed to preclude the Corporation from satisfying its obligations +in respect of any such exchange of shares of Class B Common Stock pursuant to the LLC Agreement by delivering to the holder of +shares of Class B Common Stock upon such exchange, cash in lieu of shares of Class A Common Stock in the amount permitted by and +provided in the LLC Agreement or shares of Class A Common Stock which are held in the treasury of the Corporation. All shares of +Class A Common Stock that shall be issued upon any such exchange will, upon issuance in accordance with the LLC Agreement, be validly +issued, fully paid and non-assessable. +f. The +number of authorized shares of Class A Common Stock, Class B Common Stock or Preferred Stock may be increased or decreased (but +not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority in voting power of +the outstanding shares of stock of the Corporation entitled to vote thereon irrespective of the provisions of Section 242(b)(2) +of the DGCL (or any successor provision thereto), and no vote of the holders of Class A Common Stock, Class B Common Stock or Preferred +Stock voting separately as a class shall be required therefor. +g. No +stockholder shall, by reason of the holding of shares of any class or series of capital stock of the Corporation, have any preemptive +or preferential right to acquire or subscribe for any shares or securities of any class, whether now or hereapfter authorized, +which may at any time be issued, sold or offered for sale by the Corporation, unless specifically provided for in the terms of +a series of Preferred Stock. +FIFTH: The business +and affairs of the Corporation shall be managed by or under the direction of the Board. Until +the first date on which R/C IV Liberty Oilfield Services Holdings, L.P., a Delaware limited partnership (“ R/C +Holdings ”), R/C Energy IV Direct Partnership, L.P., a Delaware limited partnership (“ R/C +Partnership ” and, together with R/C Holdings, “ Riverstone ”), Laurel +Road, LLC, a California limited liability company (“ Laurel I ”), Laurel Road II, LLC, +a California limited liability company (“ Laurel II ” and, together with Laurel I, “ Laurel ”), +Concentric Equity Partners II, L.P., a Delaware limited partnership, BRP Liberty, LLC, a Georgia limited liability company, Bay +Resource Partners, L.P. a Delaware limited partnership, Bay II Resource Partners, L.P., a Delaware limited partnership, Thomas +E. Claugus, GMT Exploration, LLC, a Georgia limited liability company, SH Ventures LOS, LLC, a Delaware limited liability company +(together with SH Ventures LOS, LLC, Concentric Equity Partners II, L.P.-Liberty Series, Bay Resource Partners, L.P., Bay II Resource +Partners, L.P., Thomas E. Claugus, GMT Exploration, LLC, SH Ventures LOS, LLC, the “ Spruce Holders ”) +together with Riverstone, Laurel and each of their respective successors and affiliates who are assignees pursuant to Section 5.9 +of the Stockholders Agreement (as defined below), the “ Principal Stockholders ”) no longer +individually or collectively beneficially own (or otherwise have the right to vote or direct the vote of) more than 50% of the +outstanding shares of Common Stock (the “ Trigger Date ”), the directors, other than those +who may be elected by the holders of any series of Preferred Stock specified in the related Preferred Stock Designation, shall +consist of a single class, with the initial term of office to expire at the 2019 annual meeting of stockholders, and each director +shall hold office until his successor shall have been duly elected and qualified, subject, however, to such director’s earlier +death, resignation, disqualification or removal. For purposes of this Amended and Restated Certificate of Incorporation, beneficial +ownership of shares shall be determined in accordance with Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as +amended. At each annual meeting of stockholders, directors elected to succeed those directors whose terms then expire shall be +elected for a term of office to expire at the next succeeding annual meeting of stockholders after their election, with each director +to hold office until his successor shall have been duly elected and qualified, subject, however, to such director’s earlier +death, resignation, disqualification or removal. The directors, other than those who +may be elected by the holders of any series of Preferred Stock specified in the related Preferred Stock Designation, shall be divided +as follows: +A- 6 +On +and after the Trigger Date, the directors, other than those who may be elected by the holders of any series of Preferred Stock +specified in the related Preferred Stock Designation, shall be divided, with respect to the time for which they severally hold +office, into three classes, as nearly equal in number as is reasonably possible, with the initial term of office of the first class +to expire at the first annual meeting of stockholders following the Trigger Date, the initial term of office of the second class +to expire at the second annual meeting of stockholders following the Trigger Date, and the initial term of office of the third +class to expire at the third annual meeting of stockholders following the Trigger Date, with each director to hold office until +his successor shall have been duly elected and qualified, subject, however, to such director ’ s earlier death, +resignation, disqualification or removal, and the Board shall be authorized to assign members of the Board, other than those directors +who may be elected by the holders of any series of Preferred Stock, to such classes at the time such classification becomes effective. +At each annual meeting of stockholders following the Trigger Date, directors elected to succeed those directors whose terms then +expire shall be elected for a term of office to expire at the third succeeding annual meeting of stockholders after their election, +with each director to hold office until his successor shall have been duly elected and qualified, subject, however, to such director ’ s +earlier death, resignation, disqualification or removal. +1. +Commencing with the election of directors at the 2026 annual meeting of stockholders, there shall be two classes of directors: (i) the directors in the class elected at the 2024 annual meeting of stockholders and having a term that expires at the 2027 annual meeting of stockholders, and (ii) the directors in the class elected at the 2025 annual meeting of stockholders and having a term that expires at the 2028 annual meeting of stockholders. Directors elected at the 2026 annual meeting of stockholders shall be elected for a one-year term expiring at the 2027 annual meeting of stockholders. +2. +Commencing with the election of directors at the 2027 annual meeting of stockholders, there shall be one class of directors: those directors elected at the 2025 annual meeting of stockholders and having a term that expires at the 2028 annual meeting of stockholders. Directors elected at the 2027 annual meeting of stockholders shall be elected for a one-year term expiring at the 2028 annual meeting of stockholders. +A- 7 +3. +From and after the election of directors at the 2028 annual meeting of stockholders, the Board of Directors shall cease to be classified and the directors elected at the 2028 annual meeting of stockholders (and each annual meeting of stockholders thereafter) shall be elected for a term expiring at the following annual meeting of stockholders. +Subject to applicable +law and the rights of the holders of any series of Preferred Stock then outstanding and the then-applicable +terms of the Stockholders Agreement, among the Corporation and the Principal Stockholders, as it may be amended, restated, supplemented +and otherwise modified from time to time (the “ Stockholders Agreement ” ), , +any newly created directorship that results from an increase in the number of directors or any vacancy on the Board that results +from the death, resignation, disqualification or removal of any director or from any other cause shall, unless otherwise required +by law or by resolution of the Board, be filled (A) prior to the Trigger Date, by the affirmative +vote of a majority of the total number of directors then in office, even if less than a quorum, or by a sole remaining director, +or the affirmative vote of the holders of a majority of the voting power of the outstanding shares of stock of the Corporation +entitled to vote generally for the election of directors, voting together as a single class and acting at a meeting of the stockholders +or by written consent (if permitted) in accordance with the DGCL, this Amended and Restated Certificate of Incorporation and the +bylaws of the Corporation, and (B) on or after the Trigger Date, solely by the affirmative vote of a majority of +the total number of directors then in office, even if less than a quorum, or by a sole remaining director, and shall not be filled +by the stockholders. Any director elected to fill a newly created directorship that results from an +increase in the number of directors shall be elected for a term expiring at the next annual meeting of stockholders and to hold +office until his successor shall have been duly elected and qualified, subject, however, to such director ’ s earlier +death, resignation, disqualification or removal. Any director elected to fill a vacancy not resulting from an increase +in the number of directors shall hold office for the remaining term of his predecessor. No decrease in the number of authorized +directors constituting the Board shall shorten the term of any incumbent director. +Until +the Trigger Date, subject to the rights of the holders of shares of any series of Preferred Stock, if any, to elect additional +directors pursuant to this Amended and Restated Certificate of Incorporation (including any Preferred Stock Designation thereunder) +and the then applicable terms of the Stockholders Agreement, any director may be removed at any time, either for or without cause, +upon the affirmative vote of the holders of a majority of the voting power of the outstanding shares of stock of the Corporation +entitled to vote generally for the election of directors, voting together as a single class and acting at a meeting of the stockholders +or by written consent (if permitted) in accordance with the DGCL, this Amended and Restated Certificate of Incorporation and the +bylaws of the Corporation. +On +and after the Trigger Date, subject Subject to the rights of the holders +of shares of any series of Preferred Stock, if any, to elect additional directors pursuant to this Amended and Restated Certificate +of Incorporation (including any Preferred Stock Designation thereunder) and the then applicable +terms of the Stockholders Agreement , any director may be removed from office only +for cause, upon the affirmative vote of the holders of at least 66 +2/3% a majority of the outstanding shares of stock of the Corporation entitled +to vote generally for the election of directors, acting at a meeting of the stockholders or by written consent (if permitted) in +accordance with the DGCL, this Amended and Restated Certificate of Incorporation and the bylaws of the Corporation. Any +director, or their successor, serving in a class that was elected for a three-year term at the annual meetings of stockholders +held from 2023 through 2025 may only be removed for cause. All other directors may be removed either with or without cause. +Except as applicable law otherwise provides, cause for the removal of a director shall be deemed to exist only if the director +whose removal is proposed: ( I 1 ) has been +convicted of a felony by a court of competent jurisdiction and that conviction is no longer subject to direct appeal; (2) has been +found to have been guilty of willful misconduct in the performance of his duties to the Corporation in any matter of substantial +importance to the Corporation by a court of competent jurisdiction; or (3) has been adjudicated by a court of competent jurisdiction +to be mentally incompetent, which mental incompetency directly affects his ability to serve as a director of the Corporation. +A- 8 +Subject to the rights +of the holders of any series of Preferred Stock to elect directors under specified circumstances, if any, the number of directors +shall be fixed from time to time exclusively pursuant to a resolution adopted by a majority of the Board. Unless and except to +the extent that the bylaws of the Corporation so provide, the election of directors need not be by written ballot. +SIXTH: Prior +to the Trigger Date, any action required or permitted to be taken at any annual meeting or special meeting of the stockholders +of the Corporation may be taken without a meeting, without prior notice and without a vote of stockholders, if a consent or consents +in writing, setting forth the action so taken, is or are signed by the holders of outstanding stock having not less than the minimum +number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon +were present and voted. On and after the Trigger Date, subject Subject to +the rights of holders of any series of Preferred Stock with respect to such series of Preferred Stock, any action required or permitted +to be taken by the stockholders of the Corporation must be taken at a duly held annual or special meeting of stockholders and may +not be taken by any consent in writing of such stockholders. +SEVENTH: Special meetings +of stockholders of the Corporation may be called only by the Chief Executive Officer, the Chairman of the Board or the Board pursuant +to a resolution adopted by a majority of the total number of directors that the Corporation would have if there were no vacancies ; +provided, however , that prior to the Trigger Date, special meetings of the stockholders of the Corporation shall also be +called by the Secretary of the Corporation at the request of Riverstone. . +The authorized person(s) calling a special meeting may fix the date, time and place, if any, of such meeting. On +and after the Trigger Date, except Except as otherwise required by law and +subject to the rights of the holders of any series of Preferred Stock, the stockholders of the Corporation do not have the power +to call a special meeting of stockholders of the Corporation. The Board may postpone, reschedule or cancel any special meeting +of the stockholders previously scheduled by the Board. +EIGHTH: In furtherance +of, and not in limitation of, the powers conferred by the laws of the State of Delaware, the Board is expressly authorized to adopt, +amend or repeal the bylaws of the Corporation without any action on the part of the stockholders of the Corporation; provided that, +in addition to any vote of the holders of any class or series of stock of the Corporation required by law or by this Amended and +Restated Certificate of Incorporation, any bylaw adopted or amended by the Board, and any powers thereby conferred, may be amended, +altered or repealed (A) prior to the Trigger Date, by the affirmative vote of +holders of not less than 50% in voting power of the then-outstanding shares of stock entitled +to vote thereon, voting together as a single class, and (B) on and after the Trigger Date, by the affirmative vote of holders of +not less than 66 2/3% a majority in voting power of the then-outstanding +shares of stock entitled to vote thereon, voting together as a single class. No bylaws hereafter made or adopted, nor any repeal +of or amendment thereto, shall invalidate any prior act of the Board that was valid at the time it was taken. +A- 9 +NINTH: No director +or officer of the Corporation shall be liable to the Corporation or its stockholders for +monetary damages for breach of fiduciary duty as a director or officer, as applicable , +except to the extent such exemption from liability or limitation thereof is not permitted under the DGCL as it now exists. In addition +to the circumstances in which a director or officer, as applicable , of the Corporation +is not personally liable as set forth in the preceding sentence, a director or officer +of the Corporation shall not be liable to the fullest extent permitted by any amendment to the DGCL hereafter enacted that further +limits the liability of a director or officer . +Any amendment, repeal +or modification of this Article Ninth shall be prospective only and shall not affect any limitation on liability of a director +or officer for acts or omissions occurring prior to the date of such amendment, repeal +or modification. +TENTH: Reserved. +To the fullest extent permitted by applicable law, the Corporation, on behalf of itself and its +subsidiaries, renounces any interest or expectancy of the Corporation and its subsidiaries in, or in being offered an opportunity +to participate in, any business opportunities that are from time to time presented to any of the Principal Stockholders or any +of their respective affiliates or any of their respective agents, shareholders, members, partners, directors, officers, employees, +affiliates or subsidiaries (other than the Corporation and its subsidiaries), including any director or officer of the Corporation +who is also an agent, shareholder, member, partner, director, officer, employee, affiliate or subsidiary of any Principal Stockholder +(each, a “ Business Opportunities Exempt Party ” ), even if the business opportunity is +one that the Corporation or its subsidiaries might reasonably be deemed to have pursued or had the ability or desire to pursue +if granted the opportunity to do so, and no Business Opportunities Exempt Party shall have any duty to communicate or offer any +such business opportunity to the Corporation or be liable to the Corporation or any of its subsidiaries or any stockholder, including +for breach of any fiduciary or other duty, as a director or officer or controlling stockholder or otherwise, and the Corporation +shall indemnify each Business Opportunities Exempt Party against any claim that such person is liable to the Corporation or its +stockholders for breach of any fiduciary duty, by reason of the fact that such person (i) participates in, pursues or acquires +any such business opportunity, (ii) directs any such business opportunity to another person or (iii) fails to present any such +business opportunity, or information regarding any such business opportunity, to the Corporation or its subsidiaries, unless, in +the case of a person who is a director or officer of the Corporation, such business opportunity is expressly offered to such director +or officer in writing solely in his capacity as a director or officer of the Corporation. +A- 10 +Neither +the amendment nor repeal of this Article Tenth, nor the adoption of any provision of this Amended and Restated Certificate of Incorporation +or the bylaws of the Corporation, nor, to the fullest extent permitted by Delaware law, any modification of law, shall eliminate, +reduce or otherwise adversely affect any right or protection of any person granted pursuant hereto existing at, or arising out +of or related to any event, act or omission that occurred prior to, the time of such amendment, repeal, adoption or modification +(regardless of when any proceeding (or part thereof) relating to such event, act or omission arises or is first threatened, commenced +or completed). +If +any provision or provisions of this Article Tenth shall be held to be invalid, illegal or unenforceable as applied to any circumstance +for any reason whatsoever, (a) the validity, legality and enforceability of such provisions in any other circumstance and of the +remaining provisions of this Article Tenth (including, without limitation, each portion of any paragraph of this Article Tenth +containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) +shall not in any way be affected or impaired thereby and (b) to the fullest extent possible, the provisions of this Article Tenth +(including, without limitation, each such portion of any paragraph of this Article Tenth containing any such provision held to +be invalid, illegal or unenforceable) shall be construed so as to permit the Corporation to protect its directors, officers, employees +and agents from personal liability in respect of their good faith service to or for the benefit of the Corporation to the fullest +extent permitted by applicable law. +This +Article Tenth shall not limit any protections or defenses available to, or indemnification or advancement rights of, any director +or officer of the Corporation under this Amended and Restated Certificate of Incorporation, the bylaws of the Corporation or applicable +law. To the fullest extent permitted by law, any person or entity purchasing or otherwise acquiring any interest in any securities +of the Corporation shall be deemed to have notice of and to have consented to the provisions of this Article Tenth. +ELEVENTH: The Corporation +shall not be governed by or and +subject to the provisions of Section 203 of the DGCL as now in effect or hereafter amended, if and +for so long as Section 203 or any successor statute thereto by its terms shall apply to +the Corporation . +TWELFTH: The Corporation +shall have the right, subject to any express provisions or restrictions contained in this Amended and Restated Certificate of Incorporation +or bylaws of the Corporation, from time to time, to amend this Amended and Restated Certificate of Incorporation or any provision +hereof in any manner now or hereafter provided by applicable law, and all rights and powers of any kind conferred upon a director +or stockholder of the Corporation by this Amended and Restated Certificate of Incorporation or any amendment hereof are subject +to such right of the Corporation. +Notwithstanding any +other provision of this Amended and Restated Certificate of Incorporation or the bylaws of the Corporation (and in addition to +any other vote that may be required by applicable law or , +this Amended and Restated Certificate of Incorporation ), prior to or +the Trigger Date, bylaws of the Corporation), +the affirmative vote of the holders of a majority in voting power of the outstanding shares of stock of the Corporation entitled +to vote thereon, voting together as a single class, shall be required to amend, alter or repeal any provision of this Amended and +Restated Certificate of Incorporation. +A- 11 +THIRTEENTH: Reserved. +Notwithstanding any other provision of this Amended and Restated Certificate of Incorporation +or the bylaws of the Corporation (and in addition to any other vote that may be required by applicable law, this Amended and Restated +Certificate of Incorporation or the bylaws of the Corporation), on and after the Trigger Date, the affirmative vote of the holders +of at least 66 21-l% in voting power of the outstanding shares of stock of the Corporation entitled to vote thereon, voting together +as a single class, shall be required to amend, alter or repeal any provision of this Amended and Restated Certificate of Incorporation. +FOURTEENTH: Unless +the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall, +to the fullest extent permitted by applicable law, be the sole and exclusive forum for (i) any derivative action or proceeding +brought on behalf of the Corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer, +employee or agent of the Corporation to the Corporation or the Corporation’s stockholders, (iii) any action asserting a claim +against the Corporation or any director or officer or other employee of the Corporation arising pursuant to any provision of the +DGCL, this Amended and Restated Certificate of Incorporation or the Corporation’s bylaws, or (iv) any action asserting a +claim against the Corporation or any director or officer or other employee of the Corporation governed by the internal affairs +doctrine, in each such case subject to said Court of Chancery having personal jurisdiction over the indispensable parties named +as defendants therein. Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the Corporation +shall be deemed to have notice of and consented to the provisions of this Article Fourteenth. +If any provision or +provisions of this Article Fourteenth shall be held to be invalid, illegal or unenforceable as applied to any person or entity +or circumstance for any reason whatsoever, then, to the fullest extent permitted by law, the validity, legal and enforceability +of such provisions in any other circumstance and of the remaining provisions of this Article Fourteenth) including, without limitation, +each portion of any sentence of this Article Fourteenth containing any such provision held to be invalid, illegal or unenforceable +that is not itself held to be invalid, illegal or unenforceable) and the application of such provision to other persons or entities +and circumstances shall not in any way be affected or impaired thereby. +To the fullest extent +permitted by law, if any action the subject matter of which is within the scope of the first paragraph of this Article Fourteenth +is filed in a court other than a court located within the State of Delaware (a “ Foreign Action ”) in the +name of any stockholder, such stockholder shall be deemed to have consented to (A) the personal jurisdiction of the state and federal +courts located within the State of Delaware in connection with any action brought in any such court to enforce the first paragraph +of this Article Fourteenth) an “ FSC Enforcement Action ”) and (B) having service of process made upon +such stockholder in any such FSC Enforcement Action by service upon such stockholder’s counsel in the Foreign Action as agent +for such stockholder. +A- 12 +IN WITNESS WHEREOF, +the undersigned has executed this Second Amended and Restated Certificate of Incorporation +as of this 17 th day of January, 2018 April +15, 2025 . +LIBERTY ENERGY INC. +By: +Name: Michael Stock R. Sean Elliott +Title: Chief Financial Legal Officer +[Signature Page to Second +Amended and Restated Certificate of Incorporation] +A- 13 +ANNUAL +MEETING OF STOCKHOLDERS OF +LIBERTY +ENERGY INC. +Tuesday, +April 15, 2025 +GO GREEN +e-Consent +makes it easy to go paperless. With e-Consent, you can quickly access your proxy material, statements and other eligible documents +online, while reducing costs, clutter and paper waste. Enroll today via www.astfinancial.com to enjoy online access. +NOTICE +OF INTERNET AVAILABILITY OF PROXY MATERIAL : +The Notice of Meeting, proxy statement and proxy card +are available at http://www.astproxyportal.com/ast/21952 +Please +sign, date and mail +your proxy card in the +envelope provided as soon +as possible. +Please +detach along perforated line and mail in the envelope provided. +041525 +THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE NOMINEES LISTED IN PROPOSAL 1, +“FOR” PROPOSALS 2, 3, 5, 6, 7, 8, 9 AND “1 YEAR” FOR PROPOSAL 4. +PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE ☒ +1. Election of Directors: To elect three Class III directors to the Company’s +Board of Directors to serve until the 2028 annual meeting or until their +successors are duly elected and qualified. +☐ +NOMINEES: +FOR +ALL NOMINEES +Peter A. Dea +William F. Kimble +☐ +WITHHOLD AUTHORITY +FOR ALL NOMINEES +James R. McDonald +☐ +FOR ALL EXCEPT +(See instructions below) +INSTRUCTIONS: To +withhold authority to vote for any individual nominee(s), mark “FOR ALL EXCEPT” +and fill in the circle next to each nominee you wish to withhold, as shown here: +● +To change the address on your account, please check the box at right and indicate your new address in the address space above. +Please note that changes to the registered name(s) on the account may not be submitted via this method. +☐ +FOR +AGAINST +ABSTAIN +2. +Advisory vote to approve the compensation of the Company’s named executive officers. +☐ +☐ +☐ +FOR +AGAINST +ABSTAIN +3. +Ratification of appointment of the Company’s independent registered public accounting firm. +☐ +☐ +☐ +1 YEAR +2 +YEARS +3 YEARS +ABSTAIN +4. +Advisory vote to determine the frequency of future advisory votes to approve the compensation of the Company’s named +executive officers. +☐ +☐ +☐ +☐ +FOR +AGAINST +ABSTAIN +5. +Approve an amendment to the Company’s certificate of incorporation to declassify the board of directors. +☐ +☐ +☐ +FOR +AGAINST +ABSTAIN +6. +Approve an amendment to the Company’s certificate of incorporation to remove the 66 2/3% supermajority vote requirements +to amend, alter, or repeal the Company’s certificate of incorporation and bylaws and to remove directors from office. +☐ +☐ +☐ +FOR +AGAINST +ABSTAIN +7. +Approve an amendment to the Company’s certificate of incorporation to limit the liability of certain officers. +☐ +☐ +☐ +FOR +AGAINST +ABSTAIN +8. +Approve an amendment to the Company’s certificate of incorporation to delete the waiver of Section 203 of the Delaware +General Corporation Law. +☐ +☐ +☐ +FOR +AGAINST +ABSTAIN +9. +Approve miscellaneous amendments to clarify and update the Company’s certificate of incorporation. +☐ +☐ +☐ +TO INCLUDE ANY COMMENTS, USE THE COMMENTS +BOX ON THE REVERSE SIDE OF THIS CARD. +IMPORTANT +NOTICE +YOUR +VOTE IS IMPORTANT. PLEASE SIGN, DATE AND RETURN YOUR PROXY AS SOON AS POSSIBLE. BY DOING SO, YOU MAY SAVE LIBERTY ENERGY INC. +THE EXPENSE OF ADDITIONAL SOLICITATION. +NOTE: +In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting +or an adjournment or postponement thereof. +MARK “X” +HERE IF YOU PLAN TO ATTEND THE VIRTUAL MEETING ☐ +Signature of Stockholder +Date: +Signature of Stockholder +Date: +Note: +Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When +signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, +please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please +sign in partnership name by authorized person. +1 +LIBERTY +ENERGY INC. +THIS +PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS +FOR THE ANNUAL MEETING OF STOCKHOLDERS +The +undersigned hereby appoint(s) Ron Gusek, Michael Stock and R. Sean Elliott, or any one of them, attorneys with full power of substitution +and revocation to each, for and in the name of the undersigned with all the powers the undersigned would possess if personally +present, to vote the shares of the undersigned in Liberty Energy Inc. as indicated on the proposals referred to on the reverse +side hereof at the annual meeting of its stockholders to be held virtually via live webcast at https://web.lumiconnect.com/245867901 +(password: liberty2025) on Tuesday, April 15, 2025 at 9:00 a.m. Mountain Time and at any adjournments or postponements thereof, +and in their or his discretion upon any other matter which may properly come before said meeting. +THE +SHARES REPRESENTED BY THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. +IF NO SPECIFIC DIRECTION IS GIVEN AS TO THE PROPOSALS ON THE REVERSE SIDE, THIS PROXY WILL BE VOTED “FOR” THE NOMINEES LISTED +IN PROPOSAL 1 AND “FOR” PROPOSALS 2, 3, 5, 6, 7, 8, 9 AND “1 YEAR” FOR PROPOSAL 4. PLEASE MARK, SIGN, DATE AND RETURN +THE PROXY CARD PROMPTLY. +This +card also constitutes voting instructions to the trustees under the Liberty Energy Inc. savings plans to vote, in person or by +proxy, the proportionate interest of the undersigned in the shares of Common Stock of Liberty Energy Inc. held by the trustees +under the plans, as described in the proxy statement. +(Continued +and to be signed on the reverse side) +COMMENTS: +1.1 +14475 \ No newline at end of file diff --git a/raw/proxies/0001694028/0001839882-25-014204/proxy_rpt.txt b/raw/proxies/0001694028/0001839882-25-014204/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..c46969f4f633c6800952ff3a44611e0bdf8d4d4d --- /dev/null +++ b/raw/proxies/0001694028/0001839882-25-014204/proxy_rpt.txt @@ -0,0 +1,141 @@ +any related-person transactions. +Our +Board periodically reviews its governance and committee structure to ensure that it continues to meet the Company’s needs. +Director +Independence and Family Relationships +The +Company’s standards for determining director independence require the assessment of directors’ independence each year. +A director cannot be considered independent unless the Board affirmatively determines that he or she does not have any relationship +with management or the Company that may interfere with the exercise of his or her independent judgment, including any of the relationships +that would disqualify the director from being independent under the rules of the NYSE. +14 +The +Board has assessed the independence of each non-employee director under the independence standards of the NYSE. The Board has +determined that each of Messrs. Ayat, Babcock, Dea, Kimble, McDonald, Murti and Steinbeck and Ms. Norton is considered independent +under the NYSE rules. In connection with its assessment of the independence of each non-employee director, the Board also determined +that Messrs. Ayat, Babcock, Dea, Kimble, McDonald, Murti and Steinbeck and Ms. Norton are independent as defined in Section 10A-3 +of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”) and under the standards set forth by +the NYSE applicable to members of the Audit Committee. Furthermore, none of our directors or officers have any family relationship +with any director or other officers. “Family relationship” for this purpose means any relationship by blood, marriage +or adoption, not more remote than first cousin. +BOARD +COMMITTEES +Overview +Our +Board has established an Audit Committee, a Compensation Committee of the Board (the “ Compensation Committee ”) +and a Nominating and Governance Committee as further detailed herein. The below chart sets forth the members and chairperson of +each Board committee. +Name +Audit +Committee +Compensation +Committee +Nominating +and +Governance +Committee +William +F. Kimble + +* +● +Cary +D. Steinbeck +● +● +Peter +A. Dea +* +● +Ken +Babcock +● +Gale +A. Norton +● +* +Simon +Ayat +● +James +R. McDonald +● ++ +Non-Executive Chairman +of +the Board +* +Chairperson +● +Member +Audit +Committee +Rules +implemented by the NYSE and the SEC require us to have an Audit Committee comprised of at least three directors who meet the independence +and experience standards established by the NYSE and the Exchange Act. Our Audit Committee currently consists of four directors, +all of whom are independent under the rules of the SEC and the standards set forth by the NYSE applicable to members of an Audit +Committee. Messrs. Ayat, Kimble and Steinbeck and Ms. Norton are the members of our Audit Committee with Mr. Kimble serving as +the chairperson. Each member of our Audit Committee is financially literate, and our Board has determined that Mr. Kimble qualifies +as an “audit committee financial expert” as defined in applicable SEC rules. +The +Audit Committee oversees, reviews, acts on and reports on various auditing and accounting matters to our Board, including: the +selection of our independent accountants, the scope of our annual audits, fees to be paid to the independent accountants, the +performance of our independent accountants and our accounting practices. The general purpose of our Audit Committee is to assist +the Board in oversight responsibilities regarding the integrity of the Company’s financial statements, compliance with legal +and regulatory requirements, performance of the independent registered public accounting firm engaged by the Company and the effectiveness +of the Company’s internal audit functions. The Audit Committee is also responsible for oversight of the Company’s +information technology and cybersecurity risks. The Audit Committee operates under an Audit Committee charter that defines the +committee’s primary duties in a manner consistent with the rules of the SEC and NYSE. A current copy of the Audit Committee +charter can be found on our website, www.libertyenergy.com , by first clicking “ Investors ” then “ Corporate +Governance ” and proceeding to “ Governance Documents .” +Compensation +Committee +Our +Compensation Committee currently consists of four directors: Messrs. Dea, Babcock, McDonald, and Steinbeck with Mr. Dea serving +as the chairperson. Our Compensation Committee establishes salaries, incentives and other forms of compensation for the Board, +executive officers, and other senior officers. Our Compensation Committee also assists the Board with the administration and oversight +of our incentive compensation and benefit plans, our compensation recovery policy, and our stock ownership guidelines. The Compensation +Committee has the authority to delegate to its chairperson or any one of its members the responsibility and authority for any +particular matter, as it deems appropriate from time to time under the circumstances. The Compensation Committee operates under +a Compensation Committee charter that defines the committee’s primary duties. A current copy of the Compensation Committee +charter can be found on our website, www.libertyenergy.com , by first clicking “ Investors ” then “ Corporate +Governance ” and proceeding to “ Governance Documents .” +The +Board has determined that all directors on the Compensation Committee are independent under the standards set forth by the NYSE +and under the Exchange Act. +15 +Nominating +and Governance Committee +Our +Nominating and Governance Committee currently consists of three directors: Ms. Norton and Messrs. Kimble and Dea with Ms. Norton +serving as the chairperson. The Nominating and Governance Committee operates under a Nominating and Governance Committee charter +that defines the committee’s primary duties. A current copy of the Nominating and Governance Committee charter can be found +on our website, www.libertyenergy.com , by first clicking “ Investors ” then “ Corporate Governance ” +and proceeding to “ Governance Documents .” +Our +Nominating and Governance Committee oversees our corporate governance framework, including identifying, evaluating and recommending +qualified nominees to serve on our Board. Our Nominating and Governance Committee also develops and oversees our corporate governance +processes, including the annual performance evaluation of the Board and its committees, and of senior management, evaluating director +independence, and develops, reviews and recommends to the Board any changes to our Corporate Governance Guidelines and other applicable +governance policies. +The +Board and the Nominating and Governance Committee believe the skills, qualities, attributes, and experience of our directors provide +our Company with business acumen and a diverse range of perspectives to effectively address our evolving needs and represent the +best interests of our stockholders. +When +identifying director nominees, the Nominating and Governance Committee considers and reviews the following criteria: the candidate’s +relevant skills, qualifications and experience; independence under applicable standards; qualifications to serve on Board committees +and, as appropriate, serve as a committee chairperson; business judgement; service on boards of directors of other companies; +personal and professional integrity; openness and ability to work as part of a team; willingness to commit to the required time +to serve as a member of the Board; and familiarity with the Company and its industry. Additionally, when considering the recommendation +to the Board that an existing director be nominated for election at the annual meeting of stockholders, the Nominating and Governance +Committee will consider and review: the past Board and committee meeting attendance and performance, the length of Board service, +the personal and professional integrity, the relevant experience, skills, qualifications and contributions that the existing director +brings to the Board and their independence under the applicable standards. +The +Nominating and Governance Committee will consider suggestions from any source, particularly from stockholders, regarding possible +candidates for director; provided, however , that in order for such stockholder recommendation to be considered, the recommendations +must comply with the procedures outlined under “ Stockholder Proposals ” below. +The +Board has determined that all directors on the Nominating and Governance Committee are independent under the 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+Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +☒ +Definitive Proxy Statement +☐ +Definitive Additional Materials +☐ +Soliciting Material Pursuant to § 240.14a-12 +LIBERTY ENERGY INC. +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check all boxes that apply): +☒  No fee required +☐  Fee +paid previously with preliminary materials. +☐  Fee +computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11 +LIBERTY ENERGY INC. +950 17 TH STREET, SUITE 2400 +DENVER, COLORADO 80202 +NOTICE OF 2024 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD APRIL 16, 2024 +To our valued stockholders: +Notice is hereby given that the 2024 Annual Meeting of Stockholders (the “ Annual Meeting ”) of Liberty Energy Inc. ( the “ Co mpany ” or “ Liberty ”) will be held on Tuesday, April 16, 2024, at 9:00 a.m. Mountain Time. This year’s Annual Meeting will be accessible through the Internet in order to permit our stockholders to participate from any geographic location with Internet connectivity. We believe this enhances accessibility to our Annual Meeting for all stockholders. To attend the Annual Meeting, you must access the meeting website at https://web.lumiagm.com/245867901. Although no physical in-person meeting will be held, we have designed the format of the virtual Annual Meeting to ensure that our stockholders of record who attend the Annual Meeting will be afforded similar rights and opportunities to participate as they would at an in-person meeting, while providing an online experience available to all of our stockholders regardless of location. At the Annual Meeting, stockholders will be asked to: +1. Elect three (3) Class II directors to our board of directors to serve until the 2027 annual meeting or until their successors are duly elected and qualified ( Proposal 1 ); +2. Approve, on an advisory basis, the compensation of our named executive officers ( Proposal 2 ); +3. Ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2024 ( Proposal 3 ); +4. Approve an amendment and restatement of our Long Term Incentive Plan ( Proposal 4 ); and +5. Transact such other business as may properly be brought before the Annual Meeting. +You can find more information, including the nominees for directors, executive compensation, and details regarding our independent registered public accounting firm, in the attached proxy statement. The board of directors recommends that you vote in favor of each of the above proposals. Pursuant to the “notice and access” rules adopted by the Securities and Exchange Commission, we have elected to provide access to our proxy materials on the Internet. The approximate date on which the attached proxy statement, the accompanying Notice of Internet Availability of Proxy Materials (the “ Notice ”), proxy card, and the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 are first being made available to stockholders at http://astproxyportal.com/ast/21952/ is March 7, 2024. The Notice includes instructions on how to access our proxy materials over the Internet, vote online and request a printed copy of these materials. +Only stockholders of record at the close of business on February 21, 2024 are entitled to notice of, and to vote at, the Annual Meeting or any adjournment. A complete list of stockholders entitled to vote at the Annual Meeting will be available for examination ten days before the Annual Meeting. If you would like to inspect the list of Company stockholders of record, please contact the Investor Relations department at IR@libertyenergy.com to schedule an appointment or request access electronically or in person. +IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE ANNUAL MEETING. ACCORDINGLY, EVEN IF YOU PLAN TO ATTEND THE ANNUAL MEETING VIRTUALLY, WE URGE YOU TO COMPLETE, SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY CARD IN THE POSTAGE-PREPAID ENVELOPE PRIOR TO THE ANNUAL MEETING OR FOLLOW THE INTERNET OR TELEPHONE VOTING PROCEDURES DESCRIBED ON THE PROXY CARD. IF YOU ATTEND THE ANNUAL MEETING VIRTUALLY AND WISH TO VOTE AT THAT TIME, YOU MAY WITHDRAW YOUR PROXY AND VOTE AT THE MEETING. YOUR PROMPT CONSIDERATION IS GREATLY APPRECIATED. YOUR VOTE IS IMPORTANT TO US. +By Order of the Board of Directors, +/s/ R. Sean Elliott +R. Sean Elliott +Chief Legal Officer and Corporate Secretary +Denver, Colorado +March 7, 2024 +IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING +TO BE HELD ON APRIL 16, 2024 +THIS NOTICE OF ANNUAL MEETING AND PROXY STATEMENT AND OUR ANNUAL REPORT ON FORM 10-K ARE AVAILABLE AT +http://astproxyportal.com/ast/21952/ +i +TABLE OF CONTENTS +GENERAL INFORMATION ABOUT THE 2024 ANNUAL MEETING OF STOCKHOLDERS AND VOTING +1 +PROPOSAL 1 – ELECTION OF THREE CLASS II DIRECTORS TO A THREE-YEAR TERM EXPIRING +AT THE 2027 ANNUAL MEETING OF STOCKHOLDERS +5 +THE BOARD AND ITS COMMITTEES +9 +EXECUTIVE OFFICERS +15 +COMPENSATION DISCUSSION & ANALYSIS +16 +COMPENSATION COMMITTEE REPORT +23 +EXECUTIVE COMPENSATION TABLES +24 +DIRECTOR COMPENSATION +29 +CEO PAY RATIO +31 +PAY VERSUS PERFORMANCE +32 +PROPOSAL 2 – ADVISORY VOTE TO APPROVE THE COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS +36 +PROPOSAL 3 – RATIFICATION OF APPOINTMENT OF THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +37 +AUDIT COMMITTEE REPORT +38 +PROPOSAL 4 – APPROVAL OF AN AMENDMENT AND RESTATEMENT OF THE COMPANY’S LONG TERM INCENTIVE PLAN +40 +EQUITY COMPENSATION PLAN INFORMATION +45 +SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT +46 +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +48 +DELINQUENT SECTION 16(a) REPORTS +51 +HOUSEHOLDING +51 +STOCKHOLDER PROPOSALS +51 +WHERE YOU CAN FIND MORE INFORMATION +51 +OTHER MATTERS +52 +ANNEX A: LIBERTY ENERGY INC. AMENDED AND RESTATED LONG TERM INCENTIVE PLAN +A-1 +1 +LIBERTY ENERGY INC. +950 17 TH STREET, SUITE 2400 +DENVER, COLORADO 80202 +PROXY STATEMENT +GENERAL INFORMATION ABOUT THE 2024 ANNUAL MEETING OF STOCKHOLDERS AND VOTING +The enclosed proxy is solicited on behalf of the Board of Directors (the “ Board ”) of Liberty Energy Inc. (the “ Company ”) for use at the Company’s 2024 Annual Meeting of Stockholders that will be held on Tuesday, April 16, 2024, at 9:00 a.m. Mountain Time, virtually at https://web.lumiagm.com/245867901 (the “ Annual Meeting ”). In this proxy statement (the “ Proxy Statement ”) the terms “ Liberty ,” “ we ,” “ us ” and “ our ” all refer to the Company. This Proxy Statement contains important information for you to consider when deciding how to vote on the matters brought before the Annual Meeting. Please read it carefully. +We are providing these proxy materials to you in connection with the solicitation by the Board of proxies to be voted at the Annual Meeting and at any adjournment or postponement thereof. By executing and returning the enclosed proxy card or by voting via the Internet or by telephone as set forth herein, you authorize the persons named in the proxy to represent you and vote your shares on the matters described herein. Those persons will also be authorized to vote your shares to adjourn the Annual Meeting from time to time and to vote your shares at any adjournments or postponements of the Annual Meeting. +Pursuant to the “notice and access” rules adopted by the Securities and Exchange Commission (the “ SEC ”), we have elected to provide stockholders access to our proxy materials over the Internet. The approximate date on which this Proxy Statement, the accompanying Notice of Internet Availability of Proxy Materials (the “ Notice ”), proxy card, and the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 are first being made available to stockholders at http://astproxyportal.com/ast/21952/ is March 7, 2024. The Notice includes instructions on how to access our proxy materials over the Internet and how to request a printed copy of these materials. +Choosing to receive your future proxy materials by e-mail or to receive a single set of proxy materials per household will save the Company the cost of printing and mailing documents to you and will reduce the impact of the Company’s annual meetings on the environment. If you choose to receive future proxy materials by e-mail, you will receive an e-mail next year with instructions containing a link to those materials and a link to the proxy voting site. Your election to receive proxy materials by e-mail will remain in effect until you terminate it. +Annual Meeting Time & Location + Date : Tuesday, April 16, 2024 + Time : 9:00 a.m. Mountain Time + Location : Virtually held at https://web.lumiagm.com/245867901 +Who Can Vote at the Annual Meeting +The Company’s Class A Common Stock, par value $0.01 per share (the “ Common Stock ”), is the only class of securities entitled to vote at the Annual Meeting. Each share of Common Stock outstanding at the close of business on February 21, 2024 (the “ Record Date ”) entitles its holder to one vote with respect to each matter at the Annual Meeting, and only stockholders of record on the Record Date are entitled to notice of, and to vote, virtually online or by proxy, at the Annual Meeting. +A complete list of stockholders entitled to vote at the Annual Meeting will be available for examination ten days before the Annual Meeting. If you would like to inspect the list of Company stockholders of record, please contact the Investor Relations department at IR@libertyenergy.com to schedule an appointment. +2 +How to Vote at the Annual Meeting +Many holders of the Company’s Common Stock hold their shares through a broker, bank, trustee or other nominee rather than directly in their own name. As summarized below, there are some distinctions between shares held of record and those owned beneficially. +Stockholder of Record. If your shares are registered directly in your name with our transfer agent, Equ initi Trust Company LLC (“Equiniti”), then you are considered a “stockholder of record” with respect to those shares. In this case, a Notice or, if requested, a set of proxy materials has been sent to you directly by us. As a stockholder of record, you may vote over the Internet as described in the Notice that was mailed to you or, if you have received or requested a hard copy of this Proxy Statement and accompanying proxy card, you may vote by telephone as described on the proxy card, or by mail by marking, signing, dating and mailing your proxy card in the postage-paid envelope provided. Your designation of a proxy is revocable by following the procedures outlined in this Proxy Statement. The method by which you vote will not limit your right to vote virtually at the Annual Meeting. If you submit a signed proxy card but do not give voting instructions as to how your shares of Common Stock should be voted on a particular proposal at the Annual Meeting, your shares will be voted in accordance with the recommendations of our Board stated in this Proxy Statement. +Beneficial Owners of Shares Held in Street Name. If your shares of our Common Stock are held in a brokerage account or by a bank, trust or other nominee or custodian, then you are considered the beneficial owner of those shares, which are held in “street name.” In this case, a Notice or, if requested, a set of proxy materials has been forwarded to you by the organization that holds your shares. The organization holding your account is considered the stockholder of record for purposes of voting at the Annual Meeting. As the beneficial owner, you have the right to instruct that organization how to vote the shares held in your account. If you are a beneficial owner of shares held in “street name,” you need to submit voting instructions to your broker, bank or other nominee in order to cast your vote. The Notice that was mailed to you by that organization has specific instructions for how to submit your vote, or if you have received or requested a hard copy of this Proxy Statement you may mark, sign, date and mail the accompanying voting instruction form in the postage-paid envelope provided. Your vote is revocable by following the procedures outlined in this Proxy Statement. However, since you are not a stockholder of record you may not vote your shares virtually at the Annual Meeting without obtaining authorization from your broker, bank or other nominee. Whether or not you plan to attend the Annual Meeting virtually, we urge you to vote by following the voting instructions provided to you to ensure that your vote is counted. To vote virtually at the Annual Meeting, you must first obtain a legal proxy from your broker, bank or other agent and then register in advance to attend the Annual Meeting. After obtaining a legal proxy from your broker, bank or other agent, to then register to attend the Annual Meeting, you must submit proof of your legal proxy reflecting the number of your shares along with your name and email address to Equiniti. Requests for registration should be directed to proxy@equiniti.com or to facsimile number 718-765-8730. Written requests can be mailed to: +Equiniti Trust Company LLC +Attention: Proxy Tabulation Department +55 Challenger Road, 2nd Floor +Ridgefield Park, New Jersey 07660 +Requests for registration must be labeled as “Legal Proxy” and be received no later than 5:00 p.m., Eastern Time, on April 2, 2024. You will receive a confirmation of your registration by email after we receive your registration materials. +Telephone +and Internet voting for stockholders of record will be available up until 11:59 p.m. Eastern Time on April 15, 2024, and mailed +proxy cards must be received by April 15, 2024 in order to be counted at the Annual Meeting. If the Annual Meeting is adjourned or +postponed, these deadlines may be extended. The voting deadlines and availability of telephone and Internet voting for beneficial +owners of shares held in “street name” will depend on the voting processes of the organization that holds +your shares of Common +Stock. Therefore, we urge you to carefully review and follow the voting instructions card and any other materials that you receive +from that organization. +If you receive more than one Notice, it is because your shares are registered in more than one name or are registered in different accounts. Please follow the instructions on each Notice received to ensure that all of your shares of Common Stock are voted. +“Broker Non-Votes” and Abstentions and their Effect on Proposals +A broker non-vote occurs when a broker, bank, trust or other nominee or custodian holding shares for a beneficial owner in “street name” does not vote the shares on a proposal because the nominee does not have discretionary voting power for a particular item and has not received instructions from the beneficial owner regarding voting. Brokers who hold shares for the accounts of their clients have discretionary authority to vote shares if specific instructions are not given, only with respect to “routine” items. +3 +If your shares are held by a broker on your behalf and you do not instruct the broker as to how to vote your shares of Common Stock with regard to the election of directors (“ Proposal 1” ), the advisory vote regarding the compensation of named executive officers (“ Prop osal 2” ), or the vote to amend and restate our Long Term Incentive Plan (the “ A&R LTIP ”) (“ Proposal 4 ”), the broker may not exercise discretion to vote for or against those proposals because each of these proposals are considered “non-routine” under applicable New York Stock Exchange (“ NYSE ”) rules. With respect to the ratification of the appointment of Deloitte & Touche LLP (“ Deloitte ”) as our independent registered public accounting firm for the fiscal year ended December 31, 2024 (“ Proposal 3” ), the broker may exercise its discretion to vote for or against those proposals in the absence of your instruction. Broker non-votes are treated as not entitled to vote with respect to non-discretionary matters. +An abstention (i.e. if you or your broker mark “ABSTAIN” on a proxy or voting instruction form, or if a stockholder of record attends the Annual Meeting but does not vote (either before or during the Annual Meeting)) has the same effect as voting “AGAINST” the advisory vote regarding the compensation of named executive officers (Proposal 2), the ratification of the appointment of Deloitte as our independent registered public accounting firm for the fiscal year ended December 31, 2024 (Proposal 3), or the vote to approve our A&R LTIP (Proposal 4). Votes that are withheld from a director’s election will not affect the outcome of the vote on the election of a director (Proposal 1). +Quorum Requirements for the Annual Meeting +The presence at the Annual Meeting, whether in person or by proxy, of stockholders holding a majority of the shares of Common Stock outstanding on the Record Date and entitled to vote at the meeting will constitute a quorum, permitting us to conduct our business at the Annual Meeting. On the Record Date, there were 166,087,015 shares of Common Stock issued and outstanding and entitled to be voted at the Annual Meeting. Abstentions and broker non-votes will be considered to be shares present at the Annual Meeting for purposes of constituting a quorum. +Votes Required to Approve Proposals and Board Recommendations +Proposal +Required Vote +Board +Recommendation +Treatment of +Abstentions +Broker Non-Votes +(1) To elect three (3) Class II directors to the Board to serve until the 2027 annual meeting or until their successors are duly elected and qualified. +Plurality of Votes Cast: The three nominees receiving the greatest number of votes cast ( 1 ) +“FOR” EACH NOMINEE +Abstentions have no effect. In addition, if you “withhold” authority to vote with respect to the election of some or all of the nominees, your shares will not be voted with respect to those nominees indicated. +Broker non-votes have no effect +(2) To approve, on an advis ory ba sis, the compensation of our named executive officers. ( 2 ) +Affirmative vote of a majority of shares present in person or by proxy and entitled to vote on the matter +“FOR” +Abstentions have the effect of a vote against “AGAINST” +Broker non-votes have no effect +(3) To ratify the appointment of Deloitte as our independent registered public accounting firm for the fiscal year ending December 31, 2024. +Affirmative vote of a majority of shares present in person or by proxy and entitled to vote on the matter +“FOR” +Abstentions have the effect of a vote “AGAINST” +There will be no broker non-votes on Proposal 3 because brokers have discretion to vote on this proposal +(4) To approve our A& R LTI P. +Affirmative vote of a majority of shares present in person or by proxy and entitled to vote on the matter +“FOR” +Abstentions have the effect of a vote “AGAINST” +Broker non-votes have no effect +(1) If any nominee receives a greater number of “withhold authority” than votes “for” his or her election in an uncontested election, where an uncontested election is any election of directors in which the number of nominees for election does not exceed the number of directors to be elected, then that nominee is required to tender his or her resignation, which the Board, upon the recommendation of the Nominating and Governance Committee, will decide to accept or decline. +(2) Because this stockholder vote is advisory, the vote will not be binding, but the Compensation Committee will review the voting results and take them into consideration when making future compensation decisions for our named executive officers. +4 +Revoking Your Proxy; Changing Your Vote +If you are a stockholder of record, you may revoke your proxy before the vote is taken at the Annual Meeting by: +• signing, dating and delivering a new proxy with a later date before the applicable deadline to our Corporate Secretary; +• attending virtually and voting virtually online at the Annual Meeting; or +• filing a written revocation with our Corporate Secretary. +If your shares are held in “street name,” you may submit new voting instructions by contacting your broker or other organizati on holding your shares. You may also vote virtually online at the Annual Meeting, which will have the effect of revoking any previously submitted voting instructions, if you obtain a legal proxy from the organization that holds your shares. +Your last vote or proxy will be the vote or proxy that is counted. Your virtual attendance at the Annual Meeting will not automatically revoke your proxy. +Dissent and Appraisal Rights +No action is proposed at the Annual Meeting for which the laws of the State of Delaware or other applicable law provides a right of our stockholders to dissent and obtain appraisal of or payment for such stockholders’ Common Stock. +Solicitation Costs +The cost of preparing, assembling and mailing the proxy materials and of reimbursing brokers, nominees and fiduciaries for the out-of-pocket and clerical expenses of transmitting copies of the proxy materials to the beneficial owners of shares held of record by such persons, will be borne by the Company. The Company has retained D.F. King & Co., Inc. (“ D.F. King ”) to aid in the solicitation of proxies. It is estimated that the cost of D. F. King’s services will be approximately $9,500 plus expenses. In addition to the solicitation of proxies by mail, proxies may also be solicited by telephone, electronic communication, or personal communication by employees of D.F. King and the Company. +Voting Results +We will publish final results in a Current Report on Form 8-K to be filed with the SEC within four (4) business days following the Ann ual Mee ting. +Management Q&A Session +Stockholders of record who have registered with their voting control number will be able to submit questions for the Annual Meeting’s question and answer session during the meeting through https://web.lumiagm.com/245867901 by referring to the “Chat Box” icon located at the top of the left-hand panel of their screen. For questions regarding the webcast please reach out to IR@libertyenergy.com . +Technical Difficulties or Trouble Accessing the Annual Meeting +If you encounter any technical difficulties with accessing the audio webcast on the day of the Annual Meeting, contact I R@libertyenergy.com . Eq uiniti will also be present at the Annual Meeting and monitoring the webcast to assist with any issues. +Questions +You may call or contact our proxy solicitor, D.F. King, at (888) 605-1958 or via email at libertyenergy@dfking.com if you have any questions concerning this Proxy Statement. +PLEASE VOTE. YOUR VOTE IS IMPORTANT TO US. +5 +PROPOSAL 1 — ELECTION OF THREE CLASS II DIRECTORS TO A THREE-YEAR TERM EXPIRING AT THE 2027 ANNUAL MEETING OF STOCKHOLDERS +Our Board currently consists of nine (9) directors. In accordance with the terms of our Amended and Restated Certificate of Incorporation (as amended, the “ Amended and Restated Certificate of Incorporation ”) and Second Amended and Restated Bylaws (as amended, the “ Second Amended and Restated Bylaws ”), our Board is divided into three classes: Class I, Class II and Class III, with each class serving staggered three-year terms. Upon the expiration of the term of a class of directors, directors in that class will be eligible to be elected for a new three-year term at the annual meeting of stockholders in the year in which their term expires. Each director elected to the Board will hold office until his or her successor has been elected and qualified or until the earlier of their death, resignation, disqualification or removal. The current members of the classes of our Board are divided as follows: +♦ Class II (term expires in 2024): Ken Babcock, Audrey Robertson, and Christopher A. Wright +♦ Class III (term expires in 2025): Peter A. Dea, William F. Kimble, and James R. McDonald +♦ Class I (term expires 2026): Simon Ayat, Gale A. Norton, and Cary D. Steinbeck +To be elected, director nominees must receive a plurality of the votes cast by the holders of the shares entitled to vote in the election of directors at the Annual Meeting. Nonetheless, pursuant to our Corporate Governance Guidelines, in an uncontested election, any director nominee who receives a greater number of “WITHHOLD” votes than votes “FOR” his or her election (a “Majority Withheld Vote”) is required to tender his or her resignation to the Chair of the Nominating and Governance Committee within seven days following certification of the stockholder vote. The Nominating and Governance Committee must recommend to the Board whether to accept the resignation offer within 60 days of receiving the offer of resignation. The Board is required to consider and act on the recommendation within 30 days following receipt of the recommendation. +Unless otherwise instructed, the proxy holders will vote the proxies received by them for the three (3) director nominees named below, all of whom are presently directors of the Company. In the event that any nominee is unable or declines to serve as a director at the time of the Annual Meeting, the proxies will be voted for any nominee who shall be designated by the present Board to fill the vacancy, unless the size of the Board is reduced. The proxies cannot be voted for a greater number of persons than the number of nominees named in this proxy statement. It is not expected that any nominee will be unable or will decline to serve as a director. Biographical information regarding each nominee is set forth below, as well as a summary of the experiences, qualifications, attributes or skills that caused the Board to determine that each nominee should serve as a director of the Company. Each nominee’s experience is evaluated in determining the overall composition of the Board. +NOMINEES FOR ELECTION AS CLASS II DIRECTORS TO A THREE-YEAR TERM EXPIRING +AT THE 2027 ANNUAL MEETING OF STOCKHOLDERS +KEN BABCOCK +Age: 67 +Key Areas of Experience +Director Since: 2018 +INDEPENDENT +• Technology/Cybersecurity +• Senior Management Experience (CEO/CFO) +• Oilfield Services +• Mergers & Acquisitions +• Marketing/Sales +• HR/Compensation +Mr. Babcock is currently the Chief Executive Officer of Abaco Energy Technologies LLC (“ Abaco ”), a private Houston-based portfolio company of Riverstone Holdings LLC, an energy-focused private equity firm (“ Riverstone ”), that was formed in 2013 to focus on opportunities in manufacturing and services related to North American drilling, completion, and production, and associated infrastructure. Prior to joining Abaco, Mr. Babcock was the President and Chief Executive Officer of Titan Specialties, Ltd. (“ Titan ”) from 2008 until its sale to Hunting PLC in September 2011. Following the sale, Mr. Babcock remained at Titan until June 2012. Prior to joining Titan, from 2005 until 2008, Mr. Babcock served as President and Chief Executive Officer of International Logging, Inc. (“ ILI ”) where he took a narrowly-focused mud logging company of over 300 employees to a diverse well site services organization of over 1,800 employees spread over 60 countries in a little over two years. Prior to joining ILI, Mr. Babcock was Director of Strategic Sales at Baker Hughes INTEQ and Vice President of Business Development at Noble Technology Services. Mr. Babcock began his career with EXLOG in 1980. Mr. Babcock has a Bachelor of Science in Geology from Florida State University. We believe that Mr. Babcock’s strong business leadership experience qualifies him for service on our Board. +6 +AUDREY ROBERTSON +Age: 43 +Key Areas of Experience +Director Since: 2021 +• Exploration and Production +• Corporate Finance/Capital Markets +• Senior Management Experience (CEO/CFO) +• Public Accounting +• Mergers & Acquisitions +• Investor Relations +• Risk Management +Ms. Robertson is a co-founder of Franklin Mountain Energy, LLC, a private oil and gas company operating in the Permian Basin, and serves as its Executive Vice President of Finance and prior to that was Chief Financial Officer from September 2018 to January 2023. She also served as a co-founder and Managing Partner of Copper Trail Partners, LLC, a private equity platform based in Denver from November 2017 until December 2021. From 2005 to 2016, she served as a Partner and Senior Managing Director at Kayne Anderson Capital Advisors. Prior to that time, she was an investment banker with Goldman Sachs & Co. Ms. Robertson was a Director of Bonanza Creek Energy, LLC and served on both the audit and compensation committees from January 2020 until November 2021 and served on the board of directors of Extraction Oil and Gas, LLC from September 2019 to January 2021 where she served on the audit committee. She is a member of the Board of Directors of the New Mexico Oil and Gas Association and serves on the Finance and Governance su b-commit tees. She has served on the boards of several private companies and not-for-profit organizations. She holds a Bachelor of Science degree in Applied Economics and Management from Cornell University and a Master of Accounting degree from the University of Southern California. We believe that Ms. Robertson’s significant experience in the oil and gas exploration and production industry and accounting credentials qualify her for service on our Board. +CHRISTOPHER A. WRIGHT +Age: 59 +Key Areas of Experience +Director Since: 2018 +• Exploration and Production +• Technology/Cybersecurity +• Senior Management Experience (CEO/CFO) +• Oilfield Services +• Mergers & Acquisitions +• ESG +• Marketing/Sales +• HR/Compensation +• Investor Relations +Mr. Wright has served as our Chief Executive Officer since December 2016 and as the Chief Executive Officer of our predecessor company since its founding in 2011. Mr. Wright is the Executive Chairman of Liberty Resources LLC, an oil and natural gas exploration and production company focused in the Williston Basin, and was the Chief Executive Officer from its formation in September 2010 until March 2017. Mr. Wright founded Pinnacle Technologies, a company that developed and commercialized tiltmeter and microseismic fracture mapping and served as Chief Executive Officer of Pinnacle Technologies from 1992 to 2006. From 2000 to 2006, Mr. Wright served as Chairman of Stroud Energy, Inc., a shale natural gas producer. From October 2021 to December 2023, Mr. Wright served on the board of directors of Accretion Acquisition Corp. Mr. Wright also serves on the board of directors for Urban Solution Group, a private company, and the Federal Reserve Bank of Kansas City, Denver Branch. Mr. Wright has a Bachelor of Science in Mechanical Engineering from the Massachusetts Institute of Technology (“ MIT ”) and conducted graduate work in electrical engineering at both the University of California-Berkeley and MIT. We believe that Mr. Wright’s experience leading our growth as our Chief Executive Officer and his extensive experience in the hydraulic fracturing services industry qualifies him for service on our Board. +Vote Required +The election of directors requires the affirmative vote of a plurality of the votes cast by the holders of the shares of Common Stock entitled to vote at the election. If you submit a signed proxy card but do not give voting instructions as to how your shares of Common Stock should be voted, your shares will be voted in accordance with the recommendations of our Board stated in this Proxy Statement. Neither abstentions nor broker non-votes will have any effect on the outcome of voting on director elections. +THE BOARD RECOMMENDS VOTING “ FOR ” +THE ELECTION OF EACH CLASS II DIRECTOR NOMINEE. +7 +DIRECTORS CONTINUING IN OFFICE +PETER A. DEA +Age: 70 +Key Areas of Experience +Director Since: 2018 +INDEPENDENT +• Exploration and Production +• Senior Management Experience (CEO/CFO) +• Mergers & Acquisitions +• ESG +• HR/Compensation +• Investor Relations +• Corporate Governance +Mr. Dea has been the Executive Chairman of Confluence Resources LP (“ Confluence ”) since September 2016. Mr. Dea has served as the President and Chief Executive Officer of Cirque Resources LP (“ Cirque ”) since May 2007. Both Confluence and Cirque are private oil and gas companies. From November 2001 through August 2006, Mr. Dea was President and Chief Executive Officer and a director of Western Gas Resources, Inc. (“ Western Gas ”). Mr. Dea joined Barrett Resources Corporation (“ Barrett ”) in November 1993 and served as Chief Executive Officer and director from November 1999 and as Chairman from February 2000 through August 2001. Western Gas and Barrett were public oil and gas companies. Prior to that, Mr. Dea served in several geologic positions with Exxon Company, U.S.A. Mr. Dea currently serves as the Chairman of the Board of Ovintiv Inc. and has served as a director of Antero Midstream Corporation since the closing of its simplification transaction in March 2019. Prior to the simplification, Mr. Dea served as a director of the general partner of Antero Midstream GP LP beginning in April 2018. Mr. Dea has a Bachelor of Arts in Geology from Western State Colorado University and a Masters of Science in Geology from the University of Montana. Mr. Dea also attended the Harvard Business School, Advanced Management Program. We believe that Mr. Dea’s extensive oil and gas exploration and production experience and involvement in state and national energy policies qualify him for service on our Board. +WILLIAM F. KIMBLE +Age: 64 +Key Areas of Experience +Director Since: 2018 +INDEPENDENT +• Public Accounting +• Mergers & Acquisitions +• Legal/Regulatory +• Corporate Governance +• Risk Management +• Technology/Cybersecurity +Mr. Kimble has served on our Board since the initial public offering of our Common Stock (the “ IPO ”) and as Lead Director since October 2018. From 2009 until his retirement in 2015, Mr. Kimble served as the Office Managing Partner for the Atlanta office and Managing Partner - Southeastern United States at KPMG LLP (“ KPMG ”), one of the largest audit, tax and advisory services firms in the world. Mr. Kimble was also responsible for moderating KPMG’s Audit Committee Institute and Audit Committee Chair Sessions. Until his retirement, Mr. Kimble had been with KPMG or its predecessor firm since 1986. During his tenure with KPMG, Mr. Kimble also held numerous senior leadership positions, including Global Chairman of Industrial Markets. Mr. Kimble served as KPMG’s Energy Sector Leader for ten (10) years and was the executive director of KPMG’s Global Energy Institute. Mr. Kimble serves on the board of directors and is the chair of the audit committee of Northern Oil and Gas, Inc. Mr. Kimble also served on the board of directors, the special committee, and was chair of the audit committee of DCP Midstream, LP from June 2015 until October 2023. Mr. Kimble has a Bachelor of Accounting and Business Administration from Southern Methodist University. We believe that Mr. Kimble’s extensive accounting background and his experience as a director of public companies qualify him for service on our Board. +JAMES R. MCDONALD +Age: 45 +Key Areas of Experience +Director Since: 2020 +INDEPENDENT +• Technology/Cybersecurity +• Oilfield Services +• Marketing/Sales +• Investor Relations +Mr. McDonald has been Senior Vice President of Investor Relations for Schlumberger (“ SLB ”), an international oilfield services and technology company, since April 2023. Previously, he served as President Americas Land of SLB, overseeing onshore operations in North and South America, from June 2020 to April 2023. Previously, he served as President of Well Services running SLB’s global stimulation, coiled tubing intervention, cementing and offshore vessel operations. In addition, Mr. McDonald held multiple leadership roles in line management, operations, quality and safety, and business development at SLB over the past 21 years. His assignments spanned North and South America, North Africa and the Middle East in both land and offshore environments that included unconventional and deep water. Mr. McDonald graduated from the Massachusetts Institute of Technology with a degree in chemical engineering. He is actively engaged within the energy industry and community, and currently serves on the Board of Directors of Permian Strategic Partnership, the Energy Workforce and Technology Council, and he is on the Upstream and Service Supply and Technology Committees of the American Petroleum Institute. Mr. McDonald was initially nominated to serve on our Board by SLB pursuant to a stockholders agreement that is no longer in effect. We believe Mr. McDonald’s extensive experience in the oilfield services industry qualifies him for service on our Board. +8 +SIMON AYAT +Age: 69 +Key Areas of Experience +Director Since: 2020 +INDEPENDENT +• Corporate Finance/Capital Markets +• Senior Management Experience (CEO/CFO) +• Oilfield Services +• Mergers & Acquisitions +• Legal/Regulatory +• Corporate Governance +• ESG +• HR/Compensation +• Investor Relations +• Risk Management +Mr. Ayat served as Senior Strategic Advisor to the Chief Executive Officer for SLB from January 2020 until January 2022. From March 2007 until January 2020, he served as the Executive Vice President and Chief Financial Officer of SLB. Mr. Ayat has held several financial and operational positions in SLB, where he commenced his career in 1982. He was based in Paris, Houston and Dallas, as well as in the Middle East and Far East regions, serving as group treasurer, controller, Geomarket manager for Indonesia and drilling regional vice president for Asia Pacific. Mr. Ayat is also a member of the board of directors of Tenaris S.A., a manufacturer of pipes and related services for energy and industrial applications. He is a French and Lebanese citizen. Mr. Ayat was initially nominated to serve on our Board by SLB pursuant to a stockholders agreement that is no longer in effect. We believe Mr. Ayat’s extensive experience in the oilfield services industry and as the Chief Financial Officer of a publicly traded oilfield services company with international operations qualifies him for service on our Board. +GALE A. NORTON +Age: 69 +Key Areas of Experience +Director Since: 2019 +INDEPENDENT +• Legal/Regulatory +• Corporate Governance +• ESG +Ms. Norton has been the President of Norton Regulatory Strategies, a consulting firm, since 2011. From 2007 to 2010, she served as General Counsel, Unconventional Oil, of Royal Dutch Shell, an international oil and natural gas company (“ Shell ”). Prior to joining Shell, Ms. Norton served as the Secretary of the Interior of the United States under President George W. Bush from 2001 until 2006 and as the Attorney General of the State of Colorado from 1991 until 1999. Ms. Norton is a director of American Transmission Company, a private company in the electric utility industry and she has been a Governance Fellow of the National Association of Corporate Directors. Ms. Norton holds Bachelor of Arts and Juris Doctorate degrees from the University of Denver. We believe that Ms. Norton’s experience as Attorney General of the State of Colorado and Secretary of the Interior of the United States qualifies her for service on our Board. +CARY D. STEINBECK +Age: 52 +Key Areas of Experience +Director Since: 2018 +INDEPENDENT +• Exploration and Production +• Mergers & Acquisitions +• Corporate Finance/Capital Markets +Mr. Steinbeck has been a Managing Director at Shea Ventures, an investment firm, since October 2014. From 2007 to 2014, he served as a Managing Director at Oakmont Corporation, an investment firm. Mr. Steinbeck is a member of the board of directors of Liberty Resources LLC and served on the board of directors of Accretion Acquisition Corp. from October 2021 to December 2023. Mr. Steinbeck is a Chartered Financial Analyst ® charterholder and has a Bachelor of Arts in Economics from the University of California, Santa Barbara, and a Master of Business Administration from the University of Southern California. We believe that Mr. Steinbeck’s experience in the private equity industry, energy sector investing experience, extensive board participation and understanding of financial markets provide valuable insights for our Company and qualify him for service on our Board. +9 +THE BOARD AND ITS COMMITTEES +THE BOARD +Composition of the Board +Our Board consists of nine members separated into three classes of directors, each as equal in number as possible, with each class serving staggered three-year terms. +In evaluating director candidates, we, through the Nominating and Governance Committee of the Board (the “ Nominating and Governance Committee ”), review the following criteria when assessing director candidates: +✓ relevant skills, qualifications and experience; +✓ independence under applicable standards; +✓ qualifications to serve on Board committees and, as appropriate, serve as a committee chairperson; +✓ business judgment; +✓ service on boards of directors of other companies; +✓ personal and professional integrity; +✓ openness and willingness to work as part of a team; +✓ willingness to commit the required time to serve as a Board member; and +✓ familiarity with the Company and its industry. +Board Diversity and Summary of Director Core Skills +The diversity of experience and range of competencies, qualifications and viewpoints of each director on our Board embody key abilities that our Nominating and Governance Committee considers valuable to effective oversight of the Company. The Nominating and Governance Committee values diversity of thought in director candidates, and further believes that gender and ethnic diversity can be one way to accomplish diversity of thought while still maintaining a Board that is adequately qualified to discharge its duties. Presently: +✓ two Board members are female; and +✓ two additional Board members qualify as ethnically diverse. +We believe that our director nominees are able to provide a well-rounded set of expertise that will assist in effective oversight of management at the Company. The matrix below identifies the core skills, primary competencies and other attributes that each director brings forth in their service to our Board and committees. The lack of an indicator for a particular item does not mean that the director does not possess that qualification, skill or experience in general. The indicator merely represents a core skill that the director brings to our Board. Furthermore, each director possesses other competencies not identified below. We believe identifying primary skills is a more meaningful presentation of the key contributions and value that each director brings to their service on the Board and to our stockholders. For more information about each director, see the individual biographies set forth above. +10 +Ayat +Babcock +Dea +Kimble +McDonald +Norton +Robertson +Steinbeck +Wright +Exploration and Production +✓ +✓ +✓ +✓ +Technology/Cybersecurity +✓ +✓ +✓ +✓ +Corporate Finance/Capital Markets +✓ +✓ +✓ +Senior Management Experience (CEO/CFO) +✓ +✓ +✓ +✓ +✓ +Oilfield Services +✓ +✓ +✓ +✓ +Public Accounting +✓ +✓ +Mergers & Acquisitions +✓ +✓ +✓ +✓ +✓ +✓ +✓ +Legal/Regulatory +✓ +✓ +✓ +Corporate Governance +✓ +✓ +✓ +✓ +ESG +✓ +✓ +✓ +✓ +Marketing/Sales +✓ +✓ +✓ +HR/Compensation +✓ +✓ +✓ +✓ +Investor Relations +✓ +✓ +✓ +✓ +✓ +Risk Management +✓ +✓ +✓ +Board Leadership Structure and Role in Risk Oversight +Our Board does not have a policy regarding separation of the roles of Chief Executive Officer and Chairman of the Board (the “ Chairman ”). The Board believes it is in our best interests to make that determination based on circumstances from time to time. Currently, our Chief Executive Officer serves as the Chairman, and William F. Kimble, a non-employee independent director, serves as our Lead Director. As Lead Director, Mr. Kimble serves as a liaison between the Chairman and the non-management directors and presides at executive sessions of the non-management directors and any other Board meetings at which the Chairman is not present, among other responsibilities. Our Board believes that this structure, combined with our corporate governance policies and processes, creates an appropriate balance between strong and consistent leadership and independent oversight of our business. The Chairman chairs the meetings of our Board and stockholders, with input from the Lead Director, and as such, our Board believes that a person with comprehensive knowledge of the Company is in the best position to serve the role of Chairman. +Our Board believes its administration of its risk oversight function has not affected its leadership structure. Risk is inherent with every business, and how well a business manages risk can ultimately determine its success. We face a number of risks, including those described under “ Risk Factors ” in our Annual Report on Form 10-K for the year ended December 31, 2023. Our Board is actively involved in oversight of risks that could affect us. This oversight is conducted by the Board, which has responsibility for general oversight of risks, but the Audit Committee of the Board (the “ Audit Committee ”) assists the Board in fulfilling such oversight responsibilities. Risk assessment and oversight are an integral part of our governance and management processes. The Board encourages management to promote a culture that incorporates risk management into our corporate strategy and day-to-day business operations. Management discusses strategic and operational risks at regular management meetings and conducted a specific strategic session during the year that included a focused discussion and analysis of the risks facing us. Throughout the year, senior management reviews risks with the Board at regular Board meetings as part of management presentations that focus on the Company’s overall operations and presents the steps taken by management to mitigate or eliminate such risks. +The Board does not have a standing risk management committee, but rather administers this oversight function through the Audit Committee and the Board as a whole. The Board is responsible for monitoring and assessing strategic risk exposure, and the Audit Committee assists the Board in fulfilling such oversight responsibilities by overseeing our major risk exposures, including significant financial, information technology, and cybersecurity risks, and the steps our management has taken to monitor and control these exposures. The Audit Committee also monitors compliance with legal and regulatory requirements and considers and approves or disapproves any related-person transactions. +Our Board periodically reviews its governance and committee structure to ensure that it continues to meet the Company’s needs. +Director Independence and Family Relationships +The Company’s standards for determining director independence require the assessment of directors’ independence each year. A director cannot be considered independent unless the Board affirmatively determines that he or she does not have any relationship with management or the Company that may interfere with the exercise of his or her independent judgment, including any of the relationships that would disqualify the director from being independent under the rules of the NYSE. +11 +The Board has assessed the independence of each non-employee director under the independence standards of the NYSE. The Board has determined that each of Messrs. Ayat, Babcock, Dea, Kimble, McDonald and Steinbeck and Ms. Norton is considered independent under the NYSE rules. In connection with its assessment of the independence of each non-employee director, the Board also determined that Messrs. Ayat, Babcock, Dea, Kimble, McDonald and Steinbeck and Ms. Norton are independent as defined in Section 10A-3 of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”) and under the standards set forth by the NYSE applicable to members of the Audit Committee. Furthermore, none of our directors or officers have any family relationship with any director or other officers. “Family relationship” for this purpose means any relationship by blood, marriage or adoption, not more remote than first cousin. +BOARD COMMITTEES +Overview +Our Board has established an Audit Committee, a Compensation Committee of the Board (the “ Compensation Committee ”) and a Nominating and Governance Committee as further detailed herein. The below chart sets forth the members and chairperson of each Board committee. +Name +Audit Committee +Compensation Committee +Nominating and +Governance Committee +William F. Kimble +* +• +Cary D. Steinbeck +• +• +Peter A. Dea +* +• +Ken Babcock +• +Gale A. Norton +• +* +Simon Ayat +• +James R. McDonald +• +*  Chairperson  •   Member +Audit Committee +Rules implemented by the NYSE and the SEC require us to have an Audit Committee comprised of at least three (3) directors who meet the independence and experience standards established by the NYSE and the Exchange Act. Our Audit Committee currently consists of four (4) directors, all of whom are independent under the rules of the SEC and the standards set forth by the NYSE applicable to members of an Audit Committee. Messrs. Ayat, Kimble and Steinbeck and Ms. Norton are the members of our Audit Committee with Mr. Kimble serving as the chairperson. Each member of our Audit Committee is financially literate, and our Board has determined that Mr. Kimble qualifies as an “audit committee financial expert” as defined in applicable SEC rules. +The Audit Committee oversees, reviews, acts on and reports on various auditing and accounting matters to our Board, including: the selection of our independent accountants, the scope of our annual audits, fees to be paid to the independent accountants, the performance of our independent accountants and our accounting practices. The general purpose of our Audit Committee is to assist the Board in oversight responsibilities regarding the integrity of the Company’s financial statements, compliance with legal and regulatory requirements, performance of the independent registered public accounting firm engaged by the Company and the effectiveness of the Company’s internal audit functions. The Audit Committee is also responsible for oversight of the Company’s information technology and cybersecurity risks. The Audit Committee operates under an Audit Committee charter that defines the committee’s primary duties in a manner consistent with the rules of the SEC and NYSE. A current copy of the Audit Committee charter can be found on our website, www.libertyenergy.com , by first clicking “ Investors ” then “ Corporate Governance ” and proceeding to “ Governance Documents .” +Compensation Committee +Our Compensation Committee currently consists of four (4) directors: Messrs. Dea, Babcock, McDonald, and Steinbeck with Mr. Dea serving as the chairperson. Our Compensation Committee establishes salaries, incentives and other forms of compensation for officers and other employees. Our Compensation Committee also assists the Board with the administration and oversight of our incentive compensation and benefit plans, our incentive compensation recovery policy, and our stock ownership guidelines. The Compensation Committee has the authority to delegate to its chairperson or any one of its members the responsibility and authority for any particular matter, as it deems appropriate from time to time under the circumstances. The Compensation Committee operates under a Compensation Committee charter that defines the committee’s primary duties. A current copy of the Compensation Committee charter can be found on our website, www.libertyenergy.com , by first clicking “ Investors ” then “ Corporate Governance ” and proceeding to “ Governance Documents .” +The Board has determined that all directors on the Compensation Committee are independent under the standards set forth by the NYSE. +12 +Nominating and Governance Committee +Our Nominating and Governance Committee currently consists of three (3) directors: Ms. Norton and Messrs. Kimble and Dea with Ms. Norton serving as the chairperson. The Nominating and Governance Committee operates under a Nominating and Governance Committee charter that defines the committee’s primary duties. A current copy of the Nominating and Governance Committee charter can be found on our website, www.libertyenergy.com , by first clicking “ Investors ” then “ Corporate Governance ” and proceeding to “ Governance Documents .” +Our Nominating and Governance Committee oversees our corporate governance framework, including identifying, evaluating and recommending qualified nominees to serve on our Board. Our Nominating and Governance Committee also develops and oversees our corporate governance processes, including the annual performance evaluation of the Board and its committees, and of senior management, evaluating director independence, and develops, reviews and recommends to the Board any changes to our Corporate Governance Guidelines and other applicable governance policies. +The Board and the Nominating and Governance Committee believe the skills, qualities, attributes, and experience of our directors provide our Company with business acumen and a diverse range of perspectives to effectively address our evolving needs and represent the best interests of our stockholders. +When identifying director nominees, the Nominating and Governance Committee considers and reviews the following criteria: the candidate’s relevant skills, qualifications and experience; independence under applicable standards; qualifications to serve on Board committees and, as appropriate, serve as a committee chairperson; business judgement; service on boards of directors of other companies; personal and professional integrity; openness and ability to work as part of a team; willingness to commit to the required time to serve as a member of the Board; and familiarity with the Company and its industry. Additionally, when considering the recommendation to the Board that an existing director be nominated for election at the annual meeting of stockholders, the Nominating and Governance Committee will consider and review: the past Board and committee meeting attendance and performance, the length of Board service, the personal and professional integrity, the relevant experience, skills, qualifications and contributions that the existing director brings to the Board and their independence under the applicable standards. +The Nominating and Governance Committee will consider suggestions from any source, particularly from stockholders, regarding possible candidates for director; provided, however , that in order for such stockholder recommendation to be considered, the recommendations must comply with the procedures outlined under “ Stockholder Proposals ” below. +The Board has determined that all directors on the Nominating and Governance Committee are independent under the standards set forth by the NYSE. +MEETING ATTENDANCE OF THE BOARD AND BOARD COMMITTEES +During 2023, the Board and its committees regularly met on a set schedule as set forth in the following table. Additionally, the Board and its committees acted by written consent from time to time, as appropriate. The Board held one special meeting and its committees held no special meetings during 2023. +Regularly +Scheduled +Meetings +Special +Meetings +Total +Meetings +Board of Directors +5 +1 +6 +Audit Committee +7 +0 +7 +Compensation Committee +4 +0 +4 +Nominating and Governance Committee +2 +0 +2 +At each Board meeting, time is reserved for the independent directors to meet in executive session without the Chief Executive Officer present. Furthermore, executive officers regularly attend Board meetings to present information to our Board on our business and strategy. From time to time between meetings, Board and committee members confer with each other and with management and independent consultants regarding relevant issues, and representatives of management may meet with such consultants on behalf of the relevant committee. +Each director participated, whether in person or by telephone or videoconference, in at least seventy-five percent (75%) of all meetings of the Board and the committees of which such director is a member. There is no formal policy as to director attendance at the Annual Meeting, but our corporate governance guidelines encourage directors to attend. All members of our Board attended last year’s annual stockholder meeting. +13 +ESG FOCUSED +We support all energy sources that improve our energy system and better lives. We passionately work to better the process of bringing hydrocarbons to the surface in a clean, safe and efficient fashion and view these principles as foundational to our business. We focus on developing and adding technologies to our operations that assist our customers in implementing their goals. The list below sets forth specific examples of our efforts in this regard: +♦ In 2013, we introduced Tier II dual-fuel technology to our fleets which allows our frac pumps to use natural gas in place of some diesel fuel to lower particulate emissions. +♦ In 2014, we began the use of containerized sand delivery at frac locations, which reduces dust, noise and truck traffic. +♦ In 2016, we introduced Quiet Fleet® technology, which significantly reduces noise levels associated with frac operations. +♦ In 2018, we began a partnership with an equipment supplier to introduce Tier IV dynamic gas blending, or DGB, engines to our frac fleet that can substitute up to 80% of the diesel typically used by a frac pump with natural gas and significantly lower emission levels in frac operations. Tier IV DGB engines were added to our fleet in 2020. +♦ In 2018, we began the design and development of digiFrac SM , our innovative, purpose-built electric frac pump that has approximately a 25% lower CO2e emission profile than the Tier IV DGB. In 2021, we announced the successful test of digiFrac and in 2022 commenced delivery of commercial pumps. +♦ In October 2021, we acquired PropX, a provider of last-mile proppant delivery solutions including proppant handling equipment and logistics software. PropX offers innovative, environmentally friendly technology with optimized dry and wet sand containers and wellsite proppant handling equipment that drive logistics efficiency and reduce noise and emissions. +♦ In 2022, we began the design and development of digiPrime SM , the first hybrid pump technology, utilizing direct mechanical drive for the pumps while simultaneously generating power capable of electrifying supporting equipment at the well site. These pumps have a lower CO2e emissions profile than digiFrac. +♦ In September 2022, we announced our investment in Natron Energy (“Natron”) as we plan to collaborate with Natron to introduce sodium-ion batteries as an energy storage solution to provide uninterruptible backup power for our digiFrac electric frac pumps. Natron’s sodium-ion batteries are expected to be used to maximize uptime and optimize generator utilization ensuring a lower emissions footprint for onsite power generation . +♦ In 2023, we launched Liberty Power Innovations LLC, an integrated alternative fuel and power solutions provider for remote applications, and acquired Siren Energy & Logistics, LLC, a Permian focused integrated natural gas compression and compressed natural gas delivery business. We believe that the shift in fuel consumption from diesel to cleaner natural gas has the potential to promote emissions reductions in the industry. +♦ In 2023, we commenced deployment of digiFleets SM , comprised of digiFrac and digiPrime pump technology along with other complementary equipment from our digiTechnologies SM suite. +♦ In January 2024, we established the Bettering Human Lives Foundation, a non-profit organization dedicated to improving the well-being of communities worldwide with an early focus on promoting clean cooking solutions. +♦ In February 2024, we released the third edition of our Bettering Human Lives report, emphasizing energy’s central role in human lives. The report has been updated to include real-world case studies and is now segmented into six sections: Energy, Energy and the Modern World, Energy Poverty, Climate Change, Climate Economics, and an in-depth section on Liberty Energy. +Furthermore, we are continuously committed to engagement in our communities. We provide K-12 scholarships to low-income children through ACE (Alliance for Choice in Education) and we have launched a Liberty Scholars program at Montana Technological University to enable lower income students to obtain a college education. In total, over 140 students received Liberty scholarships across the US and Canada in 2023. In addition to our educational initiatives, we have other efforts targeting veterans, poverty abatement, low-income housing, criminal justice reform and job opportunities for those who had a disadvantaged start in life. To double our impact and encourage our employees to get involved in their communities, we launched Love, Liberty, our corporate matching program in 2021. In 2023, Liberty processed over 100 match requests to nearly 50 different organizations, totaling nearly $30,000 in matching contributions. +14 +CORPORATE CODE OF BUSINESS CONDUCT AND ETHICS +Our Board has adopted a Corporate Code of Business Conduct and Ethics (the “ Ethics Code ”) applicable to our employees, directors and officers, in accordance with applicable U.S. federal securities laws and the corporate governance rules of the NYSE. Any waiver of the Ethics Code may be made only by our Board or a Board committee and will be promptly disclosed as required by applicable SEC laws and the corporate governance rules of the NYSE. A current copy of the Ethics Code can be found on our website, www.libertyenergy.com , by first clicking “ Investors ” then “ Corporate Governance ” and proceeding to “ Governance Documents ,” and is available in print to any stockholder who requests it. We intend to post any waiver of our Ethics Code or substantive amendments to the Ethics Code to our website. +CORPORATE GOVERNANCE GUIDELINES +Our Board has adopted Corporate Governance Guidelines (the “ Governance Guidelines ”) in accordance with the corporate governance rules of the NYSE that serve as a framework within which our Board and committees operate. These guidelines cover matters including, but not limited to, the composition of our Board, Board membership criteria and qualifications, director responsibilities, meetings of the Board and non-management directors, Board committees, director access to management and independent advisors, director compensation, and evaluation of management and management succession planning. A current copy of our Governance Guidelines can be found on our website, www.libertyenergy.com , by first clicking “ Investors ” then “ Corporate Governance ” and proceeding to “ Governance Documents ,” and is available in print to any stockholder who requests it. +DIRECTOR RESIGNATION POLICY +Our director resignation policy is set forth within our Corporate Governance Guidelines. To be elected, director nominees must receive a plurality of the votes cast by the holders of the shares entitled to vote in the election of directors at the Annual Meeting. However, in an uncontested election, any director nominee who receives a Majority Withheld Vote is required to tender his or her resignation to the Chair of the Nominating and Governance Committee within seven days following certification of the stockholder vote. The Nominating and Governance Committee must recommend to the Board whether to accept the resignation offer within 60 days of receiving the offer of resignation. The Board is required to consider and act on the recommendation within 30 days following receipt of the recommendation. +COMPENSATION RECOVERY POLICY +On October 17, 2023, our Board adopted a Compensation Recovery Policy (the “ Recovery Policy ”) pursuant to the Exchange Act and NYSE rules. Our Recovery Policy provides that incentive-based compensation paid to our current and former executive officers may be recovered in the event of a restatement of our financial results. In connection with any such restatement, the Compensation Committee may seek recovery of any erroneously awarded incentive compensation paid within a three-year lookback period, including payments under the annual cash incentive program and payments and grants under the long-term incentive plan, by reimbursement, cancellation, forfeiture, and/or offset. +COMMUNICATION WITH THE BOARD +The Board welcomes communications from the Company’s stockholders and other interested parties. Stockholders and any other interested parties may send communications to the Board, any committee of the Board, the Chairman or any other director to: +Liberty Energy Inc. +c/o Corporate Secretary +950 17th Street, Suite 2400 +Denver, Colorado 80202 +Stockholders and any other interested parties should mark the envelope containing each communication as “Stockholder Communication with Directors” and clearly identify the intended recipient(s) of the communication. The Company’s Corporate Secretary or other officer as designated by the Board, will review each communication received from stockholders and other interested parties and will forward the communication, as expeditiously as reasonably practicable, to the addressees if the communication falls within the scope of matters generally considered by the Board. To the extent the subject matter of a communication relates to matters that have been delegated by the Board to a committee or to an executive officer of the Company, then the Company’s Corporate Secretary may forward the communication to the executive officer or chairman of the committee to which the matter has been delegated. The acceptance and forwarding of communications to the members of the Board or an executive officer does not imply or create any fiduciary duty of the Board members or executive officer to the person submitting the communications. +15 +COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION +The members of the Compensation Committee are set forth above. During 2023, our last completed fiscal year, none of our executive officers served on the board of directors or compensation committee of a company that had an executive officer that served on our Board or Compensation Committee. Further, no member of our Board was an executive officer of a company in which one of our executive officers served as a member of the board of directors or compensation committee of that company. +EXECUTIVE OFFICERS +The following sets forth certain information with respect to the executive officers of the Company as of February 21, 2024. +Name +Age +Position(s) +Christopher A. Wright +59 +Chairman of the Board and Chief Executive Officer +Michael Stock +62 +Chief Financial Officer and Treasurer +Ron Gusek +52 +President +R. Sean Elliott +49 +Chief Legal Officer and Corporate Secretary +Ryan T. Gosney +50 +Chief Accounting Officer +Christopher Wright – Chairman of the Board and Chief Executive Officer . See “ Proposal 1 – Election of Directors – Nominees for Election as Class II Directors to a Three-Year Term Expiring at the 2027 Annual Meeting of Stockholders ” above for information regarding Mr. Wright. +Michael Stock – Chief Financial Officer and Treasurer . Michael Stock has served as our Chief Financial Officer since December 2016, our Treasurer since March 2018 and as the Chief Financial Officer of our predecessor company from April 2012 until our IPO. Mr. Stock served as a director of the Company from December 2016 up until January 2018 and resigned upon completion of our IPO. From 2009 to 2012, he was employed by TAS Energy Inc., an industrial energy technology company. During his tenure, he served as Chief Financial Officer and was a key part of the raising of equity from leading investment groups including Kleiner Perkins, Element Partners, Natural Gas Partners and Credit Suisse. From 1997 to 2009, Mr. Stock served as Chief Financial Officer for Pinnacle Technologies. +Ron Gusek – President . Ron Gusek has served as our President since December 2016 and as the President of our predecessor company from November 2016 until the IPO. Mr. Gusek served as the Vice President of Technology and Development of our predecessor company, from 2014 until his promotion to President. From 2011 to 2014, Mr. Gusek served as Vice President, Corporate Engineering and Technology of Sanjel Corporation, a global energy service company. Prior to joining Sanjel Corporation, from 2009 to 2011, Mr. Gusek was Director of Engineering for Zodiac Exploration, an oil and natural gas exploration and production company working in the central San Joaquin valley in California. From 2003 to 2008, Mr. Gusek was the Canadian Regional Manager of Pinnacle Technologies. Mr. Gusek has a Bachelor of Science in Mechanical Engineering from the University of Alberta. +R. Sean Elliott – Chief Legal Officer and Corporate Secretary . Sean Elliott served as our Vice President and General Counsel from March 2017 to January 2023, as our Corporate Secretary since 2018 and was appointed Chief Legal Officer in January 2023. Between September 2016 and March 2017, Mr. Elliott worked as Assistant General Counsel at USAA Real Estate Company, a real estate investment firm. Between June 2015 and September 2016, Mr. Elliott served as Counsel at Haynes and Boone, LLP, an international corporate law firm. Between November 2007 and May 2015, Mr. Elliott served as Vice President, General Counsel, Corporate Secretary and Chief Compliance Officer of CARBO Ceramics Inc., an oilfield services production enhancement company. Mr. Elliott has a Bachelor of Arts in Economics and Business Administration from Austin College and a Doctor in Jurisprudence degree from the University of Texas at Austin. +Ryan T. Gosney – Chief Accounting Officer . Ryan Gosney has been our Chief Accounting Officer since March 2017. Between July 2016 and February 2017, Mr. Gosney served as the Chief Accounting Officer of Vantage Energy Inc. (“ Vantage ”), an oil and gas exploration and production company. Prior to joining Vantage, Mr. Gosney served as Chief Financial Officer for Dorado E&P Partners, LLC, an oil and gas company, from January 2012 to January 2016. Mr. Gosney began his career as an auditor with Arthur Andersen, LLP in September 1995 where he served in increasing roles of responsibility up to Audit Manager until June 2002. Mr. Gosney has also served as Controller for Patina Oil & Gas Corporation from October 2002 to October 2005 and Delta Petroleum Corporation from October 2005 to January 2012. Mr. Gosney has a Bachelor of Business Administration from Texas Christian University. +16 +COMPENSATION DISCUSSION & ANALYSIS +This Compensation Discussion & Analysis provides information about our rationale and policies with regard to the compensation of our principal executive officer, principal financial officer and our three other most highly-compensated executive officers (our “ Named Executive Officers ” or “ NEOs ”) for 2023 and is intended to provide investors with the material information necessary for understanding our compensation policies and decisions regarding our Named Executive Officers as well as providing context for the tabular disclosure provided in the executive compensation tables below. Our Named Executive Officers for 2023 include: +Name +Title +Christopher A. Wright +Chairman of the Board and Chief Executive Officer +Michael Stock +Chief Financial Officer and Treasurer +Ron Gusek +President +R. Sean Elliott +Chief Legal Officer and Corporate Secretary +Ryan T. Gosney +Chief Accounting Officer +2023 Compensation Overview +The Compensation Committee recommended, and the Board approved, the following compensation-related actions for our Named Executive Officers for fiscal year 2023, further detailed below: +• Base Salaries : The 2023 base salaries for each Named Executive Officer other than Messrs. Stock and Wright were increased in response to marketplace pay increases. +• Annual Incentive Awards : The bonus target criteria for annual incentive awards was the same used in 2022 based on the achievement of specific Company performance objectives. +• Long-Term Incentive Compensation : The long-term incentive compensation included both time-based awards, vesting ratably over a three-year period, and performance-based awards, with three-year cliff vesting. +2023 Say on Pay +At our 2023 annual meeting of stockholders, our stockholders were asked to approve, on a non-binding, advisory basis, the compensation of our Named Executive Officers, as reported in our 2023 proxy statement (“ Say on Pay ”). In 2023, our stockholders overwhelmingly approved the compensation of our Named Executive Officers, with over 98% of the votes cast in favor of such practices. The Compensation Committee and the Board viewed the results of the Say on Pay vote and, given the strong stockholder support for the compensation of our Named Executive Officers in 2023, believe that no significant changes to our compensation program were warranted as a result of this vote. As discussed in more detail in “ Proposal 2: Advisory Vote to Approve the Compensation of the Company’s Named Executive Officers ,” the Board has recommended that stockholders vote, on a non-binding advisory basis, to approve the compensation of our Named Executive Officers, as described below. +Compensation Best Practices +The Company’s compensation program has been designed to support a strong governance model. Key elements of the program in support of this objective are set forth in the chart below: +What We Do +What We Don’t Do +✓ +Determine annual incentive compensation with the majority of the potential payment based upon the achievement of pr e-established performance goals +x +No excise tax gross ups +x +No single-trigger severance +x +No excessive perquisites +✓ +Generally target the market median for total compensation +x +No short-term or speculative trading of Company stock +✓ +Use an independent compensation consultant +x +No re-pricing of incentive awards +✓ +Hold regular executive sessions of the Compensation Committee without management present +x +x +No supplemental retirement plans +No guaranteed bonuses or uncapped incentives +✓ +Base a portion of the long-term incentives upon our performance relative to peers +✓ +Apply Stock Ownership Guidelines for executive officers and most Board members +✓ +Manage incentive compensation overpayment risk through compensation recovery/clawback policy +17 +Process for Setting Compensation and Role of Compensation Consultant +At the beginning of each year, the Compensation Committee engages an independent executive compensation consulting firm in order to provide independent and objective market compensation data, conduct compensation analysis, recommend plan design changes and advise on compensation related risks. The Compensation Consultant (as defined below) acts solely on behalf of the Compensation Committee and not on behalf of the Company’s management team. During 2023, the Compensation Committee engaged NFP Compensation Consulting as such compensation consultant (the “ Compensation Consultant ”). The Compensation Consultant compiles compensation surveys for review by the Compensation Committee and management. After review of the Compensation Consultant’s surveys, management provides recommendations of compensation for our Named Executive Officers to the Compensation Committee. Such recommendations are generally based upon the guidance of the Compensation Consultant and the performance of our management as a team. The Compensation Committee then reviews management’s recommendation with the ability to ask questions of both management and the Compensation Consultant and may conduct an executive session as needed to discuss compensation. Previously, the Compensation Committee and Board collectively have had the final authority to make all decisions regarding compen sation. In January 2022, the Board approved amendments to the Compensation Committee charter that authorize the Compensation Committee to make recurring and other compensation decisions without separate Board approval, providing the Compensation Committee with additional autonomy. +The Compensation Consultant also assists the Compensation Committee with the determination of our Peer Group, as defined and described below, and design of our annual incentive program and long-term incentive awards. Using the independence factors established by the SEC and the NYSE, the Compensation Committee determined that the Compensation Consultant’s work did not raise any conflicts of interest, and they are considered an independent consulting firm. +Competitive Market Position and Peer Group +To further emphasize the alignment between Company performance and executive pay and to ensure compensation is competitive, for 2023 the Compensation Committee generally targeted the 50 th percentile for total compensation (base salary and short-term and long-term incentives) for the named executive officers as a group, as reflected by various sources of compensation data (collectively, “ Market Data ”). The Market Data provided to the Compensation Committee by the Compensation Consultant includes compensation information from our Peer Group as well as other broad-based compensation survey sources selected by the Compensation Consultant. Although the Compensation Committee used the Market Data to inform its decisions regarding the form and amount of compensation provided to our Named Executive Officers in 2023, the Compensation Committee also considered other factors such that the compensation provided to our Named Executive Officers is not exclusively reflective of the Market Data. +For purposes of setting 2023 compensation, the peer group companies (our “ Peer Group ”) used by the Compensation Consultant and the Compensation Committee included the following companies: +NOV Inc. +Flowserve Corporation +Weatherford International plc +Helmerich & Payne, Inc. +Patterson-UTI Energy, Inc. +ChampionX Corporation +NexTier Oilfield Solutions Inc. +Valaris Limited +Cactus, Inc. +Oceaneering International, Inc. +Gates Industrial Corporation plc +Our Peer Group was selected based on companies that broadly represent related drilling, oilfield services and manufacturing businesses and are of reasonably comparable size to the Company based on revenue, market capitalization and other financial metrics. While some of these companies have different revenues or market capitalizations, these companies represent the market in which we most directly compete for qualified professionals. As a whole, our Peer Group reflects companies with related operations, of reasonably similar size, and with which we compete for talent. +Objectives of Compensation +The goal of the Company’s compensation program is to help attract and retain qualified executive talent and to strengthen the alignment between executives and stockholders’ interests, enhancing stockholder value. To achieve this goal, the Compensation Committee’s decisions are guided by the following principles: provide a competitive compensation package; relate compensation to the performance of the Company and the individual; and align employee objectives with the objectives of stockholders by encouraging executive sto ck ownership. +18 +In order to achieve these objectives, the Compensation Committee has created a compensation package that combines fixed and variable cash compensation with equity-based compensation. The Company’s compensation program for executive officers consists of the following items: +* base salary; +* performance-based annual incentive payments under the Company’s Long-Term Incentive Plan (“ LTIP ”), which in 2023 were based upon the Company’s adjusted pre-tax earnings per share (“ Adjusted Pre-Tax EPS ”), return on capital employed (“ ROCE ”), the Company’s adjusted ROCE (ROCE revised to a standardized calculation as described herein) (“ Adjusted ROCE ”) as compared to the Adjusted ROCE of a peer group of companies (such comparison, “ Comparative ROCE ”) and personal performance; +* long-term equity awards under our LTIP, consisting of both time-based and performance-based restricted stock units; and +* matching contributions under the Liberty Oilfield Services 401(k) Savings Plan. +The Compensation Committee structures executive total direct compensation to emphasize performance through the annual incentive program and long-term incentives. The Compensation Committee believes that the compensation mix should strike a balance promoting long-term returns without motivating or rewarding excessive or inappropriate risk-taking. +Elements of Compensation +2023 Pay Mix +Our compensation program is designed so that the higher an executive’s position in the Company, the greater the percentage of compensation is contingent on the Company’s performance. The Company believes that having a significant portion of our Named Executive Officers’ compensation at risk better aligns their interests with the long-term interests of the Company and its stockholders. A majority of our Named Executive Officers total target direct compensation for fiscal year 2023 was variable, at approximately 88% for our Chief Executive Officer and averaging 81% for our other Named Executive Officers. The following charts illustrate the total target mix of direct compensation for our Named Executive Officers for fiscal year 2023. +Base Salary +Each Named Executive Officer’s base salary is a fixed component of compensation for performing specific job duties and functions. In January 2023, the Compensation Committee approved a raise to Named Executive Officer base salaries effective February 2023. Base salary raises were recommended by the Compensation Consultant, but the 5% increase was lower than the Compensation Consultant believed would be used at comparable companies in 2023. Nevertheless, the Named Executive Officers requested that the raise be left at 5% in order to better align with raises that would be offered to other employees of the Company. Specifically, the annualized base salaries for each Named Executive Officer are as follows for 2023: +Name +2023 Base Salary +Increase over 2022 +Base Salary +Christopher A. Wright +$643,000 +5% +Michael Stock +$428,000 +5% +Ron Gusek +$473,000 +5% +R. Sean Elliott +$420,000 +5% +Ryan T. Gosney +$315,000 +5% +19 +Annual Incentive Award +In 2023, based on the analysis provided by the Compensation Consultant and the recommendation of the Compensation Committee, the Board established performance metrics and hurdles for our 2023 annual incentive awards that are focused on the results of adjusted P re-T ax EPS, ROCE and Comparative ROCE. The Compensation Consultant recommended, and the Compensation Committee approved, maintaining an element of discretion in the annual incentive for our Named Executive Officers in order to provide the Compensation Committee the flexibility to respond to specific events that are relevant to each Named Executive Officer’s performance during the year. No payout percentage would be earned for a metric if the actual Company performance of that metric was below the threshold level set for that metric below. Payouts for performance between threshold, target and maximum would have been calculated using straight line interpolation. The overall payout amount for each Named Executive Officer is capped at 200% of each Named Executive Officer’s target incentive award. The performance metrics, their related thresholds and weightings and actual performance for the year ended Dec ember 31, 202 3 are set forth in the table below: +Performance Metric +Weighting +Threshold +(50% +Payout) +Target +(100% +Payout) +Maximum +(200% +Payout) +Actual +Performance +Earned +Payout +Percentage +of Annual +Incentive +Award +Adjusted Pre-Tax EPS (1) +25% +$1.09 +$4.71 +$6.52 +$4.44 +96.3% +ROCE (2) +25% +13% +46% +60% +42.8% +95.1% +Comparative ROCE (3) +30% +See Comparative ROCE Chart below +1 of 10 (4) +200% +Discretionary +20% +N/A +N/A +N/A +30% +30% +(1) Adjusted Pre-Tax EPS is equal to the Company’s 2023 Adjusted EBITDA (calculated as presented in the Company’s Annual Report on Form 10-K), minus interest expense, depreciation and amortization, divided by basic weighted average shares outstanding for 2023. +(2) ROCE is equal to the Company’s 2023 Adjusted EBITDA (calculated as presented in the Company’s Annual Report on Form 10-K), minus depreciation and amortization, divided by the simple average of capital (debt and equity) employed at December 31, 2023 and 2022. +(3) Comparative ROCE is determined by comparing the Company’s Adjusted ROCE, which is equal to the Company’s 2023 income before taxes and loss (gain) on remeasurement of liability under tax rece ivable agreements, plus interest expense and stock-based compensation expense, and ranking it against the Adjusted ROCE of the 2023 peer group, as further detailed below. +(4) Comparative ROCE Peer Group data estimated on a consistent basis with Company and based on public data as of February 28, 2024. +In 2023, our Named Executive Officers continued to work and build on the success achieved in 2022, after recovering from the challenges experienced in 2020 and 2021 due to the COVID-19 pandemic and the integration of the Schlumberger acquisition. The Company achieved record levels of revenue, net income and Adjusted EBITDA in 2023, despite softening market conditions in the second half of 2023. In the view of the Compensation Committee, the Company faced these softening conditions better than several of its competitors. Given these facts and the rate of performance in 2023 on Adjusted Pre-Tax EPS, ROCE and Comparative ROCE financial metrics, the Compensation Committee approved a 30% payout on the 2023 discretionary incentive opportunity for all Named Executive Officers. The same rate of payout on the discretionary portion was awarded for each executive officer to recognize the collaborative team effort utilized to obtain these results. +The target incentive for each Named Executive Officer and the 2023 annual incentive payout for each Named Executive Officer is set forth below. Target incentive levels were increased in 2023 from 8 to 20% depending on the individual officer in order to better align targeted total cash compensation with the 50 th percentile of the Peer Group. +Name +Target +Annual +Incentive +(% of Base +Salary) +Target Annual +Incentive ($) +Performance +Achievement +Level +(% of Target) +Actual 2023 +Annual Incentive +Payout +Christopher A. Wright +155.5% +$1,000,000 +137.9% +$1,378,500 +Michael Stock +135.5% +$580,000 +137.9% +$799,530 +Ron Gusek +133.2% +$630,000 +137.9% +$868,455 +R. Sean Elliott +107.1% +$450,000 +137.9% +$620,325 +Ryan T. Gosney +111.1% +$350,000 +137.9% +$482,475 +20 +Comparative ROCE is determined by comparing and ranking the Company’s Adjusted ROCE against the Adjusted ROCEs of a group of peer companies (such peer group, the “ ROCE Peer Group ”). Our Adjusted ROCE and the ROCE Peer Group Adjusted ROCEs for a calendar year are calculated and then ranked in order of highest to lowest, with the highest Adjusted ROCE being ranked 1 of 10, and the lowest Adjusted ROCE ranked 10 of 10. The amount of the target award paid for this metric is then based on our numerical ranking against the ROCE Peer Group as follows, with the use of linear interpolation to determine the exact amount of payout (the “ ROCE Ranking Matrix ”): +Comparative ROCE +Ranking of Company Adjusted ROCE against ROCE Peer Group +Payout Percentage of Target Award +1 of 10 +200% +2 of 10 +175% +3 of 10 +150% +4 of 10 +125% +5 of 10 +100% +6 of 10 +75% +7 of 10 +50% +8 of 10 +0% +9 of 10 +0% +10 of 10 +0% +The ROCE Peer Group is reviewed and set each year, provided that the Compensation Committee reserves the right to recommend, and the Board to make, substitutions and revisions to the ROCE Peer Group throughout the year. While some companies in the ROCE Peer Group may overlap with companies in Peer Group, the focus of the ROCE Peer Group is to provide a metric by which the effectiveness of capital deployment can be measured. Accordingly, the ROCE Peer Group focuses more particularly on other companies that have capital needs that are similar to those of the Company. The Peer Group tends to focus and include companies based on the relative size of the peers based on metrics such as revenue and market capitalization. The ROCE Peer Group also utilizes the S&P 500 to provide a broader measure of the effectiveness of deployment of capital across various industries. The 2023 ROCE Peer Group consists of the following companies and indices. Initially, the Compensation Committee included NexTier Oilfield Solutions Inc. in the 2023 ROCE Peer Group. Given the merger of NexTier into Patterson-UTI Energy Inc. in the second half of 2023 and in accordance with the terms established for the Annual Incentive Program, the Compensation Committee replaced NexTier with the PHLX Oil Service Sector Index (“OSX”) in October 2023. Similar to the rationale for using the S&P 500, the Committee believes that that the OSX index also provides a broad measure of the effectiveness of the deployment of capital across the oilfield services industry. +Helmerich & Payne, Inc. +OSX Index +Oil States International, Inc. +Patterson-UTI Energy, Inc. +ProPetro Holding Corp. +RPC, Inc. +S&P 500 Index +Nine Energy Service, Inc. +Halliburton Company +Our Company Adjusted ROCE for 2023 was 42.8%, which ranked 1 of 10 against the ROCE Peer Group for 2023 based on public data as of February 28, 2024, resulting in a weighted payout percentage for the Comparative ROCE component of the annual incentive award equal to 200.0%. +Long-Term Incentive Compensation +We maintain the LTIP in order to incentivize individuals providing services to us or our affiliates. In 2023, following recommendations by the Compensation Consultant and our Compensation Committee, our Board granted both time-based and performance-based restricted stock units (“ RSUs ”), each which represent the right to receive shares of our Class A Common Stock following the applicable vesting period. The Compensation Committee has considered the use of other forms of equity awards, including restricted stock and stock options, and ultimately determined to use RSUs given that they have a less dilutive effect than stock options and do not require the issuance of actual shares of Class A Common Stock unless and until vesting conditions are met. For 2023, the grant date value of RSUs for the Named Executive Officers as a group was initially set at approximately the 50 th percentile based on Market Data. The Compensation Committee and our Board determined that a combination of time-based and a performance-based vesting approach was appropriate given the Company’s desire to provide our Named Executive Officers with a long-term retention-focused award that also aligns the interests of our Named Executive Officers with those of our stockholders while at the same time furthering the Company’s pay-for-performance philosophy. +21 +For 2023, one-half of the RSUs awarded to Messrs. Wright, Stock and Gusek vest ratably over a three-year period, and one-half vests at the end of a three-year performance period based on the Company’s performance against a ROCE Peer Group. Messrs. Elliott and Gosney received RSU awards with similar time and performance-based vesting conditions for 2023, except that 67% of these awards were time-based, and 33% were performance-based. +Performance-based RSUs provide the Named Executive Officer the right to receive an amount ranging from 0% to 200% of the target performance-based RSUs granted based on the Company’s Comparative ROCE performance during the three-year performance period, subject to the continued employment of the Named Executive Officer. To determine the Company’s Comparative ROCE, Adjusted ROCE will be calculated for the Company and each entity in the ROCE Peer Group, as described above under “ Elements of Compensation—Annual Incentive Award ,” for each applicable year. After the end of the three-year performance period, the Adjusted ROCE calculations of each entity for each year shall be averaged in order to obtain an average Adjusted ROCE calculation for the entire three-year period. The entities in the ROCE Peer Group will be arranged (highest to lowest) by their averaged Adjusted ROCE, excluding the Company. The Company’s percentile rank will be interpolated between the entity with the next highest average Adjusted ROCE and the entity with the next lowest average Adjusted ROCE. The Company’s percentile rank will then be used to determine the payout percentage of the target performance-based RSU by using the ROCE Ranking Matrix set forth above. The chart below shows the Company’s Comparative ROCE rank for 2021, 2022, and 2023, resulting in an award payout of 178% of target for the performance-based RSUs that were awarded to Named Executive Officers in January 2021 and vest on April 1, 2024: +Year +Company Adjusted +ROCE Percentage +Ranking of +Company Adjusted +ROCE against +ROCE Peer Group +2021 +-11.7% +9 of 10 +2022 +34.0% +3 of 10 +2023 +42.9% +1 of 10 +3-year average +21.8% +2 of 10 +Employment, Severance and Change in Control Agreements +The Company has entered into a change in control agreement with each of Mr. Elliott and Mr. Gosney (the “ Change in Control Agreements ”). No such change of control agreements have been entered into with the Company’s other Named Executive Officers, as the value of the vested equity interests in the Company that such officers acquired prior to the time of the IPO would likely provide adequate benefits in the event of a change in control transaction. +Each Change in Control Agreement provides severan ce benefits in the event the executive officer’s employment is terminated without cause or the executive officer resigns for good reason within 18 months following a change in control, as described in more detail below under “ Potential Payments Upon Termination or Change in Control—Change in Control Agreements .” The benefits provided to the executive officer in the Change in Control Agreements were primarily based on the recommendation of the Compensation Consultant and Peer Group median data provided at the time the Change in Control Agreements were executed. +We have not entered into any other employment, severance or change in control agreements with any of our Named Executive Officers. +Other Compensation Elements +401(k) Plan. We currently maintain a retirement plan intended to provide benefits under Section 401(k) of the Internal Revenue Code of 1986, as amended (the “ Code ”) under which employees, including our Named Executive Officers, are allowed to contribute portions of their base compensation to a tax-qualified retirement account under the Liberty Oilfield Services 401(k) Savings Plan. We provide matching contributions at a rate of $1.00 for each $1.00 of employee contribution, subject to a cap of the lower of (i) 6% of the employee’s salary and (ii) the applicable contribution limits under the Code. +Pension and Nonqualified Deferred Compensation. We have not maintained, and do not currently maintain, a defined benefit pension plan or nonqualified deferred compensation plan. +Perquisites and Other Benefits . We provide limited perquisites to our Named Executive Officers. For example, none of our Named Executive Officers receive car allowances. +Anti-Hedging and Pledging Policy. Our Insider Trading Policy (the “ Insider Trading Policy ”) generally prohibits our directors, employees and officers from hedging and pledging of Company securities by providing that hedging or monetization transactions, whether direct or indirect, involving the Company’s securities and the pledging of Company securities as collateral are prohibited. Short term exceptions to this prohibition (such as temporary margin loans) may be granted depending on specific facts and circumstances. Any exceptions to the Insider Trading Policy for our directors and officers must be granted by our Audit Committee and will be periodically communicated to the Board. The Insider Trading Policy also prohibits transactions involving Company-based derivative securities. +22 +Stock Ownership Guidelines . We have implemented stock ownership guidelines for our executive officers and our directors who receive compensation from us for Board service to foster equity ownership and align interests with our stockholders. Within five years of the later of (a) the date of becoming an executive officer and (b) October 18, 2022, our Chief Executive Officer is expected to own a number of shares equal to six times of his base salary and all other executive officers are expected to own a number of shares equal to two times their base salary. Similarly, within five years of the later of (a) the date a compensated director commences service with the Company in such position and (b) October 18, 2022, our compensated directors are expected to own a number of shares equal to five times their annual Board cash retainer. Shares that are owned directly, indirectly (such as through a 401(k) plan or family trust) and shares issuable upon settlement of restricted stock units (including the target number of shares to be issued under performance-based units) count towards meeting these ownership requirements. In the event that an executive officer or compensated director fails to comply with these ownership guidelines following the end of the applicable transition period and subject to certain exceptions, they are expected to retain not less than 50% of the number of shares issued to him or her under our LTIP or similar future equity compensation plans, net of the number of shares applied to the payment of taxes on such awards. Each of our executive officers and compensated directors was within the transition period provided for in the stock ownership guidelines as of the Record Date; however as of the Record Date all of our executive officers and directors were in compliance with these guidelines even without the benefit of the transition period. +Risk Assessment +The Compensation Committee reviewed our employee compensation practices and policies and determined that such policies do not encourage excessive or unnecessary risk-taking and are not likely to have a material adverse effect on the Company. Furthermore, the Board and Compensation Committee recently adopted our compensation recovery policy to further enhance integrity and accountability in relation to the Company’s compensation philosophy. +23 +COMPENSATION COMMITTEE REPORT +The information contained in this Compensation Committee Report shall not be deemed to be “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933, as amended (the “ Securities Act ”), or the Exchange Act, except to the extent that the Company specifically incorporates such information by reference in such filing. +The Compensation Committee reviewed and discussed the Compensation Discussion & Analysis required by Item 402 of Regulation S-K promulgated by the SEC with management of the Company, and, based on such review and discussions, the Compensation Committee recommended to the Board that such Compensation Discussion & Analysis be included in this Proxy Statement and incorporated by reference into the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023. +Compensation Committee of the Board of Directors: +Peter A. Dea, Chairman +Ken Babcock, Member +James McDonald, Member +Cary D. Steinbeck, Member +24 +EXECUTIVE COMPENSATION TABLES +Summary Compensation Table +The following table summarizes the compensation awarded to, earned by or paid to Principal Executive Officer (“ PEO ”) and our other Named Executive Officers for the fiscal years ended December 31, 2023, 2022, 2021. +Name & Principal Position +Year +Salary +($) +Bonus +($) (1) +Stock Awards ($) (2) +Non-Equity Incentive Plan Compensation ($) (1) +All Other Compensation ($) (3) +Total +($) +Christopher A. Wright +Chairman of the Board & +Chief Executive Officer +2023 +2022 +638,231 +612,000 +300,000 +360,000 +3,590,569 +3,406,258 +1,078,500 +1,350,927 +20,800 +18,300 +5,628,100 +5,747,485 +2021 +612,000 +180,000 +3,801,972 +0 +17,400 +4,611,372 +Michael Stock +Chief Financial Officer & Treasurer +2023 +2022 +424,923 +408,000 +174,000 +200,000 +1,609,575 +1,526,949 +625,530 +750,515 +20,800 +18,300 +2,854,828 +2,903,764 +2021 +408,000 +100,000 +1,689,762 +0 +17,400 +2,215,162 +Ron Gusek +President +2023 +2022 +469,462 +443,538 +189,000 +220,000 +1,609,575 +1,526,949 +679,455 +825,567 +20,800 +18,300 +2,968,292 +3,034,354 +2021 +408,000 +200,000 +1,689,762 +0 +17,400 +2,315,162 +R. Sean Elliott +Chief Legal Officer & Corporate Secretary +2023 +2022 +416,923 +394,954 +135,000 +150,000 +996,456 +945,531 +485,325 +562,886 +20,800 +18,300 +2,054,504 +2,071,671 +2021 +367,200 +144,000 +1,662,426 +0 +17,400 +2,191,026 +Ryan T. Gosney +Chief Accounting Officer +2023 +2022 +312,692 +296,215 +105,000 +120,000 +619,062 +587,291 +377,475 +450,309 +20,800 +5,891 +1,435,029 +1,459,706 +2021 +275,400 +81,000 +1,020,111 +0 +16,524 +1,393,035 +(1) The amounts reported in the “Non-Equity Incentive Plan Compensation” column reflect the portion of the annual incentive payouts related to achievement of the Company-wide performance metrics. The portion of the annual incentive payouts related to the discretionary component are reported in the “Bonus” column. +(2) The amounts shown do not reflect compensation actually received by the Named Executive Officer. Rather, amounts set forth in the “Stock Awards” column represent the aggregate grant date fair value of time-based and performance-based restricted stock unit awards computed in accordance with FASB ASC Topic 718 for financial statement reporting purposes by the Company with respect to restricted stock units. A discussion of the assumptions used in this valuation with respect to awards made in fiscal year 2023 may be found in Note 10 to the Company’s financial statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. Performance-based awards are included based on the assumption that they will vest at 100% of the target award, since actual vesting will not be determined until the end of the performance period. +(3) For the Named Executive Officers, amounts reported in the “All Other Compensation” column for 2023 reflect discretionary matching contributions earned by each Named Executive Officer pursuant to the Company’s 401(k) plan and a holiday bonus that was paid in an equal amount to all Company employees. +25 +Grants of Plan-Based Awards +The following table provides information for each of our Named Executive Officers regarding plan-based awards granted during fiscal year 2023. +Name +Grant Date +Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) +Estimated Future Payouts Under Equity Incentive Plan Awards (2) +All Other Stock Awards: Number of Shares of Stock or Units +(#) (3) +Grant Date Fair Value of Stock Awards +($) (4) +Threshold ($) +Target +($) +Maximum +($) +Threshold +(#) +Target +(#) +Maximum +(#) +Christopher A. Wright +400,000 +800,000 +1,600,000 +2/8/2023 +57,394 +114,788 +229,576 +1,795,284 +2/8/2023 +114,788 +1,795,284 +Michael Stock +232,000 +464,000 +928,000 +2/8/2023 +25,729 +51,457 +102,914 +804,787 +2/8/2023 +51,457 +804,787 +Ron Gusek +252,000 +504,000 +1,008,000 +2/8/2023 +25,729 +51,457 +102,914 +804,787 +2/8/2023 +51,457 +804,787 +R. Sean Elliott +180,000 +360,000 +720,000 +2/8/2023 +10,513 +21,025 +42,050 +328,831 +2/8/2023 +42,687 +667,625 +Ryan T. Gosney +140,000 +280,000 +560,000 +2/8/2023 +6,531 +13,062 +26,124 +204,290 +2/8/2023 +26,520 +414,773 +(1) The amounts shown in these columns reflect the potential threshold, targe t and maximum payouts with respect to the performance-based financial metrics approved under the 2023 annual incentive awards. The amounts reflected herein do not include amounts that may be earned with respect to the discretionary component of the 2023 annual incentive awards. +(2) The amounts shown in these columns reflect the potential threshold, target and maximum number of performance-based RSU awards granted to the Named Executive Officers during fiscal year 2023. +(3) The amounts shown in this column reflect time-based vesting RSU awards granted to the Named Executive Officers during fiscal year 2023. +(4) The amounts shown in this column do not reflect compensation actually received by the Named Executive Officer. Rather, amounts set forth herein represent the aggregate grant date fair value of time-based and performance-based RSUs computed in accordance with FASB ASC Topic 718 for financial statement reporting purposes in fiscal year 2023 by the Company. A discussion of the assumptions used in this valuation with respect to awards made in fiscal year 2023 may be found in Note 10 to the Company’s financial statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. +26 +Outstanding Equity Awards at 2023 Fiscal Year-End +The following table reflects information regarding outstanding equity-based awards held by our Named Executive Officers as of December 31, 2023, which consist of time-based RSU awards and performance-based RSU awards. +Name +Stock Awards +Number of Shares +or Units of Stock +That Have Not +Vested +(#) +Market Value +of Shares +or Units of Stock +That Have +Not Vested +($) (4) +Equity Incentive +Plan Awards: +Number of +Unearned Shares, +Units or Other +Rights That Have +Not Vested +(#) +Equity Incentive +Plan Awards: +Market or Payout +Value of Unearned +Shares, Units or +Other Rights That +Have Not Vested +($) (8) +Christopher A. Wright +48,819 +91,714 +114,788 +(1) +(2) +(3) +885,577 +1,663,692 +2,082,254 +292,910 +275,142 +229,576 +(5) +(6) +(7) +5,313,387 +4,991,076 +4,164,509 +Michael Stock +21,697 +41,114 +51,457 +(1) +(2) +(3) +393,584 +745,808 +933,430 +130,182 +123,340 +102,914 +(5) +(6) +(7) +2,361,501 +2,237,388 +1,866,860 +Ron Gusek +21,697 +41,114 +51,457 +(1) +(2) +(3) +393,584 +745,808 +933,430 +130,182 +123,340 +102,914 +(5) +(6) +(7) +2,361,501 +2,237,388 +1,866,860 +R. Sean Elliott +17,990 +34,115 +42,687 +(1) +(2) +(3) +326,339 +618,846 +774,342 +148,214 +50,408 +42,050 +(5) +(6) +(7) +2,688,602 +914,401 +762,787 +Ryan T. Gosney +11,039 +21,190 +26,520 +(1) +(2) +(3) +200,247 +384,387 +481,073 +90,948 +31,310 +26,124 +(5) +(6) +(7) +1,649,797 +567,963 +473,889 +(1) These RSUs granted on January 20, 2021 vest on April 1, 2024, so long as the applicable Named Executive Officer remains employed through such date. +(2) These RSUs granted on January 18, 2022 vest in one-half increments on each of April 1, 2024 and April 1, 2025, so long as the applicable Named Executive Officer remains employed through such dates. +(3) These RSUs granted on February 8, 2023 vest in one-third increments on each of April 1, 2024, April 1, 2025 and April 1, 2026, so long as the applicable Named Executive Officer remains employed through such dates. +(4) Amounts in this column reflect the value of unvested time-based RSU awards held by the Named Executive Officers, calculated based on the closing price of our Class A Common Stock on December 29, 2023 of $18.14. +(5) These performance-based RSUs granted on January 20, 2021 will vest on April 1, 2024, subject to achievement of the Comparative ROCE performance metrics and the applicable Named Executive Officer’s continued employment through such date. As of December 31, 2023, the performance-based RSUs granted on January 20, 2021 were trending above target, and in accordance with the SEC rules, are reflected in this table at maximum, therefore, the performance-based RSUs may actually vest at a lower amount than reflected in this column. +(6) These performance-based RSUs granted on January 18, 2022 will vest on April 1, 2025, subject to achievement of the Comparative ROCE performance metrics and the applicable Named Executive Officer’s continued employment through such date. As of December 31, 2023, the performance-based RSUs granted on January 18, 2022 were trending above target, and in accordance with the SEC rules, are reflected in this table at maximum, therefore, the performance-based RSUs may actually vest at a lower amount than reflected in this column. +27 +(7) These performance-based RSUs granted on February 8, 2023 will vest on April 1, 2026, subject to achievement of the Comparative ROCE performance metrics and the applicable Named Executive Officer’s continued employment through such date. As of December 31, 2023, the performance-based RSUs granted on February 8, 2023 were trending above target, and in accordance with the SEC rules, are reflected in this table at maximum, therefore, the performance-based RSUs may actually vest at a lower amount than reflected in this column. +(8) Amounts in this column reflect the value of unvested performance-based RSU awards held by the Named Executive Officers reported in the preceding column calculated based on the closing price of our Class A Common Stock on December 29, 2023 of $18.14. +Option Exercises and Stock Vested +The following table reflects the value received by each Named Executive Officer on the vesting of restricted stock awards and RSU awards during fiscal year 2023. None of our Named Executive Officers held stock option awards during the 2023 year. +Name +Stock Awards +Number of +Shares Acquired +on Vesting +(#) +Value Realized +on Vesting +($) (1) +Christopher A. Wright +369,202 +4,729,478 +Michael Stock +164,266 +2,104,247 +Ron Gusek +164,266 +2,104,247 +R. Sean Elliott +94,378 +1,208,982 +Ryan T. Gosney +58,123 +744,556 +(1) The amounts in this column reflect the value of the shares in the preceding column based on the closing price of our Class A Common Stock of $12.81 on April 1, 2023, the applicable vesting date, including the value of any shares withheld for tax withholding purposes. +Pension Benefits and Nonqualified Deferred Compensation +We do not maintain and our Named Executive Officers do not participate in any defined benefit pension plan or nonqualified deferred compensation plan. +Potential Payments Upon Termination or Change in Control +Change in Control Agreements +The Company has entered into Change in Control Agreements with each of Mr. Elliott and Mr. Gosney. For further detail on the Company’s decision to enter into Change in Control Agreements with these Named Executive Officers, see the section titled “ Employment, Severance and Change in Control Agreements ” contained in the Compensation Discussion & Analysis section set forth herein. Each Change in Control Agreement provides that if the Named Executive Officer’s employment is terminated without “cause” or the Named Executive Officer resigns for “good reason” within 18 months following a “change in control,” the Named Executive Officer will be entitled to receive, subject to such Named Executive Officer’s timely execution and non-revocation of a release of claims in favor of the Company: (i) two times the sum of (a) the Named Executive Officer’s annualized base salary for the year in which the termination occurs (or, if greater, that in effect immediately preceding the change in control) plus (b) an amount equal to the higher of (1) the Named Executive Officer’s target annual bonus for year in which the termination occurs or (2) the average of the Named Executive Officer’s target annual bonus for the three most recently completed calendar years; (ii) a pro-rated portion of the Named Executive Officer’s target annual bonus for the calendar year in which the termination occurs; (iii) reimbursement for a portion of the COBRA premiums paid by the executive for continued coverage under the Company’s group health plans for up to 18 months plus a lump sum cash payment equal to six times such monthly amount; and (iv) vesting of all outstanding time-based and performance-based equity awards granted pursuant to any Company long term incentive plan as of the date of termination, with such performance-based equity awards being vested at the higher of target performance or actual performance through the termination date. +For purposes of the Change in Control Agreements, the following terms generally have the meanings set forth below: +* “ Cause ” generally means the Named Executive Officer’s (i) material breach of the Change in Control Agreement or any other agreement with the Company, (ii) material breach of any policy or code of conduct, (iii) violation of any law applicable to the workplace or employment relationship that is materially injurious to the Company, (iv) gross negligence, willful misconduct or willful breach of fiduciary duty, fraud, theft or embezzlement, (v) conviction or indictment, or plea of nolo contendere, to any felony or conviction or plea of nolo contendere to any crime involving moral turpitude, or (vi) willful failure or refusal to substantially perform such Named Executive Officer’s obligations or to follow in any material respect any specific lawful direction from the Company. Clauses (i), (ii), (iii) and (vi) are subject to certain notice and cure rights. +28 +* “ Change in Control ” generally means (i) a change in the ownership of the Company, (ii) a change in the effective control of the Company, or (iii) a change in the ownership of a substantial portion of the Company’s assets, in each case, as such phrases are defined under the Treasury regulations promulgated pursuant to Section 409A of the Code. +* “ Good Reason ” generally means (i) a material diminution in the Named Executive Officer’s total cash compensation, (ii) a material diminution in the Named Executive Officer’s authority, duties or responsibilities as a whole, (iii) a geographic relocation by more than 50 miles, (iv) a material breach by the Company of the Change in Control Agreement or any other agreement between the Named Executive Officer and the Company, or (v) a failure to timely pay or provide any material payment, benefit or other consideration or compensation owed to the Named Executive Officer, in each case, subject to certain notice and cure rights. +RSU Awards +The RSUs held by our Named Executive Officers under the LTIP will accelerate and become 100% vested upon a termination of the Named Executive Officer’s employment with the Company due to the Named Executive Officer’s death or “disability.” For RSUs that use performance-based vesting, the award will remain outstanding and eligible to be earned based on the Company’s achievement of the applicable performance metrics at the end of the performance period. For purposes of the RSU awards, “disability” means the Named Executive Officer’s inability to perform his duties, after accounting for reasonable accommodation, due to a mental or physical impairment that continues (or can reasonably be expected to continue) for (i) 90 consecutive days or (ii) 180 days out of any 365-day period, which, in either case, shall only be deemed to occur following the written determination by the Company of any such occurrence of disability. +The table below describes and estimates the amounts and benefits each Named Executive Officer would have been eligible to receive upon a termination of his employment in certain circumstances or a change in control, assuming such events occurred as of December 31 , 2023, the last day of fiscal year 2023. The estimated payments are not necessarily indicative of the actual amounts such executive would have received in such circumstances, as such amounts could not be known with certainty until the applicable event occurred. The table excludes compensation amounts accrued through December 31, 2023 that would be paid in the normal course of continued employment, such as accrued but unpaid salary and vested account balances under our retirement plans that are generally available to all of our salaried employees. Where applicable, the information in the table uses a price per share for our Common Stock of $18.14, the closing price on December 29, 2023 (the “ Year-End Closing Price ”). Generally, payment of severance benefits to a Named Executive Officer following termination of employment is subject to such officer’s timely execution and non-revocation of a release of claims in favor of the Company. +Name +Change in +Control +($) +Death/ +Disability +($) +Termination without Cause or Resignation for Good Reason on or within 18 Months Following a Change in Control +($) +Christopher A. Wright +Equity Award Acceleration (1) +— +19,100,495 +— +Michael Stock +Equity Award Acceleration (1) +— +8,538,571 +— +Ron Gusek +Equity Award Acceleration (1) +— +8,538,571 +— +R. Sean Elliott +Cash Severance (2) +— +— +2,190,000 +Benefit Continuation (3) +— +— +33,414 +Equity Award Acceleration (1) +— +6,091,847 +6,091,847 +Ryan Gosney +Cash Severance (2) +— +— +1,680,000 +Benefit Continuation (3) +— +— +33,546 +Equity Award Acceleration (1) +— +3,757,356 +3,757,356 +(1) The amounts reported in these rows reflect the value of time-based RSU and performance-based RSU awards that would accelerate in connection with the applicable event, calculated based on the Year-End Closing Price. For purposes of the performance-based RSUs granted in 2021, 2022 and 2023 these amounts reflect an assumed achievement of maximum performance, as the performance-based RSUs were trending above target as of December 31, 2023. +(2) The amounts reported in these rows reflect the full amount of each Named Executive Officer’s target annual incentive award for 2023, as the pro-ration provided for under the Change in Control Agreements would result in the full amount of such target annual incentive awards being payable as of December 31, 2023 +(3) The amounts reported in these rows are calculated based on the premiums in effect as of December 2023, which are assumed for purposes of this table to remain the same throughout the applicable benefit reimbursement period. +29 +DIRECTOR COMPENSATION +We have adopted a non-employee director compensation program that is applicable to each of our non-employee directors. The Compensation Consultant also conducted an analysis of market-competitive total director compensation (annual retainers, meeting fees and equity awards) using our Peer Group as a comparative metric. Pursuant to this program, during 2023 each non-employee director was entitled to receive the following compensation for their service on our Board: +* A cash retainer of $100,000 per year, payable quarterly in arrears; +* An additional cash retainer of $20,000 per year, payable quarterly in arrears if such non-employee director serves as the chairperson of our Audit Committee; +* An additional cash retainer of $15,000 per year, payable quarterly in arrears if such non-employee director serves as the chairperson of our Compensation Committee; +* An additional cash retainer of $10,000 per year, payable quarterly in arrears if such non-employee director serves as the chairperson of a Nominating and Governance Committee; +* An additional cash retainer of $20,000 per year, payable quarterly in arrears if such non-employee director serves as the Lead Director of the Company; and +* Either: +(a) annual equity-based compensation in the form of RSUs with an aggregate grant date value of $162,000, subject to the terms of the LTIP and the award agreement pursuant to which such award is granted. The award shall be subject to a 12-month vesting period, unless otherwise determined by the Board. The annual grant is automatically made on January 2nd of each year, using the 30-day average closing price of the Company’s Class A Common Stock prior to the date of grant to determine the number of units to be granted; +(b) an additional cash payment of $100,000 per year, payable quarterly in arrears; or +(c) a charitable cash donation by the Company of $100,000 per year, payable quarterly in arrears, to an organization designated by the director and that is qualified under Section 501(c)(3) of the Internal Revenue Code, provided that the organization must be independent of the director and reasonably acceptable to the Compensation Committee. +Effective as of January 1, 2024, our non-employee director compensation program was updated to (i) increase the amount of the grant date value for equity-based compensation from $162,000 to $175,000 and (ii) add an annual cash retainer for members of Board committees that do not serve as Chairperson in the following amounts: Audit Committee: $10,000; Compensation Committee: $7,500 and Nominating and Governance Committee: $5,000. These changes were made by the Compensation Committee and ratified by the Board in October 2023 in response to a recommendation from the Compensation Consultant in order to better align with market place practices. +Each non-employee director shall be given an opportunity to elect whether they would like to receive item (a), (b) or (c) above prior to the beginning of each year. If a non-employee director joins the Board or otherwise becomes eligible for director compensation during the course of a calendar year, the director will be allowed to make such election upon joining or becoming eligible. If a non-employee director joins the Board during the course of a calendar year, the director will be entitled to receive a prorated RSU award (if so elected) for that year, which shall vest over the remaining portion of the year, unless otherwise determined by the Board. All annual cash payments, including the charitable cash contribution option if elected, shall be prorated for partial years of service or eligibility. +In addition, each non-employee director is reimbursed for out-of-pocket expenses incurred in connection with attending Board and committee meetings. +30 +The table below s ets forth the compensation our non-employee directors received for the fiscal year ended December 31, 2023. +Name +Fees Earned or Paid in Cash ($) +Stock Awards ($) (1) +All Other Compensation ($) +Total ($) +Simon Ayat +100,000 +149,781 +— +249,781 +Ken Babcock +100,000 +149,781 +— +249,781 +Peter A. Dea +115,000 +149,781 +— +264,781 +William F. Kimble +140,000 +149,781 +— +289,781 +James R. McDonal d +— +— +100,000 (2) +100,000 (2) +Gale A. Norton +110,000 +149,781 +— +259,781 +Audrey Robertson +100,000 +149,781 +— +249,781 +Cary D. Steinbeck +100,000 +149,781 +— +249,781 +(1) The amounts shown do not reflect compensation actually received by the directors. Rather, amounts set forth in the Stock Awards column represent the aggregate grant date fair value of awards computed in accordance with FASB ASC Topic 718 for financial statement reporting purposes in fiscal year 2023 by the Company with respect to restricted stock units. A discussion of the assumptions used in this valuation with respect to awards made in fiscal year 2023 may be found in Note 10 to the Company’s financial statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. As of December 31, 2023, Messrs. Ayat, Babcock, Dea, Kimble and Steinbeck and Ms. Norton and Ms. Robertson each held 10,259 unvested RSUs. +(2) The Company has agreed to make up to $100,000 in charitable donations to organizations designated by Mr. McDonald in connection with his 2023 Board service. As of February 21, 2024, no donations have been designated and therefore no payments have been made by us. +31 +CEO PAY RATIO +As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, we are providing the following information about the relationship of the annual total compensation of our employees and the annual total compensation of Christopher A. Wright, our Chief Executive Officer (our “ CEO ”). +For 2023, our last completed fiscal year: +* The total compensation of our median employee was $112,613, as calculated pursuant to the same methodology as that used to determine pay for our CEO in the Summary Compensation Table included above; and +* The total compensation of our CEO, as reported in the Summary Compensation Table included above, was $5,628,100. +* Based on this information, for 2023 the ratio of the total compensation of our CEO to the median employee total compensation was reasonably estimated to be 50 to 1. +The pay ratio set forth above is a reasonable estimate calculated in a manner consistent with SEC rules based on our human resources systems of record and the methodology described below. Because the SEC rules for identifying the median employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices, the pay ratio reported by other companies may not be comparable to the pay ratio that we report above, as other companies may have different employment and compensation practices, different types of workforce, and operate in different countries, and may use different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios. To identity the median of the annual total compensation of all our employees, as well as to determine the annual total compensation of our median employee and our CEO, we took the following steps: +✓ We determined that, as of December 11, 2023, our employee population excluding our CEO consisted of approximately 5,500 individuals with all of these individuals located in the United States and Canada. This population consisted of our full-time, part-time and temporary employees who received Company benefits, as we do not have seasonal workers. We selected December 11, 2023 as our identification date for determining our median employee because it enabled us to make such identification in a reasonably efficient and economic manner, as this is the date of the last period worked during the year for which payment was made to employees in 2023. +✓ We used a consistently applied compensation measure to identify our median employee by comparing the amount of compensation as reported to the Internal Revenue Service on Form W-2 for 2023 for US employees and the amount of compensation as reported to the Canadian Revenue Agency on T4 Statement of Renumeration Paid for 2023 for Canadian employees. +✓ We identified our median employee by consistently applying this compensation measure to all of our employees included in our analysis. Since all of our employees, including our CEO, are located in the United States and Canada, we did not make any cost of living adjustments in identifying the median employee. Our median employee for 2023 was a full-time, salaried employee working as a maintenance crew leader with annual compensation of $106,546 set forth on such employee’s Form W-2 for 2023. +✓ After we identified our median employee, we combined all of the elements of such employee’s compensation for the 2023 year in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K, resulting in annual total compensation of $112,613. The differences between such employee’s taxable compensation reported on Form W-2 for 2023 of $106,546 and the employee’s annual total compensation calculated pursuant to Regulation S-K include the following adjustments: (i) modification from bonuses paid during 2023 to bonuses earned during 2023, if needed, (ii) addition of contributions made by the employee and by the Company on the employee’s behalf to our 401(k) plan for 2023, if any, (iii) addition of the costs of tax deductible employee group health plan premiums and employee contributions to tax deductible flexible spending accounts, if any and (iv) subtraction of other taxable compensation including compensation for provided housing or transportation and that attributable to group term life, short-term and long-term disability benefits, if applicable. +✓ With respect to the annual total compensation of our CEO, we used the amount reported in the “Total” column of our 2023 Summary Compensation Table included in this Proxy Statement and incorporated by reference under Item 11 of Part III of our Annual Report on Form 10-K for the year ended December 31, 2023. +32 +PAY VERSUS PERFORMANCE +Pay Versus Performance Table for 2023 +Year +Summary Compensation Table Total for PEO +($) (1) +Compensation Actually Paid to PEO +($) (2) +Average Summary Compensation Table Total for Non-PEO NEOs +($) (3) +Average Summary Compensation Actually Paid to Non-PEO NEOs +($) (4) +Value of Initial Fixed $100 Investment Based On: +Net Income (Loss) +(in Thousands) ($) (6) +Adjusted ROCE (7) +Company TSR +($) +Peer Group TSR +($) (5) +2023 +5,628,100 +9,819,996 +2,328,163 +3,919,083 +169.06 +115.11 +556,317 +42.9 % +2022 +5,747,485 +12,201,790 +2,367,374 +4,567,954 +147.11 +112.94 +399,602 +34.0 % +2021 +4,611,372 +3,946,524 +2,028,596 +1,738,700 +88.85 +69.94 +( 179,244 ) +- 10.3 % +2020 +3,310,114 +2,493,998 +1,218,682 +909,552 +94.44 +57.93 +( 115,583 ) +- 13.9 % +(1) The dollar amounts reported +are the amounts of total compensation reported for Christopher A. Wright (our Chairman/CEO) for each corresponding year in +the “Total” column of the Summary Compensation Table provided above. +(2) The dollar amounts reported +represent the amount of “compensation actually paid” to Mr. Wright, as computed in accordance with Item 402(v) of SEC Regulation +S-K. The dollar amounts reported do not reflect the actual amount of compensation earned by or paid to Mr. Wright during the applicable +year. In accordance with the requirements of Item 402(v) of SEC Regulation S-K, the following adjustments were made to Mr. Wright’s +total compensation for each year to determine the compensation actually paid to Mr. Wright: +(3) The dollar amounts reported +represent the average of the amounts reported for our NEOs as a group (excluding Mr. Wright) in the “Total” column of the +Summary Compensation Table provided above. The NEOs (excluding Mr. Wright) included for purposes of calculating the average amounts in +each applicable year are Messrs. Stock, Gusek, Elliott and Gosney. +(4) The dollar amounts reported +represent the average amount of “compensation actually paid” to the NEOs as a group (excluding Mr. Wright), as computed in +accordance with Item 402(v) of SEC Regulation S-K. The NEOs (excluding Mr. Wright) included for purposes of calculating the average amounts +in each applicable year are Messrs. Stock, Gusek, Elliott and Gosney. The dollar amounts reported do not reflect the actual average amount +of compensation earned by or paid to the NEOs as a group (excluding Mr. Wright) during the applicable year. In accordance with the requirements +of Item 402(v) of SEC Regulation S-K, the following adjustments were made to average total compensation for the NEOs as a group (excluding +Mr. Wright) for each year to determine the compensation actually paid: +(5) The peer group selected +for each listed year consists of the OSX. We also use this peer group for purposes of the Stock Performance Graph set forth in “Item +5 - Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities” of our +Annual Report on Form 10-K for the year ended December 31, 2023. +(6) The dollar amounts reported +represent the amount of net income (loss) (in thousands) attributable to Liberty Energy Inc. in our audited consolidated financial statements +for the applicable year. +(7) Adjusted ROCE is equal +to the Company’s 2023 income before taxes and loss (gain) on remeasurement of liability under tax receivable agreements, plus interest +expense and stock-based compensation expense, divided by the simple average of capital (debt and equity) employed at December 31, 2023 +and 2022. We rank our Adjusted ROCE against those of the ROCE Peer Group to determine Comparative ROCE, which is used as a metric to +determine a portion of annual incentive compensation and the vesting of performance-based RSU awards. While we use numerous financial +and non-financial performance measures for the purpose of evaluating performance for our compensation programs, we have determined that +our Adjusted ROCE is the financial performance measure that, in our assessment, represents the most important performance measure (that +is not otherwise required to be disclosed in this table) used by us to link compensation actually paid to our NEOs for the most recently +completed fiscal year, to our performance. +(1) The dollar amounts reported are the amounts of total compensation reported for Christopher A. Wright (our Chairman/CEO) for each corresponding year in the “Total” column of the Summary Compensation Table provided above. +(2) The dollar amounts reported represent the amount of “compensation actually paid” to Mr. Wright, as computed in accordance with Item 402(v) of SEC Regulation S-K. The dollar amounts reported do not reflect the actual amount of compensation earned by or paid to Mr. Wright during the applicable year. In accordance with the requirements of Item 402(v) of SEC Regulation S-K, the following adjustments were made to Mr. Wright’s total compensation for each year to determine the compensation actually paid to Mr. Wright: +Year +Reported Summary Compensation Table Total for PEO +($) +Deduct +Fair Value of Equity Awards Reported in Summary Compensation Table +($) +Add Year-End Fair Value of Equity Awards Granted in Current Year +($) +Add (Deduct) Change in +Fair Value at Year End of Unvested Equity Awards Granted in Prior Years +($) +Add (Deduct) Change in +Fair Value of Equity Awards Vested in Current Year +($) +Compensation Actually Paid +to PEO +($) +2023 +5,628,100 +( 3,590,569 ) +4,164,509 +4,410,269 +( 792,313 ) +9,819,996 +2022 +5,747,485 +( 3,406,258 ) +4,405,023 +3,612,975 +1,842,565 +12,201,790 +2021 +4,611,372 +( 3,801,972 ) +2,841,227 +99,171 +196,725 +3,946,524 +2020 +3,310,114 +( 2,876,014 ) +3,082,298 +( 209,920 ) +( 812,480 ) +2,493,998 +(3) The dollar amounts reported represent the average of the amounts reported for our NEOs as a group (excluding Mr. Wright) in the “Total” column of the Summary Compensation Table provided above. The NEOs (excluding Mr. Wright) included for purposes of calculating the average amounts in each applicable year are Messrs. Stock , Gusek , Elliott and Gosney . +(4) The dollar amounts reported represent the average amount of “compensation actually paid” to the NEOs as a group (excluding Mr. Wright), as computed in accordance with Item 402(v) of SEC Regulation S-K. The NEOs (excluding Mr. Wright) included for purposes of calculating the average amounts in each applicable year are Messrs. Stock, Gusek, Elliott and Gosney. The dollar amounts reported do not reflect the actual average amount of compensation earned by or paid to the NEOs as a group (excluding Mr. Wright) during the applicable year. In accordance with the requirements of Item 402(v) of SEC Regulation S-K, the following adjustments were made to average total compensation for the NEOs as a group (excluding Mr. Wright) for each year to determine the compensation actually paid: +Year +Reported Average Summary Compensation Table Total for Non-PEO NEOs +($) +Deduct +Fair Value of Equity Awards Reported in Summary Compensation Table +($) +Add Year-End Fair Value of Equity Awards Granted in Current Year +($) +Add (Deduct) Change in +Fair Value at Year End of Unvested Equity Awards Granted in Prior Years +($) +Add (Deduct) Change in +Fair Value of Equity Awards Vested in Current Year +($) +Average Compensation Actually Paid to Non-PEO NEOs +($) +2023 +2,328,163 +( 1,208,667 ) +1,401,868 +1,667,331 +( 269,613 ) +3,919,083 +2022 +2,367,374 +( 1,146,682 ) +1,482,906 +1,259,414 +604,943 +4,567,954 +2021 +2,028,596 +( 1,515,516 ) +1,132,550 +22,787 +70,282 +1,738,700 +2020 +1,218,682 +( 957,726 ) +1,026,420 +( 68,658 ) +( 309,165 ) +909,552 +(5) The peer group selected for each listed year consists of the OSX. We also use this peer group for purposes of the Stock Performance Graph set forth in “Item 5 - Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities” of our Annual Report on Form 10-K for the year ended December 31, 2023. +(6) The dollar amounts reported represent the amount of net income (loss) (in thousands) attributable to Liberty Energy Inc. in our audited consolidated financial statements for the applicable year. +33 +(7) Adjusted ROCE is equal to the Company’s 2023 income before taxes and loss (gain) on remeasurement of liability under tax receivable agreements, plus interest expense and stock-based compensation expense, divided by the simple average of capital (debt and equity) employed at December 31, 2023 and 2022. We rank our Adjusted ROCE against those of the ROCE Peer Group to determine Comparative ROCE, which is used as a metric to determine a portion of annual incentive compensation and the vesting of performance-based RSU awards. While we use numerous financial and non-financial performance measures for the purpose of evaluating performance for our compensation programs, we have determined that our Adjusted ROCE is the financial performance measure that, in our assessment, represents the most important performance measure (that is not otherwise required to be disclosed in this table) used by us to link compensation actually paid to our NEOs for the most recently completed fiscal year, to our performance. +Performance Metrics +The most important financial performance measures that we use to link executive compensation actually paid to the NEOs for the most recently completed fiscal year to our performance are as follows: +* Pre-tax Earnings Per Share (as defined in footnote 1 of “Compensation Discussion and Analysis- Elements of Compensation-Annual Incentive Award” above) +* ROCE (as defined in footnote 2 of “Compensation Discussion and Analysis- Elements of Compensation-Annual Incentive Award” above) +* Adjusted ROCE (as defined in footnote 3 of “Compensation Discussion and Analysis- Elements of Compensation-Annual Incentive Award” above) +* Comparative ROCE (as defined in footnote 3 of “Compensation Discussion and Analysis- Elements of Compensation-Annual Incentive Award” above) +Analysis of Information in Pay Versus Performance Table +As described in more detail in “Compensation Discussion and Analysis” above, our executive compensation program includes variable components in the form of annual incentive compensation and long-term incentive awards. While we utilize several performance measures to align executive compensation with our performance, all of those measures are not presented in the “Pay Versus Performance Table for 2023.” Moreover, we generally seek to incentivize long-term performance and, therefore, do not specifically align our performance measures with compensation that is actually paid (as computed in accordance with SEC regulations) for a particular year. In accordance with SEC regulations, we are providing the following descriptions of the relationships between information presented in the “Pay Versus Performance Table for 2023.” +Compensation Actually Paid and Cumulative TSR +As demonstrated by the following graph, the amount of compensation actually paid to Mr. Wright and the average amount of compensation actually paid to our NEOs as a group (excluding Mr. Wright) is generally aligned with our cumulative TSR over the three years presented in the “ Pay Versus Performance Table for 2023.” The alignment of compensation actually paid with our cumulative TSR over the period presented is because a significant portion of the compensation actually paid to our NEOs is comprised of equity awards. +34 +For each of the three years presented in the “Pay Versus Performance Table for 2023,” our cumulative TSR exceeded that of peers contained in the OSX stock index. The following table details our cumulative TSR in comparison to the OSX cumulative TSR for each of the measurement periods (determined in accordance with SEC regulations). +Compensation Actually Paid and Net Income (Loss) +As demonstrated by the following table, the amount of compensation actually paid to Mr. Wright and the average amount of compensation actually paid to other NEOs as a group (excluding Mr. Wright) is generally aligned with our net income (loss) over the three years presented in the “Pay Versus Performance Table for 2023.” While we do not use net income (loss) as a performance measure in the overall executive compensation program, the measure of net income (loss) is correlated with the measures of Pre-Tax EPS and ROCE, which we do use in setting goals for annual incentive compensation, and Comparative ROCE, which we use both in setting goals for annual incentive compensation and the vesting of performance-based RSU awards. +35 +Compensation Actually Paid and Adjusted ROCE +As demonstrated by the following table, the amount of compensation actually paid to Mr. Wright and the average amount of compensation actually paid to our other NEOs as a group (excluding Mr. Wright) is generally aligned with our Adjusted ROCE over each of the three years presented in the “ Pay Versus Performance Table for 2023.” +36 +PROPOSAL 2 — ADVISORY VOTE TO APPROVE THE COMPENSATION OF THE +COMPANY’S NAMED EXECUTIVE OFFICERS +Section 14A(a)(1) of the Exchange Act, which was added to the Exchange Act by Section 951 of the Dodd-Frank Act, affords the stockholders a vote to approve, on a non-binding, advisory basis, the compensation of our Named Executive Officers for the fiscal year ended December 31, 2023 (commonly known as a “ say-on-pay vote ”). This vote is not intended to address any specific item of compensation and is not a vote on our general compensation policies, compensation of the Board, or our compensation policies as they relate to risk management. Section 14A(a)(2) of the Exchange Act requires us to hold a say-on-pay vote at least once every three years, although the Company currently holds this vote annually. +As described more fully in the “ Compensation Discussion & Analysis ” section of this Proxy Statement and the accompanying tabular and narrative disclosures, the Company’s compensation policy is designed to attract and retain highly qualified executive officers. The Company’s compensation program seeks to align executive compensation with stockholder value on an annual and long-term basis through a combination of base pay, annual incentives, and certain long-term incentives. Please read the Compensation Discussion & Analysis section of this Proxy Statement for additional details on our executive compensation program. +The Board strongly endorses the Company’s executive compensation program and recommends that the stockholders approve on an advisory, non-binding basis, the following resolution: +RESOLVED, that the stockholders approve, on an advisory basis, the compensation of the Company’s Named Executive Officers as described in the proxy statement, including the Compensation Discussion & Analysis, and the compensation tables and related narrative disclosure contained therein. +Vote Required +Your votes with respect to the approval of Proposal 2 are advisory, which means the results of such votes are not binding on us, the Board and the committees of the Board. Although non-binding, the Board and its committees value the opinions of our stockholders and will review and consider the voting results when making future decisions regarding executive compensation. The approval, on a non-binding basis, of the compensation of our Named Executive Officers requires the affirmative vote of a majority of the shares of Common Stock present in person or represented by proxy at the Annual Meeting and entitled to vote on the matter. If you submit a signed proxy card but do not give voting instructions as to ho w your shares of Common Stock should be voted, your shares will be voted in accordance with the recommendations of our Board stated in this Proxy Statement. Abstentions will have the same effect as a vote “AGAINST” Proposal 2, and broker non-votes will not have any effect on the outcome of Proposal 2. +THE BOARD RECOMMENDS VOTING “ FOR ” THE APPROVAL, ON AN ADVISORY BASIS, OF THE COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS. +37 +PROPOSAL 3 — RATIFICATION OF APPOINTMENT OF THE COMPANY’S +INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +The Audit Committee has appointed Deloitte as the Company’s independent registered public accounting firm to audit the financial statements of the Company for the fiscal year ending December 31, 2024. The audit of the Company’s consolidated financial statements for the fiscal year ended December 31, 2023 was completed by Deloitte on February 8, 2024. Deloitte has acted as the Company’s independent registered public accounting firm since 2016. +The Board is submitting the appointment of Deloitte for ratification at the Annual Meeting. The submission of this matter for approval by stockholders is not legally required, but the Board and the Audit Committee believe the submission provides an opportunity for stockholders through their vote to communicate with the Board and the Audit Committee about an important aspect of corporate governance. If the stockholders do not ratify the appointment of Deloitte, the Audit Committee will reconsider the appointment of that firm as the Company’s independent registered public accounting firm. +The Audit Committee has the sole authority and responsibility to retain, evaluate and replace the Company’s independent auditors, and stockholder ratification of this appointment does not limit the authority of the Audit Committee to change auditors at any time. Representatives of Deloitte are expected to be present at the Annual Meeting and will have an opportunity to make a statement if they so desire and will be available to respond to appropriate questions. +The following table summarizes the aggregate fees billed or expected to be billed by Deloitte for the fiscal years ended December 31, 2023 and 2022. +2023 +2022 +Audit Fees ( 1 ) +$ 2,650,000 +$ 2,500,000 +Audit-Related Fees ( 2 ) +— +85,000 +Tax Fees ( 3 ) +374,300 +241,995 +All Other Fees ( 4 ) +— +— +Total Fees +$ 3,024,300 +$ 2,826,995 +Before Deloitte is engaged to render audit or non-audit services, the Audit Committee must pre-approve the engagement. The charter of the Audit Committee and its pre-approval policy provides that pre-approval is not required if the engagement is entered into pursuant to pre-approval policies and procedures established by the Audit Committee. The Chairman of the Audit Committee has the authority to grant pre-approvals, provided such approvals are within the pre-approval policy and presented to the Audit Committee at a subsequent meeting. The Audit Committee pre-approved all of the fees described in the table set forth above. The duties of the Audit Committee are described in the charter of the Audit Committee that can be found on the Company’s website, www.libertyenergy.com , by first clicking “ Investors ” then “ Corporate Governance ” and proceeding to “ Governance Documents .” +Vote Required +The affirmative vote of a majority of the shares of Common Stock present in person or represented by proxy at the Annual Meeting and entitled to vote on the matter is required to approve Proposal 3. If you submit a signed proxy card but do not give voting instructions as to how your shares of Common Stock should be voted, your shares will be voted in accordance with the recommendations of our Board stated in this Proxy Statement. Abstentions will have the same effect as a vote “AGAINST” Proposal 3, and there will be no broker non-votes with respect to Proposal 3. +THE BOARD RECOMMENDS VOTING “ FOR ” THE RATIFICATION OF APPOINTMENT OF +DELOITTE AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +FOR THE FISCAL YEAR ENDING DECEMBER 31, 2024. +(1) Deloitte’s audit fees related primarily to the integrated annual audit of the consolidated financial statements for the fiscal year as included in our Annual Report on Form 10-K, which integrated audit includes the audit of the effectiveness of internal controls over financial reporting, quarterly reviews, and consultations relating to the audit and quarterly reviews. +(2) Deloitte’s audit-related fees related primarily to SEC filings in connection with certain TRA exchanges. +(3) Deloitte’s fees for tax services related primarily to professional services rendered by Deloitte for tax compliance, tax advice and tax planning. +(4) Deloitte did not provide any other products and services so no other fees were incurred. +38 +AUDIT COMMITTEE REPORT +The information contained in this Audit Committee Report shall not be deemed to be “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act or the Exchange Act, except to the extent that the Company specifically incorporates such information by reference in such filing. +Primary Oversight Responsibilities +Our management is responsible for establishing a system of internal controls, assessing such controls and for preparing our consolidated financial statements in accordance with generally accepted accounting principles. The Audit Committee provides oversight of these management activities. Our independent registered public accounting firm is responsible for auditing our consolidated financial statements in accordance with standards of the United Stated Public Company Accounting Oversight Board (the “ PCAOB ”) and issuing its report based on its audit. +Under the Audit Committee’s charter, the purpose of the Audit Committee is to assist the Board in fulfilling its oversight responsibilities as to, among other duties: (i) the integrity of the Company’s financial statements; (ii) the Company’s compliance with legal and regulatory requirements; (iii) qualifications, independence and performance of the independent registered public accounting firm engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the Company; (iv) effectiveness and performance of the Company’s internal audit function; (v) the annual preparation of this report and publishing this report in the Company’s Proxy Statement for its annual meeting of stockholders or its Annual Report on Form 10-K; and (vi) performing such other functions as the Board may assign to the Audit Committee from time to time. +Oversight of Independent Auditors +In connection with the evaluation, appointment and retention of the independent registered public accounting firm, at least annually the Audit Committee reviews and evaluates the independence and quality control procedures of the independent registered public accounting firm and the experience and qualifications of its senior personnel providing audit services to the Company. In this evaluation, the Audit Committee may consider, among other factors, the following with respect to the independent registered public accounting firm: their historical and recent performance on our audit, the quality and candor of their communications with the both the Audit Committee and management, the depth of expertise of their audit team and the value provided by their national office, the appropriateness of their fees, how effectively they maintained their independence, their tenure as our independent auditors, their knowledge of our operations, accounting policies and practices, and internal control over financial reporting, and external data relating to audit quality and performance by them and their peer firms. Based on this overall evaluation, the Audit Committee retained Deloitte as our independent registered public accounting firm for 2023. +2023 Audited Financial Statements +In connection with the preparation of the audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023: +• The Audit Committee reviewed and discussed the audited financial statements and associated audit with the independent registered public accounting firm and management; +• The Audit Committee discussed with the independent registered public accounting firm the matters required to be discussed by Auditing Standard No. 1301 “Communications with Audit Committees” as adopted by the PCAOB. In general, these auditing standards require the independent registered public accounting firm to communicate to the Audit Committee certain matters that are incidental to the audit, such as any initiation of, or changes to, significant accounting policies, management judgments, accounting estimates and audit adjustments; disagre ements with management; the independent registered public accounting firm’s judgment about the quality of our accounting principles; significant audit risks identified and any changes from planned audit strategy; the use of specialists on the audit team; and issues for which the independent registered public accounting firm have consulted outside the engagement team; and +• The Audit Committee has received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the PCAOB regarding the independent registered public accounting firm’s communication with the Audit Committee concerning independence and has discussed the independent registered public accounting firm’s independence with the independent registered public accounting firm. The Audit Committee also considered whether the independent registered public accounting firm’s provision of non-audit services to us was compatible with maintaining their independence. +39 +Based on the review and discussions noted above, the Audit Committee recommended to the Board that the audited consolidated financial statements of the Company for the year ended December 31, 2023 be included in our Annual Report on Form 10-K filed with the SEC. +Audit Committee of the Board of Directors: +William F. Kimble, Chairman +Simon Ayat, Member +Gale A. Norton, Member +Cary D. Steinbeck, Member +40 +PROPOSAL 4 — APPROVAL OF AN AMENDMENT AND RESTATEMENT OF THE COMPANY’S +LONG TERM INCENTIVE PLAN +The +Board is seeking the approval of our stockholders of the Liberty Energy Inc. Amended and Restated Long Term Incentive Plan (the +“ A&R LTIP ”) +which is an amendment, restatement, and replacement of the Liberty Oilfield Services Inc. Long Term Incentive Plan (the +“ LTIP ”), +which was adopted by the Board on January 11, 2018 in connection with our IPO. The material amendments to the LTIP that are included +in the A&R LTIP are as follows: +• Increase the number of shares of Class A common stock that the Company may issue under the A&R LTIP by 8,330,510 shares, which is approximately 5% of the number of shares of Class A common stock outstanding as of the Record Date. After taking into account this increase and subject to adjustment as provided in the A&R LTIP, as of the date of the Annual Meeting, the total number of shares of Class A common stock authorized for issuance under the A&R LTIP will equal 21,239,244, which includes the 12,908,734 shares of our Class A common stock previously authorized under the LTIP; +• Impose a minimum vesting requirement on awards of one year, subject to certain limited exceptions; +• Extend the term of the A&R LTIP by 10 years from the date of stockholder approval; +• Revise the availability of shares provision so that shares withheld upon exercise or vesting of an award for purposes of paying the exercise price or tax withholding shall be treated as delivered and counted against the maximum number of shares that may be issued under the A&R LTIP; +• Provide that no dividends or dividend equivalents may be paid or granted with respect to an option or a stock appreciation right; +• Subject any dividends paid or granted with respect to restricted stock or dividend equivalents paid or granted with respect to restricted stock units to the same vesting terms as the underlying award of restricted stock or restricted stock units, as applicable, such that dividends and dividend equivalents are accrued but not paid until the underlying award vests; and +• Provide other clarifying and ministerial changes. +Our long term incentive program has been used effectively and efficiently for seven years of annual employee awards and non-employee director compensation since its commencement in connection with the Company’s IPO, during which period the Company has experienced significant growth in revenue and headcount. The current LTIP has met the Company’s needs since the IPO due to management maintaining an appropriate balance between stockholder interests and its ability to attract, incentivize, and retain qualified employees, directors, and consultants. However, we believe an insufficient number of shares remain available for issuance under our LTIP to meet our projected needs and we expect that the current LTIP may run out of available shares in approximately two years based on current forecasts if the stockholders do not approve the A&R LTIP. Therefore, it is the judgment of the Board that the A&R LTIP is in the best interest of the Company and its stockholders. We believe that the A&R LTIP, which increases the number of shares of Class A common stock available for issuance pursuant to awards under the A&R LTIP, reflects best practices in our industry and is appropriate to permit the grant of equity awards at expected levels for the future. +In January 2024, the Compensation Committee recommended, and the Board subsequently approved, the A&R LTIP, subject to approval by the Company’s stockholders at the Annual Meeting. The effective date for the A&R LTIP will be the date it is approved by the stockholders of the Company. If the A&R LTIP is not approved by stockholders at the Annual Meeting, then the LTIP will continue in its original form and the amendment and restatement will be null and void. +As of December 31, 2023, there were 3,155,889 shares remaining for future issuance as awards under the LTIP. We believe we have demonstrated our commitment to sound equity compensation practices. In consideration of this proposal, stockholders should also be aware that the burn rate or average number of shares granted (in the form of RSU awards) under the LTIP since its commencement since the IPO through December 31, 2023, divided by the number of shares outstanding, is approximately 1.1%, which is consistent with the three-year average burn rate of the Peer Group. Based on historical prior years’ grants, historical stock prices, and the current size of the Company’s employee base, we anticipate that the shares available for issuance under our A&R LTIP will be sufficient to meet the needs of our long term incentive program for up to approximately five years. +Description of the A&R LTIP +The following is a general summary of the material provisions of the A&R LTIP, which is qualified in its entirety by reference to the full text of the A&R LTIP, which is attached to this Proxy Statement as Annex A. +41 +Purpose . We believe that the A&R LTIP is a necessary and powerful tool to facilitate attracting, incentivizing, and retaining qualified persons as employees, directors, and consultants, and to strengthen the alignment between such persons and stockholders’ interests, enhancing stockholder value. +A&R LTIP Share Limits . Subject to adjustment in the event of certain transactions or changes of capitalization in accordance with the A&R LTIP, the aggregate number of shares of Class A common stock authorized for grant under the A&R LTIP (after giving effect to the amendment and restatement) is 21,239,244 shares, which includes the 12,908,734 shares previously authorized under the LTIP of which 9,752,845 shares have been issued or are subject to unvested RSU grants and 3,155,889 shares remain available for issuance as of December 31, 2023. The total number of shares reserved for issuance under the A&R LTIP may be issued pursuant to incentive stock options (which generally are stock options that meet the requirements of Section 422 of the Code). Class A common stock subject to an award that expires or is canceled, forfeited, exchanged, settled in cash or otherwise terminated will not be considered “delivered shares” under the A&R LTIP and will again be available for delivery pursuant to other awards under the A&R LTIP; provided, however, that shares of Class A common stock otherwise deliverable pursuant to an award that are withheld upon exercise or vesting of an award for purposes of paying the exercise price or tax withholdings shall be treated as delivered and shall be counted against the maximum number of shares of Class A common stock that may be issued under the A&R LTIP. +Admini stration . The A&R LTIP will be administered by the Compensation Committee of our Board, except to the extent our board of directors elects to administer the A&R LTIP itself. Presently, the Compensation Committee administers the LTIP and is expected to continue to administer the A&R LTIP. The Compensation Committee has broad discretion to administer the A&R LTIP, including the power to determine the eligible individuals to whom awards will be granted, the number and type of awards to be granted and the terms and conditions of awards. The Compensation Committee may also accelerate the vesting or exercise of any award and make all other determinations and to take all other actions necessary or advisable for the administration of the A&R LTIP. +Eligibility . Any individual who is our officer or employee or an officer or employee of any of our affiliates, and any other person who provides services to us or our affiliates, including members of our board of directors, are eligible to receive awards under the A&R LTIP at the discretion of our board of directors. As of December 31, 2023, the Company had approximately 5,500 employees and eight non-employee directors. +Stock Options . The Compensation Committee may grant incentive stock options and options that do not qualify as incentive stock options, except that incentive stock options may only be granted to persons who are our employees or employees of one of our subsidiaries, in accordance with Section 422 of the Code. The exercise price of a stock option generally cannot be less than 100% of the fair market value of a share of our Class A common stock on the date on which the option is granted and the option must not be exercisable for longer than ten years following the date of grant. In the case of an incentive stock option granted to an individual who owns (or is deemed to own) at least 10% of the total combined voting power of all classes of our capital stock, the exercise price of the stock option must be at least 110% of the fair market value of a share of our Class A common stock on the date of grant and the option must not be exercisable more than five years from the date of grant. +Stock Appreciation Rights . A SAR is the right to receive an amount equal to the excess of the fair market value of one share of our Class A common stock on the date of exercise over the grant price of the SAR. The grant price of a SAR generally cannot be less than 100% of the fair market value of a share of our Class A common stock on the date on which the SAR is granted. The term of a SAR may not exceed ten years. SARs may be granted in connection with, or independent of, a stock option. SARs may be paid in cash, Class A common stock or a combination of cash and Class A common stock, as determined by the Compensation Committee. +Restricted Stock . Restricted stock is a grant of shares of Class A common stock subject to the restrictions on transferability and risk of forfeiture imposed by the Compensation Committee. In the discretion of the Compensation Committee, cash dividends and stock dividends distributed prior to vesting shall be withheld by our company for the participant’s account, and interest may be credited on the amount of the cash dividends withheld at a rate and subject to such terms as determined by the Compensation Committee. Such cash dividends or stock dividends so withheld by our company and attributable to any particular share of unvested restricted stock shall be distributed to such participant in cash or shares of Class A common stock upon the release of restrictions on such restricted stock and, if such share of restricted stock is forfeited, the participant shall have no right to such corresponding dividends. +Restricted Stock Units . A restricted stock unit is a right to receive cash, Class A common stock or a combination of cash and Class A common stock at the end of a specified period equal to the fair market value of one share of our Class A common stock on the date of vesting. Restricted stock units may be subject to the restrictions, including a risk of forfeiture, imposed by the Compensation Committee. +Stock Awards . A stock award is a transfer of unrestricted shares of our Class A common stock on terms and conditions determined by the Compensation Committee. +Dividend Equivalents . Dividend equivalents entitle an individual to receive cash, shares of Class A common stock, other awards, or other property equal in value to dividends or other distributions paid with respect to a specified number of shares of our Class A common stock. Dividend equivalents may be awarded on a free-standing basis or in connection with an award of restricted stock units +42 +or a substitute award. Dividend equivalents shall not be awarded with respect to an award of stock options, SARs, restricted stock, or a stock award. The Compensation Committee may provide that dividend equivalents will be paid or distributed when accrued or at a later specified date, including at the same time and subject to the same restrictions and risk of forfeiture as the award with respect to which the dividends accrue if they are granted in tandem with another award. +Other Stock-Based Awards . Subject to limitations under applicable law and the terms of the A&R LTIP, the Compensation Committee may grant other awards related to our Class A common stock. Such awards may include, without limitation, awards that are convertible or exchangeable debt securities, other rights convertible or exchangeable into our Class A common stock, purchase rights for Class A common stock, awards with value and payment contingent upon our performance or any other factors designated by the Compensation Committee, and awards valued by reference to the book value of our Class A common stock or the value of securities of, or the performance of, our affiliates. +Cash Awards . The A&R LTIP will permit the grant of awards denominated in and settled in cash as an element of or supplement to, or independent of, any award under the A&R LTIP. +Substitute Awards . Awards may be granted in substitution or exchange for any other award granted under the A&R LTIP or any other right of an eligible person to receive payment from us. Awards may also be granted under the A&R LTIP in substitution for similar awards held by individuals who become eligible persons as a result of a merger, consolidation or acquisition of another entity or the assets of another entity by or with us or one of our affiliates. +Performance Awards . Performance awards represent awards with respect to which a participant’s right to receive cash, shares of our Class A common stock, or a combination of both, is contingent upon the attainment of one or more specified performance measures during a specified period. The Compensation Committee will determine the applicable performance period, the performance goals and such other conditions that apply to each performance award. Our Compensation Committee may use any business criteria and other measures of performance it deems appropriate in establishing the performance goals applicable to a performance award. +Recapitalization . In the event of any change in our capital structure or business or other corporate transaction or event that would be considered an equity restructuring, our Compensation Committee shall or may (as required by applicable accounting rules) equitably adjust the (i) aggregate number or kind of shares that may be delivered under the A&R LTIP, (ii) the number or kind of shares or other property (including cash) subject to an award, (iii) the terms and conditions of awards, including the purchase price or exercise price of awards and performance goals, and (iv) the applicable share-based limitations with respect to awards provided in the A&R LTIP, in each case to equitably reflect such event. +Change in Control . Except to the extent otherwise expressly provided in any applicable award agreement, no award will vest solely upon the occurre nce of a change in control. In the event of a change in control or other changes in our company or our Class A common stock, our Compensation Committee may, in its discretion, (i) accelerate the time of exercisability of an award, (ii) require awards to be surrendered in exchange for a cash payment (including canceling a stock option or SAR for no consideration if it has an exercise price or the grant price less than the value paid in the transaction), (iii) cancel awards that remain subject to a restricted period as of the date of the change in control or other event without payment, or (iv) make any other adjustments to awards that our Compensation Committee deems appropriate to reflect the applicable transaction or event. +No Repricing . Except in connection with (i) the issuance of substitute awards granted to new service providers in connection with a transaction or (ii) adjustments to awards granted under the A&R LTIP as a result of a transaction or recapitalization involving us, without the approval of the stockholders of our company, the terms of outstanding options or SARs may not be amended to reduce the exercise price or grant price or to take any similar action that would have the same economic result. +Clawback . All awards granted under the A&R LTIP are subject to reduction, cancelation, or recoupment under any written clawback policy that we may adopt and that we determine should apply to awards under the A&R LTIP. +Amendment and Termination . The A&R LTIP will automatically expire on the tenth anniversary of its effective date. Our Compensation Committee may amend or terminate the A&R LTIP at any time, subject to stockholder approval if required by applicable law, rule, or regulation, including the rules of the stock exchange on which our shares of Class A common stock are listed. Our Compensation Committee may amend the terms of any outstanding award granted under the A&R LTIP at any time so long as the amendment would not materially and adversely affect the rights of a participant under a previously granted award without the participant’s consent. +Federal Income Tax Consequences +The following is a brief summary of certain federal income tax consequences relating to the transactions described under the A&R LTIP as set forth below. This summary does not purport to address all aspects of federal income taxation and does not describe any potential state, local, or foreign tax consequences. This discussion is based upon provisions of the Code and the applicable Treasury Regulations issued thereunder, as well as judicial and administrative interpretations under the Code and Treasury Regulations, all as in effect as of the date hereof, and all of which are subject to change (possibly on a retroactive basis) or different interpretation. +43 +Law Affecting Deferred Compensation . In 2004, Section 409A was added to the Code to regulate all types of deferred compensation. If the requirements of Section 409A of the Code are not satisfied, deferred compensation and earnings thereon will be subject to tax as it vests, plus (i) an interest charge at the then-current underpayment rate plus 1% and (ii) a 20% penalty tax. Certain performance awards, stock options, SARs, restricted stock units, and certain types of restricted stock are subject to Section 409A of the Code. +Incentive Stock Options . A participant will not recognize income at the time an incentive stock option is granted. When a participant exercises an incentive stock option, a participant also generally will not be required to recognize income (either as ordinary income or capital gain). However, to the extent that the fair market value (determined as of the date of grant) of the Class A common stock with respect to which the participant’s incentive stock options are exercisable for the first time during any year exceeds $100,000, the incentive stock options for the Class A common stock over $100,000 will be treated as nonqualified stock options, and not incentive stock options, for federal tax purposes, and the participant will recognize income as if the incentive stock options were nonqualified stock options (discussed below). In addition to the foregoing, if the fair market value of the Class A common stock received upon exercise of an incentive stock option exceeds the exercise price, then the excess may be deemed a tax preference adjustment for purposes of the federal alternative minimum tax calculation. The federal alternative minimum tax may produce significant tax repercussions depending upon the participant’s particular tax status. +The tax treatment of any Class A common stock acquired by exercise of an incentive stock option will depend upon whether the participant disposes of his or her shares prior to the later of: (i) two years after the date the incentive stock option was granted and (ii) one year after the Class A common stock was transferred to the participant (referred to as, the “Holding Period”). If a participant disposes of Class A common stock acquired by exercise of an incentive stock option after the expiration of the Holding Period, any amount received in excess of the participant’s tax basis for such shares will be treated as a short-term or long-term capital gain, depending upon how long the participant has held the Class A common stock. If the amount received is less than the participant’s tax basis for such shares, the loss will be treated as a short-term or long-term capital loss, depending upon how long the participant has held the shares. +If the participant disposes of Class A common stock acquired by exercise of an incentive stock option prior to the expiration of the Holding Period, the disposition will be considered a “disqualifying disposition.” If the amount received for the Class A common stock is greater than the fair market value of the Class A common stock on the exercise date, then the difference between the incentive stock option’s exercise price and the fair market value of the Class A common stock at the time of exercise will be treated as ordinary income for the tax year in which the disqualifying disposition occurs. The participant’s basis in the Class A common stock will be increased by an amount equal to the amount treated as ordinary income due to such disqualifying disposition. In addition, the amount received in such disqualifying disposition over the participant’s increased basis in the Class A common stock will be treated as capital gain. However, if the price received for Class A common stock acquired by exercise of an incentive stock option is less than the fair market value of the Class A common stock on the exercise date and the disposition is a transaction in which the participant sustains a loss that otherwise would be recognizable under the Code, then the amount of ordinary income that the participant will recognize is the excess, if any, of the amount realized on the disqualifying disposition over the basis in the Class A common stock. +Nonqualified Stock Options . A participant generally will not recognize income at the time a nonqualified stock option is granted. When a participant exercises a nonqualified stock option, the difference between the exercise price and any higher market value of the Class A common stock on the date of exercise will be treated as compensation taxable as ordinary income to the participant. The participant’s tax basis for the Class A common stock acquired under a nonqualified stock option will be equal to the exercise price paid for such Class A common stock, plus any amounts included in the participant’s taxable income as compensation. When a participant disposes of Class A common stock acquired by exercise of a nonqualified stock option, any amount received in excess of the participant’s tax basis for such shares will be treated as short-term or long-term capital gain, depending upon how long the participant has held the Class A common stock. If the amount received is less than the pa rticipant’s tax basis for such shares, the loss will be treated as a short-term or long-term capital loss, depending upon how long the participant has held the shares. +Special Rule if Exercise Price is Paid for in Class A Common Stock . If a participant pays the exercise price of a nonqualified stock option with previously-owned shares of the Company’s Class A common stock and the transaction is not a disqualifying disposition of Class A common stock previously acquired under an incentive stock option, the Class A common stock received equal to the number of Class A common stock surrendered are treated as having been received in a tax-free exchange. The participant’s tax basis and holding period for the Class A common stock received will be equal to the participant’s tax basis and holding period for the Class A common stock surrendered. The Class A common stock received in excess of the number of Class A common stock surrendered will be treated as compensation taxable as ordinary income to the participant to the extent of their fair market value. The participant’s tax basis in the Class A common stock will be equal to their fair market value on the date of exercise, and the participant’s holding period for such shares will begin on the date of exercise. +If the use of previously acquired Class A common stock to pay the exercise price of a nonqualified stock option constitutes a disqualifying disposition of Class A common stock previously acquired under an incentive stock option, the participant will have ordinary income as a result of the disqualifying disposition in an amount equal to the excess of the fair market value of the Class A common stock surrendered, determined at the time such shares of Class A common stock were originally acquired upon exercise of the incentive stock option, over the aggregate exercise price paid for such Class A common stock. As discussed above, a disqualifying disposition of Class A common stock previously acquired under an incentive stock option occurs when the participant disposes of such shares before the end of the +44 +holding period. The other tax results from paying the exercise price with previously-owned shares are as described above, except that the participant’s tax basis in the Class A common stock that are treated as having been received in a tax-free exchange will be increased by the amount of ordinary income recognized by the participant as a result of the disqualifying disposition. +Restricted Stock . A participant who receives restricted stock generally will recognize as ordinary income the excess, if any, of the fair market value of the Class A common stock granted as restricted stock at such time as the Class A common stock are no longer subject to forfeiture or restrictions, over the amount paid, if any, by the participant for such Class A common stock. However, a participant who receives unvested restricted stock may make an election under Section 83(b) of the Code within 30 days of the date of transfer of the Class A common stock to recognize ordinary income on the date of transfer of the Class A common stock equal to the excess of the fair market value of such shares (determined without regard to the restrictions on such Class A common stock) over the purchase price, if any, paid for such shares. If a participant does not make an election under Section 83(b) of the Code, then the participant will recognize as ordinary income any dividends received with respect to such Class A common stock. At the time of the sale of such shares, any gain or loss realized by the participant will be treated as either short-term or long-term capital gain or loss depending upon how long the participant has held the shares. For purposes of determining any gain or loss realized, the participant’s tax basis will be the amount previously taxable as ordinary income, plus the purchase price paid by the participant, if any, for such shares. +Stock Appreciation Rights . Generally, a participant who receives a stand-alone SAR will not recognize taxable income at the time the stand-alone SAR is granted, provided that the SAR is exempt from or complies with Section 409A of the Code. If an individual receives the appreciation inherent in the SARs in cash, the cash will be taxed as ordinary income to the recipient at the time it is received. If a recipient receives the appreciation inherent in the SARs in stock, the spread between the then-current market value and the grant price, if any, will be taxed as ordinary income to the participant at the time it is received. In general, there will be no federal income tax deduction allowed to us upon the grant or termination of SARs. However, upon the exercise of a SAR, we will be entitled to a deduction equal to the amount of ordinary income the recipient is required to recognize as a result of the exercise. +Other Awards . In the case of an award of restricted stock units, performance awards, dividend equivalent rights, or other stock-based or cash awards, the recipient will generally recognize ordinary income in an amount equal to any cash received and the fair market value of any shares received on the date of payment or delivery, provided that the award is exempt from or complies with Section 409A of the Code. In that taxable year, we will receive a federal income tax deduction in an amount equal to the ordinary income which the participant has recognized as to such other awards. +Federal Tax Withholding . Any ordinary income realized by a participant upon the granting, vesting, exercise, or conversion of an award under the A&R LTIP, as applicable, is subject to withholding of federal, state, and local income tax and to withholding of the participant’s share of tax under the Federal Insurance Contribution Act and the Federal Unemployment Tax Act, if applicable. To satisfy our federal income tax withholding requirements, we (or, if applicable, any of our subsidiaries) will have the right to require, as a condition to delivery of any certificate for Class A common stock, the participant remit to us an amount sufficient to satisfy the withholding requirements. Alternatively, we may, if we consent, withhold a portion of the Class A common stock (valued at fair market value) that otherwise would be issued to the participant to satisfy all or part of the withholding tax obligations or may, if we consent, accept delivery of Class A common stock (that the participant has not acquired from us within six months prior to the date of exercise) with an aggregate fair market value that equals or exceeds the required tax withholding payment. Withholding does not represent an increase in the participant’s total income tax obligation because it is fully credited toward his or her tax liability for the year. Additionally, withholding does not affect the participant’s tax basis in the Class A common stock. Compensation income realized and taxes withheld will be reflected on Forms W-2 supplied by us to employees no later than January 31st of the succeeding year. Deferred compensation that is subject to Section 409A of the Code will also be subject to certain federal income tax withholding and reporting requirements. +Tax Consequences to the Company . To the extent that a participant recognizes ordinary income in the circumstances described above, the Company will be entitled to a corresponding deduction, provided that, among other things, the income meets the test of reasonableness, is an ordinary and necessary business expense, is not an “excess parachute payment” within the meaning of Section 280G of the Code, and is not disallowed by the $1,000,000 limitation on certain executive compensation under Section 162(m) of the Code. +Million Dollar Deduction Limit and Other Tax Matters . We may not deduct compensation of more than $1,000,000 that is paid to “covered employees” (as defined in Section 162(m) of the Code), which include (i) an individual (or, in certain circumstances, his or her beneficiaries ) who, at any time during the taxable year, is either our principal executive officer or principal financial officer; (i i) a n individual who is among our three highest compensated officers for the taxable year (other than an individual who was either our principal executive officer or principal financial officer at any time during the taxable year); or (iii) anyone who was a covered employee for purposes of Section 162(m) of the Code for any tax year beginning on or after January 1, 2017. This limitation on deductions (x) only applies to compensation paid by a publicly-traded corporation (and not compensation paid by non-corporate entities) and (z) may not apply to certain types of compensation, such as qualified performance-based compensation that is payable pursuant to a written, binding contract that was in effect as of November 2, 2017, so long as the contract is not materially modified after that date. +If an individual’s rights under the A&R LTIP are accelerated as a result of a change in control and the individual is a “disqualified individual” under Section 280G of the Code, the value of any such accelerated rights received by such individual may be included in +45 +determining whether such individual has received an “excess parachute payment” under Section 280G of the Code, which could result in (i) the imposition of a 20% federal excise tax (in addition to federal income and employment taxes, if applicable) payable by the individual on the value of such accelerated rights and (ii) the loss by us of a corresponding compensation deduction. +Interest of Directors and Executive Officers +All members of our Board and all of our executive officers are eligible for awards under the A&R LTIP and, thus, have a personal interest in the approval of the A&R LTIP. +New Plan Benefits +All awards granted under the A&R LTIP are subject to the discretion of our Compensation Committee. Therefore, the total benefits that will be received by any particular person or group under the Plan are not determinable at this time. Therefore, the New Plan Benefits Table is not provided. +EQUITY COMPENSATION PLAN INFORMATION +The following table sets forth information about our Class A Common Stock that may be issued under the LTIP as of December 31, 2023 and the Record Date: +Plan Category +Number of defined securities +to be issued upon exercise +of outstanding options, warrants and rights +(a) +Weighted–average +exercise price of outstanding options, warrants and rights +(b) (3) +Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected +in column (a)) +(c) (4) +December 31, 2023 (1) +February 21, 2024 (2) +December 31, 2023 +February 21, 2024 +December 31, 2023 +February 21, 2024 +Equity compensation plans +approved by security holders +— +— +— +— +— +— +Equity compensation plans not +approved by security holders +5,664,354 +6,766,568 +— +— +3,155,889 +1,981,862 +Total +5,664,354 +6,766,568 +— +— +3,155,889 +1,981,862 +(1) This column reflects shares of our Class A Common Stock subject to RSU awards granted under the LTIP outstanding and unvested as of the December 31, 2023. The performance-based RSUs granted under the LTIP are reflected based on an achievement of maximum performance. No stock options or warrants have been granted under the LTIP. +(2) This column reflects shares of our Class A Common Stock subject to RSU awards granted under the LTIP outstanding and unvested as of the Record Date. The performance-based RSUs granted under the LTIP are reflected based on an achievement of maximum performance. No stock options or warrants have been granted under the LTIP. +(3) No stock options have been granted under the LTIP, and the RSU awards reflected in column (a) are not reflected in this column as they do not have an exercise price. +(4) This column reflects the total number of shares of Class A Common Stock remaining available for issuance under the LTIP, giving effect to the “share recycling” feature of the LTIP, which allows shares that are forfeited due to termination of service or surrendered to satisfy tax withholding obligations to be eligible for reissuance under the LTIP. This “share recycling” feature has been eliminated from the A&R LTIP with respect to tax withholdings. +Our only equity compensation plan is the LTIP. The LTIP was approved by our Board prior to our IPO and has not been approved by our public stockholders. Please read Note 10 to the Company’s financial statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 for a description of our equity compensation plan. In addition, a detailed description of the terms of the LTIP is available in our registration statement on Form S-1, last filed on January 2, 2018, under the heading “ Executive Compensation—Actions Taken Following Fiscal Year End—Long-Term Incentive Plan .” +Vote Required +The approval of our A&R LTIP requires the affirmative vote of a majority of the shares of Common Stock present in person or represented by proxy at the Annual Meeting and entitled to vote on the matter. If you submit a signed proxy card but do not give voting instructions as to how your shares of Common Stock should be voted, your shares will be voted in accordance with the recommendations of our Board stated in this Proxy Statement. Abstentions will have the same effect as a vote “AGAINST” Proposal 4, and broker non-votes will not have any effect on the outcome of Proposal 4. +THE BOARD RECOMMENDS VOTING “ FOR ” THE APPROVAL OF AN AMENDMENT AND +RESTATEMENT OF OUR LONG TERM INCENTIVE PLAN. +46 +SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT +The following table sets forth the beneficial ownership of our common stock as of February 21, 2024, by: +* each person known to us to beneficially own more than 5% of any class of our outstanding voting securities; +* each member of our Board and each nominee to our Board; +* each of our Named Executive Officers; and +* all of our directors, director nominees and Named Executive Officers as a group. +Except as otherwise indicated, the persons listed below have sole voting and investment power with respect to all shares of our Common Stock beneficially owned by them, except to the extent this power may be shared with a spouse. All information with respect to beneficial ownership has been furnished by the 5% or more stockholders, directors or Named Executive Officers, as the case may be. Unless otherwise noted, the mailing address of each listed beneficial owner is 950 17th Street, Suite 2400, Denver, Colorado 80202. The percentage of Class A Common stock beneficially owned is based on 166,087,015 shares of our Class A Common Stock outstanding on February 21, 2024. +Class A +Common Stock +Number +% +5% Stockholders +Blackrock, Inc. (1) +25,855,259 +15.6 +% +The Vanguard Group (2) +19,224,315 +11.6 +% +FMR LLC (3) +11,770,094 +7.1 +% +Dimensional Fund Advisors LP (4) +9,443,949 +5.7 +% +T. Rowe Price Investment Management Inc. (5) +9,097,818 +5.5 +% +Directors and Named Executive Officers: +Christopher A. Wright (6) +2,877,953 +1.7 +% +Michael Stock (6) +857,404 +* +Ron Gusek (6) +1,235,454 +* +R. Sean Elliott (6) +263,721 +* +Ryan T. Gosney (6) +166,667 +* +Simon Ayat +25,722 +* +Ken Babcock +73,133 +* +Peter A. Dea +60,313 +* +William F. Kimble +73,133 +* +James R. McDonald +— +— +Gale A. Norton +56,952 +* +Audrey Robertson (7) +31,515 +* +Cary D. Steinbeck (8) +449,468 +* +Directors and Named Executive Officers +as a group (13 persons) +6,171,434 +3.7 +% +(1) This information is based solely on a Schedule 13G/A filed with the SEC on January 22, 2024 by Blackrock, Inc., in which it reported that Blackrock, Inc. has sole voting power as to 25,257,241 shares of Class A Common Stock and sole dispositive power as to 25,855,259 shares of Class A Common Stock. The principal business address of Blackrock, Inc. is 50 Hudson Yards, New York, NY 10001. +(2) This information is based solely on a Schedule 13G/A filed with the SEC on February 13, 2024 by The Vanguard Group, in which it reported that The Vanguard Group has shared voting power as to 172,985 shares of Class A Common Stock, sole dispositive power as to 18,903,189 shares of Class A Common Stock and shared dispositive power as to 321,126 shares of Class A Common Stock. The principal business address of The Vanguard Group is 100 Vanguard Blvd., Malvern, PA 19355. +(3) This information is based solely on a Schedule 13G/A filed with the SEC on February 9, 2024, by FMR LLC and Abigail P. Johnson, in which it reported that FMR LLC has sole voting power as to 11,756,836 shares of Class A Common Stock and sole dispositive power as to 11,770,094 shares of Class A Common Stock and Ms. Johnson has no voting power, and sole dispositive power as to 11,770,094 shares of Class A Common Stock. The principal business address of FMR LLC is 245 Summer Street, Boston, MA 02210. +(4) This information is based solely on a Schedule 13G filed with the SEC on February 9, 2024 by Dimensional Fund Advisors LP, in which it reported that Dimensional Fund Advisors LP has sole voting power as to 9,278,827 shares of Class A Common Stock, sole dispositive power as to 9,443,949 shares of Class A Common Stock. The principal business address of Dimensional Fund Advisors LP is 6300 Bee Cave Road, Building One, Austin, TX 78746. +47 +(5) This information is based solely on a Sc hedule 13G filed with the SEC on February 14, 2024, by T. Rowe Price Investment Management, Inc., in which it reported that T. Rowe Price Investment Management, Inc. has sole voting power as to 3,079,477 shares of Class A Common Stock and sole dispositive power as to 9,097,818 shares of Class A Common Stock. The principal business address of T. Rowe Price Associates, Inc. is 100 E. Pratt Street, Baltimore, MD 21202. +(6) Shares of Class A Common Stock held by Messrs. Wright, Stock, Gusek, Elliott and Gosney include (a) 132,938; 59,406; 59,406; 49,276; and 30,474 shares of stock, respectively, that will be received upon the vesting of time-based RSUs and (b) 260,575; 115,811; 115,811; 131,852; and 80,908 shares of stock, respectively, that will be received upon the vesting of performance-based RSUs within 60 days of February 21, 2024. +(7) Includes 200 shares held in custodial accounts on behalf of minor children of Ms. Robertson and 5 shares held through a Roth IRA. +(8) Includes 379,350 shares of Class A Common Stock held by the Steinbeck Family Trust and 9,805 shares of Class A Common Stock held by the Cary Dustin Steinbeck & Melissa Maucione Crimson Steinbeck Trust. Mr. Steinbeck has voting and dispositive power over these shares. +* Less than 1.0%. +48 +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +Policies and Procedures for Review of Related Party Transactions +A “ Related Party Transaction ” is a transaction, arrangement or relationship in which the Company or any of its subsidiaries was, is or will be a participant, the amount of which involved exceeds $120,000, and in which any related person had, has or will have a direct or indirect material interest. A “ Related Person ” is: +♦ any person who is, or at any time during the applicable period was, one of our executive officers or one of our directors; +♦ any person who is known by us to be the beneficial owner of more than 5% of our Class A Common Stock; +♦ any immediate family member of any of the foregoing persons, which means any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law of a director, executive officer or a beneficial owner of more than 5% of our Class A Common Stock, and any person (other than a tenant or employee) sharing the household of such director, executive officer or beneficial owner of more than 5% of our Class A Common Stock; and +♦ any firm, corporation or other entity in which any of the foregoing persons is a partner or principal or in a similar position or in which such person has a 10.0% or greater beneficial ownership interest. +Our Board has adopted a written related party transactions policy. Pursuant to this policy, our Audit Committee reviews all material facts of all Related Party Transactions and either approves or disapproves entry into the Related Party Transaction, subject to certain limited exceptions. The determination of the Audit Committee is documented in the Audit Committee’s minutes. In determining whether to approve or disapprove entry into a Related Party Transaction, our Audit Committee takes into account, among other factors, the following: (i) whether the Related Party Transaction is on terms no less favorable than terms generally available to an unaffiliated third-party under the same or similar circumstances and (ii) the extent of the Related Person’s interest in the transaction. Furthermore, the policy requires that all Related Party Transactions required to be disclosed in our filings with the SEC be so disclosed in accordance with applicable laws, rules and regulations. +Related Party Transactions +The following is a description of transactions entered into, or in effect, after January 1, 2023 to which we have been a party, in which the amount involved in the transaction exceeds $120,000, and in which any of our directors, executive officers or beneficial owners of more than 5% of our voting securities, or affiliates or immediate family members of any of our directors, executive officers or beneficial owners of more than 5% of our voting securities, had or will have a direct or indirect material interest. We believe the terms obtained or consideration that we paid or received, as applicable, in connection with the transactions described below were comparable to terms available or the amounts that would be paid or received, as applicable, from unrelated third parties. +Liberty LLC Agreement +We entered into the Second Amended and Restated Limited Liability Company Agreement of Liberty Oilfield Services New HoldCo LLC (“ Liberty LLC ”) (the “ Liberty LLC Agreement ”) in connection with the closing of our IPO, which provides for limitations on the ability of holders of units of Liberty LLC (the “ Liberty LLC Units, ” and the holders of Liberty LLC Units “ Liberty Unit Holders ”) to transfer their Liberty LLC Units and provides the Company, as managing member of Liberty LLC, with the right to impose restrictions (in addition to those already in place) on the ability of Liberty Unit Holders to redeem their Liberty LLC Units pursuant to the Redemption Right (as defined below) to the extent the Company believes it is necessary to ensure that Liberty LLC will continue to be treated as a partnership for U.S. federal income tax purposes. +Effective January 31, 2023, Liberty LLC was merged into the Company (such merger, the “ Liberty LLC Merger ”), with the Company being the surviving entity of the Liberty LLC Merger. In connection with Liberty LLC Merger, all outstanding shares of our Class B Common Stock were redeemed and exchanged for an equal number of shares of our Class A Common Stock. Also effective January 31, 2023, as a result of the Liberty LLC Merger, the Liberty LLC Agreement terminated. +Redemption Rights +Under the Liberty LLC Agreement, each Liberty Unit Holder had, subject to certain limitations, the right (the “ Redemption Right ”) to cause Liberty LLC to acquire all or a portion of its Liberty LLC Units for, at Liberty LLC’s election, (i) shares of our Class A Common Stock at a redemption ratio of one share of Class A Common Stock for each Liberty LLC Unit redeemed, subject to conversion rate adjustments for stock splits, stock dividends and reclassification and other similar transactions or (ii) an equivalent amount of cash. Alternatively, upon the exercise of the Redemption Right, the Company (instead of Liberty LLC) had the right (the “ Call Right ”) to, +49 +for administrative convenience, acquire each tendered Liberty LLC Unit directly from the redeeming Liberty Unit Holder for, at the Company’s election, (x) one share of Class A Common Stock or (y) an equivalent amount of cash. In addition, upon a change of control of the Company, the Company had the right to require each holder of Liberty LLC Units (other than the Company) to exercise its Redemption Right with respect to some or all of such unit holder’s Liberty LLC Units. In connection with any redemption of Liberty LLC Units pursuant to the Redemption Right or the Call Right, the corresponding number of shares of Class B Common Stock would be cancelled. +As of January 31, 2023, and, as a result of the Liberty LLC Merger, all outstanding Redemption Rights for Liberty LLC Units had been exercised, and no further redemption of Liberty LLC Units will occur in the future. +Distributions and Allocations +Under the Liberty LLC Agreement, the Company had the right to determine when distributions will be made to the holders of Liberty LLC Units and the amount of any such distributions. If the Company authorized a distribution, such distribution would be made to the holders of Liberty LLC Units generally on a pro rata basis in accordance with their respective percentage ownership of Liberty LLC Units. +Liberty LLC allocated its net income or net loss for each year to the holders of Liberty LLC Units pursuant to the terms of the Liberty LLC Agreement, and the holders of L iberty LLC Units, including the Company, generally incurred U.S. federal, state and local income taxes on their share of any taxable income of Liberty LLC. Net income and losses of Liberty LLC generally were allocated to the holders of Liberty LLC Units on a pro rata basis in accordance with their respective percentage ownership of Liberty LLC Units, subject to requirements under U.S. federal income tax law that certain items of income, gain, loss or deduction be allocated disproportionately in certain circumstances. To the extent Liberty LLC had available cash and subject to the terms of any debt instruments, the Company intended to cause Liberty LLC to make (i) generally pro rata distributions to the holders of Liberty LLC Units, including the Company, in an amount sufficient to allow the Company to pay its taxes and to allow it to make payments under the Tax Receivable Agreements (as defined below), (ii) tax advances, which will be repaid upon exercise of the Redemption Right or the Call Right, as applicable, in an amount sufficient to allow each of the Liberty Unit Holders to pay its respective taxes on such holder’s allocable share of Liberty LLC’s taxable income after taking into account certain other distributions or payments received by the Liberty Unit Holders from Liberty LLC or the Company, and (iii) non-pro rata payments to the Company to reimburse it for its corporate and other overhead expenses. +Issuance of Equity +The Liberty LLC Agreement generally provided that at any time the Company issues a share of its Class A Common Stock or any other equity security, the net proceeds received by the Company with respect to such issuance, if any, shall be concurrently invested in Liberty LLC, and Liberty LLC shall issue to the Company one Liberty LLC Unit or other economically equivalent equity interest. Conversely, if at any time, any shares of Class A Common Stock were redeemed, repurchased or otherwise acquired, Liberty LLC would redeem, repurchase or otherwise acquire an equal number of Liberty LLC Units held by the Company, upon the same terms and for the same price, as the shares of the Class A Common Stock are redeemed, repurchased or otherwise acquired. +Transactions with Liberty Resources +Liberty Resources LLC (“ Liberty Resources ”) is an oil and gas exploration and production company of which Mr. Wright is the Executive Chairman and an equity owner. Mr. Wright previously served as the Chief Executive Officer at Liberty Resources from its formation in September 2010 until March 2017. Liberty Resources entered into a master service agreement with Liberty Oilfield Services LLC, a subsidiary of the Company (“ Liberty Services ”), whereby Liberty Services provides hydraulic fracturing service to Liberty Resources at market service rates. For the year ended December 31, 2023, the amounts related to the provision of hydraulic fracturing services to Liberty Resources under the master services agreement were $38.8 million. +In December 2022, the Company entered into a letter agreement with Liberty Resources to extend the payment terms for certain accounts receivable until April 1, 2024, and, in August 2023, the parties revised such letter agreement to make various modifications including further extending payment terms until January 1, 2025, subject to timely payment of monthly interest charges ranging from 15-20%. As of December 31, 2023, the amount of receivables subject to this letter agreement was approximately $15 million. +Transactions with Franklin Mountain +Franklin Mountain Energy LLC (“ Franklin Mountain ”) is an oil and gas exploration and production company of which Ms. Robertson serves as the Chief Financial Officer. Franklin Mountain entered into a master service agreement with Liberty Services, whereby Liberty Services provides hydraulic fracturing service to Franklin Mountain at market service rates. For the year ended December 31, 2023, the amounts related to the provision of hydraulic fracturing services to Franklin Mountain under the master services agreement was $176.1 million or 3.7% of the Company’s revenues for such period. +50 +Transactions with Tim Babcock +Tim Babcock is currently employed by a subsidiary of the Company as a director of operations. Tim Babcock is the son of Ken Babcock, who serves on the Board. For the year ended December 31, 2023, Tim Babcock was paid $218,780 for his services as an employee. +Transactions with the Bettering Human Lives Foundation +In December 2023, the Company established the Bettering Human Lives Foundation (the “ Foundation ”), a nonprofit organization dedicated to promoting clean cooking solutions and improving the well-being of communities worldwide. Mr. Wright, the Company’s CEO, serves as the Chairman of the Foundation, and Anne Hyre serves as its executive director. Ms. Hyre is the sister-in-law of M r. Wright. I n December 2023, the Company made an initial commitment to make a charitable contribution of $1 million to the Foundation. In addition, effective January 2024, Ms. Hyre is employed by a subsidiary of the Company and seconded to the Foundation. We expect that Ms. Hyre will receive total compensation of approximately $250,000 from the Company for the year ended De cember 31, 202 4. +Indemnification for Officers and Directors +Our Amended and Restated Certificate of Incorporation and Second Amended and Restated Bylaws provide indemnification rights to our directors and officers and permit us to purchase insurance on behalf of any officer, director, employee or other agent for any liability arising out of that person’s actions as our officer, director, employee or agent, regardless of whether Delaware law would mandate indemnification. Additionally, we have entered into separate indemnity agreements with our directors and certain officers to provide additional indemnification benefits, including the right to receive, in advance, reimbursements for expenses incurred in connection with a defense for which the director or officer is entitled to indemnification. We believe that the limitation of liability provisions in our Amended and Restated Certificate of Incorporation, Second Amended and Restated Bylaws and the indemnity agreements will facilitate our ability to continue to attract and retain qualified individuals to serve as directors and officers. +Conflicts of Interest +The related party transactions described herein may cause certain conflicts of interests, including that: +♦ we may enter into contracts between us, on the one hand, and related parties, on the other, that are not as a result of arm’s-length transactions; +♦ our executive officers and directors that hold positions of responsibility with related parties may be aware of certain business opportunities that are appropriate for presentation to us as well as to such other related parties and may present such business opportunities to such other parties; and +♦ our executive officers and directors that hold positions of responsibility with related parties may have significant duties with, and spend significant time serving, other entities and may have conflicts of interest in allocating time. +For example, Mr. Wright, our Chief Executive Officer, is the Executive Chairman of Liberty Resources, a position which may require a portion of his time and which may cause conflicts of interest in pursuing business opportunities of which he becomes aware. +51 +DELINQUENT +SECTION 16( a ) REPORTS +Section 16(a) of the Exchange Act requires the Company’s directors, executive officers and persons who are beneficial owners of more than ten percent (10%) of a registered class of the Company’s equity securities to file with the SEC initial reports of ownership and reports of changes in ownership. Directors, executive officers and beneficial owners of more than ten percent (10%) of a registered class of the Company’s equity securities are also required to furnish the Company with copies of all Section 16(a) r eports that they file with the SEC. If requested, the Company assists its executive officers and directors in complying with the reporting requirements of Section 16(a) of the Exchange Act. The SEC has designated specific deadlines for these reports, and we must identify in this Proxy Statement those persons who did not file these reports when due. +To the Company’s knowledge, based solely on examination of these reports and on written representations provided to us that no other reports were required to be filed during the year ended December 31, 2023, all directors, executive officers and ten percent (10%) beneficial owners timely filed all reports regarding transactions in our securities required to be filed for 2023 pursuant to Section 16(a) of the Exchange Act, except for (i) a Form 4 filing for Ken Babcock that was made in September 2023 for an open market sale of our Common Stock, and (ii) a Form 4 filing for Christopher Wright that was made in October 2023 for an open market sale of our Common Stock effected pursuant to a Rule 10b5-1 trading plan. +HOUSEHOLDING +The SEC permits companies and intermediaries (such as brokers and banks) to satisfy delivery requirements for proxy statements and annual reports with respect to two or more stockholders sharing the same address by delivering a single proxy statement and annual report to those stockholders. This process, which is commonly referred to as “householding,” is intended to reduce the volume of duplicate information stockholders receive and reduce expenses for companies. Both the Company and some of our intermediaries may be householding our proxy materials and Annual Report on Form 10-K. Once you have received notice from your broker or another intermediary that they will be householding materials sent to your address, householding will continue until you are notified otherwise or until you revoke your consent. Should you wish to receive separate copies of our Annual Report on Form 10-K and proxy statement in the future, we will promptly deliver a separate copy of each of these documents to you if you send a written or oral request to us at our address or phone number appearing on the cover of this Proxy Statement, to the attention of the Corporate Secretary. If you hold your shares through an intermediary that is householding and you want to receive separate copies of our Annual Report on Form 10-K and proxy statement in the future, you should contact your bank, broker or other nominee record holder. +STOCKHOLDER PROPOSALS +Pursuant to Rule l4a-8 under the Exchange Act, in order for a stockholder proposal to be included in the Company’s proxy statement for its 2025 annual meeting, such proposal must be received at the Company’s principal executive offices at 950 17th Street, Suite 2400, Denver, Colorado 80202, Attention: Corporate Secretary, no later than November 7, 2024, and must comply with additional requirements established by the SEC. SEC rules set standards for eligibility and specify the types of stockholder proposals that may be excluded from a proxy statement. In addition, the Company’s Second Amended and Restated Bylaws provide that any stockholder who would like to have a proposal considered at our 2025 annual meeting of stockholders must submit the proposal to the Secretary of the Company at the Company’s principal executive offices so that it is received by not earlier than the close of business on December 17, 2024, and not later than the close of business on January 16, 2025, unless the date of our 2025 annual meeting is more than 30 days before or more than 60 days after April 16, 2025, in which case the proposal must be received no later than the 10th day following the day on which public announcement of the date of such meeting is first made by the Company. A copy of the Company’s Second Amended and Restated Bylaws is available upon request from the Secretary of the Company. Stockholders who intend to submit a proposal for nomination of persons for election to our Board or a proposal of business at the 2025 annual meeting (other than matters properly brought under Rule 14a-8 under the Exchange Act and included in the Company’s notice of meeting) must follow the procedures prescribed in the Company’s Second Amended and Restated Bylaws. No stockholder proposal was received for inclusion in this Proxy Statement. +Stockholders who intend to solicit proxies in support of director nominees other than our nominees must provide notice to the Secretary of the Company that sets forth the information required by Rule 14a-19 of the Exchange Act in accordance with and within the time period prescribed in the advance notice provisions of our Second Amended and Restated Bylaws. +WHERE YOU CAN FIND MORE INFORMATION +We file or furnish annual, quarterly and current reports, proxy statements and other documents with the SEC under the Exchange Act. The SEC also maintains an internet website at www.sec.gov that contains reports, proxy and information statements and other information regarding issuers, including us, that file electronically with the SEC. +We also make available free of charge through our website, www.libertyenergy.com , electronic copies of certain documents that we file with the SEC, including our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. +52 +OTHER MATTERS +As of the date of this Proxy Statement, the Board does not intend to present any matters other than those described herein at the Annual Meeting and is unaware of any matters to be presented by other parties. If other matters are properly brought before the meeting for action by the stockholders, proxies will be voted in accordance with the recommendation of the Board or, in the absence of such a recommendation, in accordance with the judgment of the proxy holder. +IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING TO BE HELD ON APRIL 16, 2024: +A COPY OF THIS PROXY STATEMENT, THE NOTICE OF 2024 ANNUAL MEETING OF STOCKHOLDERS, THE 2024 ANNUAL REPORT TO STOCKHOLDERS AND THE PROXY CARD ARE AVAILABLE AT HTTP://ASTPROXYPORTAL.COM/AST/21952 +IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, YOU ARE URGED TO VOTE BY INTERNET, BY PHONE OR IF YOU HAVE RECEIVED PAPER COPIES OF THE PROXY MATERIALS, BY COMPLETING, SIGNING AND RETURNING THE PROXY IN THE ENCLOSED POSTAGE-PAID, ADDRESSED ENVELOPE. +By Order of the Board of Directors, +/s/ R. Sean Elliott +R. Sean Elliott +Chief Legal Officer and Corporate Secretary +Denver, Colorado +March 7, 2024 +A-1 +ANNEX A +LIBERTY ENERGY INC. AMENDED AND RESTATED LONG TERM INCENTIVE PLAN +1. +Purpose . The purpose of the Liberty Energy Inc. Amended and Restated Long Term Incentive Plan (the “ Plan ”) is to provide a means through which (a) Liberty Energy Inc. f/k/a Liberty Oilfield Services Inc., a Delaware corporation (the “ Company ”), and its Affiliates may attract and retain able persons as employees, directors and consultants, thereby enhancing the profitable growth of the Company and its Affiliates and (b) persons upon whom the responsibilities of the successful administration and management of the Company and its Affiliates rest, and whose present and potential contributions to the welfare of the Company and its Affiliates are of importance, can acquire and maintain stock ownership or awards the value of which is tied to the performance of the Company, thereby strengthening their concern for the welfare of the Company and its Affiliates. Accordingly, the Plan provides for the granting of Options, SARs, Restricted Stock, Restricted Stock Units, Stock Awards, Dividend Equivalents, Other Stock-Based Awards, Cash Awards, Substitut e Awards, Performance Awards, or any combination of the foregoing. The Plan amends, restates and replaces the Liberty Oilfield Services Inc. Long-Term Incentive Plan, originally effective January 11, 2018 (the “ Prior Plan ”), in its entirety, provided that the terms of the Prior Plan shall continue to apply to awards granted under the Prior Plan prior to the Effective Date of the Plan. +2. +Definitions . For purposes of the Plan, the following terms shall be defined as set forth below: +(a) “ Adjustment Event ” has the meaning set forth in Section 7(d) . +(b) “ Affiliate ” means any corporation, partnership, limited liability company, limited liability partnership, association, trust or other organization that, directly or indirectly, controls, is controlled by, or is under common control with, the Company. For purposes of the preceding sentence, “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”), as used with respect to any entity or organization, shall mean the possession, directly or indirectly, of the power (i) to vote more than 50% of the securities having ordinary voting power for the election of directors of the controlled entity or organization or (ii) to direct or cause the direction of the management and policies of the controlled entity or organization, whether through the ownership of voting securities, by contract, or otherwise. +(c) “ Applicable Law ” means all legal requirements relating to the administration of equity incentive plans and the issuance and distribution of shares of Stock, if any, under applicable corporate laws, applicable securities laws, the rules of any exchange or inter-dealer quotation system upon which the Company’s securities are listed or quoted, the rules of any foreign jurisdiction applicable to Awards granted to residents therein, and any other applicable law, rule or restriction. +(d) “ ASC Topic 718 ” means the Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation – Stock Compensation , as amended or any successor accounting standard. +(e) “ Award ” means any Option, SAR, Restricted Stock, Restricted Stock Unit, Stock Award, Dividend Equivalent, Other Stock-Based Award, Cash Award, Substitute Award or Performance Award, together with any other right or interest, granted under the Plan. +(f) “ Award Agreement ” means any written instrument (including any employment, severance or change in control agreement or any resolution of the Committee) that sets forth the terms, conditions, restrictions and/or limitations applicable to an Award, in addition to those set forth under the Plan. +(g) “ Board ” means the Board of Directors of the Company. +(h) “ Cash Award ” means an Award denominated in cash granted under Section 5(j) . +(i) “ Change in Control ” means, except as otherwise provided in an Award Agreement, the occurrence of any of the following events after the Effective Date: +(i) A “change in the ownership” of the Company within the meaning of Treasury Regulation § 1.409A-3(i)(5)(v), whereby any one person, or more than one person acting as a “group” (for purposes of this Section 2(h)(i) , as such term is defined in Treasury Regulation § 1.409A-3(i)(5)(v)(B)), acquires beneficial ownership (as such term is defined in Rule 13d-3), directly or indirectly, of securities in the Company that, together with securities beneficially owned by such person or group, constitutes more than 50% of the total fair market value or total voting power of the outstanding securities of the Company; +(ii) A “change in the effective control” of the Company within the meaning of Treasury Regulation § 1.409A-3(i)(5)(vi), whereby either (A) any one person, or more than one person acting as a “group” (for purposes of this Section 2(h)(ii) , as such term is defined in Treasury Regulation § 1.409A-3(i)(5)(vi)(D)), acquires (or has +A-2 +acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) beneficial ownership (as such term is defined in Rule 13d-3), directly or indirectly, of securities of the Company possessing 30% or more of the total voting power of the outstanding securities of the Company; or (B) a majority of the members of the Board are replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election; or +(iii) A “change in the ownership of a substantial portion” of the Company’s assets within the meaning of Treasury Regulation § 1.409A-3(i)(5)(vii), whereby any one person, or more than one person acting as a “group” (for purposes of this Section 2(h)(iii) , as such term is defined in Treasury Regulation § 1.409A-3(i)(5)(vii)(C)), acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets of the Company that have a total gross fair market value equal to or more than 40% of the total gross fair market value of all the assets of the Company immediately prior to such acquisition or acquisitions. +Notwithstanding the foregoing, if a Change in Control constitutes a payment event with respect to any portion of an Award that provides for a deferral of compensation under the Nonqualified Deferred Compensation Rules, the transaction or event described in clauses (i), (ii) or (iii) above with respect to such Award (or portion thereof) must also constitute a “change in control event,” as defined in Treasury Regulation § 1.409A-3(i)(5) to the extent required by the Nonqualified Deferred Compensation Rules. +(j) “ Change in Control Price ” means the amount determined in the following clause (i), (ii), (iii), (iv) or (v), whichever the Committee determines is applicable, as follows: (i) the price per share offered to holders of Stock in any merger or consolidation, (ii) the per share fair market value of the Stock immediately before the Change in Control or other event without regard to assets sold in the Change in Control or other event and assuming the Company has received the consideration paid for the assets in the case of a sale of the assets, (iii) the amount distributed per share of Stock in a dissolution transaction, (iv) the price per share offered to holders of Stock in any tender offer or exchange offer whereby a Change in Control or other event takes place, or (v) if such Change in Control or other event occurs other than pursuant to a transaction described in clauses (i), (ii), (iii), or (iv) of this Section 2(j) , the value per share of the Stock that may otherwise be obtained with respect to such Awards or to which such Awards track, as determined by the Committee as of the date determined by the Committee to be the date of cancellation and surrender of such Awards. In the event that the consideration offered to stockholders of the Company in any transaction described in this Section 2(j) or in Section 7(e) consists of anything other than cash, the Committee shall determine the fair cash equivalent of the portion of the consideration offered which is other than cash and such determination shall be binding on all affected Participants to the extent applicable to Awards held by such Participants. +(k) “ Claim ” means any claim, liability or obligation of any nature, arising out of or relating to the Plan or an alleged breach of the Plan or an Award Agreement. +(l) “ Code ” means the Internal Revenue Code of 1986, as amended from time to time, including the guidance and regulations promulgated thereunder and successor provisions, guidance and regulations thereto. +(m) “ Committee ” means a committee of two or more directors designated by the Board to administer the Plan; provided, however, that, unless otherwise determined by the Board, the Committee shall consist solely of two or more Qualified Members. +(n) “ Corporation ” means any entity that (i) is defined as a corporation under Section 7701 o f the Code and (ii) is the Company or is in an unbroken chain of corporations (other than the Company) beginning with the Company, if each of the corporations other than the last corporation in the unbroken chain owns stock possessing a majority of the total combined voting power of all classes of stock in one of the other corporations in the chain. For purposes of clause (ii) hereof, an entity shall be treated as a “Corporation” if it satisfies the definition of a corporation under Section 7701 of the Code. +(o) “ Date of Grant ” means the effective date on which an Award is made to a Participant as set forth in the applicable Award Agreement; provided, however, that solely for purposes of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder, the Date of Grant of an Award shall be the date of stockholder approval of the Plan if such date is later than the effective date of such Award as set forth in the Award Agreement. +(p) “ Disability ” shall have the meaning in the Participant’s employment, consulting and/or severance agreement as in effect, provided that if no such agreement is in effect or such agreement does not define the term “Disability”, Disability means, unless otherwise provided in the Participant’s Award Agreement, a Participant is qualified for long-term disability benefits under the Company’s or an Affiliate’s disability plan or insurance policy or under applicable +A-3 +non-U.S. law; or, if no such plan, policy or law is then in existence or if the Participant is not eligible to participate in such plan or policy, that the Participant, because of a physical or mental condition resulting from bodily injury, disease, or mental disorder, is unable to perform his or her duties of employment for a period of six continuous months, as determined in good faith by the Committee, based upon medical reports or other evidence satisfactory to the Committee; provided that, with respect to any ISO, Disability shall have the meaning given it under the rules governing ISOs under the Code. Notwithstanding the foregoing provisions of this Section 2(p) , in the event an Award issued under the Plan is subject to Section 409A of the Code, then, in lieu of the foregoing definition and to the extent necessary to comply with the Nonqualified Deferred Compensation Rules, the definition of “Disability” for purposes of such Award shall be the definition of “disability” provided for under Section 409A of the Code and the regulations or other guidance issued thereunder. +(q) “ Dividend Equivalent ” means a right, granted to an Eligible Person under Section 5(h) , to receive cash, Stock, other Awards or other property equal in value to dividends paid with respect to a specified number of shares of Stock, or other periodic payments. +(r) “ Effective Date ” means April 16, 2024. +(s) “ Eligible Person ” means any individual who, as of the Date of Grant of an Award, is an officer or employee of the Company or of any of its Affiliates, and any other person who provides services to the Company or any of its Affiliates, including directors of the Company; provided , that, any such individual must be an “employee” of the Company or any of its parents or subsidiaries within the meaning of General Instruction A.1(a) to Form S-8 if such individual is granted an Award that may be settled in Stock. An employee on leave of absence may be an Eligible Person. +(t) “ Equitable Adjustments ” has the meaning set forth in Section 7(d) . +(u) “ Exchange Act ” means the Securities Exchange Act of 1934, as amended from time to time, including the guidance, rules and regulations promulgated thereunder and successor provisions, guidance, rules and regulations thereto. +(v) “ Exempt Shares ” means shares of Stock subject to an Award that has been granted with (or that has been amended by the Committee to include) more favorable vesting provisions than those set forth in Section 5(b) . No more than 5% of the shares of Stock that may be delivered pursuant to Awards may be shares designated as “Exempt Shares.” +(w) “ Fair Market Value ” means, as of any specified date, (i) if the Stock is listed on a national securities exchange, the closing sales price of the Stock, as reported on the stock exchange on that date (or if no sales occur on such date, on the last preceding date on which such sales of the Stock are so reported); (ii) if the Stock is not traded on a national securities exchange but is traded over the counter on such date, the average between the reported high and low bid and asked prices of Stock on the most recent date on which Stock was publicly traded on or preceding the specified date; or (iii) in the event Stock is not publicly traded at the time a determination of its value is required to be made under the Plan, the amount determined by the Committee in its discretion in such manner as it deems appropriate, taking into account all factors the Committee deems appropriate, including the Nonqualified Deferred Compensation Rules. Notwithstanding this definition of Fair Market Value, with respect to one or more Award types, or for any other purpose for which the Committee must determine the Fair Market Value under the Plan, the Committee may elect to choose a different measurement date or methodology for determining Fair Market Value so long as the determination is consistent with the Nonqualified Deferred Compensation Rules and all other Applicable Laws. +(x) “ ISO ” means any Option intended to be and designated as an “incentive stock option” within the meaning of Section 422 of the Code. +(y) “ Nonqualified Deferred Compensation Rules ” means the limitations or requirements of Section 409A of the Code, as amended from time to time, including the guidance and regulations promulgated thereunder and successor provisions, guidance and regulations thereto. +(z) “ Nonstatutory Option ” means any Option that is not intended to be an ISO. +(aa) “ Option ” means a right, granted to an Eligible Person under Section 5(c) , to purchase Stock at a specified price during specified time periods. +(bb) “ Other Stock-Based Award ” means an Award granted to an Eligible Person under Section 5(i) . +(cc) “ Participant ” means a person who has been granted an Award under the Plan that remains outstanding, including a person who is no longer an Eligible Person. +A-4 +(dd) “ Performance Award ” means an award granted to an Eligible Person under Section 5(l) , the grant, vesting, exercisability and/or settlement of which (and/or the timing or amount thereof) is subject to the achievement of one or more performance goals specified by the Committee. +(ee) “ Qualified Member ” means a member of the Board who is (i) a “non-employee director” within the meaning of Rule 16b-3(b)(3), and (ii) “independent” under the listing standards or rules of the securities exchange upon which the Stock is traded, but only to the extent such independence is required in order to take the action at issue pursuant to such standards or rules. +(ff) “ Restricted Stock ” means Stock granted to an Eligible Person under Section 5(e) that is subject to certain restrictions and to a risk of forfeiture. +(gg) “ Restricted Stock Unit ” means a right, granted to an Eligible Person under Section 5(f) , to receive Stock, cash or a combination thereof at the end of a specified period (which may or may not be coterminous with the vesting schedule of the Award). +(hh) “ Rule 13d-3 ” means Rule 13d-3, promulgated by the SEC under Section 13 of the Exchange Act. +(ii) “ Rule 16b-3 ” means Rule 16b-3, promulgated by the SEC under Section 16 of the Exchange Act. +(jj) “ SAR ” means a stock appreciation right granted to an Eligible Person under Section 5(d) . +(kk) “ SEC ” means the Securities and Exchange Commission. +(ll) “ Section 409A Payment Date ” has the meaning set forth in Section 8(k) . +(mm) “ Securities Act ” means the Securities Act of 1933, as amended from time to time, including the guidance, rules and regulations promulgated thereunde r and successor provisions, guidance, rules and regulations thereto. +(nn) “ Stock ” means the Company’s Class A common stock, par value $0.01 per share, and such other securities as may be substituted (or re-substituted) for Stock pursuant to Section 7 . +(oo) “ Stock Award ” means unrestricted shares of Stock granted to an Eligible Person under Section 5(g) . +(pp) “ Substitute Award ” means an Award granted under Section 5(k) . +3. +Administration . +(a) Authority of the Committee . The Plan shall be administered by the Committee except to the extent the Board elects to administer the Plan, in which case references herein to the “Committee” shall be deemed to include references to the “Board.” Subject to the express provisions of the Plan, Rule 16b-3 and other Applicable Laws, the Committee shall have the authority, in its sole and absolute discretion, to: +(i) designate Eligible Persons as Participants; +(ii) determine the type or types of Awards to be granted to an Eligible Person; +(iii) determine the number of shares of Stock or amount of cash to be covered by Awards; +(iv) determine the terms and conditions of any Award, including whether, to what extent and under what circumstances Awards may be vested, settled, exercised, cancelled or forfeited (including conditions based on continued employment or service requirements or the achievement of one or more performance goals); +(v) modify, waive or adjust any term or condition of an Award that has been granted, which may include the acceleration of vesting, waiver of forfeiture restrictions, modification of the form of settlement of the Award (for example, from cash to Stock or vice versa), early termination of a performance period, or modification of any other condition or limitation regarding an Award; +(vi) determine the treatment of an Award upon a termination of employment or other service relationship; +(vii)  impose a holding period with respect to an Award or the shares of Stock received in connection with an Award; +(viii)  interpret and administer the Plan and any Award Agreement; +A-5 +(ix) correct any defect, supply any omission or reconcile any inconsistency in the Plan, in any Award, or in any Award Agreement; and +(x) make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the Plan. +The express grant of any specific power to the Committee, and the taking of any action by the Committee, shall not be construed as limiting any power or authority of the Committee. Any action of the Committee shall be final, conclusive and binding on all persons, including the Company, its Affiliates, stockholders, Participants, beneficiaries, and permitted transferees under Section 6(a) or other persons claiming rights from or through a Participant. +(b) Exercise of Committee Authority . At any time that a member of the Committee is not a Qualified Member, any action of the Committee relating to an Award granted or to be granted to an Eligible Person who is then subject to Section 16 of the Exchange Act in respect of the Company where such action is not taken by the full Board may be taken either (i) by a subcommittee, designated by the Committee, composed solely of two or more Qualified Members, or (ii) by the Committee but with each such member who is not a Qualified Member abstaining or recusing himself or herself from such action; provided , however , that upon such abstention or recusal, the Committee remains composed solely of two or more Qualified Members. Such action, authorized by such a subcommittee or by the Committee upon the abstention or recusal of such non-Qualified Member(s), shall be the action of the Committee for purposes of the Plan. For the avoidance of doubt, the full Board may take any action relating to an Award granted or to be granted to an Eligible Person who is then subject to Section 16 of the Exchange Act in respect of the Company. +(c) Delegation of Authority . The Committee may delegate any or all of its powers and duties under the Plan to a subcommittee of directors or to any officer of the Company, including the power to perform administrative functions and grant Awards; provided , however , that such delegation does not (i) violate Applicable Law, or (ii) result in the loss of an exemption under Rule 16b-3(d)(1) for Awards granted to Participants subject to Section 16 of the Exchange Act in respect of the Company. Upon any such delegation, all references in the Plan to the “Committee,” other than in Section 9 , shall be deemed to include any subcommittee or officer of the Company to whom such powers have been delegated by the Committee. Any delegation of authority by the Committee to an officer to grant Awards shall specify the maximum number of Awards that such officer can grant, the time period during which such delegation is effective and when the Awards may be issued, and the minimum amount of consideration (if any) for which such Awards may be issued and a minimum amount of consideration for the shares of Stock issuable upon exercise thereof. Further, any such delegation shall not limit the right of such subcommittee members or such an officer to receive Awards; provided, however, that such subcommittee members and any such officer may not grant Awards to himself or herself, a member of the Board, or any executive officer (as defined under Rule 3b-7 promulgated under the Exchange Act) of the Company or an Affiliate, or take any action with respect to any Award previously granted to himself or herself, a member of the Board, or any such executive officer of the Company or an Affiliate. The Committee may also appoint agents who are not executive officers of the Company or members of the Board to assist in in administering the Plan, provided that such individuals may not be delegated the authority to grant or modify any Awards that will, or may, be settled in Stock. +(d) Limitation of Liability and Indemnification of the Board and Committee . The Committee and each member thereof shall be entitled to, in good faith, rely or act upon any report or other information furnished to him or her by any officer or employee of the Company or any of its Affiliates, the Company’s legal counsel, independent auditors, consultants or any other agents assisting in the administration of the Plan. No member of the Board or the Committee, nor any officer or employee of the Company acting on behalf of the Board or the Committee, shall be personally liable for any action, determination, or interpretation taken or made in good faith with respect to the Plan, and all members of the Board and the Committee, each officer of the Company, and each employee of the Company acting on behalf of the Board or the Committee shall, to the extent permitted by law, be fully indemnified and protected by the Company in respect of any such action, determination, or interpretation to the fullest extent provided by law. Except to the extent required by any unwaiveable requirement under Applicable Law, no member of the Board or the Committee (and no Affiliate of the Company) shall have any duties or liabilities, including without limitation any fiduciary duties, to any Participant (or any person or entity claiming by and through any Participant) as a result of the Plan, any Award Agreement or any Claim arising hereunder and, to the fullest extent permitted under Applicable Law, each Participant (as consideration for receiving and accepting an Award Agreement) irrevocably waives and releases any right or opportunity such Participant might have to assert (or participate or cooperate in) any Claim against any member of the Board or the Committee and any subsidiary of the Company arising out of the Plan. +(e) Participants in Non-U.S. Jurisdictions . Notwithstanding any provision of the Plan to the contrary, to comply with Applicable Laws in countries other than the United States in which the Company or any of its Affiliates operates or has emp loyees, directors or other service providers from time to time, or to ensure that the Company complies with any +A-6 +applicable requirements of foreign securities exchanges, the Committee, in its sole discretion, shall have the power and authority to: (i) determine which of the Company’s Affiliates shall be covered by the Plan; (ii) determine which Eligible Persons outside the United States are eligible to participate in the Plan; (iii) modify the terms and conditions of any Award granted to Eligible Persons outside the United States to comply with applicable foreign laws or listing requirements of any foreign exchange; (iv) establish sub-plans and modify exercise procedures and other terms and procedures, to the extent such actions may be necessary or advisable (any such sub-plans and/or modifications shall be attached to the Plan as appendices), provided , however , that no such sub-plans and/or modifications shall increase the share limitations contained in Section 4(a) ; and (v) take any action, before or after an Award is granted, that it deems advisable to comply with any applicable governmental regulatory exemptions or approval or listing requirements of any such foreign securities exchange. For purposes of the Plan, all references to foreign laws, rules, regulations or taxes shall be references to the laws, rules, regulations and taxes of any applicable jurisdiction other than the United States or a political subdivision thereof. +4. +Stock Subject to Plan . +(a) Number of Shares Available for Delivery . Subject to adjustment in a manner consistent with Section 7 , 21,239,244 shares of Stock are reserved and available for delivery with respect to Awards, and such total shall be available for the issuance of shares upon the exercise of ISOs. +(b) Application of Limitation to Grants of Awards . Subject to Section 4(c) , no Award may be granted if the number of shares of Stock that may be delivered in connection with such Award exceeds the number of shares of Stock remaining available under the Plan minus the number of shares of Stock issuable in settlement of or relating to then-outstanding Awards. The Committee may adopt reasonable counting procedures to ensure appropriate counting, avoid double counting (as, for example, in the case of tandem or Substitute Awards) and make adjustments if the number of shares of Stock actually delivered differs from the number of shares previously counted in connection with an Award. +(c) Availability of Shares Not Delivered under Awards . Shares of Stock subject to an Award under the Plan that expires or is cancelled, forfeited, exchanged, settled in cash or otherwise terminated shall not be considered “delivered shares” under the Plan, shall be available for delivery with respect to Awards, and shall no longer be considered issuable or related to outstanding Awards for purposes of Section 4(b) ; provided, however, that shares of Stock otherwise deliverable pursuant to an Award that are withheld upon exercise or vesting of an Award for purposes of paying the exercise price or tax withholdings shall be treated as delivered to the Participant and shall be counted against the maximum number of shares of Stock that may be issued under the Plan. If an Award may be settled only in cash, such Award need not be counted against any share limit under this Section 4 . +(d) Stock Offered . The shares of Stock to be delivered under the Plan shall be made available from (i) authorized but unissued shares of Stock, (ii) Stock held in the treasury of the Company, or (iii) previously issued shares of Stock reacquired by the Company, including shares purchased on the open market. +5. +Specific Terms of Awards . +(a) General . Awards may be granted on the terms and conditions set forth in this Section 5 . Awards granted under the Plan may, in the discretion of the Committee, be granted either alone, in addition to, or in tandem with any other Award. In addition, the Committee may impose on any Award or the exercise thereof, at the Date of Grant or thereafter (subject to Section 9 ), such additional terms and conditions, not inconsistent with the provisions of the Plan, as the Committee shall determine. +(b) Vesting . The Committee, in its sole discretion, shall establish the vesting terms applicable to an Award, provided that any such vesting terms shall not be inconsistent with the terms of the Plan, including, without limitation, this Section 5(b) . Except as otherwise provided herein, no Award (nor any portion of an Award, even on a pro rata basis) that would result in the issuance of Stock may vest earlier than one year after the Date of Grant (other than Substitute Awards) other than in the event of the Participant’s retirement (as defined in the Participant’s Award Agreement), death, Disability or the occurrence of a Change in Control. Notwithstanding the foregoing, the Committee may, in its sole discretion, grant Awards with more favorable vesting provisions than set forth in this Section 5(b) , or accelerate the vesting or waive the restriction period for Awards at any time, provided that the shares of Stock subject to such Awards shall be Exempt Shares. +(c) Options . The Committee is authorized to grant Options, which may be designated as either ISOs or Nonstatutory Options, to Eligible Persons on the following terms and conditions: +A-7 +(i) Exercise Price . Each Award Agreement evidencing an Option shall state the exercise price per share of Stock (the “ Exercise Price ”) established by the Committee; provided , however , that except as provided in Section 5(k) or in Section 7 , the Exercise Price of an Option shall not be less than the greater of (A) the par value per share of the Stock or (B) 100% of the Fair Market Value per share of the Stock as of the Date of Grant of the Option (or in the case of an ISO granted to an individual who owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or its parent or any of its subsidiaries, 110% of the Fair Market Value per share of the Stock on the Date of Grant). +(ii) Time and Method of Exercise; Other Terms . The Committee shall determine the methods by which the Exercise Price may be paid or deemed to be paid, the form of such payment, including cash or cash equivalents, Stock (including previously owned shares or through a cashless exercise, i.e., “net settlement”, a broker-assisted exercise, or other reduction of the amount of shares otherwise issuable pursuant to the Option), other Awards or awards granted under other plans of the Company or any Affiliate, other property, or any other legal consideration the Committee deems appropriate (including notes or other contractual obligations of Participants to make payment on a deferred basis), the methods by or forms in which Stock will be delivered or deemed to be delivered to Participants, including the delivery of Restricted Stock subject to Section 5(e) , and any other terms and conditions of any Option. In the case of an exercise whereby the Exercise Price is paid with Stock, such Stock shall be valued based on the Stock’s Fair Market Value as of the date of exercise. No Option may be exercisable for a period of more than ten years following the Date of Grant of the Option (or in the case of an ISO granted to an individual who owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or its parent or any of its subsidiaries, for a period of more than five years following the Date of Grant of the ISO). +(iii) ISOs . The terms of any ISO granted under the Plan shall comply in all respects with the provisions of Section 422 of the Code. ISOs may only be granted to Eligible Persons who are employees of the Company or employees of a parent or any subsidiary corporation of the Company that is a Corporation. Except as otherwise provided in Section 7 , no term of the Plan relating to ISOs (including any SAR in tandem therewith) shall be interpre ted, amended or altered, nor shall any discretion or authority granted under the Plan be exercised, so as to disqualify either the Plan or any ISO under Section 422 of the Code, unless the Participant has first requested the change that will result in such disqualification. ISOs shall not be granted more than ten years after the earlier of the adoption of the Plan or the approval of the Plan by the Company’s stockholders. Notwithstanding the foregoing, to the extent that the aggregate Fair Market Value of shares of Stock subject to an ISO and the aggregate Fair Market Value of shares of stock of any parent or subsidiary corporation (within the meaning of Sections 424(e) and (f) of the Code) subject to any other incentive stock options of the Company or a parent or subsidiary corporation (within the meaning of Sections 424(e) and (f) of the Code) that are exercisable for the first time by a Participant during any calendar year exceeds $100,000, or such other amount as may be prescribed under Section 422 of the Code, such excess shall be treated as Nonstatutory Options in accordance with the Code. As used in the previous sentence, Fair Market Value shall be determined as of the date the ISO is granted. If a Participant shall make any disposition of shares of Stock issued pursuant to an ISO under the circumstances described in Section 421(b) of the Code (relating to disqualifying dispositions), the Participant shall notify the Company of such disposition within the time provided to do so in the applicable award agreement. +(iv) Dividends/Dividend Equivalents . No dividends or Dividend Equivalents may be paid or granted with respect to any Option granted hereunder. +(d) SARs . The Committee is authorized to grant SARs to Eligible Persons on the following terms and conditions: +(i) Right to Payment . An SAR is a right to receive, upon exercise thereof, the excess of (A) the Fair Market Value of one share of Stock on the date of exercise over (B) the grant price of the SAR as determined by the Committee. +(ii) Grant Price . Each Award Agreement evidencing an SAR shall state the grant price per share of Stock established by the Committee; provided , however , that except as provided in Section 5(k) or in Section 7 , the grant price per share of Stock subject to an SAR shall not be less than the greater of (A) the par value per share of the Stock or (B) 100% of the Fair Market Value per share of the Stock as of the Date of Grant of the SAR. +(iii) Method of Exercise and Settlement; Other Terms . The Committee shall determine the form of consideration payable upon settlement, the method by or forms in which Stock (if any) will be delivered or deemed to be delivered to Participants, and any other terms and conditions of any SAR. SARs may be either free-standing or granted in tandem with other Awards. No SAR may be exercisable for a period of more than ten years following the Date of Grant of the SAR. +A-8 +(iv) Rights Related to Options . An SAR granted in connection with an Option shall entitle a Participant, upon exercise, to surrender that Option or any portion thereof, to the extent unexercised, and to receive payment of an amount determined by multiplying (A) the difference obtained by subtracting the Exercise Price with respect to a share of Stock specified in the related Option from the Fair Market Value of a share of Stock on the date of exercise of the SAR, by (B) the number of shares as to which that SAR has been exercised. The Option shall then cease to be exercisable to the extent surrendered. SARs granted in connection with an Option shall be subject to the terms and conditions of the Award Agreement governing the Option, which shall provide that the SAR is exercisable only at such time or times and only to the extent that the related Option is exercisable and shall not be transferable except to the extent that the related Option is transferrable. +(v) Dividends/Dividend Equivalents . No dividends or Dividend Equivalents may be paid or granted with respect to any SAR granted hereunder. +(e) Restricted Stock . The Committee is authorized to grant Restricted Stock to Eligible Persons on the following terms and conditions: +(i) Restrictions . Restricted Stock shall be subject to such restrictions on transferability, risk of forfeiture and other restrictions, if any, as the Committee may impose. Except as provided in Section 6(a)(iii) and Section 6(a)(iv) , during the restricted period applicable to the Restricted Stock, the Restricted Stock may not be sold, transferred, pledged, hedged, hypothecated, margined or otherwise encumbered by the Participant. +(ii) Dividends . As a condition to the grant of an Award of Restricted Stock, the Committee may provide that the Participant shall have the right to receive any dividends paid with respect to such Restricted Stock, provided that, if the right to receive dividends is awarded, then (A) any cash dividends and stock dividends with respect to the unvested Restricted Stock shall be withheld by the Company for the Participant’s account, and interest may be credited on the amount of the cash dividends withheld at a rate and subject to such terms as determined by the Committee; and (B) such cash dividends or stock dividends so withheld by the Company and attributable to any particular share of unvested Restricted Stock (and earnings thereon, if applicable) shall be distributed to such Participant in cash or, at the discretion of the Committee, in shares of Stock having a Fair Market Value equal to the amount of such dividends, if applicable, upon the release of restrictions on such share and, if such share is forfeited, the Participant shall have no right to such corresponding dividends. +(f) Restricted Stock Units . The Committee is authorized to grant Restricted Stock Units to Eligible Persons on the following terms and conditions: +(i) Award and Restrictions . Restricted Stock Units shall be subject to such restrictions (which may include a risk of forfeiture) as the Committee may impose. +(ii) Settlement . Settlement of vested Restricted Stock Units shall occur upon vesting or upon expiration of the deferral period specified for such Restricted Stock Units by the Committee (or, if permitted by the Committee, as elected by the Participant). Restricted Stock Units shall be settled by delivery of (A) a number of shares of Stock equal to the number of Restricted Stock Units for which settlement is due, or (B) cash in an amount equal to the Fair Market Value of the specified number of shares of Stock equal to the number of Restricted Stock Units for which settlement is due, or a combination thereof, as determined by the Committee at the Date of Grant or thereafter. +(g) Stock Awards . The Committee is authorized to grant Stock Awards to Eligible Persons as a bonus, as additional compensation, or in lieu of cash compensation any such Eligible Person is otherwise entitled to receive, in such amounts and subject to such other terms as the Committee in its discretion determines to be appropriate. +(h) Dividend Equivalents . The Committee is authorized to grant Dividend Equivalents to Eligible Persons, entitling any such Eligible Person to receive cash, Stock, other Awards, or other property equal in value to dividends or other distributions paid with respect to a specified number of shares of Stock. Dividend Equivalents may be awarded on a free-standing basis or in connection with an award of Restricted Stock Units or a Substitute Award. Dividend Equivalents shall not be awarded with respect to an Award of Options, SARs, Restricted Stock or a Stock Award. The Committee may provide that Dividend Equivalents shall be paid or distributed when accrued or at a later specified date and, if distributed at a later date, may be deemed to have been reinvested in additional Stock, Awards, or other investment vehicles or accrued in a bookkeeping account without interest, and subject to such restrictions on transferability and risks of forfeiture, as the Committee may specify. With respect to Dividend Equivalents granted in connection with another Award, absent a contrary provision in the Award Agreement, such Dividend Equivalents shall be subject to the same restrictions and risk of forfeiture as the Award with respect to which the dividends accrue and shall not be paid unless and until such Award has vested and been earned. +A-9 +(i) Other Stock-Based Awards . The Committee is authorized, subject to limitations under Applicable Law, to grant to Eligible Persons such other Awards that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, Stock, as deemed by the Committee to be consistent with the purposes of the Plan, including convertible or exchangeable debt securities, other rights convertible or exchangeable into Stock, purchase rights for Stock, Awards with value and payment contingent upon performance of the Company or any other factors designated by the Committee, and Awards valued by reference to the book value of Stock or the value of securities of, or the performance of, specified Affiliates of the Company. The Committee shall determine the terms and conditions of such Other Stock-Based Awards. Stock delivered pursuant to an Other-Stock Based Award in the nature of a purchase right granted under this Section 5(i) shall be purchased for such consideration, paid for at such times, by such methods, and in such forms, including cash, Stock, other Awards, or other property, as the Committee shall determine. +(j) Cash Awards . The Committee is authorized to grant Cash Awards, on a free-standing basis or as an element of, a supplement to, or in lieu of any other Award under the Plan to Eligible Persons in such amounts and subject to such terms as the Committee in its discretion determines to be appropriate. +(k) Substitute Awards; No Repricing . Awards may be granted in substitution or exchange for any other Award granted under the Plan or under another plan of the Company or an Affiliate or any other right of an Eligible Person to receive payment from the Company or an Affiliate. Awards may also be granted under the Plan in substitution for awards held by individuals who become Eligible Persons as a result of a merger, consolidation or acquisition of another entity or the assets of another entity by or with the Company or an Affiliate. Such Substitute Awards referred to in the immediately preceding sentence that are Options or SARs may have an exercise price that is less than the Fair Market Value of a share of Stock on the date of the substitution if such substitution complies with the Nonqualified Deferred Compensation Rules and other Applicable Laws and exchange rules. Except as provided in this Section 5(k) or in Section 7 , without the approval of the stockholders of the Company, the terms of outstanding Awards may not be amended to (i) reduce the Exercise Price or grant price of an outstanding Option or SAR, (ii) grant a new Option, SAR or other Award in substitution for, or upon the cancellation of, any previously granted Option or SAR that has the effect of reducing the Exercise Price or grant price thereof, (iii) exchange any Option or SAR for Stock, cash or other consideration when the Exercise Price or grant price per share of Stock under such Option or SAR exceeds the Fair Market Value of a share of Stock or (iv) take any other action that would be considered a “repricing” of an Option or SAR under the applicable listing standards of the national securities exchange on which the Stock is listed (if any), provided that nothing in clauses (i)-(iv) shall prevent the Committee from taking any actions authorized by Section 7 . +(l) Performance Awards . The Committee is authorized to designate any of the Awards granted under the foregoing provisions of this Section 5 as Performance Awards. The Committee may use such business criteria and other measures of performance as it may deem appropriate in establishing any performance goals applicable to a Performance Award, and may exercise its discretion to reduce or increase the amounts payable under any Performance Award. Performance goals may differ for Performance Awards granted to any one Participant or to different Participants. The performance period applicable to any Performance Award shall be set by the Committee in its discretion but shall not exceed ten years. +6. +Certain Provisions Applicable to Awards . +(a) Limit on Transfer of Awards . +(i) Except as provided in Sections 6(a)(iii) and (iv) , each Option and SAR shall be exercisable only by the Participant during the Participant’s lifetime, or by the person to whom the Participant’s rights shall pass by will or the laws of descent and distribution. Notwithstanding anything to the contrary in this Section 6(a) , an ISO shall not be transferable other than by will or the laws of descent and distribution. +(ii) Except as provided in Sections 6(a)(i) , (iii) and (iv) , no Award, other than a Stock Award, and no right under any such Award, may be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by a Participant and any such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void and unenforceable against the Company or any Affiliate. +(iii) To the extent specifically provided by the Committee, an Award may be transferred by a Participant without consideration to immediate family members or related family trusts, limited partnerships or similar entities or on such terms and conditions as the Committee may from time to time establish. +(iv) An Award may be transferred pursuant to a domestic relations order entered or approved by a court of competent jurisdiction upon delivery to the Company of a written request for such transfer and a certified copy of such order. +A-10 +(b) Form and Timing of Payment under Awards; Deferrals . Subject to the terms of the Plan and any applicable Award Agreement, payments to be made by the Company or any of its Affiliates upon the exercise or settlement of an Award may be made in such forms as the Committee shall determine in its discretion, including cash, Stock, other Awards or other property, and may be made in a single payment or transfer, in installments, or on a deferred basis (which may be required by the Committee or permitted at the election of the Participant on terms and conditions established by the Committee); provided , however , that any such deferred or installment payments will be set forth in the Award Agreement and shall comply with the Nonqualified Deferred Compensation Rules, if applicable. Payments may include, without limitation, provisions for the payment or crediting of reasonable interest on installment or deferred payments or the grant or crediting of Dividend Equivalents or other amounts in respect of installment or deferred payments denominated in Stock. +(c) Evidencing Stock . The Stock or other securities of the Company delivered pursuant to an Award may be evidenced in any manner deemed appropriate by the Committee in its sole discretion, including in the form of a certificate issued in the name of the Participant or by book entry, electronic or otherwise, and shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the Plan or the rules, regulations, and other requirements of the SEC, any stock exchange upon which such Stock or other securities are then listed, and any applicable federal, state or other laws, and the Committee may cause a legend or legends to be inscribed on any such certificates to make appropriate reference to such restrictions. Further, if certificates representing Restricted Stock are registered in the name of the Participant, the Company may retain physical possession of the certificates and may require that the Participant deliver a stock power to the Company, endorsed in blank, related to the Restricted Stock. +(d) Consideration for Grants . Awards may be granted for such consideration, including services, as the Committee shall determine, but shall not be granted for less than the minimum lawful consideration. +(e) Additional Agreements . Each Eligible Person to whom an Award is granted under the Plan may be required to agree in writing, as a condition to the grant of such Award or otherwise, to subject an Award that is exercised or settled following such Eligible Person’s termination of employment or service to a general release of claims and/or a noncompetition or other restricted covenant agreement in favor of the Company and its Affiliates, with the terms and conditions of such agreement(s) to be determined in good faith by the Committee. +7. +Subdivision or Consolidation; Recapitalization; Change in Control; Reorganization . +(a) Existence of Plans and Awards . The existence of the Plan and the Awards granted hereunder shall not affect in any way the right or power of the Company, the Board or the stockholders of the Company to make or authorize any adjustment, recapitalization, reorganization or other change in the Company’s capital structure or its business, any merger or consolidation of the Company, any issue of debt or equity securities ahead of or affecting Stock or the rights thereof, the dissolution or liquidation of the Company or any sale, lease, exchange or other disposition of all or any part of its assets or business or any other corporate act or proceeding. +(b) Additional Issuances . Except as expressly provided herein, the issuance by the Company of shares of stock of any class, including upon conversion of shares or obligations of the Company convertible into such shares or other securities, and in any case whether or not for fair value, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number of shares of Stock subject to Awards theretofore granted or the purchase price per share of Stock, if applicable. +(c) Subdivision or Consolidation of Shares . The terms of an Award and the share limitations under the Plan shall be subject to adjustment by the Committee from time to time, in accordance with the following provisions: +(i) If at any time, or from time to time, the Company shall subdivide as a whole (by reclassification, by a Stock split, by the issuance of a distribution on Stock payable in Stock, or otherwise) the number of shares of Stock then outstanding into a greater number of shares of Stock or in the event the Company distributes an extraordinary cash dividend, then, as appropriate (A) the maximum number of shares of Stock available for delivery with respect to Awards and applicable limitations with respect to Awards provided in Section 4 shall be increased proportionately, and the kind of shares or other securities available for the Plan shall be appropriately adjusted, (B) the number of shares of Stock (or other kind of shares or securities) that may be acquired under any then outstanding Award shall be increased proportionately, and (C) the price (including the Exercise Price or grant price) for each share of Stock (or other kind of shares or securities) subject to then outstanding Awards shall be reduced proportionately, without changing the aggregate purchase price or value as to which outstanding Awards remain exercisable or subject to restrictions; provided, however, that in the case of an extraordinary cash dividend that is not an Adjustment Event, the adjustment to the number of shares of Stock and the Exercise Price or grant price, as applicable, with respect to an outstanding Option or SAR may be made in such other manner as the Committee may determine that is permitted pursuant to applicable tax and other laws, rules and regulations. +A-11 +(ii) If at any time, or from time to time, the Company shall consolidate as a whole (by reclassification, by reverse Stock split, or otherwise) the number of shares of Stock then outstanding into a lesser number of shares of Stock, then, as appropriate (A) the maximum number of shares of Stock available for delivery with respect to Awards and applicable limitations with respect to Awards provided in Section 4 shall be decreased proportionately, and the kind of shares or other securities available for the Plan shall be appropriately adjusted, (B) the number of shares of Stock (or other kind of shares or securities) that may be acquired under any then outstanding Award shall be decreased proportionately, and (C) the price (including the Exercise Price or grant price) for each share of Stock (or other kind of shares or securities) subject to then outstanding Awards shall be increased proportionately, without changing the aggregate purchase price or value as to which outstanding Awards remain exercisable or subject to restrictions. +(d) Recapitalization . In the event of any change in the capital structure or business of the Company or other corporate transaction or event that would be considered an “equity restructuring” within the meaning of ASC Topic 718 and, in each case, that would result in an additional compensation expense to the Company pursuant to the provisions of ASC Topic 718, if adjustments to Awards with respect to such event were discretionary or otherwise not required (each such an event, an “ Adjustment Event ”), then the Committee shall equitably adjust (i) the aggregate number or kind of shares that thereafter may be delivered under the Plan, (ii) the number or kind of shares or other property (including cash) subject to an Award, (iii) the terms and conditions of Awards, including the purchase price or Exercise Price of Awards and performance goals, as applicable, and (iv) the applicable limitations with respect to Awards provided in Section 4 to equitably reflect such Adjustment Event (“ Equitable Adjustments ”). In the event of any change in the capital structure or business of the Company or other corporate transaction or event that would not be considered an Adjustment Event, and is not otherwise addressed in this Section 7 , the Committee shall have complete discretion to make Equitable Adjustments (if any) in such manner as it deems appropriate with respect to such other event. +(e) Change in Control and Other Events . Except to the extent otherwise provided in any applicable Award Agreement, vesting of any Award shall not occur solely upon the occurrence of a Change in Control and, in the event of a Change in Control or other changes in the Company or the outstanding Stock by reason of a recapitalization, reorganization, merger, consolidation, combination, exchange or other relevant change occurring after the date of the grant of any Award, the Committee, acting in its sole discretion without the consent or approval of any holder, may exercise any power enumerated in Section 3 (including the power to accelerate vesting, waive any forfeiture conditions or otherwise modify or adjust any other condition or limitation regarding an Award) and may also effect one or more of the following alternatives, which may vary among individual holders and which may vary among Awards held by any individual holder: +(i) accelerate the time of exercisability of an Award so that such Award may be exercised in full or in part for a limited period of time on or before a date specified by the Committee, after which specified date all unexercised Awards and all rights of holders thereunder shall terminate; +(ii) in the event the acquiror or the surviving or resulting corporation does not agree to assume the Awards or in the event of any merger, consolidation or share exchange pursuant to which the Company is not the surviving or resulting corporation, redeem in whole or in part outstanding Awards by requiring the mandatory surrender to the Company by selected holders of some or all of the outstanding Awards held by such holders (irrespective of whether such Awards are then vested or exercisable) as of a date, specified by the Committe e, in which event the Committee shall thereupon cancel such Awards and pay to each holder an amount of cash or other consideration per Award (other than a Dividend Equivalent or Cash Award, which the Committee may separately require to be surrendered in exchange for cash or other consideration determined by the Committee in its discretion) equal to the Change in Control Price, less the Exercise Price with respect to an Option and less the grant price with respect to a SAR, as applicable to such Awards; provided , however , that to the extent the Exercise Price of an Option or the grant price of an SAR exceeds the Change in Control Price, such Award may be cancelled for no consideration; +(iii) cancel Awards that remain subject to a restricted period as of the date of a Change in Control or other such event without payment of any consideration to the Participant for such Awards; or +(iv) make such adjustments to Awards then outstanding as the Committee deems appropriate to reflect such Change in Control or other such event (including the substitution, assumption, or continuation of Awards by the successor company or a parent or subsidiary thereof); provided , however , that so long as the event is not an Adjustment Event, the Committee may determine in its sole discretion that no adjustment is necessary to Awards then outstanding. If an Adjustment Event occurs, this Section 7(e) shall only apply to the extent it is not in conflict with Section 7(d) . +A-12 +8. +General Provisions . +(a) Tax Withholding . The Company and any of its Affiliates are authorized to withhold from any Award granted, or any payment relating to an Award, including from a distribution of Stock, taxes due or potentially payable in connection with any transaction involving an Award, and to take such other action as the Committee may deem advisable to enable the Company, its Affiliates and Participants to satisfy the payment of withholding taxes and other tax obligations relating to any Award in such amounts as may be determined by the Committee. The Committee shall determine, in its sole discretion, the form of payment acceptable for such tax withholding obligations, including the delivery of cash or cash equivalents, Stock (including previously owned shares, net settlement, a broker-assisted sale, or other cashless withholding or reduction of the amount of shares otherwise issuable or delivered pursuant to the Award), other property, or any other legal consideration the Committee deems appropriate. Any determination made by the Committee to allow a Participant who is subject to Rule 16b-3 to pay taxes with shares of Stock through net settlement or previously owned shares shall be approved by either a committee made up of solely two or more Qualified Members or the full Board. If such tax withholding amounts are satisfied through net settlement or previously owned shares, the maximum number of shares of Stock that may be so withheld or surrendered shall be the number of shares of Stock that have an aggregate Fair Market Value on the date of withholding or surrender equal to the aggregate amount of such tax liabilities determined based on the greatest withholding rates for federal, state, foreign and/or local tax purposes, including payroll taxes, that may be utilized without creating adverse accounting treatment for the Company with respect to such Award, as determined by the Committee. To the extent the number of shares withheld exceeds the required tax withholding due, the Company shall make a cash payment to the Participant equal to the excess amount as soon as administratively practicable thereafter. +(b) Limitation on Rights Conferred under Plan . Neither the Plan nor any action taken hereunder shall be construed as (i ) gi ving any Eligible Person or Participant the right to continue as an Eligible Person or Participant or in the employ or service of the Company or any of its Affiliates, (ii) interfering in any way with the right of the Company or any of its Affiliates to terminate any Eligible Person’s or Participant’s employment or service relationship at any time, (ii i) givi ng an Eligible Person or Participant any claim to be granted any Award under the Plan or to be treated uniformly with other Participants and/or employees and/or other service providers, or (iv) conferring on a Participant any of the rights of a stockholder of the Company unless and until the Participant is duly issued or transferred shares of Stock in accordance with the terms of an Award. +(c) Governing Law; Submission to Jurisdiction . The Plan shall be governed by, construed, and enforced in accordance with the laws of the State of Delaware (excluding any conflict of laws, rule or principle of Delaware law that might refer the governance, construction, or interpretation of the Plan to the laws of another state). A Participant’s sole remedy for any Claim shall be against the Company, and no Participant shall have any claim or right of any nature against any Affiliate of the Company or any stockholder or existing or former director, officer or employee of the Company or any Affiliate of the Company. Award Agreements may require the Participant to release and covenant not to sue any person or entity other than the Company over any claims. The individuals and entities described above in this Section 8(c) (other than the Company) shall be third-party beneficiaries of the Plan for purposes of enforcing the terms of this Section 8(c) . With respect to any Claim or dispute related to or arising under the Plan, the Company and each Participant who accepts an Award hereby consent to the exclusive jurisdiction, forum and venue of the state and federal courts located in the State of Delaware. +(d) Severability and Reformation . If any provision of the Plan or any Award is or becomes or is deemed to be invalid, illegal, or unenforceable in any jurisdiction or as to any person or Award, or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to the Applicable Law or, if it cannot be construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction, person or Award and the remainder of the Plan and any such Award shall remain in full force and effect. If any of the terms or provisions of the Plan or any Award Agreement conflict with the requirements of Rule 16b-3 (as those terms or provisions are applied to Eligible Persons who are subject to Section 16 of the Exchange Act) or Section 422 of the Code (with respect to ISOs), then those conflicting terms or provisions shall be deemed inoperative to the extent they so conflict with the requirements of Rule 16b-3 (unless the Board or the Committee, as appropriate, has expressly determined that the Plan or such Award should not comply with Rule 16b-3) or Section 422 of the Code, in each case, only to the extent Rule 16b-3 and such sections of the Code are applicable. With respect to ISOs, if the Plan does not contain any provision required to be included herein under Section 422 of the Code, that provision shall be deemed to be incorporated herein with the same force and effect as if that provision had been set out at length herein; provided , further, that, to the extent any Option that is intended to qualify as an ISO cannot so qualify, that Option (to that extent) shall be deemed a Nonstatutory Option for all purposes of the Plan. +A-13 +(e) Unfunded Status of Awards; No Trust or Fund Created . The Plan is intended to constitute an “unfunded” plan for certain incentive awards. Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any Affiliate and a Participant or any other person. To the extent that any person acquires a right to receive payments from the Com pany or any Affiliate pursuant to an Award, such right shall be no greater than the right of any general unsecured creditor of the Company or such Affiliate. +(f) Nonexclusivity of the Plan . Neither the adoption of the Plan by the Board nor its submission to the stockholders of the Company for approval shall be construed as creating any limitations on the power of the Board or a committee thereof to adopt such other incentive arrangements as it may deem desirable. Nothing contained in the Plan shall be construed to prevent the Company or any of its Affiliates from taking any corporate action which is deemed by the Company or such Affiliate to be appropriate or in its best interest, whether or not such action would have an adverse effect on the Plan or any Award made under the Plan. No employee, beneficiary or other person shall have any claim against the Company or any of its Affiliates as a result of any such action. +(g) Fractional Shares . No fractional shares of Stock shall be issued or delivered pursuant to the Plan or any Award, and the Committee shall determine in its sole discretion whether cash, other securities, or other property shall be paid or transferred in lieu of any fractional shares of Stock or whether such fractional shares of Stock or any rights thereto shall be cancelled, terminated, or otherwise eliminated with or without consideration. +(h) Interpretation . Headings are given to the Sections and subsections of the Plan solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of the Plan or any provision thereof. Words in the masculine gender shall include the feminine gender, and, where appropriate, the plural shall include the singular and the singular shall include the plural. In the event of any conflict between the terms and conditions of an Award Agreement and the Plan, the provisions of the Plan shall control. The use herein of the word “including” following any general statement, term or matter shall not be construed to limit such statement, term or matter to the specific items or matters set forth immediately following such word or to similar items or matters, whether or not non-limiting language (such as “without limitation”, “but not limited to”, or words of similar import) is used with reference thereto, but rather shall be deemed to refer to all other items or matters that could reasonably fall within the broadest possible scope of such general statement, term or matter. References herein to any agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof and not prohibited by the Plan. +(i) Facility of Payment . Any amounts payable hereunder to any individual under legal disability or who, in the judgment of the Committee, is unable to manage properly his financial affairs, may be paid to the legal representative of such individual, or may be applied for the benefit of such individual in any manner that the Committee may select, and the Company shall be relieved of any further liability for payment of such amounts. +(j) Conditions to Delivery of Stock . Nothing herein or in any Award Agreement shall require the Company to issue any shares with respect to any Award if that issuance would, in the opinion of counsel for the Company, constitute a violation of the Securities Act, any other applicable statute or regulation, or the rules of any applicable securities exchange or securities association, as then in effect. In addition, each Participant who receives an Award under the Plan shall not sell or otherwise dispose of Stock that is acquired upon grant, exercise or vesting of an Award in any manner that would constitute a violation of any applicable federal or state securities laws, the Plan or the rules, regulations or other requirements of the SEC or any stock exchange upon which the Stock is then listed. At the time of any exercise of an Option or SAR, or at the time of any grant of any other Award, the Company may, as a condition precedent to the exercise of such Option or SAR or settlement of any other Award, require from the Participant (or in the event of his or her death, his or her legal representatives, heirs, legatees, or distributees) such written representations, if any, concerning the holder’s intentions with regard to the retention or disposition of the shares of Stock being acquired pursuant to the Award and such written covenants and agreements, if any, as to the manner of disposal of such shares as, in the opinion of counsel to the Company, may be necessary to ensure that any disposition by that holder (or in the event of the holder’s death, his or her legal representatives, heirs, legatees, or distributees) will not involve a violation of the Securities Act, any other applicable state or federal statute or regulation, or any rule of any applicable securities exchange or securities association, as then in effect. Stock or other securities shall not be delivered pursuant to any Award until payment in full of any amount required to be paid pursuant to the Plan or the applicable Award Agreement (including any Exercise Price, grant price, or tax withholding) is received by the Company. +(k) Section 409A of the Code . It is the general intention, but not the obligation, of the Committee to design Awards to comply with or to be exempt from the Nonqualified Deferred Compensation Rules, and Awards will be operated and construed accordingly. Neither this Section 9(k) nor any other provision of the Plan is or contains a representation to +A-14 +any Participant regarding the tax consequences of the grant, vesting, exercise, settlement, or sale of any Award (or the Stock underlying such Award) granted hereunder, and should not be interpreted as such. In no event shall the Company be liable for all or any portion of any taxes, penalties, interest or other expenses that may be incurred by the Participant on account of non-compliance with the Nonqualified Deferred Compensation Rules. Notwithstanding any provision in the Plan or an Award Agreement to the contrary, in the event that a “specified employee” (as defined under the Nonqualified Deferred Compensation Rules) becomes entitled to a payment under an Award that would be subject to additional taxes and interest under the Nonqualified Deferred Compensation Rules if the Participant’s receipt of such payment or benefits is not delayed until the earlier of (i) the date of the Participant’s death, or (ii) the date that is six months after the Participant’s “separation from service,” as defined under the Nonqualified Deferred Compensation Rules (such date, the “ Section 409A Payment Date ”), then such payment or benefit shall not be provided to the Participant until the Section 409A Payment Date. Any amounts subject to the preceding sentence that would otherwise be payable prior to the Section 409A Payment Date will be aggregated and paid in a lump sum without interest on the Section 409A Payment Date. The applicable provisions of the Nonqualified Deferred Compensation Rules are hereby incorporated by reference and shall control over any Plan or Award Agreement provision in conflict therewith. +(l) Clawback . The Plan and all Awards granted hereunder are subject to any written clawback policies that the Company, with the approval of the Board or an authorized committee thereof, may adopt either prior to or following the Effective Date, including, without limitation, any policy adopted to conform to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and rules promulgated thereunder by the SEC and that the Company determines should apply to Awards. Any such policy shall subject a Participant’s Awards and amounts paid or realized with respect to Awards to reduction, cancelation, forfeiture or recoupment to the extent required by Applicable Law and, even if not required by Applicable Law, if certain specified events or wrongful conduct occur, including an accounting restatement due to the Company’s material noncompliance with financial reporting regulations or other events or wrongful conduct specified in any such clawback policy. +(m) Status under ERISA . The Plan shall not constitute an “employee benefit plan” for purposes of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended. +(n) Plan Effective Date and Term . The Plan was adopted by the Board to be effective on the Effective Date. No Awards may be granted under the Plan on and after the tenth anniversary of the Effective Date. However, any Award granted prior to such termination (or any earlier termination pursuant to Section 9 ), and the authority of the Board or Committee to amend, alter, adjust, suspend, discontinue, or terminate any such Award or to waive any conditions or rights under such Award in accordance with the terms of the Plan, shall extend beyond such termination until the final disposition of such Award. +9. +Amendments to the Plan and Awards. The Committee may amend, alter, suspend, discontinue or terminate any Award or Award Agreement, the Plan or the Committee’s authority to grant Awards without the consent of stockholders or Participants, except that any amendment or alteration to the Plan, including any increase in any share limitation, shall be subject to the approval of the Company’s stockholders not later than the annual meeting next following such Committee action if such stockholder approval is required by any federal or state law or regulation or the rules of any stock exchange or automated quotation system on which the Stock may then be listed or quoted, and the Committee may otherwise, in its discretion, determine to submit other changes to the Plan to stockholders for approval; provided , that, without the consent of an affected Participant, no such Committee action may materially and adversely affect the rights of such Participant under any previously granted and outstanding Award. For purposes of clarity, any adjustments made to Awards pursuant to Section 7 will be deemed not to materially and adversely affect the rights of any Participant under any previously granted and outstanding Award and therefore may be made without the consent of affected Participants. +ANNUAL MEETING OF STOCKHOLDERS +OF +LIBERTY ENERGY INC. +Tuesday, April 16, 2024 +GO +GREEN +e-Consent +makes it easy to go paperless. With e-Consent, you can quickly access your proxy material, statements and other eligible documents +online, while reducing costs, clutter and paper waste. Enroll today via www.astfinancial.com to enjoy online access. +NOTICE OF INTERNET +AVAILABILITY OF PROXY MATERIAL : +The Notice of Meeting, proxy statement and proxy card +are +available at http://www.astproxyportal.com/ast/21952 +Please sign, date and mail +your proxy card in the +envelope provided as soon +as possible. +Please +detach along perforated line and mail in the envelope provided. +20330303000000001000 +6 +041624 +THE +BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE NOMINEES LISTED IN PROPOSAL 1 AND "FOR” +PROPOSALS 2, 3 AND 4. +PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE +☒ +1. Election +of Directors: To elect three (3) Class II directors to the Board to serve until the 2027 +annual meeting or until their successors are duly elected and qualified. +☐ +NOMINEES: +FOR +ALL NOMINEES +Ken Babcock +Audrey Robertson +☐ +WITHHOLD AUTHORITY +FOR +ALL NOMINEES +Christopher +A. Wright +☐ +FOR ALL EXCEPT +(See +instructions below) +INSTRUCTIONS: To +withhold authority to vote for any individual nominee(s), mark “FOR ALL EXCEPT” +and fill in the circle next to each nominee you wish to withhold, as shown here: +● +To +change the address on your account, please check the box at right and indicate your new +address in the address space above. Please note that changes to the registered name(s) +on the account may not be submitted via this method. +☐ +FOR +AGAINST +ABSTAIN +2. +Approval, +on an advisory basis, of the compensation of the Company’s named executive officers. +☐ +☐ +☐ +FOR +AGAINST +ABSTAIN +3. +Ratification +of the appointment of Deloitte & Touche LLP as the Company’s independent registered +public accounting firm for the fiscal year ending December 31, 2024. +☐ +☐ +☐ +FOR +AGAINST +ABSTAIN +4. +Approval +of an amendment and restatement of the Company’s long term incentive plan. +☐ +☐ +☐ +TO +INCLUDE ANY COMMENTS, USE THE COMMENTS BOX ON THE REVERSE SIDE OF THIS CARD. +IMPORTANT +NOTICE +YOUR +VOTE IS IMPORTANT. PLEASE SIGN, DATE AND RETURN YOUR PROXY AS SOON AS POSSIBLE. BY DOING SO, YOU MAY SAVE LIBERTY ENERGY INC. +THE EXPENSE OF ADDITIONAL SOLICITATION. +NOTE: +In their discretion, the Proxies are authorized to vote upon such other business +as may properly come before the meeting or any adjournment or postponement thereof. +MARK +“X” HERE IF YOU PLAN TO ATTEND THE VIRTUAL MEETING ☐ +Signature of Stockholder +Date: +Signature of Stockholder +Date: +Note: +Please +sign exactly as your name or names appear on this Proxy. When shares are held jointly, +each holder should sign. When signing as executor, administrator, attorney, trustee or +guardian, please give full title as such. If the signer is a corporation, please sign +full corporate name by duly authorized officer, giving full title as such. If signer +is a partnership, please sign in partnership name by authorized person. +1 +LIBERTY +ENERGY INC. +THIS +PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS +FOR +THE ANNUAL MEETING OF STOCKHOLDERS +The +undersigned hereby appoint(s) Christopher A. Wright, Michael Stock and R. Sean Elliott, or any one of them, attorneys with full +power of substitution and revocation to each, for and in the name of the undersigned with all the powers the undersigned would +possess if personally present, to vote the shares of the undersigned in Liberty Energy Inc. as indicated on the proposals referred +to on the reverse side hereof at the annual meeting of its stockholders to be held virtually via live webcast at https://web.lumiagm.com/245867901 +(password: liberty2024) on Tuesday, April 16, 2024 at 9:00 a.m. Mountain Time and at any adjournments or postponements thereof, +and in their or his discretion upon any other matter which may properly come before said meeting. +THE +SHARES REPRESENTED BY THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. +IF NO SPECIFIC DIRECTION IS GIVEN AS TO THE PROPOSALS ON THE REVERSE SIDE, THIS PROXY WILL BE VOTED “FOR” THE NOMINEES LISTED +IN PROPOSAL 1 AND “FOR” PROPOSALS 2, 3 AND 4. PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY. +This +card also constitutes voting instructions to the trustees under the Liberty Energy Inc. savings plans to vote, in person or by +proxy, the proportionate interest of the undersigned in the shares of Common Stock of Liberty Energy Inc. held by the trustees +under the plans, as described in the proxy statement. +(Continued +and to be signed on the reverse side) +COMMENTS: +1.1 +14475 \ No newline at end of file diff --git a/raw/proxies/0001694028/0001999371-24-003271/proxy_rpt.txt b/raw/proxies/0001694028/0001999371-24-003271/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..716609b04e0df1491565845e9f559e689fceaa0d --- /dev/null +++ b/raw/proxies/0001694028/0001999371-24-003271/proxy_rpt.txt @@ -0,0 +1,43 @@ +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +Policies and Procedures for Review of Related Party Transactions +A “ Related Party Transaction ” is a transaction, arrangement or relationship in which the Company or any of its subsidiaries was, is or will be a participant, the amount of which involved exceeds $120,000, and in which any related person had, has or will have a direct or indirect material interest. A “ Related Person ” is: +♦ any person who is, or at any time during the applicable period was, one of our executive officers or one of our directors; +♦ any person who is known by us to be the beneficial owner of more than 5% of our Class A Common Stock; +♦ any immediate family member of any of the foregoing persons, which means any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law of a director, executive officer or a beneficial owner of more than 5% of our Class A Common Stock, and any person (other than a tenant or employee) sharing the household of such director, executive officer or beneficial owner of more than 5% of our Class A Common Stock; and +♦ any firm, corporation or other entity in which any of the foregoing persons is a partner or principal or in a similar position or in which such person has a 10.0% or greater beneficial ownership interest. +Our Board has adopted a written related party transactions policy. Pursuant to this policy, our Audit Committee reviews all material facts of all Related Party Transactions and either approves or disapproves entry into the Related Party Transaction, subject to certain limited exceptions. The determination of the Audit Committee is documented in the Audit Committee’s minutes. In determining whether to approve or disapprove entry into a Related Party Transaction, our Audit Committee takes into account, among other factors, the following: (i) whether the Related Party Transaction is on terms no less favorable than terms generally available to an unaffiliated third-party under the same or similar circumstances and (ii) the extent of the Related Person’s interest in the transaction. Furthermore, the policy requires that all Related Party Transactions required to be disclosed in our filings with the SEC be so disclosed in accordance with applicable laws, rules and regulations. +Related Party Transactions +The following is a description of transactions entered into, or in effect, after January 1, 2023 to which we have been a party, in which the amount involved in the transaction exceeds $120,000, and in which any of our directors, executive officers or beneficial owners of more than 5% of our voting securities, or affiliates or immediate family members of any of our directors, executive officers or beneficial owners of more than 5% of our voting securities, had or will have a direct or indirect material interest. We believe the terms obtained or consideration that we paid or received, as applicable, in connection with the transactions described below were comparable to terms available or the amounts that would be paid or received, as applicable, from unrelated third parties. +Liberty LLC Agreement +We entered into the Second Amended and Restated Limited Liability Company Agreement of Liberty Oilfield Services New HoldCo LLC (“ Liberty LLC ”) (the “ Liberty LLC Agreement ”) in connection with the closing of our IPO, which provides for limitations on the ability of holders of units of Liberty LLC (the “ Liberty LLC Units, ” and the holders of Liberty LLC Units “ Liberty Unit Holders ”) to transfer their Liberty LLC Units and provides the Company, as managing member of Liberty LLC, with the right to impose restrictions (in addition to those already in place) on the ability of Liberty Unit Holders to redeem their Liberty LLC Units pursuant to the Redemption Right (as defined below) to the extent the Company believes it is necessary to ensure that Liberty LLC will continue to be treated as a partnership for U.S. federal income tax purposes. +Effective January 31, 2023, Liberty LLC was merged into the Company (such merger, the “ Liberty LLC Merger ”), with the Company being the surviving entity of the Liberty LLC Merger. In connection with Liberty LLC Merger, all outstanding shares of our Class B Common Stock were redeemed and exchanged for an equal number of shares of our Class A Common Stock. Also effective January 31, 2023, as a result of the Liberty LLC Merger, the Liberty LLC Agreement terminated. +Redemption Rights +Under the Liberty LLC Agreement, each Liberty Unit Holder had, subject to certain limitations, the right (the “ Redemption Right ”) to cause Liberty LLC to acquire all or a portion of its Liberty LLC Units for, at Liberty LLC’s election, (i) shares of our Class A Common Stock at a redemption ratio of one share of Class A Common Stock for each Liberty LLC Unit redeemed, subject to conversion rate adjustments for stock splits, stock dividends and reclassification and other similar transactions or (ii) an equivalent amount of cash. Alternatively, upon the exercise of the Redemption Right, the Company (instead of Liberty LLC) had the right (the “ Call Right ”) to, +49 +for administrative convenience, acquire each tendered Liberty LLC Unit directly from the redeeming Liberty Unit Holder for, at the Company’s election, (x) one share of Class A Common Stock or (y) an equivalent amount of cash. In addition, upon a change of control of the Company, the Company had the right to require each holder of Liberty LLC Units (other than the Company) to exercise its Redemption Right with respect to some or all of such unit holder’s Liberty LLC Units. In connection with any redemption of Liberty LLC Units pursuant to the Redemption Right or the Call Right, the corresponding number of shares of Class B Common Stock would be cancelled. +As of January 31, 2023, and, as a result of the Liberty LLC Merger, all outstanding Redemption Rights for Liberty LLC Units had been exercised, and no further redemption of Liberty LLC Units will occur in the future. +Distributions and Allocations +Under the Liberty LLC Agreement, the Company had the right to determine when distributions will be made to the holders of Liberty LLC Units and the amount of any such distributions. If the Company authorized a distribution, such distribution would be made to the holders of Liberty LLC Units generally on a pro rata basis in accordance with their respective percentage ownership of Liberty LLC Units. +Liberty LLC allocated its net income or net loss for each year to the holders of Liberty LLC Units pursuant to the terms of the Liberty LLC Agreement, and the holders of L iberty LLC Units, including the Company, generally incurred U.S. federal, state and local income taxes on their share of any taxable income of Liberty LLC. Net income and losses of Liberty LLC generally were allocated to the holders of Liberty LLC Units on a pro rata basis in accordance with their respective percentage ownership of Liberty LLC Units, subject to requirements under U.S. federal income tax law that certain items of income, gain, loss or deduction be allocated disproportionately in certain circumstances. To the extent Liberty LLC had available cash and subject to the terms of any debt instruments, the Company intended to cause Liberty LLC to make (i) generally pro rata distributions to the holders of Liberty LLC Units, including the Company, in an amount sufficient to allow the Company to pay its taxes and to allow it to make payments under the Tax Receivable Agreements (as defined below), (ii) tax advances, which will be repaid upon exercise of the Redemption Right or the Call Right, as applicable, in an amount sufficient to allow each of the Liberty Unit Holders to pay its respective taxes on such holder’s allocable share of Liberty LLC’s taxable income after taking into account certain other distributions or payments received by the Liberty Unit Holders from Liberty LLC or the Company, and (iii) non-pro rata payments to the Company to reimburse it for its corporate and other overhead expenses. +Issuance of Equity +The Liberty LLC Agreement generally provided that at any time the Company issues a share of its Class A Common Stock or any other equity security, the net proceeds received by the Company with respect to such issuance, if any, shall be concurrently invested in Liberty LLC, and Liberty LLC shall issue to the Company one Liberty LLC Unit or other economically equivalent equity interest. Conversely, if at any time, any shares of Class A Common Stock were redeemed, repurchased or otherwise acquired, Liberty LLC would redeem, repurchase or otherwise acquire an equal number of Liberty LLC Units held by the Company, upon the same terms and for the same price, as the shares of the Class A Common Stock are redeemed, repurchased or otherwise acquired. +Transactions with Liberty Resources +Liberty Resources LLC (“ Liberty Resources ”) is an oil and gas exploration and production company of which Mr. Wright is the Executive Chairman and an equity owner. Mr. Wright previously served as the Chief Executive Officer at Liberty Resources from its formation in September 2010 until March 2017. Liberty Resources entered into a master service agreement with Liberty Oilfield Services LLC, a subsidiary of the Company (“ Liberty Services ”), whereby Liberty Services provides hydraulic fracturing service to Liberty Resources at market service rates. For the year ended December 31, 2023, the amounts related to the provision of hydraulic fracturing services to Liberty Resources under the master services agreement were $38.8 million. +In December 2022, the Company entered into a letter agreement with Liberty Resources to extend the payment terms for certain accounts receivable until April 1, 2024, and, in August 2023, the parties revised such letter agreement to make various modifications including further extending payment terms until January 1, 2025, subject to timely payment of monthly interest charges ranging from 15-20%. As of December 31, 2023, the amount of receivables subject to this letter agreement was approximately $15 million. +Transactions with Franklin Mountain +Franklin Mountain Energy LLC (“ Franklin Mountain ”) is an oil and gas exploration and production company of which Ms. Robertson serves as the Chief Financial Officer. Franklin Mountain entered into a master service agreement with Liberty Services, whereby Liberty Services provides hydraulic fracturing service to Franklin Mountain at market service rates. For the year ended December 31, 2023, the amounts related to the provision of hydraulic fracturing services to Franklin Mountain under the master services agreement was $176.1 million or 3.7% of the Company’s revenues for such period. +50 +Transactions with Tim Babcock +Tim Babcock is currently employed by a subsidiary of the Company as a director of operations. Tim Babcock is the son of Ken Babcock, who serves on the Board. For the year ended December 31, 2023, Tim Babcock was paid $218,780 for his services as an employee. +Transactions with the Bettering Human Lives Foundation +In December 2023, the Company established the Bettering Human Lives Foundation (the “ Foundation ”), a nonprofit organization dedicated to promoting clean cooking solutions and improving the well-being of communities worldwide. Mr. Wright, the Company’s CEO, serves as the Chairman of the Foundation, and Anne Hyre serves as its executive director. Ms. Hyre is the sister-in-law of M r. Wright. I n December 2023, the Company made an initial commitment to make a charitable contribution of $1 million to the Foundation. In addition, effective January 2024, Ms. Hyre is employed by a subsidiary of the Company and seconded to the Foundation. We expect that Ms. Hyre will receive total compensation of approximately $250,000 from the Company for the year ended De cember 31, 202 4. +Indemnification for Officers and Directors +Our Amended and Restated Certificate of Incorporation and Second Amended and Restated Bylaws provide indemnification rights to our directors and officers and permit us to purchase insurance on behalf of any officer, director, employee or other agent for any liability arising out of that person’s actions as our officer, director, employee or agent, regardless of whether Delaware law would mandate indemnification. Additionally, we have entered into separate indemnity agreements with our directors and certain officers to provide additional indemnification benefits, including the right to receive, in advance, reimbursements for expenses incurred in connection with a defense for which the director or officer is entitled to indemnification. We believe that the limitation of liability provisions in our Amended and Restated Certificate of Incorporation, Second Amended and Restated Bylaws and the indemnity agreements will facilitate our ability to continue to attract and retain qualified individuals to serve as directors and officers. +Conflicts of Interest +The related party transactions described herein may cause certain conflicts of interests, including that: +♦ we may enter into contracts between us, on the one hand, and related parties, on the other, that are not as a result of arm’s-length transactions; +♦ our executive officers and directors that hold positions of responsibility with related parties may be aware of certain business opportunities that are appropriate for presentation to us as well as to such other related parties and may present such business opportunities to such other parties; and +♦ our executive officers and directors that hold positions of responsibility with related parties may have significant 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AND EXCHANGE COMMISSION +Washington, D.C. 20549 +SCHEDULE 14A +Proxy Statement Pursuant to Section 14(a) of the +Securities Exchange Act of 1934 +(Amendment No.  ) +Filed by the Registrant ☒ +Filed by a party other than the Registrant ☐ +Check the appropriate box: +☐ +Preliminary Proxy Statement +☐ +Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) +☒ +Definitive Proxy Statement +☐ +Definitive Additional Materials +☐ +Soliciting Material Pursuant to § 240.14a-12 +LIBERTY ENERGY INC. +(Name of Registrant as Specified In Its Charter) +(Name of Person(s) Filing Proxy Statement, if other than the Registrant) +Payment of Filing Fee (Check all boxes that apply): +☒ +No fee required +☐ +Fee paid previously with preliminary materials. +☐ +Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11 +LIBERTY ENERGY INC. +950 17th STREET, SUITE 2400 +DENVER, COLORADO 80202 +NOTICE OF 2026 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD APRIL 14, 2026 +To our valued stockholders: +Notice is hereby given that the 2026 Annual Meeting of Stockholders (the “ Annual Meeting ”) of Liberty Energy Inc. (the “ Company ” or “ Liberty ”) will be held on Tuesday, April 14, 2026, at 9:00 a.m. Mountain Time. This year’s Annual Meeting will be accessible through the Internet in order to permit our stockholders to participate from any geographic location with Internet connectivity. We believe this enhances accessibility to our Annual Meeting for all stockholders. To attend the Annual Meeting, you must access the meeting website at edge.media-server.com/mmc/p/azh3pr84. Although no physical in-person meeting will be held, we have designed the format of the virtual Annual Meeting to ensure that our stockholders of record who attend the Annual Meeting will be afforded similar rights and opportunities to participate as they would at an in-person meeting, while providing an online experience available to all of our stockholders regardless of location. At the Annual Meeting, stockholders will be asked to: +1. Elect four Class I directors to our board of directors to serve until the 2027 annual meeting or until their successors are duly elected and qualified (“ Proposal 1 ”); +2. Approve, on an advisory basis, the compensation of our named executive officers (“ Proposal 2 ”); +3. Ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2026 (“Proposal 3”); and +4. Transact such other business as may properly be brought before the Annual Meeting. +You can find more information, including the nominees for directors, executive compensation, and details regarding our independent registered public accounting firm, in the attached proxy statement. The board of directors recommends that you vote in favor of each of the above proposals. Pursuant to the “notice and access” rules adopted by the Securities and Exchange Commission, we have elected to provide access to our proxy materials on the Internet. The approximate date on which the attached proxy statement, the accompanying Notice of Internet Availability of Proxy Materials (the “ Notice ”), proxy card, and the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 are first being made available to stockholders at www.astproxyportal.com/ast/21952 is March 5, 2026. The Notice includes instructions on how to access our proxy materials over the Internet, vote online and request a printed copy of these materials. +Only stockholders of record at the close of business on February 18, 2026 are entitled to notice of, and to vote at, the Annual Meeting or any adjournments or postponements thereof. A complete list of stockholders entitled to vote at the Annual Meeting will be available for examination ten days before the Annual Meeting. If you would like to inspect the list of Company stockholders of record, please contact the Investor Relations department at IR@libertyenergy.com to schedule an appointment or request access electronically or in person. +IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE ANNUAL MEETING. ACCORDINGLY, EVEN IF YOU PLAN TO ATTEND THE ANNUAL MEETING VIRTUALLY, WE URGE YOU TO COMPLETE, SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY CARD IN THE POSTAGE-PREPAID ENVELOPE PRIOR TO THE ANNUAL MEETING OR FOLLOW THE INTERNET OR TELEPHONE VOTING PROCEDURES DESCRIBED ON THE PROXY CARD. IF YOU ATTEND THE ANNUAL MEETING VIRTUALLY AND WISH TO VOTE AT THAT TIME, YOU MAY WITHDRAW YOUR PROXY AND VOTE AT THE MEETING. YOUR PROMPT CONSIDERATION IS GREATLY APPRECIATED. YOUR VOTE IS IMPORTANT TO US. +By Order of the Board of Directors, +/s/ R. Sean Elliott +R. Sean Elliott +Chief Legal Officer and Corporate Secretary +Denver, Colorado +March 5, 2026 +IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING +TO BE HELD ON APRIL 14, 2026 +This Notice of Annual Meeting and Proxy Statement and our Annual Report on Form 10-K are available at +www.astproxyportal.com/ast/21952 +i +TABLE OF CONTENTS +GENERAL INFORMATION ABOUT THE 2026 ANNUAL MEETING OF STOCKHOLDERS AND VOTING +1 +PROPOSAL 1 – ELECTION OF DIRECTORS +5 +THE BOARD AND ITS COMMITTEES +11 +EXECUTIVE OFFICERS +17 +COMPENSATION DISCUSSION & ANALYSIS +18 +COMPENSATION COMMITTEE REPORT +26 +EXECUTIVE COMPENSATION TABLES +27 +DIRECTOR COMPENSATION +33 +EQUITY COMPENSATION PLAN INFORMATION +35 +CEO PAY RATIO +36 +PAY VERSUS PERFORMANCE +37 +PROPOSAL 2 – ADVISORY VOTE TO APPROVE THE COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS +41 +PROPOSAL 3 – RATIFICATION OF APPOINTMENT OF THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +42 +AUDIT COMMITTEE REPORT +44 +SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT +46 +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +48 +HOUSEHOLDING +50 +STOCKHOLDER PROPOSALS +50 +WHERE YOU CAN FIND MORE INFORMATION +50 +OTHER MATTERS +51 +1 +LIBERTY ENERGY INC. +950 17th STREET, SUITE 2400 +DENVER, COLORADO 80202 +PROXY STATEMENT +GENERAL INFORMATION ABOUT THE 2026 ANNUAL MEETING OF STOCKHOLDERS AND VOTING +The enclosed proxy is solicited on behalf of the Board of Directors (the “ Board ”) of Liberty Energy Inc. (the “ Company ”) for use at the Company’s 2026 Annual Meeting of Stockholders that will be held on Tuesday, April 14, 2026, at 9:00 a.m. Mountain Time, virtually at edge.media-server.com/mmc/p/azh3pr84 (the “ Annual Meeting ”). In this proxy statement (the “ Proxy Statement ”) the terms “ Liberty ,” “ we ,” “ us ” and “ our ” all refer to the Company. This Proxy Statement contains important information for you to consider when deciding how to vote on the matters brought before the Annual Meeting. Please read it carefully. +We are providing these proxy materials to you in connection with the solicitation by the Board of proxies to be voted at the Annual Meeting and at any adjournments or postponements thereof. By executing and returning the enclosed proxy card or by voting via the Internet or by telephone as set forth herein, you authorize the persons named in the proxy to represent you and vote your shares on the matters described herein. Those persons will also be authorized to vote your shares to adjourn the Annual Meeting from time to time and to vote your shares at any adjournments or postponements of the Annual Meeting. +Pursuant to the “notice and access” rules adopted by the Securities and Exchange Commission (the “ SEC ”), we have elected to provide stockholders access to our proxy materials over the Internet. The approximate date on which this Proxy Statement, the accompanying Notice of Internet Availability of Proxy Materials (the “ Notice ”), proxy card, and the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 are first being made available to stockholders at www.astproxyportal.com/ast/21952 is March 5, 2026. The Notice includes instructions on how to access our proxy materials over the Internet and how to request a printed copy of these materials. +Choosing to receive your future proxy materials by email or to receive a single set of proxy materials per household will save the Company the cost of printing and mailing documents to you and will reduce the impact of the Company’s annual meetings on the environment. If you choose to receive future proxy materials by email, you will receive an email next year with instructions containing a link to those materials and a link to the proxy voting site. Your election to receive proxy materials by email will remain in effect until you terminate it. +Annual Meeting Time & Location +➞ Date : Tuesday, April 14, 2026 +➞ Time : 9:00 a.m. Mountain Time +➞ Location : Virtually held at edge.media-server.com/mmc/p/azh3pr84 +Who Can Vote at the Annual Meeting +The Company’s Class A Common Stock, par value $0.01 per share (the “ Common Stock ”), is the only class of securities entitled to vote at the Annual Meeting. Each share of Common Stock outstanding at the close of business on February 18, 2026 (the “ Record Date ”) entitles its holder to one vote with respect to each matter at the Annual Meeting, and only stockholders of record on the Record Date are entitled to notice of, and to vote, virtually online or by proxy, at the Annual Meeting. +A complete list of stockholders entitled to vote at the Annual Meeting will be available for examination ten days before the Annual Meeting. If you would like to inspect the list of Company stockholders of record, please contact the Investor Relations department at IR@libertyenergy.com . +2 +Purpose of the Annual Meeting +At our Annual Meeting, stockholders will act upon the following matters outlined in the Notice: +1. Elect four Class I directors to our Board to serve until the 2027 annual meeting or until their successors are duly elected and qualified (“ Proposal 1 ”); +2. Approve, on an advisory basis, the compensation of our named executive officers (“ Proposal 2 ”); +3. Ratify the appointment of Deloitte & Touche LLP (“ Deloitte” ) as our independent registered public accounting firm for the fiscal year ending December 31, 2026 (“ Proposal 3 ”); and +4. Transact such other business as may properly be brought before the Annual Meeting. +How to Vote at the Annual Meeting +Many holders of the Company’s Common Stock hold their shares through a broker, bank, trustee or other nominee rather than directly in their own name. As summarized below, there are some distinctions between shares held of record and those owned beneficially. +Stockholder of Record. If your shares are registered directly in your name with our transfer agent, Equiniti Trust Company LLC (“ Equiniti ”), then you are considered a “stockholder of record” with respect to those shares. In this case, a Notice or, if requested, a set of proxy materials has been sent to you directly by us. As a stockholder of record, you may vote over the Internet as described in the Notice that was mailed to you or, if you have received or requested a hard copy of this Proxy Statement and accompanying proxy card, you may vote by telephone as described on the proxy card, or by mail by marking, signing, dating and mailing your proxy card in the postage-paid envelope provided. Your designation of a proxy is revocable by following the procedures outlined in this Proxy Statement. The method by which you vote will not limit your right to vote virtually at the Annual Meeting. If you submit a signed proxy card but do not give voting instructions as to how your shares of Common Stock should be voted on a particular proposal at the Annual Meeting, your shares will be voted in accordance with the recommendations of our Board stated in this Proxy Statement. +Beneficial Owners of Shares Held in Street Name. If your shares of our Common Stock are held in a brokerage account or by a bank, trust or other nominee or custodian, then you are considered the beneficial owner of those shares, which are held in “street name.” In this case, a Notice or, if requested, a set of proxy materials has been forwarded to you by the organization that holds your shares. The organization holding your account is considered the stockholder of record for purposes of voting at the Annual Meeting. As the beneficial owner, you have the right to instruct that organization how to vote the shares held in your account. If you are a beneficial owner of shares held in “street name,” you need to submit voting instructions to your broker, bank or other nominee in order to cast your vote. The Notice that was mailed to you by that organization has specific instructions for how to submit your vote, or if you have received or requested a hard copy of this Proxy Statement you may mark, sign, date and mail the accompanying voting instruction form in the postage-paid envelope provided. Your vote is revocable by following the procedures outlined in this Proxy Statement. However, since you are not a stockholder of record you may not vote your shares virtually at the Annual Meeting without obtaining authorization from your broker, bank or other nominee. Whether or not you plan to attend the Annual Meeting virtually, we urge you to vote by following the voting instructions provided to you to ensure that your vote is counted. To vote virtually at the Annual Meeting, you must first obtain a legal proxy from your broker, bank or other agent and then register in advance to attend the Annual Meeting. After obtaining a legal proxy from your broker, bank or other agent, to then register to attend the Annual Meeting, you must submit proof of your legal proxy reflecting the number of your shares along with your name and email address to Equiniti. Requests for registration should be directed to proxy@equiniti.com or to facsimile number 718-765-8730. Written requests can be mailed to: +Equiniti Trust Company LLC +Attention: Proxy Tabulation Department +1110 Centre Pointe Curve Suite 101 +Mendota Heights, MN 55120 +Requests for registration must be labeled as “Legal Proxy” and be received no later than 5:00 p.m., Eastern Time, on March 31, 2026. You will receive a confirmation of your registration by email after we receive your registration materials. +Telephone and Internet voting for stockholders of record will be available up until 11:59 p.m. Eastern Time on April 13, 2026, and mailed proxy cards must be received by April 13, 2026 in order to be counted at the Annual Meeting. If the Annual Meeting is adjourned or postponed, these deadlines may be extended. The voting deadlines and availability of telephone and Internet voting for beneficial owners of shares held in “street name” will depend on the voting processes of the organization that holds your shares of Common Stock. Therefore, we urge you to carefully review and follow the voting instructions card and any other materials that you receive from that organization. +If you receive more than one Notice, it is because your shares are registered in more than one name or are registered in different accounts. Please follow the instructions on each Notice received to ensure that all of your shares of Common Stock are voted. +3 +“Broker Non-Votes” and Abstentions and their Effect on Proposals +A broker non-vote occurs when a broker, bank, trust or other nominee or custodian holding shares for a beneficial owner in “street name” does not vote the shares on a proposal because the nominee does not have discretionary voting power for a particular item and has not received instructions from the beneficial owner regarding voting. Brokers who hold shares for the accounts of their clients have discretionary authority to vote shares if specific instructions are not given, only with respect to “routine” items. +If your shares are held by a broker on your behalf and you do not instruct the broker as to how to vote your shares of Common Stock with regard to Proposals 1 and 2, the broker may not exercise discretion to vote for or against those proposals because each of these proposals are considered “non-routine” under applicable New York Stock Exchange (“ NYSE ”) rules. With respect to Proposal 3, the broker may exercise its discretion to vote for or against such proposal in the absence of your instruction. Broker non-votes are treated as not entitled to vote on a matter with respect to non-discretionary matters. +An abstention (i.e. if you or your broker mark “ABSTAIN” on a proxy or voting instruction form, or if a stockholder of record attends the Annual Meeting but does not vote (either before or during the Annual Meeting)) has the same effect as voting “AGAINST” Proposals 2 and 3. Votes that are withheld from a director’s election will not affect the outcome of Proposal 1. +Quorum Requirements for the Annual Meeting +The presence at the Annual Meeting, whether in person or by proxy, of stockholders holding a majority of the shares of Common Stock outstanding on the Record Date and entitled to vote at the meeting will constitute a quorum, permitting us to conduct our business at the Annual Meeting. On the Record Date, there were 162,051,526 shares of Common Stock issued and outstanding and entitled to be voted at the Annual Meeting. Abstentions and broker non-votes will be considered to be shares present at the Annual Meeting for purposes of constituting a quorum. +Votes Required to Approve Proposals and Board Recommendations +Proposal +Required Vote +Board +Recommendation +Treatment of +Abstentions +Broker Non-Votes +(1) To elect four Class I directors to the Board to serve until the 2027 annual meeting or until their successors are duly elected and qualified +Plurality of Votes Cast: The four nominees receiving the greatest number of votes cast in person or represented by proxy and entitled to vote on the matter 1 +“FOR” EACH NOMINEE +Abstentions are not applicable. If you “withhold” authority to vote with respect to the election of some or all of the nominees, your shares will not be voted with respect to those nominees indicated. Votes that are withheld have no effect on the outcome of this proposal +Broker non-votes have no effect on the outcome of this proposal +(2) To approve, on an advisory basis, the compensation of our named executive officers 2 +Affirmative vote of a majority of shares present in person or by proxy and entitled to vote on the matter +“FOR” +Abstentions have the effect of a vote against “AGAINST” +Broker non-votes have no effect on the outcome of this proposal +(3) To ratify the appointment of Deloitte as our independent registered public accounting firm for the fiscal year ending December 31, 2026 +Affirmative vote of a majority of shares present in person or by proxy and entitled to vote on the matter +“FOR” +Abstentions have the effect of a vote “AGAINST” +There will be no broker non-votes because brokers have discretion to vote on this proposal +(1) If any nominee receives a greater number of “withhold authority” than votes “for” his or her election in an uncontested election, where an uncontested election is any election of directors in which the number of nominees for election does not exceed the number of directors to be elected, then that nominee is required to tender his or her resignation, which the Board, upon the recommendation of the Nominating and Governance Committee, will decide to accept or decline. +(2) Because this stockholder vote is advisory, the vote will not be binding, but the Compensation Committee will review the voting results and take them into consideration when making future compensation decisions for our named executive officers. +4 +Revoking Your Proxy; Changing Your Vote +If you are a stockholder of record, you may revoke your proxy before the vote is taken at the Annual Meeting by: +• signing, dating and delivering a new proxy with a later date before the applicable deadline to our Corporate Secretary; +• attending virtually and voting virtually online at the Annual Meeting; or +• filing a written revocation with our Corporate Secretary. +If your shares are held in “street name,” you may submit new voting instructions by contacting your broker or other organization holding your shares. You may also vote virtually online at the Annual Meeting, which will have the effect of revoking any previously submit ted voting instructions, if you obtain a legal proxy from the organization that holds your shares. +Your last vote or proxy will be the vote or proxy that is counted. Your virtual attendance at the Annual Meeting will not automatically revoke your proxy. +Dissent and Appraisal Rights +No action is proposed at the Annual Meeting for which the laws of the State of Delaware or other applicable law provides a right of our stockholders to dissent and obtain appraisal of or payment for such stockholders’ Common Stock. +Solicitation Costs +The cost of preparing, assembling and mailing the proxy materials and of reimbursing brokers, nominees and fiduciaries for the out- of-pocket and clerical expenses of transmitting copies of the proxy materials to the beneficial owners of shares held of record by such persons, will be borne by the Company. The Company has retained D.F. King & Co., Inc. (“ D.F. King ”) to aid in the solicitation of proxies. It is estimated that the cost of D. F. King’s services will be approximately $11,500 plus expenses. In addition to the solicitation of proxies by mail, proxies may also be solicited by telephone, electronic communication, or personal communication by employees of D.F. King and the Company. +Voting Results +We plan to publish the voting results in a Current Report on Form 8-K, which we expect will be filed with the SEC within four business days following the Annual Meeting. +Management Q&A Session +Stockholders of record who have registered with their voting control number will be able to submit questions for the Annual Meeting’s question and answer session during the meeting through edge.media-server.com/mmc/p/azh3pr84 by referring to the “Questions Box” located at the right of their screen. +Technical Difficulties or Trouble Accessing the Annual Meeting +If you encounter any technical difficulties with accessing the audio webcast on the day of the Annual Meeting, contact the technical support team . Equiniti will also be present at the Annual Meeting and monitoring the webcast to assist with any issues. +Questions +You may call or contact our proxy solicitor, D.F. King, at (866) 342-4882 or via email at libertyenergy@dfking.com if you have any questions concerning this Proxy Statement. +5 +PROPOSAL 1 — ELECTION OF FOUR CLASS I DIRECTORS TO A ONE-YEAR TERM EXPIRING AT THE 2027 ANNUAL MEETING OF STOCKHOLDERS +Information about our Board +Our Board currently consists of 10 directors. At the Company’s 2025 annual meeting of stockholders (the “2025 Annual Meeting”), the Company’s stockholders approved the adoption of the Company’s Second Amended and Restated Certificate of Incorporation (the “A&R Charter”) to, among other things, remove the three separate classes of directors of the Board over a three-year phase-in period (the “Declassification Amendment”). The Declassification Amendment will be implemented as follows: (i) the current Class I directors will be elected at this Annual Meeting to serve for a term of one year, (ii) the current Class I and II directors will be elected at the 2027 annual meeting of stockholders to serve for a term of one year, and (iii) the current Class I, II and III directors will be elected at the 2028 annual meeting of stockholders to serve for a term of one year, at which time all directors will be elected to serve for one-year terms at all subsequent annual meetings of stockholders. Each director elected to the Board will hold office until his or her successor has been elected and qualified or until the earlier of their death, resignation, disqualification or removal. The current members of the classes of our Board are divided as follows: +♦ Class I (term expires at this Annual Meeting): Simon Ayat, Arjun Murti, Gale A. Norton, and Cary D. Steinbeck +♦ Class II (term expires at the 2027 annual meeting): Ken Babcock, Ron Gusek, and Alice Yake +♦ Class III (term expires at the 2028 annual meeting): Peter A. Dea, William F. Kimble, and James R. McDonald +To be elected, director nominees must receive a plurality of the votes cast by the holders of the shares entitled to vote in the election of directors at the Annual Meeting. Nonetheless, pursuant to the Corporate Governance Guidelines, in an uncontested election, any director nominee who receives a greater number of “WITHHOLD” votes than votes “FOR” his or her election (a “Majority Withheld Vote”) is required to tender his or her resignation to the Chair of the Nominating and Governance Committee within seven days following certification of the stockholder vote. The Nominating and Governance Committee must recommend to the Board whether to accept the resignation offer within 60 days of receiving the offer of resignation. The Board is required to consider and act on the recommendation within 30 days following receipt of the recommendation. +Unless otherwise instructed, the proxy holders will vote the proxies received by them for the four director nominees named below, all of whom are presently directors of the Company. In the event that any nominee is unable or declines to serve as a director at the time of the Annual Meeting, the proxies will be voted for any nominee who shall be designated by the present Board to fill the vacancy, unless the size of the Board is reduced. The proxies cannot be voted for a greater number of persons than the number of nominees named in this proxy statement. It is not expected that any nominee will be unable or will decline to serve as a director. Biographical information regarding each nominee is set forth below, as well as a summary of the experiences, qualifications, attributes or skills that caused the Board to determine that each nominee should serve as a director of the Company. Each nominee’s experience is evaluated in determining the overall composition of the Board. +Recent Changes and Developments regarding our Board +The A&R Charter adopted in 2025 provided for the declassification of our Board. For more information, see “ Information about our Board ” above. +On January 22, 2025 the Board determined to increase the size of the Board from nine directors to 10 directors and appointed Arjun Murti to fill the newly created vacancy. Mr. Murti was appointed as a Class I director with an initial term expiring at this Annual Meeting. +On February 3, 2025, Christopher A. Wright, our then-Chairman of the Board, Director, and Chief Executive Officer, was confirmed as the Secretary of Energy of the United States and resigned from his positions at the Company. In accordance with the Company’s succession plan, effective on February 3, 2025, the Board appointed (i) independent director William Kimble as the non-executive Chairman of the Board and (ii) Ron Gusek as the Company’s Chief Executive Officer and as a Class II director of the Board with an initial term expiring at the 2027 annual meeting of stockholders. +On August 26, 2025, Audrey Robertson resigned from the Board and was subsequently confirmed as the Assistant Secretary of Energy for Energy Efficiency and Renewable Energy at the Department of Energy of the United States. On October 16, 2025, the Board appointed Alice Yake to fill the vacancy resulting from Ms. Robertson’s resignation. Ms. Yake was appointed as a Class II director with an initial term expiring at the 2027 meeting of stockholders. +6 +DIRECTOR NOMINEES FOR ELECTION TO A ONE-YEAR TERM +SIMON AYAT +Age: 71 +Key Areas of Experience +Director Since: 2020 +INDEPENDENT +• Corporate Finance/Capital Markets +• Senior Management Experience (i.e. CEO/CFO) +• Oilfield Services +• Mergers & Acquisitions +• Legal/Regulatory +• Public Accounting +• Corporate Governance +• ESG +• HR/Compensation +• Investor Relations +• Risk Management +Mr. Ayat served as Senior Strategic Advisor to the Chief Executive Officer for SLB Limited (formerly known as Schlumberger N.V.) (“SLB”) from January 2020 until January 2022. From March 2007 until January 2020, he served as the Executive Vice President and Chief Financial Officer of SLB. Mr. Ayat has held several financial and operational positions in SLB, where he commenced his career in 1982. He was based in Paris, Houston and Dallas, as well as in the Middle East and Far East regions, serving as group treasurer, controller, geomarket manager for Indonesia and drilling regional vice president for Asia Pacific. Mr. Ayat is also a member of the board of directors and audit committee of Tenaris S.A., a manufacturer of pipes and related services for energy and industrial applications. He is a French and Lebanese citizen. Mr. Ayat was initially nominated to serve on our Board by SLB pursuant to a stockholders agreement that is no longer in effect. We believe Mr. Ayat’s extensive experience in the oilfield services industry and as the Chief Financial Officer of a publicly traded oilfield services company with international operations qualifies him for service on our Board. +ARJUN MURTI +Age: 56 +Key Areas of Experience +Director Since: 2025 +INDEPENDENT +• Exploration and Production +• Corporate Finance/Capital Markets +• ESG +• Mergers & Acquisitions +• Oilfield Services +Mr. Murti is currently a Partner at Veriten LLC, a private research, investment and strategy firm (“Veriten”), and a Senior Advisor at Warburg Pincus, a private equity firm. He previously was a Partner at Goldman Sachs (“GS”) from 2006 to 2014. Prior to becoming Partner at GS, he served as Managing Director from 2003 to 2006 and as Vice President from 1999 to 2003. During his time at GS, Mr. Murti worked as a sell-side equity research analyst covering the energy sector and was co-director of equity research for the Americas from 2012 to 2014. Previously, Mr. Murti held equity analyst positions at JP Morgan Investment Management from 1995 to 1999 and at Petrie Parkman from 1992 to 1995. Mr. Murti has been a member of the board of directors of ConocoPhillips since 2015 and serves on its audit and finance committee as chair, executive committee, and human resources and compensation committee. He also serves on the advisory boards of ClearPath and the Center on Global Energy Policy at Columbia University. Mr. Murti has a Bachelor of Science and Arts in Finance from the University of Denver. We believe that Mr. Murti’s extensive experience in the areas of finance, capital markets, and energy policy qualify him for service on our Board. +GALE NORTON +Age: 71 +Key Areas of Experience +Director Since: 2019 +INDEPENDENT +• Legal/Regulatory +• Corporate Governance +• ESG +Ms. Norton has been the President of Norton Regulatory Strategies, a consulting firm, since 2011. From 2007 to 2010, she served as General Counsel, Unconventional Oil, of Royal Dutch Shell, an international oil and natural gas company (“Shell”). Prior to joining Shell, Ms. Norton served as the Secretary of the Interior of the United States under President George W. Bush from 2001 until 2006 and as the Attorney General of the State of Colorado from 1991 until 1999. Ms. Norton is a director of American Transmission Company, a private company in the electric utility industry and she has been a Governance Fellow of the National Association of Corporate Directors. Ms. Norton holds Bachelor of Arts and Juris Doctorate degrees from the University of Denver. We believe that Ms. Norton’s experience as Attorney General of the State of Colorado and Secretary of the Interior of the United States qualifies her for service on our Board . +7 +CARY STEINBECK +Age: 54 +Key Areas of Experience +Director Since: 2018 INDEPENDENT +• Exploration and Production +• Mergers & Acquisitions +• Corporate Finance/Capital Markets +• Risk Management +Mr. Steinbeck has been a Managing Director at Shea Ventures, an investment firm, since October 2014. From 2007 to 2014, he served as a Managing Director at Oakmont Corporation, an investment firm. Mr. Steinbeck is a member of the board of directors of Liberty Resources LLC and served on the board of directors of Accretion Acquisition Corp. from October 2021 to December 2023. Mr. Steinbeck is a Chartered Financial Analyst® charterholder and has a Bachelor of Arts in Economics from the University of California, Santa Barbara, and a Master of Business Administration from the University of Southern California. We believe that Mr. Steinbeck’s experience in the private equity industry, energy sector investing experience, extensive board participation and understanding of financial markets provide valuable insights for our Company and qualify him for service on our Board. +Vote Required +The election of directors requires the affirmative vote of a plurality of the votes cast by the holders of the shares of Common Stock entitled to vote in the election. If you submit a signed proxy card but do not give voting instructions as to how your shares of Common Stock should be voted, your shares will be voted in accordance with the recommendations of our Board stated in this Proxy Statement. Broker non-votes will have no effect on the outcome of voting on director elections. +THE BOARD RECOMMENDS VOTING “ FOR ” THE ELECTION OF EACH DIRECTO R NOMINEE. +8 +DIRECTORS CONTINUING IN OFFICE +WILLIAM KIMBLE +Age: 66 +Key Areas of Experience +Director Since: 2018 INDEPENDENT +• Public Accounting +• Mergers & Acquisitions +• Legal/Regulatory +• Corporate Governance +• Risk Management +• Technology/Cybersecurity +Mr. Kimble has served on our Board since the initial public offering of our Common Stock (the “ IPO ”) and as non-executive Chairman of the Board since February 2025. He held the position of Lead Director from October 2018 until his appointment as non-executive Chairman. From 2009 until his retirement in 2015, Mr. Kimble served as the Office Managing Partner for the Atlanta office and Managing Partner - Southeastern United States at KPMG LLP (“ KPMG ”), one of the largest audit, tax and advisory services firms in the world. Mr. Kimble was also responsible for moderating KPMG’s Audit Committee Institute and Audit Committee Chair Sessions. Until his retirement, Mr. Kimble had been with KPMG or its predecessor firm since 1986. During his tenure with KPMG, Mr. Kimble also held numerous senior leadership positions, including Global Chairman of Industrial Markets. Mr. Kimble served as KPMG’s Energy Sector Leader for 10 years and was the executive director of KPMG’s Global Energy Institute. Mr. Kimble serves on the board of directors and is the chair of the audit committee of Northern Oil and Gas, Inc. Mr. Kimble also served on the board of directors, the special committee, and was chair of the audit committee of DCP Midstream, LP from June 2015 until October 2023. Mr. Kimble has a Bachelor of Accounting and Business Administration from Southern Methodist University. We believe that Mr. Kimble’s extensive accounting background and his experience as a director of public companies qualify him for service on our Board. +PETER DEA +Age: 72 +Key Areas of Experience +Director Since: 2018 INDEPENDENT +• Exploration and Production +• Senior Management Experience (i.e. CEO/CFO) +• Mergers & Acquisitions +• ESG +• HR/Compensation +• Investor Relations +• Corporate Governance +• Risk Management +Mr. Dea was the Executive Chairman of Confluence Resources LP (“ Confluence ”) from September 2016 to September 2025. Mr. Dea served as the President and Chief Executive Officer of Cirque Resources LP (“ Cirque ”) from May 2007 to December 2025. Both Confluence and Cirque were private oil and gas companies. From November 2001 through August 2006, Mr. Dea was President and Chief Executive Officer and a director of Western Gas Resources, Inc. (“ Western Gas ”). Mr. Dea joined Barrett Resources Corporation (“ Barrett ”) in November 1993 and served as Chief Executive Officer and director from November 1999 and as Chairman from February 2000 through August 2001. Western Gas and Barrett were public oil and gas companies. Prior to that, Mr. Dea served in several geologic positions with Exxon Company, U.S.A. Mr. Dea currently serves as the Chairman of the Board of Ovintiv Inc. and has served as a director of Antero Midstream Corporation since the closing of its simplification transaction in March 2019. Prior to the simplification, Mr. Dea served as a director of the general partner of Antero Midstream GP LP beginning in April 2018. Mr. Dea has a Bachelor of Arts in Geology from Western State Colorado University and a Masters of Science in Geology from the University of Montana. Mr. Dea also attended the Harvard Business School, Advanced Management Program. We believe that Mr. Dea’s extensive oil and gas exploration and production experience and involvement in state and national energy policies qualify him for service on our Board. +9 +JAMES MCDONALD +Age: 47 +Key Areas of Experience +Director Since: 2020 INDEPENDENT +• Technology/Cybersecurity +• Oilfield Services +• Marketing/Sales +• Investor Relations +• HR/Compensation +Mr. McDonald has been Senior Vice President of Investor Relations for SLB, an international oilfield services and technology company, since April 2023. Previously, he served as President Americas Land of SLB, overseeing onshore operations in North and South America, from June 2020 to April 2023. Previously, he served as President of Well Services running SLB’s global stimulation, coiled tubing intervention, cementing and offshore vessel operations. In addition, Mr. McDonald held multiple leadership roles in line management, operations, quality and safety, and business development at SLB over the past 20 plus years. His assignments spanned North and South America, North Africa and the Middle East in both land and offshore environments that included unconventional and deep water. Mr. McDonald graduated from the Massachusetts Institute of Technology with a degree in chemical engineering. He is actively engaged within the energy industry and community, and currently serves on the Board of Directors of Permian Strategic Partnership, the Energy Workforce and Technology Council, and he is on the Upstream and Service Supply and Technology Committees of the American Petroleum Institute. Mr. McDonald was initially nominated to serve on our Board by SLB pursuant to a stockholders agreement that is no longer in effect. We believe Mr. McDonald’s extensive experience in the oilfield services industry qualifies him for service on our Board. +KEN BABCOCK +Age: 69 +Key Areas of Experience +Director Since: 2018 +INDEPENDENT +• Technology/Cybersecurity +• Senior Management Experience (i.e. CEO/CFO) +• Oilfield Services +• Mergers & Acquisitions +• Marketing/Sales +• HR/Compensation +Mr. Babcock served as the Chief Executive Officer of Abaco Energy Technologies LLC (“Abaco”), a private Houston-based portfolio company of Riverstone Holdings LLC, an energy-focused private equity firm, until Abaco’s acquisition in January 2026. Abaco was formed in 2013 to focus on opportunities in manufacturing and services related to North American drilling, completion, and production, and associated infrastructure. Prior to joining Abaco, Mr. Babcock was the President and Chief Executive Officer of Titan Specialties, Ltd. (“Titan”) from 2008 until its sale to Hunting PLC in September 2011. Following the sale, Mr. Babcock remained at Titan until June 2012. Prior to joining Titan, from 2005 until 2008, Mr. Babcock served as President and Chief Executive Officer of International Logging, Inc. (“ILI”) where he took a narrowly-focused mud logging company of over 300 employees to a diverse well site services organization of over 1,800 employees spread over 60 countries in a little over two years. Prior to joining ILI, Mr. Babcock was Director of Strategic Sales at Baker Hughes INTEQ and Vice President of Business Development at Noble Technology Services. Mr. Babcock began his career with EXLOG in 1980. Mr. Babcock has a Bachelor of Science in Geology from Florida State University. We believe that Mr. Babcock’s strong business leadership experience qualifies him for service on our Board . +10 +RON GUSEK +Age: 54 +Key Areas of Experience +Director Since: 2025 +• Exploration and Production +• Technology/Cybersecurity +• Senior Management Experience (i.e. CEO/CFO) +• Oilfield Services +• Risk Management +• ESG +• Marketing/Sales +• HR/Compensation +• Investor Relations +• Power Generation/Distribution +Mr. Gusek has served as the Company’s Chief Executive Officer since February 2025 and has been President since 2016. He served as the Company’s Vice President of Technology and Development of the Company’s predecessor from 2014 until his promotion to President in 2016. From 2011 to 2014, Mr. G usek served as Vice President, Corporate Engineering and Technology of Sanjel Corporation, a global energy service company. Prior to joining Sanjel Corporation, from 2009 to 2011, Mr. Gusek was Director of Engineering for Zodiac Exploration, an oil and natural gas exploration and production company working in the central San Joaquin valley in California. From 2003 to 2008, Mr. Gusek was the Canadian Regional Manager of Pinnacle Technologies. Mr. Gusek has a Bachelor of Science in Mechanical Engineering from the University of Alberta. We believe that Mr. Gusek’s experience leading our growth during his tenure as our President, and now Chief Executive Officer, and his extensive experience in the hydraulic fracturing services industry, including technical expertise, qualifies him for service on our Board. +ALICE YAKE +Age: 47 +Key Areas of Experience +Director Since: 2025 +INDEPENDENT +• Power Generation/Distribution +• Technology/Cybersecurity +• Senior Management Experience (i.e. CEO/CFO) +• Legal/Regulatory +• Investor Relations +• ESG +• Risk Management +Ms. Yake began serving as VP – Grid Modeling Initiative of Breakthrough Energy in April 2025. Previously, Ms. Yake served as Senior Vice President, System Strategy and Chief Planning Officer at Xcel Energy Inc. (NASDAQ: XEL), a major U.S. electricity and natural gas company, from June 2022 to March 2025. From May 2018 to June 2022, she served as President of Xcel Energy - Colorado. From September 2016 to May 2018, she served as Associate Vice President of Strategic Revenue Initiatives at Xcel Energy Inc. She is a member of the board of directors of XOS, Inc. Ms. Yake also is the former chair of the board of directors of the Smart Electric Power Alliance, and sits on the boards of the Denver Museum of Nature and Science, Mile High United Way, Colorado Concern, and formerly on the American Red Cross CO/WY Chapter. Ms. Yake received a B.S. in Management Information Systems from Texas A&M University and completed the Harvard Business School Program for Leadership Development. We believe Ms. Yake’s significant energy infrastructure and power generation experience qualifies her for service on our Board. +11 +THE BOARD AND ITS COMMITTEES +THE BOARD +Composition of the Board +Our Board consists of 10 members, including our Chief Executive Officer. At the Company’s 2025 Annual Meeting, the Company’s stockholders approved the adoption of the A&R Charter to, among other things, remove the three separate classes of directors of the Board over a three-year phase-in period. For more information, see the section titled “ Information about our Board .” +In evaluating director candidates, we, through the Nominating and Governance Committee of the Board (the “ Nominating and Governance Committee ”), review the following criteria when assessing director candidates: +✓ relevant skills, qualifications and experience; +✓ independence under applicable standards; +✓ qualifications to serve on Board committees and, as appropriate, serve as a committee chairperson; +✓ business judgment; +✓ service on boards of directors of other companies; +✓ personal and professional integrity; +✓ openness and willingness to work as part of a team; +✓ willingness to commit the required time to serve as a Board member; and +✓ familiarity with the Company and its industry. +Board Diversity and Summary of Director Core Skills +The diversity of experience and range of competencies, qualifications and viewpoints of each director on our Board embody key abilities that our Nominating and Governance Committee considers valuable to effective oversight of the Company. The Nominating and Governance Committee values a range of talents, ages, skills, experiences, diversity, and expertise sufficient to provide sound and prudent guidance with respect to the Company’s strategic and operational objectives, and further believes that gender and ethnic diversity can be one way to accomplish diversity of thought while still maintaining a Board that is adequately qualified to discharge its duties. Presently, 50% of our Board is comprised of members representing gender and ethnic diversity with: +✓ two Board members being female; and +✓ three additional Board members being ethnically diverse. +We believe that our director nominees are able to provide a well-rounded set of expertise that will assist in effective oversight of management at the Company. The matrix below identifies the core skills, primary competencies and other attributes that each director brings forth in their service to our Board and committees. The lack of an indicator for a particular item does not mean that the director does not possess that qualification, skill or experience in general. The indicator merely represents a core skill that the director brings to our Board. Furthermore, each director possesses other competencies not identified below. We believe identifying primary skills is a more meaningful presentation of the key contributions and value that each director brings to their service on the Board and to our stockholders. For more information about each director, see the individual biographies set forth above. +12 +Ayat +Babcock +Dea +Gusek +Kimble +McDonald +Murti +Norton +Steinbeck +Yake +Exploration and Production +✓ +✓ +✓ +✓ +Technology/Cybersecurity +✓ +✓ +✓ +✓ +✓ +Corporate Finance/Capital Markets +✓ +✓ +✓ +Senior Management Experience (i.e. CEO/CFO) +✓ +✓ +✓ +✓ +✓ +Oilfield Services +✓ +✓ +✓ +✓ +✓ +Power Generation/Distribution +✓ +✓ +Public Accounting +✓ +✓ +Mergers & Acquisitions +✓ +✓ +✓ +✓ +✓ +✓ +✓ +Legal/Regulatory +✓ +✓ +✓ +Corporate Governance +✓ +✓ +✓ +✓ +ESG +✓ +✓ +✓ +✓ +✓ +✓ +Marketing/Sales +✓ +✓ +✓ +HR/Compensation +✓ +✓ +✓ +✓ +✓ +Investor Relations +✓ +✓ +✓ +✓ +✓ +Risk Management +✓ +✓ +✓ +✓ +✓ +✓ +Board Leadership Structure and Role in Risk Oversight +Our Board does not have a policy regarding separation of the roles of Chief Executive Officer and Chairman of the Board (the “ Chairman ”). In accordance with the Corporate Governance Guidelines, the Board periodically reassesses the separation of the roles of Chief Executive Officer and Chairman. In connection with Mr. Wright’s resignation from his positions as Chairman, Director and Chief Executive Officer due to his appointment as the Secretary of Energy of the United States, the Board appointed Mr. Kimble to serve as the non-executive Chairman, effective February 3, 2025. As the non-executive Chairman, Mr. Kimble presides at executive sessions of the non-management directors among other responsibilities, including chairing the meetings of our Board and stockholders. Our Board believes that this structure, combined with our corporate governance policies and processes, creates an appropriate balance between strong and consistent leadership and independent oversight of our business. Additionally, this structure allows our Chief Executive Officer to focus on executing our business strategy, enhancing our operational excellence, furthering our leading technological innovation, and engaging with our stakeholders. Meanwhile, our non-executive Chairman can focus on leading the Board, ensuring that it provides strong oversight of management and that all directors are well-positioned to discharge their duties appropriately. +The Board is responsible for overseeing that the risk management processes designed and implemented by our management are functioning as intended, and that steps are taken by management to identify and mitigate significant and emerging risks to the Company. Risk is inherent with every business, and how well a business manages risk can ultimately determine its success. We face a number of risks, including those described under “ Risk Factors ” in our Annual Report on Form 10-K for the year ended December 31, 2025. Our Board is actively involved in oversight of risks that could affect us. This oversight is conducted by the Board, which has responsibility for general oversight of risks, but the Audit Committee of the Board (the “ Audit Committee ”) assists the Board in fulfilling such oversight responsibilities. Risk assessment and oversight are an integral part of our governance and management processes. The Board encourages management to promote a culture that incorporates risk management into our corporate strategy and day-to-day business operations. Management discusses strategic and operational risks at regular management meetings and conducts a specific strategic session during the year that includes a focused discussion and analysis of the risks facing the Company. Throughout the year, senior management reviews risks with the Board at regular Board meetings as part of management presentations that focus on the Company’s overall operations and presents the steps taken by management to mitigate or eliminate such risks. +The Board does not have a standing risk management committee, but rather administers this oversight function through the Audit Committee and the Board as a whole. The Board is responsible for monitoring and assessing strategic risk exposure, and the Audit Committee assists the Board in fulfilling such oversight responsibilities by overseeing our major risk exposures, including significant financial, information technology, and cybersecurity risks, and the steps our management has taken to monitor and control these exposures. The Audit Committee also monitors compliance with legal and regulatory requirements and considers and approves or disapproves any related-person transactions. +Our Board periodically reviews its governance and committee structure to ensure that it continues to meet the Company’s needs. +Director Independence and Family Relationships +The Company’s standards for determining director independence require the assessment of directors’ independence each year. A director cannot be considered independent unless the Board affirmatively determines that he or she does not have any relationship with +13 +management or the Company that may interfere with the exercise of his or her independent judgment, including any of the relationships that would disqualify the director from being independent under the rules of the NYSE. +The Board has assessed the independence of each non-employee director under the independence standards of the NYSE. The Board has determined that each of Messrs. Ayat, Babcock, Dea, Kimble, McDonald, Murti and Steinbeck and Mses. Norton and Yake is considered independent under the NYSE rules. In connection with its assessment of the independence of each non-employee director, the Board also determined that Messrs. Ayat, Babcock, Dea, Kimble, McDonald, Murti and Steinbeck and Mses. Norton and Yake are independent as defined in Section 10A-3 of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”) and under the standards set forth by the NYSE applicable to members of the Audit Committee. Furthermore, none of our directors or officers have any family relationship with any director or other officers. “Family relationship” for this purpose means any relationship by blood, marriage or adoption, not more remote than first cousin. +BOARD COMMITTEES +Overview +Our Board has established an Audit Committee, a Compensation Committee of the Board (the “ Compensation Committee ”) and a Nominating and Governance Committee as further detailed herein. The below chart sets forth the members and chairperson of each Board committee. +Name +Audit Committee +Compensation Committee +Nominating and +Governance Committee +William F. Kimble+ +* +• +Cary D. Steinbeck +• +• +Peter A. Dea +* +• +Ken Babcock +• +Gale A. Norton +• +* +Simon Ayat +• +James R. McDonald +• ++ +Non-Executive Chairman of the Board   *   Chairperson +•   Member +Audit Committee +Rules implemented by the NYSE and the SEC require us to have an Audit Committee comprised of at least three directors who meet the independence and experience standards established by the NYSE and the Exchange Act. Our Audit Committee currently consists of four directors, all of whom are independent under the rules of the SEC and the standards set forth by the NYSE applicable to members of an Audit Committee. Messrs. Ayat, Kimble and Steinbeck and Ms. Norton are the members of our Audit Committee with Mr. Kimble serving as the chairperson. Each member of our Audit Committee is financially literate, and our Board has determined that Mr. Kimble qualifies as an “audit committee financial expert” as defined in applicable SEC rules. +The Audit Committee oversees, reviews, acts on and reports on various auditing and accounting matters to our Board, including: the selection of our independent accountants, the scope of our annual audits, fees to be paid to the independent accountants, the performance of our independent accountants and our accounting practices. The general purpose of our Audit Committee is to assist the Board in oversight responsibilities regarding the integrity of the Company’s financial statements, compliance with legal and regulatory requirements, performance of the independent registered public accounting firm engaged by the Company and the effectiveness of the Company’s internal audit functions. The Audit Committee is also responsible for oversight of the Company’s information technology and cybersecurity risks. The Audit Committee operates under an Audit Committee charter that defines the committee’s primary duties in a manner consistent with the rules of the SEC and the NYSE. A current copy of the Audit Committee charter can be found on our website, www.libertyenergy.com , by first clicking “ Investors ” then “ Corporate Governance ” and proceeding to “ Governance Documents .” +Compensation Committee +Our Compensation Committee currently consists of four directors: Messrs. Dea, Babcock, McDonald, and Steinbeck with Mr. Dea serving as the chairperson. Our Compensation Committee establishes salaries, incentives and other forms of compensation for the Board, executive officers, and other senior officers. Our Compensation Committee also assists the Board with the administration and oversight of our incentive compensation and benefit plans, our compensation recovery policy, and our stock ownership guidelines. The Compensation Committee has the authority to delegate to its chairperson or any one of its members the responsibility and authority for any particular matter, as it deems appropriate from time to time under the circumstances. The Compensation Committee operates under +14 +a Compensation Committee charter that defines the committee’s primary duties. A current copy of the Compensation Committee charter can be found on our website, www.libertyenergy.com , by first clicking “ Investors ” then “ Corporate Governance ” and proceeding to “ Governance Documents .” +The Board has determined that all directors on the Compensation Committee are independent under the standards set forth by the NYSE and under the Exchange Act. +Nominating and Governance Committee +Our Nominating and Governance Committee currently consists of three directors: Ms. Norton and Messrs. Kimble and Dea with Ms. Norton serving as the chairperson. The Nominating and Governance Committee operates under a Nominating and Governance Committee charter that defines the committee’s primary duties. A current copy of the Nominating and Governance Committee charter can be found on our website, www.libertyenergy.com , by first clicking “ Investors ” then “ Corporate Governance ” and proceeding to “ Governance Documents .” +Our Nominating and Governance Committee oversees our corporate governance framework, including identifying, evaluating and recommending qualified nominees to serve on our Board. Our Nominating and Governance Committee also develops and oversees our corporate governance processes, including the annual performance evaluation of the Board and its committees, and of senior management, evaluating director independence, and develops, reviews and recommends to the Board any changes to the Corporate Governance Guidelines and other applicable governance policies. +The Board and the Nominating and Governance Committee believe the skills, qualities, attributes, and experience of our directors provide our Company with business acumen and a diverse range of perspectives to effectively address our evolving needs and represent the best interests of our stockholders. +When identifying director nominees, the Nominating and Governance Committee considers and reviews the following criteria: the candidate’s relevant skills, qualifications and experience; independence under applicable standards; qualifications to serve on Board committees and, as appropriate, serve as a committee chairperson; business judgement; service on boards of directors of other companies; personal and professional integrity; openness and ability to work as part of a team; willingness to commit to the required time to serve as a member of the Board; and familiarity with the Company and its industry. Additionally, when considering the recommendation to the Board that an existing director be nominated for election at an annual meeting of stockholders, the Nominating and Governance Committee will consider and review: the past Board and committee meeting attendance and performance, the length of Board service, the personal and professional integrity, the relevant experience, skills, qualifications and contributions that the existing director brings to the Board and their independence under the applicable standards. +The Nominating and Governance Committee will consider suggestions from any source, particularly from stockholders, regarding possible candidates for director; provided, however , that in order for such stockholder recommendation to be considered, the recommendations must comply with the procedures outlined under “ Stockholder Proposals ” below. +The Board has determined that all directors on the Nominating and Governance Committee are independent under the standards set forth by the NYSE. +MEETING ATTENDANCE OF THE BOARD AND BOARD COMMITTEES +During 2025, the Board and its committees regularly met on a set schedule as set forth in the following table. Additionally, the Board and its committees acted by written consent from time to time, as appropriate. The Board and its committees held no special meetings during 2025. +Regularly +Scheduled +Meetings +Special +Meetings +Total +Meetings +Board of Directors +5 +0 +5 +Audit Committee +8 +0 +8 +Compensation Committee +4 +0 +4 +Nominating and Governance Committee +3 +0 +3 +At each Board meeting, time is reserved for the independent directors to meet in executive session without the Chief Executive Officer present. Furthermore, executive officers regularly attend Board meetings to present information to our Board on our business and strategy. From time to time between meetings, Board and committee members confer with each other and with management and independent consultants regarding relevant issues, and representatives of management may meet with such consultants on behalf of the relevant committee. +15 +Each director participated, whet her in person or by telephone or videoconference, in at least seventy-five percent (75%) of all meetings of the Board and the committees of which such director is a member. There is no formal policy as to director attendance at the Annual Meeting, but the Corporate Governance Guidelines encourage directors to attend. Each director who was serving at the time of the 2025 Annual Meeting attended such meeting. +CORPORATE CODE OF BUSINESS CONDUCT AND ETHICS +Our Board has adopted a Corporate Code of Business Conduct and Ethics (the “ Ethics Code ”) applicable to our employees, directors and officers, in accordance with applicable U.S. federal securities laws and the corporate governance rules of the NYSE. Any waiver of the Ethics Code may be made only by our Board or a Board committee and will be promptly disclosed as required by applicable SEC laws and the corporate governance rules of the NYSE. A current copy of the Ethics Code can be found on our website, www.libertyenergy.com , by first clicking “ Investors ” then “ Corporate Governance ” and proceeding to “ Governance Documents ,” and is available in print to any stockholder who requests it. We intend to post any waiver of our Ethics Code or substantive amendments to the Ethics Code to our website. +CORPORATE GOVERNANCE GUIDELINES +Our Board has adopted the Corporate Governance Guidelines in accordance with the corporate governance rules of the NYSE that serve as a framework within which our Board and committees operate. These guidelines cover matters including, but not limited to, the composition of our Board, Board membership criteria and qualifications, director responsibilities, meetings of the Board and non-management directors, Board committees, director access to management and independent advisors, director compensation, and evaluation of management and management succession planning. A current copy of the Corporate Governance Guidelines can be found on our website, www.libertyenergy.com , by first clicking “ Investors ” then “ Corporate Governance ” and proceeding to “ Governance Documents ,” and is available in print to any stockholder who requests it. +DIRECTOR RESIGNATION POLICY +Our director resignation policy is set forth within the Corporate Governance Guidelines. To be elected, director nominees must receive a plurality of the votes cast by the holders of the shares entitled to vote in the election of directors at the Annual Meeting. However, in an uncontested election, any director nominee who receives a Majority Withheld Vote is required to tender his or her resignation to the Chair of the Nominating and Governance Committee within seven days following certification of the stockholder vote. The Nominating and Governance Committee must recommend to the Board whether to accept the resignation offer within 60 days of receiving the offer of resignation. The Board is required to consider and act on the recommendation within 30 days following receipt of the recommendation. +COMPENSATION RECOVERY POLICY +Our Compensation Recovery Policy provides that incentive-based compensation paid to our current and former executive officers may be recovered in the event of a restatement of our financial results. In connection with any such restatement, the Compensation Committee may seek recovery of any erroneously awarded incentive compensation paid within a three-year lookback period, including payments under the annual cash incentive program and payments and grants under the long-term incentive plan, by reimbursement, cancellation, forfeiture, and/or offset. +COMMUNICATION WITH THE BOARD +The Board welcomes communications from the Company’s stockholders and other interested parties. Stockholders and any other interested parties may send communications to the Board, any committee of the Board, the Chairman or any other director to: +Liberty Energy Inc. +c/o Corporate Secretary +950 17th Street, Suite 2400 +Denver, Colorado 80202 +Stockholders and any other interested parties should mark the envelope containing each communication as “Stockholder Communication with Directors” and clearly identify the intended recipient(s) of the communication. The Company’s Corporate Secretary or other officer as designated by the Board, will review each communication received from stockholders and other interested parties and will forward the communication, as expeditiously as reasonably practicable, to the addressees if the communication falls within the scope of matters generally considered by the Board. To the extent the subject matter of a communication relates to matters that have been delegated by the Board to a committee or to an executive officer of the Company, then the Company’s Corporate Secretary may forward the communication to the executive officer or chairperson of the committee to which the matter has been delegated. The acceptance and forwarding of communications to the members of the Board or an executive officer does not imply or create any fiduciary duty of the Board members or executive officer to the person submitting the communications. +16 +STOCKHOLDER ENGAGEMENT +We believe that regular dialogue with, and accountability to, our stockholders is critical to our success and value creation. Our management team participates in investor meetings throughout the year to discuss our business and strategic priorities and financial performance. These meetings include in-person, telephone and webcast engagements, as well as investor conferences. The feedback obtained through such engagement provides our Board and management with valuable insights on our business strategy and performance, technological innovation, corporate responsibility, executive compensation, sustainability initiatives, and many other topics of interest to our stockholders. +COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION +The members of the Compensation Committee are set forth above. During 2025, our last completed fiscal year, none of our executive officers served on the board of directors or compensation committee of a company that had an executive officer that served on our Board or Compensation Committee. Further, no member of our Board was an executive officer of a company in which one of our executive officers served as a member of the board of directors or compensation committee of that company. +17 +EXECUTIVE OFFICERS +The following sets forth certain information with respect to the executive officers of the Company as of February 18, 2026. +Name +Age +Position(s) +Ron Gusek +54 +Director, Chief Executive Officer, and President +Michael Stock +64 +Chief Financial Officer and Treasurer +R. Sean Elliott +51 +Chief Legal Officer and Corporate Secretary +Ryan T. Gosney +52 +Chief Accounting Officer and Vice President of Finance +Ron Gusek – Director, Chief Executive Officer, and President . See “ Proposal 1 – Election of Directors – Directors Continuing in Office ” above for information regarding Mr. Gusek. +Michael Stock – Chief Financial Officer and Treasurer. Michael Stock has served as our Chief Financial Officer since December 2016, our Treasurer since March 2018 and as the Chief Financial Officer of our predecessor company from April 2012 until our IPO. Mr. Stock served as a director of the Company from December 2016 up until January 2018 and resigned upon completion of our IPO. From 2009 to 2012, he was employed by TAS Energy Inc., an industrial energy technology company. During his tenure, he served as Chief Financial Officer and was a key part of the raising of equity from leading investment groups including Kleiner Perkins, Element Partners, Natural Gas Partners and Credit Suisse. From 1997 to 2009, Mr. Stock served as Chief Financial Officer for Pinnacle Technologies. +R. Sean Elliott – Chief Legal Officer and Corporate Secretary. Sean Elliott has been our Chief Legal Officer since January 2023 and prior to that was Vice President and General Counsel since March 2017. He has also served as our Corporate Secretary since 2018. Between September 2016 and March 2017, Mr. Elliott worked as Assistant General Counsel at USAA Real Estate Company, a real estate investment firm. Between June 2015 and September 2016, Mr. Elliott served as Counsel at Haynes and Boone, LLP, an international corporate law firm. Between November 2007 and May 2015, Mr. Elliott served as Vice President, General Counsel, Corporate Secretary and Chief Compliance Officer of CARBO Ceramics Inc., an oilfield services production enhancement company. Mr. Elliott has a Bachelor of Arts in Economics and Business Administration from Austin College and a Doctor in Jurisprudence degree from the University of Texas at Austin. +Ryan T. Gosney – Chief Accounting Officer and Vice President of Finance. Ryan Gosney has been our Chief Accounting Officer since March 2017 and Vice President of Finance since January 2025. Between July 2016 and February 2017, Mr. Gosney served as the Chief Accounting Officer of Vantage Energy Inc. (“ Vantage ”), an oil and gas exploration and production company. Prior to joining Vantage, Mr. Gosney served as Chief Financial Officer for Dorado E&P Partners, LLC, an oil and gas company, from January 2012 to January 2016. Mr. Gosney began his career as an auditor with Arthur Andersen, LLP in September 1995 where he served in increasing roles of responsibility up to Audit Manager until June 2002. Mr. Gosney has also served as Controller for Patina Oil & Gas Corporation from October 2002 to October 2005 and Delta Petroleum Corporation from October 2005 to January 2012. Mr. Gosney has a Bachelor of Business Administration from Texas Christian University. +18 +COMPENSATION DISCUSSION & ANALYSIS +This Compensation Discussion & Analysis provides information about our rationale and policies with regard to the compensation of our principal executive officer, principal financial officer and our three other most highly-compensated executive officers (our “ Named Executive Officers ” or “ NEOs ”) for 2025 and is intended to provide investors with the material information necessary for understanding our compensation policies and decisions regarding our Named Executive Officers as well as providing context for the tabular disclosure provided in the executive compensation tables below. Our Named Executive Officers for 2025 include: +Name +Title +Christopher A. Wright (1) +Former Chairman of the Board and Former Chief +Executive Officer +Michael Stock +Chief Financial Officer and Treasurer +Ron Gusek (2) +Director, Chief Executive Officer and President +R. Sean Elliott +Chief Legal Officer and Corporate Secretary +Ryan T. Gosney +Chief Accounting Officer and Vice President +of Finance +(1) Mr. Wright resigned as Chairman of the Board and Chief Executive Officer effective February 3, 2025 in connection with his confirmation as Secretary of the United States Department of Energy, as previously disclosed in the Company’s Current Report on Form 8-K filed on November 19, 2024. +(2) Mr. Gusek was appointed Chief Executive Officer effective February 3, 2025 in connection with the resignation of Mr. Wright as described in the above footnote. +2025 Compensation Overview +The Compensation Committee recommended, and the Board approved, the following compensation-related actions for our Named Executive Officers for fiscal year 2025, further detailed below: +• Base Salaries : The 2025 base salaries for each Named Executive Officer were increased in response to marketplace pay incr eases. +• Annual Incentive Awards : The bonus target criteria for annual incentive awards were the same used in 2024 based on the achievement of specific Company performance objectives. +• Long-Term Incentive Compensation : The long-term incentive compensation included both time-based awards, vesting ratably over a three-year period, and performance-based awards, with three-year cliff vesting. +Leadership Changes +On February 3, 2025, Christopher A. Wright, our then-Chairman of the Board, Director, and Chief Executive Officer, was confirmed as the Secretary of Energy of the United States and resigned from his positions at the Company. In accordance with the Company’s succession plan, effective on February 3, 2025, the Board appointed independent director William Kimble as the Company’s non-executive Chairman of the Board and Ron Gusek as the Company’s Chief Executive Officer and as a Class II director of the Board with an initial term expiring at the 2027 annual meeting of stockholders. +In response to this appointment, the Compensation Committee considered whether to utilize the provisions of our LTIP (as defined below), as approved by our stockholders in 2024, to accelerate Mr. Wright’s then outstanding time-based and performance-based RSUs. In making this decision, the Compensation Committee considered: +• the very unique circumstances presented by Mr. Wright’s appointment as Secretary of Energy; +• Mr. Wright’s nearly 14 years of successful and distinguished service and contributions as a founder and leader of the Company, including his service as Chief Executive Officer and Chairman of the Board; and +• Mr. Wright’s departure was the result of his willingness to serve his country and enter into public service. +Moreover, the three-year performance period for Mr. Wright’s 2022 time-based and performance-based RSUs, which comprised over half of the overall fair value of the accelerated awards, had already been completed as of December 31, 2024 and the service condition had been substantially completed with less than two months remaining until vesting. Furthermore, the 2023 and 2024 awards were vested at target despite such awards trending at performance levels in excess of target. +Based on these factors, the Compensation Committee approved the accelerated vesting of the remaining unvested time-based and performance-based RSUs previously awarded to Mr. Wright pursuant to the LTIP. This accelerated vesting became effective February 3 , 2025 commensurate with Mr. Wright’s ratification and confirmation by the United States Senate as Secretary of Energy of the United States. +19 +2025 Say on Pay +At our 2025 Annual Meeting, our stockholders were asked to approve, on a non-binding, advisory basis, the compensation of our Named Executive Officers, as reported in our 2025 proxy statement (“ Say on Pay ”). In 2025, our stockholders overwhelmingly approved the compensation of our Named Executive Officers, with more than 98% of the votes cast in favor of such practices, continuing our track record of having received over 98% stockholder approval in each of our annual Say on Pay advisory votes held since our IPO in 2018. The Compensation Committee and the Board viewed the results of the Say on Pay vote and, given the strong stockholder support for the compensation of our Named Executive Officers in 2025, believe that no significant changes to our compensation program were warranted as a result of this vote. As discussed in more detail in “ Proposal 2: Advisory Vote to Approve the Compensation of the Company’s Named Executive Officers ,” the Board has recommended that stockholders vote, on a non-binding advisory basis, to approve the compensation of our Named Executive Officers, as described below. +Compensation Best Practices +The Company’s compensation program has been designed to support a strong governance model. Key elements of the program in support of this objective are set forth in the chart below: +What We Do +What We Don’t Do +✓ +Determine annual incentive compensation with the majority of the potential payment based upon the achievement of pre-established performance goals +x +No excise tax gross ups +x +No “single trigger” severance upon a change of control +x +No excessive perquisites +✓ +Generally target the market median for total compensation +x +No short-term or speculative trading of Company stock +✓ +Use an independent compensation consultant +x +No re-pricing of incentive awards +✓ +Hold executive sessions of the Compensation Committee without management present +x +x +No supplemental retirement plans +No guaranteed bonuses or uncapped incentives +✓ +Compensation Committee comprised solely of +independent directors +x +x +No payment of dividends on unvested stock awards +Ban on hedging or pledging of Company stock +✓ +Base a portion of the long-term incentives upon our performance relative to peers +✓ +Apply Stock Ownership Guidelines for executive officers and Board members +✓ +Manage incentive compensation overpayment risk through compensation recovery/clawback policy +✓ +“Double trigger” severance upon a change of control +✓ +Significant portion of total target compensation for NEOs is performance-based or at risk +Process for Setting Compensation and Role of Compensation Consultant +At the beginning of each year, the Compensation Committee engages an independent executive compensation consulting firm in order to provide independent and objective market compensation data, conduct compensation analysis, recommend plan design changes and advise on compensation related risks. The Compensation Consultant (as defined below) acts solely on behalf of the Compensation Committee and not on behalf of the Company’s management team. During 2025, the Compensation Committee engaged CBIZ Inc. as compensation consultants (the “ Compensation Consultant ”). The Compensation Consultant compiles compensation surveys for review by the Compensation Committee and management. After review of the Compensation Consultant’s surveys, management provides recommendations of compensation for our Named Executive Officers to the Compensation Committee. Such recommendations are generally based upon the guidance of the Compensation Consultant and the performance of our management as a team. The Compensation Committee then reviews management’s recommendation with the ability to ask questions of both management and the Compensation Consultant and may conduct an executive session as needed to discuss compensation. The Compensation Committee has the final authority to make decisions regarding recurring and other compensation decisions without separate Board approval, except as may be required by the charter of the Compensation Committee and applicable law. +The Compensation Consultant also assists the Compensation Committee with the determination of our Peer Group, as defined and described below, and design of our annual incentive program and long-term incentive awards. Using the independence factors established by the SEC and the NYSE, the Compensation Committee determined that the Compensation Consultant’s work did not raise any conflicts of interest, and they are considered an independent consulting firm. +20 +Competitive Market Position and Peer Group +To further emphasize the alignment between Company performance and executive pay and to ensure compensation is competitive, for 2025 the Compensation Committee generally targeted the 50th percentile for total compensation (base salary and short-term and long-term incentives) for the Named Executive Officers as a group, as reflected by various sources of compensation data (collectively, “ Market Data ”). The Market Data provided to the Compensation Committee by the Compensation Consultant includes compensation information from our Peer Group as well as other broad-based compensation survey sources selected by the Compensation Consultant. Although the Compensation Committee used the Market Data to inform its decisions regarding the form and amount of compensation provided to our Named Executive Officers in 2025, the Compensation Committee also considered other factors such that the compensation provided to our Named Executive Officers is not exclusively reflective of the Market Data. +For purposes of setting 2025 compensation, the peer group companies (our “ Peer Group ”) used by the Compensation Consultant and the Compensation Committee included the following companies: +NOV Inc. +Flowserve Corporation +Weatherford International plc +Gates Industrial Corporation plc +ChampionX Corporation +Oceaneering International, Inc. +Valaris Limited +Helmerich & Payne, Inc. +Patterson-UTI Energy, Inc. +Cactus, Inc. +Our Peer Group was selected based on companies that broadly represent related drilling, oilfield services and manufacturing businesses and are of reasonably comparable size to the Company based on revenue, market capitalization and other financial metrics. While some of these companies have different revenues or market capitalizations, these companies represent the market in which we most directly compete for qualified professionals. As a whole, our Peer Group reflects companies with related operations, of reasonably similar size, and with which we compete for talent. Our 2025 Peer Group consists of the same companies that comprised our compensation peer group for 2024. +Objectives of Compensation +The goal of the Company’s compensation program is to help attract and retain qualified exe cutive talent and to strengthen the alignment between executives and stockholders’ interests, enhancing stockholder value. To achieve this goal, the Compensation Committee’s decisions are guided by the following principles: provide a competitive compensation package; relate compensation to the performance of the Company and the individual; and align employee objectives with the objectives of stockholders by encouraging executive stock ownership. +In order to achieve these objectives, the Compensation Committee has created a compensation package that combines fixed and variable cash compensation with equity-based compensation. The Company’s compensation program for the Named Executive Officers consists of the following items: +* base salary; +* performance-based annual incentive payments under the Company’s Amended and Restated Long-Term Incentive Plan (“ LTIP ”), which in 2025 were based upon the Company’s adjusted pre-tax earnings per share (“ Adjusted Pre-Tax EPS ”), return on capital employed (“ Adjusted ROCE ”), the Company’s Adjusted ROCE as compared to the Adjusted ROCE of a peer group of companies (such comparison, “ Comparative ROCE ”), and personal performance; +* long-term equity awards under our LTIP, consisting of both time-based and performance-based restricted stock units (“ RSUs ”); and +* matching contributions under the Liberty Energy Services 401(k) Savings Plan. +The Compensation Committee structures executive total direct compensation to emphasize performance through the annual incentive program and long-term incentives. The Compensation Committee believes that the compensation mix should strike a balance promoting long-term returns without motivating or rewarding excessive or inappropriate risk-taking. +21 +Elements of Compensation +2025 Pay Mix +Our compensation program is designed so that the higher an executive’s position in the Company, the greater the percentage of compensation is contingent on the Company’s performance. The Company believes that having a significant portion of our Named Executive Officers’ compensation at risk better aligns their interests with the long-term interests of the Company and its stockholders. A majority of our Named Executive Officers total target direct compensation for fiscal year 2025 was variable, at approximately 86% for our Chief Executive Officer and averaging 84% for our other Named Executive Officers. The following charts illustrate the total target mix of direct compensation for our Named Executive Officers for fiscal year 2025. +Each Named Executive Officer’s base salary is a fixed component of compensation for performing specific job duties and functions. In January 2025, the Compensation Committee approved the below adjustments to Named Executive Officer base salaries effective February 2025 since current salaries had fallen below the 25th percentile of the Peer Group. Specifically, Mr. Gusek’s increase is part of a planned multiyear phase-in period to incrementally adjust his compensation level from that of his prior role with the Company towards that of a chief executive officer in the Peer Group. The annualized base salaries for each Named Executive Officer are as follows for 2025. +Name +Title +2025 Base Salary +Increase over 2024 Base Salary +Christopher A. Wright (1) +Former Chairman of the Board and Former Chief Executive Officer +$675,000 +0% +Ron Gusek +Director, Chief Executive Officer, and President +$603,580 +21% +Michael Stock +Chief Financial Officer and Treasurer +$462,470 +3% +R. Sean Elliott +Chief Legal Officer and Corporate Secretary +$454,230 +3% +Ryan T. Gosney +Chief Accounting Officer and Vice President of Finance +$341,000 +3% +(1) The Compensation Committee did not determine a 2025 base salary for Mr. Wright given his pending resignation from the Company and confirmation as Secretary of Energy of the United States. +22 +Annual Incentive Award +In 2025, based on the analysis provided by the Compensation Consultant and the recommendation of the Compensation Committee, the Board established performance metrics and hurdles for our 2025 annual incentive awards that are focused on the results of adjusted Pre-Tax EPS, Adjusted ROCE and Comparative ROCE. The Compensation Consultant recommended, and the Compensation Committee approved, maintaining an element of discretion in the annual incentive for our Named Executive Officers in order to provide the Compensation Committee the flexibility to respond to specific events that are relevant to each Named Executive Officer’s performance during the year. No payout percentage would be earned for a metric if the actual Company performance of that metric was below the threshold level set for that metric below. Payouts for performance between threshold, target and maximum would have been calculated using straight line interpolation. The overall payout amount for each Named Executive Officer is capped at 200% of each Named Executive Officer’s target incentive award. The performance metrics, their related thresholds and weightings and actual performance for the year ended December 31, 2025 are set forth in the table below: +Performance Metric +Weighting +Threshold (50% +Payout) +Target (100% +Payout) +Maximum (200% +Payout) +Actual Performance +Earned Payout Percentage of Annual Incentive Award +Adjusted Pre-Tax EPS (1) +25% +$0.13 +$0.70 +$1.79 +$1.18 +144.4% +Adjusted ROCE (2) +25% +1% +5.3% +13.6% +8.7% +140.9% +Comparative ROCE (3) +30% +See Comparative ROCE Chart below +3 of 10 (4) +154. 8 % +Discretionary +20% +N/A +N/A +N/A +20% +100% +(1) Adjusted Pre-Tax EPS is equal to the Company’s 2025 adjusted pre-tax income (adding back income tax and certain adjustments that include tax receivable agreement impacts, when applicable), divided by diluted weighted average shares outstanding for 2025. +(2) Adjusted ROCE is equal to the Company’s 2025 adjusted pre-tax net income (adding back income tax and tax receivable agreement impacts, when applicable) divided by the simple average of capital (debt and equity) employed at December 31, 2025 and 2024. +(3) Comparative ROCE is determined by comparing the Company’s Adjusted ROCE and ranking it against the Adjusted ROCE of the ROCE Peer Group, as further detailed below. +(4) Based on publicly filed data as of March 2 , 2026 . +In the view of the Compensation Committee, the Company faced softening market conditions in 2025 better than its peers as evidenced by the Company’s financial execution and approved a target payout of 20% on the 2025 discretionary incentive opportunity for all Named Executive Officers. The same rate of payout on the discretionary portion was awarded for each Named Executive Officer to recognize the collaborative team effort utilized to obtain these results. +The target incentive for each Named Executive Officer and the 2025 annual incentive payout for each Named Executive Officer is set forth below. Target incentive levels were increased in 2025 by 3-33% from the prior year, depending on the officer, in order to better align targeted total cash compensation with the 50th percentile of the Peer Group. In particular, Mr. Gusek’s target incentive amount was increased to reflect his assumption of the role of Chief Executive Officer and Mr. Gosney’s target incentive was increased to account for additional responsibilities associated with his promotion to the position of Vice President of Finance. +Name +Target +Annual Incentive +(% of Base Salary) +Target Annual Incentive ($) +Performance Achievement Level +(% of Target) +Actual 2025 Annual Incentive Payout +Christopher A. Wright (1) +N/A +N/A +N/A +N/A +Ron Gusek +148.8% +$898,160 +137. 8 % +$1, 237 , 350 +Michael Stock +138.3% +$639,630 +137. 8 % +$88 1 , 186 +R. Sean Elliott +109.3% +$496,460 +137. 8 % +$683, 948 +Ryan T. Gosney +132.0% +$450,000 +137. 8 % +$619, 943 +(1) The Compensation Committee did not determine a 2025 annual incentive for Mr. Wright given his pending resignation from the Company and confirmation as Secretary of Energy of the United States. +Comparative ROCE is determined by comparing and ranking the Adjusted ROCE (as defined below) of the Company against the Adjusted ROCE of peer companies (such peer group, the “ ROCE Peer Group ”). Our Adjusted ROCE and the Adjusted ROCE of each member of the ROCE Peer Group is calculated for a calendar year and then ranked in order of highest to lowest, with the highest +23 +Adjusted ROCE being ranked 1 of 10, and the lowest Adjusted ROCE ranked 10 of 10. The amount of the target award paid for this metric is then based on our numerical ranking against the ROCE Peer Group as follows, with the use of linear interpolation to determine the exact amount of payout (the “ ROCE Ranking Matrix ”): +Comparative ROCE +Ranking of Company Adjusted ROCE +against ROCE Peer Group +Payout Percentage of Target Award +1 of 10 +200% +2 of 10 +175% +3 of 10 +150% +4 of 10 +125% +5 of 10 +100% +6 of 10 +75% +7 of 10 +50% +8 of 10 +0% +9 of 10 +0% +10 of 10 +0% +The ROCE Peer Group is reviewed and set each year, provided that the Compensation Committee reserves the right to revise the ROCE Peer Group throughout the year, which may include adjustments to eliminate the effects of extraordinary or non-recurring items. While some companies in the ROCE Peer Group may overlap with companies in our Peer Group, the focus of the ROCE Peer Group is to provide a metric by which the effectiveness of capital deployment can be measured. Accordingly, the ROCE Peer Group focuses more particularly on ot her companies that have capital needs that are similar to those of the Company. The Peer Group tends to focus and include companies based on the relative size of the peers based on metrics such as revenue and market capitalization. The ROCE Peer Group also utilizes the S&P 500 to provide a broader measure of the effectiveness of deployment of capital across various industries. Similar to the rationale for using the S&P 500, the Committee believes that that the OSX index also provides a broad measure of the effectiveness of the deployment of capital across the oilfield services industry. The 2025 ROCE Peer Group consists of the same companies and indices that comprised our ROCE peer group for 2024, except that Nine Energy Service, Inc. was replaced with ProFrac Holding Corp. due to the latter being a more suitable peer based on similarity of business scope, operations, and capital demands: +S&P 500 Index +Halliburton Company +OSX Index +Oil States International, Inc. +ProPetro Holding Corp. +Helmerich & Payne, Inc. +Patterson-UTI Energy, Inc. +RPC, Inc. +ProFrac Holding Corp. +Our Company Adjusted ROCE for 2025 was 8.7%, which ranked 3 of 10 against the ROCE Peer Group for 2025 based on publicly filed data as of March 2 , 2026 , resulting in a weighted payout percentage for the Comparative ROCE component of the annual incentive award equal to 154. 8 %. +Long-Term Incentive Compensation +We maintain the LTIP in order to incentivize individuals providing services to us or our affiliates. In 2025, following recommendations by the Compensation Consultant and our Compensation Committee, our Board granted both time-based and performance-based RSUs, each of which represent the right to receive shares of our Class A Common Stock following the applicable vesting period. The Compensation Committee has considered the use of other forms of equity awards, including restricted stock and stock options, and ultimately determined to use RSUs given that they have a less dilutive effect than stock options and do not require the issuance of actual shares of Class A Common Stock unless and until vesting conditions are met. For 2025, the grant date value of RSUs for the Named Executive Officers as a group was initially set at approximately the 50th percentile based on market data. The Compensation Committee and our Board determined that a combination of time-based and a performance-based vesting approach was appropriate given the Company’s desire to provide our Named Executive Officers with a long-term retention-focused award that also aligns the interests of our Named Executive Officers with those of our stockholders while at the same time furthering the Company’s pay-for-performance philosophy. +For 2025, one-half of the RSUs awarded to Messrs. Gusek, Stock, and Gosney vest ratably over a three-year period, and one-half vests at the end of a three-year performance period based on the Company’s performance against the ROCE Peer Group. Mr. Elliott received RSU awards with similar time and performance-based vesting conditions for 2025, except that 67% of these awards were time-based, and 33% were performance-based. +24 +Performance-based RSUs provide the Named Executive Officer the right to receive an amount ranging from 0% to 200% of the target performance-based RSUs granted based on the Company’s Comparative ROCE performance during the three-year performance period, subject to the continued employment of the Named Executive Officer through the vesting date. For the years prior to 2024, Comparative ROCE is based on Adjusted ROCE, which is equal to income before taxes and loss (gain) on remeasurement of liability under tax receivable agreements, plus interest expense and stock-based compensation expense for the year divided by the simple average of capital (debt and equity) employed at the beginning and end of each year presented. Beginning in 2024, the Adjusted ROCE calculation was changed to be equal to adjusted pre-tax net income (adding back income tax and tax receivable agreement impacts, when applicable) for the year divided by the simple average of capital (debt and equity) employed at the beginning and end of such year. After the end of the three-year performance period, the Adjusted ROCE calculations of the Company and each entity in the ROCE Peer Group will be computed for each year and then averaged for the entire three-year period. The entities in the ROCE Peer Group will be arranged (highest to lowest) by their averaged Adjusted ROCE, excluding the Company. The Company’s percentile rank will be interpolated between the entity with the next highest average Adjusted ROCE and the entity with the next lowest average Adjusted ROCE. The Company’s percentile rank will then be used to determine the payout percentage of the target performance-based RSU by using the ROCE Ranking Matrix set forth above. The chart below shows the Company’s Comparative ROCE rank for 2023, 2024, and 2025, resulting in an award payout of 200% of target for the performance-based RSUs that were awarded to Named Executive Officers in January 2023 and vest on April 1, 2026: +Year +Company Adjusted ROCE Percentage +Ranking of Company +Adjusted ROCE against +ROCE Peer Group +2023 +42.9% +1 of 10 +2024 +22.7% +1 of 10 +2025 +12.3% +3 of 10 +3-year average +26.0% +1 of 10 +Employment, Severance and Change in Control Agreements +The Company has entered into a change in control agreement with each of Mr. Elliott and Mr. Gosney (the “ Change in Control Agreements ”). No such change of control agreements have been entered into with the Company’s other Named Executive Officers, as we believe the value of the vested equity interests in the Company that such officers acquired prior to the time of the IPO will provide adequate benefits in the event of a change in control transaction. +Each Change in Control Agreement provides severance benefits in the event the respective Named Executive Officer’s employment is terminated without cause or such Named Executive Officer resigns for good reason within 18 months following a change in control, as described in more detail below under “ Potential Payments Upon Termination or Change in Control—Change in Control Agreements .” The benefits provided to the Named Executive Officers in the Change in Control Agreements were primarily based on the recommendation of the Compensation Consultant and Peer Group median data provided at the time the Change in Control Agreements were executed. +We have not entered into any other employment, severance or change in control agreements with any of our Named Executive Officers. +Other Compensation Elements +Phased Adjustment to Total Compensation for Mr. Gusek . The Compensation Committee determined that, in connection with Mr. G usek’s appointment as CEO following Mr. Wright’s resignation, that Mr. Gusek’s total compensation will be incrementally adjusted over a planned multiyear phase-in period to increase his compensation level from his prior role with the Company towards that of a chief executive officer in the 50 th percentile of the Peer Group. +Accelerated Vesting for Mr. Wright . Mr. Wright resigned as Chairman of the Board and Chief Executive Officer effective February 3, 2025 in connection with his confirmation as Secretary of the United States Department of Energy as previously disclosed in the Company’s Current Report on Form 8-K filed on November 19, 2024. Additionally, as previously disclosed in the Company’s Current Report on Form 8-K filed on January 22, 2025, the Compensation Committee, having considered that Mr. Wright was departing the Company in order to serve the country and his significant contributions towards the success of the Company during his tenure as Chief Executive Officer, approved the accelerated vesting of all unvested time-based and performance-based RSUs previously awarded to Mr. W right pursuant to the LTIP. This accelerated vesting became effective February 3, 2025 upon Mr. Wright’s ratification and confirmation by the United States Senate as the Secretary of Energy of the United States. +401(k) Plan. We currently maintain a retirement plan intended to provide benefits under Section 401(k) of the Internal Revenue Code of 1986, as amended (the “ Code ”) under which employees, including our Named Executive Officers, are allowed to contribute portions of their base comp ensation to a tax-qualified retirement account under the Liberty Energy Services 401(k) Savings Plan. We provide matching contributions at a rate of $1.00 for each $1.00 of employee contribution, subject to a cap of the lower of (i) 6% of the employee’s salary and (ii) the applicable contribution limits under the Code. +25 +Pension and Nonqualified Deferred Compensation. We have not maintained, and do not currently maintain, a defined benefit pension plan or nonqualified deferred compensation plan. +Perquisites and Other Benefits . We provide limited perquisites to our Named Executive Officers. For example, none of our Named Executive Officers receive car allowances. +Other Compensation Policies +Anti-Hedging and Pledging Policy. Our Insider Trading Policy (the “ Insider Trading Policy ”) generally prohibits our directors, employees and officers from hedging and pledging of Company securities by providing that hedging or monetization transactions, whether direct or indirect, involving the Company’s securities and the pledging of Company securities as collateral are prohibited. Short term exceptions to this prohibition (such as temporary margin loans) may be granted depending on specific facts and circumstances. Any exceptions to the Insider Trading Policy for our directors and officers must be granted by our Audit Committee and will be periodically communicated to the Board. The Insider Trading Policy also prohibits transactions involving Company-based derivative securities. While the Company is not subject to the Insider Trading Policy, the Company does not trade in its securities when it is in possession of material non-public information except as may be pursuant to an appropriately adopted Rule 10b5-1 trading plan. +Policies and practices related to the grant of certain equity awards close in time to the release of material non-public information. The Company does not currently grant stock options, stock appreciation rights, or similar option-like instruments. Accordingly, the Company has no specific policy or practice on the timing of such awards in relation to the disclosure of material non-public information by the Company. If in the future the Company determines to grant options, stock appreciation rights, or similar option-like instruments, the Company intends to establish policies or practices regarding the timing of such awards in relation to the disclosure of material non-public information, and the Board will evaluate the appropriate steps to take in relation to the foregoing. +Stock Ownership Guidelines . We have implemented stock ownership guidelines for our executive officers and our directors who receive compensation from us for Board service to foster equity ownership and align interests with our stockholders. Within five years of the later of (a) the date of becoming an executive officer and (b) October 18, 2022, our Chief Executive Officer is expected to own a number of shares with a value equal to six times his base salary and all other executive officers are expected to own a number of shares with a value equal to two times their base salary. Similarly, within five years of the later of (a) the date a compensated director commences service with the Company in such position and (b) October 18, 2022, our compensated directors are expected to own a number of shares with a value equal to five times their annual Board cash retainer. Shares that are owned directly, indirectly (such as through a 401(k) plan or family trust) and shares issuable upon settlement of RSUs (including the target number of shares to be issued under performance-based units) count towards meeting these ownership requirements. In the event that an executive officer or compensated director fails to comply with these ownership guidelines following the end of the applicable transition period and subject to certain exceptions, they are expected to retain not less than 50% of the number of shares issued to him or her under our LTIP or similar future equity compensation plans, net of the number of shares applied to the payment of taxes on such awards. As of the Record Date, each of our executive officers and compensated directors was in compliance with these guidelines when taking into account the benefit of the transition period for Ms. Y ake, who was recently appointed to the Board in October 2025. +Risk Assessment +The Compensation Committee reviewed our employee compensation practices and policies and determined that such policies do not encourage excessive or unnecessary risk-taking and are not likely to have a material adverse effect on the Company. Furthermore, the Board and Compensation Committee recently adopted our compensation recovery policy to further enhance integrity and accountability in relation to the Company’s compensation philosophy. +26 +COMPENSATION COMMITTEE REPORT +The information contained in this Compensation Committee Report shall not be deemed to be “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933, as amended (the “ Securities Act ”), or the Exchange Act, except to the extent that the Company specifically incorporates such information by reference in such filing. +The Compensation Committee reviewed and discussed the Compensation Discussion & Analysis required by Item 402 of Regulation S-K promulgated by the SEC with management of the Company, and, based on such review and discussions, the Compensation Committee recommended to the Board that such Compensation Discussion & Analysis be included in this Proxy Statement and incorporated by reference into the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025. +Compensation Committee of the Board of Directors: +Peter A. Dea (Chair) +Ken Babcock +James R. McDonald +Cary D. Steinbeck +27 +EXECUTIVE COMPENSATION TABLES +Summary Compensation Table +The following table summarizes the compensation awarded to, earned by or paid to our Principal Executive Officer (“ PEO ”), Principal Financial Officer, and other Named Executive Officers for the fiscal years ended December 31, 2025, 2024, and 2023. +Name & Principal Position +Year +Salary +($) (6) +Bonus +($) (1) +Stock Awards +($) (2) +Non-Equity +Incentive Plan +Compensation +($) (1) +All Other +Compensation +($) (3) +Total +($) +Christopher A. Wright +Former Chairman of the Board & +Former Chief Executive Officer (4) +2025 +80,481 +— +16,630,644 +(7) +— +4,829 +16,715,954 +2024 +696,039 +214,000 +3,832,639 +1,070,803 +23,008 +5,836,488 +2023 +638,231 +300,000 +3,590,569 +1,078,500 +20,800 +5,628,100 +Ron Gusek +Chief Executive Officer & President (5) +2025 +591,282 +179,632 +2,943,855 +1,057,718 +21,000 +4,793,487 +2024 +512,423 +134,800 +1,718,213 +674,506 +22,597 +3,062,538 +2023 +469,462 +189,000 +1,609,575 +679,455 +20,800 +2,968,292 +Michael Stock +Chief Financial Officer & +Treasurer +2025 +460,916 +127,926 +2,309,449 +753,260 +21,000 +3,67 2 , 551 +2024 +463,038 +124,200 +1,718,213 +621,466 +22,486 +2,949,403 +2023 +424,923 +174,000 +1,609,575 +625,530 +20,800 +2,854,828 +R. Sean Elliott +Chief Legal Officer & +Corporate Secretary +2025 +452,704 +99,292 +1,559,571 +58 4 , 656 +21,000 +2,71 7 , 223 +2024 +454,731 +96,400 +1,063,656 +482,362 +22,468 +2,119,616 +2023 +416,923 +135,000 +996,456 +485,325 +20,800 +2,054,504 +Ryan T. Gosney +Chief Accounting Officer & Vice President of Finance +2025 +339,846 +90,000 +1,270,474 +529, 943 +21,000 +2,25 1 , 263 +2024 +341,269 +77,000 +689,492 +385,289 +22,214 +1,515,264 +2023 +312,692 +105,000 +619,062 +377,475 +20,800 +1,435,029 +(1) The amounts reported in the “Non-Equity Incentive Plan Compensation” column reflect the portion of the annual incentive payouts related to achievement of the Company-wide performance metrics. The portion of the annual incentive payouts related to the discretionary component are reported in the “Bonus” column. +(2) The amounts shown do not reflect compensation actually received by the Named Executive Officer. Rather, amounts set forth in the “Stock Awards” column represent the aggregate grant date fair value of time-based and performance-based RSU awards computed in accordance with the Federal Accounting Standards Board Accounting Standards Codification (“ FASB ASC ”) Topic 718 for financial statement reporting purposes by the Company with respect to RSUs. The grant date fair value of RSU awards is $18.02 for Mr. Gusek based on a February 3, 2025 date of grant and $22.17 for Messrs. Stock, Elliott, and Gosney based on a January 22, 2025 date of grant. A discussion of the assumptions used in this valuation with respect to awards made in fiscal year 2025 may be found in Note 10 to the Company’s financial statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. Performance-based RSUs are included based on the assumption that they will vest at 100% of the target award, which is based on the probable outcome of the performance conditions as of the date of grant, since actual vesting will not be determined until the end of the performance period. If the maximum amount of 200%, rather than the probable amount of target, were reported in the table with respect to the performance-based RSUs, the values associated with such performance-based RSUs would be as follows for each NEO: Mr. Gusek, $2,943,855; Mr. Stock, $2,309,449; Mr. Elliott, $1,029,309; and Mr. Gosney, $1,270,474, while values associated with time-base d RSUs would remain as follows for each NEO: Mr. Gusek, $1,471,928; Mr. Stock, $1,154,724; Mr. Elliott, $1,044,916; and Mr. Gosney, $635,237. +(3) For the Named Executive Officers, amounts reported in the “All Other Compensation” column for 2025 reflect discretionary matching contributions made to each Named Executive Officer pursuant to the Company’s 401(k) plan. +(4) Mr. Wright resigned as Chairman of the Board and Chief Executive Officer effective February 3, 2025 in connection with his confirmation as Secretary of the United States Department of Energy as previously disclosed in the Company’s Current Report on Form 8-K filed on November 19, 2024. +(5) Mr. Gusek was appointed Chief Executive Officer effective February 3, 2025 in connection with the resignation of Mr. Wright as described in the above footnote. +(6) Salary for 2024 reflects an additional pay period during the year due to the timing of the bi-weekly payroll calendar. +(7) The amount reported for Mr. Wright reflects the incremental fair value, calculated in accordance with FASB ASC Topic 718, arising from the modification and accelerated vesting of previously granted equity awards, as described above in the Compensation Discussion & Analysis. Under SEC disclosure rules, the incremental fair value of the modification is required to be reported in the Summary Compensation Table; however, this modification does not constitute the grant of any additional stock awards. Because the awards are reported based on their incremental fair value, the table reflects the adjustment resulting from the modification rather than a new grant. The fair value of Mr. Wright’s accelerated RSU awards is $22.67 based on a January 15, 2025 modification date. For more information concerning the Compensation Committee’s evaluation of the acceleration of these awards, see the section titled “ Leadership Changes ” contained in the Compensation Discussion & Analysis section above. +28 +Grants of Plan-Based Awards +The following table provides information for each of our Named Executive Officers regarding plan-based awards granted during fiscal year 2025. +Estimated Future Payouts Under Non- Equity Incentive Plan Awards (1) +Estimated Future Payouts Under Equity Incentive Plan Awards (2) +All Other Stock Awards: Number of Shares of Stock or +Units +(#) +Grant Date Fair Value of Stock +Awards +($) (4) +Name +Grant Date +Threshold +($) +Target +($) +Maximum +($) +Threshold +(#) +Target +(#) +Maximum +(#) +Christopher A. Wright (5) +N/A +N/A +N/A +1/15/2025 +733,597 +16,630,644 +Ron Gusek +359,264 +718,528 +1,437,056 +2/3/2025 +40,842 +81,683 +163,366 +1,471,928 +2/3/2025 +81,683 +(3) +1,471,928 +Michael Stock +255,852 +511,704 +1,023,408 +1/22/2025 +26,043 +52,085 +104,170 +1,154,724 +1/22/2025 +52,085 +(3) +1,154,724 +R. Sean Elliott +198,584 +397,168 +794,336 +1/22/2025 +11,607 +23,214 +46,428 +514,654 +1/22/2025 +47,132 +(3) +1,044,916 +Ryan T. Gosney +180,000 +360,000 +720,000 +1/22/2025 +14,327 +28,653 +57,306 +635,237 +1/22/2025 +28,653 +(3) +635,237 +(1) The amounts shown in these columns reflect the potential threshold, target and maximum payouts with respect to the performance-based financial metrics approved under the 2025 annual incentive awards. The amounts reflected herein do not include amounts that may be earned with respect to the discretionary component of the 2025 annual incentive awards. +(2) The amounts shown in these columns reflect the potential threshold, target and maximum number of performance-based RSUs that may be earned pursuant to awards granted to the Named Executive Officers during fiscal year 2025. +(3) The amounts shown in this column reflect time-based vesting RSU awards granted to the Named Executive Officers during fiscal year 2025. +(4) The amounts shown in this column do not reflect compensation actually received by the Named Executive Officer. Rather, amounts set forth herein represent the aggregate grant date fair value, with respect to Messrs. Gusek, Stock, Elliott, and Gosney, and aggregate modification date fair value with respect to Mr. Wright, of time-based and performance-based RSUs computed in accordance with FASB ASC Topic 718 for financial statement reporting purposes in fiscal year 2025 by the Company. A discussion of the assumptions used in this valuation with respect to awards made in fiscal year 2025 may be found in Note 10 to the Company’s financial statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. The fair value of awards is $18.02 for Mr. Gusek based on a February 3, 2025 date of grant; $22.17 for Messrs. Stock, Elliott, and Gosney based on a January 22, 2025 date of grant; and $22.67 for Mr. Wright based on a January 15, 2025 date of modification. +(5) Mr. Wright resigned as Chairman of the Board and Chief Executive Officer effective February 3, 2025 in connection with his confirmation as Secretary of the United States Department of Energy and therefore he was not granted any plan-based awards during fiscal year 2025; however, as discussed above, the Compensation Committee approved the accelerated vesting of his remaining unvested time-based and performance-based RSUs that had been previously awarded. +29 +Outstanding Equity Awards at Fiscal Year-End +The following table reflects information regarding outstanding equity-based awards held by our Named Executive Officers as of December 31, 2025, which consist of time-based RSU awards and performance-based RSU awards. +Stock Awards +Name +Number of Shares or Units of Stock That Have Not Vested +(#) +Market Value of Shares or Units of Stock That Have Not Vested +($) (5) +Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested +(#) +Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested +($) (10) +Christopher A. Wright (11) +N/A +N/A +N/A +N/A +Ron Gusek +17,153 +(1) +316,644 +33,068 +(2) +610,435 +81,683 +(3) +1,507,868 +102,914 +(6) +1,899,792 +99,204 +(7) +1,831,306 +163,366 +(9) +3,015,736 +Michael Stock +17,153 +(1) +316,644 +33,068 +(2) +610,435 +52,085 +(4) +961,489 +102,914 +(6) +1,899,792 +99,204 +(7) +1,831,306 +104,170 +(8) +1,922,978 +R. Sean Elliott +14,229 +(1) +262,667 +27,431 +(2) +506,376 +47,132 +(4) +870,057 +42,050 +(6) +776,243 +40,532 +(7) +748,221 +46,428 +(8) +857,061 +Ryan T. Gosney +8,840 +(1) +163,186 +17,782 +(2) +328,256 +28,653 +(4) +528,934 +26,124 +(6) +482,249 +26,274 +(7) +485,018 +57,306 +(8) +1,057,869 +(1) These RSUs granted on February 8, 2023 vest on April 1, 2026, so long as the applicable Named Executive Officer remains employed through such dates. +(2) These RSUs granted on January 22, 2024 vest in one-half increments on each of April 1, 2026 and April 1, 2027, so long as the applicable Named Executive Officer remains employed through such dates. +(3) These RSUs granted on February 3, 2025 vest in one-third increments on each of April 1, 2026, April 1, 2027 and April 1, 2028, so long as the applicable Named Executive Officer remains employed through such dates. +(4) These RSUs granted on January 22, 2025 vest in one-third increments on each of April 1, 2026, April 1, 2027 and April 1, 2028, so long as the applicable Named Executive Officer remains employed through such dates. +(5) Amounts in this column reflect the value of unvested time-based RSU awards held by the Named Executive Officers, calculated based on the closing price of our Class A Common Stock on December 31, 2025 of $18.46. +(6) These performance-based RSUs granted on February 8, 2023 will vest on April 1, 2026, subject to achievement of the Comparative ROCE performance metrics and the applicable Named Executive Officer’s continued employment through such date. As of December 31, 2025, the performance-based RSUs granted on February 8, 2023 were trending above target, and in accordance with the SEC rules, are reflected in this table at maximum, therefore, the performance-based RSUs may actually vest at a lower amount than reflected in this column. +30 +(7) These performance-based RSUs granted on January 22, 2024 will vest on April 1, 2027, subject to achievement of the Comparative ROCE performance metrics and the applicable Named Executive Officer’s continued employment through such date. As of December 31, 2025, the performance-based RSUs granted on January 22, 2024 were trending above target, and in accordance with the SEC rules, are reflected in this table at maximum, therefore, the performance-based RSUs may actually vest at a lower amount than reflected in this column. +(8) These performance-based RSUs granted on January 22, 2025 will vest on April 1, 2028, subject to achievement of the Comparative ROCE performance metrics and the applicable Named Executive Officer’s continued employment through such date. As of December 31, 2025, the performance-based RSUs granted on January 22, 2025 were trending above target, and in accordance with the SEC rules, are reflected in this table at maximum, therefore, the performance-based RSUs may actually vest at a lower amount than reflected in this column. +(9) These performance-based RSUs granted on February 3, 2025 will vest on April 1, 2028, subject to achievement of the Comparative ROCE performance metrics and the applicable Named Executive Officer’s continued employment through such date. As of December 31, 2025, the performance-based RSUs granted on February 3, 2025 were trending above target, and in accordance with the SEC rules, are reflected in this table at maximum, therefore, the performance-based RSUs may actually vest at a lower amount than reflected in this column. +(10) Amounts in this column reflect the value of unvested performance-based RSU awards held by the Named Executive Officers reported in the preceding column calculated based on the clos ing price of our Class A Common Stock on December 31, 2025 of $18.46. +(11) As discussed above, Mr. Wright resigned as Chairman of the Board and Chief Executive Officer effective February 3, 2025 in connection with his confirmation as Secretary of the United States Department of Energy. The Compensation Committee, having considered that Mr. Wright was departing the Company in order to serve the country and his significant contributions towards the success of the Company during his tenure as Chief Executive Officer, approved the accelerated vesting of all unvested time-based and performance-based RSUs previously awarded to Mr. Wright pursuant to the LTIP. This accelerated vesting became effective February 3, 2025 upon Mr. Wright’s ratification and confirmation by the United States Senate as Secretary of Energy of the United States. +Option Exercises and Stock Vested +The following table reflects the value received by each Named Executive Officer on the vesting of time-based and performance-based RSUs during fiscal year 2025, which performance-based RSUs vested at 200 % of target. None of our Named Executive Officers held stock option awards during fiscal year 2025. +Stock Awards +Name +Number of Shares Acquired on Vesting +(#) +Value Realized +on Vesting +($) +Christopher A. Wright +733,597 +(1) +13,219,418 +(2) +Ron Gusek +177,583 +2,814,691 +(3) +Michael Stock +177,583 +2,814,691 +(3) +R. Sean Elliott +95,410 +1,512,249 +(3) +Ryan T. Gosney +59,635 +945,215 +(3) +(1) As discussed above, the Compensation Committee, having considered that Mr. Wright is departing the Company in order to serve the country and his significant contributions towards the success of the Company during his tenure as Chief Executive Officer, approved the accelerated vesting of all unvested time-based and performance-based RSUs previously awarded to Mr. Wright pursuant to the LTIP. As a result, 233,025 time-based RSUs and 500,572 performance-based RSUs vested on February 3, 2025. +(2) The amounts in this column reflect the value of the shares in the preceding column based on the closing price of our Class A Common Stock of $18.02 on February 3, 2025, the applicable vesting date, including the value of any shares withheld for tax withholding purposes. +(3) The amounts in this column reflect the value of the shares in the preceding column based on the closing price of our Class A Common Stock of $15.85 on April 1, 2025, the applicable vesting date, including the value of any shares withheld for tax withholding purposes. +Pension Benefits and Nonqualified Deferred Compensation +We do not maintain and our Named Executive Officers do not participate in any defined benefit pension plan or nonqualified deferred compensation plan. +Potential Payments Upon Termination or Change in Control +Change in Control Agreements +The Company has entered into Change in Control Agreements with each of Mr. Elliott and Mr. Gosney. For further detail on the Company’s decision to enter into Change in Control Agreements with these Named Executive Officers, see the section titled “ Employment, Severance and Change in Control Agreements ” contained in the Compensation Discussion & Analysis section set forth herein. Each Change in Control Agreement provides that if the Named Executive Officer’s employment is terminated without “cause” or the Named Executive Officer resigns for “good reason” within 18 months following a “change in control,” the Named Executive Officer will be +31 +entitled to receive, subject to such Named Executive Officer’s timely execution and non-revocation of a release of claims in favor of the Company: (i) two times the sum of (a) the Named Executive Officer’s annualized base salary for the year in which the termination occurs (or, if greater, that in effect immediately preceding the change in control) plus (b) an amount equal to the higher of (1) the Named Executive Officer’s target annual bonus for year in which the termination occurs or (2) the average of the Named Executive Officer’s target annual bonus for the three most recently completed calendar years; (ii) a pro-rated portion of the Named Executive Officer’s target annual bonus for the calendar year in which the termination occurs; (iii) reimbursement for a portion of the COBRA premiums paid by the executive for continued coverage under the Company’s group health plans for up to 18 months plus a lump sum cash payment equal to six times such monthly amount; and (iv) vesting of all outstanding time-based and performance-based equity awards granted pursuant to any Company long term incentive plan as of the date of termination, with such performance-based equity awards being vested at the higher of target performance or actual performance through the termination date. +For purposes of the Change in Control Agreements, the following terms generally have the meanings set forth below: +* “ Cause ” generally means the Named Executive Officer’s (i) material breach of the Change in Control Agreement or any other agreement with the Company, (ii) material breach of any policy or code of conduct, (iii) violation of any law applicable to the workplace or employment relationship that is materially injurious to the Company, (iv) gross negligence, willful misconduct or willful breach of fiduciary duty, fraud, theft or embezzlement, (v) conviction or indictment, or plea of nolo contendere, to any felony or conviction or plea of nolo contendere to any crime involving moral turpitude, or (vi) w illful failure or refusal to substantially perform such Named Executive Officer’s obligations or to follow in any material respect any specific lawful direction from the Company. Clauses (i), (ii), (iii) and (vi) are subject to certain notice and cure rights. +* “ Change in Control ” generally means (i) a change in the ownership of the Company, (ii) a change in the effective control of the Company, or (iii) a change in the ownership of a substantial portion of the Company’s assets, in each case, as such phrases are defined under the Treasury regulations promulgated pursuant to Section 409A of the Code. +* “ Good Reason ” generally means (i) a material diminution in the Named Executive Officer’s total cash compensation, (ii) a material diminution in the Named Executive Officer’s authority, duties or responsibilities as a whole, (iii) a geographic relocation by more than 50 miles, (iv) a material breach by the Company of the Change in Control Agreement or any other agreement between the Named Executive Officer and the Company, or (v) a failure to timely pay or provide any material payment, benefit or other consideration or compensation owed to the Named Executive Officer, in each case, subject to certain notice and cure rights. +Death or Disability +The RSU awards held by our Named Executive Officers under the LTIP will accelerate and become 100% vested upon a termination of the Named Executive Officer’s employment with the Company due to the Named Executive Officer’s death or “disability.” For RSUs that use performance-based vesting, the award will remain outstanding and eligible to be earned based on the Company’s achievement of the applicable performance metrics at the end of the performance period. For purposes of the RSU awards, “disability” means the Named Executive Officer’s inability to perform his duties, after accounting for reasonable accommodation, due to a mental or physical impairment that continues (or can reasonably be expected to continue) for (i) 90 consecutive days or (ii) 180 days out of any 365-day period, which, in either case, shall only be deemed to occur following the written determination by the Company of any such occurrence of disability. +32 +The table below describes and estimates the amounts and benefits each Named Executive Officer would have been eligible to receive upon a termination of his employment due to death or disability, or a change in control, assuming such events occurred as of December 31 , 2025, the last day of fiscal year 2025. The estimated payments are not necessarily indicative of the actual amounts such executive would have received in such circumstances, as such amounts could not be known with certainty until the applicable event occurred. The table excludes compensation amounts accrued thro ugh December 31, 2025 that would be paid in the normal course of continued employment, such as accrued but unpaid salary and vested account balances under our retirement plans that are generally available to all of our salaried employees. Where applicable, the information in the table uses a price per share for our Common Stock of $18.46, the closing price on December 31, 2025 (the “ Year-End Closing Price ”). Generally, payment of severance benefits to a Named Executive Officer following termination of employment is subject to such officer’s timely execution and non-revocation of a release of claims in favor of the Company. +Name +Death or +Disability +($) +Double-Trigger: Change in Control followed by Termination without Cause or Resignation for Good Reason on or within 18 months +($) +Christopher A. Wright +Cash Severance +— +— +Benefit Continuation +— +— +Equity Award Acceleration (1) (4) +— +— +Ron Gusek +Cash Severance +— +— +Benefit Continuation +— +— +Equity Award Acceleration (1) +9,181,781 +— +Michael Stock +Cash Severance +— +— +Benefit Continuation +— +— +Equity Award Acceleration (1) +7,542,644 +— +R. Sean Elliott +Cash Severance (2) +— +2,397,840 +Benefit Continuation (3) +— +28,525 +Equity Award Acceleration (1) +4,020,625 +4,020,625 +Ryan Gosney +Cash Severance (2) +— +2,032,000 +Benefit Continuation (3) +— +28,571 +Equity Award Acceleration (1) +3,045,512 +3,045,512 +(1) The amounts reported in these rows reflect the value of outstanding time-based RSU and performance-based RSU awards that would accelerate in connection with the applicable event, calculated based on the Year-End Closing Price. For purposes of the performance-based RSUs granted in 2023, 2024 and 2025 these amounts reflect an assumed achievement of maximum performance, as the performance-based RSUs were trending above target as of December 31, 2025. +(2) The amounts reported in these rows reflect the full amount of each Named Executive Officer’s target annual incentive award for 2025, as the pro-ration provided for under the Change in Control Agreements would result in the full amount of such target annual incentive awards being payable as of December 31, 2025. +(3) The amounts reported in these rows are calculated based on the premiums in effect as of December 2025, which are assumed for purposes of this table to remain the same throughout the applicable benefit reimbursement period. +(4) As discussed above, Mr. Wright resigned as Chairman of the Board and Chief Executive Officer effective February 3, 2025 in connection with his confirmation as Secretary of the United States Department of Energy. In connection with his resignation, the Compensation Committee approved the accelerated vesting of all unvested equity awards previously granted to Mr. Wright, resulting in a fair value of $13,219,418 on the date of vesting. Mr. Wright did not receive any other compensation or benefits in connection with his resignation and is not entitled to any further payments from the Company; accordingly, no other amounts are reflected in this table for Mr. Wright. +33 +DIRECTOR COMPENSATION +We have adopted a non-employee director compensation program that is applicable to each of our non-employee directors. The Compensation Consultant also conducted an analysis of market-competitive total director compensation (annual retainers, meeting fees and equity awards) using our Peer Group as a comparative metric. Pursuant to this program, during 2025 each non-employee director was entitled to receive the following compensation for their service on our Board: +* A cash retainer of $100,000 per year, payable quarterly in arrears; +* An additional annual cash retainer of $10,000 for serving as a member of our Audit Committee or $20,000 for serving as the chairperson of our Audit Committee, in each case payable quarterly in arrears; +* An additional annual cash retainer of $7,500 for serving as a member of our Compensation Committee or $15,000 for serving as the chairperson of our Compensation Committee, in each case payable quarterly in arrears; +* An additional cash retainer of $5,000 for serving as a member of our Nominating and Governance Committee or $10,000 for serving as the chairperson of our Nominating and Governance Committee, in each case payable quarterly in arrears; +* An additional annual cash retainer of $20,000 for serving as the Lead Director of the Board, payable quarterly in arrears; +* An additional annual cash retainer of $60,000 for serving as the Non-Executive Chairman of the Board, payable quarterly in arrears; +* Either: +(a) annual equity-based compensation in the form of an RSU award with an aggregate grant date value of $175,000, subject to the terms of the LTIP and the award agreement pursuant to which such award is granted. The award shall be subject to a 12-month vesting period, unless otherwise determined by the Board. The annual grant is automatically made on January 2nd of each year, using the 30-day average closing price of the Company’s Class A Common Stock prior to the date of grant to determine the number of units to be granted; +(b) an additional cash payment of $100,000 per year, payable quarterly in arrears; or +(c) a charitable cash donation by the Company of $100,000 per year, payable quarterly in arrears, to an organization designated by the director and that is qualified under Section 501(c)(3) of the Internal Revenue Code, provided that the organization must be independent of the director and reasonably acceptable to the Compensation Committee; and +* An additional annual RSU award with an aggregate grant date fair value of $75,000, on the same terms and conditions set forth in paragraph (a) above, for serving as Non-Executive Chairman. +Each non-employee director is given an opportunity to elect whether they would like to receive item (a), (b) or (c) above prior to the beginning of each year. If a non-employee director joins the Board or otherwise becomes eligible for director compensation during the course of a calendar year, the director will be allowed to make such election upon joining or becoming eligible. If a non-employee director joins the Board during the course of a calendar year, the director will be entitled to receive a prorated RSU award (if so elected) for that year, which shall vest over the remaining portion of the year, unless otherwise determined by the Board. All annual cash payments, including the charitable cash contribution option if elected, shall be prorated for partial years of service or eligibility. +In addition, each non-employee director is reimbursed for out-of-pocket expenses incurred in connection with attending Board and committee meetings. +34 +The table below sets forth the compensation our non-employee directors earned for their service for the fiscal year ended December 31, 2025 . +Name +Fees Earned or Paid in Cash ($) +Stock Awards ($) (1) +All Other Compensation ($) +Total ($) +Simon Ayat +110,000 +(2) +196,103 +— +306,103 +Ken Babcock +107,500 +(2) +196,103 +— +303,603 +Peter A. Dea +120,000 +(2) +196,103 +— +316,103 +William F. Kimble +185,000 +(2) +269,228 +(3) +— +454,228 +James R. McDonald (4) +— +— +— +— +Arjun Murti (5) +94,167 +184,144 +— +278,311 +Gale A. Norton +120,000 +(2) +196,103 +— +316,103 +Audrey Robertson +75,000 +165,802 +(6) +— +240 , 802 +Cary D. Steinbeck +117,500 +(2) +196,103 +— +313,603 +Alice Yake (5) +21,389 +37,324 +— +58,713 +(1) The amounts shown do not reflect compensation actually received by the directors. Rather, amounts set forth in the Stock Awards column represent the aggregate grant date fair value of awards computed in accordance with FASB ASC Topic 718 for financial statement reporting purposes in fiscal year 2025 by the Company with respect to the annual award of RSUs. RSUs accrue dividend equivalents, the value of which is factored into the grant date fair value, and are paid upon vesting of the underlying RSU. A discussion of the assumptions used in this valuation with respect to awards made in fiscal year 2025 may be found in Note 10 to the Company’s financial statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. As of December 31, 2025, Messrs. Ayat, Babcock, Dea, and Steinbeck and Ms. Norton each held 9,469 unvested RSUs; Mr. Kimble held 13,527 unvested RSUs; Mr. Murti held 8,306 unvested RSUs; and Ms. Yake held 3,126 unvested RSUs. +(2) Amount includes additional fees earned for serving as a Board committee chairperson or a Board committee member. +(3) Amount includes additional RSUs awarded for serving as Non-Executive Chairman of the Board. +(4) The Company has agreed to make up to $100,000 in charitable donations to organizations designated by Mr. McDonald in connection with his 2025 Board service. As of February 18, 2026, no donations have been designated and therefore no payments have been made by us for such 2025 Board service. +(5) Amounts are prorated based on Mr. Murti joining the Board on January 22, 2025 and Ms. Yake joining the Board on October 16, 2025. +(6) On August 26, 2025, in connection with Ms. Robertson’s resignation to serve the country as Assistant Secretary of Energy for Energy Efficiency and Renewable Energy at the Department of Energy of the United States, the C ompensation Committee approved the accelerated vesting of all unvested RSUs granted to Ms. Robertson . Accordingly, the amount reported for Ms. Robertson in the Stock Awards column consists of the grant date fair value of her original annual award of RSUs and the incremental fair value attributable to the modification and accelerated vesting of that award, each calculated in accordance with FASB ASC Topic 718 . T his modification does not represent the grant of any additional stock awards. +35 +EQUITY COMPENSATION PLAN INFORMATION +The following table sets forth information about our Class A Common Stock that may be issued under the LTIP as of December 31, 2025: +Plan Category +Number of defined securities to be issued upon exercise of outstanding options, warrants and rights (a) +Weighted–average exercise price of outstanding options, warrants and rights (b) (2) +Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) (3) +December 31, 2025 (1) +December 31, 2025 +December 31, 2025 +Equity compensation plans approved by security holders +4,752,023 +— +8,152,818 +Equity compensation plans not approved by security holders +— +— +— +Total +4,752,023 +— +8,152,818 +(1) This column reflects shares of our Class A Common Stock subject to RSU awards granted under the LTIP that were outstanding and unvested as of the Decem ber 3 1, 2025. The performance-based RSUs granted under the LTIP are reflected based on an achievement of maximum performance. No stock options or warrants have been granted under the LTIP. +(2) No stock options have been granted under the LTIP, and the RSU awards reflected in column (a) are not reflected in this column as they do not have an exercise price. +(3) This column reflects the total number of shares of Class A Common Stock remaining available for issuance under the LTIP. +Our only equity compensation plan is the LTIP. The LTIP was approved by the Company’s stockholders at the 2024 annual meeting of stockholders. Please read Note 10 to the Company’s financial statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 for a description of our equity compensation plan. In addition, a detailed description of the terms of the LTIP is available in our Definitive Proxy Statement on Schedule 14A filed on March 7, 2024 under the discussion of Proposal 4 therein. +36 +CEO PAY RATIO +As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, we are providing the following information about the relationship of the annual total compensation of our employees and the annual total compensation of M r . Gusek , our Chief Executive Officer ( our “ CEO ”). +For 2025, our last completed fiscal year: +* The total compensation of our median employee was $128,701 calculated using the same methodology used to determine pay for our CEO in the Summary Compensation Table included above; and +* We had multiple non-concurrent PEOs during 2025 and, in accordance with applicable Securities and Exchange Commission regulations, we elected to calculate our CEO’s total compensation for purposes of the CEO pay ratio by annualizing the compensation of Mr. Gusek, who began serving as our CEO on February 3, 2025. The total compensation of our CEO for purposes of CEO pay ratio was $4,805,785, which differs from the amount shown in the Summary Compensation Table due to the annualization adjustment. +* Based on this information, for 2025 the ratio of the total compensation of our CEO to the median employee total compensation was reasonably estimated to be 37 to 1. +The pay ratio set forth above is a reasonable estimate calculated in a manner consistent with SEC rules based on our human resources systems of record and the methodology described below. Because the SEC rules for identifying the median employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices, the pay ratio reported by other companies may not be comparable to the pay ratio that we report above, as other companies may have different employment and compensation practices, different types of workforce, and operate in different countries, and may use different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios. To identity the median of the annual total compensation of all our employees, as well as to determine the annual total compensation of our median employee and our CEO, we took the following steps: +✓ We determined that, as of December 20, 2025, our employee population excluding our CEO consisted of approximately 5,800 individuals with all of these individuals located in the United States and Canada. This population consisted of our full-time, part-time and temporary employees who received Company benefits, as we do not have seasonal workers. We selected December 20, 2025 as our identification date for determining our median employee because it enabled us to make such identification in a reasonably efficient and economic manner, as this is the date of the last period worked during the year for which payment was made to employees in 2025. +✓ We used a consistently applied compensation measure to identify our median employee by comparing the amount of compensation as reported to the Internal Revenue Service on Form W-2 for 2025 for US employees and the amount of compensation as reported to the Canadian Revenue Agency on T4 Statement of Renumeration Paid for 2025 for Canadian employees. +✓ We identified our median employee by consistently applying this compensation measure to all of our employees included in our analysis. We did not make any cost of living adjustments in identifying the median employee. Our median employee for 2025 had annual compensation of $114,930 set forth on such employee’s Form W-2 for 2025. +✓ After we identified our median employee, we combined all of the elements of such employee’s compensation for the 2025 year in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K, resulting in annual total compensation of $128,701. The differences between such employee’s taxable compensation reported on Form W-2 for 2025 of $114,930 and the employee’s annual total compensation calculated pursuant to Regulation S-K include the following adjustments: (i) modification from bonuses paid during 2025 to bonuses earned during 2025, if needed, (ii) addition of contributions made by the employee and by the Company on the employee’s behalf to our 401(k) plan for 2025, if any, (iii) addition of the costs of tax deductible employee group health plan premiums and employee contributions to tax deductible flexible spending accounts, if any and (iv) subtraction of other taxable compensation including compensation for provided housing or transportation and that attributable to group term life, short-term and long-term disability benefits, if applicable. +37 +PAY VERSUS PERFORMANCE +Pay Versus Performance Table for 2025 +Summary Compensation Table Total for PEO ($) (1) +Compensation Actually +Paid to PEO ($) (2) +Average Summary Compensation Table Total for Non-PEO NEOs ($) (3) +Average Summary Compensation Actually Paid to Non-PEO NEOs ($) (4) +Value of Initial Fixed $100 Investment Based On: +Net Income (Loss) (in Thousands) ($) (6) +Adjusted ROCE (7) +Company TSR ($) +Peer Group TSR ($) (5) +Year +Wright +Gusek +Wright +Gusek +2025 +16,715,954 +4,793,487 +( 1,857,300 +) +4,854,542 +2,880,346 +2,521,173 +189.17 +181.74 +147,872 +8.7 % +2024 +5,836,488 +— +10,045,829 +— +2,411,705 +3,805,434 +199.13 +175.55 +316,010 +19.6 % +2023 +5,628,100 +— +9,819,996 +— +2,328,163 +3,919,083 +179.01 +198.73 +556,317 +42.9 % +2022 +5,747,485 +— +12,201,790 +— +2,367,374 +4,567,954 +155.77 +194.99 +399,602 +34.0 % +2021 +4,611,372 +— +3,946,524 +— +2,028,596 +1,738,700 +94.08 +120.73 +( 179,244 +) +( 10.3 )% +(1) +The dollar amounts reported reflect the total compensation shown in the “Total” column of the Summary Compensation Table for Mr. Wright (our former Chairman and Chief Executive Officer) for each of 2021, 2022, 2023, 2024 and 2025, and for Mr. Gusek for 2025. +(2) +The dollar amounts reported represent the amount of “compensation actually paid” to Mr. Wright and Mr. Gusek, as computed in accordance with Item 402(v) of SEC Regulation S-K. The dollar amounts reported do not reflect the actual amount of compensation earned by or paid to Mr. Wright or Mr. Gusek during the applicable year. In accordance with the requirements of Item 402(v) of SEC Regulation S-K, the following adjustments were made to Mr. Wright and Mr. Gusek’s total compensation for each year to determine the compensation actually paid to Mr. Wright and Mr. Gusek: +(3) +The dollar amounts reported for 2025 represent the average of the amounts reported for our NEOs as a group (excluding Mr. Wright and Mr. Gusek) in the “Total” column of the Summary Compensation Table provided above. For 2025, the non-PEO NEOs included for purposes of calculating the average amount are Messrs. Stock, Elliott and Gosney. For 2021, 2022, 2023 and 2024, the non-PEO NEOs included for the purposes of calculating the average amounts are Messrs. Stock, Gusek, Elliott and Gosney. +(4) +The dollar amounts reported represent the average amount of “compensation actually paid” to the NEOs as a group (excluding Mr. Wright), as computed in accordance with Item 402(v) of SEC Regulation S-K. The NEOs (excluding Mr. Wright) included for purposes of calculating the average amounts in each applicable year are Messrs. Stock, Gusek, Elliott and Gosney. The dollar amounts reported do not reflect the actual average amount of compensation earned by or paid to the NEOs as a group (excluding Mr. Wright) during the applicable year. In accordance with the requirements of Item 402(v) of SEC Regulation S-K, the following adjustments were made to average total compensation for the NEOs as a group (excluding Mr. Wright) for each year to determine the compensation actually paid: +(5) +The peer group selected for each listed year consists of the OSX. We also use this peer group for purposes of the Stock Performance Graph set forth in “Item 5 - Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities” of our Annual Report on Form 10-K for the year ended December 31, 2025. +(6) +The dollar amounts reported represent the amount of net income (loss) (in thousands) attributable to Liberty Energy Inc. in our audited consolidated financial statements for the applicable year +(7) +For the years ended December 31, 2024 and December 31, 2025, Adjusted ROCE is equal to the Company’s income before taxes and loss (gain) on remeasurement of liability under tax receivable agreements, divided by the simple average of capital (debt and equity) employed at the beginning and end of the year. For the years ended December 31, 2021 to 2023, Adjusted ROCE is equal to the Company’s income before taxes and loss (gain) on remeasurement of liability under tax receivable agreements, plus interest expense and stock-based compensation expense for the year, divided by the simple average of capital (debt and equity) employed at the beginning and end of each year presented. We rank our Adjusted ROCE against those of the ROCE Peer Group to determine Comparative ROCE, which is used as a metric to determine a portion of annual incentive compensation and the vesting of performance-based RSU awards. While we use numerous financial and non-financial performance measures for the purpose of evaluating performance for our compensation programs, we have determined that our Adjusted ROCE is the financial performance measure that, in our assessment, represents the most important performance measure (that is not otherwise required to be disclosed in this table) used by us to link compensation actually paid to our NEOs for the most recently completed fiscal year, to our performance. +(1) +The dollar amounts reported reflect the total compensation shown in the “Total” column of the Summary Compensation Table for Mr. Wright (our former Chairman and Chief Executive Officer) for each of 2021, 2022, 2023, 2024 and 2025, and for Mr. Gusek for 2025. +(2) +The dollar amounts reported represent the amount of “compensation actually paid” to Mr. Wright and Mr. Gusek, as computed in accordance with Item 402(v) of SEC Regulation S-K. The dollar amounts reported do not reflect the actual amount of compensation earned by or paid to Mr. Wright or Mr. Gusek during the applicable year. In accordance with the requirements of Item 402(v) of SEC Regulation S-K, the following adjustments were made to Mr. Wright and Mr. Gusek’s total compensation for each year to determine the compensation actually paid to Mr. Wright and Mr. Gusek: +Year +Reported Summary Compensation Table Total for PEO +($) +Deduct Fair Value of Equity Awards Reported in Summary Compensation Table +($) +Add Year-End Fair Value of Equity Awards Granted in Current Year +($) +Add (Deduct) Change in +Fair Value at Year End of Unvested Equity Awards Granted in Prior Years +($) +Add (Deduct) Change in +Fair Value of Equity Awards Vested in Current Year +($) +Compensation Actually Paid to PEO +($) +2025 +Gusek +4,793,487 +( 2,943,855 +) +3,015,736 +706,609 +( 717,435 +) +4,854,542 +Wright +16,715,954 +( 16,630,644 +) +— +— +( 1,942,610 +) +( 1,857,300 +) +2024 +5,836,488 +( 3,832,639 +) +4,401,339 +2,715,100 +925,541 +10,045,829 +2023 +5,628,100 +( 3,590,569 +) +4,164,509 +4,410,269 +( 792,313 +) +9,819,996 +2022 +5,747,485 +( 3,406,258 +) +4,405,023 +3,612,975 +1,842,565 +12,201,790 +2021 +4,611,372 +( 3,801,972 +) +2,841,227 +99,171 +196,725 +3,946,524 +(3) +The dollar amounts reported for 2025 represent the average of the amounts reported for our NEOs as a group (excluding Mr. Wright and Mr. Gusek) in the “Total” column of the Summary Compensation Table provided above. For 2025, the non-PEO NEOs included for purposes of calculating the average amount are Messrs. Stock, Elliott and Gosney. For 2021, 2022, 2023 and 2024, the non-PEO NEOs included for the purposes of calculating the average amounts are Messrs. Stock, Gusek, Elliott and Gosney. +(4) +The dollar amounts reported represent the average amount of “compensation actually paid” to the NEOs as a group (excluding Mr. Wright), as computed in accordance with Item 402(v) of SEC Regulation S-K. The NEOs (excluding Mr. Wright) included for purposes of calculating the average amounts in each applicable year are Messrs. Stock, Gusek, Elliott and Gosney. The dollar amounts reported do not reflect the actual average amount of compensation earned by or paid to the NEOs as a group (excluding Mr. Wright) during the applicable year. In accordance with the requirements of Item 402(v) of SEC Regulation S-K, the following adjustments were made to average total compensation for the NEOs as a group (excluding Mr. Wright) for each year to determine the compensation actually paid: +Year +Reported Average Summary Compensation Table Total for Non-PEO NEOs +($) +Deduct +Fair Value of Equity Awards Reported in Summary Compensation Table +($) +Add Year-End Fair Value of Equity Awards Granted in Current Year +($) +Add (Deduct) Change in +Fair Value at Year End of Unvested Equity Awards Granted in Prior Years +($) +Add (Deduct) Change in Fair Value of Equity Awards Vested in Current Year +($) +Average Compensation Actually Paid to Non-PEO NEOs +($) +2025 +2,880,346 +( 1,713,165 +) +1,426,478 +375 , 453 +( 447,939 +) +2,521,173 +2024 +2,411,705 +( 1,297,394 +) +1,489,905 +826,530 +374,687 +3,805,434 +2023 +2,328,163 +( 1,208,667 +) +1,401,868 +1,667,331 +( 269,613 +) +3,919,083 +2022 +2,367,374 +( 1,146,682 +) +1,482,906 +1,259,414 +604,943 +4,567,954 +2021 +2,028,596 +( 1,515,516 +) +1,132,550 +22,787 +70,282 +1,738,700 +(5) +The peer group selected for each listed year consists of the OSX. We also use this peer group for purposes of the Stock Performance Graph set forth in “Item 5 - Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities” of our Annual Report on Form 10-K for the year ended December 31, 2025. +38 +(6) +The dollar amounts reported represent the amount of net income (loss) (in thousands) attributable to Liberty Energy Inc. in our audited consolidated financial statements for the applicable year +(7) +For the years ended December 31, 2024 and December 31, 2025, Adjusted ROCE is equal to the Company’s income before taxes and loss (gain) on remeasurement of liability under tax receivable agreements, divided by the simple average of capital (debt and equity) employed at the beginning and end of the year. For the years ended December 31, 2021 to 2023, Adjusted ROCE is equal to the Company’s income before taxes and loss (gain) on remeasurement of liability under tax receivable agreements, plus interest expense and stock-based compensation expense for the year, divided by the simple average of capital (debt and equity) employed at the beginning and end of each year presented. We rank our Adjusted ROCE against those of the ROCE Peer Group to determine Comparative ROCE, which is used as a metric to determine a portion of annual incentive compensation and the vesting of performance-based RSU awards. While we use numerous financial and non-financial performance measures for the purpose of evaluating performance for our compensation programs, we have determined that our Adjusted ROCE is the financial performance measure that, in our assessment, represents the most important performance measure (that is not otherwise required to be disclosed in this table) used by us to link compensation actually paid to our NEOs for the most recently completed fiscal year, to our performance. +Performance Measures +The most important financial performance measures that we use to link executive compensation actually paid to the NEOs for the most recently completed fiscal year to our performance are Adjusted Pre-tax EPS , Adjusted ROCE , and Comparative ROCE , which performance measures for the most recently completed fiscal year are defined in the footnotes to the table in “Compensation Discussion and Analysis – Elements of Compensation – Annual Incentive Award” above. +Analysis of Information in Pay Versus Performance Table +As described in more detail in the “Compensation Discussion and Analysis” above, our executive compensation program includes variable components in the form of annual incentive compensation and long-term incentive awards. While we utilize several performance measures to align executive compensation with our performance, all of those measures are not presented in the “Pay Versus Performance Table for 2025.” Moreover, we generally seek to incentivize long-term performance and, therefore, do not specifically align our performance measures with compensation that is actually paid (as computed in accordance with SEC regulations) for a particular year. In accordance with SEC regulations, we are providing the following descriptions of the relationships between information presented in the “Pay Versus Performance Table for 2025.” +Compensation Actually Paid and Cumulative TSR +As demonstrated by the following graph, the amount of compensation actually paid to Messrs. Gusek and Wright and the average amount of compensation actually paid to our NEOs as a group (excluding Messrs. Gusek and Wright) is generally aligned with our cumulative TSR over the five years presented in the “ Pay Versus Performance Table for 2025.” The alignment of compensation actually paid with our cumulative TSR over the period presented is because a significant portion of the compensation actually paid to our NEOs is comprised of equity awards. +(1) +Compensation actually paid to our PEO includes amounts paid to Mr. Wright for the years ended December 31, 2021, 2022, 2023 and 2024. Compensation actually paid to our PEO for the year ended December 31, 2025 includes $4,854,542 paid to Mr. Gusek and ($1,857,300) paid to Mr. Wright. +39 +For each of the five years presented in the “Pay Versus Performance Table for 2025,” our cumulative TSR exceeded that of peers contained in the OSX stock index. The following table details our cumulative TSR in comparison to the OSX cumulative TSR for each of the measurement periods (determined in accordance with SEC regulations). +Compensation Actually Paid and Net Income (Loss) +As demonstrated by the following table, the amount of compensation actually paid to Messrs. Gusek and Wright and the average amount of compensation actually paid to other NEOs as a group (excluding Messrs. Gusek and Wright) is generally aligned with our net income (loss) over the five years presented in the “Pay Versus Performance Table for 2025.” While we do not use net income (loss) as a performance measure in the overall executive compensation program, the measure of net income (loss) is correlated with the measures of Pre-Tax EPS and ROCE, which we do use in setting goals for annual incentive compensation, and Comparative ROCE, which we use both in setting goals for annual incentive compensation and the vesting of performance-based RSU awards. +(1) +Compensation actually paid to our PEO includes amounts paid to Mr. Wright for the years ended December 31, 2021, 2022, 2023 and 2024. Compensation actually paid to our PEO for the year ended December 31, 2025 includes $4,854,542 paid to Mr. Gusek and ($1,857,300) paid to Mr. Wright. +40 +Compensation Actually Paid and Adjusted ROCE +As demonstrated by the following table, the amount of compensation actually paid to Messrs. Gusek and Wright and the average amount of compensation actually paid to our other NEOs as a group (excluding Messrs. Gusek and Wright) is generally aligned with our Adjusted ROCE over each of the five years presented in the “ Pay Versus Performance Table for 2025.” +(1) +Compensation actually paid to our PEO includes amounts paid to Mr. Wright for the years ended December 31, 2021, 2022, 2023 and 2024. Compensation actually paid to our PEO for the year ended December 31, 2025 includes $4,854,542 paid to Mr. Gusek and ($1,857,300) paid to Mr. Wright. +41 +PROPOSAL 2 — ADVISORY VOTE TO APPROVE THE COMPENSATION OF THE +COMPANY’S NAMED EXECUTIVE OFFICERS +Section 14A(a)(1) of the Exchange Act, which was added to the Exchange Act by Section 951 of the Dodd-Frank Act, affords the stockholders a vote to approve, on a non-binding, advisory basis, the compensation of our Named Executive Officers for the fiscal year ended December 31, 2025 (commonly known as a “ say-on-pay vote ”). This vote is not intended to address any specific item of compensation and is not a vote on our general compensation policies, compensation of the Board, or our compensation policies as they relate to risk management. Section 14A(a)(2) of the Exchange Act requires us to hold a say-on-pay vote at least once every three years, although the Company currently holds thi s vote annually. +As described more fully in the “ Compensation Discussion & Analysis ” section of this Proxy Statement and the accompanying tabular and narrative disclosures, the Company’s compensation policy is designed to attract and retain highly qualified executive officers. The Company’s compensation program seeks to align executive compensation with stockholder value on an annual and long-term basis through a combination of base pay, annual incentives, and certain long-term incentives. Please read the Compensation Discussion & Analysis section of this Proxy Statement for additional details on our executive compensation program. +The Board strongly endorses the Company’s executive compensation program and recommends that the stockholders approve on an advisory, non-binding basis, the following resolution: +RESOLVED, that the stockholders approve, on an advisory basis, the compensation of the Company’s Named Executive Officers as described in the proxy statement, including the Compensation Discussion & Analysis, and the compensation tables and related narrative disclosure contained therein. +Vote Required +Your votes with respect to the approval of Proposal 2 are advisory, which means the results of such votes are not binding on us, the Board and the committees of the Board. Although non-binding, the Board and its committees value the opinions of our stockholders and will review and consider the voting results when making future decisions regarding executive compensation. Because the advisory vote on executive compensation occurs well after the beginning of the compensation year and because the different elements of our executive compensation programs are designed to operate in an integrated manner and to complement one another, it may not be appropriate or feasible to change our executive compensation programs in consideration of one year’s advisory vote on executive compensation by the time of the following year’s annual meeting of stockholders. +The approval, on a non-binding basis, of the compensation of our Named Executive Officers requires the affirmative vote of a majority of the shares of Common Stock present in person or represented by proxy at the Annual Meeting and entitled to vote on the matter. If you submit a signed proxy card but do not give voting instructions as to how your shares of Common Stock should be voted, your shares will be voted in accordance with the recommendations of our Board stated in this Proxy Statement. Abstentions will have the same effect as a vote “AGAINST” Proposal 2, and broker non-votes will not have any effect on the outcome of Proposal 2. +THE BOARD RECOMMENDS VOTING “ FOR ” THE APPROVAL, ON AN ADVISORY BASIS, OF THE COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS. +42 +PROPOSAL 3 — RATIFICATION OF APPOINTMENT OF THE COMPANY’S +INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +The Audit Committee is responsible for the appointment, compensation, retention, oversight of the work, and evaluation of the principal independent registered public accounting firm retained to audit the Company’s financial statements. The Audit Committee has appointed Deloitte as the Company’s independent registered public accounting firm to audit the financial statements of the Company for the fiscal year ending December 31, 2026. The Audit Committee annually evaluates Deloitte’s performance and independence in determining whether to retain Deloitte or engage a different independent registered public accounting firm. As further described in the following Audit Committee Report, this evaluation includes a variety of factors including, but not limited to, Deloitte’s performance and service level, experience and qualification of personnel, execution of audit plans, quality and extent of communications with management and the Audit Committee, quality control procedures and peer reviews, the nature and extent of non-audit services, and independence controls. +The audit of the Company’s consolidated financial statements for the fiscal year ended December 31, 2025 was completed by Deloitte on February 2, 2026. Deloitte has acted as the Company’s independent registered public accounting firm since 2016. +The Board is submitting the appointment of Deloitte for ratification at the Annual Meeting. The submission of this matter for ratification by stockholders is not legally required, but the Board and the Audit Committee believe the submission provides an opportunity for stockholders, through their vote, to communicate with the Board and the Audit Committee about an important aspect of corporate governance. If the stockholders do not ratify the appointment of Deloitte, the Audit Committee will reconsider the appointment of that firm as the Company’s independent registered public accounting firm. +The Audit Committee has the sole authority and responsibility to retain, evaluate and replace the Company’s independent auditors, and stockholder ratification of this appointment does not limit the authority of the Audit Committee to change auditors at any time. Representatives of Deloitte are expected to be present at the Annual Meeting and will have an opportunity to make a statement if they so desire and will be available to respond to appropriate questions. +The following table summarizes the aggregate fees billed or expected to be billed by Deloitte for the fiscal years ended December 31, 2025 and 2024. +2025 ($) +2024 ($) +Audit Fees (1) +2,933,200 +2,730,000 +Audit-Related Fees (2) +210,100 +30,000 +Tax Fees (3) +58,600 +89,513 +All Other Fees (4) +— +— +Total Fees +3,201,900 +2,849,513 +(1) Deloitte’s audit fees related primarily to the integrated annual audit of the consolidated financial statements for the fiscal year as included in our Annual Report on Form 10-K, which integrated audit includes the audit of the effectiveness of internal controls over financial reporting, quarterly reviews, and consultations relating to the audit and quarterly reviews. +(2) Deloitte’s audit-related fees in 2025 were in connection with preapproved attest engagements, comfort letters, and similar items, including Deloitte’s audit of the Liberty Energy Services 401(k) savings plan. Deloitte’s audit-related fees in 2024 were in connection with the Company’s Registration Statement on Form S-8 filed on May 17, 2024 and the auditor consent thereto. +(3) Deloitte’s fees for tax services related primarily to professional services rendered by Deloitte for tax compliance, tax advice and tax planning. +(4) Deloitte did not provide any other products and services so no other fees were incurred. +Before Deloitte is engaged to render audit or non-audit services, the Audit Committee must pre-approve the engagement. The charter of the Audit Committee and its pre-approval policy provides that pre-approval is not required if the engagement is entered into pursuant to pre-approval policies and procedures established by the Audit Committee. The Chairman of the Audit Committee has the authority to grant pre-approvals, provided such approvals are within the pre-approval policy and presented to the Audit Committee at a subsequent meeting. The Audit Committee pre-approved all of the services and associated fees described in the table set forth above prior to Deloitte being engaged for such services. The duties of the Audit Committee are described in the charter of the Audit Committee that can be found on the Company’s website, www.libertyenergy.com , by first clicking “ Investors ” then “ Corporate Governance ” and proceeding to “ Governance Documents .” +43 +Vote Required +The affirmative vote of a majority of the shares of Common Stock present in person or represented by proxy at the Annual Meeting and entitled to vote on the matter is required to approve Proposal 3. If you submit a signed proxy card but do not give voting instructions as to how your shares of Common Stock should be voted, your shares will be voted in accordance with the recommendations of our Board stated in this Proxy Statement. Abstentions will have the same effect as a vote “AGAINST” Proposal 3, and there will be no broker non-votes with respect to Proposal 3. +THE BOA RD RECOMMENDS VOTING “ FOR ” THE RATIFICATION OF APPOINTMENT OF +DELOITTE AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING +FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2026. +44 +AUDIT COMMITTEE REPORT +The information contained in this Audit Committee Report shall not be deemed to be “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act or the Exchange Act, except to the extent that the Company specifically incorporates such information by reference in such filing. +Primary Oversight Responsibilities +Our management is responsible for establishing a system of internal controls, assessing such controls and for preparing our consolidated financial statements in accordance with generally accepted accounting principles. The Audit Committee provides oversight of these management activities. Our independent registered public accounting firm is responsible for auditing our consolidated financial statements in accordance with standards of the United Stated Public Company Accounting Oversight Board (the “ PCAOB ”) and issuing its report based on its audit. +Under the Audit Committee’s charter, the purpose of the Audit Committee is to assist the Board in fulfilling its oversight responsibilities as to, among other duties: (i) the integrity of the Company’s financial statements; (ii) the Company’s compliance with legal and regulatory requirements; (iii) qualifications, independence and performance of the independent registered public accounting firm engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the Company; (iv) effectiveness and performance of the Company’s internal audit function; (v) the annual preparation of this report and publishing this report in the Company’s Proxy Statement for its annual meeting of stockholders or its Annual Report on Form 10-K; and (vi) performing such other functions as the Board may assign to the Audit Committee from time to time. +Oversight of Independent Auditors +In connection with the evaluation, appointment and retention of the independent registered public accounting firm, at least annually the Audit Committee reviews and evaluates the independence and quality control procedures of the independent registered public accounting firm and the experience and qualifications of its senior personnel providing audit services to the Company. In this evaluation, the Audit Committee may consider, among other factors, the following with respect to the independent registered public accounting firm: their historical and recent performance on our audit, the quality and candor of their communications with the both the Audit Committee and management, the depth of expertise of their audit team and the value provided by their national office, the appropriateness of their fees, how effectively they maintained their independence, their tenure as our independent auditors, their knowledge of our operations, accounting policies and practices, and internal control over financial reporting, and external data relating to audit quality and performance by them and their peer firms. Based on this overall evaluation, the Audit Committee retained Deloitte as our independent registered public accounting firm for 2025. +2025 Audited Financial Statements +In connection with the preparation of the audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025: +• The Audit Committee reviewed and discussed the audited financial statements and associated audit with the independent registered public accounting firm and management; +• The Audit Committee discussed with the independent registered public accounting firm the matters required to be discussed by Auditing Standard No. 1301 “Communications with Audit Committees” as adopted by the PCAOB. In general, these auditing standards require the independent registered public accounting firm to communicate to the Audit Committee certain matters that are incidental to the audit, such as any initiation of, or changes to, significant accounting policies, management judgments, accounting estimates and audit adjustments; disagreements with management; the independent registered public accounting firm’s judgment about the quality of our accounting principles; significant audit risks identified and any changes from planned audit strategy; the use of specialists on the audit team; and issues for which the independent registered public accounting firm have consulted outside the engagement team; and +• The Audit Committee has received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the PCAOB regarding the independent registered public accounting firm’s communication with the Audit Committee concerning independence and has discussed the independent registered public accounting firm’s independence with the independent registered public accounting firm. The Audit Committee also considered whether the independent registered public accounting firm’s provision of non-audit services to us was compatible with maintaining their independence. +45 +Based on the review and discussions noted above, the Audit Committee recommended to the Board that the audited consolidated financial statements of the Company for the year ended December 31, 2025 be included in our Annual Report on Form 10-K filed with the SEC. +Audit Committee of the Board of Directors: +William F. Kimble (Chair) +Simon Ayat +Gale A. Norton +Cary D. Steinbeck +46 +SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT +Except to the extent indicated otherwise in the footnotes, the following table sets forth the beneficial ownership of our common stock as of February 18, 2026 based on 162,051,526 shares of our Class A Common Stock and zero shares of our Class B Common Stock outstanding on such date: +* each person known to us to beneficially own more than 5% of any class of our outstanding voting securities; +* each member of our Board and each nominee to our Board; +* each of our Named Executive Officers; and +* all of our current directors and executive officers as a group. +Except as otherwise indicated, the persons listed below have sole voting and investment power with respect to all shares of our Common Stock beneficially owned by them, except to the extent this power may be shared with a spouse. All information with respect to beneficial ownership has been furnished by the 5% or more stockholders, directors, director nominees, or Named Executive Officers, as the case may be. Unless otherwise noted, the mailing address of each listed beneficial owner is 950 17th Street, Suite 2400, Denver, Colorado 80202. +Class A +Common Stock +Number of Shares +% +5% Stockholders +BlackRock, Inc. (1) +24,090,636 +14.9 +The Vanguard Group (2) +19,224,315 +11.9 +Dimensional Fund Advisors LP (3) +9,443,949 +5.8 +Directors, Director Nominees, and Named Executive Officers: +Christopher Wright (4) +— +* +Ron Gusek (5) +1,351,908 +* +Michael Stock (5) +782,270 +* +R. Sean Elliott (5) +290,012 +* +Ryan T. Gosney (5) +198,883 +* +Simon Ayat +44,480 +* +Ken Babcock (6) +68,758 +* +Peter A. Dea (7) +79,071 +* +William F. Kimble +83,490 +* +James R. McDonald +— +* +Arjun Murti +18,001 +* +Gale A. Norton +75,710 +* +Audrey Robertson (8) +50,273 +* +Cary D. Steinbeck +185,862 +* +Alice Yake +3,126 +* +Current Directors and Executive Officers +as a group (13 persons) (9) +3,181,571 +2.0 +(1) This information is based solely on a Schedule 13G/A filed with the SEC on April 28, 2025 by BlackRock, Inc., in which it reported that BlackRock, Inc. has sole voting power as to 23,800,208 shares of Class A Common Stock and sole dispositive power as to 24,090,636 shares of Class A Common Stock. The principal business address of BlackRock, Inc. is 50 Hudson Yards, New York, NY 10001. +(2) This information is based solely on a Schedule 13G/A filed with the SEC on February 13, 2024 by The Vanguard Group, in which it reported that The Vanguard Group has shared voting power as to 172,985 shares of Class A Common Stock, sole dispositive power as to 18,903,189 shares of Class A Common Stock and shared dispositive power as to 321,126 shares of Class A Common Stock. The principal business address of The Vanguard Group is 100 Vanguard Blvd., Malvern, PA 19355. +(3) This information is based solely on a Schedule 13G filed with the SEC on February 9, 2024 by Dimensional Fund Advisors LP, in which it reported that Dimensional Fund Advisors LP has sole voting power as to 9,278,827 shares of Class A Common Stock, sole dispositive power as to 9,443,949 shares of Class A Common Stock. The principal business address of Dimensional Fund Advisors LP is 6300 Bee Cave Road, Building One, Austin, TX 78746. +47 +(4) Includes Mr. Wright in his capacity as a Named Executive Officer of the Company. On February 3, 2025, Mr. Wright resigned from all positions with the Company in connection with his confirmation as Secretary of Energy of the United States. Mr. Wright informed the Company that he divested all of his ownership in the Company in accordance with federal ethics requirements relating to his confirmation. +(5) Shares of Class A Common Stock held by Messrs. Gusek, Stock, Elliott and Gosney include (a) 60,914; 51,048; 43,654; and 27,282 shares of stock, respectively, that will be received upon the vesting of time-based RSUs and (b) 102,914; 102,914; 42,050; and 26,124 shares of stock, respectively, that will be received upon the vesting of performance-based RSUs within 60 days of February 18, 2026. +(6) Includes 9,289 shares of Class A Common Stock held by a family trust. +(7) Includes 57,143 shares of Class A Common Stock held by a family trust. +(8) Includes 200 shares of Class A Common Stock held in custodial accounts on behalf of minor children of Ms. Robertson and five shares held in a Roth IRA. Ms. Robertson’s ownership information is as of August 26, 2025, which is the date that she resigned as a director of the Company and ceased to be a Section 16 reporting person in connection with her subsequent confirmation as Assistant Secretary of Energy for Energy Efficiency and Renewable Energy at the Department of Energy of the United States. In connection with Ms. Robertson’s resignation to serve the country, the Compensation Committee approved the accelerated vesting of all unvested RSUs. +(9) Excludes Mr. Wright, who was no longer a director or an executive officer of the Company, and Ms. Robertson who was no longer a director of the Company, as of the date of this table. +* Less than 1.0%. +48 +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +Policies and Procedures for Review of Related Party Transactions +A “ Related Party Transaction ” is a transaction, arrangement or relationship in which the Company or any of its subsidiaries was, is or will be a participant, the amount of which involved exceeds $120,000, and in which any related person had, has or will have a direct or indirect material interest. A “ Related Person ” is: +♦ any person who is, or at any time during the applicable period was, one of our executive officers or one of our directors; +♦ any person who is known by us to be the beneficial owner of more than 5% of our Class A Common Stock; +♦ any immediate family member of any of the foregoing persons, which means any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law of a director, executive officer or a beneficial owner of more than 5% of our Class A Common Stock, and any person (other than a tenant or employee) sharing the household of such director, executive officer or beneficial owner of more than 5% of our Class A Common Stock; and +♦ any firm, corporation or other entity in which any of the foregoing persons is a partner or principal or in a similar position or in which such person has a 10.0% or greater beneficial ownership interest. +Our Board has adopted a written related party transactions policy. Pursuant to this policy, our Audit Committee reviews all material facts of all Related Party Transactions and either approves or disapproves entry into the Related Party Transaction, subject to certain limited exceptions. The determination of the Audit Committee is documented in the Audit Committee’s minutes. In determining whether to approve or disapprove entry into a Related Party Transaction, our Audit Committee considers, among other factors, the following: (i) w hether the Related Party Transaction is on terms no less favorable than terms generally available to an unaffiliated third- party under the same or similar circumstances and (ii) the extent of the Related Person’s interest in the transaction. Furthermore, the policy requires that all Related Party Transactions required to be disclosed in our filings with the SEC be so disclosed in accordance with applicable laws, rules and regulations. +Related Party Transactions +The following is a description of transactions entered into, or in effect, after January 1, 2025 to which we have been a party, in which the amount involved in the transaction exceeds $120,000, and in which any of our directors, executive officers or beneficial owners of more than 5% of our voting securities, or affiliates or immediate family members of any of our directors, executive officers or beneficial owners of more than 5% of our voting securities, had or will have a direct or indirect material interest. We believe the terms obtained or consideration that we paid or received, as applicable, in connection with the transactions described below were comparable to terms available or the amounts that would be paid or received, as applicable, from unrelated third parties. +Transactions with Tim Babcock +Tim Babcock is currently employed by the Company as a director of operations. Tim Babcock is the son of Ken Babcock, a member of our Board. For the year ended December 31, 2025, Tim Babcock was paid gross compensation of approximately $211,000 for his services as an employee. +Transactions with the Bettering Human Lives Foundation +In December 2023, the Company established the Bettering Human Lives Foundation (the “ Foundation ”), a nonprofit organization dedicated to promoting clean cooking solutions and improving the well-being of communities worldwide. Mr. Wright, the Company’s former Chief Executive Officer also formerly served as Chairman of the Foundation, and his sister-in-law, Anne Hyre, currently serves as the Foundation’s executive director. Ms. Hyre is employed by the Company and seconded to the Foundation. Ms. Hyre received total compensation of approximately $177,000 from the Company for the year ended December 31, 2025. In addition, the Company and the Foundation are parties to a Support Services Agreement (the “Support Services Agreement”) whereby the Company provides certain administrative and operational support services to the Foundation. During the year ended December 31, 2025, the Company made charitable contributions of $0.9 million to the Foundation and received $0.6 million in other service revenue from the Foundation under the Support Services Agreement. +49 +Transactions with Veriten LLC +Mr. Murti joined our Board in January 2025. He is a partner at Veriten LLC, a private research, investment and strategy firm, that the Company retained for consulting services in 2025 for approximately $250,000 and has retained again in 2026 for approximately $250,000. +Transactions with Franklin Mountain Energy +A former member of the Board, Ms. Audrey Robertson, served as Executive Vice President of Finance of Franklin Mountain Energy, LLC (“Franklin Mountain”) until its acquisition by an unaffiliated party. Accordingly, effective January 28, 2025, Franklin Mountain is no longer a related party. The amounts of the Company’s revenue related to completion services provided to Franklin Mountain during 2025 was $5.8 million. +Indemnification for Officers and Directors +Our Charter and Third Amended and Restated Bylaws (our “Bylaws”) provide indemnification rights to our directors and officers and permit us to purchase insurance on behalf of any officer, director, employee or other agent for any liability arising out of that person’s actions as our officer, director, employee or agent, regardless of whether Delaware law would mandate indemnification. Additionally, we have entered into separate indemnity agreements with our directors and certain officers to provide additional indemnification benefits, including the right to receive, in advance, reimbursements for expenses incurred in connection with a de fense for which the director or officer is entitled to indemnification. We believe that the limitation of liability provisions in our Charter, Bylaws and the indemnity agreements will facilitate our ability to continue to attract and retain qualified individuals to serve as directors and officers. +Conflicts of Interest +The Related Party Transactions described herein may cause certain conflicts of interests, including that: +♦ we may enter into contracts between us, on the one hand, and related parties, on the other, that are not as a result of arm’s-length transactions; +♦ our executive officers and directors that hold positions of responsibility with related parties may be aware of certain business opportunities that are appropriate for presentation to us as well as to such other related parties and may present such business opportunities to such other parties; and +♦ our executive officers and directors that hold positions of responsibility with related parties may have significant duties with, and spend significant time serving, other entities and may have conflicts of interest in allocating time. +50 +HOUSEHOLDING +The SEC permits companies and intermediaries (such as brokers and banks) to satisfy delivery requirements for proxy statements and annual reports with respect to two or more stockholders sharing the same address by delivering a single proxy statement and annual report to those stockholders. This process, which is commonly referred to as “householding,” is intended to reduce the volume of duplicate information stockholders receive and reduce expenses for companies. Both the Company and some of our intermediaries may be householding our proxy materials and Annual Report on Form 10-K. Once you have received notice from your broker or another intermediary that they will be householding materials sent to your address, householding will continue until you are notified otherwise or until you revoke your consent. Should you wish to receive separate copies of our Annual Report on Form 10-K and proxy statement in the future, we will promptly deliver a separate copy of each of these documents to you if you send a written or oral request to us at our address or phone number appearing on the cover of this Proxy Statement, to the attention of the Corporate Secretary. If you hold your shares through an intermediary that is householding and you want to receive separate copies of our Annual Report on Form 10-K and proxy statement in the future, you should contact your bank, broker or other nominee record holder. +STOCKHOLDER PROPOSALS +Pursuant to Rule 14a-8 under the Exchange Act, in order for a stockholder proposal to be included in the Company’s proxy statement for its 2027 annual meeting of stockholders, such proposal must be received at the Company’s principal executive offices at 950 17th Street, Suite 2400, Denver, Colorado 80202, Attention: Corporate Secretary, no later than November 5, 2026, and must comply with additional requirements established by the SEC. SEC rules set standards for eligibility and specify the types of stockholder proposals that may be excluded from a proxy statement. In addition, the Bylaws provide that any stockholder who would like to have a proposal considered at our 2027 annual meeting of stockholders must submit the proposal to the Secretary of the Company at the Company’s principal executive offices so that it is received by not earlier than the close of business on December 15, 2026, and not later than the close of business on January 14, 2027, unless the date of our 2027 annual meeting of stockholders is more than 30 days before or more than 60 days after April 14, 2027, in which case the proposal must be received no later than the 10th day following the day on which public announcement of the date of such meeting is first made by the Company. A copy of the Bylaws is available upon request from the Secretary of the Company. Stockholders who intend to submit a proposal for nomination of persons for election to our Board or a proposal of business at the 2027 annual meeting of stockholders (other than matters properly brought under Rule 14a-8 under the Exchange Act and included in the Company’s notice of meeting) must follow the procedures prescribed in the Bylaws. No stockholder proposal was received for inclusion in this Proxy Statement. +Stockholders who intend to solicit proxies in support of director nominees other than our nominees must provide notice to the Secretary of the Company that sets forth the information required by Rule 14a-19 of the Exchange Act in accordance with and within the time period prescribed in the advance notice provisions of the Bylaws. +WHERE YOU CAN FIND MORE INFORMATION +We file or furnish annual, quarterly and current reports, proxy statements and other documents with the SEC under the Exchange Act. The SEC also maintains an internet website at www.sec.gov that contains reports, proxy and information statements and other information regarding issuers, including us, that file electronically with the SEC. +We also make available free of charge through our website, www.libertyenergy.com , electronic copies of certain documents that we file with the SEC, including our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. +51 +OTHER MATTERS +As of the date of this Proxy Statement, the Board does not intend to present any matters other than those described herein at the Annual Meeting and is unaware of any matters to be presented by other parties. If other matters are properly brought before the meeting for action by the stockholders, proxies will be voted in accordance with the recommendation of the Board or, in the absence of such a recommendation, in accordance with the judgment of the proxy holder. +IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING TO BE HELD ON APRIL 14, 2026: +A COPY OF THIS PROXY STATEMENT, THE NOTICE OF 2026 ANNUAL MEETING OF STOCKHOLDERS, THE 2026 ANNUAL REPORT TO STOCKHOLDERS AND THE PROXY CARD ARE AVAILABLE AT WWW.ASTPROXYPORTAL.COM/AST/21952 +IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, YOU ARE URGED TO VOTE BY INTERNET, BY PHONE OR IF YOU HAVE RECEIVED PAPER COPIES OF THE PROXY MATERIALS, BY COMPLETING, SIGNING AND RETURNING THE PROXY IN THE ENCLOSED POSTAGE-PAID, ADDRESSED ENVELOPE. +By Order of the Board of Directors, +/s/ R. Sean Elliott +R. Sean Elliott +Chief Legal Officer and Corporate Secretary +Denver, Colorado +March 5, 2026 +2026 ANNUAL MEETING OF STOCKHOLDERS +OF +LIBERTY ENERGY INC. +Tuesday, April 14, 2026 +GO GREEN +e-Consent makes it easy to go paperless. With e-Consent, you can quickly access your proxy material, statements and other eligible documents online, while reducing costs, clutter and paper waste. Enroll today via equiniti.com/us/ast-access to enjoy online access. +NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL : +The notice of meeting, annual report, proxy statement and +proxy card are available at www.astproxyportal.com/ast/21952 +Please sign, date and mail your +proxy card in the envelope +provided as soon as possible. +Please detach along perforated line and mail in the envelope provided. +20433000000000000300 9 +041426 +THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" ALL NOMINEES IN PROPOSAL 1 AND +"FOR" PROPOSALS 2 AND 3. +PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE ☒ +1. Election of Directors: To elect four directors to the Company's Board of Directors to serve until the next annual meeting or until their successors are duly elected and qualified. +☐ +NOMINEES: +FOR ALL NOMINEES +Simon Ayat +Arjun Murti +☐ +WITHHOLD AUTHORITY +FOR ALL NOMINEES +Gale Norton +Cary Steinbeck +☐ +FOR ALL EXCEPT +(See instructions below) +INSTRUCTIONS : To withhold authority to vote for any individual nominee(s), mark “FOR ALL EXCEPT” and fill in the circle next to each nominee you wish to withhold, as shown here: ● +To change the address on your account, please check the box at right and indicate your new address in the address space above. Please note that changes to the registered name(s) on the account may not be submitted via this method. +☐ +FOR +AGAINST +ABSTAIN +2. +Advisory vote to approve the compensation of the Company’s named executive officers. +☐ +☐ +☐ +3. +Ratification of appointment of the Company’s independent registered public accounting firm. +☐ +☐ +☐ +TO INCLUDE ANY COMMENTS, USE THE COMMENTS BOX ON THE REVERSE SIDE OF THIS CARD. +IMPORTANT NOTICE +YOUR VOTE IS IMPORTANT. PLEASE SIGN, DATE AND RETURN YOUR PROXY AS SOON AS POSSIBLE. BY DOING SO, YOU MAY SAVE LIBERTY ENERGY INC. THE EXPENSE OF ADDITIONAL SOLICITATION. +NOTE: In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting or an adjournment or postponement thereof. +MARK “X” HERE IF YOU PLAN TO ATTEND THE VIRTUAL MEETING ☐ +Signature of Stockholder +Date: +Signature of Stockholder +Date: +Note: +Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person. +1 +LIBERTY ENERGY INC. +THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS +FOR THE 2026 ANNUAL MEETING OF STOCKHOLDERS +The undersigned hereby appoint(s) Ron Gusek, Michael Stock and R. Sean Elliott, or any one of them, attorneys with full power of substitution and revocation to each, for and in the name of the undersigned with all the powers the undersigned would possess if personally present, to vote the shares of the undersigned in Liberty Energy Inc. as indicated on the proposals referred to on the reverse side hereof at the annual meeting of its stockholders to be held virtually via live webcast at the website edge.media-server.com/mmc/p/azh3pr84 (password: liberty2026) on Tuesday, April 14, 2026, at 9:00 AM Mountain Time and at any adjournments or postponements thereof, and in their or his discretion upon any other matter which may properly come before said meeting. +THE SHARES REPRESENTED BY THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO SPECIFIC DIRECTION IS GIVEN AS TO THE PROPOSALS ON THE REVERSE SIDE, THIS PROXY WILL BE VOTED "FOR" ALL NOMINEES IN PROPOSAL 1 AND "FOR" PROPOSALS 2 AND 3. PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY. +This card also constitutes voting instructions to the trustees under the Liberty Energy Inc. savings plans to vote, in person or by proxy, the proportionate interest of the undersigned in the shares of Common Stock of Liberty Energy Inc. held by the trustees under the plans, as described in the proxy statement. +(Continued and to be signed on the reverse side) +COMMENTS: +1.1 +14475 \ No newline at end of file diff --git a/raw/proxies/0001694028/0001999371-26-005123/proxy_rpt.txt b/raw/proxies/0001694028/0001999371-26-005123/proxy_rpt.txt new file mode 100644 index 0000000000000000000000000000000000000000..14f245fecdba74b532950d44d14c3ae94198f376 --- /dev/null +++ b/raw/proxies/0001694028/0001999371-26-005123/proxy_rpt.txt @@ -0,0 +1,29 @@ +CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS +Policies and Procedures for Review of Related Party Transactions +A “ Related Party Transaction ” is a transaction, arrangement or relationship in which the Company or any of its subsidiaries was, is or will be a participant, the amount of which involved exceeds $120,000, and in which any related person had, has or will have a direct or indirect material interest. A “ Related Person ” is: +♦ any person who is, or at any time during the applicable period was, one of our executive officers or one of our directors; +♦ any person who is known by us to be the beneficial owner of more than 5% of our Class A Common Stock; +♦ any immediate family member of any of the foregoing persons, which means any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law of a director, executive officer or a beneficial owner of more than 5% of our Class A Common Stock, and any person (other than a tenant or employee) sharing the household of such director, executive officer or beneficial owner of more than 5% of our Class A Common Stock; and +♦ any firm, corporation or other entity in which any of the foregoing persons is a partner or principal or in a similar position or in which such person has a 10.0% or greater beneficial ownership interest. +Our Board has adopted a written related party transactions policy. Pursuant to this policy, our Audit Committee reviews all material facts of all Related Party Transactions and either approves or disapproves entry into the Related Party Transaction, subject to certain limited exceptions. The determination of the Audit Committee is documented in the Audit Committee’s minutes. In determining whether to approve or disapprove entry into a Related Party Transaction, our Audit Committee considers, among other factors, the following: (i) w hether the Related Party Transaction is on terms no less favorable than terms generally available to an unaffiliated third- party under the same or similar circumstances and (ii) the extent of the Related Person’s interest in the transaction. Furthermore, the policy requires that all Related Party Transactions required to be disclosed in our filings with the SEC be so disclosed in accordance with applicable laws, rules and regulations. +Related Party Transactions +The following is a description of transactions entered into, or in effect, after January 1, 2025 to which we have been a party, in which the amount involved in the transaction exceeds $120,000, and in which any of our directors, executive officers or beneficial owners of more than 5% of our voting securities, or affiliates or immediate family members of any of our directors, executive officers or beneficial owners of more than 5% of our voting securities, had or will have a direct or indirect material interest. We believe the terms obtained or consideration that we paid or received, as applicable, in connection with the transactions described below were comparable to terms available or the amounts that would be paid or received, as applicable, from unrelated third parties. +Transactions with Tim Babcock +Tim Babcock is currently employed by the Company as a director of operations. Tim Babcock is the son of Ken Babcock, a member of our Board. For the year ended December 31, 2025, Tim Babcock was paid gross compensation of approximately $211,000 for his services as an employee. +Transactions with the Bettering Human Lives Foundation +In December 2023, the Company established the Bettering Human Lives Foundation (the “ Foundation ”), a nonprofit organization dedicated to promoting clean cooking solutions and improving the well-being of communities worldwide. Mr. Wright, the Company’s former Chief Executive Officer also formerly served as Chairman of the Foundation, and his sister-in-law, Anne Hyre, currently serves as the Foundation’s executive director. Ms. Hyre is employed by the Company and seconded to the Foundation. Ms. Hyre received total compensation of approximately $177,000 from the Company for the year ended December 31, 2025. In addition, the Company and the Foundation are parties to a Support Services Agreement (the “Support Services Agreement”) whereby the Company provides certain administrative and operational support services to the Foundation. During the year ended December 31, 2025, the Company made charitable contributions of $0.9 million to the Foundation and received $0.6 million in other service revenue from the Foundation under the Support Services Agreement. +49 +Transactions with Veriten LLC +Mr. Murti joined our Board in January 2025. He is a partner at Veriten LLC, a private research, investment and strategy firm, that the Company retained for consulting services in 2025 for approximately $250,000 and has retained again in 2026 for approximately $250,000. +Transactions with Franklin Mountain Energy +A former member of the Board, Ms. Audrey Robertson, served as Executive Vice President of Finance of Franklin Mountain Energy, LLC (“Franklin Mountain”) until its acquisition by an unaffiliated party. Accordingly, effective January 28, 2025, Franklin Mountain is no longer a related party. The amounts of the Company’s revenue related to completion services provided to Franklin Mountain during 2025 was $5.8 million. +Indemnification for Officers and Directors +Our Charter and Third Amended and Restated Bylaws (our “Bylaws”) provide indemnification rights to our directors and officers and permit us to purchase insurance on behalf of any officer, director, employee or other agent for any liability arising out of that person’s actions as our officer, director, employee or agent, regardless of whether Delaware law would mandate indemnification. Additionally, we have entered into separate indemnity agreements with our directors and certain officers to provide additional indemnification benefits, including the right to receive, in advance, reimbursements for expenses incurred in connection with a de fense for which the director or officer is entitled to indemnification. We believe that the limitation of liability provisions in our Charter, Bylaws and the indemnity agreements will facilitate our ability to continue to attract and retain qualified individuals to serve as directors and officers. +Conflicts of Interest +The Related Party Transactions described herein may cause certain conflicts of interests, including that: +♦ we may enter into contracts between us, on the one hand, and related parties, on the other, that are not as a result of arm’s-length transactions; +♦ our executive officers and directors that hold positions of responsibility with related parties may be aware of certain business opportunities that are appropriate for presentation to us as well as to such other related parties and may present such business opportunities to such other parties; and +♦ our executive officers and directors that hold positions of responsibility with related parties may have significant duties with, and spend significant time serving, other entities and may have conflicts of interest in allocating time. +50 +HOUSEHOLDING +The SEC permits companies and intermediaries (such as brokers and banks) to satisfy delivery requirements for proxy statements and annual reports with respect to two or more stockholders sharing the same address by delivering a single proxy statement and annual report to those stockholders. This process, which is commonly referred to as “householding,” is intended to reduce the volume of duplicate information stockholders receive and reduce expenses for companies. Both the Company and some of our intermediaries may be householding our proxy materials and Annual Report on Form 10-K. Once you have received notice from your broker or another intermediary that they will be householding materials sent to your address, householding will continue until you are notified otherwise or until you revoke your consent. Should you wish to receive separate copies of our Annual Report on Form 10-K and proxy statement in the future, we will promptly deliver a separate copy of each of these documents to you if you send a written or oral request to us at our address or phone number appearing on the cover of this Proxy Statement, to the attention of the Corporate Secretary. If you hold your shares through an intermediary that is householding and you want to receive separate copies of our Annual Report on Form 10-K and proxy statement in the future, you should contact your bank, broker or other nominee record holder. \ No newline at end of file